2002 Executive of the Year

Being the Multifamily Executive Executive of the Year means more than leading a company with a good financial record. It means having compassion for those you serve, and respect from your peers and for your employees.

This year's Executive of the Year, H. Eric Bolton, chairman, president and CEO of Mid-America Apartment Communities L.L.C., has continuously made wise business decisions that have ensured his company's sound reputation as the provider of an excellent product. He embraces change as a positive way of doing business and has an open door policy that is inviting to his staff, says Joe Pettigrew, Ph.D., president of Leaderpoint Inc., a business consultancy.

H. Eric Bolton, chairman, president and CEO of Mid-America Apartment Communities "Our first, and probably our most important, guiding principal is to treat people with respect," says Bolton. His goal is to meet the expectations of Mid-America's three constituents – residents, employees and shareholders – and he does that by leading his team with compassion and faith, which makes Mid-America's communities a place where people want to live and work.

And, Bolton tries to show respect and consideration for his employees every day. For instance, when Jackie Melnick, an area manager for the Eastern region, had to miss the company's leadership conference because of a family emergency, Bolton still found a way to include her. "He called me from the stage on a speaker phone and told me I won an award," she says. "Three hundred associates were cheering for me. I was thrilled to be included. He knew it was something he could do to make me feel good. He recognized my contribution even though he had to go out of his way to do it."

For Melnick, having a boss that consistently goes out of his way to help his employees simply motivates her to do the same for the company and its residents.

And while displays of faith are unheard of in public companies, it has added to Mid-America's ability to serve its constituents. Mid-America is known for its weekly moments of meditation and it's not uncommon for a prayer to be offered before a meeting, says Bolton. He recognizes that religion in the work place is not for everyone, but his attitude has been, "It's who we are and we are not going to change it or apologize for it."

The moments of meditation were started as a way the company could come together after the tragedy of Sept. 11th, says Nancy Roberts, senior vice president of organizational development at Mid-America. "We had people flying in our Atlanta market that day. There was a true desire to be home with family. And that is where it stems from, the need of people to feel connected, and there was a recognition of God as part of it." The weekly program also has given employees a forum to discuss topics such as being patient, finding solace in silence and understanding Islam.

Personal Touch "An important component of a successful multifamily company is remembering what it is we are in business to do. We are providing people with homes," says Bolton. "And that is one of those services that goes beyond the product. You get involved in people's lives. So, when you're providing a service and you're negotiating with individuals who are making a decision about where they're going to live and raise their families, I think that requires more compassion and emotion."

People who work for Mid-America know and understand that everyone plays a role in affecting the lives of the people that live in their homes. It's their goal to give residents a better place to live. In an effort to do that, the employees at Mid-America make sure the products and services are as high quality as they can be, says Bolton.

For instance, the on-site staff provides gifts and welcome packages for new residents, says Melnick. "By having the opportunity to care about residents, make decisions, take chances and do the right thing, it gives us the ability to make residents happy."

It's also important for Mid-America to be a part of the communities in which its apartments are located, says Roberts. One of its most influential and famous programs is its Open Arms Foundation, a charity that provides free, fully-furnished apartments to families in medical crisis who are far from home.

In addition, the company pays for all utilities and stocks the pantry. Employees also can donate funds to the foundation through a voluntary deduction program.

Employee Relations "The new products, services and overall professionalism that has developed within the industry over the last 10 years is phenomenal. And while we work aggressively to continually reinvent ourselves and implement new systems, products and methods, we must never lose touch with the properties and especially our folks on-site directly serving our residents," says Bolton. "I spend probably an average of two, sometimes three days per week going to our properties and talking with the staff."

In addition, Bolton has monthly roundtable discussions with employees selected at random, says Kevin Perkins, vice president of capital improvements and maintenance operations. During lunch, they discuss everything from property management to personal goals and expectations. The ideas are summarized in the monthly newsletter, and some are implemented in the field, says Perkins.

"I try to create a comfortable and open platform," says Bolton, "I ask, 'How are we doing? What can we do better? Are we doing OK?' So, it's really a good open discussion and it's fun."

All employees receive support from the top. "I don't have a fear of going in and talking to [Bolton] about anything," says Roberts. "He understands that other things can be important to people besides the job."

Employees also receive support through training programs. For instance, when managers are hired they are brought to Memphis, Tenn., the company's headquarters, to get indoctrinated in the company's culture. Leasing associates are trained right away in marketing and leasing skills, and receive additional follow-up training. And, everyone receives training that deals with conflict and leadership skills.

"Bolton spends an enormous amount of energy training his property management staff and keeping them motivated, even though you can lose them in the industry," says Pettigrew. "A lot of times companies are afraid to [help people grow professionally] because they don't want them to leave, but Bolton's philosophy is, 'What's better: to grow and leave or not to grow and stay?'"

