Glossary

Investment & Financial Terms

Acquisition Fee: A fee charged by sponsors (typically 1-2% of purchase price) for identifying, evaluating, and acquiring a property.
Assets Under Management (AUM): The total market value of assets that an investment company manages on behalf of investors.
Cap Rate (Capitalization Rate): The ratio between a property's net operating income and its market value or acquisition cost, used to estimate potential return on investment.
Cap Rate Compression: The trend of capitalization rates decreasing over time, typically indicating rising property values relative to their income.
Cash on Cash Return: The ratio of annual cash flow to the total cash invested, measuring the cash income earned on cash invested in a property.
Cost Segregation: An analysis that identifies and reclassifies building components to accelerate depreciation and reduce taxes.
Debt Origination: The process of creating a new loan for real estate acquisition or refinancing.
EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization - a measure used to evaluate a company's operating performance.
Equity Multiple: The total cash distributions received from an investment divided by the total equity invested.
Internal Rate of Return (IRR): A metric used to estimate the profitability of investments, considering the time value of money.
Net Operating Income (NOI): A property's gross operating income minus operating expenses.
Preferred Return: A minimum return (often 7-8%) that limited partners receive before the general partner participates in profits.
Refinancing: The process of replacing existing debt with new debt, often with better terms or to extract equity.
Waterfall Distribution: A method of distributing returns to different classes of investors according to a predetermined formula.

Property Types & Classifications

Class A Properties: Modern facilities with premium construction, high ceilings (32+ feet), and prime locations.
Class B Properties: Well-maintained but older properties (10-20 years) with good functionality but dated systems.
Class C Properties: Older properties (20+ years) often requiring significant upgrades.
Cold Storage Facility: Temperature-controlled warehouse for perishable goods, featuring specialized cooling systems.
Data Center: Facility designed to house computer systems with robust power, cooling, and security infrastructure.
Distribution Center: Facility optimized for receiving, storing, and shipping products efficiently.
Flex Space: Industrial property combining office, manufacturing, warehouse, or R&D space.
Heavy Manufacturing Facility: Property designed for large-scale production with reinforced floors and heavy power capacity.
Last-Mile Facility: Smaller warehouse (50,000-100,000 SF) located near urban centers for rapid delivery.
Light Assembly Facility: Property designed for smaller-scale production with standard power service.
Manufacturing Facility: Property designed for production and assembly of goods.
R&D Facility: Space designed for research and development activities with specialized infrastructure.

Property Features & Specifications

Clear Height: Usable height from floor to lowest hanging ceiling element.
Cross-Dock Configuration: Facility design with loading docks on opposite sides for efficient transfer.
Dock Door: Specialized entrance designed for loading and unloading trucks.
HVAC: Heating, Ventilation, and Air Conditioning systems.
Loading Dock: Platform designed for efficient loading/unloading of trucks.
Office Build-Out: The portion of an industrial building converted to office space.
Power Infrastructure: Electrical systems supporting facility operations, measured in amperage capacity.
Trailer Storage: Dedicated space for parking semi-trailers.

Market & Industry Terms

Absorption: The amount of space leased in a market during a specific period.
Market Equilibrium: Balance between supply and demand in a real estate market.
Net Absorption: The change in occupied space from one period to another.
Occupancy Rate: The percentage of leased space in a property or market.
Speculative Development: Construction started without secured tenants.
Vacancy Rate: The percentage of unoccupied space in a property or market.

Legal & Structure Terms

506(b) Offering: A private placement exempt from SEC registration, limiting advertising.
506(c) Offering: A private placement allowing general solicitation but requiring verified accredited investors.
Accredited Investor: Individual with $200,000+ annual income or $1 million net worth excluding primary residence.
General Partner (GP): The sponsor/manager responsible for executing the business plan.
Joint Venture Partner: Entity collaborating in property ownership or development.
Limited Partner (LP): Passive investor providing capital without management involvement.
Operating Agreement: Legal document outlining the terms of property ownership and management.
Private Placement: Offering of securities to a limited number of investors.

Lease & Operations Terms

Common Area Maintenance (CAM): Expenses for maintaining shared property areas.
Lease Rate: The rental rate per square foot per year.
Net Lease: Lease where tenant pays some or all property expenses.
Operating Expense: Costs associated with property operation and maintenance.
Operating Expense Ratio: Operating expenses divided by gross operating income.
Tenant Improvement Allowance: Funds provided by landlord for space improvements.
Triple Net Lease (NNN): Lease where tenant pays all property expenses including taxes, insurance, and maintenance.

Investment Strategy Terms

Core Investment: Low-risk strategy focusing on stable, fully-leased properties.
Core Plus Investment: Moderate-risk strategy with potential for modest improvements.
Development: Strategy involving new property construction.
Opportunistic Investment: Highest-risk strategy involving major property improvements.
Value-Add: Strategy focused on improving properties to increase value and income.

Market Analysis Terms

Comparable Sales ("Comps"): Similar properties recently sold in the market.
Market Analysis: Study of supply, demand, and pricing trends in a specific area.
Price Per Square Foot: Property price divided by its total square footage.
Replacement Cost: Estimated cost to construct a similar property today.
Submarket: Distinct section of a larger real estate market.

Tax & Financial Planning Terms

1031 Exchange: Tax-deferred exchange of similar investment properties.
Accelerated Depreciation: Method allowing faster write-off of property components.
Cost Basis: Original value of property for tax purposes.
Depreciation: Tax deduction for property value decrease over time.
Real Estate Professional Status: Tax designation allowing unlimited passive loss deductions.

Environmental & Sustainability Terms

Environmental Assessment: Study of potential property contamination.
Green Building: Property designed for environmental sustainability.
LEED Certification: Recognition of building environmental performance.
Sustainability Features: Elements reducing environmental impact and operating costs.

Technology & Infrastructure Terms

Automated Storage: Systems using robotics for inventory management.
Building Management System: Technology controlling facility operations.
Fiber Connectivity: High-speed internet infrastructure.
Smart Building Features: Technology integration for improved efficiency.