Howard Hughes Holdings Inc. · NYSE:HHH
Howard Hughes — Merger or Acquisition (October 2021)
25 slides from Howard Hughes's merger presentation, Oct 19, 2021
Slide 1: Douglas Ranch: The Next Great MPC
Douglas Ranch The Next Great MPC
Slide 2: Non-GAAP financial measures
Non-GAAP financial measures The Company believes that net operating income, or NOI, a non-GAAP financial measure, 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 expens
Slide 3: The Acquisition and The Opportunity
• The sellers sought out HHC given its reputation as a best-in-class MPC developer, and they view HHC as being uniquely qualified to execute this opportunity • Douglas Ranch will become an industry-leading community focused on sustainable development and technological advancement which will help ser
Slide 4: Douglas Ranch is a great strategic fit for HHC
Douglas Ranch is a great strategic fit for HHC Why Douglas Ranch? Exceptionally situated in the fastest growing metro region in the U.S. Superior demographics, favorable business environment, and a thriving job market in one of the most affordable areas of the country High Growth Market Acquisition
Slide 5: Douglas Ranch Meets HHC Investment Criteria
Douglas Ranch Meets HHC Investment Criteria Sources: Land Advisors report, U.S. Bureau Labor of Statistics, Cromford report and market research. Phoenix market is the fastest growing MSA with low unemployment rate Affordable location in a pro- business, low-tax state Substantial returns for 50 yrs.
Slide 6: Douglas Ranch and Map of Phoenix's West Valley
Douglas Ranch(1) Map of Phoenix's West Valley(1) Douglas Ranch Relation to Phoenix Located in the West Valley, Douglas Ranch sits approximately 50 miles west of Phoenix, Arizona in the city of Buckeye Sources: Land Advisors report, U.S. Bureau Labor of Statistics, Cromford report and market research
Slide 7: Douglas Ranch Offers Ideal Location
Douglas Ranch Offers Ideal Location Douglas Ranch Convenient access to six major metropolitan cities Situated directly in the pathway of robust demand driven by: • Rapid population growth • Permanent geographical constraints • Continued housing affordability These demand drivers suggest positive inv
Slide 8: One of the Fastest Growing Cities
One of the Fastest Growing Cities Sources: Land Advisors report, U.S. Bureau Labor of Statistics, Cromford report and market research. (1) As of August 2021. (2) In 2020. Phoenix is Experiencing Rapid Growth Residential & Commercial Growth Since 2010, Phoenix has added almost 1mm residents and has g
Slide 9: Affordability Meets High Growth Market
Modest Home Price Range Affordability Meets High Growth Market Sources: U.S. Census Bureau and Arizona Commerce Authority, HSH, RL Brown, Phoenix Metro Area data, Land Advisors report and market research. Phoenix is Most Affordable Metro Area $199 $125 $122 $108 $87 $83 $79 $79 $78 $68 $63 $61 $60 $
Slide 10: Home Builder Outlook for Phoenix is Among the Strongest
Sources: John Burns 2021 Survey, Land Advisors report, and market research. Key Market Observations Home Builder Outlook for Phoenix is Among the Strongest Strong market conditions reflect builders experiencing robust / steady sales (4 to 5 a month), with prices increasing every month “Anticipates [
Slide 11: NW Phoenix is Experiencing Outsized Returns
NW Phoenix is Experiencing Outsized Returns New Home Demand to Remain Strong into Future Phoenix's Population has been Migrating West Families are Migrating to the West Valley Avg. Annual Household Growth 1-3% 3-5% 5-8% 8%+ (1)-1% Metropolitan Statistical Area Boundary NW Phoenix Phoenix Scottsdale
Slide 12: Background on Douglas Ranch
Background on Douglas Ranch 2002: JDM Purchases Douglas Ranch 2005: Partnership between JDM and El Dorado established 2010: Entered into a master plan agreement with the City of Buckeye 2022: Entering first contracts with homebuilders at Trillium 2015: Groundbreaking for I-11 freeway, which will bis
Slide 13: Overview of the First Village – Trillium
