Amortization: The process of paying off a debt over time through regular payments that cover both principal and interest.

Assignment: The transfer of a tenant’s entire interest in a leased property to another party, with the landlord’s consent.

Assignee: The party to whom the lease is assigned.

Build-Out: The process of finishing the interior space of a commercial property according to the tenant’s specifications, which may include partitions, flooring, ceilings, lighting, and other fixtures.

Building Footprint: The total area that a building covers on the ground, including all floors and levels.

Capital Expenditures (CapEx): Funds used to acquire, upgrade, or maintain physical assets such as buildings or equipment, extending their useful life and improving value.

Cap Rate (Capitalization Rate): The rate of return on a real estate investment property based on the income the property is expected to generate. Calculated as the net operating income divided by the property’s purchase price.

Cash Flow: The net amount of cash being transferred into and out of a property, reflecting the property’s ability to generate income after expenses.

Change of Use: A modification to the designated use of a property, which may require a new planning permit.

Common Area Maintenance (CAM): Charges that tenants pay to cover their share of maintaining common areas in a commercial property, such as lobbies, hallways, and parking lots.

Common Parts Fee: A fee charged to tenants for the maintenance and upkeep of common areas in a building or complex.

Contract of Works: An agreement for the completion of specific work or improvements to the property, often related to tenant improvements.

Date of Signing: The date on which the lease or contract is officially signed by all parties involved.

Debt Service Coverage Ratio (DSCR): A measure of a property’s ability to generate enough income to cover its debt obligations, calculated as net operating income divided by total debt service.

Deposit: A sum of money paid by the tenant at the start of the lease to secure the property and cover potential damages or unpaid rent.

Di Fermo: A term referring to a fixed, definite, or certain lease period or condition.

Di Rispetto: A term referring to a lease condition that ensures respect for certain terms or conditions, often related to the maintenance of property or adherence to specific rules.

Due Diligence: The investigation process before entering into a contract or agreement, where potential buyers or investors verify the details and condition of a property.

Effective Date: The date on which the lease or contract becomes legally binding and enforceable.

Equity Multiple: A ratio that measures the total cash returned to an investor relative to the invested equity, indicating the total return on investment.

Escrow: A financial arrangement where a third party holds funds or assets until conditions of a transaction are met, ensuring both parties fulfill their contractual obligations.

Estate Agency Fees: Fees paid to a real estate agent or broker for their services in facilitating the lease or sale of a property.

Expiration: The end date of the lease term, after which the lease agreement is no longer in effect.

Floor Plate: The gross square meterage of a single floor of a building, typically referring to office buildings.

Force Majeure: A clause that frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control prevents one or both parties from fulfilling their obligations under the contract.

Gross Lease: A lease where the landlord pays for all property-related expenses, such as taxes, insurance, and maintenance. The tenant pays a fixed rental amount.

Gross Leasable Area (GLA): The total floor area designed for tenant occupancy and exclusive use, measured from the center of interior walls to the center of shared walls and to the outside face of exterior walls.

Guarantor: A person or entity that guarantees the obligations of the tenant under the lease, often used to provide additional security to the landlord.

Healthcare Property: Properties used for medical and healthcare services, including hospitals, clinics, and assisted living facilities.

Hospitality Property: Real estate used for accommodating travelers and guests, including hotels, motels, and resorts.

Industrial Property: Real estate used for manufacturing, production, distribution, and storage of goods, including warehouses and factories.

Initial Period: The first term of the lease agreement before any renewals or extensions.

Increments: Regular increases in rent or lease payments, typically specified in the lease agreement.

Internal Rate of Return (IRR): A metric used to evaluate the profitability of an investment, representing the discount rate at which the net present value of future cash flows equals zero.

Land: Undeveloped property that can be used for various purposes, such as residential, commercial, agricultural, or industrial development.

Landlord: The owner of the property who leases it to a tenant.

Landlord’s Registered Address: The official address of the landlord as registered in legal documents.

Lease Assignment: The transfer of a tenant’s lease rights and obligations to another party, with the landlord’s consent.

Lease to Buy: An agreement where the tenant has the option to purchase the property after a specified period.

Leasehold Interest: The tenant’s right to occupy a property for a specified lease term, as granted by the lease agreement.

Leverage: The use of borrowed capital to finance the purchase of a property, aiming to increase the potential return on investment.

