The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Anthony Paolone - JPMorgan - Analyst
: Thanks and good morning. Maybe for Bill to start here. You've been in this process for for a little while now, and you've talked pretty clearly about
what you want to do with it. So just wondering what you think the timeline is to see the first transactions completed and is this something that
you've got a pipeline teed up and ready to go or or do you just now start to get go into the market and find deals?
Question: Anthony Paolone - JPMorgan - Analyst
: Okay. That's really helpful. And if I could just ask a follow up to all of this, you have the $900 million. It's substantial, but I think it sounds like your
plans are also quite substantial. So how does capital allocation work going forward related to what goes into new businesses versus the traditional
real estate Howard Hughes? You have probably over $1 billion worth of apartment assets. You're getting this density in Hawaii that increases the
value there. I guess, like, do you envision changing or moving capital out of the legacy real estate into other areas or does that all just be left alone?
Question: Anthony Paolone - JPMorgan - Analyst
: Okay. Appreciate all of the context, Bill.
Question: Connor Mitchell - Piper Sandler - Analyst
: Hey, good morning. Thanks for taking my question. I guess just thinking about David being the CEO of the holding company now and then longer
down the line when there's a few more companies or portfolio companies underneath the holding. Is the plan for you guys to appoint somebody
to oversee the MPC business or will David kind of be still in charge of the CEO of the company overall as well as the MPC business and maybe just
put in department heads or company CEOs for the different, acquired businesses down the line.
Question: Connor Mitchell - Piper Sandler - Analyst
: Okay. I appreciate that. And then, you mentioned that maybe you want to bring the debt up to investment grade. Can you just walk us through
some of the steps that might be needed to change or improve the balance sheet in a way to reach the investment grade that you're aspiring to?
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MAY 08, 2025 / 2:00PM, HHH.N - Q1 2025 Howard Hughes Holdings Inc Earnings Call
Question: Connor Mitchell - Piper Sandler - Analyst
: Okay. And then just to follow up quickly, is the $900 million cash infusion, is any of that kind of plan to pay off any of the debts for the Howard
Hughes at the moment or is that really just being held to acquire the new businesses to develop the insurance business or more along the lines of
the parent company movements.
Question: Connor Mitchell - Piper Sandler - Analyst
: Okay. I appreciate all the color. Thank you.
Question: John Kim - BMO Capital Markets - Analyst
: Thank you. I had a similar line of questioning. If you look at the cash flow statement of Howard Hughes, cash flow from operations been positive
to the last three years. It turned negative this quarter, partially offset by cash flow from investments. I think a lot of that is property development,
but the point is it's very lumpy investments, especially condo and commercial developments.
So my question is Howard Hughes -- is the cash flow generation going to accelerate over the next few years and be self-funding or will it really be
after the current, kind of, developments planned coming to fruition?
Question: John Kim - BMO Capital Markets - Analyst
: Okay. And David, you talked about, during the quarter, home sales up sequentially, down year-over-year of a strong, quarter last year. But how has
activity and the home sales market been since Liberation Day?
Question: John Kim - BMO Capital Markets - Analyst
: Okay. My final question is for Bill, the $900 million cash injection into the company, how much of that will be earmarked for the insurance investment
versus other investments that you're looking at? And what are your return on invested capital hurdle rates on new investments.
Question: John Kim - BMO Capital Markets - Analyst
: Appreciate it. Thank you.
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