Thank you, Susan and welcome to our third quarter conference call. As usual, just a reminder that we have a legal disclaimer that all participants received and it's available online on our website if you have any questions about it.

What we're going to attempt to do during the call is answer basically every question that we've received that we're permitted to answer. We do have some restrictions by virtue of regulatory restrictions on certain questions we can't answer.

But if you have follow-on questions, feel free to contact the Pershing Square IR team at [email protected]. As usual, a replay will be available for the next two weeks until Thursday available at www.pershingsquareholdings.com.

Third quarter was actually quite a strong quarter, pretty much caught up year-to-date to -- for most of our funds to the performance of the -- quite close or in some cases, ahead of the performance of the S&P 500 year-to-date. Our companies are doing well and we're going to walk through in pretty good detail of the portfolio, kind of incorporating your questions into the presentation.

Before I start talking about the portfolio, I just want to introduce a new member of the team, not so new, Manning, you've been here how long?

About 2.5 months so.

So Manning Feng, she joins us from Warburg Pincus but I'll let her give a little introduction.

Thanks, Will. Hi, everyone.

So my name is Manning and as Will said, I joined the investment team in September of this year. Pipers.

I worked at Warburg Pincus in the Industrials and Business Services group in New York. And then before that, I started my career in investment banking at Sanofi Partners.

Excellent. And Manning has gotten right to work at the firm.

And one of the things we're not going to talk about today is we've been building a position in a new name that manning really has done an excellent job doing research on, along with some other members of the team. But right out of the box, he's being productive.

So we're earning a very attractive return on investment in men. Also on the call, Halit Coussin, who's been with the firm for how many years Halit?

2007.

So she's a lifer practically. Halit is our Chief Legal Officer and we're going to also just walk through some information about the Tontine Holdings litigation which you will address.

But let's start with the kind of biggest event of the quarter which was the acquisition of Universal Music by the Pershing Square Funds. About $3 billion of that stake was acquired by the core funds and we've raised a co-investment vehicle with $1 billion or so of capital.

By way of background here, so many of you familiar, we began working on the Universal transaction for Pershing Square Tontine Holdings in November of last year. It was a long road.

It's a complicated transaction. There were many issues that we needed to navigate.

The counterparty, Vivendi, the control shareholder was on a path to take the business public through distribution we're going to help facilitate that distribution but a number of obstacles emerged over time, tax, U.S. tax inversion rules, French tax, capital gains rules, regulatory, legal and just the desires of the counterparty and we had to kind of bob and weave around these things in order to get a transaction that would fit the New York Stock Exchange back rules.

We believe we have achieved that objective with the advice of very good counsel and also actually with the advice of very good counsel to Vivendi was similarly concerned about our ability -- capability to close the transaction. Unfortunately, pretty much at the 11th hour in the midst of the redemption tender offer process, we ultimately could not get the transaction through the SEC.

We're certainly in the time frame we had to close the transaction, at which point PSTH had to abandon the transaction. The company had the ability to assign the acquisition contract to us, us being Pershing Square -- the Pershing Square Funds, assuming we're willing to take over that assignment and we were delighted to do so.

And the Board ultimately elected to assign the contract to us. The purchase for core funds assumed the Vivendi indemnity and also assumed about $25 million of transaction costs but we have become quite enamored about the Universal Music business over the 7-month period, got to know the management of the company, kind of kind of fell in love, as they say.

And this is an asset and this is a business that we hope to own for maybe even decades to come. One of the great businesses of the world, one of the great management teams and actually an industry going through technological change that we think is very, very favorable to the kind of top players in the industry of which Universal is a clear far away, number one.

So that was an important transaction for us and the benefit of our consummating that deal even when the spec could not, I think it kind of preserves our reputation for doing what we say we're going to do in completing transactions. PSTH is -- I'll give and we'll go into some more detail later but is actively working on other potential alternative transactions we hope to have an alternative to discuss if we're able to do so.

or on behalf of a new entity that we're in the process of taking through the SEC registration process called Pershing Square Spark Holdings. With that, why don't I pass it to Ryan Israel.

And Ryan, why don't you kind of give us -- and we've talked a little bit about Universal and letters. But what are the key things people should be thinking about in this -- what is a very large state for us?

And by the way, we paid in the low €18 per share and the stock today is something in the order of high €25 per share, it's up about 40% from the price paid. And we still think it's a very undervalued asset.

But Ryan, go ahead.

Sure. So I think as we've talked about, we're very excited about the business.

And clearly, given the market reaction and the significant share price appreciation since the spin, I think the market is starting to understand some core parts of the story. But we actually think there's a lot more to come as investors get more used to the business, get to hear more from the management team.

And really, as more research analysts who hadn't really covered the company when it was a subsidiary of Vivendi, really get to dig in here. So I guess maybe a couple of things to highlight.

In late August, after we gave our initial presentation on Universal, the company held a Capital Markets Day and they really made two points to investors in terms of how they thought about their growth over the medium term. On the top line, they talked about a high single-digit revenue growth profile.

And then on margins, I talked about margins expanding from about a 20% level to about a mid-20s EBITDA level. Now, I think what's interesting is just really about two weeks ago, they reported their third quarter results which is the first time they become a public company.

and they're already well north of the progression that those targets would imply. So for example, revenue in the third quarter this year was up high teens and EBITDA was actually up in the low 20s which was significantly in excess of what the company has talked about.

Our perspective, as we laid out in the presentation, is that while we appreciate the company for giving what we think are very achievable targets to the capital markets. We actually think that this company has the ability to grow top line a lot faster than high single digits over the medium term.

They're already doing that. They've historically done that.

We think they'll continue. We actually think the duration of growth as to how they can grow revenue at a double-digit rate is likely to be well beyond the medium term.

And as you talked about owning this business for decades, we think it's because they can continue to produce a very high rate of growth for a very long time. I think the market will probably need to see more quarters of this growth before it understands that the targets that were laid out in our view, are pretty conservative on the top line.

Clearly, the margin progression, we think people are starting to see already even after just the first quarter results. The other thing I would point out, though, that I think is maybe somewhat of a debate on the stock as to why people aren't even more excited about it than they currently seem to be is really about how capital-intensive this business.

