Author Topic: HHC - Howard Hughes Corp  (Read 41657 times)

Liberty

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mankap

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Re: HHC - Howard Hughes Corp - new spinoff from ggp
« Reply #21 on: December 27, 2011, 04:51:25 AM »

Liberty

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Olmsted

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Re: HHC - Howard Hughes Corp - new spinoff from ggp
« Reply #23 on: January 30, 2012, 07:37:36 PM »
Valuing HHC is tricky, as Ackman himself discusses in his letter.  The assets will not be monetized for a while, it is uncertain how much cash will be needed, one would need to predict the trajectory of several regional property markets, discount rates, etc.  I have seen some articles that use HHC's own sales data and extrapolate them to a valuation - but there is a big difference between the price obtained in piecemeal sales and the price for large blocs of undeveloped real estate.  These articles have failed to bridge that gap to my satisfaction.  I do remember doing a discounted cash flow analysis when HHC first started trading, and using the sales data provided in the registration documents - assuming these continued at the same price and pace - it looked like HHC was undervalued by about half (give or take a lot).  But I never became all that comfortable due to the myriad assumptions that went into that analysis. 

So imagine my excitement when I noticed a WSJ report on a private-market transaction that may help value HHC!  Calpers sold its portfolio of 28 housing communities in development to Newland Real Estate ("Calpers Downsizes Housing Portfolio", Wed Jan 18, Money&Investing section).  Ah, now we have a comparable transaction that we can apply to HHC's master-planned communities segment.  The article states that the price range for the deal valued each home site at $35,000.  Here's my back-of-the-envelope take:

Looking at HHC's 2011 sales, they report sales at an average of $88,000 a lot and $356,000 an acre.  This means that HHC's average "home site" is about .25 acres.  They report that among their master-planned communities they have 14,000 saleable acres - or 56,000 home sites.  At the Calpers price/site - that gives this segment an enterprise value of $1.96b.  HHC also has a bunch of operating assets.  These operating assets do $53m in NOI.  Slap a cap rate of 7% on it, and we have $800m in enterprise value.* 

That's an implied enterprise value for the whole company of $2.8b versus $2.4b currently.  About $400m of debt means that the equity market cap is currently $2b, and should be $2.4b.  The stock is undervalued by $400m, or 20%.  Margin of safety?  I think so, and here's why:

-I am not terribly familiar with the Calpers portfolio, but I doubt it is as good as the HHC master-planned community portfolio.  HHC's communities are really best of breed, and therefore the simple price/home site metric from the Calpers transaction is probably understates its value significantly.
-HHC is a grab bag of assets and I simplified greatly in the analysis.  Any assets besides "saleable land" and the "operating assets" - that is, the "strategic developments" - are ignored and are pure upside to this valuation.  The Ala Moana air rights?  The Maui land? etc.  If this segment is just worth its book value ($188m), that's another 10% of undervaluation.  Many of these assets are on the books from a long time ago, and should be worth more than book value once some attention is paid to them.

To me this was an interesting exercise to see how HHC's development assets are valued compared to a private-market bulk transaction of a similar asset.  It is good to see that even with what I think is a poorer asset quality, the Calpers transaction puts a value on HHC above what the market thinks.  Of course this is based on only one transaction, but I think this exercise is valuable as a supplement to a DCF analysis in order to better "triangulate" a good valuation for HHC.

Thoughts?

*These numbers are actually quite close to the book value for these two segments.
**All info is from the 10Q for the period ending 9/30/2011
« Last Edit: February 02, 2012, 07:30:26 AM by Olmsted »

Liberty

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Re: HHC - Howard Hughes Corp - new spinoff from ggp
« Reply #24 on: January 30, 2012, 08:10:19 PM »
Thank you Olmsted, very interesting. It does help me create a clearer picture of the value range in my head, but it's still incredibly fuzzy. Too bad, because Bill Ackman's involvement is making this one really interesting to me -- I just know he did a massive amount of due diligence on it..

