Lease Rental Discounting Explained: Turning Rental Income into Financing
6 min readPublished 07 Sep 2026
Lease Rental Discounting Explained: Turning Rental Income into Financing
Lease Rental Discounting (LRD) allows commercial real estate owners to raise term debt against assigned rental cash flows from corporate tenants.
How LRD Cash Flow Financing Works
- Escrow Structure: Rent receipts are routed directly through a designated escrow bank account.
- Present Value Discounting: Loan quantum is calculated as the discounted present value of net future rental cash flows.
- Tenant Quality: Corporate tenant creditworthiness and lease tenure serve as primary underwriting criteria.
Note: LTV margins and discounting rates depend on tenant rating and lease lock-in periods.
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