Global Definitions Database

Paid in capital

The cumulative drawdown amount or the aggregate amount of committed capital actually transferred to a fund or property.

Paid in Capital Multiple

This ratio gives information regarding how much of the total commitments have been drawn down.

Paid in capital to committed capital multiple

See paid in capital multiple

Par Value

The face value of an item of intangible property that has both a stated face value and a fluctuating market value; applied especially to corporate stocks.

A separate investment vehicle that enables one or more individuals or entities to pool and invest capital together alongside other investors in another vehicle, or pool of assets, with the ability to control their exposure to the underlying portfolio.

Pari-Passu

A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors, or obligations are equally managed without preference.

Parking Index

The ratio of the number of parking bays occupied in a time duration to the total space available; gives an aggregate measure of how effectively parking space is utilized.

Parking Ratio

The total rentable square footage of a property divided by the number of parking spaces; typically expressed as a ratio of spaces per 1,000 square feet.

Partial Period (for TWR purposes)

If an asset is acquired on a date other than the first day of a quarter, or sold on a date other than the last, the resulting measurement is said to be a "partial period" because the asset does not have a full quarter's worth of activity during that period. Different methodologies are used to treat partial periods within the TWR calculation.

Participated Loan

A loan arranged by a group of lenders, but unlike a syndicated loan, each lender does not have a direct contractual relationship with the Borrower and typically, there is no lead bank/manager.

Participating mortgage

an investment secured by a lien on real estate that generally consists of three parts: (1) "based interest" payments at contractually stated fixed or floating rates; (2) "contingent interest" payment where the lender is paid a percentage of property net operating income or cash flow after debt service and (3) "additional contingent interest" which is in the form of lender participation in the appreciation in value of the underlying property.

Partnership

A legal entity or formal arrangement between two or more partners to manage and operate a business, governed by a partnership agreement. The partners have direct rights to a share of the assets and the profits of the partnership. An example of a partnership is a Limited Partnership.

Party-in-Interest

Any fiduciary, legal counsel, employee of an employer-sponsored benefit plan, or service provider to the plan.

Party-in-Interest Transaction

An otherwise legitimate transaction that is prohibited under the Employee Retirement Income Security Act (ERISA).

Pass-Through Entity

A special business structure that is used to reduce the effects of double taxation.

Payment in Kind (PIK) interest/ Accrued Interest

Payment in Kind (PIK) interest accrues and capitalises periodically over the life of the debt instrument, thus increasing the underlying principal (i.e. compound interest). This is typical of development loans where there is no income at the asset.

Pension Real Estate Association (PREA)

PREA is a non-profit organization whose members are engaged in the investment of tax-exempt pension and endowment funds into real estate assets. PREA's mission is to serve its members engaged in institutional real estate investments through the sponsorship of objective forums for education, research initiatives, membership interaction, and the exchange of information. PREA is co-sponsor of the Reporting Standards. See www.prea.org.

Percentage In Point (PIP)

A unit of change in an exchange rate of a currency pair; also known as “price interest point”.

Percentage of total capital commitments invested

Total capital commitment drawn / Total capital commitments (by all investors). This expresses the amount of the capital commitment to the vehicle that is currently invested (allowing for reinvested returned capital) as a percentage of the total vehicle size in terms of total commitments.

Percentage Rent

A percentage of the tenant's total annual sales paid as rent. Percentage rent is normally paid after a predetermined sales level has been achieved. The percentage factor is then applied to all sales over the preset level (breakpoint).

Performance Allocation

A form of incentive fee compensation paid to a fund general partner in the form of an allocation of the profits of the fund, typically calculated as a set percentage of the profits of the fund after returning the investors’ capital contributions and a preferred rate of return; designed to ensure that a general partner’s interest is aligned with the limited partners’ interests; also known as “carried interest,” “carry,” and “promote”.

Performance Attribution

Analysis of the performance of an investment against its benchmark. It quantifies and explains the returns of a portfolio when compared to its appropriate benchmark. It facilitates understanding of what decisions or events lead to the performance.

Performance Bond

A type of surety bond that guarantees the contract will be completed according to its terms and conditions of the contract.

Performance fee

Also known as incentive fees, promote or carried interest, are fees charged by investment advisors, or managers, after a predetermined investment performance has been attained. Carried interest represents a re-allocation of equity and should be treated accordingly for accounting, tax or regulatory purposes.

