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Oracle Property Manager User Guide
Release 12.1
Part Number E13616-04
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Managing Variable Rent

This chapter provides a complete description of the functionality for creating variable rent agreements and calculating rent.

This chapter covers the following topics:

Overview of Variable Rent

The Variable Rent feature enables you to calculate rent based on a variety of factors. You can create variable rent agreements and calculate rent on any variable volume such as sales volumes, utility consumption, hours, or services provided. For example, you can calculate rent based on a percentage of the sales volume on the leased premises.

Before you can calculate rent, you must create a variable rent agreement to define the attributes that Oracle Property Manager uses for rent calculation. These attributes include calculation methods, rent periods, breakpoints, constraints, and allowances.

To calculate rent, you must periodically collect and report the volumes against which you calculate rent. The calculation process applies agreement attributes to the reported volumes to determine the rent amount for each invoice. If actual volumes are not available for rent calculation, Oracle Property Manager enables you to use forecast volumes to calculate rent. You can later reconcile the difference between actual and forecast rent and if necessary, generate an adjustment to settle the difference.

Creating Variable Rent Agreements

Before you can calculate variable rent and create variable rent terms, you must create variable rent agreements. You can directly create a variable rent agreement or use an agreement template. You create a variable rent agreement for a defined duration. You can extend or shorten this duration, if required.

You create a variable rent agreement for a lease, a business category, and business volume type. For example, you can create a variable rent agreement for a camera store with a volume type of sales.

You can further define lines of business or line items for which you separately enter volumes and calculate rent. For example, for a camera store, you can calculate rent separately for the line items of sales, camera repair services, and film processing.

In addition, you must define the following agreement attributes that the calculation process uses to calculate rent:

You define attributes for calculating rent and generating periods in the Variable Rent window. You define line items, breakpoints, constraints, and abatements and allowances in the Set Up window. You navigate to the Set Up window from the Variable Rent window.

Entering Agreement Details

You enter details for a variable rent agreement that determine the purpose of the agreement, and the frequency and procedure for calculating variable rent. You enter these details in the Variable Rent window. These details are listed below.

You can enter agreement details manually each time you create a variable rent agreement. Alternatively, you can create an agreement template in the Variable Rent Template window and use this template to copy default details into new agreements. If required, you can modify default values in the Variable Rent window.

Variable Rent Window Reference

This section explains selected fields of the Variable Rent window.

Lease Details Region

Name/Number. Select the name or number of the lease for which you are creating this variable rent agreement. If you select either the lease name or number, Oracle Property Manager automatically displays the other.

Extension End Date. Displays the new end date if you extend the lease.

Location. Select the location for which you are creating this variable rent agreement. The default value is the primary location for the lease.

Variable Rent Details Region

Number. Based on your setting for the Automatic Number Generation (Variable Rent) system option, you can either enter the number for the agreement or have Oracle Property Manager generate the number. For more information, see System Options, Oracle Property Manager User Guide.

Commencement/Termination Date. Displays lease start and end dates for the agreement. You can edit these dates.

Term Template. Select the payment or billing term template you want to use to create variable rent terms. Alternatively, you can use the Term Template button to create a new one or modify an existing one.

Currency. Enter the currency in which you pay or receive variable rent.

Agreement Tab

Negative Rent. Select how Oracle Property Manager treats rent that is a negative amount. The default value is Ignore.

Volume Type. Select the type of business volume for which you are calculating rent. The volume type you select determines the labels for the Channel and Product Category fields for line items. See Window Reference for the Breakpoints Tab in the Setup Window.

Category. Select the business category for which you are creating a rent agreement.

Use GL Calendar. Select to generate variable rent periods using a GL calendar. The default is value is No.

GL Calendar. If you choose to use a GL calendar to generate variable rent periods, select a GL accounting calendar. Ensure that the duration of the GL calendar is longer than that of the variable rent agreement.

Period Type. If you choose to use a GL calendar to generate variable rent periods, select the type of GL calendar period. For example, you can choose Month, Week, or Quarter.

Annual Period Start Day. If you are not using a GL calendar, enter the day of the year on which Oracle Property Manager begins generating periods. For percentage rent, this is the start day of the sales reporting calendar.

Frequency. Select the frequency with which Oracle Property Manager generates the respective period. The invoicing frequency must be greater than or equal to the calculation frequency. In turn, the calculation frequency must be greater than or equal to the reporting frequency. You can select from a frequency of monthly, quarterly, semiannually, or annually.

You enter volumes for a reporting period, calculate gross variable rent for a calculation period, and derive rent for an invoice period. You cannot change the frequency after you approve a rent amount for an invoice.

Due Day/No. of Days After (Reporting). Enter the due day or the number of days after the reporting period to derive the due date for the volume report. Enter a day from 1 through 28 or the number of days after the reporting period when the volume report is due.

For example, if you enter a due day value of 10 for an agreement with monthly reporting frequency, the volume report is due on the tenth day of every month.

Alternatively, if you enter 10 as the number of days after the reporting period and the reporting period ends on February 14, 2007, the due date for the volume report is February 24, 2007.

Day/No. of Days After (Invoicing). Enter the due day or the number of days after the invoice period to derive the due date for variable rent payment. The value you enter appears as the start date and schedule day for the invoice rent amount in the Term Details window. Enter a day from 1 through 28 or the number of days after the invoice period when variable rent is due.

For example, if you enter a due day value of 10 for a variable rent agreement that starts on January 1, 2007 and has a quarterly invoicing frequency, the first variable rent due date is April 10, 2007.

Alternatively, if you enter 10 as the number of days after the invoice period and the invoice period ends on April 14, 2007, the due date for the next variable rent payment is July 24, 2007.

Annual Periods Tab

Actual Variable Rent. Displays the rent for the annual period based on actual volumes.

Forecasted Variable Rent. Displays the rent for the annual period based on forecast volumes.

Variance. Displays the difference between actual and forecast rent amounts.

Status. Displays the system-defined status of the annual period. The status can be any of the following:

Using an Agreement Template

You can create a template that you can use to create variable rent agreements. You define the following agreement details for the agreement template in the Variable Rent Template window:

When you select a template for the agreement in the Variable Rent window, Oracle Property Manager automatically copies agreement details that you defined in the template to the new variable rent agreement. You can manually override any default value in the agreement.

You can also delete existing templates or change an existing template for use on future variable rent agreements. Changing and deleting a template has no effect on existing agreements based on the template.

Variable Rent Template Window Reference

For information on the fields in this window, see the following window references:

Variable Rent Window Reference

Window Reference for the Breakpoints tab in the Setup Window

Generating Periods

You must generate periods for a variable rent agreement in order to enter volumes, calculate rent, and create and approve terms for invoice rent amounts. To enable Oracle Property Manager to generate periods, you must enter annual period dates, and invoicing, calculation, and reporting frequencies.

