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Oracle Property Manager User Guide
Release 12.1
Part Number E13616-04
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Managing Operating Expenses

This chapter describes the Operating Expenses feature in Oracle Property Manager. Refer to this chapter for information on creating operating expense agreements if a lease requires you to pay your landlord a pro rata share of operating expenses for a property.

This chapter covers the following topics:

Overview of Operating Expenses

Landlords regularly incur expenses for enhancing and maintaining their properties. These expenses are commonly referred to as operating expenses, common area maintenance, other rent, recoveries, or expense pass-through. Landlords generally pass some or all such expenses to tenants as part of rent. They estimate operating expenses during their annual budgeting process and bill tenants regularly using this estimated amount. Periodically, landlords may update estimates and notify tenants. If the new estimated amount is effective retroactively, tenants must make an adjustment payment based on revised estimates. Oracle Property Manager refers to these adjustments as catch-up payments.

At the end of the year (or other mutually agreeable period), landlords calculate actual operating expense amounts, compare them to estimated payments received, and send their tenants a reconciliation statement. Depending on payments made during the period, tenants may then make a reconciliation payment.

If your organization leases space to tenants and charges them for operating expenses, then you must create recovery agreements. See Recovery Expense.

If you lease space from a landlord, then you can create operating expense agreements to perform the following tasks:

  1. Document provisions related to operating expenses in a lease

  2. Make payments to landlords based on initial and revised estimates

  3. Track reconciliation and audit dates

  4. Reconcile payments made based on estimates with actual operating expenses

  5. Review the landlord’s calculation of your pro rata share of expenses

Creating Operating Expense Agreements

After creating an expense lease, you can create one or more operating expense agreements to represent the lease clauses for operating expense recovery. You create agreements from the Operating Expense Dashboard. The standard flow for creating an agreement is as follows:

  1. Specify the expense clause, agreement name, status, dates, and other basic information. Enter an expense clause to describe the expense recovered through the agreement.

  2. Specify the fees, constraints, and stops that you apply to operating expenses (method details) and the method of calculating your share (pro rata bases).

  3. Associate pro rata bases with the different expenses covered (expense groups).

  4. Specify any maximum or minimum constraints (caps).

  5. Enter estimated payments, if required. You can also create estimated payment terms directly in the associated lease. See Making Estimated Payments.

  6. Specify the critical dates for the agreement, for example, the reconciliation due date or the payment due date.

When setting up or updating agreements, you can create notes to record important information. Oracle Property Manager marks agreement notes depending on where you created them. So, during reconciliation, you can find and review notes if you require the information.

Specifying Method Details

When creating an agreement, you must provide information for determining the following:

Determining Reconciliation Periods

You specify a reconciliation frequency and the month in which the landlord’s expense year ends to indicate how you want Oracle Property Manager to create reconciliation periods. The reconciliation frequency determines how often you reconcile your estimated payments with the landlord's actual expenses. The expense year end month indicates the month in which the landlord's fiscal year ends. For example, if your reconciliation frequency is yearly and the expense year ends in December, each reconciliation period is from January 1 to December 31. For details, see Entering Basic Reconciliation Information.

You can change the reconciliation frequency or the month in which the landlord’s fiscal year ends at any time. However, changes do not have a retroactive impact on existing reconciliations.

Specifying a Stop

Stops indicate the amount over which your landlord recovers operating expenses. That is, you calculate your pro rata share of total expenses (after applying caps and fees) and compare it to the stop. You only pay the amount over the stop amount to your landlord. You can enter a flat stop amount or an amount per unit of area.

Specifying Pro Rata Bases

Pro rata bases describe the method for calculating your share of the total operating expenses incurred by the landlord. Generally, a pro rata basis represents the ratio of the area you occupy to the landlord’s area expressed in terms of a percentage. Your lease agreement and the type of operating expense determines whether you base the calculation on the landlord's total property area or only a part. For example, parking lot maintenance benefits all of a mall's tenants and all tenants may share in the expense. In this case, you compare the area you occupy to the total area of the mall to derive the pro rata percent. You then apply the percent to the total expense for parking lot maintenance to calculate pro rata share.

On the other hand, only interior tenants or food court tenants may share in expenses that benefit them. So, you compare your area to the sum of the area occupied by all interior or food court tenants to derive the pro rata percent.

Alternative methods of defining a pro rata basis include specifying a fixed percent or deriving a percentage by comparing your sales to the total sales on the premises. The following table describes available pro rata basis types:

Pro Rata Basis Type Description Information Required
Fixed Percentage A user-specified pro rata percent You must manually enter the fixed pro rata percent value. You can also specify values for the tenant area and total area.
Gross Leasable Area Oracle Property Manager derives the pro rata percent by comparing the area you occupy (tenant area) to the total area of the property, whether occupied or not. You must enter values for the tenant area and total area, either when creating the agreement or during reconciliation.
Occupied Area Oracle Property Manager derives the pro rata percent by comparing the tenant area to the total occupied area of the property. You must enter values for the tenant area and the total area. You enter information for occupied area when creating the reconciliation.
Occupied Area with Floor Oracle Property Manager derives the pro rata percent by comparing the tenant area to the total occupied area of the property or the specified floor percent, whichever is greater. You must enter values for the tenant area and the total area, You must also specify the floor percent. You enter information for occupied area when creating the reconciliation.
Pro Rata Share of Sales Oracle Property Manager derives the pro rata percent by comparing your sales with the total sales on the premises.

