Specialized Lending and Structured Credit

Introduction and Context

Specialized lending is the practice of designing credit solutions around the economics, risks, cash flows, assets, contracts, and stakeholders of a particular sector or transaction. Unlike standard corporate lending, where repayment depends primarily on the general balance sheet and cash flows of an established borrower, specialized credit requires the lender to understand the underlying project, asset, transaction structure, or commercial ecosystem.

The central principle is repayment source discipline: a lender must identify the primary source of repayment, test its resilience under adverse conditions, and ensure that legal, financial, operational, and security arrangements support recovery if that source fails. Specialized lending therefore combines credit analysis with contract analysis, financial modelling, industry expertise, collateral evaluation, risk allocation, and continuous monitoring.

This chapter examines project finance, infrastructure lending, commercial real estate, acquisition finance, supply-chain finance, agricultural credit, and syndicated facilities. Each segment requires a different appraisal method. A project-finance lender focuses on ring-fenced cash flows and contractual protections; a real-estate lender focuses on property value and debt-service capacity; a supply-chain financier focuses on trade flows and obligor quality; and a syndicated lender focuses additionally on inter-creditor governance and information-sharing.

Learning Objectives

By the end of this chapter, the learner should be able to:

1. Distinguish specialized lending from conventional corporate lending.
2. Evaluate project and infrastructure finance using cash-flow, contractual, and risk-allocation analysis.
3. Appraise commercial real-estate and acquisition-finance transactions using appropriate leverage and coverage measures.
4. Explain the operation and risks of supply-chain and agricultural finance.
5. Analyse syndicated facilities, lender protections, and inter-creditor arrangements.
6. Construct a segment-appropriate credit decision incorporating structure, covenants, stress testing, governance, and responsible-lending considerations.

1. The Architecture of Specialized Credit

A specialized-credit decision has six connected dimensions:

The lender should distinguish recourse. In full-recourse lending, the lender may claim against the borrower’s general assets. In limited-recourse lending, claims are restricted principally to project assets, pledged shares, contractual rights, and specified support. Non-recourse lending limits claims largely to the financed asset and its cash flows. The terminology must be tested against actual legal documents rather than assumed from transaction labels.

A useful credit hierarchy is:

1. Identify the primary repayment source.
2. Identify secondary repayment sources, including guarantors and collateral.
3. Analyse cash-flow volatility and downside protection.
4. Allocate risks to the parties best able to control them.
5. Verify enforceability, perfection, and priority of security.
6. Design covenants, reserves, monitoring, and remedies.

Core Financial Measures

Debt-service coverage ratio is commonly defined as:

CFADS means cash flow available for debt service during the measurement period; debt service normally includes scheduled principal and interest. Both quantities must cover the same period and use consistent cash-flow definitions. A ratio above 1.00 indicates that cash flow exceeds scheduled debt service, but the acceptable level depends on volatility, tenor, contract strength, and lender policy.

Loan-to-value is:

Debt yield, especially in income-producing real estate, is:

NOI is net operating income before financing costs and income taxes. These measures are not interchangeable: DSCR measures cash-flow coverage, LTV measures collateral leverage, and debt yield relates property income to debt exposure.

2. Project Finance and Infrastructure Lending

2.1 Concept and Structure

Project finance is a financing method in which repayment depends substantially on the future cash flows of a legally distinct project company, often called a special-purpose vehicle (SPV). Sponsors contribute equity and arrange contracts, but lenders generally rely on the project’s assets, accounts, rights, and cash flows rather than the sponsors’ unrestricted balance sheets.

Infrastructure lending applies similar principles to transport, power, water, telecommunications, social infrastructure, and other long-life assets. Projects may be financed through:

• Project finance: repayment from project cash flows, with limited sponsor recourse.
• Corporate finance: repayment from the sponsor’s consolidated cash flows.
• Public-private partnership finance: private financing linked to a public-sector concession or availability-payment contract.
• Asset-based infrastructure lending: repayment supported by a specific operating asset and its revenue.

2.2 Project-Finance Life Cycle

The life cycle normally includes development, construction, commissioning, operations, refinancing, and eventual transfer or decommissioning. Risk is highest during construction because the asset does not yet produce operating cash flow. Lenders therefore examine fixed-price, date-certain engineering, procurement, and construction contracts; performance guarantees; liquidated damages; completion tests; contingency funding; and sponsor support.

