The debt yield is becoming an increasingly important ratio in commercial real estate lending. Traditionally, lenders have used the loan to value ratio and the debt service coverage ratio to underwrite a commercial real estate loan. Now, the debt yield is used by some lenders as an additional underwriting ratio. However, since it’s not widely used …
The Debt Service Coverage Ratio, often abbreviated as “DSCR”, is an important concept in real estate finance and commercial lending. It’s critical when underwriting commercial real estate and business loans as well as tenant financials, and it is a key part in determining the maximum loan amount. In this article, we’ll take a deep dive …
The Modified Internal Rate of Return, often just called the MIRR, is a powerful and frequently used investment performance indicator. Yet, it’s commonly misunderstood by many finance and commercial real estate professionals. In this post, we’ll take a deep dive into the concept of the MIRR. We’ll define the MIRR, look at the logic and intuition …
The Net Present Value (NPV) is one of the most important and widely used concepts in finance and commercial real estate. In this article, you’ll learn: What Is Net Present Value (NPV)? Net Present Value (NPV) is an investment performance measure widely used in finance and commercial real estate. NPV is the difference between the present …
In finance and commercial real estate it’s simply expected that you know how to use a financial calculator. Yet, it’s surprising how many commercial real estate and finance professionals still don’t know how to properly use a financial calculator. Sometimes it’s because they didn’t learn it correctly the first time, and other times it’s because they …
What’s the difference between a recourse vs. non-recourse loan? In commercial real estate both types of loans are common depending on the stage and type of financing. In this article, we’ll take a closer look at recourse and non-recourse commercial real estate loans, as well as the “bad boy guaranty.” What is a Recourse Loan? …
In commercial real estate, a common lease structure is the triple net lease, often abbreviated as “NNN Lease”. Despite its popularity, the triple net lease structure is still commonly misunderstood. In this article, we’ll take a deep dive into the triple net lease and cover: What is a Triple Net Lease (NNN)? What is a …
The operating expense ratio provides a lot of useful insight into a commercial property analysis, but it’s not as widely used as it ought to be. The operating expense ratio is a simple ratio that’s easy to calculate and in this article we’ll take a closer look at how to calculate the operating expense ratio, …
In commercial real estate the tenant estoppel often comes up during the due diligence phase of an acquisition or during the underwriting of a loan. What exactly is a tenant estoppel and how does it work? Let’s dive in and take a closer look at the tenant estoppel. What is a Tenant Estoppel? What exactly is …