CapEx (Capital Expenditures)

Category: finance

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

CapEx is the "big fix." Fixing a toilet is an operating expense; replacing the entire roof or upgrading the HVAC system is CapEx. CapEx does not show up in the NOI calculation; it goes "below the line," but it is vital for estimating the long-term cash drain on a property.

Common Examples

• The buyer negotiated a price reduction after discovering that the building required $2M in immediate structural CapEx.
• We set aside a dedicated CapEx reserve fund from our monthly cash flow to ensure we can cover the inevitable parking lot resurfacing.