A variable rent agreement has the following periods:

After you generate periods, you can change the following components of the variable rent agreement any time before you approve terms:

To change dates and frequencies, you must first undo generated periods and regenerate them after you make your changes. Undoing periods removes all related data. For example, you must re-enter breakpoints, constraints, abatements, allowances, and volumes.

When you extend an agreement, Oracle Property Manager automatically generates periods for the extension. Similarly, when you contract an agreement, Oracle Property Manager automatically shortens periods that start before the new termination date and deletes periods that start after the new termination date.

Related Topics

Calculating Gross Variable Rent

Calculating Net Variable Rent

Extending and Contracting Agreements

Defining Line Items and Breakpoints

A line item enables you to define a specific detail business activity, and enter volumes and calculate rent for the line item. For each agreement, you can enter one or more line items. For example, a restaurant with the volume type of quantity, can have food and bar as line items.

After you define line items, you can enter breakpoints for them. A breakpoint is a volume that Oracle Property Manager compares with the line item volume for the calculation period in order to calculate rent.

After you define line items and breakpoints, you must generate them before you enter volumes and deductions for line items. Oracle Property Manager displays generated breakpoints in the Line Items window and uses them when calculating rent. For more information, see Entering Volumes. To change line items or breakpoints after you generate them, Oracle Property Manager enables you to undo the generation.

Defining Line Items

You can define line items for a variable rent agreement template in the Variable Rent Template window. When you create an agreement from the template, Oracle Property Manager automatically copies these line items to the agreement. Alternatively, you can set up new or additional line items in the Setup window after you generate periods.

Defining Breakpoints

You define breakpoints for a line item in the Setup window. For a breakpoint, you define a range of volumes, a rate, and a period when the rate is applicable. Each breakpoint can have its own set of breakpoint details. Each breakpoint detail has its own range of volumes, rate, and period. Oracle Property Manager uses the applicable breakpoint detail volume for the calculation period to calculate rent.

Breakpoints for a line item and breakpoint details for a breakpoint must not overlap. Neither must dates nor volumes for breakpoints and breakpoint details overlap.

To calculate rent, Oracle Property Manager uses the calculation method to determine the reported volume and applicable breakpoint detail volume that it must compare. If you are calculating rent for a partial annual period, Oracle Property Manager uses the partial year method to determine the volumes. If the reported volume exceeds the breakpoint detail volume, Oracle Property Manager applies the breakpoint detail rate to the overage volume to calculate variable rent.

You can choose to define either natural or artificial breakpoints. For natural breakpoints, Oracle Property Manager creates breakpoint details. For artificial breakpoints, you must create breakpoint details. You can change breakpoint definitions for both natural breakpoints and artificial breakpoints at any time. To change artificial breakpoints, you must first undo the breakpoints, make your changes, and then generate the changed breakpoints. For natural breakpoints, Oracle Property Manager automatically updates them with your changes. In either case, you must recalculate rent after making changes.

Note: Deleting a breakpoint deletes all breakpoint details for the breakpoint. Deleting a line item deletes breakpoints, breakpoint details, and all associated volumes and deductions.

Defining Natural Breakpoints

For natural breakpoints, Oracle Property Manager uses the specified breakpoint rates and dates to derive the annualized basis amount, and calculate breakpoint detail volumes and rates.

To derive the annualized basis amount, Oracle Property Manager considers the terms you included and the frequency of these terms in an annual period. In the Payment or Billing tab of the Lease window, you can select to include in the annualized basis either the term, or both the term and the approved rent increase term based on the term. The annualized natural breakpoint basis amount is thus the sum of included term amounts. For each change in the total of basis terms, Oracle Property Manager creates a new breakpoint detail.

For each breakpoint detail, Oracle Property Manager calculates the period breakpoint volume and then uses this period breakpoint volume to calculate the group breakpoint volume. The period breakpoint volume is for an annual period whereas the group breakpoint volume is for a calculation period. See the following formulas:

  1. Period breakpoint volume equals Annualized basis amount divided by Breakpoint rate for the annual period

  2. Group breakpoint volume equals Period breakpoint volume divided by Number of calculation periods in an annual period

If the annualized basis changes or you change the natural breakpoint rate, then Oracle Property Manager automatically recalculates the breakpoint detail volumes. The annualized basis can change if you change your inclusion selections. For example, you may approve a new rent increase term, which is marked for inclusion in the natural breakpoint basis.

The natural breakpoint basis can also change if you make changes in the lease either directly in a draft lease or through amendments and edits for a finalized lease. When you save the edits, the Update Natural Breakpoint concurrent program runs automatically and retroactively recalculates the new annualized basis amount. Oracle Property Manager then creates new breakpoints for the new annualized basis.

Defining Artificial Breakpoints

For artificial breakpoints, you must manually enter the ranges of volumes and corresponding rates for breakpoint details. For breakpoint details, you can either enter period breakpoint volumes or group breakpoint volumes, and Oracle Property Manager calculates the other using the following formula. A period breakpoint volume is for an annual period; a group breakpoint volume is for a calculation period.

Group breakpoint detail volume equals Period breakpoint detail volume divided by Number of calculation periods in an annual period

You can enter multiple breakpoint volumes and change them at any time. A variable rent agreement can have the following artificial breakpoint types each with its own method of applying breakpoint rate:

Window Reference for the Breakpoints Tab in the Setup Window

This section describes selected fields of the Breakpoints tab in the Setup window.

Lines Region

Channel. Enter the channel that identifies the line item. You must enter either a Channel or a Product Category, or both, for every line item.

Product Category. Enter the product category that identifies the line item.

Start/End Date. Line item start and end date. Oracle Property Manager displays the start date of the earliest breakpoint and the end date of the latest breakpoint. These dates must match the agreement start and end dates.

Breakpoint Header Region

Start/End Date. Enter the start and end date of the breakpoint for which the rate is applicable.

Note: Oracle Property Manager displays the dates of the agreement as the default start and end dates of the breakpoint. You can modify the dates. The start date of subsequent breakpoints is always one day after the end date of the previous breakpoint.

Frequency. Displays the calculation frequency that you defined for the agreement. The calculation frequency can be monthly, quarterly, semiannually, or annually. Oracle Property Manager uses this value to calculate the group breakpoint.

Break Type. Select the type of breakpoints you want to define for the line item; natural or artificial. The default value is Natural. The default for a subsequent breakpoint is the value of the previous breakpoint for that line item.

Natural Break Rate. Enter the rate that Oracle Property Manager must use to calculate natural breakpoints. This can be different from the rate for the period or group breakpoint.

Breakpoint Type. If you choose to define artificial breakpoints, select if you want to define flat, sliding, or stratified breakpoints. The default value is Flat. The default for a subsequent breakpoint is the value of the previous breakpoint.

Note: Save a breakpoint before creating another. When you save a breakpoint, Oracle Property Manager validates the saved breakpoint against existing breakpoints for the line item to ensure that dates and volumes do not overlap.

