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Raising Fee
A Fee charged by a Funding Institution for raising the finance on a property transaction, usually a % of the loan amount.
Related Topic: Acquisition Costs, Administration Fees.

Rates & Taxes Clearance Certificate
A certificate issued by the municipality or local authority to confirm that all the rates and taxes for the property are paid up to date. The documentation is required before a property transfer can take place.

Real Right
A right over or in respect of property. Real rights over or in respect of immovable property are registered against the title deed of the property.

Redlining
A term describing a lending institution’s refusal to lend money to owners or prospective buyers of property in certain locations. Banks in South Africa are no longer allowed to use redlining but can still reject a loan on legal grounds.

Refinancing
Accessing the positive equity, i.e. the amount by which the market value of the property exceeds the outstanding bond amount, in a home loan or bond.

Registered Right
A right over property registered in a deeds office against the title deed of the property. The purchaser of immovable property is bound by the rights registered over the property whether or not he knew of their existence at the time of sale.

Registering Attorney (Bond)
A conveyancer appointed by the bank, which will hold the new mortgage bond (home loan) over the property. The attorney attends to the registration of the new bond into the name of the buyer. The registration attorney or bond attorney can be nominated by the buyer.
Related Topic: Attorney, Cancellation Attorney.

Registration
The process of recording the transfer of the property into the purchaser’s name at the Deeds Office, which ensures the purchaser is noted as the legally registered owner of the property. The home loan is secured at the Deeds Office by registering it over the property as a mortgage bond.

Real Estate Investment Trust
A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.

Individuals can invest in REITs either by purchasing their shares directly on an open exchange or by investing in a mutual fund that specializes in public real estate. An additional benefit to investing in REITs is the fact that many are accompanied by dividend reinvestment plans (DRIPs). Among other things, REITs invest in shopping malls, office buildings, apartments, warehouses and hotels. Some REITs will invest specifically in one area of real estate - shopping malls, for example - or in one specific region, state or country. Investing in REITs is a liquid, dividend-paying means of participating in the real estate market.

Equity REITs
Equity REITs invest in and own properties (thus responsible for the equity or value of their real estate assets). Their revenues come principally from their properties' rents.

Mortgage REITs
Mortgage REITs deal in investment and ownership of property mortgages. These REITs loan money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans.

Hybrid REITs
Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages.
Related Topic: PLS, Property Loan Stock, PUT, REIT .

REIT
A REIT is an entity that invests primarily in real estate and qualifies for special tax status, so there is single taxation at the investor level.
Related Topic: PLS, Property Loan Stock, PUT, Real Estate Investment Trust .

Renewal Option
A right contained in a clause in a lease contract which takes effect at or near the termination date of a contract. The party who enjoys the right may choose to continue the agreement on terms as set out in the option clause or to treat the contract as at an end on the termination date.
Related Topic: Basic Rental, Escalation Rate, Gross Lease, Huur Gaat Voor Koop, Lease, Lease with Option to Purchase, Leasehold, Long Lease, Natural Vacancy Rate, Net Lease, Notarial Deed of Lease, Occupation, Percentage Lease, Rental Types, Rent-Free Period, Resolutive Condition, Right of Pre-Emption, Sale & Leaseback, Triple Net Lease, Turnover Rental.

Rental Types

Basic Rental:
A set amount used as a minimum rent in a lease which also employs a percentage of turnover or other allocation for additional rent.

Gross Rental:
The total rental payable by the tenant, excluding VAT, the tenant’s own electricity and water charges, but including other operating costs recovered by the landlord (if any), as well as promotion expenses payable by the tenant in the case of shopping centres.

Net Rental:
The amount payable by the tenant, excluding VAT and excluding operating costs recovered by the landlord (if any).

Nominal Rental:
This has a dual meaning Firstly, it refers to rentals where the analyst or valuer assumes no incentives like a rent-free period, free relocation, cash upfront, or balance-of-installation allowance. It also excludes amortisation of tenant-installation costs. Secondly, it can also mean actual rental values (i.e. not deflated).

Pioneer Rental:
The highest rental actually achieved – and could be a once-off outlier deal; hence “pioneer” is not “market”. The difference between pioneer and the highest market rentals may be used as a blunt tool to gauge the prospects for market rental growth in the short term. If the differential is positive, it is an indication of growth prospects in the node. If the differential is negative, it is an indication that landlords are finding it difficult to find new tenants at the going market rental rate.

