Howard Hughes (NYSE:HHH) Q4 2025 Earnings call February 20, 2026 10:00 AM ET Speaker7Good day, and thank you for standing by. Welcome to the Howard Hughes Holdings fourth quarter 2025 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your qu ...

Core Insights - Apartment supply in the Sun Belt negatively impacted MAA in Q4 2025, with same-store revenues declining by 0.1% year over year and net operating income decreasing by 0.5% during the period [1] Market Conditions - Approximately two-thirds of MAA's competitors are providing concessions, averaging around five weeks, which increases to eight to ten weeks for lease-ups [2] - Despite broader economic concerns, MAA executives anticipate a recovery in demand for their region, indicating optimism for the upcoming year [3] Financial Performance - Rent-to-income ratios have improved, making rents more affordable, with new apartment deliveries sharply declining by over 60% in 2026 compared to peak levels [4] - MAA expects the creation of 340,000 to 350,000 jobs in its markets this year, while apartment completions are projected to be about half that number, indicating an improving job-to-completion ratio [4] Regional Performance - Richmond, Virginia; Kansas City, Missouri; and Greenville, South Carolina showed strong performance in Q4, with same-store revenue rates increasing by 4.2%, 3%, and 2.9% year over year, respectively [6] - MAA's mid-tier markets, particularly in Virginia and South Carolina, are outperforming the overall portfolio, with strong pricing power and occupancy rates [6] - Atlanta and Dallas, MAA's two largest markets, are also showing steady progress in pricing and occupancy, with significant year-over-year improvements in Q4 [6]

Core Viewpoint - Merko Ehitus reported a significant decrease in revenue and net profit for 2025 compared to 2024, but proposed a dividend payment reflecting a solid financial position despite the downturn in construction activity [1][9][14]. Financial Performance - In Q4 2025, Merko Ehitus generated revenue of EUR 69 million and a net profit of EUR 3.2 million, while the full year revenue was EUR 311 million and net profit was EUR 39.9 million, marking a 42.3% decrease in annual revenue compared to 2024 [1][10][9]. - The pre-tax profit for 2025 was EUR 44.8 million, with a pre-tax profit margin of 14.4%, slightly up from 14.2% in 2024 [8]. - The net profit margin for 2025 was 12.8%, compared to 12.0% in 2024 [9]. Order Book and Contracts - As of December 31, 2025, the secured order book stood at EUR 466.9 million, an increase from EUR 340.6 million in 2024, with new contracts signed amounting to EUR 362.8 million for the year [11][4]. - In 2025, Merko signed new construction contracts worth EUR 363 million, including significant projects like the Rail Baltica Ülemiste passenger terminal and the Tallinn–Pärnu main line [4][3]. Real Estate Development - The residential real estate market showed improvement, with Merko delivering 358 apartments in 2025, up from 323 in 2024, and launching construction of 894 apartments, a threefold increase compared to the previous year [6][12]. - The revenue from the sale of developed apartments was EUR 67.8 million in 2025, compared to EUR 58.9 million in 2024 [12]. Cash Position and Equity - At the end of 2025, Merko had EUR 41.4 million in cash and cash equivalents, with total equity of EUR 260.6 million, representing 62.8% of total assets [13][17]. - The company's net debt was negative EUR 8.3 million, indicating a strong financial position [13]. Dividend Proposal - The management board proposed a dividend distribution of EUR 22.1 million, equating to EUR 1.25 per share, which reflects a 55% dividend rate for 2025 [14].

Group 1 - In 2025, apartment entity-level deals saw a significant decline of 96% to $354 million compared to 2024, while individual asset sales increased by 20% to $136.8 billion, indicating a shift in investor behavior [3][4] - Mid- and high-rise trades rose by 7% year-over-year to $69.6 billion in 2025, and garden property transactions increased by 11% year-over-year to $95.8 billion, reflecting a positive trend in specific market segments [4] - Despite rising vacancy rates and falling rents, investors are looking beyond current challenges to future income growth, often seeking properties at discounted prices [5] Group 2 - Heitman announced the successful closing of its largest closed-end fund, Heitman Value Partners Fund VI, with commitments totaling $2 billion, surpassing its target of $1.75 billion [6] - Heitman expressed confidence in the near-term growth prospects for apartments, noting that most markets have moved past peak deliveries [7] - Overall apartment sales volume increased by 9% year-over-year to $165.5 billion in 2025, with growth across all subtypes and metro tiers, despite a challenging comparison to the previous year's high-profile transactions [8] Group 3 - Prices for multifamily properties fell by 1.3% year-over-year in 2025, a moderation from the 3% decline in 2024, while cap rates have remained stable at 5.7% for the past eight quarters [8]

