Howard Hughes Starts 2025 Strong as Pershing Square Investment Takes Shape

It’s been a high-flying week for Howard Hughes Holdings (HHH).

HHH released its first-quarter earnings report on Thursday, boasting $63 million in adjusted operating cash flow and a total net operating income of $72 million. Its operating income was a new quarterly record and a 9 percent increase compared to the same time last year.

The earnings release came a few days after Bill Ackman’s Pershing Square Capital Management struck a deal to take a larger stake in the commercial real estate giant by investing $900 million and acquiring 9 million newly issued shares of HHH for $100 apiece, as Commercial Observer previously reported.

As part of the deal, which was first proposed in January, Pershing Square will own a 46.9 percent stake in HHH. In addition, Ackman will become executive vice chairman of HHH’s board of directors, while Ryan Israel, currently Pershing Square’s chief investment officer, will become HHH’s chief investment officer and Jean-Baptiste Wautier will join as a new director.

Meanwhile, HHH CEO David O’Reilly will remain in his position to oversee the company’s real estate operations, and Ackman and Israel will instead focus on “acquiring new businesses,” Ackman said during HHH’s Thursday morning earnings call.

“The business plan is to acquire what we call durable growth companies that meet our standards for business quality and defensibility,” Ackman said during the call.

“These are businesses that earn high returns on capital that we want to prepare to own for decades, and businesses that will diversify Howard Hughes’ exposure to real estate … and offer greater long-term growth,” Ackman added. “The long-term plan is for Howard Hughes to become an investment-grade company and for us to build a valuable business over a long period of time.”

Ackman also referenced Berkshire Hathaway CEO Warren Buffett as a “role model” for the deal, saying during the call that Buffett has done “a great job of acquiring family-owned, family-controlled businesses that meet those criteria.” Buffett announced May 5 that he would retire at the end of the year.

In addition, Ackman outlined plans to “build an insurance company inside of the HHH corporation.” The team has already “identified a superb potential leader of that business,” and a potential transaction could be announced by the fall, Ackman said.

While the Pershing Square deal was largely the focus of Thursday’s earnings call, HHH also reported strong first-quarter numbers across its master-planned communities, with earnings before tax of $63 million increases sequentially year-over-year, driven by the sale of 70 residential acres at an average price of $991,000 per acre, the report said.

Plus, HHH saw a $39.2 million year-over-year jump in land sales, largely thanks to two sales totaling 29 acres in Summerlin, Nev., and increased lot sales in its Bridgeland and Woodland Hills communities in Texas, the report said.

And the company is on track to complete construction of its Ritz-Carlton Residences, a new luxury condominium project in The Woodlands, Texas, in 2027, HHH said.

However, it wasn’t all a slam dunk for HHH. Its net income from continuing operations per diluted share was 21 cents, compared to $3.25 during the fourth quarter of 2024, according to the report.

O’Reilly dismissed any concerns about the home sales market, following President Donald Trump’s “Liberation Day” tariffs announced April 2.

“We are very cognizant of the national headlines and what’s going on across the country,” O’Reilly said during the call. “We haven’t seen those headlines in our community, and I think that speaks to the quality of what we have. Our sales were strong this quarter … and it gives us great confidence in reaffirming our guidance.”

Isabelle Durso can be reached at idurso@commercialobserver.com.