Global Definitions Database

Racketeer Influenced and Corrupt Organizations Act (RICO)

A US federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization.

Rating Agency

Independent firm engaged to rate the creditworthiness of securities for the benefit of investors.

Real Estate Expense Ratio (REER)

REER represents property fees and costs as a percentage of time weighted average INREV GAV.

Real Estate Investment Trust (REIT)

A company that owns or finances income-producing real estate.  It may or may not be traded in the public markets and must meet a series of requirements regarding cash flow and investments.  

Real Estate Market Cycle

The period between the two latest highs or lows of a common benchmark; refers to trends or patterns that emerge during different business environments; often has four distinct phases (recovery, expansion, hypersupply, and recession) and, at different stages of a full market cycle, real estate assets will respond to market forces differently.

Real Estate Market Cycle Risk

The risk of financial losses due to economic volatility associated the real estate market cycle.

Real Estate Operator

Any individual or combination of individuals, labor unions, joint apprenticeship committees, partnerships, associations, corporations, legal representatives, mutual companies, joint stock companies, trust, unincorporated organizations, trustees in bankruptcy, receivers or other legal or commercial entity, the city or any of its agencies or any owner of real property that is engaged in the business of selling, purchasing, exchanging, renting or leasing real estate, or the improvements thereof, including options, or that derives income, in whole or in part, from the sale, purchase, exchange, rental or lease of real estate.

Real Property Interest

Consists of the interests, benefits, and rights inherent in the ownership of land plus anything permanently attached to the land or legally defined as immovable; the bundle of rights with which ownership of real estate is endowed.

Realised (capital) gain/ loss

The appreciation and depreciation for vehicle assets and liabilities due to a transaction event such as a disposition of assets or a settlement of liabilities.

Realization Multiple

See Cumulative Distribution to paid-in capital (DPI)

Recallable Capital

Also known as recyclable capital, returned capital that can be recalled by the investment manager, in accordance with the Vehicle Documentation. The existence of recallable capital increases investors' remaining capital commitments.

Recognized Environmental Condition (REC)

A term used to identify environmental liability within the context of a Phase I Environmental Site Assessment (ESA); indicates the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property that is (i) due to release to the environment, (ii) under conditions indicative of a release to the environment, or (iii) under conditions that pose a material threat of a future release to the environment.

Reconciliation

With reference to valuation:  the final step in the valuation process wherein consideration is given to the relative strengths and weaknesses of the three approaches to value, the nature of the property appraised, and the quantity and quality of available data in formation of an overall opinion of value (either a single point estimate or a range of value).

Recourse Debt

A legal agreement by which the lender has the legal right to collect pledged collateral in the event that the borrower is unable to satisfy debt obligations. Recourse lending provides protection to lenders, as they are assured to have some sort of repayment - either cash or liquid assets. Traditionally, companies that issue recourse debt have a lower cost of capital, as there is less underlying risk in lending to that firm.  

Recourse Loan

A legal agreement by which the lender has the legal right to collect pledged collateral in the event that the borrower is unable to satisfy debt obligations. Recourse lending provides protection to lenders, as they are assured to have some sort of repayment - either cash or liquid assets. Traditionally, companies that issue recourse debt have a lower cost of capital, as there is less underlying risk in lending to that firm.  

Recoveries

Costs which are paid back to a landlord by a tenant; generally includes property taxes, property insurance, maintenance and repair costs, and other operational expenses; at the end of the year (or the end of the lease), the landlord will reimburse the tenant if actual costs are less than expected costs; alternately, the landlord will bill the tenant any additional expenses that were not covered by their monthly tenant reimbursement bill; also known as “expense reimbursements”.

Recovery Payment Proceeds

Amounts recovered from any claim an Obligor may have against a Vendor to be used in mandatory payment.

Redemption

The partial or full return of an investor’s equity by the Vehicle, at the investor’s request, at a pricing as defined in the Vehicle Documentation.

Redemption fees

One-time fee paid to the manager when investors redeem from the fund, calculated as redemption amount, NAV or NAV per share, multiplied by redemption fee rate. This fee is mostly seen in open-ended funds.  If the amount is paid to the fund, then it is not included in TGER.

Redemption limits (cap)

The partial or maximum amount of an investor’s equity that may be returned from the Vehicle over a predefined time period, at the investor’s request, as defined in the Vehicle Documentation.

