GLOSSARY

Glossary of commercial
real estate terms

Welcome to the Walker & Dunlop Glossary of Commercial Real Estate Terms.

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We created this glossary to define and explain a collection of terms and acronyms in everyday use within commercial real estate and finance. As our industry continues to evolve and grow, so will our glossary.

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Terms & Definitions

Terms

Definitions

Commercial Real Estate Terms - General and Lending

1031 Exchange

Letter

A tax-deferral mechanism allowing real estate investors to sell a property and reinvest the proceeds into similar properties to defer capital gains taxes if IRS rules are followed.

Investment Management

Accredited Investor

Letter

An accredited investor is an individual, trust, or a business entity that is deemed a sophisticated investor based on certain financial and professional criteria.

Commercial Real Estate Terms - General and Lending

Adaptive Reuse

Letter

A property converted to a different use to meet current demand. Examples could include an office building converted to residential space or an industrial space converted to a retail space.

Commercial Real Estate Terms - General and Lending

Adjustable-Rate Mortgage (ARM) Loan

Letter

A loan with an interest rate that adjusts with the market over time. With an ARM loan, the initial interest rate is fixed for a period of time (floating over an index like SOFR). After that, the interest rate applied to the outstanding balance is reset periodically, at yearly or even monthly intervals. If the interest rate increases, your payments increase, and vice versa.

Housing and Property Types

Affordable Housing

Letter

Defined by HUD as housing where the occupant pays 30% or less of their gross income on housing and utilities.

Associations

Affordable Housing Investors Council (AHIC)

Letter

An organization that supports the investment in affordable housing by providing resources, guidance, and collaboration opportunities for investors, with the goal of addressing the affordable housing crisis and promoting community development.

Affordable Housing

Affordable Housing Preservation

Letter

Preserving affordable properties that are at or nearing the end of their 15 year compliance period, preventing them from being redeveloped into market-rate properties. W&D Affordable Preservation does this by acquiring these assets and either extending existing income and/or rent restrictions or putting new restrictions in place.

Finance

Agency Lender

Letter

A lender licensed or authorized to originate and/or service loans for Fannie Mae, Freddie Mac, and other government-sponsored enterprises. Walker & Dunlop is an agency lender.

Government - Sponsored Enterprises (GSEs)

Agency Lender

Letter

A lender licensed or authorized to originate and/or service loans for Fannie Mae, Freddie Mac, and FHA. Walker & Dunlop is an agency lender.

Commercial Real Estate Terms - General and Lending

Amortization

Letter

Continuous repayment schedule of loan principal over a period of time until the loan is repaid.

Valuations

Appraisal

Letter

An unbiased professional opinion of the value of a property conducted by a licensed appraiser, based on factors such as geographic location, economic fluctuations, demographics, market demand, and maintenance.

Associations

Appraisal Institute

Letter

The Appraisal Institute is a global professional association of real estate appraisers, with over 16,000 professionals in almost 50 countries throughout the world. Its mission is to empower valuation professionals through community, credentialing, education, body of knowledge, and ethical standards.

Valuations

Appraisal Report

Letter

A written document prepared by an appraiser that details the appraisal process, methodology, and the final value estimate.

Valuations

Apprise By Walker & Dunlop

Letter

W&D’s independent third-party valuation and advisory team that provides up-front deal sizing support, market intelligence, appraisals, financial reporting, and custom data-driven technology solutions for internal and external clients.

Investment Management

Assets Under Management (AUM)

Letter

The total market value of investments that an advisor, investment management firm, real estate developer, fund, or other entity that manages invested capital handles on behalf of investor customers.

Housing and Property Types

Assisted Living

Letter

State-licensed residences and facilities for seniors and people with disabilities who need assistance with daily tasks and access to medical care. These facilities typically offer care that’s less extensive than that of a nursing home. These often include memory-care facilities.

Financial Terms

Balance Sheet

Letter

The company’s valuation and financial position at a particular time, including assets, liabilities, and equity.

Finance

Balloon Payment

Letter

A large, lump-sum payment due at the end of a loan term, typically used in commercial real estate loans with short-term durations and lower regular payments. It covers the remaining principal balance not paid during the loan term.

Financial Terms

Basis Point (BPS)

Letter

1/100th of 1%, used in reference to interest rates. e.g., 100 bps = 1% and 50 bps = 1⁄2 %.

Affordable Housing

Big A Affordable Housing

Letter

This housing is specifically for renters earning below 60 percent of AMI (Area Median Income) and qualify for subsidy programs such as LIHTC and Housing Choice vouchers. All Big A affordable properties have some form of Land Use Restriction Agreement (LURA) attached to them, requiring rents to be restricted to set affordable levels.

Financial Terms

Break-Even Point

Letter

The occupancy or revenue level at which a property's income equals its operating expenses and debt service, resulting in neither profit nor loss.

Commercial Real Estate Terms - General and Lending

Bridge Loan

Letter

A temporary or short-term loan that provides financing during the transition to longer term, lower-rate, or more permanent financing. Borrowers often use bridge loans when acquiring or repositioning any asset class.

Investment Sales

Broker Opinion Of Value (BOV)

Letter

An unofficial assessment of a property’s value by an expert, like a commercial real estate broker, which is often used in estimates before an official appraisal.

Housing and Property Types

Build-For-Rent (BFR)

Letter

A subset of the single-family rental (SFR) market. These properties, purpose-built to be rental homes, are typically lower in density than traditional multifamily properties, and may have differing maintenance and property management considerations.

Housing and Property Types

Build-to-Suit

Letter

A property development custom-built for a tenant’s specific requirements, often with a long-term lease in place.

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