Howard Hughes Corp. Revenue Jumps 10.9%, Net Income Soars on Land Sales

TL;DR

**HHC is crushing it with land sales and rental income, making it a solid long-term play despite rising debt.**

AI Summary

The Howard Hughes Corporation (HHC) reported a significant increase in total revenues for the nine months ended September 30, 2025, reaching $850.4 million, up from $767.1 million in the prior year, representing a 10.9% increase. This was primarily driven by Master Planned Communities land sales, which rose to $445.2 million from $385.4 million, and rental revenue, which increased to $330.9 million from $315.5 million. Net income attributable to Howard Hughes Holdings Inc. for the nine-month period was $117.4 million, a substantial improvement from $43.5 million in the same period of 2024, largely due to the absence of discontinued operations losses and a gain on sale of real estate. The company's total assets grew to $9.80 billion as of September 30, 2025, from $9.21 billion at December 31, 2024, with net investment in real estate increasing by $535.6 million. Mortgages, notes, and loans payable, net, increased to $5.29 billion from $5.13 billion, reflecting increased financing activities. A key strategic change was the May 5, 2025, Pershing Square transaction, where Howard Hughes Holdings Inc. (HHH) sold 9,000,000 shares for $900 million to fund a new strategy of becoming a diversified holding company. Risks include increased interest expense, which rose to $128.6 million for the nine months ended September 30, 2025, from $122.6 million in 2024, and potential credit losses on receivables. The company's strategic outlook is focused on leveraging its master planned communities as a foundation for broader investments.

Why It Matters

This 10-Q reveals Howard Hughes Corp.'s strong financial performance, particularly in its Master Planned Communities, which is crucial for investors seeking growth in real estate development. The substantial increase in net income to $117.4 million for the nine months ended September 30, 2025, compared to $43.5 million in 2024, signals improved profitability and operational efficiency, potentially attracting new capital. The $900 million Pershing Square investment in parent HHH underscores a strategic pivot towards diversification, which could impact future resource allocation and competitive positioning within the real estate sector. For employees and customers, continued growth in master planned communities suggests ongoing development and stability in these large-scale projects, while the broader market will watch how HHH's new diversified holding company strategy unfolds against its core real estate foundation.

Risk Assessment

Risk Level: medium — The company's mortgages, notes, and loans payable, net, increased by $159.9 million to $5.29 billion as of September 30, 2025, from $5.13 billion at December 31, 2024, indicating a reliance on debt financing. Interest expense also rose to $128.6 million for the nine months ended September 30, 2025, from $122.6 million in the prior year, suggesting vulnerability to interest rate fluctuations. Additionally, the company reported a loss on sale of MUD receivables of $48.2 million for the nine months ended September 30, 2025, highlighting potential volatility in certain asset dispositions.

Analyst Insight

Investors should consider HHC's strong revenue growth in Master Planned Communities and improved net income as a positive indicator. However, they should closely monitor the increasing debt levels and interest expenses, as these could impact future profitability. Evaluate HHH's new diversification strategy for its potential to create long-term value beyond its core real estate holdings.

Financial Highlights

debt To Equity

2.33

revenue

$850.4M

operating Margin

37.6%

total Assets

$9.80B

total Debt

$5.29B

net Income

$117.4M

cash Position

$568.0M

revenue Growth

+10.9%

Revenue Breakdown

Key Numbers

• $850.4M — Total Revenues (Increased from $767.1M in 2024 for the nine months ended September 30, 2025, a 10.9% increase.)
• $117.4M — Net Income Attributable to HHH (Increased from $43.5M in 2024 for the nine months ended September 30, 2025, a 169% increase.)
• $445.2M — Master Planned Communities Land Sales (Increased from $385.4M in 2024 for the nine months ended September 30, 2025.)
• $330.9M — Rental Revenue (Increased from $315.5M in 2024 for the nine months ended September 30, 2025.)
• $9.80B — Total Assets (Increased from $9.21B at December 31, 2024.)
• $5.29B — Mortgages, Notes, and Loans Payable, Net (Increased from $5.13B at December 31, 2024.)
• $128.6M — Interest Expense (Increased from $122.6M in 2024 for the nine months ended September 30, 2025.)
• $48.2M — Loss on Sale of MUD Receivables (Reported for the nine months ended September 30, 2025.)
• $900M — Pershing Square Investment (Proceeds from HHH's sale of 9,000,000 shares to PS Holdco on May 5, 2025.)

