The Howard Hughes Corporation Issues Letter to Shareholders
One transaction that I failed to discuss previously and wanted to highlight was the recent repurchase of warrants from the company's initial sponsors:
"Our long-term goal is to increase the value of the company on a per-share basis. We do this by improving our assets through the development process and by opportunistically deploying excess cash. In the fourth quarter, we purchased approximately 6.1 million of the 8 million Sponsor warrants issued as part of our emergence as a public company. These warrants had a strike price ofGreat transaction for the company and shows how focused management is on realizing shareholder value (great alignment of incentives, but I don't anticipate Mr. Weinreb giving up his warrants so cheaply).
$50.00per share and a November 2017expiration date. They were the most expensive and dilutive security in our capital structure. Before their retirement, the warrants represented an economic drag on our per-share progress as every dollar of appreciation of our stock price above $50.00would require us to generate $1.16of value. The repurchase of these warrants in exchange for $81 millionof cash and 1.5 million shares is a break-even proposition for the company if our stock price equals $81.10in 2017, a price which we expect will be well below the potential value of our stock at that time. As a result of retiring the warrants, our shareholders now own 10.1% more of the company."
Disclosure: I own shares of HHC