Acquisition cost
The outlay of funds needed to purchase a property. In addition to the purchase price, it includes expenses such as closing costs, mortgage loan origination fees, legal and appraisal fees, and title insurance.

Amortization
The process of retiring debt through repayment of principal. Amortization occurs when the payment on the debt exceeds the required interest payment for a given time period.

Anchor
The store within a shopping center that attracts or generates the majority of traffic. Anchors are strategically placed to maximize traffic and sales for all tenants.

Book value
The net value of a company’s assets less its liabilities. Book value will reflect depreciation and amortization, which are expensed for accounting purposes.

Capitalization Rate (or Cap Rate)
A measure of the return generated by a property investment. The cap rate is calculated by dividing property net operating income by its purchase price.

Community shopping center
A shopping center that typically measures 100,000 to 300,000 square feet, has 20 to 70 retail spaces, and is anchored by a grocery store or discount store.

Depreciation
An annual charge taken to reduce the value of a property due to age, obsolescence, etc. Depreciation is a non-cash expense that reduces income but not cash flow.

Distribution yield
The annualized per share distribution expressed as a percentage of the share price.

Distribution Reinvestment Program (DRP)
A program that enables existing stockholders to automatically reinvest their distributions towards the purchase of additional shares.

EBITDA
Earnings before interest, taxes, depreciation and amortization.

Freestanding stores
Retail stores that are not located in a shopping center or central business district.

Funds available for distribution (FAD)
A term used to measure the funds a REIT has available to make distributions.

Gross Leasable Area (GLA)
The total floor space of a building that is designed for the occupancy of tenants. GLA does not include common areas.

Interest coverage ratio
A metric used to measure a company’s ability to meet its debt interest obligations. This is usually calculated as the ratio of EBITDA to interest expense.

Lease rollover
The re-leasing of a space with the same tenant after the expiration of a prior lease on the same space.

Leverage
The utilization of debt to finance property acquisitions. The average publicly-traded REIT has debt comprising 50% of its capital structure.

Liquidity
The ability to convert assets into cash without an appreciable loss in value. Investments are said to have good liquidity if they can quickly and easily be converted into cash.

Neighborhood shopping center
A shopping center that generally measures 30,000 to 100,000 square feet, has 15 to 20 retail spaces, and is anchored by a grocery store.

Net asset value (NAV)
The market value of a company’s properties and other assets after subtracting its liabilities and other obligations.

Real Estate Investment Trust (REIT)
Created through an act of Congress in 1960, Real Estate Investment Trusts own portfolios of income producing properties and enjoy special status under the US tax code that allows them to pay no corporate income tax. By law, REITS are required to pay out 90% of their taxable income.

Return of capital
The portion of a REIT’s distribution in excess of taxable income. For a tax-paying stockholder, a return of capital does not create taxable ordinary income but does reduce the stockholders’ tax basis.

Shadow anchor
A store that may bring in significant traffic but is not considered part of that shopping center. Shadow anchors can occur when shopping centers are located in close proximity to each other.

Straight-lining
An accounting treatment of rental income which requires real estate companies to average the tenant’s rent payments over the life of the lease.

Triple net lease
A lease in which the tenant pays expenses such as property taxes, insurance and maintenance.