UpREIT vs DownREIT
What is UpREIT vs DownREIT? The terms UpREIT vs DownREIT describe the differences that exist in the corporate structure of REITs. The concept of UpREIT, which stands for “Umbrella Partnership Real Estate Investment Trusts,” was introduced in 1992. An UpREIT allows long-established REITs to pool all the real estate properties that they own under a…
Common Size Ratio
What is the Common Size Ratio? The Common Size Ratio refers to any number on a business’ financial statements that is expressed as a percentage of a base. Global Common Size Ratios Global common size ratios express a number on a business’ financial statement as a percentage of a denominating relevant number on the statement….
Synthetic Cash
What is Synthetic Cash? Synthetic cash is a financial instrument that is created to function like other financial instruments, but certain characteristics of the simulated financial instrument are altered. The simulated instruments may not necessarily exist. Synthetic cash provides investors with patterns of cash flows that are specifically tailored to them. It also offers investors…
Sales Comparison Approach (Real Estate)
What is the Sales Comparison Approach (Real Estate)? The sales comparison approach depends on recent sales of similar real estate properties as the one being appraised. The property being compared should also fall in the same locality and current use. Understanding the Sales Comparison Approach While evaluating the value of the subject property, price adjustments…
Credit Risk Analysis Models
What are Credit Risk Analysis Models? Financial institutions used credit risk analysis models to determine the probability of default of a potential borrower. The models provide information on the level of a borrower’s credit risk at any particular time. If the lender fails to detect the credit risk in advance, it exposes them to the…
Defeasance
What is Defeasance? Defeasance is a provision in business law that renders an agreement void under certain conditions. In the case of a debt agreement, defeasance provisions outline the needs that are to be fulfilled by the lender before the borrower is required to release their interest in a particular asset or property. Defeasance accounts…
Vertical Equity
What is Vertical Equity? Vertical equity is a method of taxation wherein the personal income tax liability of an individual increases as their income increases. It is based on the principle that individuals with higher incomes and more assets must pay a higher income tax than others. The opposite of the vertical equity system is…
Compound Growth Rate
What is the Compound Growth Rate? The compound growth rate is a measure used specifically in business and investing contexts, that indicates the growth rate over multiple time periods. It is a measure of the constant growth of a data series. The biggest advantage of the compound growth rate is that the metric takes into…
Dividend Growth Rate
What is the Dividend Growth Rate? The dividend growth rate (DGR) is the percentage growth rate of a company’s dividend achieved during a certain period of time. Frequently, the DGR is calculated on an annual basis. However, if necessary, it can also be calculated on a quarterly or monthly basis. The dividend growth rate is…
