Glossary
Underwriting glossary
Definitions, formulas and worked examples for the terms investors, lenders and investment committees use every day.
Adjusted EBITDAAdvance RateAI UnderwritingAmortizationAppraisalAttachment PointBalloon PaymentBasis RiskBreakeven OccupancyCapital Expenditure Reserve (Replacement Reserve)Capitalization Rate (Cap Rate)Carry Cost (Cost of Carry)Cash-on-Cash ReturnCombined RatioConditional Prepayment Rate (CPR)Constant Default Rate (CDR)Credit Memo (Credit Memorandum)Customer ConcentrationDebt Service Coverage Ratio (DSCR)Debt YieldDefeasanceDiscount RateEarnoutEBITDAEffective Gross Income (EGI)Equity MultipleEscrow HoldbackExit Cap Rate (Terminal Cap Rate)Expected Loss (EL)Going-In Cap RateGross Potential Rent (GPR)Interest-Only Loan (IO Period)Internal Rate of Return (IRR)Investment Committee Memo (IC Memo)Key Person RiskLetter of Intent (LOI)Loan CovenantsLoan to Cost (LTC)Loan to Value (LTV)Loss Given Default (LGD)Mezzanine DebtMultiple on Invested Capital (MOIC)Net Music RevenueNet Operating Income (NOI)Net Present Value (NPV)Operating Expense Ratio (OER)Phase I Environmental Site Assessment (Phase I ESA)Preferred EquityPrepayment PenaltyPurchase Price Allocation (PPA)Quality of Earnings (QoE)Rate on Line (ROL)RecoupmentRent RollRepresentations and Warranties Insurance (RWI)Residual ValueRoyalty DecaySBA 504 LoanSBA 7(a) LoanSeller Note (Seller Financing)Seller's Discretionary Earnings (SDE)Senior DebtSensitivity AnalysisStress TestT12 (Trailing Twelve Month Operating Statement)Tenant Improvements and Leasing Commissions (TI/LC)Term SheetUnderwritingUnitranche LoanUtilization RateVacancy and Credit LossWeighted Average Cost of Capital (WACC)Weighted Average Lease Term (WALT)Working Capital PegYield Maintenance
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