Key Players & Entities

• Howard Hughes Corporation (company) — registrant of the 10-Q filing
• Howard Hughes Holdings Inc. (company) — parent holding company of The Howard Hughes Corporation
• Pershing Square Holdco, L.P. (company) — investor in Howard Hughes Holdings Inc.
• Pershing Square Capital Management, L.P. (company) — partner in the Pershing Square transaction
• $850.4 million (dollar_amount) — total revenues for the nine months ended September 30, 2025
• $117.4 million (dollar_amount) — net income attributable to Howard Hughes Holdings Inc. for the nine months ended September 30, 2025
• $900 million (dollar_amount) — aggregate purchase price of shares sold to PS Holdco
• $5.29 billion (dollar_amount) — mortgages, notes, and loans payable, net, as of September 30, 2025
• $128.6 million (dollar_amount) — interest expense for the nine months ended September 30, 2025
• Seaport Entertainment Group Inc. (company) — discontinued operations spun off on July 31, 2024

FAQ

Risk Factors

• Increased Interest Expense [medium — financial]: Interest expense rose to $128.6 million for the nine months ended September 30, 2025, from $122.6 million in the same period of 2024. This increase, driven by higher financing activities and potentially higher rates, impacts profitability and cash flow.
• Credit Losses on Receivables [medium — financial]: The company reported a $48.2 million loss on sale of MUD receivables for the nine months ended September 30, 2025. Potential credit losses on outstanding receivables, including MUD receivables, pose a risk to asset valuation and earnings.
• Development and Construction Risks [medium — operational]: Significant investments in 'Developments' ($1.86B as of Sept 30, 2025) carry inherent risks related to project execution, cost overruns, delays, and market demand for completed properties.
• Real Estate Market Fluctuations [high — market]: The company's performance is heavily tied to the real estate market, particularly in its Master Planned Communities and rental properties. Downturns in the real estate market could negatively impact land sales, rental income, and property values.
• Leverage and Debt Service [high — financial]: Total liabilities increased to $6.86 billion, with mortgages, notes, and loans payable, net, at $5.29 billion. High leverage requires substantial debt service payments and increases financial risk, especially in a rising interest rate environment.

Industry Context

Howard Hughes Corporation operates within the real estate development and management industry, with a focus on large-scale master planned communities and diversified holdings. The industry is cyclical and sensitive to economic conditions, interest rates, and consumer confidence. Competitors range from large national developers to regional players, each vying for land acquisition, development opportunities, and tenant/buyer demand. Trends include a growing demand for mixed-use developments and a focus on sustainable building practices.

Regulatory Implications

As a real estate developer and operator, HHC is subject to a wide array of local, state, and federal regulations concerning land use, environmental protection, building codes, and fair housing. Changes in zoning laws, environmental standards, or tax policies could impact development timelines and costs. The company's financial reporting is governed by SEC regulations, requiring adherence to GAAP and timely disclosures.

What Investors Should Do

1. Monitor the execution of the new diversified holding company strategy funded by the Pershing Square investment.
2. Analyze the sustainability of revenue growth, particularly from Master Planned Communities land sales.
3. Assess the impact of rising interest expenses and potential credit risks on future earnings.
4. Evaluate the company's ability to manage its significant debt load.

