SINCE BEGINNING his career in 1991 with Seattle-based HSC Real Estate, PÃ¥l Ottesen has built a reputation for multifamily operations and administrative management based on the power of motivated personnel. When HSC was purchased in 2008 by Dallas-based Riverstone Residential Group, Ottesen took over as COO of the firm's West division and assumed the chief administrative officer reins for the entire company. His appointment in July as CFO (he remains CAO, as well) comes at a time when apartment markets across the country—and many of Riverstone's fee-management clients— are in full recovery mode.
You've got deep experience on the operations side. What are the No. 1 capital needs at the community level?
What we're seeing in our portfolio today is a range of clients that are starting to renovate units again and see a pop in rents on properties that are in good shape, versus clients that have deferred maintenance for several years. We think our renovation experience can come into play competitively now because of those needs.
What are some of the internal investments Riverstone has made recently?
We're trying to hire highly trained professional marketing people to help the property and regional managers market and sell their properties. We've also partnered with several vendors to develop a true online leasing product where you can go through the entire rent process in your living room. That's taken us a long time, and a lot of our vendors were very challenged by the initiative. It was not inexpensive, but I think it's going to pay off.
What mark will you make on Riverstone's balance sheet?
You need to create an environment where people enjoy coming into work. Without that, I don't think you get the loyalty you need. How much can the CFO influence that? A little bit, perhaps. My goal is to have this company be a viable long-term investment for the owners but also a place where employees are secure in their jobs because it's a firm that's profitable and growing.
What, if anything, might prevent a multifamily bull market between now and 2014?
Unfortunately, the volatility in the stock and debt markets will continue as long as we don't generate new jobs. Without them, the economy can't grow. Part of that, I think, is that single-family housing has to stabilize. You can't have sustained growth without having that part of the economy at least bottom out, and I don't think that's happened yet.
We've seen rent growth over the past year, and I see that continuing. But that, too, will change, and we're already seeing it in many markets. We expect substantial infill along with some fairly good-sized apartment projects being built over the next two to three years. By then, we'll hopefully be in an economy that's healed enough to have the sustained growth needed to support the absorption of that product.