SAP Solution in Detail

SAP ERP
SAP® Real Estate Management
Strategies for Commercial
Real Estate Managers

Commercial real estate

managers are under intense
pressure to increase cor­
porate profit margins. To
achieve this goal, they must
maintain high occupancy
levels, invest in the right
markets at the right time,
deliver projects on time and
on budget, and control
operational costs – all while
strategically planning growth
or diversification. The SAP®
Real Estate Management
application, based on the
SAP ERP application and
the SAP NetWeaver® tech­
nol­ogy platform, serves as
the cornerstone for the life-
cycle management of real
estate property. The soft­
ware supports key industry
processes and provides
robust, integrated analytical
functionality.
Content
4 Prospering in a Complex
Commercial Real Estate
Market
4 Effectively Managing the Real
Estate Property Life Cycle
5 Building Profitability from the
Ground Up
6 Key Functions of SAP Real
Estate Management
6 Generating Flexible Reporting
and Analytics
7 Managing Physical Property
Assets
7 Displaying the Usage View
8 Displaying the Architectural
View
8 Viewing Capital Asset Data
8 Managing Construction and
Tenant Improvements
9 Handling Facility and Service
Requests
9 Tracking Land Ownership
9 Optimizing Lease Administration
10 Contract Type
10 Contacts
10 Terms
10 Property Assignment
10 Lease Measurements
10 Posting Parameters
10 Conditions
11 Performance- or Sales-Based
Rent
11 Rent Escalation or Rent
Adjustments
11 Common Area Maintenance
Reconciliation
11 Reminders
11 Option Rate Method for
Input Tax
11 Overviews
12 Optimizing Lease Processes 20 Building for the Future
12 Giving Notice on an 20 End-to-End Real Estate and
Open-Ended Lease Facilities Life-Cycle
12 Tracking Renewal Options Management
on Fixed-Term Leases 20 Increased Real Estate Portfolio
12 Handling Early Termination Revenue
on a Fixed-Term Lease 20 Improved Space Utilization
12 Managing Sales-Based Leases 20 Optimized Lease Administration
12 Processing Rent Adjustments 20 Controlled Expenses
13 Amending Leases 20 Improved Decision Making
13 Managing Occupancy 21 Foundation for Your Success
13 Tracking Utilization 21 Find Out More
13 Promoting Vacant Space
22 Table of Processes Supported
14 Managing Contacts by SAP Real Estate
14 Managing Documents and Management
Correspondence
14 Storing Documents in a 24 Quick Facts
Repository
14 Centralizing Data Access
14 Creating Mass and Individual
Communication
15 Building Lease Abstracts
15 Executing Transaction
Management
15 Using Optical Archives
16 Maximizing Organizational Skills
16 Streamlining Financial and
Management Accounting
16 Automating Rental Accounting
Processes
18 Improving Real Estate
Controlling Processes
19 Managing Third-Party
Properties and Condominiums
19 Handling Expense Recovery and
Common Area Maintenance
19 Mitigating Risk and Improving
Compliance
Prospering in a Complex
Commercial Real Estate Market
Tools That Support High Performance
and Profitability
For commercial real estate companies,
competing successfully has never
been more challenging. Operations are
becom­ing intrinsically more complex.
Favorable regulations overseas and
declining profitability margins in local
markets are driving many organizations
to expand their international holdings.
Many organizations are diversifying their
portfolio mix to pursue new opportuni­
ties and ease cyclical market swings.
Some enterprises are generating addi­
tional revenue through complimentary
lines of business such as construction
or facilities services.
Profitability is ever more elusive. Rising
energy costs have boosted property
upkeep expenditures. Global expansion
and diversification can create costly
operational impediments, such as
ex­­­pand­­ed compliance efforts and addi­
tional time needed for site selection and
development. The business sys­tems
used by most commercial real estate
companies are ill equipped to meet
these challenges. Multiple legacy sys­
tems and IT vendors can lead to dupli­
cate management efforts that result in
untimely, often inaccurate, information
and inefficient processes. All these
factors can negatively impact overall
portfolio profitability.
Despite these industry realities, com­
pa­ny managers and investors expect
commercial real estate managers to
4 SAP Solution in Detail – SAP Real Estate Management
deliver high performance while devel­op­
ing new strategies, maximizing oppor­
tunities, and avoiding unnecessary
portfolio risk. You must increase profit
margins by maintaining high occupancy
levels, investing in the right markets at
the right time, delivering projects on
time and on budget, and controlling
operational costs – all while strate­
gically planning corporate growth or
diversification.
Effectively Managing the Real
Estate Property Life Cycle
All types of property – including retail,
office, industrial, residential, land –
progress through a similar property life
cycle (see Figure 1). Commercial real
Real Estate
Operations
Construction/
Refurbishment
Acquisition
Investment
Idea
Planning and
Optimization
Figure 1: Property Management Life Cycle
estate managers must handle numer­ous
strategic and operational tasks from the
time a purchase is initially considered
through such stages as acquisition,
construction, refurbishment, leasing,
and final disposition.
Point solutions work well for companies
managing small regional portfolios or
those with little potential for growth or
diversification. However, these solu­tions
come with definite liabilities, especially
for growing organizations.
Often point solutions lack the capacity
and flexibility to handle all property types
and processes. Most offer a limited
range of country localizations to support
local languages, currencies, measure­
Facility
and Service Disposition
Management
ments, regulatory issues, and tax
requirements. Furthermore, only rarely
can these solutions support comple­
mentary lines of business, such as
construction and facilities management.
The most significant shortcoming is that
these products lack fully integrated,
automated functionality. They cannot
provide complete transparency or real-
time access to a unified view of the
business.
Building Profitability from the
Ground Up
Commercial real estate managers can
address these challenges by introduc­
ing the SAP® Real Estate Management
application – a full property-life-cycle
solution – as an integral part of their busi­
ness operations. The SAP Real Estate
Management application has been spe­
cifically developed to meet the needs
of real estate companies. It is part of
the SAP ERP application, the trusted
foundation for business excellence
and innovation, and runs on the SAP
NetWeaver® technology platform.
SAP Real Estate Management provides
a single, integrated data source and a
powerful analytical layer that you can
use to generate customized reporting,
portfolio analysis, and capital planning.
It offers a comprehensive view of your
real estate portfolio and all business Enterprise query,
transactions related to it, allowing you to:
• Accommodate any type of real estate
reporting, and analysis
portfolio mix, including office, indus­ packages from SAP
trial, retail, multifamily, and land assets
• Strategically manage real estate
and Business Objects,
port­folios across all political and an SAP company, help
geo­graphic boundaries
• Administer numerous lease tem­plates,
your company capitalize
support related lease processes, and on the value of accurate
create and distribute documents and
correspondence
and relevant corporate
• Proactively monitor occupancy levels data. These packages
• Automatically generate critical
reminder dates
can help you increase
• Centrally administer all relevant insight into property
contact information
• Recover common area maintenance
portfolio performance,
fees and other expenses make better investment
• Govern rental accounting and
controlling processes
decisions about con­
• Integrate processes with comple­ struc­tion and moderni­
mentary business areas, such as
investments, construction, tenant
za­tion, enhance trans­
improvements, and facility parency of space usage,
management
• Conduct internal and external report­
and improve monitoring
ing from the operational to executive of maintenance and
levels
repair budgets.
With more than 15 years of experience
serving real estate enterprises, SAP
has the depth and breadth of industry
knowledge and solutions necessary to
enhance your control and generate new
insight into your real estate portfolio.
SAP Solution in Detail – SAP Real Estate Management 5
Key Functions of SAP Real Estate
Management
Manage Commercial Operations with
Speed and Agility