Key Dates

• 2025-05-05: Pershing Square Transaction — Howard Hughes Holdings Inc. sold 9,000,000 shares for $900 million, providing capital to fund a new strategy of becoming a diversified holding company.
• 2025-09-30: End of Nine Months Reporting Period — Key financial results for the period, including significant revenue growth and improved net income, were reported.
• 2024-09-30: Prior Year Nine Months Reporting Period End — Provides a crucial comparison point for the current period's performance, highlighting revenue and net income improvements.
• 2024-12-31: End of Fiscal Year 2024 — Baseline for asset and liability growth reported as of September 30, 2025.

Glossary

Master Planned Communities (MPC)

Large-scale residential developments that are planned and built as a cohesive whole, often including amenities, commercial areas, and infrastructure. (A primary revenue driver for HHC, with significant land sales contributing to overall revenue growth.)

Municipal Utility District (MUD) receivables

Receivables related to amounts owed by MUDs, which are governmental entities providing public utilities and services in Texas. (A specific type of receivable for HHC, which has experienced losses on the sale of these receivables.)

Net investment in real estate

The carrying value of the company's real estate assets, net of accumulated depreciation and other adjustments. (Represents the core asset base of the company, showing substantial growth in the period.)

Noncontrolling interests

The portion of equity in a subsidiary that is not attributable to the parent company, representing ownership by outside shareholders. (Reflects ownership stakes in consolidated entities that do not belong to Howard Hughes Holdings Inc.)

Discontinued operations

A component of a business that has been disposed of or is classified as held for sale, and whose operations and cash flows can be clearly distinguished from the rest of the company. (The absence of losses from discontinued operations significantly improved net income in the current period compared to the prior year.)

Year-Over-Year Comparison

Howard Hughes Corporation demonstrated robust performance in the nine months ended September 30, 2025, compared to the prior year. Total revenues increased by 10.9% to $850.4 million, primarily driven by a 15.5% surge in Master Planned Communities land sales and a 4.9% rise in rental revenue. Net income attributable to HHH saw a dramatic increase of 169% to $117.4 million, largely due to the absence of discontinued operations losses and a gain on sale of real estate. Total assets grew to $9.80 billion, reflecting increased investment in real estate developments, while total debt also rose slightly to $5.29 billion. Interest expense increased by $6 million, indicating higher financing costs.

Filing Documents

• hhc-20250930.htm (10-Q) — 1998KB
• hhc20250930ex311.htm (EX-31.1) — 10KB
• hhc20250930ex312.htm (EX-31.2) — 10KB
• hhc20250930ex321.htm (EX-32.1) — 7KB
• 0001498828-25-000006.txt ( ) — 10895KB
• hhc-20250930.xsd (EX-101.SCH) — 82KB
• hhc-20250930_cal.xml (EX-101.CAL) — 120KB
• hhc-20250930_def.xml (EX-101.DEF) — 402KB
• hhc-20250930_lab.xml (EX-101.LAB) — 878KB
• hhc-20250930_pre.xml (EX-101.PRE) — 642KB
• hhc-20250930_htm.xml (XML) — 1713KB

Financial Statements

Financial Statements Condensed Consolidated Financial Statements (Unaudited) 2 Condensed Consolidated Balance Sheets 2 Condensed Consolidated Statements of Operations 3 Condensed Consolidated Statements of Comprehensive Income (Loss) 4 Condensed Consolidated Statements of Equity 5 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 8 Note 1. Presentation of Financial Statements and Significant Accounting Policies 8 Note 2. Discontinued Operations 12 Note 3. Investments in Unconsolidated Ventures 12 Note 4. Acquisitions and Dispositions 14 Note 5. Impairment 15 Note 6. Other Assets and Liabilities 15 Note 7. Mortgages, Notes, and Loans Payable, Net 16 Note 8. Fair Value 18 Note 9. Derivative Instruments and Hedging Activities 19 Note 10. Commitments and Contingencies 21 Note 11. Income Taxes 23 Note 12. Accumulated Other Comprehensive Income (Loss) 24 Note 13. Revenues 25 Note 14. Leases 26 Note 15. Segments 28 Item 2. Management's Narrative Analysis of Results of Operations 32 Forward-Looking Information 33 Overview 35 Results of Operations 36 Item 4.

