Howard Hughes Holdings Inc. · NYSE:HHH
Howard Hughes — Investor Day (May 2017)
164 slides from Howard Hughes's investor day presentation, May 17, 2017
Slide 1: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Statements made in this presentation that are not historical facts, including statements accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,” “project,” “realize,” “should,” “transform,” “would,” and oth
Slide 2: Strategic Overview and Financial Strategy
Strategic Overview David R. Weinreb, CEO & Grant Herlitz, President Financial Strategy David R. O’Reilly, CFO
Slide 3: Presenters and Agenda
Houston MPCs Paul Layne, EVP Master Planned Communities Tim Welbes, President, The Woodlands Ward Village Nick Vanderboom, EVP Summerlin Kevin Orrock, President, Summerlin Conclusion David R. Weinreb, CEO Columbia Greg Fitchitt, SVP, Maryland
Slide 4: Presenters and Agenda
ea A A A AA AW ALY AR A |Z A A A A |Z A A A A AS Houston MPCs Paul Layne, EVP Master Planned Communities Ne Tim Welbes, President, The Woodlands Ward Village * Nick Vanderboom, EVP Summerlin Kevin Orrock, President, Summerlin Conclusion : David R. Weinreb, CEO Columbia a 5 hh Greg Fitchitt, SVP, Mar
Slide 5: Hughes > Rouse > Mitchell > HHC
Hughes > Rouse > Mitchell > HHC 1950 Howard Hughes acquires land encompassing Summerlin MPC 2004 General Growth Properties acquires the Rouse Company 2010 The Howard Hughes Corporation emerges as a tax-free spin-off of General Growth Properties 1996 The Howard Hughes Corporation merges with the Rous
Slide 6: Master Planned Communities, Strategic Developments, Operating Assets
1. 2. 3. MASTER PLANNED STRATEGIC DEVELOPMENTS OPERATING ASSETS COMMUNITIES Valuable asset base generates substantial cash flow 50M SF opportunity for substantial value enhancement Consistent and growing stream of operating income • MPCs located in desirable locations (Houston, TX, Las Vegas, NV and
Slide 7: Master Planned Communities
MASTER PLANNED COMMUNITIES Highly diversified portfolio of operating assets and MPCs with robust cash flow generation THE WOODLANDS BRIDGELAND SUMMERLIN COLUMBIA Notes: 1,2,3,4,5: for footnotes please refer to appendix. MPC GROSS SALES VALUE Remaining Saleable and Developable Acres Average Price per
Slide 8: Master Planned Communities
MASTER PLANNED COMMUNITIES ~8,000 ACRES REMAINING TO BE DEVELOPED & SOLD ACROSS OUR MPC’S
Slide 9: Master Planned Communities Houston The Woodlands
MASTER PLANNED COMMUNITIES HOUSTON THE WOODLANDS –1M SF +238K SF CLASS A OFFICE ABSORPTION CLASS A OFFICE ABSORPTION THE WOODLANDS
Slide 10: Strategic Developments
STRATEGIC DEVELOPMENTS 50M SQ FT OF VERTICAL DEVELOPMENT ENTITLEMENTS WITHIN OUR PORTFOLIO 110 NORTH WACKER DRIVE
Slide 11: Operating Assets
OPERATING ASSETS EMBASSY SUITES 7M SF 2,300 MULTI-FAMILY UNITS ~1,000 HOTEL ROOMS RETAIL & OFFICE PROPERTIES
Slide 12: Progress Since Inception
PROGRESS SINCE INCEPTION Expected to deliver $1.6 bn 9.2% Yield on cost Completed development to date $358m Invested cash equity 21.9% Assuming 5.5% Cost on Debt Return on equity
Slide 13: Progress Since Inception: Operating Assets NOI
PROGRESS SINCE INCEPTION OPERATING ASSETS NOI ($ in millions) OPERATING ASSETS NOI INCREMENTAL CONTRIBUTION TO OPERATING ASSETS NOI(1) FROM STABILIZED 241 232 2010 2011 2012 2013 2014 2015 2016 Q1 2017 annualized 92 140 71 72 119 49 55 61 51 169 392% INCREASE IN RECURRING NOI SINCE INCEPTION EXCLUDI
Slide 14: Progress Since Inception: Operating Assets NOI
PROGRESS SINCE INCEPTION OPERATING ASSETS NOI cs:in mi INCREASE IN RECURRING NO! SINCE INCEPTION EXCLUDING THE SEAPORT DISTRICT od Hogs 2010 FROM STABILIZED AND UNSTABILIZED PROPERTIES FROM PROPERTIES UNDER CONSTRUCTION 20112012, 2013, 201420152016 | 1.2017 annualized
Slide 15: Self-funded, fully-integrated business model
1. Self-funded, fully-integrated business model and a unique controlling position provides synergies and sustainable competitive advantages
Slide 16: Aligned management and development team
2. Aligned management and development team with proven track record of creating value and managing risk 1. Self-funded, fully-integrated business model and a unique controlling position provides synergies and sustainable competitive advantages
Slide 17: Sought-after assets with value creation opportunities
3. Sought-after assets with significant value creation opportunities 2. Aligned management and development team with proven track record of creating value and managing risk 1. Self-funded, fully-integrated business model and a unique controlling position provides synergies and sustainable competitiv
Slide 18: Low-leverage, flexible balance sheet
4. Low-leverage, flexible balance sheet 3. Sought-after assets with significant value creation opportunities 2. Aligned management and development team with proven track record of creating value and managing risk 1. Self-funded, fully-integrated business model and a unique controlling position provi
Slide 19: Highly diversified portfolio with robust cash flow
