Conversation with Ted Rollins: Campus Crest Communities Pursues Growth Strategies
- Aug 26, 2011
Campus Crest Communities is on the fast track to expansion.
The company, which went public in October of 2010, is now increasing its portfolio at the rate of about 20 percent, or 3,000 beds, per year, says its CEO and co-chairman of the board Ted Rollins [pictured, with Mike Harnett, Chief Investment Officer (left)]. The REIT’s footprint now covers 15 states and 17,500 beds.
The portfolio growth will be accretive to the REIT’s shareholders, explains Rollins. “To obtain market share in the U.S., we need to continue to build student housing in underserved markets,” he says.
Student housing properties that the company opened last year were located in Conway, Ark. (180 units), serving the University of Central Arkansas; Huntsville, Texas (192 units), marketing to the Sam Houston State University; and Stateboro, Ga. (200 units), targeting students in Georgia Southern University. The company’s registration statement says that it has five identified sites under contract, with completion targeted for this year.
Campus Crest Communities’ strategy is to zero in not so much on the largest flagship state universities, but second-tier-sized universities in the secondary markets, Rollins indicates. The company generally seeks markets in which student enrollment exceeds 8,000, and a majority of the students resides off campus.
Primary markets have a greater tendency to experience a greater degree overbuilding, whereas in secondary markets, the developer can more easily clinch a “first mover” advantage and primary piece of real estate, says Rollins. “In the rush to the bigger markets, developers have overlooked many great markets,” he says.
If Campus Crest Communities appears to be headed for strong portfolio growth, the REIT’s predecessor, Campus Crest Group, was expanding at an even faster pace. Campus Crest Group was formed in 2004 and was wholly owned by Rollins and Michael Hartnett, co-chairman and chief investment officer. From just one community in 2004, the company grew by an average rate of 93 percent per year for the years after it was formed, says Rollins.
One of Campus Crest Communities’ distinct advantages is the vertical integration of its platform. The company owns the entities that perform its construction, property management and asset management functions and, Rollins points out, it will will benefit from 100 percent of the value creation by these entities.
Properties are generally being developed according to set prototypes by Campus Crest Communities’ own general contracting company‑Campus Crest Construction LLC, which oversees the design and construction of projects. By acting as general contractor‑the company is also in essence acting as its own distributor‑Campus Crest Communities for example expects to obtain discounts of 10 to 20 percent on building materials, says Rollins.
Student housing developed by Campus Crest Communities will operate under “The Grove” name. The company also assumes a focus, distinct among student housing managers, on student lifestyle programming designed to enhances students’ lives at the communities. In fact, Campus Crest Communities believes this emphasis drives its success.
The “SCORES” program provides social, cultural, outreach, recreational, educational and even spiritual events for student residents. Events include parties, movie nights, bonfires, concerts, blood drives, mentoring, tournaments, CPR training, resume writing workshops and bible studies.
Student housing provides one of the best investment opportunities in real estate currently, says Rollins. “The supply and demand characteristics of student housing is very compelling,” he says. And to meet that demand for student housing, Campus Crest Communities is confidently embarking on its development plans.