Gregmal Posted October 22, 2019 Share Posted October 22, 2019 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 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. Link to comment Share on other sites More sharing options...
CorpRaider Posted October 22, 2019 Share Posted October 22, 2019 He must like SRG better. Link to comment Share on other sites More sharing options...
johnny Posted October 22, 2019 Share Posted October 22, 2019 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. Link to comment Share on other sites More sharing options...
Spekulatius Posted October 22, 2019 Share Posted October 22, 2019 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. Link to comment Share on other sites More sharing options...
peridotcapital Posted October 22, 2019 Share Posted October 22, 2019 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? Link to comment Share on other sites More sharing options...
KJP Posted October 22, 2019 Share Posted October 22, 2019 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." Link to comment Share on other sites More sharing options...
BG2008 Posted December 2, 2019 Share Posted December 2, 2019 Price Spike of 4% with heavy volume, any news? Link to comment Share on other sites More sharing options...
thepupil Posted December 2, 2019 Share Posted December 2, 2019 indeed. for perspective, 1.5mm shares traded today relative to the average of 250K. As many shares traded today as in the day following the "disappointing" announcement of no total sale. Bloomberg shows no news, EDGAR has no filings. kind of wild. Link to comment Share on other sites More sharing options...
BG2008 Posted December 2, 2019 Share Posted December 2, 2019 Someone probably knows something about an asset sale, 110 N Wacker perhaps. Totally speculating and no idea. Trading volume just looks weird. Link to comment Share on other sites More sharing options...
BG2008 Posted December 4, 2019 Share Posted December 4, 2019 Still no news, that was a very weird trading session Link to comment Share on other sites More sharing options...
BG2008 Posted December 4, 2019 Share Posted December 4, 2019 http://www.snl.com/IRWeblinkx/ShowFile.aspx?KeyFile=401392528&Output=XML&Format=XML Anyone understands this structure? Link to comment Share on other sites More sharing options...
BG2008 Posted December 4, 2019 Share Posted December 4, 2019 Name Trade Date Buy/Sell/Exercise No. of Shares / Quantity Unit Cost Strike Price Trade Amount Security Expiration Date Pershing Square, L.P. December 2, 2019 Sell 746,476 $115.00 N/A $ 85,844,740 Common Stock N/A Pershing Square International, Ltd. December 2, 2019 Sell 270,556 $115.00 N/A N/A Cash-Settled Total Return Swap December 2, 2019 Pershing Square International, Ltd. December 2, 2019 Sell 120,645 $115.00 N/A N/A Cash-Settled Total Return Swap December 2, 2019 Pershing Square International, Ltd. December 2, 2019 Sell 331,096 $115.00 N/A N/A Cash-Settled Total Return Swap December 2, 2019 Pershing Square International, Ltd. December 2, 2019 Buy 270,556 $115.00 N/A N/A OTC Equity Forward June 3, 2020 Pershing Square International, Ltd. December 2, 2019 Buy 120,645 $115.00 N/A N/A OTC Equity Forward June 3, 2020 Pershing Square International, Ltd. December 2, 2019 Buy 78,490 $115.00 N/A N/A OTC Equity Forward June 3, 2020 Pershing Square Holdings, Ltd. December 2, 2019 Buy 746,476 $115.00 N/A $ 85,844,740 Common Stock N/A Pershing Square Holdings, Ltd. December 2, 2019 Buy 1,000,000 $115.00 N/A $115,000,000 Common Stock N/A Pershing Square Holdings, Ltd. December 2, 2019 Sell 868,687 $115.00 N/A N/A Cash-Settled Total Return Swap December 2, 2019 Pershing Square Holdings, Ltd. December 2, 2019 Sell 1,351,415 $115.00 N/A N/A Cash-Settled Total Return Swap December 2, 2019 Pershing Square Holdings, Ltd. December 2, 2019 Sell 497,047 $115.00 N/A N/A Cash-Settled Total Return Swap December 2, 2019 Pershing Square Holdings, Ltd. December 2, 2019 Sell 750,000 $115.00 N/A N/A Cash-Settled Total Return Swap December 2, 2019 Pershing Square Holdings, Ltd. December 2, 2019 Buy 868,687 $115.00 N/A N/A OTC Equity Forward June 3, 2020 Pershing Square Holdings, Ltd. December 2, 2019 Buy 1,351,415 $115.00 N/A N/A OTC Equity Forward June 3, 2020 Pershing Square Holdings, Ltd. December 2, 2019 Buy 1,247,047 $115.00 N/A N/A OTC Equity Forward June 3, 2020 Pershing Square Holdings, Ltd. December 2, 2019 Buy 252,606 $115.00 N/A N/A OTC Equity Forward June 3, 2020 Link to comment Share on other sites More sharing options...