Generating Flexible Reporting The SAP software provides reporting

and Analytics and analytics functionality that can help
The contacts related you develop portfolio insight and make
One of the biggest challenges for com­ critical business decisions. The SAP Real
to your portfolio may mercial real estate executives is simply Estate Management application pro­vides
include property man­ gaining insight into the corporate real numerous reports. In addition, the SAP
estate portfolio. In recent years, many NetWeaver Business Intelli­gence com­
agers, lease adminis­ companies that experienced multiple ponent delivers industry-specific ana­
tra­tors, tenants and acquisitions and rapid growth began to lytics and insight, giving you access to
manage their portfolios by instinct alone. key information on the utili­zation and
landlords, owners, and With more complex markets and exten­ operation of your prop­erties. You can
service providers. SAP sive property portfolios, however, such capture data from all integrated SAP
“seat of the pants” management is no solutions – including core finan­cials as
Real Estate Manage­ longer adequate. well as data on proj­ects, facility main­te­
ment helps you create nance, real estate, and legacy systems –
and create reports and key perfor­mance
a unique data record indicator (KPI) reports (see Figure 2).
for each of these con­
tacts and allows you
to assign each contact
one or more roles. You
can create the roles
you need, and you can
specify which roles
can access what port­
folio data or leases.

Figure 2: KPI Reports for Commercial Real Estate Managers

6 SAP Solution in Detail – SAP Real Estate Management

Based on the templates, the software
can generate information on your KPIs
as well as on any aspect of your
business, including:
• Asset information (such as
measurements and locations)
• Occupancy and vacancy reporting
• Lease reporting (such as term,
renewal options, rent roll, lease
measurements, and escalations)
• Tenant and other portfolio contact
information
• Tenant account sheet and status
reporting
• Cost recovery and common area
maintenance details
• Revenues, cost, and profitability
reporting per region, site, building,
piece of land, space, and lease
• Related financial reporting
• Critical date reporting
• Reporting related to facilities man­
agement and construction projects
Based on the open SAP architecture,
the software can combine information
from both SAP and non-SAP software
in industry-related reports and analyt­
ics. Role-based data views provide
man­agers, departments, and teams
company-wide with instant access to
information. What’s more, the software
offers features that help you dissemi­
nate valuable insights about the real
estate portfolio securely; embedded
security functionality ensures data con­
sistency and maintains data integrity.
In addition, you can use enterprise query,
reporting, and analysis packages from
SAP and Business Objects, an SAP
company, to help your company capital­
ize on the value of accurate and relevant
corporate data. These pack­ages can help
you increase insight into property port­
folio performance, make better invest­
ment decisions about con­struc­tion and
modernization, enhance transpar­ency
of space usage, and improve moni­tor­ing
of maintenance and repair budgets.
Managing Physical Property Assets
SAP Real Estate Management can
help you manage any type of physical
property or infrastructure in your port­
folio. In addition to buildings, pieces
of land, and rental properties, you can
manage assets such as sites composed
of single or multiple buildings, struc­
tures such as billboards or towers, and
parking lots.
Depending on your specific require­
ments, you can display and manage
property portfolio data from two per­
spectives: the usage view and the archi­­
tectural view. The usage view shows
SAP Solution in Detail – SAP Real Estate Management
physical real estate assets and leases
from a leasing perspective. The archi­
tectural view shows all structures on
a site, whether or not they are leased.
Displaying the Usage View
With the usage view, you can display
how the property is used by tenants,
including sites, land, buildings, and
rental spaces. Rental objects can be
represented either as fixed rental units
(such as apartments) or as rental
spaces of related pooled space. A
pooled space could be a larger asset,
such as an office or retail area from
which smaller rental units can be
extracted according to specific lease
terms (see Figure 3).
Company Code
Site
Buildings  Land
Rental Units Pooled Spaces
Rental Spaces
Figure 3: Usage View of Portfolio Structure
7

