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The Howard Hughes Corp (HHH 0.23%)
Q2Â 2020 Earnings Call
Aug 4, 2020, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning and welcome to the Howard Hughes Corporation's Second Quarter 2020 Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to David Striph. Please go ahead, sir.
David Striph -- Executive Vice President, Investor Relations
Good morning and welcome to the Howard Hughes Corporation's second quarter 2020 earnings call. With me today are Paul Layne, Chief Executive Officer; David O'Reilly, President and Chief Financial Officer; and Peter Riley, General Counsel.
Before we begin, I would like to direct you to our website www.howardhughes.com, where you can download both our second 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 second 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, Paul Layne.
Paul H. Layne -- Chief Executive Officer
Thank you, Dave, and thank you all for joining us today. Welcome to our second quarter 2020 earnings call. We hope you and your families staying are safe and healthy during this time. Before we discuss the quarter's results, I would first like to highlight a very important and positive change in our management structure.
On June 25th, I announced that our Chief Financial Officer, David O'Reilly would expand his duties and become President as well as CFO of the company. Since joining us in 2016, David has been an exceptional leader and mentor across the company and has been instrumental in unlocking value and driving results throughout our portfolio. I very much look forward to our continued partnership. David, once again, congratulations.
I also want to thank our team members across the country for their dedication during these difficult circumstances over the past several months. They have all risen to meet the challenges of the situation, both in their personal lives and at work. I am truly grateful to all of them. As always, HHC remains unwavering, our commitment to their safety and to the safety of all of our stakeholders. I would like to say a few words about race multiculturalism and diversity at the Howard Hughes Corporation.
As you know, we have always had a zero tolerance policy toward any form of discrimination. We have always strive to be an inclusive workplace. But we do realize that there is much more that we can and will do. Companies can play a significant role in driving change and we want to be the type of employer that is inclusive in every way. We have the opportunity to shift the beliefs that influence the complex social dynamic of race relations in the workplace with respect to diversity, equity and inclusion. We are beginning a process of reevaluating certain aspects of our internal culture and intent to report back to you on a regular basis, how we are doing in this regard.
To begin this process, we have hired DEI Consultant, who is leading training sessions and workshops dealing with race and racism to develop awareness and make improvements for all of our employees and stakeholders. I have joined approximately a thousand other CEOs in signing the CEO Action for Diversity and Inclusion Pledge, which is the largest CEO driven business commitment to advance diversity and inclusion within the workplace. This group recognizes that organizational change begins at the executive level and I'm proud to be part of this incredible group of leaders.
Now, let's turn to the company's performance during the second quarter. We saw the strength of our master-planned communities come shining through with strong residential land and new home sales. We also saw continued strength in condo sales at Ward Village. These areas of strength are very encouraging and are a testament to the quality of our communities and to our company's diversified businesses.
As expected, we experienced negative headwinds brought on by the pandemic in our operating asset segment, specifically in retail, hospitality and in the ballpark in downtown Summerlin along with the closure of the Seaport District in New York.
Despite these headwinds, we saw positive signs in retail and hospitality as the quarter progressed. We saw many of our retailers resuming operations and a corresponding increase in collections from April through June. Additionally, our hotels reopened and we're very close to breaking even in June and will likely turn a small profit in July.
In our MPC segment, new home sales, which are a leading indicator of land sales slowed in April due to the pandemic, but increased dramatically in May and continued this trend in June and July. For the first half of the year, New home sales across our MPCs totaled 1,248, only 3 less than the same period in 2019.
We believe, most of the increased activity experienced during May, June and July is a testament to the exceptional quality of life that residents are seeking in a post-COVID world, including walkable communities and beautiful natural settings with urban conveniences, outstanding amenities and expansive open green spaces.
So speaking of quality, our MPCs continue to be recognized as some of the best places to live in the country. During the quarter, niche.com released a list of the best places to live in America with Woodlands taking second place and Columbia following closely behind as the seventh best city to live in America. Additionally, the Robert Charles Lesser Company, a national real estate consultant recognized Summerlin and Bridgeland on their top-10 list of best-selling master-planned communities through the first half of 2020. Summerlin was ranked 4th on the list and was the highest-ranked MPC in Nevada. Bridgeland was ranked 10th on the list and was the highest-ranked MPC in all of Texas.
The second quarter of 2020 was actually the best quarter for home sales in Bridgeland's history, selling 232 homes. In Summerlin, while home sales were down slightly for the first half, we have seen excellent activity during June and July and believe this is the beginning of a positive trend. During the quarter, our operating asset segment performance was bifurcated between the continued strength of our office and multifamily assets and the COVID-related disruption seen within hospitality, retail in the ballpark that I just mentioned.
Despite a 32.4% decline in operating asset NOI compared to the second quarter of 2019, we remain optimistic about the segment's recovery potential. Collections for multifamily and office remain steady during the quarter in the high 90% range and maintain this range through the end of July. Retail collections were at 49.7% during the quarter.
