Meeting Campus Advantage president and CEO Michael Peter instantly transports you back to those first days at college: moving into your dorm room, getting to know your roommates and your neighbors, and making that first psychological link to your alma mater via the resident assistant (RA) who lives on your hall and helps guide you and 30 to 40 other wide-eyed students towards the first steps of a four-year journey of self-discovery and social and academic growth. Peter, who was an RA as an undergrad at the University of Wisconsin 25 years ago, still exudes the same clean-cut, down-to-earth, and trust-inspiring friendliness that roughly 50,000 RAs embody to encourage and enthuse the three million students who filter through the nation’s colleges and universities every year.
This month, roughly 30,000 of those students will be moving into a Campus Advantage apartment at one of 52 locations in 21 states nationwide—and chances are they’ll be meeting one of the student housing firm’s executives on that very first day. “Move-in day is the most stressful time of the year for both residents and on-site staff,” says Peter of the annual fracas that Campus Advantage typically staggers over a two-to-three-day period and stages with food, drinks, and rest station tents, at times negotiating street closures with municipalities. Three years ago, Peter mandated that every member of the executive team rolls up his or her sleeves to help manage the madness. “So we go on site, moving luggage, meeting parents, and the parents always have an odd look on their faces and typically ask, ‘Who are you?’” Peter says. “Well, I’m the president of the company, and I’m here to help you move in.”
These types of personal touches have been a hallmark of Austin, Texas-based Campus Advantage since the company launched in 2003 to fill a void perceived by Peter and his team in privatized student housing: off-campus apartments with an equal or higher level of resident life services as compared to traditional on-campus residence halls. (The firm does manage three on-campus communities.) “The idea of being able to give students the resources to be successful in their journey has been a core mission of on-campus housing and has been seen as an integral part of the experience at colleges and universities since the development of the Oxford and Cambridge model [of incorporating residence life, sports, clubs, associations, and academics into a holistic model],” says Campus Advantage vice president of residence life Dan Oltersdorf. “To this day, colleges and universities are great at that. What had not been done in our mind very effectively or consistently was transferring that same philosophy to the private world, when we’re serving the same people at the same stage in life with the same needs.”
Switching Majors
Originally funded by a second mortgage on Peter’s house, Campus Advantage burst onto the student housing scene in 2003 with three employees and a single management contract on a 571-bed property in Tallahassee, Fla., serving both Florida A&M and Florida State University. The firm quickly won additional management contracts by focusing on high net-worth individuals and mom-and-pop operators who had multifamily real estate near campuses but not the proclivity or interest to run the day-to-day operations of a student housing asset. “We began early on in our formation with a focus on revenues and cash flow,” Peter says of the company’s original growth strategy. “If you had a pulse and a purse and a need for student housing management, we were there.”
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.
Campus Advantage
School Cool: The Automatic Lofts in Chicago, one of Campus Advantage's latest management contracts, serves more than six area colleges.
Credit: Campus Advantage
• Year Founded: 2003
• No. of Employees: 1,000-plus
• No. of Properties Managed: 52
• No. of Beds Managed: 30,000
• Estimated 2010 Revenue: $10 million
• Market Coverage: National in 21 states
“We do a lot of targeted recruiting, reaching out to student organizations and administrators to identify the students who have already flagged themselves as active leaders,” Oltersdorf says. “We likewise encourage the perception of the job as a coveted and competitive position: Having 60 or more applicants is not unusual for a typical property with six openings.” Still, the recruiting task isn’t always an easy one: Campus Advantage contends with restaurant and retailer employers that can usually offer equal or better compensation with a much lighter hourly commitment. (CAs are typically compensated with a varying combination of stipend and price-adjusted meals and housing that, in total, is equitable to prevailing job-market wages for the college student demographic.) To compete, the company emphasizes the value of on-the-job experience with a seminar for existing and inbound CAs each spring called “From CA to CEO,” which outlines transferable skills, assists with resume building, and encourages the seniors in the group to consider staying in student housing, specifically with Campus Advantage.
