Hartford Business Journal

12 Hartford Business Journal • February 16, 2015 www.HartfordBusiness.com 'Elvis has left the building' for what was then one of Connecticut's biggest real estate lenders, and wrangling real estate investments for 14 years for predecessor Aetna Inc., Reilly was recruited in 1995 to help set up and run Cornerstone for parent Massachusetts Mutual Life Insurance Co. During Reilly's 20 years at Cornerstone, its managed assets have mushroomed from $980 million when it was primarily MassMutual's equity-real estate investment and management arm. Today, Reilly and his 314-person global team (about 170 in Hartford) oversee $47.4 bil- lion in managed assets on behalf of its parent and third-party institutional investors, such as pension funds and nonprofit endowments and foundations. It also provides investment advisory and capital-raising services. Credit for much of Cornerstone's growth goes to Reilly, who is as smart and entrepre- neurial as he is witty and egoless, say people who know him. But, the long days and weeks, the globetrotting between Hartford to its far- flung offices in London, Germany and Asia — an overseas expansion Reilly launched in 2005 — have taken their toll, he says. "Number one,'' said Reilly, 67, "you realize … I've been here 20 years. It's a great compa- ny — part of my life. But you spend so much time here — 80 hours a week. After a while, you realize it wears on you.'' Hartford realty broker-adviser Richard Mulready has known Reilly since 1973, when Mulready was chief loan officer for defunct Hartford National Bank's Westport real estate investment trust, HNC Realty, and hired an inexperienced Reilly to work there. "I have five friends in the world, and he's one of them,'' said Mulready, founder of R.M. Bradley & Co., whose office is two floors above Reilly's 17th-floor suite in Hartford's "Gold Building.'' "He's a bright guy. He learned the real estate business well. He sees the big pic- ture. He knows the A-B-C's — the alphabet part of the business. But he's smart enough not to look just at the letters, but the paragraphs, too.'' Reilly says real estate enamored him prac- tically from the start. "It's a very dynamic business. It's a people business,'' the Simsbury resident said. "It's ever changing. It's never boring." Fast guns His true education into the industry, he said, came during the mid-70s economic slump that sent property values into a tailspin. Troubles rippled through HNC Realty's construction- financing portfolio, including involvement in a loan "to the wrong developer,'' Reilly said, for which HNC had to step in and almost restart the project from scratch. "We were all young and obviously aggres- sive, trying to do the right thing,'' Reilly said. "It was more of a cowboy-style mentality. Our guns were filled with cash and we were going to fire our bullets.'' Unfortunately for Team HNC, realty buck- aroos throughout New England and the U.S. were gunning for big deals, too. Before long, the mid-70s commercial market was bristling with too many realty investors/developers chasing too few viable projects, careening it toward eventual collapse. Reilly was part of Mulready's HNC team of a half-dozen loan officers who became loan- workout specialists overnight. HNC eventually unwound or sold off its mostly troubled assets in that period, many for cents on the dollar, wracking up a $50 million loss, said Reilly, add- ing "I worked my tail off to solve the problems.'' "I always say I got a $50 million education,'' he said of that period. "You learned that things don't always go right.'' "Today, what's so dramatically different is the market is much more transparent,'' he said, citing the mass of online market research and intelligence about specific mar- kets and what developers are doing in them. Reilly says today's Cornerstone Real Estate Advisors is a major player, particular- ly in the middle market, in a realty advisory industry in which clients are gravitating more toward firms offering "a complete basket of goods'' like Cornerstone's. He says U.S. interest rates likely will remain at historic lows for another six months to a year, before the Federal Reserve slowly revers- es their course, to manage inflation. Also, the influx of foreign money into the safe-haven of U.S. debt and the dollar could extend the low- interest-rate environment, he said. "There's abundant capital out there'' to do deals, he said. But Reilly harbors some worries, particu- larly overseas. Economic instability in the European Union, particularly in Greece, Por- tugal and Spain, could spark tariff wars and other protectionist measures that hobble real estate investment, he said. The United King- dom, Germany, along with the Nordic nations, are the EU's bright spots, he said. Back at home, two prominent East Coast developments, admirers say, best illustrate Reilly's big-picture focus, negotiating skills and attention to detail. Prominent pair In Boston, MassMutual and Cornerstone are financial partners in the Fan Pier, a projected $4 billion-plus mixed-use development cover- ing nine city blocks in a former industrial zone overlooking Boston Harbor. Developer Joe Fal- lon said he brought in both because of Reilly, whom he has known and worked with for years. "There's a great respect for each other's capa- bilities,'' The Fallon Co. president and CEO said. "Dave has great common sense. Dave can cut through the B.S. and he understands the benefits of [Fan Pier]. He understands what I do.'' In southwest Florida, MassMutual has owned the renowned 732-room Marco Island Marriott Resort since 1971. Reilly persuaded