Commercial Mtg Glossary

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1031 Exchange:
Internal Revenue Code Section 1031 is a powerful tool for deferring capital gains tax on commercial/investment transactions. This Section allows taxpayers to exchange real or personal property for new 'like-kind' property, while deferring recognition of any capital gains. Section 1031 creates the ability for sellers to defer capital gains on investment property by placing the sale proceeds with a 'Qualified Intermediary' for up to 180 days until the closing of the purchase of the replacement property.

A

AAA Tenant:
A tenant with a top credit rating. This type of tenant is often critical to the developer's ability to arrange both construction and permanent financing for a major commercial project, such as a shopping center or office building.

Abandonment:
The voluntary relinquishment of rights of ownership or another interest (such as an easement) by failure to use the property, coupled with intent to abandon (give up the interest).

Abatement:
Often referred to as free rent or early occupancy and may occur outside or in addition to the primary term of the lease. A reduction or decrease. Usually applies to a decrease of assessed valuation of ad valorem taxes after the assessment, and levy.

Above Building Standard:
Upgraded finishes and specialized designs necessary to accommodate a tenant's requirements.

Absorption Rate:
The rate at which rentable space is filled. Gross absorption is a measure of the total square feet leased over a specified period with no consideration given to space vacated in the same geographic area during the same time period. Net absorption is equal to the amount occupied at the end of a period minus the amount occupied at the beginning of a period and takes into consideration space vacated during the period. This rate is usually expressed in square feet per year or in the case of multi-family housing, in the number of units per year. 'Market Absorption'.

Abstract of Judgment:
A summary of money judgment obtained in court. (When this summary or abstract is recorded in the county recorder's office, in some states the judgment becomes a lien on the debtor's property, both presently owned and/or after-acquired.)

Abstract of Title:
A summary prepared by a licensed abstractor of all documents recorded in the public records of the political subdivision where the land is located. An abstract in some states or areas is reviewed by an attorney or other experienced title examiner to determine the status of title. Virtually every abstractor today provides actual copies of the records rather than an abstract of each document.

Acceleration Clause:
A cause in a deed of trust or mortgage, which 'accelerates,' or hastens, the time when the indebtedness becomes due. For example, some deeds of trust contain a provision (an acceleration clause) stating that the note shall become due immediately upon the sale of the land or upon failure to pay interest or an installment of principal and interest.

Accommodation Recording:
Recording of instruments with the county recorder by a title company merely as a convenience to a customer and without assumption of responsibility for correctness or validity.

Acknowledgment:
A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own act and deed. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.

Acquisition and Development Loan:
Debt financing for the purchase and preparation of raw land for development. Usually a construction loan or land sale is the source of repayment.

Acre:
A measure of land equal to 43,560 square feet.

Adjoining:
In actual contact with another object (i.e., attached). Same as 'Contiguous'.

Adjusted funds from operations (AFFO):
A measure of REIT performance or ability to pay dividends used by many analysts with concerns about quality of earnings as measured by funds from operations (FFO). The most common adjustment to FFO is an estimate of certain recurring capital expenditures needed to keep the property portfolio competitive in its marketplace.

Ad Valorem:
Latin, meaning 'according to value,' this is a tax imposed on the value of property that is typically based on the local government's valuation of the property.

Advances:
Payments made by the servicer when the borrower fails to make a payment.

Advisory Services:
Outsourced professional services provided to commercial real estate practitioners in order to assist them with areas in which they don't have the internal skill sets or where they need third party impartiality. A broker, consultant or investment banker who represents an owner in a transaction. Advisers may be paid a retainer and/or a performance fee upon the close of a financing or sales transaction.

Add-On Factor:
Often referred to as the Loss Factor or Rentable/Usable (R/U) Factor, it represents the tenant's pro-rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. It is usually expressed as a percentage which can then be applied to the usable square footage to determine the rentable square footage upon which the tenant will pay rent.

Agent:
An individual/entity who transacts, represents, or manages business for another individual/entity. Permission is provided by the individual/entity being represented.

Aggregation Risk:
Risk associated with warehousing mortgages during the pooling process for future securitization

Allowance Over Building Shell:
Most often used in a yet-to-be constructed property, the tenant has a blank canvas upon which to customize the interior finishes to their specifications. This arrangement caps the landlord's expenditure at a fixed dollar amount over the negotiated price of the base building shell. This arrangement is most successful when both parties agree on a detailed definition of what construction is included and at what price.

