Howard Hughes raises 2025 MPC EBT guidance to $450M as insurance acquisition advances

Earnings Call Insights: Howard Hughes Holdings Inc. (HHH) Q3 2025

MANAGEMENT VIEW

* CEO David O'Reilly stated, "We delivered another strong quarter across every business segment, underscoring the strength of our real estate platform and the value of our transformation into a diversified holding company." He highlighted a record quarter for the MPC segment, with $205 million EBT and 319 acres sold in Summerlin, including a single 231-acre bulk sale. O'Reilly also noted, "We expect to finish the year with record high residential land sales, record pricing and a record full year MPC EBT. Given this performance, we're once again raising our full year MPC guidance."
* O'Reilly announced operating assets NOI grew 5% year-over-year to $68 million, with office NOI up 7% and retail NOI up 9%. He emphasized strong leasing momentum, with the stabilized office portfolio ending the quarter 89% leased, and the stabilized multifamily portfolio at 96% leased. He reported, "We reached a new record with $1.4 billion in condo presales, led by Melia and Ilima, our 12th and 13th towers at Ward Village. Both are off to an incredible start and already collectively 57% presold."
* CFO Carlos Olea said, "We refinanced about $114 million of near-term maturities during the quarter, pushing them out into 2026 and beyond... our 2025 maturities are down to just $76 million." Olea added, "Strong land sales across our MPCs led us to raise full year EBT guidance to $450 million at the midpoint, up $20 million from prior guidance."
* Olea reported an increase in adjusted operating cash flow guidance to $440 million or $7.86 per diluted share, stating, "What's important is what we do with that cash flow, is reinvested into our communities to generate even greater value."
* Executive Chairman William Ackman updated on the insurance acquisition: "We've made substantial progress. We identified a target. We've done a significant amount of due diligence. We've come to an agreement on price... I'm actually growing confidence that the transaction will be completed."

OUTLOOK

* The company raised full year MPC EBT guidance to $450 million at the midpoint, up $20 million from prior guidance. Olea stated, "2025 will be another record-breaking year. Now not every year will look like this, but it shows the power of our model when all cylinders are firing."
* Full year NOI guidance for operating assets was reaffirmed at $267 million. Condo revenue target was adjusted slightly down by $15 million to $360 million, reflecting a timing shift for Ulana closings. Olea explained, "Ulana remains fully sold and is expected to deliver at breakeven."
* Adjusted operating cash flow guidance was raised to $440 million, up $30 million from the previous outlook.

FINANCIAL RESULTS

* The MPC segment achieved $205 million EBT for the quarter. Land sales included 319 acres in Summerlin, with 231 acres sold at a 75% margin. Builder price participation in Summerlin contributed more than $14.5 million.
* Operating assets NOI reached $68 million, with office NOI up 7% and retail NOI up 9% year-over-year. The stabilized office portfolio ended the quarter 89% leased, and the multifamily portfolio was 96% leased.
* Condo presales hit $1.4 billion, with Melia and Ilima collectively 57% presold. The Launiu in Ward Village and the Ritz-Carlton Residences in The Woodlands were 68% and 74% presold, respectively.
* The company refinanced $114 million in near-term maturities, reducing 2025 maturities to $76 million.

Q&A

* Anthony Paolone, JPMorgan: Asked about superpad sales and the trade-off between taking discounts for bulk sales versus holding for higher prices. O'Reilly responded, "In this unique situation, by selling that superpad at a lower net price per acre or lower gross price per acre, but higher net price per acre, we were able to generate great cash flow for the company... you should expect us to transact on superpads going forward, consistent with the way we have the past several quarters at a much higher gross and net price per acre."
* Paolone also inquired about the insurance company acquisition's impact on capital. Ackman answered, "It will consume the available cash that we've injected into the company... insurance is clearly our first priority."
* Alexander Goldfarb, Piper Sandler: Asked about Ward Village entitlements and timing of Phase 2. O'Reilly replied, "Beyond these 2 towers, Melia and Ilima, there is one more site that will use the remaining square feet... we're already well underway in predevelopment of incremental towers in addition to what we had by right under our original master development agreement."
* Goldfarb followed up on the insurance entity's structure. Ackman described it as "a very clean transaction for us. It's a platform, kind of a diversified insurance company platform that really fits our -- the criteria that we've outlined."
* Jonathan Petersen, Jefferies: Queried about Ritz-Carlton Residences sales and future condo projects. Ackman noted, "I said, you know what, the community just needs to see this thing built before. So you know what, don't sell any more than half the units... David has been sneaking out a few units because he achieved prices that he just felt he obligated to sell." O'Reilly added, "We're about 75% sold now."
* Petersen asked about Teravalis land sales outlook. O'Reilly replied, "We've sold about 1,000 lots year-to-date in Teravalis... you may be able to see us sell some incremental lots in 2026, but 2027 will probably be a year where we re-up after those lots that we sold this year end up in the hands of residents and homebuyers."
* Goldfarb asked about 2026 land sales guidance. O'Reilly stated, "I think it is pretty early right now to feel comfortable providing any sort of guidance on 2026 land sales."

SENTIMENT ANALYSIS

* Analysts were neutral to slightly positive, with questions focusing on sustainability of land sales, project pipelines, and clarity on the insurance transaction. Dialogue was constructive, and questions were answered directly.
* Management maintained a confident and optimistic tone in both prepared remarks and Q&A, as indicated by O'Reilly's comment, "I couldn't be prouder of how our teams continue to execute," and Olea's assertion, "2025 will be another record-breaking year."
* Compared to the previous quarter, both analysts and management displayed steady confidence, with management's tone remaining upbeat despite caution regarding the sustainability of current results.

QUARTER-OVER-QUARTER COMPARISON

* The company again raised full year MPC EBT guidance, this quarter to $450 million from $430 million previously. Adjusted operating cash flow guidance was also increased to $440 million from a prior midpoint of $410 million.
* Condo revenue guidance was revised slightly downward due to a timing shift, whereas operating asset NOI guidance remained consistent at $267 million.
* Management reiterated its commitment to reinvesting cash flow for long-term value creation and provided more details on the progress of the insurance acquisition, moving from general intent to near completion of a target.
* Analyst questions showed continued interest in land sales sustainability, insurance strategy, and the pace/timing of new development. Management's responses remained consistently confident, with a focus on long-term execution and capital allocation.

RISKS AND CONCERNS

* Management acknowledged that "not every year will look like this" in terms of land sales performance, emphasizing the cyclical nature of the business.
* The slight decrease in condo revenue guidance was attributed to timing of Ulana closings, though management stated Ulana is fully sold and expected to deliver at breakeven.
* O'Reilly cautioned against extrapolating 2025 results into future years, preferring to provide guidance quarter-by-quarter.
* Ackman noted that while progress on the insurance acquisition is strong, "It is possible that something would emerge that would cause us not to go forward."

FINAL TAKEAWAY

Management at Howard Hughes Holdings highlighted record-breaking land sales, a robust pipeline of presold condos, and the strengthening of its diversified holding company model, underpinned by a strategic insurance acquisition nearing completion. The company raised its full year MPC EBT and adjusted operating cash flow guidance, reflecting strong business momentum, while maintaining a disciplined approach to future projections and reinvestment of cash flows. The leadership team expressed confidence in continued value creation and flexibility for future growth as the business model evolves.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/hhh/earnings/transcripts]

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