Note: You cannot use pro rata share of sales if:

  • You specify a stop amount

  • You specify first year caps or minimum amounts per unit area. See Specifying Caps.

You only specify names for the pro rata bases you create. You enter sales information when creating the reconciliation.

You must select one pro rata basis type when creating an agreement. However, you can create multiple pro rata bases, each with its own area or sales values. You can then associate the different pro rata bases with different expense groups so that Oracle Property Manager calculates tenant share of each expense appropriately. Note that if your lease specifies different methods of pro rata basis calculation for different expenses, you can create multiple operating expense agreements for the lease.

Specifying Expense Groups

A lease may stipulate that you pay a share of several operating expenses, including your landlord’s utility expenses, cleaning, and insurance liability. You generally do not record each expense item in the agreement. Rather, you create an expense group to represent a set of expenses that Oracle Property Manager must treat similarly, in terms of rules such as pro rata basis, caps, and fees. Consequently, when creating a reconciliation, you enter the subtotal amount for each expense group using information from the landlord’s reconciliation statement.

You must create at least one expense group for an agreement. However, the number of expense groups you create depends on your business requirements. So, if you must track expenses separately even though you treat them alike, create multiple expense groups.

For each expense group, specify a name, and optionally, provide a description. You can also specify the standard group to which the group belongs, for example, tax, landscaping, or security. You must then select the pro rata basis and indicate whether caps and fees apply.

Important: You cannot specify that an expense group is subject to cap but not to fee if you apply caps to the landlord total before calculating fees. See Specifying Caps.

You can also specify a multiple if your lease indicates that you must increase (or decrease) the total landlord expense before calculating tenant share. Consider the following example. The following table lists assumptions for agreement details and expenses for a particular reconciliation period:

Required Information Value
Landlord expenses for expense group $20,000
Pro rata basis type Gross Leasable Area
Tenant area/total area 1,000/10,000 (square feet)
Pro rata percent 10% (1,000/10,000)
Cap, tax, and gross up No
Fees 2.5%
Multiple 1.5

Based on the provided information, Oracle Property Manager calculates tenant share for the expense group using the following formula:

Pro rata percent * (Landlord expense * Multiple) * (1 + Fee)

That is: 10% of ($20,000 * 1.5) * (1 + 2.5%)

So, the tenant share for the expense group is $3,075

Specifying Contributions

Contributions describe deductions from the landlord's total expenses before calculation of tenant share. Usually, contributions represent fixed amounts that anchor (major) tenants pay towards a particular operating expense. However, you can create contributions to describe other credits, for example, the deduction of parking lot revenue from parking lot expenses before pro rata share calculation.

You define contributions when creating expense groups. Like other expense groups, you can apply fees, caps, and taxes to contributions. For example, if your lease states that you must subtract contributions from expenses before you calculate fees (that is, contributions are before fee), you can select to apply fees to the contribution. Similarly, you can specify that you deduct contributions before you apply caps.

Using Contributions as Stops

Creating contributions that Oracle Property Manager applies after calculating caps or fees is similar to entering stop amounts. However, the following points differentiate constraints from stops:

Specifying Caps

Specify caps to indicate the maximum or minimum amounts that landlords can declare as their total expenses or charge you as tenant share of operating expenses. You specify caps separately for the first year (first reconciliation period) and for subsequent reconciliation periods of the agreement. Consider the following points when specifying first year maximum or minimum constraints:

When you select to prorate first year constraints, Oracle Property Manager assumes that you have entered annualized constraint amounts that it must increase or decrease based on the length of the first partial period.

To create constraints for reconciliation periods other than the first year of the agreement, specify a subsequent year cap or a subsequent year minimum. Keep the following points in mind when creating constraints for subsequent years:

The following sections describe the calculation of subsequent year constraints and the process of carrying forward cap overruns or shortfalls.

Calculating Subsequent Year Caps and Minimums

Oracle Property Manager derives caps or minimums as follows:

Deriving the Percentage

Specify a rate type to indicate which of the following Oracle Property Manager must use as the source of the percentage:

If you use an index to calculate caps, you must select an existing index and indicate the month whose index value you want to use. For information on creating, updating, and viewing index data, see Entering Index History.

The following table describes how Oracle Property Manager calculates the current and previous index values that it compares to calculate the index change percent:

Value Description
Current index value Oracle Property Manager derives the current index value by incrementing the month in which the current reconciliation period ends by the index finder month value.
Prior index value Oracle Property Manager derives the prior index value by incrementing the month in which a prior reconciliation period ended by the index finder month value.
Depending on the basis type, Oracle Property Manager uses the index value from a month in the previous reconciliation period or the first reconciliation period as the prior index value. See Deriving the Basis.

The example below describes how Oracle Property Manager derives the index values for calculating the index change percent. The following table lists basic assumptions:

Required Information Value
Basis type Previous Year Actual Amount
Index finder month -1
Reconciliation period start January 1, 2006
Reconciliation period end December 31, 2006

Based on the available information, Oracle Property Manager derives the months as follows:

Deriving the Basis

When calculating constraints, Oracle Property Manager uses expense amounts and index values from a prior period. You determine the prior period by specifying a basis type, as described below.

Previous Year Actual Amount

If you select Previous Year Actual Amount as the basis type, Oracle Property Manager derives the unconstrained expense amount and prior index value, if required, from the previous reconciliation period.

Note: Oracle Property Manager uses an appropriate amount based on whether you apply constraints to the landlord's total expenses or to pro rata tenant share.

