Is Bill Ackman Buying Howard Hughes' Real Estate Holdings? Here's What You Need To Know

Howard Hughes was an eccentric business magnate, perhaps best known for his success as a producer and director in Hollywood. The Scarface producer was one of the richest and most influential people of his time, with his total wealth amounting to $2.5 billion at the time of his death. Adjusted for inflation, Hughes' net worth is $55 billion in today's dollars. 

Hughes, who was once the richest man in the world, amassed his wealth through several business interests, ranging from health care to aviation. One of the most prominent threads in his web of enterprises is his real estate empire, which now exists under the publicly traded Howard Hughes Holdings Inc. HHH. During his lifetime, Hughes bought a 25,000-acre plot on the Western edge of Las Vegas Valley, making him the largest landowner in the area. 

Don’t Miss:

• Find out how you compare to the average American couple’s retirement balance — will you make the $1,000,000 mark?
• This billion-dollar fund has invested in the next big real estate boom, here's how you can join for $10.
  This is a paid advertisement. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the Fund's prospectus. Read them carefully before investing.

However, General Growth Properties, which once operated Hughes' real estate empire, declared bankruptcy after the 2008 U.S. housing crisis. In 2010, Howard Hughes Corporation was established as a spinoff from General Growth Properties.

Ackman's Stake 

Interestingly, Ackman's holdings in Howard Hughes Holdings predate its existence. In 2008, the silver-haired billionaire held a 25% stake in the now-defunct General Growth Properties and reportedly supported its bankruptcy plans. 

 “We didn’t think it was a logical structure,” Ackman said. “The question was: When does it make sense for these to become separate companies?” 

Ackman's $60 million investment in the distressed General Growth Properties company netted him approximately $1.6 billion, making it one of his most profitable bets. Pershing Square Holdings' net return stood at roughly 29% in 2010. 

“I watched the stock go from $60 to 30 cents. You had to look at something like that. It wasn’t an internet company stock. It's one of the most stable real estate asset classes. It just had a liquidity problem,” Ackman said. 

Ackman's hedge fund, Pershing Square, owns a 37.5% stake in Howard Hughes Holdings and a 37.9% stake in its recent spinoff, Seaport Entertainment Group Inc. SEG. 

Keep Reading: 

• Oprah, Madonna and DiCaprio have turned to the alternative asset that is outperforming the S&P 500. Discover the potential of this market before other investors.
• Interest rate cuts could supercharge the real estate industry. Get started investing in commercial real estate today.

Future Potential

According to a recent filing with the U.S. Securities and Exchange Commission, modern-day financial titan Bill Ackman seems to have his sights set on what remains of Hughes' real estate legacy. 

"Ackman knows the company cold and he only has to buy around 60% at this point," said Alex Goldfarb, an analyst at Piper Sandler. 

Howard Hughes Holdings’ revenue streams don't come from collecting rent. Roughly two-thirds of the company's current value comes from its future earnings potential. 

"Sony's agreed to film a billion dollars of content over the next 10 years there," said David O'Reilly, CEO of Howard Hughes Holdings. "Bill's rationale for wanting to own 38% of Howard Hughes or even more, based on his filing, is because he believes, like I believe, that there is an incredible long-term ability to create shareholder value."

You Can Profit From Real Estate Without Being A Landlord

Real estate is a great way to diversify your portfolio and earn high returns, but it can also be a big hassle. Luckily, there are other ways to tap into the power of real estate without 

The Arrived Homes investment platform has created an Income Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of only $100. 

Looking for fractional real estate investment opportunities? The Benzinga Real Estate Screener features the latest offerings.

Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.