THE HOWARD HUGHES CORPORATION REPORTS

FOURTH QUARTER AND FULL YEAR 2015 RESULTS

Full Year Earnings Highlights

Fourth Quarter Earnings Highlights

Full Year Property Highlights

(all lease, occupancy or sales percentages are as of February 1, 2016)

We completed the following development projects in 2015:

We continued development on the following projects in 2015:

Construction on the following projects began in 2015: 

Other 2015 Property Highlights:

DALLAS, February 29, 2016 - The Howard Hughes Corporation (NYSE: HHC) (the “Company”) today announced its results for the year and quarter ended December 31, 2015.

For the year ended December 31, 2015, net income attributable to common stockholders was $126.7 million, or $1.60 per diluted common share, compared with a net loss attributable to common stockholders of $(23.5) million, or $(0.60) per diluted common share, for the year ended December 31, 2014. Our 2015 net income includes a $58.3 million non-cash warrant gain offset by $(64.3) million of non-cash, after-tax depreciation and amortization expense. Our 2014 net loss includes a $(60.5) million non-cash warrant loss, $(36.4) million of non-cash, after-tax depreciation and amortization expense,  and a $(74.0) million net non-cash loss relating to the tax indemnity receivable and its settlement. Depreciation and amortization amounts excluded from adjusted net income attributable to common stockholders are net of income taxes using a 35.0% effective tax rate for the years ending December 31, 2015 and 2014, respectively. Non-cash warrant liability gains/(losses) and gains/(losses) related to the tax indemnity receivable in 2014 are not tax deductible, therefore pre-tax and after-tax amounts are the same. Excluding these non-cash gains and losses, adjusted net income attributable to common stockholders was $132.7 million, or $3.10 per diluted common share, and $147.4 million, or $3.43 per diluted common share, for the years ended 2015 and 2014, respectively.

For the three months ended December 31, 2015, net income attributable to common stockholders was $25.9 million, or $0.59 per diluted common share, compared with $31.9 million, or $(1.18) per diluted common share, for the three months ended December 31, 2014. Fourth quarter 2015 net income attributable to common stockholders includes a non-cash $0.9 million warrant gain and $(17.8) million of non-cash, after-tax depreciation and amortization expense. Excluding these non-cash items, adjusted net income attributable to common stockholders was $42.8 million, or $1.00 per diluted common share. For the fourth quarter 2014, adjusted net income attributable to common stockholders was $35.5 million or $0.82 per diluted common share, excluding a $78.6 million non-cash warrant gain, $(68.5) million net non-cash loss on the tax indemnity receivable and its settlement, and $(13.6) million in non-cash, after-tax depreciation and amortization expense.

As we complete and place our developments into service, non-cash depreciation and amortization expense associated with these cash-flowing commercial real estate properties is becoming a more material and growing component of our net income. Adjusted net income is a non-GAAP measure that excludes depreciation and amortization and non-cash warrant liability and tax indemnity receivable gains and losses. The presentation of net income excluding depreciation and amortization is consistent with other companies in the real estate business who also typically report an earnings measure that excludes non-cash depreciation and amortization. The tax indemnity receivable was settled in the fourth quarter 2014 and is not a component of our net income beginning in 2015. For a reconciliation of adjusted net income to net income (loss) attributable to common stockholders, please refer to the Supplemental Information contained in this earnings release.

David R. Weinreb, Chief Executive Officer of The Howard Hughes Corporation, stated, “This year marked our fifth year as a public Company, and our financial results for 2015 reflect the material value being created through our development activities. Earnings from our newly-developed commercial real estate properties are increasing significantly as these assets transition towards stabilization. In particular, Downtown Summerlin and The Outlet Collection at Riverwalk made meaningful contributions to NOI growth this year.  Residential condominium units under contract at Waiea and Anaha also significantly contributed to our net income in 2015, and I am pleased with the progress and momentum we have made in differentiating Ward Village with a scale and product quality that is unmatched in Hawaii. We also advanced development and leasing plans for the 35 acres in Downtown Columbia surrounding the Merriweather Post Pavilion amphitheater, which we call the Merriweather District.  We have planned initially for nearly five million square feet of development out of the estimated 13 million square feet of entitlements in this area, and I look forward to making significant announcements regarding this project in 2016.”

