Q1 2024 Howard Hughes Holdings Inc Earnings Call
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Operator: Ladies and gentlemen, thank you for standing by. Welcome to Howard Hughes' first quarter 2024 earnings call.
Ladies and gentlemen, thank you for standing by welcome to Howard Hughes first quarter 'twenty 'twenty four earnings call. At this time, all participants are in a listen only mode.
Operator: 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 that 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.
Eric Holcomb: After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone you wouldn't hear an automated message of bites in your hand, it's raised.
Operator: Withdraw your question. Please press star one one again, please be advised that today's conference is being recorded.
Operator: I would like now to turn the conference over to Eric Holcomb Senior Vice President.
Eric Holcomb: The Investor Relations. Please go ahead.
Eric Holcomb: 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 Valaine, General Counsel. Before we begin, I would like to direct you to our website, howardshughes.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.
Eric Holcomb: Good morning, and welcome to Howard Hughes Holdings first quarter 2024 or earnings call with me today are David O'reilly, Chief Executive Officer, Jay <unk> President and.
Eric Holcomb: Carlson Chief Financial Officer, Dave striking president of asset management, and operations and Joe Blaine General Counsel.
Eric Holcomb: Before we begin I would like to direct you to our website <unk> Dot com, where you can download both our first quarter earnings press release, and our supplemental package.
Eric Holcomb: 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.
Eric Holcomb: 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.
Eric Holcomb: 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.
Eric Holcomb: 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.
Eric Holcomb: Not under any duty to update forward looking statements unless required by law.
David O'Reilly: I will now turn the call over to our CEO, David O'Brien. Thank you, Eric. And good morning to all from Phoenix. Before we begin, I'd like to welcome Joe Hullane, 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 athletic 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 playing communities in Seaport.
Eric Holcomb: I will now turn the call over to our CEO David O'brien.
David O'Reilly: Thank you Eric and good morning to all from Phoenix before we begin I'd like to welcome Joe Helane, 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.
David O'Reilly: On our call today I'm going to begin with a recap of the first quarter and cover the segment highlights for our Master plan communities and seaports.
David O'Reilly: Dave Striph will cover the performance of our operating assets, followed by remarks from Jay Cross, who will provide updates on our strategic development project. Finally, Carlos Olea will review our four-year guidance and the balance sheet before we open up the lines for Q&A. All right, jumping into our results.
David O'Reilly: Strike will cover the performance of our operating assets followed by remarks from Jay Cross will provide updates on our strategic development projects.
Speaker Change: It really follows the lab will review, our full year guidance and the balance sheet before we open up the lines for Q&A.
David O'Reilly: The first quarter of 2024 continued our strong momentum we experienced 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 homebuilder 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 Foreo, paving the way for the start of our next great MPC, Terra Valley.
David O'Reilly: Alright jumping into our results. The first quarter of 2024 continued our strong momentum experienced throughout 2023 setting the stage for what we expect to be another incredible year across each of our core businesses.
David O'Reilly: In our MPC as we saw increased underlying demand, including a double digit acceleration of new home sales.
David O'Reilly: Elevated homebuilder interest for our land, which we expect will yield strong lansdale, and Nevada, and Texas during the remainder of the year.
David O'Reilly: In Arizona, we achieved a major milestone with the closing of our first residential land sales before are paving the way for the start of our next great MPC care abouts.
David O'Reilly: 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.
David O'Reilly: Our operating assets delivered $63 million of NOI, representing an impressive 7% year over year growth with solid improvement in office and multifamily.
David O'Reilly: This result provided a strong foundation for the full year, which we expect will achieve a new all time high for NOI in 2024.
David O'Reilly: 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 represents future revenue of nearly $560 million. We're still on track for a late 2024 delivery of Victorian Place, which we expect will generate approximately $700 million in 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-sale.
David O'Reilly: And strategic development demand for our newest condominium project in Hawaii in Texas with extraordinary with more than 250 residence is pre sold in the quarter, which represent future revenue of nearly $560 million.
David O'Reilly: We're still on track for a late 2020 for delivery of Victoria place, which we expect will generate approximately $700 million revenue in the fourth quarter.
David O'Reilly: Looking at Ward village overall, we reached <unk> $6 billion in sales.
David O'Reilly: Including the communities fixed delivered towers that are 100% sold and those towers that are currently under construction or increase sales.
David O'Reilly: Looking into the results of our MPC segment, we delivered MPC-EBT of $24 million in the first quarter, largely driven by the sale of 31 acres of residential land in Bridgeland and $13 million of builder price participation across our community. As expected, we did not close on the sale of any residential land in Sumner, as all super pads are expected to close in the second and third quarter. In the Woodland Hills, land sales were muted in the quarter as many lot deliveries were postponed as a result of municipal permitting.
David O'Reilly: Looking at the results of our MPC segment, we delivered MPC EBT of $24 million in the first quarter largely driven by the sale of 31 acres of residential land in Britain and $13 million of build a price participation across our communities.
David O'Reilly: As expected we did not close on the sale of any residential land in summer.
David O'Reilly: All Super pads are expected to close in the second and third quarters.
David O'Reilly: And the woodland Hills land sales were muted in the quarter as many lot deliveries were postponed as a result of municipal permitting issues.
David O'Reilly: 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 landfills only occurring in Bridgeland and the Woodland Hills, our average residential price per acre was $600,000.
David O'Reilly: These delays have since been resolved and we anticipate significant increases in residential land sales Miss MPC during the remainder of the year, most likely to levels outpacing 2020 results.
David O'Reilly: With land sales only occurring in Brazil, and the woodland Hills, our average residential price per acre was $600000.
David O'Reilly: This reflected a year-over-year reduction, primarily due to six custom lot sales in the Woodlands and Sunland 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.
David O'Reilly: This reflected a year over year reduction primarily due to the six custom lot sales in the woodlands in summerlin during the prior year for $2 $9 million per acre.
David O'Reilly: Excluding these customized sales or price per acre increased 15% year over year.
David O'Reilly: As we've reiterated for years.
David O'Reilly: Land sales can be lumpy and should not be measured on a quarterly basis.
David O'Reilly: The volatility can be driven by custom lot sales, commercial land sales, and 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, a Floreo joint venture closed on its first residential landfill, which totaled 52 acres and an impressive $758,000 per net acre.
David O'Reilly: Volatility can be driven by custom lots sales commercial land sales changes in inventory.
David O'Reilly: All of which contributed to this quarter's year over year comparisons.
David O'Reilly: 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.
David O'Reilly: In Arizona, our floor rail joint venture closed on its first residential land sales, which totaled 52 acres and an impressive $758000 per net acre.
David O'Reilly: Much of this revenue is deferred until we complete infrastructure and law 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 sets, which we believe are a leading indicator of future land demand, we saw increased demand with a total of 654 homes sold across our NPC. This represented the highest quarterly sales in three years, outpacing the first quarter of 2023 by 18 percent and the fourth quarter by 24 percent. Increases were realized in each of our NPCs.
