Setting Up and Calculating Percent Rent

This chapter provides an overview of percent rent terms, lists prerequisites, and discusses how to:

Set up percent rent terms.
Report sales and calculate percent rent.

Understanding Percent Rent Terms

Percent rent enables you to negotiate a lower monthly base rent in exchange for a portion of your sales once the threshold is met. This lease method is appealing because you receive a lower monthly liability in months of lower sales. As the sales amount reaches a specified threshold (breakpoint), the percentage changes, thus altering the amount of the final rent amount. For a breakpoint, the rent can be a fixed amount, a percentage of sales, or a combination of fixed amount and percentage.

When multiple breakpoints are established, the system determines which breakpoint has been reached and adds its incremental percentage over and above the other breakpoints. For example, let's say the breakpoints are as follows:

0 to 1,000 (5%)
1,000.01 to 4,999.99 (4%)
5,000 to 99,999,999,999.99 (3% + 1,000 USD)

If the sales amount is 1,500 USD, then the system takes the maximum of the prior breakpoint multiplied by that breakpoint percentage (or amount, or both depending on lease terms), adds the incremental amount over that breakpoint maximum, multiplied by the new breakpoint percentage.

In this example, the calculation is as follows: 1,000 × 5% + (1,500 − 1,000) × 4% = 70.

Using the previous example, if a lease had three breakpoints in percent rent setup, and the sales amount reached the third level (10,000), then the calculation is as follows: 1,000 × 5% + (4,999.99-1,000) × 4% + (10,000 − 4,999.99) × 3% +1,000 = 1360.

These tables provide additional examples of the percent rent calculation methodology:

Percent Rent Setup Data

Financial Term	Amount
Current Base Rent	1000.00 USD
Minimum Fee	25.00 USD
Maximum Fee	800.00 USD

Sales Breakpoints

From	To	Type	Amount	Full Breakpoint
0	999.99	Percent	5%	50.00 USD
1000	4999.99	Percent	4%	160.00 USD
5000	9999.99	Percent	3%	150.00 USD
10000	99,999,999,999.99	Percent	2%	Not applicable

Sales Data

Year	Month	Reported Sales (USD)	Breakpoint Amount	Variable Rent (USD)	Adjusted Variable Amount (USD)	Base Rent (USD)	Total Rent (USD)	Comment
2004	January	250.00	5%	12.50		1,000.00	1,025.00	Minimum not met, use adjusted amount.
2004	February	2,000	VAR2	90.00		1,000.00	1,090.00	Second breakpoint reached, add full breakpoint calculation to incremental difference.
2004	March	1,800	VAR2	82.00		1,000.00	1,082.00
2004	April	6,000	VAR3	240.00		1,000.00	1,240.00	Third breakpoint reached, add full breakpoint calculations to incremental difference.
2004	May	5,000	VAR4	210.00		1,000.00	1,210.00
2004	June	50,000	VAR4	1,160.00	800.00	1,000.00	1,800.00	Maximum exceeded, use adjusted amount
2004	July	30,000	VAR4	760.00		1,000.00	1,760.00
2004	August	15,000	VAR4	460.00		1,000.00	1,460.00
2004	September	7,500	VAR3	285.00		1,000.00	1,285.00
2004	October	4,200	VAR2	180.00		1,000.00	1,180.00
2004	November	800	5%	40.00		1,000.00	1,040.00
2004	December	20,000	VAR4	560.00		1,000.00	1,560.00

You define the percentage breakpoints for the percent rent tier structure before activating the lease; after the lease is activated, you must create an amendment to perform any changes to the structure. You include percent rent terms on the lease and enter them into the system prior to lease activation. You set the various sales breakpoints (or tiers) for the lease under different sales categories. In the absence of actual reported data, you can enter or have the system attempt to estimate sales data. You enter the estimated information on the Sales Report Details page and set the type to Estimated. The Sales Report Details page is a worksheet to enter and calculate the total sales amounts. The system uses past data to help determine an appropriate estimate.

Sales Estimation Methods

The PeopleSoft Real Estate Management system provides you with three sales estimation methods to assist you in deciding the estimated sales data. Using this data helps you determine the monthly rent amount.

The three sales estimation methods are:

Past 6 Period Average: The system takes an average of sales of all prior periods up to six months, assuming there is sales data for the last six months in the database.

