Glossary

• Absorption Rate
  The rate at which available homes are sold in a specific real estate market during a stated time period. The figure shows how many months it will take to deplete the current supply of homes on the market.
• Acceleration Clause
  A clause in a contract that allows a lender to command full or partial repayment of an outstanding loan if certain conditions are not met by the borrower.
• Accredited Investor
  An Accredited Investor ("AI") is an individual or firm who meets the minimum financial threshold set by regulators in the country and is given access to exclusive investment opportunities with fewer regulatory constraints.
• Acquisition Costs
  The cost of acquiring a property; including purchase price and all other allied costs like legal fees, brokerage charges, due diligence expenses etc.
• Acre
  An area of land of any shape containing 43,560 square feet or 4,840 square yards or approximately 4,047 square meters.
• Adjustable-Rate Mortgage (ARM)
  Mortgages with interest rates indexed to a certain benchmark. Typically, the mortgage begins with a fixed rate for a period and is adjusted periodically thereafter.
• Adjusted Tax Basis
  The Adjusted Tax Basis is the proportionate value of an asset or security after adjusting for any deductions applied, or capital improvements to the asset or property.
• Alpha
  In investments, Alpha is a measure of the returns attributed to active management, rather than market exposure, or beta. It is often used to refer to the value added by a manager’s skill. This definition may be extended to private real estate transactions and management.
• Alternative Investments
  Investment categories other than traditional securities or long-only stock and bond portfolios; they include hedge funds, venture capital, private equity, and real estate, commodities. Alternative investments often employ strategies typically unavailable to long-only managers, such as the use of derivatives, the ability to short, and the ability to hold illiquid assets.
  
  Alternative investments tend to be less liquid, exhibit lower correlations with public markets, and are generally constituent of less efficient private markets.
• Amortisation
  Amortisation is a repayment model where the loan is repaid in several instalments over time, with each installment consisting of both principal and interest payments.
• Anchor Tenant
  An anchor tenant is the major occupier of the subject property. They often receive rent discounts and incentives as reward for leasing a significant space of a shopping mall is a major retail or department store that is one of the larger stores in the mall. As a reward for bringing people to the mall, anchor tenants often receive discounted rents.
• Ancillary Tenant
  Ancillary tenants are smaller tenants of a subject property that occupy less space and pay a higher rent rate.
• Annual Sinking Fund
  A sinking fund where payments and interest accumulated are calculated yearly.
• Annual Value
  AV is used as the basis to compute property tax for properties. AV is the gross annual rental value which a property is expected to fetch when let and less what the landlord pays for expenses of repair and maintenance.
• Appraisal
  An appraisal is a procedure that relies on something other than the real estate investor or professional agent’s input. It has nothing to do with the priorities concerning selling the subject property. Moreover, it is typically driven by the requirements in securing a mortgage from lenders. The written report detailing the valuation of the subject property is the key to partnering with financial institutions when qualifying for support to purchase a real estate asset.
• Base Rate
  The base rate, otherwise known as the bank rate or base interest rate, refers to the set interest rate, as determined by the central bank or reserve within a local economy, to be applied to loans for any commercial banks. Whilst these commercial banks may decide on the interest rates for providing loans, these interest rates are usually built on the base rate.
• Basis Point
  A basis point (bps) is equal to 1/100th of 1% or .01% and is a common unit of measure for interest rate changes.
• Beta
  In investments, Beta is a measure of the sensitivity of a security or portfolio to broad market movements. The beta of the market index is 1.0. A security with a beta of greater than 1.0 tends to rise or fall more than the market; a security with a beta of less than 1.0 tends to rise or fall less than the market. The term “beta” can also indicate the portion of portfolio returns that result from market exposure, rather than from manager strategies or skill (alpha).
• Bridge Loan
  A bridge loan is a short term loan that is used till a person or company secures permanent financing or removes an existing financial obligation. These are short term loans backed by collateral, typically the underlying property in the context of real estate, and have relatively high interest rates while providing immediate capital.
