REIT Glossary
155 terms, defined in plain language. Back to the guides.
1099-DIV
The IRS tax form a broker sends each year reporting dividend income, including the boxes that break a REIT distribution into its ordinary dividend, qualified dividend, capital gain, Section 199A dividend, and return-of-capital components.
5/50 Rule
A REIT qualification rule providing that no five or fewer individuals may own, directly or indirectly, more than 50% of a REIT's shares during the last half of its taxable year. It is intended to keep REIT status limited to widely held companies rather than closely held ones.
90% Distribution Test
The requirement that a REIT distribute at least 90% of its taxable income, excluding net capital gains, to shareholders each year in order to qualify for REIT tax status. In practice, many REITs distribute at or near 100% of taxable income, since undistributed taxable income can trigger corporate-level tax.
Read more about the 90% distribution rule.
Absorption
The net change in occupied space in a market or portfolio over a period, combining new leasing activity with move-outs. Positive net absorption means more space was leased than vacated over that period.
Adjusted FFO (AFFO)
AFFO starts from FFO and adjusts further for recurring capital expenditures, leasing costs, and non-cash items such as straight-line rent, aiming to approximate the cash a REIT actually has available to pay its dividend. Unlike FFO, AFFO is not standardized industry-wide, so each company defines its own adjustments and figures are not perfectly comparable across REITs.
See AFFO and its close cousins (Core FFO, Normalized FFO, FAD, CAD).
Agency MBS
Mortgage-backed securities whose principal and interest are guaranteed by a U.S. government agency or government-sponsored enterprise, namely Ginnie Mae, Fannie Mae, or Freddie Mac. Agency MBS is the primary asset held by many residential mortgage REITs, given the liquidity and reduced credit risk the guarantee provides.
Anchor Tenant
The largest or most prominent tenant in a retail property, such as a grocery store in a shopping center, whose presence is meant to draw foot traffic that benefits the property's smaller, in-line tenants.
Asset Test
A REIT qualification rule requiring that, at the close of each quarter, at least 75% of a REIT's total assets consist of real estate, cash, and government securities, along with additional limits on how much of its assets can be securities of any single non-TRS issuer.
Average Daily Rate (ADR)
The average revenue earned per occupied hotel room per day, calculated as room revenue divided by rooms sold, not divided by total rooms available, which is what distinguishes it from RevPAR.
Baby Bond
An exchange-listed bond with a small face value, typically $25, rather than the $1,000 face value common for institutional bonds. That makes it accessible to individual investors, who can buy and sell it on an exchange like a stock.
See REIT preferred stock and baby bonds.
Base Rent
The fixed minimum rent a tenant is contractually obligated to pay under a lease, before adding any variable charges such as percentage rent or expense reimbursements.
Beta
A measure of how much a stock's price has historically moved relative to a broader market index. A beta above 1 indicates historically larger price swings than the index; below 1 indicates smaller ones.
Blue-Chip REIT
An informal term for a large, well-established, financially strong REIT with a long operating history. It is common market shorthand, not a defined or regulated category.
Compare REITs by size and history in the directory.
Book Value
The value of a company's assets minus liabilities as carried on its balance sheet under GAAP. For REITs, book value is often well below NAV, because real estate is carried at depreciated historical cost rather than current market value.
Cap Rate
Short for capitalization rate: a property's annual NOI divided by its value or purchase price, expressed as a percentage. It is a single-year, unlevered yield measure used to value and compare income-producing real estate.
Read more in cap rates explained.
Capital Expenditure (CapEx)
Spending on improving, replacing, or expanding a physical asset, as opposed to routine operating expenses. CapEx is capitalized on the balance sheet and depreciated over time rather than expensed immediately.
Capital-Gain Distribution
The portion of a distribution representing a REIT's own realized long-term capital gains, for example from selling a property, passed through to shareholders and generally taxed at long-term capital-gains rates.
Cash Available for Distribution (CAD)
Another name, used by some REITs, for essentially the same concept as FAD and AFFO: cash flow after recurring capital needs, viewed as the pool available to pay dividends from. As with those measures, there is no single standardized formula across the industry.
