Home' Australian Ageing Agenda : AAA Spt-Oct 2013 Contents "The organisation and
its CEO end up operating
in a fragmented capacity
out of multiple smaller
locations or consolidating
into legacy premises that
are now poorly adapted
for their current use," Mr
He says, while it might
seem fortunate to be able
to operate out of a range
of legacy buildings owned
by the organisation, there
are financial downsides.
downside can be either
maintenance or spending
money on adapting and
maintaining what are fundamentally
inappropriate buildings, often in poorly
"The real cost of the property's
inefficiencies are lost in the
'miscellaneous' column in the accounts,
and there is no transparency of the real
cost of property in running the business.
"The commercial reality is that if the
costs are not being measured, then they
cannot be efficiently managed," he says.
GETTING THE MESSAGE
The backlog of matters accruing from
historic property arrangements is often
only recognised or acknowledged by
management and the board, says Martoo,
when specific issues begin to emerge.
"Once the property issue becomes
sufficiently serious to warrant the CEO's
attention, it is often time to take a broader
look at the property portfolio and to start
asking questions about its suitability."
Martoo says triggers can include
reactive issues such as cost blowouts in
property outgoings, plant and equipment
failures, roof leaks etcetera, from deferred
maintenance and even
the need to respond to a
property Resumption or
Town Planning rezoning
notice [see case study].
But a property portfolio
review can also be
triggered by opportunities
arising such as changes
to government funding
models, new services or
service changes, a lease
donation or a merger or
In reviewing the property
portfolio, Martoo says the
CEO will need to provide
the board with a range of business cases.
It might include identifying investment
opportunities and sites, feasibility studies,
negotiation with statutory bodies, plans to
manage the delivery of new premises and
overseeing the marketing and disposal of
The starting point for the review, he says,
must be the organisation's 'reason for being';
it should not be the existing property assets.
"The elements of the management
strategy for any organisation should support
its mission, vision and values. Once the
service delivery model is properly identified
and understood a suitable property
management plan can be prepared.
This may ultimately include choosing
between being a property owner versus a
property user, he adds.
"The best approach is to undertake
a holistic review of the organisation,
the business model and the service
delivery strategy and develop a property
strategy that will support it, not the
other way around." n
Russell Martoo is managing director of
RCP. Email: email@example.com
property asset dilemma
Good management of a legacy property portfolio can not only
avoid potential losses, it can underwrite service expansion and
help guarantee the not-for-profit organisation's mission. Keryn
Curtis picked up some tips from Russell Martoo at this year's
Better Boards Conference.
Not-for-profit organisations can
often have quite substantial
legacy property portfolios that
have been acquired over time.
They might involve church
land and assets; property bequeathed
by individuals or government; or be the
product of amalgamations and mergers.
These property portfolios have often
grown like topsy, over a long period of
time, by organic transformation rather
than commercial viability. Many are
Yet, according to a project management
specialist, despite their intrinsic value, the
property portfolio's potential as an asset is
frequently under-realised and sometimes
At a well-attended session at this year's
Better Boards Conference in Melbourne
in early July, project management
consultant Russell Martoo argued that,
with a thoughtfully considered property
strategy, an organisation can both protect
and maximize the value of these property
assets, thus enhancing its ability to
provide its valuable services.
AN ACTIVE ASSET
Martoo says there is a tendency among
many not-for-profit organisations to assume
their property assets must remain static.
"A property portfolio is not a static asset
and its value can rise or fall with a range of
factors, positive and negative" he says.
With proper attention, he argues, the
valuable asset can be actively contributing
to the organisation's ability to provide its
services. If totally ignored, the asset may
become a liability.
"If the non-profit is an organisation
that delivers services from more than
one location it will often also comprise a
mixture of uses and tenure arrangements,
for example, freehold, leasehold, licensed
or deed of grant in trust, even rent-free.
Sometimes there is nothing in writing!
34 | SEPTEMBER -- OCTOBER 2013 | AAA
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