- Altman Z-Score
- Bankruptcy prediction model for public companies. Z-score above 2.99 = safe zone; below 1.81 = distress zone.
- BoV (Broker Opinion of Value)
- A broker's analysis estimating property value, often including comp tables. Useful as an input source for Trestle's appraisal.
- Cap Rate
- Property's annual NOI divided by its purchase price (or value), expressed as a percentage.
- Example: $70K NOI ÷ $1M = 7% cap rate
- Cap Rate Comp
- A recently-sold comparable property used to estimate market cap rates. Sales comparison approach to valuation.
- Composite Underwriting Score
- Trestle's overall score (0-10), weighted average of: tenant credit (40%), lease quality (25%), market fundamentals (20%), financial metrics (15%).
- Example: 6.5+ = strong | 5.0-6.4 = marketable | <5.0 = challenging
- Dark Value
- 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.
- Debt Yield
- Annual NOI ÷ loan amount, expressed as a percentage. More conservative than LTV/DSCR — doesn't depend on assumed cap rate or interest rate. Lenders typically want 8-10% minimum.
- Example: $700K NOI ÷ $10M loan = 7% debt yield
- DSCR (Debt Service Coverage Ratio)
- Annual NOI ÷ annual debt service. Lenders typically want ≥1.20-1.25x — meaning NOI is 20-25% larger than the loan payment.
- Example: 1.30x = NOI is 30% larger than annual debt service
- EPA ECHO
- Enforcement and Compliance History Online — the EPA's public database of environmental violations, enforcement actions, and compliance status. Trestle queries it to flag properties with a history of environmental issues.
- HBU (Highest and Best Use)
- The use of a property that is legally permissible, physically possible, financially feasible, and maximally productive. Appraisers consider HBU before valuing — a dark big-box's HBU might be re-tenanting, redevelopment, or demolition.
- HHI (Herfindahl-Hirschman Index)
- Measure of tenant concentration in multi-tenant properties. Sum of squared rent shares × 10,000. Higher HHI = more concentrated tenant risk.
- Example: Single tenant = 10,000; 10 equal tenants = 1,000
- Income Approach
- Valuation method that derives property value from its income. Value = NOI ÷ Cap Rate. Primary method for stabilized income-producing CRE like NNN deals.
- Example: $100K NOI ÷ 7% cap rate = $1.43M value
- Investment Grade (IG)
- Tenant credit rating of BBB- or higher (S&P/Fitch) or Baa3 or higher (Moody's). Lower-risk tenants generally trade at lower cap rates.
- LTV (Loan-to-Value)
- Loan amount divided by property value, expressed as a percentage.
- Example: 75% LTV on $10M property = $7.5M loan
- NNN (Triple Net Lease)
- Tenant pays all property expenses (taxes, insurance, maintenance, repairs) on top of rent. Landlord receives 'net' rent.
- NOI (Net Operating Income)
- Annual rent minus operating expenses. For NNN deals, NOI ≈ annual rent (tenant pays expenses).
- OM (Offering Memorandum)
- The marketing document brokers prepare to sell a property. Source document for most of Trestle's deal data extraction.
- Phase I ESA (Environmental Site Assessment)
- A non-invasive environmental review of a property — historical records, database searches, site reconnaissance, interviews. Identifies 'recognized environmental conditions' without any physical sampling. Required for most CRE financings.
- Reconciled Value
- Final valuation = weighted blend of income approach + sales comparison. Default: 70% income, 30% sales (heavier on income for stabilized NNN deals).
- Rent Comp
- Market rent data point ($/SF or annual rent for a similar property). Used in income approach to determine market rent vs contract rent.
- Sales Comparison Approach
- Valuation method that uses recently-sold comparable properties to estimate value on a $/SF or $/unit basis. Complementary to income approach.
- Stress DSCR
- DSCR calculated under a stressed interest rate scenario (typically +200bps). Tests downside protection.
- Superfund (CERCLA)
- The EPA's program for cleaning up the nation's most contaminated sites. Trestle checks whether a property is on or near a Superfund site (NPL — National Priorities List) since proximity can carry liability.
- Title Commitment
- A title insurance company's formal promise to issue a title policy on the property, subject to listed exceptions (easements, liens, CC&Rs, etc.). Lenders require a title commitment before closing.
- WALT (Weighted Average Lease Term)
- For multi-tenant properties: average remaining lease term weighted by each tenant's share of total rent. Higher WALT = more stable income.