Setting Up JD Edwards EnterpriseOne Advanced Real Estate Forecasting

This chapter provides an overview of setting up JD Edwards EnterpriseOne Advanced Real Estate Forecasting and discusses how to:

• Set up user-defined codes.

• Set up growth patterns.

• Set up recurring bill code rules.

• Set up building constants.

• Set up expense participation rules (optional).

• Set up sales overage rules (optional).

Understanding the Setup Requirements for JD Edwards EnterpriseOne Advanced Real Estate Forecasting

After you upload units from JD Edwards EnterpriseOne Real Estate Management to generate a revision number, you can perform the setup tasks. Except for user-defined codes, you set up JD Edwards EnterpriseOne Advanced Real Estate Forecasting by revision number and either building or property number. For each new revision that you want to generate, you must also generate the setup information for that revision, which includes growth patterns, recurring bill code rules, building constants, and unit assumptions.

Revisions enable you to compare different budget and forecasting methods using different setup information. The revision number serves as the audit trail for reviewing budgets and forecasts.

Prerequisite

Before you complete the tasks in this section, upload or add the units for the revision number that you want to use to set up the system.

Setting Up User-Defined Codes

Many fields in the programs for JD Edwards EnterpriseOne Advanced Real Estate Forecasting accept only user-defined code (UDC) values. The system does not accept user-defined codes that are not defined in a user-defined code table. Some user-defined codes are hard coded and should not be changed. Some user-defined codes contain a special handling code to direct the system to perform a specific function.

This table lists the user-defined codes for JD Edwards EnterpriseOne Advanced Real Estate Forecasting and provides you with detailed information about whether new codes can be added and existing codes modified, as well as how the codes are used in the program:

Setting Up Growth Patterns

This section provides an overview of growth pattern information and discusses how to:

• Set the processing options for AREF Growth Patterns.

• Add growth patterns.

Understanding Growth Pattern Information

You use growth patterns to set up the amount or percent of increase that you want the system to apply to the recurring billing amounts, if they exist, or to the balance of other accounts that you specify during the account definition process when the system calculates the budget amounts.

The system uses growth pattern types, which are hard-coded user-defined codes (15L/GT), to determine whether the growth amounts that you enter represent a fixed amount, a percentage, or an amount per square foot. For example, if you enter 1.00 in the Year 01 field of the growth pattern, depending on the growth pattern type the system:

• Adds 1 to the account balance, if you use a growth pattern type of FX (fixed amount).

• Multiplies the account balance by 1.01 percent, which is equivalent to multiplying the account balance by one percent and adds that result to the account balance, if you use a growth pattern type of PC (percentage).

• Multiplies the area of the unit (represented in square feet) by 1 and adds that result to the account balance if you use a growth pattern type of SF (square foot).

You can specify different annual growth amounts (or percentages, or amounts per square foot) for each growth pattern for as many as 15 years. The system compounds the growth amounts that you enter for each year. For example, if you enter a percentage growth pattern type and specify 1.0 in Year 01 and 2.0 in Year 02, the system multiplies the account balance by 1.01 percent the first year, and then multiplies that resulting amount by 1.02 percent the following year (for a total of 3.02 percent).

You set up growth patterns by building and revision number and then use them as part of the assumption rule, which is also set up by building and revision number, that you assign to each unit for which you want to calculate a budget amount. You also assign growth patterns to detail assumptions, recurring bill code rules, sales overage rules, and expense participation rules.

Note. You cannot set up growth patterns for revision numbers for which you do not have units uploaded or created. For example, you cannot enter a growth pattern for revision number 7 if you do not have any units for revision number 7.

Growth pattern information is stored in the AREF Growth Pattern File table (F15L105).

Form Used to Set Up AREF Growth Patterns

Setting Processing Options for the AREF Growth Patterns Program (P15L105)

Use these processing options to specify the default values for the fields that appear on the form.

Defaults

Use these processing options to specify the default growth pattern type and the default growth rate to assign to each budget year.

Adding Growth Patterns

Access the AREF Growth Pattern Revisions form.

Building	Enter an alphanumeric code that identifies a separate entity within a business for which you want to track costs. For example, a business unit might be a warehouse location, job, project, work center, branch, or plant. You can assign a business unit to a document, entity, or person for purposes of responsibility reporting. For example, the system provides reports of open accounts payable and accounts receivable by business unit to track equipment by responsible department. Business unit security might prevent you from viewing information about business units for which you have no authority.
Growth Pattern	Indicates a defined growth pattern. Growth patterns are used to anticipate increasing amounts for lease revenue and expenses based on several market factors, including: Square feet Flat amount Percentage amount Specified number of years JD Edwards EnterpriseOne Advanced Real Estate Forecasting account definition provides starting values that increase by the growth pattern assigned to the building. You may add a descriptive statement of up to 50 characters in length.
Growth Pattern Type	Enter a user-defined code (15L/GT) that identifies the amount type for the associated growth pattern in the Year 01 through Year 15 fields as amounts, percentages, or amounts per square foot. We have defined these amount types and they should not be changed. Values are: FX: Fixed amount PC: Percentage amount SF: Amount per square foot
Revision Number	Indicates a unique budget revision. You store multiple revisions of information you set up and calculated budget information within the system. The system stores each what-if scenario according to the budget revision number you assign.
Year 01 - Year 15	Indicates the growth rate that you anticipate for the given year. This value can be defined as a currency, a percentage, or an amount per square foot.
AREF Report Code 01- AREF Report Code 05	Enter a user-defined code (15L/01) that you use to meet the needs of the organization. For example, you might use this field to set up reporting codes for specific regions of the country. Use this value for reporting purposes only.

Setting Up Recurring Bill Code Rules

This section provides an overview of recurring bill code rules and discusses how to:

• Set the processing options for AREF Recurring Bill Code Rules.

• Add recurring bill code rules.

Understanding Recurring Bill Code Rules

You use recurring bill code rules to specify the bill codes to use to retrieve the corresponding revenue amounts from the recurring billing information that is set up in JD Edwards EnterpriseOne Real Estate Management for units associated with a lease. You also use recurring bill code rules to designate which bill codes you use for non-rent. The system calculates the forecasted revenue amounts differently for rent bill codes than it does for nonrent bill codes:

• For rent bill codes, the system uses only the amounts from the recurring billing information to forecast revenue amounts for the term of the lease.

• For nonrent bill codes, the system retrieves the amounts from recurring billing and applies the corresponding growth pattern from the recurring bill code rule.

  Note. The system uses the result from the first year as the base amount to which it applies the growth pattern for the second year. The system continues compounding the amounts for each subsequent year for which the budget is forecast.

The system updates the amount to the account that is set up in the automatic accounting instruction (AAI) that corresponds to the bill code when you run the AREF Budget Calculation program (R15L1091).

