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Also traded in: Germany, Mexico

GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 4/10

vs
industry
vs
history
Cash-to-Debt 0.16
NYSE:HHC's Cash-to-Debt is ranked lower than
68% of the 1685 Companies
in the Global Real Estate - General industry.

( Industry Median: 0.31 vs. NYSE:HHC: 0.16 )
Ranked among companies with meaningful Cash-to-Debt only.
NYSE:HHC' s Cash-to-Debt Range Over the Past 10 Years
Min: 0.02  Med: 0.29 Max: 0.89
Current: 0.16
0.02
0.89
Equity-to-Asset 0.43
NYSE:HHC's Equity-to-Asset is ranked lower than
55% of the 1644 Companies
in the Global Real Estate - General industry.

( Industry Median: 0.45 vs. NYSE:HHC: 0.43 )
Ranked among companies with meaningful Equity-to-Asset only.
NYSE:HHC' s Equity-to-Asset Range Over the Past 10 Years
Min: 0.4  Med: 0.48 Max: 0.72
Current: 0.43
0.4
0.72
Debt-to-Equity 1.02
NYSE:HHC's Debt-to-Equity is ranked lower than
63% of the 1404 Companies
in the Global Real Estate - General industry.

( Industry Median: 0.77 vs. NYSE:HHC: 1.02 )
Ranked among companies with meaningful Debt-to-Equity only.
NYSE:HHC' s Debt-to-Equity Range Over the Past 10 Years
Min: 0.14  Med: 0.79 Max: 1.05
Current: 1.02
0.14
1.05
Debt-to-EBITDA 11.22
NYSE:HHC's Debt-to-EBITDA is ranked lower than
79% of the 1321 Companies
in the Global Real Estate - General industry.

( Industry Median: 5.13 vs. NYSE:HHC: 11.22 )
Ranked among companies with meaningful Debt-to-EBITDA only.
NYSE:HHC' s Debt-to-EBITDA Range Over the Past 10 Years
Min: -74.58  Med: 4.85 Max: 14.8
Current: 11.22
-74.58
14.8
Interest Coverage 1.30
NYSE:HHC's Interest Coverage is ranked lower than
90% of the 1519 Companies
in the Global Real Estate - General industry.

( Industry Median: 6.01 vs. NYSE:HHC: 1.30 )
Ranked among companies with meaningful Interest Coverage only.
NYSE:HHC' s Interest Coverage Range Over the Past 10 Years
Min: 1.3  Med: 4.32 Max: 75.17
Current: 1.3
1.3
75.17
Piotroski F-Score: 3
Altman Z-Score: 0.96
Beneish M-Score: -2.45
WACC vs ROIC
6.59%
1.50%
WACC
ROIC
GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 7/10

vs
industry
vs
history
Operating Margin % 10.03
NYSE:HHC's Operating Margin % is ranked lower than
67% of the 1673 Companies
in the Global Real Estate - General industry.

( Industry Median: 17.31 vs. NYSE:HHC: 10.03 )
Ranked among companies with meaningful Operating Margin % only.
NYSE:HHC' s Operating Margin % Range Over the Past 10 Years
Min: -508.02  Med: 15.05 Max: 31.57
Current: 10.03
-508.02
31.57
Net Margin % 5.36
NYSE:HHC's Net Margin % is ranked higher than
57% of the 1677 Companies
in the Global Real Estate - General industry.

( Industry Median: 13.74 vs. NYSE:HHC: 5.36 )
Ranked among companies with meaningful Net Margin % only.
NYSE:HHC' s Net Margin % Range Over the Past 10 Years
Min: -516.04  Med: 0.83 Max: 53.39
Current: 5.36
-516.04
53.39
ROE % 1.83
NYSE:HHC's ROE % is ranked lower than
59% of the 1689 Companies
in the Global Real Estate - General industry.

( Industry Median: 7.69 vs. NYSE:HHC: 1.83 )
Ranked among companies with meaningful ROE % only.
NYSE:HHC' s ROE % Range Over the Past 10 Years
Min: -46.83  Med: 0.38 Max: 8.21
Current: 1.83
-46.83
8.21
ROA % 0.81
NYSE:HHC's ROA % is ranked lower than
56% of the 1729 Companies
in the Global Real Estate - General industry.

( Industry Median: 2.98 vs. NYSE:HHC: 0.81 )
Ranked among companies with meaningful ROA % only.
NYSE:HHC' s ROA % Range Over the Past 10 Years
Min: -24.22  Med: 0.16 Max: 4.59
Current: 0.81
-24.22
4.59
ROC (Joel Greenblatt) % 950.83
NYSE:HHC's ROC (Joel Greenblatt) % is ranked higher than
85% of the 1700 Companies
in the Global Real Estate - General industry.

( Industry Median: 17.04 vs. NYSE:HHC: 950.83 )
Ranked among companies with meaningful ROC (Joel Greenblatt) % only.
NYSE:HHC' s ROC (Joel Greenblatt) % Range Over the Past 10 Years
Min: -893.11  Med: 189.75 Max: 2127.84
Current: 950.83
-893.11
2127.84
3-Year Revenue Growth Rate 9.70
NYSE:HHC's 3-Year Revenue Growth Rate is ranked higher than
73% of the 1535 Companies
in the Global Real Estate - General industry.

( Industry Median: 3.90 vs. NYSE:HHC: 9.70 )
Ranked among companies with meaningful 3-Year Revenue Growth Rate only.
NYSE:HHC' s 3-Year Revenue Growth Rate Range Over the Past 10 Years
Min: 9.7  Med: 26.3 Max: 47.1
Current: 9.7
9.7
47.1
3-Year EBITDA Growth Rate -3.30
NYSE:HHC's 3-Year EBITDA Growth Rate is ranked higher than
78% of the 1355 Companies
in the Global Real Estate - General industry.

