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
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.
HHH 2025 FORM 10-K | 36
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.
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
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.
HHH 2025 FORM 10-K | 38
RESULTS OF OPERATIONS
Operating Assets
Segment EBTThe 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
(Provision for) recovery of doubtful accounts (232) (504) 272 54 %
Gain (loss) on extinguishment of debt (698) (465) (233) (50) %
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.
HHH 2025 FORM 10-K | 39
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
Add back:
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
(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.
HHH 2025 FORM 10-K | 40
Master Planned Communities
Segment EBTThe following table presents segment EBT for MPC for the years ended December 31:
MPC Segment EBT
thousands except percentages 2025 2024 $ Change % Change
Depreciation and amortization (408) (438) 30 7 %
Other income (loss), net 120 — 120 NM
(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
(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.
HHH 2025 FORM 10-K | 41
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 HillsEBT 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
HHH 2025 FORM 10-K | 42
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.
Total commercial land sales closed 20,168 4,984
Net recognized (deferred) revenue:
The Woodlands Hills 61 30
Total net recognized (deferred) revenue (27,880) (11,102)
HHH 2025 FORM 10-K | 43
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
Residential Land Sales Closed
Bridgeland
Summerlin
The Woodlands Hills
Commercial Land Sales Closed
(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
(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.
HHH 2025 FORM 10-K | 44
Below is a reconciliation of segment EBT to MPC Net Contribution for the years ended December 31:
thousands except percentages 2025 2024 $ Change % Change
Plus:
Depreciation and amortization 408 438 (30) (7) %
Distributions from unconsolidated ventures — 4,896 (4,896) (100) %
Less:
(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:
(a)Development expenditures are inclusive of capitalized interest and property taxes.
(b)MUD reimbursable costs represent land development expenditures transferred to MUD Receivables.
HHH 2025 FORM 10-K | 45
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
Other land, rental, and property revenues 4,174 4,321 (147) (3) %
Equity in earnings (losses) from unconsolidated ventures 317 251 66 26 %
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.
HHH 2025 FORM 10-K | 46
Strategic Developments ProjectsThe 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.
HHH 2025 FORM 10-K | 47
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:
Completed
Under construction
The Ritz-Carlton Residences The Woodlands, TX — 84 111 76 % 2027
Predevelopment
HHH 2025 FORM 10-K | 48
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
Corporate depreciation and amortization (3,410) (3,066) (344) (11) %
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
Total Pershing Square advisory fee $ 17,133
HHH 2025 FORM 10-K | 49
Income Taxes
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.
HHH 2025 FORM 10-K | 50
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,
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 ActivitiesNet 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 LiquidityIn 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.
HHH 2025 FORM 10-K | 51
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 LiquidityThe 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 CostsThe 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.
HHH 2025 FORM 10-K | 52
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.
Operating Assets
Strategic Developments
(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:
(a)Interest is based on the borrowings that are presently outstanding and current floating interest rates.
DebtAs 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.
HHH 2025 FORM 10-K | 53
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.
Less:
Unconsolidated VenturesWe 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 Reportfor 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:
Operating Assets
Master Planned Communities
Strategic Developments
West End Alexandria — 3,752
HHH 2025 FORM 10-K | 54
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
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 $1.2 billion of variable-rate debt outstanding at December 31, 2025, of which $361.5 million was swapped to a fixed rate through the use of interest rate swaps and $648.1 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 $29.0 million as of December 31, 2025, which will be covered by the interest rate cap and collar contracts upon drawing. Refer to Note 11 - Derivative Instruments and Hedging Activities in the Notes to Consolidated Financial Statements under Item 8 of this Annual Report for additional detail.
As of December 31, 2025, annual interest costs would increase approximately $2.1 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, 2025:
Contractual Maturity Date
HHH 2025 FORM 10-K | 56
FINANCIAL STATEMENTSINDEX Table of ContentsIndex to Financial Statements
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements and Financial Statement Schedule Page
Consolidated Financial Statements
Management’s Report on Internal Control over Financial Reporting 58
Report of Independent Registered Public Accounting Firm (PCAOB ID : 185) 59
Consolidated Balance Sheets as of December 31, 2025, and 2024 61
Notes to Consolidated Financial Statements 67
Note 2. Pershing Square 78
Note 3. Discontinued Operations 79
Note 4. Investments in Unconsolidated Ventures 80
Note 5. Acquisitions and Dispositions 82
Note 6. Impairment 82
Note 7. Other Assets and Liabilities 83
Note 8. Intangibles 84
Note 9. Mortgages, Notes, and Loans Payable, Net 85
Note 10. Fair Value 87
Note 11. Derivative Instruments and Hedging Activities 89
Note 12. Commitments and Contingencies 91
Note 13. Stock-Based Compensation Plans 92
Note 14. Income Taxes 94
Note 15. Accumulated Other Comprehensive Income (Loss) 96
Note 16. Earnings Per Share 97
Note 20. Quarterly Financial Information (Unaudited) 104
Schedule III – Real Estate and Accumulated Depreciation 105
HHH 2025 FORM 10-K | 57
FINANCIAL STATEMENTS Table of ContentsIndex to Financial Statements
Management’s Report on Internal Control over Financial Reporting
Management of Howard Hughes Holdings Inc. (the Company) is responsible for establishing and maintaining a system of internal control over financial reporting designed to provide reasonable assurance that transactions are executed in accordance with management authorization and that such transactions are properly recorded and reported in the financial statements, and that records are maintained so as to permit preparation of the financial statements in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Management has assessed the effectiveness of the Company’s internal control over financial reporting utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013 Framework). Management concluded, based on its assessment, that the Company’s internal control over financial reporting was effective as of December 31, 2025.
KPMG LLP, an independent registered public accounting firm, has audited the Company’s internal control over financial reporting as of December 31, 2025, as stated in their report which is included in this Annual Report on Form 10-K (Annual Report).
HHH 2025 FORM 10-K | 58
FINANCIAL STATEMENTS Table of ContentsIndex to Financial Statements
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
Howard Hughes Holdings Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Howard Hughes Holdings Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
HHH 2025 FORM 10-K | 59
FINANCIAL STATEMENTS Table of ContentsIndex to Financial Statements
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Master Planned Communities (MPC) cost of sales estimates
As discussed in Note 1 to the consolidated financial statements, when developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs, based on relative sales value, that benefit the property sold. For purposes of allocating development costs, estimates of future revenues and future development costs are re-evaluated throughout the year, with adjustments being allocated prospectively to the remaining parcels available for sale. MPC cost of sales estimates are highly judgmental as they are sensitive to cost escalation and sales price escalation, which are subject to judgment and affected by expectations about future market or economic conditions. The Company recognized MPC cost of sales of $188.7 million for the year ended December 31, 2025.
