Glossary of Real Estate Terms

This information is used with permission from Black's Guide Inc., 444 N. Frederick Avenue, #420, Gaithersburg, MD 20877-2432.

Black's Guide's Glossary of Real Estate Terms provides a complete reference dictionary of terms and phrases used in the commercial real estate industry. These definitions have been endorsed by numerous industry organizations as the Market Standard for their respective regions.

Abatement: A reduction or decrease; usually applies to the forgiveness of rent or a decrease of assessed valuation of ad valorem taxes after the assessment and levy. Above Building Standard: Specialized design and engineering services and all construction necessary to personalize tenant space.

Absorbed Space: Net change in leased space between two dates. Absorption: The rate at which land or buildings will be sold or leased in the marketplace during a predetermined period of time, usually a month or a year. Also called "Market Absorption."

Absorption Period: The number of months required to convert vacant space into leased space assuming no new delivered space. Computed by dividing the average monthly absorbed space during a recent period into the current vacant space.

Ad Valorem: (According to value) Used in reference to general property tax, which is usually based on the official valuation of property.

Add-On Factor: Considered a loss factor, the percentage of gross rentable square footage which is lost to the tenant's physical occupancy.

Adequate Rate Covenant: An agreement often required in revenue bond-financed projects; guarantees the operator will charge adequate rates to produce revenue necessary to cover principal and interest payments.

Alienation Clause: A type of acceleration clause where a debt becomes due in its entirety upon the transfer of ownership of a secured property. See also "Due on Sales Clause" and "Acceleration Clause."

Allowance Over Building Shell: One of three arrangements often used for financing tenant improvements (finishing out office space to accommodate a tenant such as walls, doors, carpeting etc.). Often used in a yet-to-be-built building, this arrangement caps the landlord's expenditure at a fixed dollar amount over the negotiated price of the base building shell. This arrangement is most successful when both parties agree on a detailed definition of what construction is included and at what price. Tenants may ask for a contingency in the event the actual build-out costs are less than the allowance. requiring the landlord to return the savings in the form of rent abatement or other concession.

AM: Accredited Member (designation offered by the American Society of Appraisers). Annual Percentage Rate (APR): APR reflects the cost of a loan on a yearly basis. It may be higher than the note rate because it includes Interest, loan origination fees, loan discount points and other credit costs paid to the lender.

Anticipatory Breach: Occurs when one party to a contract, prior to time of performance, informs the other of his or her intent not to perform. Example: The buyer informs the seller before the closing date of his or her intent not to buy.

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