David O'Reilly: Much of this revenue is deferred until we complete infrastructure and lot preparation later this year or early next year.
David O'Reilly: We expect more lot closings to occur in the second and third quarters and hope to celebrate our Grand opening next year.
David O'Reilly: Turning to new home steps, which we believe are leading indicators of future land sales.
David O'Reilly: We saw increased demand with a total of 654 homes sold across our Mpc's.
David O'Reilly: This represented the highest quarterly sales in three years outpacing the first quarter of 2023 by 18% in the fourth quarter by 24%.
David O'Reilly: Increases were realized in each of our mpc's with people continuing to choose our highly monetized communities, which operating exceptional quality of life, a variety of housing options and short commutes.
David O'Reilly: With people continuing to choose our highly amortized communities, which offer an exceptional quality of life, a variety of housing options, and a short commute, 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 resale supply in the market.
David O'Reilly: Looking forward, we anticipate strong demand for new home sales during the remainder of 2024.
David O'Reilly: With mortgage rates now expected to remain at levels of around 7% for the foreseeable future and most homeowners benefiting from mortgage existing mortgages of 5% or less we expect to continued significant lack of retail supply in the market.
David O'Reilly: As a result, homebuyers will be driven into the new home construction market, where they often benefit from lucrative mortgage rate buydowns and other incentives from our home builder 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 to increase gradually. This will ultimately drive what we expect will be robust residential land sales and MPC-EVT for the full year in 2024.
David O'Reilly: As a result, homebuyers will be driven to the new home construction market, where they often benefit from lucrative mortgage rate buy downs and other incentives from our homebuilder partners.
David O'Reilly: With elevated demand for new homes as well as the significant under supply of vacant developed lots, which remains well below equilibrium in the Las Vegas and Houston markets.
David O'Reilly: We expect continued strong homebuilder demand for incremental acreage.
David O'Reilly: This will ultimately drive what we expect will be a robust residential land sales and MPC EBT for the full year in 2024.
David O'Reilly: 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 Hughes 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.
David O'Reilly: Carlos who will provide more details in a few minutes.
David O'Reilly: Turning to the seaport, we're making considerable progress towards the successful spinoff of Seaport Entertainment, which will include all of the seaport The Las Vegas Aviators baseball team, the Las Vegas ballpark or 25% interest in John George restaurants, and our 80% Air rights over the fashion show mall in Las Vegas.
David O'Reilly: In January and finally, Kadima joined at Howard Hughes 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.
David O'Reilly: We remain positive and confident about the opportunities that the spin-off 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's 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 sponsors.
David O'Reilly: We remain positive and confident about the opportunities that the spinoff will create in years ahead, both for Howard Hughes and supported its David.
David O'Reilly: And we look forward to sharing more with you soon.
David O'Reilly: Looking at the financials seaport operating results remain challenged generating revenue of $11 $5 million, which reflected a modest $395000 year over year reduction.
David O'Reilly: The decline was primarily associated with poor weather and lower foot traffic in our restaurants as well as a decrease in sponsorships.
David Michael Striph: These reductions were partially offset by increased revenue from the Fulton Market Building, which benefited from the commencement of the Alexander Wayne 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 Seedform Entertainment, including equity losses of $8.9 million, primarily from the Tim building, total Seaport NOI with a loss of $17.5 million in the quarter.
David O'Reilly: These reductions were partially offset by increased revenue from the Fulton market building.
David Michael Striph: She is benefiting from the commencement of the Alexander whaler lease and the opening of the long path late last year.
David Michael Striph: Net operating losses were $8 $6 million in the quarter were $3 million year over year reduction primarily.
David Michael Striph: Primarily due to sales mix and increased costs associated with the standup is performing okay.
David Michael Striph: Including equity losses of $8 $9 million, primarily from the Tin building total seaport NOI with a loss of $17 $5 million in the quarter.
David Michael Striph: Although these losses remain sizable, the student 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 Striph for a review of our operating... Thank you, David.
David Michael Striph: Although these losses remains sizable.
David Michael Striph: In building this the improved financial results, both sequentially and year over year.
David Michael Striph: Significant changes in the operating platform, which have been implemented by John George the consultation with ancillary and his team are yielding positive results and contributing to enhanced efficiencies and reduce costs.
David Michael Striph: With more changes to come we expect further improvements going forward.
David Michael Striph: With that I'll turn the call over to Dave stripe for a review of our operating assets.
David Michael Striph: In our operating assets segment, we started the year on a positive note, delivering strong NOI of $63 million, including the contribution from Unconsolidated Ventures. This represented a 7% year-over-year improvement driven primarily by our office and multifamily portfolio. The most significant year-over-year growth was seen in Office, which generated first quarter NOI of $31 million. This reflected a $3 million or 10% year-over-year improvement and was primarily the result of strong lease-up activity and rent abatement expirations at various properties in the Woodlands and Suburbs, most notably at 9950 Woodlock Forest and 1700 Pavilion. These gains were partially offset by reduced NOI from 1725 Hughes Landing in the Woodlands due to lower occupancy primarily from attendant bankruptcy.
David Michael Striph: Thank you David.
David Michael Striph: During the quarter, we continue to execute new or expanded office leases totaling 86,000 square feet, including 46,000 square feet in the Woodlands and 40,000 square feet in downtown Columbia. We also successfully completed two significant renewals in the Woodlands, pulling 180,000 square feet. This strong leasing performance exemplifies the heightened demand we continue to see from companies seeking quality workspaces in walkable, mixed-use communities where their employees want to live. Since this time last year, our stabilized office portfolio has increased from 86% to 88%, the most notable improvement in which is now 90%.
David Michael Striph: Our operating asset segment, we started the year in a positive note delivering strong NOI of $63 million, including the.
David Michael Striph: <unk> contribution from unconsolidated ventures. This represented a 7% year over year improvement driven primarily by our office and multifamily portfolios.
David Michael Striph: The most significant year over year growth was seen in office, which generated first quarter NOI of $31 million.
David Michael Striph: This reflected a $3 million or 10% year over year improvement was primarily the result of strong lease up activity and rent abatement explorations at various properties in the woodlands and subsequent most notably at $99 50 would like for US in 2000 $701 billion.
David Michael Striph: These gains were partially offset by reduced NOI from $17 25, Hughes landing in the woodlands due to lower occupancy primarily from a tenant bankruptcy.
David Michael Striph: During the quarter, we continued to execute new or expanded office leases totaling 86000 square feet <unk>.
David Michael Striph: Including 46000 square feet in the woodlands, and 40000 square feet in downtown Columbia.
David Michael Striph: We also successfully completed two significant renewals in the woodlands totaling 180000 square feet.
David Michael Striph: This strong leasing performance exemplifies the heightened demand we continue to see from companies seeking quality workspaces and walkable mixed use communities, where their employees want to live.
