Finance category
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Debt Fund Yield Calculator
Debt funds borrow cheaply (warehouse, repo) and lend at higher rates — capturing spread. This calculator computes leveraged yield on fund equity.
Levered equity yield
16.00%
Net spread on loan
3.00%
Unlevered gross yield
9.00%
How the math works
Levered yield = [gross − (warehouse cost × advance rate)] ÷ equity share − fees. Leverage multiplies net spread onto narrow equity base.
Conservative funds lever 60-70% and target 8-12% equity yield. Aggressive funds lever 80%+ and target 14%+. Higher leverage = higher reward, higher blow-up risk.
How to Use
- Enter gross loan yield.
- Enter warehouse borrowing cost.
- Enter warehouse advance rate.
- Enter fund fees.
- Read levered fund yield.
Frequently Asked Questions
What's typical?
Private credit RE funds: 10-15% levered yield on equity. Core funds: 6-8%. High yield/distressed: 14-20%. Match fund mandate to risk.
What is warehouse leverage?
Short-term revolving credit against loans held on balance sheet. Advance rates 60-80% of loan value. Cost = SOFR + 150-400bps depending on loan quality.
Risks?
Warehouse funding can be pulled (as in 2008). Duration mismatch between short warehouse funding and longer loans = refinance risk. Best funds lock in longer-tenor financing.
How do I benchmark this?
Benchmark against industry data from NCREIF, IREM, Yardi Matrix, CoStar, or RCA. Institutional operators also benchmark internally across their own portfolio to identify operating outliers. A single number means little; the trend and the peer comparison mean everything. Run quarterly benchmarks and note deviations that exceed 10% — those warrant investigation.
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