Common Area Maintenance_Reconciliation_Presentation.pptx

The document explains the concept, process, and best practices for CAM (Common Area Maintenance) Reconciliation in commercial real estate accounting.

1. CAM Reconciliation Overview, Process, and Best Practices

2. What is CAM? Common Area Maintenance (shared operating expenses) Examples: lobbies, hallways, elevators, landscaping, lighting Costs distributed among tenants

3. What is CAM Reconciliation? Annual comparison: Estimated vs. Actual CAM charges Shortfall → tenant pays more Surplus → tenant gets credit/refund

4. Categories in CAM Reconciliation CAM Year-End (CY) – Operating expenses Insurance Year-End (IY) – Insurance premiums Re-Tax Year-End (RY) – Property taxes

5. Expense Pool Group of actual operating expenses allocated to tenants Types: CAM expenses, Insurance, Taxes

6. CAM Reconciliation Process 1. Collect actuals (GL, invoices) 2. Identify lease terms 3. Allocate expense pool 4. Compare estimated vs. actual 5. Calculate adjustments 6. Post journal entries 7. Send invoices/credits

7. Common Challenges Missing data Timing mismatches Incorrect allocations Cash sheet issues Mislabeling categories

8. Example Reconciliation Categories CAM Year-End (CY): Operating Expenses (Maintenance, Cleaning) Insurance Year-End (IY): Property Insurance (Fire, Liability) Re-Tax Year-End (RY): Property Tax Recovery (Local Tax Bills)

9. Expense Pools in Detail CAM Expense Pool → janitorial, landscaping, utilities, security, trash removal Insurance Pool → property, liability, machinery, flood, umbrella policies Re-Tax Pool → real estate taxes, assessments, school/county taxes

10. Lease Clauses to Review Base year CAM cap Gross vs. NNN lease Exclusions Pro-rata share

11. Capital vs Operating Expenses Operating = included (repairs, utilities) Capital = usually excluded (roof replacement, HVAC upgrades)

12. Posting in Accounting Software Journal entries for adjustments Use appropriate GL accounts Batch posting under proper naming Save backup documentation

13. Supporting Documents Budget (approved) Actual Expense Report (GL detail) Lease Abstracts Reconciliation Worksheet Invoices issued/credited

14. Best Practices Document assumptions Cross-check estimates vs. actuals Maintain version control Peer review before posting Transparency with tenants

15. Additional Tips Use property management software (Yardi, MRI) Provide clear breakdowns to tenants Regular training for teams

16. Final Note CAM reconciliation ensures fairness, accuracy, and trust Following structured processes builds compliance and transparency