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Federal Property Management

Federal Property Management. Professor Andrew Baum. September 19th 2014. Introduction. How should government property assets be managed? Who owns the asset? Who manages and operates the asset? Models Owner occupied Leased Partnership operated. Ownership. Capital availability

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Federal Property Management

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  1. Federal Property Management Professor Andrew Baum September 19th 2014

  2. Introduction • How should government property assets be managed? • Who owns the asset? • Who manages and operates the asset? • Models • Owner occupied • Leased • Partnership operated

  3. Ownership • Capital availability • Commitment to future liabilities • Refurbishment costs

  4. Management • Office design and layout • Building maintenance • Facilities management

  5. Model 1: owner-occupation • Ownership provides control • Fit for purpose facilities and management? • Flexibility?

  6. Model 2: leasehold • Sale and leaseback can maximise capital receipts • Shared control: who manages facilities?

  7. Building 1 • Private tenants • Short leases • Value: £900m psf

  8. Building 2 • Government tenant • 20 year lease • Value: £1,500 psf

  9. Example: building 2 • Government tenant, 20 year lease • Rent £500,000, fixed • Government bond yield: 7% • Value?

  10. Example: building 2 • Government tenant, 20 year lease • Rent £500,000, indexed to inflation • Government indexed bond yield: 3% • Value?

  11. Model 3: partnership • Operating partner owns asset • Provides combination of space and facilities • Flexible for occupier • Expensive?

  12. Summary • How should government property assets be managed? • Who owns the asset? • Who manages and operates the asset? • Models • Owner occupied • Leased • Partnership operated • What would a private business do? Is government different?

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