--- title: Commercial Loans and Fun Blog | Health Ratio description: Health Ratio | George Blackburne, owner, offers insight into the commercial loans and mortgage industry in this Commercial Real Estate Loan Tips blog. --- [![c-loans-logo-2025](https://info.c-loans.com/hs-fs/hubfs/images/c-loans-logo-2025.png?width=183&height=86&name=c-loans-logo-2025.png)](https://c-loans.com) [Terms of Use](https://www.c-loans.com/terms-of-use) | [Disclaimer](https://www.c-loans.com/disclaimer) | [Blog](https://info.c-loans.com/) # Commercial Loans and Fun Blog ## [Commercial Loans and the Health Ratio](https://info.c-loans.com/commercial-loans-and-the-health-ratio) Posted by [George Blackburne](https://info.c-loans.com/author/george-blackburne) on Thu, Jan 23, 2025 - [Tweet](https://twitter.com/share)   Suppose you are *life company* - a life insurance company that makes large commercial real estate loans on trophy properties - and a deal crosses your desk on a power center in Phoenix.   [![Free Book, "How To Invest in 12% First Trust Deeds"](https://no-cache.hubspot.com/cta/default/37671/23901fd2-646a-4871-be41-d3adcf3c588f.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/23901fd2-646a-4871-be41-d3adcf3c588f)   ![Screen Shot 2025-01-22 at 1.52.46 PM](https://info.c-loans.com/hs-fs/hubfs/Screen%20Shot%202025-01-22%20at%201.52.46%20PM.png?width=404&height=507&name=Screen%20Shot%202025-01-22%20at%201.52.46%20PM.png)   [![Free List of 3,159 Commercial Lenders Sort By Your Own Criteria](https://no-cache.hubspot.com/cta/default/37671/a01b8f09-b66d-4255-af77-115a495e6559.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/a01b8f09-b66d-4255-af77-115a495e6559)   A *power center* is a retail subtype generally around 450,000 SF and larger, where you will find category-dominant anchors, including discount department stores, wholesale clubs, and off-price stores. Among their most common type of anchors are home improvement, discount department, warehouse club and off-price retailers. Power centers serve a trade area of 5 to 10 miles. Think of a power center as a huge shopping center consisting of big box stores.  A *big-box store*, a hyperstore, a supercenter, a superstore, or a megastore is a physically large retail establishment, usually part of a chain of stores. So let's go back to the loan request on your desk.  It looks like a good deal, but one of the largest retailers, Urban Outfitters, has a short-term lease that is maturing in just two years.  Will they renew?  If not, suddenly the deal is a risky one.   [![Apply For a Commercial Loan to Blackburne & Sons](https://no-cache.hubspot.com/cta/default/37671/34e9010d-6f3b-4979-93c2-9e705da5a9fc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/34e9010d-6f3b-4979-93c2-9e705da5a9fc)   ![Screen Shot 2025-01-22 at 9.20.26 AM](https://info.c-loans.com/hs-fs/hubfs/Screen%20Shot%202025-01-22%20at%209.20.26%20AM.png?width=392&height=324&name=Screen%20Shot%202025-01-22%20at%209.20.26%20AM.png)   [![Free Commercial Loan Calculator](https://no-cache.hubspot.com/cta/default/37671/5b0c8bf1-9bfc-45f5-a950-b60a0346e9c1.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/5b0c8bf1-9bfc-45f5-a950-b60a0346e9c1)   You therefore look at the Health Ratio.  The *Health Ratio* is the ratio of the Occupancy Cost (rent, etc.) divided by the Total Sales of the particular subject store. Health Ratio = Occupancy Cost / Total Sales For example, suppose the store is in San Francisco, where rents eight years ago used to be very high.  The store might be paying $70,000 per month in rent and concessions, but it might only be selling $800,000 in goods per month.     [![Submit Your Loan to 750 Commercial Lenders Using C-Loans.com.  It's Free!](https://no-cache.hubspot.com/cta/default/37671/dcd11210-cbb0-42bd-b761-d0cb0da003c9.