What is Debt Yield?
The ratio of a property's net operating income to the total loan amount, expressed as a percentage.
Formula
Debt Yield = NOI ÷ Loan Amount
Typical range
Many CMBS and institutional lenders use a 10% minimum debt yield threshold
Debt Yield in commercial lending practice
Debt yield is a leverage-neutral measure of loan risk that is independent of interest rate or amortization assumptions. A higher debt yield indicates lower risk because the property generates a larger NOI cushion relative to the outstanding loan. Debt yield is particularly useful for refinancing analysis: even if rates change or amortization terms shift, debt yield reflects the underlying property cash flow against the principal balance.
Related terms
Related concepts in commercial underwriting
NOI (Net Operating Income)
Total property revenue minus operating expenses, excluding debt service, capital expenditures, depreciation, and income taxes.
Read definitionDSCR (Debt Service Coverage Ratio)
The ratio of net operating income (or available cash flow) to total annual debt service, including principal and interest payments.
Read definitionCap Rate (Capitalization Rate)
The ratio of a property's net operating income (NOI) to its current market value or purchase price, expressed as a percentage.
Read definitionLTV (Loan-to-Value Ratio)
The ratio of the loan amount to the appraised value of the collateral property.
Read definitionSee it in Aloan
How Debt Yield shows up in AI underwriting
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