Howard Hughes Corp - FORM 8-K - EX-99.2

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EX-99.1 - EX-99.1 - Howard Hughes Corp	ex-99d1.htm
8-K - 8-K - Howard Hughes Corp	f8-k.htm

Exhibit 99.2

NYSE: HHC

Supplemental Information

3/31/2017


The Howard Hughes Corporation
13355 Noel Road, 22nd Floor	Phone: 214.741.7744
Dallas, TX 75240	www.howardhughes.com

Cautionary Statements

Forward Looking Statements

This presentation includes forward-looking statements. Forward-looking statements give our current expectations relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to current or historical facts. These statements may include words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,” “project,” “realize,” “should,” “transform,” “would,” and other statements of similar expression. Forward-looking statements should not be relied upon. They give our expectations about the future and are not guarantees. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements to materially differ from any future results, performance and achievements expressed or implied by such forward-looking statements. For a discussion of the risk factors that could have an impact these forward-looking statements, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The statements made herein speak only as of the date of this presentation and we do not undertake to update this information except as required by law. Past performance does not guarantee future results. Performance during time periods shown is limited and may not reflect the performance in different economic and market cycles.

Non-GAAP Financial Measures

We use certain non-GAAP performance measures, in addition to the required GAAP presentations, as we believe these measures improve the understanding of our operational results and makes comparisons of operating results among peer companies more meaningful. Management continually evaluates the usefulness, relevance, limitations, and calculation of the Company’s reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change. The non-GAAP financial measures used in this presentation are funds from operations, or FFO, core funds from operations, or Core FFO, and net operating income, or NOI.

FFO is defined by the National Association of Real Estate Investment Trusts (NAREIT) as net income calculated in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization and impairment charges (which we believe are not indicative of the performance of our operating portfolio). We calculate FFO in accordance with NAREIT’s definition. Since FFO excludes depreciation and amortization and gains and losses from depreciable property dispositions, and impairments, it can provide a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities, and financing costs. This provides a perspective of our financial performance not immediately apparent from net income determined in accordance with GAAP. Core FFO is calculated by adjusting FFO to exclude the impact of certain non-cash and/or nonrecurring income and expense items, as set forth in the calculation herein. These items can vary greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among other factors. We believe that by excluding these items, Core FFO serves as a useful, supplementary measure of the ongoing operating performance of our core operations, and we believe it is used by investors in a similar manner. Core FFO is a non-GAAP and non-standardized measure and may be calculated differently by other peer companies.

We define NOI as operating revenues (rental income, tenant recoveries and other revenue) less operating expenses (real estate taxes, repairs and maintenance, marketing and other property expenses). NOI excludes straight-line rents and amortization of tenant incentives, net interest expense, ground rent amortization, demolition costs, amortization, depreciation, and development-related marketing costs. We also generally include our share of NOI from equity method joint ventures and distributions from cost basis investments herein unless otherwise noted.

While Core FFO, FFO and NOI are relevant and widely used measures of operating performance of real estate companies, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity or operating performance. FFO, Core FFO and NOI do not purport to be indicative of cash available to fund our future cash requirements. Further, our computations of FFO, Core FFO and NOI may not be comparable to FFO, Core FFO and NOI reported by other real estate companies. We have included a reconciliation of NOI, FFO and Core FFO to GAAP net income in this presentation. Non-GAAP financial measures should not be considered independently, or as a substitute, for financial information presented in accordance with GAAP.

Additional Information

Our website address is www.howardhughes.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other publicly filed documents are available and may be accessed free of charge through the “Investors” section of our website under the SEC Filings subsection, as soon as reasonably practicable after those documents are filed with, or furnished to, the SEC. Also available through our Investors section of our website are beneficial ownership reports filed by our directors and executive officers on Forms 3, 4 and 5.

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Table of Contents


FINANCIAL OVERVIEW		PORTFOLIO OVERVIEW		PORTFOLIO PERFORMANCE		DEBT & OTHER
Company Profile	3	MPC Portfolio	10	Lease Expirations	12	Debt Summary	19
Company Profile (cont'd)	4	Portfolio Key Metrics	11	Commercial Development	13	Property-Level Debt	20
Financial Summary	5			Unstabilized Assets	14	Ground Leases	21
Balance Sheet	6			Acquisitions / Dispositions	15	Definitions	22
Statement of Operations	7			MPC Land	16	Reconciliation of Non-GAAP	23
Income Reconciliation	8			Ward Village Condos	17
NOI by Region	9			Other Assets	18

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Company Profile – Summary & Results

Company Overview – Q1-17		Recent Company Highlights
Exchange / Ticker Share Price - March 31, 2017 Earnings / share FFO / Share Core FFO / Share	NYSE: HHC $ 117.25 $ 0.13 $ 0.23 $ 1.66	LAS VEGAS--(BUSINESS WIRE)--May 1, 2017-- The Howard Hughes Corporation® (NYSE: HHC) announced today that it has finalized a 15-year, build-to-suit lease with Aristocrat Technologies, Inc., allowing the leading global provider of land-based and online gaming solutions to consolidate several of its Las Vegas facilities to a new campus in the Summerlin® master planned community. Aristocrat’s new campus will be located minutes away from Downtown Summerlin®, reflecting the growth of commercial offerings in the community’s urban core as Summerlin continues to gain appeal as a workplace. The relocation is in line with the growing corporate trend to locate workplaces closer to where employees live in an effort to shorten commutes and boost quality of life. DALLAS--(BUSINESS WIRE)--Mar. 30, 2017-- The Howard Hughes Corporation® (NYSE: HHC) (the “Company”) today announced the expiration of its previously announced tender offer and consent solicitation (the “Tender Offer”) for any and all of its existing 6.875% senior notes due 2021 (the “Notes”), which commenced on March 2, 2017 and is described in the Offer to Purchase and Consent Solicitation Statement, dated March 2, 2017 (the “Offer to Purchase”), and a related Consent and Letter of Transmittal (together with the Offer to Purchase, the “Offer Documents”). The Company has also completed the redemption of all of its outstanding Notes not tendered in the Tender Offer at a redemption price equal to 105.156% of the unpaid principal amount (or $158.3 million, plus $8.2 million, or approximately $5.16 per $1,000 principal amount of Notes) plus accrued and unpaid interest on such Notes up to, but excluding, the redemption date. The Company used a portion of its offering of $800 million in aggregate principal amount of 5.375% senior notes due 2025, which closed on March 16, 2017, to redeem the outstanding Notes not tendered by the holders. CHICAGO--(BUSINESS WIRE)--Mar. 17, 2017-- The Howard Hughes Corporation® (NYSE: HHC) received unanimous approval at today’s Chicago Planning Commission meeting for its future trophy-class office building to be built at 110 North Wacker Drive, in collaboration with Riverside Investment & Development, Goettsch Partners and CBRE – the development, design and leasing team behind the recently completed 150 North Riverside Plaza office tower. With its prominent riverfront location, 110 North Wacker is a highly desirable office development site in the heart of the city, designed to be a dynamic addition to Chicago’s iconic skyline. For more press releases, please visit www.howardhughes.com/press

Operating Portfolio by Region		Q1-17 MPC & Condominium Results
		$ in millions		$ in millions

		Q1-17 MPC EBT		Q1-17 Condo Gross Profit
		Bridgeland	$13.4	Waiea	$3.5
		Columbia	(0.3)	Anaha	16.2
		Summerlin	30.0	Ke Kilohana	0.0
		The Woodlands	1.1	Ae`o	—
		Total	$44.2	Total	$19.7

