Debt yield
Asset-Backed Securities glossary · Collateral & Cash Flow Modeling
Definition
NOI divided by loan amount; CMBS underwriting metric.
Debt yield in plain English
Debt yield is a quick, no-nonsense way to judge how risky a property loan is by asking: if the lender had to seize this building tomorrow, how fast would its income pay back the loan? You take the building's yearly income after expenses (NOI) and divide it by the loan amount, so a $1,000,000 loan on a property earning $100,000 a year has a debt yield of 10%. A higher number means the lender is more protected, because the property throws off more cash relative to the debt. Unlike other metrics, it ignores interest rates and property value guesses — it's a stripped-down reality check on the income versus the loan.
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