sap real estate management better insight and control over your property portfolio (1)

The SAP® Real Estate Man-agement application is a full-featured solution suitable for all types of real estate. The application gives you better insight into and control over your property portfolio and can handle the entire real estate life cycle – from the acquisition and disposal of real estate to management of your property portfolio and facilities and support processes such as account-ing and reporting. The soft-ware is flexible enough to cover industry-specific re-quirements and integrates fully with financial and logis-tics software from SAP to align your leasing transac-tions with accounting, con-trolling, maintenance, and reporting tasks.

SAP® ReAl eStAte MAnAgeMent BETTER InSIghT And ConTRol oVER YoUR PRoPERTY PoRTFolIo

SAP Solution in DetailSAP ERP

4 Real Estate Life-Cycle Management

5 A Complete Real Estate Solution

7 Portfolio Management 7 Real Estate Analytics 8 Master data Management 8 Usage View 8 Many different Standard

Reports 9 Architectural View 9 Partner Management 10 Transaction Management

11 Commercial Real Estate Management

11 Real Estate Search 11 lease Management 12 Creating a lease 13 giving notice on a lease 13 Renewing Fixed-Term Contracts 13 lease Accounting 13 Types of Provisions in lease

Management Contracts 14 Condition Adjustment (Rent

Escalation) 14 Percentage Rent (Sales-Based

Rent) 15 Cost Recovery (Service-Charge

Settlement) 16 Third-Party Management 17 legal Compliance

18 Corporate Real Estate Management

18 Space and Move Management 19 Room Reservation

20 Facilities Management 20 Construction 21 Modernization and

Refurbishment 22 Maintenance, Repair, and

Service Management

24 Support Processes 24 Accounting 25 Controlling 26 documents and

Correspondence 27 document and Records

Management 28 other Tools 29 Integration with SAP Industry

Solutions

30 A Wide Range of Business Benefits

30 Find out More

32 Quick Facts

COntent

In addition to greater portfolio diversity, the managers of commercial real estate face a higher dependence on capital markets for property financing as well as many new legal requirements. To meet these challenges, they must optimize their processes for compliance and risk management, enhance the skills of their employees, address increased business competition, and modernize their IT landscapes.

The SAP® Real Estate Management application provides full support for port-folio management, corporate real estate management, commercial real estate management, and facilities management. It can help you develop, construct, operate, and deploy the real estate property related to your business while making property costs more visible and controllable.

Recent growth – along with economic downturns, market globalization, and energy reduction goals – has increased the strategic importance of real estate life-cycle management. Meanwhile, real

estate managers must meet a more demanding set of goals for generating revenue and cutting costs.

A recent study by Aberdeen group Inc. of small, midsize, and large businesses from across the globe found that 71% felt that the role of real estate and facili-ties life-cycle management has become more strategic over the past two years – mainly due to company growth (see Figure 1).1 This should come as no

surprise when you consider that real estate represents the largest financial asset on the balance sheets of most companies and often draws the highest operating cost after human capital.

“Real estate and facilities spend is not merely a sunk cost or just an operational expense for enterprises,” Aberdeen noted. “It can, in fact, prove to be a strategic asset, and can even go so far as to be a key driver of success, depending on the industry or market.”

Making the most of this opportunity is not always easy. Market globalization and the prevalence of mergers and acquisitions have made it difficult to answer even basic questions such as: What properties do we own? Which do we lease? Where are these properties located? how are they being used? how much do they cost? how much space is vacant?

ReAl eStAte lIFe-CYCle MAnAgeMent A KEY dRIVER oF SUCCESS

1. Aberdeen group Inc., Real Estate and Facilities lifecycle Management: Strategic Value, Savings, and Efficiencies, June 2008.

Source: Aberdeengroup, June 2008

Figure 1: Role of Real Estate and Facilities Life-Cycle Management over the Past Two Years

71%

3%

26% •More strategic

•less strategic

•Remained the same

The SAP Real Estate Man-agement application pro-vides full support for port-folio management, corporate real estate management, commercial real estate man-agement, and facilities man-agement. It can help you develop, construct, operate, and deploy the real property related to your business, while making property costs more visible and controllable.

4 SAP Solution in Detail – SAP Real Estate Management

SAP Real Estate Management supports the full real estate life cycle. In addition to providing a centralized database of information, it offers power ful analytical tools and functions for the development, construction, operation, and deployment of property.

As the solution map for this application shows (see Figure 2), SAP Real Estate Management provides robust func-tionality for the following key business processes:

Portfolio management. The application can help you analyze property perfor-mance, track property details, manage your business partners, and handle property acquisition and disposal.

Commercial real estate management. You can automate searches for new

tenants as well as the creation of con-tract offers, lease administration, rent escalation, postings of open items, and third-party property management.

Corporate real estate management. You can optimize space utilization, room and service reservation handling, and the planning and execution of employee moves.

Facilities management. The software can also help you plan property invest-ments, monitor construction and mod-ernization projects, and schedule and execute repair and maintenance work.

Support processes. You gain greater control over your records, documents, business data, and workflows and can smoothly integrate lease processes with your financials application.

A COMPlete ReAl eStAte SOlutIOnFoR oFFICE, RETAIl, IndUSTRIAl, RESIdEnTIAl, And lAnd PoRTFolIoS

Figure 2: SAP® Real Estate Management Solution Map

Support Processes

Corporate Real Estate Management

Facilities Management

Portfolio Management

Commercial Real Estate Management

Accounting Controlling Tools Integration to SAP® Industry Solutions

Space Management Move Management Room Reservation

Real Estate Search

Lease Management

Condition Adjustment

Percentage Rent

Cost Recovery

Third-Party Management

Legal Compliance

Construction

Real Estate Analytics

Modernization and Refurbishment

Master Data Management

Maintenance and Repair

Partner Management

Service Management

Transaction Management

5SAP Solution in Detail – SAP Real Estate Management

SAP Real Estate Management is built on the SAP netWeaver® technology platform and smoothly integrates with the SAP ERP application to align your leasing transactions with your account-ing, controlling, maintenance, and report-ing functions. The result is a centralized database for property information, com-bined with robust analytical tools and powerful functions for property-related processes across an enterprise.

You get complete support for key man-agement processes and all relevant types of properties. The software can help you manage complex portfolio mixes that include office, retail, industrial, and residential properties as well as land. It can streamline and optimize such key business activities as portfolio manage-ment, commercial real estate manage-ment, corporate real estate management, and facilities management – as well as a variety of essential support processes.

The real estate life cycle looks basi-cally the same in all industries. how-ever, the SAP® Real Estate Manage-ment application is also flexible enough to handle various industry-specific real estate requirements for enter-prises such as:• Airports – which earn a large portion

of their revenue from leasing out retail space, warehouses, hangars, and concourses

• Banks – which must manage their headquarters as well as networks of local banking offices and often manage real estate as a capital investment using separate companies

• Building services firms – which provide comprehensive property management services in a highly competitive market

• Energy suppliers – which manage properties for power plants, power lines, transformers, and customer centers in addition to administrative buildings

• Facilities managers – who handle office space for a company’s private use and provide optimum working conditions for its employees

• Harbors – which lease out offices, terminals, sheds, and container facilities to trading companies and shipping and forwarding agents

• Housing authorities – who must manage a large number of standard-ized leases as cost-effectively as possible

• Insurance companies – which deal with long-term investments in real estate

• Manufacturers – which may lease property to outside contractors and suppliers while managing their own production facilities, warehouses, and offices

• Office-space managers – who emphasize the attractiveness of properties and the satisfaction of tenants to meet the goal of full occupancy

• Postal services – which depend heavily on a highly efficient network of branch offices, logistics centers, and distribution centers

• Public sector organizations – which must manage the large real estate holdings of government and nonprofit organizations while com-plying with unique legal and budget-ary requirements

• Railways – which increasingly treat their train stations like shopping centers, while managing their track systems, warehouses, and mainte-nance facilities

• Real estate investment trusts – which are expected to realize the highest possible returns for inves-tors while minimizing risk

• Retailers – which require a per fectly functioning infrastructure of attractive branch stores, modern warehouses, and strategically positioned distri-bution centers

• Shopping center managers – who must entice shoppers and meet the service expectations of their tenants

• Telecommunications firms – which lease sites for antennas and other infrastructure in addition to office space

PORtFOlIO MAnAgeMentdEFInIng And UndERSTAndIng YoUR ASSETS

Making a profit is a key element of effec-tive portfolio management, along with limiting risk. Selling or buying property at the right location, time, and price requires a comprehensive stream of information that is both timely and accurate. SAP Real Estate Management – together with SAP ERP – can help you analyze your real estate portfolio, evaluate investment decisions, and manage all data related to your portfolio and busi-ness partners. Included are functions for real estate analytics, master data management, partner management, and transaction management to help you:• Evaluate key performance indicators

of existing property portfolios, such as performance and risk

• Analyze and compare investment alternatives

• Simulate how future investments might affect portfolio performance

• Track detailed data about building architecture and usage

• Manage relationships with business partners involved with the portfolio

• Provide standardized roles and related reports that cover return on invest-ment, building-related expenses and revenues, utilization and vacancy rates, and space specifications – as well as maintenance, repair, and service costs

• Visualize portfolio data by integrating computer-aided design (CAd) and geographic information system (gIS) software from third-party vendors

• Track property acquisition and sales processes

Real Estate Analytics

To make smart portfolio decisions, you must carefully consider all relevant influ-ence factors and evaluate the projected outcomes of those decisions. one of the biggest challenges for real estate executives is portfolio insight. This could include monitoring a property’s return on investment, critical key dates, or occu-pancy levels.