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Company Profile – Summary & Results (cont’d)


Path to Annual Stabilized NOI

Currently Under Construction		Currently Unstabilized		Currently Stabilized		Total

Retail & Office S.F.	513,000	Retail & Office S.F.	2,043,656	Retail & Office S.F.	4,569,966	Retail & Office S.F.	7,126,622
Multifamily Units	729	Multifamily Units	514	Multifamily Units	1,108	Multifamily Units	2,351
Hotel Keys	72	Hotel Keys	913	Hotel Keys	-	Hotel Keys	985
Other Units	784	Other Units	654	Other Units	-	Other Units	1,438
Projected Stabilized NOI	$ 22.4	Projected Stabilized NOI	$ 96.1	Projected Stabilized NOI	$ 122.3	Projected Stabilized NOI	$ 240.8

Q1-17 - Operating Results by Property Type


Currently Under Construction	Currently Unstabilized	Currently Stabilized	Total

Note: Path to NOI Stabilization charts above exclude Seaport NOI until we have greater clarity with respect to the performance of our tenants. See page 13 for Stabilized NOI Yield and other project information.

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Financial Summary


Company Profile	Q1 2017			Q4 2016			Q3 2016			Q2 2016			Q1 2016			FY 2016			FY 2015
Share price	$	117.25		$	114.10		$	114.50		$	114.32		$	105.89		$	114.10		$	113.16
Market Capitalization	$	5.1	b	$	4.9	b	$	4.9	b	$	4.9b	b	$	4.5	b	$	4.9	b	$	4.9	b
Enterprise Value1	$	7.3	b	$	6.9	b	$	7.1	b	$	6.9b	b	$	6.3	b	$	6.9	b	$	6.9	b
Dilutive effect of stock options		241			289			299			277			239			277			316
Warrants2		2,641			2,894			2,892			2,835			2,570			2,894			2,873
Weighted avg. shares - basic		39,799			39,492			39,502			39,492			39,473			39,492			39,470
Weighted avg. shares - diluted		42,757			42,753			42,760			42,664			42,400			42,729			42,754
Diluted shares outstanding (in thousands)		43,194			42,973			43,030			42,946			42,633			42,961			42,904

Earnings Profile

Operating Segment Income
Revenues	$	79,856		$	76,000		$	71,238		$	72,224		$	63,593		$	283,057		$	251,414
Expenses	$	39,265		$	38,436		$	39,893		$	36,982		$	36,142		$	152,329		$	135,666
Company's Share of Equity Method Investments NOI and Cost Basis Investment	$	4,129		$	888		$	569		$	2,272		$	3,932		$	8,893		$	4,951
Net Operating Income3	$	44,720		$	38,454		$	31,914		$	37,514		$	31,383		$	139,621		$	120,699
Avg. NOI margin		56	%		51	%		45	%		52	%		49	%		49	%		48	%

MPC Segment Earnings
Total revenues	$	68,706		$	81,738		$	51,304		$	70,507		$	49,755		$	253,304		$	229,865
Total expenses4	$	35,357		$	45,429		$	30,720		$	36,895		$	25,365		$	138,409		$	133,612
Interest income, net5	$	5,557		$	5,468		$	5,253		$	5,009		$	5,355		$	21,085		$	18,113
Equity in earnings in Real Estate and Other Affiliates		5,280			20,928			13,699			8,874			—			43,501			—
MPC Segment EBT5	$	44,186		$	62,705		$	39,536		$	47,495		$	29,745		$	179,481		$	114,366

Condo Gross Profit
Revenues6	$	80,145		$	123,021		$	115,407		$	125,112		$	122,094		$	485,634		$	305,284
Expenses6	$	60,483		$	81,566		$	83,218		$	79,726		$	74,815		$	319,325		$	191,606
Condo Net Income	$	19,662		$	41,455		$	32,189		$	45,386		$	47,279		$	166,309		$	113,678

Debt Summary

Total debt payable7	$	2,771,492		$	2,708,460		$	2,865,456		$	2,668,522		$	2,561,944		$	2,708,460		$	2,463,122
Fixed rate	$	1,324,634		$	1,184,141		$	1,152,897		$	1,114,735		$	1,120,393		$	1,184,141		$	1,121,669
Weighted avg. rate		4.94	%		5.89	%		5.99	%		6.29	%		6.17	%		5.89	%		6.08	%
Variable rate	$	1,309,169		$	1,363,472		$	1,425,276		$	1,403,762		$	1,374,211		$	1,363,472		$	1,313,636
Weighted avg. rate		3.45	%		3.33	%		3.08	%		2.76	%		2.8	%		3.33	%		2.92	%
Short term condominium financing	$	137,689		$	160,847		$	287,283		$	150,025		$	67,340		$	160,847		$	27,817
Weighted avg. rate		7.68	%		7.47	%		7.28	%		7.20	%		7.19	%		7.47	%		7.11	%
Leverage ratio (debt to enterprise value)		38.0	%		39.0	%		39.9	%		38.4	%		40.1	%		38.8	%		35.6	%

(1)

Enterprise Value = (Market value of common stock + book value of debt + noncontrolling interest) - cash and equivalents

(2)

Warrants assume net share settlement.

(3)

Net Operating Income = Operating Assets NOI excluding properties sold or in redevelopment + Company's Share of Equity Method Investments NOI and the annual Distribution from our Cost Basis Investment.

(4)

Expenses include both actual and estimated future costs of sales allocated on a relative sales value to land parcels sold, including MPC-level G&A and real estate taxes on remaining residential and commercial land.

(5)

MPC Segment EBT (Earnings before tax, as discussed in our GAAP financial statements), includes negative interest expense relating to capitalized interest for the segment relating to debt held in other segments and at corporate.

(6)

Revenues represent "Condominium rights and unit sales" and expenses represent "Condominium rights and unit cost of sales" as stated in our GAAP financial statements, based on the percentage of completion method ("POC").

(7)

Represents Total mortgages, notes, and loans payable, as stated in our GAAP financial statements, excluding unamortized deferred financing costs and underwriting fees.

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Balance Sheet


In thousands
ASSETS	Q1 2017		Q1 2016		FY 2016		FY 2015
Real estate assets		Unaudited		Unaudited
Master Planned Community assets	$	1,672,484	$	1,647,947	$	1,669,561	$	1,642,842
Land		314,259		325,412		320,936		322,462
Buildings and equipment		2,131,973		1,884,772		2,027,363		1,772,401
Less: accumulated depreciation		(266,260)		(252,095)		(245,814)		(232,969)
Developments		994,864		806,862		961,980		1,036,927
Net property and equipment		4,847,320		4,412,898		4,734,026		4,541,663
Net investment in Real Estate and Other Affiliates		70,381		56,295		76,376		57,811
Total Real Estate Assets	$	4,917,701	$	4,469,193	$	4,810,402	$	4,599,474
Cash and cash equivalents		541,508		736,834		665,510		445,301
Accounts Receivable		10,177		54,194		10,038		11,626
MUD receivables, net		160,189		157,282		150,385		139,946
Deferred expenses		64,155		63,532		64,531		61,804
Prepaid expenses and other assets		714,412		550,939		666,516		463,431
Total Assets	$	6,408,142	$	6,031,974	$	6,367,382	$	5,721,582

