Q2 2024 Howard Hughes Holdings Inc Earnings Call

Good day and welcome to Howard Hughes Holdings second quarter 2024 earnings conference call.

Operator: At this time, all participants are in a listen-only mode for the speaker presentation. Q&A: If you would like to ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is safe.

Speaker Change: At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star-one-one on your telephone. You will then hear an automated message advising that your hand has been raised.

Speaker Change: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Senior Vice President of Investor Relations, Eric Holcomb.

Eric Holcomb: For your question, please press star 1 1 again. I advise that today's conference is being, It is now my pleasure to introduce and Senior Vice President of Investor Relations, Eric Holcomb. Good morning from our headquarters here in the Woodlands, Texas, and welcome to Howard Hughes Holding's second quarter 2024 earnings call. With me today are David O'Reilly, Chief Executive Officer, Jay Cross, President, Carlos Olea, Chief Financial Officer, Dave Striph, President of Asset Management and Operations, and Joe Villain, General Counsel.

Speaker Change: Good morning from our headquarters here in the Woodlands, Texas, and welcome to Howard Hughes Holdings' second quarter 2024 earnings call. With me today are David O'Reilly, Chief Executive Officer, Jay Cross, President, Carlos Olea, Chief Financial Officer, Dave Striph, President of Asset Management and Operations, and Joe Villain, General Counsel.

Eric Holcomb: Before we begin, I would like to direct you to our website, howardhughes.com, where you can download both our second quarter earnings press release and our supplemental package. The earnings release and supplementary 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 law.

Speaker Change: Before we begin, I would like to direct you to our website, howardhughes.com, where you can download both our second quarter earnings press release and our supplemental package.

Speaker Change: The earnings release and subliminal package include reconciliations of non-GAAP financial measures that will be discussed today in relation to their most directly comparable GAAP financial measures.

Speaker Change: 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: Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that these expectations will be achieved. Please see the forward-looking statement disclaimer in our second quarter earnings press release and the risk factors in our SEC filings for factors that could cause material differences between forward-looking statements and actual results. We are not under any duty to update forward-looking statements unless required by law.

Speaker Change: 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.

Speaker Change: Please see the forward-looking statements disclaimer in our second quarter earnings press release and the risk factors in our SEC filings for factors that could cause material differences between forward-looking statements and actual results.

David Michael Striph: I will now turn the call over to our CEO, David O'Reilly. Thank you, Eric. Good morning, everyone, and welcome to our second quarter earnings call. On our call today, I'm going to begin with a recap of the quarter and cover the segment highlights for our master plan communities in the CBP. Dave Stripe will cover the performance of our operating assets, followed by remarks from Jay Cross, who will provide updates on our strategic development.

Speaker Change: We are not under any duty to update forward-looking statements unless required by law. I will now turn the call over to our CEO , David O'Reilly.

David O'Reilly: Thank you, Eric. Good morning, everyone, and welcome to our second quarter earnings call. On our call today, I'm going to begin with a recap of the quarter and cover the segment highlights for our master plan communities in the C-Quarter. Dave Striph will cover the performance of our operating assets, followed by remarks from Jay Cross, who will provide updates on our strategic development projects.

David Michael Striph: Finally, Carlos Olea will review our latest Blue Year guidance and the balance sheet before we open up the lines for Q&A. For the second quarter, I'm pleased to report that Howard Hughes delivered exceptional results across our core business, highlighting the strong demand we continue to see in our master plan communities and further solidifying our strong 2024 outlook. Looking quickly around the segment.

Speaker Change: Finally, Carlos Olea will review our latest Blue Year guidance and the balance sheet before we open up the lines for Q&A.

Speaker Change: For the second quarter, I'm pleased to report that Howard Hughes delivered exceptional results across our core business segments, highlighting the strong demand we continue to see in our master plan communities and further solidifying our strong 2024 outlook.

David Michael Striph: In MPCs, we continue to see heightened demand for new acreage from homebuilders, which contributed to a significant increase in residential land sales across our community. These land sales achieved a new record average price per acre, leading to robust MPC EBT that puts us well on our path to meet our full-year goal. Our operating assets delivered solid NOI, led by strong performance in office, as well as meaningful year-over-year growth in retail and multifamily, and Strategic Development's buyer interest for our premier condos and ward village in the Woodlands remained at elevated levels. In the quarter, we contracted to sell 94 units, which equates to future revenue of $207 million.

Speaker Change: Looking quickly around the segments, in MPCs we continue to see heightened demand for new acreage from homebuilders, which contributed to a significant increase in residential land sales across our community.

Speaker Change: These land sales achieved a new record average price per acre, leading to robust MPC EBT that puts us well on our path to meet our full year guidance.

Speaker Change: Our operating assets delivered solid NOI led by strong performance in office, as well as meaningful year-over-year growth in retail and multifamily.

Speaker Change: In strategic development, buyer interest for our premier condos and ward village in the woodlands remained at elevated levels. In the quarter, we contracted to sell 94 units, which equates to future revenue of $207 million.

Speaker Change: We're still on track for a fourth-quarter delivery of Victoria Place, which we now expect will see more condo units close in 2024. With these outstanding results, we have reiterated our full-year guidance for MPC EBT and raised our guidance for operating asset, NOI, and condo sales.

David Michael Striph: We're still on track for a fourth quarter delivery of Victoria Place, which we now expect we'll see more condo units close in 2020. With these outstanding results, we have reiterated our full year guidance for MPC-EBT and raised our guidance for operating asset, NOI, and condos. Carlos will discuss more later in the, diving into our MPC segment results, we delivered outstanding MPC EBT of $123 million in the second quarter, underscored by the sale of 164 acres of residential land across our communities and a new record high average price per acre of $1 million.

Speaker Change: Carlos will discuss more later in the call.

Carlos Olea: Diving into our MPC segment results, we delivered outstanding MPC EBT of $123 million in the second quarter, underscored by the sale of 164 acres of residential land across our communities at a new record high average price per acre of $1 million.

David Michael Striph: Land sales were led by Summerlin, which will be closed on the sale of 87 acres of superpats at an impressive $1.5 million per acre. Land sales in Texas were also strong, with 77 acres sold in Bridgeland and the Woodland Hills representing a 55% increase year over year.

Carlos Olea: Land sales were led by Summerlin, where we closed on the sale of 87 acres of superpats at an impressive $1.5 million per acre.

Carlos Olea: Land sales in Texas were also strong, with 77 acres sold in Bridgeland and the Woodland Hills, representing a 55% increase year-over-year.

David Michael Striph: Overall, land sales revenue totaled $155 million in the quarter, or a 266% increase year-over-year. New home sales, which we believe are a leading indicator of future land sales, maintained the strong momentum seen in recent quarters, with a total of 579 homes sold in our NPC. Although down a modest 4% from the prior year, when home sales experienced a significant resurgence, year-to-date home sales are pacing 7% higher.

Carlos Olea: Overall, land sales revenue totaled $155 million in the quarter, or a 266% increase year-over-year.

Carlos Olea: New home sales, which we believe are a leading indicator of future land sales, maintain the strong momentum seen in recent quarters, with a total of 579 homes sold in our NPCs.

Carlos Olea: Although down a modest 4% from the prior year, when home sales experienced a significant resurgence.

David Michael Striph: Looking forward, we remain confident in the strength of the new home market, despite recent national headlines reporting rising new home inventories and reduced new homes. (Inaudible) which were recently reported to have risen to over nine months nationally, can be a misleading metric because this metric includes homes that have not yet become construction, homes under construction, and homes that are actually completed. Looking at only the completed inventory, you'll find that there are actually less than two months of completed inventory available in the overall market, far fewer than the headline data suggests. In our communities, completed new home inventories have been in decline since year-end and are currently one month or less in Bridgeland and Summerlin.

Carlos Olea: Year-to-date home sales are pacing 7% higher.

Carlos Olea: Looking forward, we remain confident in the strength of the new home market, despite recent national headlines reporting rising new home inventories and reduced new home sales.

Carlos Olea: New home inventories, which were recently reported to have risen to over nine months nationally, can be a misleading metric, because this metric includes homes that have not become construction, homes under construction, and the homes that are actually completed.

Carlos Olea: Looking at only the completed inventory, you'll find that there are actually less than two months of completed inventory available in the overall market, far fewer than the headline data suggests.

Speaker Change: In our communities, completed new home inventories have been in decline since year-end and are currently one month or less in Bridgeland and Summerlin.

David Michael Striph: With respect to new home sales, which were recently reported to have softened, we have found that reported data has been consistently adjusted higher in subsequent periods, questioning the accuracy of the initial report. Our company's favorable view is further supported by our home builder partners, who continue to report strong results, healthy home buyer interest, significant increases in new orders, and low cancellation. Overall, the new home market remains incredibly resilient, and mortgage applications for new homes continue to rise despite high interest rates.

Speaker Change: With respect to new home sales, which were recently reported to have softened, we have found that reported data has been consistently adjusted higher in subsequent periods, questioning the accuracy of the initial reports.

Speaker Change: Our company's favorable view is further supported by our home builder partners, who continue to report strong results, healthy homebuyer interest, significant increases in new orders, and low cancellation rates.

Speaker Change: Overall, the new home market remains incredibly resilient, and mortgage applications for new homes continue to rise despite high interest rates.

David Michael Striph: We expect this to continue for several reasons. First and foremost is affordability. For the first time in several decades, home prices have flipped, with new home prices now cheaper than resale. Together with attractive builder incentives, including mortgage rate buydowns, monthly payments on new homes are simply more attractive to homeowners. New homes offer superior build quality, require less upkeep, have lower insurance costs, and provide higher building efficiency, all keeping costs lower.

Speaker Change: We expect this to continue for several reasons. First and foremost is affordability. For the first time in several decades, home pricing has flipped, with new home pricing now cheaper than resale pricing.

Speaker Change: Together, with attractive builder incentives, including mortgage rate buydowns, monthly payments on new homes are simply more attractive to homebuyers.