SAP Real Estate Management provides a single, complete, fully integrated source of historical, current, and forecast data for your entire enterprise. This single information source gives you an accurate basis for decision making, budgeting, and planning and facilitates a robust audit trail. Managers, department heads, and employee teams can instantly access the information they need for their par-ticular duties. This can improve perfor-mance, encourage collaboration, and facilitate faster responses to tenant requests. Embedded security functional-ity helps ensure consistency and helps maintain data integrity.

A fully integrated analytical layer helps you manage your portfolio more effec-tively and perform capital planning, budgeting, and forecasting more accu-rately. You can capture data from all integrated software. These might include core financial, project, facility, and main-tenance solutions – as well as solutions related to property portfolio data, leases, vacancies, and space utilization. Cus-tomized reporting and calculation tools help you analyze that data and provide crucial support for strategic, tactical,

and operational decisions. These tools can also help you respond to changing business conditions more quickly and find new ways to reduce costs.

Integration with the SAP netWeaver Business Intelligence (SAP netWeaver BI) component lets you generate reports that – for example – list detailed char-acteristics of specific property sites, the financial terms of property leases, costs and revenues related to certain locations, property utilization and vacan-cy rates, and relevant deadlines for the property portfolio. You can predefine user roles and create role-specific work-books that support user-tailored analytics.

SAP Real Estate Man-agement – together with SAP ERP – can help you analyze your real estate portfolio, evaluate investment decisions, and manage all data related to your portfolio and business partners.


You can analyze data from both SAP and non-SAP applications as well as data from external databases, online information services, and the Internet.

The analytical tools available in SAP Real Estate Management can help you define key figures and track key performance indicator metrics – such as return on investment and discounted cash flows – configured according to your needs. You gain additional insight with options that let you make drill-down analyses, generate charts, and export data to Microsoft Excel and other applications. You can generate reports for cost recov-eries (service-charge settlements) or real estate controlling and monitor all contract terms, notice dates, occupancy dates, and vacancies.

For standard reports in SAP Real Estate Management, you can select assets and contracts by business partner or by role. You can restrict the selected assets by key data or time periods.

You can modify standard reports, save and reuse report layouts (either standard or customized), and manage different types of layouts for the same report. SAP Real Estate Management gives you rapid access to key information – including open items on tenant accounts, revenues, property costs, and relevant posting documents. By exporting data to applications like Microsoft Excel, you can create reports for predefined groups of properties, calculate totals, and create charts.

Reports are available for use with vari-ous market indicators, financial model-ing for premises, lease/buy/retain/sell modeling, and risk modeling. You can compare your real estate performance results with other key business figures by retrieving comparative data from outside sources such as the Internet. You can run reports for any part of your portfolio – using list or detail views.

Master Data Management

Real estate is a complex asset that involves a wide range of detailed infor-mation. In addition to recording this information, you must track all changes in data over an asset’s life cycle. Since property is often spread across a broad geographic region, you need a single, fully integrated source of information that is accurate and up-to-date. SAP Real Estate Management lets you display and manage property data through a usage view or an optional architectural view.

Usage ViewWith this view (see Figure 3), you can monitor and manage data related to the actual usage of sites, buildings, and land in your portfolio. You can track the value of these assets as well as details – such as the number of rooms in a building and its square footage. You can track utilization details for individual assets, such as type of usage, utilization level, and the opportunity costs for vacancies.

For each property type, the usage view lets you display and manage the follow-ing types of information:

The SAP® Real Estate Management application offers a wide range of standard reports that collect, sum-marize, and evaluate property and related financial data. Included in these reports is information about:• Individual sites, buildings, land,

rental objects, architectural objects, and asset assignments

• occupancy of rental objects• Vacancies (and the reasons for

those vacancies)• leases – including information on

lease terms, notices, renewal, and security deposit agreements

• Measurements for selected port-folio data or contracts

• Conditions of rental properties and contracts

• Rent escalations that show the adjustment history of conditions

for selected rental properties and contracts

• Business partners – by role, address data, bank details, or associated asset, assigned to property and contracts

• Chargebacks – including cost recovery for common-area mainte-nance – with displays of current settlement periods per settlement unit, itemization or meters for settle-ment units, meters for rental proper-ties, and reports

• Controlling – which includes line items posted to the real estate data and contracts for each asset type and cost element

• Parcels of land you own and related ownership and usage information and permits

Many Different Reporting Templates

General data. You can enter informa-tion about administrative structures, location descriptions, relationships to profit centers or business departments, applicable tenancy laws, and units of measurement (such as square feet).

Dates. You can list critical dates such as those for inspections, maintenance, or renovations.

Fixtures and fittings. You can display property details such as the type of heating and flooring or any intercom systems that may be present and use these details to define rental rates.

Posting parameters. You can assign rules for posting contract conditions into general-ledger, accounts receiv-able, and accounts payable software. You can specify rules for calculating taxes and assign multiple vendors or customers for particular contract conditions.

Partners. The software lists the orga-nizations or persons that are related to a property and their roles (such as tenants, owners, architects, tech-nicians, or administrators).

Availability. You can map income leases and expense leases to specific proper-ties in your portfolio. A time-dependent indicator specifies which properties are available for occupation and which have already been leased.

Services. The software assigns main-tenance and repair areas for individual properties based on integration with functionality for enterprise asset management.

Architecture. You can display information on defined assignments for one or more usage objects to an architectural object.

Architectural ViewAn optional architectural view provides detailed architectural information about a building’s structure and attributes. The hierarchy of this structure can be defined with respect to attributes such as:• Locality – to specify address• Floor – to indicate building level • Space – to specify parking spaces,

storage space, or office space• Room – to specify room number

You can use the architectural view to:• Specify measurements for a property

– including its total area, capacity, and numbers of workstations

• Assign relationships of business part-ners to the property, such as owner or service provider

• Assign employees to rooms and allocate costs

• Manage room reservations

• Plan and execute moves• link to graphical software, such as

a CAd application

Partner Management

To manage your business partners effectively, you must be able to specify the partners associated with your real estate transactions and assign them to one or more roles based on specific business scenarios. You must also be able to change those roles as needed over the course of a business relation-ship and access this information at any time. SAP Real Estate Management can help you enter and assign vendors and customers for each transaction.

A business partner could be an organi-zation, group of companies, or individual in which your company has a business interest – including contract-related contacts or service providers. A partner may act as an owner, operator, architect, tenant, lease administrator, service

RentalSpace (RS)

Figure 3: Usage View of Portfolio Structure

•leased •vacant

RentalUnit

Company Code

Site

Building or land

Pooled Space 1

Pooled Space 2

Pooled Space 3

RS 1

RS 1

RS 1RS 2

RS 2 RS 3


manager, or employee (in a corporate real estate situation). Users can define partner roles for both real estate objects and leases and give partners more than one role. Partners can have role-specific addresses – one as tenant and another as owner, for example – and be identified by their relationships with other partners.

You can create and manage portfolio data specific to a business partner and integrate that data with other functions in SAP ERP, such as accounts receiv-able or accounts payable, to achieve a 360-degree view of the business partner. In addition, you can specify what role the business partner plays in business processes for individual properties. When creating an income lease with a new business partner, for example, you can use the real estate contract to create a new business partner record as well as a customer account for accounts receivable purposes.

Transaction Management

Property acquisition and sales are com-plex processes that involve many stake-holders, last significantly longer than other real estate processes, and require a large amount of data. SAP Real Estate Management provides a holistic display of all transaction-related data – including information on the parties, property, and contracts involved – to give you complete transparency into the approval process. You can use the software to

track different transaction steps and handle various approval procedures.

