Keys

Number of guest rooms. Deals are priced "per key."

MF analog Units

OccupancyOcc

Rooms sold ÷ rooms available, measured nightly.

MF analog Physical occupancy

Average Daily RateADR

Rooms revenue ÷ rooms sold.

MF analog Average rent per occupied unit

Revenue per Available RoomRevPAR

Occupancy × ADR, or rooms revenue ÷ rooms available. 75% × $200 = $150.

MF analog Effective rent per unit incl. vacancy

Total RevPARTRevPAR

All revenue (rooms, F&B, parking, spa) per available room.

MF analog Total income per unit incl. other income

GOP per Available RoomGOPPAR

Gross operating profit per available room. Owners care about this more than RevPAR.

Flow-through

Share of incremental revenue that becomes incremental profit. Rate-driven growth flows through better than occupancy-driven growth, because every occupied room must be cleaned.

Comp set

The competing hotels a property is benchmarked against.

Occupancy IndexMPI

Your occupancy ÷ comp set occupancy.

ADR IndexARI

Your ADR ÷ comp set ADR.

RevPAR IndexRGI

Your RevPAR ÷ comp set RevPAR. 115 is a selling point; 85 is a "management or brand upside" story.

Fair share

An index of 100: you capture demand in proportion to your supply.

Departmental revenue & expense

Rooms, F&B (food & beverage) and other operated departments, each with its own profit line.

Undistributed expenses

Costs no single department owns: A&G (administrative & general), S&M (sales & marketing), POM (property operations & maintenance), utilities.

Gross Operating ProfitGOP

Departmental profit less undistributed expenses. The operator is judged on it.

Fixed charges

Property taxes, insurance, ground rent.

FF&E reserve

Usually ~4% of total revenue, set aside to replace furniture, fixtures and equipment.

NOI (hotel)

Usually after the FF&E reserve. Always confirm which definition an OM uses.

Operating leverage

High fixed costs mean profit swings much more than revenue. A hotel at a 30% margin hurts badly when RevPAR drops.

MF analog MF runs ~55–65% NOI margins

Full-service

Restaurants, meeting space, banquets. More revenue, much more cost.

Select / focused-service

Limited F&B such as breakfast and a small bar. Think Courtyard or Hilton Garden Inn.

Limited-service

Rooms plus breakfast at most.

Extended-stay

Guests staying 5+ nights, lean staffing (Residence Inn, Homewood Suites).

MF analog Closest hotel product to apartments

Lifestyle / boutique

Design-driven, often soft brands or independents.

Soft brand / collection

A brand affiliation that lets the hotel keep its own name and identity. Popular for conversions.

Chain scale

STR's tiers: Luxury, Upper Upscale, Upscale, Upper Midscale, Midscale, Economy.

Franchise agreement

Lets the owner use the brand. Owner pays royalty fees (~5–6% of rooms revenue) plus marketing/loyalty fees.

Hotel management agreementHMA

Contract with the company that runs the hotel: the brand itself ("brand-managed") or a third-party manager.

Base management fee

Usually ~2–3% of total revenue.

Incentive management feeIMF

Manager's share of profit above an owner's priority return.

Property Improvement PlanPIP

Renovation the brand requires, usually at sale or franchise renewal. A major acquisition cost line.

Key money

Upfront cash a brand or operator pays the owner to win the contract.

Encumbered vs. unencumbered

Whether the hotel is sold subject to an existing management agreement. Unencumbered trades at a premium.

Area of protection

Radius in which the franchisor won't license the same brand to a competitor.

Transient

Individual travelers: BAR (Best Available Rate), corporate negotiated, OTA (Expedia, Booking.com), GDS (travel-agent systems).

Group

Blocks of 10+ rooms for conferences or weddings.

SMERF

Social, military, educational, religious, fraternal groups. Price-sensitive business that fills soft nights.

On-the-books & paceOTB

Bookings for future dates vs. the same point last year.

Pickup

New bookings over a period.

Attrition

A group books fewer rooms than it contracted for.

Displacement

Whether a low-rate group pushes out higher-paying transient guests.

Compression night

A sold-out citywide event where you can push rate hard.

Shoulder season

Between peak and off-peak.

Walk a guest

You overbooked and must relocate a guest to another hotel.

Price per key

The headline valuation unit, compared against replacement cost per key.

Cap rate on T-12

Applied to trailing-twelve-month NOI after reserve. Hotel caps run above multifamily for volatility.

Ramp-up / stabilization

Period after an opening, renovation or rebrand before the hotel reaches its run-rate.

Debt yield

NOI ÷ loan. Lenders want it meaningfully higher on hotels than apartments, often low double digits or more.

Franchisor comfort letter

Keeps the brand affiliation in place if the lender forecloses.

Cash management trigger

Moves the loan into a lockbox or cash sweep if DSCR or debt yield drops below a threshold.

Seasonality

Big monthly cash-flow swings, so reserves and covenant testing periods matter.

Pre-opening expense

Hiring, training and sales launch before the first guest arrives.

Rentable SFRSF

The space a tenant pays for, including its share of common areas.

MF analog Unit count / net rentable SF

Usable SFUSF

The space a tenant actually occupies.

Load factor / loss factor

Share of lobbies, corridors and mechanical rooms added on top of USF. A 15% load bills 10,000 USF as ~11,500 RSF.

BOMA

The industry standard for measuring office space.

Floorplate

Size and shape of one floor. Large, efficient floorplates with good column spacing attract big tenants.

Core-to-glass depth

Distance from the building core to the windows. Drives natural light, office appeal and residential conversion feasibility.

Class A / B / C

A relative grade of location, age, systems and amenities within a market.

Trophy

The very top of Class A: newest, best-located, highest rents.

Flight to quality

Tenants shrink their footprint while moving into newer, better buildings. Since the pandemic, the best buildings do well and older commodity buildings struggle.