Controls and Procedures

Controls and Procedures 46 PART II Item 1.

Legal Proceedings

Legal Proceedings 47 Item 1A.

Risk Factors

Risk Factors 47 Item 6. Exhibits 48

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents PART I

Condensed Consolidated Financial Statements (Unaudited)

Item 1. Condensed Consolidated Financial Statements (Unaudited) THE HOWARD HUGHES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) thousands September 30, 2025 December 31, 2024 ASSETS Master Planned Communities assets $ 2,570,383 $ 2,511,662 Buildings and equipment 3,902,350 3,841,872 Less: accumulated depreciation ( 1,052,355 ) ( 949,533 ) Land 304,147 302,446 Developments 1,858,555 1,341,029 Net investment in real estate 7,583,080 7,047,476 Investments in unconsolidated ventures 165,117 169,566 Cash and cash equivalents 568,006 595,696 Restricted cash 516,870 402,420 Accounts receivable, net 125,018 105,185 Municipal Utility District (MUD) receivables, net 429,377 463,799 Deferred expenses, net 161,921 139,350 Operating lease right-of-use assets 5,382 5,806 Other assets, net 246,581 279,495 Total assets $ 9,801,352 $ 9,208,793 LIABILITIES Mortgages, notes, and loans payable, net $ 5,287,369 $ 5,127,469 Operating lease obligations 5,253 5,456 Deferred tax liabilities, net 171,401 143,107 Accounts payable and other liabilities 1,392,656 1,092,460 Total liabilities 6,856,679 6,368,492 Commitments and Contingencies (see Note 10) EQUITY Common stock: 10 shares authorized, issued, and outstanding as of September 30, 2025, and December 31, 2024 — — Additional paid-in capital 2,944,108 2,955,247 Retained earnings (accumulated deficit) attributable to Howard Hughes Holdings Inc. ( 65,028 ) ( 182,462 ) Accumulated other comprehensive income (loss) ( 1,416 ) 1,968 Total equity attributable to Howard Hughes Holdings Inc. 2,877,664 2,774,753 Noncontrolling interests 67,009 65,548 Total equity 2,944,673 2,840,301 Total liabilities and equity $ 9,801,352 $ 9,208,793 See Notes to Condensed Consolidated Financial Statements. HHC 2025 FORM 10-Q | 2

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents THE HOWARD HUGHES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, thousands 2025 2024 2025 2024 REVENUES Condominium rights and unit sales $ 142 $ 3 $ 677 $ 26 Master Planned Communities land sales 248,467 198,239 445,150 385,444 Rental revenue 111,377 108,613 330,882 315,461 Other land, rental, and property revenues 14,237 10,700 34,297 31,105 Builder price participation 16,012 9,592 39,437 35,063 Total revenues 390,235 327,147 850,443 767,099 EXPENSES Condominium rights and unit cost of sales 59 11,833 1,112 15,694 Master Planned Communities cost of sales 78,280 72,582 148,672 143,254 Operating costs 45,940 50,841 147,247 149,412 Rental property real estate taxes 15,630 14,484 46,294 43,799 Provision for (recovery of) doubtful accounts ( 345 ) 190 41 327 General and administrative 19,974 23,826 70,554 66,228 Depreciation and amortization 46,381 44,088 135,845 134,833 Other 3,332 3,582 12,402 11,268 Total expenses 209,251 221,426 562,167 564,815 OTHER Gain (loss) on sale or disposal of real estate and other assets, net 14,449 3,165 29,834 7,959 Other income (loss), net 2,445 90,489 1,963 91,870 Total other 16,894 93,654 31,797 99,829 Operating income (loss) 197,878 199,375 320,073 302,113 Interest income 5,697 5,341 16,390 19,270 Interest expense ( 43,856 ) ( 43,802 ) ( 128,644 ) ( 122,597 ) Gain (loss) on extinguishment of debt ( 173 ) — ( 480 ) ( 198 ) Gain (loss) on sale of MUD receivables — ( 51,525 ) ( 48,197 ) ( 51,525 ) Equity in earnings (losses) from unconsolidated ventures ( 2,529 ) ( 1,630 ) ( 3,096 ) ( 4,230 ) Income (loss) from continuing operations before income taxes 157,017 107,759 156,046 142,833 Income tax expense (benefit) 38,603 10,418 38,345 17,838 Net income (loss) from continuing operations 118,414 97,341 117,701 124,995 Net income (loss) from discontinued operations, net