For the month of June, collections were at 59.5%, which while substantially lower than historic levels came in higher than the 44% same for the month of April when almost all retailers were closed. Retail collections during July were approximately 64%. When stay-at-home restrictions were lifted in May, we began reopening our hotels, starting with the Woodlands Resort & Conference Center, followed by the Embassy Suites in June and lastly, the Westin in early July.
In our Strategic Development segment, pre-sale activity at Victoria Place, our latest project at Ward Village continued to progress and we are approximately 69% pre-sold as of July 28th. Since beginning a web-only based marketing plan in mid-March, we have sold 21 homes at Ward Village totaling $35.1 million through July 28th. This I believe is a testament to our resourceful and talented sales staff and marketing teams, they doing incredible job in the neighborhood that we have created there. The two projects that are currently under construction are expected to be completed in late 2021 and 2022 and are well-sold at 84% and 76% respectively as of June.
Please note that year-over-year revenues are not comparable in our strategic development segment as we had condo tower deliveries in early 2019 and have not delivered any new condo towers in 2020.
Phase one of reopening in New York City was implemented on June 8th, allowing construction to resume at the Seaport District. Our assets in the Seaport remain closed, but we anticipate a gradual reopening of a few select businesses, including the Pier 17 Rooftop over the course of the next several weeks. Despite these unprecedented circumstances, we continue to aggressively pursue potential tenants for our vacant space and remain focused on the long-term vision at the Seaport.
Moving on to an update of our transformation plan, which as you may recall was officially announced this past October. We have made substantial progress with the first pillar of reducing annualized G&A expenses by $45 million to $50 million, with the remainder of savings to be realized once we transition our corporate office from Dallas to The Woodlands later this year.
The second pillar was committing to selling approximately $2 billion gross of non-core assets, generating approximately $600 million of net proceeds. So far, we have realized the sale of six non-core assets, generating approximately $132 million in net proceeds. To-date, this represents 22% of our original goal announced in the transformation plan. Given the state of the current market environment, the timing has been delayed, but we remain vigilant in finding the right buyers and maximizing the proceeds from these assets.
The final pillar was to decentralize our operating model, allowing us to concentrate growth and value creation within our core assets. Although, we do not expect any new construction starts within our communities in the next quarter or two, we have restarted modest investments in pre-development work, so that we are ready to move forward the minute that the demand returns.
As you can see, there has been significant progress made in our transformation plan since it was announced in October, and we believe that it has strengthened our defensive financial profile, given our many stakeholders additional confidence in us and help insulate ourselves from the market fluctuations.
And with that, I'd like to now turn the call over to our President and CFO, David O'Reilly.
David O'Reilly -- President and Chief Financial Officer
Thank you, Paul, and good morning, everyone. I'm going to start with a review of each of our operating segments' performance during the quarter and then turn to our financial results and balance sheet. With quarterly NOI of $40.8 million, our operating asset saw a decrease of 32.4% when compared to the second quarter of 2019 and 36.1% compared to the first quarter of 2020.
As Paul mentioned, the decrease in NOI was largely driven by hospitality, retail and the Las Vegas Ballpark as a result of the pandemic. Hospitality NOI dropped by $11.4 million or 119% compared to the same quarter in 2019, as all three hotels in the Woodlands were forced to shutter for all or part of the quarter.
We were able to begin to slowly reopen starting with the Woodlands Resort & Conference Center in May. As of the end of June, we were able to bring 54% of our rooms back into service. We then opened the Embassy Suites in June, where 100% of our rooms were available at the end of the quarter. In early July, we reopened the Westin. Given the increased activity seen within our hotels, we were very close to breakeven in June from an NOI perspective and expect to turn a small profit in July, which shows the progress made by our dedicated hospitality team over the last few months.
Retail NOI decreased $15.1 million in the second quarter of 2019 to $8.6 million in the second quarter of 2020, a 46% drop. Many of our retail tenants began to open and see increased activity in the back half of the quarter, which translated into a collection rate of 59.5% for the month of June, noticeably higher than the 44% collection rate seen for the month of April.
While many of our retail tenants were able to seek help through the government's PPP program, it has still been very challenging time for them. As we said last quarter, we have actively engaged with all of our tenants, and particularly with our small business local tenants who need assistance the most, where our help in the form of rent deferrals can make a real difference in their ability to survive. We are cautiously optimistic that we will see increased collections, similar to that of June as the economy continues to reopen in most states.
Multifamily NOI was down $1 million to 21% when compared to the second quarter of 2019. Our multifamily assets continue to see stable collections of 97% due to the high quality profile of the tenants who are drawn to our well-located, newly constructed exceptional assets.
The reduction in NOI was partially due to real estate tax increases on our newly constructed assets, which were appealing and an increase in concessions in the Houston market. During the quarter, one of our newly completed assets Two Lakes Edge in the Woodlands was moved from the strategic development segment into operating asset, where we expect to generate approximately $8.5 million of stabilized NOI, representing an 8% yield on cost. This is a prime example of how continuous reinvestment in our MPCs will drive outsized growth and create value for years to come.
