Solving the Dysfunctional Property
Asset Dilemma
Finding solutions for the asset rich but cash poor
non-profit organisation
Russell Martoo
Managing Director
RCP
Solving the Dysfunctional Property Asset Dilemma
Solving the Dysfunctional Property Asset Dilemma
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.”
Solving the Dysfunctional Property Asset Dilemma
• 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 Dilemma
The 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 Dilemma
The 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
Solving the Dysfunctional Property Asset Dilemma
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 Dilemma
The 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
Solving the Dysfunctional Property Asset Dilemma
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
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 Dilemma
Recommendations in such reviews may include:
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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 Dilemma
Business 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
Solving the Dysfunctional Property Asset Dilemma
Input of
funds from
financiers
Development
and
Construction
Industry
….brief and fund
the….
Property
Owners
….to design and construct
assets for use by ….
PROPERTY
ASSETS
Who pay rent to (or purchase
completed assets from)
Control of design
standards and Town
Planning
development
controls by
Government
Property
Users
Leases and Sale
contracts advice by
Lawyers
Solving the Dysfunctional Property Asset Dilemma
Actions and outcomes to consider in preparing a business case and
action plan for a property portfolio rationalisation:
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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
Solving the Dysfunctional Property Asset Dilemma
Consultation with the affected stakeholders including:
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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 Dilemma
MontroseAccess
Action
• 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 application
Result
• 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 Dilemma
Brisbane Youth Service
Action
• 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:
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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)
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Solving the Dysfunctional Property Asset Dilemma
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?