If data is not available for all six months, it takes only the average of whatever data is available up to the last six months. The system cannot provide an estimate if there is no data for the last six months.
Same Period Last Year: The system takes the sales from the same period last year assuming there is sales data for the same period last year.

For example, if the current sales report being estimated is period 2 of 2005, then the system looks for period 2 of 2004 to formulate an estimate. The system cannot provide an estimate if there is no data for the same period last year.
Prior Period: The system takes the sales for the preceding period, assuming there is sales data for the preceding period. The system cannot provide an estimate if there is no data for the preceding period.

Note. In addition to the sales estimation methods, the system also provides an adjustment factor that is a percentage field, at the lease level, to assist with altering the numbers to account for slower business, recession periods, inflation, and so on.

Adjustments to Estimated Rents

When you bill based on estimated sales, you will likely need to make adjustments, effectively changing the actual billable rent amount. The system provides the ability to adjust the previously calculated and processed data, as well as the ability to adjust the prior entries posted to the various subsystems. This is called the sales report revision.

A change to previously processed calculated data is called an adjustment. You can change sales report data any number of times before the transactions are processed. While making an adjustment, you select the sales type to indicate the changes that you are making. The sales type has no bearing on generating billing lines; it is informational only. The same billing lines are generated regardless of type and are updated at any time throughout this process.

When you enter the new data, the system calculates the rent amount on the worksheet. However, the system also takes into account the last processed worksheet and compares the two to determine the amount of the adjustment. Although the data from worksheet to worksheet is compared to determine the net difference, doing so accurately over multiple iterations can be complicated. As a result, the system uses the last of the prior worksheets to determine the amount billed. The system creates a complete reversal of the bill, sending a negative bill entry to the same transaction code by sales category, and updates the bill with the new amounts. For example, the original worksheet has three sales categories and three bill lines generated for billing, each with a unique transaction code. During an adjustment process, three negative bill line entries are created for the full amount billed, along with three new bill lines for the new full amount to bill.

On the Sales Report Details page for processed reports, the latest worksheet appears as display-only until you click the Update Report button. The worksheet is then available for changes, and a new version is saved to the table with a new revision number. You can view all past adjustments, but adjust only the latest one.

Prerequisites

Before setting up percent rent terms, you must set up the following:

Detail calendars for percent rent schedules.
Calendar ID selection for the business unit.
Sales categories.
Transaction routing codes.
Accounting rules.

Setting Up Percent Rent Terms

This section discusses how to enter percent rent terms.

Pages Used to Set Up Percent Rent Terms

Page Name	Object Name	Navigation	Usage
Create New Lease - Financial Terms	RE_LS_TERMS	Lease Administration, Receivables Leases, Create New Lease, Financial Terms Lease Administration, Receivables Leases, Maintain Lease, Financial Terms Lease Administration, Payables Leases, Create New Lease, Financial Terms Lease Administration, Payables Leases, Maintain Lease, Financial Terms	Enter financial terms for a lease. See Define Financial Terms.
Financial Terms - Percent Rent	RE_LS_PCTRENT_SEC	Click the Percent Rent link on the Financial Terms page.	Enter the sales estimation method, sales category, and breakpoints.

Page Name

Object Name

Navigation

Usage

Create New Lease - Financial Terms

RE_LS_TERMS

Lease Administration, Receivables Leases, Create New Lease, Financial Terms
Lease Administration, Receivables Leases, Maintain Lease, Financial Terms
Lease Administration, Payables Leases, Create New Lease, Financial Terms
Lease Administration, Payables Leases, Maintain Lease, Financial Terms

Enter financial terms for a lease.

See Define Financial Terms.

Financial Terms - Percent Rent

RE_LS_PCTRENT_SEC

Click the Percent Rent link on the Financial Terms page.

Enter the sales estimation method, sales category, and breakpoints.

Entering Percent Rent Terms

Access the Financial Terms - Percent Rent page.

Sales Estimation Method

Select a sales estimation method. The system uses this method for estimating the sales, in the absence of a sales report. The options are

Past 6 Period Average: An average of sales of all prior periods up to six months.

Prior Period: Sales for the preceding period.

Same Period Last Year: Sales of the same period last year.

