Multi-Housing News: Q&A with Toby Bozzuto -- We Will Focus on Becoming a Stronger Company During a Slow 2009
January 15, 2009
Bozzuto Development Co. recently promoted Toby Bozzuto to president. Previously, he served as executive vice president. Bozzuto joined the company in 2001 and in 2007 was named a partner of The Bozzuto Group of companies. He was previously a financial analyst with J.P. Morgan Chase’s Real Estate Debt Group, and was also with Columbia National Real Estate Finance.
He talks to MHN Online News Editor Anuradha Kher about taking on this new role, his plans for the company and why he thinks the down time in the economy can strengthen the company.
MHN: Did you replace Thomas Baum, the previous president of Bozzuto Development?
Bozzuto: I worked with Tom while he was president of both Bozzuto Development and Bozzuto Homes, and reported to him for several years. As Bozzuto Development grows and evolves, this change is a natural step, a natural progression. The move allows Tom to focus all his energies on running Bozzuto Homes.
MHN: What do you plan to do as president of the company to weather the tough times?
Bozzuto: We want to continue to develop cutting-edge, urban projects that are green and design forward and stylistic. This year, there won’t be any new projects getting financing, so we are lucky that we have three big mixed-use communities (in the Washington-Baltimore area) opening this year. But we will continue to look for opportunities and build on the relationships we have. Also, we will use this down time when there isn’t much going on, to become a stronger company and sharpen our pencils if you will.
MHN: What are the communities opening in the coming year?
Bozzuto: Mariner Bay at Annapolis Towne Centre will be completed this Spring. Wyomissing Square is scheduled for completion in early 2010 and The Fitzgerald at UB Midtown broke ground in Fall ‘08 and is scheduled for completion in 2010.
MHN: Bozzuto has three new mixed-use projects opening in 2009. How have the troubles in the retail sector affected these projects, if at all?
Bozzuto: The leasing for the retail spaces in these projects happened over the last few years, so we haven’t had any problems. No big retailer has pulled off leases, maybe a few small ones. But if anyone was looking for retail leases right now, they probably wouldn’t be able to do it.
MHN: Given the way the economy is performing, have you had to drive down rents in the residential component of these new projects?
Bozzuto: The Washington/Baltimore economy is relatively stronger than the rest of the country. So rents aren’t dropping, but neither are they growing. They are slack right now, and growing slightly for some projects. Many people are coming into the rental fold right now, because it is a very good option due to the problems in the for-sale market.
MHN: What kind of projects do you think will get funded in the current tough environment?
Bozzuto: It’s going to be very difficult for developers to get financing for any kind of project. FHA funded, some tax credit projects and publicly funded projects will start in 2009, but any project that relies on the capital markets for financing, can forget about it.
MHN: What should multifamily investors, owners and managers be doing to avoid losses to their companies?
Bozzuto: For existing properties, developers need to be vigilant with expenses, cherish and appreciate customers, and pay particular attention to the way the building looks. The asset and the customer need to be focused on. With any new projects, it is going to be difficult. But with the Obama policies, there will be a lot of focus on transit oriented developments, infrastructure development and affordable housing. So that’s where the growth is going to be.