Sublease space

Space tenants are trying to offload, usually at a discount, competing with your direct space.

Shadow vacancy

Space that's leased but unused. It shows up as sublease supply or non-renewals later.

Utilization

How much of its space a tenant actually uses (often from badge-swipe data). A tenant at 30% is a likely non-renewal.

Amenities

Fitness, tenant lounge, conference center, roof terrace. Now an expectation for Class A.

Full Service GrossFSG

Landlord pays operating expenses and taxes out of the rent.

Triple netNNN

Tenant pays its share of opex and taxes on top of base rent.

Modified gross

Somewhere in between: some expenses passed through, some not.

Base year / expense stop

Tenant pays only increases in opex above the first-year level (or a fixed stop).

Escalations

Annual rent bumps, e.g. 3% per year, or pass-through of expense increases.

Expense recoveries

What landlords collect back from tenants for opex and taxes.

Termination / contraction option

Tenant's right to leave early or give back space, usually for a fee. Lenders discount leases that have them.

ROFO / ROFR

Right of first offer / first refusal on adjacent or expansion space.

Tenant improvement allowanceTI

Landlord's contribution to building out the tenant's space, quoted in $/RSF.

MF analog Unit turn cost, but 10–50x larger

Leasing commissionLC

Paid to tenant and landlord brokers, usually up front, as a % of total lease value or $/RSF per year.

Free rent / abatement

Months of no rent at the start of a lease.

MF analog Concessions ("one month free")

Face (headline) rent

The quoted rent.

Net effective rentNER

Face rent after deducting free rent, TI and LC, spread over the term. Sophisticated landlords track NER.

Spec suites

Pre-built, move-in-ready small suites. Key tool for leasing up a value-add building.

Work letter

Lease exhibit defining who builds out the space and what the TI covers.

Cold / warm shell, turnkey

Delivery condition: raw space, basic systems in place, or fully finished by the landlord.

Weighted avg. lease termWALT

Remaining lease term, weighted by rent or SF. Long WALT = durable income.

Rollover

Leases expiring in a given period. A big rollover year is a risk event.

Downtime

Months of vacancy between a tenant leaving and a new one paying rent.

Renewal probability

Share of expiring tenants expected to stay. Renewals cost far less TI and LC.

Market leasing assumptionsMLA

The model's set of rent, term, TI, LC, free rent, downtime and renewal assumptions for each space.

Blend-and-extend

Lower a tenant's rent now in exchange for a longer term.

TI/LC reserve

Below-NOI reserve ($/RSF per year) for future leasing costs. Office is capital-intensive even when stabilized.

Dark value

What the building is worth empty. A floor on value for a distressed asset.

Spec (speculative)

Built without tenants signed. Rarely financeable for office today.

Pre-leased

A portion leased before construction starts. Lenders often require 40–50%+.

Build-to-suit

Built for one specific tenant.

Anchor tenant

The large, creditworthy tenant that makes the project financeable.

Merchant build

Develop, lease up and sell at stabilization to a core buyer.

Estoppel

Tenant certifies its lease terms are as represented.

SNDA

Subordination, non-disturbance and attornment agreement between tenant and lender.

Carry / completion / repayment guarantees

Sponsor recourse that's standard on office construction loans.

Special servicer

Manages defaulted CMBS loans: modifies, forecloses or sells them.

REO

Real estate owned: property a lender took back through foreclosure.

Loan-to-own

Buy the defaulted note at a discount, then take title.

Discounted payoffDPO

Lender accepts less than the full balance to retire the loan.

Extend and pretend

A loan modification that pushes out maturity hoping values recover.

Appraisal reduction

A new, lower appraisal on a troubled CMBS loan that shifts losses down the capital stack.

Leasing hurdles / cash sweep

Value-add loan terms: future funding tied to leasing milestones; excess cash trapped if leasing lags.

Bulk distribution / big box

Large warehouses, usually 250,000–1,000,000+ SF, near interstates. Tenants are retailers, e-commerce and 3PLs moving goods regionally.

Last-mile / infill

Smaller, often older buildings inside dense metros, close to consumers. Location matters more than specs, and land is scarce.

MF analog Infill urban vs. suburban garden

Small-bay / shallow-bay

Multi-tenant buildings with suites of roughly 5,000–50,000 SF. Many small tenants, more management, strong rent growth.

Flex / light industrial

Mix of office and warehouse space, usually more finished office, lower clear heights. Tenants: R&D, showrooms, light assembly.

Manufacturing

Purpose-built for production: heavy power, cranes, special floors. Often single-tenant, harder to re-lease.

Cold storage

Refrigerated and freezer warehouses for food and pharma. Costs 2–3x a dry warehouse to build; fewer tenants, higher rents.

Industrial outdoor storageIOS

Mostly paved, fenced land with a small building, used to park trucks, trailers and equipment. Priced per acre, low building coverage.

Cross-dock / truck terminal

Long, narrow buildings with doors on both sides so freight moves straight from inbound to outbound trucks.

Multi-story warehouse

Ramped buildings with truck access to upper floors. Built only where land is very expensive.

Clear height

Usable height from floor to the lowest overhead obstruction (joists, sprinklers). Modern bulk is 36–40'; older buildings are often 18–24'. More height means more pallets stacked per SF.

MF analog Ceiling height, but it changes what the space can be used for

Dock-high doors

Loading doors at truck-bed height (~4'), so trailers load straight onto the warehouse floor.

Drive-in / grade-level doors

Ground-level doors that trucks or forklifts drive through.

Dock ratio

Dock doors per SF of building, e.g. 1 per 5,000 SF for e-commerce or 1 per 10,000 SF for storage.

Truck court

Paved area in front of the docks where trucks maneuver. 130' is the minimum; 185' allows a row of trailer parking.

