Acquisition and Development Loan [A&D Loan]
A loan for the purchase and preparation of raw land for development. Usually a construction loan or land sale is the source of repayment.

Adjustable Rate Mortgage [ARM]
A type of real estate loan in which either the interest rate charged or the length of the loan, or both, can change. This type of loan forces the Borrower to absorb the uncertainty of changes in interest rates during the life of the loan. ARM loans are normally tied to some index such as government securities. Also called variable rate mortgages.

Amortization
The repayment of a mortgage debt over a period of time in a series of periodic installments. It should be noted that a portion of each payment consists of a blend of interest and amortization of principal. Specifically, this is the payback of the principal portion of the loan owed to the lender. The effect of amortization is to build up the paper value of the owner's equity while reducing the debt obligation.

Anchor Tenant
A well-known commercial retail business such as a national chain store or regional department store (AAA Tenant) strategically placed in a shopping center so as to generate the most customers for all of the stores located in the shopping center.

Anchored Centers
A shopping center with an anchor tenant.

Annual Loan Constant
The ratio of the annual debt payment on a loan to the original amount borrowed. The loan constant is also referred to as a mortgage constant.

Appraisal
A demonstrative narrative report of a specific market’s economic condition and an assessment of property value performed by a member of the American Institute of Real Estate Appraisers. The property’s value is derived using three (3) separate methods of valuation including replacement cost approach, sales comparison approach and income approach.

Arbitrage
The simultaneous buying and selling of any securities, including mortgages, mortgage backed securities or futures contracts in different market places, for the purpose of realizing a profit from different prices.

Attornment
A tenant’s formal agreement to be a tenant of a new landlord.

Average Daily Rate [ADR]
The average rate charged by a hotel for one (1) room for one (1) day; arrived at by dividing the total room revenue by the actual rooms occupied.

Average Life
It is a way to look at the term of a loan or bond that accounts for principal paydowns. If a loan is interest only with a full balloon at the end, the average life will equal the maturity. If there is amortization, principal is being paid over the life of the loan, decreasing the balloon payment and the average life. This number is then used to find the treasury that has the closest remaining term, but is not shorter.