Use our helpful glossary to better understand what we do. Our glossary contains relevant investment industry terms that might be used throughout this website.

10-K
This term refers to a comprehensive summary report of a company’s performance submitted annually to the Securities and Exchange Commission. Typically, the 10-K contains much more detail than the annual report. It includes information such as company history, organizational structure, equity, holdings, earnings per share, subsidiaries, etc.

10-K/A
This term refers to an amendment to the 10-K.

10-Q
This term refers to a comprehensive company performance report submitted quarterly by all public companies to the Securities and Exchange Commission. In the 10-Q, firms are required to disclose relevant information regarding their financial position. The form must be submitted on time and the information should be available to all interested parties.

10-Q/A
This term refers to an amendment to the 10-Q.

8-K
This term refers to a report of unscheduled material events or corporate changes at a company of possible importance to the shareholders or the Securities and Exchange Commission.

Acquisition Cost
The outlay of funds needed to purchase a property. In addition to the purchase price, it includes expenses such as closing costs, mortgage loan origination fees, legal and appraisal fees, and title insurance.

Adjusted Funds from Operations (AFFO)
This term refers to a computation made by analysts and investors to measure a real estate company’s cash flow generated by operations. AFFO is usually calculated by subtracting from Funds from Operations (FFO) both (1) normalized recurring expenditures capitalized by the REIT and then amortized, but which are necessary to maintain a REIT’s properties and its revenue stream (e.g., new carpeting and drapes in apartment units, leasing expenses and tenant improvement allowances) and (2) “straight-lining” of rents. This calculation also is called Cash Available for Distribution (CAD) or Funds Available for Distribution (FAD).

Amortization
This term refers to the repayment of a loan by installments or the process of decreasing or accounting for an amount over a period of time.

Annual Percentage Rate (APR)
The periodic rate times the number of periods in a year. For example, a 5% quarterly return has an APR of 20%.

Annual Percentage Yield (APY)
The effective, or true, annual rate of return. The APY is the rate actually earned or paid in one year, taking into account the effect of compounding. The APY is calculated by taking one plus the periodic rate and raising it to the number of periods in a year. For example, a 1% per month rate has an APY of 12.68% (1.01^12).

Annual Report
This term refers to the yearly record of a publicly held company’s financial condition. The report includes a description of the firm’s operations, its balance sheet and income statement. SEC rules require it be distributed to all shareholders. For public reporting companies is sometimes referred to as the 10-K.

Appraisal
This term refers to a valuation of property (e.g. real estate, a business, an antique) by the estimate of an authorized person.

Articles of Incorporation
This term refers to the legal document establishing a corporation and its structure and purpose.

Asset
This term refers to any possession having value in an exchange.

Asset Classes
This term refers to categories of assets, such as stocks, bonds, real estate and foreign securities.

Asset / Equity Ratio
This term refers to the ratio of total assets to stockholder equity.

Asset-Based Financing
Methods of financing in which lenders and equity investors look principally to the cash flow from a particular asset or set of assets for a return on, and the return of, their financing.

Auditor’s Report
This term refers to a section of an annual report containing the auditor’s opinion about the veracity of the financial statements.

Authorized Shares
Number of shares authorized for issuance by an entity’s charter.

Balance Sheet
Also called the statement of financial condition, it is a summary of the assets, liabilities, and owners’ equity.

Basis Point (BPS)
A unit equal to 1/100th of 1%. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

Blue-Sky Laws
State laws covering the issue and trading of securities.

Book Value
Book Value is the net value of a company’s assets, less its liabilities. Book value will reflect depreciation and amortization, which are expensed for accounting purposes. A company’s book value might be more or less than its market value.

Book Value per Share
The ratio of stockholder equity to the average number of common shares. Book value per share should not be thought of as an indicator of economic worth, since it reflects accounting valuation (and not necessarily market valuation).

Broker
This term refers to an individual who is paid a commission for executing customer orders.

Budget
A detailed schedule of financial activity.

Capital Budget
A firm’s set of planned capital expenditures.

Capital Expenditures
Amount used during a particular period to acquire or improve long-term assets such as property, plant or equipment.

Capital Gain
When a stock is sold for a profit, it’s the difference between the net sales price of securities and their net cost, or original basis. If a stock is sold below cost, the difference is a capital loss.

