# Howard Hughes Holdings Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [Howard Hughes Holdings Inc.](/companies/hhh.md) (CIK 1981792)
- Form: 10-Q
- Filed: 2025-05-07
- Accepted by EDGAR: May 7, 2025, 16:03 ET
- Period: 2025-03-31
- Accession: 0001628280-25-023135
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1981792/000162828025023135/hhh-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1981792/000162828025023135/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $199.3m | us-gaap:Revenues |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $47.9m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $41.1m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $3.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $10.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.21 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.21 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 50,028,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$224.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2025-03-31 | $493.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2025-03-31 | $9.29bn | us-gaap:Assets |
| Total liabilities | at 2025-03-31 | $6.43bn | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $2.79bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,507 characters.

The following discussion and analysis by management should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes included in this Quarterly Report on Form 10-Q and with the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 26, 2025. All references to numbered Notes are to specific notes to our unaudited Condensed Consolidated Financial Statements included in this Quarterly Report. Capitalized terms used, but not defined, in this MD&A have the same meanings as in such Notes.

| Index | Page |
| --- | ---: |
| Forward-Looking Information | 30 |
| Overview | 32 |
| Results of Operations | 34 |
| Operating Assets | 34 |
| Master Planned Communities | 36 |
| Strategic Developments | 38 |
| Corporate Income, Expenses, and Other Items | 41 |
| Liquidity and Capital Resources | 42 |

### HHH 2025 FORM 10-Q \| 29

**MANAGEMENT’S DISCUSSION AND ANALYSIS** Table of Contents

### FORWARD-LOOKING INFORMATION

Certain statements contained in or incorporated by reference into this Quarterly Report, including, without limitation, those related to our future operations constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (Exchange Act). All statements other than statements of historical fact included in this Quarterly Report are forward-looking statements and may include words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,” “project,” “realize,” “should,” “transform,” “will,” “would,” and other statements of similar expression.

These forward-looking statements involve known and unknown risks, uncertainties, and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this Quarterly Report or in the information incorporated herein by reference.

Forward-looking statements include:

- accelerated growth in our core Master Planned Communities assets
- expected performance of our stabilized, income-producing properties and the performance and stabilization timing of properties that we have recently placed into service or are under construction
- forecasts of our future economic performance
- expected capital required for our operations and development opportunities for our properties
- impact of technology on our operations and business
- expected performance of our segments
- expected commencement and completion for property developments and timing of sales or rentals of certain properties
- estimates of our future liquidity, development opportunities, development spending and management plans; and
- descriptions of assumptions underlying or relating to any of the foregoing

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. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

- our ability to realize the anticipated benefits of the transactions with Pershing Square and our new strategy
- our inability to identify and consummate transactions as part of our new strategy of becoming a diversified holding company
- risks inherent in acquiring or making investments in operating companies, especially companies in industries unrelated to our existing real estate business
- our ability to realize the anticipated benefits of the spinoff of Seaport Entertainment Group Inc. that we completed in 2024, as well as other effects the Spinoff may have on our ongoing business
- macroeconomic conditions such as volatility in capital markets, unstable economic and political conditions within the U.S. and foreign jurisdictions, geopolitical conflicts, and a prolonged recession in the national economy, including any adverse business or economic conditions in the homebuilding, condominium-development, retail, and office sectors
- changes in trade policies, including tariffs or duties on construction or homebuilding materials, potential retaliatory actions by other countries, and related impacts on market conditions and business activity
- our inability to obtain operating and development capital for our properties, including our inability to obtain or refinance debt capital from lenders and the capital markets
- interest rate volatility and inflation
- the availability of debt and equity capital
- our ability to compete effectively, including the potential impact of heightened competition for tenants and potential decreases in occupancy at our properties
- general inflation, including core and wage inflation; commodity and energy price and currency volatility; as well as monetary, fiscal and policy interventions in anticipation of our reaction to such events, including increases in interest rates
- mismatch of supply and demand, including interruptions of supply lines
- extreme weather conditions or climate change, including natural disasters, that may cause property damage or interrupt business
- the impact of water and electricity shortages
- contamination of our property by hazardous or toxic substances

**MANAGEMENT’S DISCUSSION AND ANALYSIS** Table of Contents

- terrorist activity, acts of violence, or breaches of our or our vendors’ data security
- losses that are not insured or exceed the applicable insurance limits
- our ability to lease new or redeveloped space
- our ability to obtain the necessary governmental permits for the development of our properties and necessary regulatory approvals pursuant to an extensive entitlement process involving multiple and overlapping regulatory jurisdictions, which often require discretionary action by local governments
- increased construction costs exceeding our original estimates, delays or overruns, claims for construction defects, or other factors affecting our ability to develop, redevelop or construct our properties
- regulation of the portion of our business that is dedicated to the formation and sale of condominiums, including regulatory filings to state agencies, additional entitlement processes, and requirements to transfer control to a condominium association’s board of directors in certain situations, as well as potential defaults by purchasers on their obligations to purchase condominiums
- fluctuations in regional and local economies, the impact of changes in interest rates on residential housing and condominium markets, local real estate conditions, tenant rental rates, and competition from competing retail properties and the internet
- inherent risks related to disruption of information technology networks and related systems, including cyber security attacks
- our ability to attract and retain key personnel
- our ability to collect rent and attract tenants
- our indebtedness, including our $750,000,000 5.375% Senior Notes due 2028, $650,000,000 4.125% Senior Notes due 2029 and $650,000,000 4.375% Senior Notes due 2031, contain restrictions that may limit our ability to operate our business
- our directors’ involvement or interests in other businesses, including real estate activities and investments
- our inability to control certain of our properties due to the joint ownership of such property and our inability to successfully attract desirable strategic partners
- our dependence on the operations and funds of our subsidiaries, including The Howard Hughes Corporation
- catastrophic events or geopolitical conditions, such as international armed conflicts, or the occurrence of epidemics or pandemics; and
- other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in our other reports and other public filings with the SEC

