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Deal structure: With regard to the financing of an acquisition,
deals can be unleveraged, leveraged, traditional debt, participating debt,
participating/convertible debt or joint ventures.
Debt service: The outlay necessary to meet all interest and principal
payments during a given period.
Debt service coverage ratio (DSCR): The annual net operating income
from a property divided by annual cost of debt service. A DSCR below 1 means
the property is generating insufficient cash flow to cover debt payments.
Dedicate: To appropriate private property to public ownership for a
public use
Deed: A legal instrument transferring title to real property from the
seller to the buyer upon the sale of such property
Deed in lieu of foreclosure: A deed given by an owner/borrower to a
lender to satisfy a mortgage debt and avoid foreclosure
Deed of trust: An instrument used in place of a mortgage by which
real property is transferred to a trustee to secure repayment of a debt
Default: The general failure to perform a legal or contractual duty
or to discharge an obligation when due
Deferred maintenance account: An account a borrower is required to
fund that provides for maintenance of a property
Deficiency judgment: Imposition of personal liability on a borrower
for the unpaid balance of mortgage debt after a foreclosure has failed to
yield the full amount of the debt
Defined-benefit plan: An employee's benefits are defined, either as a
fixed amount or a percentage of the beneficiary's salary at the time of
retirement. Pension plans, Health and Welfare plans, and some Keogh plans
are established as defined benefit plans.
Defined-contribution plan: An employee's benefits at retirement are
determined by the amount contributed by the employer and/or the employee
during his or her employment tenure, and by the actual investment earnings
on those contributions over the life of the fund. Examples include 401(k),
thrift plans and profit sharing plans.
Demising wall: The partition wall that separates one tenant's space
from another or from the building's common areas
Depreciation: A decrease or loss in property value due to wear, age
or other cause. In accounting, depreciation is a periodic allowance made for
this real or implied loss.
Derivative securities: Securities that are created artificially,
i.e., derived from other financial instruments. In the context of CMBS, the
most common derivative security is the interest-only strip.
Design/build: A system in which a single entity is responsible for
both the design and construction
Discount rate: A yield rate used to convert future payments or
receipts into present value
Discretion: The level of authority granted to an adviser or manager
over the investment and management of a client's capital. A fully
discretionary account typically is defined as one in which the adviser or
manager has total ability to invest and manage a client's capital without
prior approval of the client.
Distraint: The act of seizing personal property of a tenant in
default based on the right and interest a landlord has in the property
Diversification: The process of consummating individual investments
in a manner that insulates a portfolio against the risk of reduced yield or
capital loss, accomplished by allocating individual investments among a
variety of asset types, each with different characteristics
Dividend: Cash or stock distribution paid to holders of common stock.
REITs must pay at least 90 percent of their taxable income in the form of
dividends.
Dividend yield: The annual dividend rate for a security expressed as
a percent of its market price (annual dividend/price = yield)
Dividend-ex date: The first date on which a person purchasing the
stock is no longer eligible to receive the most recently announced dividend
Dollar stop: An agreed dollar amount of taxes and operating expense
each tenant will pay on a prorated basis
DOWNREIT: An organizational structure that makes it possible for
REITs to buy properties using partnership units. The effect is the same as
an UPREIT, however, the DOWNREIT is subordinate to the REIT itself, hence
the name.
Due diligence: Activities carried out by a prospective purchaser or
mortgager of real property to confirm that the property is as represented by
the seller and is not subject to environmental or other problems. In the
case of an IPO registration statement, due diligence is a reasonable
investigation by the parties involved to confirm that all the statements
within the document are true and that no material facts are omitted.
Due on sale: A covenant that makes a mortgage due if the property is
sold before the maturity date
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