After the lease expires, the system uses the assumption rules that are assigned to the unit.

You set up recurring bill code rules using the AREF Recurring Bill Code Rules program (P15L106). After you set up the rules, you assign them to each unit or to the building constant record. The system stores recurring bill code rules in the AREF Recurring Bill Code Rules Header (F15L106) and AREF Recurring Bill Code Rules Detail (F15L116) tables.

Example: Budget Calculation for Nonrent Bill Codes

The example shows how the system uses the recurring bill code rule to calculate the forecasted budget for the nonrent revenue accounts specified:

Recurring Bill Code Rule

This example assumes that the recurring bill code was set up according to the table:

Growth Patterns

The example assumes that the growth pattern was set up according to the table:

Term of Lease: 36 months (3 years)

Calculation for TXIN:

1,700 × 12 = 20,400 (annual amount)

20,400 + 1,000 = 21,400 ÷ 12 = 1,783.33 (forecasted amount for each period in year 1)

21,400 + 2,000 = 23,400 ÷ 12 = 1,950 (forecasted amount for each period in year 2)

23,400 + 3,000 = 26,400 ÷ 12 = 2,200 (forecasted amount for each period in year 3)

The system updates account 5320 in the AREF Budget Results table (F15L109) with the forecasted amount for each period of each year for which the budget is forecast while the lease is effective.

Calculation for UTIL:

2,300 × 12 = 27,600 (annual amount)

27,600 × 1.01 = 27,876 ÷/ 12 = 2,323 (forecasted amount for each period in year 1)

27,876 × 1.02 = 28,433.52 ÷ 12 = 2,369.46 (forecasted amount for each period in year 2)

28,433.52 × 1.03 = 29,286.53 ÷ 12 = 2,440.54 (forecasted amount for each period in year 3)

The system updates account 5330 in the F15L109 table with the forecasted amount for each period of each year for which the budget is forecast while the lease is effective.

Form Used to Set Up Recurring Bill Code Rules

Setting Processing Options for the AREF Recurring Bill Code Rules Program (P15L106)

Use these processing options to specify the field values to retain when adding multiple recurring bill code rules, as well as the default version to use when you select programs from the Row or Form menus.

Defaults

Use these processing options to specify whether to retain values entered in specific fields when adding multiple records.

Versions

Use these processing options to specify the version of the program to use when the program is accessed from a Row or Form menu.

Adding Recurring Bill Code Rules

Access the AREF Recurring Bill Code Rule Revisions form.

Recurring Bill Code Rule

Enter a user-defined, 10-character field that specifies the bill code rule.

Setting Up Building Constants

This section provides an overview of building constants and discusses how to:

• Set the processing options for AREF Building Constants.

• Add building constants information.

Understanding Building Constants Information

If you apply the same set of rules to the majority of the units in a building for which you generate a forecasted budget, you can expedite the setup process by adding building constant records. You can add the record for each building or for the property. If the business unit has an associated property, the system uses the building constants record that is set up for the property if it cannot locate a building constant record for the building. You set up building constants by building (business unit) and revision number to establish the default rules to use to calculate the budgets for units that do not have assumptions (rules) assigned to them. If the unit has assumptions assigned to it, the system uses them and ignores the building constant.

In addition to the default assumptions that you can set up, you can also use building constants to set up the parameters to calculate management fees, such as the rate, amount limits, and bill codes. The system uses the revenue bill code that you specify to retrieve the amount to which it applies the rate, and then updates the result to the account specified by the resulting bill code. If you have revenue fee information set up in JD Edwards EnterpriseOne Real Estate Management, an option enables you to use those rules, if desired. You can also specify an account association code to use to report bad debt.

The building constants program also enables you to enter information about the building, such as the purchase price, discount percentage, selling cost percentage, and so forth, that the system uses to calculate NPV (net present value) and IRR (internal rate of return) when you run the AREF Valuation Report (R15L111).

If you have more than one building for which you want to use building constants, you can copy an existing record. You can add, modify, and delete building constant records, as necessary.

Note. You cannot set up a default constant to use for all buildings and revisions.

After you set up building constant records, you can update them globally by setting up and using a building constant model.

The system stores building constants in the AREF Building Constants table (F15L100).

See Also

Revising Building Constants Using Models

Setting Up Account Association Information

Forms Used to Add Building Constants Information

Setting the Processing Options for AREF Building Constants (P15L100)

Use these processing options to specify default values and to provide the rules to use for setting up building constant records.

Defaults

Versions

Use these processing options to specify the version of the program to use when the program is accessed from a Row or Form menu.

Adding Building Constants Information

Access the AREF Building Constants Revisions form.

