Howard Hughes (HHH) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net loss of $26.2 million or $0.50 per diluted share for the year ended December 31, 2020, compared to a net income of $74 million or $1.71 per diluted share in 2019 [67] - For Q4 2020, the net loss was $6.6 million or $0.12 per diluted share, compared to a net loss of $1.1 million or $0.03 per diluted share for the same period in 2019 [67] - The year-over-year decline in earnings was largely due to the impact of COVID-19 across various business segments, along with significantly lower condo sales revenue recognized in 2020 [68] Business Line Data and Key Metrics Changes - The Master-Planned Communities (MPC) segment achieved earnings before tax (EBT) of $209 million, exceeding pre-COVID expectations of $180 million to $200 million [13][46] - New home sales increased by 10% over 2019, with a total of 2,724 new homes sold in 2020 [14] - Operating asset net operating income (NOI) was $190 million, an 11% decline compared to 2019, primarily due to the impact of COVID-19 on retail, hospitality, and ballpark assets [50] Market Data and Key Metrics Changes - Retail collections improved to 73% in Q4 2020 from 66% in Q3 2020, showing signs of recovery as local economies reopened [17][55] - The price per acre of residential land in Summerlin increased by 17% to $272,000 in 2020 compared to 2019 [47] - Bridgeland saw new home sales rise by 18% in 2020, with a price per acre increase of 8% to $439,000 [48] Company Strategy and Development Direction - The company plans to launch 2 million square feet of new developments in 2021, focusing on areas with strong demand [72] - Aalii, a new condo tower at Ward Village, is expected to generate $100 million to $125 million in net profit upon completion [65] - The company is committed to maximizing the value of its master-planned communities and will only develop new projects when underlying demand dictates [41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for continuous improvement in retail and hospitality assets in 2021, anticipating a return to a full Minor League Baseball season [18] - The company expects MPC EBT to remain in the range of $180 million to $200 million for 2021, consistent with previous guidance [63] - Management highlighted the resilience of their business model and the strong demand for homes in their communities, driven by trends such as remote work [81] Other Important Information - The company completed a bond offering of $1.3 billion to strengthen its balance sheet and extend its debt maturity profile [70][71] - The company ended 2020 with $1 billion in cash and strong liquidity, positioning it well for future growth [71] Q&A Session Summary Question: What drove the 35% increase in saleable residential acres at Bridgeland in Q4 2020? - Management noted that the increase was due to refining the master plan at Bridgeland, allowing for more detailed neighborhood openings in 2021 and 2022 [74] Question: What caused the 25% decline in other operating rent collections in Q4 versus Q3? - Management attributed the decline to timing differences related to specific properties, expecting normalization in Q1 2021 [76] Question: Will there be gains recognized from condo towers in Hawaii this year? - Management expects to recognize between $100 million and $125 million in net profitability from the completion of Aalii and other sales [78] Question: Are there plans to buy back shares after dilution due to COVID? - Management is evaluating capital allocation decisions, including potential share repurchases, depending on market conditions [79] Question: What is the outlook for Downtown Columbia's development? - Management expressed excitement about the progress in Downtown Columbia, highlighting its strong performance during the pandemic [80] Question: How is the company capitalizing on the demand for real estate in states like Texas and Florida? - Management emphasized that increased home sales lead to more land sales to homebuilders, driving further development in their communities [83]