Alpha:
A coefficient which measures risk-adjusted performance, factoring in the risk due to the specific security, rather than the overall market. A high value for alpha implies that the stock or mutual fund has performed better than would have been expected given its beta (volatility).

Alternative or Specialty Investments:
Property types that are not considered conventional institutional-grade real estate investments. Examples include congregate care facilities, self-storage facilities, mobile homes, timber, agriculture and parking lots.

Amendment:
A change to either alter, add to, or correct part of an agreement without changing the principal idea or essence.

Amortization:
The repayment of a mortgage debt over a period of time in a series of periodic installments. It should be noted that a portion of each payment consists of a blend of interest and amortization of principal. Specifically, this is the payback of the principal portion of the loan owed to the lender. The effect of amortization is to build up the paper value of the owner's equity while reducing the debt obligation. For your convenience, we have provided a list of most asset classes where you will see typical amortization schedules as they relate to said asset classes.

Anchor Tenant:
A well-known commercial retail business such as a national chain store or regional department store (AAA Tenant) strategically placed in a shopping center so as to generate the most customers for all of the stores located in the shopping center. This term usually applies in reference to a retail property. For more information on underwriting guidelines for retail loans please click here.

Anchored Centers:
A shopping center with at least one anchor tenant.

Annual Loan Constant:
The ratio of the annual debt payment on a loan to the original amount borrowed. The loan constant is also referred to as a mortgage constant.

Annual percentage rate (APR):
The actual cost of borrowing money. It may be higher than the note rate because it represents full disclosure of the interest rate, loan origination fees, loan discount points and other credit costs paid to the lender.

Appraisal:
An estimate of opinion and value based upon a factual analysis of a property by a qualified professional who preferably possesses an MAI designation. For more information please see our Advisory Services page.

Appreciation:
An increase in the value or price of an asset.

Appreciation Return:
The portion of the total return generated by the change in the value of the real estate assets during the current quarter, as measured by both appraisals and sales of assets

Arbitrage:
Buying securities in one market and then selling them immediately in another market to make a profit on the price discrepancy

'As-Is' Condition:
The acceptance by the tenant of the existing condition of the premises at the time the lease is consummated. This would include any physical defects.

Assessment:
A fee imposed on property, usually to pay for public improvements such as water, sewers, streets, improvement districts, etc.

Asset Management:
The various disciplines involved with managing real property assets from the time of investment through the time of disposition, including acquisition, management, leasing, operational/financial reporting, appraisals, audits, market review and asset disposition plans

Asset Management Fee:
A fee charged to investors based on the amount invested into real estate assets for the fund or account.

Asset Turnover:
Calculated as total revenues for the trailing 12 months divided by the average total assets

Assets Under Management:
The current market value of real estate assets for which a manager has investment and asset management responsibilities

Assignee:
Individual to whom a contract is assigned.

Assignment:
A transfer by lessee of lessee's entire estate in the property. Distinguishable from a sublease where the sub lessee acquires something less than the lessee's entire interest.

Assignor:
An individual who transfers a contract to another individual.

Attorn:
To agree to recognize a new owner of a property and to pay him/her rent.

Average Common Equity:
Calculated by adding the common equity for the five most recent quarters and dividing by five

Average Downtime:
Expressed in months, the amount of time expected between the expiration of a lease and the commencement of a replacement lease under current market conditions

Average Free Rent:
Expressed in months, the rent abatement concession expected to be granted to a tenant as part of a lease incentive under current market conditions

Average occupancy:
The average occupancy rate of each of the preceding 12 months

Average total assets:
Calculated by adding the total assets of a company for the five most recent quarters and dividing by five

Average Daily Rate (ADR):
The average rate charged by a hotel for one (1) room for one (1) day; arrived at by dividing the total room revenue by the actual rooms occupied. Please view our hospitality underwriting guidelines for more information

Average Life:
It is a way to look at the term of a loan or bond that accounts for principal pay downs. If a loan is interest only with a full balloon at the end, the average life will equal the maturity. If there is amortization, principal is being paid over the life of the loan, decreasing the balloon payment and the average life. This number is then used to find the treasury that has the closest remaining term, but is not shorter. For example, a 10/25 loan has an average life of 9 years. 9 years from today is October 2008. The current list of outstanding, non-callable US treasury securities with maturities in 2008 includes March 2008, June 2008, September 2008 and a December 2008. The lender would choose the December 2008 because it is longer than the actual due date.

