Debt Yield Requirement Sample Clauses
A Debt Yield Requirement clause sets a minimum ratio of a property's net operating income to its loan amount, ensuring the property's income is sufficient relative to its debt. In practice, lenders use this metric to assess the risk of a loan by requiring that the property's income divided by the outstanding loan balance meets or exceeds a specified percentage, such as 10%. This clause helps protect lenders by providing an objective measure of the property's ability to generate enough income to cover its debt, thereby reducing the risk of default.
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Debt Yield Requirement. Commencing on the date hereof and continuing thereafter until the Loan is fully repaid, Borrower shall maintain a debt yield of at least seven and one-half percent (7.5%) (the “Debt Yield Requirement”) tested quarterly, based upon the net operating income (to include projected, contracted rental payments from executed Approved Leases (hereinafter defined) pursuant to which the applicable tenant commences paying full rent during the calculation period, but excluding Lease Termination Fees (i.e., any termination fees payable by any tenants pursuant to a termination right contained in a tenant’s lease) and rents from tenants which have exercised a lease termination right) of the Borrower divided by the then outstanding indebtedness under the Loan times 100. The net operating income will be calculated by the Lender based upon annualized financial statements covering the prior six (6) consecutive months of operations, which shall be delivered to the Lender monthly within 20 days following the close of the prior month’s accounting period. If the Debt Yield Requirement for the Property is not satisfied as of the last day of any six-month period, Borrower shall execute and deliver the Account Assignment to Lender within five (5) days after written notice to Borrower in substantially the form attached hereto as Exhibit C (the “Debt Yield Escrow Notice”) and shall deposit, or shall cause its property manager to deposit on the last business day of each calendar month thereafter, all Excess Revenues (hereinafter defined) from the Property into the Control Account and shall submit to Lender a budget setting forth in reasonable detail budgeted monthly operating income and monthly operating and capital expenses for the Property, which budget shall be subject to the Lender’s approval in its reasonable discretion (the “Operating Budget”). If the Debt Yield Requirement is thereafter satisfied for three (3) consecutive calendar months, provided that no default then exists, nor any event or omission which with the giving of notice or passage of time would constitute a default,
Debt Yield Requirement. Maintain a Debt Yield Calculation of not less ---------------------- than 0.13 at all times.