Intensive time and resource investment in student recruiting is undoubtedly invaluable to Campus Advantage, where having in-the-know students on the ground is seen as a prerequisite for on-site success. In fact, more than half of the corporate executive team boasts a resident assistant bullet point on their own resumes, and even those with no personal on-site RA experience see the upshot of having the students run the show. “If you left leasing ideas up to a 48-year-old white male accountant, things would be pretty lame,” attests Campus Advantage executive vice president of operations and finance Mark Hager. “Fortunately, we have 400 people in their early 20s who are our consumers, at our properties, using our services, and driving our ideas. Every week they come up with something I never would have thought of.”
Case in point: social networking campaigns centered on property mascots. “We just started using mascots at properties this year, and it’s really taking off,” says Campus Advantage vice president of operations Chip Schell, noting that Campus Assistants pick the mascot and write its back story. Participating properties to date include Cabana Beach in Gainesville, Fla., near the University of Florida featuring Copa the Parrot and Campus Lodge in Tampa, Fla., near the University of South Florida featuring Bob the Moose. “You’ve got this fairy animal that is just this furry hunk of colored cloth that has taken on a life of its own on YouTube and Facebook,” Schell says. “That’s the success angle to social media: You can post, ‘We have a free rent special,’ or you can post videos of your parrot driving around in a convertible or your moose on a beach in Clearwater.” Results of the marketing initiative speak for themselves: Leasing velocity at properties with mascots has improved by 25 percent.
To assist CAs with assuming the accounting, marketing, and management responsibilities of million dollar real estate assets, Campus Advantage relies heavily on training and technology. Every year, senior residence life staff, including residence directors and multi-year CA veterans, is flown into Austin for a week-long “train the trainer” boot camp where student staffers are trained on everything from alcohol awareness and crisis management to throwing a job fair or managing roommate arguments.
Additionally, Oltersdorf, along with vice president of IT Derek Benavides, has developed an online database that charts every program and initiative across the company’s portfolio. Launched last fall, the system already contains 1,996 residence life programs and has a social networking and blog-style architecture that allows CAs to comment on programs or search for specific ideas. “We look for the on-site staff to captain their ships because there are no better experts,” Peter says. “We want to make the CAs look brilliant in the eyes of everyone.”
Extracurricular Activities
Campus Advantage also wants to look brilliant in the eyes of the institutions whose students annually fill its communities. The rapport between colleges with their own student housing initiatives and off-campus providers looking for residents has traditionally been a competitive, and, at times, adversarial relationship. Campus Advantage’s efforts to enrich the residence life component of off-campus living are intended to begin to bridge that gap. The firm requires its properties to provide annual programming across a spectrum of social, academic, and life skill development curriculums (see “Course Requirements,” on page 31), all geared toward assisting residents to form a more solid and lasting connection with their alma mater.
Course Requirements
Campus Advantage properties provide programming across a spectrum of social and academic curriculums to help residents form a lasting connection with their alma mater.
Largely comprised of undergrad students, the Campus Advantage on-site staff nevertheless has to engage student residents in best-in-class residence life programming for the company’s strategic tactics to succeed. Yes, they do barbecues and pool parties, but resident life staff is also responsible for tapping into six core programming categories over the course of the academic year. Campus Advantage vice president of residence life Dan Oltersdorf explains the syllabus:
Civic Engagement and Volunteerism: “We’re striving to put forth opportunities for people to volunteer,” Oltersdorf says. “Luckily, today’s student is much more interested in getting involved. In Fort Collins, Colo., we just did a Habitat for Humanity build. It was on a Friday and I wanted to get out of the office to join them, but when I called on Wednesday we already had more students heading out to the site than we could handle.”
Building Community: This is the fun stuff. The social events range from traditional pool parties to concerts to Wii sports tournaments. “The key to social planning is to get our student staff on the ground to decide what their residents are interested in,” Oltersdorf says.
