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.
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.
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.
net value of a company’s assets less its liabilities. Book value
will reflect depreciation and amortization, which are expensed for
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.
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.
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
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.
before interest, taxes, depreciation and amortization.
Retail stores that are not located in a shopping
center or central business district.
for distribution (FAD)
A term used to measure the funds
a REIT has available to make distributions.
The total floor space of a building that is designed
for the occupancy of tenants. GLA does not include common areas.
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.
re-leasing of a space with the same tenant after the expiration of
a prior lease on the same space.
utilization of debt to finance property acquisitions. The average publicly-traded
REIT has debt comprising 50% of its capital structure.
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.
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.
The market value of a company’s properties
and other assets after subtracting its liabilities and other obligations.
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.
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
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.
accounting treatment of rental income which requires real estate companies
to average the tenant’s rent payments over the life of the lease.
A lease in which the tenant pays expenses such as
property taxes, insurance and maintenance.