HHC - Howard Hughes Corp

[Liberty]

http://phx.corporate-ir.net/phoenix.zhtml?c=241177&p=RssLanding&cat=news&id=1664421

 

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.

[dcollon]

Pretty impressive quarter.  Here is the shareholders letter

 

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

 

 

[racemize]

http://phx.corporate-ir.net/phoenix.zhtml?c=241177&p=RssLanding&cat=news&id=1664421

 

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.

[hyten1]

http://www.dnainfo.com/20120309/downtown/south-street-seaports-pier-17-be-gutted-under-new-plan

[Kraven]

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!

[dcollon]

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.

[Liberty]

Well, this stock is up about 40% since I started looking at it. Too bad I never bought any  :P

[Liberty]

http://www.valuewalk.com/2012/03/whitney-tilson-howard-hughes-is-super-cheap/

[Liberty]

http://www.gurufocus.com/news/179300/ackman-rolls-swaps-on-howard-hughes-co

[dcollon]

Small update on South Street Seaport/Pier 17 from NY Times.

Pier_17_Mall_Has_Upgrades_Planned_After_Hurricane_Sandy_-_NYTimes.pdf

[hyten1]

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

[dcollon]

Letter to Shareholders

 

http://phx.corporate-ir.net/phoenix.zhtml?c=241177&p=irol-newsArticle_print&ID=1792151&highlight=

 

[hyten1]

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

 

 

[snailslug]

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?

[fareastwarriors]

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."

 

 

[hyten1]

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?

[hyten1]

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

 

[hyten1]

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

[luck]

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. 

[valueinvesting101]

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.

[yader]

http://www.bizjournals.com/pacific/news/2014/01/31/penthouse-at-howard-hughes-honolulu.html?page=all

 

Wonderful pricing!

[dcollon]

CEO of HHC can sing

 

http://www.businessinsider.com/david-weinreb-super-bowl-after-party-2014-2

[Lowlight]

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.

[PSV_Cannibal]

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.

[Liberty]

Thanks for sharing, Cannibal. Welcome to the forum!