Pershing Square to invest $900M to acquire 9M shares of Howard Hughes

Howard Hughes (HHH) Holdings and Pershing Square announced an agreement pursuant to which Pershing Square invest $900 million to acquire 9,000,000 newly issued shares of HHH. Pershing Square’s investment will enable HHH to become a diversified holding company by acquiring controlling stakes in high-quality, durable growth public and private operating companies while continuing to invest in and grow the Company’s core real estate development and Master Planned Communities business. Pershing Square’s acquisition of $900 million of newly issued shares of HHH common stock for $100.00 per share represents a premium of 48% to HHH’s closing share price on Friday, May 2, 2025. Pershing Square will now own 46.9% of HHH shares outstanding. Pershing Square has generally agreed to limit its voting power to 40% and its beneficial ownership to 47%. Pershing Square’s Chairman and CEO, Bill Ackman, has been named the Executive Chairman of the HHH Board of Directors. Ryan Israel, Pershing Square’s Chief Investment Officer, will become HHH’s Chief Investment Officer, a new senior leadership role at the Company. The HHH leadership team, led by CEO David O’Reilly, will remain unchanged with expanded roles and responsibilities. HHH’s other employees will remain unchanged. As part of the transaction, the entire Pershing Square organization will now be available to HHH to support the Company’s transformation by providing investment, advisory, and other ancillary services, including corporate development, transaction execution, and capital markets assistance. Pershing Square will also assist HHH in identifying and hedging macro-related risks. Pershing Square Holdco is owned 90% by Pershing Square principals and 10% by strategic investors. Holdco’s $900 million investment represents a ‘look-through’ cash investment by Pershing Square principals of $810 million. When combined with the Pershing Square funds’ existing ownership, this represents a total look-through investment in HHH of $1.2 billion by Pershing Square’s principals. HHH will pay Pershing Square a quarterly base fee of $3.75M and a quarterly management fee equal to 0.375% of the increase in HHH’s equity market capitalization above the Reference Market Cap of the Company. The Reference Market Cap is determined by multiplying the post-transaction share count of 59,393,938 by the Reference Market Price of $66.1453, which is adjusted annually for inflation, subject to equitable adjustment for stock splits, reclassifications or similar capital changes. The Reference Share Count does not change in the event the Company issues additional shares to raise equity, to acquire a company for stock, or to provide equity compensation to employees. As a result, the management fee will not increase due to share issuances. It will only increase if the Company’s share price compounds at a rate in excess of inflation. HHH will not pay any additional fees, cash compensation, or equity incentives to Pershing Square or its principals or employees. Howard Hughes Corporation, the principal operating subsidiary of HHH, will continue to develop its core Master Planned Communities, Operating Assets and Strategic Developments segments, furthering its commitment to becoming the premier residential and commercial real estate developer. The transaction was negotiated and unanimously approved by the Special Committee of HHH composed entirely of independent and disinterested directors. Upon recommendation of the Special Committee, the Howard Hughes Board of Directors approved the transaction, which closed today. Going forward, the Howard Hughes Board of Directors will consist of a majority of independent directors, with Pershing Square having the right to nominate three directors so long as it continues to beneficially own at least 17.5% of the fully diluted HHH shares. The Board now includes David Eun, Beth Kaplan, David O’Reilly, Scot Sellers, Steven Shepsman, Mary Ann Tighe, Anthony Williams, Pershing Square’s Bill Ackman, Ben Hakim and Ryan Israel, and Jean-Baptiste Wautier as a new director.