• Buy Down
  A cash payment to a lender in order to reduce the interest rate a borrower must pay.
• Capital Gains Tax
  Capital gains refer to profits generated from the sale of capital assets of a higher value than what was paid for. Capital assets comprise investment products, such as stocks, bonds, mutual funds or other real estate products like land, houses, just to name a few.
  
  Capital gains can be short-term or long-term. Short-term capital gains are profits gained from the sale of assets held for less than one year while long-term capital gains are profits accrued from the sale of assets held for more than one year.
• Capital Stack
  The capital stack refers to the legal organisation of the capital invested in a project. The stack is the riskiest at the top, and risk reduces when moving down the stack to the lease risk. Higher positions in the stack expect higher returns for their capital for undertaking higher risk. There can be many different layers to a capital stack, with the most common ones being (in order of decreasing riskiness) –
  
  1) Common equity
  2) Preferred equity
  3) Mezzanine debt
  4) Senior debt
  
  The capital stack determines who has legal rights to certain assets and income and the priority of payment in the event of default or sale or liquidation of the property.
• Capitalisation (Cap) Rate
  Cap Rate is the rate of return for a property based on its annual income. It is calculated by dividing the net operating income of the property by the total value of the property. Cap rates can provide a good initial measure to compare different investment opportunities but should not be the sole factor considered. While a meaningful way to assess risk and value, they are best understood within the context of the particular market the property is found in and by their relationship to prevailing interest rates. The most competitive primary markets, like London, frequently have far lower cap rates than secondary or tertiary markets. When analysing the assumptions made by Sponsors about the sale of an asset, real estate investors will frequently look at the assumed exit Cap Rate and test the impact on their net returns if the assumption is incorrect.
• Capital Preservation
  Capital Preservation is a term referring to an investment strategy with the main objective of preserving capital and avoiding losses in an investment portfolio. With a Capital Preservation strategy, investments tend to consist of the safest short-term investment products, such as fixed deposits and bonds.
• Cash Yield (before or after tax)
  Cash Yield is the ratio of annual cash flow to the total amount of cash invested, expressed as a percentage. This figure can be expressed as before or after tax expenses.
• Commercial Real Estate
  Commercial Real Estate (CRE) refers to real estate assets that are used for business or commercial purposes. As such, tenants in CRE assets typically conduct income-producing business activities. CRE assets can range from single units with one tenant to massive shopping malls or office towers with multiple tenants varying in size and category.
• Common Equity
  The capital stack with the riskiest but highest potential upside for a commercial real estate project. Since all other parties are entitled to payment first, common equity investments carry the highest attendant risk. However, common equity investments typically have unlimited upside on profits if the investment performs well.
• Comparative Market Analysis (CMA)
  The most common method used to value residential real estate is Comparative Market Analysis. It is a tool that helps to determine the fair market value of a landed property, a condominium or a HDB flat by evaluating similar properties that are recently sold in the same area.
• Compound Annual Growth Rate (CAGR)
  The Compound Annual Growth Rate, or CAGR, is the calculated rate of return required for an investment to increase from its initial value to the value at the end of the investment period. The CAGR calculation assumes that all profits generated through the investment are reinvested throughout the investment period at the CAGR.
• Condominium (Condo)
  A condominium, also known as a condo, is a large housing complex divided into individual units for the purpose of sale, with each unit having an individual title and hence could be separately owned. When an individual rents a condo, he is renting directly from the condominium owner or landlord.
• Core
  Core investments in real estate are investments into properties that are stable and income producing. Core properties are characterized by:
  – Relatively low degree of leverage
  – Properties that are fully (or mostly) leased with stable cash flow
  – The property is in good shape, with little need for major renovations
  – Located in a demand-heavy and transparent market with strong underlying fundamentals
  – Usually follow a “buy and hold” business plan
  
  This investment strategy sits well with relatively conservative investors who prioritise wealth preservation and inflation hedging as their primary investment objectives.