It then multiplies the unconstrained amount by the percentage (determined by the rate type) to calculate the cap. Consider the example, provided below, for calculating subsequent year minimum. The following table lists basic assumptions:

Required Information Value
Total expense for previous year $100,000
Apply to Landlord Total
Rate type Greater of Fixed Percent or Index
Fixed percent 8%
Prior index (previous year) 10
Index in current year 11

Based on the above information, Oracle Property Manager determines that the index change percent is 10% (representing a rise in index from 10 to 11). The index change percent is greater than the fixed percent. Therefore, Oracle Property Manager applies the index change percent to the total expense for the previous year to arrive at the minimum for the current period: $110,000.

Previous Year Constrained Amount

If you use Previous Year Constrained Amount as the basis type, Oracle Property Manager uses the constrained expense amount and prior index value, if required, from the previous reconciliation period. It multiplies the constrained amount by the appropriate percentage to calculate caps.

Base Year Actual Amount (Non-Compounding)

If you use Base Year Actual Amount (Non-Compounding) as the basis type, Oracle Property Manager uses the expense amount and prior index value, if required, from the base year (first reconciliation period). Oracle Property Manager calculates caps using the following formula:

Base year actual amount * (1 + (Percentage * Number of years since the agreement began))

Base Year Actual Amount (Compounding)

If you use Base Year Actual Amount (Compounding) as the basis type, Oracle Property Manager uses the expense amount and prior index value, if required, from the base year. Oracle Property Manager calculates caps using the following formula:

Base year actual amount * (1 + (Percentage)Num)

Here, Num represents the number of years since the agreement began.

Base Year Constrained Amount (Non-Compounding)

If you use Base Year Constrained Amount (Non-Compounding) as the basis type, Oracle Property Manager uses the constrained expense amount and prior index value, if required, from the base year. Oracle Property Manager calculates caps using the following formula:

Base year constrained amount * (1 + (Percentage * Number of years since the agreement began))

Base Year Constrained Amount (Compounding)

If you use Base Year Constrained Amount (Compounding) as the basis type, Oracle Property Manager uses the constrained expense amount and prior index value, if required, from the base year. Oracle Property Manager calculates caps using the following formula:

Base year constrained amount * (1 + (Percentage)Num)

Here, Num represents the number of years since the agreement began.

Carrying Forward Cap Overruns or Savings

While setting up subsequent year cap, you specify how Oracle Property Manager must deal with expense overruns or savings. An expense overrun represents the amount over the cap while a saving represents the difference between the actual expense amount and the cap when the expense falls below the cap. You can specify that Oracle Property Manager must do one of the following:

Calculating Accumulated Overruns

If your landlord accumulates overruns, Oracle Property Manager carries the amount over the cap (plus any accumulated overruns from previous years) to the next year as accumulated overruns. If the expenses fall below the cap in some future period, the landlord may increase the actual amount, up to the cap amount, by using the accumulated overruns.

Consider the example below. The following table describes the calculation of the overrun for years three through six of an operating expense agreement:

Year Unconstrained Amount Overrun Cap Constrained Amount
3 $500,000 $0 $485,000 $485,000
4 $495,000 $15,000 $505,000 $505,000
5 $500,000 $5,000 $525,000 $505,000
6 NA $0 NA NA

Calculating Accumulated Savings

Your agreement may specify that the landlord accumulates savings. When your expense is below the cap, Oracle Property Manager carries the difference to the next year, along with any savings from previous years, as accumulated savings. If the expenses in a future period are above the cap, the landlord may increase the cap up to the actual expense amount by using the accumulated savings.

Consider the example below. The following table describes the calculation of the savings for years three through six of an operating expense agreement:

Year Unconstrained Amount Savings Cap Constrained Amount
3 $470,000 $0 $485,000 $470,000
4 $515,000 $15,000 $505,000 $515,000
5 $535,000 $5,000 $525,000 $530,000
6 NA $0 NA NA

Specifying Rules for Critical Dates

When creating an agreement, you can specify how Oracle Property Manager derives important agreement and reconciliation dates for each reconciliation period. For example, you can define rules for determining the following dates:

You can specify rules for these and create additional critical dates to determine how Oracle Property Manager calculates the actual date for each reconciliation period. You express the rules as a number of years, months, or days before or after certain predefined events. For example, to determine the critical date Reconciliation Statement Due from Landlord, you can specify that the landlord must deliver the reconciliation statement a maximum of three months after the end of the reconciliation period.

Making Estimated Payments

Tenants generally make regular payments to landlords based on estimates of operating expenses. You can create, and when required, update estimated payments at any time after you create and save an agreement. You can create estimated payment terms in the operating expense agreement or directly in the lease.

Creating Estimated Payments in the Agreement

When first creating an estimated payment, you must provide the following general term information:

Oracle Property Manager uses this general information for all estimated payment terms. You then enter the start and end dates, and the amount for the first estimated payment. You enter the following information for dates:

Oracle Property Manager uses the estimated payment information you enter and the information in the term template to create a draft estimated payment term.

Important: If you do not specify a schedule day in the term template, Oracle Property Manager uses the payment start date.

You can view and update draft estimated payment terms before approving them.

Updating Estimated Payments

Landlords change estimated payment amounts through the life of the operating expense agreement. To update your payments accordingly, create a new estimated payment. The process of entering subsequent estimated payments is similar to that for creating the first estimated payment. The key differences are as follows:

The following example describes how Oracle Property Manager calculates the default start date of a new estimated payment. Assume the following values:

Effective Date: January 1

Estimated Payment Frequency: Monthly

Schedule Day: 1

Oracle Property Manager calculates the start date as follows:

You can modify default dates and other term information before approving the term.