You can use the software to associate
each property asset with related infor­
mation, which can be used for reporting
or other processes. Information that
can be associated with property assets
includes:
• General information – such as address,
dimensions, dates of validity
• Controlling and posting data – useful
for posting data such as tax informa­
tion and allocated cost and revenue
• Contacts or business partners –
such as information about tenants,
owners, or service providers
• Linked data – such as information
about the property’s fixed assets
(for accounting purposes), ongoing
or planned projects, internal orders,
functional location of facilities man­
agement, and architectural objects
When you display physical property
assets in the usage view, the data is
structured hierarchically showing, for
example, a site on one level and all its
associated buildings or pieces of land
on the next. Buildings may have multiple
pooled spaces and rental units. The
software automatically replicates infor­
mation captured at the higher level to
any relevant asset on the lower levels
of the display.
8 SAP Solution in Detail – SAP Real Estate Management
Displaying the Architectural View
The architectural view supplements
the data shown in the usage view with
detailed space information. You can
dis­play detailed information about a
building’s structure and attributes that
may be inconsequential to leasing
pro­cesses yet critical for move man­
age­ment, facilities operations, or other
processes. For example, areas such
as building lobbies, bathrooms, and
storage rooms may not be important
for lease management purposes but
can be sig­nificant for move and facili­
ties management.
You can use the architectural view to:
• Display detailed information about the
architectural structure and space of a
property shown in the usage view
• Specify measurements for a prop­
erty, including area, capacity, and
number of workstations
• Assign relationships to business
partners, such as service providers
• Manage room reservations
• Plan and execute moves
• Link to CAD drawings or documents
produced by a computer-aided facility
management system
Viewing Capital Asset Data
In addition to the usage and architec­
tural views, you can use SAP Real Estate
Management to display data related to
capital assets, such as buildings, large
pieces of equipment, or any other
struc­­tures that depreciate over time.
Data on capital assets is also captured
in the asset accounting functionality
of the SAP ERP Financials solution.
Inte­gra­tion between this software and
SAP Real Estate Management lets you
view all capital assets and capture
associ­ated depreciation costs related
to your portfolio.
Managing Construction and
Tenant Improvements
You can use SAP software to manage
construction projects and the process
of making tenant improvements and
associate the costs of these projects
with specific assets in your real estate
portfolio.
For large construction, refurbishment,
and tenant improvement projects, SAP
offers the project and portfolio man­age­
ment functionality of the SAP ERP Cor­
porate Services solution. You can use
this software to manage a full project
throughout its life cycle or as an aid in
project controlling. For smaller projects
that require no detailed monitoring or
scheduling, you can use the internal
orders functionality of SAP ERP to cap­
ture associated costs of the project.
You can transfer all costs associated
with these activities to the building
or property asset that incurs them.
Because SAP Real Estate Manage­ment,
the project and portfolio management
functionality, and SAP ERP are inte­
grated, you can analyze the costs as
part of your portfolio expenses and
generate total profitability reporting.
You can use the software to display all
projects and internal order assignments
for each site, building, land, and space.
In addition, you can use SAP Real Estate
Management to distribute and charge
project costs to your tenants or asso­ci­
ate these costs with the internal depart­­
ments that requested the improvements.
Handling Facility and Service
Requests
With the SAP software, you can manage
facility upkeep and service requests for
real estate assets within your portfolio.
Combining the functionality of SAP Real
Estate Management with that offered
by other SAP software products pro­
vides commercial real estate compa­nies
with optimum visibility into facility and
service operations.
To manage facility and related services,
you can use the SAP Service and
Asset Management solution. The soft­
ware helps you perform budgeting, plan­
ning, and processing operations. It can
be used to help negotiate service-level
agreements with service providers and
with tenants and to schedule and pro­
cess work orders. You can also use this
software to support cost and revenue
controlling activities.
The enterprise asset management
functionality of SAP Service and Asset
Management offers portfolio hierar­chies
similar to those found in SAP Real
Estate Management. You can use the
hierarchies in the enterprise asset
management software to identify areas
where recurring and ad hoc mainte­nance
activities may occur. You can also specify
maintenance equipment associated with
these areas that might require mainte­
nance, such as elevators or heating,
ventilating, and air conditioning systems.
The maintenance areas identified in the
enterprise asset management software
– also known as functional locations –
can be integrated into the architectural
or usage views in SAP Real Estate
Management. You can then configure
SAP Real Estate Management to auto­
matically include those areas as physi­
cal properties or structures in your
portfolio. When you classify functional
areas as structures, the software can
manage recurring and ad hoc mainte­
nance processes as well as any other
facility-related service requests asso­
ciated with them.
Finally, you can use SAP Real Estate
Management to better understand the
costs and revenues associated with
maintenance and service activities by
settling orders from enterprise asset
management to cost elements in SAP
Real Estate Management. The software
can analyze these values in relation to
your real estate portfolio’s total
profitability.
Tracking Land Ownership
With SAP Real Estate Management,
you can track land registration and
ownership information for a parcel
of land, including its entire history of
purchase and sales contracts, leases,
easements, and right-of-way agree­
ments. The software can track the legal
relationships between owners, related
SAP Solution in Detail – SAP Real Estate Management
rights, encumbrances and restrictions,
liens, and mortgages. Parcels can be
described in detail, including such infor­
mation as addresses, parcel map loca­
tions, area views based on overlays
and classification types, and site devel­
opment aspects. The SAP software can
incorporate local requirements to inte­
grate your internal view of the cor­porate
portfolio with the public and legal view
of a specific land parcel.
Optimizing Lease Administration
To optimize the administration of asset
leases, you can use SAP Real Estate
Management to create lease templates
that define the primary parameters of
different contractual relationships. The
template structure lets you control what
data is entered, and standard SAP
tools are available to validate that data,
which helps minimize human error and
accelerate lease processing. That data
can serve as the basis for numerous
rental accounting and lease adminis­
trative processes.
The software supplies standard lease
templates you can easily modify to pro­
duce all the types of tenant and land­
lord leases you may require. You can
also produce templates for con­tracts
that do not deal directly with space
rental, such as service and sales con­
tracts. With minimal effort you can
delete sections from the template that
do not apply and add sections you do
require. The following sections describe
the basic components in these lease
templates.
9
Contract Type
Contract type is the primary defining
component of each lease template. The
contract type specifies the following:
• Whether the lease should integrate
with accounts receivable or accounts
payable or whether it is used for
intercompany agreements
• What numbering ranges should be
used for the contract number
• Which types of contacts or business
partners – such as tenants or land­lords
– are required or allowed on the lease
• What types of property – for example,
buildings or spaces – must, may, or
must not be included in a specific
contract type
• What rental charges or payments
(collectively called conditions) are
allowed or required
• How software screens are displayed
Contacts
When you specify that contacts are
allowed or required on a lease, you can
use the software to assign a role to
each contact, with contacts managed
through the integration of SAP Real
Estate Management with the business
partner. Potential contact roles can
include tenants, landlords, or owners.
The role selected determines whether
the software shares the information with
other parts of the SAP software. If you
specify on the lease template that the
information should be shared, the con­
tact information will be provided to
the customer or vendor account in the
SAP ERP Financials solution. The SAP
Real Estate Management software also
uses contact information for billing and
pay­ment processes as well as for
communication.
10 SAP Solution in Detail – SAP Real Estate Management
Terms
All lease contracts require terms infor­
mation. Lease terms specify the begin­
ning and ending dates of the lease as
well as information such as lease dura­
tion, termination notice rules, and any
renewal option rules.
Property Assignment
Each lease or contract can include more
than one property as well as parts of
properties. You use this field to specify
which spaces, buildings, and other port­
folio items are part of a lease agreement.
All property assignments are time-
specific. You can assign a property to
a lease for the duration of the lease or
for a specific time segment occurring
within the leased period. When multiple
