Glossary
Glossary
A
Accredited investor
An investor who meets the requirements established by financial regulations to participate in certain restricted investment opportunities. These requirements are often related to income level, net worth, or previous investment experience.
ACPR (Autorité de Contrôle Prudentiel et de Résolution)
ACPR is a French authority responsible for supervising and regulating the activities of financial and insurance institutions to ensure the stability and soundness of the financial system in France.
Acte de bénéficiaire effectif (Effective Beneficial Actions)
The Beneficial Ownership Act is a document that identifies and registers the individuals or legal entities that have effective control over an entity or asset, thereby revealing the true ownership behind an investment or property.
Active management
It is an investment management approach in which managers make active decisions to buy and sell assets with the goal of outperforming the market returns. Active fund managers conduct analysis and make decisions based on their own judgment and strategy.
Alternative investments
These are investments that deviate from traditional forms of investment, such as stocks and bonds. Alternative investments include assets such as real estate, commodities, hedge funds, and other unconventional financial instruments.
Appreciation
Appreciation refers to the increase in the value of an asset, such as a real estate property, over time. Appreciation can result from factors such as market demand, location improvements, or favorable economic conditions.
AER (Annual Equivalent Rate)
It is a standardized measure that represents the annualized cost or return of a financial product, taking into account both the interest and other associated costs.
Articles of association of a company
They are the internal rules and regulations governing the operations of a company. The articles of association establish the governance structure, rights and obligations of shareholders, and other legal provisions of the company.
Asset allocation
An investment strategy that involves distributing resources among different asset classes, such as stocks, bonds, real estate, etc., with the aim of diversifying risk and maximizing returns.
B
Banck of Spain
The Banco de España is the national central bank of Spain, responsible for supervising and regulating the country’s financial system. Its functions include currency issuance, inflation control, and financial system stability.
Bonds
Bonds are debt securities issued by government entities, corporations, or other organizations. Investors who purchase bonds are lending money to the issuer in exchange for periodic interest payments and the return of the invested capital on a specific date.
Business angel
A business angel, also known as an angel investor, is a person who provides capital and expertise to high-potential startup companies in exchange for an equity stake. These investors often provide early-stage funding and strategic guidance to early-stage companies.
C
Cap rate or capitalization rate
The cap rate is a measure used in real estate investment to determine the potential return of a property. It represents the capitalization rate, i.e., the percentage of expected net income from a property in relation to its market value.
Capital call
Refers to a request by an investment fund to its investors to contribute additional capital to the fund. Capital calls typically occur when additional funds are needed to finance specific investments or projects.
Capital increase
Capital increase refers to the increase in the amount of a company’s share capital through the issuance of new stocks. This can be done to finance investment projects or strengthen the company’s financial structure.
cash-on-cash returns
An indicator that compares the cash flows generated by a real estate investment with the amount of capital invested. It is used to evaluate the relative profitability of different investments.
CNMV
CNMV (National Securities Market Commission): The CNMV is the regulatory authority responsible for supervising and inspecting financial markets in Spain, including real estate crowdfunding and other forms of investment.
Collateral
It is a guarantee offered as security to ensure the fulfillment of a financial obligation. In the real estate context, it may refer to a property used as collateral to secure a loan or investment.
Commercial Registry
It is a public registry where companies and commercial entities are registered. The commercial registry provides information about the constitution, structure, and commercial activities of the companies, as well as acts and documents related to their operation.
Committed capital
Committed capital refers to the funds that investors have agreed to invest in a project or company. Although they have not yet been disbursed, these funds are reserved and available for use according to the terms of the investment agreement.
Compound interest rate
An interest rate applied to an investment or loan that is calculated on the initial capital and previously accumulated interest. As interest is reinvested, the compound interest rate allows generated interest to be added to the original capital, resulting in exponential growth.
Concentration risk
The risk associated with having a large portion of the investment or portfolio concentrated in a single asset, sector, or geographic region. Concentration risk increases exposure to events or adverse conditions that may affect that asset, sector, or region.
Conflict of interest
It occurs when a person or entity has conflicting interests that may affect their impartiality in decision-making. In the real estate investment field, it is important to avoid conflicts of interest to ensure transparency and investor protection.
