Polling Landlords & Property Managers on CAM

[Robert T.]

Fellow BP members who are commercial landlords & PM: Out of 100 tenants, how many of your tenants would pay the adjustable CAM at the end of the year? Any strategies to share? Thanks! 

[Mike Giudici]

They should all pay. If they don't, they are in default of the lease. Do you have concerns with the end of the yer coming up?

A few things to note:

1. Unless you're dealing with larger national or corporate tenants, there is a pretty good chance the Tenants will need a lot of hand holding as you explain the reconciliation process and any monies owed, etc. be prepared for a pushback, especially if they owe money.

2. if the property is well managed, the reconciliation should be a breeze and most Tenants should not owe or receive credits of more than a few hundred dollars. Budgeting and completely understanding all facets of a Tenants lease are important steps to preparing an accurate estimate each year.

3. If you deal with a larger or national Tenant, be prepared for an occasional 3rd party audit (if allowed under the lease). Keep good records and make sure all invoices are billed correctly and have clear descriptions and locations of all services. If you are audited, and they find large discrepancies, the Tenant will expect answers and an immediate credit, and in some circumstances make the Landlord pay for the audit. Not to mention subject further CAM billings to additional scrutiny. 

CAM reconciliations can be difficult for both Landlords and Tenants at times. A small 10,000 SF single use NNN property would be very simple, whereas a large class A 1,000,000 SF multi-tenant high rise tower would be quite complex.