• Core Plus
  These projects also focus on relatively-stable assets in strong, established markets and submarkets, but also entail increased opportunity in the form of some property renovation and optimisations to rent roll. Typically at least one attribute of the underlying asset is riskier than you would expect from a core investment — the property may be in a suburb or secondary market, or the property may not be fully-leased (which presents both risk and opportunity). Returns for both Core and Core-Plus strategies tend to be primarily driven by rental yield rather than capital value appreciation.
• Crowdfunding
  Crowdfunding means financing a business venture, product, idea, or property using funds pooled from a large number of potential investors (“”the crowd””). Crowdfunding is typically associated with raising funds through an online platform, which utilises technology to present information and manage the transaction. Crowdfunding began as a new means to finance business or artistic ventures and initially relied on donations from the crowd. Pioneering companies like Kickstarter and Indiegogo helped fuel the growth of donation based crowdfunding and also utilised reward crowdfunding, where donors would receive a gift or sample product for their funds.
• Debt Fund
  A real estate debt fund is a fund backed by private equity, lending short-term capital to potential real estate investors or providing refinancing to existing property investors.
• Debt-to-Equity Ratio
  Debt-to-Equity Ratio, or D/E Ratio represents a company’s financial leverage. The D/E ratio formula measures how much of a company’s finances are leveraged through debt compared to its retained earnings. This represents the company’s financial risk by indicating how the shareholders’ equity can cover the company’s outstanding debt should a downturn occur.
• Debt Service Coverage Ratio (DSCR)
  The debt service coverage ratio is the ratio of cash available for debt servicing to interest, principal and lease payments. In real estate, DSCR is a key measure to determine if a property will be able to meet its financial obligations based on cash flow. Senior loan documents typically impose a minimum DSCR.
• Deed of Trust
  A Deed of Trust is a deed where the legal title to the property is transferred to a trustee which holds it as security for a loan between a borrower and a lender. The trust deed represents an agreement between the borrower and a lender to have the property held in trust by a neutral and independent third party until the loan is paid off.
• Depreciation Recapture
  Depreciation recapture is taxable income that is earned when the sale price of capital property exceeds the depreciated price of the property.
• Distribution Waterfall
  A distribution waterfall is the order in which an investment vehicle makes payment distributions.
• Diversification
  Diversification is a commonly used investment strategy, defined as the mixture of a variety of investments within an investment portfolio. The aim of diversification is to spread out investments across different asset classes, sectors, and strategies so that a downturn in a particular area is less likely to impact the portfolio as a whole.
• Dividend Yield
  Dividend yield is a measure used to calculate the amount a company pays out in dividends relative to the price of its stock. The value obtained represents the approximate dividend-only return that a stock provides.
• Double Net Lease
  A Double Net Lease, otherwise known as a NN lease, is a type of leasing agreement whereby the tenant is required to pay for the property taxes and insurance premiums for the property. These form two of the three main expenses of a property.
• Due Diligence
  Real Estate Due Diligence is the structured process of auditing real estate assets. It is an important step in the investment process that can be carried out at any point of the investment timeline and is carefully carried out by specialists using established analytical techniques. Real Estate Due Diligence is a more comprehensive auditing process which covers different parties involved in the transaction. There are several different areas covered by Real Estate Due Diligence, including Market, Legal, Tax, Technical, Environmental, and Financial Due Diligence. A Real Estate Due Diligence Report is typically produced at the end of the audit. Having reports for each of these areas promotes transparency for all parties involved in the transaction and investment.
• Economic Obsolescence
  Loss of value of real property due to external forces or events; e.g., a sewer plant is built next door to the subject property.
• Encumbrance
  When you purchase real estate, be it for investment purposes or as a primary residence, problems such as structural defects and insect infestations may be visible to you.
