Global Definitions Database

Safe Harbor

A legal provision to reduce or eliminate legal or regulatory liability in certain situations as long as certain conditions are met (see also “prohibited transactions safe harbor”).

Sale-Leaseback

An arrangement by which the owner-occupant of a property agrees to sell all or part of the property to an investor, then lease it back and continue to occupy space as a tenant.

Sales Comparison Approach (SCA)

One of three approaches to valuation; estimates a property’s value (or some other characteristic, such as its depreciation) by reference to comparable sales; also known as the “market approach”.

Sales Risk

The risk of a decline in revenue due to sales failure.

Saturated Trading Area

A geographic area with the proper amount of retail facilities to satisfy the needs of its population for a specific good or service, as well as to enable retailers to prosper.

Savings and Loan Association (S&L)

A type of financial institution that was originally created to accept savings from private investors and to provide home mortgage services for the public; typically private businesses, mutually owned by their customers that relied on a share-accumulation model whereby members committed to buying shares in the association and subsequently had the right to borrow against the value of those shares in order to purchase a home; as a result of deregulation in the late 20th century, they began to enter the business of commercial lending, trust services, nonmortgage consumer lending, and large-scale speculation, particularly in real estate.

Scenario Analysis

The process of estimating the expected value of a portfolio after a given period of time, assuming specific changes in the values of the portfolio's securities or key factors take place, such as a change in the interest rate; commonly used to estimate changes to a portfolio's value in response to an unfavorable event and may be used to examine a theoretical worst-case scenario; can be used to examine the amount of risk present within a given investment as related to a variety of potential events, ranging from highly probable to highly improbable; output of analysis is only as good as the inputs and assumptions made by the analyst.

Second Generation Space

Previously occupied space that becomes available for lease, either directly from the landlord or as sublease space; also known as “secondary space”.

Second Mortgage

A mortgage claim ranking subordinate to the senior mortgage, secured over the real estate asset.

Secondary Space

Previously occupied space that becomes available for lease, either directly from the landlord or as sublease space; also known as “second generation space”.

Secondary Trade

A transaction whereby an existing investor transfers units or shares in a Vehicle directly to another investor (either a new investor, or one already invested in the Vehicle), based on pricing and terms agreed between the two parties, without the occurrence of new share/unit issue or redemption by the Vehicle itself.

Secondary Trade Area

A geographic area containing the customers of a particular firm or group of firms for specific goods or services; encompasses an additional 15 to 25 percent of a store's customers; located outside the primary trade area (or geographic core) with customers more widely dispersed.

Section 892 Exemption

Exempts from US income taxation certain qualified investments, including income from investments in financial instruments, derived by a foreign government.

Secured Overnight Financing Rate (SOFR)

A broad measure of the cost of borrowing cash overnight collateralized by Treasury securities; utilized to price US dollar-denominated derivatives and loans.

Securities Act of 1933

A US federal law designed to protect investors after the stock market crash of 1929; requires that investors receive financial and other significant information concerning securities being offered for public sale and prohibits deceit, misrepresentations, and other fraud in the sale of securities; also known as the “truth in securities law”.

Securities and Exchange Commission (SEC)

An independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation; empowered under the Securities Exchange Act (SEA) of 1934 to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as US securities self-regulatory organizations (SROs); generally, issues of securities offered in interstate commerce must be registered with the SEC before they can be sold to investors; financial services firms—such as broker-dealers, advisory firms and asset managers, as well as their professional representatives—must also register with the SEC to conduct business.

Securities Exchange Act (SEA) of 1934

A US federal law that governs securities transactions on the secondary market, after issue, ensuring greater financial transparency and accuracy and less fraud or manipulation; authorized the formation of the Securities and Exchange Commission (SEC) and empowers the SEC with broad authority over all aspects of the securities industry.

Securities handling charges

Handling fees charged by third-parties on certain real estate security transactions.

Securitization

The process of converting an illiquid asset, such as a mortgage loan, into a tradable form, such as mortgage-backed securities.

Securitized Loan

A loan or portfolio of loans which are pooled and re-structured by way of risk apportionment, to provide collateral for issuance of securities.

