Commercial Lending Glossary
A glossary of definitions for common terms used in commercial real estate hard money lending & CRE investing.
Tenant Improvements (TI)
The customized alterations a building owner makes to rental space as part of a lease agreement to configure the space for the needs of a particular tenant. Tenant improvements may include changes to walls, floors, ceilings, lighting, and others. In practice, these customized tenant improvements usually have a useful economic life of 5 to 10 years, which spans the average commercial lease term. The total amount a landlord is willing to spend is referred to as the tenant improvement allowance.
The period of time designated as the "lifespan" of an investment or repayment period. For investments, the term refers to the elapsed time between acquisition and sale of an equity; for debt, the term refers to the time it takes for the borrower to make all payments to the lender.
Triple Net Lease (NNN)
A lease agreement that designates the lessee (the tenant) as being solely responsible for, in addition to the rent fee, the three separate types of net costs associated with leasing the asset. The structure of this type of lease requires the lessee to pay for net real estate taxes on the asset, net building insurance, and net common area maintenance.