Global Definitions Database

A-Note (Senior Debt/Loan)

The highest tranche of an asset backed security (ABS) or other structured financial product; during bankruptcy, default, or other credit proceedings, an A note is senior to other notes, such as B notes; the senior status allows the payment from the underlying assets of A note debt before others; an A note can be rated, or labeled, into AAA, AA or A categories, depending on the credit quality of the underlying asset; also known as a “class A note”.

Absolute energy

The total amount of energy consumed by an entity and those deemed to be within its organisational boundaries.

Absolute Return Attribution

Identifies the contributions of portfolio components to the total return of a portfolio; also known as “return contribution analysis”.

Absorption or Absorption Rate

The rate at which rentable space is leased within a market or submarket over a given period of time, typically reported as the “absorption rate” or “space absorption”.

Account Pledgor

A loan party that has the right to receive capital contributions from Investors and that pledges the deposit account or securities account into which investor capital contributions are to be funded to the lender.

Accounting Standards Codification (ASC) 820

Codification that defines fair value, provides a framework for measuring fair value in generally accepted accounting principles (GAAP), discusses acceptable valuation techniques and inputs to valuation techniques, establishes a fair value hierarchy that prioritizes the inputs, and requires extensive financial statement disclosures about the valuation of plan investments.

Accounting Standards Update (ASU)

A document issued by the Financial Accounting Standards Board (FASB) in the United States, which details accounting standards and guidance on selected accounting policies set out by FASB. See www.fasb.org

Accounts

Commingled funds, both open-end funds and closed-end funds, and separatley managed accounts (SMAs).

Accredited Investor

An investor with special status under financial regulations and satisfying one or more requirements regarding income, net worth, asset size, governance status and/or professional experience; also known as a “sophisticated investor”.

Acquisition

Purchase of an interest in an asset in exchange for consideration paid.

Acquisition Fee

A fee charged by an investment manager or operating partner to acquire new buildings, usually charged as a percent of the acquisition cost. The fee compensates for costs of sourcing, underwriting, negotiating and closing the investment.

Acquisition-Date Cohort

Similar investments with the same acquisition date over the same period of time as subject; also known as an “inception-date cohort”.

Activity and Use Limitation (AUL)

A legal document required for land that has been remediated for environmental contamination but in which there are conditions that must be maintained in order to prevent potentially hazardous exposure; restricts possible land use for the future and alerts future property owners that the property has potential risk for exposure; often an option used by landowners who are required by law to remediate their property, but who do not wish to incur the costs related to achieving a permanent solution without any limitation.

ADC Arrangements

An ADC arrangement is an arrangement in which a bank (lender) provides financing for real estate acquisition, development, or construction purposes and has virtually the same risks and potential rewards as those of owners or joint ventures. There is often little risk in such arrangements to the borrower. The lender may advance all or substantially all the necessary funds to complete a project (including fees and interest), may have a share in the residual profits of the project (an equity "kicker"), and must look to the eventual sale or refinancing of the property for repayment of the advances. Such transactions are often structured in a manner that makes default unlikely because there is no requirement for the borrower to make payments while the project is in progress. ADC arrangements should be reported as loans, real estate ventures, or direct investments in real estate in accordance with guidance presented by the AICPA in a Notice to Practitioners issued in February 1986.

Additional Contingent Interest

Lender participation in the appreciation in value of the underlying property in a participating loan (REIS)

Additionality

The positive impact that would not have occurred without the investment. Real Estate impact investment strategies may ensure additionality by creating additional affordable housing, social housing, healthcare or education or by investing in real estate to improve its environmental performance.

Adjustable-Rate Debt/Loan/Mortgage (ARM)

A debt financing obligation issued to a company or an individual by a bank or similar financial institution for which the interest rate (coupon rate) is adjusted periodically to reflect changes in a previously selected index rate; may have interest rate caps and floors that limit the annual and/or the lifetime change in the coupon rate.

Adjusted Basis

The original purchase price of an asset plus its acquisition costs plus any capital improvements less the cumulative depreciation deductions.

Advisory Board or Committee

A body of individuals and/or representatives of entities that advises the board of directors and/or management of a fund or organization but does not have authority to vote on corporate matters or investment management decisions of the respective fund or organization; appointed advisory committee members bring unique knowledge and skills that augment the knowledge and skills of the board of directors and/or management in order to more effectively guide the organization or fund.

Affiliate Agreement

A document through which two parties, the company and the affiliate, form a relationship whereby the affiliate receives funds for certain qualified actions.

