Investment Terms

Core Investment

What is a Core Investment

Core Investment refers to a low‑risk real estate strategy focused on prime, high‑quality assets in top locations with long‑term leases and stable income. Core properties attract risk‑averse investors seeking steady returns, predictable cash flow, and minimal asset management.

Value-Add Investment

What is a Value-Add Investment

Value‑Add Investment is a real estate strategy focused on acquiring underperforming or partially stabilized properties and improving them through renovations, leasing, or operational upgrades. Investors target higher returns by increasing a property’s income, occupancy, and overall market value after repositioning.

Yield on Cost

What is Yield on Cost

Yield on Cost measures a property’s return based on total development or acquisition cost by dividing stabilized Net Operating Income (NOI) by the project’s overall investment. It helps investors evaluate profitability, compare projects, and assess whether expected income justifies the capital deployed.

Loan-to-Value (LTV)

What is the Loan-to-Value (LTV)

Loan‑to‑Value (LTV) is a key lending metric that compares the size of a loan to a property’s appraised value, expressed as a percentage. A lower LTV indicates lower lender risk and typically results in more favorable financing terms for commercial real estate borrowers.

Due Diligence

What is Due Diligence

Due Diligence is the comprehensive review and verification process conducted before acquiring a property, assessing its financial, legal, technical, and operational risks. Investors use due diligence to confirm asset quality, validate assumptions, and ensure the property meets investment and compliance requirements.

Letter of Intent (LOI)

What is a Letter of Intent (LOI)

A Letter of Intent (LOI) is a preliminary, non‑binding document outlining the key terms and conditions proposed for a commercial real estate transaction. It serves as the framework for negotiations, clarifying price, timelines, obligations, and deal structure before drafting the final binding agreement.

Capital Gains Tax Liability (LCGT)

What is Capital Gains Tax Liability (LCGT)

Capital Gains Tax Liability (LCGT) represents the estimated tax owed on the unrealized gain of a property if it were sold at its current market value. It reflects the deferred tax obligation embedded in the asset’s valuation and is important for investment analysis, pricing, and future exit planning.

Sale–Leaseback

What is a Sale–Leaseback

A Sale–Leaseback is a transaction where an owner sells a property to an investor and simultaneously leases it back under a long‑term agreement. This structure allows companies to unlock capital, improve liquidity, and maintain operational control while providing investors with stable, secured rental income.

IRR (Internal Rate of Return)

What is IRR (Internal Rate of Return)

Internal Rate of Return (IRR) is a key investment metric that calculates the annualized rate of return a real estate project is expected to generate over its holding period. IRR considers all projected cash flows and the eventual sale price, helping investors compare profitability and assess long‑term performance across different assets.

Net Yield & Gross Yield

What are Net Yield & Gross Yield

Gross Yield measures a property’s annual rental income divided by its purchase price, without subtracting operating costs. It provides a quick, high‑level indicator of investment income potential. Net Yield reflects the property’s actual return after deducting operating expenses such as maintenance, management, insurance, and taxes. It offers a more accurate view of profitability and investment performance.