This chapter contains the topic:
The JD Edwards World Real Estate Management (formally known as Property Management) system is lease-based. A lease is a contract or agreement between a tenant and property owner for the rental of real estate such as land, apartments, offices, retail stores, and parking spaces. It can also be for other types of property such as machinery, equipment, appliances, kiosks, television and radio programs, billboards, benches at bus stops, licenses, and so on.
You can assign a lease number to virtually any type of a contract that includes a recurring billing. Recurring billings are transactions that are created automatically on a period-by- period basis. Depending on the lease, either recurring A/R invoices or A/P vouchers can be created through the system. This can be useful for franchise operations where rents payable to landlords and rents receivable from franchisees need to be generated.
The system acts as a large "workfile" for the JD Edwards World General Accounting, Accounts Receivable, and Accounts Payable systems. When you post the transactions from the Real Estate Management system, the respective G/L, A/R, and A/P Account Ledger files are then updated. This chapter is an overview of the important features of the Real Estate Management system.
To access the Real Estate Management system, choose Real Estate Management from the Master Directory (G).
From the Real Estate Management System menu (G15), you can access the menus, screens, and processes that make up the system.
Note:
In the chapters of this guide, the navigation for the programs and facilities begins with the Real Estate Management System menu.This section provides an overview of the features of the Real Estate Management system
You can maintain information about the companies and people with whom you do business. This information is stored in the Address Book system, and each entry is referred to as an address. You must set up addresses before you can set up the information related to business units, facilities, tenants, and leases. It is the first step in the process that makes up the Real Estate Management system.
You can maintain information and set up standards for leases, buildings, floors, and units. This user-defined information includes unlimited lines for free-form text. The system can automatically supply standards to a lease, building, floor, or unit when you add it to the system. The lease setup controls whether you can create A/R invoices or A/P vouchers. Some of the billing processes, such as manual billing, recurring billing, and sales overage, can produce either type of transaction. Numerous reports are available that are based on the DREAM Writer facility, which gives you extensive choices related to format and data selection.
Critical (tickle) dates relate to lease and facility information that require some kind of action or decision such as lease renewal, insurance expiration, and elevator inspection. The system lets you manage these dates online and with printed reports.
You use the manual billing process to bill tenants for one-time charges such as tenant build-outs, supplies, postage, promotions, and repairs. It is a single cycle in which you use processing options to specify such features as tax processing. The process also includes a text feature that lets you attach free-form text to a manual billing record.
You use the recurring billing process to bill tenants automatically on a period-by-period basis for receivable, payable, or accrual billings (general ledger only).
The system can create unlimited types of billings such as regular office rent, parking space rent, apartment rent, estimated expense participation, and escalations.
These user-defined billings can be set up for monthly, bi-monthly, quarterly, semi-annual, annual, and odd-period cycles.
The system can also create prorated billings and catch-up billings, and controls are built in to prevent duplicate billings.
Multiple unit billings can be created for a single lease.
The billings can debit and credit the same or different account numbers in the general ledger.
The Real Estate Management system has its own cash application process. The screens are similar, but not identical to the ones for the JD Edwards World Accounts Receivable system. The primary differences for Real Estate Management are the use of lease numbers and bill codes. Some of the methods that you use to apply payments are also different.
The Real Estate Management system has its own collections system. The collection process is guided by activity rules established for each building (business unit). You can enter data for a given lease/building/unit combination that has outstanding credit and collection issues. You can update, display, summarize, replicate, or output this information on a report.
For retail tenants, leases are often set up that involve a low fixed rent or no fixed rent at all. In return, the tenants are then billed for a percentage of their sales to their customers. Sales overage is the process you use to automatically generate such billings. These rents can be calculated based on multiple breakpoints and percentages, and the results can be adjusted for minimum and maximums rents and recoveries. The system not only uses the sales history from retail tenants to calculate rent, but it also can analyze the information and present it online and in reports.
