Impound (or Reserves) - Portion of a borrower's monthly payments held by the lender to pay for taxes, insurance, and other items as they become due.
Impound Account - Savings account for accumulating that portion of a borrowers monthly payments designated for future payments of taxes and insurance. (Required by certain lenders or with certain types of financing.)
Improvements - In the context of leasing, the term typically refers to the improvements made to or inside a building but may include any permanent structure or other development, such as a street, sidewalk, utilities, etc.
Incentive Fee - Applies to fee structures where the amount of the fee that is charged is determined by the performance of the real estate assets under management.
Income Approach - A method of appraising property based on the propertys anticipated future income. Once the net income is established, it is then divided by the estimated capitalization rate to arrive at a fair market value.
Income Capitalization Value - The indication of value derived for an income-producing property by converting its anticipated benefits into property value through direct capitalization of expected income or by discounting the annual cash flows for the holding period at a specified yield rate.
Income Property - Real estate that is owned or operated to produce revenue.
Income return - The percentage of the total return that is generated by the income from operations of a property, fund or account.
Indirect Costs - Development costs other than direct material and labor costs that are directly related to the construction of improvements, including administrative and office expenses, commissions, architectural, engineering and financing costs.
Index - A published interest rate, such as prime rate, LIBOR, T-Bill rate or the 11th District COF. Lenders use indexes to establish interest rates charged o mortgages or to compare investment returns.
Interim Financing - A loan, including a construction loan, used when the property owner is unable or unwilling to arrange permanent financing. Generally arranged for less than 3 years, used to gain time for operations and or market conditions to improve.
Ingress and Egress - Applied to easements, meaning the right to go in and out over a piece of property but not the right to park on it.
Interest Rate - The periodic charge, expressed as a percentage, for use of credit.
Interest-only strip - A derivative security consisting of all or part of the interest portion of the underlying loan or security.
Interest Rate Cap - A safeguard built into ARMs to prevent drastic changes in interest rates.
Internal Rate of Return (IRR) - The true annual rate of earnings on an investment. Equates the value of cash invested with cash returns. Considers the application of compound interest factors. Requires a trial-and-error method for solution.
Investment Strategy - The investment parameters used by the manager in structuring the portfolio and selecting the real estate assets for a fund or account. This includes a description of the types, locations and sizes of properties to be considered, the ownership positions that will be used, and the stages of the investment lifecycle.
Investment Structures - Unleveraged acquisitions, leveraged acquisitions, traditional debt, participating debt, convertible debt, triple-net leases and joint ventures.
Investment-Grade CMBS - Commercial mortgage-backed securities with ratings of "AAA," "AA," "A" or "BBB".
Investor Status - In reporting to clients and consultants, all investors are divided into two categories: taxable and tax-exempt. The tax-exempt category includes all qualified pension and retirement accounts. The taxable category includes all other accounts under management, including off-shore capital.