Sales Adjustment Factor

Select a sales adjustment factor. This percentage field assists with altering the numbers to account for slower business, recession periods, inflation, and so on. Set the adjustment factor to 1.0 if you do not want any adjustment done to the sales estimation.

Payee

Enter the entity to whom you make payments. The system uses the landlord as the default. This field appears only for payables leases.

Payor

Enter the entity that is responsible for making payments. The system uses the tenant as the default. This field appears only for receivables leases.

Minimum Fee

Enter the minimum amount to be charged for the entire percent rent. If the minimum is not met, the amount is increased to the minimum level.

Note. If the amount calculated based on sales reported by payor and breakpoints is less than the minimum fee, then the minimum fee amount is spread across the sales categories in the ratio of calculated bill amount.

Maximum Fee

Enter the maximum amount to be charged to the entire percent rent. If the maximum is exceeded, the amount is reduced to the maximum level.

Note. If the amount calculated based on sales reported by payor and breakpoints is greater than the maximum fee, then the maximum fee amount is spread across the sales categories in the ratio of the calculated bill amount.

Calendar

Enter the calendar ID, which determines the frequency with which you report or receive sales reports. Percent rent sales reporting uses a specific calendar with distinct periods and start and end dates. In addition, this calendar structure enables the system to search for and determine when sales reports are missing, as well as to prevent duplicate sales reports for the same period. The system uses the percent rent calendar ID value from the from the business unit level, but you can override this value at the least level.

Add Sales Category

Click to add an additional sales category in the group box.

Calculate Breakpoints

Click to calculate breakpoints. If you have multiple breakpoints, the system calculates the To Breakpoint from the data entered into the From Breakpoint.

Sales Reporting Categories

Sales Category

Select a sales category to classify sales reports. You can select only from active sales categories.

See Defining Sales Categories.

Add Breakpoint

Click to add an additional breakpoint for the sales category.

Breakpoints

From Breakpoint	Enter the starting amount for the break. For the first break, this value appears as 0. You use breakpoints within each of the sales categories to facilitate assigning of rent based on the sales.
To Breakpoint	Displays the maximum sales amount allowed within the break. The system determines this value based on the next breakpoint entered when you click the OK or Calculate Breakpoints button.
Operator	Enter the operator to use for the calculation of rent based on the sales amount. These are the options: Amount: Specifies that a fixed amount be applied as rent within a breakpoint for a sales category. Note. If you select this option, you must enter a value in the Amount field. Percent: Specifies that a percentage of the amount be applied as rent within a breakpoint for a sales category. Note. If you select this option, you must enter a value in the Percent field. Both: Specifies that both a fixed amount and a percentage of the amount be applied as rent within a breakpoint for a sales category. Note. If you select this option, you must enter values in the Amount and Percent fields.
Amount	Enter a flat rent amount to be charged. Note. This is a required field if the Operator field is set to Amount or Both. You must enter a base amount for billing or payment.
Percent	Enter the percentage to be applied to the sales amount to calculate the rent. Note. This is a required field if the Operator field is set to Percent or Both.

Reporting Sales and Calculating Percent Rent

This section provides an overview of sales reporting and percent rent calculation and discusses how to:

Search for sales reports.
Find missing sales reports.
Create new sales reports and calculate percent rent.
Import sales reports.

Understanding Sales Reporting and Percent Rent Calculation

When setting the percent rent terms in a lease, the sales reports form the basis that the system uses to calculate rent. After you set the percent rent terms and activate the lease, you begin working with the tenant sales reports to periodically generate the rent invoices.

You collate, enter, and revise all reported sales figures for the past period in the Report Sales - Sales Report Details page. This page enables you to enter estimated or actual figures, and the system calculates the appropriate rent amount, taking into consideration the percentage breakpoints and base rent setup. The system uses the percent and fixed amount selection and enters a fixed amount for every breakpoint row.

Note. You can select a calendar for a lease that suits your billing frequency. If the tenant reports sales in a different frequency than billing, you must collate and convert this data to match the billing frequency outside of the system prior to using this worksheet.

The system populates the categories that are set up in the lease by default. You cannot add any additional rows for categories because they have to be set up on the lease to exist on the worksheet to provide validations.

You can isolate missing sales reports. For the missing reports, you can enter estimated information. Based on the sales estimation method and the adjustment factor that you selected while setting up the percent rent terms, you can estimate the sales.

