Net cash flow can be determined using the formula net operating income (NOI) less debt service payments, tenant improvements, leasing commissions and capital expenditures.
Simply put, net cash flow is the difference between all company cash inflows and outflows over a given time period. In the context of commercial real estate, net cash flow is similar to free cash flow for corporate analysis as it considers capital expenditures.
As an example calculation, if a property generates $100,000 in net operating income (NOI) but has $50,000 in debt service payments and $10,000 in capital expenditures, then its net cash flow is $40,000 ($100,000 less $50,000 less $10,000). Note that net cash flow is not the same as Net Income or Net Operating Income.
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