Break-even Occupancy is the occupancy level needed to cover fixed operating expenses and debt service. Which formula expresses Break-even Occupancy?

• A. (Fixed OpEx + Debt Service) / NOI
• B. (Fixed OpEx + Debt Service) / PGI per occupancy
• C. NOI / (Fixed OpEx + Debt Service)
• D. PGI per occupancy / (Fixed OpEx + Debt Service)

Answer: (B)

Break-even occupancy asks how many units must be occupied to cover fixed operating expenses and debt service. At break-even, income equals expenses, so the total income from occupied units must equal Fixed OpEx plus Debt Service. Each occupied unit contributes PGI per occupancy, making total income equal to (PGI per occupancy) times the number of occupied units. Solving for the number of occupied units gives: (Fixed OpEx + Debt Service) divided by PGI per occupancy. That is exactly the form where the denominator is the income contributed by a single occupied unit, yielding the required count of occupied units. Using NOI in the denominator or numerator would mix after-expense income with the occupancy calculation, and using a different ratio would not produce a unit count. If you needed a percentage instead of a count, you’d divide by total units, but the given expression expresses break-even occupancy as a count of occupied units.