5. Highly diversified portfolio of operating assets and MPCs with robust cash flow generation 4. Low-leverage, flexible balance sheet 3. Sought-after assets with significant value creation opportunities 2. Aligned management and development team with proven track record of creating value and managin
Slide 20: Self-funded, fully-integrated business model
1. Self-funded, fully-integrated business model provides synergies and unique competitive advantages Operating Assets Strategic Developments Master Planned Communities
Slide 21: Virtuous cycle of segment synergies
1. Self-funded, fully-integrated business model provides synergies and unique competitive advantages 1. HHC sells land to home builders (MPC Segment) Operational synergies of HHC’s three business segments creates a virtuous cycle
Slide 22: Virtuous cycle of segment synergies
1. Self-funded, fully-integrated business model provides synergies and unique competitive advantages 1. HHC sells land to home builders (MPC Segment) Operational synergies of HHC’s three business segments creates a virtuous cycle 2. New homeowners generate demand for commercial assets or amenities
Slide 23: Virtuous cycle of segment synergies
1. Self-funded, fully-integrated business model provides synergies and unique competitive advantages 1. HHC sells land to home builders (MPC Segment) Operational synergies of HHC’s three business segments creates a virtuous cycle 2. New homeowners generate demand for commercial assets or amenities 3
Slide 24: Virtuous cycle of segment synergies
1. Self-funded, fully-integrated business model provides synergies and unique competitive advantages 1. HHC sells land to home builders (MPC Segment) Operational synergies of HHC’s three business segments creates 2. New homeowners generate demand for commercial assets or amenities a virtuous cycle 4
Slide 25: Virtuous cycle of segment synergies
1. Self-funded, fully-integrated business model provides synergies and unique competitive advantages 1. HHC sells land to home builders (MPC Segment) Operational synergies of HHC’s three business segments creates 2. New homeowners generate demand for commercial assets or amenities 5. Commercial amen
Slide 26: Financial Synergies
1. Self-funded, fully-integrated business model provides synergies and unique competitive advantages Operating Assets Strategic Developments Master Planned Communities Financial Synergies Self fund thru MPC sales and Operating Asset NOI - No equity dilution - Retain (Not Sell) Developed Assets
Slide 27: Financial Synergies
1. Self-funded, fully-integrated business model provides synergies and unique competitive advantages Operating uc’ Assets -. f + Master Planned Strategic Communities, =3y Developments Financial Synergies Self fund thru MPC sales and Operating Asset NO! - No equity dilution - Retain (Not Sell) Develo
Slide 28: Hughes Landing - Today
Hughes Landing - Today 1.4M SF Class A Office 390 Luxury Multi-Family Units 126K SF Retail 205 key Embassy Suites Hotel $49M Stabilized NOI
Slide 29: Strong alignment between management and shareholders
2. Strong alignment between seasoned management team and shareholders BOARD OF DIRECTORS Skin in the game: • Board of Directors and Management have a combined ownership in HHC of approximately 21% • Subject to shareholder vote, David R. Weinreb has agreed to simultaneously redeem his existing warran
Slide 30: Strategic Developments: Ward Village
2. Proven track record of creating value and managing risk Strategic Developments: Ward Village CONDO SALES • • • Total projected costs: ~$1.5 billion 82.5% of units have been pre-sold / sold Projected average gross margin: 30% RISK MITIGANTS - - - PRE-SALES FINANCING DEPOSITS = LIMITED EQUITY RISK
Slide 31: Case Study: Seaport Assemblage
2. Proven track record of creating value and managing risk Case Study: Seaport Assemblage • In 2014 and 2015, created a 42,694 SF lot with 817,784 SF of available development rights through multiple acquisitions, totaling $249 million. Understanding the risks in the Manhattan luxury residential mark
Slide 32: Sought-after assets with significant value creation opportunities
3. Sought-after assets with significant value creation opportunities HHC has decreased risk of its development pipeline through its unique business model. • Synergies from three fully integrated segments • Control in high barrier submarkets • Low land basis • Established platform, experienced team •
Slide 33: Low-leverage, flexible balance sheet
4. Low-leverage, flexible balance sheet • Self-funded business model • Focus on project-specific financing • Low-risk, non-recourse debt • Well-staggered maturity profile
Slide 34: Substantial cash balance of $542 million
4. Low-leverage, flexible balance sheet Substantial cash balance of $542 million SUFFICIENT CASH ON BALANCE IN-PROCESS ($112) JECTS DEVELOPMENTS CONSTRUCTION $542 SHEET TO FUND ALL $1,197 FUNDING FOR UNDER $353 Est. comple:on Deposits & CommiEed debt An:cipated Remaining costs Exis:ng cash cost (all
Slide 35: Low-leverage, flexible balance sheet
