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The Howard Hughes Corporation Acquires Morgan Stanley Real Estate Investinga?s Interest in The Woodlands Master Planned Communi

^{Published on 2011-06-29 05:41:14 - Market Wire}
 

DALLAS--([ BUSINESS WIRE ])--The Howard Hughes Corporation (NYSE: HHC) today announced that it has entered into a definitive agreement to acquire from Morgan Stanley Real Estate Investing its 57.5% legal interest, which equates to a 47.5% economic interest based on the partiesa™ financial arrangement, in The Woodlands Master Planned Community located in Houston, Texas for $117.5 million. The purchase consideration consists of $20 million in cash payable at closing and a $97.5 million non-interest bearing promissory note due December 1, 2011. The acquisition has been approved by the Board of Directors of The Howard Hughes Corporation, is subject to customary closing conditions and is anticipated to close on July 1, 2011. The Howard Hughes Corporation, including its predecessors, has been an investor in The Woodlands since 2004 and its partner, Morgan Stanley Real Estate Investing, has been an investor since 1997. Upon completion of the purchase, The Woodlands will become a wholly owned subsidiary of The Howard Hughes Corporation.

"For almost four decades The Woodlands organization has thoughtfully planned and developed a community desirable to residents and business, and in the process created a strong brand known for quality and excellence. We expect to generate significant financial benefits by combining the Howard Hughes and The Woodlands MPC organizations."

The Woodlands is one of the most successful large-scale master planned communities (MPCs) in the U.S., comprising over 28,000 acres with over 97,000 residents and 1,700 employers. At March 31, 2011 The Woodlands had approximately 1,372 acres of unsold residential land, representing approximately 4,532 lots, and approximately 936 acres of unsold land for commercial use. The Woodlands also has full or partial ownership interests in commercial properties totaling approximately 434,328 square feet of office space, 203,282 square feet of retail and service space, 865 rental apartment units, and also owns and operates a 440 room conference center facility and a 36-hole country club. Please refer to the tables below for more information regarding The Woodlands residential and commercial land, and commercial property assets.

The Woodlands generated $36.3 million and $120.3 million of revenues for the three months ended March 31, 2011 and the year ended December 31, 2010, respectively. The first quarter 2011 revenues include $18.5 million from the sale of 217 residential lots, and $3.4 million from the sale of five acres of commercial lots. For the full year 2010, The Woodlands sold 789 residential lots for $70.1 million of revenues and 57 acres of commercial lots for $23.9 million of revenues. As of March 31, 2011, The Woodlands had approximately $573 million of total assets, $332 million of third-party debt and $57 million of cash. A complete description of The Woodlandsa™ historical operating results is included in The Howard Hughes Corporation 10-Q for the three months ended March 31, 2011 and 10-K for the year ended December 31, 2010.

David R. Weinreb, CEO of The Howard Hughes Corporation, stated, "This strategic acquisition provides Howard Hughes with a world-class master planned community developer and operator, a brand widely recognized throughout the U.S., and very attractive residential and commercial assets. By owning all of The Woodlands, we can unleash and integrate the management expertise and intellectual property of The Woodlands across our full MPC portfolio.a

Mr. Weinreb continued, aFor almost four decades The Woodlands organization has thoughtfully planned and developed a community desirable to residents and business, and in the process created a strong brand known for quality and excellence. We expect to generate significant financial benefits by combining the Howard Hughes and The Woodlands MPC organizations.a

Grant Herlitz, President of The Howard Hughes Corporation, commented, aFew organizations have been able to successfully execute on all aspects of the complicated master planned community business. The Woodlands has not only created consistent demand at premium pricing for its residential land, but also has thoughtfully planned that development to generate strong demand for commercial properties from businesses seeking access to a desirable labor market. We believe the opportunity to develop commercial properties at The Woodlands will contribute materially to our future profitability.a

ABOUT THE HOWARD HUGHES CORPORATION

The Howard Hughes Corporation owns, manages and develops commercial, residential and mixed-use real estate throughout the country. Created from a selected subset of 34 assets previously held by General Growth Properties, the company's properties include master planned communities, operating properties, development opportunities and other unique assets spanning 18 states from New York to Hawaii.

Master Planned Communities

The Howard Hughes Corporation owns, develops, and sells property in four master planned communities that include over 14,000 acres of marketable land. In addition to The Woodlands, Howard Hughesa™ MPC portfolio includes Bridgeland in Houston, Maryland in Columbia, Md. and Summerlin in Las Vegas.

Bridgeland, approximately 30 miles southwest of The Woodlands, encompasses more than 11,400 acres, with a plan including a carefully designed network of trails totaling over 60 miles that will provide pedestrian connectivity to distinct residential villages. The community will feature over 3000 acres of unique waterways, lakes, trails, parks and open space, as well as an expansive town center with room for employment, retail, educational and entertainment facilities.

Maryland Communities of Columbia, Emerson and Fairwood combined account for more than 16,000 acres. Columbia is embarking on a new phase in its growth with the launch of a 30-year master plan development of downtown Columbia. Columbia Town Center has an approved master plan to create up to 13 million square feet of mixed-use development. The plan includes up to 5,500 residential units, approximately one million square feet of retail, five million square feet of commercial office space and 640 hotel rooms.

Summerlin spans the western rim of the Las Vegas Valley and is located about 7.5 miles from the Strip; the 22,500-acre community offers the best of suburban living with all the amenities and accessibility to world-class dining, shopping and entertainment. Home to nearly 100,000 residents Summerlin is comprised of hundreds of neighborhoods and dozens of villagesa"all connected by a 150-mile-long trail system and nearly 150 parks. The Shops at Summerlin Center is a retail project with the potential to be developed with retail, office, hotel and multi-family residential.

Operating Assets

The Howard Hughes Corporationa™s operating assets are primarily retail properties including Ward Centers (Honolulu, Hawaii), South Street Seaport (Manhattan, N.Y.), Landmark Mall (Alexandria, Va.), Park West (Peoria, Ariz.), Rio West Mall (Gallup, N.M.), Riverwalk Marketplace (New Orleans, La.) and Cottonwood Square (Holladay, Utah).

Strategic Development Opportunities

The Howard Hughes Corporation owns an unparalleled pipeline of near, mid and long-term real estate with over 21,000,000 square feet of future development. These range from Summerlin Centre in Las Vegas, Cottonwood Mall in Salt Lake City and Ala Moana Tower in Honolulu.

For more information on the company, please visit our website at:[ www.howardhughes.com ] or contact Kay Weinmann via e-mail at [ kay.weinmann@howardhughes.com ] or by telephone at (214) 741-7744.

Safe Harbor Statement

This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are accompanied by words as such abelieves,a aexpects,a aanticipates,a aforesees,a aforecasts,a aestimatesa or words or phrases of similar import. Similarly, statements herein that describe the transaction involving The Woodlands, including its financial impact, and other statements of managementa™s beliefs, intentions or goals also are forward-looking statements. These statements are based on managementa™s expectations, estimates, assumptions and projections as of the date of this release and are not guarantees of future performance. Actual results may differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ materially include, but are not limited to, The Howard Hughes Corporationa™s ability to successfully integrate and apply the management expertise and intellectual property of The Woodlands and the other risks and important factors contained and identified in The Howard Hughes Corporationa™s filings with the Securities and Exchange Commission. Such filings include The Howard Hughes Corporationa™s Annual Report on Form 10-K for the year ended December 31, 2010 filed on April 8, 2011 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed on May 10, 2011. The Howard Hughes Corporation cautions you not to place undue reliance on the forward-looking statement contained in this release and does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.