Lastly, our second quarter 2020 office NOI increased by $7.6 million or 38% over the same period in 2019. This was in large part due to the acquisition of The Woodlands Towers this past December. Excluding The Woodland Towers, our office NOI was still higher by 7% when compared to the same period last year. Similar to multifamily, collections from our office tenants remain in the mid-to-upper 90s as a result of the high credit quality of our tenants.
Two operating assets to note would be the Las Vegas Ballpark in downtown Summerlin and the Outlet Collection at Riverwalk in New Orleans. On June 30th, Minor League Baseball officially announced that there will be no season for 2020. The cancellation of the season will obviously have a material impact on the Ballpark, which generates roughly $8 million in annualized NOI.
With the cancellation of the season, we now expect the Ballpark to reflect a loss of roughly $1.5 million in NOI, excluding refunds for the remaining six months of the year. And may also have a negative impact on the retail in downtown Summerlin as the fans who were attending these games shop in our retail stores and eat at our restaurants on game days.
Additionally, the Outlet collection at Riverwalk NOI was lower by 87% compared to the same period in 2019. It continues to be impacted by the coronavirus, as the majority of the food traffic is driven by the tourism industry. Due to its location, Riverwalk is mostly visited by shoppers from the cruise ship port. Since the cruise industry was abruptly stopped due to the pandemic, activity has declined accordingly. In-light of these events, you may recall that we took a $48.7 million impairment charge last quarter. The CDC has just extended the ban on cruise ships sailing through the U.S. through September 30th, but the property is reopened with approximately 86% of our tenants open for business.
Moving onto the MPC segment. Land sales were down a better-than-expected 19% during the second quarter, with 91 residential acres selling during the period compared to 112 acres in the second quarter of 2019. However, sequentially, land sales increased by almost 60% from the first quarter where 56.5 acres were sold. As Paul mentioned in his opening remarks, new home sales, a leading indicator of land sales dropped considerably in April as a result of the stay-at-home orders, but experienced a large uptick in May, June and July as local economies began to reopen.
Bridgeland continues to outperform, even in the midst of a pandemic, setting an all time high of 112 new homes sold in May, a 78% increase compared to May of 2019. As we've mentioned, this is an excellent indicator of future demand for our land. For the quarter, New home sales totaled 232 compared to 215 for the second quarter of 2019, an 8% increase. For the first six months of the year, there were 425 new home sales compared to 351 for the same period of 2019, a 21% increase.
Land sales at Bridgeland totaled 38.4 acres for the quarter compared to 40.7 acres in the second quarter of 2019. Price per acre increased from $404,000 in the second quarter of '19 to $429,000 in the second quarter of 2020. We are pleased with Bridgeland's performance. Due to lower superpad sales, Summerlin reported a small decrease in land revenue from $29.7 million in the second quarter of 2019 to $26.3 million this quarter. New home sales for the quarter were down from 365 in Q2 2019 to 233 this quarter.
Year-to-date, new home sales are only down 7.5% and we've seen excellent activity through June and July, which is very encouraging. When we look at the totality of new home sales throughout our regions, we had total volume of 1,248 homes sold during the first half of the year, only three less than the first half of last year at 1,251 homes.
As we've said in the past, we are a price maker in our MPCs and only sell land to meet current demand based on underlying home sales, which appears to be increasing. Demand continues to be stronger than expected for new home sales. And we attribute a great deal of this to the unique nature of our communities, they're incredible amenities and wide open spaces, which is more important to buyers than ever at this point in time.
EBT was down $6.5 million or 13% for the quarter compared to the same period in 2019, largely due to a $3 million loss from equity in earnings at The Summit. The quarterly loss at The Summit was primarily attributed to lower custom lot sales, higher unit completion costs and lower land sales revenue, all of which were impacted by COVID-19. Sequentially, EBT was down 4% compared to the first quarter of 2020. This was largely due to the stay-at-home orders enacted by local governments in April.
Turning to our Strategic Development segment. We continue to make progress on our two buildings under construction at Ward Village Aalii and Koula, which are expected to be completed in late 2021 and 2022. These projects are on time and on budget and are well sold at 84% and 76%, respectively as of June 30th. These sales all have hard deposits from buyers.
Our latest project began sales Victoria Place is progressing well with 69% of units pre-sold as of July 28th. Excluding Victoria Place, as of June 30th, we are 90.3% either closed or under contract and the other six projects, either under construction or completed, and the neighborhood that we have created is unlike anything else in the islands. I would like to note that we reduced the sales prices on certain remaining larger condo units over $4 million at Waiea and Anaha to better align with current market values and recent sales. This resulted in a $5.1 million loss reflected in condo rights in unit cost of sales.
Finally, let's take a look at the Seaport. The Seaport District was significantly impacted by COVID-19, as New York City was one of the hardest hit areas in the country. This resulted in an abrupt stop to construction at the Tin Building and caused our tenants in JV-owned businesses to close their stores. Construction was able to resume recently, but our assets at the Seaport remained closed.
We do however anticipate a reopening for a select number of businesses in the district over the next several weeks. Further, we had to postpone our summer concert series on the rooftop of Pier 17 until 2021. The revenue and sponsorship of this series has been a meaningful contributor to our revenue.
