What is Recovery Ratio?

Definition

The recovery ratio measures the percentage of total operating expenses a landlord actually recovers from tenants through CAM charges. A recovery ratio of 100% means the landlord has recovered every dollar of recoverable expense; ratios below 100% indicate CAM leakage — the landlord is absorbing costs that should be passed through. Common causes of low recovery ratios include gross-up errors, missed cap escalators, excluded expenses inadvertently omitted from billings, and denominator miscalculations. Tracking recovery ratios by property, expense category, and time period is a key financial metric for property controllers and asset managers evaluating operational efficiency.