The software lets you link purchase and sales agreements, along with related payment information, to master data for pieces of land and buildings. You can track all documents and approval circulars involved in the agreements as well as data related to ownership, ease-ments, and rights for parcels of land.Managers of retail,

office, industrial, and residential property require robust support for enterprise resource planning to cover their core business processes and drive revenue. SAP Real Estate Manage-ment provides functions for real estate search, lease management, rent (condition) adjustment, percentage (sales-based) rent, cost re-covery (service-charge settlement), third-party management, and legal compliance.


COMMeRCIAl ReAl eStAte MAnAgeMentCoVERIng CoRE PRoCESSES And dRIVIng REVEnUE

The software can help you generate a list of properties that meet the specific needs of prospective tenants and include details such as property location and amenities. once a prospective tenant selects a property, you can send an automatically generated contract offer. once the contract is signed, you can convert the offer into a lease agreement. This can save you time, make the leasing process more transparent, improve the quality of the process, reduce vacancy rates, and increase revenues.

You can sort search properties by price, location, square footage, fixtures, or fittings. A search request summarizes lease dates provided by the prospect to find the most suitable property. Features for a fast entry let you search by specific criteria and incorporate additional data later. Search results are displayed in a hit list that you can use for further activities related to the search.

Lease Management

lease administration is a time-consuming business. SAP Real Estate Management can make it more efficient.

The software lets you proactively manage the entire lease life cycle – from initial lease abstracting and setup through bill-ing, lease changes, critical-date tracking, renewals, and lease expiration or termi-nation. Automated processes and tem-plates increase productivity and mini-mize the risk of human error to keep tenant satisfaction high and administra-tive costs low. Integration with the SAP ERP Financials solution provides a highly visible audit trail of all financial activities related to your leases and a clear view of tenant accounts. It also helps you automate special accounting posting requirements.

Managers of retail, office, industrial, and residential property require robust support for enterprise resource plan-ning to cover their core business pro-cesses and drive revenue. SAP Real Estate Management provides functions to support commercial real estate pro-cesses, such as real estate search, lease management, rent escalation or condition adjustment, percentage or sales-based rent, cost recovery or service-charge settlement, third-party management, and legal compliance. These functions make it easier to:• Manage and operate third-party

property• Manage expense and income leases

and other property-related contractual agreements

• Monitor critical days or reminders and renewal options

• Make price index–related condition adjustments and other types of rent escalations

• Manage percentage-rent agreements• Match vacant properties to requests

from prospective tenants• Create contract offers• Calculate chargeable expenses,

balances, and advance payments for common-area maintenance reconciliation

Real Estate Search

An effective way to minimize vacancies is to search actively for follow-up ten-ants for vacant or soon-to-be vacant properties at the earliest possible stage. You can use SAP Real Estate Manage-ment to search for vacant rental objects, find suitable prospects for these rental objects (or vice versa), and send contract offers.

Figure 4: Real Estate Search Process Flow

hit list•Favorites•Rejectobject•Changestatus•Createoffer•Createlease-out

lease-out•Contracttype•Objects(Real estate search request, offered

object, rental object, and contract offer )

•Partner(tenant)

•Term•Conditions...

Tenant

Activate

Master data Summary

Contract offer

Contract Form

general letter

Prospect Correspondence

lease Abstract

Search Request•Realestatesearch

request type•Price(from/to)•Location•Squarefeet•Fixtures/fittings

offered object•Price•Location•Squarefeet•Fixtures/fittings

Search•Standardsearch•Extendedsearch•Textsearch

Contract offer•Contracttype•Objects(Real estate search request, offered

object, and rental object)

•Partner(prospect)

•Term•Conditions...

Copy


With SAP Real Estate Management, you can create standardized lease agreements that define the primary parameters of contractual relationships for all the properties in your portfolio. You can use these flexible agreements for vendors or customers and modify them to reflect any unique rental fees or terms of a specific contract.

You can use the software to define and specify a variety of contract items. You can, for example, specify the purpose of a lease and the resulting posting activi-ties. Contract types include expense and income leases that involve open items, either for a vendor or customer account. Contracts could also be assigned to parts of the internal orga-nization such as cost centers or auto-mate recurring postings between general-ledger accounts. When you specify the contract type, you can note whether there are any related to lease, sales, service, or security deposit agreements.

You can also specify the start and – if applicable – end date of a contract and the prerequisites for giving notice to terminate or renew the contract. You can use the software to monitor the related processes – such as sending out confirmation letters to tenants, making final postings, or launching the search for a new tenant. If necessary, you can track changes by assigning validity periods to these rules.

Each contract can refer to one or multiple usage objects, parcels of land, functional locations, pieces of equipment, cost centers, and work breakdown structure (WBS) elements. Predefined rules pro-vide comprehensive support for date and deadline management.

Regarding usage tracking, only rental units and rental space can be assigned to income leases. however, you can assign available rental space from a pooled space. You can assign these rental objects to a contract for a speci-fied time period. You can also group

rental spaces and units that are subject to the same rental fees in one lease.

Creating a lease When you create a lease, you can enter the data you need most frequently into a simplified form. This includes such critical data as:• Tenants or landlords involved in the

lease• lease start and end dates as well

as notice and renewal rules• Rental fees• Relevant buildings, pieces of land,

rental units, and rental spaces• Any rules for settling percentage rents

or cost recovery from common-area maintenance

• Postings rules

Your lease can also include the following details:

Business partners. You can create one or more new partners or assign existing partners involved in a lease and assign roles to them. This might include, for example, tenants or landlords.

Terms. You can define a contract’s start and end dates, duration, periods for giving notice, and renewal rules for fixed-term contracts. The software enters the date of contract start as the default first posting date. If no contract end date is specified, the contract will be treated as unlimited. If the first posting date and the possession date are different from the contract start date, the software allows you to track these deviations.

Objects. You can create new rental spaces from a pooled space when cre-

An effective way to minimize vacancies is to search actively for follow-up tenants for vacant or soon-to-be- vacant properties at the earliest possible stage.You can use SAP Real Estate Management to search for vacant rental objects, find suitable prospects for these rental objects (or vice versa), and send con-tract offers.

12 SAP Solution in Detail – SAP Real Estate Management 12

ating a lease and assign existing rental units and spaces to the lease – with or without a time restriction.

Contract measurements. You can define dedicated measurements that are unique to the lease and could not be derived from the usage objects. For example, you can note the measure-ments of a common area in the lease or assign the number of persons using a property to apportion trash collection fees.

Posting parameters. You can define time-dependent posting terms such as payment methods, tax types, and dunning rules – as well as the terms for the frequency and form of payments and the terms for organizational assign-ments related to the posting, such as a profit center or business area.

Conditions. You can define time- dependent rental fee data for a lease or for the rental spaces addressed by the contract, such as a basic rental fee or advance payments for common- area maintenance. You can use these conditions to create planned records in the cash flow for any postings that will be generated. These planned records will be converted into actual records in the financial accounting software during the periodic posting run. Conditions can be used for both leases and rental objects. You can process multiple cur-rencies within the same lease.

Adjustment. You can use the software to escalate rents on a legal or contrac-tual basis automatically and specify the relevant rules.

Settlement participation. Although cost recovery for common-area maintenance is automatically defined for each asset, you can define exceptions to automatic settlement participation. The software provides an overview of all rental prop-erties affected by chargeback activities and shows the time periods relevant to each rental space. It also shows settle-ment participation details for the asset you select. You may change the validity period and the participation type of the property.

Option rate methods. Where applicable, you can specify the option rate method for monthly calculations of deductible and nondeductible input taxes and man-age related correction items in upcoming years. Reminders. You can define rules for calculating reminder dates for renewal options, termination notices, and other important lease activities. Overviews. You can specify key analyt-ical reports, such as a list of items in the customer account related to the tenant.

giving notice on a leaseEvery lease that has no fixed end date must include terms for ending the con-tract. These include procedures for generating termination notices and setting lease periods and deadlines for deciding whether to continue or end a lease. With SAP Real Estate Manage-ment, you can define standard notice procedures for a contract and include multiple notice rules in each lease. This lets you set different rules for property tenants, owners, and operators.