Affordable Housing

Affordable housing refers to housing units that are affordable to buy or rent by the low-income section of a society (for example, whose income is below median household income). Affordability is defined with a maximum percentage of gross income which may differ from country to country and also depending on whether this is a percentage of net, gross, individual or household income.

After-Tax Cash Flow

The amount of money an investment generates after payment of any tax liabilities.

After-Tax Internal Rate of Return (ATIRR)

An internal rate of return (IRR) calculated using after-tax net cash flows.

Alignment of Interest

A series of factors that determine if the GP has similar investment motivations as LP(s) and influenced by factors such as fee structure, allocation policies, investment exclusivity and other factors. Legal agreements aim to create alignment of interest. When the GP is perceived to be motivated to act in ways that are not aligned with LP interests, the vehicle is deemed to have a Conflict of Interest issue.

All Appropriate Inquiries

The process of evaluating a property's environmental conditions, which may be relevant to assessing potential liability for any contamination.

All-in Interest Rate

The percentage rate charged by a Lender which includes the reference rate (e.g. LIBOR / EURIBOR / SONIA) plus a margin.

Allocated Loan Amount

The amount of Loan attributed to a particular portion of the underlying collateral, usually a single property within a portfolio of underlying assets.

Allocation (in Attribution)

With reference to attribution: the value the manager adds by having different sector weights in the portfolio than the sector weights in the benchmark; a sector weight in the portfolio greater than the equivalent benchmark sector weight would be described as overweight and a lesser weight would be described as underweight.

Allocation by Abstraction

A method of separating a whole property value into land and improvement components; the appraiser estimates replacement cost new, subtracts an appropriate amount for depreciation, and subtracts the remainder from the whole property value to estimate the land value.

Allocation by Ratio

A method of separating a whole property value into land and improvement components, in which the appraiser develops proportions of land and improvement values for comparable properties and applies those proportions to the subject’s whole property value.

Allocation Method

A method used to value land, in the absence of vacant land sales, by using a typical ratio of land to improvement value; also known as “land ratio method”.

Allocation Policy

A policy used by a General Partner to allocate investments to different investment vehicles in a fair manner when the investment vehicles do not have Exclusivity rights.

Allowances

A balance sheet contra-account linked with another account that has an opposite value to that account, and is reported as a subtraction from the linked account's balance.

Alpha (α)

The excess return of an investment relative to the return of a benchmark index; often considered the active return on an investment; gauges the performance of an investment against a market index or benchmark that is considered to represent the market's movement as a whole.

Alternative Investment Fund (AIF)

The European Securities and Markets Authority (ESMA) defines AIF as any collective investment undertaking, including investment compartments thereof, which raises capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors and which does not require authorization pursuant to European regulation (see https://www.esma.europa.eu)

Alternative Investment Fund Manager (AIFM)

A specific form of a management company authorized to manage an alternative investment fund (AIF) in the context of European regulation (see https://www.esma.europa.eu).

Alternative Investment Risk

The risk of loss associated with investment in alternative investments or alternative investment vehicles.

Alternative Investment Vehicle (AIV)

An investment structure created to facilitate one or more specific investments; typically, a fund is permitted to establish an alternative investment vehicle to accommodate the tax, legal and/or regulatory concerns of any partner or the partnership as a whole.

Alternative Lender

An individual, entity or organization that provides loans, lines of credit, or cash advances to others, outside of the traditional forms of credit offered by a commercial bank or credit union.

Amenities

A desirable or useful feature of a building or place, amenities look to provide comfort and convenience for tenants occupying the property; Amenities encompass additions that are in excess of the basic needs of an individual, and usually include features such as pools, workout facilities, and internet.

American Institute of Certified Public Accountants (AICPA)

A national trade association that represents certified public accountants in business and industry, public practice, government, and education.

Amortization Period

Number of months used to calculate the amount of monthly payments for principal and interest which could be longer than the loan term.

Amortizing/Amortization

The liquidation of a financial debt through regular periodic installment payments; for tax purposes, the periodic deduction of capitalized expenses.

Anchor Tenant

The tenant that serves as the predominant draw to a commercial property, usually the largest tenant in a shopping center or retail development.

ANREV

ANREV is the Asian Association for Investors in the Non-Listed Real Estate Vehicles. The platform for sharing knowledge on the non-listed real estate industry and to improve transparency, professionalism and best practices across the sector to make the asset class more accessible and attractive to investors. See www.anrev.org/en.

Anti-Dilution Clause/Covenant/Provision

An adjustment mechanism for preferred stock, options, or convertible securities that provides the holder the right to receive additional securities in the event of a future financing in which securities are sold at a lower price than originally paid by the holder of the right; typically, there are exceptions for the adjustment mechanism that carve out situations such as the issuance of certain employee options or existing convertible securities.

