The ticker is HHH, Howard Hughes Holdings. They're based in Houston, in The Woodlands, actually, which is where one of their master planned communities is. With us here today from the company is Eric Holcomb. He's a Senior Vice President, and Tom Han is a Senior Investor Relations Analyst. Howard Hughes is a client of Three Part Advisors, so if anyone would like a follow-up call or a meeting, please reach out to me directly. Happy to set that up. With that, I'll just turn it over to Eric.
Great. Thanks, Jeff. Good morning, everyone. It's a pleasure to be here to talk to you about Howard Hughes this morning. Before we begin, legal disclaimers. We'll be talking some forward-looking statements, as well as some non-GAAP financial measures. You can refer to our SEC filings for more information about the risks about that, as well as the reconciliations, and then one other legal disclaimer that I have to read. As we previously announced, the company's board of directors have formed a special committee comprised of independent directors in light of Pershing Square's Schedule 13D filing. The company and the special committee are committed to acting in the best interests of the company and its stockholders. The special committee will provide an update to our stockholders as and when appropriate, and as such, we will not be taking any questions related to that matter today. All right.
Before I go through my presentation, we put together a short video just to give a little overview of Howard Hughes and our portfolio and what we do. So we'll start with that, and then we'll go through the deck. Hopefully, it works. And you would know it's not going to work. Let's back out of it and then go back in.
While many companies are looking forward and figuring out how they're going to integrate new technology and innovation next year, next month, we're looking forward 10, 20, 30, 40 years, and we're also doing it with decades of experience and knowledge of what it takes to build a great city, build an incredible community, and how those technological advances can be embraced within that community setting.
Howard Hughes is a development company, first and foremost, but unlike most developers, we don't just develop buildings here and there. We develop whole communities.
Our focus is on creating the best master plan communities in the United States.
Think of us as more of a community builder. Developers buy a plot of land, build a building, maximize the value, sell it, and move on. Community builders like Howard Hughes, we build and we stay.
We're a forever owner in every one of our communities. We don't build, sell, and leave. We become part of the fabric of the community.
What makes Howard Hughes unique, and that we're developing only within communities where we have large land holdings and the ability to control supply, differentiates us, gives us a meaningful competitive advantage.
Most other developers have to sell each community they develop in order to fund the next development. Instead, we're able to own each of these strategic developments long-term and use the cash flow produced from these assets to fund future developments.
We have tens of thousands of undeveloped acres, both residential and commercial, that we'll be building on for decades to come. We don't need that next great master plan into our portfolio to be successful. We just need to execute on the acres that we have, unlocking the value in the undeveloped commercial acres into great income-producing assets that will generate recurring cash flow for decades ahead.
Columbia is situated in between Washington D.C., and Baltimore, but it's its own true city. There's 16,000 acres. It's the original master plan community, and we're responsible for filling out the downtown. We're building the urban center for this entire community. The downtown Columbia plan was established over a decade ago, so we're well on our way through that, but it's a 30-year plan. We have offices and apartments and retail. We can bring all those together in a really unique way.
Here in the Houston region, we have The Woodlands and Bridgeland. The Woodlands is approximately 28,000 acres. It is located 25 miles north of downtown Houston. The Woodlands is now celebrating its 50th year in 2024 and is home to over 120,000 residents. It has been named the number one place to live in America several times and is also a great place to have a business, short commutes, and provide a great quality of life. We have a significant operating portfolio here in The Woodlands, made up of Class A offices, multifamily, and retail centers, and we continue to deliver new projects all the time. Bridgeland is located on the northwest side of Houston, right in the path of growth, and makes up 11,500 acres. This year, we were named the number one master plan community in the country by the National Association of Home Builders.
We expect 70,000 residents at total buildout in Bridgeland, and we're just at the tip of the iceberg of the commercial offerings that we're bringing as well. You're seeing some of those projects break ground now, but you're going to see those projects continue for decades to come. Summerlin, which is a 22,500-acre master plan community located in Las Vegas, 15 minutes from the Strip and adjacent to the natural landscape of Red Rock Canyon. With more than three decades of planning and design completed, Summerlin consistently ranks as one of the top-selling communities in the country. The quality of life that you can experience when you come into Summerlin is meaningfully different. Great connectivity to nature, a trail system that is second to none.
From a commercial perspective, we have an incredible portfolio, the majority of which is in Downtown Summerlin, our 400-acre mixed-use urban core, where we have Class A offices, premier multifamily developments, and a vibrant, walkable retail, dining, and entertainment center.
