Global Definitions Database

Access, learn and discover all terms related to the non-listed real estate sector.

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A

Accounting Standards Update (ASU)

A document issued by the Financial Accounting Standards Board (FASB) in the United States, which details accounting standards and guidance on selected accounting policies set out by FASB. See www.fasb.org View full definition

Asset management fee

Fee typically charged by investment advisors, or managers, for their services regarding the management of the vehicle’s assets. Asset management fees generally cover services such as: • strategic input and production of asset level business plans; • management of assets including refurbishment; • appointment of third party service providers at asset level; • reporting activities at asset level. Occasionally, asset management fee and fund management fee are combined. View full definition

Audit costs

Costs associated with annual external audit engagements and other audit services provided (both paid to independent third party firms or manager/advisor). View full definition

B

Bank / loan / overdraft / debt interest

See definition Bank Charges. View full definition

Bank Charges

Costs charged by a financial institution to manage and maintain the cash accounts of the vehicle, or in relation to overdrawing an account. View full definition

C

Carried interest

A re-allocation of profits from the investor's capital account to the investment manager capital account based on the ability of the latter party to outperform a certain predetermined benchmark. Carried interest is structured as a re-allocation of equity within the capital accounts rather than a straight charge to the investment manager generally due to tax purposes. View full definition

Cash management fee third party

See definition Bank charges. View full definition

Claw back

A reduction to previously received or allocated / accrued performance fees or carried interest due to investment performance falling below a predetermined level or benchmark, and whereby the investment manager may be obligated to return a portion / all of its previously received performance fee or carried interest payments. View full definition

Commitment fees

A commitment fee is a charge to investors on undrawn committed capital for the duration of the commitment period. This is seen to be part of the fund management fee. View full definition

Custodian costs

Also known as depository costs, these are charged by a fiduciary entity entrusted with holding and safeguarding securities or assets, deposit transactions and keeping records for institutional clients. View full definition

D

Dead deal costs

Costs usually charged by third parties concerning work undertaken for acquisition/disposition projects which do not ultimately close. Such costs cannot be capitalised, and thus must be expensed. Services undertaken by the advisor/manager are passed through as an expense. View full definition

Debt arrangement costs

Debt arrangement costs paid to a lender, broker, or other third party, in connection with obtaining debt financing for asset purchase or financing at the vehicle or other special purpose entity level of the holding structure. View full definition

Debt arrangement fee

Also known as financing fee, this represents a fee charged by the investment manager for services rendered in arranging debt financing for asset purchases or financing at the vehicle or other special purpose entity level of the holding structure. This fee is separate from any arrangement costs paid to the debt provider or external party such as a broker. View full definition

Deferred taxes

Tax on taxable/deductible temporary differences between the tax value and the book value of assets/liabilities of the vehicle. The main source of deferred taxes are the tax on capital gains payable at the time a property is sold. View full definition

Development fee

A fee charged to the vehicle by the investment manager for the construction processes of a development project. These costs may be expensed or capitalised at the property level. View full definition

Disposition

Sale of an interest in an asset in exchange for consideration received. View full definition

Distribution fee

Fees charged in conjunction with operating or return of capital cash distributions to investors. View full definition

E

Exempt fees and costs

Specific fees and costs which are not included in the TER and REER calculations. See example of exempt fees and costs in the fee and expense metrics module. View full definition

External leasing commissions

Commissions charged by the listing agent/broker and tenant representative after a new lease or a renewal lease is signed. These include marketing of vacant space. Commission ranges vary and may depend on the market and/or the value of the transaction. View full definition

F

Fee reductions/rebates

A fee reduction occurs when an investor is charged a management fee lower than the one specified in the vehicle terms (e.g. in the PPM or LPA). However, if the investor is charged the same management fee as the one specified in the fund terms, but once that fee is received by the management company, the investor receives a portion of its fee back as a rebate, this is considered a Fee Rebate. View full definition

Fee waivers

Fee waivers represent a portion of the management fee that is waived and can be used by the investment manager to satisfy a capital call. The waived management fee process and potential distribution of the amount waived to be used in a capital call are generally detailed in the vehicle documentation. The amount waived and the amount used for the capital calls for the year are disclosed in financial statement footnotes. View full definition

Financing fee

See definition Debt Arrangement Fee View full definition

Fund management fee

Also known as Investment Management or Investment Advisory fees, Fund Management fees are typically charged by investment advisors, or managers, for their services regarding the management of the vehicle. They generally cover services such as: • appointment of third party service providers • reporting activities to investors • cash management and dividend payment • managing the vehicle level structure • arrangement of financing • fund administration • investor relations Occasionally, fund management fee and asset management fee are combined. View full definition

