The Opportunity Revealed

We are continually presented with great opportunities, brilliantly disguised as (un)solvable problems.

Modified quote from Lee Iacocca, Business Leader

Job loss, deficit spending, unexpected capital expenditures, loan capital calls, lawsuits, more lawsuits, higher market vacancies, bad credit reports, midnight move-outs, a fire, another fire, foreclosure threats, higher taxes, insurance company fights, escrow release restrictions, lower appraisals, lender re-negotiations what a year we've had.

Can't say that its been fun, but I have to admit, it has been educational for me and our leadership team. Two years ago, none of these problems were on our radar screen. Now we deal we these items every day and have been very successful in solving most of them.
In 2007 it seemed like the only issue in real estate, was to see how fast you could refinance into a higher leverage loan and how much cash can come out of it. Today its the opposite. How much cash do you need to put in to keep the thing afloat. How much more will be needed if things get worse or when the loan comes due. We now live in very different times than 2007. For the real estate industry as well as many other industries, this is a time of major adjustments.

The positive: Over the past year, we have learned things in our business, that will allow us to be a much more sustainable company for the future. No more borrowing to survive. Today, it comes down to operating profitably.

It seems like every industry is adjusting to this new reality. And I expect that this reality will be the norm for quite some time to come, possibly decades.

At Signature Community we have taken the past 12 months to stay focused on one goal - profitable operations. Coming off of some expensive years, this was a very big goal. Our company was staffed for growth (which had been put on hold by the economy) and had a good deal of inefficiencies and overlap in the operations. Over the past 12 months we cut down expenses, reduced redundant positions, slashed our corporate overhead and substantially changed our reporting structure. The results are nothing short of amazing. (An unfortunate testament to the slow, jobless economic recovery). Our manager in the past would fill out a couple page form each week, that would be reviewed by the asset management dept. Now the managers engage in a DAILY huddle with their region and discuss what is going on DAILY. Regionals then get on a call with corporate and filter up the information. The process is daily, its collaborative, interactive and very effective. You may ask - "Show me the money?". The results speak for themselves. Our company wide occupancy on September 1st 09 is 97% -- 6% points above the national average and in some markets we are leading the average by more than 10% points. Our gross collections overall are 2% higher than in 08 (not bad in a down year). And our resident retention rates are almost 15-20% points higher than the industry.

At the end of the day it's pretty simple, empower good people to consistently hit a few common goals at a time, while always keeping the customer in mind. We did it last quarter through consolidation, standardization and maximizing of operating efficiencies.

Thanks everyone at Signature Community for making it happen and continuing to make our communities better than the rest.