Part 6 in the series picks up where we left off:
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Occupancy Rate
Occupancy rate represents room nights occupied expressed as a percentage of room nights available, during any given period. For other properties (other than a hotel), it is the measure of the
percentage of floor space occupied by tenants as compared to the total lettable area of the building.
Occupancy Certificate (OC)
A document issued by the local municipal authority building proposal department that provides no objection to occupy the building under reference for its specifed use. An OC is issued only once the building has been completed in all respects and can be occupied. A corporate can carry out its commercial activity only once the premises/building has received its OC.
Occupancy Cost
Cost faced by a tenant associated with the occupancy of premises. This includes charges such as rent. taxes, rates and insurance.
Occupied Stock
Total amount of stock which is leased or owner occupied.
Off-site Improvements
Development of land adjacent to a property to make it habitable such as side-walks, paved access roads, sewers, etc.
On-site Improvements
Directly enhancing the physical nature of a property such as renovating a building, installing a new driveway and parking lot and gardening.
Open Listing
An agreement permitting a real estate agent to sell the property while also allowing the homeowner or other agents to make the sale. Upon the sale of the property, the owner is under no obligation to notify anyone of the fact of the sale.
Open Market Value
The amount that a seller may expect to obtain for property,services, or securities in the open market.
Open-End Mortgage
A mortgage or trust deed in which the principal amount can be increased by the mortgagor, i.e., the mortgagor may secure additional money from the mortgagee (lender) through an agreement which typically stipulates a maximum amount that can be borrowed.
Option
The right to buy or sell an item at a specified price within a given period of time.The right, if not exercised after a specifed time, expires. E.g. a lease of a property with the option to buy.
Oral Contract
The term refers to a verbal contract made between parties where there is partial or no written agreement.These types of contracts have a very weak legal standing and are dependent on witnesses to the said contract.
Ordinance
A statute enacted by a city or town especially enactments of the legislative body of a municipal corporation or a country.
Ordinary Asset
Property which includes inventory for sale or property used in connection with trade, business, or source of income.
Ordinary Repairs
Minor day-to-day repair and maintenance of a property to prevent its wear and tear.
Outgoings
Costs incurred by the owner of an interest in property, usually calculated on a yearly basis, e.g. management, repairs, rates,insurance and rent payable to the holder of a superior interest, as appropriate to his contractual or other liabilities.lt is prudent to make annual provision for future items involving expenditure at intervals of more than one year.
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Pallet
A flat transport structure usually made of wood, which can support a variety of goods in a stable fashion while being lifted by any mobile forklift or other jacking device. It is colloquially called a Skid. A standard pallet measures 100 cm x 120 cm x 12 cm (slightly less than 40 in x 48 in x 5 in). It weighs 15-21 kg when empty and can easily carry 1,000 kg (about 2,000 Ibs) of load.
Parapet
A low, protective wall or railing along the edge of a roof, balcony or similar structure.
Part Occupation Certificate (DC)
A document issued by the building proposal department of the local municipal authority that provides a no objection to occupy the specific floor in the building under reference for its specified use.The Part OC is issued only once the premises] building has been completed in all respects and can be occupied. A corporate can occupy and carry on its operations only once the demised premises has received its DC.
Passing Rent
The amount of rent as at current date or the date of valuation.
Patent Defect
Visible defect in a product. property or document In legal matters.the term refers to a defect, which cannot be corrected on the document itself and a fresh document rectifying the flaw has to be obtained.
Patio
An area adjoining the house that is paved with concrete, flagstone, brick, etc. and is used for relaxation or recreation purposes.
Percentage Lease (Turnover Rent)
A lease of property in which the rental is based on a percentage of the volume of sales made upon
the leased premises. It usually stipulates a minimum rental and is regularly used for retailers who are tenants. Usually does not fall below a base rent Also referred to as Overage Income.
Performance Bond
A bond given by a contractor and issued by an insurance company to guarantee the completion of contracted work.
