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

Dollars spent to improve the physical condition of an asset. These improvements are done to maintain building operating efficiency as well as tenant and customer satisfaction.

Capital growth

Appreciation in the capital or market value of an investment, as opposed to income derived from the investment.

Capital return

A component of the fund’s Total Return over a defined period, represented by the net change in value of the underlying asset(s) of the fund. It excludes the Income Return of the assets over the same period.

Capitalisation rate / Cap rate

The rate of return utilised to value a given cash flow. Similar to the inverse of a price-to-earnings ratio. It is used as the discount rate to determine the current value or prospective cash return on an investment property. Cap rate also refers to net operating income (NOI) yield or 'yield on cost' of investment properties. The cap rate for a property is determined by dividing the property's net operating income by its purchase price. A high cap rate indicates higher returns and greater perceived risk.

Carried interest

A carried interest is equivalent to the share of a fund's profit that will accrue to the fund manager, despite not contributing any capital. Usually used in opportunistic funds.

Cash management fee

A cash management fee is a charge for treasury services provided by the manager or a third party. Cash management fees are applicable for funds that carry out significant amounts of interest rate hedging, foreign exchange hedging and money market transactions to ensure that the fund makes an optimal return on its cash holdings.

Catchment area

The geographic area from which a shopping centre attracts customers or visitors.

Certificate of Occupancy

A document from a local government agency or building department certifying that a building has been inspected and is in a condition suitable for occupancy. Occupation is illegal prior to the Certificate of Occupancy being issued.


Mechanical plant that generates chilled water, which is circulated through cooling coils supply air conditioning to a building.


The frequency with which a building's tenants are moved or changed with the building or a tenant relocating. Also reconfiguration within a tenants premises.

City centre retail

Retail premises within an arcade or mall development within the Central Business District (CBD). Total GLAR exceeds 1,000 sqm. e.g. Wintergarden, Queen Street Mall, Brisbane, QLD: 13,500 sqm.

Clawback fee arrangements

Clawback is an arrangement in which either the investors or fund manager agree to reimburse performance fees paid in previous periods to cover subsequent poor performance.

Closed ended funds

A fund is closed ended when:
– a formal limit is placed upon the maximum amount of capital which may be accepted into the fund without existing investors' consent
– it has a finite life
– there is limited liquidity
Investors wishing to purchase a stake in the fund may buy units from existing investors once the fund is closed.
e.g.ISPT Development and Opportunities Funds are closed ended.


The investment by more than one investor in a specific asset.

Commitment fee

A commitment fee is a charge to investors on undrawn committed capital for the duration of the commitment period. These fees are charged instead of acquisition fees and enable the fund manager to employ the required level of resources during the acquisition phase without being subject to undue pressure to invest.

Commitment period

The period of time in which the manager is able to call a commitment from investors.

Common area

Building areas that are available for common use by all tenants and are included when calculating the tenant's pro-rata share of building operating expense. Including lobbies, corridors, parking facilities, sidewalks, landscaped areas, public bathrooms and service facilities.

Compulsory acquisition

The acquisition of interests in land, irrespective of the owner's consent, by a public or private body empowered by relevant legislation.

Consumer Price Index (CPI)

The Consumer Price Index (CPI) is an index used to measure the prices of a select group of goods and services that typify those bought by ordinary Australian households. This index is used to measure inflation.

Contract rent / passing rent

This is the rent specified in the leasing document. The contract rent is also known as the passing rent.

Contribution analysis

Analysis reviewing the individual asset total return to the performance of the portfolio total return.

Cooling tower

Mechanical plant that dissipates heat from water-cooled systems through a combination of heat and mass transfer, whereby the water to be cooled is distributed in the tower and exposed to circulated ambient air.

Core fund

A fund is a ‘core fund’ when:
– the fund’s assets provide stable total returns, with the income component comprising the majority (between 60-80%) of the total return
– the income return is substantially underpinned by minimum investment-grade lease covenants
– its overall target total return, after tax and fees, is referenced to CPI. The typical target total return is CPI plus 4-6% pa; and
– its permitted leverage ratio is usually no higher than 30% of gross asset value

Core funds are seen as low risk funds that invest in stabilised, income producing property which is held typically for five to ten years and have little acquisition/disposal activity after the fund has been invested. e.g. ISPT Core Fund.

Corporate Social Responsibility (CSR)

A corporate philosophy and strategy for creating long-term shareholder value by embracing opportunities and managing risk derived from social, environmental and economic factors.

Cost-benefit analysis

A method of evaluating projects or investments by comparing the present value of expected benefits to the project costs.

Crown lease

A right of tenure of Crown land by lease, licenses, irrigation holdings, special leases, yearly leases and including removal of minerals.

Custodian fee

Fees paid to a custodian organisation that safeguards and maintains assets on behalf of others. These are usually a direct third party cost borne by the fund.