Speaker Change: New homes offer superior build quality, require less upkeep, have lower insurance costs, and provide higher building efficiency, all keeping costs lower.

David Michael Striph: Availability and move-in ready inventory are also important. New homes now represent nearly one-third of total inventory, more than double the historic average. However, homeowners remain reluctant to trade in their historically low mortgage. This trend is not likely to reverse without significant rate cuts, as the average homeowner has a mortgage rate of 4% or less.

Speaker Change: Availability and move-in ready inventory are also important factors. New homes now represent nearly one-third of total inventory, more than double historic averages, as homeowners remain reluctant to trade in their historically low mortgages.

Speaker Change: This trend is not likely to reverse without significant rate cuts, as the average homeowner has a mortgage rate of 4% or less.

David Michael Striph: As a result, existing home sales have slowed to their lowest level since the Great Financial Crisis, when new home market share has risen to its highest, with elevated demand for new homes, as well as a significant undersupply of vacant developed lots, which remain well below equilibrium in our communities and their surrounding MSAs. We anticipate continued strong home builder demand for our land going forward. For that reason, we expect a strong second half of 2024, which will contribute to record residential land sales and robust MPC EBT of approximately $300 million for the full year.

Speaker Change: As a result, existing home sales have slowed to their lowest level since the Great Financial Crisis, when new home market share has risen to its highest percentage.

Speaker Change: With elevated demand for new homes, as well as a significant undersupply of vacant developed lots, which remain well below equilibrium in our communities and their surrounding MSAs, we anticipate continued strong home builder demand for our land going forward.

Speaker Change: For that reason, we expect a strong second half of 2024, which will contribute to record residential land sales and robust NPC EBT of approximately $300 million for the full year.

David Michael Striph: Turning to Seaport, as we announced last week, our board of directors approved the spinoff and the distribution of Seaport Entertainment shares to HHH holders of record at the close of business on this coming Monday, July 29. The distribution is expected after market close on Wednesday, July 31st, with HHH shareholders receiving one share of Seaport Entertainment Commons stock for every nine shares of HHH Commons. Seaport Entertainment will begin trading under the ticker SEG on the NYSE American Stock Exchange on Thursday, August 1st. Looking at their financials, the company generated net operating losses of $9.4 million.

Speaker Change: Turning to the Seaport, as we announced last week, our board of directors approved the spinoff and the distribution of Seaport Entertainment Shares to HHH holders of record at the close of business on this coming Monday, July 29th.

Speaker Change: The distribution is expected after market close on Wednesday, July 31st with HHH shareholders receiving one share of Seaport Entertainment Common Stock for every nine shares of HHH Common Stock.

Speaker Change: Seaport Entertainment will begin trading under the ticker SEG on the NYSE American Stock Exchange on Thursday, August 1st.

Speaker Change: Looking at their financials, the Seaport generated net operating losses of $9.4 million in the second quarter.

Speaker Change: This reflected a $6.9 million year-over-year incremental loss, primarily due to costs associated with the stand-up of seaport entertainment and reduced revenues as a result of poor weather.

Speaker Change: including equity losses of 5.6 million dollars primarily from the Tim building total Seaport NOI was a loss of 15 million dollars

David Michael Striph: This reflected a $6.9 million year-over-year incremental loss, primarily due to costs associated with the stand-up of seaport entertainment and reduced revenues as a result of poor weather, including equity losses of $5.6 million, primarily from the Tin Building. Total Seaport NOI was a loss of $15 million. With that, I'll turn the call over to Dave Striph for a review of our operating assets. Thank you, David. Good

David Michael Striph: In the second quarter, the strong momentum that has been building in our operating assets segment continued with the delivery of $68 million of NOI, including the contribution from Unconsolidated Ventures. This represented a 1% year-over-year reduction driven in part by $4 million of office lease termination fees received in the prior year. Excluding this benefit in the prior year, operating assets and OI were up 5%. Our strong performance was led by Office, which reported $33 million of NOI this quarter. Excluding those lease termination fees of $4 million in the prior year, Office NOI increased $3 million, representing a 12% year-over-year increase.

Speaker Change: With that, I'll turn the call over to Dave Striph for a review of our operating assets.

David Michael Striph: Thank you, David. Good morning. In the second quarter, the strong momentum that has been building in our operating assets segment continues with the delivery of $68 million of NOI, including the contribution from Unconsolidated Ventures.

David Michael Striph: This represented a 1% year-over-year reduction, driven in part by $4 million of office lease termination fees received in the prior year. Excluding this benefit in the prior year, operating assets NOI was up 5%.

David Michael Striph: Our strong performance was led by Office, which reported $33 million of NOI this quarter. Excluding the lease termination fees of $4 million in the prior year, Office NOI increased $3 million, representing a 12% year-over-year increase.

David Michael Striph: Strong improvement given the backdrop of a difficult office market nationwide. During the quarter, we continued our leasing success with the execution of 145,000 square feet of new or expanded office leasing. With our stabilized office portfolio now 89% leased, we expect to benefit from this leasing momentum in 2025 as office build-outs are completed and free rent periods burn off. During the quarter, we acquired Waterway Plaza 2, a 142,000 square foot Class A office building located in the Woodlands Town Center for approximately $19 million. This reflected a purchase price of approximately $135 per square foot for the office space, not considering the value of the associated land and the adjacent parking garage.

Speaker Change: A strong improvement given the backdrop of a difficult office market nationwide.

Speaker Change: During the quarter, we continued our leasing success with the execution of 145,000 square feet of new or expanded office leases.

Speaker Change: With our stabilized office portfolio now 89% leased, we expect to benefit from this leasing momentum in 2025 as office build-outs are completed and free rent periods burn off.

Speaker Change: During the quarter, we acquired Waterway Plaza 2, a 142,000 square foot Class A office building located in the Woodlands Town Center for approximately $19 million.

Speaker Change: This reflected a purchase price of approximately $135 per square foot for the office space, not considering the value of the associated land and the adjacent parking garage.

David Michael Striph: With our Woodland Town Center office portfolio essentially fully leased, this asset adds much-needed inventory and is expected to achieve a double-digit return upon stabilization. In addition, with over three prime acres in the heart of the woodlands, this acquisition creates an unparalleled covered land play with a low-cost basis and exceptional long-term opportunities for future redevelopment. Your Milton family portfolio also performed very well in the quarter, delivering NOI of $14 million, or an 8% year-over-year increase.

Speaker Change: With our Woodlands Town Center office portfolio essentially fully leased, this asset adds much needed inventory and is expected to achieve a double digit return upon stabilization.

Speaker Change: In addition, with over three prime acres in the heart of the woodlands, this acquisition creates an unparalleled covered land play with a low-cost basis and exceptional long-term opportunities for future redevelopment.

Speaker Change: Your Milton family portfolio also performed very well in the quarter delivering NOI of 14 million dollars or an 8% year-over-year increase.

David Michael Striph: This growth was primarily driven by increased rental revenue associated with the lease up of our newest properties, including Starling at Bridgeland, Marlowe in downtown Columbia, and Tanager Echo in San Luis Obispo. These properties have seen impressive leasing success during the last year, with Starling now 94% leased, Marlowe at 74%, and Tanager Echo at 67%.

Speaker Change: This growth was primarily driven by increased rental revenue associated with the lease up of our newest properties including Starling at Bridgeland, Marlowe in downtown Columbia, and Tanager Echo in Summerlin.

Speaker Change: These properties have seen impressive leasing success during the last year, with Starling now 94% leased, Marlow at 74%, and Teninger Echo 67% leased.

David Michael Striph: During a time when multifamily rents have seen pressure in many markets across the country, our rents remain stable with 1% growth across the portfolio, further demonstrating the strength and quality of our assets and our highly desirable master plan community. Overall, we are pleased with these results, and we expect further multifamily NOI growth as the year progresses. In retail, NOI was $15 million in the second quarter, which increased 19% year-over-year.

Speaker Change: During a time when multifamily rents have seen pressure in many markets across the country, our rents remain stable with one percent growth across the portfolio, further demonstrating the strength and quality of our assets and our highly desirable master plan communities.

Speaker Change: Overall, we are pleased with these results and we expect further multifamily NOI growth as the year progresses.

Speaker Change: In retail, NOI was $15 million in the second quarter, which increased 19% year-over-year. This improvement was primarily driven by the collection of prior period reserves at Ward Village.

Speaker Change: With our retail portfolio 94% lead, we expect full-year NOI growth in 2024.

David Michael Striph: This improvement was primarily driven by the collection of prior period reserves at Ward Village. With our retail portfolio 94% ahead, we expect full year NOI growth in 2020. With that, I'll turn the call over to our president, Jay Croft. Thanks, Dave, and good morning, everyone.

Speaker Change: With that, I'll turn the call over to our President, Jay Cross.

Jay Cross: In addition to strategic developments, we had another great quarter, achieving several important milestones. First, in Nevada, we completed Meridian, our 148,000-square-foot office building adjacent to the proposed movie studio site in Summerville. Since its completion, tenant interest has been steady, with half of the complex currently under advanced LOI or in lease negotiation. In Maryland, we also completed 10-285 Lakefront, our first medical office building in downtown Columbia.

Jay Cross: Thanks, Dave, and good morning, everyone. In strategic developments, we had another great quarter, achieving several important milestones.

Jay Cross: First, in Nevada, we completed Meridian, our 148,000-square-foot office building adjacent to the proposed movie studio site in Summerlin. Since its completion, tenant interest has been steady, with half of the complex currently under advanced LOI or in-lease negotiations.

Jay Cross: In Maryland, we also completed 10285 Lakefront, our first medical office building in downtown Columbia. This 85,000 square foot project is currently 48% leased and another 28% under LOI or in negotiations.

Jay Cross: This 85,000-square-foot project is currently 48% leased and another 28% under LOI or in negotiation. In this quarter, we celebrate the start of construction on two new projects, including one Bridgeland Green, the first mass timber office building in the Houston area and in our entire portfolio. This innovative 49,000-square-foot project, which we expect will be completed next year, has seen high demand. As of this week, it was already 80 percent pre-leased, with another 7 percent under LOI. In Hawaii, we commenced construction on Kalai, a 329-unit front-row condo tower across from Keuala Harbor in Ward Village.

