Real Estate Dealings Policy

Intent

This Policy has been established to ensure that all of James Cook University’s (JCU; the University) Real Estate marketplace enquiries, investigations, negotiations and dealings are managed by an Authorised Person and approved by the relevant financial delegate. The key objectives are to manage JCU’s risk and financial exposure, optimise and improve the quality of JCU’s Real Estate portfolio, and achieve value for money, whilst providing the best possible outcome for staff and students in strategic geographical locations.

Scope

This Policy applies to all staff, students, consultants and contractors representing JCU Australia.

This Policy does not apply to the Brisbane or Singapore campuses.

Definitions

Except as otherwise specified in this policy, the meaning of terms used in this policy are as per the Policy Glossary.

Acquisition means the acquisition of any kind of interest in Real Estate, regardless of value or tenure, by or on behalf of JCU. The term includes freehold, leasehold, Licence and similar occupancy arrangements.

Additional Acquisition Criteria means the document of the same name which provides further guidance on the particulars of property JCU seeks to acquire.

Authorised Person means Manager, Leasing and Commercial Portfolio; Associate Director, Planning and Capital Development; Director, Estate; or representatives approved by the Director, Estate to act on behalf of JCU.

Business Case means a document that justifies a project or undertaking on the basis of expected benefit for JCU, that is suitable for consideration by the management and governance committees of the University.

Client means the Division, College, Directorate, or Work Unit that will be the end user of the Real Estate that is to be acquired.

Demonstrated Approval means suitable approval from the funding source.

• In relation to term acquisitions this can be from the relevant manager or dean responsible for the budget that rental and maintenance funds will be sourced from (including funding source) and with sufficient financial delegation;  and in the cases where those funds are externally provided the approved budget from the funding source.
• In relation to permanent acquisitions this means the fully executed grant document.

Demonstrated Need means evidence that shows JCU’s need for the property is essential to be provided in step 1 of the procedures.

• For term acquisitions, this may be bookings to show the property has been adequately used and achieved an occupancy of at least 50% in the prior period.
• For permanent acquisitions this shows a demand for the property through bookings occupancy in leased property, or a fully executed grant document.

Develop means constructing a new Improvement on the Real Estate or making changes to an existing Improvement that increases or decreases the Gross Floor Area, the value or changes the Real Estate in any way.

Development Application means a formal application submitted to the local consent authority (Council) for permission to carry out a new development.

Development Work means any change to improve or unimproved Real Estate.

Disposal means the sale, termination or gifting of any kind of an interest in Real Estate, regardless of value, by or on behalf of JCU.

Draft Acquisition Strategy means the document provided by the Authorised Person to the client for approval. The document will demonstrate actions approvals and indicative timelines for the acquisition so the client is well informed of the process.

Due Diligence precedes and informs negotiations. It means thorough detailed analysis and investigation of Real Estate to ascertain compliance, fitness for purpose, value for money, safety, risks and opportunities.

Financier means the person or entity that is providing the finance for the Acquisition of the Real Estate. Note the source of the finance may impact certain aspects of this procedure.

Gross Floor Area means for a building, the total floor area of all storeys of the building, measured from the inside of the external walls and the centre of any common walls of the building.

Improvement means changes to any:

(a) building, fence or yard; or

(b) artificial watercourse or watering-place, bore, reservoir, well or apparatus for raising, holding or conveying water; or

(c) cultivation, garden, orchard or plantation; or

(d) building, structure or appliance that is a fixture for the working or management of land or stock pastured on the land or for maintaining, protecting or increasing the natural capabilities of the land.

JCU Special Conditions means the document of the same name that specifies all the special conditions that JCU must insert into acquisition documents, relevant to the nature of the acquisition.

Lease means a contractually binding document used by one party (lessor or landlord) to grant certain rights to another party (lessee or tenant) in relation to a particular premises for a particular term in exchange for consideration (usually rent). Generally, a lease provides exclusive rights to the tenant.

Lessee means the party that is granted the lease over the premises from the lessor. Also known as a tenant.

