Post Properties, Inc.
Post Properties, Inc.
Sales: $203.4 million (1997)
Stock Exchanges: New York
Ticker Symbol: PPS
SICs: 6798 Real Estate Investment Trusts
Post Properties, Inc. is known throughout the “Sun Belt” states for its landscaped apartment homes, but in business terms it is a real estate investment trust, or REIT. Typically, an apartment developer merely builds dwellings, but does not manage them. Similarly, most apartment management companies are not in the development business. A defining feature of Post is that it participates in all phases of the creation and operation of its apartment communities, from initial site selection to construction to leasing to ongoing maintenance and management. As of 1998, Post had more than 29,000 apartment units in Georgia, Florida, Virginia, Tennessee, and—thanks to its 1997 acquisition of Dallas-based Columbus Realty Trust—Texas. Using a formula involving “garden-style” apartment dwellings—usually three-story structures which cover a relatively large area of land—the company has experienced steady growth. In the mid- to late 1990s, however, Chairman John Williams began taking Post in a new direction. Keeping with the “New Urbanism” movement in the United States, Post Properties began constructing and/or renovating multi-story high-rises in urban centers.
A Business Started at the Breakfast Table
Post founder John A. Williams began his multimillion-dollar enterprise at an International House of Pancakes (IHOP) restaurant. “Armed with slides of development sites and lots of chutzpah,” wrote Jeanie Franco Hallem in 1987, Williams “would commandeer a table for the morning and meet prospective investors.” Williams began his work day with a 6:30 a.m. breakfast meeting, he told Hallem. “We would say good-bye at 7:30 a.m., then my second appointment would arrive. Normally I had two or three breakfasts.”
Williams’s background included attending the Georgia Institute of Technology, where he earned his B.S. in industrial management in 1964. At the age of 20, he went to work as a financial systems analyst for Georgia Power, the state’s leading electrical utility. A year later, he moved to the Southern Company, where he worked as a sales engineer—a job that put him into contact with developers throughout metropolitan Atlanta. In the late 1960s, Atlanta was on the verge of phenomenal growth, which would continue through the end of the century. Williams would become a significant part of that growth. In 1969, at the age of 26, Williams decided that he wanted to start his own business. In 1971, with just $25,000, he founded Post Properties.
Growing with the Post Formula in the 1970s and 1980s
Much of Williams’s formula for success with Post Properties revolved around careful attention to detail. The company purports to have started the landscaping concept for apartment complexes. “I can promise you,” Williams told Business Atlanta in 1987, “in ‘71 or ‘72, you didn’t see flowers” in apartment complexes. Ben W. Johnson, in a National Real Estate Investor editorial nearly a decade after the 1987 Business Atlanta piece, expressed similar ideas: “We’ve lived in Post communities for five years now,” he wrote, “and we’ve been pretty darned impressed (and spoiled) by the company’s attention to the big things, like attitude (the customer comes first), and the little (beautiful landscaping and grounds maintenance).”
Post’s overall formula, however, was about much more than flowers. Its upscale apartment communities featured amenities with its “yuppie” clientele in mind. For instance, Post Lenox Park in Atlanta’s Buckhead district includes a 24-hour business center with a fax machine, copier, and computer. The company also puts on a number of social events for its renters, many of whom are single and transient; and, of course, service is paramount. For example, a 1987 Business Atlanta article detailed a time when an apartment air conditioner broke down in the heat of the summer. The company’s maintenance team had to order a part that would take a few days to arrive. But, because Post’s stated policy is “one-day service,” the company remedied the situation by sending a limousine to pick up the residents and take them to a hotel.
On the management end, the company grew steadily, but carefully. In the early 1970s, prior to the mid-decade recession, there was a lot of capital available in real estate. Many developers entered too many deals, and many people entered into the business of developing who probably should not have done so. The result was exposure to debt, and lenders who possessed little staying power. Post, on the other hand, selected its financing carefully, grew slowly, and thus was able to account for fully 100 percent of Atlanta’s new apartment construction in 1975 and 1976—during the recession. Such a feat could hardly have been replicated in the period of fast growth the city of Atlanta experienced in the 1980s, 1990s, and beyond, but by then Post had become a more significant player in both the Atlanta market and in other cities.