Calculating the Catch-Up Amount

When a catch-up payment is required, Oracle Property Manager calculates the amount using the following formula:

((Annual amount for new term - Annual amount for previous term)/ 12) * Number of payments between the effective date and the start date

The following rules apply to catch-up amount calculation:

Creating Terms for Updated Payments

When you create terms for updated estimated payments, Oracle Property Manager performs the following tasks:

Except for the dates and the payment amount, the new estimated payment term inherits default term information from the previous estimated payment term. You can modify term details until you approve the estimated payment.

Important: If you change the dates or amounts for the new estimated payment term while viewing term details, Oracle Property Manager does not recalculate the catch-up amount.

The catch-up payment term also inherits most values from the previous estimated payment, with the following exceptions:

You can modify catch-up payment term details, except for the frequency and the term start date, until you approve the term.

Approving Operating Expense Terms

When you approve an operating expense term from the agreement, reconciliation, or dashboard, Oracle Property Manager runs the Approve Operating Expense Terms concurrent program. This concurrent program transfers the term to the main lease and initiates the Schedules and Items concurrent program to create the appropriate draft schedules.

Note: You can manually run the Approve Operating Expense Terms concurrent program for a range of leases, agreements, or terms.

When transferring an operating expense term to the main lease, Oracle Property Manager performs the following tasks:

Rules for Approving Terms

Keep the following points in mind when approving terms:

Related Topics

Payment/Billing Terms

Creating Operating Expense Terms in the Lease

You can create estimated payment and catch-up payment terms in the lease and associate them with an existing agreement. The process for creating operating expense terms is the same as that of creating other lease terms. For details, see Setting Up Payments.

Estimated payment or catch-up amounts that you enter in the lease do not appear in the operating expense agreement. However, Oracle Property Manager does include the appropriate amount in the total Paid in Period amount displayed in the reconciliation.

Reconciling Payments

Landlords periodically assess actual operating expenses and compute each tenant's share. Landlords then reconcile the tenant's share of expenses for a reconciliation period with the estimated payments made. As a tenant, you may receive a reconciliation statement detailing the calculation of your share of expenses, showing the amount already paid, and invoicing for the reconciliation payment amount. On receipt of the reconciliation statement, you can create a reconciliation in Oracle Property Manager.

Reconciliations present a side-by-side comparison of information from the landlord's statement and that calculated by Oracle Property Manager (expected information). So, you can use reconciliations to review the landlord's reconciliation statement, identify discrepancies, and then initiate disputes or make appropriate reconciliation payments. Reconciliations include the following:

Creating Reconciliations

You create reconciliations either from the operating expense agreement or from the dashboard. You must create a reconciliation for each reconciliation period. That is, reconciliations must be contiguous and non-overlapping. Often, you may skip the reconciliation process for one year and perform a detailed reconciliation in the following year. To skip a reconciliation, enter at least the end date and statement received date, accept the default revision name, and save the reconciliation.

You perform the following tasks when creating a reconciliation:

Viewing and Entering Information in a Reconciliation

For each data input and calculation, Oracle Property Manager presents the landlord statement version alongside the expected version. You enter values directly from the landlord statement in the statement sections. Depending on the value, the expected version could be one of the following:

When you review your reconciliation, Oracle Property Manager also displays the difference between the expected values and the statement values. Therefore, you can easily identify any discrepancies and initiate a dispute with the landlord, if required.

Entering Basic Reconciliation Information

When you first create a reconciliation, you must enter information including the revision name, reconciliation status, and reconciliation-related dates. Important information is described below.

Oracle Property Manager automatically supplies other general information, such as agreement number and period start date based on the agreement.

Determining Reconciliation Period Dates

Reconciliations must be contiguous. Therefore, Oracle Property Manager sets the start date as follows:

The table below provides examples of how Oracle Property Manager derives the default value for the next natural period end date after the period start date, based on the reconciliation frequency and expense year end month from the agreement. The examples are based on the following assumptions:

Expense Year End Month: December

Reconciliation Period Start Date: March 1, 2007

Reconciliation Frequency Impact Example Period End Date
Annual The end date is the next occurrence of the last day of the expense year end month. December 3, 2007
Semiannual The agreement implies two reconciliation periods, ending six months apart. Therefore, the default end date is the first of these dates after the start date. June 30, 2007
Quarterly The agreement implies four reconciliation periods, ending three months apart. Therefore, the default end date is the first of these dates after the start date. March 31, 2007

Viewing and Entering Notes

While working on a reconciliation, you can append new notes, and view existing notes for previous reconciliations and from the associated agreement. The process of entering reconciliation notes is similar to that of creating agreement notes. See Creating Operating Expense Agreements.

When viewing notes, you can select to view notes of a particular type and notes from a particular reconciliation period.

Entering Area or Sales Information for Pro Rata Bases

You must enter data from the landlord's reconciliation statement for each pro rata basis specified in the agreement. You can also review, and in some cases, override expected information derived from the agreement.

As described in the table below, the information you can enter or modify depends on the pro rata basis type. Note that unless you are using a pro rata basis type of Fixed Percent, Oracle Property Manager calculates the pro rata percent. You can override the calculated value, as required.