Cell Tower
A structure supporting wireless communications antennas and equipment. Cell tower REITs own towers and lease space on them to multiple wireless carriers under long-term contracts.
Browse this group in the Infrastructure sector.
CMBS
Commercial Mortgage-Backed Securities: bonds created by pooling commercial real estate loans, including loans secured by REIT-owned properties, and selling investors interests in the cash flows those loans produce.
Cold Storage
Temperature-controlled warehouse and distribution space used to store perishable goods, such as food and pharmaceuticals, throughout the supply chain.
Browse this group in the Industrial sector.
Common Area Maintenance (CAM)
The costs of maintaining a property's shared spaces, such as parking lots, lobbies, landscaping, and security, that a landlord typically bills back to tenants, often as a per-square-foot charge alongside rent.
Convertible Security
A bond or preferred stock that gives the holder the right to convert it into a set number of common shares, usually at a specified price, combining bond-like income with potential upside if the common stock rises.
See REIT preferred stock.
Core FFO
FFO adjusted to remove one-time, non-recurring items, such as gains or losses on debt extinguishment, severance costs, or litigation settlements, to show a more comparable run-rate figure. Companies define their own Core FFO adjustments, so it is not a standardized measure.
Cost Basis
The original value used to measure gain or loss on an investment for tax purposes, typically the purchase price plus commissions, reduced over time by any return-of-capital distributions received.
Data Center
A specialized building designed to house servers and networking equipment for cloud computing, data storage, and internet infrastructure. Data center REITs lease space, power, and cooling capacity to technology tenants.
Read more in data center REITs explained, or browse the Data Centers sector.
Debt Maturity Ladder
The schedule of when a company's outstanding debt comes due, spread out year by year. A well-staggered ladder avoids concentrating too much debt maturing, and needing to be refinanced, in any single year.
Debt Service Coverage Ratio (DSCR)
A property or company's net operating income divided by its debt service, meaning scheduled principal plus interest. It is a coverage ratio showing how many times over the income covers required debt payments, and lenders commonly set minimum DSCR covenants in loan agreements.
Debt-to-Capital
Total debt divided by total capital, meaning debt plus book equity: a leverage ratio showing what share of a company's capital structure is debt versus equity. This is a book-value ratio, distinct from debt as a share of total market capitalization, which uses the market value of equity and is usually lower.
Declaration Date
The date a company's board of directors formally announces, or declares, an upcoming dividend, including its amount, record date, and payment date.
Depreciation
A non-cash accounting expense that spreads a building's cost over its useful life under tax and GAAP rules. Because depreciation reduces a REIT's taxable income and GAAP earnings without reducing its actual cash flow, it is the main reason REIT metrics like FFO add depreciation back to net income.
Development
Building new real estate from the ground up, as opposed to acquiring an already-built, income-producing property. Development generally involves construction risk and a lease-up period before the property generates stabilized income.
Distribution
The general term for a payment a REIT makes to shareholders, often used interchangeably with "dividend." A distribution can include a return-of-capital component that is not technically a taxable dividend.
Diversified REIT
A REIT that owns properties across more than one sector, for example a mix of office and industrial, rather than concentrating in a single property type.
Browse diversified REITs in the Diversified sector.
Dividend
A cash, or occasionally stock, payment a company distributes to its shareholders out of its earnings or cash flow, usually on a recurring schedule.
Dividend Reinvestment Plan (DRIP)
A program that automatically uses an investor's cash dividends to purchase additional shares, including fractional shares, of the same company, often without a brokerage commission.
See how DRIPs work.
Dividend Yield
The indicated annual dividend divided by the current share price, expressed as a percentage.
Compare yields across the sector on the REIT screener, or read more in dividend yield explained.
Double Net Lease
A lease in which the tenant pays real estate taxes and insurance in addition to rent, but the landlord remains responsible for structural and common-area maintenance, unlike a triple net lease, where the tenant covers maintenance too.
DownREIT
A structure similar to an UPREIT, except the REIT owns some properties directly while also holding an interest in one or more separate partnerships that own specific other properties. It is typically used to let the owner of a single property contribute it in a tax-deferred exchange without folding it into the REIT's main operating partnership.
