New asset base for ALIA
ALIA's move into a new building in Canberra in 1990 - 9-11 Napier Close, Deakin - was a major step for the Association, following intense discussion about the benefits of being located in the nation's capital versus our original base in Sydney.
The property was an important investment for ALIA and has served us well over the last 30 years but has now reached a point where it is too big for our needs, costly to maintain and, when partially untenanted, a financial drain.
Over the years, ALIA Directors have debated the merits of retaining the building as the Association's main asset or selling it and investing in an alternative asset base, which would be more flexible and adaptable than bricks and mortar. After consultation with an Advisory Committee of long-term ALIA members and senior library leaders, the ALIA Board has made the decision to progress with the sale of the building and the property will be listed for sale in the third quarter of 2020.
Legacy for the next generation
The sale will enable ALIA to create a substantial, flexible asset base, with several million dollars held in a balanced investment vehicle. It will enable the future leaders of the Association to choose how and where to employ staff, for example there could be a smaller base in Canberra, with the potential for hubs in other cities, or for more remote workers. Additionally, it will free ALIA from the burden of property management, the ups and downs of the Canberra real estate market and the cost of building maintenance.
In 2019, the ALIA Board sought advice from an Advisory Committee comprising ALIA members with a long-standing interest in the Canberra property. The Committee received presentations and detailed reports from property and town planning experts and commissioned independent financial modelling. On the advice of the Committee and with supporting evidence from Civium real estate, Purdon planning and Deloitte finance consultants, the ALIA Board made this decision. It is in line with the ALIA Strategic Plan 2018–2022, Future-proofing: we will ensure the Association’s financial sustainability and responsibly manage the Association’s assets. The decision has not been made because ALIA is in financial distress; the financial status of ALIA is secure and stable. It has been made to safeguard the financial future of the Association. Our aim is to ensure the Association reaches its 100th anniversary in 2037 fit for purpose and in a strong and sustainable position.
Strong financial benefit
Deloitte was asked to assess the financial impact of ALIA selling the property.
Scenarios were based on:
- The current rental income
- The risks associated with less than 100% occupancy
- The future return on an alternative form of investment
- The cost of alternative accommodation, essential maintenance requirements and the capital value of the building going forward to 2030.
Deloitte’s model provided the following results, which indicated that a modest 4.5% return on a future investment would provide an $800,000 uplift in ALIA’s finances, compared with the best possible scenario of 100% building occupancy for the next 10 years (noting that we experienced 50% occupancy between 2016 and 2018).
Business as usual
There are no plans for ALIA to move from Canberra and, depending on the terms of the agreement, it is likely that the Association will remain in our current premises for at least three years post-sale and potentially longer.
Questions and concerns can be directed to email@example.com or the questions can be asked in person or via teleconference at the upcoming ALIA Board meeting on 27 March 2020. Teleconference details will be provided upon request.