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OHA Property Strategic Management

Assessment of OHA Real Estate Strategy. OHA Real Estate Business Plan. OHA Real Estate Investment Policy. OHA Property Strategic Management. The decision rules employed to evaluate properties are made explicit through OHA Real Estate Investment Assessment Model.

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OHA Property Strategic Management

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  1. Assessment of OHA Real Estate Strategy OHA Real Estate Business Plan OHA Real Estate Investment Policy OHA Property Strategic Management The decision rules employed to evaluate properties are made explicit through OHA Real Estate Investment Assessment Model. OHA Real Estate Investment Assessment Model The interaction of the assessment of each property and its implication for the overall OHA property portfolio are addressed through the dual application of the OHA Real Estate Investment Assessment Model and the OHA Real Estate Asset Allocation Investment Portfolio Model. OHA Real Estate Vision Mission and Strategy OHA Real Estate Asset Allocation Investment Portfolio Model The objectives and particulars of OHA property involvement are specified in the OHA real Estate Investment Policy. OHA Real Estate Strategy is informed by the assessment of real estate involvements and considerations of implication of OHA’s current real estate practices and desired best practices derived from assessment process. High level ideas and priorities of real estate strategy are converted to more particular implementation programs in OHA Business Plan The portfolio composition and diversification guidelines specified in the Investment Policy are implemented through OHA Real Estate Asset Allocation Investment Portfolio Model. 1

  2. Implementing the OHA Real Estate Vision • OHA commitment to create property strategy • Diagnostic work to assess SWOT, address objectives, create strategy • Design strategy re REVMS • Board of Trustees assess and discuss strategy • Board of Trustees approve strategy • Pursue return of Ceded Lands • Translate strategy into investment policy • Extend strategy to create real estate business plan 2

  3. OHA Real Estate Vision Mission & Strategy • Champion best practices re property involvements for every aspect of board and staff organization. • Expand the portfolio of Hawaii lands over which OHA exerts direct influence and control. • Pursue initiatives that can facilitate creating dominion over all of Hawaii’s lands and the public aspects of every decision concerning Hawaii’s lands. • Establish powerful organization and strong infrastructure to implement OHA land vision and mission. • Build financial foundation to support the OHA land and real estate objectives. 3

  4. Implementation Involves Balancing Multiple Considerations • Fiduciary duty • Compliance with REVMS guidelines and OHA Real Estate Investment Policy • Current organization resources and capabilities • Building a land base plus wealth creation aspirations • Fiscal prudence re current financial realities 4

  5. Pursue Return of Ceded Lands • Engage in negotiations to gain return of ceded lands • Establish process to evaluate and select target lands • Evaluate all Hawaii public lands • Select target properties • Negotiate terms of selected properties with State • Board approval • Finalize approved properties to be returned to OHA 5

  6. Translate REVMS into Investment Policy • Consider how to reconcile multiple competing priorities • Address specific critical strategic investment issues • Integrate ceded lands into Investment Policy and Portfolio Composition Guidelines • Specify portfolio composition • Specify investment return targets 6

  7. Must Reconcile Multiple Competing Priorities • Role of land in Hawai’ian culture • Objective to build land base for future nation • Consequence of return of ceded lands • Responsibilities • Opportunities • Implications • Balance user and programmatic priorities with fiduciary investing principles 7

  8. Strategic Portfolio Management NeededTo Balance Competing Interests • Balance staff needs and project requirements • Balance timing of current and future returns • Balance allocation to legacy/programmatic property and economic property • Create portfolio management function • Balance competing interests re OHA property involvements 8

  9. Address Specific Critical Strategic Investment Issues • Allocation of total investable funds to real estate investing program • Specify portfolio composition guidelines • Specify return objectives for each property type • Establish decision process re direct investing • Role of global real estate securities in portfolio • Diversify Hawaii risk • Realize higher investment returns 9

  10. Strategic Implications of Future Value Property • Timing re when value might be realized, • Duration of time that might be required to realize the value • The political challenges OHA might confront, • The political capital OHA might need to expend to harvest the value • The financial resources OHA might need to spend to steward • The ultimate value of the property. 10

  11. Implications of Substantial Portfolio Allocation to Future Value Properties More Investment in Future Value Property More staff resources needed to manage property Less investment in current return property Larger staff maybe needed to manage overall LAND MANAGEMENT Portfolio Less current income and higher costs Less staff time available to find superior economic investments Need make investments via management resources and professional services Invest fund balances to create future value Less funds available provide services currently to beneficiaries 11

  12. Management Resources and Property Involvement 12

  13. Financial Consequences of Property Involvement 13

  14. Management Resources and Financial Consequences of Pure Stewardship: Culturally Significant Sacred Property 14

  15. Management Resources and Financial Consequences of Pure Stewardship: Programmatic Lands 15

  16. Management Resources and Financial Consequences of Pure Stewardship: OHA Direct Property Involvements 16

  17. Management Resources and Financial Consequences of Pure Stewardship: Global Property Securities Investment 17

  18. Management Resources and Financial Consequences of Pure Stewardship: Integrated OHA Property Involvement Strategies 18