4. Low-leverage, flexible balance sheet TOTAL REVENUES TOTAL ASSETS Total Revenues Total Assets 27% NET DEBT TO ENTERPRISE VALUE NET DEBT TO ENTERPRISE VALUE NET SNEeCt SUeRcuErDedD DEeBbTt TtoO EEnNteTrEpRrisPeR VIaSlEueV 1A LUE 16% NET SECURED DEBT TO ENTERPRISE VALUE 19% 26% 26% 27% 2010 2011 201
Slide 36: Leverage by Segment
4. Low-leverage, flexible balance sheet LEVERAGE BY SEGMENT (IN MILLIONS AS OF MARCH 31 2017) 74% OF HHC’S DEBT IS GENERALLY ASSOCIATED WITH STABLE, INCOME-PRODUCING OPERATING ASSETS. OPERATING ASSETS CONSERVATIVELY LEVERAGED AT ONLY 61% NET DEBT TO BOOK VALUE Includes $61 million of Special Improve
Slide 37: Unlocking Value from Wall Street to Waikiki
5. Highly diversified portfolio of operating assets and MPCs with robust cash flow generation UNLOCKING VALUE FROM WALL STREET TO WAIKIKI
Slide 38: Unlocking Value: Seaport District
5. Highly diversified portfolio of operating with robust cash flow generation assets and MPCs UNLOCKING VALUE FROM WALL STREET TO WAIKIKI SEAPORT DISTRICT NEW YORK
Slide 39: Unlocking Value: Downtown Columbia
5. Highly diversified portfolio of operating with robust cash flow generation assets and MPCs UNLOCKING VALUE FROM WALL STREET TO WAIKIKI SEAPORT DISTRICT NEW YORK DOWNTOWN COLUMBIA MARYLAND
Slide 40: Unlocking Value: Houston MPCs
5. Highly diversified portfolio of operating with robust cash flow generation assets and MPCs UNLOCKING VALUE FROM WALL STREET TO WAIKIKI SEAPORT DISTRICT NEW YORK DOWNTOWN COLUMBIA MARYLAND HOUSTON MPC’s
Slide 41: Unlocking Value: Summerlin
5. Highly diversified portfolio of operating with robust cash flow generation assets and MPCs UNLOCKING VALUE FROM WALL STREET TO WAIKIKI SEAPORT DISTRICT NEW YORK SUMMERLIN LAS VEGAS DOWNTOWN COLUMBIA MARYLAND HOUSTON MPC’s
Slide 42: Unlocking Value: Ward Village
5. Highly diversified portfolio of operating with robust cash flow generation assets and MPCs UNLOCKING VALUE FROM WALL STREET TO WAIKIKI SEAPORT DISTRICT NEW YORK SUMMERLIN LAS VEGAS DOWNTOWN COLUMBIA MARYLAND WARD VILLAGE HAWAII HOUSTON MPC’s
Slide 43: Unlocking Value from Wall Street to Waikiki
5. Highly diversified portfolio of operating assets and with robust cash flow generation MPCs UNLOCKING VALUE FROM WALL STREET TO WAIKIKI 110 N WACKER CHICAGO SEAPORT DISTRICT NEW YORK ELK GROVE CALIFORNIA LANDMARK VIRGINIA SUMMERLIN LAS VEGAS DOWNTOWN COLUMBIA MARYLAND RIVERWALK NEW ORLEANS KENDALL
Slide 44: Discover Houston MPCs
Discover Houston MPCs Paul Layne & Tim Welbes
Slide 45: Our Houston MPCs
2,055 ACRES 28,475 ACRES Our Houston MPCs 11,400 ACRES DOWNTOWN HOUSTON
Slide 46: Discover The Woodlands
Discover The Woodlands
Slide 47: The Woodlands, TX
The Woodlands, TX MPC launched in 1974 Total acreage: 28,475 acres Total residents: 115,000 Expected residents at completion: 132,000 One of the safest suburbs in the Houston MSA Top-tier schools within Houston MSA Who Lives Here? The Woodlands Houston MSA Median Household Income $110,000 $61,000 Me
Slide 48: Progress since 2011 acquisition of partner interest
2011 HHC acquires our partner’s remaining 47.5% interest for $117.5M Since then we have: Sold over 3,000 Residential Lots Sold over 175 ACRES Commercial Land to non-competitive users Developed 1.7M SF Office Developed 224K SF Retail Delivered 704 Multi-Family Units Delivered 913 Hotel Rooms
Slide 49: Awards
Awards 2017 The Woodlands named as number one city to live in Texas and number six in the U.S. by Paper City Magazine 2016 Hughes Landing, “Mixed Use” Landmark Award, Houston Business Journal 2016 (2007) The Woodlands, “Humanitarian of the Year” PRISM Award, Greater Houston Builders Association 2015
Slide 50: MPC Overview - Amenities
MPC Overview - Amenities First-Class Retail Employment Center 2,150+ companies within The Woodlands 64,000+ employees working in The Woodlands The Woodlands Town Center developed by How-ard Hughes is a regional employment center and in close proximity to ExxonMobil’s corporate campus 30 minutes from
Slide 51: MPC Overview - Amenities
MPC Overview - Amenities 23 exemplary public and 9 acclaimed private schools 7 Championship golf courses Upscale shopping and dining options throughout the community One of the top rated amphitheaters the world for outdoor concerts in A thriving medical district with 5 hospital systems Over 200 mile
Slide 52: MPC Overview: Housing Options
MPC Overview: Housing Options 10 villages attracting a wide range of residents with different age and income profiles wanting to benefit from living in a self-sustaining suburban city. Single-Family Detached homes Single-Family Attached homes Multifamily Apartments Built and operated by Howard Hughe
Slide 53: Residential: Development
Residential: Development APPROX. 1,000 LOTS REMAINING TOTALING 307 ACRES 3% 97% EST. SELL-OUT IN 2022 Gross Margin on Land RESIDENTIAL LAND SITE PLANLIFE CYCLE & MARGIN EVOLUTION Time LOTS SOLD & REMAINING 1% 2% LOTS SOLDREMAINING DETACHEDATTACHED
Slide 54: Residential: Lot Sales and Margin Data
