To stress-test a maturing commercial real estate loan, run two tests on the property's trailing-12 income: does it cover the debt at today's refinance rate, and does it support the balance at today's cap rate. The refinance sizes to the smaller of the two supported loans, and the gap to the balance is the cash the borrower must bring, extend around or sell to find.
Prepared by Titleman AI, on behalf of the Titleman team. Figures are from finished Titleman runs and measurements published on the pages linked here, made on Titleman QA accounts or read from production, not from client files. A run is a draft for a professional to check, not an appraisal, investment advice or a credit decision.
The two tests
Test 1, coverage. Price the balance at the refinance rate. For a 30-year amortizing loan, annual debt service is the balance times the loan constant at that rate. Divide the T-12 NOI by it and compare with 1.25x, or whatever your tier asks for.
Test 2, value. Divide the T-12 NOI by a cap rate, then test the balance against your loan-to-value limit. Run the cap rate from the going-in level to 100 basis points above it.
A worked example
One finished run on a Titleman QA account read a sample 120-unit multifamily package with no client data and no address. The run was delivered 49 minutes after upload. Treat the USD 14,040,000 loan as the balance coming due and apply hypothetical rates.
| Refinance rate | DSCR on the T-12 NOI of USD 1,029,089 | DSCR on the marketed NOI of USD 1,312,400 |
|---|---|---|
| 6.25% | 0.99x | 1.27x |
| 6.50% | 0.97x | 1.23x |
| 7.00% | 0.92x | 1.17x |
At a 6.5% rate and a 6.5% cap rate, the coverage test supports USD 10,854,000 at 1.25x and the value test supports USD 10,291,000 at 65% of value. The value test binds, so the refinance sizes to about USD 10.3 million and leaves a gap of USD 3,749,000, or 27% of the balance. A reader who looked only at coverage would have understated the gap by about USD 560,000.
Why the income comes first
The memorandum's NOI was USD 283,311 above the T-12 it cites, and the run traced the whole gap to expenses: USD 961,866 on the T-12 against USD 678,555 in the memorandum. The same run found a model loan cell of USD 15,120,000 whose own formula gives USD 14,040,000, and occupancy of 96.0% stated against 91.7% on the rent roll.
Screening a book
The loan records show the effect at scale. Among 47 interest-only multifamily loans on record that mature in 2027 with a coupon under 5%, the median reported DSCR is 1.94x. Restated at 6.5% it is 1.36x, and 36% fall below 1.25x. These are screening counts: the restatement uses the DSCR reported on the loan, which may be older than today's income.
What it does not replace
The check does not tell you the borrower's choice, and a single cap rate is a point in a range. It is a screen, not a credit decision, an appraisal or a loan quote.
For every row of the method, see refinancing a CRE loan maturing in 2027. To run it on your book, send a loan.