A property's annual gross revenue minus operating expenses, before debt service and income taxes. NOI is the primary metric used to value commercial real estate; a higher NOI means a higher property value. Because CAM reimbursements from tenants offset operating expenses, landlords have a financial incentive to maximize CAM pass-throughs.
NOI = Gross Revenue (base rent + CAM reimbursements + other income) minus Operating Expenses (taxes, insurance, maintenance, management fees). Debt service (mortgage payments) and capital expenditures are excluded. Cap rate valuation: Property Value = NOI ÷ Cap Rate. Every $1 added to NOI through increased CAM reimbursements increases property value by $1 ÷ cap rate (e.g., at a 6% cap, $1 of additional NOI adds $16.67 to property value).
A landlord preparing to sell a building reclassified $200,000 of previously landlord-borne expenses into the CAM pool. This increased annual CAM reimbursements by $200,000, boosting NOI by the same amount. At a 6% cap rate, the reclassification increased appraised value by over $3.3 million, all at the tenants' expense.
Watch for new CAM charges appearing after a building acquisition or during a period when the landlord is likely preparing to sell. A sudden addition of expenses that were previously landlord-borne is a classic NOI-manipulation signal.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
