Food Chain

Have you seen this?

REAL ESTATE:

What a hedge fund’s $1 billion play has to do with downtown Columbia Lillian Reed, Baltimore Banner

Well! 

I didn’t, as they say, have this on my bingo card. But I suppose we should talk about it. The article begins like this:

The hedge fund is displeased.

Billionaire Bill Ackman of investment firm Pershing Square made that much clear in his letter Monday to Howard Hughes Holdings, the Texas-based developer that owns much of downtown Columbia.

Pershing Square owns a 38% stake in Howard Hughes and has been frustrated for months with the company’s stock price. Ackman’s letter this week put Howard Hughes’ board of directors on notice that the firm now wants to pay $1 billion to snap up more of the developer’s stock with the intent of a merger.

There’s a local conversation about this going on over on the Columbia reddit, if you are interested.

I am no expert in real estate, mergers, or hedge funds. But, like all of you, I have opinions. The Howard Hughes Corporation is far bigger than just Columbia, of course. I have a hard time seeing that bigger picture. To me, this article is primarily about my home. Tunnel vision, maybe. Understandable? I think so.

Here is my wildly simplified take on what’s at stake here: 

Columbia was created by a man, Rouse, and a company, The Rouse Company. The Rouse Company was an entity that did things. That’s what it was for. Eventually it was sold to a company that wanted to own the companies that did things (General Growth ) then spun off to a new company that wanted to own and develop the real estate holding created by the companies that did things.

Are you still with me? 

Bill Ackman talks about wanting to use his investment capabilities to turn Howard Hughes into something like Berkshire Hathaway.  In grossly simple terms, Berkshire Hathaway is a company that amasses companies that bought companies that were originally companies that actually did something.

When I look at this it sounds a lot like what happened to the Baltimore Sun and what has happened to newspapers all over this country. I cannot name one example in which this turned out well either for the newspapers or for the communities who are better served by high quality, professional journalism.

Or think of what has happened as private equity firms buy into health care. 

When you are a company that makes something, or does something, you are keenly aware of where your focus should be. What constitutes excellence? Making the best somethings, or doing the best job at the something you do. If you are Bill Ackman, you are so far removed from that concept that your goals are wholly disconnected from what created those companies in the first place. 

Here is the mission statement of the Howard Hughes Corporation:

At Howard Hughes, our mission is to enhance people’s lives by building inspired, award-winning communities.

Our passionate professionals are energized by the opportunity to create a sense of discovery and wonder. To bring innovative approaches and perspectives to creating new ways of enjoying life. And to create vibrant, sustainable communities that reflect the diverse interests and priorities of their neighbors and residents.

All of this to say that at Howard Hughes, we’re not just about brick and mortar; we’re about heart and soul. And the chance to enrich life’s journey, every day.

So, are Bill Ackman and his hedge fund displeased because HHC is failing to fulfill the goals in its mission statement? Heck, no. 

It’s all about the stock price. 

I personally find the disconnect horrifying. But money is money and ownership is ownership and I don’t see how we could possibly have any say here. Friends, I have never felt exactly warm and cuddly about the Howard Hughes Corporation but this feels a whole lot worse. 

What do you think?

Village Green/Town² Comments