We're located on the south shore of Oʻahu, and it's this incredible opportunity of 60 acres along the coast, complemented by really being in the center of Honolulu. Honolulu has so many incredible aspects to it, whether it's our beaches, our shopping, our restaurants, our culture. And the way we view our village is, how can we bring together all these positive attributes in a coherent way? We have a chance to deliver really a high-rise format of mixed-use and do that in a sequence that integrates the streetscapes, the parks, the retail, the shopping, the restaurants at a scale that is really unprecedented. And that's a lot of what Howard Hughes does, is trying to make the sum of the parts more valuable and more exciting than just the individual pieces.
In Arizona, our latest acquisition, 37,000 acres just west of the White Tank Mountains. What's really exciting about Terra Vallis is that it's truly a blank canvas. Today, we have population zero. We're laying incredible amounts of fiber to meet the telecommunication needs of this community: water, sewer, power, infrastructure. Think of us as a community builder.
We build communities where people want to live, where people want to work, where people want to grow their families and live for generations.
Okay. So that gives you a feel of our communities, which stretch across the U.S. There's seven in total, and when you put it all together, we're roughly about 7 million sq ft of office, 3 million sq ft of retail, about just under 6,000 multifamily units, and we've sold about 2,700 condos in Hawaii that are sold. Actually, that number is a little higher now because we just closed on another 350 units this month, and we've done all that with very good returns, a historical yield on cost of 9% and an 18% return on equity. I'm going to spend a little bit of time on this slide because it walks you through how we think about the business from a perpetual cycle of value creation and our master planning process.
It starts with just initial master planning and planning out the community and what we want it to be, and looking forward and thinking about 50 years from now, what is this community going to need? From that, we move into infrastructure development: water, sewer, roads, parks, you name it, electricity. And once we do that, that's when we start to sell land to home builders. The home builders are ultimately responsible for building the homes. We give them guidelines to follow, but they build the homes and they sell the homes. So we're not actually in the home selling business, but we are in the land sales business. As residents come into our communities, we naturally need things like churches and community services, fire, police, safety, and things like that.
As we get to a certain number of rooftops, we'll start to look at retail, small retail, maybe a pharmacy, like a CVS, maybe it's a grocery store, small inline retail. And as the community grows further, then we start to think about office buildings, and this could take many years. I mean, it could be 15 years for the example in Bridgeland, where we're just now building our first office building. And we use the rental funds from that to ultimately fund more development, and the cycle repeats over and over and over again. And you can see that with our results over time. So we've been in existence for about 14 years, and from a commercial perspective, we've grown our net operating income from $46 million to about $250 million annually today.
At the same time, because these amenities that we create, these commercial amenities that we bring into our communities make our land more valuable, you can see in each one of our communities what our land values have done over the years. Example, The Woodlands is up over 250%. Summerlin, we're selling acres today at $1.5 million an acre. Our basis in that is practically nothing because Howard Hughes bought it for $3 an acre in the 1950s. Bridgeland, a newer community in Houston, up over 54%. We're selling acres there for almost $600,000 an acre right now, and you can see this, kind of the proof in the pudding, if you will. If we go back to 2017, our gross asset value for our land holdings was about $3.7 billion. Since that time, we've sold $2.4 billion of land, roughly about 4,000 acres.
Today, our land is worth more despite selling all that acreage over the last six, seven years. This does not include our Arizona holdings because we acquired that in 2021, and it would be a little misleading to show that included in the calculation. The actual land value is worth even more with Arizona. As we build commercial amenities, as I said, we build all the commercial amenities within our communities, and we do that within our strategic development segment. Historically, we've built about $1 billion a year. Right now, we're doing less because rates are high, costs are high, and we've been squeezed a bit. Over the last three years, for example, from 2022 to 2024, we've built about 19; we've been working on about 19 projects, and it's from every aspect, whether it be multifamily, office, retail, and condos.
It's about a little under 5 million sq ft, a little under $4 billion worth of development costs. And that $4 billion, that $3.6 billion, there's about $2.3 billion of condo development that we ultimately sell off when those condos close. Those generated about $3.2 billion of revenue, and our operating assets have grown by about $60 million annually. That has, I talked about, we were about $250 million right now. That's part of that, and some of that will be future income as we grow higher. If we look at our portfolio, I've already gone through the size and the scale of the portfolio, but I do want to touch on the demand that we see in our portfolio. So from a leasing perspective, today, our retail portfolio is 94% leased, our multifamily is 95% leased, and our office is 88% leased.
So some people might think, well, 88% not that great, but if you go back three years ago, no one was ever going to go to the office again. And during a time when a lot of people, a lot of companies were losing tenants, we were actually gaining tenants because a lot of companies moved to our communities because we provide a better quality of life. You can have a short commute. You can be like me and have a one-mile commute to your office. Companies want that for their employees today, and so we've seen growth there. And in The Woodlands, for example, our portfolio is 90% leased today. And in Summerlin, in Nevada, we're 96% leased. So we've had really good results growing our portfolio in terms of leasing over the last few years.
