What is Cumulative Cap?

Definition

A cumulative cap is a CAM cap structure where unused cap allowance from years with below-cap expense growth carries forward to future years, allowing the landlord to pass through larger increases in subsequent periods. For example, if a lease has a 5% cumulative cap and expenses increase only 3% in year one, the unused 2% carries forward, allowing up to a 7% increase in year two. Cumulative caps benefit landlords by preventing the cap from permanently limiting recovery when expenses are volatile — a single low-expense year does not reset the cap baseline. From a billing system perspective, cumulative caps require tracking the running cap balance over the entire lease term, which many standard property management systems do not handle natively. Property controllers must often calculate cumulative cap balances manually or in supplementary spreadsheets.