Student Housing Business

MAY-JUN 2018

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

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MANAGEMENT May/June 2018 56 iors and make adjustments today that can save money or push the rents. On expenses, whatever those needle movers are, that's where we'll first target, but we will go line item by line item and double check to make sure we're thinking of every strategy within and outside the box. We have to deliver results as operators, and we have to have the trust of our client to say, 'here's where I can get you value, here's where we're stretching.' Having those hon- est conversations and not over- promising and under-delivering in a market that never would've been able to get those rents is important. Petersen: Grant, can you expand on what you were saying earlier on the payroll side? At Peak, that is one of the areas where we have seen the most growth. Collard: If you're an investor and you're going into a new asset, and you say, 'okay, the past team or owner wasn't able to get there, but we're going to take their cur- rent payroll budget, cut it by 20 percent and achieve wonderful things' — it's really tough to get there. With the sector expand- ing so quickly, you really need a strong property manager right now. This is not the time to find a property manager for $16 an hour and say 'let them figure it out.' That's one area where we've really been focusing. We want someone that is going to be here four or five years; we don't want this to be a glorified community assistant manning the ship. That's terribly important when you're looking to add a lot of value and trying to turn the ship around. Your pro forma may be that the first year, we need to pop NOI 20 percent, those are steep orders when you don't have the right team on the ground. Byrley: We all remember the days where 95 percent was considered a success. Now, we never get a pro forma anymore at 95 percent — it's always 96, 97, 99. We're sit- ting there going, 'oh, we're at 95, we missed pro forma.' It's crazy to us to say that we did really well, but we're still missing these numbers, so we have a really big challenge with that. With pay- roll, you're getting incentives cut because you often think the next operator is going to be so much better than the guy before. We get those cut, and it's frustrating for our teams, because you have to do these things, they're all aspects of good quality property manage- ment, doing things that are best practices are actually considered failures on the pro forma side. Fuller-Wilson: With the sophis- tication that has come into our space, the elevation of our tal- ent base needs to go along with that. Our managers are running $100 million assets, in some cases. You've got to be able to get the college-educated judgment and decision-making that you need there, and that's the last place that you're going to nickel-and-dime. You're going to pay for it ten-fold on the backend if they're not able to push that NOI. Another thing, too, is that, when we go through the staffing matrixes, you'll look at T12s [trailing 12 month finan- cial statements] from the previous company, and there's always a story in those T12s. I always try to tell my clients, and also Greystar investment owned assets as well, what the is story in there that you're trying to extrapolate, and don't just assume. We've had situ- ations where they've said, 'take all of the bonuses out; there are no bonuses in the T12, they're not used to that.' Well, that may be the reason that the occupancy is at 88 percent, but there may be a story. Look at everything holistically and make sure you completely understand what the financials are really telling you and don't make quick judgments for that bottom line that will cost you double in the future. SHB YOU BRING THE LEMONS. WE'LL BRING THE SUGAR. FIND OUT HOW WE CAN SWEETEN YOUR DEAL, CALL US AT 607.444.2202 • 5-STAR REPUTATION • TOP 50 ORA POWER RANKING • 98.3% OCCUPANCY • 4.1% RENT GROWTH • 12.3% NOI GROWTH • TIER 2 & 3 MARKET EXPERTS DEVELOPMENT | MANAGEMENT | ACQUISITION 607.444.2202 • WWW.NDGLIVING.COM " We try to determine buying behaviors and make adjustments that save money or push the rents. For example, is cable required as a competitive advantage? — Michelle Fuller-Wilson, Managing Director, Greystar

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