Common terms used in commercial property investment

Gearing – a measure of how much an investment is funded using debt versus the equity provided by investors. Also known as Leverage or LVR.

IM (or Information Memorandum) – an offer document produced for the sale of a product or asset to wholesale investors.

Leverage – the ratio of a company’s loan capital (debt) to the value of its equity. Also known as Gearing or LVR.

Liquidity – refers to how easy it is to convert assets into cash.

Listed property trust/fund – a unitised portfolio of property assets, listed on the New Zealand Stock Exchange (NZX).

LVR (or Loan to Value ratio) – the amount borrowed to purchase an asset (e.g., building/property), represented as a percentage of the value of the asset. Also known as Gearing or Leverage.

PDS (or Product Disclosure Statement) – a legal offer document for a financial product.

Property syndicates – property syndicates are a pooled property investment usually facilitated by a fund manager. Many investors are able to pool their money to buy a property that alone they would not have the funds to purchase.

REIT (or Real Estate Investment Trust) – pools the resources of investors together to buy a range of property assets, which the trust then manages for a profit. They are listed and can be exchanged on local Securities Exchanges. Also known as a listed property trust/fund.

Unlisted property fund – a form of property investment that provides investors the opportunity to gain access to commercial property assets through an investment in a fund.

WALE, or Weighted Average Lease Expiry – is the way to measure the average time period that all leases in a commercial property will expire.

Yield – a measure of returns to investors that is expressed as a percentage over a set period of time