Our thesis on the stock is that this is a very capital-light, high-growth annuity capital-light, high-growth annuity. And I think there is some confusion as to whether or not the company needs to spend a lot of money in order to replenish it's growth or whether any money it spends in order to acquire artists and acquire catalogs is really M&A and something that would be in addition to growth.

And our perspective is that the company can achieve a top line revenue growth rate of double digits without having to spend any significant amount of capital dollars in order to grow the business. And so over the last several years, the company has spent several hundred million dollars kind of on average.

And recently, that figure has been even higher but we believe those deals in order to acquire catalogs are things that are likely to be additive to the growth targets that they give in the street. So, the way we sort of think about it is this business really only requires 1% to 2% of sales in order to grow at that double-digit rate, anything they decide to do would be a company acquiring a much smaller company, we think about it in other context of our portfolio.

And it's really inorganic and those are opportunities for them to deploy capital to high rate but they're not required to spend that money in order to grow the top line. And so we think that over time, the company will explain that.

On the third quarter earnings call, they got several questions about how much of their earnings, converting to free cash flow or how capitalized the business is and the company decided that at the end of the year, so kind of in a few months from now, they'll be discussing a lot more about that. But based on our analysis of the business, we think that, that result, people will find very favorable and how capital light the business is.

Another way to think about it is kind of the core business owning music and then helping create more music IP for the company by investing in new artists and helping them succeed. And think of that business as a kin to kind of an earlier stage investment business.

But on top of that, they also buy some stabilized assets. and stabilized assets offer lower going yields, more certainty but still attractive returns to the company.

Now a logical question is you can't go a day without a front page or a mention on the front page. Today being a perfect example of an important music asset being up for sale and private equity interest and other company's interest.

And the logical question is, okay, is this business becoming more competitive, etcetera. And I think one of the important things for people to consider is there are financial buyers of these assets that are very attractive to the nature of the noncapital-intensive royalty-like streams generated by music acids in a world with growing streaming, those assets can generate growth over many, many years, particularly for the iconic orders that I think we all expect will be here forever.

And that's attracting financial capital. But if you're the best operator in the business, if you understand how to maximize the value of publishing assets, publishing assets are -- you can own them on a static basis but the way they make them really valuable is you get the content synced in movies and films and commercials, in games.

And that's where Universal brings a lot to the table. So they are a value-added acquirer of these kinds of assets which I think helps make transactions that they do more competitive.

Now, there's some interesting things we think they can do; some ideas we share with the company for how they can be even more competitive when competing with financial buyers who use alternative financial structures and acquiring assets. So we think there's lots of opportunity for that business for Universal but the core driver of the growth of the company, they would need to buy another -- they don't need to buy or sting and they still have a double-digit revenue growing very attractive bottom line growing free cash flow generative business that is as choices, what it can do with it's free cash flow.

Any further thoughts on Universal? Or should we on to the next?

On to next. Okay.

Lowe's, Charles. Lowe's announced a quarter last night, looked pretty good to me.

What do you think?

Yes. It was another great quarter from Lowe's, kind of featured strong same-store sales growth, rising gross margins, notwithstanding an inflationary environment, significant SG&A leverage taken together that showcase both margin expansion and robust earnings growth.

So revenue grew 3%. Gross profit grew 4%.

SG&A actually declined 8%. In part, they were lapping over onetime COVID and other related costs from the prior year period.

And so taken together, operating profits grew 27% year-over-year and earnings grew 38%, aided by an 8% share count reduction. They bought back nearly $3 billion of stock again this quarter which is pretty incredible from a capital return standpoint.

And what's driving this? Look, as we've discussed in recent quarters, the entire home improvement category in Lowe's in particular, has and continues to experience very robust demand in response to evolving consumer behaviors following the arrival of COVID-19.

And the macro backdrop continues to be attractive for Lowe's which is informed by consumers enhanced focus and appreciation on the importance of the home, higher home asset utilization, rising home prices, low mortgage rates and aging housing stock, strong consumer balance sheets and a general lack of new housing inventory which you'll hear later from Ross on Howard Hughes is also experiencing kind of a similar phenomenon. But so touching on same-store sales for .

In the past quarter, the company reported comparable sales growth of positive 2.6% or positive 34% on a two year stack basis. And this is being driven by a combination of continued engagement from DIY customers and a strong pipeline of pro-specific projects which really has accelerated post the removal of lockdowns there was kind of a pent-up demand for larger scale projects which are now kind of coming to fruition.

And notably, same-store sales actually accelerated on both a one year and a two year stack basis throughout the quarter as DIY trends accelerated post Labor Day and the return of children to school. So October same-store sales were up 40% on a two year stack basis.

And management noted on the call that, that level of strength has continued November month-to-date. So just extremely robust kind of demand.

And this now position Lowe's to deliver mid-single-digit same-store sales growth for 2021 notwithstanding the incredible strength that they witnessed in 2020. So in response to this level of outperformance, the company upped their full year revenue and margin guidance which now stands at 12.4% relative to 12.2%.

They also upped their buyback range to $12 billion of capital return from $9 billion. It's roughly 7.2% of the company's market cap.

So just very, very robust capital return. And taken together, they're poised to deliver roughly $12 of earnings this calendar year -- I'm sorry, I should say this fiscal year.

The company additionally announced that they're going to be hosting an analyst update in mid-December which should be well received. They intend to discuss the various strategic initiatives they have underway and to provide a financial outlook for 2022.

And while it's difficult, I think, for 2022 to know how the demand environment is likely to evolve giving the relatively high base of demand that exists today. We believe the company can grow earnings actually at a fairly attractive rate driven by a combination of market share gains, margin expansion and continued robust share buyback program.

And we look forward to hearing the company's commentary on these various perspectives -- or sorry, on these various topics. Notwithstanding the stock, it's up 57% year-to-date.

Lowe's continues to actually be one of the cheaper stocks we own. It's trading at 19x roughly NTM earnings today and this compares to Home Depot which is trading in excess of 25x.

