# iv. Underwriting & Credit Analysis

Underwriting and credit analysis assess the risks and assumptions underlying a real estate investment or loan. These processes evaluate income durability, asset quality, borrower strength, and downside scenarios to determine whether capital should be deployed and under what terms.

#### **Borrower Creditworthiness**

An assessment of a borrower’s financial strength, track record, and ability to meet debt obligations.

#### **Debt Service Coverage Ratio (DSCR)**

A metric comparing net operating income to required debt service, used to evaluate loan repayment capacity.

#### **Downside Scenario**

A stress-tested projection reflecting adverse market or operating conditions.

#### **Expense Assumptions**

Forecasted operating cost estimates used in underwriting models.

#### **Guarantor**

An individual or entity that provides additional credit support by agreeing to repay obligations if the borrower defaults.

#### **Loan Covenant**

A contractual requirement or restriction imposed by a lender to manage risk during the loan term.

#### **Sensitivity Analysis**

An evaluation of how changes in key assumptions affect projected outcomes.

#### **Stress Testing**

The process of modeling extreme but plausible scenarios to evaluate resilience.

#### **Underwritten NOI**

Net operating income adjusted for conservative assumptions used in underwriting.

#### **Vacancy Assumption**

An estimated level of vacancy applied in underwriting to reflect market and operational risk.


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