2. Solving the Dysfunctional Property Asset Dilemma

3. Finding solutions for the asset rich but cash poor non-profit organisation Russell Martoo Managing Director RCP

4. Solving the Dysfunctional Property Asset Dilemma

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

7. 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.”

8. 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

9. MontroseAccess Recycled school serving as administration building

10. 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

11. 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

12. 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

13. 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

14. 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)

15. MontroseAccess Master Plan

17. Brisbane Youth Service Acquisition of New Premises for Administration and Delivery of Services for BYS – Business Case

18. Solving the Dysfunctional Property Asset Dilemma Recommendations 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

19. 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

20. Solving the Dysfunctional Property Asset Dilemma 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

21. Solving the Dysfunctional Property Asset Dilemma Actions 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

22. Solving the Dysfunctional Property Asset Dilemma 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

23. 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

24. 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: 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)

25. 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

26. Questions?