CAMs and what is included

3 Replies

Hi BP

I wanted to get your opinion on what is included in Common Area Maintenance fees (CAMs). I know that most if not all fees for the maintenance and care of the property are included. However one thing I am wondering is if you have a tenant (I am speaking from the commercial side of real estate) and have a NNN lease. In your CAMs charges, do you include the fee for a management company or manager?

I am looking at developing a few industrial properties and want to be able to base my underwriting correctly if I should include the management fee in the CAMs once the property is up an running.  

Thank you!

Typically there is a mgt fee for the CAMs that are included. For example, if the CAMs are $100. The CAM mgt fee would add on $10 assuming 10% CAM mgt fee. So the total passed on to a NNN tenant would be $110 for CAMs.

@Chad Hale Thank you for the information.  I figured as much but wasn't quite sure.  In talking with a few property managers I know that have done commercial management.  The fees are usually based on a percentage of income the property draws from leases.  The CAMs are then expensed back to the tenants typically.  Thank you for confirming that Management fees are included in the expensing back to tenants.  Really helps.

@Jonathan Orr   Just to be clear only the management expense associated with the CAM charges are passed back to the tenants.  The "regular" management expenses are not charged back to the tenants.  

Hopefully, I didn't just confuse everyone.