Assumption Action	Enter a user-defined code (15L/UA) that specifies whether the assumption rule applies to the new or renewal market rate, or a blend of the two, when used by the system to forecast the budget amounts. Values are: N: New R: Renewal B: Market blend We have defined these assumption actions and they should not be changed. The system uses the values from the Market Rate New (NWMK), Market Rate Renewal (RNMK), and Renewal Probability Percent (RPPC) fields on the unit assumption in this formula to determine the value for the market blend: {[(100) – (prob percent) / 100] * new} + {[(prob percent) ÷ (100)]* renew)} For example, if the new market rate is 10, the renewal market rate is 8, and the renewal probability percent is 60, the system calculates the blend rate as 8.8: {[(100 – 60) ÷ 100] x new} + (60 ÷ 100) × 8 = 8.8
Use Existing RE Rules	Identifies what management fee rule to use when calculating JD Edwards EnterpriseOne Advanced Real Estate Forecasting (AREF) budgets. If you select the check box, the system uses the information that is set up in the Management Fee Master table (F1505B) for the business unit only (not the lease) in JD Edwards EnterpriseOne Real Estate Management. The system disables the fields in the Management Fee portion of the form. If you do not select the check box, the system uses the information that is set up in the Management Fee group box on the form.
Rev Bill Code	Enter a code that determines the trade account that the system uses as the offset when you post invoices or vouchers. The system concatenates the value that you enter to the AAI item RC (for Accounts Receivable) or PC (for Accounts Payable) to locate the trade account. For example, if you enter TRAD, the system searches for the AAI item RCTRAD (for receivables) or PCTRAD (for payables). You can assign up to four alphanumeric characters to represent the general ledger offset or you can assign the three-character currency code (if you enter transactions in a multicurrency environment). You must, however, set up the corresponding AAI item for the system to use; otherwise, the system ignores the general ledger offset and uses the account that is set up for PC or RC for the company specified. If you set up a default value in the G/L Offset field of the customer or supplier record, the system uses the value during transaction entry unless you override it. Note. Do not use code 9999. It is reserved for the post program and indicates that offsets should not be created.
Fee Rate	Enter a rate for an administration fee. It is expressed as a decimal. For example, you would enter .05 for a 5 percent rate.
Minimum	Enter the minimum amount for revenue fees. If the fees calculated are less than the minimum amount, the minimum amount is invoiced or vouchered. If the fees calculated are greater than the minimum amount, the calculated fees are invoiced or vouchered.
Results Bill Code	Enter the general ledger offset, or billing/receipt code for invoices that are automatically generated for revenue fees.
Maximum	Enter the maximum amount for revenue fees. If the fees calculated are greater than the maximum amount, the maximum amount is invoiced or vouchered. If the fees calculated are less than the maximum amount, the calculated amount is invoiced or vouchered.
Account Association Code	Enter the EA code used to specify a group of account numbers that the system uses when you run the AREF Account Association program (P15L120). You use the AREF Account Association code to group certain types of income or expenses that you cannot group with AAIs. The system refers to the AREF Account Association code that is assigned to a group of accounts for calculation and reporting purposes.
Percentage	Enter the percentage of the account balances represented by the account association code that you entered for bad debt. To derive a value of bad debt for the building, the system multiplies the sum of the account balances by the percentage that you specify. The system uses this information only when you generate the AREF Input Assumptions report (R15L005). Enter the percentage in a decimal format. For example, enter .01 to specify 1 percent.
Initial Purchase Price	Enter a number that specifies the initial purchase amount of the associated building. The initial purchase price is one of several building constants that the system uses to calculate the building budget.
Cap Rate Percent	Enter a number that specifies the cap rate percent. You enter the cap rate percent when you run the Valuation Report (R15L111) program. The cap rate percent is used in the calculation of the building's sales price and net proceeds from the sale of the building. The system calculates stabilized Net Operating Income (NOI) based on revenue and expenses (except capital expenditures) for a year that you determine to be stable. The NOI is then used along with the Cap Rate Percent to calculate the selling price. You can define the cap rate percent to meet the needs. Note. The system uses the cap rate percent only when you generate the AREF Valuation Report (R15L111).
Discount Rate Percent	Enter a number that specifies the Discount Rate Percent. The Discount Rate Percent is one of several building constants that the system uses to calculate a budget. It might represent the rate of inflation or the interest rate of a competing investment. The Discount Rate Percent is used to calculate the Net Present Value (NPV) of an investment. The NPV uses a discount rate and a series of future payments and income. Note. The system uses the discount rate percent only when you generate the AREF Valuation Report (R15L111).
Selling Cost Percent	Enter the umber that specifies the Discount Rate Percent. The Discount Rate Percent is one of several building constants that the system uses to calculate a budget. It might represent the rate of inflation or the interest rate of a competing investment. The Discount Rate Percent is used to calculate the Net Present Value (NPV) of an investment. The NPV uses a discount rate and a series of future payments and income. Enter the percentage as a whole number. For example, enter 15 to specify 15 percent. Note. The system uses the selling cost percent only when you generate the AREF Valuation Report (R15L111).
Year for Stabilized NOI (year for stabilized net operating income)	Enter a number that specifies the year that the system uses to determine the stabilized net operating income when you run the Valuation Report program (R15L111).

Setting Up Expense Participation Rules (optional)

This section provides an overview of expense participation (E.P.) and discusses how to:

• Set the processing options for AREF E.P. Rules.

• Add expense participation rules.

Understanding Expense Participation Rules

Expense participation is a method of allocating expenses among tenants based on criteria such as the area of the unit they lease or the location of the unit in the building.

In JD Edwards EnterpriseOne Advanced Real Estate Forecasting, expense participation is based on an amount per square foot. You forecast expense participation revenue based on the area of the tenant's unit in relation to the total area of the building or property for the expense class. The system retrieves the area to use from the building logs based on the E.P. code that it locates from the expense participation rule. If the system cannot locate the area from the building logs, it uses the sum of the areas of the units that are set up for the building or property in the F15L101 table.

You set up expense participation rules in JD Edwards EnterpriseOne Advanced Real Estate Forecasting for the system to use when the lease expires or when expense participation rules are not set up in JD Edwards EnterpriseOne Real Estate Management. The system always uses the expense participation rules that are set up in JD Edwards EnterpriseOne Real Estate Management before it uses the rules set up in JD Edwards EnterpriseOne Advanced Real Estate Forecasting.

For example, if expense participation information is set up in JD Edwards EnterpriseOne Real Estate Management for a lease that ends January 31, 2007, the system uses that information to calculate and forecast expense participation amounts through the end of the lease. At the time the lease expires, the system uses the expense participation rules that are set up in JD Edwards EnterpriseOne Advanced Real Estate Forecasting for the subsequent years that are forecasted.

As a property owner or landlord, you can use expense participation to calculate the expenses for which the tenant would be responsible if the unit were leased, or the amount of potential revenue that is lost. When you set up expense participation rules in JD Edwards EnterpriseOne Advanced Real Estate Forecasting, you must specify whether the rule pertains to retail or commercial property. If the rule applies to retail property, the system calculates a pro-rata share of expenses for the unit. If the rule applies to commercial properties, you must additionally specify an E.P. recovery type of net, gross, or mixed:

• If the recovery type is gross, the landlord pays all expenses and the rule that you set up is for informational purposes only.

• If the recovery type is net, the tenant pays all expenses, and the system calculates the tenant's expense amount as if the unit were leased.

  The information that you set up determines only the expense amount and the account to update.

• If the recovery type is mixed, the tenant pays a share of the expenses, and the system calculates the tenant's share of expenses as if the unit were leased.

  The information that you set up determines how much the tenant pays.

Depending on the type of property and the recovery type that you specify, the system enables or disables fields in the detail portion of the AREF E.P. Rules Revisions form. This table shows the fields that the system disables based on the criteria that you specify when you set up the expense participation rule (all other fields on the form are enabled):

If you select a method whereby the system calculates expense participation based on the tenant's pro-rata share, the AREF E.P. Budget Calculations program (R15L1096) derives this amount by dividing the area of the unit by the total area of all of the units in the building or for the property, and then multiplying it by the class exposure. You can manipulate the tenant's pro-rata share by:

• Setting up a value in the Exp Stop per Sq. Ft. (expense stop per square foot) (BSEX) field.

  The system multiplies the amount per square foot that you specify by the area and then subtracts it from the expense class.

• Setting up a value in the Amount Per Sq. Ft. (amount per square foot) (AEPA) field.

  The system applies the growth pattern to the amount per square foot that you specify, divides that result by 12, and then subtracts that result from the final expense participation billable amount.

• Setting up a tenant exclusion rule, which reduces the class exposure by subtracting expenses based on bill codes, expense participation unit type, or both.

  Because the unit is not leased, the system excludes the amounts associated with the accounts that are set up in the AAIs that correspond to the bill codes specified. For example, if the exclusion rule is set up to exclude amounts associated with bill codes RO and RRTL, the system retrieves the account from the corresponding AAI, in this example 5320 and 5330, respectively, and subtracts the account balances from the class exposure.