LIABILITIES AND EQUITY
Liabilities
Mortgages, notes and loans payable	$	2,750,254	$	2,543,638	$	2,690,747	$	2,443,962
Deferred tax liabilities		210,043		141,972		200,945		89,221
Warrant liabilities		313,797		277,940		332,170		307,760
Uncertain tax position liability		—		3,340		—		1,396
Accounts payable and accrued expenses		516,742		564,621		572,010		515,354
Total Liabilities	$	3,790,836	$	3,531,511	$	3,795,872	$	3,357,693
Equity
Capital stock	$	404	$	398	$	398	$	398
Additional paid-in capital		2,893,042		2,851,343		2,853,269		2,847,823
Accumulated deficit		(272,253)		(336,450)		(277,912)		(480,215)
Accumulated other loss		(6,428)		(17,760)		(6,786)		(7,889)
Treasury stock		(1,231)		(840)		(1,231)		—
Total stockholders' equity		2,613,534		2,496,691		2,567,738		2,360,117
Non-controlling interest		3,772		3,772		3,772		3,772
Total Equity	$	2,617,306	$	2,500,463	$	2,571,510	$	2,363,889

Total Liabilities and Equity	$	6,408,142	$	6,031,974	$	6,367,382	$	5,721,582
Share Count Details (in thousands)
Shares outstanding		40,312		39,824		39,790		39,715
Dilutive effect of stock options		241		239		277		316
Warrants (assumes net share settlement)		2,641		2,570		2,894		2,873
Total Diluted Share Equivalents Outstanding		43,194		42,633		42,961		42,904

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Comparative Statement of Operations: Total Portfolio


In thousands	Q1 2017		Q1 2016		FY 2016		FY 2015
Revenues:	Unaudited		Unaudited
Condominium rights and unit sales	$	80,145	$	122,094	$	485,634		305,284
Master Planned Community land sales		53,481		41,942		215,318		187,399
Builder price participation		4,661		4,647		21,386		26,846
Minimum rents		46,326		41,309		173,268		150,805
Tenant recoveries		11,399		10,528		44,330		39,542
Hospitality revenues		19,711		12,909		62,252		45,374
Other land revenues		10,582		3,033		16,232		14,803
Other rental and property revenues		5,457		3,204		16,585		27,035
Total revenues	$	231,762	$	239,666	$	1,035,005	$	797,088

Expenses:
Condominium rights and unit cost of sales	$	60,483	$	74,815	$	319,325	$	191,606
Master Planned Community cost of sales		25,869		15,688		95,727		88,065
Master Planned Community operations		9,394		9,594		42,371		44,907
Other property operating costs		18,508		15,742		65,978		72,751
Rental property real estate taxes		7,537		6,748		26,847		24,138
Rental property maintenance costs		3,028		3,132		12,392		10,712
Hospitality operating costs		13,845		10,475		49,359		34,839
Provision for doubtful accounts		535		3,041		5,664		4,030
Demolition costs		65		472		2,212		3,297
Development-related marketing costs		4,205		4,531		22,184		25,466
General and administrative		18,117		20,324		86,588		81,345
Depreciation and amortization		25,524		22,972		95,864		98,997
Total expenses	$	187,110	$	187,534	$	824,511	$	680,153

Operating income before other items		44,652		52,132		210,494		116,935

Other:
Provision for impairment		—		—		(35,734)		—
Gain on sale of properties		32,215		140,479		140,549		—
Other income, net		687		359		11,453		1,829
Total other	$	32,902	$	140,838	$	116,268	$	1,829

Operating Income	$	77,554	$	192,970	$	326,762	$	118,764

Interest expense, net of interest income		(17,236)		(15,724)		(64,365)		(59,158)
Loss on early extinguishment of debt		(46,410)		—		—		—
Warrant liability (loss) / gain		(12,562)		29,820		(24,410)		58,320
Gain on acquisition of joint venture partner's interest		5,490		—		27,088		—
(Loss) / gain on disposal of operating assets		—		—		(1,117)		29,073
Equity in earnings from Real Estate and Other Affiliates		8,520		1,932		56,818		3,721
Income (loss) before taxes		15,356		208,998		320,776		150,720
Provision for income taxes		(9,697)		(65,233)		(118,450)		(24,001)
Net income		5,659		143,765		202,326		126,719
Net income attributable to noncontrolling interests		—		—		(23)		—
Net income (loss) attributable to common stockholders	$	5,659	$	143,765	$	202,303	$	126,719

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	Reconciliation of Net Income to FFO and Core FFO


In thousands	Q1 2017		Q1 2016		FY 2016		FY 2015
RECONCILIATION OF NET INCOME TO FFO
Net income attributable to common shareholders	$	5,659	$	143,765	$	202,303	$	126,719
Add:
Segment real estate related depreciation and amortization		23,549		21,943		89,368		92,955
Loss (gain) on disposal of depreciable real estate operating assets		—		—		1,117		(29,073)
Gains on sales of properties		(32,215)		(140,549)		(140,549)		—
Income tax expense (benefit) adjustments - deferred
Loss (gain) on disposal of depreciable real estate operating assets		—		—		(419)		10,176
Gains on sales of properties		12,081		52,706		52,706		—
Impairment of depreciable real estate properties		—		—		35,734		—
Reconciling items related to noncontrolling interests		—		—		23		—
Our share of the above reconciling items included in earnings from unconsolidated joint ventures		830		1,196		863		2,255
FFO		9,904		79,061		241,146		203,032

Adjustments to arrive at Core FFO:
Acquisition expenses		32		—		526		—
Loss on redemption of senior notes due 2021		46,410		—		—		—
Gain on acquisition of joint venture partner's interest		(5,490)		—		(27,088)		—
Warrant (gain) loss		12,562		(29,820)		24,410		(58,320)
Severance expenses		828		190		487		767
Non-real estate related depreciation and amortization		1,975		1,029		6,496		6,042
Straight-line rent adjustment		1,961		3,121		10,689		7,391
Deferred income tax expense (benefit)		(3,193)		7,509		61,411		10,976
Non-cash fair value adjustments related to hedging instruments		(198)		351		1,364		1,745
Share based compensation		1,906		2,722		6,707		7,284
Other non-recurring expenses (development related marketing and demolition costs)		4,270		5,003		24,396		28,763
Our share of the above reconciling items included in earnings from unconsolidated joint ventures		75		227		206		(3)
Core FFO	$	71,042	$	69,393	$	350,750	$	207,677


FFO per diluted share value	$	0.23	$	1.86	$	5.64	$	4.75

Core FFO per diluted share value	$	1.66	$	1.64	$	8.21	$	4.86

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NOI by Region


Dollars in thousands
	%									1Q17				Time to
Property	Ownership		Total	1Q17 SF/Units	1Q17	1Q17		1Q17			Annualized	Stabilized		Stabilize
	(a)		SF / Units	Occupied	SF/Units Leased	% Occupied		% Leased			Cash NOI (a) (b)	NOI (a) (c)		(Years)
Stabilized Properties
Office - Houston	100	%	1,452,473	1,420,111	1,430,452	98	%	98	%	$	35,972	$	38,200	NA
Office - Columbia	100	%	1,085,070	978,897	1,010,821	90	%	93	%		13,544		14,500	NA
Office - Other	100	%	226,000	226,000	226,000	100	%	100	%		6,064		6,100	NA
Retail - Houston (d)	100	%	233,362	224,308	225,948	96	%	97	%		6,952		6,500	NA
Retail - Columbia	100	%	88,556	68,100	88,556	77	%	100	%		1,564		2,200	NA
Retail - Hawaii	100	%	1,143,533	1,070,347	1,078,352	94	%	94	%		23,600		25,600	NA
Retail - Other	100	%	340,972	333,699	333,699	98	%	98	%		7,352		7,200	NA
Multi-Family - Houston	100	%	707	617	646	87	%	91	%		6,204		9,100	NA
Multi-Family - Columbia	50	%	380	350	355	92	%	93	%		2,764		3,500	NA
Multi-Family - New York	100	%	21	20	20	96	%	96	%		476		600	NA
Other Assets (e)	NA		NA	NA	NA	NA		NA			8,821		8,821	NA
Total Stabilized Properties (f)										$	113,313	$	122,321	NA