Maintenance: The upkeep of property elements such as lifts, AC units, HVAC systems, interiors, exteriors, roofs, and sewage systems, ensuring they remain in good working condition.

Management Agreement: A contract between the property owner and a management company outlining the services and responsibilities for managing the property.

Market Value: The estimated amount for which a property should exchange on the date of valuation, between a willing buyer and seller in an arm’s length transaction.

Mixed-Use Property: A development that combines residential, commercial, cultural, and/or industrial uses, promoting a blend of activities and reducing urban sprawl.

Modified Gross Lease: A lease where the tenant pays base rent plus a share of some property expenses, such as utilities and janitorial services, while the landlord covers other expenses.

Multifamily Property: Residential properties with multiple units, such as apartments and condominiums, designed to accommodate several families or tenants.

Net Leasable Area (NLA): The area within a building that is available for lease to tenants, excluding common areas, service areas, and vertical penetrations like elevators and stairwells.

Net Operating Income (NOI): The total income generated from a property after operating expenses have been deducted, but before deducting taxes and interest.

Notice Period: The period during which the tenant or landlord must notify the other party of their intention not to renew or extend the lease.

Operating Expenses: The costs associated with running a property, including maintenance, utilities, property management fees, insurance, and property taxes.

Option to Renew: A clause in a lease that gives the tenant the right to extend the lease term for an additional period under specified conditions.

Ordinary Repairs: Routine maintenance and minor repairs that are typically the responsibility of the tenant.

Percentage Lease: A lease where the tenant pays a base rent plus a percentage of their gross sales, commonly used in retail properties.

Planning Permit: Official approval from local authorities to use or develop a property in a specific way.

Premises: The property or space that is the subject of the lease agreement.

Pro Forma: A financial statement that projects the future income and expenses of a property based on certain assumptions, used for evaluating investment potential.

Pro-rata: A proportional allocation or distribution of costs, such as rent or maintenance fees, based on the tenant’s share of the total area.

Real Estate Investment Trust (REIT): A company that owns, operates, or finances income-producing real estate, allowing investors to buy shares in real estate portfolios without owning the properties directly.

Renewal Period: The extended term of the lease after the initial period, subject to agreement by both landlord and tenant.

Rentable Area: The total area for which rent is charged to the tenant, including the tenant’s usable area plus a pro-rata share of building common areas such as lobbies, restrooms, and hallways.

Return on Investment (ROI): A measure of the profitability of an investment, calculated as the gain or loss from the investment divided by the initial investment amount.

Shell Condition: A property that is delivered with an unfinished interior, providing a blank canvas for tenant improvements. Typically includes only the basic structure, roof, exterior walls, windows, and basic utility connections.

Square Meterage: A measurement of area expressed in square meters, used to determine the size of a property or space within a property.

Sub-lessee: The party to whom the original tenant subleases the property.

Sub-lessor: The original tenant who subleases the property to another party.

Sublease: An arrangement where the original tenant leases out part or all of the rented space to another tenant, often for the remaining term of the original lease.

Tail Off Period: The final phase of a lease agreement where the tenant gradually reduces their occupancy or operations before vacating the premises.

Tenant: The individual or entity that leases the property from the landlord.

Tenant Improvements (TI): Modifications made to a rental space by the tenant to suit their business needs, often funded by the landlord up to a certain amount.

Termination: The end of the lease agreement, either at the expiration date or earlier if certain conditions are met.

Triple Net Lease (NNN): A lease agreement where the tenant pays for rent and most of the property expenses, including property taxes, insurance, and maintenance. The landlord typically handles structural repairs.

Turnkey: A space that is fully built-out and ready for immediate occupancy, with all necessary improvements and fixtures installed according to the tenant’s requirements.

Usable Area: The actual occupied area of a floor or office suite, measured from the center of shared walls to the inside finished surface of the dominant portion of the permanent outer building walls.

Utility Costs: Expenses for services such as electricity, water, gas, and internet, which may be paid by the tenant or landlord depending on the lease agreement.

Vacancy Rate: The percentage of available rental units in a property or market that are unoccupied at a given time, indicating the supply and demand balance.

Vanilla Box: A commercial space with basic finishing, typically including finished walls, ceilings, lighting, and flooring, but without any specific tenant improvements.

White Box: Similar to vanilla box, a white box space is finished with basic amenities such as walls, ceilings, and lighting, but usually lacks tenant-specific improvements like partitions or specialized fixtures.