Establishing Operating Expenses for a Lease

This topic discusses how to establish operating expenses for a lease.

Page Name

Definition Name

Usage

Financial Terms - Operating Expenses Details Page

RE_LS_TRM_SEC

Define an operating expense for the lease. When you establish your operating expense details, you can set up categories and minimum and maximum amounts for that operating expense.

Accounting Distributions Page

RE_LS_TRM_DST_SEC

Override the accounting distributions defined at the business unit level.

Prorata Share Details - Basis Page

RE_LS_PRTA_SEC

Use this page to enter prorata basis information for this operating expense.

This link is available only if you select Gross Leasable Area, Occupied area, or Occupied Area with Floor as the Prorata Share Basis.

Cap/Minimum Details Page

RE_LS_OPX_CAP_SEC

Use this page to enter caps detail information for this operating expense.

This link is available only if you select Apply as the CAP/MIN.

Operating Expense Approval Page

RE_LS_OPX_APP

Approve operating expenses that exceed tolerances.

Use the Financial Terms - Operating Expenses Details page (RE_LS_TRM_SEC) to define an operating expense for the lease.

When you establish your operating expense details, you can set up categories and minimum and maximum amounts for that operating expense.

Navigation:

Lease Administration > Receivables Leases > Maintain Lease > Financial Terms

Click the Add Operating Expense button.

This example illustrates the fields and controls on the Financial Terms - Operating Expense page. You can find definitions for the fields and controls later on this page.

 Financial Terms - Operating Expense page

Field or Control

Description

Start Date

Enter the begin date for the operating expense. The start date must occur on or after the lease start date. The system uses the lease start date as the default.

End Date

Enter the end date for the operating expense. The end date should occur on or before the lease termination date. The system uses the lease end date as the default.

Payee

Enter the entity who receives the operating expense payments. The default value is the landlord from the lease. This field appears only for operating expenses that are associated with payables leases.

Location

Enter the location. You can override the default location from the lease header for a financial term.

Ship To

Enter the supplier ship to location. This location will be used for VAT and SUT calculations by PeopleSoft Payables Voucher Build application. Applicable only for payables leases. This is not a required field and if this is left blank, Voucher Build will populate the default ship to location for the supplier.

Payor

Enter the entity who is responsible to make the operating expense payments. The default value is the tenant from the lease. This field appears only for operating expenses that are associated with receivables leases.

Accounting Distribution

Click this link to access the Accounting Distribution page and to override the operating expense details accounting distribution rules defined at the business unit level.

Add Expense Line

Click to add a new row to the Operating Expense Categories grid.

Operating Expense Details

Field or Control

Description

Prorata Share Method

This is the basis on which the tenant's share of expenses is calculated. Generally, it represents the ratio of the area of the tenant's premises to that of the building or property as a whole, or an appropriate part thereof. Select either:

  • Fixed Percentage: Select this value if the tenant's prorata basis is stated in the lease as a percentage.

  • Gross Leasable Area: Select this value if the tenant's prorata basis is calculated as a ratio of the tenant area over the total area, whether the tenant occupied the entire area or not.

  • None

  • Occupied Area: Select this value if the tenant's prorata basis is calculated as the ratio of the tenant area over the occupied area.

  • Occupied Area with Floor: Select this value if the tenant's prorata basis is calculated as the ratio of the tenant area over the greater of the occupied area or the floor area. The floor is usually expressed in the lease as an occupancy percentage, which is multiplied times the gross leasable area and then compared to the occupied area.

Prorata Details

Click this link to access the Prorate Share Details - Basis page.

This link is only available if you select Gross Leasable Area, Occupied Area, or Occupied Area with Floor as the Prorata Share Method.

Admin Fee Method (administration fee method)

Choose either:

  • Accrual Method: The administration fee will be charged as a percentage of landlord's overall expenses.

  • Amount: The administration fee will be charged as fixed amount for an expense category.

  • Cash Method: The administration fee will be charged as a percentage of expenses paid by tenant.

  • None

Admin Fee Percentage(administration fee percentage)

Enter the admin fee percentage

Exclude Base Year

Select this check box to exclude a base year. The base year fields are informational only.

Base Year

Enter the year to be used as the base year. If you select Exclude Base Year, then you must enter a base year.

Base Year Amount

Enter the amount to be used for the base year. If you select Exclude Base Year, then you must enter a base year amount.

Base Year Gross Up Percent

Enter the base year gross up percentage. If you select Exclude Base Year, then you must enter a base year gross up percent.

Cap/Min

  • Alerts: If this option is selected, then the Caps/Min calculation is not applied. The maximum amount defined at the category level will be used to validate the actual amount and an alert will be displayed in the worksheet against the category if the actual amount is greater than the maximum for the category.