So it's still roughly a 25% discount to it's closest competitor. And longer term, we continue to see line of sight for accelerated double-digit earnings growth off the current base as the company continues to close the relative revenue productivity and margin gap versus closest competitor.

Yes. We still find the discount to Home Depot to be anomalous in light of the fact that we think Lowe's has a lot more potential to get to where Home Depot is everything from sales productivity to margins and management led by Marvin Ellison has really done an outstanding job.

I find it kind of remarkable that we increased our stake in this company at about $70 a share, 18, 20 months ago. And they've done an incredible job.

And we do benefit by it being cheap because if they're buying this much stock back, it's better for them to buy the shares at 19x and 25x but it is anomaly in terms of it's cheapness. Chipotle Anthony.

I actually just had -- I have to admit to Chipotle, burritos in advance of the call just to make sure I have the proper energy to participate, although I didn't have the -- anyway, you don't need to know I'm eating. Go ahead, Anthony.

Go ahead. Anthony has eaten nothing.

So if you detect the lack of energy, you should go get a burrito from the kitchen.

Definitely be having Chipotle after the call. But Chipotle's business momentum and solid results have continued and has just been remarkable since the current management team has assumed the helm of the company in March of 2018.

In the latest quarter, same-store sales grew 15% versus 2020 and 25% versus 2019 levels. That was 600 basis points or 6 percentage points faster than what they grew in Q2 versus 2019.

So momentum was accelerating. And management also noted that Q4 was off to a great start.

I'll call out several key drivers of current momentum. One is the company continues to recover in restaurant sales that they lost during the pandemic.

So they've now recovered 80% of kind of peak pre-pandemic in restaurant sales but they're still retaining most of the digital sales gains that they've made when consumers shifted to online ordering and delivery during the pandemic. So they're recovering 80% of in-restaurant while retaining 80% of digital sales gains and that has driven their average unit volumes or average sales per restaurant up close to 2.6 million per store which is above the old milestone before the food safety crisis, when we made the investment of $2.5 million.

So they've kind of checked the box and now the next milestone is $3 million; so stay tuned. A couple of other factors that are contributing.

Product innovation continues to be a big hit. Smoke brisket is the current kind of limited offering at the stores.

It's done so well that it's set to actually run out in a couple of weeks. If you haven't tried it, where you want to have it again, you should get over there soon.

And they're currently testing plant-based Jariso and Pollo Asado chicken offering and both of those kind of optimistic about the potential. Pricing is also a significant contributor to the company took about a 4% price increase in June to fund an investment in labor.

So they're raising the national average wage to $15 an hour. In fact, we have already done it.

and they took a price increase to cover some of that cost. And remarkably, they saw basically no resistance to that price increase.

So it's funny they took the 4% price increase in June and sales growth actually went accelerated beyond -- by 6% in the subsequent quarter. So they took a price increase of 4% and demand actually went up 2% which is incredible.

And that just speaks to the Chipotle.

It's not Incredible. It's predictable, right?

And it speaks to Chipotle's best-in-class pricing power. This is one of the big reasons that we love the business.

We made the investment what you get for what you pay for at Chipotle in terms of the quality of the food in terms of how healthy it can be depending on what you choose. And in terms of how fresh it is versus other offerings at that price point, there's just no competition.

and their product continues to be an amazing value for money and that gives them a lot of pricing power to manage the current inflationary environment that the whole industry is facing. Staffing is kind of the key challenge for the company right now and they've done a good job managing it so far.

They proactively invested in labor which I just talked about. They've made some operational adjustments in the stores and they'll use pricing power as necessary to kind of manage it going forward.

And the light at the end of the tunnel is that once the current environment subsides and staffing kind of the labor market kind of gets back to a more normal state, one, retention will be better because the job experience will be better for the people that actually remain in the stores. So, if you're working in an understaffed store that's really busy, it's not a lot of fun because you just work on the phone.

So the job experience will get better which will drive higher retention which will then drive importantly for shareholders, higher throughput. So higher throughput means more sales during the peak, lunch and dinner hours of the day and there's a nice margin benefit that goes along with that and a virtuous cycle whereby customers move to the line faster, they want to come back more and it kind of feeds on itself in a nice way.

So unit growth is continuing at a high rate. So they're on track to open close -- just at or above 200 units this year and the management talked about on the call, how they expect a step up in the pace of unit growth in 2022.

Correct. Actually, interesting you touched on, I think, a really important point in terms of talking about pricing power.

And one of the things we look for in a business is pricing power because we try to protect ourselves against things we're not in control of, if you will and one of them is inflation which is something people haven't thought about for a very long time. And I think now everyone is thinking about it.

We haven't touched on this -- we didn't touch on this in the Universal case. But what's interesting about music is it's been a very deflationary asset, right?

It used to be you spend $100 and you buy six or seven records 20 years ago. And today for about the -- actually probably less than that, you can get a subscription on Spotify family plan and you can listen to 60 million songs with much more convenience from pretty much any device in your home, in the car, on your way.

And that price has been pretty sticky. And so in that the artists and the record labels and the publishing companies all at the end of the day are beneficiaries of higher streaming subscriber fees if and when the Spotify's of the world as they add increased price that flows through to all of the participants in the system.

So we like businesses that have royalty-like characteristics and that's a very good reason for it. Charles, I want to just touch on Lowe's as a retailer, so they sort of pass through inflation ultimately to their customers.

What is the impact? How do we think about the impact on inflation for Lowe's?

We saw enormous wood inflation, if you will, earlier this year but give us your thoughts?

So that -- I think that was a concern slightly heading into the quarter. And frankly, both Home Depot and Lowe's demonstrated this quarter that they're poised to navigate inflationary conditions reasonably well.

Inflation actually was not -- it did not impact Lowe's ticket at all this quarter because inflation in copper in certain commodities was actually offset by deflation from lumber which saw significant inflation last year given shortages in the kind of the midst of COVID. But there's a component of the store which is commodity products and they pass through those price increases.

And I think two or three years ago, Lowe's would have struggled to be quite as adept at managing through the current environment. I think the systems that Marvin and team have put in place and the pricing excellence that they've established within the company and kind of the merchandising capabilities, they're much better poised today to be reactive in the current environment.