Mr. Weinreb continued, “The Las Vegas market remains strong, and Summerlin continued to deliver very solid revenues and prices per acre.  Throughout 2015, the Houston economic climate has been challenged by low oil prices,

and we experienced lower sales volumes than in prior years, yet residential land prices achieved in both Bridgeland and The Woodlands remained high compared to historical levels. Our MPCs are the premier communities in their markets, and my experience is that the best positioned and well-capitalized assets will not only out-perform their competitors during difficult times but will be even stronger versus the competition when the market recovers. This has been our experience with Summerlin in Las Vegas coming out of the housing recession, and I believe the same will occur when Houston inevitably recovers from this downturn.”

For a more complete description of the status of our developments, please refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 37 of our Form 10-K for the year ended December 31, 2015. 

Business Segment Operating Results

For comparative purposes, MPC land sales and Operating Assets NOI are presented in our Supplemental Information to this earnings release.  For a reconciliation of Operating Assets NOI to Operating Assets real estate property earnings before taxes (“REP EBT”), Operating Assets REP EBT to GAAP-basis income (loss), segment-basis MPC land sales revenue to GAAP-basis land sales revenue, and Adjusted Net Income, please refer to the Supplemental Information contained in this earnings release. Non-recourse debt means that the debt is non-recourse to The Howard Hughes Corporation, but is collateralized by a real estate asset and/or is recourse to the subsidiary entity owning such asset. All construction cost estimates presented herein are exclusive of land costs.

Operating Assets Highlights

NOI from our combined retail, office, multi-family and hospitality properties increased $43.5 million, or 58.7%, to $117.6 million for the year ended 2015, compared to NOI of $74.1 million for the year ended 2014. These properties are referred to as our “income-producing Operating Assets.” These amounts include our share of NOI from our non-consolidated equity-method ventures and the annual distribution we receive in the first quarter from our Summerlin Hospital cost-basis investment, which together were $5.0 million and $3.1 million for the years ended December 31, 2015 and 2014, respectively. These amounts exclude NOI from properties that are substantially closed for redevelopment and/or were sold during the periods.

The increase in NOI in 2015 compared to 2014 is primarily attributable to the following:

In the fourth quarter 2015, we completed construction and placed in service 1725 and 1735 Hughes Landing Boulevard which consists of two office buildings totaling 649,237 square feet in The Woodlands. ExxonMobil began taking

occupancy in October 2015 and has leased the 318,170 square foot West Building for 12 years and 159,952 square feet of the 331,067 square foot East Building for eight years.

In fourth quarter 2015, we substantially completed construction and placed in service Hughes Landing Hotel, a  205-key Embassy Suites by Hilton branded hotel located in Hughes Landing, which will be owned and managed by the Company.

In the third quarter 2015, we sold to its members The Club at Carlton Woods, a 36-hole golf and country club in The Woodlands, for net cash proceeds of $25.1 million and the assumption of membership deposit and other liabilities of the Club. The property was developed and operated by the Company as an amenity to help sell residential lots in a gated community in The Woodlands. Most of the lots have been sold, and the sale of this asset will allow us to redeploy capital to our development activities.

South Street Seaport remains substantially closed while redevelopment of Pier 17 and the renovation of the Historic District area continue. 

Master Planned Communities Highlights

Land sales in our MPC segment, excluding deferred land sales and other revenue, decreased $(157.5) million, or (44.8)%, to $193.8 million compared to $351.3 million for the year ended December 31, 2014.  Land sales, exclusive of deferred land sales and other revenue, decreased by $(53.4) million, or (55.5%), to $42.9 million for the three months ended December 31, 2015, as compared to $96.3 million for the same period in 2014.

