Archibus SaaS / Leases / Lease Portfolio / Lease Portfolio Console
Real Property / Costs / Cost Administrator

About Lease Indexing Calculations

Archibus uses a workflow rule to perform lease indexing calculations. By default, this workflow rule runs daily at midnight, checking for leases for which you have enabled indexing, and that should be indexed that day. This parameter is configurable, so your site might run the rule on a different schedule.

Archibus indexes a lease from the Date Indexing Start until either the lease or the indexing expires whichever comes first. The application uses the following dates:

• The Date Indexing End entered in the Lease Indexing Profile
• The Date End entered for the lease
• The End Date entered for the lease's base rent recurring cost record

When a lease's indexing date equals the current date, the indexing workflow rule proceeds to calculate the new rent based on the percentage change in the price index from one period to the another. The details for this process are described in the following section.

Lease indexing automated workflow calculations

Before Archibus runs the indexing calculation for a lease, it does the following:

1. Determines the leases to index that day: If a lease is flagged as Indexed (the Index Cost? field is set to Yes), and all the following conditions are met, the lease is indexed that day:
   • The Date - Index Starts set in the Lease Indexing Profile must be before or equal to the current date and
   • The Date - Next Indexing must be before or equal to the current date. The application calculates this date as the Date Indexing Starts + the Indexing Frequency and
   • The Date - Next Indexing must be before the Date - Index Ends set in the Lease Indexing Profile.
2. Selects the base rent cost record to be indexed. For a lease that meets the conditions in step 1, the application selects the active base rent recurring cost record with the most recent Start Date.
3. Determines if retroactive indexing is needed by:
   • Determining if the Date - Next Indexing is today or if this date has passed.
     • If the Date - Next Indexing has passed, then retroactively indexes the lease.
     • If the Date - Next Indexing is equal to the current date, then retroactive indexing is not required, and the application goes to step 5.
4. Determines if cost indexing transactions already exist. If step 3 determines that the lease should be retroactively indexed, then the application determines if cost indexing transactions already exist by extracting the year from the Date - Next Indexing, and verifying that there are no existing cost indexing transactions for that year and Lease Code.
   • If there are cost indexing transactions for that year and Lease Code, the application recalculates the Date - Next Indexing. by adding the Indexing Frequency to the date for the most recent indexing transaction, and returns to step 2.
   • If there are no cost indexing transactions for the year and lease, proceed to step 5 to process the lease indexing.
5. Sets the Date Indexing value. Set Date - Indexing to the current value for Date - Next Indexing. The Date - Indexing is the date on which the indexing transaction is generated. It is stored in the Cost Index Transaction table.
6. Locates the Index Value New for the Date Indexing. The application finds the Index Value New for the desired Date Indexing.
   • The application selects the most recent index value that is before or equal to the Date - Next Indexing., and proceeds to step 7.
   • If there is no index value new, or if Index Value New is equal to Index Value Initial (the index value hasn't changed form one period to another), then the rent remains the same, and no further action is needed.
7. Calculates the Index Percentage Change The application calculates the percentage change in the index value from the previous value to the current value, using the following formula:

   Index Percentage Change = (Index Value New / index Value Initial -1) x 100.

   Where the Index Value Initial is the index value used for the previous indexing, and Index Value New is the most recent index value entered for the index.

8. Calculates the Rent Percentage Change. To calculate Rent New the application runs the following formulas to calculate the Rent Percentage Change:

   Rent Percentage Change - Calc (%) (cost_index_trans.rent_pct_change_calc) =Index Percentage Change / 100 X Percentage Change Adjustment / 100

   The Percentage Change Adjustment is the percentage of the index percentage change that should be applied to the lease. You enter the Percentage Change Adjustment in the Lease Indexing Profile.

   Rent Indexed = Rent Initial X (100 + Rent Percentage Change - Calc) / 100

9. Adjusts for any minimum and maximum caps and determines the Rent New:

   If Rent Indexed is greater than or equal to the Maximum New Rent, then:

   New Rent = Maximum New Rent (rounded)

   Or, If Rent Indexed is less than or equal to the Minimum New Rent, then Rent New = Minimum New Rent (rounded)

   If neither of these apply, then Rent New = Rent Indexed (rounded)

   The Rent New amount is rounded to the settings in the Lease Indexing Profile.

10. Creates new recurring cost records: To store the Rent New, the application creates a new recurring cost record with the RENT - BASE RENT cost category.
    • If the Archibus Enhanced Global Feature Set is enabled, the Rent New amount is stored in the Amount Income - Base Payment field for landlords, or the Amount Expense - Base (Payment) field for tenants. VAT settings are copied from the previous recurring cost record.
    • If the Archibus Enhanced Global Feature Set is not enables, the Rent New is stored in the Amount Income (for landlords), or the Amount Expense (for tenants).
11. Expires the existing recurring cost record. Expires the existing record by updating the End Date for the record to the Date Indexing - 1 day. The cost record is still set to Active, so you have an historical record of indexed base rent.
12. Creates a new cost indexing transaction ( The application creates a new record in the Cost Indexing Transaction table for the new recurring cost record. The data that the workflow rule calculated (Rent Percentage Change - Calc., Rent Indexed, Rent New) is saved in the cost transaction record.
13. Adjusts any existing schedule costs: If the Date - Indexing (the date the indexing transaction was generated) is after or equal to today, the application looks for any active scheduled costs created from the previous recurring costs that have expired. If these costs have a Due Date that is after or equal to the current date.
    • The application updates their amount to the Rent New and the recurring cost code to the new one.
      • If the Archibus Enhanced Global Feature Set is enables, update the Amount Income - Base (Payment) for landlords, the Amount Expense - Base (Payment) for tenants, or the Amount Income - Base (Payment) for other types of lease owners.
      • If the Archibus Enhanced Global Feature Set is not enables, the Amount Income (for landlords) or the Amount Expense (for tenants) is updated.
      • The cost administrator can later on approve or reject these costs scheduled costs in bulk using the Cost Wizard. See Approving and Adding Scheduled Costs.
14. Updates the Lease Indexing Profile: The application updates the Lease Indexing Profile table as follows:
    • Index Initial Value (index_value_initial) will be updated to the Index Value used for the most recent indexing
    • Update Date - Next Indexing equal to the Date Indexing plus Indexing Frequency
    • If the Reset Initial Values flag is set to Yes, the system will update the following in the Lease Indexing Profile:
      • Index Value Initial: Updates to the Index Value New used for indexing
      • Rent Initial: Updates to the value of the Rent New
      • Maximum New Rent and Minimum New Rent: Are recalculated based on the new Rent Initial Value.

    See Resetting Initial Values in the Lease Indexing Profile.

15. If the Updated Date - Next Indexing is before or equal to the current date, but either the lease, lease indexing, or recurring cost base rent record has expired, then no further indexing takes place.
16. Otherwise, if the lease, indexing, or cost record is not expired, the application returns to step 3.
17. If the updated Date - Next Indexing is after the current date, the application ends the indexing workflow for the lease. The indexing will resume when the Date - Next Indexing is reached.

See Also

How the Cash Flow Reports Use Lease Indexing Values (Costs Application)

Lease Indexing Overview