The corporate housing pioneer continues to chart new territory: in its deal with Archstone-Smith, Oakwood transferred real estate assets while increasing its leased portfolio and delivering choice to customers.

Forty-five years ago, I applied the idea of niche marketing to apartments. The idea was so successful that it ultimately evolved into a new industry--corporate housing.

In addition to managing Oakwood's equity portfolio as "Oakwood Apartments," over the years Oakwood has become the nation's largest private lessee of apartments from the multifamily housing industry through its Oakwood Corporate Housing division. While many companies have since entered the corporate housing market, Oakwood Corporate Housing remains an innovative leader with the largest global inventory by a wide margin.

Oakwood Worldwide continues to progressively look for global expansion opportunities that will meet the needs of its corporate housing clients while strengthening its leadership position as the world's largest global provider of corporate housing.

In March, Oakwood Worldwide announced a divestiture of the real estate assets by the property-owning partnerships associated with Oakwood. The investment partners in these partnerships have been investors for many years, some as long as 40 years. This transaction permits them to have greater flexibility in managing their investment by giving them the opportunity to continue their investment with Archstone-Smith through operating units or by converting their investment to cash.

The divestment of assets is scheduled to move forward in the third quarter of 2005, as property-owning partnerships affiliated with Oakwood will transfer ownership of 30 apartment communities to Archstone-Smith.

In an unprecedented move for the apartment industry, 15 of these properties will be leased back by Oakwood Apartment Management, who will continue to manage and operate these properties under the Oakwood name. Strategically, this allows Oakwood to continue management of its flagship properties while satisfying investor needs. This is the first residential real estate deal of its size to involve lease backs.

The apartment communities involved in the lease back include strategically situated properties, such as Oakwood Toluca Hills, Oakwood Marina del Rey, and Oakwood San Jose in California; Oakwood Arlington and Oakwood Falls Church in Virginia; and Oakwood Seattle in Washington.

The Oakwood Corporate Housing and Oakwood Asia Pacific businesses are untouched by the transaction. The company will continue to dominate the global corporate housing market in locations throughout North America, Asia and Europe.

This transaction will be imperceptible to Oakwood's customers. There will be no name changes or operational changes at Oakwood's flagship properties. It's business as usual.

This transaction comes at an exciting time for the corporate housing industry, as it begins to emerge into a significant segment of the overall lodging industry. Corporate housing rates grew at 9 percent in 2004, more than 5 points higher than the hotel industry's growth rate. Typically, a corporate housing unit is two and a half times larger than a standard hotel room and it is almost double the size of a hotel suite. For relocating families, the extra room an apartment provides is a necessity. Oakwood leases high-quality apartments in every major city, from a "Who's Who" of REITs and other multifamily housing owners.

Oakwood has been doing this 45 years and it knows that business travelers, whether relocating or on temporary assignment, have specific and unique needs. Oakwood also provides value to multifamily properties, increasing their revenue, reducing their vacancy and taking care of their units.

In addition to Oakwood's core business of leasing apartments and furnishing them with its own household goods (also known as Home Services), a key element of Oakwood's flexibility is the company's ever-expanding inventory network, a "virtual" network of furnished apartment providers that allows Oakwood to provide corporate housing on demand in every market around the world.

Oakwood's robust and growing inventory network model allows it to aggressively expand the company. In turn, partners can tap into Oakwood's resources and customer base to fill their vacant units. Oakwood partners with independent apartment providers to ensure an on-demand global supply of units. The apartment providers must go through the Oakwood Accredited Provider Program to ensure quality and consistency for Oakwood guests. When customers contact Oakwood requesting housing in more remote markets, the company can immediately accommodate the request through these accredited providers, with all billing and tracking processed through Oakwood systems.

Howard F. Ruby is Chairman of Oakwood Worldwide, Los Angeles, Calif.