Key terms used throughout the course

NOI

Net operating income, calculated before debt service and income taxes.

Cap Rate

NOI divided by value or purchase price, used to compare income yield.

IRR

Annualized return metric that accounts for the timing of cash flows.

Equity Multiple

Total equity distributions divided by total equity invested.

Debt Yield

NOI divided by loan amount, a lender risk metric.

DSCR

NOI divided by annual debt service.

Yield on Cost

Stabilized NOI divided by total development cost.

Preferred Return

Priority return paid to investors before promote tiers.

Promote

Sponsor share of upside after negotiated investor return thresholds.

Exit Cap Rate

Cap rate used to estimate terminal sale value.

Rent Roll

Tenant-level schedule showing rent, square footage, lease dates, recoveries, and rollover exposure.

Economic Vacancy

Revenue loss from vacancy, concessions, credit loss, or below-market collections.

Sources and Uses

Acquisition or development schedule that balances capital needs against debt and equity funding.

Loan Constant

Annual debt service divided by loan amount, often used to estimate payment burden.

Interest Reserve

Capital set aside or borrowed to fund interest during construction or before stabilization.

Lease-Up

Period after delivery when occupancy and income move toward stabilized assumptions.

Disposition Costs

Brokerage, legal, transfer, and closing costs incurred when selling an asset.

Unreturned Capital

Investor capital that has not yet been repaid through distributions.

Catch-Up

Waterfall tier that may allocate distributions to the sponsor after the preferred return before residual splits.

Investment Committee Memo

Decision document summarizing thesis, assumptions, returns, risks, sensitivities, and recommendation.