Global Definitions Database
Access, learn and discover all terms related to the non-listed real estate sector.
Selected filters:
A
Asset weighted
An averaging technique whereby numerical characteristics (such as interest rates or rents) of a group of assets are averaged in proportion to each asset's common characteristic (such as asset value or square feet).
View full definition
Asset weighting methodology
Asset weighting of the portfolio returns within a composite using beginning-of-period weightings, beginning of period market values plus weighted cash flows, or by aggregating portfolio assets and cash flows to calculate performance as a single master portfolio.
View full definition
Asset-weighted composites
An aggregation of individual portfolios representing a similar investment objective or strategy, weighted by the beginning-of-period market values of the constituent portfolios.
View full definition
B
C
Catch-up
A special distribution, as agreed beween investors and the investment manager, meant to compensate the investment manager once the investors' pre-established hurdle has been achieved (thus allowing the investment manager to "catch-up"). A common structure where investors receive distributions up to a pre-established level of preferred return, at which point the investment manager receives a percentage of distributions therafter (this could be up tp 100% of distributions) until a pre-established balance between the investors and investment manager is reached.
View full definition
Commitment
The total agreed capital an investment manager can draw down from an investor, with a specified notice as outlined in the vehicle documentation.
View full definition
Composite
A composite is an aggregation of one or more portfolios into a single group that represents a particular investment objective or strategy. See www.gipsstandards.org.
View full definition
Controlling Equity Interest
An ownership position that meets the requirements of control according to the governing accounting literature.
View full definition
Core (INREV Style)
A fund which invests mainly in income producing investments. The fund will use low leverage, have no or very low development exposure and generate a high proportion of return through income.
View full definition
Core (RS Style)
An Account that includes a preponderance of core attributes; the Account as a whole will have low leasing exposure and low leverage. A low percentage of noncore assets is acceptable. As a result, such portfolios should achieve relatively high-income returns and exhibit relatively low volatility.
View full definition
Costs of Sale
An estimate of the incremental direct costs to transact the sale of the property. These costs generally include brokerage commissions, closing costs and fees, and other necessary disposition expenses.
View full definition
Cumulative TWR returns
Returns for periods longer than a single period, calculated by geometrically linking all periods in the measurement period.
View full definition
Currency exposure
Net amount of balances denominated in currencies other than the vehicle reporting currency expressed as a percentage of NAV.
View full definition
Current development exposure as percentage of Gross Asset Value (GAV)
The percentage of vehicle Gross Asset Value (GAV) that is invested in development projects. This equals fair value of development portfolio/ GAV of vehicle.
View full definition
D
Discretion
Within the GIPS standards, discretion is the management company's ability to execute transactions and to make decisions regarding the vehicle's investments on behalf of the investors without their prior approval. There are degrees of discretion. However not all investor imposed restrictions or investor approval rights will necessarily cause a portfolio to be non-discretionary. GIPS describes a discretionary portfolio as one for which the investors have not imposed restrictions or requirements that impede the manager from fully executing the defined and approved strategy.
View full definition
Distribution-dividend yield
The amount of income (or shareholder loan interest payments) the vehicle distributes to investors on a rolling 12 months basis as a percentage of the average NAV over the same period.
View full definition
Distributions
Cash or other assets paid from the Vehicle to its investors as a share of income or gains from operations or a return of capital.
View full definition
Distributions to paid-in capital (DPI) multiple
Measures what portion of the return actually been returned to the investors. The DPI will be zero until distributions are made. As the fund matures, typically the DPI will increase. When the DPI is the equivalent of one, the fund has broken even. Consequently, a DPI of greater than one suggests the fund has generated profit to the investors
View full definition
Dividend Payment
A form of Distribution as defined in the Vehicle’s Documentation.
View full definition
E
Economic Share
Please see Effective Share.