Trailer parking / stalls

Space to park trailers that aren't docked. A major differentiator for logistics tenants.

Column spacing / speed bay

Distance between columns, e.g. 56' × 50', with a wider 60' "speed bay" along the docks for staging freight.

ESFR sprinklers

Early Suppression, Fast Response sprinklers. Allow high-piled storage without in-rack sprinklers. Standard in modern warehouses.

Slab thickness

Floor thickness, e.g. 7–8" reinforced concrete. Matters for heavy racking and automation.

Building depth / loading config

Rear-load (docks on one side), cross-dock (both sides), or front-load. Deeper buildings suit bulk; shallower suit small-bay.

Office finish %

Share of the building that's finished office, typically 2–10%. Kept low because warehouse tenants don't pay much for office.

Power

Electrical service in amps and voltage (e.g. 2,000A, 480V 3-phase). Automation, EV truck charging and cold storage need much more.

Site coverage ratio

Building footprint ÷ land area. ~40–50% for modern distribution; IOS is often under 10%.

Tilt-up construction

Concrete wall panels cast on site and lifted into place. Fast and cheap, the standard way to build warehouses.

Triple netNNN

Tenant pays base rent plus its share of taxes, insurance and common area maintenance. The landlord's NOI is close to base rent.

MF analog The opposite of an apartment, where the landlord pays opex

Rent quoting

Usually $/SF per year NNN (e.g. "$9.50 net"). Some West Coast markets quote monthly (e.g. "$1.25/SF/month").

Annual escalations

Fixed bumps, often 3–5% per year in recent leases.

Mark-to-market

Gap between in-place rent and today's market rent. "40% mark-to-market" means leases roll up 40% when they expire. The core industrial value-add thesis.

CAM / recoveries

Common area maintenance and other costs billed back to tenants. On vacant space the landlord eats them.

Spec vs. build-to-suitBTS

Spec: built with no tenant signed. BTS: designed and built for one tenant, often with a long lease.

Third-party logistics3PL

Companies that run warehouses for other businesses. A large share of industrial demand; their credit varies.

Single-tenant risk

A one-tenant building is 100% leased or 0% leased. Credit quality, lease term and renewal odds dominate the underwriting.

Divisibility

Whether a big building can be split for 2–4 tenants: multiple office corners, separate dock areas and power. Widens the tenant pool.

Absorption & deliveries

Absorption: net change in occupied SF. Deliveries: new SF completed. Deliveries above absorption push vacancy up.

Land price per acre

How industrial land trades. Infill land can be worth more than the building on it.

Entitlements

Zoning and approvals to build. Many towns now resist new warehouses, which makes entitled land valuable.

Horizontal / site work

Grading, utilities, roads, stormwater and paving before the building goes up. A big share of industrial cost.

Shell cost

Cost of the building envelope: slab, walls, roof, sprinklers, docks. Office and TI are separate.

Yield on cost & spread

Stabilized NOI ÷ total cost, compared with the exit cap. Industrial developers typically want 100–150+ bps.

Covered land play

Buying an older building mainly for the land underneath, collecting rent until redevelopment makes sense.

Functional obsolescence

A building that still stands but doesn't meet modern needs: low clear height, shallow truck court, few docks.

Phase I / Phase II ESA

Environmental site assessments. Older industrial sites often carry contamination risk (underground tanks, solvents, PFAS).

Critical IT loadMW

Power available to run the servers, in megawatts. The unit everything is priced in: "a 60 MW campus."

Power usage effectivenessPUE

Total facility power ÷ IT power. 1.2–1.5 is typical; the extra is cooling and losses.

Hyperscale

Huge campuses leased to cloud and AI giants (often 10–15-year leases, investment-grade credit).

Colocation (colo)

Multi-tenant facilities. Retail colo leases racks or cages to many customers; wholesale colo leases whole halls.

Powered shell vs. turnkey

Powered shell: building plus utility power, tenant installs the electrical and cooling gear. Turnkey: landlord delivers it all.

$/kW/month

How rent is quoted: dollars per kilowatt of IT capacity per month.

Redundancy (N, N+1, 2N)

Backup level for power and cooling. N+1 has one spare unit; 2N duplicates the whole system.

Rack density

Power per server rack. Traditional racks use 5–15 kW; AI racks can exceed 100 kW and need liquid cooling.

Time to power

How soon the utility can deliver the needed megawatts. Today's biggest constraint; sites with power secured command a premium.

White space / gray space

White space holds servers. Gray space holds electrical and mechanical equipment.

Price per SF vs. replacement cost

Buyers compare price to what it would cost to build new today, including land.

Going-in cap vs. mark-to-market

Infill buildings often trade at low going-in caps because buyers pay for future rent growth.

Dark value

Value with the building empty. Critical for single-tenant underwriting.

Credit tenant lease

A long lease to an investment-grade tenant. Lenders may underwrite the tenant more than the building.

Debt yield (industrial)

Industrial is seen as the most financeable commercial asset; lenders accept lower debt yields than for hotels or office.

Structural reserve

Non-recoverable reserve for roof, structure and parking, often $0.10–0.20/SF per year.

Neighborhood center

30,000–150,000 SF, usually anchored by a grocery store. Daily-needs shopping within a few miles. The best-performing format today.

Community center

125,000–400,000 SF with several anchors such as a grocer, discount department store, off-price apparel and home goods.

Power center

250,000–600,000+ SF dominated by big-box category killers (electronics, home improvement, sporting goods) with little small-shop space.

Regional / super-regional mall

Enclosed centers of 400,000–1,000,000+ SF anchored by department stores. Graded A to D; the A malls still thrive, many lower-grade malls are being redeveloped.

Lifestyle center

Open-air, upscale, restaurant- and experience-heavy. Often part of mixed-use projects.

Unanchored strip

Small row of shops with no anchor, relying on visibility and convenience. Higher turnover, local tenants.

