Real estate holdings have become an increasingly significant issue for Washington State University, including purchases, sales, the receiving of real estate gifts, as well as development, maintenance, rent and repair.
A solution to effective, efficient real estate management recently arrived with the formation of Washington State University Real Estate Holdings (REH), a nonprofit corporation affiliated with WSU.
REH was created “to support the university,” said Melvin Taylor, director of special projects/external relations for the Office for Business Affairs.
The idea is simple: REH can purchase real estate that the WSU Foundation receives as a gift and can hold it, lease it out or develop it to sell later. This is not a function the university or the foundation normally are set up to manage. REH will generate income from the management or sale of the property, and that income can be distributed to the university.
“The university and the WSU Foundation have a strong working relationship on real estate matters, and the REH will enhance that relationship,” said Karen Kellerman, chief investment officer for the Office of Business Affairs.
“The WSU Foundation views REH as a valuable partner in dealing with issues associated with gifts of real estate,” said Dan Peterson, senior vice president of the foundation. “It’s important to be able to provide the maximum level of flexibility to our donors and to the university.”
Real estate for scholarships
“The need for REH is to augment fundraising efforts of the WSU Foundation through active management of real estate gifts,” Kellerman said. “Gifts of real estate are often given to the foundation in lieu of cash to create a scholarship. That scholarship cannot be created until the real estate is sold and the cash proceeds invested in the WSU Foundation Endowment Fund.
“The foundation is highly motivated to capture today’s value of the gift to ‘get it working’ for scholarship purposes,” she said. “If the property is one with attractive price appreciation potential, REH can buy the property at market price, hold and manage it, and sell it later when the value has gone up.
“The income generated by the management and sale of the property also can be used to buy more property, to improve property held by REH, or to be distributed to WSU for various programs as designated by the university,” Kellerman said.
Board of directors
REH will function as a nonprofit corporation, with a board of directors to advise on a voluntary basis. “For the board of directors, REH will look for people who have experience with real estate or finance because they can provide valuable expertise in the complex real-estate financing and management issues that will be handled by REH,” Kellerman said.
Right now the board of directors is finishing the bylaws for operation, as well as applying to the IRS for recognition as a tax-exempt organization. “After that, REH will work with the foundation to seek donations for start-up money,” Kellerman said.
REH will not receive money from WSU, but will have to create a start-up fund through donations of money or real estate. “All donations to WSU are still made through the foundation, but if a donor likes this idea and specifies that they want their gift to be used by REH, then the gift will be passed on to REH for furthering its mission,” Kellerman said.