Capital Lease
A lease obligation capitalized on the balance sheet.

Capital Loss
The term refers to the difference between the net cost of a security and the net sale price, if the security is sold at a loss.

Capital Structure
The makeup of the liabilities and stockholders’ equity side of the balance sheet, especially the ratio of debt to equity and the mixture of short and long maturities.

Capitalization
The debt and/or equity mix funding a firm’s assets.

Capitalization Rate (or Cap Rate)
A measure of the return generated by a property investment. The capitalization rate (or “cap” rate) for a property is determined by dividing the property’s net operating income by its purchase price.

Capitalized
Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives greater than one year.

Cash
The term refers to the value of assets convertible into cash immediately. Usually includes bank accounts and marketable securities.

Cash (or Funds) Available for Distribution
Cash (or Funds) available for distribution (CAD or FAD) is a measure of a REIT’s ability to generate cash and to distribute dividends to its shareholders. In addition to subtracting from FFO normalized recurring real estate-related expenditures and other non-cash items to obtain AFFO, CAD (or FAD) is usually derived by also subtracting nonrecurring expenditures.

Cash Budget
A forecasted summary of a firm’s expected cash inflows and cash outflows as well as its expected cash and loan balances.

Cash Equivalent
The term refers to a short-term security sufficiently liquid it may be considered the financial equivalent of cash.

Cash Flow
Earnings before depreciation, amortization and non-cash charges. Cash flow from operations (called Funds from Operations (FFO)) by real estate and other investment trusts is important because it indicates the ability to pay dividends.

Cash Flow Coverage Ratio
The number of times financial obligations (for interest, principal payments, preferred stock dividends, and rental payments) are covered by earnings before interest, taxes, rental payments, and depreciation.

Cash Flow from Operations
A firm’s net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus non-cash expenses deducted in calculating net income.

Collateral
Assets than can be repossessed if a borrower defaults.

Commission
The fee paid to a broker to execute a trade, based on number of shares, bonds, options, and/or their dollar value.

Common Stock
The term refers to securities representing equity ownership in an entity. Common shares often have voting rights and/or give the holder a share in a company’s profits via dividend payments or the capital appreciation of the security.

Common Stock Ratios
Ratios designed to measure the relative claims of stockholders to earnings (cash flow per share), and equity (book value per share) of a firm.

Cost of Capital
The cost to a company of raising capital in the form of equity (common or preferred stock) or debt. The cost of equity capital generally is considered to include both the dividend rate, as well as, the expected equity growth either by higher dividends or growth in stock prices. The cost of debt capital is merely the interest expense on the debt incurred.

Coverage Ratios
Ratios used to test the adequacy of cash flows generated through earnings for purposes of meeting debt and lease obligations, including the interest coverage ratio and the fixed charge coverage ratio.

Current Ratio
Determined by dividing current assets by current liabilities. The ratio is a good indicator of an entity’s ability to pay its short-term debt. The higher the ratio, the more liquid the company.

Custodial Fees
Fees charged by an institution holding securities in safekeeping for an investor.

Debt Ratio
Total debt divided by total assets.

Debt to Equity Ratio
Determined by dividing long-term debt by common stockholder equity. The ratio is a good indicator of an entity’s financial leverage. Compares assets provided by creditors to assets provided by shareholders.

Declaration Date
The date on which a Trust’s Trustees meet and announce the date and amount of the next dividend.

Depreciate
To allocate the purchase cost of an asset over its life.

Depreciation
An annual charge taken to reduce the value of a property due to age, obsolescence, etc. Depreciation is a non-cash expense reducing taxable income but not cash flow.

Dilutive Effect
Result of a transaction decreasing earnings per common share.

Discounted Cash Flow (DCF)
Future cash flows multiplied by discount factors to obtain present values.

Distribution Reinvestment Program (DRP)
A program enabling existing Unit-holders to automatically reinvest their distributions towards the purchase of common shares.

Distribution Yield
The annualized per unit distribution expressed as a percentage of the unit price.

Distributions
Payments from cash flow, including dividends from earnings, capital gains from sale of portfolio holdings and return of capital.

Diversification
Dividing investment funds among a variety of securities with different risk, reward, and correlation statistics so as to minimize unsystematic risk.

