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General Category => Investment Ideas => Topic started by: hyten1 on November 10, 2010, 06:59:57 AM

Title: HHC - Howard Hughes Corp
Post by: hyten1 on November 10, 2010, 06:59:57 AM
what do people think of hhc?
Title: Re: HHC - howard hughes corp - new spinoff from ggp
Post by: Myth465 on November 10, 2010, 07:00:53 AM
What do you think?
Title: Re: HHC - howard hughes corp - new spinoff from ggp
Post by: hyten1 on November 10, 2010, 07:28:00 AM
complicated situation, still looking at it, just a note, blackstone etc purchase 5.2mil share of hhc at $47 and change as part of the reorg investment plan

Title: Re: HHC - howard hughes corp - new spinoff from ggp
Post by: rogermunibond on November 10, 2010, 08:42:11 AM
Hyten - is that $37?  Why would Blackstone buy at $10 over the trading price?
Title: Re: HHC - howard hughes corp - new spinoff from ggp
Post by: maxprogram on November 10, 2010, 09:45:49 AM
It's hard to peg any kind of precise value to any of HHC's assets, but I think there is certainly a lot of potential upside, and not much downside.

It's trading at an Enterprise Value of about $1.8 billion right now. Their Master Planned Communities (the biggest of which is Summerlin) have a net interest of ~13,500 acres, which I think could be worth at least $1 billion ($74k an acre, with about 7 or 8 lots per acre in Summerlin). They just sold some unfinished lots to other homebuilders for over $500k an acre.

Some other "premier" properties are the South Street Seaport, Victoria Ward Centers, and Landmark Mall. The South St. Seaport in NYC is on the books for $2.9mm, probably worth 100x or more that amount. The Ward Centers in Honolulu are on the books for $320mm, probably worth at least 2x that if not up to $1bb. The rest of their properties have a book value of $400mm, but many need to be developed and could be worth more. The company is relatively unlevered and they have the opportunity to either sell properties to a developer or take on some new debt and have someone develop some of the good properties. (For example, one of the smaller properties, Cottonwood Mall, is a mile away from my office and is 11 acres of empty land in a prime location. Before the crash, it was slated to be a $500mm mixed use development.)

So, hard to put a value on but some good potential especially with Ackman and connections to Brookfield. Now that they are out of bankruptcy they can start the ball rolling on realizing some value in these properties.
Title: Re: HHC - howard hughes corp - new spinoff from ggp
Post by: hyten1 on November 10, 2010, 10:29:40 AM
rogermunibond you read it correct its $47 and change
Title: Re: HHC - howard hughes corp - new spinoff from ggp
Post by: Bronco on November 15, 2010, 08:58:28 AM
This stock is up nicely today.  Any reasons?

Title: Re: HHC - howard hughes corp - new spinoff from ggp
Post by: vn35 on November 20, 2010, 08:48:40 AM
The current valuation of HHC holdings  are presented already (in the CS Boston paper).  I think the downside is probably limited but a good upside is there.   I will take a nibble on this.
Title: Re: HHC - howard hughes corp - new spinoff from ggp
Post by: momentumgeek on November 30, 2010, 01:09:41 PM
Which CS paper? The GGP initiation from 9/13/2010 or is there another more complete one?
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: rogermunibond on April 06, 2011, 05:26:17 PM
HHC has been fantastic.  Massively underpriced at the spinoff.  Anyone have an inkling of the IV now?
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: txlaw on April 08, 2011, 01:52:11 PM
Reading Ackman's letter, I can't help but think about how his insights apply to JOE as well.

The difficulty is that the real estate assets owned by HHC are notoriously difficult to value.  First, you should consider that their long-term value - the value that can be achieved by a long-term owner - is, in my opinion, materially higher than their liquidation value.

. .  .

For our MPC assets, one can make assumptions about the timing and number of future lot sales and then discount back these cash flows over the 30-or-so-year life of the project at a discount rate you deem appropriate. The problem with such an approach is that small changes in assumptions on discount rates, lot pricing and selling velocity, inflation, etc. can have an enormous impact on fair value.

For our development assets, one needs to make assumptions about what will be built, when it will it be built, to whom it will be leased, what rents it will achieve, what expenses it will incur, and what multiple an investor will place on these cash flows. Again, even highly sophisticated real estate investors will assign substantially divergent values to the same assets when using their own assumptions.

. . .

In light of the complexity of our asset base and the inadequacy of GAAP accounting to track our progress, you should now understand how important it is to get the right management team in place with the right incentives.


I'm guessing Bruce Berkowitz would wholeheartedly agree with almost all of what's in Ackman's letter.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Junto on April 09, 2011, 05:23:35 AM
It is hard to discuss HHC without reading the informed analysis by @ToddSullivan; http://Www.valueplays.net
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: gfp on April 14, 2011, 10:20:54 AM
http://www.sec.gov/Archives/edgar/data/1195979/000120919111022881/xslF345X03/doc4.xml
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: rogermunibond on April 14, 2011, 10:43:32 AM
Junto are you shilling for Todd Sullivan.  'Cause it's hard to read the informed analysis of Todd Sullivan behind the paywall.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: ShahKhezri on May 03, 2011, 12:54:38 PM
Looking to see what kind of pop Tilson gives it today:

http://www.valueinvestingcongress.com/images/VIC_P11_Agenda.pdf

Just a hunch he's probably going to talk about HHC.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: accutronman on May 09, 2011, 12:38:14 PM
Tilson's presentation on HHC (as well as his short thesis on JOE) is located here: http://www.marketfolly.com/2011/05/whitney-tilsons-presentation-on-st-joe.html

The exciting part about HHC is the potential worth of the Hawaii property (Ward Center) as well as the Ala Moana air rights:

Ward Centers is comprised of approximately 60 acres situated along Ala Moana Beach Park and is within one mile of Waikiki and downtown Honolulu. Ward Centers currently is a 550,000-square-foot shopping district containing six specialty centers and over 135 unique shops, a variety of restaurants and an entertainment center, which includes a 16-screen movie theater. In January 2009, the Hawaii Community Development Authority approved a 15-year master plan, which entitles a mixed-use development encompassing up to 9.3 million square feet, including up to 7.6 million square feet of residential (4,300 units), five million square feet of retail and four million square feet of office, commercial and other uses.


The Howard Hughes Corporation also owns the rights to develop a residential condominium tower over a parking structure at Ala Moana Center, one of the most visited and profitable shopping centers in the world. Ideally located between downtown Honolulu and the world-famous Waikiki Beach, Ala Moana hosts more than 42 million visitors each year. The parking structure is designed to accommodate the construction of a condominium tower and is located adjacent to Nordstrom.

Have held HHC since the spin-off...definitely a winner!
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: accutronman on May 10, 2011, 01:36:19 PM
The Howard Hughes Corporation Reports First Quarter 2011 Results

First quarter 2011 net income was $11.5 million, excluding the $126.0 million non-cash charge relating to an increase in estimated value of the Company’s warrants, compared to net loss of $(20.5) million for the same period in the prior year. First quarter 2011 net loss was $(114.5) million inclusive of the non-cash warrant expense.
Master Planned Community land sales, including our share of the sales at The Woodlands joint venture, were $34.3 million for first quarter 2011, compared to $15.1 million for first quarter 2010.
Net operating income for our Operating Assets was $13.5 million for first quarter 2011, compared to $10.6 million for first quarter 2010.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: stahleyp on May 10, 2011, 02:20:11 PM
it looks like HHC has some warrants. Anyone know anything about them? I've done some digging but haven't found much.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: claphands22 on May 12, 2011, 10:36:12 AM
it looks like HHC has some warrants. Anyone know anything about them? I've done some digging but haven't found much.

I think those were only given to insiders...interactive brokers doesn't offer the warrants.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Liberty on December 26, 2011, 03:56:22 PM
This looks like an interesting one. I've starting looking at it, but very early stages. I'm mostly looking to learn, far from investing at this point.

No updates in a while; anyone still holding it?
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Liberty on December 27, 2011, 12:03:57 AM
Here's a pretty good report on the spinoff:

http://www.hamincny.com/docs/General%20Growth%20Properties%20Spin-Off%20Report%20October%202010.pdf
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: mankap on December 27, 2011, 04:51:25 AM
Here is Bill Ackman's letter to HHC shareholders

http://www.valueplays.net/2011/04/07/ackmans-letter-to-howard-hughes-shareholders/
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Liberty on December 27, 2011, 10:27:32 AM
Here is Bill Ackman's letter to HHC shareholders

http://www.valueplays.net/2011/04/07/ackmans-letter-to-howard-hughes-shareholders/

Thanks. I've already seen it. There's also a companion letter from Weinberg:

http://phx.corporate-ir.net/phoenix.zhtml?c=241177&p=irol-newsArticle&ID=1548151&highlight=
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Olmsted 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
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Liberty 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.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Liberty 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.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: dcollon on March 01, 2012, 07:36:53 AM
Pretty impressive quarter.  Here is the shareholders letter

http://phx.corporate-ir.net/phoenix.zhtml?c=241177&p=irol-newsArticle_print&ID=1667641&highlight

Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: racemize 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.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: hyten1 on March 09, 2012, 05:20:59 AM
http://www.dnainfo.com/20120309/downtown/south-street-seaports-pier-17-be-gutted-under-new-plan
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Kraven 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!
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: dcollon on March 09, 2012, 06:18:18 AM
That looks/sounds like it could be very cool.  I have been impressed with how much progress HHC has been making over the past few months.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Liberty on March 09, 2012, 12:59:18 PM
Well, this stock is up about 40% since I started looking at it. Too bad I never bought any  :P
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Liberty on March 16, 2012, 07:39:26 AM
http://www.valuewalk.com/2012/03/whitney-tilson-howard-hughes-is-super-cheap/
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Liberty on June 10, 2012, 09:52:49 AM
http://www.gurufocus.com/news/179300/ackman-rolls-swaps-on-howard-hughes-co
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: dcollon on December 26, 2012, 07:06:01 AM
Small update on South Street Seaport/Pier 17 from NY Times.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: hyten1 on February 13, 2013, 12:11:00 PM
good idea of what HHC will be worth, a lot more than what its currently being traded at :)

https://event.webcasts.com/viewer/event.jsp?ei=1013559
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: dcollon on March 05, 2013, 05:20:01 AM
Letter to Shareholders

http://phx.corporate-ir.net/phoenix.zhtml?c=241177&p=irol-newsArticle_print&ID=1792151&highlight=
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: hyten1 on March 19, 2013, 08:20:41 AM
i don't know if any realized

in feb 2013, hhc (and its partners) did pre sale on ONE Ala Moana  condo that they plan to build (200 or so units). Units at ONE Ala Moana sold for an average price of $1.6 million, or approximately $1,170 per square foot.

using the above numbers you can get a good idea of what the wards village development condo units will sell for

hhc plan to build 4000 units at ward village at $1300 per sq ft (its projected to be higher than one ala moana) with average unit of 1200 sq ft that translates to 6.24bil in sales, the project profit margin is around 30%, so 30% of 6.24bil is 1.9bil. current market cap its 3.6bil and moving up.

so the value of ward village residential units alone is 1.9bil. remember this does not include commercial (both office and shopping) they plan to build in ward. Honolulu malls have some of the highest sales per sq ft in the nation. Also there are many other properties/development that HHC owns (south street seaport, summerlin in vegas etc etc).

a good way to play the real estate bounce back, i think

Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: snailslug on March 21, 2013, 07:13:50 AM
so the value of ward village residential units alone is 1.9bil.

How would you discount this to present value to account for the 15-year build out? What assumptions would you make?
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: fareastwarriors on March 21, 2013, 08:21:13 AM
http://online.wsj.com/article/SB10001424127887323419104578372762717957832.html?mod=WSJ_NY_RealEstate_LEADNewsCollection (http://online.wsj.com/article/SB10001424127887323419104578372762717957832.html?mod=WSJ_NY_RealEstate_LEADNewsCollection)


New York could have its answer to San Francisco's Ferry Building or Boston's Faneuil Hall Marketplace—a waterfront public market where people shop for fresh fish, grab a loaf of artisanal bread or take in a dozen oysters at lunch.

Developer Howard Hughes Corp. has agreed to create a 10,000-square-foot market in the South Street Seaport, bowing to a last-minute community push to include the amenity in a project to develop the Tin and New Market buildings at the historic Fulton Fish Market.

