Good day, and welcome to the Howard Hughes Corporation Investor Update Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Phil Ackman, Chairman of the Board.
Please go ahead.
Thank you so much, operator. And I'm very pleased to be making this announcement on behalf of the company and the Board. As you've seen the press release, David O'Reilly, who I'm sure all of you know well, is being formally made CEO of the company. He's been in the interim CEO role for the last two months. And Jay Cross is joining or has joined as President of Howard Hughes.
Just a little bit of background. If you remember, in late September we announced a process to seek a new CEO for the company. We mentioned at the time that David O'Reilly was a prime candidate. And we began that process, and we were very fortunate that Jay Cross raised his hand and expressed interest. And it was one of those moments where you a process.
You know, if someone makes an incredible bid, you can preempt a deal instead of shopping it. And that's basically what we did here. And Jay comes from most recently a dozen years building Hudson Yards, the largest private development project in The U. S. And for those of you who are familiar with Hudson Yards, the degree of complexity, the scale, the financing, the technology, the integration of technology into the project, you know, the politics involved.
You know, these are, you know, credible collection of skills and experiences, you know, that Jay has built over the course of his career. And we felt, combined with David, who secretly was my first choice for CEO, I couldn't imagine a better candidate in that role. He's been with the company now for four years. We've worked incredibly closely together, you know, the full board alongside David. And he's always jumped in as needed.
He's been serving and we the only thing he didn't do is he didn't negotiate pay for being CEO, President and CFO all at the same time. We've got a bargain there for the last couple of months. But the reward is, you know, David becoming our full time CEO. And we think the combination is really an unbeatable combination to manage. You know, what is a complicated company?
You know, this is a public company. It's got lots of complicated financial and business and other issues. But it's also a real estate developer. And, you know, the combination of the skills, you know, David obviously has a ton of real estate experience by virtue of experience at Howard Hughes and experience beforehand. But, you know, Jay has been a developer really over the course of his career, focused on very challenging, politically construction, architecturally challenging projects.
And that collection of skills, we think, will really advance the ball for the company. So I'm going to turn it back to David. I think he'll say a few words, and then we'll have the opportunity for Jay to walk us through some of his CV and some of the projects he's been involved with over time. And I think you can follow along on the web with that presentation. So with that, I'm going to
turn it over to David. Thank you so much, Bill, and I so appreciate the kind words. I I am just so grateful for the opportunity and thrilled to be, the CEO of the Howard Hughes Corporation and and not just as reaching this this title and this role, but to be here at this time, at this moment, where it is such an exciting time for the Howard Hughes Corporation, where our master plan communities are so well positioned. They're benefiting from an increase in both residents and corporations looking for those great mixed use communities. And I am so thrilled to partner with Jay and to leverage his expertise and execute on what's ahead of us.
It is, so like I said, an incredible time for Howard Hughes, and we have an incredible opportunity. And to be coming out of, what was a pretty challenging time during the pandemic with the most liquidity the company's ever had, some incredible land holdings and blank canvases to to help create the mixed use city centers of tomorrow. And to do that with the expertise that Jay brings to the table, really contributes to all the enthusiasm So thank you, Bill. Thank you to the Board and for everybody for giving me this opportunity.
And I'll turn it back over to you.
So with that, why don't we welcome Jay as our President. And Jay, why don't you tell us a little bit about what you've been up to for the last few decades?
Thank you, Bill. And I too, like David, want to thank you, Bill, and the Board for this opportunity. I'm very keen to join Howard Hughes as I think that the the strategy of the master plan community is perfectly aligned with what I've been doing for the last twenty plus years. When we started at Hudson Yards, we used to talk about our tagline was always a city within a city. And what we meant by that was that we wanted to build a live, work, and play environment.
And and understanding, I think, over the course of time in that project that a live, work, play environment is much more than simply residential, retail, and office building types. It's really much more the the glue that links them all together. And being a master developer allows you to personally sort of curate all those other experiences, whether it be the open space, the connectivity, landscaping, arts and culture, health and wellness, dining, and in many cases, special experiences, like amphitheaters and observation decks, etcetera. And when you get these elements pulled together in a natural way that feels authentic, then you really do create dynamic town centers. And I think that's really, what attracted me to the Howard Hughes strategy that we're starting with mature communities that are now ready for their own town centers.