Summerlin land sales decreased by $(26.7) million, or (18.4%), to $118.4 million for the year ended 2015 compared to $145.1 million for the same period in 2014. The Summerlin market is strong, driven by a scarcity of attractive developable residential land, a shortage of resale homes and robust economic conditions. Overall land prices appear to be stabilizing consistent with 2014 levels. The decrease in land sales for 2015 compared with 2014 is due to timing of development and sale of land to homebuilders. We primarily develop superpad sites at Summerlin, which are typically approximately 20 acres in size; therefore, revenues in a given period can be significantly impacted by one or two closings. Average price per acre for superpads increased by $41,000, or 8.6%, to $519,000 for the year ended 2015 compared to 2014. The differences in land pricing between periods at Summerlin reflect changes in the product mix and locations sold during the periods.

Within our Summerlin MPC, land development and pre-sales activities are progressing at The Summit, a joint venture with Discovery Land Company to develop a low-density luxury golf course community.  As of December 31, 2015, the project has contracted for approximately $119 million in land sales, with first lot closings expected to begin in early 2016.  We will receive 100% of the cash distributions on this investment until we receive a 5.0% return on our contributed capital and a return of our $125 million capital contribution. Discovery is entitled to a 5.0% return on its capital contribution plus cash distributions from the joint venture until it has received two times its capital contribution. Any further cash distributions are shared 50/50.

Bridgeland land sales decreased by $(6.8) million, or (17.8%), to $31.5 million for year ended 2015 compared to $38.3 million for the same period in 2014. The decrease is primarily due to homebuilders currently developing homes for sale on lots purchased during the second half of 2014. Average price per acre for detached residential product decreased by (15.7%) to $382,000 for 2015 compared to 2014. Lower home sales velocity caused by low oil prices is also causing homebuilders to be more cautious in managing their land inventory levels.

Land sales in The Woodlands decreased by $(124.1) million to $43.8 million for the year ended 2015 compared to the same period in 2014. The decrease was primarily caused by $80.9 million of lower commercial land sales and

increased homebuilder caution due to slowing home sales velocity caused by low oil prices.  We typically do not sell large tracts of commercial land unless there are compelling strategic reasons to do so, and in 2014 we sold a 59-acre tract of land to the Houston Methodist Hospital System, bringing a major healthcare provider to The Woodlands.  Residential land sales decreased by $(45.4) million, or (58.3%), to $32.4 million for the year ended 2015 compared to 2014. Average price per acre for detached residential product decreased by (14.1%) to $633,000 for 2015 compared to 2014, but increased by 2.9% compared to the $615,000 per acre we received in 2013.

An uncertain economic climate in the greater Houston area due to the decline in oil prices contributed to a slowed sales velocity in 2015 compared to 2014 in our Houston MPCs.

Strategic Developments Highlights

Pre-sales for Waiea and Anaha, two residential condominium towers within Ward Village, began in the first quarter 2014, and construction on both towers began later in the year. During 2015, we launched pre-sales of Ae‘o and the first of two Gateway condominium towers. Sales contracts require a minimum deposit from the buyer equal to 20% of the contracted price and are subject to a 30-day rescission period, after which time the deposit becomes non-refundable. Substantially all of the contracted units are past their rescission periods.

Waiea will have 174 total units, of which 90.8% have been contracted as of February 1, 2016. These contracted sales represent 85.8% of the total residential square feet available for sale. Total development costs are expected to be approximately $403 million (excluding land value) and as of December 31, 2015, we have incurred $198.7 million of development costs. We expect to complete the project by the end of 2016.

Anaha will have 317 total units, of which 87.7% have been contracted as of February 1, 2016. These contracted sales represent 80.0% of the total residential square feet available for sale. Total development costs are expected to be approximately $401 million (excluding land value) and as of December 31, 2015, we have incurred $106.4 million of development costs. We expect to complete the project by mid-2017.

