One on One is a weekly feature offering excerpts of interviews 1/2 conducted by The Evening Sun with newsworthy business and civic leaders. Patrick Hughes recently was named president and chief operating officer with BTR Realty Inc., a Linthicum-based developer and builder of shopping centers, office buildings and industrial parks.
Q. By now everyone has heard about the sluggish real estate market. How is BTR Realty responding to the situation?
A. We're responding by being sluggish. That is, we are not operating in a "full speed ahead" mode. We have not been, for probably the last 18 months. We are scaled down and focusing on the number of new projects for the future. . . . It's almost a project triage, as it were, in the sense that you pick the ones with the best possibilities and work those.
Q. Describe BTR's operating projects and development projects.
A. In general, BTR is a developer that is active in nine states, with our major focus being community-based shopping centers, which would be those shopping centers which have conveniences -- food, drug -- that would generally draw two to three to four visits per week. I would say that our operating strategies are that we wish to develop shopping centers, like I described, community-based shopping centers, with anchor tenants that have good, valid credit behind them and are the strongest marketers in their particular area.
Q. How did BTR begin?
A. We've been in business since 1947 and involved in real estate actively or passively since 1965. We started as the Baltimore Trotting Races; it was a harness racing operation. The site of the Pulaski Industrial Park is the site of the old Baltimore Raceway. Then harness racing was taken over by flat tracks and thoroughbred racing. The area was growing, (Interstate) 695 was coming, 95 was coming, and that's where Pulaski Industrial Park was. And the Harford Mall is the site of the old Harford County Fairgrounds. . . . There was a track there. And they were the first two projects that came out of this company. . . . If you think of a racetrack, it actually lays out perfectly for an enclosed mall or an industrial park.
Q. What projects do you have in Maryland?
A. In Maryland, we have the Gateway project we're sitting on currently; Harford Mall in Belair, and we have five other shopping centers around the beltway.
Q. Are you worried about leasing Gateway International?
A. You always worry when you have a vacancy. Especially in a market like this. I'm worried because I want to see this building leased, but I'm not unduly concerned that it could tremendously, adversely affect the company.
L Q. How are your development plans different from a year ago?
A. I would say that we're attempting to take far more risk out of the equation. We're extending our land options where possible. If we can't extend them and we can't get the risk out of them, then we won't pursue them. Recognizing the changed financial climate, we have to have our anchor tenant leases signed up before we build. Two years ago, we would have gotten one anchor tenant for a center, (and) we would have said, "Well, let's go with this because we've got one, we'll get the others."
Q. Are you doing this voluntarily or because the lenders are forcing this more conservative approach?
A. We're going to maintain an internal discipline. We have a couple of K-mart projects in North Carolina we're looking at doing. And we have a couple more projects in upstate New York. But we've been working on those. The North Carolina projects have been in the works for two years and the New York projects longer, so most of the cost of those projects are already spent, and what we're doing is we're going to work on those projects, so we can get them to the point where we can proceed or not proceed.
Q. Do you have anything under construction at this time?
A. We just finished the Gateway office building, and we are completing the Gateway shopping center in Page, Ariz.
Q. Have you found it difficult to find lenders to loan you money for these developments?
A. Currently, everything we have is financed. The Page project took a long period of time to finance, because Arizona banks are in worse shape than the Atlantic banks. . . . All deals are difficult right now. There's no such thing as a deal that you know with confidence you can walk to a bank and get it financed. . . . If you contrast this to 1979, the real estate dip has been a little different for different reasons. In 1979, we were in that so-called "stagflation" period, where we had high inflation and a 22 percent prime rate. There was money available. You could pay for it. You could pay 22 percent or 18 percent or 19 percent. . . . But today the rates are down, in terms of interest rates, but the money's not available. So, it doesn't matter what the rate is because you can't get the money.
Q. You develop shopping centers, offices and industrial parks. Where do you see the most potential for growth in the coming year?