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Acceleration Clause - An acceleration clause is a contract term that allows a lender to force a borrower to repay the entire balance of a loan if specific conditions are not met. The reasons for the lender's right to demand loan repayment, as well as the amount of repayment required, are outlined in an acceleration clause.
Accredited Investor - A person or entity that is accredited, is permitted to invest in securities that are not registered with the Securities and Exchange Commission (SEC). However, there are accredited investor qualifications like specific income and net worth requirements to achieve to be considered one.
Accrued Interest - Refers to the interest that has been accumulated on a loan or other financial responsibility as of a given date but has not yet been paid.
Active Income - Active income is defined as a salary earned from specific duties or services rendered according to an agreed task, within a specified time frame. While in contrast, active income vs. passive income, also known as unearned income, is a type of income that can be earned or maintained automatically with little or no effort.
Adjusted Tax Basis - The initial cost or another basis of property, lowered by depreciation deductions and raised by capital expenditures, is referred to as the adjusted basis or adjusted tax basis.
Alternative Investment  - A financial asset that does not fall into one of the traditional investment categories is known as an alternative investment. Stocks, bonds, and cash are all common types. Private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts are examples of alternative investments.
Amortization  - Amortization definition, is a strategy used in accounting to reduce the book value of a loan or intangible asset over a predetermined period of time. When it comes to a loan, amortization refers to the process of spreading out payments over time. Amortization is analogous to depreciation when applied to an asset.
Anchor Tenant - The largest or most visible store in a shopping center is known as anchor tenant. They either have unique things or have a well-known name, thus they help lure customers into the region. Big-box businesses like Target, Wal-Mart, and grocery stores are common anchor tenants in strip malls.
Annual Percentage Return (APR) - The yearly interest earned by a sum charged to borrowers or paid to investors is referred to as the annual percentage rate (APR). It is a percentage that represents the real annual cost of money for a loan or investment over the period of the loan. APR can be thought of as the percentage of return on a loan, taking into account its costs
Assets Under Management (AUM) - The overall market value of the investments managed by a person or entity on behalf of investors.
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Basis PointWhat are basis points? One-hundredth of one percentage point is referred to as a basis point. Permyriad is a related term that means one-hundredth of 1%. Interest rate changes are frequently expressed in basis points. If a 10% interest rate climbed by one basis point, it became 10.01%.
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Cap Rate - The capitalization rate or cap rate is a metric of real estate worth that is used to compare various real estate investments. Although there are many variants, the cap rate in real estate is commonly defined as the ratio of a real estate asset's annual rental income to its current market value.
Capital Appreciation - A rise in the price or worth of an asset is known as capital appreciation. It could apply to an increase in the value of an investor's firm stocks or bonds, an increase in the value of land, or any other upward revaluation of fixed assets.
Capital Call - A capital call is an investment or insurance firm's legal authority to demand a portion of the money guaranteed to it by an investor. The money that had been pledged to the fund would be referred to as a capital call fund. The capital call is when the pledged money are actually sent to the investment target.
Capital Gain - The profit generated on the sale of an asset that has increased in value throughout the holding term is referred to as capital gain. Investment or asset might be tangible, such as a car or a business, or intangible, such as stock.
Capital Gains TaxesTaxes on capital gains are taxes on an investment's earnings that are paid when the investment is sold. The capital gains, or profits, are referred to as realized when stock shares or other taxable investment assets are sold. Unsold investments and unrealized capital gains are exempt from the tax.
Capitalization Cap Rate - In the field of commercial real estate, the capitalization rate, also known as a cap rate is used to express the projected rate of return on a real estate investment property.
Capitalization Rate - A profitability indicator used to assess a real estate property's return on investment.
Cash On Cash Return - Term that is frequently used in real estate transactions to refer to the rate of return on cash invested in a property.
Commercial Mortgage Backed Security (CMBS) - Fixed-income investments secured by mortgages on business properties rather than residential real estate are known as commercial mortgage-backed securities (CMBS).
Common EquityWhat is common equity? It is the amount invested in a corporation by all common shareholders. This includes, most notably, the value of the common shares themselves.
