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TOPIC: Lease CAM Questions

Lease CAM Questions 20 Sep 2001 20:19 #14189

  • BECKWITH1
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We are looking at a lease on an 8 plex with 22000 sq ft. Rate would be 4.75 per sq ft, BUT the CAM cost is over 3,000 per month - figures out to be about 1.88 per sq ft additional cost. This includes real estate tax, insurance and common area charges. My current CAM figures out to be about .38 per sq ft in same area. Could anyone help me with understanding this. Do I have an unusually low CAM now or does this make any sense to you? It seems to be based on actual expenses so it doesn't look like an attempt to get additional rent and I'm concerned about how much it could go up over the lease term.
Please comment!
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Re: Lease CAM Questions 23 Sep 2001 20:26 #14190

  • Rialto
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Will the landlord consider any sort of gross or modified gross deal instead of triple net? Have you tried to negotiate a cap on increases in CAM charges either tying them to a specific percentage or to no more than the CPI increase for your market area? Might be worth inquiring about what kind of and amount of insurance coverage you are paying for in the CAM on both properties. Also is the 8-plex in an area with special assessments on its property taxes? This could also be driving up CAM cost. The range does seem extreme.
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Re: Lease CAM Questions 24 Sep 2001 14:04 #14191

  • Mike
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I would absolutely interview with the current tenants and find out how much they are paying. In addition: a cinema is a serious draw for a mall and you should be subsidized by them rather than the opposite. You have probably one of the largest operations in the place so why should you pay for thier parking lot cleaning, etc. At this time in the economy negotiaition is the key word. Stay friendly and positive but make it clear that the CAM is excessive.

Mike Hurley
www.bigscreenbiz.com
Michael Hurley
Impresario
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Re: Lease CAM Questions 25 Sep 2001 18:20 #14192

  • BECKWITH1
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Thanks for the replies. I didn't pickup up the whole CAM charge as quoted to me from the financial statements. I found the real estate taxes and "CAM and insurance" but missed the other thousand. It might be buried in with the property insurance which is 1200/ mo. The previous tenants have been paying 9.25 per sq ft plus CAM. It doesn't hurt to know that they have been making a tiny profit at these rates, but attendance has been declining.
I will take your advice and request some details on the CAM charge, but wanted to know if I was crazy first. That is where you helped! Rialto, I will also look at ways to limit further expansion of the CAM as you suggested. The proposal I am looking at does include percent rent at 1.8 million. I also don't want to go into business with my landlord as you all have discussed before on this forum. I just want a deal I can live with even if the economy goes down the tubes and when no one wants to see movies (like right now!).
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Re: Lease CAM Questions 17 Jan 2007 01:58 #14193

  • BurneyFalls
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Can someone explain triple net and CAM? I own my two singles, but am curious what these terms represent.
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Re: Lease CAM Questions 17 Jan 2007 09:17 #14194

  • rodeojack
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CAM, or "Common Area Maintenance" charges would apply to such things as parking lot maintenance and lighting, landscaping, security, common hallway janitorial, etc. However, this web site suggests that most anything could be fitted under the classification:
http://www.rentmanager.com/cam_charges.htm

Double or triple net leases help define what the landlord actually makes on the deal, as opposed to what his costs are. In such leases, you get charged an additional amount over the rent, based on what it costs the landlord to own, insure and maintain the property you lease from him. In such cases, you should get annual statements, itemizing these amounts, though I've had landlords who were reluctant to provide them.

Here's some more info on Triple-Nets.
http://www.netleasedretail.com/tripleNet.php
http://www.mortgage-investments.com/Investors_in_Real_Estate/net-lease_commercial.htm
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Re: Lease CAM Questions 17 Jan 2007 17:33 #14195

  • BurneyFalls
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Thanks Rodeojack.
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