 B

Balloon (ie: Bullet Loan):
A loan with a maturity that is shorter than the amortization period

Balloon Risk:
The risk that a borrower will not be able to make a balloon (lump sum) payment at maturity due to a lack of funding

Bankrupt:
The condition or state of a person (individual, partnership, corporation, etc.) who is unable to repay it's debts as they are, or become, due.

Bankruptcy:
Proceedings under federal statures to relieve a debtor who is unable or unwilling to pay its debts. After addressing certain priorities and exemptions, the bankrupt's property and other assets are distributed by the court to creditors as full satisfaction for the debt. See also: 'Chapter 11'.

Base Principal Balance:
The original mortgage amount adjusted for subsequent fundings and principal payments without regard to accrued interest or other unpaid debt

Base Rent:
A set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease. See also 'Escalation Clause', 'Operating Expense Escalation' and 'Percentage Lease'.

Base Year:
Actual taxes and operating expenses for a specified base year, most often the year in which the lease commences. Once the base year expenses are known, the lease essentially becomes a dollar stop lease.

Basis Points:
1/100 of 1 percent. Used primarily to describe changes in yield or price on debt instruments including mortgages and mortgage-backed securities.

Below-grade:
Any structure or a portion of a structure located underground or below the surface grade of the surrounding land.

Beneficiary:
An employee covered by an employee benefit plan

Beta:
A quantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the S&P 500. Specifically, the performance the stock, fund or portfolio has experienced in the last 5 years as the S&P moved 1% up or down. A beta above 1 is more volatile than the overall market, while a beta below 1 is less volatile.

Bid:
An offer, stated as a price or spread, to buy whole loans or securities

Blind pool:
A commingled fund accepting investor capital without prior specification of property assets

Book value:
Also referred to as common shareholder's equity, this is the total shareholder's equity as of the most recent quarterly balance sheet minus preferred stock and redeemable preferred stock.

Broker:
A person who acts as an intermediary between two or more parties in connection with a transaction

Buildable acres:
The area of land that is available to be built on after subtracting for roads, setbacks, anticipated open spaces and areas unsuitable for construction

Bridge Loan:
A loan which enables a buyer to purchase a property, then allow for time to rehab and/or increase NOI prior to placement of permanent financing or enables buyer to get financing to make a down payment and pay closing costs before selling the present property. Also called 'gap' financing.

Building Classifications:
Building classifications in most markets refer to Class 'A', 'B', 'C' and sometimes 'D' properties. While the rating assigned to a particular building is very subjective, Class 'A' properties are typically newer buildings with superior construction and finish in excellent locations with easy access, attractive to credit tenants, and which offer a multitude of amenities such as on-site management or covered parking. These buildings, of course, command the highest rental rates in their sub-market. As the 'Class' of the building decreases (i.e. Class 'B', 'C' or 'D') one component or another such as age, location or construction of the building becomes less desirable. Note that a Class 'A' building in one sub-market might rank lower if it were located in a distinctly different sub-market just a few miles away containing a higher end product.

Building Code:
The various laws set forth by the ruling municipality as to the end use of a certain piece of property and that dictate the criteria for design, materials and type of improvements allowed.

Building or 'Core' Factor:
Represents the percentage of Net Rentable Square Feet devoted to the building's common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Loss Factor or Rentable/Usable (R/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage. See also 'Rentable/Usable Ratio'.

Building Owners & Managers Association (BOMA):
An organization of practitioners who own and manage buildings, most often office space. Sets the basis by which most regional expense standards are established. Address: Building Owners and Managers Association 1221 Massachusetts Avenue NW Washington, DC 20005.

Building Standard:
A list of construction materials and finishes that represent what the Tenant Improvement (Finish) Allowance/Work Letter is designed to cover while also serving to establish the landlord's minimum quality standards with respect to tenant finish improvements within the building. Examples of standard building items are: type and style of doors, lineal feet of partitions, quantity of lights, quality of floor covering, etc.

