Finance
What is 'debt yield' and how is it used as an underwriting metric for Hawaii commercial loans?
AA. The interest rate charged by the lender on commercial loans in Hawaii
BB. A lender underwriting metric: NOI divided by the loan amount; reflects the lender's annual return if they foreclosed and operated the property; more stable than DSCR across interest rate environments✓ Correct
CC. The return on investment for debt funds investing in Hawaii commercial real estate
DD. The yield on Hawaii state bonds used as a benchmark for commercial loan rates
Explanation
Debt yield = NOI / Loan Amount. For example, if NOI is $300,000 and the loan is $4,000,000, the debt yield is 7.
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