Howard Hughes Holdings Inc.

Good day and welcome to Howard Hughes Holdings Inc third quarter 2023 earnings call. Today all participants will be in a listen only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note that today's event is being recorded. I would now like to turn the conference over to Eric Holcomb, Senior Vice President of Investor Relations. Please go ahead, sir.

Good morning, and welcome to Howard Hughes Holdings' third quarter 2023 earnings call. With me today are David O'Reilly, Chief Executive Officer, Jay Cross, President, Carlos Alea, Chief Financial Officer, and Dave Strife, Head of Operations. Before we begin, I would like to direct you to our website, howardhughes.com, where you can download both our third quarter earnings press release and our supplemental package. The earnings release and supplemental package include reconciliations of non-GAAP financial measures that will be discussed today in relation to their most directly comparable GAAP financial measures. Certain statements made today that are not in the present tense or that discuss the company's expectations are forward-looking statements within the meanings of the federal securities laws. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that these expectations will be achieved. Please see the forward-looking statement disclaimer in our third quarter earnings press release and the risk factors in our SEC filings for factors that could cause material differences between forward-looking statements and actual results. We are not under any duty to update forward-looking statements unless required by law. With that, I will now turn the call over to our CEO, David O'Reilly.

Thank you, Eric. Good morning, and welcome to our third quarter earnings call. I'm going to begin today with a recap of the quarter and cover the segment highlights for our master plan communities in the Seaport. Dave Stripe will cover our operating assets, followed by Jay Cross, who will update our development projects in Ward Village. And then finally, Carlos Olea will provide an update on our full-year guidance and review our balance sheet. For the third quarter, I'm pleased to report that our company continued to deliver strong financial results in our businesses with resilient underlying demand across our world-class portfolio of assets. Looking quickly around our core segments, we reported strong MPC EBT, which was highlighted by meaningful land sales at a record average price per acre. Our MPC results were complemented by a sharp increase in new homes sold, which is a leading indicator of future land sales, further providing assurance for robust land sales activity in the quarters ahead. Our operating assets continue to deliver incredible results, with year-over-year NOI growth in all three core property types, including double-digit increases in multifamily. In Ward Village, our sales team delivered another quarter of exceptional condo sales, selling out Aali'i and Ulana, and all but one unit at Kaula, which was contracted in early October. At quarter end, more than 98% of all condo units in Ward Village were sold or under contract, which is simply an amazing achievement. With these strong results and our favorable outlook for the fourth quarter, we've further increased our full-year guidance expectations for MPC EBT and operating asset NOI. We've also expanded our projected condo sales and gross margins to include the sellout of Ali'i and Kaula. At the seaport, results remain challenging, with third quarter revenues declining $3 million or 9% compared to the prior year. In total, Seaport reported a net operating loss of $9.5 million, which was essentially unchanged year over year, and included losses of $8.1 million for the Tin Building. Year over year performance was impacted by the closure of restaurant concepts, fewer private events, and poor weather conditions. In September alone, New York received more than 14 inches of rain, with more than 50% of peak Thursdays to Sunday periods affected, including 60% of Saturdays and 75% of Sundays. The continued challenges at the Seaport led us to conduct an impairment analysis and record a significant non-cash after-tax charge of approximately $555 million. Carlos will provide additional details in a few moments. Subsequent to the quarter end, we announced our intent to create Seaport Entertainment, a new division which is expected to comprise HHH's entertainment-related assets in New York and Las Vegas, most notably including the Seaport and the Las Vegas Aviators minor league baseball team. We intend to spin off Seaport Entertainment into its own publicly traded company in 2024. This planned separation from Howard Hughes will ultimately refine the identity of Howard Hughes, or HHH, as a pure play real estate company focused solely on the significant pipeline of growth opportunities within our portfolio of acclaimed master plan communities. Similarly, Seaport Entertainment, which will operate independently as an entertainment-focused enterprise, will have greater opportunities to unlock the inherent value within these assets and pursue growth within the entertainment industry. Turning to our MPC segment, we delivered $85 million of EBT, or a 12% year-over-year increase, primarily due to increased super pad sales in Summerlin and residential lot sales in Bridgeland. In total, we sold more than 84 acres of residential land in the quarter at an average price of $913,000 per acre, representing an all-time record high for Howard Hughes. We also sold an additional 13 acres of commercial land in Bridgeland to Chevron, which in September announced plans to build an R&D campus on over 77 acres of land in Bridgeland Central. This significant development is not only a catalyst for initial commercial development in Bridgeland, but also for incremental future land sales, home sales, and absorption within our multifamily properties. It will also drive increased demand for retail as we kick off the development of Bridgeland's future 925-acre downtown. Our strong MPC land sales were complemented by solid builder price participation revenue of $16 million, as well as $14 million of equity earnings primarily related to the sale of the final clubhouse condominiums in the summit. New home sales in our MPCs remained exceptional during the quarter, with a total of 605 homes sold. This represented a sharp 113% year-over-year increase, with both Summerlin and Bridgeland more than doubling the number of homes sold in the prior year. In fact, new home sales in the Las Vegas Valley during the month of August were the highest since the late 2000s. As we described in last quarter's earnings call, the surge in new home sales is largely being driven by significant lack of resale inventory, as existing homeowners remain reluctant to sell their below market mortgage rate. This dynamic has forced home buyers into the new home market, which through August accounted for nearly 30% of all homes sold in the United States, more than double historical norms. Ultimately, this is contributing to a strong level of demand for home builders, and is driving elevated interest for our land. During the quarter, we continue to contract additional land parcels at near record prices across our MPCs, many of which have not yet closed. As a result, we expect continued strong land sales in the fourth quarter and into 2024, giving us increased confidence to significantly increase our 2023 MPC EBT guidance. Carlos will discuss our guidance in more detail in a few moments, but for now, I'd like to hand the call over to Dave Streif to review the performance of our operating assets.