David Michael Striph: Since this time last year, our stabilized office portfolio has increased from 86% to 88% leased within most notable improvement in <unk>, which is now 90% leased.
David Michael Striph: We expect to benefit from this leasing momentum later in the year with more significant NOI improvements in 2025 as office build-outs are completed and free rent periods burn off. Our multifamily portfolio also performed well in the quarter, delivering NOI of $14 million, or a 9% year-over-year increase. This growth was primarily driven by increased rental revenue associated with the lease-up of Starling and Bridgeland in Marlowe in downtown Columbia, as well as 4% in place rent growth. These gains were partially offset by non-recurring insurance recoveries in the first quarter of 2023, which were related to damages from the 2021 winter freeze in the Houston region.
David Michael Striph: We expect to benefit from this leasing momentum later in the year.
David Michael Striph: With more significant NOI improvements in 2025 as office build outs are completed and free rent periods burn off.
David Michael Striph: Our multifamily portfolio also performed well in the quarter, delivering NOI of $14 million or a 9% year over year increase.
David Michael Striph: This growth was primarily driven by increased rental revenue associated with the lease up of Sterling at Brentwood, and Milo in downtown Columbia, as well as 4% in place rent growth.
David Michael Striph: These gains were partially offset by nonrecurring insurance recoveries in the first quarter of 2023, which were related to damages from the 2021 winter freeze in the Houston region.
David Michael Striph: At quarter end, our stabilized properties were 95% leased, and we continue to see solid lease-up at our unstabilized assets. At Wingspan, which remains partially under construction with 63% of the units delivered, we are now 28% leased. We expect the project will be fully completed this summer. In downtown Columbia, Marlowe finished the quarter 65% leased, and in Nevada, Tangireka was 31% leased. Overall, we are pleased with these results, and we expect further Multifamily Analyte Growth as the year progresses. In retail, I was $15 million in the first quarter, which was unchanged year over year.
David Michael Striph: At quarter end, our stabilized properties with 95% leased and we continue to see solid lease up at our on stabilized assets.
David Michael Striph: <unk> Bank, which remains partially under construction was 63% of the units delivered we are now 28% leased we expect the project will be fully completed this summer.
David Michael Striph: In downtown Columbia, Marlow finished the quarter, 65% leased and in Nevada tanker Eco was 31% leased.
David Michael Striph: Overall, we are pleased with these results and we expect further.
David Michael Striph: Family NOI growth as the year progresses.
David Michael Striph: In retail NOI was $15 million in the first quarter, which was unchanged year over year increase rental revenue from new tenants in the ground floor retail with juniper at Marlow in downtown Columbia were offset by the impact of a national kind of bankruptcy and downtown Summerlin.
David Michael Striph: Increased rental revenue from new tenants in the ground floor retail at Juniper and Marlowe in downtown Columbia was offset by the impact of a national tenant bankruptcy in downtown Selma. This space is now in lease negotiations, and we expect this and other tenant upgrades, which are already underway in downtown Summerlin, to yield full year NOI growth in 2024. With that, I will now turn the call over to our president, Jake. Thanks, Dave. And good morning, everyone.
Jake: This space is now in lease negotiations and we expect this and other tenant upgrades, which are already underway in downtown summerlin to yield full year NOI growth in 2024.
Jake: With that I'll now turn the call over to our President Jay cost.
Jay Cross: In the first quarter, we continue to make solid progress on our commercial construction projects, which represent future stabilized NOI of more than $21 million for our operating assets site. First, in The Woodlands, construction on One Reba Road, our 268-unit LEED Silver Multifamily Tower, is going very well. This luxury development on the Woodlands Waterway is expected to be completed in the second half of 2025 with a strong NOI contribution of nearly $10 million in stabilization. In Bridgeland, we recently broke ground on Village Green at Bridgeland Central, a new mixed-use development which will be anchored by an HEB grocery store and feature inline retail and standalone restaurants.
Jake: Thanks, Dave and good morning, everyone.
Jay Cross: In the first quarter, we continued to make solid progress in our commercial construction projects, which represent future stabilized NOI of more than $21 million for our operating asset segment.
Jay Cross: First in the woodlands construction on one rebid row, our 268 unit LEED silver multifamily tower is going very well.
Jay Cross: Luxury development on the woodlands waterway is expected to be completed in the second half of 2025 with a strong NOI contribution of nearly $10 million on stabilization.
Jay Cross: Enbridge Lynn, we recently broke ground on village Green Enbridge and central a new mixed use development, which will be anchored by an HEB grocery store a feature in line retail and Standalone restaurants with this being the first large scale retail development in Britain, we've experienced high demand from potential tenants at the end of the quarter, 94% of the inline retail and.
Jay Cross: With this being the first large-scale retail development in Bridgeland, we've experienced high demand from potential tenants. At the end of the quarter, 94% of the inline retail and restaurant space was already pre-leased or in advanced negotiations. We expect to complete this project next year. We're also breaking ground this week on Bridgeland's first office building, which has also seen strong demand and is remarkably 94% pre-leased or in advanced negotiation. This innovative 49,000 square foot mass timber office building will be the first of its kind in the Houston area.
Jay Cross: Brandt space was already pre leased or in advanced negotiations, we expect to complete this project next year.
Jay Cross: We are also breaking ground. This week Enbridge lens first office building, which is also seeing strong demand and is remarkably 94% pre leased or in advanced negotiations. This innovative 49000 square foot mass timber office building will be the first of its kind in the Houston area.
Jay Cross: In downtown Summerlin, construction of the Summerlin Grocery Anchorage Center, which will feature Summerlin's first Whole Foods Market, is on track to be completed in the third quarter. We expect its retail center, which is adjacent to our Tanager and Tanager Echo multi-family properties, will be an important amenity and vital part of our downtown Summerlin master plan. A couple miles away, construction on Meridian, our 147,000 square foot office building, adjacent to the proposed movie studio site in Village 15, is finishing up and expected to be completed on budget this quarter.
Jay Cross: Downtown Summerlin construction of the Summerlin in grocery anchored center, which will feature someone's first whole foods market is on track to be completed in the third quarter. We expect its retail center, which is adjacent to our tanager and Tanja Echo multifamily properties will be an important amenity and vital part of our downtown Summerlin Master plan.
Jay Cross: A couple of miles away construction on Meridian are 147000 square foot office building adjacent to the proposed movie studio site in village 15 is finishing up and expected to be completed on budget. This quarter with the project now essentially complete tenant interest has substantially increased which mirrors our experience in 2700 pavilion.
Jay Cross: With the project now essentially complete, tenant interest has substantially increased, which mirrors our experience at 1700 Pavilion, and we hope to share positive leasing news in the coming months. In Maryland, we are in the final stages of construction of our 86,000 square foot medical office building in downtown Columbia.