• Equity Multiple
  The equity multiple is defined as the total cash distributions received from an investment, divided by the total equity invested. Here is the equity multiple formula:
  
  For example, if the total equity invested into a project was $1,000,000 and all cash distributions received from the project totalled $2,500,000, then the equity multiple would be $2,500,000 / $1,000,000, or 2.50x.
• Escrow
  An agreement between two or more parties for an asset to be held by a third party (escrow agent) on behalf of two other parties that are in the process of completing a transaction. The escrow agent holds the funds or assets until it receives appropriate instructions or until predetermined contractual obligations are fulfilled. Money, securities, funds, and other assets can all be held in escrow.
• Financial Advisor
  A Financial Advisor is someone who has strong expertise and knowledge of finance and the general economic market. Financial Advisors generally create financial plans for their clients to aid them in achieving their financial objectives, and consult regularly with clients to evaluate and adjust their financial plans.
• Financial Leverage
  Financial leverage is the utilisation of borrowed funds (debt) rather than equity in the purchase of an asset. The usage of financial leverage comes with the assumption that after-tax income and capital gain generated from the asset to equity holders exceed the borrowing cost of debt. Financial leverage is also referred to as leverage or trading on equity.
• Fiscal Policy
  Fiscal policy is the manner in which a government regulates its spending levels and tax rates in order to control and influence a nation’s economy.
• Fixed-Rate Mortgage
  Fixed-rate mortgages maintain a stable interest rate, irrespective of market fluctuations. Borrowers with this type of mortgage make fixed monthly instalment payments throughout the duration of the mortgage, providing them financial predictability.
• Floor Area Ratio (FAR) or Plot Ratio
  Floor area ratio (FAR), also known as floor space ratio and floor space index, is a term for the ratio of a building’s total floor area to the size of the lot on which it is built. The ratio is determined by dividing the total or gross floor area of the building by the gross area of the lot. A higher ratio is more likely to indicate a dense or urban construction.
• Foreclosure
  A legal process instituted by a mortgagee or lien creditor after the debtor’s default.
• Freehold
  Freehold property refers to property that you can own for an indefinite period of time.
• Gated Communities
  When people talk about gated communities, many would conjure images of oceanfront villas and bungalows, waterway and hillside mansions, and swanky condominiums within the exclusive Sentosa Cove, Singapore’s exclusive resort island for the ultra-rich. On the contrary, gated communities simply mean any type of neighbourhood with some form of controlled access where residents or visitors must go through before they are allowed to enter the property. In this regard, condominiums and cluster housing are considered gated communities, since they usually have security guards to screen visitors, and residents have unique keycards that allow them to access the facility.
• GP Investor
  The GP (or “general partner”) investor refers to the managing party on an investment. “GP Investor” can also be labelled as “the Sponsor” with respect to real estate investments – it is the party responsible for originating the investment, sourcing debt and equity financing, and managing the project through to completion. As such, GP investors assume greater risk, take an active role in ensuring success of the investment (as opposed to passive LP investors), are afforded greater potential return in the structuring of the investment.
• Gross Potential Income
  Gross potential income is the income that will be realised if a property is fully occupied and all rents are collected.
• Hold Period
  The duration of ownership of an asset, usually for real estate investments.
• Illiquid Investments
  Illiquid Investments refer to investments such as assets or securities, which cannot be liquidated easily for cash, without suffering a significant drop in value.
• Income Property
  Income property is property that is acquired or developed specifically for the purpose of generating income for its owner through leasing, renting, or capital appreciation. These properties can be commercial or residential.
• Industrial Property
  Industrial properties range from smaller properties, often called “Flex” or “R&D” properties, to larger office service or office warehouse properties to the very large “big box” industrial properties. Industrial properties often on long term leases and can sometimes be build-to-suit buildings that have difficulty changing tenants without extensive modification.