View full definition
Effective Share
Also known as Economic Share, a term used to describe the ownership of the Fund's interest in a particular investment based on the current period hypothetical liquidation (i.e., waterfall) calculation. (As used herein, joint venture means any investments which is other than wholly owned). At different points in the life of the investment, the Effective Share may differ from the contractual (i.e., legal or contribution) share for the investment.
View full definition
Equity multiple (Gross)
Current equity multiple (Gross) is the same as the Current equity multiple (Net) but adjusted so as to remove the effect of vehicle-level fees, taxes and carried interest deductions. This uses as a numerator the aggregate of the cash flows used to calculate the IRR since inception gross and as a denominator total capital drawn down (for the avoidance of doubt, not Total capital commitments drawn).
View full definition
Equity multiple (Net)
Current equity multiple (Net) = [Total return of capital + Total Income/Interest/Dividend distributions + Fair value of vehicle (NAV)] / Total capital drawn down. This uses as a numerator the aggregate of the cash flows used to calculate the IRR since inception net and as a denominator the Total capital drawn down since inception (for the avoidance of doubt, not Total capital commitments drawn).
View full definition
Equity multiple- gross, projected
Current projected gross equity multiple from inception to end of vehicle term (gross of taxes, fees and carried interest) per the manager's estimate, or in the case of an open end vehicle over a period agreed between the manager and investors. This is the weighted average of the equity multiple of realized investments and the manager's projection of the equity multiple of unrealized investments.
View full definition
Equity multiple-net, projected
Current projected net equity multiple from inception to end of vehicle term (net of all taxes, fees and carried interest) per the manager's estimate, or in the case of an open end vehicle over a period as agreed between the manager and investors. This is the weighted average of the equity multiple of realized investments and the manager's projection of the equity multiple of unrealized investments.
View full definition
F
Fair Value
As defined under ASC 820 is "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date"
View full definition
Fair Value (GIPS, Appraisal Institute)
The amount at which that asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale. The appraisal profession further expands this definition as follows: The most probable price which a specified interest in real property is likely to bring under all of the following conditions: ▪ Consummation of a sale occurs as of a specified date. ▪ An open and competitive market exists for the property interest appraised. ▪ The buyer and seller are each acting prudently and knowledgeably. ▪ The price is not affected by undue stimulus. ▪ The buyer and seller are typically motivated. ▪ Both parties are acting in what they consider their best interest. ▪ Marketing efforts were adequate and a reasonable time was allowed for exposure in the open market. ▪ Payment was made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. ▪ The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. This definition can also be modified to provide for valuation with specified financing terms.
View full definition
Fair value (IFRS definition)
IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The IFRS definition of fair value is assumed in the INREV Guidelines, except where specifically mentioned otherwise.
View full definition
Fair Value Accounting Policy Manual
A consistent set of accounting standards for use when preparing financial statements for the institutional real estate investment community.
View full definition
Fair Value Net Asset Value (FV NAV)
Represents the excess of the fair value of investments owned, cash, receivables, and other assets over the liabilities of the reporting entity. Notwithstanding different financial statement presentations that exist between the Operating Model and Non-operating Model, FV NAV reported by a reporting entity under both models is generally expected to be similar because both models require investments to be reported at fair value in accordance with ASC 820.
View full definition
Fair value of investment portfolio
Fair value of investment properties and trading properties intended for sale (properties that are stabilized and in lease up) in accordance with the Property Valuation module.
View full definition
Fair value of vehicle according to INREV guidelines
NAV as reported by the manager in accordance with the INREV NAV module.
View full definition
Fair Value Option
Under ASC 825-10, the Fair Value Option permits entities to elect a on-time option that is irrevocable to measure financial instruments at fair value on an instrument by instrument basis.
View full definition
Foundational Standards
Standards established by existing authoritative organizations including, but not limited to, valuation standards established through Uniform Standards of Professional Appraisal Practice (USPAP), accounting principles generally accepted in the United States of America established by the Financial Accounting Standards Board (GAAP), and the performance measurement and reporting standards promulgated by the CFA Institute known as the Global Investment Performance Standards (GIPS®).
