We love initials: What do they all mean?

We use a lot of abbreviations in commercial brokerage; in this issue I will give you an idea as to what some of those letters mean and define a few other terms: Used mostly in leasing: LOI Letter of Intent - this reflects all the agreed terms of a lease when finalized. It may be initially an offer to rent space, then used as a check list during negotiations. The final agreed LOI is the basis for drafting the actual lease. GLA Gross Leasable Area - the total square footage of the entire building, complex or center. CAM Common Area Maintenance - A landlord may for the benefit of all the tenants enter into various contracts with service providers (rubbish collection, cleaning, landscaping, etc.) then divide the cost of these services proportionately amongst all the tenants. NNN Triple Net Lease - The tenant(s) is responsible to pay all the operating costs of the building or property. TI Tenants Improvements - A request that construction (space modifications) be done in the unit or building for the tenant. This is usually requested during the lease negotiations. When purchasing: Subject to - A desire to have the contract proceed, contingent to certain items, typically: financing, satisfactory environmental report, engineers inspection. Due Diligence - A request for a period of time to accomplish "subject to" items or examine or verify information. i.e. income and expense statements, leases, expense bills. ADS Annual Debt Service - When property is mortgaged, the amount of money that must be paid back to the bank in a given year, including principal and interest. LTV Loan to Value - A percentage of the properties value that a bank or other financial institution would consider loaning to a purchaser. This indicates required down payments. Investment Properties: NOI Net Operating Income - After determining the potential rental income from a building, subtracting the owners operating expenses leaves the Net Operating Income. This is the simple definition there are other things that must be considered to realistically examine the cash flow of a property. CAP Capitalization Rate - This reflects the percentage return on an investment by dividing the Net Operating Income (NOI) by the Value (or price). This also becomes a traceable percentage based on actual transactions; as such it may be used to determine market value by dividing the NOI by the CAP Rate. Think of this as an investors desired profit percentage at a give time in a specific market. COC Cash on Cash return - This reflects the percentage return on an investment when it has been mortgaged. CFBT Cash Flow Before Taxes - When properties are mortgaged the "bottom line," CFBT reflects what monies are left after repayment of mortgage expenses. Net Operating Income less Annual Debt Service equals the Cash Flow Before Taxes. CFAT Cash Flow After Taxes - This gets a bit complicated to calculate but as the initials imply this reflect the after tax remaining cash flow. IRR Internal Rate of Return - This is a reflection of the return on an investment taking into consideration the entire life of the investment. Calculations include the appreciation in value from purchase to sale, at the end of the holding period, plus consideration of annual cash flows. And there are more initials! But, that's enough for this article. Edward Smith, RECS, is the Long Island metro regional director of Coldwell Banker Commercial NRT, Eastport, N.Y.