Residential: Lot Sales LOT SALES AND PER ACRE DATA (HOWARD HUGHES) and Margin Data HOMES SALES DATA (HOME BUILDERS) MEDIAN HOME SALE PRICE 2016 $557,349 GROSS MARGIN IS A FACTOR OF TOTAL DEVELOPMENT COSTS WHICH ARE PARTIALLY OFFSET BY MUDS. The Woodlands Acreage Data $735,000 $666,000 $678,000 2014
Slide 55: Commercial Land: Operating Assets (owned)
Commercial Land: Operating Assets (owned) MULTIFAMILY 8% OFFICE NET OPERATING INCOME (2016) Current NOI $81.2M Future NOI (at stabilization) $38.2M Total NOI (at stabilization) $119.4M Wtd. Avg. Stablization date 2019 SQUARE FOOTAGE 20%HOTEL 20% 4.4M SF RETAIL 52%
Slide 56: The Woodlands Commercial: Operating Assets
The Woodlands Commercial: Operating Assets Office 2.1M SF $32M - 2016 NOI $52.7M Stabilized • 10 Class-A office buildings • Major tenants such as ExxonMobil & Newfield Exploration
Slide 57: The Woodlands Commercial: Operating Assets
The Woodlands Commercial: Operating Assets Office 2.1M SF $32M - 2016 NOI $52.7M Stabilized Multi-Family 1,097 Units $8.3M - 2016 NOI $16.6M Stabilized • 10 Class-A office buildings • Major tenants such as ExxonMobil & Newfield Exploration • • 3 multifamily assets Units ranging from 625sf – 1,668sf
Slide 58: The Woodlands Commercial: Operating Assets
The Woodlands Commercial: Operating Assets Office 2.1M SF $32M - 2016 NOI $52.7M Stabilized Multi-Family 1,097 Units $8.3M - 2016 NOI $16.6M Stabilized Retail 308K SF $7.7M - 2016 NOI • 10 Class-A office buildings • Major tenants such as ExxonMobil & Newfield Exploration • • 3 multifamily assets Uni
Slide 59: The Woodlands Commercial: Operating Assets
The Woodlands Commercial: Operating Assets Office 2.1M SF $32M - 2016 NOI $52.7M Stabilized Multi-Family 1,097 Units $8.3M - 2016 NOI $16.6M Stabilized Retail 308K SF $7.7M - 2016 Hotel 913 Keys $12.9M - 2016 NOI $31.5M Stabilized NOI • 10 Class-A office buildings • Major tenants such as ExxonMobil
Slide 60: The Woodlands Commercial: Operating Assets
The Woodlands Commercial: Operating Assets Office 2.1M SF $32M - 2016 NOI $52.7M Stabilized Multi-Family 1,097 Units $8.3M - 2016 NOI $16.6M Stabilized Retail 308K SF $7.7M - 2016 Hotel 913 Keys $12.9M - 2016 NOI $31.5M Stabilized Storage 1,438 Units $1.6M Stabilized NOI NOI • 10 Class-A office buil
Slide 61: Planned Development: Office
The Woodlands Commercial: Planned Development Office • Potential for 5+ Class-A office buildings over the next 10 years Targeting major build-to-suit tenants, including opportunities from corporate relocations and consolidations Typical building size 200K – 500K SF • •
Slide 62: Planned Development: Multi-Family
The Woodlands Commercial: Planned Development Multi-Family • 1 multifamily asset with 292 total units ranging from 578sf – 1,398sf • Potential for 1,000 – 2,000 additional residential units over next 10 years, inclusive of age restricted and senior living offerings
Slide 63: Planned Development: Retail
The Woodlands Commercial: Planned Development Retail • 60K sf of power center retail Pursuing 50% preleasing to investment grade tenants Potential for additional neighborhood retail and one larger project in Town Center • •
Slide 64: Planned Development: Medical Office
The Woodlands Commercial: Planned Development Medical Office • 206K SF build-to-suit project 100% preleased to University of Texas Health System AAA Credit Rated with a 15-year term Currently seeking additional opportunities to expand platform • • •
Slide 65: Short- and Long-Term Opportunities
The Woodlands Commercial: Short-and Long-Term Opportunities SHORT-TERM IDENTIFIED PARCELS • • • • • 1.0m+ sf of office 500k sf of retail 1,000+ multifamily units 600 hotel rooms To be completed within 10 years 7.0M+ SF LONG-TERM OPPORTUNITIES • • 780+ acres Fully entitled for commercial development
Slide 66: Short- and Long-Term Opportunities
The Woodlands Commercial: Short-and Long-Term Opportunities SHORT-TERM IDENTIFIED PARCELS + 1.0m+ sf of office 7 0 M S F + 500k sf of retail * 1,000+ multifamily units . + + 600 hotel rooms + To be completed within 10 years LONG-TERM OPPORTUNITIES + 780+ acres sidan + Fully entitled for a | y | 8 0
Slide 67: Bridgeland, TX
Bridgeland, TX MPC launched in October 2003 Total acreage: 11,400 acres Total residents: 8,300 Expected residents at completion: 65,000 59 I One of the safest suburbs in the Houston School ratings: Top tier schools within MSA Houston MSA; CFISD district in the Texas is the 3rd largest GY 10 RRIDOR C
Slide 68: Awards
Awards 2017 – Landscape Designer of the Year, Silver; National Association of Home Builders 2016 – Best TV/Video Promotion, Best Event of the Year and Best Interactive Point of Sale; Greater Houston Builders Association 2016 – Developer of the Year Award; Texas Association of Builders 2016 – Website
Slide 69: MPC Overview - Amenities
MPC Overview - Amenities 3,000 acres of open space, lakes, trails and parks Park space no more than a quarter-mile from every home in Bridgeland More than 30 community groups offer residents opportunities to connect, create and explore 140-acre Josey Lake is under construction now and will open next
Slide 70: MPC Overview: Housing Options
