|EARNING BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA): |
Calculated by taking revenues less expenses (excluding interest, taxes, depreciation and amortization). EBITDA reflects profitability, not cash flow. EBITDA leaves out the cash required to fund working capital and the replacement of old equipment, which can be significant. It is important to look at other measurements to fully understand investment performance.
Right to use the land of another for a particular purpose.
Acronym for Exchange Accommodation Titleholder.
|ECONOMIC CONSTRAINT: |
Any outside constraint which limits the development of a property. Examples are oversupply of competing vacant space, failure of the market to support a rental rate sufficient to justify construction costs, or lack of available financing.
Also called Development Constraint
|ECONOMIC OBSOLESCENCE: |
The reduction in a property's value due to external circumstances such as legislation or changes in nearby property use.
|EFFECTIVE GROSS INCOME (EGI): |
Gross income of a property less an allowance for
|EFFECTIVE GROSS RENT (EGR): |
Net rent generated, after adjusting for tenant
improvements and other capital costs, and for lease commissions and other sales
|EFFECTIVE NET RENT: |
Computed in the same manner as Effective Rent with the
rental amount reduced by operating expenses included in the quoted lease rental rate. Effective Rent is representative of the tenant's actual cost. Effective Net Rent is representative of the landlord's return to the capital investment in the property.
|EFFECTIVE RENT: |
Rental income from a lease over the life of the lease and expressed as an annual dollar. Rent less any abated rent and allowances, divided by the term of the
lease. Sometimes calculated with the time value of money factored in, call Equivalent Level Rent or Level Rent.
A term concerning a right to go out or go across the land (public or private)
|EMINENT DOMAIN: |
The right of a governmental entity to acquire property for public purpose by the exercise of condemnation powers. Under the Constitution, property may not be so acquired without the payment of appropriate compensation to the owner.
Uses, densities, heights, setbacks, and other development rights
which are allowable without further governmental action or conditional approval. Does not constitute a building permit.
|ENVIROMENTAL IMPACT REPORT: |
A report of the probable effect of a development on the surrounding area (environment). The report is prepared by an independent company to federal, state, or local guide lines.
|EXPENSE STOP: |
The level (or maximum amount) up to which the landlord will pay certain operating expenses. Amounts above the stop are the responsibility of the tenant.
|EMINENT DOMAIN: |
The right of the government to acquire privately owned real estate for public use.
The right to develop or improve a property with government approvals for zoning, density, utility installations, occupancy, use and street permits.
When a property is considered leased at market without excessive leasing concessions. Can also be side of markets when demand for space and supply are equal (less nominal space for normal turnover).
|ESCALATIONS RENT: |
Rent in addition to the base rent. Examples are: fixed increases on specific dates and CPI adjustments. Pass-throughs are not escalation rents but rather recoveries of expenses that don't result in an increase in cash flow to the owner. Also called Bumps.
|ESTOPPEL CERTIFICAT: |
Document executed by a tenant where tenant reaffirms that the existing lease is in full force and effect and that no defaults exist unless noted. Buyer and lender require making sure leases are a binding document as represented.
|EXCLUSIVE-AGENCY LISTING: |
A listing contract under which the owner appoints real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms for a commission. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker.
|EXCLUSIVE-RIGHT-TO-SELL LISTING: |
A listing contract under which the owner appoints real estate broker as his or her exclusive agent for a designated period of time, to sell the property, on the owner's stated terms and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner or another broker.
|EXIT CAP RATE: |
The estimated or actual cap rate of a property on date of disposition or sale. Also called Terminal Cap Rate.
|EXPENSE STOP: |
The maximum amount of building operating
expenses which will be borne by the owner prior to passing additional
expenses through to the tenant.
|EXIT STRATEGY: |
Way in which investor plans to liquidate all or part of their investment.
|EXTERNAL OBSOLESCENCE: |
Incurable - caused by negative factors not on the subject property such as environmental, social or economic forces.
This Glossary of Commercial Real Estate Terms is provided for general understanding purposes. Readers should consult with their legal and/or accounting professionals for specific situations and questions. TM 1031 Exchange Inc. and its employees provide neither legal nor accounting services or advice.