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization: a widely used proxy for operating cash flow, applied across many industries, not just real estate. In REIT leverage ratios it is often replaced with the REIT-specific EBITDAre measure.
EBITDAre
Nareit's standardized, REIT-specific variant of EBITDA: EBITDA further adjusted to remove gains and losses on property sales and impairment write-downs, plus the REIT's proportionate share of those items at unconsolidated joint ventures. It is designed to better reflect the recurring operating performance of a real estate portfolio and is commonly used in leverage ratios like net debt to EBITDA.
Economic Occupancy
Occupancy measured by the rent actually being collected as a share of the total rent the property could generate if fully leased at market rates. It can differ from physical occupancy when tenants have free-rent periods, are behind on payments, or pay below-market rent.
Effective Rent
The average rent a landlord actually nets over a lease term after accounting for concessions such as free-rent periods and tenant-improvement allowances. It is typically lower than the lease's stated, or face, rent.
Enterprise Value (EV)
A measure of a company's total value that adds net debt and preferred stock to market capitalization, representing the value of the whole business rather than just the common-equity portion. This is why EV, rather than market cap, is typically paired with NOI or EBITDA in valuation multiples.
Equity REIT
A REIT that owns and operates physical, income-producing real estate and earns most of its revenue from rent. It is the traditional and most common type of REIT, as distinct from a mortgage REIT, which invests in real estate debt instead of owning buildings.
Ex-Dividend Date
The first trading day on which a share no longer carries the right to the next declared dividend. An investor must own the stock before this date to receive that payment, and the share price typically adjusts down by roughly the dividend amount on this date.
External Advisor
The outside management company that runs an externally managed REIT's day-to-day operations and investment decisions under a contract, in exchange for fees paid by the REIT.
Externally Managed
A REIT structure in which day-to-day management and investment decisions are handled by a separate advisory company under a contract, in exchange for fees the REIT pays, rather than by the REIT's own employees.
Farmland
Agricultural land leased to farm operators. Farmland REITs typically collect rent from tenant farmers, sometimes with a component tied to crop revenue, rather than farming the land themselves.
FIRPTA
The Foreign Investment in Real Property Tax Act, a federal law that generally taxes gains foreign investors realize on U.S. real property, including stock in real-property-heavy corporations. Stock in a "domestically controlled" REIT, and small holdings of 10% or less of a class of stock in a publicly traded REIT, are generally excepted from FIRPTA.
Fixed Rate
An interest rate that is set for the life of a loan or bond and does not change with market interest rates.
Fixed-Charge Coverage
A broader coverage ratio than DSCR: EBITDA or a similar earnings measure divided by all of a company's fixed obligations, including interest, scheduled principal, preferred dividends, and ground lease payments. It is commonly referenced in bond indentures and credit-facility covenants.
Floating Rate
An interest rate that resets periodically based on a reference rate, historically LIBOR and now commonly SOFR, plus a fixed spread, so payments rise and fall as market rates change.
Free Float
The portion of a company's outstanding shares available for public trading, excluding shares held by insiders, founders, or other holders unlikely to sell. Stock indexes often weight companies by free float rather than total shares outstanding.
FTSE Nareit Index
A family of stock indexes, maintained by FTSE Russell in partnership with Nareit, that track the performance of the U.S. listed REIT market as a whole and by property sector.
Funds Available for Distribution (FAD)
A cash-flow measure similar to AFFO: FFO further reduced by recurring capital expenditures and other routine cash needs, intended to show the residual cash actually available to fund the dividend. Definitions vary by company, and FAD is often used interchangeably with AFFO or CAD.
Funds From Operations (FFO)
FFO is the REIT industry's standard earnings measure, used instead of GAAP net income because net income is weighed down by real estate depreciation that does not reflect an actual decline in a well-maintained property's value. In its standardized Nareit form, FFO equals net income plus real estate depreciation and amortization, minus gains, or plus losses, on property sales.
Read the full breakdown in FFO explained.
