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 | $29.54M | -0.6% | -0.6% | +0.0% | 7.28% (+0) | $2.15M | 55% |
| Mar 2026 | $29.73M | +0.4% | +0.0% | +0.4% | 7.28% (-3) | $2.16M | 54% |
| Dec 2025 | $29.60M | +0.1% | -0.2% | +0.3% | 7.31% (-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 2.7%. PD rises with leverage and a deteriorating value trend; at the current LTV of 55% and a trailing trend of -0.7%, the model places the asset in a low-risk band.
Loss given default (LGD) is 0%, 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 = 0.00% × $16,175,000 = $0. 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 0.7%, from $29,741,000 to $29,544,028 across 6 quarterly re-valuations. Decomposing the move, 1.6% is attributable to the income effect (implied NOI moved from $2,185,964 to $2,150,805) and 0.9% to the cap-rate effect (the market yield moved from 7.35% to 7.28%). The dominant driver over the window was the change in net operating income.
With the loan balance fixed at $16,175,000, the loan-to-value ratio is now 55%. This remains within covenant tolerances.
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.
| $2.16M |
| 55% |
| Sep 2025 | $29.58M | +0.5% | -0.3% | +0.8% | 7.33% (-6) | $2.17M | 55% |
| Jun 2025 | $29.43M | -1.1% | -0.5% | -0.5% | 7.39% (+4) | $2.17M | 55% |
| Input | Origination | Today | Δ |
|---|---|---|---|
| Loan-to-value | 54% | 55% | ▲ +0.4% |