Howard Hughes Holdings Starts 2025 Strong With Major Investment
Howard Hughes Holdings Inc. (HHH) has kicked off 2025 on a high note, showcasing impressive financial results and a transformative investment from Pershing Square Capital Management.
It’s been a high-flying week for Howard Hughes Holdings (HHH). On May 8, 2025, the company released its first-quarter earnings report, boasting $63 million in adjusted operating cash flow and a total net operating income of $72 million. This operating income marks a new quarterly record and a 9% increase compared to the same time last year. The positive earnings report coincides with a significant investment deal from Bill Ackman’s Pershing Square Capital Management, which recently acquired a larger stake in HHH by investing $900 million and purchasing 9 million newly issued shares at $100 each, as previously reported by Commercial Observer.
The deal, first proposed in January, results in Pershing Square owning a 46.9% stake in HHH. As part of the agreement, Ackman will take on the role of executive vice chairman of HHH’s board of directors, while Ryan Israel, currently Pershing Square’s chief investment officer, will become HHH’s chief investment officer. Jean-Baptiste Wautier will also join the board as a new director. Meanwhile, HHH CEO David O’Reilly will continue overseeing the company’s real estate operations, while Ackman and Israel will focus on acquiring new businesses.
During the earnings call, Ackman articulated the business plan to acquire what he described as “durable growth companies” that meet high standards for business quality and defensibility. He stated, “These are businesses that earn high returns on capital that we want to prepare to own for decades and businesses that will diversify Howard Hughes’ exposure to real estate and offer greater long-term growth.” Ackman also referenced Berkshire Hathaway CEO Warren Buffett as a “role model” for the deal, particularly noting Buffett’s success in acquiring family-owned businesses.
Alongside the investment news, HHH reported strong first-quarter numbers across its master-planned communities (MPC), with earnings before tax of $63 million, a 161% increase year-over-year. This growth was driven by the sale of 70 residential acres at an average price of $991,000 per acre. Additionally, HHH saw a $39.2 million year-over-year jump in land sales, largely attributed to two significant sales totaling 29 acres in Summerlin, Nevada, and increased lot sales in its Bridgeland and Woodland Hills communities in Texas.
Moreover, the company is on track to complete construction of its Ritz-Carlton Residences, a luxury condominium project in The Woodlands, Texas, expected to finish in 2027. Despite these successes, HHH did experience a decline in net income from continuing operations per diluted share, which was 21 cents compared to $3.25 during the fourth quarter of 2024.
O’Reilly addressed concerns about the home sales market, particularly following President Donald Trump’s “Liberation Day” tariffs announced on April 2, 2025. He stated, “We are very cognizant of the national headlines and what’s going on across the country. We haven’t seen those headlines in our community, and I think that speaks to the quality of what we have. Our sales were strong this quarter … and it gives us great confidence in reaffirming our guidance.”
In addition to the impressive sales figures, HHH’s strategic transformation into a diversified holding company was a key focus of the earnings call. The company’s Master Planned Communities segment generated $349 million in earnings before taxes for 2024, while the Strategic Developments segment delivered $211 million in adjusted condo gross profit. The Operating Assets segment produced $257 million in net operating income (NOI), with expectations to reach $353 million at stabilization.
HHH’s Q4 2024 earnings report had already posted revenue of $983.59 million, surpassing forecasts of $933.43 million, despite an EPS miss of $3.25 against expectations of $3.69. As of the latest close, HHH’s stock has shown resilience, trading at $68.70.
The company highlighted its unique self-funding business model and competitive advantages in the master-planned community space, emphasizing its position as the dominant owner of commercial assets within its MPCs. This allows HHH to build according to demand with minimal competition, creating a perpetual cycle of value creation where commercial amenities increase residential land values, and new residents drive demand for additional commercial development.
Looking ahead, HHH projects continued growth across all segments for 2025. The company’s guidance includes a 5-10% growth in MPC EBT, targeting $375 million, and Operating Asset NOI reaching $262 million. The transformation into a diversified holding company under Pershing Square’s influence represents a significant strategic shift that could expand HHH’s investment horizons beyond its traditional real estate focus.
As the company navigates its strategic transformation, it remains optimistic about its long-term prospects. With a strong financial position, including over $800 million in liquidity, HHH is well-positioned to invest in its current projects and explore new opportunities.
In summary, Howard Hughes Holdings Inc.’s first-quarter earnings reflect both challenges and opportunities as the company embarks on a new chapter. The positive market reaction suggests investor confidence in the company’s long-term vision and its ability to leverage its strong real estate foundation while pursuing new growth opportunities.
