Real Estate, Construction and Lodging: American Campus Communities
American Campus Communities
Room(s) for improvement
Real estate investors used to dismiss student housing as a financial black hole. Bill Bayless proved them wrong.
As a marketing major and dormitory resident advisor at West Virginia University, Bill Bayless first dreamed of starting a company that would enhance the student housing experience, one he thought was lacking at most institutes of higher learning. “You lived in a dorm the first year, then maybe moved off campus to low-quality housing with absentee landlords,” he says. “I thought there was a better way.”
His vision of student housing as a potentially lucrative venture defied conventional business wisdom. Investments in student housing to that point were a black hole, avoidable at all costs. Bayless was assigned a textbook for one of his real estate classes whose author concluded: “Give me vacancies before you give me students. They won’t pay their rent, they have no loyalty, you’d rather have vacancies than students.”
Undeterred, Bayless — working after college for companies that developed hotels, apartment buildings and office complexes — tried at each stop to interest his bosses in student housing. His arguments fell on deaf ears. “Nobody really bought into it,” he recalls. “It was unproven. People didn’t look at it as a viable alternative. Fast-forward to today, and student housing is one of the hottest global investments.”
With the help of a German investor he’d met at a conference and $3,000 of his own money, Bayless launched American Campus Communities, Inc. (ACC) in 1993. Starting with 4 employees, the company now has a staff of 3,500 nationwide with 350 located at the home office in Austin, Texas. It has expanded to accommodate some 140,000 students at more than 90 colleges and universities.
The game changer for the company occurred in 2004 when Bayless took ACC public. “We launched an IPO in an industry that did not exist,” he says. “We didn’t just create a company — we literally created an industry.” At the time, Bayless’ company had 16 student housing assets. Today, it owns and operates 200 facilities, growing an average of 26% in the years since. Going public coincided with budget-driven changes in how universities were planning and operating student housing. Deep cuts to state university and college funding across many states forced school leaders to search for spending alternatives. Bayless responded with American Campus Equity, a program to build and operate on- and off-campus apartments directly.
“We could build it better and at higher quality for a fraction of what they could and deliver it faster — with no use of taxpayer dollars,” he says. “This is our core competency.” The program started at Arizona State University and has spread steadily from there to both public and private institutions, enlisting schools from Princeton University to the University of California, Berkeley.
His internal management style and philosophy fit nicely with the evolution of his public business. For example, Bayless instituted a home-grown approach to talent development. In 2003, he conceived the Inside Track Program to recruit college students with an eye toward building his management team of tomorrow. Community assistants (a term he prefers to resident advisors) are interviewed and, if hired, are deployed to management, marketing and sales positions. Top candidates are identified early on and put on career tracks within the company.
The strategy is paying off. “We have 19 positions that I’ll call senior management. Five of the people now in those positions started with us as residents, part of the initial Inside Track program,” he says. “We’re proud of that.” Those shared experiences from employees’ university days tend to foster a collegial spirit. “We work hard; we play hard. It’s a blessing. It’s like we never left college,” he says. “My board members always tell me how unique and special our culture is.”
That spirit extends to his philanthropy. Bayless established the American Campus Charity Foundation in 2002, and it has raised more than $1.5 million for Austin charities including the Boy Scouts, the Boys & Girls Club, organizations for visual and performing arts, and the nationally recognized Rise School of Austin for disabled children. At least one ACC board member sits on the boards of each charity and is actively involved in their management.
Bayless is a father of two and grandfather of three; both of his children attended Texas State University. Any added pressure on them as they searched for housing? Not at all, he says. “They had no decision in it — it was mandated by their mother and me where they would live.” It was, of course, an American Campus Community building.
There was one concern, though. “I was always absolutely paranoid that they paid their rent on time — I’m sure my operations people would have liked nothing better than to see my name on a delinquency notice,” he laughs.
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