thepupil Posted December 4, 2019 Share Posted December 4, 2019 so there are 43mm HHC shares outstanding Before the December 2nd transactions, Pershing square owned 1.1mm shares of HHC directly, but had larger economic exposure through a total return swap. Pershing Square previously sold its common shares and converted them to total return swap form, in part for regulatory reasons related to the Foreign Investment in Real Property Tax Act https://assets.pershingsquareholdings.com/media/2018/01/02163526/PSH-Announces-Proposed-Sale-of-Howard-Hughes-Corporation-Common-Stock-and-Potential-Tender-Offer-for-PSH-Shares-by-William-A.-Ackman-and-Affiliates.pdf From how I read the form 4, the total return swap on 4.1mm shares expired on December 2nd. Pershing square rolled that into an OTC equity forward expiring in June 2020. So they kept their economic exposure the same. The 4.1mm share transaction does not represent any net buying/selling of HHC. It represents a rolling of existing exposure, but interestingly, because forward is not a swap. A forward is an agreement to purchase the actual asset at a certain date, Bloomberg is saying that Pershing just bought an additional 10% of the company, even thought they haven't increased/decreased their risk in the name. There's an additional crossing transaction of 746K shares that is from "rebalancing between Pershing Funds". this is a sell by pershing square LP and a buy by Pershing Square Holdings. Then finally there is a 1mm share purchase by Bill Ackman, personally. EDIT: I think its a net 1mm purchase by Pershing Square Holdings, not bill's PA. I think the net effect of it all is BillPSH bought 1mm shares. the rest is a change in nature of ownership but not a net buy/sell. Link to comment Share on other sites More sharing options...
Gregmal Posted December 4, 2019 Share Posted December 4, 2019 So effectively the bump a few days ago was some derivative, down the line effect of the Ackman position? A counter party offsetting some of the OTC calls. Billy likes his swaps. If I was a billionaire I would too. Link to comment Share on other sites More sharing options...
Spekulatius Posted December 4, 2019 Share Posted December 4, 2019 So effectively the bump a few days ago was some derivative, down the line effect of the Ackman position? A counter party offsetting some of the OTC calls. Billy likes his swaps. If I was a billionaire I would too. Maybe it’s fun, but it did cost PSH a couple of million apparently. Link to comment Share on other sites More sharing options...
Gregmal Posted December 30, 2019 Share Posted December 30, 2019 Soooo.... after a long drawn out process, talks of simplifying the company, selling noncore assets, paying down debt, and buying back stock, OXY sells half billion of assets to HHC, who claimed to being trying to do the same type of things.... Perhaps Im a little skeptical, but I just cant stand how public companies absolutely refuse to ever "really" shrink the company. Link to comment Share on other sites More sharing options...
thepupil Posted December 30, 2019 Share Posted December 30, 2019 I think the bottom line is that HHC is a going concern and we shouldn’t expect a liquidation. The announced result of the alts search is a concentration on core MPC’s. I could think of nothing more core and consistent with HHC’s stated strategy than these prime woodlands locations / assets The woodlands portion seems like a very low risk deal where the bulk of the woodlands assets are being leased back by OXY for a 13 year term. I don’t like OXY but I don’t envision them going BK so being a long term landlord to them doesn’t seem a bad place to be. Reserving further judgment until we get an idea of cap rate pro-forma for when they flip the big ass campus; I don’t think they’d have done the deal if the attractiveness is based on aggressive assumptions on the sale of that asset, but you never know. HHC is in a much better position than OXY and I imagine they got a good deal from a motivated (but not distressed) seller. Overall I see this as a modest positive; further scale high quality assets with several plausible reasons theta they could have bought it well. EDIT: it is also helpful to know that the woodlands largest tower will be 100% occupied for 13 years; an all out move out by Anadarko/OXY could have been short term painful. I assume they occupy and are vacating the smaller tower, which is still pretty big and hopefully doesn't cool the submarket in the woodlands too much (I don't follow HHC in this degree of detail so I don't have a sense for that vacancy's potential impact on The Woodlands). In general this could actually be more defensive in that OXY could've extracted some economics from HHC by threatening to leave HHC with 1.4mm of empty space in its submarket and therefore kind of force HHC into entering into a less than amazing transaction. will have to see more info. https://www.google.com/amp/s/www.houstonchronicle.com/business/energy/amp/As-takeover-of-Anadarko-looms-The-Woodlands-13937358.php cool basketball court! https://aiahouston.org/media/uploads/resource-docs/pp_anadarko_hackett_tower.pdf EDIT: Some more additions https://www.dropbox.com/s/2au0ybjcze1pfyx/2019-Q2-TheWoodlands-OfficeSnapshot-Colliers.pdf?dl=0 I found the above helpful. It lays out that the Woodlands is doing well but that the biggest concern is the 1.3mm of office that could potentially come online with Anadarko getting bought out. We now know that 800K of that is locked down by OXY for 13 years and I think we can assume that the other 550K will indeed hit the market. there are 13mm square feet of class A office space in the woodlands so 550K is 4% of the total market. after this transaction, HHC owns ~4mm of the 13mm of class A in the woodlands. the colliers report also says that average rents for class A is $37/foot/year. I would assume that OXY will pay a premium to that for the basketball court campus, but who knows. Link to comment Share on other sites More sharing options...