Academic Success: After packing in a ton of social planning for the first month-and-a-half after move-in, Campus Advantage turns on-site attention to academics around midterm. “We’ll increase hours for study amenities if they are not already 24/7,” Oltersdorf says. “We’ll also keep the coffee brewing, promote use of the conference rooms as study areas, go door-to-door with a midnight milk and cookie cart. We’ve even done faculty roundtables.”
Valuing Difference: College enables a greater awareness of the people around you, and Campus Advantage makes sure to tap into the multicultural aspect of university life. “At one community, we launched a program to have Indian students teach some of the Americans how to play cricket that turned into weekly cricket matches,” Oltersdorf recalls. “We’ll do international food potlucks or a winter newsletter focusing on holidays beyond Christmas. Anything to learn more about the different people around you.”
Life Skills: Believe it or not, red sweatshirts are still turning wash loads of whites into dryer loads of pinks. Campus Advantage works hard to assist residents broaden their life skills. “We’ll bring someone in from a credit union to talk about student loan management and budgeting and investing in your 20s,” Oltersdorf says. “At one property, we had a fashion show at the pool with professional attire donated by Nordstrom, and a representative from the career center came out to talk about how to dress for success.”
Sustainability: Today’s students have likely never known a time when environmentalism wasn’t intricately woven into all aspects of life, and Campus Advantage keeps the green message coming. “We require each property to do at least one program in sustainability every year,” Oltersdorf says. “That ranges from planting a tree on Arbor Day to implementing a full-scale recycling program. We also do a lot of educational initiatives on energy and water savings for shower- and power-hungry students.”
“The research tells us that moving off campus results in students less engaged with the college experience, who have a lower GPA, who graduate at a lower rate,” Oltersdorf says. “To build that bridge back to the institution, we try to emphasize that we understand it is vital to get them connected with the experience the institution wants them to have. Traditionally, the off-campus housing provider comes in looking for a list of people to market to rather than a partnership with the university on working together to serve the students.” Campus Advantage has forged strong relationships with many of its clients, including Texas A&M and the University of Florida.
Not that Campus Advantage is ignoring the marketing agenda in throttling its residence life offerings and working to integrate with its residents’ institutions. “We want to be more than just a friendly neighbor, though,” Peter says. “We want the colleges and universities to view us as an asset so when parents and students come to them and say they want to live off campus, Campus Advantage is either officially or unofficially the first name that comes to mind.”
Postgraduate Plans
That type of preferential plug will figure large into Campus Advantage’s plans for future growth, particularly as it abandons a revenue-at-all-costs strategy for qualitative over quantitative growth in portfolio building. Peter also is keeping an eye on its competitors who have gone public, including Austin-based American Campus and Memphis, Tenn.-based Education Realty Trust, as a means for gaining access to broader capital markets opportunities. While he says Campus Advantage is having “too much fun” as a private firm, he doesn’t rule out the eventual public option as a strategic necessity. “I know IPOs are getting a lot of looks among our competitors, and if capital is the issue, then certainly that is a great way to go,” Peter says.
The owner/operator model is likewise a platform that Campus Advantage is cognizant of as the company continues to grow. Critical to that consideration is the prospect of any conflict of interest in markets where the firm currently holds fee-management contracts. “We’ve created amazing cash flow opportunities for our clients, and you’d be insanely naive to think that there isn’t an opportunity to create those types of returns internally for the company to provide financial stability and further our operational expertise,” Peter says.
For the immediate future, the opportunities facing Campus Advantage remain strictly in portfolio building with a focus on retaining the spirit and ambition of a first-year resident assistant, while leveraging the scale opportunities and branding gravitas of a national student housing management firm.
This month, the firm’s executive team will head out to move-in day at campuses across the country to do just that. “There are some great opportunities and greatly underserved markets,” Peter says. “We want to maintain a can-do attitude: carrying luggage upstairs and helping out the maintenance guy. Whether that comes from our belief that residence life results in a better education and a closer affiliation with the institution or directly from our own resident assistant backgrounds, we want to preserve the culture the way it is at any cost.”