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Exploring Bill Ackman’s Bet on Real Estate: The Strategic Brilliance Behind Howard Hughes Corp

Real Estate Development is just the tip of the iceberg in this billion-dollar bet.

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Dear Bottom Line Investor,

Billionaire Bill Ackman (worth some $4.2 billion), is renowned for his incisive investment strategies, owns a substantial 32% of Howard Hughes Corporation (HHC). 

This article delves into why HHC is seen as a particularly attractive investment.

Ackman Already Told Us Why He Invested

At the Ira Sohn Investment Conference in 2017, Bill Ackman made a compelling case for Howard Hughes Corp, likening its strategic approach to that of Donald Bren at Irvine Ranch. 

Bren, with a net worth of $18 billion today, currently holds the title of richest real estate developer in America. 

In his presentation, Ackman underscored the principles of successful land development such as zoning control, prudent debt leverage, and long-term planning—all strengths of HHC in Ackman’s eyes.

2023’s Solid Results

Howard Hughes Holdings Inc. ended 2023 on a high note, with significant growth in its Master Planned Community (MPC) segment, evidenced by a 110% increase in new home sales and a 22% rise in the price per acre, reflecting strong demand in communities like Summerlin and Bridgeland. The company's Operating Assets also performed robustly, achieving record net operating income, driven by gains in multi-family and office sectors.

Looking forward, Howard Hughes is poised for continued growth in 2024, particularly with strategic moves like the spin-off of Seaport Entertainment, which aims to optimize its focus on core residential and commercial developments.

Speaking of which…

Land Development Isn’t All There Is Under the Hood

Howard Hughes Corp plans to spin off its entertainment-related assets into a new entity called Seaport Entertainment.

This new entity will include the Seaport complex in New York City, Howard Hughes Corp’s minor league baseball team in Las Vegas (yes, HHC actually owns a baseball team), an ownership stake in Jean-Georges Restaurants, and air rights at the location of a proposed new casino on the Las Vegas Strip.

All should be strong drivers of shareholder value in the years ahead.

The Bottom Line

Investing in Howard Hughes Corporation represents an opportunity to align with one of the sharpest minds in investing. Bill Ackman’s substantial involvement and the company’s strategic approach to land development and capital management combine to make HHC a compelling blend of risk and reward. Investors are encouraged to consider how this investment fits with their overall portfolio strategy.

Also, before you go, we recommend checking out…

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