CAM recovery reconciliation
Test the tenant share, a compounded dollar cap and year-end reconciliation.
Your scenario
All entered eligible expenses are treated as controllable and capped. The cap applies to the tenant’s dollar obligation; exclusions, gross-up, separate pools, noncumulative clauses and actual lease language require a different model.
How the model works
Recovery = lesser of eligible expense × tenant share and cap base × (1 + cap)^years. Reconciliation equals recovery less estimated payments.
Worked illustration
A 12.5% share of $300,000 is $37,500. A $30,000 base compounded at 5% for three years caps recovery at $34,728.75. Less $32,000 paid leaves $2,728.75 due.
Confirm what is actually capped
This model applies a compounded cap to one tenant’s dollar recovery. Enter only the expense pool subject to that cap. Taxes, insurance, utilities or other categories may be treated differently in a real lease, and some caps apply to the property expense pool or a cost per square foot instead. A noncumulative annual limit, a cumulative unused allowance and a compounded base are different formulas.
The allocation denominator comes from the lease. Total physical area, leased area, occupied area and a designated cost pool can produce different shares. Gross-up provisions can change eligible costs before allocation, but do not universally allow a landlord to shift all vacancy costs to occupied tenants. The calculator does not invent those contractual rights. The linked 2006 SEC retail lease illustrates allocated maintenance costs and exclusions. Its provisions do not establish this calculator’s hypothetical compounded cap or a universal Chicago recovery right.
Move from entitlement to collection
A positive reconciliation is the modeled balance above estimates paid. A negative result is an illustrative tenant credit. Verify delivery, audit, documentation and dispute procedures before billing. The arithmetic alone does not establish enforceability or collectability. A tenant-specific cap should be applied once, rather than subtracting the whole property’s capped expense reduction from each tenant.
For acquisition, reconcile the most recent true-up with historical ledgers and the purchase agreement. Identify which party bears refunds, owns later collections and handles objections. Those settlement items can change closing cash without changing recurring stabilized NOI. Preserve category details and document references so the next owner or manager can reproduce the schedule instead of inheriting a single unexplained recovery percentage.
What to check before relying on the result
A single controllable-expense pool with a cap on tenant dollars. Actual lease provisions govern exclusions, separate pools, gross-up and noncumulative limits.
Model an adverse scenario as well as the expected outcome. Change one assumption at a time to identify what drives the result, then test combinations that could occur together. A property can meet a modeled financial threshold and still fail diligence, legal requirements or lender approval.
Keep the cash-flow definitions consistent
Distinguish recurring property operations from tenant improvements, leasing commissions, capital expenditure, financing costs and entity-level distributions. Verify whether reserves are expenses, funding requirements or cash movements in the documents you are analyzing. A cash-flow convention must remain consistent across the model and the comparison.
Research context
Consult the source material for this topic. The model is an original educational calculation, not a reproduction of a lender’s underwriting system. The initial numbers are hypothetical inputs rather than current market terms. No scenario inputs are transmitted or saved by this calculator.