Dividend
A dividend is a portion of a company’s profit paid to common shareholders. For example, a stock selling for $20 a share with an annual dividend of $1 a share yields the investor 5%.

Dividend Coverage
Funds from Operation (FFO) divided by dividends paid to shareholders and unit holders.

Dividend Payout Ratio
Percentage of earnings paid out as dividends.

Dividend Rate
The fixed or floating rate paid on preferred stock based on par value.

Dividend Reinvestment Plan (DRP)
A program enabling existing shareholders to automatically reinvest their dividends towards the purchase of more common shares. Some plans provide for the purchase of additional shares at a discount to market price. Dividend reinvestment plans allow shareholders to accumulate stock over the long-term using dollar cost averaging. The DRP is usually administered by the company without charges to the holder.

Dividend Rights
A shareholders’ rights to receive per-share dividends identical to those other shareholders receive.

Dividend Yield
Indicated yield represents annual dividends divided by current stock price.

Dividends per Share
Dividends paid for the past 12 months divided by the number of common shares outstanding, as reported by a company. The number of shares often is determined by a weighted average of shares outstanding over the reporting term.

Earnings
Net income for the company during a period.

Earnings per Share (EPS)
EPS is a company’s profit divided by its number of outstanding shares. If a company earned $2 million in one year had 2 million shares of stock outstanding, its EPS would be $1 per share. Companies often use a weighted average of shares outstanding over the reporting term.

Earnings Yield
The ratio of earnings per share after allowing for tax and interest payments on fixed interest debt, to the current share price. The total twelve months earnings divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is shown in percentage.

EBITDA
Earnings before interest, taxes, depreciation and amortization. This measure is sometimes referred to as Net Operating Income (NOI).

EDGAR
The Securities & Exchange Commission uses Electronic Data Gathering and Retrieval to transmit company documents such as 10-Ks, 10-Qs, quarterly reports, and other SEC filings, to investors.

Effective Annual Interest Rate
The term refers to an annual measure of the time value of money fully reflecting the effects of compounding.

Effective Annual Yield
Annualized interest rate on a security computed using compound interest techniques.

Equitization
The process by which the economic benefits of ownership of a tangible asset, such as real estate, are divided among numerous investors and represented in the form of publicly-traded securities.

Equity
(1) A stock or any other security representing an ownership interest; (2) On a company’s balance sheet, the amount of the funds contributed by the owners (the stockholders) plus the retained earnings (or losses). Also referred to as “shareholders’ equity”; (3) In the context of real estate, it is the amount the owner would receive after selling a property and paying off the mortgage.

Equity Market Cap
The market value of all outstanding common stock of a company.

Equity REIT
A REIT which owns, or has an “equity interest” in, rental real estate (rather than making loans secured by real estate collateral).

Expensed
Charged to an expense account, fully reducing reported profit of that year, as is appropriate for expenditures for items with useful lives under one year.

Financial Leverage
Use of debt to increase the expected return on equity. Financial leverage is measured by the ratio of debt to debt plus equity.

FINRA
The Financial Industry Regulatory Authority – formerly the NASD and NYSE Member Regulation – is the largest non-governmental regulator for all securities firms doing business in the United States.

Fixed Asset
Long-lived property owned by a firm used in the production of its income. Tangible fixed assets include real estate, plant, and equipment. Intangible fixed assets include patents, trademarks, and customer recognition.

Fixed Cost
A cost fixed in total for a given period of time and for given production levels.

Fixed-Rate Loan
A loan on which the rate paid by the borrower is fixed for the life of the loan.

Form 3
A document filed with the Securities and Exchange Commission (SEC) by an insider affiliated with a public company’s operation.

Form 4
A document filed with the Securities and Exchange Commission (SEC) whenever there is a material change in the holdings of company insiders.

Form 5
This term refers to a document filed with the Securities and Exchange Commission (SEC) by an insider who conducted an insider transaction during the year which were not previously reported via a Form 4 submission.

Funds Available for Distribution (FAD)
A term used to measure the funds a REIT has available to make distributions.

Funds from Operations (FFO)
The most commonly accepted and reported measure of REIT operating performance. It is a REIT’s net income, excluding gains or losses from sales of property, and adding back real estate depreciation.

