Contrarian Corpus
activist conference presentation follow up
2017-05-08 · 50 pages

Howard Hughes Corporation HHC

N 5 Narrative
V 4 Visual
C 4 Craft
Original source ↗

The three reasons

  1. 1

    HHC owns the best public-market analogue to Donald Bren's $15B Irvine Ranch MPC empire

  2. 2

    37M SF of remaining entitlements equals ~10x the development HHC has already executed since 2011

  3. 3

    Self-funding virtuous cycle of MPC land sales, operating NOI, and strategic developments requires no new equity

Primary demands

  • Recognize HHC as a long-duration compounder modeled on the Irvine Ranch playbook
  • Credit the 37M SF of remaining vertical entitlements at HHC's MPCs as a massive future value-creation engine
  • Consider a REIT conversion for Operating Assets pending tax reform

KPIs cited

Remaining vertical development entitlements
~37M SF at Summerlin, Columbia, Woodlands, and Bridgeland — roughly 10x development executed since 2011
Completed commercial operating properties since 2011
3.9M SF built with $1.6B of development cost, projected $144M stabilized NOI (>9% yield on cost)
Implied cap rate environment
5%–7% cap rates on comparable commercial assets
Hughes Landing NOI
~$50M projected NOI from 1.4M SF of office, 126K SF retail, hotel and apartments delivered in 2.5 years
Downtown Summerlin NOI
>$32M stabilized NOI from retail/office/apartment development
Ward Village condo sales
1,100+ units contracted across four towers; ~$1.5B total project cost; 86% of first tower closed
Total MPC acreage
80,880 gross acres across Columbia, Woodlands, Summerlin, Bridgeland serving 342,300 residents
Balance sheet structure
2/3 of outstanding debt is non-recourse; recently refinanced 6.875% bonds into $800M 5.375% bond
Tax basis
$4B of existing tax basis shielding Operating Asset NOI
HHC share price
$122 on 5/4/2017 vs. $37 at 11/5/2010 IPO

Pattern membership

Where this document fits across the library's 12 rhetorical / structural patterns.

Notable slides (7)

Notes

Long thesis (not short/adversarial) delivered at Ira Sohn 2017. Classic analogical framing: 'SimCities' — HHC is the public-market version of Donald Bren's Irvine Ranch. Pershing has owned HHC since the 2010 GGP spin-off, so this is a follow-up public pitch rather than initial thesis. Uses Bren (positive) quotes, 1976-vs-today land photos, and a clean Irvine/HHC/Most Developers checkmark comparison slide (p17) as the rhetorical spine. Disclosure notes Ackman chairs HHC's board, so the tone is educational/promotional, not adversarial — no villain, no management quote contradictions. No explicit SOTP valuation table, but p45 back-of-envelope yields-on-cost math plays a similar role.