Debt Yield

Category: finance

A risk metric calculated by dividing a property’s Net Operating Income (NOI) by the total loan amount, expressed as a percentage.

Unlike the DSCR, debt yield ignores interest rates and amortization schedules entirely, focusing strictly on cash-flow power relative to the leverage size. If a property has an NOI of $100,000 and the loan is $1,000,000, the debt yield is 10%. Lenders like this because it doesn't shift with market tricks.

Common Examples

• Our investment criteria requires a minimum debt yield of 9% before we will consider underwriting an office building asset.
• The debt yield remained stable despite shifting interest rates, proving the underlying cash generation power of the facility.