( Industry Median: 7.70 vs. NYSE:HHC: -3.30 )
Ranked among companies with meaningful 3-Year EBITDA Growth Rate only.
NYSE:HHC' s 3-Year EBITDA Growth Rate Range Over the Past 10 Years
Min: 0  Med: -3.3 Max: 68.7
Current: -3.3
0
68.7
3-Year EPS without NRI Growth Rate -6.20
NYSE:HHC's 3-Year EPS without NRI Growth Rate is ranked lower than
99.99% of the 1272 Companies
in the Global Real Estate - General industry.

( Industry Median: 7.60 vs. NYSE:HHC: -6.20 )
Ranked among companies with meaningful 3-Year EPS without NRI Growth Rate only.
NYSE:HHC' s 3-Year EPS without NRI Growth Rate Range Over the Past 10 Years
Min: 0  Med: 0 Max: 43.5
Current: -6.2
0
43.5
GuruFocus has detected 10 Warning Signs with The Howard Hughes Corp NYSE:HHC.
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» NYSE:HHC's 30-Y Financials

Financials (Next Earnings Date: 2019-05-02)


Revenue & Net Income
Cash & Debt
Operating Cash Flow & Free Cash Flow
Operating Cash Flow & Net Income

» Details

Guru Trades

Q1 2018

HHC Guru Trades in Q1 2018

Ken Heebner 130,000 sh (New)
David Dreman 1,780 sh (unchged)
Chuck Royce 5,000 sh (unchged)
Louis Moore Bacon Sold Out
Bill Ackman 2,204,534 sh (-53.14%)
Murray Stahl 2,215,426 sh (-9.69%)
Jim Simons 2,200 sh (-93.08%)
» More
Q2 2018

HHC Guru Trades in Q2 2018

Jim Simons 134,500 sh (+6013.64%)
Ken Heebner 350,000 sh (+169.23%)
Bill Ackman 2,204,534 sh (unchged)
Chuck Royce Sold Out
Murray Stahl 2,093,935 sh (-5.48%)
» More
Q3 2018

HHC Guru Trades in Q3 2018

Ken Heebner 350,000 sh (unchged)
Jim Simons 34,400 sh (-74.42%)
Murray Stahl 2,055,798 sh (-1.82%)
Bill Ackman 2,133,236 sh (-3.23%)
» More
Q4 2018

HHC Guru Trades in Q4 2018

Ken Heebner Sold Out
Jim Simons 14,300 sh (-58.43%)
Murray Stahl 1,885,861 sh (-8.27%)
Bill Ackman 1,233,589 sh (-42.17%)
» More
» Details

Insider Trades

Latest Guru Trades with NYSE:HHC

(List those with share number changes of more than 20%, or impact to portfolio more than 0.1%)

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Business Description

Industry: Real Estate Services » Real Estate - General    NAICS: 531190    SIC: 6798
Compare:SHSE:600208, SZSE:000046, BOM:532868, HKSE:00014, DFM:EMAARDEV, SGX:U14, HKSE:00884, HKSE:03377, SZSE:000732, HKSE:00817, HKSE:02009, XSWX:SPSN, HKSE:00683, SZSE:000671, SZSE:002146, SZSE:000656, OSTO:CAST, ADX:ALDAR, DFM:DAMAC, XTER:LEG » details
Traded in other countries:HHE.Germany, HHC.Mexico,
Headquarter Location:USA
The Howard Hughes Corp is a real estate company. It is in the development of master planned communities and other strategic real estate development opportunities across the United States.

The Howard Hughes Corp is a real estate company and is in the development of master planned communities and other strategic real estate development opportunities across the United States. Its mission is to be the preeminent developer and operator of Master Planned Communities (MPCs) and mixed-use properties. The company specialize in the development of master planned communities, the development of residential condominiums, and the ownership, management and development or repositioning of real estate assets currently generating revenues, also called operating assets, as well as other strategic real estate opportunities in the form of entitled and unentitled land and other development rights, also called strategic developments.

Guru Investment Theses on The Howard Hughes Corp

Bill Ackman Comments on The Howard Hughes Corp - Nov 15, 2018

HHC (NYSE:HHC)’s share price decreased 6% during the third quarter, and has declined nearly 17% year-to-date. We believe this underperformance is due to investor concern regarding a potential housing slowdown as higher interest rates and increasing labor and material costs make homes less affordable. Homebuilders, which purchase land and manufacture and sell homes to generate cash flow, have been particularly impacted with many home builder stocks down 30% or more this year.

By comparison, however, HHC’s business fundamentals, performance and execution tell a much different story. In its master planned communities (MPCs), HHC recorded its highest ever residential land sales in the third quarter with no signs of a housing slowdown. HHC owns some of the most desirable and well-located MPCs in the country which benefit from in-migration to Las Vegas and Houston as those markets have no state income tax. Furthermore, HHC controls the supply and distribution of its MPC land (while generating 75% to 99% cash margins on its land sales), so it can be patient to protect the long- term value of its MPCs if it experiences a future slow- down in sales activity. While time is not the friend of the homebuilder to the extent new-built homes remain unsold, time is the friend of the MPC owner of well-located land which benefits from long-term land price appreciation due to population growth and inflation.

