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SRE continues to work on change management


SJSC “State Real Estate” (SRE) continues working on change management and overcoming strategic challenges. So far, we have remedied or are in the process of remedying a part of the problems identified by the State Audit Office (SAO) from 2018 to 2021, says Renārs Griškevičs, Chairman of the Board at SRE.

SAO audited the SRE in the period from 1 January 2018 to 31 December 2021. The capital company initiated significant changes in line with its “Medium-Term Strategy 2018-2022” (the Strategy). A number of improvements, such as restructuring operational processes, which allowed a shift from function-based to customer-oriented service, and improvements in both the accounting process and the methodology for calculating rent and investments, were introduced as early as the time of the audit. It has also started reorganising our IT and data infrastructure which is expected to significantly improve data quality and is preparing to migrate the State Real Estate Information System to a new platform.

“We appreciate the real estate improvement opportunities highlighted in the SAO audit based on the 2018-2021 data. We are working together with all the stakeholders to review the processes still under development and the opportunities for additional improvement in line with the SAO's guidance. However, I would like to point out that some of the weaknesses identified were undergoing change at the time of the report and are no longer present,” says R. Griškevičs.

Introducing the Strategy has significantly optimised SRE's operations. The company has made significant investments to improve its working environment and develop a common understanding of its internal regulations, for example by specifying the procedure for cost-sharing and information selection criteria. Significant improvements were also made to the methodology for calculating rent, including the separate accounting of costs for unforeseen management works. SRE's goal is to accurately aggregate costs, which would allow for a recalculation of the rate based on actual costs. It also developed a method for calculating management measure plans and introduced changes to the procedure for planning management measures. At the same time, the Company developed a new and improved procedure for calculating the necessary investment for repairs, which contributes to greater accuracy for the methodology used to draw up an investment plan for a specific property. Previous lease agreements will be updated with this new calculation method, thereby reducing the risks associated with reserves. Innovative and sustainable real estate management is a development priority of SRE, which is included in the overall strategic objective. Buildings and structures of strategic importance for national security are essential for institutions and for the development of State and local government administrative territories.

SRE provides professional real estate management and administration for 350 building and structure properties, comprising 975 buildings with a total area of 0.95 million m2, as well as land beneath structures with a total area of 599 ha, and 3441 land properties with a total area of 892 ha. SRE is one of 23 Latvian companies that received the highest platinum award in the Institute for Corporate Responsibility and Sustainability's Sustainability Index 2022, demonstrating good governance and sustainability of its operations. It also received the third highest corporate governance index score of 90 points in the TOP101 Most Valuable Companies in Latvia 2022 and was ranked 21st among the 101 most valuable companies in Latvia. The company was founded in 1996 and its sole shareholder is the Ministry of Finance.