The Comeback Kid
Even by the standards of a town not known for late-night dining, 6:45 seemed a little early for dinner. So Harold Brown's associates couldn't understand why he was rushing them to order.
At first they thought Brown just wanted to get back to work. “We get the menus and he says, 'Hurry up, we gotta order,'” remembers one of those companions, lawyer Harvey Silverglate. But it was a nice place near South Station. What was the hurry?
“I finally said, 'Harold, why do we have to order so fast?'” Silverglate says.
Brown responded, “The prices go up at 7.”
Harold Brown owned part of that restaurant. He also owned a piece of a movie production company and a clothing boutique, and enough real estate to make him the biggest landlord in the state. The man who preferred the early-bird special was a multimillionaire. Yet he had only two suits and took home the leftovers.
“It's not that he's cheap or a chiseler,” Silverglate says, noting that Brown picked up the tab that night. “It's that he has a mentality that says 'no waste.'”
Brown's rise to real estate icon from his beginnings as one of seven children of Siberian immigrants is either legendary or notorious, depending on who's telling the story. He built the state's largest apartment empire the old-fashioned
way—raising rents, spying on a tenants union—and amassed a half-billion-
dollar fortune before suffering a spectacular downfall in the biggest individual bankruptcy in Massachusetts history.
At the time of that dinner, Brown just couldn't stay out of the papers. A business associate (who happened to be suing him) publicly called him “rapacious, underhanded, and disreputable.” Brown was convicted of attempting to bribe a city official with $1,000 in cash.
Now Harold Brown is back. In the past three years alone, he's quietly bought close to $200 million worth of buildings in Quincy, Watertown, and Boston, and has another $100 million in projects under construction.
And he has no plans to stop. After all, he's only 81. “Harold is never going to slow down, thank God,” says broker Kevin Ahearn, who has watched Brown operate for 25 years. “They're going to take him out of the office toes-up.”
Brown lives in a spacious luxury condo on Beacon Street near Coolidge Corner with his second wife, Maura, who is 48. In the entryway are photographs of Brown at Brookline High and as an engineering student at MIT. There's a huge portrait of Maura, blond in tennis whites, standing next to her father, Joe Nolan, a retired Massachusetts Supreme Court justice who is the same age as Brown.
Small but wiry, with white hair and sharp eyes, Brown looks like someone who not only always wins at arm wrestling, but explains how he's beating you while he's doing it. He's a perpetual-motion man, spending the predawn hours on an elliptical trainer and lifting weights. His real estate firm, the Hamilton Company, is above an Avon outlet in an unassuming building in Allston, a block from where he was born in 1925.
Brown bought his first building on Commonwealth Avenue in 1954, with no plan other than to avoid paying rent. But when he refinanced and pulled down five grand more than he had sunk into the property, he says, “a light bulb went off and I said, 'This is a very good business.'”
Over the next two decades, Brown snatched up 300 or so similar buildings. He moved fast, splitting large units into small ones and renting dreary basements as “garden level” apartments. In the early days he did much of the work himself, sleeping in whatever apartment he happened to be renovating. Then he rented them out, refinanced, signed for more loans, and bought more buildings. His portfolio peaked at 10,000 units—by his own estimate, that worked out to one in every 15 apartments in Greater Boston, including nearly 40 percent of the Allston and Brighton neighborhoods. It made him the largest landlord in Massachusetts. And a big target.
Tenants in Allston called him arrogant, an absentee landlord who liked to throw his weight around. When 50 picketed his office in 1981 protesting huge rent increases, he reportedly lured one of their leaders away with a job. When 100 then stopped paying rent, he went to court to evict them. In a sworn statement he revealed that a tenant on his payroll had been spying on their meetings.
Brown carved out a niche for himself by making a profit on properties others wrote off as impossible fixer-uppers. Take the former Hotel Touraine, as Brown calls it, though his marketing people would surely prefer he use its fancy new name, 62 Boylston on the Park. It's a tall hulk of a building near the old Combat Zone. By the '70s, the once-chic hotel had been converted to about 300 apartments and commercial space, but fell into foreclosure. Desperate to cut its losses, the bank approached Brown and offered to sell him the building for a bargain-basement $1 million.
“The building was 35 percent vacant, and the other 65 percent were hookers,” Brown says. “The taxes were more than the gross rent.” He bought it anyway, convinced the city to lower the taxes, kicked out the prostitutes, and renovated. It's been full ever since. He's been offered $60 million for it, but he isn't selling.