• Inflation
  Inflation quantifies the rate at which a currency’s value declines, resulting in an increase in prices of goods and services in a particular economy. Inflation is also reflected in the decline in purchasing power of a particular currency as time passes. Inflation serves to determine the impact of the changes in price of a range of goods and services and this is represented as a single value.
• Institutional Investor
  An institutional investor is defined as a legal entity or organisation that pools funds from numerous investors (which may be individual investors or other legal entities) to invest in different financial instruments such as stocks, bonds, real estate, or any other investment vehicles.
• Internal Rate of Return (“IRR”)
  One of the most common metrics used to gauge investment performance is the Internal Rate of Return (IRR). It is one of the first performance indicators you are likely to encounter when browsing real estate opportunities. The IRR is defined as the discount rate at which the net present value of a set of cash flows (ie, the initial investment, expressed negatively, and the returns, expressed positively) equals zero. In more simple terms, it is the rate at which a real estate investment grows but it also factors in the time sensitive compounded annual rate of return. One of the keys to IRR analysis, though, is realising that timing plays an important role. The time or duration of the investment hold period and the timing that cash distributions are paid to investors both have a big influence on this equation.
• Investment Property
  An Investment Property is a real estate asset purchased for the purpose of generating capital returns. These returns on the investment may be generated either through renting the property to produce rental income, capital gains from the appreciation in value of the property, or both. Investment Properties may be owned by an individual investor, an institutional investor or a group of investors.
• Leasehold
  Leasehold is an accounting term for an asset that is being leased, such an asset is usually a property. The user (lessee) of property or space enters into a contract with the owner (lessor) of the property for the exclusive right to use the property in exchange for a scheduled payment in cash or in kind over the lease period.
• Lease Purchase
  A lease purchase is an agreement between the tenant and the landlord which allows the tenant to purchase the rented property from the landlord once the lease period expires. With a lease purchase agreement, the tenant enjoys exclusive rights to purchase the property at a pre-determined price.
• Loan-to-Cost Ratio (LTC)
  The loan-to-cost (LTC) ratio is a metric used in commercial real estate construction to compare the financing of a project (as offered by a loan) with the cost of building the project. The LTC ratio allows commercial real estate lenders to assess the risk of providing a construction loan. It also allows developers to understand the amount of equity they retain during a construction project.
• Loan-to-Value Ratio (LTV)
  Loan-to-value (LTV) ratio is an examination of lending risk that financial institutions and other lenders assess before granting a mortgage. Typically, assessments with high LTV ratios are higher risk and comes at a greater cost to borrowers (higher interest rates), if the mortgage is approved.
• LP Investor
  In this term, “LP” stands for “limited partner”. LP investors in equity investments assume both a limited share of risk and, consequently, a limited share of potential profits as compared with GP investors (GP investor is typically synonymous with “the Sponsor” or the “managing partner”). LP investors are not liable for debt, and are exempt from much of the legal risk inherent in the real estate project, the GP investor is typically entitled to a proportionally greater share of profits.
• Market Value
  The price that a willing buyer and a willing seller, both given full information, and neither under pressure to act, would agree upon. Also known as Fair Market Value.
• Mezzanine Debt
  Mezzanine debt is a hybrid lending instrument, commonly used by real estate developers, to secure additional financing. Mezzanine debt gives the lender the right to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. It is generally subordinated to debt provided by senior lenders such as banks and venture capital companies.
• Modular Home
  A modular home, often referred to as a prefabricated home, is a home that is built offsite in a factory to near-completion before being transported to the actual building site to be assembled.
• Monetary Policy
  Monetary policy is how central banks or other agencies control the supply of money and interest rates in an economy to influence output, employment, and prices.
• Multifamily Real Estate
  Considered as one of the four major commercial real estate asset classes, multifamily refers to properties with more than one distinct unit, suitable for multiple tenants or groups of tenants to occupy. The term may refer to apartments, condo complexes, or even co-living spaces.