Single-tenant net leaseSTNL

One tenant (pharmacy, QSR, dollar store, bank) on a long NNN or absolute net lease. Bought largely on tenant credit.

MF analog None: closer to a bond than a building

Outparcel / pad site

A separate lot at the front of a center for a drive-thru, bank or restaurant. Sold or ground-leased.

Anchor

The large tenant that draws traffic (grocer, Target, Home Depot). Pays low rent per SF because it creates the traffic everyone else needs.

Junior anchor

Mid-size box of roughly 10,000–40,000 SF: off-price apparel, pet, fitness, discount stores.

Shop space / in-line

Small units (1,000–5,000 SF) between anchors. Highest rent per SF and the main source of NOI.

Shadow anchor

A big store next to your center that you don't own but whose traffic you benefit from.

Tenant mix / merchandising

Choosing which uses go where so they feed each other's traffic. Landlords curate it like a store curates products.

Necessity / daily-needs retail

Grocery, pharmacy, services, restaurants, medical. Hard to replace with e-commerce.

Medical retail (medtail)

Urgent care, dental, physical therapy and similar uses in retail space. Sticky tenants with high build-out.

QSR

Quick-service restaurant. Drive-thru QSRs are the most sought-after pad tenants.

National / regional / local tenant

Credit and stickiness generally fall from national chains to local "mom-and-pop" tenants. Locals often pay more rent per SF.

CAM

Common area maintenance: parking lot, landscaping, lighting, security, snow removal. Billed back to tenants by pro-rata share.

Pro-rata share

Tenant SF ÷ center GLA (or a defined denominator). Determines its share of CAM, taxes and insurance.

CAM admin fee & caps

Landlords often add a 10–15% admin fee to CAM. Anchors often negotiate fixed or capped CAM, which leaves the landlord paying the rest.

CAM reconciliation

Year-end true-up of estimated vs. actual expenses. Errors here are a common source of tenant disputes and audits.

Percentage rent

Extra rent equal to a % of sales above a breakpoint. Natural breakpoint = base rent ÷ % rate.

Sales reporting

Lease requirement for tenants to report sales, used for percentage rent and to monitor tenant health.

Occupancy cost ratio

Total occupancy cost (rent + CAM + tax + insurance) ÷ sales. Above ~12–15% for most shop tenants is a warning sign.

Co-tenancy clause

Lets a tenant pay reduced rent or leave if a named anchor closes or occupancy falls below a threshold. Turns one vacancy into many rent cuts.

Go-dark / continuous operation

Whether a tenant may close its store while still paying rent. A dark anchor that pays rent still kills traffic.

Exclusive use clause

Prevents the landlord from leasing to a competitor (e.g. only one grocer, one pharmacy, one coffee shop).

Radius restriction

Stops a tenant from opening another store within a set distance, protecting the center's sales.

Kick-out clause

Lets a tenant terminate if sales stay below a set level.

REA / OEA

Reciprocal (or operating) easement agreement among owners in a center, governing parking, access, signage and permitted uses. Anchors often hold approval rights over changes.

Vanilla / white box

Delivery condition: finished walls, HVAC, restroom and basic lighting, ready for the tenant's fit-out.

Gross leasable areaGLA

Total floor area tenants can lease. Retail's SF unit.

Trade area

Where the center's shoppers come from, often a 3- or 5-mile radius or a drive-time ring.

Demographics

Population, households and median household income in the trade area. Tenants screen sites on these.

Traffic countsVPD

Vehicles per day passing the site. Pads want 25,000+ VPD on the main road.

Access & visibility

Signalized intersections, curb cuts, turn lanes and pylon signage. Hard to fix after the fact.

Parking ratio

Spaces per 1,000 SF of GLA, typically 4–5. Excess parking can become pad sites.

Grocer sales per SF

A strong grocer does $600–1,000+/SF. It shows how much traffic the anchor brings.

Foot-traffic data

Mobile location data (e.g. Placer.ai) showing visits, dwell time and where shoppers come from.

Anchor vs. shop rent

Anchors pay maybe $8–18/SF on long leases; shops pay $25–45/SF on shorter ones. Value depends heavily on shop occupancy.

Dark anchor risk

An anchor closing can trigger co-tenancy, cut traffic and cause shop tenants to leave. The single biggest retail risk.

Box split / demising

Dividing a large vacant box into smaller units for junior anchors.

Re-anchoring

Replacing a failed anchor with a stronger traffic driver, often a grocer, fitness or medical use.

Densification

Adding pads or residential on excess parking. Long-term upside on large retail sites.

Lender focus

Anchor lease term vs. loan term, co-tenancy exposure, tenant sales and rollover. Many lenders require anchors to extend past loan maturity.

Active adult (55+)

Age-restricted rental apartments with amenities but no services or care. Underwritten much like multifamily.

MF analog Closest to a normal apartment

Independent livingIL

Apartments for seniors (often 75+) with services bundled into rent: meals, housekeeping, transport, activities. Usually not licensed.

Assisted livingAL

Help with activities of daily living (bathing, dressing, medication). State-licensed, 24-hour staff.

Memory careMC

Secured units for residents with dementia. Highest staffing and rates outside nursing homes.

Skilled nursingSNF

Nursing homes providing medical care. Paid largely by Medicare and Medicaid, so it's a healthcare business with heavy regulation.

CCRC / Life plan community

Campus offering IL, AL, MC and often nursing, so residents can age in place. Often uses entrance fees.

Acuity

How much care a resident needs. Higher acuity means more staff hours and higher fees.

Activities of daily livingADLs

Bathing, dressing, eating, toileting, transferring, continence. Needing help with 2+ usually qualifies for AL.

Monthly rate / base rent

The monthly charge for the unit and bundled services, e.g. $4,500 IL or $7,000 AL.

Level of care fees

Extra monthly charges by care tier or points, added to base rent in AL.

