Howard Hughes Holdings Inc.

Good day and thank you for standing by. Welcome to the Howard Hughes Holding 4Q 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated end message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Eric Holcomb, SVP of Investor Relations. Please go ahead.

Good morning and welcome to Howard Hughes Holdings' fourth quarter 2023 earnings call. With me today are David O'Reilly, Chief Executive Officer, Jay Cross, President, Carlos Olea, Chief Financial Officer, and Dave Strife, President of Asset Management and Operations. Before we begin, I would like to direct you to our website, howardhughes.com, where you can download both our fourth 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 meaning 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 fourth 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. I will now turn the call over to David O'Reilly.

Thank you, Eric, and good morning, everyone. Welcome to our fourth quarter earnings call. On our call today, I'm going to begin with a recap of an outstanding year and cover the segment highlights for our master plan communities in the seaport. Dave Stripe will cover the performance of our operating assets, followed by remarks from Jay Cross to provide updates on our strategic development projects in Ward Village. Finally, Carlos will provide a review of our 2024 guidance and the balance sheet before we open the lines for Q&A. In short, our fourth quarter results met or exceeded our enhanced guidance expectations within each of our core businesses, closing out another exceptional year for Howard Hughes. Highlights of the year included record MPC EBT of $341 million, aided by significant growth in new home sales, strong land sales, and record residential price per acre. Our operating assets delivered record NOI of $244 million, a 4% increase year-over-year excluding dispositions, with solid growth in multifamily and office. In Ward Village, we sold out all remaining units at Aali'i and Kaula and ended the year with more than 96% of all condo units at our towers under construction or in pre-sales under contract. Although credit markets were incredibly tight during 2023, we continued to strengthen our balance sheet and commence new developments by successfully executing over $659 million of financing. This included several important refinancings for loans nearing maturity, as well as $498 million of construction loans for new developments. These new financings enabled the start of construction on several key projects in our pipeline, including Ulana, our ninth condo project in Hawaii, One Riva Row, a luxury multifamily development in the Woodlands, and the Whole Foods Anchored Grocery Center in downtown Sunwell. Now, let's take a little deeper dive on the results of our MPC segment. We delivered an outstanding fourth quarter, capping off a very strong year and setting new quarterly and full-year records for both EBT and residential price per acre. For the fourth quarter, MPC EBT was $139 million, representing an 82% increase year over year. This robust growth was primarily driven by exceptional super pad sales in Summerlin, where we sold 130 acres at a 22% increase in the average residential price per acre to over $1 million. The strong results of the quarter contributed to full year record MPC EBT of $341 million, exceeding our most recent guidance and outpacing 2022's strong results by 21%. This growth was largely driven by exceptional residential land sales, totaling more than 375 acres across our MPCs at a record average price of $944,000 per acre for the year. Strong equity earnings from the summit, which were related to Phase II lot sales and the closeout of the final clubhouse condominium units, also contributed. Turning to home sales, which we believe is a leading indicator of future land sale, we had 527 new homes sold across our MPCs in the quarter. For the year, home builders in our MPCs sold nearly 2,300 homes, representing a 45% increase year over year. This sharp increase was primarily attributable to 985 new homes sold in Bridgeland, a new all-time high for this growing community, as well as a 38% increase in Summerlin to nearly 1,100 homes. These strong results propelled Summerlin and Bridgeland into the number four and number five top-selling MPCs in the nation, for RCLCO's 2023 rankings, respectively, further solidifying the appeal of Howard Hughes' award-winning master plan communities and setting the stage for continued growth in 2024. Looking forward, we expect another strong year for new home construction, with increased starts in sales aided by a significant lack of resale inventory. With the majority of U.S. homeowners locked into an interest rate of 5% or less, and mortgage rates expected to ease, but only to levels about 6% for the foreseeable future, we do not anticipate an increase in resale supply. As a result, homebuyers will continue to be driven into the new home construction market, which not only offers the opportunity to pick the size, location, and style, but also attractive incentives like mortgage rate buy-downs offered by many of our homebuilder partners. With increased expectations for new home construction and a significant undersupply of vacant lots in the Las Vegas and Houston markets, we anticipate continued strong home builder demand for new acreage in Summerlin, Bridgeland, and the Woodland Hills throughout 2024. We also expect to close on the sale of our first lots in Florio, the first village of Terra Vallis near Phoenix. During the fourth quarter, we contracted to sell more than 500 lots in this new MVC. and were recently contracted more than an additional 300 lots in January. All of these lots are expected to close in the first half of the year. Overall, we expect another strong year of MPC EBT in 2024. Carlos will provide more details on our full year guidance in a few notes. Turning to the C4, operating results remain challenged in the fourth quarter, with a modest 3% year-over-year revenue reduction and a net operating loss of $6.6 million, including equity losses of $11.6 million, primarily from the 10 building. Total Seaport NOI was a loss of $18.2 million in the quarter. Although improved $2.4 million year over year, primarily due to reduced equity losses at the 10 building, performance from our wholly owned businesses declined as a result of poor weather conditions and lower restaurant revenues. Despite these disappointing results, there were several bright spots during the quarter, including our successful Winterland Venture, which transformed the rooftop into an immersive holiday activation and attracted more than 50,000 guests to the seaport. At the Tin Building, we successfully launched our e-commerce platform, and we closed the year in December with our strongest month of sales since the venue opened in 2022. And finally, at the Fulton Market Building, we officially opened a lawn club in November, and the Alexander Wang lease commenced in mid-December. With that, this building is now 100% occupied, and we expect improved profitability going forward. During the quarter, we announced our intent to spin off the Seaport, including our 25% minority interest in John George restaurants, together with the Las Vegas Aviators, the Las Vegas Ballpark, and our 80% ownership of air rights over Fashion Show Mall into its own publicly traded company called Seaport Entertainment. In January, Anton Nicodemus joined HHH as the CEO of Seaport Entertainment, and together we are working hard to complete the spin transaction later this year. We'll have more details to share in the coming months, but we remain positive and confident about the opportunities that this spinoff will create, both for Howard Hughes and Seaport Entertainment in the years ahead. I'll now turn the call over to Dave Streit.