UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 02, 2022
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of principal executive offices)
Registrant’s telephone number, including area code: (281) 719-6100
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | |||||||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On November 2, 2022, The Howard Hughes Corporation (the “Company”) issued a press release announcing the Company’s financial results for the third quarter ended September 30, 2022. A copy of this press release is attached hereto as Exhibit 99.1.
The information contained in this Current Report on Form 8-K pursuant to this “Item 2.02 Results of Operations and Financial Condition” is being furnished. This information shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section or shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, unless specifically identified therein as being incorporated by reference.
Item 7.01 Regulation FD Disclosure.
On November 2, 2022, the Company issued supplemental information for the third quarter ended September 30, 2022. The supplemental information contains key information about the Company. The supplemental information is attached hereto as Exhibit 99.2 and has been posted on our website at www.howardhughes.com under the “Investors” tab.
The information contained in this Current Report on Form 8-K pursuant to this “Item 7.01 Regulation FD Disclosure” is being furnished. This information shall not be deemed to be filed for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section or shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, unless specifically identified therein as being incorporated by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| THE HOWARD HUGHES CORPORATION | |||||||||||
| By: | /s/ Peter F. Riley | ||||||||||
| Peter F. Riley | |||||||||||
| Senior Executive Vice President, Secretary and General Counsel | |||||||||||
Date: November 2, 2022
Exhibit 99.1
THE HOWARD HUGHES CORPORATION® REPORTS THIRD QUARTER 2022 RESULTS
Solid third quarter results driven by Ward Village® condo sales and strong MPC performance
HOUSTON, November 2, 2022 – The Howard Hughes Corporation® (NYSE: HHC) (the “Company,” “HHC” or “we”) today announced operating results for the third quarter ended September 30, 2022. The financial statements, exhibits and reconciliations of non-GAAP measures in the attached Appendix and the Supplemental Information at Exhibit 99.2 provide further detail of these results.
Third Quarter 2022 Highlights Include:
–Third quarter net income of $108.1 million, or $2.19 per diluted share, compared to net income of $4.1 million, or $0.07 per diluted share, in the prior-year period.
–Master Planned Community (MPC) earnings before taxes (EBT) totaled $75.4 million in the quarter—a 39% increase over the prior-year quarter—driven by solid land sales in Bridgeland®, strong builder price participation revenue, and higher equity earnings from The Summit.
–At Ward Village®, HHC completed construction at Kō‘ula®, closing on 398 units and generating $413.0 million net revenue. Pre-sales were launched at Kalae—Ward Village’s tenth tower—in late September with more than 40% of condo units already under contract.
–Operating Assets net operating income (NOI), including contribution from equity investees, of $60.8 million reflected a 2% year-on-year improvement excluding the impact from non-core asset sales. The segment’s results benefited from year-on-year NOI growth in multi-family and office.
–HHC and Discovery Land expanded their joint venture at The Summit, continuing the strong momentum within this highly successful, premier custom lot community in Summerlin®.
–Celebrated the grand opening of the Tin Building by Jean-Georges in New York City which has been met with significant market interest and positive culinary reviews.
–JDM Partners exercised its second option on TeravalisTM (formerly named Douglas Ranch), repurchasing an additional 2.8% ownership interest for approximately $15.0 million.
“The third quarter’s results reflected solid financial performance despite significant macroeconomic uncertainty,” commented David R. O’Reilly, Chief Executive Officer of The Howard Hughes Corporation. “While our segments were not immune to the market headwinds, our acclaimed portfolio of mixed-use assets performed well, generating increased MPC EBT, robust condo sales, and strong NOI in our world-class multi-family and office portfolios.
“In Hawai‘i, we welcomed the first residents to Kō‘ula—our sixth condo tower to open at Ward Village—generating significant earnings in the quarter. The successful completion of this tower represents another milestone in our vision to develop a premier MPC in the heart of Honolulu. With strong demand for housing in this market, we continue to see record-breaking sales momentum for our development projects. In September, we launched pre-sales on our tenth condo tower—Kalae—which has been met with exceptional demand and more than 40% of units being under contract as of the end of October.
“At the Seaport, we celebrated the grand opening of the Tin Building by Jean-Georges, a one-of-a-kind culinary marketplace featuring dining and retail experiences from around the world. Since its opening, the marketplace has been met with tremendous crowds, strong sales, and significant acclaim from the media. At Pier 17, we continued to experience increased foot traffic and revenue at all of our managed restaurants, as well as on The Rooftop. With the Tin Building by Jean-Georges now open, the Seaport has firmly established itself as a premier dining and entertainment venue in New York City which we expect will continue to drive improved financial results.
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“In Operating Assets, we experienced strong NOI growth within our multi-family and office portfolios. In multi-family, our stabilized assets experienced continued strong demand, with all properties at or near full stabilized occupancy and average in-place effective rent growth of nearly 13% compared to the prior year. With additional multi-family development projects nearing completion, we expect continued strong NOI growth. We also continued to make significant progress with the lease-up of our Class-A office buildings. In The Woodlands, we contracted nearly 94,000 square-feet of space to a diverse mix of companies during the quarter. Together with an exceptional initial lease-up at 1700 Pavilion—our newest office tower in Downtown Summerlin—we are making significant progress towards meaningful NOI growth from our office portfolio in the years ahead.
“In our MPCs, we delivered another quarter of strong results which were highlighted by solid land sales in Bridgeland, record prices for residential acres sold, and continued growth in builder price participation revenue. Despite these favorable results, our homebuilders reported a 48% reduction in new home sales as rising mortgage rates, inflation, and market uncertainty weighed on buyer sentiment. In the near-term, we believe these market headwinds will contribute to some reductions in residential land sales relative to the unprecedented levels of activity seen in 2021. However, we expect favorable demand for our land will continue as homebuilder lot inventories remain at historic lows in all of our core markets. Together with continued migration into our highly desirable MPCs—which offer a low cost of living, outstanding amenities, and exceptional quality of life—we expect to finish the year on a strong note.”
Third Quarter 2022 Highlights
Total Company
–Net income increased to $108.1 million or $2.19 per diluted share in the quarter, compared to net income of $4.1 million or $0.07 per diluted share in the prior-year period due to the timing of Ward Village condo sales and growth in MPC EBT.
–This positive year-over-year performance included condo gross profit of $123.3 million and MPC EBT of $75.4 million, an increase of $21.3 million. There were no condo sales in the prior-year period.
–Closed the third quarter with $354.6 million of cash on the balance sheet and total debt of $4.6 billion, with 82% of the balance maturing in 2026 or later.
–Repurchased 368,806 shares of common stock for $25.4 million at an average price of $68.98 per share.
–HHC earned the top ranking in the U.S. Diversified Listed peer group for the 2022 GRESB Real Estate Benchmark Assessment. The Company was also recognized as Sector Leader in the Americas Diversified category.
Operating Assets
–Total Operating Assets NOI, including contribution from equity investees, totaled $60.8 million in the quarter, representing a $2.1 million or 3% reduction compared to $62.9 million in the prior-year period. Excluding a decline of $3.4 million related to the sale of HHC’s hospitality properties in The Woodlands in the third quarter of 2021 and the sale of Outlet Collection at Riverwalk in the second quarter of 2022, NOI increased $1.2 million or 2% year-on-year.
–Retail NOI of $13.2 million declined 15% compared to the prior-year period primarily due to one-time benefits at Ward Village associated with the recovery from the COVID-19 pandemic recognized in the third quarter of 2021. The core of the retail portfolio performed well and benefited from improved occupancy rates in each region.
–Multi-family NOI of $11.7 million increased 27% year-over-year due to continued rent growth across the portfolio and strength in the lease-up of the Company’s latest multi-family developments that are all at or near full occupancy. Starling at Bridgeland welcomed its first residents in September and was 16% leased at the end of the quarter.
–Office NOI of $28.5 million increased 3% compared to the prior-year period largely due to improved leasing activity at HHC’s Class-A properties in The Woodlands® and Downtown Columbia®. During the third quarter, the Company leased 94,000 square feet of office space in The Woodlands.
–The Las Vegas Ballpark® generated $3.7 million of NOI, representing a reduction of $1.6 million compared to the prior-year period. The decline was primarily due to poor weather during the quarter, fewer games played in 2022, as well as outsized fan attendance for the Las Vegas Aviators® in 2021 after COVID restrictions were lifted.
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MPC
–MPC EBT totaled $75.4 million in the quarter, a 39% increase compared to $54.1 million in the prior-year period, driven primarily by strong land sales revenue in Bridgeland, increased builder price participation revenue, and equity earnings from The Summit. These improvements were offset by reduced superpad sales in Summerlin.
–MPC land sales revenue was $52.6 million, a 7% decrease compared to the prior-year period. This reduction was primarily driven by lower superpad sales in Summerlin, and partially offset by increased commercial land sales in Bridgeland and a higher price per acre of land sold in all MPCs
–Builder price participation revenue rose to $18.9 million during the quarter—representing an increase of 69% from the prior-year period as the sales prices of new homes sold in HHC’s communities remained strong.
–The price per acre of residential land sold was approximately $790,000 per acre during the quarter, representing a 36% increase compared to approximately $580,000 per acre in the prior-year period.
–MPC equity earnings were $14.9 million—representing a $6.6 million increase year-over-year—primarily related to The Summit. With limited remaining lots and condos in inventory, HHC and Discovery Land expanded The Summit joint venture to include a second phase of development during the quarter. HHC contributed an additional 54 acres of land—which will be used to develop approximately 28 custom home sites—resulting in a $13.5 million gain in MPC equity earnings. This gain is the result of marking the cost basis of the land contributed to its estimated fair value at the time of contribution.
–A total of 284 new homes were sold in HHC’s MPCs during the quarter representing a 48% decline compared to the prior-year period as home sales have tapered off in light of high mortgage rates, inflation, and market uncertainty.
–JDM Partners exercised its second option on Teravalis (formerly named Douglas Ranch), repurchasing an additional 2.8% ownership interest for approximately $15.0 million. JDM Partners’ total ownership is now approximately 12%.
Strategic Developments
–Completed construction at Kō'ula in September and closed on 398 units totaling $413.0 million in net revenue during the third quarter. At the end of the period, Kō'ula was 97% sold. Subsequent to quarter end, in October we closed on an additional 146 condos at Kō'ula representing an additional $201.5 million in net revenue.
–Sold six condo units at ‘A‘ali‘i generating $5.6 million in net revenue. At quarter end, ‘A‘ali‘i was 95% sold.
–Pre-sales for condo towers in development—The Park Ward Village and Ulana—remained strong with a total of 42 units contracted during the quarter. As of September 30, 2022, The Park Ward Village was 91% pre-sold, and Ulana was 96% pre-sold. Construction on these two towers is expected to begin in the fourth quarter.
–Pre-sales at Kalae were launched in late September. No contracted units were past the 30-day rescission period at quarter end; however, as of the end of October, Kalae was already more than 40% contracted with strong pre-sales activity expected to continue in the fourth quarter.
–The 1700 Pavilion office building in Summerlin, which is expected to be completed in the fourth quarter, has experienced exceptional demand with this new Class-A office asset already 51% pre-leased with 40% under letters of intent or in negotiation as of the end of October.
–Completed construction of the Memorial Hermann Medical Office Building in The Woodlands. This 20,000 square-foot building is 100% leased.
–Commenced construction on the South Lake Medical Office Building in Downtown Columbia. The 86,000-square-foot-building, which is already 21% pre-leased, is expected to be completed in 2024.
Seaport
–The Seaport generated negative NOI, including contribution from equity investees, of $9.5 million in the quarter, a $5.9 million decline compared to a $3.6 million loss in the prior-year period. This reduction was primarily related to start-up costs and equity losses from the Tin Building by Jean-Georges.
–Seaport revenue of $31.7 million rose 57% compared to revenue of $20.2 million during the third quarter of 2021 driven by a very successful summer concert series on The Rooftop at Pier 17®, increased demand at all of the Company’s managed restaurants, and rental revenue related to the Tin Building.
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–At the Tin Building by Jean-Georges, a soft opening commenced in early August with a grand opening celebration in late September. Pre-opening and initial operating costs contributed to the Company’s share of equity investee NOI losses of $11.4 million during the quarter. Since the grand opening, hours of operation have remained constrained due to continued labor shortages; however, foot traffic and sales have been very strong during service hours. The Company is making good progress hiring additional staff and expects the Tin Building to operate at full capacity by the end of the fourth quarter.
Financing Activity
–In August 2022, the Company closed on a $392.0 million construction loan for the development of The Park Ward Village. The loan bears interest at SOFR plus 3.90% with an initial maturity of February 2026, and a one-year extension option.
Full-Year 2022 Guidance
–Operating Asset NOI has experienced strong leasing activity in multi-family, improved lease-up in office, and increased occupancy in retail throughout 2022. These benefits in 2022 are partially offset by no hospitality NOI as a result of the sale of our hotel portfolio during 2021, as well as reduced non-recurring COVID-related rent recoveries for certain retail tenants during 2021. With continued multi-family, office, and retail strength anticipated in the fourth quarter, we now expect 2022 Operating Asset NOI to increase 3% to 5% year-over-year. This represents an improvement relative to our prior full year guidance which contemplated a year-over-year reduction of 0% to 2% compared to 2021.
–MPC EBT has benefited from strong land sales throughout 2022 despite macroeconomic headwinds. Based on this strength, EBT is projected to remain higher compared to the earnings we generated on average over 2017 to 2020. However, compared to 2021, we continue to expect EBT to decline due to outsized land sales, including the closing of a 216-acre superpad in Summerlin. Superpad sales of this size do not occur every year. Based on strong results year-to-date and anticipated residential and commercial land sales in the fourth quarter, we now expect 2022 MPC EBT to decline 10% to 17% year-over-year. This represents an improvement relative to our prior full year guidance which contemplated an EBT decline of 25% to 30% compared to 2021. Notwithstanding the range provided, MPC EBT can be inherently uncertain due to market conditions and the timing of closings for large land sales transactions.
–Condo sales guidance is unchanged and is projected to range between $650 million to $700 million, with gross margins between 26.5% to 27.5%. Projected condo sales are driven by the closing of units at Kō‘ula during the third and fourth quarters and additional closings at ‘A‘ali‘i.
–Cash G&A guidance is unchanged and is projected to range between $75 million to $80 million, which excludes anticipated non-cash stock compensation of $5 million to $10 million.
Conference Call & Webcast Information
The Howard Hughes Corporation will host its investor conference call on Thursday, November 3, 2022, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) to discuss third quarter 2022 results. To participate, please dial 1-877-883-0383 within the U.S., 1-866-605-3850 within Canada, or 1-412-902-6506 when dialing internationally. All participants should dial in at least five minutes prior to the scheduled start time, using 0392401 as the passcode. A live audio webcast and Quarterly Spotlight will also be available on the Company's website (www.howardhughes.com). In addition to dial-in options, institutional and retail shareholders can participate by going to app.saytechnologies.com/howardhughes. Shareholders can email hello@saytechnologies.com for any support inquiries.
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We are primarily focused on creating shareholder value by increasing our per-share net asset value. Often, the nature of our business results in short-term volatility in our net income due to the timing of MPC land sales, recognition of condominium revenue and operating business pre-opening expenses, and, as such, we believe the following metrics summarized below are most useful in tracking our progress towards net asset value creation.
| Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
| $ in thousands | 2022 | 2021 | $ Change | % Change | 2022 | 2021 | $ Change | % Change | |||||||||||||||||||||||||||||||||
Operating Assets NOI (1) | |||||||||||||||||||||||||||||||||||||||||
| Office | $ | 83,338 | $ | 79,929 | $ | 3,409 | 4 | % | $ | 28,540 | $ | 27,814 | $ | 726 | 3 | % | |||||||||||||||||||||||||
| Retail | 41,163 | 40,889 | 274 | 1 | % | 13,206 | 15,577 | (2,371) | (15) | % | |||||||||||||||||||||||||||||||
| Multi-family | 34,710 | 22,353 | 12,357 | 55 | % | 11,725 | 9,208 | 2,517 | 27 | % | |||||||||||||||||||||||||||||||
| Other | 13,759 | 13,266 | 493 | 4 | % | 5,652 | 7,475 | (1,823) | (24) | % | |||||||||||||||||||||||||||||||
| Dispositions | 162 | 6,865 | (6,703) | (98) | % | (466) | 2,901 | (3,367) | (116) | % | |||||||||||||||||||||||||||||||
| Operating Assets NOI | 173,132 | 163,302 | 9,830 | 6 | % | 58,657 | 62,975 | (4,318) | (7) | % | |||||||||||||||||||||||||||||||
| Company's share NOI (a) | 11,279 | 5,783 | 5,496 | 95 | % | 2,139 | (47) | 2,186 | NM | ||||||||||||||||||||||||||||||||
| Total Operating Assets NOI | $ | 184,411 | $ | 169,085 | $ | 15,326 | 9 | % | $ | 60,796 | $ | 62,928 | $ | (2,132) | (3) | % | |||||||||||||||||||||||||
| Projected stabilized NOI Operating Assets ($ in millions) | $ | 360.4 | $ | 368.6 | $ | (8.2) | (2) | % | |||||||||||||||||||||||||||||||||
| MPC | |||||||||||||||||||||||||||||||||||||||||
| Acres Sold - Residential | 216 | 232 | (16) | (7) | % | 60 | 84 | (24) | (29) | % | |||||||||||||||||||||||||||||||
| Acres Sold - Commercial | 51 | 27 | 24 | 87 | % | 17 | 2 | 15 | NM | ||||||||||||||||||||||||||||||||
| Price Per Acre - Residential | $ | 722 | $ | 604 | $ | 118 | 20 | % | $ | 790 | $ | 580 | $ | 210 | 36 | % | |||||||||||||||||||||||||
| Price Per Acre - Commercial | $ | 735 | $ | 370 | $ | 365 | 99 | % | $ | 436 | $ | 1,683 | $ | (1,247) | (74) | % | |||||||||||||||||||||||||
MPC EBT (1) | $ | 206,327 | $ | 187,306 | $ | 19,021 | 10 | % | $ | 75,383 | $ | 54,120 | $ | 21,263 | 39 | % | |||||||||||||||||||||||||
Seaport NOI (1) | |||||||||||||||||||||||||||||||||||||||||
| Landlord Operations | $ | (10,260) | $ | (11,226) | $ | 966 | 9 | % | $ | (4,335) | $ | (4,152) | $ | (183) | (4) | % | |||||||||||||||||||||||||
| Landlord Operations - Multi-family | 96 | 84 | 12 | 14 | % | 22 | (52) | 74 | 142 | % | |||||||||||||||||||||||||||||||
| Managed Businesses | 149 | 7 | 142 | NM | 1,010 | 923 | 87 | 9 | % | ||||||||||||||||||||||||||||||||
| Tin Building | 1,612 | — | 1,612 | NM | 1,612 | — | 1,612 | NM | |||||||||||||||||||||||||||||||||
| Events and Sponsorships | 3,545 | (909) | 4,454 | NM | 3,259 | (244) | 3,503 | NM | |||||||||||||||||||||||||||||||||
| Seaport NOI | (4,858) | (12,044) | 7,186 | 60 | % | 1,568 | (3,525) | 5,093 | 144 | % | |||||||||||||||||||||||||||||||
| Company's share NOI (a) | (19,851) | (320) | (19,531) | NM | (11,034) | (38) | (10,996) | NM | |||||||||||||||||||||||||||||||||
| Total Seaport NOI | $ | (24,709) | $ | (12,364) | $ | (12,345) | (100) | % | $ | (9,466) | $ | (3,563) | $ | (5,903) | (166) | % | |||||||||||||||||||||||||
| Strategic Developments | |||||||||||||||||||||||||||||||||||||||||
| Condominium units contracted to sell (b) | 85 | 152 | (67) | (44) | % | 5 | 61 | (56) | (92) | % | |||||||||||||||||||||||||||||||
(a)Includes Company’s share of NOI from non-consolidated assets
(b)Includes units at our buildings that are open or under construction as of September 30, 2022
NM - Not Meaningful
Financial Data
(1)See the accompanying appendix for a reconciliation of GAAP to non-GAAP financial measures and a statement indicating why management believes the non-GAAP financial measure provides useful information for investors.
