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Real Estate Financial Modeling Accelerator (Updated June 2024)

Prior to launching the Accelerator program, Michael and I fielded email after email requesting a more structured real estate financial modeling training program on the site. Over the years, we've covered hundreds of real estate modeling…

European-Style Waterfall

A common method for distributing investment cash flow between two or more partners. A European-Style waterfall refers to a form of equity waterfall where no promote (i.e. carried interest) is paid to the sponsor (i.e. general partner) until…

Fee Simple

Fee simple is a form of ownership in real property. Specifically, it refers to an owner having full and irrevocable ownership of the land and any buildings on that land. Fee simple is the highest form of property ownership, and most real estate…

FF&E

Furniture, Fixtures, and Equipment (FF&E). In real estate financial analysis, FF&E is most often found as a line item in development budgets and operating statements. It can generally be defined as any easily moveable object not permanently…

Floor Area Ratio

A ratio expressing the relationship between the buildable area (currently built or permitted) and the land on which the property is located. A higher FAR ratio indicates a higher density (i.e. the more area legally permissible to be built on…

Fixed Price Contract

As it relates to commercial real estate, a fixed price contract is an agreement where a contractor presents a quote to the property owner or general contractor, with a predetermined value that does not change to perform the work of a contract.…

Fixed Rate Debt

Fixed Rate debt refers to a form of financing where the interest rate used to calculate the interest due in each period is constant (i.e. does not change). This is in contrast to Floating Rate debt, where the interest rate does change periodically. The…

Entitlement Process

The process through which a real estate developer or landowner seeks the right to develop (or redevelop) property with government approvals for zoning, density, design, use, and occupancy permits. Upon securing all necessary entitlements from…

Floating Rate Debt

Floating Rate or Variable Rate debt, refers to a form of financing where the interest rate used to calculate the interest due in each period changes (i.e. varies or floats) periodically. The interest rate for a floating rate loan is generally…

Financing Memorandum

A request for mortgage financing given to lenders by commercial real estate borrowers (or their representatives) for the lenders' investment consideration. The memorandum will typically highlight various terms and property specifics such as…

Fixed Costs

Costs that do not change based upon of the property’s level of occupancy or operation. For example. the landlord’s monthly insurance premiums will generally remain fixed regardless of whether the property is 50% or 80% occupied. In some…

Expense Stop

A mechanism in a Full Service Gross Lease, the Expense Stop is a fixed amount of operating expense above which the tenant is responsible to pay. Thus, the landlord is responsible to pay for all operating expenses below the Expense Stop, while…

Expansion Rights

The legal right given by a landlord to a tenant to occupy additional leasable area in a building. These rights constrain the landlord’s ability to lease the building and are thus typically only seen when tenants have a high degree of negotiation…

Factory Outlet

A factory outlet center is a retail subtype characterized for having outlet stores owned by manufacturers and retailers that sell brand-name discounted goods. Anchors for this subtype include those same manufacturers' and retailers' outlets…

Equitable Title

Equitable title and legal title are like two parts to a complete title. Equitable title gives an entity beneficial interest in the property or the full use and enjoyment of the property. Legal title provides enforceable legal ownership in court.…

Elevation

An architectural drawing that depicts an object in two dimensions and from a front, side, or back vantage point. Putting 'Elevation' in Context Pinnacle Homes, a national home builder, is developing a new single-family subdivision called…