Glossary of real estate terms

Acquisition costs
Sum of all costs arising from acquisition of a property (purchase price, notary and ownership transfer costs, commissions) and/or effective cost price of own construction, plus cost of value-increasing investments and general refurbishments.

Administrative and operating expenses
Sum of all costs incurred by owner through use of a property, excluding maintenance and repair expenses. Administrative and operating expenses also include all ancillary costs that are not recoverable from tenants, e.g. due to specific provisions in rental contract.

Collection losses and loss of income as a result of rent-free periods
Sum of all rental default losses and expenses in connection with rebates offered to existing or future tenants, rent-free periods, etc., plus revenue losses due to floor space vacancies during alterations.

Earnings from sale of investment real estate
Difference between effective sale price (sales proceeds) and most recently reported market value, with due allowance for transaction costs in connection with sale and any cash-out guarantees granted to seller.

Earnings on property
Rental income minus expenses for management, operation, maintenance, repairs and value-maintaining refurbishments. Denotes real estate earnings before tax and borrowing costs (EBIT).

Gross return
Calculated from target rental income in percent of market value as at 1 January.

Investment volume
Total site and construction costs (incl. capitalisable company-produced assets and building loan interest) at cost.

Maintenance and repair expenses
Sum of all costs borne by owner that arise from reinstatement of a property to or maintenance of a property in its required condition. Also included are all servicing costs.

Market value
Estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller after proper marketing, wherein the parties had each acted independently, knowledgeably and without compulsion.

Net yield
Calculated from earnings on property in percent of market value as at 1 January.

Rental income
Sum of all revenue achieved in period under consideration (target rental income) minus ground rent, vacancy losses and collection losses.

Revaluation effect
Higher or lower valuation of investment real estate (yield-producing properties and investment real estate under construction), compared to previous year´s balance sheet cut-off date, resulting from revaluation by external real estate valuer, with allowance for resulting changes in deferred taxes (difference between market and acquisition value).

Target rental income
Sum of all revenue potentially achievable in period under consideration in case of full letting, before deduction of ground rent, vacancy losses and collection losses.

Vacancy rate
Aggregate of all rental losses due to unlet/vacant premises in percent of target rental income.


The definitions of the above terms are based on Document D 0213 “Financial benchmarks for real estate” (“Finanz
für Immobilien”) issued by SIA (Swiss Society of Engineers and Architects) and SVIT (Swiss Real Estate Association), 2005 edition.

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