Item 7. Management’s Discussion and Analysis
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our Consolidated Financial Statements and the related notes filed as a part of this Annual Report on Form 10-K (Annual Report). This discussion contains forward-looking statements that involve risks, uncertainties, assumptions, and other factors, including those described in Part I, Item 1A . Risk Factors and elsewhere in this Annual Report. These factors and others not currently known to us could cause our financial results in 2025 and subsequent fiscal years to differ materially from those expressed in, or implied by, those forward-looking statements. You are cautioned not to place undue reliance on this information which speaks only as of the date of this report. We are not obligated to update this information, whether as a result of new information, future events or otherwise, except as may be required by law.
This section of our Annual Report discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussion of 2023 and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report can be found in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
All references to numbered Notes are to specific Notes to our Consolidated Financial Statements included in this Annual Report and which descriptions are incorporated into the applicable response by reference.
Index Page
Overview
36
Results of Operations
39
Operating Assets
39
Master Planned Communities
41
Strategic Developments
46
Corporate Income, Expenses, and Other Items
49
Liquidity and Capital Resources
51
Critical Accounting Policies and Estimates
55
Recently Issued Accounting Pronouncements and Developments
55
HHH 2025 FORM 10-K | 35
MANAGEMENT’S DISCUSSION AND ANALYSIS
OVERVIEW
Table of Contents
Index to Financial Statements
OVERVIEW
General Howard Hughes Holdings Inc. (HHH or the Company) is a holding company that owns a real estate development subsidiary, The Howard Hughes Corporation (HHC). Through HHC, the Company operates a large‑scale, mixed‑use real estate platform focused on the development of master planned communities (MPCs), the investment in strategic real estate development opportunities, and the ownership and operation of income‑producing properties. References to HHH, the Company, we, us, and our refer to Howard Hughes Holdings Inc. and its consolidated subsidiaries, which includes The Howard Hughes Corporation, unless otherwise specifically stated. References to HHC or Howard Hughes Communities refer to The Howard Hughes Corporation and its consolidated subsidiaries unless otherwise specifically stated.
In 2025, the Company began executing a long-term strategy to transition from a pure-play real estate company to a diversified holding company. On May 5, 2025, the Company issued 9,000,000 shares of newly issued common stock to Pershing Square for an aggregate purchase price of $900 million (Pershing Square Issuance). In connection with the investment, the Company and Pershing Square entered into related agreements, including a Services Agreement, Shareholder Agreement, Standstill Agreement, and Registration Rights Agreement. The Company intends to use the proceeds from the transaction to acquire or invest in operating businesses.
As previously disclosed in our Current Report on Form 8‑K filed on December 18, 2025, the Company entered into a definitive agreement to acquire 100% of Vantage Group Holdings Ltd. (Vantage), a privately held specialty insurance and reinsurance company, for cash consideration of approximately $2.1 billion. The transaction remains subject to regulatory approvals and other customary closing conditions, and is expected to close in the second quarter of 2026. To support the funding of the acquisition, the Company also entered into an equity commitment letter with Pershing Square Holdings, Ltd. under which Pershing Square committed to purchase up to $1.0 billion of the Company’s preferred stock, prior to and contingent upon the closing of the Vantage acquisition. Over time, the Company will have the right, but not the obligation, to repurchase the preferred stock during specified periods and upon certain triggering events. The acquisition is expected to be funded through the Company’s cash on hand, and proceeds from the issuance of the preferred stock.
Refer to Item 1. Business for a general description of the assets contained in our three business segments and Item 2. Properties for details regarding the asset type, size, location, and key metrics about our various properties.
We are primarily focused on creating stockholder value by increasing our per-share net asset value. Often, the nature of our business results in short-term volatility in our net income due to the timing of Master Planned Communities (MPC) land sales, recognition of condominium revenue, and operating business pre-opening expenses.
Changes for monetary amounts between periods presented are calculated based on the amounts in thousands of dollars stated in our consolidated financial statements and then rounded to the nearest million. Therefore, certain changes may not recalculate based on the amounts rounded to the nearest million.
2025 Results During 2025, we delivered exceptional results across our core business lines. Operating Assets net operating income (NOI) and MPC earnings before taxes (EBT) both reached record highs, while our condo and strategic development activities extended the runway for future growth.
In our MPCs, we continued to experience heightened demand and home builder interest for new land parcels. As a result, MPC EBT increased 36% year-over-year, driven by a new full-year record number of residential acres sold.
In Operating Assets, we delivered another full-year NOI record, outpacing 2024 results by 7%, excluding dispositions. This growth was led by our office portfolio, which continued to benefit from strong lease-up activity and abatement expirations at various properties in The Woodlands, Merriweather District, and Summerlin. In 2025, the Company executed 484,000 square feet of new or expanded office leases including 334,000 square feet in The Woodlands, 88,000 square feet in Merriweather District, and 62,000 square feet in Summerlin. Our multifamily portfolio also contributed meaningfully to the outperformance due to continued lease-up at our newer properties in Summerlin, Bridgeland, and Merriweather District.
In Strategic Developments, Ward Village had another strong year, closing 690 units at Ulana Ward Village, a workforce tower that generated $369.5 million of condominium revenues at a break even gross margin, which is consistent with our typical target for workforce towers. Pre-sales activity for our under construction condominiums progressed, and these projects were 93% pre-sold at year end and represent more than $1.9 billion of future contracted revenue. Leasing activity at The Launiu remained strong and we launched pre-sales for two new Ward Village condominiums, Melia and ‘Ilima in June 2025, with 66% of the units at these predevelopment towers pre-sold at year end representing $2.0 billion of future contracted revenue. Future contracted revenues will be recognized as projects are completed.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
OVERVIEW
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Index to Financial Statements
2026 Outlook Proceeding into 2026, we maintain a positive long-term outlook for our businesses and believe we are well positioned to create value across cycles. We remain focused on maintaining liquidity, managing near‑term maturities, and allocating capital to the highest‑return opportunities across our business segments. Development spending will continue on a disciplined basis, and we will evaluate opportunities to recycle capital and enhance balance‑sheet flexibility as market conditions evolve.
Across our master planned communities, we expect demand for new homes, retail, and office space to remain resilient, supported by constrained inventories of existing homes, continued migration to our communities, and the quality and scale of our offerings. MPC EBT is expected to normalize in 2026 following a record year of land sales in 2025 and Operating Assets performance is expected to be stable to modestly positive. We expect condominium activity during the year to be driven primarily by The Park Ward Village, which is substantially pre-sold and positioned to contribute meaningful revenue and gross profit as it is delivered.
Additionally, the Pershing Square investment and the pending agreement to acquire Vantage mark important steps in broadening our strategic reach. We expect to make meaningful progress in 2026 toward building a durable foundation to compound long-term shareholder value across multiple platforms, while maintaining our focus on liquidity, disciplined capital allocation, and balance sheet flexibility. The Company’s expectations will be updated as applicable throughout 2026, and as additional information becomes available regarding the pending Vantage acquisition and its expected contribution to the consolidated business.
Our outlook is subject to risks and uncertainties, including those related to interest rates, capital markets conditions, general economic and housing trends in our key regions, and other factors described in Part I, Item 1A. Risk Factors and elsewhere in this Annual Report.