Community fee

One-time move-in fee in rental communities, often equal to about one month's rent.

Entrance fee

Large upfront payment in CCRCs ($200k–$1M+), sometimes partly refundable, plus lower monthly fees.

Private pay

Residents pay from savings, home sale proceeds or long-term care insurance. Most IL, AL and MC is private pay.

RevPOR

Revenue per occupied room (unit) per month. The senior housing version of ADR.

MF analog Average rent per occupied unit

Second-person fee

Extra monthly charge when a couple shares a unit.

Length of stay

Roughly 2–4 years in IL, ~2 years in AL, under 2 years in MC. Turnover is constant, so marketing never stops.

Move-ins / move-outs

Net move-ins per month drive lease-up. A new community might add 3–5 net residents a month.

Operator

The company that runs the community, hires staff and delivers care. Operator quality drives value as much as location.

Labor ratio

Labor as a share of revenue or expenses, often 50–60% of operating costs. The biggest risk in the P&L.

Agency labor

Temporary staff from agencies at premium rates. A warning sign when it's high.

Management fee

Operator's fee, typically ~5% of revenue, sometimes with incentives.

Operating margin

Roughly 35–45% for IL, 25–35% for AL and MC. Apartments run 55–65%.

RIDEA structure

Lets a REIT own the operating business through a taxable subsidiary and keep the profits, with an operator under a management contract. The owner takes operating risk and upside.

Triple-net lease to operator

Owner leases the whole building to an operator for fixed rent. Owner gets steady income; operator takes the business risk.

Rent coverage (EBITDAR)

Operator's earnings before rent ÷ rent owed. Measures whether a NNN-leased operator can keep paying.

Licensing

States license AL and MC, with rules on staffing, training, building features and inspections.

Primary market areaPMA

Where most residents come from, often 5–10 miles. Adult children nearby often choose the community.

Age- & income-qualified households

Seniors in the PMA old enough (75+ for AL, 80+ for MC) and wealthy enough (income plus home equity) to pay.

Penetration rate

Existing and planned units ÷ qualified households. High penetration means the market is saturated.

Capture rate

Share of qualified households this project must attract to fill. Lower is safer.

NIC MAP

Industry data source for senior housing occupancy, rates and supply by market.

Lease-up period

Typically 24–36 months to reach ~90% occupancy. Requires a large operating deficit reserve.

HUD 232

Government-insured long-term loan program for stabilized senior housing and nursing homes. A common take-out for construction loans.

Net rentable SFNRSF

The unit floor area customers rent. Storage is priced and measured per NRSF.

MF analog Net rentable area

Gross-to-net efficiency

NRSF ÷ gross building SF. ~75–80% in multi-story buildings with hallways and elevators; ~90%+ for single-story drive-up.

Climate-controlledCC

Heated and cooled interior units. Rents for more and is the standard in new multi-story facilities.

Drive-up / non-climate

Single-story units with roll-up doors you can drive to. Cheaper to build, lower rent.

Unit mix

Sizes from 5×5 to 10×30. 10×10s are the benchmark unit; small units earn the most per SF.

Boat / RV storage

Covered or open parking spaces for vehicles. Low capex, strong demand in some suburbs and resort areas.

Conversion

Turning a vacant big-box store, warehouse or office into storage.

Street rate / web rate

The advertised rate for a new customer today. Changes daily with demand, like hotel rates.

In-place rent

What existing customers are paying, often different from street rate.

Physical occupancy

Rented NRSF (or units) ÷ total. Stabilized facilities run ~88–93%.

Economic occupancy

Actual rent collected ÷ potential rent at street rates if fully leased. Captures discounts and below-market rents.

ECRI

Existing customer rate increases. Raising rents on current customers, often 8–15% a year after move-in. A major profit driver because few people move out over a small increase.

Move-in specials

Low teaser rates such as "first month $1" to win new customers, recovered later through ECRIs.

Tenant protection / insurance

Coverage sold to customers for their stored goods. High-margin ancillary income.

Ancillary income

Locks, boxes, truck rental, admin and late fees.

Length of stay

Many customers stay over a year, which is why ECRIs work.

Seasonality

Demand peaks in late spring and summer with moving season.

Trade area

Usually a 3-mile radius (5+ miles in rural areas). Most customers come from close by.

SF per capita

Storage NRSF in the trade area ÷ population. The U.S. averages around 7–8 SF; well above that suggests oversupply.

Demand drivers

The "4 Ds" (death, divorce, dislocation, downsizing), plus moves, apartment living and small businesses.

Supply pipeline

New facilities planned or under construction in the trade area. Storage is quick to build, so supply can arrive fast.

Lease-up

New facilities take ~3–4 years to stabilize, filling with discounts and then pushing rates.

NOI margin

Roughly 60–70% at stabilization. Few staff, little maintenance, no unit turns.

MF analog MF runs ~55–65%

Third-party management

Large platforms run facilities for owners for ~6% of revenue, bringing pricing software, websites and brand.

Revenue management

Software that sets street rates and ECRIs by unit type based on demand.

Mom-and-pop

Independent owner-operators. Often under-priced, under-marketed and without ECRI programs: the classic value-add target.

Lien sale / auction

Legal process to sell a delinquent customer's goods after notice.

CO deal

A developer agrees to sell a new facility to a buyer (often a REIT) when it receives its certificate of occupancy, at a pre-set price, before lease-up.

Expansion phase

Building more units on excess land at an existing facility. Cheap growth with proven demand.

Price per NRSF

How storage assets are compared, alongside cap rate.

Conduit

A pool of 30–60 fixed-rate loans from several lenders, diversified by property type and geography. The classic CMBS deal.

Single-asset single-borrowerSASB

One large loan (or one portfolio) securitized on its own. Buyers underwrite one property and sponsor in depth.