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/dcd11210-cbb0-42bd-b761-d0cb0da003c9)   ![Screen Shot 2025-01-20 at 9.07.36 AM](https://info.c-loans.com/hs-fs/hubfs/Screen%20Shot%202025-01-20%20at%209.07.36%20AM.png?width=391&height=360&name=Screen%20Shot%202025-01-20%20at%209.07.36%20AM.png)   [![How To Market For Commercial Loans  Video Course ](https://no-cache.hubspot.com/cta/default/37671/31b3aab7-d992-4293-81e6-ba38a950a89d.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/31b3aab7-d992-4293-81e6-ba38a950a89d)   Common sense tells you that the health ratio here looks awful.  I don't know what that ratio should be, but it seems to me that your rent should only be a tiny fraction of your sales. Now let's suppose that the store is selling $15 million in goods every month.  Now that looks healthy and profitable.  Urban Outfitters will surely renew its lease, so you make the loan. My thanks to George Smith Partners who posted this tombstone several years ago:   [![Nine-Hour Video Training Course How to Broker Commercial Loans](https://no-cache.hubspot.com/cta/default/37671/2fa994cb-f6ac-4671-821f-b4bd48cb5f1f.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/2fa994cb-f6ac-4671-821f-b4bd48cb5f1f)   ![Screen Shot 2025-01-19 at 7.32.02 PM](https://info.c-loans.com/hs-fs/hubfs/Screen%20Shot%202025-01-19%20at%207.32.02%20PM.png?width=370&height=495&name=Screen%20Shot%202025-01-19%20at%207.32.02%20PM.png)   [![Free Commercial Loan Placement Kit](https://no-cache.hubspot.com/cta/default/37671/882eb54a-a8b4-4c38-a2ed-605338b6f07a.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/882eb54a-a8b4-4c38-a2ed-605338b6f07a)   "George Smith Partners successfully arranged $7,600,000 in permanent financing for a non-traditional anchored shopping center in Northern California.  The Big Lots and Dollar Tree anchors had short terms remaining on their primary leases, (but) they both had exceptional health ratios (occupancy cost/total sales)."   [![Free Commercial Loan Software](https://no-cache.hubspot.com/cta/default/37671/91457cad-8798-4053-804b-fc684233b7cc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/91457cad-8798-4053-804b-fc684233b7cc)   ![Screen Shot 2025-01-17 at 2.15.52 PM](https://info.c-loans.com/hs-fs/hubfs/Screen%20Shot%202025-01-17%20at%202.15.52%20PM.png?width=357&height=359&name=Screen%20Shot%202025-01-17%20at%202.15.52%20PM.png)   [![Follow George on X (Twitter) Hit the Follow Button Next](https://no-cache.hubspot.com/cta/default/37671/8ece6f95-5245-4c5e-af9a-b1a255850a22.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/8ece6f95-5245-4c5e-af9a-b1a255850a22)   [![Subscribe to the Commercial Loans and Fun Blog](https://no-cache.hubspot.com/cta/default/37671/a3bd32c3-bff3-4066-9ca8-2ec475fb5bbc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/a3bd32c3-bff3-4066-9ca8-2ec475fb5bbc)   0 Comments [Click here to read/write comments](https://info.c-loans.com/commercial-loans-and-the-health-ratio#comments-listing) Topics: [Health Ratio](https://info.c-loans.com/topic/health-ratio) ## [The Tenant Health Ratio in Commercial Real Estate Lending](https://info.c-loans.com/the-tenant-health-ratio-in-commercial-real-estate-lending) Posted by [George Blackburne](https://info.c-loans.com/author/george-blackburne) on Tue, Dec 22, 2020 - [Tweet](https://twitter.com/share) ![temperature](https://info.c-loans.com/hs-fs/hubfs/temperature.jpg?width=275&name=temperature.jpg)My friends at George Smith Partners, the old-time commercial mortgage banking firm that services loans for life companies, recently posted the following tombstone: "George Smith Partners successfully arranged $7,600,000 in permanent financing for a non-traditional anchored shopping center in Northern California.  