We can help through the entire process, from Asset Map and Holding Company to Implementing a hands-on active asset management.
Indicative
valuation
An ‘Asset Map’ aims to
– Surface the vast majority of asset that is held directly or indirectly by various governments entities, through asset tracing techniques
– Compile an Asset Register and Indicative Valuation by analysing the value of the aggregate inventory and utilizing a blend of property pricing techniques.
The Asset Map could be used as a feasibility study to gain a better understanding of the potential value and revenues generated from better management of public assets.
The simple data sets required for producing an Asset Map of the real estate portfolio, can be best understood from the Boston-example in the attached presentation and the underlying data sheets in this link.
Publishing an Annual Review, outlining the value and yield of the portfolio, could help generate public support for professionalizing the management of the portfolio (see the attached Lithuanian-example)
The Public Wealth Fund
Consolidate the commercial portfolio with the proper governance structure will help minimize fiscal risk and fully delegate financial responsibility and accountability to an independent institution
An independent holding company at arms-length from short-term political interference, will allow government to focus on the wider economic issues by fully delegating the management of the commercial portfolio to professional management.
Active Asset Management
Once inside the holding company, a comprehensive business plan will help put each asset to its most productive use, alternatively making clear the opportunity cost of using the asset in a sub-optimal way.
Implementing a hands-on active asset management will allow you to commercialize, optimize and potentially rationalize your commercial portfolio to the benefit of the whole of society.
Commercialization
of public assets requires that a comprehensive business plan makes an assessment of all assets, including real estate assets that are unused, used by third parties, or directly used in the provision of public services, but that can either be relocated to more cost-effective/ beneficial locations, or used to generate ancillary income.
Optimization
requires economies of scale to be achieved across the entire portfolio.
Rationalization
Is an option that involves determining mature assets, which are those that have reached a fair value and where the proceeds from a sale can be reinvested in assets that are capable of yielding a higher return. Mature assets could be disposed of at the relevant point in the market’s cycle, as part of the broader business plan for maximization of yield across the entire portfolio.
Monies generated from rationalization activities should be first made available as a source of funding for the achievement of the business plan and ultimately to fund other investments such as infrastructure investments. including housing. Alternatively, the yield could be used for economic development in other areas such as schools or hospitals – to the benefit of society as a whole.
“The monetization of these under-exploited real commercial public assets will likely require considerable innovation in capital markets and investment banking
Willem Buiter, Chief Economist Citi Group
Dag Detter
|
+46 70 327 61 39
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dag@detterco.com
Dag Detter | +46 70 327 61 39 | DAG@DETTERCO.COM