DALLAS-Superstorm Sandy took a partial bite out of Howard Hughes Corp.'s Q4 2012 earnings. With the dust settled by the end of the year, net income was $30 million, excluding the $(22.3) million non-cash warrant loss and $(8.6) million non-cash loss relating to a reduction in the tax indemnity receivable, compared to the Q4 2011 net income of $30.6 million, excluding the $0.8 million non-cash warrant gain.

Net operating income also took a hit, weighing in at $11.5 million for Q4 2012, versus $15.2 million from the previous year. According to a press release from the company, all lost income caused by the storm will be covered by insurance. Still, overall net income for 2012 was $77 million, compared to 2011's net income of $60.8 million. NOI stood at $62 million for 2012, compared to $55.6 million at the end of 2011.

Activities included:

Construction launch on two Class A office towers in The Woodlands, 3 Waterway and One Hughes Landing, containing approximately 427,000 square feet. 3 Waterway is 90% leased, and both buildings will be completed in 2013.
Acquisition of partner's equity interest in the 393-unit Millennium Waterway apartment property located in The Woodlands for $6.9 million, representing a $72 million purchase price for the building, with proceeds from a $55.6 million ten-year non-recourse mortgage at a 3.75% interest rate, generating $4.2 million of cash for the company.
Construction launch on Millennium Woodlands Phase II, a 314-unit Class A apartment building located in The Woodlands, which is being developed through a joint venture with the same developer with whom we developed the Millennium Waterway apartments.
Phase Two commencement of the Ward Village Shops, part of Ward Centers in Honolulu, HI, a $26.2 million project to build 57,000 square feet of new retail space for Pier 1 Imports and Nordstrom Rack, whose relocation opens space for future redevelopment in Ward Village. The tenants are expected to take occupancy in late 2013 or early 2014 and should together contribute approximately $1.0 million of incremental annual NOI.
Ground lease amendment completion with the Economic Development Corporation of the City of New York which permits the redevelopment of Pier 17. Obtained unanimous Landmarks Commission approval with the support of Community Board 1 for the design, and in February 2013, obtained City Planning Commission approval for the Pier 17 redevelopment.
Acquisition of 70 Columbia Corporate Center, a 169,590 square foot Class A office building in Columbia, MD, by assuming a $16 million non-recourse mortgage bearing interest at 4.25% and by providing a commitment to fund $5 million for leasing. Secured a 76,308 square foot tenant which will increase occupancy to 68.7% in 2013 and increase annual NOI to approximately $1.9 million.
Completion of $348.6 million of non-recourse financing commitments in 2012, the proceeds of which will primarily be used to fund vertical commercial and horizontal land development activities.

Instant Insights /

Some Declines in Howard Hughes' Q4 Numbers

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