Property Manager

Rent Increase Document

Author: Vaishali Karanth

Creation Date: 10-Jun-2018
Last Updated:
Document Ref:
Version: 1A

Organization: Oracle India Private Limited.

Document Control

Change Record
6
5

Date Author Versio Change Reference

n

10-Jun- Vaishali Karanth 1A Initial document

2018

Reviewers

Name Position

Jai Thakkar Manager, Product Support

Audience

Name Position

Product Support Team Internal.

Development Team
Contents
1. Overview ............................................................................................................................................. 6

2. Rent increase Agreement ...................................................................................................................... 6

2.1 Rent Increase Header Tab ......................................................................................................... 7

2.1.1 Lease Details .............................................................................................................................. 7

2.1.2 Rent Increase Details................................................................................................................. 8

2.2 Agreement Tab ........................................................................................................................... 9

2.2.1 Details ......................................................................................................................................... 9

2.2.2 Defaults.................................................................................................................................... 11

2.3 Basis Periods tab....................................................................................................................... 12

2.4 Constraints ................................................................................................................................ 14

3 Flow Diagram of Table Mapping................................................................................................... 16

4 Rent Increase Agreement Setup and Transaction flow............................................................... 16

4.1 Prerequisite Setup .......................................................................................................................... 17

4.1.1 Creating the Main lease .......................................................................................................... 17

4.1.2. Create Index History and Index values .............................................................................. 17

4.2 Rent Increase Agreement Setup ................................................................................................... 19

4.3 Generate Rent Increase Periods ................................................................................................... 22

4.4 Rent Increase Calculations ............................................................................................................ 23

4.5 Approve Rent increase Terms Concurrent ................................................................................. 25

5. Rent Increase Calculation.................................................................................................................... 28

5.1 Fixed Rate Calculation – Basis type Compound........................................................................ 28

5.2 Fixed Rate Calculation – Basis type Fixed .................................................................................. 29

5.3 Fixed Rate Calculation – Basis type Rolling ............................................................................... 30

 5.4 Fixed Rate Calculation – Basis type Compound and Retail Initial Basis Yes ........................ 31

5.5 Index Only Calculation – Basis type Fixed and Reference period Base Year ........................ 33

5.6 Index Only Calculation – Basis type Compound and Reference period Previous year –use
previous current index ........................................................................................................................ 35

5.7 Index Only Calculation – Basis type Rolling and Reference period Previous year –use
previous current index ........................................................................................................................ 36

5.8 Index Only Calculation – Basis type compound and Negative Rent ‘This period’ .............. 38

5.9 Index Only Calculation – Basis type compound and Negative Rent ‘ Next period’ ............ 39

5.10 Index Only Calculation – Basis type compound and Negative Rent ‘ Ignore’.................... 41

5.11 Greater off Calculation – Basis type Compound and Negative Rent ‘ Ignore’ ................. 43

5.12 Lesser off Calculation – Basis type Compound and Negative Rent ‘ Ignore’ ................... 44

5.13 Rent increase calculation based on Term template ................................................................ 46

5.14 Rent increase calculation when Index Finder is set .............................................................. 48

5.14 .1 Always Finder date ............................................................................................................. 48

5.14 .2 Default Most Recent............................................................................................................ 50

5.14 .3 Always finder date without Backbill................................................................................ 51

5.15. Rent Increate Back Bill calculation............................................................................................ 52

5.15.1 One Time Backbill ................................................................................................................. 53

5.15.2 Single Term ............................................................................................................................ 54

5.15.3 Recurring Backbill ................................................................................................................. 55

5.16. Rent increase calculation with Constraints % ......................................................................... 56

6. Transactions on the Main lease which will have an impact on Rent Increase ............................ 59

6.1 Adding a new Payment term ....................................................................................................... 59

6.1.1 Adding a term before the rent increase term is approved ................................................ 59

6.1.2 Adding a term after the rent increase term is approved ................................................... 61
6.2 Early Termination of the Lease .................................................................................................... 63

6.3 Extending the lease term ............................................................................................................... 64

 1. Overview
Normally when a property is rented, there will be an agreement between landlord and lessee to
increase the lease amount over a pre-defined time. The increase is agreed based on the specific
amounts of payment/billing lines of the main lease or it can on cumulated amounts of the lease.

Oracle Property Manager’s Rent Increase feature helps to automatically increase base rent either
by a fixed percentage or by an amount proportional to the index change. Fixed percentage
increase raises rental costs with a predetermined percentage which is agreed by both land lord
and lessee where as index increase raises the rent agreement based on the inflation by raising
rent every year in proportion to hikes in consumer price indexes.

2. Rent increase Agreement

To setup a rent increase, navigate to Oracle Property Manager > Lease and Documents >
Rent Increase > Enter Rent Increase. The below form will be opened
2.1 Rent Increase Header Tab

2.1.1 Lease Details

Operating Unit:- The operating unit to which the rent agreement belongs.

Name:- The main lease name against which the rent agreement is created. This LOV will
show all the existing leases and it is a mandatory field.

Number:- The main lease number which is linked to the rent increase agreement. If the lease

name is already selected, the number will default. This field is required.

Class:- The lease class gets defaulted from the main lease setup and cannot be updated here

Commencement Date:- The lease commencement date is a display-only date field that

defaults from the Lease window.

