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Lender Yield article

How is the Lender Yield calculated for commercial real estate investments and developments? What are the factors that the Lender Yield takes into consideration when shown in a proforma income statement, and what is ignored? Why is the Lender Yield useful for investment real estate? These are the questions that are explored using the Proforma Example in this article.

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Video Title: Learn about the Lender Yield

Video Publication_Date: Monday, October 23, 2023

Video Duration: 2:46

Video Description:
The topic for this commercial real estate investment analysis video is Lender Yield. Throughout the video planEASe Software is used to illustrate Lender Yield. The video does not use the current Proforma Example, but all the factors that the Lender Yield are sensitive to are covered.

How is the Lender Yield calculated?
The Rate of Return (IRR or MIRR, depending on the Model being used) on the Total Debt Service for the property or investment. It is computed by reversing the sign of the Debt Service (to look at it from the Lender's perspective, where the draw is an outflow and the debt service and repay are inflows) and computing returns as normal on these reversed cash flows.

Written by
Michael Feakins, CCIM
of planEASe Software