Security

Assets pledged by the borrower or another party (as collateral against) amounts lent by the lender to the borrower. Following the occurrence of certain default events, the lender can use the secured assets towards recovering the amounts owed to it. Different from financial securities (stock, bonds, etc.).

Security Agent

The financial institution that empowered under the faciility agreement to take action on behalf of the lender to enforce Security in case of an event of default. Useful in loan agreements where there are, or will be, more than one lender.

Security Market Line (SML)

A graphical representation of the capital asset pricing model (CAPM); the SML is a linear depiction of the CAPM drawn on an axis chart, where the x-axis represents risk in terms of beta and the y-axis represents expected return.

Seed Asset

The initial investment in a portfolio or commingled fund.

Segregated Account

See definition Single Account

Selection (in Attribution)

With reference to attribution: the value the portfolio manager adds by holding individual securities or instruments within the sector in different-than-benchmark weights.

Self-Storage (facility)

Self-storage units. Single and multi-story, basic or climate-controlled.

Senior Debt/Loan/Mortgage

A debt financing obligation issued to a company or an individual by a bank or similar financial institution that holds legal claim to the borrower's assets above all other debt obligations; in the event of a bankruptcy it will be the first loan to be repaid before any other creditors, preferred stockholders, or common stockholders receive repayment; usually secured via a lien against the assets of the borrower.

Senior Living (facility)

Specialized housing designed specifically to accommodate the needs of senior citizens, but whose function is not primarily healthcare. Note: Senior Living facilities without medical care should be classified in the Apartments (A) property type.

Senior Loan

First ranking portion of a real estate loan. A loan that ranks higher (in terms of repayment and enforcement of security) than other loans to the same Borrower or borrower group.

Sensitivity Analysis

The examination of how different values of an independent variable impact a particular dependent variable under a given set of assumptions; also known as “what-if analysis”.

Separate Accounts

A segregated investment account set up by a life insurance company which, through subaccounts, invests in the underlying mutual funds offered through a variable annuity or variable life insurance contract. The Separate Account assets are maintained separately from the insurance company's general account so they cannot be used to pay claims associated with any other business of the insurance company. Separate Accounts are regulated by state insurance departments and may or may not be registered with the Securities and Exchange Commission.

Set-up costs

See Vehicle formation costs

SFAS

A FASB Statement of Financial Accounting Standard.

Sharpe Ratio

The average return earned in excess of the risk-free rate per unit of volatility or total risk; generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return.

Shopping Center

A group of retail and other commercial establishments that is planned, developed, owned, and managed as a single property; on-site parking provided; size and orientation generally determined by the market characteristics of the trade area served by the center; the two main configurations are malls and open-air strip centers.

Side Letter

An agreement entered into between a vehicle and an investor, and/or, a manager and an investor that amends or supplements the investor's rights and obligations in connection with its investment in a vehicle, in accordance with the vehicle documentation.

Sidecar Fund or Investment

An investment vehicle used in a fund structure to provide for co-investment opportunities by one or more investors in the fund, which investments are generally made alongside investments by the main fund.

Signage

Any visual representation which gives information about a business and its products and used to communicate a message to a specific group, usually for the purpose of marketing.

Single Account

Customized real estate investment accounts funded by one qualified investor. The manager makes investments from the account to meet the strategic and other portfolio management needs of the institutional investor. In certain jurisdictions, it can also be known as separate, segregated or single client account or mandate. The account's investment mandate can be of discretionary or non-discretionary nature.

Single Asset Deal

A transaction involving the sale of a single asset or building; transactions involving assets consisting of multiple buildings in one location also included.

Single Client Account

See definition Single Account.

Single Real Estate Operating Company (REOC) Fund

A fund offered by a fully or partially vertically integrated real estate operating company; the fund does not enter into joint ventures with third party operators, because the REOC sponsoring the fund is the operator of the assets.

Site Analysis

Determines the suitability of a specific parcel of land for a specific use.

Site Development

The installation of all necessary improvements made to a site before a building or project can be constructed on the site.

Site Plan

A detailed plan that depicts the location of improvements on a parcel.