So they will be cities within the metropolitan complexes where they live. And I think it's thinking about that in the next version with all new construction, and having infrastructure in place and being ready to go is super attractive. And then I think the other aspect of the of the master plan community is that they are communities, and and that's really what I've learned from my sports background that, in many cases, sports facilities can be accelerators to development, and that was definitely the case in Toronto where they brought financial district closer to the waterfront in Miami where we basically led to the revitalization of Biscayne Boulevard. And I think Howard Hughes has seen that with Summerlin with the Aviators Ballpark. And when you do do those public private partnerships, inevitably, you're dealing with the public sector for infrastructure or land assembly or financing, and you quickly learn the importance and the dynamics that their their currency, the money, the currency is trust.
They need to know that you're gonna do what's right for the community. And I think I've learned as a developer that, you know, what's good for the developer is good for the community. And, therefore, I really look forward to the opportunity to develop communities, you know, across America in these really dynamic cities where Howard Hughes presently operates. So with that, I'm gonna turn it back to David, and and he's gonna walk you through our pipeline quickly.
Well, thank you, Jay, and and welcome again. Couldn't be more excited. And I think it's clear from Jay's background and some of the projects that he highlighted that he has really been at the forefront and at the intersection of not just great real estate, but where great real estate intersects with community and where the development of great real estate can impact the residents and the folks in that community in a very positive way. And for us, we have incredible opportunities to do that to do that exact same thing. The Woodlands is a great example with 722 commercial acres of land yet to be developed and 7,000,000 near near term entitlements ready to go.
Just down the road, their next community, Bridgeland, much less mature than The Woodlands, but with on target this year to sell over 800 homes and accelerating new residents coming to that market. Those residents are gonna seek commercial amenities, and it is a community that is gonna be prime for a next generation town center right off the Grand Parkway and some of that land that you're looking at right there. We have fifth over 1,500 commercial acres of land to execute the next generation town center in Bridgeland. Shifting further west to Summerlin, you know, 100,000 residents with another 100,000 to come as we sell more residential land to homebuilders for the next fifteen years And with eight fifty one acres of commercial land to execute on, 5,000,000 square feet in the town center right next to the existing retail known as Downtown Summerlin, the Las Vegas Aviators Ballpark, a practice facility for the Golden Knights, this is an incredible near term opportunity to execute on our vision. Shifting to Columbia, very similar story.
It's the integration of multifamily office hospitality around entertainment with the Merriweather Post Pavilion on the lakefront where we can do regular office, medical office, a full complement of commercial opportunities that can drive outsized risk returns for our shareholders. And to be able to execute there over the next several years, incredibly exciting. And then, obviously, in Ward Village where we have just under 6,000,000 square feet of remaining residential entitlements. But this isn't just about building condo towers. This is about building a community.
This is about the connectivity of the Central Park, of the ground floor retail, of the access to the beach, the harbor, the marina that has continued to drive our success in sales and will continue to drive that success for years to come. And finally, on the East Coast Of Seaport, being able to leverage, Jay's experience, at Hudson Yards and to bring that to 250 Water Street where we recently announced our plans, for the two tower design. This is gonna bring some much needed mixed income housing to Lower Manhattan. And this development is not just important for Howard Hughes, but we see this as really important for New York City, Lower Manhattan, and the Seaport District. So to wrap up, before we open to q and a, again, you know, look, I I would tell you the combination of our strategic vision with our amazing raw land of commercial land holdings combined with the most liquidity and capital this company has ever had and the expertise in house to execute is what is, I think, well positioned us to execute, not just for the next several quarters or years, but for the next decade in terms of building these incredible master plan communities across the country.
So with that, we'll turn it over to Q and A. Operator, if you could give the first question, please.
Thank you. We will now begin the question and answer session. Our first question comes from Alexander Goldfarb. First,
David, congrats. Hopefully, you did order some business cards with all three titles on on them, some collector's items. And, Jay, I have to say, I think this may be a first to have a nuclear engineer in REIT land. So, welcome.
Thank you.