Building Standard Plus Allowance:
The landlord lists, in detail, the building standard materials and costs necessary to make the premises suitable for occupancy. A negotiated allowance is then provided for the tenant to customize or upgrade materials. See also 'Workletter'.

Build-out:
The space improvements put in place per the tenant's specifications. Takes into consideration the amount of Tenant Finish Allowance provided for in the lease agreement. See also 'Tenant Improvement Allowance'

Build-To-Suit:
An approach taken to lease space by a property owner where a new building is designed and constructed per the tenant's specifications.

Bullet Loan:
Any short-term, generally five to seven years, financing option that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced in order to meet the balloon payment obligation. Essentially, should the refinancing not be available, often due to the property not performing as anticipated, the borrower is 'shot' and the property is subject to foreclosure. An example of this is when a developer borrows to cover the costs of construction and carry-costs for a new building with the expectation that it would be replaced by long-term (or 'permanent') financing provided by an institutional investor once most of risk involved in construction and lease-up had been overcome resulting in an income-producing property.

 C

Call date:
Periodic or continuous rights given to the lender to cause payment of the total principal balance prior to the maturity date.

Capital Appreciation:
The change in market value of a property or portfolio adjusted for capital improvements and partial sales.

Capital Expenses:
This type of expense is most often defined by reference to generally accepted accounting principles (GAAP), but GAAP does not provide definitive guidance on all possible expenditures. Accountants will often disagree on whether or not to include certain items.

Capital Expenditures:
Investment of cash or the creation of a liability to acquire or improve an asset, as distinguished from cash outflows for expense items that are considered part of normal operations.

Capital Gain:
The amount by which the net proceeds from the sale of a capital item exceeds the book value of the asset.

Capital Improvements:
Expenditures that arrest deterioration of property or add new improvements and appreciably prolong its life

Capital Markets:
Public and private markets where businesses or individuals can raise or borrow capital.

Capitalization:
The total dollar value of various securities issued by a company.

Capitalization Rate:
The rate at which net operating income is discounted to determine the value of a property. It is the net operating income divided by the sales price or value of a property expressed as a percentage.

Carrying Charges:
Costs incidental to property ownership that must be absorbed by the landlord during the initial lease-up of a building and thereafter during periods of vacancy

Cash Flow:
The revenue remaining after all cash expenses are paid

Cash-on-Cash Yield:
The relationship, expressed as a percentage, between the net cash flow of a property and the average amount of invested capital during an operating year.

Carve-Outs:
Specific items that a Lender will require the Borrower to personally guarantee for the life of the loan. Typically include (but are not limited to) environmental, fraud, misappropriation of funds, and theft.

Certificate of Occupancy:
A document presented by a local government agency or building department certifying that a building and/or the leased area has been satisfactorily inspected and is in a condition suitable for occupancy

Chapter 7:
That portion of the federal bankruptcy code that deals with business liquidations

Chapter 11:
That portion of the federal bankruptcy code that deals with business reorganizations.

Circulation Factor:
Interior space required for internal office circulation not accounted for in the net square footage.

Class 'A':
A real estate rating generally assigned to properties that will generate the highest rents per square foot due to their high quality and/or superior location

Class 'C':
Buildings that offer few amenities but are otherwise in physically acceptable condition and provide cost-effective space to tenants who are not particularly image-conscious

Clear-Span Facility:
A building, most often a warehouse or parking garage, with vertical columns on the outside edges of the structure and a clear span between columns

Closing:
A period of time, usually less than seven days, after a registration statement is effective and the offering commences, giving the underwriters time to receive payment for the securities

Closing Costs:
Various fees and expenses payable by the seller and buyer at the time of a real estate closing, (also termed transaction costs). These costs include brokerage commissions, lender fees, title insurance, recording fees, prepayment penalty, inspection and appraisal fees, and attorney's fees.

CMBS (commercial mortgage-backed securities):
Securities backed by loans on commercial real estate

CMO (collateralized mortgage obligation):
Debt obligations that are collateralized by and have payments linked to a pool of mortgages

Co-Investment:
Co-investment occurs when two or more pension funds or groups of funds share ownership of a real estate investment. In co-investment vehicles, relative ownership is always based on the amount of capital contributed. It also refers to an arrangement in which an investment manager or adviser co-invests its own capital alongside the investor.