  • Apply: Select this value to apply caps and minimums to this operating expense.

  • None

Caps Detail

Click this link to access the Caps/Minimum Details page. This link appears only if Apply is selected as the Cap/Min value.

Exp. Gross Up(expense gross up)

Select this check box to enable expense gross up.

Gross Up Percent

Enter the gross up percentage to be applied to this operating expense.

Gross Up Method

Select either:

  • Method A: If the actual occupancy is more than gross up percentage specified on the lease, then the expenses will be grossed up to 100 percent occupancy level.

  • Method B: If the actual occupancy is more than the gross up percentage specified on the lease, then the expenses will not be grossed up.

Expense Categories

Field or Control

Description

Operating Expense

Enter or select the operating expense category for recoverable shared expenses. You can select from only active operating expense categories.

See Defining Operating Expense Categories.

Estimated Amount

Enter the estimated amount for the operating expense. Use the estimated amount for monthly recurring invoices or payments.

Sales/Use Tax

Click this link to access the Sales/Use Tax Information page.

For additional information on Sales/Use Tax Information page, refer Defining Lease Financial Terms

VAT

Click this link to access the VAT Information page. This field appears only for VAT enabled business units.

For additional information on VAT Information page, refer Defining Lease Financial Terms

Min Amount (minimum amount)

Enter the minimum amount for the operating expense.

Note: This field is for information use only.

Max Amount (maximum amount)

Enter the maximum amount to charge for the operating expense. Use this field to calculate audit alerts during the audit and reconciliation processes.

Administration Fee

Enter the administration fee. The system adds this amount to the operating expense charges after final calculations of all operating expenses for the lease.

Straightline

Select to apply straightline calculations to the operating expense.

Note: If the rent amount or recurring expense amount for the operating expense is not evenly billed across periods, then those amounts must be reported in the general ledger on a straightline basis (an even distribution).

See Understanding Straightline Accounting.

Calculate

Click the button to calculate the recurring monthly operating expenses.

Note: This button is only available when the lease or amendment is in pending status.

Total Estimated Payment

Displays the total estimated payment amount for the operating expenses.

Schedule

Select a value from the prompt table to specify how often to invoice or pay the operating expenses. Use this field to determine the frequency of the invoice or payment. The values from which you select come from the Schedule component.

Note: If the value you need is not available, to the Schedule component to add additional values.

See Defining Common Journal Definitions.

Frequency

Displays the frequency that is associated with the schedule that you selected.

Anticipated Process Date

Displays the current anticipated processing date or the next date on which a transaction is available to be approved and sent to PeopleSoft Payables or PeopleSoft Billing. This field appears only after lease activation.

Note: You must run the Transaction Generator to get the scheduled transactions into the transaction queue.

Terms Calendar

Enter the terms calendar, which determines the start date and end date of billing periods for the operating expense. The calendar ID from the business unit definition appears by default. You can override this value, but the frequency of the schedule and terms calendar must be the same. This is a required field.

Details

Field or Control

Description

Caps

Select this check box is caps apply to this expense.

Fee

Select this check box if fees apply to this expense.

Gross Up

Select this check box if grossing up applies to this expense.

Anchor Contribution

Enter any anchor contribution made by the tenant.

Basis

Select a basis for this operating expense.

Catch Up

Catch up payments are the adjustment payment for the first months of the new year. The difference between the estimated payment amount paid to date in a new lease year (which has been paid at the prior year estimated payment amount) and the amount due per the new estimated payment amount This catch up payment will be added to the first transaction that will be sent to the transaction queue after the amendment is activated.

Accounting Distribution

Click this link to access the Accounting Distribution page and override the operating expense category accounting rules defined at the business unit level.

Use the Accounting Distributions page (RE_LS_TRM_DST_SEC) to override the accounting distributions defined at the business unit level.

Navigation:

Click the Accounting Distributions link on the Financial Terms - Operating Expenses Details page.

This example illustrates the fields and controls on the Accounting Distributions page. You can find definitions for the fields and controls later on this page.

 Accounting Distributions page

The fields on this page differ depending upon the distribution selected. When you select a value other than None, the ChartField values become available for edit.

Field or Control

Description

Distribute By

Select either:

  • Percentage: Select this value to change the accounting distribution by percentage for each financial term.

  • Area: Select this value to change the accounting distribution by area for each financial term. The rent will be distributed based on the ratio of the areas.

  • None: Select this option to use the accounting distribution set up at the business unit level.

Add Distribution

This button appears if you select Percentageor Area for the distribute by value.

Click this button to insert a new distribution row.

Delete Distribution

This button appears if you select Percentage or Area for the distribute by value.

Select a row and click this button to delete it from this page.

Select

This option appears if you select Percentage or Area for the distribute by value.

