Sign in
HH

Howard Hughes Holdings Inc. (HHH)·Q1 2025 Earnings Summary

Executive Summary

  • Solid quarter with revenue modestly above consensus and EPS ahead of expectations; management reaffirmed full‑year 2025 guidance across segments, and Operating Assets NOI reached a new quarterly record, up 9% YoY .
  • Reported revenue was $199.3M vs S&P consensus of $197.0M* and diluted EPS from continuing ops was $0.21 vs $0.13*; strength was driven by Operating Assets (office and multifamily) and robust MPC land sales/pricing; condo activity was light ahead of Ulana closings later in 2025 .
  • MPC EBT rose to $63.3M with 70 acres sold at $991K/acre (+65% YoY), supporting confidence in FY25 MPC EBT midpoint of ~$375M (up 5–10% YoY) .
  • Post‑quarter, Pershing Square invested $900M at $100/share (48% premium) and Bill Ackman became Executive Chairman; HHH plans to evolve into a diversified holding company while maintaining the real estate engine—this is the likely medium‑term stock narrative catalyst .

What Went Well and What Went Wrong

  • What Went Well

    • Record Total Operating Assets NOI of $71.6M (+9% YoY), led by 8% YoY growth in office NOI (leasing momentum, abatements expiring) and 14% YoY in multifamily (lease‑up at Tanager Echo, Marlow, Wingspan) .
    • MPC momentum continued: EBT $63.3M (+161% YoY), 70 residential acres sold at $991K/acre (+65% YoY) with sequential improvement in home sales and strong superpad pricing in Summerlin (~$1.5M/acre) .
    • Strategic pipeline steady: contracted 27 condo units ($51M), Ward Village backlog ~$2.7B of future revenue; Launiu 64% pre‑sold; regulatory change may add 2.5–3.5M gross sq ft of entitlements in Ward Village .

  • What Went Wrong

    • Retail NOI declined 2% YoY on non‑recurring tenant reserve collections at Ward Village in 2024 and tenant upgrade turnover at Downtown Summerlin; 2025 retail NOI expected to be modestly down YoY .
    • New home sales were 543 units, +6% QoQ but −17% YoY against a tough prior‑year comp; builder price participation also normalized from prior exceptionally strong periods .
    • Elevated financing costs remain a headwind (variable‑rate tranches, condo financing in high‑single digits), though management executed several extensions/upsizes and completed a significant post‑quarter MUD receivable sale (~$180M proceeds) to bolster liquidity .

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus
Revenue ($M)$327.1 $983.6 $199.3 $197.0*
Diluted EPS – Continuing Ops ($)$1.95 $3.25 $0.21 $0.13*
Operating Income ($M)$198.3 $260.5 $47.9 —
Total Operating Assets NOI ($M)$64.8 $61.2 $71.6 —
MPC Segment EBT ($M)$144.8 $56.9 $63.3 —
  • Estimates disclaimer: *Values retrieved from S&P Global.

Segment breakdown (Operating Assets NOI)

Segment NOI ($M)Q1 2024Q1 2025YoY Δ
Office$30.6 $32.9 +8%
Retail$14.2 $13.8 −2%
Multifamily$13.8 $15.8 +14%
Other$1.5 $1.5 +5%
Total Operating Assets NOI$65.6 $71.6 +9%

Key KPIs

KPIQ1 2024Q1 2025
Residential acres sold31 acres 70 acres
Avg price per residential acre$600K $991K
New homes sold656 (3‑yr high comp) 543 (+6% QoQ, −17% YoY)
Stabilized leasing – Office88% 88%
Stabilized leasing – Retail95% 96%
Stabilized leasing – Multifamily95% 96%
Adjusted Operating Cash Flow—$63.5M ($1.27/share)

Guidance Changes

MetricPeriodPrevious Guidance (as of Q4’24)Current Guidance (Q1’25)Change
MPC EBTFY 2025~$375M mid (up 5–10% YoY) ~$375M mid (up 5–10% YoY) Maintained
Operating Assets NOIFY 2025~$262M mid (flat to +4% YoY) ~$262M mid (flat to +4% YoY) Maintained
Condo Sales RevenuesFY 2025~$375M (Ulana only; ~0% GP) ~$375M (Ulana only; ~0% GP) Maintained
Cash G&AFY 2025$76–86M; $81M mid $76–86M; $81M mid Maintained
Adjusted Operating Cash FlowFY 2025$325–375M; ~$350M ($7.00/share) mid $325–375M; ~$350M ($7.00/share) mid Maintained

