2012 Annual Review - Campus Living Villages

2Campus Living VillagesOperational highlightsAnnual Review 2012United States2Head officeHouston, United StatesDate of entry into market2006—Century Campus HousingAcquisitionNumber of beds1,63Number of properties30FY12 revenueAU $6.6millionNet asset valueAU $26.2millionunited statesMartin EarpChief ExecutiveOfficer, Global andCLVusTroy BayhamChief Operating OfficerGary CookVice President ofFacilitiesBeth CornwellVice President of HumanResourcesBrenda KoelemayVice President of FinancePam ThayerGeneral CounselFinancial performanceCLVus has outperformed thesluggish US economy and the real estatemarket, with EBITDA increasing by 6.7%year-on-year, FY11 versus FY12. The FY12distribution to the consolidated businesswas also significantly improved fromthe previous year. Occupancy remainedstrong in most assets, sitting at over90%.Perhaps the biggestachievement over the last two years wasthe refinancing of a significant number ofproperties, putting CLVus on a sound andsustainable financial footing that takesaccount of the new trading conditionswithin the US (both operational andfinancial). CLVus has been fortunate thatit has had excellent working relationshipswith its existing investor base and hasbeen able to work through this challengewithout impacting the product offering.These refinancing activities requiredsome degearing to post-GFC financinglevels, which was provided through anequity raising from our existing investorbase.Of particular note was thedecision to refinance the on-campusportfolio via a 21-year debt facility(private placement organised by RoyalBank of Scotland). This demonstrates thelong-term commitment that CLVus andits owners have towards our investmentsand university partners.Business performanceThe slowdown in economicgrowth has impacted the studentaccommodation sector. Whilst thenumber of students enrolling at collegehas generally remained positive,impacts on financial aid and fewer parttime job opportunities have resultedin a decreasing number of studentswilling to pay a premium for dedicatedstudent accommodation. Instead, morestudents are choosing to live at home orin shared accommodation further fromthe heart of campus. In response, CLVusis implementing a more sophisticatedapproach to rental rates that caters toa wider range of students. From FY13,rates will include a budget option forstudents that currently struggle toafford on-campus accommodation.In FY12, CLVus turned its attentionto delivering a higher level of service toour partner universities, owners of ourmanagement contracts and our students.We have invested heavily in placingexperienced, highly skilled “local leaders”at the villages, who are supported by highquality staff and systems at the corporatelevel. Many of the selected leaders havecome from a commercial background with astrong focus on creating and implementingstrategic plans. At the same time, theyare very aware of the sensitivities arounddealing with students and the importanceof establishing and maintaining strongrelationships with partner universities. Athead office, CLVus has put in place highlyexperienced operators who are focusedon improving the quality of village supportsystems and working collaboratively toprovide guidance to village staff. Thisproject has proceeded ahead of our timelineand the positive impacts are already beingfelt in all our sites across the US. It is agreat testament to the CLVus team thatthe change in strategic direction has beenembraced.The second stage of this project willfocus on achieving operational excellence inall areas of the business. As part of a largerglobal program of Operational Excellence,CLVus has been investing in its businesssystems and its operating framework toensure that the villages are supported in away that allows them to work efficiently andeffectively.Our aim is not necessarily to bethe biggest student accommodation firmin the US, but to be a business that deliversexcellence to all our key stakeholders –students, educational institutions, parents,investors and our staff. This investment insystems, processes and people will allowCLVus to continue to offer affordable ratesin the market places in which it operates,but still retain a focus on the studentexperience.Business developmentCLVus has continued to focus onimprovements to the existing portfolioin order to address many of the externalissues affecting the sector, such as theUS economy and the impacts on studentspending. Significant research has beenconducted into what students valueand ways in which these services andUrban Academic Villagepiloted at Texas SouthernUniversityproducts can be provided. This has led to aninvestment in high-speed internet and theenhancement of communal spaces at ourproperties, allowing us to provide residentswith the physical spaces and infrastructureto support the Live, Learn, Grow residentiallife program.We have also enhanced our focus onsafety and security by investing in electronickeys, CCTV, secure gated communities,sprinkler systems, smoke alarms andimproved operational procedures. Theseinitiatives were implemented hand-in-handwith our partner universities to cater for thespecific needs of their students.In addition to improving the qualityof our existing assets, CLVus remainsactive in the industry and continues tolook to grow, both organically with existingpartners and by undertaking new deals andmanagement contracts.The year aheadDespite the limitations on studentspending, CLVus has observed a shift inpreference from shared bedrooms towardsindividual bedrooms, even among firstyear students. Fortunately, the majority ofIn Fall 2011, CLVus collaborated withTexas Southern University (TSU) to initiate anon-campus Urban Academic Village dedicatedto creating a student-centred learningcommunity for freshmen and sophomorestudents.A select group of 00 incomingfreshmen participated in a pilot program thatfocused on promoting academic discourseand discovery, full immersion in university lifeand the maintenance of an academic focusthroughout their sophomore year.“The academic and developmentalsuccess of the Urban Academic Villagehas infused a new culture and climate intoTexas Southern University,” says ArchieCephas, Assistant Director of ResidentialLife and Student Education at TSU. “Workingcollaboratively with Campus Living Villages,our portfolio consists of apartment-styleoperations which were originally targetedtowards sophomore and junior students.One of the areas that CLVus will focus on inthe upcoming year is how we can work withacademic partners to adapt our portfolioand address this trend.Another focus will be on pinpointingand providing the services that studentsand their parents really value, rather thaninvesting in amenities that look good inbrochures or on site tours but do not deliverreal value day-in and day-out. Researchwill be conducted into the physical assetsand programming that deliver real valueto students. By working with CLVus, ourpartners will be able to refresh their productofferings at little cost to their balance sheet,while retaining a significant influence inthe day-to-day operations of the business.The case study below shows a new wayof working that has resulted in significantbenefits for all parties.all critical stakeholders - students, parents,faculty, staff and community leaders haveacknowledged the immediate and profoundimpact the program has had on all thoseinvolved…The combined efforts andcommitment of university administratorsand property management staff will yieldsustainable outcomes of student success formany years to come.”According to James Douglas, TSU’sVice President for Governmental Relations,the Academic Village has immensely improvedthe academic performance, continuation rateand graduation rate of participating students.He says that feedback from parentshas been that “the village was one of the bestthings that Texas Southern University has everdone to improve the academic performance ofour students”.