DEBT GUIDE
What Is Debt Yield?
Debt yield is annual NOI divided by outstanding loan balance and gives lenders a rate-independent view of collateral cash flow.
In this guideWhat the analysis measuresCalculation frameworkUnderwriting reviewHow to use the result
What the analysis measures
Use sustainable NOI before interest and loan principal. The denominator is the relevant loan balance, not property value or equity.
Calculation framework
A €900k NOI on a €10m loan produces 9% debt yield. If NOI falls or debt increases, debt yield declines directly.
Underwriting review
Match the lender’s NOI definition, including vacancy, management fees and reserves. Forward, trailing and underwritten NOI may differ materially.
How to use the result
Use debt yield with LTV and DSCR. It does not show payment burden, interest-rate risk or amortization, but it is useful for comparing leverage across loans.