Breakpoint Detail Region

Start/End Date. For a natural breakpoint, displays the calculated start and end dates of breakpoint details based on the dates that the natural breakpoint basis amount changes. For an artificial breakpoint, enter start and end dates of breakpoint details that fall within the start and end dates of the breakpoint.

From/To Period/Group Breakpoint Volume. For a natural breakpoint detail, displays the range of period and group volumes derived by dividing the annualized basis by the natural breakpoint rate. For an artificial breakpoint detail, enter either the range of period volumes or the range of group volumes.

Rate. For an artificial breakpoint detail, enter the rate to be applied to the overage volume to calculate rent. For a natural breakpoint detail, the default value is the rate that you defined for the natural breakpoint. You can override this rate. Oracle Property Manager retains and uses the override rate to calculate the new breakpoint detail volumes when the annualized basis changes.

Annualized Basis. For a natural breakpoint detail, displays the annualized sum of basis term amounts for the range of dates.

Defining Constraints

A constraint is a limitation on the variable rent amount. You can enter a maximum constraint on the amount of variable rent that a tenant can pay and a minimum constraint amount that a landlord can charge as variable rent for a period.

When defining a constraint, you specify the dates for which the constraint is valid. You define constraints in the Constraints tab of the Setup window. Dates must be within the agreement dates. However, a single constraint can span multiple annual and invoice periods. For an agreement, you can enter one or more constraints of the maximum or minimum type. However, dates for constraints of the same type must not overlap.

After you define and generate constraints, Oracle Property Manager applies them to the calculated gross variable rent for an invoice period. For example, if you specify a maximum constraint of $4,000 for a period in the variable rent agreement and the calculated variable rent for the same period is $5,000, then the system creates a term for $4,000. Similarly, if you specify a minimum constraint of $3,000 for a period in the variable rent agreement and the calculated variable rent is $2,500 for the same period, then system creates a term for $3,000.

Constraints can change. If you change a constraint after it is applied to the gross variable rent amount to calculate the net rent for an invoice period, you must recalculate rent. When recalculating, Oracle Property Manager deletes existing unapproved variable rent terms and creates adjustment terms to reverse approved terms.

However, constraints are unaffected if you extend a variable rent agreement without undoing the generated periods. If you also want constraints extended for the extended variable rent agreement, you must undo constraints, manually change the dates on the Constraints tab of the Setup window, generate constraints again, and recalculate variable rent. Additionally, if you undo the generated periods you must enter and generate constraints again. Contracting a variable rent agreement automatically either contracts or deletes constraints.

Window Reference for the Constraints Tab in the Setup Window

This section describes selected fields in the Constraints Tab of the Setup window.

Year Start Day. Displays the annual period start day if you did not select to use a GL calendar to generate annual periods.

Type. Select the type of constraint you want to define; maximum or minimum.

Amount. Enter the constraint amount.

Constraints Window Reference

For information on the fields in this window, see Window Reference for the Constraints tab in the Setup window. In addition, see below for the description of the additional fields specific to this window.

Period Num. Displays the number of the annual period.

Reporting. Displays the reporting frequency that you defined for the agreement.

Invoicing. Displays the invoicing frequency that you defined for the agreement.

Period Start/End Date. Displays the start and end dates of the annual period.

Num. Displays the constraints record number.

Defining Allowances and Abatements

An abatement or allowance is a reduction or adjustment on the variable rent amount. Abatements can be fixed amounts that you specify or lease terms that you select as abatements.

In addition, you can have a one-time allowance for tenant improvement that the landlord and tenant negotiate, and that the calculation process adjusts against variable rent until it is used up. For example, the landlord might agree to provide the tenant an allowance for such occurrences as refitting space or performing in-store maintenance.

Allowances are usually large enough to affect multiple invoices before being used up. The natural order of application is by invoice date sequence. However, you may sometimes skip an invoice period when calculating variable rent. In this case, when you later calculate for the missed period, the change in allowance balance can affect subsequent invoice periods.

If you define both abatements and allowances, you can specify the order in which the calculation process must apply them to gross variable rent for an invoice period after constraints.

You can enter the following types of abatements:

Oracle Property Manager applies the sum of the recurring and fixed abatement amounts for the invoice period to the constrained gross variable rent. For more information, see Calculating Net Variable Rent.

If the sum of the abatements is in excess of the gross variable rent for an invoice period, you can select whether Oracle Property Manager must ignore the excess abatement amount or treat it as negative rent. If you select to treat excess abatement as negative rent, Oracle Property Manager validates this against your specifications for the treatment of negative rent. For example, if you want excess abatement to be treated as negative rent you cannot choose to ignore negative rent. For more information on treatment of negative rent, see Negative Rent.

The calculation process uses the following rules when applying fixed abatements and allowances:

  1. Uses the abatement or allowance start date to start applying

  2. Ignores any remaining balance after the abatement or allowance end date

  3. Uses the order of the start dates when applying allowances. For example, if two allowances have different start dates, Oracle Property Manager applies the one that starts first and exhausts this before applying the next one.

For recurring abatements, the calculation process uses the following rules:

  1. At the time that the first calculation for an agreement is performed, the check box values from the prior invoice period are rolled forward to all subsequent invoice periods.

  2. If you manually change check box selections after the initial roll-forward, Oracle Property Manager does not override the manual changes.

  3. If you manually change check box selections after variable rent for a later invoice period has been calculated, you can specify if you want to roll forward the changes you made to all subsequent invoice period calculations.

  4. If a recurring backbill term exists for the rent increase term included in the abatement, then Oracle Property Manager includes this term.

  5. If you select to also include rent increase terms, Oracle Property Manager includes as abatement only the rent increase terms that are available when calculating variable rent. If the selected rent increase term has not yet been created, you must include it when it is available and recalculate variable rent.

Note: For an agreement with partial periods and First Year and Last Year partial year method for which invoice periods in the partial periods are longer, the calculation process prorates the fixed abatement amount before applying it.

For example, if the invoice frequency is semi-annual, the abatement amount is $1,000, and the First Year invoice period is 9 months, the calculation process applies an abatement amount of $1,500 for this invoice period.

Window Reference for the Allowances and Abatements Tab in the Setup Window

This section explains selected fields of the Allowances and Abatements tab in the Setup window.

Year Start Day. Displays the annual period start day of the year if you select not to use a GL calendar to generate annual periods.

Order of Application. Select whether Oracle Property Manager must apply allowances first or abatements. The default value is Allowance First. If you select to apply abatements first, Oracle Property Manager first applies any applicable recurring and fixed Abatements and if variable rent is remaining, applies allowances.

Allowance Type. Select whether you are defining a rolling allowance or fixed abatement.

Description. Enter the description of the allowance or abatement.

Amount. Enter the amount of allowance or fixed abatement that Oracle Property Manager must apply to the constrained variable rent.

