solving the dysfunctional property asset dilemma

Solving the Dysfunctional Property Asset Dilemma

Finding solutions for the asset rich but cash poor

non-profit organisationRussell Martoo

Managing DirectorRCP

MontroseAccess

“providing therapy, respite and recreation services to more than 600 children and young adults with physical disabilities throughout Queensland.”

Brisbane Youth Service

“assisting young people to find and maintain appropriate housing, address physical & mental health issues, establish successful relationships & support networks and provide them with pathways to education & long term employment.”


• The non-profit organisation is more likely to regard their property portfolio as ‘static’ due to the legacy factors

• A common characteristic of an organisation with property assets accumulating over time is ‘growing into’ the current configuration

• Without a comprehensive Property Management Plan increased admin services can take over under-utilised areas within a building or ‘creep’ into rented or sub-leased offices by default

MontroseAccess

Recycled school serving as administration building

Solving the Dysfunctional Property Asset DilemmaThe long term net result for any organisation with a disparate property portfolio is either:• Operating in a fragmented and poorly coordinated

manner from multiple smaller locations; or• Consolidating into one larger legacy premises that

is poorly adapted for the current issue; or worse• Doing both of the above

Solving the Dysfunctional Property Asset DilemmaThe downsides for the organisation that finds itself in these circumstances include:

• Much higher than necessary property outgoings costs, i.e. rent, rates, electricity, gas, water, cleaning, waste removal, landscape and building maintenance

• Inefficiencies in staffing costs from duplication of roles in multiple offices

• Inefficiencies in staff time in managing multiple sites• Poor corporate communications and internal business process• Poor staff working conditions resulting in higher than

necessary staff turnover and inefficient working practises


Continued….• Higher IT costs due to complex network requirements or

poor IT services and capability• Difficulties in attracting and keeping volunteer staff due

to poor working conditions• Inefficiencies by being in less than ideal locations for

customers / clients and staff for the current service model

• Unnecessary expenditure on the adaption and maintenance of inappropriate premises and internal fit outs

• Regularly deferring maintenance

Solving the Dysfunctional Property Asset DilemmaThe types of issues that might arise for a CEO or Board that make them question their current portfolio composition:• Cost blowouts in property outgoings• Plant and equipment failures, roof leaks etc. from

deferred maintenance• Corporate response required to property

Resumption Notice or Town Planning rezoning notice


Or opportunities such as: • Further sourcing of Government services to non-profit sector

resulting in new service agreements and grant funding• Changes in funding models requiring new business

development, for example the NDIS• Changes in services delivery practise by the organisation• New services extensions to existing programmes• A property lease expiry• A grant of $ or property as a philanthropic donation• A merger or acquisition of another organisation or group with

property assets (or liabilities)

MontroseAccess Master Plan

Brisbane Youth Service

Acquisition of New Premises for Administration and Delivery of Services for BYS – Business Case

Solving the Dysfunctional Property Asset DilemmaRecommendations in such reviews may include:• identifying investment opportunities and sites• preparing feasibility studies• site acquisition• negotiation with statutory bodies• managing the delivery of new premises• overseeing the marketing and disposal of the

existing property assets

Solving the Dysfunctional Property Asset DilemmaBusiness Model Review Identify the ‘reason for being’Starting point for development of Property Management Plan:• Mission, Vision and Values• Service identification and delivery• Management strategy and resources

NOT the existing property assets


PROPERTY ASSETS

Development and

Construction

Industry

Property Users

….to design and construct assets for use

by ….

Property

Owners

….brief and fund the….

Who pay rent to (or purchase completed

assets from)

Input of funds from

financiers

Control of design standards and Town Planning development controls by Government

Leases and Sale contracts advice by Lawyers

Solving the Dysfunctional Property Asset DilemmaActions and outcomes to consider in preparing a business case and action plan for a property portfolio rationalisation:• Identifying investment opportunities and sites for

new premises• Undertaking feasibility studies• Acquiring new properties, due diligence studies• Developing new properties or refitting existing• Leasing and tenancy negotiations• Disposal of redundant and surplus to requirement

assets


Consultation with the affected stakeholders including: • Board of Management• Staff• Client / customers and their supporters / friends and families• Donating organisations and individuals• Volunteers and other support groups• Local community around particular premises or sites• Local, State and Federal Government• Fundraising granting and service agreement bodies and institutions• Adjacent landowners • Landlords and body corporates

Solving the Dysfunctional Property Asset DilemmaMontroseAccessAction• Secure previous development rights (or obtain compensation for loss) by:

• Town Planning application under the Superseded Planning Scheme rules of the Sustainable Planning Act

• Consult with legal advisors• Consultant team of Town Planner, Urban Designer, Engineer, Ecologist, Cost

Planner • Valuer appointed to prepare applicationResult• Consent to lodge a full site DA Development Permit approved by Council• Previous development rights secured• Land sale campaign on existing site • Negotiation with State Government on new land for Respite Centre and AFL

for new building for therapy and admin functions

Solving the Dysfunctional Property Asset DilemmaBrisbane Youth ServiceAction• Business Case prepared to present to Government • Government approved $2m capital grant and a suitable property was

identified• Property put under contract with 60 day due diligence period to:

• Execute necessary funding agreement and a bank mortgage• Carry out thorough due diligence• Prepare concept designs and confirm a budget

• Consultant team of Architect, Town Planner, Quantity Surveyor, Building Services Engineer, Civil/Structural Engineer, Environmental Specialist, Certifier appointed

Result• Financial negotiations completed• Offers of a Grant and Mortgage was secured (however later withdrawn with

change of govt)


Property Strategy = Business Model + Service Delivery Strategy

Not facing the property portfolio dilemma will only restrict the potential growth of the valuable service offering by tying up resources with inefficient and under-performing property assets

Questions?

solving the dysfunctional property asset dilemma

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