Although we presently believe that the plans, expectations, and anticipated results expressed in or suggested by the forward-looking statements contained in or incorporated by reference into this Quarterly Report are reasonable, all forward-looking statements are inherently subjective, uncertain, and subject to change, as they involve substantial risks and uncertainties, including those beyond our control. New factors emerge from time to time, and it is not possible for us to predict the nature, or assess the potential impact, of each new factor on our business. Given these uncertainties, we caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update or revise any of our forward-looking statements for events or circumstances that arise after the statement is made, except as otherwise may be required by law.

The above list of risks and uncertainties is only a summary of some of the most important factors and is not intended to be exhaustive. Additional information regarding risk factors that may affect us is included in our 2024 Annual Report. The risk factors contained in our 2024 Annual Report are updated by us from time to time in Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings that we make with the SEC.

**MANAGEMENT’S DISCUSSION AND ANALYSIS OVERVIEW** Table of Contents

### OVERVIEW

### Description of Business

Our award-winning assets include one of the nation's largest portfolios of MPCs, spanning approximately 101,000 gross acres, as well as operating properties, strategic developments, and other assets across five states. We create some of the most sought-after communities in the country by curating an environment tailored to meet the needs of our residents and tenants. Our unique business model allows us to seek attractive risk-adjusted returns while maintaining a sharp focus on sustainability to ensure our communities are equipped with the resources to last several decades.

We operate through three business segments: Operating Assets, MPCs, and Strategic Developments. We create a continuous value-creation cycle through operational and financial synergies associated with our three business segments. In our MPC segment, we plan, develop, and manage small cities and large-scale, mixed-use communities, in markets with strong long-term growth fundamentals. This business focuses on the horizontal development of residential land. The improved acreage is then sold to homebuilders who build and sell homes to new residents. New homeowners create demand for commercial developments, such as retail, office, and hospitality offerings. We build these commercial properties through Strategic Developments at the appropriate times, which helps mitigate development risk, using the cash flow harvested from the sale of land to homebuilders. Once the commercial developments are completed, the assets transition to Operating Assets, which increases recurring Net Operating Income (NOI), further funding our Strategic Developments. New office, retail, and other commercial amenities make our MPC residential land more appealing to buyers and increase the velocity of land sales at premiums that typically exceed the broader market. This increased demand for residential land generates more cash flow from MPCs, thus continuing the value-creation cycle.

Information provided in this report does not take into account the anticipated changes in our business as a result of the shift in our strategic direction following the recent transactions with Pershing Square. Refer to Note 17 - *Subsequent Events* in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Quarterly Report for additional information on the transactions with Pershing Square.

In addition to the required presentations using GAAP, we use certain non-GAAP performance measures, such as NOI and MPC Net Contribution. See the Operating Assets and MPC sections below for the reconciliations of these GAAP to non-GAAP financial measures and statements indicating why management believes these non-GAAP financial measures provide useful information for investors.

Changes for monetary amounts between periods presented are calculated based on the amounts in thousands of dollars stated in our consolidated financial statements, and then rounded to the nearest million. Therefore, certain changes may not recalculate based on the amounts rounded to the nearest million.

**MANAGEMENT’S DISCUSSION AND ANALYSIS OVERVIEW** Table of Contents

### First Quarter 2025 Highlights

### Comparison of the three months ended March 31, 2025, to the three months ended March 31, 2024

### Total Company

- Net income from continuing operations increased to income of $10.8 million in the current quarter, compared to a loss of $21.0 million in the prior-year period. This improvement was primarily driven by increased MPC residential land sales.
- We continue to maintain a strong liquidity position with $493.7 million of cash and cash equivalents, $1.0 billion of undrawn lender commitment available to be drawn for property development, and limited near-term debt maturities, all as of March 31, 2025.

### Operating Assets

- Operating Assets NOI totaled $64.0 million in the current quarter, a $3.7 million increase compared to $60.4 million in the prior-year period.
- Office NOI increased $2.3 million primarily due to strong leasing activity and abatement expirations at various properties in The Woodlands and Summerlin, most notably at 9950 Woodloch Forest and 1700 Pavilion. These increases were partially offset by lower occupancy at certain properties in Downtown Columbia and The Woodlands.
- Multifamily NOI increased $2.0 million primarily due to continued lease-up at Tanager Echo in Summerlin, Marlow in Downtown Columbia, and Wingspan in Bridgeland.

### MPC

- MPC EBT totaled $63.3 million in the current quarter, a $39.0 million increase compared to $24.3 million in the prior-year period.
- The increase in EBT was primarily due to higher residential land sales, net of costs, at Summerlin due to an increase in superpad acres sold in the current quarter.