Core Plus - Real estate investments in the core plus category are known for providing both income and capital growth. Core plus real estate is frequently sought by real estate investors who want to enhance value to a property while also receiving a steady income.
Cost Basis - The cost basis total is the asset's original tax value, which is normally its purchase price, adjusted for stock splits, dividends, and return of capital distributions. The capital gain, which is equal to the difference between the asset's cost basis and its current market value, is calculated using this value.
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Debt - A real estate debt fund is made up of private equity-backed capital that lends money to potential real estate buyers or present owners.
Depreciation - Here's the definition of depreciation. A reduction in the price or worth of an asset is known as depreciation. When the market value of an asset falls below the amount paid by an investor, depreciation happens. It can refer to a drop in the value of the real estate, equities, bonds, or any other investable asset type.
Depreciation Recapture - The gain earned on the sale of depreciable capital property that must be declared as ordinary income for tax purposes is known as depreciation recapture. When the sale price of an asset exceeds the tax basis or adjusted cost basis, depreciation recapture is applied.
Distribution Waterfall - A distribution waterfall is a method of allocating investment returns or capital gains among a group or pooled investment participants. The distribution waterfall, which is commonly connected with private equity firms, specifies the order in which distributions are distributed to limited and general partners.
Downside Protection - When strategies are used to mitigate or avoid a loss in the value of an investment, it is known as downside protection. To avert losses, investors and fund managers often want downside protection, which can be achieved through a variety of products or strategies.
Drip - A dividend reinvestment plan (DRIP) or drip funds enable investors to reinvest their cash dividends into more shares or partial shares of the underlying stock on the dividend payment day.
Due Diligence - In investment, due diligence is an investigation of a potential investment, such as a stock or a product, to ensure that all facts are correct. Examining all financial documents, prior firm performance, and anything else deemed relevant are examples of these facts.
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Equity Equity in real estate is the difference between the market worth of your home and the amount you owe the mortgage lender is called equity. Simply put, it's the amount of money you'd get if you sold your house after paying off your mortgage.
Equity Multiple - The sum of all cash distributions received from an investment divided by the total amount put in the investment.
Escrow - An escrow meaning is a contract in which a third party receives and disburses money or property on behalf of the primary transacting parties, with the disbursement conditional on the transacting parties' agreement.
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Floor Area Ratio (FAR)What is floor area ratio? The floor area ratio (FAR) is a calculation that compares the size of a building's floor area to the size of the land or parcel on which it is built. It is calculated by dividing the total area of the building by the total area of the parcel (building area ÷ lot area) and expressed as a decimal value.
Free Cash Flow (FCF) - Free cash flow (FCF), also known as a free cash flow to firm in corporate finance, is the amount by which a company's operating cash flow exceeds its working capital needs and fixed asset expenditures.
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Gateway Market - In terms of population, economic health, economic variety, density, and desirability for residents—particularly young professionals—gateway markets are cities, metros, or DMAs (designated market areas) that are rated in the top tier by real estate investors.
GP Investor What is GP in finance? The profit a firm makes after deducting the costs of producing and selling its products, or the costs of delivering its services, is known as gross profit. It is computed by subtracting the cost of goods sold (COGS) from revenue on a company's income statement or sales.
Gross Potential Income - The predicted earnings from a sale or the performance of services is known as gross potential income. In real estate, gross potential income refers to all of the income a rental property can earn assuming it is fully occupied and all rents are paid on time.
Ground LeaseWhat is ground lease? A ground lease is an agreement that allows a tenant to develop a piece of property for the duration of the lease, after which the land and its improvements are returned to the property owner.
Ground Up Development - The term ground-up development, also known as ground-up construction refers to the construction of a real estate asset from the ground up. Either raw, undeveloped land or the full demolition of any existing structure serves as beginning points.
Guaranteed Maximum Price (GMP) Contract - A guaranteed maximum price (GMP) contract establishes a ceiling, or maximum price, that the customer must pay their contractor or subcontractor, regardless of actual costs.
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Hold Period - The interval between the acquisition of an asset and its sale is referred to as the hold period. It is the amount of time that an individual investor or entity holds a certain asset.
