Debt capital refers to money loaned on a long-term basis that is used to finance an investment, including real estate. Unlike equity capital, debt capital must be repaid to the lenders with interest.
A DOWNREIT is an arrangement between the owner of real property and a Real Estate Investment Trust (REIT) aimed at providing tax advantages to the property owner. The result is effectively a partnership with ownership units held by those who contribute properties to the venture. The DOWNREIT owns real estate either outright or as part of a limited partnership.
An entity is the legal form under which property is owned, impacting the benefits and risks associated with owning real estate. It can vary widely and includes structures like corporations, individual ownership, joint ventures, limited liability companies (LLCs), limited partnerships, partnerships, and real estate investment trusts (REITs).
Financial transparency in real estate involves the full disclosure and public reporting of financial activities, allowing outsiders to accurately estimate risk and forecast income from investments.
Funds From Operations (FFO) is a measure of the profitability of a Real Estate Investment Trust (REIT) derived from net income adjusted for non-cash items such as depreciation and amortization. It is widely regarded as a more accurate indicator of a REIT's performance than GAAP net income.
The National Association of Real Estate Investment Trusts (NAREIT) is a trade association that represents the interests of real estate investment trusts (REITs) and publicly traded real estate companies. NAREIT provides data on REIT performance, industry definitions, and serves as an advocate for the real estate investment industry.
An OPCO/PROPCO Deal is a financial arrangement where a parent company creates a subsidiary property company to manage real estate assets. This deal structure allows the operating company to reduce debt exposure, improve credit ratings, and potentially avoid double taxation when the property company is set up as a REIT.
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.