Construction of the 389,000 square foot Ae‘o tower and the 54,000 square foot Whole Foods Market, located on the same block, is expected to begin in early 2016 with completion scheduled in 2018. Pre-sales began in July 2015, and as of February 1, 2016, 44.4% of the 466 total units were under contract, representing 37.2% of the total residential square feet available for sale. This tower was designed with unit sizes averaging approximately 836 square feet, smaller than the average 1,687 square foot unit size for Waiea and Anaha. We have incurred $18.8 million of pre-development costs as of December 31, 2015.

Pre-sales began in July 2015 on the first tower of the iconic Gateway Towers designed by Richard Meier & Partners. These towers will frame the main entrance of the community and planned village green and are an important element in communicating to the market our vision for a fully-developed Ward Village. With this product, we are bringing a level of product quality and overall experience never before seen in the market that sets a new peak for Ward Village. As a result, we are expecting a more measured and longer time period for absorption than at our other Ward Village developments. We have incurred $14.3 million of pre-development costs for the first tower as of December 31, 2015 and are finalizing the project budget.

In the third quarter 2015, we began construction on the Alden Bridge Self-Storage Facility, a 670 unit self-storage facility located in The Woodlands, which we expect to complete by the fourth quarter 2016. The project is financed by a $6.7 million non-recourse construction loan for this facility, bearing interest at one-month LIBOR plus 2.60% with an initial maturity date of October 2019, with two one-year extension options.

In the first quarter 2016, our Parcel C joint venture closed on an $88.0 million loan and began construction. Parcel C is a 437-unit, Class A multi-family development, which will also have 29,000 square feet of ground floor retail space, located in Columbia, MD, that we expect to complete in 2017.

About The Howard Hughes Corporation®

The Howard Hughes Corporation owns, manages and develops commercial, residential and mixed-use real estate throughout the U.S. Our properties include master planned communities, operating properties, development opportunities and other unique assets spanning 16 states from New York to Hawai'i. The Howard Hughes Corporation is traded on the New York Stock Exchange as HHC with major offices in New York, Columbia, MD, Dallas, Houston, Las Vegas and Honolulu. For additional information about HHC, visit www.howardhughes.com.  

Safe Harbor Statement

Statements made in this press release that are not historical facts, including statements accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,”  “project,” “realize,” “should,” “transform,” “would,”” and other words of similar expression, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s expectations, estimates, assumptions and projections as of the date of this release and are not guarantees of future performance. Actual results may differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ materially are set forth as risk factors in The Howard Hughes Corporation’s filings with the Securities and Exchange Commission, including its Quarterly and Annual Reports.  These factors include the continued effects of low oil prices on the Houston market. The Howard Hughes Corporation cautions you not to place undue reliance on the forward-looking statements contained in this release. The Howard Hughes Corporation does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release, except as required by law.

For more information, contact:

The Howard Hughes Corporation

Caryn Kboudi, 214-741-7744

caryn.kboudi@howardhughes.com 

THE HOWARD HUGHES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

THE HOWARD HUGHES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

Supplemental Information

December 31, 2015

As our three segments, Master Planned Communities, Operating Assets and Strategic Developments, are managed separately, we use different operating measures to assess operating results and allocate resources among these three segments. The one common operating measure used to assess operating results for our business segments is real estate property earnings before taxes (“REP EBT”). REP EBT, as it relates to our business, is defined as net income (loss) excluding general and administrative expenses, corporate interest income and corporate interest and depreciation expense, provision for income taxes, warrant liability gain (loss), other income, gains on sales relating to operating properties and, prior to 2015, the changes in tax indemnity receivable. We present REP EBT because we use this measure, among others, internally to assess the core operating performance of our assets. However, REP EBT should not be considered as an alternative to GAAP net income (loss).

MPC Land Sales Summary

Three Months Ended December 31,

* Applicable exclusively to Summerlin.

NM – Not Meaningful

MPC Land Sales Summary

Year Ended December 31,