Real estate terms

Acquisition costsSum of all costs arising from acquisition of a property (purchase price, notary and ownership transfer costs, commissions) and/or effective cost price of own construction, plus cost of value-increasing investments and general refurbishments.
Gross returnCalculated from rental income in percent of continued market value as at 1 January.
Earnings from sale of investment real estateDifference between effective sale price (sales proceeds) and most recently reported market value, with due allowance for transaction costs in connection with sale and any cash-out guarantees granted to seller.

Collection losses and loss of income as a result of rent-free periodsSum of all rental default losses and expenses in connection with rebates offered to existing or future tenants, rent-free periods etc., plus revenue losses due to floor space vacancies during alterations.
Investment volumeTotal site and construction costs (incl. capitalisable company-produced assets and building loan interest) at cost.
Vacancy rateAggregate of all rental losses due to unlet/vacant premises in percent of target rental income.
Earnings on propertyRental income minus expenses for management, operation, maintenance, repairs and value-maintaining refurbishments. Denotes real estate earnings before tax and borrowing costs (EBIT).
Market valueEstimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller after proper marketing, where each party had acted independently, knowledgeably and without compulsion.

Market value is normally estimated by means of discounted cash flow (DCF) method, with no allowance made for transaction costs.
Rental incomeSum of all revenue achieved in period under consideration (target rental income) minus ground rent, vacancy losses and collection losses.
Net yieldCalculated from rental income in percent of continued market value as at 1 January.
Revaluation effectHigher or lower valuation of investment real estate (yield-producing properties and investment real estate under construction), compared to previous year's balance sheet cut-off date, resulting from revaluation by external real estate valuer, with allowance for resulting changes in deferred taxes (difference between market and acquisition value).
Target rental incomeSum of all revenue potentially achievable in period under consideration in case of full letting, before deduction of ground rent, vacancy losses and collection losses.
Maintenance and repair expensesSum of all costs borne by owner that arise from reinstatement of a property to or maintenance of a property in its required condition. This also includes all servicing costs.
Administrative and operating expensesSum of all costs incurred by owner through use of a property, excluding maintenance and repair expenses. Administrative and operating expenses also include all ancillary costs that are not recoverable from tenants, e.g. due to specific provisions in rental contract.

The definitions of the above terms are based on Document D 0213 “Financial Benchmarks for Real Estate” (“Finanzkennzahlen für Immobilien”) issued by SIA (Swiss Society Engineers and Architects) and SVIT (Swiss Real Estate Association), 2005 edition.