During operations, attention shifts to demand, tariffs, operating costs, resource availability, maintenance, technology, regulation, and counterparty credit quality. A project with strong construction protection may still be weak if its operating revenues are volatile or its offtaker is financially fragile.

2.3 Revenue Models and Contract Quality

Common revenue structures include:

• Take-or-pay: the buyer pays for contracted capacity or quantity whether or not it takes delivery, subject to contractual conditions.
• Availability payment: the public or private counterparty pays when the asset meets specified availability and performance standards.
• Merchant exposure: revenues depend on market prices and volumes.
• Regulated tariff: revenue is determined under a regulatory formula.
• Concession revenue: the project earns from users under a concession agreement.

The lender should review price, volume, indexation, termination compensation, change-in-law protection, force majeure, credit support, assignment rights, and dispute resolution. A long-term contract is not automatically a bankable contract; bankability depends on enforceability, pricing adequacy, counterparty strength, and alignment between contract tenor and debt maturity.

2.4 Financial Model and Credit Metrics

Project models should be integrated: sources and uses, construction expenditure, operating assumptions, revenues, taxes, working capital, reserve accounts, debt drawdowns, interest during construction, and distributions. The model must reconcile opening cash plus inflows less outflows to closing cash in each period.

For a project with uneven cash flows, the minimum DSCR is often more informative than the average:

The loan life coverage ratio (LLCR) compares the present value of CFADS over the loan life, often including the relevant debt-service period, with outstanding debt. A simplified form is:

The discount rate must be specified by the lender’s methodology, and the cash-flow horizon must be defined consistently. The project life coverage ratio (PLCR) extends the numerator over the remaining project life rather than only the loan life. These ratios are model-based and sensitive to discount rates, terminal assumptions, and operating forecasts.

Worked Example: Project Debt Capacity

An operating project is expected to generate annual CFADS of $18 million. Scheduled annual debt service is $12 million. The base-case DSCR is therefore:

Suppose a downside case reduces CFADS by 20%, while debt service remains unchanged:

The project remains above 1.00×, but the lender must decide whether 1.20× provides adequate protection given construction, demand, refinancing, and regulatory risks. The calculation assumes that CFADS is correctly defined and that debt service does not change under the scenario.

2.5 Infrastructure-Specific Risks

Important risks include land acquisition, permits, construction delay, cost overrun, geological conditions, technology failure, demand shortfall, tariff intervention, political risk, foreign-exchange mismatch, interest-rate changes, environmental damage, and climate-related disruption. Mitigants may include completion guarantees, reserve accounts, hedging, political-risk insurance, step-in rights, direct agreements, minimum revenue mechanisms, and termination payments.

The Equator Principles, environmental and social impact assessment practices, and national laws may influence due diligence. Environmental compliance is not merely reputational: breaches can cause shutdowns, litigation, fines, loss of permits, and impaired collateral value.

3. Commercial Real-Estate Lending

Commercial real-estate credit is secured by income-producing property such as offices, logistics facilities, hotels, retail centres, and multifamily housing. The appraisal combines property economics with borrower and sponsor analysis.

3.1 Income and Value

Net operating income is generally:

Effective gross income may include rental income, service charges, and other property income after vacancy and collection adjustments. Operating expenses exclude interest, principal repayment, and usually income taxes; definitions must be consistent with valuation and loan documents.

Under a capitalization approach:

The capitalization rate is the market-required yield for comparable property risk and is expressed as a decimal. The formula assumes stabilized NOI, a suitable market capitalization rate, and a property whose income stream can reasonably be capitalized. It is not reliable when income is highly volatile, the property is incomplete, or comparable market evidence is weak.

Worked Example: Real-Estate Leverage

A warehouse produces stabilized NOI of $2.4 million. If the market capitalization rate is 8%, estimated value is:

A proposed loan of $18 million gives:

If annual debt service is $1.6 million, DSCR is 1.50×. A lender should stress both NOI and the capitalization rate. If NOI falls to $2.0 million and the capitalization rate rises to 9%, stressed value is approximately $22.22 million, producing an LTV of about 81.0%. This demonstrates why collateral value can deteriorate rapidly when income and market yields move adversely.