Extending and Contracting Agreements

You can change the termination date of the variable rent agreement at any time after you calculate variable rent, and create and approve terms. You can also extend an agreement that you contracted. For such an agreement, existing reversals and adjustments do not affect new terms that you create.

You can also extend or contract the agreement by contracting or extending the lease with which the variable rent agreement is associated. You can amend the lease to contract or extend it. For example, you can change the lease status to Month-to-Month.

When you contract the lease, Oracle Property Manager terminates all the variable rent agreements for the lease to the new lease termination date. When you extend the lease, you can choose to have Oracle Property Manager extend the associated variable rent agreements and agreement breakpoints.

Contracting an Agreement

When you contract the agreement, Oracle Property Manager shortens annual periods, calculation periods, invoice periods, and breakpoint definitions that end after the new termination date. In addition, Oracle Property Manager deletes constraints, volumes, deductions, and draft terms that are no longer relevant. If dates for constraints and volumes overlap the new termination date, Oracle Property Manager sets the end dates for the records to the new termination date. Oracle Property Manager also shortens existing breakpoints that extend beyond the new agreement end date and automatically generates new periods for them. For shortened breakpoints, you must manually prorate volumes before recalculating rent.

For annual and invoice periods that start after the new end date, Oracle Property Manager performs the following actions:

For invoice periods that start after the new end date and have approved terms, Oracle Property Manager creates the necessary reversal invoices. Then, you can enable the Create Term check box or run the PRC: Create Variable Rent Terms concurrent program to create the corresponding adjustment terms. If the original terms that Oracle Property Manager reverses via the new adjustment terms used some of the rolling allowance amount, the rolling allowance is recharged for this amount. For shortened invoice periods with approved terms, you must recalculate rent and create the necessary adjustment terms.

Extending an Agreement

When you extend an agreement and choose to have Oracle Property Manager automatically extend breakpoints, Oracle Property Manager performs the following actions:

Calculating Variable Rent

After you set up a variable rent agreement and generate periods, breakpoints, constraints, and abatements and allowances, you must enter volumes for every reporting period and any deductions on these volumes. Oracle Property Manager considers deductions and uses the net volume to calculate rent. You enter volumes and deductions for a line item.

To calculate rent, you run the Calculate Variable Rent concurrent program. You can submit the Calculate Variable Rent concurrent program from the navigator, concurrent manager, or from the Annual Periods tab of the Variable Rent window. When you submit the program from the Variable Rent window, the program calculates rent for invoice periods in the selected annual period in the context of a single lease. Otherwise, the program calculates rent for specified leases.

Oracle Property Manager uses the following steps to calculate the net rent for an invoice period for which you create a variable rent term for approval:

  1. Determines reported volume for the calculation period and subtracts deductions to arrive at net volume

  2. Determines applicable breakpoint detail volume for the calculation period, depending on the method, and prorates, if necessary

  3. Compares net volume with breakpoint detail volume, depending on the method, to arrive at the overage volume

  4. Applies the breakpoint detail rate to the overage volume to determine gross variable rent for each segment. A segment can be an entire calculation period or a partial calculation period. Each range of a stratified and sliding breakpoint has a segment. Oracle Property Manager then adds segment gross rents in the calculation period and calculation period gross rents in an invoice period to determine the total gross variable rent for the invoice period.

  5. Applies constraints to determine constrained gross variable rent for the invoice period

  6. Subtracts deferred negative rent, if any, and applicable allowances and abatements to determine the net variable rent for the invoice period

Note: The steps above describe the calculation process if you select to invoice on actual volumes. For information on steps for calculating variable rent if you select to invoice on forecast volumes, see Working with Forecast Volumes.

Entering Volumes

Oracle Property Manager enables you to record volumes that the tenant reports on a regular basis. The Calculate Variable Rent concurrent program considers these volumes for calculating rent.

You enter volumes for a reporting period. You can enter volumes manually by line items or in a batch for multiple leases in the Variable Rent Gateway. You can also use the Variable Rent Gateway to enter batches of volumes directly from the tenant's application.

The calculation process only uses volumes with approved status. The VR Volume Status Default profile option controls the default status value. You can set the default value for the profile option to Draft or Approved, depending on your business process.

You can change a volume in the Line Items window till you approve the variable rent term using this volume. You can change volumes in the Variable Rent Gateway at any time. However, if you change a volume after approving the variable rent term based on this volume, you must recalculate variable rent. The calculation process creates adjustment terms for the difference in the approved term amount and the recalculated amount. For more information, see Recalculating and Adjusting Rent.

Entering Volumes by Line Items

You can enter reported volumes by line items in the Volume tab of the Line Items window. If you select to invoice on forecast volumes, you can enter actual volumes in the Line Items window only after you enter forecast volumes and calculate rent based on forecast volumes. For more information, see Working with Forecast Volumes.

Since the calculation process only uses approved volumes, you must ensure that you set the status to Approved for volumes that Oracle Property Manager must consider for calculating variable rent.

Window Reference for the Volume Tab in the Line Items Window

This section describes selected fields of the Volume tab in the Line Items window.

Start/End Date. Displays the annual period start and end dates.

Actual/Forecasted Amount. Based on the Invoice On value for the agreement, enter either only the actual volume, or enter first the forecast volume and after calculating rent and approving the rent amount for the invoice, enter the actual volume.

Status. Select the status for the reported volumes. The VR Volume Status Default profile option controls the default value for the status. You must change the status to Approved before you calculate or reconcile variable rent.

Group Date. Displays the group date that Oracle Property Manager generates based on the calculation frequency. You can enter any number of volume records for different date ranges and Oracle Property Manager associates them with the appropriate group date based on the calculation period start and end dates.

Due Date. Displays the date on which the volume report is due. Oracle Property Manager derives this date from the value you enter in the Variable Rent window for either the reporting due day of the month, or the number of days after the reporting period.

Actual/Forecasted Cumulative. Displays the running total of actual and forecast volumes for an annual period.

Report Type. Optionally, select the report type to be used to report sales.

Certified By. Displays the user ID of the person responsible for certifying the volume and changing the volume status to Approved.

Entering Volumes Using the Variable Rent Gateway

The Variable Rent Gateway enables you to view volumes for multiple agreements and leases on a single page, and quickly enter in a single batch, relevant volumes reported by the tenant. You can create a batch for actual volumes, forecast volumes, or deductions for different variable rent agreements. You can create a new batch of volumes that you enter manually in the Create Volume History page from Variable Rent Gateway Volume Import. Alternatively, you can design a custom process to automatically load batches of volumes into the Variable Rent Gateway directly from another application.

The Variable Rent Gateway consists of interface tables in which you enter volumes for import into Oracle Property Manager using the Variable Rent Gateway Import Process concurrent program. To create a batch, you specify a range of leases or locations, and dates for which you want to enter volumes. You can then enter volumes for each reporting period of the variable rent agreements associated with the lease or location.

