Real Estate Glossary P [Part 7]


Continued from…

:point_right: Real Estate Glossary P [Part 6]

100% PSA

The typical mortgage repayment arrangement. The monthly prepayment rate is estimated to be 0.2% per annum in the first month after issuance and to climb by 20 basis points per year per month for the next 28 months in this scenario. The monthly prepayment rate is anticipated to level out at 6% per annum beginning in the 30th month following issuance and to remain at that level for the life of the mortgage pool to which the scenario is applied.

200% PSA

A mortgage prepayment scenario in which prepayments are assumed to be made twice as quickly as in the benchmark mortgage prepayment scenario. The monthly prepayment rate is expected to be 0.4% per year in the first month after issuance and to climb by 40 basis points per year each month for the next 28 months in the 200% PSA scenario. The monthly prepayment rate is anticipated to level out at 12% per year beginning in the 30th month following issuance and to remain at that level for the life of the mortgage pool to which the scenario is applied.

Passing rent

The current rent due under the provisions of a lease or tenancy agreement.

PAUG template

ISDA’s 2005 template for Credit Derivative Transaction on Mortgage-Backed Securities with Pay-As-You-Go or Physical Settlement, as revised. To address trading of ABCDS in North American markets, the PAUG Template adopts the Credit Derivatives Definitions. By the invention of so-called pay-as-you-go settlement of variable amount events, this template solves the settlement and credit concerns associated with CDS referencing MBS and certain forms of ABS more specifically than the CPS Template.


Property Finance Made Easy

We specialise in Development funding | Commercial finance | Construction loans | Portfolio refinancing & Property investment loans in Australia.


Click Here to strategise with Amber

Pay rate

The interest rate paid on a mortgage on a regular basis. The accrual rate may differ.

Paying agent

A bank with a worldwide reputation that is in charge of making payments on commercial mortgage loans. Payment is typically made through a clearing system (in Europe usually through Euroclear or Clearstream International). In Europe, this job is sometimes handled by a third party linked with the trustee or administrator; in the United States, the trustee is normally responsible for making payments to investors.

Payment history

A record of the payments made by a borrower.

Payout event

An early amortisation occurrence.


A generic word for the procedure that must be followed in order for a charge holder’s Security to have the intended precedence above the chargor’s other creditors.

Performing loan

A mortgage loan or other debt for which the borrower has made all interest and principal payments on time.


A debt instrument issued by some German mortgage banks and financial organisations. Pfandbriefe are classified into two types: Hypothekenpfandbriefe, which banks use to fund their lending activities, and “Offentliche Pfandbriefe,” which they use to fund their loans to public sector firms.

Phase rent

Rental payments are made without regard for any lease concessions (for example rent free periods).

Pik or pik-able

In-kind payment. CDO Bonds (usually Mezzanine Pieces) that allow the interest to be put off if the issuer doesn’t have enough money from the underlying portfolio of assets to pay the interest on time and in full.

Pledge (US)

A security interest in the Debtor’s or a third party’s property that includes the Creditor’s power to enforce it through a public sale in the event of the Debtor’s default. The authority of the Creditor to levy on pledged property takes precedence over the rights of successive pledge Creditors and unsecured Creditors. While a pledge is a sort of possessory security in which the Creditor has possession of the pledged property, ownership to the pledged property is not transferred to the Creditor.


To repair or cure any securitisation structure leakage.

Pool factor

The amount of the original principal balance of a group of assets that is still owed as of a certain date.

Pooling and servicing agreement

A contract that describes a transaction in which a set number of financial assets are brought together and shows how the cash flows those assets will generate in the future will be split between the parties to the contract. This also tells you what the master servicer and the special servicer are responsible for when it comes to managing a CMBS.


The mix or spread of investments or other assets that an investor, fund, or issuer owns.


A legally binding agreement to rent something out at a future date, when a development that is planned or being built at the time of the agreement is done.

Prepayment interest shortfall

The difference between the interest on the mortgages and the interest on the prepayment. This usually happens when the interest on the prepayment is less than the interest on the mortgages. This shortfall could be given to certain classes of notes, which would be bad for those classes.

Prepayment rate

The rate at which mortgage loans (or other receivables in separate pools) are reported to have been paid off, given as a percentage of the remaining principal balance of the pool. Most of the time, prepayment rates change with the market interest rate.

Prescribed part

The fund that section 176A of the Insolvency Act of 1986 says must be set aside from the net sales of property with a floating charge and given to unsecured creditors. The Enterprise Act of 2002 put in place the required part.