The “New Urbanism” in the 1990s
Post went public in the summer of 1993, with its stock priced at $25.50 per share. The company had to make another 1.38 million shares available because the initial offering of 9.2 million shares was so far oversubscribed.
Post had certainly succeeded with its well-manicured “garden” apartment complex formula; but by the 1990s it appeared that the company had possibly succeeded just a bit too much. Numerous other apartment developers in Atlanta and elsewhere were catching on to the idea pioneered by Post and others, spawning thousands of rapidly built units in cookie-cutter complexes that one observer—noting the sameness and apparent regimentation in the design—called “yuppie prisons.”
The company itself had become aware of the phenomenon, and had begun to look in new directions. It issued a statement, under the heading “The Future,” at its site on the World Wide Web: “In recent years, we have become concerned about the future of garden apartments, particularly those located in suburban areas. Such apartments have become a ubiquitous element of modern suburban sprawl, and have increasingly taken on the undifferentiated characteristics of a commodity product.” Due to its misgivings about the potential for garden apartments to appreciate in value, in the late 1980s the company began to explore urban “in-fill locations”—that is, areas in once-vacant urban centers that were beginning to become residential again.
The rebirth of the United States’ cities and towns, termed “New Urbanism,” spelled an end to years of decay in the nation’s downtown centers. Interstate highways, the growth of suburbs, and the destruction of historic landmarks during the 1960s and 1970s in favor of box-like glass and concrete buildings had all contributed to the flight of residents from the urban centers. This was particularly true of downtown Atlanta, whose nighttime population consisted mainly of conventioneers and the homeless. In the late 1980s, Post became part of efforts to turn this situation around, and in 1991 it entered into a joint venture with developer Ackerman & Co. to build Renaissance City Center in a blighted area near the Atlanta Civic Center.
With the advent of the 1996 Summer Olympics nearing, Atlanta became the first major city in decades to create a new downtown park—Centennial Park, which was built in an area of abandoned factories and housing projects near the CNN Center, the Georgia World Congress Center, and other important Olympic venues. In March 1996, the Atlanta Journal and Constitution reported that Post had expressed an interest in building apartments adjacent to the park, which was expected to become a magnet to downtown development in coming years. Following the Olympics in 1997, Post proposed a number of additional projects, including a six- or seven-story apartment building near Peachtree Battle Shopping Center and a mixed-use development in a decayed area near the Lindbergh Center MARTA (Metropolitan Atlanta Rapid Transit Authority) rail station. Neither development was likely to be a traditional Post product in the eyes of most Atlantans, but both projects were in line with the company’s new focus.
Moving Beyond Atlanta in the Late 1990s
In August 1997, Post announced a merger with Columbus Realty Trust. The $600 million company, based in Dallas, Texas, would expand Post’s holdings by more than a third, from over 21,000 units to more than 29,000. In a company press release about the merger, Williams stated that Post considered Dallas to be “one of the few major metropolitan markets in the country with the long-term appeal of our home base, Atlanta.” Industry analysts agreed that Post’s expansion into markets outside its typical geographic area was a smart move, and noted that the decision was made in order to expand, rather than because the company was not faring well in the Atlanta area.
We are committed to building better neighborhoods throughout America, not only for our residents, but for the greater community, taking care to preserve the environment, improve infrastructures, and enhance the beauty of our settings.
Post’s expansion beyond Atlanta, however, may have been partly due to other environmental factors as well. A May 1997 Atlanta Journal and Constitution article indicated that increasing levels of government regulation regarding development had made Atlanta “a more and more difficult place to build.” The company stated its desire to reduce the percentage of its overall holdings that were based in Atlanta from the 70 percent level. Rather than doing this by divesting some of its Atlanta holdings, the company wished to expand into other markets and obtain holdings elsewhere that would increase the company’s percentage of non-Atlanta properties.
In October 1997, the Constitution reported that development of the Peachtree property was being held up due to inadequate sewers. An Atlanta official was quoted as saying that the city “would prefer to see a sewer developed along Peachtree Street,” and it appeared that Post might have to bear the sewer expansion’s financial burden in order to speed up the process. The problem provided evidence of the sort of bureaucratic boondoggle that was driving Post away from its Atlanta base. Fellow developer Blaine Kelley told the Constitution that the developers were “not willing to pay for a major overhaul of the city system down a city street.”
