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Dec 31, 2024
Howard Hughes Q4 2023 Earnings Report
Howard Hughes Holdings Inc. reported strong fourth quarter performance, propelling full year MPC EBT and Operating Assets NOI to new all-time highs with momentum expected to continue into 2024.
Key Takeaways
Howard Hughes Holdings Inc. reported a net income of $34.3 million, or $0.69 per diluted share, for the fourth quarter of 2023. This was primarily driven by increased earnings from MPC land sales, partially offset by the timing of condo sales compared to the prior year. The company also saw strong performance in its Operating Assets segment, with multi-family NOI increasing by 23% year-over-year.
Net income per diluted share was $0.69 in Q4 2023, compared to $1.07 in the prior-year period, primarily due to the timing of condo sales.
Record quarterly MPC EBT of $139.3 million, an 82% increase year-over-year, was driven by a 22% increase in price per acre and a 110% increase in new home sales.
Total Operating Assets NOI was $54.3 million in Q4 2023, a 1% year-over-year decrease, with multi-family NOI increasing by 23%.
The company closed on $85 million of financings, extending upcoming maturities of two office and retail loans and enabling the start of two new retail development projects.
Howard Hughes
Howard Hughes
Howard Hughes Revenue by Segment
Revenue by Segment
Condominium Rights & Unit Sales Revenue
CapyFin.comMPC Land Sales Revenue
CapyFin.comRental Revenue
CapyFin.comOther Land, Rental & Property Revenue
CapyFin.comBuilder Price Participation Revenue
CapyFin.com Forward Guidance
MPC EBT is projected to remain robust during 2024, aided by modest anticipated reductions in mortgage rates and tight supply of existing homes on the market. New home sales in Summerlin, Bridgeland, and The Woodlands Hills® are expected to be strong, leading to continued homebuilder demand for residential land. The first land sales in Floreo—the first village in Teravalis™—are also expected to contribute incremental EBT in 2024. These year-over-year gains are expected to be more than offset by reduced EBT associated with exceptional commercial land sales and builder price participation during 2023, as well as reduced inventory of custom lots available to sell at Aria Isle in The Woodlands and The Summit in Summerlin. As a result, 2024 MPC EBT is expected to modestly decline 10% to 15% year-over-year with a mid-point of approximately $300 million. Operating Assets NOI is projected to benefit from increased occupancy at new multi-family developments in Downtown Columbia, Summerlin, and Bridgeland, as well as improved retail leasing and new tenants in Downtown Columbia, Ward Village, and The Woodlands. The office portfolio is expected to benefit from strong leasing momentum experienced since mid-2022, but free rent periods on many of the new leases and the impact of some tenant vacancies and new office developments expected to be completed in 2024 will likely result in office NOI being relatively flat year-over-year. Overall, 2024 Operating Assets NOI is expected to be in a range of up 1% to 4% year-over-year with a mid-point of approximately $250 million. This includes approximately $5.0 million of projected NOI from The Las Vegas Aviators and the Las Vegas Ballpark, which are expected to be included in the spin-off of Seaport Entertainment. Condo sales revenues are projected to range between $675 million and $725 million, with gross margins between 28% to 30%. Projected condo sales revenues will be driven by the closing of units at Victoria Place—a 349-unit upscale development in Ward Village which is 100% pre-sold and expected to be completed late in the fourth quarter of 2024. This guidance contemplates approximately $75 million of condo sales revenues for Victoria Place occurring in the first quarter of 2025 due to the timing of condo closings. Cash G&A is projected to range between $80 million and $90 million, excluding approximately $20 million of cash expenses associated with the spin-off of Seaport Entertainment and $5 million of anticipated non-cash stock compensation.
Positive Outlook
- MPC EBT is projected to remain robust due to anticipated reductions in mortgage rates and tight supply of existing homes.
- New home sales in Summerlin, Bridgeland, and The Woodlands Hills® are expected to be strong, leading to continued homebuilder demand for residential land.
- First land sales in Floreo—the first village in Teravalis™—are expected to contribute incremental EBT.
- Operating Assets NOI is projected to benefit from increased occupancy at new multi-family developments and improved retail leasing.
- Condo sales revenues are projected to be strong, driven by the closing of units at Victoria Place.
Challenges Ahead
- 2024 MPC EBT is expected to modestly decline 10% to 15% year-over-year, with a mid-point of approximately $300 million.
- Reduced EBT associated with exceptional commercial land sales and builder price participation during 2023.
- Reduced inventory of custom lots available to sell at Aria Isle in The Woodlands and The Summit in Summerlin.
- Office NOI is expected to be relatively flat year-over-year due to free rent periods on new leases and impact of tenant vacancies and new office developments.
- Approximately $75 million of condo sales revenues for Victoria Place are expected to occur in Q1 2025 due to timing of closings.