The land Ohio University owns on East State Street might be sold for more than $12 million, money that could be reinvested in buying land closer to its Athens campus.
But selling the land would cost OU at least $496,000 a year in rent.
OU’s Board of Trustees announced a resolution last week to sell most of its real estate on East State Street. The properties in question represent 70.63 acres of land, and the businesses which use the land include Lowes, Wal-Mart, Kroger, Staples and the Athens Mall.
OU owns hundreds of acres in Athens County, including the land most university buildings sit on and the land it hopes to sell on East State Street.
None of the land associated with OU’s Athens campus generates lease revenue. However, the university still makes hundreds of thousands of dollars from leasing land off-campus to corporations and businesses.
Last year, OU made $759,480.28 in base rent. That does not include additional rent paid from businesses to the university based on businesses revenue for that year.
In most situations in which businesses pay OU a percentage of their rent, 5 percent of a business’ revenue over a certain dollar-amount is paid in addition to the base rent.
For example, Putnam Square Apartments pays $22,500 in base rent a year, plus an additional 5 percent on any money they bring in over $553,000.
The land on East State Street OU wants to sell makes up 65.4 percent of the total base rent income. In other words, the university would give up a little under half a million dollars a year by selling the properties.
The university’s Office of Real Estate Management found the more than 70 acres of rent-generating properties on East State Street as “surplus,” opening a route for sale.
A memo from Stephen Golding, vice president for Finance and Administration, in the board’s agenda for this week’s meeting said rent the lease agreements currently generate for OU are “undervalued” warranting a sale of the properties.
The properties have been found to be worth about $12.05 million, according to the evaluation. Selling the properties would be equivalent to generating more than 24 years of base rent, or less when the percentage rent is included.
With the money generated from the sale, OU is possibly looking to expand its real estate holdings closer to the central campus. In the agenda, Golding said the new funds would allow the university to support the core mission of the university and expand the footprint of the Athens campus.
A resolution at the board meeting will not sell the properties outright, but would grant the power to the President Roderick McDavis, or his designee, to “negotiate, evaluate, and dispose of these properties in a manner consistent with the requirements of Ohio law.”
Decisions on what to do with any money generated are not final yet.
First, the resolution allowing the properties to be sold has to be approved by the board. Then, the properties can be listed for sale.
While they are being sold, two planning efforts are being undertaken by the Ridges Master Plan and Comprehensive Master Planning committees, said Donna Goss, director of Engagement and Real Estate Management, in the board agenda.
The Ridges committee is looking at ways to improve the utilization of buildings and surrounding land at the former Athens Asylum, while the Comprehensive Master Planning committee guides the university in new construction and renovations.
Business sitting on the land in question will most likely not be affected by the sale.
A Kroger spokesperson said the company will likely transfer its rent to the new landlord.
@SethPArcher
sa587812@ohio.edu