Around the nation, evidence of Post’s presence began to appear in formerly depressed downtown areas. In November 1997, Max Jarman of the Arizona Republic reported that “The missing link to successful redevelopment of downtown Phoenix is about to be added to the chain,” noting that Post Properties had taken over a $75 million, 800-unit project in that area. The facility would be built on an 11-acre site, and would incorporate several historic buildings such as the old Gold Spot Market and the bishop’s house for the Episcopal diocese. It was thought that when completed, the project would help bring a new wave of downtown residents into the area, who would then support the city’s restaurants, drugstores, and other service businesses.
In Denver, Colorado, another project was under way, and Erika Gonzalez wrote in the Rocky Mountain News that Post Properties would “breathe new life” into the site of a hospital closed since 1993. The project, which would cost $80 million, would include 1,100 residential units, 70 loft apartments, 50,000 square feet of retail space, and two 500-space parking garages.
Throughout the country at the end of the 1990s, Post left its mark on many once-dead urban centers. In 1998, in its Atlanta base, Post was putting the finishing touches on a development which exemplified the “New Urbanism.” Riverside, located off Northside Parkway near the Chattahoochee River, would feature living spaces modeled on New York brownstones, with retail shops on the first floor and apartments above. Residents would be able to live, work, and socialize in the same place, without once having to get in their cars—an idea almost previously unheard of in Atlanta. “There is quite frankly nothing like it in existence in the Southeast,” Williams told Martin Sinder-man of the Atlanta Business Chronicle.
The development, meanwhile, had sparked controversy—not over its design, but its “history.” The latter was an entirely fictionalized account which Post presented in advertisements that were pen-and-ink drawings of the buildings and browning photos of the imaginary residents. The advertisements’ fine print, however, revealed that the history was simply a tale spun to add interest to the project. Hence, for instance, it was not true that one building in the complex “was a grist mill and a boarding house a century ago. During the Civil War, that building became a hospital—one that camouflaged a small arsenal that played a crucial role in the Battle of Peachtree Creek.” In reality, the building—like the rest of Riverside—had been built in the late 1990s. Although the “hoax” inspired quite a few letters to the editor, few residents seemed truly concerned. As for Williams, he said that the whole affair “was a lot of fun for us.”
Post, in fact, decided to move its corporate headquarters to Riverside in June 1998. There, the company continued to focus its energies on fulfilling its stated mission: “To provide a superior apartment living experience for our residents.” As the 20th century drew to a close, Post Properties seemed to possess the past experience and future focus to succeed well into the years to come.
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Friedman, Alan, “Post Initial Offering in Big Demand,” Marietta Daily Journal, July 20, 1993.
Gonzalez, Erika, “Builder Breaks Ground at St. Luke’s Site,” Rocky Mountain News, December 16, 1997, p. 8B.
Hallem, Jeanie Franco, “Post U.S.A.,” Business Atlanta, September 1987, p. 34.
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McCarthy, Mike, “Downtown Apartments: Major Developer Plans to Build 800 Units,” Business Journal—Sacramento, April 17, 1998, p. 1.
Salter, Sallye, “Post Properties to Use Funds from Stock Offering to Cut Debt,” Atlanta Constitution, May 14, 1993, p. F5.
____, “Two Peachtree Road Projects Held Up by Sewer Inadequacy,” Atlanta Constitution, October 16, 1997, p. D2.
Saporta, Maria, “Post Hoping to Hang Its Hat at More Places Outside Town,” Atlanta Journal and Constitution, May 23, 1997, p. E3.
Schneider, Craig, “A Charming, Fictional Story: Plan Invents Past in Present,” Atlanta Journal and Constitution, March 23, 1998, p. El.
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Sotto, Cindy M., “Post Downtown Is a Go,” Atlanta Business Chronicle, May 27, 1991, p. 1.
Westfall, Jill Elizabeth, “Apartment of the Week,” Atlanta Journal and Constitution, September 7, 1997, p. H53.
Wilbert, Tony, “Bidders Lining Up for MARTA,” Atlanta Business Chronicle, January 16, 1998, p. 1A.
____, “Post to Develop Apartments Near Peachtree Battle,” Atlanta Business Chronicle, September 19, 1997, p. 1A.