Glossary

1099
An IRS tax form used to report income received outside of traditional employment, such as interest, dividends, or independent contractor payments. It is issued by the payer to both the recipient and the IRS.

’40-Act REIT
A type of private real estate investment trust that is registered with the SEC under the Investment Company Act of 1940. Offers purchases and periodic liquidity at share prices that equal NAV rather than daily market pricing. Typically offers greater transparency than Non-traded REITs due to certain requirements of the ’40-Act and ease of use benefits for investors including the ability to purchase via a ticker. 

Accredited Investor
An accredited investor is an individual or entity that meets specific income, net worth, or professional criteria set by regulators, allowing them to invest in private securities offerings that are not registered with the U.S. Securities and Exchange Commission (SEC). In the U.S., this generally includes individuals with at least $1 million in net worth (excluding a primary residence) or $200,000 in annual income ($300,000 with a spouse), as well as certain licensed professionals and entities meeting asset thresholds.

Appraisal-Based Valuation
A method of determining property value based on an assessment by one or more independent third parties, typically conducted monthly or quarterly. Common approaches include discounted cash flow analysis, income capitalization, comparable sales, and replacement cost.

Asset-Based Finance (ABF)
A type of lending that is backed by diversified pools of hard or financial assets with returns driven by contractual cash flows.

Asset Class
A category of investments with similar characteristics, such as private infrastructure, which comprises of subsectors including digital infrastructure, transportation, utilities, energy, etc.

Business Development Company (BDC)
BDCs are closed-end funds that provide private loans to small and mid-sized US companies, and act as a vehicle for investors to access private credit assets.

Buy-and-Build
Acquiring a foundational company and bolting on additional businesses to accelerate growth.

Buyout
Majority investments in mature companies, typically involving operational and financial restructuring.

Capital Expenditure (CapEx)
Money spent by a company to acquire, upgrade, and maintain physical assets, including purchases of land, buildings, equipment, or technology, upgrades, and maintenance programs; long-term investments.

Capital Stack
The layers of debt and equity used to finance a property, ranked by seniority and risk. Senior debt sits at the top with first claim on cash flows, followed by mezzanine debt, preferred equity, and common equity at the bottom.

Capitalization Rate (Cap Rate)
Net operating income divided by property value, expressed as a percentage. A higher cap rate suggests higher income relative to price, often indicating higher risk or lower-quality assets. Cap rates move inversely to property values.

Carried Interest
A performance-based fee paid to fund managers, typically a % of profits above a preferred return threshold. Common in drawdown private funds and may also be a feature in evergreen structures. Also called an Incentive Fee.

Catch-Up Provision
After LPs have received their preferred return, a catch-up provision typically allocates a share of subsequent profits to the GP, allowing the GP to “catch up” to its agreed percentage of the total profit split (carried interest).

Class A Property
High-quality, institutional-grade assets in prime locations. Typically new construction or recently renovated with top-tier amenities, strong tenant demand, and premium rents.

Class B Property
Middle-quality assets that are older but functional. Often targets for value-add strategies seeking to improve operations and increase income through renovations.

Class C Property
Older properties in less desirable locations requiring significant capital investment. Higher risk but potential for substantial returns if improvements are executed successfully.

Collateral
Assets or property pledged by a borrower to secure a loan.

Commercial Mortgage-Backed Securities (CMBS)
Bonds backed by a pool of commercial real estate loans.

Core
Invests primarily in high-quality, established assets or businesses that generate stable, predictable cash flows. Focuses on capital preservation and steady income, and typically has the lowest risk and return profile within an asset class.

Core Plus
Invests in mostly stable assets or businesses with reliable cash flows and clear opportunities for modest improvement or growth. Seeks a balance of current income and potential appreciation, with a low-to-moderate risk and return profile.

Corporate Carve-Out
Purchasing a business unit that a parent company divests.

Covenant
A contractual condition the borrower must meet to remain in compliance with the loan terms.

Credit Committee
An internal group within a lending organization that reviews and approves or rejects proposed credit transactions based on risk, structure, and underwriting analysis.

Decarbonization
The concept of reducing carbon emissions through various means, including transitioning to renewable energy or improving energy efficiency, supported by investments in sectors such as renewables, biomass power, and fleet electrification.

Default Rate
The percentage of loans in a portfolio where borrowers fail to meet repayment obligations.

Digital Infrastructure
The physical infrastructure supporting data consumption, consisting of interconnected systems and networks that facilitate the storage, processing, and transmission of digital data, including data centers, fiber optic networks, and telecom towers.

Direct Lending
Loans originated privately to mid-sized companies, often senior secured and floating-rate.

Dispersion
The performance spread between top-quartile and bottom-quartile managers.

Distressed Debt
Loans to companies experiencing financial difficulty or bankruptcy, often purchased at a discount.

Distributions to Paid-In Capital (DPI)
DPI is a key performance metric that measures the actual cash returned to investors (Limited Partners) relative to the capital they have contributed to a fund.

