Howard Hughes Corp. (NYSE:HHC)
As a developer/owner of major real estate projects and master planned communities, HHC is inherently a long-term investment proposition. The company continues to make material progress completing its developments, launching new projects, selling condominiums and residential lots, and leasing space to office and retail tenants and apartment renters. This is driving substantial increases in the company’s net operating income, recurring cash flows, and intrinsic value.
The company’s stock price has declined year-to- date largely we believe because of its ownership of two master planned communities in Houston, namely the Woodlands and Bridgeland. The substantial decline in oil prices has and will likely continue to reduce lot sale velocity and leasing activity in Houston. We do not, however, believe that the decline in oil prices will permanently impair Houston or these assets, as they represent the best office (in the case of the Woodlands) and among the best residential markets (both the Woodlands and Bridgeland) in the city, and because Houston’s economy, while meaningfully dependent on oil and gas, has in recent years diversified substantially. We expect that the Woodlands will continue to take market share from other locations in Houston as it is arguably the most desirable place to live and work in Houston.
From Bill Ackman (Trades, Portfolio)'s Pershing Square Holdings third quarter 2015 letter to shareholders.