Termination Date:- The lease termination date is a display-only field that defaults from

the Lease window.

Location Code:- The primary location associated with the main lease. If the main lease has
multiple locations associated, then user can override the primary location defaulted to any
other location associated with the lease. If the main lease does not have any primary location
associated with it then the field will be blank.
2.1.2 Rent Increase Details

Number:- This field is required if automatic number generation is set to off in System options
setup. If the system option has automatic Number generation yet to yes, then the rent increase
number will be automatically generated.

Index Type:- The name of the index you want to use with the rent increase agreement.

Commencement Date:- The rent increase commencement date. It must be between the main
lease commencement and termination dates. It defaults to one year greater than the
commencement date of the lease, but can be overridden. It is used to generate rent increase
periods. This field is required.

Termination Date:- The rent increase termination date must lie between the main lease
commencement and termination dates and must be equal to, or later than, the rent increase
commencement date. It defaults to the termination date of the lease, but can be overridden. The
rent increase termination date cannot be greater than the main lease termination date. This is
the last date by which rent increases can be evaluated.

User Responsible. This field is required shows the person responsibility for creating the rent
increase.
2.2 Agreement Tab

2.2.1 Details

Assess in Years:- The frequency, in years, that rent increase is assessed / increased. This field is
required and based on the value in this field the periods in basis period tab will be generated.

Date Assessed:- The date of every year on which rent increase is assessed. The date in this field
needs to be entered as day-month-year, e.g. DD-MMM-YYYY and like schedule date even the
date value in this field cannot exceed the 28th day of any month.

Base Year:- The base year value is required if the reference period option is set as ‘base year’
and this field is not mandatory if ‘Default Relation’ option is set to ‘Fixed Rate only’. The base
year field is formatted as DD-MMM-YY.

Increase On:- The Increase On field is a validated list of values and it shows all the values from
the ‘Type’ field of the main lease attached to the rent increase agreement. If there is no base rent
in the main lease, then base rent will not appear in this LOV. If you select Operating Expenses,
the system adds all the payments or billings of the type operating expense for the period
duration. A payment/billing term of Base Rent must exist in the main lease for base rent to
appear in the LOV.

The value in this field can be changed even after calculating the rent increase amount and
system will reset the initial basis amount once it is changed and the same will be recalculated
during the next rent increase calculated
Gross check box:- The field denotes if the system should take into account all the terms defined
in the main lease for calculation of the basis amount. The Gross check box and the Increase On
fields are mutually exclusive.

Reference Period:- The Reference period LOV shows

 Base Year - All the calculations are compared to the values in the Base Period and if
reference period is set to Base year, the Basis Type has to be ‘Fixed type’. You cannot
select the Basis Type of Rolling or Compounded if the Reference Period is Base Year.

 Previous Year use Assessment Date Duration - All increases are calculated based on
the previous rent increase period and the Basis Type can be either Rolling or
Compounded. It cannot be fixed.

 Previous Year-Use Assessment Date Duration- The current index value is compared
to the previous year index value.

Basis Type :-The basis type can be

 Fixed - Basis stays the same from period to period.

 Rolling - The basis for each new period is calculated as selecting all payment/billing
items, depending on the value of the Increase On field, that lie within the basis start
and end dates.

 Compound- System will add this year's rent, plus the previous year's rent increase,
to calculate the new basis.

Index Finder: The Index Finder field is a scroll box containing three values and a contingency
default if the index is unavailable. The three values include the following:

• Always Finder Date without BackBill - The finder date is always used
 • Default Most Recent - The most recent index date defaults

• Always Finder Date with BackBill - The systems waits until the index date is
available. It then creates an extra payment/billing term for the back billed amount

2.2.2 Defaults

Default Relation:- This option decides whether the rent increase % will be manually calculated
or using indexes. The available options are

• Fixed Rate only – The rent increase % will be based on the fixed rate entered in
‘Default Fixed Rate’ field

• Index Only – The increase % will be based on the index values entered

• Greater of – The fixed rate and Index % will be compared and the higher of both will
be considered

• Lesser of - The fixed rate and Index % will be compared and the lesser of both will be
considered

Default Fixed Rate%:- The optional default basis percentage to be used for calculations. This
field is disabled when the ‘default Relation’ is set to ‘Index Only’. In all other ‘default Relation’
types this field is mandatory

Term Template:- The term template used for payment/billing purposes.

Negative Rent:- This field has three options i.e

• Ignore: Choosing this value will cause the system to ignore the negative rent.

• This Period: This value recognizes the negative rent in this period.
 • Next Period: Choosing this value will pass on the negative rent as an abatement
to the next period.

The default is to disallow negative rent increase. This field is required.

Spread Frequency:- The frequency in which the annual invoiced amount is spread over the
year. It cannot be updated after one rent increase invoice has been exported.

Index Finder Months:- This is the number that will be added to the Date Assessed to find the
Index Finder Date for each period. The number can be positive, negative or zero. This field is
required and defaults to -2.

Initial Basis:- The Basis rent to be used in calculations of the first period. System picks up all the
payments or billings lines with the value specified in ‘Increase on’ option for the period and
puts the sum in this field. Although you can update this field, once the basis amounts in the
basis periods have been calculated, updating the initial basis in the Agreements tabbed region
would not change the basis amounts in the periods dynamically. To recalculate, you would first
have to Undo periods or delete the individual basis amounts.

