Glossary of commercial 
real estate terms

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 mortgage that meets the underwriting standards set by Fannie Mae and Freddie Mac, including loan limits, credit score, and documentation requirements. These loans typically offer better rates and are easier to securitize.

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 type of multifamily ownership where residents buy shares in a corporation that owns the building, rather than owning individual units outright. Co-ops often have stricter approval and governance processes.

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.

A numerical measure of a borrower’s creditworthiness, based on credit history and payment behavior. In mortgage finance, it plays a critical role in loan approval, pricing, and underwriting.

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.

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 legal document that formally transfers property ownership from one party to another. It is executed at closing and recorded in public records as proof of property ownership.

Failure of a borrower to meet the terms of the mortgage, typically non-payment of principal or interest. It can lead to foreclosure and is a key risk metric in mortgage lending.

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 percentage of loans in a portfolio where borrowers are late on payments, an indicator of borrower stress and overall market risk in mortgage finance.

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

The decline in the value of a property over time due to wear and tear, age, or market factors. It allows investors to deduct a portion of the asset’s cost annually, improving after-tax returns.