What is Debt Yield and Why Do Banks Care?

The Banker’s Perspective

Unlike LTV (Loan to Value), Debt Yield is independent of interest rates and market caps. It tells the lender how much of the loan would be covered by the property's income if they had to take it over today.

Formula: $$\text{Debt Yield} = \frac{\text{Net Operating Income (NOI)}}{\text{Total Loan Amount}} \times 100$$