Glossary of commercial 
real estate terms

A property used primarily for manufacturing, research and development, production, maintenance, and storage or distribution of goods or both.

Construction of new housing on vacant or underused parcels within existing urban areas, leveraging existing infrastructure and amenities while promoting higher-density growth.

A loan structure where the borrower pays only the interest for a defined period, delaying principal repayment.

A loan in which the borrower is only required to pay back the interest, not the principal, during some or all of the loan duration.

A period of time during which a borrower only pays interest on the loan. The borrower does not repay any of the original loan balance (the principal), so the borrower owes the same amount of money at the end of an interest-only period as the borrower did at the beginning of the loan.

A financial instrument that will cap the amount of interest a borrower could pay on a floating rate loan.

A minimum interest rate set in a loan agreement or financial product, ensuring that the rate cannot fall below a specified level, even if market rates decrease. It protects lenders by guaranteeing a baseline return on the loan.

A financial instrument that will fix the interest rate of a floating rate loan.

Loans used for short-term financing, such as acquisitions or property renovations. Bridge loans are a form of interim loans.

The internal rate of return (IRR) is the annual rate of growth that an investment is expected to generate (or has generated if realized).

An investment vehicle similar to a fund but typically with one investor partner. In a joint venture, WDIP is also investing its own capital.

A loan that exceeds conforming limits set by Fannie Mae and Freddie Mac, often requiring stricter underwriting standards due to increased credit risk.

A Freddie Mac product that features a range of investor options with stable cash flows and a structured credit enhancement. K-Deals include guaranteed senior and interest- only classes. The related underlying private label trust includes unguaranteed subordinate and interest-only bonds.

A Land Use Restriction Agreement (LURA) is a binding, recorded contract between a property owner and a government entity or funding agency that sets specific limitations on property use, particularly in affordable housing programs such as LIHTC. It ensures compliance with requirements such as income targeting, rent levels, tenant eligibility, and duration of affordability.

Period during which a property is being leased to reach stabilized occupancy. It’s closely tracked for absorption rate and rent performance.

The time from a property's first available unit to the point of stabilized occupancy, typically 90%+. It's critical to underwriting and revenue projections.

A preliminary agreement negotiated between a tenant and landlord or buyer and seller. The Letter of Intent or LOI states the primary economics and deal points with proposed terms.

The use of borrowed funds to finance the purchase of a property or investment, aiming to increase potential returns. In commercial real estate, it is typically expressed as a loan-to-value (LTV) ratio.

A highly specialized property type designed for laboratory or research and development purposes.

A dollar-for-dollar federal tax credit for affordable housing investments. Private investors receive a federal income tax credit as an incentive to make equity investments in affordable rental housing. The role of the investor is to partner with the developer of a project (the general partner) by providing equity to help finance its construction or rehabilitation. Many capital investors receive additional tax savings due to the depreciation deduction from the projects. Most current investors are banks and other institutions that want or need CRA (Community Redevelopment Act) credit.

The limited partner(s) (if applicable) are passive investors in investments or funds.

Also known as workforce housing, where households typically earn between 60 and 120 percent of AMI (Area Median Income), this housing is aimed at those who earn too much to qualify for subsidy programs such as LIHTC and Housing Choice Vouchers but are cost-burdened at market-rate rent levels. This also includes naturally occurring affordable properties that do not have Land Use Restriction Agreements (LURA).

A commercial real estate professional who provides options to borrowers on multiple capital source executions.

A loan closer is responsible for assisting clients in securing a mortgage loan. They often handle each aspect of the loan closing process, which includes completing the proper paperwork, informing clients of the loan’s contract requirements, and preparing loan reports. Their goal is to help their clients gain approval for a loan and disperse their funds efficiently. These professionals have an in-depth understanding of loan regulations and payment procedures.

A loan committee/designated loan committee is the managing committee of a lending institution which approves or rejects loans, particularly higher-risk loans that are outside of a loan officer’s authority.