Net Operating Income definition and formula
Net operating income (NOI) is the most important profit measure in real estate. It strives to isolate to core operating profits of real estate assets, so as to avoid muddying the waters with non operating items such as corporate overhead and major non cash items like depreciation.
More important than what expenses factor into NOI are the expenses that don’t impact NOI. Namely, NOI captures profitability before any depreciation, interest, taxes, corporate level SG&A expenses, capital expenditures, or financing payments
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