Jay Cross: And we hope to share positive leasing news in the coming months.
Jay Cross: In Maryland, we are in the final stages of construction of our 86000 square foot Medical office building in downtown Columbia. This project has experienced high demand with 93% of the space pre leased or in advanced negotiations.
Jay Cross: This project has experienced high demand, with 93% of the space pre-leased or in advanced negotiation. Shifting to condo sales, as David mentioned, we had a tremendous first quarter, both in Hawaii and at our first condo in Texas. At Ward Village, we went to contract on 196 condos representing incremental future revenue of approximately $320 million. The majority of these pre-sales related to the LENU, our 11th condo project in Ward Village, which launched pre-sales in February. Demand for this 485-unit project, which will offer sweeping use of diamond head with solid, was exceeding 37% of total units in just under 45 days.
Jay Cross: Shifting to condo sales as David mentioned, we had a tremendous first quarter, both in Hawaii and at our first condo in Texas.
Jay Cross: At Ward village, we went to contract on 196 condos, representing incremental future revenue of approximately $320 million. The majority of these pre sales related to the renewed our 11 condo project in ward village, which launch pre sales in February.
Jay Cross: <unk> for this 485 unit project, which will offer sweeping views of Diamond had was solid with pre sales eclipsing, 37% of total units and just under 45 days.
Jay Cross: We also sold 14 units combined at the Parkour Village in Clyde, with these two towers now 95% and 90% pre-sold, respectively. From a construction perspective, we remain on track to deliver a successful place in the fourth quarter. Construction on Ulana and the Parkour Village is advancing with anticipated deliveries in 2025 and 2026, respectively, and we expect to start construction on Kauai later this quarter.
Jay Cross: We also saw a 14 is combined at the park Ward village and Clyde, but these two towers now 95%, 90% pre sold respectively.
Jay Cross: From a construction perspective, we remain on track to deliver at Victoria place in the fourth quarter construction on <unk> in the Park Ward village is advancing with anticipated deliveries in 2025, and 2026, respectively, and we expect to start construction on <unk> later this quarter.
Jay Cross: And finally, in Texas, saving the best for last, we commence pre-sales of the Ritz-Carlton residences The Woodlands at the end of the quarter. Demand for this ultra-luxury, first-of-its-kind condo on the shores of Lake Woodlands has been nothing short of amazing, closing the quarter with more than 50% of its residences already pre-sold at prices per square foot never before seen in the Houston market. Sales have continued at a solid pace throughout April, and currently, the project is 61% pre-sold.
Jay Cross: And finally in Texas saving the best for last we commenced pre sales of the Ritz Carlton residences, the woodlands at the end of the quarter.
Jay Cross: Demand for this ultra luxury first of its kind condo on the shores of Lakewood ons has been nothing short of amazing closing the quarter with more than 50% of its residents is already pre sold at prices per square foot never before seen in the Houston market.
Jay Cross: Sales have continued at a solid pace throughout April and currently the project is 61% pre salt we hope to start construction on this exciting project later this year.
Jay Cross: We hope to start construction on this exciting project later this year. I would now like to hand the call over to our CFO, Carlos Olea, who will review our guidance and the balance. Thank you, Jay, and good morning, everyone.
Carlos Olea: I would now like to hand, the call over to our CFO, Carlos <unk>, who will review our guidance and the balance sheet.
Carlos Olea: Thank you Jay and good morning, everyone.
Carlos Olea: With the strong momentum that we experienced across our core segments during the first quarter, we remain confident in our ability to deliver our 2024 guidance as issued on our last earnings call. Looking briefly into each segment, in MPC, we continue to project robust DVD revenue of $300 million at the midpoint. This represents a 10 to 15% year-over-year reduction, but it's still significantly higher than historical norms, which have been closer to $200 to $250 million pre-COVID.
Carlos Olea: With the strong momentum that we experienced across our core segments. During the first quarter, we remain confident in our ability to deliver our 2024 guidance as issued on our last earnings call.
Carlos Olea: Looking briefly into each segment in MPC, we continue to project robust EBIT of $300 million at the midpoint.
Carlos Olea: This represents a 10% to 15% year over year reduction, but it is still significantly higher than historical norms, which have been closer to $200 million to $250 million pre COVID-19.
Carlos Olea: In operating assets, we continue to project full-year NOI of approximately $250 million at the midpoint, reflecting an increase of 1 to 4% compared to 2023. Our full-year guidance includes approximately $5 million of projected NOI from the Las Vegas Aviators and the Las Vegas Wallparks, which are expected to be included in the spinoff of Seaboard Entertainment. Condo sales revenues are projected to range between $675 and $725 million and be driven entirely by the completion of Victoria Place in the fourth quarter.
Carlos Olea: And operating assets, we continue to predict full year NOI of approximately $250 million at the midpoint, reflecting an increase of 1% to 4% compared to 2023.
Carlos Olea: Our full year guidance includes approximately $5 million or predict that NOI from Vegas aviators in Walmart, which are expected to be included in the spinoff of Seaport Entertainment.
Carlos Olea: On the sales revenues are projected to range between 675 and $725 million and be driven entirely by the completion of Victoria place in the fourth quarter.
Carlos Olea: We continue to anticipate strong growth margins between 28 and 30% for this development. However, our guidance contemplates approximately $75 million of condo sale revenue delayed into the first quarter of 2025 due to the timing of closings at Victoria Place. And finally, we expect CAHPS DNA to range between $80 and $90 million for the full year. This guidance excludes approximately $25 million in cash expenses to complete the spinoff of Seaport Entertainment, as well as approximately $5 million of anticipated non-cash stock compensation.
Carlos Olea: We continue to anticipate strong gross margins between 28 and 30% for this development.
Carlos Olea: Our guidance contemplates approximately $75 million have gone the tail revenue delayed into the first quarter of 2025 due to the timing of closing that Victoria place.
Carlos Olea: And finally, we expect cash G&A to range between 80 and $90 million for the full year.
Carlos Olea: This guidance excludes approximately $25 million of cash expenses to complete the spinoff from separate entertainment as well as approximately $5 million with anticipated non cash stock compensation.
Carlos Olea: Looking at asset disposition, in February, we sold the Creekside Park Medical Plaza in the woodlands for $14 million. This sale, which reflected an attractive 5.6% cap rate, generated a gain of approximately $5 million during the quarter.
Carlos Olea: Looking at asset disposition in February stalled at Creekside Park Medical Plaza in the woodlands or $14 million.
Carlos Olea: This sale, which reflected an attractive five 6% cap rate, we generated a gain of approximately $5 million during the quarter.
Carlos Olea: Turning to our balance sheet, we had $463 million of cash at the end of the quarter. Together with our strong guidance expectations for the full year, we are well positioned to deploy additional capital into our development pipeline. At the end of March, the remaining equity contribution needed to fund our current project was approximately $260 million. From that perspective, we have $5.4 billion outstanding with only $257 million of maturities in 2024.
