CRE terms, plainly defined.

Capitalization rate is the unleveraged annual yield on a property, computed as net operating income divided by purchase price (or current market value).

Net Operating Income is the cash flow a property generates after operating expenses and before debt service, capital expenditures, depreciation and taxes.

Debt Service Coverage Ratio is net operating income divided by annual debt service — the cushion between cash flow and the loan payment.

Loan-to-Value is the ratio of loan principal to property value, expressed as a percent.

Debt yield is net operating income divided by loan principal — the unleveraged return the lender would earn if they had to take the property back.

A 1031 exchange is a like-kind property swap under IRC Section 1031 that defers federal capital gains tax when proceeds from a sold property are reinvested in another investment property within specific deadlines.

NNN (triple-net) is a lease structure where the tenant pays base rent plus the three property-level expenses — property taxes, insurance and maintenance — directly or via reimbursement, leaving the landlord with a near-passive income stream.

A buy-box is the explicit set of criteria — asset class, geography, size, price band, cap floor, and any structural filters — that defines what a specific buyer will and will not consider on any given mandate.

A mandate is one named buy-side relationship with one client — its own buy-box, decision criteria, audit trail, and pipeline — kept separate from every other client a broker represents.

An Offering Memorandum is the marketing document the seller's broker produces for a deal: a glossy multi-page PDF that summarises the asset, the market, the financials and the offering terms.

T-12 (trailing twelve months) is a statement of the property's actual operating income and expenses over the most recent twelve months, used as the basis for underwriting and lender sizing.

Area Median Income is the median household income for a metropolitan statistical area as published annually by HUD, used as the income reference for affordability programs and LIHTC underwriting.