Investor Larry Connor Isn’t Afraid of Heights — No, You Don’t Understand

Connor’s ambition to visit a space well outside his comfort zone mirrors in many ways the winning foundation he has built at The Connor Group (TCG), a $5 billion multifamily investment shop just outside of Dayton, Ohio, that hires people only from outside the commercial real estate industry. 

“It’s the same fundamental belief in the philosophy that if you get the right people together, you have a plan, you work hard, you persevere and you have grit, you can do things that most people would believe you’re not qualified to do,” said Connor during Commercial Observer’s  early October visit to the TCG offices in Dayton’s Miamisburg suburb. “Our belief has always been, if we have the right people and we have a good plan, we can be successful even if we’re in an industry we don’t know a lot about or maybe we’re not as well capitalized as we’d like to be.”

Connor’s outside-the-box hiring philosophy stems from his belief that those embedded in the CRE field are constrained by preconceived notions of what can be achieved. His strategy has led to producing returns of 30.4 percent since TCG’s founding in 1992, higher than industry behemoths Blackstone and Brookfield in that same period.  

Stretching the limits of what many would perceive out of reach has extended to both above and below the surface.

In September 2023, Connor completed the highest high-altitude, low-open formation skydive ever, jumping from 38,139 feet above mean sea level into a desert area near Roswell, N.M.

Two and half years prior to the historic skydive, in April 2021, the longtime Ohio resident, who said he has an immense passion for the ocean despite his Midwestern roots, completed three dives in five days in the Pacific’s Mariana Trench, the deepest point on earth.

The fuel for adventure drove him to the racetrack as well, going back two decades, when in 2004 Connor competed in the 24 Hours of Le Mans in France, one of the more well-known, endurance-focused sports car races.

The drive to tackle many quests outside of the office connects with Connor’s desire to scale his company to as high a level as possible. 

“If you tell us ‘That’s impossible,’ chances are we’re all in to prove you otherwise,” said Connor, who noted that all his extreme sports endeavors are taken on only after deciding they can be done safely and successfully. “We’re not deterred by somebody else’s opinion that that’s too hard to do or that’s impossible.”

TCG’s 40,000-square-foot headquarters, situated on a 9-acre site next to Dayton–Wright Brothers Airport, provides motivation to its more than 600 employees through a number of inspirational messages inscribed on the walls. One of them reads, “Never rule out a goal you think is impossible. Set and embrace audacious, ‘impossible’ goals.”

One of the audacious goals Connor has established from the top is improving net operating income (NOI) for all of TCG’s acquired properties by 60 to 80 percent compared to the previous owner, and he gives his team 18 to 24 months to accomplish the task. Connor said this strategy has especially paid off of late since it is immune from interest rate changes by accounting for revenue minus expenses before debt service or interest costs.

In a typical year, TCG will seek information on 700 to 800 assets for sale in its 18 targeted markets, conduct analytics on 300 to 400, visit 175 to 250, and, at the end of the day, buy fewer than 10 that have the best NOI growth opportunities. In 2023, TCG acquired eight properties to grow its portfolio of what it describes as luxury units from 12,971 to more than 15,000. It expanded last year into its 18th market, Phoenix, with the acquisition of The Aston Scottsdale, where available one-bedrooms start at $1,899 a month. 

“Over the last 32 years, whether a market has been going up or markets are going down or markets are static, you are always able to find, if you do a lot of looking, mismanaged apartment communities,” Connor said. “We generally buy A-location apartment communities that have all the fundamentals but just aren’t being well managed, maybe because it’s institutionally owned and you have a third-party management company.”

Each transaction TCG tackles has special meaning to Connor. That’s evident by one of the conference rooms at TCG’s offices where wall displays map out the story behind each deal since the company’s early days. It’s symbolic of TCG’s transactional model that often seeks to sell assets within 24 to 36 months, rather than bulking up on assets under management like many competitors.

Dean Smith, a vice chairman at Newmark (NMRK), has brokered deals for TCG for nearly 20 years, and called its investment approach “unique in the CRE industry.” Yet TCG’s tactics have become “the gold standard for multifamily property acquisitions,” Smith said. 

“The level of trust we have, not only in Larry but all of his key team members, is the key element to their success,” Smith said. “Quite simply, their reputation gives them an edge in buyer selection on marketed assets and a first call on many off-market opportunities.” 

The seeds of TCG’s successful formula stretch back to Connor’s early days as an entrepreneur. His jobs then included painting houses, selling wines with damaged labels to college students, and even working for a funeral home where he picked up bodies for $5 apiece. The funeral home job, which he held while attending Ohio University in the early 1970s, involved working a weekend graveyard shift from 5 p.m. to 8 a.m, answering phone calls.

“We started the painting business in high school, and we had to convince people that we were responsible enough to go paint your beautiful house on the outside, and then we also had to deliver customer service and a really quality product,” said Connor, referring to his first business venture as a teenager. “Whether it’s that or the wine, you learn fundamentals of business, and at certain points you start to manage people, and you learn by trial and error how you correctly or incorrectly manage people.”

One management approach Connor implemented at TCG as a way to incentivize employees is a program where anybody within the organization can become a true equity partner if they perform at a high level. TCG currently has 435 associates, of whom 76 are equity partners. Beyond motivation, Connor enacted the policy as a way to open doors to wealth creation for some people who may otherwise not gain that opportunity. The company’s chief mechanic and head groundskeeper both have ownership stakes in TCG, and Connor’s goal is to eventually create 100 millionaires through the promotion of 100 partners. 

“We think it’s the right thing to do to share the wealth, and we think we can grow the profit pie, so to speak, by having a lot of owners who all have aligned and shared visions and beliefs,” Connor said. “Are you better off in your 18 markets if you have 76 owners out there or one? I think the 76 is better to look out for your best interest.”

TCG also has a nonprofit arm called the Connor Group Kids and Community Partners, to which Connor steers a percentage of TCG’s revenue. The program spearheaded the opening of The Greater Dayton School in 2022 as Ohio’s first private nonreligious school for low-income students, and Connor hopes to eventually develop 20 to 30 similar schools around the country.

Connor’s efforts to lift up the Dayton area have also involved becoming active in recent years with the University of Dayton, where in 2017 he led a fundraising campaign to renovate its basketball arena through a $72 million project that proved to be the college’s largest-ever capital project.

A longtime sports fan who attends many University of Dayton basketball games, Connor sees a lot of similarities in athletics with what he has tried to instill throughout his lengthy CRE career that led to producing a winning formula. 

“In college basketball, there are moments when you are going to fail,” he said. “The question is: Can the head coach, the assistant coaches and the players learn from that experience and get better as a result? Some do, and some do not.”

Andrew Coen can be reached at acoen@commercialobserver.com