Perpetuity
The condition of being never ending. In legal terms it refers to an interest under which property is less than completely alienable for longer than the law allows.
Physical Depreciation
Decline in the value of property due to physical damage to the property such as wear and tear or lack of maintenance.
Plat (Plat Map)
A map of a parcel of land showing the boundaries of individual
properties that has been divided into lots.
Plat Book
Public record of maps showing the division of streets, blocks and lots and providing the measurements of the individual parcels.
Pledge
The pawning of property as a security against a loan.
Pledged Account Loan
A savings bank account that is used as a collateral security against a loan.
Pledgee
Entity to whom a mortgage or property is pledged.
Pledgor
Entity who is responsible for making the payments on a mortgage on property that has been pledged.
Plot Ratio
Plot ratio determines the maximum gross floor area (GFA) allowable on a plot of land. A plot ratio of two means that the GFA allowable is two times the site’s area.
PMI
An acronym for Private Mortgage Insurance. A type of mortgage insurance available to conventional lenders on the first, high risk portion of a loan guarantying payment.
PMI Pass-Through Certificates
Conventional mortgage securities that are supported by mortgages insured by private mortgage insurance companies.
Probable Maximum Loss (PML)
An index used to assess the risk of possible damage a structure may suffer in the event of a natural disaster, more specifically an earthquake.lt is included in the engineering report in the due diligence procedure and the lower the number, the more earthquake-tolerant the structure.
Possession
The position a lender takes in repossessing a property, the legal right, control and/or occupancy of a property where the borrower is in default of its loan obligations.
Possibility of Reverter
Legal term to describe a situation where a person having relinquished his right (by sale, gift, etc.) over a property, retains the right to reassert his claims over it if the property is not used for the purpose for which it was sold,gifted, etc. E.g. A person sells a property on the condition that it will be used for an orphanage. If it is used for any other purpose the seller has the right to demand a reversal of the original transaction.
Post
To display (an announcement) in a place of public view or to cover with posters, notices, etc.
Power of Attorney
A legal instrument authorising one to act as another’s attorney or agent.
Power of Sale
A power granted (as in a will, trust, or mortgage) to sell the property to which the power relates often under specified circumstances (as upon the default of a mortgage).
Pre-Commitment
Leases signed/commitments recorded for buildings that would be ready for occupation in the following quarter/year. Could be included as a part of actual absorption.
C&W Definition: Recorded leases/MOU signed for buildings that would be ready for occupation in the future as per the specified time frame.E.g. If a building is under-construction and a tenant starts their fit outs in the space leased by them, the transaction is considered as a pre-commitment. If a company signs a leaseiMOU for a building that is expected to enter the market after a specific time frame, it is considered as pre-commitment.
Pre-emption Right
The right of first refusal or to make an offer before others.
Prefabricated House
A modular structure built of blocks manufactured elsewhere and assembled at the site.
Prefabrication
A technique whereby large units of a building or parts of it are produced in factories to be assembled, on the building site.
Preliminary Title Report
A report filed by a lawyer who has conducted a preliminary search of a property’s title. Preliminary title reports are followed by final title reports that may confirm the
findings of the earlier report or provide data on additional facts which come to light following a more detailed search.
Prepaid Terms
Advance payment of expenses such as taxes, insurance, rent, etc. on a property that may be prorated upon sale of the said property.
Prepayment
The payment of a debt or obligation, in part or full prior to its due date. Such payment may or may not result in penalties, depending on the terms of the contract.
Pre-sale
Similar to buying off plan, in which buyer purchases part of a future development It is commonly used by developers to finance projects.
Present Value
The future worth of a property or a sum of money discounted to its present-day equivalent, taking account of all relevant circumstances, including inflation.
Price-Earning Ratio
The comparison of the market price of a share of stock to the earning per share of that stock, expressed as a ratio. Also called the P/E ratio.
Prime Yield
Descriptive of the current yield used in the valuation of property let at full market value and which — for the class of property concerned is of the best physical quality, in the best
location, and with the best tenant’s covenant and contemporary lease terms.
