Over recent years, the tertiary sector has been confronted with significant shifts in government policy, often requiring individual universities to make significant changes to their property portfolio to reflect changing education priorities.
Maddocks has advised various universities on all issues relevant to divesting significant property assets in response to changes in government policy. Fundamental to ensuring a smooth transaction and optimum outcome is to prepare properly at the outset and identify any potential areas of risk or delay. Best practice includes addressing the following:
- is the current zoning (usually public use education) appropriate to go to the market
- appoint planning consultants to advise and engage with local councils/state government planning department prior to going to market.
- appoint well-credentialed specialist advisors (e.g. commercial property advisory, valuation, environmental, building regulation, mechanical, electrical, hydraulic etc.)
- conduct title searches and carry out establishment survey of title and building boundaries
- prepare existing conditions report evidencing current status to identify any discrepancies
- obtain preliminary valuation
- commission appropriate environmental reports
- conduct legal review of leases and other agreements and encumbrances.
Establish procurement process
Consider what sale process (or series of processes) is best given the nature of the property and the market. For example:
- expression of interest
- request for proposals
- structured negotiations
State government policy
- consider requirements of Government Land Monitor (or equivalent)
- understand if state government and local councils have a first right of refusal
- inability to sell at less than market value
- valuation to be obtained from Valuer-General
- understand whether private treaty sales are permitted.
- ministerial approval will be required for certain sales
- engage with Department of Education and Training (or equivalent) to understand government approval process.
- establish independent project team and evaluation panel
- appoint specialist advisors in property, legal, environmental etc. to assist in negotiations and advise evaluation panel
- define decision making role of University council;
- appoint a probity advisor and approve a probity plan
- disclosure of conflicts of interest and confidentiality obligations
- manage communications with proponents, government and other stakeholders
- ensure best practice file management.
In the increasingly complex environment of delivering tertiary education, universities need to be prepared for the possibility of having to divest long-held property assets in a relatively short timeframe. Addressing the above issues in a timely fashion will help ensure a smoother transition of the property to market and, ultimately, an optimal divestment.