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About The Howard Hughes Corporation®
The Howard Hughes Corporation owns, manages and develops commercial, residential and mixed-use real estate throughout the U.S. Its award-winning assets include the country’s preeminent portfolio of master planned communities, as well as operating properties and development opportunities including: the Seaport in New York City; Downtown Columbia® in Maryland; The Woodlands®, The Woodlands Hills®, and Bridgeland® in the Greater Houston, Texas area; Summerlin® in Las Vegas; Ward Village® in Honolulu, Hawai‘i; and TeravalisTM in the Greater Phoenix, Arizona area. The Howard Hughes Corporation’s portfolio is strategically positioned to meet and accelerate development based on market demand, resulting in one of the strongest real estate platforms in the country. Dedicated to innovative placecmaking, the Company is recognized for its ongoing commitment to design excellence and to the cultural life of its communities. The Howard Hughes Corporation is traded on the New York Stock Exchange as HHC. For additional information visit www.howardhughes.com.
The Howard Hughes Corporation has partnered with Say, the fintech startup reimagining shareholder communications, to allow investors to submit and upvote questions they would like to see addressed on the Company’s third quarter earnings call. Say verifies all shareholder positions and provides permission to participate on the November 3, 2022 call, during which the Company’s leadership will be answering top questions. Utilizing the Say platform, The Howard Hughes Corporation elevates its capabilities for responding to Company shareholders, making its investor relations Q&A more transparent and engaging.
Safe Harbor Statement
Certain statements contained in this press release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts, including, among others, statements regarding the Company’s future financial position, results or performance, are forward-looking statements. Those statements include statements regarding the intent, belief, or current expectations of the Company, members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,” “project,” “realize,” “should,” “transform,” “will,” “would,” and other statements of similar expression. Forward-looking statements are not a guaranty of future performance and involve risks and uncertainties that actual results may differ materially from those contemplated by such forward-looking statements. Many of these factors are beyond the Company’s abilities to control or predict. Some of the risks, uncertainties and other important factors that may affect future results or cause actual results to differ materially from those expressed or implied by forward-looking statements include: (i) the impact of the COVID-19 pandemic on the Company’s business, tenants and the economy in general, including the measures taken by governmental authorities to address it; (ii) general adverse economic and local real estate conditions; (iii) potential changes in the financial markets and interest rates; (iv) the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their business; (v) financing risks, such as the inability to obtain equity, debt or other sources of financing or refinancing on favorable terms, if at all; (vi) ability to compete effectively, including the potential impact of heightened competition for tenants and potential decreases in occupancy at our properties; (vii) ability to successfully dispose of non-core assets on favorable terms, if at all; (viii) ability to successfully identify, acquire, develop and/or manage properties on favorable terms and in accordance with applicable zoning and permitting laws; (ix) changes in governmental laws and regulations; (x) increases in operating costs, including construction cost increases as the result of trade disputes and tariffs on goods imported in the United States; (xi) lack of control over certain of the Company’s properties due to the joint ownership of such property; (xii) impairment charges; (xiii) the effects of geopolitical instability and risks such as terrorist attacks and trade wars; (xiv) the effects of natural disasters, including floods, droughts, wind, tornadoes and hurricanes; (xv) the inherent risks related to disruption of information technology networks and related systems, including cyber security attacks; and (xvi) the ability to attract and retain key employees. The Company refers you to the section entitled “Risk Factors” contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the Company's filings with the Securities and Exchange Commission. Copies of each filing may be obtained from the Company or the Securities and Exchange Commission. The risks included here are not exhaustive and undue reliance should not be placed on any forward-looking statements, which are based on current expectations. All written and oral forward-looking statements attributable to the Company, its management, or persons acting on their behalf are qualified in their entirety by these cautionary statements. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to
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update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law.
Financial Presentation
As discussed throughout this release, we use certain non-GAAP performance measures, in addition to the required GAAP presentations, as we believe these measures improve the understanding of our operational results and make comparisons of operating results among peer companies more meaningful. We continually evaluate the usefulness, relevance, limitations and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change. A non-GAAP financial measure used throughout this release is net operating income (NOI). We provide a more detailed discussion about this non-GAAP measure in our reconciliation of non-GAAP measures provided in the appendix in this earnings release.
Media Contact
The Howard Hughes Corporation
Cristina Carlson, 646-822-6910
Senior Vice President, Head of Corporate Communications
cristina.carlson@howardhughes.com
Investor Relations Contact
The Howard Hughes Corporation
Eric Holcomb, 281-475-2144
Senior Vice President, Investor Relations
eric.holcomb@howardhughes.com
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THE HOWARD HUGHES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
| Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||
| thousands except per share amounts | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Condominium rights and unit sales | $ | 459,681 | $ | 50,191 | $ | 418,645 | $ | 163 | |||||||||||||||
| Master Planned Communities land sales | 199,032 | 152,124 | 52,585 | 56,305 | |||||||||||||||||||
| Rental revenue | 296,081 | 269,590 | 96,917 | 95,215 | |||||||||||||||||||
| Other land, rental and property revenues | 119,870 | 120,982 | 52,550 | 56,350 | |||||||||||||||||||
| Builder price participation | 51,819 | 29,338 | 18,852 | 11,155 | |||||||||||||||||||
| Total revenues | 1,126,483 | 622,225 | 639,549 | 219,188 | |||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Condominium rights and unit cost of sales | 329,026 | 68,485 | 295,300 | 82 | |||||||||||||||||||
| Master Planned Communities cost of sales | 75,304 | 63,928 | 19,355 | 23,419 | |||||||||||||||||||
| Operating costs | 236,763 | 219,866 | 85,089 | 90,025 | |||||||||||||||||||
| Rental property real estate taxes | 40,314 | 42,519 | 12,118 | 14,812 | |||||||||||||||||||
| Provision for (recovery of) doubtful accounts | 2,238 | (1,944) | 106 | 154 | |||||||||||||||||||
| General and administrative | 60,874 | 61,133 | 19,471 | 19,033 | |||||||||||||||||||
| Depreciation and amortization | 147,584 | 155,395 | 50,015 | 56,299 | |||||||||||||||||||
| Other | 7,985 | 8,253 | 2,902 | 4,063 | |||||||||||||||||||
| Total expenses | 900,088 | 617,635 | 484,356 | 207,887 | |||||||||||||||||||
| OTHER | |||||||||||||||||||||||
| Provision for impairment | — | (13,068) | — | — | |||||||||||||||||||
| Gain (loss) on sale or disposal of real estate and other assets, net | 4,009 | 60,474 | — | 39,141 | |||||||||||||||||||
| Other income (loss), net | 2,497 | (12,278) | 2,004 | (1,307) | |||||||||||||||||||
| Total other | 6,506 | 35,128 | 2,004 | 37,834 | |||||||||||||||||||
| Operating income (loss) | 232,901 | 39,718 | 157,197 | 49,135 | |||||||||||||||||||
| Interest income | 1,273 | 84 | 995 | 12 | |||||||||||||||||||
| Interest expense | (79,963) | (97,205) | (24,373) | (31,556) | |||||||||||||||||||
| Gain (loss) on extinguishment of debt | (645) | (37,543) | — | (1,577) | |||||||||||||||||||
| Equity in earnings (losses) from real estate and other affiliates | 19,528 | 15,815 | 7,708 | (7,848) | |||||||||||||||||||
| Income (loss) before income taxes | 173,094 | (79,131) | 141,527 | 8,166 | |||||||||||||||||||
| Income tax expense (benefit) | 41,822 | (16,706) | 33,858 | 6,049 | |||||||||||||||||||
| Net income (loss) | 131,272 | (62,425) | 107,669 | 2,117 | |||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | 510 | 4,725 | 427 | 1,936 | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 131,782 | $ | (57,700) | $ | 108,096 | $ | 4,053 | |||||||||||||||
| Basic income (loss) per share | $ | 2.59 | $ | (1.04) | $ | 2.19 | $ | 0.07 | |||||||||||||||
| Diluted income (loss) per share | $ | 2.59 | $ | (1.04) | $ | 2.19 | $ | 0.07 | |||||||||||||||
8
THE HOWARD HUGHES CORPORATION
CONSOLIDATED BALANCE SHEETS
UNAUDITED
| thousands except par values and share amounts | September 30, 2022 | December 31, 2021 | |||||||||
| ASSETS | |||||||||||
| Investment in real estate: | |||||||||||
| Master Planned Communities assets | $ | 2,396,689 | $ | 2,282,768 | |||||||
| Buildings and equipment | 4,177,563 | 3,962,441 | |||||||||
| Less: accumulated depreciation | (841,363) | (743,311) | |||||||||
| Land | 307,037 | 322,439 | |||||||||
| Developments | 1,085,302 | 1,208,907 | |||||||||
| Net property and equipment | 7,125,228 | 7,033,244 | |||||||||
| Investment in real estate and other affiliates | 261,615 | 369,949 | |||||||||
| Net investment in real estate | 7,386,843 | 7,403,193 | |||||||||
| Net investment in lease receivable | 2,897 | 2,913 | |||||||||
| Cash and cash equivalents | 354,605 | 843,212 | |||||||||
| Restricted cash | 571,703 | 373,425 | |||||||||
| Accounts receivable, net | 95,364 | 86,388 | |||||||||
| Municipal Utility District receivables, net | 506,666 | 387,199 | |||||||||
| Notes receivable, net | 4,700 | 7,561 | |||||||||
| Deferred expenses, net | 123,815 | 119,825 | |||||||||
| Operating lease right-of-use assets, net | 47,629 | 57,022 | |||||||||
| Prepaid expenses and other assets, net | 414,459 | 300,956 | |||||||||
| Total assets | $ | 9,508,681 | $ | 9,581,694 | |||||||
| LIABILITIES | |||||||||||
| Mortgages, notes and loans payable, net | $ | 4,627,411 | $ | 4,591,157 | |||||||
| Operating lease obligations | 51,716 | 69,363 | |||||||||
| Deferred tax liabilities | 228,396 | 204,837 | |||||||||
| Accounts payable and accrued expenses | 1,050,267 | 983,167 | |||||||||
| Total liabilities | 5,957,790 | 5,848,524 | |||||||||
| Redeemable noncontrolling interest | — | 22,500 | |||||||||
| EQUITY | |||||||||||
| Preferred stock: $0.01 par value; 50,000,000 shares authorized, none issued | — | — | |||||||||
| Common stock: $0.01 par value; 150,000,000 shares authorized, 56,307,386 issued and 49,901,001 outstanding as of September 30, 2022, 56,173,276 shares issued and 54,065,661 outstanding as of December 31, 2021 | 564 | 563 | |||||||||
| Additional paid-in capital | 3,969,840 | 3,960,418 | |||||||||
| Retained earnings (accumulated deficit) | 115,326 | (16,456) | |||||||||
| Accumulated other comprehensive income (loss) | 9,884 | (14,457) | |||||||||
| Treasury stock, at cost, 6,406,385 shares as of September 30, 2022, and 2,107,615 shares as of December 31, 2021 | (609,724) | (220,073) | |||||||||
| Total stockholders' equity | 3,485,890 | 3,709,995 | |||||||||
| Noncontrolling interests | 65,001 | 675 | |||||||||
| Total equity | 3,550,891 | 3,710,670 | |||||||||
| Total liabilities and equity | $ | 9,508,681 | $ | 9,581,694 | |||||||
9
Appendix – Reconciliation of Non-GAAP Measures
Below are GAAP to non-GAAP reconciliations of certain financial measures, as required under Regulation G of the Securities Exchange Act of 1934. Non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be comparable to similarly titled measures.
As a result of our four segments—Operating Assets, Master Planned Communities (MPC), Seaport and Strategic Developments—being managed separately, we use different operating measures to assess operating results and allocate resources among these four segments. The one common operating measure used to assess operating results for our business segments is earnings before tax (EBT). EBT, as it relates to each business segment, represents the revenues less expenses of each segment, including interest income, interest expense and equity in earnings of real estate and other affiliates. EBT excludes corporate expenses and other items that are not allocable to the segments. We present EBT because we use this measure, among others, internally to assess the core operating performance of our assets. However, segment EBT should not be considered as an alternative to GAAP net income.
| Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| thousands | 2022 | 2021 | $ Change | 2022 | 2021 | $ Change | |||||||||||||||||||||||||||||
| Operating Assets Segment EBT | |||||||||||||||||||||||||||||||||||
| Total revenues (a) | $ | 327,742 | $ | 334,933 | $ | (7,191) | $ | 109,493 | $ | 125,072 | $ | (15,579) | |||||||||||||||||||||||
| Total operating expenses (a) | (146,958) | (161,516) | 14,558 | (48,994) | (61,091) | 12,097 | |||||||||||||||||||||||||||||
| Segment operating income (loss) | 180,784 | 173,417 | 7,367 | 60,499 | 63,981 | (3,482) | |||||||||||||||||||||||||||||
| Depreciation and amortization | (115,143) | (123,850) | 8,707 | (37,714) | (44,224) | 6,510 | |||||||||||||||||||||||||||||
| Interest income (expense), net | (64,776) | (55,179) | (9,597) | (23,340) | (18,027) | (5,313) | |||||||||||||||||||||||||||||
| Other income (loss), net | (57) | (10,539) | 10,482 | 421 | (285) | 706 | |||||||||||||||||||||||||||||
| Equity in earnings (losses) from real estate and other affiliates | 21,898 | (36,931) | 58,829 | 4,132 | (15,108) | 19,240 | |||||||||||||||||||||||||||||
| Gain (loss) on sale or disposal of real estate and other assets, net | 4,018 | 39,141 | (35,123) | — | 39,141 | (39,141) | |||||||||||||||||||||||||||||
| Gain (loss) on extinguishment of debt | (645) | (1,455) | 810 | — | (573) | 573 | |||||||||||||||||||||||||||||
| Operating Assets segment EBT | 26,079 | (15,396) | 41,475 | 3,998 | 24,905 | (20,907) | |||||||||||||||||||||||||||||
| Master Planned Communities Segment EBT | |||||||||||||||||||||||||||||||||||
| Total revenues | 266,990 | 194,926 | 72,064 | 78,188 | 72,061 | 6,127 | |||||||||||||||||||||||||||||
| Total operating expenses | (113,087) | (92,646) | (20,441) | (31,055) | (35,474) | 4,419 | |||||||||||||||||||||||||||||
| Segment operating income (loss) | 153,903 | 102,280 | 51,623 | 47,133 | 36,587 | 10,546 | |||||||||||||||||||||||||||||
| Depreciation and amortization | (286) | (272) | (14) | (104) | (102) | (2) | |||||||||||||||||||||||||||||
| Interest income (expense), net | 35,697 | 31,734 | 3,963 | 13,492 | 10,362 | 3,130 | |||||||||||||||||||||||||||||
| Other income (loss), net | 23 | — | 23 | — | — | — | |||||||||||||||||||||||||||||
| Equity in earnings (losses) from real estate and other affiliates | 16,990 | 54,568 | (37,578) | 14,862 | 8,277 | 6,585 | |||||||||||||||||||||||||||||
| Gain (loss) on extinguishment of debt | — | (1,004) | 1,004 | — | (1,004) | 1,004 | |||||||||||||||||||||||||||||
| MPC segment EBT | 206,327 | 187,306 | 19,021 | 75,383 | 54,120 | 21,263 | |||||||||||||||||||||||||||||
Seaport Segment EBT | |||||||||||||||||||||||||||||||||||
| Total revenues | 70,053 | 39,494 | 30,559 | 32,501 | 21,143 | 11,358 | |||||||||||||||||||||||||||||
| Total operating expenses | (79,329) | (53,721) | (25,608) | (31,404) | (25,219) | (6,185) | |||||||||||||||||||||||||||||
| Segment operating income (loss) | (9,276) | (14,227) | 4,951 | 1,097 | (4,076) | 5,173 | |||||||||||||||||||||||||||||
| Depreciation and amortization | (25,194) | (22,926) | (2,268) | (9,651) | (9,087) | (564) | |||||||||||||||||||||||||||||
| Interest income (expense), net | 3,003 | 666 | 2,337 | 1,731 | 377 | 1,354 | |||||||||||||||||||||||||||||
| Other income (loss), net | 289 | (2,088) | 2,377 | (18) | (1,134) | 1,116 | |||||||||||||||||||||||||||||
| Equity in earnings (losses) from real estate and other affiliates | (20,223) | (1,697) | (18,526) | (11,273) | (1,009) | (10,264) | |||||||||||||||||||||||||||||
| Seaport segment EBT | (51,401) | (40,272) | (11,129) | (18,114) | (14,929) | (3,185) | |||||||||||||||||||||||||||||
10
| Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| thousands | 2022 | 2021 | $ Change | 2022 | 2021 | $ Change | |||||||||||||||||||||||||||||
| Strategic Developments Segment EBT | |||||||||||||||||||||||||||||||||||
| Total revenues | 461,655 | 52,575 | 409,080 | 419,353 | 809 | 418,544 | |||||||||||||||||||||||||||||
| Total operating expenses | (344,271) | (84,971) | (259,300) | (300,515) | (6,708) | (293,807) | |||||||||||||||||||||||||||||
| Segment operating income (loss) | 117,384 | (32,396) | 149,780 | 118,838 | (5,899) | 124,737 | |||||||||||||||||||||||||||||
| Depreciation and amortization | (4,083) | (4,936) | 853 | (1,406) | (1,741) | 335 | |||||||||||||||||||||||||||||
| Interest income (expense), net | 12,334 | 2,610 | 9,724 | 5,817 | 850 | 4,967 | |||||||||||||||||||||||||||||
| Other income (loss), net | 1,361 | 19 | 1,342 | 900 | 5 | 895 | |||||||||||||||||||||||||||||
| Equity in earnings (losses) from real estate and other affiliates | 863 | (125) | 988 | (13) | (8) | (5) | |||||||||||||||||||||||||||||
| Gain (loss) on sale or disposal of real estate and other assets, net | (9) | 21,333 | (21,342) | — | — | — | |||||||||||||||||||||||||||||
| Provision for impairment | — | (13,068) | 13,068 | — | — | — | |||||||||||||||||||||||||||||
| Strategic Developments segment EBT | 127,850 | (26,563) | 154,413 | 124,136 | (6,793) | 130,929 | |||||||||||||||||||||||||||||
| Consolidated Segment EBT | |||||||||||||||||||||||||||||||||||
| Total revenues | 1,126,440 | 621,928 | 504,512 | 639,535 | 219,085 | 420,450 | |||||||||||||||||||||||||||||
| Total operating expenses | (683,645) | (392,854) | (290,791) | (411,968) | (128,492) | (283,476) | |||||||||||||||||||||||||||||
| Segment operating income (loss) | 442,795 | 229,074 | 213,721 | 227,567 | 90,593 | 136,974 | |||||||||||||||||||||||||||||
| Depreciation and amortization | (144,706) | (151,984) | 7,278 | (48,875) | (55,154) | 6,279 | |||||||||||||||||||||||||||||
| Interest income (expense), net | (13,742) | (20,169) | 6,427 | (2,300) | (6,438) | 4,138 | |||||||||||||||||||||||||||||
| Other income (loss), net | 1,616 | (12,608) | 14,224 | 1,303 | (1,414) | 2,717 | |||||||||||||||||||||||||||||
| Equity in earnings (losses) from real estate and other affiliates | 19,528 | 15,815 | 3,713 | 7,708 | (7,848) | 15,556 | |||||||||||||||||||||||||||||
| Gain (loss) on sale or disposal of real estate and other assets, net | 4,009 | 60,474 | (56,465) | — | 39,141 | (39,141) | |||||||||||||||||||||||||||||
| Gain (loss) on extinguishment of debt | (645) | (2,459) | 1,814 | — | (1,577) | 1,577 | |||||||||||||||||||||||||||||
| Provision for impairment | — | (13,068) | 13,068 | — | — | — | |||||||||||||||||||||||||||||
| Consolidated segment EBT | 308,855 | 105,075 | 203,780 | 185,403 | 57,303 | 128,100 | |||||||||||||||||||||||||||||
| Corporate income, expenses and other items | (177,583) | (167,500) | (10,083) | (77,734) | (55,186) | (22,548) | |||||||||||||||||||||||||||||
| Net income (loss) | 131,272 | (62,425) | 193,697 | 107,669 | 2,117 | 105,552 | |||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | 510 | 4,725 | (4,215) | 427 | 1,936 | (1,509) | |||||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 131,782 | $ | (57,700) | $ | 189,482 | $ | 108,096 | $ | 4,053 | $ | 104,043 | |||||||||||||||||||||||
(a)Total revenues includes hospitality revenues of $35.6 million for the nine months ended September 30, 2021, and $14.0 million for the three months ended September 30, 2021. Total operating expenses includes hospitality operating costs of $30.5 million for the nine months ended September 30, 2021, and $11.7 million for the three months ended September 30, 2021. In September 2021, the Company completed the sale of its three hospitality properties.
11
NOI
We believe that NOI is a useful supplemental measure of the performance of our Operating Assets and Seaport portfolio because it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating real estate properties and the impact on operations from trends in rental and occupancy rates and operating costs. We define NOI as operating revenues (rental income, tenant recoveries and other revenue) less operating expenses (real estate taxes, repairs and maintenance, marketing and other property expenses). NOI excludes straight-line rents and amortization of tenant incentives, net; interest expense, net; ground rent amortization, demolition costs; other income (loss); amortization; depreciation; development-related marketing cost; gain on sale or disposal of real estate and other assets, net; provision for impairment and equity in earnings from real estate and other affiliates. All management fees have been eliminated for all internally-managed properties. We use NOI to evaluate our operating performance on a property-by-property basis because NOI allows us to evaluate the impact that property-specific factors such as lease structure, lease rates and tenant base have on our operating results, gross margins and investment returns. Variances between years in NOI typically result from changes in rental rates, occupancy, tenant mix and operating expenses. Although we believe that NOI provides useful information to investors about the performance of our Operating Assets and Seaport assets, due to the exclusions noted above, NOI should only be used as an additional measure of the financial performance of the assets of this segment of our business and not as an alternative to GAAP Net income (loss). This amount is presented as Operating NOI and Seaport NOI throughout this document. Total Operating NOI and Total Seaport NOI represent NOI as defined above with the addition of our share of NOI from equity investees.
For reference, and as an aid in understanding our computation of NOI, a reconciliation of segment EBT to NOI for Operating Assets and Seaport has been presented in the tables below.
| Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||
| thousands | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Operating Assets segment EBT (a) | $ | 26,079 | $ | (15,396) | $ | 3,998 | $ | 24,905 | |||||||||||||||
| Add back: | |||||||||||||||||||||||
| Depreciation and amortization | 115,143 | 123,850 | 37,714 | 44,224 | |||||||||||||||||||
| Interest (income) expense, net | 64,776 | 55,179 | 23,340 | 18,027 | |||||||||||||||||||
| Equity in (earnings) losses from real estate and other affiliates | (21,898) | 36,931 | (4,132) | 15,108 | |||||||||||||||||||
| (Gain) loss on sale or disposal of real estate and other assets, net | (4,018) | (39,141) | — | (39,141) | |||||||||||||||||||
| (Gain) loss on extinguishment of debt | 645 | 1,455 | — | 573 | |||||||||||||||||||
| Impact of straight-line rent | (7,283) | (10,030) | (1,744) | (936) | |||||||||||||||||||
| Other | (312) | 10,454 | (519) | 215 | |||||||||||||||||||
| Operating Assets NOI | 173,132 | 163,302 | 58,657 | 62,975 | |||||||||||||||||||
| Company's Share NOI - Equity Investees | 6,641 | 2,028 | 2,139 | (47) | |||||||||||||||||||
| Distributions from Summerlin Hospital Investment | 4,638 | 3,755 | — | — | |||||||||||||||||||
| Total Operating Assets NOI | $ | 184,411 | $ | 169,085 | $ | 60,796 | $ | 62,928 | |||||||||||||||
| Seaport segment EBT (a) | $ | (51,401) | $ | (40,272) | $ | (18,114) | $ | (14,929) | |||||||||||||||
| Add back: | |||||||||||||||||||||||
| Depreciation and amortization | 25,194 | 22,926 | 9,651 | 9,087 | |||||||||||||||||||
| Interest (income) expense, net | (3,003) | (666) | (1,731) | (377) | |||||||||||||||||||
| Equity in (earnings) losses from real estate and other affiliates | 20,223 | 1,697 | 11,273 | 1,009 | |||||||||||||||||||
| Impact of straight-line rent | 1,519 | 1,265 | (185) | 398 | |||||||||||||||||||
| Other (income) loss, net | 2,610 | 3,006 | 674 | 1,287 | |||||||||||||||||||
| Seaport NOI | (4,858) | (12,044) | 1,568 | (3,525) | |||||||||||||||||||
| Company's Share NOI - Equity Investees (b) | (19,851) | (320) | (11,034) | (38) | |||||||||||||||||||
| Total Seaport NOI | $ | (24,709) | $ | (12,364) | $ | (9,466) | $ | (3,563) | |||||||||||||||
(a)Segment EBT excludes corporate expenses and other items that are not allocable to the segments.
(b)The Company’s share of NOI related to Tin Building by Jean-Georges is calculated using our current partnership funding provisions.
12
Same Store NOI - Operating Assets Segment
The Company defines Same Store Properties as consolidated and unconsolidated properties that are acquired or placed in-service prior to the beginning of the earliest period presented and owned by the Company through the end of the latest period presented. Same Store Properties exclude properties placed in-service, acquired, repositioned or in development or redevelopment after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented. Accordingly, it takes at least one year and one quarter after a property is acquired or treated as in-service for that property to be included in Same Store Properties.
We calculate Same Store Net Operating Income (Same Store NOI) as Operating Assets NOI applicable to Same Store Properties. Same Store NOI also includes the Company's share of NOI of unconsolidated properties and the annual distribution from a cost basis investment. Same Store NOI is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that Same Store NOI is helpful to investors as a supplemental comparative performance measure of the income generated from the same group of properties from one period to the next. Other companies may not define Same Store NOI in the same manner as we do; therefore, our computation of Same Store NOI may not be comparable to that of other companies. Additionally, we do not control investments in unconsolidated properties and while we consider disclosures of our share of NOI to be useful, they may not accurately depict the legal and economic implications of our investment arrangements.
| Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| thousands | 2022 | 2021 | $ Change | 2022 | 2021 | $ Change | |||||||||||||||||||||||||||||
| Same Store Office | |||||||||||||||||||||||||||||||||||
| Houston, TX | $ | 54,527 | $ | 52,924 | $ | 1,603 | $ | 19,050 | $ | 17,894 | $ | 1,156 | |||||||||||||||||||||||
| Columbia, MD | 18,259 | 16,387 | 1,872 | 5,881 | 6,325 | (444) | |||||||||||||||||||||||||||||
| Las Vegas, NV | 10,560 | 10,620 | (60) | 3,499 | 3,597 | (98) | |||||||||||||||||||||||||||||
| Total Same Store Office | 83,346 | 79,931 | 3,415 | 28,430 | 27,816 | 614 | |||||||||||||||||||||||||||||
| Same Store Retail | |||||||||||||||||||||||||||||||||||
| Houston, TX | 10,083 | 9,381 | 702 | 3,756 | 3,768 | (12) | |||||||||||||||||||||||||||||
| Columbia, MD | 1,520 | 1,180 | 340 | 464 | 242 | 222 | |||||||||||||||||||||||||||||
| Las Vegas, NV | 17,328 | 18,377 | (1,049) | 5,687 | 5,449 | 238 | |||||||||||||||||||||||||||||
| Honolulu, HI | 11,521 | 11,237 | 284 | 3,318 | 5,529 | (2,211) | |||||||||||||||||||||||||||||
| Total Same Store Retail | 40,452 | 40,175 | 277 | 13,225 | 14,988 | (1,763) | |||||||||||||||||||||||||||||
| Same Store Multi-Family | |||||||||||||||||||||||||||||||||||
| Houston, TX | 20,937 | 14,448 | 6,489 | 7,087 | 6,084 | 1,003 | |||||||||||||||||||||||||||||
| Columbia, MD | 4,934 | 2,856 | 2,078 | 1,667 | 1,387 | 280 | |||||||||||||||||||||||||||||
| Las Vegas, NV | 5,543 | 5,158 | 385 | 1,895 | 1,846 | 49 | |||||||||||||||||||||||||||||
| Company's Share NOI - Equity Investees | 5,440 | 5,032 | 408 | 1,910 | 1,705 | 205 | |||||||||||||||||||||||||||||
| Total Same Store Multi-Family | 36,854 | 27,494 | 9,360 | 12,559 | 11,022 | 1,537 | |||||||||||||||||||||||||||||
| Same Store Other | |||||||||||||||||||||||||||||||||||
| Houston, TX | 5,303 | 5,066 | 237 | 1,650 | 1,812 | (162) | |||||||||||||||||||||||||||||
| Columbia, MD | (141) | (59) | (82) | (17) | 46 | (63) | |||||||||||||||||||||||||||||
| Las Vegas, NV | 8,293 | 8,043 | 250 | 3,876 | 5,475 | (1,599) | |||||||||||||||||||||||||||||
| Honolulu, HI | 222 | 214 | 8 | 118 | 124 | (6) | |||||||||||||||||||||||||||||
| Company's Share NOI - Equity and Cost Investees | 5,839 | 5,622 | 217 | 229 | 952 | (723) | |||||||||||||||||||||||||||||
| Total Same Store Other | 19,516 | 18,886 | 630 | 5,856 | 8,409 | (2,553) | |||||||||||||||||||||||||||||
| Total Same Store NOI | 180,168 | 166,486 | 13,682 | 60,070 | 62,235 | (2,165) | |||||||||||||||||||||||||||||
| Non-Same Store NOI | 4,243 | 2,599 | 1,644 | 726 | 693 | 33 | |||||||||||||||||||||||||||||
| Total Operating Assets NOI | $ | 184,411 | $ | 169,085 | $ | 15,326 | $ | 60,796 | $ | 62,928 | $ | (2,132) | |||||||||||||||||||||||
13
Cash G&A
The Company defines Cash G&A as General and administrative expense less non-cash stock compensation expense. Cash G&A is a non-GAAP financial measure that we believe is useful to our investors and other users of our financial statements as an indicator of overhead efficiency without regard to non-cash expenses associated with stock compensation. However, it should not be used as an alternative to general and administrative expenses in accordance with GAAP.
| Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| thousands | 2022 | 2021 | $ Change | 2022 | 2021 | $ Change | |||||||||||||||||||||||||||||
| General and Administrative | |||||||||||||||||||||||||||||||||||
| General and administrative (G&A) | $ | 60,874 | $ | 61,133 | $ | (259) | $ | 19,471 | $ | 19,033 | $ | 438 | |||||||||||||||||||||||
| Less: Non-cash stock compensation | (3,989) | (7,418) | 3,429 | (1,298) | (2,637) | 1,339 | |||||||||||||||||||||||||||||
| Cash G&A (a) | $ | 56,885 | $ | 53,715 | $ | 3,170 | $ | 18,173 | $ | 16,396 | $ | 1,777 | |||||||||||||||||||||||
(a)The first quarter of 2022 includes $2.3 million of severance and bonus costs related to our former Chief Financial Officer.
14
The Howard Hughes Corporation Supplemental Information Three Months Ended September 30, 2022 NYSE: HHC Exhibit 99.2
HOWARD HUGHES 2 Cautionary StatementsCautionary Statements Forward Looking Statements This presentation includes forward-looking statements. Forward-looking statements give our current expectations relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to current or historical facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “forecast,” “plan,” “intend,” "believe," “likely,” “may,” “realize,” “should,” “transform,” “would” and other statements of similar expression. Forward-looking statements give our expectations about the future and are not guarantees. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements to materially differ from any future results, performance and achievements expressed or implied by such forward-looking statements. We caution you not to rely on these forward-looking statements. For a discussion of the risk factors that could have an impact on these forward-looking statements, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the Securities and Exchange Commission (SEC) on February 28, 2022. The statements made herein speak only as of the date of this presentation, and we do not undertake to update this information except as required by law. Past performance does not guarantee future results. Performance during time periods shown is limited and may not reflect the performance for the full year or future years, or in different economic and market cycles. Non-GAAP Financial Measures Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP); however, we use certain non-GAAP performance measures in this presentation, in addition to GAAP measures, as we believe these measures improve the understanding of our operational results and make comparisons of operating results among peer companies more meaningful. Management continually evaluates the usefulness, relevance, limitations and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change. The non-GAAP financial measures used in this presentation are funds from operations (FFO), core funds from operations (Core FFO), adjusted funds from operations (AFFO) and net operating income (NOI). FFO is defined by the National Association of Real Estate Investment Trusts (NAREIT) as net income calculated in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization and impairment charges (which we believe are not indicative of the performance of our operating portfolio). We calculate FFO in accordance with NAREIT’s definition. Since FFO excludes depreciation and amortization, gains and losses from depreciable property dispositions, and impairments, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition, development activities and financing costs. This provides a perspective of our financial performance not immediately apparent from net income determined in accordance with GAAP. Core FFO is calculated by adjusting FFO to exclude the impact of certain non-cash and/or nonrecurring income and expense items, as set forth in the calculation herein. These items can vary greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among other factors. We believe that by excluding these items, Core FFO serves as a useful, supplementary measure of the ongoing operating performance of the core operations across all segments, and we believe it is used by investors in a similar manner. Finally, AFFO adjusts our Core FFO operating measure to deduct cash expended on recurring tenant improvements and capital expenditures of a routine nature to present an adjusted measure of Core FFO. Core FFO and AFFO are non-GAAP and non-standardized measures and may be calculated differently by other peer companies. We define NOI as operating revenues (rental income, tenant recoveries and other revenue) less operating expenses (real estate taxes, repairs and maintenance, marketing and other property expenses,). NOI excludes straight-line rents and amortization of tenant incentives, net interest expense, ground rent amortization, demolition costs, amortization, depreciation, development-related marketing costs, gain on sale or disposal of real estate and other assets, net, provision for impairment, and Equity in earnings from real estate and other affiliates. We use NOI to evaluate our operating performance on a property-by- property basis because NOI allows us to evaluate the impact that factors which vary by property, such as lease structure, lease rates and tenant bases, have on our operating results, gross margins and investment returns. We believe that NOI is a useful supplemental measure of the performance of our Operating Assets and Seaport segments because it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating real estate properties and the impact on operations from trends in rental and occupancy rates and operating costs. This amount is presented as Operating NOI and Seaport NOI throughout this document. Total Operating NOI and Total Seaport NOI represent NOI as defined above with the addition of our share of NOI from equity investees. While FFO, Core FFO, AFFO and NOI are relevant and widely used measures of operating performance of real estate companies, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity or operating performance. FFO, Core FFO, AFFO and NOI do not purport to be indicative of cash available to fund our future cash requirements. Further, our computations of FFO, Core FFO, AFFO and NOI may not be comparable to FFO, Core FFO, AFFO and NOI reported by other real estate companies. We have included in this presentation a reconciliation from GAAP net income to FFO, Core FFO and AFFO, as well as reconciliations of our GAAP Operating Assets segment earnings before taxes (EBT) to NOI and Seaport segment EBT to NOI. Non-GAAP financial measures should not be considered independently, or as a substitute, for financial information presented in accordance with GAAP. Additional Information Our website address is www.howardhughes.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other publicly filed or furnished documents are available and may be accessed free of charge through the “Investors” section of our website under the "SEC Filings" subsection, as soon as reasonably practicable after those documents are filed with, or furnished to, the SEC. Also available through the Investors section of our website are beneficial ownership reports filed by our directors, officers and certain shareholders on Forms 3, 4 and 5.
