Julie Smith - Smooth Operator (#48)

Bio

Julie A. Smith, Chief Administrative Officer, The Bozzuto Group

Show Notes

Current Role

• Currently Chief Administrative Officer for 5 yrs. now. Spent first 25 yrs. of career running Property Management. Toby Bozzuto assumed CEO role when she made the transition to CAO role (5:00)
  • Suggested her role change would offer opportunities to others to run Property Management (6:00)
• Mike Schlegel is COO who runs P&L units (7:00)
• CAO role is all non operating functions (7:15)
• Vertical growth of The Bozzuto Group (9:00)
  • Initial intention to manage their own assets (9:15)
  • Started in 1989 and was “cash strapped” (9:30)
  • An equity partner asked them to manage the property on a third party basis in the early 1990s (9:40)
    • First project for institutional owners, which became a theme for third party management (11:00)
  • Action steps- Focused on revenue first (11:30)
    • Why wasn’t top line growing? (12:00)
    • Looked at all aspects of project to increase rents and reduce vacancy (12:30)
    • Setting up variable compensation to align rewards of employees (13:00)
    • No control over “fixed expenses” (14:00)
    • Variable expenses are “nickels on the floor” (14:20)

Origins and Education

• Grew up in Niagara Falls, NY (14:30)
• Parents were school teachers (15:00)
• Area driven by industrial activities primarily (15:20)
  • Love Canal issue negatively impacted area (15:30)
• Parents grew up in 1930s (15:50)
  • Dad a Principal (16:00)
  • Mom was a home economics teacher- she learned about details in cooking that spilled over to her “eye for details” in most of her activities (16:30)
  • Her Dad was loved by students- treated people with respect (18:00)
    • Elementary school Principal who dealt well with parents of challenging students (18:45)
    • Special relationship with her- all her girlfriends would share with him (19:50)
• Attended State University of New York- Oswego (20:30)
  • Father went there (21:00)
  • Could afford it (21:15)
  • Business and Communications major (21:30)
  • Spent her Junior year in Copenhagen, Denmark (21:45)
    • Traveled around Europe while there (22:15)
    • Became more worldly after her year there (22:30)
    • Met a good friend from Pittsburgh who suggested that the two of them move to Washington, DC after graduation (23:10)

First Job

• First job at Warner Communications in the DC CBD (24:20)
  • Public Affairs- Premiere of Superman with Christopher Reeve (24:50)
  • Sharing a taxi with Elizabeth Dole (25:30)
  • No interest in Public Affairs (26:15)

First Real Estate Positions

• Met with someone who introduced her to the B.F. Saul Co.- Worked for Roger Ellison there (26:20)
  • Gave her an apartment general manager’s job in Reston, VA (27:00)
  • On the job training in 1985 to learn how to manage the property (27:20)
  • She moved then to Fort Lauderdale, FL with the Saul Company and opened new apartments there (28:25)
  • She met people from Oxford Properties from DC and she mentioned that she wanted to come back to DC and they hired her (29:15)
• Joined Oxford as a Marketing Coordinator in Gaithersburg, MD in 1986. Tom Bozzuto was running the region. (29:55)
  • Plug and Play- Build as many projects as possible (30:40)
  • 55,000 units in portfolio at that time nationally (30:50)
  • Active in many national markets, yet she worked the Northeast region with Tom Bozzuto (31:25)
  • 1986 tax law changes basically demolished Oxford’s business, as their projects were “tax oriented” and did not generate pre-tax cash flows (32:00)