The Big Lots and Dollar Tree anchors had short terms remaining on their primary leases, (but) they both had exceptional health ratios."   [![Apply For a Commercial Loan to Blackburne & Sons](https://no-cache.hubspot.com/cta/default/37671/34e9010d-6f3b-4979-93c2-9e705da5a9fc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/34e9010d-6f3b-4979-93c2-9e705da5a9fc)   ![family gathering](https://info.c-loans.com/hs-fs/hubfs/family%20gathering.png?width=462&name=family%20gathering.png)   [![Invest in First Trust Deeds](https://no-cache.hubspot.com/cta/default/37671/2fe7dd80-f084-4460-a850-97cd31298fda.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/2fe7dd80-f084-4460-a850-97cd31298fda)   What on earth is a (tenant) health ratio?  The ***Tenant Health Ratio*** is computed by taking the cost of occupying a space and dividing it by the tenant's total sales at that location.  In other words: Tenant Health Ratio  = Occupancy Cost / Total Sales x 100% Obviously the higher the ratio, the better the tenant is doing at that particular location. The better the tenant is doing **at that particular location**, the more likely it is that the tenant is going to negotiate an extension of his current lease.   [![Submit Your Loan to 750 Commercial Lenders Using C-Loans.com.  It's Free!](https://no-cache.hubspot.com/cta/default/37671/dcd11210-cbb0-42bd-b761-d0cb0da003c9.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/dcd11210-cbb0-42bd-b761-d0cb0da003c9) They sure look like baby dinosaurs to me.  What are they??? But then I'm drinking right now.  *Haha!* ![131119798_5298320626848466_6157880606516433902_n](https://info.c-loans.com/hs-fs/hubfs/131119798_5298320626848466_6157880606516433902_n.jpeg?width=396&name=131119798_5298320626848466_6157880606516433902_n.jpeg)   [![Free List of 3,159 Commercial Lenders Sort By Your Own Criteria](https://no-cache.hubspot.com/cta/default/37671/edc33fe8-9d87-477b-bf2f-07a33d3d2d24.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/edc33fe8-9d87-477b-bf2f-07a33d3d2d24)   In the above case, Big Lots and Dollar Tree must have been selling goods like crazy.  The health ratio must have been so high that the bank financing this particular shopping center must have felt quite confident that these two tenants would want to renew, when their current short-term leases expired. What is a high tenant health ratio and what is a low one?  I have no idea.  If anyone out there knows, kindly write to me at [george@blackburne.com](mailto:george@blackburne.com), and I will update this blog post.   [![Get Four Free Commercial  Training Courses](https://no-cache.hubspot.com/cta/default/37671/0823a684-b4a7-44a5-bdd5-22f0164bab11.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/0823a684-b4a7-44a5-bdd5-22f0164bab11)   ![Screen Shot 2020-12-22 at 3.36.31 PM](https://info.c-loans.com/hs-fs/hubfs/Screen%20Shot%202020-12-22%20at%203.36.31%20PM.png?width=340&name=Screen%20Shot%202020-12-22%20at%203.36.31%20PM.png) Craig Cooper traded 20 loan officers for a Find Your Own Private Investors course this week. [![Free $549 Training Course](https://no-cache.hubspot.com/cta/default/37671/81455359-7ff8-4ae8-bb3c-b13cbddca7a0.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/81455359-7ff8-4ae8-bb3c-b13cbddca7a0)   **Watch the Price of Gold:** It's always wise to keep an eye on the price of gold.  There are a lot of very savvy investors out there, many with a whole network of contacts scattered throughout the world.  The price of gold can tell you a lot of things. First of all, gold will warn you about any disturbing world events.  This is particularly important today, with China and the U.S. rushing to build ships and missiles in preparation for the First Taiwanese War.   