NBL0303 Posted January 1, 2020 Share Posted January 1, 2020 I think the deal is a positive also, the economics of it work. It is unusual because they were going to be divesting and they end up doing an acquisition, but to me that is the rational approach if the deal was financially accretive. Many or most managements would pass on it because they are worried about being inconsistent/contradictory - but I would rather have the management that doesn't pass on good deals just because of poor optics or due to over-concern for short-term market sentiment. Link to comment Share on other sites More sharing options...
thepupil Posted January 2, 2020 Share Posted January 2, 2020 https://www.bamsec.com/filing/110465919076835/3?cik=1498828 completely missed this presentation. I think this is a good deal for HHC. $25mm of NOI on the 13 years leaseback asset. applied against the whole acquisition that's a 4.2% cap rate, not including anything else. Let's just pretend they only got that building; they'd be paying $281mm non-recourse building level of 3.5% interest only debt and $220mm of equity, for $500mm, a 5% cap rate. the debt will cost ~$10mm / year, for $15mm NOI - interest =~6.8% cash on cash. not exciting but not incredibly terrible either. Of course they arenn't just getting that building. They are getting 10 acres next to it, and the empty building next door w/ project level financing, and they are getting the campus. They see 3 year out NOI at $44mm and a pro-forma 7% cap rate ($44mm/$630mm) after they lease up Woodloch Forest Drive. Given the low risk nature of the in place NOI, the very attractive financing, the degree to which this is very much in HHC's wheelhouse (buying the buildings that sandwich their new corporate HQ in their most successful MPC), the tax benefits from the 1031, I think this deal will create a lot of value. Link to comment Share on other sites More sharing options...
Saluki Posted January 5, 2020 Share Posted January 5, 2020 I lucked out and sold out right before the big price drop. I was going to jump back in if it kept falling, but it rebounded and I don't want to chase it. I still like their assets (even at these prices) but I'm keeping this on the watch list because some of the catalysts (redeveloping the Chicago bldg, making the Seaport profitable, and the Houston housing market appreciating) will take time to play out so hopefully I'll get more chances to bite at the apple. Link to comment Share on other sites More sharing options...
BG2008 Posted February 21, 2020 Share Posted February 21, 2020 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 I feel like a high school girl gossiping. But Holy Crap, this Gulfstream was clad in Gold on the outside. Holy Crap! https://flightaware.com/photos/view/152792-906ffcdf047146899e7c70a9d9a3cc42a0d6194f/aircrafttype/GLF4 https://flightaware.com/photos/view/152792-a39da99a459bd28660f394fc051f63ae2d8de0f9 https://flightaware.com/photos/view/867565-3d5d531ec573c6f872dcf5b664e03902b77131e0 Looks like it was sold on the same day that they bought the Occidental Towers 30-Dec-2019 ZARKY AVIATION LLC DALLAS TX 27-Jun-2019 HOWARD HUGHES MANAGEMENT CO LLC DALLAS TX 20-Jul-2017 HOWARD HUGHES MANAGEMENT CO LLC WILMINGTON DE Link to comment Share on other sites More sharing options...
Gregmal Posted March 7, 2020 Share Posted March 7, 2020 Mr. Hughes, shall we dance again? Getting back into my "margin the fucker and profit" zone. Link to comment Share on other sites More sharing options...
Castanza Posted March 7, 2020 Share Posted March 7, 2020 Mr. Hughes, shall we dance again? Getting back into my "margin the fucker and profit" zone. I picked up a little more of this today Link to comment Share on other sites More sharing options...
Spekulatius Posted March 7, 2020 Share Posted March 7, 2020 Mr. Hughes, shall we dance again? Getting back into my "margin the fucker and profit" zone. I picked up a little more of this today I like VNO better. Bought a few shares. Link to comment Share on other sites More sharing options...
Gregmal Posted March 9, 2020 Share Posted March 9, 2020 Still watching, but boy are things starting to get interesting. I'm not going to be one of those who qualms about problems for a company sporting an already problem indicative valuation, but you'd have to think that OXY deal may have been a bad move. This one unfortunately nicks pretty much every box of everything everyone is afraid of right now, in a diversified way. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now