Global Definitions Database

Make-Whole Margin

Payment made as compensation to lender for unpaid interest arising due to early payment of outstanding loan principal, refers to the make-whole provision.

A provision which allows a borrower to repay a loan early, without lender consent, but subject to certain payments being made to the lender to compensate them for the loss of interest which would have otherwise been payable until the final maturity date of the loan.

Management Fee

See Asset Management Fee.

Management Risk

The risk associated with decisions made by a company’s managers in relation to the overall interest of shareholders and the company at large.

Mandate

A mandate is an authorization or directive to carry out a policy or course of action; for example, an investment manager could receive a mandate from an investor to use an allocation of funds for a specific purpose or strategy.

Mandatory disclosure requirements

Legally binding reporting requirements for listed or non-listed companies. In the EU, these requirements include the European Accounts Modernisation Directive, which is interpreted in different ways by different countries.

Manufacturing facility (industrial)

Buildings with 10-16 foot ceilings or sufficient height for overhead cranes. Provides floor height and dock height loading.

Margin

The percentage rate of interest charged by lenders over the relevant basis rate reflecting the credit quality of the collateral.

Mark-to-Market

Revaluing the price of an asset or liability to reflect current market value.

Market Analysis

A study of the demand for and supply of a property type and the specific market area for that property type.

Market Approach (valuation technique)

The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

Market Area

The geographic area from which a majority of demand is derived and the majority of competition is located.

Market Cycle

The period between the two latest highs or lows of a common benchmark; refers to trends or patterns that emerge during different business environments; often has four distinct phases and at different stages of a full market cycle, different asset classes will respond to market forces differently.

Market Delineation

The process of defining the geographic extent of the demand for a specific property.

Market Interest Rate

The prevailing rate of interest paid on deposits and other investments, determined by the interaction of the supply of and demand for funds in the money market.

Market Participants

Those buyers and sellers transacting business in the principal market for an asset or liability; they are not related parties, have a reasonable understanding of the asset or liability, are capable of entering into a transaction to buy or sell the item, and are motivated to do so.

Market Portfolio

A theoretical portfolio consisting of all assets available to investors, with each asset held in proportion to its market value relative to the total market value of all assets.

Market Rent

The rental income that a property most likely would command in the open market, indicated by the current rents asked and paid for comparable space.

Market Risk

The risk inherent to the entire market that cannot be mitigated or reduced through diversification; also known as “non-diversifiable risk,” “systematic risk,” or “undiversifiable risk”.

Market Risk Premium

A measure of the extra return, or risk premium, that investors demand to bear risk; the difference between the expected return on a market portfolio and the risk-free rate and is equal to the slope of the security market line (SML).

Market Segmentation

The process of dividing a market of potential customers into groups, or segments, based on different characteristics; segments created are composed of consumers who will respond similarly to marketing strategies and who share traits such as similar interests, needs, or locations.

Market Share

The percentage of total sales in a retail category that each competing outlet is expected to capture based on current patterns and trends in the market.

Market Study

A forecast of future demand for a certain type of real estate project that includes an estimate of the square footage that can be absorbed and the rents that can be charged.

Market Vacancy

Current vacancy rate for the market for the same property type.

Market Value

The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. (IVS, Eighth Edition, 2007, Standard 1.4.1 pg. 79

Marketability Analysis

A study of how a specific property is expected to perform as it competes for the available market demand in a specific market.

Marketing costs

See definition vehicle formation costs.

Master Lease

A primary lease that controls subsequent leases and may cover more property than subsequent leases.

Master Vehicle

A Master Vehicle, also known as Primary Vehicle, is the primary underlying investment vehicle which pools capital from individuals or entities, including Feeder Vehicle, to invest in a portfolio of assets.

Material Adverse Effect

This is used as a qualifier to certain representations and undertakings as well as triggering the material adverse change Event of Default. This definition should be considered on a case by case basis and is frequently the subject of negotiation.

Maturity Date

The date when the Total Principal Balance comes due.