CRE CLO

Pools of floating-rate transitional (bridge) loans, often actively managed. Sponsor retains the bottom slice.

Agency CMBS

Multifamily loans securitized by Freddie Mac (K-deals) or Fannie Mae (DUS). Senior bonds carry the agency's guarantee.

Pari passu split loan

A large loan cut into equal-priority notes placed in several conduits. One deal's servicing agreement controls the whole loan.

Mezzanine loan

A loan secured by the borrower's ownership interest, sitting outside the trust and subordinate to the mortgage.

Tranche / class

A slice of the bond stack with its own rating, size, coupon and priority (Class A-1, A-S, B, C, D...).

Credit enhancementCE

The share of the pool below a tranche that must be lost before it loses a dollar. A senior AAA might have 30%.

Attachment / detachment

The pool-loss levels where a tranche starts and finishes taking losses. A BBB- tranche might attach at 8% and detach at 10.5%.

Sequential pay

Principal pays the most senior class first until it's retired, then the next. Losses hit the most junior class first.

Interest-only stripX class

A bond that receives excess interest but no principal. Hurt by early payoffs and defaults.

WAC

Weighted average coupon of the loans in the pool. Some bond coupons are tied to it.

REMIC

The tax election that lets the trust pass income to bondholders without entity tax. It strictly limits what the trust can do with loans, including modifications.

Risk retention

Rule requiring 5% of the deal's credit risk to be kept for 5 years, usually by a third-party B-piece buyer holding the bottom classes.

B-piece buyer

Investor that buys the unrated and low-rated bottom classes, re-underwrites every loan and usually controls special servicing.

Pooling & servicing agreementPSA

The deal's governing contract: who does what, how cash flows, how decisions get made.

Master servicer

Collects payments from performing loans, sends reports and advances missed payments if it expects to recover them.

Special servicer

Takes over loans in default or at risk of default and decides how to resolve them. Paid fees on workouts and liquidations.

Directing certificateholder / controlling class

The most junior class that still has enough value (usually the B-piece). Can appoint and replace the special servicer and consent to major decisions.

Operating advisor

Independent party that reviews the special servicer's actions on behalf of all bondholders.

Trustee / certificate administrator

Holds the loans for the trust and calculates and pays distributions to bondholders.

Rating agencies

Moody's, S&P, Fitch, KBRA, DBRS Morningstar. Each applies its own haircuts to NCF and value to size credit enhancement.

Annex A

The loan-by-loan data tape in the offering documents: balances, NCF, DSCR, LTV, tenants, reserves.

Underwritten NCFUW NCF

Net cash flow after reserves for TI, LC and capex, as underwritten by the lender. The basis for every metric.

MF analog NOI less replacement reserves

Debt yield

NCF ÷ loan. Independent of interest rate and amortization, so it's the purest test of leverage. ~9–11% is typical for conduit loans.

Non-recourse & carve-outs

The borrower isn't personally liable except for "bad acts" such as fraud, unauthorized transfers or voluntary bankruptcy, backed by a guarantor.

SPE / bankruptcy-remote

The borrower is a single-purpose entity owning only the property, often with an independent director.

Defeasance

Prepayment substitute: the borrower buys Treasuries that replicate the loan's payments, freeing the property. Keeps bondholders whole.

Yield maintenance

A prepayment penalty that makes the lender whole for lost interest at current rates.

Lockout / open period

Lockout: no prepayment at all. Open period: the final months when the loan can be repaid at par.

Lockbox & cash management

Rents go into a lender-controlled account. "Springing" cash management starts only after a trigger such as low DSCR or a major tenant leaving.

Cash sweep / trap

Excess cash is held as extra reserves instead of going to the borrower once a trigger hits.

Balloon / refi risk

Most conduit loans don't amortize much, so the full balance must be refinanced at maturity.

Watchlist

Loans flagged by the master servicer for low DSCR, big rollover, occupancy loss or other issues.

Term vs. maturity default

Term default: can't pay during the loan. Maturity default: pays fine but can't refinance at the end. Recent office distress is mostly maturity default.

Servicing transfer

Moving a loan from the master servicer to the special servicer after default, imminent default or a borrower request.

P&I advances

The master servicer keeps paying bondholders on a delinquent loan as long as it expects to recover the money from the property.

Nonrecoverability

The servicer's decision that advances can't be recovered, so they stop. Bottom classes then miss interest.

Appraisal reduction amountARA

Roughly: loan balance plus unpaid amounts minus 90% of the new appraised value. Reduces advances and can shift control of the deal.

ASER

Appraisal subordinate entitlement reduction: interest on the appraisal-reduced portion is not advanced, so the lowest classes take an interest shortfall.

Control appraisal period / appraised out

When ARAs shrink the controlling class below 25% of its original balance, control passes to the next class up.

Loss severity

Loss ÷ loan balance at liquidation, including advances and fees. Historical CMBS averages are roughly 35–50%.

Modification / A-B split

Changing loan terms. An A/B (hope note) split keeps a performing A-note and a B-note paid only if value recovers.

Discounted payoffDPO

The special servicer accepts less than the full balance to settle the loan.

REO

Real estate owned by the trust after foreclosure or deed-in-lieu, then sold.

Garden-style

2–4 story walk-up buildings on a large suburban site with surface parking. Cheapest to build per unit.

Mid-rise / podium ("5-over-1")

4–7 stories of wood frame over a concrete podium with parking or retail. The most common new urban and suburban product.

Wrap

Apartments wrapped around a central parking garage.

High-rise

Concrete or steel towers, usually 10+ stories. Highest cost per unit, highest rents.

Build-to-rentBTR

Single-family homes or townhomes built as a rental community.

Class A / B / C

A: new, top amenities and rents. B: 10–30 years old, solid. C: older, dated, lower rents, often more operating problems.

Vintage

The year built. "1970s vintage" signals older systems and likely capex needs.

