Glossary

An easement is the right to use all or a portion of the real property owned by another for a specific purpose such as placement of utility lines, sewer lines and rights of entry and exit.

EBITDA is one of the measures that lenders use to evaluate a business's creditworthiness and its ability to repay a loan. It is calculated by taking the net earnings of the company (revenues minus expenses) and then adding back interest costs, taxes, depreciation and amortization.

Gross income of a building if fully rented, less an allowance for estimated vacancies.

EGI is used to analyze investment properties. It is determined by taking Gross Income less vacancy and credit losses, plus miscellaneous income.

Actual rate as opposed to announced, estimated, offered, planned, or promised rate.

An entity or trust which does not engage in regular and continuous business activity, which leases real or personal property to an operating company for use in the operating company_s collateral.

Anything that affects or limits the fee simple title to property, such as mortgages, leases, easements, or restrictions.

Report generated by an architect or engineer describing the current physical condition of the property and its major building systems, i.e., HVAC, parking lot, roof, etc. The report also determines an amount for calculating replacement reserves, if needed.

A right to benefits specified especially by law or contract.

One who assumes the financial risk of the initiation, operation and management of a given business or undertaking.

Environmental Indemnity An agreement by a business borrower or a guarantor to protect or reimburse another party (usually a lender) from any loss incurred as a result of an environmental problem.

Report generated by qualified environmental firms to determine potential environmental hazards in a building_s region or within the building itself.

Risk of loss of collateral value and of lender liability due to the presence of hazardous materials, such as asbestos, PCB_s, radon or leaking underground storage tanks (LUSTS) on a property.

Environmental Site Assessment or Phase I Site Assessment A study of real estate to determine any unique environmental attributes, encompassing everything from endangered species to existing or potential hazardous waste to historical significance. Generally it involves visual inspection, interviews, and checking local records.

Environmental Site Assessment Phase II A Phase II report will normally be performed when a potential environmental condition is indicated after a Phase I report. The Phase II will include sampling and evaluation of suspect materials or areas on the site.

Environmental Site Assessment Phase III A Phase III will set forth plans for the mitigation or remediation of the environmental conditions on the site.

The difference between the fair market value and current indebtedness, also referred to as owner_s interest.""

In connection with business financing requests this generally refers to the cash and value of property contributed to the business by the borrower(s).

A loan for an equity position which represents an ownership position in a property or a loan for the participation in the profits of the commercial property.

Equity Net Equity or Net Worth basically refers to the assets of the business minus its liabilities.

A provision in a lease whereby real estate tax increases imposed on the lessor are passed along to the lessee as additional rent.

Documents, real estate, money, or securities deposited with a neutral third party (the escrow company) to be delivered upon fulfillment of certain conditions, as established in a written agreement.

A neutral third party that holds documents and money for a real estate sale transaction and ensures that all conditions of the sale are met before any disbursement of funds or articles.

A written statement setting forth certain facts about a piece of real estate, such as the precise amount of indebtedness remaining.

U.S. dollar denominated deposits at commercial banks outside of the United States.

A clause in contract holding one party harmless in the event of some default. In a lease, the exculpatory clause relieves the landlord of liability for the personal injury to tenants or damage to tenants' property. In a mortgage, it allows the borrower to surrender the property to the lender without personal liability for the loan.

A hotel that caters to a business traveler on an extended lodging period.