Core Insights - Mid-America Apartment Communities, Inc. (NYSE:MAA) is recognized as one of the 15 Best High Yield Stocks to Buy [1] - Barclays has raised its price target for MAA to $144 from $142 while maintaining an Equal Weight rating, indicating a neutral outlook for the REIT sector in 2026 [2] - The company focuses on improving existing properties rather than selling older buildings, having renovated 5,665 apartments in 2024, resulting in a 7.3% increase in average rent for upgraded units [3] Company Strategy - MAA's strategy of renovating existing properties helps preserve a limited supply of quality apartments and enhances the value of each unit without incurring high transaction costs [4] - The company has maintained its dividend payouts since its introduction in 1994, reflecting a steady approach to shareholder returns [4] - MAA operates as a multifamily-focused REIT that is fully self-managed and self-administered, concentrating on owning and operating apartment communities [5]

Market Overview - Apartment values have increased, with Real Capital Analytics reporting a 0.5% year-over-year rise in commercial property price indexes for multifamily properties, and an annualized increase of 3.6% from September [3] - Cap rates have decreased by 10 basis points over the past year, averaging 5.5% in October [3] Transaction Insights - Camden Property Trust's CEO noted that cap rates for Class A assets are stabilizing between 4.5% to 5%, while Class B assets range from 5% to 5.5% [4] - The transaction market for 2025 is expected to be similar to 2024, with fluctuations observed in sales volume, which increased in Q3 but fell in October [4] - The overall sales volume for apartment transactions fell by 28% year-over-year to $10.2 billion in October, with individual asset sales down 22% year-over-year [8] Sales Activity - Total individual asset trades over the 12 months ending in October reached $131.4 billion, indicating a return to pre-COVID-19 levels, as the average from 2015 to 2019 was $126.4 billion per year [8] - Portfolio activity saw a significant decline of 54% year-over-year to $1.3 billion, contributing to the overall decrease in sales [8] - Mid- and high-rise trades fell by 32% year-over-year to $4 billion in October, while garden property transactions decreased by 25% year-over-year to $6.3 billion [8]

Core Insights - Uncertainty regarding job stability is negatively impacting demand for apartments, coinciding with a period of cooling asking rents [1] Group 1: Job Market Impact - The current job market uncertainty is leading to decreased consumer confidence, which in turn affects the demand for rental apartments [1] - As job security becomes a concern, potential renters are hesitant to commit to new leases, further dampening demand [1] Group 2: Rental Market Trends - Asking rents have shown signs of cooling, indicating a shift in the rental market dynamics [1] - The combination of job market uncertainty and cooling rents suggests a potential slowdown in the rental market's recovery [1]

Core Insights - The Estonian real estate market showed stable and moderately recovering activity in Q3 2025, with transaction levels comparable to the previous quarter and a slight upward trend in average prices per square meter, particularly in Tallinn [2][3] - Arco Vara successfully completed its first public bond offering, which was oversubscribed more than twofold, marking the largest single bond issue among Baltic real estate developers [4] - The company initiated a strategic exit from the Bulgarian market to focus on development projects in Estonia, enhancing operational efficiency and value creation [11] Market Overview - The Estonian real estate market is influenced by high interest rates and buyer caution, but improved confidence and stabilized economic expectations have supported steady demand [3] - The market appears to have reached a phase of balance, with both prices and transaction volumes stabilizing after previous fluctuations [3] Company Developments - Arco Vara's bond issue aims to finance the Luther Quarter project, transforming a historic industrial area into a modern urban environment [5] - The company is focused on creating a "city within a city" in the Luther Quarter, integrating residential, commercial, and public spaces [6] - Ongoing developments include Rannakalda, Soodi 6, and Spordi, with significant sales activity and construction progress reported [7][8][9] Financial Performance - For the first nine months of 2025, Arco Vara reported sales revenue of EUR 5,624 thousand, an increase of EUR 1,537 thousand compared to the same period in 2024 [15] - The company achieved an operating profit of EUR 622 thousand and a net profit of EUR 214 thousand, a significant turnaround from the losses reported in the previous year [15][19] - As of September 30, 2025, total assets had more than doubled compared to the previous year, primarily due to new development project acquisitions [17] Sales and Inventory - In Q3 2025, Arco Vara sold a total of 25 apartments, with a total of 35 apartments sold in the first nine months of the year, showing a strong increase compared to the same period in 2024 [16] - The inventory as of September 30, 2025, included 12 completed apartments, down from 37 completed apartments a year earlier [17] Strategic Focus - The main objectives for Q4 2025 include active sales efforts, completing the sale of remaining units in ongoing projects, and preparing for the presale of the Luther development [13] - The approval of the detailed spatial plan for the Arcojärve development is expected to lay the groundwork for further investments in inner-city projects [10]

