Managing Common Area Maintenance (CAM) charges is an essential part of commercial real estate operations. Accurate CAM reconciliation ensures both landlords and tenants are billed fairly, but performing manual calculations can be time-consuming and error-prone, especially for businesses with a large portfolio of leases. This is where Nakisa Real Estate (NRE) software comes in, providing an automated solution that streamlines CAM reconciliation. In this post, we’ll guide you through the steps to automate CAM reconciliation using Nakisa Real Estate and explain how this software helps manage complex commercial real estate portfolios more efficiently.

What Are CAM Charges in Real Estate?

CAM charges are the costs associated with maintaining common areas in a commercial property, such as lobbies, hallways, elevators, and parking lots. These charges are typically shared among tenants, based on the amount of space they occupy. While the landlord typically manages these areas, the tenants bear the costs. CAM charges can fluctuate from year to year, making it essential for tenants to account for these costs in their financial planning.

Reconciliation of CAM charges is vital as it ensures tenants are only billed for their fair share of the actual maintenance costs. If there’s a discrepancy between the amount paid by tenants and the actual costs incurred, the reconciliation process corrects it, ensuring transparency and fairness in billing.

Benefits of Automating CAM Reconciliation

Automating CAM reconciliation with commercial real estate software provides several key benefits, especially for large enterprises. Let’s take a look at how automation helps streamline this critical process:

• Accuracy: With hundreds of lease contracts, it’s easy to miss specific terms or overlook exclusions. Automation ensures that all terms are considered during reconciliation, reducing the risk of human error.

• Cost and Time Savings: Automation reduces the time spent on manual calculations and spreadsheets, allowing teams to reconcile CAM charges much faster. For example, companies with large portfolios can save millions annually by automating this process.

• Transparency: Centralizing lease terms and expenses makes it easier to spot discrepancies. It ensures that all charges are accounted for and that you have a clear understanding of what each tenant owes.

• Efficient Dispute Resolution: With clear, accessible data, any disagreements over CAM charges can be resolved quickly. Accurate, real-time data makes it easier for landlords and tenants to manage discrepancies and avoid conflicts.

How to Automate CAM Reconciliation with Nakisa Real Estate Software

Now that we’ve discussed the benefits, let’s walk through the process of automating CAM reconciliation using Nakisa Real Estate (NRE) software. This process involves three main steps: setting up lease terms, adding operational costs, and performing the reconciliation. Here’s how it works:

Step 1: Set Up Lease Terms and Conditions

The first step is to create the lease contract in Nakisa Real Estate. This is where you’ll define the terms that govern CAM charges, such as expense types, pro-rata share conditions, and expense caps.

• Expense Types: In NRE, you can specify different types of CAM expenses, such as building maintenance, parking lot maintenance, and utilities. For greater accuracy, use detailed labels for each category instead of broad terms like “CAM.”

• Pro-Rata Share Conditions: This refers to the percentage of the building’s total square footage that each tenant occupies. NRE automatically calculates this share based on the input areas, ensuring that tenants are billed fairly.

• Expense Caps: Often, lease agreements include caps, which limit the amount tenants will pay for certain expenses. NRE allows you to set different types of caps, such as fixed or percentage-based limits. These can be applied to individual expense categories, making it easier to adhere to lease terms.

Step 2: Add Operational Costs at the Location Level

Next, you need to input the operational costs associated with the entire building. These costs typically include maintenance, taxes, utilities, and other shared expenses. This step involves adding the actual charges for the property, which will be used for reconciliation.

• Go to the Operating Costs tab at the location level in NRE and add the annual operating costs. These should include all expenses from the landlord’s invoices, such as building maintenance, parking, and utilities.

• Once the charges are added, you can track and manage the operating costs year by year. The system will display a summary table of the expenses, allowing you to review and edit them if needed.

Step 3: Perform CAM Reconciliation at the Lease Contract Level

The final step in the process is to perform the CAM reconciliation. Here’s how to do it in NRE:

• Go to the Reconciliation tab in the lease contract section and create a new reconciliation period. Input the relevant details such as the reconciliation year, period start and end dates, and invoice amounts.

• Map Expenses to Lease Conditions: After setting up the reconciliation period, map the operational costs (from Step 2) to the corresponding lease conditions (from Step 1). For example, if there’s a charge for parking lot maintenance, map this expense to the relevant lease condition for parking.

• Automate the Calculation: Once the mapping is complete, click on “Calculate.” The system will use the pro-rata share and any applicable caps to determine each tenant’s portion of the CAM charges.

• Review and Post: The final reconciliation amount will be displayed, showing the calculated CAM charges, including any adjustments for caps and fees. You can then review the results and post the payment to your ERP system, making the process seamless and efficient.

Conclusion

Automating CAM reconciliation with Nakisa Real Estate software simplifies a traditionally complex and error-prone task. By ensuring accurate billing, reducing manual effort, and improving transparency, NRE enables both landlords and tenants to manage CAM charges more efficiently. The ability to automate calculations, track expenses, and reconcile charges seamlessly across multiple leases makes NRE an invaluable tool for commercial real estate managers.

With Nakisa Real Estate, you can ensure that your CAM reconciliation process is streamlined, accurate, and compliant, saving both time and money while improving relationships between landlords and tenants.