Renewing Fixed-Term ContractsYou can streamline the renewal of fixed-term contracts by assigning renewal rules. SAP Real Estate Management provides you with two renewal methods:• Renewal by option – which lets you

define one or more one-time or recur-ring renewal options that must be approved individually by the contrac-tual partner before they take effect

• Automatic renewal – which lets you specify how a contract term can be renewed without additional approval

You can apply renewal options and automatic renewals separately or in combination. Renewal options always take precedence over automatic renew-als. An authorized party must give notice to discontinue automatic renewals.

lease AccountingWith SAP Real Estate Management, all property posting processes integrate completely into financial and managerial

Types of Provisions in Lease Management Contracts

• Fixed-rent or percentage-rent (sales-based) provisions within income and expense leases

• Security deposits• Easements and rights of way • Environmental liabilities • Property sales and purchase

agreements• Service agreements• Provisions for postings between

legal entities of a group of companies


accounting functions within SAP ERP Financials. This means that you can see all the data for your contract partners and view up-to-date costs and revenues in real time.

Each landlord has a business partner and corresponding vendor record, and each third-party tenant has a corre-sponding customer record. Internal occupancy can be billed to cost elements such as cost centers, WBS elements, or internal orders.

Periodic postings of all payable, receiv-able, and general-ledger transactions are created in an automated posting run that includes all postings due out of a cash flow that is based on the defined contract conditions. In the same way, vacancy periodic postings are created for all rental objects, where the vacancy cost centers are billed.

Real estate invoices are created and printed from within SAP Real Estate Management based on postings made

to the customer account. The created open items are managed through func-tions for accounts payable and accounts receivable.

one-time postings related to leases may be generated through SAP Real Estate Management. This makes it possible to post an individual fee that is not part of the lease directly to the customer account.

The application also has functionality for handling multiple currencies in a lease. You can define conditions for contracts, rental objects, or contract offers that are in a currency that differs from the local currency of the company code. For foreign currency exchange, SAP Real Estate Management deploys the standard features out of SAP ERP Financials. different currencies can be entered directly when processing conditions or via defined currency translation rules in the posting term.

The software also lets you split condi-tions into postings for multiple customers or vendors if, for instance, a specific rental fee will be paid by more than one tenant.

Condition Adjustment (Rent Escalation)

In many leases you must specify how rental fees or other conditions for con-tracts and objects might be adjusted. These changes may include freely defined adjustments, adjustments based on indexes such as a country’s consumer price index, or adjustments of advance payments and flat rates based on the results of a cost recovery.

With SAP Real Estate Management, you can use different calculation meth-ods to change the amounts of condition items for real estate contracts, pooled spaces, rental spaces, and rental units to meet the requirements for mass pro-cessing. These calculation methods include:• Free adjustment (residential and

commercial)• Index adjustment• Adjustment based on a representative

list of apartment rents• Adjustment based on comparative

apartment rents• Adjustment of advance payments and

flat rates based on the results of a cost recovery (service-charge settlement)

To adjust condition amounts, you first assign adjustment rules to the conditions in the contract or rental object that are to be adjusted and change or add to the parameters for these rules. The adjustment process then consists of:1. Specifying the adjustments (the

system generates a list of possible adjustments)

2. Editing the adjustments (you can make changes to automatically calculated adjustments)

3. generating correspondence for tenant approval

4. Entering the approval or rejection5. Activating the adjustment6. Informing the tenant of the adjustment

The adjustment run could be first carried out as a simulation, the list saved as an update run, and the adjustments directly activated in the individual step. If neces-sary, you can reverse an entire adjustment or individual adjustment records. The adjustments take into account numerous country-specific legal requirements.


Percentage Rent (Sales-Based Rent)

In a retail environment, rental fees are usually tied to tenants’ inventory turnover. In addition to negotiating the percentage-rent contracts, managers of retail prop-erty must handle information from retail sales reports and calculate and settle the resulting rent amounts.

With SAP Real Estate Management, you can efficiently calculate, settle, and post rents for retail property based on turn-over percentages. Settlements auto-matically post to accounts receivable functions in your SAP financial account-ing software.

You can draw up lease agreements for commercial real estate based on tenant sales that define contract terms, condi-tions, and adjustments. The percentage-rent agreement may be calculated accord-ing to the value of turnover or number of sold pieces. The software provides support for the most complex and flexi-ble agreements and facilitates complete transparency and simplified handling. A lease can contain any combination of percentage-rent types.

Flexible reporting rules specify which types of sales must be reported and let you distinguish actual sales from planned and statistical sales. The sales rules can be based on reported inventory turn-over, a measure of output (such as the number of customers served), or con-sumption (such as the number of meals served).

You can manage minimum and maximum percentage rent as separate conditions. Advance payments can be managed in

the same way. You can also run the settlement based on cumulative settle-ment values. In cumulative settlement, the reported sales from the previous periods are taken into consideration for each settlement (for example, the first quarter is settled, the second quarter is settled, and the sales results of the first quarter are taken into account). This helps to level peaks and lows during the settlement period.

Sales-based settlement consists of the following steps:1. Create a sales-relevant real estate

contract with the appropriate percentage-rent conditions.

2. In this contract, define one or more percentage-rent agreements with valid reporting and sales rules.

3. Assign the sales rules to conditions.4. Enter the sales reports either for

individual contracts (single entry) or as a collective entry for multiple contracts.

5. Carry out the sales-based rent settle-ment, calculate the percentage rent, and post it in your financial accounting software. Condition amounts can be adjusted for the following settlement period.

Tenants must report their sales at regu-lar intervals using reporting rules in the contract. one sales report can be used for calculating any number of conditions that are dependent on sales. Reporting rules can contain an unlimited number of product groups (sales types). You can handle minimum rent and advance payments on percentage rent as sepa-rate conditions. Sales can be entered electronically via the Internet. Tools are also available to track entered sales reports and those that may be missing.

Cost Recovery (Service-Charge Settlement)

In an office or retail environment – and in some countries also in residential environments – common-area mainte-nance is regularly recovered from tenants based on individual contract agreements. Allocating costs for services, property taxes, insurance fees, and maintenance expenses is known as service-charge settlement, cost recovery for common-area maintenance, or recovery reconcil-iation billing. In some countries this pro-cess is legally defined and binding for residential property management. Many lease agreements include regu-lations about cost recovery for shared-cost items such as operating costs, heating expenses, and trash collection. SAP Real Estate Management helps you automatically manage, assign, and collect these service charges or charge-backs more effectively. You can use the software to:• Create a settlement structure consist-

ing of settlement units, chargeback catalysts, and cost collectors

• define participation groups to delineate the relationship between real estate objects and settlement units

• define cost recovery exceptions in the individual leases

• Collect costs from vendor invoices and internal cost allocation on settle-ment units and their cost collectors

• handle service charges monitored by external settlement companies

• distribute apportioned costs to ten-ants for a specific settlement period, using individual control mechanisms

• Where applicable, apportion costs based on measurements (such as fixed values, consumption values, or percentage shares)


• Apportion chargebacks for vacant units to vacancy cost centers

• Send correspondence to tenants about the results of individual settlements that result in a debit or credit note

• Execute all related postings in the financials software

The software can also help you settle all service charges for real estate con-tracts and rental objects. This includes the internal settlement of costs and the settlement monitored by external settle-ment companies – for instance, operat-ing costs or heating expenses. You can distribute apportionable costs to tenants for a particular settlement period using individual control mechanisms. Key features include:• Settlement of contracts with multiple

objects• Settlement to rental objects and

contracts• Settlement in individual steps, with

the option of continuing at the end of any step at a later time

• Extensive simulation function with reports

• Storing of results without posting• Alternative measurements for differ-

ent apportionments during simulation – for example, in case meter readings are not yet available

• Settlements of special agreements between tenant and landlord

You can use cost recovery to distribute apportionable costs to tenants for a particular settlement period, using indi-vidual control mechanisms that include: • Categorization of service charges

incurred (using the service-charge key)• Time-dependent apportioning of

costs based either on measurements (such as fixed values, consumption

values, percentage shares, and equal shares) or on conditions in the contract

• Time-dependent settlement participa-tion of usage objects (such as sites, buildings, pieces of land, or rental objects) with the ability to exclude individual rental objects when assign-ing higher-level usage objects

• Clearing of costs that are not appor-tionable to the tenant (in case there is a percentage landlord share, a definition of maximum costs, or settlement of nonapportionable service charges)

• Apportionment of vacancy costs to the tenant

• Integration of external settlement results

A service-charge key defines which cost can be apportioned to tenants and which method is used to apportion the costs incurred by measurement (such as space size or number of people). Account assignment of service charges is made to the respective settlement units or master settlement units in your financial accounting software when posting vendor invoices. The settlement amount is transferred automatically to the correct settlement period by means of the defined settlement reference date.

