Commercial real estate glossary
Plain-English definitions of the leasing, accounting, and finance terms commercial property operators use every day — with formulas and worked examples.
Leasing
Common Area Maintenance (CAM)
Common Area Maintenance (CAM) is the cost of operating and maintaining the shared areas of a commercial property, recovered from tenants based on their pro-rata share.
Read definitionTriple Net Lease (NNN)
A triple net (NNN) lease is a commercial lease where the tenant pays base rent plus their pro-rata share of property taxes, insurance, and common area maintenance.
Read definitionBase Year
A base year is the reference year whose operating expenses set a baseline — the tenant later pays its pro-rata share of any expense increases above that base.
Read definitionExpense Stop
An expense stop is a fixed operating-expense amount per square foot that the landlord covers — the tenant pays its pro-rata share of costs above the stop.
Read definitionPro-Rata Share
A pro-rata share is a tenant’s proportion of a property — typically its rentable square footage divided by the property’s total rentable square footage — used to allocate shared expenses.
Read definitionAccounting
Trailing Twelve Months (T-12)
A T-12 (trailing twelve months) is an operating statement showing a property’s income and expenses month by month for the most recent 12 months.
Read definitionCAM True-Up (Reconciliation)
A CAM true-up is the annual reconciliation that compares the estimated CAM a tenant was billed to their share of actual costs, then charges or credits the difference.
Read definitionGross-Up (Expense Gross-Up)
A gross-up adjusts variable operating expenses up to what they would be at a stated occupancy (often 95–100%) so tenants are billed fairly when a building is not fully leased.
Read definitionOperating Expenses (OpEx)
Operating expenses (OpEx) are the recurring costs of running a property — taxes, insurance, utilities, maintenance, and management — excluding debt service and capital expenditures.
Read definitionFinance
Net Operating Income (NOI)
Net Operating Income (NOI) is a property’s operating income minus operating expenses — before debt service, capital expenditures, depreciation, and income taxes.
Read definitionDebt Service Coverage Ratio (DSCR)
The Debt Service Coverage Ratio (DSCR) is net operating income divided by total debt service — a measure of how comfortably a property’s income covers its loan payments.
Read definitionLoan-to-Value (LTV)
Loan-to-Value (LTV) is the loan amount divided by the property’s value, expressed as a percentage — a measure of leverage and lending risk.
Read definitionCapitalization Rate (Cap Rate)
A capitalization rate (cap rate) is net operating income divided by property value — the unlevered annual return a property produces at its current price.
Read definitionFrom definitions to done
Plazee turns these concepts into automated workflows — CAM/NNN, recoveries, and lender reporting on a real accounting platform.