CAM Question

[gville81]

How would you view " $22.50 NNN with CAM $3.50"?

Would this mean that CAM makes up part of the $22.50NNN or to have actual NNN it would be $26NNN?

 

[TerryRohrer]

The landlord nets the triple net after reimbursement of the CAM charges (before their own expenses) if the terms are applied as typically meant.

 

[glenn walker]

Has to be spelled out. There are modified CAMs and ones that aren't typical.

 

[Gobears81]

CAM may or may not equal all operating expenses. I recently appraised a multi-tenant property where some tenants had over $6/ SF in CAM charges, others had much lower or no CAM charges. Some include management fees and others cap out RE taxes reimbursements, so not every agreement is created equal. There is a greater likelihood that the landlord isn't passing through 100% of operating expenses in a weaker market than a stronger market. I would try to get more information about what is included.

 

[George Hatch]

It's not common but the leases can occasionally be written differently even within the same property; some on NNN and others on some form of modified or full service gross.

I always run CAM charges on a separate line. Occupancy counts. Nobody is collecting CAM charges from vacant units.

 

[gville81]

The landlord nets the triple net after reimbursement of the CAM charges (before their own expenses) if the terms are applied as typically meant.

Gotcha, thank you. Some leases are advertised like this to show potential buyers the expenses not associated with taxes and insurance?

 

[BRCJR]

It's not common but the leases can occasionally be written differently even within the same property; some on NNN and others on some form of modified or full service gross.

I always run CAM charges on a separate line. Occupancy counts. Nobody is collecting CAM charges from vacant units.

Around here the CAM is a charge, based upon leasable area, whether or not occupied. The owner, of the space, is responsible for paying. Even if that is the owner of the building they are required to "pay" their fair share. Otherwise, if the owner of the building had not paid their "fair" share you could have unfair assessments, if something needed fixed. The occupied spaces would be subsidizing the unoccupied spaces.

 

[TerryRohrer]

Gotcha, thank you. Some leases are advertised like this to show potential buyers the expenses not associated with taxes and insurance?

Generally, you can not rely on anyone to use terms in strict adherence to their standard definitions. With the exception of a relatively small population of appraisers, most are using standard terms according to their own personal definitions that are never articulated. Some are ignorant and some intend to mislead. When it comes to cap rates and income or expenses that impact NOI, I try to verify the minutia and make my own calculations so I control inputs into the highly sensitive income capitalization process. Otherwise, the validity of the outcome is unknown. You would be better off throwing darts or rolling dice.