Real estate strategy development for a Victorian regional university

As in many industries, COVID-19 created a seismic shift in the Higher Education sector. With sharp declines in international student revenue, underperforming domestic offers and areas of operational inefficiency were exposed across many Universities. A new Vice Chancellor and executive team had taken an important step by developing and engaging the organisation on a five-year strategic plan (Strategic Plan), to which real estate was central.

The University’s real estate portfolio comprised large parcels of land and expansive buildings with unrealised potential to support academic and vocational training programs specifically targeted within the Strategic Plan. KordaMentha was engaged to work alongside executive and asset commercialisation teams to identify, formulate and implement practical, efficient steps to unlock capital and operational value over the short, medium and long terms.

The key objectives of the engagement were for our team to: 

• Develop a real estate portfolio strategy aligned with the Strategic Plan.
• Design and implement a new structured approach to investment decision-making, giving regard to project prioritisation, capital expenditure programs, including commercial implications of legacy maintenance issues and resourcing constraints.
• Introduce market and leading industry insights to master planning process with industry informed feedback.

How we helped

We lead our approach with an asset commercialisation opportunity assessment across the geographically, physically, functionally and commercially diverse portfolio of real estate assets. University leadership was then engaged to gain buy-in on proposed solutions, including presentations to critical council sub-committess, before implementing support to the asset commercialisation and facilities managements teams to progress the priority real estate projects identified.

Outcomes 

• Formulation of strategic real estate capital initiatives to release significant, unproductive capital across the portfolio.
• Secured support from the university executive and endorsement of the university’s council within two months of our appointment to pursue proposed initiatives.
• Designed and managed an ‘audit’ of asset management practices and information available.
• Identified and appointed specialised consultants to address critical information gaps; including the detailed account of a $13 million capital expenditure liability.
• Initiated and led extensive informal market sounding process – supported by bespoke collateral - with leading institutional investors and social infrastructure facility operators.
• Designed and recommended practical and efficient asset-backed debt and equity funding solutions, informed by findings from the soft-sounding process, in addition to financial modelling of debt and equity capital partnership scenarios.