Accrued interest refers to the interest that has been earned but not yet paid or received. It is often reported during interim periods between scheduled interest payments, and it accumulates from the date of issuance or the time of last interest payment.
Adjusted Basis refers to the net cost of an asset after adjusting for various factors such as improvements, depreciation, and damage, and is primarily used for calculating capital gains or losses upon the sale of the asset.
The Amount of One per Period, also known as the Compound Amount of One per Period, is a financial concept used to determine the future value of a series of regular investments or payments. It allows investors and financial planners to project the growth of periodic contributions over time, considering the effect of compounded interest.
An annuity is a series of equal, or nearly equal, periodic payments or receipts. These payments could be for loans, investments, or pensions, providing a predictable stream of income over a specified period.
Capital refers to the financial assets or their financial value, as well as tangible factors of production used to create value. It is a significant part of the assets owned by an entity and is used to fund long-term operations and investments.
The term 'Cash Out' refers to the process of completely liquidating an asset, enabling the owner to receive its total monetary value in cash.
Commercial Mortgage-Backed Securities (CMBS) are a type of mortgage-backed security that is secured by mortgages on commercial properties rather than residential real estate.
Compound Interest refers to the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is calculated only on the principal amount, compound interest grows at an accelerating rate due to its compounding effect.
A debenture is a type of debt instrument that is not secured by physical assets or collateral. It relies on the creditworthiness and reputation of the issuer for backing.
A disbursement refers to the act of paying out money, often seen in contexts like loan origination or the dissolution of investment ventures.
Disintermediation refers to the process where financial intermediaries, such as banks or savings and loan associations, are bypassed, and funds are directly invested into other assets to seek higher yields.
The Effective Interest Rate (EIR) represents the true rate of return on a loan or investment, factoring in all associated financing expenses beyond the nominal interest rate.
Equity participation entails property owners selling an interest in their property to an investor, who, in return, provides capital or financial support. It enables property owners to unlock capital without relinquishing full control.
A financial institution is a company whose 'product' involves money, such as making loans, investments, and accepting deposits. These institutions are fundamental to the functioning of the financial system and economy.
A Financial Intermediary is an institution that acts as a middleman between savers and borrowers, collecting deposits and channeling them into investments such as loans and securities.
A forced sale, also known as a distress sale, occurs when the owner of a property is compelled to sell, often at a price lower than the market value, typically due to urgent circumstances such as financial distress, legal judgments, or repossession.
Illiquidity refers to the inability to quickly convert an asset into cash without a significant loss in value. Real estate is considered an illiquid investment because of the time, effort, and costs required to sell properties.
A level-payment income stream refers to a series of equal payments made at regular intervals over a specific period of time. It is typically associated with annuities, mortgages, or other financial instruments.
A merger is the fusion of two or more interests, such as businesses or investments, resulting in a single, larger entity.
The money market involves the interaction of buyers and sellers of short-term (one year or less) debt instruments, providing liquidity for major financial institutions and companies. Examples include Treasury bills, commercial paper, and certificates of deposit.
An Ordinary Annuity is a series of equal payments made at the end of consecutive periods, commonly used in financial planning, loan repayments, and retirement accounts.
Prepayment risk is the probability that a fixed-income security will be retired before its term ends, typically caused by a borrower's provision to prepay the loan balance at any time without penalty, impacting the expected returns for investors.
Pro rata is a Latin term meaning 'in proportion' or 'according to the rate.' In a real estate context, it refers to the equitable distribution of costs, profits, or liabilities based on the share of ownership or participation.
The rate of interest, also known as the interest rate, is the proportion of a loan that is charged as interest to the borrower. It is a crucial factor in real estate financing and investment.
A Real Estate Investment Trust (REIT) is an investment vehicle that allows investors to invest in real estate or mortgages without directly owning the property. REITs avoid double taxation by distributing most of their income to shareholders and complying with specific IRS requirements.
A Real Estate Mutual Fund is a regulated investment vehicle focused on investing in securities offered by real estate-related companies, including REITs, real estate development and management firms, and homebuilders.
Regulation D is a regulation of the Securities and Exchange Commission (SEC) that sets forth specific conditions under which a private offering is exempt from the registration requirements for a public offering.
The reinvestment rate is the interest rate an investor is assumed to be able to earn on intermediate cash flows in the projection of a terminal value.
Toxic assets refer to financial assets that have lost most or all of their value and are difficult or impossible to sell due to a lack of functioning market. These assets can significantly harm the balance sheets of institutions that hold them.
Venture capital (VC) is a form of private equity and financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.
