Every property management company's mission statement is based around customer service. Fogelman Properties Inc., an owner and third-party property manager, has similar goals and expectations – to be the best property management company in the markets that it serves. The company wants to be known as the No. 1 company in the eyes of its clients, associates and residents, says Rick Fogelman, president and CEO of Fogelman Properties, and CEO of Fogelman Management Group, the company's property management subsidiary.

But while the company's mission statement might sound familiar, the approach this mid-sized company uses to achieve its goal is quite unique.

A typical property management structure uses regional vice presidents, district managers, multi-site managers and on-site managers. Fogelman Management has cut out the middle layers. Its structure has only regional vice presidents between the corporate office and business managers (or on-site managers). In essence, it runs a flat organization.

For Fogelman Management, part of having a flat organization also means having an inverted organizational structure, where the business managers are on top of the chart and the executive management team is on the bottom. "It's one of our overriding philosophies," explains Fogelman. "Our purpose here is to support the sites and to support the people who are directly overseeing the sites. We try to make everyone realize that we're here to help support them."

To achieve success with this type of structure, it's critical that the company hires "extremely talented people at the regional vice president level," says Fogelman.

In an effort to accomplish this goal, the company has hired executives who, prior to joining Fogelman Management, managed portfolios that have been three to five times the size that they are currently managing, explains Rick's brother, Mark Fogelman, president and COO of Fogelman Management and senior vice president of Fogelman Properties.

These days, many companies believe that with the help of technology – cell phones, pagers, laptops, wireless and high-speed Internet connections – you can overload regional vice presidents with 15 to 20 properties, explains R. Fogelman. "However, we are very committed to not overburdening our associates."

For example, Debra J. Millwood oversaw 17 properties at her former company. "The reporting requirements on that many properties is unreasonable," says Millwood, formerly regional property manager for NPI Management Group and now senior vice president at Fogelman Management. "I spent all of my time doing paperwork and I didn't have time to supervise the properties. A smaller portfolio allows me the time to provide the support to the people on-site."

Technology doesn't equal service, explains R. Fogelman. "If the foundation of our company is property management and it's a people business, then you've got to be there to be able to kick the bricks and to be accessible to the property owners when needed."

So, when a regional vice president only has eight properties to manage, that person has the ability to spend the time necessary to not just visit a site and motivate the on-site team, but to actually work with them and mentor them, says R. Fogelman. "It all goes back to our organizational structure that [gives] us the flexibility to be able to put the people and resources in the places where they're needed," he says.

Management Focus

The Fogelman real estate business traces its roots back to Rick's and Mark's grandfather – Morris Fogelman – who in 1941 started a local real estate sales business in Memphis. The modern day Fogelman Properties really took shape as a multifamily company in 1963, when Avron Fogelman, their father, joined the family business and expanded the company from a local firm to one of the top privately held apartment companies in the country. The company has gone through a lot of phases, but has consistently focused on the multifamily housing industry. It now manages just shy of 14,000 units in 34 properties in nine states. Of those units, 8,286 of them are owned by Fogelman Properties.

The 1960s was the company's first building phase. It developed a mix of garden-style communities and a high-rise complex in the Memphis area. The company's claim to fame in that phase was the development of the 11-story Woodmont Towers, which at that time was considered a high-rise and it was the first of its kind in Memphis. In order to get this project done, everyone in the family worked on it. Their grandmother was responsible for picking out the carpet colors and wallpaper, and their mother and aunt assisted with getting the apartments ready and the leasing.

In the 1970s, the company changed its focus from developing to acquiring multifamily properties in the Memphis area. Toward the later part of the '70s, the company began acquiring properties in Florida and North Carolina.

By the time the '80s rolled around, Fogelman Properties was back to developing projects. The company developed throughout the Southeast and the Midwest. "It really was the period of the company's greatest growth as an owner," says R. Fogelman.

No matter how the company obtained growth, the primary focus was always on the management of the properties. "That is the foundation and the roots of our company," says R. Fogelman.