• Setting up a share factor denominator, which reduces the area of the building or property by excluding the area of specific units based on the expense participation unit type, area, or a combination or both.

You set up tenant exclusions and share factor denominators in JD Edwards EnterpriseOne Real Estate Management.

Note. If the expense participation information in JD Edwards EnterpriseOne Real Estate Management includes a share factor denominator or tenant exclusion rule, you must run the Gross Lease Occupancy Refresh program (R15141) prior to generating the budget calculations.

If the expense participation rule in JD Edwards EnterpriseOne Advanced Real Estate Forecasting includes a share factor denominator or tenant exclusion rule, you must run the AREF Occupancy Refresh program (R15L1092) prior to generating the budget calculations. A processing option enables you to submit from the AREF Budget Calculation program (R15L1091). When you run the AREF Budget Calculation program and you set the processing option to calculate expense participation, the system runs the AREF E.P. Budget Calculations program (R15L1096) to calculate the expense participation amounts and updates the F15L109 table.

The system stores JD Edwards EnterpriseOne Advanced Real Estate Forecasting expense participation rules in the:

• AREF E.P. Rules Header (F15L104) table.

• AREF E.P. Rules Detail (F15L114) table.

Prerequisites

Before you complete the tasks in this section:

• Become familiar with expense participation processing in JD Edwards EnterpriseOne Real Estate Management.

• Set up the E.P. code and corresponding area for each property and building on the associated building log in JD Edwards EnterpriseOne Real Estate Management.

• Set up expense participation classes.

  See Setting Up Expense Participation Classes.

• Set up tenant exclusion rules, if necessary.

  See Setting Up Tenant Exclusion Rules.

• Set up share factor denominators, if necessary.

  See Setting Up Share Factor Denominators.

Form Used to Set Up Expense Participation Rules

Setting Processing Options for the AREF E.P. Rules Program (P15L104)

Use these processing options to specify default values for fields and for versions.

Defaults

Versions

Use these processing options to specify the version of the program to use when the program is accessed from a Row or Form menu.

Adding Expense Participation Rules

Access the AREF E.P. Rules Revisions form.

E.P. Rule (expense participation rule)	Enter a user-defined 10-character code that specifies the expense participation rule. This code is a key to the F15L104 and the F15L114 tables.
Retail and Commercial	Select the option that specifies the type of expense participation (EP) rule. This code also controls the expense participation recovery type (EPVT) that you choose to declare the rule. Choices are: R: Retail If the rule type is retail, then recovery type is not available. C: Commercial If the rule type is commercial, then the recovery type can be defined as net, gross, or mixed.
Net, Gross, and Mixed	Select the option that specifies who pays for property expenses and maintenance on commercial properties. Each option corresponds to a hard-coded value in UDC table 15L/RV (E.P. Recovery Type). Choices are: Net: The tenant (lessee) agrees to pay all expenses. Gross: The property owner (lessor) agrees to pay all expenses. Mixed: The tenant agrees to pay a pro-rata share of expenses. If you select this option, the expense participation rule is informational only. The system disables all of the fields in the detail area and does not perform a calculation.
E.P. CLS (expense participation class)	Identify a category of expense participation It is a user-defined code (15/EC).
E.P. Code (expense participation code)	Enter a user-defined code (15/EP) that identifies a log line used for the control square footage of a property or building. The system uses this control square footage to calculate expense participation. The system uses this code only when you do not use a share factor denominator. If you use a share factor denominator, the system ignores this field.
C M (computation method)	Enter a code (15L/EM) specifying the method for calculating the denominator value in JD Edwards EnterpriseOne Advanced Real Estate Forecasting. Values are: B: Building P: Property
Bill Code	Enter a code that determines the trade account that the system uses as the offset when you post invoices or vouchers. The system concatenates the value that you enter to the AAI item RC (for Accounts Receivable) or PC (for Accounts Payable) to locate the trade account. For example, if you enter TRAD, the system searches for the AAI item RCTRAD (for receivables) or PCTRAD (for payables). You can assign up to four alphanumeric characters to represent the G/L offset or you can assign the three-character currency code (if you enter transactions in a multicurrency environment). You must, however, set up the corresponding AAI item for the system to use; otherwise, the system ignores the G/L offset and uses the account that is set up for PC or RC for the company specified. If you set up a default value in the G/L Offset field of the customer or supplier record, the system uses the value during transaction entry unless you override it. Note. Do not use code 9999. It is reserved for the post program and indicates that offsets should not be created.
Base Year Offset	Enter a code that specifies an offset value that the system uses to determine the base year. This value defines a unit's base year offset for the base year amount values. The base year amount is defined by the offset value in the Expense Participation (EP) rules. An offset method of 1 indicates that the system uses the values from the previous year from the F15L109 table. If these values do not exist, or if you select 0, then the system uses the base account definition values to calculate that month's base year amount. This amount is used to determine the class exposure of a unit. Values are: 0: Use the current year. 1: Use the previous year. If the system cannot locate the account balances for the previous year, it retrieves the account balances for the current year. If you specified Retail as the E.P. Rule Type or Commercial as the E.P. Rule Type and Net as the E.P. Recovery type, this field is disabled.
Exp Stop Per Sq Ft (expense stop per square foot)	Enter a number that specifies the expense base amount for the class. This is a per square foot amount that is used to reduce the class exposure before the exposure is multiplied by the share factor. The system uses this amount to calculate the compounded base exclusion, which it then subtracts from the adjusted exposure before calculating a tenant's share. If you specified Retail as the E.P. Rule Type or Commercial as the E.P. Rule Type and Net as the E.P. Recovery type, this field is disabled.
Denominator Rule	Enter a code that you set up in the Share Factor Denominator Revisions program (P150122) when you create a rule for denominator exclusions for the Expense Participation Calculation Generation program (R15110). For example, a share factor denominator rule might specify something like: For any anchor tenants over 16,000 square feet, deduct the over square footage from the denominator calculations in the Expense Participation Calculation Generation program. The system uses the share factor denominator only when you assign it to the expense participation information that you set up for the lease. If you specified Commercial as the E.P. Rule Type and either Net or Gross as the E.P. Recovery Type, this field is disabled.
Exclusion Rule	Enter a code that identifies the tenant exclusion rule. The system does not include amounts specified by the tenant exclusion rule when it calculates the tenant's share factor. For example, a tenant exclusion rule might specify: Deduct amounts associated with bill code EXPA from all tenants who lease any unit that is defined as an anchor and that has an area of more than 5,000 square feet. The system uses the tenant exclusion rule only when you assign it to the expense participation information that you set up for the lease. Use this field to specify the tenant exclusion from JD Edwards EnterpriseOne Real Estate Management. If you specified Commercial as the E.P. Rule Type and either Net or Gross as the E.P. Recovery Type, this field is disabled.
Amount Per Sq Ft (amount per square foot)	Enter a number that specifies the currency amount per square foot that is deducted from the total E.P. billable amount. The amount is grown, de-annualized, and then deducted from the total. The system applies the growth pattern to the amount, divides the result by 12, and then deducts that result from each period amount that the system calculates as the expense participation billing amount. If you specified Commercial as the E.P. Rule Type, this field is disabled.
Amount Growth Pattern	Enter a number that specifies a defined growth pattern. Growth patterns are used to anticipate increasing amounts for lease revenue and expenses based on several market factors, including: Square feet Flat amount Percentage amount Specified number of years JD Edwards EnterpriseOne Advanced Real Estate Forecasting account definition provides starting values that increase by the growth pattern assigned to the building.