3.2 Appraisal Considerations

The lender should assess tenant concentration, lease expiry, rent review clauses, vacancy, incentives, arrears, anchor tenants, property condition, environmental liabilities, zoning, insurance, location, liquidity, and independent valuation. Hotels require analysis of occupancy, average daily rate, revenue per available room, seasonality, and operator quality. Development finance additionally requires permits, construction budget, contractor capability, presales or pre-leases, cost-to-complete testing, and exit assumptions.

Common protections include interest reserves, debt-service reserves, cash sweeps, minimum DSCR, maximum LTV, leasing covenants, restrictions on additional debt, insurance requirements, and property-maintenance obligations.

4. Acquisition Finance and Leveraged Lending

Acquisition finance funds the purchase of a company, business division, or portfolio. Repayment may depend on the acquired company’s future cash flows and, after closing, on consolidated group cash flows. The lender must analyse both the target as a stand-alone business and the combined entity.

4.1 Sources, Uses, and Capital Structure

A sources-and-uses table should reconcile total funding with total transaction requirements:

The transaction should not close unless total sources equal total uses. Sources may also include rollover equity, seller financing, or preferred instruments, each with distinct priority and governance implications.

Key metrics include leverage, interest coverage, fixed-charge coverage, free-cash-flow conversion, covenant headroom, and pro forma earnings quality. Adjusted EBITDA requires particular scepticism: synergies, cost savings, or one-off adjustments should be supported by evidence and should not be treated as certain cash flows merely because they appear in an acquisition model.

4.2 Due Diligence and Structural Risks

Critical diligence areas include quality of earnings, customer concentration, working-capital seasonality, litigation, tax, pensions, intellectual property, cyber risk, management retention, regulatory approvals, integration costs, and change-of-control provisions. Acquisition finance also creates execution risk: the transaction may fail, close late, lose a key customer, or produce fewer synergies than projected.

Lenders use financial covenants, restricted-payment tests, leverage step-downs, mandatory prepayment from excess cash flow or asset sales, acquisition restrictions, guaranties, share pledges, and information undertakings. Covenant design must balance early warning with operational flexibility; overly tight covenants may encourage defensive behaviour or trigger technical default without economic impairment.

5. Supply-Chain Finance and Receivables-Based Lending

Supply-chain finance supports the movement of goods and payments among buyers, suppliers, logistics providers, and financial institutions. Its strength lies in linking finance to verified commercial transactions rather than relying solely on the supplier’s standalone balance sheet.

5.1 Main Structures

• Receivables purchase or factoring: the financier purchases eligible receivables, with or without recourse.
• Approved-payables finance: a financier pays suppliers early against an approved invoice, while the buyer pays at maturity.
• Inventory finance: funding is secured by controlled inventory and borrowing-base calculations.
• Purchase-order finance: funding supports production against credible purchase orders.
• Trade finance: letters of credit, documentary collections, guarantees, and short-term import or export facilities support cross-border commerce.

The lender must verify existence, eligibility, enforceability, and non-duplication of receivables. Important tests include debtor concentration, dilution, ageing, disputes, returns, credit notes, fraud, assignment restrictions, and collection control. In approved-payables finance, the risk may be closer to the buyer’s credit risk than the supplier’s, but legal analysis must establish whether the arrangement is a loan, receivables purchase, or another form of obligation.

5.2 Borrowing Base

A simplified borrowing base is:

The advance rate reflects dilution, debtor quality, concentration, currency, and collection risk. Reserves may cover ineligible receivables, concentration excesses, taxes, claims, or operational costs. The formula is valid only when eligibility criteria, valuation dates, and reserve definitions are clearly documented.

Technology can improve invoice matching, shipment tracking, and fraud detection, but digitisation does not eliminate legal or counterparty risk. Artificial-intelligence tools should support—not replace—human review of anomalies, data quality, model bias, and explainability.

6. Agricultural Credit

Agricultural lending is affected by biological cycles, weather, commodity prices, land tenure, input costs, perishability, and fragmented borrowers. Appraisal must be based on the production cycle and the actual repayment event, not simply on annual accounting statements.

The lender should assess:

• crop or livestock plan and technical assumptions;
• acreage, yields, input costs, and production history;
• water availability and climate exposure;
• offtake arrangements and storage capacity;
• commodity-price and foreign-exchange risk;
• insurance, government support, and disaster mechanisms;
• borrower experience, household obligations, and land rights;
• aggregation, cooperative, warehouse, or value-chain arrangements.