Affordable / LIHTC

Rents restricted to households under income limits, usually funded with Low-Income Housing Tax Credits.

Workforce housing

Rents affordable to middle-income households (roughly 60–120% of area median income), often unregulated Class B and C.

Rent-stabilized

Units where rent increases are capped by law (e.g. much of NYC's older stock). Limits upside and value-add options.

Condo vs. co-op

Condo: you own your unit and a share of common areas. Co-op: you own shares in a corporation that owns the building. Both are for-sale housing, not rentals.

Gross potential rentGPR

Rent if every unit were leased at market rent for the full year.

Market rent vs. in-place rent

Market: what a new tenant would pay today. In-place: what current tenants actually pay.

Loss-to-lease

The gap between market rent and in-place rent. Shrinks as leases renew at higher rates.

Physical vs. economic occupancy

Physical: share of units with a tenant. Economic: share of potential rent actually collected after vacancy, concessions and bad debt.

Concessions

Free rent or discounts to sign a lease, e.g. "6 weeks free" during lease-up.

Bad debt / delinquency

Rent owed but not collected. A big issue in Class C and in some markets with slow eviction courts.

Other income

Parking, pet rent, storage, amenity fees, application fees, and utility billing.

RUBS

Ratio utility billing system: splitting the building's water, sewer and trash bills among tenants by a formula.

Effective gross incomeEGI

GPR minus vacancy, concessions and bad debt, plus other income.

Trade-out

Rent change on a unit: new lease vs. the prior lease ("new lease trade-out") or renewal vs. expiring rent.

Retention / turnover

Share of tenants who renew. Each move-out costs vacancy days plus turn costs.

Absorption (lease-up pace)

Net new leases per month at a new building, often 15–30 for a mid-size project.

Opex per unit

Annual operating expenses ÷ units, e.g. $6,000–9,000 depending on market, age and taxes.

Expense ratio

Opex ÷ EGI. Typically 35–45%.

Controllable vs. non-controllable

Controllable: payroll, repairs, marketing, turns. Non-controllable: property taxes, insurance, utilities.

Turn cost / make-ready

Paint, cleaning and repairs to re-lease a unit after a move-out.

Management fee

Usually 2.5–4% of EGI for third-party property management.

Replacement reserve

Annual set-aside for roofs, appliances and other capital items, often $250–400 per unit. Lenders require it.

Property tax reassessment

Many jurisdictions reset taxes on sale, so the buyer's taxes can be much higher than the seller's. Always underwrite post-sale taxes.

Tax abatement / PILOT

Reduced property taxes for a period, often in exchange for affordable units (e.g. NYC's 485-x program).

Rent roll

Unit-by-unit list of tenants, rents, lease dates, deposits and balances owed. The first document you review.

T-12 / T-3 annualized

Trailing 12 months of income and expenses; T-3 annualized uses the latest 3 months × 4 to show the current run rate.

Interior renovation

Upgrading units (kitchens, baths, flooring, fixtures, washer/dryer) to charge a rent premium.

Rent premium & renovation ROI

Premium × 12 ÷ renovation cost. $200/month premium on a $15,000 renovation is a 16% return.

Deferred maintenance

Repairs the previous owner skipped. Must be fixed before renovations add value.

Down units

Units that can't be rented until repaired.

Unit mix

Share of studios, 1-, 2- and 3-bedroom units. Drives rent per SF and tenant profile.

Revenue management software

Pricing tools that set daily asking rents by unit. Under legal scrutiny in several places.

Density (units per acre)

Garden ~20–30, podium ~60–120, high-rise several hundred. Set by zoning.

Building efficiency

Net rentable SF ÷ gross SF, ~80–85% for apartments.

Untrended vs. trended yield on cost

Untrended: stabilized NOI at today's rents ÷ cost. Trended: rents grown to the stabilization date. IC usually wants to see both.

Merchant build

Build, lease up and sell, rather than hold.

Inclusionary zoning

Requirement to set aside a share of units as affordable, sometimes in exchange for extra density or tax breaks.

Lease-up concessions

Free rent offered to fill a new building. Burns off as the building stabilizes.

Agency debt

Fannie Mae and Freddie Mac loans for stabilized apartments: long-term, fixed or floating, often the cheapest debt available.

HUD 221(d)(4)

Government-insured construction-to-permanent loan with high leverage and a 40-year term, but slow to close.

Bridge loan

Short-term floating-rate loan for value-add deals, usually with future funding for renovations.

Interest rate cap

Hedge required on floating-rate loans that pays out if rates rise above a strike. Expiring caps caused many 2021-era bridge loan defaults.

DSCR, LTV, debt yield

Agency lenders mainly size to ~1.25x DSCR and ~65–75% LTV.

Negative leverage

When the loan's interest rate is above the cap rate, so debt lowers your cash yield instead of raising it.

Gross sellout

Total sales revenue if every condo unit sells at projected prices.

Sellable SF

Area of the units you can sell, the basis for price per SF.

Presales & deposits

Contracts signed before completion, with 10–20% deposits held in escrow. Construction lenders often require a minimum presale level.

Absorption (sales pace)

Units sold per month. Slower sales mean more interest and carry.

Offering plan

The disclosure document filed with regulators before selling condos. In New York, it's filed with the Attorney General's office.

Release price

Amount of each unit sale that goes to the construction lender to pay down the loan, often 100% until it's repaid.

Inventory loan

Loan secured by unsold finished units, used to pay off the construction loan and give more time to sell.

Margin on cost

Profit ÷ total cost. Condo developers often target 20–25%+ to compensate for sales risk.

Common charges / HOA

Monthly fees owners pay for building operations and the reserve fund.

Condo conversion

Turning an existing rental building into condos. Governed by local tenant protection rules.

Insider price

Discounted price offered to existing tenants in a conversion.

