Definition: The Minimum DSC Threshold sets the minimum ratio of effective annual net cash flow to annual debt service utilized when calculating tenant improvement and leasing commission costs. This threshold is utilized to analyze projected annual cash flow deficiencies resulting from TI & LC expenditures over the loan term. Generally, a minimum threshold margin of 1 .1 Ox is desired. Lenders use this ratio to assist them in determining the likelihood of a negative cash flow event as a result of TI & LC costs during the term of the loan. See TI/LC Stress DSCR.
