Glossary of Terms

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JOINT VENTURE
An agreement by two or more individuals or entities to engage in a single project or undertaking. Joint ventures are used in real estate development as a means of raising capital and spreading risk. For all practical purposes a joint venture is similar to a general partnership. However, once the purpose of the joint venture has been accomplished, the entity ceases to exist.

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L

LEASE ASSIGNMENT
An agreement between the commercial-property owner and the lender that assigns lease payments directly to the lender.

LEASE TYPE
Gross, Triple Net (NNN), Net Net (NN), Hybrid, etc. These terms convey which of the operating costs the tenant assumes responsibility for. Gross Triple Net is the most favorable to a lender.

LEASEHOLD IMPROVEMENTS
The cost of improvements for a leased property, often paid by the tenant.

LEASING COMMISSIONS
An amount earned by a real estate broker or leasing agent for his services.

LESSEE
Tenant in a building.

LIBOR (London Interbank Offered Rate)
The rate that the most creditworthy international banks dealing in Eurodollars charge each other for large loans. Rates are quoted in monthly increments out to 1 year.

LIMITED LIABILITY COMPANY (LLC)
The restriction of one�s potential losses to the amount invested, thus the absence of personal liability, usually provided to stockholders in a corporation and limited partners of a limited partnership.

LIMITED PARTNERSHIP
One in which there is at least one partner who is passive and limits liability to the amount invested, and at least one partner whose liability extends beyond monetary investment.

LIMITED SERVICE
A hotel that offers lodging services only.

LOAN PROCESSING FEE
The fee charged by a lender to prepare all the documents associated with your mortgage.

LOAN�TO�VALUE RATIO (LTV)
The ratio between the principal amount of the mortgage balance, at origination or thereafter, to the current value of the underlying real estate collateral. The ratio is commonly expressed to a potential borrower as the percentage of value a lending institution is willing to finance. The ratio is dynamic and varies by lending institution, property type, geographic location, property size, etc.

LOCK�OUT PERIOD
A period of time after loan origination during which a borrower cannot prepay the mortgage loan without paying the interest the loan would have incurred during the lock-out period.

LOT SIZE
Total square footage of the land.

LOW�RISE OFFICE
A commonly-used expression referring to an office building that is too low to require an elevator.