Proprietary Commercial Real-Estate Investments
Real-estate opportunities often emerge individually. In that context it can be difficult to focus on the whole portfolio and easy to lose sight of broader strategic goals. At the same time, today’s ever-changing market conditions can quickly render existing strategies ineffective and expose a company to risk. In our experience, comprehensive strategies that balance long-term value creation and appropriate risk considerations are crucial to success. We assist clients in developing a strategy that addresses three core dimensions—geographic focus, asset class focus, and role in the value chain. At the same time, by identifying key risk categories, we ensure that clients properly manage risk. In recent years we have worked closely with clients to assess various strategic questions including scale-up opportunities across cities, portfolio mix across asset classes, product offerings, financing and appropriate debt levels, and ownership and development structures.
Our global real estate team works closely with related practices—including corporate finance, organization, and operations—to constantly test, improve, and expand our tools and knowledge. Through extensive client service we have developed best practices for core real estate processes such as project budgeting, design and engineering, project management, project approvals, and risk management. Over the course of an engagement we build our clients’ capabilities in those processes so that long after we leave, our clients continue to achieve results.
Maximizing Revenue from Government-Owned Assets
The United States Federal Government's facilities and real-estate portfolio is amongst the largest and most diverse in the world, ranging from research labs to secure defense installations. The US General Services Administration (GSA) reports that Federal agencies occupy 273,000 buildings (92% owned) for a total 2.8 billion square feet and approximately $27Bn annual spend in annual operating cost. These facilities are critical to delivering on their respective agency missions. Selling public assets can be an effective way to improve fiscal health but can also be unpopular, slow, and risky. It is also just one of many available options. From real estate and roads to state-owned agencies and monopolies, there are multiple approaches to create new sources of general revenue that governments can use to improve finances or invest in new infrastructure and other key priorities.
As financial deficits remain high in much of the developed world and spending needs continue to rise, full asset sales will be an important option for meeting these needs. In the United Kingdom, for example, the government has announced a £20 billion (US $33 billion) target for asset sales. The Australian government announced plans to raise up to AU $130 billion (US $120 billion) from asset sales. And there is substantial scope for such sales: eurozone governments hold €4 trillion of fixed assets, and the US government owns an estimated 45,000 underused or underutilized buildings. With an explicit understanding of motivations, a thorough scan and sift of assets, rapid diagnostics to identify opportunities, and execution with care, governments can create new sources of revenue. By exploring the range of options from asset sales to alternative approaches, governments can create unexpected value for the public.
Valuation and Due Diligence
We work with clients on issues relevant to the enterprise-wide management of their business such as growth, portfolio mix, business unit strategy, the impact of global trends, and the management of government stakeholders. Our partners and experts are well versed in both top-down strategic approaches and the innovation needed to compete in a global economy marked by disruptive technology and property markets. To support those structures we assist clients in defining decision rights and performance-management processes. We take a holistic approach to address the pricing potential and sales and marketing strategy for a project. We work closely with our Marketing and Sales Practice, draw upon benchmarks, and apply best practices in areas such as phasing and showing flats to help our clients succeed.