Howard Hughes Holdings Inc. (HHH)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 printed $260.9M in total revenues and GAAP diluted EPS of $(0.22), driven by a $(48.2)M loss on sale of MUD receivables (net impact $(0.66)/sh), while Adjusted Operating Cash Flow rose to $90.8M ($1.64/sh) .
• Operating Assets NOI increased 5% YoY to $68.9M on record office and multifamily performance; MPC EBT was $102.4M with record residential pricing ($1.35M/acre) despite fewer acres sold .
• Management raised full‑year guidance: Adjusted Operating Cash Flow to ~$410M (from ~$350M), MPC EBT to ~$430M (from ~$375M), and Operating Assets NOI to ~$267M (from ~$262M); condo revenue ~$375M maintained with no gross profit from Ulana .
• Strategic transformation advanced with Pershing Square’s $900M investment at $100/sh (46.9% ownership) and detailed insurance platform strategy akin to Berkshire, a key future stock narrative catalyst .
• Street context: Q2 revenue missed S&P Global consensus ($260.9M vs $289.0M*) and GAAP EPS missed ($-0.22 vs $0.84*), largely due to the non‑recurring MUD receivable sale impact .

What Went Well and What Went Wrong

• What Went Well

  • Record residential land pricing ($1.35M/acre; Summerlin superpads $1.6M/acre) underscored demand and pricing power despite national housing softening .
  • Record office and multifamily NOI; stabilized office 89% leased and multifamily 97% leased, with strong leasing momentum across assets .
  • Guidance raised across core metrics: Adjusted Operating Cash Flow (+$60M midpoint), MPC EBT (+$55M), Operating Assets NOI (+$5M) reflecting strength into 2H25 .
  • CEO: “HHH is firmly positioned to generate substantial positive cash flow… record recurring Adjusted Operating Cash Flow… exceptionally well positioned to drive growth” .

• What Went Wrong

  • GAAP loss on sale of MUD receivables drove Q2 GAAP EPS to $(0.22) and a sizable variance vs Street EPS; MUD sale recognized $(48.2)M loss pre‑tax .
  • MPC EBT declined 17% YoY to $102.4M on lower acres sold (111 vs 164), highlighting quarter‑to‑quarter lumpiness of land sales .
  • Retail NOI down 7% YoY due to prior‑year non‑recurring tenant reserve collections in Ward Village; ex‑that impact, retail NOI +1% .

Financial Results

Core P&L and Operating Metrics (sequential trend)

YoY Comparison (Q2 2025 vs Q2 2024)

Segment Breakdown (NOI)

KPIs

Notes:

• Q2 GAAP operating loss drivers included $(48.2)M loss on sale of MUD receivables; offset by $67.9M operating income and $10.3M interest income .
• Liquidity improved: $1.441B cash and cash equivalents and $1.4B undrawn lender commitments .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO: “HHH is firmly positioned to generate substantial positive cash flow now and into the future… projected record recurring Adjusted Operating Cash Flow from MPC land sales and Operating Assets” .
• CFO: Raised Adjusted Operating Cash Flow to $385–$435M (mid ~$410M), MPC EBT to ~$430M, Operating Assets NOI to ~$267M; liquidity ~$2.0B including $1.4B cash and $515M undrawn capacity after MUD sale proceeds reduce Bridgeland Notes to $85M .
• Executive Chairman (Ackman): Outlined insurance strategy modeled on Berkshire—low leverage underwriting, float in short U.S. Treasuries, equity invested in high‑quality names, with Pershing Square managing investments for HHH at no fee; targeting control stake .

Q&A Highlights

• MPC resilience: Despite macro housing headlines, company sees consistent demand across price points and communities; “flight to quality” supports record land pricing .
• Insurance acquisition approach: Preference to acquire an existing, well‑run insurer and operate conservatively under HHH control; potential deal size ~$1–3B with co‑investment flexibility .
• Development/G&A: Centralization of development capabilities and reduced regional redundancy to improve returns and maintain G&A neutrality with advisory fees .
• Retail/condo strategy: Ritz‑Carlton sales intentionally paced to capture higher pricing nearer completion; remaining units are representative mix .
• Hedging: Use of asymmetric hedges (e.g., CDS) sized so losses are immaterial if risks don’t materialize; significant upside protection if they do .

Estimates Context

Values with asterisks (*) retrieved from S&P Global.

Drivers: The EPS shortfall was largely attributable to the non‑recurring $(48.2)M GAAP loss on sale of MUD receivables (net impact $(0.66)/sh), while core operating metrics (Operating Assets NOI +5% YoY; record MPC pricing) remained healthy .

Key Takeaways for Investors

• Core cash generation remains strong: Adjusted Operating Cash Flow of $90.8M ($1.64/sh) in Q2 and full‑year guidance raised to ~$410M midpoint .
• Land pricing power intact: Record $1.35M/acre amid housing softness; expect 3Q land sales concentration (Summerlin superpads, Bridgeland lots) to support raised MPC EBT guidance .
• Operating Assets momentum: Office/multifamily NOI at quarterly records; leasing trends support raised NOI outlook to ~$267M .
• One‑off GAAP headwind: EPS miss tied to MUD receivable sale; do not extrapolate to core profitability metrics .
• Strategic upside catalyst: Execution on insurance acquisition and capital deployment under Pershing Square’s framework can broaden investor base and lower cost of capital over time .
• Near‑term trading: Watch for 3Q land sale timing, leasing updates, and any insurance transaction announcements (Annual Meeting Sep 30) as potential stock movers .
• Medium‑term thesis: Self‑funding real estate platform plus a conservatively run insurance business with equity compounding could drive per‑share intrinsic value growth .

Appendix: Additional Q2 2025 Details

• Operating Assets NOI composition: Office $35.2M (+6% YoY), Multifamily $16.9M (+19% YoY), Retail $13.4M (‑7% YoY; ex prior‑year reserve collection +1%) .
• Liquidity and financing: $180M proceeds from MUD receivable sale; Bridgeland Notes paid down to $85M; extended Marlow construction loan to Apr‑27; new $75M mortgage at 7.073% for 1700 Pavilion .
• Condo pre‑sales: 17 units contracted ($35.2M future revenue); Launiu 67% pre‑sold; Ulana 100% pre‑sold; Park Ward Village 97%; Kalae 93%; Ritz‑Carlton, The Woodlands 70% .
• Cash G&A in Q2: $28.4M; includes severance and advisory fee elements as part of cost initiatives and Pershing Square agreement .