The Howard Hughes Corporation (NYSE: HHC) announced Wednesday that it has entered into a definitive agreement to acquire from Morgan Stanley Real Estate Investing its 57.5 percent legal interest, which equates to a 47.5 percent economic interest in The Woodlands Development Company for $117.5 million.

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.

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 Development Company will become a wholly owned subsidiary of The Howard Hughes Corporation.

The purchase consideration consists of $20 million in cash payable at closing and a $97.5 million non-interest bearing promissory note due Dec. 1, according to a press release from the Howard Hughes Corporation.

The Woodlands is one of the most successful large-scale master planned communities 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.

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 Woodlands' 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."

Mr. Weinreb continued, "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."

Grant Herlitz, President of The Howard Hughes Corporation, commented, "Few 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."
Source: Conroe Courier

Visit Michele Flory at www.MicheleFlory.com for more information on The Woodlands community.