Kings Square Agreement Extended (on Good Advice)

Last night was another big Fremantle Council meeting with the item of most interest being the six month extension of the agreement with Sirona for the Kings Square project.

Disappointingly a lot of inflammatory and inaccurate accusations have been thrown around by members of the Fremantle Society and others in recent weeks. This is including what their “experts” (not involved in the detail of this agreement) are purported to be saying.  It is worth noting that, despite multiple requests, the Fremantle Society have still not been able to provide the name of a single expert willing to put their names to their claims.

In contrast the City of Fremantle used a range of independent experts and consultants – who all were willing to put their names to their advice – with extensive experience to provide advice and review including:

  • Leedwell Strategic including Matthew Adcock as the lead consultant that prepared the business case, supported by Cameron Bryson.
  • David Shetliffe (co-author Fremantle Retail Model Plan) – project facilitator
  • CBRE – 2012 valuation of Properties
  • Ralph Bailey Bosworth (RBB) – quantity surveyors
  • RSM Bird Cameron – due diligence
  • Jackson McDonald – legal advice and support
  • Australian Property Group – peer review (property)
  • 3M Property Group – 2016 valuations

As the City of Fremantle CEO said; “Without exception, each of these consultants has considerable standing in their respective fields of expertise.  In terms of meeting your fiduciary responsibilities as elected members, having the City contract this depth of expertise to provide advice throughout the development of the business plan more than satisfies the requirements”.

Last night was also a good night to clarify some the questions around the valuations of the City of Fremantle owned properties. The Fremantle Society has misleadingly being pushing the line that: “Fremantle Council was selling $50 million worth of assets for $29 million…at well below market prices.” It is hard to work out how they arrived at this inflated figure but looking at their public presentation last week it looks as though they mistakenly assumed the sale of the Newman Court, the Civic Triangle and they assumed that the cinemas were a fully leased asset. None of this is true and Sirona is paying FULL market value for our properties. My frustration around this is that there have been multiple offers to meet with the Fremantle Society and go through the detail of the agreement but this has not been taken up. I guess it is harder to put out a scare campaign if you have all the information in front of you.

The good news is that we heard last night is that the Dept of Finance decision of State Government office commitments is imminent. The final stage is that this now has to go through the Economic Review Committee and Cabinet before their recommendation is made public. While we do not know if Kings Square will be the winner of this competitive process, what we do know is that by renewing the agreement we can honestly say that we gave it our best shot.

 

kings sq 5

About Mayor of Fremantle Brad Pettitt's blog
City of Fremantle Mayor

16 Responses to Kings Square Agreement Extended (on Good Advice)

  1. Martin says:

    Hi Brad,

    I do not expect you to publish so I will reproduce on Roel’s blog. I notice that you won’t publish otherwise, and prefer to censor comments that challenge you.

    I am delighted that this vote went the way it did, as it is now on the public record. I am particularly delighted that Jeff McDonald took it upon himself to research the matter independently of the flock, consult with the concerned public and form his own opinion, and vote NO. His stocks in Freo have gone through the roof.

    I can produce many public statements by FS / FRRA / FICRA throwing their support behind Sirona’s efforts to secure the Dept of Housing for Freo. Their issue is only with the $47 million investment of ratepayers funds in replacing the civic buildings. Why do you continue to state the exact opposite? The negativity and spin is unhelpful. Is the truth so difficult?

    I can perhaps boil the public’s concerns and questions to the CoF down to a single matter:

    Essentially the only expert advice statement that has been requested from the CoF is the one that will support your statement that the $47 million building will be worth $97.5 million in 20 years time. Frankly nobody is particularly interested in the rest – just this one!

    Despite 18 months of trying to get to the bottom of this assumption, the only people who will stand up and defend this assumption are:
    1 CEO Graeme MacKenzie
    2. Mayor Brad Pettit

    You have been asked repeatedly to provide a statement from an expert to support this statement. A statement from an expert who is prepared to put his reputation and the reputation of his company at risk and who is prepared to state that this is an appropriate assumption for the CoF to use when making this $47 million investment decision on behalf of ratepayers

    You won’t produce it because you do not have it. You did not discuss it in the Business Plan because you hoped nobody would notice it. Without this statement, your statement of financial impact is false, and deliberately misleading, and the value of the CoF investment is negative $30 million. I will back Craig Ross’ expertise on this matter over Pettit, MacKenzie or Coggin any day.

    WHY WILL YOU NOT PRODUCE THIS EXPERT STATEMENT?

    Until you provide this statement, you comments about the use of experts rings hollow.

    You know full well that this is the only matter on which the Fremantle Society’s independent expert has commented, and these statements have been well documented, yet you continue to state otherwise in order to try to discredit the FS. Again and inability to tell the truth.

