| Education Realty Trust: Second Wave |
| Corporate Spotlight | |
| Monday, 01 October 2007 | |
 In the 1960s, Education Realty Trust became the first company in the nation to develop, own, and operate student residence halls. The company broke the traditional college dormitory mold and created four-person suites—the student hotel concept—and rode the baby boomer wave to success. By the late 1990s, the company’s owners were ready to pursue other interests. All but three of the locations from Education Realty Trust’s portfolio were sold, and two of the three owners rode off into the sunset. Paul Bower, with the company since 1969, decided to stick around. “I recognized we were in the so called baby boom echo,” said Bower, now president and CEO. “Why kill a niche business when another wave of college enrollment was about to hit? Universities needed us just as badly as they did in the 1960s. So we decided to crank up the business and do it all over again.”  Paul Bower, President and CEO Unique market Education Realty Trust’s resurgence didn’t happen overnight. In 1998, the company’s three remaining properties yielded a shallow revenue stream, and acquisitions proved difficult. When there were only seven locations by 2004, Bower was faced with a difficult decision. “We decided the best way to grow meaningfully was to take the company public and access shareholder equity,” he said, and in January 2005, Bower rang the opening bell at the New York Stock Exchange. With the capital generated by the IPO, Education Realty Trust rapidly built its portfolio up to 43 properties, owned and managed by the company’s subsidiary, Allen & O’Hara Education Services. After two rapid years of growth, Bower and his team have settled in to face a familiar challenge: leasing, managing, and maintaining thousands of units rented to 19- to 21-year-old college students. “It’s a unique market,” Bower said. “Most of our tenants are away from home for the first time. That creates challenges, but we try to handle it with the same attitude the university has with its students: it’s part of their maturation into adulthood. We’re not just handing these students a set of keys; we’re teaching them responsibilities like paying bills on time, respecting your neighbors, and respecting other people’s property.” To help in that task, Education Realty Trust reaches out to students with programs and people that help them make the adjustment, and parents are kept involved through a newsletter and regular satisfaction surveys. Parents, students, and universities appreciate the company’s efforts, and that’s generated positive word of mouth about Education Realty Trust properties. That’s critical, Bower said, in helping the company overcome its most daunting challenge: leasing its units to the next wave of 40,000 students that hit campuses every 12 months. “We use the analogy of a cruise ship. Once it leaves the dock, you can’t put any more passengers on it. Once school starts, we won’t get but a handful of new customers for the next 12 months. If we miss the mark, we have a problem. But that’s never happened in over 40 years.” A-1 Education Realty Trust manages to hit the mark every year by being proactive. Students don’t live in an Education Realty Trust property for more than two months before they’re asked if they’d be interested in renewing their lease for the next school year. The proactive marketing push eases the company’s leasing burden. Roughly 40% to 45% of Education Realty Trust renters choose to stay for consecutive years, cutting the number of units that need to be filled significantly. To bridge the gap, the company has model units on each of its properties for prospective renters to explore, and it’s tough to flip through a student newspaper or turn to a college radio station on any campus without seeing or hearing about the company. Regular events, such as pool parties, are also held at Education Realty Trust properties, welcoming renters and prospective renters alike. These combined efforts have allowed the company to enjoy annual occupancy rates of 95% to 97%. But what really keeps students flocking to the company’s properties is its stellar reputation. Education Realty Trust strives to maintain all of its units in A-1 condition. If a student reports a problem in the unit before noon, the company guarantees service that same day. And through quarterly inspections, the company is able to identify and fix problems or damage in a timely manner. “It’s a good business and marketing strategy, but it’s also self defense,” Bower said with a laugh. “We learned a long time ago that if you maintain a property in top shape, students will respect it and help you keep it that way. If you let it go, they will utterly destroy it.” The next level Education Realty Trust isn’t resting on its laurels. In July, the company began construction on its first wholly owned development project since going public in 2005. The 528-bed student community at Southern Illinois University demonstrates the company’s effort to take student housing to the next level. Along with a resort-quality swimming pool, game room, and computer lab, the state-of-the-art units will feature leather furniture and granite countertops in kitchens and baths. “We’re going for the wow factor,” Bower said, noting the first phase of the community is slated to open in 2008. “We want people to walk in and think, ‘Wow, this is first class. This is where I want to live.’” That’s something college students have been saying about Education Realty Trust properties since the company first introduced the student hotel concept in the 1960s. As Bower said, the product has changed, but the company’s focus remains the same. |
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American Executive is a RedCoat Publishing publication.
American Executive is a RedCoat Publishing publication.