We identified the evaluation of estimated future development costs and revenues that drive the MPC cost of sales estimates as a critical audit matter. Subjective auditor judgment was required to evaluate the cost escalation and sales price escalation assumptions.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the process to estimate MPC cost of sales. This included controls related to management’s monitoring and review of the assumptions noted above. We tested the assumptions related to cost escalation and sales price escalation by:
•agreeing the current year estimates for revenues and costs to actual results, where applicable
•comparing the Company’s historical cost escalation and sales price escalation estimates to actual results to assess the Company’s ability to accurately estimate these amounts
•performing site visits for certain MPC developments, as needed and historically when warranted, to compare the overall status of the developments to what is reflected within the MPC cost of sales estimates
•comparing expected price per acre for each property type available for sale to applicable market data
•comparing the cost and sales price escalation rates throughout the duration of the development to available market data.
/s/ KPMG LLP
We have served as the Company’s auditor since 2022.
Dallas, Texas
February 19, 2026
HHH 2025 FORM 10-K | 60
FINANCIAL STATEMENTS Table of ContentsIndex to Financial Statements
HOWARD HUGHES HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
December 31,
thousands except par values and share amounts 2025 2024
ASSETS
Municipal Utility District (MUD) receivables, net 459,729 463,799
Operating lease right-of-use assets 5,231 5,806
LIABILITIES
Commitments and Contingencies (see Note 12)
EQUITY
Preferred stock: $0.01 par value; 50,000,000 shares authorized, none issued — —
Retained earnings (accumulated deficit) (62,096) (185,993)
Accumulated other comprehensive income (loss) (1,827) 1,968
See Notes to Consolidated Financial Statements.
HHH 2025 FORM 10-K | 61
FINANCIAL STATEMENTS Table of ContentsIndex to Financial Statements
HOWARD HUGHES HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
REVENUES
EXPENSES
Provision for (recovery of) doubtful accounts 232 504 (2,762)
OTHER
Gain (loss) on extinguishment of debt (698) (465) (97)
Gain (loss) on sale of MUD receivables (48,197) (48,651) —
Equity in earnings (losses) from unconsolidated ventures 1,772 (5,829) 25,776
Net income (loss) from discontinued operations, net of tax — (88,223) (634,940)
Net (income) loss attributable to noncontrolling interests 54 711 (243)
Basic income (loss) per share — continuing operations $ 2.22 $ 5.75 $ 1.68
Basic income (loss) per share — discontinued operations $ — $ (1.78) $ (12.81)
Diluted income (loss) per share — continuing operations $ 2.21 $ 5.73 $ 1.68
Diluted income (loss) per share — discontinued operations $ — $ (1.77) $ (12.80)
See Notes to Consolidated Financial Statements.
HHH 2025 FORM 10-K | 62
FINANCIAL STATEMENTS Table of ContentsIndex to Financial Statements
HOWARD HUGHES HOLDINGS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Year Ended December 31,
Other comprehensive income (loss)
(a)Amounts are shown net of deferred tax benefit of $1.2 million for the year ended December 31, 2025, deferred tax expense of $0.1 million for the year ended December 31, 2024, and deferred tax benefit of $2.7 million for the year ended December 31, 2023.
(b)The deferred tax impact was not meaningful for the years ended December 31, 2025, 2024, and 2023.
See Notes to Consolidated Financial Statements.
HHH 2025 FORM 10-K | 63
FINANCIAL STATEMENTS Table of ContentsIndex to Financial Statements
HOWARD HUGHES HOLDINGS INC.
CONSOLIDATED STATEMENTS OF EQUITY
Retained Accumulated
Additional Earnings Other Total
Teravalis noncontrolling interest — — — — — — — — 219 219
Other — — — — — — — — (22) (22)
Teravalis noncontrolling interest — — — — — — — — 206 206
Pension adjustment, net of tax expense (benefit) of $24 — — — — 90 — — 90 — 90
Deconsolidation of Associations of Unit Owners — — — — — — — — 979 979
Teravalis noncontrolling interest — — — — — — — — 317 317
See Notes to Consolidated Financial Statements.
HHH 2025 FORM 10-K | 64
FINANCIAL STATEMENTS Table of ContentsIndex to Financial Statements
HOWARD HUGHES HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES
Amortization of intangibles other than in-place leases 120 120 120
(Gain) loss on extinguishment of debt 698 465 97
Provision for (recovery of) doubtful accounts 3,414 (499) 8,274
Net Changes:
CASH FLOWS FROM INVESTING ACTIVITIES
Reimbursements under tax increment financings and grants 6,583 8,721 1,469
Investments in unconsolidated ventures, net (3,582) (3,500) —
Net parent investment in discontinued operations — (169,490) (115,185)
HHH 2025 FORM 10-K | 65
FINANCIAL STATEMENTS Table of ContentsIndex to Financial Statements
Year Ended December 31,
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net 862,789 — —
Debt extinguishment costs (422) — —
Deferred financing costs and bond issuance costs (6,091) (6,235) (569)
Stock options exercised 58 — —
Sale of preferred stock in Seaport subsidiary — 9,850 —
Contributions from Teravalis noncontrolling interest owner 317 206 219
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION — CONTINUING OPERATIONS
Income taxes paid (refunded), net
Maryland 235 — —
Illinois — — 624
All other states 150 — —
NON-CASH TRANSACTIONS — CONTINUING OPERATIONS
Consideration from sale of properties $ 41,125 $ — $ 5,250
Initial recognition of operating lease right-of-use asset — 766 —
Initial recognition of operating lease obligation — 766 —
NON-CASH TRANSACTIONS — DISCONTINUED OPERATIONS
See Notes to Consolidated Financial Statements.
HHH 2025 FORM 10-K | 66
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
1. Presentation of Financial Statements and Significant Accounting Policies
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. 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.
See Note 2 - Pershing Square for additional information related to the transactions with Pershing Square in the current period.
Principles of Consolidation and Basis of PresentationThe accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The consolidated financial statements include the accounts of Howard Hughes Holdings Inc. and its subsidiaries after elimination of intercompany balances and transactions. The Company also consolidates certain variable interest entities (VIEs) in accordance with Financial Accounting Standards Board’s Accounting Standards Codification (ASC) 810 Consolidation. The outside equity interests in certain entities controlled by the Company are reflected in the Consolidated Financial Statements as noncontrolling interests.