I

Internal leasing commissions

Commissions charged by investment advisors, or managers, after a new lease or a renewal lease is signed. These include marketing of vacant space. Commission ranges vary and may depend on the market and/or the value of the transaction. View full definition

L

Legal fees (Not property specific)

See definition professional service costs. View full definition

M

Marketing costs

See definition vehicle formation costs. View full definition

N

National Council of Real Estate Investment Fiduciaries (NCREIF)

NCREIF is a US based not-for-profit association of institutional real estate professionals which includes investment managers, plan sponsors, academicians, consultants, appraisers, certified public accountants (CPAs) and other service providers who share a common interest in the industry of institutional real estate investment. NCREIF is a co-sponsor of the Reporting Standards. See www.ncreif.org. View full definition

O

Other/misc. vehicle costs

Small or infrequent vehicle level costs that are not assigned to another cost category but are classified as a group. These may include other administration costs, statutory costs, etc. View full definition

P

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. View full definition

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. View full definition

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. View full definition

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. View full definition

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. View full definition

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. View full definition

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. View full definition

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. View full definition

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. View full definition

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. View full definition

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. View full definition

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. View full definition

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. View full definition

R

Real Estate Expense Ratio (REER)

REER represents property fees and costs as a percentage of time weighted average INREV GAV. View full definition

Redemption fees

One-time fee paid to the manager when investors redeem from the fund, calculated as redemption amount, NAV or NAV per share, multiplied by redemption fee rate. This fee is mostly seen in open-ended funds. If the amount is paid to the fund, then it is not included in TGER. View full definition

Regulatory / Statutory costs

See definition other/misc. vehicle costs. View full definition

Related parties

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence or joint control over the other party in making financial and operating decisions. (source: IAS 24). View full definition

Replacement Costs

Expenditures that provides for the periodic restoration of building components that wear out more rapidly than the building itself and must be replaced during the building's economic life. View full definition

S

Securities handling charges

Handling fees charged by third-parties on certain real estate security transactions. View full definition

Set-up costs

See Vehicle formation costs View full definition

Staff costs

Costs incurred by the owner of an investment property for the staff required to manage the property. Staff costs may be covered by the property management fees. Staff costs required to run the day-to-day management and operations of a property may include payroll for the property manager, assistant property manager, and property engineer. It may happen that some vehicles have hired employees. Related staff costs should be allocated based on the activity of the employees. View full definition

Subscription fee

One-time fee paid to the manager when investors subscribe to the fund, calculated as investment amount, NAV or NAV per share multiplied by subscription fee rate. This fee is mostly seen in open-end funds. If the amount is paid to the vehicle, then it is not included in TGER. View full definition

T

Taxes on property related activities

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. View full definition

Transaction offsets

Transaction offsets occur typically if income, based on investment and not for specific services (e.g. closing or monitoring fee), is earned by the investment manager or management company of the vehicle from the portfolio properties, and a portion of that income is required to be offset against the management fee by the vehicle documentation. View full definition

Transfer agent costs

Costs charged by trustees who are responsible for managing the assets owned by a trust for the trust’s beneficiaries. This is most relevant in a REIT structure where trustees act on behalf of all unit holders. View full definition

Trustee Costs

Also known as Placement Agent Costs View full definition

U

Uniform Standards of Professional Appraisal Practice (USPAP)

Valuation standards established through Uniform Standards of Professional Appraisal Practice in the United States. USPAP is developed, interpreted, and amended by the Appraisal Standards Board of the Appraisal Foundation. USPAP are quality control standards applicable to real property, personal property, intangibles, and business valuation appraisal and opinions which interpret the standards. USPAP is the foundational standard for valuation within the Reporting Standards. See www.uspap.org. View full definition

Utilities, repair and maintenance costs (non-rechargeable portion)

Shortfalls between the property operating expenses (incl. repairs and maintenance) incurred by the owner of an investment property and the expenses that are charged to the tenants. View full definition

V

Valuation costs

Costs in connection with the external (third party) appraisal of the real estate assets and liabilities owned by the vehicle. Appraisals may be performed routinely or ad-hoc which can be triggered by certain provisions in the vehicle agreement. View full definition

Vehicle administration costs

Costs related to bookkeeping activities either paid to a 3rd party service provider or the manager/advisor. View full definition

Vehicle formation costs

Also known as set-up costs, these charges are incurred at the launch of a vehicle, and do not relate to the portfolio acquisition and financing structure. These include organisational costs (typically legal & notary services) as well as syndication costs, various marketing costs, including printing / publication, and initial subscription fees. View full definition

W

Wealth taxes

Represents a type of annual tax on “tax haven” indirect ownership of property. View full definition

Wind-up fee

Also known as liquidation fee, it is typically found in liquidating trusts, upon termination and dissolution of the vehicle. The sponsor is responsible for liquidating the partnership in an orderly manner. View full definition