Cost recovery functions help you to:• Calculate total costs for the settlement

period for each service-charge key • Apportion costs to the relevant

contracts or rental objects• determine advance payments by

individual tenants • Calculate and post settlement results

to tenant accounts• Adjust operating cost advance pay-

ments for the following settlement period

When adjusting advance payments, you can account for factors such as percent-age surcharge and maximum costs. Following the settlement run, you can automatically adjust advance payments and flat rates for service charges accord-ing to the higher or lower consumption that was determined in the settlement result. The software supports automatic data carrier exchange for the transfer of the required data to the settlement company.

Third-Party Management

Real estate organizations that operate properties owned by others have unique challenges. SAP Real Estate Manage-ment can increase the efficiency of third-party management to make these properties profitable contributors to your bottom line.

Before managing a property, the real estate manager must receive a legal mandate from the property owner. Using SAP Real Estate Management, you can create and store mandates by individual owners and associate the mandate with the real estate and processes to which they apply. You can create separate financial statements for each mandate and maintain separate assets for all third-party properties. The software also supports third-party management specific to condominium owner associ-ations (CoAs).

With SAP Real Estate Management, you can handle a variety of third-party management tasks related to:


• Real estate data– Represent properties that belong

to other owners– Map relationships between manag-

ers and owners– Map relationships between CoAs

and individual condominium owners• Mandates

– Maintain separate assets for owners and managers, creating distinct financial statements for each

– Provide accounting functions for owners and CoAs

– Manage bank accounts of owners and CoAs

– Settle CoA costs and revenues for CoA members

– Perform chargebacks for tenants who lease condominiums from owners

– Create annual budgets– Perform periodic postings for

assessments as well as assess-ment collection

– handle special posting procedures for CoAs

– Manage financial transactions with tenants using a CoA bank account

– Calculate special assessments• Reporting and correspondence

– Create financial statements for individual owners or the entire CoA

– Create account statements for owners

– Report on accounts and items– Perform CoA settlement– handle chargebacks for tenants

who lease condominiums from owners

– Create an overall annual budget for a CoA, with individual annual budgets for each condominium

Each mandate that is granted by an owner has its own dependent real estate objects and processes. These are represented in the software by a separate company code for each mandate. The mandate company code provides the basis for separating the assets of the owner and the manager and supports the creation of separate financial statements.

The rental and management of an object on behalf of a third party is provided upon the owner’s request. The service can include anything from basic management to looking after the entire rental process. The fees paid to the manager by the owner depend on the services provided and are calculated using flexible fee calculation methods. Management fees can be periodic or event driven and can be based, for example, on the number of objects being managed, the total amount of area managed, an object status, or an event such as the notice for a rental contract.

Legal Compliance

For maximum efficiency and optimized business value, companies with global property portfolios must manage their real estate as a unified asset across all political and geographic boundaries. however, each property must also be managed according to local regulations.

SAP Real Estate Management covers a wide variety of country-specific require-ments with respect to withholding taxes, property taxes, and rent escalations. It can also handle transactions in multiple currencies and other global issues.

The SAP® Real Estate Management application provides a dedicated localization strategy. Examples of country-specific support include:• land management (germany)• Input tax distribution and correction

items (germany)• Extended withholding tax (Portugal

and Spain)• Rent adjustments (Portugal and

Switzerland)• Property tax (Czech Republic, Italy,

and Portugal)• Stamp tax (Italy and Portugal)• Quarter days (United Kingdom)• Tax jurisdiction code (United

States)• Straight-lining of rents according

to Financial Accounting Standards Board statement 13 (United States)


analysis, consider future usage based on existing leases, and track space utilization based on the start and end dates of assigned leases. You can use the software to help ensure the continuous occupation of rooms and other real estate objects, record which employees occupy such space, and plan internal moves of employees from one space to another. You can plan individual moves, big-bang moves, and team moves. The software lets you take advantage of CAd applications to analyze utilization and vacancy rates. You can visualize all the spaces and their allocations using the graphics software of your choice. You can also launch plan representations directly from SAP Real Estate Manage-ment and use the graphical representa-tion of relocation variants to support your relocation planning.

SAP Real Estate Management provides comprehensive support for analyzing space demand and availability and allo-cating costs and revenues to appropriate departments. The software can help you:• Assign employees to specific spaces• Specify which rooms or other real

estate objects can be continuously occupied

• Run occupancy and vacancy reports• Plan moves of employees from one

object to another• Allocate costs for using work spaces

to the relevant organizational units within your company

With SAP Real Estate Management, you can flexibly structure information about office space and divide space into sites, buildings, wings, floors, and rooms – and include architectural details for each of these objects. You can track and ana-lyze space size, characteristics, usage types, utilization, and vacancies by time period. You can also perform historical

Corporate real estate managers – includ-ing managers of offices, branches, and other corporate work spaces – help a core business achieve goals such as growth, cost reduction, and a produc-tive environment for employees.

SAP Real Estate Management supports these efforts with functions for such key activities as space management, move management, and room reservation that you can integrate with existing tools for CAd visualization to:• Assign and move employees to

specific spaces• Allocate costs for using work spaces

and meeting rooms to the relevant organizational units within your company

• handle room and service reservations for one-time and recurring meetings

• Book services such as catering

Space and Move Management

As the structures and business strat-egies of your enterprise change, it is critical that you organize employee work-places quickly and flexibly. Increased insight into space demand and utilization can help you make better investment decisions about, the leasing of additional space and space usage. By automating and streamlining the assignment of employees to various spaces and their moves from one space to another, you can also save time and overhead costs. Visualization via CAd integration can provide enhanced analytical insight and improve collaboration among engineers, real estate managers, and the heads of different lines of business.

CORPORAte ReAl eStAte MAnAgeMentSUPPoRTIng CoRE BUSInESS goAlS

Figure 5: SAP® Real Estate Management Helping to Manage Corporate Office Space

Rooms shaded in blue have capacity for 10 or more employees.


• Bill the costs of room reservations to internal users and external parties

• Create a graphical representation of the meeting location

• Confirm any additional services and equipment that may be required

The software automatically determines objects for account assignment using existing data, such as hR master data for assigned employees. You can dis-tribute costs to more than one account-assignment object and allocate costs during the periodic posting run. You may create external reservations while post-ing outline agreements and allocate costs for catering and other services.

book and bill for services – such as lunch, additional chairs, or audio-visual equipment. The software integrates with your controlling application to help you allocate the costs for these services to the appropriate departments.

With SAP Real Estate Management, you can:• Represent real estate objects with

master data of architectural objects• generate reservation objects from

architectural objects• Search for and reserve reservation

objects based on specific criteria and availability

• Bill for room costs based on room reservations

You can allocate costs based on account-assignment information. You can calcu-late pricing based on variables such as

meeting locations and duration – via measurement or capacity – and use calculation rules such as fixed price per month or price per occupancy.

Room Reservation

Many companies waste administrative time and effort looking for available space, specific equipment, or additional services when reserving rooms for meetings and other uses. They may also lack full transparency for the costs involved in reserving space or may use available space inefficiently.

SAP Real Estate Management can sim-plify and optimize the organization of meetings – both one-time or recurring – and improve meeting cost transparency. It can help you make better use of your meeting rooms, sports facilities, or lec-ture rooms – while reducing processing costs and employees stay within certain cost limitations. In addition, you can

For room reservation functionality, SAP also supports services within a service-oriented architecture (SoA). These services can be used to build employee self-service func-tionality by connecting the SAP® Real Estate Management application to a working environment that employees are most familiar with, such as a company’s intranet or portal.

SoA is a blueprint for an adaptable, flexible, and open IT architecture for developing services-based, enterprise-scale business solutions. With the SAP netWeaver® technology plat-form as a technical foundation, SoA moves IT architectures to higher levels of adaptability – and moves compa-nies closer to the vision of real-time enterprises by elevating Web services to an enterprise level.

Corporate real estate man-agers – including managers of offices, branches, and other corporate work spaces – help a core business achieve goals such as growth, cost reduction, and a productive environment for employees.

Professionally executed facilities man-agement is essential for maintaining value in real estate portfolios. The large variety of related tasks and the technical complexity of real estate – with its differ-ent forms of construction, interior work, and building systems – require the care-ful coordination and control of facilities management processes.

Through integration with software for project systems and enterprise asset management from SAP, SAP Real Estate Management can help you manage services, maintenance, and repairs for your buildings and plan and oversee all related renovations and improvements. The software can help you handle noti-fications for unscheduled maintenance as well as scheduled maintenance work, service requests, and framework agree-ments for facilities, services, and mate-rials that you may have with external providers.