### Strategic Developments

- Strategic Developments EBT increased $4.2 million to a loss of $1.2 million in the current quarter, compared to a loss of $5.4 million in the prior-year period.
- The increase in EBT was primarily attributable to final Waiea remediation expenditures incurred in the prior period that did not occur in the current period, partially offset by a loss on deconsolidation of the Victoria Place homeowners’ association in the current quarter as ownership and control was passed to the residents.
- We contracted 26 units at The Launiu during the current quarter and of March 31, 2025, this development project was 63.7% pre-sold.
- As of March 31, 2025, 95.6% of the units at our four towers under construction, The Park Ward Village, Ulana Ward Village, Kalae, and The Ritz-Carlton Condominiums, are under contract.

### RESULTS OF OPERATIONS

### Operating Assets

**Segment EBT** Segment EBT for Operating Assets is presented below:

| Operating Assets Segment EBT thousands | Three Months Ended March 31, 2025 | 2024 | $ Change |
| --- | ---: | ---: | ---: |
| Rental revenue | **$108,354** | $101,200 | $7,154 |
| Other land, rental, and property revenues | **5,648** | 5,800 | (152) |
| **Total revenues** | **114,002** | 107,000 | 7,002 |
| Operating costs | **(34,222)** | (32,712) | (1,510) |
| Rental property real estate taxes | **(14,751)** | (13,561) | (1,190) |
| (Provision for) recovery of doubtful accounts | **156** | 119 | 37 |
| **Total operating expenses** | **(48,817)** | (46,154) | (2,663) |
| **Segment operating income (loss)** | **65,185** | 60,846 | 4,339 |
| Depreciation and amortization | **(43,123)** | (41,840) | (1,283) |
| Interest income (expense), net | **(34,218)** | (32,942) | (1,276) |
| Other income (loss), net | **(196)** | 408 | (604) |
| Equity in earnings (losses) from unconsolidated ventures | **4,643** | 5,817 | (1,174) |
| Gain (loss) on sale or disposal of real estate and other assets, net | **9,979** | 4,794 | 5,185 |
| **Segment EBT** | **$2,270** | $(2,917) | $5,187 |

### For the three months ended March 31, 2025:

Operating Assets segment EBT increased $5.2 million compared to the prior-year period primarily due to the following:

- Gain on sale of real estate increased $5.2 million primarily due to the sale of two land parcels and a retail space in Ward Village in 2025, compared to the sale of Creekside Park Medical Plaza in 2024.
- Rental revenues, net of Operating costs increased $5.6 million primarily due to increased leasing activity across our portfolio.

These increases to EBT were partially offset by the following:

- Depreciation expense increased $1.3 million primarily related to new assets placed in service.
- Interest expense increased $1.3 million primarily due to increased borrowings on construction loans secured by our operating assets as well as an increase related to the change in fair value of certain derivative instruments.
- Rental property real estate taxes increased $1.2 million primarily due to the receipt of refunds in 2024.
- Equity earnings decreased $1.2 million primarily due to lower earnings, partially offset by higher dividends.

**Net Operating Income** In addition to the required presentations using GAAP, we use certain non-GAAP performance 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.

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); depreciation and amortization; development-related marketing costs; gain on sale or disposal of real estate and other assets, net; loss on extinguishment of debt; provision for impairment; and equity in earnings from unconsolidated ventures.

We believe that NOI is a useful supplemental measure of the performance of our Operating Assets segment because it provides a performance measure that reflects the revenues and expenses directly associated with owning and operating real estate 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 rental and occupancy rates, tenant mix, and operating costs have on our operating results, gross margins, and investment returns.

A reconciliation of Operating Assets segment EBT to Operating Assets NOI is presented in the table below.

| Operating Assets NOI thousands | Three Months Ended March 31, 2025 | 2024 | $ Change |
| --- | ---: | ---: | ---: |
| Total Operating Assets segment EBT | **$2,270** | $(2,917) | $5,187 |
| Add back: |  |  |  |
| Depreciation and amortization | **43,123** | 41,840 | 1,283 |
| Interest (income) expense, net | **34,218** | 32,942 | 1,276 |
| Equity in (earnings) losses from unconsolidated ventures | **(4,643)** | (5,817) | 1,174 |
| (Gain) loss on sale or disposal of real estate and other assets, net | **(9,979)** | (4,794) | (5,185) |
| Impact of straight-line rent | **(1,160)** | (847) | (313) |
| Other | **189** | (54) | 243 |
| **Operating Assets NOI** | **$64,018** | $60,353 | $3,665 |

The table below presents Operating Assets NOI by property type:

| Operating Assets NOI by Property Type thousands | Three Months Ended March 31, 2025 | 2024 | $ Change |
| --- | ---: | ---: | ---: |
| Office | **$32,903** | $30,598 | $2,305 |
| Retail | **13,810** | 14,153 | (343) |
| Multifamily | **15,763** | 13,777 | 1,986 |
| Other | **1,542** | 1,466 | 76 |
| Dispositions (a) | **—** | 359 | (359) |
| **Operating Assets NOI** | **$64,018** | $60,353 | $3,665 |

(a) Properties that were sold are shown separately for all periods presented.

### For the three months ended March 31, 2025:

Operating Assets NOI increased $3.7 million compared to the prior-year period primarily due to the following:

- Office NOI increased $2.3 million primarily due to strong leasing activity and abatement expirations at various properties in The Woodlands and Summerlin, most notably at 9950 Woodloch Forest and 1700 Pavilion, partially offset by decreases related to lower occupancy at certain properties in Downtown Columbia and The Woodlands.
- Multifamily NOI increased $2.0 million primarily due to continued lease-up at Tanager Echo in Summerlin, Marlow in Downtown Columbia, and Wingspan in Bridgeland.