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Illiquid AssetIlliquid by definition refers to a stock, bond, or other assets that cannot be sold or exchanged for cash without suffering a significant loss in value.
Interest Reserve - The interest reserve is a capital account set up by the lender to meet the interest payments on a loan during the construction period. In addition, the interest on the interest is paid by the borrower, funded but no money is actually used until the interest is settled.
Internal Rate of Return (IRR) - The internal rate of return (IRR) is a financial statistic that is used to calculate the profitability of possible investments. In a discounted cash flow analysis, the IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero. IRR is calculated using the same formula as NPV.
Investing Entity - An investment entity is a business that makes investments with the aim of capital appreciation, investment income, or both. The performance of those assets is likewise evaluated on a fair value basis by an investment corporation.
Investing Terms - It can refer to the estimated life of an asset or liability, during which the asset's or liability's value is projected to rise or diminish, depending on its nature.
Investment Property - What is an investment property? It is a piece of real estate purchased with the goal of generating a profit through rental income, future sales of the property, or both. An individual investor, a group of investors, or a business may own the property.
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Jumpstart Our Business Startups (JOBS Act) - Jumpstart Our Business Startups Act (JOBS Act 2012), is a bill designed to boost small business finance in the United States by loosening many of the country's securities restrictions. It was signed into law by President Barack Obama on April 5, 2012, with bipartisan backing.
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Key Principal Real Estate - Key principals refer to any entity (whether person or company) that manages and controls the Borrower or Property. They are often called Guarantors as they are required to present and provide a Guaranty.
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Limited Liability Corporation (LLC) - The limited liability corporation (LLC) meaning, is a type of private limited company that is unique to the United States. It's a business structure that combines a partnership's or sole proprietorship's pass-through taxation with a corporation's restricted liability.
Linear IncomeLinear income, also known as work income, refers to a paycheck that is based on how much effort you put in. Working a specific number of hours for a predetermined hourly salary is the most common way to make linear revenue.
Liquidity - A security's ability to be bought or sold rapidly in the market at a price mirroring its current value.
Liquidity PremiumWhat is liquidity premium? A liquidity premium is any additional compensation required to promote investment in assets that cannot be converted into cash at fair market value quickly and readily. A long-term bond, for example, will have a higher interest rate than a short-term bond due to its illiquidity.
Loan To Cost Ratio (LTC) - The loan-to-cost (LTC) ratio is a statistic used in commercial real estate construction to compare a project's funding (as provided by a loan) to the project's construction costs. The LTC ratio is used by commercial real estate lenders to assess the risk of a construction loan.
Loan To Value Ratio (LTV) - The resulting LTV or loan-to-value ratio is the value of a home that increases or decreases as the down payment is increased or decreased.
LP Investor - The abbreviation LP stands for Limited Partner. An LP investor who becomes a member of a fund by making a capital contribution like an investment is referred to as a member. A limited partnership is a sort of investment partnership that is frequently used as a vehicle for investing in assets such as real estate.
LTV - The loan-to-value (LTV) ratio is a calculation that compares the amount of your mortgage to the property's appraised worth. The lower your LTV ratio, the greater your down payment. Lenders may use the LTV to assess whether or not to lend to you and whether or not to obtain private mortgage insurance.
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Mezzanine Debt - Let's define mezzanine debt, it is a hybrid debt issue that is subordinated to another debt issue from the same issuer. Mezzanine debt, which is subordinate to pure debt but senior to pure equity, bridges the gap between debt and equity financing and is one of the riskiest types of finance.
Modern Portfolio TheoryModern Padfolios Theory (MPT) is an investment theory that allows investors to build a portfolio of assets that maximizes the expected return for a given amount of risk. The theory assumes that investors are risk-averse and that they will always pick the less risky portfolio for a given amount of projected return.
Multifamily Real EstateWhat is multifamily real estate? Multifamily real estate, also known as a multi-dwelling unit or MDU, is a type of housing in which one or more buildings within a complex have multiple independent housing units for residential residents.
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Net Asset Value (NAV) - The net asset value (NAV) is the total value of an entity's assets minus the entire value of its liabilities, and it represents the entity's net worth. The NAV formula indicates the per share/unit price of a mutual fund or an exchange-traded fund (ETF) on a certain date or time and is most typically used in the context of a mutual fund or an exchange-traded fund (ETF).