Co-Investment Program:
An investment partnership or insurance company separate account that enables two or more pension funds to co-invest their capital in a single property or portfolio of properties. The primary appeal for investors is to achieve greater diversification or invest in larger properties typically outside the reach of small- to mid-sized tax-exempt funds, with a greater measure of control than is afforded in typical commingled fund offerings.

Collateral:
Asset(s) pledged to a lender to secure repayment of a loan in case of default.

Commercial Bank:
A financial institution authorized to provide a variety of financial services, including consumer and business loans (generally short-term with full recourse to the Borrower). Commercial banks may be members of the Federal Reserve System.

Commitment Fee:
A charge required by a lender to lock in specific terms on a loan at the time of Commitment.

Commitment Letter:
An official notification from a Lender to a Borrower indicating that the Borrower's loan application has been approved. It will state in detail the terms and conditions of the prospective loan.

Commingled Fund:
A pooled fund vehicle that enables qualified employee benefit plans to commingle their capital for the purpose of achieving professional management, greater diversification or investment positions in larger properties.

Common Area:
For lease purposes, the areas of a building and its site that are available for the non-exclusive use of all its tenants, e.g., lobbies, corridors, etc.

Common Area Maintenance:
Rent charged to the tenant in addition to the base rent to maintain the common areas. Examples include snow removal, outdoor lighting, parking lot sweeping, insurance, property taxes, etc.

Comparables:
Used to determine the fair market lease rate or asking price, based on other properties with similar characteristics.

Concessions:
Cash or cash equivalents expended by the landlord in the form of rental abatement, additional tenant finish allowance, moving expenses or other monies expended to influence or persuade a tenant to sign a lease

Condemnation:
The process of taking private property, without the consent of the owner, by a governmental agency for public use through the power of eminent domain

Conduit:
An alliance between mortgage originators and an unaffiliated organization that acts as a funding source by regularly purchasing loans, usually with a goal of pooling and securitizing them

Constant:
Percentage of the original loan paid in equal annual payments that provides principal reduction and interest payments over the life of the loan.

Construction Loan:
Interim financing during the developmental phase of a property

Construction Management:
The act of ensuring the various stages of the construction process are completed in a timely and seamless fashion

Consultant:
Any company or individual that provides the following services to institutional investors: definition of real estate investment policy; adviser/manager recommendations; analysis of existing real estate portfolios; monitoring of and reporting on property asset, commingled fund and portfolio performance; and review of specified property and portfolio investment opportunities. Consultants are distinguished from investment advisers or investment managers in that a consultant does not source or execute transactions and does not directly manage assets.

Consumer Price Index (CPI):
Measures inflation in relation to the change in the price of goods and services purchased by a specified population during a base period of time. The CPI is commonly used to increase the base rent periodically as a means of protecting the landlord's rental stream against inflation or to provide a cushion for operating expense increases for a landlord unwilling to undertake the record-keeping necessary for operating expense escalations.

Contiguous Space:
Multiple suites/spaces within the same building and on the same floor that can be combined and rented to a single tenant, or a block of space located on multiple adjoining floors in a building.

Contract Documents:
The complete set of design plans and specifications for the construction of a building.

Contract Rent:
The rental obligation, expressed in dollars, as specified in a lease. Also known as face rent.

Convertible Debt:
A mortgage position that gives the lender the option to convert to a partial or full ownership position in a property within a specified time period.

Convertible Preferred Stock:
Preferred stock that is convertible to common stock under certain formulas and conditions specified by the issuer of the stock.

Conveyance:
Most commonly refers to the transfer of title to property between parties by deed. The term may also include most of the instruments with which an interest in real estate is created, mortgaged or assigned.

Core Factor:
Represents the percentage of Net Rentable Square Feet devoted to the building's common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Loss Factor or Rentable/Usable (R/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage.'

Core Properties:
The major property types - specifically office, retail, industrial and multifamily. Core assets tend to be built within the past five years or recently renovated. They are substantially leased (90 percent or better) with higher-credit tenants and well-structured long-term leases with the majority fairly early in the term of the lease. Core assets generate good, stable income that, together with potential appreciation, is expected to generate total returns in the 10 percent to 12 percent range.

