Real Estate Glossary

A summary of real estate terms

Acquisition Price

The acquisition price is the price that was actually paid for an asset when it was first acquired by the sponsor.


An appraisal is an unbiased professional opinion of an asset’s value. This is prepared by an appraiser to determine the current fair market value of a property for the potential buyer/lender.


A Broker Opinion of Value (BOV), also referred to as a broker price opinion (BPO), is used to determine an estimate of value for a specific asset. These are generally less detailed and potentially less reliable than formal third-party appraisals.

Cap Rate (Capitalization Rate)

The capitalization rate is the unleveraged yield (i.e., not taking any debt into account) of an asset over a one-year time horizon. Cap Rate is calculated by dividing the asset’s Net Operating Income (NOI) by its original value.

Cash Yield

The cash yield is calculated by taking the distributions of the last 12 months and dividing them by the current equity.

Current Equity

Current Equity is calculated by taking the original equity invested in the deal and subtracting any capital returns (e.g., from any sales or refinances).

Implied Cap Rate (Capitalization Rate)

The implied Cap Rate is calculated by dividing the T12 (Trailing 12 months) NOI by the implied valuation of the asset.

Implied Valuation

The asset’s implied valuation is calculated by taking the share price and multiplying it by 100,000 and adding the Outstanding Loan Balance and Outstanding Preferred Equity.

Loan to Cost (LTC)

Loan to cost is the ratio between the loan amount and the total cost of the asset.

Net Operating Income (NOI)

NOI is the annual income after deducting the operating expenses.

Operating Expenses (OPEX)

Opex includes costs like maintenance, utilities, management, real estate tax, etc.

Outstanding Loan Balance

Most assets are acquired with a senior loan from a lender. The outstanding loan balance is the remaining balance owed to the lender.

Outstanding Preferred Equity

Some assets are acquired with the use of Preferred Equity, a type of capital structure that places a private investor after the repayment of a senior lender but before payment to other participating investors or sponsor (Common Equity).


The numbers of shares represent the percentage interest in the asset.

For ease of reference, a percentage interest of 1% equals 1,000 shares.

Share price

The base share price is calculated by dividing the Current Equity offered value by 100,000. The share price is then subsequently set by the market through bids and asks.

Target remaining hold period

The target remaining hold period refers to the estimated holding period of an investment estimated by the sponsor at the time of purchase.

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