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UK Commercial Property Debt Yield Calculator
Calculate debt yield from Net Operating Income (NOI) and loan amount. Evaluate maximum commercial mortgage proceeds against UK clearing bank and debt fund hurdles.
Last updated:
Workflow
How it works
Follow the underwriting path lenders use: input the deal, apply constraints, then read the result.
Step 1
1. Enter net property income
Input annual net operating income after deducting non-recoverable service charges and sinking fund reserves.
UK Debt Yield Formula
In UK commercial finance, debt yield measures the annual net rental return relative to the debt balance, independent of Sonia benchmark rate fluctuations.
Read the calculation methodology and limitations.
Debt Yield (%) = (Annual Net Rental Income / Loan Facility Balance) x 100
Maximum Supported Loan = Net Rental Income / Minimum Debt Yield FloorExample
A London logistics facility with £1,000,000 net income and a £10,000,000 loan facility has a debt yield of exactly 10.00%.
⚡ UNDERWRITING BENCHMARKS
See This Calculator in Action
Explore institutional underwriting examples. Load any scenario into the live calculator with one click to customize rates, amortization, and property valuation.
Prime office facility
London Midtown Office
Net Operating Income (NOI)
£1,200,000Annual in-place net cash flow
Requested Senior Debt
£12,000,000Proposed loan financing balance
SIZING OUTCOMEUnderwriting Benchmark
10.00% Debt Yield
Calculated In-Place Debt YieldUnderwriting Math Formula
NOI ÷ Loan Amount = Debt YieldStep: £1,200,000 ÷ £12,000,000 = 10.00%
💡
Institutional Takeaway
Right at a 10% hurdle, so any NOI shortfall at refinance would force a smaller facility.
Worked examples
| Scenario | Calculation | Result |
|---|---|---|
| London Midtown Office | £1,200,000 NOI / £12,000,000 Loan | 10.00% Debt Yield |
| Regional Distribution Hub | £850,000 NOI / 9.25% Hurdle | £9,189,189 Max Facility |
Conversion reference
| Property Sector | Typical Min Debt Yield | Typical Max LTV |
|---|---|---|
| Build to Rent (BTR) / Residential | 7.50% – 8.50% | 65% – 70% |
| Prime Logistics / Industrial | 8.25% – 9.50% | 60% – 65% |
| Foodstore-Anchored Retail | 8.75% – 10.00% | 55% – 60% |
| Regional Commercial Office | 10.00% – 12.00%+ | 50% – 55% |
Quick facts
- Debt yield remains stable when Sterling Sonia rates move up or down.
- UK clearing banks evaluate Debt Yield alongside Interest Cover Ratio (ICR).
UK Commercial Debt Advisory Team
CRE Underwriting & Prudential Regulation Reviewers
- Prudential Regulation Authority (PRA) Supervisory Statement SS9/17 compliance reviews
- Commercial mortgage debt yield & Interest Cover Ratio (ICR) quantitative structuring
Our technical team reviews commercial property lending models across London, the South East, and UK regional corridors, aligning calculations with Bank of England and RICS valuation standards.
Methodology: formulas are calculated from borrower-entered inputs using standard CRE underwriting relationships for NOI, debt yield, DSCR, LTV, cap rate, loan constant, and maximum loan proceeds.
Reviewer note: pages are reviewed for formula accuracy and updated when lender benchmarks or site methodology changes.
Disclaimer: results are educational estimates only and are not financial, legal, tax, valuation, or lending advice.
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Frequently asked questions
Because ICR reflects interest rate sensitivity, whereas debt yield provides a pure measure of unlevered cash-flow cover relative to the outstanding facility balance.