Introduction to SAP Real Estate Management

Foreword

As our world changes, we must react to regulatory, technological, economic, and social trends. No matter if it is about changing business models, technologies, regulatory changes, or viruses – changes massively influence the real estate sector.

While staying safe, our workspaces need to utilize the best of demanding technologies like digital twins, AI, virtual reality, IoT, robotics, AI chatbots, sensors, blockchain, big data alongside with more or less classical GIS, CAD, BIM, EHS, HMS, CRM services. So, buildings are getting smarter and autonomous.

Technology is the key business factor for real estate and influence on its lifecycle costs, operation efficiency and sustainably, all while achieving the desired outcomes. With the right approach and technologies, any building and any company can be smart.

SAP Flexible Real Estate Management (RE-FX) is a robust fully functional real estate management solution that provides accounting, administrative and reporting capabilities and is IFRS 16, ASC 842 compliant. SAP RE-FX streamlines a portfolio of assets and offers a centralized repository for lease contract data collection and validation, triggering financial postings derived from valuation calculations. 

It is a fully integrated management software for real estate transactions. The module is available for both SAP ERP and SAP S/4HANA. Whether buying or selling, renting or building, SAP RE-FX allows you to map all business transactions and processes in a holistic way.
 

With SAP Cloud Platform real estate management is empowered with the future-proof solutions and utilizes cloud analytics and big data services with great ease of use, rapid implementation, and continuously installed updates:

• SAP Cloud for Real Estate Management centralizes the management of your real estate portfolio and uses embedded analytics to monitor and optimize performance.
• SAP Asset Intelligence Network seamlessly connects to SAP Cloud for Real Estate, SAP S/4 HANA, SAP ERP and allows the extension of the digital twin to each asset within the building.
• SAP Project Intelligence Network establishes a common data environment to digitalize the exchange of project information and connect with a digital twin.

Who might need it?

SAP RE-FX key capabilities

Real estate objects management

• Access a dual view of master data, with an architectural view and a usage view to build a building pass, building register, building informational model
• Create and manage all types of real estate objects, including business entity, land, building, rental unit, rental space, and rental room objects
• Manage real estate objects that are owned by others

Contract management

• Manage all contracts related to your real estate portfolio, including lease-in, lease-out, customer, and vendor contracts, service contracts
• Assign any number of rental objects from different business entities, buildings, or company codes to any one contract by room reservations and long-term seating arrangements
• Search for vacant rental objects and find suitable prospects for these rental objects, or vice versa

Space management and optimization

• Account for architectural structures, usage considerations, and technical amenities and features
• Define spaces flexibly and rent them, extracting them from a larger available space
• Optimize your internal room and occupancy
• Plan and track your moves and relocations

Credit-side view of lease-in processes

• Control of cash flows through a credit side view of the lease-in process
• Organize expense posting
• Distribute apportionable costs which are service charges to tenants for a particular settlement period, using individual control mechanisms

Centralized business processes

• Integrate asset management postings and reports; real estate controlling; and planning and controlling of new building developments, maintenance, and modernization projects
• Manage purchase order processing and commitments for real estate maintenance
• Fully integrated into FI-GL, FI-AA, CO, TR, PS-CD, FI-AR, FI-AP, PS, PM/CS, MM, DMS and others

Document Management

• Document Management functions give you control over all documents and correspondence associated with real estate business processes

Localization

• Ready to deploy the country-specific functions for Germany, Switzerland, Austria, Italy, Spain, Netherlands, Portugal, Hungary, Czech Republic, Slovakia, France and other countries.

Real Estate Management connects processes across departments to make better use of your real estate portfolio.
 

The IFRS 16 compliance

SAP RE-FX is fully compliant with the accounting standards IFRS 16, ASC 842 and others similar.

Lease accountants can evaluate the impact of each lease on financial statements and generate validation postings following the new standards. With the present value of a lease calculated by the system, an Right-Of-Use (ROU) asset and lease liability are automatically created. The system will recognize monthly depreciation of the ROU asset as well as separate the lease payments and interest portions of the payment. Should any rates such as the consumer price index (CPI) increase, the system will revalue the lease – the user will have visibility over incremental differences and track all calculations and postings for a given period.

The benefits

• A fully integrated system to map all business transactions in real estate management
• Reduction of operating costs with improved transparency in expenses
• Single source of truth regarding real estate portfolios and contracts
• More informed decisions based on constantly updated and harmonized data
• Comprehensive document management
• Increased efficiency in the overall management of real estate
• Reallocate investments to optimize your return on assets (ROA)
• Optimize utilization of workspaces and improve employee productivity
• Comply with new lease accounting standards with native integration into SAP Finance

Let’s talk

Each case is unique and might require individual solutions. Let’s start with a conversation. You will get an individual assessment for your REM processes and REM digitalization strategy.

About the author

Ilya has been working with SAP since 2005 both as part of customer and vendor in various roles as implementation consultant, team leader, solution architect, trainer, and support consultant. He specializes on Real Estate Management and Enterprise Asset Management solutions and has a good understanding of coherent finance and logistic processes and technical possibilities in SAP.

Get in touch with Ilya to discuss your case: ilya@s5con.no