Ventura Institute

Glossary

ADR (Average Daily Rate): The average revenue earned per occupied hotel room per night, excluding unoccupied rooms — one half of the RevPAR calculation.
BRRR (Buy, Refurbish, Refinance, Rent): A strategy where an investor buys a property below its post-refurbishment value, adds value through works, then refinances against the uplifted valuation to recycle capital back out of the deal.
DSCR (Debt Service Coverage Ratio): Net operating income divided by mortgage interest cost. Lenders use DSCR — often stress-tested at a higher interest rate — to assess whether a property’s income comfortably covers its debt cost.
EBITDAR (Earnings Before Interest, Tax, Depreciation, Amortisation and Rent): An operating profit measure that strips out rent as well as the usual EBITDA adjustments, used in operational real estate sectors (hotels, care homes) to compare trading performance independent of lease structure.
Enfranchisement (Leasehold Enfranchisement): The statutory right of leaseholders to collectively purchase the freehold of their building, or individually extend their lease, under UK leasehold reform legislation.
Equivalent Yield (Equivalent Yield): A single weighted-average yield that blends a property’s initial (current) income and its reversionary (future, post-rent-review) income into one figure. The standard metric RICS valuers use for formal valuations.
ERV (Estimated Rental Value): A valuer’s opinion of the open-market rent a property could achieve today, distinct from the rent it is actually currently let at (the "passing rent").
GDV (Gross Development Value): The total expected sales or capital value of a completed development scheme, before deducting any costs. The starting point of a residual land value calculation.
IRR (Internal Rate of Return): The discount rate at which the net present value of a series of future cash flows equals zero. Used to compare investments with different cash flow timing profiles — a single annualised percentage return that accounts for the timing, not just the total, of cash received.
LTV (Loan-to-Value): The mortgage or loan amount expressed as a percentage of the property’s value. A 75% LTV loan on a £1,000,000 property is £750,000 of debt against £250,000 of equity.
Marriage Value (Marriage Value): The uplift in combined value created by merging a freehold and leasehold interest — typically shared 50/50 between leaseholder and freeholder — which becomes payable as part of a lease extension premium once unexpired lease term falls below 80 years.
NIY (Net Initial Yield): Current passing rent, net of purchase costs, expressed as a percentage of gross purchase price. The standard headline metric used to market UK commercial investment property.
PBSA (Purpose-Built Student Accommodation): Accommodation specifically designed and operated for students, typically offered on academic-year tenancies with on-site management, distinct from standard residential lettings to students in converted houses.
Rent Cover (Rent Cover Ratio): EBITDAR divided by rent — how many times over an operator could theoretically pay the rent from trading profit. The key affordability metric in operational real estate leases.
Residual Land Value (Residual Land Value): The maximum a developer can pay for land and still achieve their target profit, calculated by deducting build costs, fees, finance costs and required profit from Gross Development Value.
Reversionary Yield (Reversionary Yield): The yield a property would show once it reverts to full open-market rent — relevant where a property is currently under-rented relative to its market rental value.
RevPAR (Revenue Per Available Room): Occupancy multiplied by Average Daily Rate — the standard measure of hotel trading performance, since it captures both how full the hotel is and how much it charges.
SDLT (Stamp Duty Land Tax): A tax on property purchases in England and Northern Ireland, charged progressively across price bands, with an additional 3% surcharge for most second homes and investment purchases.
Void Period (Void Period): Time a property sits empty between tenancies, during which no rent is collected — a key assumption in any realistic cash flow projection.
WAULT (Weighted Average Unexpired Lease Term): The average remaining term across a property or portfolio’s leases, weighted by the rent each lease contributes. A key driver of commercial property value — longer WAULT to a strong covenant generally supports a lower yield.