I think you saw that this quarter in that gross margin actually expanded modestly notwithstanding some of these challenges. And I think that it's something to watch but I think we feel very comfortable that the current team with the tools and systems they have in place are well adept to push through price increases to the consumers.

Ryan, why don't you update us on Hilton?

Sure. So Hilton, obviously, was at the eye of the COVID storm and it's really very rapidly staging to come back.

Every quarter since COVID was at it's peak, the company has continued to improve it's results. And while it's not exactly back to the levels that it was pre-COVID, in terms of RevPAR which is the industry's same-store sales metric, it's getting close.

And we actually think based on the current pacing next year, it will likely be back to where it was pre-COVID which is very remarkable that it would have recovered so quickly given how damaging COVID was to travel at the time. To your point view, I think one thing that's interesting is while the company has not recovered in terms of RevPAR, it actually has effectively in the United States recovered in terms of pricing already, even though occupancy is lower.

And the way the industry normally works is that occupancy is the first to recover and then pricing lags as you have fewer availability, you're able to take up price more. But I think the company is showing that it has much more pricing power than what people had historically thought as well has gotten much better at figuring out how to price for certain types of customers in certain markets.

And so I think that's an interesting aspect of the business that we hadn't previously seen before COVID. But I think the overall point with Hilton is that this is a business that's going to rebound more quickly than people thought from COVID.

And we believe it's going to be much more valuable because of COVID, interestingly, really for three reasons. First, the company was forced to cut a lot of costs by finding ways to be much more efficient during covenant.

So last year, they actually reduced their costs by about 30% in terms of their G&A. Some of that will come back as the revenue rebounds but the company believes that it will maintain a higher margin business because of those efficiencies that found coming out of the crisis than going in.

But also secondly, the technology that they have is really leading the industry and we think is in line with the way that people are going to want to travel going forward. So for example, in the palm of your hand, with your phone, you now have the ability to check in, you can actually choose your room.

You can actually open the door with your app and then you can control a variety of things in the room, such as the temperature and the lights and things like that which we think is very much in line with how people want to live.

And the TV; I never wanted to touch one of those remote controls.

And so we think that's something that's going to really -- in order to Hilton's benefit because very few hotel competitors have the ability to offer that. And that's in line with what consumers are demanding these days.

And then thirdly, even though people weren't really traveling for most of the last two years, Hilton was still able to average an increase in it's room count by about 5% per quarter which I think reflects how owners looking longer term beyond COVID, thought that the economic proposition for opening up new units was still very attractive. And what's interesting is the company likely we think, in the near term to be able to return to it's historical level of 6% to 7% growth.

So coming on the back end of that, we think when Hilton does recover, likely at some point in the next year, they're going to have a more valuable business in terms of the earnings base being higher. At the same time, I think this has really proved the concept which has been our thesis that this is a very high-quality annuity-like growth stream.

Being able to go through the proverbial 100-year flood and come out this strongly so soon after, we think really should convince the marketplace that this business is worth a much higher multiple to it's earnings than what the market had described to at pre-COVID. So very excited about the future, very, very pleased with the management team and we think that the future is very bright for the business.

And again, on the inflation side, Pershing can be your friend in the hotel industry. It's one of the few places in real estate where you reprice your product every day and being the brand royalty company that Hilton is, it participates in those increases in room rate and in RevPAR in revenues.

Okay. Restaurant Brands, Feroz?

Sure. So Restaurant Brands continues to make progress in returning it's brands to growth while also making investments in the future.

So when you look at Tim Hortons Canada, that has now improved to a negative mid-single-digit decline relative to 2019 levels which is about a 500 basis points improvement from last quarter. And if you look at the stores that are still meaningfully below 2019 levels, that's really stores in super urban locations and stores without drive-throughs.

And so what those have in common is that as mobility returns as Canadians return back to work and return back to their normal routines, that should come back strong. In terms of Burger King U.S., that has historically performed well in line with it's competitors prior to the pandemic.

But really since the onset of the pandemic, it has somewhat fallen behind. We believe these issues are much more focused on the...

I would say it's somewhat fallen behind. I think it's dramatically fallen behind.

Very much fallen behind, in particular, relative to the primary competitor, McDonald's. We fundamentally believe these are ultimately fixable and are related to execution.

Now, the good news is they brought in a new President, Tom Curtis, who was at Domino's for more than 35 years and he's going to be focused on revamping operations, transitioning the brand to digital as well as refocusing the menu towards value as well as our core offerings like the Whopper. On the positive side, however, Burger King International and Popeyes are growing quite well, both relative to last year as well as 2019.

At the same time, the company is not standing still. They are working on making future investments.

So in particular, digital sales are growing quite strongly and now represent just about 10% of sales at Burger King, about 17% of Popeyes and more than 30% at Tim Hortons. The company also reaffirmed that it's going to return back to it's historical unit growth algorithm of 5% this year and actually accelerate next year.

And this is really driven by new development agreements they've signed in very large countries like China and India for both Popeyes and Tim Hortons. Another pillar of growth available uniquely to this company is the acquisition of new brands.

So they recently announced the acquisition of Firehouse Subs for about $1 billion, paying about 20x EBITDA before any improvement. And while small today, we think Firehouse Subs has the potential to be a significant driver of growth going forward.

we see actually many similarities to Popeyes which they acquired in 2017 for about $1.5 billion which will now generate about $230 million of EBITDA this year. And so Firehouse Subs is a mission-driven loved organization.

And like Restaurant Brands and other brands, it also has a significant unit growth opportunity relative to it's largest competitor which is seeding shares to fast-growing concepts like Firehouse Subs. And so restaurant brands expertise in digital their franchisee network and development capabilities should allow Firehouse Subs to accelerate it's unit growth, both in the U.S.

and Canada as well as globally. Putting that all together, Restaurant Brands now trades at less than 18x next year's free cash flow which is a significant discount to it's other franchise restaurant peers.

And so as they return to brand, in particular, Tims in Canada and Burger King U.S. back to growth, we think the share price should appreciate from current levels.

Great. Look, the thesis behind this investment is that we've got a strong management team.