Rounding Flag:- The rounding flag check box field controls whether or not the payment term
amount is rounded.

Aggregation :- Select this check box to create rent increase terms based on the terms in the main
lease (that are the basis for the rent increase) and to create multiple rent increase terms. Oracle
Property Manager allocates the net rent increase assessed for a period to each rent increase term
in proportion to the amounts in the main lease terms. In short a separate rent increase terms will
be created for each payment / Billing terms.

Retain initial basis:- If the check box is checked, and the initial basis field is not null, the initial
basis is not overridden. If the check box is selected and the initial basis is null, the null initial
basis is overridden and replaced with a new calculated value.

2.3 Basis Periods tab

The fields in the basis period tab are system populated values and gets automatically
populated once all the information is rent increase header and agreement tabs are
entered and basis terms are selected against which rent increase need to be created. Post
that we need to click on ‘Generate Periods’ option which will generate all the periods
based on the setup in agreement tab.
 Click ‘ Generate Periods’
option to generate the
Periods

Number:- This is a system generated field and shows the number of the periods,
distinguished by assessment dates.

Date Assessed :- The date the rent increase amount is assessed.

Start Date :- This value is system generated and shows the basis start date. Normally
basis start date is 366 days prior to the Assess Date.

End Date. The Basis End date is the day prior to the Assessed Date.

Index Finder Date. The index finder date is the sum of the values of the Date Assessed
plus the Index Finder Months. This value is defaulted into the Index Finder Date field
for each period. The index finder date is the date associated with the index and is the
date used to select the current index value. You can update the Index Finder Date field.

Actual Index Date. The actual index date represents the index finder date used to
calculate the previous index. This field is especially useful in determining the index
finder date for the previous index when the Default Most Recent option is selected in
the Index Finder Method field.

Annualized Basis:- The basis is calculated for all the schedule items between the Basis
Start and End dates excluding the One Time payment terms. It is a system generated
value.
 Relationship :-Shows the value used for ‘default relationship’ value for the rent increase
agreement. The possible values are Greater Of, Lesser Of, Basis Only, and Index Only.

Index Change %. The Index Change % is the system-calculated index change, and
Factors in base period or previous period.

Basis Change %. The user-entered % of basis change to be compared with the index %
change. If rent increases are fixed, then this field is required and user entered. If there is
a comparative, such as the greater of or the lesser of, then this field is required.

Unconstrained Rent Due. The calculated annualized rent increase amount.

Constrained Rent Due. The constraints from Constraints window are applied to the
unconstrained rent increase. Constraints from Negative Rent in the Agreement tabbed
region are also applied.

2.4 Constraints

Constraint Proration:

This option allows to prorate the constraint amount/percent. The options are:

 No Proration - the constraint condition will apply in all cases

 Days Per Year - the prorate will be calculated as the days per year between the
Proration Start Date and the rent increase Commencement Date over 365/366
days upon leap year and the result multiplied with constraint amount.

 Full and Partial Months per Year - the prorate will be calculated as the number of
months between the Proration Start Date and the rent increase Commencement
Date over 12 months and the result multiplied with the constraint amount.
Increase Over Constraint:-

You can define the treatment of the amounts that exceed the rent increase maximum
constraints. The available options include the following:

 No Carry Forward: If you use the No Carry Forward option, none of the
amounts in excess of the rent increase maximum constraints are carried forward
when the calculated CPI or the basis percentage rent increase exceeds the
maximum constrained increase allowed.

 Carry Forward Percentage: If you use the Carry Forward Percentage option, the
amounts in excess of the rent increase maximum constraints are carried forward
in the form of a percentage.

 Carry Forward Amount: If you use the Carry Forward Amount option, the
amounts in excess of the rent increase maximum constraints are carried forward
to subsequent periods as numeric amounts.

Scope:- The scope poplist consists of two values: Rent Due or Period to Period Increase.

Minimum Amount:- The Minimum Amount constraint is mutually exclusive with the
Minimum Percentage constraint.

Maximum Amount:- The Maximum Amount constraint is mutually exclusive with the
Maximum Percentage constraint and must be equal to or greater than the Minimum
Amount.

Minimum Percentage:- The Minimum Percentage increase constraint is mutually

exclusive with the Minimum Amount constraint.

Maximum Percentage:- The Maximum Percentage constraint is mutually exclusive with

the Maximum Amount constraint and must be equal to or greater than the Minimum
Percentage.
 3 Flow Diagram of Table Mapping

PN_INDEX_LEASES_ALL

PN_INDEX_LEASE_PERIODS_ALL PN_INDEX_LEASE_CONSTRAIN
TS_ALL

In addition to above tables, PN_INDEX_EXCLUDE_TERM_ALL table will also gets

populated with the details of the terms that are excluded i.e the terms existing in lease
but not included in rent increase agreement.

4 Rent Increase Agreement Setup and Transaction flow

While setting up the rent increase agreement there are multiple steps that need to be
followed. After you complete a step, then only you can continue on to the next step, or you
can stop the process at that point, and return to the next step at a later time. The steps
involved are
4.1 Prerequisite Setup

4.1.1 Creating the Main lease

Before setting the rent increase setup the main lease has to be entered and it should have at least
one billing/payment term created.

