1. Evolution of Asset Management at GSA
William Matthews
Assistant Commissioner for Real Property Asset Management
Public Buildings Service
United States General Services Administration
9/21/2018
2005 TWN Workshop

2. GSA’s Inventory 9/21/2018 2005 TWN Workshop Courthouses
Courthouses/Office Buildings
Customhouses
Office Buildings
Warehouses
Border Stations
Residence
Laboratories
Other (Sheds and Pump Houses)
Garages
Federal Centers
Parking Lots and Decks
9/21/2018
2005 TWN Workshop

3. A Historical Perspective
200 year tradition
Federal Property and Administrative Services Act of 1949
Economical and efficient system for procurement and utilization
Public Buildings Act of 1959
Federal Buildings Fund created in 1972
Commercial market rent – operations and maintenance
A tradition of stewardship
Changing our business model
9/21/2018
2005 TWN Workshop

4. PBS Inventory Challenge:
Many properties are physically and functionally obsolete
Many properties are in the wrong location to meet customer needs
Costs of repairs to the owned inventory are beyond our ability to fund
9/21/2018
2005 TWN Workshop

5. Alexander Hamilton Custom House
Historic 1810 – 1941
Alexander Hamilton Custom House
New York, NY
US Courthouse
San Juan, Puerto Rico
9/21/2018
2005 TWN Workshop

6. World War II 1942 – 1949 Federal Center Federal Center Auburn, WA
Kansas City, MO
9/21/2018
2005 TWN Workshop

7. Federal Building and Courthouse
Great Society 1950 – 1979
Federal Building
Los Angeles, CA
Federal Building and Courthouse
Phoenix, AZ
9/21/2018
2005 TWN Workshop

8. Contemporary 1980 – 1993 Thomas O’ Neill Federal Building Boston, MA
Alan Bible Federal Building
Las Vegas, NV
9/21/2018
2005 TWN Workshop

9. Design Excellence 1994 – Present
Lloyd George Courthouse
Las Vegas, NV
Federal Courthouse
Islip, NY
9/21/2018
2005 TWN Workshop

10. A Decade of Change Government Performance and Results Act
GAO more investment/better utilization
OMB focus on results
Executive Order 13327
Market premium on value
Outsourcing
Customer demand shifts
9/21/2018
2005 TWN Workshop

11. Portfolio Strategy: A Balanced Approach
STRATEGIC VALUE
Community Perception
Historic Value
Location
Federal Need
Asset Use
REAL ESTATE MARKET
Type of space available
Ability to meet customer need
Price
Market Forecast
Moving Costs
ASSETS
MARKETS
FINANCIAL VALUE
Return / Financial Picture
Vacancy / Utilization
Condition of Asset
Environmental Risk
Market Value
PORTFOLIO
STRATEGY
CAPITAL MARKET
Availability of Funds
Cost
CUSTOMERS
RISK ASSESSMENT
Budget Constraints
Political Environment
Space Trends
Customer Mission
HOUSING PROFILE
Build-out Requirements
Security Requirements
Community Perception
9/21/2018
2005 TWN Workshop

12. PBS Asset Management Principles
Customer needs drive portfolio
Assets must perform financially
Assets should be applied where they fit best
Reinvestment is essential
Income/Expense should be comparable to the market
Redeploy assets in a timely fashion
Use industry practices and metrics
9/21/2018
2005 TWN Workshop

13. Asset Management: A Continuous Cycle
Financial performance
Occupancy / demand
Physical condition / lifecycle
Market
Operating expenses
Historic status
Asset valuation
9/21/2018
2005 TWN Workshop

14. Asset Performance Metrics
FFO – Funds From Operations
NOI – Net Operating Income
Vacant space
Operating costs vs. market
Customer satisfaction
Asset value
9/21/2018
2005 TWN Workshop

15. Portfolio Strategy
Restructuring portfolio to consist primarily of strong income producing assets
Defining holding periods & strategies for every asset
Targeting reinvestment
Renegotiating rents
Creating solutions and adding value
Exchanges
Ground Lease – Leaseback 585c
Disposal
Demolition
9/21/2018
2005 TWN Workshop

16. Tiering the Owned Portfolio
Performing:
Tier 1. Solid financial performance – satisfies long-term customer needs
Tier 2a. Good financial performance large capital improvements required
Under-performing:
Tier 2b. Poor financial performance
Non-performing:
Tier 3. Poor financial performance – assets with negative cash flow
9/21/2018
2005 TWN Workshop

17. Restructuring Highlights: Rentable Square Feet
9/21/2018
2005 TWN Workshop

18. Portfolio Progress 325 buildings removed from tiering since FY2002
178 excess buildings
47 buildings demolished
100 building data corrections
9.3M RSF to disposal
1.3M RSF to demolition
2.2M RSF reclassified to reflect actual ownership
Over $200 million reinvestment avoided
9/21/2018
2005 TWN Workshop

19. Federal Real Property Asset Management (E.O 13327)
Given the enormous size and value of the federal inventory, a mere one percent reduction in the total amount of unneeded federally – owned properties would yield billions of dollars in savings. Therefore, in the next four years, agencies will establish and achieve an aggressive set of goals for disposing of unneeded or underused properties. The Council anticipates that these efforts could reduce the overall size of the federal inventory by at least 5%, yielding significant savings and efficiencies
-Clay Johnson III, Deputy Director for Management, March 2, 2004
9/21/2018
2005 TWN Workshop

20. Stakeholder Support Retention of net proceeds Ground lease/leaseback
Increased reinvestment
9/21/2018
2005 TWN Workshop

21. Successful Reinvestments
9/21/2018
2005 TWN Workshop

22. Evolution of Real Property Asset Management at GSA
Establishing Holding Period
Identifying Core Assets
Refining Reinvestment Forecast
Refining Disposal Forecast
Leading Us To Predictable End State
9/21/2018
2005 TWN Workshop

23. End State More leased than owned Larger owned properties
Owned assets concentrated in larger markets
Specialized space in other markets
Self-sustaining portfolio
Quality of space improvements
9/21/2018
2005 TWN Workshop

24. GSA: Evolution of Asset Management
QUESTIONS?
GSA: Evolution of Asset Management
9/21/2018
2005 TWN Workshop