What is Net Operating Income (NOI)?

Net Operating Income (NOI) measures annual revenue from an income-generating asset minus standard operating expenses, excluding financing or tax obligations. It reflects daily cash flow or profitability before interest charges or depreciation. By focusing only on fundamental revenues and costs—like occupant payments, maintenance, and utilities—NOI clarifies how efficiently an asset is managed.

• Core Earnings: Showcases the asset’s baseline financial health.
• Expenses Counted: Typical overhead includes repairs, insurance, or property management.
• Exclusions: Mortgage interest, depreciation, and capital expenditures stay outside NOI scope.
• Metric for Comparison: Helps weigh multiple assets or track performance shifts year to year.

This metric offers transparent insights, guiding stakeholders on day-to-day viability, occupant satisfaction levels, and potential improvement areas to enhance net returns.