Overview of the First Village –“Trillium” Sun Valley Parkway Trillium to Generate Momentum for MPC Comprised of ~3,029 acres and is at the front door to Douglas Ranch via the Sun Valley Parkway Strategically positioned in the pathway of Phoenix's significant growth in the West Valley The first lots
Slide 14: In Negotiations to Sell First Residential Lots
$264 $331 $382 $377 $408 $444 2011 2013 2015 2017 2019 2021 $366 $370 $577 $584 $659 $962 2011 2013 2015 2017 2019 2021 In Negotiations to Sell First Residential Lots Delivering Long-Term Appreciation in Value Source: Company filings and data. Price per acre, $ in thousands (1) 2021 price per acre i
Slide 15: Phases of Return Generation for Douglas Ranch
Phases of Return Generation for Douglas Ranch Investment Phase Land Sale Phase Perpetual Return Phase Value of Land As-Developed Value Total Value Value of Land As-Developed Value Total Value Value of Land As-Developed Value Total Value Equal Value-Added Return Perpetual Value Creation Acquire Land
Slide 16: Near-term and Long-term Development Plans
Cash Flow Neutral Cash Flow Positive Near-term and long-term development plans for Douglas Ranch are already in place, which allow for immediate action Initial Proposed Development Plan Long-term Plan (~20 Years) Near-term Plan (~5 Years) Establish Douglas Ranch as the premier MPC within the Phoenix
Slide 17: Deal Overview and JDM Six-Month Option
HHC’s acquisition and JDM’s six-month option period provides strong deal dynamics Deal Overview HHC acquires 37,000 acre Douglas Ranch for $600mm(1) • JDM (Seller) simultaneously escrows $33.8mm for a non-refundable deposit (1) JDM and El Dorado continue to hold a 50% stake in Trillium. JDM has six
Slide 18: HHC Has Significant Excess Liquidity for Investment Opportunities
HHC Has Significant Excess Liquidity for Investment Opportunities Sufficient Excess Liquidity Remaining Well-Positioned With Strong Fundamentals Source: Company filings and data. In $ millions. (1) As of 2Q ‘21. (2) Net proceeds following the sale of HHC’s three Woodlands-based hotels announced Sept
Slide 19: Addition of Douglas Ranch Will Add Meaningful Value to HHC's NAV
Addition of Douglas Ranch Will Add Meaningful Value to HHC’s NAV Source: Company filings and data. In $ millions. (1) Values in table as of Dec. 31st, 2020 to match NAV presented at HHC’s 2021 Investor Day.
Slide 20: Douglas Ranch Adds to HHC's Depth of Opportunities
Douglas Ranch Adds to HHC’s Depth of Unmatched Opportunities Portfolio Now Spans 100,000+ Acres Across Six States Summerlin NEVADA The Woodlands TEXAS Bridgeland TEXAS The Woodlands Hills TEXAS Columbia MARYLAND Seaport NEW YORK Ward Village HAWAII Douglas Ranch ARIZONA Douglas Ranch diversifies and
Slide 21: HHC Has a Community in Nearly Every Stage of the Lifecycle
HHC Now Has a Community in Nearly Every Stage of the Lifecycle We Move From Land Holder to Landlord Over Time As Communities Mature Residential Development Tenant Leases Summerlin NEVADA Ward Village HAWAII The Woodlands Hills TEXAS The Woodlands TEXAS Bridgeland TEXAS Columbia MARYLAND Douglas Ranc
Slide 22: Core Principles of HHC's Founders Shape Douglas Ranch
Core Principles of HHC’s Founders Shape Future for Douglas Ranch Douglas Ranch Sustainability George Mitchell Technology & Innovation Howard Hughes Integrate fiber technology for ultimate connectivity Install innovative amenities including EV charging infrastructure Provide enhanced mobility systems
Slide 23: Douglas Ranch Exemplifies the HHC Opportunity
Douglas Ranch Exemplifies the HHC Opportunity Acquisition solidifies HHC’s position as the nation’s leading developer of large-scale master planned communities Positioned in markets that generate outsized risk-adjusted returns due to ability to create large-scale communities and drive local demand S
Slide 24: Appendix
Of WAL Appendix ]
Slide 25: HHC Final Basis and Ownership Summary
HHC Final Basis and Ownership Summary HHC wins favorable dynamics with either ownership option Deal Basis and Ownership A–B = C ($ in millions) At Closing JDM Repurchase Final HHC Ownership Basis per Acre ($k) Trillium $59.0 – $59.0 50% $39.0 Douglas Ranch 541.0 33.8 507.2 100% 15.0 Total $600.0 $33