Collateral value is only formally re-appraised every few years. Continuous monitoring re-values this asset each quarter, so credit risk surfaces as it develops — on a basis that traces to source and holds up under examination, rather than waiting for the next appraisal cycle.
Collateral is formally re-appraised roughly every three years; until then the books carry the origination value — a flat line. Continuous monitoring re-values each quarter, so a decline is reflected as it happens. The shaded region is the value change not yet recorded on the bank's books.
Value = NOI ÷ cap rate, so every move decomposes exactly into an income effect and a cap-rate effect.
Each quarter's change attributed to income vs. cap-rate movement.
| Quarter | Value | Δ | ← Income | ← Cap rate | Cap % | Implied NOI | LTV |
|---|---|---|---|---|---|---|---|
| Jun 2026 | $43.42M | -1.0% | +0.2% | -1.2% | 6.86% (+8) | $2.98M | 73% |
| Mar 2026 | $43.85M | -0.6% | -0.2% | -0.4% | 6.78% (+3) | $2.97M | 72% |
| Dec 2025 | $44.12M | -0.2% | -0.5% | +0.3% | 6.75% (-2) |
The inputs the monitoring model is carrying for this asset today.
The market yield applied to stabilized income. Re-estimated each quarter from observed transaction and survey evidence; a lower rate implies a higher value for the same income.
Derived as value × cap rate. Reflects the monitoring model's current view of stabilized income; the originating appraisal's NOI is shown for comparison below.
Stabilized income normalized to the subject's size for comparison against the competitive set.
The 90% interval is wider than a fresh appraisal because monitoring re-values from market movement rather than a new inspection and full three-approach reconciliation.
Each enrolled asset is re-valued every quarter; a fresh signed appraisal is recommended when a material-change or covenant alert fires.
How each key input has moved since the originating appraisal.
Probability of default (PD) is modeled at 13.8%. PD rises with leverage and a deteriorating value trend; at the current LTV of 73% and a trailing trend of -3.9%, the model places the asset in a watch-risk band.
Loss given default (LGD) is 7%, reflecting the shortfall if the collateral were liquidated at a distressed CRE haircut (~32%) net of selling costs against the outstanding loan balance.
Expected credit loss (ECL) = PD × LGD × loan balance = 0.91% × $31,606,000 = $287,213. This feeds the CECL reserve. The model is illustrative; a production CECL model incorporates macro scenarios, borrower financials, and guarantor support.
Since enrollment, the monitored value has decreased 3.9%, from $45,174,000 to $43,416,196 across 6 quarterly re-valuations. Decomposing the move, 0.9% is attributable to the income effect (implied NOI moved from $3,004,071 to $2,978,351) and 3.0% to the cap-rate effect (the market yield moved from 6.65% to 6.86%). The dominant driver over the window was the movement in market capitalization rates.
With the loan balance fixed at $31,606,000, the loan-to-value ratio is now 73%. This is approaching the covenant threshold and is on watch.
The figures above are produced by the quarterly monitoring model, which re-values from observed market movement in cap rates and income. They are a screening view; a fresh, MAI-signed appraisal — with a new inspection and full three-approach reconciliation — is recommended before a credit decision, and automatically whenever a material-change or covenant alert fires.
| $2.98M |
| 72% |
| Sep 2025 | $44.22M | -1.3% | -0.1% | -1.2% | 6.77% (+8) | $2.99M | 71% |
| Jun 2025 | $44.82M | -0.8% | -0.2% | -0.6% | 6.69% (+4) | $3.00M | 71% |
| Input | Origination | Today | Δ |
|---|---|---|---|
| Loan-to-value | 70% | 73% | ▲ +2.8% |