Learn


CRE Finance Council Commercial Mortgage-Backed Securities (CMBS) Glossary 

The CREFC CMBS glossary is always changing. If you have suggestions for term additions, please contact us.
Download the CMBS Glossary

No content found

No content found

No content found

No content found

Learn

Glossary

E-Curve

The front end of the swap curve is constructed with Eurodollar futures contracts, which are future contracts on 3-month LIBOR. Unlike the J-spread, which is a spread over the bond’s average life point on the Treasury curve, the E-spread is a single constant spread that is added to each relevant point on the Eurodollar futures curve.

Learn

Glossary

Earn-Out Loans

A loan agreement which provides that the original principal balance may be resized by an additional advance as the operating performance of the property is able to service additional debt by meeting specified metrics.  Earn-out loans are made on properties of which performance is expected to improve in the near term due to such factors as renovations, re-tenanting or repositioning. Earn-out loans specify certain resizing criteria such as minimum debt service coverage ratios (DSCRs), debt yield, lease-up and, in some cases, minimum loan to value ratios (LTVs). Also see Reverse Earn-Out Loans .

Learn

Glossary

Economic Recovery Tax Act (ERTA), 1981

Tax reform which created tax incentives for construction of commercial real estate. The practical effect was to fuel excess building, particularly of multifamily properties, which were only economically viable in that tax-advantaged environment. Also see Tax Reform Act, 1986 .

Learn

Glossary

Employee Retirement Income Security Act of 1974 (ERISA)

Legislation which stipulates the standards of risk that are appropriate and acceptable for private pension plan investments. A fiduciary of an employee benefit plan, i.e., a pension fund subject to ERISA, may invest in CMBS only if the certificates meet specified investment guidelines.

Learn

Glossary

Environmental Risk

The risk of liability and losses to the lender on a mortgage loan due to the presence of hazardous materials, such as asbestos, RCB, radon, or leaking underground storage tanks (LUSTS) on a property. Properties in a CMBS are required to have at least a Phase I environmental clearance. Even when properties show no current environmental problems, rating agencies sometimes in effect “price in” the possibility that properties are at risk of not meeting future environmental standards. Also see Phase I Environmental Site Assessment (ESA) .

Learn

Glossary

Equity Kicker

A loan or investment provision that allows the lender/investor to receive an equity-based return in addition to normal rates upon some event. Typically this involves a lender/investor receiving a disproportionate percentage share of the proceeds of refinancing or sale.

Learn

Glossary

Equity Yield Rate

See Cash-on-Cash Return .

Learn

Glossary

ERISA

See Employee Retirement Income Security Act of 1974.

Learn

Glossary

ERTA

See Economic Recovery Tax Act, 1981.

Learn

Glossary

Escrow Account

A deposit jointly held by a borrower and a lender which provides reserved funds for key operating or capital expenses. Typical escrow accounts are held for real estate taxes, insurance, tenant improvement, leasing commissions, necessary structural repairs or environmental remediation, or reserves for replacement. Also called an Impound Account.

Learn

Glossary

Estoppel

Agreement provided by tenant to mortgage lender verifying the lease, any known defaults, payment amounts and term, and certain other key provisions the lender requires to corroborate.

Learn

Glossary

Excess Interest/Excess Spread

Interest received from repayments that is greater than the interest on the certificates. It is defined as the difference between the interest paid on the mortgage loans (net of servicing fees) and the interest accrued on the certificates.  

Learn

Glossary

Expense Ratio

The ratio between operating expenses and operating revenues.

Learn

Glossary

Replace This With Glossary Item Title

Lease clauses that stipulate the maximum amount of a landlord’s or owner’s obligation for expenses; expenses greater than the stipulated amount (i.e., the “stop”) are paid by tenants, pro-rated by the amount of space occupied by each tenant.

Learn

Glossary

Extension/Extension Option

A period of time past the contractual termination of the mortgage given to a borrower to repay a mortgage loan through refinancing or sale of the property, or an automatic provision permitting extension of the original term of the mortgage. In order to prevent placing a property in foreclosure, thereby incurring additional costs, servicers may grant an extension to a borrower who has a balloon payment due.

Learn

Glossary

Extension Advisor

A third party who has the right, or obligation, to approve loan extensions and modifications recommended by the master servicer or special servicer. Not all CMBS have third party extension advisors.

Learn

Glossary

Extension Risk

The risk of a borrower’s potential inability to refinance balloon mortgages in a timely manner, thereby requiring that the life of the security be extended beyond the expected life. 

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

No content found

Become a Member

CREFC offers industry participants an unparalleled ability to connect, participate, advocate and learn!
Apply Now

Sign Up for eNews