Last week, Western National Property Management unveiled the opening of an office in Las Vegas supported by 1,400 units under contract with four separate apartment owners. “One of Western National Property Management’s goals for 2011 is increasing the third-party management portfolio, particularly in the Las Vegas market,” said Laura Khouri, president of the Irvine, Calif.-based company, in a statement announcing the deals. “It is a market in which we have operated in the past, and while the current economy is challenging, we believe in the long-term re-emergence of Las Vegas as a strong residential market.”
As Western National prepares to bring its Sin City assets into the fold of its already 23,700 units under management across California, Utah, and Nevada, Khouri checked in with Multifamily Executive senior editor Chris Wood about Nevada's growth opportunities, challenging rent fundamentals, and bringing morals back to Las Vegas multifamily.
MFE: If entering the Las Vegas market has been a goal of Western National for some time, that makes you a bit of a maverick. Why Las Vegas? And why now?
KHOURI: The story goes back several years. One of our regional vice presidents has been looking to enter that market for some time, and coincidentally, as he was pursuing his broker’s license over the past year, we had a client that we manage for in Southern California approach us with the opportunity to manage these four assets in Las Vegas. It was almost handed to us on a silver platter. As word got out that we were entering the market, we were able to secure two additional clients, and it looks like we have three more in the hopper.
MFE: What can you tell me about these management contracts and the properties they represent?
KHOURI: Las Vegas is a completely different feel, even from a curb appeal standpoint: There are rocks instead of grass, so there’s a little bit of a culture shock there. These assets are probably B-minus, with the opportunity to become B-plus. We think we have an ability to spruce these properties up and get residents in the door, and thereby maximize the market window to push rents. The previous management company didn’t quite have that focus.
MFE: How are you dealing with the challenges in Las Vegas? Things like the large supply overhang or the lack of disparity between the cost to rent and the cost to own.
KHOURI: It’s not about reinventing the wheel in Vegas. We’ll bring in proven property management techniques that we use in California. There is something to be said about making investments into improving the quality of the asset and reaching out through advertising. People will also rent where they feel most comfortable. We’ll bring to this market our ability to lease buildings through our staff members and use programs like our Care and Connect on-site training program, which has resulted in some of the highest scores with Ellis Mystery Shopping. Our regional vice president is visiting the properties twice a week and [Western National] CEO Mike Hayde is scheduled to visit the properties next month for his credo class. To our knowledge, Mike is the only CEO in the industry to personally give a class in morals, values, and ethics to every employee.
MFE: Western National is involved in property management, ownership, and development. Do you have any immediate or long-term plans for acquisitions or construction in the Las Vegas market?
KHOURI: No immediate plans, but perhaps something in the shorter term. Because we are there managing, you can always do better when you have a presence. Our sister company has the entire Nevada market in their growth prospectus. I can’t say if the growth will be through acquisition or development; it just really depends on the product and opportunities that are brought to them. But certainly they have not exited off of this part of the map.
MFE: What other markets is Western National interested in establishing a presence in through property management?
KHOURI: I think what we'd really like to do would be to strengthen our presence in the Utah market. We have our Crossing at Daybreak development there, which is currently in lease-up and doing very well. In a joint venture with the Kennecott Land Co., we are looking to buy, build, and take on property management contract opportunities there. So Vegas, Utah, and of course Southern California where our core market is, but where there is still opportunity for growth. We are in due diligence on some California properties now that we feel will fold into our portfolio extremely well.