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Glossary

Accredited Investor

An accredited is defined by the U.S. Securities and Exchange Commission as meeting at least one of the following requirements:

Capital Stack

The full range of capital required for a property investment starting at the bottom with the most senior (priority) debt and “stacking” on top the additional capital ending with the least senior capital in the stack, the equity.

Capitalization (Cap) Rate

The ratio of a property’s Net Operating Income to its value on a static basis. Also known as the property’s cash yield.

Core

Unleveraged, low-risk/low-potential return strategy with predictable cash flows. Generally stable, fully leased, multi-tenant properties in strong, diversified metropolitan areas.

Core Plus

Moderate-risk/moderate-return strategy. Many of these properties will require some form of enhancement or value-added element.

Crowdfunding

Crowdfunding refers to the raising of capital for a venture or investment in increments from various investors.

Debt

Some listings involve purchasing a stake in the financing instrument, rather than the equity, of a property. The debt has a priority position in the capital stack over the equity.

Distributions

Payments made to investors periodically over the course of the investment hold period.

Equity

Most deals involve investing in part of the equity of the project, or the capital that the developer invests in the property. The equity has a junior position to the debt in the capital stack.

Fund

Some listings are organized as funds. Investors invest capital for multiple properties at once under the management of the fund, as opposed to an individual property.

Minimum Investment

This is the minimum amount that an investor can invest into a property. It varies by property.

Opportunistic

High-risk/high-return strategy. The properties will require a high degree of enhancement. This strategy may also involve investments in development, raw land, mortgage notes, and niche property sectors.

Percent Funded

This refers to the percentage of the desired capital that has currently been raised. Once a project has achieved 100%, the listing will move to the Closed Deals page.

Reversion

The value of the property produced upon sale at the end of the holding period.

Targeted Hold Period

This is an estimate of how long the investor should expect to have money invested in the property.

Targeted Internal Rate of Return

IRR is the calculation of an investment’s return on its initial investment. The targeted IRR is the property developer’s pro forma return of and on the investment and takes into account the initial investment, the annual net cash flow from the project and the reversion or net cash flow upon sale of the project.

Value Add

Medium-to-high-risk/medium-to-high-return strategy. It involves buying a property, improving it in some way, and selling it at an opportune time for gain. Properties are considered value added when they exhibit management or operational problems, require physical improvement, and/or suffer from capital constraints.

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