Mid-Year Tenant Adjustment Workflow
Move-ins, move-outs, and expansions — getting the partial-year math right
When a tenant moves in, moves out, or changes their space mid-year, their CAM calculation requires partial-year proration. This is one of the most error-prone areas of CAM reconciliation because ERP systems handle it inconsistently and the calculations require careful attention to the denominator impact.
Step-by-Step Process (5 steps)
Identify Tenant Changes
January (at year-end close)Document all lease changes during the year: new tenants (move-in dates), departing tenants (move-out dates), lease expansions or contractions (effective dates), and any temporary vacant space.
Common errors at this step:
- • Missing mid-year expansion or contraction effective dates
- • Co-tenancy clauses triggered by vacancy not identified
Update the Pro-Rata Denominator
January–FebruaryDetermine whether the denominator changes during the year based on lease definitions. Some leases use a fixed denominator (total building RSF). Others use an occupancy-based denominator that changes when tenants move in or out.
Common errors at this step:
- • Using year-end occupancy for the full year instead of period-weighted average
- • Forgetting to update denominator when new space was added to the building
Calculate Partial-Year Pro-Rata Share
FebruaryFor tenants with partial-year occupancy, calculate their pro-rata share for the occupied period only. Common method: (days occupied / 365) × annual pro-rata share. Verify that the lease definition matches this methodology.
Common errors at this step:
- • Using calendar days vs. lease days (360-day year vs. actual days)
- • Not accounting for the commencement date rent concession period — tenant may owe CAM even during free rent
Adjust Estimated CAM Payments
February–MarchReconcile actual estimated payments collected for the partial period against what the tenant paid. New tenants may have been paying estimates based on a prorated annual estimate. Moving tenants may have overpaid or underpaid.
Common errors at this step:
- • Not reconciling partial-year estimates collected vs. what tenant actually paid
- • New tenant CAM estimates not set up at commencement — landlord undercollected all year
Apply Gross-Up to Denominator
FebruaryWhen the denominator changes due to vacancy, the gross-up calculation must account for the vacancy correctly. The denominator change should not distort the gross-up calculation — only variable expenses get adjusted.
Common errors at this step:
- • Gross-up calculation using the wrong period's occupancy when denominator changed mid-year
- • Fixed expenses grossed up because of denominator change — they should not be
Timeline
Mid-year adjustments are processed at year-end during the standard reconciliation cycle. They add complexity but not additional calendar time — they must be completed with the rest of the portfolio by March 31.
Where CapVeri Fits
CapVeri handles partial-year proration automatically when you flag the effective dates. Enter move-in and move-out dates; CapVeri applies the correct proration methodology per the lease definition and flags any conflict between ERP output and lease terms.
Need lease data before you reconcile?
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