Common Area Maintenance (CAM) Charges

Common area maintenance charges are the share of a building's operating costs that commercial tenants pay on top of base rent: lobby cleaning, parking lot lighting, landscaping, snow removal and similar items. In an NOI calculation, CAM reimbursements are other income and the underlying costs are operating expenses.

The two sides do not always cancel. A landlord who bills $40,000 of CAM against $45,000 of actual common area cost absorbs the $5,000 gap, and NOI falls by that amount. Vacancy makes it worse, because an empty suite pays no CAM but the parking lot still gets plowed. Underwriters check the recovery ratio, reimbursements divided by recoverable expenses, for exactly this reason.

Residential rentals rarely use the term, but the idea shows up as utility billback, where a landlord recovers water or trash from tenants. The calculator handles it the same way: put the recovery in other monthly income and the cost in owner-paid utilities. On the default property, a $50 a month billback adds $570 to NOI after vacancy, worth $8,769 at a 6.5% cap rate.

Further reading: Common Area Maintenance (CAM) Charges on Wikipedia.