properties or parts of properties are
included in the same lease or subject
to similar requirements – such as rental
fees or billing cycles – you can group
them to simplify processing.
Lease Measurements
The measurements used for billing,
pay­ment, and other lease-related
calculations originate from the property
data noted on the lease. However, in
some cases, the measurement used
for rent calculation does not accurately
reflect the physical attributes of the
leased space. In these cases, you can
use the lease measurements field to
capture the correct measurement data.
Posting Parameters
You can use the posting parameters
field to capture general information that
affects a lease’s financial and control­
ling postings. This information includes
posting frequency and calculations, tax
and jurisdiction codes, dunning rules,
and controlling information about to
which cost center or business area that
posting is made.
Conditions
You can use the conditions field to indi­
cate the types of rental fees that may
be applied to a lease. You can specify
that a flat rate is to be applied or that
the fee is to be calculated from the
measurements stored for the individual
properties – buildings, spaces, or other
portfolio items – that were assigned to
the lease using the property assign­ment
field. Alternatively, you can specify that
the rental fee is to be calculated from
the lease measurements explicitly
speci­fied for this purpose or from other
sources. To streamline the lease crea­
tion process, you can specify that any
market rates, values, or other calcula­
tions used to assess rental fees default
to preselected values.
All rental fees are time specific. You can
use the software to assess fees begin­
ning with the lease commence­ment date
or for any lease interval. Based on the
conditions specified, you can capture
advanced payments or prepayments
that are reconciled at a later date.
You can use the conditions field to
initiate a controlling or financial posting
action. When you enter conditions on
a lease, the software automatically cre­
ates a cash-flow projection of planned
income or expense, which is posted to
the SAP ERP Financials solution. The
software converts the planned income
or expense data into open items in the
financial software when the periodic
posting run is processed.
You can also specify conditions on
pooled spaces, rental spaces, and rental
units. This allows you to specify that any
market rates, values, or other cal­cu­la­
tions used to assess rental fees for
these spaces default to preselected
values.
Performance- or Sales-Based Rent
You can use the lease template to spec­
ify that a lease is sales based, mean­ing
that the rental fees will be calculated
based on sales revenues or volume
sales. When a lease is sales based, the
software captures all condi­tions, calcu­
lations, and tenant reporting information
that is relevant to the sales-based rent
settlement process.
Rent Escalation or Rent Adjustments
SAP Real Estate Management provides
a mass-rent adjustment tool, which is
useful when you need to adjust rent to
match fair market values or consumer
price indexes. Using the mass-rent
adjustment process can save you from
having to adjust or calculate each lease
individually. For the software to reflect
a lease in any adjustment process, you
must assign the specific process here.
Common Area Maintenance
Reconciliation
The software automatically uses data
entered for leased spaces to identify
leases that have a share in common
area maintenance reconciliation. You
can further adjust this information for
each individual lease. The software
then uses the information captured on
the lease to support recovery calcula­
tions and billing processes.
Reminders
You can specify critical dates on each
lease and have the software generate
a critical-dates report for part or all of
your lease portfolio. Based on the
report criteria you specify, the software
selects upcoming reminders for inclu­
sion in the report. The critical-date
reminders ensure that no critical lease The commercial real
date goes unnoticed and that all action
related to the critical date is captured.
estate industry is paper
intensive. You must
You can manually enter critical dates on
a lease, or you can configure the soft­
access, store, and man­
ware to automatically default to infor­ma­ age a large and diverse
tion entered in other lease areas. For
example, if you enter renewal option
assort­ment of docu­
dates and notices in the terms field, ments and correspon­
the software automatically generates
reminders based on these dates. You
dence to support on­
can specify critical-date descriptions as going operations and to
recurring or one-time events.
remain legally compli­
Option Rate Method for Input Tax ant. SAP provides a
In certain countries where input tax dis­
tribution is legally applicable, you can
number of document
use SAP Real Estate Management to manage­ment and cor­
calculate the deductible and nondeduct­
ible portions of input tax for properties
respon­dence tools that
with mixed rentals, such as commercial inte­grate with the SAP
and residential. The software calculates
option rates monthly. You can manage
Real Estate Manage­
any related correction items as they arise. ment soft­­ware. These
Overviews
tools support central­
You can use the software to specify ized access to portfolio-
frequently used analytical reports that
you want to be able to generate with
related documents and
a keystroke. Examples of reports you correspondence as well
may want to quickly generate include
tenant accounts, assigned buildings
as electronic trans­
and rooms, periodical costs and reve­ action manage­ment.
nues, vacancy rates per site or time
slot, and building size.
SAP Solution in Detail – SAP Real Estate Management 11
Optimizing Lease Processes
With the SAP Real Estate Management
application, you can handle common
commercial real estate industry process­
es, including real estate lease termina­
tion, renewals, and notices as well as
sales-based retail leases, mass-rent
adjustments, and lease amendments.
The following sections describe the
lease processes you can manage with
this software.
Giving Notice on an Open-Ended Lease
Some leases are open ended, with a
clause that specifies a time period or
procedure that must be honored when
a tenant gives notice – providing six
months’ notice to terminate a lease
agreement, for example. Leases may
include additional restrictions, such as
a requirement that notice can be given
only at certain times of the year. You
can use functionality in SAP Real Estate
Management to track these clauses
and requirements and process related
termination notices.
Tracking Renewal Options on
Fixed-Term Leases
With fixed-term leases, the software can
help you capture and track multiple re­
newal options and notice combina­tions
as they are stated in the lease clause.
To simplify lease renewals, you can
create templates for commonly used
renewal options or notice combinations.
Once you enter renewal options and
notice combinations in the lease, the
software’s reminder functionality can
automatically inform you of upcoming
renewal dates. The application can also
send e-mail messages directly to the
12 SAP Solution in Detail – SAP Real Estate Management
responsible contact person. Once the
renewal is activated, the software auto­
matically extends the new lease period,
ensuring that lease and accounting
processes, such as billing, continue
uninterrupted.
You can set up the renewal functionality
to support additional requirements –
month-to-month lease extensions or
lease holdover periods, for example.
Handling Early Termination on a
Fixed-Term Lease
When a lease is terminated before its
scheduled expiration date, you can use
SAP Real Estate Management to pro­
vide full process support. The software
can handle initial tracking of the early
termi­nation request, internal approvals,
related tenant correspondence, and the
application of early termination fees.
Once the early termination is process­ed,
the software can automatically end the
lease, preventing it from inappropri­ately
affecting related processes such as
billing, reminders, or adjustments.
Managing Sales-Based Leases
In retail operations, all or part of a
tenant’s rental charges may be based
on the amount of revenue generated or
the number of units or products sold.
You can use SAP Real Estate Man­age­
ment to handle these percentage- or
sales-based leases.
The software’s sales-based lease func­
tionality captures detailed information
on the sales calculation employed,
including the types of eligible products,
number of products sold, product
schedule or grading, and any effective
sales caps. You can use the software
to capture additional information, such
as how tenant sales are reported,
whether prepayments are expected,
and how the settlements or calcula­tions
are processed.
Once you enter this information in the
lease, the software then tracks report­ed
tenant sales and processes rent calcu­
lations at specified intervals. SAP Real
Estate Management generates open
items in the accounts receivable func­
tionality of SAP ERP for rent to be paid,
entering a sum that is based on the
reported sales. When incoming pay­
ments are processed, the software
clears the open items.
Users can view the sales-based rental
data from the SAP ERP Financials
solution or from the lease in the SAP
Real Estate Management software.
This process is supported by the SAP
Interactive Forms software by Adobe.
The tenant enters sales data using the
SAP Interactive Forms software, which
compiles sales reports and correspon­
dence. The SAP NetWeaver Portal
component supports this process by
enabling the collection of tenant sales
reports and invoices.
The sales-based lease functionality can
also be used for expense leases, for
example, when a retailer leases a shop
from a shopping mall operator.
Processing Rent Adjustments
You can use SAP Real Estate Man­age­
ment to adjust rental fees. The soft­
ware supports adjustments based on
indexes, percentages, and amounts.
You can also use the application to
adjust rents when a property has been

