In commercial leases, tenants pay a pro-rata share of common area costs based on their square footage. CAM reconciliation compares estimated payments to the actual share — billing the shortfall or crediting the overage.
The example
$80k CAM, 2,500 of 25,000 sqft.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | Share 10% | $8,000 |
| 3 | vs $7,200 paid | → owes $800 |
The formula
The formula:
How it works
How it works:
- Pro-rata share = tenant sqft ÷ total leasable sqft.
- Multiply by total CAM costs for the tenant’s actual share.
- True-up = actual share − estimates paid — positive means the tenant owes, negative is a credit.
- Some leases cap annual CAM increases — apply
MIN(share, prior × (1+cap)).
CAM is a year-end true-up against monthly estimates. Tenants pay an estimated CAM each month; at year end you compute each tenant’s actual pro-rata share and reconcile — bill the shortfall or issue a credit. The pro-rata fraction (tenant sqft ÷ total sqft) must be consistent and the cost pool clearly defined in the lease. This is illustrative; CAM clauses and caps vary by lease.
Try it: interactive demo
Total CAM, tenant sqft, total sqft, estimates paid.
Variations
Pro-rata share %
Tenant fraction:
True-up
Owed or credit:
Capped increase
Annual cap:
Pitfalls & errors
Consistent sqft. Use the same leasable-area basis for every tenant.
Define the pool. What counts as CAM is set by the lease.
Caps and exclusions. Apply lease caps before billing the true-up.
Practice workbook
Frequently asked questions
How do I calculate a CAM share in Excel?
How does the reconciliation work?
How do I apply a CAM cap?
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