Also the lease status has be either Final, Lease Ordered and Signed Lease

The main lease can be defined by navigating to Leases and Documents > Main Lease > Enter
Leases and Documents.

Can be Lease Ordered or

Signed Lease also

Atleast one Payment term

should exist

4.1.2. Create Index History and Index values

In Property manager, rent increase % every year will be based on the inflation in consumer
price indexes. We can define multiple index type based on the requirement and also the same
index can be used across multiple leases.

The index values can be changed or updated in Index History window any time. However, if
Oracle Property Manager detects that the changed value are used for rent increase calculations,
it gives you the option either to continue with the change or to cancel. If you continue with the
change, Oracle Property Manager initiates the “Recalculate Index Periods for Updated Index
History Lines” concurrent program that updates the rent increase agreements affected by this
change, including all leases using this value. It does not affect periods that have approved index
rent terms.

To Define Index navigate to

 Index Name
Indicates from where the index
information is derived

Index date and Index values

Note :- Only value entered in Actual Index will be used for calculating the rent increase. The
two other columns like Unadjusted 1 and Unadjusted 2 are optional columns and it will not be
used in rent increase calculation. The index details defined will be stored in
 4.2 Rent Increase Agreement Setup
The next step in rent increase workflow is to set up the rent increase agreement. The navigation
is

Leases and Documents > Rent Increase >Enter Rent Increase. The rent increase agreement form
has 3 sections.

Lease Details
Rent increase
Section
Details Section

Rent increase agreement Details and other default values

based on which the rent increase % will be derived by the
system

Once the Agreement setup is done, the next step would be to SAVE the details. Once we
save
 Gets enabled after
saving the Rent
Increase Agreement

Click on ‘Basis Terms’ button to select the Payment terms to be included in rent increase
agreement.
 Even though Lease has
many Payment terms, only
one is appearing in Basis
term form because in
Agreement we have
selected the ‘Increase on’
as ‘Index’

As per the current functionality, rent increase terms cannot be created on ‘one time’
payment terms.

In the Basis Terms form, all the terms matching the option set in ‘Increase on’ will be
shown. If we want to exclude any of such terms, we need to uncheck the ‘Include’
option.

Uncheck for the lines

which needs to be
excluded

At this stage, at table level data will be populated only in PN_INDEX_LEASES_ALL

table which will store the details of rent increase agreement details
4.3 Generate Rent Increase Periods
The next step would to be generating the periods of the rent increase between the
Commencement Date and Termination Date of the rent increase agreement. To generate periods
navigate to Basis Periods tab of the rent increase agreement

Click ‘ Generate Periods’

option to generate the
Periods

Once we click on Generate periods button the periods will get populated in the basis periods
tab.
 Shows the Relationship
Defined in Agreement
tab . If required, it can be
change for a particular
period

Basis periods will generated depending the options set for Assess in Years and Date
Assessed. In our example, the

Rent Increase Agreement Start and End date – 01st Jan 2017 and 31st Dec 2020

Assess in years – 1

Date assessed – 01st Jan 2017

So basis period is generated for all the years starting from 01st Jan 2016.

In short Assess in Years will provide the frequency on which the rent increase terms will
be generated. If the value is 1 then terms will be created for each year between the
Commencement Date and Termination Date. The Date Assessed will provide the date
for the second rent increase period.

Once the periods are generated, the period details will be stored in

4.4 Rent Increase Calculations

Once the rent increase periods are generated, the next step would be to calculate the rent
increase. To calculate the rent increase amount
 Click ‘ Calculate All’ to
calculate the rent
increase amount

System will generate the below message once the ‘calculate All’ button is clicked

We can select the option of ‘Calculate All’. Once the calculate option is selected, below
confirmation message will shown to confirm the rent increase calculation.
 Now the rent increase amount is calculated based on the options set in agreement tab to
calculate the rent increase.

If the Constraints option is used then the results of each period is compared with the
constraints option and the rent increase amounts are automatically re-adjusted if the
constraint applies.

4.5 Approve Rent increase Terms Concurrent

Once the rent increase amount is calculated, the next step would be to approve the rent increase
terms and add it to main lease. There are two ways to approve the rent increase terms i.e

1. Approve Rent increase Terms

For mass approval of Rent Increase terms, use the Approve Rent Increase Terms
concurrent program . The navigation is Lease and Documents> Rent Increase> Approve
Rent Increase Terms
 In Approve Rent Increase Terms concurrent many rent increase agreements can be
approved simultaneously by selecting the different available parameters.

2. Manual Approval.

Other way of approving rent increase agreement is via rent increase agreement form. In
rent increase form, navigate to

Click ‘ Terms’ Button

The below terms form will open

Change the Status to
‘Approved’

Concurrent is fired to
approve the rent Increase

At table level, once the rent increase terms are approved then

An Amendment transaction is
generated for rent increase

Index period id is the connecting link

between PN_INDEX_LEASE_PERIODS_ALL
and PN_PAYMENT_TERM_ALL
 In PN_PAYMENT_TERMS_ALL table separate terms are inserted for each basis
period and the rent amount is calculated based on the rent increase %.

