Developed Properties Industry Terminology

The submarket's quarterly absorption turned positive at 120,000 SF.; Slow absorption is lengthening our lease-up timeline.; We underwrote absorption at 15 units per month.

The lender requires an ALTA survey before closing.; The ALTA shows an encroachment on the east lot line.; Update the ALTA to reflect the new utility easement.

We secured a grocery anchor for the center.; Losing the anchor triggers co-tenancy clauses.; Anchor rent is below market but drives traffic.

The appraisal came in at $42 million.; We ordered an MAI appraisal for the refinance.; A low appraisal jeopardized our loan proceeds.

Measure rentable area per BOMA 2017 Office.; BOMA load factors increased after remeasurement.; Our lease uses BOMA calculations for RSF.

It’s a brownfield requiring remediation.; We applied for brownfield tax credits.; Phase II confirmed contaminants on-site.

Tenant wants a BTS with a 20-year lease.; We priced a BTS for the city’s new office.; BTS reduces leasing risk but limits future flexibility.

Tenant pays base rent plus CAM.; Annual CAM reconciliation is due in March.; We capped controllable CAM at 5%.

We bought at a 6.0% cap rate.; Our exit cap is underwritten 25 bps higher.; Cap rates compressed last year across Sunbelt markets.

The CO is expected next month.; The lease prohibits occupancy before the CO.; Failed inspection delayed our CO.

The lender requires a 1.25x DSCR.; DSCR dips in year one during lease-up.; We stress-tested DSCR under rate increases.

We’re in a 60-day due diligence period.; DD revealed roof and HVAC issues.; Extend DD to complete zoning research.

Entitlements include site plan and zoning approvals.; We budgeted 12 months for entitlements.; Entitlement risk is material in this submarket.

Zoning allows a 6.0 FAR on this parcel.; We’re transferring air rights to increase FAR.; FAR constraints drove our building massing.

We selected the GC via a GMP bid.; The GC issued a change order for steel prices.; GC mobilization starts next week.

The center has 150,000 SF of GLA.; We reconfigured bays to add GLA.; GLA per capita supports another pad site.

Hard costs escalated by 10%.; Value engineering reduced hard costs.; The GMP caps hard cost exposure.

HBU analysis favors multifamily over office.; Parking ratios affect the HBU conclusion.; The appraiser determined HBU as industrial.

We target a 17% levered IRR.; IRR falls if we extend the hold to year seven.; Run an IRR sensitivity on exit cap rates.

We structured a 50/50 JV with the landowner.; The JV agreement includes major decision rights.; Phase II is a separate JV with the lender’s fund.

Tenant signed a non-binding LOI.; The LOI outlines rent, term, and TI.; We have LOIs covering 40% of phase one.

Construction loan is capped at 65% LTV.; Post-stabilization LTV improves with NOI lift.; High LTV triggered partial recourse.

Mezz fills the gap in the capital stack.; The mezz loan carries a 12% current pay.; Watch the intercreditor agreement with mezz.

Ground-floor retail with apartments above.; Mixed-use complicates shared parking.; We phased the mixed-use to manage absorption.

NOI grew 5% year over year.; We underwrite stabilized NOI at delivery.; Adjust NOI for one-time concessions.

NIMBY opposition surfaced at the hearing.; We engaged neighbors to address NIMBY concerns.; NIMBY resistance slowed our approvals.

The loan is non-recourse with bad-boy carve-outs.; We prefer non-recourse on value-add deals.; Non-recourse limits sponsor liability to the collateral.

HVAC replacement is CapEx; filters are OpEx.; Budget OpEx separately from CapEx.; The lease defines OpEx pass-throughs.

There’s an 8% pref before the promote.; The pref accrues and compounds annually.; Sponsor catch-up kicks in after the pref.

Update the pro forma for new rent comps.; Pro forma assumes 5% stabilized vacancy.; Lenders underwrite our pro forma NOI.

A public REIT acquired the portfolio.; The REIT’s FFO beat estimates.; We may exit via a REIT sale.

The rent roll shows 12-month expirations.; Clean up the rent roll before appraisal.; The lender requested a certified rent roll.

The lender requires SNDAs from key tenants.; We negotiated SNDA language with the anchor.; Without SNDA, foreclosure risk increases for tenants.

Our loan floats at SOFR + 250 bps.; We hedged SOFR exposure with an interest rate cap.; SOFR replaced LIBOR in new loan docs.

Bridge debt converts to life-company takeout.; The takeout requires a 1.30x DSCR at stabilization.; We timed TCO to line up takeout funding.

Landlord offers $40/SF in TI.; TI covers build-out of the office suite.; Excess TI is amortized into rent.

We need lender’s and owner’s title policies.; Schedule B exceptions must be cleared.; Endorsements added to the title premium.

Tenant pays NNN plus base rent.; NNN reconciliations occur annually.; NNN leases reduce landlord OpEx exposure.

Underwrite to market rents and 5% vacancy.; The underwriting flags a weak credit tenant.; We tightened underwriting assumptions for rates.

We applied for a use variance to add retail.; The variance hearing is set for June.; Without the variance, the project isn’t feasible.

Submarket vacancy fell to 6%.; We underwrite 5% stabilized vacancy.; High vacancy exerts downward pressure on rents.

Light value-add via unit renovations.; The value-add thesis relies on TI spend and rent bumps.; Returns hinge on executing the value-add scope.

Portfolio WALT is 6.8 years.; WALT drops as near-term expirations roll.; We extended WALT with early renewals.

Promote is paid per the waterfall.; Model the waterfall on quarterly distributions.; The waterfall includes a sponsor catch-up tier.

The work letter defines LL vs tenant scope.; Attach the work letter to the lease as an exhibit.; Disputes often trace back to vague work letters.

We use XIRR to compute deal IRR in Excel.; XIRR handles irregular cash flow timing.; Audit the model’s XIRR formula for sign errors.

Prepayment requires yield maintenance.; The YM penalty is steep early in the term.; Consider defeasance versus yield maintenance.

Stabilized yield on cost is 7.5%.; YOC equals NOI divided by all-in project cost.; We won’t build below 150 bps over exit cap.

The site is zoned C-2.; Zoning caps building height at 80 feet.; Rezoning is politically challenging here.

Variance granted for reduced parking.; A variance denial will delay the project.; We’re seeking a signage variance.