Core values: the new assets

Are we having fun yet? Actually, at Camden Property Trust they are, even in the midst of this terrible economy. And, by having a good time they are fulfilling and strengthening one of the core values upon which Camden CEO Ric Campo and President Keith Oden founded their company together 27 years ago: Have fun.

209

“And we’re serious about that,” said Oden in a late February interview. “We’re just as serious about that one as we are about acting with integrity,” he said, citing another of the nine values upon which the company’s culture is based. Lead by example, always do the right thing, be a team player, be flexible and reward results, look for better ways to serve customers and do whatever it takes to make the company’s nearly 100,000 renters happy round out the list that every Camden employee must memorize.

Those values are the foundation of the “Culture matters” strategy that Campo and Oden forged when they first set out to build a business that people would enjoy working for. More than two decades later, their efforts have been rewarded by the priceless loyalty of Camden’s nearly 1,800 employees – loyalty that has translated into recognition by Fortune Magazine two years running as one of the 100 best places to work in the country, the first multifamily company ever to be included on that prestigious roster.

And that recognition also translates into money, said Campo, the investment specialist half of the team. “If you take the 10-year compounded return for the companies that are on the Fortune 100 best companies to work for in America list, it’s like a 6.8 percent return.

That’s for 2008 over 1998 and 2008 was a really ugly year. If you take the S&P 500 during that same period it’s 1.04 percent, 576 basis points of out-performance by the 100 best companies vs. the S&P 500.

“Since Fortune’s been doing this list the out-performance has always been that big,” Campo said. “It’s always something like 300 to 400 to 500 basis points different from the S&P 500. So it’s not just touchy- feely happy. That tells you that it matters monetarily,” he said.

“We’ve had a lot of good things happen and we’ve been recognized locally and on the state level as a great place to work, but, the gold standard for recognition of your work place is the Fortune list. We’re very honored to not only get on it, but to have made a repeat appearance and to have moved up on the list to 41 from our 2008 debut at 50,” Oden, who focuses more on the operations side of the company, said of the achievement that was just a pipe dream three years ago.

The pie-in-the-sky notion was born during the company’s annual leadership meeting in 2006 when an outside facilitator asked the gathering of VPs and top management to come up with a stand, a just- barely-possible dream, he recalled in late February. “It’s something that, if you achieve it you’d say, ‘Wow! I never could have imagined that!’ But you have to imagine it first in order to get it on anybody’s radar screen.”

Oden’s stand was for Camden to be nationally recognized as one of the country’s best places to work within the next three years and the achievement of that goal is a dream come true. “I tell people all the time and unabashedly that the most gratifying accomplishment of my professional career to date is being associated with a company that’s on that list,” he said.

Where it all started
Campo and Oden, who first met in 1980 when Oden was applying for a job at Century Development, then the largest developer of commercial real estate in Houston, probably didn’t envision the possibility that the company they started together in 1982 would ever earn a spot on that celebrated list, or become the 13th largest apartment owner in the country with a geographically diversified nationwide portfolio of more than 62,000 apartments in 187 properties in 15 high-growth markets from Southern California to Washington, D.C., by the end of 2008.

“When we first started our company, it was just about making the rent,” said Campo, who was director of financial planning at Century when he interviewed Oden for a job as a financial analyst. “He had an awesome resume and passed the CPA exam the first time, and usually those kinds of people tend not to be very social. He was both, which was very unique, so I hired him,” Campo recalled, remembering clearly all these years later the thing that impressed him most during the interview.

“One of the things he asked me in his interview – and I thought it was a really valid question – was about the fact that the company was owned basically by one guy and his family. Keith’s question to me was, ‘How do you really get ahead long-term in a company that’s owned by a family and their kids are working here?’ And my answer was, ‘Well, at some point, you have to buy them out. You have to own the company,’ and he was like, ‘Oh. Cool.’ And then, about five years after he started and about 10 years after I did, we bought our division,” Campo recalled.

“Somewhere in there, we were running different divisions of Century at the time. We put them together and spun them off into a separate entity in 1983,” Oden elaborated, adding that Campo is fond of telling people that working at Camden and its predecessor companies is the only job he’s ever had. “I worked for Deloitte, Haskins & Sells after college as a management consultant for two years prior to coming to work for Ric at Century, so I’ve actually had two jobs in my career and he still considers me to be unstable,” he said, with a bit of a grin in his voice.

“Keith will say that he’s the volatile guy because he’s had two jobs and I’m the stable one, who’s had one,” Campo accurately predicted, referring to the story that’s become folklore at Camden.

Name that company
They christened the new company Centeq, the winning name in a contest they conducted, chosen because it referred back to their heritage with Century, with an “eq” added at the end to denote a high-tech, cutting- edge company. They started out focused on high-rise condominiums and purchased their first apartment community in Houston in 1989. By 1993, when they took the company public, they had 310 employees and owned 6,000 Texas apartments.

The name Camden was the winner of a contest conducted in 1993, when the company was going through the IPO process with plans to become a REIT. Campo and Oden, whose names were combined to create the REIT’s new name, were initially uneasy with the geographical connection it might bring to mind and also the ego thing involved with naming a company after themselves, but the long-time business partners agree the name is now so well known that people don’t even think about its origins.

