Compare CAM caps year by year.
Is your cap cumulative or non-cumulative, and how much does that matter? Enter the first year's controllable CAM, the cap rate and what costs actually did each year. The table shows every kind of cap side by side: its ceiling, what's billed and what the tenant saves.
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The CAM cap calculator
The cap and the first year
The tenant's share, or the whole pool
What the costs actually did
What each cap bills
Non-cumulative, billed: $543,942.88 over 5 years. Non-cumulative, actual: $548,060.30 over 5 years. Cumulative, compounding: $550,366.63 over 5 years. Cumulative, simple: $548,000.00 over 5 years.
Non-cumulative, billed
$543,942.88
Saves $12,734.40 over 5 years
Non-cumulative, actual
$548,060.30
Saves $8,616.98 over 5 years
Cumulative, compounding
$550,366.63
Saves $6,310.65 over 5 years
Cumulative, simple
$548,000.00
Saves $8,677.28 over 5 years
| Year | Actual | Non-cumulative, billed | Non-cumulative, actual | Cumulative, compounding | Cumulative, simple |
|---|---|---|---|---|---|
| 1 | $100,000.00 | $100,000.00 | $100,000.00 | $100,000.00 | $100,000.00 |
| 2 | $103,000.00 | $103,000.00ceiling $105,000.00 | $103,000.00ceiling $105,000.00 | $103,000.00ceiling $105,000.00 | $103,000.00ceiling $105,000.00 |
| 3 | $113,300.00 | $108,150.00ceiling $108,150.00 | $108,150.00ceiling $108,150.00 | $110,250.00ceiling $110,250.00 | $110,000.00ceiling $110,000.00 |
| 4 | $115,566.00 | $113,557.50ceiling $113,557.50 | $115,566.00ceiling $118,965.00 | $115,566.00ceiling $115,762.50 | $115,000.00ceiling $115,000.00 |
| 5 | $124,811.28 | $119,235.38ceiling $119,235.38 | $121,344.30ceiling $121,344.30 | $121,550.63ceiling $121,550.63 | $120,000.00ceiling $120,000.00 |
| Total | $556,677.28 | $543,942.88 | $548,060.30 | $550,366.63 | $548,000.00 |
How the numbers are worked out.
The formulas
- Non-cumulative, on last year's billed
- billed(n) = the lesser of actual(n) and billed(n - 1) x (1 + r)
- Non-cumulative, on last year's actual
- billed(n) = the lesser of actual(n) and actual(n - 1) x (1 + r)
- Cumulative, compounding
- billed(n) = the lesser of actual(n) and actual(1) x (1 + r) ^ (n - 1)
- Cumulative, simple
- billed(n) = the lesser of actual(n) and actual(1) x (1 + r x (n - 1))
What it assumes
- Caps here limit controllable costs, the ones the landlord can manage. Enter the tenant's share or the whole pool; the math is the same.
- Each year's ceiling is rounded half up to the cent before it's compared with the actual amount.
- A cap never bills more than the actual amount, even when costs fall.
- A partial first year is annualized before later years grow from it.
Worked example: a 5% cap over five years
Year one's controllable CAM is $100,000.00 and the cap is 5%. Actual costs then rise 3%, 10%, 2% and 8%: $100,000.00, $103,000.00, $113,300.00, $115,566.00, $124,811.28.
| Year | Actual | Non-cum., billed | Non-cum., actual | Cum., compounding | Cum., simple |
|---|---|---|---|---|---|
| 1 | $100,000.00 | $100,000.00 | $100,000.00 | $100,000.00 | $100,000.00 |
| 2 | $103,000.00 | $103,000.00 | $103,000.00 | $103,000.00 | $103,000.00 |
| 3 | $113,300.00 | $108,150.00 | $108,150.00 | $110,250.00 | $110,000.00 |
| 4 | $115,566.00 | $113,557.50 | $115,566.00 | $115,566.00 | $115,000.00 |
| 5 | $124,811.28 | $119,235.38 | $121,344.30 | $121,550.63 | $120,000.00 |
| Total | $556,677.28 | $543,942.88 | $548,060.30 | $550,366.63 | $548,000.00 |
Year three shows the difference: costs jump 10% to $113,300.00. A non-cumulative cap stops at $108,150.00; a compounding cumulative cap allows $110,250.00, because year two used only 3% of its 5%.
General information to help you check the math, not legal, tax or accounting advice. Your lease controls: where it says something different, follow the lease.
Edge cases and common mistakes.
Edge cases
Costs that fall
The tenant pays the actual amount. Under a non-cumulative cap on billed amounts, next year's ceiling then grows from the lower figure.
A partial first year
Annualize the first year's amount before it becomes the base. Enter the days occupied and the calculator does it.
Renewals
Some leases restart the cap at renewal with a new first year. Start a new schedule from that year.
Caps per square foot
A cap written as dollars per square foot works the same way: enter the amounts per square foot, or multiply by the area first.
Before or after gross-up
Caps are often tested after gross-up. If your lease caps the actual amounts, enter them before grossing up.
The admin fee inside or outside the cap
If the fee is figured on capped CAM, cap first and then add the fee; the reconciliation calculator does it in that order.
Common mistakes
Calling every cumulative cap compounding
Cumulative caps can grow simply (5% of year one each year) or compound (5% on top of last year's ceiling). After a few years the two differ.
Growing from the wrong base
A non-cumulative cap grows from last year's billed amount or last year's actual amount. The lease says which, and the gap widens every year.
Capping uncontrollable costs
Taxes, insurance and utilities are often outside the cap. Cap only what the lease's cap covers.
Questions
What is a CAM cap?
A limit in the lease on how much the tenant's share of certain operating costs, usually controllable ones, can grow from year to year. Costs above the ceiling stay with the landlord.
What is the difference between cumulative and non-cumulative caps?
A non-cumulative cap compares each year only with the year before, so room left unused one year is gone. A cumulative cap measures from the first year, so a landlord who stayed under the cap one year can recover that room later.
What does a compounding cap mean?
The yearly rate builds on itself: a 5% compounding cap allows 105% of year one in year two, 110.25% in year three and so on. A simple cumulative cap adds 5% of year one each year: 105%, 110%, 115%.
Which expenses does a CAM cap cover?
Whatever the lease says. Caps often cover controllable expenses, and leave out taxes, insurance, utilities and sometimes snow removal.
Does the cap apply in a partial year?
Leases handle it differently. A common approach prorates the ceiling for the days occupied, which is what the reconciliation calculator does.
Cornerhold does this from your leases and invoices.
Cornerhold reads each lease's cap, its type and its base from the lease itself, with the page it came from, and applies it in every reconciliation, on controllable costs when the lease says so. Owner and Owner Plus start with 14 days free, and you can set up your portfolio in about ten minutes.
The buildings, businesses, people and figures in the examples on this page are made up.