2019 Performance Review
Pershing Square Increased its Ownership in HHC
In December 2019, PSH sold its total return swap position in HHC and
acquired common stock and equity forward contracts. Pershing Square
now has a 15% beneficial ownership interest in HHC
Previously, PSH's HHC position was held through total return swaps that created
structural complexities and incurred substantial ongoing financing costs
Converting our position to voting securities will eliminate financing costs and
result in a FIRPTA (Foreign Investment in Real Property Tax Act) tax for PSH
equal to 21%¹ of the gain upon our eventual disposition of the position
While the gain (using our $115 share price basis at the conversion date) is only taxed
upon the disposition of the position, PSH will accrue the tax in its NAV calculations
In light of our intended long-term holding period, direct stock ownership, with
potential future FIRPTA tax at eventual disposition, is likely to be less costly than
ownership through total return swaps
(1) Current U.S. corporate tax rate
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