Common area maintenance (CAM) charges play a key role in managing and maintaining commercial properties. CAM charges are not standardized and vary from one property/landlord/market/location to another. To maintain transparency with tenants these expenses are allocated appropriately and proportionately, and it is therefore important to follow the lease terms and guidelines and ensure accurate calculations to maintain good tenant relationship.
To reconcile CAM charges accurately it is imperative for property managers to know what expenses fall under the category of CAM and keep a close track of relevant expenses that need to be added under CAM charges. Reconciliation and calculation of CAM charges are critical for landlords/owners in order to ensure a well-maintained space and optimum return on property investment. Even then, CAM reconciliation remains one of the challenging areas for commercial real estate owners, owing to varied CAM structures, large scale property portfolios, lack of resources and stringent deadlines.
Minor losses result in substantial cost over time
Commercial property owners are swamped with a variety of property management and accounting tasks apart from their day-to-day operations. Because of which they often are pressed for time to meet the deadline for submitting CAM reconciliations, whereby tenant have enough time to be notified of the charges. CAM reconciliation is a complex and a time-consuming process to start with, the challenge is compounded when the deadline looms large and your team is racing against the time. Simple calculation errors are inherent in such situations. Although minor slippage, such as not adding certain costs, may seem benign and random, but these incremental losses stack up very high, very quickly. Apart from slippage and calculation errors, not giving your tenants enough time or not following up with them to address their concerns, if any, may also lead to defaults.
Now, imagine such random calculation errors and defaults across your retail portfolio over the years – the losses you are looking at are substantial and even worse is that they are challenging to recover.
Timely and accurate CAM reconciliation can save thousands of dollars
Needless to mention that efficient and timely CAM reconciliation can ensure that tenants have enough time to budget that amount. When you comply with the preset deadlines for CAM reconciliations, tenant get sufficient notice to review and pay the stipulated charges. Moreover, adhering to the timelines allow property managers to follow up with tenants and ensure they are aware of all the charges. It also provides time to address tenants’ concerns if any, which helps avoid any disputes or late payments later.
By carefully and accurately calculating and reconciling CAM charges, you can ensure timely communication to tenants and that charges are understood and paid by the deadline. Besides, tenants value transparency and proactiveness that further strengthens landlord-tenant relationship. And that is not all, on time and full collection of CAM expenses also helps efficient maintenance of the property, improves cash flow and optimize property valuation.
Springbord has been helping commercial real estate property managers ensure accurate calculation and reconciliation of CAM charges across the globe. Tell us about your challenges and we can help you by ensuring timely and efficient reconciliation and communication. Talk to us today and we will walk you through our services.