Pro Rata Basis Type Information Required
Fixed Percent Enter a value for pro rata percent and for tenant and total area from the statement. You can also override the default expected values.
Gross Leasable Area Enter values for tenant and total area from the statement. You can also override the default expected values.
Occupied Area Enter values for the tenant and total areas from the statement. Also, specify a value for either the occupied area or occupancy percent. Oracle Property Manager calculates the other value using the following formula:
Occupancy percent equals occupied area divided by total area
You can also enter expected area values if your figures do not agree with the values in the landlord reconciliation statement.
Occupied Area with Floor Along with area values, you must also specify the floor percent, based on information in the landlord statement.
You can also enter expected area values. However, Oracle Property Manager displays the expected floor percent from the agreement. You cannot override this value.
Pro Rata Share of Sales Enter values for tenant sales and total sales based on information in the landlord’s statement. You can also enter an expected sales figure, if your estimate of total sales differs from the information in the landlord statement.

Entering Amounts for Expense Groups

For each expense group or contribution, you enter the statement amount and multiple, if any. Oracle Property Manager calculates the statement recoverable amount by applying the multiple to the statement amount. Oracle Property Manager then compares the statement amount with the amount from the reconciliation for the previous period to calculate the change percent.

Important: Oracle Property Manager uses the recoverable amount, rather than the statement amount for the expense group in all further reconciliation calculations.

If you have information that differs from the amounts in the landlord’s reconciliation statement, you can provide an expected recoverable amount for a contribution or expense group. After you specify all the required information, Oracle Property Manager displays totals and percent change figures for all expense groups and all contributions.

Entering Other Information That Affects Net Tenant Share

After you enter general reconciliation information and data for each pro rata basis and expense group, you can review and override information such as fees, constraints, stops, and proration factors, which affect the calculation of net tenant share. Oracle Property Manager calculates the following amounts and figures based on information in the agreement and reconciliation:

If the values in the reconciliation statement do not agree with expected values calculated by Oracle Property Manager, you can enter statement overrides. You can also provide expected override values, if required.

Determining the Proration Factor

In the first and last periods of an agreement, you may not occupy the location space for a full reconciliation period. In such cases, your landlord may prorate your share of expenses based on the length of occupancy. Oracle Property Manager calculates the proration factor by dividing the occupied days by the total days. Oracle Property Manager determines these values as follows:

The number of days for which you occupy a location may be greater than the days in the reconciliation period. This occurs if the agreement starts shortly before the end of a reconciliation period and you combine the first partial period with the second reconciliation period. In this case, you pay an increased share of the expenses for the full period.

Consider the following example. Your agreement begins on December 1, 2006 and is subject to annual reconciliation with years ending in December. The default end date of the first reconciliation period is December 31, 2006. However, you may change it to December 31, 2007. In this case, Oracle Property Manager calculates your share based on the expenses for 2007 multiplied by a proration factor of 396/365.

Reviewing Reconciliations and Making Payments

When reviewing the reconciliation, you examine, side-by-side, amounts calculated based on the reconciliation statement, expected amounts based on the agreement and information available with you, and the difference between the two. Oracle Property Manager first presents calculations of your share for each pro rata basis and then a summary of your total net share after applying fees and caps, and deducting stops.

Reviewing Information for Individual Pro Rata Bases

Oracle Property Manager performs the following calculations for each pro rata basis:

The parameters in the agreement influence the order in which the application performs these steps and displays the resultant information. For example, if some expense groups using a pro rata basis are subject to caps and others are not, then Oracle Property Manager displays information separately for both types of expenses. In addition, Oracle Property Manager totals amounts for all expense groups subject to fees and all expense groups not subject to fees separately.

The table below provides a detailed description of how Oracle Property Manager calculates your tenant share for each pro rata basis. Keep the following points in mind while reviewing the table:

Amount Subject to Cap Not Subject to Cap
Expenses Subject to Fee The sum of all amounts you enter in the reconciliation for expense groups that are subject to fee The sum of all amounts you enter in the reconciliation for expense groups that are subject to fee
Total Contributions Before Fee The sum of all amounts you enter in the reconciliation for expense contributions deducted before you calculate a fee amount The sum of all amounts you enter in the reconciliation for expense contributions deducted before you calculate a fee amount
Net Expenses Subject to Fee Expenses subject to fee minus the contributions deducted before fee calculation Expenses subject to fee minus the contributions deducted before fee calculation
Overrun Credit The cap overruns from previous years. Oracle Property Manager displays the value here if you apply caps before fee. Not applicable
Minimum The minimum constraint. Oracle Property Manager displays the value here if you apply caps before fee. Not applicable
Cap Oracle Property Manager displays the cap here if you apply caps before fee. Note that the cap includes any carried forward savings. Not applicable
Capped Expenses If you apply caps before fee, then Oracle Property Manager calculates the capped expense as follows:
  1. Calculates the greater of the net not subject to fee amount (plus any overrun credit) and the minimum constraint