A wide range of functions for construc-tion, modern ization and refurbishment, maintenance and repair, and service management help you:• Conduct scheduled and unscheduled

maintenance on your rental objects• display costs in integrated reports• Assign services to internal and

external providers• Monitor modernization and mainte-

nance tasks• handle malfunctions and problems

reported via phone• Prepare and procure goods and

external services• Manage available spaces

• Maintain spaces and rooms as geographical representations with CAd or computer-aided facility management systems

The software can help you create or assign notifications for functional locations to document an inspection or a technical malfunction in a location or equipment. You can also create or assign orders for functional locations that define the tasks you want to per-form and who should perform them. The software lets you determine when to generate scheduled maintenance orders and create nonscheduled activi-ties manually. Integration with human resources software from SAP lets you assign personnel resources to specific tasks. You can also generate purchase requisitions for orders that involve external service providers.

With SAP Real Estate Management, you can subsequently post invoices from external service providers or track the maintenance and service work of inter-nal teams. You can settle maintenanceorders to real estate objects (such as contracts, settlement units, or usage objects) or capitalize in asset account-ing. You can also charge tenants not covered by rental agreements.

You can assign equipment such as fur-niture or fire extinguishers to specific functional locations. Classification char-acteristics describe the details of func-tional locations and equipment such as the length, width, and height of a room, the construction year of a fixed asset, or the acquisition costs.

By providing full facilities life-cycle man-agement functionality, SAP Real Estate Management supports all processes related to building operations, ranging from construction, modernization and refurbishment, maintenance, and repair to various kinds of service management.

Construction

SAP Real Estate Management supports a full range of processes for building construction, including the following: Planning. The software lets you seg-ment projects into elements or service catalogs and structure the project schedules using linked processes. You determine the required resources (materials, persons, or services) and plan costs using the structure plans that reflect country-specific standards, such as german dIn276. You can derive project scheduling from the structure plans and determine project milestones.

Budgeting. You can plan budgets for project structure plans and automatically reconcile them with corporate invest-ment budgets. You can also set budget availability checks.

Controlling. Support for milestone-trend analysis shows whether your project is on time and within budget.

Inviting bids. You can collect prerequi-sites and specifications and create ser-vice catalogs related to your project plan. You can list restrictions related to size, delivery contents, level of quality, schedule, and offer validity.

FACIlItIeS MAnAgeMentMAInTAInIng ThE VAlUE oF YoUR PoRTFolIo


Modernization and Refurbishment

At some point your properties will need a face-lift. SAP Real Estate Management can help you make the most of these projects by providing robust support for planning and monitoring your modern-ization and refurbishment projects. Inte-gration with project and portfolio man-agement software from SAP and the Collaboration Projects application lets you gather and plan, manage, and mon-itor modernization projects through the entire project life cycle (see Figure 6). Integration with asset management and purchasing applications streamlines work and purchase orders as well as order planning, confirmation, and settlement.

You can use the software to manage bid invitations, contract awards, invoic-ing, and the procurement of external services. There is also support for:• Creating and organizing projects into

WBS elements

• Planning work items and related resources

• Planning project milestones• Planning and budgeting project costs• Creating purchase orders for materials

and services• Settling costs for WBS elements• Monitoring completion rates and

costs• Capitalizing project costs to asset in

asset accounting• Requesting chargebacks of costs

from tenants• Adjusting rental fees in leases due

to space improvements

Awarding contracts. You can use the software to manage contracts with ser-vice providers and compare them with original offers. You can make final calcu-lations of resources, costs, and revenues. You can then send work packages elec-tronically, provide local confirmations, and integrate this information into your overall project plan.

Invoicing. The software provides invoice verifications for service catalogs or contracts and lets you handle security deposits through your financial account-ing application.

Managing cash. The software integrates your treasury functions with electronic banking, customer relationship man-agement, and financial processes to improve liquidity, maximize yields on financial assets, and simplify multicur-rency management.

Integration with project and portfolio management software from SAP lets you:• Create projects based on templates• design a WBS for cost planning,

budget controls, and extensive reporting

• link WBS elements to real estate master data and contracts

• Integrate work orders, material usage, and all other work details

• Integrate resourcing with procure-ment functions

• Track scheduling• Collaborate with third parties• Monitor and analyze construction

status

Figure 6: Managing the Entire Modernization Life Cycle

Costs are reviewed within a report

new tenant wants newly painted rooms

order for modern-ization project is created

External service is requested

Paint work has been done and needs to be settled

Work is confirmed

order is completed and order settlement is created

Costs are settled to a work breakdown structure element


Maintenance, Repair, and Service Management

handling maintenance, repairs, and ser-vices for the buildings in your portfolio is a critical part of effective real estate management. The proper preparation and execution of both planned and unplanned projects requires that you be able to assign the appropriate inter-nal resources and manage framework agreements with external service pro-viders. In addition, you must be able to:• gather and define all tenant requests

for improvements or repairs• Invite bids from building services

providers• negotiate and conclude framework

agreements• Request services contained in the

framework agreement• Monitor the actual work or services• Settle orders and allocate costs to

tenants or property

SAP Real Estate Management can help you automate and streamline such tasks for your own properties – as well as those of your customers – over the entire maintenance, repair, or service process (see Figure 7). Through integration with the SAP ERP Corporate Services solution, you can directly analyze costs that arise from these activities.

Manage maintenance plans and requests. You can display building maintenance plans using descriptions of required inspections and other tasks for maintenance objects. You can define dates and actions and automatically generate and group together mainte-nance requests from both malfunction reports and scheduled maintenance plans.

Plan scheduling and resources. You can use bills of materials or task lists to schedule maintenance plans and auto-matically plan for required materials and personnel.

Report malfunctions. You can report malfunctions or service requests from users or tenants related to individual real estate objects – either online or via handheld computing devices.

Monitor costs and dates. You can gather and display maintenance costs and keep track of crucial dates and deadlines.

Resolve customer issues. Customer interaction centers provide service and support by helping agents manage and fulfill commitments with efficient service planning and execution. You can resolve customer issues quickly by connecting the entire service process – from initial customer contact to final resolution and financial settlement.

Create framework agreements. You can create agreements regarding standardized service and material deliveries and their negotiated price by vendor. The software supports the management of framework agreements with external service providers and the assignment of such companies to pur-chase orders.

Procure external services. Standard procurement functions help you pur-chase regular facilities-management services – such as caretaking, clean-ing, cafeteria, security, gardening, and internal mail delivery.


Manage fire safety. The software repre-sents technical fire prevention objects such as fire extinguishers and fire doors as equipment on functional locations and links them directly to your real estate objects. It also helps you determine and monitor inspection dates in maintenance plans. Integration with computer-aided design and facility management systems supports the mapping of fire escape routes and the location of fire safety objects.

With SAP Real Estate Management, you can request services online, by management or tenants, or automati-cally via your maintenance and service plans. Commitments are displayed directly with the real estate object. You can define required services or materi-als for individual real estate objects or usage types, along with service levels and standards. You can also define the suppliers for materials and services according to the specific service type

and building location. After you enter the receipt of goods or confirm com-pleted services, the software automati-cally charges the costs for these goods and services to the relevant real estate object.

In addition, you can:• Create functional locations (such as

rooms) and assign equipment (such as desks and computers)

• Create maintenance plans• Create and execute work orders

using internal or external resources• Receive confirmations from service

teams• Post and pay vendor invoices for time

and material• Receive costs via internal cost

allocation• Settle service and maintenance costs

with tenantsFigure 7: Managing the Entire Maintenance, Repair, and Service Life Cycle

All work order costs are settled against the building

Tenant discovers defective hVAC

Bui

ldin

g

Tenant enters notification by telephone

Facility manager calls up the daily workload and finds this notifi-cation waiting with the status “outstanding”

Facility manager receives notification that hVAC is not working properly; assigns internal and external resources, runs warranty check

Work order is as-signed because the repairs require third-party involvement

Repairs are completed

Facility manager enters completion

Facility manager sends note to tenant that work is done

Tenant receives e-mail notification, and outside costs are entered on the work order


Control of your property portfolio will be more effective if all the tools you need are available on a single platform. SAP Real Estate Management provides robust functionality for property support processes such as the management of records, documents, business data, and workflows. Integration with SAP ERP provides additional functionality and tools of a mature ERP application. Inte-gration with accounting and controlling software – as well as with the SAP industry solutions for public services and a variety of other tools – provides the support you need to:• Plan and execute cost and revenue

postings – including allocations and settlements for profit and cost centers

• Execute postings on general-ledger accounts

• Post expenditures and earnings on profit-and-loss accounts

• Create open items for customer and vendor accounts

• Invoice open items for accounts receivable

• handle payments, collections, dun-ning, disputes, installments, and write-offs

• Create correspondence and organize incoming and outgoing documents into folders

• Incorporate industry- and customer-specific functions

You get a complete real estate manage-ment solution that addresses such key business areas as:

Financial accounting – to create all required financial statements

Controlling – to provide a planning and control instrument for all value flows. Controlling functions also support gen-eral cost-accounting procedures, from absorption costing to activity-based costing.

