The Intelligent REIT Investor Guide

The Intelligent REIT Glossary

The following is a glossary containing some terms used frequently in the worlds of commercial real estate in general and REITs specifically. Admittedly, investors don't always interpret all of them the same way. So you will undoubtedly encounter definitions elsewhere that are somewhat different. Nonetheless, this list is meant to be as accurate and helpful as possible.

Another good resource in this regard can be found at Nareit's website: www.reit.com/IndividualInvestors/GlossaryofREITTerms.aspx

Absorption rate:

The pace at which landlords are able to fill rentable space, usually as compared to existing supply. (See Gross absorption; Net absorption.)

Acquisition costs: 

The direct expenses involved in purchasing a particular asset, such as closing costs, brokerage fees, legal fees, title insurance, and due diligence.

Adjusted funds from operations (AFFO): 

Funds from operations (see FFO) minus normalized recurring expenditures that are necessary to properly maintain and lease the property (e.g., new carpeting and draperies in apartment units, leasing expenses, tenant improvement allowances) that are properly capitalized and amortized. Adjustments are also made to eliminate any rent straight‐lining. (See Straight‐line rent.)

Amortization: 

The repayment of some of the principle on a loan before its term end. This cannot apply to interest‐only loans, where intangible asset‐related expenses are professionally recorded after net operating income (see ...