Setting Up Sales Overage Rules (optional)

This section provides an overview of the sales overage process, sales overage rules, sales overage computation methods, and natural breakpoint calculation, and discusses how to:

• Set the processing options for AREF Sales Overage Rules.

• Add sales overage rules.

Understanding Sales Overage Processing

A common industry practice for retail leases is for landlords to calculate rent on the unit as a percentage of the tenant's reported sales. In return for a lower fixed rent amount or no fixed rent amount, the tenant pays a percentage of their sales after they exceed a specific amount (breakpoint). Because the tenant pays on the amount over the breakpoint, this billing process is referred to as sales overage.

Like expense participation, you can set up sales overage processing in JD Edwards EnterpriseOne Real Estate Management and in JD Edwards EnterpriseOne Advanced Real Estate Forecasting. For units that are leased, the system always attempts to use the sales overage information that is set up in JD Edwards EnterpriseOne Real Estate Management:

• If sales overage information is set up, the system retrieves the actual sales amounts to use from the Sales History Work File table (F1541BW).

  If it cannot locate actual sales amounts, it uses the projected sales amounts from the Projected Sales table (F1542). If the system cannot locate any sales amounts, it does not process sales overage.

• If sales overage information is not set up, the system uses the sales overage information from JD Edwards EnterpriseOne Advanced Real Estate Forecasting and uses the period sales amounts from the AREF Unit Master (F15L101) table when it calculates sales overage.

For units that are not leased, the system always uses sales overage information from JD Edwards EnterpriseOne Advanced Real Estate Forecasting.

You process sales overage amounts in JD Edwards EnterpriseOne Advanced Real Estate Forecasting by:

• Setting up a sales overage rule.

  The sales overage rule specifies the calculation method to use, the breakpoint amount, and the percentage by which the system multiplies the sales amounts to determine the sales overage amount (or rent).

• Assigning the sales overage rule to the desired units or to the building constants.

  If you want to use the same rule to calculate sales overage amounts, you can set it up in the constants as a default value, instead of assigning it to each unit.

• Loading forecasted sales from JD Edwards EnterpriseOne Real Estate Management, if desired.

  If the sales overage information in JD Edwards EnterpriseOne Real Estate Management is set up for computation method 0, a processing option in the AREF Budget Calculation program (R15L1091) enables you to process sales overage using the rules from JD Edwards EnterpriseOne Advanced Real Estate Forecasting. If you want to use the projected sales amounts from JD Edwards EnterpriseOne Real Estate Management in conjunction with the sales overage rule from JD Edwards EnterpriseOne Advanced Real Estate Forecasting, you can upload them to JD Edwards EnterpriseOne Advanced Real Estate Forecasting using the AREF Load Forecasted Sales program (R15L3011).

  Note. Because current releases of AREF now look at sales information and sales amounts from Real Estate Management, the R15L3011 and P15L301 programs are no longer necessary. However, the programs can still be used for informational purposes.

• Assigning period sales amounts to each unit.

  Period sales amounts must be entered for each unit for which you want to process sales overage in JD Edwards EnterpriseOne Advanced Real Estate Forecasting using the AREF Unit Maintenance program (P15L101).

• Assigning annual recapture amounts to each unit, if desired.

  The recapture amount is an amount for which the system does not calculate sales overage. The system uses the recapture amount in the same manner that it uses the minimum rent amount in JD Edwards EnterpriseOne Real Estate Management; it divides the amount by 12 and subtracts it from the period amount for which sales overage is calculated. For example, if you assume that the tenant pays you a minimum rent amount of 12,000 annually, the system subtracts 1,000 from the sales overage amount for each period.

• Running the AREF Budget Calculation program (R15L1091).

  When you run the AREF Budget Calculation program and you set the processing option to calculate sales overage, the system runs the AREF Sales Overage Budget Calculation program (R15L1097) to calculate the sales overage amounts and updates the AREF Budget Results table (F15L109) and the AREF Prior Gross Billings table (F15L302).

  Note. The system does not perform calculations for accruals and it ignores year-end override records.

Understanding Sales Overage Rules

If you do not have sales overage rules set up in JD Edwards EnterpriseOne Real Estate Management, or if the sales overage rules no longer apply because the lease has expired, you must set up sales overage rules in JD Edwards EnterpriseOne Advanced Real Estate Forecasting.

You set up sales overage rules by building and revision number. When you set up a sales overage rule, you must specify the growth pattern to assign, the calculation method to use, the type of breakpoint to use, and the percentage of sales. You can assign as many breakpoint amounts and corresponding breakpoint sales percentages as necessary. For example, you might want to encourage sales by lowering the breakpoint sales percentage as sales amounts increase.

The system derives the sales overage amounts based on the calculation method that you assign and whether you specify to use a natural breakpoint or breakpoint amount:

• If you specify to use a natural breakpoint, the breakpoint amount is determined by a percentage of the annual rent.

  The rent amount billed is a percentage of the reported sales.

• If you specify a breakpoint amount, the system does not calculate sales overage until the amount of sales exceeds the breakpoint amount.

  The system subtracts the breakpoint amount from the sales amount and then multiplies the corresponding breakpoint sales percent by the result to derive the sales overage amount.

Using the AREF Sales Overage Rules program (P15L103), you can add, revise, or copy sales overage rules.

The system stores sales overage rules in the AREF Sales Overage Rule Header (F15L103) and AREF Sales Overage Detail (F15L113) tables.

Understanding Sales Overage Computation Methods

JD Edwards EnterpriseOne Advanced Real Estate Forecasting uses only four computation methods, while JD Edwards EnterpriseOne Real Estate Management uses seven (including 0). When the system tries to process sales overage using the information that is set up in JD Edwards EnterpriseOne Real Estate Management for computation methods 0, 5, and 6, it:

• Determines whether the system bypasses the calculation or uses the sales overage rule that is set up in JD Edwards EnterpriseOne Advanced Real Estate Forecasting using a processing option setting for the AREF Budget Calculation program (R15L1091) if the computation method is 0.