R. Fogelman joined the company in 1988 and M. Fogelman came aboard in 1993. In 1995, they took over day-to-day operations of the company.

"At the time, we saw a growing niche for quality fee management for institutional and individual owners," explains R. Fogelman. "And, it was a niche [in which] we have been very fortunate to have a number of very strong relationships with institutional investors."

Fogelman Management was able to get its initial management assignments from companies that were previously its borrowers or partners. "There was a natural evolution since we were already managing properties in which we [joint ventured] with them or in which we were the borrower of their loan," he says.

In addition to starting the third-party management business, the company also started offering property management services for fee owners. Some of the services that Fogelman Management provides include market research, acquisition due diligence, unit-by-unit inspections, capital needs analysis, financial projections and renovation budgets.

In April, Fogelman Properties formed a joint venture with GE Capital Real Estate to purchase four properties in Memphis. They also have a fifth property under contract, which is expected to close this month. GE Capital has been a long-term institutional partner with Fogelman Properties.

"Getting back into the acquisition game was a big piece to bite off and we were able to successfully pull it off," explains M. Fogelman. "We're hoping this is just the first in a successful string of acquisitions. We will pick our spots, and stick to areas we know very well and be aggressive in those areas."

Ridgelake in Nashville, Tenn., is surrounded by mountain views and lush landscaping. The complex features one- and two-bedroom apartments and townhomes.
Ridgelake in Nashville, Tenn., is surrounded by mountain views and lush landscaping. The complex features one- and two-bedroom apartments and townhomes.

Customer Service But with this latest acquisition, some clients might be worried that Fogelman Management is going to be spending more time on the properties it owns vs. its clients properties. But, according to R. Fogelman, there is nothing further from the truth. "We have to prove ourselves each and every day," he says.

In fact, having an ownership affiliate has helped Fogelman Management better understand the long-term goals and strategies of its clients, says M. Fogelman. "Whether it be repositioning a project for a long-term return or getting a quick boost in occupancy to facilitate a sale, we've been through every possible scenario and know how to get results," he adds. "In the end, it all comes down to delivering bottom-line results for our clients."

As far as the clients are concerned, because Fogelman Properties also is an owner, it only adds to the service that they get. "[Fogelman Management] treats the property as if it's their own," says Martha J. Logan, president of Martha Logan & Associates, who uses Fogelman Management for two communities.

"The [company] gives just as much attention to my properties as [it] does [to its] own assets. That professionalism is built into their structure," says Kevin Moyer, vice president of asset management at Jupiter Realty Corp., one of Fogelman Management's clients. Delivering Results Even though the market has softened and many properties have experienced high vacancies, Fogelman Management's clients still want results. So, in Atlanta, where several properties were suffering occupancy levels in the 80 percent and low 90 percent range, Fogelman Management found a way to bring traffic back to the properties it managed, says Moyer.

Instead of offering two- and three-month concessions, which was common-place in the Atlanta market, Fogelman Management offered $1,000 off the rent, explains Moyer. "Everyone saw four figures," he says. "They thought it was a lot of money and it drew in traffic. In addition, the [management team] went out to renewals that were coming up and offered those people a $200 concession if they signed a renewal lease. Fogelman Management was proactive and ahead of everyone else, and it worked."

The end result of this program was that Fogelman Management was able to maintain occupancy around 96 percent, while the rest of the market was in the 80 percent to low 90 percent range, says Moyer.

The vacancy problems at Jupiter Realty's class A property were a little easier to fix than the problems that Fogelman Management faced at Regency Park Apartments in East Point, Ga., a C+ class property in the Atlanta area.

When Fogelman Management took over the property, occupancy was at 85 percent, several of the units were uninhabitable, there was deferred maintenance and there was a crime problem, explains M. Fogelman. "[However,] the company took a no-nonsense attitude and was very aggressive on delinquencies and collecting rents," says Logan, the asset manager for the owner of the property.

Some of the improvements that Fogelman Management implemented included landscaping to improve the curb appeal of the property, adding a water billing program to cut down water costs and improve net operating income, and implementing a comprehensive maintenance program, she says.

