We recently acquired a 256-unit value-add deal in Savannah, GA. Despite being a relatively new asset (2015 construction) and performing well (95% historical occupancy), we intend to upgrade and reposition the property, targeting rents approximately $250 above the market rate at takeover. We believe there is unmet demand in the submarket, which has experienced significant growth in recent years. However, achieving success requires flawless execution and a flexible hold period.
Flawless execution begins prior to takeover. We establish goals and expectations for the staff. At Atlas, we strive to create the best possible living experience for our residents, relying heavily on the onsite team to help us achieve this. I view the property manager as the CEO of the business and believe that a happy team leads to happy residents, resulting in strong retention, referrals, and a great reputation.
Before takeover, we share an internal document that outlines our expectations and sets clear goals for the team. We expect them to prioritize resident satisfaction, communicate openly, and think outside the box.
We make incremental improvements as quickly as possible. While we plan to implement a comprehensive renovation strategy, we also focus on immediate upgrades that residents can appreciate. Upgrades such as improving the coffee machine, replacing pool furniture and fitness equipment, introducing a monthly newsletter (sample provided below) and event calendar, and adding a pet treat station in the clubhouse have an immediate impact. These upgrades were already part of our plan, so expediting them is worthwhile. These improvements establish a positive tone under new ownership and signal to residents that we are committed to enhancing their living experience.
When it comes to the renovation and rebranding, we take a strategic approach. On a typical value-add deal, we balance the pace of renovations with cash flow. In this case, our goal is to maintain 95% occupancy as we fine-tune the renovation scope, develop a new brand, and identify residents’ preferences and market opportunities. While we have an investment thesis, the market ultimately dictates the demand and ultimately our strategy.
We closely monitor leasing trends, assess the competition, spend time in the market, and listen to the staff, making adjustments to our business plan accordingly. We delay the rebranding efforts until meaningful upgrades have been completed and a new reputation has been established. The rebranding presents the biggest opportunity to introduce the property to the market, so it is essential not to rush it.
We also embrace the local community. I believe that every property should reflect the local character of the community. We collaborate with local businesses for all events, such as food trucks, pet groomers, smoothie shops, and cafes. Additionally, we provide move-in bags filled with local goods and set up stations throughout the property that showcase local businesses. For instance, we have a dog treat station in the clubhouse equipped with treats from a local pet boutique, a café that uses beans from local roasters, and a “wow fridge” stocked with treats from local markets. These are relatively simple gestures that resonate with residents and prospects.
We retain the staff if they are competent and trainable. The easiest way to ensure a smooth transition is to retain the current staff. The key here is to ensure that the team is performing well, trainable, and free of any bad habits. Determining this can be challenging, but it can be assessed by reading online reviews, conducting staff interviews, and observing staff interactions. If the staff members are exceptional, it is worth making an effort to retain them.
With any takeover, there will inevitably be disruptions and challenges. My goal is to minimize these issues and use the transition as an opportunity to highlight the positive changes we are making. As long-term holders, we believe that our resident-first approach and differentiated approach will drive outperformance.