Social Impact

The European Commission defines 'social impact' as the reflection of social outcomes as measurements, both long-term and short-term, adjusted for the effects achieved by others, for effects that would have happened anyway (dead-weight), for negative consequences (displacement), and for effects declining over time (drop-off). (see http://www.europarl.europa.eu)

Social Investing

Investments driven in whole or in part by social or political (non-real estate) objectives.

Social Responsibility

A theory that argues that businesses are obligated to function in a manner that benefits the broader society, whether that be a local community, region or country.

Solver Function (Excel)

A Microsoft Excel add-in program used for sensitivity analysis; the solver function finds an optimal (maximum or minimum) value for a formula in one cell, called the objective cell, subject to constraints, or limits, on the values of other formula cells in an Excel worksheet.

Sophisticated 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 “accreditor investor”.

Sovereign Wealth Fund (SWF)

A state-owned investment fund or entity which comprises of pools of money derived from a country's reserves; reserves are funds set aside for investment to benefit the country's economy and its citizens; funding comes from central bank reserves which accumulate because of budget and trade surpluses, official foreign currency operations, money from privatizations, governmental transfer payments and revenue generated from the exporting of natural resources.

Space Absorption

The amount of inventory or units of a specific commercial property type that become occupied during a specified time period (usually a year) in a given market, typically reported as the “absorption rate”.

Space Market

The mechanism for the voluntary trading of the rights to use land and buildings; demand for space is created by those who are willing to pay for the use of space and supply for space is provided by those willing to sell the rights that they own to the users.

Space Plan

A graphic representation of a tenant's space requirements, showing wall and door locations, room sizes, and sometimes furniture layouts.

Special Limited Partner

An Investor in a fund that is an affiliate of the fund’s sponsor; generally used to receive promote or other carried interest distributions and typically has no capital commitment to the fund and limited obligations under the fund’s constituent documents.

Special Purpose Vehicle (SPV)

A separate legal entity created for a specific purpose within an investment structure, most often to acquire and/or finance specific assets as a method for isolating financial risk. An example of a SPV is a Property Company or Financing Company.

Specialist Consultant or Consulting Firm

One or more experts that provide professional advice and recommendations across a specific asset class, such as real estate, to an individual or an organization for a fee.

Specific 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,” “residual risk, ” or “unsystematic risk”.

Specified Asset or Investment

A pre-defined asset for investment.

Specified Investing

Investment in individually specified properties or portfolios, or investment in commingled funds whose real estate assets are fully or partially specified prior to the commitment of investor capital.

Speculative Space

Any tenant space that has not been leased before the start of construction on a new building.

Spens Clause

A clause that allows the borrower under a facility agreement to make an early principal repayment with the provision of a specific early repayment penalty.

Sponsor

The entity that provides equity to a Borrowerin a real estate finance transaction. The sponsor can also be the investment manager.

Stabilisation

Stabilisation is a relative term and it is dependent on the condition to which it relates. When using this term, it is therefore important to specify the context (e.g. development, leasing/market conditions, a single property vs. entire portfolio, etc.), as this term carries a broad range of implications. For example, the conditional criteria can be applied individually or collectively to determine the stability status of construction, operations, occupancy level, net income generation, or financing arrangements.

Staff costs

Costs incurred by the owner of an investment property for the staff required to manage the property. Staff costs may be covered by the property management fees. Staff costs required to run the day-to-day management and operations of a property may include payroll for the property manager, assistant property manager, and property engineer. It may happen that some vehicles have hired employees. Related staff costs should be allocated based on the activity of the employees.

Standalone Sustainable Lending Policy

Policy or guidance document that outlines real estate lending criteria and includes sustainability-related metrics/factors.

Standard Deviation (σ)

A measure of the dispersion of a data set from its mean, calculated as the square root of variance by determining the variation between each data point relative to the mean.

Standing investment

Operational real estate assets that are completed and lettable and not in the course of, or held for, development.

Start of Investment Period

The beginning of the period during which the vehicle can acquire assets.

Stated Rent

The rental obligation, expressed in dollars, as specified in a lease; also known as “contract rent” or “face rent”.

Statement of Position (SOP) (accounting)

An AICPA Statement of Positon.