MPC Overview: Housing Options 4 villages attracting a wide range of residents with different age and income profiles wanting to benefit from living in a self-sustaining suburban city. Single-Family Detached homes Single-Family Attached homes MPC infrastructure and grading of lots by Howard Hughes; c
Slide 71: Residential Land: Development
Residential Land: Development LIFE CYCLE & MARGIN EVOLUTION RESIDENTIAL LAND SITE PLAN Time APPROX. 15,000 LOTS REMAINING TOTALING 2,474 SALEABLE RESIDENTIAL ACRES AND 1,530 COMMERCIAL ACRES EST. RESIDENTIAL SELL-OUT IN 2037 Gross Margin on Land Bridgeland
Slide 72: Residential Land: Lot Sales and Margin Data
Residential Land: Lot Sales LOT SALES AND PER ACRE DATA (HOWARD HUGHES) and Margin Data HOMES SALES DATA (HOME BUILDERS) ACREAGE DATA Acreage Data $453,000 $382,000 $372,000 $328,135 MEDIAN HOME SALE PRICE 2016 $359,687 2014 2015 2016 2017 Proj. Acres Sold Price Per Acre GROSS MARGIN DATA Gross Marg
Slide 73: Commercial Land: Short- and Long-Term Opportunities
Commercial Land: Short-and Long-Term Opportunities LONG-TERM OPPORTUNITIES • • 1,530 acres Fully entitled for commercial development Strategic buildout over a 20+ year horizon 1,530 ACRES • SHORT-TERM IDENTIFIED PARCELS • • • • • 500K SF of office 250K SF of retail 600 multifamily units 300 hotel ro
Slide 74: Discover Summerlin Las Vegas
Discover Summerlin Las Vegas Kevin Orrock
Slide 75: Summerlin at a glance
200,000 RESIDENTS AT FULL BUILD OUT 9 MILES FROM THE LAS VEGAS STRIP 22,500 ACRES Future Development The Summit Downtown Summerlin
Slide 76: Las Vegas market trends
VISITOR UNEMPLOYMENT 900BPS TO 5.0% TRAFFIC AT ALL-TIME HIGH $18BN 2 NEW PRO SPORT FRANCHISES COMMERCIAL REAL ESTATE DEVELOPMENT PLANNED OR UNDERWAY
Slide 77: Las Vegas market trends
VISITOR TRAFFIC AT ALL-TIME HIGH $18BN COMMERCIAL REAL ESTATE DEVELOPMENT:PEANNED OR UNDERWAY, UNEMPLOYMENT | 900. 105.0% 2. NEW PRO SPORT FRANCHISES
Slide 78: Summerlin, NV
Summerlin, NV Development officially commenced in the mid-1980’s with the first parcel sale in 1990 Total acreage: 22,500 acres Total residents: 107,000 Expected residents at completion: 200,000+ Development agreements in place with the City of Las Vegas and Clark County expire in December of 2033 a
Slide 79: Awards
Awards NAIOP Southern Nevada – Spotlight Award winner for Trendsetter Firm, 2017. Recipient, Downtown Summerlin – Las Vegas Review – Journal 2016 for Best Shopping Center/Mall. Ranked as America’s best-selling master-planned community for a decade. According to independent surveys by Arthur Andersen
Slide 80: MPC Overview - Amenities
MPC Overview - Amenities Employment Center Finest Education System 25 schools k-12 14 public / 9 private / 2 charter Exemplary public schools and acclaimed private schools 3 higher education campuses including two colleges (Roseman University of Health Sciences and University of Phoenix) as well as
Slide 81: MPC Overview - Amenities
MPC Overview - Amenities MPC Amenities 230+ neighborhood and community parks 3 resident-exclusive pools 10 golf courses Upscale shopping and dining at Downtown Summerlin 14 houses of worship 150+ miles of hiking and bike trails Adjacent to Red Rock National Conservation Area Three hotels including t
Slide 82: MPC Overview: Housing Options
MPC Overview: Housing Options Six villages to choose from attracting a wide range of residents aspiring to live an active and healthy Single-Family Attached and Detached homes $300K to $3.0M lifestyle in a beautifully master planned community Custom Single-Family homes $1.8M to $20M+ Multifamily Apa
Slide 83: Residential Land: Development
Residential Land: Development TOTALING APPROX. 3,700 SALEABLE ACRES APPROX. 40,000 POTENTIAL RESIDENTIAL UNITS REMAINING BASED ON CURRENT ENTITLEMENTS 20% 3% EST. SELL OUT IN 2039 Gross Margin on Land RESIDENTIAL LAND SITE PLANLIFE CYCLE & MARGIN EVOLUTION Time ACRE SALES 80% 17% SOLD/UNSALEABLEREMA
Slide 84: Residential Land: Lot Sales and Margin Data
Residential Land: Lot Sales and Margin Data $591,000 $528,000 $578,000 $577,000 47% 46% GROSS MARGIN IS A FACTOR OF TOTAL DEVELOPMENT COSTS WHICH ARE PARTIALLY OFFSET BY SIDS. $115m $114m $111m 1) 2016 ACREAGE PRICING OF $578,000 EXCLUDES A 116.8 ACRE SALE TO PULTE HOMES THAT HAD A UNIQUE ECONOMIC S
Slide 85: Acreage Data and Gross Margin Data
ACREAGE DATA $528,000 $577,000 $578, $591,000 2015 2018 2017 P Acres Sold Pulte Sale —®=Price Per Acre GROSS MARGIN DATA 1) 2016 ACREAGE PRICING OF $578,000 EXCLUDES A 116.8 ACRE SALE TO PULTE HOMES THATHAD A UNIQUE ECONOMIC STRUCTURE. AVERAGE PRICE PER ACRE INCLUSIVE OF THE SALE TO PULTE HOMES WAS
Slide 86: The Summit
The Summit 77 Lots Sold $247M Revenue
Slide 87: Summerlin Commercial Land: Operating Assets (owned)
Commercial Land Summerlin: SQUARE FOOTAGE Operating Assets (owned) 1.7M SF RETAIL OFFICE NET OPERATING INCOME (ANNUALIZED Q1 2017) Current NOI $26.1M Future NOI (at stabilization) $15.3M Total NOI (at stabilization) $41.4M Wtd. Avg. Stablization date 2018 MULTIFAMILY 8% 69% 23%
Slide 88: Summerlin Commercial Land: Operating Assets (owned)
