Asset Management Sydney

Overview

DSA provides a range of NDIS funded services to people with disabilities across NSW. Over its 60+ years evolution through organic growth and acquisition, the property portfolio had grown to include more than a dozen commercial facilities, including offices, education centres, counselling spaces, packaging factories and warehouses.

The portfolio included a combination of owned and leased facilities and was identified as being both a major expense for the business and also a potential source of significant cost inefficiency.

We were appointed to undertake an independent evaluation of the utilisation and commercial efficacy of the portfolio and recommend a revised portfolio model to sustain the business for the next 10-20 years.

Approach

To develop an accurate profile of the profile, a full analysis of each property and its utilisation was undertaken. The analysis detailed for each leased property: size, FTE/m2, $/m2, $/FTE, # workstations, # hot desks, # meeting room, utilisation of each space, $ of under-utilised space.

For owned assets, the same metrics were gathered and comparable costs were calculated using current market rates for similar properties; these metrics were supplemented with additional costs associated with asset ownership:

• Projected maintenance costs for ten years
• Projected capital costs for ten years
• Analysis of BCA compliance and the cost of achieving and maintaining compliance.

These costs were compared to cost of leasing equivalent facilities and benefits of generating cash through sale of leased properties.

The analysis proved that most facilities were significantly underutilised and many legacy leases were considerably above market rates. The review of owned facilities also highlighted that lack of compliance with applicable statutory instruments and the cost of rectification and ongoing compliance was calculated and included in the overall analysis.

Benefits

It was evident that the portfolio was inefficient and a major operational and financial burden to the organisation. A business case for rationalising and consolidating the portfolio was developed and submitted to DSA’s Board which approved all the recommendations which included:

• Sourcing a new centralised multi-purpose head-office, warehouse and factory site
• Developing a project scope for the design and construction of the new facility
• Negotiating the new lease, including asset lifecycle agreements, make-good obligations and incentives
• Arranging the sale of the owned properties to be vacated
• Negotiating lease-breaks with landlords
• Planning and completing all make-good obligations
• Appointing a D&C contractor
• Management of the D&C project

Due to other compliance factors that arose within the organisation, the entire process had to be completed within 15 months; which it was, under budget.