Appraisal

An estimate of a property’s fair market value by an authorized person with applicable knowledge and expertise.

Appraisal Institute

An international real estate trade organization representing professional real estate appraisers.

Appreciation

An increase or decrease in value of an asset. Appreciation may be attributable to improvement or deterioration in the financial performance of the asset or changes in the market value for the asset.

Arbitrage

Buying securities in one market and then selling them immediately in another market to make a profit on the price discrepancy.

Arbitration

A form of alternative dispute resolution process conducted out-of-court whereby the dispute between parties to a contact is decided by an impartial third party arbitrator.

ARGUS

A computer program utilized to analyze portfolio performance and purchase opportunities.

Arithmetic Mean

A mathematical representation of the typical value of a series of numbers, computed as the sum of all the numbers in the series divided by the count of all numbers in the series; also known as “average” or “mean”.

Arm’s Length Transaction

A sale between a willing buyer and a willing seller that are unrelated and are not acting under duress, abnormal pressure or undue influences.

Arrears

A financial and legal term that refers to the status of payments in relation to their due dates.

As-Is Condition

The acceptance by the tenant of the existing condition of the premises at the time a lease is consummated, including any physical defects.

As-Is Value

The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date.

Asking Rent

The list price for rent.

Assemblage

The assembling of adjacent parcels of land into a single unit.

Assessed Value

The monetary value assigned by government assessors to a property and act as the basis for property values.

Assessor

A local government official who determines the assessed value of taxable property in a county or municipality; this valuation is used to determine the tax basis for a property in a given area.

Asset Allocation

An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an investor’s goals, risk tolerance, and investment horizon.

Asset Backed Security

A debt security collateralized by assets created from the securitization of any loans; may describe the broad category that includes named subcategories, such as securitized residential mortgage backed securities (RMBS) and securitized commercial mortgage backed securities (CMBS).

Asset Class

A grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations; made up of instruments which often behave similarly to one another in the marketplace.

Asset Liability Matching (ALM)

A form of risk management which entails managing assets and cash flows to satisfy liabilities.

Asset Management Company

A legal entity that specialises in the tactical management of a vehicle's assets on behalf of the owner of the real estate. Services may include strategic input and production of asset level business plans, appointment of third party service providers at asset level as well as reporting activities at asset level.

Asset management fee

Fee typically charged by investment advisors, or managers, for their services regarding the management of the vehicle’s assets. Asset management fees generally cover services such as: • strategic input and production of asset level business plans; • management of assets including refurbishment; • appointment of third party service providers at asset level; • reporting activities at asset level. Occasionally, asset management fee and fund management fee are combined.

Asset Manager

The tactical management of investments and their related properties, within an overall portfolio. The asset manager will commonly oversee the work of the property manager, manage the overall relationship with tenants, and develop and monitor specific business, investment and financial plans related to individual investments within a portfolio.

Asset Originator

The party that has created a loan asset or group of assets by extending credit to one or more creditors.

Asset weighted

An averaging technique whereby numerical characteristics (such as interest rates or rents) of a group of assets are averaged in proportion to each asset's common characteristic (such as asset value or square feet).

Asset weighting methodology

Asset weighting of the portfolio returns within a composite using beginning-of-period weightings, beginning of period market values plus weighted cash flows, or by aggregating portfolio assets and cash flows to calculate performance as a single master portfolio.

Asset-backed securities (ABS)

A security issued as part of a securitisation, which is backed by a portfolio assets, which may or may not be income generating.

Asset-weighted composites

An aggregation of individual portfolios representing a similar investment objective or strategy, weighted by the beginning-of-period market values of the constituent portfolios.

Assets under Management (AUM)

Assets under Management (AUM) refers to the market value of real estate as well as non-real estate related assets (including any cash in the vehicle or mandate) with respect to which a company provides oversight and investment management services (for internal client capital and third-party capital), and which generally consist of: • direct real estate investments (investment property) at fair value and gross of leverage; • investment property under construction at fair value; • % share owned by JVs and co-investments, gross of leverage; • debt investments at fair value and gross of leverage; • % share owned by investments in underlying funds (fund of funds) and securities at net asset value; • undrawn investor commitments without any gross-up for leverage, both at property and vehicle level, contractually locked in, non-revocable, and not subject to expiration. Note: Going forward this definition will be used by INREV, NCREIF, and ANREV for research purposes (and referenced within the INREV DDQ). This may be adopted by investment managers and investors at their discretion.

Country-by-Country Guide

Due Diligence Questionnaire (DDQ)

Standard Data Delivery Sheet (SDDS)