Year-End CAM Reconciliation Workflow
From January GL close to tenant statements — the complete process map
Year-end CAM reconciliation is the annual process of calculating actual operating expenses, applying gross-up and cap calculations, and generating tenant statements that reconcile estimated payments against actual amounts owed. For a 20–50 building portfolio, this is a 6–10 week process that consumes most of Q1.
Step-by-Step Process (9 steps)
GL Year-End Close
January 1–15Close the GL for December. Post year-end accruals. Reclassify any expense miscoding identified during the year. Verify that all vendor invoices for Q4 are posted.
Common errors at this step:
- • Forgetting Q4 accruals for services delivered but not invoiced
- • Capital expenditures not separated from operating expenses before close
Export GL to Recovery Pool
January 15–25Export year-end operating expenses from your ERP (Yardi, MRI, or equivalent). Verify that all expense accounts are mapped to the correct recovery pools. Check for unmapped accounts that should be included.
Common errors at this step:
- • New GL accounts added during the year not mapped to recovery pools
- • Tenant-specific expenses included in shared pools
Verify Recovery Pool Configuration
January 20–30Confirm that recovery pool configuration matches current lease terms: occupancy type setting, gross-up threshold, fixed vs. variable expense classification, and cap parameters. Any amendments since last year must be reflected.
Common errors at this step:
- • Lease amendments not reflected in ERP configuration
- • Single pool-level gross-up threshold when tenants have different thresholds
Calculate Gross-Up Adjustments
January 25 – February 5Apply gross-up calculations to variable expenses only. Verify occupancy calculation method (economic weighted average vs. physical snapshot). Confirm gross-up threshold matches each tenant's lease terms.
Common errors at this step:
- • Gross-up applied to fixed expenses (insurance, property taxes)
- • Using physical occupancy snapshot instead of economic weighted average when building had significant move-ins/outs
Apply CAM Caps
February 1–10Apply expense caps per tenant. Identify cap type (cumulative vs. non-cumulative), base year, and cap percentage. Calculate any carryforward amounts for cumulative caps. Flag tenants whose charges exceed caps.
Common errors at this step:
- • Non-cumulative cap applied when lease says cumulative
- • Wrong base year used after lease renewal
- • Cap applied to all expenses including property taxes when lease excludes them
Calculate Pro-Rata Shares
February 5–15Verify each tenant's pro-rata denominator matches their lease definition. Update denominator for any tenant move-ins, move-outs, or expansion/contraction during the year. Apply mid-year proration for partial-year tenants.
Common errors at this step:
- • Denominator not updated for mid-year vacancies
- • Wrong denominator definition — lease says total building RSF, ERP uses occupied area
Generate Reconciliation Statements
February 10–28Generate reconciliation statements for each tenant. Verify that each statement shows: actual expenses, tenant's pro-rata share, gross-up adjustment, cap adjustment (if applicable), estimated payments collected, and balance due or credit.
Common errors at this step:
- • Statements missing required disclosure items (SB 1103 in California)
- • Balance calculation error from estimated payment tracking issue
Internal Review and Approval
February 20 – March 10Property controller reviews statements for calculation accuracy. Director of property management approves for release. Legal review for any tenants in dispute or with unusual lease structures.
Common errors at this step:
- • Skipping internal review under Q1 time pressure
- • Not flagging tenants with active disputes before sending statements
Distribute to Tenants
March 1–31Send reconciliation statements to all tenants. Document delivery method and date (important for audit rights tracking). Set up payment tracking for balance-due amounts. Process credits for tenants who overpaid.
Common errors at this step:
- • Missing lease-required notice period for statements
- • Not documenting delivery dates for SB 1103 compliance
Timeline
Standard timeline: January 1 – March 31 for most commercial leases. Some leases require statements within 90–120 days of year-end. California SB 1103 requires response to Qualified Commercial Tenant requests within 30 days.
Where CapVeri Fits
CapVeri sits between steps 2 and 7. Upload your ERP export after GL close. CapVeri independently recalculates every tenant's reconciliation and flags errors before statements are generated. Typical time savings: 60–75% reduction in reconciliation calculation time per building.
Related Resources
Free Tools for This Workflow
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