Proportionate Share Definition
The formula for calculating each tenant's percentage share of operating expenses, typically based on the ratio of tenant's rentable area to total building rentable area.
Model Lease Language Variations
“Tenant's Proportionate Share shall be a fraction, the numerator of which is the Rentable Area of the Premises and the denominator of which is the total Rentable Area of the Building as reasonably determined by Landlord from time to time. As of the Commencement Date, Tenant's Proportionate Share is estimated to be 8.50%.”
Landlord has discretion to remeasure and change the denominator. 'From time to time' language allows adjustments that could increase tenant's share. No BOMA standard specified.
“Tenant's Proportionate Share shall be 8.50%, calculated as the Rentable Area of the Premises (12,750 RSF) divided by the total Rentable Area of the Building (150,000 RSF), measured in accordance with BOMA 2017 (ANSI/BOMA Z65.1-2017). The Proportionate Share shall be adjusted only if the Building is expanded or the Premises are remeasured by mutual agreement.”
Fixed percentage with BOMA measurement standard. Can only change on expansion or mutual remeasurement. Tenant has certainty over their share.
“Tenant's Proportionate Share is fixed at 8.50% for the Term and all renewal periods. The Proportionate Share shall not be adjusted for any reason, including remeasurement, expansion of the Building, or change in the BOMA standard. If the Building is expanded, Tenant's Proportionate Share shall be recalculated using the expanded building SF as the denominator, resulting in a lower percentage.”
Locked share that can only decrease (on expansion). No remeasurement risk. Maximum certainty. Landlord bears measurement risk.
Calculation Methodology
1. Measure Premises rentable area per the agreed standard (BOMA 2017 or 2024). 2. Measure total Building rentable area per the same standard. 3. Divide Premises by Building total: Proportionate Share = Premises RSF / Building RSF. 4. Apply the resulting percentage to each recoverable expense category. 5. If the lease has separate pools (e.g., retail CAM vs. office CAM), calculate separate proportionate shares for each pool.
Common Drafting Errors
Not specifying the measurement standard (BOMA 2017 vs. 2024) — can create a 5-10% difference in rentable area calculations
Using 'Gross Leasable Area' interchangeably with 'Rentable Area' — these are different measurements in retail vs. office contexts
Failing to address how the denominator changes when space is taken out of service for renovation or when the building is expanded
Not specifying whether storage rooms, parking structures, or outdoor areas are included in the denominator
Relevant Case Law
Landlord remeasured building from BOMA 1996 to BOMA 2017 standards, reducing the denominator by 4% and increasing all tenant proportionate shares. Court held the lease specified 'BOMA standards' without a version, allowing the update. Tenant's share increased from 12.3% to 12.8%.
Billing System Implications (Yardi / MRI)
In Yardi, proportionate share is entered in the lease abstract and applied to recovery pools. Common error: manually overriding the share for 'adjusted' billing without updating the lease abstract, creating a permanent discrepancy. In MRI, the pro rata share is calculated from the square footage entries — verify that both Premises SF and Building SF match the lease and that the BOMA measurement methodology is documented.
CapVeri Analysis
Proportionate share errors are the most straightforward billing error to detect and the hardest to defend. A 0.5% error in proportionate share affects every dollar of CAM over the lease term. CapVeri validates proportionate share calculations against lease terms and flags discrepancies between the stated percentage and the SF-based calculation.
Related Resources
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