On July 31, 2024, the spinoff of Seaport Entertainment Group Inc. and its subsidiaries (Seaport Entertainment or SEG) was completed (the Spinoff). As the Spinoff represented a strategic shift in the Company’s operations, the results of SEG are presented as discontinued operations in the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows and, as such, have been excluded from both continuing operations and segment results for all periods presented. The Consolidated Statements of Comprehensive Income (Loss), and Equity are presented on a consolidated basis for both continuing operations and discontinued operations. The disclosures presented in the notes to the Consolidated Financial Statements are presented on a continuing operations basis unless otherwise noted. See Note 3 - Discontinued Operations for additional information.
Management has evaluated for disclosure or recognition all material events occurring subsequent to the date of the Consolidated Financial Statements up to the date and time this Annual Report was filed.
Variable Interest Entities The Company has interests in various legal entities that represent a variable interest entity. A VIE is an entity: (a) that has total equity at risk that is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other entities; (b) where the group of equity holders does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance, or the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected residual return, or both (i.e., lack the characteristics of a controlling financial interest); or (c) where the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights.
HHH 2025 FORM 10-K | 67
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
The Company determines if a legal entity is a VIE by performing a qualitative analysis that requires certain subjective decisions, taking into consideration the design of the entity, the variability that the entity was designed to create and pass along to its interest holders, the rights of the parties and the purpose of the arrangement. Upon the occurrence of certain reconsideration events, the Company reassesses its initial determination as to whether the entity is a VIE.
The Company also performs a qualitative assessment of each VIE to determine if it is the primary beneficiary. The Company is the primary beneficiary and would consolidate the VIE if it has a controlling financial interest where it has both (a) the power to direct the economically significant activities of the entity and (b) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. This assessment requires certain subjective decisions, taking into consideration the contractual agreements that define the ownership structure, the design of the entity, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties. Management’s assessment of whether the Company is the primary beneficiary of a VIE is continuously performed.
Upon initial consolidation of a VIE, the Company records the assets, liabilities, and noncontrolling interests at fair value and recognizes a gain or loss for the difference between (i) the fair value of the consideration paid, the fair value of noncontrolling interests and the reported amount of any previously held interests and (ii) the net amount of the fair value of the assets and liabilities.
If the Company determines it is no longer the primary beneficiary of a VIE, it will deconsolidate the entity and measure the initial cost basis for any retained interests that are recorded upon the deconsolidation at fair value. The Company will recognize a gain or loss for the difference between the fair value and the previous carrying amount of its investment in the VIE.
Consolidated Variable Interest Entities
TeravalisAt December 31, 2025, and 2024, the Company owned an 88.0% interest in Teravalis, the Company’s newest large-scale master planned community in the West Valley of Phoenix, Arizona, and a third party owned the remaining 12.0%. Teravalis was determined to be a VIE, and as the Company has the power to direct the activities that most significantly impact its economic performance, the Company is considered the primary beneficiary and consolidates Teravalis.
Under the terms of the LLC agreement, cash distributions and the recognition of income-producing activities will be pro rata based on economic ownership interest. As of December 31, 2025, the Company’s Consolidated Balance Sheets included $543.9 million of MPC assets and $65.2 million of Noncontrolling interest related to Teravalis. As of December 31, 2024, the Company’s Consolidated Balance Sheets included $542.1 million of MPC assets and $65.1 million of Noncontrolling interest related to Teravalis.
‘Ilima The Company entered into a joint venture agreement with Discovery Land Company (Discovery) to form Block E Ward Village (‘Ilima) for the purpose of developing, constructing, and operating a residential condominium tower in Ward Village. ‘Ilima was determined to be a VIE, and as the Company has the power to direct the activities that most significantly impact its economic performance, the Company is considered the primary beneficiary and consolidates ‘Ilima. Pre-sales for ‘Ilima commenced in June 2025. The Company currently funds 100% of the predevelopment activity.
Once pre-sales targets are met and construction financing is obtained, the Company will contribute land and Discovery will contribute to up $5.0 million. All other necessary capital contributions will be funded by the Company. After completion of the condominium tower and closing of condominium sales, cash distributions and the recognition of income-producing activities will be pro rata based on ownership interest. At December 31, 2025, and 2024, the Company owned approximately 100% of this venture.
HHH 2025 FORM 10-K | 68
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
The Company’s Consolidated Balance Sheets included the following amounts related to ‘Ilima as of December 31:
Buildings and equipment $ 7,161 $ 698
Less: accumulated depreciation (1,354) (19)
Accounts receivable, net 65 —
Deferred expenses, net 13,571 —
Other assets, net 565 —
Accounts payable and other liabilities $ 153,430 $ 159
Investments in Unconsolidated Ventures The Company’s investments in unconsolidated ventures are accounted for under the equity method to the extent that, based on contractual rights associated with the investments, the Company can exert significant influence over a venture’s operations. Under the equity method, the Company’s investment in the venture is recorded at cost and is subsequently adjusted to recognize the Company’s allocable share of the earnings or losses of the venture. Dividends and distributions received by the Company are recognized as a reduction in the carrying amount of the investment. Generally, joint venture operating agreements provide that assets, liabilities, funding obligations, profits and losses, and cash flows are shared in accordance with ownership percentages. For certain equity method investments, various provisions in the joint venture operating agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses, and preferred returns may result in the Company’s economic interest differing from its stated ownership or if applicable, the Company’s final profit-sharing interest after receipt of any preferred returns based on the venture’s distribution priorities. For these investments, the Company recognizes income or loss based on the joint venture’s distribution priorities, which could fluctuate over time and may be different from its stated ownership or final profit-sharing percentage.
The Company periodically assesses the appropriateness of the carrying amount of its equity method investments, as events or changes in circumstance may indicate that a decrease in value has occurred which is other‐than‐temporary. In addition to the property‐specific impairment analysis performed on the underlying assets of the investment, the Company also considers the ownership, distribution preferences, limitations and rights to sell and repurchase its ownership interests. If a decrease in value of an investment is deemed to be other‐than‐temporary, the investment is reduced to its estimated fair value, and an impairment-related loss is recognized in the Consolidated Statements of Operations as a component of Equity in earnings (losses) from investments in unconsolidated ventures.
For investments in ventures where the Company has virtually no influence over operations and the investments do not have a readily determinable fair value, the Company has elected the measurement alternative to carry the securities at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the issuer. Equity securities not accounted for under the equity method, or where the measurement alternative has not been elected, are required to be reported at fair value with unrealized gains and losses reported in the Consolidated Statements of Comprehensive Income (Loss) as Net unrealized gains (losses) on instruments measured at fair value through earnings.
Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The estimates and assumptions include, but are not limited to, capitalization of development costs, provision for income taxes, recoverable amounts of receivables and deferred tax assets, initial valuations of tangible and intangible assets acquired, and the related useful lives of assets upon which depreciation and amortization is based. Estimates and assumptions have also been made with respect to future revenues and costs, and the fair value of warrants, debt, and options granted. MPC cost of sales estimates are highly judgmental as they are sensitive to cost escalation, sales price escalation, and lot absorption, which are subject to judgment and affected by expectations about future market or economic conditions. Additionally, the future cash flow estimates and fair values used for impairment analysis are highly 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. Both MPC cost of sale estimates and estimates used in impairment analysis are affected by expectations about future market or economic conditions. Actual results could differ from these and other estimates.
HHH 2025 FORM 10-K | 69
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
SegmentsThe Company operates in three business segments: (i) Operating Assets; (ii) MPC; and (iii) Strategic Developments. Segment information is prepared on the same basis that management reviews information for operational decision-making purposes. Management evaluates the performance of each of HHH’s real estate assets or investments individually and aggregates such properties into segments based on their economic characteristics and types of revenue streams.
Net Investment in Real Estate
Master Planned Community Assets, Buildings and Equipment, and Land Real estate assets are stated at cost less any provisions for impairments and depreciation as applicable. Expenditures for significant improvements to the Company’s assets are capitalized. Tenant improvements relating to the Company’s operating assets are capitalized and depreciated over the shorter of their economic lives or the lease term. Maintenance and repair costs are charged to expense when incurred.
Depreciation The Company periodically reviews the estimated useful lives of properties. Depreciation or amortization expense is computed using the straight‐line method based upon the following estimated useful lives:
Asset Type Years Balance Sheet Location
Buildings and improvements 7 - 40 Buildings and Equipment
Equipment and fixtures 5 - 20 Buildings and Equipment
Computer hardware and vehicles 3 - 5 Buildings and Equipment
Tenant improvements Related lease term Buildings and Equipment
Leasing costs Related lease term Other assets, net
From time to time, the Company may reassess the development strategies for certain buildings and improvements which results in changes to the Company’s estimate of their remaining useful lives. The Company did not recognize additional depreciation expense of significance for the years ended December 31, 2025, 2024, and 2023.
Developments Development costs, which primarily include direct costs related to placing the asset in service associated with specific development properties, are capitalized as part of the property being developed. Construction and improvement costs incurred in connection with the development of new properties or the redevelopment of existing properties are capitalized before they are placed into service. Such costs include planning, engineering, design, direct material, labor, and subcontract costs. Real estate taxes, utilities, direct legal and professional fees related to the sale of a specific unit, interest, insurance costs, and certain employee costs incurred during construction periods are also capitalized. Capitalization commences when the development activities begin and ceases when a project is completed, put on hold, or at the date that the Company decides not to move forward with a project. Capitalized costs related to a project where HHH has determined not to move forward are expensed if they are not deemed recoverable. Capitalized interest costs are based on qualified expenditures and interest rates in place during the construction period. Demolition costs associated with redevelopments are expensed as incurred unless the demolition was included in the Company’s development plans and imminent as of the acquisition date of an asset.
Once construction of operating properties is complete, the assets are placed into service, and capitalized costs are reclassed to Buildings and equipment and are depreciated in accordance with the Company’s policy. Once construction of condominiums is complete, the assets are reflected as condominium inventory in Other assets, net until the sale of each condominium unit is closed and the related cost is realized in Condominium rights and units cost of sales. In the event that management no longer has the ability or intent to complete a development, the costs previously capitalized are evaluated for impairment.
Developments consist of the following categories as of December 31:
HHH 2025 FORM 10-K | 70
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
Acquisitions of PropertiesThe Company accounts for the acquisition of real estate properties in accordance with ASC 805 Business Combinations. This methodology requires that assets acquired and liabilities assumed be recorded at their fair values on the date of acquisition for business combinations and at relative fair values for asset acquisitions. Acquisition costs related to the acquisition of a business are expensed as incurred. Costs directly related to asset acquisitions are considered additions to the purchase price and increase the cost basis of such assets.
The fair value of tangible assets of an acquired property (which includes land, buildings and improvements) is determined by valuing the property as if it were vacant, and the as-if-vacant value is then allocated to land, buildings and improvements based on management’s determination of the fair value of these assets. The as-if-vacant values are derived from several sources which incorporate significant unobservable inputs that are classified as Level 3 inputs in the fair value hierarchy and primarily include a discounted cash flow analysis using discount and capitalization rates based on recent comparable market transactions, where available.
The fair value of acquired intangible assets consisting of in-place, above-market, and below-market leases is recorded based on a variety of considerations, some of which incorporate significant unobservable inputs that are classified as Level 3 inputs in the fair value hierarchy. In-place lease considerations include, but are not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases (i.e., the market cost to execute a lease, including leasing commissions and tenant improvements); (2) the value associated with lost revenue related to tenant reimbursable operating costs incurred during the assumed lease-up period (i.e., real estate taxes, insurance, and certain other operating expenses); and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Above-market and below-market leases are valued at the present value, using a discount rate that reflects the risks associated with the leases acquired, of the difference between (1) the contractual amounts to be paid pursuant to the in-place lease; and (2) management’s estimate of current market lease rates, measured over the remaining non-cancelable lease term, including any below-market renewal option periods.
Impairment HHH reviews its long-lived assets (including those held by its unconsolidated ventures) for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount of an asset is not recoverable and exceeds its fair value. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future economic conditions, such as occupancy, rental rates, capital requirements, and sales values that could differ materially from actual results in future periods. If impairment indicators exist and it is expected that undiscounted cash flows generated by the asset are less than its carrying amount, an impairment provision is recorded to write down the carrying amount of the asset to its fair value.
Impairment indicators for HHH’s assets or projects within MPCs are assessed separately and include, but are not limited to, significant decreases in sales pace or average selling prices, significant increases in expected land development and construction costs or cancellation rates, and projected losses on expected future sales. MPC assets have extended life cycles that may last 20 to 40 years, or longer, and have few long‐term contractual cash flows. Further, MPC assets generally have minimal to no residual values because of their liquidating characteristics. MPC development periods often occur through several economic cycles. Subjective factors such as the expected timing of property development and sales, optimal development density, and sales strategy impact the timing and amount of expected future cash flows and fair value.
Impairment indicators for Operating Assets are assessed for each property and include, but are not limited to, significant decreases in net operating income, significant decreases in occupancy, ongoing low occupancy, and significant net operating losses.