It's not like I have cash to invest anyway, but I do want to learn more about HCC to enlarge my circle of competence, so I really appreciate your contribution.
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Liberty

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Re: HHC - Howard Hughes Corp - new spinoff from ggp
« Reply #25 on: February 23, 2012, 07:23:16 PM »
http://phx.corporate-ir.net/phoenix.zhtml?c=241177&p=RssLanding&cat=news&id=1664421

Quote
THE WOODLANDS, Texas--(BUSINESS WIRE)--Feb. 23, 2012-- The Howard Hughes Corporation (NYSE:HHC) today announced that Waste Connections, Inc. (NYSE:WCN) has executed a lease for 49,929 square feet at 3 Waterway Square Place, an 11-story, 234,000-square-foot Class A office building to be built in The Woodlands Town Center. In addition, Nexeo Solutions has increased its leased space at 3 Waterway Square Place from 64,046 square feet to 106,710 square feet. 3 Waterway is situated at the corner of Lake Robbins Drive and Woodloch Forest Drive in the heart of The Waterway Square District and was designed by Elkus Manfredi of Boston, MA. The building is slated for completion in early 2013.

“Having the majority of the building leased prior to the start of construction with the caliber of tenants such as Nexeo Solutions and Waste Connections validates our decision to invest in The Woodlands. Our ability to offer our customers the complete package of live, work, play and learn will continue to set us apart from our competitors,” stated Grant Herlitz, President of The Howard Hughes Corporation.

In addition, The Woodlands Development Company (TWDC), a division of The Howard Hughes Corporation, secured a commitment for $43.3 million of financing, led by Texas Capital Bank, for construction of the building. The start of construction is imminent.

Waste Connections, an integrated solid waste services company that provides solid waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets, announced in December that it would be relocating its corporate headquarters to The Woodlands, Texas.

“This location in the heart of The Woodlands Town Center offers our employees an extremely attractive and convenient work environment, close to shopping, dining and entertainment,” said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer of Waste Connections. “The Woodlands also provides an exceptional quality of life, with a wide range of affordable housing, excellent educational opportunities, health care and outdoor recreation. We look forward to becoming an active partner in The Woodlands’ corporate community.”

Nexeo Solutions, LLC is an independent global chemicals, plastics, composites and environmental services distribution company.

3 Waterway Square is situated in the 73-acre Waterway Square District of Town Center, surrounding The Woodlands Waterway®. The District currently has 1.1 million square feet of office space, 148,000 square feet of retail, nearly 500 urban residences and 343 hotel rooms at The Woodlands Waterway Marriott Hotel and Convention Center, an AAA Four Diamond rated hotel.

As a result of the strong leasing activity at 3 Waterway Square, The Howard Hughes Corporation is exploring opportunities to construct up to three new Class A office buildings and an adjacent parking garage. The proposed development would be constructed on 9.02 acres located immediately west of the McKesson Building.

“Given the strong market activity, we are now ready to begin our next development project and realize the expanding potential of The Woodlands Town Center,” added Herlitz.

Waste Connections, Inc. was represented by Jason Whittington with NAI Houston. Dan Bellow, Beau Bellow and Diana Dunlap of Jones Lang LaSalle represented Nexeo Solutions, LLC. The Woodlands Development Company was represented by Robert S. Parsley and Norman V. Munoz of Colliers International.

For more information about The Woodlands, visit www.thewoodlands.com. For more information about Waste Connections visit www.wasteconnections.com, and Nexeo Solutions, http://nexeosolutions.com.
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dcollon

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Re: HHC - Howard Hughes Corp - new spinoff from ggp
« Reply #26 on: March 01, 2012, 07:36:53 AM »

racemize

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Re: HHC - Howard Hughes Corp - new spinoff from ggp
« Reply #27 on: March 01, 2012, 07:53:18 AM »
http://phx.corporate-ir.net/phoenix.zhtml?c=241177&p=RssLanding&cat=news&id=1664421