The concession was one of several made by Howard Hughes in order to receive approval for its plan to redevelop a 200,000-square-foot shopping center on Pier 17—the first part of an agreement with the city to redevelop the South Street Seaport.

The modifications to the city's lease with Howard Hughes also will allow Pier 17 businesses to stay open year-round rather than just through the busy summer season to help them recover from superstorm Sandy and give the public access to the development's rooftop. The developer also agreed to build a second market in the Pier 17 building by Oct. 1, 2014.

The changes were announced hours before the project received final City Council approval Wednesday.

"We will no longer be one of the only major cities in the world without a destination market," City Council Speaker Christine Quinn said at a news conference announcing the deal. "We want to try to preserve them and make them into something that will be a permanent benefit to the city and a permanent part of the city's food economy."

The once-thriving Fulton Fish Market has remained vacant since the fishmongers who had long used the space moved to the Bronx in 2005.

"It is good news that the Tin Building that's been shuttered will have life again," said Catherine McVay-Hughes, chairwoman of local Community Board 1. "There is no seven-day-a-week, year-round local food market downtown. It's something…the residents, workers and businesses in the area have a need for."

The mandate passed by the city Wednesday says that any proposal for a mixed-use development at the Tin Building must include a food market with at least 10,000 square feet of floor space.

The rules also lay out what kinds of purveyors can be housed in the building, with stalls going exclusively to growers and producers of local, regionally sourced foods such as produce, meat and fish as well as artisanal pastas, honeys and condiments.

Howard Hughes has until the end of June to decide it wants to redevelop the site of the New Market and Tin buildings. If not, it would be up to the city to find a new developer for the site.

"Our vision for a revitalized South Street Seaport has taken an important step forward today," David Weinreb, chief executive of Howard Hughes, said in a statement. "I am particularly pleased because the redevelopment will have a catalytic effect on Lower Manhattan and help the area continue to recover from the impact of Hurricane Sandy."

The company declined to comment on whether is will exercise its option for the Fulton Fish Market buildings.

While the city has a handful of indoor markets like the Chelsea and Essex Street markets, bringing some kind of large-scale public market back to the South Street Seaport has long part of a vision for the space laid out by the City Council.

It also has been the desire of advocates led by the New Amsterdam Market, which has operated a Sunday market in the parking lot of the Tin Building from April to December during the past three years.

The group set out to show city leaders that a market at the site was sustainable and would help bring New Yorkers to shop in an area that in recent years has become almost exclusively a tourist destination.

The success led New Amsterdam leaders to increase their push to preserve the space, gaining the support of some of the city's well-known chefs, including April Bloomfield, Daniel Boulud and Jean-Georges Vongerichten.

Last Thursday, hundreds of supporters crammed a City Council committee hearing to discuss the Howard Hughes plans for the Pier 17 site, forcing the committee to postpone and move it to a room large enough to hold the group.

A day later, Howard Hughes officials met with Ms. Quinn and City Council Member Margaret Chin, whose district houses the South Street Seaport. The developer was told it would need to include a market at Fulton Fish Market site in order to move forward with the Pier 17 plan, Ms. Chin said.

The indoor market will be modeled after similar public markets in Seattle, San Francisco and London, which are destination spots and incubators for small businesses and jobs, Ms. Chin said.

She said the city envisions a market with a model similar to one used currently by the New Amsterdam Market—independent, small businesses that source food from a 500-mile region.

"I think it's a model that everybody is looking toward," Ms. Chin said.

Robert LaValva, president of the New Amsterdam Market, noted that markets in San Francisco, Seattle and London are much larger than the one approved for Fulton Fish Market space, but he called the decision a victory for the city.

"I think it's a really great amenity to have a regional food market of that size in that neighborhood," he said, "In terms of what we have been promoting, it's more like a mini version of it."

Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: hyten1 on March 21, 2013, 08:32:58 AM
snailslug,

you  got me :)

i have no idea how to discount the value for 15 years.

for me what i did was i try to value (current value) that parts that are easiest for example their operating unit, ward, sea port from there as you start valuing each piece and add up the value you can compare that to the current market value. also now the 1.9bil is from current sales figure if/when the project takes 15 yrs the future sales value will obviously be more etc.   also note the ward property is of high quality. these are not normal real estate assets.

operating unit + ward + sea port + summerlin

obviously this idea is not as much of a no brainer after it ran from 30s to 80s.

think margain of safety for the unknown

that is all i have

hy


so the value of ward village residential units alone is 1.9bil.

How would you discount this to present value to account for the 15-year build out? What assumptions would you make?
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: hyten1 on March 21, 2013, 08:37:49 AM
here is a good example, obviously some of these value need to updated due to new info

http://www.valueinvestorclub.com/value2/Idea/ViewIdea/83032
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: hyten1 on March 31, 2013, 11:20:41 AM
seaport will have residential, marketplace and a hotel

good and/or bad depending on how you look at it

http://ny.curbed.com/archives/2013/03/31/turns_out_howard_hughes_corp_is_plotting_a_seaport_hotel.php

this bodes well for hhc's valuation
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: luck on March 31, 2013, 06:57:07 PM
on top of all this, excellent management team with aligned incentives.  weinreb's presentation on the hhc website (guessing it's still there) is pretty informative.  bought this around $55 and won't sell a share until $110.  awesome downside protection. 
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: valueinvesting101 on May 08, 2013, 02:19:24 PM
Anyone has updated their thesis on HHC? I think it is still undervalued and difficult to analyze but housing recovery and low interest environment should help them. I like all the things they have been doing so far.


But everything going higher these days and that makes me little cautious.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: yader on February 03, 2014, 07:35:27 AM
http://www.bizjournals.com/pacific/news/2014/01/31/penthouse-at-howard-hughes-honolulu.html?page=all

Wonderful pricing!
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: dcollon on February 05, 2014, 05:23:02 AM
CEO of HHC can sing

http://www.businessinsider.com/david-weinreb-super-bowl-after-party-2014-2
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Lowlight on January 17, 2015, 05:42:57 PM
Looks like it has been about a year since anyone has posted on HHC.  And presumably due to the decline in the price of oil, HHC is trading back where it was in early 2014.  While the company certainly has exposure to job losses caused by the oil price decline due to their two MPCs in Houston and significant commercial properties and development opportunities there, it seems unlikely these properties are now worth zero.  With the stock selling below $120 it is effectively trading at a 20% discount to estimates of NAV when assigning zero value to woodlands and decreasing the value of all properties in Houston dramatically.  It seems like today's price offers a compelling entry point for HHC. To value the company I have used the model provided on VIC and modified where I felt appropriate. 

I'm currently long the company and will be looking to add if prices decline further without a corresponding decrease in NAV.  I know some people made a lot of money on HHC at much lower prices and I think this might keep the, away from the name today.  But in my opinion it still remains attractive and the valuation is a little clearer now.  Interested to hear if anyone sees it differently.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: PSV_Cannibal on January 18, 2015, 11:30:18 AM
I believe a few key things need to happen before the shares rocket up beyond its previous $160 high:

(1) Clarity on what the Seaport area is worth. For Phase I alone, I estimate an equity value as low as $825m or as high as $2 billion ($100 PSF vs. $300 PSF - high end with 4.5% cap rate). At the high end, Phase I alone could be worth 40% of the current market cap. Does anyone have a localized view on what a realistic rent PSF would be for the Seaport area? Would be very very helpful.  Phase II (Seaport tower) is being contested by local opposition, so I'm not even sure if it will be built.  But assuming it is, what rents are realistic for a middle school, hotels, and condos in the area?  And then there are the recent acquisitions in the Seaport areaby HHC - $100m for 80 South Street and $20m for 85 South Street.  Management has not announced what its plans are for these nearby properties.  So I think investors need more visibility for Phase I at least before extrapolating...this could really move the needle.  What if Phase I rents end up being far north of $300 PSF? Again, I don't know Manhattan real estate well enough to have confidence in my estimates.

(2) Spin-off of REIT or creation of tracking stock.  It is very tough for me to pitch HHC to anyone without having the spreadsheet in front of me.  You can't just whip a cap rate on the whole company's earnings before  tax, as a big portion of earnings come from MPC lot and condo sales, which I assume get a lower valuation than the company's commercial properties that produce recurring NOI.  As the average market participant will not spend the time to tabulate NOI from each disclosed project (and there are many), I can only presume that the 'average' person buying or selling the stock on any given day does not have a very clear idea of HHC's intrinsic value.  And then there is the matter of projecting volume/pricing for lot and condo sales over the next few years...

HHC is still a big holding for me, largely because I believe the management team is fantastic.  Weinreb/Herlitz have demonstrated their deal making prowess through infrequent but significant transactions (e.g. buying out remainder of Woodlands for a steal in 2011, buying back warrants in late 2012 right before the shares took off).  I see HHC as a public company that is run like a private company; there are few investor presentations, no quarterly conference calls, and no bulge bracket coverage.  I think this will change in a few years as NOI from commercial properties ramps up (thus making back-of-envelope valuation easier) and management announces the spin-off in tandem with NOLs running out.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Liberty on January 18, 2015, 04:03:25 PM
Thanks for sharing, Cannibal. Welcome to the forum!
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Lowlight on May 08, 2015, 04:58:43 PM
Found this link on the HHC investors page.  Good article (maybe it is already posted elsewhere on Ackman related companies).  Wouldn't surprise me with the way Ackman speaks about HHC if he did try to transform the company once they spin out the income producing assets into a REIT.  Whether they continue to invest in real estate assets only or turn the company into a hold co for other investments will be interesting to see.  Doesn't have anything to do with the thesis for HHC at this time, but is interesting to consider. 

http://www.forbes.com/sites/antoinegara/2015/05/06/bill-ackman-baby-buffett-howard-hughes/
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: valueinvesting101 on August 24, 2015, 08:42:45 AM
HHC sells couple buildings at South Seaport for $390 million.

http://www.stroock.com/news/two-ny-sites-sell-for-390m
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: JBTC on September 16, 2015, 07:52:01 AM
Just wondering if anyone has thoughts on HHC lately - shares have been quite weak, due presumably to concerns about oil price impacting the Houston assets.

Also curious if anyone knows how we should think about the impact of higher rates on HHC and whether concerns about rising rates are another factor impacting HHC.

Then of course there are always noises about the so called community's objections to HHC's South Seaport proposals.

Thanks...
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: BG2008 on January 28, 2016, 10:19:03 AM
Seems like Howard Hughes can't get a break with their Seaport development.  They canned the 52 st tower, the 42 st tower, now the hotel/mixed use concept is tabled as well.  In a separate article, some have speculated that Howard Hughes doesn't have the political and local connections like a Tishman and related company to get projects to move forward. 
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: racemize on January 28, 2016, 11:24:04 AM
Here's a write-up I just found and is on my reading list:

http://clarkstreetvalue.blogspot.com.es/2016/01/howard-hughes-houston-concerns-creating.html
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: JBTC on March 04, 2016, 05:23:00 PM
New epic slide deck on HHC -

http://valueseekerinvestments.blogspot.hk/2016/02/the-howard-hughes-corp-hhc-65-page.html
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: JBTC on March 17, 2016, 06:58:38 AM
In case anyone cares -

NEW YORK--(BUSINESS WIRE)--The Howard Hughes Corporation® (NYSE: HHC) announced the closing yesterday of the sale of 80 South Street to China Oceanwide Holdings for $390 million. The company expects to recognize a pre-tax gain of approximately $140 million during the quarter ended March 31, 2016. The 42,694 square foot zoning lot adjacent to the Historic District at the Seaport is capable of supporting 817,784 square feet of fully entitled development rights.

http://www.businesswire.com/news/home/20160317005365/en/Howard-Hughes-Corporation%C2%AE-Completes-Sale-80-South
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: phil_Buffett on March 17, 2016, 07:13:12 AM
In case anyone cares -

NEW YORK--(BUSINESS WIRE)--The Howard Hughes Corporation® (NYSE: HHC) announced the closing yesterday of the sale of 80 South Street to China Oceanwide Holdings for $390 million. The company expects to recognize a pre-tax gain of approximately $140 million during the quarter ended March 31, 2016. The 42,694 square foot zoning lot adjacent to the Historic District at the Seaport is capable of supporting 817,784 square feet of fully entitled development rights.

http://www.businesswire.com/news/home/20160317005365/en/Howard-Hughes-Corporation%C2%AE-Completes-Sale-80-South


great thanks  ;)
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: JBTC on April 06, 2016, 01:27:00 AM
Observations from 2015 The Howard Hughes Corp. (HHC) CEO Letter [3/24/2016]

http://valueseekerinvestments.blogspot.hk/2016/03/observations-from-2015-howard-hughes.html
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: smj on November 02, 2016, 08:11:44 PM
Does anyone have access to the new CJS Securities report on HHC? If so, could you please post.

