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Rent Coverage Ratio Calculator
Rent coverage ratio = tenant EBITDAR ÷ rent. A healthy tenant has 2-4x coverage. Falling below 1.5x = distress. This calculator computes the ratio and benchmarks it.
Rent coverage ratio
2.92
EBITDAR ÷ rent
EBITDAR after rent
$230,000
Coverage cushion (excess over 1.0x)
$230,000
How the math works
Rent coverage tells you whether the tenant is over-levered to rent. A restaurant with 3.2x coverage can survive a revenue dip; 1.2x coverage can't.
LLs should request EBITDAR reporting in the lease. At renewal, coverage guides rent bump decisions — high coverage supports aggressive increase; low coverage means rent probably can't move.
How to Use
- Enter tenant annual EBITDAR (earnings before interest, tax, depreciation, amortization, rent).
- Enter annual base rent + NNN.
- Read rent coverage ratio.
Frequently Asked Questions
What is EBITDAR?
Earnings Before Interest, Tax, Depreciation, Amortization, and Rent. Strips out rent because rent is the denominator. Restaurants and retailers report this routinely for lease negotiations.
What's healthy coverage?
QSR restaurants: 2.5-4x coverage is normal; under 2x flags risk. Fitness/healthcare: 3-5x. Retail: 2-3x. Coverage under 1.5x triggers lender distress watch.
How does this help LL?
Shows which tenants are paying from robust profit vs limping along. Weak-coverage tenants are unlikely to renew at market or accept rent increases — and are default risks.
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