Financial Data and Key Metrics Changes - For Q2 2025, adjusted operating cash flow was $91 million or $1.64 per diluted share, reflecting strong performance across business segments [6][7] - The company raised its full-year guidance for adjusted operating cash flow to a range of $385 million to $435 million, with a midpoint of approximately $410 million, an increase of $60 million at the midpoint compared to previous guidance [14][16] - The company reported a quarterly net operating income (NOI) of $69 million, representing a 5% year-over-year increase [9][10] Business Line Data and Key Metrics Changes - The master planned communities (MPC) segment delivered an earnings before tax (EBT) of $102 million, driven by land sales at a record average price per acre of $1.35 million, a 29% increase over the previous year [7][8] - The operating assets segment achieved a record quarterly NOI across office and multifamily properties, with a 5% year-over-year growth [7][10] - The multifamily portfolio delivered a record NOI of $17 million, a 19% increase year-over-year [10][11] Market Data and Key Metrics Changes - Home sales in the MPCs totaled 487 homes sold in Q2, a decline from the previous year due to reduced inventory and regulatory delays, but expected to rebound in the second half of the year [8][9] - The national housing market showed signs of softening, yet the company’s record price per acre indicates strong demand and desirability for its MPCs [8][9] Company Strategy and Development Direction - The company aims to transform from a pure play real estate company to a diversified holding company, with a focus on acquiring an insurance operation to enhance cash generation and investment returns [5][21] - The strategic direction includes maintaining a conservative leverage approach in the insurance business, similar to Berkshire Hathaway's model [21][26] - The company plans to leverage its real estate operations to support the growth of the insurance segment, aiming for a diversified holding company structure [22][79] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of home sales within its communities despite broader market challenges, attributing this to the quality of its assets and amenities [39][41] - The company anticipates continued strength in land sales and homebuilder demand, projecting record residential land sales for the full year 2025 [9][43] - Management emphasized a cautious yet optimistic outlook for the insurance acquisition strategy, with expectations for it to become a significant part of the business in the near term [48][49] Other Important Information - The company has approximately $1.4 billion in cash and $515 million in undrawn lines of credit, providing strong liquidity for future investments [17][18] - The company successfully reduced near-term maturities and extended financing for key properties, enhancing its financial stability [18][19] Q&A Session Summary Question: Insights on MPC business amidst market challenges - Management noted strong home sales resilience due to the quality of assets and amenities, with a diverse range of price points attracting various buyers [36][39] Question: Thoughts on building versus acquiring an insurance entity - Management indicated a preference for acquiring an existing insurance operation to leverage established management and operations, rather than starting from scratch [44][46] Question: Expectations for earnings contribution from insurance versus stock portfolio - Management highlighted that the investment aspect of the insurance operation could significantly contribute to overall profitability, similar to Berkshire Hathaway's model [49][50] Question: Clarification on leverage and potential deal sizes for insurance acquisition - Management stated that they aim to maintain appropriate leverage and control over any acquired insurance operation, with potential deal sizes in the range of $1 billion to $3 billion [56][62] Question: Changes made within the organization post-acquisition - Management confirmed no significant changes to the real estate operations but emphasized G&A savings through centralization and efficiency improvements [65][70]

Strategic Transaction & Company Overview - Pershing Square invested $900 million in HHH, purchasing 9 million newly issued shares at $100 per share, representing a 48% premium[12] - Pershing Square's beneficial ownership increased to approximately 469%, with voting power capped at 40% and beneficial ownership limited to 47%[12] - Howard Hughes is transforming into a diversified holding company seeking controlling stakes in high-quality, durable growth companies while continuing to invest and grow the core real estate development business[12] - Howard Hughes has 34,000 acres of raw land[16] Financial Performance - The company's 2024 Master Planned Communities (MPC) Earnings Before Tax (EBT) was $349 million[18] - The company's 2024 Adjusted Condo Gross Profit was $211 million[20] - The company's 2024 Operating Assets Net Operating Income (NOI) was $257 million[23] - The company's Adjusted Operating Cash Flow for 2025 is projected to be $410 million[42] Operating Assets - Operating Assets In-Place NOI is $265 million with $353 million expected at stabilization[100]

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 Viewpoint - Bill Ackman has successfully negotiated a deal with Howard Hughes Holdings to create a diversified holding company, akin to a modern-day Berkshire Hathaway, with a significant investment from Pershing Square [1][10]. Investment Details - Pershing Square will invest $900 million in newly created shares, purchasing 9 million shares at a price of $100 each, resulting in a 46.9% stake in Howard Hughes [3][4]. - The investment will enable the company to build a portfolio of controlling stakes in high-quality public and private operating companies while continuing to grow its core real estate business [4]. Management Structure - Ackman will assume the role of executive chairman, while the current leadership team, including CEO David O'Reilly, will remain in place [5]. - A new position of chief investment officer will be created, to be filled by Pershing Square's CIO, Ryan Israel [5]. Fee Structure Changes - The management fee structure has been revised to a base fee of $3.75 million paid quarterly, approximately 0.4% of the current market cap annually, which aligns management incentives with shareholder success [6][7][8]. - Additionally, a quarterly management fee of 0.375% will be applied only to any increase in the company's market cap above a threshold of approximately $3.9 billion, adjusted for inflation [7]. Future Prospects - Ackman indicated that acquiring or building an insurance company may be part of the business strategy, similar to Berkshire Hathaway's model [11]. - The transaction does not require further shareholder approvals and was finalized on May 5, following the board's approval [11].

Core Viewpoint - Pershing Square is investing $900 million in Howard Hughes Holdings Inc. (HHH) to support its strategic expansion into a diversified holding company, acquiring controlling interests in high-quality public and private companies while continuing its core real estate development business [2][9]. Investment Details - Pershing Square will acquire 9,000,000 newly issued shares of HHH at $100.00 per share, representing a 48% premium to HHH's closing price on May 2, 2025 [3][9]. - Following the investment, Pershing Square will own 46.9% of HHH shares outstanding, with an agreement to limit its voting power to 40% and beneficial ownership to 47% [3][6]. Leadership Changes - Bill Ackman, Chairman and CEO of Pershing Square, has been appointed as the Executive Chairman of HHH's Board of Directors, while Ryan Israel will take on the role of Chief Investment Officer at HHH [4][9]. - The existing leadership team at HHH, led by CEO David O'Reilly, will remain unchanged but will have expanded roles and responsibilities [4][11]. Strategic Support - The entire Pershing Square organization will provide HHH with investment, advisory, and ancillary services, including corporate development and capital markets assistance [5][9]. - HHH will continue to develop its core Master Planned Communities and other strategic developments, maintaining its position as a leading community builder [10][11]. Financial Arrangements - HHH will pay Pershing Square a quarterly base fee of $3.75 million and a management fee based on the increase in HHH's equity market capitalization above a predetermined reference market cap [7][8]. - The reference market cap is calculated using a post-transaction share count of 59,393,938 and a reference market price of $66.1453, adjusted annually for inflation [7]. Governance Structure - The transaction was approved by HHH's Special Committee, composed entirely of independent directors, and will result in a board with a majority of independent directors [12][13]. - Pershing Square has the right to nominate three directors as long as it holds at least 17.5% of HHH's fully diluted shares [13].