Just Return To bring in consistent returns, Mid-America needs to please its residents so that they continue to live in its apartments. And to please the residents, Mid-America needs to get 110 percent effort from its employees.

"They're only going to give you 110 percent over the long haul because they want to," explains Bolton. "So, I think that you have to approach your leadership of the company and your leadership of the people with the realization that you've got to motivate them to want to give 110 percent."

As a result of this thinking, the company has been able to deliver just under 13 percent compounded returns since going public in 1994. Bolton has kept the stock even, when others in the industry have fallen off, says Jay Harris, vice president of property management at the National Multi Housing Council.

One of the ways Mid-America has continued to bring value to its shareholders is through its acquisition strategy. "Eric can look at an opportunity and find new and creative solutions to benefit from it," says Pettigrew.

Currently, Mid-America is acquiring properties in the Southeast. The company has an ownership interest in 33,000 units in the Southeast and South Central United States. It looks for properties to which it can add cash value through rehabs. The company has found opportunities in large markets like Dallas and Atlanta as well as mid-tier markets such as Jacksonville, Fla.; Memphis.; Nashville, Tenn.; and Austin, Texas; and small-tier markets, such as Gainesville, Fla.; Jackson, Miss.; and Chattanooga, Tenn.

Usually, the company starts with exterior enhancements, including landscaping upgrades, a paint job, and new shutters and leasing centers. "All you need to do is go to one of our properties and you will see our award-winning landscaping," says James Maclin, vice president of the company. "That's money in the bank. That's the greatest draw to bring in prospects and keep them. It's one of the reasons we outperform our competition."

If interior upgrades are needed, typical improvements include new cabinetry, counters and upgrading the appliances and light fixtures. In addition, Mid-America looks at acquiring new properties that are having problems leasing up. "Owners of these properties have the timing of their delivery in the cycle wrong, and thus they've become distressed," explains Bolton. "Financing is due and the developers have to get out, so we can make an attractive acquisition."

The company has spent up to $10,000 per unit to reposition a property, but the amount varies based on the age and condition of the property. The amount of rehab performed depends on what people will pay for in rent increases. In the past, the company has been able to bump up rents anywhere from 10 percent to 15 percent in the first year. "When we put our capital to work, we're looking to get at least a 17 percent internal rate of return on our money," says Bolton.

"While you're only in business if you make money, beyond that is the caring for individuals and people," says Roberts. And when disaster happens on-site, the entire company rallies to help out, including Bolton.

After a tornado displaced 70 residents and caused the Township in Hampton Woods in Hampton, Va., to be condemned in 1999, Melnick called Bolton to tell him what happened. "The first thing he said was, 'Was anyone hurt?'" recalls Melnick. "He came down to the site and met with contractors and supported us setting up the new office. We spent a lot of time working though details. He helped me write a letter to residents to reassure them and tell them what we were doing to get things back to normal and them back to their homes. He was a calming influence to help take care of residents." And that's why Mid-America is in this business – to serve its residents.

Must Be Fate H. Eric Bolton was raised in Memphis, Tenn. But, after attaining his bachelor's of business administration from the University of Memphis and working in Memphis for a few years, he decided he would continue his professional career in Dallas. "It was the place to be. The city was booming and growing," recalls Bolton. But, he always knew he would return to Memphis.

While in Dallas, Bolton worked for the Trammell Crow organization where he worked on the finance side of the office and industrial market. While there, he completed his master's in business administration at the University of North Texas.

"I thought I would stay in Dallas for three or four years and then come home," he says. "But the real estate market became very difficult in the late '80s and I stayed to work through a lot of those issues."

However, in 1993, Bolton was ready to return to Memphis. His parents told him about an article in the newspaper about a local real estate company that had just gone public and was looking for a CFO – that company was Mid-America Apartment Communities L.L.C.

"I didn't know George Cates [the founder of Mid-America] or the company," says Bolton. "However, I had gotten to know a little bit of Cates' youngest son, Andy, who worked for Trammell Crow."

At lunch one day, Bolton decided to drop a blind letter, introducing himself to Cates, in the mail. "I never said anything to anybody about the letter," he recalls.

However, when he returned from lunch, Andy stopped by his office and asked if Bolton would be interested in talking to his dad. "About an hour later, George called," says Bolton.

"We were in the final decision process of picking a CFO when my son Andy said, 'you have to talk to someone,'" recalls Cates. "We were very impressed with [Bolton], but had already decided on someone else. [He] was very understanding."

A few days later, Cates called Bolton back and asked if he would be interested in growing with the company in an operational role. "He came aboard overseeing new development and moved quickly into the operational side of the business, where he earned his stripes," says Cates.

"I had the great fortune of working directly with [Cates] for eight years," says Bolton. "There's not a greater guy to learn the multifamily operating side of the business from."

Now, eight years later, Cates has retired and Bolton is the president, CEO and chairman of the company, and he's back home with his family.