In 1986, Brown made headlines again by trying to bribe Boston's chief plans examiner to expedite a stalled building permit. He insists he did this because the delay was costing him $10,000 a month while his crews cooled their heels. “The plans examiner said, 'Give me a thousand and I'll give you the permit,'” Brown recalls. He handed it over, reportedly quipping, “I hope this will be the start of a good working relationship.” (He denies saying this.)
He didn't know the examiner was tape-recording their meeting, cooperating with a federal investigation into the Boston permitting process. He still didn't know it when he denied in court that he had paid the bribe, insisting he would never do such a thing. When the truth came out—and he faced prison time for perjury—Brown admitted to attempted bribery and paid a $25,000 fine. “It was not too bright,” he concedes. “I was young and naive. But that's education.”
Greasing a few palms was a below-the-line cost of doing business during Boston's wilderness years. (Brown was also accused of paying off a city councilor, but no charges were ever filed.) “He felt that in his business you sometimes have to cut corners,” says Silverglate, then Brown's lawyer. And, in fact, over 10 months 15 other developers and city officials were indicted—including the plans examiner himself, who confessed to taking bribes while working with authorities. “I think Harold saw how even the mighty can fall,” Silverglate says. “To whatever extent he had any touch of arrogance, it left him.”
At the height of his apartment holdings, Brown sold—skimming off several thousand apartments to finance a jump into commercial real estate. “Maybe it was ego,” he says. “A downtown office building is higher profile than a small apartment building in Allston. We thought we were so good in residential that we should really get into commercial.”
He assembled all $28 million worth of land for the showy 75 State Street office complex. It was during that project that Thomas Finnerty, the consultant who called Brown rapacious and underhanded, sued, saying Brown didn't pay him his full fee. Brown countersued, alleging he was being shaken down. Yet he settled out of court, saying it was cheaper than paying legal fees. (Today he says the whole ordeal was a misunderstanding.) A Globe reporter calculated that Brown had bought enough commercial space by 1990 to fill the Prudential Tower nearly seven times over.
That November, in the middle of the worst recession in decades, Brown spoke at a seminar titled “Hardball Real Estate: Surviving the Next Two Years.” With a personal fortune by then estimated at $500 million, Brown certainly seemed safe. But two days later he met with his banks to tell them he couldn't pay his millions of dollars in loans on time. He said the economy was turning around; he just needed them to extend his forbearance period. But the bank regulators were spooked and, with Brown racking up more than $14,000 a day in interest, the banks began to sue.
Brown finally sought bankruptcy protection in 1991. His case was unique: Involving $675 million in loans, 60 lawyers, and 35 banks—more than 100 people connected with the case came to court the first day—it was at the largest bankruptcy of an individual businessman in state history. When it was over, the former $500 million man told a reporter his fortune was down to $10 million.
Silverglate calls Brown's move into commercial space “a disastrous departure,” the one time he got burned by a fad. When the commercial real estate market crumbled in the '80s, overheated prices cooled and Brown was left overextended. “Harold has prospered precisely because he's been able to resist what's hot,” Silverglate says. “He deviated once and got buried in the rubble.”
Since then, Brown has been digging himself out. The bankruptcy court approved his reorganization plan less than two years after he first sought its protection, an unheard-of achievement for even a small case. His creditors, too, were in unanimous support. All of them got paid something, though one attorney estimates they wrote off $100 million of the $675 million debt. Brown jumped back into the game with a pent-up energy that came from being on the sidelines for so long, first buying back many of the $150 million in buildings he lost. He was right about the market recovery, of course, which goes a long way toward explaining why six of the 35 banks in his case went under while he's still around and worth an estimated $200 million and counting.
In his Allston office, I ask Brown if he ever thought he would fail. “I would never say that. Never,” he snaps, annoyed by the suggestion. “Why would I? It's probably the best thing that ever happened to us. We modernized, put in a big computer system. Everything worked out fine.”