Looking forward, we're roughly at about $250 million in operating income from our asset, from our operating portfolio today, and we have line of sight for about another $100 million on top of that over the coming years. I would say this is about a three to five-year timeline where we'll grow closer to $350 million, and that's by stabilizing our assets that we already have as well as finishing the assets that are currently under construction and getting them up and running and stabilized. If we look at our land holdings, in the video you saw, we have about 35,000 acres of land remaining to develop, and that's scattered across all of our communities, from the most mature being The Woodlands to the least mature being Terra Vallis in Arizona, where we haven't even built a single home yet.
It's really just, it's every size and scale, but in general, anywhere between 10 years and 50 years of development is ahead of us in each, across our communities. Turning to our condo business, so you saw in the video that we're building vertically. It's a small master plan community of about 60 acres right in the center of Honolulu. And so far, we have built seven towers there that have sold, and the most recent one is Victoria Place that we closed on here in the last couple of weeks. The seven towers that we've closed on today represent roughly about $4 billion of revenue, and we've done that with about a 25%-30% gross margin on those towers. We have three towers that are under construction today, Ulana, The Park, and Kalae, and those are going to come in 2025, 2026, and 2027.
The Launiu is our most recent tower that we've announced. It's about half sold right now, about 55%, and we're expecting to start construction on that one hopefully next year, and we'll deliver that one in 2028. Again, these all come with roughly 25%-30% margins. It'll be roughly about $6.2 billion of revenue. Actually, it would be more than that as these towers sell out more, but this is a recurring cash machine for Howard Hughes and has been extremely successful. We're taking that, well, and let me back up. Beyond those towers, we have three more waiting in the wings. Melia and 'Ilima are going to be the most luxurious and the highest-priced towers that we've ever delivered in Ward Village. They are on the water.
They're directly across from the beach, and they have the best views of Diamond Head, and that's what our buyers really want. So we've already got a lot of demand for these towers. We expect to start pre-selling these next year. 'llima is actually a partnership that we're going to do with Discovery Land Company, who we've partnered with in the past in Summerlin and been very successful. And then Mahana will be our last tower under our current entitlements. Those three towers, though, roughly about $2.5 billion of additional revenue that will ultimately take Howard Hughes to roughly about $9 billion of revenue in Hawaii. And we're trying to get more entitlements beyond these with the HCDA to continue our business there beyond 2031. And we're taking our success in Hawaii and we're bringing it to the mainland.
Right now, we just started construction on The Ritz-Carlton Residences, The Woodlands. It's the last really nice plot of land on Lake Woodlands. We're going to build 111 homes there. It's roughly about 70% sold today with about $335 million of revenue. The success of this was unlike anything we could have ever imagined. We actually sold 50% of this in less than one week. It was so successful that we actually have taken the remaining units off the market because we think we can achieve a higher price once people can see it and touch it and feel it and walk it. So as it stands right now, it's the highest price per foot that has ever been achieved in the Houston market. So just taking a step and looking at our outlook for 2024, across our segments, master plan communities are roughly $330 million of earnings.
Our condominium sales are about $760 million. That's at about a 27%-28% margin. That's actually occurring in the fourth quarter here. And then our operating assets business, recurring income is about $257 million. Cash flow is a very important thing at Howard Hughes. It's really how we manage the business and how we think about the business. And so we've actually just had our investor day on Monday, and we introduced what we're going to call adjusted operating cash flow. It's going to be a new overarching metric for Howard Hughes that we're hoping our analysts will get on board with and use to be as a forward-looking guidance metric for Howard Hughes that kind of brings all the pieces together into one metric. Historically, we've given guidance on segments, and this will be an overarching component.
But the way that we like to think about it is that currently, our operating asset NOI covers our interest expense and our overhead. And you recall I talked about where we're seeing this go another $100 million higher. So as that grows over the coming years, that gives us even more optionality from a cash flow perspective to be able to make capital allocation decisions. But ultimately, with that covering our overhead, it basically leaves our condo gross profit, roughly one tower per year, plus the profits that we get from our land sales to invest in the business, whether it be through future developments, but also share buybacks given the attractiveness of our stock price right now and potential debt paydown.
Looking at 2025, we'll give formal guidance at the beginning of the year, but at the highest levels, we expect that MPC EBT is going to be just as strong as it was this year. We've kind of set a new trend in this business where we're achieving over $300 million a year. Historically, that would have been something closer to $150 million - $200 million. Our operating assets business, we expect to continue to set new records. Condos, next year, we do have one tower that will deliver. I meant to mention this earlier, but this tower is what we call a workforce tower. So it's effectively affordable housing, and it is a break-even proposition for Howard Hughes.