A growing percentage of HHC’s value and cash flow are now being generated from stable and recurring real estate cash flows (net operating income or NOI) from its Operating Asset segment. Since going public eight years ago, HHC has grown its Operating Asset NOI from $49 million to a current run rate of $184 million with an NOI target of $318 million upon stabilization (excluding the Seaport) making its Operating Asset segment a much larger contributor to its overall enterprise value. The growth of HHC’s Operating Asset segment further differentiates HHC from the homebuilding sector.

HHC also continues to make meaningful progress at its important Ward Village and Seaport assets. In the 60-acre waterfront Ward Village, Honolulu community, HHC just broke ground on its fifth condo tower (A’ali’i). HHC began public sales on this condo tower in January and is already 77% pre-sold as of the end of October, highlighting the significant demand for its Ward Village condo product. At the Seaport, HHC recently signed a 23,000 sq. ft. lease with Nike for creative office space, and has experienced significant demand for the balance of the office space. 10 Corso Como (29,000 sq. ft.) an iconic Milan-based fashion and design retailer opened at the Seaport in September to considerable acclaim and customer response. HHC welcomed more than five million visitors to the Seaport during the summer despite ongoing construction. HHC is positioning the Seaport for long-term success by carefully cultivating and attracting world-class tenants and partners.

We recently sold a block of HHC shares for portfolio management purposes as the size of our HHC investment had become disproportionately large in the private Pershing Square funds. Senior management acquired $ 6 million of shares from our block sale. The Pershing Square private funds’ sale of HHC shares replaces its previously announced 10b5-1 sale program. PSH maintains a large, long-term investment in HHC held through total return swaps which create the same economic exposure as ownership of the common stock. We consider today’s current share price, which was first achieved more than five years ago, to be particularly attractive in light of HHC’s substantial continued business progress.

From Bill Ackman (Trades, Portfolio)'s third-quarter 2018 Pershing Square shareholder letter.

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Bill Ackman Comments on The Howard Hughes Corp - Aug 10, 2018

The Howard Hughes Corporation (NYSE:HHC)

The Howard Hughes Corporation (NYSE:HHC) continues to make progress creating long-term value across its collection of unique and irreplaceable real estate assets.

In its Operating Asset segment, HHC increased its estimated stabilized net operating income (NOI) target to $309 million, which represents a compound annual growth rate of 29% over the past three years. The growth in NOI has come from organic development opportunities on HHC’s existing land assets. To date, HHC has only developed a fraction of its 50 million sq. ft. of vertical development entitlements, providing a development pipeline for decades to come. As a growing percentage of HHC’s enterprise value is represented by stabilized, cash-flow-generative real estate assets, it should become easier for investors to underwrite the value of its assets, which we believe will attract more traditional real estate-oriented investors to the HHC story.

In its Ward Village Hawaii 60-acre coastal development, HHC has nearly sold all of its condo inventory at its four existing condo towers. These four towers have a total projected cost of $1.5 billion and an estimated 30% profit margin. HHC launched pre-sales of its new 751-unit condo tower offering (A’ali’i) in January and has already pre-sold 67% of the units at July month end, highlighting the significant future opportunity at Ward Village as 75% of its entitlements remain.

At the South Street Seaport in NYC, HHC launched its summer 2018 concert series at its spectacular rooftop venue, which we believe will enhance the visibility of this unique and valuable asset to the community. In Summerlin Las Vegas, HHC continued its pace of strong land sales at its master planned community (MPC). HHC’s MPCs in Houston, Texas, and Columbia, Maryland, continue to perform well with ongoing commercial real estate development generating attractive yields on cost. Lastly, HHC celebrated the ground breaking of its 53-story, 1.4 million sq. ft. Class A office development at 110 North Wacker in Chicago. The total estimated cost of the project is over $750 million, more than $700 million of which is financed with third-party debt and equity, structured so that HHC retains the majority of the equity upside while minimizing risk.

From Bill Ackman (Trades, Portfolio)'s second quarter 2018 Pershing Square shareholder letter.

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Bill Ackman Comments on The Howard Hughes Corp - May 17, 2018

The Howard Hughes Corporation (NYSE:HHC)

During the quarter, HHC adopted a new revenue recognition standard that significantly reduced GAAP revenue and earnings for the quarter, but had no impact on the company’s intrinsic value or cash flows. Up until this quarter, HHC recognized revenue for its condominium projects using percentage of completion accounting where units under contract to be sold were recognized into revenue as the corresponding condominium tower was constructed. The new accounting requirement better matches cash flows as condo sales are recognized only when unit sales are completed and title is transferred to the buyer. We believe some analysts and investors were confused by the change as HHC’s stock declined despite strong demonstrated value creation during the quarter. During the quarter, the company opportunistically acquired about 1% of its shares outstanding for $120.33 per share as each of HHC’s core master planned communities (MPCs) showed continued growth and business progress as we describe in detail below.

Ninety-five percent of the 1,381 available condo units in HHC’s Hawaii Ward Village’s four existing towers under construction are now under contract or have been sold. HHC began pre-sales of its new 751 unit condo tower offering (A’ali’i) in January. In four months, the tower is already 39% pre-sold, highlighting the continued demand for high quality, differentiated, Ward Village for-sale product. With only 25% of its entitlements utilized, Ward Village offers substantial continued value creation for HHC over the next decade. The company’s outright ownership of its land allows it to carefully control the pace of deliveries, enabling HHC to meet market demand while substantially reducing the risk of oversupply.

In Summerlin, Las Vegas, continued strong land sales and increasing home prices generated continued strong cash flows. HHC began construction of the ballpark for its wholly owned Las Vegas 51s Triple A baseball team, which is expected to cost approximately $115 million and is estimated to produce approximately $7 million of cash flow. This is an attractive expected return from an amenity principally designed to increase the value of Downtown Summerlin and the surrounding property owned by HHC.

