NPT 100 groups turning real estate into cash.
Nonprofits like the YMCA generate millions of dollars in program service revenues while museums and art institutions of all kinds enjoy healthy endowments.
In recent years, some organizations have sold off property before the real estate market imploded. Profits from those sales generally end up in the "other revenue" category. Most nonprofits don't have investment properties but instead might have some type of program-related properties, said Dan Romano, executive director, tax, northeast higher education and nonprofit practice for Grant Thornton LLP. Charities wouldn't sell property unless they were considering getting rid of it anyway, he said, not just for the purpose of making money in a hot real estate market.
The Museum of Modern Art (45) sold a vacant lot adjacent to its Midtown Manhattan facility early last year for $125 million. That would explain "other revenue" for the museum more than doubling, from $45 million in fiscal year ending 2006 to $113 million last year. The sale was expected to net about $65 million for the museum.
With a footprint of about 17,000 square feet, the property will be developed into a mixed-use facility that also will provide additional gallery space as well as basement space for storage.
At the time of the sale in January 2007, then-MoMA Director Glenn Lowery said the museum had acquired the site during the course of the past decade for future expansion of gallery space. "However, over the past several months it became clear that current real estate market conditions make this an opportune time for the museum to realize its investment to accomplish two important goals: to expand our gallery space and generate revenue to strengthen the museum's endowment," he said.
The property was sold to Hines, an international real estate firm, which had not established a timeframe for development, that it is expected to take several years.
"Other revenue" at The Smithsonian (30) looks like it dropped off considerably, from $137 million in FYE 2006 to $68 million last year. In the previous fiscal year, the organization realized the entire gain on the sale of two properties, one an office building in Washington, D.C., and a warehouse.
Located in the revitalized Gallery Place neighborhood near the MCI Center, the Victor Building was purchased for $86 million in 1999 to house staff for the National Portrait Gallery, Smithsonian American Art Museum and Archives of American Art, all of which had to vacate when the Patent Office Building was renovated.
The nine-story, 343,000-square-foot building fetched $157.5 million for the Smithsonian when it was sold to Trizec Properties, a Chicago-based property investment firm.
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|Title Annotation:||THE 2008 NPT TOP 100|
|Publication:||The Non-profit Times|
|Date:||Nov 1, 2008|
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