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You didnt provide enough information to answer the question lol. Divide the relevant NOI by 1.15x then the loan amount and you'll get the max rate they want.
thank you; in round numbers-the NOI is $70,000,000 per annum. For the loan amount, I assume I should be using the remaining loan amount today?
In that case, the loan amount would be $675,000,000.
(((NOI/DSCR)/Loan Amount)*360/365) - Spread
You calculate the DS required to get to a 1.15x based on your in place NOI, then subtract the spread from said %. This would be the SOFR/Index rate you need to be at to reach a 1.15x.
To calculate that DS, you do in-place NOI\1.15. Then goal seek (principal balance * (x-1%)) = DS you just solved for.
Let me know if this helped!
Thank you very helpful. Just to confirm-the loan amount used in that case is the remaining principal at the time the hedge has to be purchased or the original loan amount. I'd assume it's the remaining principal loan amount at time of hedge but please let me know if some shops do this differently
Yep it’s whatever the current balance is at the time. I’ve seen lenders require caps on the fully funded amounts if there are holdbacks, but usually it’s just based on the current notional.
thank you!! can you explain the goal seek part (not the formula). After calculating the minimum NOI needed to be at 1.15x DSCR, what inputs am I using in goal seek?
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