Howard Hughes Holdings Inc. 10-K

Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are subject to interest rate risk with respect to our variable-rate financings as increases in interest rates would cause our payments under such financings to increase. With respect to fixed-rate financings, increases in interest rates could make it more difficult to refinance such debt when it becomes due. As properties are placed into service and become stabilized, we typically refinance the variable-rate debt with long-term fixed-rate debt. The Company uses derivative instruments to manage its interest rate risk, primarily through the use of interest rate swaps, caps, and collars. The Company had $1.8 billion of variable-rate debt outstanding at December 31, 2023, of which $250.7 million was swapped to a fixed rate through the use of interest rate swaps and $422.2 million had interest rate cap contracts in place. Additionally, the interest rate caps and collars are on construction loans and mortgages with undrawn loan commitment of $31.9 million as of December 31, 2023, which will be covered by the interest rate cap and collar contracts upon drawing. Refer to Note 9 - Derivative Instruments and Hedging Activities in the Notes to Consolidated Financial Statements under Item 8 of this Form 10-K for additional detail. As of December 31, 2023, annual interest costs would increase approximately $10.8 million for every 1.00% increase in floating interest rates. Generally, a significant portion of our interest expense is capitalized due to the level of assets we currently have under development; therefore, the current impact of a change in our interest rate on our Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income would be less than the total change, but we would incur higher cash payments and the development costs of our assets would be higher, resulting in greater depreciation or cost of sales in later years. The following table summarizes principal cash flows on our debt obligations and related weighted-average interest rates by expected maturity dates as of December 31, 2023: Contractual Maturity Date thousands 2024 2025 2026 2027 2028 Thereafter Total Mortgages, notes, and loans payable $ 214,526 $ 527,478 $ 968,964 $ 298,601 $ 835,522 $ 2,507,519 $ 5,352,610 Weighted-average interest rate 5.64 % 5.08 % 4.84 % 4.59 % 4.45 % 4.20 % HHH 2023 FORM 10-K | 61 FINANCIAL STATEMENTS INDEX Table of Contents Index to Financial Statements