• Bypasses the calculation if the computation method is 5.

• Automatically uses computation method 3 in conjunction with the sales overage rules in JD Edwards EnterpriseOne Real Estate Management if the computation method is 6.

These examples illustrate how the system calculates sales overage (gross billing) amounts for each calculation method using single and multiple breakpoints.

Note. The setup information uses a growth pattern that is a fixed amount. In the calculations that follow, the system adds the growth pattern amount to the period sales amount. If the growth pattern is a percentage, instead of a fixed amount, the system multiplies the period sales by the percentage and adds the result to the period sales amount. Stated differently, the system multiplies the period sales by 1+ the growth pattern percentage. For example, if the growth pattern is set up for five percent, the system multiplies the period sales by 1.05.

Setup Information - Single Breakpoint

Growth Pattern: FIXED

Growth Pattern Amount Year 01: 1,000

Breakpoint Amount: 500

Sales Breakpoint Percentage: 5

Period 01 Sales Amount: 15,000

Period 02 Sales Amount: 20,000

Period 03 Sales Amount: 25,000

Recapture Amount for Year 1 = 1,200

Setup Information - Multiple Breakpoints

The system uses the same growth pattern, periods, sales amounts, and recapture amounts as described in the setup information for a single breakpoint.

1^st Breakpoint Amount: 500

1^st Sales Breakpoint Percentage: 5

2^nd Breakpoint Amount: 20,000

2^nd Sales Breakpoint Percentage: 4

3^rd Breakpoint Amount: 40,000

3^rd Sales Breakpoint Percentage: 3

Computation Method 1 (Each Period) - Single Breakpoint

The system calculates sales overage amounts for each period separately using this formula:

{[(period sales × 12) + (growth pattern) − (breakpoint amount)] × (sales breakpoint percentage)} ÷ (12) − (recapture amount ÷ 12)

Using the setup information for a single breakpoint, the system derives the sales overage (gross billing) amounts for each period:

• Period 01: {[(15,000 x 12) + 1,000 − 500] × .05} ÷ 12 − 100 = 652.08

• Period 02: {[(20,000 x 12) + 1,000 − 500] × .05} ÷ 12 − 100 = 902.08

• Period 03: {[(25,000 x 12) + 1,000 − 500] × .05} ÷ 12 – 100 = 1,152.08

Computation Method 1 (Each Period) - Multiple Breakpoints

The system uses multiple calculations for each breakpoint amount and corresponding percentage using the steps:

1. The system multiplies the period sales amount by 12.

2. The system applies the growth pattern and compares the result with the breakpoint amounts to determine which breakpoint to use.

3. The system subtracts the appropriate breakpoint amount from the calculation.

4. The system multiplies the result of step 3 by the corresponding breakpoint percentage.

5. The system divides the result by 12.

After the system calculates the amount for the highest breakpoint amount, it uses the formula to process the remaining amounts for each breakpoint:

[(difference between breakpoint amounts) × (corresponding breakpoint percentage)] ÷ 12

Then, the system adds the sum of the sales overage amounts for each breakpoint and subtracts the recapture amount (if specified) to derive the gross billing amount.

Using the setup information for multiple breakpoints, the system derives the gross billing amount for period 01:

{[(15,000 × 12) + 1,000 – 40,000] × .03} ÷ 12 = 352.50

Because 180,000 (15,000 × 12) is greater than 40,000 (the third breakpoint), the system uses the corresponding breakpoint percentage for amounts over 40,000.

[(40,000 − 20,000) × .04] ÷ 12 = 66.67

[(20,000 – 500) × .05] ÷ 12 = 81.25

352.50 + 66.67 + 81.25 − 100 (recapture) = 400.42 (gross billing amount)

Using the same methodology for periods 02 and 03, the system derives the sales overage (gross billing) amounts:

• Period 01: 400.42

• Period 02: 550.42

• Period 03: 700.42

Computation Method 2 (Cumulative) - Single Breakpoint

The system calculates the sales overage amount for each period using the formula:

[(cumulative period sales) + (growth pattern) – (breakpoint amount)] x (sales breakpoint percentage) – (prior gross billings) – (recapture amount / 12)

Using the setup information for a single breakpoint, the system derives the sales overage amounts for each period:

• Period 01: (15,000 + 1,000 − 500) × .05 − 100 = 675

• Period 02: (35,000 + 1,000 − 500) × .05 − 675 − 100 = 1,000

• Period 03: (60,000 + 1,000 – 500) × .05 − 675 − 1,000 − 100 = 1,250

Computation Method 2 (Cumulative) - Multiple Breakpoints

When you set up multiple breakpoints, the system uses a separate calculation for each breakpoint amount and corresponding percentage using these steps:

1. The system applies the growth pattern to the cumulative sales amount for the period and compares the result to the breakpoint amounts to determine which breakpoint to use.

2. The system subtracts the appropriate breakpoint amount from the calculation.

3. The system multiplies the result of step 2 by the corresponding breakpoint percentage.

4. The system calculates the sales overage amounts for the remaining breakpoints using the formula:

   difference between breakpoint amounts x corresponding breakpoint percentage

5. The system adds the sales overage amounts for each breakpoint, subtracts the prior gross billings, and subtracts the recapture amount (divided by 12).

Using the setup information for multiple breakpoints, the system calculates the sales overage (gross billing) amount for each period:

Period 01: 675

(15,000 + 1,000 − 500) × .05 − 100 = 675

The system uses the first breakpoint only (500) because 15,000 is less than 20,000.

Period 02: 840

The system calculates the sales overage amount for the highest breakpoint first, which in this example is the second breakpoint (20,000) because the cumulative sales amount is not greater than 40,000.

(35,000 + 1,000 − 20,000) × .04 = 640

The system calculates the sales overage amount for the remaining breakpoint:

(20,000 − 500) × .05 = 975

The system sums the sales overage amounts for each breakpoint, subtracts the prior gross billings, and then subtracts the recapture amount to derive the sales overage amount for the period:

640 + 975 − 675 − 100 = 840

Period 03: 790

(60,000 + 1000 − 40,000) × .03 = 630

The system uses the third breakpoint (40,000) because 60,000 is greater than 40,000.

The system calculates the sales overage amounts for the other breakpoints as follows:

(40,000 − 20,000) × .04 = 800

(20,000 − 500) = .05 = 975

The system sums the sales overage amounts for each breakpoint, subtracts the prior gross billings, and then subtracts the recapture amount to derive the sales overage amount for the period:

630 + 800 + 975 − 675 − 840 − 100 = 790

Computation Method 3 (Cumulative Pro-Rata) - Single Breakpoint

Using a combination of computation methods 1 and 2, the system uses the steps to calculate sales overage for a single breakpoint:

1. The system multiplies the cumulative period sales amount by 12.

2. The system divides the result by the period number.

3. The system applies the growth pattern.

4. The system compares the result from step 3 with the breakpoint, and if it exceeds it, the system subtracts the appropriate breakpoint amount from the calculation.