At the South Street Seaport, HHC finalized new leases (ESPN, Malibu Farms) and new sponsorship agreements (Lincoln Motor, Heineken). The Seaport is not just a real estate asset that will generate rental income, but an operating business that will have sustained sponsorship and business income in addition to rental income. Live Nation recently announced a summer 2018 rooftop concert series at the Seaport which will further enhance the visibility and attractiveness of the Seaport to the community, and increase demand for remaining space and more corporate sponsorships.

In Chicago, HHC began construction on a 53-story, 1.4 million sq. ft. Class A office development at 110 North Wacker. The total estimated cost of the project is $761 million with an estimated 7.9% unlevered yield on cost. HHC arranged third-party debt and preferred and common equity commitments, which reduce HHC’s cash investment to the project to just $49 million. HHC will retain a significant portion of the profit on the project with its share of stabilized cash flow estimated to be over $19 million. To date, we believe that few HHC shareholders have assigned significant value to this non-core asset.

In its Operating Asset segment, HHC increased its projected stabilized net operating income target from $255 million to $291 million as a result of the addition of three new developments to its pipeline. As a growing percentage of HHC enterprise value is represented by stabilized, cash-flow-generative real estate assets, it should become easier for investors to underwrite the value of its assets and HHC’s intrinsic value, which we believe is substantially greater than the current share price.

From Bill Ackman (Trades, Portfolio)'s first-quarter 2018 shareholder letter.



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Bill Ackman Comments on Howard Hughes - Nov 16, 2017

Howard Hughes (NYSE:HHC) continues to show solid and steady progress across its entire collection of trophy real estate assets. Unlike many real estate investment trusts that rely on access to the equity markets in order to grow, the equity for HHC’s development program is provided by cash generated from existing income producing assets and residential lot sales, as the company is not required to distribute its profits to shareholders. Furthermore, HHC’s large land ownership and entitlements provide decades of high-return investment opportunities without the need to acquire any new assets.

In Ward Village (Hawaii) where HHC has four large condo towers in various stages of construction, the company achieved its highest volume of sales, 52 condo units, without the launch of a new building. In Q4 2017, HHC will launch its fifth residential project, A'ali'i which will have 751 homes. The company still has a long runway ahead as it has begun development of only 25% of its Ward Village entitlements.

Despite Hurricane Harvey, HHC’s Houston master planned communities (MPCs) remained stable and resilient with strong residential land sales at Bridgeland and The Woodlands. During the quarter, HHC initiated development of a new MPC at Woodland Hills. The first phase consists of 192 single-family homes and will start to sell lots in Q4 2017.

At the South Street Seaport, HHC announced a 19,000 sq.ft. long-term lease with ESPN where it will broadcast its high profile daily shows. This lease will generate attractive cash flows at top-of-the-market rents and provide great visibility for the Seaport as ESPN will feature the Seaport in its broadcasts much the same way NBC has created on-air exposure for Rockefeller Center.

In Summerlin Las Vegas, HHC is on track to generate over $100 million in land sales for the fifth year in a row. During the quarter, HHC announced the development of a ballpark for its wholly owned Las Vegas 51s Triple A baseball team, and signed a 20-year, $80 million naming rights agreement with the Las Vegas Convention and Visitor’s Authority.

In its Operating Asset segment, HHC announced three new development projects within its MPCs that will generate over $15 million of stabilized net operating income (NOI), increasing HHC’s projected stabilized NOI target to $261 million. Because a growing percentage of HHC enterprise value is represented by stabilized cash-flow-generative real estate assets, it should become easier for investors to determine that HHC is trading at a substantial discount to intrinsic value.

During the quarter, David Weinreb and Grant Herlitz, HHC’s CEO and President, entered into 10-year employment agreements. As part of these agreements, David and Grant completed their respective purchases of $50 million and $2 million of warrants from the company, which they are restricted from selling or hedging for the next five years. This represents one of the largest investment commitments that we have seen by a management team, highlighting the strong shareholder alignment and long-term focus of HHC’s seasoned management team.

Howard Hughes is a US-only taxpayer. As such, we expect it would be a large beneficiary of a reduction in corporate tax rates.

From Bill Ackman (Trades, Portfolio)'s third quarter 2017 shareholder letter.

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Bill Ackman Comments on Howard Hughes - Aug 18, 2017

Howard Hughes (NYSE:HHC) initiated an effort this year to increase visibility and transparency into its business. HHC started conducting quarterly conference calls and releasing a quarterly supplemental information package, which provides investors and analysts with additional detailed data about its business. HHC conducted its first ever Investor Day on May 17, 2017 at the South Street Seaport in New York City. Pershing Square also presented Howard Hughes at the Sohn Conference on May 8, 2017 in a presentation entitled SimCities. We believe that the increased transparency will showcase the significant underlying value at HHC over time.

HHC continues to make steady progress across its three business lines – Operating Assets, Strategic Developments and Master Planned Communities (MPCs). In its Operating Asset portfolio, Howard Hughes has steadily increased its projected stabilized net operating income target to $245 million. In its Strategic Development segment, Howard Hughes sold an additional 65 condo units at Ward Village in Hawaii during the first half of the year, increasing the percentage of total units closed or under contract at its four condo towers to 85%, with three towers at more than 93% sold, and the fourth at 69%. The South Street Seaport is on track to open in New York City in summer 2018. In its MPCs, HHC will likely generate over $100 million in land sales at Summerlin (Las Vegas) for the fifth year in a row. Land sales are increasing in Houston as that market is showing signs of a rebound as crude prices have stabilized.