First question is, you know, David, clearly, you know, you've been at the company a long time. You've been integrally involved in all aspects, you know, from day one and, you know, certainly in the, in the, reorientation that you guys undertook about a year or so ago. So with the announcements today, should we expect any major changes? Or it would seem that the plans that you outlaid, I think it was about a year or so ago, you know, really are set in stone, and, therefore, you know, we shouldn't really expect much deviation as far as, you know, where the company is focusing its resources and, the assets that the company is looking to sell.
Yeah. Alex, it's a great question. And it was just over a year ago where we announced a transformation plan. And I'm I'm sure you recall, and many on the call will remember that we talked about really three aspects of that transformation plan. One was rightsizing our g and a and cutting 40,000,000 to $45,000,000 of overhead, which we largely accomplished and we talked about on our most recent earnings call.
The second was the sale of noncore assets, and we've knocked out about 25% of that. And the remainder, we're still working on, but, obviously, that is gonna be, somewhat delayed specifically within the hospitality and resale assets that were set to be sold as a result of the pandemic. But that's still to be done, and we are still committed to executing on that leg of the plan. And the final and and really most important part of that transformation plan was accelerating the growth in our core master plan communities. And I think based on what we talked about today and using Jay's expertise and experience and applying that to some of our commercial land within our MPCs that I just talked about, that plan hasn't shifted.
And the strategy remains very consistent to what we talked about just over a year ago, and we're now in a spot with the liquidity and capital, the expertise, and the opportunity to move forward and accelerate on that execution. And for us, that's really exciting.
Okay. And then second question is just going and as you look over the your portfolio, you know, you guys have had huge success in Hawaii and in Vegas and Houston, Summerlin, etcetera. New York has been, you know, sort of a much tougher spot. Jay's background is is clearly heavy urban, heavy public private. But does that mean that you're thinking about making more of an effort in the in in a market like New York where the view is, hey.
Our best returns seem to come from, you know, those other MPCs, and therefore, it's not that we're we're using Jay's urban background to go more urban. It's that we're using his background to extract more out of the the Hustons, Summerlins, the Columbia's, and the and the and the Ward villages?
Look. I I I would take a step back, Alex, and
say that that our execution strategy and where we see our best growth going forward is always gonna be where we see those strongest risk adjusted returns. And there are gonna be times when Colombia, like right now, based on cybersecurity, health care, and education, are gonna be strongest. And times where Houston as a result of today's energy prices may not be may not have as much demand for new commercial growth right now. So our ability to be nimble and allocate that capital between New York, Hawaii, Summerlin, Columbia, and Houston is one of our greatest benefits, and that's not gonna change. I don't think that that, the company's expertise, Jay's expertise or experience would influence that capital allocation decision other than really focused on where we see the deepest demand and the best returns available.
Okay. Thank you, David.
Thanks, Alex.
Our next question comes from Vahid Khorsand. Please go ahead.
Good morning. Thanks for taking my question. David, congratulations. Jay, welcome aboard. Just wanted to get some clarity on I know you're still in the CFO search, if you have a timeline for that and if there's any color you can provide on any additional leadership changes.
We haven't established a firm timeline, and then I'm not gonna commit to date certain, because it's really about finding, the right candidate, not the first candidate. We're committed to doing a full search, and I'm sure that that will unearth some amazing talent that we'd love to bring into Howard Hughes. Beyond that, I don't see any major leadership changes at this point. I think that, you know, once we're able to find a CFO and fill out the the c suite, if you will, between Jay, Peter, our general counsel, our CFO, myself, with incredible support from the board, I don't see any other major changes.
Okay. And I have just one more question. Jay had mentioned his experience with public private partnerships. Just looking at your portfolio, is that something you see more of? I know you have something similar to that with the ballpark, but is that something in across your portfolio where you see opportunities for that?
Well, we're always exploring where there's opportunities to do that in all of our portfolios and with all of our master plan communities. And, you know, could there be an opportunity for something like that in Hawaii in the future? Sure. Obviously, we executed on a, the first of the million delta that was issued by Howard County in our Columbia project, where we've been able to to take on those type of partnerships. I wouldn't rule anything out.
We're always looking and opportunistic as it relates to, finding the best cost of capital to help execute on the vision.
K. Thank you, and thanks for taking my question.
Our next question comes from Jon Petersen. Great.
Thanks. David, Jay, congratulations. This is great. I guess, know, Jay, I was curious if you could maybe talk to us a little bit about the Hudson Yards experience you had, maybe kind of what worked, what didn't work. And clearly, there's some parallels between that and the South Street Seaport.