Unstabilized Properties
Office - Houston	100	%	676,688	243,609	306,095	36	%	45	%	$	2,384	$	14,500	3.0
Office - Columbia	100	%	204,020	97,930	122,412	48	%	60	%		1,488		5,100	3.0
Office - Summerlin	100	%	208,347	137,926	160,636	66	%	77	%		3,720		5,700	1.0
Retail - Houston (d)	100	%	157,641	104,208	110,182	66	%	70	%		2,504		3,600	0.5
Retail - Summerlin	100	%	796,443	670,605	699,277	84	%	88	%		17,916		26,300	1.0
Multi-Family - Houston	100	%	390	300	336	77	%	86	%		4,244		7,500	1.0
Multi-Family - Summerlin	50	%	124	96	106	77	%	86	%		—		1,100	1.0
Hospitality - Houston	100	%	913	605	605	66	%	66	%		23,464		31,500	2.9
Self Storage - Houston	100	%	654	—	—	NA		NA			—		800	2.0
Total Unstabilized Properties										$	55,720	$	96,100	1.7

Under Construction Properties
Office - Houston	100	%	203,000	—	203,000	NA		100	%		NA	$	5,100	2.0
Office - Columbia	100	%	130,000	—	97,500	NA		75	%		NA		3,600	4.0
Office - Summerlin	100	%	180,000	—	180,000	0	%	100	%		NA		4,100	2.0
Multi-Family - Houston	100	%	292	—	—	NA		0	%		NA		3,500	2.0
Multi-Family - Columbia	50	%	437	—	—	NA		0	%		NA		4,000	2.0
Hospitality - New York	35	%	72	—	—	NA		0	%		NA		1,300	1.0
Self Storage - Houston	100	%	784	—	—	NA		NA			NA		800	2.0
Total Under Construction Properties											NA	$	22,400	2.1

Total/ Wtd. Avg for Portfolio										$	169,033	$	240,821	1.9

Notes

(a)

Includes our share of NOI where we do not own 100%.

(b)

Annualized 1Q17 NOI includes distribution received from our cost basis investment. For purposes of this calculation, these one time annual distributions are not annualized.

(c)

Table above excludes Seaport NOI until we have greater clarity. Please reference page 13 for Stabilized NOI Yield and other project information.

(d)

Retail - Houston is inclusive of retail in The Woodlands and Bridgeland.

(e)

Other Assets are primarily made up of income from Kewalo Basin, Summerlin Baseball and Hockey ground lease, and our share of other equity method investments not included in other categories.

(f)

For Stabilized Properties, the difference between 1Q17 cash NOI and Stabilized NOI is attributable to a number of factors which may include timing, free rent or other temporary abatements, tenant turnover and market factors considered nonpermanent.

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MPC Portfolio

(Dollars in thousands)	Nevada	Texas	Maryland	Total
MPC Performance - FY-16 & Q1-17
MPC Net Contribution (FY-16) (a)	$136,500	$7,583	($1,179)	$142,904
MPC Net Contribution (Q1-17) (a)	$20,395	$2,478	($303)	$22,570
Operating Asset Performance - 2017 & Future
Annualized 1Q17 In-Place Cash NOI	$25,016	$81,724	$19,360	$126,100
Est. Stabilized NOI (Future)	$40,580	$121,100	$32,900	$194,580
Wtd. Avg. Time to Stab. (yrs.)	1.0	1.9	3.0	—

Note

(a)

Reconciliation from GAAP MPC segment EBT to MPC Net Contribution for the three months ended March 31, 2017 is found on Reconciliation of non-GAAP Measures.

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Portfolio Key Metrics


	MPC Regions						Non-MPC Regions
	Woodlands	Woodlands Hills	Bridgeland	Summerlin	Columbia	Total	Hawaii	Seaport	Other	Total
	Houston, TX	Houston, TX	Houston, TX	Las Vegas, NV	Columbia, MD	MPC Regions	Honolulu, HI	New York, NY		Non-MPC
Operating - Stabilized Properties
Office s.f.	1,452,473	—	—	—	1,085,070	2,537,543	—	—	226,000	226,000
Retail s.f.	233,362	—	—	—	88,556	321,918	1,143,533	—	340,972	1,484,505
Multifamily units	707	—	—	—	380	1,087	—	21	—	21
Hotel Rooms	—	—	—	—	—	—	—	—	—	—
Self Storage	—	—	—	—	—	—	—	—	—	—

Operating - Unstabilized Properties
Office s.f.	676,688	—	—	208,347	204,020	1,089,055	—	—	—	—
Retail s.f. (a)	74,669	—	82,972	796,443	—	954,084	—	—	—	—
Multifamily units	390	—	—	124	—	514	—	—	—	—
Hotel rooms	913	—	—	—	—	913	—	—	—	—
Self Storage	654	—	—	—	—	654	—	—	—	—

Operating - Under Construction Properties
Office s.f.	203,000	—	—	180,000	130,000	513,000	—	—	—	—
Retail s.f. (b)	—	—	—	—	—	—	—	—	—	—
Multifamily units	292	—	—	—	437	729	—	—	—	—
Hotel rooms	—	—	—	—	—	—	—	72	—	72
Self Storage	784	—	—	—	—	784	—	—	—	—

Residential Land
Total gross acreage/condos (c)	28,475 ac.	2,055 ac.	11,400 ac.	22,500 ac.	16,450 ac.	80,880 ac.	1,381	n.a.	n.a.	1,381
Current Residents (c)	115,000	—	8,300	107,000	112,000	342,300	n.a.	n.a.	n.a.	—
Remaining saleable acres/condos	307	1,439	2,474	3,740	n.a.	7,998	241	n.a.	n.a.	241
Estimated price per acre (d)	$560	$207	$372	$577	n.a.		n.a.	n.a.	n.a.

Commercial Land
Total acreage remaining	752	171	1,530	826	108	3,387	n.a.	n.a.	n.a.	—
Estimated price per acre (e)	$957	$552	$394	$759	$316		n.a.	n.a.	n.a.

Notes

Portfolio key metrics herein include square feet, units and rooms included in joint venture projects.

(a)

Retail s.f. within the Summerlin region excludes 381,767 sq. ft. of anchors.

(b)

Retail s.f. within New York region excludes Pier 17 and Uplands, pending final plans for this project.

(c)

Acreage and current residents shown as of December 31, 2016.

(d)

Residential pricing: average 2016 acreage pricing for Bridgeland, Summerlin and The Woodlands. Summerlin avarage pricing excludes the sale of approximately 117 acres to Pulte with an atypical economic structure. Pro forma acreage pricing for The Woodlands Hills.

(e)

Commercial pricing: estimate of current value based upon recent sales, third party appraisals and third party MPC experts. The Woodlands Hills commercial is valued at cost.

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Lease Expirations


	Office Expirations					Retail Expirations
	Annualized Cash		Percentage of		Wtd. Avg. Annualized	Annualized Cash		Percentage of		Wtd. Avg. Annualized
	Rent		Annualized Cash		Cash Rent Per Leased Sq.	Rent		Annualized Cash		Cash Rent Per Leased Sq.
Expiration Year	($ in thousands)		Rent		Ft.	($ in thousands)		Rent		Ft.

