Policy Real Estate Acquisition Term (Lease) Procedure

Real Estate Acquisition Term (Lease) Procedure


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Intent

This Procedure sets out the steps to lease or take temporary possession of Real Estate on behalf of James Cook University (JCU; the University).

Scope

The procedure applies to all staff, students, consultants and contractors representing JCU Australia in the acquisition of Real Estate via lease.

This procedure does not apply to JCU Brisbane or JCU Singapore.

This Procedure does not apply to the acquisition of Real Estate via purchase – refer to the Real Estate Acquisition Permanent Procedure.

Definitions

Except as otherwise specified in this procedure, the meaning of terms used in this procedure are as per the Real Estate Dealings Policy and the Policy Glossary.

Introduction

To fulfill its strategic objectives to serve regional and remote Queensland, the University requires a diverse Real Estate portfolio across the State. The University’s Real Estate portfolio ranges from residential houses and apartment to commercial buildings and land. From time to time the range and location of Real Estate within the portfolio will change, requiring an Authorised Person (AP) to acquire (including leasing) or dispose of Real Estate.

This procedure sets out the process and steps to take to ensure the University leases the correct Real Estate in response to the University’s strategic plans and objectives, on the correct terms, relevant to its needs and the greater market conditions, and in the correct geographical location. For example, when JCU leases property for student accommodation or commercial use, this procedure and policy apply in full. For the avoidance of doubt, the source of the finance which pertinent to the transaction and Tenure of Real Estate is irrelevant and the policy and procedure apply.

Procedure

Under this Procedure, a Lease or term agreement shall fit under one of the following four processes:

  • Process 1 – Renewal Lease - Small;
  • Process 2 – Renewal Lease – Large;
  • Process 3 – New Lease – Small; and
  • Process 4 – New Lease – Large.

To provide further direction and clarity, each of these processes are expanded further into a series of steps as detailed below.

The steps also identify what actions will occur, how it will be processed and who is responsible for the execution, including:

  • Actions;
  • Responsible officer;
  • Timing; and
  • Sequence.

Some of the actions may overlap rather than run consecutively. The timings shown are indicative and should only be used as a guide.

Process 1 – Renewal Lease – Small

Typically, this process will be used for residential property such as student accommodation but may also be used for other short-term lease arrangements. Ideally this need should have been identified in the annual planning process.

Use this process if:

  • The Real Estate has been leased by JCU previously; and
  • The Lease term is 3 years or less; and
  • The proposed gross rent (including outgoings) will not exceed $50,000 + GST per annum.

Step

Action

Responsible Officer

Timing

1.1

Client identifies a need and submits a Real Estate Request Form to Manager, Leasing and Commercial Portfolio. The request should include supporting documentation e.g., budget, future funding source, demand analysis, long term plan.

Demand analysis should include a record of historic use for the prior period.

Client

 

1.2

Acting as the AP, the request is evaluated and compared to existing property portfolio. AP consults with parties including Space Team. AP arranges meeting with Client to discuss.

Manager, Leasing and Commercial Portfolio

2 weeks

1.3

AP completes market scan to determine fair market rates and analyse other available Real Estate on the market at the time.

Manager, Leasing and Commercial Portfolio

2 weeks

1.4

If the existing Real Estate still represents the best option in the area, the AP negotiates a new lease period of 3 years or less.

If the market scan identifies better alternative Real Estate, then Process 3 – New Lease – Small, shall be followed.

Manager, Leasing and Commercial Portfolio

2 weeks

1.5

Check the last Real Estate audit for outstanding actions. If any action is being delayed by the Landlord, ensure they are resolved as part of the lease renewal process.

NOTE: Safety and security are very important and should not be compromised in residential Real Estate.

Manager, Leasing and Commercial Portfolio

2 weeks

1.6

AP signs Lease.

Manager, Leasing and Commercial Portfolio

1 week

1.7

Arrange for Landlord or Agent to sign Lease.

Manager, Leasing and Commercial Portfolio

1 week

1.8

AP to;

  1. Save lease to legal system;
  2. Update Master tenancy database; and
  3. Inform FaBS, Treasury & Corporate Finance, WHS, Insurance and Estate Services.

