Howard Hughes Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
HHH$77.73-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-26.
0001628280-24-033188
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking InformationOverviewCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0001628280-24-044991
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking InformationOverviewThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 79 previous paragraphs and 73 current paragraphs.
46 unchanged; 20 reworded; 6 added; 13 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
–Net income from continuing operations increased to $96.5 million in the current quarter, compared to $32.1 million in the prior-year period. This improvement was primarily driven by increased MPC residential land sales, improved NOI performance from Operating Assets, and settlement of the construction defect claims at Waiea in Ward Village, partially offset by a loss on sale of MUD receivables.
Current report
–The increase in EBT was primarily attributable to an increase in other income related to the receipt of$90.0 million of insurance proceeds in the current period following the execution of a settlement agreement related to the construction defect claims at Waiea, partially offset by a$12.1 million increase in cost of sales related to the settlement of final project costs previously incurred by the Waiea general contractor.
Current report
–Subsequent to quarter end, the Company completed construction at Victoria Place. This condominium development is 100% pre-sold and unit closings are expected to commence in November 2024.
Current report
–During the current quarter, we commenced construction in two Woodlands redevelopment projects, Grogan’s Mill Retail and Grogan’s Mill Library and Community Center.
Removed paragraphs (13)
Previous report
–our ability to satisfy the necessary conditions and complete the spinoff on a timely basis (or at all)
Previous report
–the effects of the spinoff on our ongoing business
Previous report
Seaport Entertainment On October 5, 2023, Howard Hughes Holdings Inc. (HHH) announced the intent to form a new division, Seaport Entertainment, which includes the Company’s entertainment-related assets in New York and Las Vegas, including the Seaport in Lower Manhattan, the Las Vegas Aviators Triple-A Minor League Baseball team and the Las Vegas Ballpark, as well as the Company’s ownership stake in Jean-Georges Restaurants and other partnerships, and an interest in and to 80% of the air rights above the Fashion Show Mall in Las Vegas.
Previous report
On July 18, 2024, the HHH Board of Directors authorized and declared a pro rata distribution of 100% of the outstanding shares of common stock of Seaport Entertainment Group, Inc. (SEG) to holders of record of HHH common stock as of the close of business on July 29, 2024 (Record Date). The distribution is expected to be paid after market close on July 31, 2024. As a result, holders of HHH common stock will receive one share of SEG common stock for every nine shares of HHH common stock held as of the close of business on the Record Date. SEG common stock is expected to begin trading on the NYSE American stock exchange on August 1, 2024, under the symbol “SEG”.
Previous report
–Net income attributable to common stockholders increased to a net income of $21.1 million for the current quarter, compared to a net loss of $19.1 million for the prior-year period, primarily attributed to increased MPC residential land sales in the current quarter, and $16.1 million of window remediation expenditures at Waiea in Ward Village in the prior-year period, which were not incurred in the current quarter. These increases were partially offset by $7.9 million of general and administrative expenses related to the pending spinoff of Seaport Entertainment.
Previous report
–Other NOI decreased $3.3 million primarily due to reduced attendance and sales revenues at the Las Vegas Ballpark.
Previous report
–Seaport NOI decreased $6.9 million to a loss of $9.4 million in the current quarter, compared to a loss of $2.4 million in the prior-year period. This change was primarily due to increased overhead costs associated with the stand-up of Seaport Entertainment in anticipation of the pending spinoff, as well as reduced restaurant and concert revenue as poor weather in the current year negatively impacted foot traffic.
Previous report
–Seaport NOI excludes the impact of the Company’s equity ownership interest in the Tin Building by Jean-Georges managed business. Tin Building by Jean-Georges NOI was a loss of $6.7 million in the current quarter and a loss of $9.6 million in the prior-year period. See Seaport segment discussion for additional detail.
