Glossary - N « Commercial Real Estate Mortgage Brokers

Glossary - N

March 24, 2008

NAREIT (National Association of Real Estate Investment Trusts): The national, not-for-profit trade organization that represents the real estate investment trust industry

NCREIF (National Council of Real Estate Investment Fiduciaries): An association of real estate professionals who serve on working committees, sponsor research articles, seminars and symposiums, and produce the NCREIF Property Index

NCREIF Property Index (NPI): The index reports quarterly and annual returns consisting of income and appreciation components. The index is based on data collected from the voting members of NCREIF. Specific property-type subindices include apartment, office, retail, industrial and hotel; regional subindices include West, East, South and Midwest.

Negative amortization: The accrual feature found in numerous participating debt structures that allows an investor to pay, for an initial period of time, an interest rate below the contract rate stated in loan documents.

Net asset value (NAV): The value of an individual asset or portfolio of real estate properties net of leveraging or joint venture interests

Net asset value per share: The current value of a REIT’s assets divided by shares outstanding

Net assets: Total assets less total liabilities on a market-value basis

Net cash flow: Generally determined by net income plus depreciation less principal payments on long-term mortgages

Net investment in real estate: Gross investment in real estate less the outstanding debt balance

Net investment income: The income or loss of a portfolio or entity resulting after deducting all expenses, including portfolio and asset management fees, but before realized and unrealized gains and losses on investments

Net operating income (NOI): A before-tax computation of gross revenue less operating expenses and an allowance for anticipated vacancy. It is a key indicator of financial strength.

Net present value (NPV): Net present value usually is employed to evaluate the relative merits of two or more investment alternatives. It is calculated as the sum of the total present value of incremental future cash flows plus the present value of estimated proceeds from sale. Whenever the net present value is greater than zero, an investment opportunity generally is considered to have merit.

Net purchase price: Gross purchase price less associated debt financing

Net real estate investment value: The market value of all real estate less property-level debt

Net returns: Returns to investors net of fees to advisers or managers

Net sales proceeds: Proceeds from the sale of an asset or part of an asset less brokerage commissions, closing costs and market expenses

Net square footage: The space required for a function or staff position

Nominal yield: The yield to investors before adjustments for fees, inflation or risk

Non-compete clause: A clause that can be inserted into a lease specifying that the business of the tenant is exclusive in the property and that no other tenant operating the same or similar type of business can occupy space in the building. This clause benefits service-oriented businesses desiring exclusive access to the building’s population.

Non-discretionary funds: Funds allocated to an investment manager requiring the investor’s approval on each transaction

Non-investment-grade CMBS: Securities rated “BB” or “B,” also referred to as high-yield CMBS

Non-performing loan: A loan that is unable to meet its contractual principal and interest payments

Non-recourse debt: A loan that, in the event of a default by the borrower, limits the lender’s remedies to a foreclosure of the mortgage, realization on its assignment of leases and rents, and acquisition of the real estate

NNN: Triple Net Lease. is a lease agreement on a property where the tenant or lessee agrees to pay all Real Estate Taxes, Building Insurance and Common Area Maintenance on the property in addition to any normal fees that are expected under the agreement (rent, etc.). The tenant or lessee is responsible for all costs associated with repairs or replacement of the structural building elements of the property, as if they owned the property. For example, a free-standing building the tenant pays 100%, is multi-tenant, the tenant pays their share based on square footage or other agreed amount.

Commercial Real Estate Mortgage Brokers

Glossary - N

March 24, 2008

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