NOI Calculation Examples: Three Commercial Real Estate Scenarios
Three NOI Scenarios
These examples cover a stabilized retail center (recovery working well), a lease-up office scenario (occupancy driving NOI variability), and a value-add retail property (CAM gap analysis shows where NOI is hiding). All use actual math with realistic figures for 2026.
NOI examples are most useful when they show the full calculation, not just the answer. Each scenario below walks through every line, including the recovery ratio analysis that most operators skip.
Example 1: Stabilized Neighborhood Retail Center
Property: 75,000 sf neighborhood retail, suburban Phoenix. 97.3% occupied. Strong grocery anchor, 14 inline tenants.
Revenue
Base Rent:
| Tenant | SF | Rate/sf/yr | Annual |
|---|---|---|---|
| Grocery anchor | 32,000 | $14.50 | $464,000 |
| Drug store | 8,500 | $20.00 | $170,000 |
| Inline tenants (14) | 32,500 | $25.50 avg | $828,750 |
| Subtotal | 73,000 | $1,462,750 | |
| Vacant | 2,000 | — | — |
Recovery Revenue:
CAM expenses incurred: $312,000 ($4.16/sf on 75,000 sf GLA)
- Anchor: excludes management fee → effective pool share 94.5%; no cap binding
- Drug store: 100% with 3% cap; cap not binding (pool up 2.8% year-over-year)
- Inline: 100% standard
Blended recovery ratio: 95.1% CAM billed: $312,000 × 95.1% = $296,712
Tax and Insurance:
- Property taxes: $245,000 → 100% recovered
- Insurance: $41,000 → 100% recovered
Other: Kiosk rental $9,600, ATM $4,200 → $13,800
Total EGI:
| Line | Amount |
|---|---|
| Base Rent | $1,462,750 |
| CAM Recovery | $296,712 |
| Tax Recovery | $245,000 |
| Insurance Recovery | $41,000 |
| Other | $13,800 |
| EGI | $2,059,262 |
Expenses
| Expense | Amount |
|---|---|
| CAM (incurred) | $312,000 |
| Property Taxes | $245,000 |
| Insurance | $41,000 |
| Management (4%) | $82,370 |
| Non-Recoverable Maint. | $24,000 |
| Legal/Admin | $14,500 |
| Total | $718,870 |
NOI = $2,059,262 − $718,870 = $1,340,392
Recovery ratio: 95.1% | NOI Margin: 65.1% | Value at 6.75% cap: $19.86M
Interpretation: This is a well-run property. The 4.9% unrecovered CAM is almost entirely the anchor's management fee exclusion. Billing is accurate, ratios are strong. At a 6.75% cap, it's worth ~$19.9M. Recovering the last $14,861 of CAM through tighter anchor lease negotiation at renewal would add ~$220,000 in value.
Example 2: Lease-Up Office Scenario
Property: 95,000 sf Class B suburban office, Charlotte. Currently 72% occupied (68,400 sf). Target: 88% in 24 months.
As-Is NOI
Base Rent: 9 tenants at various rates, average $22.50/sf
- Occupied space revenue: 68,400 sf × $22.50 = $1,539,000
Recovery Revenue:
Lease structure: full-service gross leases with expense stops at $12.50/sf (2022 base year). 2026 actual operating costs: $18.40/sf — tenants pay $5.90/sf in above-stop expenses.
Without gross-up: CAM/above-stop recovery = 68,400 sf × $5.90 = $403,560.
Gross-up provision applies: landlord normalizes to 95% occupancy. The gross-up adjusts the per-tenant denominator so each tenant's share is calculated as if the building were 95% occupied.
Total operating expenses: $18.40 × 95,000 = $1,748,000 Grossed-up expense per sf: $1,748,000 ÷ (95,000 × 95%) = $1,748,000 ÷ 90,250 = $19.37/sf Above-stop per sf grossed-up: $19.37 − $12.50 = $6.87/sf Total billed to occupied tenants: 68,400 × $6.87 = $469,908
Without gross-up: $403,560. Gross-up adds $66,348.
Total As-Is Revenue:
| Line | Amount |
|---|---|
| Base Rent | $1,539,000 |
| Above-Stop Recovery | $469,908 |
| EGI | $2,008,908 |
As-Is Expenses:
| Expense | Amount |
|---|---|
| Total Operating (incurred) | $1,748,000 |
| Management (4%) | $80,356 |
| Non-Recoverable (structural) | $48,000 |
| Total | $1,876,356 |
As-Is NOI = $2,008,908 − $1,876,356 = $132,552
That's a very thin margin — 6.6% of EGI. Office in lease-up at 72% occupancy with full-service leases is capital-intensive. Value at 7.5% cap: $1.77M (on a property likely worth $12-15M at stabilization).