The process of determining the coupon and price of securities before they are issued. Any financial instrument’s pricing should be equal to the present value of the cost flow that it is expected to generate. Because of the effect of prepayment on the timing of cash flows in a securitisation structure, the pricing process creates expected-case cash flows using a prepayment scenario.


:rotating_light: You are missing out if you haven’t yet subscribed to our YouTube channel.

Prime property

A real estate investment that is thought to be the best in its class and area.

Principal only notes

There are types of Notes that can only get their principal back and not their interest.

Principal proceeds

Collections from underlying debt instruments, whether scheduled or unscheduled, consisting of principal payments.

Priority of distributions

Provisions that govern how, when, and to whom available monies are dispersed.

Priority of payments

The terms of a Securitisation (or any other transaction involving structural subordination) that govern how, when, and to whom available funds are delivered. In general, available funds will be dispersed to each class of Securities based on their seniority. Once the most senior class of securities’ interest and principle are paid, the next most senior class of securities’ interest and principal will be paid, and so on. Also referred to as the Waterfall.

Private equity

Money put into businesses that aren’t on any stock exchange.

Private equity real estate funds

Pooled investment vehicles are made so that many investors can invest in a series of real estate projects as a group to reach certain economic goals while staying within their own risk tolerances.

Private label securitisation

MBS and CMBS Securitizations that are privately backed and use investment bank and commercial bank lending conduits.

Probability of default

How likely it is that a borrower will not pay back the loan given a set of economic conditions.

Procédure de sauvegarde

The French way of keeping people safe is similar to what the U.S. does.

Professional indemnity insurance

Insurance that a person who gives professional services buys to protect themselves from claims made by the person who gets the services that they lost money because of the person giving the services.

Profit share

A part of a loan or investment that lets the lender or investor get an equity-based return on top of the normal rates if something happens. Most of the time, this means that a lender or investor gets a bigger share of the money from the sale or refinancing than they should.

Profit stripping

The procedure by which a firm that has sold its assets in a securitisation continues to extract value from those assets by syphoning off the securitisation vehicle’s income. As a result, the corporation keeps the economic benefits of ownership of the securitised assets.

Prohibited business activities

In an Islamic finance context, the operation of a business whose core activities (a) include the manufacture or distribution of alcoholic beverages or pork products for human consumption (or, in some cases, firearms); (b) have a significant involvement in gaming, brokerage, interest-based banking, or impermissible insurance; (c) accumulate certain types of entertainment elements (particularly pornography); or (d) have impermissible amounts of interest-based indebtedness or interest income. Actions (a) through (c) are forbidden under Sharia’a.

Property authorised investment fund

An AIF that primarily invests in real estate.

Property derivative

A derivative whose price and value are based on a commercial or residential property index that has been made public. A property derivative gives you the chance to bet on or hedge the value of a property for a certain amount of time.

Property income distribution (PID)

UK REITs pay dividends out of the money they make from their Property Investment Business.

Property industry alliance (PIA)

The British Property Federation (BPF), the British Council for Offices (BCO), the Investment Property Forum (IPF), and the Royal Institution of Chartered Surveyors (RICS) are four UK property trade groups that work together on issues that affect all of them.

Property investment certificate (PIC)

A British public debt security that represents a stake in a special-purpose vehicle that owns real estate and is traded on the stock market. The value of PIC coupons and how much you can get back for them depend on how well a real estate index does, like one put out by the IPD.

Property linked notes (PLN)

A debt security that gives a return based on how well property does. A PLN can be set up so that the person who owns it has control rights over the property it is backed by. Real estate owners have given out PLNs in order to get rid of the income, expenses, and responsibilities that come with owning property. For the length of the PLN, the person who owns the PLN is essentially the property owner.

Property protection advance

A way for the servicer or special servicer to pay for things like insurance premiums that are needed to protect the property that is used as collateral for the loan. If the borrower doesn’t make a property protection payment, the servicer or special servicer can require that a property protection advance be made, either by the borrower using a liquidity facility or by the servicer or special servicer making the payment out of their own money and getting paid back by the issuer.

Property protection payment

A payment that the borrower must make on the property that is being used as collateral, such as insurance, property taxes, or rent due on a headlease.

Prospectus directive

Directive 2003/71/EC of the European Communities. The Prospectus Directive specifies the disclosure requirements for issuers of securities who wish to offer them to the public or admit them to trading on any regulated market in the EU. The European Commission announced a new amending regulation to simplify and improve the application of the Prospectus Directive, which went into effect across the EU on July 1, 2012.

Purchase event of default

A right granted to subordinated lenders to purchase the senior portion of a defaulted debt.


Refers to space in a building that has been rented out before work begins or before a Certificate of Occupancy is issued.