Carlos Olea: Turning to our balance sheet, we have $453 million of cash at the end of the quarter together with our strong guidance expectations for the full year, we are well positioned to deploy additional capital into our development pipeline.
Carlos Olea: At the end of March and our remaining equity contribution needed to fund our current project with approximately $260 million.
Carlos Olea: From a debt perspective, we had $5 $4 billion outstanding with only $257 million with maturities in 2024.
Carlos Olea: Approximately $246 million of this is related to the construction loan on Victoria Place, which will be repaid as units close in the fourth quarter, leaving us well-positioned with only $11 million of principal amortization payments due in 2024. For 2025, we have approximately $548 million maturing, which includes the bridge and construction loans for three of our newest office properties, 9950 Woodlock Forest, 6100 Merriweather, and 1700 Pavilion, all of which are It also includes our two multifamily construction loans for Marlowe and Tanager Echo.
Carlos Olea: Approximately $246 million of this is related to the construction loan and Victoria place, which will be repaid as units closed in the fourth quarter, leaving us well positioned with only $11 million of breakup, our amortization payments due in 2024.
Carlos Olea: For 2025, we have approximately $548 million maturity, which included the bridge and construction loans for our three newest office property 90, 950 would look for 50 to 100 Merriweather in 1700 per Valeant.
Carlos Olea: All of which are 90% leased or more.
Carlos Olea: It also includes our two multifamily construction loans for Marlow antennas or echo.
Carlos Olea: Refinancing discussions for many of these are already underway, and we will have more to share with you in the coming quarter. With that, I would now like to turn the call back over to David for closing remarks. Thank you, Carlos.
Carlos Olea: The financing discussions for many of these are already underway and we will have more to share with you in the coming quarters.
Carlos Olea: With that I would now like to turn the call back over to David for closing remarks.
David O'Reilly: Before we open up the lines for Q&A, we want to announce the date of our next Investor Day, which will be held in Summerlin on the afternoon of Monday, November 18, in conjunction with the NARIC REIT World Investor Conference in Las Vegas. More information will be available in the coming months, but please mark your calendar to join us. The Experience West Summerlin consistently ranks as one of the best-selling MPCs in the country. Now, just a few final thoughts.
David O'Reilly: Thank you Carlos before we open up the lines for Q&A, we wanted to announce the date of our next Investor day, which will be held in summerlin. The afternoon of Monday November 18 in conjunction with the NAREIT REIT World Investor Conference in Las Vegas.
David O'Reilly: More information will be available in the coming months, but please mark your calendar to join us experienced by Summerlin consistently ranked as one of the best selling mpc's in the country.
David O'Reilly: Now just a few final thoughts.
David O'Reilly: First, our first quarter and the strength of new home sales and condo pre-sales have laid the groundwork for another outstanding year at Howard Hughes. As a result, full year guidance, which anticipates robust MPC EBT, record operating asset NOI, and over $200 million of gross profit from condo sales, remains intact. With respect to the spinoff from Seaport Entertainment, we continue to make solid progress, and we anticipate completing the transaction later this summer.
David O'Reilly: First our first quarter and the strength of new home sales and condo pre sales of laid the groundwork for another outstanding year at Howard Hughes as a result, our full year guidance, which anticipates robust MPC EBT record operating asset NOI and over $200 million of gross profit from condo sales remains intact.
David O'Reilly: With respect to the spinoff of seaborne entertainment, we continue to make solid progress and we anticipate completing the transaction later this summer.
David O'Reilly: Anton and his team are already making incremental improvements to these unique assets and have identified many pathways for enhanced performance in the quarters and years ahead. For Howard Hughes, we're excited about our future as a pure play real estate company focused solely on the development of our world class portfolio of master plan communities. With strong demand for our unmatched land bank, premier operating assets, and upscale condo developments, as well as our solid pipeline of future opportunities, we are uniquely positioned to grow net asset value and drive strong returns in the future. With that, let's start the Q&A portion of the call. Operator, can you please open the lines for the first question? Thank you.
David O'Reilly: And Tony and his team are already making incremental improvements of these unique assets and have identified many pathways for enhanced performance in the quarters and years ahead.
David O'Reilly: For Howard Hughes, we're excited about our future as a pure play real estate company focused solely on the development of our world class portfolio of Masterplan communities.
David O'Reilly: With strong demand for our unmatched land bank Premier operating assets in upscale condo developments as well as our solid pipeline of future opportunities. We are uniquely positioned to grow net asset value and drive strong returns in the future.
David O'Reilly: With that let's start the Q&A portion of the call. Operator can you. Please open the line for the first question.
Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Press star 11 again to remove your question. Please stand by while we compile the Q&A list. The first question comes from Anthony Paolone with J.P. Morgan. Your line is open.
Speaker Change: Thank you.
Operator: We remind her to ask a question. Please press star one on your telephone and wait for your name to be announced.
Operator: Star one again to remove your question. Please standby, while we compile the Q&A roster.
Anthony Paolone: The first question comes from Anthony <unk> with Jpmorgan. Your line is open.
David O'Reilly: Great, thank you. The first question is just as it relates, excuse me, to the operating property portfolio. If we just annualize the first quarter, I think it puts you above your guidance already. So wondering if you could just talk about how you feel about the prospects of that, maybe doing a bit better or if there are other... sort of headwinds that you expect over the course of the year to offset sort of the run rate right now.
Anthony Paolone: Alright, great. Thank you.
David O'Reilly: The first question is just as it relates excuse me to the operating property portfolio. If we just annualize the first quarter I think it puts you above your guidance already.
David O'Reilly: So I'm wondering if you could just talk about how.
David O'Reilly: How you are feeling about the prospects of that maybe doing a bit better if there are other.
David O'Reilly: Sort of headwinds that you expect over the course of the year to offset sort of the run rate right now.
David O'Reilly: Morning, Tony. I appreciate the question. Look, we had a great start to the year and we saw great increases across office, and multi-family that candidly exceeded our expectations. In the first quarter, though, we also received our annual distribution from Summerlin Hospital, which is only one time a year. So I wouldn't annualize that as you think about, you know, taking the first quarter and annualizing it. And look, I think that we have the opportunity, if things continue along this path, to, hopefully, increase that guidance range over time. But as we sit here today, I'm just not comfortable enough to do that given a lot of the uncertainty that's around.
Speaker Change: Good morning, Tony I appreciate the question.
David O'Reilly: You look we had a great start to the year.
David O'Reilly: We saw great increases across office multifamily debt.
David O'Reilly: Yes.
David O'Reilly: Handedly exceeded our expectations.
David O'Reilly: In the first quarter. We also received our annual distribution from this time on hospital, which is the one time of year. So I wouldn't annualize that as you think about taking the first quarter and annualize it.
David O'Reilly: And look I think that we have the opportunity if things continue along this path and hopefully over time increase that guidance range.
David O'Reilly: But as we sit here today I'm, just not comfortable enough to do that given a lot of the uncertainty that's out there.
Jay Cross: Okay, fair enough. The second one is just, you know, the Ritz-Carlton project seems to be going off pretty well on the condo side. Outside of Hawaii, are there other potential MPCs or opportunities where you see condos making sense and taking that capability, you know, to those other areas?
Speaker Change: Okay fair enough.
Jay Cross: The second one is just.
Jay Cross: The Ritz Carlton project seems to be going off pretty well on the condo side.
Jay Cross: Outside of Hawaii are there other.
Jay Cross: Potential npcs or opportunities, where you see condos, making sense and taking that capability.
David O'Reilly: Hi, it's Jay Cross. I'm going to respond to that question. Yes, we do. We're really bullish on downtown Summerlin. We have two condo projects in the design phase right now, and possibly even a third. And so, as that market matures, and based on the success that we've enjoyed at the summit, we think that an urban product could do very well there.
Jay Cross: To those other areas.
Jay Cross: Hi, It's Jay Cross on our response to that question, Yes, we do where we're really bullish on downtown.
David O'Reilly: Two kind of projects into the design phase right now and possibly even a third.
David O'Reilly: And so we see as that market matures and based on the success. We've enjoyed at the summit, we think that urban product could be very well there.
Operator: Okay, and then just if I just ask one more final question, just for David, just, you know, housing is performing well, your MPCs are doing well, business is performing, the stock is still seemingly at a discount and has had a reaction to, you know, Bill Ackman, you know, leaving the chair role, any thoughts on just revisiting the buyback or anything on that front or using some of the capacity for the stock? Yeah, absolutely, Tony. And it's something that we can do.
David O'Reilly: Okay, and then just if I could.
Operator: To ask one more final one just maybe for David just.
Operator: Housing is performing well youre mpc's are doing well business is performing stock still seemingly at a discount and it has had a reaction to.
Operator: Bill Ackman.
Operator: Leaving the chair role any thoughts on just revisiting the buyback or anything on that front are you using some of the capacity for.
David O'Reilly: Yeah, absolutely, Tony, and it's something that we discuss very much in real-time, both in the management team, as well as in the boardroom. It's absolutely on our radar in terms of a potential allocation of capital. As you can imagine, with an announced spinoff, but no documents associated with that spinoff publicly filed, we're in a spot right now where we have information that keeps us out of the market from buying our own shares.
David O'Reilly: The stock.
David O'Reilly: Absolutely Tony and it's something that we discussed very much real time.
David O'Reilly: Both in the management team.
David O'Reilly: <unk> team as well as in the boardroom.
David O'Reilly: Absolutely on our radar in terms of a potential allocation of capital as you can imagine with an announced spinoff, but no documents associated with Thats been a publicly filed awareness spot right now where we have information that keeps us out of the market from buying our own shares.
David O'Reilly: So, you know, we need to get that publicly filed. We need to get that on record so everyone can see the capitalization of both companies, the expected timing of both companies, and the overhead of both companies. And when that information is public and we have the opportunity to be back in the market, if we continue to trade at this, candidly, very disappointing level, I think that a potential way that we would raise capital in the future would be back into our own shares.
David O'Reilly: So we need to get that publicly filed we need to get that on record. So everyone can see the capitalization of both companies do you expect the timing of both companies.
David O'Reilly: The overhead of both companies and when that information is public and we have the opportunity to be back in the market. If we continue to trade.
David O'Reilly: Candidly very disappointing level that I think that a potential way that we would allocate capital in the future would be into back into our own shares.
Speaker Change: Great. Thank you for that.
Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Please stand by for the next question. The next question comes from Anthony Goldfarb with Piper Sandler. Your line is now open.
David O'Reilly: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Operator: Standby for the next question.
Alexander David Goldfarb: The next question comes from Anthony <unk>.
Alexander David Goldfarb: <unk> with Piper Sandler Your line is now open.
Unknown Attendee: Hey, morning down there. And it's just my stage name.
Alexander David Goldfarb: Hey, good morning down there and it just by stage name.
Unknown Attendee: Maybe Anthony will ask smarter questions Alex.
David O'Reilly: So maybe Anthony will ask smarter questions than Alex. So let me just continue on the real, the real Anthony Paolone's question on buybacks, David. Assuming all else is equal, the stock is where it is when you guys are able to be back in the market. Do you see incremental cash on hand going to buybacks or development? I'm just trying to understand, from your perspective, the board's perspective, if where the stock is means that it's really hard to underwrite breaking ground on a new project versus buying back the stock, or if, you know, it would sort of be split between the two.
David O'Reilly: So let me let me just continuing on the real the real Anthony per loans question on buybacks, David assuming all else equal if the stock is where it is when you guys are able to be back in the market do you see incremental cash on hand going to buybacks or development I'm just trying to understand from your.
David O'Reilly: Perspective, the board's perspective, if where the stock is it means that it's really hard to underwrite breaking ground on a new project versus buying back the stock or if it would sort of be split between the two.
David O'Reilly: I don't think it's an all or none decision. I think we're going to look at each potential development and where we are trading at that moment in time and make the best decision we can at that point, Alex. I think right now if I tried to pencil out a potential office development in today's Unknown Attendee, Unknown Shareholder, Howard Hughes Corp. But if we have the opportunity to build a condominium tower with a nominal amount of equity, given our low land basis, buyer deposit, there's also a number of those development talks that, as you know, and we've talked about this in the past, that, you know, don't generate the best yield for that postage stamp that we're developing on.
David O'Reilly: I don't think it's an.
David O'Reilly: An all or none decision I think we're going to look at each potential development and where we're trading at that moment in time and make the best decision. We can at that point, Alex I think right now if I try to pencil out a potential office development in today.
David O'Reilly: Largely unknown cap rate world in today's interest rate environment, I think it's pretty easy decision to say that that capital would go into buybacks instead of a speculative office development.
David O'Reilly: But if we have the opportunity to build a condominium tower with a nominal amount of equity given our low land basis buyer deposits.
David O'Reilly: And massive free sales that generate meaningfully outside risk adjusted returns even relative to buybacks I think you'll see us continue to build condo towers in Hawaii and continue to be thoughtful in terms of where our developments are.
David O'Reilly: There is also.
David O'Reilly: Development.
David O'Reilly: You know and we've talked about this in the past that.
David O'Reilly: That don't generate the best yield for that postage stamp that we're developing on integrate example of that is the whole foods in downtown Summerlin.
David O'Reilly: And a great example of that is the Whole Foods in downtown Summerlin. But the impact of that development and the value of that development on the surrounding land that we own, the way that that development will drive multifamily rents higher, and multifamily absorption higher, and potentially unlock new product types. And as Jay said, potentially condos in downtown Summerlin. When you add all those things up, that creates so much long-term value for our shareholders. We have to consider those.
