EBITDAR

EBITDAR = earnings before interest, taxes, depreciation, amortization, and rent — a tenant's operating cash flow before it pays rent. It is the number that tells you whether a tenant's business can comfortably afford its lease.

How to find it

Start from the tenant's EBITDA on their income statement and add the annual rent expense back:

EBITDAR = EBITDA + annual rent.

• Public tenant — pull EBITDA and the rent/lease expense from their filings (10-K / 10-Q), then add them together.
• Private tenant — take it from the financials or guarantor statements provided in diligence; rent is usually a separate operating line you add back to EBITDA.

The rent add-back matters because EBITDA is after rent, while you want to judge the tenant's earnings before the rent you're underwriting — otherwise you'd be double-counting the very expense you're testing.

Why it matters

On a single-tenant net lease, the tenant's ability to pay the rent is the whole risk. Rent coverage = EBITDAR ÷ rent measures whether the tenant's business out-earns the rent, and by how much — institutional buyers generally want ~1.5–2.0×. Below 1.0×, the rent consumes all of the tenant's pre-rent cash flow, which is fragile income. Run a lease through the NNN lease analyzer to see the coverage and how it erodes as rent escalates.

EBITDAR is the single-tenant cousin of DSCR: DSCR measures the property's NOI against your loan payment, while rent coverage measures the tenant's earnings against the rent.