Summerlin developer considering high-rise condo project
Summerlin’s developer has filled out tracts of land across from its big outdoor mall in Las Vegas, building apartments, a ballpark and a new retail center with a Whole Foods Market that opened Thursday.
It could also put up high-rise housing.
Howard Hughes Holdings CEO David O’Reilly said in a recent interview that he’s contemplating a high-rise condo project on land just east of the Downtown Summerlin open-air mall off Sahara Avenue and the 215 Beltway.
“I think that’s a great use right now,” he told the Las Vegas Review-Journal.
O’Reilly pointed to condo sales in The Summit Club, a wealthy enclave in Summerlin with homeowners such as movie star Mark Wahlberg. He said land near the mall could have a mix of offices, retail, and for-sale and rental housing, but he also noted that plans for that area have evolved over the years.
He said the company would have penciled a lot more office space for the site a decade ago than it would today, after the pandemic slashed demand for offices around the country amid widespread work-from-home arrangements.
Hedge-fund stock deal
O’Reilly spoke with the Review-Journal after New York hedge-fund boss Bill Ackman reached a deal to boost his ownership stake in the developer and widen its scope of operations.
As announced May 5, Ackman’s Pershing Square Capital Management acquired 9 million newly issued shares in Texas-based Hughes Holdings for $100 apiece, or $900 million total.
Ackman, the company’s former chairman, was also named executive chairman, and his investment firm’s ownership stake in the developer climbed to 46.9 percent from 37.6 percent as of early this year.
Ackman had sought to acquire 10 million new shares in Hughes Holdings for $90 apiece — also $900 million total — and take the helm as chairman and chief executive.
Instead, his firm bought less stock at a higher price-per-share, and O’Reilly kept the CEO’s seat.
The deal will enable the developer to become a diversified holding company by acquiring controlling stakes in operating companies — a shift proposed by Ackman — while still growing its core real estate business, according to a news release.
Hughes Holdings has projects and properties, including master-planned communities such as Summerlin, in Texas, Arizona, Hawaii, Maryland and Nevada.
Spanning 22,500 acres along the Las Vegas Valley’s western rim, Summerlin boasts 130,000 residents and some of the highest home prices in Southern Nevada, as well as parks, trails and community centers.
The developer’s namesake Howard Hughes, the famed aviator, business tycoon and recluse, acquired the land mass in the 1950s.
Hughes Holdings sells land in Summerlin to homebuilders and has developed hundreds of millions of dollars’ worth of projects in the heart of Las Vegas’ biggest master-planned community.
$900M ‘put to work’
O’Reilly said the transaction with Pershing Square will not impact Summerlin’s development or the company’s broader real estate business, other than improving its credit and cost of capital.
He also indicated that it would use the investment from Ackman’s firm to buy stakes in outside companies.
“It’s that $900 million that’s going to be put to work to do that,” O’Reilly said.
He said the task of finding, valuing and buying stakes in other companies will be largely handled by Pershing Square and Hughes Holdings’ new chief investment officer, Ryan Israel, who holds the same role at Ackman’s firm.
Plus, O’Reilly doesn’t expect to invest in real estate-related businesses, noting such companies typically spend a lot of money upfront and wait a while for returns to roll in.
Pershing Square’s investment portfolio has included such companies as payroll processor ADP, streaming giant Netflix and ride-hailing firm Uber.
“I think it would be unlikely to actually see us invest in a real estate business,” O’Reilly said.
Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342.