• Third quarter 2011 net income was $9.6 million, excluding the $169.9 million non-cash warrant gain and $(15.2) million of non-recurring charges, compared to net income of $0.3 million, excluding a $(16.5) million reorganization charge, for the third quarter of 2010.
• Land sales in our Master Planned Community segment were $31.2 million for the third quarter 2011, compared to $24.0 million for third quarter 2010.
• Net operating income for our income-producing Operating Assets was $13.1 million for the third quarter 2011, compared to $10.8 million for third quarter 2010.
• Howard Hughes entered into joint ventures to develop its Ala Moana, Bridges at Mint Hill and a portion of the Columbia Town Center properties.
• Completed a $250.0 million flexible five-year financing for Ward Centers at a 3.45% interest rate.

DALLAS, Nov 10, 2011 (BUSINESS WIRE) --
The Howard Hughes Corporation (NYSE: HHC) today announced its results for the third quarter of 2011, which includes the first full quarter of consolidated results for The Woodlands master planned community.

Net income attributable to common stockholders was $164.3 million for the three months ended September 30, 2011, compared with net loss of $(16.2) million for the three months ended September 30, 2010. Excluding the warrant gain, early extinguishment of debt and basis adjustments described below, net income attributable to common stockholders for the three months ended September 30, 2011 was $9.6 million, or $0.25 per diluted share. Third quarter 2011 net income includes a $169.9 million non-cash gain relating to the decrease in estimated value of outstanding warrants during the quarter, a $(11.3) million after-tax loss relating to the refinancing of $209.5 million of mortgage debt carried on our books at a discount, and a non-cash $(3.9) million after-tax loss to adjust the basis of our equity investment in The Woodlands prior to its consolidation. Diluted loss per common share was $(0.14) for the three months ended September 30, 2011, compared with $(0.43) per share for the same period in 2010. The warrant liability gain is not included in diluted earnings per share according to generally accepted accounting principles.

On July 1, 2011, we acquired our partner's 47.5% economic interest (represented by a 57.5% legal interest) in The Woodlands master planned community. The consideration consisted of $20.0 million in cash paid at closing and a $97.5 million non-interest bearing note due December 1, 2011. We intend to repay the note at maturity with cash on hand. We consolidated approximately $591.5 million of assets and $346.2 million of liabilities, including $271.2 million of net debt, as of the acquisition date. Prior to the acquisition of our partner's interest, The Woodlands was accounted for as a non-consolidated equity investment. As part of the consolidation, we eliminated the $134.8 million carrying value of our pre-existing non-controlling interest in The Woodlands, which resulted in a $(3.9) million after-tax book basis adjustment loss. Howard Hughes is in the process of integrating The Woodlands' operations.
For comparative purposes, MPC land sales and Operating Assets NOI relating to The Woodlands are presented in our Supplemental Information and discussion of results as if we owned 100% of The Woodlands during the periods being compared. We also include the commercial real estate assets of The Woodlands in the Operating Assets segment. These properties in prior periods had been included in the MPC segment. For a reconciliation of Operating Assets NOI to Operating Assets earnings before taxes (EBT), Operating Assets EBT to GAAP-basis loss from continuing operations, and segment-basis MPC land sales revenue to GAAP-basis land sales revenue, please refer to the Supplemental Information contained in this earnings release.

Land sales in our Master Planned Communities (MPC) segment, excluding deferred land sales and other revenue, were $31.2 million for the third quarter 2011, a $7.2 million increase over $24.0 million of land sales for the third quarter 2010. Our former partner's share of The Woodlands land sales of $18.4 million for the third quarter 2010 was approximately $8.7 million. The Woodlands third quarter 2011 residential and commercial lot sales increased approximately $5.4 million over the prior year, primarily due to higher lot sales volume in the third quarter 2011. Bridgeland sales velocity and average price per lot also continued to increase, with third quarter and year-to-date 2011 lot sales increasing by 16 and 51 lots, to 103 and 260 lots, respectively, over the same periods in 2010. Both Bridgeland and The Woodlands are benefitting from a strong Houston, Texas new home sales market. Summerlin had no lot sales for the third quarter 2011 as builder demand remains unpredictable, reflecting continuing difficult economic and residential housing market conditions in the Las Vegas, Nevada area.

Our Operating Assets segment now includes the commercial real estate properties of The Woodlands. Net operating income (NOI) from the combined retail, office and resort and conference center properties, including our share of the NOI of our non-consolidated ventures, was $13.1 million for the three months ended September 30, 2011, compared with $10.8 million for the three months ended September 30, 2010. Other commercial properties, including two parking garages, ground leases and a private golf club located at The Woodlands, generated a $(2.3) million NOI loss for the third quarter 2011, compared with a $(0.5) million loss for the third quarter 2010.

During the second half of 2011, The Howard Hughes Corporation entered into agreements with partners to pursue development opportunities for its Ala Moana condominium rights and Bridges at Mint Hill property, and an agreement to develop apartments on a land parcel located at Columbia Town Center. The joint venture agreements for the Ala Moana and Columbia Town Center projects contemplate The Howard Hughes Corporation having an equal interest with its local development partner. We expect to be the majority equity partner in the Bridges at Mint Hill development. Our equity in the ventures will consist of the value of the condominium rights for Ala Moana and the value of the land for Columbia and Bridges at Mint Hill joint ventures. All of these joint venture development opportunities are contingent upon the approval of the applicable development plans by the various parties and obtaining financing for the development and construction of the projects. At this time, we have agreed with our partners to jointly conduct pre-development activities, and there can be no assurance that any of these ventures will result in actual development or construction.

David R. Weinreb, CEO of The Howard Hughes Corporation, stated, "We are pleased to be working with three high quality local partners to develop and unlock the value of these assets. Market conditions appear to be favorable for these developments, and we currently believe that construction for each could begin by 2013."

Mr. Weinreb continued, "The progress our development and leasing teams are making on creating plans for several of our assets continues to affirm my view about the substantial opportunities in our company. The development planning for many of our other assets, such as Ward Centers and South Street Seaport, is ongoing, and we will announce more specific development plans as they are finalized."