Howard Hughes (NYSE:HHH) executives used the company’s fourth-quarter 2025 earnings call to outline a shifting narrative for investors as the real estate operator moves toward what leadership described as a diversified holding company model, anchored by the pending acquisition of Vantage Holdings.
Leadership frames valuation approach ahead of Vantage closing
Executive Chairman Bill Ackman said shareholders have long struggled to apply a conventional public-company valuation framework to Howard Hughes because results are driven by multiple components with different cash flow characteristics. Ackman argued that focusing on a single quarterly earnings number and applying a multiple is not appropriate for the company’s mix of stabilized income-producing real estate, condominium development, and master planned communities (MPCs).
Ackman also said Howard Hughes expects to close the Vantage transaction by June, subject to regulatory approvals, and noted that adding what he described as a $2.1 billion insurance asset would further change how investors should evaluate the company. He said key indicators for the insurance business should include growth in book value and returns on equity, and he discussed plans to shift Vantage’s investment portfolio over time toward higher-return common stock investments managed by Pershing Square.
Vantage described as diversified platform with operating leverage opportunity
Chief Investment Officer Ryan Israel said Vantage operates across more than 24 lines of business spanning specialty insurance and reinsurance and has a management team led by CEO Greg Hendrick, whom he said has more than 30 years of industry experience. Israel highlighted that Vantage was founded in 2020, which he said limited exposure to reserving issues tied to business written in the 2015–2019 period. He also cited what he described as appropriate reserves and a strong book value position.
In response to a question about Vantage’s combined ratio, Ackman said the insurer is still scaling after building infrastructure for a larger platform and suggested operating leverage should improve profitability as revenues grow. Israel added that the company views Vantage’s loss ratio as historically consistent with well-run insurers in its lines, while the expense component has been elevated due to upfront investments. Israel said the company believes Vantage is positioned to bring its expense ratio down as it benefits from scale.
Management also reiterated that investment returns are a key driver of long-term insurance profitability and said a shift from fixed income toward common stocks is expected to improve returns on equity over time.
Management calls 2025 one of strongest operating years, led by real estate
CEO David O’Reilly said 2025 was “one of the strongest operating years” in Howard Hughes’ history and emphasized that the year’s earnings and cash flow were generated entirely by the company’s real estate platform.
In MPCs, O’Reilly said segment EBT reached a record $476 million. He attributed results to the sale of 621 residential acres at an average price of $890,000 per acre, with strong demand in Summerlin and Bridgeland. Excluding a bulk sale of undeveloped land in Summerlin, finished residential land sold at a record $1.7 million per acre, which he said demonstrated embedded value in entitled and developed product.
O’Reilly also highlighted the grand opening of Teravalis in Phoenix’s West Valley, describing it as a 37,000-acre community entitled for up to 100,000 homes over time and an early-stage, long-duration growth engine.
For operating assets, O’Reilly said the company delivered record full-year NOI of $276 million, up 8% year-over-year, with same-store office NOI up 11% and multifamily NOI up 6%. He characterized operating assets as the company’s recurring cash flow engine, contrasting them with more episodic MPC earnings tied to land sales. He also said One Riva Row along The Woodlands Waterway was completed in the fourth quarter and that leasing began ahead of expectations, with an anticipated meaningful NOI contribution as the asset stabilizes.
In condominiums, O’Reilly said the company contracted $1.6 billion of future condo revenue in 2025, the strongest year in its history. He cited substantial presales at The Park Ward Village (97%) and Kalae (93%) and described the company’s approach as de-risked through substantial presales prior to construction and roughly 60% non-recourse loan-to-cost financing supported by buyer deposits.
O’Reilly also referenced the recent announcement of the Toro District, an 83-acre sports and entertainment development in Bridgeland anchored by the Houston Texans’ new global headquarters and training facility. He said the project is expected to enhance long-term recurring revenue potential and support surrounding land values.
2026 guidance reflects “normalization,” with key ranges across segments
CFO Carlos Olea said 2025 results exceeded guidance and that 2026 guidance is intended to provide a normalization framework given the pending Vantage closing and an “outsized” Summerlin bulk land sale in 2025. The company’s 2026 expectations included:
- Adjusted operating cash flow: $415 million to $465 million
- MPC EBT: $343 million to $391 million, with the year-over-year decline largely attributed to the absence of the Summerlin bulk sale
- NOI (including JV share): $279 million to $290 million, implying 1% to 5% growth versus 2025
- Condominium gross revenue (2026): approximately $720 million to $750 million
- Condominium profit (2026): $108 million to $128 million on margins of 15% to 17%
- Cash G&A (2026): $82 million to $92 million, including $15 million in annual base fees paid to Pershing Square and excluding variable fees tied to quarter-end stock prices
Olea said condos under construction and in pre-development represent about $5 billion of remaining expected gross revenue over their life, with an estimated $1.3 billion in profits at a 25% margin. He said the company expects to recognize roughly 40% of those revenues in 2026–2027 and 60% in 2028–2030. Olea said the newest towers, Melia and ‘Ilima, are expected to close in 2030 and represent 41% of future revenues, with margins exceeding 25%.
Financing, leverage philosophy, and use of excess cash
On the balance sheet, Olea said the company refinanced and upsized its 2028 $750 million senior notes with $1 billion of new notes due in 2034. He said the issuance achieved the tightest credit spreads in the company’s history—191 basis points for the 6.25-year tranche and 198 basis points for the eight-year tranche—and noted the company received a modest upgrade from S&P.
Olea described the additional Pershing preferred investment of up to $1 billion as carrying a zero percent coupon and said it provides permanent capital with no fixed cash costs and optionality for redemption. He also said the company does not manage to a fixed net debt-to-EBITDA target, citing the lumpiness of real estate earnings, and instead finances each segment based on asset characteristics while maintaining liquidity.
In the Q&A, Ackman said the first priority for excess cash—defined as cash not needed for reinvestment in the company’s communities—would be to redeem the Pershing Square Holdings preferred stock tied to the Vantage transaction so that Howard Hughes ultimately owns 100% of the insurer economically. After that, he said excess cash would principally be used for other operating investments, including potential additional capital into the insurer and investments in other operating companies.
Separately, Ackman addressed strategy around commercial real estate ownership, saying the company takes a long-term view and believes controlling commercial assets within its MPCs helps limit competitive dynamics and supports occupancy and rental growth through downturns. He said selling commercial land is generally not preferred, though management noted an example where users may require ownership. O’Reilly added that 30 acres sold were on the edges of The Woodlands and were sold to educational and healthcare users rather than in the city center, which he described as “incredibly valuable.”
On condominium margins at The Park Ward Village, management said infrastructure upgrades—water, sewer, and electric—were anticipated, with a larger allocation to that tower that is expected to benefit future towers. O’Reilly also said The Park Ward Village is a “second-row” tower and includes more retail space than many prior towers, affecting reported margins because retail revenue is expected to come through future NOI rather than unit sales.
About Howard Hughes (NYSE:HHH)
Howard Hughes Holdings Inc, together with its subsidiaries, operates as a real estate development company in the United States. It operates in four segments: Operating Assets; Master Planned Communities (MPCs); Seaport; and Strategic Developments. The Operating Assets segment consists of developed or acquired retail, office, and multi-family properties along with other retail investments. Its MPCs segment develops, sells, and leases residential and commercial land designated for long-term community development projects in and around Las Vegas, Nevada; Houston, Texas; and Phoenix, Arizona.