They just initiated coverage and I am not familiar with them.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: LongTermView on March 15, 2017, 04:29:23 PM
berkshire101 and I plan on going to the Investor Day in NY on May 17th.  Is anyone else going?
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: dcollon on May 08, 2017, 12:19:54 PM
Ackman at Sohn Conference

http://www.cnbc.com/2017/05/08/bill-ackman-recommends-howard-hughes-corp-at-sohn.html

Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: BG2008 on May 22, 2017, 10:20:46 PM
Observations from 2015 The Howard Hughes Corp. (HHC) CEO Letter [3/24/2016]

http://valueseekerinvestments.blogspot.hk/2016/03/observations-from-2015-howard-hughes.html

Does anyone have any more background on who value seeker is? 
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: Green King on May 23, 2017, 03:51:43 AM
Observations from 2015 The Howard Hughes Corp. (HHC) CEO Letter [3/24/2016]

http://valueseekerinvestments.blogspot.hk/2016/03/observations-from-2015-howard-hughes.html

Does anyone have any more background on who value seeker is?

He is on fintwit https://twitter.com/Find_Me_Value you can try dm him.
Title: Re: HHC - Howard Hughes Corp - new spinoff from ggp
Post by: BG2008 on August 31, 2017, 11:03:16 AM
Howard Hughes is hosting an OPUS festival in Columbia, MD.  The admission is free. 

Is there anyone that live in the DC/Baltimore/Columbia area that may want to attend this event and share their findings.  I would love to hear your thoughts on the event.  I can arrange to make a small donation to your charity as an added incentive.   

http://opusmerriweather.com/
http://www.businesswire.com/news/home/20170830005919/en/Howard-Hughes-Corporation%C2%AE-Launch-OPUS-Festival-Columbia

Title: Re: HHC - Howard Hughes Corp
Post by: chrispy on September 01, 2017, 05:02:22 AM
I'm from Columbia, graduated from high school on the MPP stage, and worked summers there selling beer and hot dogs. I will most likely be attending although I do move the following weekend. Will keep you posted.
Title: Re: HHC - Howard Hughes Corp
Post by: james22 on March 01, 2018, 10:22:27 PM
From Whitney Tilson's latest email to investors:

1) I have invested my children's college accounts in 50% Berkshire (BRK.A, BRK.B), 25% Howard Hughes Corp. (NYSE:HHC), and 25% split evenly among Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), and Facebook (NASDAQ:FB).


https://seekingalpha.com/article/4152156-whitney-tilson-puts-childrens-college-savings-berkshire-howard-hughes-corp-fa-n-g

Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on March 15, 2018, 06:36:19 PM
I find it funny that Seritage has 57 pages and HHC has 7 pages.  Shares trades below its 2014 high of $160.  But a lot of value has been created since 2013/2014 with the condos in Hawaii built and sold, residential lots in The Woodlands, The Bridgelands, and Summerlin sold, South Street Seaport about to open (in stages) in 2018.  The O&G crisis is the reason why the shares trades where it trades at today. 
Title: Re: HHC - Howard Hughes Corp
Post by: NBL0303 on March 15, 2018, 07:19:54 PM
I find it funny that Seritage has 57 pages and HHC has 7 pages.  Shares trades below its 2014 high of $160.  But a lot of value has been created since 2013/2014 with the condos in Hawaii built and sold, residential lots in The Woodlands, The Bridgelands, and Summerlin sold, South Street Seaport about to open (in stages) in 2018.  The O&G crisis is the reason why the shares trades where it trades at today.

It is interesting that a few years ago - many people who were sort of challenging the long investors thesis - were sort of questioning whether the values of some of these properties were really what the longs were claiming they were.  Subsequent events have sort of shown that those properties - like the Hawaii specifically but also Summerlin in Vegas and others - really are as valuable as HHC's proponents claimed - yet the stock is cheaper now than it was then.  That is kind of interesting.
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on March 15, 2018, 10:12:05 PM
I think HHC is a 10-20 year hold.  As I have gotten older, I have come to appreciate the ability to hold something for 10 years.  That means that you're not constantly having to find new ideas every calendar year.  I think it's got a 10 year runway where you can compound at 10-15%.  In a shorter time frame, it's likely a double a 3 years (I'm using a $125 share price).  With the Trump policies, I think The Woodlands, TX and Summerlin becomes more attractive when you view it from a 10 year horizon.  One of the better management team that I've seen in a while. 
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on March 15, 2018, 10:14:32 PM
I do think that if the market crash like it did in 2008/2009, HHC NPV drops.  Now I said NPV, not necessarily intrinsic value.  The same lots etc are still very valuable.  It pushes out the time table 3-5 years.  The management team has a lot of discipline where they won't sell lots in a bear market. Or sell enough to cover overhead and no more. 
Title: Re: HHC - Howard Hughes Corp
Post by: hyten1 on March 16, 2018, 05:49:37 AM
i'm still holding, it is almost 8 years  :) and :(
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on March 16, 2018, 07:55:32 AM
i'm still holding, it is almost 8 years  :) and :(

Well, I think the first 3 years were awesome and the last 5 has been muddling along.  But overall a 3-4 bagger in 8 years, not too shabby.  Frankly, I think the stock got ahead of itself in 13 and 14.  Since then, the developments and increase in NAV have caught up to the price a bit. 
Title: Re: HHC - Howard Hughes Corp
Post by: KJP on March 16, 2018, 08:29:53 AM
I find it funny that Seritage has 57 pages and HHC has 7 pages.   

I made the same comment in the Seritage thread.  I suspect Buffett plus a superficially easier to model business explains Seritage's greater appeal.  But I don't think it's a close question whether you'd rather own Seaport + Ward Village + Summerlin + Woodlands + 50 N. Wacker, et al. for the next 20 years over Seritage's collection of assets.
Title: Re: HHC - Howard Hughes Corp
Post by: Foreign Tuffett on March 16, 2018, 09:54:25 AM
I find it funny that Seritage has 57 pages and HHC has 7 pages.   

I made the same comment in the Seritage thread.  I suspect Buffett plus a superficially easier to model business explains Seritage's greater appeal.  But I don't think it's a close question whether you'd rather own Seaport + Ward Village + Summerlin + Woodlands + 50 N. Wacker, et al. for the next 20 years over Seritage's collection of assets.

I agree with you.....but I'm not sure how relevant the comparison is unless price is factored in. HHC's EV is nearly $8B, SRG's is $3.1B.
Title: Re: HHC - Howard Hughes Corp
Post by: KJP on March 16, 2018, 10:54:59 AM
I find it funny that Seritage has 57 pages and HHC has 7 pages.   

I made the same comment in the Seritage thread.  I suspect Buffett plus a superficially easier to model business explains Seritage's greater appeal.  But I don't think it's a close question whether you'd rather own Seaport + Ward Village + Summerlin + Woodlands + 50 N. Wacker, et al. for the next 20 years over Seritage's collection of assets.

I agree with you.....but I'm not sure how relevant the comparison is unless price is factored in. HHC's EV is nearly $8B, SRG's is $3.1B.

The discussion was about the apparent relative levels of interest in the two companies.  If choosing how to prioritize my time, I'd start with the company whose assets are of far higher quality.  But based on the amount of discussion on the two boards, it doesn't appear that most people agree with that approach.

 
Title: Re: HHC - Howard Hughes Corp
Post by: NBL0303 on March 16, 2018, 11:54:44 AM
I find it funny that Seritage has 57 pages and HHC has 7 pages.   

I made the same comment in the Seritage thread.  I suspect Buffett plus a superficially easier to model business explains Seritage's greater appeal.  But I don't think it's a close question whether you'd rather own Seaport + Ward Village + Summerlin + Woodlands + 50 N. Wacker, et al. for the next 20 years over Seritage's collection of assets.

I agree with you there is no question about which assets you would prefer, but I feel compelled to recite value investing scripture: it is really a question of whether you like Seritage's assets at $2 billion (and the totality of its capital structure) versus Howard Hughes at $6 billion (along with its capital structure).  I know I am being annoying because you were probably implicitly incorporating their respective market values in your thoughts - but the OCD value investor that I am - I wanted to at least make it explicit.

Edit: Sorry I didn't realize someone else had already made this point.
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on March 17, 2018, 04:08:04 AM
The key question is with asset quality though. Granted, SRG may be a 60c on the dollar valuation, but those are retail assets RE assets, which are structurally challengened. It is better to purchase assets that are valued at 90c on the dollar when they are likely to appreciate compared to assets for 60c on the dollar that may be falling in value, especially in conjunction with leverage.
Title: Re: HHC - Howard Hughes Corp
Post by: Foreign Tuffett on October 10, 2018, 11:49:54 AM
Is anyone looking at this here? It strikes me as notable that the stock is trading at ~ the same price it was at 5 years ago.
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on October 10, 2018, 12:01:36 PM
Is anyone looking at this here? It strikes me as notable that the stock is trading at ~ the same price it was at 5 years ago.

I've been keeping an eye on it, but have the following reservations.

I think it's high quality, and cheap, but... dont exactly see major catalysts.

I also think it's highly overrated in the sense that it often gets presented as an under the radar, orphan name. I've always seen this as a hedge fund hotel with kind of a mini BRK type of cult like following to it. It definitely isn't off the radar.

They own assets that will likely face the same type of challenges any real estate co will in the present environment, there is not A TON unique to how they go about their business; the difference IMO, while there, is generally exaggerated.

Because of some of the above misconceptions, I think it got way ahead of itself 4-5 years ago, and has been paying the price since. I'd also speculatively gander that the hedgie underperformance and as a result redemption and selling has been an overhang here. I'd probably start dabbling soon with a 1-2% position, but I think you need to really play the LOOONG game here with this one. It'll take time to shake out the above mentioned issues.
Title: Re: HHC - Howard Hughes Corp
Post by: Saluki on October 10, 2018, 12:04:42 PM
Is anyone looking at this here? It strikes me as notable that the stock is trading at ~ the same price it was at 5 years ago.

It's trading at the same price, but the story has gotten better.  South Street Seaport should start making money this year, the Hawaii project sold out phase I of the condos and they are now building phase II and III. North Wacker was taken offline, but once the property is rehabbed, it should be a big money maker and Houston and Las Vegas are plugging along nicely too (No major damage to Houston properties in last year's hurricane). I like it longterm but I don't want to sell anything to add to it.   
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on October 11, 2018, 02:30:34 PM
Shhh, I'm rooting for the shares to fall more.  Please $85 a share....I'll take $90
Title: Re: HHC - Howard Hughes Corp
Post by: ander on November 15, 2018, 09:47:13 AM
Pershing Square cut its stake by 40%+ in HHC according to 13F. Smallest holding now.
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on November 15, 2018, 10:16:11 AM
CEO buys $5.5 million https://www.sec.gov/Archives/edgar/data/1498828/000117911018012786/xslF345X03/edgar.xml
President buys $0.5 million https://www.sec.gov/Archives/edgar/data/1498828/000117911018012788/xslF345X03/edgar.xml

It's interesting that Ackman held onto the shares for the past 5-6 years when shares traded as high as $160 a share in 2014 and 2015.  But now is a bad time to own it at $109. Hmm.  From a price movement perspective, there's probably a chance that HHC could trade lower if home building drops off. 
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on November 15, 2018, 10:16:57 AM
$85!! $85!!
Title: Re: HHC - Howard Hughes Corp
Post by: Saluki on November 15, 2018, 10:32:51 AM
CEO buys $5.5 million https://www.sec.gov/Archives/edgar/data/1498828/000117911018012786/xslF345X03/edgar.xml
President buys $0.5 million https://www.sec.gov/Archives/edgar/data/1498828/000117911018012788/xslF345X03/edgar.xml

It's interesting that Ackman held onto the shares for the past 5-6 years when shares traded as high as $160 a share in 2014 and 2015.  But now is a bad time to own it at $109. Hmm.  From a price movement perspective, there's probably a chance that HHC could trade lower if home building drops off.

