Commercial lease economics and CAM reconciliation
Calculate net effective rent and reconcile a tenant share of eligible common-area expenses from entered lease terms.
Worked commercial lease examples
These illustrative calculations use the default form inputs.
Net effective rent
Uses the initial figures in the Net effective rent form.
- Total base rent collected
- 23,200 USD
- Present value after allowance
- 21,600 USD
- Undiscounted net effective monthly rent
- 900 USD/month
- Undiscounted effective annual rent per square foot
- 10.8 USD/ft²/year
- Discounted equivalent monthly rent
- 900 USD/month
Illustrative monthly rent schedule
| Month | Scheduled rent (USD) | Collected rent (USD) | Present value (USD) |
|---|---|---|---|
| 1 | 1,000 | 0 | 0 |
| 2 | 1,000 | 0 | 0 |
| 3 | 1,000 | 1,000 | 1,000 |
| 4 | 1,000 | 1,000 | 1,000 |
| 5 | 1,000 | 1,000 | 1,000 |
| 6 | 1,000 | 1,000 | 1,000 |
| 7 | 1,000 | 1,000 | 1,000 |
| 8 | 1,000 | 1,000 | 1,000 |
| 9 | 1,000 | 1,000 | 1,000 |
| 10 | 1,000 | 1,000 | 1,000 |
| 11 | 1,000 | 1,000 | 1,000 |
| 12 | 1,000 | 1,000 | 1,000 |
| 13 | 1,100 | 1,100 | 1,100 |
| 14 | 1,100 | 1,100 | 1,100 |
| 15 | 1,100 | 1,100 | 1,100 |
| 16 | 1,100 | 1,100 | 1,100 |
| 17 | 1,100 | 1,100 | 1,100 |
| 18 | 1,100 | 1,100 | 1,100 |
| 19 | 1,100 | 1,100 | 1,100 |
| 20 | 1,100 | 1,100 | 1,100 |
| 21 | 1,100 | 1,100 | 1,100 |
| 22 | 1,100 | 1,100 | 1,100 |
| 23 | 1,100 | 1,100 | 1,100 |
| 24 | 1,100 | 1,100 | 1,100 |
CAM reconciliation
Uses the initial figures in the CAM reconciliation form.
- Tenant share
- 10 %
- Modeled tenant CAM recovery
- 6,000 USD
- Balance due from tenant (negative means credit)
- -500 USD
Yield maintenance estimate
Uses the initial figures in the Yield maintenance estimate form.
- Discounted remaining payments and balloon
- 101,957.3324 USD
- Present value less principal
- 1,957.3324 USD
- Entered minimum premium
- 1,000 USD
- Modeled prepayment premium
- 1,957.3324 USD
ASC 842 fixed operating lease starting balances
Uses the initial figures in the ASC 842 fixed operating lease starting balances form.
- Initial lease liability
- 32,871.0162 USD
- Initial right-of-use asset
- 32,871.0162 USD
- Straight-line monthly lease expense
- 1,000 USD/month
Investor distribution waterfall for one payment
Uses the initial figures in the Investor distribution waterfall for one payment form.
- LP preferred return paid
- 10,000 USD
- LP capital returned
- 100,000 USD
- GP capital returned
- 20,000 USD
- Residual for tier split
- 30,000 USD
- LP distribution
- 134,000 USD
- GP distribution
- 26,000 USD
How these calculations work
Base rent escalates every twelve months. Free rent is applied at the beginning and the allowance is paid at signing. Discounted rent is the level month-end payment with the same present value. CAM applies the entered building-level expense stop before the tenant share. Verify which costs are eligible under the lease and enter any caps or exclusions in the eligible expense pool.
Yield maintenance discounts the entered remaining payments and balloon. Use this convention only if the loan documents specify it. See the Fannie Mae prepayment guidance. The ASC 842 example assumes an already classified operating lease with equal month-end payments and no incentives, prepayments or initial direct costs. See FASB Topic 842. The distribution model pays the entered LP preference, returns capital proportionally and then splits the residual. It does not calculate accrual, catch-up or IRR tiers.
Use the commercial real estate feasibility calculator for annual underwriting and loan sizing.