### Master Planned Communities

**Segment EBT** The following table presents segment EBT for MPC:

| MPC Segment EBT thousands | Three Months Ended March 31, 2025 | 2024 | $ Change |
| --- | ---: | ---: | ---: |
| Master Planned Communities land sales (a) | **$71,642** | $32,415 | $39,227 |
| Other land, rental, and property revenues | **3,525** | 3,894 | (369) |
| Builder price participation (b) | **9,287** | 12,566 | (3,279) |
| **Total revenues** | **84,454** | 48,875 | 35,579 |
| Master Planned Communities cost of sales | **(25,214)** | (12,904) | (12,310) |
| Operating costs | **(12,991)** | (12,145) | (846) |
| **Total operating expenses** | **(38,205)** | (25,049) | (13,156) |
| **Segment operating income (loss)** | **46,249** | 23,826 | 22,423 |
| Depreciation and amortization | **(111)** | (110) | (1) |
| Interest income (expense), net | **16,786** | 15,246 | 1,540 |
| Equity in earnings (losses) from unconsolidated ventures | **(3,410)** | (14,711) | 11,301 |
| Gain (loss) on sale or disposal of real estate and other assets, net | **3,750** | — | 3,750 |
| **Segment EBT** | **$63,264** | $24,251 | $39,013 |

(a) MPC land sales include deferred revenue from land sales closed in a previous period that met criteria for recognition in the current period and excludes amounts deferred from current period land sales that do not yet meet the recognition criteria.

(b) Builder price participation revenue is earned when a developer that acquired land from us develops and sells a home to an end user at a price higher than a predetermined breakpoint. The excess over the breakpoint is shared between us and the developer at the time of closing on the sale of the home based on a previously agreed-upon percentage. This revenue fluctuates based upon the number and the prices of homes closed that qualify for builder price participation payments.

The following table presents MPC segment EBT by MPC:

| MPC Segment EBT by MPC thousands | Three Months Ended March 31, 2025 | 2024 | $ Change |
| --- | ---: | ---: | ---: |
| Bridgeland | **$16,792** | $17,247 | $(455) |
| Summerlin | **42,089** | 7,309 | 34,780 |
| Teravalis (a) | **1,086** | 943 | 143 |
| The Woodlands | **1,222** | (2,350) | 3,572 |
| The Woodlands Hills | **2,075** | 1,102 | 973 |
| **Segment EBT** | **$63,264** | $24,251 | $39,013 |
| Floreo (b) | **$2,944** | $2,425 | $519 |

(a) As of March 31, 2025, the Company owned an 88.0% interest in and consolidates Teravalis. For additional detail, refer to Note 1 - *Presentation of Financial Statements and Significant Accounting Policies* in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Quarterly Report.

(b) These amounts represent 100% of Floreo EBT. As of March 31, 2025, the Company owned a 50% interest in Floreo. Refer to Note 3 - *Investments in Unconsolidated Ventures* in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Quarterly Report for a description of the joint venture and further discussion.

### For the three months ended March 31, 2025:

MPC segment EBT increased $39.0 million compared to the prior-year period primarily due to the following:

Summerlin EBT increased $34.8 million compared to the prior-year period.

- MPC sales, net of MPC cost of sales increased $25.5 million primarily due to the following activity:
- increase in superpad acres sold, with 29.4 acres sold at an average price of $1.5 million per acre in the first quarter of 2025, compared to no acres sold in the prior-year period
- increase due to $2.3 million in SID bond assumptions resulting from an increase in superpad sales in the first quarter of 2025, compared to the prior-year period
- decrease due to $5.2 million less revenue recognized out of deferred revenue net of associated deferred costs in the first quarter of 2025, compared to the prior-year period
- Equity earnings at The Summit increased $11.0 million. This is primarily due to higher losses in the prior-year period related to changes to the development model.
- Builder price participation decreased $2.1 million as fewer homes were closed with sales prices over the predetermined breakpoint necessary for participation revenue in the current period.

The Woodlands EBT increased $3.6 million compared to the prior-year period.

- Gain on sale or disposal of real estate and other assets, net increased $3.7 million due to an eminent domain settlement related to the condemnation of a 9.9-acre parcel of non-saleable land.

The Woodlands Hills EBT increased $1.0 million compared to the prior-year period.

- MPC sales, net of MPC cost of sales increased $1.0 million primarily due to the following activity:
- increase in residential acres sold, with 3.8 acres sold at an average price of $471,000 per acre in the first quarter of 2025, compared to 0.4 acres sold at an average price of $538,000 per acre in the prior-year period

Bridgeland EBT decreased $0.5 million compared to the prior-year period.

- Builder price participation decreased $1.2 million as fewer homes were closed with sales prices over the predetermined breakpoint necessary for participation revenue in the current period.
- MPC sales, net of MPC cost of sales increased $0.4 million primarily due to the following activity:
- increase in residential acres sold, with 37.0 acres sold at an average price of $605,000 per acre in the first quarter of 2025, compared to 30.7 acres sold at an average price of $601,000 per acre in the prior-year period
- decrease in commercial acres sold, with no acres sold in the first quarter of 2025, compared to 3.5 acres sold at an average price of $801,000 per acre in the prior-year period
- decrease due to $1.6 million less revenue recognized out of deferred revenue net of associated deferred costs in the first quarter of 2025, compared to the prior-year period

**MPC Net Contribution** MPC Net Contribution is a non-GAAP financial measure derived from EBT, adjusted for certain items as discussed below. Management uses this measure because it captures current period performance through the velocity of sales, as well as current period development expenditures based upon demand at our MPCs, which varies depending upon the stage of the MPC’s development lifecycle, and the overall economic environment. MPC Net Contribution is defined as MPC segment EBT, plus MPC cost of sales, Depreciation and amortization, and net collections from MUD and SID bonds receivables, reduced by MPC development expenditures, land acquisitions, and Equity in earnings from unconsolidated ventures, net of distributions. MPC Net Contribution is not a GAAP-based operational metric and should not be used to measure operating performance of the MPC assets as a substitute for GAAP measures of such performance nor should it be used as a comparison metric with other comparable businesses.

