Rebilling Recoveries Terminology

Recoveries Terminology

Understanding the terminology used in Recoveries is key to fully understand what the system is capable of and what options will work best for you as you attempt to recover portions of your operating expense.

Grossing Up

Leases based on Base Years and Expense Stops usually include a provision that permits a practice known as Grossing Up. This procedure seeks to stabilize the recovery costs so that they accurately reflect actual operating costs for the occupied portions of your property.

The best and most fair approach is to review each line item of operating expense and determine if it has been impacted by vacancy. For instance, Janitorial Services are the most obvious charges in this category. A cleaning contractor will provide a vacancy credit for empty space that is not serviced. A gross up of this charge effectively eliminates the credit for recovery purposes and establishes a true full building cost for janitorial services.

C.A.M. (Common Area Maintenance)

Groups of operating expenses associated with the entire building or property, such as Landscaping or Security is typically categorized as C.A.M. Per the lease agreement, tenants may be billed for a prorated portion of those expenses under this category. It is common to hear the phrase Rebilling Recoveries referred to as C.A.M. Rebillings.

Expense Cap

Values representing maximum amounts of operating expenses the tenant is responsible for are referred to as Expense Caps.

Rentable Square Footage

A suite’s useable square footage plus a prorated share of common area, such as hallways is referred to as Rentable Square Footage.

Useable Square Footage

The space physically occupied by the suite is referred to as Useable Square Footage.

Occupancy

The percentage of the property occupied by tenants is referred to as Occupancy and is used determining the grossup calculations for rebilling recoveries.

Square Footage Factor

The percentage used to calculate a tenant’s prorated share of operating expenses is typically referred to as the Square Footage Factor.

Add On Factor

The multiplier added to the rebilling amount is referred to as the Add On Factor. For instance, Administrative Fees of 15% added to rebilling recoveries is considered the Add On Factor.