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Pro Rata Share

Pro Rata Share refers to an investor’s proportional share or allocation of a particular item, based on their ownership interest in a property or investment entity. This term is commonly used to determine how certain costs, revenues, benefits, or liabilities are allocated among investors or co-owners.

For instance, in a multi-tenant commercial property, tenants may be responsible for their pro rata share of common area maintenance expenses (often called CAM charges). This means that if a tenant occupies 20% of the leasable square footage in a building, they would be responsible for paying 20% of the CAM charges.

Similarly, in a partnership or joint venture where investors pool their money to purchase a property, an individual investor’s pro rata share of rental income, expenses, and profits or losses would be based on the proportion of their investment in the venture.

Essentially, pro rata translates to “in proportion,” so when referring to one’s pro rata share, it indicates an allocation in proportion to a specified metric, like ownership percentage or leased space.