Profit center accounting – to support internal control functions and profitability analyses

Asset accounting – to value fixed assets for accounting purposes

Document management and optical archiving – to provide overviews of all documents and correspondence associated with business processes

Accounting

Integration with your accounting soft-ware makes lease administration smooth and efficient and provides support for the following accounting activities:

Periodic postings. Real estate partners, such as tenants or landlords, are repre-sented as customers or vendors. The periodic posting on contracts either posts or reverses receivables or pay-ables to the respective contract partner based on the condition amounts defined for each contract. You can manage accounts receivables and accounts payables on an open-item basis. The periodic posting for vacant rental objects posts the imputed costs resulting from the conditions of the rental objects.

One-time postings. You can manually pass on receivables that are not auto-matically covered by the conditions entered in the contract but must be assigned to the tenant. You can assign invoice amounts directly to the individual contracts, debit them to the customer, and post credit memos in the same way. The data-entry screens for one-time postings are user friendly and tailored to the needs of real estate managers.

Payment transactions. The software supports all regular payment procedures such as automatic debit, checks, and bank transfers. It also supports addi-tional and country-specific functions for data exchange with certain banks and electronic account statements and supports open-item management.

Dunning. The software provides a flexible procedure for creating dunning notices. It defines dunning levels with the required correspondence and calcu-lates dunning fees or interest on arrears as required.

Input tax opting. You can automatically calculate portions of deductible and nondeductible input taxes based on the determined option rate that specifies the basis for dividing input tax into deductible and nondeductible tax.

Accrual and deferral. You can assign planned costs and revenue to the rele-vant accounting periods and make accru-als and deferrals for actual postings to these periods. Accrual functionality helps you calculate and post accruals and deferrals. If you execute an accrual

SuPPORt PROCeSSeSCoMPlETIng YoUR SolUTIon


or deferral, the software automatically generates the required documents, transfers them to accounting, and then provides corresponding financial documents.

Appreciation and depreciation. The software helps you manage appreciation from modernization and refurbishment projects that increases the value of your real estate. You can determine depreciation representing a loss of property value according to accounting rules described in trade and fiscal law.

Additional real estate–specific function-ality lets you:• Use contract numbers for incoming

payment transactions• display tenant accounts from within

rental contracts• Import and process account

statements• Specify installment payments for open

items in tenant accounts (the software can divide payments into several equal installments from within rental contracts)

• Write off open items• Summarize records of each contract’s

payment transactions to reduce the posting volume

Controlling

The effective management of controlling processes is critical for the profitable planning, oversight, and evaluation of real estate. The integration of SAP Real Estate Management with controlling functions in the SAP ERP Financials solution lets you plan, post, settle, and

evaluate the costs and revenues related to your properties. By automatically assigning costs and revenues to your real estate objects, the software can eliminate redundant data entry.

You get support for planning costs and revenues for individual sites and leases – as well as support for cost assessment, the settlement of property costs and revenues, and the reconciliation of costs and revenues to different profit centers. The software can help you estimate future costs, activity input, revenue, and statistical key figures on both prop-erties and leases. You can also perform actual postings for manual follow-up postings of costs, revenue, and line items – and use all standard controlling instruments such as internal activity allocation, the controlling of settlements and assessments, distributions, periodic repostings, and the transfer of costs and revenues into statistical key figures.

The software provides additional control-ling support in the following key areas:

Cost and revenue planning. You can manually plan costs and revenues on real estate objects, a function similar to that for cost centers. You can perform cost planning, activity-input planning, revenue planning, and statistical key-figure planning for both usage objects and real estate contracts. You can use planning aids for costs and revenues on real estate objects to generate or calculate planning values from planned or posted data. This means, for example, that you can copy values posted on real estate objects from actual to planned

or planned to planned and from cash-flow records for real estate contracts to planned. Prognosis tools help you forecast future rent from the conditions and adjustment rules in contracts and comparison reports to determine differ-ences between month-to-month total rent revenue. Integration with SAP netWeaver BI helps you compare planned costs and revenues with actual data posted to your real estate objects.

SAP Real Estate Man-agement can make costs visible and con-trollable for any type of property management. You gain further control of expenses by auto-mating transactions and optimizing maintenance, repairs, and building services.


Cost and revenues posting. You can assign cost and revenue postings directly to real estate objects. You can evaluate in the object structure the costs and revenues that the real estate objects incur – with no additional formal structures, such as cost or profit centers. You can use direct-cost assignment to evaluate costs and revenues of different characteristics for real estate objects, such as usage types and regional loca-tions. You can post lost revenues from vacancies to defined cost centers as accrued costs.

Activity allocation. You can allocate, enter, and make additional settlements on internal activities in real estate objects. For example, you can apportion costs for specific activities to tenants by determining and posting such costs to corresponding settlement units and having the service-charge settlement account for such costs.

Costs settlement. You can settle costs incurred on real estate objects or use other account-assignment objects. Real estate objects can receive costs from other account-assignment objects – such as cost centers, orders, or assets. Settlement rules help you determine the portion of costs for particular real estate objects that you can settle with specific recipients.

Activity-based costing. You can deter-mine and allocate overhead costs according to the business processes that drive such costs and allocate the costs to your real estate objects according to various business processes (such as the creation of new contracts, rent adjustments, or notices). You can derive detailed information about the

overhead costs that your real estate objects incur for each business process for increased cost transparency. You can attain visibility to identify options for optimizing business processes among several cost centers. You can use the rules within the process template to determine the quantity of resources and cost drivers.

Controlling tools are available for both real estate objects and contracts. The software allows manual planning of costs, activity inputs, and revenues and lets you compare those values with actual values. With cash flow to planned, you have the option of rolling up planned values into a superior object (such as transferring cash-flow data from building contracts to the building as planned costs). In addition, you can enter a percentage rate of increase when you copy values (such as cash flow to the following year, plus 0.5%).

Documents and Correspondence

Real estate organizations must commu-nicate with a wide variety of business partners, tenants, and vendors. You can use SAP Real Estate Management to generate the many documents – includ-ing letters, e-mail messages, and faxes – that are part of this communication. You may create correspondence for wide distribution as well as individual letters or documents. There is support for event-related correspondence (required for specific, individually created business transactions, such as address changes) as well as for periodic corre-spondence (required for regularly occur-ring and widely distributed business transactions, such as invoices).

SAP records-management function-ality – to structure default document folders per object type and handle approval circulars

SAP document-management function-ality – to manage building leases and other documents

SAP Interactive Forms software by Adobe and SAP smart-form function-ality – to create mass documents based on master data, contracts, or mass-procedure data (such as rent escalations)

Integration with Microsoft Word – to create lease agreements and other indi-vidual documents using existing data

Integration with Microsoft Excel – to facilitate the controlling planning process

SAP workflow – to facilitate automated communication between users for busi-ness processes, such as when getting an approval for creating a contract

You can create online and offline inter-active forms in Adobe PdF thanks to SAP Interactive Forms software (for both wide distribution and individual corre-spondence) and in word-processing applications such as Microsoft Word and lotus Word Pro (for single docu-ments). You can use predefined tem-plates that extract data from SAP Real Estate Management to create documents of either correspondence type. You can then store and track your documents and link them to the relevant real estate properties.


You can use PdF-based sample forms in SAP Interactive Forms to create gen-eral letters and data summaries for each property asset. For leases, you can use preconfigured templates for general letters, data summaries, contract forms, contract account sheets, cost recoveries, percentage-rent settlements, adjust-ments, notices, and notice confirmations – or you can create your own templates.

When you use PdF-based forms, you get support for:• high-performance printing for wide

distribution with optional document archiving

• Automatic insertion of relevant prop-erty data from the software into the correspondence, as well as insertion of relevant customer data

• Creation of correspondence custom-ized for specific business partners

Interactive forms support document and process management. You can use interactive forms internally and to exchange information, such as invoic-es, between companies. Where appli-cable, you can employ digital signature technology.

document and Records ManagementReal estate businesses must access, store, and manage a large and diverse assortment of documents to support their ongoing operations. These docu-ments must be readily available, filed for easy access, or archived as part of long-term record-keeping efforts (see Figure 8).