The shutdown during the quarter was reflected in our quarterly revenue of only $2.7 million, down from $11.4 million in the second quarter of 2019. Operating expenses followed suite, declining from $14.3 million in Q2 2019 to $6.1 million this quarter, bringing our NOI to a loss of $3.7 million for the quarter compared to $2.9 million loss for the same period of 2019.
In July, the Seaport entered into management agreements, with a creative culinary management company to manage and operate the food and beverage operations at the Fulton, R-17, Cobble and Co. and Malibu Farm. By bringing on creative culinary, these industry experts will ensure that our restaurants are running efficiently.
On July 16th, we sold our 35% equity stake in Mr. C Seaport for $750,000 and recorded an impairment charge of $6 million. The 66-room boutique hotel located in close proximity to the Seaport was severely impacted by the coronavirus as occupancy levels plummeted. The sales in-line with our stated plan to sell non-core assets.
As construction on the Tin Building has resumed and we anticipate the reopening of select businesses in the area, our long-term vision for the Seaport is not changed. And we believe that once complete, the Seaport will be one of the premier districts in Manhattan.
I would also like to note that on June 29th, we entered into a termination of a participation agreement regarding the previous sale of a property in West Windsor, New Jersey. We originally sold the property for $40 million, plus a future profit participation. The participation was making it difficult for the buyer to raise equity, so they bought us out early. The $8 million payment reflects the projected value of that profit participation.
Taking a look at GAAP earnings. We completed the second quarter with a net loss of $34.1 million or $0.61 per diluted share compared to earnings of $13.5 million or $0.31 per diluted share for the same period last year. The large reduction in earnings between quarters is based on both the impact that coronavirus pandemic has had on our operating assets, MPC and Seaport District segments and the fact that we closed on a portion of the Ae'o condo tower in 2019 and have not delivered any mixed-use project this year in our Strategic Development segment. NAREIT defined FFO was $0.22 per diluted share for the quarter as compared to $1.19 for the second quarter of 2019.
I would now like to take a look at the liability side of the balance sheet to provide some detail around our debt. As of the end of the quarter, we had approximately $4.4 billion in total debt. Of which, approximately $2.5 billion is floating rate. Of that amount, $705 million has been swap to fix and an additional $271 million is subject to an interest rate caller. That leaves approximately $1.6 billion unhedged. Most of this debt is associated with our Woodlands Towers bridge facility, construction loans including 110 North Wacker and our downtown Summerlin mortgage loan.
In terms of maturity profile, we have approximately $61 million of debt maturing in 2020 on our Three Hughes Landing office building, which is approximately 89% leased and which we are working currently on the refinancing. Maturing in 2021 of four loans totaling just under $341 million. The largest component is 1201 Lake Robbins, which is fully leased to Occidental Petroleum.
Moving on to financing activity during the quarter. On June 22nd, we modified the existing downtown Summerlin loan, extending the financing by three years to June 2023 at LIBOR plus 2.15%. In exchange for a pay-down of $33.8 million to a total commitment of $221.5 million.
On May 20th, we extended the remaining $280.3 million bridge loan for the Woodland Towers and the Woodlands Warehouse for six months at LIBOR plus 2.35%, with an option for an additional six-month extension at LIBOR plus 2.9%, extending the final maturity to June 2021.
As of the end of the second quarter, our total consolidated debt to total assets was approximately 48%. And our net debt to enterprise value was 48.4% at the end of the quarter. From a liquidity perspective, we finished the quarter with $931 million of cash on hand. As you can see from the projects under construction in the table provided under the results of operation in our 10-Q, we have a net equity requirement of $315 million, giving us more than enough liquidity to meet all of our current funding commitments.
I'll now turn the call back over to Paul for some closing remarks.
Paul H. Layne -- Chief Executive Officer
Thank you, David. While the company has clearly been affected by the pandemic, I am confident in our incredible assets and our businesses and our people. While there is still uncertainty in the economy, we are in extremely fortunate position at Howard Hughes. We have irreplaceable assets in locations where people want to live, work and shop. These communities provide safety, security, incredible amenities and wide open spaces. We have a self-funding business model that is unique in our public markets and a diversified income stream with a solid balance sheet and as we have said more than $930 million of cash on hand.
During the year, we prepared for this set of circumstances in a very prudent manner. We have raised equity, we have substantially cut overhead and streamlined our business. All of these things have helped prepare us for this moment and they have ensured that we will have the ability to harvest the value embedded in our core assets over the long-term.
We will now turn to the Q&A section of the call.
The first few questions, we will answer have been generated by Say technology and will be read by Dave Striph. Dave, can you please read the first question?
Questions and Answers:
David Striph -- Executive Vice President, Investor Relations
Yes, Paul. The first question is, do you have plans to expand the master-planned communities to other states?
Paul H. Layne -- Chief Executive Officer
Thanks, Dave. We are always looking for opportunities that generate the best risk adjusted returns for our shareholders. But it is very difficult to find land in the size range that we want with the close proximity to large cities and major infrastructure. We really believe the best opportunities to deploy capital at the highest risk-adjusted returns, reside within our existing core assets. Our master-planned communities, as we have stated in our transformation plan, which we rolled out last October.