Impairment indicators for assets in the Strategic Developments are assessed by project and include, but are not limited to, significant changes in projected completion dates, revenues or cash flows, development costs, market factors, significant decreases in comparable property sale prices, and feasibility.
The cash flow estimates used for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental rates, occupancy, pricing, development costs, sales pace, capitalization rates, and estimated holding periods for the applicable assets. Although the estimated fair value of certain assets may be exceeded by the carrying amount, 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. In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset. 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. Assets that have been impaired will in the future have lower depreciation and cost of sale expenses. The impairment will have no impact on cash flows.
HHH 2025 FORM 10-K | 71
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
Cash and Cash EquivalentsCash and cash equivalents consist of highly-liquid investments with maturities at date of purchase of three months or less and include registered money market mutual funds which are invested in United States Treasury bills that are valued at the net asset value of the underlying shares in the funds as of the close of business at the end of each period as well as deposits with major banks throughout the United States. Such deposits are in excess of FDIC limits and are placed with high-quality institutions in order to minimize concentration of counterparty credit risk.
Restricted CashRestricted cash reflects amounts segregated in escrow accounts in the name of the Company, primarily related to escrowed condominium deposits from buyers and other amounts related to taxes, insurance, and legally restricted security deposits and leasing costs.
Accounts Receivable, netAccounts receivable, net includes straight-line rent receivables, tenant receivables, related-party receivables, and other receivables. On a quarterly basis, management reviews the lease-related receivables, including straight-line rent receivables and tenant receivables, for collectability. This analysis includes a review of past due accounts and considers factors such as the credit quality of tenants, current economic conditions, and changes in customer payment trends. When full collection of a lease-related receivable or future lease payment is deemed to be not probable, a reserve for the receivable balance is charged against rental revenue and future rental revenue is recognized on a cash basis. The Company also records reserves for estimated losses if the estimated loss amount is probable and can be reasonably estimated.
Related-party receivables are primarily due from the Floreo joint venture. This balance includes reimbursable overhead costs incurred by the Company on behalf of Floreo and a $6.0 million guaranty fee associated with the increased borrowing capacity of Floreo’s bond financing in the first quarter of 2025. See Note 4 - Investments in Unconsolidated Ventures for additional information on the Floreo joint venture and Note 12 - Commitments and Contingencies for additional information on the guaranty fee.
Other receivables are primarily related to short-term trade receivables. The Company is exposed to credit losses through the sale of goods and services to customers and assesses its exposure to credit loss related to these receivables on a quarterly basis based on historical collection experience and future expectations by portfolio. The Company records an allowance for credit losses if the estimated loss amount is probable.
The following table represents the components of Accounts Receivable, net of amounts considered uncollectible, in the accompanying Consolidated Balance Sheets as of December 31:
(a)As of December 31, 2025, the total reserve balance for amounts considered uncollectible was $7.2 million, composed of $7.0 million attributable to lease-related receivables and $0.2 million attributable to the allowance for credit losses related to other accounts receivable. As of December 31, 2024, the total reserve balance was $8.2 million, comprised of $8.1 million attributable to lease-related receivables and $0.1 million attributable to the allowance for credit losses related to other accounts receivables.
The following table summarizes the impacts of the collectability reserves in the accompanying Consolidated Statements of Operations for the years ended December 31:
thousands
Provision for (recovery of) doubtful accounts 232 504 (2,762)
HHH 2025 FORM 10-K | 72
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
Municipal Utility District Receivables, netIn Houston, Texas, certain development costs are reimbursable through the creation of a Municipal Utility District, also known as Water Control and Improvement Districts, which are separate political subdivisions authorized by Article 16, Section 59 of the Texas Constitution and governed by the Texas Commission on Environmental Quality (TCEQ). MUDs are formed to provide municipal water, wastewater, drainage services, recreational facilities, and roads to those areas where they are currently unavailable through the regular city services. Typically, the developer advances funds for the creation of the facilities, which must be designed, bid, and constructed in accordance with the City of Houston’s and TCEQ requirements.
The MUD Board of Directors authorizes and approves all MUD development contracts, and MUD bond sale proceeds are used to reimburse the developer for its construction costs, including interest. At the date the expenditures occur, the Company determines the costs it believes will be eligible for reimbursement and recognizes that as MUD receivables. These expenditures are subject to review by the MUD engineers for eligibility in accordance with the development contracts as part of the process for reimbursement. MUD receivables are pledged as security to creditors under the debt facilities relating to Bridgeland.
Sale of MUD Receivables In September 2024, the Company entered into a sales transaction of MUD receivables, in which it transferred the reimbursement rights to $186.0 million of existing MUD receivables and $9.3 million of related accrued interest, as well as $40.0 million of anticipated future MUD receivables, for total cash consideration of $176.7 million. Using the relative fair value method, $146.7 million of the cash consideration was allocated to the sale of the existing MUD receivables and $30.0 million was allocated to the sale of the anticipated future MUD receivables. As a result of the sale, the Company derecognized the existing MUD receivables and related accrued interest, resulting in a loss on sale of $51.5 million in the Consolidated Statements of Operations in the third quarter of 2024. Due to an adjustment to the allocation between projects, a slight reduction in the loss was recognized in the fourth quarter of 2024, and the final impact of this sale was a loss of $48.7 million.
In May 2025, the Company entered into a transaction in which it transferred the reimbursement rights to $147.0 million of existing MUD receivables and $14.1 million of related accrued interest, as well as $95.9 million of anticipated future MUD receivables, for total cash consideration of $180.0 million. Using the relative fair value method, $112.8 million of the cash consideration was allocated to the sale of the existing MUD receivables and $67.2 million was allocated to the sale of the anticipated future MUD receivables. As a result of the sale, the Company derecognized the existing MUD receivables and related accrued interest, resulting in a loss on sale of $48.2 million in the Consolidated Statements of Operations.
For both transactions, the Company is required to complete future development activities. As such, liabilities associated with the future development spend were recorded at amortized cost in Accounts payable and other liabilities on the Consolidated Balance Sheets. The associated discounts, which represent the differences between the total future development spend and the allocated cash proceeds, are being amortized into interest expense over the expected development period using the effective interest method. As of December 31, 2025, the total remaining liability was $64.4 million and the total unamortized discount was $12.8 million. Interest expense related to the discount amortization was $21.8 million for the year ended December 31, 2025.
Other Assets, netThe major components of Other assets, net include security, escrow, and other deposits; Special Improvement District (SID) receivables; in-place leases; intangibles; Tax increment financing (TIF) receivables; prepaid expenses related to the Company’s properties; condominium inventory; and various other assets.
