UPDATED 4/2/25 8:30am
David O’Reilly isn’t just the CEO of Howard Hughes Holdings and the de facto mayor of a 120,000-person city in Houston, he’s the person who could turn financier Bill Ackman into the next Warren Buffet.
O’Reilly and his wife live in an apartment in the company’s centerpiece community, the Woodlands, and while he’s not elected, neighbors still come to him with requests: Can he move a tree in that median? Could he pick a different paint color?
O’Reilly spends just 10 days a month in his Texas home, the most time he spends anywhere. For the rest of each month, he travels to Howard Hughes’ other master-planned communities: Columbia in Maryland, Summerlin in Las Vegas, Ward Village in Honolulu and the latest, Teravalis in Phoenix.
Master-planned communities always have good trails, and most days, wherever he is, the ex-Lehman Brothers, ex-hockey player from Boston goes for a run. The exertion provides clarity to whatever his mind is chewing on, and these days, the spectrum is vast.
In Vegas, O’Reilly is playing the part of movie exec, partnering with Sony, Warner Bros. Discovery and Mark Wahlberg to launch a studio in Summerlin. In Phoenix, he’s a water engineer, figuring out how residents of the future 300,000-person city will shower, drink and wash dishes for the next century.
His actual electorate is the board, and they’re happy.
“It’s four and a half years since he’s been made CEO, and I think you would find — I know you would find — a board that universally believes he’s just doing a spectacular job,” New York power broker and Howard Hughes board member Mary Ann Tighe said.
But the lovefest in the C-suite belies investors’ long-standing disappointment with the company’s stock.
Since billionaire activist investor Bill Ackman, the company’s former chairman, siphoned off Howard Hughes from mall operator General Growth Properties in 2010, the company’s stock price hasn’t reflected the value of the thoughtfully constructed cities Howard Hughes has become known for, those bullish on the company would tell you.
As a result, Ackman wants to take the master-planned community company private.
He has proposed increasing his firm Pershing Square Capital Management’s stake in the company, then turning Howard Hughes Holdings into the piggy bank for a whole hedged investment strategy, putting the cash HHH throws off into companies that will pay off bigger, sooner. O’Reilly’s job would be ensuring the piggy bank doesn’t crack.
There are plenty of potential cracks to watch out for. A Howard Hughes committee rejected Ackman’s price in early March but extended a standstill agreement until early April. There are two months until a Nevada state legislative vote on film tax credits for its movie studio in Summerlin. And, with mortgage rates still high and tariffs threatening homebuilders’ budgets, O’Reilly has a new city to build: Teravalis in suburban Phoenix.
For sale: Howard Hughes Holdings
O’Reilly may be the engine of the vehicle that is Howard Hughes, but Ackman is the maker.
The polarizing investor went dumpster diving for Howard Hughes when he helped rescue General Growth Properties during the Great Financial Crisis. He bought a $60 million stake in the struggling shopping mall operator and encouraged it to file for bankruptcy. He reportedly netted $1.6 billion from the play.
Ackman looped New York City powerbroker Mary Ann Tighe into his plans for what would become Howard Hughes. The longtime friend of Ackman liked the vision and “the quality of the assets that were in the rejection pile.”
Eccentric billionaire developer Howard Hughes founded the company in 1972 with assets including the 30,000 acres in Nevada that would become Summerlin. The Rouse Company acquired Howard Hughes Corporation in 1996; General Growth Properties picked it up in 2004.
Meanwhile, O’Reilly kicked off his career at Lehman Brothers, where he started on the desk on Sept. 10, 2001. He avoided Lower Manhattan until his first interview with Ackman for the CFO job. There, O’Reilly introduced himself boldly as “the next CFO at Howard Hughes.”
Tighe quickly saw that he was “over-credentialed for the job.” She saw him as on track for more, she said.
The gap between Howard Hughes’ stock price and underlying value first brought the company to a crossroads in 2019.
Leadership, including O’Reilly, who became CEO in 2020, weighed the possibilities of restructuring or selling the company and opted to streamline operations. O’Reilly described the process as feeling like “chefs putting together a great menu for a restaurant.” Howard Hughes moved its headquarters from Dallas to the Woodlands and shifted focus to development, which meant spinning off assets like hotels and restaurants. In July, the company split off its Seaport assets, leaving just the planned communities.
“People can do their own math.”
Then, in April 2024, Ackman stepped down as chairman of the company. A potential take-private plan surfaced in a Securities and Exchange Commission filing in August. Howard Hughes put together a committee to evaluate a potential deal. O’Reilly isn’t privy.