According to M. Fogelman, the key to the success of this property was bringing a sense of community back to the property. "We solicited resident involvement," he says. "We surveyed residents to see what they wanted, the [on-site] manager had an open door policy and we cleaned house of the undesirables – the non-payers and the ones who attracted criminal activity."

In addition, the company set up an after school program with help from the local elementary school and is trying to put a summer program together with the local YMCA and Boys and Girls Clubs.

Other programs that helped change the reputation of Regency Park include implementing a preferred employer program – which Fogelman Management does at all of its managed properties.

The company teams up with large area employers which in turn pass on special offers to their employees, in terms of reduced security deposits and application fees, and discounts on rent. In addition, to get residents to pay their rent early, the management team offers monthly contests with cash prizes for early rental payment.

"There was probably a 90-day period of getting all the issues cleaned up at this property," explains M. Fogelman. "During that period, occupancy and operations actually took a step backwards in order for us to get the property to where it needed to be."

After managing the property for a little more than a year, the property has a 95 percent occupancy rate, says Logan.

While not every project is going to be as challenging and need as much attention, the company is prepared to continue its hands-on approach, explains Melissa Smith, director of management development at Fogelman Management. "Because we are so focused on being a team, if there is a property having trouble performing, we can send help, whether it's me on a training capacity or we send [on-site help] from other properties," she explains.

Country Squire Apartments in Cordova, Tenn., has 972 units. Amenities include on-site laundry facilities and a pool.
Country Squire Apartments in Cordova, Tenn., has 972 units. Amenities include on-site laundry facilities and a pool.

And, even if the company reaches its goal of having 20,000 to 25,000 units under management, the brothers still intend to make sure they are capable of "providing excellent service ... and to be able to know the names of all of our associates on-site," says R. Fogelman. "We are very focused on being a people-oriented, team-based management company," says Smith. "Rick and Mark can walk on any property and know the names of the employees. So many companies have a problem knowing the names of its properties, let alone the names of the employees. It's a nice thing to have that relationship."

It's in the Details

As a third-party manager and a manager for its own account, the management philosophy at Fogelman Properties Inc. is simple: "We have to be able to manage the workload of our people and then give them the tools to support their needs," explains Rick Fogelman, president and CEO of Fogelman Properties, and CEO of Fogelman Management Group, the company's property management subsidiary.

"The biggest advantage we have is that we make a commitment to our clients to maintain a flat organizational structure with close supervision of their assets by senior managers in the field who we feel are much better prepared, trained and have much more experience than what our competitors would put out there in terms of regional and district managers," says Mark Fogelman, president and COO of Fogelman Management, and senior vice president of Fogelman Properties.

But in order to give the regional vice presidents the time and freedom to manage the properties, someone else has to manage the details. Fogelman Management created a position called director of real estate services to handle everything from vendor contracts to utility reimbursement programs.

Until recently, M. Fogelman held that position. He created a report that looked at all of the company's vacant apartments and the utility bills for those units. If a bill was more than $30, it would get flagged. This lets business managers know if there is a potential problem, like the lights were left on or the heating, ventilation and air-conditioning system wasn't turned off. "This is often an overlooked part of our business," explains R. Fogelman, but "it makes common sense that if you're not in the apartment, turn the air-conditioning down."

With the assistance of their accounting departments, this position also produces a utility consumption report, which looks at the water and sewer consumption by meter at each property.

"We know the typical garden apartment in Atlanta should be using 150 to 180 gallons of water per day. And by looking at the number of units and the consumption each month, we can compute the consumption of water per occupied unit," says R. Fogelman. "So, if the average is 250 gallons per occupied unit when it only should be 150 to 180 gallons, it's obvious that we've got a leak or a problem.

We can now take the appropriate actions to fix it.

"These are the little things that all add up to increasing the property's net operating income," he adds.

Having someone else deal with the utility and sewage companies allows the business managers and the regional vice presidents to focus on operating the properties," says R. Fogelman.