Canonical page: https://sequoia-research.com/writing/best-dst-investments-debt-structure-scenario-calculator Author: Sequoia Research Published: 2026-10-17T05:24:55.073Z Updated: 2026-10-17T05:24:55.073Z Interactive tool: https://sequoia-research.com/writing/best-dst-investments-debt-structure-scenario-calculator#research-tool # Best DST Investments: Debt-Structure Scenario Calculator ## What Is This Article About? This calculator shows how a single DST loan could respond to chosen interest-rate cases. You enter the loan amount, rate terms, limits, maturity, and a period of up to 366 days. The result separates those entered terms from the assumptions you choose and shows interest costs and an optional cash remainder. This guide explains the math, works through a fictional loan, and shows where a more detailed loan model is needed. ## Table of Contents - [Start With One Loan and a Clear Scope](#start-with-one-loan-and-a-clear-scope) - [Separate Loan Terms From Rate Assumptions](#separate-loan-terms-from-rate-assumptions) - [Enter Fixed Rates, Spreads, Floors, and Caps](#enter-fixed-rates-spreads-floors-and-caps) - [Choose the Period and Day-Count Basis](#choose-the-period-and-day-count-basis) - [Read the Fictional Alder Court Example](#read-the-fictional-alder-court-example) - [Connect Interest Costs to a Cash Assumption](#connect-interest-costs-to-a-cash-assumption) - [Keep Principal Repayment and Maturity Visible](#keep-principal-repayment-and-maturity-visible) - [Use the Results in a DST Comparison](#use-the-results-in-a-dst-comparison) - [Save Results and Resolve Entry Errors](#save-results-and-resolve-entry-errors) - [Frequently Asked Questions](#frequently-asked-questions) - [About Sequoia Research](#about-sequoia-research) - [Sources](#sources) ## Start With One Loan and a Clear Scope Use this tool for one loan with a principal balance that stays constant during the chosen period. Principal is the borrowed amount still being modeled. If the borrower will make principal payments, draw more funds, or repay the loan during the period, this version does not model that schedule. Name the loan and the property or trust it serves. A property's full loan balance is different from an investor's share. Keep the amount and any cash assumption on the same ownership scope. The tool does not allocate debt or cash among investors. The result is a limited interest-cost comparison. It does not calculate a total financing cost, an investment return, or the price at which a property must sell. It also does not decide which DST is best. A lower interest cost may come with other terms that matter more to a particular comparison. The OCC's commercial real estate handbook treats loan structure, principal repayment, and maturity as separate parts of a lending review. Its discussion helps explain why a short interest estimate leaves other questions open. It is guidance for bank supervision, not a required investor worksheet. [OCC: Commercial Real Estate Lending, printed pages 39–41](https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/commercial-real-estate-lending/pub-ch-commercial-real-estate.pdf) Collect the loan agreement and effective amendments before entering actual terms. A summary may omit a limit, condition, or change date. If the documents are unclear, use the calculator only for a clearly labeled hypothetical case until the terms are resolved. ## Separate Loan Terms From Rate Assumptions The form has two main groups. Entered loan terms include principal, maturity, day-count basis, rate structure, and any supported rate limits. Chosen assumptions include the analysis dates, the index levels used for each case, and optional cash before interest. Enter a source reference with the document title, version, pages, and relevant limits. Record when you checked it. That checked date cannot follow the review date, and the review date cannot be later than the current date on your device. Future scenario dates are allowed because they are assumptions rather than observed results. The source field stores your reference as text. The calculator does not open a document, verify a rate, or confirm that an amendment is effective. A complete reference makes a later review easier; it does not make the entered terms verified facts. Explain why you chose the assumptions. A useful note might say that the cases test a lower index, an unchanged index, and a higher index while holding the loan balance and cash input steady. Do not describe those values as forecasts unless separate research supports that description. The SEC's performance-claims bulletin distinguishes hypothetical results from actual results and explains why calculation methods matter. These outputs are conditional arithmetic. No probability is assigned to a case, and the reference case is not automatically the most likely outcome. [SEC: Performance Claims](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-47) ## Enter Fixed Rates, Spreads, Floors, and Caps Fixed mode uses one entered annual rate for the full period. It produces one result. Floating mode produces a reference case plus Scenario B and Scenario C. In each floating case, the tool adds the chosen index to the contractual spread. A spread is an amount added to the index, expressed in percentage points. If the chosen index is 4% and the spread is two percentage points, the raw annual rate is 6%. The tool then applies any entered all-in floor or cap. An all-in floor is a minimum for the combined rate in this model. An all-in cap is a maximum for that combined rate. These are direct limits on the modeled loan rate. An index-only limit is different. So is a separate hedge contract that may make payments to offset part of the loan's interest. For example, an index cap of 5% with a two-point spread would not mean a 5% all-in loan rate. Do not place that index cap into this tool's all-in cap field. Ask for a model that matches the actual contract if the distinction cannot be resolved. Choose whether each all-in limit is known or absent. Unknown blocks the floating calculation. A blank number does not silently mean that no limit