Hughes Corp. to Sell Real Estate Holdings
Howard Hughes Corp. is close to reaching an agreement to sell its huge real estate holdings in Las Vegas and Los Angeles to Rouse Co., a well-known Maryland-based property development firm, sources confirmed Tuesday.
A definitive sales agreement could be reached within two months, according to an executive familiar with the deal who asked not to be identified.
Mark E. Brown, a spokesman for Hughes, declined to comment, saying only the privately held firm is in the “final stages of a recapitalization process that we began in May 1995.”
As the deal is now taking shape, Las Vegas-based Hughes would sell its entire real estate portfolio--which includes a planned community near Las Vegas and a large interest in the Playa Vista project in Los Angeles--to Rouse, a nationwide retail and residential developer. The properties are valued at about $800 million.
Hughes, which is owned by the heirs of the legendary billionaire, ranks as one of the largest and most prominent developers in Las Vegas, where the rapidly growing gambling industry has spawned a real estate boon in recent years.
Hughes projects include Summerlin, a 22,500-acre master-planned community in northwestern Las Vegas, as well as major business and industrial parks in the city’s center and adjacent to McCarran International Airport.
“There has been a tremendous amount of capital chasing real estate in Las Vegas over the last couple of years,” said Marc Renard, director of the financial services group at Cushman Wakefield in Los Angeles. Rouse’s interest in the Hughes properties “gives an indication of how healthy Las Vegas is.”
While Las Vegas’ housing market softened a bit last year and intense competition has eroded profit margins, the world’s gambling capital has remained a powerful magnet for builders and developers. Another wave of casino expansion this year and next could generate as many 10,000 new jobs, creating even more demand for housing and commercial space, real estate and economic specialists say.
“Virtually everything that has been added has been [filled] very quickly,” said Brian Cary, a senior economist at First Interstate Bank in Phoenix.
Rouse, whose projects include the master-planned community of Columbia, Md., where the firm is based, also would not disclose what plans it has for the Hughes property. However, Rouse Chief Executive Anthony Deering told Bloomberg Business News that the firm expects to complete the acquisition this year. The pending talks were first disclosed in Tuesday’s Wall Street Journal.
According to sources, Rouse would buy Hughes’ portfolio in exchange for cash, stock and the assumption of Hughes debt. The Hughes heirs decided to put the company on the auction block last year.
In Los Angeles, Howard Hughes Corp. has teamed up with developer Maguire Thomas Partners in planning the 1,087-acre Playa Vista project, which will serve as the headquarters to DreamWorks SGK and other entertainment-related companies. The company also owns the Howard Hughes Center, a 70-acre commercial project adjacent to the San Diego Freeway near Culver City.
