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Interest Reserve Runway Calculator
Interest reserves carry debt service during lease-up.
Runway months
32.7
Net monthly reserve burn
$55,000
Shortfall if stabilization missed
$0
How the math works
Net burn = debt service − NOI (floored at 0). Runway = reserve / burn.
$1.8M reserve. Net burn $55k/mo. Runway 32.7 months > 24 stabilization target — comfortable cushion.
How to Use
- Enter interest reserve balance.
- Enter monthly debt service.
- Enter NOI monthly contribution.
- Enter stabilization month target.
- Read runway and shortfall.
Frequently Asked Questions
What is interest reserve?
Dedicated loan proceeds set aside to pay interest during lease-up or construction. Lender sizes based on projected months to stabilization + cushion. Typical: 12-36 months of interest. Sized too small = mid-deal distress; too large = wasted loan proceeds.
How to size?
Projected interest expense × (months to stabilization + 6-month cushion). Conservative sponsors add 12 months cushion. Lender typically caps at 20-25% of loan (NCREIF benchmark). If math says more needed, loan is oversized for project.
What if depleted?
Interest reserve depletion = loan default trigger in most docs. Sponsor must fund additional capital or negotiate extension. Stabilization delay cascades: more TI, more LC, more carry. Prudent sponsors maintain 30%+ cushion vs base case projection.
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