GLOSSARY OF TERMS - E

Calculated by taking revenues less expenses (excluding interest, taxes, depreciation and amortization). EBITDA reflects profitability, not cash flow. EBITDA leaves out the cash required to fund working capital and the replacement of old equipment, which can be significant. It is important to look at other measurements to fully understand investment performance.

Right to use the land of another for a particular purpose.

Acronym for Exchange Accommodation Titleholder.

Any outside constraint which limits the development of a property. Examples are oversupply of competing vacant space, failure of the market to support a rental rate sufficient to justify construction costs, or lack of available financing. Also called Development Constraint

The reduction in a property's value due to external circumstances such as legislation or changes in nearby property use.

Gross income of a property less an allowance for vacancy.

Net rent generated, after adjusting for tenant improvements and other capital costs, and for lease commissions and other sales expenses.

Computed in the same manner as Effective Rent with the rental amount reduced by operating expenses included in the quoted lease rental rate. Effective Rent is representative of the tenant's actual cost. Effective Net Rent is representative of the landlord's return to the capital investment in the property.

Rental income from a lease over the life of the lease and expressed as an annual dollar. Rent less any abated rent and allowances, divided by the term of the lease. Sometimes calculated with the time value of money factored in, call Equivalent Level Rent or Level Rent.

A term concerning a right to go out or go across the land (public or private) of another.

The right of a governmental entity to acquire property for public purpose by the exercise of condemnation powers. Under the Constitution, property may not be so acquired without the payment of appropriate compensation to the owner.

Uses, densities, heights, setbacks, and other development rights which are allowable without further governmental action or conditional approval. Does not constitute a building permit.

A report of the probable effect of a development on the surrounding area (environment). The report is prepared by an independent company to federal, state, or local guide lines.

The level (or maximum amount) up to which the landlord will pay certain operating expenses. Amounts above the stop are the responsibility of the tenant.

The right of the government to acquire privately owned real estate for public use.

The right to develop or improve a property with government approvals for zoning, density, utility installations, occupancy, use and street permits.

When a property is considered leased at market without excessive leasing concessions. Can also be side of markets when demand for space and supply are equal (less nominal space for normal turnover).

Rent in addition to the base rent. Examples are: fixed increases on specific dates and CPI adjustments. Pass-throughs are not escalation rents but rather recoveries of expenses that don't result in an increase in cash flow to the owner. Also called Bumps.

Document executed by a tenant where tenant reaffirms that the existing lease is in full force and effect and that no defaults exist unless noted. Buyer and lender require making sure leases are a binding document as represented.

A listing contract under which the owner appoints real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms for a commission. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker.

A listing contract under which the owner appoints real estate broker as his or her exclusive agent for a designated period of time, to sell the property, on the owner's stated terms and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner or another broker.

The estimated or actual cap rate of a property on date of disposition or sale. Also called Terminal Cap Rate.

The maximum amount of building operating expenses which will be borne by the owner prior to passing additional expenses through to the tenant.

Way in which investor plans to liquidate all or part of their investment.

Incurable - caused by negative factors not on the subject property such as environmental, social or economic forces.