A seasonal working-capital facility may be repaid after harvest. A repayment schedule that ignores harvest timing can create artificial delinquency. Security may include land, livestock, inventory, warehouse receipts, receivables, equipment, or guarantees, but enforceability and practical liquidation value must be tested.

Responsible agricultural lending requires attention to over-indebtedness, food security, land rights, environmental effects, indigenous communities, and fair treatment of smallholders. Climate stress testing should consider both physical risks, such as drought and flood, and transition risks, such as changing standards or market preferences.

7. Syndicated Facilities

A syndicated facility is a loan provided by multiple lenders under common documentation and coordinated administration. Syndication distributes credit exposure, supports larger transactions, and combines different lender capabilities. Typical roles include lead arranger, bookrunner, facility agent, security agent, and participating lenders.

7.1 Syndication Process

The process generally involves mandate and structuring, lender information memorandum, underwriting or best-efforts arrangement, lender due diligence, commitments, documentation, financial close, drawdown, administration, and secondary transfers. A lender must distinguish an underwritten deal—where the arranger temporarily bears placement risk—from an agency or best-efforts structure.

7.2 Inter-Creditor and Governance Issues

Documents should address voting thresholds, majority-lender decisions, unanimous-consent matters, enforcement control, sharing of recoveries, turnover provisions, permitted transfers, confidentiality, default reporting, and amendments. Facility agents administer mechanics but do not normally assume the credit risk of every lender. Each lender remains responsible for its own credit decision, sanctions screening, legal review, and regulatory obligations.

Security sharing is especially important where senior, mezzanine, revolving, and hedging creditors coexist. An inter-creditor agreement establishes ranking, payment blockage, standstill periods, enforcement rights, and turnover. Ambiguity can delay enforcement and destroy value.

8. Integrated Appraisal Framework

A professional credit paper should combine the following analyses:

1. Transaction rationale: why the financing is required and whether the underlying transaction creates economic value.
2. Repayment analysis: base case, downside case, and timing of cash flows.
3. Counterparty analysis: sponsors, offtakers, tenants, buyers, suppliers, contractors, and guarantors.
4. Structure: tenor, amortisation, grace period, security, reserves, covenants, and cash controls.
5. Legal analysis: ownership, licences, assignment, perfection, priority, insolvency, and enforceability.
6. Risk allocation: whether contracts place each risk with a party able and incentivised to manage it.
7. Stress testing: revenue, cost, delay, interest rate, currency, refinancing, and recovery scenarios.
8. Monitoring plan: information frequency, site visits, model updates, covenant testing, and escalation triggers.

Stress testing should be multi-variable where risks are correlated. For example, a recession may reduce property occupancy, weaken tenant credit, increase capitalization rates, and raise refinancing risk simultaneously. A single-variable sensitivity can materially understate loss potential.

Illustrative Case: Solar Infrastructure with a Corporate Offtaker

Background

This fictional case illustrates an appraisal method. GreenPeak Solar SPV proposes a 100-megawatt solar project under a 20-year power-purchase agreement with an industrial offtaker. Construction cost is $120 million. Sponsors provide $42 million of equity and request $78 million of senior debt. The EPC contractor offers a fixed-price, date-certain contract, subject to defined relief events.

Problem

The lender must determine whether the project can support debt despite construction risk, generation variability, offtaker concentration, and foreign-exchange exposure. The PPA is denominated in local currency, while a portion of equipment cost and proposed debt service is in dollars.

Analysis

The base case forecasts annual CFADS of $13 million and annual debt service of $9 million:

A downside case combines a 15% generation shortfall, a 5% operating-cost increase, and delayed commercial operation. The model estimates CFADS of $10.2 million during the affected period. Assuming debt service remains $9 million:

The project is not automatically acceptable. The lender must test whether the downside is temporary or persistent, whether the PPA provides deemed-energy payments, whether the offtaker can pay, and whether reserve accounts cover the delay. Currency depreciation could reduce dollar-equivalent CFADS further.

Approach and Solution

The proposed structure includes a debt-service reserve sized under the financing documents, sponsor support for specified cost overruns, assignment of the PPA and EPC contract, direct agreements with the offtaker and contractor, performance guarantees, insurance, hedging or natural currency matching, and a cash waterfall. Distributions are blocked if DSCR falls below the distribution threshold. The lender also requires independent engineer certification before completion and periodic technical reporting.