David Striph -- Executive Vice President, Investor Relations
Thanks, Paul. The next question is, is there a plan to convert to a REIT or will you return -- retain the current structure?
David O'Reilly -- President and Chief Financial Officer
Dave, I'm happy to take that and Bobby, appreciate the question and participating in the Say technologies. I can tell you today, as of today, we have no plans to convert and that is candidly a result of a cost benefit analysis of a reconversion. The potential benefit would be that we could save taxes on just the operating asset segment of our company that's -- those are the assets that are reeligible, but with the meaningful tax shield in the form of our net operating losses that should last us at least until 2022, that benefit is largely muted. And as a consideration, we really value our ability to self-fund our development pipeline using the free cash flow of our operating assets, MPC land sales and condominium profits. And a reconversion would force us to dividend out a meaningful portion of that free cash flow limiting our ability to self-fund our development pipeline. So, I think today and this is something that we will continue to evaluate over the coming years into the future as the makeup of our portfolio shifts and our net operating losses become exhausted. But as of today, there is no plans to convert.
David Striph -- Executive Vice President, Investor Relations
Thanks, David. The next question also comes from Bobby. Have you thought about converting your condo buildings into apartment buildings?
Paul H. Layne -- Chief Executive Officer
Yeah, thank you for your question. We've looked at the rental concept many times in Honolulu, but the math really doesn't work for us. We'd be competing with the individuals who buy our condos and put them into the rental pool at little or no return. Condos by far in a way are the best return on our capital in Honolulu.
David Striph -- Executive Vice President, Investor Relations
Thanks, Paul. Next one is from Aaron at A&M Capital. Any chance, share repurchase can get approved and accelerated while stock prices are at current levels?
David O'Reilly -- President and Chief Financial Officer
Another great question Aaron, and I appreciate it. In March when we raised equity, we raised it planning for the worst and hoping for the best. And I think as we talked about in the prepared remarks earlier, we are far from the worst and we saw some great spots in the portfolio in terms of continued strength of land sales, office performance, multifamily performance, Ward Village, etc. I would say that I'm not convinced entirely given where this country is in light of the COVID-19 that we are entirely out of the woods and I don't feel such certainty that our excess liquidity right now should be used for share repurchases today. Again, we're always going to evaluate the best capital allocation decisions for the company, whether that's share buybacks, new investments, potential new developments or just maintaining excess liquidity to make sure that we can make it through this pandemic.
So all of that's always on the table. But as we sit here today, I think a lot of comfort in having the liquidity that we have that knowing that we will absolutely be able to get to the other side of this pandemic and hopefully the strength that we saw in 2Q continues in 3Q and 4Q. And we don't have to worry about a second wave or any sort of reversion in the financial results. But until we know that for sure, I can imagine using up too much of our excess liquidity for share repurchases.
David Striph -- Executive Vice President, Investor Relations
Thanks, David. Next question comes from Bill Hammer at Hammer Wealth Group. What are the greatest reinvestment opportunities over the next two to three years?
Paul H. Layne -- Chief Executive Officer
Thanks, Bill. It's a great question. As I mentioned before, we believe redeploying capital back into our core assets, provide the greatest risk adjusted returns for our shareholders. We had laid this out in our transformation plan, and we feel very strongly about this. We are aggressively looking in our MPCs for new medical development similar to what we did in the Woodlands for MD Anderson and other build-to-suit office opportunities pushing hard in our recruitment efforts for all types of users through our MPCs which -- our MPCs provide outstanding wide open spaces as well as amenity rich, walkable, urban cores.
As David stated in our prepared remarks, a prime example of reinventing our core asset is Two Lakes Edge. One of our newly completed multifamily assets in the Woodlands. Total investment of approximately $108 million. We expect this asset to generate $8.5 million annualized NOI over the next few years, representing an 8% return on an asset that should be valued in the 4.5% cap rate range.
David Striph -- Executive Vice President, Investor Relations
Thanks, Paul. Another question from Bill Hammer, what is the status of selling your interest in 110 North Wacker?
Paul H. Layne -- Chief Executive Officer
We are so pleased with 110 North Wacker. It is opening in October and coming in on time and on budget. The building is currently 74% pre-leased to credit tenant. We firmly believe that once complete, this building should sell for a premium. Thank you.
David Striph -- Executive Vice President, Investor Relations
Alright. Next question, how do you plan on making the company easier to understand and therefore value over time? And how do we get more analyst to cover HHC?
David O'Reilly -- President and Chief Financial Officer
Now this is something that we talked about all the time, Dave. I'm happy to handle this question. If you look, obviously, Howard Hughes is a unique company without any direct peers or comps. And there is always going to be some inherent challenges in trying to simplify a more complicated company, but at the end of the day, we think that we need to still the pieces of what we do, which is using our free cash flow to self-fund outsize risk-adjusted return development opportunities in our core MPCs where we have meaningful competitive advantages. It's not as complicated as it can seem at first. We've worked hard to make things more simplified and provided our detailed supplemental package that really provides a roadmap to calculating NAV of the company. And aside from us providing discount rates and cap rates, everything is there to value this company.