  19. Implication of Integrated OHA Property Involvement Strategies Diverse range of activities Varying management resources Varying financial consequences Much interdependency between different strategies Integrated, holistic strategic approach preferred over incremental, transactions style 19

  20. OHA Real Estate Value Mission and Strategy Mandates Championing Cultural, Advocacy and Programmatic Objectives and Building Solid Financial Foundation 20

  21. OHA Real Estate Value Mission and Strategy Mandates Championing Cultural, Advocacy and Programmatic Objectives and Building Solid Financial Foundation 21

  22. OHA Real Estate Value Mission and Strategy Mandates Championing Cultural, Advocacy and Programmatic Objectives and Building Solid Financial Foundation 22

  23. Economic Engine 23

  24. OHA Real Estate Portfolio Composition Targets 24

  25. OHA Investment Return Expectations 25

  26. Significant Organizational/Financial Implications of Portfolio Composition Decisions • Balance managerial/financial inputs and sacred/financial outputs • Inputs and outputs vary considerably by • Type of property • Specific property • Portfolio decisions influence OHA’s ability to delivery beneficiary services and achieve OHA mission • Portfolio strategy decisions determine requirements for organization resources to support OHA property involvements: • Stewardship - Advocacy • Programmatic - Investment 26

  27. Organizational and Financial Inputs Vary Considerably by Property Type and Specific Property • Magnitude of capital investment • Intensity of staff resources • Professional services requirements • Ongoing business support and deficient subsidy 27

  28. Organizational and Financial Inputs Vary Considerably by Property Type and Specific Property • Financial returns • Programmatic requirements and benefits • Promote Hawaii sense of place • Enhance property involvements in Hawaii • Level of/balance between inputs and outputs influence OHA ability to delivery beneficiary services and achieve OHA mission 28

  29. Craft Real Estate Business Plan • Translate REVMS into structures, staffing, rewards systems, processes • Create LAND MANAGEMENT HALE • Establish business management structure • Establish investment ownership structure • Design and implement staffing plan • Prepare financial plan and management system • Specify staff criteria, development and rewards 29

  30. Staffing Requirements Follow From Need for Strategic Real Estate Management • Every property is a business • Real estate businesses are not all the same • Resource needs, scale, complexity of different property businesses vary considerably • One size fits all style – NOT! • Decisions where each property have profound implications 30

  31. Create LAND MANAGEMENT HALE • Create three OHA divisions, each led by Deputy Administrator • Establish new position of Deputy Managing Administrator • Design LAND MANAGEMENT division within OHA • Specify functions within LAND MANAGEMENT • Link REVMS priorities to LAND MANAGEMENT functions • Build organization and supporting infrastructure 31

  32. OHA Organization Chart Administrator Deputy Managing Administrator Deputy Land Management Deputy Support Services Deputy Beneficiary Advocacy and Empowerment Legacy and Programmatic Lands Legal Hawaiian Governance Treasury Native Rights and Culture Present Advocacy Human Resources Education Property Investment Government Relations & Legislator Affairs Economic Development Marketing Administrative Services Health and Human Services Board Services 32

  33. OHA LAND MANAGEMENT Organization Chart 33

  34. OHA LAND MANAGEMENT Organization Chart 34

  35. Establish Limited Liability Corporation Ownership and Foundation Funding Structure • Establish LAND MANAGEMENT LLC operating entity • Overall Managerial oversight for all property • Provides services to particular property entities • Specify LLC and/or Foundation for each property and project • Create family of foundations to fund real estate acquisitions and legacy land stewardship • Some major properties shall have full time dedicated staff employed by LLC/Foundation 35

  36. OHA Property Foundation Family Provides Support For All OHA Property Involvements • Family of foundations for specific properties • Each individual island • Programmatic priorities – i.e. housing • Legacy lands stewardship • Historic landmark stewardship • Each major property shall have dedicated foundation to fund that land involvement 36

  37. Implementation Priorities reLAND MANAGEMENT HALE • Substantial investment in LAND MANAGEMENT team • Substantial investment in LAND MANAGEMENT technology • Design and Implement strategic portfolio management SYSTEM to balance competing interests • Prepare business plan for each property involvement • Determines what OHA needs to do • Informs timing re staffing additions • Implement organization infrastructure • Systems • Equipment 37

  38. Substantial Investment in to Build LAND MANAGEMENT Organization • Substantial investment in team • World class talent/knowledge/skills • Competitive compensation • Professional development • Motivation/incentives • Substantial investment in technology • Systems automation • Analysis software • Databases: MIS and GIS • Financial models for LAND MANAGEMENT 38

  39. Dedicated Real Estate Investment Policy • Devise OHA Investment Trust • Half corporate securities • Half land and property involvements, including global real estate securities • Create two investment funds, each supported by investment policy and parallel spending policy • Manage all property investments consisted with an integrated strategy • Real estate investment policy specifies portfolio competitive target and return expectations 39

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