Outcome

The credit committee approves the facility subject to conditions precedent, a lower initial draw until permits and land rights are confirmed, and a covenant requiring minimum projected DSCR of 1.20× under the defined base case. The committee records that the principal unresolved risk is offtaker concentration and requires quarterly counterparty monitoring.

Learning Points

The case demonstrates that headline leverage is insufficient. Bankability depends on contract quality, construction certainty, currency alignment, reserve sufficiency, technical evidence, and enforceability. A 1.44× base-case DSCR is meaningful only when assumptions are transparent and downside resilience is acceptable.

9. Governance, Regulation, and Ethical Practice

Specialized lending can create systemic and social consequences. Governance should include independent credit approval, segregation of origination and approval, conflicts-of-interest controls, valuation independence, sanctions and anti-money-laundering screening, beneficial-ownership verification, and documented exceptions.

Regulatory expectations commonly address capital adequacy, large exposures, connected lending, concentration risk, provisioning, expected credit losses, collateral valuation, liquidity, and stress testing. The exact rules depend on jurisdiction and prudential framework. Internal policy must not be treated as a substitute for applicable law.

Ethical issues include aggressive leverage, opaque fees, mis-selling to smaller borrowers, exclusion of vulnerable agricultural communities, forced displacement, environmental harm, greenwashing, and misuse of confidential transaction data. A lender’s fiduciary or contractual duties vary by legal system, but professional integrity requires accurate representations, fair treatment, and escalation of material concerns.

10. Contemporary Developments and Best Practice

Specialized credit is being reshaped by digital documentation, real-time payment data, satellite and sensor data in agriculture, automated covenant monitoring, tokenised assets, climate-risk analytics, and platform-based supply-chain finance. These tools can reduce processing time and improve monitoring, but they introduce cyber, privacy, model-risk, data-provenance, and third-party concentration risks.

Best practice is to:

• define repayment sources before discussing collateral;
• use independent technical, legal, valuation, and insurance advisers where necessary;
• reconcile financial models to legal documents and operational evidence;
• test correlated downside scenarios;
• avoid unsupported EBITDA or overly optimistic terminal values;
• align currency, tenor, amortisation, and cash-flow timing;
• document security perfection and enforcement assumptions;
• establish early-warning indicators and escalation responsibilities;
• review environmental, social, climate, and conduct risks;
• preserve human accountability when using automated tools.

Chapter Summary

Specialized lending requires segment-specific appraisal rather than a generic borrower score. Project and infrastructure finance depend on ring-fenced cash flows, contractual bankability, construction protection, technical diligence, reserves, and risk allocation. Commercial real-estate lending combines NOI, value, LTV, debt yield, DSCR, leasing risk, and property condition. Acquisition finance requires disciplined sources-and-uses analysis, quality-of-earnings review, leverage assessment, integration analysis, and covenant design. Supply-chain finance depends on verified transactions, receivable eligibility, debtor quality, dilution control, and borrowing-base discipline. Agricultural credit must reflect biological cycles, climate, commodity prices, land rights, and repayment timing. Syndicated facilities add agency, voting, transfer, security-sharing, and inter-creditor complexities. Across all segments, sound decisions integrate cash-flow resilience, legal enforceability, governance, responsible lending, monitoring, and realistic recovery analysis.

Key Terms

Specialized lending: Credit designed around the economics and risks of a particular sector or transaction.

Project finance: Financing repaid substantially from the cash flows of a legally distinct project.

Special-purpose vehicle (SPV): A legally separate entity established to own or operate a project or transaction.

Limited recourse: Lending in which claims against sponsors are restricted to specified support or circumstances.

CFADS: Cash flow available for debt service after defined operating and project cash-flow adjustments.

DSCR: CFADS divided by scheduled debt service.

LLCR: Present value of cash flows over the loan life divided by outstanding debt.

Take-or-pay: A contractual obligation to pay for contracted capacity or quantity, subject to terms.

Availability payment: Payment based on an asset meeting specified performance or availability standards.

Loan-to-value: Loan amount expressed as a percentage of collateral value.

Debt yield: NOI expressed as a percentage of loan amount.

NOI: Property income after operating expenses but before financing costs.

Acquisition finance: Funding used to purchase a company, business, or portfolio.

Borrowing base: Maximum availability calculated from eligible collateral and advance rates.