I think he mentioned a couple of quarters back that he sold shares and replaced them with derivatives which gave him the same exposure but freed up cash for other investments.  Some of the the projects in the pipeline, like redeveloping Landmark mall into a mixed use community will take years to play out, so i'd be surprised he thought it was a hold at $160 and a sell at $109.   
Title: Re: HHC - Howard Hughes Corp
Post by: NBL0303 on November 17, 2018, 09:58:20 AM
$85!! $85!!

Did it actually trade close to $85?
Title: Re: HHC - Howard Hughes Corp
Post by: KJP on December 17, 2018, 07:45:19 AM
$85!! $85!!

Getting closer ...
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on January 10, 2019, 09:31:39 AM
FYI, bought a bunch in the mid $90s. Didn't bottom tick it and probably will never be able to fine point the bottom ever in my career.  But this should do well in the long run.  Really hoped that it would go to $85 despite having a sizable position already.   
Title: Re: HHC - Howard Hughes Corp
Post by: no_free_lunch on January 10, 2019, 09:48:11 AM
Can you expand on how you derive your price target?   Do you have any links to a valuation model?   I really want to like this one but the work to model it out seems quite extensive.
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on January 10, 2019, 10:25:44 AM
The key question is with asset quality though. Granted, SRG may be a 60c on the dollar valuation, but those are retail assets RE assets, which are structurally challengened. It is better to purchase assets that are valued at 90c on the dollar when they are likely to appreciate compared to assets for 60c on the dollar that may be falling in value, especially in conjunction with leverage.

+1
Title: Re: HHC - Howard Hughes Corp
Post by: ander on January 10, 2019, 01:49:16 PM
How are you guys valuing HHC? (e.g., cash flow, current property values, timing, etc.)?
Title: Re: HHC - Howard Hughes Corp
Post by: Deepdive on January 12, 2019, 10:25:18 PM
Can you expand on how you derive your price target?   Do you have any links to a valuation model?   I really want to like this one but the work to model it out seems quite extensive.

I think over 90% of the analysts feel the same way
Title: Re: HHC - Howard Hughes Corp
Post by: Foreign Tuffett on May 07, 2019, 03:56:05 PM
Any thoughts on why HHC has been flat over the last six years? Off the top of my head:

* Energy downturn hurt Houston MPCs

* Seaport still hasn't gained critical mass -- and isn't going to generate as much cash flow as was once thought

* Investors are cautious due to HHC's reliance on the historically fragile Las Vegas housing market

* Ackman selling off much of his position didn't engender much confidence

* Stock was probably somewhat overvalued in 2013. It has taken awhile for intrinsic valueTM to catch up to the stock price.

* HHC has lots of long tail-type assets that don't generate much cash flow. There haven't been any catalystsTM to force the market to bid this up to NAV

Title: Re: HHC - Howard Hughes Corp
Post by: Eye4Valu on May 07, 2019, 08:53:06 PM
Any thoughts on why HHC has been flat over the last six years? Off the top of my head:

* Energy downturn hurt Houston MPCs

* Seaport still hasn't gained critical mass -- and isn't going to generate as much cash flow as was once thought

* Investors are cautious due to HHC's reliance on the historically fragile Las Vegas housing market

* Ackman selling off much of his position didn't engender much confidence

* Stock was probably somewhat overvalued in 2013. It has taken awhile for intrinsic valueTM to catch up to the stock price.

* HHC has lots of long tail-type assets that don't generate much cash flow. There haven't been any catalystsTM to force the market to bid this up to NAV

FT-I don't want you to get a cease and desist. Those words are trademarked.
Title: Re: HHC - Howard Hughes Corp
Post by: Deepdive on May 07, 2019, 10:16:42 PM
Any thoughts on why HHC has been flat over the last six years? Off the top of my head:

* Energy downturn hurt Houston MPCs

* Seaport still hasn't gained critical mass -- and isn't going to generate as much cash flow as was once thought

* Investors are cautious due to HHC's reliance on the historically fragile Las Vegas housing market

* Ackman selling off much of his position didn't engender much confidence

* Stock was probably somewhat overvalued in 2013. It has taken awhile for intrinsic valueTM to catch up to the stock price.

* HHC has lots of long tail-type assets that don't generate much cash flow. There haven't been any catalystsTM to force the market to bid this up to NAV

FT-I don't want you to get a cease and desist. Those words are trademarked.

Someone on the call today acknowledged that they are creating a lot of value and NAV is growing.  But he lamented that HHC should do something to pay a dividend, even a small one, so that the institutions will own the stock.  Six years is a long time for a stock to languish. 
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on May 08, 2019, 06:10:01 AM
Just thought I'd bring up, as it may be useful for bigger picture context, or maybe not... I occasionally spend time reading old write ups, older annual reports, or just tangential info relating to companies I follow; There was a time before this was spun out, where the HHC assets were largely considered the "bad" assets. Yes this was an odd time but the reasons I think they were viewed as such had to do with where the economy and RE markets were. Which if nothing else, highlights the various waves of market cycles and how far we've come. Maybe also where we are in the cycle. Who knows.

I am noticing that RE is starting to get broad stroked "cheap" treatment. Just like how every auto trades at 5-6x, I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV. Personally I prefer this not occur; as it could mean we are in for a longer dull period until the perception of what's causing this widespread sentiment changes. Much easier to change a few things with one company to get a better valuation than have to have an entire sector have something change.
Title: Re: HHC - Howard Hughes Corp
Post by: NBL0303 on May 08, 2019, 07:32:30 AM

I am noticing that RE is starting to get broad stroked "cheap" treatment. Just like how every auto trades at 5-6x, I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV. Personally I prefer this not occur; as it could mean we are in for a longer dull period until the perception of what's causing this widespread sentiment changes. Much easier to change a few things with one company to get a better valuation than have to have an entire sector have something change.

Good points. Just curious, "I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV." Which high-quality ones are you referring to/interested in? Thank you.
Title: Re: HHC - Howard Hughes Corp
Post by: Castanza on May 08, 2019, 07:45:44 AM
http://clarkstreetvalue.blogspot.com/2019/03/howard-hughes-updated-thoughts-2019.html

A good read on HHC.
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on May 08, 2019, 08:14:17 AM

I am noticing that RE is starting to get broad stroked "cheap" treatment. Just like how every auto trades at 5-6x, I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV. Personally I prefer this not occur; as it could mean we are in for a longer dull period until the perception of what's causing this widespread sentiment changes. Much easier to change a few things with one company to get a better valuation than have to have an entire sector have something change.

Good points. Just curious, "I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV." Which high-quality ones are you referring to/interested in? Thank you.

VNO depending on the cap used for office space is pretty wildly undervalued, HHC supposedly trades at a massive discount, Griffin Industrial trades well below, FRP Holdings probably $20 per share below, Consolidated Tomoka $30 per share, Washington Prime trades 10 football fields away from the asset value...Probably a few more but these conditions have me wondering if the market at then moment is just planning to perpetually discount these things, much like we've seen in other sectors like auto and airlines. Which means they may not be as attractive as I've previously thought.
Title: Re: HHC - Howard Hughes Corp
Post by: Saluki on May 08, 2019, 09:07:52 AM
When I looked at the JVs and out parcels that SRG and WPG sold off (which weren't the crown jewels) I thought there was a big disconnect between the cap rate that private parties were paying for these assets vs what they were being priced in the public markets.  I thought that they eventually the price would reflect that but I hadn't considered that might be permanently ugly like car companies or airlines.  (I am long HHC, SRG and JOE, all of which seem to have a lot of potential that the market doesn't want to recognize). 
Title: Re: HHC - Howard Hughes Corp
Post by: racemize on May 08, 2019, 10:27:00 AM
My main objection to all of them is that I'd rather own BPY/BPR. 
Title: Re: HHC - Howard Hughes Corp
Post by: bizaro86 on May 08, 2019, 11:46:19 AM
I don't think public market real estate can be a permanently under valued sector unless private market RE prices follow it down.

Airlines and autos are not divisible entities. UA couldn't sell its Houston hub for 12x ebitda. I know fiat has done spin and sale transactions, but the core auto biz is still one business.

Real estate is exactly opposite. If you own 10 malls or 10 office buildings there isn't much of a scale advantage, and it'd be easy to sell one independently. In many cases individual assets are as easy to sell as portfolios. Maybe easier, because there are more potential buyers. In fact, on big assets you can even sell a partial equity interest in a property and get a reasonable price in the private market.

If the public-private market arbitrage opportunity stays open, more firms will either undertake it on purpose or face activists who try to make them do so.
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on May 08, 2019, 12:03:26 PM

I am noticing that RE is starting to get broad stroked "cheap" treatment. Just like how every auto trades at 5-6x, I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV. Personally I prefer this not occur; as it could mean we are in for a longer dull period until the perception of what's causing this widespread sentiment changes. Much easier to change a few things with one company to get a better valuation than have to have an entire sector have something change.

Good points. Just curious, "I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV." Which high-quality ones are you referring to/interested in? Thank you.

VNO depending on the cap used for office space is pretty wildly undervalued, HHC supposedly trades at a massive discount, Griffin Industrial trades well below, FRP Holdings probably $20 per share below, Consolidated Tomoka $30 per share, Washington Prime trades 10 football fields away from the asset value...Probably a few more but these conditions have me wondering if the market at then moment is just planning to perpetually discount these things, much like we've seen in other sectors like auto and airlines. Which means they may not be as attractive as I've previously thought.

MAC and TCO trade at almost an 8% cap rate and own almost exclusively A- malls.
Title: Re: HHC - Howard Hughes Corp
Post by: peridotcapital on May 08, 2019, 02:16:37 PM
The Seaport is really turning into a headwind for the stock, it appears, especially considering that one would have thought that the project would generate above-average returns given the uniqueness of the property. Including all of the G&A involved, HHC is going to sink over $1B into this thing, and will be lucky to earn $50M of annual NOI. And yet they keep buying parcels, even though the community challenges every single idea they have for development. I hope they sell this asset upon stabilization. It's unfortunate that they keep pushing back the stabilization date, and I was shocked when they disclosed last quarter that they are actually taking ownership stakes in many of the businesses, even running them internally. What does HHC really know about operating clothing shops, ice cream stores, and restaurants, and why on earth would they choose to be anything but the landlord? It really begs the question what the true rental demand is for their space. Nobody would have thought that in 2019 the Seaport would lose money...
Title: Re: HHC - Howard Hughes Corp
Post by: Sombunall on May 08, 2019, 03:55:46 PM
We own the stock and I would agree... Their estimate of NOI for Seaport is $43m-$53m. I'm hoping that's really a sandbagged number, or this project doesn't look like it's anywhere near the rest of their stuff. (Hard to guess what Seaport's NOI could be... lots of variables, which makes me think they aimed low with their public guess... but we'll see). The other properties they own are doing very well. It is a surprise -- I wouldn't have guessed it, say, a year ago --- to say that Seaport is dragging things down, but it's true... I'm guessing management knows this already, and pressure is building on them about the stock price / NAV disconnect, so I wouldn't discount a sale of Seaport, or some other move... Having said all this, I still think the upside is great. It's just going to take some time to unlock...
Title: Re: HHC - Howard Hughes Corp
Post by: jsgcapital13 on May 08, 2019, 07:07:39 PM
Management compensated is heavily aligned with creating long term shareholder value, through a series of staggered warrants (IIRC but could be wrong), and I also believe they bought a lot of stock shortly after the spin in the open market. This was during the height of Ackman mania, and there were a lot of articles / videos on the HHC vision.

here is one from 2015:
https://www.forbes.com/sites/antoinegara/2015/05/06/bill-ackman-baby-buffett-howard-hughes/

and here is the comments from his letter earliest this year:
During 2018, HHC continued to make strong business progress. It recently reported the highest level of residential land sales in its master planned communities in HHC’s history. Sales of units in HHC’s Ward Village in Hawaii remained strong. Since the initial pre-sale launch of units in 2014, Ward Village has sold more than 1,900 condo units generating total proceeds of over $2.2 billion at projected 30% gross margins. In addition, HHC now has 50 million square feet of development entitlements within its existing portfolio and is nearing completion of the South Street Seaport development in downtown New York.