3 Table of Contents Table of Contents FINANCIAL OVERVIEW Definitions 4 Company Profile 5 Financial Summary 7 Balance Sheets 9 Statements of Operations 10 OPERATING PORTFOLIO PERFORMANCE Same Store Metrics 11 NOI by Region 13 Stabilized Properties 15 Unstabilized Properties 17 Under Construction Properties 18 Seaport Operating Performance 19 OTHER PORTFOLIO METRICS Ward Village - Sold Out Condominiums 20 Ward Village - Completed or Under Construction Condominiums to be Sold 21 Summary of Remaining Development Costs 22 Portfolio Key Metrics 23 MPC Performance 24 MPC Land 25 Lease Expirations 26 Acquisition / Disposition Activity 27 Other/Non-core Assets 28 Debt Summary 29 Property-Level Debt 30 Ground Leases 32 Reconciliations of Non-GAAP Measures 33
HOWARD HUGHES 4 Stabilized - Properties in the Operating Assets and Seaport segments that have been in service for more than 36 months or have reached 90% occupancy, whichever occurs first. If an office, retail or multi-family property has been in service for more than 36 months but does not exceed 90% occupancy, the asset is considered underperforming. Unstabilized - Properties in the Operating Assets and Seaport segments that have been in service for less than 36 months and do not exceed 90% occupancy. Under Construction - Projects in the Strategic Developments and Seaport segments for which construction has commenced as of September 30, 2022, unless otherwise noted. This excludes MPC and condominium development. Net Operating Income (NOI) - We define net operating income (NOI) as operating cash revenues (rental income, tenant recoveries and other revenue) less operating cash expenses (real estate taxes, repairs and maintenance, marketing and other property expenses). NOI excludes straight-line rents and amortization of tenant incentives, net interest expense, ground rent amortization, demolition costs, amortization, other (loss) income, depreciation, development-related marketing costs, gain on sale or disposal of real estate and other assets, net, provision for impairment and, unless otherwise indicated, equity in earnings from real estate and other affiliates. We use NOI to evaluate our operating performance on a property-by-property basis because NOI allows us to evaluate the impact that factors which vary by property, such as lease structure, lease rates and tenant bases, have on our operating results, gross margins and investment returns. We believe that NOI is a useful supplemental measure of the performance of our Operating Assets and Seaport segments because it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating real estate properties and the impact on operations from trends in rental and occupancy rates and operating costs. This amount is presented as Operating NOI and Seaport NOI throughout this document. Total Operating NOI and Total Seaport NOI These terms represent NOI as defined above with the addition of our share of NOI from equity investees. Estimated Stabilized NOI - Stabilized NOI is initially projected prior to the development of the asset based on market assumptions and is revised over the life of the asset as market conditions evolve. On a quarterly basis, each asset’s Annualized NOI is compared to its projected Stabilized NOI in conjunction with forecast data to determine if an adjustment is needed. Adjustments to Stabilized NOI are made when changes to the asset's long-term performance are thought to be more than likely and permanent. Remaining Development Costs - Development costs and related debt held for projects that are under construction or substantially complete and in service in the Operating Assets or the Seaport segment but have not reached stabilized occupancy status are disclosed on the Summary of Remaining Development Costs slide if the project has more than $1.0 million of estimated costs remaining to be incurred. The total estimated costs and costs paid are prepared on a cash basis to reflect the total anticipated cash requirements for the projects. Projects not yet under construction are not included. Same Store Properties - The Company defines Same Store Properties as consolidated and unconsolidated properties that are acquired or placed in-service prior to the beginning of the earliest period presented and owned by the Company through the end of the latest period presented. Same Store Properties exclude properties placed in- service, acquired, repositioned or in development or redevelopment after the beginning of the earliest period presented or disposed of prior to the end of the latest period presented. Accordingly, it takes at least one year and one quarter after a property is acquired or treated as in-service for that property to be included in Same Store Properties. Same Store NOI - We calculate Same Store Net Operating Income (Same Store NOI) as Operating Assets NOI applicable to consolidated properties acquired or placed in-service prior to the beginning of the earliest period presented and owned by the Company through the end of the latest period presented. Same Store NOI also includes the Company's share of NOI of unconsolidated properties and the annual distribution from a cost basis investment. Same Store NOI is a non-GAAP financial measure and should not be viewed as an alternative to net income calculated in accordance with GAAP as a measurement of our operating performance. We believe that Same Store NOI is helpful to investors as a supplemental comparative performance measure of the income generated from the same group of properties from one period to the next. Other companies may not define Same Store NOI in the same manner as we do; therefore, our computation of Same Store NOI may not be comparable to that of other companies. Additionally, we do not control investments in unconsolidated properties and while we consider disclosures of our share of NOI to be useful, they may not accurately depict the legal and economic implications of our investment arrangements. DefinitionsDefinitions
HOWARD HUGHES 5 ‘A‘ali‘i 60% Kō'ula 40% Bridgeland 21% Summerlin 75%The Woodlands/ Woodlands Hills 4% Recent Company Highlights NEW YORK, July 18, 2022 (PRNewswire) - The Howard Hughes Corporation announced that iconic fashion designer Alexander Wang has selected the Seaport in New York City for its new global headquarters and showroom, signing a 15-year lease for approximately 46,000 square feet of creative office space at the Fulton Market Building in Lower Manhattan. The fashion company will take over the entire top floor, including a 5,000-square-foot patio of the historic building overlooking the Seaport's cobblestone streets and offering views of the Brooklyn Bridge and East River. PHOENIX, Aug. 22, 2022 (PRNewswire) - The Howard Hughes Corporation (HHC) announced that JDM Partners has exercised their remaining option to reacquire a stake in Teravalis (formerly named Douglas Ranch), the recently launched large-scale master planned community in Phoenix's West Valley. On August 18, JDM Partners exercised its second option to buy back into Teravalis, acquiring an additional 2.8% interest in the Teravalis joint venture for approximately $15 million. The transaction brings the aggregate of JDM Partners' investment in Teravalis—excluding Floreo (formerly named Trillium), the community's first 3,000-acre village—to approximately $65 million, which equates to approximately 12% of the joint venture. HONOLULU, Sept. 14, 2022 (PRNewswire) - The Howard Hughes Corporation announced the opening of the Kōʻula® tower at Ward Village®, the sixth residential project to open at the acclaimed 60-acre master planned community located in the heart of Honolulu, just blocks from the Pacific Ocean. NEW YORK, Sept. 29, 2022 (PRNewswire) - The Howard Hughes Corporation and Chef Jean-Georges Vongerichten celebrated the opening yesterday of the Tin Building by Jean-Georges—a 53,000-square-foot culinary marketplace at Pier 17 at the Seaport on the site of the former Fulton Fish Market—which features an extensive offering of international food experiences at an iconic New York City waterfront location. Q3 2022 Company Performance Share Price - September 30, 2022 $ 55.39 Diluted Earnings / Share $ 2.19 FFO / Diluted Share $ 3.18 Core FFO / Diluted Share $ 3.70 AFFO / Diluted Share $ 3.57 Company Profile - Summary & Results Operating Portfolio by Region Q3'22 MPC EBT $75.4M Q3'22 Condos Contracted 5 units NYSE: HHC Company Profile - Summary & Results
HOWARD HUGHES 6 Office 37% Multi-family 59% Retail 4% Office 83% Multi-family 8% Retail 10% Office 48% Multi-family 25% Retail 20% Other 7% Office 46% Multi-family 22% Retail 23% Other 9% Office 80% Multi-family 12% Retail 8% Q3 2022 Path to Projected Annual Stabilized NOI Currently Under Construction Currently Unstabilized Currently Stabilized (a) Total Projected Stabilized NOI $34.9M Projected Stabilized NOI $291.8M Projected Stabilized NOI $360.4M Office 46% Multi-family 23% Retail 21% Other 10% Office 47% Multi-family 23% Retail 20% Other 10% Path to Projected Annual Stabilized NOI charts exclude Seaport NOI, units, and square footage until we have greater clarity with respect to the performance of our tenants. See page 19 for Seaport NOI and other project information. See page 4 for definitions of Under Construction, Unstabilized,Stabilized and Net Operating Income (NOI). (a) Decrease in Stabilized square footage from the prior quarter is primarily due to the transfer of Ward Village Retail square footage to the Strategic Developments segment for condominium development. Q3 '22 Stabilized NOI $59.9M Q3 '22 Unstabilized NOI $0.9M Q3 '22 Total NOI $60.8M Projected Stabilized NOI $33.7M Retail Sq. Ft. 68,800 Retail Sq. Ft. 84,151 Retail Sq. Ft. 2,307,148 Retail Sq. Ft. 2,460,099 Office Sq. Ft. 386,000 Office Sq. Ft. 934,255 Office Sq. Ft. 5,286,448 Office Sq. Ft. 6,606,703 Multi-family Units 1,029 Multi-family Units 358 Multi-family Units 4,200 Multi-family Units 5,587 Q3 2022 Operating Results by Property Type Currently Unstabilized Currently Stabilized Total Company Profile - Summary & Results (cont.)
HOWARD HUGHES 7 thousands except share price and billions Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 YTD Q3 2022 YTD Q3 2021 Company Profile Share price (a) $ 55.39 $ 68.05 $ 103.61 $ 101.78 $ 87.81 $ 55.39 $ 87.81 Market Capitalization (b) $2.8b $3.4b $5.4b $5.5b $4.8b $2.8b $4.8b Enterprise Value (c) $7.1b $7.7b $9.4b $9.3b $8.3b $7.1b $8.3b Weighted avg. shares - basic 49,445 50,786 52,453 54,487 55,727 50,880 55,703 Weighted avg. shares - diluted 49,471 50,822 52,501 54,535 55,756 50,912 55,703 Total diluted share equivalents outstanding (a) 49,901 50,263 52,433 54,068 55,126 49,901 55,126 Debt Summary Total debt payable (d) $ 4,675,327 $ 4,847,318 $ 4,722,552 $ 4,639,416 $ 4,468,713 $ 4,675,327 $ 4,468,713 Fixed-rate debt $ 3,316,050 $ 3,320,845 $ 3,197,722 $ 3,125,559 $ 2,795,832 $ 3,316,050 $ 2,795,832 Weighted avg. rate - fixed 4.40 % 4.40 % 4.40 % 4.41 % 4.49 % 4.40 % 4.49 % Variable-rate debt, excluding condominium financing $ 1,310,277 $ 1,255,498 $ 1,291,921 $ 1,314,674 $ 1,298,358 $ 1,310,277 $ 1,298,358 Weighted avg. rate - variable 5.19 % 4.45 % 3.58 % 3.49 % 3.95 % 5.19 % 3.95 % Condominium debt outstanding at end of period $ 49,000 $ 270,975 $ 232,909 $ 199,183 $ 374,523 $ 49,000 $ 374,523 Weighted avg. rate - condominium financing 8.14 % 5.00 % 4.79 % 4.77 % 3.99 % 8.14 % 3.99 % Leverage ratio (debt to enterprise value) 65.16 % 62.36 % 49.63 % 50.64 % 53.60 % 65.16 % 53.60 % General and Administrative General and administrative (G&A) $ 19,471 $ 15,512 $ 25,891 $ 20,857 $ 19,033 $ 60,874 $ 61,133 Less: Non-cash stock compensation (1,298) (1,254) (1,437) (2,468) (2,637) (3,989) (7,418) Cash G&A (e)(f) $ 18,173 $ 14,258 $ 24,454 $ 18,389 $ 16,396 $ 56,885 $ 53,715 Financial Summary (a) Presented as of period end date. (b) Market capitalization = Closing share price as of the last trading day of the respective period times total diluted share equivalents outstanding as of the date presented. (c) Enterprise Value = Market capitalization + book value of debt + noncontrolling interest - cash and equivalents. (d) Represents total mortgages, notes and loans payable, as stated in our GAAP financial statements as of the respective date, excluding unamortized deferred financing costs and bond issuance costs. (e) Cash G&A is a non-GAAP financial measure that we believe is useful to our investors and other users of our financial statements as an indicator of overhead efficiency without regard to non-cash expenses associated with stock compensation. However, it should not be used as an alternative to general and administrative expenses in accordance with GAAP. (f) The first quarter of 2022 includes $2.3 million of severance and bonus costs related to our former Chief Financial Officer. Financial Summary
HOWARD HUGHES 8 Financial Summary (a) Total Operating Assets NOI includes the Howard Hughes Corporation's (the Company or HHC) share of equity method investments NOI and the annual distribution from our cost basis investment. Prior periods have been adjusted to be consistent with current period presentation. (b) Expenses include both actual and estimated future costs of sales allocated on a relative sales value to land parcels sold, including Master Planned Communities (MPC)-level G&A and real estate taxes on remaining residential and commercial land. (c) MPC Segment EBT (Earnings before tax, as discussed in our GAAP financial statements), includes negative interest expense relating to capitalized interest for the segment on debt held in other segments and at corporate. (d) Company's Share of NOI - Equity Investees for the Tin Building by Jean-Georges has been updated for the first and second quarters of 2022 using our current partnership funding provisions compared to the stated ownership of 65% used previously. (e) Total Seaport NOI includes the Company's share of equity method investments NOI. (f) Excludes $2.7 million charge in the second quarter of 2022 and $20.5 million charge in the first quarter of 2021, for the estimated costs related to construction defects at the Waiea tower. The Company expects to recover all the repair costs from the general contractor, other responsible parties and insurance proceeds. thousands except percentages Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 YTD Q3 2022 YTD Q3 2021 Operating Assets Segment Income Revenues $ 107,706 $ 115,504 $ 96,805 $ 103,177 $ 124,095 $ 320,015 $ 325,062 Expenses (49,049) (51,543) (46,291) (47,813) (61,120) (146,883) (161,760) Company's Share NOI - Equity investees 2,139 2,386 6,754 2,053 (47) 11,279 5,783 Total Operating Assets NOI (a) $ 60,796 $ 66,347 $ 57,268 $ 57,417 $ 62,928 $ 184,411 $ 169,085 Avg. NOI margin 56% 57% 59% 56% 51% 58% 52% MPC Segment Earnings Total revenues $ 78,188 $ 108,110 $ 80,692 $ 214,820 $ 72,061 $ 266,990 $ 194,926 Total expenses (b) (31,055) (45,136) (36,896) (101,205) (35,474) (113,087) (92,646) Depreciation and amortization (104) (92) (90) (94) (102) (286) (272) Interest (expense) income, net (c) 13,492 11,783 10,422 10,949 10,362 35,697 31,734 Other income (loss), net — 23 — — — 23 — Equity in earnings (losses) from real estate and other affiliates 14,862 (3,422) 5,550 4,831 8,277 16,990 54,568 Gain (loss) on extinguishment of debt — — — — (1,004) — (1,004) MPC Segment EBT (c) $ 75,383 $ 71,266 $ 59,678 $ 129,301 $ 54,120 $ 206,327 $ 187,306 Seaport Segment Income Revenues $ 31,729 $ 27,090 $ 9,961 $ 14,749 $ 20,224 $ 68,780 $ 37,323 Expenses (30,161) (27,774) (15,703) (20,268) (23,749) (73,638) (49,367) Company's share NOI - equity investees (d) (11,034) (4,979) (3,838) (272) (38) (19,851) (320) Total Seaport NOI (e) $ (9,466) $ (5,663) $ (9,580) $ (5,791) $ (3,563) $ (24,709) $ (12,364) Avg. NOI margin (30%) (14%) (83%) (39%) (18%) (36%) (33%) Condo Gross Profit Condominium rights and unit sales $ 418,645 $ 21,420 $ 19,616 $ 464,406 $ 163 $ 459,681 $ 50,191 Adjusted condominium rights and unit cost of sales (f) (295,300) (16,833) (14,180) (345,714) (82) (326,313) (47,989) Condo adjusted gross profit $ 123,345 $ 4,587 $ 5,436 $ 118,692 $ 81 $ 133,368 $ 2,202 Financial Summary (cont.)