This option is used to delete distribution rows. Select this option and click the Delete Distribution button to delete the rows.

Percentage

This field appears if you select Percentagefor the distribute by value.

Enter a percentage amount for this distribution line.

Percentage amounts must equal 100% to be valid.

Area

This field appears if you select Areafor the distribute by value.

Enter the area for this distribution line.

All lines must add up to the total rentable area for the lease to be valid.

Valid

Used to indicate a valid combination of chartfields. When activating the lease, edit checking will be provided and the option will be selected for each row representing a valid combination of chartfields. A lease cannot be activated until every accounting distribution is marked as valid.

Use the Prorata Share Basis page (RE_LS_PRTA_SEC) to use this page to enter prorata basis information for this operating expense.

Navigation:

  • Lease Administration > Payables Leases > Maintain Lease > Financial Terms

  • Click the Add Operating Expense button.

    Click the Prorata Detailslink.

This example illustrates the fields and controls on the Prorata Share Details - Basis page. You can find definitions for the fields and controls later on this page.

 Prorata Share Details - Basis page

The fields on this page vary depend on which prorata share basis is selected on the Operating Expense page.

Field or Control

Description

Prorata Share Method

Displays the prorata share method selected on the Operating Expense Details page.

Unit of Measure

Displays the unit of measure.

Agreement No(agreement number)

Displays the agreement number for the prorata share details.

Prorata Basis

Enter a prorata basis.

Tenant Area

Enter the tenant's area.

Total Area

Enter the total area to be considered for this prorata basis. The total area of the property selected on the lease will be defaulted here. The user can override this value here.

Floor Percentage

Enter the percentage of floor to be considered for this prorata basis.

This field is only available if you select Occupied Area With Floor as the Prorata Basis option on the Operating Expense Details page.

Description

Enter a description for the prorata share details.

Use the Caps/Minimum Details page (RE_LS_OPX_CAP_SEC) to use this page to enter caps detail information for this operating expense.

Navigation:

  • Lease Administration > Payables Leases > Maintain Lease > Financial Terms

  • Click the Add Operating Expense button.

    Click the Caps Detailslink.

This example illustrates the fields and controls on the Caps/Minimum Details page. You can find definitions for the fields and controls later on this page.

 Caps/Minimum Details page

Field or Control

Description

Caps Applied To

Select whether the caps are applied to Tenant Share or Landlord Expense.

Caps Basis

Select either:

  • Prior Year Restricted: The cap calculation is applied to the prior period landlord or tenant share after caps are applied.

  • Prior Year Actual: The cap calculation is applied to the prior period landlord or tenant share before caps are applied.

Cap Applied

Select either:

  • Before Fee: Caps should be applied on the landlord or tenant share before administration fee is applied.

  • After Fee: Caps should be applied on the landlord or tenant share after administration fee is applied.

Subsequent Year Cap

Field or Control

Description

Method

  • Percentage: Caps will be calculated as a percentage increase over the prior year expense.

  • Indexed: Caps will be linked to an index.

  • Least of Percent or Index: For this method of calculating minimum and maximum, define a percentage and the system will calculate the indexed value and the least of the two will be considered for the final calculation. the indexed value at the end date of the current audit period will be compared with the last date of the baseline period.

Percentage

Enter the percentage to be used in calculation.

Compare To

Select a comparison value:

  • Base

  • Last

Index Name

For Indexed or Least of Percent or Index, specify the index value to be used.

Subsequent Year Minimum

Field or Control

Description

Method

  • Percentage: Caps will be calculated as a percentage increase over the prior year expense.

  • Indexed: Caps will be linked to an index.

  • Least of Percent or Index: For this method of calculating minimum and maximum, define a percentage and the system will calculate the indexed value and the least of the two will be considered for the final calculation. indexed value on the start date of the current audit period will be compared with the first date of the baseline period

Percentage

Enter the percentage to be used in calculation.

Compare To

Select a comparison value:

  • Base

  • Last

Index Name

For Indexed or Least of Percent or Index, specify the index value to be used.

Use the Operating Expense Approval page (RE_LS_OPX_APP) to approve operating expenses that exceed tolerances.

Navigation:

Select a task item from your worklist.

This example illustrates the fields and controls on the Operating Expense Approval page.

 Operating Expense Approval page

If operating expenses are outside tolerance limit, the system will:

  1. On Processing, set the operating expense worksheet to Pending Approval.

  2. Create tasklist for the approver

  3. Route the approver from the tasklist to the approval page

  4. If the transaction is approved, send the transactions to the TQM and change the status of the Worksheet to Processed.

  5. If the transaction is denied, change the status of the worksheet to Pending so that the worksheet can be edited and the whole process can be repeated.

The Approval map displays the path and status of approvals. Ad-Hoc approvers can be added by clicking on the Add button.