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

A loss in value due to a decrease in the usefulness of property caused by decay, changes in technology, people’s behavioural patterns or environmental changes. See also depreciation.

Occupancy Cost

The total costs incurred by a retail tenant to provide space for operations. Including net rent, operating costs (outgoings) such as promotional levies, marketing fees, capital costs, taxes, insurance and depreciation allowances.

Occupancy Cost Ratio

Calculated by dividing the tenants’ total occupancy costs by their gross turnover.

Off the Plan purchase

The purchase of a property by reference to concept plans, designs and sketches of the property's final appearance that usually occurs well before occupation is possible and in most case individual titles would not be issued, in the case of subdivision or strata development. An off the plan purchase is the purchase of real estate that does not actually exist at the time the contract is signed. Off the plan purchase is common in residential unit tower developments.

Office – A grade

High quality office space includes:

– high quality views, outlook and natural light
– high quality access from an attractive street setting
– high quality lobby and lift finishes
– high quality lift ride
– high quality amenities
– high quality presentation and maintenance
e.g. The Urban Workshop, 50 Lonsdale Street, Melbourne, VIC.

Office – B grade

Good quality office space with a good standard of finish and maintenance.

Office – premium

A landmark office building located in major CBD office markets. A pacesetter in establishing rents and includes:

– expansive views/outlook
– ample natural light
– prestige quality access from an attractive street setting
– prestige lobby and lift finishes
– premium quality lift ride
– premium quality amenities
– premium presentation and maintenance
e.g. ANZ Tower, Liberty Place, 161 Castlereagh Street, Sydney, NSW

Open ended funds

A fund is open ended when:
– no formal limit is placed upon the maximum amount of capital which may be invested into the fund
– trading takes place by the fund issuing new units/redeeming existing units or units being traded between investors. e.g. ISPT Core Fund is open ended.

Operating costs / Outgoings

Costs involved in operating a building including rates and taxes, insurances, security, property management, building repairs and maintenance, lift and air-conditioning running costs and maintenance, cleaning and property management fees.

Opportunistic fund

This strategy may also involve investments in development, englobo land, mortgage notes, and niche property sectors. This is a high-risk/high-return strategy and usually high levels of debt are utilised. e.g. ISPT Development and Opportunities Funds No. 1 and No. 2.

Option

The right, but not the obligation, to buy or sell an asset in the future.

Ordinary Resolution

A resolution that requires only a simple majority to pass i.e. 50% of the unitholders who are entitled to vote. (see also Special Resolution and Unanimous Resolution).

Over rented

Where the passing rent in a lease is above the market rent.

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