Rent Growth Still Expected
- Jan 02, 2009
Thomas K. Shelton, CAPS, CPM, is the new president of Western National Property Management, the multifamily management arm of Western National Group. Western National Property Management currently oversees the management of over 20,000 residential units, valued at more than $3 billion. In his new position, Shelton will lead a team of real estate professionals who supervise a portfolio of assets owned by Western National Group, as well as assets owned by third-party clients.Shelton previously served as regional partner of Greystar Real Estate Partners where he supervised a portfolio of 26,000 units throughout the western United States. He is also a past president of the National Apartment Association (NAA) and a member of the National Multi Housing Council (NMHC).Shelton talks to Online News Editor Anuradha Kher about the challenges of taking on the role of president at such a difficult time, his plans for the company, and why the Obama administration creates uncertainties about investment strategies.What challenges do you face as president of the company in such troubled times?The challenges in this position at the present time are similar in nature to those of my peers across the country. Fortunately, the balance of our portfolio is located in Orange County, Calif., one of the more stable markets in the country, as evidenced by the fact that we intend to see some rent growth in our portfolio next year. So, while we are not immune to the softness of the overall economy, the overall stability of our portfolio will allow me an opportunity to focus on operational excellence, the continued development of our people, continued opportunities for revenue growth and expense reduction, as well as business development.Why did you decide to take up this job during a downturn? Did you fear that you might not succeed?The opportunity to be the president of one of the country’s most respected real estate companies is one that does not come along frequently. I see Western National as a company poised to do great things in the future. Our track record for success in development, acquisitions and management is widely recognized, and my intention is to continue to fine-tune our property management programs while identifying opportunities to expand our footprint more regionally.Where is the company cutting costs during this last quarter of 2008?Like many other companies, we continuously look to economize and reduce overhead costs wherever practical. Western National Property Management has operated for years in a very efficient and profitable manner with above-market operating margins. There may be some slight reductions in our workforce as we head into 2009, but we do not expect anything dramatic.What perks/concessions is Western National giving renters in its properties today? Or are you reducing rents?We certainly see downward pressure on rents and realize that the renter of today is much more price-conscious than he or she has been historically. Our properties compete regularly with other assets utilizing daily pricing models, so while we do offer concessions on the majority of our properties, we have yet to make meaningful reductions in rent.What are your plans for the company in 2009?We have an excellent platform in place, and our plan for 2009 is to continue to make solid business decisions with the highest probability of positively impacting the returns being provided to our partners and clients. We will also be focusing on opportunities to expand our current geographic presence.How do you plan to implement those plans, given that the economy is changing so rapidly and for the worse?Generally speaking, softer economic conditions in the apartment market generally create opportunities for well-positioned management companies.How will Obama administration policies affect your company’s 2009 business plan?The change to Democratic leadership in the White House creates some level of uncertainty with regard to some investment strategies. The discussion of an increase in the capital gains tax rate is high on the list of concerns for owners of real estate who may be looking to dispose of assets in the near future. Let’s hope that the Congress provides the new President with the ability to make changes meaningful enough to stimulate the economy and, in turn, create some level of sustainable job growth.What is your advice to small multifamily companies right now? Continue to be operationally diligent, be mindful of becoming over-extended in terms of credit and borrowing, always hire the best people available and do not hesitate to invest in providing them the tools and resources needed to be successful.