David O'Reilly: But the impact of that development and the value of that development on the surrounding land that we own the way that that development will drive multifamily rents higher multifamily absorptions higher potentially unlock new product types, and as Jason and potentially condos in downtown Summerlin.
David O'Reilly: And all those things up that creates so much long term value for our shareholders we have to consider those.
Unknown Attendee: Okay, second question, David, and again, I like to rib you that you guys make everything look so easy. But you know, the Phoenix sales, you know, exceeded your expectations so far. The Ritz Carlton, again, looks really easy. You guys exceeded. Obviously, you do the same out in Hawaii.
Speaker Change: Okay second question David is.
Unknown Attendee: And again I'd like to review that you guys make everything look so easy, but the Phoenix sales exceeded your expectations so far.
Unknown Attendee: The Ritz Carlton again, yes.
Unknown Attendee: It looks really easy you guys exceeded obviously you do the same out in Hawaii. So if you could just talk a little bit more especially around Phoenix and the risks in Houston, because literally those are new new projects then too shall.
David O'Reilly: So if you could just talk a little bit more, especially around Phoenix and the Ritz in Houston, because literally, those are new, new projects, then to, you know, should we take it that you guys are just really conservative in underwriting? Or do you think that maybe there's like a disconnect on your team's view of where the market is versus where the actual demand is? Because each time, it seems to not just slightly exceed but well exceed where you guys are thinking.
David O'Reilly: Should we take it that you guys are just really conservative in underwriting.
David O'Reilly: Underwriting or do you think that may be there is like a disconnect in your team's view of where the market is versus where the actual demand is because each time it seemed to not just slightly exceed but well exceed where you guys are thinking.
David O'Reilly: I like to think part of my job as we communicate with the street is to under-promise and over-deliver. And as we, to answer the first part of your question, think about land sales in Phoenix, when we go out to the market, we go out with kind of an open bid process. We don't necessarily set prices and make people jump over them, and we've been pleasantly surprised with the level of demand and the interest among home builders for Floreo. And we hope that that will continue.
Speaker Change: I like to think part of my job as we communicate with the street is to under promise and over deliver.
David O'Reilly: And as we to answer the first part of your question think about land sales in Phoenix, when we go out to the market. We go out with a kind of an open bid process, we don't unnecessarily set prices that make people jump over it in.
David O'Reilly: We've been pleasantly surprised with the level of demand and the interest among homebuilders for L'oreal and we hope that that will continue now as.
David O'Reilly: Now, as you know, we also get builder price participation in our contracts, which means that if home prices continue to go higher, despite higher interest rates, and those homes sell for greater amounts than we expect, we will be made whole. So overall, I think that's a great process for land sales. As it relates to the Ritz-Carlton condos, Unknown Speaker Where we decided to launch pricing on those was well within the reach of where any market study said it was possible, and it was heavily debated within the C-suite; it was heavily debated within the boardroom.
David O'Reilly: As you know we also get build their price participation in our contracts, which means that if home prices continue to go higher despite higher interest rates and those homes sell for greater amounts than what we expect will be made whole. So overall I think thats a great process on land sales as it relates to the Ritz Carlton condos.
David O'Reilly: Unknown Speaker And what we did is we launched a small portion of the building, and over the course of that launch, we increased prices, sometimes multiple times per day, that totaled in excess of 17%. And since launch, we've pulled almost all of the units off the market with the exception of a handful and have continued to push prices higher. And our view at this point is that we're going to hold off selling the remaining units in the Ritz until the building is complete, until people can walk in and see the incredible Bob Stern design.
David O'Reilly: With this where we decided to launch pricing on those.
David O'Reilly: With well in excess of where any market study said was possible.
David O'Reilly: And it was heavily debated within the C suite it was heavily debated within the boardroom.
David O'Reilly: And what we did is we launched a small portion of the building and over the course of that launch we increased pricing, sometimes multiple times per day that totaled in excess of 17%.
David O'Reilly: And since launch we've pulled almost all of the units off the market with the exception of a handful and have continued to push pricing higher.
David O'Reilly: And our view at this point is that we're going to hold off selling the remaining units and the risks until the building is complete and so people can walk in and see the incredible Bob Stern design. They can see the used from those units the lakefront pristine that they'll enjoy as residents of the Ritz Carlton and I think that is.
David O'Reilly: They can see the views from those units, the lakefront pristine that they'll enjoy as residents of the Ritz Carlton. And I think that at that point, when we go to sell the remaining 50% of the building, we'll even further exceed the prices that we've achieved to date.
David O'Reilly: That point when we go to sell the remaining 50 50.
David O'Reilly: 50% of the building will even further exceed pricing that we've achieved to date.
Unknown Attendee: So let me just follow up on that, David. Sometimes, though, developer expectations, you know, bird in hand versus, you know, two in the bush or whatever the expression is. Why? Why take that risk? Like, the market could change when you deliver. Why not continue to sell now? Unknown Speaker
Speaker Change: So let me just follow up on that though David sometimes though develop our expectations.
Unknown Attendee: Bird in hand versus two.
Unknown Attendee: Two in the bush or whatever the expression is why why take that risk like the market could change when you deliver why not continue to sell now.
David O'Reilly: Well, I think that this is the best remaining residential site in the Woodlands, with the best potential combination of interiors and architecture and the highest level of finishes that have ever been seen. To date, we have seen outstanding demand that has been nothing short of incredible, pushing prices to levels that have never been seen in the Houston market before. And while we are going to take a little bit of market risk, I think the money that we have left on the table for the best site in the Woodlands will be worth taking that risk, and if there's a time when we finish construction, if the market isn't receptive, it's not as if we're just going to fire sale these units. These are an incredible once in a lifetime opportunity to buy a Okay.
Speaker Change: I think that this is the best remaining residential site in the woodlands with the best potential combination of interiors and architecture. The highest level of finishes that have ever been seen to date, we have seen outstanding demand has been nothing short of incredible pushing price.
David O'Reilly: <unk> to levels that have never been seen in the Houston market before and while we are going to take a little bit of market risk I think the money that we have left on the table for the best site in the woodlands.
David O'Reilly: We will be worth taking that risk.
David O'Reilly: Okay time, when we finished construction of the market isn't receptive it's not as if we're just going to fire sale. These units. These these are incredible once in a lifetime opportunity to buy the residents. Unlike woodlands and we'll wait until we achieve the pricing we think is appropriate.
Unknown Attendee: Okay, just one final question. Carlos, any additional spin costs that we should be modeling? There was 19 cents in the first quarter, and presumably there's an additional in the remaining I know David's not an FFO guy, but you know, those of us on the street are just that we can be aware of. So as we're thinking about earnings for the rest of the year, we can think about some element of the impact of spin costs. Thanks, Alex. And good morning. Now that the 25 million that was disclosed
Speaker Change: Okay, and just final question Carlos.