We've got a portfolio of great brands and that each -- and we have a free cash flow -- enormously free cash flow generative business. But again, an inflation-protected free cash flow stream leverage of owning a royalty on sales at all these various stores which is a great set up for success.

I think the challenge has been compared to the monoline operator. Think of Chick-fil-A or McDonald's on the hamburger side, although you have to give credit for Popeyes doing a fantastic job relative to Chick-fil-A.

If there is a problem, it does tend to take management attention away from some of the successes. So we've seen kind of -- it seems like there's always something to worry about of Restaurant Brands which we think is one of the reasons why the valuation of the stock has stayed cheap.

And fortunately, I think management recognizes well and they're starting to get more aggressive about repurchasing shares. It's okay if you've got a cheap stock price but it's not okay if it's really frustrating if you don't do anything about it.

And I think using some of that free cash flow to retire shares, while they're working out Burger King U.S., I think, is a very smart strategy. Howard Hughes; Bharath, why don't you give us an update?

Sure. So Howard Hughes had a stellar third quarter with extremely strong results in it's core MPC business and significant progress on a number of strategic initiatives, including the acquisition of a new MPC development in Phoenix, the sale of a noncore hotel portfolio in the Woodlands and the initiation of a new share buyback program.

So starting with core MPCs, demand for residential land continues to accelerate, driven by the appeal of Her fuses expansive many rich communities which are well situated in states like Nevada and Texas low cost of living, tax advantage states. The company is tracking towards a record year of landfill profitability this year with year-to-date MPC EBIT of around $200 million, up an impressive 52% from 2019 and up 26% from -- up 52% from 2020 and up 26% from 2019.

Now, turning to it's income-producing operating assets. There we're experiencing a very robust recovery with Q3 NOI of $60 million, nearly back to pre-pandemic quarterly NOI of $64 million.

And retail NOI in particular which is most impacted by the pandemic, is also sequentially improving and rent collections have steadily increased to 83%. In Ward Village, the company is setting a remarkable pace for condo sales.

In their eighth and most recent condo tower, they're already 64% presold despite having just launched presales in July. At the Seaport, the construction of the Tin Building remains on track and it's scheduled to have it's grand opening in the spring of next year.

And we expect the Tin Building to have a transformational impact and driving foot traffic to the Seaport and accelerating the stabilization of that asset. So in addition to the solid -- very solid momentum in it's core business, the company closed on the sale of it's Woodlands hotel portfolio for around $250 million which brings the total net proceeds to date from noncore asset sales to around $400 million.

And in October, they announced the acquisition of the Douglas Ranch MPC which is a 37,000 acre MPC in the suburb of Phoenix. And that transaction represents a very strategic redeployment of capital from noncore asset sales into a new MPC that can leverage Howard Hughes' core franchise and development expertise.

And we think Douglas Ranch has a multi-decade growth runway and land sales could begin as early as the first half of next year. And despite the impact of the pandemic, the company has emerged with an extremely strong balance sheet with $1 billion in cash which is more than ample liquidity to fund both the Douglas Ranch acquisition and reinitiate their buyback program.

So overall, as evidenced by the results this quarter, we're very optimistic about Howard Hughes long-term growth potential and it's ability to compound it's net asset value at a highly attractive rate for years to come.

And it remains a very cheap stock, one of the cheapest stocks in our portfolio. And I think a big part of it is the complexity of the story.

And I think what's happening is the story is becoming a lot simpler, right? We're getting rid of noncore assets, we're turning those assets into cash.

We're acquiring another MPC, another leg to the stool in a tax advantage. Phoenix is, I think, the fastest-growing city in the country, huge net migration to Phoenix and the environments.

And the company is -- whether this is a business that is ever loved on Wall Street is not something that we know the answer to but it's a business that generates enormous amounts of cash over time. The company is also really accelerating development.

The addition of Jay Cross from Hudson Yards, the related company has been a very, very important in addition to the company, kind of a master developer that's really helping mentor fantastic, in most cases, very young talent we have at various MPCs. And I think this acceleration of vertical development where we're finding all kinds of potential development opportunities.

We're a business of selling lots and redeploying the cash very accretively in building and come producing assets, monetizing the noncore portfolio, having -- I just think that this is a really interesting story. And if no one notices, we own today 25% of the company.

And with enough buybacks, eventually, we'll get to 100, I guess. If everyone else doesn't like it.

But it's really an amazing business and David Reilly is doing a fantastic job just actually had a board call. And the question always is, with all the progress the company is making, why is the stock so cheap?

So that's a question for the shareholders. Domino's, Feroz?

Sure. So Domino's reported another strong set of results last quarter.

And while there were many attention grabbing headlines that U.S. same-store sales were negative for the first time in 41 quarters, they're actually lapping the strongest results ever last year of 17.5% same-store sales.

So on a two year stack basis, same-store sales increased 15.3% which is a slight deceleration from last quarter but very much in line with the prior two quarters. And so that deceleration relative to last quarter was driven by the winning effect of stimulus and the ongoing impact from labor shortages, both of which we believe are obviously temporary.

And so the underlying trends remain very strong and consistent 15% two year same-store sales trends are actually meaningful because it's a very fantastic execution by the team. And so, while the ongoing staffing environment has led to shortened hours and a little bit of more service for some customers, the company is proactively taking action by launching a new applicant tracking system, new onboarding, simplifying employee tasks and importantly, raising wages.

In the international business, the company continued to shrink where it has positive same-store sales growth for more than 111 quarters in a row. And two year stack same-store sales were 15.5% and Interestingly, those two year stack same-store sales have now accelerated for six quarters in a row as well.

And so when we invested back in March of this year, we felt that Domino's had many levers in place for continued growth. And while some of these are beginning to play out, there are still many levers at the company's disposal.

First of all, carryout's contribution was positive to same-store sales this past quarter but order counts are still below 2019 levels. suggesting continued opportunity for growth.

In particular, the return of group locations as well as of late night business should be a tailwind to growth. The company is also continuing it's emphasis on new product innovation and successfully launched a new product of Gibson Twists this past quarter.

