Enhancing Opportunities: Real Estate Managers Realize New Profits with VA Partnerships
Rothenberg, Pamela V., Journal of Property Management
With over 230,000 employees and a budget approaching $80 billion, the U.S. Department of Veterans Affairs (VA) is the federal government's second largest agency and one of the major property managers in the federal government.
The agency administers and maintains approximately 32,527 acres of federal land and 5,306 buildings on approximately 300 sites. At the close of fiscal year 2005, the cost to operate and maintain VA properties nationwide was more than $750 million.
As is the case with most property owners, buildings and assets are not always aligned with the business needs and demands of the enterprises owning them. To address this issue, Congress authorized the VA Secretary in 1991 to exercise "Enhanced-Use Lease" (EUL) authority. The EUL authority permits the VA to realign its underperforming properties to produce a positive return for veterans and taxpayers.
The EUL program provides a win-win situation for developers, real estate management firms and local VA facilities. A developer receives access to a piece of desirable property for a lease term of up to 75 years, the real estate management firm attains new business to add to its portfolio and the VA "enhances" its mission of serving veterans.
Here are a few examples of VA's recent and successful EUL transactions:
* Minneapolis, Minnesota -- Single Room Occupancy (2005): The VA awarded an Enhanced-Use Lease of approximately 4.341 acres of land on the VA Medical Center campus to a developer for the construction of not less than 140 residential units in two existing VA buildings. The developer financed, designed, constructed and renovated the buildings. Additionally, the developer contracted out operations, maintenance and provision of services at the facility to a property management firm. …