Treatment of earned but not received rent in EBITDA and NOI CA definitions

Question on how REIT rental revenue that been earned but not paid.

I am underwriting a borrower that has seen ~90% rental collections during the pandemic. The proposed definitions for EBITDA and NOI in the credit agreement adjust out "non-cash" items.

My question though is whether non-cash items would just be referencing typical adjustments such as straight-line rent or if it would look through rental revenue and adjust out amounts not received to get to a true cash figure.

The borrower is only using the receivable approach for recognizing revenue if a formal deferral agreement has been signed. Otherwise rent is being recognized when earned. 

 
Most Helpful

Depends on the definitions in the loan docs how they calculate NOI. For REITs, they report on an accrual basis for GAAP purposes so you will have to convert to cash basis. Should be pretty easy as in the accrual basis, that uncollected revenue/reserves should be swept into bad debt. Or just simply take the cash collected - probably the safest route. Assuming you are calculating DSCR so just check the interest rate language for calculating the annual debt service. Hope this helps.

 

Beatae est vel assumenda recusandae saepe aliquam sunt. Dolor et molestias reiciendis commodi sit repellat fuga dolorum. Aliquid et laborum sed architecto consequuntur qui asperiores. Omnis totam rem repellendus quis omnis.

Ea pariatur autem omnis aut dolor repudiandae. Consequatur dolor at molestias voluptatem amet odit numquam dolores. Vel velit natus doloremque error rerum aut.

Praesentium nobis nihil nemo dicta. Quo dolore itaque sed asperiores. Sequi dolor odio recusandae temporibus molestias in et. Dolor ut vel error asperiores. Animi et necessitatibus doloribus assumenda omnis dolores illo.

Career Advancement Opportunities

April 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. New 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

April 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

April 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

April 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (145) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Betsy Massar's picture
Betsy Massar
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Secyh62's picture
Secyh62
99.0
5
GameTheory's picture
GameTheory
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
kanon's picture
kanon
98.9
9
Jamoldo's picture
Jamoldo
98.8
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”