Previous report
–The increase in EBT was primarily attributable to a$16.1 million decrease in remediation costs at Waiea, partially offset bya $1.7 million decrease in profits from condominium sales, with no sales closed during the current quarter, compared to closings of 11 units at ‘A‘ali‘i and 4 units at Kō'ula during the prior-year period. The lower volume of condominium closings is expected as our completed towers are 100.0% sold and the next tower, Victoria Place, is not scheduled for completion until late 2024.
Previous report
–During the current quarter, we completed construction on 10285 Lakefront Medical Office in Downtown Columbia, and Meridian, an office property in Summerlin. We commenced construction on One Bridgeland Green, an office property in Bridgeland.
Reworded paragraphs (20)
Previous wording
The following discussion and analysis by management should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes included in this quarterly report on Form 10-Q (the Quarterly Report) and in the Howard Hughes Holdings Inc. (HHH or the Company) audited annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (SEC) on February 27, 2024 (the Annual Report). All references to numbered Notes are to specific notes to our unaudited Condensed Consolidated Financial Statements included in this Quarterly Report.
Current wording
The following discussion and analysis by management should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes included in this Quarterly Report on Form 10-Q and in the Howard Hughes Holdings Inc. (HHH or the Company) audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 27, 2024. All references to numbered Notes are to specific notes to our unaudited Condensed Consolidated Financial Statements included in this Quarterly Report. Capitalized terms used, but not defined, in this MD&A have the same meanings as in such Notes.
Previous wording
– accelerated growth in our core Master Planned Communities (MPC) assets
Current wording
– accelerated growth in our core Master Planned Communities assets
Previous wording
– the potential impact of a resurgence of the COVID-19 pandemic on our business, our tenants and the economy in general, and our ability to accurately assess and predict such impacts on the financial condition, results of operations, cash flows, and performance of our Company; and
Current wording
– the potential impact of a pandemic on our business, our tenants and the economy in general, and our ability to accurately assess and predict such impacts on the financial condition, results of operations, cash flows, and performance of our Company; and
Previous wording
–terrorist activity, acts of violence, or breaches of our data security
Current wording
–terrorist activity, acts of violence, or breaches of our or our vendors’ data security
Previous wording
–catastrophic events or geopolitical conditions, such as international armed conflicts, or a resurgence of the COVID-19 pandemic; and
Current wording
–catastrophic events or geopolitical conditions, such as international armed conflicts, or a pandemic; and
Previous wording
Our award-winning assets include one of the nation's largest portfolios of MPCs, spanning approximately 101,000 gross acres, as well as operating properties, strategic developments, and other unique assets across six states from New York to Hawai‘i. We create some of the most sought-after communities in the country by curating an environment tailored to meet the needs of our residents and tenants. Our unique business model allows us to drive outsized risk-adjusted returns while maintaining a sharp focus on sustainability to ensure our communities are equipped with the resources to last several decades.
Current wording
Our award-winning assets include one of the nation's largest portfolios of MPCs, spanning approximately 101,000 gross acres, as well as operating properties, strategic developments, and other assets across five states. We create some of the most sought-after communities in the country by curating an environment tailored to meet the needs of our residents and tenants. Our unique business model allows us to seek attractive risk-adjusted returns while maintaining a sharp focus on sustainability to ensure our communities are equipped with the resources to last several decades.
Previous wording
The pending separation of SEG from Howard Hughes will refine the identity of HHH as a pure-play real estate company focused solely on its core businesses and development of its master planned communities, and allow the new company, SEG, to operate independently as an entertainment-focused enterprise.
Current wording
On July 31, 2024, the spinoff of Seaport Entertainment Group Inc. (SEG) was completed. The spinoff included all assets previously included in the Company’s Seaport segment and the Las Vegas Aviators and the Las Vegas Ballpark, which were previously included in the Operating Assets segment. The separation of SEG from Howard Hughes refined the identity of HHH as a pure-play real estate company focused solely on our core businesses and development of our MPCs. As the spinoff of SEG represents a strategic shift in the Company’s operations, the results of SEG are included as discontinued operations for all periods presented and disclosures presented in this MD&A are presented on a continuing operations basis unless otherwise noted. Refer to Note 2 -Discontinued Operations in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Form 10-Q for additional information.