refurbished or modernized, when its
value is reassessed, or to bring the
rent into alignment with comparable
properties.
The two most commonly used adjust­
ment methods are based on indexes
and custom adjustments. Index adjust­
ments are based on indexes published
by governmental organizations. You can
assign these adjustment methods as
well as any additional details and restric­
tions in the lease. The software config­
ures the adjustment methods and main­
tains index points using mea­sures such
as a consumer price index. Based on
the index details cited in the lease and
the index points, the soft­ware pro­poses
rent adjustments when appro­priate.
You can use the custom adjustment
method to increase rental fees based on
a specific percentage or amount. This
method is most effective for mass
pro­cessing, however, you do need to
spec­i­­fy that is it allowed for a specific
lease. To process a custom adjust­ment,
you enter the appropriate values – in
either percentage or amount – and the
soft­ware calculates the new rental fees.
You can review and adjust the proposed
rent amounts and approve them before
the software adjusts the leases. The
custom adjustment process is support­
ed by cor­respondence functionality.
It can also be used to update market
rates on rental spaces.
Amending Leases
During the term of a lease, you may
want to make legal amendments such
as adding space, making rent adjust­
ments, or changing the names of those
responsible for rent payments. You
can use the software to make these
amend­­ments in the original lease,
noting rele­vant start dates. This feature
not only captures the history of the
lease but also ensures that the soft­
ware version of the lease matches the
paper version.
Managing Occupancy
An unoccupied property is an unprofit­
able asset. To maximize revenues, you
must continuously monitor property
occupancy rates and strive to minimize
vacancy. Yet identifying properties
with­out tenants or those about to be
vacated – and being able to easily
access details about the property’s
location, charac­­teristics, and availability
– can be diffi­cult and time consuming
when data is stored in diverse software
applications. Non­integrated software
also makes it dif­fi­cult to accelerate or
SAP Solution in Detail – SAP Real Estate Management
automate the leas­ing process to reduce
property turn­­over time. The following
sections describe functionality provided
by SAP Real Estate Management that
can help you in these areas.
Tracking Utilization
You can use SAP Real Estate Manage­
ment to track the utilization of all your
rental spaces, so you can easily com­
pare and review each property’s occu­
pancy status. You can generate reports
with this information, which can help you
determine occupancy levels over time.
Because you can review this space
uti­li­zation information for all your prop­
er­ties, you can efficiently antici­pate
poten­tial vacancies and take proactive
steps to maximize occupancy levels.
The software offers a reminder func­
tionality which discloses critical lease
dates and projects upcoming vacancies
in advance, helping you take the appro­
priate steps in a timely fashion.
Promoting Vacant Space
Another way to minimize vacancies is
to actively promote vacant or soon-to-
be-vacant properties among potential
and current tenants. SAP Real Estate
Management provides a real estate
search feature that you can use to
match prospective tenants with avail­
able properties, based on the renters’
preferences. Once the tenant selects
a rental space, you can use the soft­
ware to generate a lease offer from the
data. If the offer is accepted, the soft­
ware automatically converts the offer
infor­ma­tion into a new lease agree­ment.
This functionality can reduce lease
turn­over time for residential leases
and other lease types that are highly
standardized.
13