And in terms of increasing the number of analysts, we're working hard to increase the number of analysts and we believe that the recent equity offering that we did in March, should lead to some increased coverage that will hopefully pick up by the end of this year.
David Striph -- Executive Vice President, Investor Relations
Thanks, David. One last question from Say, at what capacity would it make sense for restaurants at the Seaport to reopen?
David O'Reilly -- President and Chief Financial Officer
As we discussed in the prepared remarks, we're going to have some limited openings that have really started already and will continue to rollout over the coming weeks and months. But there is no single answer since our restaurants all vary in size the dining spaces, outdoor seating capacity, pricing and so forth. We're going to continue to evaluate on a case-by-case basis when reopening venues make sense based on market demand.
Candidly, as we continue to reopen we are so excited about the new relationship with Creative Culinary, they're going to lend their market expertise during this reopening process and this new management structure is not only going to elevate the customer experience, but it's also going to put our restaurants in the best position for success coming out of this pandemic. Creative Culinary was -- it's going to be responsible for employment and supervision of all employees, day-to-day operations, accounting, food and beverage operations, setting menus all those critical items where they really hold the expertise and we're so excited about this new relationship.
Operator
[Operator Instruction] And our first question will come from Hamed Khorsand with BWS Financial. Please go ahead.
Vahid Khorsand -- BWS Financial -- Analyst
Hi. It's actually Vahid. Quick question. Thank you for taking the question this morning. I have three questions, probably all three quick. First starting in Summerlin, I think it's turning out better than you guys had expected from Q1. But was wondering, these land sales you're getting now, is that something where they are in smaller lot orders, meaning are they putting in orders for a smaller size of acreage than before? Is there any hesitation in the homebuilders in taking on the same acreage as before?
Paul H. Layne -- Chief Executive Officer
Yes, thank you for the question. This is Paul Layne. The tracks of land or superpads in Summerlin that are selling are generally the same pads that have been planned to sell as part of the master plan. David, anything to add there?
David O'Reilly -- President and Chief Financial Officer
Yeah, I would say that, obviously, we're excited about the number of underlying home sales and that home sale demand and transaction volume continues to keep our homebuilding partners very interested in the same tracks of lands that we had anticipated selling. We're not shrinking superpads, we're not going back to selling lots. We're really progressing along the same business plan and we see that demand from our homebuilding partners and we're excited that we believe we're going to continue to be able to execute at really strong levels in both number of acres and price per acre through the remaining six months of the year.
Vahid Khorsand -- BWS Financial -- Analyst
Thank you. And then turning over to work -- sorry, go ahead.
Paul H. Layne -- Chief Executive Officer
Sorry. Just to follow up on that, I mean, when you look at Summerlin, downtown Summerlin and how it has affected the demand for home sales. It's very exciting the Ballpark, the hockey practice facility. The retail we announced Monday that but 11 new retailers coming into downtown Summerlin, totaling 35,000 feet including the Anthropologie. So the amenity base continues to expand driving home sales, which drives the direct corollary to superpad sales. Thank you.
Vahid Khorsand -- BWS Financial -- Analyst
And then, just jumping over to Ward Village, just a real quick question. I know you said Victoria Place 69% pre-sold. I didn't see a construction date, when do you anticipate breaking ground on that?
Paul H. Layne -- Chief Executive Officer
Sure. Great question. We -- depending on construction-financing availability, we plan to break ground early of next year. In addition to that being -- that property being very well pre-sold, seven -- all seven of our Ward Village towers, our 88% of the units are sold. Pretty phenomenal.
Vahid Khorsand -- BWS Financial -- Analyst
And if you'll allow me one more question. On Seaport, I know in the past, we've talked about it being mostly -- the restaurants and entertainment venues being operated by yourself. Given the current COVID environment, is there an opportunity to -- are you imagining that it's going to be more Howard Hughes owned and operated entertainment restaurant venues? Or is the Retail and Entertainment segment there still -- is it strong enough to allow outside operators to come in?
Paul H. Layne -- Chief Executive Officer
Let me start and I'll turn it over to David. But we believe that -- and we have some things in the works that we're excited about that would be outside operators that would sign leases. We also, in addition to retail, we have some of the best office space with incredible views available that CBRE is marketing for us and we are -- as we come out of this pandemic, we are optimistic about the leasing of that office space as well. David?
David O'Reilly -- President and Chief Financial Officer
I think the view before and after pandemic hasn't shifted much and that we are very much focused on bringing in the best-in-class operators of restaurants across the board. And to be able to execute on transactions that Jean-Georges, David Chang, Andrew Carmellini, Helene Henderson has been tremendous. And we're just really looking forward to the day when we get all of those venues open and operating at capacity on the other side of this pandemic, that can really demonstrate how strong that Seaport will be.
Vahid Khorsand -- BWS Financial -- Analyst
Thank you very much.