After bringing the data from the estimation tools into the worksheet, the system enables you to adjust the calculated data. If the system is unable to generate an estimate, it displays a warning indicating the reason. Once you are satisfied with the estimate, you can click Create Pending Invoice in the worksheet and initiate the transfer to Billing or PeopleSoft Payables for further processing. As in normal sales reporting, the system saves the estimates along with the date, time, and user ID to the database for historical purposes.

Importing Sales Reports

You can populate the into the Report Sales - Sales Report Details page by importing the sales reports from a file. Before you can import sales reports, you must set up the URL path for attachments and configure the sales report file format.

Access the URL Maintenance page for the RE_ATTACHMENTS identifier and enter the URL in the format ftp://<username>:<password>@<machinename>/directory name. The user name and password are critical, as the system uses these to connect all users to the FTP server. The <machinename> is the physical name by which the FTP server is identified on the network. You can include the directory name on the server where the sales report attachments are stored, or you can store the sales report attachments in the root directory of the FTP server. If you store the resume attachments anywhere but the root of the FTP server, you must append the directory name to the URL.

To populate the Report Sales - Sales Report Details page, the system uses data from the file along with lease data that already exists.

This table contains the record fields that the file must contain along with the structure of the fields:

Record Field	Field Description	Type	Length	Required
BUSINESS_UNIT	Business Unit	Char	5	Y
LSE_NBR	Lease Number	Char	10	Y
FISCAL_YEAR	Sales Year	Nbr	4	Y
ACCOUNTING_PERIOD	Sales Period	Nbr	3	Y
CHG_GRP_CD	Category Code	Char	10	Y
SLS_AMT_TYPE	Sales Amount Type	Char	1	Y
SLS_CURR_CD	Sales Currency Code	Char	3	Y
SLS_AMT	Sales Amount	Signed Nbr	23.3	Y

The system accepts only the translate values for the Sales Amount Type field. These are the valid values with their descriptions:

1: Reported
2: Estimated
3: Actual
4: Audited

The file layout uses the comma separated value (CSV) format and is mapped to the sales report file received. The file contains eight fields to map the sales report data received and rest of the information to create a sales report is retrieved from the corresponding lease.

This table contains sample data that the sales report file should contain. You cannot change the order of fields and the values must be separated by commas.

Business Unit	Lease Number	Sales Year	Sales Period	Category Code	Sales Amount Type	Sales Currency	Sales Amount
US001	US-NVV-03	2006	05	FOODSALE	3	USD	10000
US001	US-NVV-03	2006	05	SPORTS	3	USD	5023.75
US001	US-NVV-03	2006	05	ELECTRONIC	3	USD	15000
US001	US-NVV-03	2006	05	PHARMACY	3	USD	10000

Effects of Lease Amendments on Sales Reporting

When you change a percent rent term setup because of a lease amendment, these changes are reflected during the update of a pending sales report. The changes result in an adjustment to the sales report. The recalculation is done automatically. The following occurs when you create a lease amendment:

If you want to add a category, do so when updating a pending or adjusting sales report.
If you delete a category, the category becomes display-only to prevent changes.

If the amendment is done for a sales revision, the amendment creates only a negative amount for the deleted category.
The amendment to the minimum fee or maximum fee and sales adjustment factor impacts the total rent.

Pages Used to Report Sales and Calculate Percent Rent

Page Name	Object Name	Navigation	Usage
Report Sales - Sales Reports	RE_SLSRPT_SRCH	Lease Administration, Receivables Leases, Enter Sales Reports Lease Administration, Receivables Leases, Enter Sales Reports	Search for all available sales reports. Create a new sales report and import sales data.
Report Sales - Find Missing Sales Reports	RE_MISSING_SLS	Click the Find Missing Sales Reports link on the Sales Reports page.	Find missing sales reports.
Report Sales - Create New Sales Reports	RE_SLSRPT_INV	Click the Create New Sales Reports button on the Report Sales - Sales Reports page.	Create new sales reports.
Report Sales - Sales Report Details	RE_SLSRPT_INV	Click a date link on the Report Sales - Sales Report page.	View processed sales reports or modify pending sales reports.
Sales Reports - Sales Report (import)	RE_IMPORT_SLS	Click the Import Sales Report button on the Report Sales - Sales Reports page.	Create sales reports by importing data from a CSV file.