Previous wording
We operate through four business segments: Operating Assets, MPCs, Strategic Developments, and Seaport. We create a unique and continuous value-creation cycle through operational and financial synergies associated with our three primary business segments of Operating Assets, MPCs, and Strategic Developments. In our MPC segment, we plan, develop, and manage small cities and large-scale, mixed-use communities, in markets with strong long-term growth fundamentals. This business focuses on the horizontal development of residential land. The improved acreage is then sold to homebuilders who build and sell homes to new residents. New homeowners create demand for commercial developments, such as retail, office, and hospitality offerings. We build these commercial properties through Strategic Developments at the appropriate times using the cash flow harvested from the sale of land to homebuilders, which helps mitigate development risk. Once the commercial developments are completed, the assets transition to Operating Assets, which increases recurring Net Operating Income (NOI), further funding our Strategic Developments. New office, retail, and other commercial amenities make our MPC residential land more appealing to buyers and increase the velocity of land sales at premiums that typically exceed the broader market. This increased demand for residential land generates more cash flow from MPCs, thus continuing the value-creation cycle. Our fourth business segment, the Seaport, is one of the few multi-block districts largely under private management by a single owner in New York City. This historic waterfront area is being revitalized and enhanced into a mixed-use neighborhood featuring unique culinary and entertainment offerings.
Current wording
We operate through three business segments: Operating Assets, MPCs, and Strategic Developments. We create a continuous value-creation cycle through operational and financial synergies associated with our three business segments of Operating Assets, MPCs, and Strategic Developments. In our MPC segment, we plan, develop, and manage small cities and large-scale, mixed-use communities, in markets with strong long-term growth fundamentals. This business focuses on the horizontal development of residential land. The improved acreage is then sold to homebuilders who build and sell homes to new residents. New homeowners create demand for commercial developments, such as retail, office, and hospitality offerings. We build these commercial properties through Strategic Developments at the appropriate times using the cash flow harvested from the sale of land to homebuilders, which helps mitigate development risk. Once the commercial developments are completed, the assets transition to Operating Assets, which increases recurring Net Operating Income (NOI), further funding our Strategic Developments. New office, retail, and other commercial amenities make our MPC residential land more appealing to buyers and increase the velocity of land sales at premiums that typically exceed the broader market. This increased demand for residential land generates more cash flow from MPCs, thus continuing the value-creation cycle.
Previous wording
In addition to the required presentations using accounting principles generally accepted in the United States (GAAP), we use certain non-GAAP performance measures, such as NOI. See the Operating Assets and Seaport sections below for the reconciliation of this GAAP to non-GAAP financial measure and a statement indicating why management believes the non-GAAP financial measure provides useful information for investors. Changes for monetary amounts between periods presented are calculated based on the amounts in thousands of dollars stated in our consolidated financial statements, and then rounded to the nearest million. Therefore, certain changes may not recalculate based on the amounts rounded to the nearest million.
Current wording
In addition to the required presentations using GAAP, we use certain non-GAAP performance measures, such as NOI and MPC Net Contribution. See the Operating Assets and MPC sections below for the reconciliations of these GAAP to non-GAAP financial measures and statements indicating why management believes these non-GAAP financial measures provide useful information for investors.
Previous wording
–We continue to maintain a strong liquidity position with $436.8 million of cash and cash equivalents, $1.2 billion of undrawn lender commitment available to be drawn for property development, and limited near-term debt maturities.
Current wording
–We continue to maintain a strong liquidity position with $400.7 million of cash and cash equivalents, $1.5 billion of undrawn lender commitment available to be drawn for property development, and limited near-term debt maturities, all as of September 30, 2024.
Previous wording
–Operating Assets NOI totaled $65.5 million in the current quarter, a $0.6 million decrease compared to $66.1 million in the prior-year period.