Carlos Olea: Any additional spin costs that we should be modeling there was <unk> 19 in the first quarter, presumably there is an additional and the remaining just I know David is not an <unk> guy, but those of US on the street are just that we can be aware of so as we're thinking about earnings the rest of the year. We can think about some element of impact of spin costs.
Carlos Olea: morning. Now that the 25 million that
Unknown Attendee: Yes.
Speaker Change: Thanks, Alex and good morning.
Carlos Olea: The $25 million.
Carlos Olea: This was the number that we're tracking towards the between now and that will come with numbers and also.
Carlos Olea: You can use that number is the number that we're comfortable tracking too.
Unknown Attendee: Okay, thank you.
Operator: One moment for the next question. Our next question comes from Alexander, I'm sorry, Alex Barron with the Housing Research Center.
Speaker Change: Okay. Thank you.
Speaker Change: One moment for the next question.
Alex Barron: Our next question comes from Alexander.
Operator: Sorry, Alex Barron with housing Research Center.
Alex Barron: Ladies and gentlemen, I was just hoping to get a bit more details on the Floreo. Unknown Speaker, [inaudible] Are you expecting a similar size of... um, you know land sales each quarter, or is it going to be lumpy like what's the outlook there?
Alex Barron: Thank you gentlemen.
Alex Barron: I was just hoping to get a bit more details on the rail.
Alex Barron: Pizza land, I guess or joint venture.
Alex Barron: What percentage of the joint venture I guess.
Alex Barron: Owned Bayou guidance and as you look forward.
Alex Barron: Are you expecting a similar size.
Alex Barron: Gain on land sales each quarter or is it going to be lumpy like what's the outlook there.
David O'Reilly: Morning, Alex. I appreciate the question. We're a 50% joint venture partner at Floreo, which is the first phase of the overall TerraBalance joint venture. You know, I think that, as we've kind of talked about a lot with all of our MPCs, land sales tend to be lumpy. I don't expect that we will see a similar amount of land sales at Floreo every single quarter to the level that we saw this quarter.
Alex Barron: Good morning, Alex I. Appreciate the question, we're a 50% joint venture partner <unk>, which is the first phase of the overall tariff tariff Atlas joint venture.
David O'Reilly: I think that as we've kind of talked about.
David O'Reilly: A lot with all of our MPC land sales tend to be lumpy I don't expect that we will see a similar amount of landfill and florio every single quarter to the level that we saw this quarter I think we will probably have another group of <unk>.
David O'Reilly: I think we'll probably have another group of sales that will sell in the remainder of 2024, and that will, in all likelihood, be in the third quarter or potentially the fourth quarter. But this is not something that we should model on a quarterly basis. It'll be one to two times per year. We'll close on a handful of parcels with our builders, and, you know, over the course of a year, we'll allow us to track enough land into the hands of builders to keep up with the underlying hometown.
David O'Reilly: Sales it will sell in the remainder of 2024 and that will in all likelihood be end of third quarter or potentially the fourth quarter, but this is not something that we should model on a quarterly basis there'll be one to two times per year.
David O'Reilly: On a handful of <unk>.
David O'Reilly: Parcels with our builders and over the course of a year will allow us to track to enough land into the hands of builders to keep up with underlying Huntsville.
David O'Reilly: Okay, great. The other question is that it looks like the density was about seven homes per acre, which seems a little bit high. Was that more like a patch product, or is the density likely to go down to four more single-family type homes in the future?
Speaker Change: Okay, great. The other question is it looks like the density was about seven homes per acre, which seems a little bit.
David O'Reilly: Was that more like attach product or is the density likely to go down to four more single family type homes in the future.
David O'Reilly: Now, these are all going to be single-family homes; these are not attached products. The density may come out that way because we're looking at net acres instead of gross. And, you know, I would say that we have a variety of block sizes, a variety of product mix, a host of great builders, and we're going to be, hopefully, meeting the sweet spot of demand across what exists out there in the West Valley of Phoenix, which is a more affordable product, especially as we launch the first phase of this community.
David O'Reilly: No. These are all going to be single family homes. These are not attached product.
David O'Reilly: Entity may come out that way because we're looking at net acres instead of growth.
David O'Reilly: I would say that we have a variety of block sizes, a variety of product mix a host of great builders.
David O'Reilly: And we're going to be hopefully meeting the suite quite a demand across what exists out there in the west Valley of Phoenix, which is a more affordable product, especially as we launched the first phase of this community.
David O'Reilly: And on the Ritz-Carlton project, obviously, you guys sold quite a bit in a week. Are the sales going to continue at that pace, or are you going to slow down and raise the prices for the rest? Well, we've already, as I kind of mentioned in the last question, Alex, you know, we've raised prices 17% already from launch till today. We're going to raise them further, but we're going to hold the vast majority of the remaining units off the market until we complete construction, where we think we'll be able to exact an even higher price per unit.
Speaker Change: Got it.
David O'Reilly: On the Ritz Carlton project.
David O'Reilly: Obviously, you guys saw quite a bit in a week.
Alex Barron: Got it. All right. Sorry about that. Thank you. No worries, Alex. Thank you.
David O'Reilly: Are the sales going to continue at that pace or are you going to slow down and raise the prices for the rest well we've already kind of mentioned.
Alex Barron: The last question, Alex we've raised prices, 17% already from launch so today, we're going to raise it further but we're going to hold the vast majority of the remaining units off the market until we complete construction, where we think we will be able to exact an even higher price per unit.
Speaker Change: Got it alright, sorry about that thank you. Thank.
Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. I am showing no further questions at this time. I would like now to turn the call back to David O'Reilly for closing remarks.
Speaker Change: Thank you.
Alex Barron: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
David O'Reilly: I am showing no further questions at this time I would like now to turn the call back to David O'reilly for closing remarks.
David O'Reilly: Appreciate everyone's time today, and thank you again for joining our call. You know, just as a last reminder, we are planning our next Investor Day right before NAVRETE out in Sutherland. Come see why it's one of the best places to live in America.
David O'Reilly: I appreciate everyone's time today and thank you again for joining our call just as a last reminder, we are planning our next Investor day, right before NAREIT <unk> Ireland.
David O'Reilly: <unk> is one of the best places to live in America, I think we can influence in terms of our investors thoughts about the quality.
David O'Reilly: I think we can influence it in terms of our investors' thoughts about the quality and the exceptional ability to live within a Howard Hughes community. As always, if there are follow-up questions or anything you need between now and the next call, by all means, please reach out to Eric, Carlos, and myself. We're always happy to help. Thank you again.
David O'Reilly: The exceptional ability to live within Howard Hughes community as always if there are follow up questions or anything you need between now and the next call by all means please reach out to Eric Carlos myself, we're always happy to help thank you again.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.
Operator: Okay.
Operator: Okay.
Operator: Okay.
Operator: Yes.