Jay Cross: In this quarter, we celebrate the start of construction on two new projects, including one Bridgeland Green, the first mass timber office building in the Houston area and in our entire portfolio.

Jay Cross: This innovative 49,000-square-foot project, which we expect will be completed next year, has seen high demand. As of this week, it was already 80% pre-leased, with another 7% under LOI.

Jay Cross: In Hawaii, we commenced construction on Kalai, a 329-unit front row condo tower across from Kuala Harbour in Ward Village. This project, which is expected to be completed in 2027, is impressively 92% pre-sold, with only 26 units remaining in inventory.

Jay Cross: This project, which is expected to be completed in 2027, is impressively 92% pre-sold, with only 26 units remaining in inventory. With KALAI, we now have four condo project centers under construction in Hawaii, together with Victoria Place, Dulana, and the Park Ward Village, which are scheduled to be completed in late 2024, late 2025, and mid-2026 respectively. These four towers are collectively 97% pre-sold and represent meaningful future revenue of $2.6 billion, which will be recognized as these projects are delivered. Looking at condo sales, as David mentioned, we had an outstanding second quarter. In Ward Village, we contracted 78 condos representing incremental future revenue of approximately $140 million.

Jay Cross: With KALAI, we now have four condo projects under construction in Hawaii, together with Victoria Place, Yulana, and the Park Ward Village, which are scheduled to be completed in late 2024, late 2025, and mid-2026, respectively.

Jay Cross: These four towers are collectively 97 percent pre-sold and represent meaningful future revenue of $2.6 billion, which will be recognized as these projects are delivered.

Jay Cross: Looking at condo sales, as David mentioned, we had an outstanding second quarter. In Ward Village, we contracted 78 condos, representing incremental future revenue of approximately 140 million dollars. The majority of these pre-sales related to the LaNue, our 11th condo project in Ward Village.

Jay Cross: The majority of these pre-sales related to the LaNu, our 11th condo project in Ward Village. Since its launch in the first quarter, demand for this 485-unit project has been solid, with pre-sales eclipsing 50% of total units by quarter end. And finally, in Texas, following the extremely successful launch of the Ritz-Carlton Residences The Woodlands in the last week of March, we sold an additional 16 condos in the second

Speaker Change: Since its launch in the first quarter, demand for this 485-unit project has been solid, with pre-sales eclipsing 50% of total units by quarter end.

Speaker Change: And finally, in Texas, following the extremely successful launch of the Ritz-Carlton residence's The Woodlands, in the last week of March, we sold an additional 16 condos in the second quarter.

Jay Cross: This 111-unit luxury project is now 65% pre-sold with contracted future revenues of $313 million. We expect to start construction on this exciting development later this year. I would now like to hand the call over to our CFO, Carlos Olea, who will review our guidance and the ballot. Thank you, Jay, and good morning, everyone.

Speaker Change: This 111-unit luxury project is now 65% pre-sold, with contracted future revenues of $313 million. We expect to start construction on this exciting development later this year.

Carlos Olea: I would now like to hand the call over to our CFO , Carlos Olea, who will review our guidance and the balance sheet.

Carlos Olea: With an incredibly successful second quarter, we look to continue the momentum that we have experienced across our core segments, and we remain confident that 2024 will be a strong year. Today, we reiterate our MPC-EBT and DNA guidance, and we increase our operating asset and condo sales guidance for the year. As David mentioned earlier, in our MPC segment, we continue to project robust EBT of $300 million at the MIT.

Carlos Olea: Thank you, Jay, and good morning, everyone.

Carlos Olea: With an incredibly successful second quarter, we look to continue the momentum that we have experienced across our core segments, and we remain confident that 2024 will be a strong year.

Carlos Olea: Today we reiterate our MPC EBT and DNA guidance and we increase our operating asset and condo sales guidance for the year.

Carlos Olea: As David mentioned earlier, in our MPC segment, we continue to project robust EBT of $300 million at the midpoint.

Carlos Olea: This guidance contemplates record residential land sales with significant super fat sales in Summerlin during the third quarter and steady residential lot sales in Bridgeland and the Woodland Hills throughout the second half of the year. As previously highlighted, year-over-year growth in residential landfills will be offset by reduced commercial landfills and builder price participation, as well as limited inventory of custom lot sales due to the significant past success of Aria Island Woodlands and the Summit in Summerlin due to the strong performance of our operating assets in the first half of 2024, most notably in office.

David O'Reilly: This guidance contemplates record residential land sales with significant super fat sales in Summerlin during the third quarter and steady residential lot sales in Bridgeland and the Woodland Hills throughout the second half of the year.

David O'Reilly: As previously highlighted, year-over-year growth in residential landfills will be offset by reduced commercial landfills and builder price participation, as well as limit an inventory of custom lot sales due to the significant past success of Aria Island Woodlands and the Summit in Summerlin.

Carlos Olea: We are increasing our outlook for the full year. Our previous range, which was expected to increase 1% to 4% year-over-year with a midpoint of approximately $250 million, is now expected to be in a range of up 3% to 6% year-over-year with a midpoint of approximately $255 million. This new guidance also contemplates the removal of approximately $1 million of NOI in the second half of 2024 related to the Las Vegas ballpark, which is being spun off with Seaport Entertainment.

David O'Reilly: Because of the strong performance of our operating assets in the first half of 2024, most notably in office, we are increasing our outlook for the full year.

David O'Reilly: Our previous range, which was expected to increase 1% to 4% year-over-year, with a midpoint of approximately $250 million,

David O'Reilly: is now expected to be in a range of up 3% to 6% year-over-year with a midpoint of approximately $255 million.

David O'Reilly: This new guidance also contemplates the removal of approximately $1 million of NOI in the second half of 2024 related to the Las Vegas ballpark, which is being spun off with Seaport Entertainment.

Carlos Olea: Funded sales revenues, which were previously expected to range between $675 million and $725 million, with gross margins between 28 to 30 percent, are now expected to range between $730 million and $750 million, with gross margins of approximately 28 percent.

David O'Reilly: One of those revenues, which were previously expected to range between $675 and $725 million, with gross margins between 28 to 30 percent,

David O'Reilly: are now expected to range between $730 million and $750 million, with gross margins of approximately 28 percent.

Carlos Olea: Our guidance is almost driven entirely by the completion of Victoria Place in the fourth quarter, which we now expect will see more residences closed in 2024. Our new guidance contemplates approximately $30 to $50 million of condo sales revenue delaying into the first quarter of 2025 due to the timing of closing, compared to approximately $75 million in our previous guidance. And finally, we expect cash GNA to continue to range between 80 and 90 million dollars for the full year.

David O'Reilly: Our guidance is almost driven entirely by the completion of Victoria Place in the fourth quarter, which we now expect will see more residences closed in 2024.

David O'Reilly: Our new guidance contemplates approximately $30-$50 million of condo sales revenues delaying into the first quarter of 2025 due to the timing of closing, compared to approximately $75 million in our previous guidance.

David O'Reilly: And finally, we expect cash GNA to continue to range between $80 and $90 million for the full year.

Carlos Olea: It is important to note that this guidance excludes approximately $30 million of cash expenses to complete the spinoff of Seeper Entertainment, as well as approximately $8 million of anticipated non-cash stock compensation. Turning to our balance sheet, we have $437 million of cash at the end of the quarter. Together with our strong guidance expectations for the full year, we are well positioned to further strengthen our balance sheet and deploy capital appropriately. At the end of June, the remaining equity contribution needed to fund our current project was approximately $277 million.

David O'Reilly: It is important to note that this guidance excludes approximately $30 million of cash expenses to complete the spin-off of Seeper Entertainment, as well as approximately $8 million of anticipated non-cash stock compensation.

David O'Reilly: Turning to our balance sheet, we have $437 million of cash at the end of the quarter.

David O'Reilly: Together, with our strong guidance expectations for the full year, we are well-positioned to further strengthen our balance sheet and deploy capital appropriately.

David O'Reilly: At the end of June , the remaining equity contribution needed to fund our current project was approximately $277 million.

Carlos Olea: From a debt perspective, we have $5.5 billion outstanding with only $278 million of maturities in 2024. Approximately 271 of this $278 total is related to a construction loan on Victoria Place, which will be repaid as units close in the fourth quarter, leaving us in a strong position with only $7 million of principal amortization payments due in 2024. For 2025, we have approximately $441 million maturing after the successful $130 million refinancing of 9950 Woodlock Forest Drive with a five-year non-recourse loan at a fixed rate of approximately 7%.

David O'Reilly: From a debt perspective, we have $5.5 billion outstanding with only $278 million of maturities in 2024.

David O'Reilly: Approximately 271 of this 278 total is related to the construction loan on Victoria Place which will be repaid as units close in the fourth quarter, leaving us in a strong position with only $7 million of principal amortization payments due in 2024.

David O'Reilly: For 2025, we have approximately $441 million maturing after the successful $130 million refinancing of 9950 Woodlock Forest Drive with a five-year non-recourse loan at a fixed rate of approximately 7%.

Carlos Olea: This loan previously represented 24% of our 2025 maturities, and the closing of this refinancing, particularly in today's challenging market, truly speaks to the strong demand we are seeing for office and the quality of our assets in the world. And finally, we also closed on a $420 million construction loan for Collide. The non-recursive loan bears interest at SOFR plus 5% with a maturity in 2027.

David O'Reilly: This loan previously represented 24% of our 2025 maturities, and the closing of this refinancing, particularly in today's challenging market, truly speaks to the strong demand we are seeing for office and the quality of our assets in the woodlands.

David O'Reilly: And finally, we also closed on a $420 million construction loan for Collide.

David O'Reilly: The non-recursive loan bears interest at SOFR plus 5% with a maturity in 2027.

David Michael Striph: This tower, which already has contracts representing $761 million of future revenue, further demonstrates our ability to create value with our condo projects in Ward Village with minimal cash equity. With that, I would now like to turn the call back over to David for closing remarks. Thank you, Carlos. Before we open up the lines for Q&A, I just want to remind everyone about our next Investor Day, which will be held in Summerlin at 1 p.m. Pacific time on Monday, November 18, in conjunction with the NAIRI Investor Conference in Las Vegas. Invitations with registration information will be coming soon, but please mark your calendars to join us.

David O'Reilly: This tower, which already has contracts representing $761 million of future revenue, further demonstrates our ability to create value with our condo projects in Ward Village with minimal cash equity.

David O'Reilly: With that, I would now like to turn the call back over to David for closing remarks.

David Michael Striph: Thank you, Carlos. Before we open up the lines for Q&A, I just want to remind everyone about our next Investor Day, which will be held in Summerlin at 1 p.m. Pacific Time on Monday, November 18th, in conjunction with the NAIRI Investor Conference in Las Vegas.

David Michael Striph: If you have specific questions in the meantime, please reach out to Eric Holcomb. In closing, our second quarter results were nothing short of outstanding across our core businesses, further solidifying what we expect will be another remarkable and record-breaking year for Howard Hughes. With this strong performance, we foresee record residential land sales and robust MPC-EBT, record operating asset NOI, and over $200 million of gross profit from condo sales for the full year.

David Michael Striph: Invitations with registration information will be coming up soon, but please mark your calendars to join us.

David Michael Striph: If you have specific questions in the meantime, please reach out to Eric Holcomb.

David Michael Striph: In closing, our second quarter results were nothing short of outstanding across our core businesses. Further solidifying, what we expect will be another remarkable and record-breaking year for Howard Hughes.

David Michael Striph: With this strong performance, we foresee record residential land sales and robust MPCEBT, record operating asset NOI, and over $200 million of gross profit from condo sales for the full year.

David Michael Striph: With the spinoff of Seaport Entertainment nearly completed, I want to take a minute and thank all of our many employees who have worked tirelessly to make the spinoff a success. And to the Seaport Entertainment team, we wish you all the best in your journey ahead.

David Michael Striph: With the spinoff of Seaport Entertainment nearly completed, I want to take a minute and thank all of our many employees who have worked tirelessly to make the spinoff a success.

David Michael Striph: For Howard Hughes, we embark on an exciting new chapter in our history with a refined identity as a pure play real estate company, solely focused on what we do best, building world-class master plan communities. With nearly 35,000 acres of unmasked land remaining in our portfolio, we have decades of opportunities for thoughtful growth and value creation ahead of us. With that, let's start the Q&A portion of the call. Operator, can you open the line for our first question, please? Certainly. As a reminder, to ask a question, please press Star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, press star 1-1 again.

David Michael Striph: And to the Seaport Entertainment team, we wish you all the best in your journey ahead.

David Michael Striph: For Howard Hughes, we embark on an exciting new chapter in our history, with a refined identity as a pure play real estate company.

David Michael Striph: solely focus on what we do best, building world-class master plan communities.

David Michael Striph: With nearly 35,000 acres of unmasked land remaining in our portfolio, we have decades of opportunities for thoughtful growth and value creation ahead of us.

Speaker Change: With that, let's start the Q&A portion of the call. Operator, can you open the line to our first question, please?

Speaker Change: Certainly. As a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again. One moment please.

Alexander David Goldfarb: This question comes from the line of Alexander Goldfarb with Piper Sandoval. Hey, morning down there. David, with the Seaport finally, you know, the spinoff finally here, just a few, you know, I guess sort of math questions for you. So it's twofold.

Speaker Change: Our first question comes from the line of Alexander Goldfarb with Piper Sandler.

Alexander David Goldfarb: Hey, morning down there.

Alexander David Goldfarb: David, with the Seaport finally, you know, the spinoff finally here, just a few, you know, I guess sort of math questions for you. So it's a twofold. One,

David Michael Striph: One, can you just, you know, as we think about, I think you said a $15 million NOI loss, but I think there was also, sort of, a $9.4 million negative contribution from the Seaport. So basically, as we look forward to the third quarter, obviously, all the losses related to the Seaport go away. It sounds like all the GNA related to the spinoff are embedded in that Seaport number. So I just want to make sure as we think about you guys going forward that, you know, Seaport is really the entity that we want to remove from earnings, you know, and make sure we're not missing anything else in other. Yeah, absolutely. I was happy to walk you through that. In fact, I'm going to ask Carlos to give you color and detail on all that. He's been living in the weeds longer than I have.

Alexander David Goldfarb: Can you just, you know, as we think about, I think you said a 15 million dollar NOI loss, but I think there was also, sort of, for a book value, 9.4 million negative contribution from the seaport. So, basically, as we look forward,

Alexander David Goldfarb: to third quarter. Obviously, all the losses related to the seed port go away. It sounds like all the GNA related to the spinoff are embedded in that seed port number, so I just want to make sure as we're thinking about you guys going forward.

Speaker Change: that, you know, the seaport is really the entity that we want to remove from earnings.

Speaker Change: and make sure we're not missing anything else in other parts of the income statement. And the second part is, can you just remind us the amount of capital, if any, that's going from Howard Hughes to the new seaport that's going to come off your balance sheet?

Speaker Change: Yeah absolutely Alex, happy to walk you through that. In fact I'm going to ask Carlos to give you the color and detail on all that. He's been living this in the weeds more than I have. But I do want to just clarify one thing as part of your question before Carlos takes the details.

David Michael Striph: But I do want to just clarify one thing as part of your question before Carlos gives you the details. Next quarter, we won't be changing entirely, right? Because this is going to be effective July 31st.

Carlos Olea: Next quarter, we won't be removing entirely, right, because this is going to be effective July 31st. So we will have one of the three months of 3Q, inclusive of the results of CPORT, before the spin is effective. So there will be a little bit of noise next quarter. It'll be a lot less than this.

David Michael Striph: So we will have one of the three months of 3Q, inclusive of the results of Seaport, before the spin is effective. So there will be a little bit of noise next quarter. It'll be a lot less than this. And then in the fourth quarter, we will be reporting as a pure play MPC company, which for us is incredibly exciting. But Carlos?

Carlos Olea: Yeah, thank you, David. Good morning, Alex. So yes, when Seaport goes effective August 1st, the entity that you see on our financials is the Seaport segment. It is the part that will go away. Everything has been encapsulated there for quite some time to run as an autonomous segment, particularly in anticipation of the spinoff. Although, as you know, we have been reporting in a separate segment even before. But yes, whatever you see in the Seaport results is what will go away past the spinoff and nothing else. In addition to that, it is in the segment, but the ballpark and the baseball team, as well, as we all know, are going to go with the spinoff.

Carlos Olea: And then in the fourth quarter, we will be reporting as a pure play MPC company, which for us is incredibly exciting. Carlos? Yes, thank you, David. Good morning, Alex. So, yes, when the Seaport goes effective August 1st, the entity that you see on our financials of the Seaport segment is the part that will go away. Everything has been encapsulated there for quite some time to run as an autonomous segment, particularly in anticipation of the spinoff, although, as you know, we have been reporting it as separate segments even before.

Carlos Olea: But yes, whatever, what you see in the SIPA results is what will go away past the spin-off and nothing else.

Speaker Change: In addition to that, it is in the segment, but the ballpark and the baseball team as well, as we all know, are going to go with the spinoff.

David Michael Striph: And then what about capital going from... Yes, as far as cash infusions are concerned, there's going to be a $23 million cash infusion that will take place at the completion of the spinoff from us to Seaport Entertainment. David, going back to home sales, it's been quite a topic. You've obviously been quoted in the press and on TV related to home sales. You referenced a two-month inventory. I'm not sure if that was just Howard Hughes in general or nationwide, but maybe you could just talk a little bit more because this is something that we hear from the bears, which is that the housing inventory is the biggest it's been since the credit crisis, whatever. And then you look at other data, which shows that no, it's not.

Speaker Change: And then what about capital going from...

Speaker Change: Yes, as far as the cash infusion, there's going to be a $23 million cash infusion that will take place at the completion of the spinoff from us to Seaport Entertainment.

David Michael Striph: And to your point, home sales remain healthy, and obviously, it's all going to new homes. So maybe you could just parse out a bit more of some of the headline numbers that we see versus what you guys are actually seeing on the ground. And also, on that inventory number, the two months, was that national, or was that just your communities overall? Yeah. I'm happy to go a little deeper on that, Alex. I think it's super important.

Speaker Change: Okay. One time. Okay. One time. Okay. Familiar. Caution.

Speaker Change: Okay, and then, David, going back to home sales,

David Michael Striph: It's been quite a topic, you know, you've obviously been quoted in the press and on TV.

David Michael Striph: related to home sales you referenced.

Speaker Change: a two-month inventory. I'm not sure if that was just Howard Hughes in general or nationwide. But maybe you could just talk a little bit more, because this is something that we hear from the Bears.

Speaker Change: which is that, you know, the...

Speaker Change: Housing Inventory is like the biggest it's been, you know, since the

Speaker Change: Credit Crisis, whatever, and then you look at other data which shows, no, it's not, and to your point,

Speaker Change: You know, home sales remain, you know, healthy and obviously it's all going to new homes.

Speaker Change: So maybe you could just parse out a bit more of, you know, some of the headline numbers that we see versus what you guys are actually seeing on the ground.

Speaker Change: And then also on that inventory number, the two months, was that national or that's just your communities overall?

David Michael Striph: And I think often the headlines become incredibly misleading in terms of what's really happening. If we backed up the clock 60 days, when April home sales were first reported, we saw an initial number of about 634,000 homes, which was a year over year decline in the headlines, red, dooming blue. Roll forward the clock to about a week ago when June numbers were reported. In that report, the April number was revised to 730,000.

Alex: Yeah, happy to go a little deeper on that Alex. I think it's super important and I think often the headlines become

David Michael Striph: That's a 15% upward revision in 60 days. If that original report had shown 730,000, we would have celebrated a year-over-year increase. But, you know, that just wasn't reported that way, you know, because the data wasn't as clear.

Alex: incredibly misleading in terms of what's really happening.

Speaker Change: If we backed up the clock 60 days, when April home sales were first reported, we saw an initial number of about 634,000 homes, which was a year-over-year decline in the headlines red dooming bloom.

Speaker Change: Roll forward the clock to about a week ago when June numbers were reported. In that report, the April number was revised to 730,000. That's a 15% upward revision in 60 days.

Speaker Change: If that original report had shown 730,000, we would have celebrated a year-over-year increase.

David Michael Striph: So I do think that we have to pay a little bit closer attention to what's underlying the data to make an informed decision. And then on home inventory, as that number gets reported, Alex, it consists of three things. It consists of lots that have been sold and contracted, and it consists of homes that are under construction, which are predominantly contracted and sold unless there's been a cancellation or builders are building spec, which they rarely do.

Speaker Change: But, you know, that just wasn't reported that way, you know, because the data wasn't as clear. So I do think that we have to pay a little bit closer detail to what's underlying data to make an informed decision. And then on home inventory, as that number gets reported, Alex, it consists of three things.

Alex: It consists of lots that have been sold and contracted.

Alex: It consists of homes that are under construction, which are predominantly

David Michael Striph: And it includes completed new homes that are not sold that represent truly the spec inventory. If you just look at that spec inventory, the completed new homes, the third leg of the stool that I just described, nationally, that's at a two-month number. In our portfolio, in Summerlin, it's at half a month, and in Brisbane, it's at one month. So this overhang of completed spec home inventory that's sitting there is not nearly the negative headline that I think we see reported nationally. I think it's very doable.

Alex: contracted and sold unless there's been a cancellation, or builders are building spec, which they rarely do, and it includes completed new homes that are not sold that represent truly the spec inventory.

Alex: If you just look at that spec inventory, the completed new homes, the third leg of the stool that I just described, nationally, that's at a two-month number.

Speaker Change: In our portfolio, in Summerlin, it's at half a month, and in Bridgeland, it's at one month.

Speaker Change: So this overhang of completed spec home inventory that's sitting there is not nearly the negative headline that I think we see reported nationally. I think it's very manageable, I think it's an appropriate level, and in fact it's relatively tight compared to historic norms.

David Michael Striph: I think it's an appropriate level, and in fact, it's relatively tight compared to historic norms. We really saw that number spike, and we saw that number increase when interest rates ticked higher rapidly, and the cancellations flowed through the home builder books. That created a much higher level of completed new home inventory than anything close to what we're seeing today.

Speaker Change: We really see that number spike and we saw that number increase when interest rates ticked higher rapidly and the cancellations flowed through the home builder books. That created a much higher number of completed new home inventory than anything close to what we're seeing today.

David Michael Striph: And just the final question on the RITs at the Woodlands. Happy to hear more pre-sales there. Last quarter, you talked about holding a meaningful amount of the units off-market until the end, which is in contrast to the way that you sold condos out in Ward Village. Are you guys rethinking the RITs project and now going more towards selling the bulk of the units now rather than waiting until the end just to de-risk, or are you still looking to hold out a chunk of the units until the end? No, our strategy hasn't changed, Alex.

Speaker Change: Okay, and just the final question on the RITs at the Woodlands.

Speaker Change: Happy to hear more pre-sales there.

Speaker Change: Last quarter you talked about holding, you know, a meaningful amount of the units off-market until the end.

Speaker Change: which is in contrast to the way that you sold condos out in Ward Village. Are you guys rethinking the Ritz project and now going more towards selling the bulk of the units?

David Michael Striph: We've taken almost all the remaining units off the market, with the exception of a handful. The handful that we do have listed and available through the sales team in our sales gallery here in the Woodlands, we've increased prices pretty dramatically in an effort to honestly slow sales until we finish the building and can show off the quality of what we built because we think that the prices will go higher at that point in time. Despite the efforts of increasing pricing and listing only a few units, the team has still sold units. I suppose sometimes the best efforts go unrewarded.

Speaker Change: Now, rather than waiting till the end just to de-risk, or are you still looking to hold out a chunk of the unit till the end?

Speaker Change: No, our strategy hasn't changed, Alex. We've taken almost all the remaining units off the market with the exception of a handful. The handful that we do have listed and available through the sales team in our sales gallery here in the Woodlands, we've increased prices pretty dramatically.

Speaker Change: In an effort to honestly slow sales until we finish the building and can show off the quality of what we built is we think that the pricing will go higher at that point in time. Despite the efforts of increasing pricing and listing only a few units, the team has still sold units.

David Michael Striph: So, look, I think that our strategy hasn't shifted. In Hawaii, our strategy is a bit different, and you're 100% right because we have over 10 towers to sell there, and the ability to deliver value to shareholders is not just about squeezing the last dollar price but about speed and the net present value of delivering towers over time. So getting them sold out and sold quickly allows us to launch that next tower immediately. In the woodlands, perhaps we might have another tower someday.

Speaker Change: You know, look, even sometimes the best efforts to go unrewarded, I suppose. So look, I think that our strategy hasn't shifted. In Hawaii, our strategy is a bit different and you're 100% right because, you know, we have.

Speaker Change: Over 10 towers to sell there. And the ability to deliver value to shareholders is not just about squeezing the last dollar price, but about speed, and the net present value of delivering towers over time. So getting them sold out and sold quickly allows us to launch that next tower.

David Michael Striph: But today we have one, and it's the best building on the best site in one of the best master plan communities in the country. And I think that by taking a thoughtful, pragmatic approach to the sellout of that building, we're going to deliver excess value to our shareholders rather than rifle through and sell it as fast as we can. Okay. Thank you, David. Thank you, Alex.

Speaker Change: immediately. In the Woodlands, perhaps we might have another tower someday, but today we have one, and it's the best building on the best site in one of the best master plan communities in the country.

Speaker Change: And I think that by taking a thoughtful, pragmatic approach on the sell-out of that building, we're going to deliver excess value to our shareholders rather than rifle through and sell it as fast as we can.

Operator: Thank you. One moment, please, for our next question. And our next question comes from the line of Anthony Paolone with J.P. Morris. Thanks. Good morning.

Speaker Change: Okay. Thank you, David. Thank you, Alex.

Anthony Paolone: Can you maybe talk to us about just how to think about capital allocation perhaps over the next 12 to 18 months because the cash drag from CPORT is going to be gone, you've got a lot of upcoming condo sales kind of locked up, the MPCs are performing well, so it just seems like you're going to have incremental cash, and how should we think about that and perhaps the pecking order even as it relates to, you know, maybe buying You know, Tony, it's a great question.

Speaker Change: Thank you. One moment please for our next question.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Anthony Paolone with J.P. Morgan.

Anthony Paolone: Thanks, good morning. Can you maybe talk to us about just how to think about capital allocation perhaps over the next 12 to 18 months because

Anthony Paolone: The cash drag from CPORT is going to be gone. You've got a lot of upcoming condo sales kind of locked up. The MPCs are performing well, so it just seems like you're going to have incremental cash. How should we think about that and perhaps the pecking order, even as it relates to maybe buying back stock even?

Anthony Paolone: It's something that we debate all the time, not just within the C-suite but within our board, in terms of how we allocate that capital to drive the intrinsic value of our company on a per share basis higher every day. And, you know, today, given inflationary pressures on construction costs and rental rate growth that has not kept up with them, new development becomes harder and harder. And as a result, I think you've seen us take a more rifle shot approach to those new development projects, really focused on those highest return opportunities. All our condos in Hawaii, the Ritz Carlton here, potentially sitting on some dry powder, or if we're able to get the law passed in Nevada to do the studios.

Anthony Paolone: You know, Tony, it's a great question. It's something that we debate all the time, not just within the C-suite, but within our board, in terms of how we allocate that capital to drive

Speaker Change: The intrinsic value of our company on a per share basis is higher every day.

Speaker Change: and you know today given inflationary pressures on construction costs

Speaker Change: Rental rate growth that has not kept up with those, new development becomes harder and harder. And as a result, I think you've seen us take a more rifle-shot approach to those new development projects.

Speaker Change: It's really focused on those highest return opportunities, all our condos in Hawaii, the Ritz Carlton here, potentially sitting on some dry powder for if we're able to get the law passed in Nevada to do the studios.

David Michael Striph: And I think that as those development returns have gotten squeezed, the opportunity to create value through shared buybacks rises higher on the list. And as we see incremental capital on our books, share buybacks become a more realistic and executable opportunity than, you know, a couple of years ago when we were knocking off multifamily properties across our portfolio at an 8% return on cost in a 4% cap rate environment, right? That environment doesn't exist today.

Speaker Change: And I think that as those development returns have gotten squeezed,

Speaker Change: The opportunity to create value through shared buybacks raises higher up the list.

Speaker Change: And as we see incremental capital onto our books.

Speaker Change: Share buybacks become a more realistic and executable opportunity than, you know, a couple years ago when we were knocking off multifamilies across our portfolio at an 8% return on cost in a 4% cap rate environment.

David Michael Striph: And as a result, we have to be thoughtful, pragmatic, and take a more rightful shot approach to how we unlock the value of our raw commercial land with new development. Okay, thanks for that. And then you mentioned the studios and that that was on my list as well.

Speaker Change: That environment doesn't exist today, and as a result, we have to be thoughtful, pragmatic, and take a more rightful shot approach to how we unlock the value of our raw commercial land with new developments.

David Michael Striph: So is there any update to the Nevada legislation there or them potentially holding a special, you know, session to get that moving? And also, what should we think about as sort of the equity that HHH will need to kind of do that deal? So the studio bill, as it sits right now, is actually being drafted by one of our great senators in the state of Nevada. And the intent is that we can hopefully get that bill on to the legislative session when they come back into session in February. I think, given the election year dynamics and some of the local politics going on in the state, it would be unlikely to see a special session called between now and November.

