The metrics that drive institutional investment decisions.
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Cap Rate
Cap Rate = NOI / Value × 100
The capitalisation rate measures the expected annual return assuming all-cash purchase. Higher cap rate = higher yield but often higher risk or secondary location.
Benchmark: Prime office 4–5% | Logistics 3.5–5%
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NOI
NOI = Gross Rental − Operating Expenses
Net Operating Income is the pre-debt, pre-tax cash flow from a property. The most fundamental measure of commercial property value. OPEX includes insurance, taxes, maintenance.
Benchmark: NOI margin 50–70% of gross rental
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DSCR
DSCR = NOI / Annual Debt Service
Debt Service Coverage Ratio. Lenders require DSCR ≥ 1.25x. Below 1.0 means property income cannot cover mortgage payments — distress signal.
Benchmark: >1.25x = lender-safe | <1.0 = distress
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WALT
WALT = Σ(lease_remaining × sqm) / total_sqm
Weighted Average Lease Term. Measures income stability. Long WALT = predictable cashflows, easier financing, lower risk premium for buyers.
Benchmark: >5 years preferred | <2 years = risk
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GIM
GIM = Price / Gross Rental Income
Gross Income Multiplier. A quick relative value tool. A GIM of 10 means you pay 10× annual gross rent. Lower = cheaper relative to income, but doesn't account for expenses.
Benchmark: Retail 8–15× | Industrial 6–12×
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Yield on Cost
YoC = Stabilised NOI / (Price + CapEx)
Critical for value-add and development plays. Measures return on your all-in cost including renovation. Spread between YoC and going-in cap rate = value-add profit.
Benchmark: YoC > market cap rate = accretive deal
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Tenant Concentration
TC = Single tenant NOI / Total NOI
A single tenant representing >30% of NOI creates concentration risk. If they vacate, revenue drops significantly. Multi-tenant properties diversify cashflow.
Risk threshold: >30% from one tenant
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Rollover Risk
RR = Expiring NOI (24m) / Total NOI
Percentage of income from leases expiring in the next 24 months. High rollover means leasing risk and potential void periods. Monitor closely pre-acquisition.
Risk threshold: >30% rolling within 24 months