Below is a reconciliation of segment EBT to MPC Net Contribution:

| MPC Net Contribution thousands | Three Months Ended March 31, 2025 | 2024 | $ Change |
| --- | ---: | ---: | ---: |
| MPC segment EBT | **$63,264** | $24,251 | $39,013 |
| Plus: |  |  |  |
| Master Planned Communities cost of sales | **25,214** | 12,904 | 12,310 |
| Depreciation and amortization | **111** | 110 | 1 |
| MUD and SID bonds collections, net (a) | **7,498** | 248 | 7,250 |
| Less: |  |  |  |
| MPC development expenditures | **(82,760)** | (77,098) | (5,662) |
| Equity in (earnings) losses from unconsolidated ventures | **3,410** | 14,711 | (11,301) |
| **MPC Net Contribution** | **$16,737** | $(24,874) | $41,611 |

(a) SID collections are shown net of SID transfers to buyers in the respective periods.

MPC Net Contribution increased $41.6 million in the three months ended March 31, 2025, compared to the prior-year period, primarily due to higher MPC land sales and higher MUD and SID bonds collections, partially offset by higher MPC development expenditures.

**MPC Land Inventory** The following table summarizes MPC land inventory activity for the three months ended March 31, 2025:

| thousands | Bridgeland | Summerlin | Teravalis | The Woodlands | The Woodlands Hills | Total MPC |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Balance December 31, 2024** | $509,231 | $1,153,737 | $545,381 | $189,493 | $113,820 | $2,511,662 |
| Development expenditures (a) | 37,053 | 40,750 | 230 | 984 | 3,743 | 82,760 |
| MPC Cost of sales | (7,964) | (16,588) | — | (5) | (657) | (25,214) |
| MUD reimbursable costs (b) | (33,026) | — | — | (578) | (2,960) | (36,564) |
| Transfer to Strategic Development and Operating Assets Segments | (1,459) | — | — | — | — | (1,459) |
| Other | 3,290 | (333) | 68 | 449 | 2,380 | 5,854 |
| **Balance March 31, 2025** | $507,125 | $1,177,566 | $545,679 | $190,343 | $116,326 | $2,537,039 |

(a) Development expenditures are inclusive of capitalized interest and property taxes.

(b) MUD reimbursable costs represent land development expenditures transferred to MUD Receivables.

### Strategic Developments

Our Strategic Developments assets generally require substantial future development to maximize their value. Other than our condominium properties, most of the properties and projects in this segment do not generate revenues. Our expenses relating to these assets are primarily related to costs associated with constructing the assets, selling condominiums, marketing costs associated with our Strategic Developments, carrying costs including, but not limited to, property taxes and insurance, and other ongoing costs relating to maintaining the assets in their current condition. If we decide to redevelop or develop a Strategic Developments asset, we expect that with the exception of the residential portion of our condominium projects, upon completion of development, the asset would likely be reclassified to Operating Assets when the asset is placed in service and NOI would become a meaningful measure of its operating performance. All development costs discussed herein are exclusive of land costs.

**Segment EBT** Segment EBT for Strategic Developments is presented below:

| Strategic Developments Segment EBT thousands | Three Months Ended March 31, 2025 | 2024 | $ Change |
| --- | ---: | ---: | ---: |
| Condominium rights and unit sales | **$342** | $23 | $319 |
| Rental revenue | **59** | 169 | (110) |
| Other land, rental, and property revenues | **453** | 401 | 52 |
| **Total revenues** | **854** | 593 | 261 |
| Condominium rights and unit cost of sales | **(242)** | (3,861) | 3,619 |
| Operating costs | **(3,576)** | (4,149) | 573 |
| Rental property real estate taxes | **(548)** | (644) | 96 |
| **Total operating expenses** | **(4,366)** | (8,654) | 4,288 |
| **Segment operating income (loss)** | **(3,512)** | (8,061) | 4,549 |
| Depreciation and amortization | **(1,158)** | (1,419) | 261 |
| Interest income (expense), net | **4,646** | 4,024 | 622 |
| Other income (loss), net | **(1,262)** | 3 | (1,265) |
| Equity in earnings (losses) from unconsolidated ventures | **87** | 39 | 48 |
| **Segment EBT** | **$(1,199)** | $(5,414) | $4,215 |

### For the three months ended March 31, 2025:

Strategic Developments segment EBT increased $4.2 million compared to the prior-year period primarily due to the following:

- Condominium cost of sales decreased, primarily due to $3.0 million of charges in the first quarter of 2024, to fund the final remediation expenditures at Waiea, that did not occur in the current period.

This increase to EBT was partially offset by the following:

- Other income (loss), net decreased $1.3 million, primarily due to the loss on deconsolidation of the Victoria Place homeowners’ association, as ownership and control was passed to the residents in the first quarter of 2025, following the completion of the condominium tower at the end of 2024.