Redemption Period

The timeframe after an initial lock-up period during which an investor may withdraw its capital (in whole or in part) from a fund, usually on a quarterly basis; typically applies to hedge funds, core real-estate funds and other open-end fund investment vehicle structures.

Redemption Queue

With reference to a fund:  Form when investor demand for liquidity exceeds both incoming capital from new investors and proceeds available from property dispositions; generally redeemed pro rata to the extent of cash available for redemptions; depending on the severity of liquidity needs, investors can wait for a quarterly redemption or seek liquidity in the secondary market.

Redemption Queuing Mechanism

The order in which outstanding redemption requests/ investor requests to redeem or sell their shares or units in the investment vehicle are prioritised by the Investment Manager in accordance with the  Vehicle Documentation. It establishes a queue or waiting list, ensuring a fair and transparent process for honouring redemption requests, particularly in open-end vehicles.

Redevelopment

The act or process of improving or changing a site with pre-existing conditions or land use type through (partial) demolition of the existing real property or infrastructure and replacing it with new or different construction or land use improvements, such as buildings, roads, or utilities with the purpose of increasing value.

Refurbishment

Renew or restore an existing building to a better technical condition and/or appearance.

Regional Center

A retail property that provides general merchandise (a large percentage of which is apparel) and services in full depth and variety; main attractions are its anchors:  traditional, mass merchant, discount department stores, or fashion specialty stores; usually enclosed with an inward orientation of the stores connected by a common walkway and parking surrounds the outside perimeter.

Regional Mall

Provides a variety of goods comparable to those of a central business district in a small city, including general merchandise, apparel and home furnishings, as well as a variety of services and perhaps recreational facilities. Two or more full-line department stores anchor a total area of 400,000 to 800,000 square feet.

Registered Investment Advisor (RIA)

Any person or firm that gives investment recommendations or advice in return for any form of economic benefit and is registered with the U.S. Securities and Exchange Commission (SEC) or qualifies under SEC rules to be regulated by and required to register with the SEC. For further consideration please visit https://www.sec.gov

Registration Statement

Forms filed with the Securities and Exchange Commission (SEC) (or the appropriate state regulatory agency) in connection with a proposed offering of new securities or the listing of outstanding securities on a national exchange.

Regression Analysis

A particular statistical technique, similar to correlation, used to analyze data in order to predict the value of one variable (the dependent variable), such as market value, from the known values of other variables (the independent variables), such as lot size, number of rooms, and so on; if only one independent variable is used, the procedure is called simple regression analysis and differs from correlation analysis only in that correlation measures the strength of relationship, whereas regression predicts the value of one variable from the value of the other; when two or more variables are used, the procedure is called multiple regression analysis.

Regression Line

A straight line that describes how a response variable y (the dependent variable) changes as an explanatory variable x (the independent variable) changes; often used to predict the value of y for a given value of x.

Regulation A+ Offering (Reg A+)

An exemption from registration requirements—instituted by the Securities Act—that applies to public offerings of securities that do not exceed $50 million in any one-year period; companies utilizing the exemption must still file offering statements with the Securities and Exchange Commission (SEC); however, the companies utilizing the exemption are given distinct advantages over companies that must fully register.

Regulation D Offering (Reg D)

A Securities and Exchange Commission (SEC) regulation governing private placement exemptions that allows companies to raise capital through the sale of equity or debt securities without having to register their securities with the SEC.

Regulatory / Statutory costs

See definition other/misc. vehicle costs.

Reilly’s Law of Retail Gravitation

An approach to estimating the retail trade area (and sales/revenue potential) for a given establishment or center which holds that trade centers draw consumers from neighboring communities in proportion to the trade areas’ populations and in inverse proportion to the distances between the communities and the trade areas; in analogy with Isaac Newton's law of gravitation, the point of indifference is the point at which the "attractiveness" of two retail centers (postulated to be proportional to their size and inversely proportional to the square of the distance to them) is equal; utilized as the traditional means of trading-area delineation that establishes a point of indifference between two cities or communities, so the trading area of each can be determined;  heuristic developed by William J. Reilly in 1931.

Reimbursement Income

Any payment made by tenants to reimburse the landlord for expenses.

Related parties

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence or joint control over the other party in making financial and operating decisions. (source: IAS 24).

Related Party Transaction

A transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.

Relative Return

The return achieved by an asset over a specific time period contrasted to a benchmark; computed as the difference between the absolute return reached by the asset and the return reached by the benchmark.

Remaining capital commitment

See definition of Outstanding capital commitment. 