Diversification
The strategy of allocating capital across different asset types, geographies, sectors, and vintages to reduce concentration risk and smooth returns.

Drawdown Fund
Traditional private structure where capital is committed upfront and called over time.

Duration
A measure of a bond or loan’s sensitivity to interest rate changes.

Essential Services
Services critical to daily economic activity and societal functioning, such as water, electricity, connectivity, waste management, and transportation, which tend to exhibit relatively inelastic demand profiles.

Evergreen Fund
An investment vehicle that continuously accepts new capital and reinvests proceeds without a fixed termination date. Sometimes referred to as an Evergreen Private Equity Vehicle, it is important to note that evergreen funds exist across the asset classes, including Credit, Infrastructure, and Real Estate. Evergreen funds are typically not listed or traded on an exchange. 

Floating Rate
Type of loan where the Interest rate adjusts with a benchmark rate (e.g., SOFR), typically plus a spread.

Fund Commitment
Capital LPs agree to provide to a fund for future investment.

General Partner (GP)
The manager of a fund responsible for sourcing deals, overseeing companies, and exiting investments.

Growth Equity
Minority investments in more mature, fast-growing companies that need capital to scale.

Illiquidity Premium
The additional return investors expect for holding assets that cannot be easily traded or sold.

Illiquidity Risk
The inability to quickly sell or redeem an investment without significant loss of value.

Inflation Hedge
The ability of certain investments or assets to preserve purchasing power through explicit inflation linkages (i.e. CPI-linked contracts, take-or-pay contracts, regulated revenue models, etc.) or implicit pricing power tied to essential service provision.

Information Advantage
The ability for managers to leverage private information and diligence to identify value.

Infrastructure Investment Gap
The structural shortfall between global infrastructure needs and available public funding, which creates the need and opportunity for private capital to support long-term investment and development.

Institutional Investors
Professional asset owners (e.g., pensions, endowments, insurers).

Interval Fund / Tender Offer Fund
Semi-liquid fund structures offering periodic redemptions.

Internal Rate of Return (IRR)
A measure of performance based on the timing and size of cash flows.

K-1 (Schedule K-1)
A tax form reporting an investor's share of income, deductions, and credits from a partnership. More complex than a 1099 tax form and may require specialized tax preparation.

Leverage
The use of borrowed capital to finance property acquisitions.

Limited Partners (LP)
Investors who commit capital to funds but do not control day-to-day decisions.

Liquidity
The ability to access capital through means such as redemptions or secondary transactions; also refers to the degree to which an investment can be quickly converted into cash without losing value. Private markets generally offer lower liquidity compared to public markets, but structural innovations such as wealth-tailored evergreen vehicles help address this.

Loan Spread
The additional yield above a risk-free benchmark (e.g., SOFR, U.S. Treasuries, in the case of Credit) to compensate for borrower or collateral risk. Loan Spread is often used in the context of Credit, but is applicable across asset classes. 

Loan to Value (LTV)
A ratio that compares the amount of a loan to the appraised value of the underlying asset.

Lower Middle Market
Companies with <$50 million EBITDA.

Market Consolidation / M&A
Using acquisitions to expand scale or capabilities.

Mezzanine Debt
Subordinated debt that ranks between senior debt and equity in the capital stack. If the borrower defaults, mezzanine lenders are paid after senior lenders but before equity holders.

Multiple on Invested Capital (MOIC)
Total value divided by initial investment.

Net Asset Value (NAV)
The total value of an entity’s assets minus its liabilities, often expressed on an aggregate and per-share basis for funds. It represents the underlying equity value at a given point in time.

Net Operating Income (NOI)
A property’s annual income after operating expenses are deducted, but before debt service, taxes, and capital expenditures. It is a key measure of a real estate asset’s operating performance.

Non-bank lenders
Entities that provide loans and credit outside the traditional banking system.

Non-Traded REIT
A type of private real estate investment trust registered with the SEC but not listed on a stock exchange. Offers purchases and periodic liquidity at share prices that equal NAV rather than daily market pricing. Typically available to Accredited Investors.

Opportunistic Strategy
Highest-risk investment approach involving ground-up development, major redevelopment, or significant repositioning. Targets highest returns with substantial leverage.

Operational Improvement
Enhancing company operations to increase efficiency and value.

Portfolio Company
A business that a fund owns or controls.

Preferred Equity
A hybrid instrument ranking above common equity but below debt in the capital stack. Provides fixed distributions with priority over common equity but typically no participation in appreciation.

Preferred Return
Funds typically have a stated preferred return or “hurdle rate.” If the fund returns are equal or greater to that rate, LPs can receive fund returns up to the preferred rate. Most vehicles specify a preferred return for LPs. This figure, often called the hurdle rate, represents the minimum annualized return LPs must receive before the GP participates meaningfully in profits. LPs are paid distributions up to this rate once their contributed capital has been returned.

Private Company
A business that raises capital through private placements rather than public markets.

Private Credit
Private credit is credit issued to private companies by non-bank lenders.

Private Equity (PE)
Private equity is comprised of ownership stakes in private companies that are not traded on public stock exchanges.

