Defence Housing Australia

Purpose 4: Portfolio management

Generate capital through our property investment program where we sell property on long term lease back arrangements. In addition, we sell excess land and surplus properties that no longer meet Defence minimum standards or requirements. We also retain ownership of and manage a portfolio of housing in strategic locations around Australia.12

12We used the term ‘Sale and Leaseback program’ in our Corporate Plan 2016–17 and SCI. During the year, this terminology changed to ‘property investment program’. ‘Property investment program’ is used throughout this statement and report.

Table 3.10: Purpose 4, KPI 9 result

KPI 9: Revenue from the property investment program

Corporate Plan target

$350.0 million

Achievement

$363.9 million

Result

Met target

The property investment program continued to be our key funding source to enable the delivery of our Corporate Plan. In 2016–17 we settled 655 properties, generating revenue of $363.9 million. This result was $13.9 million above the Corporate Plan target.

The net margin percentage for sales from this program was also 1.6 per cent above the budgeted margin. This was largely due to margins achieved on sales in Sydney where market conditions remained strong in comparison to most other capital cities.

Refer to the overarching analysis on performance and detailed report on performance for more information.

Table 3.11: Purpose 4, KPI 10 result

KPI 10: Revenue from the disposal of surplus property

Corporate Plan target

$59.7 million

Achievement

$64.2 million

Result

Met target

In 2016–17 we settled 116 properties that no longer met minimum Defence standards or provisioning requirements, generating revenue of $64.2 million. This result was $4.5 million above the Corporate Plan target.

Refer to the overarching analysis on performance and detailed report on performance for more information.

Table 3.12: Purpose 4, KPI 11 result

KPI 11: Revenue from the sale of development land and property

Corporate Plan target

$155.6 million

Achievement

$116.4 million

Result

Did not meet target (<84 per cent of the Corporate Plan target)

In 2016–17 we settled 63 properties from development property sales, generating revenue of $47.5 million. This result was $31.1 million below target. We also settled 183 lots from development land sales, generating revenue of $68.9 million. This result was $8.1 million below the Corporate Plan target. Both results were not unexpected.

The variance was largely due to factors over which we had little or no control that delayed progress of two of our development projects. Specifically:

  • Inclement weather delayed construction at our Crimson Hill development in Sydney (NSW).
  • In accordance with section 7(2) and (3) of the DHA Act, we can only enter into a contract of equal to or greater than $15 million in value with written permission from the Minister for Defence. When both houses of Parliament were dissolved on 9 May for the 2016 federal election, caretaker conventions came into effect. The Minister cannot approve any contracts during the caretaker period, which meant we were unable to appoint a contractor to commence works at stage 7 of our Breezes Muirhead development in Darwin (NT).

The aforementioned delays meant that property and land lots from these developments were not delivered in time for us to sell and realise the revenue in 2016–17. Importantly, the revenue is not lost, rather it is deferred to 2017–18.

Of note, although we did not achieve the revenue target, net margin from the sale of development land and property was exceeded due to the realisation of better than budgeted margins.

Refer to the overarching analysis on performance and detailed report on performance for more information.

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