HHC’s share price decreased 26% in 2018 and rebounded 13% year-to-date in 2019. While HHC has now operated independently since 2010, it operated quietly, out of view from much of the investment community until 2017 when it had its first Investor Day. Despite HHC’s recent public facing efforts, the company is still not well followed or understood by the investment community which, in our view, is one of the reasons why the company’s stock declined in the fourth quarter. HHC tends to be grouped with homebuilding-related stocks, which declined in the fourth quarter as the market focused on potential housing headwinds.

Today, HHC owns a highly diversified portfolio of operating assets that generate consistent cash flows. We expect that over time, as other investors gain a better understanding of HHC’s business and appreciate that it has different and more favorable economic characteristics than a homebuilder, HHC will achieve a valuation that is more reflective of its intrinsic value that continues to grow at a rapid pace.

Title: Re: HHC - Howard Hughes Corp
Post by: Mephistopheles on May 09, 2019, 12:00:17 PM

I am noticing that RE is starting to get broad stroked "cheap" treatment. Just like how every auto trades at 5-6x, I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV. Personally I prefer this not occur; as it could mean we are in for a longer dull period until the perception of what's causing this widespread sentiment changes. Much easier to change a few things with one company to get a better valuation than have to have an entire sector have something change.

Good points. Just curious, "I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV." Which high-quality ones are you referring to/interested in? Thank you.

VNO depending on the cap used for office space is pretty wildly undervalued, HHC supposedly trades at a massive discount, Griffin Industrial trades well below, FRP Holdings probably $20 per share below, Consolidated Tomoka $30 per share, Washington Prime trades 10 football fields away from the asset value...Probably a few more but these conditions have me wondering if the market at then moment is just planning to perpetually discount these things, much like we've seen in other sectors like auto and airlines. Which means they may not be as attractive as I've previously thought.

MAC and TCO trade at almost an 8% cap rate and own almost exclusively A- malls.

How did you get that high of a cap rate for Macerich? I am only getting 5%. I did market cap + debt - cash to get market value and revenues - expenses + depreciation to get the NOI.
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on May 09, 2019, 06:36:23 PM

I am noticing that RE is starting to get broad stroked "cheap" treatment. Just like how every auto trades at 5-6x, I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV. Personally I prefer this not occur; as it could mean we are in for a longer dull period until the perception of what's causing this widespread sentiment changes. Much easier to change a few things with one company to get a better valuation than have to have an entire sector have something change.

Good points. Just curious, "I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV." Which high-quality ones are you referring to/interested in? Thank you.

VNO depending on the cap used for office space is pretty wildly undervalued, HHC supposedly trades at a massive discount, Griffin Industrial trades well below, FRP Holdings probably $20 per share below, Consolidated Tomoka $30 per share, Washington Prime trades 10 football fields away from the asset value...Probably a few more but these conditions have me wondering if the market at then moment is just planning to perpetually discount these things, much like we've seen in other sectors like auto and airlines. Which means they may not be as attractive as I've previously thought.

MAC and TCO trade at almost an 8% cap rate and own almost exclusively A- malls.

How did you get that high of a cap rate for Macerich? I am only getting 5%. I did market cap + debt - cash to get market value and revenues - expenses + depreciation to get the NOI.

I calculated it indirectly from Morningstar, They state a $57 value/share at a 6.1% cap rate. Using $5.6B in debt and ~150M shares, I get and NOI of $866M, which translates into a  cap rate of 7.3%. I have  seen mid 7% cap rates in other analyst reports.

The JV make it difficult to calculate a cap rate, because the contribution and the debt in the JV is not consolidated , so once has to rely on either the company or analyst report (which probably get numbers from management).
Title: Re: HHC - Howard Hughes Corp
Post by: Mephistopheles on May 11, 2019, 11:26:33 AM

I am noticing that RE is starting to get broad stroked "cheap" treatment. Just like how every auto trades at 5-6x, I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV. Personally I prefer this not occur; as it could mean we are in for a longer dull period until the perception of what's causing this widespread sentiment changes. Much easier to change a few things with one company to get a better valuation than have to have an entire sector have something change.

Good points. Just curious, "I am beginning to notice that a surprising number of high quality companies are trading at big discounts to NAV." Which high-quality ones are you referring to/interested in? Thank you.

VNO depending on the cap used for office space is pretty wildly undervalued, HHC supposedly trades at a massive discount, Griffin Industrial trades well below, FRP Holdings probably $20 per share below, Consolidated Tomoka $30 per share, Washington Prime trades 10 football fields away from the asset value...Probably a few more but these conditions have me wondering if the market at then moment is just planning to perpetually discount these things, much like we've seen in other sectors like auto and airlines. Which means they may not be as attractive as I've previously thought.

MAC and TCO trade at almost an 8% cap rate and own almost exclusively A- malls.

How did you get that high of a cap rate for Macerich? I am only getting 5%. I did market cap + debt - cash to get market value and revenues - expenses + depreciation to get the NOI.

I calculated it indirectly from Morningstar, They state a $57 value/share at a 6.1% cap rate. Using $5.6B in debt and ~150M shares, I get and NOI of $866M, which translates into a  cap rate of 7.3%. I have  seen mid 7% cap rates in other analyst reports.

The JV make it difficult to calculate a cap rate, because the contribution and the debt in the JV is not consolidated , so once has to rely on either the company or analyst report (which probably get numbers from management).

Thanks for this. The JV stuff is what I was overlooking. They actually detail the balance sheet and income statement for the JV in the 10-k (pgs 57, 80-84), and I'm getting a cap rate of 6.6% accounting for all of this. I'll start a new thread for MAC as to keep this one for HHC.
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on May 11, 2019, 08:42:18 PM
The Seaport is really turning into a headwind for the stock, it appears, especially considering that one would have thought that the project would generate above-average returns given the uniqueness of the property. Including all of the G&A involved, HHC is going to sink over $1B into this thing, and will be lucky to earn $50M of annual NOI. And yet they keep buying parcels, even though the community challenges every single idea they have for development. I hope they sell this asset upon stabilization. It's unfortunate that they keep pushing back the stabilization date, and I was shocked when they disclosed last quarter that they are actually taking ownership stakes in many of the businesses, even running them internally. What does HHC really know about operating clothing shops, ice cream stores, and restaurants, and why on earth would they choose to be anything but the landlord? It really begs the question what the true rental demand is for their space. Nobody would have thought that in 2019 the Seaport would lose money...

I think the retail model has changed forever.  It's very different for locations that offers incredible foot traffic, i.e. Time Square, Fifth Ave, Seaport etc.  As a landlord, do you say "pay me $x in rent, if you do awesome then you get to keep everything above the fixed rent?"  Or do you say "Pay me a small fixed fee, and I get to keep a % of your revenue?"  The con is that HHC is trying out a new retail concept which I believe the entire retail landlord needs to.  The old model of signing 10 year leases is broken.  Landlord and tenants are more joined at the hip going forward.

Developing in NYC is tough, what a shocker?  That's like saying water is wet and fire is hot.   Why do you think stabilized assets in NYC commands 3.5-4.0% cap rates?  It's because it is so hard to build anything.  People fight you every step along the way.  The general rule of thumb for real estate development is that "if it's easy for you to develop, it's easy for your competitors to develop.  If it's hard..."  Not sure if they will hit, $40, 50, or 60mm of NOI.  Is suspect that the first generation rent will be much lower than second generation rent as the place build some buzz.  This is why they only sign 5 years agreements with Heineken, Chase, etc.  They want more money for the 2nd gen.  Either way, the market assigns the Seaport zero value today.  Any stabilized cashflow will be a positive to the thesis. 
Title: Re: HHC - Howard Hughes Corp
Post by: peridotcapital on May 13, 2019, 08:48:15 AM

I think the retail model has changed forever.  It's very different for locations that offers incredible foot traffic, i.e. Time Square, Fifth Ave, Seaport etc.  As a landlord, do you say "pay me $x in rent, if you do awesome then you get to keep everything above the fixed rent?"  Or do you say "Pay me a small fixed fee, and I get to keep a % of your revenue?"  The con is that HHC is trying out a new retail concept which I believe the entire retail landlord needs to.  The old model of signing 10 year leases is broken.  Landlord and tenants are more joined at the hip going forward.

Developing in NYC is tough, what a shocker?  That's like saying water is wet and fire is hot.   Why do you think stabilized assets in NYC commands 3.5-4.0% cap rates?  It's because it is so hard to build anything.  People fight you every step along the way.  The general rule of thumb for real estate development is that "if it's easy for you to develop, it's easy for your competitors to develop.  If it's hard..."  Not sure if they will hit, $40, 50, or 60mm of NOI.  Is suspect that the first generation rent will be much lower than second generation rent as the place build some buzz.  This is why they only sign 5 years agreements with Heineken, Chase, etc.  They want more money for the 2nd gen.  Either way, the market assigns the Seaport zero value today.  Any stabilized cashflow will be a positive to the thesis.

I would not have a problem with them charging a low base rent and a high percentage rent, but I think owning and operating businesses is far removed from that, and it increases risk (and therefore reduces the multiple investors will pay in general).

If i felt confident that I was getting the Seaport for free, that would help, but I don't know if the rest of the assets are worth the current E/V of nearly $7.5B.
Title: Re: HHC - Howard Hughes Corp
Post by: Sombunall on June 24, 2019, 08:10:18 PM
Down almost 5% today on news of... financing for Seaport? I suppose the market is concerned about delays and red ink at Seaport. But seems severe. Was there some other news today?



Title: Re: HHC - Howard Hughes Corp
Post by: peridotcapital on June 25, 2019, 06:46:29 AM
Down almost 5% today on news of... financing for Seaport? I suppose the market is concerned about delays and red ink at Seaport. But seems severe. Was there some other news today?

They keep saying how they are fully funded for all pipeline projects with current cash and liquidity, so adding more debt is certainly unexpected and begs the question why...
Title: Re: HHC - Howard Hughes Corp
Post by: Jcmeg35 on June 25, 2019, 06:50:21 AM
Down almost 5% today on news of... financing for Seaport? I suppose the market is concerned about delays and red ink at Seaport. But seems severe. Was there some other news today?

They keep saying how they are fully funded for all pipeline projects with current cash and liquidity, so adding more debt is certainly unexpected and begs the question why...
I may be conflating the whole Seaport with just the Pier, but my memory was that in the past they had said they expected to take out financing for it at some point in the future..
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on June 25, 2019, 08:42:12 AM
Down almost 5% today on news of... financing for Seaport? I suppose the market is concerned about delays and red ink at Seaport. But seems severe. Was there some other news today?

They keep saying how they are fully funded for all pipeline projects with current cash and liquidity, so adding more debt is certainly unexpected and begs the question why...

Note that the interest rate on this loan is fairly high at 6.1%. Maybe that’s the going rate for construction loans.
Title: Re: HHC - Howard Hughes Corp
Post by: adhital on June 25, 2019, 12:02:26 PM
Quick Back of the envelop valuation. Please correct me if I'm way off here..

MPC : land undiscounted value $5 Billion.  land value increase as MPC matures, so we may not need to discount this. However, for margin, lets discount by 30%. MPC value $3.5Billion.

Operating asset
$321mm NOI stabilized in the next 5 years. $200mm as of 2019 and $121mm in the next 5 years (or ~$100mm discounted @ 10% based on company's yearly projection). $1.7 Billion debt. with 6% CAP = OP asset equals $3.1 Billion net. Bill said they deserve higher CAP, perhaps 4/5?
corporate -$757mm debt


North waker $0
Sea port $0
hawaii condo $0


Share outstanding 43MM

BV/share = 3500+3100-757 = $135/share

I don't know why anyone needs to really care about seaport for what it is selling for today.
Title: Re: HHC - Howard Hughes Corp
Post by: Foreign Tuffett on June 25, 2019, 12:10:26 PM
Quick Back of the envelop valuation. Please correct me if I'm way off here..

MPC : land undiscounted value $5 Billion.  land value increase as MPC matures, so we may not need to discount this. However, for margin, lets discount by 30%. MPC value $3.5Billion.

