Overview: Pershing Square's new positions and disposals in 1Q14 (Part 6 of 7)
Bill Ackman’s Pershing Square took new stakes in Platform Specialty Products (PAH), Apartment Investment & Management Company (AIV), Allergan Inc. (AGN), and Home Properties Inc. (HME). Positions sold include General Growth Properties (GGP) and Procter & Gamble Co (PG).
In 1Q14, Ackman’s Pershing Square exited its position in General Growth Properties (GGP) that accounted for 6.74% of Pershing Square’s 4Q13 portfolio. GGP is the second-largest shopping center real estate investment trust (or REIT) in the U.S., with a market capitalization of $18.4 billion.
In February, Market Realist reported that Pershing Square exited its remaining stake in GGP—one of the firm’s most profitable investments. On February 11, 2013, GGP announced it had bought back 27,624,282 of its common shares from affiliates of Pershing Square at $20.12 per share for total consideration of approximately $556 million. GGP said it used its available liquidity to buy back the shares.
In 2010, Ackman was part of an investor group that rescued GGP from bankruptcy after the financial crisis. In 2011, Ackman told Bloomberg that his $60 million investment had “turned into $1.6 billion.” After a failed move to sell GGP to larger rival, Simon Property Group, Ackman sold some of his shares and warrants to another major shareholder, Brookfield Asset Management, earlier in 2013. In September 2013, Pershing Square sold 25 million shares for $500 million.
GGP exceeded street expectations for its 1Q 2014 earnings. On a year-over-year (or YoY) basis, funds from operations increased from $0.25 to $0.31 cents—a 21% increase. Company funds from operations increased 15.8%, to $292 million from $253 million in the prior year’s first quarter. Comparable net operating income (same-store NOI) per store increased 5.7%, to $534 million from $505 million the year before. Net income came in at $0.13 a share versus as loss of $0.01 a share a year ago.
For more on GGP’s guidance and industry observations, please read the Market Realist series General Growth Properties’ 1Q14 earnings: Key takeaways.
The shopping center REIT sector is dominated by three large players. Simon Property Group (SPG) is by far the largest. The other main player is Australian-operated Westfield. Other large shopping center REITs include Kimco Realty (KIM) and Realty Income Corp (O). Investors can also gain exposure to the REIT sector via the Vanguard REIT ETF (VNQ).
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