You can also edit reporting period dates for a volume in the Variable Rent Gateway. When you edit reporting dates, Oracle Property Manager validates the new dates against the defined calculation frequency. You can save the batch, search for it later, and continue editing and adding to the batch before you import volumes. After you enter volumes, you can import a single batch from the Create Volume History page or run the Variable Rent Gateway Import Process concurrent program from the concurrent manager to import multiple batches.

After you import batches, you can revise volumes including volumes used in calculations for approved variable rent terms. After you revise volumes, you must re-import and recalculate rent. To revise volumes in the Variable Rent Gateway, create a new batch and select the Show Period Volumes for Revision check box on the Create History page to display existing volumes for editing. This batch includes existing volumes for the specified date range and leases or locations, and reporting periods that do not have any existing volumes. When you import changed volumes, the Variable Rent Gateway Import Process concurrent program saves the original volumes in a volume archive table. You can also update the status and report types for volumes in the Variable Rent Gateway.

In addition, you can change the dates of existing volumes. The Variable Rent Gateway validates the changed dates based on the calculation frequency. For example, for a standard calendar year with monthly reporting frequency and quarterly calculation frequency, the Variable Rent Gateway Import Process program imports volumes for the January, February, and March reporting periods. If you change the dates of the first volume from the original January 1 to 31 to the new dates of January 13 to February 19, Oracle Property Manager accepts the change because the new dates are within the calculation period.

After calculating rent or reconciling rent for an invoice period, you can run the Variable Rent Gateway Purge Process concurrent program to clear old batches of volumes from the interface tables.

Related Topics

PN_VOL_HIST_BATCH_ITF Interface Table, Oracle Property Manager User Guide

PN_VOL_HIST_LINES_ITF Interface Table, Oracle Property Manager User Guide

Variable Rent Gateway Import Process

Variable Rent Gateway Purge Process

Entering Deductions

A landlord and tenant can agree to exclude certain sales volumes from the gross sales volumes before you calculate variable rent. These are deduction volumes that can be used for bad debt expenses, employee purchases, reductions, or gift certificates. You can enter deduction amounts manually for a line item in the Deductions tab of the Line Items window or in a batch in the Variable Rent Gateway. You enter a deduction for a group date or calculation period.

Deductions apply only to actual volumes. When you calculate rent, the calculation process applies these deductions to actual sales volumes to calculate the gross variable rent. If you are invoicing on forecast volumes, Oracle Property Manager ignores deductions till you reconcile variable rent. For more information, see Working with Forecast Volumes.

You can change a deduction amount after you calculate variable rent and also after you approve variable rent terms. You can change deduction amounts in the Line Items window or in the Variable Rent Gateway. If you change deductions in the Variable Rent Gateway, you must run the Variable Rent Gateway Import Process concurrent program to import the new deductions to Oracle Property Manager. While importing the new deductions, this program saves the original deduction amount in the volume archive table.

After you make changes to deductions, you must run the Calculate Variable Rent concurrent program to recalculate variable rent. The recalculation process deletes draft terms and enables you to create and approve the term for the recalculated variable rent amount. If approved terms exist for variable rent amounts based on actual volumes or for variance amounts after you reconcile forecast variable rent amounts, the recalculation process determines the adjustment amount for which you must then create and approve an adjustment term. This term defines the difference between the approved term and the recalculated amount.

Window Reference for the Deductions Tab in the Line Items Window

For information on the fields in the Deductions tab, see Window Reference for the Volume tab in the Line Items window. In addition, see below for the description of the additional field specific to this tab.

Deduction Type. Select the type of deduction you are entering. Examples of deduction types include employee sales, damaged goods, and bad debt.

Calculating Gross Variable Rent

This is the first step in calculating variable rent. Oracle Property Manager calculates gross variable rent first for a calculation period and sums the results for an invoice period. Oracle Property Manager considers the following factors when calculating gross variable rent:

To calculate the gross variable rent for a calculation period, the Calculate Variable Rent concurrent program must derive the volume and breakpoint volume to be compared. To do this, the program uses the calculation and partial year methods that you selected.

The calculation process then applies deductions to the volume and compares the net volume with the breakpoint volume to determine the overage volume. Oracle Property Manager then applies the breakpoint rate to the overage volume to calculate the gross actual variable rent for the entire calculation period or segment of calculation period. For the gross variable rent of an invoice period, the calculation process adds up the segment and calculation period gross variable rents.

Using Calculation Methods

To calculate gross variable rent for a calculation period, Oracle Property Manager uses the calculation method that you select to derive the volume and the breakpoint volume that it must consider.

This section describes how Oracle Property Manager uses the calculation method to determine volume and breakpoint for a calculation period for flat breakpoints and calculate gross variable rent. For stratified breakpoints, the process is the same for each stratified range in a calculation period. Oracle Property Manager then adds the gross variable rents from stratified ranges for the calculation period gross variable rent.

Using the Noncumulative Calculation Method

The noncumulative calculation method compares the total volume for the current calculation period with the breakpoints for the same period to determine the overage, then multiplies the overage with the rate for the gross variable rent.

A calculation period can have a subperiod if the calculation period is at the start or end of the agreement or if the calculation period has a change in breakpoint or breakpoint rate. In this case, Oracle Property Manager uses the following steps to calculate the gross variable rent:

  1. Determines prorated group breakpoints using the proration factor for the subperiod

  2. Determines prorated net volume for the subperiod

  3. Determines overage for the calculation subperiod by comparing prorated breakpoints with prorated volumes

  4. Calculates segment gross variable rents for calculation subperiods by multiplying the rate with the overage for each subperiod

  5. Adds segment gross variable rents for the calculation period

Using the Cumulative Calculation Method

The cumulative calculation method compares the year-to-date cumulative volume for the calculation period with the cumulative breakpoint volume for each breakpoint rate in the same period. For the volume, this method considers the cumulative cycles of the agreement. A cumulative cycle starts and ends with an annual period unless the breakpoint rate changes. A change in the breakpoint rate starts a new cumulative cycle.

If a breakpoint changes in the middle of a cumulative cycle, and particularly if it changes in the middle of a calculation period, the calculation for gross variable rent is as follows.

For the cumulative cycle, Oracle Property Manager follows the steps below to determine annual breakpoints:

  1. Determines prorated group breakpoints using the proration factor for each calculation subperiod

  2. Adds group breakpoints for all calculation periods and subperiods in the cumulative cycle to arrive at annual breakpoint

Next, Oracle Property Manager follows the steps below to calculate gross variable rent for each calculation period:

  1. Determines the net volume to date, as of the end of the calculation period

  2. Determines overage for the calculation period by comparing the annual breakpoints with the year-to-date volume

  3. Calculates gross variable rent for the calculation period by multiplying the rate with the overage

Using the Year-to-Date Calculation Method

The Year-to-Date calculation method compares the year-to-date cumulative volumes with year-to-date breakpoints. This method considers the cumulative cycles in the agreement. For information on cumulative cycles, see Cumulative Calculation Method.

