Glossary of commercial 
real estate terms

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.

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

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.

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.

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.

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.

Recognition given to banks and financial institutions under the Community Reinvestment Act (CRA) for activities that support the credit needs of low- and moderate-income communities. CRA credit can be earned through activities such as lending for affordable housing, investing in community development projects, or providing financial services to underserved areas. It is used to evaluate an institution's compliance with the CRA during regulatory assessments.

A property that is similar to the subject property in terms of location, size, condition, and other relevant characteristics, used for comparison in the valuation process. Also known as “comps”, these can be sales comps of recently sold properties, operating comps for individual income and expense line items, assessment/tax comps, or rent comps.

A privately owned individual housing unit within a complex of other units.

A loan backed by the federal government – Fannie Mae, Freddie Mac, or FHA. There are no governmental subsidies. The loan doesn’t qualify as Affordable by the definition of the Agencies.

A valuation method that estimates the value of a property by considering the cost of replacing it, taking into account depreciation and obsolescence.

The combined cost of equity and debt financing required to fund a real estate project.

A risk indicator within WDSuite showing the percentage of multifamily tenants behind on debt payments, signaling potential cash flow issues.

The rate at which new data center inventory is leased within a given market over a specific time period. High absorption rates signal strong demand from enterprise users and hyperscalers, influencing development pipelines, cap rates, and market valuations in key data center hubs.

A property class focused on facilities that house and operate servers hosting data and web applications, storage devices, switches, routers, and fiber optic transmission equipment with controlled HVAC and cooling systems.

A transaction in which a data center owner sells the asset to an investor and simultaneously leases it back. This structure allows operators to unlock capital tied up in real estate while retaining operational control, and offers investors a stable, long-term income stream backed by mission-critical infrastructure.