Annual CAM Estimate Letter Workflow
The document tenants read most carefully — get the estimate right
The annual CAM estimate letter sets tenants' monthly payments for the upcoming year. Inaccurate estimates create problems in both directions: overestimates create friction and disputes at year-end; underestimates create large true-up bills that tenants didn't budget for. Most disputes about CAM estimates are actually disputes about methodology — easily avoided with transparent, well-supported estimates.
Step-by-Step Process (5 steps)
Compile Prior-Year Actuals
Q2–Q3 (for following year estimates)Pull final actuals from the just-completed reconciliation. Use these as the base for next-year estimates. For categories with systematic prior-year variance, apply a correction factor based on the variance analysis.
Common errors at this step:
- • Using unreconciled actuals — prior-year reconciliation may not be final yet in Q2
- • Not adjusting for known one-time items in prior year — last year's hurricane repair shouldn't be in next year's estimate
Apply Trend Factors
Q3Apply category-specific trend factors: utility contracts (use contract rate increases, not CPI), maintenance (prior contract renewal amounts), insurance (renewal premium plus broker estimate), property taxes (assessed value × millage, or prior year plus known assessment changes).
Common errors at this step:
- • Using a single CPI factor for all expense categories
- • Not updating property tax estimates when assessment appeals are pending or assessments changed
Calculate Per-Tenant Estimates
Q3–Q4Apply each tenant's pro-rata share to the projected pool total. Account for any lease changes effective during the upcoming year: renewals with new base years, expansions, contractions. Verify that estimated amounts comply with any lease-required estimate notice timing.
Common errors at this step:
- • Using prior-year pro-rata share when tenant square footage changed
- • Not accounting for cap structure in estimate calculation — tenant may be capped below their pro-rata share
Draft and Review Estimate Letters
Q4 (for January 1 effective date)Generate estimate letters with the methodology clearly explained: prior-year actuals base, trend factor applied, projection total, tenant's pro-rata share, monthly estimate amount. Internal review by property controller. Legal review for tenants in dispute or with unusual lease structures.
Common errors at this step:
- • Estimate letters without supporting methodology — tenants immediately dispute them
- • Sending estimate letters that don't match the lease-required content or format
Send with Required Notice Period
November–DecemberSend estimate letters with the notice period required by each tenant's lease (typically 30–60 days before the new estimate period begins). Document delivery method and date for compliance purposes.
Common errors at this step:
- • Missing the lease-required notice period — landlord may be required to honor prior estimates if notice is late
- • Not documenting delivery — SB 1103 compliance requires documented delivery
Timeline
Annual estimate letter cycle: Q2 analysis, Q3 methodology update, Q4 letter generation and delivery for January 1 effective date. Leases with non-calendar year anniversaries require custom timing.
Where CapVeri Fits
CapVeri generates estimate letters directly from reconciliation actuals — the same data that drove the just-completed reconciliation becomes the base for next year's estimates. One workflow: reconcile, review, generate estimate letters. No manual re-entry of expense data.
Free Tools for This Workflow
Automate the Most Error-Prone Steps
Export your GL data and upload to CapVeri. Independent recalculation of every tenant's reconciliation — with errors flagged before statements go out. First audit is always free.
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