As with the cumulative method, if a breakpoint changes in the middle of a cumulative cycle, and particularly if it changes in the middle of a calculation period, Oracle Property Manager follows the steps listed below to determine year-to-date breakpoints:

  1. Determines prorated group breakpoints using the proration factor for each calculation subperiod

  2. Adds group breakpoints for all calculation periods and subperiods up through the end of the current calculation period to derive the year-to-date breakpoint

Next, Oracle Property Manager follows the steps listed below to calculate gross variable rent for each calculation period:

  1. Determines the net volume to date, as of the end of the calculation period

  2. Determines overage for the calculation period by comparing the year-to-date breakpoints with the year-to-date volume

  3. Calculates gross variable rent for the calculation period by multiplying the rate with the overage

Using the True Up Calculation Method

The True Up calculation method is a combination of the cumulative and noncumulative calculation methods. The calculation process first performs a noncumulative calculation for each invoice period. You then create a variable rent term for this rent amount that is essentially an estimated payment or billing term.

At the end of the annual period, you must run the Variable Rent True Up concurrent program to calculate the actual rent amount for the annual period. This program compares the cumulative annual period volume with the annual breakpoint. If the breakpoint changes in the annual period, Oracle Property Manager determines and uses a blended annual breakpoint.

If the calculated gross variable rent amount for the annual period using the cumulative method is different from the sum of the estimated terms, you must create an adjustment term called the true-up term for the difference.

Note: The true-up process considers approved and draft estimated terms when calculating the difference between estimated terms and the cumulative true-up rent amount for the entire annual period.

You can run the Variable Rent True Up concurrent program for agreements by a selected lease or property. For more information, see Variable Rent True Up concurrent program.

Using Partial Year Calculation Methods

When an agreement has first or last years that are partial years, you can select from the various partial year methods that Oracle Property Manager provides to calculate rent for these periods. To calculate rent for a partial period, Oracle Property Manager must prorate volumes and breakpoints.

Partial year methods ensure that variable rent amounts are appropriate to the duration of the first or last year of an agreement. For example, many retailers in the US make more than half of their yearly sales in the three months leading up to Christmas. For these retailers, using a prorated annual breakpoint for a partial year can lead to a very high or very low percentage of rent.

If $1,800,000 of annual sales, instead of being steady, comes from six months at $100,000 followed by six months at $200,000 per month. If the six-month partial year is in the first half of the year and the annual prorated breakpoint is $750,000, the overage is (6 x $100,000) - $750,000 = $0. If it falls, however, in the last half of the year, the overage volume is (6 x $200,000) - $750,000 = $450,000. Neither of these is fair. Consequently, lease negotiation is likely to result in a blended annual breakpoint with an overage rate of approximately $25,000 per month, as it would be, on average, during a full year.

For the other years of the agreement that have complete annual periods, Oracle Property Manager uses the calculation method you select to calculate rent.

Oracle Property Manager provides the following partial year methods:

Note: For agreements with a last partial year, Oracle Property Manager uses the Standard Proration partial year method to calculate rent unless you select a Last Year or a First Year and Last Year partial year method.

Only certain partial year methods are compatible with certain calculation methods. The table below shows valid and invalid combinations.

Partial Year Calculation Method Noncumulative Calculation Method Cumulative Calculation Method Year-to-Date Calculation Method True Up Calculation Method
Standard Yes Yes Yes Yes
First Year No Yes Yes Yes
Last Year No Yes Yes Yes
First Year and Last Year No Yes Yes Yes
Combined Sales Without Breakpoint Proration No Yes Yes Yes
Combined Sales with Breakpoint Proration No Yes Yes Yes
No Proration Yes Yes No No

Note: If the agreement has an Invoice On value of Forecasted, then Oracle Property Manager only uses the Standard and No Proration partial year methods.

Using the Standard Proration Calculation Method

The Standard Proration method has no special treatment for the first or last partial years of the agreement. This method takes the percentage rent that is based directly on the actual sales for the partial period.

For example, if an organization uses a July to June calendar and the variable rent agreement begins in January 1, 2005, Oracle Property Manager prorates the annual breakpoint such that it represents the breakpoint for the first partial year of 181 days between January 1 and June 30. Oracle Property Manager then compares this breakpoint volume with the reported volumes for those six months.

Using First, Last, and First and Last Partial Year Calculation Methods

For these partial year methods, Oracle Property Manager compares the annual breakpoint with an estimate of the volume for a full 12-month cycle to determine the monthly overage volume. Oracle Property Manager then calculates net variable rent for the full 12-month cycle, and prorates it back to the actual length of the partial year.

First Partial Year Calculation Method

For a first partial year, the calculation process determines the volume for a full year by combining the actual volume for the partial year with the actual volume from the first part of the next year to make up for the missing volumes in the year. For example, if the sales year starts on January 1, but the agreement begins on April 1, the variable rent for the first annual period is based on the nine months of volumes from April to December, plus the volumes from January to March of the second sales year.

Oracle Property Manager calculates variable rent as if it was for a full year and prorates the result so that the actual percentage rent is proportional to the fraction of the year covered by the agreement. First Year Proration is always based on 365 or 366 days.

The calculation formula for the first partial year is as follows:

((Sales for first 365 or 366 days – 365 or 366 days Breakpoint volume) *Rate) * (Number of days in the partial year/365 or 366 days)

Note: You can only create a term for an invoice for the first partial year at the end of the first full year. Negative rent rules apply starting with the first full year. If the agreement also has a last partial year, Oracle Property Manager applies the standard proration method to calculate the rent for the last partial year.

If you select the true-up, cumulative, or year-to-date calculation method with the First Year partial year method, Oracle Property Manager performs all true-up, cumulative, and year-to-date calculations only after you enter volumes for the first twelve months.

Last Year Partial Year Calculation Method

The method is the same as the First Year method, except that it uses the volume from the last 12 months of the lease instead of the first 12 months. However, if you select this method for an agreement with partial first and last years, Oracle Property Manager uses the Standard Proration method to calculate rent for the first partial year.

First Year and Last Year Partial Year Calculation Method

This method uses the First Year partial year method for a partial first year and the Last Year partial year method for a partial last year.

Using the Combined Sales with Breakpoint Proration Calculation Method

This method evens out the overage amount for the partial period by blending it with a full year of sales. The calculation process for this method compares the sum of the sales for the first partial year and the first full year with the total breakpoint for the combined period.

For example, if the annual breakpoint is $1,500,000, the effective annual breakpoint is $750,000 for a combined period of 6 months, and $2,250,000 for a combined period of 18 months. If you select a cumulative calculation method, the calculation process uses a breakpoint value of $750,000 for 6 months and $2,250,000 for 18 months. The monthly breakpoint stays at $125,000 for either combined period.