Private Land Grant
The transfer of land owned by the government to a private party.Such transfer may be in lieu of money or for charitable or other purposes.
Private Treaty
The most common method of disposal of real property, in which negotiations are carried out between the vendor and prospective purchasers (or their respective agents) privately and in comparative secrecy, normally without any limit on the time within which they must be completed before contracts are exchanged.
Program (Schedule)
A group of activities set out in sequence to provide a plan of how a project will be executed.
Project
A piece of planned work or an activity which is completed over a period of time and intended to achieve a particular aim, normally the construction of a facility.
Project Management
The process of planning, organising, staffing, directing and controlling a project
Property Asset Management
A comprehensive form of management, similar to property portfolio management except that the managers have a wider degree of discretion.The primary objective is to maximise overall financial performance.
Property Brief
An abridged or concise description of the property for sale, issued and approved by the seller and given to the buyer.
Property Investment Trust
A financial organisation on the lines of a mutual fund that collects money from a large body of investors and deploys the same in properties. It derives its income stream from rental and from the sale of properties that appreciate above their purchase price.
Property Management
The range of functions concerned with looking after a building,including collection of rents, payment of outgoings, maintenance including repair, provision of services, insurance and supervision of staff employed for services, and negotiations with tenants or prospective tenants.The extent of responsibility for management between landlord and tenant depend on the terms of the lease(s).The landlord may delegate some or all of these functions to managing agents.
Property Management Agreement
An agreement between an owner of a property and the manager hired to manage the same. The agreement lays down in detail the scope of activities entailed in the service along with the terms and conditions of payment for the services rendered.
Property Operation, Maintenance and Energy Costs (POMEC)
All expenses incurred by the owner of a property, usually a
hotel, resort, commercial property or shopping mall on maintaining and running the property.
Includes expenses incurred on electricity,gas and fuels.The term originated in the hospitality industry, but is now used across almost all types of properties.
Property Portfolio Management
The unified management of a group of properties which are under single ownership. Decisions taken in respect of any issue are reached on the basis of achieving the maximum benefit for the
owners, having regard to the effect on the portfolio as a whole rather than on an individual property.
Quantum Allowance
In a valuation of a relatively large property when appropriate in
market terms, it is an end deduction from the rental or capital value, which is calculated by reference to comparable smaller properties; its purpose is to reflect the greater size of the subject of the valuation.
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Rack Rate
The rate charged by a lodging establishment for a room before any discount has been taken into account It is the published rate for a guest room. A rack rate is often the rate a lodging establishment would offer a guest if he / she approaches the establishment directly.
Rate Index
Benchmark or index on which the interest rate of a floating loan is based.
Ready Building
A Building that has got the Occupancy Certificate and/or is occupied by at least one tenant.
REIT (Real Estate Investment Trust)
A REIT is a corporation or trust that uses pooled capital of many investors to purchase and manage real estate assets and / or mortgage loans. REITs are traded on major stock exchanges as
normal stocks and are often also granted special tax considerations. Key benefits of REITs are their inherent liquidity and their instant pricing. REITs enable investment in all major asset types including shopping centres and other commercial or industrial properties.
Registration
Every Leave & License Agreement/ Lease Agreement in India has to be registered with the office of the sub registrar of assurances (local authority) for it to be enforceable by law.This is an obligation of the licensor/ lessor/ landlord. However, the cost towards registration of the agreement is usually paid by the licensee/ lessee.
Registration Charges
Charges levied on the registration of a property. This charge can vary from districts and states.
Relocation
Refers to the process of transferring people/entities from one location/region to another locationlregion.
Remediatior
The act of correcting, replacing or repairing a malfunction/ damage in a service/ product.E.g. correcting a fit out or cleaning an
environmentally contaminated site. Remediation is generally subject to an array of regulatory
requirements.
Remise
To give up a claim.
