Core Perspective - Berkshire Hathaway has delivered exceptional returns under Warren Buffett's leadership, but its ability to generate outsized returns is limited at its current valuation of over $1 trillion [1] Group 1: Berkshire Hathaway's Historical Performance - An investment of $10,000 in Berkshire Hathaway in 1985 would have grown to nearly $4.1 million today, highlighting the company's long-term success [2] Group 2: Potential Investment Opportunities - Markel Corporation is identified as a potential "early Berkshire Hathaway," with a similar business model and a focus on specialty insurance, which could lead to superior profitability [5][7] - Markel's intrinsic value has increased by nearly 130% over the past five years, while its stock price has risen by less than half that amount, suggesting it may be undervalued [9] - Howard Hughes Holdings, under the influence of Bill Ackman, is exploring a direction to build a conglomerate similar to Berkshire Hathaway, with plans to incorporate an insurance business [10][11] - Kinsale Capital Group focuses on specialty insurance for smaller clients and has demonstrated best-in-class profitability, with a combined ratio of 76.4% in 2024, indicating a nearly 24% underwriting profit [13][15] Group 3: Future Outlook - While it is unlikely that another company will replicate Berkshire Hathaway's extraordinary returns, the conglomerate-building method used by Berkshire can still yield significant returns over time [18][19]

Core Viewpoint - Howard Hughes Corporation has agreed to Bill Ackman's terms for capital injection and business acquisitions, aiming to transform the company into a "modern-day Berkshire Hathaway" [1] Group 1: Company Developments - Bill Ackman has made his third offer to increase his ownership stake in Howard Hughes Holdings [1] - The agreement includes plans for capital injection and the acquisition of businesses [1] Group 2: Investor Insights - Investors should be aware of the final terms of the deal and its implications for the company's future [1]

Group 1 - The individual has extensive experience in the energy industry, having worked for 22 years in various roles including engineering, planning, and financial analysis [1] - The investment strategy focuses on achieving returns that match the S&P 500 with lower volatility and higher income, emphasizing long-term holdings unless compelling reasons to sell arise [1] - The approach to investment is opportunistic, seeking value regardless of asset class, market cap, sector, or yield, with a preference for buying when prices are low relative to intrinsic value [1]

Financial Data and Key Metrics Changes - The company reported adjusted operating cash flow of $63 million, or $1.27 per diluted share, indicating strong momentum in the first quarter [5][6] - Operating assets delivered a new quarterly record of $72 million in NOI, representing a 9% year-over-year growth [6][11] - The full year EBT guidance is set at $375 million, reflecting confidence in continued strong performance [6][19] Business Line Data and Key Metrics Changes - The Master Planned Communities (MPC) segment achieved EBT of $63 million, a significant increase of $39 million or 161% year-over-year, driven by robust land sales [7][8] - Average price per acre reached $991,000 during the first quarter, showing both sequential and year-over-year improvements [8] - New home sales totaled 543 in the first quarter, indicating a sequential improvement despite a year-over-year decline [9][10] Market Data and Key Metrics Changes - Land sales in Texas increased by 31% year-over-year, with strong demand noted in Bridgeland and The Woodlands [8] - The condo pipeline represents $2.7 billion of future revenue expected between 2025 and 2028, with solid presales reported [7][14] Company Strategy and Development Direction - The company is transitioning to a diversified holding company model, aiming to acquire durable growth companies that meet high standards for business quality [26][29] - The focus remains on enhancing the MPC business while also exploring new investment opportunities, including a potential insurance subsidiary [29][50] - The company plans to maintain its long-term view in managing communities and will not divert capital from MPCs to fund other ventures [41][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of MPCs amid a softening national housing market, noting strong demand for new homes [10][60] - The company anticipates that the MPC business will generate excess cash flow over time, which can be reinvested into new projects [58][62] Other Important Information - The company closed on a $200 million credit facility extension and a $20 million construction loan, enhancing liquidity [21][22] - A recent sale of MUD receivables generated approximately $180 million in cash proceeds, providing additional liquidity [23] Q&A Session Summary Question: Timeline for first transactions and deal pipeline - Management indicated that discussions with potential counterparties are in early stages, with expectations for announcements by fall [36][38] Question: Capital allocation between new businesses and traditional real estate - The company plans to maintain its MPC business while also investing in new ventures, with excess cash flow from MPCs expected to support future investments [39][41] Question: Cash flow generation and self-funding capabilities - Management confirmed that cash flow generation is expected to accelerate as MPCs mature, leading to increased free cash flow [58] Question: Allocation of the $900 million cash infusion - The allocation will depend on the nature of new investments, with a focus on high return strategies [62]