2025 Highlights
Overall
– Net income from continuing operations decreased to $123.8 million in 2025, compared to net income of $285.2 million in the prior year. The year-over-year decrease was primarily attributed to a change in the product mix of condominium closings as we closed units at a workforce tower in the current year, compared to closing units at a luxury tower in the prior year, and the receipt of insurance proceeds in the prior year following the execution of a settlement agreement related to the construction defect claims at Waiea. These decreases were partially offset by an increase in residential acres sold in Summerlin.
– We continue to maintain a strong liquidity position with $1.5 billion of cash and cash equivalents, $515.0 million of undrawn capacity on our Secured Bridgeland Notes, and $686.6 million of undrawn lender commitment available to be drawn for property development, and limited near-term debt maturities.
Operating Assets
– Operating Assets EBT increased $1.0 million, with a loss of $27.4 million in 2025, compared to a loss of $28.5 million in the prior year.
– Operating Assets NOI was $262.0 million in 2025, a $16.5 million increase compared to $245.5 million in the prior year.
– Office NOI increased $13.6 million, primarily due to strong leasing activity and abatement expirations at various properties in The Woodlands, Merriweather District, and Summerlin, most notably at 9950 Woodloch Forest, 6100 Merriweather, and 1700 Pavilion, partially offset by decreases related to lower occupancy at certain properties in The Woodlands, most notably at 3831 Technology Forest and Two Hughes Landing.
– Multifamily NOI increased $3.9 million primarily due to continued lease-up at Tanager Echo in Summerlin, Wingspan in Bridgeland, and Marlow in Merriweather District.
– In 2025, the Company completed the sale of four land parcels and retail spaces in Ward Village for total proceeds of $18.2 million, and a combined gain on sale of $14.4 million.
MPC
– MPC EBT totaled income of $476.1 million in 2025, a $127.0 million increase compared to income of $349.1 million in the prior year.
– The increase in EBT was primarily due to higher residential land sales at Summerlin and Bridgeland, higher commercial land sales in The Woodlands, and lower equity losses at The Summit.
HHH 2025 FORM 10-K | 37
MANAGEMENT’S DISCUSSION AND ANALYSIS
OVERVIEW
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Index to Financial Statements
Strategic Developments
– Strategic Developments EBT totaled a loss of $13.9 million in 2025, a $296.7 million decrease compared to income of $282.8 million in the prior year.
– The decrease in EBT was primarily due to a decrease in condominium sales net cost of sales due to the change in the product mix of condominium closings as we closed units at a workforce tower in the current year, compared to closing units at a luxury tower in the prior year, and a decrease in other income related to accruing a charge for a legal judgment in Columbia in the current year, compared to the receipt of insurance proceeds for the Waiea remediation in the prior year. These decreases were partially offset by an increase in gain on sale of real estate assets due to a land swap in The Woodlands and the sale of a land parcel near Merriweather District in the current year.
– Leasing activity at The Launiu remained strong and we launched pre-sales for two new Ward Village condominiums, Melia and ‘Ilima in June 2025. During 2025, we contracted 283 pre-development units and as of December 31, 2025, 66% of the units at our three pre-development towers are under contract.
– In 2025, we placed three properties in service, including Grogan’s Mill Retail, a retail property in The Woodlands; One Bridgeland Green, an office property in Bridgeland; and 1 Riva Row, a multifamily property in The Woodlands. These properties represent 268 multifamily units and approximately 81,000 square feet of retail and office space.
– In 2025, we began construction on Memorial Hermann Medical Office, an office building in Bridgeland, and the redevelopment of 7 Waterway, an office building in The Woodlands. These properties represent approximately 237,000 square feet of office space.
Corporate
– Net expenses related to Corporate income, expenses, and other items decreased $7.3 million compared to the prior year primarily due to a decrease in income tax expense, partially offset by an increase in general and administrative expenses, primarily related to the Pershing Square advisory fee and a strategic reduction in force in the current year.
Capital and Financing Activities
– In 2025, our financing activity included draws on existing mortgages of $573.5 million, refinancings of $184.2 million, and repayments of $365.7 million. In addition, we repaid $198.0 million on the Secured Bridgeland Notes using the proceeds from the sale of Municipal Utility District (MUD) receivables. For additional information, refer to Note 9 - Mortgages, Notes, and Loans Payable, Net in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report.
– Subsequent to year end, on February 17, 2026, HHC, the Company’s wholly owned subsidiary, issued $500.0 million of 5.875% senior unsecured notes due 2032 and $500.0 million of 6.125% senior unsecured notes due 2034. HHC used the net proceeds to redeem its outstanding $750.0 million 5.375% senior unsecured notes due 2028, including premiums, accrued and unpaid interest and related expenses, and will use the remaining proceeds for general corporate purposes. Refer to Note 9 - Mortgages, Notes, and Loans Payable, Net in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional detail.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
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RESULTS OF OPERATIONS
Operating Assets
Segment EBT The following table presents segment EBT for Operating Assets for the years ended December 31:
Operating Assets Segment EBT
thousands except percentages 2025 2024 $ Change % Change
Rental revenue $ 441,413 $ 421,641 $ 19,772 5 %
Other land, rental, and property revenues 24,155 22,659 1,496 7 %
Total revenues 465,568 444,300 21,268 5 %
Operating costs (145,464) (138,172) (7,292) (5) %
Rental property real estate taxes (58,577) (55,915) (2,662) (5) %
(Provision for) recovery of doubtful accounts (232) (504) 272 54 %
Total operating expenses (204,273) (194,591) (9,682) (5) %
Segment operating income (loss) 261,295 249,709 11,586 5 %
Depreciation and amortization (172,835) (169,040) (3,795) (2) %
Interest income (expense), net (136,637) (138,207) 1,570 1 %
Other income (loss), net 2,266 822 1,444 176 %
Equity in earnings (losses) from unconsolidated ventures 4,829 5,819 (990) (17) %
Gain (loss) on sale or disposal of real estate and other assets, net 14,354 22,907 (8,553) (37) %
Gain (loss) on extinguishment of debt (698) (465) (233) (50) %
Segment EBT $ (27,426) $ (28,455) $ 1,029 4 %
Operating Assets segment EBT increased $1.0 million compared to the prior year primarily due to the following:
– Rental revenues, net of Operating costs increased $12.5 million primarily due to increased leasing activity across our portfolio.
This increase to EBT was partially offset by the following:
– Gain on sale of real estate decreased $8.6 million primarily due to the sale of four land parcels and retail spaces in Ward Village in 2025, compared to the sale of Lakeland Village Center at Bridgeland, Creekside Park Medical Plaza, and four non-core ground leases in The Woodlands in 2024.
Net Operating Income In addition to the required presentations using accounting principles generally accepted in the United States (GAAP), we use certain non-GAAP performance measures, as we believe these measures improve the understanding of our operational results and make comparisons of operating results among peer companies more meaningful. Management continually evaluates the usefulness, relevance, limitations and calculation of our reported non-GAAP performance measures to determine how best to provide relevant information to the public, and thus such reported measures could change.
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, net; ground rent amortization; demolition costs; other income (loss); depreciation and amortization; development-related marketing costs; gain on sale or disposal of real estate and other assets, net; loss on extinguishment of debt; provision for impairment; and equity in earnings from unconsolidated ventures.
