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 92 regional manager working in the same market; you have an individual who is very familiar with the market and all the attributes associ- ated with that market. They see the benefit of the supervisory cost or that the allocation of travel expenses that gets billed to the property can be allocated among multiple properties." Competitive Advantage A key advantage for many managers operat- ing multiple assets, especially in smaller mar- kets, is market knowledge. By managing mul- tiple assets, operators are able to see overall market-wide metrics, like occupancy and lease up rates more quickly. "The biggest advantage is that you just know the market better than everyone else," says Collard. "While there are national data ser- vices, we are in some small markets where they don't have absolute data. If I look at our lease-up curve at BYU, I'll know within half a percent exactly where we are every 10 minutes of the day. You also know every owner in the market by name; you may manage properties for half of them. It works because you know everything." Knowing the market so well has been advan- tageous for some operators. Redstone, for example, recently landed a management con- tract in one of its markets for an owner that has management capabilities, likely because the market was small and the owner saw that there would have to be considerable effort put forth to learn and execute in the small market. "They essentially said, 'Do we want to go to this market and fight it out with our manage- ment company, or do we go with the manager who has 40 percent of the market?'" says Col- lard. "Overall, it's easier for everyone to have us manage the assets." A Boost For Leasing and Acquisitions When they manage multiple assets in a given market, leasing personnel have the benefit of redirecting students to other properties if a property the prospective renter is initially seeking is full or doesn't meet their needs in some way. "We like to think of it like Baskin Robbins; we've got all the flavors," says Smith. "We try to make sure we have a diverse mix of proper- ties in a market. We don't want five cottage projects in one market. We want to have every product type and every unit type so that we have every price point covered." In markets where it has multiple assets, Scion has trained its leasing staff to cross-sell other properties in case a student is looking for different criteria than the property they are visiting. "Our leasing staff members are not going to necessarily sell you on their property; they are going to find out what you are looking for and sell whichever product works for you," says Smith. While this is more common among owners who manage their own assets, referrals some- times happen with third-party managers if a property is fully leased. "The only time we ever redirect a prospect is if we have two different property types in the same market and the prospect cannot afford the property they are visiting," says Bonnin. "If we have other properties, we can direct them to those assets that are within the needed price point." For owners, like American Campus Com- munities and The Scion Group, that some- thing-for-everyone strategy has to be a part of the company's acquisition strategy when it is acquiring additional properties in a market where it already owns assets. That enables the owner to have multiple offerings to stu- dents. In 2017, ACC acquired AVA U District in Seattle from Avalon Bay. Within four months, the company acquired two other assets, all within three blocks of each other, pedestrian to the University of Washington campus. Wil- liam Talbot, executive vice president and chief investment officer of ACC, says the company is also pursuing other properties in the market, including ground up development. Redstone Residential also is careful to choose when it expands to new markets. The company only does so when it knows it will be success- ful with multiple properties. "Do we just want to shade in more states on the map and have a property at every school? No," says Collard. "We would rather have a much smaller geographic footprint and know the market cold." Redstone has expanded to markets like Clemson, South Carolina, where it sees the opportunity for expansion. The company seeks additional ownership or management oppor- tunities when it enters a market, many based on having relationships with a property's owner. "There are economies of scale both in having multiple properties with one relationship and multiple properties within one market," says Collard. "That's how we grow. An owner will say, 'we have five properties together; you've done a great job. I'm thinking of buying this in another market. We learn that market together, and once we're there, we try to grow further." "We focus on offering a diverse array of price points, unit offerings and amenities within a given market in order to be able to meet the needs of every person who walks into our leas- ing office," adds Talbot. "Challenges include owning too many beds at one price point or similar offerings competing for the same target student subset." Further consolidating management, some companies have a centralized leasing center for all their properties within a market. ACC has been testing a centralized leasing, management and facilities team in the Austin, Texas, market, where it operates 5,000 beds in seven properties. "We are now evaluating a phased roll out of this strategy in other concentrated markets," says Talbot. "With over 42 percent of our net operating income generated in our top 10 mar- kets, there is a tremendous opportunity for sig- nificant value creation for our shareholders." Managing multiple assets can be aided by a company's acquisition profile. ACC has con- Redstone Residential acquired NorthPoint Apartments in Rexburg, Idaho, in May 2018 from a local owner. The company manages about 2,000 student housing beds in the Rexburg market, home to BYU-Idaho. Asset Campus Housing also manages Berkeley House in the College Station/Texas A&M market.

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