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Implied cap rate: Net operating income divided by the sum of a
REIT's equity market capitalization and its total outstanding debt
Improvements: In the context of leasing, the term typically refers to
the improvements made to or inside a building but may include any permanent
structure or other development, such as a street, sidewalk, utilities, etc.
Incentive fee: Applies to fee structures where the amount of the fee
that is charged is determined by the performance of the real estate assets
under management
Income capitalization value: The indication of value derived for an
income-producing property by converting its anticipated benefits into
property value through direct capitalization of expected income or by
discounting the annual cash flows for the holding period at a specified
yield rate
Income property: Real estate that is owned or operated to produce
revenue
Income return: The percentage of the total return that is generated
by the income from operations of a property, fund or account
Indirect costs: Development costs other than direct material and
labor costs that are directly related to the construction of improvements,
including administrative and office expenses, commissions, architectural,
engineering and financing costs
Individual account management: Accounts established for individual
plan sponsors or other investors for investment in real estate, where a firm
acts as an adviser in acquiring and/or managing a direct real estate
portfolio
Inflation: The annual rate at which consumer prices increase
Inflation hedge: An investment that tends to increase in value at a
rate greater than inflation and helps contribute to the preservation of the
purchasing power of a portfolio
Initial public offering (IPO): The first time a private company
offers securities for sale to the public
Institutional-grade property: Various types of real estate properties
generally owned or financed by tax-exempt institutional investors. Core
investments typically include office, retail, industrial and apartments.
Specialty investments include hotels, congregate care facilities, land
beneath existing improvements, vacant land, mixed-use properties (i.e., a
property containing at least two property types) and mobile home parks.
Insurance company separate account: A real estate investment vehicle
that may only be offered by life insurance companies. This ownership
arrangement enables an ERISA-governed fund to avoid the creation of
unrelated taxable income for certain types of property investments and
investment structures.
Interest: The price paid for the use of capital
Interest-only strip: A derivative security consisting of all or part
of the interest portion of the underlying loan or security
Internal rate of return (IRR): A discounted cash-flow analysis
calculation used to determine the potential total return of a real estate
asset during an anticipated holding period
Inventory: All space within a certain proscribed market without
regard to its availability or condition
Investment committee: The governing body overseeing corporate pension
investments. Also, the subcommittee of a board of trustees charged with
developing investment policy for board approval.
Investment manager: Any company or individual that assumes discretion
over a specified amount of real estate capital, invests that capital in
assets via a separate account, co-investment program or commingled fund, and
provides asset management
Investment policy: A document that formalizes an institution's
guidelines for investment and asset management. An investment policy
typically will contain goals and objectives; core and specialty investment
criteria and methodology; and guidelines for asset management, investment
advisory contracting, fees and utilization of consultants and other outside
professionals.
Investment strategy: The investment parameters used by the manager in
structuring the portfolio and selecting the real estate assets for a fund or
account. This includes a description of the types, locations and sizes of
properties to be considered, the ownership positions that will be used, and
the stages of the investment lifecycle.
Investment structures: Unleveraged acquisitions, leveraged
acquisitions, traditional debt, participating debt, convertible debt,
triple-net leases and joint ventures
Investment-grade CMBS: Commercial mortgage-backed securities with
ratings of "AAA," "AA," "A" or "BBB"
Investor status: In reporting to clients and consultants, all
investors are divided into two categories: taxable and tax-exempt. The
tax-exempt category includes all qualified pension and retirement accounts.
The taxable category includes all other accounts under management, including
off-shore capital.
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