We believe that NOI is a useful supplemental measure of the performance of our Operating Assets segment because it provides a performance measure that reflects the revenues and expenses directly associated with owning and operating real estate properties. We use NOI to evaluate our operating performance on a property-by-property basis because NOI allows us to evaluate the impact that property-specific factors such as rental and occupancy rates, tenant mix, and operating costs have on our operating results, gross margins, and investment returns.
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RESULTS OF OPERATIONS
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A reconciliation of Operating Assets segment EBT to Operating Assets NOI is presented in the table below.
Operating Assets NOI
thousands except percentages 2025 2024 $ Change % Change
Operating Assets segment EBT $ (27,426) $ (28,455) $ 1,029 4 %
Add back:
Depreciation and amortization 172,835 169,040 3,795 2 %
Interest (income) expense, net 136,637 138,207 (1,570) (1) %
Equity in (earnings) losses from unconsolidated ventures (4,829) (5,819) 990 17 %
(Gain) loss on sale or disposal of real estate and other assets, net (14,354) (22,907) 8,553 37 %
(Gain) loss on extinguishment of debt 698 465 233 50 %
Impact of straight-line rent (1,964) (4,770) 2,806 59 %
Other 388 (306) 694 NM
Operating Assets NOI $ 261,985 $ 245,455 $ 16,530 7 %
NM Not meaningful.
The below table presents Operating Assets NOI by property type:
Operating Assets NOI by Property Type
thousands except percentages 2025 2024 $ Change % Change
Office $ 138,173 $ 124,594 $ 13,579 11 %
Retail 55,132 54,163 969 2 %
Multifamily 62,694 58,827 3,867 7 %
Other 5,986 6,153 (167) (3) %
Dispositions (a) — 1,718 (1,718) (100) %
Operating Assets NOI $ 261,985 $ 245,455 $ 16,530 7 %
(a) Properties that were transferred to our Strategic Developments segment for redevelopment and properties that were sold are shown separately for all periods presented.
Operating Assets NOI increased $16.5 million compared to the prior year primarily due to the following:
– Office NOI increased $13.6 million primarily due to strong leasing activity and abatement expirations at various properties in The Woodlands, Merriweather District, and Summerlin, most notably at 9950 Woodloch Forest, 6100 Merriweather, and 1700 Pavilion, partially offset by decreases related to lower occupancy at certain properties in The Woodlands, most notably at 3831 Technology Forest and Two Hughes Landing.
– Multifamily NOI increased $3.9 million primarily due to continued lease-up at Tanager Echo in Summerlin, Wingspan in Bridgeland, and Marlow in Merriweather District.
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RESULTS OF OPERATIONS
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Master Planned Communities
Segment EBT The following table presents segment EBT for MPC for the years ended December 31:
MPC Segment EBT
thousands except percentages 2025 2024 $ Change % Change
Master Planned Communities land sales (a) $ 562,586 $ 453,195 $ 109,391 24 %
Other land, rental, and property revenues 19,929 17,707 2,222 13 %
Builder price participation (b) 52,341 52,023 318 1 %
Total revenues 634,856 522,925 111,931 21 %
Master Planned Communities cost of sales (188,704) (169,191) (19,513) (12) %
Operating costs (45,298) (52,736) 7,438 14 %
Total operating expenses (234,002) (221,927) (12,075) (5) %
Segment operating income (loss) 400,854 300,998 99,856 33 %
Depreciation and amortization (408) (438) 30 7 %
Interest income (expense), net 75,160 60,473 14,687 24 %
Other income (loss), net 120 — 120 NM
Equity in earnings (losses) from unconsolidated ventures (3,374) (11,899) 8,525 72 %
Gain (loss) on sale or disposal of real estate and other assets, net 3,750 — 3,750 NM
Segment EBT $ 476,102 $ 349,134 $ 126,968 36 %
(a) MPC land sales include deferred revenue from land sales closed in a previous period that met criteria for recognition in the current period and excludes amounts deferred from current period land sales that do not yet meet the recognition criteria.
(b) Builder price participation revenue is earned when a developer that acquired land from us develops and sells a home to an end user at a price higher than a predetermined breakpoint. The excess over the breakpoint is shared between us and the developer at the time of closing on the sale of the home based on a previously agreed-upon percentage. This revenue fluctuates based upon the number and the prices of homes closed that qualify for builder price participation payments.
NM Not meaningful.
The following table presents MPC segment EBT by MPC for the years ended December 31:
MPC Segment EBT by MPC
thousands except percentages 2025 2024 $ Change % Change
Bridgeland $ 100,396 $ 77,611 $ 22,785 29 %
Summerlin 361,205 260,924 100,281 38 %
Teravalis (a) (3,163) 3,596 (6,759) (188) %
The Woodlands 7,380 (8,863) 16,243 183 %
The Woodlands Hills 10,284 15,866 (5,582) (35) %
Segment EBT $ 476,102 $ 349,134 $ 126,968 36 %
Floreo (b) $ (3,602) $ 9,816 $ (13,418) (137) %
(a) As of December 31, 2025, the Company owned an 88.0% interest in and consolidates Teravalis. For additional detail, refer to Note 1 - Presentation of Financial Statements and Significant Accounting Policies in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report.
(b) These amounts represent 100% of Floreo EBT. As of December 31, 2025, the Company owned a 50% interest in Floreo. Refer to Note 4 - Investments in Unconsolidated Ventures in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for a description of the joint venture and further discussion.
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MPC segment EBT increased $127.0 million compared to the prior year, primarily due to higher residential land sales at Summerlin and Bridgeland, higher commercial land sales in The Woodlands, and lower equity losses at The Summit.
Summerlin EBT increased $100.3 million compared to the prior year.
– MPC sales, net of MPC cost of sales increased $72.5 million primarily due to the following activity:
– increase in superpad acres sold, with 412.3 acres sold at an average price of $970,000 per acre in 2025, compared to 216.5 acres sold at an average price of $1.3 million per acre in 2024
– decrease due to $6.0 million less revenue recognized out of deferred revenue, net of associated deferred costs in 2025, compared to 2024
– decrease in custom lot acres sold partially offset by an increase in price per acre, with 2.7 acres sold at an average price of $7.5 million per acre in 2025, compared to 3.8 acres sold at an average price of $6.0 million per acre in 2024
– Equity earnings at The Summit increased $15.2 million. This was primarily due to higher losses in 2024 related to changes to the development model.
– Builder price participation increased $4.9 million as homes earned higher participation revenue per home, partially offset by fewer homes closing with sales prices above the predetermined breakpoint necessary for participation revenue in 2025, compared to 2024.
– Increase of $4.0 million primarily due to higher capitalized interest inclusive of derivatives.
– Other land, rental, and property revenues increased $3.5 million primarily due to higher advertising revenue related to superpad acres sold in 2025, compared to 2024.
Bridgeland EBT increased $22.8 million compared to the prior year.
– Increase of $9.4 million primarily due to higher capitalized interest.