David O'Reilly -- President and Chief Financial Officer
Thank you.
Operator
Thank you. Our next question will come from Alex Barron with Housing Research Center. Please go ahead.
Alex Barron -- Housing Research Center -- Analyst
Yeah. Thank you, guys. And sounds like things are making some progress. I wanted to ask about downtown Summerlin. Seems like the NOI took a bit of a step back. Was there anything of a one-time nature there or is that kind of the run rate we should expect going forward?
David O'Reilly -- President and Chief Financial Officer
Well, the NOI...
Alex Barron -- Housing Research Center -- Analyst
Doesn't.
David O'Reilly -- President and Chief Financial Officer
Summerlin, Alex. Yeah, is really impacted by the retail tenancy. And when we had stay-at-home orders in March and April, most of those retail tenants had to close and they weren't able to operate. Only a handful were actually to continue -- able to continue doing business, whether they were grocers like our Trader Joe's or doing take out curbside pickup for some of our restaurants.
As a result, a lot of our smaller local tenants there needed some help to make sure that they can survive this pandemic and we've worked with all of them. Really focused on doing rent deferrals. In some instances, we were -- we did abate modest amounts of rent, but as a result of all those closures and our collections falling to 44% as we noted in our prepared remarks, that NOI was obviously impacted.
Now as we did note, our collections in retail did increase from April to June and then even more from June to July. That should translate into a recovery in that NOI over time. And it's not to say that we're going to go back to 4Q 2019 run-rate NOI next quarter, but I think you should expect over the next several quarters, a gradual growth in that NOI to get back toward a stabilized level. As Paul noted in answering a previous question, we signed a tremendous number of leases, brought in some new great retailers and those -- as those spaces get build out and tenants move in, that should also contribute to that growing NOI getting us back to a run rate level more consistent with the stabilized target.
Alex Barron -- Housing Research Center -- Analyst
Thanks for that...
Paul H. Layne -- Chief Executive Officer
Alex -- yeah, go ahead. Sorry. Just to follow-up. So, Summerlin retail collections in July, it increased as David referenced up to 66%. The lowest was in April, was in the 20s. So, we've had a strong increase in collections. We have a very -- as a company, during the pandemic, we have focused on collections and driving new business and velocity of tours in our apartments, etc., gone back to the basics. And our team collecting rents and making the solid relationships and building trust with our tenants from Hawaii to New York, has really been strong, really proud of them. And I think it shows in the percentages of collections, just like in Summerlin.
Alex Barron -- Housing Research Center -- Analyst
Yeah. I just wanted to have a quick follow-up on the same topic, if you will still allow me another question. So how does the rent deferral work? I mean, it's not a rent forgiveness, is it? Is it just that made with when they get back up on their feet a year from now, whatever, they'll owe you...
Paul H. Layne -- Chief Executive Officer
Well...
Alex Barron -- Housing Research Center -- Analyst
They'll pay you back what they didn't pay now. Is that how it works?
Paul H. Layne -- Chief Executive Officer
We try to treat every single one of our tenants -- Summerlin has over 120 retailers, but we have over 700 retailers across the country. We tried to treat each of them as individually, as a special understanding as possible and build that trust with our retailers. Generally speaking, we have done modest deferments of a month or two, where they would pay back the deferred rent over -- it depends on the tenant, but generally, you're right, over a year or so. And that combined with most of our tenants taking advantage of the PPP plan, it has helped about a four-month assistance.
Alex Barron -- Housing Research Center -- Analyst
Okay, great. And then I wanted to switch to the MPC land sales. I heard you guys give us the home sales for Columbia -- I'm sorry for Bridgeland, but I was wondering, if you had what those numbers were for the other three and MPCs? And also whether you would consider disclosing the actual either acre sold or dollars made in each of the MPCs? I think, from a modeling perspective, it would be very helpful.
Paul H. Layne -- Chief Executive Officer
David, do you want to take that?
David O'Reilly -- President and Chief Financial Officer
Yeah, sure. And the acres sold and the price per acres sold in each community is highlighted on Page 22 of our supplemental. So that information, hopefully, you can have -- you can download that supplemental of the Investor Relations tab on our website and you'll be able to see exactly what's sold from both the residential and commercial acre price per acre, etc.
From an underlying home sales perspective, obviously, Bridgeland was the shining star, but we also talked about the other most material aspect of our home sales, which is in Summerlin, which year-to-date, we -- as we said in the prepared remarks were down only 7.5%. And we've seen a pickup in Summerlin in June and July, which is really encouraging. So we're hopeful that we'll be able to even further close that gap as the year progresses.
Alex Barron -- Housing Research Center -- Analyst
Okay. I do see the details in the supplement. I had missed that. So, sorry about that. Thank you.
David O'Reilly -- President and Chief Financial Officer
Well, alright.
Paul H. Layne -- Chief Executive Officer
Well, thank you, Alex. Always great talking to you.
Operator
And our next question will come from Jon Petersen with Jefferies. Please go ahead.
