Wednesday, October 24, 2012

Campus Crest Attracts Investors But Performs Poorly Because of Inexperience On Its Management Team

Paula Poskon

Campus Crest Communities, which has four student-housing properties here in Alabama, stumbled out of the gate as a publicly traded company because of inexperience in its executive ranks, a Wall Street analyst tells Legal Schnauzer.

Paula Poskon, of Robert W. Baird and Company, expressed confidence that new blood on the management team will help Campus Crest right the ship. But she said the company's emergence as one of the country's three publicly traded student-housing REITs (Real Estate Investment Trust) has not been without growing pains.

We have reported extensively on Campus Crest Communities, mainly because of CEO Ted Rollins' central role in an Alabama divorce case that we have deemed the worst civil cheat job in our experience. Poskon said the investment community generally is aware of, and somewhat concerned about, the nasty nature of Rollins' divorce. But that has not kept Wall Street from supporting his company to the tune of more than $400 million, including a $380-million IPO that was completed in late 2010.

Our conversation with Poskon touched heavily on the ugliness in Ted Rollins' background, and the interview went in some extremely interesting directions when that subject came up. We will provide details in a series of upcoming posts. But first we asked Poskon about Campus Crest's performance as a business entity, its place in the student-housing sector, and Robert W. Baird's role as one of about a half dozen underwriters on the IPO.

Baird is an investment bank, and Poskon is a research analyst covering Campus Crest. "I like to call investment bankers the dating service of the financial world," Poskon said. "They essentially do one of two things. When companies are in a growth mode and need capital . . . [the bankers] go find capital partners. . . . The other thing the bankers do is when companies want to buy and sell divisions or entire companies they go to the M and A departments, mergers and acquisitions. So I think of the bankers as matchmakers." (See first video below.)

Campus Crest joins two other publicly traded REITs that specialize in student housing. American Campus Communites, based in Austin, Texas, is the "best in class" player in the market, followed by Memphis-based Education Realty Trust. Campus Crest is the new presence in a market that has been in the public sector for only about a decade, with many private companies jockeying for position.

How has Campus Crest performed since going public? Well, not so great. (See second video below.) From Paula Poskon:

They had a very big series of missteps, post-IPO. They were optimistic in their projections, in their forecasting. They closed in October 2010, and their first earnings call was in March 2011--and it was a complete disaster. They missed on every line item . . . and the stock was off 25 percent. It gets back to [Mr. Rollins] not having been a public CEO before, and it's a small company . . . No matter how much advice you get, you are always amazed how consuming the IPO process is. . . . It's grueling, and if don't have lot of excess corporate bandwith on your team . . . it's easy to take your eye off running the company, and I think that's a good part of what happened.

Poskon does see hopeful signs for Campus Crest:

What they learned from that is that they needed more senior-level talent and made some key hires and revamped some processes, learned lessons about what is important to the Street, how to communicate with investors and analysts like myself. . . . I think they are in midst of turning it around. I've spent a lot of time with those guys, been out on the road. I think they are going to turn it around, but there is a lot of investor skepticism in this environment.

How does the ugliness in Ted Rollins' background sit with investors? "I am aware of the unpleasant nature of his divorce," Poskon says. "I would say he is challenged from a personal-reputation perspective. Does that matter? Sure. Perception is reality for most investors."

Poskon said she asked Rollins about his divorce and received an answer that calmed her nerves. "It's not a big concern for me at the moment," she said.

Her tone changed when I shared details that Ted Rollins has not made part of the story he shares with Wall Street.

More on that coming soon.

Note: A condensed version of this article appeared yesterday at Seeking Alpha, one of the country's top Web sites for business news.


Anonymous said...

Good job getting the interview with Paula Poskon. She sure was generous with her time. She came across as intelligent and not afraid to see the truth whatever that might be. Her statement about perception being reality immediately caused me to remember clicking on a random link a month or so ago. Someone interviewing Ted about Campus Crest. As a longtime regular reader of LS I was prepared to find a man who at the very least would seem to somehow be hiding something. Instead he came across as genuine, likable, almost a self-effacing demeanor. I found myself trying to make a case for how some of the negative allegations might not be true. Could he be getting a bad rap? I came to my senses and back to reality with the undeniable fact of his wealth and the fact that he lied to cheat his family into poverty. Without that proof he might have gotten away with fooling most.

legalschnauzer said...

Anon at 12:02--

Thanks for a thoughtful comment. Oh, Ted Rollins is capable of coming across very well. He's a nice-looking guy, has an MBA from Duke, knows how to say the right things, grew up around money, in the "refined air." So he does not come across as a monster at all. I'm told he can be utterly charming on the party/dinner circuit. This is a guy who knows all the right buzz words and can very adeptly handle an interview, as long as it doesn't touch on subjects he doesn't want to address. That's why he won't agree to an interview with me. But he loves talking to those business types on the various REIT Web sites. He is slick, but when you talk to people who actually know him--have lived with him, or worked for him--the picture clouds up considerably. The public record of assault convictions/investigations, perjury, etc. also tells a different story.

legalschnauzer said...

Forgot to mention: Yes, Paula Poskon was generous with her time, and I have much more to come on the interview. What you've heard is probably less than half of it.

Anonymous said...

I was surprised that Ms. Poskon was so critical of Campus Crest. I was expecting mostly fluff from her, but she laid it on the line.

Anonymous said...

LS, post cards are due for the Seeking Alpha news, etc.

First, though, I am doing my best to see this picture composition as it is:

Rollins destroyed his family and made certain they were paupers.

Meanwhile he is saving the economy by getting funds from the criminals that destroyed the global economy, that is, Wall Street.

Wall Street has the money to get "Campus Crest" across the nation and beginning again, from the South.

The South likes to get the shaft from the North, Wall Street is not Southern and this monster has destroyed the future for our offspring, the Rollins children have been intentionally harmed.

Rollins, Ted, is the classic American Wall Street image.

Fraud, fraud and more fraud.

But, the front cover glossy of magazines, TV, any up front profile of Wall Street's perfect image sells.

Real Estate Investment Trusts, isn't this clever.

How to sell Wall Street's fraud, while stealing homes that belong to Legal Schnauzer.

PAY DIRT is the real value and Campus Crest as the eminent domain champion of Wall Street?

How many Americans have lost all their investments in real property, for the stocks in the Wall Street's monsters caches to fill up more and more ... to hell with our children.

Move right in, children, and then what do the monsters really have in their 'minds,' for our futures.

How, LS, does Paula Poskon explain so much money for campuses to house 'children' when the schools systems are, as you know, not performing at all in the genuine realm of academia.

Just wondering why so much REIT, other than the Wall Street monsters need to fill up the damage done as the "Housing Foreclosure Fraud," to the American children, and in their own cult the BLOB clearly .. the profits the best to stay very well hidden, as always.

Campus Crest should benefit the "Public" and NOT the "Private."

Obama no doubt is to be our "First Black President" for the next four years and this is the dance we've known already: stumble and fall.

Privatize also, all that is the Constitutional Republic's.

And Obama a "Constitutionalist" excedpt when it comes to Wall Street's "money."

jeffrey spruill said...

Anon@11:31 AM

I knew it was to good to be true:

Will JPMorgan CEO Jamie Dimon Be Indicted? FBI Arrest Warrant Issued?


Especially since JPMorgan Chase & Co gave $808,799 to the Obama campaign-circa 2008 to buy their way out of trouble: