What is CAM and how is a tenant's share calculated?
CAM is a tenant's share of the cost of running a property's shared areas, such as parking lots, landscaping and common utilities. The usual share is your leased square feet divided by the property's gross leasable area. A 5,000 sq ft store in a 50,000 sq ft center pays 10% of the pool.
| Line | Amount |
|---|---|
| Store size | 5,000 sq ft |
| Center gross leasable area | 50,000 sq ft |
| Pro rata share | 10% |
| Actual CAM pool for the year | $250,000 |
| Store's actual CAM | $25,000 |
| Estimates paid ($2,000 × 12) | $24,000 |
| True-up owed to landlord | $1,000 |
Check the denominator first. A lease may define it as leasable, leased or occupied area, and each gives a different share. If the landlord quietly drops vacant space from the denominator, every remaining tenant pays more.
What should you check on a CAM reconciliation statement?
Compare every statement with its lease. Confirm the pro rata share and denominator, that caps on controllable costs were applied correctly, that any gross-up touches only variable costs, that excluded items were left out, that management fees stay within the lease percentage, and that the estimates credited match what you actually paid.
| Common error | What to check against the lease |
|---|---|
| Capital expenditures passed through in full | Whether capital items are excluded or must be amortized over their useful life |
| Management fee above the lease limit | The management fee percentage and what it is calculated on |
| Gross-up applied to fixed costs | Gross-up should adjust variable costs only, to the stated occupancy level |
| Vacant space dropped from the denominator | How the lease defines the area used for your share |
| Caps compounded incorrectly | Whether the cap is cumulative or non-cumulative, and its base year |
| Excluded costs included | Exclusions such as leasing commissions, debt service, insurance-covered repairs and other tenants' build-outs |
| Utilities billed twice | Utilities you pay directly should not also appear in the CAM pool |
How long do you have to audit or dispute CAM charges?
The lease sets the audit window, commonly 30 to 90 days after you receive the reconciliation, sometimes longer. If you miss it, the statement is usually deemed accepted. Many leases shift the audit cost to the landlord if the overcharge exceeds a threshold, often around 5 percent. Track every lease's deadline separately.
With 20 or more stores, statements arrive across the first half of the year from many landlords, each with its own deadline. Log the date each one arrives, calculate its deadline from that lease, and review the largest and the most changed statements first.
How do you account for CAM estimates and the annual true-up?
Expense monthly CAM estimates as you pay them. When the reconciliation arrives, record the true-up as an additional expense or a receivable from the landlord in that store's books. If a material true-up is probable and estimable before year end, accrue it. Under ASC 842, CAM billed on actual costs stays out of the lease liability.
Keep CAM, real estate taxes and insurance in separate accounts per store. It makes year-over-year comparisons possible and turns a spike at one location into something visible in the flux review rather than buried in rent.