The Closing: Owen Thomas

The Boston Properties CEO on milking cows, giving last rites to Lehman Brothers and filling the shoes of the legendary Mort Zuckerman

New York Issue /
Jan.January 20, 2020 01:05 PM

Owen Thomas (Photo by Axel Dupeux)

Owen Thomas has served as CEO of Boston Properties since April 2013, when the firm’s famed co-founder Mort Zuckerman tapped him as his successor. Thomas was seen as a surprise pick for the role, as he came to the real estate investment trust from the world of finance — after almost 25 years at Morgan Stanley and about a year as chair of Lehman Brothers Holdings at the height of the financial crisis. Since taking the reins at Boston Properties, which now boasts a market cap of $21 billion, Thomas has overseen major projects including the REIT’s expansion into Los Angeles and the official opening of its Dock 72 development with Rudin Management in the Brooklyn Navy Yard. But he did not seek to drastically change the way Boston Properties has been doing business, helping him gain trust to grow the firm despite coming in as a rare outside hire. Boston Properties now has seven completed office buildings in New York City spanning about 8.6 million square feet, and 195 properties overall encompassing about 51.4 million square feet in several major U.S. markets. Thomas was recently named the global chairman of the Urban Land Institute and still sits on the board of directors at Lehman Brothers Holdings, and he holds degrees from the University of Virginia and Harvard Business School.

DOB: June 16, 1961
Primary lives in: Bronxville, New York
Hometown: Staunton, Virginia
Family: Married with three children

Where did you grow up? On a farm by Staunton, Virginia, which is in the Shenandoah Valley.

Was it a working farm? Oh yeah, a dairy farm. I worked on it all the time: milked cows, fixed fences, you name it.

What did your parents do when you were growing up? My dad grew up on a farm himself — and that was part of his occupation — but he was also in the real estate business. He had a brokerage company in Staunton and was one of the leading brokers of farms in the area. My first job away from the farm was working with him in the real estate office when I was a teenager.

What were you doing for him? All kinds of things. I spent a lot of time in the courthouse looking up records on transactions: who the buyers and sellers were, mortgages, things like that. So I caught the bug early, and I got a Virginia real estate license when I was 18 years old.

Now you’re married with children? I am. They’re 22, 19 and 15. The oldest is at the University of Virginia; the middle is at Berkeley; and the youngest is still in high school.

Where do you live? Bronxville … We [also] have a camp up in the Adirondacks that we use and the farm down in Virginia.

What were some of the biggest challenges you faced taking over for a legend like Mort Zuckerman at Boston Properties? Well, I think you hit on it: I took over for a legend. You’re leading the company following an icon, and the thing that I realized is I wasn’t going to be Mort Zuckerman. I understood that my goal wasn’t to try to emulate Mort but to be the leader that I could be given my strengths and capabilities.

What are the key differences between Mort’s leadership style and yours? Mort was an entrepreneur. He and Ed Linde founded the company, and they built it up to what it was in 2013 when I joined. I came from Morgan Stanley, which was a larger company with a larger staff and a more diverse set of business lines. So we have different backgrounds. But a lot of the things that I’m required to do were things that he did well — capital allocation, investment judgements, leadership. Things like that are important no matter what your background is.

You were considered a surprise choice in the industry. Were you surprised when Mort wanted you for the CEO role? Not at all. I mean, when I left Morgan Stanley, I didn’t necessarily say, “Oh, the next step in my career is I’m going to go become the CEO of a public REIT.” So in that sense, perhaps it was a surprise. But I felt confident in my ability to do a good job for the company and its shareholders.

How closely do you work with [Ed Linde’s son] Douglas Linde, who was seen as the other major contender for the CEO role? We are partners running this company. I’m the CEO, and he’s the president. Any capital decisions that the board delegates to us we make jointly.

Was there any resistance or skepticism that you had to overcome, given that you came in as the new guy from the finance industry? Yeah. Boston Properties does not make a lot of lateral hires, so when the CEO comes in laterally, there’s clearly going to be a lot of observation. I think skepticism is too strong a word, but it was a different approach for Boston Properties in that sense. That said, I found the team here to be very welcoming. … I think one of the keys to the success that we’ve had since I’ve been here is that the entire executive leadership has stayed.

Do you think that team staying helped allay some of the company’s initial concerns? Yes. I mean, this company was not broken. It had a CEO who was in his mid-70s, and it accomplished its succession goal through my arrival, but the company had an excellent strategy. It’s created above-market returns for shareholders since its IPO in 1997, so we didn’t need to go through a strategy shift or anything like that.

