Browse Property Ownership & Investment Terms
Industrial real estate is one of the strongest-performing commercial property sectors. These terms cover how industrial assets are valued, financed, and structured for investors and owner-occupants alike.
Industrial Real Estate
A category of commercial property used for manufacturing, warehousing, distribution, research and development, and related operational activities.
View definition →Net Lease Investment
An industrial property where the tenant assumes operating expense obligations, reducing the landlord's management burden and delivering predictable, bond-like income streams.
View definition →Sale-Leaseback
A transaction where a property owner sells their building to an investor and simultaneously signs a long-term lease to remain in occupancy as tenant, unlocking capital while retaining use.
View definition →Cap Rate
The ratio of a property's net operating income to its current market value, expressed as a percentage — the primary metric for comparing investment yields across industrial assets.
View definition →Net Operating Income (NOI)
Annual gross revenue from a property minus all operating expenses, before debt service and taxes — the core metric used to value industrial real estate.
View definition →Gross Potential Income (GPI)
The maximum rental income a property could theoretically generate if fully occupied at current market rents with no vacancies or credit losses.
View definition →Effective Gross Income (EGI)
Gross potential income reduced by a vacancy and credit loss allowance, representing a realistic estimate of the income a property is expected to generate.
View definition →Vacancy Allowance
A deduction from gross potential income accounting for anticipated periods of unoccupied space or tenant non-payment in a property's underwriting model.
View definition →Cash-on-Cash Return
The ratio of annual pre-tax cash flow from a property to the total equity invested, providing a simple measure of the current yield on invested capital.
View definition →Internal Rate of Return (IRR)
The annualised rate at which all future cash flows — including the eventual sale — discount to a net present value of zero; a core benchmark for evaluating industrial investments.
View definition →Debt Service Coverage Ratio (DSCR)
The ratio of a property's NOI to its total annual debt obligations; lenders typically require a minimum DSCR of 1.20 to 1.25 for industrial property financing.
View definition →Loan-to-Value Ratio (LTV)
The ratio of a loan amount to the appraised property value, used by lenders to assess risk — industrial properties typically qualify for 65% to 75% LTV financing.
View definition →Industrial REIT
A publicly traded real estate investment trust that owns and operates industrial properties, offering investors liquid exposure to the warehouse and logistics real estate sector.
View definition →1031 Exchange
A tax-deferral strategy allowing an investor to sell one investment property and reinvest the proceeds into a like-kind property without immediately recognising capital gains tax.
View definition →Value-Add Industrial Property
An industrial asset with below-market rents, deferred maintenance, or significant lease-up opportunity that an investor acquires and improves to increase its income and value.
View definition →Core Industrial Property
A stabilised, fully leased industrial asset in a prime location with a creditworthy tenant on a long lease term, offering lower risk and predictable income.
View definition →Core-Plus Industrial Property
An industrial asset slightly below core quality — with moderate vacancy, shorter lease terms, or a secondary location — offering modestly higher returns for marginally higher risk.
View definition →Owner-Occupant
A business that purchases an industrial property and operates its own business from it, combining real estate ownership with operational use rather than leasing from a third party.
View definition →Capital Expenditure (CapEx)
Significant spending on major property improvements, systems replacements, or structural repairs that extend the useful life of an industrial asset and are capitalised on the balance sheet.
View definition →Deferred Maintenance
Maintenance work that has been postponed, accumulating as a liability that reduces property value and typically requires near-term capital outlay by a new owner or tenant.
View definition →Property Management
The day-to-day operation and maintenance of an industrial property on behalf of the owner, covering tenant relations, vendor management, maintenance coordination, and financial reporting.
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