Authorised Guarantee Agreement (AGA) - A type of guarantee, the terms of which are controlled by law, given by a tenant when assigning a lease.
Anchor store - A major store, usually a department, DIY store or supermarket, occupying a large unit within a shopping centre or retail park, which serves as a draw to other retailers and consumers.
Assignment – An assignment of a lease takes place when the tenant (assignor) transfers/sells to another person (assignee) their entire interest in the property for the unexpired residue of the lease.
Break clauses - A clause contained within a lease agreement which allows the occupier to end the agreement before the fixed term of the contract runs out.
Book value - The amount at which assets and liabilities are reported in the financial statements.
Equivalent yield - Calculated by the Group's valuers, equivalent yield is the internal rate of return from an investment property, based on the gross outlays for the purchase of a property (including purchase costs), reflecting reversions to current market rent, and such items as voids and non-recoverable expenditure but disregarding potential changes in market rents. The calculation assumes rent is received annually in arrears.
ERV - Gross estimated rental value (ERV). The estimated market rental value of lettable space.
Gearing (net) - Total borrowings, including bank overdrafts, less short-term deposits, corporate bonds and cash, at book value as a percentage of total equity.
Gross external area (GEA) - The area of a building measured externally (i.e. to the external face of the perimeter walls) at each floor level. It includes all floors, and the thickness of external walls and any external projections.
Gross internal area (GIA) - A method of measurement that measures the whole enclosed area of a building within the external walls.
Hereditament - The term used for a single unit of rateable property. Hereditament 'means property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list;'.
Hot desking - A process by which desks are shared in an office. Because people will be out of the office at any one time, this reduces the number of desks needed and total space required, thus reducing energy, pollution and raw material consumption.
Initial yield - Annualised net rents on investment properties expressed as a percentage of the acquisition cost.
Joint venture - An entity in which the Group holds an interest on a long-term basis and is jointly controlled by the Group and one or more venturers under a contractual arrangement whereby decisions on financial and operating policies essential to the operation, performance and financial position of the venture require each venturer's consent.
Lease - Landlord and tenant: an agreement by which a landlord gives the right of exclusive possession to a tenant for a term and usually for a specified rent.
Lessor - The party that grants a lease on a property, usually the landlord.
Lessee - The party to whom a lease is granted. Synonymous with 'tenant'.
Lease incentives - Any incentive offered to occupiers to enter into a lease. Typically the incentive will be an initial rent-free period, or a cash contribution to fit-out or similar costs. For accounting purposes, the value of the rent-free period is spread over the life of the lease.
LIBOR - The London Interbank Offered Rate, the interest rate charged by one bank to another for lending money.
Listed building - A building that is included on a statutory list under the provisions of the Planning (Listed Buildings and Conservation Areas) Act 1990 because of its special architectural or historic quality
Local Development Framework (LDF) - Comprises a suite of Local Development Documents, including statutory development plan documents, non-statutory supplementary planning documents, a statement of community involvement, local development scheme and annual monitoring reports.
Lock-out agreement - An agreement to proceed with a sale to one party and exclude other offers for a property for an agreed period, to allow that sale to be concluded without the risk of the prospective buyer being outbid.
Market value - Market value is determined in accordance with the RICS Valuation Standards, as an opinion of the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing.
Net initial yield - Net initial yield is a calculation of the yield that would be received by a purchaser, based on the estimated net rental income expressed as a percentage of the acquisition cost, being the market value plus assumed usual purchasers’ costs at the reporting date. Estimated net rental income is the passing cash rent less ground rent at the balance sheet date, estimated non-recoverable outgoings and void costs including service charges, insurance costs and void rates.
Net internal area (NIA) - The usable area within a building measured to the internal face of the perimeter walls at each floor level. The rules of measurement of net internal area are defined in the RICS Code of Measuring Practice (6th edition).
Notice of alteration - When valuation officers alter rating lists they are required to notify the ratepayer of the change within four weeks. Usually this occurs within a few days of the change. Proposals challenging the alteration can usually be made if the ratepayer considers the alteration incorrect.
Open A1 planning consent - Planning permission for the retail sale of any goods
Outline planning consent - This gives consent in principle for a development, and covers matters such as use and building mass. Full details of the development scheme must be provided in an application for full planning consent, including detailed design, external appearance and landscaping before a project can proceed. An outline planning permission will lapse if full planning permission is not granted within three years.
Over-rented - Space where the passing rent is above the ERV.
Rating Liability – A Rating Liability is a charge based on the occupation of commercial land and buildings administered by the Local Authority. The “Rateable Value” of a property is assessed by the Valaution Office and should represent the rental value of the property at a set valuation date.
Reversionary or under-rented - Space where the passing rent is below the ERV.
Reversionary yield - The anticipated yield to which the initial yield will rise (or fall) once the rent reaches the ERV.
Rent Review – Rent Review provisions in commercial property leases were originally introduced to counter the effect of inflation during a lease. A standard review clause will generally require the rent to be reviewed at fixed intervals, usually five yearly, during the term.
Rent free period - A portion of the term of a lease when no rent is required. It is offered by a landlord as a rental concession to attract tenants. For accounting purposes under IFRS, the value of the rent-free period is spread over the non-cancellable life of the lease.
Repair Covenants - Covenants in a lease are the terms of the contract between the Landlord and the Tenant and normally make express provision for one party to repair one part and for the other party to repair and maintain the remainder.
Schedule of Dilapidations – This is a list of outstanding repair and maintenance items that a Landlord has assessed have accrued under the terms of tenants repair obligations.
Service Charge - Sum of money payable by a tenant on account of services provided by the Landlord. A service charge usually arises when a property is in multiple occupation such as an office block or shopping centre.
Sub-Letting -A sub-letting takes place when a tenant grants a new lease for their property or part, to another occupier, for a period less than the residue of the tenant’s lease.
Stamp Duty Land Tax – This is a Government Fixed Tax for transactions such as Leases, Agreements for Leases and Conveyances. Current rates are as follows (as at Feb 2011): Up to £125,000 – Zero, Over £125,000 to £250,000 1% (0% for first time residential buyers) Over £250,000 to £500,000 3%, Over £500,000 4%.
Turnover rent - Rental income which is related to an occupier's turnover.
User Clause – This is a contractual provision within a lease, that specifies the use, or uses to which a property may be put and the uses which may be prohibited. The terminology of a user clause contained within a lease is critical in determining whether the use specified is restrictive or open.
Voids - Voids are unlet and vacant space, also tends to include where refurbishment work is being carried out.
Yield shift - A movement (negative or positive) in the equivalent yield of a property asset.
Zone A - A means of analysing and comparing the rental value of retail space by dividing it into zones parallel with the main frontage. The most valuable zone, Zone A, is at the front of the unit. Each successive zone is valued at half the rate of the zone in front of it.