HOWARD HUGHES 9 thousands except par values and share amounts September 30, 2022 December 31, 2021 ASSETS Unaudited Unaudited Investment in real estate: Master Planned Communities assets $ 2,396,689 $ 2,282,768 Buildings and equipment 4,177,563 3,962,441 Less: accumulated depreciation (841,363) (743,311) Land 307,037 322,439 Developments 1,085,302 1,208,907 Net property and equipment 7,125,228 7,033,244 Investment in real estate and other affiliates 261,615 369,949 Net investment in real estate 7,386,843 7,403,193 Net investment in lease receivable 2,897 2,913 Cash and cash equivalents 354,605 843,212 Restricted cash 571,703 373,425 Accounts receivable, net 95,364 86,388 Municipal Utility District receivables, net 506,666 387,199 Notes receivable, net 4,700 7,561 Deferred expenses, net 123,815 119,825 Operating lease right-of-use assets, net 47,629 57,022 Prepaid expenses and other assets, net 414,459 300,956 Total assets $ 9,508,681 $ 9,581,694 LIABILITIES Mortgages, notes and loans payable, net $ 4,627,411 $ 4,591,157 Operating lease obligations 51,716 69,363 Deferred tax liabilities 228,396 204,837 Accounts payable and accrued expenses 1,050,267 983,167 Total liabilities 5,957,790 5,848,524 Redeemable noncontrolling interest — 22,500 EQUITY Preferred stock: $0.01 par value; 50,000,000 shares authorized, none issued — — Common stock: $0.01 par value; 150,000,000 shares authorized, 56,307,386 issued and 49,901,001 outstanding as of September 30, 2022, 56,173,276 shares issued and 54,065,661 outstanding as of December 31, 2021 564 563 Additional paid-in capital 3,969,840 3,960,418 Retained earnings (accumulated deficit) 115,326 (16,456) Accumulated other comprehensive income (loss) 9,884 (14,457) Treasury stock, at cost, 6,406,385 shares as of September 30, 2022, and 2,107,615 shares as of December 31, 2021 (609,724) (220,073) Total stockholders' equity 3,485,890 3,709,995 Noncontrolling interests 65,001 675 Total equity 3,550,891 3,710,670 Total liabilities and equity $ 9,508,681 $ 9,581,694 Share Count Details (thousands) Shares outstanding at end of period (including restricted stock) 49,901 54,066 Dilutive effect of stock options (a) — 2 Total diluted share equivalents outstanding 49,901 54,068 (a) Stock options assume net share settlement calculated for the period presented. Balance Sheets
HOWARD HUGHES 10 thousands except per share amounts Q3 2022 Q3 2021 YTD Q3 2022 YTD Q3 2021 REVENUES Unaudited Unaudited Unaudited Unaudited Condominium rights and unit sales $ 418,645 $ 163 $ 459,681 $ 50,191 Master Planned Communities land sales 52,585 56,305 199,032 152,124 Rental revenue 96,917 95,215 296,081 269,590 Other land, rental and property revenues 52,550 56,350 119,870 120,982 Builder price participation 18,852 11,155 51,819 29,338 Total revenues 639,549 219,188 1,126,483 622,225 EXPENSES Condominium rights and unit cost of sales 295,300 82 329,026 68,485 Master Planned Communities cost of sales 19,355 23,419 75,304 63,928 Operating costs 85,089 90,025 236,763 219,866 Rental property real estate taxes 12,118 14,812 40,314 42,519 Provision for (recovery of) doubtful accounts 106 154 2,238 (1,944) General and administrative 19,471 19,033 60,874 61,133 Depreciation and amortization 50,015 56,299 147,584 155,395 Other 2,902 4,063 7,985 8,253 Total expenses 484,356 207,887 900,088 617,635 OTHER Provision for impairment — — — (13,068) Gain (loss) on sale or disposal of real estate and other assets, net — 39,141 4,009 60,474 Other income (loss), net 2,004 (1,307) 2,497 (12,278) Total other 2,004 37,834 6,506 35,128 Operating income (loss) 157,197 49,135 232,901 39,718 Interest income 995 12 1,273 84 Interest expense (24,373) (31,556) (79,963) (97,205) Gain (loss) on extinguishment of debt — (1,577) (645) (37,543) Equity in earnings (losses) from real estate and other affiliates 7,708 (7,848) 19,528 15,815 Income (loss) before income taxes 141,527 8,166 173,094 (79,131) Income tax expense (benefit) 33,858 6,049 41,822 (16,706) Net income (loss) 107,669 2,117 131,272 (62,425) Net (income) loss attributable to noncontrolling interests 427 1,936 510 4,725 Net income (loss) attributable to common stockholders $ 108,096 $ 4,053 $ 131,782 $ (57,700) Basic income (loss) per share $ 2.19 $ 0.07 $ 2.59 $ (1.04) Diluted income (loss) per share $ 2.19 $ 0.07 $ 2.59 $ (1.04) Statements of Operations
HOWARD HUGHES 11 thousands Q3 2022 Q3 2021 $ Change % Change YTD Q3 2022 YTD Q3 2021 $ Change % Change Same Store Office Houston, TX $ 19,050 $ 17,894 $ 1,156 6 % $ 54,527 $ 52,924 $ 1,603 3 % Columbia, MD 5,881 6,325 (444) (7) % 18,259 16,387 1,872 11 % Las Vegas, NV 3,499 3,597 (98) (3) % 10,560 10,620 (60) (1) % Total Same Store Office 28,430 27,816 614 2 % 83,346 79,931 3,415 4 % Same Store Retail Houston, TX 3,756 3,768 (12) — % 10,083 9,381 702 7 % Columbia, MD 464 242 222 92 % 1,520 1,180 340 29 % Las Vegas, NV 5,687 5,449 238 4 % 17,328 18,377 (1,049) (6) % Honolulu, HI 3,318 5,529 (2,211) (40) % 11,521 11,237 284 3 % Total Same Store Retail 13,225 14,988 (1,763) (12) % 40,452 40,175 277 1 % — — — Same Store Multi-Family Houston, TX 7,087 6,084 1,003 16 % 20,937 14,448 6,489 45 % Columbia, MD 1,667 1,387 280 20 % 4,934 2,856 2,078 73 % Las Vegas, NV 1,895 1,846 49 3 % 5,543 5,158 385 7 % Company's Share NOI - Equity Investees 1,910 1,705 205 12 % 5,440 5,032 408 8 % Total Same Store Multi-Family 12,559 11,022 1,537 14 % 36,854 27,494 9,360 34 % Same Store Other Houston, TX 1,650 1,812 (162) (9) % 5,303 5,066 237 5 % Columbia, MD (17) 46 (63) (137) % (141) (59) (82) (139) % Las Vegas, NV 3,876 5,475 (1,599) (29) % 8,293 8,043 250 3 % Honolulu, HI 118 124 (6) (5) % 222 214 8 4 % Company's Share NOI - Equity and Cost Investees 229 952 (723) (76) % 5,839 5,622 217 4 % Total Same Store Other 5,856 8,409 (2,553) (30) % 19,516 18,886 630 3 % Total Same Store NOI 60,070 62,235 (2,165) (3) % 180,168 166,486 13,682 8 % Non-Same Store NOI 726 693 33 5 % 4,243 2,599 1,644 63 % Total Operating Assets NOI $ 60,796 $ 62,928 $ (2,132) (3) % $ 184,411 $ 169,085 $ 15,326 9 % See page 4 for definitions of Same Store Properties and Same Store NOI. Same Store NOI - Operating Assets Segment
HOWARD HUGHES 12 thousands Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 Same Store Metrics Stabilized Leasing Percentages Office 89 % 88 % 90 % 91 % 88 % Retail 95 % 95 % 93 % 93 % 92 % Multi-Family 96 % 96 % 98 % 99 % 97 % Unstabilized Leasing Percentages Office 71 % 64 % 52 % 52 % 45 % Retail 90 % 78 % 72 % 72 % 70 % Multi-Family (a) — % — % — % — % 89 % Same Store NOI Office $ 28,430 $ 29,739 $ 25,177 $ 29,908 $ 27,816 Retail 13,225 14,506 12,721 14,422 14,988 Multi-Family 12,559 12,435 11,860 11,562 11,022 Other 5,856 7,890 5,770 884 8,409 Total Same Store NOI $ 60,070 $ 64,570 $ 55,528 $ 56,776 $ 62,235 Quarter over Quarter Change in Same Store NOI (7) % 16 % (2) % (9) % See page 4 for definitions of Same Store Properties and Same Store NOI. (a) As of Q4 2021, all same store multi-family properties are stabilized. Same Store Performance - Operating Assets Segment
HOWARD HUGHES 13 thousands except Sq. Ft. and units % Ownership (a) Total Q3 2022 Occupied (#) Q3 2022 Leased (#) Q3 2022 Occupied (%) Q3 2022 Leased (%) Q3 2022 Annualized NOI (b) Stabilized NOI (c) Time to Stabilize (Years) (d)Sq. Ft. Units Sq. Ft. Units Sq. Ft. Units Sq. Ft. Units Sq. Ft. Units Stabilized Properties Office - Houston 100 % 3,373,048 — 2,855,647 — 2,962,390 — 85 % — % 88 % — % $ 78,010 $ 92,140 — Office - Columbia 100 % 1,380,972 — 1,147,844 — 1,199,401 — 83 % — % 87 % — % 22,130 26,180 — Office - Summerlin 100 % 532,428 — 520,848 — 527,102 — 98 % — % 99 % — % 14,110 14,900 — Retail - Houston 100 % 420,527 — 370,291 — 387,243 — 88 % — % 92 % — % 12,820 14,570 — Retail - Columbia 100 % 99,899 — 99,899 — 99,899 — 100 % — % 100 % — % 2,760 2,710 — Retail - Hawai‘i 100 % 854,869 — 752,631 — 777,233 — 88 % — % 91 % — % 17,720 24,810 — Retail - Summerlin 100 % 800,140 — 783,487 — 797,708 — 98 % — % 100 % — % 24,780 26,300 — Multi-Family - Houston (e) 100 % 34,419 2,610 32,438 2,478 32,438 2,529 94 % 95 % 94 % 97 % 35,130 39,980 — Multi-Family - Columbia (e) Various 97,294 1,199 55,587 1,124 84,275 1,153 57 % 94 % 87 % 96 % 14,370 16,860 — Multi-Family - Summerlin (e) 100 % — 391 — 365 — 370 — % 93 % — % 95 % 7,550 7,650 — Self-Storage - Houston 100 % — 1,363 — 1,291 — 1,303 — % 95 % — % 96 % 1,390 1,390 — Other - Summerlin 100 % — — — — — — — % — % — % — % 13,080 14,270 — Other Assets (f) Various 135,801 — 135,801 — 135,801 — 100 % — % 100 % — % 6,970 10,000 — Total Stabilized Properties (g) $ 250,820 $ 291,760 — Unstabilized Properties Office - Houston 100 % 615,055 — 263,859 — 370,987 — 43 % — % 60 % — % $ (240) $ 18,500 0.3 Office - Columbia 100 % 319,200 — 218,418 — 298,610 — 68 % — % 94 % — % 3,660 9,200 0.3 Retail - Houston 100 % 72,976 — 54,205 — 65,792 — 74 % — % 90 % — % 940 2,200 0.3 Retail - Hawaii 100 % 11,175 — 9,784 — 9,784 — 88 % — % 88 % — % (20) 640 2.3 Multi-Family - Houston (e) 100 % — 358 — 16 — 56 — % 4 % — % 16 % — 4,350 2.8 Total Unstabilized Properties $ 4,340 $ 34,890 2.2 NOI by Region, excluding Seaport
HOWARD HUGHES 14 NOI by RegionNOI by Region, excluding Seaport (cont.) (a) Includes our share of NOI for our joint ventures. (b) To better reflect the full-year performance of the properties, the impacts of certain prior period accruals and adjustments included in Q3 2022 NOI were not annualized. Annualized Q3 2022 NOI also includes distribution received from cost method investment in Q1 2022. For purposes of this calculation, this one time annual distribution is not annualized. (c) Excludes Seaport NOI, units, and square feet until we have greater clarity with respect to the performance of our tenants. See page 19 for Seaport Est. stabilized yield and other project information. (d) The expected stabilization date used in the Time to Stabilized calculation for all unstabilized and under construction assets is set 36 months from the in-service or expected in-service date. (e) Multi-Family square feet represent ground floor retail whereas multi-family units represent residential units for rent. (f) These assets can be found on page 16 of this presentation. (g) For Stabilized Properties, the difference between Annualized NOI and Stabilized NOI is attributable to a number of factors which may include temporary abatements, timing of lease turnovers, free rent and other market factors. thousands except Sq. Ft. and units % Ownership (a) Total Q3 2022 Occupied (#) Q3 2022 Leased (#) Q3 2022 Occupied (%) Q3 2022 Leased (%) Q3 2022 Annualized NOI (b) Stabilized NOI (c) Time to Stabilize (Years) (d)Sq. Ft. Units Sq. Ft. Units Sq. Ft. Units Sq. Ft. Units Sq. Ft. Units Under Construction Properties Office - Houston 100 % 33,000 — — — — — — % — % — % — % n/a $ 790 1.8 Office - Columbia 100 % 86,000 — — — — — — % — % — % — % n/a 3,200 3.3 Office - Summerlin 100 % 267,000 — — — — — — % — % — % — % n/a 8,380 3.3 Retail - Hawai‘i 100 % 36,800 — — — — — — % — % — % — % n/a 1,280 3.0 Multi-Family - Houston (e) 100 % — 263 — — — — — % — % — % — % n/a 4,860 3.5 Multi-Family - Summerlin (e) 100 % — 294 — — — — — % — % — % — % n/a 5,900 4.3 Multi-Family - Columbia (e) 100 % 32,000 472 — — — — — % — % — % — % n/a 9,320 3.5 Total Under Construction Properties n/a $ 33,730 3.4 Total / Wtd. Avg. for Portfolio $ 255,160 $ 360,380 3.1
HOWARD HUGHES 15 thousands except Sq. Ft. and units Location % Ownership Rentable Sq. Ft. Q3 2022 % Occ. (a) Q3 2022 % Leased (a) Annualized Q3 2022 NOI (b) (c) Est. Stabilized NOI (b) Office One Hughes Landing Houston, TX 100 % 197,719 55 % 55 % $ 2,840 $ 6,170 Two Hughes Landing Houston, TX 100 % 197,714 69 % 78 % 4,090 6,000 Three Hughes Landing Houston, TX 100 % 320,815 92 % 94 % 8,900 8,240 1725 Hughes Landing Boulevard Houston, TX 100 % 331,176 56 % 64 % 5,390 6,900 1735 Hughes Landing Boulevard Houston, TX 100 % 318,170 100 % 100 % 8,580 8,900 2201 Lake Woodlands Drive Houston, TX 100 % 24,119 100 % 100 % 520 570 Lakefront North Houston, TX 100 % 258,058 75 % 87 % 1,790 6,450 8770 New Trails Houston, TX 100 % 180,000 100 % 100 % 5,730 4,400 9303 New Trails Houston, TX 100 % 97,967 72 % 72 % 1,210 1,530 3831 Technology Forest Drive Houston, TX 100 % 95,078 100 % 100 % 2,540 2,620 3 Waterway Square Houston, TX 100 % 232,021 91 % 91 % 5,790 6,500 4 Waterway Square Houston, TX 100 % 218,551 77 % 80 % 3,840 6,860 1201 Lake Robbins Tower (d) Houston, TX 100 % 805,993 100 % 100 % 26,330 25,500 1400 Woodloch Forest Houston, TX 100 % 95,667 67 % 84 % 460 1,500 10 - 70 Columbia Corporate Center Columbia, MD 100 % 889,516 83 % 86 % 13,080 14,330 Columbia Office Properties Columbia, MD 100 % 63,831 52 % 84 % 280 1,400 One Mall North Columbia, MD 100 % 96,977 58 % 58 % 810 1,950 One Merriweather Columbia, MD 100 % 206,632 100 % 100 % 5,530 5,400 Two Merriweather Columbia, MD 100 % 124,016 93 % 98 % 2,430 3,100 Aristocrat Las Vegas, NV 100 % 181,534 100 % 100 % 4,390 4,520 One Summerlin Las Vegas, NV 100 % 206,279 94 % 97 % 5,900 6,440 Two Summerlin Las Vegas, NV 100 % 144,615 100 % 100 % 3,820 3,940 Total Office 5,286,448 $ 114,250 $ 133,220 Retail Creekside Village Green Houston, TX 100 % 74,670 84 % 89 % $ 2,400 $ 2,400 Hughes Landing Retail Houston, TX 100 % 125,798 85 % 89 % 3,690 4,990 1701 Lake Robbins Houston, TX 100 % 12,376 100 % 100 % 560 540 Lake Woodlands Crossing Retail Houston, TX 100 % 60,261 85 % 95 % 1,280 1,670 Lakeland Village Center at Bridgeland Houston, TX 100 % 67,947 86 % 91 % 1,590 1,800 20/25 Waterway Avenue Houston, TX 100 % 50,062 98 % 98 % 1,890 2,000 Waterway Garage Retail Houston, TX 100 % 21,513 100 % 100 % 1,100 870 2000 Woodlands Parkway Houston, TX 100 % 7,900 100 % 100 % 310 300 Columbia Regional Building Columbia, MD 100 % 89,199 100 % 100 % 2,230 2,310 Merriweather District Area 3 Standalone Restaurant Columbia, MD 100 % 10,700 100 % 100 % 530 400 Ward Village Retail Honolulu, HI 100 % 854,869 88 % 91 % 17,720 24,810 Downtown Summerlin (e) Las Vegas, NV 100 % 800,140 98 % 100 % 24,780 26,300 Total Retail 2,175,435 $ 58,080 $ 68,390 Stabilized PropertiesStabilized Properties - Operating Assets Segment
HOWARD HUGHES 16 Q3 2022 % Occ.(a) Q3 2022 % Leased (a) thousands except Sq. Ft. and units Location % Ownership Rentable Sq. Ft. Units Rentable Sq. Ft. Units Rentable Sq. Ft. Units Annualized Q3 2022 NOI (b) (c) Est. Stabilized NOI (b) Multi-family Creekside Park Apartments Houston, TX 100 % — 292 n/a 96 % n/a 99 % $ 2,790 $ 3,000 Creekside Park The Grove Houston, TX 100 % — 360 n/a 96 % n/a 98 % 4,780 4,780 Lakeside Row Houston, TX 100 % — 312 n/a 95 % n/a 96 % 3,400 3,870 Millennium Six Pines Apartments Houston, TX 100 % — 314 n/a 94 % n/a 97 % 3,510 4,500 Millennium Waterway Apartments Houston, TX 100 % — 393 n/a 95 % n/a 97 % 3,250 4,600 One Lakes Edge Houston, TX 100 % 22,971 390 91 % 95 % 91 % 96 % 7,170 7,200 The Lane at Waterway Houston, TX 100 % — 163 n/a 94 % n/a 95 % 2,600 3,500 Two Lakes Edge Houston, TX 100 % 11,448 386 100 % 95 % 100 % 97 % 7,630 8,530 Juniper Apartments Columbia, MD 100 % 55,677 382 25 % 92 % 77 % 95 % 6,730 9,160 The Metropolitan Downtown Columbia Columbia, MD 50 % 13,591 380 100 % 95 % 100 % 97 % 3,430 3,450 m.flats/TEN.M Columbia, MD 50 % 28,026 437 100 % 94 % 100 % 96 % 4,210 4,250 Constellation Apartments Las Vegas, NV 100 % — 124 n/a 94 % n/a 96 % 2,440 2,500 Tanager Apartments Las Vegas, NV 100 % — 267 n/a 93 % n/a 94 % 5,110 5,150 Total Multi-family (f) 131,713 4,200 $ 57,050 $ 64,490 Other Hughes Landing Daycare Houston, TX 100 % 10,000 — 100 % — % 100 % — % $ 250 $ 280 The Woodlands Warehouse Houston, TX 100 % 125,801 — 100 % — % 100 % — % 1,390 1,520 HHC 242 Self-Storage Houston, TX 100 % — 634 n/a 94 % n/a 95 % 710 710 HHC 2978 Self-Storage Houston, TX 100 % — 729 n/a 95 % n/a 96 % 680 680 Woodlands Sarofim #1 Houston, TX 20 % n/a n/a n/a n/a n/a n/a 20 250 Stewart Title of Montgomery County, TX Houston, TX 50 % n/a n/a n/a n/a n/a n/a 880 2,380 Houston Ground Leases Houston, TX 100 % n/a n/a n/a n/a n/a n/a 1,640 2,300 Kewalo Basin Harbor Honolulu, HI 100 % n/a n/a n/a n/a n/a n/a 2,020 2,180 Hockey Ground Lease Las Vegas, NV 100 % n/a n/a n/a n/a n/a n/a 580 580 Summerlin Hospital Medical Center Las Vegas, NV 5 % n/a n/a n/a n/a n/a n/a 4,640 4,640 Las Vegas Ballpark (g) Las Vegas, NV 100 % n/a n/a n/a n/a n/a n/a 7,860 9,050 Other Assets Various 100 % n/a n/a n/a n/a n/a n/a 770 1,090 Total Other 135,801 1,363 $ 21,440 $ 25,660 Total Stabilized $ 250,820 $ 291,760 (a) Percentage Occupied and Percentage Leased are as of September 30, 2022. (b) For Stabilized Properties, the difference between Annualized NOI and Stabilized NOI is attributable to a number of factors which may include temporary abatements, timing of lease turnovers, free rent and other market factors. (c) To better reflect the full-year performance of the properties, the impacts of certain prior period accruals and adjustments included in Q3 2022 NOI were not annualized. (d) 1201 Lake Robbins and 9950 Woodloch Forest, are collectively known as The Woodlands Towers at the Waterway. 9950 Woodloch Forest is an unstabilized property as of September 30, 2022. (e) Downtown Summerlin rentable sq. ft. excludes 381,767 sq. ft. of anchor space and 40,846 sq. ft. of office space. (f) Multi-Family square feet represent ground floor retail whereas multi-family units represent residential units for rent. (g) The Las Vegas Ballpark presentation is inclusive of the results from both the stadium operations and those of our wholly owned team, the Las Vegas Aviators. Annualized NOI is based on a trailing 12-month calculation due to seasonality. Stabilized Properties - Operating Assets Segment (cont.)
