Key Terms
Debt Coverage Ratio
DCR = Net Operating Income ÷ Debt Service
Debt Coverage Ratio (DCR) shows how many times the Net Operating Income can cover the property's debt obligations.
A DCR above 1.0 means the property generates enough income to cover its debt payments. Most lenders require a minimum DCR of 1.20–1.25, meaning the property earns at least 20–25% more than what is owed. Nile Equity Group stress tests DCR across multiple economic scenarios during due diligence to ensure each acquisition can service its debt even during periods of reduced occupancy or revenue.