Manager, Leasing and Commercial Portfolio

1 week

Process 2 – Renewal Lease – Large

Typically, this process will cover the exercising of an option of an existing lease, or the landlord offering a new lease to JCU of commercial Real Estate, for example a city campus.

Estate Advisory Committee endorsement is a necessary step of this process.

Ideally the need to extend or renew an existing lease should have been identified in the annual planning process and therefore be preapproved.

Use this process if:

  • The Real Estate has been leased by JCU previously; and
  • JCU has an option to exercise to grant a further term; and
  • The Real Estate is not covered by Process 1.

Step

Action

Responsible Officer

Timing

2.1

AP notifies Client of option 9 months prior.

Manager, Leasing and Commercial Portfolio

 

2.2

Client submits a Real Estate Request Form to Manager, Leasing and Commercial Portfolio. Request should include supporting documentation e.g., budget, future funding source, demand analysis, long term plan.

Demand analysis should include a record of historic use for the prior period.

Client

4 weeks

2.3

AP reviews and drafts lease renewal documentations and consults with Client.

Manager, Leasing and Commercial Portfolio

3 weeks

2.4

If the renewal has not been preapproved in the annual planning process, the Client drafts Estate Advisory Committee (EAC) paper seeking approval.

Client

2 weeks

2.5

AP submits paper to EAC and EAC consider paper and recommend to the Vice Chancellor.

Approved – AP goes to step 6.

Not approved – AP notify Client and Landlord and commence departure from tenancy.

Manager, Leasing and Commercial Portfolio

EAC

Up to 12 weeks

2.6

Check the last Real Estate audit for outstanding actions. If any action is being delayed by the Landlord, ensure they are resolved as part of the lease renewal process.

NOTE: Safety and security are very important and should not be compromised.

Manager, Leasing and Commercial Portfolio

2 weeks

2.7

Exercise option in writing with assistance from JCU Legal if required; and

Review proposed documents provided by landlord with JCU Legal.

Manager, Leasing and Commercial Portfolio

2 weeks

2.8

Negotiate a fair market rent.

Note: these mechanisms are generally set out in the lease, leaving little room for negotiation. AP to ensure compliance with lease provisions.

Manager, Leasing and Commercial Portfolio

4 weeks

2.9

AP to:

  1. Present   Lease and recommendations to the DVC S&R for signing;
  2. Save lease amendment documents in the legal drive when provided by landlord;
  3. Update master tenancy database;
  4. Notify the client and ensure they provide OPF to FaBS; and
  5. Inform FaBS, Treasury & Corporate Finance, WHS, Insurance and Estate Services.

Manager, Leasing and Commercial Portfolio

2 weeks

Process 3 – New Lease – Small

Typically, this process will be used for residential property such as student accommodation but may also be used for other short-term lease arrangements.  Ideally this need should have been identified in the annual planning process.

Note – the Client is not permitted to make any enquiries with any third party, agent, agency, developer, or anyone other than the AP.

Use this process if:

  • The Real Estate has not been leased by JCU previously; and
  • The Lease term is 3 years or less; and
  • The proposed gross rent (including outgoings) will not exceed $50,000 + GST per annum.

Step

Action

Responsible Officer

Timing

3.1

Client identifies a need and submits a Real Estate Request Form to Manager, Leasing and Commercial Portfolio. Request should include supporting documentation e.g., budget, demand analysis, long term plan.

Client

 

3.2

Request evaluated and compared to existing property portfolio, AP consults with parties including Space team. AP arrange meeting with Client to discuss.

Manager, Leasing and Commercial Portfolio

1 week

3.3

If the AP agrees that new Real Estate is still required, the Client completes a Preliminary Acquisition Checklist, including the provision of funding source.

Client

1 week

3.4

AP completes market scan, then shares and discusses results with Client.

Manager, Leasing and Commercial Portfolio

2 weeks

3.5

Once a preferred option is agreed, AP negotiates with the Landlord or Agent.

Manager, Leasing and Commercial Portfolio

1 week

3.6

Organise and complete a physical inspection, including safety, security, building works, etc with a cost estimate.  Present a go / no go preliminary recommendation to the Client for approval and budget.

Obtain Landlord or Agent approval to complete works.

NOTE: Safety and security are very important and should not be compromised.

