Co-Investment to Commercial Acre

 

Co-Investment

In the commercial property investment arena, the term co-investment often is used to describe an investment situation in which multiple investment funds share ownership of a project. Pension funds, mutual funds and investment pools are important source of funding for commercial and development projects. If a project is too big or carries too much risk for one fund, the risk and benefits can be shared between two or more funds, through co-investment programs.

Co-Investment Program

A co-investment program is an investment partnership, joint venture or similar arrangement that allows multiple investment funds to invest together in a larger project or portfolio of projects. It’s basically a mutual fund for pension and investment funds.

Collar Beam

The collar beam is a horizontal beam that attaches a rafter beam on one side of a ridge board to a rafter beam on the other side of the ridge board. Collar beams provide additional support for the roof and are used in the conventional method of roof framing. The collar beam is not at the bottom of the rafters, but is placed closer to the middle or top of the rafters. Compare with the Truss Roof entry.

Collateral

Any asset used and acceptable as security for a loan is considered collateral. With mortgage loans, the subject property is the primary collateral or security for the loan. With non-recourse loan, the property is the only collateral for the loan.

Collateral Assignment Agreement

The collateral assignment agreement is a contract that is sometimes used with blanket mortgages and partial releases; it allows the borrower or developer to obtain a partial release with an assignment of a promissory note (from the end buyer), instead of cash. For example, if the developer agrees to provide seller financing or a seller-held second mortgage, that developer can assign the mortgage deed to the blanket mortgage lender, in exchange for a partial release. [Why would the blanket mortgage lender accept a note instead of cash? Primarily because the note rate is usually higher than the market rate. Also, the developer- or seller-held mortgage loan usually holds a first mortgage lien.]

Collateral Lender

See the Asset-Based Lender entry.

Collateralized Debt Obligation (CDO)

A collateralized debt obligation is a type of asset-backed security that promises to deliver cash flows to investors, according to a prescribed sequence. CDOs are typically divided into tranches or classes. Senior trances are paid first and are thus considered less risky, while junior tranches are only paid after the preceding classes are satisfied, which makes junior mortgages more risky. The first CDOs were issued by the now-defunct Drexel Burnham Lambert. By 2006, the CDO market had grown to nearly $2 trillion. Unfortunately, because investors, economists and credit rating agencies failed to fully understand the underlying risks and true valuation of CDOs, these financial instruments were a big factor in the real estate crisis that began in late 2007.

Collateralized Mortgage Obligation (CMO)

Similar to the collateralized debt obligation, the collateralized mortgage obligation (CMO) is a financial instrument that uses a pool of debts as collateral for securities that are then sold to investors. In this case, mortgage loans are the collateral. Mortgage-backed securities are a common form of collateralized mortgage obligations. An investor or lender can use their pool of mortgage loans (on which they are collecting payments) to borrow funds. The cash flow from their pool of mortgage loans is used as their qualifying income to support the borrowed funds. The CMO was first introduced in 1983 by the former Salomon Brothers investment bank, as a money-raising vehicle for Freddie Mac (the Federal Home Loan Mortgage Corporation). The CMO is legally considered a separate entity from the institution that created and sold it. In turn the CMO is the legal owner of the pool of mortgage loans that it is using for collateral.

Collection

A collection is the process of forcing repayment of a delinquent obligation. For creditors and lenders of unsecured debt, the collection process is a legal stage after the borrower has lapsed into serious delinquency or default, and lasting until the creditor takes the obligation to court for legal judgment.

Colonia

The term Colonia is used for the unincorporated areas along the US-Mexico border.

Colonial American

The Colonial American is a traditional style of housing originating in 17th century and 18th century colonial United States. This style typically features a simple construction, with few frills. It can often be distinguished by narrow clapboard external siding, small paned windows, large chimneys and a paneled entrance door.

Color of Title

Real estate term referring to a claim of title that only appears to be valid, but in reality is not.

Colorado Doctrine

The Colorado Doctrine is another name for the Prior Appropriation theory of water rights.

Column Capital

In architecture, the capital is the crowing element atop a column.

Column Footing

The column footing is the base for a load-bearing post or column. Compare with the Footing entry.

Column Lot

With regard to air rights, the column lot is the air space between the surface of land and an imaginary plane 23 feet above that surface. Above that plane is the air lot.

Combination Door

The combination door is a type of door that combines the features of a storm door and a screen door. The combination door normally require storm and screen panels to be interchanged according to the season.

Combination Trust

Sometimes called a balanced trust in California, the combination trust is a trust that invests in real estate projects as both a lender and an equity investor.

Combination Window

The combination window is a type of window that allows for interchangeable glass and screen panels. Screen panels are typically inserted during the summer, but are then replaced with glass storm windows for autumn and winter. Modern windows now provide separate tracks for both glass panels and screens, so seasonal changes are no longer necessary.

Combined Apartment

A combined apartment is a condominium or apartment unit that has been created from the joining of two previously separate units, to create one larger unit.

Combined Heat and Power Plant

See the Cogeneration Plant entry.

Combined Loan-To-Value

The CLTV is the loan-to-value ratio that includes both primary and junior mortgages, as well as other loan liens on the property. For example, if a homeowner with a $100,000 house has a first mortgage of $60,000 and a second mortgage of $12,000 liened against that property, then the CLTV is 72% ($72,000 / $100,000). Sometimes referred to as Total Loan-to-Value (TLTV) ratio. CLTV and TLTV most often come into play with second mortgage loans.

Commercial Acre

With the subdivision of real estate, a commercial acre is the portion of an acre of land that remains after setting aside space for common areas, such as sidewalks, sewers, utilities, streets and greenways.