Howard Hughes Holdings Inc. Q1 FY2025 earnings call

• David O'Reilly began with a recap of Q1 results, noting strong momentum across segments. Dave Striph discussed operating assets' NOI record. Jay Cross provided updates on condo pre-sales (27 units contracted, $51M incremental revenue) and commercial construction projects in Texas. Carlos Olea reviewed 2025 guidance. Bill Ackman and Ryan Israel discussed the new transaction to transform Howard Hughes into a diversified holding company, aiming to acquire durable growth companies.

Master Planned Communities (MPCs): Delivered adjusted operating cash flow of $63 million or $1.27 per diluted share. First quarter MPC EBT was $63 million, up $39 million year-over-year, driven by land sales growth (e.g., 29 acres in Summerlin, 41 acres in Texas). New home sales totaled 543 in Q1, sequentially improved with gains in Bridgeland and Summerlin. Operating assets: Delivered NOI of $72 million, a new quarterly record with 9% year-over-year growth. Office NOI was $33 million (+8% YOY) due to improved occupancy and lease-up. Multifamily NOI was $16 million (+14% YOY) from strong lease-up. Retail NOI was $14 million, with progress in Downtown Summerlin tenant upgrades.

• MPCs: Projected EBT of $375 million at midpoint, led by record residential land sales and price per acre (5%-10% YOY growth). Operating assets: Projected full-year NOI between $257M and $267M (midpoint $262M, new full-year record). Condo sales revenues projected at ~$375M in 2025, driven by closings. Adjusted operating cash flow projected to range $325M-$375M in 2025 (midpoint ~$350M or $7 per share).

Factors that could cause material differences between forward-looking statements and actual results, including economic conditions affecting real estate, leverage (non-investment grade), and exposure to economic cycles impacting the real estate business.

Q: What's the timeline for completing first transactions and capital allocation?

A: Bill Ackman mentioned a realistic outcome could be by fall, with high priority on insurance idea. Capital allocation to be managed with focus on MPC business while exploring new investments.

Q: How will cash flow generation accelerate?

A: Carlos Olea stated as MPCs mature and infrastructure costs diminish, free cash flow generation will increase, with excess free cash flow of real-estate subsidiary growing meaningfully over time.

Q: Plans for debt to reach investment-grade?

A: David O'Reilly noted infusion of $900M cash and having a strong parent as a credit positive event, with subsidiary expected to become cash rich and return capital to holding company over time.