Gaming REIT
A REIT that owns casino real estate, meaning the buildings and land, and leases it back to casino operators under long-term, often triple net, leases. This separates ownership of the real estate from operation of the gaming business itself.
Read more in gaming and specialty REITs explained, or browse the Gaming sector.
Gross Asset Value (GAV)
The total estimated market value of a REIT's assets before subtracting liabilities and debt, that is, NAV before the "minus liabilities" step.
Gross Leasable Area (GLA)
The total floor area of a property designed for tenants' exclusive use and rent payment, typically measured in square feet. It is the standard way retail and industrial portfolios are sized.
Gross Lease
A lease in which the tenant pays a flat rent and the landlord is responsible for paying the property's taxes, insurance, and operating expenses out of that rent. Gross leases are common in office buildings.
Ground Lease
A long-term lease of land alone, under which the tenant owns or builds the buildings on that land and pays rent to the landowner. At the lease's end, ownership of the improvements typically reverts to the landowner.
Ground leases often run 50 to 99 years and are common under retail, hotel, and office buildings in dense urban locations.
Health Care REIT
A REIT that owns health care-related real estate, such as senior housing, skilled nursing facilities, medical office buildings, hospitals, and life science space.
Read more in health care REITs explained, or browse the Health Care sector.
Hybrid REIT
A REIT that combines both major strategies: owning physical, income-producing property like an equity REIT, while also holding real estate debt investments like a mortgage REIT, within a single company.
Implied Cap Rate
The cap rate the public market is implicitly assigning to a REIT's real estate, back-calculated from its enterprise value and NOI. It is a way of comparing how public markets are pricing a REIT's portfolio against cap rates seen in private real-estate transactions.
Income Test
A pair of REIT qualification rules requiring that at least 75% of a REIT's gross income come from real-estate-related sources, such as rents and mortgage interest, and at least 95% come from that same real-estate income combined with other passive sources like dividends and interest.
Indicated Dividend
A company's current dividend rate per share, annualized based on its most recently declared payment. It is the standard basis for calculating a current dividend yield.
Industrial REIT
A REIT that owns logistics-oriented real estate such as warehouses and distribution centers, which tenants use for storing and moving goods, including the smaller "last mile" facilities that support e-commerce delivery.
Read more in industrial REITs explained, or browse the Industrial sector.
Infrastructure REIT
A REIT that owns communications and other infrastructure real estate, most commonly cell towers along with related assets like fiber networks, leased to wireless carriers and other tenants under long-term contracts.
Read more in cell tower and infrastructure REITs explained, or browse the Infrastructure sector.
Interest Rate Sensitivity
The tendency of REIT share prices and borrowing costs to be influenced by changes in interest rates, both because REITs typically carry meaningful debt loads and because income-focused investors sometimes compare REIT dividend yields with bond yields. The degree of sensitivity varies by REIT and by property sector.
Internally Managed
A REIT structure in which the executives and staff who manage the company's properties and make investment decisions are direct employees of the REIT itself, so management costs are simply the REIT's own overhead rather than a fee paid to an outside company. Compare with externally managed.
Leasing Commission
The fee paid to real estate brokers for arranging a lease, typically a percentage of the total rent over the lease term, paid by the landlord.
Leasing Spread
The percentage difference between the rent on a newly signed or renewed lease and the rent the prior lease charged for the same space. A positive spread means new leases are being signed at higher rents than the leases they replace.
See REIT leasing metrics.
Life Science
Laboratory and specialized research space leased to biotechnology, pharmaceutical, and life-sciences companies. This space requires specialized infrastructure, such as ventilation, plumbing, and power capacity, beyond a typical office buildout.
Browse this group in the Health Care sector.
Liquidity
How easily an asset can be bought or sold without materially moving its price. For a stock, liquidity is typically gauged by average daily trading volume.
Loan-to-Value (LTV)
A loan's balance divided by the appraised value of the property or portfolio securing it. LTV is widely used in commercial real estate lending, including by mortgage REITs, to gauge the cushion a lender has against a decline in collateral value.
Lodging REIT
A REIT that owns hotels, typically leasing them to third-party operators who run day-to-day operations under a hotel brand, since REITs generally cannot operate hotels directly under the REIT rules.
