NOI (Net Operating Income)

Net Operating Income (NOI) is a critical financial metric used in the evaluation and management of income-producing commercial real estate properties, including industrial and logistics assets. It represents the total revenue generated by a property—primarily rental income and additional operational revenues—after subtracting all operating expenses necessary to maintain and run the property. These expenses typically include property management fees, maintenance and repairs, insurance, property taxes, utilities, and other recurring costs directly related to property operation. Importantly, NOI excludes financing expenses such as mortgage interest payments and capital expenditures related to property enhancements or major repairs. As a result, NOI provides a clear picture of the property’s ability to generate income from ongoing operations alone. For investors and asset managers in the industrial real estate sector, including those operating within Central and Eastern Europe (CEE), NOI serves as a foundation for property valuation, performance benchmarking, and investment decision-making. Additionally, NOI is often used to calculate key investment metrics such as the capitalization rate (cap rate), which helps determine fair market value and assess return potential relative to market conditions. Understanding and optimizing NOI enables stakeholders to make informed decisions on leasing strategies, operational efficiencies, and investment opportunities specific to industrial logistics hubs, warehouses, and distribution centers.