Operating asset
$321mm NOI stabilized in the next 5 years. $200mm as of 2019 and $121mm in the next 5 years (or ~$100mm discounted @ 10% based on company's yearly projection). $1.7 Billion debt. with 6% CAP = OP asset equals $3.1 Billion net. Bill said they deserve higher CAP, perhaps 4/5?
corporate -$757mm debt


North waker $0
Sea port $0
hawaii condo $0


Share outstanding 43MM

BV/share = 3500+3100-757 = $135/share

I don't know why anyone needs to really care about seaport for what it is selling for today.

NPV of their corporate overhead?
Title: Re: HHC - Howard Hughes Corp
Post by: adhital on June 25, 2019, 01:07:32 PM
Quick Back of the envelop valuation. Please correct me if I'm way off here..

MPC : land undiscounted value $5 Billion.  land value increase as MPC matures, so we may not need to discount this. However, for margin, lets discount by 30%. MPC value $3.5Billion.

Operating asset
$321mm NOI stabilized in the next 5 years. $200mm as of 2019 and $121mm in the next 5 years (or ~$100mm discounted @ 10% based on company's yearly projection). $1.7 Billion debt. with 6% CAP = OP asset equals $3.1 Billion net. Bill said they deserve higher CAP, perhaps 4/5?
corporate -$757mm debt


North waker $0
Sea port $0
hawaii condo $0


Share outstanding 43MM

BV/share = 3500+3100-757 = $135/share

I don't know why anyone needs to really care about seaport for what it is selling for today.

NPV of their corporate overhead?

2018 10K says $100 million/year administrative cost. I think we can live with that given $0 given to Hawaii, NY or Chicago strategic initiatives and lets not discount the organic NOI growth.
Title: Re: HHC - Howard Hughes Corp
Post by: Sombunall on June 26, 2019, 08:21:09 AM
Agree, as you show Seaport could be a doughnut and HHC still works.
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on June 26, 2019, 09:02:07 AM
I personally would rather own Beyond Meat than HHC.  At least Beyond Meat is working.  What's HHC done in the last 5-6 years? 
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on June 26, 2019, 09:38:50 AM
I personally would rather own Beyond Meat than HHC.  At least Beyond Meat is working.  What's HHC done in the last 5-6 years?
Here is the answer:
https://youtu.be/Y7tvauOJMHo (https://youtu.be/Y7tvauOJMHo)

Bought a few today. The selling seems a bit too much.
Title: Re: HHC - Howard Hughes Corp
Post by: Saluki on June 26, 2019, 09:55:10 AM
I added some today too. Seems oversold to me and I had planned on owning it for another 2 or three years so I don't mind the dip. I would've bought more but, until I sell something else, I'm fully invested except for some spare change in the sofa cushions. 
Title: Re: HHC - Howard Hughes Corp
Post by: adhital on June 26, 2019, 11:25:34 AM
I’m all in as well :)
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on June 26, 2019, 12:36:04 PM
I bought some this morning as well. However my concerns are across the board.

Specifically, how can you say this is "cheap" when frankly, every real estate company(barring a few like O, NNN) I look at these days is optically "cheap" or "trading at a discount"? This is how stealth(or not so stealth) sector wide multiple contractions occur. If even the best ones trade at discounts, I dont think its proper to base buying a company on the fact that it trades at a discount.

How these guys execute is a short-medium term risk. But I think value can even be destroyed here(as others mentioned) and from $92 one still makes out well if your horizon is 5+ years.

Its funny though, all the talk of a bubble... real estate investors would die for even fair valuations on their holdings...Like seriously? how can we be in a bubble if you can't even get NAV minus 10% for some of the best companies in the sector?

Title: Re: HHC - Howard Hughes Corp
Post by: thepupil on June 26, 2019, 12:49:01 PM
Its funny though, all the talk of a bubble... real estate investors would die for even fair valuations on their holdings...Like seriously? how can we be in a bubble if you can't even get NAV minus 10% for some of the best companies in the sector?

amen. At parties, I have started to introduce myself as a real estate investor via the stock market, rather than a hobbyist stock investor.
Title: Re: HHC - Howard Hughes Corp
Post by: NBL0303 on June 26, 2019, 01:03:12 PM
Just curious, does Bill Ackman still own Howard Hughes shares? Please believe me when I say that I do not take any information whatsoever from Ackman/Pershing buying or selling - and I am literally zero more or less interested in buying something because of him - but I'm just curious if he is still selling shares - because I remember he was selling a significant amount a year or so ago. Just wondering if this has added to the effective float.
Title: Re: HHC - Howard Hughes Corp
Post by: SHDL on June 26, 2019, 01:16:16 PM
Its funny though, all the talk of a bubble... real estate investors would die for even fair valuations on their holdings...Like seriously? how can we be in a bubble if you can't even get NAV minus 10% for some of the best companies in the sector?

IIRC there was a story somewhere about how REITs as an asset class got really cheap relative to the general stock market in the late 1990s and how Charlie Munger used it as a place to hide out for a while.

I've been thinking about doing something similar but it will likely take a while as real estate isn't an area that I'm really familiar with...
Title: Re: HHC - Howard Hughes Corp
Post by: adhital on June 26, 2019, 01:20:32 PM
Its funny though, all the talk of a bubble... real estate investors would die for even fair valuations on their holdings...Like seriously? how can we be in a bubble if you can't even get NAV minus 10% for some of the best companies in the sector?

amen. At parties, I have started to introduce myself as a real estate investor via the stock market, rather than a hobbyist stock investor.

I think this sector is depressed because of the recent bond-yield plunge, late in the housing and credit cycle etc. etc. Or,  its just that FANG’s of the world is taking mr.market's attention. but he will be back!
I once owned KW when it was on sale, ~$16 for no real reason, and took capital out when it was $23 within few months. I think KW is worth $28+ in private. For now, I take HHC as a gift and to hold it for a very long time. If the world goes south, at least I know I own the hard and income producing assets managed by good mangers and an optionality for one of the MPC or projects to be like Irvine ranch or MSG..
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on June 26, 2019, 07:35:17 PM
Real estate is doing fine, Real estate packaged as and equity security not so much. It is easy to buy real estate of decent to good quality for 20-40% discounts. Management can’t rely on PP presentation showing NAV, they need to act, sell assets and buy back stock. My guess however is that they are not incentivized to shrink the company they run, even if it is accretive to NAV.
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on June 26, 2019, 10:45:15 PM
Real estate is doing fine, Real estate packaged as and equity security not so much. It is easy to buy real estate of decent to good quality for 20-40% discounts. Management can’t rely on PP presentation showing NAV, they need to act, sell assets and buy back stock. My guess however is that they are not incentivized to shrink the company they run, even if it is accretive to NAV.

Tell that to the SL Green shareholders, it's been tough for them as well
Title: Re: HHC - Howard Hughes Corp
Post by: peridotcapital on June 27, 2019, 06:54:47 AM
Quick Back of the envelop valuation. Please correct me if I'm way off here..

MPC : land undiscounted value $5 Billion.  land value increase as MPC matures, so we may not need to discount this. However, for margin, lets discount by 30%. MPC value $3.5Billion.

Operating asset
$321mm NOI stabilized in the next 5 years. $200mm as of 2019 and $121mm in the next 5 years (or ~$100mm discounted @ 10% based on company's yearly projection). $1.7 Billion debt. with 6% CAP = OP asset equals $3.1 Billion net. Bill said they deserve higher CAP, perhaps 4/5?
corporate -$757mm debt


North waker $0
Sea port $0
hawaii condo $0


Share outstanding 43MM

BV/share = 3500+3100-757 = $135/share

I don't know why anyone needs to really care about seaport for what it is selling for today.

$3.5B for the present value of the MPC land seems very, very high.

The NPV of $200M of land sale profit annually for each of the next 20 years comes out to $1.75B (using a 10% discount rate).

And obviously the economic cycle will make for some very low years during recessions.
Title: Re: HHC - Howard Hughes Corp
Post by: peridotcapital on June 27, 2019, 06:56:44 AM
CNBC's David Faber reports HHC has hired bankers to explore strategic alternatives. Unless they can get a great price, I hope they don't sell the whole business, which leaves us public investors out of the long run plans completely.

Stock up 15% on the news initially.
Title: Re: HHC - Howard Hughes Corp
Post by: Saluki on June 27, 2019, 07:03:43 AM
https://www.cnbc.com/2019/06/27/david-faber-howard-hughes-corp-hires-centerview-to-explore-sale.html

Ack!  I bought some yesterday but I didn't want to sell anything to buy a lot more.  That's my stupid tax for the day! 
Title: Re: HHC - Howard Hughes Corp
Post by: peridotcapital on June 27, 2019, 07:25:10 AM
The more I think about the idea of the board considering a sale of the entire company, the more I wonder if maybe they should wait a little longer for the market to come around (though some kind of separation/spin/partial sale could make sense).

I think a big reason why the market price has been weak (vs NAV) lately is because many would have hoped that at this size (2018 operating asset revenue of $400M) the company would be turning a profit on those assets, such that further land/condo sales would fund construction projects to grow earnings in a fairly predictable straight line.

And yet, on that $400M of revenue last year, the operating assets posted FFO of NEGATIVE $31 million. Compared to other public real estate plays, that is not going to get much attention. I don't know if the high cost structure is temporary or not ($100M of annual G&A plus $85M of annual interest expense with about 7 million SF of space leased), but if their profit margins will look far different in 2-3 years, as a public shareholder I would want them to wait and see how the market would react to that. Or maybe they could focus on the cost side too because that G&A number is huge.

What do others think about the idea of selling the whole business? At what price would you be happy to sell today?
Title: Re: HHC - Howard Hughes Corp
Post by: adhital on June 27, 2019, 07:31:11 AM
The more I think about the idea of the board considering a sale of the entire company, the more I wonder if maybe they should wait a little longer for the market to come around (though some kind of separation/spin/partial sale could make sense).

I think a big reason why the market price has been weak (vs NAV) lately is because many would have hoped that at this size (2018 operating asset revenue of $400M) the company would be turning a profit on those assets, such that further land/condo sales would fund construction projects to grow earnings in a fairly predictable straight line.

And yet, on that $400M of revenue last year, the operating assets posted FFO of NEGATIVE $31 million. Compared to other public real estate plays, that is not going to get much attention. I don't know if the high cost structure is temporary or not ($100M of annual G&A plus $85M of annual interest expense with about 7 million SF of space leased), but if their profit margins will look far different in 2-3 years, as a public shareholder I would want them to wait and see how the market would react to that. Or maybe they could focus on the cost side too because that G&A number is huge.

What do others think about the idea of selling the whole business? At what price would you be happy to sell today?

Close to $200/share
Title: Re: HHC - Howard Hughes Corp
Post by: adhital on June 27, 2019, 07:35:08 AM
Quick Back of the envelop valuation. Please correct me if I'm way off here..

MPC : land undiscounted value $5 Billion.  land value increase as MPC matures, so we may not need to discount this. However, for margin, lets discount by 30%. MPC value $3.5Billion.

Operating asset
$321mm NOI stabilized in the next 5 years. $200mm as of 2019 and $121mm in the next 5 years (or ~$100mm discounted @ 10% based on company's yearly projection). $1.7 Billion debt. with 6% CAP = OP asset equals $3.1 Billion net. Bill said they deserve higher CAP, perhaps 4/5?
corporate -$757mm debt


North waker $0
Sea port $0
hawaii condo $0


Share outstanding 43MM

BV/share = 3500+3100-757 = $135/share

I don't know why anyone needs to really care about seaport for what it is selling for today.

$3.5B for the present value of the MPC land seems very, very high.

The NPV of $200M of land sale profit annually for each of the next 20 years comes out to $1.75B (using a 10% discount rate).

And obviously the economic cycle will make for some very low years during recessions.

I’m not an expert on this but I think, MPC’s land price is vey hard to predict. The last remaining slots can command very very high valuation. I don’t think current ebit multiple is the right way to value this.
Title: Re: HHC - Howard Hughes Corp
Post by: mjm on June 27, 2019, 07:35:24 AM
I personally would rather own Beyond Meat than HHC.  At least Beyond Meat is working.  What's HHC done in the last 5-6 years?
Here is the answer:
https://youtu.be/Y7tvauOJMHo (https://youtu.be/Y7tvauOJMHo)

Bought a few today. The selling seems a bit too much.

congrads
Title: Re: HHC - Howard Hughes Corp
Post by: Sombunall on June 27, 2019, 07:56:05 AM
 I find it hard to believe they will sell the whole company. The more and more I think about it, the more and more a partial sale seems a more likely option.  I guess there is a price for everything so we’ll see… For me I’d be disappointed if it was less than say $150 per share. Remember it was $145 last year, before the q4 sell off...
Title: Re: HHC - Howard Hughes Corp
Post by: Sombunall on June 27, 2019, 07:59:06 AM
Check that, $142 last summer...

