Asset management
Property Cash Flow Reconciliation
Use this shared financial method to reconcile a stated NOI convention with actual property cash, account movements and the selected financing scope. Office and industrial pro formas retain their rent, recovery, expense and lease assumptions. A cash subtotal, an account balance change, an investor distribution and an investment return are different quantities.
Also known as: NOI-to-Cash Bridge
Updated
NOI to Property Cash
Define the entity, period, currency, account boundary and included cash uses first. State whether NOI uses actual cash, accrual entries or underwriting allowances.
The displayed property cash excludes financing and income-tax payments. Include those flows separately in the stated entity/account reconciliation. Property-tax cash already included in the selected operating expenses remains in the operating bridge.
For one selected period:
Cash Operating Surplus = Stated NOI + Signed Cash Reconciliation
Selected Property Cash Before Financing = Cash Operating Surplus
− Actual TI Payments − Actual LC Payments − Actual Building CapEx Payments
− Other Selected Property Cash Uses
The signed reconciliation converts the selected income/expense convention into operating cash. Identify receivable/payable timing, noncash or imputed items and any relevant omitted cash operations explicitly. An allowance is added back only when the reconciliation establishes that it is not an actual cash use in the selected period; this is not a universal NOI adjustment.
Use non-overlapping payment categories and actual dates. An amount already inside cash operating surplus is not another capital or other-use deduction. Record a refund as a receipt or negative payment once. A budget, quoted allowance, depreciation charge, reserve expense and actual funded work are different inputs. Lease Execution Costs and Allowances owns contractual TI/LC inputs; Physical Work Cost Scenarios owns conditional work budgets and actual-payment paths.
Restricted Accounts and Available Cash
Replacement Reserve Funding owns the separate reserve-account schedule. An internal transfer between included accounts changes availability, not total external cash. Count a reserve-funded replacement once in total property spending. Trace ownership and access before including an account; a reported third-party balance is not automatically the modeled entity's cash.
For the same owned unrestricted/restricted account boundary, currency and period, with no unrecorded valuation or noncash balance changes:
Change in Unrestricted Cash = Net External Cash Across Included Accounts
− Change in Restricted Cash
Include every external receipt/payment crossing that boundary, including financing and equity flows when they occur. State whether the series is before or after distributions. A subtotal that omits relevant flows does not reconcile actual balances. Include account earnings, fees, releases and other movements where applicable. Restricted-account decline is not an extra operating receipt or investment gain.
Debt service and other entity/financing cash require their own dated schedule. CRE Capital Stack and Debt Structuring owns funded closing advances and escrow allocations. CRE Return Metrics and KPIs owns the selected cash-equity denominator and distribution distinctions. Available cash is not automatically permitted to be distributed; actual documents, retention and allocations govern that decision.
Hypothetical Period and Reserve Reconciliation
Curator assumptions, reviewed 2026-10-17; USD: assume underwritten NOI of 1,000,000 after a 100,000 imputed reserve allowance. That allowance is not a cash payment in this period and no actual replacement payment is already deducted in NOI. Separately assume a net collection-timing adjustment of −20,000. All listed amounts share one period and cash boundary, with no other reconciliation items:
| Component | Assumed amount |
|---|---|
| Underwritten NOI | 1,000,000 |
| Add back the specified noncash allowance | +100,000 |
| Net collection-timing adjustment | −20,000 |
| Cash operating surplus | 1,080,000 |
| Actual TI payments | −50,000 |
| Actual LC payments | −20,000 |
| Actual building CapEx payments | −200,000 |
| Other selected property cash uses | −10,000 |
| Selected property cash before financing | 800,000 |
Separately assume debt service of 500,000, with no new loan advances, sales, income-tax payments, equity flows or other entity cash. Net external cash across the included property accounts after debt service is 300,000. This is a cash amount, not a cash yield or actual distribution.
Assume the entity owns a restricted replacement account with opening cash 150,000, a 100,000 internal contribution from unrestricted cash and all 200,000 building CapEx paid from that account. Assume zero account earnings/fees, no other payments or releases, and contributions available before payment. Ending restricted cash is 50,000, a decline of 100,000. Actual terms and payment-date liquidity need separate evidence.
Unrestricted cash therefore increases by 300,000 − (−100,000) = 400,000. A direct unrestricted-account check gives 1,080,000 − 50,000 − 20,000 − 10,000 − 100,000 contribution − 500,000 debt service = 400,000. The reserve pays the 200,000 work, so that payment is not deducted again from unrestricted cash. Conversely, the internal 100,000 contribution is not another external cost after counting that work in total property cash.
The combined change is 400,000 unrestricted − 100,000 restricted = 300,000 total cash after debt service. These different cash views do not authorize a dividend or establish a realized return. The example supplies no market reserve, accounting mandate, lender requirement, engineering cost or tax rule.
Applications and Return Models
- Hold, Sell, and Refinance Decision Framework compares future ownership paths from a common decision date, investor objective and cash boundary.
- Office Underwriting and Lease Structures retains its office hierarchy and dated worked example.
- Industrial Valuation and Probability-Weighted Underwriting retains industrial lease income and recovery conventions.
- Incremental Capital Project Returns compares complete baseline-relative project cash and sale proceeds.
- Sensitivity and Scenario Analysis tests complete-path cash needs and availability.
- CRE Tax and After-Tax Underwriting owns the dated tax-payment comparison. Here a modeled tax payment is only a stated cash input; nominal deferred tax is not another cash receipt. CRE Tax and After-Tax Underwriting separately distinguishes noncash deduction entries, actual allowable use and cash tax benefits; add back a charge only when the starting income measure actually deducted it. CRE Tax and After-Tax Underwriting distinguishes taxable gain, sale-attributed liability and closing/retained cash; income-tax withholding or a reserve deposit does not establish final tax expense. CRE Tax and After-Tax Underwriting identifies entity/owner obligations and payments already inside a starting distribution; count each payment once at its actual boundary.
The Texas Public-Entity Property Tax Exemption Underwriting application compares complete rent/tax/fee cases and distinguishes a gross tax component from incremental owned and unrestricted cash. Legal eligibility and compliance metrics keep their own evidence; a lower modeled tax line is not another inflow after using the resulting cash.
The LIHTC Calculation Mechanics application separates rent limits, full lease rent, tenant/assistance portions and actual owner receipts. Its assumed collection shortfall is not automatically permanent loss; an allowance or family reimbursement is not another owner receipt.
CRE Lease Structures and Expense Recovery supplies the rent-period versus cash-period application bridge and distinguishes snapshot occupancy, occupied unit-days, collection against due and rental realization. A stated EGI subtotal does not replace that reconciliation or establish actual bank receipts.
Sources
- Source: Cash Yield Scope Review 2026 — historical NCREIF income-versus-after-capital distinctions. Its quarterly indicator has its own denominator, categories and filters; this page does not implement that index or an LP return convention.
- Source: Debt Yield Scope Review 2026 — retained OCC distinctions between cash, underwritten NOI assumptions and actual expenses. The displayed reconciliations and teaching case are curator modeling conventions, not prescribed accounting or loan terms.