Which of the following are subtracted from Gross Potential Rent (GPR) to calculate Net Potential Rent (NPR)?

• A. Loss to Lease and Concessions
• B. Vacancy
• C. Operating Expenses
• D. Property Taxes

Answer: (A)

Net Potential Rent shows what the property would actually collect in rent after removing amounts that bring potential rent down from market levels. The reductions that come from existing lease terms are Loss to Lease (the difference between market rent and rents in place) and Concessions (rent discounts, free rent, TI allowances). These are exactly the items that lower potential rent from the theoretical maximum, so subtracting them from Gross Potential Rent yields NPR.

Vacancy is about space that isn’t leased at all and is treated separately in the rent roll analyses, while Operating Expenses and Property Taxes are costs, not reductions in rent, so they don’t subtract from NPR. For example, if GPR is 1,000,000 and there are 60,000 in loss to lease and 20,000 in concessions, NPR would be 920,000.