• Mutual Funds
  Real estate mutual funds, similar to other mutual funds, are a type of investment that cover a wide variety of asset classes to create a diversified portfolio.
• Net Effective Rent
  Net effective rent is derived from the rent that a lessee pays on average per month of a lease period. It is not the actual rent that he/she pays every month.
• Net Operating Income (NOI)
  The income stream generated by operational activities of the property, independent of external factors such as financing and income taxes. A property’s yearly gross income less operating expenses.
• Net Present Value
  Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyse the profitability of an investment or project. Because of the time value of money, a dollar earned in the future won’t be worth as much as one earned today. The discount rate in the NPV formula is a way to account for this.
• Opportunistic
  Opportunistic real estate investments are usually associated with little to no in-place rent roll, require significant rehabilitation or even entail ground-up development. It is common for opportunistic and value-add strategies to have the returns back-end loaded, nearer to the end of the target investment period, which can amount to significant risk. While opportunistic investments entail a relatively high degree of risk, they typically project to an IRR of 24% or more, and sometimes much higher.
• Pari Passu
  Pari-passu is a Latin phrase meaning “equal footing” that describes situations where two or more assets, securities, creditors, or obligations are equally managed without preference.
• Patio Home
  A patio home is a residential property ranging from one to one-and-a-half storey high, with at least one wall shared with an adjacent property. The upper floor may have a loft or smaller bedroom, but does not contain the full-sized rooms and facilities that two-storey houses enjoy. In spite of its name, a patio home may not necessarily have a patio to be considered as such.
• Pooled Investment Vehicle
  Pooled Investment refers to a group of investors injecting funds into a shared pool to buy shares of an investment product/company. Generally, a pooled investment vehicle is one large portfolio of investment products funded by numerous investors. Investors of these products realise their returns in the form of dividends or interest distributions and/or price appreciation as the investment’s per-share price rises due to market volatility.
• Preferred Equity
  Preferred Equity is a class of ownership that has a higher claim on the assets and earnings of a property than common equity, but is subordinate to senior debt.
• Preferred Return
  A preferred return is a mechanism for allocating cash flow to various investors in a real estate investment before others. Investors or partners entitled to a preferred return will receive cash flows distributed by the investment before other equity investors receive any share of the profit. Preferred returns signal that the Sponsor feels that the investment’s performance will likely exceed the level of the preferred return, because the Sponsor’s profits depend on it.
• Prepayment Penalty
  A prepayment penalty is usually specified in a clause in a mortgage contract stating that a penalty will be imposed on the borrower if significant pays down on the mortgage occurs before term, usually within the first five years of committing to the loan. Prepayment penalties protect the lender against the financial loss of interest income that would otherwise have been paid over time.
• Private-Market Real Estate
  Private-market real estate and private real estate investing refers to the universe of non-traded real estate investments; illiquid by definition and typically characterized by investment in a discrete property. Private-market real estate investments stand in contrast to publicly-traded REITs (real estate investment trusts) which are liquid but tend to correlate with public equities markets.
• Property Bonds
  Property bonds, or property investment bonds, are bonds that investors can purchase to contribute to a real estate project. These property bonds may be implemented by the developer during the commencement of a real estate development to generate capital for the project.
• Property Management
  Property management is the management and overseeing of a real estate asset by a property management firm or property manager. The property being managed is typically owned by another individual or entity, and may range in type, such as residential, industrial or commercial real estate.
• Property Preservation
  Property preservation is the process of maintaining the inside and outside of a property that may be occupied or vacant. The objective of property preservation is to keep a vacant property in tip-top condition. This means maintenance of the roof, walls, piping, electrical wiring, and everything else that can possibly go wrong inside a property. It includes a thorough cleaning and performing preventive maintenance to ensure the property is safe for occupation.
• Real Estate Crowdfunding
  Real estate crowdfunding refers to online platforms that offer real estate investments to investors. Such platforms offer investments to individual investors at low minimum sums and through efficient, online platforms.
