Recovery Ratio Stress Test Calculator

Triple-net recoveries depend on occupancy. This calculator stresses the recovery ratio under downside vacancy and shows the NOI hit.

Base occupancy %

Stressed occupancy %

Annual pass-through expenses

Recovery gap (annual)

$112,000

Base recovered

$736,000

Stress recovered

$624,000

How the math works

Recovery gap = (base − stress occupancy) × pass-through expenses. LL eats gap when stress hits.

Underwrite recovery at stabilized minus 5-10%. Don't credit 100% occupancy in pass-through flow. The gap is real cash out the door when a big tenant leaves.

How to Use

Enter base-case occupancy.
Enter stressed occupancy.
Enter annual pass-through expenses.
Read recovery gap and NOI hit.

Frequently Asked Questions

Why does vacancy bite?

Empty space doesn't pay recoveries. LL eats that share. A 90% to 75% occupancy drop can shift $100k+ of expenses onto LL. NOI drops by exactly that amount.

Typical buffer?

Reserve 1-2 months of pass-through expenses in operating account. Don't rely on monthly recoveries if tenant payment timing is inconsistent. Major tenant defaults create immediate gaps.

Is it recoverable?

Yes, when vacancy fills. Meanwhile, it's a working-capital hit. Chronic gross-up abuse (pretending vacant rent still passes through) is legally suspect and tenant-visible.

How do institutional LPs use this?

Institutional LPs expect sensitivity tables at every underwriting — base case plus at least two stress scenarios. Submit this output alongside traditional pro formas. LPs read quickly for two things: does the base case clear target IRR, and does the stress case produce positive equity multiple. If both yes, deal is investable. If stress goes negative, more equity or a lower purchase price is needed.