Supply-chain finance: Financing linked to commercial transactions among buyers, suppliers, and intermediaries.

Syndicated facility: A facility provided by multiple lenders under coordinated documentation.

Inter-creditor agreement: Agreement governing ranking, rights, recoveries, and enforcement among creditors.

Covenant: A contractual promise or financial test imposed on the borrower.

Bankability: The extent to which a project or transaction has sufficient contractual, financial, legal, and operational strength to attract financing.

Review Questions

Short Answer Questions

1. What distinguishes project finance from conventional corporate finance?
2. Define DSCR and explain why its measurement period must be consistent.
3. Why is NOI important in commercial real-estate lending?
4. What is a borrowing base?
5. Identify two functions of an inter-creditor agreement.

Long Answer Questions

1. Explain the principal risks and mitigants across the construction and operating phases of an infrastructure project.
2. Compare the appraisal methods used for commercial real estate and acquisition finance.
3. Discuss how supply-chain finance can reduce supplier liquidity pressure while creating new fraud and concentration risks.
4. Explain the distinctive features of agricultural credit appraisal.
5. Analyse the governance and documentation challenges of a syndicated facility.

Analytical / Application Questions

1. A project has CFADS of $24 million and annual debt service of $16 million. Under a 25% CFADS decline, calculate base and downside DSCR and assess the significance of the result.
2. A property has NOI of $3 million, a capitalization rate of 7.5%, and a proposed loan of $28 million. Calculate estimated value and LTV, then explain two limitations of the valuation.
3. Design a credit structure for an export-oriented agricultural processor exposed to seasonal supply, commodity-price volatility, and foreign-exchange risk. Justify the repayment source, security, covenants, and monitoring plan.

Multiple Choice Questions with Answers

Question 1

Which repayment source is most characteristic of limited-recourse project finance?

A. The project’s contracted and operating cash flows

B. The unsecured personal income of every project employee

C. The lender’s general investment portfolio

D. A fixed government grant in every operating period

Correct Answer: A. The project’s contracted and operating cash flows

Question 2

A project has CFADS of $15 million and debt service of $10 million. What is its DSCR?

A. 0.67×

B. 1.00×

C. 1.50×

D. 2.50×

Correct Answer: C. 1.50×

Question 3

A property has NOI of $2 million and a capitalization rate of 8%. What is its estimated value?

A. $16 million

B. $25 million

C. $80 million

D. $1.6 million

Correct Answer: B. $25 million

Question 4

Which item is normally excluded from NOI?

A. Rental income

B. Vacancy adjustment

C. Routine operating expenses

D. Scheduled loan principal repayment

Correct Answer: D. Scheduled loan principal repayment

Question 5

In a borrowing-base facility, the advance rate is primarily applied to:

A. Eligible collateral

B. The borrower’s stated growth target

C. The lender’s share price

D. Historical tax expense only

Correct Answer: A. Eligible collateral

Question 6

Which feature most directly protects a project lender against construction cost overruns?

A. A fixed-price construction contract with defined sponsor support

B. An increase in discretionary dividends during construction

C. Removal of completion testing

D. Reliance solely on projected terminal value

Correct Answer: A. A fixed-price construction contract with defined sponsor support

Question 7

In acquisition finance, a sources-and-uses schedule should demonstrate that:

A. Uses exceed sources to preserve flexibility

B. Sources equal total transaction uses

C. Equity is always zero

D. Debt is always greater than purchase consideration

Correct Answer: B. Sources equal total transaction uses

Question 8

Why is agricultural repayment scheduling often linked to harvest timing?

A. Agricultural borrowers never incur operating costs

B. Cash inflows are commonly seasonal

C. Commodity prices are legally fixed

D. Land cannot be used as security

Correct Answer: B. Cash inflows are commonly seasonal

Question 9

What is a key function of a facility agent in a syndicated loan?

A. Guaranteeing repayment by all borrowers

B. Administering specified facility mechanics and communications

C. Setting the borrower’s commercial strategy

D. Replacing every participating lender’s credit committee

Correct Answer: B. Administering specified facility mechanics and communications

Question 10

A downside case reduces CFADS from $20 million to $15 million while debt service remains $12 million. What is the downside DSCR?

A. 0.80×

B. 1.25×

C. 1.67×

D. 2.40×

Correct Answer: B. 1.25×