This Glossary provides definitions of terms related to property and property investing.
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Term and Definition
Incentives

Benefits offered by a landlord to entice a tenant to sign a lease. Incentives can come in many forms including free rent for a specific period, a fitout or contribution to one, capital expenditure works or contribution, cash contribution or a reduced rent payable for a specific period.

Income Return

The component of Total Return which is predominantly derived from the regular annual rental payments.

Indirect property

Purchasing of shares in an unlisted company or an AREIT whose underlying assets are physical property. Indirect property investment allows investors to receive financial returns in line with those of the property market. Indirect property does not require large capital outlays required to purchase direct property rights while also providing a higher level of liquidity in their property assets.

Indoor Air Quality (IAQ)

The quality of air required within a work environment to minimise harmful effects to human health including the provision of adequate airspace and ventilation. Also the limitation of contaminants or harmful substances such as dust, other airborne particles, fumes, mists or vapours, and smoke. Requirements for workplace IAQ are stipulated in occupational health and safety legislation.

Industrial estate

An area zoned and planned for the purpose of industrial development, usually located near transportation routes including road and rail. e.g. Charles Sturt Industrial Estate, Woodville, SA.

Industrial property

A property zoned for industrial use, including manufacturing, research and development, factories and warehouses.

Industry superannuation fund (Industry fund)

Industry funds originally catered to workers from a particular employment industry or industrial award. Most are now open to the public, are usually lower cost, and are run only to benefit members, not shareholders.

Inflation

An increase in the prices of goods and services in the economy. It is typically measured by examining a basket of goods and services as reflect in the Consumer Price Index.

Initial Yield / Passing Yield

Is the current passing net income generated by the property divided by the price or value.

Interest rate cover (ICR)

A ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio is calculated by dividing earnings before interest and taxes (EBIT) by interest expenses. The lower the ratio, the more the company is burdened by debt expenses.

Interest rate hedging

The activity of using financial products to protect against future changes in interest rates. Interest rate hedging helps protect borrowings from the risk of fluctuations in interest rates. Interest rate swaps are the most common form of interest rate hedging.

Interest rate swap

Financial instrument in which two parties agree to exchange interest rate cash flows, based on a specified notional amount from a fixed rate to a floating rate, or vice versa, or from one floating rate to another. Interest rate swaps are commonly used for hedging.

Investment Property Databank (IPD)

IPD is a global organisation, owned by MSCI, providing performance analysis and independent property performance benchmarking. The primary benchmark is the Mercer/IPD Pooled Property Fund Index (IPD PPFI).

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