Net Operating Income - A financial indicator that is used to determine the profitability of income-generating real estate ventures.
Net WorthWhat is the definition of net worth? A person's net worth is a measure of their wealth. The amount of a person's or company's assets, less any obligations or liabilities, is their net worth.
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Opportunistic - The riskiest sort of real estate investment, with the least predictable cash flows, is opportunistic real estate. They also have the best opportunity of making the most money and having the most debt and vacancies.
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Pari PassuPari Passu is a Latin term that means with equal footing or with an equal step. It can also be rendered as equally ranking,hand-in-hand, with equal force, or moving together, and, by extension, fairly, without partiality.
Passive Income - Any revenue earned on a consistent basis from a source besides an employer or contractor.
Passive Real Estate Investing - Maintaining a passive real estate investing does not necessitate much effort on the part of the investor. Real estate investment trusts (REITs), crowdfunding opportunities, remote ownership, and real estate funds are all options for passive real estate investing.
Pooled Investment VehiclePooled investment vehicles, in general, are those in which numerous investors participate. Each investor contributes money to the pool in order to purchase shares in the investment. Essentially, it's a single enormous portfolio backed by a number of investors. Dividend or interest payouts, as well as price appreciation when the investment's per-share price rises, are used to generate returns.
Preferred Equity - Any class of securities that receives a higher priority than common equity for distributions of a company's cash flow or earnings.
Preferred Return - A preferred return definition is a profit distribution preference in which gains from operations, sales, or refinancing are given to one class of equity before another until the initial investment yields a particular rate of return.
Prepayment Penalty - What is a prepayment penalty? If you pay off all or part of your mortgage early, you may be charged a prepayment penalty by some lenders. You would have agreed to a prepayment penalty when you closed on your property if one existed. However, a prepayment penalty is not applicable to all mortgages.
Private Equity FundWhat's private equity fund? A private-equity fund is a type of collective investment scheme that invests in a variety of equity securities using one of the private equity investment methodologies. The majority of private equity funds are limited partnerships with a 10-year duration.
Private Market Real Estate - The universe of non-traded real estate assets known as private-market real estate is characterized by investment in a discrete property and is illiquid by definition. Compared to publicly-traded REITs (real estate investment trusts), private-market real estate investments are less risky.
Pro FormaWhat does pro forma mean? It is a procedure or document that is supplied as a courtesy or meets minimum standards, corresponds to a norm or doctrine, is executed perfunctorily, or is regarded a formality.
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Qualified Purchaser - An individual or a family-owned company that owns investments worth at least $5 million.
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Real Estate - Property, as well as any permanent improvements related to the land, whether natural or man-made, such as water, trees, minerals, buildings, dwellings, fences, and bridges, is the definition of real estate.
Real Estate Investment Trust (REIT) - Real estate investment trusts (REITs) are businesses that own or finance income-producing real estate in a variety of markets. To qualify as REITs, these real estate businesses must meet a variety of criteria.
Real Estate Syndicate - A real estate syndication occurs when a group of investors pool their capital to collectively acquire a significant piece of real estate.
Recurring Income - Recurring income, also known as residual or passive income, is obtained by establishing or acquiring an asset that continues to produce profits even if no active work is being done on it. While the method of investing a specified amount of money on a regular basis, frequently on an automatic basis, is known as recurring investment.
Regulation ARegulation A is a registration exemption established in the United States under the Securities Act of 1933. Under the Securities Act of 1933, any offer to sell securities must either be registered with the Securities and Exchange Commission or meet certain qualifications to be exempted from registration.
Regulation D (Reg D) - The Securities and Exchange Commission (SEC) regulates private placement exemptions under Regulation D (Reg D). It should not be confused with Federal Reserve Board Regulation D, which restricts savings account withdrawals.
Regulation D1 - Regulation D falls under the Securities Act and is a regulation that provides exemptions from registration requirements in order to allow companies to sell securities without registering offerings with the SEC. Rule 506 specifically allows raising unlimited amounts from accredited investors without an SEC public sale. This assumes that any accredited investors will be able to bear this investment decision burden without a SEC review.
