Every operating statement has three NOIs

Ask what a property's NOI is and you'll get one number. There are at least three, and the spread between them routinely moves a going-in cap rate by 100+ basis points.

The three variants

• Reported NOI is whatever the operating statement prints. It includes whatever the preparer chose to include: interest income, vendor rebates, insurance proceeds, owner-personal expenses buried in repairs. Useful for tracing back to the source document. Useless as a valuation anchor.
• Clean operating NOI strips the non-operating items from both sides: interest income, rebates, and insurance proceeds out of income; depreciation, debt service, reserves, and capex misclassified as opex out of expenses. This is the income a buyer would generate from operations if the trailing twelve months were entirely operational and recurring.
• Normalized operating NOI re-bases one-time monthly spikes to run-rate. The direction matters: an unexplained income spike inflates trailing income, so smoothing it pulls NOI down; a one-time repair shouldn't burden the annual, so smoothing it pulls NOI up. Exception: insurance and property-tax spikes are flagged but not normalized — they almost always reflect real premium true-ups or assessments that recur.

Which one anchors the analysis? If income spikes were detected and smoothed, normalized — because clean NOI inherits the overstatement. If no income spikes, clean. Reported is never the anchor; it's shown for traceability only.

The mixed-basis trap

The subtler problem is statements that combine bases in one build. The most common pattern: trailing-12 expenses paired with a current-snapshot income side where vacant units are grossed up to market rent, then a 5% economic vacancy line applied to the inflated total. The header usually says so in plain text — something like “T12 Expenses & Current RR w/ Vacancies at Market.” That income column is not actuals. It is a stabilized-style synthetic build wearing an actuals costume.

Rebuild both views, every time

• In-place: rent roll sum × 12, no gross-up, plus ancillary income, minus disclosed concessions, minus operating expenses and reserves. What the property collects today.
• Broker stabilized: the published build, with the gross-up and vacancy lines named as separate rows so a reader can dispute either.

One more adjustment separates paper yield from cash yield: capex. Operating NOI excludes it by definition, but a buyer's cash return doesn't. A property with $1.85M of revenue and $144K of trailing capex (7.8% of revenue) has materially different economics from one with the same NOI and $30K of capex. When trailing capex exceeds roughly 3% of revenue, compute effective cash NOI — anchor NOI minus trailing capex — and quote the cap rate on that number alongside the others. The cap rate on operating NOI flatters the first property. The cap rate on effective cash NOI tells the truth.