SID receivables are amounts due from SID bonds related to the Company’s Summerlin MPC. Proceeds from SID bonds are held in escrow by a third-party and are used to reimburse the Company for a portion of the development costs incurred in Summerlin. See Note 9 - Mortgages, Notes, and Loans Payable, Net for additional information on the SID bonds.
The Company’s intangibles include in-place lease assets and above-market lease assets where HHH is the lessor, as well as internally developed software, trademark and trade name intangibles related to MPCs, and goodwill. The Company amortizes finite-lived intangible assets less any residual value, if applicable, on a straight-line basis over the term of the related lease or the estimated useful life of the asset.
TIF receivables are amounts which the Company has submitted for reimbursement from Howard County in Maryland or from the state of Maryland, in conjunction with development costs expended on key roads and infrastructure work within Merriweather District specified per the terms of the county’s TIF legislation, Special Obligation Bonds issued in October 2017, and Grant Disbursement Agreement executed in April 2023.
HHH 2025 FORM 10-K | 73
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
Notes receivable, net includes non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, they are recorded at amortized cost less any provision for impairment as required under ASC 326 Financial Instruments - Credit Losses.
Condominium inventory includes available for sale units at HHH’s completed condominium towers and is stated at the lower of cost or fair value less selling costs. Condominium inventory includes land acquisition and development costs, construction costs, and interest and real estate taxes that are capitalized during the development period. HHH evaluates condominium inventory for impairment when potential indicators exist. An impairment loss is recognized if the carrying amount of condominium inventory exceeds the fair value less selling costs, which is based on comparable sales in the normal course of business under existing and anticipated market conditions.
Financial Instruments - Credit Losses The Company is exposed to credit losses through the sale of goods and services to the Company’s customers. Receivables held by the Company primarily relate to short-term trade receivables and financing receivables, which include MUD receivables, SID bonds, TIF receivables, net investments in lease receivables, and notes receivable. The Company assesses its exposure to credit loss based on historical collection experience and future expectations by portfolio segment. Historical collection experience is evaluated on a quarterly basis by the Company.
The amortized cost basis of financing receivables, consisting primarily of MUD and SID receivables, totaled $560.3 million as of December 31, 2025, and $569.1 million as of December 31, 2024. The MUD receivable balance includes accrued interest of $48.2 million at December 31, 2025, and $44.0 million at December 31, 2024. The allowance for credit losses for financing receivables was not material as of December 31, 2025, and 2024, and there was no material activity related to the allowance for credit losses for the years ended December 31, 2025, 2024, and 2023.
Financing receivables are considered to be past due once they are 30 days contractually past due under the terms of the agreement. The Company currently does not have significant financing receivables that are past due or on nonaccrual status. There have been no significant write-offs or recoveries of amounts previously written-off during the current period for financing receivables.
Income TaxesThe Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards.
The Company periodically assesses the realizability of its deferred tax assets. If the Company concludes that it is more likely than not that some of the deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance. The Company considers many factors when assessing the likelihood of future realization of deferred tax assets, including expectations of future taxable income, carryforward periods available to the Company for tax reporting purposes, various income tax strategies, and other relevant factors. In addition, interest and penalties related to uncertain tax positions, if necessary, are recognized in income tax expense.
In the Company’s MPCs, gains with respect to land sales, whether for commercial use or for single-family residences, are reported for tax purposes either on the modified accrual method or on the percentage-of-completion method. Under the percentage-of-completion method, a gain is recognized for tax purposes as costs are incurred in satisfaction of contractual obligations.
Deferred Expenses, netDeferred expenses consist principally of leasing costs. Deferred leasing costs are amortized to expense using the straight‐line method over the related lease term. Deferred expenses are shown net of accumulated amortization of $68.1 million as of December 31, 2025, and $69.1 million as of December 31, 2024.
Marketing and AdvertisingEach of the Company’s segments incur various marketing and advertising costs as part of their development, branding, leasing, or sales initiatives. These costs include special events, broadcasts, direct mail and online digital and social media programs, and they are expensed as incurred.
Fair Value of Financial InstrumentsThe carrying values of cash and cash equivalents, escrows, receivables, accounts payable, accrued expenses, and other assets and liabilities are reasonable estimates of their fair values because of the short maturities of these instruments.
HHH 2025 FORM 10-K | 74
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
Derivative Instruments and Hedging ActivitiesDerivative instruments and hedging activities require management to make judgments on the nature of its derivatives and their effectiveness as hedges. These judgments determine if the changes in fair value of the derivative instruments are reported as a component of Net Income in the Consolidated Statements of Operations or as a component of Comprehensive Income in the Equity on the Consolidated Balance Sheets. While management believes its judgments are reasonable, a change in a derivative’s effectiveness as a hedge could materially affect expenses, net income, and equity. The Company accounts for the changes in the fair value of an effective hedge in other comprehensive income (loss) and subsequently reclassifies the balance from other comprehensive income (loss) to earnings over the term that the hedged transaction affects earnings. The Company accounts for the changes in the fair value of an ineffective hedge directly in earnings.
Stock-Based Compensation The Company maintains various equity incentive plans, with outstanding stock-based compensation awards (Awards) which include stock options and restricted stock awards (RSAs). In 2023, pursuant to the holding company reorganization discussed above, each outstanding share of HHC’s common stock was automatically converted into one share of HHH common stock. HHH assumed all obligations under the equity incentive plans. All stock options and restricted stock outstanding will be settled in HHH stock.
In 2024, at the time of the Spinoff, all of these Awards were modified to adjust the number of HHH shares by certain ratios and/or allocation factors. The stock options were modified into HHH stock options and SEG stock options based on the applicable ratios and/or allocation factors. In addition, the growth targets for the RSAs based on Net Asset Value and related performance conditions were revised to carve out the impact of the Spinoff. Also, the market conditions related to Total Shareholder Return (TSR) targets were evaluated as of the Spinoff date for the TSR-based RSAs and then modified to time-based, service conditions only. See Note 13 - Stock-Based Compensation Plans for additional information.
The Company applies the provisions of ASC 718 Stock Compensation which requires all share‐based payments to be recognized in the Consolidated Statements of Operations based on their fair values. The fair value of stock option awards is determined using the Black-Scholes option-pricing model. Restricted stock awards are valued using the market price of the Company’s common stock on the grant date. For restricted stock awards with market conditions or performance conditions, the award is valued using a Monte Carlo simulation. The Company records compensation cost for stock-based compensation awards over the requisite service period. If the requisite service period is satisfied, compensation cost is not adjusted unless the award contains a performance condition. If an award contains a performance condition, expense is recognized only for those shares that ultimately vest using the per-share fair value measured at the grant date. The Company recognizes forfeitures as they occur.