Financial Data and Key Metrics Changes - The company reported adjusted operating cash flow of $63 million or $1.27 per diluted share for Q1 2025, indicating strong momentum across segments [5][6] - The operating assets delivered a new quarterly record of $72 million in NOI, reflecting a 9% year-over-year growth [10][11] - The company expects full-year EBT guidance of $375 million, representing a significant increase compared to previous years [6][18] Business Line Data and Key Metrics Changes - The Master Planned Communities (MPC) segment achieved EBT of $63 million in Q1 2025, a 161% increase year-over-year, driven by robust land sales [6][7] - Land sales in Texas increased by 31% year-over-year, with an average price per acre of $991,000 [7][8] - New home sales totaled 543 in Q1 2025, showing sequential improvement despite a decline compared to the previous year's record [8][9] Market Data and Key Metrics Changes - The company noted solid demand for new homes across its MPCs, contrasting with signs of softening in the national housing market [9][60] - The condo pipeline represents $2.7 billion in future revenue expected between 2025 and 2028, indicating strong market demand [6][13] Company Strategy and Development Direction - The company is transitioning to a diversified holding company model, aiming to acquire durable growth companies to enhance shareholder value [26][28] - The focus remains on the MPC business, with plans to continue developing communities that meet long-term demand [39][41] - The company is exploring opportunities in the insurance sector, which is seen as a high priority for future growth [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve its 2025 guidance, citing strong momentum across segments [18][19] - The CEO highlighted the resilience of the MPCs and the quality of life they provide, which supports ongoing demand for new homes [9][60] - The management team is optimistic about the future, expecting significant cash flow generation from matured MPCs [58][52] Other Important Information - The company closed on a $200 million credit facility extension and a $20 million construction loan, enhancing liquidity [20][21] - A recent sale of MUD receivables generated approximately $180 million in cash proceeds, providing additional liquidity [21] Q&A Session Summary Question: Timeline for first transactions and pipeline readiness - The company is in early discussions and expects to have potential transactions announced by fall [31][36] Question: Capital allocation between new businesses and traditional real estate - The MPC business will continue to be prioritized, with excess cash flow expected to be reinvested into new projects over time [39][41] Question: Cash flow generation and self-funding capabilities - The company anticipates that as MPCs mature, free cash flow generation will increase significantly, leading to self-funding capabilities [58] Question: Cash infusion allocation for insurance investment versus other investments - The allocation for the insurance subsidiary is still to be determined, with a focus on high return strategies for new investments [62]

The HHH Opportunity 1Q 2025 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 other statements of similar expression and other words of similar expression, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, a ...

Core Insights - Howard Hughes Holdings (HHH) reported revenue of $199.33 million for Q1 2025, marking a 16.5% year-over-year increase and exceeding the Zacks Consensus Estimate by 6.35% [1] - The company achieved an EPS of $0.21, a significant improvement from -$1.06 a year ago, with an EPS surprise of 61.54% compared to the consensus estimate of $0.13 [1] Revenue Breakdown - Master Planned Community land sales generated $71.64 million, surpassing the average estimate of $59.53 million, reflecting a year-over-year increase of 121% [4] - The Operating Assets Segment reported revenues of $114 million, slightly above the average estimate of $112.18 million, with a year-over-year change of 3.5% [4] - Revenues from the Master Planned Communities Segment reached $84.45 million, exceeding the estimated $75.23 million, representing a 72.8% increase compared to the same quarter last year [4] Stock Performance - Over the past month, shares of Howard Hughes Holdings have returned +8.2%, while the Zacks S&P 500 composite has seen a +10.6% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Group 1: Earnings Performance - Howard Hughes Holdings reported quarterly earnings of $0.21 per share, exceeding the Zacks Consensus Estimate of $0.13 per share, compared to a loss of $1.06 per share a year ago, representing an earnings surprise of 61.54% [1] - The company posted revenues of $199.33 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 6.35%, and showing an increase from year-ago revenues of $171.14 million [2] Group 2: Stock Performance and Outlook - Howard Hughes Holdings shares have declined approximately 10.8% since the beginning of the year, while the S&P 500 has decreased by 4.7% [3] - The current consensus EPS estimate for the upcoming quarter is $0.99 on revenues of $308.75 million, and for the current fiscal year, it is $1.43 on revenues of $1.37 billion [7] Group 3: Industry Context - The Real Estate - Development industry, to which Howard Hughes Holdings belongs, is currently ranked in the bottom 24% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Landsea Homes, another company in the same industry, is expected to report a quarterly loss of $0.08 per share, reflecting a year-over-year change of -233.3%, with revenues projected at $320.15 million, an increase of 8.9% from the previous year [9]

