ACQUISITIONS – Turn Up The Volume
“What’s In It For Me?”
Brokers respond better, faster, and more consistently to those firms which understand the phrase “What’s In It For Me” …from the perspective of the broker!
Meaning, the brokers are all Tom Cruise, and they are asking prospective buyers every day to “Help Me To Help You”.
Brokers “eat only what they kill” therefore, they place prospective buyers who respond better, faster, and more consistently higher on their list of “where do I spend my limited time”.
TURN UP THE VOLUME
United Dominion Realty Trust (“UDR”) was already a very well established, NYSE listed, apartment and retail REIT based in Richmond, VA, when I showed up as their new Acquisitions Director.
I was following a legend in the role—Larry Salzman—and I was second choice (the person to whom they offered the job left UDR at the altar)!
We experienced “Black Monday” the week I started. Global stock markets crashed, (e.g., DJIA dropped 22.6%), the largest one-day percentage decline in history
UDR had not closed an acquisition in the 12 months PRIOR to “Black Monday” (interest rates were unusually high relative to capitalization rates), the volume of prospective acquisition submittals had dropped to a handful most weeks, and I had NO direct experience in leading an acquisition team.
ASSESS THE ASSETS
My time in the Pennsylvania General Assembly taught me how to spend other people’s money! I inherited Buddy Scott, analyst extraordinaire. I became “Mr. Outside” (stir up excitement with the market)—balanced by Buddy’s “Mr. Inside” (who helped me discern a good property from a likely disaster).
John McCann, President and CEO, was a fellow Marine (I was a reservist sergeant; John was a captain who led men into the jungle in Vietnam); we spoke a similar language – Attack head on the problem(s).
Jim Dolphin, CFO, had a great relationship with our investment bankers. Jim coined our renovated apartments mantra—make them “Clean, Safe, and Cheap.”
Barry Kornblau, COO, squeezed the last penny out of older apartments and was always focused on improving occupancy (and then slowly raise the rents).
Katheryn Surface Burks—a smart, creative, and delightful General Counsel – joined later and led a team dedicated to getting acquisitions closed right and on time.
Richard Giannotti, VP of Construction, brought the magic. He could see the potential of a property and saved us—many times—from acquisitions which would have sunk the firm due to hidden physical problems.
WHAT THEN?
Respond – We went from simply discarding opportunities which didn’t fit to responding with our issues to every submittal within 48 hours. Brokers prefer a fast no – with insight – to a “slow maybe” which gets nobody anywhere anytime soon!
Road Map – We generated and distributed an acquisitions criteria to brokers. Most buyers did not (and still don’t). Hard to get brokers to hit a target they can’t see!
Celebrate – We announced EVERY acquisition by press release and in a new mailed twice/quarter acquisitions newsletter, giving credit to the brokers involved. We helped their business by shining a public light on their success.
BOTTOM LINE!
Volume in the door doubled quickly, we closed three apartment acquisitions in the first year, and we went on to deliver 10X growth over 10 years.
Embrace the strengths already available to you, find ways to enhance their opportunity to succeed, and enjoy the ride!