HOWARD HUGHES 17 Q3 2022 % Occ.(a) Q3 2022 % Leased (a) Develop. Costs Incurred Est. Total Cost (Excl. Land) Annualized Q3 2022 NOI Est. Stabilized NOI (b) Est. Stab. Date Est. Stab. Yield thousands except Sq. Ft. and units Location % Ownership Rentable Sq. Ft. Units Rentable Sq. Ft. Units Rentable Sq. Ft. Units Office 6100 Merriweather Columbia, MD 100 % 319,200 — 68 % n/a 94 % n/a 118,511 138,221 3,660 9,200 2022 7 % Memorial Hermann Medical Office Building Houston, TX 100 % 20,000 — — % n/a 100 % n/a $ 3,704 $ 6,237 $ — $ 600 2023 10 % 9950 Woodloch Forest (c)(d) Houston, TX 100 % 595,055 — 44 % n/a 59 % n/a 168,089 210,971 (240) 17,900 2022 8 % Total Office 934,255 — $ 290,304 $ 355,429 $ 3,420 $ 27,700 Retail A'ali'i (e) Honolulu, HI 100 % 11,175 — 88 % n/a 88 % n/a $ — $ — $ (20) $ 640 2024 — % Creekside Park West Houston, TX 100 % 72,976 — 74 % n/a 90 % n/a 19,657 20,777 940 2,200 2022 11 % Total Retail 84,151 — $ 19,657 $ 20,777 $ 920 $ 2,840 Multi-Family Starling at Bridgeland Houston, TX 100 % — 358 — % 4 % — % 16 % $ 46,108 $ 60,572 $ — $ 4,350 2025 7 % Total Multi-Family — 358 $ 46,108 $ 60,572 $ — $ 4,350 Total Unstabilized $ 356,069 $ 436,778 $ 4,340 $ 34,890 (a) Percentage Occupied and Percentage Leased are as of September 30, 2022. (b) Company estimates of stabilized NOI are based on current leasing velocity, excluding inflation and organic growth. (c) 9950 Woodloch Forest development costs incurred and estimated total cost are inclusive of acquisition and tenant lease-up costs. (d) 1201 Lake Robbins and 9950 Woodloch Forest, are collectively known as The Woodlands Towers at the Waterway. 1201 Lake Robbins is a stabilized property as of September 30, 2022, as Occidental Petroleum has leased 100% of the building through 2032. (e) Condominium retail Develop. Cost Incurred and Est. Total Costs (Excl. Land) are combined with their respective condominium costs on page 20 and 21 of this supplement. Unstabilized Properties - Operating Assets Segment
HOWARD HUGHES 18 Under Construction Properties thousands except Sq. Ft. and units Location % Ownership Est. Rentable Sq. Ft. Percent Pre- Leased (a) Const. Start Date Est. Stabilized Date (b) Develop. Costs Incurred Est. Total Cost (Excl. Land) Est. Stabilized NOI Est. Stab. Yield Office Creekside Park Medical Plaza Houston, TX 100 % 33,000 — % Q1 2022 2024 $ 4,631 $ 10,351 $ 790 8 % 1700 Pavilion Las Vegas, NV 100 % 267,000 43 % Q2 2021 2025 79,864 121,515 8,380 7 % South Lake Medical Office Building Columbia, MD 100 % 86,000 21 % Q3 2022 2026 3,846 44,833 3,200 7 % Total Office 386,000 $ 88,341 $ 176,699 $ 12,370 Retail Kō'ula (c) Honolulu, HI 100 % 36,800 29 % Q3 2019 2025 $ — $ — $ 1,280 — % Total Retail 36,800 $ — $ — $ 1,280 in thousands except Sq. Ft. and units Location % Ownership # of Units Monthly Est. Rent Per Unit Const. Start Date Est. Stabilized Date (b) Develop. Costs Incurred Est. Total Cost (Excl. Land) Est. Stabilized NOI Est. Stab. Yield Multi-family Marlow Columbia, MD 100 % 472 $ 1,984 Q1 2021 2026 $ 83,159 $ 130,490 $ 9,320 7 % Tanager Echo Las Vegas, NV 100 % 294 2,148 Q2 2021 2026 50,971 86,853 5,900 7 % Wingspan (d) Houston, TX 100 % 263 2,460 Q2 2022 2026 3,116 86,548 4,860 6 % Total Multi-family 1,029 $ 137,246 $ 303,891 $ 20,080 Total Under Construction $ 225,587 $ 480,590 $ 33,730 (a) Represents leases signed as of September 30, 2022, and is calculated as the total leased square feet divided by total leasable square feet, expressed as a percentage. (b) Represents management's estimate of the first quarter of operations in which the asset may be stabilized. (c) Condominium retail Develop. Cost Incurred and Est. Total Costs (Excl. Land) are combined with their respective condominium costs on page 20 and 21 of this supplement. (d) Wingspan is our first single-family rental community in Bridgeland. The project, which will include 263 homes, is expected to start welcoming residents in late 2023. Under Construction Projects - Strategic Developments Segment
HOWARD HUGHES 19 NOI by Region Q3 2022 Landlord Operations (a) Landlord Operations - Multi-family (b) Managed Businesses (c) Tin Building (d) Events and Sponsorships (e) Q3 2022 Totalthousands except sq. ft. and percentages Revenues Rental revenue (f) $ 2,101 $ 237 $ — $ 1,563 $ — $ 3,901 Tenant recoveries 232 — — 243 — 475 Other rental and property (expense) revenue — (3) 13,558 — 13,797 27,352 Total Revenues 2,333 234 13,558 1,806 13,797 31,728 Expenses Other property operating costs (f) (6,668) (212) (12,548) (194) (10,538) (30,160) Total Expenses (6,668) (212) (12,548) (194) (10,538) (30,160) Seaport NOI $ (4,335) $ 22 $ 1,010 $ 1,612 $ 3,259 $ 1,568 Company's Share NOI - Equity Investees (f) — — 332 (11,366) — (11,034) Total Seaport NOI (g) $ (4,335) $ 22 $ 1,342 $ (9,754) $ 3,259 $ (9,466) Rentable Sq. Ft. / Units Total Sq. Ft. / units 399,919 13,000 / 21 50,970 53,783 21,077 Leased Sq. Ft. / units (h) 250,280 — / 21 50,970 53,783 21,077 % Leased or occupied (h) 63 % — % / 100 % 100 % 100 % 100 % Development Development costs incurred $ 564,296 $ — $ — $ 191,123 $ — $ 755,419 Estimated total costs (excl. land) $ 594,368 $ — $ — $ 196,113 $ — $ 790,481 (a) Landlord Operations represents physical real estate in the Historic District and Pier 17 developed and owned by HHC and leased to third parties. (b) Landlord Operations - Multi-family represents 85 South Street which includes base level retail in addition to residential units. (c) Managed Businesses represents retail and food and beverage businesses in the Historic District and Pier 17 that HHC owns, either wholly or through joint ventures, and operates, including license and management agreements. For the three months ended September 30, 2022, these businesses include, among others, The Fulton, The Greens, Mister Dips, Carne Mare and Malibu Farm. Managed Businesses also includes our equity share of NOI from Ssäm Bar and Jean- Georges Restaurants. (d) The Company owns 100% of the Tin Building which was completed and placed in service during the third quarter of 2022. The Company leased 100% of the space to The Tin Building by Jean-Georges joint venture, in which the Company has an equity ownership interest. (e) Events and Sponsorships includes private events, catering, sponsorships, concert series and other rooftop activities. (f) Rental revenue earned from and expense paid by businesses we wholly own and operate is eliminated in consolidation. For joint ventures where the Company is the landlord, the Company recognizes 100% of rental revenue earned. The Company’s share of rental expense paid by joint ventures is included in the Company’s Share NOI – Equity Investees. (g) Total Seaport NOI includes NOI from businesses we wholly own and operate as well as the Company's share of NOI from equity investees. See page 34 for the reconciliation of Total Seaport NOI. (h) The percent leased for Landlord Operations includes agreements with terms of less than one year. Seaport Operating Performance
HOWARD HUGHES 20 As of September 30, 2022 Anaha Ae‘o Ke Kilohana (a) Victoria Place Total Key Metrics ($ in thousands) Type of building Luxury Upscale Workforce Luxury Number of units 317 465 423 349 1,554 Avg. unit Sq. Ft. 1,417 838 696 1,164 991 Condo Sq. Ft. 449,205 389,663 294,273 406,351 1,539,492 Street retail Sq. Ft. 16,048 70,800 28,386 n/a 115,234 Stabilized retail NOI $1,200 $2,400 $1,200 n/a $4,800 Stabilization year 2020 2019 2020 n/a Development progress ($ in thousands) Status Opened Opened Opened Under Construction Start date Q4 2014 Q1 2016 Q4 2016 Q1 2021 Completion date Q4 2017 Q4 2018 Q2 2019 2024 Total development cost $403,974 $430,737 $218,406 $503,271 $1,556,388 Cost-to-date 403,546 429,774 216,935 148,769 1,199,024 Remaining to be funded $428 $963 $1,471 $354,502 $357,364 Financial Summary ($ in thousands) Units closed (through Q3 2022) 317 465 423 — 1,205 Units under contract (through Q3 2022) — — — 349 349 Total % of units closed or under contract 100.0% 100.0% 100.0% 100.0% 100.0% Square footage closed or under contract (total) 449,205 389,663 294,273 406,351 1,539,492 Total % square footage closed or under contract 100.0% 100.0% 100.0% 100.0% 100.0% Total cash received (closings & deposits) $515,877 $512,770 $218,536 $157,526 $1,404,709 Total GAAP revenue recognized $515,877 $512,770 $218,536 $— $1,247,183 Total future GAAP revenue for units under contract $— $— $— $774,584 $774,584 Deposit Reconciliation (thousands) Spent towards construction $— $— $— $75,040 $75,040 Held for future use (b) — — — 82,486 82,486 Total deposits from sales commitment $— $— $— $157,526 $157,526 (a) Ke Kilohana consists of 375 workforce units and 48 market rate units. (b) Total deposits held for future use are presented above only for projects under construction and are included in Restricted cash on the balance sheet. Ward Village - Sold Out Condominiums
HOWARD HUGHES 21 As of September 30, 2022 Waiea ‘A‘ali‘i Kō'ula Total Key Metrics ($ in thousands) Type of building Luxury Upscale Upscale Number of units 177 750 565 1,492 Avg. unit Sq. Ft. 2,138 520 725 790 Condo Sq. Ft. 378,488 390,097 409,612 1,178,197 Street retail Sq. Ft. (a) 7,716 11,175 36,800 55,691 Stabilized retail NOI $450 $640 $1,280 $2,370 Stabilization year 2017 2024 2025 Development progress ($ in thousands) Status Opened Opened Opened Start date Q2 2014 Q4 2018 Q3 2019 Completion / Est. Completion date Q4 2016 Q4 2021 Q3 2022 Total development cost $598,664 $394,908 $487,039 $1,480,611 Cost-to-date 528,041 378,766 367,885 1,274,692 Remaining to be funded $70,623 $16,142 $119,154 $205,919 Financial Summary ($ in thousands) Units closed (through Q3 2022) 176 712 398 1,286 Units under contract (through Q3 2022) — 1 148 149 Units remaining to be sold (through Q3 2022) 1 37 19 57 Total % of units closed or under contract 99.4% 95.1% 96.6% 96.2% Units closed (current quarter) — 6 398 404 Units under contract (current quarter) — 3 2 5 Square footage closed or under contract (total) 377,311 360,608 398,196 1,136,115 Total % square footage closed or under contract 99.7% 92.4% 97.2% 96.4% Total cash received (closings & deposits) $696,578 $496,232 $579,530 $1,772,340 Total GAAP revenue recognized $696,393 $495,927 $413,022 $1,605,342 Total future GAAP revenue for units under contract $— $1,161 $204,006 $205,167 Expected avg. price per Sq. Ft. $1,900 - $1,950 $1,300 - $1,350 $1,500 - $1,550 Deposit Reconciliation (thousands) Spent towards construction $— $— $— $— Held for future use (b) — — — — Total deposits from sales commitment $— $— $— $— (a) Expected construction cost per retail square foot for all sold and remaining to be sold condos is approximately $1,100. (b) Total deposits held for future use are presented above only for projects under construction and are included in Restricted cash on the balance sheet. Ward Village - Completed or Under Construction Condominiums Remaining to be Sold
