Walgreens Houston Heights TX: controllable expense cap breach case study
A public-record retail CAM case study showing $84,400 in controllable expense cap overcharges: landlord billed $1,010,000 against a $925,600 cap (4% over prior year $890,000).
What happened
Walgreens' Houston Heights lease caps annual controllable expense growth at 4%. Prior year controllable expenses (CAM, maintenance, security, management fee) were $890,000, capping 2021 at $925,600. The reconciliation billed $1,010,000 in controllable items, which is 13.5% above prior year, nearly 3.5 times the allowed rate.
Findings from the pipeline
Rule 8: Controllable Expense Cap Overcharge
high confidence
$84,400
Controllable expenses of $1,010,000.00 exceed the 4.0% cap. Max allowed: $925,600.00 (prior year $890,000.00).
Lease evidence
Controllable Expenses shall not increase by more than four percent (4%) per calendar year over the prior year's actual Controllable Expenses. Section 8.4.
Section 8.4, page 14
Math proof
prior_controllable=890000.00, cap_rate=0.04, max_allowed=925600.00, controllable_total=1010000.00, overcharge=84400.00
Lease evidence
- 4% annual NON_CUMULATIVE controllable expense cap (Section 8.4).
- Controllable = CAM + maintenance + management fee (utilities excluded).
Why this matters
Controllable expense caps differ from overall CAM caps because they exclude non-controllable items (taxes, insurance, utilities). Landlords sometimes apply the cap only to the overall CAM total while letting controllable items balloon uncapped. The result is that the cap provides less protection than the tenant negotiated.
Dispute letter draft excerpt
Request for Cooperative Review of Certain Line Items. The automated review flagged a controllable expense cap breach of $84,400.00 : billed controllable expenses of $1,010,000 exceed the 4% cap of $925,600.
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