Contingency fund
A component in the budget of a project or investment intended to cover unforeseen expenses or contingencies that may arise during its execution. The contingency reserve is set aside to address unplanned situations and mitigate risks.
Convenience test
Core strategy
Refers to a real estate investment strategy that focuses on acquiring and holding stable and high-quality real estate assets in prime locations. The objective is to generate regular income through long-term rentals.
Core-plus strategy
It is a real estate investment strategy that combines elements of the core strategy with the pursuit of value-added opportunities. In addition to acquiring stable assets, it seeks improvements or enhancements that can increase long-term returns.
Create and Grow Act
It is legislation in Spain aimed at promoting the growth and development of companies and entrepreneurs. The Crea y Crece Law includes measures to facilitate financing, reduce regulatory burdens, and encourage business innovation.
Crowdfunding
It is a model of collective financing in which multiple individuals contribute small amounts of money to fund a project. In the real estate context, crowdfunding allows investors to participate in real estate projects through small investments.
Crowdfunding platform
Also known as a platform for crowdfunding, it is an online platform that allows companies and projects to obtain funding from a community of investors through small individual contributions.
Crowdinvesting
It is a general term that encompasses different models of collective investment, including crowdfunding. It involves multiple individuals investing their money in a project or company, usually through online platforms.
Currency
It is a foreign currency used as a medium of exchange. In the real estate investment context, it can refer to the currency in which financial transactions are conducted and real estate assets are valued.
D
Debt projects
Investment projects in which investors provide capital in the form of loans or debt. These projects involve the payment of periodic interest and the repayment of the borrowed capital within a specified period.
Distribution
In the context of real estate investment, distribution refers to the periodic payments that investors receive as part of the returns generated by a real estate project. These payments can come from rents, sales, or profits.
Diversification
It is an investment strategy that involves spreading capital among different types of assets, sectors, or geographies. The goal is to reduce risk by not relying solely on a single investment.
Dollar-cost-averaging
An investment technique that involves the regular and consistent purchase of an asset, such as stocks or investment funds, regardless of the current price. This allows for the acquisition of more assets when prices are low and fewer when prices are high, thereby averaging the cost over time.
Due diligence
It is a process of thorough investigation and analysis conducted before making an investment. It involves carefully evaluating the financial, legal, operational, and commercial aspects of a project or company.
E
EBITDA
An acronym for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It is a financial measure that indicates a company’s operating earnings before considering financial costs, taxes, and the depreciation of assets.
Electronic wallets
Applications or online services that allow storage, sending, and receiving of electronic money. Electronic wallets are used to securely and conveniently conduct online transactions.
Equity investments
It refers to a class of financial assets that do not have predetermined periodic payments and whose returns fluctuate based on market performance. Equity includes stocks and shares in investment funds.
Equity projects
Investment projects in which investors acquire stakes in a company or property with the objective of profiting from the increase in the investment’s value over time. Equity or appreciation projects seek to capture capital appreciation.
ETF (Exchange-Traded-Fund)
It is an exchange-traded investment fund that tracks an index or basket of underlying assets. ETFs are traded on the secondary securities market and provide investors with diversified exposure to different markets or sectors.
Experienced investor
F
Family Office
It is a private entity that provides management and financial advisory services to wealthy families. Family offices are responsible for managing investments, estate planning, and other financial aspects to preserve and grow family wealth.
FILPE
Acronym for “Fondo de Inversión Libre de Promoción Empresarial” (Free Fund of Business Promotion). These are investment funds that benefit from favorable taxation in Spain and are intended to invest in small and medium-sized growing companies.
FIL or Hedge Funds
They are private and unregulated investment funds that seek to generate returns through different investment strategies. Hedge funds may employ sophisticated techniques such as leverage and the use of derivatives to generate profits in various market conditions.
Finacial Advisory
Financial advisory involves providing guidance and recommendations to investors on how to manage their personal or corporate finances, including aspects related to real estate investment and strategic financial decision-making.
Finacial Asset
A financial asset is an instrument or contract that represents an ownership right or a debt. It can include stocks, bonds, certificates of deposit, investment fund shares, among others.