You can use this method with the cumulative, year-to-date, or true-up calculation methods. The calculation process uses the calculation method to calculate rent for the first combined period that combines the first two years making the first annual period more than 12 months. Thus, the cumulative cycle, normally one year or less, may be longer than a year. The calculation process must determine both volumes and breakpoints for this cumulative cycle.

Unlike with the First Year and Last Year partial period methods, Oracle Property Manager creates terms throughout the combined period. If you select the true-up calculation method, Oracle Property Manager performs a single true-up calculation for the combined period of partial year and first full year.

Note: The combined rules do not deal with last partial years. If the agreement has a last partial year, Oracle Property Manager uses standard proration to calculate rent for the last partial period.

Using the Combined Sales Without Breakpoint Proration Calculation Method

This partial year method compares the sum of the sales for the first partial year and the first full year to an annual blended breakpoint for the combined period.

An annual blended breakpoint is the average monthly breakpoint for the combined period multiplied by 12 (the number of months in a period). The average monthly breakpoint for the combined period is the sum of the monthly breakpoints for the combined period divided by the number of months in the combined period. The blended annual breakpoint is, in effect, one that does not change with the length of the combined period though the sales does.

Note: Because the breakpoint is calculated for 12 months rather than for the combined period which is longer than 12 months, the breakpoint is considered not prorated.

You can use this method with the cumulative, year-to-date, or true-up calculation methods. The calculation process also uses a blended monthly breakpoint if you select the true-up or year-to-date calculation methods with this partial year method. Oracle Property Manager creates noncumulative terms throughout the combined period. If you select the true-up calculation method, Oracle Property Manager also performs a single true-up calculation for the combined period of partial year and first full year.

Using the No Proration Calculation Method

This partial year method does not prorate the annual breakpoint for the partial year. The calculation process for this method compares the volume for the partial annual period with the breakpoint for the annual period. Oracle Property Manager creates terms during the partial year if the volume exceeds the breakpoint.

Calculating Net Variable Rent

This is the process of deriving the net variable rent for an invoice period for which you create and approve the term for the invoice. Oracle Property Manager applies the following to the gross variable rent for the invoice period to derive the net rent:

  1. Constraints

  2. Deferred negative rent (can also result from excess abatement of previous invoice period)

  3. Allowances or fixed and recurring abatements by specified order of application

For rent based on forecast volumes, Oracle Property Manager ignores constraints, negative rent, allowances, and abatements. The invoice rent amount is simply the gross forecast rent. For more information, see Working with Forecast Volumes.

Handling Negative Rent

When calculating rent, negative amounts can result in two ways. First, if the actual volume is less than the lowest breakpoint volume or the breakpoint rate for the breakpoint range is negative, this results in a negative overage and a negative gross variable rent for the calculation period. Second, it can result when abatement amounts are in excess of the gross variable rent for an invoice period.

When this happens, you can choose to have Oracle Property Manager treat negative rent assessments in any of the following ways:

Creating and Approving Terms

You must create terms for amounts that you calculate as rent or as adjustment against rent for an invoice period and approve them before you can pay or receive payment for them. In Oracle Property Manager, you create and approve terms for the following types of amounts:

You can review calculated net rent amounts by line items in the Line Items window and by annual periods in the Annual Periods tab of the Variable Rent window. You can also review calculated net rent amounts for invoice periods in the Invoice Review window and create terms for selected invoice periods from this window. Alternatively, you can submit the Create Variable Rent Terms concurrent program from the navigator or the concurrent manager to create variable rent terms across agreements, leases, or locations. Oracle Property Manager uses the term template you attached to the variable rent agreement to create terms and enter default account distribution information.

Note: If you set the Require Volume for Entire Invoice Period profile option to Yes, you must ensure that you enter volumes for the entire invoice period before you create a term for that period.

You can then review the terms you create in the Term Details window and approve them. You can also approve terms from the Term History window which displays calculations and adjustment terms for the annual period. You can approve terms for invoice periods in any order. To modify approved terms, you must create an adjustment. See Recalculating and Adjusting Variable Rent.

After you approve a term, Oracle Property Manager transfers the term to the lease and creates payment schedules and items. You must authorize a payment schedule to approve the payment items on the schedule for export to Oracle Payables. For more information, see Payments and Billings Overview in the Oracle Property Manager User Guide.

Invoice Review Window Reference

This section describes selected fields for the Invoice window.

Annual Period Details

Total Variable Rent. Displays variable rent for the annual period.

Summary Tab

Create Terms check box. Select the check box to create terms for selected invoice periods. Oracle Property Manager enables this check box for this tab only if the agreement has an Invoice On value of Forecasted and you have calculated and approved forecast rent amount.

PTD Variance. The difference between actual and forecast rent.

YTD Variance. The year-to-date difference between actual and forecast rent.

Actual Tab

Create Terms. Select this check box for one or more invoice periods to create terms for the invoice periods. When you save your selections, Oracle Property Manager runs the Create Variable Rent Terms concurrent program to create terms and enable the Term Details button. You can then review the term in the Term Details window, and approve it to transfer it to the main lease. If you change data and recalculate rent after you create a term, then Oracle Property Manager deletes the existing term and deselects the Create Terms check box for the old rent amount.

Oracle Property Manager enables this check box for this tab if the agreement has an Invoice On value of Actual.

Start/End. This is the invoice period start date.

Total. Total variable rent amount for the invoice period.

New Term Amount. Displays the total variable rent for the invoice period less the amount of any previously approved terms. This is the total variable rent until you approve the first term, after which it is zero. Displays the adjustment amount for a subsequent calculation until you approve the adjustment term, after which it is again zero.

Gross Rent. Displays the gross variable rent amount for the invoice period before constraints.

Constrained Variable Rent. Displays the gross variable rent amount for the invoice period after constraints.

Negative Rent Applicable. Displays deferred negative rent that Oracle Property Manager must apply to the gross variable rent after constraints.

Allowance. Displays the rolling allowance available for Oracle Property Manager to apply to the gross rent for this invoice period after constraints and deferred negative rent.

Abatement. Displays the sum of all recurring or fixed abatements available for this invoice period.

Abatements Override. Enter a different override abatement amount that is less than the total recurring abatement amount for this invoice period.

Net Rent. Displays the variable rent amount for the invoice period after constraints, negative rent, allowances and abatements.

Cumulative Rent. Displays the running total of the net variable rent amounts till this invoice period.

Invoice Date. Identifies the invoice subperiod.

Adjusted. Oracle Property Manager automatically selects this check box if there has been an adjustment in this invoice period since the original term was created.

Approved. Oracle Property Manager automatically selects this check box if you have approved the term for the most current invoice period calculation.

Forecasted Tab

Create Terms. Select this check box to create terms for selected invoice periods. Oracle Property Manager enables this check box for this tab if the agreement has an Invoice On value of Forecasted.