Financial Performance - The company reported a net income from continuing operations of $10.8 million, or $0.21 per diluted share, compared to a loss of $(21.0) million, or $(0.42) per diluted share in the prior-year period[13]. - Net income attributable to common stockholders for the three months ended March 31, 2025, was $10,533,000, a recovery from a loss of $52,477,000 in 2024[29]. - Operating income for the period was $47,930,000, compared to $12,608,000 in 2024, marking a substantial improvement[29]. - The company's interest income (expense), net, for the three months ended March 31, 2025, was $(34,976), compared to $(139,577) for the year ended December 31, 2024[47]. Revenue Growth - Total revenues for the three months ended March 31, 2025, were $199,328,000, an increase of 27% from $156,484,000 in 2024[29]. - Master Planned Communities land sales increased significantly to $71,642,000, up 121% from $32,415,000 in 2024[29]. - Total Operating Assets NOI rose to $71,566 thousand for the three months ended March 31, 2025, compared to $65,575 thousand in 2024, marking an increase of 9.06%[38]. - Operating Assets NOI increased by 6% to $64,018,000 in 2025 from $60,353,000 in 2024[21]. - The company's share of NOI from unconsolidated ventures rose by 45% to $7,548,000 compared to $5,222,000 in the previous year[21]. Asset Management - The company reported a gain on the sale or disposal of real estate and other assets of $13,729,000, compared to $4,794,000 in 2024, reflecting improved asset management[29]. - Total assets increased to $9,289,379 thousand as of March 31, 2025, compared to $9,211,236 thousand as of December 31, 2024, reflecting a growth of 0.85%[31]. - Total liabilities increased to $6,434,319 thousand as of March 31, 2025, compared to $6,369,462 thousand as of December 31, 2024, indicating a rise of 1.02%[31]. Cash Flow and Liquidity - Adjusted Operating Cash Flow for the quarter was $63 million, or $1.27 per diluted share, with a full-year guidance maintained at approximately $350 million, or $7.00 per diluted share[4][19]. - Cash and cash equivalents decreased to $493,657 thousand as of March 31, 2025, down from $596,083 thousand as of December 31, 2024, a decline of 17.25%[31]. - Cash G&A for the three months ended March 31, 2025, was $19,685, down from $22,436 in the previous year, indicating a decrease of about 12.3%[43]. Sales and Backlog - The company contracted to sell 27 condominium units for a total value of $51 million, contributing to a backlog of future condo revenues amounting to $2.7 billion[7]. - New homes sold in HHH's communities totaled 543 units, representing a 6% sequential increase, although a 17% decline compared to the prior-year period[17]. - The average price per acre of residential land sold was approximately $991,000, representing a 65% year-over-year increase, driven by the sale of two superpads in Summerlin[17]. - The company reported a decrease in total condominium rights and unit sales to $342 for the three months ended March 31, 2025, compared to $778,616 for the year ended December 31, 2024[45]. Segment Performance - Master Planned Community (MPC) Earnings Before Tax (EBT) totaled $63 million, marking a 161% increase compared to $24.3 million in the prior-year period, with a full-year guidance target of approximately $375 million[12][16]. - Master Planned Communities segment achieved total revenues of $84,454 thousand for the three months ended March 31, 2025, a significant increase of 72.69% compared to $48,875 thousand in 2024[33]. - The Operating Assets segment EBT improved to $2,270 thousand for the three months ended March 31, 2025, compared to a loss of $2,917 thousand in the same period of 2024, showing a turnaround of $5,187 thousand[33]. - Strategic Developments segment EBT improved to a loss of $1,199 thousand in Q1 2025, compared to a loss of $5,414 thousand in Q1 2024, reflecting a positive change of $4,215 thousand[33].

