Glossary
Calculations & Formulas
Pro-Rata Share
The percentage of total CAM costs allocated to a specific tenant based on the ratio of their leased square footage to the total leasable area of the building or property. The denominator is a critical variable that landlords sometimes manipulate.
Firm impact
A denominator error affects every dollar in the CAM pool for every year it persists. When your firm identifies a pro-rata share error in Year 1 of a five-year engagement, the recovery compounds across the entire lookback period. It's one of the highest-leverage findings in a CAM audit.
How this gets abused
A 100,000 SF shopping center has a tenant occupying 5,000 SF. The lease calls for a denominator of total GLA, giving a 5% pro-rata share. The landlord uses occupied space (80,000 SF) as the denominator, raising the share to 6.25%. On $500,000 of CAM, this error alone costs the tenant $6,250 per year.
Practitioner note
Verify the denominator independently. Request the property occupancy report and compare the denominator on the reconciliation against the lease definition and the property rent roll. Denominator discrepancies are sometimes intentional, not clerical.
FAQ
Questions about pro-rata share
What denominator should a well-negotiated lease specify?
The most tenant-favorable denominator is total gross leasable area of the property, including vacant space. This prevents tenants from bearing the cost burden of vacant units. Gross-up provisions can further normalize the expense pool.
Does CAMAudit verify the pro-rata share denominator?
CAMAudit's tenant share math check compares the denominator used on the reconciliation against the denominator defined in the lease. Even a small denominator error compounds across multiple years, and CAMAudit flags the exact dollar overcharge.
You know the term. Now check the math.
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