Glossary of commercial 
real estate terms

A key financial metric in commercial real estate that assesses a property's ability to generate enough income to cover its debt obligations. It is calculated as:

DCR = Net Operating Income (NOI) ÷ Total Debt Service

A DCR greater than 1.0 indicates that the property generates more income than needed to cover debt payments, while a DCR below 1.0 suggests insufficient income.

Provides the capital that WDIP uses to originate a loan.

The relationship of the existing cash flow of the property to the cost of the debt. If $125 of cash flow is coming from the property and the mortgage cost is $100, then the DSCR is 1.25x.

A reserve fund established by borrowers in commercial real estate to ensure sufficient funds are available to cover debt service payments (principal and interest) in case of cash flow shortfalls or unexpected expenses. It acts as a financial safety net for lenders and investors.

A ratio of net operating income to total loan amount that determines the risk of the loan. Lower debt yields indicate higher leverage and higher risk. Higher debt yields indicate lower leverage and lower risk. Debt yield (DY) = NOI/total loan amount. NOI = $100K Total Loan Amount = $1M DY=10%.

A common type of prepayment penalty. Defeasance refers to the replacement of the collateral of a loan with securities (generally fixed-rate government bonds) that will offer a lender an equivalent return.

Under the delegated underwriting and servicing (DUS) model, a lender is pre-approved and given the authority to underwrite, close, and service loans on behalf of Fannie Mae. W&D was one of the original eight lenders given this designation. We are the only one of the original eight remaining. There are other lenders who now have this designation.

The analysis of population groups to guide real estate development and marketing strategies.

A valuation method used to estimate the present value of a property by projecting its future cash flows and discounting them using a required rate of return. It helps investors assess a property's profitability and investment potential.

The act of selling, subleasing, or conducting a lease buyout of commercial real estate property. It’s often done to monetize assets to reallocate funds into the company or pay off debt.

Allows borrowers to lock in the interest rate early in the loan origination process.

Provides the capital that WDIP uses to finance properties through one of its equity funds.

Homebuilding, building products, apartments, demographics, homecenters, macro housing, mortgage finance, real estate services, and single-family rental.

A financial model that determines how profits from an investment are distributed among stakeholders, typically prioritizing returns to investors based on predefined tiers, such as preferred returns, return of capital, and profit-sharing splits.

The annual rate of return on an investor's equity in a real estate investment, calculated based on the cash flow received relative to the initial equity investment. It reflects the profitability of the equity portion of the investment.

W&D’s team that finances new construction, refinances, and substantial rehabilitation of the nation’s workforce and affordable housing.

A loan backed by the federal government – the Federal Housing Authority (FHA) - which is part of the US Dept. of Housing and Urban Development (HUD).

The Federal National Mortgage Association, chartered by Congress to provide a reliable source of affordable mortgage financing across the U.S.

Fannie Mae Small Mortgage Loan is a streamlined lending program geared toward smaller rental properties offering fixed-and-variable-rate mortgage loans up to $9 million nationwide.

A division of HUD which insures loans by approved lenders for single-family homes, multifamily properties, residential care facilities, and hospitals in the U.S.

The FHFA is responsible for the supervision and oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Bank Systems.

The Federal Housing Finance Agency (FHFA) is responsible for the supervision and oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Bank Systems.

A financial agreement that allows a borrower in commercial real estate to lock in an interest rate for a future loan or refinancing, protecting against interest rate fluctuations during the lock period and providing cost predictability.

The Federal Home Loan Mortgage Corporation, chartered by Congress to support the US housing finance system and help ensure an affordable, reliable supply of mortgage funds across the country.

A suite of lending products from Freddie Mac tailored to affordable housing, seniors housing, and market-rate housing.