Commercial Land Summerlin: Operating Assets (owned) Retail Office Multi-Family • 1.2M sf of retail at Downtown Summerlin Includes restaurant, department stores, in-line fashion retail, and grocers Major tenants such as Apple, Crate and Barrel, and Dave and Busters 88% leased • One Summerlin office b
Slide 89: Summerlin Commercial Land: Operating Assets (owned)
Commercial Land Summerlin: Operating Assets (owned) Retail * 1.2M sf of retail at Downtown Summerlin + Includes restaurant, department stores, in-line fashion retail, and grocers + Major tenants such as Apple, Crate and Barrel, and Dave and Busters + 88% leased Office + One Summerlin office building
Slide 90: Downtown Summerlin
Downtown Summerlin
Slide 91: Downtown Summerlin
Downtown Summerlin
Slide 92: Downtown Summerlin
Downtown Summerlin 16M 2016 Visitors $32M NOI at Stabilization +20% Increase in year over year traffic
Slide 93: Commercial Land: Short- and Long-Term Opportunities
20-25 years • To be completed within 10 years SUMMERLIN WEST APPROX 175 ACRES REMAINING Commercial Land: Short-and Long-Term Opportunities SHORT-TERM IDENTIFIED PARCELS• 1.4M sf of office LONG-TERM OPPORTUNITIES • 600+ acres, excluding land • 100K sf of retail for schools 5.0+M SF• 4K multifamily un
Slide 94: Summerlin - Top
Summerlin - Top 4 Future Development The Summit Downtown Summerlin
Slide 95: Summerlin - Dominate the market
Summerlin - Top 4 Dominate the market Future Development The Summit Downtown Summerlin
Slide 96: Land constrained with barriers to entry
Summerlin - Top 4 Dominate the market Land constrained with barriers to entry Future Development The Summit Downtown Summerlin
Slide 97: Abundant commercial entitlements
Summerlin - Top 4 Dominate the market Land constrained with barriers to entry entitlements Abundant commercial Future Development The Summit Downtown Summerlin
Slide 98: Remaining residential land = most valuable
Summerlin - Top 4 Dominate the market Land constrained with Abundant commercial barriers to entry entitlements Remaining residential land = most valuable Future Development The Summit Downtown Summerlin
Slide 99: Remaining residential land = most valuable
Summerlin - Top 4 Dominate the market Land constrained with Abundant commercial barriers to entry entitlements Remaining residential land = most valuable Future Development The Summit Downtown Summerlin
Slide 100: Discover Downtown Columbia Maryland
Discover Downtown Maryland Greg Fitchitt Columbia
Slide 101: Downtown Columbia: Perfectly Positioned
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Slide 102: Columbia, MD ranked #1 Best Places to Live
Columbia, MD ranked #1 in Money magazine’s “Best Places to Live” in 2016 HOWARD COUNTY FACTS 287,000 Population 60% Adults w/ College Degrees 40 QSSI 2.7% Unemployment $110,000 Median Household Income 7083 70 ELLICOTT CITY695 HOWARD COUNTY95 DOWNTOWN IMPAQ COLUMBIA895 WR GRACE TENABLE100 JOHNS HOPKI
Slide 103: JOHNS HOPKINS APL@® x BWI
287,000 60% 2.7% JOHNS HOPKINS APL@® x BWI $110,000 @ FORT MEADE / NSA
Slide 104: (Ld ale
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Slide 105: [LOGO]
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Slide 107: Downtown Columbia Master Plan
Downtown Columbia Master Plan 5,500 New Residential Units 4.3M SF Commercial Office Space 1.3M SF Retail 640 Hotel Rooms
Slide 108: Columbia: Operating Assets (owned)
Commercial Land Columbia: Operating Assets (owned) SQUARE FOOTAGE Retail 5% Mul1family 21% 1.7M SF Office 74% NET OPERATING INCOME (2016) Current NOI $19.4M Total NOI (at stabilization) $32.9M Future NOI (at stabilization) $13.5M Wtd. Avg. Stablization date 2018
Slide 109: Columbia: Operating Assets (owned)
Commercial Land Columbia: Operating Assets (owned) Office Multi-Family Retail • • 12 class-A/B office buildings Major tenants: MedStar Health, Enterprise Business Partners, GP Strategies, QSSI, & Harkins Builders 90% stabilized occupancy • • 1 multifamily asset 380 units ranging from 646sf – 1,486sf
Slide 110: Columbia: Operating Assets (owned)
Commercial Land Columbia: Operating Assets (owned) Office * 12 class-A/B office buildings * Major tenants; MedStar Health, Enterprise Business Partners, GP Strategies, QSSI, & Harkins Builders + 90% stabilized occupancy Multi-Family + 1 multifamily asset + 380 units ranging from 646sf — 1,486sf 92%
Slide 111: Multi-Family
Multi-Family
Slide 112: Retail
Retail
Slide 113: Lakefront - Initial Redevelopment Area
Lakefront - Initial Redevelopment Area Mall North One American City Building
Slide 114: Commercial Land: Under Development Assets
Commercial Land: Under Development Assets SQUARE FOOTAGE 543K SF 76% MULTI-FAMILY 24% OFFICE NET OPERATING INCOME (AT STABILIZATION) Office Multi-Family $7.6M $4.0M MULTI-FAMILY $3.6M OFFICE • • • • 1 class-A office building Major tenant: Pearson Education 58% pre-leased Includes close to 30k sf of
Slide 115: Commercial Land: Under Development Assets
Commercial Land: Under Development Assets
Slide 116: -.. • I \ • "',--.'.,_,_-"' "' - - ":--.'.-..,..-,.-.., .-- -.,". -_--ll-i ·.-..
