Ordinary Capital Expenditures

Approvers’ Course

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Topic Selection

• This course is designed so that you can select a particular topic at any time.

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Software Demonstrations• There are a variety of software demonstrations

throughout this course that will launch automatically.

• When the demos are finished, click the “X” button on the toolbar at the top of the screen to return to this course. Then, press the “Play” button on the navigational toolbar to continue the course.

Reference Documents and Attachments• Click on the Attachments tab to access the

following Ordinary Capital reference documents:– Introduction–Overview Ordinary Capital Spending Plan– Capital Improvement Process– Planned Request Process Map– Unplanned Request Process Map

At the completion of this course you will be able to . . .

• Define Ordinary Capital and GGP’s Ordinary Capital policies• List the purpose of the Ordinary Capital System• Describe the Ordinary Capital System and its relationship to

the Capital Expenditure Requests• List the roles and routing sequence in the Approval Process• Login to the Forms Library and use the features and views• Review requests according to your role and make necessary

comments and/or adjustments• Reject and Accept Capital Expenditure Requests• Use the Capital Expenditure System to track projects and

plan spending

Objectives

What is Ordinary Capital?

• Current improvements and upgrades to maintain a “like new” condition

• Compliance with building codes or ADA• Compliance with the recommendations of Risk

Management or other internal or external review programs

• Improvements in operating efficiency• In certain situations, financing or refinancing a

center

What is NOT Ordinary Capital?

• Landlord construction in lieu of tenant allowance– Lease and REA capital expenses are tracked by

DealMaker and the Lease Committee

• Holiday décor• Redevelopment projects in excess of $2 million

Purpose of Ordinary Capital System

• In accordance with GGP’s Capital Improvement Policy, the automated Ordinary Capital System provides documentation of compliance with the Sarbanes-Oxley Act with regard to the bidding and approval process for ordinary capital work.

• Each year, a budget approval process will generate endorsed Capital Plans. Throughout the year, the Ordinary Capital System will move Capital Plans through the steps of documented approval.

Process Roles

• Originator• General Manager• Group Director• Accounting VP• National Operations Director• Group Director (final if < $100,000)• VP of Partner Relations (if a partner mall)• Ordinary Capital Committee (if > $100,000)

Approval Process

Accessing the Ordinary Capital System

Accessing the Ordinary Capital System

Accessing the Ordinary Capital System, demo

Demonstration

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Reviewing Requests

• As Capital Expenditure Requests route through the system, e-mails are automatically sent to the next approver notifying them of requested approval action.

Email Notifications

• Normal Submittal • Form Approved• Form Rejected• Post Notification• Variance (change order)

Submitted• Variance (change order)

Approval• Administrator

Modification

The Capital Expenditures Request Forms Library

Accessing the Forms Library , demo

Demonstration

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Demonstrating the Approval Process• Let’s take a look at a sample Capital Expenditure

Request as it’s routed through the various approvers.

• Please keep in mind that each Approver can approve or reject a request upon review.

• Rejecting a request will trigger post notification e-mails.

• Originators will have the opportunity to make corrections for resubmittal.

• Approvers are asked to process requests promptly, the same day, if possible, to expedite the approval process.

Reviewing Requests Demo:General Manager• General Manager completes first review.• First opportunity to review that request is

complete, contains applicable documentation, and follows Capital Plans for location.

• Approve, if appropriate, and request routes to Group Director for review.

Reviewing Requests Demo:General Manager

Demonstration

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Reviewing Requests Demo: Group Director• Group Director also reviews that request is

complete, contains applicable documentation, and follows Capital Plans for location.

• If request is unplanned, ensure there is sufficient explanation why spending was not planned during Capital Plan process.

• Approve, if appropriate, and request routes to Accounting Director/VP for review.

• Group Directors should address the capital spending impact to the property, NOI, and CVA using the QPR information on the request.

Reviewing Requests Demo: Group Director

Demonstration

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Reviewing Requests Demo: Accounting VP• Accounting VP reviews in particular, that the

coding and amortization treatment is appropriately defined for this project, as well as the project’s eligibility for a capitalized accounting treatment.

• Approve, if appropriate, and request routes to National Operations Director for review.

Reviewing Requests Demo: Accounting VP

Demonstration

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Reviewing Requests Demo: National Operations Director• National Operations Director also reviews that

request is complete, contains applicable documentation, and follows Capital Plans for location.

• Check for involvement of GGP approved consultants.

• Review the proposed warranty coverage and consultation with National Purchasing where pertinent.

• Approve, if appropriate, and request routes to Group Director for their final review.

Reviewing Requests Demo: National Operations Director

Demonstration

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Reviewing Requests Demo: Group Director (final if < $100,000)• Group Directors can indicate final approval for

requests under $100,000.• If the request is for $100,000 or more, it will

proceed to the Ordinary Capital Committee, or VP of Partner relations, if it is a partner mall.

Reviewing Requests Demo: Group Director (final if < $100,000)

Demonstration

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Reviewing Requests Demo: VP of Partner Relations• On the way to Ordinary Capital Committee,

requests of $100,000 or more for Partner Malls will route to the VP of Partner Relations for approval.

• If appropriate, the VP of Partner Relations should Approve the form and an e-mail will be sent to the Ordinary Capital Committee admin, who will place the request on the Committee’s next scheduled meeting agenda.

Reviewing Requests Demo: VP of Partner Relations

Demonstration

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Reviewing Requests Demo: Ordinary Capital Committee• The Ordinary Capital Committee will review

requests in order to balance allocation of capital among all GGP centers, factoring in timing of expenditures based upon quickly changing business conditions and appropriate scheduling of projects.

• Decisions of the Ordinary Capital Committee will be entered following each committee meeting, indicating approval status.

• E-mails will be sent to all members of the “Post-Notification” list with this information.

Reviewing Requests Demo: Ordinary Capital Committee

Demonstration

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Reviewing Requests Demo: Change Order• In the event that a Capital Request has already

been approved, and a Project Variance of +/- $10,000 needs to be documented, the system will facilitate appropriate documentation.

• Decisions of the Ordinary Capital Committee Initiating the Project Variance will generate an e-mail notification to the Ordinary Capital admin denoting activity with regard to the specific request.

Reviewing Requests Demo: Change Order

Demonstration

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Reviewing Requests Demo: Post Notification• Post Notification is the term used to describe

e-mails sent to the full Approval Routing group for each request.

• Post Notifications will inform those named of the approval (or rejection) status of the request.

Reviewing Requests Demo: Post Notification

Demonstration

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We Hope This Course Has Helped You:• Define Ordinary Capital• Understand how to use the automated

Ordinary Capital System• Understand your role in the Approval Process

and how to check the status of Ordinary Capital Expenditure Requests via the Forms Library

• One final reminder: All approvers are asked to promptly take action on capital requests to facilitate timely processing.

Thank you for attending!

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