The Bozzuto Group

• Tom Bozzuto, John Slidell and Rick Mostyn left Oxford and started Bozzuto (32:50)
  • Julie joined Bozzuto one year into it to operate projects (33:00)
  • She was uncertain about its viability, but could do something else if it didn’t work (34:20)
  • Enjoyed doing what needed to be done on a “start-up” business (34:45)
  • Learned how to develop properties with John Slidell (35:15)
  • Learned about financing with Rick Mostyn (35:40)
  • She was the “table setter” of the operations (36:00)
  • Competitors- Lincoln Properties, Trammell Crow, Caliber, Artery & Shelter (36:40)
• First urban property- Managed McLean Gardens for Alex Brown as asset managers (38:30)
  • 1994 took over for good experience (39:25)
• Westbrooke Place– Attempting to get $2.00/s.f. in rents (39:50)
  • First luxury property (40:40)
  • Springboard to other opportunities (40:55)
  • First website on a property- “Digital experience” (41:15)
  • Good learning experience to understand the “luxury” market (42:00)
• Customer Experience- Bozzuto philosophy of “Sanctuary” (42:50)
  • Housing change is a stressful experience- diffuse “negative experience” into a positive experience (43:40)
  • Goal to make “customers for life” (44:30)
  • Relentless focus on the customer (44:50)
  • The best customer is the one you already have (45:00)
  • Perfectionist spirit- driving values (46:00)
  • Core Values of Bozzuto (46:15)
• Grown company through following clients to new markets (47:55)
  • Good work begets good work (48:15)
  • Northwestern Mutual took them to New Jersey and then Boston (48:30)
  • Heitman gave them a trophy asset in Chicago and now have 18 buildings there (49:20)
  • A few “false starts” in Atlanta and Charlotte (49:45)
  • Did expand in Florida (49:55)
  • Developed relationships with operators as well as investors (50:20)
  • Led with management to markets (52:30)
  • Manage relationships (52:50)
• Management business requires “scale” (54:30)
  • Work for companies that are loyal and let them get a project to an efficient operation (54:50)
  • Risky business (55:15)
  • Nothing like the hospitality business (55:25)
  • At her origins in the business, fees were 5-6% or so. Fees today are much lower and required skills are much more necessary today (55:50)
• Dealing with customers is an art and have a good relationship (57:45)
  • It is a juggling act to manage properties (58:40)
  • Job for extroverts (58:55)
  • Bozzuto team “moves mountains” to overcome challenges for tenants (59:20)
  • Some residents told them that “they were the best thing that happened during COVID-19” (59:45)
  • 70% of residents are “single” (1:00:00)
• Bozzuto was ranked as a “Top Employer” in Washington region for six consecutive years (1st in 2020) (1:00:55)
  • Exciting for employees to see that culture (1:01:20)
  • Family culture (1:02:15)
  • Responsibility to “each other” and diverse as an organization (1:02:40)
  • Employee led community groups (1:03:00)
  • Grass roots organizations among employees (1:03:30)
• Stephanie Williams– succeeded Julie in President of Property Management role (1:04:15)
  • She had been a developer and had done a couple projects (1:04:30)
  • Julie went to her and asked her to consider moving over to the business development role (1:04:55)
  • She and Julie spent time on airplanes pitching business (1:06:00)
  • Julie decided to offer her the President role (1:06:15)
  • Her role would be to manage a large group of people (1:07:15)
  • Spent 9 years “training” Stephanie (1:08:00)
• Pandemic impact (1:08:40)
  • Transition was not too difficult, except for the property management on site “essential employees” which was a challenge to keep them “protected” and how to juggle families (1:09:10)
  • Feedback- Site task force to learn about issues (1:10:00)
  • Some employees got COVID (1:10:20)
  • People were moving out and not moving in- vacancy increased dramatically and it had a stressful impact on management staffs (1:11:20)
  • Rental Assistance Program- Stimulus checks and supplemental benefits were helpful (1:12:20)
    • Challenges working with local housing agencies for distribution of allocated capital (1:13:00)
    • Eviction moratorium continues to extend (1:13:40)
  • Markets recovered to the point when rents can now be escalated (1:14:15)
  • Construction costs and supply chain issues are delaying projects and increasing costs (1:15:30)
• Amenity Wars- bar is always being raised (1:17:20)
  • Flexibility is and will be a necessary amenity- term flexibility- less than one year leases or options to terminate lease (1:17:50)
  • Space to work in apartment (1:18:30)
  • Retail is important (1:18:50)
  • Service is becoming even more important than ever (1:19:20)
• City Ridge project (Roadside) (1:20:15)
  • Bozzuto will be leasing and managing it (1:20:30)
• Cathedral Commons– Students “left” during COVID so it had a negative impact (1:21:30)
• Short stay units “dried up quickly” during the pandemic (1:22:20)
• Office tenants are “locked in” yet apartment renters don’t (1:23:00)
• Customer experience is the most important thing (1:24:00)
  • Investment in the “nest” (1:24:20)
  • Difficult to buy a home now (1:25:55)
  • Shelve housing plans until more housing stock increases (1:26:30)
  • Several residents “moved up” to larger units (1:26:55)
  • Single family rentals (1:27:20)
• Home building- Ritz Carlton in Chevy Chase Lake (1:28:50)
  • Building but not sales of projects (1:29:10)

