Net lease glossary
Debt Yield
Net operating income divided by the loan amount, showing the lender's return if it had to take the property.
Debt yield is NOI divided by the loan amount, expressed as a percentage. Unlike DSCR, it ignores interest rate and amortization, and unlike LTV, it does not rely on an appraised value. A lender requiring a 9% debt yield on a property with $90,000 of NOI would lend no more than $1,000,000. Debt yield is common in conduit and balance sheet lending as a check on leverage.