View full definition
Fund /Account(s)
Commingled Funds, both Open-end Funds and Closed-end Funds and Single Client Accounts
View full definition
G
Geometrically linked TWR
A process by which sub-period returns are averaged to arrive at a period's rate of return. The linking formula is: (1 + S1) x (1 + S2) x ... (1 + Sn) - 1, S1 - is the first sub-period return , S2 - is the second sub-period return , and Sn - is the last sub-period return.
View full definition
Global Investment Performance Standards (GIPS®)
The Global Investment Performance Standards are a set of standardized, industry-wide ethical principles that provide investment managers with guidance on how to calculate and report their investment results to prospective clients based on the principles of fair representation and full disclosure. The GIPS® standards are sponsored by the CFA Institute. The GIPS® standards (www.gipsstandards.org) are the Foundational Standards for performance within the Reporting Standards and INREV Performance Guidelines.
View full definition
Gross Assets (for fund leverage measures)
Under the Operating Model, gross assets equals the sum of total balance sheet assets minus the JV partner's economic share of total assets. (if the Operating Model includes investments that are subject to both consolidation and equity method accounting, separate adjustments to the denominator need to be made on an investment by investment basis.) Under the Non-operating model it is the sum of total balance sheet assets plus the Fund's economic share of JV liabilities.
View full definition
Gross equity multiple of vehicle realized
Equity multiple of portion of equity invested that has been divested (regardless of whether the proceeds have been distributed), before any vehicle-level fees, taxes and carried interest are deducted.
View full definition
Gross initial yield
The passing rent divided by the property value.
View full definition
Gross operating income
The total income generated by an investment before deducting general operating expenses. Total income includes rental income, and all other income associated with the investment (eg, parking).
View full definition
Gross property return
The absolute unleveraged return of the property portfolio over a stated period before any vehicle-level costs are deducted.
View full definition
Gross property value
The fair value of the property based on the latest external or internal valuation as of the reporting date.
View full definition
Gross return
The absolute return of the vehicle over a stated period before any vehicle-level fees and expenses are deducted.
View full definition
H
I
Income return
Net investment income divided by NAV plus the time weighted (daily) contributions for the measurement period (TwdC) minus the time weighted (daily) redemptions for the measurement period (TwdR) and minus the time weighted (daily) distributions for the measurement period (TwdD). See Performance Measurement Module of the INREV Guidelines.
View full definition
INREV Guidelines
An integrated set of principles and recommendations including tools and examples for governance and information provision for investment managers and investors of non-listed real estate Vehicles. See www.inrev.org/.
View full definition
Internal Rate of Return - IRR (INREV)
The annual rate of return based on the present value of a capital investment over a holding period expressed as a percentage of the investment.
View full definition
Internal Rate of Return - IRR (RS)
The annualized implied discount rate (effective compounded nominal rate) that equates the present value of all of the appropriate cash inflows associated with an investment with the sum of the present value of all the appropriate cash outflows accruing from it and the present value of the unrealized residual investment.
View full definition
Internal Rate of Return-gross
The absolute IRR of the property portfolio before any vehicle-level fees are deducted.
View full definition
Internal Rate of Return-net
The absolute leveraged IRR of the property portfolio after all vehicle-level fees are deducted. Source: www.nationalcne.org/faq/re_glossary.htm
View full definition
Internal Rate of Return-original and projected
Original and projected IRRs include actual fund performance to date and the projected performance through the anticipated liquidation date of the fund. In the early stage of the fund a projected IRR may be what was reported within the fund offering documents
View full definition
Internal Rate of Return-realized (Gross) vehicle
IRR of portion of equity invested that has been achieved from actual divestments (regardless of whether the proceeds have been distributed or reinvested), before any vehicle-level fees, taxes and carried interest are deducted. Ignores any unrealized returns or distributions not derived from disposals and does not include NAV as an end value.
