Deal structure - How a financing package for an acquisition is designed. Deals can be unleveraged or leveraged; traditional, participatory, or convertible debt; or joint venture.
Debt service - The financial outlay needed to meet interest and principal payments on a debt during a given period.
Debt service coverage ratio (DSCR) - A property's net operating income divided by cost of debt service on an annual basis. A DSCR less than 1 means the property's cash flow is insufficient to cover its debt payments.
Debt-to-Income Ratio (DTI) - A financial calculations performed by lenders to determine if borrowers can afford a certain monthly payment. The DTI (or the obligations ratio) is the total of all a borrower's monthly debt payments including monthly mortgage payment divided by his total monthly income. Acceptable DTI for typical Conventional Loan is 36 - 38%, FHA Loans is 41 - 43%, and VA Loans is 41%.
Dedicate - To convert privately owned property to public ownership for a public use.
Deed - A legal instrument that transfers ownership title to real estate property from a seller to a buyer.
Deed in lieu of foreclosure - Transfer of a deed from an owner/borrower to a lender to avoid foreclosure.
Deed of trust - Similar to a mortgage, an instrument that registers that real estate property is encumbered to secure a debt's repayment.
Default - Failure to perform a legal or contractual duty or to meet a contract or loan obligation.
Deferred interest - When a mortgage payment's amount does not cover the note's full interest payment
Defeasance - The legal release of a debtor from being the primary obligor under a debt, either by the courts or by the creditor.
Defeasance clause - A mortgage provision assuring the revesting of title in the mortgagor when all the conditions and terms of the mortgage have been met. A clause which permits the mortgager-borrower to defeat the temporary and conditional conveyance by discharging the debt and so causing a release of any interests in the real estate.
Deferred maintenance account - An account, funded by a borrower, which contains the funds to meet future maintenance of a property.
Deficiency judgment - A judgment that requires the borrower to assume personal liability for the unpaid balance of mortgage debt after the foreclosure of the property used to secure the mortgage fails to cover the debt's full amount.
Defined-benefit plan - An employee's benefits are defined by a prearranged amount, either as a fixed monthly amount or a percentage of the beneficiary's salary at the time of retirement.
Defined-contribution plan - An employee's benefits at retirement determined by the amount contributed by the employer and/or the employee during their employment tenure, plus any investment earnings on those contributions.
Demising wall - A fixed partition wall that defines the separation of one tenant's space from another tenant or from the building's common area.
Depreciation - In accounting, a periodic allowance for an asset's real or implied loss in value due to wear, age and other factors.
Derivative securities - Securities that are created artificially, i.e., derived from other financial instruments, but are traded on their own. In the context of Collateralized Mortgage-Backed Securities, the interest-only strip most common derivative security.
Design/Build - A company that is responsible for both the design and construction of a property.
Discount rate - A yield rate used to determine the present value of future receipts or payments.
Discretion - The amount of authority an adviser or manager has over the management and investment of a client's account. A "fully discretionary" account means one in which the adviser or manager can manage and invest a client's account without the client's prior approval.
Distraint - The act of seizing a tenant in default's personal property, based on the landlord's right and interest in the property, in payment of a debt.
Diversification - The process of designing an investment portfolio to insulate against the risks of reduced interest yield or capital loss through allocating the individual investments among a several types of assets, each with different characteristics.
Dividend - Cash or stock distribution of profits paid to stockholders. Real Estate Investment Trusts (REITs) must pay at least 90 percent of their taxable income as dividends.
Dividend yield - The annual dividend of a security divided by the price of the security expressed as a percent of its market price.
Dividend - ex date - The date at which a person purchasing a stock is no longer eligible to receive that stock's dividend.
Dollar stop - A maximum agreed-upon amount each tenant will pay on a prorated basis for taxes and operating expense.
Dolo - In Spanish law, a bad or mischievous design.
DOWNREIT - A financing structure that makes it possible for an REIT to acquire properties using units of the REIT. The similar to an UPREIT, except that the DOWNREIT is subordinate to the REIT itself.
Due diligence - Investigative activities carried out by a potential buyer or mortgager of real property to assure that the property is as the seller represented, that all documents are true, no material is left out, and it is not subject to structural, environmental or other problems. In an IPO registration statement, due diligence is the parties' reasonable investigation to assure that all the document's statements are verifiable with no material facts omitted.
Due on sale - A covenant in a mortgage agreement that makes the mortgage due and payable if the mortgaged property is sold before the note's maturity date.