5. Rent Increase Calculation

5.1 Fixed Rate Calculation – Basis type Compound

Agreement setup is as follows

Year 1 Basis Amount Increase Calculation Rent increase

% amount

1st Jan 2017 - 10000 5% 10000*5% 500.00

31 Dec 2020
st

1st Jan 2018 - 10500 5% 10500*5% 525.00

31st Dec 2020

1st Jan 2019- 11025 5% 11025*5% 551.25

31st Dec 2020

1st Jan 2020- 11576.25 5% 11576.25*5% 578.81

31st Dec 2020
5.2 Fixed Rate Calculation – Basis type Fixed

When Basis type is left blank,

it will treated as ‘Fixed ‘

Year 1 Basis Amount Increase Calculation Rent increase

% amount

1st Jan 2017 - 10000 5% 10000*5% 500.00

31st Dec 2020

1st Jan 2018 - 10000 5% 10000*5% 500.00

31 Dec 2020
st

1st Jan 2019- 10000 5% 10000*5% 500.00

31 Dec 2020
st

1st Jan 2020- 10000 5% 10000*5% 500.00

31 Dec 2020
st
5.3 Fixed Rate Calculation – Basis type Rolling
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2020 - -

Payment Term 01-Jan-2016 31-Dec-2020 10000 Monthly

Payment Term 01-Jan-2016 31-Dec-2016 15000 Monthly

The agreement is set as follows

 Year 1 Basis Amount Increase Calculation Rent increase
% amount

1st Jan 2017 - 25000 5% 25000*5% 1250.00

31 Dec 2020
st

1st Jan 2018 - 10000 5% 10000*5% 500.00

31 Dec 2020
st

1st Jan 2019- 10000 5% 10000*5% 500.00

31 Dec 2020
st

1st Jan 2020- 10000 5% 10000*5% 500.00

31st Dec 2020

5.4 Fixed Rate Calculation – Basis type Compound and Retail Initial Basis Yes
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2020 - -

Payment Term 01-Jan-2016 31-Dec-2020 10000 Monthly

Payment Term 01-Jan-2016 31-Dec-2016 15000 Monthly

Year 1 Basis Amount Increase Calculation Rent increase
% amount

1st Jan 2017 - 25000 5% 25000*5% 1250.00

31 Dec 2020
st

1st Jan 2018 - 11250 5% 11250*5% 562.50

31 Dec 2020
st

1st Jan 2019- 11812.5 5% 11812.5*5% 590.63

31st Dec 2020

1st Jan 2020- 12403.13 5% 12403.13*5% 620.16

31st Dec 2020
5.5 Index Only Calculation – Basis type Fixed and Reference period Base Year
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

Payment Term 01-Jan-2016 31-Dec-2016 8000 Monthly

 Year 1 Basis Previous Current Index % Change Calculation Rent
Amount Index Index increase
value value amount

1st Jan 18000 120.7 130.9 (130.9-120.7)/ 18000*8.450704% 1521.13

2017 - 120.7*100=8.450704
31st Dec
2019

1st Jan 18000 120.7 140.9 (140.9-120.7)/ 18000*16.73571% 3012.43

2018 - 120.7*100=16.73571
31 Dec
st

2019

1st Jan 18000 120.7 150.7 (150.7-120.7)/ 18000*24.85501% 4473.90

2019- 120.7*100=24.85501
31st Dec
2019

The details of index used and the change in index can be seen in

Shows the Date from

Annual Amount which indexes are
picked
5.6 Index Only Calculation – Basis type Compound and Reference period Previous year
–use previous current index
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

Payment Term 01-Jan-2016 31-Dec-2016 5000 Monthly

 Year 1 Basis Amount Previou Curre Index % Change Calculation Rent
s Index nt increas
value Index e
value amoun
t

1st Jan 15000 120.7 130.9 (130.9-120.7)/ 15000*8.450704% 1267.61

2017 - 120.7*100=8.450704
31 Dec
st

2019

1st Jan 10000 130.9 140.9 (140.9-130.9)/ 11267.61*7.639419% 860.78

2018 - +1267.61= 130.9*100=7.639419
31st Dec
11267.61
2019

1st Jan 11267.61 140.9 150.7 (150.7-140.9)/ 12128.39*6.955287% 843.56

2019- +860.78=12128 140.9*100=6.955287
31st Dec .39
2019

5.7 Index Only Calculation – Basis type Rolling and Reference period Previous year –use
previous current index
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

Payment Term 01-Jan-2016 31-Dec-2016 5000 Monthly

Year 1 Basis Amount Previou Curre Index % Change Calculation Rent
s Index nt increas
value Index e
value amoun
t

1st Jan 15000 120.7 130.9 (130.9-120.7)/ 15000*8.450704% 1267.61

2017 -31 st 120.7*100=8.450704
Dec 2019

1st Jan 10000 130.9 140.9 (140.9-130.9)/ 10000*7.639419% 763.94

2018 -31 st 130.9*100=7.639419
Dec 2019

1st Jan 10000 140.9 150.7 (150.7-140.9)/ 10000*6.955287% 695.53

2019-31st 140.9*100=6.955287
Dec 2019
5.8 Index Only Calculation – Basis type compound and Negative Rent ‘This period’
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