The company has also yet to run a boost week since Q1 of 2020 and currently had it's largest ever war chest of advertising funds. Another lever at it's disposal is pricing.

So with cost of goods and labor increasing, many of Domino's competitors in the restaurant space have increased menu prices. And given Domino's is by far the cheapest way to feed your family of four, we think we have plenty of room to take pricing which should obviously be a tailwind to same-store sales growth.

And so Domino's currently trades at a modest premium to it's historical average which we think is warranted given fantastic execution and it's a very long runway for growth. And the shares appreciated quite nicely from our initial purchases in March, about 50% from our average cost but we continue to believe it's a fantastic investment for us at these levels.

Great. And again, I think I sound like a broken record here but this is another around royalty company, right?

We -- if they were to go from $7.99 to $8.99, that's, I think, good for the franchisees but also good for the parent company, of which we're a big shareholder. Okay.

So the two disappointments for the year or call it three or Fannie Mae, Freddie Mac and Pershing Square Tontine and actually the attribution, those investments cost us anywhere between 800 and a little over 1,000 basis points of performance for the year and about 40% of that is Fannie Freddie and about 60% of that has come from PSTH. Fannie, Freddie, there really are no developments since our last report to you.

So I'm going to focus our time remaining on the call to talk about PSTH or Pershing Square Tontine. So I've already obviously talked about, it's been widely covered in the press that our intended transaction was not closable.

And we've fairly quickly set up the entity to pursue another transaction, basically put it back in the place it was prior to by, in effect, taking over the indemnity which we think ultimately will have no -- any material cost associated with it but could have been an overhang to PSTH in terms of it's ability to do a transaction and then putting back $25 million of transaction costs that it spent to get the Universal transaction which capitalizes PSTH with more than sufficient capital to consummate the new transaction. Unfortunately, shortly after we walked away from that transaction, a couple of plaintiffs or plaintiff inspired by a couple of law professors, brought a case against Pershing Square Tontine and a couple of other SPACs with apparently plan to sue the entire universe of SPACs which I think they backed off from after 68 of the top law firms in the world put out a letter saying that they believe these lawsuits had no merit.

The unfortunate thing in this country, even with lawsuits of Numera , is they do create somewhat of an overhang. That being said, with the right counterparty, the moment we enter into a merger with PSTH with an operating company, all those claims go away.

And the plaintiffs have kind of made clear to us they don't want to stand in the way. And I think they're afraid standing in the way of a potential transaction because the liability to them would be significant in that circumstance.

So we are working hard to try to consummate a transaction for PSTH. And at the same time, we are working to get Pershing Square Spark Holdings approved by the SEC and to get the rule change that the New York Stock Exchange has proposed that has been published in the Federal Register and that is up for approval or disapproval by the SEC on December 9, although the SEC can push that data out if they so choose.

But our goal is to be in a position for this entity to be a registered company by hopefully at or around the end of the year. We intend to make a public filing of the prospectus for PSTH ideally by Wednesday of next week or the following Monday, hopefully, might Wednesday, that will provide a lot more details on the structure of Pershing Square Spark Holdings.

And we've made some progress in terms of structure design to make it even more appealing. And let me just summarize a few of the key attributes.

So number one, this is back and reverse in the sense that instead of putting up your cash day one, the transaction is announced and then you have the right to redeem once you learn all about it, you opt out. This is an entity where we intend to distribute warrants to the shareholders of PSTH and to the warrant holders of TSDH and those warrants will be distributed for free and people are -- if we had not -- we're not in the midst of a transaction of PSTH at that time, we intend to seek a shareholder vote to return the PSTH capital, at which point shareholders will have no investment.

They'll own a publicly traded ideally New York Stock Exchange listed warrant that entitles them to invest in our next transaction at NAV. Those warrants will have a $10 minimum strike price with the ability for us to adjust the strike price upwards depending on the transaction size.

And the beauty of that is it will give us flexibility to have a smaller starting base of capital but effectively an unlimited amount of capital to pursue even a very large acquisition and to kind of tailor make the capital for the situation. And the -- that makes actually the warrants more valuable and it makes the warrants -- it makes the entity more likely to find a transaction that makes sense because rather than having a fixed base of capital with a floating base of capital plus backing from us as the sponsor, we believe that entity will be the best entity in the world in which to come public.

Other interesting attributes, no underwriting fees, typical pack, the 5.5% leakage in underwriting fees. We're also -- we probably should put a press release out just to update on this, Halit.

I'm looking at our Chief Compliance Officer. We are going to give the publicly distributable warrant holders to Spark warrants for each distributable warrant that they hold.

So the ultimate capital structure will be 200 million warrants with a strike price of 10% with our ability to upside that drive price to really any number, plus another $44 million to for each of the $22 million distributable warrants that are outstanding which means we have 244 million warrants that will become stock if and when we identify a transaction that makes sense and people exercise, just so you understand the math. At $10, that means we'd raised $2.4 billion from the public.

At $20, we'd raised $4.8 billion from the public, assuming everyone exercised their warrants. And if the transaction requires a $10 billion equity check or a $15 million equity check fee, what's fascinating is as long as the transaction makes sense and the warrants have positive value, they will very likely get exercised.

And that means we have total flexibility to pursue transactions or really any size. So, no underwriting fees, no upfront costs, no opportunity cost of capital, the ability to tailor make the transaction size and we think this will make for a very, very interesting entity.

There also won't be any shareholder warrants outstanding. So it will be a pure common stock capital structure which will make the potential upside for a shareholder greater because there's no shareholder warrant dilution.

And our -- the sponsor director warrants will be approximately 5% of the entity versus 6% for the existing PSTH. We've designed it to be a super-efficient structure and we're excited about it.

And you'll read more about it in our upcoming prospectus -- apologies for that, phone ringing. But let's just briefly address the litigation and Halit, why don't you just summarize where things stand?

We recently filed a brief in support of our motion that is made back on November 4.

Halit, if you could speak a little louder into the microphone, that would be great.

Sure Yes. So as I was saying, we recently filed a brief in support of our motion to the Smith.

That was on November 4. I actually encourage everyone to read that brief.