“To me it just seems like it was always the right name and when I hear it, I see the hummingbird. That’s Camden,” said Oden, referring to the company’s logo, created when Camden underwent a re-branding in 2001 and added the tagline Living Excellence.

The portrayal of the tiny bird on the wing in the moment just prior to landing, intended to convey the idea of destination and coming home, is a message that is carried through to the new Web site the company launched last fall.

Downsizing development plans
Campo and Oden saw the signs of the oncoming economically troubled times early and reined in their development plans a couple of years ago in preparation for the coming capital crunch.

“We have navigated many business cycles and market conditions. This is not our first rodeo,” Campo told analysts during the Houston-based company’s 61st quarterly conference call in Q4 2008. “Beginning in the third quarter, we began right-sizing our G&A, development and construction staffing levels for fewer development starts and a more difficult economy.”

Many of Camden’s markets entered the recession in late 2006 and 2007, so the company took action to diminish its development pipeline before many of its peers did and had only five developments still underway at the end of December, two wholly owned and three in joint venture.

“We have not started a wholly-owned new development since mid 2007,” Campo said, adding that the REIT has just $5 million of still unfunded development spending remaining in 2009 and the company’s liquidity and balance sheet are strong. Having already tapped the secured markets through Fannie Mae, the company probably will continue to do so this year, he said.

“Development will continue to be a core competency for Camden, but we will not start any new projects until market conditions improve,” he said, predicting that 2009 likely will be another tough year. Dennis Steen, Camden CFO and Senior VP of finance, said the company is assuming no 2009 development starts and no proceeds from asset sales.

Hybrid call center
But they do plan to continue developing the technological end of the business, rolling out a kind of hybrid call center this year that’s a first in the industry. Many apartment companies have outsourced their call centers to third parties and others have built their own call centers and do it all internally, but, with mixed results, Oden said during the company’s Investor-Analyst Day last September.

Camden tried completely outsourcing calls to third parties, but couldn’t get comfortable with half of the sales calls coming into a Camden community being answered by a third party that also was trying to provide similar service to 15,000 other communities across the country. Company execs believed a third party couldn’t replicate the level of involvement and connectedness to the Camden experience their employees could provide customers and potential customers, so they opted for a hybrid call center, using technology created by RealPage, co-creator with Camden of the company’s revenue management system, YieldStar. Camden employees will man the call center that is to be rolled out by the end of the year.

A new place in cyberspace
And, instead of starting actual apartment buildings last year, they hammered away at virtual development, creating the brand new online presence for the company that debuted last fall. “Even though our other Web site had won all kinds of awards, two things had happened.

One was technology. That Web site was seven or eight years old and technology has changed pretty dramatically and we wanted to improve the customer experience, particularly with regard to the search for apartments,” said Oden.

Getting away from images of bricks-and-mortar buildings on the Web site was the second reason for the Web site overhaul that started about a year ago. “We really wanted to get back to emphasizing our employees and our customers,” he said. The new domain features an apartment search device on the home page along with an animated circlet of resident and employee cameos waiting for the click of a mouse to come forward and tell the Web site visitor why they love working for the company or living in a Camden apartment.

The strong company culture takes on a personal perspective in the mini- videos on the new site. The short movie of Laurie Ann Anderson, for example, voices the company’s commitment to its customers when she says, “It’s important to me to make my residents feel like family. A lot of times, they come from all over the U.S., or the country, the world and they don’t know anybody, so you’re their only friend.

They’ve talked to you on the phone, over emails, so taking a couple of minutes just to sit with them, ask them how their day is going, how’s the new job, how’s school, might just make their day,” she said.

“They might be all day studying or working sitting in a cubicle by themselves, so just a friendly smile, either in person or over the phone, could just make their whole day better, even if it’s after hours and you’re walking to your car and you’re tired. But it makes them feel like they’re home, which is exactly what it is. Camden’s coming home,” she said, in a voice so full of sweet sincerity it makes you want to live wherever Laurie Ann works.

The video that features Taylor King Bertin, who lives in a Camden apartment in Houston, indicates that the full-time effort Campo and Oden believe is necessary to maintain a strong company culture is paying off at the resident level.

Taylor tells a story about how the manager and leasing agent at his apartment community came to his rescue when his car broke down and he couldn’t reach anyone else. “I called my new family and that was the employees who work at Camden,” he said, “It was just nice to know I have a family outside my friends and my immediate family to take care of me if something goes wrong like that. It’s definitely one of the reasons why I live at Camden,” he said.

Cultivating culture
How do you create employees like Laurie Ann and the manager and leasing agent at Taylor’s apartment community? “It’s easy to talk about how you want to have great people and you want to treat them with respect and you want them to respect their co-workers and all that, but if you don’t work on it every single day and implement programs and work on the little details around that, then you won’t be able to create the culture,” Campo said. “Culture gets you through tough times like these because people are more engaged in solving problems or dealing with issues if they have a great culture,” he said. Employees who are committed to the company will skip lunch, stay late and come in early to solve problems.