Stabilized NOI (88% Occupancy)
Additional 15.2% occupancy = 14,440 sf of new leases at market rent ($23.50/sf, 3 months free rent year 1)
Year 1 effective rent contribution: 14,440 × $23.50 × (9/12) = $254,505 Full-year run rate: 14,440 × $23.50 = $339,340
Recovery on new leases (same expense stop): $6.87/sf × 14,440 = $99,203
Stabilized Revenue (Year 2+): Base Rent: $1,539,000 + $339,340 = $1,878,340 Above-Stop Recovery: $469,908 + $99,203 = $569,111 EGI: $2,447,451
Management fee increases: $97,898
Stabilized NOI: $2,447,451 − $1,876,356 − (additional mgmt $17,542) = $553,553
Value at 7.0% stabilized cap: $7.9M — dramatically better, but lease-up requires 24 months, $800K in TI for new tenants, and leasing commissions. Value-add math works; stabilized NOI is the target.
Example 3: Value-Add Retail with CAM Gap Analysis
Property: 110,000 sf power center, Atlanta. 89% occupied. Previous owner had loose CAM management.
Current Reported NOI (from seller's financials)
Seller reports: EGI $2,480,000 − Expenses $1,420,000 = NOI $1,060,000 at 7.5% cap = $14.1M asking.
Buyer's CAM Audit Findings
Running the cam-variance-analysis and recovery-ratio-analysis:
Finding 1: Recovery ratio understated Seller reports $520,000 CAM recovery on $640,000 in expenses = 81.3%. Lease analysis shows theoretical maximum (after caps) is 91.4%. Gap: 10.1 percentage points = $64,640/year in missed billing.
Finding 2: Capital items improperly excluded $48,000 in 2024 CAM was parking lot crack-sealing — properly capitalizable, but included in the CAM pool. This will likely face tenant challenge and requires reversal. Remove $48,000 from historical CAM pool.
Finding 3: Property tax appeal pending Current tax $380,000. Appeal filed; expected reduction to $310,000. Affects both expense and recovery line equally — net NOI impact zero, but cash flow timing matters.
Finding 4: One anchor overbilled Home improvement anchor was billed on a per-square-foot basis rather than pro-rata-of-GLA basis per lease. Overbilled by ~$22,000/year. Three-year look-back creates $66,000 in potential credit liability. See cam-overbilling-liability.
Adjusted NOI Analysis
Note: The seller's consolidated financials showed EGI of $2,480,000 and NOI of $1,060,000 — likely netting management fees against recovery revenue and using different expense categorization. The buyer's line-item reconstruction below disaggregates the components to identify the specific adjustments.
| Item | Buyer's Reconstruction | Adjustment | Buyer's Adjusted NOI |
|---|---|---|---|
| Base Rent | $1,820,000 | — | $1,820,000 |
| CAM Recovery | $520,000 | +$64,640 (gap) −$22,000 (overbill) | $562,640 |
| Tax Recovery | $380,000 | −$22,000 (anchor credit accrual) | $358,000 |
| Insurance | $68,000 | — | $68,000 |
| Other | $32,000 | — | $32,000 |
| Total Revenue | $2,820,000 | $2,840,640 | |
| CAM Expenses | ($640,000) | −$48,000 (remove capital) | ($592,000) |
| Taxes, Ins, Mgmt | ($780,000) | — | ($780,000) |
| Total Expenses | ($1,420,000) | ($1,372,000) | |
| NOI | $1,400,000 | $1,468,640 |
Corrected Buyer NOI: $1,468,640
At 7.5% cap (same as asking): $19.6M value — vs. $14.1M asking on seller's metrics. The spread isn't entirely in buyer's favor: the $22,000 overbilling creates a $66,000 credit liability, and there's TI needed for two lease renewals upcoming. Net of liabilities and near-term capital: fair value around $17.5-18.5M.
This is what what-is-cre-finops means in practice — the CRE FinOps discipline applied to CAM reconciliation turns due diligence findings into negotiating leverage.
How to Use These Examples
Each scenario shows the same structure — base rent, recovery, other income, expenses, NOI — but the analytics differ:
- Stabilized: Focus on recovery ratio optimization and cap rate sensitivity
- Lease-up: Focus on gross-up provisions and stabilized NOI projection
- Value-add: Focus on CAM gap analysis and liability identification
For the formula itself, see noi-formula-calculation-guide. For a step-by-step calculation guide, see how-to-calculate-noi-real-estate. For valuation from NOI, see noi-to-value-commercial-property. And for the overall NOI context in CRE, start with net-operating-income-real-estate-guide.
Run your own scenarios using the NOI impact calculator — input your CAM pool, current recovery ratio, and target cap rate to see the value at stake from recovery improvement.