Read more in hotel and lodging REITs explained, or browse the Lodging and Resorts sector.
Maintenance CapEx
Essentially synonymous with recurring CapEx: spending required to keep existing properties operating as-is, as distinct from spending on new development, redevelopment, or acquisitions.
Manufactured Housing
Residential communities of factory-built homes sited on individually leased land plots. In many manufactured-housing REIT portfolios, the REIT owns and leases the underlying land while residents own, or lease, the home itself.
Browse this group in the Residential sector.
Mark-to-Market
In a leasing context, the gap between the rent a portfolio's existing leases charge and the rent that space could command if leased at today's market rates. A portfolio with rents "below market" has room for rent growth as leases roll over and reset to current market rates.
Market Capitalization
The total value of a company's outstanding common shares: share price multiplied by shares outstanding.
Sort REITs by market cap in the directory.
Medical Office Building (MOB)
Office space built or configured for outpatient medical use, such as physician practices and diagnostic services, often located on or near hospital campuses.
Browse this group in the Health Care sector.
Modified Gross Lease
A lease that splits operating expenses between landlord and tenant by agreement, for example the tenant pays its own utilities and janitorial costs while the landlord covers taxes and insurance. It sits between a gross lease and a net lease.
Mortgage REIT (mREIT)
Often called an mREIT, a mortgage REIT typically does not own physical property. Instead it originates or purchases mortgages and mortgage-backed securities, earning income from the spread between what it collects on those assets and what it pays to finance them.
Browse this group in the Mortgage sector.
MSCI US REIT Index
An index maintained by MSCI that tracks U.S. listed equity REITs, and the basis for a number of widely held REIT index funds and ETFs.
Multifamily
Apartment properties containing multiple separate rental housing units in one building or complex.
Browse multifamily REITs in the Residential sector.
Nareit
The National Association of Real Estate Investment Trusts, the REIT industry's trade association. Nareit publishes standardized industry definitions, such as FFO and EBITDAre, and maintains widely used REIT performance indexes.
Nareit FFO
FFO computed under the standardized definition published by Nareit, the REIT industry's trade association. It is the common industry baseline that most REITs start from before layering on their own Core FFO or AFFO adjustments.
Net Debt
Total debt minus cash and cash equivalents: the debt a company would still owe if it used all its cash on hand to pay debt down.
Net Debt to EBITDA
Net debt divided by annualized EBITDA (or EBITDAre): a leverage ratio showing roughly how many years of current cash earnings it would take to pay off net debt if none of it were spent on anything else. It is one of the most commonly cited leverage metrics in REIT credit analysis.
Net Lease
A lease structure, see triple net lease, in which the tenant pays some or all of the property's operating costs in addition to rent. In a REIT-sector context, "net lease" is also used loosely to describe portfolios built primarily around single-tenant properties leased this way.
See net lease REITs.
Net Operating Income (NOI)
NOI is property-level revenue minus property-level operating expenses, before corporate overhead, depreciation, interest expense, and capital expenditures. It is the standard measure of a property or portfolio's underlying operating profitability and the usual input into a cap rate calculation.
See NOI explained.
Non-Traded REIT
A REIT that registers with and reports to the SEC and pays dividends like any other REIT, but whose shares do not trade on a public stock exchange. Because there is no continuous market price, buying, selling, or valuing shares is generally harder than with a listed REIT, and liquidity is typically limited to periodic, capped share-repurchase programs.
Read more in non-traded REITs explained.
Normalized FFO
Functionally similar to Core FFO: FFO adjusted to strip out unusual or non-recurring items so the remaining figure better reflects ongoing operating performance. As with Core FFO, the specific adjustments are company-defined rather than standardized.
Occupancy
The percentage of a property or portfolio's rentable space that is currently leased.
Office REIT
A REIT that owns and leases office buildings to business tenants, ranging from downtown high-rises to suburban office parks.
Read more in office REITs explained, or browse the Office sector.
