Tuesday, 22 January 2013

Another Instance of Emerging Value - West Windsor?

HHC will be meeting with residents on Jan. 30 to discuss development plans for the 658 acre, former site of American Cyanamid across from the mall on Quakerbridge Road in New Jersey.
What could be going on here? My speculation is that plans for some kind of multi-family, mixed use property will be announced... I say this because there is already a 1.1 million sq. ft. shopping center across the road.

Here is an example of a free option in the stock.  Currently, I just slap $100,000 against each acre for a value of $66 million ($1.46/share on a fully-diluted basis).  But I am quite sure that if recent events are even loosely relevant precedents, investors will soon see some of the hidden value in this thing.  For example, take a look at slide 30 in the investor presentation on the website: 4.8 acres was contributed into a JV at a value of $15.5 million to build 314 condo units for Millenium Phase II in the Woodlands. This equates to $3.2 million per acre!  Now, flip to slide 41 and you will see that land was contributed into another JV to build 375 condo units in downtown Columbia at 6.7x book value ($20.1 mm vs. $3mm book value).  So regardless of how much less you think the New Jersey land is worth relative to the examples listed above, I am quite confident that my $100,000/acre (remember, this isn't farmland) will prove ultra-conservative.

From the Howard Hughes website:

West Windsor is a former Wyeth Agricultural Research & Development Campus on Quakerbridge Road and U.S. Route One near Princeton, New Jersey. The land is comprised of two large parcels on Quakerbridge Road that are bisected by Clarksville Meadows Road and a third smaller parcel. The approximate 352 acres north of Clarksville holds the former Wyeth Campus and the 300 acres south of Clarksville is largely vacant land. The third parcel (approximately six acres) is separated from the balance of the land by an adjacent rail line. Across Quakerbridge Road is the Quaker Bridge Mall, a two-level, 1.1 million square foot regional shopping center owned by Simon Property Group. The mall is anchored by JCP, Macy's, Lord & Taylor, and Sears. The property opened in 1975 and has over 120 stores.

Full disclosure: I still own lots of this stock!!!  And I have never met an employee of the company.  I just like puzzles, and HHC is the most interesting puzzle I have ever looked at.

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