Speaker Change: Okay, thanks for that and then you'd mentioned the studios and that that was on on my list as well so is there any update to the Nevada legislation there or them potentially holding a special you know session to get that that moving and also

Speaker Change: What should we think about as sort of being the equity that HHH will need to kind of do that deal?

Speaker Change: So, um...

Speaker Change: The studio bill, as it sits right now, is actually being drafted by one of our great senators in the state of Nevada. And the intent is that we can hopefully get that bill onto the legislative session when they come back into session in February.

Speaker Change: I think given the election year dynamics and some of the local politics going on in the state, it would be unlikely to see a special session called between now and November . And then the time frame with holidays after the November election, before they actually go back officially in February , is so tight a special session is also unlikely then.

David Michael Striph: And then the timeframe with holidays after the November election before they actually go back officially in February is so tight; a special session is also unlikely then. So we're really focused, and we're really putting all of our efforts toward getting ready for the February legislative session, and we're very hopeful and optimistic that we can try to get something done early on in that session. In terms of the amount of capital that we would need for that project, that's going to depend entirely on how much of the bill gets passed because that will drive the size of the studio, which will drive the overall cost of the studio.

Speaker Change: So we're really focused and we're really putting all of our efforts towards getting ready for the February legislative session, and we're very hopeful and optimistic that we can try to get something done early on in that session.

Speaker Change: In terms of the amount of capital that we would need for that project, that's going to depend entirely on how much of the bill gets passed, because that will drive the sizing of the studio.

David Michael Striph: But if you thought about a project in the 450 to 500-ish million dollar range on a typical 60-ish percent construction loan, that remaining equity requirement would be what I don't want to say split because it implies equality, but shared between Sony and Howard Hughes. Okay, thanks. Those are helpful brackets.

Speaker Change: which will drive the overall cost of the studio but if you thought about a project in the 450 to 500-ish million dollar range in a typical 60-ish percent construction loan that remaining equity requirement would be what would be

Speaker Change: I don't want to say split because it implies even, but shared between Sony and Howard Juice.

David Michael Striph: And then just last one, if I can, you mentioned the strong pricing in the MPC segment this quarter, and the, you know, unit pricing was stronger than we expected as well. Can you talk about just maybe, like, how much that might have been just mix in terms of what got sold versus, you know, real price appreciation, say, year over year? Look, I think that we saw a pretty dramatic year-over-year price appreciation as it relates to residential land in Sumnerland.

Speaker Change: Okay thanks those are helpful brackets and then just last one if I can

Speaker Change: You mentioned the strong pricing in the MPC segment this quarter, and the unit pricing was stronger than we expected as well. Can you talk about just maybe how much that might have been just mix in terms of what got sold versus real price appreciation, say, year over year?

Speaker Change: Look, I think that we saw a pretty dramatic year-over-year price appreciation as it relates to residential land in Summerlin.

David Michael Striph: And to see us get to, you know, $1.5 million per acre across multiple SuperPADS and 87 acres in Summerlin, look, it's nothing short of remarkable, and the team at Summerlin continues to surprise me every day with their execution. Across our other communities, and if you looked at page 26 of the supplemental, you'd see some decent growth in Bridgeland from 515 acres to almost 590, and a 10-plus percent increase in price breaks for the Woodland Hills from about $408,000 to $450,000.

Speaker Change: and to see us get to, you know, a $1.5 million per acre

Speaker Change: across multiple superpads and 87 acres in Summerlin.

Speaker Change: Look, it's nothing short of remarkable, and the team certainly continues to surprise me every day with their execution.

Speaker Change: Across our other communities, and if you looked at page 26 of the supplemental, you'd see some decent growth in Bridgeland from 515 acres to almost 590, and a 10-plus percent increase in price breakers in the Wilderness Hills at about $408,000 to $450,000.

David Michael Striph: So it helps because we sold a lot in Summerlin for $1.5 million an acre and less in Woodland Hills for $450,000. But if you dig into each one of the MPCs, you can see price per acre appreciation, which was pretty strong. Okay, thanks for the time. A nice quarter. Thank you, Tony. Always a pleasure.

Speaker Change: So, it helps because we sold a lot in Summerlin at $1.5 million an acre and less in Woodland Hills at $450. But if you dig into each one of the MPCs, you can see price per acre appreciation, which was pretty strong.

Operator: Thank you. One moment, please, for our next question. And our next question comes from the line of John Kim with BMO Capital Markets. Good morning.

Speaker Change: Okay, thanks for the time and nice quarter. Thank you, Tony. Always a pleasure.

Speaker Change: Thank you. One moment please for our next question.

John P. Kim: On the MPC guidance that you left unchanged, David, you talked a lot about the strong results and momentum, but the second half of the year is basically implying that it's flat over the first half, and in a declining interest rate environment as well. Is the reason why you kept it unchanged based on uncertainty about superlot timing? Or are there other factors that's driving that? Ah, well, look, if you look, um... Maybe I'm overly cautious or overly conservative.

Speaker Change: And our next question comes from the line of John Kim with BMO Capital Markets.

John P. Kim: Good morning. On the MPC guidance that you left unchanged, David, you talked a lot about the strong results and momentum, but the second half of the year is basically implying that it's flat over the first half.

Speaker Change: and in a declining interest rate environment as well. Is the reason why you kept it unchanged based on uncertainty of superlight timing or are there other factors that's driving that?

Speaker Change: Ah, well, look, he's like, um...

John P. Kim: But our guidance already implies the best year ever in the history of residential land sales for Howard Hughes. And while, you know, the second half of the year, the implication for the second half of the year is very consistent with what we delivered in the first half of the year, the first half of the year was nothing short of remarkable. To stretch even beyond that to the second half of the year in an environment that, you know, does have some question marks about it, I think that may just be a little bit overaggressive.

Speaker Change: Maybe I'm overly cautious or overly conservative, but our guidance already implies the best year ever in the history of residential land sales for Howard Hughes.

Speaker Change: And while, you know, the second half of the year, the implication for the second half of the year is very consistent with what we delivered in the first half of the year, the first half of the year was nothing short of remarkable.

Speaker Change: to stretch even beyond that to the second half of the year in an environment that does have some question marks about it?

John P. Kim: And look, I pride myself, and I know this organization prides itself on under-promising and over-delivering, and as a result, I think that we want to take a prudent approach and hang our hat on the best year in Howard Hughes' history for residential land sales. And how much of an impact has Interstate had?

Speaker Change: I think that may just be a little bit overaggressive and look I pride myself and I know this organization prides itself on under promising and over delivering and as a result I think that we want to take a prudent approach and hang our hat on the best year of the history of Howard Hughes on residential land sales.

David Michael Striph: You know, in the last month, it's been trending down. I know it's been pretty volatile year-to-date, but in your conversations with... homebuilders, how have the last 30 days or so trended?

Speaker Change: And how much of an impact has interest rates had? You know, in the last month it's been trending down. I know it's been pretty volatile year-to-date. But in your conversations with homebuilders,

David Michael Striph: Look, I would say home sales have been strong and consistent throughout the second quarter and throughout the first quarter. I wouldn't tell you that home sales have picked up with a modest decrease in mortgage rates. They've been very consistent with the previous month.

Speaker Change: How's the last 30 days or so trended?

Speaker Change: Look, I don't see the home sales have been strong and consistent throughout the second quarter and throughout the first quarter. I don't, I wouldn't tell you that home sales have picked up with a modest decrease in mortgage rates. They've been very consistent with the previous months.

David Michael Striph: We're also getting into the slower summer season, so maybe this is actually a positive relative to past years, but, you know, I don't see an uptick. I haven't seen an increase in demand, given the prognosis of lower rates coming into the second half of the year or the slight downtick in underlying mortgage rates. I think it's just been pretty consistently strong, which for us is great news. On the seaport, this may be the last time you comment on it, but looking at revenue this year versus last year, it's come down.

Speaker Change: We're also getting into the slower summer season, so maybe that this is actually a positive relative to past years, but...

Speaker Change: You know, I don't see an uptick. I haven't seen an increase in demand given the prognosis of lower rates coming into the second half of the year or the slight downtick in underlying mortgage rates. I think it's just been pretty consistently strong, which for us is great news.

Speaker Change: On the seaport, this may be the last time you comment on it, but...

David Michael Striph: Ten buildings and events have come down as well, which is a bit surprising. What do you think will turn it around? Maybe under new management? could turn that around going forward. But I think that some year-over-year headwinds we've seen have been weather-related.

Speaker Change: Looking at revenue this year versus last year, it's come down. 10 buildings and events have come down as well, which is a bit surprising. What do you think turns it around, maybe under new management?

David Michael Striph: I think there's been a drop in sponsorship and event revenue business really across the board, and I don't think that's Seaport-specific. And as I've pulled a lot of the other public company results of public companies that own restaurants for a living, there's been a lot of pressure. I think spending has been down, and spending has been down on restaurants and food and beverage in New York. I think the team there has done an incredible job right-sizing the overhead, bringing in the right talent to run that organization, and focusing on maximizing margins, profitability, food costs, and labor costs. And that takes time. It's not a magic wand overnight. It is a month and a quarter, or Err's process, to get it exactly right. And I think Anton has the skills and talent, and the team is entirely focused.

Speaker Change: could turn that around going forward.

Speaker Change: I think that some year-over-year headwinds we've seen have been weather-related. I think there's been a drop in sponsorship and event revenue business.

Speaker Change: really across the board, and I don't think that's seaport specific.

Speaker Change: And as I pulled a lot of the other public company results, public companies that own restaurants for a living, there's been a lot of pressure. I think spending has been down, and spending has been down on restaurants and food and beverage in New York.

Speaker Change: I think the team there has done an incredible job right sizing the overhead, bringing in the right talent to run that organization, focus on maximizing margins, profitability, food costs, labor costs.

Speaker Change: And that takes time. It's not a magic wand overnight.