– MPC sales, net of MPC cost of sales increased $8.9 million primarily due to the following activity:
– increase in price per acre offset by a slight decrease in residential acres sold, with 177.1 acres sold at an average price of $669,000 per acre in 2025, compared to 178.1 acres sold at an average price of $591,000 per acre in 2024
– decrease due to $3.0 million less revenue recognized out of deferred revenue, net of associated deferred costs in 2025, compared to 2024
– decrease in commercial acres sold, with no acres sold in 2025, compared to 13.5 acres sold at an average price of $369,000 per acre in 2024
– Operating costs decreased $7.6 million due to lower real estate taxes, primarily from the finalization of prior-year accrual estimates.
– Builder price participation decreased $3.1 million as fewer homes were closed with sales prices over the predetermined breakpoint necessary for participation revenue in 2025, compared to 2024.
The Woodlands EBT increased $16.2 million compared to the prior year.
– MPC sales, net of MPC cost of sales increased $13.2 million primarily due to the following activity:
– increase in commercial acres sold, with 30.1 acres sold at an average price of $670,000 per acre in 2025, compared to no acres sold in 2024
– decrease due to $2.1 million less revenue recognized out of deferred revenue, net of associated deferred costs in 2025, compared to 2024
– Gain on sale or disposal of real estate and other assets, net increased $3.7 million due to an eminent domain settlement related to the condemnation of a 9.9-acre parcel of non-saleable land in 2025, with no similar activity in 2024.
Teravalis EBT decreased $6.8 million compared to the prior year.
– Equity earnings at Floreo decreased $6.7 million primarily related to lower land sales in 2025 compared to 2024. Our Floreo joint venture sold a total of 10.6 residential acres at an average price of $793,000 per acre in 2025, compared to 115.4 acres sold at an average price of $777,000 per acre in 2024.
The Woodlands Hills EBT decreased $5.6 million compared to the prior year.
– MPC sales, net of MPC cost of sales decreased $4.7 million primarily due to the following activity:
– decrease in residential acres sold partially offset by an increase in price per acre, with 28.4 acres sold at an average price of $479,000 per acre in 2025, compared to 47.0 acres sold at an average price of $458,000 per acre in 2024
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MPC Equity Investments
The Summit
The Summit, our joint venture with Discovery Land Company, offers a mix of custom lots, single-family homes, and clubhouse suites in our Summerlin MPC. The original 555-acre community (Phase I) is nearing completion and expected to consist of approximately 245 homes and 32 condominiums. In 2022, the Company contributed an additional 54 acres (Phase II) to The Summit adjacent to the existing Summit community to develop approximately 28 custom home sites. We recognized equity losses of $1.6 million and received no cash distributions in 2025, compared to equity losses of $16.8 million and cash distributions of $4.9 million in 2024.
Floreo
Land development is currently underway at Floreo, our joint venture with Trillium Development Holding Company, LLC. In late 2025, the Company welcomed the first residents and celebrated the grand opening of the community.
For additional detail, refer to Note 4 - Investments in Unconsolidated Ventures in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report.
Master Planned Communities Land Sales The following table presents the detail of MPC land sales recognized for the years ended December 31, 2025 and 2024. Total net recognized (deferred) revenue includes revenues recognized in the current period which are related to sales closed in prior periods, offset by revenues deferred on sales closed in the current period.
thousands 2025 2024
Total residential land sales closed $ 552,360 $ 441,044
Total commercial land sales closed 20,168 4,984
Net recognized (deferred) revenue:
Bridgeland 2,542 6,491
The Woodlands (2,137) 517
The Woodlands Hills 61 30
Summerlin (28,346) (18,140)
Total net recognized (deferred) revenue (27,880) (11,102)
Special Improvement District revenue 17,938 18,269
Master Planned Communities land sales $ 562,586 $ 453,195
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Residential and Commercial Land Sales Closed The following tables detail our residential and commercial land sales closed for the years ended December 31:
Summary of MPC Land Sales Closed
Land Sales Acres Sold Average Price Per Acre
thousands, except acres sold 2025 2024 2025 2024 2025 2024
Residential Land Sales Closed
Bridgeland
Single family $ 118,538 $ 105,296 177.1 178.1 $ 669 $ 591
Summerlin
Superpad sites 400,046 291,230 412.3 216.5 970 1,345
Custom lots 20,175 22,982 2.7 3.8 7,472 6,048
The Woodlands Hills
Single family 13,601 21,536 28.4 47.0 479 458
Total residential land sales closed (a) $ 552,360 $ 441,044 620.5 445.4 $ 890 $ 990
Commercial Land Sales Closed
Bridgeland $ — $ 4,984 — 13.5 $ — $ 369
The Woodlands 20,168 — 30.1 — 670 —
Total commercial land sales closed (a) $ 20,168 $ 4,984 30.1 13.5 $ 670 $ 369
(a) Excludes revenues recognized in the current period which are related to sales closed in prior periods and includes revenues deferred on sales closed in the current period. Please see the summary of MPC land sales table above which reconciles total residential and commercial land sales closed to MPC land sales revenue recognized for the years ended December 31, 2025 and 2024.
Although our business does not involve the sale or resale of homes, we believe that net new home sales are an important indicator of future demand for our superpad sites and finished lots. Therefore, we use this statistic where relevant in our discussion of MPC operating results herein. Net new home sales reflect home sales made by homebuilders, less cancellations. Cancellations generally occur when a homebuyer signs a contract to purchase a home but later fails to qualify for a home mortgage or is unable to provide an adequate down payment to complete the home sale.
Net New Home Sales Median Home Sales Price
thousands except percentages 2025 2024 % Change 2025 2024 % Change
Bridgeland 812 938 (13.4) % $ 470 $ 465 1.1 %
Summerlin 949 1,038 (8.6) % 779 692 12.6 %
The Woodlands (a) 4 9 (55.6) % 2,875 2,249 27.8 %
The Woodlands Hills 171 249 (31.3) % 400 419 (4.5) %
Total 1,936 2,234 (13.3) %
(a) New home sales in The Woodlands are not expected to be significant as residential land development is nearing completion.
MPC Net Contribution MPC Net Contribution is a non-GAAP financial measure derived from EBT, adjusted for certain items as discussed below. Management uses this measure because it captures current period performance through the velocity of sales, as well as current period development expenditures based upon demand at our MPCs, which varies depending upon the stage of the MPC’s development lifecycle, and the overall economic environment. MPC Net Contribution is defined as MPC segment EBT, plus MPC cost of sales, Depreciation and amortization, and net collections from MUD and Special Improvement District (SID) bonds receivables, reduced by MPC development expenditures, land acquisitions, and Equity in earnings from unconsolidated ventures, net of distributions. MPC Net Contribution is not a GAAP-based operational metric and should not be used to measure operating performance of the MPC assets as a substitute for GAAP measures of such performance nor should it be used as a comparison metric with other comparable businesses.
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Below is a reconciliation of segment EBT to MPC Net Contribution for the years ended December 31:
thousands except percentages 2025 2024 $ Change % Change
MPC segment EBT $ 476,102 $ 349,134 $ 126,968 36 %
Plus:
Master Planned Communities cost of sales 188,704 169,191 19,513 12 %
Depreciation and amortization 408 438 (30) (7) %
MUD and SID bonds collections, net (a) 37,293 107,031 (69,738) (65) %
Proceeds from sale of MUD receivables 180,043 176,680 3,363 2 %
Distributions from unconsolidated ventures — 4,896 (4,896) (100) %
Less:
MPC development expenditures (477,870) (427,979) (49,891) (12) %
Equity in (earnings) losses from unconsolidated ventures 3,374 11,899 (8,525) (72) %
MPC Net Contribution $ 408,054 $ 391,290 $ 16,764 4 %
(a) SID collections are shown net of SID transfers to buyers in the respective periods.