2017	$	5,022	6.25	%	28.47	$	8,843	8.56	%	29.43
2018		3,768	4.69	%	25.16		7,975	7.72	%	40.44
2019		7,187	8.95	%	29.67		4,368	4.23	%	36.55
2020		8,537	10.63	%	28.19		7,183	6.95	%	48.47
2021		5,179	6.45	%	32.97		7,123	6.89	%	28.65
2022		8,965	11.16	%	29.92		4,734	4.58	%	50.17
2023		9,411	11.71	%	28.71		6,296	6.09	%	47.13
2024		10,345	12.88	%	29.55		4,442	4.30	%	34.90
2025		8,908	11.09	%	33.55		27,854	26.95	%	55.98
2026		947	1.18	%	35.99		5,536	5.36	%	37.79
Thereafter		12,069	15.02	%	23.17		18,991	18.38	%	15.08
Total	$	80,337	100.00	%		$	103,345	100.00	%

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Commercial Development


Dollars in thousands, except per sq. ft. and unit amounts
Owned & Managed									Const.	Est.	Develop.		Est.		Est.		Stabilized
Project	City,	%		Est. Rentable		Percent			Start	Stabilized	Costs		Total		Stabilized		NOI
Name	State	Ownership		Sq. Ft.		Pre-Leased1		Project Status	Date	Date2	Incurred		Cost		NOI3		Yield
Office
100 Fellowship Dr	Houston, TX	100	%	203,000		100	%	Under construction	Q2 2017	Q4 2019	$	1,323	$	63,278	$	5,062	8	%
Two Merriweather	Columbia, MD	100	%	130,000		58	%	Under construction	Q3 2016	Q2 2020	$	8,833	$	40,941	$	3,685	9	%
Aristocrat	Las Vegas, NV	100	%	180,000		100	%	Under construction	Q2 2017	2019	$	201	$	45,085	$	4,071	9	%

Retail
Seaport - Uplands / Pier 17	New York, NY	100	%	401,787		49	%	Under construction	Q4 2013	Q1 2021	$	364,227	$	731,000	$	43,000 - $58,000	6%-8	%

Total				914,787							$	374,584	$	880,304

						Monthly			Const.	Est.		Develop.		Est.		Est.	Stabilized
Project	City,	%		Est. Number		Est. Rent			Start	Stabilized		Costs		Total		Stabilized	NOI
Name	State	Ownership		of Units		Per Unit		Project Status	Date	Date2		Incurred		Cost		NOI3	Yield
Multifamily
Creekside Apartments	Houston, TX	100	%	292	$	1,538		Under construction	Q1 2017	Q4 2019	$	1,403	$	42,111	$	3,499	8	%
m.flats/Ten.M Building4	Columbia, MD	50	%	437	$	1,982		Under construction	Q1 2016	Q3 2019	$	63,900	$	109,345	$	8,100	7	%

Self-Storage
HHC 2978 Self Storage	Houston, TX	100	%	784	$	142		Under construction	Q1 2016	Q2 2020	$	5,964	$	8,476	$	759	9	%

Total				1,513							$	71,267	$	159,932

Note: Seaport - Uplands / Pier 17 Estimated Rentable sq. ft. and costs are inclusive of the Tin Building, the status of which is still pending. All costs are shown net of insurance proceeds of approximately $55 million.

(1)

Based on leases signed as of Q1 2017 and is calculated as the total est. rentable square feet leased divided by total est. rentable square feet, expressed as a percentage.

(2)

Represents management's estimate of the first quarter of operations in which the asset may be stabilized.

(3)

Total NOI shown gross, not at share.

(4)

The remaining costs in this non-consolidated joint-venture are expected to be funded by the in-place construction financing.

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Unstabilized Assets


Dollars in thousands									Develop.	Est.	Annualized	Annualized
		%		Rentable	1Q17		1Q17		Costs	Total	1Q17	Est.	Est.
Project Name	Location	Ownership		Sq. Ft. / Units	% Occ.		% Leased		Incurred	Cost	Cash NOI	Stab. NOI (a)	Stab. Date
Office
Three Hughes Landing	Houston, TX	100	%	320,815	18	%	23	%	$ 60,778	$ 90,162	NM	$ 7,600	2020
1725 Hughes Landing (b)	Houston, TX	100	%	331,754	54	%	68	%	50,185	74,994	3,060	6,900	2020
One Merriweather	Columbia, MD	100	%	204,020	48	%	60	%	57,549	78,187	1,488	5,100	2020
One Summerlin (c)	Las Vegas, NV	100	%	208,347	66	%	77	%	—	—	3,720	5,700	2018

Retail
Creekside Village Green	Houston, TX	100	%	74,669	84	%	84	%	15,779	15,779	2,028	1,900	2017
Lakeland Village Center	Houston, TX	100	%	82,972	50	%	57	%	12,721	16,274	476	1,700	2018
Downtown Summerlin (c)	Las Vegas, NV	100	%	796,443	84	%	88	%	415,074	418,304	17,916	26,300	2018

Residential
One Lakes Edge	Houston, TX	100	%	390	77	%	86	%	81,729	81,729	4,244	7,500	2018
Constellation	Las Vegas, NV	50	%	124	77	%	84	%	20,760	20,760	256	1,100	2018

Hotel
Embassy Suites at Hughes Landing	Houston, TX	100	%	205	84	%	N/A		42,911	46,363	6,156	4,500	2019
The Woodlands Resort & Conference Center	Houston, TX	100	%	406	55	%	N/A		72,360	72,360	9,836	16,500	2020
The Westin at The Woodlands	Houston, TX	100	%	302	70	%	N/A		91,349	97,380	7,472	10,500	2020

Other
HHC 242 Self-Storage	Houston, TX	100	%	654	7	%	7	%	7,034	8,607	NM	800	2019

Notes

(a)

Company estimates of stabilized NOI based solely on current leasing velocity, excluding inflationary and organic growth.

(b)

Shown net of tenant reimbursements.

(c)

One Summerlin development costs are combined with Downtown Summerlin.

14	www.howardhughes.com

Acquisition / Disposition Activity

In thousands, except rentable sq. ft. and acres

1Q2017 Acquisitions

Type of

Rentable

Acquisition

Date Acquired

Property

Ownership

% Ownership

Location

Sq. Ft./ Acres

Price

1/6/2017

Macy's Parcel

100

Alexandria, VA

11.4

22,200

3/1/2017

LV51s Baseball Team (a)

100

Las Vegas, NV

n.a.

16,400

1Q2017 Dispositions

Type of

Rentable

Date Sold

Property

Ownership

% Ownership

Location

Sq. Ft./ Acres

Sale Price

1/18/2017

Elk Grove Casino Site

Elk Grove, CA

36.0

36,000

Team

Note

(a)

On March 1, 2017, we acquired our joint venture partner’s 50.0% interest in the Las Vegas 51s minor league baseball team for $16.4 million. Upon completion of the transaction, we became the sole owner (100%) of this Triple-A baseball team affiliated with the New York Mets. Team NOI is included in Other Assets on page 9 and generates a stabilized NOI of $0.4 million.