Permitted Payment

Payments permitted as outlined in the loan documentation (e.g. amortisation, or repayments from sales in a portfolio) under the payment waterfall. These payments should be considered on a transaction by transaction basis.

Personal Property

Consists of every kind of property that is not real property; movable without damage to itself or the real estate; subdivided into “tangible personal property” and “intangible personal property”.

Persons

The average number of persons used as a denominator of a building energy intensity indicator. For example: visits to shopping centres, workstations in offices, workers in industrial, residents in multifamily housing, guests in hotels.

Phase I Environmental Site Assessment (ESA)

A study of a property and its surrounding area to determine whether there are any hazards to the environment and human health; if issues are found, it presents a potential liability for the lender and/or owner, as well as affecting the value of the property; completed prior to the closure of a real estate transaction and can be used to satisfy the requirements of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) innocent land owner defense under the All Appropriate Inquiries (AAI) rule.

Phase II Environmental Site Assessment (ESA)

A study of a property and its surrounding area to determine whether there are any hazards to the environment and human health triggered when a Phase I Environmental Site Assessment (ESA) identifies a Recognized Environmental Condition (REC) or the potential for soil contamination; determines the presence, or absence of, petroleum products or hazardous waste in the subsurface of a site and includes sampling and laboratory analysis to conﬁrm the presence of hazardous materials.

Phase III Environmental Site Assessment (ESA)

A study of a property and its surrounding area to determine whether there are any hazards to the environment and human health triggered by the confirmation of environmental contaminants discovered during a Phase II Environmental Site Assessment (ESA); determines the extent of environmental contaminants and the amount of soil and groundwater impacted; allow parties involved to develop a Remedial Action Plan (RAP) to remove environmental contaminants from the property.

Physical Obsolescence

The reduction in a property’s value due to gross mismanagement and physical neglect resulting in deferred maintenance; however, physical deterioration in itself is not a form of obsolescence that is too costly to repair.

Physical Risk

The physical, locational and integrated systems risks associated with the impact of climate change on real assets and investments. It can be event driven (acute; e.g. natural hazards, cyclones, hurricanes, or floods), or longer-term shifts in climate patterns (chronic; e.g. sea level rise or chronic heat waves). Physical risks may have financial implications for organisations, such as direct damage to assets and indirect impacts due to extreme temperature changes (e.g. increased demand of heating and/or cooling). (In line with TCFD Definition)

Placement Agent

An intermediary who raises capital for investment funds; professional placement agents are required to be registered with the securities regulatory agency in their jurisdiction, such as (in the US) the Securities and Exchange Commission (SEC).

Placement agent costs

Costs incurred when sponsors of real estate funds retain placement agents in connection with the sale of limited partnership interests in the fund. It is calculated based on investor commitments sourced by the placement agent multiplied by the placement fee rate. Placement costs are usually born by the vehicle; however it is possible that investors negotiate an offset against management fee of 100% of any placement agent cost paid by the vehicle.

Planned Liquidation Date

The specific date, as defined in the Vehicle’s Documentation, on which the Vehicle is expected to be liquidated and all residual equity returned to the investors.

Pooled Fund

See “Commingled Fund”

Pooled Trusts

A multi-investor investment Vehicle which is legally structured as a trust.

Portfolio Deal

A single transaction involving the sale of multiple buildings or companies.

Portfolio Interest Service Coverage Ratio

Projected NOI over the following four quarters as a ratio of projected interest payments on bank (not shareholder) loans over the same period. This is a portfolio metric which may not reflect precisely the varying stipulations of each loan facility of the vehicle but aims to give an indication of the vehicle’s general ability to service its debt. For the avoidance of doubt, the ISCR is calculated without reference to cash in bank.

Positive Leverage

The cost of borrowed funds is less than the free and clear internal rate of return (IRR) on the property.

Potential Gross Income (PGI)

The sum of potential gross rent and miscellaneous income; the income from rent and other sources that a property could generate with normal management, before allowing for vacancies, collection losses, and normal operating expenses.

Potential Gross Rent

The total rent a property would produce if 100 percent occupied at market rent.