Managing Contacts
Managing the many contacts related to
your portfolio can be challenging, and
they may include property managers,
lease administrators, tenants and land­
lords, owners, and service providers.
SAP Real Estate Management helps
you create a unique data record for
each of these contacts and allows you
to assign each contact one or more
roles. For example, a contact respon­
sible for rent payment could be assigned
the role of a real estate tenant as well
as that of a customer in the accounts
receivable software. You can also create
the roles you need. Contacts can be
companies, individuals, or organiza­
tions, and they may have one or more
addresses.
14 SAP Solution in Detail – SAP Real Estate Management
Because contacts related to your port­
folio are likely to change over time, you
can use the software to limit the terms
of the contact relationship or to add
new contact information for a portfolio
beginning at a specified date. This func­
tionality lets you maintain a full history of
contact information for both your physi­
cal property and your lease portfolio.
Managing Documents and
Correspondence
The commercial real estate industry is
paper intensive. You must access, store,
and manage a large and diverse assort­
ment of documents and correspon­dence
to support ongoing operations and to
remain legally compliant.
SAP provides a number of document
management and correspondence tools
that integrate with the SAP Real Estate
Management software. These tools,
which are described in the following
sections, support centralized access to
portfolio-related documents and corre­
spondence as well as electronic trans­
action management.
Storing Documents in a Repository
The SAP Real Estate Management soft­
ware includes document management
service functionality that allows you to
store, classify, and assign documents
to leases, sites, buildings, land parcels,
and other assets in your portfolio.
These documents can then be viewed
from the software or directly from the
assets in your real estate portfolio. If
your company already has a home­grown
or third-party document repository
solution, you can link documents stored
there directly to any portfolio asset in
SAP Real Estate Management.
Centralizing Data Access
The SAP software simplifies access
to data associated with any asset in
your portfolio. With SAP Real Estate
Man­agement, you can display any
corre­spondence related to a portfolio
asset that was either generated during
a related real estate process or created
manually. For example, you can use the
software to display a lease and then
access the original lease documents
and any lease amendments. You can
display various other correspondence,
such as a letter generated in response
to an index adjustment process or an
ad hoc letter sent to the tenant by the
lease administrator.
Creating Mass and Individual
Communication
Commercial real estate companies
must communicate with a wide variety
of stakeholders. SAP Real Estate
Management provides the functionality
to create and process mass and indi­
vidual tenant correspondence and other
portfolio-related communication, includ­
ing letters, e-mail messages, and faxes.
Mass correspondence can originate
from portfolio-related processes, such
as mass-rent adjustment, cost recov­ery,
or common area maintenance billing, or
it can be manually initiated. With SAP
Real Estate Management, the user
selects the correspondence type from
a list of templates and then adds the
relevant contact name, address, and
details. (For manually generated corre­
spondence, the user initiates this pro­
cess.) Each piece of mass correspon­
dence is assigned to the portfolio asset
for later reference. Although the mass
correspondence tool is most often used
to create correspondence meant for
wide distribution, you can also use it to
process individual letters.
You can also use the SAP Interactive
Forms software by Adobe to create
online and offline templates in Adobe
Portable Document Format (PDF). Using
SAP Interactive Forms is advantageous
when you are creating correspondence
such as a request or an update docu­
ment, because tenants can easily update
the form and return the information to
you. For example, tenants with sales-
based leases must periodically provide
their revenues to meet their lease terms.
To collect this information, you can send
tenants an SAP Interactive Forms reve­
nue sheet or make the form available
through a portal. The template extracts
the data from the SAP software for
each tenant and displays it on the form.
The tenants can update the information
and submit the form. The SAP software
extracts any revised or added data from
the form and updates the database
used by SAP ERP.
For ad hoc correspondence, you can
create individual letters or pieces of
correspondence using Microsoft Word
or Ami Pro. These products allow you
to create generic templates that collect
information from the SAP software –
such as addresses, greetings, and other
default information – which you can Efficiently managing
use in the individual correspon­dence
as needed.
the many tasks carried
out by commercial real
Building Lease Abstracts
You can use the tools designed for cre­
estate managers re­
ating mass correspondence to pre­pare quires strong organi­
a lease abstract template. When you
generate a lease abstract, the soft­ware
zational skills. You
fills in the related lease informa­tion as can use the SAP Real
specified by the template. Lease admin­
istrators can send the abstracts to your
Estate Management
contacts, or you can grant access to software to help you
the abstracts to authorized users.
more effec­tively man­
Executing Transaction Management age such tasks as
To help structure and manage real
estate–related transactional processes,
track­ing critical dates
you can use the SAP Records Manage­ for follow-up acti­vities,
ment application. With this software,
you can define folder templates for each
monitoring the com­ple­
real estate object type, assign docu­ tion of criti­cal due dates,
ments to these folders, and track the
individual versions of each docu­ment.
and issuing re­minders
You can use this software to send for tasks that must be
requests for approval to other corpo­rate
employees responsible for processes,
per­form­ed in speci­fic
such as the acquisition of a new build­ time frames.
ing. Furthermore, you can use the SAP
Real Estate Management software to
attach documents archived in optical
storage devices to the correspondence. after you issue it. Once in the optical
archive, users can access it from
Using Optical Archives the related lease in SAP Real Estate
You can use optical archiving software Management. In this way, you provide
to take a snapshot of documents and full transparency, not only of tenant
correspondence and store the images documents and other received com­
for later retrieval. For example, you can munications but also of all corre­spon­
archive a renewal notice letter right dence generated by the software.
SAP Solution in Detail – SAP Real Estate Management 15
Maximizing Organizational Skills
Efficiently managing the many tasks
carried out by commercial real estate
managers requires strong organiza­
tional skills. You can use the SAP Real
Estate Management software to help
you more effectively manage such tasks
as tracking critical dates for follow-up
activities, monitoring the completion of
critical due dates, and issuing remind­ers
for tasks that must be performed in
specific time frames.
You can use the software to associate
critical dates not only with leases but
also with physical portfolio assets and
items related to cost recovery and
mass-rent adjustment. For example,
leases often have critical dates associ­
ated with term end dates and renewals,
while buildings can have reminders
related to insurance renewal. You can
configure the soft­ware’s remind­­­er func­
tionality to allow for vari­ous kinds of
reminders and renewal-date calculations.
Once you have entered the reminders,
you can use the software to generate
reports based on items such as critical
date criteria, reminder types, physical
property elements, or lease portfolios.
After you complete the follow-up
activities on a reminder, the software
updates the critical-date status in real
time. This update can be made either
as a mass update that is executed
through the report or by manual entry
into the relevant individual lease or
physical property.
16 SAP Solution in Detail – SAP Real Estate Management
Streamlining Financial and
Management Accounting
Managing commercial real estate oper­a­
tions requires extensive interaction with
your company’s financial and account­
ing software. When you use SAP Real
Estate Management, you can stream­line
these operations through the soft­ware’s
integration with the SAP ERP Financials
solution. SAP ERP Financials supports
all major currencies and global account­
ing standards, most industry-specific
standards, and multiple languages.
Unicode support is provided for Asian
characters.
By using the SAP software to optimize
and stabilize these financial processes,
you can redeploy internal resources
to other value-enhancing tasks, such
as tracking unpaid rents and other pay­
ments, increasing tenant and vendor
satisfaction and retention, and stream­
lining planning, budgeting, and fore­
casting activities. Moreover, the SAP
software can help safeguard your com­
pany from risk by facilitating compli­ance
with applicable regulations and statutes.
The following sections describe how you
can take advantage of the inte­gra­tion
between SAP Real Estate Management
and SAP ERP Financials to support
your rental accounting and real estate
controlling operations.
Automating Rental Accounting
Processes
Through its integration with the SAP
ERP Financials solution, SAP Real
Estate Management helps simplify your
account­ing processes by automating
many tasks related to payment process­­
ing. With the software, you can automate
one-time and recurring postings, create
invoices, post incoming payments, man­
age electronic bank statements, carry
out dunning procedures, create install­
ment payments, and withdraw postings
considered to be irrecoverable debts.
When you specify the contract type in
the lease template, you can stipulate
finan­cial and controlling requirements,
for example, whether the lease should:
• Integrate with accounts receivable,
for leases with tenants
• Integrate with accounts payable, for
leases with landlords and service
providers
• Initiate only internal controlling post­
ings, for leases with interdepart­mental
occupancy agreements
• Have no financial or controlling inte­
gration, such as when there are right-
of-way agreements with no associ­ated
charges
Once these integration settings are
established, you can specify through
the contract type field whether contact
with customer or vendor accounts is
required and the type of rental charges
allowed for this lease type. The soft­
ware determines which postings should
occur on the initial billing or payment
for each real estate rental charge as
well as any follow-up periodic postings
and accounts that should be used. The
following sections describe the post­ings
and other transactions that the soft­ware
processes.
Automating Recurring Postings
SAP Real Estate Management provides
a recurring or periodic posting program.
Based on the selection criteria you
choose in the lease type field, this
program can check all active system
leases, create suggested open items in
accounts receivable or accounts pay­
able, update reconciliation accounts in
the general ledger, and propose other
relevant controlling postings. Once you
have reviewed and approved these
proposals, you can use the software to
execute the relevant postings in the
general ledger and subledgers as well
as update the profit-and-loss statement.
If you find a mistake with the posting
run before the open items are cleared,
you can use the software’s reverse
posting program to undo these postings.
You can then correct the mistake and
repeat the posting run. If a user error
causes open items to be cleared by
retroactive changes or other lease rent
adjustment processes, the software
calculates the accurate amounts and
proposes relevant financial and con­trol­
ling follow-up postings. This func­tion­ality
creates a full audit trail that is visible
from both the SAP ERP Financials solu­
tion and from individual leases in the
SAP Real Estate Management software.
Processing One-Time Postings
Occasionally, you must post a one-time
billing or payment, such as a tenant
charge for early termination fees,
improvements, lost keys, or an ad hoc
vendor payment. To process these post­
ings, you can use a real estate–specific
entry screen in the SAP Real Estate
Management software. You can also
use the software to configure tem­
plates for one-time posting in advance,
which speeds data entry and increases
posting accuracy. As with recurring
postings, the software generates one
or more financial and controlling docu­
ments for one-time postings to update
your financial accounting records.
Creating Rent Invoices
In some regions, real estate companies
provide rent invoices to tenants. With
the software’s invoice program, you
can create invoices based on financial
information that can be processed as
a single lease or as a group of leases
if the tenant occupies multiple spaces.
Highly flexible invoice layouts let you
include not only open items that origi­
nate from the SAP ERP Financials solu­
tion but also calculations used by your
business processes and other related
rental charge information.
Processing Manual and Electronic
Incoming Payments
You can use the software to receive
paper or electronic payments. When
tenants pay by check, you can use the
SAP Solution in Detail – SAP Real Estate Management
software to automatically or manually
indicate that the payment was received
and clear the open payment items.
You can specify that the software auto­
mati­cally match bank payment files with
lease-related open items. To clear open
items manually as you receive pay­ments,
you select either the tenant making a