Common area maintenance (CAM) consists of operating expenses related to a property such as the cost of utilities, taxes, insurance, maintenance, and advertising. Such expenses can be automatically passed on to the tenants. Expense participation is the process that you use to bill tenants a proportion of the expenses. It can be subject to limits, base exclusions, gross-ups, account exclusions, ceilings, administration fees, occupancy adjustments, adjustment amounts and factors, and estimated billings.
The system can also automatically calculate estimated amounts for expense participation. The estimates can be based on budget amounts, actual expense amounts, or a percentage increase of actual expense amounts.
Many commercial leases (retail, office, and industrial) are set up so that the rent amounts increase regularly based on an index such as the Consumer Price Index (CPI), Porters' Wage, or a user-defined index. Escalation is the process you use to automatically generate these increases. The calculations for the rent increase can also include catch-up billing.
Security deposits are added to a tenant's ledger as an unapplied cash receipt. The system is designed to track security deposits and automatically refund them when necessary. For both deposits that are required and those that have been received, the information can be viewed online as well as printed on reports. Interest can be simple or compound.
The refund process adjusts unapplied credit from the tenant's ledger and creates an A/P voucher. It can also subtract any unpaid amounts on the tenant's account from the deposit refund.
The system uses fee type tables to calculate amounts for revenue fees such as management fees or commissions. These amounts can be based on a variety of G/L accounts and leases. The amounts can then be used to create A/R, A/P, and G/L transactions. For example, a fee management company could use receivables to bill owners or could use payables to pay a leasing agent. Since this process is user-defined, you can customize it to meet a specific business need.
The system can generate charges against late payments. You can set up many levels of late fees and interest for virtually any situation. The fees can be general for all leases, tenants, billing types, and buildings, or you can make them specific to any combination of those items. You can use the same process to accrue interest on security deposits. Interest can be simple or compound.
In the standards set up by the Financial Accounting Standards Board (FASB), article 13 deals with the proper accounting for rent concessions and rent steps. FASB 13 states that financial statements must present revenue evenly in all accounting periods within the term of a lease. Therefore, the rent billed should be the amount of rent for the life of a lease divided by the length of the lease in months, which results in an average or straight-line rent. Straight-line rent is compared to actual rent and an adjustment is made to accrue or defer revenue.
Changes in rent amounts and lease terms affect FASB 13 and result in changes to accrued and deferred rent adjustments. You can make these adjustments at the time of the change or you can average them into the remaining term of the lease, which affects accrual and deferral adjustments from that point forward. The FASB 13 process in the Real Estate Management system automatically calculates and produces FASB 13 accrual and deferral entries. When a change occurs for a lease term or rent amount, a warning window can automatically appear on the Recurring Billing Entry screen to remind users to regenerate FASB 13 calculations.
Estimated revenues for occupied and vacant units can be projected into the future based on recurring billing setups and market rent information. When you generate projected rent, the system prints a basic report. With the JD Edwards World facility, Financial Analysis Spreadsheet Tool and Report Writer (FASTR), you can create additional reports. FASTR lets you design your own reports based on the projected information from the general ledger.
The system can change or correct unpaid invoices and log (detail) lines for leases. It can remove old or obsolete information for leases, properties, and buildings. Both updates and purges can be specific or for a group of leases, buildings, or properties within the same business unit. The system can also perform global (large scale) updates on rent amounts. New rent amounts are created while old ones are suspended for user-defined dates.
The work order process in the JD Edwards World Work Orders system lets property managers add, work with, and report on work orders for tenants. This process lets you manage simple projects such as maintenance, repairs, tenant improvements, and emergencies. The costs can then be charged to the related lease, building (business unit), or both.
Tenant work orders are similar to other work orders, except they require some tenant-specific information from the Real Estate Management system such as the lease, building, unit, and tenant. In the Work Orders system, you can access the Tenant/Lease Search and Unit Search screens to locate and return the information to the related fields on the Tenant Work Order Entry screen. This information defines the setup, limits searches, and controls cost inquiries and status summaries for the work orders.
For more information, see the JD Edwards World Work Orders Guide.