NEW YORK CITY AND THE WOODLANDS, TEXAS — Pershing Square Capital Management, a New York City-based hedge fund founded and operated by Bill Ackman, has acquired 9 million shares of newly issued common stock of real estate giant The Howard Hughes Holdings Inc. (NYSE: HHH) in a deal valued at roughly $900 million. The deal closed today.
The purchase price of $100 per share represents a premium of 48 percent to HHH’s closing per-share price of $67.47 on Friday, May 2. Pershing Square now owns 46.9 percent of HHH’s outstanding shares and has generally agreed to limit its voting power to 40 percent and its beneficial ownership to 47 percent. According to Reuters, Pershing Square’s stake in HHH was previously 37.6 percent.
Pershing Square’s investment enables HHH to become a diversified holding company by acquiring controlling stakes in high-quality, public and private operating companies while continuing to invest in and grow the company’s core real estate development and master-planned communities business.
Ackman, who currently serves as chairman and CEO of Pershing Square, has been named executive chairman of the HHH’s board of directors. Ryan Israel, Pershing Square’s chief investment officer, will become HHH’s chief investment officer, a new senior leadership role at the company. The HHH leadership team, led by CEO David O’Reilly, will remain unchanged with expanded roles and responsibilities.
Through its Dallas-based REIT and subsidiary, The Howard Hughes Corp., HHH has developed numerous large-scale, master-planned communities throughout the United States. These developments include Downtown Columbia in Maryland, The Woodlands in greater Houston (also home to HHH’s headquarters office), Summerlin in Las Vegas, Ward Village in Honolulu and Teravalis in the greater Phoenix area.
“HHH has built substantial value for shareholders in recent years that has largely gone unrecognized due to the high cost of capital that the market assigns to the company in light of its pure-play exposure to real estate development and community creation,” says Ackman. “We believe that HHH is a superb platform to build a faster-growing, high-returning holding company that will acquire control of companies that meet Pershing Square’s criteria for business quality and durable growth.”
“Pershing Square’s investment will create new avenues for growth, while our core business as the nation’s leading community builder will not change,” says O’Reilly. “We remain steadfast in our commitment to creating exceptional communities, pursuing innovative development opportunities and acting nimbly to meet market demand and deliver sustainable growth.”
The stock price of HHH opened at $71.22 per share on Monday, May 5, as news of the deal began to circulate. Shares of the company are up a little over 10 percent from $64.33 per share about a year ago. Taylor Williams