Glossary
Financial Concepts
Net Operating Income (NOI)
A property's total rental and operating income minus its operating expenses (including property taxes), before debt service and income taxes, the core profitability metric landlords and investors use to value commercial real estate. Because a property's sale value is typically NOI divided by a market capitalization rate, every dollar landlords keep out of operating expenses and into net income raises the property's valuation.
Firm impact
NOI helps explain, without excusing, why CAM overcharges cluster in specific categories. Any cost a landlord can shift from its own books into the tenant-funded operating expense pool improves NOI without landlords spending a dollar more. Firms can use this as a lens for where to look first, not as evidence on its own.
How this gets abused
A landlord reclassifies a portion of its own asset management overhead as a CAM-recoverable operating expense. The reclassification lowers the landlord's reported operating costs and raises NOI, improving the property's valuation, while shifting that same cost onto tenants through the reconciliation.
Practitioner note
When multiple findings point the same direction, such as capital costs expensed as CAM alongside landlord overhead billed as operating costs, note that both patterns move the same lever: lower landlord-side expense, higher NOI. That context helps explain a pattern to a client, even though it isn't itself proof of any single finding.
FAQ
Questions about net operating income (noi)
Why do CAM overcharges concentrate in certain expense categories?
Costs a landlord can legally keep off its own books and shift into the CAM pool lower the landlord's reported operating expenses, which raises net operating income and the property's resulting valuation. This incentive doesn't prove any specific charge is wrong, but it explains why certain categories get more scrutiny.
Does a higher NOI always mean CAM overcharges are happening?
No. NOI is just a valuation metric. It's a useful lens for understanding landlord incentives, not evidence of an overcharge on its own. Each finding still needs to stand on the lease language and the actual math.
You know the term. Now check the math.
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