Howard Hughes Spins Off South Street Seaport, Las Vegas Holdings

Howard Hughes Holdings (HHH) is spinning off its New York and Las Vegas entertainment assets into a new company, the Houston-based firm announced has announced.

The new subsidiary, Seaport Entertainment, will include the company’s South Street Seaport in Lower Manhattan, the Las Vegas Aviators minor league baseball team, and an 80% stake in the air rights above Fashion Show Mall, where the firm plans to develop a casino resort on the Strip.

The spinoff also will include the company’s ownership stake in Jean-Georges Restaurants. Howard Hughes aims to complete the spinoff of Seaport Entertainment as a publicly traded company by the end of 2024.

“The planned separation of Seaport Entertainment from Howard Hughes will refine the identity of HHH as a pure-play real estate company focused solely on its portfolio of acclaimed master-planned communities,” HHH said, in a release.

“The assets of Seaport Entertainment lie at the intersection of real-estate and entertainment,” said David R. O’Reilly, CEO of Howard Hughes, in a statement.

Anton Nikodemus, a veteran casino executive who most recently served as president and COO of CityCenter for MGM Resorts International, has been named CEO of Seaport Entertainment.

The HHH portfolio of master-planned communities include three developments in Greater Houston, as well as communities in Downtown Columbia, MD; Summerlin, a Las Vegas suburb; Honolulu and Greater Phoenix.

The spinoff was enabled by the Howard Hughes Corp.’s restructuring into a holding company, HHH, which allows the firm to spin off portfolio assets into other entities.

In June, Howard Hughes prevailed in court fight with residents of Southbridge Towers, who opposed its $850M multifamily high-rise on a lot next to Manhattan’s landmark South Street Seaport.

The court case pitted a group known as the South Street Seaport Coalition against NYC’s Landmark Preservation Commission and Historic Districts Council, which had approved the project.

New York Supreme Court Justice Arthur Engoron had sided with the petitioners and invalidated the approval of the new residential tower at 250 Water Street, but his decision was overturned by an appellate court in New York.

Justice Ergoron cited an allegedly “impermissible” relationship between Hughes and the Landmark Preservation Commission, according to a report in the New York Post.

The judge was implying that because the Hughes Corp. operates the Seaport complex on South Street and recently had invested $55M in a 40-eatery empire of the New York chef Jean-Georges Vongerichten-including The Fulton at the Seaport-that the city’s Landmark Preservation Commission might be inclined to favor its project across the street.

The appeals courts unanimously squashed this suggestion, declaring that the Landmarks Preservation Commission had not acted in an “arbitrary and capricious or irrational” manner in approving the project.

The dispute was fueled by apartment residents in adjacent Southbridge Towers who wanted to block any new buildings from rising at the empty lot at 250 Water Street. The Southbridge residents said the development will block their view of the East River.

The Hughes project at 250 Water Street envisions a multifamily tower encompassing 399 apartment units, of which 100 will be designated as affordable, along with stores, offices and community space, the Post reported.

Hughes paid $45M to acquire a 25% stake in Jean-Georges Restaurants and $10M for an option to buy to an additional 20% of the company.