HHC refinanced its existing bonds with a new $800 million bond issuance in a positive net present value transaction, saving 150 basis points in interest and extending the maturity date by 3.5 years. It then subsequently closed on an incremental $200 million bond add-on at a yield-to-worst of less than 5%. HHC now has $660 million of cash on its balance sheet, which will allow it to finance its remaining development projects without the need to raise additional equity capital.

David Weinreb, HHC’s CEO, sold some of his expiring warrants, exercised warrants to purchase $50 million of common stock and agreed to purchase $50 million in new warrants from the company which he is restricted from selling or hedging for the next five years. Along with a smaller purchase by Grant Herlitz, HHC’s President, this is one of the largest investment commitments that we have seen by a management team.

During the quarter we net settled our HHC warrants shortly before their expiration according to their terms (the warrants were not exercisable). By doing so we slightly reduced our notional exposure to HHC, disposed of the only Level 3 asset that we owned, and now own only HHC common stock and total return swaps.

From Bill Ackman (Trades, Portfolio)'s second quarter 2017 shareholder letter.

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Keeley Funds Comments on Howard Hughes Corp - Aug 14, 2017

Howard Hughes Corp. (NYSE:HHC) is a real estate development company that was a spinoff from General Growth Properties. The company has benefitted from growing excitement as they become more shareholder friendly under the leadership of new CFO, David O’Reilly. Showcasing one of their major developments, they held their inaugural investor day at South Street Seaport in New York City. This followed their first earnings conference call earlier in the quarter. Finally, the company has also begun to travel and proactively meet with investors. Operationally, HHC is continuing to progress on developing their five main projects and they remain focused on increasing the Net Operating Income (NOI) as the developments mature.



From Keeley All Cap Value Fund second quarter 2017 shareholder commentary.



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Bill Ackman Comments on Howard Hughes Corp - May 12, 2017

Pershing Square presented the Howard Hughes Corporation (NYSE:HHC) at the Sohn Conference on May 8th . Here is a link to the powerpoint presentation. HHC held its second quarterly conference call on May 4th and intends to conduct its first ever Investor Day on May 17th at the South Street Seaport. It also released detailed Supplemental Information for the first time, in an effort to provide the market with increased transparency into its business.

HHC continues to make strong progress across its three business lines – Operating Assets, Strategic Developments and Master Planned Communities (MPCs). In its Operating Asset portfolio, Howard Hughes continued to lease up its existing operating portfolio, increased the stabilized net operating income (NOI) target to $240 million, and grew NOI in Q1 2017 by 42.4% to $44.7 million, as compared to the prior year. MPC segment revenue was $68.7 million, an increase of $19 million as compared to the first quarter of last year.

In its Strategic Development segment, Howard Hughes sold an additional 34 condo units at Ward Village in Hawaii, increasing the percentage of total units closed or under contract at its four condo towers to nearly 83%, with three towers at more than 93% sold and the fourth at 62%. The South Street Seaport is expected to open in New York City in Summer 2018.

During the quarter, Howard Hughes refinanced its existing bonds with a new $800 million bond issuance in a positive net present value transaction, saving 150 basis points in interest and extending the maturity date by 3.5 years.



From Bill Ackman (Trades, Portfolio)'s first quarter 2017 shareholder letter.


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Bill Ackman Comments on Howard Hughes Corp - May 08, 2017

The Howard Hughes Corporation (NYSE:HHC) was formed in November 2010 as a tax-free spinoff from General Growth Properties, with a collection of disparate real estate holdings designed to receive appropriate management attention and recognition in the public markets. Pershing Square helped orchestrate the spinoff, hired the management team, and has been the largest investor in HHC since its inception. Management has done a superb job growing asset value, yet, the company has not received the recognition it deserves, i.e., an appropriate valuation in the public markets. Despite a more than three-fold increase over the last six years, it remains undervalued in our view.

HHC’s mission is to be the preeminent developer and operator of master planned communities (“MPCs”) and mixed-use properties. HHC’s management team has transformed the company’s disparate assets into a collection of high-quality core trophy assets. The majority of HHC’s value is now represented by the South Street Seaport, Ward Village in Hawaii and master planned communities in Houston, Las Vegas and Maryland. These assets are comprised of steady cash-flow generating properties and longer-term development opportunities that encompass more than 50 million square feet of real estate development potential.

HHC continued to make meaningful progress in 2016 to enhance the value of its key assets. In its operating asset segment, HHC grew net operating income (“NOI”) in 2016 to $135 million or $156 million annualizing Q4 NOI, from $118 million in 2015 (all excluding the Seaport, which is undergoing redevelopment). HHC management increased its projected stabilized 2020 NOI estimate to $232 million from $219 million.

In Hawaii, at its 60-acre coastal Ward Village property in the heart of Honolulu, HHC has four condo towers with nearly 1,400 units in various stages of completion. These towers have an estimated total cost of $1.5 billion on which the company expects to generate net margins of approximately 25% to 30%. These towers are over 80% sold with one tower projected to be delivered each year from now until 2019 (generating meaningful cash proceeds for the company). In total, HHC has entitlements to build more than 9 million square feet of mixed-use development with over 4,000 residences and 1 million square feet of retail upon completion of its plan at Ward Village.