Despite the distinct hiss of the deflating real estate bubble, business for Brown is booming. He now owns or controls some 4,500 units, more than triple the number he had when he shook off the last reorganization requirements a decade ago. He collects $110 million a year in residential and commercial rents, and he's selling, on average, a $300,000 condo every business day. When he makes the papers now it's to celebrate another big donation. As chairman of the Hamilton Charitable Foundation, he's given hundreds of thousands to help local hospitals, fund college scholarships, and support community groups, and is unveiling a $75,000 monument in Coolidge Corner this April. It will be topped by three lights, one for each century of Brookline's history. And he's been on a spending spree for the past three years, buying $200 million worth of buildings in Quincy (Hamilton Bay, Executive House), Watertown (Hamilton Place), and other areas where you can still get a condo for less than $250,000. He has another $100 million in new construction in Brookline (St. Paul Street), Brighton (Chestnut Hill Gardens, 99 Chestnut Hill Park), and Cambridge's biotech area (110 Second Avenue), where all those scientists need places to live. “That's where the excitement is,” he says of the new projects. “That's where the challenge is, so you don't lose your ass—which you can do, incidentally. It takes one mistake.”
Brown now owns a broad swath of property on the border of the South End and Chinatown. Here, he does not expect to lose his ass. The area looks primed to become the next big thing, a South End North. Last year he bought the landmark Chau Chow City building for about $12 million. Meanwhile, he was planning to evict nearby Ming's Asian supermarket to make room for 77 new apartments. The Boston Redevelopment Authority loved the prospect of new housing in the cramped neighborhood, but the neighbors bussed a few hundred protesters to the public hearing. Brown jokes that he was lucky to get out of there alive. “Ming's has this big, burly guard—with a gun—and this guard says”—he jumps out of his chair, hand on an imaginary holster—”'You're taking my job! My family!' Yelling and screaming.” He trails off.
Despite occasionally jumping up to act out dramatic scenes, Brown tends to truncate his stories, leaping from the middle of one to the beginning of the next. They always end the same anyway: Everything works out fine. In this case, Brown could have forced the supermarket's eviction, but instead withdrew the apartment proposal at a $100,000 loss.
Compromises like that have people whispering that Brown has mellowed. His weekend tennis partner, Alex d'Arbeloff, the 79-year-old cofounder of electronics giant Teradyne, disagrees. “Sometimes people think you've mellowed because you have more experience and you handle it better,” he says. “You have the same objective, but you do it with more grace.” After all, Ming's didn't beat Brown. He's renovating the storefronts and expanding the building—and Ming's rent. “It's a quid pro quo. Everyone's happy,” Brown says. “Or, everyone's a little unhappy—that means it's good.”
Brown hasn't mellowed with age: He's streamlined. He's unwilling to waste time because he knows that time is his scarcest commodity. Once Brown is sure a project “is well under control, he'll go on to the next one,” says Carl Valeri, president and COO of Brown's company, whose job it is to engineer deals and keep an eye on the details. “There are times when we'll put a project under agreement—and there are many, many things, from the purchase and sales agreement to closing to execution—and as far as he's concerned, that property has been closed, purchased, and we've sold off all the units.”
Take the 120-unit stucco building Brown bought a few months ago on Stoneholm Street near the Berklee College of Music. Dozens of sales offers come across Brown's and Valeri's desks every month, but this one stood out. The seller was asking $24 million—which included the building's 80-car garage—Brown recalls. “I told my people, 'It's not $24 million. They fucked up; it's worth more than that.'”
Valeri chooses his words more delicately. “Well, we don't want to disparage the broker or the seller,” he says later, as the three of us sit around a table in Brown's conference room. In theory, he says, they'll sell the condos for several million more than what they paid, and rent the parking. “We think there's value in the parking of $4 million to $5 million that they did not assign.”
“We could be wrong,” Brown agrees. But he says this in a way that makes clear he knows he's right.
On a drizzly evening, Brown is the guest of honor at a benefit for the Brookline Senior Center. He's contributed $20,000 toward a van to shuttle retirees to the center from their homes. A stout woman resting in a chair declines a second glass of wine, saying it would make her sing a number from the musical she's writing, called Retirement Love. She sings a few lines anyway. Brown works the room, shaking hands and joking. Forgoing the elevator, he climbs the stairs to the third-floor ballroom, where the event is being held.
Former Brookline Selectman Mickey Geller introduces Brown by running through the story of his long career. Brown shakes Geller's hand and takes the podium. He's wearing his one suit (Maura made him throw away the other one) and carrying a cardboard model of the Coolidge Corner monument. In a few minutes he'll hold it up and get a big laugh by saying, “It really is a shtekl“—Yiddish for a phallic symbol—”but we call it a 'historical monument.'” But first, Brown looks out over the crowd of wrinkled faces and leans into the microphone.
“Many of the things that Mickey said were in the past, not today,” he says. And, just like that, Harold Brown begins.