Fixed income
It refers to a class of financial assets that generate predetermined periodic payments, such as interest, dividends, or coupons. Fixed income securities include bonds, notes, and other debt instruments.
Funds of funds
It is an investment fund that invests in other funds rather than directly in individual assets. The purpose is to diversify the investment through a portfolio of different funds.
Funding round
Refers to a specific stage in which a company seeks external financing to fuel its growth or finance its operations. During a funding round, investors may contribute capital in exchange for shares or equity in the company.
H
HNWI
Acronym for “High Net Worth Individual.” It refers to an individual or family with a high level of wealth, typically defined by a specific threshold of financial assets or net worth.
I
Index fund
An investment fund whose portfolio consists of assets that replicate a specific index, such as the S&P 500 index. The objective is to track the performance of the index rather than actively trying to outperform it.
Inflation
It is the sustained and general increase in the prices of goods and services in an economy over time. Inflation reduces the purchasing power of money, which means that over time, more money is needed to buy the same amount of goods and services.
Inflation risk
This is the risk that inflation will reduce the purchasing value of money over time. When the inflation rate is high, investors run the risk that their real returns will be lower than inflation, which reduces their purchasing power.
Infrastructure
Refers to the facilities and physical structures necessary for the functioning of a society, such as roads, bridges, airports, transportation networks, power plants, and telecommunication systems. Investment in infrastructure involves financing and developing these assets.
Intangible Assets
Intangible assets are those that do not have a physical form but possess economic value. In the real estate context, they may include intellectual property rights, trademarks, patents, or lease contracts.
Internal Return Rate
A measure used to evaluate the profitability of an investment. IRR is the discount rate that represents the present value of the investment’s future cash flows with the initial capital invested. A higher IRR indicates a higher investment return.
Invested capital
Invested capital refers to the funds that investors have disbursed and committed to a specific investment. It is the actual amount of money that has been allocated to a company, project, or real estate asset.
Investment Agreement
An investment agreement is a contract that establishes the terms and conditions of an investment made by an investor in a company or real estate project. These agreements typically detail the participation, rights, and responsibilities of the involved parties.
Investment fund
It is a form of collective investment in which funds from multiple investors are gathered together to acquire a diversified portfolio of assets. Investment funds are managed by professionals and allow investors to access different types of assets.
Investment portfolio
It is the collection of financial assets such as stocks, bonds, investment funds, and other instruments held by an investor. The investment portfolio is diversified to balance risk and seek optimal returns.
J
J-curve
Refers to a graphical representation in the form of a curve that shows the evolution of a real estate project. The J-curve indicates that initially there may be a decrease in value or profitability before experiencing significant growth.
K
KYC and AML
KYC (Know Your Customer) and AML (Anti-Money Laundering) are processes and measures implemented by financial institutions to know the identity of their customers and assess the risks associated with their financial activities. These processes are designed to prevent money laundering and terrorism financing.
L
Land Registry
It is a public registry where property rights over real estate are recorded. The property registry provides legal and juridical information about the property, such as the owner’s name, existing charges or encumbrances, and details of the property deed.
Limited Partner (LP)
Refers to a limited partner in a limited partnership, such as an investment fund. LPs contribute capital to the fund but have limited liability in terms of the fund’s debts and obligations.
Liquidity
It is the ability to convert an asset into cash quickly without incurring significant losses. In financial markets, liquidity refers to the ease with which securities can be bought or sold without significantly affecting their price.
Liquidity risk
The risk of not being able to buy or sell an asset quickly without incurring significant losses. Liquidity risk refers to the difficulty in converting an asset into cash due to the lack of buyers or sellers in the market.
Loan-to-cost (LTC)
The ratio between the loan or financing obtained for a real estate project and the total estimated cost of the project. LTC is used to assess the level of leverage and risk associated with project financing.
Loan-to-value (LTV)
The ratio between the loan or financing obtained for the purchase of a property and the appraised value of the property. LTV is used to assess the level of leverage and risk associated with property financing.
M
Make-whole
A contractual provision that allows the borrower or bond issuer to prepay the debt before the deadline, but in exchange for payment a penalty or compensation is given to the lender or investors.