Revenue Recognition and Related Matters
Condominium Rights and Unit Sales Revenue from the sale of an individual unit in a condominium project is recognized at a point in time (i.e., the closing) when HHH satisfies the single performance obligation to construct a condominium project and transfers control of a completed unit to a buyer. The transaction price, which is the amount of consideration the Company receives upon delivery of the completed condominium unit to the buyer, is allocated to this single obligation and is received at closing less any amounts previously paid on deposit.
The Company receives cash payments in the form of escrowed condominium deposits from customers who have contracted to purchase a condominium unit based on billing schedules established in HHH’s condominium purchase agreement contracts. The amounts are recorded in Restricted cash until released from escrow in accordance with the escrow agreement and on approval of HHH’s lender to fund construction costs of a project. A corresponding condominium contract deposit liability is established at the date of receipt, representing a portion of HHH’s unsatisfied performance obligation at each reporting date.
These deposits, along with the balance of the contract value, are recognized at closing upon satisfaction of HHH’s performance obligation and transfer of title to the buyer. Real estate project costs directly associated with a condominium project, which are HHH’s costs to fulfill contracts with condominium buyers, are capitalized while all other costs are expensed as incurred. Total estimated project costs include direct costs such as the carrying value of the land, site planning, architectural, construction, and financing costs, as well as indirect cost allocations. The allocations include costs which clearly relate to the specific project, including certain infrastructure and amenity costs which benefit the project as well as others, and are based upon the relative sales value of the units. Furthermore, incremental costs incurred to obtain a contract to sell condominium units are evaluated for capitalization in accordance with ASC 340-40 Components, Costs & Considerations, with incremental costs to fulfill a contract only being capitalized if the costs relate directly to a specifically identified contract, enhance resources to satisfy performance obligations in the future, and are expected to be recovered.
HHH 2025 FORM 10-K | 75
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
Master Planned Communities Land Sales Revenues from land sales are recognized at a point in time when the land sale closing process is complete. The transaction price generally has both fixed and variable components, with the fixed price stipulated in the contract and representative of a single performance obligation. See Builder Price Participation (BPP) below for a discussion of the variable component. The fixed transaction price, which is the amount of consideration received in full upon transfer of the land title to the buyer, is allocated to this single obligation and is received at closing of the land sale less any amounts previously paid on deposit.
The Company receives cash payments in the form of land purchase deposits from homebuilders or other commercial buyers who have contracted to purchase land within the Company’s MPCs, and HHH holds any escrowed deposits in Restricted cash or Cash and cash equivalents based on the terms of the contract. In situations where the Company has completed the closing of a developed land parcel or superpad and consideration is paid in full, but a portion of HHH’s performance obligation relating to the enhancement of the land is still unsatisfied, revenue related to HHH’s obligation is recognized over time. The Company recognizes only the portion of the improved land sale where the improvements are fully satisfied based on a cost input method. The aggregate amount of the transaction price allocated to the unsatisfied obligation is recorded as deferred land sales and is presented in Accounts payable and other liabilities. The Company measures HHH’s unsatisfied obligation based on the costs remaining relative to the total cost at the date of closing.
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. In accordance with ASC 970-360-30-1 Real Estate Project Costs, 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.
Builder Price Participation BPP is the variable component of the transaction price for certain Master Planned Communities land sales. BPP is earned when a developer that acquired land from HHH 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 HHH and the developer at the time of closing on the sale of the home based on a previously agreed-upon percentage. Generally, BPP is constrained, and accordingly, the Company does not recognize an estimate of variable consideration. The Company’s conclusion is based on the following factors:
–BPP is highly susceptible to factors outside HHH’s influence such as unemployment and interest rates
–the time between the sale of land to a homebuilder and closing on a completed home can take up to three years
–there is significant variability in home pricing from period to period
The Company evaluates contracts with homebuilders with respect to BPP at each reporting period to determine whether a change in facts and circumstances has eliminated the constraint and will record an estimate of BPP revenue, if applicable.
For Condominium rights and unit sales, Master planned communities land sales, and Builder price participation the Company elected the practical expedient to not adjust promised amount of consideration for the effects of a significant financing component when the expected period between transfer of the promised asset and payment is one year or less.
Rental Revenues Revenue associated with the Company’s operating assets includes minimum rent, percentage rent in lieu of fixed minimum rent, tenant recoveries, and overage rent.
Minimum rent revenues are recognized on a straight‐line basis over the terms of the related leases when collectability is reasonably assured and the tenant has taken possession of, or controls, the physical use of the leased asset. Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants. Minimum rent revenues also include amortization related to above-market and below‐market tenant leases on acquired properties.
Recoveries from tenants are stipulated in the leases, are generally computed based upon a formula related to real estate taxes, insurance, and other real estate operating expenses, and are generally recognized as revenues in the period the related costs are incurred.
If the lease provides for tenant improvements, the Company determines whether the tenant improvements are owned by the tenant or by HHH. When HHH is the owner of the tenant improvements, rental revenue begins when the improvements are substantially complete. When the tenant is the owner of the tenant improvements, any tenant allowance funded by the Company is treated as a lease incentive and amortized as an adjustment to rental revenue over the lease term.
HHH 2025 FORM 10-K | 76
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
Other Land, Rental, and Property Revenues Other land revenues recognized over time include ground maintenance revenue, and homeowner association management fee revenue. These revenues are recognized over time, as time elapses. The amount of consideration and the duration are fixed, as stipulated in the related agreements, and represent a single performance obligation.
Other land revenues also include transfer and advertising fees on the secondary sales of homes in MPCs, forfeitures of earnest money deposits by buyers of HHH’s condominium units, lease termination fees, and other miscellaneous items. These items are recognized at a point in time when the real estate closing process is complete or HHH has a legal right to the respective fee or deposit.
Other rental revenues also includes overage rent which is recognized on an accrual basis once tenant sales exceed contractual thresholds contained in the lease and is calculated by multiplying the tenant sales in excess of the minimum amount by a percentage defined in the lease.
Noncontrolling Interests As of December 31, 2025, and December 31, 2024, noncontrolling interests related to the 12% noncontrolling interest in Teravalis and the noncontrolling interest in the Ward Village Homeowners’ Associations (HOAs). All revenues and expenses related to the HOAs are attributable to noncontrolling interests and do not impact net income attributable to common stockholders.
