Bill Ackman Aims to Purchase Majority of Howard Hughes Holdings in $1.5B Deal

Bill Ackman’s Pershing Square Capital aims to merge with one of the largest public commercial real estate companies in the United States in a $1.5 billion deal. 

Ackman announced Monday that Pershing Square Capital wants to purchase 11.7 million shares of Howard Hughes Holdings (HHH) at $85 per share in a deal valued at $1 billion. Pershing also wants to engage in a $500 million share repurchase program funded through new bond issuances, thereby increasing its ownership stake in the firm from 38 percent to as much as 69 percent. 

The $85-per-share offer is nearly 20 percent higher than $71.78 Howard Hughes closed at on Jan. 10. The stock price has remained roughly flat at around $77 per share over the past year.  

Reuters first reported news of the proposed share purchase, noting that the Woodlands, Texas-based Howard Hughes Holdings has a market value of $3.6 billion. 

In a letter sent to the board of Howard Hughes Holdings, Ackman wrote that Pershing Square first became an investor in the firm in 2010 and has considered taking the company private since August 2024. He proposes creating a new subsidiary, Pershing Square Holdco, and merging it into Howard Hughes Holding Company, making Pershing Square the largest owner of the dual company while providing existing investors with options to remain in the fold.  

“Put simply, we are all in, and we intend for Pershing Square Holdco’s investment in HHH to be a permanent holding,” wrote Ackman. “In other words, we intend to hold HHH stock forever.”

He added that Howard Hughes Holdings would become a diversified holding company and that Howard Hughes Corporation “would remain unchanged,” as the senior leadership team and CEO David O’Reilly would remain in place.  

“We do not intend to make any changes to the HHC organization, its employees, or its long-term strategy,” wrote Ackman. Referring to investor Warren Buffett, he added: “With apologies to Mr. Buffett, HHH would become a modern-day Berkshire Hathaway that would acquire controlling interests in operating companies.” 

Howard Hughes Corporation specializes in developing master-planned communities. The firm currently holds 7 communities across five states with nearly 6,000 units of housing, together with 6.9 million square feet of office space and 2.9 million square feet of retail space.  

Among the firm’s largest real estate holdings are its 400-acre master-planned community of Downtown Columbia in Maryland, which includes 1.9 million square feet of office and retail, and more than 1,600 residential units. HHH also has three master-planned communities in the Houston area, which include 4.5 million square feet of office space, 3,499 multifamily units, and 146,000 residents. 

The stock of Howard Hughes peaked at $151.61 per share in August 2014 and reached as high as $119.21 per share in February 2020, just prior to the COVID-19 pandemic. The stock cratered to $38.20 per share in March 2020 and has not risen beyond $105 per share since, spending all of 2024 between a low of $56 per share and a high of $86 per share. 

In the letter to the HHH board, Ackman called the stock’s performance “obviously extremely disappointing,” and said Pershing has received only a 35 percent total return over the last 14 years from its $250 million investment made in 2010, for a compound annual return of just 2.2 percent. 

“While we are pleased with the substantial business progress Howard Hughes Holdings has made over the more than 14 years since it went public, we, like other long-term shareholders and this board, have been displeased with the company’s stock price performance,” wrote Ackman. 

He added in his letter to the board that Pershing Square’s management team and resources would be used to help HHH acquire new operating companies and other assets in the private market.

“The transaction would empower HHH to leverage Pershing Square’s transaction sourcing and execution capabilities in the private and controlled company markets and enable Pershing Square to pursue these opportunities via its substantial investment in HHH,” wrote Ackman. 

Howard Hughes Corporation and Howard Hughes Holdings did not respond to requests for comment. 

Brian Pascus can be reached at bpascus@commercialobserver.com