  2. Compares the figure arrived at above to the cap and selects the lesser amount

Not applicable
Fee Percent The fee percent from the agreement The fee percent from the agreement
Fee If you apply caps before fee, then Oracle Property Manager calculates the fee by multiplying the capped expenses by the fee percent.
Else, the fee is the net subject to fee amount multiplied by the fee percent
The net subject to fee amount multiplied by the fee percent
Subtotal of Expenses with Fee If you apply caps before fee, then Oracle Property Manager calculates the subtotal with fee by adding the fee amount to the capped expenses. Else, it adds the fee amount to the net subject to fee amount. The net subject to fee amount plus the fee
Expenses Not Subject to Fee The sum of all amounts you enter in the reconciliation for expense groups that are not subject to fee The sum of all amounts you enter in the reconciliation for expense groups that are not subject to fee
Total Contributions After Fee The sum of all amounts you enter in the reconciliation for contributions deducted after calculating the fee amount The sum of all amounts you enter in the reconciliation for contributions deducted after calculating the fee amount
Net Expenses Not Subject to Fee Expenses not subject to fee minus the contributions deducted after fee calculation Expenses not subject to fee minus the contributions deducted after fee calculation
Total Expenses The subtotal with fee amount plus the net not subject to fee amount The subtotal with fee amount plus the net not subject to fee amount
Overrun Credit The cap overruns from previous years. Oracle Property Manager displays the value here if you apply caps to the landlord's expense after calculating the fee. Not applicable
Minimum The minimum constraint. Oracle Property Manager displays the value here if you apply caps to the landlord's expense after calculating the fee. Not applicable
Cap Oracle Property Manager displays the cap here if you apply caps to the landlord’s expense after calculating the fee. Note that the cap includes any carried forward savings. Not applicable
Capped Expenses If you apply caps to the landlord total after calculating the fee amount, then Oracle Property Manager calculates the capped expense as follows:
  1. Calculates the greater of the total expenses (plus any overrun credit) and the minimum constraint

  2. Compares the figure arrived at above the cap and selects the lesser amount

Not applicable
Pro Rata Percent The pro rata percent calculated when you enter pro rata basis information in the reconciliation The pro rata percent calculated when you enter pro rata basis information in the reconciliation
Tenant Share If you apply caps to the landlord total after calculating the fee amount, then Oracle Property Manager calculates the tenant share by multiplying the capped expenses by the pro rata percent. Else, Oracle Property Manager multiplies the total expenses by the pro rata percent. The total expenses multiplied by the pro rata percent

Reviewing and Adjusting Total Tenant Share

After displaying the calculations for individual pro rata bases, Oracle Property Manager displays the calculations used to derive your net obligation and the final reconciliation payment amount. As it did for each pro rata basis, Oracle Property Manager displays amounts based on the landlord’s statement, expected amounts, and the difference, if any. Oracle Property Manager allows you to specify corrections or adjustments to the following:

Based on its calculations and any adjustments you specify, Oracle Property Manager displays two final amounts:

  1. Statement Amount Due: The amount you abstract from the reconciliation statement when entering reconciliation overview information. If the landlord’s statement contains no errors, and you have created the agreement and reconciliation correctly, this amount matches the Amount Due calculated based on statement information.

  2. Payment Term Amount: Oracle Property Manager uses this amount when creating the reconciliation term. This amount is the calculated value for the expected amount due. If the amount due is not available, then Oracle Property Manager uses the statement amount due. You can override this value, as required.

The following table provides a detailed description of the information for the total tenant share calculations. The table displays all possible rows. When you create a reconciliation, Oracle Property Manager displays rows based on your agreement. For example, Oracle Property Manager displays either a row for tenant share or for tenant share subject to cap, but never both.

Amount Description
Tenant Share The sum of the tenant share subject to cap and the tenant share not subject to cap for each pro rata basis
Tenant Share Subject to Cap The sum of your expenses (tenant share) that are subject to caps
Overrun Credit The cap overruns from previous years. Oracle Property Manager displays the value here if you apply caps to your pro rata share of expenses.
Minimum The minimum constraint. Oracle Property Manager displays the value here if you apply minimum constraints to your pro rata share of expenses.
Cap Oracle Property Manager displays the minimum constraint here if you apply caps to your pro rata share of expenses. Note that the cap includes any carried forward savings.
Capped Tenant Share If you apply caps to your pro rata share of expenses, then Oracle Property Manager calculates the capped value as follows:
  1. Calculates the greater of the tenant share subject to cap (plus any overrun credit) and the minimum constraint

  2. Compares the figure arrived at above the cap and selects the lesser amount

Tenant Share not Subject to Cap The sum of your expenses (tenant share) that are not subject to cap
Total Tenant Share The capped tenant share plus the tenant share not subject to cap
Previous Period Your total pro rata share of expenses in the previous reconciliation period
Percent Change The difference between the total tenant share and the previous period amount expressed in terms of a percentage
Expense Stop Amount Oracle Property Manager displays this value if the agreement specifies a flat stop amount.
Expense Stop (Unit Area) Oracle Property Manager considers this value if the agreement specifies a stop amount per unit area. It calculates the stop amount for the area by dividing the stop amount by the area you occupy.
Expenses over Stop Oracle Property Manager calculates the expenses over the stop by deducting the stop amount from the total tenant share.

Note: Oracle Property Manager replaces negative amounts with zero.

Adjustment Enter an adjustment amount, if required.
Adjusted Total Charge The expenses over the stop plus the adjustment amount
Occupied Days The value for occupied days entered in the reconciliation
Total Days The value for total days entered in the reconciliation. See Entering Other Reconciliation Information.
Occupancy Proration Factor The occupied days divided by the total days
Occupancy Prorated Total Charge The adjusted total charge multiplied by the occupancy proration factor
Paid in Period The total amount paid to the landlord in the form of estimated payments in the current reconciliation period
Prior Reconciliation Payments The total amount paid to the landlord in the form of reconciliation payments in the current reconciliation period (through prior reconciliation revisions)
Reconciled Amount The occupancy prorated total charge minus all estimated and reconciliation payments made in this reconciliation period
Adjustment Enter a second adjustment amount, if required.
Amount Due The reconciled amount plus the second adjustment amount

Creating and Approving Reconciliation Terms

After you review the reconciliation payment term amount, save the reconciliation and create the reconciliation payment term. You can then review the payment term, make any required modifications, and approve the term. You can also save the term and approve it later. For more information, see Approving Operating Expense Terms.

