Debt yield: the CMBS sizing test that ignores the interest rate
By Brad Beattie, Director, Capital Markets, Janover Capital LLC · Published
Debt yield is a property's net operating income divided by the loan amount. A $20 million loan on $2 million of NOI has a 10% debt yield. On 750 CMBS whole loans originated between October 19, 2025 and October 19, 2026 (co-op housing aside), the median underwritten debt yield was 10.1%, according to the loans' SEC filings.
The debt yield formula
Debt yield = net operating income ÷ loan amount
It is the return the lender would earn on its money if it owned the property outright at the loan amount. Nothing else enters the calculation: not the interest rate, not the amortization schedule, not an appraiser's cap rate. That is the point. A loan sized on debt yield cannot grow just because rates fell or because a valuation came in high.
CMBS prospectuses report two versions. In the BANK5 2025-5YR14 prospectus, "U/W NCF Debt Yield" is underwritten net cash flow divided by the loan's cut-off date balance, and the NOI version uses underwritten net operating income before reserves for capital expenditures, tenant improvements and leasing commissions. For a loan split into pari passu notes, the balance is all the senior notes together, without any subordinate note. The figures on this page are the NOI version.
From debt yield to loan amount
Turn the formula around and the floor sets the largest loan: maximum loan = NOI ÷ debt yield floor. With $2,000,000 of NOI:
| Debt yield floor (illustrative) | Maximum loan |
|---|---|
| 8% | $25,000,000 |
| 9% | $22,222,222 |
| 10% | $20,000,000 |
| 11% | $18,181,818 |
| 12% | $16,666,667 |
Every point of debt yield on this property is worth roughly two million dollars of proceeds, and more at the low end. The floors above are round numbers for the arithmetic, not any lender's terms; each lender sets its own by property type and market, and the CMBS bond market moves them. The lender then also checks the debt service coverage ratio and loan-to-value, and lends the lowest of the three. The CMBS loan calculator runs all three on your figures.
Debt yield, cap rate and loan-to-value
When a property's value is its NOI divided by a cap rate, the three ratios are tied together: debt yield = cap rate ÷ loan-to-value. A 6.5% cap rate at 65% LTV is a 10.0% debt yield. The lower the cap rate, the sooner a debt yield floor binds before the LTV limit does, so in a market of rich valuations the debt yield test usually sets the loan. For a full-term interest-only loan, debt yield also connects to coverage: net cash flow debt yield divided by the interest rate equals the DSCR.
Debt yield on recent CMBS loans, by property type
Underwritten NOI debt yield at securitization from each loan's SEC asset-level filing (Form ABS-EE), loans originated between October 19, 2025 and October 19, 2026, whole loans only. Bars show the middle half of loans with the median marked.
| Property type | Whole loans | 25th pct. | Median | 75th pct. |
|---|---|---|---|---|
| Multifamily | 257 | 8.2% | 8.8% | 9.8% |
| Mobile home park | 70 | 8.6% | 9.4% | 10.3% |
| Self-storage | 88 | 9.2% | 9.7% | 10.7% |
| Mixed use | 52 | 8.3% | 10.0% | 11.6% |
| Industrial | 40 | 9.9% | 10.9% | 11.8% |
| Retail | 107 | 10.2% | 11.3% | 12.6% |
| Office | 55 | 12.6% | 13.5% | 15.6% |
| Hotel | 71 | 13.9% | 15.0% | 16.3% |
| Co-op housing | 89 | 34.2% | 52.6% | 67.1% |
| All types except co-op | 750 | 8.8% | 10.1% | 12.4% |
The spread across property types is the market's view of risk in one column: multifamily loans closed at the lowest median debt yield (8.8%) and hotel loans at the highest (15.0%), leaving co-ops aside. Steadier income earns a lower floor; income that can reset quickly, like a hotel's, needs more cushion. For a single deal, the BANK5 2025-5YR14 pool ranged from 7.8% to 16.8% with a weighted average of 11.6% (prospectus, "Mortgage Pool Characteristics"). More: CMBS by property type, CMBS statistics.
Where debt yield shows up after closing
- Cash management. Many CMBS loan agreements spring a cash trap when debt yield or DSCR falls below a level set in the agreement.
- Partial releases. Loans on several properties often let one be released only if the remaining collateral passes LTV, DSCR or debt yield tests; several BANK5 2025-5YR14 loans are written that way. See partial release.
- Refinancing at maturity. The takeout lender will size on debt yield again. If NOI has not grown, an interest-only loan needs the same debt yield to refinance at par. Test it with the CMBS refinance calculator, and see when a CMBS loan is maturing and the maturity wall.
- Assumptions. A buyer assuming your loan is underwritten too; see CMBS loan assumption.
Sources: BANK5 2025-5YR14 prospectus (424B2, filed 2025-04-02), definitions of Underwritten NCF Debt Yield and Underwritten NOI, "Mortgage Pool Characteristics"; SEC Form ABS-EE asset-level filings via cmbs.news. How the medians are computed.
Questions people ask
What is a good debt yield for a CMBS loan?
Lenders set their own floors by property type and market, and they move with the bond market. For reference, the median underwritten NOI debt yield on CMBS loans originated between October 19, 2025 and October 19, 2026 was 10.1%, with the middle half between 8.8% and 12.4%.
How do I work out the maximum loan from a debt yield?
Divide the net operating income by the debt yield floor. $2,000,000 of NOI at a 10% floor supports a $20,000,000 loan; at 11% it supports about $18,180,000. The lender will also check DSCR and loan-to-value and lend the lowest of the three.
Is debt yield calculated on NOI or net cash flow?
Both appear. CMBS prospectuses report an underwritten NOI debt yield and an underwritten net cash flow debt yield; the NCF figure is lower because it deducts reserves for capital expenditures, tenant improvements and leasing commissions. Ask which one a term sheet uses.
How is debt yield related to the cap rate?
If the property is valued at NOI divided by a cap rate, debt yield equals the cap rate divided by the loan-to-value ratio. A 6.5% cap rate at 65% LTV is a 10% debt yield.
What will your NOI support?
Janover Capital LLC sizes CMBS loans against bank and life company quotes. Send the property and the numbers.