Image source: Howard Hughes Corp.

Condo units at Howard Hughes' (NYSE:HHC) Wards Village project in Hawaii continue to be popular. To date, buyers have snapped up more than 90% of the available units at the company's first two towers. That said, while Wards Village was the highlight of the quarter, it was not the sole driver of the company's success.

Howard Hughes results: the raw numbers


Q2 2016 Actuals

Q2 2016 Actuals

Growth (YOY)

Adjusted net income

$67.3 million

$24.2 million


NOI from operating assets

$36.1 million

$28.5 million


Adjusted EPS




Data source: Howard Hughes Corp.

What happened with Howard Hughes this quarter? 

All three of Howard Hughes' operating segments contributed this quarter:

  • Net operating income from the company's income-producing operating assets was up 27.4%, thanks to the continued stabilization of its properties. The company added new tenants to several properties over the past year, including its Downtown Summerlin and Hughes Landing retail properties, its ONE Summerlin and Two Hughes Landing office properties, and its One Lakes Edge multifamily property. In addition to that, it commenced rent collection at two new hospitality properties: The Westin at The Woodlands and Embassy Suites at Hughes Landing.
  • Land sales closed in the company's master planned community segment slumped 27.6% to $33.9 million. This decline was due in part to a slowdown in residential land sales at The Woodlands community resulting from the impact that low oil prices are having on the Houston housing market. That said, revenue from land sales rose 34.5% to $61.1 million after the company recognized deferred revenue from closings that occurred during prior periods.
  • Sales of condominium units within the company's strategic development segment were strong, with revenue up 44.6% to $125.1 million. 

What management had to say 

CEO David Weinreb, commenting on the company's results, said:

Significant contributions from each of our three business segments drove strong earnings results this quarter. In particular, residential condominium sales volume at Ward Village continues to demonstrate the desirability of our community and the high quality product that we are developing in Honolulu. NOI from our operating assets is increasing over prior periods as our recently developed properties stabilize. I am especially pleased that our commercial properties in The Woodlands have continued to generate steady and growing earnings for the company, with no credit issues to date, throughout challenging economic conditions in the overall Houston market.

Howard Hughes' Wards Village project in Hawaii is an important driver for the company at the moment. The company already has 90.8% of the units in its first tower, Waiea, under contract, with the $403 million project on pace to be complete by the end of the year. Meanwhile, 92.1% of the units at its second tower, Anaha, are under contract, with that $401 million project expected to be complete by the second quarter of next year. The company has two more projects in development as part of the first phase of Wards Village. Construction has already started on Ae'o, which is more than 50% pre-sold and is expected to be complete in late 2018. Meanwhile, Ke Kilohana pre-sales have been robust since starting in March. That said, neither project is far enough along in the process to allow the company to recognize any revenue just yet.

Looking forward 

While Wards Village remains one of the most significant growth drivers for Howard Hughes, it is just one of several strategic developments the company currently has underway. This quarter the company highlighted the progress of its Downtown Columbia project. The company is currently constructing One Merriweather, which is a class-A office building that is already 49% leased to a leading regional heathcare provider and is expected to be complete by the end of this year. Additionally, the company plans to start construction of Two Merriweather in the third quarter, with that project already 57.7% leased. Finally, it began construction of a large multi-family project in Columbia earlier this year, and it expects to start renting space next year. 

With so many projects under development, Howard Hughes has plenty of visible growth in the pipeline. 

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