The renewal of Harold Brown
After struggles in '90s, storied developer marks 50 years in the business with acquisition binge
Harold Brown is on a buying spree.
Brown, one of Boston's most storied landlords who was struggling to reorganize his bankrupt real estate empire in the early 1990s, is on pace to do $80 million in property acquisitions this year, up from $47 million in 2003, according to his company.
Fifty years after buying his first apartment building, his firm, Hamilton Co., last week acquired Whitney on Main, a 280-unit complex of rental apartments in Watertown, from AEW Capital Management for $56 million. Brown said he's also set to close on a $10.2 million purchase next week of Minuteman Apartments, a 42-unit rental complex in Lexington.
At 79 and with no plans to retire, Brown also claims to have $100 million worth of projects under development or just completed, from the conversion of a former nursing home in Brighton into 48 condos, to the construction of a 48-unit apartment building at 32-40 Boylston St. on the edge of Chinatown.
It's a major comeback for a man who, like many other developers in the early 1990s, was burned by the real estate crash. He filed for bankruptcy protection, and when he emerged from Chapter 11, he said he had just over 2,000 rental apartments. With last week's Watertown acquisition, that number is now 4,000, with about 1,500 units outside of Boston. They generate about $80 million in annual rental income, Brown said.
''We do projects too big for the small guys and too small for the big guys," Brown says of his more recent strategy. ''In general, anything above $25 million we leave to the big guys."
The price tag for the Watertown apartment complex, just renamed Hamilton Place, is well north of most recent deals. Brown said he made an exception in this case because, ''you couldn't build anything like this today at that price." The complex was built in 1975.
Brown's career stretches from his student days at the Massachusetts Institute of Technology to a recent dinner honoring him with a community leadership award from the Franciscan Hospital for Children. In between, there was a stint as a doughnut-shop entrepreneur, military service in World War II and the Korean War, and a brush with the law. In 1986, he pleaded guilty to bribing a building inspector to get a housing project going, a ''mistake" he regrets, he said.
Though he builds condos and owns 3 million square feet of commercial real estate, Brown prefers residential rental properties. His strategy is to buy older buildings, spruce them up, then rent units at 5 to 10 percent below market rates, or about $1,200 to $1,250 a month for a two-bedroom apartment today, he said. By keeping rents at those levels, Hamilton has a vacancy rate of 2 percent, he said. In the spring, a research firm called Northeast Apartment Advisors pegged Greater Boston's vacancy rate at 5.1 percent.
In 1954, while still making a living from his metallurgy degree from MIT, Brown bought his first building -- on Commonwealth Avenue in Allston-Brighton near where he grew up. The building had six large apartments. Working with his father, a retired cabinet maker, Brown rehabilitated the building into 15 units, then refinanced.
''I ended up with a lot more than the $25,000 I paid for the building and I said to myself, 'This is a good business,' " he recalled.
By the 1980s, Brown had emerged as Boston's biggest landlord, owning about 10,000 units at his peak.
But the '80s were a contentious period, with many tenants battling landlords over rent decontrol and condo conversions of apartment buildings. Tenant wrath was often directed at Brown.
''When you're a big landlord, you're a target," Brown said.
Harvey Shapiro, a lawyer with Greater Boston Legal Services between 1974 and 1985, said he often represented tenants who ''tangled" with Brown during that era. Some issues -- rent decontrol and condo conversions -- have lost their immediacy. And many of the working-class tenants who fought those battles were ultimately chased out of the city by high rents, according to Shapiro.
Last year, Shapiro again represented tenants in a legal matter with Brown.
''He was quite reasonable," Shapiro said of Brown. ''He may well have mellowed a bit with age."
Today Brown draws praise from Paul Berkeley, president of the Allston Civic Association. Brown buys run-down properties and improves them, including one that was a neighborhood ''nightmare," Berkeley said. And when there's a community meeting, Brown shows up.
''It's unusual to see the head of a company sitting in those metal chairs instead of sending underlings," Berkeley said.
Following the purchase of the Watertown complex, Hamilton will explore the possibility of gradually selling vacant units as condos, though the preference is to keep them as rentals, Brown said. One change would be the start of a $3 million improvement program to renovate apartments and upgrade roofs.
''Our strategy is to acquire and hold," said Carl A. Valeri, Hamilton's president.
But in 50 years, one thing hasn't changed.
''I've never bought a building," Brown recalled, ''where someone didn't say, 'How could you pay so much for it?' "
Chris Reidy can be reached at firstname.lastname@example.org.