OP Units
Ownership units in a REIT's operating partnership, issued to property owners who contribute real estate to the partnership in exchange for units instead of cash. OP units are generally convertible into REIT common shares, or their cash equivalent, after a holding period, and that conversion is typically a taxable event.
Operating Partnership (OP)
The underlying partnership, typically formed as part of an UPREIT structure, that directly owns a REIT's properties. The REIT itself usually serves as the general partner and holds a majority interest in the operating partnership.
Ordinary Dividend
The portion of a REIT distribution taxed at an investor's ordinary income tax rate rather than the lower qualified-dividend or capital-gains rates. This is the typical tax treatment for most REIT dividends, since REIT income generally has not already been taxed at the corporate level.
Payment Date
The date a declared dividend is actually paid out to shareholders of record.
Payout Ratio
Dividends paid divided by earnings, expressed as a percentage. For REITs, the payout ratio is commonly measured against FFO or AFFO rather than GAAP net income, since the 90% distribution requirement is based on taxable income, not GAAP earnings, and net income is depressed by depreciation.
Percentage Rent
Additional rent, common in retail leases, calculated as a percentage of the tenant's sales above a specified breakpoint, charged on top of base rent.
For example, a mall tenant might pay a fixed base rent plus a percentage of any sales above an agreed annual threshold.
Physical Occupancy
Occupancy measured strictly by leased square footage or units as a share of total rentable space, regardless of whether every leased tenant is currently paying rent in full. Compare with economic occupancy.
Preferred Stock
A class of stock that ranks ahead of common stock but behind debt in a company's capital structure, typically paying a fixed dividend and generally carrying no voting rights or the same upside tied to business growth that common stock has.
See REIT preferred stock.
Price-to-AFFO
Share price divided by AFFO per share, following the same logic as price-to-FFO but measured against the more cash-flow-oriented AFFO figure instead.
Price-to-FFO
Share price divided by FFO per share: a commonly cited valuation multiple and the REIT-sector analog to the price-to-earnings ratio used for other stocks, since GAAP earnings are distorted by real estate depreciation.
Private REIT
A REIT that is not registered with the SEC and is typically offered only to institutional or accredited investors. It has no public trading market and is subject to less standardized public disclosure than either a listed REIT or a registered non-traded REIT.
Property Class (A/B/C)
An informal grading system for a building's age, location, finishes, and amenities. Class A properties are generally the newest and most amenity-rich in the strongest locations; Class B properties are solid but older or less centrally located; Class C properties are older, with fewer amenities, and typically rent for correspondingly less.
Publicly Traded REIT
A REIT whose shares are listed on a national stock exchange, such as the NYSE or Nasdaq, so shareholders can buy and sell throughout the trading day at a continuously quoted market price. This is the type of REIT covered in this site's directory.
Qualified Dividend
A dividend eligible for lower long-term capital-gains tax rates rather than ordinary income rates. Most REIT dividends do not receive this treatment, because REITs generally do not pay corporate tax on the income they distribute, though a portion of a REIT's dividend can occasionally qualify, for example income passed through from a taxable REIT subsidiary that already paid corporate tax.
Record Date
The date a company checks its shareholder records to determine who is entitled to receive a declared dividend.
Recurring CapEx
Capital spending needed on an ongoing basis just to maintain a property's condition and competitiveness, such as roof and parking-lot replacement or routine leasing costs on renewals. It is commonly subtracted from FFO in AFFO-style calculations.
See REIT CapEx explained.
Redevelopment
Substantially renovating, repositioning, or rebuilding a property a company already owns, typically to modernize it, change its use, or increase the rent it can command.
Refinancing
Replacing existing debt with new debt, typically at or before the original debt's maturity, in order to extend the repayment timeline and potentially change the interest rate or lender.
REIT
REIT stands for Real Estate Investment Trust: a company that owns, operates, or finances income-producing real estate and is generally required to distribute at least 90% of its taxable income to shareholders as dividends each year. In exchange for meeting that and other IRS rules, a REIT generally pays no corporate income tax on the earnings it distributes, unlike an ordinary corporation.
Browse every U.S.-listed REIT in the REIT directory, or read more in what is a REIT.
