In 2006, when apartment buyers and condo converters were trading multifamily communities in an all out blitz, Scottsdale, Ariz.-based property management start-up Mark-Taylor Residential got word that a seven-property portfolio for which they held the management contracts was hitting the block. “It was a challenging moment for Mark-Taylor,” recalls company president Dale Phillips. “Those seven communities were approximately 45 percent of our business at the time, and we had to make some quick and important decisions on how to handle things during the sales process while planning for the future.” Given the hot transaction market replete with a variety of private, public, institutional, and opportunistic investors, Phillips and his team knew that the continuity of their management contracts were hardly guaranteed. At the same time, the Mark-Taylor crew saw an unbelievable opportunity to exponentially grow their business regardless of whether or not they retained management of the portfolio.
“We quickly realized that the due diligence process was about to bring as many as 50 prospective buyers out to tour and underwrite our properties and operations,” Phillips says. “We wanted to showcase our management expertise at every turn to what we knew would be a wide range of operators.”
Landscapes were manicured, occupancy was supercharged, and property staff even donned professional name tags, but as it turned out, Mark-Taylor ultimately lost the management contracts. To make matters worse, the new owner made a run at Mark-Taylor on-site personnel, a poaching tactic quite common to new fee-management takeovers (see “Taking Talent”). Still, the ulterior strategy of selling Mark-Taylor to prospective buyers paid off: In the four years since the portfolio transaction, Mark-Taylor has tripled its units under management, with a lot of the new business coming from clients (and referrals from those clients) that were met during the 2006 deal. “That process is still paying off in new business,” Phillips says.