Agreement is set as follows

Negative amount is
charged in the
current period itself
 Year 1 Basis Previous Curre Index % Change Calculation Rent
Amount Index nt increase
value Index amount
value

1st Jan 10000 120.7 101.1 (101.1-120.7)/ 10000*-16.2386% -1623.86

2017 -31 st 120.7*100=-16.2386
Dec 2019

1st Jan 8376.14 101.1 140.9 (140.9-101.1)/ 8376.14*39.36696% 3297.43

2018 -31st 101.1*100=39.36696
Dec 2019

1st Jan 11673.57 140.9 150.7 (150.7-140.9)/ 11673.5*6.955287% 811.93

2019-31 st 140.9*100=6.955287
Dec 2019

5.9 Index Only Calculation – Basis type compound and Negative Rent ‘ Next period’
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

 Rent Increase amount is not
calculated for 1st Jan 2017 to
31st Jan 2017 period because it
was a negative amount for that
period

Year 1 Basis Previous Curre Index % Change Calculation Rent

Amount Index nt increase
value Index amount
value

1st Jan 2017 - 10000 120.7 101.1 (101.1-120.7)/ 10000*-16.2386% -1623.86

31 Dec
st 120.7*100=-16.2386
2019

1st Jan 2018 - 10000 101.1 140.9 (140.9-101.1)/ 10000*39.36696% 2312.84

31st Dec 101.1*100=39.36696
(3936.70-
2019
1623.86)*
**

1st Jan 2019- 12312.84 140.9 150.7 (150.7-140.9)/ 12312.84*6.955287% 856.39

31 Dec
st 140.9*100=6.955287
2019

*** At rent increase agreement level, since the negative rent option is set to ‘Next period’
the negative rent amount calculated for the first year i.e 1st jan 2017 to 31st Dec 2017 got
 adjusted in next fiscal year. The same details can be seen in
PN_INDEX_LEASE_PERIODS_ALL

Actual Rent increase amount

and Adjusted rent increase
Amount

5.10 Index Only Calculation – Basis type compound and Negative Rent ‘ Ignore’
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

Rent Increase amount for 1st

Jan 2017 to 31st Jan 2017
period is not calculated
because it was a negative
amount and Negative rent
option is set to ‘Ignore’
 Year 1 Basis Previou Curre Index % Change Calculation Rent
Amount s Index nt increase
value Index amount
value

1st Jan 10000 120.7 101.1 (101.1-120.7)/ 10000*-16.2386% -1623.86

2017 -31 st 120.7*100=-16.2386
Dec 2019

1st Jan 10000 101.1 140.9 (140.9-101.1)/ 10000*39.36696% 3936.70

2018 -31st 101.1*100=39.36696
Dec 2019

1st Jan 13936.7 140.9 150.7 (150.7-140.9)/ 13936.7*6.955287% 969.34

2019-31 st 140.9*100=6.955287
Dec 2019

Even though system has not calculated the rent increase amount for the negative rent period i.e
01-Jan-2017 to 31-Dec-2017, the negative amount will be stored in
PN_INDEX_LEASE_PERIODS_ALL

Negative Rent amount

calculated for the first
fiscal year
5.11 Greater off Calculation – Basis type Compound and Negative Rent ‘ Ignore’
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

For 2018 period, since Index rate was

more than fixed rate, system generated
two terms one based on fixed rate i.e
11000*10%. For the difference amount
one more term is created
 Year 1 Basis Previ Curre Index % Rate Calculation As per Rent
Amo ous nt Change increase
unt Inde Index amount
x value
valu
e

Index Rate

1st Jan 10000 120.7 125.9 (125.9-120.7)/ 10% 10000*4.30 10000*10 1000
2017 - 120.7*100=4.308 8202%=430 %=1000
31 Dec
st 202 .82
2019

1st Jan 11000 125.9 140.9 (140.9-125.9)/ 10% 11000*11.9 11000*10 1310.56
2018 - 125.9*100=11.91 1422%=131 %
31 Dec
st 422 0.56
=1100
2019

1st Jan 12310 140.9 150.7 (150.7-140.9)/ 10% 12310.6*6.9 12310.6 * 1231.06
2019-31st .6 140.9*100=6.955 55287% 10%=
Dec 287 =856.24 1231.06
2019

5.12 Lesser off Calculation – Basis type Compound and Negative Rent ‘ Ignore’
In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

Year 1 Basis Previo Curr Index % Change Rate Calculation As per Rent
Amou us ent increase
nt Index Inde amount
value x
valu
e

Index Rate

1st Jan 10000 120.7 125.9 (125.9-120.7)/ 10% 10000*4.30 10000*10% 430.82
2017 -31 st 120.7*100=4.30820 8202%=43 =1000
Dec 2019 2 0.82

1st Jan 10430.8 125.9 140.9 (140.9-125.9)/ 10% 10430.82*1 10430.82*10 1043.08
2018 -31st 2 125.9*100=11.9142 1.91422%= %=
Dec 2019 2 1242.75
1043.08

1st Jan 11473.9 140.9 150.7 (150.7-140.9)/ 10% 11473.9*6. 11473.9* 798.04
2019-31 st 140.9*100=6.95528 955287% 10%=
Dec 2019 7 =798.04 1147.39
5.13 Rent increase calculation based on Term template
In all the above examples we were doing the rent increase calculation on aggregation basis.
When Aggregation check box is checked at rent increase agreement level, distribution of the
rent increase amount will be based of the different combination derived from the main lease
terms. If in case if a rent increase needs to be done based on some other criteria’s like party,
location, purpose etc, then the same can be achieved using term templates.