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Master Planned Community Land


	Woodlands						Woodlands Hills				Bridgeland						Summerlin						Maryland				Total
Dollars in thousands	Q1 2017			Q1 2016			Q1 2017		Q1 2016		Q1 2017			Q1 2016			Q1 2017			Q1 2016			Q1 2017		Q1 2016		Q1 2017		Q1 2016
Revenues:
Residential land sale revenues	$	2,361		$	2,464		$	0	$	0	$	8,723		$	4,281		$	38,598		$	23,777		$	—	$	—	$	49,682	$	30,522
Commercial land sale revenues		3,799			10,405			—		—		—			—			—			1,015			—		—		3,799		11,420
Builder price participation		274			503			—		—		15			255			4,372			3,889			—		—		4,661		4,647
Other land sale revenues		1,909			129			10		0		6,629			75			2,015			2,960			2		2		10,565		3,166
Total revenues	$	8,343		$	13,501		$	10	$	0	$	15,367		$	4,611		$	44,984		$	31,641		$	2	$	2	$	68,706	$	49,755

Expenses:
Cost of sales - residential land	$	(1,127)		$	(955)			—		—	$	(2,675)		$	(1,447)		$	(21,167)		$	(9,141)			—		—		(24,969)		(11,543)
Cost of sales - commercial land		(900)			(4,145)			—		—		—			—			—			—			—		—		(900)		(4,145)
Real estate taxes		(1,265)			(1,329)			(75)		(23)		(331)			(236)			(590)			(541)			(164)		(165)		(2,424)		(2,294)
Land sales operations		(3,005)			(3,659)			(62)		(52)		(1,372)			(1,003)			(2,408)			(2,505)			(123)		(81)		(6,970)		(7,300)
Depreciation and amortization		(30)			(30)			—		—		(35)			(24)			(25)			(24)			(3)		(5)		(93)		(83)
Total Expenses	$	(6,327)		$	(10,118)		$	(137)	$	(75)	$	(4,413)		$	(2,710)		$	(24,190)		$	(12,211)		$	(290)	$	(251)	$	(35,356)	$	(25,365)

Net interest capitalized (expense)		(912)			(1,624)			142		137		2,462			2,466			3,868			4,367			(3)		9		5,557		5,355
Equity in earnings from real estate affiliates		—			—			—		—		—			—			5,280			—			—		—		5,280		—

EBT	$	1,104		$	1,759		$	15	$	62	$	13,416		$	4,367		$	29,942		$	23,797		$	(291)	$	(240)	$	44,186	$	29,745

Key Performance Metrics:
Residential
Total acres sold		4.5			4.1			—		—		18.6			11.1			37.7			118.1			NM		NM
Price per acre achieved	$	525		$	601			NM		NM	$	390		$	380		$	697		$	357			NM		NM
Avg. gross margins		52	%		61	%		NM		NM		69	%		66	%		45	%		63	%		NM		NM
Commercial
Total acres sold		10.4			4.3			—		—		—			—			—			—			NM		NM
Price per acre achieved	$	365		$	2,420			NM		NM		NM			NM			NM			NM			NM		NM
Avg. gross margins		76	%		60	%		NM		NM		NM			NM			NM			NM			NM		NM
Avg. combined before-tax net margins		67	%		60	%		NM		NM		69	%		66	%		45	%		63	%		NM		NM


Key Valuation Metrics:	Woodlands					Woodlands Hills					Bridgeland					Summerlin					Maryland
Remaining saleable acres
Residential			307					1,439					2,474					3,740			NM
Commercial			752					171					1,530					826			108(a)
Projected est. % superpads / lot size	0	%			—	0	%			—	0	%			—	79	%			0.25 ac	NM
Projected est. % single-family detached lots / lot size	75	%			0.28 ac	87	%			0.32 ac	89	%			0.16 ac	0	%			—	NM
Projected est. % single-family attached lots / lot size	25	%			0.07 ac	13	%			0.13 ac	10	%			0.12 ac	0	%			—	NM
Projected est. % custom homes / lot size	0	%			—	0	%			—	1	%			1.0 ac	21	%			0.4 ac	NM
Estimated builder sale velocity (blended total) - Q1 2017			20					—					40					70			NM
Gross margin (GAAP), net of MUDs (b)			67.1	%				NM					69.3	%				45	%		NM
Projected cash gross margin, net of MUDs (b)			96.6	%				80.0	%				85.5	%				66.8	%		NM
Sellout date estimate
Residential			2022					2029					2036					2035			—
Commercial			2025					2028					2045					2039			—

Notes

(a)

Does not include 31 commercial acres held in the Strategic Development segment in Downtown Columbia.

(b)

GAAP gross margin is based on GAAP revenues and expenses which exclude revenues deferred on sales closed where revenue did not meet criteria for recognition, and includes revenues previously deferred that met criteria for recognition in the current period. Gross margin for each MPC may vary from period to period based on the locations of the land sold and the related costs associated with developing the land sold. Projected cash gross margin includes all future projected revenue less all future projected development costs, net of expected reimbursable costs, and capitalized overhead, taxes and interest.

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Ward Village Condominiums


	Waiea (a)			Anaha			Ae'o			Ke Kilohana (b)			Total
Key Metrics
Type of building	Ultra-Luxury			Luxury			Upscale			Workforce
Number of units		174			317			466			424			1,381
Avg. unit s.f.		2,174			1,417			836			694			5,121
Condo s.f.		378,238			449,205			389,368			294,273			1,511,084
Street retail s.f.		8,000			16,000			67,000			22,000			113,000
Total s.f.		386,238			465,205			456,368			316,273			1,624,084

Development progress
Status		Opened			U/C			U/C			U/C
Start date (actual or est.)		2Q14			4Q14			1Q16			4Q16
Completion date (actual or est.)		2Q17			3Q17			4Q18			2019
Total development cost ($m)	$	414.2		$	401.3		$	428.5		$	218.9			$ 1,462.9
Cost-to-date ($m)	$	377.0		$	257.3		$	92.6		$	28.6			755.5
Remaining to be funded ($m)	$	37.2		$	144.0		$	335.9		$	190.3			$ 707.4

Financial Summary (Dollars in thousands, except per sq. ft.)
# of units closed or under contract in 1Q17		163			301			289			387			1,140
Total % of units closed or under contract		94	%		95	%		62	%		91	%		83	%
Number of units closed or under contract (current quarter)		3			3			24			1			31
Square footage closed or under contract (total)		335,991			401,304			219,328			256,666			1,213,289
Total % square footage closed or under contract		89	%		89	%		56	%		87	%		80	%
Target condo profit margin at completion (excl. land cost)		—			—			—			—			30	%
Total cash received (closings & deposits)		—			—			—			—			$ 725,504
Total GAAP revenue recognized		—			—			—			—			$ 940,097
Expected avg. price per sq. ft.	$	1,900 - $1,950		$	1,100 - $1,150		$	1,300 - $1,350		$	700 - $750			$1,300 - $1,325
Expected construction costs per retail sq. ft.		—			—			—			—			$ 1,100

Deposit Reconciliation (Dollars in thousands)
Deposits from sales commitment
spent towards construction		N/A		$	79,850		$	0		$	0			$ 79,850
held for future use (c) (d)		N/A			13,069			66,766			19,220			99,055
Total deposits from sales commitment		N/A		$	92,919		$	66,766		$	19,220			$ 178,905

Notes

(a)

We began delivering units at Waiea in November 2016. As of April 18, 2017, we've closed 150 units, we have 13 under contract, and 11 units remaining to be sold.

(b)

Ke Kilohana consists of 375 workforce units and 49 market rate units.

(c)

Only $0.8 million, $52.0 million, and $19.0 million can be used for development at Anaha, Ae`o and Ke Kilohana, respectively.

