Layne out as leader of Howard Hughes

CEO led company through transformation to focus on its master-planned communities

Less than a year after taking the helm of Howard Hughes Corp. and orchestrating cost cuts and a headquarters move to Houston from Dallas, Paul Layne has stepped down as CEO.

Layne, named chief executive last October after being a senior executive of the company since 2012, retired, the company announced Monday afternoon.

David O’Reilly, 46, Hughes Corp.’s president and chief financial officer, has been named interim CEO. The company said it has begun a a search for a permanent replacement.

“Paul’s superb oversight of the development of The Woodlands and his strong stewardship during the pandemic have created and preserved tremendous value for our shareholders, positioning Howard Hughes for long-term success,” Bill Ackman, billionaire hedge fund manager and the company’s board chairman, said in a press release.

Publicly traded Hughes Corp. owns, manages and develops commercial, residential and mixed-use real estate throughout the United States. It owns some of the country’s largest masterplanned communities, including The Woodlands, The Woodlands Hills and Bridgeland in the Houston area, as well as Summerlin in Las Vegas, Ward Village in Honolulu, Columbia in Maryland and the Seaport District in New York.

As CEO of Hughes Corp., Layne led the company through a transformation plan to focus the organization on its master-planned communities. That included reducing overhead expenses by some $50 million annually and selling assets. Layne led the acquisition of land and approximately 1.4 million square feet of office space in The Woodlands from Occidental Petroleum, and directed the development of 110 North Wacker, a luxury office tower in Chicago set to open next month.

Layne, 63, said he was proud of everything the company has

achieved and the pace at which the changes occurred.

“The things we’ve been able to accomplish at Howard Hughes in the last year have been absolutely phenomenal,” he said late Monday. “We’ve accomplished the vast majority of things that we were targeting in the transformation plan.”

The company’s stock price, however, has fallen about 54 percent this year as the COVID-19 pandemic had a “draconian effect” on the company initially, according to a mid-year financial report of Ackman’s Pershing Square Holdings.

The company saw rent collections decline drastically, residential lot sales freeze and would-be buyers of Hughes Corp. assets walk away from negotiations or cut their offer prices, the report noted.

In addition, a loan to replace bridge financing for the company’s acquisition of the former Anadarko corporate campus in The Woodlands fell through due to the decline in oil prices and the creditworthiness of Occidental, which leased back one of the buildings, according to the report. In response, the company raised $600 million in equity in late March and Pershing Square committed $500 million of capital in the offering to protect its investment and position it for a rebound in stock price.

On June 3, Pershing Square sold 1.7 million shares in the company at $58.66 per share, according to a public filing.

Layne came to the Hughes Corp. with a background in office development and marketing. He previously served as executive vice president for Brookfield Properties Corp., overseeing a 9.7 million-square-foot portfolio in downtown Houston.

During his nine years with Hughes, Layne helped lead more than $1.2 billion in development of office, retail, apartment, hotel and storage properties in The Woodlands.

“Mr. Layne steered the company through the onset of the coronavirus pandemic and leaves Howard Hughes in a strong and opportunistic position as a result of its recent highly successful equity and bond offerings,” according to Monday’s press release.

Layne, who was president of the company’s central region before being named CEO, replaced David Weinreb, who also gave up his seat on the board. President Grant Herlitz left at the same time.

O’Reilly, his interim replacement, has been CFO since 2016 and his role was expanded in June when he was appointed president.

Layne’s 2019 employment agreement outlined terms including a $750,000 annual salary and as much as a $1 million annual bonus based on certain goals beginning in 2020.

Layne, who also stepped down from the company’s board, said he is looking forward to seeing what’s next.

“I’m excited about the next chapter in my career,” he said.