Recently Issued Accounting Standards The following is a summary of recently issued and other notable accounting pronouncements which relate to the Company’s business.
Accounting Standards Update 2024-03, Disaggregation of Income Statement Expenses This update requires the disclosure of additional disaggregated information in the notes to financial statements for certain categories of costs and expenses that are included on the face of the statement of operations. The new disclosure requirements are effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact this standard will have on its financial statement presentation and disclosures.
HHH 2025 FORM 10-K | 77
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
2. Pershing Square
Common Share Issuance to Pershing Square On May 5, 2025, the Company entered into a Share Purchase Agreement (Purchase Agreement), by and between the Company and Pershing Square Holdco, L.P. (PS Holdco), pursuant to which the Company sold to PS Holdco 9,000,000 newly issued shares of the Company’s common stock at a purchase price of $100 per share, for an aggregate purchase price of $900 million (the Pershing Square Issuance). In connection with the Purchase Agreement, the Company also entered into several other agreements, dated May 5, 2025, with PS Holdco and Pershing Square Capital Management, L.P. (together, Pershing Square), including a Services Agreement, a Shareholder Agreement, a Standstill Agreement, and a Registration Rights Agreement.
As of December 31, 2025, Pershing Square beneficially owned approximately 46.9% of the Company’s outstanding shares of common stock. The Company expects to use the proceeds from the transaction to acquire or make investments in operating companies as part of the Company’s new strategy of becoming a diversified holding company.
Transaction Costs The Company incurred $38.3 million in costs directly attributable to the Pershing Square Issuance. As required by the Purchase Agreement, these transaction costs included the reimbursement of $25.0 million of reasonable and documented expenses incurred by Pershing Square in connection with the negotiation and execution of the transaction. These reimbursement costs were treated as a reduction of the proceeds and recorded directly in Additional paid-in capital on the Consolidated Balance Sheets. The remaining $13.3 million of costs were incurred directly by the Company and included $12.2 million of costs attributable to the sale of common stock recognized in Additional paid-in capital and $1.1 million of costs which were expensed as incurred as General and administrative expenses in the Consolidated Statements of Operations.
Services Agreement Pursuant to the terms of the Services Agreement, Pershing Square will support the Company’s new diversified holding company strategy by providing services to the Company, such as (i) investment advisory services, (ii) making recommendations with respect to hedging, balance sheet optimization and capital allocation, (iii) executing transactions, (iv) assisting the Company with business and corporate development functions, (v) making voting recommendations for the Company’s investments, (vi) assisting with and advising on fundraising, (vii) monitoring operations of the Company and its investments, subject to the day-to-day authority and responsibility of management of the Company, (viii) providing recommendations for persons to serve as designees or deputies of the Chief Investment Officer, (ix) engaging and supervising third-party service providers, (x) making dividend payment recommendations, and (xi) providing other services as may be agreed upon. The Services Agreement will have an initial ten-year term and will have successive renewal terms of ten years.
The Company will pay Pershing Square a quarterly base advisory fee of $3.75 million and a quarterly variable advisory fee equal to 0.375% of the excess value of the quarter-end stock price of the Company’s common stock minus the reference price of $66.15, multiplied by the existing share count as of the transaction date, which will not increase with the issuance of new shares of common stock. The base fee and the reference share price are subject to annual adjustment based on the Core Personal Consumption Expenditures (PCE) Price Index. The total advisory fee recognized in General and administrative expenses in the Consolidated Statements of Operations was $17.1 million for the year ended December 31, 2025. As of December 31, 2025, the Consolidated Balance Sheets reflect accounts payable of $3.3 million due to Pershing Square with respect to the advisory fees.
Potential Preferred Share Issuance to Pershing Square In December 2025, in association with the pending acquisition of Vantage, 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 preferred stock will be perpetual, non‐voting (subject to customary protective rights), and will become convertible into the common stock of Vantage if not redeemed by the end of the seventh fiscal year post-transaction. The Company will have the right, but not the obligation, to repurchase the preferred stock during specified periods and upon certain triggering events. The Company is evaluating the accounting implications of the potential preferred stock issuance and will provide further disclosures upon execution of the transaction.
HHH 2025 FORM 10-K | 78
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
3. Discontinued Operations
On July 31, 2024, the Spinoff of SEG was completed. The Spinoff included all assets previously included in the Company’s Seaport segment and the Las Vegas Aviators and the Las Vegas Ballpark, which were previously included in the Operating Assets segment. As the Spinoff represents a strategic shift in the Company’s operations, the results of SEG are included as discontinued operations for all periods presented.
The following table presents key components of Net income (loss) from discontinued operations, net of income taxes, for the years ended December 31:
Provision for impairment — (672,492)
Other income (loss), net (67) (1,539)
Interest income (expense), net (7,414) 874
Gain (loss) on extinguishment of debt (1,563) (47)
Equity in earnings (losses) from unconsolidated ventures (18,960) (81,484)
(a)General and administrative expenses relate to costs incurred to complete the spinoff of Seaport Entertainment.
Continuing Involvement with SEG In connection with the Spinoff, HHH entered into several agreements with Seaport Entertainment that governed the execution of the transaction and the relationship of the parties following the Spinoff including a Separation and Distribution Agreement, Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement, Guaranty Agreement, and various other agreements. All agreements expired on August 1, 2025, and as such, HHH has no continuing obligations to or from SEG under these agreements.
Seaport Entertainment Guaranty Following the execution of the Spinoff, HHH provided a full backstop guaranty for SEG’s outstanding mortgage related to its 250 Water Street property (SEG Term Loan). On February 6, 2026, SEG announced that it had closed the sale of its 250 Water Street property. As part of the transaction, SEG repaid the SEG Term Loan in full and HHH was released from the related backstop guaranty. See Note 12 - Commitments and Contingencies for additional information.
HHH 2025 FORM 10-K | 79
FINANCIAL STATEMENTSFOOTNOTES Table of ContentsIndex to Financial Statements
4. Investments in Unconsolidated Ventures
In the normal course of business, the Company enters into partnerships and ventures with an emphasis on investments associated with the development and operation of real estate assets. As of December 31, 2025, the Company does not consolidate the investments below as it does not have a controlling financial interest in these ventures. As such, the Company primarily reports its interests in accordance with the equity method. As of December 31, 2025, these ventures had debt totaling $434.0 million, with the Company’s 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 for additional information related to the Company’s collateral maintenance obligation.
Investments in unconsolidated ventures consist of the following:
Ownership Interest (a) Carrying Value Share of Earnings/Dividends
December 31, December 31, December 31, December 31, Year Ended December 31,