Searching for Sales Reports

Access the Report Sales - Sales Reports page.

Filter search results by entering specific values in the fields in the Search Criteria group box. You must enter the business unit. If you enter only a business unit, the search returns all sales reports for all leases within that business unit.

Calendar ID	Displays the percent rent calendar ID from the lease that you enter in the Lease Number field. The calendar provides a set structure to the periods and facilitates the system's ability to search for missing sales reports. The calendar provides the start and end dates of each period so that the system can keep track of sales reports and assist with locating missing sales.
From Year	Select the year to define the start of the date range for the search criteria.
To Year	Select the year to define the end of the date range for the search criteria.
From Period	Enter the starting period to be included in the search criteria. The periods match the dates created for this detail calendar.
To Period	Select the last period to be included the search criteria. The periods match the dates created for this detail calendar.
Find Missing Sales Reports	Click to access the Report Sales - Find Missing Sales Reports page on which you can enter criteria to search for missing sales reports.
Create New Report	Click to create a new sales report.
Import Sales Report	Click to import reported sales data reported from a CSV file.

Finding Missing Sales Reports

Access the Report Sales - Find Missing Sales Reports page.

The system displays all of the missing sales reports based on the search criteria that you enter, regardless of lease status.

Include Estimated Sales	Select to include estimated sales reports in the search results for missing sales reports. Normally, searching for missing sales reports only searches for periods that have no data; selecting this box handles any estimated sales reports as missing sales because the tenant did not provide the data.
Find Existing Sales Reports	Select to return to the Report Sales - Sales Reports page to search for existing sales reports.
Generate Estimated Sales	Click to generate a new estimated sales report for the selected lease. Estimates are based on the calculation method defined at the business unit level, such as Past 6 Period Average.
Last Report Date	Displays the last date entered for a sales report for this lease.
Report Type	Displays the report type, either Missing or Estimated.

Creating New Sales Reports and Calculating Percent Rent

Access the Report Sales - Create New Sales Reports page.

Sales Period

Displays the date range for this sales report.

Fiscal Year

Displays the year to which this accounting period refers.

Accounting Period

Displays the accounting period for this sales report.

Lease Number

Click to access the Financial Terms - Percent Rent Details page on which you can view the breakpoints for this lease.

Payee

Displays the entity to whom you make payments. This field appears only for payables leases.

Payor

Displays the entity that is responsible for making payments. This field appears only for receivables leases.

Revision

Displays the latest revision number. Shows the number of adjustments for this period.

Type

Select the type of sales reporting figures being entered. You can change the type with an amendment if more accurate numbers are determined. The type enables you to classify the sales report by the values defined. The system delivers four values that you can use interchangeably. You can use any combination of these values:

Estimated: The estimated figure is either generated by the system or entered on behalf of tenant estimates. When the system generates a sales estimate, this value is automatically defaulted on the estimated row.

Reported: The figure is reported by tenant, but with possibly no documentation.

Actual: The tenant provides documentation of the actual figures.

Audited: The tenant provided an audited report or the landlord sent an auditor in to audit the figures.

Note. If you change the type from Estimated to any of the other values, you cannot change it back to Estimated.

Sales Amount

Enter the sales amount based on the type that you select for the Type field.

Click the Exchange Rate Detail icon to access the View Exchange Rate Detail page on which you can view the details of the exchange rate that the system used to calculate the converted sales amount.

Converted Sales Amount

Displays the sales amount converted back to the base currency of the lease.

Calculate

Click to calculate the bill amount based on the converted sales amount and the breakpoint using percent, amount, or both. You can enter different sales amounts to calculate and recalculate the billing amount until the calculated bill amounts are acceptable to you.

Bill Amount

Displays the amount to be billed or the amount to be paid depending on the type of lease that you are using. The system calculates the amount from the percent rent terms.

Create Pending Invoice or Create Pending Payment

Click to calculate the rent and submit the bill amount to the transaction queue for approval. The system changes the status from Pending to Processed. If the transaction is rejected in the billing transaction queue, the status of the sales report changes from Processed back to Pending.

Importing Sales Reports

Access the Report Sales - Sales Report (import) page.