At the Seaport, HHC owns more than 400,000 square feet of highly valuable real estate (along with 700,000 square feet of future development rights). Construction on the 170,000 square foot Pier 17 building is expected to be substantially completed by the end of 2017, with a grand opening in summer 2018. This architecturally significant building on the East River will have a unique group of tenants and a 1.5 acre rooftop year-round entertainment venue with iconic views. HHC advanced the revitalization of the Seaport with the approval for its Pier 17 Minor Modification, which will allow HHC to move and reconstruct the 53,000 square foot Tin Building. In Q1 2016, HHC sold an assemblage of properties it had acquired in 2014 and 2015 at the Seaport for $390 million generating a $140 million profit, which demonstrates the market appeal of the Seaport and management’s ability to create value.

While HHC’s share price performance (and intrinsic valuation creation) since its spinoff have been impressive, the share price has been flat over the last three years. Although management has done a superb job growing intrinsic value, the HHC story is largely unknown in the investment community. The HHC story and value proposition is complicated by the vast development potential that cannot be estimated by simply applying a multiple to existing cash flows. To address this concern, HHC recently started conducting quarterly earning conference calls and taking a more proactive approach to investor and analyst outreach. We believe HHC is undervalued and that further progress on asset stabilization and clarity around some of its bigger projects (e.g., Seaport and Ward Village) will help drive stock appreciation.

Howard Hughes’ total shareholder return was 0.8% in 2016.

From 2016 annual letter to shareholders of Pershing Square by Bill Ackman (Trades, Portfolio).

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Bill Ackman Comments on The Howard Hughes Corporation - Mar 30, 2017

The Howard Hughes Corporation (NYSE:HHC) was formed in November 2010 as a tax-free spinoff from General Growth Properties, with a collection of disparate real estate holdings designed to receive appropriate management attention and recognition in the public markets. Pershing Square helped orchestrate the spinoff, hired the management team, and has been the largest investor in HHC since its inception. Management has done a superb job growing asset value, yet, the company has not received the recognition it deserves, i.e., an appropriate valuation in the public markets. Despite a more than three-fold increase over the last six years, it remains undervalued in our view.

HHC’s mission is to be the preeminent developer and operator of master planned communities (“MPCs”) and mixed-use properties. HHC’s management team has transformed the company’s disparate assets into a collection of high-quality core trophy assets. The majority of HHC’s value is now represented by the South Street Seaport, Ward Village in Hawaii and master planned communities in Houston, Las Vegas and Maryland. These assets are comprised of steady cash-flow generating properties and longer-term development opportunities that encompass more than 50 million square feet of real estate development potential.

HHC continued to make meaningful progress in 2016 to enhance the value of its key assets. In its operating asset segment, HHC grew net operating income (“NOI”) in 2016 to $135 million or $156 million annualizing Q4 NOI, from $118 million in 2015 (all excluding the Seaport, which is undergoing redevelopment). HHC management increased its projected stabilized 2020 NOI estimate to $232 million from $219 million.

In Hawaii, at its 60-acre coastal Ward Village property in the heart of Honolulu, HHC has four condo towers with nearly 1,400 units in various stages of completion. These towers have an estimated total cost of $1.5 billion on which the company expects to generate net margins of approximately 25% to 30%. These towers are over 80% sold with one tower projected to be delivered each year from now until 2019 (generating meaningful cash proceeds for the company). In total, HHC has entitlements to build more than 9 million square feet of mixed-use development with over 4,000 residences and 1 million square feet of retail upon completion of its plan at Ward Village.

At the Seaport, HHC owns more than 400,000 square feet of highly valuable real estate (along with 700,000 square feet of future development rights). Construction on the 170,000 square foot Pier 17 building is expected to be substantially completed by the end of 2017, with a grand opening in summer 2018. This architecturally significant building on the East River will have a unique group of tenants and a 1.5 acre rooftop year-round entertainment venue with iconic views. HHC advanced the revitalization of the Seaport with the approval for its Pier 17 Minor Modification, which will allow HHC to move and reconstruct the 53,000 square foot Tin Building. In Q1 2016, HHC sold an assemblage of properties it had acquired in 2014 and 2015 at the Seaport for $390 million generating a $140 million profit, which demonstrates the market appeal of the Seaport and management’s ability to create value.

While HHC’s share price performance (and intrinsic valuation creation) since its spinoff have been impressive, the share price has been flat over the last three years. Although management has done a superb job growing intrinsic value, the HHC story is largely unknown in the investment community. The HHC story and value proposition is complicated by the vast development potential that cannot be estimated by simply applying a multiple to existing cash flows. To address this concern, HHC recently started conducting quarterly earning conference calls and taking a more proactive approach to investor and analyst outreach. We believe HHC is undervalued and that further progress on asset stabilization and clarity around some of its bigger projects (e.g., Seaport and Ward Village) will help drive stock appreciation.

Howard Hughes’ total shareholder return was 0.8% in 2016.



From Bill Ackman (Trades, Portfolio)'s Pershing Square 2016 annual report.


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Top Ranked Articles about The Howard Hughes Corp

The Howard Hughes Corporation® To Present At Citi 2019 Global Property CEO Conference
The Seaport District Unveils 2019 Summer Concert Series On The Rooftop at Pier 17® In Partnership With Live Nation
**Update** The Howard Hughes Corporation® Announces Dates And Times For Fourth-Quarter 2018 Earnings Release, Conference Call And Presentation
/C O R R E C T I O N -- The Howard Hughes Corporation/
The Rooftop At Pier 17® At The Seaport District Named Best New Concert Venue Of The Year By Pollstar
The Howard Hughes Corporation® Announces Dates And Times For Fourth-Quarter 2018 Earnings Release And Conference Call
Daniel Loeb, Bill Ackman Post Losses for the Year 2018 treats neither of the hedge fund managers kindly
Some of the finance world’s most prominent investors ended 2018 with lackluster returns in their flagship funds, including activist stars Bill Ackman (Trades, Portfolio) and Daniel Loeb (Trades, Portfolio). Read more...
Ward Village Debuts Victoria Ward Park, Honolulu's Newest Open-Air Gathering Place
The Howard Hughes Corporation® Announces The Las Vegas Aviators® As New Name Of Las Vegas' Professional Baseball Team
Bill Ackman Comments on The Howard Hughes Corp Guru stock highlight
HHC (NYSE:HHC)’s share price decreased 6% during the third quarter, and has declined nearly 17% year-to-date. We believe this underperformance is due to investor concern regarding a potential housing slowdown as higher interest rates and increasing labor and material costs make homes less affordable. Homebuilders, which purchase land and manufacture and sell homes to generate cash flow, have been particularly impacted with many home builder stocks down 30% or more this year. Read more...

