Marketing / Promotion Fund
Common in retail leases, provisions requiring tenants to contribute to a shared marketing, advertising, and promotional fund for the shopping center, separate from CAM charges.
Model Lease Language Variations
“Tenant shall pay a Marketing Fund contribution of $2.00 per SF per annum, increasing by five percent (5%) annually. Landlord shall administer the Marketing Fund in its sole discretion and shall have no obligation to account for Fund expenditures.”
Fixed per-SF charge with automatic escalation. No accountability for fund usage. Landlord has complete discretion over marketing spend.
“Tenant shall contribute to the Shopping Center Marketing Fund an amount equal to Tenant's Proportionate Share of actual Marketing Fund expenditures, not to exceed $1.50 per SF per annum. Landlord shall provide an annual accounting of Marketing Fund expenditures and shall spend the Fund exclusively on marketing, advertising, and promotional activities for the Shopping Center.”
Pro rata share of actual expenditures with per-SF cap. Annual accounting required. Expenditures limited to marketing purposes.
“Tenant's Marketing Fund contribution shall not exceed $1.00 per SF per annum. Landlord shall establish a Marketing Fund Advisory Committee including tenant representatives. The Fund shall be held in a separate account and used solely for marketing and promotional activities directly benefiting the Shopping Center. Landlord shall provide quarterly reports of Fund activity.”
Low per-SF cap. Tenant advisory committee provides governance. Separate accounting. Quarterly reporting. Transparent management.
Calculation Methodology
1. Determine total Marketing Fund budget for the year. 2. Calculate each tenant's contribution: either fixed per-SF amount or proportionate share of actual expenditures. 3. Apply any per-SF cap or annual increase limitation. 4. Bill tenants monthly (1/12 of annual estimate) or quarterly. 5. Reconcile at year-end if based on actual expenditures. 6. Account for Marketing Fund separately from Operating Expenses.
Common Drafting Errors
Not specifying whether the marketing fund is separate from or included in CAM charges — can lead to double-counting if included in both
Failing to require separate accounting — allows landlord to commingle marketing fund with general operating funds
Not defining 'marketing activities' — landlord may use the fund for general property improvements disguised as marketing
Omitting anchor tenant obligations — if anchors don't contribute to the fund, the burden falls disproportionately on in-line tenants
Relevant Case Law
Tenant argued marketing fund was used for security improvements and holiday decorations exceeding $500K, not traditional marketing. Court found lease's broad definition of 'promotional activities' encompassed decorations but not security.
Billing System Implications (Yardi / MRI)
In Yardi, marketing fund charges should be configured as a separate billing pool, not included in the CAM recovery pool. Common error: including marketing fund contributions in the operating expense pool, which means they are subject to CAM caps and exclusions when they should be a separate charge. In MRI, use a distinct charge code and billing category for marketing fund — verify it does not flow into the Recovery Analysis for CAM.
CapVeri Analysis
Marketing funds are unique to retail leases and are frequently misclassified in billing systems. The most common error is including marketing fund charges in the CAM pool, which subjects them to CAM caps (reducing landlord recovery) and creates confusion in reconciliation statements.
Related Resources
Validate Your Lease Compliance
CapVeri catches gross-up errors, cap violations, and billing mistakes before tenants or auditors find them — from your Yardi or MRI exports.
Start Free Audit