Glossary

Operating Expense Ratio (OER)

Also known as: Expense Ratio, OER

Total operating expenses divided by effective gross income, expressed as a percentage, used to benchmark a property's cost efficiency against its own budget, peer assets, and published industry survey data.

OER is tracked at both the total-expense level and by category, such as utilities or payroll as a percentage of effective gross income, and benchmarked against survey data segmented by property type, market, and vintage; a rising OER over time at stable occupancy is a core trigger for variance analysis. It differs from lease-side concepts such as the expense stop or operating expense cap, which govern how much opex a landlord can pass through to tenants — OER is a whole-property efficiency metric that applies even to a single-tenant net-lease asset where the tenant pays operating expenses directly. OER should be read together with occupancy and property vintage rather than in isolation: a low OER on a newer, lightly amenitized asset is not directly comparable to a low OER on an older property that may simply be under-maintaining its systems, which is why experienced analysts review OER trends alongside the deferred maintenance backlog and capital reserve funding status.