MPC Net Contribution increased $16.8 million for the year ended December 31, 2025, primarily due to higher MPC land sales, partially offset by lower MUD and SID bonds collections, net, higher MPC development expenditures, and no distributions from unconsolidated ventures in 2025 compared to 2024.
MPC Land Inventory The following table summarizes MPC land inventory activity:
thousands Bridgeland Summerlin Teravalis The
Woodlands The Woodlands Hills Total MPC
Balance December 31, 2023 $ 533,031 $ 1,079,927 $ 544,824 $ 172,652 $ 115,239 $ 2,445,673
Development expenditures (a) 204,542 186,163 573 5,853 30,848 427,979
MPC Cost of sales (47,056) (113,844) — (117) (8,174) (169,191)
MUD reimbursable costs (b) (178,701) — — (877) (20,087) (199,665)
Transfer to Strategic Development and Operating Assets Segments (1,218) — — 11,399 — 10,181
Other (1,367) 1,491 (16) 583 (4,006) (3,315)
Balance December 31, 2024 509,231 1,153,737 545,381 189,493 113,820 2,511,662
Development expenditures (a) 215,001 233,631 1,867 4,053 23,318 477,870
MPC Cost of sales (42,459) (136,797) — (4,431) (5,017) (188,704)
MUD reimbursable costs (b) (189,603) — — (1,062) (18,327) (208,992)
Transfer to Strategic Development and Operating Assets Segments (1,459) — — 121 — (1,338)
Other 31,520 6,482 (37) (859) 7,473 44,579
Balance December 31, 2025 $ 522,231 $ 1,257,053 $ 547,211 $ 187,315 $ 121,267 $ 2,635,077
(a) Development expenditures are inclusive of capitalized interest and property taxes.
(b) MUD reimbursable costs represent land development expenditures transferred to MUD Receivables.
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RESULTS OF OPERATIONS
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Index to Financial Statements
Strategic Developments
Our Strategic Developments assets generally require substantial future development to maximize their value. Other than our condominium properties, most of the properties and projects in this segment do not generate revenues. Our expenses relating to these assets are primarily related to costs associated with constructing the assets, selling condominiums, carrying costs including, but not limited to, property taxes and insurance and other ongoing costs relating to maintaining the assets in their current condition. If we decide to redevelop or develop a Strategic Developments asset, we expect that with the exception of the residential portion of our condominium projects, upon completion of development, the asset would likely be reclassified to Operating Assets when the asset is placed in service and NOI would become a meaningful measure of its operating performance. All development costs discussed herein are exclusive of land costs.
Segment EBT The following table presents segment EBT for Strategic Developments for the years ended December 31:
Strategic Developments Segment EBT
thousands except percentages 2025 2024 $ Change % Change
Condominium rights and unit sales $ 370,156 $ 778,616 $ (408,460) (52) %
Rental revenue 33 459 (426) (93) %
Other land, rental, and property revenues 4,174 4,321 (147) (3) %
Total revenues 374,363 783,396 (409,033) (52) %
Condominium rights and unit cost of sales (369,408) (582,574) 213,166 37 %
Operating costs (22,490) (17,670) (4,820) (27) %
Real estate taxes (2,191) (2,480) 289 12 %
Total operating expenses (394,089) (602,724) 208,635 35 %
Segment operating income (loss) (19,726) 180,672 (200,398) (111) %
Depreciation and amortization (6,579) (7,255) 676 9 %
Interest income (expense), net 18,851 18,603 248 1 %
Other income (loss), net (18,487) 90,534 (109,021) (120) %
Equity in earnings (losses) from unconsolidated ventures 317 251 66 26 %
Gain (loss) on sale or disposal of real estate and other assets, net 11,721 — 11,721 NM
Segment EBT $ (13,903) $ 282,805 $ (296,708) (105) %
NM Not meaningful.
Strategic Developments segment EBT decreased $296.7 million compared to the prior year primarily due to the following:
– Condominium sales, net of cost of sales decreased $195.3 million, primarily due to a change in the product mix of condominium closings executed in the current year. Although unit closings were higher with 690 units closed at Ulana Ward Village in the current year, compared to 349 units closed at Victoria Place in the prior year, condominium sales, net of cost of sales decreased as Ulana is a workforce tower and closed at a breakeven gross margin as expected. Ulana is our second workforce tower and fulfills our current reserved housing guaranty in the community. See Note 12 - Commitments and Contingencies in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional information on the reserved housing requirements in Ward Village.
– Other income (loss), net decreased $109.0 million primarily due to the accrual of a $19.8 million charge in the current year for a legal judgment in Columbia, compared to the receipt of $90.0 million of insurance proceeds in the prior year following the execution of a settlement agreement related to the construction defect claims at Waiea. See Note 12 - Commitments and Contingencies in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional information on the legal judgment in Columbia.
These decreases to EBT were partially offset by the following:
– Gain on sale of real estate increased $11.7 million due to the land swap in The Woodlands and the sale of a land parcel near Merriweather District in the current year. See Note 5 - Acquisitions and Dispositions in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional information on these transactions.
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RESULTS OF OPERATIONS
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Index to Financial Statements
Strategic Developments Projects The following describes the status of our major construction projects as of December 31, 2025. These properties will be transferred to the Operating Assets segment upon completion of construction, unless otherwise noted below.
Bridgeland
Memorial Hermann Medical Office This will be a 50,895-square-foot medical office property. Total development costs are expected to be approximately $23.7 million. We began construction in the third quarter of 2025, and anticipate project completion in the second quarter of 2026. We expect this property to reach projected annual stabilized NOI of $1.9 million by 2029.
The Woodlands
7 Waterway We acquired this 186,369 square-foot office property in the second quarter of 2025 for $16.3 million, and commenced a redevelopment project in the third quarter of 2025. Total redevelopment and tenant lease-up costs are expected to be approximately $22.9 million, bringing total expected cost for this property to $39.2 million. We anticipate project completion in the second quarter of 2026, and expect this property to reach projected annual stabilized NOI of $4.8 million by 2029.
Condominiums Condominium revenue is recognized when construction of the condominium tower is complete and unit sales close, leading to potentially significant variability in revenue recognized between periods.
For all Ward Village condominium units, sales contracts are subject to a 30-day rescission period. The buyers are required to make an initial deposit at signing and an additional deposit 30 days later at which point their total deposit becomes non-refundable. Buyers are then required to make a final deposit within approximately 90 days of our receipt of their second deposit. Buyers are required to deposit the remainder of the sales price on a predetermined pre-closing date. Contracted units disclosed below represent sales that are past the 30-day rescission period.
For The Woodlands condominium units, sales contracts are subject to a 6-day rescission period. The buyers are required to make an initial deposit at signing and a final deposit 60 days later at which point their total deposit becomes non-refundable. Buyers are required to deposit the remainder of the sales price on a predetermined pre-closing date. Contracted units disclosed below represent sales that are past the 6-day rescission period.
