What DSCR measures
The debt-service coverage ratio (DSCR) compares a property’s operating income with the scheduled debt payments. It does not by itself certify a borrower, guarantee approval, or determine rights under condominium law.
Formula and procedure
DSCR = annual net operating income (NOI) / annual debt service (principal plus interest). Start with collectible rent, deduct vacancy and operating expenses such as maintenance, insurance and management, and use the principal and interest due in the same year and currency. Do not deduct principal when calculating NOI and then deduct it again.
Worked example
Illustrative amounts, not market statistics: annual NOI of TRY 150,000 and total annual debt service of TRY 120,000 produce DSCR 1.25x. If NOI declines to TRY 105,000 while repayments remain unchanged, DSCR falls to 0.875x, indicating an operating cash-flow shortfall against scheduled debt service.
Sensitivity and lender definitions
Model vacancies, late collection, expense inflation, floating interest and any maturity balloon. A lender may deduct a replacement reserve or apply contractual adjustments: confirm the applicable definition and policy with that lender. Convert mismatched currency cash flows at the relevant dates.
Primary reference
The US Office of the Comptroller of the Currency defines DSCR as NOI divided by annual debt-service requirements in its commercial real estate lending handbook. This is a financial reference, not Turkish legislation or a lending offer: https://www.occ.gov/publications-and-resources/publications/comptrollers-handbook/files/commercial-real-estate-lending/pub-ch-commercial-real-estate.pdf