Note: Guidance relates to the legacy real estate operations and excludes impacts from the new Pershing Square strategy; revisions to be provided once developed .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
MPC housing demand & pricingRecord MPC EBT; 191 res acres at ~$1.0M/acre; lifted FY24 MPC EBT midpoint EBT $63.3M; 70 acres at $991K/acre; sequential home sales improvement; confidence in ~$375M FY25 EBT mid Strong, sustained
Office leasing & abatementsOffice NOI +5% YoY; stabilized office 89% leased Office NOI +8% YoY; 114K sf new/expanded leases; stabilized office 88% leased Positive, continued
Multifamily lease‑upNew quarterly high NOI; strong lease‑up (Marlow, Tanager Echo, Wingspan) Multifamily NOI +14% YoY; stabilized 96% leased Positive, stabilizing
Retail+15% YoY in Q4’24 (non‑recurring reserves) −2% YoY and expected modest reduction in 2025 (tenant upgrades) Mixed/normalizing
Condo pipeline & pre‑salesVictoria Place delivered; ~$760M 4Q revenue at ~27% margin 27 units contracted; Launiu 64% pre‑sold; Ulana delivery 4Q25 (no GP) Pipeline intact; 2026 profit driver
Liquidity/financing$900M+ liquidity; MUD sale accelerated cash; loan extensions $494M cash; post‑quarter ~$180M MUD sale; several loan upsizes/extensions Liquidity strengthening
Strategic shift (Pershing Square)n/a$900M primary at $100; Ackman Exec Chair; target durable growth businesses, potential insurance platform Transformational

Management Commentary

  • “We experienced 9% year-over-year NOI growth in Operating Assets, solid residential land sales in our MPCs, and meaningful condo pre-sales, paving the way for what we anticipate will be another record year at Howard Hughes.” — CEO David R. O’Reilly .
  • “Our exceptional leasing activity in office and multifamily during recent periods continued to produce positive results, contributing to record quarterly NOI of $72 million.” — CEO David R. O’Reilly .
  • “In the quarter, condo pre‑sales were solid with 27 units contracted… Launiu… 64% pre‑sold… we expect to start construction later this year with an anticipated delivery in ’28.” — President Jay Cross .
  • “With the strong momentum… we remain confident in our ability to deliver our 2025 guidance… Adjusted Operating Cash Flow will range between $325–$375 million in 2025 with a midpoint of approximately $350 million or ~$7 per share.” — CFO Carlos Olea .
  • “We… are transforming Howard Hughes into a diversified holding company… investing $900 million of fresh capital… to acquire durable growth companies… and ultimately target investment‑grade credit at the parent.” — Executive Chairman Bill Ackman .

Q&A Highlights

  • Timeline and pipeline for new acquisitions: Initial transaction announcement could come “by the fall”; focus on founder‑led, high‑ROIC durable growth businesses; contemplation of building an insurance platform where Pershing Square would manage equity assets “for free” .
  • Capital allocation vs legacy real estate: No plan to starve MPCs; expect MPCs to become cash‑generative beyond reinvestment needs over time, providing capital to the holding company for diversification .
  • Balance sheet/ratings: The $900M primary improves parent credit profile; long‑term objective is investment‑grade at the holding company, which can also benefit the real estate subsidiary’s perceived credit strength .
  • Use of $900M: Emphasis on acquisitions and potential insurance platform; not intended to pay down legacy real estate debt near term given self‑funding model and expected cash generation as communities mature .

Estimates Context

  • Revenue modest beat and EPS beat: Q1 2025 revenue $199.3M vs S&P consensus $197.0M*; diluted EPS (cont.) $0.21 vs $0.13* .
  • Where estimates may adjust: Strong Operating Assets NOI and MPC pricing/acres underpin FY25 guidance; retail NOI headwind and Ulana zero‑margin 2025 condo closings are already embedded; consensus may lift slightly for Operating Assets NOI trajectory and MPC EBT cadence given Q1 execution and visibility into superpad sales in Q2–Q3 .
  • Estimates disclaimer: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution remains strong: record Operating Assets NOI (+9% YoY) and robust MPC pricing/acres support maintained FY25 guidance amid a challenging macro for rates/retail .
  • Near‑term 2025 setup: Expect earnings cadence to skew to Q2–Q3 from Summerlin superpad timing and to Q4 for Ulana closings (zero GP), with Operating Assets continuing to provide resilience .
  • Medium‑term pivot: $900M Pershing Square investment and diversified holding company strategy are the primary multiple‑re‑rating catalysts; further details (first deal, insurance initiative) could be announced by fall .
  • Liquidity improving: $494M cash and ~$180M post‑quarter MUD sale proceeds, plus loan extensions/upsizing, reduce 2025 maturity risk and fund development pipeline .
  • Watch retail normalization: expect modest 2025 retail NOI reduction on non‑recurring items and tenant upgrades; office/multifamily remain the NOI growth engines .
  • Condo profit timing: 2025 condo revenue driven by Ulana (no gross profit); profit contribution swings to 2026+ with The Park Ward Village and later towers .
  • Stock narrative: Earnings quality and visibility plus strategic transformation elevated by Ackman’s involvement are likely to drive sentiment and flows near term; execution on first platform deal is the key inflection to monitor .

Notes: All figures are from company filings and the Q1 2025 call. S&P Global (Capital IQ) consensus values are marked with an asterisk and were retrieved from S&P Global. Citations: .