Non-eviction plan

A conversion where existing tenants can stay as renters if they don't buy. Common in New York.

Area median incomeAMI

The middle household income in a metro area, published by HUD each year by household size. Every affordable rent and income limit is a percentage of it.

Income bands

Extremely low (≤30% AMI), very low (≤50%), low (≤80%), moderate (80–120%+). Programs target specific bands.

Income limit

The most a household can earn to qualify for a unit, e.g. 60% of AMI for its size.

Rent limit

Usually 30% of the income limit, divided by 12. Based on an assumed household size, not who actually lives there.

Imputed household size

For LIHTC rent limits: 1 person for a studio, 1.5 people per bedroom otherwise.

Utility allowanceUA

Estimated tenant-paid utilities, subtracted from the gross rent limit to get the maximum rent the owner can charge.

Gross vs. net rent

Gross: rent limit including utilities. Net: what the owner collects after the utility allowance.

Hold harmless

LIHTC rule that generally keeps a project's rent limits from falling when HUD's published AMI drops.

Rent burden

Rent as a share of household income. Over 30% is "cost-burdened," over 50% "severely."

LIHTC

Low-Income Housing Tax Credit: a federal tax credit given to owners of qualifying rental housing over 10 years. Developers sell the credits to investors for equity.

9% credits

Larger credits (about 70% of eligible costs in present value) awarded competitively by each state. Limited and very competitive.

4% credits

Smaller credits (about 30% in present value) that come automatically when a project is financed with enough tax-exempt bonds. Most large deals use these.

Qualified Allocation PlanQAP

Each state's rules and scoring for awarding credits: location, affordability depth, cost limits, services.

Eligible basis

Depreciable development costs: building and most soft costs. Excludes land, and often some financing and reserve costs.

Basis boost

Eligible basis can be increased up to 130% in high-cost or low-income areas (QCTs and DDAs), raising the credits.

Applicable fraction

Share of the building that's affordable (lower of the unit share and the floor-area share). 100% for fully affordable buildings.

Qualified basis

Eligible basis × boost × applicable fraction. Credits = qualified basis × credit rate, each year for 10 years.

Minimum set-aside

The election that defines the project's affordability: 20% of units at 50% AMI, 40% at 60% AMI, or income averaging.

Income averaging

Units can serve bands from 20% to 80% AMI as long as the average is 60% or less. Lets a project mix deeper and shallower affordability.

Compliance period & extended use

15 years of federal compliance, plus extended affordability (typically 30+ years total, often longer under state or city rules).

Recapture

Investors can lose credits already taken if the project falls out of compliance during the compliance period.

Form 8609

IRS form issued after completion that confirms the credits. Final equity payments usually wait for it.

Sources & uses

Affordable deals are underwritten by making sources (loans, equity, subsidies) equal total development cost. The shortfall is the "gap."

Tax credit investor

Usually a bank or large corporation buying credits to reduce taxes. Banks also earn Community Reinvestment Act credit.

Syndicator

Firm that pools investors into funds, buys credits from developers and manages compliance.

Credit pricing

Dollars of equity per dollar of credit, e.g. $0.88. Falls when investor demand or tax rates fall, or when rates rise.

Equity pay-ins

Tax credit equity arrives in installments: some at closing, more at completion, the rest after stabilization and Form 8609.

Private activity bonds & volume cap

Tax-exempt bonds that finance 4% deals. Each state has a limited annual allotment ("volume cap").

50% / 25% bond test

To earn 4% credits, tax-exempt bonds must finance at least 50% of land plus building basis. A 2025 federal law lowered this to 25% for bonds issued after 2025, stretching scarce bond cap across more deals.

Soft / gap financing

Low-interest public loans (city, state, HOME funds) that fill the gap. Usually repaid only from leftover cash flow ("residual receipts").

Deferred developer fee

Part of the developer's fee left unpaid and repaid from future cash flow, acting as a source of funds.

Housing finance agencyHFA

State or city agency that allocates credits and bonds and often lends. In NYC: HPD and HDC.

Community Reinvestment ActCRA

Federal law encouraging banks to invest in their communities. A major reason banks buy tax credits and make affordable loans.

Housing Choice Voucher

Tenant-based Section 8: the tenant pays ~30% of income and the housing authority pays the rest to the landlord, up to a payment standard.

Project-based Section 8

Rental assistance attached to specific units through a HUD contract, so it stays with the building, not the tenant.

HAP contract

Housing Assistance Payments contract setting the "contract rent" HUD pays on project-based units. Renewals typically run 1–20 years.

Payment standard

The maximum rent a voucher will cover in an area, set by the housing authority.

Rent reasonableness

Voucher rents can't exceed rents for comparable unassisted units nearby.

Mark-to-Market / Mark-up-to-Market

HUD programs that reset project-based contract rents down to market (if above) or up to market (if below) at renewal.

RAD

Rental Assistance Demonstration: converts public housing to project-based Section 8 so owners can borrow and use tax credits for repairs.

Tenant income certification

Verifying each household's income at move-in (and often yearly) to prove the unit qualifies.

Regulatory agreement

Recorded document that binds the property to its income and rent limits for the affordability period.

Year 15

End of the federal compliance period. The investor typically exits, and the developer or a nonprofit buys out its interest, often resyndicating with new credits.

Operating & replacement reserves

Cash cushions lenders and investors require at closing, often 6 months of expenses plus annual replacement deposits.

HPD / HDC

NYC's housing preservation department and housing development corporation: the city's main sources of subsidy loans and bonds.

485-x

NYC property tax exemption for new rental buildings that include affordable units, replacing 421-a. Requirements vary by project size.

Mandatory Inclusionary HousingMIH

NYC zoning that requires a share of permanently affordable units when an area is rezoned for more density.

Housing lottery

How NYC affordable units are leased: applications through the city's Housing Connect portal, then random selection and income checks.