We explained there a variety of reasons why we think this case should be this man. The plaintiff has until Monday, November 28, to file their opposition to our motion and then we will have another two weeks to file our response.

And by that point, the motion will be fully briefed. Judge Doris will then most likely schedule a hearing to consider our motion and then we'll make a decision.

In the meantime, there's also a process that commenced for discovery. This is in front of a magistrate judge and that just started and will be ongoing.

Great. I mean I think the key takeaway points here are, we don't think the litigation has any merit.

We don't think the litigation will stop the transaction that we to the extent that we have one that we're ready to propose to shareholders but it's a bit of a cloud over PSTH. One of the other nice attributes of Pershing Square Spark Holdings is we're not holding on to any money of anyone.

There's not even an ability for someone to bring the kind of erroneous claim that was brought against PSTH for "being an investment company" because we're holding securities. And by the way, securities in this case, are U.S.

government securities, short-term U.S. government securities are specifically exempt from the investment company that rule.

So we're excited about our launch of Spark Holdings. We are continuing to work on potential -- actually, there's one thing in particular that we think is interesting but we're still nowhere in a position to have a view as to it's executability and we'd like to deliver, of course, for PSTH shareholders.

So hopefully, the hopeful worst case is we get Spark approved, relatively soon. We're able to return people's capital.

And we have actually a better entity, a more flexible, better entity of enormous scalability and to pursue a transaction. The best case scenario is we get a transaction done and announced in the relative short term, hopefully.

And we thereafter, launch Spark Holding. The -- actually, one last point on the drifting details about Pershing Square Spark Holdings which is we are going to when someone chooses to exercise their warrant to own stock in whatever the company is that Spark is merging with, they'll own stock in that company.

But they'll then receive for each warrant and they exercise a replacement Spark warrant with basically the same terms. And so -- and if you don't exercise the warrant goes unexercised, that pool of $244 million.

Spark warrants gets divided among the people who do exercise. So they're actually Tontine Spark warrants.

And the benefit of this structure is we'll always have an evergreen entity that we can use to complete a transaction. We won't have a finite time frame in which to do so which removes any perception of negotiating leverage on the part of the counterparty.

And people get the current warrant for free and then a successor warrant in addition to the potential value of the next transaction. So we think really interesting structure.

Obviously, there's some complexity there. But I think once you understand the basics, the capital structure will be simpler than any SPAC in the world.

Pure common stock capital structure with a sponsor warrant on about 5% of the shares, struck 20% of the money. And then, the flexibility did not have to put up your capital until such time as we've identified a target, negotiated the deal, announced it filed with the SEC, filed an S-1 and gotten that SEC those shares that S-1 approved, the shares registered at which point people have a 20-day period in which to exercise their warrants.

Own the shares and then receive a warrant for transaction number two; so those are the details there. Last topic in our last few minutes, we've had -- as you probably know, if you've read our letters, or heard my public thoughts on this.

Beginning in January, we always try to think about, in addition to finding the great durable growth companies of the world, what can go wrong. And going into the financial crisis, we were very concerned about the credit markets and we've built very large notional short positions in back then, single name and in index CDS which helped us manage through the crisis very effectively.

And the beauty of hedges as they become really valuable typically when our -- when stocks become cheap and that creates opportunities. We're fortunate in having early concerns about the coronavirus and we were well positioned building a large notional short position in investment grade and high-yield CVS which became very, very valuable.

And we were able to deploy that capital. We're buying stocks like Hilton at 55 and Lowe's at the high 60s , low 70s , real rebuilds.

We basically increased the portfolio by 40%, 50%. And it's almost like we had an investor give us 40% more capital but didn't take -- just said you can keep it.

It's a gift and that money was reinvested in our stocks which led to our best year in history of the firm. This year, we've -- the big risk we were concerned about in January was the sort of compounding effects of extremely forward-leaning and aggressive fiscal policy, combined with the most aggressive monetary policy combined with the stimulus from the vaccine and the stimulus from people being kind of locked up, not being able to spend their funds, not be able to have fun.

And all of those things kind of coalescing in a couple of quarters. And our view is that had to lead to huge inflation and it would also ultimately lead to higher interest rates and movement on the part of the Federal Reserve to mitigate the inflation that would be the result of those kind of activities.

So we built a very large notional short position principally in shorter-dated maturities of kind of U.S. treasuries or risk-free rates, if you will, as well as some kind of longer term, call it, 10 year rates.

And we -- you were able to set up a bet like that on an out-of-the-money basis very, very cheaply, very much like credit default swaps; but in this case, not swaps but options. So our total exposure, we invested approximately $170 million across all three funds.

And today, that $170 million is worth about $1 billion. So it's about a six-fold return as the world is kind of catching up to our view and inflation that we predicted is really kind of glaring and starting to have a pretty profound effect, particularly on people on the lower income part of the spectrum.

I always find it ironic when measures of inflation, so-called core inflation include -- exclude food and energy which I would say are probably costs number one and two for most Americans, particularly as we're going into the winter. And this is going to be a very, very challenging period for people.

Unfortunately, people still have some money, maybe left from their stimulus checks. Fortunately, there are a lot of jobs available and people can get a job.

But there are a lot of pressures. Inflation is the most regressive form of taxation and the Biden administration has to be very, very concerned about this, particularly with the President's approval ratings declining.

I think a big part of that is when someone pulls up a gas station, sees $5 gas which is $4.50 in some places in the country already or they look at what it costs to buy an avocado in the supermarket. These are -- and I think our view has been for some time that the Federal Reserve's extremely accommodative policies really make no sense now, both for -- on the housing side, where I think we're -- if you don't overbid the price and closing a week and a wave due diligence in going to buy a home today and these things are reminiscent of other beginnings of housing bubbles earlier in our history.

So you're seeing it in housing costs and other cost that's not properly reflected in inflation because it's really a lagged measure on our equivalent rents. So we think the hedge is -- still remains an appropriate hedge.

And the best hedges are ones that we think make sense even as a stand-alone investment. And that was the case last year for CDS with credit spreads at all-time tights and that makes sense with interest rates still at -- if you take some historical perspective, right and look at other times in history when unemployment was as low as it is and inflation as high as it is, never before in history have we had a 0% monetary policy with the effects that are taking place now.

