Last updated: November 5, 2026
Commercial real estate (CRE) has its own shorthand. This glossary defines the terms that show up in offering memos, lender term sheets, and operator dashboards, starting with a one-sentence meaning for each.
Net operating income (NOI) is operating income after operating expenses and before debt service and capital expenditures. Effective gross income (EGI) is potential rent plus other income minus vacancy and credit loss.
CRE underwriting usually builds from a rent roll to EGI, then to NOI, then to cash flow after debt. Mixing personal income into that stack is a residential habit that does not map cleanly to institutional CRE.
Cap rate is NOI divided by price or value. Going-in cap rate uses year-one NOI; exit or terminal cap rate is an assumption for resale value. Cap rates help compare assets, but they ignore leverage and capital plans.
When financing costs rise, buyers often bid lower prices for the same NOI, which shows up as higher cap rates. Asset quality, lease duration, and tenant credit still matter more than a single percentage.
Triple net (NNN) usually means the tenant pays taxes, insurance, and maintenance in addition to base rent. Double net and modified gross structures share those costs differently between landlord and tenant.
Always reconcile the lease abstract with the operating statements. A NNN marketing label can still leave roof, structure, or parking lot costs with the owner.
Debt service coverage ratio (DSCR) is NOI divided by annual debt service. Debt yield is NOI divided by loan amount. Loan to value (LTV) is loan amount divided by value. Lenders often look at more than one of these tests.
A deal can clear LTV and fail DSCR if income is thin relative to the payment. DSCR-style residential investment loans borrow this CRE idea and apply it to smaller rentals.
Cash on cash return is annual pre-tax cash flow divided by cash equity invested. Equity multiple is total cash returned over the hold divided by equity invested. IRR folds timing into that picture.
Sponsors lean on these metrics in investor decks. Readers should ask which NOI year, which fee load, and which refinance or sale assumptions sit underneath the headline number.
Cost basis is what you have into the asset after purchase and capital. Tenant improvements (TI) and free rent are leasing costs that reduce near-term cash and are often amortized in underwriting.
Broker opinions of value and appraisals may treat these differently. Align your model with how your lender and partners measure them.
Physical occupancy is units or square feet leased. Economic occupancy adjusts for concessions and credit loss. Weighted average lease term (WALT) summarizes how soon leases expire.
Rollover risk is the concentration of expirations in a short window. CRE marketing that ignores WALT and tenant credit is incomplete.
Square Footage covers CRE and housing news in plain language. Briefcase Studio helps proptech and CRE brands explain products without burying readers in jargon. Related pages include the proptech glossary and the DSCR loan guide.
Read the opening definition first, then skim the section headings for the decision you are making today: underwriting a deal, choosing software, or hiring marketing help. Each section is written to stand alone so you can land from search and leave with one clear answer.
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When you take ideas into your own GTM, pair education with proof. Named workflows, before-and-after operating metrics, and clear ICP language beat vague digital transformation claims. That is the same bar Square Footage uses in its weekday briefing.
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Write the metric you want to move before you pick a vendor, loan product, or agency. Days to lease, DSCR, NOI variance, and cost per door are clearer than buzzwords.
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Revisit this page when your assumptions change: rate moves, insurance quotes, or a new ICP. Evergreen guides are starting points, not substitutes for current underwriting or counsel.
Briefcase Studio builds newsletters, animated data visuals, short-form video, and launch campaigns for proptech and real estate brands. Retainers typically run $3,000 to $6,000 per month. Start at briefcase.email/studio. Square Footage, the free weekday briefing of top US real estate stories, is at briefcase.email.
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