View full definition
Internal Rate of Return-since inception gross of fees
The equity IRR at vehicle level before any vehicle-level fees, taxes and carried interest are deducted. This calculation is from inception through to the current quarter adopting NAV (adjusted to eliminate the effect of fees, taxes and carried interest if necessary) as the final end value
View full definition
Internal Rate of Return-since inception net
The equity IRR at vehicle level after any vehicle-level fees, taxes and carried interest are deducted. This calculation is from inception through to the current quarter adopting NAV (adjusted to eliminate the effect of fees, taxes and carried interest if necessary) as the final end value
View full definition
Internal Rate of Return-starting from inception to end-projected-gross
Current projected gross return performance from inception to end of vehicle term (gross of taxes, fees and carried interest) per the manager's estimate, or in the case of an open end vehicle over a period as agreed between the manager and investors.
View full definition
Internal Rate of Return-starting from inception to end-projected-net
Current projected net return performance from inception to end of vehicle term (net of all taxes, fees and carried interest) per the manager's estimate, or in the case of an open end vehicle over a period as agreed between the manager and investors.
View full definition
Investment level
Evident or applied only to the entire investment i.e.. e., "Investment-level debt" and "investment-level leverage". By contrast, "property-level" applies to characteristics of individual properties within an investment.
View full definition
Investment multiple
A ratio which measures the value of the investment relative to its cost basis, not taking into consideration the time invested.
View full definition
M
N
Net Debt Yield
Net Operating Income (NOI) as a percentage of the nominal value of debt, also known as book value.
View full definition
Net equivalent yield
A time-weighted average of the net initial yield and reversionary yield, representing the return a property will produce based upon the timing of the income received.
View full definition
Net Initial Yield (NIY)
The passing rent or net operating income divided by the gross property value including notional acquisition costs.
View full definition
Net investment income-Operating Model
Under the Operating Model, net investment income is a measure of operating results. It is primarily intended to provide a measure of operating activity, exclusive of capitalized expenditures, such as leasing commissions, tenant improvement costs, tenant inducements and other replacement cost that can be capitalized if in accordance with GAAP. Rental income is recognized when it is contractually billable to tenants (i.e., straight-lining of rents is not applicable when real estate is reported at fair value). The recognition of rental income matches appraisal methodology which factors in the future rental income in the determination of property value. Accruing for free rent/stepped rent would in essence be accounting for the same item twice (i.e., once in the property's valuation and aging in an accounts receivable/other asset account outside the property base). Expenses are generally recognized when the obligation is incurred. Certain expenses may be based on the investment vehicle's unrealized change in net asset value, including, for example, incentive management fees, and are recognized as a component of the unrealized gain or loss.
View full definition
Net return
The amount an investor earns over the stated period after all vehicle-level fees and expenses including taxes and servicing of debt are deducted.
View full definition
NOI yield
NOI / fair value of investment portfolio
View full definition
Non-controlling effects on the INREV NAV adjustments
This adjustment represents the impact on NAV of the combined effect of the recognition of minority interest on the INREV NAV adjustments (the INREV NAV excluding non-controlling effects).
View full definition
Non-Controlling Equity Interests (Minority Interest)
An ownership position that does not meet the requirements of control according to the governing accounting literature.
View full definition
Non-Operating Model
A reporting model, supported by ASC 946, Financial Services-Investment Companies. It generally employs a net presentation.
View full definition
O
Offer price
The amount that an investor must pay (relative to NAV) if it wishes to subscribe to a vehicle.
View full definition
Operating Model
A reporting model, supported by ASC 960 and GASB 25. (ASC 960 GASB 25 require certain investments held by tax-exempt investors, including defined benefit plans and endowments are to be reported at fair value. It generally employs a gross presentation.
View full definition
Operational results
NOI plus other net income
View full definition
Opportunistic (INREV Style)
A fund which typically uses high leverage, has a high exposure to development or other forms of active asset management, and will deliver returns primarily in the form of capital appreciation. The fund may invest in any markets or sectors, and may be highly focused on individual markets or property types.