Completed Condominiums
Ward Village As of December 31, 2025, our eight completed condominiums, Ae`o, Ke Kilohana, Anaha, Waiea, ‘A‘ali‘i, Kō‘ula, Victoria Place, and Ulana are completely sold. Ulana was completed in the fourth quarter of 2025, and 690 of the 696 units were closed prior to year end. The remaining 6 units are expected to close in early 2026.
Condominiums Under Construction
Ward Village As of December 31, 2025, 96% of the units at our two towers under construction, The Park Ward Village and Kalae, are under contract.
We broke ground on The Park Ward Village in October 2022, and expect to complete construction in the second quarter of 2026. The Park Ward Village will consist of 545 studio, one-, two-, and three-bedroom residences. As of December 31, 2025, we have entered into contracts for 529 units, representing 97% of total units.
We broke ground on Kalae in June 2024, and expect to complete construction in 2028. Kalae will consist of 329 one-, two-, and three-bedroom residences. As of December 31, 2025, we have entered into contracts for 307 units, representing 93% of total units.
The Woodlands We broke ground on The Ritz-Carlton Residences in October 2024, and expect to complete construction in 2027. The Ritz-Carlton Residences will consist of 111 one-, two-, three-, and four-bedroom residences. The development sits on the last available large-scale residential site on Lake Woodlands, spanning roughly eight acres across approximately 1,200 feet of premier lakefront shoreline. As of December 31, 2025, we have entered into contracts for 84 units, representing 76% of total units.
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Predevelopment Condominiums
Ward Village We launched public pre-sales for The Launiu in February 2024. The Launiu will consist of 485 studio, one-, two-, and three-bedroom residences. As of December 31, 2025, we have entered into contracts for 346 units, representing 71% of total units. Construction is expected to commence on The Launiu in early 2026.
We launched public pre-sales for Melia in June 2025. Melia will consist of 220 one-, two-, three-, and four-bedroom residences. As of December 31, 2025, we have entered into contracts for 144 units, representing 65% of total units.
We launched public pre-sales for ‘Ilima in June 2025. ‘Ilima will consist of 148 one-, two-, three-, and four-bedroom residences. As of December 31, 2025, we have entered into contracts for 76 units, representing 51% of total units.
The following provides further detail for all condominium projects as of December 31, 2025:
Location Units Closed Units Under Contract Total Units Total % of Units Closed or Under Contract Completion Date
Completed
Waiea Honolulu, HI 177 — 177 100 % Q4 2016
Anaha Honolulu, HI 317 — 317 100 % Q4 2017
Ae`o Honolulu, HI 465 — 465 100 % Q4 2018
Ke Kilohana Honolulu, HI 423 — 423 100 % Q2 2019
‘A‘ali‘i Honolulu, HI 750 — 750 100 % Q4 2021
Kō'ula Honolulu, HI 565 — 565 100 % Q3 2022
Victoria Place Honolulu, HI 349 — 349 100 % Q4 2024
Ulana Ward Village Honolulu, HI 690 6 696 100 % Q4 2025
Under construction
The Park Ward Village Honolulu, HI — 529 545 97 % Q2 2026
Kalae Honolulu, HI — 307 329 93 % 2028
The Ritz-Carlton Residences The Woodlands, TX — 84 111 76 % 2027
Predevelopment
The Launiu Honolulu, HI — 346 485 71 % 2028
Melia Honolulu, HI — 144 220 65 % 2030
‘Ilima Honolulu, HI — 76 148 51 % 2030
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RESULTS OF OPERATIONS
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Index to Financial Statements
Corporate Income, Expenses, and Other Items
The following table contains certain corporate-related and other items not related to segment activities and that are not otherwise included within the segment analyses. Variances related to income and expenses included in NOI or EBT are explained within the previous segment discussions. Significant variances for consolidated items not included in NOI or EBT are described below for the years ended December 31:
thousands except percentages 2025 2024 $ Change % Change
General and administrative expenses $ (122,240) $ (91,752) $ (30,488) (33) %
Gain (loss) on sale of MUD receivables (48,197) (48,651) 454 1 %
Corporate interest expense, net (80,307) (80,446) 139 — %
Corporate depreciation and amortization (3,410) (3,066) (344) (11) %
Income tax (expense) benefit (37,616) (80,184) 42,568 53 %
Other (19,160) (14,170) (4,990) (35) %
Total Corporate income, expenses, and other items $ (310,930) $ (318,269) $ 7,339 2 %
Corporate income, expenses, and other items were favorably impacted compared to the prior year by the following:
– Income tax expense decreased $42.6 million primarily due to a decrease in Income before income taxes in 2025 as compared to 2024 as well as the net impact of the 2024 spinoff of Seaport Entertainment Group Inc. which included a net increase in tax expense in 2024 related to the revaluation of deferred tax assets and liabilities, partially offset by a partial release of valuation allowances on the Company’s deferred tax assets. Refer to Note 14 - Income Taxes in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional information.
Corporate income, expenses, and other items were unfavorably impacted compared to the prior year by the following:
– General and administrative expenses increased $30.5 million primarily due to a $17.1 million increase in Pershing Square advisory fees, $14.2 million of expenses related to a strategic reduction in force, and $10.5 million of legal and consulting fees related to the planned acquisition of Vantage. These increases were partially offset by a decrease in compensation and benefits, including those from the strategic reduction in force, as well as other cost reduction initiatives.
– Other expenses increased $5.0 million primarily due to increased marketing costs across our condominium projects.
Pershing Square Advisory Fees Pershing Square will support the Company’s new diversified holding company strategy by providing certain investment and advisory services. The Company will pay Pershing Square a quarterly advisory fee that includes base and variable components. Refer to Note 2 - Pershing Square in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional information on the advisory fee.
The base and variable components of the quarterly advisory fee are detailed below:
thousands Year Ended December 31, 2025
Base fee $ 9,849
Variable fee 7,284
Total Pershing Square advisory fee $ 17,133
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Income Taxes
thousands except percentages 2025 2024
Income tax expense (benefit) $ 37,616 $ 80,184
Income (loss) before income taxes $ 161,459 $ 365,399
Effective tax rate 23.3 % 21.9 %
The Company’s effective tax rate is typically impacted by non-deductible executive compensation and other permanent differences as well as state income taxes, which cause the Company’s effective tax rate to deviate from the federal statutory rate.
The Company’s effective tax rate for the year ended December 31, 2025, was 23.3% compared to 21.9% for the year ended December 31, 2024. The increase was primarily due to a partial release of valuation allowances on the Company’s deferred tax assets in 2024.
For additional information on income taxes, see Note 14 - Income Taxes in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
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Index to Financial Statements
LIQUIDITY AND CAPITAL RESOURCES
We continue to maintain a strong balance sheet and endeavor to ensure we maintain the financial flexibility and liquidity necessary to fund future growth. As of December 31, 2025, we had $1.5 billion of cash and cash equivalents, $515.0 million of undrawn capacity on our Secured Bridgeland Notes, and $686.6 million of undrawn lender commitments available to be drawn for property development, subject to certain restrictions.