exists. When both limits are known, the floor cannot exceed the cap. The index field is a chosen numeric assumption. It is not a live market feed. The New York Fed describes SOFR as a measure of overnight Treasury financing costs. A loan tied to a rate with that name can still require close attention to its own definitions and reset terms. [New York Fed: Reference-Rate Information, updated October 5, 2026](https://www.newyorkfed.org/markets/reference-rates/additional-information-about-reference-rates) This tool does not calculate a compounded SOFR average. The New York Fed publishes averages and an index that reflect compounding. Here, each case holds one index level flat and uses simple interest. Do not use the output as a lender invoice for a contract with different mechanics. [New York Fed: SOFR Averages and Index](https://www.newyorkfed.org/markets/reference-rates/sofr-averages-and-index) ## Choose the Period and Day-Count Basis The start date is included and the end date is excluded. October 16 through January 14 of the next year, on that basis, is 90 actual days. The calculator allows one to 366 actual days. It counts leap days when they fall inside the period. Choose either actual/360 or actual/365 fixed. Both use the actual number of days in the numerator. The denominator is the selected number, even during a leap year. The word “fixed” in actual/365 fixed refers to that denominator; it does not mean the loan has a fixed interest rate. The formula is: **Interest = principal × applied annual rate ÷ 100 × actual days ÷ chosen basis.** The rate entered as 6 means 6%, not 0.06%. The calculator accepts rates with up to six decimal places. It calculates the full period's interest and rounds that single result to cents, with a half cent rounded up. A lender may round each day or each payment period. That can create a different total even if the broad rate and dates appear similar. Other day-count methods, payment calendars, business-day rules, and compounding methods are outside this tool. Use Terms valid through to record the last date on which the entered rate terms and limits apply. That date is inclusive. It must reach at least the day before the excluded end date. If a cap expires inside the period, shorten the period or use a more complete model; do not carry the cap forward without support. The end date also cannot follow maturity. This gate prevents the tool from assuming that an expired loan keeps running on the same terms. Ending on maturity is allowed, with a warning that the principal repayment is still omitted. ## Read the Fictional Alder Court Example The example uses an invented $4 million loan. Its spread is two percentage points. Its direct all-in floor is 5%, and its direct all-in cap is 7%. Those limits are assumed valid for the entire 90-day period. No real property, sponsor, lender, or contract is represented. The period starts October 16, 2026 and ends January 14, 2027, excluding the latter date. The example uses actual/365 fixed. It assumes $130,000 of cash before this loan's interest, after all other modeled uses. | Case | Chosen index | Raw annual rate | Applied annual rate | Modeled interest | Cash after interest | |---|---:|---:|---:|---:|---:| | Reference | 4% | 6% | 6% | $59,178.08 | $70,821.92 | | Scenario B | 2.5% | 4.5% | 5% floor | $49,315.07 | $80,684.93 | | Scenario C | 6% | 8% | 7% cap | $69,041.10 | $60,958.90 | The reference interest is $4 million × 6% × 90 ÷ 365, rounded to $59,178.08. The lower index in Scenario B would produce a raw 4.5% rate. The entered floor raises the applied rate to 5%, so the cost does not fall as far as the raw index change might suggest. Scenario C's raw rate reaches 8%. The entered direct cap holds the modeled rate at 7%. This result depends on the cap applying to the combined rate throughout the period. It says nothing about the terms or payment reliability of a separate hedge. Scenario B saves $9,863.01 of modeled interest relative to the rounded reference result. Scenario C adds $9,863.02. The one-cent difference comes from rounding each case before comparing its costs. It is not a different economic rule for increases and decreases. If the same example used actual/360, the three costs would be $60,000, $50,000, and $70,000. That change illustrates why the denominator belongs in the comparison. It is not a reason to substitute the cheaper convention for the one in a real contract. ## Connect Interest Costs to a Cash Assumption Cash before interest is optional. Leave it blank when the amount is unknown. The calculator will still show the modeled interest and its difference across cases, but it will not invent a cash remainder. If you enter cash, use the same period and loan/property scope as the interest calculation. State which other receipts and uses are already included. The tool subtracts the modeled loan interest once. It does not rebuild an operating budget from occupancy, rent, repairs, or fees. The cash comparison assumes that all modeled interest is paid within the period. Interest accrued over a period and cash paid during that period can differ. If payment dates cross the boundary, use a cash schedule that reflects them instead of treating this simplified remainder as an account balance. For the example, $130,000 minus $59,178.08 leaves $70,821.92 in the reference case. The cash input stays the same in all three cases. That holds one variable steady so the effect of changing the rate is visible. A separate test could use just $50,000 before interest. Reference cash would then be negative $9,178.08. The minus sign means an unfunded gap under those assumptions. It does not mean a bank lends the gap, a reserve covers it, or an investor must contribute it. This remainder is not automatically available for distributions. It omits principal repayment and anything else left out of your cash input. It does not test restrictions on moving cash between the property, a tenant, the trust, and investors. ## Keep Principal Repayment and Maturity Visible The calculator carries the same principal through the period. In the example, $4 million remains outside the interest-cost