Strategies from commercial real estate can help colleges and universities better adapt to the adverse effects of COVID-19 on their business models, advises Jeff Hubbard, Senior Managing Director of the Structured Real Estate Sales Division at A&G Real Estate Partners, in a column for UniversityBusiness.com.
“Now that the fallout from Covid-19 is forcing colleges and universities to rethink their business models, they should use real estate to support those strategies,” writes Hubbard, who has 28 years of experience across all real estate sectors, including higher education. “Savings on leased and owned properties could be used to buy technology or ramp up safety.”
In the Aug. 7 column (“Ramping up liquidity by rethinking real estate”) Hubbard encourages decision-makers at U.S. colleges and universities to pursue three approaches to optimizing real estate that are heavily employed in commercial real estate and turnaround management.
Aggressively engaging with landlords to renegotiate leases could lower schools’ rental payments, Hubbard advises. This could involve subleasing deals as well. “The university could respond to the rising need for affordable housing by subleasing an off-campus student housing development that, due to declining enrollment, is no longer needed,” he writes.
Sale-leasebacks of owned properties offer a way for schools to raise cash by selling mission-critical properties and then leasing them back, thus retaining their use. “These deals are particularly doable for buildings in big cities, where private equity firms and other real estate investors are forever on the lookout for long-term acquisition opportunities,” Hubbard explains.
Under today’s conditions, schools may need to raise cash under tight timeframes. Structured sales of non-core real estate assets provide certainty around when real estate transactions will occur, because bidders agree to the sale terms and due diligence items upfront. “Structured sales can boost bidders’ confidence—and lead to a better sale price,” Hubbard writes. “These accelerated transactions generally result in all-cash offers within 60 to 75 days.”
Hubbard underscores the critical need for liquidity in higher education today, adding, “The goal should be to position for the future, not merely survive. Taking a strategic approach to real estate is one way to get there.”
The full article is available at https://universitybusiness.com/ramping-up-liquidity-by-rethinking-real-estate/