Management company
Refers to the entity or company responsible for the management and administration of an investment fund or other financial products. The asset manager is responsible for making investment decisions, monitoring assets, and managing risks on behalf of the investors.
Mandate agreement
A mandate agreement is a contract in which one person or entity grants powers and authority to another to act on their behalf in matters related to real estate investment, such as sourcing opportunities, negotiations, or property management.
Market risk
The risk of financial loss due to fluctuations in asset prices in the financial markets. This risk may be caused by macroeconomic factors, geopolitical events, changes in interest rates or market volatility.
Megatrends
Large-scale and long-term trends or changes that have a significant impact on society, the economy, and markets. Megatrends are often related to demographic, technological, environmental, social, or economic aspects.
MiFID
Acronym for “Markets in Financial Instruments Directive.” It is a European Union regulation that establishes requirements and standards for the provision of investment services and investor protection.
MOIC
Acronym for “Multiples on Invested Capital.” It is a measure used in private equity investment to assess the return on investment in relation to the capital initially invested.
Mortgage guarantee
It is a real right that is established on a real estate property (usually a property) as collateral to secure the fulfillment of a financial obligation, such as a mortgage loan. In case of default, the lender can enforce the guarantee and sell the property to recover the borrowed capital.
N
Net asset value (NAV)
The total value of assets in an investment fund divided by the number of outstanding shares. Net asset value is used to determine the purchase or sale price of fund shares.
Nominal return
It is the financial return on an investment without taking into account inflation or other factors that may affect the purchasing power of money.
Non-accredited investor
An investor who does not meet the requirements established by financial regulations to be considered an accredited investor. Non-accredited investors may have limitations in terms of the investment opportunities they can participate in.
Non-experienced investor
A person with little or no investment experience that may require more guidance and education in terms of investment strategies and risks.
O
Ongoing investment plan
An investment strategy that involves investing a fixed amount of money at regular intervals, regardless of the asset’s price. This helps to avoid speculation and take advantage of market fluctuations over the long term.
Operational risk
Operational risk is the risk associated with deficiencies or failures in a company’s processes, procedures, systems, or operational resources. These failures can result in financial losses, operational disruptions, damage to reputation, or non-compliance with regulations.
Opportunistic strategy
It is a real estate investment strategy that aims to take advantage of special situations and market imbalances. Investors seek high-yield opportunities through riskier investments, such as asset restructuring or distressed property acquisitions.
Opportunity cost
It represents the benefit or value of the best option foregone when choosing an investment alternative. In the real estate context, opportunity cost refers to the missed benefits of choosing one investment over another.
P
Passive management
It is an investment management approach that seeks to replicate the performance of a specific benchmark index rather than trying to outperform it. Passive management funds, such as index funds, invest in a portfolio of assets that reflects the composition of the benchmark index.
Payment entity
It is an authorized and regulated financial institution that provides payment services such as fund transfers, direct debits, and card issuance. In the context of real estate investment, payment institutions can facilitate transactions between investors and real estate developers.
Payment gateway
A service that facilitates and manages electronic payments between buyers and sellers online. The payment gateway provides a secure and efficient platform for processing financial transactions.
Payment gateway fee
A fee or commission charged for the use of an electronic payment gateway. Payment gateways facilitate electronic transactions and provide secure and efficient payment processing services.
Placement (fundraising)
Refers to the process of raising capital to finance a project or investment. In the real estate context, it involves seeking investors interested in participating in a specific project.
Political, social and regulatory risk
The risk that changes in the political, social or regulatory environment will adversely affect an investment. This may include changes in government policies, political instability, social tensions or changes in regulations that negatively impact business.
Portfolio
Refers to the collection of investments that a person or entity owns. In the context of real estate investment, it refers to the properties or real estate projects in which one has invested.
Portfolio rebalancing
The periodic adjustment of assets in an investment portfolio to maintain the desired asset allocation. This involves selling or buying assets to restore the target percentages of each asset class.
Private debt
Refers to loans or credits provided by private investors or specialized financing companies, rather than traditional financial institutions. In the real estate context, private debt can be used to finance real estate development projects.
Private capital
Refers to funds provided by private investors or specialized investment firms used to finance real estate projects.