General Partner
A partner who has unlimited liability for the obligations of the partnership.

Generally Accepted Accounting Principles (GAAP)
A technical accounting term encompassing the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time.

Gross Leasable Area (GLA)
The total floor space of a building designed for the occupancy of tenants. GLA does not include common areas.

Holding Period
Length of time an individual holds a security.

Holding Period Return
The rate of return over a given period.

Hybrid REIT
This term refers to a REIT combining the investment strategies of both equity REITs and mortgage REITs.

Implied Equity Market CAp
The market value of all outstanding common stock of a company plus the value of all UPREIT partnership units as if they were converted into the REIT’s stock.

Income Statement (statement of operations)
A statement showing the revenues, expenses, and income (the difference between revenues and expenses) of an entity over some period of time.

Individual Retirement Account (IRA)
Created in 1974 by the Employee Retirement Income Security Act (ERISA), an IRA is an investing tool used by individuals to earn and earmark funds for retirement savings. There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs.

Intangible Asset
A legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual property, patents, copyrights, and trademarks are examples of intangible assets.

Interest
The price paid for borrowing money. It is expressed as a percentage rate over a period of time and reflects the rate of exchange of present consumption for future consumption.

Interest Coverage Ratio
The ratio of the earnings before interest and taxes to the annual interest expense. This ratio measures a firm’s ability to pay interest.

Investor
The owner of a financial asset.

Investor Relations
The process by which a company communicates with its investors.

Lease
A long-term rental agreement and a form of secured long-term debt.

Lease Rate
The payment per period stated in a lease contract.

Lease Rollover
The re-leasing of a space with the same tenant after the expiration of a prior lease on the same space.

Lend
To provide money temporarily on the condition it or its equivalent will be returned, often with an interest fee.

Lessee
This term refers to an entity leasing an asset from another entity.

Lessor
This term refers to an entity leasing an asset to another entity.

Leverage
The utilization of debt to finance property acquisitions. The amount of debt in relation to either equity capital or total capital.

Leverage Ratios
Measures of the relative contribution of stockholders and creditors, and of the firm’s ability to pay financing charges. Value of firm’s debt to the total value of the firm.

Liability
A financial obligation or the cash outlay made at a specific time to satisfy the contractual terms of such an obligation.

Limited Partner
A partner who has limited legal liability for the obligations of the partnership.

Limited Partnership
This term refers to a partnership including one or more partners who have limited liability.

Liquidity
The ability to convert assets into cash without an appreciable loss in value. Investments are said to have good liquidity if they can quickly and easily be converted into cash.

Long-Term Assets
Value of property, equipment and other capital assets minus the depreciation. This is an entry in the bookkeeping records of a company, usually on a “cost” basis and thus does not necessarily reflect the market value of the assets.

Long-Term Debt
An obligation having a maturity of more than one year from the date it was issued.

Long-Term Debt Ratio
The ratio of long-term debt to total capitalization.

Long-Term Debt to Equity Ratio
Capitalization ratio comparing long-term debt to shareholders’ equity.

Long-Term Debt / Capitalization
Determined by dividing long-term debt by the sum of long-term debt, preferred stock and common stockholder equity. It is a good indicator of a firm’s financial leverage.

Management’s Discussion
This term refers to a report from management to the shareholders accompanying the firm’s financial statements in the annual report. This report explains the period’s financial results and enables management to discuss other ideas not otherwise apparent in the financial statements in the annual report.

Market Capitalization
The total dollar value of all outstanding shares, computed as shares times current market price.

Market Capitalization Rate
The market-consensus estimate of the appropriate discount rate for a firm’s cash flows.

Market Value
(1) The price at which a security is trading and could presumably be purchased or sold; or (2) The value investors believe a firm is worth; calculated by multiplying the number of shares outstanding by the current market price of a firm’s shares.

Market-to-Market
The process whereby the book value or collateral value of a security is adjusted to reflect current market value.

Mortgage
A loan secured by the collateral of some specified real estate property which obliges the borrower to make a predetermined series of payments.

Mortgage Rate
The interest rate on a mortgage loan.

Mortgage REIT
A REIT making or owning loans and other obligations secured by real estate collateral.

