Glossary

Cap Rate

Capitalization rate — the property's annual NOI divided by its purchase price (or value), expressed as a percentage. A 7% cap rate on $1M NOI = $14.3M property value.

DSCR

Debt Service Coverage Ratio — annual NOI divided by annual debt service (loan payments). 1.25x means NOI is 25% larger than the loan payment. Most lenders want DSCR ≥ 1.20-1.25x.

LTV

Loan-to-Value — the loan amount divided by the property value, expressed as a percentage. 75% LTV on a $10M property = $7.5M loan.

Debt Yield

Debt Yield — annual NOI divided by the loan amount, expressed as a percentage. A more conservative metric than LTV/DSCR because it doesn't depend on assumed cap rate or interest rate. Most lenders want 8-10% minimum.

NOI

Net Operating Income — annual rent minus operating expenses (none for true NNN). For NNN deals, NOI ≈ annual rent.

NNN Lease

Triple Net Lease — tenant pays all property expenses (taxes, insurance, maintenance, repairs) on top of rent. Landlord receives "net" rent.

WALT

Weighted Average Lease Term — for multi-tenant properties, the average remaining lease term weighted by each tenant's share of total rent. Higher WALT = more stable income.

HHI

Herfindahl-Hirschman Index — measure of tenant concentration in multi-tenant properties. Calculated as sum of squared rent shares × 10,000. Higher HHI = more concentrated risk.

Composite Score

Trestle's overall underwriting score, 0-10. Weighted average of:

• Tenant credit (40%)
• Lease quality (25%)
• Market fundamentals (20%)
• Financial metrics like DSCR/LTV/DY (15%)

6.5+ = strong; 5.0-6.4 = marketable with considerations; below 5.0 = challenging.

Dark Value

The estimated property value if the current tenant vacates ("goes dark") and the space must be re-leased at market rent. Stress test for high-credit single-tenant deals.

Cap Rate Comp / Sales Comp

A recently-sold comparable property used to estimate market cap rates and price per square foot. Sales comparison approach to valuation.

Rent Comp

Market rent data point ($/SF or annual rent for a similar property/use). Used in income approach to determine market rent vs contract rent.

Composite Cap Rate

The cap rate Trestle applies to NOI to estimate value. Selected from a 3-tier waterfall: transaction comps (60% weight) + brokerage benchmarks (40% weight) + contract cap rate (optional anchor).

Stress DSCR

DSCR calculated under a stressed interest rate scenario (typically +200bps from current) — tests lender's downside protection.

Reconciled Value

Final valuation = weighted blend of income approach value + sales comparison value. Default weights: 70% income, 30% sales (heavier on income for stabilized NNN deals).

OM

Offering Memorandum — the marketing document brokers prepare to sell a property. Source document for most of Trestle's deal data extraction.

BoV

Broker Opinion of Value — a broker's analysis estimating property value, often including comp tables. Useful as input to a Trestle deal.

Investment Grade (IG)

A tenant with a credit rating of BBB- or higher (S&P/Fitch) or Baa3 or higher (Moody's). Lower-risk, generally lower cap rates.

Composite Underwriting Score

See Composite Score above.