REIPRIME Logo
Intermediate1.5 hours15 terms

Real Estate Dividend Recaps: Key Terms

This curated collection offers key terms that might be helpful when exploring dividend recapitalization in real estate investment. It provides definitions for commonly referenced concepts related to financing, equity, and valuation, serving as a practical reference resource.

Term Collection

1

Loan Covenants

Loan covenants are legally binding conditions within a loan agreement that borrowers must adhere to, designed to protect the lender's interests by ensuring financial health and responsible asset management throughout the loan term.

Intermediate13 min
2

Equity Multiplier

The Equity Multiplier is a financial leverage ratio that measures the proportion of a company's assets financed by shareholders' equity, indicating how much debt is used to finance assets and amplify returns.

Advanced5 min
3

Dividend Recapitalization

Dividend recapitalization is a corporate finance transaction where a company issues new debt to pay a large dividend to its shareholders, often used by private equity firms to extract value from an investment before a full exit.

Advanced7-9 min
4

Appraisal

An appraisal is an unbiased, professional opinion of a property's market value, conducted by a licensed appraiser, primarily used for lending, buying, and selling decisions.

Intermediate14-15 min
5

Internal Rate of Return

The Internal Rate of Return (IRR) is a sophisticated financial metric used in capital budgeting to estimate the profitability of potential investments, representing the discount rate at which the net present value (NPV) of all cash flows from a particular project equals zero.

Advanced15-18 min
6

Return on Equity

Return on Equity (ROE) is a financial metric that measures the profitability of a real estate investment in relation to the equity invested, indicating how efficiently an investor is using their capital to generate profits.

Intermediate15-18 min
7

Leverage in Real Estate

Leverage in real estate refers to the use of borrowed capital, typically mortgage loans, to finance a property purchase, aiming to amplify potential investment returns on the equity invested.

Intermediate4-6 min
8

Capital Stack

The capital stack is the hierarchical structure of all debt and equity financing used to fund a real estate investment, defining the priority of payment, risk, and return for each capital source.

Advanced13-16 min
9

Debt Service

Debt service is the total amount of principal and interest payments required to repay a loan over a specific period, typically for a mortgage or other property-related financing.

Beginner11-12 min
10

Underwriting

Underwriting is the process by which lenders assess the risk of lending money for a real estate transaction, evaluating the borrower's creditworthiness and capacity to repay, as well as the property's value and marketability.

Intermediate15-18 min
11

Debt Service Coverage Ratio

The Debt Service Coverage Ratio (DSCR) is a financial metric used in commercial real estate lending to assess a property's ability to generate sufficient Net Operating Income (NOI) to cover its annual mortgage debt payments.

Advanced15-18 min
12

Refinancing

Refinancing is the process of replacing an existing mortgage or loan with a new one, often to secure better terms, lower interest rates, or access built-up property equity.

Intermediate15-18 min
13

Special Dividend

A special dividend is a non-recurring distribution of company earnings to shareholders, typically paid out from a significant one-time event like an asset sale or extraordinary profit.

Intermediate2-3 min
14

Leverage

Leverage in real estate is the use of borrowed capital, typically through mortgages, to finance property purchases and amplify potential investment returns.

Intermediate15-18 min
15

Private Equity Real Estate

Private Equity Real Estate (PERE) involves institutional or high-net-worth investors pooling capital to acquire, develop, manage, and sell real estate assets, typically through a fund structure, with the goal of generating significant returns over a medium to long-term horizon.

Advanced8 min

Common Questions