Student Housing Business is the voice of the student housing industry.
Issue link: https://studenthousingbusiness.epubxp.com/i/488341
SHB EXCLUSIVE MARCH/APRIL 2015 STUDENT HOUSING BUSINESS .COM 24 pany when you can't provide the guidance and expertise to your employees. In a way, it's really not fair to employees. Everyone has professional and personal goals and, as managers, it is our job to help employees achieve these. I would fnd it very insincere to manage people if I couldn't help them. SHB: How would you view the current management's operation of Campus Crest? Denner: I think the best thing to say here is that we would be doing things very differently. We are very big believers about working hard with, and for, our employ- ees. You have to provide them with leadership that understands the nuances of the business; that has strong sector and lending rela- tionships in order to excite them to carry out the brand mission in their local markets. This of course leads to leasing and overall stability. SHB: There are probably a lot of Campus Crest employees with questions, not knowing what this proxy will mean for them. What would you say to them? Denner: This can be a tremen- dous opportunity for them. We know that our most important asset is our employees. We feel a great sense of responsibility to educate, train and provide pro- fessional growth opportunities to our employees. We understand that the last few months have been trying for them with no leader- ship and uncertainty in what their future holds. We hope we can bring to them great stability and an opportunity to learn and be part of a caring team. For those that want to be part of building a great company, the door is wide open. SHB: If shareholders decide to embrace your proposal, can you take us through the new structure of Campus Crest and what would happen to Campus Evolution Villages? Stark: Campus Crest would be acquiring the management compa- ny of Campus Evolution Villages. Campus Crest would then ben- eft from our in-place management team and all of their student hous- ing knowledge and relationships as well as all of our intellectu- al property. We also believe we can bring attractive fnancing to the company and provide it with the option to acquire the exist- ing Campus Evolution Villages owned student housing portfolio, at such time that it is accretive to shareholders. We really believe that we are a total solution for the company. SHB: What are some of the frst things you would do at Campus Crest if you are success- ful and assume leadership of the company? Denner: As we often say it is all about our employees. It is about providing them with training and the education to be successful. We look at it in two aspects. One is the people/asset aspect. So top on the list is being in front of every- one and starting the culture build. There's also a lot to do in terms of leasing, Turn, repairing and creat- ing university relationships, and making sure the higher perform- ing assets continue to perform. The other aspect is working on stabilizing fnancial results, imple- menting the appropriate policies, procedures and controls and meet- ing with shareholders. SHB: With Campus Crest being signifcantly bigger than Campus Evolution Villages, why are you confdent that you can have a seamless transition and be able to manage that larger platform? Denner: We built our business with a few things in mind. First we said we were going to build a student housing brand. A name that would be synonymous with quality and one that provides all constituents with an experience. We knew to do this we had to have best practices and policies and procedures in place; you need everyone rowing in the same direction. We've hired great tal- ent. What makes them great is not solely their student housing know-how and expertise. It's their passion to be change agents and to provide constituents with a great experience. It's much easier to just fnd smart student housing folks, but we insist on more. Campus Crest has employees and many of them probably have great abil- ity and the desire to be part of change. They simply lack leader- ship and a clear message today. It is very exciting just thinking about working with great people to affect change and have them part of something special. SHB: You have acquired a lot of sub-performing and turn- around assets under the Campus Evolution Villages brand and management. How is that applica- ble to the Campus Crest portfolio? Stark: Campus Crest has strug- gled for a long time, and a good portion of their portfolio is not well occupied. They currently suf- fer from a lack of student housing and general real estate operating knowledge and expertise that we can bring to the table. We have the ability to come in, work with employees and provide them the tools and strategies that will allow them to achieve a greater level of success. The overwhelming majority of their assets are in qual- ity locations at quality universi- ties. Under the right leadership, we believe shareholders can real- ize signifcant equity returns. SHB: What was your reaction to Campus Crest's decision to sell their development pipeline? Stark: We were engaged in a dia- logue with Campus Crest and had suggested that they be very thoughtful with their land assets so we didn't believe the bulk sell- ing of assets while the company is in transition was the best course of action. There were some markets that we believe were over-sup- plied but still have strong inves- tor interest, so strategically sell- ing those assets could have been a good course of action. On the other hand, some land assets were in markets that we thought could be accretive and provide the com- pany with a forward pipeline for growth. We believe that selling any assets while the company is for sale is unlikely to yield the best results for anyone but the buyers. SHB: It's been widely speculat- ed that the current Campus Crest management is actively trying to sell the company. Any opinion on that? Denner: We are aware of the ongoing sell process. A change of control at a premium to today's share price is a good outcome for shareholders after years of value destruction. Clinton Group's nominees have stated that they plan to continue the sale process. We believe that a company can extract a higher value in a change of control transaction where there is a management team present. SHB: Campus Crest pushed back their annual shareholder meeting, how does this affect you, if at all? Denner: It gives us more time to prepare for shareholder meetings leading up to the annual share- holder meeting. SHB: What kind of feedback have you received from other people in the student housing industry about your efforts to take control of the company? Stark: We included some quotes in our white paper presentation from executives at our competitors in the sector and from some very large and active lenders. Everyone has been very supportive. It's amazing how many folks have offered their support. We believe that a strong Campus Crest under new CEV leadership would be good for the sector overall. Campus Crest's next annual share- holder meeting is scheduled for May 15th*. To read the White Paper fled by The Clinton Group with the SEC go to http://1.usa.gov/1BofpJE. SHB reached out to Campus Crest Group to get their reaction to the Clinton Group/CEV proxy bid. We received the following response from the com- pany's investor relations representa- tive: "The Campus Crest Board and management team are in the process of conducting a comprehensive analy- sis of all potential fnancial and stra- tegic alternatives to maximize value for all shareholders. We continue to encourage Campus Evolution Villages to participate in the Board's ongo- ing process. Additionally, we remain extremely focused on executing on our strategic repositioning to drive value for shareholders as we strive to create signifcant, compelling value in the near-term." SHB * This shareholder meeting date is accurate as of March 24, but the meeting may be delayed up to fve days.