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Glossary

Our glossary of industry terms is one of the most visited sections of our site. We work continually to keep it current and are always adding new terms. In addition, if you ever can't find an industry word you are looking for, let us know. We'll research it and add it for you.


  • Parking ratio

    Dividing the total rentable square footage of a building by the building's total number of parking spaces provides the amount of rentable square feet per each individual parking space.

  • Partial sales

    The sale of an interest in real estate that is less than the whole property. This may include a sale of easement rights, parcel of land or retail pad, or a single building of a multi-building investment.

  • Partial taking

    The taking of part of an owner's property under the laws of eminent domain.

  • Participating debt

    In addition to collecting a contract interest rate, participating debt allows the lender to have participatory equity rights through a share of increases in income and/or increases in residual value over the loan balance or original value at the time of loan funding.

  • Party in interest

    Under ERISA's 2002 Modernization Act: Parties in interest include employers, unions and, in certain circumstances, fiduciaries. It excludes service providers and their affiliates. Fiduciaries would only be parties in interest where they act on behalf of a plan sponsor in entering into a transaction. An affiliate of a party in interest does not include remote affiliates of employers, unions and fiduciaries (e.g., 10 percent owners), as well as employees of such remote affiliates.

  • Pass-through certificate

    Payments of principal and interest from the underlying pool of mortgages are passed through to the holders of the certificates.

  • Payout ratio

    The percentage of the primary earnings per share, excluding extraordinary items, paid to common stockholders in the form of cash dividends during the trailing 12 months.

  • Pension fund

    A fund established by an employer to facilitate and organize the investment of employees' retirement funds contributed by the employer and employees. The pension fund is a common asset pool meant to generate stable growth over the long term, and provide pensions for employees when they commence retirement

  • Pension liability

    The total amount of capital required to fund vested pension fund benefits.

  • Percentage rent

    Rent payable under a lease that is equal to a percentage of gross sales or gross revenues received by the tenant. It is commonly used in retail center leases.

  • Performance

    The quarterly changes in fund or account values attributable to investment income, realized or unrealized appreciation, and the total gross return to the investors both before and after investment management fees. Formulas for calculating performance information are varied, making comparisons difficult.

  • Performance bond

    A surety bond posted by a contractor guaranteeing full performance of a contract with the proceeds to be used to complete the contract or compensate for the owner's loss in the event of nonperformance.

  • Performance measurement

    The process of measuring an investor's real estate performance in terms of individual assets, advisers/managers and portfolios. The scope of performance measurement reports varies among managers, consultants and plan sponsors.

  • Performance-based fees

    Fees paid to advisers or managers based on returns to investors, often packaged with a modest acquisition and asset-management fee structure.

  • Permanent loan

    The long-term mortgage on a property.

  • Placement agent

    A firm that acts as an intermediary between a fund manager seeking to raise capital and various investors who may be interested in investing in such a fund. Examples of such firms include Park Hill Real Estate, Probitas Partners, Park Madison Partners and Greenhill & Co. 

  • Plan assets

    The assets of a pension plan.

  • Plan sponsor

    The entity that establishes, contributes to and is responsible for the administration of an employee benefit plan, often used interchangeably to describe staff who administer the plan and trustees or investment board members who govern it.

  • Plat

    Map of a specific area, such as a subdivision, that shows the boundaries of individual lots together with streets and easements.

  • Portfolio management

    The portfolio management process involves formulating, modifying and implementing a real estate investment strategy in light of an investor's broader overall investment objectives. It also can be defined as the management of several properties owned by a single entity.

  • Portfolio turnover

    The average time from the funding of an investment until it is repaid or sold.

  • Power of sale

    Clause inserted in a mortgage or deed of trust giving the mortgagee (or trustee) the right and power, upon default in the payment of the debt secured, to advertise and sell the property at public auction.

  • Preferred shares

    Stocks that have prior claim on distributions (and/or assets in the event of dissolution) up to a definite amount before the common shareholders are entitled to anything. As a form of ownership, preferred shareholders fall behind all creditors in dissolutions.

  • Preleased

    Space in a proposed building that has been leased before the start of construction or in advance of the issuance of a certificate of occupancy.

  • Prepayment rights

    Rights given to the borrower to make partial or full payment of the total principal balance prior to the maturity date without penalty.

