- Auction
- A public sale of property to the highest bidder.
- Abatement
Often referred to as free rent or early occupancy and may occur outside or in addition to the primary term of the lease.
- Above building standard
- Upgraded finishes and specialized designs necessary to accommodate a tenant's requirements.
- Absorption rate
The rate at which rentable space is filled. Gross absorption is a measure of the total square feet leased over a specified period with no consideration given to space vacated in the same geographic area during the same time period. Net absorption is equal to the amount occupied at the end of a period minus the amount occupied at the beginning of a period and takes into consideration space vacated during the period.
- Acceleration clause
A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if the borrower defaults on the loan or transfers title to another individual without informing the lender.
- Ad valorem
Meaning "according to value," this is a tax imposed on the value of property that is typically based on the local government's valuation of the property.
- Adjustable-rate mortgage (ARM)
A mortgage in which the interest changes periodically, according to corresponding fluctuations in an index. All ARMs are tied to indexes.
- Adjusted funds from operations (AFFO)
A measure of REIT performance or ability to pay dividends used by many analysts with concerns about quality of earnings as measured by funds from operations (FFO). The most common adjustment to FFO is an estimate of certain recurring capital expenditures needed to keep the property portfolio competitive in its marketplace.
- Adjustment date
The date the interest rate changes on an adjustable-rate mortgage.
- Administrative fee
- Usually stated as a percentage of assets under management or as a fixed annual dollar amount
- Advances
- Payments made by the servicer when the borrower fails to make a payment.
- Adviser
A broker, consultant or investment banker who represents an owner in a transaction. Advisers may be paid a retainer and/or a performance fee upon the close of a financing or sales transaction.
- Aggregation risk
- Risk associated with warehousing mortgages during the pooling process for future securitization.
- Alternative or specialty investments
Property types that are not considered conventional institutional-grade real estate investments. Examples include congregate care facilities, self-storage facilities, mobile homes, timber, agriculture and parking lots.
- Amortization
The loan payment consists of a portion which will be applied to pay the accruing interest on a loan, with the remainder being applied to the principal. Over time, the interest portion decreases as the loan balance decreases, and the amount applied to principal increases so that the loan is paid off (amortized) in the specified time.
- Amortization schedule
A table which shows how much of each payment will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual decrease of the loan balance until it reaches zero.
- Anchor
The tenant that serves as the predominant draw to a commercial property, usually the largest tenant in a shopping center
- Annual percentage rate (APR)
This is not the note rate on your loan. It is a value created according to a government formula intended to reflect the true annual cost of borrowing, expressed as a percentage. It works like this, but not exactly, so only use this as a guideline: deduct the closing costs from your loan amount, then using your actual loan payment, calculate what the interest rate would be on this amount instead of your actual loan amount. You will come up with a number close to the APR. Because you are using the same payment on a smaller amount, the APR is always higher than the actual rate on your loan.
- Application
The form used to apply for a mortgage loan, containing information about a borrower’s income, savings, assets, debts, and more.
- Appraisal
- A determination of the value of something, such as a house, jewelry or stock. A professional appraiser--a qualified, disinterested expert--makes an estimate by examining the property, and looking at the initial purchase price and comparing it with recent sales of similar property. Courts commonly order appraisals in probate, condemnation, bankruptcy or foreclosure proceedings in order to determine the fair market value of property. Banks and real estate companies use appraisals to ascertain the worth of real estate for lending purposes. And insurance companies require appraisals to determine the amount of damage done to covered property before settling insurance claims.
- Appraised value
- An estimate of the present worth.
- Appraiser
An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.
- Appreciation
- An increase in value or worth of property. Opposite of depreciation.
- Appreciation return
The portion of the total return generated by the change in the value of the real estate assets during the current quarter, as measured by both appraisals and sales of assets.
- Arbitrage
Buying securities in one market and then selling them immediately in another market to make a profit on the price discrepancy