They’ll help a resident take their groceries from their car to their apartment.

“It’s hard to describe and there’s no secret sauce other than a lot of hard work to get to that level, but once you get to that level, it gives you that extra something that you need. It really does. People get it and they will work harder and work smarter and try to do the best they possibly can. And people who have lousy cultures go home at 5. So, if that last lease needed to get signed at 5:30, it doesn’t matter,” he said. “On the margins, a good culture helps you and it is a value differentiator.”

“The other key is to be approachable and not be in an ivory tower. I think Keith and I have done this and I think we’ve mellowed over the years,” he said, which certainly is obvious in more than one of the skits the dynamic duo has performed over the past 24 years at the company’s annual management conferences, one of which encored via video during the September meeting. In that skit, Campo wore a skirt and blond wig, playing Miley Cyrus to Oden’s Billy Ray Cyrus and they sang a duet, even though Campo swore, after playing Dolly Parton in a skit two years ago, when Oden played Kenny Rogers, that he’d never wear a dress again. He relented due to popular demand in order to cheer up the employees, who had a rough year meeting sales goals.

Serious silliness
“At our management conference each year, when we bring 400 of our community managers and front-line managers from all over the country, we have skit night,” Oden said, explaining that Camden’s six regions take turns putting on the entertainment, three each year, along with a skit by senior management. Everybody lets their hair down and forgets about titles and hierarchy in an atmosphere of shared enjoyment and laughter. But, like all the fun at Camden, there’s a very serious intent behind the goofiness.

“The real magic of the skits is in the preparation time and the team building that goes into coming up with a concept, putting it into action and the fear of failure and all the things that go into ultimately getting up on the stage in front of 400 of your peers and successfully presenting your team’s finished product,” Oden said.

Because the company’s employees are spread across the country, many see one another only once a year, but they remember those performances and that shared experience for years. “So when they see each other the next time, it’s not just somebody from Denver, it’s somebody who has been in the game,” he said.

And the skits also convey underlying messages about the company, like the lines in the song Campo and Oden sang last May that begins with Campo and Oden thanking their employees, who have been fighting an uphill battle to maintain occupancy in the 94 to 95 percent range lately, for their efforts and a promise to do whatever it takes to make them happy, including donning a dress. The song that ends with Campo telling Oden, “Next time you’ll wear the dress, and that’s all part of my succession plan,” was intended to resonate with those involved with the company’s preparations for the future.

“That message was our support of the VPAC and the idea that we’re training people as part of the succession plan,” Campo explained.

A unique succession plan
VPAC, the company’s vice president advisory committee, made up of 16 Camden VPs and senior VPs, was created a couple of years ago in response to pressure from Camden’s board of directors for a clear succession plan. “We do specialized training, trying to cross- pollinate departments and create dialogues that these current leaders and potential senior leaders otherwise would not necessarily be exposed to,” he said.

For example, somebody like the VPAC member in Washington, D.C., who runs operations in the REIT’s Mid-Atlantic region, doesn’t get a lot of exposure to the company’s financing systems or analyst type of operations, so the group gets together quarterly to share knowledge and gain a perspective broader than just their specific pieces.

Oden said the main objective of the meetings is the institutionalization of a lot of the corporate memory that Campo and Oden and Steen and Malcolm Stewart, who was promoted to the COO spot last year, carry around in their heads.

“It’s a management training program to a certain extent,” Campo said.

“We’re very comfortable that the next generation of leadership is in that group of 16 individuals who are most likely to be able to succeed to either a CFO or COO role, president and then, ultimately, a chief executive role,” said Oden.

“Our succession plan will probably look very different from most everybody else’s and part of that is because Ric and I have run the business for 20-something years, so I have to caution people – in particular our board – to be careful about saying, ‘Who’s going to replace Ric?’ or ‘Who’s going to replace Keith?’ There are only one Ric and Keith,” he said of the business partnership the two men agree has lasted so long because it is based on mutual respect and understanding and appreciation of one another’s strong points.

“There is literally not any conversation that Ric could engage in that I couldn’t, and vice versa. You want to talk about operations? Fine. You want to talk about the capital markets, fine, let’s talk about it. There’s a skill set overlap that is very unusual among most CEOs and presidents and COOs,” he explained.

For example, when attending NAREIT, most management teams must take their operations guy and their CEO because there’s no way just one of them could answer all the questions. “That’s not how it is with me and Ric,” said Oden.

He and Campo encourage those considering the next generation of company leadership to think more traditionally, in terms of skill sets, and they believe those future leaders already work for Camden.

“We want to be able to fill the positions of all of our senior people in the future internally, rather than having to go out into the marketplace,” Campo said and Oden agreed, saying, “I’m certain we have the people who understand the Camden culture and how important that is to the success of the company. Those are the two big pieces. If you’ve got the skills and you’ve got the culture, you can get there.”

But, it’s unlikely either member of the partnership that has lasted longer than most marriages will be ready to retire from the game soon, because they’re still just having too much fun.