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents THE HOWARD HUGHES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, thousands 2025 2024 2025 2024 Net income (loss) $ 118,414 $ 73,310 $ 117,701 $ 43,188 Other comprehensive income (loss): Interest rate caps and swaps (a) ( 692 ) ( 5,310 ) ( 3,384 ) ( 2,647 ) Other comprehensive income (loss) ( 692 ) ( 5,310 ) ( 3,384 ) ( 2,647 ) Comprehensive income (loss) 117,722 68,000 114,317 40,541 Comprehensive (income) loss attributable to noncontrolling interests 106 273 ( 267 ) 297 Comprehensive income (loss) attributable to Howard Hughes Holdings Inc. $ 117,828 $ 68,273 $ 114,050 $ 40,838 (a) Amounts are shown net of tax benefit of $ 0.2 million for the three months ended September 30, 2025, $ 1.1 million for the nine months ended September 30, 2025, $ 1.6 million for the three months ended September 30, 2024, and $ 0.8 million for the nine months ended September 30, 2024. See Notes to Condensed Consolidated Financial Statements. HHC 2025 FORM 10-Q | 4

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents THE HOWARD HUGHES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Noncontrolling Interests Total Equity Common Stock thousands except shares Shares Amount Balance at June 30, 2025 10 $ — $ 2,941,923 $ ( 183,548 ) $ ( 724 ) $ 2,757,651 $ 66,966 $ 2,824,617 Net income (loss) — — — 118,520 — 118,520 ( 106 ) 118,414 Interest rate swaps, net of tax expense (benefit) of $( 218 ) — — — — ( 692 ) ( 692 ) — ( 692 ) Teravalis noncontrolling interest — — — — — — 149 149 Capital transactions with HHH — — 2,185 — — 2,185 — 2,185 Balance at September 30, 2025 10 $ — $ 2,944,108 $ ( 65,028 ) $ ( 1,416 ) $ 2,877,664 $ 67,009 $ 2,944,673 Balance at June 30, 2024 10 $ — $ 3,379,063 $ ( 413,111 ) $ 3,935 $ 2,969,887 $ 66,146 $ 3,036,033 Net income (loss) — — — 73,583 — 73,583 ( 273 ) 73,310 Interest rate swaps, net of tax expense (benefit) of $( 1,569 ) — — — — ( 5,310 ) ( 5,310 ) — ( 5,310 ) Teravalis noncontrolling interest — — — — — — 54 54 Distribution of Seaport Entertainment Group Inc. to stockholders — — ( 409,126 ) — — ( 409,126 ) — ( 409,126 ) Capital transactions with HHH — — ( 15,555 ) — — ( 15,555 ) — ( 15,555 ) Balance at September 30, 2024 10 $ — $ 2,954,382 $ ( 339,528 ) $ ( 1,375 ) $ 2,613,479 $ 65,927 $ 2,679,406 Balance at December 31, 2024 10 $ — $ 2,955,247 $ ( 182,462 ) $ 1,968 $ 2,774,753 $ 65,548 $ 2,840,301 Net income (loss) — — — 117,434 — 117,434 267 117,701 Interest rate swaps, net of tax expense (benefit) of $( 1,084 ) — — — — ( 3,384 ) ( 3,384 ) — ( 3,384 ) Deconsolidation of Associations of Unit Owners — — — — — — 979 979 Teravalis noncontrolling interest — — — — — — 215 215 Capital transactions with HHH — — ( 11,139 ) — — ( 11,139 ) — ( 11,139 ) Balance at September 30, 2025 10 $ — $ 2,944,108 $ ( 65,028 ) $ ( 1

