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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…

Cash-on-Cash Return

Before tax cash flow (BTCF = CFO - Debt Service) divided by the total equity contribution to date, expressed on an annual basis as a percentage. Cash-on-Cash Return = Before Tax Cash Flow ÷ Total Equity Contribution to Date Before tax cash…

Catch Up Provision

A provision included in certain real estate partnership agreements, whereby a special distribution tier is included in the equity waterfall that allows for the general partner (GP) to "catch up" with the limited partner's (LP) cash flow distributions.…

CAGR (Compounded Annual Growth Rate)

A metric that annualizes/averages out the returns received from an investment over the invested number of years. Also known as the Geometric Mean, CAGR projects the rate at which the initial investment will grow over time until the end of the…

Central Business District

The central business district (CBD) is typically the center of business and economic activity of a city. Land use is generally more dense urban infill with various land uses, including retail, office, hotel, government, and entertainment buildings,…

Carried Land Play

A strategy in real estate development where a developer purchases a property with in-place income (i.e. land or buildings that are earning income from rent), and then uses that income from the property to carry the cost of ownership of that…

Car Stacker

A hydraulic machine used to vertically stack cars in order to maximize parking efficiency. This technology is increasingly being used in high-density urban areas where land costs and parking rates make implementing this economically feasible. Putting…

Cash Sweep

The use of any free cash flow (after deducting debt service payments) to pay down an outstanding loan balance. In real estate, a cash sweep is often implemented by a lender when a borrower is unable to payoff the balloon balance upon loan maturity. Putting…

Bridge Loan

Also referred to as a mini-perm, in real estate a bridge loan is a short-term loan typically provided to developers and value-add real estate investors and is used to "bridge" periods during which the property is not eligible for permanent financing.…

Building Owners and Managers Association

Founded in 1907, the Building Owners and Managers Association (BOMA) is an international real estate trade organization representing owners and managers of commercial real estate. The organization promotes, provides advocacy and develops various…

CCIM

A commercial real estate designation issued by the CCIM Institute. The abbreviation CCIM stands for Certified Commercial Investment Member. To earn the CCIM designation, candidates must complete an education component, demonstrate experience…

Buildup Rate

An alternative method for arriving at a capitalization rate for a real estate investment. The buildup rate is the sum of all risks of an investment (denoted in percentage) plus the risk-free interest rate. For example: Risk-Free Rate (e.g.…

Cash-Out Refinance

The process by which a borrower takes out a new mortgage with sufficient loan proceeds to pay off the existing mortgage plus return all or part the borrower's invested capital in the investment. The Cash-Out Refinance is sought by owners of…

Breakup Fee

A fee paid to one party in a real estate transaction by a counter-party when the counter-party backs out of the transaction. The breakup fee is generally a percentage of the purchase price or mortgage loan amount and is used to compensate the…

Building Core

A main concrete structural component that goes the entire vertical length of a high-rise building and houses elevators, stairwells, and MEP vertical risers. In many cases, the core will also house the bathrooms in non-residential commercial…

Common Area Maintenance (CAM)

Common Area Maintenance, commonly referred to as CAM, is a term used in commercial real estate leases that is meant to address the cost of building operations that all tenants benefit from and will pay for. Tenants usually pay a portion of CAM…