RGB Study Finds Net Operating Income Grew Nearly 11%

According to income and expense data recently released by the Rent Guidelines Board, owners’ net operating income rose 10.8 percent in 2015 and operating costs rose 1.1 percent from 2014 to 2015. This is the 11th consecutive year that net operating income has increased, and it represents the highest recorded increase since 1997 to 1998.              

The data for this report comes from the income and expense data for stabilized properties that’s mandated by Local Law 63, enacted in 1986. This statute requires owners of apartment buildings to file Real Property Income and Expense (RPIE) statements with the DOF annually. While certain types of properties are exempt from filing RPIE forms such as cooperatives, condominiums, and most residential-only buildings with fewer than 11 units or with an assessed value under $40,000, the mandate produces detailed financial information on thousands of rent-stabilized buildings. Information on individual properties is strictly confidential.

Therefore, to ensure only rent-stabilized buildings are analyzed, the DOF releases summary data only after matching income and expense data with building registration data from the DHCR. The data used in RGB income and expense studies this year includes 15,315 properties containing 698,546 units.

The net operating income figures, which measure the difference between a building’s income and expenses, and the study’s methodology have been criticized by owners who say they don’t account for major expenses. The NOI figures do not take into account a building’s debt service or the expenses of capital investments, and as a result owners argue they do not accurately represent the cost of owning buildings with rent-stabilized units.