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Real Estate Financial Modeling Accelerator (Updated April 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…

Short Sale

The sale of the property for less than the outstanding debt balance owed to all lienholders (typically senior and mezzanine debt providers). The property will fall into foreclosure if all parties do not reach a consensus agreement to sell.

Deed in Lieu of Foreclosure

The voluntary transfer of a title deed by the borrower to the lender in order to satisfy a defaulting loan (thereby avoiding foreclosure proceedings). Also referred to as "giving back the keys" or Jingle Mail.

Jingle Mail

A colloquialism in real estate, a Jingle Mail is the letter a lender would receive containing a borrower’s keys (making a “jingle” sound as the keys bounced around). This situation typically occurs when there is a sharp decrease in the…

Key Performance Indicator

A metric used to measure the performance of a property. Real estate-specific KPI’s include metrics such as Cap Rate, LTV, Debt Yield, Cash on Cash Return, Internal Rate of Return, Equity Multiple, among others.

REVPAR (Revenue Per Available Room)

Referred to in commercial real estate as RevPar, Revenue Per Available Room is a metric used in hotel underwriting to calculate the amount of revenue each available room generates in a given period. RevPar is calculated by either 1) dividing…

Average Daily Rate

The average revenue generated per paid occupied room per day, calculated by dividing total room revenue by the number of rooms sold. The ADR is commonly used in the hospitality industry together with the RevPAR metric to assess the property’s…

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…

Cash Sweep

The use of any free cash flow (after deducting debt service payments) to pay down an outstanding loan balance. In real estate, a cash sweep is often implemented by a lender when a borrower is unable to payoff the balloon balance upon loan m…

Building Owners and Managers Association

Founded in 1907, the Building Owners and Managers Association (BOMA) is an international real estate trade organization representing owners and managers of commercial real estate. The organization promotes, provides advocacy and develops various…

Floor to Ceiling Height

The height between each floor plate in a building measured from the top of a floor to the surface of the ceiling.

Floor to Floor Height

The height between each floor plate in a building measured from the top of a floor to the top of the floor above.

Gross Asset Value

A measure used to describe the market value of a property. The value includes debt and equity positions but excludes any acquisition/closing costs.

Wall Street Prime Rate

The Wall Street Prime Rate (Prime Rate), is the interest rate charged between the largest banks in the United States. The rate is not linked to the Fed funds rate although there is typically a 300 basis points (3%) spread between them. The WSJP…

Development Spread

The difference, denoted in basis points, between the market cap rate and the yield-on-cost . The Development Spread measures the "development pop", or value-added by taking on the construction and lease-up risk. The greater the development spread,…

Bridge Loan

Also referred to as a mini-perm, in real estate a bridge loan is a short-term loan typically provided to developers and value-add real estate investors and is used to "bridge" periods during which the property is not eligible for permanent financing.…