Manager, Leasing and Commercial Portfolio

2 weeks

3.7

AP signs Lease.

Manager, Leasing and Commercial Portfolio

1 week

3.8

Arrange for Landlord or Agent to sign Lease and exchange keys.

Manager, Leasing and Commercial Portfolio

1 week

3.9

AP to;

  1. Save lease to legal system;
  2. Update Master tenancy system; and
  3. Inform FaBS, Treasury & Corporate Finance, WHS, Insurance and Estate Services.

Manager, Leasing and Commercial Portfolio

1 week

Process 4 – New Lease – Large

Typically, this process will be used for leasing commercial Real Estate, for example a city campus.  The need to acquire large commercial space is a response to a strategic business decision and therefore in principle approval has already been granted, subject to finding the correct Real Estate.

Due to the scale of the investment in a large Lease and the potential risks, due diligence is an essential early step in this process, and it shall therefore occur much earlier in the program and may require external consultants as well as the JCU team.

Estate Advisory Committee endorsement is a necessary step in this process once the preferred Real Estate is identified.

Note – the Client is not permitted to make any enquiries with any third party, agent, agency, developer, or anyone other than the AP.

Use this procedure if:

  • the Real Estate has not been leased by JCU previously; and
  • the Real Estate is not covered in Process 3.

Step

Action

Responsible Officer

Timing

4.1

DVC S&R will inform the Estate Director of the business need.

DVC S&R

 

4.2

An Estate Directorate Project Manager (PM) will be assigned to the project and the AP will be made aware of the Real Estate need.

Director Estate

1 week

4.3

The PM and AP will consult with the Estate Space Team and take a brief from the Client.

Project Manager and

Manager, Leasing and Commercial Portfolio

2 weeks

4.4

The Estate Team will create a space requirement from the Client brief.

Project Manager

4 weeks

4.5

Using the space requirement, AP completes a market scan, then shares and discusses the results with PM and Client.

Manager, Leasing and Commercial Portfolio

2 weeks

4.6

If the proposed Real Estate is viable, AP develops an acquisition strategy and shares with the Client and PM and commences initial negotiations.

Manager, Leasing and Commercial Portfolio

3 weeks

4.7

Organise complete due diligence of the Real Estate to inform a go /no go decision and the EAC Paper.

Project Manager

4 weeks

4.8

AP and PM develop total cost of project and present to Estate Advisory Committee for approval, which may be subject to further due diligence.

If not approved, close project, or start at stage 2 again.

Project Manager and

Manager, Leasing and Commercial Portfolio

4 weeks

4.9

AP interaction with agents and owners to negotiate suitable terms for the contract.

Manager, Leasing and Commercial Portfolio

4 weeks

4.10

PM completes due diligence, including obtaining town planning advice and consultation with local council.

Project Manager

3 weeks

4.11

JCU Legal and external lawyers will review the contract and confirm it is OK to proceed.

Manager, Leasing and Commercial Portfolio

2 weeks

4.12

Present Lease and recommendations to the DVC S&R for execution.

Manager, Leasing and Commercial Portfolio

1 week

4.13

Arrange for Landlord or Agent to sign Lease.

Manager, Leasing and Commercial Portfolio

1 week

4.14

AP to;

  • Save lease to legal system;
  • Update Master tenancy system; and
  • Inform FaBS, Treasury & Corporate Finance, WHS, Insurance and Estate Services.

Manager, Leasing and Commercial Portfolio

1 week

Related policy instruments

Real Estate Dealings Policy

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)

Schedules/Appendices

JCU Searches List

Initial Concept Template

Draft Acquisition Strategy

Administration

NOTE:  Printed copies of this procedure are uncontrolled, and currency can only be assured at the time of printing.

Approval Details

Policy Domain

Estate and Facility Management

Policy Custodian

Deputy Vice Chancellor, Services and Resources

Approval Authority

Estate Committee

Date for next Major Review

30/11/2028

Revision History

Version

Approval date

Implementation date

Details

Author

23-1

30/11/2023

14/12/2023

Procedure established.

Manager, Leasing and Commercial Portfolio

Keywords

Lease, real estate, disposal, auction, acquisition, land, property

Contact person

Manager, Leasing and Commercial Portfolio