Howard Hughes 2025 Q1 Earnings Strong Performance as Net Income Swings 151.6%

Howard Hughes (HHH) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company exceeded expectations by returning to profitability, with a notable 151.6% positive swing in net income compared to the prior year. Howard Hughes maintained its full-year guidance for adjusted operating cash flow, affirming its expectations for continued strong performance in its Master Planned Communities and Operating Assets segments. This reflects confidence in ongoing strategic growth initiatives and robust residential land sales.

Revenue

The total revenue for Howard Hughes in Q1 2025 was $199.33 million, marking an increase of 27.4% from the previous year. The condominium rights and unit sales contributed $342,000, while master planned communities land sales generated $71.64 million. Rental revenue reached $108.41 million, and other land, rental, and property revenues added $9.64 million. Builder price participation accounted for $9.29 million, leading to the total revenue figure of $199.33 million.

Earnings/Net Income

Howard Hughes achieved a turnaround to profitability with an EPS of $0.21, reversing a loss of $1.06 per share from the previous year, signifying a positive change of 119.8%. Net income showed a remarkable improvement to $10.84 million from a net loss of $21 million in 2024 Q1. The EPS indicates a positive recovery aligned with the financial results.

Price Action

The stock price of Howard Hughes edged down 1.01% during the latest trading day, climbed 3.26% during the most recent full trading week, and increased 1.93% month-to-date.

Post-Earnings Price Action Review

Over the past five years, the strategy of purchasing Howard Hughes shares after a quarter-over-quarter revenue drop and holding for 30 days has resulted in a loss of 1.30%. This performance is slightly better than the industry median loss of 1.6%, indicating that Howard Hughes' strategy has marginally outperformed the broader market. The negative return highlights the challenges faced by the real estate sector and Howard Hughes in particular, amidst revenue decline. Despite this, the company’s strategic initiatives and focus on high-growth opportunities continue to offer potential for long-term gains.

CEO Commentary

"We began 2025 on a strong note, reporting impressive results which place us firmly on track to achieve our 2025 full-year guidance," commented David R. O'Reilly, Chief Executive Officer of Howard Hughes. O'Reilly noted a significant 9% year-over-year growth in NOI from Operating Assets and strong residential land sales in Master Planned Communities (MPCs), despite a general softening in the national housing market. He emphasized successful leasing activity in office and multifamily segments, contributing to record quarterly NOI of $72 million. The CEO expressed confidence in the company’s growth trajectory and highlighted strategic financing deals that bolster liquidity and future growth potential.

Guidance

Howard Hughes maintains its full-year guidance for Adjusted Operating Cash Flow at approximately $350 million, or $7.00 per diluted share. The company anticipates achieving a target of approximately $375 million in MPC EBT. O'Reilly reaffirmed that the ongoing strength in leasing activity and residential land sales positions HHH well for another record year, with the investment from Pershing Square aimed at transforming the company into a diversified holding entity focused on high-growth opportunities.

Additional News

In recent weeks, Howard Hughes Holdings Inc. announced a significant $900 million investment from Pershing Square Holdco, L.P., aimed at transforming the company into a diversified holding entity. Bill Ackman, the head of Pershing Square, will become the executive chairman of Howard Hughes’ board. This strategic move includes plans to acquire controlling stakes in high-quality, growth-oriented companies, both public and private. The company also announced a series of financing deals, including upsizing Floreo's credit facility in Teravalis and acquiring a construction loan for a medical office building in Bridgeland. Additionally, Howard Hughes extended its standstill agreement with Pershing Square, demonstrating ongoing collaboration and strategic alignment with the investment firm.