And I agree expenses are high, but maybe not so high if you consider so much of their activity is development.  I would expect expenses to moderate as their properties mature...

Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on June 27, 2019, 09:14:07 AM
I'm sticking to my position in Beyond Meat, it is the future.  This move in HHC is Ackman trying to window dress just before quarter end.  Short HHC!!
Title: Re: HHC - Howard Hughes Corp
Post by: Gamecock-YT on June 27, 2019, 09:45:29 AM
I'm sticking to my position in Beyond Meat, it is the future.  This move in HHC is Ackman trying to window dress just before quarter end.  Short HHC!!

This was my thoughts as well, a position of strength to liquidate into. He’s gradually been selling the past few quarters.
Title: Re: HHC - Howard Hughes Corp
Post by: Foreign Tuffett on June 27, 2019, 10:01:47 AM
I'm sticking to my position in Beyond Meat, it is the future.  This move in HHC is Ackman trying to window dress just before quarter end.  Short HHC!!

This was my thoughts as well, a position of strength to liquidate into. He’s gradually been selling the past few quarters.

I think BG2008 was being sarcastic, but I do think there's something to this line of thinking. As you mention, Ackman (who is still Chairman of the BOD) has been selling. Presumably he would welcome the opportunity to sell the rest of his position at higher prices.

Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on June 27, 2019, 10:36:10 AM
Yea lets not forget the stunt Billy Boy pulled with AGN. Certainly not out of the question, and IMO more likely than not his own interests figured into this. This has nothing to do with HHC fundamentally though. Outside of the fact shareholder just got their next 3 years worth of returns in one day.
Title: Re: HHC - Howard Hughes Corp
Post by: peridotcapital on June 27, 2019, 11:53:46 AM
Fortunately for us, Ackman has minimal financial incentive to get cute with this in the short term... it was just 2% of his disclosed 13F positions at last quarter-end. I am paring back the position and will see what happens. Decent chance nothing big comes of this and I can buy it all back 20% lower...
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on June 27, 2019, 03:06:03 PM
Yea lets not forget the stunt Billy Boy pulled with AGN. Certainly not out of the question, and IMO more likely than not his own interests figured into this. This has nothing to do with HHC fundamentally though. Outside of the fact shareholder just got their next 3 years worth of returns in one day.

I didn't really pay much attention to AGN, what did Billy Boy do? 
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on June 27, 2019, 03:10:20 PM
Ackman's got a 5% position with derivatives and what not

I think NAV is $180-220.  Best buyer likely pension funds like CALPER and can hold for 30 years.  That or Jeff Bezos if he wants to build an Amazon utopia in Summerlin Vegas.  Pay code monkeys $200k and they can live like kings in $500k houses.   This applies in The Woodlands as well. 
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on June 27, 2019, 03:34:39 PM
Yea lets not forget the stunt Billy Boy pulled with AGN. Certainly not out of the question, and IMO more likely than not his own interests figured into this. This has nothing to do with HHC fundamentally though. Outside of the fact shareholder just got their next 3 years worth of returns in one day.

I didn't really pay much attention to AGN, what did Billy Boy do?

I don’t recall exactly every detail, but more or less...He pitched Mike Pearson on having VRX buy AGN, with the agreement that he would first go out and buy a 10% position(along with having VRX buy some time too which I believe he finagled a profit share agreement on). He then built the entire position using OTC calls so his capital outlay to acquire 10% of a $60B company was only like a couple hundred million. Upon announcing the deal he more or less made 100% on his money in a few weeks. Until of course he had to give it all back in an SEC settlement.

Well, “supposedly” he did those things. One of the ballsiest things I’ve ever seen.
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on June 28, 2019, 10:25:36 AM
I'm sticking to my position in Beyond Meat, it is the future.  This move in HHC is Ackman trying to window dress just before quarter end.  Short HHC!!

See, I told you, this was a short yesterday.  Down $8 since yesterday's close.   [Sarcasm intended]
Title: Re: HHC - Howard Hughes Corp
Post by: Schwab711 on June 28, 2019, 10:54:30 AM
I'm sticking to my position in Beyond Meat, it is the future.  This move in HHC is Ackman trying to window dress just before quarter end.  Short HHC!!

Are you really long BYND?
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on June 28, 2019, 11:34:02 AM
I'm sticking to my position in Beyond Meat, it is the future.  This move in HHC is Ackman trying to window dress just before quarter end.  Short HHC!!

Are you really long BYND?

How could I not be long a fake meat company that speaks to all the cool new kids with zero barriers to entry?  Yes, it's a trend, but they can grow sales, at OMG like 30% a year, who wants to own a bunch of dirt in Texas and Nevada where all those ignorant people live?  I mean meat without having to slaughter animals versus over 10mm sqft of buildings, 6.2 mm more sqft of condo development in Hawaii, and the South Street Seaport that they are having trouble leasing up?  What would I want to own?  You know the answer.  Yeah, I mean the NOI of the HHC is more than the revenue of BYND meat, but who cares?  BYND is disruptive and of course

#Patties_Over_Seaport_All_Day 
#Save_The_Cows 
#It_Bleeds_Like_A_Murder_Burger
#Disrupt_Meat 
#Like_Meat_But_More_Expensive
#Demand_Outpacing_Supply
#169%_YOY_Growth
Title: Re: HHC - Howard Hughes Corp
Post by: merkhet on June 28, 2019, 12:10:30 PM
I'm sticking to my position in Beyond Meat, it is the future.  This move in HHC is Ackman trying to window dress just before quarter end.  Short HHC!!

Are you really long BYND?

How could I not be long a fake meat company that speaks to all the cool new kids with zero barriers to entry?  Yes, it's a trend, but they can grow sales, at OMG like 30% a year, who wants to own a bunch of dirt in Texas and Nevada where all those ignorant people live?  I mean meat without having to slaughter animals versus over 10mm sqft of buildings, 6.2 mm more sqft of condo development in Hawaii, and the South Street Seaport that they are having trouble leasing up?  What would I want to own?  You know the answer.  Yeah, I mean the NOI of the HHC is more than the revenue of BYND meat, but who cares?  BYND is disruptive and of course

#Patties_Over_Seaport_All_Day 
#Save_The_Cows 
#It_Bleeds_Like_A_Murder_Burger
#Disrupt_Meat 
#Like_Meat_But_More_Expensive
#Demand_Outpacing_Supply
#169%_YOY_Growth

You've never met BG2008 in person, have you? :P
Title: Re: HHC - Howard Hughes Corp
Post by: Schwab711 on June 28, 2019, 12:15:53 PM
I have and I get he likes RE. The borrow is 160% and he was talking about demand in the BYND thread. Maybe all his posts on BYND were sarcastic and I only took half of them as sarcasm.
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on June 28, 2019, 06:00:15 PM
I have and I get he likes RE. The borrow is 160% and he was talking about demand in the BYND thread. Maybe all his posts on BYND were sarcastic and I only took half of them as sarcasm.

Schwab,

Just so that there is no confusion.  I am long HHC in a HUUUGE way and the BYND comments are 99% sarcasm.  I do get why the younger kids want the product.  It is more of a poke at the valuation discrepancies of what you own via HHC versus BYND on a look through basis.   
Title: Re: HHC - Howard Hughes Corp
Post by: merkhet on June 29, 2019, 07:00:38 AM
I was maybe 98% sure you were kidding about BYND and 2% contemplating whether I needed to hop on a flight to NYC to stage an intervention :)
Title: Re: HHC - Howard Hughes Corp
Post by: Deepdive on June 30, 2019, 09:11:57 AM
If HHC is worth $150-200 as others have mentioned, it seems like there is still good value here
Title: Re: HHC - Howard Hughes Corp
Post by: Liberty on July 09, 2019, 12:38:45 PM
http://yetanothervalueblog.com/2019/07/quickie-idea-did-hhc-teach-us-anything-about-other-landbanks-joe-cto.html
Title: Re: HHC - Howard Hughes Corp
Post by: Ballinvarosig Investors on July 11, 2019, 02:16:59 PM
The run up in HHC will have stung Toby Carlisle's new fund, he has it has his largest short position - https://acquirersfund.com/download-holdings-usbanks.php?fticker=ZIG

I don't own HHC and never will, but is it really the most over-valued company in America?
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on July 11, 2019, 02:30:03 PM
The run up in HHC will have stung Toby Carlisle's new fund, he has it has his largest short position - https://acquirersfund.com/download-holdings-usbanks.php?fticker=ZIG

I don't own HHC and never will, but is it really the most over-valued company in America?

Theres always some jerk off somewhere, trying to have his Big Short moment or get his 15 minutes of fame. I get how one can find ways to not like HHC, but in every way, shape or form, you can not dislike HHC, without finding SRG as an even more egregious example of all that one would be turned off by with HHC.
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on July 11, 2019, 04:49:07 PM
The run up in HHC will have stung Toby Carlisle's new fund, he has it has his largest short position - https://acquirersfund.com/download-holdings-usbanks.php?fticker=ZIG

I don't own HHC and never will, but is it really the most over-valued company in America?

Well, he has a bunch of short positions, which I think were initiated at 1% each for modest has created a 0.25% portfolio drag, which is hardly earth shattering. Tobias ZIG fund more or less mechanically screen for the cheapest EV/ EBIT stocks,
 (He calls the ratio acquirers multiple) and the short are picked from the inverse high EV/EBIT multiple. It might be totally mechanical (I am not sure), but it certainly wasn’t a concentrated short big position. I guess his screening method totally ignores NAV too.
Title: Re: HHC - Howard Hughes Corp
Post by: BG2008 on July 11, 2019, 06:34:25 PM
Does he overlay a qualitative aspect to his screening.  Joel Greenblatt's magic formula will sometimes return results like the BP Prudhoe Bay Royalty Trust that has very high margin but should be valued on a DCF basis.   
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on July 11, 2019, 06:56:26 PM
Does he overlay a qualitative aspect to his screening.  Joel Greenblatt's magic formula will sometimes return results like the BP Prudhoe Bay Royalty Trust that has very high margin but should be valued on a DCF basis.

I don’t think he does, because his approach is based on mechanical screening. His approach is indeed related to Greenblatt‘s “Magic Formula”, which uses EV/EBIT and Return on capital, expect he only uses EV/EBIT. Tobias claims that his simpler formula actually works better than Greenblatts magic formula in backtests.

Tobias Carlisle is active on Twitter and has a pretty good podcast You can ask him directly, if interested.
Title: Re: HHC - Howard Hughes Corp
Post by: Liberty on July 12, 2019, 07:39:17 AM
I don't think this needs to be personalized in a negative manner. HHC has thousands of investors long and short, I'm sure.

If Tobias has been short for even just a year, he's not lost anything, as the stock is now just back to where it was not long ago.
Title: Re: HHC - Howard Hughes Corp
Post by: CorpRaider on July 12, 2019, 12:04:25 PM
It's not just a naïve ev/ebit screen (he's got financials in there, for example).  There's a lot of info in his books and he has appeared on several podcasts to discuss the strategy.  I think, however, after learning from Einhorn, I've got an absolute zero shorting policy in all investing. 
Title: Re: HHC - Howard Hughes Corp
Post by: KJP on October 21, 2019, 01:15:59 PM
Just announced:  https://investor.howardhughes.com/file/Index?KeyFile=400512570
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on October 21, 2019, 01:26:52 PM
Just announced:  https://investor.howardhughes.com/file/Index?KeyFile=400512570

Ouch. Talk about a let down.
Title: Re: HHC - Howard Hughes Corp
Post by: KJP on October 21, 2019, 01:30:35 PM
Just announced:  https://investor.howardhughes.com/file/Index?KeyFile=400512570

Ouch. Talk about a let down.

Yes, I expected more.  Ackman has lauded Weinreb and Herlitz for years.  I guess they weren't on board with his plan. 