REIT Election
The formal choice a qualifying corporation makes, by filing with the IRS, to be taxed as a REIT rather than as an ordinary corporation. The company must meet, and continue to meet, the organizational, income, asset, and distribution requirements the tax code sets out.
Residential REIT
A REIT focused on rental housing, spanning apartment communities, single-family rental homes, manufactured-housing communities, and student housing.
Read more in residential REITs explained, or browse the Residential sector.
Retail REIT
A REIT that owns shopping-oriented real estate, from enclosed malls and open-air shopping centers to freestanding single-tenant retail and restaurant buildings.
Read more in retail REITs explained, or browse the Retail sector.
Return of Capital
The portion of a distribution that represents a return of an investor's own invested capital rather than taxable income. It is common for REITs because tax depreciation reduces taxable income below cash flow, and it reduces the investor's cost basis rather than being taxed immediately as ordinary income.
Revolving Credit Facility
A bank credit line a company can draw on, repay, and draw on again as needed, up to a set limit. REITs commonly use one for short-term liquidity, such as funding an acquisition before longer-term financing is arranged.
RevPAR
RevPAR, or Revenue Per Available Room, is a hotel-industry performance measure equal to total room revenue divided by total rooms available. It is the same as occupancy rate multiplied by average daily rate, and is the standard way to compare hotel performance regardless of property size.
Browse hotel REITs in the Lodging and Resorts sector.
RMBS
Residential Mortgage-Backed Securities: bonds backed by pools of home loans. RMBS can be "agency" (see Agency MBS), meaning government-guaranteed, or "non-agency," meaning privately issued and carrying credit risk the agency kind does not have.
Sale-Leaseback
A transaction in which a company sells a property it owns, often to a REIT, and simultaneously signs a long-term lease to continue operating in that same building as a tenant. It converts owned real estate into upfront cash while letting the seller keep using the property.
Net lease REITs frequently grow their portfolios by purchasing properties through sale-leaseback transactions.
Same-Store NOI
NOI growth calculated only on properties that were owned and operated throughout both periods being compared, excluding the effect of acquisitions and dispositions. It isolates organic, property-level growth from growth that simply comes from buying or selling buildings.
For example, if a REIT bought ten new properties last quarter, same-store NOI growth would only reflect performance at the properties it already owned before that purchase.
Section 199A / QBI Deduction
A federal tax deduction, created by the 2017 Tax Cuts and Jobs Act, that lets individual taxpayers deduct up to 20% of their "qualified REIT dividends," the ordinary-income portion of REIT distributions, from taxable income. It is available even to investors who take the standard deduction, and without the wage or business-property limits that apply to other pass-through income under the same section.
Read more in the Section 199A deduction explained.
Section 721 Exchange
A tax provision that lets a property owner contribute real estate to a REIT's operating partnership in exchange for OP units without triggering an immediate taxable gain. It is the mechanism that makes the UPREIT structure work.
Secured Debt
Borrowing backed by a specific pledged asset, such as a mortgage on a named property, that a lender can foreclose on if the borrower defaults.
Self-Storage
A property type offering individually leased storage units, typically rented month-to-month by both households and businesses.
Read more in self-storage REITs explained, or browse the Self-Storage sector.
Senior Housing
Residential communities for older adults, spanning a range of service levels from independent living to assisted living to memory care. It is distinct from skilled nursing in that the emphasis is more on housing and lifestyle services than clinical nursing care.
Browse this group in the Health Care sector.
Single-Family Rental (SFR)
Standalone houses owned by a landlord and leased to individual tenant households, as opposed to apartment buildings where a landlord owns an entire multi-unit structure. SFR REITs assemble and manage portfolios of many individual rental houses, often across multiple markets.
Browse this group in the Residential sector.
Skilled Nursing Facility (SNF)
A licensed facility providing round-the-clock nursing care and rehabilitation services to residents, typically for shorter, post-acute stays rather than long-term residential living.
Browse this group in the Health Care sector.
Special Dividend
A one-time payment outside a company's regular dividend schedule, often funded by an asset sale, an unusually large gain, or excess capital rather than ongoing operating cash flow.