So I'm curious you know, as maybe as you've looked at that project from afar, if there's, you know, different strategies you think can bring to that project and, you know, to kind of get it going.
Sure. Well, think one of the lessons from Hudson Yards was that, you sort of have to figure out your phasing strategy, in a way which you can deliver critical mass all at one time, and you can't have continuous phases and be a constant construction site. And then I think as a result of that, what Hudson Yards turned out to be is a majority office dominated for the moment. The second phase will be probably dominated by residential. So that's different than the the idea of entertainment retail, and I think that, in all cases, what I like about the the Howard Hughes retail portfolio is it's pretty much all, open air sort of high what I call high street retail.
And I think that's gonna be the the future of retail coming back. And, and so, I'm optimistic that we will see retail return in new forms, but, people still want to socialize, and they want to be on the street as long as they can are allowed to be. And so I think, I'm I'm excited about what we can do both, Seaport but throughout the portfolio.
And then as we, across the MPCs, you know, I think you talked about, I don't think the word you used was urbanization, but I guess kind of what I heard was kind of, you know, more live work play, kind of densifying the core. I guess, in a post COVID world, do you think that strategy because that's kind of been the strategy over the last, you know, however, a decade or so in real estate. Do you think that strategy continues in a post COVID world, or do you think things change?
I I think in some ways, it could accelerate because I think what you might see is a is a decentralization of major urban centers, and so that there will be a a growth of what sometimes are called the secondary cities. And I think those secondary cities offer, in many cases, a higher quality of life, reduced cost of living, more open space, more room for the family or the work from home option. And I think those are all sort of strong trends that angle in the direction of Howard Hughes Corporation. I also think that the office space will change in the future. And so the opportunity to build new in relatively short order, and again, fewer communities that already have the entitlements in place, again, speaks to the future of Howard Hughes because we're gonna be building office buildings with more open space, more decks, more central areas, different amenities.
Coworking has not gone away yet. It might become back in a in a form of a flex office population for our company. So I think these all, in there to the benefit of Howard Hughes' strategy and the existing Massified Communities.
Great. And then maybe just finally, have a question for Bill. I think when you guys went through the strategic transformation, there was kind of talk of G and A savings of going from a kind of a three person C suite to a two person, so now we're expanding back to three. Maybe just some thoughts there
on that, I guess. Sure. We well, if you look at their plumbing contracts, we think we made a good deal for the company and also a good deal for them. So that's, I think, helpful. But, you know, the the value of this company is gonna be driven by our you know, making smart development decisions and smart capital allocation decisions.
And I couldn't imagine I I don't think we could find one executive that would have cover all those bases. You know, this is a a very unusual company. As you know, there are it's a bit of a one of a kind. I think if it were just a pure traditional REIT, which owns stabilized assets, that would be we could probably get by with, if you will, one C suite leader. But this is a very large scale development company with assets from Hawaii to New York City.
And having someone like Jay join the team, I think, earn an enormous return on our investment in his compensation, if you will. And so and I think, you know, if we had just hired Jay, I think he'd be too distracted running a public company to do what was really important, which is to help the MPC leadership build the best communities and the best assets. So we think, in this case, this kind of partnership, and it really is going to be a partnership between the two of them. And I think that is something that we're particularly excited about. I think we made a bargain deal to get this kind of talent, if you will.
I think they're going create a lot of value, and a lot of their compensation is incentive based and will be driven by stock price performance. And so I think we'll be nicely rewarded over time. And, you know, we're up stocks up, whatever, 4% a little more than 4% this morning. So I feel like we've already they've already earned their keep on their first day on the job. Sounds good.
All right. Thanks for that. Congrats again, guys.
Thank you. Thank you, sir.
This concludes our question and answer session. I would like to turn the conference back over to David O'Reilly for any closing remarks.
So just to wrap up and say thank you again, Bill, and to the Board all the support and for giving me this opportunity. And thank you again for everyone who dialed in today to follow the the news, ask questions, and we look forward to seeing you all, if not live, at least by video in the very near future. And, let everyone meet Jay firsthand and talk about, all the great things that we'll be doing at the Howard Hughes Corporation. So thanks again, and look forward to connecting again soon.