Glossary - F « Commercial Real Estate Mortgage Brokers

Glossary - F

March 24, 2008

Face rental rate: The asking rental rate published by the landlord

Facility space: The floor area in hospitality properties dedicated to operating departments such as restaurants, health clubs and gift shops that service multiple guests or the general public on an interactive basis not directly related to room occupancy

FAD (funds available for distribution): Funds from operations less deductions for cash expenditures for leasing commissions and tenant improvement costs

FAD multiple: Share price of a REIT divided by its funds available for distribution

Fair market value: The sale price at which a property would change hands between a willing buyer and willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts

Fannie Mae (FNMA): The Federal National Mortgage Association - A quasi-governmental corporation authorized to sell debentures in order to supplement private mortgage funds by buying and selling FHA (Federal Housing Administration) and VA (Veterans Affairs) loans at market prices.

Fee simple interest: When an owners owns all the rights in a real estate parcel

FFO (funds from operations): A ratio intended to highlight the amount of cash generated by a company’s real estate portfolio relative to its total operating cash flow. FFO is equal to net income, excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization.

FFO multiple: Share price of a REIT divided by its funds from operations

Fiduciary: The Employee Retirement Income Security Act (ERISA) defines a fiduciary as any person who exercises any discretionary authority or control over a plan’s asset management, administration or disposition, or renders investment advice for a fee or other compensation with respect to a plan’s assets. Fiduciaries may include staff, trustees, investment board members, administrators, consultants, actuaries and investment managers. ERISA permits civil action to be brought by a beneficiary against any fiduciary that has breached its fiduciary duty. Fiduciaries can be held personally liable for any losses to a plan resulting from such breach.

Finance charge: The amount paid for the privilege of deferring payment of goods or services purchased, including any charges payable by the purchaser as a condition of the loan

First mortgage: The senior mortgage that, by reason of its position, has priority over all junior encumbrances. The holder has a priority right to payment in the event of default.

First refusal right, or right of first refusal: A lease clause giving a tenant the first opportunity to buy a property or lease additional space in a property at the same price and on the same terms and conditions as those contained in a third-party offer that the owner has expressed a willingness to accept

First-generation space: Generally refers to new space that is currently available for lease and has never before been occupied by a tenant

First-loss position: The position in a security that will suffer the first economic loss if the underlying assets lose value or are foreclosed on. The first-loss position carries a higher risk and a higher yield.

Fixed costs: Costs that do not fluctuate in proportion to the level of sales or production

Fixed rate: An interest rate that remains constant over the term of the loan

Flat fee: A fee paid to an adviser or manager for managing a portfolio of real estate assets, typically stated as a flat percentage of gross asset value, net asset value or invested capital

Flex space: A building that provides a configuration allowing occupants a flexible amount of office or showroom space in combination with manufacturing, laboratory, warehouse, distribution, etc.

Float: The number of freely traded shares in the hands of the public

Floor area ratio (FAR): The ratio of the gross square footage of a building to the square footage of the land on which it is situated

Force majeure: A force that cannot be controlled by the parties to a contract and prevents them from complying with the provisions of the contract. This includes acts of God such as a flood or a hurricane, or acts of man such as a strike, fire or war.

Foreclosure: The process by which the trustee or servicer takes over a property from a borrower on behalf of the lender.

Forward commitments: Contractual obligations to perform certain financing activities upon the satisfaction of any stated conditions. Usually used to describe a lender’s obligation to fund a mortgage.

Four quadrants of the real estate capital markets

Freddie Mac (FHLMC): Federal Home Loan Mortgage Corp. - a corporation established by the Federal Home Loan Bank to issue mortgage-backed securities

Full recourse: A loan on which an endorser or guarantor is liable in the event of default by the borrower

Full-service rent: An all-inclusive rental rate that includes operating expenses and real estate taxes for the first year. The tenant is generally still responsible for any increase in operating expenses over the base year amount.

Fully diluted shares: The number of shares of common stock that would be outstanding if all convertible securities were converted to common shares

Future proposed space: Space in a proposed commercial development that is not yet under construction or where no construction start date has been set. It also may refer to the future phases of a multi-phase project not yet built.

Commercial Real Estate Mortgage Brokers

Glossary - F

March 24, 2008

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