Core Insights - Merko Ehitus reported a revenue of EUR 74 million in Q3 2025 and EUR 242 million for the first nine months, with a net profit of EUR 15 million for Q3 and EUR 36.7 million for the nine-month period, indicating a significant increase in the number of apartments and commercial premises handed over compared to the previous year [1][2][3] Financial Performance - The pre-tax profit for the first nine months of 2025 was EUR 40.2 million, with a pre-tax profit margin of 16.6%, an increase from 13.1% in the same period of 2024 [10] - Net profit attributable to shareholders for the first nine months of 2025 was EUR 36.7 million, down from EUR 44.8 million in 2024, with a net profit margin of 15.2% compared to 11.8% in the previous year [10][11] Revenue Analysis - Revenue for Q3 2025 was EUR 73.9 million, a decrease from EUR 175.1 million in Q3 2024, while the nine-month revenue decreased by 36.1% year-on-year [11] - The share of revenue earned outside Estonia was 47.4% for the first nine months of 2025, down from 60.1% in the same period of 2024 [11] Order Book and Contracts - As of September 30, 2025, the secured order book stood at EUR 486 million, an increase from EUR 430.9 million in 2024, with new contracts signed amounting to EUR 323 million in the first nine months [12] - Major contracts included the Rail Baltica Ülemiste terminal and the Rail Baltica mainline section, indicating a focus on large-scale infrastructure projects [6][12] Real Estate Development - In the first nine months of 2025, Merko sold 315 apartments, up from 194 in the same period of 2024, generating EUR 59.7 million in revenue from these sales [13] - The company started construction on 771 new apartments and 21 commercial units, with a significant portion located in Vilnius, which remains the most active market [7][13] Market Conditions - The real estate market is most active in Lithuania, with improved conditions in Estonia and a slight upward trend in Latvia [3] - The construction market is characterized by intense competition and low service margins, with a historical high in unfinished construction work [4] Cash Position - As of September 30, 2025, the company had EUR 34.3 million in cash and cash equivalents, with equity amounting to EUR 257.3 million, representing 64.4% of total assets [14]

Core Insights - AvalonBay reported lower-than-expected results for Q3, primarily due to a decline in Net Operating Income (NOI) [1] - Apartment demand has softened this year, attributed to reduced job growth, lower consumer confidence, and decreased government hiring [2] - The company revised its full-year 2025 Funds From Operations (FFO) outlook down by 1.2% due to declining rental rates and slight occupancy dip [4] Financial Performance - The company underperformed its outlook by five cents, with three cents attributed to same-store portfolio results, including one cent from lower revenue and two cents from higher operating expenses [3] - AvalonBay has $3 billion in projects under construction expected to create value in 2026 and 2027, and is on track to start $1.7 billion worth of development projects this year [5] Market Trends - Development economics are more favorable in suburban submarkets compared to urban areas, although project approvals can be more challenging [6] - Urban areas are encouraging the conversion of outdated offices to multifamily units, potentially leading to quicker supply materialization due to shorter build cycles [7] Regional Performance - Rental rates began to decline below midyear expectations in August, particularly in Denver, Southern California (notably Los Angeles), and the mid-Atlantic region [8] - AvalonBay has been reducing its exposure in lower-performing regions in California and the mid-Atlantic, including recent asset sales in Washington, D.C. [8]