**Condominiums** Condominium revenue is recognized when construction of the condominium tower is complete and unit sales close, leading to variability in revenue recognized between periods.

### Completed Condominiums

*Ward Village* As of March 31, 2025, our seven completed condominiums in Ward Village, Ae\`o, Ke Kilohana, Anaha, Waiea, ‘A‘ali‘i, Kō‘ula, and Victoria Place are completely sold.

### Condominiums Under Construction

*Ward Village* As of March 31, 2025, 97.4% of the units at our three towers under construction, The Park Ward Village, Ulana Ward Village, and Kalae are under contract.

We broke ground on The Park Ward Village in October 2022 and expect to complete construction in 2026. The Park Ward Village will consist of 545 studio, one-, two-, and three-bedroom residences. As of March 31, 2025, we have entered into contracts for 528 units, representing 96.9% of total units.

We broke ground on Ulana Ward Village in January 2023 and expect to complete construction in 2025. Ulana Ward Village, which is 100% presold, will consist of 696 studio, one-, two-, and three-bedroom units. All units are designated as workforce housing units and are being offered to local residents who meet certain maximum income and net worth requirements.

We broke ground on Kalae in June 2024 and expect to complete construction in 2027. Kalae will consist of 329 one-, two-, and three-bedroom residences. As of March 31, 2025, we have entered into contracts for 306 units, representing 93.0% of total units.

*The Woodlands* We broke ground on The Ritz-Carlton Residences in October 2024 and expect to complete construction in 2027. The Ritz-Carlton Residences, The Woodlands will consist of 111 one-, two-, three-, and four-bedroom residences. The development sits on the last available large-scale residential site on Lake Woodlands, spanning roughly eight acres across approximately 1,200 feet of premier lakefront shoreline. As of March 31, 2025, we have entered into contracts for 78 units, representing 70.3% of total units.

### Predevelopment Condominiums

*Ward Village* We launched public presales for The Launiu in February 2024. The Launiu will consist of 485 studio, one-, two-, and three-bedroom residences. As of March 31, 2025, we have entered into contracts for 309 units, representing 63.7% of total units.

The following provides further detail for all condominium projects as of March 31, 2025:

| Completed | Location | Units Closed | Units Under Contract | Total Units | Total % of Units Closed or Under Contract | Completion Date |
| --- | --- | ---: | ---: | ---: | ---: | --- |
| Waiea (a) | Honolulu, HI | 177 | — | 177 | 100.0% | Q4 2016 |
| Anaha (a) | Honolulu, HI | 317 | — | 317 | 100.0% | Q4 2017 |
| Ae\`o (a) | Honolulu, HI | 465 | — | 465 | 100.0% | Q4 2018 |
| Ke Kilohana (a) | Honolulu, HI | 423 | — | 423 | 100.0% | Q2 2019 |
| ‘A‘ali‘i (a) | Honolulu, HI | 750 | — | 750 | 100.0% | Q4 2021 |
| Kō'ula (b) | Honolulu, HI | 565 | — | 565 | 100.0% | Q3 2022 |
| Victoria Place | Honolulu, HI | 349 | — | 349 | 100.0% | Q4 2024 |
| **Under construction** |  |  |  |  |  |  |
| The Park Ward Village (c) | Honolulu, HI | — | 528 | 545 | 96.9% | 2026 |
| Ulana Ward Village (d) | Honolulu, HI | — | 695 | 696 | 99.9% | 2025 |
| Kalae (e) | Honolulu, HI | — | 306 | 329 | 93.0% | 2027 |
| The Ritz-Carlton Residences (f) | The Woodlands, TX | — | 78 | 111 | 70.3% | 2027 |
| **Predevelopment** |  |  |  |  |  |  |
| The Launiu (g) | Honolulu, HI | — | 309 | 485 | 63.7% | 2028 |

(a) The retail portions of these projects are 100% leased and have been placed in service.

(b) The retail portion of this project has been placed in service and is 56% leased.

(c) The Park Ward Village will include approximately 26,800 square feet of retail space.

(d) Ulana Ward Village will include approximately 32,100 square feet of retail space.

(e) Kalae will include approximately 2,000 square feet of retail space.

(f) The Ritz-Carlton Residences will include approximately 5,800 square feet of retail space.

(g) The Launiu will include approximately 10,000 square feet of retail space.

### Corporate Income, Expenses, and Other Items

The following table contains certain corporate-related and other items not related to segment activities and that are not otherwise included within the segment analyses. Variances related to income and expenses included in NOI or EBT are explained within the previous segment discussions. Significant variances for consolidated items not included in NOI or EBT are described below:

| thousands | Three Months Ended March 31, 2025 | 2024 | $ Change |
| --- | ---: | ---: | ---: |
| General and administrative | **$(22,436)** | $(21,712) | $(724) |
| Corporate interest expense, net | **(22,190)** | (17,582) | (4,608) |
| Corporate depreciation and amortization | **(747)** | (805) | 58 |
| Income tax (expense) benefit | **(3,436)** | 6,501 | (9,937) |
| Other | **(4,688)** | (3,322) | (1,366) |
| Total Corporate income, expenses, and other items | **$(53,497)** | $(36,920) | $(16,577) |

### For the three months ended March 31, 2025:

Corporate income, expenses, and other items was unfavorably impacted compared to the prior-year period by the following:

- Income tax expense increased $9.9 million primarily due to an increase in Income before income taxes. Refer to Note 11 - *Income Taxes* in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Quarterly Report for additional information.
- Corporate interest expense, net increased $4.6 million primarily due to interest expense recognized in the current period related to the accretion of the liability recorded in connection with the 2024 sale of future MUD receivables and lower interest income driven by lower interest rates on lower average balances in the current period. Refer to Note 1 - *Presentation of Financial Statements and Significant Accounting Policies* in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Quarterly Report for additional information on the sale of MUD receivables.

|  |  |
| --- | --- |
| **MANAGEMENT’S DISCUSSION AND ANALYSIS** | Table of Contents |
| LIQUIDITY AND CAPITAL RESOURCES |  |

### LIQUIDITY AND CAPITAL RESOURCES

We continue to maintain a strong balance sheet and endeavor to ensure that we maintain the financial flexibility and liquidity necessary to fund future growth. In 2025, we drew $132.6 million on existing mortgage loans and made repayments on mortgage loans of $10.9 million. As of March 31, 2025, we had $1.0 billion of undrawn lender commitments available to be drawn for property development, subject to certain restrictions.

### Cash Flows

| thousands | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Cash provided by (used in) operating activities of continuing operations | **$(224,924)** | $(156,418) |
| Cash provided by (used in) investing activities of continuing operations | **(63,591)** | (88,743) |
| Cash provided by (used in) financing activities of continuing operations | **128,064** | 83,648 |
| Net cash provided by (used in) discontinued operations | **—** | 286 |

**Operating Activities** Each segment’s relative contribution to our cash flows from operating activities will likely vary significantly from year to year given the changing nature of our development focus. Other than our condominium properties, most of the properties and projects in our Strategic Developments segment do not generate revenues, and the cash flows and earnings may vary. Condominium deposits received from contracted units and by other various cash uses related to condominium development and sales activities are a substantial portion of our operating activities. Operating cash is utilized to fund ongoing development expenditures in our Strategic Developments and MPC segments.

The cash flows and earnings from the MPC business may fluctuate more than from our operating assets because the MPC business generates revenues from land sales rather than recurring contractual revenues from operating leases. MPC land sales are a substantial portion of our cash flows from operating activities and are partially offset by development costs associated with the land sales business and acquisitions of land that is intended to ultimately be developed and sold.

Net cash used in operating activities of continuing operations was $224.9 million in the three months ended March 31, 2025, and $156.4 million in the three months ended March 31, 2024. The $68.5 million increase in net cash used in operating activities was primarily due to an increase in cash used for condominium towers and MPC development expenditures, partially offset by an increase in cash provided by MPC land sales, and a decrease in interest payments.

**Investing Activities** Net cash used in investing activities of continuing operations was $63.6 million in the three months ended March 31, 2025, and $88.7 million in the three months ended March 31, 2024. The $25.2 million decrease in net cash used in investing activities was primarily due to a decrease in cash used related to the net parent investment in discontinued operations, partially offset by a decrease in proceeds from asset sales and an increase in cash used for property development and operating property improvements.

**Financing Activities** Net cash provided by financing activities of continuing operations was $128.1 million in the three months ended March 31, 2025, and $83.6 million in the three months ended March 31, 2024. The $44.4 million increase in cash provided by financing activities was primarily due to a $43.6 million increase in proceeds from mortgages, notes, and loans payable and a $9.5 million increase in Special Improvement District bond funds released from escrow, partially offset by an $8.2 million increase in cash used related to principal payments on mortgages, notes, and loans payable.

### Short- and Long-Term Liquidity

**Short-Term Liquidity** In the next 12 months, we expect our primary sources of cash to include cash flow from MPC land sales and condominium closings, cash generated from our operating assets, first mortgage financings secured by our assets, and deposits from condominium sales (which are restricted to funding construction of the related developments). We expect our primary uses of cash to include condominium pre-development and development costs, debt principal payments and debt service costs, MPC land development costs, other strategic developments costs, and general operating costs. We believe that our sources of cash, including existing cash on hand, will provide sufficient liquidity to meet our existing obligations and anticipated ordinary course operating expenses for at least the next 12 months.

**Long-Term Liquidity** The development and redevelopment opportunities in Strategic Developments and Operating Assets are capital intensive and will require significant additional funding, if and when pursued. Any additional funding beyond those sources listed above would be raised with a mix of construction, bridge, and long-term financings, by entering into joint venture arrangements, as well as future equity raises.

We cannot provide assurance that financing arrangements for our properties will be on favorable terms or occur at all, which could have a negative impact on our liquidity and capital resources. In addition, we typically must provide completion guarantees to lenders in connection with their financing for our projects.

**Contractual Cash Obligations and Commitments** The following table aggregates our contractual cash obligations and commitments as of March 31, 2025:

| thousands | Remaining in 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Mortgages, notes, and loans payable | $425,414 | $586,010 | $436,786 | $840,807 | $1,270,240 | $1,727,620 | $5,286,877 |
| Interest payments (a) | 210,166 | 231,503 | 199,196 | 163,804 | 100,072 | 219,096 | 1,123,837 |
| Ground lease commitments | 300 | 300 | 300 | 300 | 300 | 5,600 | 7,100 |
| Total | $635,880 | $817,813 | $636,282 | $1,004,911 | $1,370,612 | $1,952,316 | $6,417,814 |

(a) Interest is based on the borrowings that are presently outstanding and current floating interest rates.

