Your always-onCRE covenant analyst.
Hypha tests your covenants continuously and flags risk before it becomes a breach.
Often, the hindrance causing a breach started months earlier when operations slipped. A long-term industrial tenant decided to sublet a portion of their space to an unproven logistics business, a retail tenant modified the term of their lease on short notice, collections from a conference-oriented hospitality operator slowed on the heels of multiple event reschedules and cancellations.
The breach surfaces and lenders are left to make the best of what was believed to be a surefire capital stack. That lack of stability was buried in non-uniform documentation. One critical covenant pertaining to an entire multifamily portfolio was spread across dozens of pages. Every deal and secured asset defines its terms differently.
Teams already at working capacity have to go back and check everything by hand, often finding issues too late for lower-risk action. A premier origination fitting the platform falls below the standards you need to maintain across your real estate debt portfolio.
In a perfect world, all underwriting would go exactly to plan and every debt origination would deliver above and beyond its potential. Your credit platform should not have to suffer headaches from covenant breaches which can threaten your original underwriting model.
What is Covenant Compliance?
Hypha's Covenant Monitoring is software that tracks whether the borrowers on your commercial real estate loans are meeting the terms they agreed to.
01
It reads each loan agreement and pulls out every financial covenant, including thresholds, measurement dates, look-back periods, and defined terms, with a link back to the page it came from.
02
As borrower reporting comes in, it tests each covenant against the terms in that specific loan. When a number moves toward a threshold, your team sees it early, along with the evidence behind it. The credit call stays with you, so you have time to work with the borrower before a test ever risks failing.
Covenant testing that works for you.
Extract the covenant sheet.
Load the credit agreement, leases, and every amendment. Each financial covenant comes out with its threshold, section reference, measurement date, look-back period, and deal-specific rules. Everything is cited to its exact source.
Map the terms to your spread financials.
Extracted covenant terms are paired with the output of automated spreading, so tests run on the numbers your team already approved.
Run the test by period and frequency.
Each covenant returns passed, failed, or missing an input.
Adjust and re-run
Upload missing documents or make manual adjustments to a failed test.
Issue final covenant test results.
Results roll up per deal and across the portfolio. Export any test to Excel and audit trail on its own sheet.
A test is a snapshot. Hypha captures the trend over time.
Point-in-time tools test a covenant once and hand you a number. Then the loan goes back in the drawer until next quarter, when the whole exercise starts over from scratch.
Hypha tests against the same financial record your team already mapped and approved. No re-keying is needed between spreading and testing. Results persist as a trend, so you can see how weighted average lease terms may be shifting within your industrial debt exposure. And any time the loan is amended, the tested terms update upon upload, with every prior version preserved.
Why not just ask Claude or ChatGPT?
Ask a general model whether a coverage test uses the definition in the original credit agreement or the one rewritten in a later amendment, and it will guess. Ask again and it will guess differently.
Each real estate credit deal is unique, even if select characteristics carry over from one thematic organization to the next. Other tools lack the specialization needed to amplify deal evaluation, asset management and long-term portfolio composition.
Hypha supplies what a general tool cannot: context, collaboration, and an audit trail. A covenant belongs to a loan, which is secured by properties, which report financials on a schedule. The model gets the whole chain before it answers, and it applies the same definitions every quarter, on every deal.
The judgment call stays yours.
Hypha tests and flags; your team decides. A near-miss with a good story and a clean pass hiding deterioration are different credit decisions, and no threshold makes them for you. Waivers, cures, and resolutions stay attached to the asset, reasoning included.
Every test becomes queryable history. Which loans are within ten percent of their coverage threshold? That’s an answer in seconds, not a spreadsheet someone maintains by hand.
Your covenants, on autopilot.
Built for every exam, not just the quarterly wrap.
Every tested value traces from the covenant result, to the financials behind it, to the cell in the source document with a named professional’s approval on the way. No credit origination happens in a vacuum and risk management remains at the forefront of every inbound opportunity to further build your real estate debt book.
We’re SOC 2 compliant, and you can deploy in Hypha’s environment or on your own infrastructure, with redaction that strips sensitive fields before real estate loan documents enter the platform.
Never scramble at quarter-end again.
Bring one loan agreement and the borrower’s latest financials, and watch the covenant sheet build itself.
FAQ
Covenant monitoring software tracks the financial covenants in loan agreements such as coverage, leverage, debt yield, liquidity, net worth and tests borrower performance against them each period. Hypha extracts covenants directly from the executed documents and tests them against spread financials, with every figure traced to its source.
Hypha tests financial covenants of every shape including DSCR and fixed-charge coverage, leverage, debt yield, minimum liquidity, and net worth, while allowing for deal-specific rules like synthetic amortization during interest-only periods, occupancy caps, and annualized ramp-period measurements.
Every adjustment the agreement requires is encoded once and tied to the clause that requires it. Hypha captures add-backs, exclusions, minimum capex per square foot of pace, normalized management fees and channels it all into the same engine, which can rerun each period with refreshed amounts so the definition never drifts.
Extraction rules and document versioning resolve conflicts across versions. Hypha tests against the most recent term from the latest amendment and cites where every prior version stated it.
Every value carries a citation back to the exact language in the source document. The financials being tested were verified against their source at spreading, and nothing enters a covenant test until a named professional approves the spread behind it.
No. Hypha surfaces the result, the headroom, and the evidence. Waivers, cures, and amendments are credit decisions, and they stay with your team, with the reasoning attached to the asset.
General-purpose AI produces one-off answers and trips over nested definitions. Hypha supplies context, collaboration, and an audit trail: the same defined terms applied every period, tested in one shared record, every number traced from document to result.
No. Covenant tests run on the financial record Hypha already holds: the spreads your team approved in your chart of accounts. Testing is a module on the record, not a second data entry.
Yes. Covenant risk is the last to move; operational signals shift first. Hypha tracks headroom as a trend and flags covenants deteriorating toward breach while options still exist.
Your choice. Hypha’s SOC 2 compliant environment, or a dedicated database on your infrastructure including a dedicated virtual private cloud, depending on your security requirements.
Yes. Every engagement starts with the extraction and spreading platform, and each module stands alone. Most lenders prove one workflow on live loans, then add Deal Analyzer or regulated document generation. Expansion means turning on a module, not re-implementing.