Ratios

vs
industry
vs
history
PE Ratio 83.89
HHC's PE Ratio is ranked lower than
83% of the 1424 Companies
in the Global Real Estate - General industry.

( Industry Median: 10.26 vs. HHC: 83.89 )
Ranked among companies with meaningful PE Ratio only.
HHC' s PE Ratio Range Over the Past 10 Years
Min: 23.5  Med: 34.03 Max: 91.03
Current: 83.89
23.5
91.03
Forward PE Ratio 133.33
HHC's Forward PE Ratio is ranked lower than
99.99% of the 197 Companies
in the Global Real Estate - General industry.

( Industry Median: 12.52 vs. HHC: 133.33 )
Ranked among companies with meaningful Forward PE Ratio only.
N/A
PE Ratio without NRI 83.89
HHC's PE Ratio without NRI is ranked lower than
83% of the 1377 Companies
in the Global Real Estate - General industry.

( Industry Median: 10.57 vs. HHC: 83.89 )
Ranked among companies with meaningful PE Ratio without NRI only.
HHC' s PE Ratio without NRI Range Over the Past 10 Years
Min: 23.5  Med: 34.03 Max: 91.03
Current: 83.89
23.5
91.03
Price-to-Owner-Earnings 8.28
HHC's Price-to-Owner-Earnings is ranked lower than
62% of the 840 Companies
in the Global Real Estate - General industry.

( Industry Median: 9.08 vs. HHC: 8.28 )
Ranked among companies with meaningful Price-to-Owner-Earnings only.
HHC' s Price-to-Owner-Earnings Range Over the Past 10 Years
Min: 5.45  Med: 12.37 Max: 124.95
Current: 8.28
5.45
124.95
PB Ratio 1.51
HHC's PB Ratio is ranked lower than
76% of the 1734 Companies
in the Global Real Estate - General industry.

( Industry Median: 0.94 vs. HHC: 1.51 )
Ranked among companies with meaningful PB Ratio only.
HHC' s PB Ratio Range Over the Past 10 Years
Min: 0.66  Med: 1.76 Max: 2.95
Current: 1.51
0.66
2.95
PS Ratio 4.44
HHC's PS Ratio is ranked lower than
70% of the 1677 Companies
in the Global Real Estate - General industry.

( Industry Median: 2.54 vs. HHC: 4.44 )
Ranked among companies with meaningful PS Ratio only.
HHC' s PS Ratio Range Over the Past 10 Years
Min: 3.74  Med: 7.35 Max: 16.86
Current: 4.44
3.74
16.86
Price-to-Free-Cash-Flow 22.45
HHC's Price-to-Free-Cash-Flow is ranked lower than
71% of the 695 Companies
in the Global Real Estate - General industry.

( Industry Median: 13.91 vs. HHC: 22.45 )
Ranked among companies with meaningful Price-to-Free-Cash-Flow only.
HHC' s Price-to-Free-Cash-Flow Range Over the Past 10 Years
Min: 15.01  Med: 40.21 Max: 1723.02
Current: 22.45
15.01
1723.02
Price-to-Operating-Cash-Flow 22.45
HHC's Price-to-Operating-Cash-Flow is ranked lower than
76% of the 939 Companies
in the Global Real Estate - General industry.

( Industry Median: 11.45 vs. HHC: 22.45 )
Ranked among companies with meaningful Price-to-Operating-Cash-Flow only.
HHC' s Price-to-Operating-Cash-Flow Range Over the Past 10 Years
Min: 15.01  Med: 25.43 Max: 1723.02
Current: 22.45
15.01
1723.02
EV-to-EBIT 48.49
HHC's EV-to-EBIT is ranked lower than
90% of the 1487 Companies
in the Global Real Estate - General industry.

( Industry Median: 11.73 vs. HHC: 48.49 )
Ranked among companies with meaningful EV-to-EBIT only.
HHC' s EV-to-EBIT Range Over the Past 10 Years
Min: -1154.3  Med: 20.1 Max: 197
Current: 48.49
-1154.3
197
EV-to-EBITDA 26.56
HHC's EV-to-EBITDA is ranked lower than
83% of the 1517 Companies
in the Global Real Estate - General industry.

( Industry Median: 11.23 vs. HHC: 26.56 )
Ranked among companies with meaningful EV-to-EBITDA only.
HHC' s EV-to-EBITDA Range Over the Past 10 Years
Min: -802.7  Med: 18.6 Max: 195.5
Current: 26.56
-802.7
195.5
EV-to-Revenue 7.06
HHC's EV-to-Revenue is ranked lower than
68% of the 1700 Companies
in the Global Real Estate - General industry.

