Student Housing Business

JUL-AUG 2018

Student Housing Business is the voice of the student housing industry.

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MANAGING MULTIPLE ASSETS July/August 2018 StudentHousingBusiness.com 90 Multiple Effect Managing multiple assets in a single market leads to many benefits for student housing operators. By Randall Shearin A Any owner who has bought a single student housing property in a market knows how dif- ficult it can be to manage a sole asset. Having other properties in the same market creates economies of scale, especially as it pertains to labor required to operate and lease multiple properties. For large owners, acquiring multi- ple assets in a single market allows them to be more efficient on the management side, pro- vided the properties don't directly compete at the same price point or have similar amenities that would attract the same subset of students. Owning a number of properties in the same market has been a business model for a num- ber of privatized student housing compa- nies since their inceptions. The majority of the nearly 26,000 beds owned by The Collier Companies, the nation's fifth largest student housing owner, are in the company's home- town of Gainesville, Florida. That's where the company started, and where it continues to dominate the market. Similarly, Redstone Residential was launched in 2009 when it was hired to manage three assets in Provo, Utah, near Brigham Young University. Today, the company operates more than 20,000 beds, with about 13,000 of those in Utah and Idaho. The company manages more than 5,000 beds at each of three different schools: BYU in Provo, Utah Valley University in Orem and BYU-Idaho in Rexburg, Idaho. As well, larger owners like American Campus Communities (ACC) and The Scion Group operate in a num- ber of markets where they own multiple assets through their targeted acquisition strategies. Creating Economies of Scale The biggest advantage to operating multiple assets in a single market is the economies of scale on the management side of the business. While there are savings on being able to pur- chase goods in bulk, the true benefit comes in spreading marketing costs and labor across multiple assets. "A regional manager who has six proper- ties in one market that they can see before 10 a.m. in one day is much different than it is for a regional manager who has to get on a plane for each of six properties within a region," says Grant Collard, CEO of Redstone Resi- dential. "People say working remotely doesn't matter because of the internet, but it does mat- ter in the field of property management." The Scion Group has had about a year under its belt with its current portfolio of multiple properties in the same markets. The company has approximately 14 markets where it owns and operates multiple assets. "We have noticed that our operating mar- gins in markets where we have multiple assets are better in markets where we have single assets," says Mitchell Smith, chief operating office of The Scion Group. "There are some obvious efficiencies, like bidding landscaping services to a single vendor across all the assets, and items like HVAC services." Many operational efficiencies come from grouping basic maintenance and service con- tracts, while others may not be as obvious. When Scion purchased Avenue North and Avenue South near Purdue University in West Lafayette, Indiana, one of the projects was running a shuttle to campus, while the other was using a larger bus. The company was able to sell its two smaller shuttle-style vehicles for Avenue North and run the large bus that had been serving Avenue South to both properties on a more frequent schedule. The changed saved the company nearly $100,000 across the two properties while expanding service. For operators, consolidating the marketing expense among a set of properties also makes a lot of sense when managing multiple prop- erties in a given market. "While each property tailors its own mar- keting plan and budget, there are certain com- ponents of the operations that make sense to share," says Julie Bonnin, chief operating officer of Asset Campus Management (ACH). "If we are going to acquire a list [of students] from the university or a third-party to market an asset, we can buy that list once and allocate the expense across all the properties we man- age in the market. Each property can take the list and do its own specific marketing cam- paign to the same targeted group of students." When The Scion Group signs contracts with universities to house athletes, it can spread those students across multiple properties and see benefits at all of them. For owners with smaller bed counts, it rarely makes sense to set up shop to manage a single asset in a markets, so they rely on third-party managers to fill that void. As a result, many third-party managers have become experts at operating multiple assets in a market, with multiple owners. Some larger managers, like Asset Campus Housing, have to deploy multi- ple regional managers cover a market to avoid conflicts of interest among properties owned by separate entities. "Some of our clients feel like they don't want the same regional on an asset," says Bonnin. "But there are other clients we work with who see the benefits of having the same Asset Campus Housing manages a number of properties in the College Station, Texas, market, including Cambridge at College Station (pictured).

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