Attached File

Displays the name of the file that you uploaded.

Lookup File

Browse through your files to locate the percent sales report and upload it to the ftp server.

See Defining an FTP Server for Document Attachments.

Import Sales Report

Click to import the values of the uploaded file into a sales report.

Sales Estimation Method	Select a sales estimation method. The system uses this method for estimating the sales, in the absence of a sales report. The options are Past 6 Period Average: An average of sales of all prior periods up to six months. Prior Period: Sales for the preceding period. Same Period Last Year: Sales of the same period last year.
Sales Adjustment Factor	Select a sales adjustment factor. This percentage field assists with altering the numbers to account for slower business, recession periods, inflation, and so on. Set the adjustment factor to 1.0 if you do not want any adjustment done to the sales estimation.
Payee	Enter the entity to whom you make payments. The system uses the landlord as the default. This field appears only for payables leases.
Payor	Enter the entity that is responsible for making payments. The system uses the tenant as the default. This field appears only for receivables leases.
Minimum Fee	Enter the minimum amount to be charged for the entire percent rent. If the minimum is not met, the amount is increased to the minimum level. Note. If the amount calculated based on sales reported by payor and breakpoints is less than the minimum fee, then the minimum fee amount is spread across the sales categories in the ratio of calculated bill amount.
Maximum Fee	Enter the maximum amount to be charged to the entire percent rent. If the maximum is exceeded, the amount is reduced to the maximum level. Note. If the amount calculated based on sales reported by payor and breakpoints is greater than the maximum fee, then the maximum fee amount is spread across the sales categories in the ratio of the calculated bill amount.
Calendar	Enter the calendar ID, which determines the frequency with which you report or receive sales reports. Percent rent sales reporting uses a specific calendar with distinct periods and start and end dates. In addition, this calendar structure enables the system to search for and determine when sales reports are missing, as well as to prevent duplicate sales reports for the same period. The system uses the percent rent calendar ID value from the from the business unit level, but you can override this value at the least level.
Add Sales Category	Click to add an additional sales category in the group box.
Calculate Breakpoints	Click to calculate breakpoints. If you have multiple breakpoints, the system calculates the To Breakpoint from the data entered into the From Breakpoint.

Sales Period	Displays the date range for this sales report.
Fiscal Year	Displays the year to which this accounting period refers.
Accounting Period	Displays the accounting period for this sales report.
Lease Number	Click to access the Financial Terms - Percent Rent Details page on which you can view the breakpoints for this lease.
Payee	Displays the entity to whom you make payments. This field appears only for payables leases.
Payor	Displays the entity that is responsible for making payments. This field appears only for receivables leases.
Revision	Displays the latest revision number. Shows the number of adjustments for this period.
Type	Select the type of sales reporting figures being entered. You can change the type with an amendment if more accurate numbers are determined. The type enables you to classify the sales report by the values defined. The system delivers four values that you can use interchangeably. You can use any combination of these values: Estimated: The estimated figure is either generated by the system or entered on behalf of tenant estimates. When the system generates a sales estimate, this value is automatically defaulted on the estimated row. Reported: The figure is reported by tenant, but with possibly no documentation. Actual: The tenant provides documentation of the actual figures. Audited: The tenant provided an audited report or the landlord sent an auditor in to audit the figures. Note. If you change the type from Estimated to any of the other values, you cannot change it back to Estimated.
Sales Amount	Enter the sales amount based on the type that you select for the Type field.
	Click the Exchange Rate Detail icon to access the View Exchange Rate Detail page on which you can view the details of the exchange rate that the system used to calculate the converted sales amount.
Converted Sales Amount	Displays the sales amount converted back to the base currency of the lease.
Calculate	Click to calculate the bill amount based on the converted sales amount and the breakpoint using percent, amount, or both. You can enter different sales amounts to calculate and recalculate the billing amount until the calculated bill amounts are acceptable to you.
Bill Amount	Displays the amount to be billed or the amount to be paid depending on the type of lease that you are using. The system calculates the amount from the percent rent terms.
Create Pending Invoice or Create Pending Payment	Click to calculate the rent and submit the bill amount to the transaction queue for approval. The system changes the status from Pending to Processed. If the transaction is rejected in the billing transaction queue, the status of the sales report changes from Processed back to Pending.