An increase in leverage or a significant delay in the deleveraging timetable would be likely to result in a downgrade, as would any pronounced slippage in the senior debt service coverage ratio
to below 1.7x.
In East Harlem, a 36-building portfolio bought by the Pinnacle Group saw its debt service coverage ratio
on its $204 million loan fall to .35 at the end of September, a 12.5 percent decline from year end 2007.
The Freddie Mac Small Balance Loan Terms include: Properties with at least five units; Partial or full term interest only available; Up to 80% LTV in certain markets; 1:25x debt service coverage ratio
minimum in many markets, and 1:20x in top markets; 60-120 day rate lock available; Hybrid ARM or fixed-rate mortgage loan; competitive rates.
If you have a typical debt on your community of about 75 percent of its total value, you are likely to observe a debt service coverage ratio
of approximately 1.25 to 1.30 (to determine this figure, divide your net operating income by your annual debt payment).
However, the project has generally fallen short of Fitch base case expectations, with a historical debt service coverage ratio
(DSCR) profile which has ranged from 1.26x to 1.41x and averaged 1.33x during 2013-2017.
The loan was structured at a 10-year fixed rate with six years of interest-only, followed by a 30-year amortization schedule and a 1.25x debt service coverage ratio
(ACOMM), ASMOG's parent, whereby ACOMM contributes to ASMOG an amount of cash or defers its management fees in an amount that is necessary to enable ASMOG to comply with both its debt service coverage ratio
covenant of 1.2x and its liquidity covenant of 110 days cash on hand set forth in the Master Trust Indenture.
Fewer 2013 loans had a low stressed debt service coverage ratio
or a high stressed loan-to-value ratio compared to the earlier periods."
Finally, the credit facility is secured by substantially all HickoryTech assets, with financial covenants that require it to maintain a leverage ratio of less than 3.5 to 1.0, with gradual declines in this ratio after 2014 and a debt service coverage ratio
of greater than 2.5 to 1.0.
A prerequisite for a positive rating action would be an increase in Plock's operating performance to above 12% and if it stabilises at that level, a sound debt service coverage ratio
, and/or a decline in the risk resulting from the lack of diversification in the local tax-base.
The loan is classified as a Tier 4; to qualify for Tier 4, a loan must have a 55% LTV and 1.55x debt service coverage ratio
. The refinancing of 165 West 91st Street easily meets those terms.
The rating agency noted that since its issuance in September 2003, "the transaction has experienced a collateral reduction of approximately 10% and the weighted-average debt service coverage ratio
, as of the September 2010 cut-off, was 1.90x."