Lessor means the person or party that grants a lease of a premises to the lessee. Also known as landlord.

Licence means a contractually binding document used by one party (licensor or landlord) to grant certain rights to another party (licensee or tenant) in relation to a particular premises for a particular term in exchange for consideration (usually rent). Generally, a licence provides no exclusive rights to the tenant.

Licensor means the person or party that grants a lease of a premises to the lessee. Also known as landlord.

Licensee means the party that is granted the leases over the premises from the lessor. Also known as a tenant.

Marketplace Enquiries means all enquiries, whether formal or informal, in relation to Real Estate for JCU purposes.

Material Change of Use (MCU) means any of the following:

• the start of a new use of a premises or part of a premises
• the re-establishment on the premises of a use that has been abandoned; or
• a material increase in the intensity or scale of the use of the premises.

Memorandum of Understanding (MOU) means a non-binding document which effects or may give cause to affect a future Real Estate Dealing for JCU.

Permitted Use means the activity or activities that the tenant are authorised to carry out in the premises under the terms of the lease or licence

Possession means the point in time that JCU becomes responsible for the property, this is either:

(a) the day the tenure agreement permits JCU to access the premises; or

(b) the day of settlement (once completed) for the purchase of Real Estate.

Preliminary Acquisition Checklist means the document of the same name.

Premises means the item that is the subject of a lease of licence. A premises may be land, a building, part of a building, or any tangible place or location.

Real Estate means land, regardless of tenure, including all buildings (existing or proposed). Real Estate Acquisition Request Form means the ServiceNow form of the same name.

Real Estate Dealings means Acquisitions, Disposals Due Diligence Marketplace Enquiries, and Real Estate Management.

Real Estate Management means the management of JCU’s Real Estate portfolio, excluding the management of on campus student accommodation.

Searches Checklist means the document of the same name.

Tenure means the conditions under which land or buildings are held or occupied.

Value For Money means that the Acquisition of the property must provide demonstrable benefits to JCU, which may or may not be financial.

Policy

Real Estate dealings at JCU is based on the following principles:

1. General Responsibilities

1.1 Estate Directorate is responsible for all dealings regarding Real Estate which includes property.

1.2 Estate Directorate is responsible for the development and maintenance of all relevant documentation, procedures and templates to deliver on the purpose of the Real Estate Dealings Policy.

1.3 The Manager, Leasing and Commercial Portfolio will run a Real Estate annual planning process and present to the first Vice Chancellor’s Committee (VCC) meeting of each year for approval.  This process will engage the known Clients and seek to identify the Real Estate needs for that year.

1.4 The Manager, Leasing and Commercial Portfolio provides capital investment and Acquisition cost estimates to assist the Client with development of their Business Case for the proposed Acquisition.

1.5 The Manager, Leasing and Commercial Portfolio prepares property reports and Acquisition recommendations for consideration of VCC and/or approval of the relevant financial delegate.

1.6 The Manager, Leasing and Commercial Portfolio is responsible for briefing and engaging town planning services where required for MCU or similar Development Application for the required Permitted Use.

1.7 At least once a year, the Manager, Leasing and Commercial Portfolio, consults with the University Client base on their strategic needs for the coming financial year, and in particular with regard to new Real Estate and existing Real Estate with the lowest percentage usage.  The outcome of which will be presented to VCC annually.

1.8 At least once each year, the Manager, Leasing and Commercial Portfolio site visits, inspects and prepares written inspection reports for each of the Real Estate portfolio assets.

1.9 The Manager, Leasing and Commercial Portfolio updates and monitors the tenancy management system reporting and obtains relevant direction for expiring leases, exercise of lease renewal options, rent reviews etc.

1.10 The Manager, Leasing and Commercial Portfolio negotiates makegood and handover of Real Estate leased (or licenced) by or to JCU.

1.11 The Manager, Leasing and Commercial Portfolio administers contracts for Real Estate agents managing JCU Real Estate such as the Clinical Practice Building (CPB) and reports on key performance indicators (if any) for that contract, set by the Client from time to time.