Private equity
Refers to an investment approach where investors acquire stakes in non-publicly traded companies. Private equity focuses on the growth and improvement of companies through strategic investments and active participation in their management.
Private equity funds
These are investment funds that invest in non-publicly traded companies, usually through the acquisition of majority or significant stakes. These funds seek to generate long-term profits through the improvement and growth of the companies in which they invest.
Private markets
Refers to markets where financial assets are traded that are not available to the general public and are intended for institutional or accredited investors. These markets are often less liquid and have specific regulations.
Professional investor
Refers to an investor who possesses knowledge, experience, and the ability to evaluate and take on financial risks in a more sophisticated manner. Professional investors may have access to broader investment opportunities and specialized management services.
Proptech
A term that combines “property” and “technology.” It refers to companies that use technology to innovate and transform the real estate sector, improving processes such as property buying, selling, renting, and management.
Provider of participatory financing services (PPFS)
An authorized and regulated entity that offers online platforms for crowdfunding and participatory financing, connecting investors and real estate developers in financial transactions.
Public markets
Financial markets where financial assets are traded and are available to the general public. These markets are regulated and offer greater liquidity and access for retail investors.
R
Real economy
It refers to the part of the economy related to the production, distribution, and consumption of tangible goods and services. In the real estate context, investment in the real economy refers to the acquisition and development of physical assets, such as real estate properties.
Real estate
Real estate refers to properties, including land, buildings, homes, commercial premises, and others. Real estate investment involves the acquisition, management, and sale of these assets with the aim of obtaining financial returns.
Real estate crowdfunding
The application of crowdfunding to the real estate sector. It enables investors to participate in real estate projects through capital contributions.
Real estate crowdlending
It is a form of financing in which multiple individuals or investors lend money to real estate developers. Developers use these loans to finance construction or real estate development projects.
Real estate developing company
A company dedicated to the promotion and development of real estate projects, such as the construction and sale of homes, commercial buildings, or residential complexes.
Real estate investor
A person or entity that specifically invests in real estate assets, such as residential properties, commercial properties, or land. The real estate investor seeks to generate profits through property acquisition, rental income, sales, or development.
Real return
It is the financial return on an investment adjusted for inflation or any other factor that affects the purchasing power of money. Real return takes into account the impact of currency value loss or gain.
Recap
A term used in the real estate field to refer to the recapitalization of a property or project, involving the restructuring or refinancing of existing debt and the infusion of new capital.
Real Estate Investment Trust (REIT)
A real estate investment trust is an investment vehicle that allows investors to participate in real estate projects through the purchase of company shares. REITs offer tax benefits and typically distribute a portion of the income generated by the real estate assets to shareholders.
Rental projects
Investment projects in which investors receive periodic income through the rent generated by an asset, such as property rental. Rental projects aim to generate regular income for investors.
Representation agreement
A representation agreement is a contract in which one party designates another to represent them in certain real estate investment transactions or negotiations. The representing party acts on behalf and in the interest of the represented party.
Required capital
The amount of money needed to carry out a real estate project. It represents the minimum investment amount required to participate in an investment opportunity.
Retail investor
Refers to an individual investor who participates in financial markets and makes investments with their own resources. Retail investors typically have less experience and lower investment capacity compared to institutional investors.
Return of capital
The process by which investors receive back the capital invested in a project once it has been completed. Capital return may include the reimbursement of the principal invested and the generated returns.
Return of investment
It is the financial performance or yield obtained from an investment. Return on investment is generally expressed as a percentage and can be calculated in different ways, such as total return, annualized return, or cumulative return.
Return and their concepts
Returns are the profits or yields obtained from an investment. They can be measured in different ways, such as gross return (before deductions), net return (after deductions), annualized return (over a year), and cumulative return (over a specific period).
ROIC
Acronym for “Return on Invested Capital” (Retorno sobre el Capital Invertido). It is a financial measure that indicates the profitability generated by a company in relation to the capital invested in it. ROIC is used to assess the efficiency and profitability of capital investment.
S
SDG
Acronym for “Sustainable Development Goals.” These are 17 goals established by the United Nations to address global challenges such as poverty, climate change, gender equality, and environmental protection.