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents THE HOWARD HUGHES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, thousands 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 117,701 $ 43,188 Net income (loss) from discontinued operations, net of taxes — ( 81,807 ) Net income (loss) from continuing operations 117,701 124,995 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation 121,419 120,404 Amortization 14,572 14,403 Amortization of deferred financing costs 9,330 9,122 Amortization of intangibles other than in-place leases 90 90 Straight-line rent amortization ( 5,058 ) ( 4,389 ) Deferred income taxes 29,377 29,068 Restricted stock and stock option amortization 14,941 11,124 Net gain on sale of properties ( 29,834 ) ( 7,959 ) Loss on sale of MUD receivables 48,197 51,525 Proceeds from sale of MUD receivables 180,043 176,680 (Gain) loss on extinguishment of debt 480 198 Equity in (earnings) losses from unconsolidated ventures, net of distributions 8,928 9,403 Provision for (recovery of) doubtful accounts 2,087 ( 1,017 ) Master Planned Communities development expenditures ( 325,854 ) ( 284,984 ) Master Planned Communities cost of sales 146,087 133,257 Condominium development expenditures ( 397,767 ) ( 453,896 ) Condominium rights and units cost of sales 1,112 15,694 Net Changes: Accounts receivable, net ( 33,056 ) ( 2,827 ) Other assets, net 1,873 ( 8,736 ) Condominium deposits, net 201,543 220,776 Deferred expenses, net ( 33,433 ) ( 25,015 ) Accounts payable and other liabilities 27,723 ( 15,341 ) Cash provided by (used in) operating activities of continuing operations 100,501 112,575 Cash provided by (used in) operating activities of discontinued operations — ( 51,495 ) Cash provided by (used in) operating activities 100,501 61,080 CASH FLOWS FROM INVESTING ACTIVITIES Property and equipment expenditu

FINANCIAL STATEMENTS Table of Contents

FINANCIAL STATEMENTS Table of Contents THE HOWARD HUGHES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, thousands 2025 2024 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from mortgages, notes, and loans payable 600,590 476,748 Principal payments on mortgages, notes, and loans payable ( 442,362 ) ( 323,252 ) Debt extinguishment costs ( 204 ) — Special Improvement District bond funds released from (held in) escrow 23,900 16,793 Deferred financing costs and bond issuance costs ( 6,263 ) ( 1,085 ) Taxes paid on stock options exercised and restricted stock vested — ( 943 ) Distributions to HHH ( 27,559 ) ( 21,901 ) Sale of preferred stock in Seaport Entertainment Group Inc. subsidiary — 9,850 Contributions from Teravalis noncontrolling interest owner 215 171 Cash provided by (used in) financing activities of continuing operations 148,317 156,381 Cash provided by (used in) financing activities of discontinued operations — ( 103,028 ) Cash provided by (used in) financing activities 148,317 53,353 Net change in cash, cash equivalents, and restricted cash 86,760 ( 132,331 ) Cash, cash equivalents, and restricted cash at beginning of period 998,116 1,053,057 Cash, cash equivalents, and restricted cash at end of period 1,084,876 920,726 Less: Cash, cash equivalents, and restricted cash of discontinued operations at end of period — — Cash, cash equivalents, and restricted cash of continuing operations at end of period $ 1,084,876 $ 920,726 RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH Cash and cash equivalents $ 568,006 $ 400,728 Restricted cash 516,870 519,998 Cash, cash equivalents, and restricted cash of continuing operations at end of period $ 1,084,876 $ 920,726 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION — CONTINUING OPERATIONS Interest paid, net $ 236,950 $ 251,528 Interest capitalized 109,881 114,694 Income taxes paid (refunded), net 10,233 3,958 NON