Speaker Change: For Er's process…

David Michael Striph: And I really think it's just a matter of time before that business starts humming the way we all want it to today. But it will just take the skill set of that management team to really unlock that value. Okay, my final question is on your commercial portfolio, specifically office, which you had good leasing momentum this quarter. Looking out over the next 12 to 18 months, you have a modest amount of office lease expirations, about 8% through 2025.

Anton: to get it exactly right. And I think Anton has the skills and talent, and the team is entirely focused. And I really think it's just a matter of time before that business starts humming the way we all wanted it to today. But it will just take the skill set of that management team to really unlock that value.

David Michael Striph: How do you see Occam trending during this timeframe? And if you can comment on the acquisition you made during the quarter, why are we positive about it? Why buy more inventory in the office? Yeah, no, absolutely.

Speaker Change: My final question is on your commercial portfolio, specifically office, which you had good leasing momentum.

Speaker Change: this quarter.

Speaker Change: Looking out over the next 12 to 18 months, you have a modest amount of office lease expirations, about 8% through 2025. How do you see Occamsee trending during this time frame? And if you can comment on the acquisition you made during the quarter, what are we plastered to? Why buy more inventory in office?

David Michael Striph: Great questions. Look, I think that if you look back at the office portfolio performance for the quarter and you remove the $4 million of lease term fees from the prior year, we actually saw a 12% year-over-year increase in our office portfolio, which I'm pretty proud and excited about. And then as you look at what's been signed but hasn't commenced, you know, we have about $8 million of leases that are in abatement periods in 2024 alone.

Speaker Change: Yeah, no, absolutely great questions. Look, I think that if you if you look back at the office portfolio performance for the quarter and you remove the four million dollars of lease term fees from the prior year, we actually saw a 12% year over year increase in our office portfolio.

Speaker Change: which I'm pretty proud and excited about. And then as you look at what's been signed but hasn't commenced, you know, we have about $8 million of leases that are in abatement periods in 2024 alone.

David Michael Striph: And if you go back to what's been signed across the portfolio, that will kick in over 24 and 25, that number grows to $19 million. So while we have expirations, and you know, I think everybody has expirations, I think ours are very manageable.

Speaker Change: And if you go back to what's been signed across the portfolio that will kick in over 24 and 25, that number grows to $19 million.

David Michael Striph: I think we have a great portfolio that is in demand, as demonstrated by the increase in occupancy across the board at 89%, and a lot of positive momentum and leasing that will kick in and cash in a lot throughout 24 and 25. I think that 89% over the course of the next 18 months will trend higher, given the demand that we've seen and continue to see in the leasing momentum that we're executing on, specifically here in the wilderness. And to that end, you know, Waterway Plaza, too, is right here in the heart of downtown on the waterway, where our portfolio here is essentially full at 96%, and we have demand.

Speaker Change: So while we have explorations and...

Speaker Change: You know, I think everybody has expirations. I think ours are very manageable. I think we have a great portfolio that is in demand, as demonstrated by the increase in occupancy across the board at 89%, and a lot of positive momentum and leasing that will kick in in cash NLI throughout 2024 and 2025.

Speaker Change: I think that 89% over the course of the next 18 months trends higher, given the demand that we've seen and continue to see in the leasing momentum that we're executing on, specifically here in the wilderness.

Speaker Change: And to that end, you know, Waterway Plaza, too, is right here in the heart of downtown on the waterway, where our portfolio here is essentially full at 96%, and we have demand.

David Michael Striph: This property at 142,000 square feet, it's a little over 50% leased, provides an immediate day one, Incredible cash on cash yield on our purchase. And upon stabilization, which we think we can achieve very quickly, gets us into the double digits on an unlevered basis and returns that, honestly, I can't replicate in our development portfolio. And if I think about where we're going to get the highest risk-adjusted returns on capital invested, share buybacks, as I mentioned earlier, is on the list, but buying a building, a Class A building in the heart of the waterway where we have more demand than vacant space and can execute very quickly on a lease-up strategy and deliver a double-digit unlevered cash-on-cash return is one that we couldn't pass up.

Speaker Change: This property at 142,000 square feet, it's a little over 50% leased, provides an immediate day one

Speaker Change: incredible cash-on-cash yield on our purchase and upon stabilization which we think we can achieve very quickly gets us into the double digits on an unlevered basis and returns that honestly I can't replicate in our development portfolio today.

Speaker Change: And if I think about where we're going to get the highest risk-adjusted returns on capital invested, share buybacks, as I mentioned earlier, is on the list.

Speaker Change: But buying a building, a Class A building in the heart of the waterway, where we have more demand than vacant space and can execute very quickly on a lease-up strategy and deliver a double-digit unlevered cash-on-cash return is one that we couldn't pass up.

David Michael Striph: And if you think about it long term over the next couple of decades, to have this three-acre site in the heart of the wilderness for a potential redevelopment at this basis is just like I think it was mentioned in the prepared remarks by Dave Striph. It's one of the best covered land plays I've seen in my career.

Speaker Change: And if you think about it long term, over the next couple of decades,

Speaker Change: To have this three-acre site in the heart of the wilderness for potential redevelopment at this basis is just, I think it was mentioned in the prepared remarks by Dave Striph, it's one of the best covered land plays I've seen in my career.

David Michael Striph: And look, that doesn't even include the value that we got for free with the adjacent dirt and the parking garage. So look, we're super excited. I know this is a contrarian view and we shouldn't be buying office because everyone says office is dead, but the results in our portfolio speak otherwise. And the opportunity to drive value creation for our shareholders is at the top of the list and higher than just about any other opportunity we've seen in our portfolio over the past couple of quarters. And as a result, we couldn't pass it on to him.

Speaker Change: and, you know, look, that doesn't even include the value that we got for free with the adjacent dirt and the parking garage. So, look, we're super excited. I know this is a contrarian view and we shouldn't be buying office because everyone says all office is dead, but the results in our portfolio speak otherwise.

Speaker Change: And the opportunity to drive value creation for our shareholders is at the top of the list and higher than just about any other opportunity we've seen in our portfolio over the past couple of quarters, and as a result we couldn't pass on.

David Michael Striph: What was that initial cap rate on the acquisition? I don't believe we've reported that due to the confidential nature of our purchase and sale agreement with the seller. I think next quarter when you actually see the NOI, as we reported in the supplemental, everyone will be able to back into what we think is a cap rate at 55 percent that looks, smells, and feels like a market cap rate for a full building. Sounds good.

Speaker Change: What was that initial cap rate on the acquisition?

Speaker Change: I don't believe we've reported that due to the confidential nature of our purchase and sale agreement with the seller.

Speaker Change: I think next quarter when you actually see the NOI as we report it in the supplemental, everyone will be able to back into what we think is a cap rate at 55% that looks and smells and feels like a market cap rate for a full building.

John P. Kim: All right. Thank you. Thanks, John. Thank you. One moment, please, for our next question. And our next question comes from the line of Peter Abramowitz with Jeff. Thank you, and thanks for your time.

Speaker Change: Sounds good. All right, thank you. Thanks, John .

Speaker Change: Thank you. One moment, please, for our next question.

Speaker Change: Our next question comes from the line of Peter Abramowitz with Jeffries.

Peter Dylan Abramowitz: Just a question on the MPC and the full year guidance, you kept that, maintained that in the same range. And you kind of seem to be on track based on your earlier comments from earlier in the year about the SuperPAD sales in Summerlin. I guess just taking a step back. What would make you comfortable, or what would you need to see to sort of raise that guidance? given how strong the second quarter was.

Peter Dylan Abramowitz: Thank you and thanks for the time. Just a question on the MPC and the full year guidance. You kept that, maintained that in the same range.

Peter Dylan Abramowitz: And you kind of seem to be on track based on your earlier comments from earlier in the year about the SuperPAD sales in Summerlin. I guess just taking a step back,

Speaker Change: What would make you comfortable or what would you need to see to sort of raise that guidance, particularly given how strong second quarter was?

David Michael Striph: I think that we'd have to see an acceleration of new home sales, which would lead me to believe that builders would want to buy more dirt than what I think they currently have the appetite for. I think that another factor that has led to us keeping guidance where it is is the flattening or slowing of increased home prices. Over the past two years, Peter, if you go back to our MPC-EBT, a meaningful component of that MPC-EBT has been increased builder price participation, largely the result of the acceleration of home pricing across our community.

Speaker Change: I think that we'd have to see an acceleration of new home sales, which would lead me to believe that builders would want to buy more dirt than what I think they currently have the appetite for.

Speaker Change: I think that another factor that led into us keeping guidance where it is, is the flattening or the slowing of increased home prices.

Speaker Change: Over the past two years, Peter, if you go back to our MPC EBT, a meaningful component of that MPC EBT has been increased builder price participation.

David Michael Striph: As that acceleration is slowing and home prices are modestly increasing or staying flat, builder price participation is coming down. And therefore, our NPCEVT guidance is largely driven by just price per acre and number of acres sold, which is highly correlated to underlying home sales.

Peter Dylan Abramowitz: largely the result of the acceleration of home pricing across our communities.

Peter Dylan Abramowitz: As that acceleration is slowing and home prices are

Peter Dylan Abramowitz: Modestly increasing or staying flat? Builder price participation is coming down.

Peter Dylan Abramowitz: And therefore, our MPC EBT guidance is largely driven by just price per acre and number of acres sold, which is highly correlated to underlying homesteads.

David Michael Striph: And while home sales are strong, they're also delivering, you know, a record year for us in terms of residential land sales across the portfolio, which is what's implied in that guidance. Again, I think an increase in home sales and an increase in demand from builders for more dirt could give us the confidence to increase that guidance or a sharp uptick in price of the homes, which would give us confidence in builder price appreciation. Okay, that's helpful.

Peter Dylan Abramowitz: And while home sales are strong, they're also delivering a record year for us of residential land sales across the portfolio, which is what's implied in that guidance.

Peter Dylan Abramowitz: Again, I think an increase in home sales and an increase in demand from builders for more dirt could give us the confidence to increase that guidance or a sharp uptick in price of the homes, which would give us confidence in builder price appreciation.