    On the matter of property valuations you again prefer spin over substance:

    CEO Graeme MacKenzie in his advice to you of 25 April 2016 admits that $6.35 is NOT the fair market price!!! Why do you an MacKenzie keep contradicting each other and yourselves so consistently?

    – MacKenzie clearly states that “it is true that the City could have put the building on the market in an “as is” state and possibly got a better value, however it would have been unlikely it would have been redeveloped, undermining our vision for an integrated redevelopment of the area.”

    – The CBRE valuation in the Business Plan clearly states that the $6.35 million valuation is a “Land only” valuation

    – The Business Plan clearly states that the Queensgate Centre generates $750,000 per annum, and this EXCLUDES the rent lost following the exit of the Hoyts cinema tenant. The building clearly has value.

    – A CoF valuation of 2012 clearly states that the building is valued at $15.9 million, which gives a consistent rental yield as the Spicer Site / Queensgate Car Park when using the CoF $750,000 annual rent assumption

    – This is the admission by the CEO that the CoF values the “building plus land” at $15.9 million and the “Land only” at $6.35

    – The CoF has decided to accept the lower “Land only” price in order to realise its “vision”

    – Thank you Mr MacKenzie for completely agreeing with the statements that I made in last week’s presentation to the FS / FRRA / FICRA

    – Any statements that the $6.35 million sale price for the Queensgate Centre is the “fair market price” is thoroughly discredited. For the Mayor or Councillors to state otherwise will directly contradict the statements made by the CEO on 25 April 2016, and is simply not credible or sustainable

    This is all your CoF data, not mine! The credibility problem is with the CoF statements, not anybody else’s. Is telling the truth really that difficult?

    • Martin
      While you repeatedly state I will not publish you comments, I hope you have come to see that I always do so long as you leave the third party criticisms out of your comments.

      To answer what you see as the central question: Leedwell Strategic including Matthew Adcock as the lead consultant that prepared the business case, supported by Cameron Bryson are both happy to put their professional reputations behind the assumptions on future values of the civic building. Matthew has over 20 years of experience across valuation and development management in the private and public sector markets, Matthew’s skills include financial analysis, strategy, risk profiling and development structuring for more complex property and infrastructure based projects as well as managing the implementation of divestment processes.

      What was the name of the Fremantle Society’s independent expert again?

      On your later comment of valuations I have provided the CEO’s response in full: “The City’s valuations were originally provided by CBRE, and were recently updated by 3M property group… The values have softened slightly but remain close. $50 Million Valuation Provided by Freo Society … includes the land value for the admin building property ($5.99mill) and a value for Newman Court ($6.55mill). Neither of these two properties are being sold so need to be deleted from the calculation altogether. This leaves a value of $39.05mill. But this includes a value for Queensgate Centre of $15.9mill. This is a value from around 2010 when the building was fully let with Hoyts etc. The business plan acknowledges that the cinema area makes the building difficult (expensive) to renovate and therefore it takes the view the property potential is vacant land with a value of $6.5mill. Once you correct these issues the valuation is back at $29mill.”

      Or to summarize the Queensgate building has a negative value if you want to see that site fully utilized again. We are getting FULL market value on our properties. I will repeat again if you can provide a licensed valuer happy to put his name to higher valuations I would love to see it.

      Finally, all of your often repeated misconceptions could have been easily addressed if you had taken up my and the CEO multiple offers to meet with staff and go through the detail with them It is disappointing you never took this up.

      Brad

      • Martin says:

        Brad,

        You censored all of the questions I asked of you last time, and pretended to hide behind the “borderline defamation” defence. I have written to you to ask you to elaborate but you have not. You only printed this because Roel has already printed it on his blog. I didn’t repeat it on Roel’s blog last time to see if you would print. You did not.

        A tip to anyone that wants to be published on Brad’s blog is to duplicate on Roel’s first and tell your Mayor you have done so, or expect to be censored.

        Great. Please ask Matthew Adcock and Cameron Bryson to make a combined “independent expert statement” as you have offered. It will need to be a very clear and unambiguous statement – in other words not a vague and ambiguous statement.

        They will need to state that buildings appreciate in value over a 20 year period, or at least your building will. I don’t want the words “could” or “possibly” used – it must be definitive!

        They will also need to state that it is fair and reasonable for the City of Fremantle to use this residual building value assumption when calculating the NPV of a potential $47 million investment of ratepayers money.

        Could you also ask them to confirm in their statement their professional qualifications, and the professional associations or bodies to which they are members. This will make it easier for the public to contact their professional bodies for comment.

        Now that you have committed this, please deliver [or is this just part of the spin cycle?]

