Disposing of a Property Asset

1. Russell MartooManaging DirectorRCP Disposing of a Property Asset Project Management – Development Management – Project Programming – Delay Claim Advisory

2. Disposing of a Property Asset Asset Strategy is the decision as to whether to hold, develop or dispose of a property asset

3. Prepare Asset Strategy Hold Hold / Develop / Sell Develop / Sell Highest and Best Use Study • Market Assessment by Urban Planner • Town Planning Assessment • Prepare Master Plan options • Financial Assessment / Feasibility Confirm Decision to Sell / Develop No Yes

4. Yes Sell ‘as is where is’ Value Add or Develop Rezoning, Site Remediation, Demolition, Refurbishment etc Marketing / Sales Contract Negotiation and Management • Settlement

5. Disposing of a Property Asset • Three phases in the disposal process • Deciding how to sell the property, i.e. ‘as is where is’ -vs- ‘value adding’ before offering for sale • Adding value to the property before it is sold • Marketing and selling the property

6. Disposing of a Property Asset • ‘As is where is’ -vs- ‘adding value’ • The market value of a property asset, or the price a vendor may expect to achieve in selling it, depends on its ‘highest and best use’ (HBU) • HBU means “the use of an asset that maximises its potential and that is physically possible, legally permissible and financially feasible” • The HBU of an NPO’s property asset is very often not based on its current use, but some other physically possible, legally permissible, financially feasible use

7. Disposing of a Property Asset • To determine the HBU of a property asset it may be necessary to engage a range of property consultants • Economist • Town Planning Consultant • Surveyor • Architect • Cost Planner • Valuer • Media and Communications Consultant • Development Manager

8. Disposing of a Property Asset • A decision to sell a property ‘as is where is’ is a low risk strategy which pushes the risks associated with a rezoning onto the purchaser • Number of disadvantages • Purchaser is likely to discount the true value of the property asset by factoring in a ‘risk premium’ – rezoning, decontaminate the site • Purchasers offer will be conditional on these things being satisfactorily resolved by the purchaser • May significantly delay the realisation of funds from the sale of the asset • May rule out some potential purchasers who are not prepared to take on the risks. Reducing the number of potential bidders may reduce competitive tension in the market • NPO is more likely to encounter less public and political resistance to an appropriate rezoning

9. Disposing of a Property Asset • Adding Value • Very likely that the HBU will not be used on its existing use • Unattractive in its current condition to other potential users or buyers • Number of ways an owner may ‘add value’ to a property asset • Rezoning the site to permit the HBU • Site remediation where contamination may be an issue • Demolition of existing improvements • Refurbishment of existing improvements • Redevelopment of the property

10. Disposing of a Property Asset • Rezoning – addressing the technical issues • May also be necessary to engage additional specialist consultants • Traffic • Hydraulic • Acoustic engineers • Environmental scientist • Rezoning application supported by a number of technical reports • A planning report prepared by the town planning consultant • Economic impact assessment • Environmental impact assessment • Acoustic report • A traffic impact assessment • Water, sewerage and storm water report

11. Disposing of a Property Asset • Rezoning – addressing the political issues • The rezoning decision notice • Development Manager

12. Disposing of a Property Asset • Marketing and Selling the Property Asset • Memorandum of information (MOI) • A typical MOI contains the following: • PART 1 • Invitation to Tender • Property Report • Introduction • Summary of Offer • Property Details • Site Plan • Area Overview • Ambitions / Desires • Development Potential • Concept Plans

13. Disposing of a Property Asset • PlanningReport • Introduction • Site History • Zoning • Road Closure • Development Control Plans • City Council Requirements • State Government and Regional Issues • Conclusion • Specific Requirements for the Site • Environmental Issues (if applicable) • Council Approval • PART 2 • Tender Document • Conditions of Tender • Terms and Conditions of Sale

14. Disposing of a Property Asset • Due Diligence • Building inspections • Legal investigations • Confirming the seller is legally entitled to sell the property • Investigating encumbrances, e.g. mortgages, leases, covenants, easements etc • Town planning checks • Concept designs and preliminary feasibility assessments

15. Disposing of a Property Asset • Contractual and Legal Risk Management Matters which may be managed under a conditional contract include: • Purchaser has to get all the approvals and must be seen to be acting promptly to achieve all the approvals • Purchaser has to achieve all the requested amendments to particular approvals • Environmental approvals must be carried out within an appropriate timeframe • Purchaser might need the consent from the vendor to undertake their applications • Insurances (payment of statutory fees, statutory obligations)

16. Disposing of a Property Asset • Transaction Management • Most of the transaction process will be managed by your legal representative • A Development Manager would: • Liaise with your legal representative • Manage and clearly outline the steps and timeframes to achieve settlement • Undertake a co-ordination role to follow upon what is required to happen, by whom and in a timely and complete manner

17. Disposing of a Property Asset • Putting up the ‘For Sale’ sign

18. Disposing of a Property Asset

19. Questions?