Here's the presentation for today's 5pm call:  http://www.snl.com/interactive/newlookandfeel/4265772/Transformation-Plan-Release.pdf

I love this from slide 5's description of the new CEO:  "Culture carrier and collaborative leader"
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on October 21, 2019, 01:34:44 PM
Just announced:  https://investor.howardhughes.com/file/Index?KeyFile=400512570

Ouch. Talk about a let down.

Yes, I expected more.  Ackman has lauded Weinreb and Herlitz for years.  I guess they weren't on board with his plan. 

Here's the presentation for today's 5pm call:  http://www.snl.com/interactive/newlookandfeel/4265772/Transformation-Plan-Release.pdf

@$100 its interesting again, but just like a lot of other public RE, its cheap but so what? Now you have no catalyst and the dreaded "they shopped for a deal and couldn't find something that worked" overhang... will be keeping an eye on this for sure. But damn, theres so much in this market that either falls into the category of really cheap but dead money, or super expensive and risky. Hard to find anything in between.
Title: Re: HHC - Howard Hughes Corp
Post by: thepupil on October 21, 2019, 01:48:11 PM
I bought small position $90-$97 starting in late 2018, sold 1/3 of shares after strategic announce, will be a buyer again L90's and average down. hard to believe the upside/more bullish estimates of NAV if they shopped assets and this is the plan they came up with. 

In some ways, this is exciting as HHC was a toehold for me and now it has potential to become a real position, but I have the least confidence in the NAV here of all the other real estate stuff because it has the most variables.   
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on October 21, 2019, 02:18:57 PM
I bought small position $90-$97 starting in late 2018, sold 1/3 of shares after strategic announce, will be a buyer again L90's and average down. hard to believe the upside/more bullish estimates of NAV if they shopped assets and this is the plan they came up with. 

In some ways, this is exciting as HHC was a toehold for me and now it has potential to become a real position, but I have the least confidence in the NAV here of all the other real estate stuff because it has the most variables.

Unfortunately, having seen and been apart of enough of these over the years, thats the narrative that is going to take a long time to get rid of. No more mystery about NAV, just a ceiling now quite a bit below what many thought.
Title: Re: HHC - Howard Hughes Corp
Post by: thepupil on October 21, 2019, 02:26:56 PM
could you lay out some examples?

Public RE at prices below NAV comprises 25-50% of my portfolio and like 80% of my COBF posts and I think I follow the space a fair bit. Other than Forest City coming in at $24 later than expected when I thought it'd be $30 or FOR getting taken out for less initially (but then subsequently bumped significantly), I can't really think of ones that came in way below generally thought NAV levels.

In other words, I feel like as long as one hasn't been that aggressive, it's been a pretty profitable place to be.

What have been the major disappointments you've seen? NYRT?
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on October 21, 2019, 02:36:30 PM
The first couple that come to mind were PICO, NYRT and CTO. After that there's a few others that escape me at the moment but with similar stories. Maybe Northstar at some point IIRC. FOR was rather unique but I dont think they really ran a process as much as they got one bid which led to another. It just seems that the public market overestimates the values of these things and the time it takes for things to play out.

EDIT: Forgot UCP as well, maybe lumped that with PICO, but that was supposed to go in excess of NAV and went maybe 5-8% below as well. But that also did get sold, whereas Im mainly referencing companies perceived to have high NAVs that then went on the block and didn't end up getting deals done.
Title: Re: HHC - Howard Hughes Corp
Post by: johnny on October 21, 2019, 03:28:39 PM

@$100 its interesting again, but just like a lot of other public RE, its cheap but so what? Now you have no catalyst

I'm not following all of the retail stories being passed around valueworld right now, but in the ones I have seen, a big difference is the story about reinvestment. A lot of situations you're buying at a nice discount to NAV, but it seems pretty clear that the cash-flow allocation strategy is to reinvest all cashflow into 5-6% assets that are basically commodity assets being purchased by commodity capital.

HHC still has a strong case that the assets they deploy into aren't commodity assets, and that they aren't commodity capital, so there should be a much stronger return on that re-investment. I haven't actually spot-checked the math here, but I would say that's where this catalyst-free, NAV discount RE story might differ from something like Macerich.
Title: Re: HHC - Howard Hughes Corp
Post by: Foreign Tuffett on October 21, 2019, 03:43:53 PM
Page 11 of the presentation, "Non-Core Assets"

"2007 Gulfstream G450"


Yeah, definitely non-core. All the way, 100% non-core.


Edited: Page #11, not #17
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on October 21, 2019, 04:37:18 PM
Page 11 of the presentation, "Non-Core Assets"

"2007 Gulfstream G450"


Yeah, definitely non-core. All the way, 100% non-core.


Edited: Page #11, not #17

Bro, its Howard Hughes, of course they gotta have planes!

More as this sets in, two things here stand out as questions and observations...

1) Cost cutting and noncore asset sales(such as toys like the Gulfstream) indicate there s been a lot of unnecessary spending going on. I haven't followed this super close, but Im surprised they had this much waste to purge from the system. Especially given the shareholder base. But I guess where there is a lot of value, theres people realizing it, in one form or another.

2) This thing is supposed to be gushing value, from all over. So kind of incorporating the above, its surprising that after running a process this is all they are able to do.~$2B in asset sales and some cost cutting against $9B or so EV is nice, but definitely not screaming theres so much value here they dont know what to do with it all(I suppose this is why we got the selloff).

A management shakeup also kind of implies a greater degree of uncertainty around what they'd previously been doing. I did not seem to think this was a concern. At the least, it didn't really seem to ever come up when talking with people about this name. Lastly, I love share buybacks, but given all the development and cash intensive activities here, question whether its the right use of capital at this point.
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on October 21, 2019, 04:59:33 PM
Page 11 of the presentation, "Non-Core Assets"

"2007 Gulfstream G450"


Yeah, definitely non-core. All the way, 100% non-core.


Edited: Page #11, not #17

Bro, its Howard Hughes, of course they gotta have planes!

More as this sets in, two things here stand out as questions and observations...

1) Cost cutting and noncore asset sales(such as toys like the Gulfstream) indicate there s been a lot of unnecessary spending going on. I haven't followed this super close, but Im surprised they had this much waste to purge from the system. Especially given the shareholder base. But I guess where there is a lot of value, theres people realizing it, in one form or another.

2) This thing is supposed to be gushing value, from all over. So kind of incorporating the above, its surprising that after running a process this is all they are able to do.~$2B in asset sales and some cost cutting against $9B or so EV is nice, but definitely not screaming theres so much value here they dont know what to do with it all(I suppose this is why we got the selloff).

A management shakeup also kind of implies a greater degree of uncertainty around what they'd previously been doing. I did not seem to think this was a concern. At the least, it didn't really seem to ever come up when talking with people about this name. Lastly, I love share buybacks, but given all the development and cash intensive activities here, question whether its the right use of capital at this point.

The assets are too much of an hodgepodge to be an easy sell. In a way I am not surprised that this process ended up a bit of a dud (hence sold into the pop after the news broke), but at $100 and change, I decided to buy back some shares. Looks like they had one only one potential buyer after the DD and this after contacting 35 different buyers, if this account is correct.
 https://twitter.com/coredentaldds/status/1186391149000511495?s=21 (https://twitter.com/coredentaldds/status/1186391149000511495?s=21)
Title: Re: HHC - Howard Hughes Corp
Post by: Gregmal on October 21, 2019, 05:12:39 PM
Page 11 of the presentation, "Non-Core Assets"

"2007 Gulfstream G450"


Yeah, definitely non-core. All the way, 100% non-core.


Edited: Page #11, not #17

Bro, its Howard Hughes, of course they gotta have planes!

More as this sets in, two things here stand out as questions and observations...

1) Cost cutting and noncore asset sales(such as toys like the Gulfstream) indicate there s been a lot of unnecessary spending going on. I haven't followed this super close, but Im surprised they had this much waste to purge from the system. Especially given the shareholder base. But I guess where there is a lot of value, theres people realizing it, in one form or another.

2) This thing is supposed to be gushing value, from all over. So kind of incorporating the above, its surprising that after running a process this is all they are able to do.~$2B in asset sales and some cost cutting against $9B or so EV is nice, but definitely not screaming theres so much value here they dont know what to do with it all(I suppose this is why we got the selloff).

A management shakeup also kind of implies a greater degree of uncertainty around what they'd previously been doing. I did not seem to think this was a concern. At the least, it didn't really seem to ever come up when talking with people about this name. Lastly, I love share buybacks, but given all the development and cash intensive activities here, question whether its the right use of capital at this point.

The assets are too much of an hodgepodge to be an easy sell. In a way I am not surprised that this process ended up a bit of a dud (hence sold into the pop after the news broke), but at $100 and change, I decided to buy back some shares. Looks like they had one only one potential buyer after the DD and this after contacting 35 different buyers, if this account is correct.
 https://twitter.com/coredentaldds/status/1186391149000511495?s=21 (https://twitter.com/coredentaldds/status/1186391149000511495?s=21)

Thanks. "multi decade opportunity"...thats a pretty long horizon lol. Its still a little odd they didn't find any takers for at least some of their regional assets though. I always thought these to be some pretty high quality and desirable pieces of "hodgepodge".

Guess there arent too many true "long term" investors out there, despite pretty much every fund or shop saying so. $10B or so isn't a small purchase, but it's also not really a ton of money in todays M&A world either. Funny to think, but BRK could have swiped this up and not even noticed their cash pile diminish. Given their do nothing approach to investing of late, its hard to justify why they didn't when you really think about it.
Title: Re: HHC - Howard Hughes Corp
Post by: CorpRaider on October 21, 2019, 05:17:04 PM
He must like SRG better.
Title: Re: HHC - Howard Hughes Corp
Post by: johnny on October 21, 2019, 05:30:32 PM
Just a note on how absolutely passive-aggressive putting the Gulfstream down as a line-item is. Even against just their disposition plans, that's 0.5% of assets on the block, a rounding error. Seems to me like the entire purpose is to subtextually make arguments about the former CEO that cannot be explicitly made without inviting legal headaches.

Does anybody with experience in this space have any idea how deep/granular we can presume pre-offer diligence goes in situations like this? Does Brookfield basically know all of the numbers for each individual property now? Or is there sort of a graduated disclosure escalation dance as the flirting gets more serious?

Just wondering how heavily relatively uninformed shareholders should be weighting the passes that were just taken.
Title: Re: HHC - Howard Hughes Corp
Post by: Spekulatius on October 21, 2019, 05:44:08 PM
BRK is not in the real estate development business, so it makes no sense for them to acquire this. Brookfield may buy this, but probably would pay up, so selling it to them makes no sense either. I don’t think there are too many buyers around that would pay full price for a hodgepodge of assets all over the US. I think they will need to complete the development and then sell them piecemeal to get full price for these assets.

I agree that selling the 11 year old Gulfstream was a cheap jab towards the former CEO.
Title: Re: HHC - Howard Hughes Corp
Post by: peridotcapital on October 22, 2019, 06:46:52 AM
Glad they are finally cutting G&A, as it was an obscene number relative to rental income.

Hard to see how investors come around to the story though, as NOI less G&A and interest expense will go from $5M to $60M after the transformation is completed. WHat kind of multiple is the street going to pay for that $60M? Even at $100 per share, is there really clear value here?
Title: Re: HHC - Howard Hughes Corp
Post by: KJP on October 22, 2019, 07:15:46 AM
Glad they are finally cutting G&A, as it was an obscene number relative to rental income.

Hard to see how investors come around to the story though, as NOI less G&A and interest expense will go from $5M to $60M after the transformation is completed. WHat kind of multiple is the street going to pay for that $60M? Even at $100 per share, is there really clear value here?

I assume you're getting your numbers from Slide 9 of the presentation.  That NOI figure doesn't include any contrbution from the Seaport, which ought to be much higher than zero, though it's not clear what it ultimately will be.  But even adjusting for that, the current share price is presumably (and correctly) assigning some value to future land and condo sales at the MPCs and perhaps future value creation via additional investment in income-producing assets within the MPCs.  The difficulty in valuing that activity (lumpy condo/land sales and additional development activity) is the same now as it was before the non-core asset sales.  So, to the extent "really clear value" is a cap rate derived from existing (or even projected stabilized) NOI, the answer is likely "no."