Step in Rights

Rights bestowed under a facility agreement to the lender to step-in and take control of borrower's business transactions with an aim to improve business operations for future adherence to contractual debt obligations.

Step-Up Provision

A clause specifying set increases in rent at set intervals during the term of the lease.

Stepped Rent

A component of a lease agreement that is used to establish future rent increases or decreases at stated intervals during a longer-term lease agreement. Also known as “step rent”, “step-up rent” or “graduated rent”.

Strategic Investment Decisions

Investment decisions made with a focus on long-term planning and implications.

Strategy-Account Vehicle

A description of the mandate that includes the plan for investment allocations, taking into consideration including but not limited to, goals, risk tolerance, leverage limits, holding period, and the investment style.

Strip Center

An attached row of stores or service outlets managed as a coherent retail entity, with on-site parking usually located in front of the stores; open canopies may connect the storefronts, but there are no enclosed walkways linking the stores; may be configured in a straight line, or have an "L" or "U" shape.

Style

Describes the risk profile of the investment strategy adopted by an investment vehicle - there are three commonly used industry terms: core, value-added and opportunistic.

Style Drift

The divergence of a fund from its investment style or objective.

Style-Fund

Part of the investment Strategy, there are three commonly used industry terms to describe Style: Core, Value-added and Opportunistic.

Subadvisor

An investment management firm that typically partners with an investment advisor to help with the day-to-day management of the fund; often provide specialized expertise in a specific type of investment strategy.

Subordinate Debt/Loan/Mortgage

A debt financing obligation issued to a company or an individual by a bank or similar financial institution that is ranked behind that held by secured lenders in terms of the order in which the debt is repaid.

Subordinated Creditor

Any creditor of the Borrower which is a party to a Subordination Agreementin favor of the Lender.

Subordinated Creditor's Security Agreement

An agreement that governs the ranking, or priority of payment of the junior lender and the senior lender in terms of debt waterfall including principal repayment and interest payment and during an event of default leading to enforcement or foreclosure.

Subordinated Loan

Loans subordinate to senior debt, including stretched senior (40%-60% LTV), junior (60%-70% LTV) and mezzanine financing (70%-85%+ LTV).

Subordination

The process of sharing the risk of credit losses disproportionately among two or more classes of securities.

Subordination Agreement

A legal document that establishes one debt as ranking behind another in priority for collecting repayment from a debtor; acknowledges that one party’s claim or interest is superior to that of another party in the event that the borrower's assets must be liquidated to repay the debts.

Subscription Agreement

A legally binding agreement made by an incoming investor with a Vehicle or its representative fixing the amount of the contributions paid, or to be paid, and the terms and conditions for investing in the Vehicle.

Subscription fee

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

Subscription Period

The time period in which new investors can invest in a fund.

Subscription queuing mechanism

The order in which outstanding subscription requests/ incoming investment requests from potential investors are prioritised by the Investment Manager in accordance with the Vehicle Documentation. It establishes a waiting list or queue to allocate shares or units in the vehicle when investor demand exceeds the available capacity, ensuring a fair and transparent investment process, particularly in open-end vehicles.

Subscription secured credit facilities

Revolving lines, drawn upon to make acquisitions and then paid down from capital calls and/or asset-level borrowing.

Subscription-Backed Credit Facility

A loan or line of credit made by a bank or other credit institution to a fund that is secured by (i) the unfunded commitments of the investors to make capital contributions to the fund when called from time to time by the fund or the fund’s general partner, (ii) the rights of the fund or its general partner to make capital calls upon the commitments of the investors and the right to enforce payment of the same and (iii) the account into which investors fund capital contributions in response to a capital call.

Super-Exempt US Investor

A public pension fund claiming an exemption from US federal income tax under US Code Section 115; not subject to unrelated business taxable income (UBTI) under US Code Section 511 because tax-exempt status does not derive from US Code Section 501(c); also generally exempt from annual reporting requirements that apply to exempt organizations.

Super-Regional Mall

Provides an extensive variety of shopping goods comparable to those of the central business district of a major metropolitan area. The anchors are three or more full-line department stores, with total area in excess of 800,000 square feet.