For e.g. Created a term template as follows

Supplier attached to the term

template

Now create a lease with as follows

 Two payment terms are created
for two different suppliers

Now we will create a rent increase agreement as follows

Payment term is
attached to the rent
increase agreement

Aggregation check box

is unchecked

In Basis terms for we can see both the payment terms based on the ‘Increase on’ option
selected i.e Index
 Once the Rent increase periods are generated and calculated and approved, in lease
work bench payment tab the terms will be generated as follows

Rent Increase terms are Generated only for

one supplier.

Here the rent increase terms are calculated only for one supplier for whom the payment
term attached to the rent increase is attached to. That is the reason why, even though the
other payment term created for the other supplier was matching all other criteria’s
selected for the rent increase agreement, no rent increase terms are generated for it.

Note:- Like how we have restricted the rent increase calculation to a particular supplier
in the above example, the rent increase calculation can be restricted based on other
parameters set in the payment term template like Location, Frequency, purpose etc.

5.14 Rent increase calculation when Index Finder is set

In this example, the lease has below details

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2023 - -

Payment Term 01-Jan-2016 31-Dec-2023 10000 Monthly

The Index attached to the rent increase agreement ‘CPI” is defined only until 31st Dec 2020.

5.14 .1 Always Finder date

The rent increase agreement is setup as follows
Now when trying to calculate the rent increase amount the below error will appear

The above error is because Indexes Post 2020

fiscal year is not available. We can also see that
Rent increase amount is also not calculated for the
years for which index is not available
5.14 .2 Default Most Recent

Now when we calculate the rent increase amount

In this case even for 2022, the rent

increase amount got calculated based
on the latest index available.
5.14 .3 Always finder date without Backbill
Rent increase agreement is created as follows

Now when we try to calculate the rent increase, the below message will appear as application is
not able to find the index for few periods.

And we can also see that rent increase amount is not calculated for any of the periods except the
base period for which the index was manually entered.

Now lets enter the index for 1999 and 2000 fiscal year and then calculate the rent increase
amount. Now we can see that system just calculated the rent increase amount for each fiscal
year without calculating any back bill amount
 No Back bill amount has been
calculated

5.15. Rent Increate Back Bill calculation

A back bill is a separate term that is created to cover the period between the assessment date
and the calculation date, in cases where the rent increase is calculated after the assessment date.
For example, if the assessment date is January 01 and rent increase is calculated on April 01, two
terms are created. The regular recurring rent increase term starts April 01 instead of January 01.
A one time back bill term is created for the three months (January through March) missed. If the
calculated rent increase amount is 100 per month, the back bill term will be for 300. The
payment start and end date for the back bill term is the current system date. If the basis type is
compounded, the back-billed rent increase is included in the next annual rent increase.

In property manager, how a back bill amount is invoiced is determined by profile PN: Rent
Increase Calculated After Assessment Date. This profile has 3 options
5.15.1 One Time Backbill
A one time term with end and start date as the current date for the assessment dates prior to
system date. For e.g a lease is created as follows

Details Start Date End Date Amount Frequency

Lease 01-Jan-2013 31-Dec-2018 - -

Payment Term 01-Jan-2013 31-Dec-2018 10000 Monthly

Rent increase term is created as follows

Now when we calculate the rent increase term, the terms generated will be

In the above screen shot we can see that 3 one time terms are generated for the rent
increase amount for 2014, 2015 and 2016.
 The back bill amount is calculated as follows

Year 1 Basis Amount Increase Calculation Rent Back bill

% increase amount
amount

1st Jan 10000 10% 10000*10% 1000.00 1000*36

2014 -31 st months=36000
Dec 2016

1st Jan 11000 10% 11000*10% 1100.00 1100*24

2015 -31st months=26400
Dec 2016

1st Jan 12100 10% 12100*10% 1210.00 1210*12

2016-31 st months=14520
Dec 2016

From next period onwards i.e Jan-17 period onwards, system has created a
separate term for each of the rent increase amount calculated i.e 1000, 1100,1210
amounts.

5.15.2 Single Term

You can also choose not to have a separate term created at all, but to have Property Manager
create the Rent Increase Term starting on the assessment date regardless of whether the
calculation has been performed late or not. For e.g a lease is created as follows

Details Start Date End Date Amount Frequency

Lease 01-Jan-2013 31-Dec-2018 - -

Payment Term 01-Jan-2013 31-Dec-2018 10000 Monthly

Rent increase term is created as follows

 Now when we calculate the rent increase term, the terms generated will be

In this case, no One time terms are generated and for assessment period prior to system
date also, system generated the rent increase term just like how it is done for periods
after the system date.

5.15.3 Recurring Backbill

'Recurring Backbill', results in creation of a backbill term that starts on the scheduled
assessment date and ends at the end of the Current month, That is the month when you
calculate the Rent Increase.