And I think part of that relates to the fact no one was alive for the perspective that one would have in the last pandemic and the impact it has sort of economically. We saw the 1920s where there were out growth.

And I think we're having one of our predictions here, public predictions was we're going to have something similar. And I think we're seeing it in our economy.

And I don't think low rates at this point is actually helping people get jobs. I think it's only costing people in terms of the price they pay for goods.

And we think that will have to get addressed with a much faster tapering than what has been kind of suggested by the Federal Reserve and a much more rapid rise in rates. And if it doesn't happen, that's where the real risk comes in and you start to see style, very, very aggressive GAAP moves in interest rates to make up for a very negative inflationary environment.

So, I'm sure these are things that the -- whoever our next Chair of the Federal Reserve is going to be going to be front and center. And it'll be interesting to watch how this plays out but we do think we're well positioned in terms of protecting our investors' capital in the bad event.

Others here have spent some time on this thesis, really, the whole investment team but maybe I'll ask Bharath if I missed something in my stump speech?

No, no. That was an excellent summary.

Thank you, Bharath. You don't normally give me compliments.

It's very comprehensive. Maybe just to put a finer point on inflation.

If you look over the last several months, nearly every single inflation measure, whether it's CPI, PC or the core equivalent of those indices as well as wage inflation they've all been run rating at the high single-digit range, mid- to high single-digit range which is well in excess of the Fed's long-term target of 2%. And there's a lot of noise around the impact of used cars and some other categories where you could argue -- where one could argue that supply chain shortages -- it could cause it to be more transitory in nature, even stripping out the impact of those categories you're still seeing inflation in the mid-single-digit range.

And I think the most recent October CPI report really highlighted that where categories like services and shelter were up 50 basis points month-over-month which is a 6% annualized rate. And both of those categories are generally not volatile and tend to be very internalized by consumers.

So -- and against this inflationary backdrop, there's also been substantial progress towards the Fed's maximum employment goals which is the other critical part of your dual mandate. We've recovered more than 80% of the drops that were lost during the pandemic.

And at the current pace of 500,000 job additions, we should close that remaining gap by the middle of next year. And if you look sector by sector, a lot of that employment gap is in pandemic impacted sectors like leisure and hospitality and education.

And as the impact of delta variant subsides and we fully emerge from the pandemic, that the pace of job addition should just continue to accelerate. So both on inflation and employment, we're well on our way to making -- to meeting the Fed's targets.

Yes. And a lot has been made about this notion that inflation is transitory.

And I think there have been a number of kind of structural changes that are persistent and secular and not transitory that are going to impact inflation among them on wages, right? I don't see any scenario in which wages get rolled back.

If anything, we're in a world where people are -- it's a political issue that real wages have not kept pace over time. And even now with inflation, real wages are -- they're going -- wages are going up but real wages are not going up as much.

And I think there's a big -- every CEO is conscious of the multiple of their compensation to that of their lowest paid worker. And that issue is one that's a sensitive issue for investors and they want to see the rewards of capitalism spread more widely.

And so I don't see a scenario in which wages are going lower. If anything, I think they go higher.

If I look at the housing market, I think for a meaningful period of time, kind of the millennial generation was prepared to kind of rent a relatively small apartment and then spend all their money on experiences and I think the pandemic, I think will people up to the notion, you know what, I want a place where maybe a lawn in a house that's my own. And I think that's what we're seeing in the housing market and we're just far away from being able to deliver a supply of houses to meet that, what I think is going to be persistent demand.

And by the way, Howard Hughes is incredibly well positioned to benefit from that which I think is -- we can call it a now a megatrend. And I think it's -- and that's going to continue.

The other big kind of structural issue is with the supply chain issues and with regulatory and political and IP issues. I think the notion of offshoring and being in kind of regulatory environments far away, we take container ships over thousands of miles to deliver goods is a less appealing notion.

And I think near shoring and same shoring, manufacturing in America, sourcing stuff here is also going to be more expensive. But I think as businesses evaluate risks and rewards and time to delivery and the ability to control your IP, I think that's also an important trend which is inflationary.

And then another one is just sort of the ESG movement generally, the move to alternative forms of energy which again is not a short-term phenomenon. I think it's a persistent phenomenon.

And that's also going to be a long-term driver. I mean, all kinds of negative externalities associated with cheap energy but it's cheap.

And that's, I think, another issue. The one I think there could be some debate around but technology development has been kind of a net big deflationary phenomenon for a very long period of time.

But I feel like we've gotten to a place where that may no longer be the case. You look at all the various companies that have built very significant market positions, giving away their services and products to customers.

But now that they've got -- built their businesses, I think their owners are starting to focus more on profitability. It used to be -- Uber was always -- was actually cheaper than a cab getting around New York.

And today, you can get a $43 bill to go from one side of Manhattan to another, not even a relatively short trip depending on the day. Your -- we're spending more and more money on technology of putting every other company in the portfolio is doing the same.

And it's not cheap. The next version of the software isn't half the price of the one before.

A lot of disruption has already taken place. And once the disruption has taken place, the disruptor wants to make a profit, right?

They're prepared to give away their product to take market share. And then eventually, they have to make a product -- profit.

So I don't know where we are precisely on that book for moment but this notion of companies charging windfall prices for them getting competed away by disruptors. I think we're getting closer to the point that technology is no longer a technological development, change is no longer deflationary aspect.

So, I think there is some reasonable chance we're going to see a persistent period of inflation well above the 2% level that we got used to that the Federal Reserve attained to achieve. And so, it would be very interesting to see how this plays out.

So, we don't think of ourselves as a macro fund but when we look back over time, there have been a few moments in our history where we've had kind of a differentiated variant view on things, macro and we found an asymmetric way to protect ourselves and to make a profit on the basis of that. And it is a core part of how we think about what we do but it's clearly episodic and not something that we always identify something interesting.

So stay tuned. It will be very interesting to watch how this plays out.

And we thank you for taking the time to join the call. And if you have further questions, please get in touch with the IR team and they will do their best to answer your questions.

Have a good day.