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS FOOTNOTES Table of Contents 1. Presentation of Financial Statements and Significant Accounting Policies General These unaudited Condensed Consolidated Financial Statements have been prepared by The Howard Hughes Corporation (HHC or the Company) in accordance with accounting principles generally accepted in the United States of America (GAAP). References to HHC, the Company, Howard Hughes Communities, we, us, and our refer to The Howard Hughes Corporation and its consolidated subsidiaries unless otherwise specifically stated. References to Howard Hughes Holdings Inc. (HHH) refer to the Company's parent holding company, Howard Hughes Holdings Inc., and its consolidated subsidiaries, including the Company, unless otherwise specifically stated. In accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as issued by the Securities and Exchange Commission (the SEC), these Condensed Consolidated Financial Statements do not include all of the information and disclosures required by GAAP for complete financial statements. Readers of this quarterly report on Form 10-Q (Quarterly Report) should refer to The Howard Hughes Corporation audited Consolidated Financial Statements, which are included in its annual report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 28, 2025 (the Annual Report). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows, and equity for the interim periods have been included. The results for the three and nine months ended September 30, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025, and future fiscal years. Pershing Square Transaction On May 5, 2025, HHH entered into a Share Purchase Agreement (Purchase Agreement), by and between HHH and Pershing Square Holdco, L.P. (PS Hol

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS FOOTNOTES Table of Contents Accounts Receivable, net Accounts receivable, net includes straight-line rent receivables, tenant receivables, related-party receivables, and other receivables. On a quarterly basis, management reviews the lease-related receivables, including straight-line rent receivables and tenant receivables, for collectability. This analysis includes a review of past due accounts and considers factors such as the credit quality of tenants, current economic conditions, and changes in customer payment trends. When full collection of a lease-related receivable or future lease payment is deemed to be not probable, a reserve for the receivable balance is charged against rental revenue and future rental revenue is recognized on a cash basis. The Company also records reserves for estimated losses if the estimated loss amount is probable and can be reasonably estimated. Related-party receivables are primarily due from the Floreo joint venture. This balance includes reimbursable overhead costs incurred by the Company on behalf of Floreo and a $ 6.0 million guaranty fee associated with the increased borrowing capacity of Floreo's bond financing in the first quarter of 2025. See Note 3 - Investments in Unconsolidated Ventures for additional information on the Floreo joint venture and Note 10 - Commitments and Contingencies for additional information on the guaranty fee. Other receivables are primarily related to short-term trade receivables. The Company is exposed to credit losses through the sale of goods and services to customers and assesses its exposure to credit loss related to these receivables on a quarterly basis based on historical collection experience and future expectations by portfolio. The Company records an allowance for credit losses if the estimated loss amount is probable. The following table represents the components of Accounts receivable, net of amounts considered uncollectible, in the accompanying Condensed C

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS FOOTNOTES Table of Contents In May 2025, the Company entered into a transaction in which it transferred the reimbursement rights to $ 147.0 million of existing MUD receivables and $ 14.1 million of related accrued interest, as well as $ 95.9 million of anticipated future MUD receivables, for total cash consideration of $ 180.0 million. Using the relative fair value method, $ 112.8 million of the cash consideration was allocated to the sale of the existing MUD receivables and $ 67.2 million was allocated to the sale of the anticipated future MUD receivables. As a result of the sale, the Company derecognized the existing MUD receivables and related accrued interest, resulting in a loss on sale of $ 48.2 million in the Condensed Consolidated Statements of Operations. For both transactions, the Company is required to complete future development activities. As such, liabilities associated with the future development spend were recorded at amortized cost in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets. The associated discounts, which represent the differences between the total future development spend and the allocated cash proceeds, are being amortized into interest expense over the expected development period using the effective interest method. As of September 30, 2025, the total remaining liability was $ 68.9 million and the total unamortized discount was $ 18.1 million. Interest expense related to the discount amortization was $ 7.2 million for the three months ended September 30, 2025, and $ 16.4 million for the nine months ended September 30, 2025. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and

View Full Filing

View this 10-Q filing on SEC EDGAR