SAP Real Estate Management can help you access and use such documents efficiently through integration with the SAP Records Management, SAP Easy document Management, and SAP document Builder applications. This powerful integration lets you organize, track, and manage your portfolio-related documents as your real estate portfolios grow. It can also help you link to optical archiving solutions.

Integration with SAP Records Manage-ment can help you:• Create and manage an electronic

record of documents that apply to individual real estate objects

• define a default structure of records using a lease document structure and other templates

• Edit and search for records • Initiate workflow-controlled processes

– such as requesting approvals for lease signatures – from the records themselves

You can create a master property record that describes each real estate object and create or attach related documents – such as construction designs, expert evaluations, or tenant correspondence. When processing activities related to a specific object, you can display the relevant documents directly from the data that describes the property asset. To organize the supporting documents more efficiently, you can specify a folder structure to reflect storage sites for different types of documents. For example, you could design a folder for leases that could include sections for leases, cost-recovery notes, and lease escalations.

Integration with SAP Records Manage-ment and SAP document Builder can help you manage the documents involved in the lease administration process.

You can use the software to classify documents such as portfolio summa-ries, letters, contract forms, presenta-tions, structural drawings, and photos. You can then assign those documents to various real estate objects – such as rental spaces, floors of buildings, or a room – to increase processing efficiency. When you are conducting transactions related to specific properties or spaces, you can quickly display the relevant documents for detailed reference.

Much of the data you want to use with SAP Real Estate Management may be stored as scanned documents in optical archives and accessed as you need them. Tight integration with other SAP software lets you access documents used for:


• Financial accounting• Controlling• Profit-center accounting • Asset accounting• Enterprise asset management and

customer service• Materials management • Project and portfolio management

You can integrate other arbitrary objects, including those from non-SAP software systems. The integration of business workflows lets you use records as starting points for efficient process control. Elements can originate either from the local or remote SAP software as well as from non-SAP software.

other ToolsYou may require nontraditional business practices or approaches to make your real estate operations profitable and efficient. Most business software, how-ever, cannot accommodate changes to or deviation from traditional practices.

In the rare cases when you can modify the software, such changes can make upgrades more complex. When soft-ware constricts your operations, your ability to create competitive differentia-tion from others in your market may be compromised as well.

You can make modifications to SAP Real Estate Management to suit your business requirements – without cus-tomizing the actual application. SAP provides standard tools – including business add-ins, a business data tool set, and business application program-ming interfaces – to help you adapt the application to your unique requirements.

Business Add-InsSAP-designed business add-ins help you deploy additional functions that are not included in the standard software without compromising future upward compatibility of the software during a subsequent upgrade.

Definition functionality lets application programmers define exit points in the source code through which partners or customers can attach additional coding without having to modify the original object.

Implementation functionality lets users customize the logic they need or use standard solutions when available. In both views, SAP software supports a multilevel system landscape that may include such levels as SAP code, country-specific versions, industry solutions, partner requirements, and customer versions. You can create business add-in definitions and implementations at any level of the software system landscape.

Business Data Tool SetThe business data tool set can help you maintain and change master data and simple transaction data for any object. You can use the tool set to define your own fields for dialogs to process real estate contracts or another master data table within SAP Real Estate Manage-ment. You can change the screen lay-outs, screen sequences, or the status of individual fields. You can also use the tool set to determine which fields to dis-play or hide from users, make enhance-ments to the interface, implement your own checks, or save additional data in your own tables.

BAPI Programming InterfacesYou can use BAPI programming inter-faces to distribute the elements of a business process across numerous physically separate systems. These interfaces provide object-oriented access to SAP Real Estate Manage-ment. You can use them to import

Figure 8: Examples of Digital Records

Fax and e-mailScanned

documents SAP business documents (such as leases, buildings, rental objects, and tenant or landlord master data)

notes

Transactions

Reports

document information records

other records or files

Web content

Process information

Interactive forms

officedocuments

Digital Records


or export data to and from graphical software applications, such as CAd and gIS software. The interfaces support the reusability of specific functions and data and third-party software.

Integration with SAP Industry Solutions

Every industry has its unique real estate needs. SAP Real Estate Management integrates smoothly with all industry-specific software from SAP.

Integration with the SAP Public Sector Collection and disbursement (SAP PSCd) application, for example, lets public agencies assign existing contract accounts to real estate contracts or auto-matically create new contract accounts and assign them to the contracts. It is also possible to assign business part-ners to real estate contracts and deter-mine whether postings with SAP PSCd

refer to real estate contracts or contract objects. SAP PSCd can also help you:• Process receivables for real estate

contracts in separate contract accounts or with other receivables on shared contract accounts

• Create connections to account assign-ment objects such as contracts, sites, and properties

• Use contract connections or account assignment bars for manual transac-tions of accounts receivables and accounts payables

• Use the posting interface to transfer relevant account assignments from real estate objects to SAP PSCd and SAP funds management software

Integration with SAP PSCd also helps you use contract accounts receivable and accounts payable functionality for your customer and vendor postings. You can integrate these functions with SAP Real Estate Management to unify open-item accounting in both applications.

Enhancements via business data tool set and the BAPI® programming inter-face can relate to the following real estate business objects:• Sites• Pieces of land• Buildings• Rental objects• Architectural objects• Real estate contracts• Settlement units• Participation groups• Comparative groups

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By letting companies adapt work space more quickly to the changing needs of their core businesses and providing work space services more effectively, SAP Real Estate Management can con-tribute to a company’s top-line growth. For commercial real estate management, the application can enhance revenue and growth by optimizing portfolio value, reducing risk, and facilitating smarter buy and sell decisions. This means a faster return on acquisition and merger investments and a shorter time-to-benefit period for construction and redevelop-ment activities. SAP Real Estate Management can also optimize lease administration by reducing the time and effort involved in handling recurring procedures, meeting legal requirements, and elevating tenant retention rates and related lease reve-nues. This – plus increased customer satisfaction and decreased service and adminis trative costs – can enhance bottom-line growth.

In addition, SAP Real Estate Manage-ment can make costs more visible and controllable for any type of property management. You gain further control of expenses by automating business processes and optimizing maintenance, repairs, and building services. There is also support for improved decision making through the use of automated reports based on such key performance indi cators as vacancies, utilization rates, costs, and revenues.

For managers in the corporate work-place, SAP Real Estate Management provides full transparency into space utilization and the allocation of costs and revenues by department.

Find Out More

Companies in 50 countries across all industries use SAP Real Estate Manage-ment to optimize real estate life-cycle management. SAP Real Estate Management is pow-ered by the SAP netWeaver technology platform. SAP netWeaver unifies tech-nology components into a single plat-form, providing the best way to integrate all systems running SAP or non-SAP software. SAP netWeaver also helps organizations align their IT and business strategies.

To find out how you can benefit from SAP Real Estate Management, visit our Web site at www.sap.com/realestate.

A WIde RAnge OF BuSIneSS BeneFItSdRIVIng REVEnUE And gRoWTh


www.sap.com/realestate

QuICk FACtS www.sap.com/contactsap

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Summary The SAP® Real Estate Management application provides greater insight into and control over all types of property throughout the real estate life cycle. It addresses industry-specific requirements and integrates fully with financial and logistics software from SAP. The appli-cation can help real estate managers improve top- and bottom-line growth, optimize lease administration, and improve decision making.

Business Challenges • Align the real estate portfolio with enterprise strategies and objectives• optimize space utilization, minimize costs, and increase rental income to enhance

revenue• gain greater visibility in a global economy that has increased the geographic diversity

of real estate portfolios• optimize processes for compliance and risk management

Supported Business Processes and Software Functions• Portfolio management – Analyze performance, track property details, manage your

business partners, and handle property acquisition and disposal• Commercial real estate management – Automate tenant searches, contract offers,

lease administration, rent escalation, and third-party property management• Corporate real estate management – optimize space utilization, room reservation and

service ordering, and the planning and execution of employee moves• Facilities management – Plan property investments, monitor construction and modern-

ization projects, and schedule and execute repair and maintenance work• Property support – gain greater control over your records, documents, business data,

and workflows while smoothly integrating lease processes with financial tasks

Business Benefits • Improve top-line growth by adapting work-space needs more quickly and providing

work-space services more effectively• Enhance bottom-line growth by increasing customer satisfaction and decreasing service

and administration costs• Optimize lease administration by more efficiently handling recurring procedures, meeting

legal requirements, and elevating retention rates and related lease revenues• Improve decision making by using automated reports based on key performance

indicators

For More InformationPlease call your SAP representative, or visit our Web site at www.sap.com/realestate.

www.sap.com/realestate