HOWARD HUGHES 22 As of September 30, 2022 thousands Location Total Estimated Costs (a) Costs Paid Through September 30, 2022 Estimated Remaining to be Spent Remaining Buyer Deposits/ Holdback to be Drawn Debt to be Drawn (b) Costs Remaining to be Paid, Net of Debt and Buyer Deposits/ Holdbacks to be Drawn (c) Estimated Completion Date Operating Assets (A) (B) (A) - (B) = (C) (D) (E) (C) - (D) - (E) = (F) 6100 Merriweather (d) Columbia, MD $ 138,221 $ 118,511 $ 19,710 $ — $ — $ 19,710 Open Juniper Apartments (d) Columbia, MD 116,386 106,876 9,510 — — 9,510 Open Memorial Hermann Medical Office Building(e) Houston, TX 6,237 3,704 2,533 — 2,646 (113) Open Starling at Bridgeland (e) Houston, TX 60,572 46,108 14,464 — 14,538 (74) Open Total Operating Assets 321,416 275,199 46,217 — 17,184 29,033 Seaport Assets Pier 17 and Historic District Area / Uplands (d) New York, NY 594,368 564,296 30,072 — — 30,072 Open Tin Building New York, NY 196,113 191,123 4,990 — — 4,990 Open Total Seaport Assets 790,481 755,419 35,062 — — 35,062 Strategic Developments Marlow Columbia, MD 130,490 83,159 47,331 — 47,109 222 Q4 2022 South Lake Medical Office Building (f) Columbia, MD 44,833 3,846 40,987 — — 40,987 Q1 2024 Creekside Park Medical Plaza (e) Houston, TX 10,351 4,631 5,720 — 6,056 (336) Q4 2022 Wingspan (f) Houston, TX 86,548 3,116 83,432 — — 83,432 2024 1700 Pavilion (e) Las Vegas, NV 121,515 79,864 41,651 — 40,851 800 Q4 2022 Tanager Echo (e) Las Vegas, NV 86,853 50,971 35,882 — 34,562 1,320 Q1 2023 ‘A‘ali‘i Honolulu, HI 394,908 378,766 16,142 — — 16,142 Open Kō'ula Honolulu, HI 487,039 367,885 119,154 — — 119,154 Open Victoria Place (g) Honolulu, HI 503,271 148,769 354,502 75,602 303,630 (24,730) 2024 Waiea (h) Honolulu, HI 598,664 528,041 70,623 — — 70,623 Open Total Strategic Developments 2,464,472 1,649,048 815,424 75,602 432,208 307,614 Combined Total $ 3,576,369 $ 2,679,666 $ 896,703 $ 75,602 $ 449,392 $ 371,709 See page 4 for definition of Remaining Development Costs. (a) Total Estimated Costs represent all costs to be incurred on the project which include construction costs, demolition costs, marketing costs, capitalized leasing, payroll or project development fees, deferred financing costs and advances for certain accrued costs from lenders and excludes land costs and capitalized corporate interest allocated to the project. Total Estimated Costs for assets at Ward Village and Columbia exclude master plan infrastructure and amenity costs at Ward Village and Merriweather District. (b) With respect to our condominium projects, remaining debt to be drawn is reduced by deposits utilized for construction. (c) We expect to be able to meet our cash funding requirements with a combination of existing and anticipated construction loans, condominium buyer deposits, free cash flow from our Operating Assets and MPC segments, net proceeds from condominium sales, our existing cash balances and as necessary, the postponement of certain projects. (d) Final completion is dependent on lease-up and tenant build-out. (e) Negative balance relates to costs paid by HHC, but not yet reimbursed by our lenders. We expect to receive funds from our lenders for these costs in the future. (f) We expect to secure financing to fund these developments in late 2022 or early 2023. (g) The negative balance represents equity that will be paid out as loan proceeds in Q1 2023. Until that period, costs remaining (net of debt) will reflect a negative balance. (h) Total estimated cost includes $139.2 million for warranty repairs. However, we anticipate recovering a substantial amount of these costs in the future, which is not reflected in this schedule. Summary of Remaining Development Costs
HOWARD HUGHES 23 MPC Regions Non-MPC Regions The Woodlands The Woodlands Hills Bridgeland Summerlin Teravalis Floreo Columbia Total Hawai‘i Seaport Total As of September 30, 2022 Houston, TX Houston, TX Houston, TX Las Vegas, NV Phoenix, AZ Phoenix, AZ Columbia, MD MPC Regions Honolulu, HI New York, NY Non- MPC Stabilized Properties Office Sq.Ft. 3,373,048 — — 532,428 — — 1,380,972 5,286,448 — — — Retail Sq. Ft. (a) 386,999 — 67,947 800,140 — — 197,193 1,452,279 854,869 13,000 867,869 Multi-family units 2,298 — 312 391 — — 1,199 4,200 — 21 21 Self-Storage Units 1,363 — — — — — — 1,363 — — — Other Sq. Ft. 135,801 — — — — — — 135,801 — — — Unstabilized Properties Office Sq.Ft. 615,055 — — — — — 319,200 934,255 — 188,450 188,450 Retail Sq.Ft. 72,976 — — — — — — 72,976 11,175 283,516 294,691 Under Construction Properties Office Sq.Ft. 33,000 — — 267,000 — — 86,000 386,000 — — — Retail Sq.Ft. — — — — — — 32,000 32,000 36,800 — 36,800 Multi-family units — — 263 294 — — 472 1,029 — — — Residential Land Total gross acreage/condos (b) 28,545 ac 2,055 ac 11,506 ac 22,500 ac 33,810 ac 3,029 ac 16,450 ac 117,895 ac 3,046 n/a 3,046 Current Residents (b) 120,000 1,600 17,500 120,000 — — 112,000 371,100 n/a n/a — Remaining saleable acres/ condos under construction or complete 32 ac 1,165 ac 2,387 ac 2,470 ac 17,770 ac 1,230 ac n/a 25,054 ac 57 n/a 57 Estimated price per acre (c) $1,983,000 $315,000 $494,000 $977,000 $332,000 $305,000 n/a n/a n/a Commercial Land Total acreage remaining 746 ac 167 ac 1,320 ac 808 ac 9,578 ac 337 ac 96 ac 13,052 ac n/a n/a — Estimated price per acre (c) $961,000 $515,000 $629,000 $1,039,000 $204,000 $173,000 $580,000 n/a n/a Portfolio Key Metrics Portfolio Key Metrics include 100% of square footage and units associated with joint venture projects. Retail space in Multi-family assets shown as Retail square feet. (a) Retail Sq. Ft. within the Summerlin region excludes 381,767 Sq. Ft. of anchors and 40,846 Sq. Ft of additional office space above our retail space. (b) Acreage and current residents shown as of December 31, 2021. (c) Residential and commercial pricing represents the Company's estimate of price per acre per its 2022 land models. Portfolio Key Metrics
HOWARD HUGHES 24 Master Planned Community Land Consolidated MPC Segment EBT The Woodlands The Woodlands Hills Bridgeland Summerlin Teravalis Columbia Total Floreo (a) thousands Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Revenues: Residential land sale revenues $ — $ — $ 6,338 $ 5,113 $ 10,822 $ 9,532 $ 29,731 $ 38,966 $ — $ — $ — $ — $ 46,891 $ 53,611 $ — $ — Commercial land sale revenues — 2,694 — — 5,694 — — — — — — — 5,694 2,694 — — Builder price participation 585 158 1,093 437 1,849 941 15,325 9,619 — — — — 18,852 11,155 — — Other land sale revenues 440 355 33 — 92 76 6,186 4,170 — — — — 6,751 4,601 — — Total revenues 1,025 3,207 7,464 5,550 18,457 10,549 51,242 52,755 — — — — 78,188 72,061 — — Expenses: Cost of sales - residential land — — (2,605) (2,045) (3,084) (2,576) (12,043) (18,232) — — — — (17,732) (22,853) — — Cost of sales - commercial land — (566) — — (1,623) — — — — — — — (1,623) (566) — — Real estate taxes (971) (954) (17) (34) (948) (1,268) (545) (586) (4) — (149) (147) (2,634) (2,989) (59) — Land sales operations (2,261) (5,001) (886) (428) (1,658) (986) (3,459) (2,566) (213) — (589) (85) (9,066) (9,066) (677) — Total operating expenses (3,232) (6,521) (3,508) (2,507) (7,313) (4,830) (16,047) (21,384) (217) — (738) (232) (31,055) (35,474) (736) — Depreciation and amortization (33) (34) (2) (2) (33) (37) (29) (29) (7) — — — (104) (102) (304) — Interest income (expense), net 471 (173) 531 384 4,799 4,141 7,691 6,010 — — — — 13,492 10,362 276 — Other (loss) income, net — — — — — — — — — — — — — — Gain (loss) on extinguishment of debt — (438) — — — (566) — — — — — — — (1,004) — — Equity in earnings (losses) from real estate and other affiliates (b) — — — — — — 15,284 8,277 (422) — — — 14,862 8,277 — — MPC Segment EBT $ (1,769) $ (3,959) $ 4,485 $ 3,425 $ 15,910 $ 9,257 $ 58,141 $ 45,629 $ (646) $ — $ (738) $ (232) $ 75,383 $ 54,120 $ (764) $ — (a) This represents 100% of Floreo EBT. The Company owns a 50% interest in Floreo and accounts for its investment under the equity method. (b) Equity in earnings (losses) from real estate and other affiliates for Teravalis reflects our share of earnings in our Floreo joint venture and for Summerlin our share of earnings in The Summit joint venture. MPC Performance
HOWARD HUGHES 25 Master Planned Community Land Consolidated MPC Segment The Woodlands The Woodlands Hills Bridgeland Summerlin Teravalis Columbia Floreo (a) thousands Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2021 Key Performance Metrics: Residential Total acres closed in current period — — ac 15.4 ac 14.5 ac 20.8 ac 22.3 ac 23.6 ac 47.3 ac — — — — — — Price per acre achieved NM NM $412 $353 $520 $415 $1,274 $728 NM NM NM NM NM NM Avg. gross margins NM NM 58.9% 60.0% 71.5% 73.0% 59.5% 53.2% NM NM NM NM NM NM Commercial Total acres closed in current period — 1.6 ac NM — 16.6 ac — — — — — — — — — Price per acre achieved NM $1,684 NM NM $436 NM NM NM NM NM NM NM NM NM Avg. gross margins NM 79.0% NM NM 71.5% NM NM NM NM NM NM NM NM NM Avg. combined before-tax net margins NM 79.0% 58.9% 60.0% 71.5% 73.0% 59.5% 53.2% NM NM NM NM NM NM Key Valuation Metrics: Remaining saleable acres Residential 32 ac 1,165 ac 2,387 ac 2,470 ac 17,770 ac — 1,230 ac Commercial (b) 746 ac 167 ac 1,320 ac 808 ac 9,578 ac 96 ac 337 ac Projected est. % superpads / lot size —% / — —% / — —% / — 82% / 0.25 ac —% / — NM NM Projected est. % single-family detached lots / lot size 60% / 0.36 ac 83% / 0.21 ac 89% / 0.23 ac —% / — 81% / 0.22 ac NM 100% / 0.24 ac Projected est. % single-family attached lots / lot size 40% / 0.12 ac 17% / 0.13 ac 9% / 0.09 ac —% / — 19% / 0.11 ac NM —% / 0 Projected est. % custom homes / lot size —% / — —% / — 2% / 0.63 ac 18% / 0.45 ac —% / — NM —% / — Estimated builder sale velocity (blended total - TTM) (c) 1 22 62 57 NM NM NM Projected GAAP gross margin (d) 74.7% / 76.2% 58.9% / 60.0% 71.5% / 73.1% 60.3% / 52.8% 87.3% / —% NM 44.4% / —% Projected cash gross margin (d) 96.3% 86.0% 87.2% 77% 87.6% NM 60.5% Residential sellout / Commercial buildout date estimate Residential 2025 2030 2036 2039 2081 — 2033 Commercial 2034 2030 2045 2039 2081 2024 (e) 2026 (a) This represents 100% of Floreo performance and valuation metrics. The Company owns a 50% interest in Floreo and accounts for its investment under the equity method. (b) Columbia Commercial excludes 15 commercial acres held in the Strategic Developments segment in Downtown Columbia. (c) Represents the average monthly builder homes sold over the last twelve months ended September 30, 2022. (d) Projected GAAP gross margin is based on GAAP revenues and expenses which exclude revenues deferred on sales closed where revenue did not meet criteria for recognition and includes revenues previously deferred that met criteria for recognition in the current period. Gross margin for each MPC may vary from period to period based on the locations of the land sold and the related costs associated with developing the land sold. Projected cash gross margin includes all future projected revenues less all future projected development costs, net of expected reimbursable costs, and capitalized overhead, taxes and interest. (e) Columbia land development is complete. The sale of remaining land and/or development of additional commercial assets will occur as the market dictates. NM Not meaningful. MPC Land
HOWARD HUGHES 26 Office Expirations (a) Retail Expirations (a) Expiration Year Annualized Cash Rent ($ in thousands) Percentage of Annualized Cash Rent Wtd. Avg. Annualized Cash Rent Per Leased Sq. Ft. Annualized Cash Rent ($ in thousands) Percentage of Annualized Cash Rent Wtd. Avg. Annualized Cash Rent Per Leased Sq. Ft. 2022 $ 4,286 1.85 % $ 36.79 $ 1,090 1.24 % $ 36.47 2023 9,296 4.01 % 37.16 7,432 8.48 % 45.45 2024 13,478 5.82 % 49.28 6,385 7.29 % 47.69 2025 25,749 11.12 % 42.40 16,508 18.85 % 52.98 2026 10,139 4.38 % 40.42 7,253 8.28 % 48.70 2027 31,520 13.61 % 39.43 5,935 6.78 % 53.56 2028 15,446 6.67 % 41.45 4,974 5.68 % 48.92 2029 15,345 6.62 % 45.55 5,001 5.71 % 59.60 2030 18,429 7.96 % 39.95 4,433 5.06 % 67.52 2031 5,041 2.18 % 47.29 4,710 5.38 % 55.74 Thereafter 82,907 35.78 % 49.45 23,872 27.25 % 62.14 Total $ 231,636 100.00 % $ 87,593 100.00 % (a) Excludes leases with an initial term of 12 months or less. Also excludes Seaport leases. Office and Retail Lease Expirations Total Office and Retail Portfolio as of September 30, 2022 % o f A nn ua liz ed C as h R en t E xp iri ng Houston Summerlin Columbia Hawaii Other Office 2022 Retail 2022 Office 2023 Retail 2023 Office 2024 Retail 2024 Office 2025 Retail 2025 Office 2026 Retail 2026 Office 2027 Retail 2027 Office 2028 Retail 2028 Office 2029 Retail 2029 Office 2030 Retail 2030 Office 2031 Retail 2031 Office 2032+ Retail 2032+ 0% 6% 12% 18% 24% 30% Lease Expirations
HOWARD HUGHES 27 Acquisition / Disposition Activity thousands except rentable Sq. Ft. / Units / Acres Q3 2022 Acquisitions Date Acquired Property % Ownership Location Acres Acquisition Price No acquisition activity to report for Q3 2022 Q3 2022 Dispositions Date Sold Property % Ownership Location Acres / Rentable Sq. Ft. Sale Price August 18, 2022 Noncontrolling interest in Teravalis (a) Phoenix, AZ (a) $15.0 million Acquisition/Disposition Activity (a) The October 2021 purchase of Teravalis included an option for the seller, or permitted assignee, to repurchase up to 50% interest in the Teravalis. On June 17, 2022, the seller’s assignee, JDM Member, exercised the minimum purchase option and purchased a 9.24% interest in Teravalis for $50.0 million and paid an additional $10.0 million to extend the option to repurchase up to the remaining 40.76% interest in Teravalis. On August 18, 2022, the JDM Member partially exercised the option and purchased an additional 2.78% interest in the Teravalis Property for $15.0 million, inclusive of the $10.0 million deposit previously received. The remaining purchase option expired upon partial purchase of this additional ownership interest. As of September 30, 2022, Teravalis is a consolidated variable interest entity with member equity interest of 88.0% for the Company and 12.0% for JDM Member.
