how are expenses reimbursed in shopping centers?
Hi,

I'm curious as to the calculation involved in expense reimbursement across a multi-tenant NNN retail center. Is there a square footage formula involved, or are all allocations typically covered in the lease? Is it commonplace for all tenants to pay that pro-rata charge in their monthly payments or are they billed separately for the expenses? 

Thanks
[{"id": "ey6umyl", "text": "Its generally based on SF, which would be defined in the lease.  It is fairly common to have limits on year over year increases and the owners ability to bill for first party services (pm etc).  \n\nThey generally pay estimated expenses on a monthly basis until reconciliation, which is generally once a year, then they may have paid too little or too much and it will be corrected.  They settle up and the new expense rate is created.  \n\nrinse and repeat.....  Its not like the the landlord sends everyone a stack of bills every month and the tenant has to sit down with a calculator and figure out what their share of the snow removal was this month based on sf though if that was your question", "replies": [], "depth": 1}, {"id": "ey6usly", "text": "Usually there\u2019s a CAM fee associated and that is passed thru to the tenant. (Community Area Maintenance) It is similar to the HOA that is experienced with Condos but for the commercial setting (layman terms)", "replies": [], "depth": 1}, {"id": "ey8tm5c", "text": "CAM, taxes and insurance are expenses incurred by the LL and then recovered by billing the tenants directly on a pro rata basis. CAM consists of all upkeep for the shopping center and then sometimes capital expenditures or improvement projects( my company passes through everything as we keep our centers in tip top shape.) \n\nTaxes and insurance pretty much stay the same but there are usually yearly reconciliations done. We estimate what the CAM will be with a yearly budget and then bill the tenants. At the end of the year, depending on if we went over/under our budget, tenants will then either get a credit if they overpaid based on actuals, or have to pay more if CAM was actually higher. Tenants who are wiser will typically have annual maximum increases on CAM expenses written into their leases.\n\nInstitutional owners are different. They usually keep a flat CAM expense which I don\u2019t think is the best practice. CAM charges may vary from $3-$4 a year but they may always charge a flat rate or $6.", "replies": [], "depth": 1}, {"id": "ey8u2om", "text": "I've written an article here if you are interested in reading more about CAM allocations and cost recoveries: https://cressblue.com/calculating-the-cams-common-area-maintenance/", "replies": [], "depth": 1}, {"id": "ey8zso5", "text": "pro rate share based on your Square Footage of your space.  Yes it is normally monthly payments.  \n\nThen at the end of the year, they will either credit you with amount for overcharging you through the year, or debit you because they short charged you for the year.", "replies": [{"id": "ey8zxlt", "text": "you can try to negotiate they can only bump the budget up  2-3% bumps , but not many people get it.", "replies": [], "depth": 2}], "depth": 1}]