View full definition
Opportunistic (RS Style)
An Account of preponderantly noncore investments that is expected to derive most of its return from appreciation/ depreciation and/ or which is expected to and may exhibit significant volatility in returns. This volatility may be due to a variety of characteristics, such as exposure to development, significant leasing risk, high leverage, or a combination of moderate risk factors.
View full definition
Other net income
Non-recurring non-operating profit income, calculated by subtracting related operating expenses from the revenue of development projects and non-rental revenue.
View full definition
P
Paid in capital
The cumulative drawdown amount or the aggregate amount of committed capital actually transferred to a fund or property.
View full definition
Paid in Capital Multiple
This ratio gives information regarding how much of the total commitments have been drawn down.
View full definition
Paid in capital to committed capital multiple
See paid in capital multiple
View full definition
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.
View full definition
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.
View full definition
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.
View full definition
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.
View full definition
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.
View full definition
R
Realised (capital) gain/ loss
The appreciation and depreciation for vehicle assets and liabilities due to a transaction event such as a disposition of assets or a settlement of liabilities.
View full definition
Realization Multiple
See Cumulative Distribution to paid-in capital (DPI)
View full definition
Recallable Capital
Also known as recyclable capital, returned capital that can be recalled by the investment manager, in accordance with the Vehicle Documentation. The existence of recallable capital increases investors' remaining capital commitments.
View full definition
Redemption
The partial or full return of an investor’s equity by the Vehicle, at the investor’s request, at a pricing as defined in the Vehicle Documentation.
View full definition
Remaining capital commitment
See definition of Outstanding capital commitment.
View full definition
Required standard
Those elements which must be followed, where applicable, in order for an Account Report to be deemed compliant with the Reporting Standards.
View full definition
Residual multiple
A measure of how much a return is unrealized. As the fund matures, the residual multiple will increase to a peak and then decrease as the fund eventually liquidates to a residual fair value of zero. At that point, the entire return of the fund has been distributed.
View full definition
Residual value
The remaining equity in a fund or property.
View full definition
Residual value to paid-in capital multiple (RVPI)
See residual multiple
View full definition
Return of capital
The Distributions paid to an investor until they receive all of their Capital contributions, in accordance with the Vehicle documentation.
View full definition
ROI (Return on Investment)
Financial benefits flowing from an investment, typically expressed as an annual percentage of the amount invested.
View full definition
S
T
Target percentage non-income producing investments
The target percentage of investments in non-income producing investments with the aim of generating future income after (re)development, refurbishment or re-letting activities. Note: Income producing investments are investments in assets for which construction work has been completed and which are owned for the purpose of letting, producing a rental income that is negotiated at arm’s length with third parties. Non-income producing investments are investments in assets (either properties or land) that at the time of investment are not producing any rental income and for which either (re)development, refurbishment or re-letting activities have to be undertaken before rental income is possible.
View full definition
Target percentage of (re)development exposure
The percentage of overall vehicle target GAV at any point in the life of the vehicle. Development exposure includes any development or redevelopment activities but excludes refurbishment.
View full definition
Target return derived from income
Percentage of target return derived from rental income that a vehicle is able to pay out on an annual basis.
View full definition
Tax effect of the adjustments
An adjustment representing the tax impact on NAV of certain specified adjustments if not already taken into account in the adjustment of deferred taxes.
View full definition
Time-Weighted Return (TWR)
The geometric average of the holding period yields to an investment portfolio (Investment Analysis and Portfolio Management, Seventh Edition (2003)). TWRs are commonly used in the investment industry to measure the performance of an entity (e.g. fund, investment, property). The TWR formulas isolate the performance of the entity by removing the timing effect of cash contributions and distributions from the entity's ending fair value. TWRs measure performance over a specific period regardless of the size of the investment or timing of external cash flows.
