Leadership Lessons: Mike Peter
Michael Peter President and CEO Campus Advantage
Credit: Blake Gordon/Aurora
• AGE: 44
• FIRST PROFESSIONAL JOB: Assistant property manager
• BEST BUSINESS DECISION: Creating a business with people of intelligence, integrity, and passion
• FAVORITE QUOTE: “Do not go where the path may lead, go instead where there is no path and leave a trail.” —Ralph Waldo Emerson
• GREATEST BUSINESS CHALLENGE: Be big enough to meet your client’s needs but small enough to give personal service.
• BEST ADVICE EVER RECEIVED: Be genuine.
• LAST BOOK READ: Zappos.com 2009 Culture Book (Zappos.com Gear, 2009)
• WHAT’S PLAYING ON YOUR iPOD: Asleep at the Wheel
The tactic paid off: From the beginning of 2004 to the end of 2007, Campus Advantage revenues increased 600 percent and full-time employee head count exploded from 36 to 911, landing the firm at 541 on Inc. magazine’s list of the 5,000 fastest growing companies in America. This year, the company will pull in $10 million in revenue with 30,000 beds under management at 52 properties, with a notable concentration of properties in Texas, Indiana, North Carolina, and Florida.
Peter is cognizant of the difficulty in maintaining exponential growth alongside an ever-increasing scale of operations. In a growth move that emphasizes quality over quantity, Campus Advantage is strategically shifting toward managing properties for intuitional owners and away from the mom-and-pop set as it seeks assets with owners who are committed financially and culturally to the Campus Advantage brand promise to “serve and inspire our employees and residents to achieve their full potential.”
One notable participant in the change of pace at Campus Advantage is the California State Teachers Retirement System (CalSTRS), which followed up a 16-property management portfolio award to Campus Advantage in 2007 with a joint venture program whereby the pension will provide $100 million in equity at 65 percent leverage for Campus Advantage to identify acquisition opportunities and subsequently manage the assets. “We’ve committed about $40 million of that equity, and we’ll look to place the remaining $60 million over the next 12 months,” says Campus Advantage vice president of acquisitions Michael Orsak. “We’re pretty confident that the amount of product will be there. While we’ve been outbid in a couple of situations by the public REITs, we’ve gone from looking at zero opportunities to $450 million worth of deals this year.”
By keying in on clients such as CalSTRS, Campus Advantage feels it can further refine the quality of its management portfolio—a strategy that ultimately plays into branding within a real estate sector still highly dependant on word of mouth marketing and promotion. “The properties that we want our name associated with are very important to us,” says Peter, who notes that Campus Advantage has also gone from managing one of the largest community college off-campus portfolios to being in just a handful of two-year college markets.
As the company has transitioned towards more “A” quality assets co-located with major state universities and owned by more sophisticated institutional partners, it has likewise seen better operations fundamentals, with occupancies in the high-90s to 100 percent at stabilized assets. At any given time over the past several years, approximately 25 percent of the company’s portfolio has been comprised of newer, unstabilized management contracts with lower vacancies, Peter says, and of course virtually all assets “turn” in the summer months. “We don’t try to go out and own a market, but I do think we intentionally go out and try to earn clients, and we have started not renewing with clients who seem less than committed. Yes, the revenue is nice, but we know our cost of service, and for some clients the learning curve is too steep, and in the end nobody wants a failure on their score card.”
Student Leaders
With such high standards, it likely comes as little surprise that the most vital asset at Campus Advantage is its on-site management staff. What might be more unexpected is the make-up of that management: a cadre of some 400 college undergrads with little job experience and an unavoidable turnover rate of around 50 percent due to matriculation. Since Campus Advantage mandates that all resident assistants (fondly called Campus Assistants or CAs) have at least one year of experience living in student housing, the best-case recruitment scenario is at the sophomore level, which still only guarantees a three-year tenure.