Maximum LTV

The consolidated total external leverage at the vehicle level as a percentage of the GAV of the vehicle. Depending on the accounting standards, a manager will mark the debt to market, with any gain or loss being reflected in the vehicle’s profit & loss account. Investors’ subscriptions in the form of loans (e.g., for tax purposes) should be excluded from the calculation

Mean

A mathematical representation of the typical value of a series of numbers, computed as the sum of all the numbers in the series divided by the count of all numbers in the series; also known as “arithmetic mean” or “average”.

Mean-Variance Analysis

The process of weighing risk (i.e., variance) against expected return; a component of modern portfolio theory (MPT), which assumes that investors make rational decisions and expect a higher return for increased risk.

Median Income

The middle point of area incomes; divides the income distribution range for a given area in half, one with residents having incomes above the median, and the other with residents having incomes below the median.

Metropolitan Statistical Area (MSA)

Generally, the area in and around a major city; the Office of Management and Budget (OMB) defines an MSA as having one of the following characteristics: a city with a population of at least 50,000, or an urbanized area with a population of at least 50,000 with a total metropolitan population of 100,000.

Mezzanine Debt/ Loan/ Mortgage

The capital structure layer of funding between common equity and secured borrowing, usually subordinated (to the senior debt), and secured not by a lien on property, but secured by the ownership of equity interests of a Borrower.

Minimum Capital Requirement (MCR)

The minimum level of regulatory capital that insurance companies are required to maintain under Solvency II.

Minimum Rent

The smallest amount of rent due from a tenant with a variable rental rate, such as a rent calculated as a certain percentage of gross sales, with a minimum rent of a certain amount per month.

Mixed-Asset Portfolio

An investment portfolio containing a well-diversified blend of asset types.

Mixed-Use

A building or project that provides more than one use, such as office/retail or retail/residential.

Modern Portfolio Theory (MPT)

An investment theory put forth by Harry Markowitz based on the idea that risk-averse investors can construct portfolios to optimize or maximize expected return based on a given level of market risk, emphasizing that risk is an inherent part of higher reward; MPT suggests that it is possible to construct an efficient frontier of optimal portfolios, offering the maximum possible expected return for a given level of risk.

Modified Dietz

The single period rate of return formula that is widely used throughout the financial industry to combine into TWRs. It allows the placement of sub period boundaries at dates when valuation data will be available e.g., quarterly. Within these sub-periods, if a cash flow occurs, an implicit constant rate of return before and after is effectively assumed by time-weighting the cash flows in the denominator by the fraction of the sub-period duration that the cash flows affect the portfolio.

Money-Weighted Rate of Return

A measure of investment performance calculated by finding the rate of return that will set the present values of all cash flows equal to the value of the initial investment; also known as “dollar-weighted rate of return” or “internal rate of return”.

Monte Carlo Simulation

A computerized mathematical technique that allows an individual to account for risk in quantitative analysis and decision making; furnishes the decision-maker with a range of possible outcomes and the probabilities they will occur for any choice of action; performs risk analysis by building models of possible results by substituting a range of values—a probability distribution—for any factor that has inherent uncertainty and establish the odds for a variety of outcomes.

Moral Hazard

The risk that a party has not entered into a contract in good faith or has provided misleading information about its assets, liabilities, or credit capacity; occurs when one party in a transaction has the opportunity to assume additional risks that negatively affect the other party, with such a decision based not on what is considered right, but what provides the highest level of benefit, hence the reference to morality.

Mortgage Company

A legal entity which conducts business of providing funding to borrowers in order to facilitate additional equity needs in order to acquire residential or commercial real property. The funding is typically collateralized by the real property that is acquired.

Mortgage REIT

A REIT that makes or owns loans and other obligations that are secured by real estate collateral.

Mortgagee

A person or firm to whom property is conveyed as security for a loan made by such person or firm (a creditor).

Mortgagor

One who borrows money, giving as security a mortgage or deed of trust on real property (a debtor).

Most Favored Nations Clause (MFN)

A contract provision by which a fund sponsor promises to provide an investor with terms no less favorable than the terms provided to any other investor in the fund; entitle an investor to elect to have any more-favorable right or privilege granted to another investor by the fund apply to it; clause subject to numerous exceptions, qualifications and exclusions to rights.

Country-by-Country Guide

Due Diligence Questionnaire (DDQ)

Standard Data Delivery Sheet (SDDS)