Net operating income, or NOI, is a critical metric in commercial real estate. Not just as a measure of profitability, but as a warning sign of a debt service coverage ratio that will allow a borrower to maintain payments, or not, according to Moody’s year-end NOI index report.
Moody’s looked at key collateral types for commercial mortgage-backed securities (CMBS) loans, including agency, conduit/fusion, large loan, and single asset/single borrower (SASB) deals, where data is more readily available than in many other types of CRE lending. A shift in NOI can positively or negatively affect the debt service coverage ratio (DSCR), depending on the direction of movement and assuming that expense factors are constant to make the analysis easier.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