( Industry Median: 4.23 vs. HHC: 7.06 )
Ranked among companies with meaningful EV-to-Revenue only.
HHC' s EV-to-Revenue Range Over the Past 10 Years
Min: 6.3  Med: 9.1 Max: 17.1
Current: 7.06
6.3
17.1
Current Ratio 1.54
HHC's Current Ratio is ranked lower than
57% of the 1678 Companies
in the Global Real Estate - General industry.

( Industry Median: 1.80 vs. HHC: 1.54 )
Ranked among companies with meaningful Current Ratio only.
HHC' s Current Ratio Range Over the Past 10 Years
Min: 1.54  Med: 2.63 Max: 10
Current: 1.54
1.54
10
Quick Ratio 1.54
HHC's Quick Ratio is ranked higher than
68% of the 1678 Companies
in the Global Real Estate - General industry.

( Industry Median: 1.01 vs. HHC: 1.54 )
Ranked among companies with meaningful Quick Ratio only.
HHC' s Quick Ratio Range Over the Past 10 Years
Min: 1.54  Med: 2.63 Max: 10
Current: 1.54
1.54
10
Days Sales Outstanding 80.53
HHC's Days Sales Outstanding is ranked lower than
75% of the 1504 Companies
in the Global Real Estate - General industry.

( Industry Median: 32.35 vs. HHC: 80.53 )
Ranked among companies with meaningful Days Sales Outstanding only.
HHC' s Days Sales Outstanding Range Over the Past 10 Years
Min: 20.71  Med: 70.95 Max: 113.23
Current: 80.53
20.71
113.23
Days Payable 21.02
HHC's Days Payable is ranked lower than
78% of the 1410 Companies
in the Global Real Estate - General industry.

( Industry Median: 78.67 vs. HHC: 21.02 )
Ranked among companies with meaningful Days Payable only.
HHC' s Days Payable Range Over the Past 10 Years
Min: 19.01  Med: 46.72 Max: 258.43
Current: 21.02
19.01
258.43

Buy Back

vs
industry
vs
history
3-Year Average Share Buyback Ratio -2.90
HHC's 3-Year Average Share Buyback Ratio is ranked higher than
57% of the 923 Companies
in the Global Real Estate - General industry.

( Industry Median: -4.30 vs. HHC: -2.90 )
Ranked among companies with meaningful 3-Year Average Share Buyback Ratio only.
HHC' s 3-Year Average Share Buyback Ratio Range Over the Past 10 Years
Min: -3  Med: -1.5 Max: -0.2
Current: -2.9
-3
-0.2

Valuation & Return

vs
industry
vs
history
Price-to-Tangible-Book 1.54
HHC's Price-to-Tangible-Book is ranked lower than
75% of the 1743 Companies
in the Global Real Estate - General industry.

( Industry Median: 0.98 vs. HHC: 1.54 )
Ranked among companies with meaningful Price-to-Tangible-Book only.
HHC' s Price-to-Tangible-Book Range Over the Past 10 Years
Min: 0.73  Med: 1.8 Max: 2.39
Current: 1.54
0.73
2.39
Price-to-Intrinsic-Value-Projected-FCF 1.14
HHC's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
69% of the 817 Companies
in the Global Real Estate - General industry.

( Industry Median: 0.97 vs. HHC: 1.14 )
Ranked among companies with meaningful Price-to-Intrinsic-Value-Projected-FCF only.
HHC' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 1.02  Med: 1.57 Max: 2.2
Current: 1.14
1.02
2.2
Price-to-Median-PS-Value 0.61
HHC's Price-to-Median-PS-Value is ranked higher than
67% of the 1416 Companies
in the Global Real Estate - General industry.

( Industry Median: 0.95 vs. HHC: 0.61 )
Ranked among companies with meaningful Price-to-Median-PS-Value only.
HHC' s Price-to-Median-PS-Value Range Over the Past 10 Years
Min: 0.54  Med: 0.84 Max: 1.95
Current: 0.61
0.54
1.95
Price-to-Graham-Number 2.40
HHC's Price-to-Graham-Number is ranked lower than
84% of the 1325 Companies
in the Global Real Estate - General industry.

( Industry Median: 0.67 vs. HHC: 2.40 )
Ranked among companies with meaningful Price-to-Graham-Number only.
HHC' s Price-to-Graham-Number Range Over the Past 10 Years
Min: 1.11  Med: 1.65 Max: 2.47
Current: 2.4
1.11
2.47
Earnings Yield (Greenblatt) % 2.07
HHC's Earnings Yield (Greenblatt) % is ranked lower than
75% of the 1781 Companies
in the Global Real Estate - General industry.

( Industry Median: 7.05 vs. HHC: 2.07 )
Ranked among companies with meaningful Earnings Yield (Greenblatt) % only.
HHC' s Earnings Yield (Greenblatt) % Range Over the Past 10 Years
Min: -38.2  Med: 1.8 Max: 8.7
Current: 2.07
-38.2
8.7

More Statistics

Revenue (TTM) (Mil) $1,064.54
EPS (TTM) $ 1.31
Beta1.04
Volatility25.95%
52-Week Range $89.51 - 142.36
Shares Outstanding (Mil)43.13

Analyst Estimate

Dec19
Revenue (Mil $)
EBIT (Mil $)
EBITDA (Mil $)
EPS ($) 0.84
EPS without NRI ($) 0.84
EPS Growth Rate
(Future 3Y To 5Y Estimate)
N/A
Dividends per Share ($)

Piotroski F-Score Details

Piotroski F-Score: 33
Positive ROAY
Positive CFROAY
Higher ROA yoyN
CFROA > ROAY
Lower Leverage yoyN
Higher Current Ratio yoyN
Less Shares Outstanding yoyN
Higher Gross Margin yoyN
Higher Asset Turnover yoyN

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