If you work for a major U.S. missile manufacturer, like Raytheon or General Dynamics, and you discover that gold has just soared $500 per ounce overnight in Asia, you may want to work from home that day.  A Chinese submarine, just 1,000 miles off the coast of California, could easily fly a conventional missile right through a particular window of your manufacturing plant.  If I were the Chinese, that's how I would open the First Taiwanese War.  Take out the U.S. missile manufacturing capability and the brains behind it.   [![Become a Commercial Mortgage Banker No License Required In Most States.](https://no-cache.hubspot.com/cta/default/37671/d8d9eb7b-5351-443d-aacd-9ecee4be9927.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/d8d9eb7b-5351-443d-aacd-9ecee4be9927)   ![IMG_0122](https://info.c-loans.com/hs-fs/hubfs/IMG_0122.jpg?width=424&name=IMG_0122.jpg)   [![Earn HUGE Loan Servicing Fees Become a Hard Money Lender](https://no-cache.hubspot.com/cta/default/37671/9a0940aa-f68a-41c7-8b4a-c9b1cf97a1ca.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/9a0940aa-f68a-41c7-8b4a-c9b1cf97a1ca)   [![Get Both Video Training Programs For Just $849.](https://no-cache.hubspot.com/cta/default/37671/d0fb44bc-2893-4551-8a92-6a5080c4296e.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/d0fb44bc-2893-4551-8a92-6a5080c4296e)   Think 'ole George has gone off the deep end about this coming war with China?  My friends and my investors rolled their eyes when I first published my book ([available still on Amazon](https://www.amazon.com/Reverse-Multiplier-Effect-Crushing-Deflation/dp/0615175392)) warning of a deflationary crash in 2007.  Deflation?  You can't have deflation!  That's impossible.  Once money is printed, no one is ever going to burn it, right?  Uh, huh.  Then the Great Recession hit in 2008, and investors leaned what happens when banks stop lending.  Trillions of dollars were destroyed. The price of gold will also warn you when major corporations are going to start defaulting on their debt.  Do you know when gold outperforms just about every investment on earth?  During hyper-inflation, right?  Nope. Gold performs the best during periods of ***deflation***, when major corporations start defaulting on their bonds.  Think about the bonds from Enron, Worldcom, and Lehman Brothers.  They're toast.  **Gold is one of the few assets that is not the *debt of another*.**   [![Commercial Mortgage Brokers Tired of Being Poor?](https://no-cache.hubspot.com/cta/default/37671/03ac0827-298b-470c-b828-d865b960bf39.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/03ac0827-298b-470c-b828-d865b960bf39) ![Screen Shot 2020-12-22 at 3.12.55 PM](https://info.c-loans.com/hs-fs/hubfs/Screen%20Shot%202020-12-22%20at%203.12.55%20PM.png?width=454&name=Screen%20Shot%202020-12-22%20at%203.12.55%20PM.png) [![List of Commercial Lenders 2,500 For Just $79.95](https://no-cache.hubspot.com/cta/default/37671/9488a761-b4e6-4b02-b82c-4ccc932612bc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/9488a761-b4e6-4b02-b82c-4ccc932612bc)   Lastly, gold is also a warning about future inflation.  I want to make clear that gold is only a so-so investment during periods of inflation.  Why?  Because **gold generates no income**.  Stocks and real estate are far better investments. But gold can still be the canary in the coal mine.  In the old days, miners would bring canaries into the mines with them.  If the poor canary suddenly died, it was a warning to the miners to get the heck out of the mine shaft.  The oxygen level in the mine was dangerously low.   Gold is sitting at a lofty level right now - only about 12% off its all-time high. Why so high?   Is it because of the coming war with China?  I suspect that the coming war is just a small part of today's high gold prices.   [![Huge Referral Fees! Free Insider's Guide](https://no-cache.hubspot.com/cta/default/37671/654c0510-7a0e-486f-b58e-5b17baae498f.