Cash Flows
Year Ended December 31,
thousands 2025 2024
Cash provided by (used in) operating activities of continuing operations $ 462,370 $ 447,751
Cash provided by (used in) investing activities of continuing operations (219,066) (430,705)
Cash provided by (used in) financing activities of continuing operations 855,351 (27,754)
Net cash provided by (used in) discontinued operations — (43,846)
Operating Activities Each segment’s relative contribution to our cash flows from operating activities will likely vary significantly from year to year given the changing nature of our development focus. Other than our condominium properties, most of the properties and projects in our Strategic Developments segment do not generate revenues, and the cash flows and earnings may vary. Condominium deposits received from contracted units offset by other various cash uses related to condominium development and sales activities are a substantial portion of our operating activities. Operating cash is utilized to fund ongoing development expenditures in our Strategic Developments and MPC segments.
The cash flows and earnings from the MPC business may fluctuate more than from our operating assets because the MPC business generates revenues from land sales rather than recurring contractual revenues from operating leases. MPC land sales are a substantial portion of our cash flows from operating activities and are partially offset by development costs associated with the land sales business and acquisitions of land that is intended to ultimately be developed and sold.
Net cash provided by operating activities of continuing operations was $462.4 million in 2025, and $447.8 million in 2024. The increase in cash provided by operating activities of $14.6 million was primarily due to an increase in MPC land sales, a decrease in condominium development expenditures, and a net decrease in interest payments, partially offset by a decrease in condominium deposits and cash from closings, the receipt of an insurance reimbursement for the Waiea remediation in the prior year, a decrease in MUD receivable collections, and a decrease in MPC development expenditures.
Investing Activities Net cash used in investing activities of continuing operations was $219.1 million in 2025, and $430.7 million in 2024. The $211.6 million decrease in cash used in investing activities was primarily due to a decrease in cash used related to the net parent investment in discontinued operations and a decrease in cash used for property development, partially offset by a decrease in proceeds from the sale of properties.
Financing Activities Net cash provided by financing activities of continuing operations was $855.4 million in 2025, and net cash used in financing activities was $27.8 million in 2024. The change in financing activities of $883.1 million was primarily due to $862.8 million of net proceeds received in the current year related to the Pershing Square Issuance and a $25.1 million decrease in principal payments on mortgages, notes, and loans payable.
Short- and Long-Term Liquidity
Short-Term Liquidity In the next 12 months, we expect to continue executing our strategy to transition from a pure-play real estate company to a diversified holding company.
From our real estate operations, we expect our primary sources of cash to include cash flow from MPC land sales and condominium closings, cash generated from our operating assets, first mortgage financings secured by our assets, and deposits from condominium sales (which are restricted to funding construction of the related developments). We expect our primary uses of cash to include condominium pre-development and development costs, debt principal payments and debt service costs, MPC land development costs, other strategic developments costs, and general operating costs. We believe that our sources of cash, including existing cash on hand will provide sufficient liquidity to meet our existing obligations and anticipated ordinary course operating expenses for at least the next 12 months.
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LIQUIDITY AND CAPITAL RESOURCES
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Index to Financial Statements
As previously disclosed, in December 2025, we entered into a purchase agreement to acquire Vantage for $2.1 billion in cash consideration. The transaction remains subject to regulatory approvals and other customary closing conditions, and is expected to close in the second quarter of 2026. To support the funding of the acquisition and to allow for an additional equity contribution to Vantage post acquisition to be used for working capital and general corporate purposes, the Company entered into an equity commitment letter with Pershing Square Holdings, Ltd. under which Pershing Square committed to purchase up to $1.0 billion of the Company’s preferred stock, prior to and contingent upon the closing of the Vantage acquisition. The acquisition is expected to be funded through the Company’s cash on hand, and proceeds from the issuance of the preferred stock. We also expect to incur additional transaction-related expenses prior to the closing and will reimburse all reasonable and documented expenses incurred by Pershing Square in connection with the preferred stock issuance. We believe we have adequate liquidity to meet these acquisition-related obligations; however, the timing of regulatory approvals and closing conditions may affect the timing of cash outflows associated with the transaction.
Long-Term Liquidity The development and redevelopment opportunities in Strategic Developments and Operating Assets are capital intensive and will require significant additional funding, if and when pursued. Any additional funding beyond those sources listed above would be raised with a mix of construction, bridge, and long-term financings, by entering into joint venture arrangements, as well as future equity raises. We cannot provide assurance that financing arrangements for our properties will be on favorable terms or occur at all, which could have a negative impact on our liquidity and capital resources. In addition, we typically must provide completion guarantees to lenders in connection with their financing for our projects.
The preferred stock issued by HHH to Pershing Square will become convertible into the common stock of Vantage if not redeemed by the end of the seventh fiscal year post-transaction. HHH will receive a series of call options giving it the right but not the obligation to redeem the preferred stock over the next seven years. The acquisition is expected to have other long‑term implications for the Company’s liquidity profile, although the magnitude and timing of these impacts cannot yet be determined.
Summary of Remaining Development Costs The following table summarizes remaining development costs and related debt for projects held in the Operating Assets and Strategic Developments segments as of December 31, 2025. Total cost remaining to be paid net of debt and buyer deposits consists of $56.0 million related to substantially completed projects, $35.5 million related to projects with estimated completion dates within the next 12 months, and $118.7 million related to projects with estimated completion dates in 2027 and 2028.
Projects that are substantially complete and have been placed into service in the Operating Assets segment and completed condominium projects in the Strategic Developments segment are included in the following table if the project has more than $1.0 million of estimated costs remaining to be incurred. The remaining cost related to substantially completed projects typically represent costs associated with the completion of common areas at our completed condominium towers and budgeted tenant allowances necessary to bring our completed operating assets to stabilized occupancy. The $56.0 million of remaining cost related to substantially complete projects is primarily comprised of $24.6 million for Ulana Ward Village for lease up and tenant buildout of the ground floor retail space and $23.7 million for 1 Riva Row which is being placed in service in phases with only 61% of the property in service as of December 31, 2025.
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We expect to be able to meet our cash funding requirements with a combination of existing and anticipated construction loans, condominium buyer deposits, cash flow from our Operating Assets and MPC segments, net proceeds from condominium sales, and our existing cash balances.
thousands Estimated Remaining to be Spent Remaining Buyer Deposits/Holdback to be Drawn Debt to be Drawn (a) Costs Remaining to be Paid, Net of Debt
and Buyer Deposits/Holdbacks to be Drawn (b)
Operating Assets
Columbia $ 14,337 $ — $ 14,460 $ (123)
The Woodlands 30,565 — 4,147 26,418
Bridgeland 4,921 — 1,900 3,021
Summerlin 14,179 — 14,204 (25)
Total Operating Assets 64,002 — 34,711 29,291
Strategic Developments
The Woodlands 253,327 — 149,873 103,454
Bridgeland 15,798 — 15,725 73
Ward Village 588,755 43,752 467,601 77,402
Total Strategic Developments 857,880 43,752 633,199 180,929
Total $ 921,882 $ 43,752 $ 667,910 $ 210,220
(a) Refer to Note 9 - Mortgages, Notes, and Loans Payable, Net in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional information on debt.
(b) Negative balance relates to costs paid by HHH, but not yet reimbursed by our lenders. We expect to receive funds from our lenders for these costs in the future.