Forecasted Variable Rent. Displays the sum of the forecast rent amounts for all invoice periods.

Cumulative Variable Rent. Displays the running total of the calculated forecast rent till this period.

Recalculating and Adjusting Variable Rent

A recalculation is the calculation of variable rent for invoice periods for which you have already calculated variable rent. Reasons for recalculation can be summarized as follows:

If you make any changes to lease terms that affect the natural breakpoint basis, Oracle Property Manager automatically updates the breakpoints. After any of the above changes, you must run the Calculate Variable Rent concurrent program again. The recalculation process deletes and replaces all existing unapproved variable rent terms.

If an invoice period has approved terms, Oracle Property Manager creates an adjustment term when the recalculated value for an invoice period is different from the sum of existing approved terms for that invoice period.

When you run the Calculate Variable Rent concurrent program for a recalculation, the process calculates the net variable rent for the selected agreements and invoice periods regardless of whether variable rent or approved terms for them exist. After variable rent is recalculated, the process checks to see if there are approved terms and, if so, creates an adjustment term for the difference between the new variable rent amount and the sum of approved terms. If no approved terms exist, the process deletes existing draft terms and creates an original term for the recalculated variable rent amount.

You can use Calculate in the Variable Rent window to recalculate for invoice periods in a selected annual period and all subsequent annual periods. In the same window, you can use Calculate All to recalculate for all invoice periods in the agreement.

If you selected a First Year or First Year and Last Year partial year method and you recalculate for the second year, the calculation process recalculates the entire agreement. This recalculation occurs because changes in volumes that directly affect the second year can also affect the first partial year. If you selected the true-up calculation method, the PN - Variable Rent True Up concurrent program recalculates for selected true-up periods and all subsequent annual periods.

Working with Forecast Volumes

Based on your Invoice On selection, Oracle Property Manager calculates variable rent based on actual or forecast volumes. The Calculating Variable Rent section describes the process of calculating rent for actual volumes. This section describes calculating rent for forecast volumes.

This calculation has two parts. For the first part, you enter forecast volumes and submit the Calculate Variable Rent concurrent program. When calculating rent based on forecast volumes, this program only calculates gross variable rent for the forecast volumes. In addition, the program ignores partial year methods and deductions. You then create and approve the term for the gross forecast rent amount of an invoice period.

For the second part, you enter actual volumes when available and submit the Reconcile Variable Rent concurrent program. This program performs the same function as the Calculate Variable Rent program and additionally calculates the variance between the forecast gross variable rent and the actual net variable rent. You then create and approve a reconciliation term for the invoice period based on this variance amount.

Note: If you select the true-up calculation method, you can submit the true-up process only after you enter actual volumes. You cannot run the true-up process on forecast volumes.

When calculating rent based on forecast volumes, the Calculate Variable Rent concurrent program uses the following steps:

  1. Determines total forecast volume for the calculation period

  2. Determines applicable breakpoints for the calculation period

  3. Compares volume with breakpoints to derive the overage volume

  4. Applies the breakpoint detail rate to the overage volume to determine gross forecast rent for each segment. A segment can be an entire calculation period or a partial calculation period. Oracle Property Manager then adds segment gross forecast rents in the calculation period and calculation period gross forecast rents in an invoice period to determine the total gross forecast rent for the invoice period. You then create and approve a variable rent term based on this invoice period gross forecast rent amount.

For the second part of using forecast volumes, the Reconcile Variable Rent concurrent program uses the following steps to reconcile forecast rent with actual rent:

  1. Determines actual volume for the calculation period and subtracts deductions to derive net volume

  2. Determines applicable breakpoints for the calculation period, depending on the method, and prorating, if necessary

  3. Compares net volume with breakpoints, depending on the method, to derive overage volume

  4. Applies the breakpoint detail rate to the overage volume to determine gross variable rent for each segment. A segment can be an entire calculation period or a partial calculation period. Oracle Property Manager then adds segment gross rents in the calculation period and calculation period gross rents in an invoice period to determine the total gross variable rent for the invoice period.

  5. Applies constraints to determine constrained gross variable rent for the invoice period

  6. Subtracts deferred negative rent, if any, and applicable allowances and abatements to determine the net variable rent for the invoice period

  7. Calculates the variance between the net variable rent and the gross forecast rent calculated by the Calculate Variable Rent program. You then create and approve a reconciliation term for this variance amount.

Note: You can run the Reconcile Variable Rent program after you approve the forecast variable rent term and after you enter actual volumes for a group date.

You can view forecast and actual gross rent and their variance by line items for a calculation period in the Line Items window and for an annual period in the Annual Periods tab of the Variable Rent window. You can view gross and net variable rent by invoice period for actual volumes in the Invoice Review window.

If you make any of the following changes that affect one or more invoice periods, then you must resubmit the Calculate Variable Rent concurrent program to recalculate the new net variable rent for each of the affected invoice periods:

When you recalculate, the calculation process automatically creates adjustment terms to reverse existing approved terms. Otherwise, the calculation process replaces existing terms with the new terms.

Related Topics

Calculating Variable Rent

Creating and Approving Terms

Recalculating and Adjusting Variable Rent

Window Reference for Rent Tabs in Line Items Window

This section describes selected fields of the Line Items window.

Line Items Region

Channel. Displays the business channel that identifies the line item.

Product Category. Displays the product category that identifies the line item.

Actual Rent. Displays the calculated gross rent for the line item that is based on actual volumes.

Forecasted Rent. Displays the calculated gross rent for the line item that is based on forecast volumes.

Rent – Actual Tab

Gross Volume. Displays the total reported volume for the invoice period.

Deductions. Displays the deduction amount for the invoice period.

Net Amount. Displays the net volume for the invoice period after applying deductions to the gross volume.

Cumulative Volume. Displays the running total of the net volume for the line item across invoice periods.

Actual Variable Rent. Displays the sum of net rent for all group dates within an invoice period. You can view actual variable rent for a single group date by choosing the Details button.

Cumulative Actual Variable Rent. Displays the running total of the calculated net variable rent for the line item across invoice periods.

Calculation Breakdown Region. This region displays each component that contributed to the total net rent for the invoice period. The breakdown displays one row per calculation period and per breakpoint range. For the noncumulative calculation method, a row can represent a calculation subperiod if the breakpoint detail or breakpoint rate changes in the middle of a calculation period.

Rent - Forecasted Tab

Forecasted Amount. Displays the sum of forecast volumes reported for all group dates within an invoice period.

Cumulative Volume. Displays the running total of forecast volumes for the line item across invoice periods.

Forecasted Variable Rent. Displays the sum of forecast rent for all group dates in the invoice period. You can view forecast variable rent for a single group date by selecting the Details button.

Cumulative Variable Rent. Displays the running total of the calculated forecast variable rent for the line item across invoice periods.