OPERATIONAL EXCELLENCE
Bayless says that the REIT hires —the best and the brightest at every level— and supports their personal development, providing them with opportunities for advancement. Nearly 90 percent of the company’s senior management team was promoted to that level from within the company.—We have an open-door policy and encourage debate, which promotes problem-solving and independent thinking,—he says.—All ideas are heard and considered before a final decision is made.—
Still, in the student housing arena, a great management team and quality assets aren’t enough, Bayless says. The sector is operationally intense, which is why ACC relies heavily on its proprietary technology infrastructure, dubbed the Leasing Administration & Marketing System (LAMS), to get an advantage over the competition. The Web-based system gives the REIT real-time information on its properties, allowing the company to make strategic marketing and leasing decisions.
Bayless describes LAMS as—the most sophisticated operating system—in the student housing industry. And most analysts agree.—ACC has developed an operating and leasing system that is very unique to the rigors of student housing leasing and operations,—KeyBanc’s Ford says.—Their ability to get the properties leased-up, maximize revenue, and operate the properties efficiently is unique in the space.—
Greg Dowell, senior executive vice president and COO of ACC, also points out that ACC is constantly interacting with its employees at the property level so the management team hears about what’s working and what’s not.—The property people are the ones who make the money,—he says.—We realize the importance of our on-site people because leasing and resident satisfaction occur at the individual sites.—
ACC’s operational excellence is just another reason the GMH acquisition made a lot of sense, Bayless notes.—We believe there is a significant opportunity to create net asset valuation appreciation by applying our operating platform to the GMH properties,—he explains. Specifically, Bayless says that the GMH acquisition offers the opportunity for occupancy and revenue upsides. GMH’s properties hover at an occupancy level of about 90.5 percent and rent for $437 per bed; ACC plans to push those numbers higher. Its own beds, for instance, rent for an average of $516.
Moreover, GMH had a completely decentralized management system, where regional vice presidents and regional managers made most leasing decisions—including setting rental rates. That will all change when ACC rolls out LAMS to the GMH portfolio for the 2009 school year. —Our initial reaction to this deal was to wonder how GMH was going to add to ACC,—Ford says. —Ultimately, we think it’s a good acquisition. ACC bought GMH at a good price, and there’s a lot of operational upside there because the GMH properties had been under-managed.—