Peter Dylan Abramowitz: Thank you, David. And then one other, John sort of asked it, but to look at it from maybe a longer-term perspective, you're 83% ish occupied in office today, and in the high 80s, from a lease documenting perspective, I guess, just as you look at your office portfolio overall, kind of with the market sort of seeming to inflect maybe slowly, but at least it is getting better. How should we think about the kind of stabilized long-term occupancy potential in the office?

Speaker Change: Okay, that's helpful. Thank you, David. And then one other, I guess John sort of asked it, but to look at it from maybe a longer-term perspective, you're 83%-ish occupied in office today.

Speaker Change: in the high 80s from a leased occupancy.

Speaker Change: I guess just as you look at your office portfolio overall, kind of with the market sort of seeming to inflect maybe slowly but at least is getting better, how should we think about kind of stabilized long-term occupancy potential in the office portfolio?

Peter Dylan Abramowitz: Well, I think that, you know, downtown here in the Woodlands, we're at 96. Overall, in The Woodlands, we're about 90, and the vacancy is concentrated in some great buildings at One News Landing that, unfortunately, have had some bankruptcies. I can imagine our Woodlands portfolio easily getting into the low 90s and, you know, maybe not back to the 96, 97 that we enjoyed pre-pandemic, but absolutely into the low 90s. Across Vegas, we're already at a really stabilized occupancy level with one, two Summerlin and 1,700 almost entirely full. And last but not least, what's in negotiation right now? I think it's about 95 percent. Look, do I think we could stay at 95 percent forever? I hope so, but that's a pretty fancy number.

Speaker Change: Well, I think that, you know, downtown here in the Woodlands, we're at 96, overall in the Woodlands, we're about 90, and the vacancy is concentrated in some great buildings at One News Landing that unfortunately had some bankruptcies.

Speaker Change: I can imagine our Woodlands portfolio easily getting into the low 90s, and maybe not back to the 96, 97 that we enjoyed pre-pandemic, but absolutely into the low 90s.

Speaker Change: Across Vegas, we're already at a really stabilized occupancy level with 1, 2 Summerlin and 1,700 almost entirely full. And what's not leased is in negotiation right now. I think it's about 95%.

David Michael Striph: And then we have a bit of vacancy concentrated in the Columbia portfolio in the Merriweather Row assets, while the newer assets are almost entirely full. It's really the corporate row assets, the older assets that have some vacancy as the smaller tenants there have decided to work from home in greater numbers than what we've seen in the other areas of our portfolio. And I would tell you that over the past 90 days, to your point in the question that you asked, we've seen a little bit of an inflection where we're seeing more new incremental demand than we are seeing downsizing and move outs And that's a nice turn that we haven't seen in the older Columbia office buildings.

Speaker Change: Look, do I think we could stay 95% forever? I hope so, but that's a pretty fancy number.

Speaker Change: And then we have a bit of vacancy concentrated in the Columbia portfolio, in the Merriweather Roe assets, the newer assets are almost entirely full, it's really the corporate Roe assets, the older assets that have some vacancy, as the smaller tenants there have

Speaker Change: decided to work from home in greater numbers than what we've seen in the other areas of our portfolio.

Speaker Change: And I would tell you that over the past 90 days,

Speaker Change: to your point in the question that you asked.

Speaker Change: We've seen a little bit of inflection where we're seeing more new incremental demand than we are seeing downsizing and move-outs.

Speaker Change: And that's a nice turn that we haven't seen in that older Columbia office buildings. It's been a minute since we've seen that. So it's nice over this past quarter to see some incremental demand that we think will drive that higher over the coming quarters.

Peter Dylan Abramowitz: It's been a minute since we've seen that, so it's nice this past quarter to see some incremental demand that we think will drive that higher over the coming quarter. All right, that's all for me, thanks. Thanks, Peter. Thank you. One moment, please, for our next.

Speaker Change: All right, that's all for me. Thanks. Thanks, Peter.

Operator: Our next question comes from the line of Alex Barron with Housing Research. Yes, thank you. I wanted to ask about the timing of condo closings. Victoria Place, I believe it's scheduled to start in the fourth quarter, but I was wondering, do you anticipate most of the closings to happen that quarter, or will a lot of them spill over into 2020? So, Alex, I think it's a good question, and it's one that I believe Carlos tried to mention in his prepared remarks.

Speaker Change: Thank you. One moment please for our next question.

Speaker Change: Our next question comes from the line of Alex Barron with Housing Research Center.

Alex Barron: Yes, thank you.

Alex Barron: I wanted to ask about the timing of condo closings. Victoria Place, I believe, it's scheduled to start in the...

Alex Barron: in the fourth quarter, but I was wondering, do you anticipate most of the closings to happen that quarter, or will a lot of them spill over into 2025?

Speaker Change: So, Alex, I think it's a good question and it's one that I believe Carlos tried to mention in his prepared remarks. One of the things that we did with our guidance this quarter was increase our condo sales revenue guidance.

Alex Barron: One of the things that we did with our guidance this quarter was increase our condo sales revenue guidance. A piece of that increase, a meaningful piece of that increase, is that we expect less of the Victoria Place closings to be in 2025 than we previously did. Our previous guidance expected $75 million of condo closings from Victoria Place to fall into 2025. And today's new guidance contemplates approximately $30 to $50 million.

Speaker Change: A piece of that increase, a meaningful piece of that increase, is that we expect less of the Victoria Place closings to be in 2025 than we previously did.

Speaker Change: Our previous guidance expected $75 million of condo closings from Victoria Place to fall into 2025.

David Michael Striph: So the construction there is going very well. We have a lot of confidence in our buyers there. It's 100% sold out, so we think that we can get the vast majority of those units done in 2024, and less and less potentially slipping into 2025. Okay, thanks. And then on the next tower, Ulana in 2025, do you have an approximate quarter when that one's scheduled to close? And is my understanding correct that that one will be maybe breakeven or at a slight loss because of its workforce?

Speaker Change: And today's new guidance contemplates approximately $30 to $50 million.

Speaker Change: So, the construction there is going very well. We have a lot of confidence in our buyers there. It's 100% sold out that we think that we can get the vast majority of those units done in 2024 and less and less potentially slipping into 2025.

Speaker Change: Okay, thanks. And then on the next tower, Ulana in 2025, do you have an approximate quarter when that one's scheduled to close? And is my understanding correct that that one will be maybe break-even or at a slight no profit because it's workforce?

David Michael Striph: Correct. Your inclination, Lana, is a workforce that is not a profit driver. It's a break-even-ish tower. I think that when we provide guidance for 2025, we'll be able to give you some better timing on when to expect those closings. But again, that will be a cash benefit, but not an earnings benefit. As you highlighted, that is a workforce housing tower.

Speaker Change: Correct. Your inclination, Ulana, is a workforce that is not a profit driver. It's a break even-ish tower. I think that when we provide guidance for 2025, we'll be able to give you some better timing on when to expect those closings. But again,

Speaker Change: That will be a cash benefit, but not an earnings benefit, as you highlighted, that is the workforce housing tower.

Alex Barron: Okay, awesome. And then, if I could ask one more, On Summerlin, you guys usually sell one big chunk of super pads. Historically, I think it's been more in the fourth quarter, but this time, you had a big sale this quarter. So does that mean there's going to be potentially not that much more revenue coming out of Summerlin in the back half of the year or not necessarily? No, I believe that we will see a very strong third quarter in Summerlin with more super pads sold that will give us a great third quarter.

Speaker Change #101: Okay, awesome. And then if I could ask one more. On Summerlin, you guys usually sell...

Speaker Change: one big chunk of SuperPADS. Historically, I think it's been more in the fourth quarter, but this time you had a big sale this quarter. So does that mean there's gonna be potentially not that much more revenues coming out of Summerlin in the back half of the year or not necessarily?

Alex Barron: I think that, you know, the fourth quarter this year, unlike, as you highlighted, the past several years, the fourth quarter has kind of been a big quarter for Summerlin, may be quiet because of the acceleration of takedowns of these super pads by our builders that are desperate for land to meet that demand that's in the market and led them to close on these pads. And want this dirt in their portfolio in the second and third quarter.

Speaker Change: No, I believe that we will see a very strong third quarter in Summerline, with more SuperPads sold.

Speaker Change #100: that will give us a great third quarter. I think that the fourth quarter this year, unlike as you highlighted, the past several years, the fourth quarter has kind of been a big quarter for someone, may be quiet because

Speaker Change #100: of the acceleration of takedowns of these superpads by our builders that are desperate for land to meet that demand that's in the market and led them to close on these pads and want this dirt in their portfolio in the second and third quarter.

Alex Barron: Got it. Thanks so much. I appreciate it, Alex. Thank you. Thank you. I'll now hand the call back to David O'Reilly for any closing remarks. We appreciate everyone's participation, as always, and hope that all of you can join us for our Vestor Day right around May reach this November in Summerlin, and maybe we should have all of our earnings calls on Friday morning. Because I think we have more questions today than we've had in a long time.

David Michael Striph: I really appreciate your participation. Thanks for all of your interest. And if there's any follow-up questions, we're always available. Thank you. Ladies and gentlemen, this concludes today's program, and you may now disconnect.

Speaker Change #103: Got it. Thanks so much.

Speaker Change #100: Appreciate it Alex, thank you.

Speaker Change #100: Thank you. I'll now hand the call back over to CEO David O'Reilly for any closing remarks.

David Michael Striph: We appreciate everyone's participation, as always, and hope that all of you can join us for our Vester Day.

David Michael Striph: It's right around Nae Reitz this November in Summerlin, and maybe we should have all of our earnings calls on Friday morning, because I think we have more questions today than we've had in a long time. Really appreciate the participation. Thanks for all of your interest, and if there's any follow-up questions, we're always available. Thank you.

Speaker Change #102: Ladies and gentlemen, thank you for participating. This concludes today's program and you may now disconnect.