September 29, 2015
A frequent stop for tourists in the Nashville area is The Hermitage, the estate of Andrew Jackson, who was the seventh president of the United States first elected in 1829. Although he is not remembered primarily as a land developer, locating Memphis where it is now was one of his projects, and an ancestor of the family that now owns Boyle Investment Company – a prominent developer in Tennessee and Alabama since incorporating in 1933 – was there with Old Hickory.
“The family has been involved in Memphis real estate since the founding of Memphis,” Boyle Investment Company Executive Vice President Russell Bloodworth says of the Boyle family. “One of the three founders of Memphis was John Overton, and the family descends from him. Overton, Andrew Jackson and General James Winchester did this speculative development on the bluffs of the Mississippi in 1819. So the family just had a long history of investment in Memphis.”
That speculative development became Memphis, which in the early 20th century created its own style of the blues. But Boyle Investment Company has kept the blues away from its investments by sticking with what it knows in Tennessee and Alabama. “We’ve tried to stay where we understood more of what we were doing than get off into markets that we didn’t understand very well,” Bloodworth says.
He thinks the most complex of recent Boyle Investment Company projects is Capitol View in Nashville. “It’s about a 40-acre downtown project where we are in a joint venture with Northwest Mutual Life Insurance Co. and are developing an area immediately adjacent to the capitol building in downtown Nashville,” Bloodworth says. “The first primary user that has gone in is the headquarters for the Hospital Corp. of America (HCA).” The 11-story tower under construction for HCA will include a hotel, retail and apartments in an urban configuration.
Other developments by Boyle Investment Company include a Whole Foods market in Birmingham, Ala., several shopping center additions and office buildings in Nashville, along with a large Publix grocery store, a 600-acre multiuse development called Berry Farms in Franklin, Tenn., and a 50,000-square-foot office building in Collierville, Tenn., outside of Memphis. An apartment community and a 443-acre mixed-use development called Schilling Farms is being developed. “We’re also finishing up a retail, hotel and office redo of a project called City Park in Brentwood, Tenn., which is a suburb of Nashville,” Bloodworth says. “We’ve got a lot going on if you look at it.”
Boyle Investment Company develops and manages its projects. “Most projects are owned by our company,” Bloodworth says. “We are a very long-term holder of investment property. I’m going to guess the average hold would be in excess of 25 years. We do occasionally develop for third parties, and we do a good number of joint ventures with both lenders and high-wealth individuals.”
The company usually has control over the projects on which it works. “On our large-scale land development, if we’re not in control, we have a structure that allows us to have an important influence on the direction of a project,” Bloodworth says. “We’re at risk with a substantial equity contribution in everything we do and pretty attentive to trying to minimize long-term risk. Anytime you provide any service there is some risk. Most of our construction management work is for our own account, so we are at risk in a double way – not only if we give ourselves bad advice, but we’re the ones taking the advice.”
Boyle Investment Company sometimes sells its holdings to achieve various goals. “We did several fairly complicated projects in Texas, and then we sold our interest in those when the market was valuing the product very highly,” Bloodworth recalls. “Maybe we shouldn’t have sold. You’re doing this based on your current view of the future, and we’re conservative. We have sometimes wished that we hadn’t sold. We’re tax-averse, and a long-term hold keeps us from having to have a lot of capital gains that we have to reinvest in a short period of time, which doesn’t always lead to the best acquisitions.”
Boyle Investment Company seeks properties with long-term potential. “We’re looking for very well-located properties,” Bloodworth says. “We’re not keen to be in a subsidiary location. We want to be able to cast a pretty clear vision and know that we are going to be in a very viable location 50 years out. That eliminates about 90 percent of the property that we might consider. So most of our locations are extremely strong locations and remain viable after a very long period.”
The company holds properties until their potential can be realized. “Historically, one of our clear patterns has been to acquire large acreage tracts and hold them however long it takes until they are development-ready,” Bloodworth says. “That is sometimes a 20-year hold. Other times, we’re coming out of the ground maybe two or three years after the acquisition of a large complex tract. Our Berry Farms development – which is 600 acres with three quadrants of I-65 interchange – that project we held for about seven years as we took it through entitlements and then started development.”
Completion of developments may extend beyond employees’ careers. “Most of the projects that I’ve worked on – the large-scale ones – are 30- to 40-year development tract projects. We still have one remaining site in development that we began in 1969 and we’re not quite finished. In fact, we will be redeveloping a lot of our early buildings into a more current form. So that puts us into the property management business in a big way, and it gives us kind of a long-term view to the way we structure our covenant documents and restrictions.”
Some portions of a large-scale Boyle development may be sold to other parties. “But we are holding a significant amount of the property for the long haul ourselves,” Bloodworth emphasizes. “We are vitally interested in having everything crafted appropriately to go a very long period of time.” Large-scale, umbrella associations that have subassociations that Boyle Investment Company manages are crafted to have as few surprises as possible. “Most of our large associations have never had increases in their payments over 30- or 40-year periods, which is fairly unheard of, but that’s just partially because of the way we structure them.”
Today, Boyle Investment Company remains family owned and is managed by Chairman J. Bayard Boyle Jr. – the son of co-founder Bayard Boyle Sr. – and Chairman Henry Morgan, Bayard Boyle Jr.’s brother-in-law.Paul Boyle serves as President and Henry Morgan, Jr. & Bayard Morgan serve as Executive Vice President. Bloodworth attributes the company’s longevity to conservative management. “The real issue has not been how to make a whole lot of new money, but how to refrain from losing money that has already been built up by previous generations,” he emphasizes.
“That outlook is quite different from a young entrepreneurial startup, where you are perhaps trying to amass rather than protect and enhance investment,” Bloodworth points out. “So it’s just philosophically a different way of approaching things. We approach things with tremendous risk aversion and are willing to bypass opportunities that – although there might be a lot of profit involved – also entail taking on a lot of risk. So we would rather have a reasonable return and reasonable or lower risk than to have outsize returns with very significant risk.”
The environment is a consideration for many of Boyle Investment Company’s developments and of its employees. “Several of us are very interested in environmental issues and work on pro bono-type activities to help support greening and environmental sensitivity in the land development business,” Bloodworth says. “A good number of us are Urban Land Institute members and active there and also in our locales.”
Bloodworth crystallizes his company’s concern. “I think it’s an environmental thoughtfulness that goes all the way to the original acquisition of property,” he maintains. “It’s probably most acutely felt in the planning of these mixed-use developments and how they interface with some of the natural attributes of the site – streams, contours and vegetation. We’ve always been particularly attentive to those issues and the preservation of existing vegetation and enhancement of what we find onsite. Usually, we can make things a little bit better than the condition in which we found things ”