Secondary market
A market where previously issued financial assets are traded. In the real estate context, the secondary market can refer to the buying and selling of shares in real estate funds or existing properties.
Secured lending
A loan in which the borrower offers an asset as collateral to support the loan. In case of default, the lender can execute the collateral and recover the value of the asset to cover the loan.
SGIIC
Abbreviation for “Sociedad Gestora de Instituciones de Inversión Colectiva” (Management Company of Collective Investment Institutions). It is a regulated entity responsible for managing and administrating investment funds or other collective investment vehicles.
Shareholders agreement
An agreement or contract among the shareholders of a company that sets out the rules and conditions of their relationship and collaboration. The shareholders’ agreement addresses aspects such as decision-making, obligations and rights of the shareholders, and dispute resolution.
Shareholdings
Refers to the ownership units in a company or investment fund. Units of ownership represent the proportional ownership stake that an investor has in the entity.
Shares
Shares are ownership securities issued by a company and represent a portion of its share capital. Investors who own shares become shareholders and are entitled to receive dividends and participate in the company’s decision-making.
Simple note of the commercial register
It is a document that provides basic and updated information about a company registered in the Mercantile Registry. The nota simple contains data such as the company name, administrators, corporate purpose, and annual accounts.
Socimi
Abbreviation for “Sociedad Anónima Cotizada de Inversión en el Mercado Inmobiliario” (Listed Real Estate Investment Company). It is a legal figure in Spain that allows companies to invest in real estate assets and be listed on the stock exchange. Socimis offers tax advantages and focuses on real estate investments.
SPV
SPV (Special Purpose Vehicle): A special purpose vehicle created for a specific project or investment. SPVs are often used in real estate crowdfunding to structure investments and separate the assets and liabilities of the project from other entities.
Start-ups
Refers to companies in their early stages of development and growth. Start-ups are typically innovative, technology-based, and have high growth potential but also higher levels of risk.
Stock market
An organized market where financial securities such as stocks and bonds are bought and sold. Stock markets facilitate the trading and liquidity of financial assets among investors.
Subscription
The act of investing in or acquiring shares in an investment fund or stock offering. By subscribing, an investor commits to contributing capital and participating in the profits and risks of the fund or offering.
Suitability test
A more detailed evaluation conducted on investors to determine if financial products or services are appropriate and suitable for their specific needs and investment profile.
T
Tangible assets
Tangible assets are those that have a physical form and can be touched or quantified. In the real estate field, tangible assets refer to physical properties such as buildings, land, commercial premises, or houses.
Top quartile
Refers to the upper quartile or the group with the best results in a dataset. In the investment context, top quartile is used to refer to funds or investments that have achieved the best returns compared to their peers.
Track record
The history or performance record of a fund manager, company, or project over time. Track record is used to assess consistency and the ability to generate returns based on past results.
Traditional investment
Refers to conventional forms of investment, such as buying stocks, bonds, or investment funds in traditional financial markets. Traditional investments typically have a more conservative approach and are based on more liquid and widely traded assets.
U
Unicorn
In the business context, it refers to a start-up that has reached a market valuation of at least one billion dollars before going public. Unicorns are considered rare and highly successful companies.
Unsecured loans
Loans that are granted without the need to offer an asset as collateral. These loans are based on trust in the borrower’s ability to repay and their credit history.
Urbanitae success fee
Refers to the commission or fee charged for the successful outcome of an investment made through Urbanitae. This fee is associated with the positive performance achieved in the project.
V
Value-added strategy
It is a real estate investment strategy that focuses on adding value to assets through improvements, renovations, or reconfigurations. The goal is to increase income and profitability of the assets over time.
Venture capital
Refers to the investment of capital in early-stage or start-up companies with high growth potential. Venture capital typically involves investments at early development stages in exchange for an equity stake in the company.
Venture capital fund
It is a type of investment fund that invests in high-growth potential companies but also with a significant level of risk. These funds seek to profit from buying and selling stakes in non-publicly traded companies.
Volatility
A measure of the fluctuation or variability of asset prices or investment returns over time. Volatility is used to assess the risk associated with an investment, where higher volatility indicates greater variability and potential risk.