HHC is exploring strategic alternatives
Today, CNBC reported that Howard Hughes Corporation (HHC) is exploring strategic alternatives, including a possible sale. Howard Hughes is a real estate development and management company based in Dallas, Texas. It’s a spin-off of General Growth Properties. The company has hired bankers at Centerview Partners to help it explore its options.
Bill Ackman, who heads Pershing Square, is the chair of Howard Hughes. According to CNBC, Ackman, who controls 4%–5% of HHC, is fully supportive of the company’s plan to explore its options.
HHC is looking to close the net asset value gap
In his first-quarter investor letter, Bill Ackman said, “Despite significant progress in HHC’s core business, project delays and initial losses at HHC’s Seaport District (New York City) continue to consume the majority of analyst and investor focus and may have contributed to the recent decline in the company’s stock price.”
Despite these delays, the company’s management sounded confident in its long-term value-creation potential. The letter added, “We continue to believe that HHC trades at a large discount to its underlying [net asset value] per share.” HHC’s CEO, David Weinreb, said, “The board and management are determined to close the significant gap between our share price and the company’s underlying net asset value.”
Howard Hughes stock has been struggling for the last few years. Year-to-date, the stock has risen just 5.0% compared to the S&P 500’s (SPY) gain of 17%. After today’s news of the company’s reviewing its strategic alternatives, its stock surged and was up 36.6% as of 12:55 PM ET.