The concept behind the proposal is that the market doesn’t appreciate Howard Hughes. But Ackman does. He thinks the company can be the centerpiece for a bigger hedging strategy.
Ackman, who owns 37.6 percent of the company, outlined a proposal in January. He offered to buy 11.8 million shares of Howard Hughes stock at $85 a share to own a majority stake in the company. He came back with a revised offer of $90 and a plan to increase his holdings to 48 percent.
The second offer was “a step toward narrowing the valuation gap,” Anthony Paolone, a Howard Hughes analyst with JPMorgan, said. The company puts its net asset value at $118 a share. “People can do their own math,” Piper Sandler’s Alexander Goldfarb said.
A Howard Hughes committee found the offer unacceptable in early March but entered a standstill agreement with Pershing to keep working on it. The standstill originally expired March 13 but was extended to April 7.
Tighe, talking about pricing condos in the Woodlands, said of Ackman: “I joke that when he’s buying, it’s always overpriced, and when he’s selling, we’re selling too cheap.”
The same ethos might apply to the take-private proposals.
Ackman, who has criticized the media for not getting stories about him right, didn’t respond to The Real Deal’s request for an interview.
Anyone concerned about the company’s future given Ackman’s activist past can rest easy, according to O’Reilly: “Bill’s history as an activist is very different from his history at Howard Hughes.”
Life in a bubble
Observing the sprawl from the highways that loop Texas metros can be mind-numbing enough to make you question whether developers were aiming for ugly.
The Woodlands offers an alternative to the endless copy-and-paste of single-family development that has come to define Sunbelt cities.
Thirty miles north of Houston, there’s a break in the strip malls that line Interstate 45. The entrance to the 28,500-acre community is its town center, complete with a mall, performing arts center and office buildings.
Some of the community’s most impressive houses circle the 200-acre Lake Woodlands, where there’s a boathouse and trails, and restaurants that line the eastern shore. Dozens of neighborhoods fan out from the town center, connected by the trail system. It’s as close to walkable as Texas gets. Even the retail strips are tastefully built into the woods, which haven’t been razed — just as founder George Mitchell intended when he named the development.
O’Reilly traces the company’s ideology past Mitchell to Jim Rouse, who created Columbia, Maryland. A community could be a “garden for growing people,” Rouse said.
Inspired by Rouse, Mitchell set up the Woodland’s conservation mindset: 30 percent of the acreage has to be permanent green space. (Mitchell’s also known for inventing fracking, O’Reilly mentioned.) His book sits on O’Reilly’s desk and not just for show; he cracked it to fact-check Columbia’s founding date.
But he doesn’t need a book to deliver the company line: “Our job is to build to meet demand, and when we build to meet demand, we can do that at outsized, risk-adjusted returns, creating values for our shareholders.” He also clearly enjoys the work of carefully designing a community, comparing it to playing Sim City.
Corporate relocations are “the easiest pitch we make,” O’Reilly said.
“It’s not just the office building that I build, lease to them, sell and make profit,” he said. “It’s all the other pieces of the puzzle that we bring to the table that I don’t think anybody else can do,” like homes for employees’ families, restaurants, schools for their kids.
The tight control Howard Hughes exercises can err on the side of cultish. Plus, though the company’s communities represent a departure from typical suburban development, they still cater to families whose idea of a good time might seem tame.
For many who call the Woodlands home, being generic is a small price to pay for low crime, good schools and a relatively low cost of living.
Waste Connections CEO Ron Mittelstaedt moved his company from Sacramento to the Woodlands in 2012. He said about 93 percent of his employees transferred to Texas, and of those, about 90 percent still live there.
“This is sort of life in a bubble,” Mittelstaedt said. “And for families, maybe not for young singles, life in a bubble is pretty good.”
Show business
At the Woodlands, O’Reilly is mayor. At Summerlin, he’s executive producer.
He’s spent the last two years hammering out a corporate relocation of sorts. After reading that Mark Wahlberg, a resident of Summerlin (as of 2022), was interested in building a movie studio in Las Vegas, O’Reilly got in touch.
The sons of Boston felt instant rapport over their shared hometown and positioning as “guys who like to make things happen,” Wahlberg said.
He connected O’Reilly with now-former Sony CEO Tony Vinciquerra, who’d been eyeing Las Vegas as a studio site for years. “We hit it off immediately,” Vinciquerra said.
