Zoning ordinance: The set of laws and regulations controlling the use of land and construction of improvements in a given area or zone.

Yield maintenance premium: A penalty, paid by the borrower, designed to make investors whole in the event of early redemption of principal.

Yield spread: The difference in yields between a commercial mortgage and a benchmark value, typically U.S. Treasuries of the same maturity.

Warranty Deed: A deed with the greatest protection as grantor warrants goods, marketable title, that he or she will stand by.

Weighted-average coupon: The weighted average of the gross interest rates of the mortgages underlying a pool as of the issue date, with the balance of each mortgage used as the weighting factor.

Weighted-average equity: The denominator of the fraction used to calculate investment-level income, appreciation and total returns on a quarterly basis, consisting of net assets at the beginning of the period adjusted for weighted contributions and distributions.

Weighted-average rental rates: The average proportion of unequal rental rates in two or more buildings within a market.

Working drawings: The set of plans for a building or project that comprise the contract documents that indicate the precise manner in which a project is to be built.

Workout: The process by which a borrower attempts to negotiate with a lender to restructure the borrower’s debt rather than go through foreclosure proceedings.

Write-down: The accounting procedure used when the book value of an asset is adjusted downward to better reflect current market value.

Write-off: The accounting procedure used when an asset has been determined to be uncollectible and is therefore charged as a loss.

Vacancy rate: The total amount of available space compared to the total inventory of space and expressed as a percentage.

Vacant space: Existing tenant space currently being marketed for lease excluding space available for sublease.

Value-added: A phrase generally used by advisers and managers to describe investments in underperforming and/or undermanaged assets. The objective is to generate 13 percent to 18 percent returns.

Variable-rate: A loan interest rate that varies over the term of the loan, usually tied to a predetermined index. Also called adjustable-rate.

Variance: Permission that allows a property owner to depart from the literal requirements of a zoning ordinance that, because of special circumstances, cause a unique hardship.

Virtual storefront: An online business presence for sales.

Under contract: The period of time after a seller has accepted a buyer’s offer to purchase a property and during which the buyer is able to perform its due diligence and finalize financing arrangements. During this time, the seller is precluded from entertaining offers from other buyers.

Underwriter: A company, usually an investment banking firm, that guarantees or participates in a guarantee that an entire issue of stocks or bonds will be purchased.

Unencumbered: Property that is free of liens and other encumbrances.

Unimproved land: Most commonly refers to land without improvements or buildings but also can mean land in its natural state.

Unrated classes: Typically the most subordinated classes of CMBS.

UPREIT (Umbrella partnership real estate investment trust): Organizational structure where a REIT’s assets are owned by a holding company for tax purposes.

Usable square footage: The area contained within the demising walls of the tenant space that equals the net square footage multiplied by the circulation factor.

Use: The specific purpose for which a parcel or a building is intended to be used or for which it has been designed or arranged.

Tax base: The assessed valuation of all real property that lies within a taxing authority’s jurisdiction. When multiplied by the tax rate, it determines the amount of tax due.

Tax lien: A statutory lien for nonpayment of property taxes that attaches only to the property upon which the taxes are unpaid.

Tax roll: A list or record containing the descriptions of all land parcels located within the county, the names of the owners or those receiving the tax bill, assessed values and tax amounts.

Tenant (lessee): One who rents real estate from another and holds an estate by virtue of a lease.

Tenant at will: One who holds possession of premises by permission of the owner or landlord. The characteristics of the lease are an uncertain duration and the right of either party to terminate on proper notice.

Tenant improvement (TI): Improvements made to the leased premises by or for a tenant.

Tenant improvement (TI) allowance: Defines the fixed amount of money contributed by the landlord toward tenant improvements. The tenant pays any of the costs that exceed this amount.

Tenant mix: A phrase used to describe the quality of a property’s income stream. In multi-tenanted properties, institutional investors typically prefer a mixture of national credit tenants, regional credit tenants and local non-credit tenants.

Term: The lifetime of a loan.

Time-weighted average annual rate of return: The constant annual return over a series of  years that would compound to the same return as compounding the actual annual returns for each year in the series.

Title: The means whereby the owner has the just and full possession of real property.

Title insurance: A policy issued by a title company that insures against loss resulting from defects of title to a specifically described parcel of real property, or from the enforcement of liens existing against it at the time the title policy is issued.

Title search: A review of all recorded documents affecting a specific piece of property to determine the present condition of title.

Total acres: All land area contained within a real estate investment

Total assets: The sum of all gross investments, cash and equivalents, receivables, and other assets presented on the balance sheet .

Total commitment: The full mortgage loan amount that is obligated to be funded if all stated conditions are met.

Total inventory: The total square footage of a type of property within a geographical area, whether vacant or occupied.

