# CAM recovery reconciliation

Canonical: https://chicagocommercialfunding.com/tools/cam-recovery/

Test the tenant share, a compounded dollar cap and year-end reconciliation.

## Model inputs and hypothetical defaults

- Eligible capped expense pool ($): 300000
- Tenant area (SF): 5000
- Lease allocation denominator (SF): 40000
- Tenant dollar cap base ($): 30000
- Annual compounded cap (%): 5
- Years of cap growth: 3
- Tenant estimated payments ($): 32000

## 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.

## Limitations

A single controllable-expense pool with a cap on tenant dollars. Actual lease provisions govern exclusions, separate pools, gross-up and noncumulative limits.

The canonical HTML page provides the interactive calculator. Inputs stay in the browser; hypothetical defaults are not current financing terms. Distinguish operating income, debt service, capital expenditures and investor distributions.

## Research and related reading

- [Source material](https://www.sec.gov/Archives/edgar/data/1319947/000095015206009917/l23543aexv10w1.htm)
- [Read the lease-level recovery mechanics](https://chicagocommercialfunding.com/guides/cam-recoveries-caps-exclusions-and-audit-rights/)
- [Normalize the property-level retail recoveries](https://chicagocommercialfunding.com/guides/retail-cam-reconciliation-and-nonrecoverable-expenses/)