For e.g a lease is created as follows

Details Start Date End Date Amount Frequency

Lease 01-Jan-2013 31-Dec-2018 - -

Payment Term 01-Jan-2013 31-Dec-2018 10000 Monthly

Rent increase term is created as follows

 Now when we calculate the rent increase term, the terms generated will be

In this case, for each rent increase amount, two terms will be calculated i.e one term for
the period from assessment date to System date and another term for the period after
system date to Rent increase agreement end.

In the above example the rent increase amount for the year 1st Jan 2014 to 31st Jan 2014 is
1000 (10000*10%). So system will generate two terms with 1000 i.e

 01-Jan-2014 to 31-Dec-2018– 1000

 01-Jan-2017 to 31-Dec-2018– 1000

In the same way all the rent increase amounts will have 2 terms generated.

5.16. Rent increase calculation with Constraints %

Lease is created as follows

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

Rent increase term is created as follows

Constraint setup is as follows

After the rent increase calculation and approval, the terms are generated as follows
Year 1 Basis Previ Curre Index % Calculation As per Rent
Amoun ous nt Change increase
t Index Index amount
value value

Unconstrai Constraine
ned Amt d Amt

1st Jan 2017 10000 120.7 125.9 (125.9-120.7)/ 10000*4.308 430.82 430.82
-31st Dec 120.7*100=4.308 202%=430.8
2019 202 2

1st Jan 2018 10430.8 125.9 140.9 (140.9-125.9)/ 10430.82*11 473.90(430. 473.90
-31 Dec
st 2 125.9*100=11.91 .91422%=12 82+(430.82*
2019 422 42.75 10%))

1st Jan 10904.7 140.9 150.7 (150.7-140.9)/ 10904.72*6. 521.29(473. 521.29

2019-31st 2 140.9*100=6.955 955287% 90+(473.90*
Dec 2019 287 =758.45 10%))

For the second and third year, since the Constraint amount applied is less than the normal rent
increase calculation, the constraint amounts are used for calculation. The details of the
constraint % applied and constraint amount etc can be seen in

Shows the Constrained and

Unconstrained Rent amount. Also
shows the constrained % applied.
6. Transactions on the Main lease which will have an impact on Rent
Increase
Few edit / Amend transactions that are done on a main lease will have an impact on rent
increase agreement / calculation as well like

6.1 Adding a new Payment term

When a new payment term is added to a lease which has rent increase term associated with it, if
the rent increase terms are already approved, system will insert a new line to the extent of new
term. If the Rent increase terms are not approved, then the earlier generated terms itself will be
updated with new term details.

6.1.1 Adding a term before the rent increase term is approved

Lease is created as follows

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

Create a rent increase agreement and calculate the rent increase amount. In rent increase
‘Basis Periods’ tab we can see the rent increase amount calculated as follows
Now we will add one more payment term to the lease as follows

Now when we save the about Amend transaction, two concurrent programs will be
automatically fired i.e
 Along with ‘Schedule and Items ‘
program, even ‘Calculate Rent
Increase’ program is also triggered
automatically

Now in rent increase form we can see that rent increase amount calculated earlier has
been changed and the recalculated amount includes the revised Payment term as well.

6.1.2 Adding a term after the rent increase term is approved

Now we will approve the rent increase terms which we created in above example (6.1.1). In
lease work bench > Payments tab we can see the rent increase terms created.

We will add a payment term on this lease now.

 New Payment term added to the lease

Even in this case, below two concurrent programs will be triggered

Now in rent increase form we can see the revised rent increase amount calculated
 After the rent increase term is approved, separate lines will be included for the new
terms in lease work bench > Payments tab.

Rent increase terms

generated for earlier
Payment terms

Rent increase terms

generated for newly
added payment term

6.2 Early Termination of the Lease

In case of early termination of the lease, The termination date of the rent increase
agreement will also get updated to the termination date of the lease irrespective whether
the rent increase term is approved or not. And this will also update the end date of the
terms. And any period after that early termination date will be deleted if they have no
schedules as approved/exported.

For e.g Lease is created as follows

Details Start Date End Date Amount Frequency

Lease 01-Jan-2016 31-Dec-2019 - -

Payment Term 01-Jan-2016 31-Dec-2019 10000 Monthly

Now create a rent increase and calculate and approve the rent increase amount. In rent
increase form, the schedules are generated as follows
 Now we will perform a Early termination of the lease with termination date as 31st Dec
2017. After the earlier termination, in lease work bench payments tab,

End date of both Lease

payment term and Rent
increase payment term is
updated to 31st Dec 2017.
The rent increase terms
generated post 2017 are
deleted.

Note: - If the termination date is prior to the latest approved schedule, then system will
generate a negative term to the extent of approved terms.

6.3 Extending the lease term

When a lease agreement, attached to the rent increase agreement is extended, whether the rent
increase term will also get extended or not depends on the decision users have selected while
saving the lease extend transaction.
While extending a lease agreement with rent increase terms, user will be prompted with below
choices

Confirmation to extend the

Payment terms . If we say
‘Yes’ all the associated
payment terms will get
extended

Confirmation to extend the

Rent increase terms already
approved .
 Confirmation to extend the
Rent increase Agreement

Since we have extended the rent

increase terms as well, below two
concurrent programs are fired

Now we can see that in rent increase form, the rent increase amounts are calculated even
for extended periods.

Rent Terms are created for

extended period as well