The Little Geeni

CHELMSFORD, MA–(Marketwire – October 27, 2009) - Arbor Networks®, a leading provider of secure service control solutions for global business networks, today announced that Neo Telecoms, one of the premier infrastructure and IP transit operators in Europe, has selected Arbor Networks Peakflow SP platform (“Peakflow SP”) to deliver network-wide visibility and security against distributed denial of service attacks, together with comprehensive peering and transit analysis that will enable them to reduce peering costs, improve traffic engineering and perform network troubleshooting.

The de facto standard and security platform of choice for a majority of the world’s leading service providers, Peakflow SP leverages IP flow data to deliver a unique combination of pervasive visibility into network, application and routing traffic with real-time detection, mitigation and comprehensive reporting of network anomalies, all from one fully integrated platform. This enables Neo Telecoms to manage the impact of security threats as well as network issues.

“Pervasive visibility into network, application and routing traffic allows Neo Telecoms to make more informed decisions about security incidents, transit partners, network architecture, customers and new IP services,” said Raphael Maunier, Neo Telecoms chief technology officer. “The Peakflow SP platform is purpose built for sophisticated IP-based networks like Neo Telecoms.”

“Neo Telecoms is enabling the Internet Economy across Europe, delivering a full suite of innovative IP-based services to regional ISPs, international operators, SMB’s and international enterprises,” said Patrick Sonou, Arbor Networks country manager for France. “Peakflow SP delivers the security, visibility and control over the network that Neo Telecoms’s requires to maintain its leadership position.”

Arbor Peakflow SP also dramatically improves traffic engineering and capacity planning by correlating real-time topology information with traffic data. Peakflow SP allows Neo Telecoms to optimize their network and reduce costs by providing detailed visibility into the traffic that is leaving or entering their networks via peering or transit links. Peakflow SP provides insight into critical information such as BGP routing, MPLS VPNs, QoS and applications such as DNS, VoIP and P2P — enabling Neo Telecoms to automatically recognize hot spots and engineer the network for lower costs, higher performance and new services. Key benefits to Neo Telecoms include:

– On-Demand Packet Analysis – Deeper visibility into the network and traffic for troubleshooting, fault prevention, performance monitoring and security forensics. — Global Geography Reports – Analyze peering traffic by geography, market, most used services and threat activity. — Expanded Transit Peering Reports – Gain a better understanding as to where their customer traffic is destined beyond initial peers.

About Arbor Networks

Arbor Networks is a leading provider of security and network management solutions for global business networks, including more than 70 percent of the world’s Internet service providers and many of the largest enterprise networks in use today. Arbor’s secure service control solutions give customers a single, unified view into their networks’ performance, helping them to quickly detect anomalous behavior, mitigate threats and enforce policy. This translates into actionable business intelligence to generate new forms of revenue and to maintain a competitive advantage.

Arbor also maintains ATLAS — a unique collaborative effort with 100+ service providers across the globe sharing real-time security, traffic and routing information. No other entity today has both aggregated this much real-time information about what is happening across the Internet and developed the means for cross-provider collaboration that informs numerous business decisions.

For technical insight into the latest security threats and Internet traffic trends, please visit theASERT blog.

Note to Editors: Arbor Networks, Peakflow, ATLAS and the Arbor Networks logo are trademarks of Arbor Networks, Inc. All other brand names may be trademarks of their respective owners.

Computer Security Analysis, Arbor, Network, Networks, Peakflow, Peering, Protection, Security, Selects, Telecoms, Transit

Net operating income (i.e., NOI) is one of the most important calculations made in regard to any real estate investment because it represents the property’s potential income after all vacancy and operating expenses have been subtracted. In other words, net operating income represents the investment property’s productivity, or measure of cash flow.

To help plant the idea, consider net operating income in one of the following two ways, depending on whether or not a mortgage exists.

The investor pays all cash for the property. In this case, since the investment property has no debt, NOI virtually becomes the rate of return expected from a property for any given annual period before taxes and depreciation are considered. In other words, given no deduction for debt service (loan payment), you can regard net operating income as the annual cash flow (cash flow before taxes, or CFBT).

The investor finances the property. Here, since the property has a mortgage, NOI should be regarded as the anticipated amount of cash flow available to pay the mortgage. In this case, only the remainder of NOI (net operating income less annual loan payment) becomes the annual cash flow before taxes (or CFBT).

How to Calculate Gross Scheduled Income Less Vacancy and Credit Loss = Gross Operating Income Less Operating Expenses* = Net Operating Income

Example: Assume that you want to do an analysis on an income property that generates a GOI of $100,000 with Operating Expenses of $42,000. What is the NOI?

$100,000 Less $42,000 = $58,000

*Mortgage payments, depreciation, and capital expenditures are not considered operating expenses and therefore have no impact on net operating income.