-.. • I \ • "',--.'.,_,_-"' "' - - ":--.'.-..,..-,.-.., .-- -.,". -_--ll-i ·.-.. ...: --... •' ' ..
Slide 117: Commercial Land: Under Development Assets
Commercial Land: Under Development Assets
Slide 118: Commercial Land: Short-Term Opportunities
Commercial Land: Short-Term Opportunities FULL BUILDOUT 1.5 MM SF OFFICE 2,300 RESIDENTIAL UNITS 315K SF STREET RETAIL 250 HOTEL ROOMS 4.9M SQ FT TOTAL DEVELOPMENT
Slide 119: Commercial Land: Short-Term Opportunities
Commercial Land: Short-Term Opportunities FULL BUILDOUT 1.5 MM SF OFFICE 2,300 RESIDENTIAL UNITS #\ 315K SF STREET RETAIL 250 HOTEL ROOMS 49M SQFT TOTAL DEVELOPMENT
Slide 120: Merriweather District
Merriweather District
Slide 121: Merriweather District
Merriweather District
Slide 122: Discover Ward Village Honolulu
Discover Ward Village Honolulu Nicholas D. Vanderboom
Slide 123: Ward Village location
Ko‘olau Mountains Ala Moana Beach Park Ala Moana Shopping Center Waikiki Diamond Head Kewalo Harbor
Slide 124: [LOGO]
[LOGO]
Slide 125: Architects
James Cheng Bohlin Cywinski Jackson Richard Meier & Partners
Slide 126: Artists
teamLab Zhan Wang Yayoi Kusama Tony Cragg
Slide 127: [LOGO]
[LOGO]
Slide 128: ---
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Slide 129: Unmatched Walkable Amenities
Unmatched Walkable Amenities World Class Architecture Curated Public Art Four Acre Central Plaza Master Planned by Howard Hughes These features will continue to deliver pricing premiums and dominant market share for the condos we develop.
Slide 130: Ward Village location
Ko‘olau Mountains Ala Moana Beach Park Ala Moana Shopping Center Waikiki Diamond Head Kewalo Harbor
Slide 131: Honolulu visitors 2016
Ko‘olau Mountains Ala Moana Beach Park Ala Moana Shopping Center Waikiki Diamond Head 8.8M Visitors 2016 Kewalo Harbor
Slide 132: Honolulu unemployment rate
Ko‘olau Mountains Ala Moana Beach Park Ala Moana Shopping Center Waikiki Diamond Head 8.8M Visitors 2016 2.4% Unemployment Rate Kewalo Harbor
Slide 133: Projected median home price
Ko‘olau Mountains Ala Moana Beach Park Ala Moana Shopping Center Waikiki Diamond Head 8.8M Visitors 2016 2.4% Unemployment Rate +15% Projected Median Home Price 2017-2019 Kewalo Harbor
Slide 134: Oahu Historical Median Sales Prices
Oahu Historical Median Sales Prices {1986 - 2016) $750,000 $650,000 $325,000 til $550,000 a.. c ·c a.. $275,000 c '"0' til .!!! "0 til Averace AnnualAporeciat!on Slnsle Family: Condos: 5.0% 4. 9% $450,000 E ·e $225,000 ·:c::J: ·e u"..' til QO $350,000 0 "0 c 0 $175,000 u $250,000 $125,000 $150,000 $
Slide 135: Oahu Housing Supply / Demand Imbalance
Oahu Housing Supply / Demand Imbalance 2008 - 2014 Oahu home deliveries lowest since World War II. 3,500 new units per year needed to keep pace with population growth. This does not account for offshore demand from the mainland US and Asia.