        I am quite staggered that someone with their “experience” would have recommended an agreement structure with Sirona that was so one sided – were you paying his consulting fees or was Sirona?

        Brad, could you please also provide the statement by the Fremantle Society where the Fremantle Society has stated that it has had an independent valuer state that the value of the three properties is $50 million.

        To now invent porky pies about how they made a mistake and included the land value of the admin building and Newman court is astounding! Please provide proof that this was the basis for the FS “mistake”.

        Brad, the $15.9 million valuation for the Queensgate Centre has a date of 2012 on it, not 2010. It is on the powerpoint slide. It assumes Hoyts has already left and the rent had reduced to $750,000 per annum accordingly. Do the maths. Fully tenanted (2010), the value is in the $20 – 30 million range.

        The higher valuations I have mentioned come directly from your own CEO statements and are dated 25 April 2016

        Please continue to enlighten us, because what is crystal clear is that you are incapable of understanding, never mind articulating, your own internal valuations.

        Brad, you offered once to meet and I declined on the basis that I wanted you to answer my simple question first. That was 2014. You did not answer the question and you have not offered to meet since. Frankly I am not interested.

        I understand perfectly what you have done. It was obvious to me in Oct 2014 after just 3 minutes with your business plan. I have evaluated hundreds of projects on every continent except Antarctica for more than 25 years. What is clear to me is that you are completely out of you depth and by trying to spin your way out of something you do not understand you are simply implicating yourself further and further. It is embarrassing to watch, but I am only interested in recording the statements that you and MacKenzie keep making. Please keep going.

        Here is the challenge. I am not going to publish on Roel’s blog. Will you publish this time, or censor again…?

      • Martin
        No censorship here. Just correcting your misleading assertions.
        I suspect we could have this debate forever and ultimately not agree and that is ok if it done respectfully. But in response to your specific questions:
        1. I see no need ask for such a statement. It is in the published business plan which they have backed with their professional opinion that is enough. All their fees were paid for by the City of Freo.
        2. The Fremantle Society have repeatedly said “To fund this project, the Council is intending to sell approximately $50 million of property to Sirona for just $29 million” I had assumed such a serious assertion must have been backed up with a professional opinion or a valuer of similar. But upon further investigation it appears to not be and just to be an incorrect and unsubstantiated opinion with these Newman Court evaluations etc all appearing in a powerpoint authored by you. IF you can provide a single licensed valuer who ca back up your claim then please provide it. You seem to be unwilling or unable to do this?
        3. The offer to meet was made not just by me but also by City of Freo staff and you chose not to take up these offers. If you had you might not e making the incorrect assertions you continue to make
        regards, Brad

      • Martin says:

        Brad,

        You first stated that Matthew Adcock and Cameron Bryson “…are both happy to put their professional reputations behind the assumptions on future values of the civic building.”

        Now you are saying that you have decided that “I see no need ask for such a statement. It is in the published business plan which they have backed with their professional opinion that is enough”.

        Could you please point me to where their $97.5 million assumption is discussed in the Business Plan. There is a reference to a retained asset value in a table on page 41 & 42 of the Business Plan, but no explanation as to what relates to (I read it to be building plus land), no reference to how it is calculated, and no reference as to why it is reasonable.

        In fact it is not discussed anywhere in the assumptions section of the Business Plan, despite being the single biggest assumption influencing the Project value (NPV). It is buried in the scenario analysis section of the Business Plan and disguised as a “key financial output”. To a reasonable person, this is extremely dodgy.

        You have told the people of Fremantle that everything is above board, the Business Plan stacks up, the experts all support your statements and that you have nothing to hide.

        You may see no need to ask for the independent expert statement, but the rest of us do. You need to either produce the statement as you originally offered or concede that you have colluded with Leedwell Strategic to “Goal Seek” a positive NPV for the investment of $47 million of ratepayers money, and that you tried to bury this assumption where you hoped nobody would find it.

        This issue is not going away until you produce that expert statement. At the moment it is just you and the CEO defending this assumption, and that is simply not good enough for the rest of us. You claim this assumption is supported by the experts – the onus is on you to prove it!

      • MArtin
        It is an assumption I am comfortable with and, as we have discussed previously, has precedent in older Freo civic buildings and more recent civic buildings across Perth. CLearly Leedwell Strategic were comfortable with it too and that is why they included in the business plan.
        I am not sure who the “rest of us” you refer to is but I am not getting this feedback. Overwhelmingly most residents who have contacted us just want us to get on with the development
        Brad

      • Martin says:

        Brad,

        What qualifications do you have in finance, accountancy or property valuation, and what experience do you have in project development.

        Your examples are pure nonsense. Continuing to state them does not make them any more correct. No sane person would invest their own money on the basis that you are stating – but of course it’s not your money.