Remedial Action Plan

A detailed summary of the environmental issues found on a property during a site characterization and outlines a plan of action that illustrates which remedies will be used to achieve cleanup goals.

Renewable energy

Energy sources and specific clean energy technologies that emit fewer GHG emissions relative to other sources of energy that supply the electric grid. Includes solar photovoltaic panels, solar thermal energy, geothermal energy, landfill gas, low-impact hydropower and wind turbines.

Renewal Option

A clause giving a tenant the right to extend the term of a lease.

Renovation

The process of improving, remodeling and/or rehabilitating a real estate asset in order to enhance its intended function, extend the period of usage and increase value and/or related cash flows. Sometimes referred to as “refurbishment”.

Rent (Rental) Growth

The expected trend in market rental rates over the period of analysis, expressed as an annual percentage increase.

Rent Concessions

Cash or cash equivalents expended by the landlord in the form of rental abatement, additional tenant finish allowance, moving expenses or other monies expended to influence or persuade a tenant to sign a lease.

Rent Growth

The expected trend in market rental rates over the period of projection, expressed as an annual percentage increase.

Rent-Up Period

The period following construction of a new building when tenants are actively being sought and the project is approaching its stabilized occupancy.

Rentable Area

A tenant’s pro rata share of the entire building, excluding elements of a building that penetrate through the floor to areas below, such as stairs and elevators; measurement varies with locality.

Rented Area

The amount of space under lease in a building.

Repayment

Any payment made against an outstanding loan, either in accordance with the terms of the loan documentation or an unscheduled Prepayment.

Replacement Costs

Expenditures that provides for the periodic restoration of building components that wear out more rapidly than the building itself and must be replaced during the building's economic life.

Reporting standards - handbook volume I and II

Reporting standards to promote transparent, consistent and meaningful performance, risk, accounting and valuation reporting for use of the institutional real estate investment community. The Reporting Standards are mainly used in the US and are co-sponsored by NCREIF and PREA. See www.reportingstandards.info.

Repositioning

Changing the use of the building through a combination of renovations, improvements and use in order to change its market positioning, typically to add value to the property.

Required standard

Those elements which must be followed, where applicable, in order for an Account Report to be deemed compliant with the Reporting Standards.

Research and Development (industrial)

One- and two-story buildings with 10-15 foot ceiling heights with up to 50% office/dry lab space (remainder in wet lab, workshop, storage, and other support), with dock height and floor height loading.

Reserve

An amount of money held to be used for later known or unknown expenditures.  It may be held in an account controlled by the operating partner or a lender.  

Residential Mortgage-Backed Securities (RMBS)

An issued security which is backed by a portfolio of mortgages secured against residential properties.

Residual Capitalization (Cap) Rate

The estimated or actual cap rate used to estimate the resale value of a property at the end of the holding period; calculated by dividing the expected net operating income (NOI) by the expected sale price and expressed as a percentage; also known as the “exit cap rate” or “terminal cap rate”.

Residual multiple

A measure of how much a return is unrealized. As the fund matures, the residual multiple will increase to a peak and then decrease as the fund eventually liquidates to a residual fair value of zero. At that point, the entire return of the fund has been distributed.

Residual Risk

The risk inherent to a particular investment or portfolio of investments that can be mitigated or reduced through diversification; also known as “diversifiable risk,” “idiosyncratic risk,” “specific risk,” or “unsystematic risk”.

Residual value

The remaining equity in a fund or property.

Residual value to paid-in capital multiple (RVPI)

See residual multiple

Resolution Trust Corporation (RTC)

A temporary federal agency established to act as a receiver for insolvent federal savings and loan associations and to transfer or liquidate those associations' assets; created by Congress in the wake of the 1980s savings and loan crisis, in which hundreds of depository institutions slipped into insolvency due to unsound banking practices; established in August 1989, when the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) was signed into law; under its mandate, placed closed failed financial institutions placed in conservatorship by selling or merging troubled thrifts and folding their assets back into the Federal Deposit Insurance Corporation (FDIC); shuttered a total of 747 failed financial institutions, with total assets of $394 billion.

Restrictions on transfer

The conditions outlined by a manager on the transfer of stakes in a vehicle between parties. Revaluation to fair value of derivative financial instruments held for hedging. The adjustment represents the impact on NAV of the recognition of derivative financial instruments measured at fair value. If a vehicle does not revalue, this should be clearly indicated.

