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TAUBMAN OFFERS TENANTS CAM CHOICE

BY BRANNON BOSWELL

Taubman Centers will offer tenants a fixed common-area maintenance charge option, executives said during the firm’s year-end 2004 earnings call. “We’ll allow each retailer to choose fixed CAM or the traditional net CAM, whichever works best for them,” said Lisa A. Payne, executive vice president and chief financial and administrative officer. The new CAM structure is “unique in the industry,” she said.

Taubman Centers will add a “modest” premium to the CAM charges of those tenants that choose the fixed option, she said. “If they don’t choose the fixed CAM, we’re comfortable offering them the same net CAM charges we have been up until now.”

The Bloomfield Hills, Mich.-based REIT says it does not worry about coming up short if CAM charges exceed the agreed-upon fixed rates. “The premiums will balance out any risk to the landlord,” Payne said.

Four years ago General Growth Properties became the first mall landlord to abandon variable CAM charges. “Savvy tenants will welcome this, because it will give them the ability to lock down and control CAM charges,” said Jeffrey H. Newman, a lawyer and chairman of the real estate department of Sills Cummis Epstein & Gross, Newark, N.J. “And it’s good for the landlord, because it will help avoid future litigation.”