Mortgagee
The lender of a loan secured by property.

Mortgager
The borrower of a loan secured by property.

Multi-family Loans
Loans usually represented by conventional mortgages on multi-family rental apartments.

Net Asset Value (NAV)
The market value of a company’s properties and other assets after subtracting its liabilities and other obligations.

Net Assets
The difference between total assets on the one hand and current liabilities and non-capitalized long-term liabilities on the other hand.

Net Book Value
The current book value of an asset or liability; that is, its original book value net of any accounting adjustments such as depreciation.

Net Cash Balance
Beginning cash balance plus cash receipts minus cash disbursements.

Net Income
The company’s total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses.

Net Lease
A lease arrangement under which the lessee is responsible for all property taxes, maintenance expenses, insurance, and other costs associated with keeping the asset in good working condition.

Net Operating Losses
Losses a firm can take advantage of to reduce taxes.

Passive Investment Management
Buying a well-diversified portfolio to represent a broad-based market index without attempting to search out mispriced securities.

Payout Ratio
Generally, the proportion of earnings paid out to the common stockholders as cash dividends. More specifically, the firm’s cash dividend divided by the firm’s earnings in the same reporting period.

Positive Spread Investing (PSI)
The ability to raise funds (both equity and debt) at a cost significantly less than the initial returns obtained on real estate transactions.

Price / Book Ratio
Determined by dividing current stock price by common stockholder equity per share (book value), adjusted for stock splits. Compares a stock’s market value to the value of total assets less total liabilities (book value).

Prime Rate
The interest rate at which banks lend to their best (prime) customers. Much more often than not, a bank’s most creditworthy customers borrow at rates below the prime rate.

Principal
The total amount of money being borrowed or lent.

Private Placement
The sale of a bond or other security directly to a limited number of investors.

Pro Forma Statement
A financial statement showing the forecast or projected operating results and balance sheet, as in pro forma income statements, balance sheets, and statements of cash flows.

Prospectus
This term refers to a formal written document to sell securities describing the plan for a proposed business enterprise.

Proxy
Document intended to provide shareholders with information necessary to vote in an informed manner on matters to be brought up at a stockholders’ meeting. Shareholders can and often do give management their proxy, representing the right and responsibility to vote their shares as specified in the proxy statement.

Quick Ratio
This term refers to a ratio by which to measure a company’s financial strength (or weakness). The ratio is calculated by taking current assets less inventories, divided by current liabilities. This ratio provides information regarding the firm’s liquidity and ability to meet its obligations.

Real Estate Investment Trust (REIT)
A REIT is a company dedicated to owning, and in most cases, operating income-producing real estate, such as apartments, shopping centers, offices and warehouses. Some REITs also engage in financing real estate.

Real Estate Investment Trust Act of 1960
This term refers to the Federal law authorizing REITs. Its purpose was to allow small investors to pool their investments in real estate in order to get the same benefits as might be obtained by direct ownership, while also diversifying their risks and obtaining professional management.

Record Date
Date by which a shareholder must officially own shares in order to be entitled to a dividend. For example, a firm might declare a dividend on March 1, payable April 15 to holders of record March 31.

REIT Modernization Act of 1999
Federal tax law change allowing a REIT to own up to 100% of stock of a taxable REIT subsidiary providing services to REIT tenants and others. The law also changed the minimum distribution requirement from 95 percent to 90 percent of a REIT’s taxable income — consistent with the rules for REITs from 1960 to 1980.

Return
The change in the value of a portfolio over an evaluation period, including any distributions made from the portfolio during that period.

Return of Capital
The portion of a REIT’s distribution in excess of taxable income. For a tax-paying stockholder, a return of capital does not create taxable ordinary income but does reduce the stockholders’ tax basis.

Return on Assets (ROA)
Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage.

Return on Equity (ROE)
Indicator of profitability. Determined by dividing net income for the past 12 months by common stockholder equity (adjusted for stock splits). Result is shown as a percentage.

Return on Investment (ROI)
Generally, book income as a proportion of net book value.

Return on Total Assets
The ratio of earnings available to common stockholders to total assets.

Sale and Lease-Back
Sale of an existing asset to a financial institution that then leases it back to the user.

