Image source: Howard Hughes Corp.

Real estate sales are hard to predict, which causes very uneven results for Howard Hughes (NYSE:HHC). However, this quarter the company was able to more than even things out thanks to continued strong condo sales in Hawaii.

Howard Hughes results: The raw numbers


Q3 2016 Actuals

Q3 2016 Actuals

Growth (YOY)

Adjusted Net Income

$47.2 million

$28.5 million


NOI from Operating Assets

$30.7 million

$31.9 million


Adjusted EPS




Data source: Howard Hughes Corp.

What happened with Howard Hughes this quarter? 

Howard Hughes' condo development in Hawaii drove the quarter:

  • Net operating income from the company's operating assets slipped due to headwinds in the Houston economy, which negatively impacted occupancy and conference business at The Woodlands Resort & Conference Center as well as its two recently opened hotels.
  • Land sales in the master planned community segment declined 46.5% to $31.9 million due primarily to the absence of large commercial sales, which bolstered the year-ago period. Summerlin's sales slipped 14.5% to $16.5 million due to a decline in acres sold. Meanwhile, residential land sales in Bridgeland jumped 110.4% due to increased demand from homebuilders. However, overall sales at Bridgeland slumped 79.4% to $4.7 million because it had no additional sales of commercial land this quarter. Finally, residential land sales at The Woodlands edged up 1% to $10.6 million, due to stronger acreage sales, which offset weaker prices. That said, total sales at The Woodlands were down 40%, again due to the lack of commercial land sales.
  • Sales at Ward Village, the company's condominium development in Hawaii, remained active with the company recording 35 new contracts during the quarter, representing 11.1% of the inventory it has under construction. Further, the company recorded $115.4 million in revenue from the development in the third-quarter, which was up 46.1% year over year. 

What management had to say 

CEO David Weinreb commented on the company's results by saying that,

We had a solid third quarter as we continued to increase cash flow across the portfolio and make progress in delivering value at our strategic developments while strengthening our MPCs... We continue to advance our plans at Ward Village where Waiea, our first residential tower, is nearing completion. We expect to start closing on condominium unit sales and welcoming new homeowners within the next couple of weeks. In addition, we celebrated the topping out of Anaha, our second building, which is on schedule for completion by mid-summer 2017. It is gratifying to see our vision for this vibrant community beginning to take shape.

The key driver of Howard Hughes' third-quarter results is the continued progress on its Hawaii condo development. The company has now sold 92% of the available units at its Waiea tower and 93.7% at the Anaha tower. Meanwhile, the company began construction of the Ke Kilohana tower, which had pre-sold 91.3% of the available units. That said, the company still has nearly half of the units at the Ae'o tower left to sell, which means that there's still plenty of running room for this development.

Looking forward 

Aside from the progress in Hawaii, the company continues to move forward on several other strategic developments. It commenced construction of a Class A mixed-use office building in Columbia, Maryland, it continues to sign up premier tenants for its Seaport District redevelopment project in New York City, and it announced a joint venture project on a new 130-acre mixed-use development in Westlake, Texas. These projects are critical to driving earnings and cash flow in future years.

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