Platforms use a lot of jargon. Here are the terms worth knowing, with short, opinionated definitions.
Asset Management Agreement (AMA)
The contract that defines how the property is managed, fees, reporting obligations, and exit rights. Read it — especially the termination clauses.
Cap Rate (Capitalisation Rate)
Net Operating Income ÷ Asset Value. A pricing metric. Lower cap rate = higher price for the same income.
CCD (Compulsorily Convertible Debenture)
A debt-like instrument that must convert to equity at a future date. Used in SPVs to give investors defined interest during the holding period.
Cap-ex Reserve
Money set aside for capital expenditures on the building (roof, HVAC, façade). Usually funded by withholding a percentage of rental income.
Distribution Yield
Actual cash distributed ÷ your invested capital. The number that matters for personal cash-flow.
Escalation
Contractual rent increase. Typical Indian commercial leases: 15% every 3 years, or ~5% annually.
Exit Cap Rate
The cap rate assumed when calculating the sale price at exit. Lower assumed exit cap = higher projected IRR. Watch this assumption like a hawk.
Grade-A
Institutional-quality office buildings: prime location, large floor plates, top-tier tenants, green certification.
Hurdle Rate
Minimum IRR before the platform / sponsor earns a performance fee. A hurdle with catch-up is investor-friendly.
IRR (Internal Rate of Return)
Annualised return that ties together all cash flows — subscription in, distributions out, exit out.
Lease Lock-in
Period during which the tenant cannot vacate. A 5-year lock-in on a 9-year lease means you are protected for 5 years.
LRD (Lease Rental Discounting)
A loan against future rentals. Sometimes used inside an SPV to lever returns; shifts risk onto debt service coverage.
NDCF (Net Distributable Cash Flow)
Cash available for distribution after all costs, reserves and debt service. REITs must distribute 95% of NDCF.
SPV (Special Purpose Vehicle)
A dedicated legal entity — usually a private limited company — formed to own a single property.
SM-REIT
Small & Medium REIT under SEBI's 2024 framework. Assets ₹50 Cr – ₹500 Cr, listed, ₹10 Lakhs minimum.
Secondary Market
The platform-run marketplace where existing investors can sell fractions to new investors. Subject to buyer availability.
WALE (Weighted Average Lease Expiry)
The average remaining lease term across all tenants, weighted by income. Higher WALE = more stable income.