(d)

Total deposits held for future use are shown in Other Assets on the balance sheet.

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Other Assets


Property	City,	%
Name	State	Own		Acres	Notes
Future Development
The Elk Grove Collection	Elk Grove, CA	100	%	64	Plan to build a 400,000 Sq. Ft. outlet retail center. Recently sold 36 acres for $36 million in total proceeds.
Landmark Mall	Alexandria, VA	100	%	33	Plan to transform the mall into an open-air, mixed-use community. In January 2017, we acquired the 11.4 acre Macy's site for $22.2 million.
Cottonwood Mall	Holladay, UT	100	%	54	Under contract to sell in pieces. First closing expected in 2017.
Century Plaza Mall	Birmingham, AL	100	%	59	Mall is completely vacant. We are evaluating potential redevelopment opportunities.
Circle T Ranch and Power Center	Westlake, TX	50	%	207	50/50 joint venture with Hillwood Development Company. We sold 72-acres to an affiliate of Charles Schwab Corporation.
Kendall Town Center	Kendall, FL	100	%	70	Zoned for 730,000 Sq. Ft. of commercial space. Going through re-entitlement process.
West Windsor	West Windsor, NJ	100	%	658	Current zoning allows for approximately 6 million Sq. Ft. of commercial uses.
AllenTowne	Allen, TX	100	%	238	Located 27 miles north of Downtown Dallas. Agricultural property tax exemptions are in place for most of the property, significantly reducing carrying costs.
Bridges at Mint Hill	Charlotte, NC	91	%	210	Zoned for approximately 1.3 million Sq. Ft. of commercial uses.
Lakemoor Land	Volo, IL	100	%	40	Located 50 miles north of Chicago. The project is currently designated as farmland.
Maui Ranch Land	Maui, HI	100	%	20	Two, non-adjacent, ten-acre parcels zoned for native vegetation.
Fashion Show Air Rights	Las Vegas, NV	80	%	N/A	Air rights above the Fashion Show Mall located on the Las Vegas Strip.

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Debt Summary


			March 31,			December 31,
(In thousands)			2017			2016
Fixed-rate debt:
Collateralized mortgages, notes and loans payable			$	1,283,481		$	1,140,118
Special Improvement District bonds				40,886			44,023
Variable-rate debt:
Collateralized mortgages, notes and loans payable, excluding condominium financing				1,309,436			1,363,472
Condominium financing				137,689			160,847
Mortgages, notes and loans payable			$	2,771,492		$	2,708,460
Deferred Financing Costs, net				(21,238)			(17,713)
Total consolidated mortgages, notes and loans payable			$	2,750,254		$	2,690,747
Total unconsolidated mortgages, notes and loans payable at pro-rata share			$	71,520		$	55,481
Total Debt			$	2,821,773		$	2,746,228



	Consolidated Debt Maturities and Contractual Obligations by Final Due Date (a)
(In thousands)	2017		2018-2020			2021-2022			2023 and thereafter		Total
Mortgages, notes and loans payable, excluding condominium financing	$	66,228	$	860,692	(b)	$	281,105	$	1,425,778	$	2,633,803
Condominium financing		—		137,689			—		—		137,689
Interest Payments		95,898		293,762			148,694		208,589		746,943
Ground lease and other leasing commitments		9,885		16,094			15,283		298,881		340,143
Total consolidated debt maturities and contractual obligations	$	172,011	$	1,308,237		$	445,082	$	1,933,248	$	3,858,578



	Net Debt on a Segment Basis, at share
	Master									Non-
(In thousands)	Planned		Operating			Strategic		Segment		Segment		Total
Segment Basis (c)	Communities		Assets			Developments		Totals		Amounts
Mortgages, notes and loans payable, excluding condominium financing (c)	$	252,535	$	1,604,927		$	32,153	$	1,889,615	$	794,469	$	2,684,084
Condominium financing		—		—			137,689		137,689		—		137,689
Less: cash and cash equivalents (c)		(102,732)		(85,281)			(21,260)		(209,273)		(387,651)		(596,924)
Special Improvement District receivables		(61,129)		—			—		(61,129)		—		(61,129)
Municipal Utility District receivables		(160,189)		—			—		(160,189)		—		(160,189)
Net Debt	$	(71,515)	$	1,519,646		$	148,582	$	1,596,713	$	406,818	$	2,003,531

(a)

Mortgages, notes and loans payable and Short term condominium financing are presented based on extended maturity date. Extension periods generally can be exercised at our option at the initial maturity date, subject to customary extension terms that are based on property performance as of the initial maturity date and/or extension date. Such extension terms may include, but are not limited to, minimum debt service coverage, minimum occupancy levels or condominium sales levels, as applicable, and other performance criteria. In certain cases due to property performance not meeting covenants, we may have to pay down a portion of the loan in order to obtain the extension.

(b)

Of this total, $150.0 million has been refinanced subsequent to March 31, 2017 and has an extended maturity date of 2021 (initial maturity in 2020 with a one-year extension option).

(c)

Each segment includes our share of related cash and debt balances for all joint ventures included in Investments in Real estate and Other Affiliates. See our quarterly filing on Form 10-Q for further details.

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Property Level Debt


			Contract		Interest Rate	Current Annual
Asset	Principal Balance		Interest Rate		Hedge	Interest Rate		Maturity Date (a)
Master Planned Communities
The Woodlands Master Credit Facility (b)	$	150,000	L+275		Floating	3.68	%	Mar-21
Bridgeland Credit Facility		65,000	4.60	%	Fixed	4.6	%	Nov-22
	$	215,000
Operating Assets
1701 Lake Robbins (c)	$	4,600	5.81	%	Fixed	5.81	%	Apr-17
1723-35 Hughes Landing Boulevard		109,876	L+165		Floating	2.58	%	Jun-19
70 Corporate Center		20,000	L+225		Floating	3.18	%	Jul-19
Downtown Summerlin		305,888	L+225		Floating	3.18	%	Jul-19
The Westin at The Woodlands		58,077	L+265		Floating	3.68	%	Aug-19
110 N. Wacker		21,759	5.21	%	Fixed	5.21	%	Oct-19
Outlet Collection at Riverwalk		55,293	L+275		Floating	3.68	%	Oct-19
Three Hughes Landing		36,462	L+235		Floating	3.28	%	Dec-19
Lakeland Village Center at Bridgeland		10,644	L+235		Floating	3.28	%	May-20
Embassy Suites at Hughes Landing		30,223	L+250		Floating	3.43	%	Oct-20
The Woodlands Resort & Conference Center		70,000	L+275		Floating	4.18	%	Dec-20
One Merriweather		34,072	L+215		Floating	3.08	%	Feb-21
HHC 242 Self-Storage		4,995	L+260		Floating	3.53	%	Oct-21
10-60 Corporate Centers / One Mall North		94,463	L+175		Floating	3.04	%	May-22
20/25 Waterway		13,825	4.79	%	Fixed	4.79	%	May-22
Millennium Waterway Apartments		55,584	3.75	%	Fixed	3.75	%	Jun-22
Ward Village		238,718	L+320		Floating	3.54	%	Sep-23
9303 New Trails		12,286	4.88	%	Fixed	4.88	%	Dec-23
4 Waterway Square		35,979	4.88	%	Fixed	4.88	%	Dec-23
3831 Technology Forest Drive		22,282	4.50	%	Fixed	4.50	%	Mar-26
Millennium Six Pines Apartments		42,500	3.39	%	Fixed	3.39	%	Aug-28
3 Waterway Square		51,279	3.94	%	Fixed	3.94	%	Aug-28
One Lake's Edge		69,440	4.50	%	Fixed	4.50	%	Mar-29
One Hughes Landing		52,000	4.30	%	Fixed	4.30	%	Dec-29
Two Hughes Landing		48,000	4.20	%	Fixed	4.20	%	Dec-30
Hughes Landing Retail		35,000	3.50	%	Fixed	3.50	%	Dec-36
Columbia Regional Building		25,000	4.48	%	Fixed	4.48	%	Feb-37
	$	1,558,245

Strategic Developments
Waiea and Anaha	$	137,689	L+675		Floating	7.68	%	Nov-19
Ke Kilohana		—	L+325		Floating	4.18	%	Dec-20
Two Merriweather		—	L+250		Floating	3.43	%	Oct-21
Ae'o		—	L+400		Floating	4.93	%	Dec-21
HHC 2978 Self-Storage		3,729	L+260		Floating	3.53	%	Jan-22
	$	141,418

Total (d)	$	1,914,663

Notes

(a)

Maturity dates shown assumes all extension options are exercised.

