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Howard Hughes announces management reshuffle, to sell assets worth $2 billion

Published 10/21/2019, 06:15 PM
Updated 10/21/2019, 06:19 PM
Howard Hughes announces management reshuffle, to sell assets worth $2 billion
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(Reuters) - Howard Hughes Corp (N:HHC), which counts activist investor William Ackman as chairman, said on Monday it would sell about $2 billion of non-core assets following a strategic review and announced a management reshuffle.

Shares of the company were down 18.4% at $104.70 in extended trading.

"There was a belief that the entire company would be sold or the company would go private," said Vahid Khorsand, an analyst with BWS Financial.

Ackman, however, said in a conference call with analysts that the company would only consider selling itself if a substantial premium was offered.

The company is currently valued at over $5 billion.

In June, the real estate developer hired Centerview Partners to explore strategic alternatives that included a potential sale of the company.

The asset sales along with changes to the company's organizational structure announced on Monday is expected to reduce overhead costs by $45 million to $50 million per year.

The company named Paul Layne as CEO, effective immediately. He will replace David Weinreb who, along with the president Grant Herlitz, will step down from the company.

Both Weinreb and Herlitz had signed a 10-year employment agreement with the company in 2017.

Layne was most recently the president of the company's Central Region, which include properties The Woodlands, The Woodlands Hills and Bridgeland in Texas.

Ackman said Layne's appointment along with the company's headquarters move from Dallas to Houston will enable Howard Hughes to be more profitable and free-cash-flow-generative.

Ackman's Pershing Square (NYSE:SQ) Capital Management owned 2.77% stake in Howard Hughes as of June 30, according to Refinitiv data.

Howard Hughes was formed in 2010 as a tax-free spinoff from General Growth Properties.

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