Howard Hughes Holdings Inc. · NYSE:HHH
Howard Hughes — Investor Presentation (October 2019)
20 slides from Howard Hughes's investor presentation, Oct 21, 2019
Slide 1: HHC Strategic Review October 2019
HHC Strategic ReviewOctober 2019
Slide 2: Comprehensive Strategic Review
Comprehensive Strategic Review The Board of Directors conducted a thorough and detailed review of potential strategic alternatives to maximize shareholder valueAs part of its review process, the Board evaluated a broad range of options including a sale, joint venture or spin-off of a portion of the
Slide 3: Three Pillar Transformation Plan
Three Pillar Transformation Plan Streamlined Organizational Structure Sale of Non-Core Assets Accelerated Growth in Core MPC Business $45 – $50mm reduction in overhead expenses, which consists of a $40 – $45mm reduction in corporate G&A and a $5mm reduction in overhead costs associated with developm
Slide 4: Strategic Rationale for Business Transformation
Strategic Rationale for Business Transformation Creating Value through Focus Improved execution and expedited decision-making Empowering local teams will strengthen Company’s culture Nimble and Efficient Conservative underwriting of new development projects On-time and on-budget completion Increased
Slide 5: Paul Layne Appointed New CEO
Paul Layne Appointed New CEO 35 years of diverse real estate operating and development experienceMost recently served as President, Central Region, which includes The Woodlands, The Woodlands Hills and Bridgeland (2012 – Present)Identified and led execution of $1.2bn of commercial development in The
Slide 6: HHC's Strategic Path Forward
HHC’s Strategic Path Forward Legacy HHC Holding-company structure, while critical to early stages of HHC’s development, has become increasingly redundant as the business is managed at the regional MPC-levelIncludes non-core assets which earn inadequate returns and require a disproportionate level of
Slide 7: Streamlined Organizational Structure
Streamlined Organizational Structure Corporate headquarters to move from Dallas to The WoodlandsEliminate overhead associated with non-core assetsRealign each corporate function to drive productivity for the MPCsDecentralized regional management supported by a lean corporate footprintDecision-making
Slide 8: Reduction in Overhead Expenses
Reduction in Overhead Expenses $45 - $50mm Reduction in Overhead Expenses by 2021 Anticipate $38 - $40mm in one-time cash charges associated with relocation expenses, severance packages and retention payments4 Corporate G&A ($ in mm)1 Includes stock-based compensationOverhead costs associated with d
Slide 9: Defensive Positioning Through the Cycle
Defensive Positioning Through the Cycle A simplified and focused business reduces HHC’s reliance on land and condo sales In the event of a dramatic market downturn with no land or condo sales, we expect rental NOI to comfortably cover interest expense and steady-state corporate costs Stabilized NOI
Slide 10: Sale of Non-Core Assets
Sale of Non-Core Assets ~$2bn1 of non-core asset sales over the next 12 to 18 monthsEstimated cash proceeds of $600mm, net of debt and transaction costsProceeds will be redeployed into share repurchases and development opportunities in the core MPCsNon-core assets under consideration have one or mor
Slide 11: Non-Core Assets
Non-Core Assets Non-Core Asset Region Annualized Q2 ’19 NOI Estimated Stabilized NOI Non-Core Assets Located Outside of the MPCs: ($ in mm) ($ in mm) 110 North Wacker Chicago - $14.4 Cottonwood Mall1 Salt Lake City - - West Windsor Central New Jersey - - Elk Grove Sacramento - - Outlet Collection at
Slide 12: Long-Term MPC Value Creation Model
Long-Term MPC Value Creation Model NOI Cash Flow Development Land Appreciation Growing stream of recurring rental income Densification improves desirability of MPCs and increases land values 2011 vs. 2019E Residential Land Price / Acre NOI in mm:1 $55 Cash flows from NOI and land and condo sales fun
Slide 13: Focused Growth in Core MPCs | The Woodlands
Focused Growth in Core MPCs | The Woodlands 7 million square feet of near-term identified parcels:>1 million square feet of office>1,000 multi-family units500K square feet of retail600 hotel roomsSignificant underlying demandExisting 2.3 million square-foot office portfolio is 95% leasedExisting mul
Slide 14: Focused Growth in Core MPCs | Summerlin
Focused Growth in Core MPCs | Summerlin Commercial Development Pipeline 8 million square feet of near-term identified commercial development opportunities5 million square feet of office / 5,600 multi-family units / 100K square feet of neighborhood retailExisting office portfolio is currently 99% lea
Slide 15: Focused Growth in Core MPCs | Columbia
Focused Growth in Core MPCs | Columbia Merriweather District 4.5 million square feet of near-term development:>2 million square feet office / 1,900 multi-family units 320K square feet of retail / 210 hotel rooms Lakefront District Potential to develop >800 multi-family unitsSupplement with ~750K squ
Slide 16: Focused Growth in Core MPCs | Ward Village
Focused Growth in Core MPCs | Ward Village Completed Completed Completed Completed Completed Completed UnderConstruction2021 2023 2023 2023 2023 2024 2023 2025 2025 2026 2028 2024 Under Construction 2022 5 condo projects completed, 4 in Ward Village2 condo projects under construction (A’ali’i and Ko
Slide 17: Update on Seaport
Update on Seaport Complete development of Tin Building, which will drive significant traffic to the Seaport DistrictLease remaining office space in Pier 17 and Fulton Market BuildingComplete openings and stabilize restaurant operationsFinalize plan for 250 Water Street and remaining air rights As th
Slide 18: Summary Highlights
Summary Highlights The business is continuing to perform well across all segments. The Company looks forward to announcing Q3 2019 results on November 4, 2019 New LeadershipStreamlined Organizational Structure Resulting in $45 - $50mm Reduction in Overhead Expenses~$2bn of Non-Core Asset SalesAccele
Slide 19: Appendix
I Appendix
Slide 20: Reconciliation of Net Operating Income to Net income
Reconciliation of Net Operating Income to Net income