HOWARD HUGHES 28 Other Assets Property Name City, State % Ownership Acres Notes West End Alexandria (formerly Landmark Mall) Alexandria, VA 58.33% 41.1 In June 2021, a Contribution Agreement was executed by and between affiliates of HHC, Seritage, and Foulger-Pratt which establishes a framework for a joint venture to redevelop the 52-acre site previously known as Landmark Mall in Alexandria, VA. In July, the Alexandria City Council unanimously approved the redevelopment agreements which will result in up to approximately four million square feet of residential, retail, commercial and entertaiment offerings intergrated into a cohesive neighborhood with a central plaza, a network of parks and public transportation. The development will be anchored by a new state-of-the-art Inova Hospital and medical campus. Alexandria City Council approved the use of $54 million in public bond financing to allow the City to acquire the land for the hospital and lease it to Inova, as well as $86 million in public bond financing for site preparation and infrastructure at the site and adjacent Duke Street and Van Dorn Street corridors. West End Alexandria executed a Purchase and Sale Agreement with the City of Alexandria to sell approximately 11 acres to the City of Alexandria for $54 million for the Inova Hospital and medical campus. Foulger-Pratt will manage construction of the development. Demolition on the remaining 41 acres began in the second quarter of 2022, with completion of the first buildings expected in 2025. Maui Ranch Land Maui, HI 100% 20 Two, non-adjacent, ten-acre parcels zoned for native vegetation. 80% Interest in Fashion Show Air Rights Las Vegas, NV 80% N/A Air rights above the Fashion Show Mall located on the Las Vegas Strip. 250 Water Street New York, NY 100% 1 The one-acre site is situated at the entrance of the Seaport. In October 2020, we announced our comprehensive proposal for the redevelopment of 250 Water Street, which includes the transformation of this underutilized full-block surface parking lot into a mixed-use development that would include affordable and market rate apartments, community-oriented spaces and office space. This project, which includes approximately 547,000 zoning square feet, presents a unique opportunity at the Seaport to redevelop this site into a vibrant mixed-use asset, provide long-term viability to the South Street Seaport Museum and deliver much-needed affordable housing and economic stimulus to the area. In May 2021, we received approval from the New York City Landmarks Preservation Commission (LPC) on our proposed design for the 250 Water Street site and in September 2021, the New York State Supreme Court dismissed on procedural grounds a lawsuit challenging the LPC approval. We received final approvals in December 2021 through the New York City Uniform Land Use Review Procedure known as ULURP, which will allow the necessary transfer of development rights to the parking lot site. Also in December 2021, an amendment to the Seaport ground lease was executed giving the Company extension options, at the discretion of the Company, for an additional 48 years from its current expiration in 2072 until 2120. We received a building foundation permit from the New York City Department of Buildings and began initial foundation work and remediation in the second quarter of 2022. Remediation of the site as a volunteer of the New York State Brownfield Cleanup program is expected to be completed in 2023. In the additional lawsuit that was filed in February 2022 challenging the land use approvals previously granted to the Company under the ULURP for the redevelopment and construction of 250 Water Street, the Court ruled in the Company’s favor, denying all claims of the petitioners. The same petitioners subsequently filed a request to reargue the case, which is currently under consideration by the Court. A separate lawsuit was filed in July 2022 again challenging the Landmarks Preservation Commission approval. In the Landmarks case, a Temporary Restraining Order (TRO) was granted at the request of the petitioners until the next hearing on December 1, 2022. The TRO allows HHC to continue with site remediation but otherwise prevents HHC from constructing the building while the case is pending. The Company is vigorously contesting all of these claims which it believes are without merit. Other Assets
HOWARD HUGHES 29 thousands September 30, 2022 December 31, 2021 Fixed-rate debt Unsecured 5.375% Senior Notes due 2028 $ 750,000 $ 750,000 Unsecured 4.125% Senior Notes due 2029 650,000 650,000 Unsecured 4.375% Senior Notes due 2031 650,000 650,000 Secured mortgages, notes and loans payable 1,204,101 1,006,428 Special Improvement District bonds 61,949 69,131 Variable-rate debt (a) Secured mortgages, notes and loans payable, excluding condominium financing 1,035,277 1,039,674 Condominium financing 49,000 199,183 Secured Bridgeland Notes due 2026 275,000 275,000 Mortgages, notes and loans payable 4,675,327 4,639,416 Deferred financing costs (47,916) (48,259) Total mortgages, notes and loans payable, net $ 4,627,411 $ 4,591,157 Net Debt on a Segment Basis as of September 30, 2022 (b) thousands Operating Assets Master Planned Communities Seaport Strategic Developments Segment Totals Non- Segment Amounts Total Mortgages, notes and loans payable, net $ 2,027,335 $ 332,752 $ 99,946 $ 142,234 $ 2,602,267 $ 2,025,144 $ 4,627,411 Mortgages, notes and loans payable of real estate and other affiliates (c) 90,385 14,827 — — 105,212 — 105,212 Less: Cash and cash equivalents (94,322) 15,860 (14,911) (2,426) (95,799) (258,806) (354,605) Cash and cash equivalents of real estate and other affiliates (c) (1,900) (35,566) (10,038) (8,563) (56,067) — (56,067) Special Improvement District receivables — (73,386) — — (73,386) — (73,386) Municipal Utility District receivables, net — (506,666) — — (506,666) — (506,666) TIF receivable — — — (1,776) (1,776) — (1,776) Net Debt $ 2,021,498 $ (252,179) $ 74,997 $ 129,469 $ 1,973,785 $ 1,766,338 $ 3,740,123 Consolidated Debt Maturities and Contractual Obligations by Extended Maturity Date as of September 30, 2022 thousands Remaining in 2022 2023 2024 2025 2026 Thereafter Total Mortgages, notes and loans payable (d) $ 3,720 $ 549,600 $ 28,913 $ 277,320 $ 384,674 $ 3,431,100 $ 4,675,327 Interest payments (e) 61,517 231,288 207,586 193,853 174,763 536,333 1,405,340 Ground lease and other leasing commitments 915 2,791 2,847 2,905 2,965 243,600 256,023 Total $ 66,152 $ 783,679 $ 239,346 $ 474,078 $ 562,402 $ 4,211,033 $ 6,336,690 Debt Summary (a) The Company has entered into derivative instruments to manage a portion of our variable interest rate exposure. See page 30 and 31 for additional detail. (b) Net debt is a non-GAAP financial measure that we believe is useful to our investors and other users of our financial statements as its components are important indicators of our overall liquidity, capital structure and financial position. However, it should not be used as an alternative to our debt calculated in accordance with GAAP. (c) Each segment includes our share of the Mortgages, notes and loans payable, net and Cash and cash equivalents for all joint ventures included in Investments in real estate and other affiliates. (d) Mortgages, notes and loans payable are presented based on extended maturity date, subject to customary extension terms. (e) Interest is based on the borrowings that are presently outstanding and current floating interest rates. Debt Summary
HOWARD HUGHES 30 thousands Q3 2022 Principal Balance Contract Interest Rate Interest Rate Hedge Current Annual Interest Rate Initial / Extended Maturity (a) Operating Assets Lake Woodlands Crossing Retail $ 12,093 4.61 % Floating/Swap 4.61 % (d) Jan-23 Senior Secured Credit Facility 242,174 4.61 % Floating/Swap 4.61 % (b),(c),(d) Sep-23 9303 New Trails 9,951 4.88 % Fixed 4.88 % Dec-23 4 Waterway Square 29,142 4.88 % Fixed 4.88 % Dec-23 Creekside Park West 15,713 4.61 % Floating/Swap 4.61 % (d) Mar-23 / Mar-24 6100 Merriweather 70,002 L+275 Floating/Swap 4.61 % (d) Sep-22 / Sep-24 Juniper Apartments 74,938 L+275 Floating 5.89 % (e) Sep-22 / Sep-24 Creekside Park The Grove 39,899 4.61 % Floating/Swap 4.61 % (d) Jan-24 / Jan -25 9950 Woodloch Forest 93,148 L+195 Floating/Swap 4.61 % (d) Mar-25 Ae‘o Retail 29,387 L+265 Floating 5.79 % Oct-25 Ke Kilohana Retail 8,978 L+265 Floating 5.79 % Oct-25 3831 Technology Forest Drive 19,839 4.50 % Fixed 4.50 % Mar-26 20/25 Waterway Avenue 14,500 S+250 Floating 5.48 % Apr-26 / Apr-27 Kewalo Basin Harbor 11,294 L+275 Floating/Swap 4.61 % (d) Sep-27 Memorial Hermann Medical Office Building 2,217 S+205 Floating 5.03 % Feb-25 / Feb-27 Starling at Bridgeland 28,130 L+275 Floating 5.89 % Apr-26 / Apr-27 Millennium Six Pines Apartments 42,500 3.39 % Fixed 3.39 % Aug-28 3 Waterway Square 43,600 3.94 % Fixed 3.94 % Aug-28 Two Summerlin 40,800 3.43 % Floating/Swap 3.43 % (f) Feb-27 / Feb-29 One Lakes Edge 67,820 4.50 % Fixed 4.50 % Mar-29 Aristocrat 35,323 3.67 % Fixed 3.67 % Sep-29 Creekside Park Apartments 37,730 3.52 % Fixed 3.52 % Oct-29 One Hughes Landing 48,614 4.30 % Fixed 4.30 % Dec-29 1725 Hughes Landing Boulevard 61,207 L+395 Floating 7.09 % Jan-27 / Jan-30 1735 Hughes Landing Boulevard 59,006 L+395 Floating 7.09 % Jan-27 / Jan-30 Two Hughes Landing 46,548 4.20 % Fixed 4.20 % Dec-30 Tanager Apartments 58,500 3.13 % Fixed 3.13 % May-31 Lakeside Row 35,500 3.15 % Fixed 3.15 % Sept-31 1201 Lake Robbins 250,000 3.83 % Fixed 3.83 % Oct-31 Three Hughes Landing 70,000 3.55 % Fixed 3.55 % Dec-31 The Woodlands Warehouse 13,700 3.65 % Fixed 3.65 % Jan-32 8770 New Trails 35,404 4.89 % Floating/Swap 4.89 % (g) Jan-32 One Merriweather 49,800 3.53 % Fixed 3.53 % Feb-32 Two Merriweather 25,600 3.83 % Fixed 3.83 % Feb-32 Millennium Waterway Apartments 51,000 3.94 % Fixed 3.94 % Jun-32 Two Lakes Edge 105,000 4.39 % Fixed 4.39 % Jun-32 The Lane at Waterway 37,500 4.85 % Fixed 4.85 % Jul-32 Property-Level DebtProperty-Level Debt
HOWARD HUGHES 31 (a) Extended maturity assumes exercise of all extension options, some of which have performance requirements.. (b) The following properties are included as collateral for the credit facility: 10-70 Columbia Corporate Center, One Mall North, 1701 Lake Robbins, Creekside Village Green, Lakeland Village Center at Bridgeland and certain properties at Ward Village. (c) Balance includes zero drawn on the revolver portion of the loan that is intended for general corporate use. (d) $615 million of outstanding debt is swapped to a fixed rate of 4.61%. (e) $30.1 million of the outstanding balance on Juniper Apartments is swapped to a fixed rate of 4.61% (f) Concurrent with the closing of the $40.8 million financing of Two Summerlin in the first quarter of 2022, the Company entered into an interest rate swap. The loan bears interest at Secured Overnight Financing Rate (SOFR) plus 1.75%, but is currently swapped to a fixed rate rate of 3.425%. (g) Concurrent with the closing of the $35.5 million construction loan for 8770 New Trails in June 2019, the Company entered into an interest rate swap. The loan bears interest at LIBOR plus 2.45% but it is currently swapped to a fixed rate equal to 4.89%. (h) In the first quarter of 2021, the Company closed on a $368.2 million construction loan for the development of Victoria Place in Ward Village, which bears interest at LIBOR, with a floor of 0.25%, plus 5.00%. Concurrently, the Company entered into interest rate cap agreements with a total notional amount of $368.2 million and a LIBOR strike rate of 2.00%. (i) In the third quarter of 2021, the Company closed on a $59.5 million construction loan for the development of Tanager Echo, which bears interest at LIBOR, with a floor of 0.10%, plus 2.90%. The Company entered into an interest rate cap agreement with a LIBOR strike rate of 2.50%. (j) In the third quarter of 2021, the Company closed on a $75.0 million construction loan for the development of 1700 Pavillion, which bears interest at LIBOR, with a floor of 0.10%, plus 3.80%. The Company entered into an interest rate cap agreement with a LIBOR strike rate of 2.50%. (k) Excludes JV debt, Corporate bond debt, and SID bond debt related to Summerlin. thousands Q3 2022 Principal Balance Contract Interest Rate Interest Rate Hedge Current Annual Interest Rate Initial / Extended Maturity (a) Operating Assets (cont.) Constellation Apartments $ 24,200 4.07 % Fixed 4.07 % Jan-33 Hughes Landing Retail 33,095 3.50 % Fixed 3.50 % Dec-36 Columbia Regional Building 23,462 4.48 % Fixed 4.48 % Feb-37 Las Vegas Ballpark 45,676 4.92 % Fixed 4.92 % Dec-39 $ 2,042,990 Master Planned Communities Bridgeland Notes due 2026 $ 275,000 S+230 Floating 5.28 % Sep-26 $ 275,000 Seaport 250 Water Street $ 100,000 4.61 % Floating/Swap 4.61 % (d) Nov-22 / Nov-23 $ 100,000 Strategic Developments Marlow $ 35,461 L+295 Floating 6.09 % Apr-25 / Apr-26 Victoria Place 49,000 L+500 Floating/Cap 7.00 % (h) Sep-24 / Sep-26 Creekside Park Medical Plaza 1,841 S+205 Floating 5.03 % Feb-25 / Feb-27 Tanager Echo 24,938 L+290 Floating/Cap 5.40 % (i) Sep-25 / Sep-27 1700 Pavillion 34,148 L+380 Floating/Cap 6.30 % (j) Sep-25 / Sep-27 $ 145,388 Total (k) $ 2,563,378 Property-Level Debt (cont.)
HOWARD HUGHES 32 Minimum Contractual Ground Lease Payments (thousands) Future Cash Payments Pro-Rata Three months ended Remaining Year Ended Ground Leased Asset Share Expiration Date September 30, 2022 2022 December 31, 2023 Thereafter Total Seaport 100% 2072 (b) $ 615 $ 615 $ 2,491 $ 244,917 $ 248,023 Kewalo Basin Harbor 100% 2049 — 300 300 7,400 8,000 Total $ 615 $ 915 $ 2,791 $ 252,317 $ 256,023 (a) Initial expiration is December 31, 2072, but subject to extension options through December 31, 2120. Future cash payments are not inclusive of extension options. Summary of Ground Leases
HOWARD HUGHES 33 Reconciliation of Non-GAAP Measures (a) EBT excludes corporate expenses and other items that are not allocable to the segments. (b) The Company's share of NOI related to 110 North Wacker in 2021 is calculated using our stated ownership of 23% and does not include the impact of the partnership distribution waterfall. Reconciliation of Operating Assets segment EBT to Total NOI thousands Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 YTD Q3 2022 YTD Q3 2021 Operating Assets segment EBT (a) $ 3,998 $ 12,833 $ 9,248 $ (29,894) $ 24,905 $ 26,079 $ (15,396) Add back: Depreciation and amortization 37,714 38,999 38,430 39,181 44,224 115,143 123,850 Interest (income) expense, net 23,340 21,318 20,118 20,212 18,027 64,776 55,179 Equity in (earnings) losses from real estate and other affiliates (4,132) (2,591) (15,175) 30,111 15,108 (21,898) 36,931 (Gain) loss on sale or disposal of real estate and other assets, net — (4,018) — (27) (39,141) (4,018) (39,141) (Gain) loss on extinguishment of debt — 363 282 471 573 645 1,455 Impact of straight-line rent (1,744) (3,101) (2,438) (4,685) (936) (7,283) (10,030) Other (519) 158 49 (5) 215 (312) 10,454 Operating Assets NOI 58,657 63,961 50,514 55,364 62,975 173,132 163,302 Company's Share NOI - Equity Investees (b) 2,139 2,386 2,116 2,053 (47) 6,641 2,028 Distributions from Summerlin Hospital Investment — — 4,638 — — 4,638 3,755 Total Operating Assets NOI $ 60,796 $ 66,347 $ 57,268 $ 57,417 $ 62,928 $ 184,411 $ 169,085 Reconciliation of Non-GAAP Measures
HOWARD HUGHES 34 Reconciliation of Seaport segment EBT to Total NOI thousands Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 YTD Q3 2022 YTD Q3 2021 Seaport segment EBT (a) $ (18,114) $ (12,573) $ (20,714) $ (18,146) $ (14,929) $ (51,401) $ (40,272) Add back: Depreciation and amortization 9,651 7,720 7,823 7,941 9,087 25,194 22,926 Interest (income) expense, net (1,731) (1,319) 47 309 (377) (3,003) (666) Equity in (earnings) losses from real estate and other affiliates 11,273 5,239 3,711 291 1,009 20,223 1,697 Impact of straight-line rent (185) (184) 1,888 367 398 1,519 1,265 Other (income) loss, net (b) 674 433 1,503 3,719 1,287 2,610 3,006 Seaport NOI 1,568 (684) (5,742) (5,519) (3,525) (4,858) (12,044) Company's Share NOI - Equity Investees (c) (11,034) (4,979) (3,838) (272) (38) (19,851) (320) Total Seaport NOI $ (9,466) $ (5,663) $ (9,580) $ (5,791) $ (3,563) $ (24,709) $ (12,364) Reconciliation of Non-GAAP Measures (a) EBT excludes corporate expenses and other items that are not allocable to the segments. (b) Includes miscellaneous development-related items. (c) Company's Share of NOI - Equity Investees for the Tin Building by Jean-Georges has been updated for the first and second quarters of 2022 using our current partnership funding provisions compared to the stated ownership of 65% used previously. Reconciliation of Non-GAAP Measures (cont.)
HOWARD HUGHES 35 Reconciliation of MPC Land Sales Closed to GAAP Land Sales Revenue Three Months Ended September 30, Nine Months Ended September 30, thousands 2022 2021 2022 2021 Total residential land sales closed in period $ 47,217 $ 48,807 $ 155,855 $ 140,069 Total commercial land sales closed in period 7,233 2,693 37,207 10,129 Net recognized (deferred) revenue: Bridgeland (1,538) 269 (1,528) (1,802) Woodlands Hills — — (172) — Summerlin (2,280) (2,991) 1,652 (4,842) Total net recognized (deferred) revenue (3,818) (2,722) (48) (6,644) Special Improvement District bond revenue 1,953 7,527 6,018 8,570 Total land sales revenue - GAAP basis $ 52,585 $ 56,305 $ 199,032 $ 152,124 Reconciliation of MPC Segment EBT to MPC Net Contribution Three Months Ended September 30, Nine Months Ended September 30, thousands 2022 2021 2022 2021 MPC segment EBT $ 75,383 $ 54,120 $ 206,327 $ 187,306 Plus: Master Planned Communities cost of sales 19,355 23,419 75,304 63,928 Depreciation and amortization 104 102 286 272 MUD and SID bonds collections, net 4,987 (3,669) 38,728 (1,068) Distributions from real estate and other affiliates — 10,000 — 111,672 Less: MPC development expenditures (114,729) (89,257) (286,178) (215,559) Equity in (earnings) losses from real estate and other affiliates (14,862) (8,277) (16,990) (54,568) MPC Net Contribution $ (29,762) $ (13,562) $ 17,477 $ 91,983 Reconciliation of Segment EBTs to Net Income Three Months Ended September 30, Nine Months Ended September 30, thousands 2022 2021 2022 2021 Operating Assets segment EBT $ 3,998 $ 24,905 $ 26,079 $ (15,396) MPC segment EBT 75,383 54,120 206,327 187,306 Seaport segment EBT (18,114) (14,929) (51,401) (40,272) Strategic Developments segment EBT 124,136 (6,793) 127,850 (26,563) Consolidated segment EBT 185,403 57,303 308,855 105,075 Corporate income, expenses and other items (77,734) (55,186) (177,583) (167,500) Net income (loss) 107,669 2,117 131,272 (62,425) Net (income) loss attributable to noncontrolling interests 427 1,936 510 4,725 Net income (loss) attributable to common stockholders $ 108,096 $ 4,053 $ 131,782 $ (57,700) Reconciliation of Non-GAAP Measures (cont.)
HOWARD HUGHES 36 RECONCILIATIONS OF NET INCOME TO FFO Q3 2022 Q3 2021 YTD Q3 2022 YTD Q3 2021 thousands except share amounts Unaudited Unaudited Unaudited Unaudited Net income attributable to common shareholders $ 108,096 $ 4,053 $ 131,782 $ (57,700) Adjustments to arrive at FFO: Segment real estate related depreciation and amortization 48,875 55,154 144,706 151,984 (Gain) loss on sale or disposal of real estate and other assets, net — (39,141) (4,009) (60,474) Income recognized upon sale of interest in 110 North Wacker — — 4,914 — Income tax expense adjustments: Gain on sale or disposal of real estate and other assets, net — 8,454 918 13,062 Income recognized upon sale of interest in 110 North Wacker — — (1,125) — Impairment of depreciable real estate properties — — — 13,068 Reconciling items related to noncontrolling interests (427) (1,936) (510) (4,725) Our share of the above reconciling items included in earnings from unconsolidated joint ventures 1,018 1,771 3,048 6,618 FFO $ 157,562 $ 28,355 $ 279,724 $ 61,833 Adjustments to arrive at Core FFO: (Gain) loss on extinguishment of debt — 1,577 645 37,543 Loss on settlement of rate-lock agreement — — — 9,995 Severance expenses 372 72 2,515 679 Non-real estate related depreciation and amortization 1,140 1,145 2,878 3,411 Straight-line amortization (1,928) (526) (5,763) (8,732) Deferred income tax expense (benefit) 19,127 5,606 16,193 (17,975) Non-cash fair value adjustments related to hedging instruments 728 3,172 6,709 9,186 Share-based compensation 3,051 2,497 8,911 6,613 Other non-recurring expenses (development-related marketing and demolition costs) 2,902 4,063 7,985 8,253 Our share of the above reconciling items included in earnings from unconsolidated joint ventures 81 (625) 312 (3,324) Core FFO $ 183,035 $ 45,336 $ 320,109 $ 107,482 Adjustments to arrive at AFFO: Tenant and capital improvements (2,727) (980) (8,373) (7,443) Leasing commissions (3,814) (2,027) (6,155) (4,200) AFFO $ 176,494 $ 42,329 $ 305,581 $ 95,839 FFO per diluted share value $ 3.18 $ 0.51 $ 5.49 $ 1.11 Core FFO per diluted share value $ 3.70 $ 0.81 $ 6.29 $ 1.93 AFFO per diluted share value $ 3.57 $ 0.76 $ 6.00 $ 1.72 Reconciliations of Net Income to FFO, Core FFO and AFFO