Jon Petersen -- Jefferies Group -- Analyst
Great, thanks. A couple of questions here. One, maybe you guys have already addressed this, but in terms of the retail, I'm curious if you guys have a breakout of national chains versus small business mom-and-pops, like what percent of your retail portfolio is made up of each type of tenants? David, do you have that handy?
David O'Reilly -- President and Chief Financial Officer
We don't disclose that information. I would say that it various meaningfully across our properties and our three major retail properties are downtown Summerlin, where we have a very good mix between national tenancy and local tenancy closer to 50-50. Ward Village, where we have more local tenants than national tenants. And then on a much smaller scale is the Outlet Collection of Riverwalk, where we are predominantly national tenants. But the exact details and the exact percentages, we haven't disclosed so we don't have that level of detail within the retail portfolio, within the supplemental.
Jon Petersen -- Jefferies Group -- Analyst
Okay. Alright, thanks. And maybe just more of a higher level strategy question. So you guys did the equity offering, you're sitting on a lot of cash right now. Interestingly, this recession, seems like one where home sales might remain actually pretty strong, which is the exact opposite of what we saw in the global financial crisis. However, you mentioned in your earnings release that you're not starting any new development, which also make sense, because you probably wouldn't want to be developing multifamily or office right now in this environment.
So if we kind of fast forward a few quarters or a year plus, it seems like we could be in a scenario where you've done a lot of Homeland sales and have generate a lot of cash, but don't really have development to pour that cash into. So, I guess, first of all, is that kind of in line with how you're thinking so far understanding that we are very early in this recession? And what do you do in terms of a corporate strategy when you're sitting on so much cash and maybe lack near-term investment opportunities?
Paul H. Layne -- Chief Executive Officer
Let me start with that and I'll turn over to David. But what we did say just to qualify on development, there are pockets of opportunity that we see not starting next quarter or maybe even not the quarter after. But in locations like Columbia and Bridgeland for multifamily and multifamily in Columbia and possibly even in Summerlin multifamily, we see solid leasing and the rents have been -- the last two months, 45 days have been surprisingly strong. I think the flight to quality in those locations for AAA quality multifamily may prove out that the potential for development could be there. So, I mean, there are certain pockets that we are very excited about in addition to our home sales in our MPCs. David over to you.
David O'Reilly -- President and Chief Financial Officer
Look, what we should be so blessed with the problem having too much free cash flow and not enough places to use it in terms of new developments Jon, and then we can really focus on other capital allocation decisions, whether it's external growth, dividend, share buybacks, etc. All of those areas of capital allocation that we think will generate the highest returns for our shareholders. That's where that capital will go. We are, as Paul said, optimistic that I don't think we'll be in spot where there won't be any new development. So, I think, we see some various limited pockets where there is demand, we're seeing that demand increase and as long as that continues over the next several quarters, there will be a need for incremental opportunities within our MPCs.
Jon Petersen -- Jefferies Group -- Analyst
Got it. Yeah. I understand it's a high-class problem to have. But I guess...
Paul H. Layne -- Chief Executive Officer
Especially after March. Yeah, exactly. No, I certainly appreciate that. I guess, if the investment -- and I appreciate what you said. But, I guess, if the investment opportunities aren't there in your existing MPCs, I mean, is it an opportunity to make an investment in a new market? Or is that capital better suited held onto for your existing MPCs or maybe -- I know you just issued equity, but at some point do you consider share buybacks?
David O'Reilly -- President and Chief Financial Officer
Yeah. Look...
Paul H. Layne -- Chief Executive Officer
I mean, as I mentioned -- sorry, David. As I mentioned earlier, I mean, we always are looking at opportunities. Not only within our MPCs, which we truly are focused on, but we see deals all the time they're just really hard to make any sense. And so our true focus is in our MPCs, but like the Woodlands for instance when you have 28,000 acres of potential of Summerlin at 22,000 acres and there is all different types of products that are available, we are looking at lots of different opportunities. As I mentioned earlier, we're focused on medical right now as well as office build-to-suits.
The idea that we're seeing across the country of what America wants is wide open spaces in a walkable urban, but in a non-super dense location. I think it's only logical that office companies will follow and want their employees to live in our type of master plan communities and I'm -- we're trying to find companies that want to move to our master plan communities, like we've done our build-to-suits in Woodlands and Summerlin, we can build quickly and at great prices.
Jon Petersen -- Jefferies Group -- Analyst
Great, I appreciate the color. Thanks, guys.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Paul Layne for any closing remarks. Please go ahead.
Paul H. Layne -- Chief Executive Officer
Thank you very much. And I'd like to thank everyone for joining us today. Be safe, wear your masks and we appreciate you being here. Take care [Technical Issues] good afternoon.
Operator
[Operator closing Remarks]
Duration: 60 minutes
Call participants:
David Striph -- Executive Vice President, Investor Relations
Paul H. Layne -- Chief Executive Officer
David O'Reilly -- President and Chief Financial Officer
Vahid Khorsand -- BWS Financial -- Analyst
Alex Barron -- Housing Research Center -- Analyst
Jon Petersen -- Jefferies Group -- Analyst