**Debt** As of March 31, 2025, the Company had $5.2 billion of outstanding debt and $1.0 billion of undrawn lender commitment available to be drawn for property development, subject to certain restrictions. Refer to Note 7 - *Mortgages, Notes, and Loans Payable, Net* in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Quarterly Report for additional detail. Our proportionate share of the debt of our unconsolidated ventures totaled $186.9 million as of March 31, 2025. All of this indebtedness is without recourse to the Company, with the exception of the collateral maintenance obligation for Floreo. See Note 10 - *Commitments and Contingencies* in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Quarterly Report for additional information related to the Company’s collateral maintenance obligation.

***Debt Compliance*** As of March 31, 2025, the Company was not in compliance with certain property-level debt covenants. As a result, the excess net cash flow after debt service from the underlying properties became restricted. While the restricted cash could not be used for general corporate purposes, it could be used to fund operations of the underlying assets and did not have a material impact on the Company’s liquidity or its ability to operate these assets.

***Net Debt*** The following table summarizes our net debt on a segment basis as of March 31, 2025. Net debt is defined as Mortgages, notes, and loans payable, net, including our ownership share of debt of our unconsolidated ventures, reduced by liquidity sources to satisfy such obligations such as our ownership share of Cash and cash equivalents and SID, MUD, and TIF receivables. Although net debt is a non-GAAP financial measure, we believe that such information is useful to our investors and other users of our financial statements as net debt and 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.

| thousands | Operating Assets | Master Planned Communities | Strategic Developments | Segment Totals | Non-Segment Amounts | March 31, 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Mortgages, notes, and loans payable, net | $2,368,172 | $356,264 | $490,056 | $3,214,492 | $2,034,573 | $5,249,065 |
| Mortgages, notes, and loans payable of unconsolidated ventures | 90,552 | 96,348 | — | 186,900 | — | 186,900 |
| Less: |  |  |  |  |  |  |
| Cash and cash equivalents | (22,319) | (115,469) | (10,101) | (147,889) | (345,768) | (493,657) |
| Cash and cash equivalents of unconsolidated ventures | (2,406) | (11,661) | (6,809) | (20,876) | — | (20,876) |
| Special Improvement District receivables | — | (88,331) | — | (88,331) | — | (88,331) |
| Municipal Utility District receivables, net | — | (500,255) | (3,113) | (503,368) | — | (503,368) |
| TIF receivable | — | — | (5,567) | (5,567) | — | (5,567) |
| Net Debt | $2,433,999 | $(263,104) | $464,466 | $2,635,361 | $1,688,805 | $4,324,166 |

### HHH 2025 FORM 10-Q \| 43

**MARKET RISK AND CONTROLS AND PROCEDURES** Table of Contents

## Market risk

As filed, 2,030 characters.

We are subject to interest rate risk with respect to our variable-rate financings in that increases in interest rates would cause our payments under such financings to increase. With respect to fixed-rate financings, increases in interest rates could make it more difficult to refinance such debt when it becomes due. As properties are placed into service and become stabilized, we typically refinance the variable-rate debt with long-term fixed-rate debt.

The Company uses derivative instruments to manage its interest rate risk, primarily through the use of interest rate swaps, caps, and collars. The Company had $1.5 billion of variable-rate debt outstanding at March 31, 2025, of which $250.1 million was swapped to a fixed rate through the use of interest rate swaps and $917.9 million had interest rate cap contracts in place. Additionally, the interest rate caps and collars are on construction loans and mortgages with undrawn loan commitment of $159.2 million as of March 31, 2025, which will be covered by the interest rate cap and collar contracts upon drawing. Refer to Note 9 - *Derivative Instruments and Hedging Activities* in the Notes to Condensed Consolidated Financial Statements under Item 1 of this Quarterly Report for additional information.

As of March 31, 2025, annual interest costs would increase approximately $3.4 million for every 1.00% increase in floating interest rates. The Company is focused on prudently limiting exposure to potentially higher interest rates based upon market dynamics and general expected financing activity. Generally, a significant portion of our interest expense is capitalized due to the level of assets we currently have under development; therefore, the impact of a change in our interest rate on our Condensed Consolidated Statements of Operations would be less than the total change in interest costs, but we would incur higher cash payments and the development costs of our assets would be higher, resulting in greater depreciation or cost of sales in later years.

## Controls and procedures

As filed, 1,533 characters.

### DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our reports to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by SEC rules, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025, the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures were effective as of March 31, 2025.

### CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes to our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**OTHER INFORMATION** Table of Contents

## Risk factors

As filed, 1,228 characters.

Other than as set forth below, there are no material changes to the risk factors previously disclosed in our 2024 Annual Report.

***Our recent shift in business strategy will create additional and different risks than those we face in our existing business.***

We recently announced a transaction with Pershing Square following which we expect to become a diversified holding company by acquiring controlling stakes in high-quality, durable growth public and private operating companies while continuing to invest in and grow our core real estate development and Master Planned Communities business. In embarking on this changed strategy, we are subject to risks such as being unable to identify and consummate transactions as part of the new strategy, as well as risks inherent in acquiring or making investments in operating companies, especially companies in industries unrelated to our existing real estate business. We may be unable to realize the anticipated benefits of the transactions with Pershing Square and our new strategy, which could adversely impact our financial condition, results of operations, cash flows, the quoted trading price of our securities, and our ability to satisfy our debt service obligations.

Filed May 7, 2025.
Source: SEC EDGAR, the filing index for accession 0001628280-25-023135. Last ingested by Listed: Nov 5, 2026, 18:15 ET. No prices; not investment advice.