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THE WOODLANDS, Texas and NEW YORK - Howard Hughes Holdings Inc. (NYSE: HHH), a $3.36 billion market cap company currently trading at an attractive P/E ratio of 11.6, announced today that Pershing Square Holdco, L.P., and its subsidiary, Pershing Square Capital Management, L.P., have invested $900 million in the company. According to InvestingPro analysis, HHH is currently trading below its Fair Value, with multiple indicators suggesting the stock is undervalued. This investment allows HHH to pursue a strategy as a diversified holding company, aiming to acquire controlling interests in high-quality, durable growth public and private companies. The transaction positions Pershing Square to own 46.9% of HHH, with the purchase price of $100.00 per share representing a 48% premium over HHH’s closing share price last Friday. The company maintains strong financial health with a current ratio of 1.62, indicating solid liquidity to meet its short-term obligations. Get deeper insights into HHH’s valuation and financial metrics with a comprehensive Pro Research Report, available exclusively on InvestingPro.
Bill Ackman, Pershing Square’s Chairman and CEO, has been named the Executive Chairman of HHH’s Board of Directors, with Pershing Square’s Chief Investment Officer, Ryan Israel, taking on a new leadership role as HHH’s Chief Investment Officer. The current HHH leadership team, including CEO David O’Reilly, will continue with expanded roles, while the company’s principal subsidiary, Howard Hughes Corporation, will maintain its focus on real estate development.
The agreement includes a quarterly base fee paid to Pershing Square and a management fee tied to the increase in HHH’s equity market capitalization, with provisions to prevent the fee from rising due to share issuances alone. The transaction, which was closed today, was approved by a Special Committee of independent and disinterested directors and the Howard Hughes Board of Directors.
HHH’s principal operating subsidiary, Howard Hughes Corporation, will continue to develop its core Master Planned Communities, furthering its reputation as a leading community builder. The company’s strategy aims to leverage the strong foundation of its real estate development business to create new growth avenues.
Governance changes include a majority of independent directors on the Howard Hughes Board, with Pershing Square holding the right to nominate directors contingent on its ownership percentage. In addition to Ackman, the board will include new director Jean-Baptiste Wautier, who brings extensive private equity experience.
Advisors for the transaction included Morgan Stanley & Co. LLC for the Special Committee, with legal counsel from Hogan Lovells US LLP and Richards, Layton & Finger, P.A. For Pershing Square, Jefferies LLC acted as financial advisor, with legal counsel from Sullivan & Cromwell LLP and Morris, Nichols, Arsht & Tunnell LLP.
The company has stated that this strategic expansion, supported by Pershing Square’s investment and advisory services, is set to enhance HHH’s credit profile and strategic and financial flexibility. This information is based on a press release statement.
In other recent news, Howard Hughes Holdings Inc. announced the extension of its standstill agreement with Pershing Square Capital Management L.P. until May 30, 2025. This agreement aims to allow further discussions between the two parties, although neither has disclosed the specific terms or potential outcomes of these talks. Pershing Square, the investment firm involved, has also extended its standstill agreement with Howard Hughes, emphasizing that ongoing discussions may not necessarily lead to a specific result. In a separate development, Howard Hughes Holdings has revised the employment agreements for three top executives, including David R. O’Reilly and Carlos Olea, extending their terms to December 31, 2028. The company also agreed with its President, L. Jay Cross, not to renew his employment agreement, which will expire on December 1, 2025. These changes in executive agreements are detailed in a recent SEC filing. The developments reflect Howard Hughes Holdings’ ongoing efforts to adjust its executive leadership structure.
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