Anchor Tenant Exclusion
Provisions excluding anchor tenants (typically occupying 20%+ of a center) from the CAM cost pool, requiring remaining tenants to absorb a larger share of common area expenses.
Model Lease Language Variations
“Operating Expenses shall be allocated among all tenants of the Shopping Center based on the ratio of each tenant's Premises to the total Gross Leasable Area. Notwithstanding the foregoing, Landlord reserves the right to exclude certain tenants from specific expense pools where such tenants maintain their own facilities.”
Vague exclusion right gives landlord discretion to exclude anchors from specific pools without reducing the denominator. In-line tenants effectively subsidize anchor exclusions.
“Anchor Tenants (those leasing 25,000 SF or more) shall be excluded from the Operating Expense pool for janitorial, HVAC, and common area lighting, provided such Anchor Tenants are responsible for such expenses within their premises. Tenant's Proportionate Share for excluded expenses shall be calculated using the Gross Leasable Area minus the excluded Anchor Tenant premises as the denominator.”
Specific expense exclusions for anchors who self-maintain. Denominator adjusts to exclude anchor SF — preventing cost-shifting to in-line tenants.
“Tenant's Proportionate Share shall be calculated based on total Gross Leasable Area of the Shopping Center, including all Anchor Tenant premises. If any tenant is excluded from any Operating Expense category, Landlord shall proportionally reduce Tenant's share of such category by reducing the denominator accordingly. In no event shall Tenant's actual per-SF cost for any expense category exceed the per-SF cost that would have applied had all tenants participated equally.”
Full protection against anchor exclusion cost-shifting. Per-SF cap ensures in-line tenant never pays more than their proportionate share.
Calculation Methodology
1. Identify anchor tenants excluded from the CAM pool (per lease terms). 2. Identify which expense categories anchors are excluded from. 3. For excluded categories: reduce the denominator by the excluded anchor SF. 4. Calculate proportionate share for remaining tenants using adjusted denominator. 5. For included categories: use full building SF as denominator. 6. Reconcile total billings — ensure excluded amounts are borne by landlord, not shifted to other tenants.
Common Drafting Errors
Excluding anchors from the expense pool without reducing the denominator — forces in-line tenants to pay for anchor's share
Not specifying which expense categories anchors are excluded from — creates ambiguity over whether anchors are excluded from all CAM or just self-maintained items
Failing to address what happens when an anchor goes dark (closes but retains the lease) — do they re-enter the pool?
Not defining 'anchor tenant' by SF threshold — creates disputes when mid-size tenants claim anchor status
Relevant Case Law
Court examined anchor tenant CAM exclusion in a retail center. Held that anchor exclusion from denominator must be explicitly stated in the lease; ambiguous language was construed against the landlord.
Billing System Implications (Yardi / MRI)
In Yardi, anchor exclusions require separate recovery pools for excluded and included expense categories, with different denominators for each. Common error: using a single recovery pool with a manual override that doesn't adjust the denominator. In MRI, configure separate allocation groups for anchor-excluded categories — verify that the total rentable area denominator in each group matches the lease abstracts.
CapVeri Analysis
Anchor exclusions are the most complex CAM allocation issue in retail properties. The most frequent error is failing to reduce the denominator when excluding anchors — this effectively shifts the anchor's share to in-line tenants and is a top-5 audit finding in retail CAM reconciliations.
Related Resources
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