So how should a multifamily company—or, for that matter, any firm in the commercial real estate industry—go about conducting its investor relations?
When you’re an apartment owner and operator, you have several constituencies to take good care of.
First, there are the prospects. Owner/operators spend a considerable amount of time developing marketing campaigns to attract potential residents and training their on-site staff to provide the kinds of tours and customer service that will convince prospects to sign leases.
Then, of course, there are your current residents. Resident retention depends in large part on how your teams treat renters and communicate with them.
Another critical group of customers consists of your investors. But some owner/operators don’t show their equity sources the same kind of care and attention that they do to their prospects and residents. This is a big mistake: without satisfied investors to provide a reliable stream of funding, an owner/operator won’t be able to develop new communities, acquire existing ones and pursue whatever expansion goals it may have.
So how should a multifamily company—or, for that matter, any firm in the commercial real estate industry—go about conducting its investor relations? Below are some tips.
Take care of the basics. Whether you’ve promised your investors a monthly, quarterly or semi-annual check, you can’t miss a beat when it comes to delivering on those. Furthermore, you have to deliver documents like Schedule K-1 tax forms in a prompt and timely manner, and be quick to provide whatever replacement documents an investor may need or any items an investor’s financial advisor may want to review. Failing to deliver these kinds of bread-and-butter items can torpedo an apartment company’s relationship with its investors.
Communicate, communicate, communicate. Frequent, ongoing communication with investors is absolutely critical to strong investor relations. Apartment companies that forget to check in on investors regularly and only reach out when they’re looking to raise money are making a fatal error.
Communication should include regularly sending out documents detailing the performance of investment funds and properties, as well as investors’ returns. It should also include more informal communications, such as phone calls or emails to investors expressing excitement about the upcoming purchase of a property, or your observations of a community that you’re considering acquiring.
There’s no doubt about it: regular communication is the key to building trust with your investors.
Make time for face-to-face time. Getting together with all of your investors at once is impractical for many owner/operators, given the number and geographic diversity of equity sources. But when possible, apartment companies still need to meet in person with individual investors or groups of them for dinner or a cup of coffee—or maybe even a round of golf.
These kinds of meetings strengthen the trust that investors have in your firm and let them know how much you value them.
Do what you say you’re going to do. It sounds so simple, but it’s not an unheard-of mistake in the multifamily industry. Sometimes owner/operators will woo investors by outlining a specific strategy—what kinds of communities they’re going to purchase and in which geographic markets—only to change course after procuring equity.
This is obviously a big no-no. Careful investors make their decisions based on their appetite for risk—and a change in acquisition strategy could mean you’re buying properties your investors aren’t comfortable with.
In the end, it’s hard to overstate the importance of a strong and diligent investor relations program. Taking care of your prospects and residents is imperative, but if you neglect your sources of equity, your apartment company will find itself in a world of trouble.
Steve Meyer serves as chief investment officer of JVM Realty Corp., an Oak Brook, Ill.-based apartment owner and operator.