Glossary of commercial 
real estate terms

The multi-step process involved in selling a commercial real estate loan to a borrower, including actions such as pre-qualification and underwriting.

The professional involved in the administrative aspects of a loan, including collecting and keeping records of monthly payments, collecting and paying taxes and insurance, and managing escrow funds.

The LTC ratio is a metric used in commercial real estate to compare the total cost of construction or renovation on a project to the amount borrowed.

The amount of a loan divided by the appraised value of the property, used by lenders in determining loan approvals and down payments. The higher the down payment, the lower the LTV ratio. Mortgage lenders may use the LTV in deciding whether to lend to a borrower and to determine if they will require private mortgage insurance. As a rule of thumb, a good loan-to-value ratio should be no greater than 80%. Anything above 80% is considered to be a high LTV, which means that borrowers may face higher borrowing costs, require private mortgage insurance, or be denied a loan.

A professional that understands commercial real estate and assesses an asset and a sponsor to determine acceptability of risk of a loan application. More specifically, loan underwriters evaluate the cash flows of the asset, quality of the asset, borrower and sponsor capabilities and experience, etc.

The process lenders use to evaluate the creditworthiness of a potential loan opportunity including the collateral (property) and borrower.

The MAI designation is held by professionals who can provide a wide range of services relating to all types of real property, such as providing opinions of value, evaluations, reviews, consulting, and advice regarding investment decisions, among others.

Analysis of workforce stability based on nearby Fortune 500 corporate offices, hospitals, universities, and military bases.

Homes constructed off-site, then moved to the properties where residents will live. MHCs include the pads and utility and sewer hookups affixed to the land for manufactured homes.

Housing where rents are based on existing market demand, without government subsidies.

The most probable price which a property should bring in a competitive and open market under a) conditions requisite to a fair sale, b) the buyer and seller each acting prudently and knowledgeably, and c) assuming the price is not affected by undue stimulus.

A large-scale residential development designed with integrated amenities, infrastructure, and land uses. MPCs often include schools, retail, parks, and multiple builders.

When a hybrid debt issue is subordinate to another debt issue from the same issuer. Mezzanine debt bridges the gap between debt and equity financing and is often used during mergers and acquisitions or leveraged buyouts. It is commonly referred to as Mezz Debt.

Subordinated debt that combines features of debt and equity, often used for real estate projects with higher risk.

The use of investments by foundations as tools to achieve their philanthropic goals. Mission Investments (also called Impact Investments) describe investments by mission- based organizations that are designed to generate both a social and a financial return. Mission-Related Investments (MRIs) are market-rate investments that support the mission of the foundation by generating a positive social or environmental impact, while generating reasonably competitive rates of financial return.

A property that includes both residential and commercial space such as retail or office space, fully integrated into one project.

A loan secured by real estate.

Replacing an existing loan with a new loan, typically to secure better terms, lower rates, or access equity.

Handling the day-to-day tasks involved with a mortgage. A mortgage servicer may do a number of things, including servicing assets such as the following: handling monthly payments (and the statements associated with them), managing mortgage insurance fees, allocating principal and interest in mortgage payments, managing property taxes and escrow funds, and etc.

Loan servicers charge mortgage servicing fees to process loan or mortgage paperwork.In addition, they’ll charge for any services not considered routine, or as a penalty for late payments. After a loan is closed, mortgage loans move into the servicing phase during which the monthly payment is collected until the loan is paid off. It’s the responsibility of the servicer to forward principal and interest payments to the investor in the loan, usually someone in the bond market.

Mortgage servicing rights surface when the original mortgage lender sells the right to service a mortgage to another party.

The financing - providing loans to multifamily owners using all capital sources, e.g., Agencies – FHA and Government-sponsored enterprises (GSEs - Fannie Mae & Freddie Mac), Capital Markets, and WDIP.

Any residential property that contains more than five housing units, including apartment complexes, manufactured home communities, and single-family rental properties.

Credit scores are an estimate of the likelihood for a consumer to default on a debt repayment. WDSuite’s Multifamily Tenant Credit History benchmarks tenant credit scores relative to the neighborhood and market.

The ratio of investment distributions and residual value over the paid-in capital.