Contractual Cash Obligations and Commitments The following table aggregates our contractual cash obligations and commitments as of December 31, 2025:
thousands 2026 2027 2028 2029 2030 Thereafter Total
Mortgages, notes, and loans payable $ 663,243 $ 507,661 $ 923,362 $ 1,075,975 $ 277,225 $ 1,696,748 $ 5,144,214
Interest payments (a) 260,531 214,724 173,511 108,835 85,862 149,256 992,719
Ground lease commitments 300 300 300 300 300 5,300 6,800
Total $ 924,074 $ 722,685 $ 1,097,173 $ 1,185,110 $ 363,387 $ 1,851,304 $ 6,143,733
(a) Interest is based on the borrowings that are presently outstanding and current floating interest rates.
Debt As of December 31, 2025, the Company had $5.1 billion of outstanding debt and $686.6 million of undrawn lender commitment available to be drawn for property development, subject to certain restrictions. Our proportionate share of the debt of our unconsolidated ventures totaled $215.5 million as of December 31, 2025. All of this indebtedness is without recourse to the Company, with the exception of the collateral maintenance obligation for Floreo. See Note 12 - Commitments and Contingencies in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional information related to the Company’s collateral maintenance obligation.
On February 17, 2026, HHC, the Company’s wholly owned subsidiary, issued $500.0 million of 5.875% senior unsecured notes due 2032 and $500.0 million of 6.125% senior unsecured notes due 2034 (collectively the New Notes). The New Notes will pay interest semi-annually, in each case payable on March 1 and September 1 of each year, beginning on September 1, 2026. HHC used the net proceeds to redeem its outstanding $750.0 million 5.375% senior unsecured notes due 2028, including the payment of premiums, accrued and unpaid interest and expenses related to such redemption, and will use the remaining proceeds for general corporate purposes.
Refer to Note 9 - Mortgages, Notes, and Loans Payable, Net in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional detail.
Debt Compliance As of December 31, 2025, the Company was not in compliance with certain property-level debt covenants due to not meeting certain debt service coverage ratios caused by lease expirations, vacancies, rent abatements, and other factors. As a result, the excess net cash flow after debt service from the underlying properties became restricted. While the restricted cash could not be used for general corporate purposes, it could be used to fund operations of the underlying assets, and therefore there was no material impact on the Company’s liquidity or its ability to operate these assets.
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Index to Financial Statements
Net Debt The following table summarizes our net debt on a segment basis as of December 31, 2025. Net debt is defined as Mortgages, notes, and loans payable, net, including our ownership share of debt of our unconsolidated ventures, reduced by liquidity sources to satisfy such obligations such as our ownership share of Cash and cash equivalents and SID, MUD, and Tax Increment Financing (TIF) receivables. Although net debt is a non-GAAP financial measure, we believe that such information is useful to our investors and other users of our financial statements as net debt and its components are important indicators of our overall liquidity, capital structure, and financial position. However, it should not be used as an alternative to our debt calculated in accordance with GAAP.
thousands Operating
Assets Master
Planned
Communities Strategic
Developments Segment
Totals Non-
Segment
Amounts December 31, 2025
Mortgages, notes, and loans payable, net $ 2,431,685 $ 159,280 $ 481,520 $ 3,072,485 $ 2,037,343 $ 5,109,828
Mortgages, notes, and loans payable of unconsolidated ventures 90,533 124,938 — 215,471 — 215,471
Less:
Cash and cash equivalents (25,941) (126,774) (32,060) (184,775) (1,283,732) (1,468,507)
Cash and cash equivalents of unconsolidated ventures (4,288) (12,670) (3,793) (20,751) — (20,751)
Special Improvement District receivables — (90,417) — (90,417) — (90,417)
Municipal Utility District receivables, net — (459,729) — (459,729) — (459,729)
TIF receivable — — (4,012) (4,012) — (4,012)
Net Debt $ 2,491,989 $ (405,372) $ 441,655 $ 2,528,272 $ 753,611 $ 3,281,883
Unconsolidated Ventures We have interests in certain unconsolidated ventures which, as of December 31, 2025, had mortgage financing totaling $434.0 million, with our proportionate share of this debt totaling $215.5 million. All of this indebtedness is without recourse to the Company, with the exception of the collateral maintenance obligation for Floreo. See Note 12 - Commitments and Contingencies in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional information related to the Company’s collateral maintenance obligation. The following table summarizes our share of affiliate debt and cash as of December 31, 2025:
thousands Company’s Share of Unconsolidated Ventures’ Debt Company’s Share of Unconsolidated Ventures’ Cash
Operating Assets
Operating equity investments $ 90,533 $ 4,288
Master Planned Communities
The Summit 7,690 10,862
Floreo 117,248 1,808
Strategic Developments
West End Alexandria — 3,752
Other — 41
Total $ 215,471 $ 20,751
HHH 2025 FORM 10-K | 54
MANAGEMENT’S DISCUSSION AND ANALYSIS
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Table of Contents
Index to Financial Statements
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with GAAP requires management to make informed judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates.
Below is a discussion of the accounting policies and estimates that we consider critical to an understanding of our financial condition and operating results that may require complex or significant judgment in their application or require estimates about matters which are inherently uncertain. A discussion of our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 1 - Presentation of Financial Statements and Significant Accounting Policies in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report.
Impairments
Methodology We review our long-lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Although the carrying amount may exceed the estimated fair value of certain properties, a real estate asset is only considered to be impaired when its carrying amount is not expected to be recovered through estimated future undiscounted cash flows. To the extent an impairment provision is necessary, the excess of the carrying amount of the asset over its estimated fair value is expensed to operations and the carrying amount of the asset is reduced. The adjusted carrying amount, which represents the new cost basis of the asset, is depreciated over the remaining useful life of the asset or, for MPCs, is expensed as a cost of sales when land is sold.
Judgments and uncertainties An impairment loss is recognized if the carrying amount of an asset is not recoverable and exceeds its fair value. The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy, pricing, development costs, sales pace, capitalization rates, selling costs, and estimated holding periods for the applicable assets. As such, the evaluation of anticipated cash flows is highly subjective and is based in part on assumptions that could differ materially from actual results in future periods. Unfavorable changes in any of the primary assumptions could result in a reduction of anticipated future cash flows and could indicate property impairment. Uncertainties related to the primary assumptions could affect the timing of an impairment. While we believe our assumptions are reasonable, changes in these assumptions may have a material impact on our financial results.
Master Planned Communities Cost of Sales
Methodology When residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold. When land is sold, costs are allocated to each sold superpad or lot based upon the relative sales value. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated throughout the year, with adjustments being allocated prospectively to the remaining parcels available for sale. For certain parcels of land, including acquired parcels that the Company does not intend to develop or for which development was complete at the date of acquisition, the specific identification method is used to determine the cost of sales.
Judgments and uncertainties MPC cost of sales estimates are highly judgmental as they are sensitive to cost escalation, sales price escalation, and pace of absorption, which are subject to judgment and affected by expectations about future market or economic conditions. Changes in the assumptions used to estimate future development costs could result in a significant impact on the amounts recorded as cost of sales.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS
Please refer to Note 1 - Presentation of Financial Statements and Significant Accounting Policies in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional information about new accounting pronouncements.
HHH 2025 FORM 10-K | 55
MARKET RISK
QUANTITATIVE AND QUALITATIVE DISCLOSURES
Table of Contents
Index to Financial Statements