It’s Role in Real Estate Investing

Net operating income plays a large role in a variety of real estate investment and holding period decisions. For instance, capitalization rate (cap rate) is calculated by dividing NOI by sale price. Likewise, property value (or the property’s sale price) is calculated by dividing NOI by the cap rate.

Example: Let’s continue to assume a net operating income of $58,000 (as in our example above) and a sale price of $580,000. What is the property’s capitalization rate?

Net Operating Income Divided by Sale Price = Cap Rate

$58,000 Divided by $580,000 = 10.0%

Okay, now let’s assume an NOI of $58,000 of and a cap rate of 8.0%. What is the property value?

Net Operating Income Divided by Cap Rate = Property Value

$58,000 Divided by 10.0% = $580,000

Net operating income also plays a large role with lenders. For example, Debt Coverage Ratio (DCR) is calculated by dividing the net operating income by loan payment.

Net Operating Income Divided by Annual Loan Payment = Debt Coverage Ratio

$58,000 Divided by $46,000 = 1.26

How Credible Is It?

Conceptually, NOI is important because of its use in numerous calculations surrounding property performance. Because it’s used to estimate property value and cap rate, as well as useful to lenders, NOI has become an essential component of real estate investment analysis. As a real estate investor, therefore, you should understand net operating income, and recognize what it means to your potential investment valuation.

But be careful.

Remember, NOI is not unlike other calculations typically used for real estate investing purposes. The result is only as good as the numbers are credible, and numbers can be manipulated. Sellers have sometimes been known to become very creative in order to make the relationship between the price and NOI to come out right.

So here’s a tip. Whether or not a property appears to have a favorable NOI with positive rates of return, don’t just accept the numbers. Spend the time to validate the numbers. Reconstruct the owner’s representations for income and operating expenses if necessary, and compute your own NOI. Whatever you do, rely on nothing less then the most credible net operating income possible. You can’t afford not to.

Operating Systems Analysis, Estate, Income, Operating, Real

In this article, we want to discuss the role of net operating income to real estate analysis. How it’s calculated and then how real estate analysts use net operating income to determine the profitability of investment real estate.

Net operating income (or NOI) is one of the most important calculations made during the analysis of any real estate investment because it represents the property’s potential income after all vacancy and operating expenses have been subtracted. In other words, net operating income virtually represents the income property’s productivity, or measure of cash flow.

To help plant the idea, let’s consider net operating income in one of the following two ways, depending on whether or not a mortgage exists.

1. The investor pays all cash for the property. Since the property is wholly owned and has no debt, in this case, NOI is the annual return the investor would expect from the property before consideration for taxes and depreciation. Given no deduction for debt service (loan payment), you can regard net operating income in this case as the annual cash flow before taxes (or CFBT).

2. The investor obtains a mortgage. Here, since the property has a mortgage, NOI should be regarded as the anticipated amount of cash flow available to pay the mortgage. In this case, only the remainder of NOI (after you subtract the annual loan payment) becomes the annual cash flow (or CFBT).

Okay, let’s summarize. If you pay all-cash for a rental property, because there are no mortgage payments, NOI by default represents the property’s cash flow. On the other hand, when there are mortgage payments, NOI represents the amount of money available to service the debt, and then, subsequently the cash flow only after the loan payments.

How to Calculate Net Operating Income

Gross Operating Income less Operating Expenses = Net Operating Income

For example, let’s assume you’re doing a real estate analysis on an apartment building that produces a gross operating income of $100,000 and operating expenses of $42,000. What is the NOI?

This should be easy. $100,000 less $42,000 equals $58,000.

Okay, but let’s make sure that you understand both components in the formula.

1) Gross Operating Income (GOI) – This equals the rental property’s annual gross scheduled income less vacancy and credit loss. In other words, GOI is the actual income the rental property is expected to produce.

2) Operating Expense – An operating expense ensures the property’s continued ability to produce income. Whereas such things as property taxes, utilities, and maintenance and repairs are operating expenses, mortgage payments, depreciation, and capital expenditures are not considered operating expenses.

The Role of Net Operating Income

Net operating income plays a large role in a variety of real estate investment and holding period decisions. Capitalization rate, for instance, is calculated by dividing NOI by sale price, and property value is calculated by dividing NOI by capitalization rate.

Likewise, net operating income is significant to lenders. To compute debt coverage ratio (DCR), for instance, net operating income is divided by annual loan payment.

The Credibility of Net Operating Income

Not unlike any component in a real estate analysis, net operating income is only as good as the numbers used to compute it are credible.

Whether you use real estate investment software, a spreadsheet, or pencil and paper for your real estate analysis, you must spend the time to validate the numbers and reconstruct the owner’s representations for income and operating expenses if necessary.

Prudent real estate analysis demands it. Whenever you are running the numbers on any real estate investment, rely on nothing less then the most credible net operating income possible.

Operating Systems Analysis, Estate, Income, Operating, Real, Used