1.12 Every transaction must be value for money for JCU. Whilst market conditions will always influence values, it is important to note that in certain circumstances the value JCU see in a particular asset may be greater than the market’s commercial estimate. JCU may see value in a particular property not due to the relative value in the market, but due to the opportunities the asset provides – for example, JCU may elect to purchase a property that is considered above market value if the opportunity cost of not buying is to compromise student experience.

1.13 The Manager, Leasing and Commercial Portfolio prepares property reports and Disposal recommendations for consideration of VCC and the relevant financial delegate.

2. Acquisition of Real Estate

2.1 A comprehensive brief endorsed by the Client is required by Estate Directorate prior to initiating space allocation or Marketplace Enquiries.

2.2 Estate Directorate will canvas options to acquire Real Estate only if there is no suitable space and/or land within JCU’s existing portfolio.

2.3 Only an Authorised Person has the mandate to initiate and undertake Marketplace Enquiries, negotiate Acquisition of Real Estate, and manage Real Estate on behalf of JCU.

2.4 Whilst an Authorised Person may negotiate terms and conditions for Real Estate Acquisitions, they do not have the authority to bind JCU to an Acquisition without approval of the financial delegate.

2.5 Due Diligence of preferred option/s is facilitated by Estate to ensure Real Estate is compliant and fit for purpose.  This will usually involve several engagements with the Client.  Examples of Due Diligence investigations include but are not limited to:

• Title searches, encumbrances, etc;
• Town planning and valuation advice;
• Certificate of Classification appropriate for the proposed use;
• Accessibility (AS1428.1) and security;
• Hazardous materials – asbestos, contamination, etc;
• Mechanical, electrical, fire services, etc;
• Safety and security of Real Estate, especially residential Real Estate; and
• Ascertaining building works and budget estimates required to meet the brief.

2.6 Only as a last resort and with prior approval from the financial delegate, with the Authorised Person acquire Real Estate at auction, as this type of sale does not allow for the Due Diligence process to be undertaken.

3. Real Estate Management

3.1 The Manager, Leasing and Commercial Portfolio is responsible for maintaining a register of JCU’s Real Estate portfolio including a tenancy management system for JCU’s (expenditure and revenue) leases and licences, and for all Real Estate which is not located on Bebegu Yumba or Nguma-bada campuses.

3.2 The Real Estate portfolio will be regularly reviewed and monitored by Estate Directorate, identifying opportunities for improvement in the quality of the estate, financial gains or savings, future strategic needs of the University Client base, estate usage, and risk mitigation.

4. Disposal of Real Estate

4.1 Estate Directorate is responsible for managing Disposals in a way that best protects and advances the interests of JCU.

4.2 Only an Authorised Person has the authority to brief and engage consultants such as valuers and solicitors to provide advice and prepare reports to support the Disposal process.

4.3 Only an Authorised Person may engage agents to market and facilitate the Disposal of JCU’s Real Estate.

4.4 Whilst an Authorised Person or agents acting on behalf of JCU may negotiate terms and conditions for Real Estate Disposals, they do not have the authority to bind JCU to a Disposal without approval from the financial delegate.

4.5 Any proceeds from the Disposal of JCU’s Real Estate will be allocated to Consolidated Revenue.

Related policy instruments

Space Allocation and Management Policy

Adaptive Workplace Policy

Asbestos and Management Control Policy

FMPM 710 Procurement Policy

Real Estate Acquisition Permanent Procedure

Real Estate Acquisition Term (Lease) Procedure

Schedules/Appendices

Appendix 1 Acquisition Criteria and Guidance

Related documents and legislation

James Cook University Act 1997

Statutory Bodies Financial Arrangements Act 1982 (Qld)

Land Titles Act 1994 (Qld)

Land Act 1994 (Qld)

Trusts Act 1973 (Qld)

Body Corporate and Community Management Act 1997 (Qld)

Residential Tenancies and Rooming Accommodation Act 2008 (Qld)

Property Law Act 1974 (Cth)

Administration

Approval Details

Revision History