Gables Palma Vista - Boca Raton, Florida

As a primary income investment source, a REIT must be confident in its ability to generate dividends on a long-term basis. The best way to ensure sustained growth in dividend payments is through internal growth that is driven by three fundamentals: occupancy levels, rental rates and expense control. These fundamentals, in turn, depend essentially upon how well the business is managed. This explains the high degree of importance that Gables places upon attracting and retaining the right people and developing effective organizational structures and systems. The results speak for themselves. Same-store net operating income has increased an average of 4.5% over the past five years and the dividend growth rate has begun to accelerate as we near our minimum payout levels. The safety of the dividend is further evidenced in Gables’ ability to consistently improve its coverage ratio to 1.4x, an increase of more than 22% since 1995.

Q. People are obviously a critical element of property management. How do Gables’ managers differentiate themselves?

A. We are very focused on empowerment, which requires training at every level of the Company. Training is particularly intensive for new hires, but it is also an ongoing part of every manager’s job. Not only do we offer classes regularly, but we increasingly design programs for individual needs. As a result of our investment in associates, we tend to attract and keep preferred candidates. Our turnover rate is significantly lower than the industry average.

Q. Is low turnover particularly important in property management?

A. Turnover is very expensive. Constant hiring and training of new employees at 150 different locations is a high variable cost. There is also the customer service aspect. Our associates interact with residents on a daily basis. Experience and continuity go a long way. In the renter-by-choice apartment category, residents are paying for the best - not only property amenities, but also superior management and service. That’s what we mean by “Taking Care of the Way People Live.”

Q. What aspect of property management impacts the bottom line most?

MICHAEL M. HEFLEY CHIEF OPERATING OFFICER “Our mission is ‘Taking Care of the Way People Live.’ We accomplish this by being the employer of choice, and by placing a major emphasis on training our associates to provide the highest level of service for our residents.”

A. Once a property is complete, ongoing expense levels in our business are fairly predictable. Effective revenue management is much more of a challenge. We have invested heavily in developing better revenue prediction models and systems.

Q. How has revenue management changed?

A. We are implementing a budget process that is based on a 24-month rolling forecast. These forecasts are reviewed by market on a quarterly, rather than annual, basis. This process is much better suited to monitoring changes in market dynamics and other external forces that affect occupancy and rental rates. As a result, our operating strategies can be more proactive and our results more predictable.