Collections, condo sales lift Hughes Q1 revenues

The Howard Hughes Corp., developer of master-planned communities and mixed-use developments across the United States, narrowed its losses in the first quarter as collections improved at retail properties and increased condo sales lifted revenues.

The Woodlands-based company reported a net loss of $66.6 million, or $1.20 per share, in the first quarter, an improvement from a loss of $125 million, or $2.88 per share in the first quarter of 2020. Revenues totaled $191 million in the first quarter compared with $175 million in the first quarter of 2020. The results were unaudited.

Rental revenue during the first quarter was $85.9 million, down from $92.7 million in the first quarter of 2020, according to Hughes.

Collections from retail tenants steadily increased after the initial impact of the COVID-19 pandemic, reaching 77.5 percent for the quarter. Collections were 98.7 percent for its overall portfolio, 98.8 percent for multifamily. Lower occupancy at hospitality properties as a result of the pandemic contributed to a decline in net operating income.

Condominium rights and unit sales contributed $37.2 million to revenue, a huge jump from just $43,000 in the first quarter of 2020. In the Ward Village community in Honolulu, Hughes contracted to sell 46 condos, a 64 percent increase from the previous quarter. The company began construction of the Victoria Place condo tower, which is 85 percent presold.

The company’s Master Planned Communities segment recorded nearly $37.5 million in sales the first quarter, down from $39.7 million in the year-earlier quarter.

Summerlin, a community near Las Vegas, saw higher land sales due to an increase in custom lot sales, while unit sales increased in The Summit joint venture community, Hughes reported.

Revenue from land sales in Bridgeland, a community in Cypress northwest of Houston, was lower than expected due to accelerated lot sales in the second half of 2020 that were expected to occur in the first quarter of 2021, according to Hughes. No land sales occurred in The Woodlands, which only has 27 residential acres and 721 commercial acres left for sale.

The Woodlands Hills, a community in the Conroe/ Willis area, saw sales of residential land increase by $2.4 million in the quarter, or 94 percent compared to the first quarter of 2020.

“Our MPC segment saw new home sales—a leading indicator of our future land sales—jump to 929 homes, a 35 percent increase over the same period last year and a 34 percent increase over the fourth quarter of 2020,” CEO David O’Reilly said in an announcement. “The continuing trend of out-ofstate migration and improving local economies in Houston and Las Vegas have helped propel new home sales over the last several quarters. We do not expect to see these trends abate anytime soon.”

As business and leisure travel improved, Embassy Suites at Hughes Landing and The Westin at The Woodlands saw increases in occupancy compared with the fourth quarter.

During the quarter, Hughes broke ground on Marlow, its second residential development in downtown Columbia’s Merriweather District.

Shares of Hughes closed down $5.88, 5.36 percent, to end Tuesday trading at $103.90. The stock, which started 2020 above $123, fell as low as $37.44 in March 2020.