Revising Reconciliations

When you first create a reconciliation, Oracle Property Manager creates an original revision. You can update this revision as required until you manually create a new revision or make a reconciliation payment. In either case, you must create a new revision to accommodate any changes or create new reconciliation terms. You can base a new revision on the prior reconciliation version or the current agreement. The implications are as follows:

The tables below describe the default data in a new revision depending on the method you employ to create it.

General Reconciliation Information
Details Agreement Previous Reconciliation
Period End Date and Reconciliation Status Copied from prior reconciliation revision Copied from previous reconciliation revision
Revision Name Set to Revision x by default (x is the revision number) Set to Revision x by default (x is the revision number)
Other information Calculated automatically Calculated automatically
Reconciliation Overview and Notes
Details Current Agreement Copy Previous
Last Updated Current date Current date
Critical Dates (calculated values) Derived using current agreement rules Copied from previous reconciliation revision
User-specified values Copied from previous reconciliation revision Copied from previous reconciliation revision
Pro Rata Bases
Details Current Agreement Copy Previous
Expected values from Agreement Derived from current agreement Copied from previous reconciliation revision
User-specified values Copied from previous reconciliation revision Copied from previous reconciliation revision
Expense Groups
Details Current Agreement Copy Previous
Name and all attributes defined in the agreement Derived from current agreement Copied from previous reconciliation revision
User-specified values Copied from previous reconciliation revision Copied from previous reconciliation revision
Change and Total Change over Last Period Calculated automatically Calculated automatically
Other Information
Details Current Agreement Copy Previous
User-specified values Copied from previous reconciliation revision Copied from previous reconciliation revision
Administration Fee and Stop Amount Derived from current agreement Copied from previous reconciliation revision
Fields related to caps Derived using current agreement rules Derived using current agreement rules
Fields describing days and prior payments Calculated automatically Calculated automatically

Note: Oracle Property Manager always recalculates constraints using current agreement rules.

Review Reconciliation Page
Details Current Agreement Copy Previous
User-specified values Copied from previous reconciliation revision Copied from previous reconciliation revision
Others Calculated automatically Calculated automatically

Using the Operating Expenses Dashboard

Use the Operating Expenses Dashboard to create new operating expense agreements or to access existing agreements, reconciliations, and payment terms. Oracle Property Manager does not display any information when you first navigate to the dashboard. To view information, you must search for agreements. After you perform a search, Oracle Property Manager displays information for agreements that fit the criteria you specified, and their associated reconciliations and payment terms. You can filter information in the individual regions as follows:

Filtering for information in one region or selecting a row in a table has no effect on the information in the other regions. The table below lists the tasks that you can perform from the dashboard.

Region Description
Agreements Create a new agreement, or perform the following tasks for existing agreements:
  • Update: You can update agreements at any time unless they are in Inactive status.

    Note: Agreement modifications do not have a retroactive impact on existing reconciliation revisions. However, you do have the option of basing new revisions on the changed agreement. See Revising Reconciliations.

  • Delete: You can delete an operating expense agreement until you approve payments.

  • View: Access operating expense agreements in the display-only mode by clicking on the agreement name.

  • Create or edit reconciliation: Create a new reconciliation or edit the current reconciliation for the selected agreement.

  • Maintain attachments: Add, update, or delete attachments to an agreement.

Reconciliations View or edit existing reconciliations. You can also add or delete attachments to a reconciliation.
Payment Terms View, edit, or approve existing payment terms. Note that once you have approved a term, you can no longer edit it.

Selected Field References

This section provides brief descriptions of important fields on the Operating Expense Agreement and Reconciliation pages, and the Operating Expense Dashboard.

Operating Expense Agreement

Location Code. The location associated with the operating expense agreement. If you associate only one location with the main lease, Oracle Property Manager displays the appropriate location code here. If you associate multiple locations with the lease, Oracle Property Manager behaves as follows:

Expense Clause. A short description that uniquely identifies the type of expense your landlord intends to recover. Oracle Property Manager concatenates the name of the expense clause and the lease name to create the agreement name. Therefore, you must ensure that each expense clause for a lease has a unique name.

Note: You can enter other agreement information only after you specify the expense clause and save your work.

Agreement Status. The status of the agreement. Indicate whether the agreement is in draft status, is active, inactive, or concluded. Keep the following points in mind when setting or changing an agreement's status:

Method Details Tab

Credit Against. Indicates whether you apply the credit for any overpayment to future payments for this agreement, all operating expense agreements with the same landlord, or that there are no restrictions. This value is for your information only.

Pro Rata Basis Tab

Area Units. The units used to specify area values, for example, acre, square feet, or square meters.

Tenant Area. The area of your leased premises

Total Area. Depending on your agreement, the landlord’s total area (or a part) that you compare to the area you occupy, to derive the pro rata percentage.

Total Area Type. A description of the area you specify in the Total Area field. For example, total area, interior tenants, total area less pad, or food court.

Floor Percent. The minimum occupancy percent that Oracle Property Manager uses to calculate your share of occupied area, according to the agreement. You specify a floor percent only if you select Occupied Area with Floor as the pro rata basis type.

Expense Groups Tab

Gross Up. Indicates that the expense group is subject to the gross up percent you specified when entering method details. This value is for your information only.

