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Net Operating Income (NOI)

Breaking down the all-important measure of profits for analyzing real estate investments.

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Net operating income (NOI) example

Most real estate companies including REITs as well as real estate private equity firms – will own multiple real estate properties so identifying NOI is critical for isolating property-level profitability.

Below is a net operating income example from the Prologis 2019 10-K- one of the world’s largest REITs.

Net operating income is Non-GAAP

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Interpreting net operating income (NOI)

From the Prologis 10-K , you can see that it is a non-gaap measure of profits so it does not appear on the income statement, but instead is presented in a separate table and is reconciled to GAAP metrics “operating income” and “earnings before income taxes.”


NOI is similar to a common and nearly universally used measure of operating profitability EBITDA but with even more add backs to really focus on pure operating income generated by the properties.


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