Residual Income - Revenue that continues to be received after the income-producing work is completed.
Reversion - A reversion, real estate specific, is a future interest that an individual retains in a piece of property after it has been conveyed to another individual in a lower estate. The property will be returned to the original individual once the smaller estate has expired or ceased.
Rev PARRev PAR, or revenue per available room, is a hotel performance indicator that is determined by dividing a hotel's total guestroom income by the number of rooms and days in the measurement period.
Roger Hazard Net Worth - Roger Hazard is a former television host who now runs his own business as a house designer. He studied architectural design and worked on the television show Sell This Home, where he was tasked with renovating a home and maximizing its value. As of 2022, Roger Hazard's net worth is an estimated $700,000.
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Sales CompsWhat is sales comp? Sales comp in retail refers to a company's same-store sales versus the prior year or a similar store. Comps is short for "similar company analysis" in financial analysis, which is a strategy for assigning a value to a corporation based on the valuation indicators of a peer. Comps are used in real estate to determine the worth of a property by comparing it to similar properties.
Secondary MarketsWhat are secondary markets? Also known as the aftermarket or follow-on public offering, is a financial market for buying and selling previously issued financial instruments such as stock, bonds, options, and futures.
Secured vs Unsecured Position - Let's define secured vs unsecured notes. There is no collateral supporting unsecured debt. In an unsecured loan, lenders offer funds based simply on the borrower's creditworthiness and commitment to repay. Secured debts are those for which the borrower pledges an asset as a guarantee or collateral.
Securities And Exchange Commission (SEC) - The US Securities and Exchange Commission (SEC) is an independent federal body established in the aftermath of the 1929 Wall Street Crash. The SEC's main goal is to implement anti-market manipulation legislation.
Short Term Investment - Let's define short-term investment, it is a form of investment fund that invests in high-quality, low-risk money market investments. They are frequently used by investors to temporarily store funds while arranging for their transfer to a higher-yielding investment vehicle.
Step Up In Basis - When the price of an inherited asset on the date of the decedent's death is higher than its initial purchase price, this is known as step-up in basis or step-up cost basis. The tax rules provides for a cost basis adjustment to the higher price, which reduces the amount of capital gains tax owing if the item is sold later.
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Tertiary Markets - A tertiary market is a smaller metro area that isn't big enough to be classified as primary or secondary. This market can be riskier to invest in, but it also has the potential for high rewards.
The Capital Stack - The layers of capital that go into purchasing and operating a commercial real estate venture are referred to as the capital stack. It specifies who will get the property's revenue and profits, and in what order.
Triple Net Lease - A triple net lease (NNN) is a lease agreement in which the tenant or lessee agrees to cover all of the property's expenses, such as real estate taxes, building insurance, and upkeep.
U
Unaccredited Investor - The Securities and Exchange Commission (SEC), which is also in charge of overseeing the securities industry and stock and options exchanges, defines a non-accredited investor as someone who does not meet the SEC's net worth or income requirements.
Underwriting Underwriting definition is the procedure by which a person or a company accepts financial risk in exchange for a fee. Most of the time, this risk is associated with loans, insurance, or investments.
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Value Add - The additional value that your product or service possesses over and beyond the baseline is known as a value-add. It's a way to set your firm apart from the competition. If you can provide value, the prospect will want to buy from you even if your price is a little more.
X
XIRR 2 - The extended internal rate of return (XIRR) is a single rate of return that gives the current value of the entire investment when applied to each installment and any redemptions. The individual rate of return is denoted by the symbol XIRR. It's the actual return on your investment.
Y
Yield Yield meaning in finance is the earnings made and realized on an investment over a given period of time. It's stated as a percentage based on the amount invested, the current market value, or the security's face value.
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* Information in this message, including information regarding targeted returns and investment performance, is provided by the sponsor of the investment opportunity and is subject to change. Forward-looking statements, hypothetical information or calculations, financial estimates and targeted returns are inherently uncertain. Such information should not be used as a primary basis for an investor’s decision to invest. Investment opportunities on the Saint Platform are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. Please see additional disclosures here.
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