Balloon, or bullet, loan or mortgage - A loan, frequently used for mortgages, with a maturity that is shorter than the amortization period. The interim payments are low with the bulk of the loan payable on the maturity date.
Balloon risk - The risk that a borrower will not make the lump sum (balloon) payment on the maturity date.
Bank Guarantee Funding (BG Funding) - A written instrument issued by a banking institution guaranteeing payment of a client's obligation, if the client fails to make good on an obligation to a 3rd party. The issuance of bank guarantees is a private transaction and is not a publicly traded security.
There are two types of bank guarantees:
- Direct bank guarantee - made between the bank and one of it's customers. The customer or "Obligor" obligates to a third party commonly known as a "Beneficiary"
- Indirect bank guarantee - issued by one financial insitituion in favor of another financial institution. This is commonly seen when the Obligor's bank and the beneficiary's bank are located in different countries.
Bankrupt - The state of an entity that is unable to repay its current obligations and debts.
Bankruptcy - Federal proceedings to relieve a debtor who is unable or unwilling to pay its debts. After addressing certain priorities and exemptions, the court distributes the property and assets of the bankrupt entity to creditors to fully satisfy all the outstanding debts.
Base loan amount - The original amount on which a loan's payments are based. Any closing costs and other fees wrapped into a loan increase this amount.
Base principal balance - The original mortgage amount adjusted for subsequent advances and principal payments regardless of interest accrued or paid.
Base rent - A fixed amount of rent used as a basis for increasing the rent in the future, usually stated as a percentage of the base, over the term of the lease
Base year - Taxes and operating expenses for the first year of a lease. The base sets a foundation for follow-on years.
Basis point - One-one hundredth of one percent.
Below-grade - Apart of a building constructed below the surface "grade" level.
Beneficiary - An employee or an employee's family member covered by an employee benefit plan or designated by an employee to receive the benefit of a life insurance policy.
Beta - A benchmark of the price volatility of a company's common stock relative to similar stock's in the market
Bid - An offer to buy. In real estate, an offer for a building, whole loans or securities, usually stated as a price or spread.
Blanket mortgage - A mortgage that covers more than one piece of real estate owned by a single borrower.
Blind pool - A real estate investment fund that accepts investor capital without prior specification of what real estate will be invested in.
Bond Financing - Financing that promises to repay the principal and interest of the instrument on a specified date.
Book value - Total shareholder's equity as of the latest quarterly balance sheet less the preferred stock and redeemable preferred stock. AKA common shareholder's equity
Bridge Loan - Short term financing or Òswing loanÓ which is expected to be paid back once a subsequent longer-term loan is arranged.
Broker - An intermediary person who works between two or more parties connected to a transaction, such as a property sale.
Buildable acres, buildable acreage - The portion of a property measured in acres that is available to be built upon after subtracting for roads, setbacks, any open or green spaces and areas where the terrain or other factors make it unsuitable for building.
Building code - The various regulations and laws set forth by the ruling government body as to the end use of a certain piece of property. They may dictate the criteria for allowable design, materials and types of internal and external improvements.
Building standard plus allowance - The landlord lists, in detail, the building standard materials and costs necessary to make a property suitable for occupancy. The tenant can use the negotiated allowance to upgrade or customize the materials.
Build-out - Tenant specified space improvements which take into account the amount of tenant finish allowance that the lease contract provides for.
Build-to-suit - Leasing of a property where the developer or landlord builds to a tenant's specifications.
Buydown - The process of paying additional points on the loan to reduce the monthly mortgage.
- Permanent Buydown - a large enough amount of interest is prepaid to permanently lower the interest rate.
- Temporary Buydown - only the payment for the first three years are lowered by a sufficient interest payment. Temporarily buydowns are used to lower the current payments of a loan to make it easier for a borrower to qualify for a loan. A 3-2-1 is the most common temporary buydown in which three percent lower the first year, two percent the second year, and one percent for the third year.