payment or the related lease and apply
the payment to the appropriate open
item. You can perform manual clearing
via standard financial entry screens;
however, using data entry screens that
are specific to your own business pro­
cesses may be more efficient.
When rental payments are executed
through bank transactions, the bank
sends a file with lease, payment, and
tenant information. The SAP software
matches this information against open
items. If the software cannot identify a
match, it highlights the record for excep­
tion processing, which an accounting
clerk handles manually.
Executing Dunning Procedures
Although you can use dunning function­
ality in the SAP ERP Financials solution
for commercial real estate tenants, the
SAP Real Estate Management software
provides additional integration that can
streamline these operations. It provides
the status on each lease and dunning
information, including any special dun­
ning procedure to be followed for a
specific lease. For example, if a tenant
is responsible for multiple leases, you
can set up dunning requirements on a
per-lease basis. You might specify that
the tenant will not be dunned for out­
standing items on one lease, but you
may retain dunning for outstanding items
on his or her other lease commitments.
17
 SAP Real Estate Management provides
screens to facilitate the dunning proce­
dure at both the tenant and lease level.
Operating Leases on a
Straight-Line Basis
Publicly traded companies that abide
To achieve maximum by generally accepted accounting
principles (GAAP) must also comply
efficiencies and opti­ with the regulations put forth by the
mize business value, Financial Accounting Standards Board
(FASB). Statement of Financial
companies with global Accounting Standards No. 13 (FAS13)
property portfolios requires that companies straight-line or
average their revenues or costs related
need to manage their to operating leases throughout the lease
real estate in accor­ term. This regulation ensures that com­
panies recognize costs and revenues
dance with all appli­cable associated with rentals in the period
legal require­ments and that they occur, regardless of lease
provisions such as free-rent periods or
local regu­­la­tions. The graduated rents.
SAP Real Estate Man­
When you create a lease template that
age­ment application requires rental payments be made on
facili­tates compliance a straight-line basis, the SAP software
automatically identifies any noncon­form­
with a wide variety of ing lease payments and calculates the
country- and region- required accrual or deferral postings.
During the recurring posting process,
specific requirements – the software then associates these
such as withholding tax, postings with any actual lease charges.
When changes to the rental charges
tenancy law, tax man­ occur, the software automatically
age­ment, and com­mer­ recalculates and creates an adjustment
posting, which helps your company
cial law – and helps you comply with the FAS13 requirement.
manage global issues
Maintaining Tenant Accounts
such as multi­currency Quickly accessing and processing infor­
handling. mation about your tenants can speed
your work. With SAP Real Estate
Management, authorized users can
18 SAP Solution in Detail – SAP Real Estate Management
readily display tenant information such
as over­all tenant balances, individual
open items, and payment history. They
also can set up installment payment
plans or write off irrecoverable debt.
Tracking Lost Rental Revenue
In the commercial real estate industry,
vacant space equals lost revenue. With
SAP Real Estate Management, you can
easily track revenue lost as a result of
unoccupied rental spaces. You can
check for vacancies individually or let
the software check for unoccupied
space on a scheduled basis. The soft­
ware maintains market rental charges
on spaces available for lease, such as
pooled spaces, rental spaces, and rental
units. If a space is vacant, the software
processes a controlling posting to one
or more specified cost centers for that
period, allowing you to use the lost
rental revenue data in portfolio report­
ing and analysis.
Improving Real Estate Controlling
Processes
Because it is integrated with the con­trol­
ling features of the SAP ERP Financials
solution, SAP Real Estate Management
can automate the controlling postings
you use in planning, budgeting, and
performance monitoring.
All items in your portfolio – including
sites, buildings and structures, spaces,
leases, and cost recovery buckets
(also known as settlement units) – are
handled by the software as cost ele­
ments in the controlling features of the
SAP ERP Financials solution. By default,
the software posts all costs and reve­
nues to the associated portfolio items
and then assigns those amounts to the
proper tenants. This process captures
all cost and revenue data on the physi­
cal portfolio so that it can be used for
reporting.
The software can process costs and
revenues for internal management
purposes. For example, you can post
incoming vendor invoices to a building
and then use the standard controlling
settlement process to move the posted
amounts to specified profit or cost
cen­ters. The software allows you to
specify other ways to recognize leasing-
generated revenues, if you choose.
SAP Real Estate Management provides
tools for planning and budgeting cost
and revenue on both the physical port­
folio and lease levels. The open archi­
tecture on which the software is based
supports the use of business intelli­gence
software from Business Objects as
well as other external budgeting and
planning tools.
Managing Third-Party Properties
and Condominiums
Commercial real estate companies
sometimes manage properties on behalf
of third parties or external owners. With
SAP Real Estate Management, you can
manage complex owner relationships;
multiple management contracts along
with any associated master data, such
as business partner and bank informa­
tion; and the portfolios that are com­mon
to these arrangements. In addition,
SAP Real Estate Management supports
a solution for comprehensive condo­
min­ium owners associations that is
localized for the German market. This
solution not only tracks owners, con­
tracts, and portfolios, but also allows
you to create separate financial state­
ments and pro­vides special cost
recovery and budget­ing functionality.
Handling Expense Recovery and
Common Area Maintenance
Landlords and property owners incur
costs to maintain leased property. Some
lease agreements require tenants to
pay fees to offset or repay these costs.
You can use the SAP software to help
keep track of the costs and distribute
them equitably among tenants.
SAP Real Estate Management provides
real estate–specific cost recovery tools
that help you assign, track, and recoup
costs efficiently and cost-effectively for
each property in your portfolio. With
the software, you can specify expense
categories, participating tenants or prop­
erty spaces, cost distribution methods,
and cost recovery frequen­cies. The
software collects this information and
stores it in a cost recovery bucket or
settlement unit. When you create a
lease for a space, the software auto­
matically defaults to the cost recovery
information specified for that property.
You can further detail cost recovery
information on a per-lease level.
The software processes incoming ven­
dor invoices and assigns them to the
relevant cost recovery buckets. You
can process estimated recovery pre­
pay­ments or advance payments billed
to tenants, where applicable. This
solution also supports cost recoveries
SAP Solution in Detail – SAP Real Estate Management
based on meter readings. The software
calcu­lates the amount each tenant must
pay, based on relevant vendor invoices,
advance payments, and any additional
calculation information speci­fied for either
the cost recovery bucket or the lease.
Finally, the software proposes a recov­
ery distribution plan. Once you review
and approve it, the software posts
recovery charges to relevant tenants.
If a relevant space has been vacant
during any part of the recovery period,
the software posts the associated
cost to the relevant vacant space and
vacancy cost center. You can use the
software to create relevant tenant corre­
spondence and generate extensive
reporting.
Mitigating Risk and Improving
Compliance
To achieve maximum efficiencies and
optimize business value, companies
with global property portfolios need to
manage their real estate as a unified
asset across all political and geographic
boundaries. However, each property
must be managed in accordance with
all applicable legal requirements and
local regulations.
The SAP Real Estate Management
application can help you address these
issues. It facilitates compliance with
a wide variety of country- and region-
specific requirements – such as with­
holding tax, tenancy law, tax manage­
ment, and commercial law – and helps
you manage global issues such as
multicurrency handling.
19
Building for the Future
Benefits of Using SAP for
Commercial Real Estate Operations
Based on the SAP NetWeaver tech­nol­
ogy platform, SAP Real Estate Man­age­
The SAP solution for ment supports your business goals
with intuitive and powerful functionality
commercial real estate that can improve your company’s
offers you the func­tion­ bottom line. Key benefits of the SAP
Real Estate Management application
ality you need to create are summarized here.
competitive differenti­a­
End-to-End Real Estate and
tion and promote your Facilities Life-Cycle Management
success. You can
The fully integrated SAP Real Estate
en­hance growth and Management application provides
visi­bil­i­ty, drive new support for your commercial real estate
processes, enhancing your ability to
revenues while control­ view and control costs.
ling expenses, mitigate
Increased Real Estate Portfolio
risk, and improve com­ Revenue
pliance. It empowers
The SAP software drives revenue and
your teams by encour­ growth for commercial real estate
ag­ing collaboration, en­ opera­tions by optimizing portfolio value,
reducing risk, and facilitating smarter
abling faster response purchase and sales decisions, which
to tenant requests, and enables faster return on acquisition and
merger investments and reduces the
helping them overcome time to benefit for construction and
operational and strate­ redevelopment activities.
gic impediments.
20 SAP Solution in Detail – SAP Real Estate Management
Improved Space Utilization
SAP Real Estate Management helps
commercial real estate managers
analyze vacancies and optimize space
utilization by providing integrated space
management, tracking the assignment
of tenants to office and meeting rooms,
and refining cost allocation.
Optimized Lease Administration
The software optimizes lease adminis­
tration by reducing the time and effort
required to perform recurring proce­
dures, facilitating compliance with legal
regulations and business standards,
and helping you increase occupancy
levels and associated lease revenues.
Controlled Expenses
SAP Real Estate Management helps you
control and track expenses by auto­mat­
ing transactions and optimizing mainte­
nance, repairs, and building services.
Improved Decision Making
SAP provides better decision support
by automating KPI reporting on issues
such as vacancies, utilization rates,
costs, and revenues. The software
increases your insight into property
portfolios, including all lease and finan­
cials data, and it provides full transpar­
ency into space utilization.
Foundation for Your Success
The SAP Blueprint for New
Performance and Profitability
For commercial real estate companies,
growth is an important element of suc­
cess – whether your company pur­sues
growth through geographical expansion,
investing in complimentary lines of busi­­­
ness, or expanding your physical port­
folio mix. Whichever path you choose,
increasing process effi­ciency and keep­
ing a close eye on expenses can unlock
previously untapped investment capital.
The SAP solution for commercial real
estate management offers you the
func­tionality you need to create com­
petitive differentiation and promote
your success. You can enhance growth
and visibility, drive new revenues while
controlling expenses, mitigate risk, and
improve compliance. It empowers your
teams by encouraging collaboration,
enabling faster response to tenant
requests, and helping them overcome
operational and strategic impediments.
With more than 15 years of experience
serving real estate enterprises, SAP
has the depth and breadth of industry
knowledge and solutions necessary to:
• Support your global expansion –
SAP provides the financials function­
ality to support global currencies, tax,
and regulations as well as local real
estate requirements.
• Enhance your operational efficiency
by reducing redundant activities –
The SAP software increases the speed
and accuracy with which you can pro­
cess tasks, while providing full autho­
rization and audit control to quickly
identify issues and resolve them.
• Facilitate your expansion into com­ple­
mentary lines of business, such as
con­struction and facilities management
– The SAP software provides a unified
software environment with full visibil­
ity into financial and process informa­
tion across business lines. Find Out More
• Enable expansion of your asset port­
folio mix – SAP Real Estate Manage­ The SAP Real Estate Management
ment provides the flexibility and application, based on SAP ERP and the
adapt­ability to accommodate any type SAP NetWeaver technology platform,
of real estate property mix – including provides a complete solution that can
office, industrial, multifamily, retail, help your commercial real estate orga­
and land assets –and supports it with nization meet current and future goals.
specific lease and portfolio informa­ To learn more about how SAP can help
tion, processes, reports, and you, call your SAP representative today
correspondence. or visit us at www.sap.com/realestate.
SAP Solution in Detail – SAP Real Estate Management 21
Table of Processes Supported
by SAP Real Estate Management

