CAM and TRIPLE NET Charges

[KJD]

I have a two part question for those of you that have Cam charges in your lease whether you are a tenant or a landlord.

(1) In my lease it states that all management expenses are not to excede 5% of gross income of the Shopping Center.

Would that be 5% of the cam fees collected or 5% of the gross rent collected?

(2) I have many line item charges on my Cam statement like Management fees, Bookkeeper fees, Accountant fees, Office supplies etc.

Should all these fees be included in the Management fees?

Here is the exact paragraph in my lease:
"ALL COSTS to supervise and administer the common areas, including labor,payroll,taxes,collection of rents and all management expenses of shopping center, not to exceed 5% of gross income of the Shopping Center".

[pete f]

I read that as you will be paying an additional about 5% of your rent on CAM fees.

[KJD]

I read that as you will be paying an additional about 5% of your rent on CAM fees.

Pete, this is just about the management fee.

We also pay all the other expenses like taxes, insurance, trash removal, bldg. & grounds maint. etc.

Our total RENT is $ 135,000.00 per year so you are saying the landlord is entitled to a management fee of up to $ 6750.00 (5% of $ 135,000) ?

Or would it be 5% of the cam charges which are $ 37,000.
5% of $ 37,000.00 = $ 1850.00 ?

Thanks

[anonymous]

One could view it as 5% of the rent PLUS all the CAM charges, as the total of all of them is the gross for the center. Awfully sweet deal - for the landlord!

[bodman]

Just being nosey but if rent is 135000 WHAT KIND OF gross is this place doing ? Going with a figure of 25% of gross for rent that should follow that this mat is grossing in excess of $540,000 a year. Is that the number you have confirmed?

[Walter]

KJD,

A slightly different take. There is no SHOULD in lease agreements. Every shopping center will try to construct the most one-sided terms it can get away with. IMO, the 5% could refer to the gross income of the shopping center. In many centers, each retailer has to provide a receipts tape each month to verify sales, and it's using this tape that the landlord rolls up his gross income number. Once the landlord has his gross income number, he then pro-rates the management fee among all the lessees, either based on percentage of gross income or square footage, or some other formula. In other words, it sounds to me that the 5% is a cap on how much the total fee will be to all tenants.

You need to ask for clarification from the property manager...

Walter

[KJD]

Just being nosey but if rent is 135000 WHAT KIND OF gross is this place doing ? Going with a figure of 25% of gross for rent that should follow that this mat is grossing in excess of $540,000 a year. Is that the number you have confirmed?

$ 135,000
Gross rent collected for entire shopping center (six stores)

[pete f]

I read that as you will be paying an additional about 5% of your rent on CAM fees.


I read to fast and sometimes it shows.. sorry.
5% management expense plus cam is what you did write originally. The "up to" party sounds very vague, as in yes it is 5%. plus other cam. You may have some out... as do they have to prove what the management expenses? This does not specify an outside management company expense, only the expenses of the management, IE, maillouts, office supplies, gas, stamps etc.? How long is the lease and how good is the rent? Sometimes the fight is not worth it. What did they bill last year?

[KJD]

Pete,
The old landlord charged a flat fee of $1200.00 for management fee for 15 years. The base cam fees were $24,000.00 so I assumed it was based on 5% of the cam fees collected. (I never questioned it)

New landlord has increased to:
$1800.00 Man.fee
$ 500.00 Acct. fee
$ 400.00 Bookkeeper fee
$ 200.00 Office supplies

So basicly anything management related has gone from $1200.00 (Cheap) to $2900.00 (Probably still cheap)

But my question still is 5% of what # is used?
5% of Cam fees ?
5% of gross rent collected ?
5% of gross receipts of shopping center ?

It is just about time to excercise my next five year option but do not want to ask the landlord for clarification about this clause for fear I would point out something he might be able to charge much more for.

[Walter]

KJD,

IMO, no one on the Coinwash Board can answer your question. Based on your statements, it seems the landlord could charge up to 5% of gross income for the shopping center, distributed among the tenants any way he sees fit. If it were me, I'd let sleeping dogs lie, extend my option and hope for the best...

Walter

[kbc747]

I would just ask, don't make any changes until you ask. I'm sure your landlord is approachable, if not that is the reason to leave but if they are then ask and make sure they respond in writing.

[pete f]

The 5% would be of gross rent, so $!35k 5% is $6750 could be the fee. It is "up to" Sounds like he is doing you a favor by adding on extra to the old landlord :) keeping it about 2.5%.. New landlords are looking for more ways to recoup ROI. Basicaly you are at the landlords' mercy

[Silent Roo]

Generally if it 5% it is 5% of gross. It depends on the landlords and property managers will.
This is a cost you need to have nailed down in the lease. Understand everything in the lease can be changed.