Total principal balance: The total amount of debt, including the original mortgage amount adjusted for subsequent fundings, principal payments and other unpaid items (e.g., interest) that are allowed to be added to the principal balance by the mortgage note or by law.

Total retail area: Total floor area of a retail center less common areas. It is the area from which sales are generated and includes any department stores or other areas (such as banks, restaurants or service stations) not owned by the center.

Total return: The sum of quarterly income and appreciation returns.

Trade fixtures: Personal property that is attached to a structure that is used in the business. Because this property is part of the business and not deemed to be part of the real estate, it is typically removable upon lease termination.

Tranche: A class of securities. CMBS offerings are generally divided into rated and unrated classes, or tranches, according to seniority and risk. Higher-rated tranches allow for internal credit enhancements; lower-rated classes offer higher yields.

Triple net lease: A lease that requires the tenant to pay all expenses of the property being leased in addition to rent. Typical expenses covered in such a lease include taxes, insurance, maintenance and utilities.

Trustee: The trustee oversees the flow of funds through the CMBS structure on behalf of the bondholders. The trustee is responsible for collecting principal and interest from the servicer, distributing payments to bondholders and reporting to bondholders.

Turn key project: The construction of a project in which a third party is responsible for the total completion of a building, or for the construction of tenant improvements to the customized requirements and specifications of a future owner or tenant.

Sales comparison value: A value indication derived by comparing the property being appraised to similar properties that have been sold recently.

Second-generation or secondary space: Previously occupied space that becomes available for lease, either directly from the landlord or as sublease space.

Secondary financing: A loan on real property secured by a lien junior to an existing first mortgage loan.

Secondary market: A market where existing mortgage loans are securitized and then bought and sold to other investors.

Secondary, or follow-on, offering: A stock offering made by an existing public company.

Securities and Exchange Commission (SEC): The federal agency that supervises and oversees the issuance and exchange of public securities.

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

Security deposit: A deposit of money by a tenant to a landlord to secure performance of a lease. It also can take the form of a letter of credit or other financial instrument.

Seisen (seizen): Possession of real property under claim of freehold estate.

Self-administered REIT: When members of the management are employees of the REIT or an entity having essentially the same economic ownership as the REIT.

Self-managed REIT: A REIT whose employees are responsible for performing property management functions.

Senior classes: With regard to securities, describes the classes with the highest priority to receive the payments from the underlying mortgage loans.

Separate account: A relationship where an investment manager or adviser is retained by a single pension plan sponsor to source real estate product under a stated investment policy exclusively for that sponsor.

Servicer: An organization that acts on behalf of a trustee for the benefit of security holders.

Setback: The distance from a curb, property line or other reference point, within which building is prohibited.

Shares outstanding: The number of shares of common stock currently outstanding, less the shares held in treasury.

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.

Slab: The exposed wearing surface laid over the structural support beams of a building to form the floor(s) of the building.

Social investing: Investments driven in whole or in part by social or political (non-real estate) objectives. Under ERISA, social investing is economically justified only if proper real estate fundamentals are considered first.

Soft cost: The portion of an equity investment other than the actual cost of the improvements themselves that may be tax-deductible in the first year.

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

Special assessment: Special charges levied against real property for public improvements that benefit the assessed property.

Special servicer: A firm that is employed to work out mortgages that are either delinquent or in default.

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.

Stabilized net operating income: Projected income less expenses that are subject to change but have been adjusted to reflect equivalent, stable property operations.

Stabilized occupancy: The optimum range of long-term occupancy that an income-producing real estate project is expected to achieve after exposure for leasing in the open market for a reasonable period of time at terms and conditions comparable to competitive offerings.

Step-up lease (graded lease): A lease specifying set increases in rent at set intervals during the term of the lease.

Straight lease (flat lease): A lease specifying a fixed amount of rent that is to be paid periodically, typically monthly, during the entire term of the lease.

Strip center: Any shopping area comprised of a row of stores but smaller than a neighborhood center anchored by a grocery store.

Subcontractor: A contractor working under and being paid by the general contractor, often a specialist in nature, such as an electrical contractor, cement contractor, etc.

Sublessee: A person or identity to whom the rights of use and occupancy under a lease have been conveyed, while the original lessee retains primary responsibility for the obligations of the lease.

Subordinated classes: With regard to CMBS, describes those classes with the lowest priority to receive payments from the underlying mortgage loans.

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

Surety: One who voluntarily binds himself to be obligated for the debt or obligation of another.

Surface rights: A right or easement granted with mineral rights, enabling the possessor of the mineral rights to drill or mine through the surface.

Survey: The process by which a parcel is measured and its boundaries and contents ascertained.

Synthetic lease: A transaction that appears as a lease from an accounting standpoint but as a loan from a tax standpoint.