Current wording
–Operating Assets NOI totaled $62.8 million in the current quarter, a $5.0 million increase compared to $57.8 million in the prior-year period.
Previous wording
–Office NOI decreased $0.4 million primarily due to lower occupancy at 1725 Hughes Landing and office lease termination fees received in the prior-year period. These decreases were offset by strong leasing activity and abatement expirations at various properties in The Woodlands and Summerlin, most notably at 9950 Woodloch Forest and 1700 Pavilion.
Current wording
–Office NOI increased $2.5 million primarily due to strong leasing activity and abatement expirations at various properties in The Woodlands and Summerlin, most notably at 9950 Woodloch Forest and 1700 Pavilion. These increases were partially offset by lower occupancy at 1725 Hughes Landing.
Previous wording
–Multi-family NOI increased $1.1 million primarily due to continued lease-up at our newer properties, Marlow in Downtown Columbia, Starling at Bridgeland, and Tanager Echo in Summerlin.
Current wording
–Multi-family NOI increased $2.1 million primarily due to continued lease-up at our newer properties, Tanager Echo in Summerlin, Marlow in Downtown Columbia, and Starling at Bridgeland.
Previous wording
–MPC Earnings Before Tax (EBT) totaled $123.2 million in the current quarter, a $68.3 million increase compared to $54.9 million in the prior-year period.
Current wording
–MPC EBT totaled $144.8 million in the current quarter, a $60.0 million increase compared to $84.8 million in the prior-year period.
Previous wording
–The increase in EBT was primarily due to higher residential land sales, net of costs, at Summerlin due to an increase in superpad sales with an average price per acre of $1.5 million.
Current wording
–The increase in EBT was primarily due to higher residential land sales, net of costs, at Summerlin due to an increase in superpad acres sold in the current quarter.
Previous wording
–The Company achieved a record quarterly average price per acre of $1.0 million for all residential land sold during the second quarter.
Current wording
–The average price per acre of residential land sold was approximately $1.0 million during the quarter, which was the second-highest quarterly result in HHH history.
Previous wording
–Strategic Developments EBT increased $12.1 million to a loss of $3.0 million in the current quarter, compared to a loss of $15.1 million in the prior-year period.
Current wording
–Strategic Developments EBT increased $77.0 million to $77.7 million in the current quarter, compared to $0.7 million in the prior-year period.
Previous wording
–We contracted 12 units at The Park Ward Village and Kalae during the current quarter. As of June 30, 2024, The Park Ward Village was 95.8% pre-sold and Kalae was 92.1% pre-sold. Construction on Kalae began in the second quarter of 2024.
Current wording
–We contracted four units at The Park Ward Village and Kalae during the current quarter. As of September 30, 2024, The Park Ward Village was 96.3% pre-sold and Kalae was 92.4% pre-sold.
Previous wording
–Pre-sales for The Launiu, our eleventh condominium project at Ward Village, continued at a strong pace with 66 units contracted in the current quarter. As of June 30, 2024, we have pre-sold 248 units, representing 51.1% of available units.
Current wording
–Pre-sales for The Launiu, our eleventh condominium project at Ward Village, continued at a strong pace with 20 units contracted in the current quarter. As of September 30, 2024, we had pre-sold 268 units, representing 55.3% of available units.
Previous wording
–We continued pre-sales at The Ritz-Carlton Residences, The Woodlands, with 16 units contracted in the current quarter. As of June 30, 2024, we have pre-sold 72 units, representing 64.9% of available units.
Current wording
–We continued pre-sales at The Ritz-Carlton Residences, The Woodlands, with five units contracted in the current quarter. As of September 30, 2024, we had pre-sold 77 units, representing 69.4% of available units. Construction began on The Ritz-Carlton Residences in October 2024.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Changes for monetary amounts between periods presented are calculated based on the amounts in thousands of dollars stated in our consolidated financial statements, and then rounded to the nearest million. Therefore, certain changes may not recalculate based on the amounts rounded to the nearest million.