What would you say some of the biggest differences are between working in finance and working in real estate? When I was at Morgan Stanley, and we were investing in a property, we would partner with or hire firms like Boston Properties to develop or manage our buildings. In other words, we were more of a financial investor, and we were not an operator. Here, not only do we do the investment side, but we also do all the operating stuff in terms of property management, leasing and things like that.

You were named chairman of Lehman Brothers Holdings after that firm’s collapse. Why were you tapped for that role? I left Morgan Stanley in 2011. During that period, a friend of mine who runs a hedge fund was a major creditor to Lehman Brothers and said that the firm was about to complete its reorganization plan. It was going to emerge from bankruptcy, and they wanted to turn over the stewardship to an independent board. I was asked to join and be its first chairman. One of the more complicated assets in the Lehman estate was the Archstone REIT. During my first year, I worked extensively on the sale of that. I remain on [Lehman’s] board of directors. There are still a few things left to do.

In October, you celebrated the grand opening of Dock 72 in the Brooklyn Navy Yard, where WeWork is a major tenant. Has the chaos surrounding WeWork soured your view on the company? We think the whole shared workspace industry is important, and it’s growing, and it’s here to stay. And given the scale of WeWork, they’re the primary player because they have an enormous market share. So, I think they have a strong opportunity in front of them. But, as you know, they’ve been dealing with issues. And they need to solve all those so they can move forward.

You’re still a big believer in co-working in general? Yes. We think that it’s an important innovation in office real estate and that there’s a significant customer base that wants to be in that kind of space. We’ve started our own co-working branch called Flex by BXP, and we have one location open and three under development.

How is Flex by BXP doing? Great. The location that we’ve opened is full and doing well.

Do you have an eye on expanding it? We’re not seeking to grow it for growth’s sake, but if we have a space that we think would be uniquely suited for that kind of installation, we would certainly consider another one.

Have you given any more thought to expanding Boston Properties into other cities? You’ve mentioned Seattle before. We have lots of opportunities to grow our company in the five cities that we’re in. That being said, if we could add a city, Seattle is in our sphere of interest. I wouldn’t say that’s something you should expect to see happen in the next quarter or two, but it’s something that we would consider.

Are you preparing for a downturn at all? We don’t know exactly when a recession is going to occur, but we are late in the cycle, so we’re not looking to increase our leverage. We’re still making new investments and looking at new acquisitions.

Boston Properties purchased the General Motors building and three other properties from Harry Macklowe in 2008 for almost $4 billion. Do you think the company would pay that much for an office building again? It depends on the deal. If we could find a deal that penciled out, we would absolutely invest that kind of capital to purchase something. It’s one of our advantages: We’re large.

What is the biggest mistake you’ve made in your career? Not doing more business during the earlier phases of the cycle. There were a couple of sites in San Francisco and New York that ended up being successful that we didn’t invest in.

What do you like to do to unwind? I’m a long-distance runner. I did the Chicago Marathon a few weeks ago, and I try to do one marathon a year just to have a program to stay fit. I’ve done London, Tokyo, Washington, Boston. I was scheduled to run New York the year it got canceled because of Hurricane Sandy, so I went to run in Richmond.

Do you know your best time offhand? I’m not going to give it to you, but it’s not bad. I’m kind of in the middle of the pack for my age group. I’m also an Adirondack 46er. There are 46 peaks in the Adirondacks over 4,000 feet, and there is a small handful of us enthusiasts who have done them all. They’re not necessarily that tall, but they’re hard to access. You have to hike 10 miles to get to the mountain.

Mort was a pretty prominent Democrat who was very into media. Could you see yourself buying a media property someday? No. I’m staying engaged in the public discourse because I’m interested in it, and I care deeply about our country, but I’m not going to be purchasing any media assets.

What is your biggest political concern right now? Just the lack of progress in solving some of the fundamental issues of the country at the federal level: climate change, health care, gun control, immigration, the deficit. Nothing is really getting sorted out.

Do you still keep in touch with Mort these days? I do. He remains our chairman emeritus.

Is he doing OK? We’ve heard that he’s been going through some health issues. I don’t think it’s appropriate for me to comment on that.

What do you think is the biggest part of Mort’s legacy? I certainly think building this company with Ed is an amazing legacy. I also think if he was here, Mort would talk about Israel. He was involved with the Israeli policies of presidents and legislators, and his family is involved in a lot of philanthropy and cross-border cooperation between Israel and the United States.

What do you want the biggest part of your legacy to be? When I’m finished, I want Boston Properties to be an even more respected and admired company than it was when I started.

What was your last big purchase for yourself? I haven’t bought anything big for a while. I’ll say

school tuition.

Where’s your favorite place to eat in New York? Empellón.

What’s your biggest vice? Graeter’s ice cream.

— Edited and condensed for clarity.


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