Bill Ackman General Growth Properties 21st Century Investment Story

Bill Ackman's investment in General Growth Properties is a fascinating story that showcases his ability to identify undervalued assets. He took a significant stake in the company in 2009.

Ackman's investment was worth around $2.8 billion at the time, making it one of the largest investments in the company's history. This move was not without its challenges, as the company was struggling financially due to the economic downturn.

Ackman's patience and persistence ultimately paid off as the company's value increased significantly over the next few years. General Growth Properties was able to restructure its debt and emerge from bankruptcy in 2010.

The company's turnaround was a major success, and Ackman's investment earned him a significant return. He sold a portion of his stake in 2013, realizing a profit of around $1.8 billion.

Bill Ackman's Investment History is marked by a few notable successes and failures. He made his first fortune investing in Wendy's, buying a 40% stake in the company and selling it for a 300% return.

Ackman's most famous investment failure was in Herbalife, a nutrition and weight management company he shorted in 2012. He claimed the company was a pyramid scheme, but ultimately lost millions on the bet.

Ackman has also had success with his investment in Chipotle Mexican Grill, buying a 9% stake in the company in 2006 and selling it for a 3,000% return.

In 2004, Bill Ackman's hedge fund, Pershing Square Capital Management, acquired a 25% ownership stake in General Growth Properties (GGP) for a whopping $7.2 billion in cash.

The company had just acquired The Rouse Company, which owned 37 regional shopping malls, and Howard Hughes Corporation, a land development company, for the same amount.

By 2008, GGP had taken on a staggering $25 billion in debt and was facing required debt payments, leaving the company in a precarious financial situation.

John Bucksbaum was ousted as CEO, but he remained chairman of the board, and Adam Metz was named CEO.

In December 2008, Bill Ackman's hedge fund disclosed its 25% ownership stake in the company, which likely gave him significant influence over the company's decisions.

In 2009, GGP missed a deadline to repay $900 million in loans backed by two Las Vegas properties, putting the company in danger of filing for bankruptcy protection.

The stock price had plummeted 98% in 12 months, and the Bucksbaum family's stake in the firm had declined in value by a similar amount.

On April 16, 2009, GGP filed one of the largest real estate bankruptcies ever and received $375 million in debtor-in-possession financing from Pershing Square Capital Management, the hedge fund managed by Bill Ackman.

In February 2010, Brookfield Asset Management made a $2.625 billion equity investment in GGP, which likely helped the company stabilize its finances.

In November 2010, GGP exited bankruptcy protection, a rare occurrence where creditors were paid in full and equity holders made a substantial recovery of their investment.

In December 2010, CEO Adam Metz and President and COO Thomas Nolan left the company, and Sandeep Mathrani, formerly the head of the retail division of Vornado Realty Trust, was named CEO.

In 2014, Bill Ackman sold his remaining shares in GGP back to the company for $556 million, a significant exit from his investment.

In 2015, GGP acquired the Crown Building for $1.78 billion, a major real estate deal that likely generated significant returns for Ackman's hedge fund.

In 2018, Bill Ackman's investment rival Brookfield Property Partners made a significant acquisition. Brookfield acquired GGP for $9 billion in cash on August 28, 2018.

This acquisition reunited the malls spun off in the Rouse Properties spinoff with the GGP malls. Brookfield immediately sold a 49% interest in three former GGP super-regional malls to CBRE Group, and a 49% interest in three other former GGP malls to TIAA subsidiary Nuveen.

The deal was a major transaction in the real estate industry, and it's worth noting that Brookfield is a large player in the field. They have a long history of investing in and managing properties, including shopping centers and office buildings.

Here are some key facts about the acquisition:

Bill Ackman has a significant stake in General Growth Properties, with a position of $177 million in unsecured debt and 24% of the company's equity.

He believes General Growth has one of the premier commercial real estate portfolios in the country, with flagship malls in numerous key markets.

General Growth has around 91-93% occupancy and very strong cash flow, but the credit crunch caused them problems.

Ackman thinks that bankruptcy courts will merely draw out the maturations on their debt and that current shareholders should come out okay.

He also wants to see a better capital structure and reorganization of the company.

Ackman's other notable stock pick is Target, where he has a big plan to get his slate of directors elected to the board.

He believes that none of Target's current board members have experience in retail, grocery, or credit card business, which is a major concern.

Ackman's hedge fund, Pershing Square IV, invests solely in shares of Target, and he has even ponied up $25 million of his own money into the position.

He recently sent a letter to Target shareholders, showing his commitment to making a change at the company.

Ackman has learned the importance of being humble, even when he's confident in his investment decisions.