Activity Benefit

Lease management • Efficiently create real estate contracts for landlords or tenants; set up service, sales, or
leasing contracts; create security deposit agreements
• Enter all important data into the contract, including term, assets, and business partners
• Quickly add lease conditions for the contract and adjustment rules to be used to handle
receivables and payables related to the partner recorded in the contract

Accounting • Efficiently manage all accounting processes

• Automatically transfer conditions entered on the contract to the periodic posting
operations
• Invoice partners automatically
• Instantly credit or debit vacancies to a vacancy cost center
• Automatically post rents and operating costs to the time period the revenue is earned or
the benefits are received
• Handle payment transactions promptly
• Execute accrual and deferral postings

Condition adjustment • Adjust conditions automatically, even when multiple leases must be changed for legal or
contractual reasons
• Choose from several methods to adjust conditions, including free adjustment, index
adjustment, representative list of rents adjustment, adjustment using a comparative
group of apartments, and adjustment of the advance payments made for common area
maintenance reconciliation

Cost recovery Settle all operating costs and heating expenses rapidly, including heating expenses
calculated by external service providers

Percentage-based and sales-based rent Monitor and settle contracts predicated on the tenants’ turnover

Controlling Automate controlling procedures, including planning, assessment, and settlement costs and
revenues from real estate management

22 SAP Solution in Detail – SAP Real Estate Management

Quick Facts www.sap.com /contactsap

Summary
The SAP® Real Estate Management application provides both the scalability and flexibility to
allow your company to move swiftly to execute new strategies, reduce operating costs,
drive revenue, and increase competitive advantage. It is the cornerstone of a full property
life-cycle solution for commercial real estate companies.

Business Challenges
• Overcome operational problems resulting from growth and increased complexity
• Control and reduce expenses
• Increase revenue
• Improve space utilization
• Reduce operational and investment risk
• Analyze property-related data on a strategic and operational level

Supported Business Processes and Software Functions

• Flexible reporting and analytics
• Physical portfolio management
• Lease administration
• Occupancy management
• Contact management
• Document and correspondence management
• Financial and management accounting
• Construction and tenant improvements
• Facilities management

Business Benefits
• Improved management of real estate life cycle using a system that can accommodate
your company’s current and future business
• Enhanced cost control through monitoring and recovering costs related to assets in your
real estate portfolio
• Increased revenue by increasing tenant retention and closely tracking occupancy rates
• Minimized company risk through improved process and portfolio controls,
comprehensive validation procedures, unparalleled transparency, and a full audit trail
• Optimized asset portfolio as a result of using a full set of industry-specific operational
and executive analytical tools
For More Information
To learn more about how SAP can help your commercial real estate organization increase
performance and profitability, call your SAP representative today or visit us at
www.sap.com/realestate.
50 093 207 (09/01)
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