Download - Federal Property Management
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Federal Property Management
Professor Andrew Baum
September 19th 2014
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Introduction
How should government property assets be managed?
Who owns the asset?
Who manages and operates the asset?
ModelsOwner occupiedLeasedPartnership operated
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Ownership
Capital availability
Commitment to future liabilitiesRefurbishment costs
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Management
Office design and layout
Building maintenance
Facilities management
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Model 1: owner-occupation
Ownership provides control
Fit for purpose facilities and management?
Flexibility?
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Model 2: leasehold
Sale and leaseback can maximise capital receipts
Shared control: who manages facilities?
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Building 1
• Private tenants• Short leases• Value: £900m psf
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Building 2
• Government tenant• 20 year lease• Value: £1,500 psf
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Example: building 2
Government tenant, 20 year lease
Rent £500,000, fixed
Government bond yield: 7%
Value?
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Example: building 2
Government tenant, 20 year lease
Rent £500,000, indexed to inflation
Government indexed bond yield: 3%
Value?
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Model 3: partnership
Operating partner owns asset
Provides combination of space and facilities
Flexible for occupier
Expensive?
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Summary
How should government property assets be managed?Who owns the asset?Who manages and operates the asset?
ModelsOwner occupiedLeasedPartnership operated
What would a private business do? Is government different?