Real Rental:
Deflated rental, typically observations (values) over time (a time series) from which the relevant inflation has been removed.

Related Topic: Basic Rental, Escalation Rate, Gross Lease, Huur Gaat Voor Koop, Lease, Lease with Option to Purchase, Leasehold, Long Lease, Natural Vacancy Rate, Net Lease, Notarial Deed of Lease, Occupation, Percentage Lease, Renewal Option, Rent-Free Period, Resolutive Condition, Right of Pre-Emption, Sale & Leaseback, Triple Net Lease, Turnover Rental.

Rent-Free Period
No rent is payable by the tenant for an initial portion of the term of a lease. It is offered by a landlord as a rental concession to attract tenants.
Related Topic: Basic Rental, Escalation Rate, Gross Lease, Huur Gaat Voor Koop, Lease, Lease with Option to Purchase, Leasehold, Long Lease, Natural Vacancy Rate, Net Lease, Notarial Deed of Lease, Occupation, Percentage Lease, Renewal Option, Rental Types, Resolutive Condition, Right of Pre-Emption, Sale & Leaseback, Triple Net Lease, Turnover Rental.

Repossession
A legal process by which the bank may take possession of a property and sell the property to pay off the outstanding bond amount, if the bondholder defaulted on the repayments.

Required Rate
Related Topic: Hurdle Rate.

Reserve Price
The amount set prior to an auction which must be met in the bidding for a particular item before the item will be sold. Also known as ‘reserve bid’.

Resolutive Condition
A clause in an agreement of sale or lease which has the effect that the agreement will terminate on the occurrence of an event specified in the clause. The contract is immediately binding and will remain binding unless the condition is realised. A typical example of a resolutive condition is a condition in an agreement of sale of a proposed sectional title unit stating that the agreement will terminate if the sectional title plan is not registered before or on a certain date.
Related Topic: Basic Rental, Escalation Rate, Gross Lease, Huur Gaat Voor Koop, Lease, Lease with Option to Purchase, Leasehold, Long Lease, Natural Vacancy Rate, Net Lease, Notarial Deed of Lease, Occupation, Percentage Lease, Renewal Option, Rental Types, Rent-Free Period, Right of Pre-Emption, Sale & Leaseback, Triple Net Lease, Turnover Rental.

Restrictive Conditions of Title
Conditions stipulated in the title deed of a property prohibiting the building of certain improvements on the property, or limiting the use of the property. A typical example is a condition in a title deed stating that a house must have a tile roof.

Retail Price
In the context of property syndication, this means the price at which a property-holding company’s shares are sold to the public or the price at which these shares trade.
Related Topic: Wholesale Value.

Return on Investment (ROI)
The return on an investment consists of any dividend, interest, rent or other income added to the increase in the value of the asset over a certain period - usually as an annual percentage of the original investment.

Return on Equity (ROE)
Same measurement as ROI except that it is based on the amount contributed by the Investor and not the cost of the asset purchased. Leveraging is one of the primary advantages of investing in property. Leveraging (Gearing/Debt) is not available to other asset classes, hence ROE on property will outstrip any other asset class over time.

The Leveraging Effect can be more fully understood by downloading our Commercial Property Financial Model here:
Commercial Property Financial Model
The Financial Statements Tab reflects the ROI vs ROE

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Reverse Mortgage
Also known as a home income plan. A reverse mortgage is essentially a cash loan available to retirees against the value of their paid-up property.

Right of Pre-Emption
A contractual right entitling a person to make the first offer to purchase a particular property. Also known as ‘right of first refusal’. Lease agreements sometimes provide that should the lessor wish to sell the property, the lessee has a right of pre-emption to purchase it.
Related Topic: Basic Rental, Escalation Rate, Gross Lease, Huur Gaat Voor Koop, Lease, Lease with Option to Purchase, Leasehold, Long Lease, Natural Vacancy Rate, Net Lease, Notarial Deed of Lease, Occupation, Percentage Lease, Renewal Option, Rental Types, Rent-Free Period, Resolutive Condition, Sale & Leaseback, Triple Net Lease, Turnover Rental.

Risk Profile
Risk profile refers to a borrower’s credit worthiness, including whether the borrower earns enough money to repay the loan, whether there is any record of bad payments in the past, or if the borrower has been ‘black listed’ by other creditors. The risk profile influences a person’s eligibility for a loan.
Related Topic: Underwriting.

 
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