The Howard Hughes Corporation is shaking things up in the boardroom but holding on to its massive South Street Seaport development.
On Monday, the company announced that it had completed its strategic review but the company would not be sold.
Instead, it is undertaking a “transformation plan” that includes the sale of $2 billion in noncore assets, $50 million in cost cutting and a plan to accelerate growth in its master-planned communities.
HHC also announced Paul Layne, president of HHC’s Central Region, has been named CEO, replacing David R. Weinreb on the Board of Directors. Weinreb and Grant Herlitz will step down from the company.
Bill Ackman, chairman of the Board, said, “Paul’s extensive acquisition, development, and operating experience coupled with his superb leadership style has earned him the respect of the Board and the entire Howard Hughes team.
“Paul’s efficient operating approach along with our headquarters move from Dallas to Houston will enable Howard Hughes to be a more focused, profitable, and free-cash-flow-generative company.”
Ackman praised the work of Weinreb and Herlitz, men he said he considered co-founders of The Howard Hughes Corporation.
“It is a testimony to their superb vision and execution that nine years ago 34 disparate, largely ignored, development assets, spun off from a bankrupt shopping mall company, have been transformed into one of the largest and most successful real estate development companies in the United States.”
As part of the new plan, HHC will consolidate its Dallas headquarters with its largest regional office in Texas
It has identified $2 billion of non-core assets it expects to sell over the next 18 months.
In June, HHC selected Skidmore, Owings & Merrill LLP (SOM) to advance its plan for the continuing evolution of Seaport District.
SOM has a particular focus on the surface parking lot at 250 Water Street.
HHC bought that site for $180 million last year and members of the local Save Our Seaport community group believe it did so in the belief it could bypass the historic district’s current zoning limits.
“This recent announcement makes it abundantly clear – Howard Hughes cares about one thing, their bottom line,” said SOS spokesman Ryan Marcinik, explaining, “Our view is they significantly overpaid for the parking lot thinking they could bypass the historic district’s current zoning limits.
“There have been prior comments made that the only way for them to make a decent return on their investment in the Seaport is to build a huge tower. It is not our problem that they overpaid and NYC taxpayers should not be giving up our community resources so that they can potentially earn hundreds of millions of dollars.
“They have failed to live up to promises made to this community, and New York City taxpayers should not be bailing them out of their poor investment decisions.”
The land is zoned for about 289,000 square feet, but according to the New York Post, HHC hopes it can add 600,000 s/f by buying nearby air rights.
Since assuming a long-term lease for Pier 17 and portions of the South Street Seaport Historic District in 2010, HHC has invested over $600 million in the Seaport District.
The company is building and renovating more than 450,000 s/f of space in the district, creating new culinary, fashion, entertainment and cultural experiences as well as public open space.