result. Paying the modeled interest does not reduce that amount. The output shows the number of days from the excluded period end to the entered maturity. This is a calendar distance, not a refinancing forecast or a promise of extra time. A maturity amendment belongs in the source record before you change that input. If you end a calculation exactly on maturity, the result still does not deduct the principal payoff. A positive cash remainder can therefore appear beside a much larger unpaid loan. Read the warning before using that result in a property exit or cash plan. A principal payment during the period requires a changing-balance model. So does a loan draw. Running several separate periods can help organize questions, but adding their rounded costs is not guaranteed to reproduce a lender's actual payment calculation. The OCC discusses repayment timing and the added maturity exposure that can accompany interest-only terms. This tool addresses only the selected interest period. It does not apply the handbook's bank underwriting standards to an investor or declare the loan acceptable. [OCC: Commercial Real Estate Lending, printed page 40](https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/commercial-real-estate-lending/pub-ch-commercial-real-estate.pdf) ## Use the Results in a DST Comparison Keep the question narrow. You might ask how much a chosen index change alters interest on a constant loan balance over the same 90 days. That is a question the model can answer, subject to its stated terms. A broader question about two DSTs needs more work. Different principal amounts, repair needs, loan fees, maturity dates, reserve rules, and exit rights can change the decision. Equal modeled interest does not make two offerings equal. When comparing runs, preserve each export and use the same dates and day-count assumptions only when they fit each loan. Do not force unlike contracts into matching settings. If one loan has unsupported mechanics, record that limit instead of producing a precise but misleading comparison. Ask a reviewer to trace the principal, spread, limits, and validity dates to the documents. Then ask whether the chosen cash input has already deducted this interest. That simple check can prevent an apparent cash shortfall caused by counting the same cost twice. ## Save Results and Resolve Entry Errors The page keeps entries only while it stays open. Download the JSON or text result to preserve the entered terms, assumptions, rates, calculations, and limits. The export is a record of this run; it is not a copy of the loan documents. Any input change clears the old result and disables download buttons. A rejected calculation leaves the fields intact. Loading the fictional example or clearing the form requires confirmation inside the page. Cancel preserves entries, and editing cancels a pending replacement. Fixed mode uses only the fixed rate. Floating mode uses its spread, limit states, and three index cases. Switching modes keeps the other fields on the page, but inactive terms do not affect the calculation or appear as active terms in the export. Dollar fields allow cents and values up to $1 billion in magnitude. Principal must be positive; the optional cash input may be negative. Rates and final applied rates have explicit software limits. These limits are not suggested borrowing amounts or acceptable loan prices. ## Frequently Asked Questions ### Does the Calculator Find the Best DST Investment? No. It isolates one loan's interest response to chosen assumptions. It supplies no ranking, probability, or recommendation. Property operations, costs, source quality, legal terms, and personal needs require separate review. ### Is the Reference Case Today's Market Rate? Only if you deliberately enter a supported value for that purpose and explain its date and meaning. The tool fetches no rate. Even a current observation is held flat for the whole modeled period, which is a separate assumption. ### Can I Enter an Index Cap or a Purchased Hedge? Not as the all-in cap. This model supports direct limits on the combined loan rate. A separate cap contract may have its own payment terms, expiry, costs, and counterparty. Use a model that captures those features. ### Why Does the Calculator Reject Unknown Limit Terms? An unknown floor or cap can change the applied rate. Treating it as absent would create an unsupported result. Resolve the term or clearly model a hypothetical contract with known assumptions. ### Why Is Principal Still Shown as Unpaid? The model holds principal constant and calculates only interest. It does not subtract a payoff even when the period ends on maturity. A separate repayment plan must explain where that principal will come from. ### Can the Results Reproduce My Lender's Invoice? Not necessarily. Actual documents can use different reset dates, rounding, compounding, balances, or day-count methods. Use the output to check assumptions and prepare questions, then reconcile the invoice with the governing documents. ## About Sequoia Research Sequoia Research, LLC provides independent research on DSTs and other real estate investment offerings. This educational calculator helps readers examine loan assumptions and prepare source-based questions. It does not verify contracts, forecast rates, or recommend an investment. ## Sources - [OCC: Commercial Real Estate Lending](https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/commercial-real-estate-lending/pub-ch-commercial-real-estate.pdf) — Version 2.0, March 2022; March 20, 2025 annotation; printed pages 39–41 reviewed October 16, 2026. - [SEC: Performance Claims](https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-47) — September 15, 2022; reviewed October 16, 2026. - [New York Fed: Additional Information About Reference Rates](https://www.newyorkfed.org/markets/reference-rates/additional-information-about-reference-rates) — updated October 5, 2026; reviewed October 16, 2026. - [New York Fed: SOFR Averages and Index](https://www.newyorkfed.org/markets/reference-rates/sofr-averages-and-index) — undated methodology page; reviewed October 16, 2026.