View full definition
Time-Weighted Return (TWR) (Fund Level)
A fund level TWR (also referred to as account or portfolio level) is the aggregation of all of the investments made by the entity and the amounts earned or incurred which relate to the entity but are not specifically attributable to a particular investment. Similar to investment level returns, the fund level TWRs are very broad in nature and try to capture all activity, which includes, but is not limited to, those revenues and expenses applicable to the fund, taken as a whole, such as audit and appraisal fees, interest income and portfolio borrowings. In essence, this return measures the performance of the advisor in terms of how well the management team performed its specified strategy.
View full definition
Time-Weighted Return (TWR), investment level
Investment level TWRs reflect the performance of a single investment or group of investments, whether that investment is wholly-owned or a joint venture. Investment level TWRs differ from property level in that the full scope of the investment, including ownership level activity (use of working capital, owner expenses, etc.), is included in the calculation.
View full definition
Time-Weighted Return (TWR), property level
Property level TWRs reflect the performance of an operating property or group of properties. The property level relates strictly to property operations and attempts to strip out all ownership level activity, usually including advisory fees, use of working capital and owner income and expenses. As such, property level TWRs do not represent investors' earnings from those properties, even in single property funds, but rather the earnings (in the form of appreciation and operating income) that are generated by the property.
View full definition
Total capital commitment drawn
Total capital drawn down since inception less total returned capital recalled since inception. This relates to the amount of actual capital commitment that has currently been drawn, net of any reinvested capital. This amount cannot therefore exceed total capital commitments.
View full definition
Total capital commitments (By all investors)
Total capital commitments refers to the total committed capital a manager can draw down from all investors with a specified notice as outlined in the constituent fund documents.
View full definition
Total capital drawn down
The capital (including shareholder's loans) injected by investors so far, including any returned capital that has been reinvested. The total can therefore exceed investors' total commitment. This does not reflect any returned capital that has been distributed.
View full definition
Total current outstanding capital
The total capital drawn (including investment in both shareholder equity and shareholder loans, where applicable) less total return of capital (both recallable and non-recallable). Return of capital does not include income distributions.
View full definition
Total return (net and unlevered)
Time-weighted net and unlevered return.
View full definition
Total return net to investor
This uses as a numerator the aggregate of the cash flows used in the calculation of the gross IRR of a vehicle with respect to realized investments and as a denominator the total equity invested in respect of those same realized investments.
View full definition
Total return of capital
Represents inception-to-date Return of capital.
View full definition
Total returned capital recalled
Represents a portion of inception-to-date investment proceeds paid back to investors and subsequently reutilised via a Capital call notice.
View full definition
Total Value to paid in capital multiple (TVPI)
See Investment Multiple
View full definition
U
V
Value-added (INREV Style)
A fund which may invest in any property type and deliver returns from a balance of income return and capital appreciation. The fund may allocate part of its investments in development. Typically it will also invest in forms of active management, such as active leasing risk, repositioning or redevelopment to generate returns through adding value to the property. The fund will use moderate leverage.
View full definition
Value-added (RS Style)
An account that generally includes a mix of core investments and noncore investments that will have less stable income streams. The Account as a whole is likely to have moderate lease exposure and moderate leverage. As a result, such Accounts should achieve a significant portion of the return from appreciation/ depreciation and are expected to exhibit moderate volatility.
View full definition
Vehicle 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 the GAV of the vehicle.
View full definition
Vehicle Reporting Currency
This is a denomination in which a Vehicleprepares and presents its financial statements and other financial information.
View full definition
W
Waterfall Analysis
Hypothetical sale methodology is typically employed in valuing real estate partnership interests for fair value financial reporting purposes. This methodology assumes a sale of the real estate (gross asset value) as of the measurement date and allocates that value to the various partnership interests per the terms in the partnership agreement. This is commonly referred to as the "waterfall" analysis or equity reconciliation.
View full definition
Waterfall calculation
When returns are paid to more than one party in a vehicle, the order of priority for cash flows of these is set out in the waterfall calculation.
View full definition