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/654c0510-7a0e-486f-b58e-5b17baae498f)   ![14](https://info.c-loans.com/hs-fs/hubfs/14.png?width=422&name=14.png) Do you what CTL financing is?  You would if you followed our Facebook page. [![Our Facebook Page Will Blow You Away Free Mini-Lessons in Finance Terms](https://no-cache.hubspot.com/cta/default/37671/3b331ec0-72b8-4421-9a16-430be9fc545d.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/3b331ec0-72b8-4421-9a16-430be9fc545d)   You can blame today's high gold prices on Andrew Yang.  He was the Asian-American presidential candidate who advocated giving every American a basic income of $1,000 per month.  From where would the income come?  The Treasury would simply issue Treasury bonds, and the Fed would buy them.  Presto-chango, there would be no cost.  *Uh, huh.* This week Congressional negotiators came to an agreement on a $900 billion COVID relief bill.  And from where will the money come?  The Treasury will simply issue Treasury bonds, and the Fed will buy them.  There's no cost!  As the hard rock group, Dire Straights, used to sing in 1985, ".. Money for nothin' and your chicks for free." Gold is not indifferent to inflation... and make no mistake, **inflation is definitely coming back**.  The passage of this COVID Relief Bill may prove to be a paradigm-changing event - the equivalent of Fed Chairman Paul Volker raising the prime rate to 21.5% in 1981.  This huge prime rate increase broke the back of inflation, and for the next 40 years we enjoyed disinflation.  To you young folks, welcome to 40 years of inflation.   [![Free Commercial Loan Software](https://no-cache.hubspot.com/cta/default/37671/91457cad-8798-4053-804b-fc684233b7cc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/91457cad-8798-4053-804b-fc684233b7cc)   ![Okay](https://info.c-loans.com/hs-fs/hubfs/Okay.jpeg?width=480&name=Okay.jpeg)   [![Free Commercial Loan Placement Kit](https://no-cache.hubspot.com/cta/default/37671/882eb54a-a8b4-4c38-a2ed-605338b6f07a.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/882eb54a-a8b4-4c38-a2ed-605338b6f07a)   [![Subscribe to the Commercial Loans and Fun Blog](https://no-cache.hubspot.com/cta/default/37671/a3bd32c3-bff3-4066-9ca8-2ec475fb5bbc.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/a3bd32c3-bff3-4066-9ca8-2ec475fb5bbc)     1 Comment [Click here to read/write comments](https://info.c-loans.com/the-tenant-health-ratio-in-commercial-real-estate-lending#comments-listing) Topics: [Health Ratio](https://info.c-loans.com/topic/health-ratio) [All posts](https://info.c-loans.com/all) ### George Blackburne III Owner of C-Loans, Inc. ![George Blackburne III C-Loans Owner](https://info.c-loans.com/hs-fs/hubfs/George%20Head%20Shot%20Small%205%20by%207%20copy.jpg?width=158&name=George%20Head%20Shot%20Small%205%20by%207%20copy.jpg) ### Subscribe via E-mail ### Connect with C-Loans ## [![Get the Latest Scoop on C-Loans Inc.](https://no-cache.hubspot.com/cta/default/37671/bacfb58b-143e-40d7-b126-33c182b5b90b.png)](https://cta-redirect.hubspot.com/cta/redirect/37671/bacfb58b-143e-40d7-b126-33c182b5b90b) C-Loans.com® is sponsored by  C-Loans, Inc. — For more information, contact Tom Blackburne 555 University Ave., Suite 150, Sacramento, CA 95825 Telephone: (916) 338-3232 x 317 * Tom Blackburne in Indiana: (574) 210-6686 * Fax: (916) 338-2328 Real Estate Broker -- California Department of Real Estate -- License Number 01330173 Arizona Dept. of Financial Institutions – License Number 0909472 The Florida Mortgage Brokers License Number: 0708758 [Read our many client Success Stories](https://c-loans.com/mortgage-brokers-overview/success-stories/) » © 2025 C-Loans, Inc. 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