Private Equity Fund
A pooled investment vehicle used to acquire and improve companies.

Private Infrastructure
Privately owned and operated hard-asset businesses that provide essential services to local markets and support societal functioning and economic growth. Private infrastructure assets tend to exhibit long-term cash flow visibility, typically through contracted or regulated revenue frameworks.

Private Markets
Investments not listed on public exchanges.

Private Placement
A capital raise in which securities are sold directly to a limited group of investors.

Public Equity
Ownership stakes in public companies traded daily on stock exchanges.

Public-to-Private
Buying a public company and taking it private.

Public-Private Partnership (PPP)
Collaborative agreements between government entities and private investors or operators to finance, build, and/or operate infrastructure projects or assets.

Qualified Purchaser (QP)
An individual with at least $5 million in investments (or entity with $25 million+), qualifying them for certain private investment opportunities with higher regulatory exemptions than accredited investors.  

Real Estate Investment Trust (REIT)
A company that owns, operates, or finances income-producing real estate. Must distribute at least 90% of taxable income to shareholders as dividends and meet other IRS requirements.

Recovery Rate
The proportion of loan value recouped after a default.

Redemption Limit
A stated limit defining the amount of capital that investors can withdraw during a specified period, often defined as a percentage of a Fund’s Net Asset Value. Redemption requests in excess of a stated limit are often filled on a pro rata basis. If a fund does not meet its stated redemption limits, it may be referred to as “gating”. For the avoidance of doubt, proration of redemptions in a given period is not necessarily considered “gating,”

(Please note: This term is used for educational and illustrative purposes about the private markets broadly and does not apply to, nor is it representative of, all products or investment vehicles offered by the firm.)

Regulated Assets
Infrastructure assets where pricing frameworks are set or overseen by regulatory authorities, ensuring stable revenue streams; often seen in sectors such as utilities.

Revenue Model
The framework through which a company or asset generates revenue; for infrastructure assets, these are often characterized by regulated pricing, contractual agreements, long-term or inflation-linked contracts, or market-based pricing mechanisms.

Secured Overnight Financing Rate (SOFR)
A benchmark interest rate based on overnight Treasury-backed lending.

Securitization
Securitization is the process of pooling financial assets, including loans, and issuing securities backed by their cash flows.

Senior Debt (Senior Mortgage)
First-lien debt secured by real estate, holding the highest priority claim on property cash flows and sale proceeds. Lowest risk position in the capital stack with correspondingly lower yields.

Senior Secured Loan / Senior-secured loan
Debt with the highest repayment priority in the borrower’s capital structure.

Sharpe Ratio
A measure that evaluates the risk-adjusted return of an investment by comparing its excess return (the return above the risk-free rate) to its standard deviation (volatility). A higher Sharpe Ratio indicates a more favorable risk-return profile, suggesting that the investment has generated higher returns per unit of risk taken.

Special Situations
Opportunistic lending to companies undergoing distress or restructuring.

Sponsor
The entity or individual that organizes and manages a company or real estate investment, typically holding the equity position and responsible for property operations and debt service.

Standard Deviation
A statistical measure of how widely values, such as investment returns, vary around their mean over a specified period. In an investment context, it is commonly used as a measure of return volatility: a higher standard deviation indicates returns have been more dispersed and less consistent, while a lower standard deviation indicates returns have been more tightly clustered around the mean. Because it captures the magnitude of variation in returns, standard deviation can help investors assess how variable an investment’s performance has been, though it does not distinguish between upside and downside movements.

Strategic Investments
Capital structures combining elements of debt and equity.

Strategic Repositioning
Shifting a company’s strategy to align with market opportunities.

Sustainable Infrastructure
Infrastructure assets that support environmental considerations or resource efficiency and promote long-term resilience; includes renewable generation, grid modernization, electrification, and circular economy businesses.

Term Sheet
A key document outlining the terms and conditions of a deal.

Top-Grading Talent
Improving management teams to strengthen performance.

Total Value to Paid-In (TVPI)
Measures total value generated relative to capital contributed.

Triple-Net Lease (NNN)
A lease structure where the tenant pays property taxes, insurance, and maintenance costs in addition to rent, significantly reducing landlord operating risk and expense volatility.

Unitranche Loan
A single loan combining senior and subordinated debt features.

Upper Middle Market
Companies with $50–$200 million EBITDA.

Unrelated Business Taxable Income (UBTI)
Income generated by tax-exempt entities (like IRAs) from leveraged investments or active business operations. May create unexpected tax liability even in qualified retirement accounts.

Value Add
Invests in assets or businesses that require meaningful improvement, operational changes, or growth initiatives to reach their full potential. Returns are driven by increasing cash flow and asset value, and the strategy typically involves moderate-to-higher risk and return.

Value Creation Plan
The GP’s roadmap for increasing a company’s value.

Venture Capital (VC)
Minority investments in young companies with unproven models.

Yield-to-Maturity (YTM)
The total expected return if a loan is held to maturity.