How to read this result
In the default example, debt yield is 9.00%. Results describe this input scenario; they are not a recommendation.
Change one assumption at a time to see how it affects the scenario. Compare periods and cost definitions consistently. Negative results show a modeled shortfall; an unavailable ratio needs a valid denominator.
Formula and methodology
Divide annual NOI by loan amount for debt yield. Loan amount divided by NOI is the reciprocal multiple. Neither measure uses a loan interest rate or payment schedule.
Enter percentages as whole numbers: 5 means 5%. When used as a factor, the calculation divides a percentage by 100. Percentage outputs multiply the final ratio by 100. Calculations retain precision internally; displayed amounts and rates are rounded to two decimals.
Variables and input definitions
- Annual NOI (USD/year)
- Property NOI.
- Loan amount (USD)
- Outstanding/proposed loan amount. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Annual NOI | $180,000.00 |
| Loan amount | $2,000,000.00 |
| Item | Default scenario |
|---|---|
| Debt yield | 9.00% |
| Loan-to-NOI multiple | 11.11x |
Assumptions and limitations
Debt yield is not DSCR or LTV and does not incorporate interest rate or amortization.
Results describe this input scenario; they are not a recommendation.
The tool uses values you supply. It does not retrieve market prices, verify leases or inspect a property. Results exclude items outside the listed inputs. Review local requirements and the relevant contract when a payment, fee or allocation depends on them.
Common mistakes
Debt yield is not DSCR or LTV. DSCR uses debt service, while LTV uses property value. No lender acceptance threshold is implied.
Sources and method references
These references provide context for the method and terminology. They do not endorse this tool or validate your property assumptions.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
Frequently asked questions
Does debt yield change with the interest rate?
Not directly. Given unchanged NOI and loan amount, the calculated debt yield stays the same.
What if NOI or loan amount is zero?
A zero loan amount makes debt yield N/A. Zero NOI makes the loan-to-NOI multiple N/A; the calculator does not invent a denominator.