(b)

The Woodlands Master Credit Facility has been extended to 2021.

(c)

Debt related to 1701 Lake Robbins was paid down in full in Q2-17.

(d)

Excludes JV debt, Corporate level debt, and SID bond debt related to Summerlin MPC & Retail. Above balances are as of March 31, 2017.

20	www.howardhughes.com

Summary of Ground Leases

Minimum Contractual Ground Lease Payments ($ in thousands)


									Future Cash Payments
	Pro-Rata				Three months ended				Year Ended December 31
Ground Leased Asset	Share		Expiration Date		March 31, 2017		2016		2017		2018		Thereafter		Total

Riverwalk (a)	100	%	2044-2046	(b)	$	492	$	3,334	$	3,334	$	2,454	$	60,424	$	66,212
Seaport	100	%	2031	(c)		381		1,429		1,550		1,594		205,641		208,786
Kewalo Basin Harbor	100	%	2049			75		300		300		300		9,300		9,900
							$	5,064	$	5,185	$	4,348	$	275,365	$	284,898

(a)

Includes base ground rent, deferred ground rent and the participation rent floor, as appropriate.

(b)

Except for Port of New Orleans ground lease which has no termination date, and WTC license agreement expires in 2019 but can be extended by agreement of the parties.

(c)

Initially expires 12/30/2031 but subject to options to extend through 12/31/2072.

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Definitions

Under Construction - Projects that reside in the Strategic segment for which construction has commenced as of March 31, 2017. This excludes MPC and condominium development.

Unstabilized - Properties in the Operating segment that have not been in service for more than 36 months and do not exceed 90% occupancy. If an office, retail or multifamily property has been in service for more than 36 months but does not exceed 90% occupany, the asset is considered underperforming and is included in Stabilized.

Stabilized - Properties in the Operating segment that have been in service for more than 36 months or have reached 90% occupancy, which ever occurs first. If an office, retail or multifamily property has been in service for more than 36 months but does not exceed 90% occupany, the asset is considered underperforming.

NOI - We define NOI as operating cash revenues (rental income, tenant recoveries and other revenue) less operating cash expenses (real estate taxes, repairs and maintenance, marketing and other property expenses). NOI excludes straight-line rents and amortization of tenant incentives, net interest expense, ground rent amortization, demolition costs, amortization, depreciation, development-related marketing costs and, unless otherwise indicated, Equity in earnings from Real Estate and Other Affiliates. We use NOI to evaluate our operating performance on a property-by-property basis because NOI allows us to evaluate the impact that factors, which vary by property, such as lease structure, lease rates and tenant base have on our operating results, gross margins and investment returns. We believe that net operating income (“NOI”) is a useful supplemental measure of the performance of our Operating Assets because it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating real estate properties and the impact on operations from trends in rental and occupancy rates and operating costs.

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Reconciliations of Non-GAAP Measures


Reconciliation of Operating Assets segment EBT to Total NOI:
				as filed		as filed		as filed				as filed		as filed
(In thousands)	Q1 2017 (a)		Q4 2016		Q3 2016		Q2 2016		Q1 2016 (a)		FY 2016		FY 2015
Total Operating Assets segment EBT	$	7,922	$	5,761	$	(34,316)	$	8,131	$	403	$	(19,132)	$	(9,902)

Straight-line lease amortization		1,961		1,057		2,550		4,079		3,121		10,689		7,391
Demolition costs		(65)		(629)		(16)		(6)		—		(1,123)		(2,675)
Development-related marketing costs		(418)		(2,072)		(1,950)		(1,988)		(256)		(7,110)		(9,747)
Depreciation and Amortization		(22,789)		(21,767)		(20,732)		(22,613)		(21,201)		(86,313)		(89,075)
Provision for impairment		—		—		(35,734)		—		—		(35,734)		—
Write-off of lease intangibles and other		(27)		(60)		—		(117)		(1)		(60)		(671)
Other income, net		(178)		1,475		13		2,750		363		4,601		524
Equity in earnings from Real Estate Affiliates		3,385		185		(209)		899		1,908		2,802		1,883
Interest, net		(14,524)		(10,425)		(9,769)		(10,108)		(11,329)		(39,447)		(31,111)
Total Operating Assets NOI - Consolidated		40,577		37,997		31,531		35,235		27,798		132,563		113,579

Redevelopments
South Street Seaport		—		92		186		(7)		—		(532)		(2,692)
Landmark Mall		—		(150)		—		—		(151)		(676)		(347)
Total Operating Asset Redevelopments NOI		—		(58)		186		(7)		(151)		(1,208)		(3,039)

Dispositions
The Club at Carlton Woods		—		—		—		—		—		—		(942)
Park West		(14)		489		—		—		498		1,835		1,812
Total Operating Asset Dispositions NOI		(14)		489		—		—		498		1,835		870

Consolidated Operating Assets NOI excluding properties sold or in redevelopment	$	40,591	$	37,566	$	31,345	$	35,242	$	27,451	$	131,936	$	115,748

Company's Share NOI - Equity investees		746		888		569		2,272		1,316		5,069		3,204

Distributions from Summerlin Hospital Investment		3,383		—		—		—		2,616		2,616		1,747

Total NOI	$	44,720	$	38,454	$	31,914	$	37,514	$	31,383	$	139,621	$	120,699

Note:

(a)

- Effective January 1, 2017, we moved South Street Seaport assets under construction and related activities out of the Operating Assets segment into the Strategic Developments segment. Amounts presented for Q1 2016 have been adjusted from previously reported to reflect this change.

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Reconciliations of Non-GAAP Measures


Reconciliation of MPC Land Sales Closed to GAAP Land Sales Revenue:

(In thousands)	Q1 2017		Q1 2016		FY 2016		FY 2015
Total residential land sales closed in period	$	35,881	$	48,817	$	163,142	$	157,806
Total commercial land sales closed in period		3,799		10,405		10,753		36,002
Net recognized (deferred) revenue:
Bridgeland		1,467		68		3,780		(11,136)
Summerlin		9,712		(17,380)		29,596		(16,043)
Total net recognized (deferred) revenue		11,179		(17,312)		33,376		(27,179)
Special Improvement District bond revenue		2,622		32		8,047		20,770
Total land sales revenue - GAAP basis	$	53,481	$	41,942	$	215,318	$	187,399

Total MPC segment revenue - GAAP basis	$	68,706	$	49,755	$	253,304	$	229,865

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