SAP Real Estate Management rapid-deployment solution

Real estate lifecycle management has been playing an increasingly important role over the past years. This should be no surprise considering that, in most companies; real estate represents their balance sheets largest financial asset and is one of their highest operating costs. With this in mind, optimized real estate lifecycle management can have a significant impact on the bottom line.

With the SAP Real Estate Management rapid-deployment solution, you can quickly and affordably implement and automate real estate-related business processes, letting you manage the entire real estate lifecycle in a strategic way that optimizes returns for your business. The solution provides support for end-to-end construction and investment management, lease and space management, and maintenance and repair. You can develop, construct, operate, and deploy property and make costs more visible and controllable, so you can successfully face challenges from compliance, sustainability, and competitive pressure.

Business scope

Benefits

Achieve operational excellence and greater scalability by automated process integration, providing a consistent view of your business

Centralize sources to automate complete portfolio insight and support legal compliance.

Minimize costs and risks through comprehensive monitoring of real estate processes and operations expenditures

Gain visibility, increase process standardization and integration, and automate collaboration with service providers operate more effectively and boost your portfolios profitability.

A. Investment and construction management

Analyze your portfolio, track investment decisions, bid out and award construction services, monitor projects and contractors, and manage cash for adequate funding.

1. Investment Planning

In investment management, the tasks of the asset manager include capturing and analyzing all investment alternatives and their relevant details, reviewing proposals and initiating projects, and performing investment planning across the entire portfolio.

2. Construction Project

In construction project management, the asset manager is responsible for keeping construction projects on track, monitoring project budgets, controlling service fulfillment of contractors and monitoring payments and warranty related to construction contracts.

3. Property Acquisition

After the investment planning, budgeting, and approval of an appropriation request by the asset manager, a property acquisition contract is closed. The agreed purchase price is the basis for posting to accounts payable and posting to the related controlling object. Furthermore, after a fixed asset has been created, the defined purchase price is capitalized in asset accounting.

4. Property Disposal

After the investment planning, budgeting, and approval of the related appropriation request, a property disposal contract is closed. The agreed selling price is the basis for posting the accounts receivables and posting to the related controlling object. Furthermore, the defined selling price needs to be written off in asset accounting

B. Lease and space management

Standardize and automate recurring lease administration activities, such as rent escalation, renewals, and periodic postings to save time and effort and free up capacity for more strategic tasks. Accelerate leasing processes and elevate occupancy and tenant retention rates and their associated revenues.

1. Master Data Management

The real estate manager maintains master data for all objects in the real estate portfolio. Master data objects include business entity, building, and land and rental objects. Business partners, such as tenant, landlord and service provider, are also created.

2. Service Contract

The real estate manager makes an agreement with service providers and energy suppliers regarding the provision of services and energy required to run his or her properties. This includes caretaking and security services, electricity provision, and waste removal.

3. Lease-In

The real estate manager agrees on an expense lease for the usage of a building, land, store, office, or an apartment with a landlord. The contract details are maintained in the contract.

4. Lease-Out

The real estate manager agrees on income leases for the use of a building, land, store, office, or apartment with tenants. The contract details are maintained in the contract.

5. Lease-Out - Free Adjustment

The real estate manager agrees on clauses for free rent adjustment in the lease with the tenant or the landlord. Free adjustment allows for an automatic increase of rental conditions based on a fixed amount or a percentage increase at specific intervals.

6. Lease-Out - Index Adjustment

The real estate manager agrees on clauses for index rent adjustment in the lease with the tenant or the landlord. Index adjustment clauses allow for an automatic increase or decrease of rental conditions based on changed index levels.

7. Lease-Out - Sales-Based Rent

The real estate manager agrees on clauses for sales-based rent in the lease for retail space with the tenant or the landlord. Sales-based rent clauses allow a consistent definition of sales-based rents as a percentage of retail turnover or price per sold unit, including grading, advance payments, and minimum and maximum rents.

8. Accounting

The lease accountant creates postings based on the rental fees maintained in the lease on a regular basis. Accounts payable creates open items on vendor accounts for landlords. Account receivable creates open items on tenant accounts, clears open items, executes dunning, and creates installments.

9. Reminder Dates

The real estate manager maintains reminder dates for real estate objects or a lease in order to monitor critical dates. Critical dates include reviewing rent adjustments, checking for dunning and payment blocks as well as reminders for inspections.

10. Lease-Out - Renewal

The real estate manager agrees on renewal clauses to a lease with a fixed end date with the tenant or the landlord.

11. Notice

The real estate manager can specify multiple notice rules with contract terms that lay down different periods of notice for the contractors (tenant and landlord). Notice can be given for the entire lease contract or for individual rental objects assigned to the lease contract.

12. Overall - Controlling

The controlling business process covers the planning of costs and revenues at cost element level for real estate objects in your portfolio, for the respective periods in a fiscal year.

13. Overall - Reporting

Reporting provides the real estate manager with essential information on real estate objects and contracts. These reports provide an overview of master data objects and contracts, values derived from the cost and revenue postings, as well as planned values.

Business Terms and Process Flow

A lease is a contractually binding agreement between two or more parties. In real estate, this contract is usually between a landlord, or property owner, and a tenant, person who rents the property. The lessee (tenant) agrees to pay the lessor (landlord) for use of a tangible asset (apartment, or property) for an amount of time agreed upon in the lease terms.

Common Examples of Tangible Property That Can be leased in Real Estate:

Commercial Lease

Landlord Notice

Rental Lease

Landlords Rights

Landlord Forms

Residential (apartment or home)

Commercial (retail or office)

Industrial (warehouse)

Land

Advertising Space (bulletin board)

Space on a roof or property (for cell phone towers)

Common Examples of Tenants:

Individual looking to live in residential rental space

A retail store looking for space to operate their business

An office (doctor/business) looking for a space for their practice

Another landlord leasing land to use as parking space for his tenants

A company leasing advertising space on a building

A company leasing land to put up a cell phone tower

What Is the Purpose of a Lease?

A lease is meant to protect both the lessor and the lessee. It defines the length of the agreement, as well as the terms and conditions that both parties must abide by. If the lessor or the lessee breaks the terms of the lease, the lease is no longer binding and the offending party may be subject to legal action and financial penalty for breach of contract.

What Is the Difference Between a Lease and a Rental Agreement?

The two terms have been used interchangeably over the years, but they are not actually the same thing.

A lease is an agreement over a set term. A common lease term is for one year. Some may be as short as six months, others as long as five years.

Unless both parties agree to alter the contract, the terms of the lease cannot be changed until the lease expires. In addition, when a lease expires, the lease does not automatically renew. After expiration, the lease term will either become month to month, or you will have to get the tenant to sign a new lease.

A rental agreement is a much shorter contract. It is typically a 30 day agreement. A rental agreement automatically renews at the end of the term unless either party cancels the contract in writing. The terms of the rental agreement may be altered by either party by providing written notice of the change. In many states, this notice must be given 30 days before any change will be made.