Personal Voluntary Roles

• Serves on NMHC Board (1:29:45)
• New Chair of ULI Washington (1:30:10)
  • She aspired to be like Tom Bozzuto in his giving back (1:30:30)
• Chair of Victory Housing (1:31:20)
• Began as Women’s Leadership Initiative head before taking the ULI Washington Chairperson role (1:31:50)
• All this cuts into her personal time- gets much satisfaction from it (1:32:45)
• ULI mission & education (1:33:10)
• Building a broad network (1:35:20)
• Woman leadership is scarce (1:36:00)
  • Never felt excluded at Bozzuto even as the only woman at the table (1:37:00)
  • Her experience was unique, yet she recognizes that other companies are not as well treated (1:38:50)

Hiring

• People that have a heart (1:39:40)
• Creative thinkers (1:40:00)
• Passionate (1:40:10)
• Set high bar for work (1:40:20)
• Large internship program- 90 last summer (1:40:45)
• Look for raw talent (1:41:00)

Personal

• Two daughters understand what Bozzuto does, yet neither are in real estate (1:42:20)
  • One is in digital marketing (1:42:50)
  • The other is a musician and is in Nashville, TN (1:43:10)
• Active family life (1:44:00)
• Important for her family to understand her work priorities (1:44:35)
• Dogs are a “requirement” (1:45:00)
  • Multidisciplinary Approach to Thinking story
  • 20% of residents have dogs (1:46:15)
• Work/Life balance- Harmony and integration (1:47:00)
  • Life is not balanced, but go with it (1:47:15)
• Wins in her career (1:48:15)
  • Property Management Company of the Year- First time in 2000 or so
  • Reputation- Seven years in a row as PM of the year (1:49:40)
• Losses (1:50:00)
  • Losing her Dad- So hard since he was such an influence
  • And then her Mom the same year
  • Needed a reset (1:51:15)
• Surprises
  • Bozzuto Group’s success amazes her (1:51:55)
• Advice to 25 yr. old self
  • Take more risk- measure it if you need to do it (1:52:45)
  • “Don’t be afraid to go out on a limb, because that is where the best fruit is” (1:53:00)
  • “The Defining Decade- Why the 20s Matter” (1:53:50)
  • Own your life (1:54:40)
• Billboard- “If Not Now, When?” (1:55:30)

Postscript

• Colin Madden– Hot topics forced from COVID (1:57:30)
  • Single Family Home Rental Business
    • Technology impact is significant
    • Mindset of tenancy
  • Flexibility- Reference to Dror Poleg book, “Rethinking Real Estate”
  • Dynamic spaces in residential setting
  • Remasking for Delta variant
  • Relationships with tenants
  • Bozzuto a cultural flywheel
  • What causes people to be who they are
  • Julie cares about ULI
  • ULI mission and advocacy
  • Time management
  • Take chances in life
  • Don’t hesitate