Superfund or Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)

The federal Superfund program, administered by the US Environmental Protection Agency (EPA) is designed to investigate and cleanup sites contaminated with hazardous substances; sites managed under this program are referred to as "Superfund" sites.

Supermajority

A majority (such as two-thirds or three-fifths) that is greater than a simple majority.

Supply Risk

The risk that an inbound supply problem will disrupt a business; includes issues with suppliers, shipments, and markets that disrupt production, operations, sales, and/or projects; can also result in quality problems, liability, and reputational issues.

Surety Bond

Ensures contract completion or compensation in the event of a default by the contractor. A project owner (often in development projects) seeks a contractor to fulfill a contract. In the event of the contractor defaulting, the surety company will be obligated to find another contractor to complete the contract or provide compensation to the project owner.

Sustainability

Sustainability is a broad concept reflecting three dimensions; economic, social and environmental in a balanced and integrated manner. The United Nations defines sustainable development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs” and identifies sustainable development in its three dimensions; economic, social and environmental (also known as profit, planet, people) (Reference: https://www.un.org/en). Integration of the three dimensions is key to achieving sustainable development and the capacity to create a sustainable future is balanced between productivity and respect to environment and to the society.

Sustainability scorecard

Document that outlines key sustainability attributes and risks related to the specific loan.

Sustainable Development Goals (SDG)

Also known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. The SDGs were launched by the UN and member states in 2015 and target achievement of various social and environmental development challenges by 2030. They have become an important communication framework for impact investors to align and signal commitment to specific global development areas, and are increasingly being used by investors to mobilize and allocate new capital to one or more the goals. There are 17 SDGs, each focussed on a different area of need. Impact investment strategies may focus on at least one of the SDGs. For Real Estate, an impact investing fund would typically be linked to the SDG 1: No poverty, SDG 3: Good health and well-being, SDG 4: Quality education, SDG 6: Clean water and sanitation, SDG 7: Affordable Clean Energy, SDG 11: Sustainable Cities and Communities and SDG 12: Responsible consumption and production.

Sustainable Investment

Derived from sustainability definition, sustainable investing is broadly defined as the practice of using environment, social and governance (ESG) factors when making investment decisions. Sustainable investment is a desire to make responsible investment decisions, to carry out activities without depleting resources and having harmful impacts and to target positive impact on environment and society. Sustainable investments are deemed to be products that promote sustainability or achieve a sustainable objective. Sustainable investment is about the responsibility and potential the real estate industry holds to invest in a manner which is consistent with achieving medium to long term sustainability targets. These may include contribution towards climate targets, environmental goals or social impact outcomes. Sustainable and Responsible Investment is a long-term oriented investment approach, which integrates ESG factors in the research, analysis and selection process of securities within an investment portfolio. It combines fundamental analysis and engagement with an evaluation of ESG factors in order to better capture long term returns for investors and to benefit society by influencing the behaviour of companies. (The European forum for responsible investment – Eurosif) The SFDR defines sustainable investment as "an investment in an economic activity that contributes to an environmental or social objective, provided that the investment does not significantly harm any environmental or social objective and that the investee companies follow good governance practices". Disclosure requirements apply under article 8 to products that promote also environmental or social characteristics, whereas disclosure requirements apply under article 9 to products that have sustainable investment as their objective. Article 8 SFDR (Published March 15, 2021 in the joint consultation paper: Taxonomy-related sustainability disclosures): “To develop additional disclosure rules on the pre-contractual information for Article 8 products using the environmental taxonomy (so-called “light green” products – i.e. that promote environmental characteristics), divided into technical standards for climate objectives and other environmental objectives”. Article 9 SFDR (Published March 15, 2021 in the joint consultation paper: Taxonomy-related sustainability disclosures): “To develop additional disclosure rules on the pre-contractual information for Article 9 products (so-called “dark green” products – i.e., that invest in an "economic activity that contributes to an environmental objective") making use of the environmental taxonomy, divided into technical standards for climate objectives and other environmental objectives”.

Country-by-Country Guide

Due Diligence Questionnaire (DDQ)

Standard Data Delivery Sheet (SDDS)