Broker Cap vs True Cap
The broker cap uses headline NOI; the true cap backs out reserves and landlord-retained costs. The gap is the yield a seller's pro forma hides.
The broker cap is the headline yield in the offering memorandum: NOI ÷ price, usually before replacement reserves and sometimes before management. The true cap divides post-reserves, post-landlord-cost NOI by the same price.
The difference is the part of the yield the seller's pro forma quietly leaves out — frequently 30–80 basis points on industrial and IOS deals. Underwrite to the true cap; quote the broker cap only to know what you're negotiating against.
UpsideIQ shows both side by side on every deal, and the cap-rate calculator lets you see the gap in seconds.
Related: cap rate · covered land play
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