Financial Performance - Net income from continuing operations increased to $10.8 million in Q1 2025, compared to a loss of $21.0 million in Q1 2024, primarily driven by increased MPC residential land sales[145] - Operating Assets NOI totaled $64.0 million in Q1 2025, a $3.7 million increase from $60.4 million in Q1 2024[145] - MPC EBT reached $63.3 million in Q1 2025, a $39.0 million increase compared to $24.3 million in Q1 2024, due to higher residential land sales at Summerlin[145] - Strategic Developments EBT improved by $4.2 million to a loss of $1.2 million in Q1 2025, compared to a loss of $5.4 million in Q1 2024[145] - Total revenues for Operating Assets were $114.0 million in Q1 2025, compared to $107.0 million in Q1 2024, marking a $7.0 million increase[146] - Rental revenue for Operating Assets increased to $108.4 million in Q1 2025, up from $101.2 million in Q1 2024, reflecting a $7.2 million increase[146] - Gain on sale of real estate increased by $5.2 million due to the sale of two land parcels and a retail space in Ward Village in 2025[149] - Rental revenues, net of operating costs, increased by $5.6 million primarily due to increased leasing activity across the portfolio[149] - MPC Net Contribution increased by $41.6 million to $16.7 million for the three months ended March 31, 2025, compared to a loss of $24.9 million in 2024[164] Construction and Sales Activity - As of March 31, 2025, 95.6% of the units at four towers under construction are under contract[145] - The company contracted 26 units at The Launiu during Q1 2025, with the project being 63.7% pre-sold as of March 31, 2025[145] - The Launiu project, launched in February 2024, has 309 units under contract, representing 63.7% of the total 485 units[175] - As of March 31, 2025, 97.4% of units at The Park Ward Village, Ulana Ward Village, and Kalae under construction are under contract, with 528 out of 545 units contracted for The Park Ward Village[171] - Condominium rights and unit sales revenue surged to $342,000 in Q1 2025 from $23,000 in Q1 2024, marking a $319,000 increase[168] Liquidity and Debt Management - The company maintains a strong liquidity position with $493.7 million in cash and cash equivalents and $1.0 billion of undrawn lender commitments available for property development[145] - The company had $1.0 billion of undrawn lender commitments available for property development as of March 31, 2025[181] - The company had $5.2 billion of outstanding debt and $1.0 billion of undrawn lender commitment available for property development[190] - The company's total contractual cash obligations and commitments amounted to $6.42 billion, with the largest component being mortgages, notes, and loans payable at $5.29 billion[189] - The net debt of the company, defined as total debt minus liquidity sources, was $4.32 billion as of March 31, 2025[192] - The company had $1.5 billion of variable-rate debt outstanding, with $250.1 million swapped to a fixed rate and $917.9 million covered by interest rate cap contracts[195] - Interest payments for the upcoming years are projected to total $1.12 billion, with the highest payment of $231.5 million due in 2026[189] - The company uses derivative instruments to manage interest rate risk, primarily through interest rate swaps, caps, and collars[195] - The company’s liquidity and capital resources could be negatively impacted if financing arrangements for properties are not favorable[189] Operating Performance - Office NOI increased by $2.3 million primarily due to strong leasing activity and abatement expirations at various properties[153] - Multifamily NOI increased by $2.0 million due to continued lease-up at multiple properties[153] - Interest expense increased by $1.3 million primarily due to increased borrowings on construction loans[149] - Strategic Developments segment EBT increased by $4.2 million to $(1.2) million for the three months ended March 31, 2025, compared to $(5.4) million in the prior year[169] - Total revenues for the Strategic Developments segment rose by $261,000, reaching $854,000 for the three months ended March 31, 2025, compared to $593,000 in the same period of 2024[168] Corporate Financials - The corporate income, expenses, and other items totaled $(53.5) million for the three months ended March 31, 2025, an increase of $16.6 million from $(36.9) million in the prior year[179] - Net cash used in operating activities of continuing operations was $(224.9) million for Q1 2025, up from $(156.4) million in Q1 2024, reflecting a $68.5 million increase[184] - Cash provided by financing activities increased to $128.1 million in Q1 2025 from $83.6 million in Q1 2024, a rise of $44.4 million[186] - Equity earnings at The Summit increased by $11.0 million due to higher losses in the prior-year period related to changes in the development model[161]