One of the key responsibilities of your Board is to make appropriate decisions to ensure the future well-being of the School. As a key part of planning for our future the Board has been examining whether or not the best use is being made of our assets. The School’s assets are the building we have occupied since the beginning of 2000 and our various cash investments. My communique sent out in June explained the reasons for looking at this important issue and broadly described the steps being taken. The necessary information I referred to previously has now been collected.
As mentioned previously the building is now approaching the time when a major refurbishment will need to be undertaken, not only to replace major services, but also to compete with new office buildings that will come onto the market in the next few years.
Based on advice received from leading independent building consultants the cost of refurbishing 280 Pitt Street would be in excess of $15M to bring it up to a competitive standard. The School does not have the funds to undertake such a project, let alone the capacity to continue providing services to its members while the building is out of commission. The Board is concerned that the School not arrive at the situation it found itself in prior to moving to 280 Pitt Street when our previous permanent accommodation was in a parlous state and with a weakening financial position.
The Board considers the best option available for the School to be able to continue into the future is to realise the present value of our building if a suitable price can be obtained.
There is currently high demand for investment properties in Sydney within the CBD. This has been confirmed in separate advice from two leading property consultants, Charter Keck Cramer and Colliers International. The School could benefit substantially from the sale of the current building at this time. This would enable the SMSA to either purchase or lease new accommodation and to continue providing services to our members as well as having a guaranteed income source. The market value of our building is considered to be at its highest level at the present.
A decision on whether to lease or buy a new building would be guided by the price obtained in selling the current premises and the need to ensure sufficient cash flows to support our activities. A heritage building and access to public transport is an important considerations. A condition of sale could be to lease back our current accommodation until suitable new premises are located.
The advice of Mark Robinson, Senior Counsel, was sought to ensure the Board would recommend a process that complied with our 1886 Act of Incorporation. That advice resulted in the Board recommending a process very similar to that followed in 1988 when the decision to sell 275 Pitt Street was taken. It will be reflected in the recommendation that forms part of the official notice convening a special general meeting is to be circulated in the near future.
The meeting will provide an opportunity for members to ask questions as to why the Board has recommended the sale of the building if the price obtained will ensure sufficient funds to meet our future needs. However, prior to any ‘contract for sale’ being agreed a second Special General Meeting will be called seeking members’ approval for the acceptance of an offer that the Board considers to be in the best interest of the members.
21 August 2019