• Real Estate Cycle
  The real estate cycle can help investors project income and capital appreciation of a property and also advise investors on the right time to make capital improvements or sales. Real estate investors can apply the theories of the real estate cycle in order to identify the correct phase, and deploy the appropriate investment strategy to maximise returns.
• Real Estate Depreciation
  Real estate depreciation refers to the process by which investors deduct the costs of acquiring and upgrading an income-generating investment property over the time period in which the property can effectively generate revenue.
• Real Estate Development Process
  Real estate development is the process of creating value by incorporating tangible improvements to the physical land site or property. Development of real estate may include constructing new structures, modifying existing ones or generally improving any piece of real estate to enhance its value. Real estate includes land and the temporary or permanent structures occupying that piece of land. The development process typically involves a wide range of activities and processes from purchasing land, building and developing properties, and everything else in between.
• Real Estate Investment Trust (REIT)
  A real estate investment trust is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and timberlands. Some REITs engage in financing real estate.
• Real Estate Portfolio
  An investment portfolio may consist of investments across different asset classes, such as stocks, bonds, or real estate. Within an investment portfolio, an investor may have a dedicated Real Estate Portfolio, which is a collection of different real estate investment assets held by an individual investor or an investment group.
• Real Estate Syndicate
  A Real Estate Syndicate is a body of investors who pool their funds to invest in or develop a property. This Real Estate Syndicate gives investors access to more buying power and larger investment opportunities that they would otherwise not have access to as individual investors.
• Refinance
  Refinancing is the practice of replacing an older loan with a new loan that offers better terms, such as a lower interest rate.
• Return on Equity
  Return on Equity, or ROE, is a profitability ratio that is typically used to evaluate the financial performance of a company.
• Sales Comps
  Sales comps (or ‘comparables’) are prices for recently sold assets in the immediate surroundings of a target property. Sales comps included in the investment thesis during underwriting, serving as evidence of support for projected sale (or exit) price. GP investors typically present sales comps as part of an offering memorandum when seeking investors.
• Secondary Market
  In real estate, secondary markets are markets that are less populated and less dense compared to their primary counterparts. However, the economic and population growth in these secondary markets are still considered above average. These secondary markets fall between the primary markets and tertiary markets, in terms of population, size and density.
• Senior Debt
  Senior debt is the first tranche of a company’s liabilities, which means that it is paid first, before all other creditors. Senior debt is the safest type of financing for the party providing the funds. Should a company go bankrupt, any remaining funds, dissolved assets or other available sources of value must first repay senior debt before being distributed to other creditors.
• Sharpe Ratio
  A statistical measure in modern portfolio theory frequently used to express risk-adjusted return, or return accounting for volatility. Calculated as follows: Sharpe Ratio = (Expected Return – Risk Free Rate of Return) / Standard Deviation Prevailing rate of return for treasury notes (or T-note) often represents risk-free rate of return. This formula is often used at the portfolio level to assess whether changes in asset allocation will have a positive or negative impact on the expected risk-adjusted return of a portfolio.
• Singapore Interbank Offered Rate (SIBOR)
  Singapore Interbank Offered Rate (SIBOR) is the reference interest rate for interbank lending in Singapore, where banks get loans from other banks within the Singapore market. This interbank market is typically used to transfer funds and currencies between banks in the Singapore market to manage liquidity. SIBOR is currently the most common base rate used to calculate home loan interest rates.
• Singapore Overnight Rate Average (SORA)
  SORA or the Singapore Overnight Rate Average is a new benchmark interest rate that is used as a reference rate by banks operating in Singapore to price the interest rate of bank loans made in Singapore dollars.
  
  SORA replaces two old benchmarks, namely the Singapore Interbank Offered Rate (SIBOR) and the Singapore Swap Offered Rate (SOR) in the pricing of bank loans.