But that's part of. We have to, to get our entitlements to build market-rate towers, we have to build 20% affordable housing, and this is our last tower that we have to do in the affordable housing market. So it will be a break-even proposition, but as we look forward into 2026 and 2027, we have The Park Ward Village that's going to deliver in 2026 roughly $700 million in revenue. It's 96% sold, so that'll go a little higher as we finish out the remaining 4%. And then in 2027, we have Kalae that's already under construction and the Ritz-Carlton in The Woodlands that today is roughly valued at about $1.1 billion of revenue. Again, that will be delivered at the exceptional margins that we have historically delivered in our condo business. And with that, I'll open it up for questions. Yes, sir.
If you build a community like Summerlin, is there a mayor or town council, or are you guys the sheriff?
No, we're not the sheriff. We do, we control all the remaining land, and we do own a large portion of the retail and multifamily and ultimately the commercial assets in the community. But it's managed by, well, half of Summerlin is actually in, well, all of Summerlin is in this Clark County, about half of Summerlin is in the city of Las Vegas. And so it's subject to the mayor of Las Vegas, whereas the rest of the community is the commissioner of Clark County. In The Woodlands, we have a township. So it's a board that all the residents vote to elect, and they are ultimately the people who manage The Woodlands.
But we do have considerable, I guess, influence, if you will, given our land holdings and how much we own of the commercial assets. Yes, sir. That's correct. So the question was, what's the status on share repurchases? We did stop buying shares in 2022 when the market got tight, and we didn't see a lot of land sales happening because mortgage rates were so high. Ultimately, that really hasn't panned out 100%. Our land sales have been very strong in 2023 and 2024. It is a major consideration right now. And everything, so the way that it works at Howard Hughes is every cash outflow comes to a capital allocation committee. It's comprised of a number of the senior leaders of the company.
And right now, we're evaluating every project that comes in against the returns that we could get from share buybacks. So I would tell you that share buybacks are definitely on the table again, and I would expect that we'll start to see that happen here in the coming quarters.
Do you have any operating assets like retail with Ward Village?
Yeah. Yeah. So the question is, do we have operating assets with Ward Village? We do. So Ward Village in 2010 was a bunch of old warehouses and very old retail where we got roughly $20 a foot in rent. And what we're doing as we build these towers, we tear down the old retail, and we rebuild a tower with ground floor retail at the bottom. And with that, we get roughly $70 a foot with the new retail.
So today, Tom, we're roughly about $18 million of NOI from Ward Village, give or take. Obviously, we want to move that higher as we tear down more of that old retail and build new towers and get the higher price. But yeah, where the retail component is an important piece of Ward Village. Yes, sir.
A while back, there were some issues with what Arizona property can update us on that, maybe the water situation.
Yeah. Sure. Yeah. So the question is about Terra Vallis in Arizona and the water situation there. So let me first say that we have water rights. We have, they call them 100-year water certificates or certificates of water supply. And we have the rights to build approximately 7,000 homes today, which is about the first 10 years of development. So it's the first village called what we call Floreo.
And beyond that, we don't have additional water rights. However, Terra Vallis sits right on top of the Hassayampa River Basin. And so it's an underground water reservoir. And that has more than sufficient water to build out Terra Vallis. We also are targeting a 35% lower water consumption per day per person in Terra Vallis relative to the Arizona average. So the Arizona average is 146 gallons per person per day. And we're targeting, I believe, 96, 94, 96 in Arizona. And with that, we actually have achieved that. In Summerlin, we're running in that range right now. So we're very successful at managing water. So what we would say is Arizona does not have a lack of water. Arizona has a lack of water management.
And we feel very confident that we will be able to get additional water rights to build in Arizona once the state sees the success that we expect to have with consumption and show them that we can do this at a much lower rate of consumption than the average community in the state.
Anybody else? Okay. Well, thank you for your time. If you'd like to discuss Howard Hughes in more detail, we'd love to have a call with you. So please feel free to reach out. You can reach out to me directly or you can come through Jeff. And as always, we always encourage people to come and see us. I think Howard Hughes makes much more sense when you can come and see one of the communities that we built, whether it be The Woodlands or Bridgeland in Houston or Summerlin in Las Vegas.
If you're headed out to Hawaii, we can always set up a tour of Ward Village. Everybody is always very impressed with Ward Village, and myself included. I wish I could afford one of those condos, but nevertheless, it's been a pleasure to speak with you guys today and look forward to hearing from you more later. Thank you.