Retail Investor

Any individual who purchases and sells securities for his or her own investment portfolio; may need to meet a certain level of accreditation to participate in some investments, such as private equity, hedge funds, and certain private placements.

Retrofit

The addition of new technology or features to older systems in order that a property be in compliance with updated government ordinances, codes and/or environmental and energy conservation practices.

Return of capital

The Distributions paid to an investor until they receive all of their Capital contributions, in accordance with the Vehicle documentation. 

Return on Capital (ROC)

The profit on an investment in relation to how much was invested; a ratio used in accounting, finance and valuation that shows how effective a company has been at turning capital into profits; also known as “return on invested capital” or “return on total capital”.

Return on Invested Capital (ROIC)

The profit on an investment in relation to how much was invested; a ratio used in accounting, finance and valuation that shows how effective a company has been at turning capital into profits; also known as “return on capital” or “return on total capital”.

Return on Total Capital (ROTC)

The profit on an investment in relation to how much was invested; a ratio used in accounting, finance and valuation that shows how effective a company has been at turning capital into profits; also known as “return on capital” or “return on invested capital”.

Reversionary income

The estimated increase in rent at next renewal/ review based on ERV.

Reversionary yield

The estimated rental value as a percentage of gross property value.

Reward-to-Risk Ratio

A metric that divides a measure of portfolio holding-period return by a measure of portfolio risk; the higher the value, the more return an investment portfolio has generated per unit of risk.

Right of First Offer (ROFO)

A contractual right that permit the purchase of property, or the lease of space, upon the occurrence of certain events, often referred to as trigger events; commonly triggered when a property owner elects to make his or her property available for purchase or lease; the property owner must first offer to sell or lease (as applicable) the subject property to the holder of the ROFO on terms and conditions that are determined by the owner; if the holder of the ROFO does not timely exercise its right to purchase or lease the property, the property owner may proceed to offer the subject property for sale or lease to third parties.

Right of First Refusal (ROFR)

A contractual right that permit the purchase of property, or the lease of space, upon the occurrence of certain events, often referred to as trigger events; commonly triggered when a property owner receives an acceptable offer to lease or purchase from a third party; prior to accepting the third party offer, the property owner must allow the holder of the ROFR to either lease or purchase (as applicable) the subject property either upon the same terms and conditions contained in the third party offer or upon terms otherwise specified in the parties’ ROFR agreement; the owner may only proceed with selling or leasing the property to the third party if the holder of the ROFR does not timely exercise its right to purchase or lease the property.

Risk Factor

Any attribute or characteristic that increases the likelihood of negatively affecting an investment and/or portfolio.

Risk Parity

A portfolio allocation strategy using risk to determine allocations across various components of an investment portfolio; follows the modern portfolio theory (MPT) approach to investing; typically requires quantitative methodology that makes allocations more advanced than simplified allocation strategies.

Risk Preferences

The behavioral approach and tolerance investors hold toward the inherent risk of investments.

Risk-Adjusted Discount Rate

The rate based on the risk-free rate and a risk premium used in the calculation of the present value of a risky investment.

Risk-Adjusted Return

The return of an investment relative to the amount of risk the investment has incurred over a given period of time.

Risk-Free Rate

The rate of return of an investment with no risk of loss; in practice, it does not exist as even the safest investment carries a very small amount of risk; for US investors, the interest rate on a three-month US Treasury bill or other longer-term US Treasury bonds are often used as a representation of the risk-free rate.

ROI (Return on Investment)

Financial benefits flowing from an investment, typically expressed as an annual percentage of the amount invested.

Rollover

With reference to debt:  the paying off of existing debt, usually debt about to mature, through the issuance of new debt; With reference to an investment:  the rolling over of an investment, such as a certificate of deposit at maturity, to another investment.

Rollover Risk

The risk that a tenant's lease will not be renewed.

Royal Institution of Chartered Surveyors (RICS)

A professional, representative and independent body that establishes and enforces standards for the valuation, operation, and development of assorted types of property; accredits professionals involved in the valuation, management, and development of land, real estate, construction, and/or infrastructure worldwide.

Rule 144A

Introduced in 2012, reduces the amount of time a qualified institutional buyer must hold privately placed securities from two years to six months for a company that reports to the Securities and Exchange Commission (SEC) or a year for a company that does not; the introduction of this rule has substantially enhanced liquidity in the market for private placement securities; the modification was introduced to acknowledge that sophisticated institutional buyers do not need the same protections an individual investor requires on the open market.