In one sentence
A loan covenant requiring the property to maintain a minimum debt service coverage ratio, tested periodically.
The longer version
A DSCR covenant sets a floor: the property must keep producing at least, say, 1.20x coverage, tested quarterly or annually from operating results. Falling below can trigger cash sweeps, reserves, or default.
The covenant is only as reliable as the reporting behind it, which is why financial reporting requirements and DSCR covenants are tested together.
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