Power Center

Typically 250,000 to 600,000 square feet with three or more anchor stores that occupy 75-90% of the total area. Anchor stores are "category-dominant" home improvement stores, discount department stores, warehouse clubs, and off price stores.

Predevelopment

Predevelopment is the initial stage of development. It generally includes activities pertaining to the preparation of a site or land parcel and infrastructure in anticipation of the development construction for specific usage including, but not limited to, acquisition of title or options to land, assessment of its surroundings, initial conceptual designs of the intended building, preparation for obtaining building rights and/or application for relevant governmental permits, resulting in the contractual development.

Preferred Debt/Loan/Mortgage

A financial obligation that has priority over other types of debt.

Preferred Return

A profit distribution preference whereby profits, either from operations, sale, or refinance, are distributed to one class of equity before another until a certain rate of return on the initial investment is reached.

Prepayment

When a loan is repaid or partially repaid prior to its maturity date.

Prepayment Fees

A penalty fee which may be charged if a loan is repaid or partially repaid prior to maturity (Prepayment), designed to protect the lender against loss of income should a loan be repaid quickly. The amount or calculation will be specified in the loan agreement. The penalty is usually based on a percentage of the repaid part of the loan.

Prepayment Penalty

Fees paid by borrowers for the privilege of retiring a loan early. Such charge is provided for in the debt instrument and normally is expressed as a percentage of the loan, an additional interest charge, or a flat fee.

Price Interest Point (PIP)

A unit of change in an exchange rate of a currency pair; also known as “percentage in point”.

Pricing Risk

The risk of a decline in the value of a security or an investment portfolio excluding a downturn in the market.

Primary Trade Area

A geographic area containing the customers of a particular firm or group of firms for specific goods or services; encompasses 50 to 80 percent of a store's customers; the area closest to the store and possesses the highest density of customers to population and the highest per capita sales; also known as a “geographic core”.

Prime Space

Typically refers to first-generation space that is available for lease.

Prime Tenant

The major tenant in a building, or the major or anchor tenant in a shopping center.

Principal Market

The market in which the reporting entity normally would enter into a transaction to sell the asset or to transfer the liability; the market in which the reporting entity normally exits its leveraged equity positions.

Private Placement

A private placement is the placing of institutional debt with a non-bank investor, typically an insurance company or pension fund. This provides the ability of non-bank lenders to grant long-term debt finance which may not otherwise be available in the loan or bond markets.

Private Placement Memorandum (PPM)

Private Place Memorandum (“PPM”) – A document that outlines the terms of the real estate investment vehicle to be offered in private placements. The document resembles a business plan in content and structure which includes but is not limited to a formal description of the investment opportunity, fees, capital structure, historical track record of the investment advisor, risk factors and a summary of the management team. Note that specific contents may be dictated by local jurisdictions.

Professional services costs

Costs charged at vehicle level in connection with third party services such as accounting, secretarial, legal, tax and other advisory costs, which do not fall into another specific cost category such as formation costs, valuation costs, etc.

Profit

Total income minus total expenses.

Programmatic Joint Venture

A legal entity to create a series of investments between two investors. It creates the infrastructure under which the investors can continue to invest without having to negotiate and vet different investors for each investment.

Prohibited Transaction

A certain transaction between a retirement plan and a disqualified person that is prohibited by law; two general types of transactions are prohibited: transactions with parties in interest and fiduciary self-dealing transactions; certain exemptions apply and can be statutory or granted by the US Department of Labor either on a class or individual basis.

Prohibited Transaction Safe Harbor

Under Internal Revenue Code (IRC) Section 857(b)(6)(C) safe harbor provides that the term “prohibited transaction” does not include a sale of property that is a real estate asset if certain requirements are met.

Project management costs

Costs charged by third parties for guiding the design, approval, and execution of a renovation project, as well as construction process of a development project. These costs may be expensed or capitalised at the property level.

Project management fee (excl. development activities)

A fee charged to the vehicle by the investment manager for oversight of a significant renovation project or large maintenance works.

Promote

A form of incentive fee compensation paid to a fund general partner in the form of an allocation of the profits of the fund, typically calculated as a set percentage of the profits of the fund after returning the investors’ capital contributions and a preferred rate of return; designed to ensure that a general partner’s interest is aligned with the limited partners’ interests; also known as “carried interest,” “carry,” and “performance allocation”.