• Sponsor
  A real estate Sponsor is a principal investor in a real estate project, responsible for sourcing the investment and implementing its business plan. Typically, the Sponsor has a background in asset management and construction/development, as well as real estate finance.
• Stamp Duty
  Stamp duty is a tax on dutiable documents for immovable properties, stocks and shares. These documents include lease or tenancy agreements for properties, transfer documents for properties and mortgages for properties.
• Statutory Foreclosure
  A statutory foreclosure is part of a clause in the deed of trust that enables the lender to sell the mortgaged property, if the borrower defaults.
• Subasset Class
  Any subset of a more broadly-construed class of investments. In real estate, “subasset class” may refer to a specific property type (e.g. multifamily or industrial) and/or a specific investing strategy (e.g. value-add).
• Sublease
  Subleasing is an arrangement which involves an existing tenant renting out their rented space to a new tenant, known as the sublessee.
• Tenancy in Common
  Tenancy in common is an agreement between two or more parties who wish to share the ownership of a property. Each owner has a separate and distinct share in the property, owning an equal or different percentage of the property, depending on the agreement between the owners.
• Tertiary Markets
  Tertiary markets are smaller metro areas that are not sizeable enough to be labelled as primary or secondary markets. Investments in these markets can be riskier, but have the potential for high returns.
• Timeshare
  A timeshare is an arrangement that allows for shared ownership of a vacation property. As co-owner of a timeshare, you are allotted a period of time for the exclusive use of the property. The length of this time period varies depending on your stake in the property. Typically, buyers of timeshare properties own allotments of usage in one-week increments.
• Triple Net Lease
  A Triple Net Lease (Net-Net-Net or NNN) is a lease agreement where the lessee agrees to pay all real estate taxes, building insurance, and maintenance on the property, in addition to the basic rent fee. This form of lease is commonly used for commercial freestanding buildings.
• Underwriting
  Underwriting is the process by which an underwriter performs due diligence on and otherwise scrutinizes a financing request made by a Sponsor seeking funding for a real estate project to determine how much risk to accept.
• Value-add
  Value-add properties are those which require improvements but has existing rent income. The improvements require higher commitment, such as large renovations or curing deferred maintenance. Investing in value-add properties is a moderate to high risk strategy (due to the nature of larger improvements to a property) with moderate to high returns.
• Warranty Deed
  A warranty deed is a document commonly used in real estate transactions. It protects the grantee (the buyer) by guaranteeing that the grantor (the seller) of a property legally owns the property and that there is no outstanding mortgage, lien, or encumbrance against the property. Essentially, this means that the seller provides an assurance that the property is free from all encumbrances and that he has the legal right to sell the property to the buyer.
• Zoning
  Zoning is an urban planning tool used by the government to allocate segments of the land within towns and cities, with each segment assigned for specific uses, rules and regulations. For example, certain areas such as Kampong Ubi, are designated as industrial estates, while others such as Bishan, are regarded as residential areas.

About RealVantage

RealVantage is a leading real estate co-investment platform, licensed and regulated by the Monetary Authority of Singapore (MAS), that allows our investors to diversify across markets, overseas properties, sectors and investment strategies.

The team at RealVantage are highly qualified professionals who brings about a multi-disciplinary vision and approach in their respective fields towards business development, management, and client satisfaction. The team is led by distinguished Board of Advisors and advisory committee who provide cross-functional and multi-disciplinary expertise to the RealVantage team ranging from real estate, corporate finance, technology, venture capital, and startups growth. The team's philosophy, core values, and technological edge help clients build a diversified and high-performing real estate investment portfolio.

Get in touch with RealVantage today to see how they can help you in your real estate investment journey.

Disclaimer: The information and/or documents contained in this article does not constitute financial advice and is meant for educational purposes. Please consult your financial advisor, accountant, and/or attorney before proceeding with any financial/real estate investments.