Net lease glossary
Net Operating Income (NOI)
Property income after operating expenses but before debt service, depreciation, and income taxes.
Net operating income is gross property revenue minus operating expenses, before mortgage payments, depreciation, and income taxes. In a true NNN lease the tenant pays nearly all operating costs, so NOI is close to the contract rent, less any landlord-retained costs such as roof reserves, non-reimbursed management, or vacancy allowances. NOI is the numerator in the cap rate and the basis for lender sizing metrics such as DSCR and debt yield.