Tax. Indicates that the expense group is taxable. You can specify that an expense group is taxable only if you selected to apply taxes when entering method details. This value is for your information only.

Caps Tab

Units. The units based on which you enter first year constraint amounts in the Maximum or Minimum fields. If you select Amount, you enter a total amount as the constraint. If you select Amount Per Area, Oracle Property Manager multiples the amount in the Maximum or Minimum fields by the area you occupy to calculate the actual constraint amount.

Prorate. Indicates whether you want to increase or decrease constraints in accordance with a first period that is either more or less than one year (or standard reconciliation period).

Index Finder Month. A number (between -12 and +12) signifying the months whose index values are used for calculating the cap. The index finder month (along with the value for Basis Type) helps determine the value of the current index as well as the previous index. The index finder month is relative to the last month of the reconciliation period.

Estimated Payments Tab

Percent Change. The change in the amount you pay as estimated payment compared to the amount you paid previously. Oracle Property Manager uses annual amounts to calculate the change.

Annual Amount. Annualized estimated payment term amount. Oracle Property Manager arrives at this amount by multiplying the amount by the estimated payment frequency.

Critical Dates Tab

Period and Period Type. The combination of a number and a unit to indicate that the critical date occurs a specific period before or after an event. For example, you can enter 15 and select Days to specify that a critical date is 15 days before or after an event.

Relationship. The relationship between critical date and event. Critical dates can be either before or after an event.

Event. A predefined event that you select when creating a critical date. You can select one of the following:

Reconciliation

This section describes the important fields on the Create Reconciliation: Enter Data page. For a detailed description of information available on the Create Reconciliation: Review Reconciliation page, see Reviewing Reconciliations and Making Payments.

Reconciliation Status. The status of the reconciliation. A new reconciliation has a status of Not Started. You can select another status at any time when creating or updating a reconciliation. You can use reconciliation status to search for and display reconciliations on the Operating Expenses Dashboard. Note that the creation or approval of reconciliation payment terms is not dependent on the reconciliation status. The table below describes default statuses.

Value Description
Not Started You have received the reconciliation statement from your landlord. However, you have not started reconciliation analysis.
Skipped You do not intend to perform a reconciliation analysis for this period.
In Progress You are currently working on the reconciliation.
Pending Review You have completed work on the reconciliation and have sent it for review.
In Audit The reconciliation statement is under audit.
In Dispute You have identified a potential problem in the statement and have initiated a dispute with your landlord.
Complete No further action is required for this reconciliation. All disputes that arose are resolved and you have made the appropriate reconciliation payments. Note that you cannot update or delete a complete reconciliation.

Overview and Notes Tab

Statement Received. The date on which you received the reconciliation statement. By default, this is the current date. However, you can change it, as required. Oracle Property Manager uses this date, in combination with the rules you specified in the agreement to determine two critical dates: Reconciliation Payment Due date and Audit Period End date.

Statement Amount Due. The reconciliation amount due according to the reconciliation statement or invoice sent by the landlord. Oracle Property Manager uses this value for reconciliation calculations. If you make a reconciliation payment before completing the reconciliation, Oracle Property Manager uses this amount as the payment term amount.

Audit Status. The status of the reconciliation audit. Use the audit status to indicate that a reconciliation requires audit, and if it does, the current status of the audit. Note that you can search for and display reconciliations based on audit status on the Operating Expenses Dashboard. The following table describes default audit statuses:

Value Description
Blank Leave the field blank to indicate that the reconciliation statement does not need an audit.
Needs Audit Recommend that the reconciliation must undergo an audit to verify that the landlord’s reconciliation statement contains accurate and legitimate costs.
In Audit Indicate that the reconciliation is under audit.
Audit Complete Indicate that audit is complete.

Auditor. The external or internal auditor for the reconciliation. You must enter the name of external auditors. However, if the auditor is an employee, select the appropriate user name from the list of values.

Note Type. The type of existing note that you want to view. You can view all notes or one of the following types:

Pro Rata Basis Tab

Tenant Area (Statement). The area you occupy, according to the landlord’s reconciliation statement. Oracle Property Manager labels this column Tenant Sales if the pro rata basis is Pro Rata Share of Sales.

Total Area (Statement). The total area (or applicable part) of the property, according to the landlord’s reconciliation statement. Oracle Property Manager uses this value if the pro rata basis is Gross Leasable Area or Occupied Area with Floor. Oracle Property Manager labels this column Total Sales if the pro rata basis type is Pro Rata Share of Sales.

Expense Groups Tab

Amount (Statement). The expense amount for each expense group from the landlord’s reconciliation statement

Previous Period. The statement amount for each expense group from the reconciliation (most recent revision) for the preceding reconciliation period

Recoverable (Statement). The amount derived by applying the multiple to the statement amount. You can override this value, if required.

Note: You can enter a recoverable amount in the override region if the amount you have arrived at through your calculation differs from the amount stipulated by the landlord’s reconciliation statement.

Operating Expense Dashboard

User Responsible. Specify the user who created the latest reconciliation revision for an agreement. Use this advanced search option to search for and display specific agreements and their related reconciliations and estimated payments.

Estimated Payment Increase. Specify a percentage range when performing an advanced search to locate agreements for which the estimated payments have increased by the specified percentage. If you specify only the lower end of the range, Oracle Property Manager displays all agreements whose estimated payments have increased at least by the value specified. Conversely, if you specify only the higher end of the range, Oracle Property Manager displays all agreements whose estimated payments have increased by a maximum of the value specified.