Property

A real estate asset.

Property acquisition costs

Direct costs related to a specific property acquisition such as transfer tax, legal costs, due diligence or other closing costs. These exclude costs of running an acquisition program such as general and administrative costs, costs incurred in analysing proposals that are later on rejected, joint-venture organizational costs or fees paid to the manager for execution of the deal.

Property acquisition fee

Fee charged by investment advisors, or managers, associated with the closing of a new investment. The fee compensates the real estate investment advisor, or manager, for services rendered in an investment acquisition, including sourcing, negotiating and closing the deal.

Property Company

A legal entity, often referenced as PropCo, formed with the sole purpose of owning real estate assets. This is an example of a SPV.

Property Condition Assessment Report

An evaluation of a commercial real estate asset based on a thorough inspection, including all improvements and all the systems of each building on the property; purpose of which is to observe and report on the physical condition of the subject property and to provide professional recommendations regarding future issues including financial risk or liability to the client.

Property Conversion

The process or act of changing a property type to a different property type.

Property disposition costs

Also known as disposal costs, they represent the costs of selling an investment property. Disposition costs are typically charged to the seller, and consist of legal fees, title fees and insurance, disposition fees, and broker commissions. Disposition costs include only direct costs related to a property-specific disposal and do not include costs of running an disposition program such as general and administrative costs, costs incurred in analysing proposals that are rejected, joint-venture organization costs or fees paid to the manager for execution of the deal.

Property disposition fee

Fee typically charged by investment advisors, or managers, for services rendered in an investment disposition, including sales marketing, negotiating and closing of the deal.

Property insurance costs

Expenses related to insurance coverage which is often required by lenders which compensates a property owner and/or lender should the property be damaged by fire, windstorm or other peril.

Property Level Return

A return based upon the property equity which consists of primarily cash invested in a property (at acquisition plus subsequent capitalized expenditures) plus recognized changes in value plus principal payments on debt.

Property Loan to Value (LTV)

Nominal value of debt, or book value, which includes third party facilities or credit lines (and any drawn equity bridge), over total fair value of property/ investment.

Property Management Company

A entity specialised in managing the day-to-day operations of real estate properties for the owners of real estate assets. The entity may be managed directly by the real estate owner or by an asset manager hired by the owner. Services provided can include management, leasing and / or accounting.

Property management costs

Costs charged by third parties for the administration, technical and commercial management of real estate. A property management engagement typically involves the managing of property that is owned by another party or entity. This includes property advisory services.

Property Management Fee

Fee charged by investment advisors, or managers, for the administration, technical and commercial management of real estate. A property management engagement typically involves the managing of property that is owned by another party or entity. This includes property advisory services.

Property Manager

The day-to-day management of individual real estate properties within a portfolio. Typical activities of a property manager include the invoicing and collection of rents and building maintenance. The property management responsibility can be either outsourced or insourced.

Property Protection Loan

A loan that is made to finance payments which are required to 'protect' either a specific asset (Property) or the Lender's security over that asset. This may include paying insurance policies, for example.

Property Stacking Plan

A visual representation of a commercial structure that shows the tenants on each floor, the square footage of each floor, when each tenant’s lease will expire, and other pertinent information.

Property-related taxes

Taxes assessed against real property, usually by a country or municipal taxing authority but sometimes also by special purpose districts and agencies, in proportion to the assessed value of the property. Franchise taxes and excise taxes are already included in the NAV, and thus should be excluded.

Prospective Value

A value opinion effective as of a specified future date; frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy.

Prospectus

A formal document submitted to the Securities and Exchange Commission (SEC) by a company that wishes to market a debt or equity offering to the market.

Protecting Americans from Tax Hikes Act of 2015 (PATH Act)

A US tax law created to protect taxpayers against fraud and permanently extend certain expiring tax laws; makes significant changes to provisions of the Internal Revenue Code (IRC) of 1986, as amended with respect to real estate investment trusts and the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), and permanently extends some provisions that have been the subject of frequent extender legislation in prior years.

Prudent Man Rule

The standard to which a fiduciary is held accountable under the Employee Retirement Income Security Act of 1974 (ERISA): "Act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims".

Country-by-Country Guide

Due Diligence Questionnaire (DDQ)

Standard Data Delivery Sheet (SDDS)