Slide 136: Development Barriers to Entry
Development Barriers to Entry
Slide 137: Development Barriers to Entry: Land Control
Development Barriers to Entry Land Control
Slide 138: Development Barriers to Entry: Entitlements
Development Barriers to Entry Land Control Entitlements
Slide 139: Development Barriers to Entry: Construction Cost
Development Barriers to Entry Land Control Entitlements Construction Cost
Slide 140: Development Barriers to Entry: Access to Capital
Development Barriers to Entry Land Control Entitlements Construction Cost Access to Capital
Slide 141: Development Barriers to Entry: In-Place NOI
Development Barriers to Entry Land Control Entitlements Construction Cost Access to Capital In-Place NOI
Slide 142: Development Barriers to Entry
Development Barriers to Entry Land Control Entitlements Construction Cost Access to Capital In-Place NOI
Slide 143: Future Transformation
Future Transformation
Slide 144: Ward Village Lifestyle and Amenities
Ward Village Lifestyle and Amenities NOBU HONOLULU WHOLE FOODS MARKET
Slide 145: Nobu Honolulu, Whole Foods Market
NOBU HONOLULU WHOLE FOODS MARKET ae ty? = : Te | SSS So
Slide 146: Attracting Global Media
Attracting Global Media
Slide 147: Mixed-Use Projects
Mixed-Use Projects COMPLETEDUNDER CONSTRUCTIONIN-DEVELOPMENT Waiea Anaha Ae‘o Ke Kilohana Gateway Cylinder A‘ali‘i Available price range Available price range Available price range Available price range Available price range Available price range $4.4M - $36M $2.9M - $14M $800K – $2M $845K - $918K $
Slide 148: Sales Status
Sales Status UNITS SOLD AND CLOSED WITH TOTAL SALES OF 30% 4,000+ UNITS ENTITLED Unit Sales Status 3% PROCEEDS OF $551M 8% 67% 993 UNITS PRE-SOLD WITH Closed OF $955M For Sale AVERAGE MARGIN ON 149 22% EXPEC Pre-Sold Future TED TOTAL PROCEEDS
Slide 149: Master Plan Status
COMPLETED COMPLETED Master Plan Status COMPLETED
Slide 150: Master Plan Status
UNDER CONSTRUCTION 2019 UNDER CONSTRUCTION 2018 UNDER CONSTRUCTION 2017 COMPLETED COMPLETED Master Plan Status COMPLETED
Slide 151: Master Plan Status
UNDER CONSTRUCTION 2019 IN DEVELOPMENT 2020 UNDER CONSTRUCTION 2018 2019 UNDER CONSTRUCTION 2017 COMPLETED COMPLETED Master Plan Status 2023 2022 COMPLETED IN DEVELOPMENT
Slide 152: Master Plan Status
UNDER CONSTRUCTION 2019 2022 IN DEVELOPMENT 2020 UNDER CONSTRUCTION 2018 2025 2023 2019 UNDER CONSTRUCTION 2017 COMPLETED 2021 COMPLETED 2025 2024 Master Plan Status 2023 2022 2027 2026 COMPLETED 2024 IN DEVELOPMENT 2025
Slide 153: Operating Assets: Product Mix Transformation
Operating Assets: Product Mix Transformation 2017 2027 CURRENT PRODUCT BREAKDOWN FUTURE PRODUCT BREAKDOWN % OF NOI % OF NOI Office 8% Industrial 35% Office 7% Retail 93% Retail 57% $22M $50M - $100M With approximately one million square feet at completion we expect to achieve average net rents betwe
Slide 154: Distinct value propositions and strategic advantages
Ae ‘o Gateway Ke Kilohana Waiea Anaha Distinct value propositions deliver condo Strategic advantages overcome pricing premiums and dominant market share barriers to entry that slow competition Unmatched Walkable Amenities World Class Architecture Curated Public Art Collection 4 Acre Central Plaza Ma
Slide 155: Unmatched Walkable Amenities and Barriers to Entry
Unmatched Walkable Amenities World Class Architecture Curated Public Art Collection 4 Acre Central Plaza Master Planned By Howard Hughes Land Control Entitlements Construction Cost Capital In-Place NOI
Slide 156: te BON
te BON ‘2, Soe & >» a o . A " “ " N 4 re
Slide 157: Building Blocks of NAV
Building Blocks of NAV Current Land & Operating Assets Value Undiscounted/Uninflated MPC Valuation Value of Operating Assets (NOI/Cap Rate – Cost to Complete) Net Debt
Slide 158: Building Blocks of NAV
Building Blocks of NAV Current Land & Operating Assets Value Strategic Developments In-Process Seaport District Ward Village Undiscounted/Uninflated MPC Valuation Value of Operating Assets (NOI/Cap Rate – Cost to Complete) Net Debt
Slide 159: Building Blocks of NAV
Building Blocks of NAV Current Land & Operating Assets Value Strategic Developments In-Process Potential Development Opportunites Over Time Book Value of “Option Assets” MPC Development Outlined Today Seaport District Ward Village Undiscounted/Uninflated MPC Valuation Value of Operating Assets (NOI/
Slide 160: Building Blocks of NAV
Building Blocks of NAV Undiscounted/Uninflated MPC Valuation + Value of Operating Assets (NovCap Rate - Cost to Complete) Net Debt + Seaport District + Ward Village + Book Value of “Option Assets” + MPC Development Outlined Today Current Land & Operating Assets Value Strategic Developments In-Proces
Slide 161: [LOGO]
[LOGO]
Slide 162: Appendix
Appendix
Slide 163: Financial Reconciliation
Financial Reconciliation NOTES: 1) Residential pricing: average 2016 acreage pricing for Bridgeland, Summerlin and The Woodlands. Summerlin average pricing excludes the sale of approximately 117 acres to Pulte with an atypical economic structure. Pro forma acreage pricing for The Woodlands Hills. 2)
Slide 164: Financial Reconciliation
Financial Reconciliation Reconciliation of Non-GAAP NOI to GAAP EBT For the three months ended March 3 Total Operating Assets NOI-Consolidated $40,577 Straightline lease amortization 1961 121 Early extinguishment of debt Demolition costs (65) et arketing costs 418) 256) for impairment and Amortizati