Quote
THE WOODLANDS, Texas--(BUSINESS WIRE)--Feb. 23, 2012-- The Howard Hughes Corporation (NYSE:HHC) today announced that Waste Connections, Inc. (NYSE:WCN) has executed a lease for 49,929 square feet at 3 Waterway Square Place, an 11-story, 234,000-square-foot Class A office building to be built in The Woodlands Town Center. In addition, Nexeo Solutions has increased its leased space at 3 Waterway Square Place from 64,046 square feet to 106,710 square feet. 3 Waterway is situated at the corner of Lake Robbins Drive and Woodloch Forest Drive in the heart of The Waterway Square District and was designed by Elkus Manfredi of Boston, MA. The building is slated for completion in early 2013.

“Having the majority of the building leased prior to the start of construction with the caliber of tenants such as Nexeo Solutions and Waste Connections validates our decision to invest in The Woodlands. Our ability to offer our customers the complete package of live, work, play and learn will continue to set us apart from our competitors,” stated Grant Herlitz, President of The Howard Hughes Corporation.

In addition, The Woodlands Development Company (TWDC), a division of The Howard Hughes Corporation, secured a commitment for $43.3 million of financing, led by Texas Capital Bank, for construction of the building. The start of construction is imminent.

Waste Connections, an integrated solid waste services company that provides solid waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets, announced in December that it would be relocating its corporate headquarters to The Woodlands, Texas.

“This location in the heart of The Woodlands Town Center offers our employees an extremely attractive and convenient work environment, close to shopping, dining and entertainment,” said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer of Waste Connections. “The Woodlands also provides an exceptional quality of life, with a wide range of affordable housing, excellent educational opportunities, health care and outdoor recreation. We look forward to becoming an active partner in The Woodlands’ corporate community.”

Nexeo Solutions, LLC is an independent global chemicals, plastics, composites and environmental services distribution company.

3 Waterway Square is situated in the 73-acre Waterway Square District of Town Center, surrounding The Woodlands Waterway®. The District currently has 1.1 million square feet of office space, 148,000 square feet of retail, nearly 500 urban residences and 343 hotel rooms at The Woodlands Waterway Marriott Hotel and Convention Center, an AAA Four Diamond rated hotel.

As a result of the strong leasing activity at 3 Waterway Square, The Howard Hughes Corporation is exploring opportunities to construct up to three new Class A office buildings and an adjacent parking garage. The proposed development would be constructed on 9.02 acres located immediately west of the McKesson Building.

“Given the strong market activity, we are now ready to begin our next development project and realize the expanding potential of The Woodlands Town Center,” added Herlitz.

Waste Connections, Inc. was represented by Jason Whittington with NAI Houston. Dan Bellow, Beau Bellow and Diana Dunlap of Jones Lang LaSalle represented Nexeo Solutions, LLC. The Woodlands Development Company was represented by Robert S. Parsley and Norman V. Munoz of Colliers International.

For more information about The Woodlands, visit www.thewoodlands.com. For more information about Waste Connections visit www.wasteconnections.com, and Nexeo Solutions, http://nexeosolutions.com.

Having grown up in The Woodlands, I can tell you, that area has been growing very well for a long time.  It's a nice area outside of Houston and has been increasing development/population steadily.


Kraven

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Re: HHC - Howard Hughes Corp - new spinoff from ggp
« Reply #29 on: March 09, 2012, 06:02:49 AM »
http://www.dnainfo.com/20120309/downtown/south-street-seaports-pier-17-be-gutted-under-new-plan

That's interesting.  It could certainly use some work.  I remember going down there years ago and it needed a facelift then.  Brings back some memories for sure.  I remember having a Xmas party there.  There were several going on at the time.  All the different employers had black cars lined up to take people home.  It was late and I kind of stumbled out of the party and got turned around somehow.  I finally saw one of the lines of cars and got into one.  I signed the voucher and didn't pay any attention to it.  The next day when I was looking through the stuff I dumped out from my pocket I saw that I had ridden home in a DLJ car.  Which was funny since I signed the voucher and added my id number, etc., although didn't work at DLJ!
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