Scheduled Cash Flows
The mortgage principal and interest payments due to be paid under the terms of the mortgage not including possible prepayments.

SEC
The Securities and Exchange Commission, the primary federal regulatory agency of the securities industry.

Secondary Market
The market where securities are traded after they are initially offered in the primary market.

Sector
This term refers to a group of securities similar with respect to maturity, type, rating, industry.

Securities Exchange Act of 1934
The Securities Exchange Act of 1934 was created to provide governance of securities transactions on the secondary market (after issue) and regulate the exchanges and broker-dealers in order to protect the investing public.

Securitization
Securitization is the process of financing a pool of similar but unrelated financial assets (usually loans or other debt instruments) by issuing investors security interests representing claims against the cash flow and other economic benefits generated by the pool of assets.

Share Repurchase
This term refers to a program by which a corporation buys back its own shares in the open market.

Shareholders’ Equity
This term refers to a company’s total assets minus total liabilities.

Shares
This term refers to certificates or book entries representing ownership in a corporation or similar entity.

Statement of Cash Flows
This term refers to a financial statement showing a firm’s cash receipts and cash payments during a specified period.

Stock
Ownership of a corporation which is represented by shares which represent a piece of the corporation’s assets and earnings.

Stock Dividend
This term refers to payment of a dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company, or it may be shares in a subsidiary being spun off to shareholders. Stock dividends are often used to conserve cash needed to operate the business. Unlike a cash dividend, stock dividends are not taxed until sold.

Stockholder Equity
This term refers to a balance sheet item including the book value of ownership in the corporation. It includes capital stock, paid in surplus, and retained earnings.

Straight Line Depreciation
This term refers to an equal dollar amount of depreciation in each accounting period.

Straight-Lining
Real estate companies such as REITs “straight line” rents because generally accepted accounting principles require it. Straight lining averages the tenant’s rent payments over the life of the lease.

Street
This term refers to brokers, dealers, underwriters, and other knowledgeable members of the financial community; from Wall Street financial community.

Street Name
This term describes securities held by a broker on behalf of a client but registered in the name of the Wall Street firm.

Tangible Asset
This refers to an asset whose value depends on particular physical properties. These include reproducible assets such as buildings or machinery and non-reproducible assets such as land, a mine, or a work of art.

Tax Reform Act of 1986
This term refers to a Federal law substantially altering the real estate investment landscape by permitting REITs not only to own, but also to operate and manage, most types of income-producing commercial properties. It also stopped real estate “tax shelters” attracting capital from investors based on the amount of losses created.

Total Debt to Equity Ratio
This term refers to a capitalization ratio comparing current liabilities plus long-term debt to shareholders’ equity.

Total Market Cap
This term refers to the total market value of a REIT’s (or other company’s) outstanding common stock and indebtedness.

Total Return
This term refers to a stock’s dividend income plus capital appreciation, before taxes and commissions.

Transactions Costs
This term refers to the time, effort, and money necessary, including such things as commission fees and the cost of physically moving the asset from seller to buyer.

Treasury Stock
This term refers to common stock repurchased by the company and held in the company’s treasury.

Triple-Net Lease
A lease agreement designating the lessee (the tenant) as being solely responsible for all of the costs relating to the asset being leased in addition to the rent fee applied under the lease. The structure of this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building insurance and net common area maintenance. The lessee has to pay the net amount of three types of costs, which how this term got its name.

UPREIT
An Umbrella Partnership REIT (UPREIT), under IRC §721, provides tax deferral benefits to commercial property owners who contribute their property into a new tiered ownership structure including an operating partnership (OP) and the REIT who is a partner in the OP. In exchange for the commercial property contributed to the UPREIT, the investor receives units in the operating partnerships (OP Units). The capital gain taxes remain deferred as long as the UPREIT holds the property and the investor holds the OP Units. The advantage is this structure provides a viable exit strategy to commercial property owners who otherwise might have significant capital gain tax liabilities on the sale of appreciated property. In addition, the investor benefits from additional diversification because they have an interest in a portfolio of commercial properties instead of just one property. This structure is not appropriate for every investor as they must have property the REIT wants to add to their portfolio and typically this will be a larger commercial property.

Yield
The percentage rate of return paid on a stock in the form of dividends, or the effective rate of interest paid on a bond or note.

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