Proper due diligence relieves distress: there are steps that owners can take to make community takeovers less difficult.
Dominium jumps right in and begins cleaning up the property, taking care of maintenance issues and collecting past-due rents. An onsite takeover checklist helps the transition team adhere to the company process and standards. It also ensures that all acquired communities are branded in the Dominium style.
In 2012, Dominium took on a portfolio of 10 distressed properties in Florida. Through managing the takeover process of this portfolio, Dominium established a set of standards it now uses in all property takeovers. One in particular, Nassau Bay, was in rough shape--trash around the property, damaged walls, outdated features, and more--when the company stepped in. It conducted a full makeover in two phases over the course of three years. In Phase I, workers spent months repairing walls, cleaning up trash, installing new appliances and updating the community center and fitness center; while Phase II included a re-syndication/rehab. It was also the largest property Dominium took over at the time with nearly 500 apartment homes, 150 of which were vacant. The transition team assigned to the property became fully engaged in the takeover process and laid out a plan to get the property up to company standards.
After assessing the property's physical condition, the team at Nassau Bay decided which repairs and improvements needed to be made and when. A full assessment of the community determined what should be repaired and replaced initially and what should be done in Phase II to preserve the property for the long term. At most Dominium properties, this not only includes new carpet, appliances, countertops and other interior features, but also the maintenance and repair of exterior assets, as well as rebranding the property and cleaning up its reputation.
The asset management, property management and development teams assigned to Nassau Bay and the other properties within the portfolio, understood that the most vulnerable time was the first 30 days - 90 days post acquisition. It is also important to note that during the first 90 days, or until the community is rebranded, no leasing occurs. To make sure that every-part of the process was completed, team leads established clear lines of communication with everyone in their departments. Dominium teams are very process focused, an essential characteristic that prevents important details from being overlooked.
Check the Checklists
Seasoned employees, such as regional and area managers, now know the takeover process well and train less experienced employees with tools, such as the property takeover guide that includes the all-important takeover checklists. This way, all Dominium employees can be consistent during the takeover of a new acquisition.
Each community in the portfolio acquired by Dominium in 2012 had different issues that needed to be addressed. The solution ensured all the basics were covered, maintenance issues addressed, rents collected and every property fit in with the Dominium brand and adhered to its standards. At Nassau Bay, this meant repairing damages to each apartment and common areas and updating the overall appearance to give it a more modern look. The company also analyzed the community's reputation which allowed the team to decide if they should change the community name as well as assess the viability of other changes to meet company standards.
Before coming under Dominium's control, Pines at Punta Gorda (renamed Seven Palms), another property acquired in 2012, had a bad reputation due to criminal activity, deferred maintenance and poor customer service. Its new name signified a change in management and new policies were put in place to help prevent crime and increase curb appeal, improve make-ready standards and bolster its residents' satisfaction levels.
Dominium's model also includes implementing policies consistent with the company's culture. At Seven Palms and Nassau Bay, this meant introducing a crime deterrent plan, ensuring that background checks take place during the application process. It also implemented a zero-tolerance policy for residents who violate the terms of their lease; partnered with local law enforcement to obtain "Crime Free" designation; hired onsite courtesy officers; and installed video monitoring of entry of the property and amenity areas to help deter crime.
Property management teams adhere to Dominium's standards by following "The five Cs" during the takeover process:
* Maintaining cleanliness of the property
* Completing work orders and in a timely manner
* Being customer-focused and responsive
* Communicating with residents, vendors and site staff
* Collecting rents and ensuring residents adhere to the timeline in the lease contract
Get to Know the Residents
Another important part of the takeover is getting to know the residents. As part of the process, Dominium sends out cards to residents each day for the first five days after the takeover. The cards provide an opportunity for staff to meet residents and learn more about the property, but more importantly, send a message to residents that there is new management who cares about them and the property.
Dominium invests in its communities for the long term and establishes a five-year asset plan for takeover properties to ensure the longevity of these assets. These plans not only determine what needs to be done at the property and when, and positions the property for long-term curb appeal, but outlines occupancy expectation, rent growth and upcoming significant events, such as positioning for refinance.
In the case of Nassau Bay, the property underwent additional improvements during the re-syndication period, beginning the year after the initial takeover. During Phase II, the company improved one of the two pool areas and converted the other into a splash pad, installed a new playground, covered picnic areas and school bus stop, among other upgrades, making the property more appealing for families.
When Dominium first took over the Florida portfolio in 2012, there was no standard process in place for acquisition of distressed properties. Tools and policies implemented during the takeover process of Nassau Bay, Seven Palms and the other Florida properties have changed this, and the process continues to be refined. Now, because it is implemented on all newly acquired acquisitions, the management takeover goes smoother and Dominium standards are put in place, which results in creating places residents are proud to call home.
BY KAREN KLINE
Karen Kline is Vice President of the Transition Portfolio with Dominium.
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|Date:||Aug 1, 2017|
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