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Real Estate Financial Modeling Accelerator (Updated October 2024)

Prior to launching the Accelerator program, Michael and I fielded email after email requesting a more structured real estate financial modeling training program on the site. Over the years, we've covered hundreds of real estate modeling…

Dark Value

The dark value is often analyzed by lenders to more completely understand risk. It refers to the value of the property should the main tenant "go dark" or vacate the property. This is a more crucial risk metric in scenarios where there is a…

Crystallization

Also referred to as a partnership crystallization, a crystallization is a provision in a real estate joint venture agreement where the partners agree to adjust the ownership share in the venture at some pre-defined point in the future. It is…

Cross-docked

In an industrial cross-docked building, dock doors are located on opposite sides of the building (typically the front and rear), which allows for the unloading of goods from inbound delivery trucks and loading the same goods directly onto outbound…

Cost Plus Contract

A contract whereby the contractor is reimbursed for all the construction related costs, in addition to an agreed upon percentage of such costs covering the contractor’s overhead and profit. These contracts are typically used when the scope…

CPI Rent Escalation

A form of contractual rent increase determined by changes in the Consumer Price Index, a common index used to measure inflation in the United States. Most long-term leases in commercial real estate include periodic rent increases. These rent…

In-place Rent

In-place Rent is the rent being charged/collected on existing leases at a property. In contrast to Market Rent, in-place rent is not based on market conditions but rather is based on the lease contract signed between the landlord and tenant. Also…

Core – (structural)

A vertical space in a multi-story building that commonly houses the elevators, stairwells, space for vertical MEP distribution, janitorial closets, and restrooms. It is common for buildings to have the core space in the center of the building,…

Curtailment

A type of prepayment which reduces a mortgage loan's outstanding principle balance. Curtailment can be done by either increasing one’s monthly payments or repaying a lump sum amount, both of which would shorten the loan maturity period. Putting…

Core Plus

Core Plus assets are properties that are otherwise Core assets, but with some component of risk (opportunity) attached to it. It may be a high street retail building with a tenant that takes 10% – 15% of the space vacating in 2 years and the…

Preferred Equity

In commercial real estate finance, preferred equity (or pref equity) is a form of capital that sits between debt and common equity in the capital stack. It typically offers investors a fixed return and a priority claim on the property’s…

Mezzanine Debt

In real estate, mezzanine debt or mezz, is a subordinate loan on real property secured by an interest in the entity that owns the real property rather than on the real property itself. In the event of default, because the entity rather than…

Construction Documents

Detailed documents of the development project put together by the architect after the Design Development Phase of the design process. The Construction Documents (CDs) reflect the finalized building design and provide specific details to communicate…

Concessions

Also referred to as an "Inducement", any preferential financial treatment offered by one party to another in a real estate transaction. In the case of a lease agreement, a concession most often takes the form of free rent for a period of time…

Conceptual Design

A pre-design phase where a owner and A & E team work together to bring shape to the project and outline its function and form. The conceptual design promotes an open dialogue between the architect and the owner, with concept sketches often…

Contractor Controlled Insurance Program (CCIP)

OCIP (Owner Controlled Insurance Program) and CCIP (Contractor Controlled Insurance Program) are broad and all-encompassing insurance policies that usually cover, at a minimum, general liability insurance, worker’s compensation, and excess…