Acquisitions Part of Archstone’s success also is based on its acquisition strategy. In each of the past four to five years, the company purchased more than $300 million worth of existing apartments. “When we make an acquisition, we are generally looking for similar characteristics – a well designed building in a practical location,” says Sellers. The company doesn’t have quite as much latitude on physical products it acquires because it didn’t build them. However, they are always looking for a great location that is under-managed. “We found that virtually everything we bought, we’ve been able to dramatically increase the cash flow the building’s producing just by applying our management acumen and expertise to that new acquisition.”
Archstone is not focused on amenities at properties it acquires. The company is more concerned with functional floor plans – because that’s something you can’t change, says Sellers. “If you focus on functional floor plans that meet the demands of the resident base in the area with a convenient location, everything else will really take care of itself.”
For the future, Archstone has more than 8,900 units in the pipeline. The company completed approximately 5,500 units in 2000 and expects to complete another 4,000 this year.
inglewood_tcm23-94339.jpg?width=187&404=404.png” alt=”Archstone Inglewood Hill, in Sammamish, Wash., offers a mix of one-, two- and three-bedroom units. Amenities include balcony and in-unit washers and dryers.”> Archstone Inglewood Hill, in Sammamish, Wash., offers a mix of one-, two- and three-bedroom units. Amenities include balcony and in-unit washers and dryers.
Archstone Inglewood Hill, in Sammamish, Wash., offers a mix of one-, two- and three-bedroom units. Amenities include balcony and in-unit washers and dryers. In the next five years, the company hopes that the investment community will view it differently, says Sellers. “We want to be perceived as an operating business,” he says, “and one that has every bit as much validity, intellect and future potential as any other core operating business in the S&P 500.”
The Key to Resident Services Part of being a successful developer is merging operation and development plans. A company not only needs to offer a great product, but it needs to offer the services its renters desire. Archstone Communities has done that on several levels.
It still amazes R. Scot Sellers, chairman and CEO, that three years ago, apartment companies didn’t have a way to do instant credit checks for potential residents; instead, it took at least two days. “Apartments were the only business I can think of that would let our customer walk out the door when they wanted to consummate a sale,” he says.
But as an industry, the multifamily business didn’t have the tools to process credit approvals more quickly. Archstone set out to change that by working with SafeRent to design a credit scoring mechanism which uses the latest technology – also used by mortgage, credit card and automobile finance companies – to approve customers’ credit to rent an apartment.