“It’s not just the office building that I build, lease to them, sell and make profit. It’s all the other pieces of the puzzle that we bring to the table that I don’t think anybody else can do.”
The trio has been lobbying Nevada state legislators to pass “Hollywood 2.0,” a bill that would beef up film tax credits and provide the proposed Summerlin Studios $80 million a year in tax credits between 2028 and 2043. Since the pandemic revealed the precarity of Las Vegas’ single-industry economy, political leaders in the state have been trying to diversify, so everyone is hopeful.
In presentations, meetings and cocktail receptions for legislative aides, Vinciquerra and O’Reilly have been working to persuade legislators to send resources their way. A lot of the lobbying revolves around correcting misunderstandings about incentives. Per the agreement, the state wouldn’t just funnel Vinciquerra and O’Reilly millions of dollars. They’d have to build a studio on their own dime and produce a film before they see any of the money they’re fighting so hard to get.
The current plan involves 10 stages across 31 acres in Summerlin, and they could start construction the day after this bill passes.
As of mid-March, Vinciquerra hadn’t talked to O’Reilly about the Ackman proposal. But, he has no reason to believe that it would do anything to keep him from completing the long marathon he’s been running, he said. There have been “a lot of ups and downs” to the process Vinciquerra began about five years ago, “but it feels very good right now.”
“I’m hoping that we can get this concluded pretty soon,” he said.
Water and wildlife
Between perfecting his pitch to Nevada legislators and managing the delivery of high-profile condo projects in Texas and Hawaii, O’Reilly is getting ready to start the creation cycle once more in the company’s newest place: Teravalis.
The development will bloom in the area formerly known as Douglas Ranch in Phoenix’s West Valley, in the town of Buckeye. When complete, it will include 100,000 homes and could have a population of 300,000. Model homes will open this year.
The influence of Jim Rouse is all over the website, which describes the community as “built to sustain and nurture people and the world around them.”
Sustaining means you need water, and O’Reilly meets with Buckeye Mayor Eric Orsburn to answer the question: How will these homes get water for the next century? Only after the state issues a certificate of water security can development begin. So far, Howard Hughes has certificates for the first phase of 8,500 homes.
The development will be located between two mountain ranges, a road of sorts for animals native to the area, and Orsburn said O’Reilly and his team have taken great care to preserve the wildlife corridor.
“He can cite details about the different corridors and how important they are to the wildlife moving back and forth,” Orsburn said.
Most developers don’t do this, Orsburn said. They think short term.
“The guys down the street have a five-year investment, and they don’t care about year six through 50,” as O’Reilly put it.
It’s two sides of the same coin: What allows Howard Hughes to make a community click is also what keeps it from performing well in the market.
But there are times things move fast. At one point, O’Reilly had a moonshot idea to turn a commercial zone in Teravalis into the Sam Altman Wonder World, complete with open AI data centers and open AI chip manufacturing. He needed an in with Altman.
Within an hour, Ackman had arranged for the three to talk the following Sunday morning. While Altman ended up abandoning the idea to manufacture his own chips, the interaction shows how Ackman’s deep pockets and large network complement O’Reilly’s capacity to dream big.
“He is a phone call away from getting me on the phone with the CEO,” O’Reilly said. “For me, it’s like, I gotta make 18 connections on LinkedIn and pray.”
A 40-year runway
If O’Reilly has vision and Ackman has drive, Jerry Colangelo has patience.
The sports executive and businessman has lived in Phoenix, where Teravalis will be, since he became the first general manager of the Suns in 1968.
He watched the city explode and bet on its continued growth in 2002 when he bought 37,000 acres in Buckeye, a town about 35 miles west of Phoenix.
About five years ago, when Howard Hughes was looking for its next site, Colangelo’s land fit the requirements: within 50 miles of a major airport, in a business-friendly environment, fully entitled and in a path of growth.
“It didn’t take him long to piece everything together,” Colangelo said about O’Reilly. “And no doubt he saw the future as we believed it was.”
Colangelo sold his holdings and then came back into the deal for 12 percent; it all took just a few months. He visited Summerlin and trusts O’Reilly and Ackman with, well, his legacy.
Because this is the meaning of the long-term plays at Howard Hughes: Colangelo, so long the steward of this land, will never see Teravalis finished.
“In my mind, I never thought about a 40-year build-out,” Colangelo, who is 85, said. “That seems like a long time, especially at my age.”
This story was updated to include that Warner Bros. Discovery is also a partner on the Summerlin movie studio project.
