Premium content from Houston Business Journal – by Jennifer Dawson, Houston
George Mitchell, who created The Woodlands in the early 1970s, said a plan by The Howard Hughes Corp. to acquire the remaining ownership interest in the master-planned community will benefit the development. Howard Hughes, which is spending $117.5 million to buy the 47.5 percent interest in The Woodlands from Morgan Stanley Real Estate Investing, plans to accelerate commercial development there. Dallas-based
Howard Hughes already gained a majority stake in The Woodlands and full ownership of the local Bridgeland master-planned community earlier this year after assets were spun off from former owner General Growth Properties Inc. Mitchell said a consolidated ownership will make it easier for people to do business with The Woodlands. He also expects Exxon Mobil Corp.’s new corporate campus to be a boon for residential sales in the community, which has 1,372 acres left with room for 4,532 home lots.
Mitchell sold his stake in what is now a 28,400-acre community in 1997 to focus on his other passion — Mitchell Energy and Development Corp. Mitchell, 93, still lives in The Woodlands, which opened in 1974. The Houston energy and real estate visionary is pleased with how The Woodlands has developed using his original concept and expects that to continue.
“I think the present staff is doing a very good job,” Mitchell said.
The executive team — led by copresidents Tim Welbes and Alex Sutton — is what compelled Howard Hughes to buy out the minority stake, said David Weinreb, CEO of Howard Hughes The company intends to leverage the successful platform and talent pool at The Woodlands to the benefit of its other master-planned communities, he said. Howard Hughes could not fully capitalize on The Woodlands’ success, even though it is the majority owner, he said. “We didn’t have access to the talent,” Weinreb said.
Welbes, who first learned about the transaction two weeks ago, said the deal will be positive for all concerned. Howard Hughes has high expectations for commercial development during the next five
to 10 years, Weinreb said. Plans call for construction of offices, restaurants, retail shops and possibly a hotel.
As of March 31, there were 936 acres of unsold land for commercial use in The Woodlands. The Woodlands Development Co. also had full or part ownership in 434,000 square feet of office space, 203,000 square feet of retail and service space and 865 rental apartment units at that time.
“We are going to begin to focus on accelerating the opportunities,” Weinreb said. “We think there are significant opportunities in the office development area.”
The pending acquisition consists of a cash payment of $20 million at closing and a $97.5 million non-interest bearing promissory note due Dec. 1. The deal is expected to close July 1, at which time The Woodlands will become a wholly owned subsidiary of Howard Hughes.
THE WOODLANDS BY THE NUMBERS
- As of March 31, The Woodlands had approximately $573 million in total assets, $332 million of third-party debt and $57 million in cash
- Posted $36.3 million in first-quarter revenue — $18.5 million from sale of 217 residential lots; $3.4 million from sale of 5 acres of commercial lots
- 2010 revenue was $120.3 million — $70.1 million from sale of 789 residential lots; $23.9 million from sale of 57 acres of commercial lots
SOURCE: The Howard Hughes Corp.