Glossary of commercial 
real estate terms

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.

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.

Redeveloping previously used or contaminated industrial or commercial land. In land development, these projects often require environmental remediation but can unlock valuable urban real estate in high-demand areas.

Portions of a parcel of land that is zoned, entitled, and suitable for construction based on local regulations and physical site characteristics. In land development, identifying buildable land is the first step in planning residential or commercial projects that meet zoning, environmental, and engineering requirements for construction.

A professional organization representing commercial real estate owners, managers, and service providers, offering industry standards, education, advocacy, and networking opportunities to improve the performance and sustainability of buildings.

Official approvals issued by local governments that authorize construction, renovation, or demolition. In homebuilding, permit data serves as a forward-looking indicator of future housing starts and supply pipeline.

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.

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

The difference between what builders are willing to pay for land versus what landowners are willing to accept, which can slow transactions or encourage renegotiation. This gap can widen in volatile markets and impacts deal flow and land acquisition timelines.

The rate at which a value, such as home prices or consumer spending, would have grown if it had increased at a steady rate over a specified time. It's widely used in real estate to smooth volatility in growth trends.

The ratio used to estimate the value of an income-producing property by dividing the net operating income (NOI) by the property’s purchase price or current market value. The cap rate is the yield at which an investor is willing to buy a CRE asset. If a multifamily property has a NOI of $100K and an investor requires a 5% return, then the value of the property is $2M.

A capital market is a financial market in which long-term debt or equity-backed securities are bought and sold. Capital markets are the sources of financing for commercial real estate transactions, including banks, insurance companies, and commercial mortgage- backed securities (CMBS) conduits, investors, and the bond market.

For Capital Markets execution, W&D acts as the advisor vs. the lender role for GSE execution.

A decrease in capitalization rates, often reflecting increased property values, favorable market conditions, and strong investor demand.

The share of investment profits earned by investment managers, which is subject to certain performance hurdles (e.g., investors earning at least a 7% IRR before the manager earns carried interest).

A cash-out refinance replaces an existing loan with a bigger one, allowing a borrower  to convert some or all of a property’s equity into cash.

An official document issued by a local authority that confirms a newly built or renovated home complies with building codes and is safe for habitation. Builders must obtain a CO before closing or move-in.

Designation by the CCIM Institute that an individual is a recognized expert in commercial and investment real estate.

An appraisal license classification that qualifies an individual to appraise all types of real property. This license is issued on a state by state basis.

The chief or deputy chief underwriter who supervises underwriting staff.

Class A properties are newer with high-quality amenities and finishes. They also tend to be desirably located with lifestyle or branding associated with the buildings. Class B properties tend to be older than Class A (though some older locations can maintain a Class A designation). Class B buildings have adequate or good construction and amenities but are not considered luxury spaces and have fewer amenities/less desirability than the Class A designation. Class C buildings are older buildings that are not as well located or amenitized.

The final step of a real estate transaction. Closing is when the transaction is complete, whether it be a sale with property transfer or just a refinance with new loan documents recorded.

Fixed-income investment products (bonds) backed by mortgages on commercial properties. A CMBS conduit loan is a commercial real estate loan packaged with a pool of other commercial real estate loans for sale to investors in the secondary market. CMBS allows lenders to free up capital for additional loans.

The CRE Finance Council (CREFC) is the trade association for the commercial real estate finance industry. Member firms include balance sheet and securitized lenders, loan and bond investors, private equity firms, servicers and rating agencies, among others.

Requires the Federal Reserve and other federal banking regulators to encourage financial institutions to help meet the credit needs of the communities in which they do business, including low- and moderate-income (LMI) neighborhoods. CRA is important because banks have requirements to invest in communities where they hold deposits. If W&D has an investment in those areas, it could give an investor CRA credit.