Correspondent:
A specialized type of mortgage banker whose function is limited to the origination of mortgage loans which are sold to other mortgage bankers or investment bankers under a specific commitment.

Cost-Approach Improvement Value:
The current cost to construct a reproduction of, or replacement for, the existing structure less an estimate for accrued depreciation.

Cost-Approach Land Value:
The estimated value of the fee simple interest in the land as if vacant and available for development to its highest and best use.

Cost-of-Sale Percentage:
An estimate of the costs to sell an investment representing brokerage commissions, closing costs, fees and other necessary disposition expenses.

Coupon:
The nominal interest rate charged to the borrower on a promissory note or mortgage.

Covenant:
A written agreement inserted into deeds or other legal instruments stipulating performance or non-performance of certain acts, or use or non-use of a property and/or land.

Credit Enhancement:
The credit support needed in addition to the mortgage collateral to achieve a desired credit rating on mortgage-backed securities. The forms of credit enhancement most often employed are subordination, over-collateralization, reserve funds, corporate guarantees and letters of credit.

Cross-Collateralization:
A grouping of mortgages or properties that serves to jointly secure one debt obligation.

Cross-Defaulting:
Allows the trustee to call all loans in a group into default when any single loan is in default.

Cumulative Discount Rate:
Expressed as a percentage of base rent, it is the interest rate used in finding present values that takes into account all landlord lease concessions.

Current Occupancy:
The current leased portion of a building or property expressed as a percentage of its total area or units.

Current Yield:
For CMBS, the coupon divided by the price.

 D

Deal structure:
With regard to the financing of an acquisition, deals can be unleveraged, leveraged, traditional debt, participating debt, participating/convertible debt or joint ventures.

Debenture (Bond):
A long-term bond or note issued by governments and/or corporations and not secured by a mortgage or lien on any specific property. Since there is no specific property securing the debenture, the ability to repay the debt is based solely on the financial strength of the issuer.

Debt Service Coverage Ratio (DSCR):
The relationship between the annual net operating income (NOI) of a property and the annual debt service of the mortgage loan on the property. Both Lenders and Investors calculate this ratio to assist them in determining the likelihood of the property generating enough income to pay the mortgage payments. From the lender's viewpoint, the higher the ratio, the better.

Debt Service:
The periodic payment (monthly, quarterly, or annually) necessary to pay the interest and principal on a loan which is being amortized over a longer term (usually 25-30 years).

Dedicate:
To appropriate private property to public ownership for a public use

Deed:
A legal instrument transferring title to real property from the seller to the buyer upon the sale of such property

Deed in lieu of foreclosure:
A deed given by an owner/borrower to a lender to satisfy a mortgage debt and avoid foreclosure

Deed of trust:
An instrument used in place of a mortgage by which real property is transferred to a trustee to secure repayment of a debt

Default:
The general failure to perform a legal or contractual duty or to discharge an obligation when due

Defeasance:
In defeasance, the lender replaces the cash flows of the original loan with actual Treasury Securities. The borrower pays the lender enough money to buy these securities and the lender goes out in the bond market and buys the right combination of bonds. After this is done, and the lender has a security interest in the treasuries, the property is released as collateral for the loan and the treasuries become the new loan collateral.

Deferred maintenance account:
An account a borrower is required to fund that provides for maintenance of a property

Deficiency judgment:
Imposition of personal liability on a borrower for the unpaid balance of mortgage debt after a foreclosure has failed to yield the full amount of the debt

Defined-benefit plan:
An employee's benefits are defined, either as a fixed amount or a percentage of the beneficiary's salary at the time of retirement. Pension plans, Health and Welfare plans, and some Keogh plans are established as defined benefit plans.

Defined-contribution plan:
An employee's benefits at retirement are determined by the amount contributed by the employer and/or the employee during his or her employment tenure, and by the actual investment earnings on those contributions over the life of the fund. Examples include 401(k), thrift plans and profit sharing plans.

Demising wall:
The partition wall that separates one tenant's space from another or from the building's common areas

Depreciation:
A decrease or loss in property value due to wear, age or other cause. In accounting, depreciation is a periodic allowance made for this real or implied loss.

Derivative securities:
Securities that are created artificially, i.e., derived from other financial instruments. In the context of CMBS, the most common derivative security is the interest-only strip.

Design/build:
A system in which a single entity is responsible for both the design and construction