the insurer, starting in 2000, to invest huge sums to recast the resort as a high-end retreat, add- ing a luxury spa, more meeting space, new and renovated guest rooms, restaurants and swim- ming pools, said resort General Manager Rick Medwedeff. Reilly even chose the colors for the resort carpeting, the GM said. Today, all of Marco Island's resorts are col- lectively touted highly among guests and travel reviewers, largely due to Reilly's upgrade of the Marriott Resort, which is profitable and regu- larly posts record stays, Medwedeff said. "He's not your traditional CEO,'' said Medwedeff, who arrived as the resort's GM in 2005. "He's one of the sharpest financial negotiators in the country.'' Alan Connor worked with Reilly for a time at property-casualty insurer Aetna, in its investment-assets division. Later, when MassMutual recruited Connor to establish Cornerstone, Reilly was one of Connor's first hires. In 2005, Reilly succeeded Connor as Cornerstone's CEO, when the latter retired. "High integrity. A definite team player. That goes with the no-ego thing,'' said Con- nor, who divides his time between Wyoming and New Mexico. "He's never out for himself. He's extremely high energy.'' Connor recalls working nights when, as his boss, he would have to tell Reilly that it was time to go home. Reilly's keen attention to details and great pride in his work are hallmarks, Connor said. "He wouldn't let anything go out from Cornerstone that wasn't absolutely perfect,'' Reilly's ex-boss said. MassMutual Chairman, President and CEO Roger Crandall, too, has high praise for his retiring lieutenant. "I've worked closely with Dave for nearly two decades, and he is the embodi- ment of professionalism, leadership and integrity," said Crandall. "Throughout his career, Dave has not only been a driving force behind Cornerstone's continuing suc- cess, but has been a great role model and champion for the company's values." Scott Brown, the former CBRE-New Eng- land asset-manager/investor hired to succeed Reilly as CEO, has known him for 15 years. Both partnered on deals together, Brown said. Despite that, Brown says he lacked "a full appreciation for … what a character he is. I have a sense of humor, mostly about myself. I wouldn't say I have his sense of entertainment.'' "It is absolutely humbling to fill the great shoes Dave has created,'' Brown said. Florida 'goodbye' Of all the successful skills Reilly has cul- tivated, none has been more important, he and others say, than his wry sense of humor, invoked as needed, either as a tension break- er, or to cement a point or lesson about Cor- nerstone's business model. "My style is I'm very open,'' he said. "Not at all reserved. I like to kid around. In some cases, you find things get so tense, you need some way to break the ice. We're not brain surgeons. We're not making life-and-death decisions. We're dealing in real estate. If you're not a 'people person', then don't get into real estate.'' An avowed "terrible golfer,'' Reilly says he enjoys playing the links more for the camara- derie among friends and colleagues than his score. He applies his trademark wit when he senses deep tension between parties at the deal table. It's an aesthetic he says he's proud that his Cornerstone team has embraced. His eccentric wit, or what the Marco Island GM Medwedeff calls Reilly's "goofball side,'' was on full display at Cornerstone's 20th anni- versary business meeting/celebration at the resort last October. It was there that Reilly, donning costumes as four separate literary and entertainment personas — including as Don Quixote and Elvis Presley, clad in glittery white pant suit and dark wig and exiting with the line: "Elvis has left the building'' — regaled his staff and MassMutual colleagues with songs and danc- ing, to declare he was retiring. His announce- ment even drew hugs from resort staff. "That was his way of saying 'goodbye' to everybody,'' Medwedeff said. Medwedeff recalls another time when, on a business trip to Marco Island, Reilly climbed aboard a golf cart, accidentally mashed the accelerator and plowed through the resort's landscaping. "I very much like our team spirit and embed- ded in the operation is our sense of humor and ability to cajole,'' Reilly said. "Seventy percent of our waking hours are spent working, so why not have some fun. If you don't enjoy it, why do it?'' n from page 1 David Reilly, center, at a holiday party 27 years ago at former property-casualty insurer Aetna Inc., where he once worked. He is flanked by former Aetna colleague Andrea Rothstein and Alan Connor, a then-Aetna executive who later recruited Reilly to work for him when Connor started up Cornerstone Real Estate Advisors. Reilly later succeeded Connor as Cornerstone's CEO. The David C. Reilly File Vitals: Born in New Haven July 5, 1947; raised in Cheshire. Now lives in Simsbury Family: Married 45 years; parents of two grown daughters — a California doctor and a New York City teacher Education: Boston College, business degree, 1969 Career: New Haven school teacher; The Hartford; HNC Realty; Aetna Inc.; president, Mellon McMahan, San Francisco, 1992-95; Cornerstone Real Estate Advisors, 1995 to April 2015 (CEO from 2005 to present) Leisure: Last book read, "Gone'' by James Patterson. Taking a page from his father, who enjoyed doing things with his hands, "I like to build things. I like doing odd jobs.'' The list includes erecting a shed, adding rooms in houses, among other hands-on projects. P H O T O | c O n T R i b u T e d , c O u R T e s e y d a v i d c . R e i l l y

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