Specialty REIT
A REIT focused on a property type that falls outside the traditional sector categories, such as casinos, movie theaters, or outdoor advertising structures.
Browse specialty REITs in the Specialty sector.
Sponsor
The company or organization that organizes and typically initially capitalizes a REIT. The term is used most often for non-traded REITs, where the sponsor also usually controls the external advisor that manages the REIT.
Taxable REIT Subsidiary (TRS)
A corporate subsidiary a REIT can own to conduct business activities that would otherwise put its REIT status at risk, such as operating hotels or providing certain services to tenants, because those activities do not meet the REIT's own income and asset tests. A TRS pays regular corporate income tax on its earnings, unlike the REIT parent.
Tenant Improvement (TI)
The buildout or renovation work done to customize a leased space for a specific tenant, which the landlord frequently funds in whole or in part, commonly called a "TI allowance," as a leasing incentive.
Term Loan
A loan for a fixed amount, drawn in full at closing, with a set maturity and repayment schedule, as opposed to a revolving credit facility that can be drawn and repaid repeatedly.
Timberland
Forested land managed for the commercial harvest and sale of timber. Timberland REITs own large land holdings and generate revenue primarily from periodically harvesting and selling wood products, along with occasional land sales.
Read more in timberland REITs explained, or browse the Timberland sector.
Total Return
The total gain or loss from an investment over a period, combining share-price change with dividends received.
Total Shareholder Return (TSR)
Total return expressed as an annualized percentage over a specific holding period, typically assuming dividends are reinvested. It is a standard way to compare performance across companies, or against an index, over the same period.
Triple Net (NNN) REIT
A REIT whose portfolio is built primarily around single-tenant properties leased on a triple net basis, commonly spanning retail, restaurant, and industrial properties.
See net lease REITs.
Triple Net Lease (NNN)
A lease in which the tenant pays not only rent but also the property's real estate taxes, insurance, and maintenance costs directly, leaving the landlord with a comparatively predictable, low-expense income stream.
Unsecured Debt
Borrowing not backed by any specific pledged property. Lenders rely on the overall creditworthiness of the company rather than a lien on a named asset; investment-grade REITs typically fund most of their portfolios with unsecured debt for the added financial flexibility it provides.
Unsecured Notes
Bonds issued by a REIT that are not backed by a specific property and instead rely on the company's general credit. They are the standard form of long-term, fixed-rate financing for investment-grade REITs.
UPREIT
UPREIT stands for Umbrella Partnership REIT, a structure where the REIT itself does not directly own properties but instead holds a controlling interest in an operating partnership that does. Property owners can contribute real estate to that partnership in exchange for OP units in a tax-deferred transaction, rather than selling for cash and triggering an immediate taxable gain.
Most large publicly traded U.S. REITs are organized this way. Read more in UPREIT structure explained.
Vacancy Rate
The percentage of rentable space that is not currently leased: the inverse of the physical occupancy rate.
WALE
Functionally the same measure as WALT, weighted average lease term, using "expiry" instead of "term." It is common terminology among net-lease REITs and REITs outside the U.S., and is generally interchangeable with WALT.
Weighted Average Cost of Capital (WACC)
The blended, weighted-average return a company must generate on its capital to satisfy both its lenders (interest cost) and shareholders (required return), weighted by how much debt versus equity the company uses. It is commonly used as a hurdle rate when evaluating whether an investment is likely to create value.
Weighted Average Lease Term (WALT)
WALT is the average remaining term left on a portfolio's leases, weighted by each lease's share of rent or square footage. A longer WALT means more of the portfolio's income is contractually locked in further into the future.
See REIT leasing metrics.
Withholding Tax
Tax a payer withholds and remits to a government before the balance reaches the recipient. Non-U.S. holders of U.S. REIT shares are generally subject to U.S. withholding, commonly 30% or a lower treaty rate, on ordinary REIT dividends.
Yield on Cost
A dividend's current annual rate divided by an investor's original cost basis, rather than the current share price. It tracks income growth relative to the price originally paid, distinct from the current dividend yield.
Research and education only — nothing here is investment advice.