5. The system multiplies the result of step 4 by the corresponding breakpoint percentage.

6. The system divides the result by 12.

7. The system multiplies the result of step 6 by the period number.

8. The system subtracts the prior gross billing amounts.

9. The system subtracts the recapture amount (divided by 12).

Using the setup information for a single breakpoint, the system derives the sales overage (gross billing) amounts for each period as follows:

Period 01: {[(15,000 × 12) ÷ 1 + 1,000 ÷ 500] × .05} ÷ 12 × 1 − 100 = 652.08

Period 02: {[(35,000 × 12) / 2 + 1,000 – 500] × .05} ÷ 12 × 2 − 652.08 − 100 = 1,002.08

Period 03: {[(60,000 × 12) / 3 + 1,000 – 500] × .05} ÷ 12 × 3 − 652.08 − 1,002.08 − 100 = 1,252.08

Computation Method 3 (Cumulative Pro-Rata) - Multiple Breakpoints

The system uses the same steps as those described for the calculation using a single breakpoint, but also calculates the amounts for the each subsequent breakpoint amount using the formula:

{[(difference between breakpoint amounts) × (corresponding breakpoint percentage)] / 12} × (period number)

Period 01: 400.42

The system calculates the sales overage amount using the highest breakpoint first, which in this example is the third breakpoint (40,000) because the cumulative annualized sales amount (15,000 × 12) is greater than 40,000.

{[(15,000 × 12) / (1 + 1000 − 40,000)] × .03} ÷ 12 × 1 = 352.50

The system calculates the sales overage amounts for each subsequent breakpoint:

{[(40,000 − 20,000) × .04] ÷ 12} × 1 = 66.67

{[(20,000 − 500) × .05] ÷ 12} × 1 = 81.25

The system sums the sales overage amounts for each breakpoint, subtracts the gross prior billings, and then subtracts the recapture amount.

352.50 + 66.67 + 81.25 − 100 = 400.42

Period 02: 650.41

The system calculates the sales overage amount using the highest breakpoint first:

{[(35,000 × 12) / 2 + 1000 − 40,000] x .03} / 12 × 2 = 855.00

The system calculates the sales overage amounts for each subsequent breakpoint:

{[(40,000 – 20,000) × .04] ÷ 12} × 2 = 133.33

{[(20,000 – 500) × .05] ÷ 12} × 2 = 162.50

The system sums the sales overage amounts for each breakpoint, subtracts the gross prior billings, and then subtracts the recapture amount.

855.00 + 133.33 + 162.50 − 400.42 − 100 = 650.41

Period 03: 800.42

The system calculates the sales overage amount using the highest breakpoint first:

{[(60,000 × 12) ÷ 3 + 1,000 − 40,000] × .03} / 12 × 3 = 1,507.50

The system calculates the sales overage amounts for each subsequent breakpoint:

{[(40,000 – 20,000) × .04] ÷ 12} × 3 = 200.00

{[(20,000 – 500) × .05] ÷ 12} × 3 = 243.75

The system sums the sales overage amounts for each breakpoint, subtracts the gross prior billings, and then subtracts the recapture amount.

1507.50 + 200.00 + 243.75 − 400.42 − 650.41− 100 = 800.42

Computation Method 4 (Modified Cumulative) - Single Breakpoint

When used with a single breakpoint, this computation method functions identically to computation method 2.

Computation Method 4 (Modified Cumulative) - Multiple Breakpoints

The difference between this method and computation method 2 occurs only when multiple breakpoints exist. Rather than calculate the sales overage amount using the appropriate breakpoint percentage according to the breakpoint amount, the system always applies the percentage of the highest breakpoint amount that it uses. For example, if three percent is the breakpoint percentage associated with the highest breakpoint amount, after the system calculates the sales overage amount for the highest breakpoint, it continues to multiply the difference between the subsequent breakpoints by three percent.

Using the setup information for multiple breakpoints, the system calculates the sales overage (gross billing) amounts:

Period 01: 675.00

(15,000 + 1,000 – 500) × .05 − 100 = 675.00

Period 02: 645.00

(35,000 + 1,000 − 20,000) × .04 = 640.00

The system uses four percent in the subsequent breakpoint calculations, because it is associated with the highest breakpoint amount used in the calculation.

(20,000 − 500) × .04 = 780.00

To derive the gross billing amount for the period, the system adds the sales overage amounts for both breakpoints, subtracts the prior gross billings, and then subtracts the recapture amount.

640.00 + 780.00 − 675.00 − 100.00 = 645.00

Period 03: 395.00

(60,000 + 1,000 − 40,000) × .03 = 630.00

The system uses three percent in the subsequent breakpoint calculations, because it is associated with the highest breakpoint amount used in the calculation.

(40,000 − 20,000) × .03 = 600.00

(20,000 − 500) × .03 = 585.00

To derive the gross billing amount for the period, the system adds the sales overage amounts for both breakpoints, subtracts the prior gross billings, and then subtracts the recapture amount.

630.00 + 600.00 + 585.00 − 675.00 − 645.00 − 100.00 = 395.00

Understanding the Natural Breakpoint Calculation

As an alternative to specifying the breakpoint amounts and corresponding percentages, you can have the system derive the breakpoint amount for you. To do this, you set up the sales overage rule to use a natural breakpoint. When you specify to use a natural breakpoint, the system does not display the fields for the computation method or the breakpoint amount, because it determines the breakpoint for you based on the annual revenue amounts that it locates and the breakpoint percentage that is specified on the sales overage rule. Because the system calculates one breakpoint amount, you can specify only one breakpoint percentage. The system retrieves the revenue amounts that it uses from different sources depending on whether or not the unit is leased:

• If the unit is leased, the system retrieves the revenue amounts from the recurring billing information that is set up.

  The system uses the recurring bill code rule that is assigned to the unit (or the building constants) to identify the rent (revenue bill codes). The system sums the recurring billing amounts for all bill codes identified as rent. If the system cannot locate a recurring bill code rule or recurring billing information, it uses the market rate assigned to the assumption rule to calculate the revenue amount (based on the unit's area and the growth pattern).

• If the unit is vacant, the system uses the market rate from the assumption rule to calculate the revenue amount by multiplying it by the area of the unit and adding the growth pattern.

  Note. If the sales overage information exists in JD Edwards EnterpriseOne Real Estate Management, the system uses it and does not use the sales overage rule from JD Edwards EnterpriseOne Advanced Real Estate Forecasting.

