Guides

CAM Reconciliation, Explained with a Worked Example

July 22, 2025

CAM reconciliation is the year-end (or period-end) process of comparing what a tenant paid in estimated common area maintenance charges to their share of actual expenses — then billing or crediting the difference. This guide explains the mechanics with a synthetic worked example you can reuse for training. No real property or tenant data.

If you already abstract leases into structured fields, CAM math gets faster because pro-rata share, base year, and cap language are not re-hunted in the PDF every January. See CAM reconciliation software for how DealLink automates the calculation path.

What CAM reconciliation is trying to answer

For each tenant (or each lease):

1. What did we bill in estimates during the year?
2. What was this tenant’s share of actual CAM (and related) expenses?
3. After caps, admin fees, and gross-up (if any), what is the true-up — amount due from tenant or credit back?

Get any input wrong (wrong SF, wrong share, wrong cap type) and the true-up is wrong — which is why lease terms and expense books have to stay aligned.

Inputs you need before you calculate

From the lease / abstract:

• Premises SF and denominator SF (or fixed pro-rata percentage)
• CAM / opex definition and exclusions
• Base year (if applicable)
• Cap type and rate (year-over-year vs. cumulative; controllable vs. all-in)
• Admin or management fee treatment
• Gross-up language, if any

From the property books for the reconciliation period:

• Actual CAM (and pass-through) expenses in the categories the lease allows
• Total estimates billed to the tenant during the period

Worked example (fictional)

Property: Cedar Plaza (fictional)
Tenant: Northridge Retail LLC (fictional)
Lease premises: 4200 SF
Center denominator used in lease: 42000 SF
Pro-rata share: 4200 / 42000 = 10%
Period: calendar year 2025

Actual CAM expenses (landlord books, lease-allowed categories): $810000
Tenant’s raw share (10%): $81000

Estimates billed to tenant in 2025: $72000 monthly CAM estimates annualized

Simple true-up before caps:
Actual share $81000 − estimates $72000 = $9000 due from tenant

What a cap might change

Suppose the lease caps controllable CAM increases at 5% year-over-year, and prior-year controllable actual share was $76000. Cap ceiling for this year = $76000 × 1.05 = $79800.

If $81000 of “raw share” includes only controllable expenses subject to the cap, the capped share becomes $79800 (example — real leases often split controllable vs. uncontrollable, with taxes/insurance passing uncapped).

Capped true-up example:
Capped share $79800 − estimates $72000 = $7800 due from tenant

Numbers above are for teaching. Always apply the lease’s actual cap definition, exclusions, and admin-fee stack. DealLink encodes those lease rules so the same logic runs across the roll instead of a one-off spreadsheet per tenant.

Where teams usually break the process

• Using building SF that does not match the lease denominator
• Ignoring amendments that changed share or cap language
• Applying a YoY cap when the lease is cumulative (or the reverse)
• Capping expenses the lease says are uncapped
• Reconciling from memory instead of from an abstract + source clause

A clean lease abstract with CAM structure fields is the antidote to the last two.

Spreadsheet vs. software

Practical checklist for year-end

1. Confirm lease abstract CAM fields still match the controlling documents
2. Lock the expense categories allowed under each lease
3. Load actuals and estimates for the period
4. Run share → cap → admin/gross-up → true-up
5. Review outliers (huge credits/debits) against source clauses
6. Issue statements and record payments/credits

Related

• CAM Reconciliation Software
• Lease Abstraction Software
• Lease Abstraction Checklist