Remnant
Non-acquired portion of a larger property that has been taken over by the government in eminent domain proceedings. such that this remaining portion is practically of no value.
Rent-free period
Period during which the landlord does not charge any rent from the lessee.The length of the period
varies on a case-to-case basis and is usually at the beginning of a
contract period when the lessee needs time to furnish the property to make it fit for use.
Rent Review
A provision in a lease whereby the amount of the rent is to be reconsidered at stated intervals. e.g. every three or five years or on specified dates.The method and procedure for reviewing the rent are usually outlined In the lease. Failing agreement between the parties, there is normally a provision for reference to a third party, i.e., an arbitrator or independent expert.
Rent Subsidy
Subsidy that some governments pay for renting properties to special or disadvantaged groups. In some countries this also means a rebate on taxes levied on rental income of landlords to enable
them to carry out essential repairs for the property.
Rental Value
A regular monetary charge, as per market worth, in lieu of allowing an individual or an entity to use a property. The rental value is agreed upon by the two parties (tenant & landlord) and farms one of the clauses of a lease agreement.
Residual Method (Residual Valuation)
A method of determining the value of a property which has a potential for development,redevelopment or refurbishment. The estimated total cost of the work including fees and other
associated expenditure, plus an allowance for interest, developer’s risk and profit. is deducted from the gross value of the completed project.The resultant figure is then adjusted back to the date of valuation i.e. present value.
Restoration/ Refurbishment
The process of executing repairs in order to make the building appear as it did originally.
Restriction in Interest
A limitation imposed by the state authority on a proprietor of a land limiting the usage of the land.
Retained Earnings/Losses
The total profit or loss of the company minus the total of all dividends paid. since the company’s startup.
Return of Risk and Profit
A percentage of costs to allow for the developer’s annual risk and profit in a valuation to determine a ground rent by deductions from actual or estimated occupation rent(s).
Return on Equity
Net income for the period expressed as percentage of average shareholders’ equity for the period.
Revenue per Available Room (RevPAR)
The product of Average Daily Rate (ADR) and average occupancy.
Revenue Sharing
Revenue sharing is a turnover-based rental model (also used in the retail industry) that constitutes a minimum guarantee component as well as a variable component calculated on total tenant sales. In this arrangement a retail landlord is paid either a minimum guarantee amount (see Minimum Guarantee) or a percentage of the total revenue generated by the
retail tenant, whichever is more. In certain cases, it could also be a combination of both the minimum guarantee rent and a percentage of sales.The tenant’s revenue share percentage varies according to the location of the store, the type of retail business and various other issues. Usually the accounts are settled on an annual basis, whereas the cash flow may be on a monthly/quarterly basis.This rental model is basically aimed at maximising revenues and benefiting both parties, where mall developers get to share the risks and rewards of their retail
developments with their tenants.
Reversion
An agreement such that one party (grantee) is given ownership of a piece of property from another (grantor) under the understanding that the ownership will “revert’ to the grantor when an agreed event occurs (e.g. grantee’s death, expiration of a term of years, etc.).
Reversionary Yield
The percentage return on today’s price or value that will be derived when the current market rents become payable.This yield relates the future growth in net income to the historic cost or value of the property.
Right of Survivorship
The right of a survivor to a property of a deceased person. Usually found in lease or rental agreements.
Rolling Refurbishment
The staged upgrading of premises which avoids the complete removal of tenants but does not result in a substantial upgrade of a building’s fabric and services.
Room Count
The number of rooms in a building or apartment.
Room Nights Available
The number of guest rooms/units multiplied by the number of days for which they were available
during any given period.
Row Houses
Residential houses within a housing estate having two or three lfoors, constructed next to each other, having common walls, foundations and facilities. Also referred to as “terraced houses” in Singapore and Malaysia.
Royalty
A fee paid to the owner of land for extracting natural resources (oil, coal, etc.) from it.
In case you missed A-N, you may catch up here:
Part I
Part II
Part III
Part IV
Part V
Part VI
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