One of the biggest winners in today’s markets was a major real estate developer that doesn’t get much publicity. Howard Hughes Corp (NYSE: HHC) surged on Thursday, rising by over 40 percent following news that the company might choose to put itself up for sale.
As reported by CNBC, Hughes had just hired investment bank Centerview Partners to explore a potential sale of the company. The real estate developer, which was a one-time spinoff from General Growth Properties, has struggled to get a valuation that the management team feels appropriate for their asset portfolio.
Unlike most other real estate companies that are listed on public markets, Howard Hughes isn’t a REIT. Instead, it’s a C-Corp that owns a variety of different assets that don’t easily generate recurring and predictable cash flows that real estate investors are often looking for.
“Our business continues to perform extremely well across our three core segments, with price per acre of land sold, net operating income, and condo sales all exceeding our expectations; however, our stock continues to languish below its net asset value per share. The Board and management are determined to close the significant gap between our share price and the company’s underlying net asset value,” said CEO David Weinreb. “The Board and management are determined to close the significant gap between our share price and the company’s underlying net asset value. We look forward to reporting to shareholders on the results of our strategic review and will remain focused on executing our plans during this evaluation process.”
Billionaire investors Bill Ackman, head of Pershing Square Capital, also owns around 5 percent of the company and is supportive of the proposal. At the moment, potential buyers include Brookfield Property Partners and Blackstone Group, but other wealth funds could potentially buy a portion of the company.
Shares of the real estate developer shot up 42 percent in response to today’s news. For the past month as well as the past quarter, Howard Hughes’ stock price has been falling from $115 in mid-February to a $92 low as of yesterday.
The company’s management team estimates that their net asset value would put their share prices between $130 to $170 per share, and are looking for a buyer that would be willing to pay a similar price. It’s no surprise that shares surged on Thursday to the low $130s precisely for this reason.
Howard Hughes Company Profile
The Howard Hughes Corp is a real estate company and is in the development of master planned communities and other strategic real estate development opportunities across the United States. Its mission is to be the preeminent developer and operator of Master Planned Communities (MPCs) and mixed-use properties.
The company specialize in the development of master planned communities, the development of residential condominiums, and the ownership, management and development or repositioning of real estate assets currently generating revenues, also called operating assets, as well as other strategic real estate opportunities in the form of entitled and unentitled land and other development rights, also called strategic developments. – Warrior Trading News