To determine the natural breakpoint, the system uses the formula:

annual revenue amount ÷ breakpoint percentage

For example, if the annual rent amount is 96,000 and the breakpoint percentage is 25, the system calculates the natural breakpoint as 384,000 (96,000 ÷ .25). After the system calculates the natural breakpoint, it compares it against the accumulated sales for the period, to which it applies the growth pattern assigned to the sales overage rule to determine whether to compute a sales overage amount:

• If the natural breakpoint amount is greater than the accumulated period sales plus the growth pattern, the system does not calculate a sales overage amount.

• If the natural breakpoint is less than the accumulated period sales plus the growth pattern, it calculates the sales overage (gross billing) amount:

  [(accumulated period sales) + (growth pattern) – (natural breakpoint) × (breakpoint percent)] – (prior gross billings) – (period recapture amount)

Setup Information

Growth Pattern: PERCENT

Growth Pattern Percentage for Year 01: 10 percent

Sales Breakpoint Percentage: 40 percent

Period 01 Sales Amount: 50,000

Period 02 Sales Amount: 60,000

Period 03 Sales Amount: 70,000

Period 04 Sales Amount: 80,000

Annual Revenue Amount: 72,000

Recapture Amount for Year 1 = 1,200

Calculation for Natural Breakpoint

Based on the setup information, the system calculates the natural breakpoint:

72,000 ÷/ .40 = 180,000

Using the natural breakpoint, the system calculates the sales overage amounts for each period:

Period 01: 0

The equation is:

(accumulated period sales) × (growth pattern)

For example:

50,000 × 1.10 = 55,000

Because 55,000 is less than the natural breakpoint (180,000), the system does not calculate a sales overage amount. The system uses a growth pattern of 1.10 to represent ten percent because the period sales should include the calculated growth pattern amount.

Period 02: 0

The equation is:

(accumulated period sales) × (growth pattern)

For example:

110,000 × 1.10 = 121,000

Because 121,000 is less than the natural breakpoint (180,000), the system does not calculate a sales overage amount.

Period 03: 7,100

The equation is:

(accumulated period sales) x (growth pattern)

For example:

180,000 × 1.10 = 198,000

Because 198,000 is greater than the natural breakpoint (180,000), the system calculates the sales overage amount:

[(198,000 – 180,000) × .40 (breakpoint)] − 100 (recapture ÷ 12) = 7,100

Period 04: 35,200

The equation is:

(accumulated period sales) x (growth pattern)

For example:

260,000 × 1.10 = 286,000

[(286,000 − 180,000) × .40 (breakpoint)] − 7,100 (prior gross billings) − 100 (recapture) = 35,200

Form Used to Set Up Sales Overage Rules

Setting Processing Options for the AREF Sales Overage Rules Program (P15L103)

Use these processing options to specify default values and versions.

Defaults

Versions

Use these processing options to specify the version of the program to use when the program is accessed from a Row or Form menu.

Setting Up Sales Overage Rules

Access the AREF Sales Overage Revisions form.

Overage Rule/Revision	Enter a user-defined, 10-character (maximum) value that specifies the sales overage rule. This code is a key to the F15L103 and the F15L113 tables.
Natural Break Point Y/N	Enter a code that specifies whether the sales overage rule uses a breakpoint sales percent and breakpoint amount or a fixed breakpoint percentage (natural breakpoint) of sales to determine the amount of rent due. You set up rent billing by determining sales breakpoints and percentages associated with those breakpoints. If you specify a natural breakpoint, the system multiplies sales by the breakpoint percentage to calculate the rent to be billed. If you do not specify a natural breakpoint, then the rent is calculated based on a breakpoint amount and a breakpoint percentage. An example of how the breakpoint works is as follows: Sales for Month = 27,000 Breakpoint Amount = 25,000 with a breakpoint percentage of 6 percent Breakpoint Amount = 30,000 with a breakpoint percentage of 5 percent In this case, 27,000 is greater than 25,000, but less than 30,000. Since sales have not reached 30,000, the system uses 25,000 as the natural breakpoint or a percentage of sales. Values are: Y: Use a natural breakpoint. The system calculates the natural breakpoint by dividing the annual rent revenue by the breakpoint sales percentage. N: Do not use a natural breakpoint. You must specify the computation method and breakpoint amounts that the system uses to calculate sales overage.
Growth Pattern	Enter a code that specifies the growth pattern to apply to sales amounts that the system forecasts.
Computation Method	Enter the user-defined code that specifies the method to use to calculate sales overage (percent rent). The system does not display this field when you enter Y in the Natural Break Point (Y/N) field. Values are: 1: Each Period The system separately calculates the sales overage amount for each period. The system annualizes (multiplies by 12) the sales amount for the period, processes the sales overage amount (adds the growth pattern, subtracts the breakpoint amount, and multiplies the result by the sales breakpoint percentage), and divides the result by 12. 2: Cumulative The system calculates the sales overage amount using cumulative period balances. To determine the sales overage amount, the system adds the growth pattern to the cumulative period balance, subtracts the breakpoint amount, multiplies the result by the sales breakpoint percentage, and subtracts the sales overage amounts that the system calculated for the previous periods. 3: Cumulative Pro Rata The system calculates the sales overage amount using annualized cumulative period balances. To determine the sales overage amount, the system divides the annualized amount by the period number to provide a prorated amount. Then, the system adds the growth pattern, subtracts the breakpoint amount, multiplies the result by the sales breakpoint percentage, divides the result by 12, and subtracts the sales overage amounts that the system calculated for the previous periods. 4: Modified Cumulative This method is similar to method 2, (Cumulative), except that, when the system reaches a higher breakpoint, it applies the rate that is associated with the higher breakpoint to all sales that exceed the first breakpoint. Note. If you have recapture amounts, the system divides the annual amount by 12 and subtracts the result at the end of the calculation, as described in all of the calculation methods listed previously.
Break Point Sales Percent	Specify the percentage to apply to the sales amount when it exceeds the breakpoint amount that you specified. For example, if the breakpoint sales percentage is 5.0, and the breakpoint amount is 10,000, the system multiplies the sales amount by 5 only when the sales equal or exceed 10,000. Enter the percentage as a whole number. For example, enter 3.0 to specify three percent. Note. If you specify to use a natural breakpoint, the system calculates it by dividing the annual rent revenue by the breakpoint sales percentage that you specify.
Dollar Breakpoint	Specify the amount that tenant sales must exceed before the system applies the sales breakpoint percentage. Depending on the computation method, the system compares the period, cumulative period, cumulative period annualized, or annual sales amounts to the breakpoint. If you set up multiple breakpoint amounts, the system applies the sales breakpoint percentage to the difference between the breakpoint amounts. The system does not display this field when you enter Y in the Natural Break Point (Y/N) field.
Report Code 01 – Report Code 05	Enter a user-defined code (15/U1) to use for reporting purposes.