  • Price to earnings ratio

    This ratio is calculated by dividing the current share price by the sum of the primary earnings per share from continuing operations, before extraordinary items and accounting changes, over the past four quarters.

  • Primary issuance

    The initial financing of an issuer.

  • Prime space

    Typically refers to first-generation space that is available for lease.

  • Prime tenant

    The major tenant in a building, or the major or anchor tenant in a shopping center.

  • Principal payments

    The return of invested capital to the lender.

  • Private Debt Real Estate

    One of the four quadrants of the real estate capital markets. Also known as "mortgages" or "whole loan mortgages," but also can refer to participating mortgages, loan participations and loan syndications. Typically refers to commercial loans, but also can refer to direct lending to single family homeowners. Also can refer to privately syndicated mortgage or other real estate-backed debt securities issued by either private or public real estate operating companies. Also see private equity real estate, public equity real estate, and public debt real estate.

  • Private Equity Real Estate

    One of the four quadrants of the real estate capital markets. Also known as "equity real estate" or "direct real estate."  Typically refers to commercial real estate investments, but also could include such private equity market investments as equity investments in homebuilding projects or properties, or in single family rental home investment programs, as well as private equity investments in real estate operating companies. Private equity investments can be structured in a variety of formats, from direct ownership to joint ventures to limited partnerships, private real estate investment trusts (REITs), group trusts, collective investment trusts, C-corps., limited liability companies and a variety of other legal structures. Also see private debt real estate, public equity real estate, and public debt real estate.

  • Private Equity Real Estate Fund (Private Equity Fund)

    A pooled fund vehicle targeting institutional investors, individual investors, or both, typically structured as a private real estate investment trust (REIT), or other form of real estate operating company, or through some form of commingling arrangement, that invests in direct equity real estate holdings on behalf of its interest holders. The managers of these funds are called "private equity real estate managers," or simply "real estate investment managers."  Private equity funds can be structured either as open-end funds or as closed-end funds.

  • Private Equity Real Estate Manager (Private Equity Manager)

     A manager of direct investments in real estate, either for the benefit of the private equity manager's own account, for the benefit of the manager's third party investment management investor clients, or both. Often refers to managers of Opportunity Funds – funds that typically invest in higher risk, higher return strategies with target returns in the 18% to 20% or higher range, but actually includes all types of managers who invest capital, either for their own accounts of the accounts of other, in direct equity real estate investments. Also see Private Equity Real Estate, and Private Equity Funds.   

  • Private placement

    A sale of a security in a manner that is exempt from the registration rules and requirements of the Securities and Exchange Commission. An example would be a REIT directly placing an issue of stock with a pension fund.

  • Private REIT

    An infinite- or finite-life real estate investment company structured as a real estate investment trust. Shares are placed and held privately rather than sold and traded publicly.

  • Pro rata

    In the case of a tenant, the proportionate share of expenses for the maintenance and operation of the property.

  • Production acres

    The area of land that can be used in agriculture or timber operations to produce income, not including areas used for crop or machinery storage, or other support areas.

  • Prohibited transaction

    ERISA defines the following transactions as prohibited between a pension plan and a party in interest: the sale, exchange or leasing of any property; a loan or other extension of credit; and the furnishing of goods or services. Other prohibited transactions include the transfer of plan assets to a party in interest or use of plan assets by a party in interest, and the acquisition of employer real property in excess of limits set by ERISA.

  • Prudent man rule

    The standard to which a fiduciary is held accountable under ERISA. "Act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims."

  • Public Debt Real Estate

    One of the four quadrants of the real estate capital markets. Typically refers to Commercial Mortgage Backed Securities (CMBS) and Residential Mortgage Backed Securities (RMS), but also can include public bond issues from public and private companies and agencies. Also see private equity real estate, public equity real estate and private debt real estate.

  • Public Equity Real Estate

    One of the four quadrants of the real estate capital markets. Typically refers to investments in the securities of publicly traded real estate investment trusts (REITs) and other non-REIT publicly traded real estate operating companies.  Also see private equity real estate, and private debt real estate.

  • Public-Private Partnership (P3)

    According to the National Council for Public Private Partnerships, a Public-Private Partnership (P3) is a contractual agreement between a public agency and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. Each party shares in the risks and rewards potential in the delivery of the service and/or facility.

  • Punch list

    An itemized list documenting incomplete or unsatisfactory items after the contractor has notified the owner that the tenant space is substantially complete.