Howard Hughes Holdings Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Howard Hughes' first quarter 2024 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 message advising 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 like now to turn the conference over to Eric Holcomb, Senior Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to Howard Hughes Holdings' first quarter 2024 earnings call. With me today are David O'Reilly, Chief Executive Officer, Jay Cross, President, Carlos Olea, Chief Financial Officer, Dave Strive, President of Asset Management and Operations, and Joe Villain, General Counsel. Before we begin, I would like to direct you to our website, howardhughes.com, where you can download both our first 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 first 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 our CEO, David O'Reilly.

Thank you, Eric, and good morning to all from Phoenix. Before we begin, I'd like to welcome Joe Villain, our new general counsel, to his first earnings call with Howard Hughes. Joe brings a wealth of legal expertise and experience overseeing large real estate platforms across many asset classes. and we're pleased to have him on our team. On our call today, I'm going to begin with a recap of the first quarter and cover the segment highlights for our master planning communities in Seaport. Dave Strife will cover the performance of our operating assets, followed by remarks from Jay Cross, who will provide updates on our strategic development projects. Finally, Carlos Olea will review our full-year guidance and the balance sheet before we open up the lines for Q&A. All right, jumping into our results. The first quarter of 2024 continued our strong momentum experience throughout 2023, setting the stage for what we expect to be another incredible year across each of our core businesses. In our MVCs, we saw increased underlying demand, including a double-digit acceleration of new home sales and elevated home builder interest for our land, which we expect will yield strong land sales in Nevada and Texas during the remainder of the year. In Arizona, we achieved a major milestone with the closing of our first residential land sales in Correo, paving the way for the start of our next great MPC, TerraVals. Our operating assets delivered $63 million of NOI, representing an impressive 7% year-over-year growth, with solid improvement in office and multifamily. This result provides a strong foundation for the full year which we expect will achieve a new all-time high for NOI in 2024. In strategic developments, demand for our newest condominium project in Hawaii and Texas was extraordinary, with more than 250 residences pre-sold in the quarter, which represent future revenue of nearly $560 million. We're still on track for a late 2024 delivery of Victoria Place, which we expect will generate approximately $700 million of revenue in the fourth quarter. Looking at Ward Village overall, we've reached $6 billion in sales, including the community's six delivered towers that are 100% sold and those towers that are currently under construction or in pre-sales. Looking into the results of our MPC segment, we delivered MPC EVT of $24 million in the first quarter. largely driven by the sale of 31 acres of residential land in bridgeland and 13 million dollars of builder price participation across our communities as expected we did not close on the sale of any residential land in summer as all super pads are expected to close in the second and third quarters in the woodland hills land sales were muted in the quarter as many lot deliveries were postponed as a result of municipal permitting issues These delays have since been resolved, and we anticipate significant increases in residential land sales in this MPC during the remainder of the year, most likely to levels outpacing 2023's results. With land sales only occurring in Bridgeland and the Woodland Hills, our average residential price per acre was $600,000. This reflected a year-over-year reduction, primarily due to six custom lot sales in the Woodlands and Summerlin during the prior year, for $2.9 million per acre. Excluding these custom lot sales, our price per acre increased 15% year over year. As we've reiterated, for years, land sales can be lumpy and should not be measured on a quarterly basis. The volatility can be driven by custom lot sales, commercial land sales, changes in inventory, all of which contributed to this quarter's year over year comparison. We have strong confidence in our current guidance and this quarter's results are not indicative of our expectations for the remainder of the year. In Arizona, our Floreo joint venture closed on its first residential landfills, which totaled 52 acres and an impressive $758,000 per net acre. Much of this revenue was deferred until we complete infrastructure and lot preparation later this year or early next year. We expect more lock closings to occur in the second and third quarters and hope to celebrate our grand opening next year. Turning to new home sales, which we believe are a leading indicator of future land sales. We saw increased demand with a total of 654 homes sold across our MVCs. This represented the highest quarterly sales in three years, outpacing the first quarter of 2023 by 18% and the fourth quarter by 24%. Increases were realized in each of our NPCs, with people continuing to choose our highly amountized communities, which offer an exceptional quality of life, a variety of housing options, and short commutes. Looking forward, we anticipate strong demand for new home sales during the remainder of 2024. With mortgage rates now expected to remain at levels around 7% for the foreseeable future, and most homeowners benefiting from existing mortgages of 5% or less, we expect a continued significant lack of retail supply in the market. As a result, homebuyers will be driven into the new home construction market, where they often benefit from lucrative mortgage rate buy-downs and other incentives from our homebuilder partners. With elevated demand for new homes, as well as a significant undersupply of vacant developed lots, which remain well below equilibrium in the Las Vegas and Houston markets, We expect continued strong home builder demand for incremental acreage. This will ultimately drive what we expect will be a robust residential land sales and MPC EVT for the full year in 2024. Carlos will provide more details in a few minutes. Turning to the Seaport, we're making considerable progress towards a successful spinoff of Seaport Entertainment, which will include all of the Seaport, the Las Vegas Aviators baseball team, the Las Vegas ballpark, our 25% interest in John George restaurants, and our 80% air rights over the Fashion Show Mall in Las Vegas. In January, Anton Nicodemus joined Howard News as the CEO of Seaport Entertainment, and since that time, he has been actively running the business, building his management team, and implementing operational improvements. We remain positive and confident about the opportunities that the spinoff will create in the years ahead. both for Howard Hughes and Seaport Entertainment, and we look forward to sharing more with you soon. Looking at the financials, Seaport operating results remain challenged, generating revenue of $11.5 million, which reflected a modest $395,000 year-over-year reduction. The decline was primarily associated with poor weather and lower foot traffic at our restaurants, as well as a decrease in sponsorships. These reductions were partially offset by increased revenue from the Fulton Market Building, which has benefited from the commencement of the Alexander Wang lease and the opening of the Long Club late last year. Net operating losses were $8.6 million in the quarter, or a $3 million year-over-year reduction, primarily due to sales mix and increased costs associated with the stand-up of Seaport Entertainment. including equity losses of $8.9 million, primarily from the TIN building, total seaport NOIs with a loss of $17.5 million in the quarter. Although these losses remain sizable, the TIN building did see improved financial results, both sequentially and year-over-year. Significant changes in the operating platform, which have been implemented by John George in consultation with Anton and his team, are yielding positive results and contributing to enhanced efficiencies and reduced costs. With more changes to come, we expect further improvements going forward. With that, I'll turn the call over to Dave Streif for a review of our operating assets.