Finance
A Kentucky commercial mortgage for a property with a cap rate of 6.5% and a DCR requirement of 1.25 means the NOI must be at least:
AEqual to the annual debt service
B125% of the annual debt service✓ Correct
C6.5% of the property value
D125% of the cap rate
Explanation
DCR = NOI ÷ Annual Debt Service. A DCR of 1.25 means NOI must be at least 125% of the annual debt service, providing a buffer for the lender.
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