        There were 170 people at a recent meeting that would also like an explanation, and that’s just to start with. You have the ability to close this out by simply asking your consultants to support your statements about “appreciating buildings” by issuing an independent expert statement. Without it your statements are just hot air.

        Let’s face it – there is absolutely no way Leedwell or their staff are going to put their reputations on the line to provide an expert statement. They also know it is nonsense – a pure fabrication!

        This has nothing to do with “Getting on with the project”, but is about whether the CoF has deliberately misrepresented the NPV of the $47 million civic centre rebuild.

        The fact that you refuse to get the expert statement suggests you still have a lot to hide.

      • Martin
        As I have said previously (many, many times) we have had a lot of expert opinion to inform our decisions on Kings Sq. All documented and provided. You are yet to provide a single expert willing to put there name to your assertions. When you are willing to do this let me know.
        Brad

      • Martin says:

        Brad,

        If you have expert advice – release it! That is all I am asking.

        You have not released any of the valuation reports from any of the valuers. You have not released an expert statement from Leedwell backing up any of you statements.

        It is your credability on the line here, not mine. You want to invest $47 million of ratepayers’ money, but you do not think you have any obligation to support your assertions.

        Clearly this is a waste of time. Clearly you, Wilson and MacKenzie have an aweful lot to hide!

      • Martin
        We have released ours and their advice is in the business plan which people can read in full on our website. To repeat this includes:

        David Shetliffe (co-author Fremantle Retail Model Plan) – project facilitator
        CBRE – 2012 valuation of Properties
        Cox Howlett & Bailey Woodland Architects – concept design for the City’s buildings
        Ralph Bailey Bosworth (RBB) – quantity surveyors
        RSM Bird Cameron – due diligence
        Jackson McDonald – legal advice and support
        Australian Property Group – peer review (property)
        M3 Property Group – 2016 valuations

        In contrast, you can’t even provide a name of a single expert willing to support your assertions.
        Brad

  2. Lionel says:

    Hi Brad,

    Can you provide a bit more information about 3M Property Group as I can’t find anything about them. Where are there offices located?

    • Lionel
      According to their website: m3 operates across Australia, providing a diverse range of valuation, research and advisory services across numerous property and asset classes.
      The company’s strength is drawn from the extensive experience and expertise of its valuers and consultants, and its total independence from competing interests.
      m3 has exceptional market knowledge and a longstanding reputation for professionalism and integrity. All are strong reasons why its services are sought frequently by government and investors across many industry sectors.
      cheers, Brad

  3. Martin says:

    Brad,

    I have been to the CoF website and tried to locate the reports from each of these consultants – there is nothing there.

    Perhaps to save us all some time you could provide us with direct links to the following reports:

    CBRE – 2012 valuation of Properties
    RSM Bird Cameron – due diligence
    Jackson McDonald – legal advice and support
    Australian Property Group – peer review (property)
    M3 Property Group – 2016 valuations

    I have read the Business Plan and while this may list the consultants used, this does not help anyone. I look forward to you providing access to these reports. Until you have provided these reports could you please refrain from continuing to state that you have provided the advice from these experts – you have not!

    • Martin
      Well we certainly have provided far more transparency and named experts than you have given you can’t even provide a SINGLE name of any expert willing to support your assertions.
      That said, once the competitive process for a State Government department is completed I will be urging the CEO to release this further information. But not until then.
      Brad

      • martin says:

        Brad,

        Transparency involves disclosing information not rhetoric. “Naming” experts is not disclosure. You have turned this into a joke!

        Are you saying that you will not release the CBRE and M3 valuations on grounds of confidentiality? You are quoting their figures yet refusing to disclose the advice. Sounds very suspicious?

        The sum total of all of the expert advice that you have provided to rate payers over the Kings Square Business Plan is exactly ZERO! Absolutely nothing! Transparency – zero!

        I am not recklessly investing $47 million of other people’s money – you are. It is your statements that require expert support not mine. Yet you simple refuse to provide any of it.

        You will not provide the advice because either it does not exist or you know it will not strand up to scrutiny. It is that simple. It has absolutely nothing to do with the competitive process, as we all are well aware. This behavior is discrediting the City of Fremantle.

        I do not need the expert advice that the Fremantle Society sought. It is useful in that it simply agrees with what Craig Ross and I have been saying for 18 months.

        It looks like the Freedom of Information Act will now be the only way to get these documents – if they actually exist. Do you really want the embarrassment associated with that?

      • Martin
        Given this discussion is getting a little circular perhaps we can wrap it up with something we both agree on. I agree that we should release as much information as possible and I am happy to commit to releasing as much of this as possible once the competitive process for a government department in Freo is resolved.
        Brad

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: