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eFunding, Inc. Commercial Real Estate
Investment is a group of dedicated, highly experienced, smart working professionals who specialize in the sale of Grocery Anchored Shopping Centers, Neighborhood Shopping Centers, read more |
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- Anchored tenants: big brand-name tenants, e.g. Albertsons, Longs Drug, Walmart
that bring in lots of traffic.
- Big box: a large
free-standing building with a single tenant, e.g. Costco, Home
Depot.
- CAM: Common Area Maintenance.
- Cap rate: Return of
investment in the first year of ownership. Capitalization
rate is the ratio of 1st year Net Operating
Income over the purchase price. The higher the cap rate, the higher
the rental income.
- Cash on cash: annual percentage return of your down payment
not including appreciation. First year cash flow divided by your
initial down payment.
- Class-A office: highest
quality office in term of materials, design and architecture.
- Community Center: a
100,000-300,000 SF shopping center anchored by a grocery or home
improvement or discount store and about a dozen other stores.
- Conduit loan: also called Commercial Mortgage
Backed Securities (CMBS) loan often with the lower
rate than traditional commercial
loan but either has high pre-payment penalty (called defeasance
or Yield Maintenance Penalty) or
does not have payoff flexibility.
- Convenience Center: a
multi-tenant shopping center offering day to day services: dry
cleaner, dental office, video store.
- CPD: Car Per Day or traffic volume on a road.
- CPI: Consumer Price Index. It's often used to
calculate annual rental increase.
- Due Diligence Period:
the duration after contract is executed. Normally
15-30 days to allow
buyer to investigate about the property. Buyer can cancel
the contract during this time for any reasons.
- Estoppel Certificate: a letter provided and signed by
tenant confirming the current rent and lease terms.
- Factory Outlet: a
shopping center with factory outlets or close-out outlets
selling discounted merchandise. Often located along the
main freeway outside of a major metropolitan.
- Full-service lease: tenant pays rent that covers everything
including utilities.
- Gross income: total annual income
before any expenses.
- Gross lease: lease in which tenants just pay rent. Landlord pays tax, insurance, & maintenance.
- GLA: Gross Leaseable Area or total rentable area.
- GRM: Gross Rent Multiplier for apartment. Ratio of purchase price over annual income.
- Lifestyle center: a
shopping center designed to target upscale consumers with
attractive landscaping, outdoor seating.
- LLC: Limited Liabilities Company.
- LOI: Letter of Intent/Interest or the normally non-binding
offer letter to buy a commercial property.
- MAI appraiser: Member Appraisal Institute commercial
appraiser.
- Mall: major shopping
center (normally enclosed) with adjacent parking buildings.
- Master lease: see rent guarantee.
- Mixed Use: commercial properties with retail on 1st floor
and apartment on upper floors.
- NNN (Triple net) lease: lease in which tenants pay
a base rent plus property tax, insurance & CAM fees.
Absolute NNN lease is NNN lease that tenants also pay property
management fee.
- NOI: Net Operating Income. Annual income
after all expenses (property taxes, ins., & maintenance) except
mortgage payment.
- Outparcel: see pad site.
- Pad site: a prime-location
lot in front of a big shopping center.
- Pass Thru: see reimbursement.
- Percentage lease: lease in which tenant pays base rent plus a percentage of
tenant's revenue.
- Phase I Report: inspection report that provides an
assessment for soil/environment
contamination. It's normally required by the lender as
part of loan approval process for a commercial property.
- Phase II Report:
inspection report for soil & groundwater subsurface
investigation. This inspection is more extensive which
involves testing to see if there is any soil and water
contamination.
- Proforma income: potential, i.e. higher, income when the property is 100% leased.
- Proforma Cap rate:
potential cap rate when property is
100% leased at market rent
- Reimbursement: the share of property tax, insurance & CAM fees that a tenant has to pay the landlord besides the base rent.
- Rent guarantee: rent
paid by the seller to buyer for vacant spaces until the spaces are leased.
- SBA Loan: a government-guaranteed loan for owner-occupied
properties.
- SNDA: Subordination,
Non-disturbance, and Attornment. it's an agreement
required by lender, signed by the tenants agreeing: the new lien
in 1st position; lender as landlord in case of foreclosure;
lease as valid as long as tenant is not in default.
- TIC: Tenants In Common.
A way for small/self-directed IRA investors to own a fraction of
high-valued properties as tenants in common.
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