In U.S. real estate, what does “NOI” stand for when measuring a property’s operating performance?

In U.S. real estate, NOI stands for net operating income, the income a property generates after operating expenses but before financing and income taxes.

Owners and analysts generally calculate NOI by subtracting ordinary property expenses from gross operating income. Expenses can include management, maintenance, utilities paid by the owner, insurance, and property taxes. Mortgage principal and interest are normally excluded because NOI is intended to show the property’s operating performance independently of its financing structure.

NOI is central to commercial property analysis. It is used in capitalization-rate calculations, where a property’s value is estimated by dividing NOI by a market capitalization rate. It also helps compare properties with different loan arrangements.

NOI is not the same as cash flow after debt service, taxable income, or gross rent. Vacancy, concessions, and non-recurring capital improvements may also require separate treatment depending on the analysis method.