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2018 Annual Review

5 Core Markets

At its core, real estate is very much a local business where experience, knowledge, and relationships in a given market play a critical role. Across our five core markets, we have a deep understanding of our sub-markets that we believe few other real estate companies can match. Many of our executives have been working in these markets for their entire careers, and some have been with us for more than four decades.

Our regional leaders are fully integrated into their respective communities, serving on charitable boards and business associations and speaking with homebuilders, homeowners, and tenants every day. We live and breathe our work in these markets. For those investors that are not as familiar with HHC, there is no better way to understand our business than by visiting our core assets. I encourage each of our shareholders to experience our core assets for themselves.

Beginning with our MPC’s and making our way to New York and Honolulu, in the pages that follow is a high-level overview and progress on our accomplishments at each of our core assets.

Houston MPCs


Both the Houston economy and housing market continued their resiliency and experienced strong growth in 2018. Houston has added jobs every year since 2010. Additionally, Houston’s economy continues to diversify and benefits from no state income tax, the largest port in the country, and robust infrastructure with four major beltways surrounding the city. As Houston’s economy continues to recover, these factors will make it an attractive destination for companies looking to relocate their corporate campuses. Created by visionary oil businessman George Mitchell in 1974 with an original design inspired by James Rouse’s master plan in Columbia, Maryland, The Woodlands has grown into one of the country’s most recognized MPCs over the last four plus decades. Today, more than 117,000 residents and several Fortune 500 corporations call The Woodlands home.

In addition, numerous large corporations maintain regional campuses in The Woodlands such as ExxonMobil, Chevron Phillips, Baker Hughes, McKesson, and Aon. As a result of the concentrated corporate presence, The Woodlands is one of the largest employment hubs in the region with over 64,000 jobs, helping to maintain economic stability with an average household income in excess of $97,280 (compared to $61,708 for the broader Houston area).

The Woodlands has an unrivaled collection of amenities compared to other communities in the region, including 23 public and nine private schools, seven golf courses, five hospital systems, upscale dining / shopping offerings, and the most popular outdoor amphitheater in the country—The Cynthia Woods Mitchell Pavilion.

The community also has over 200 miles of hiking and biking trails as well as more than 130 neighborhood parks. These amenities have helped make The Woodlands one of the top-selling communities in Texas for nearly two decades.

Land Sales

We generated $35 million in residential and commercial land sales at The Woodlands in 2018, a 14.3% decrease year over year…due primarily to the small amount of inventory we have remaining. With just a little over 500 residential lots remaining in the community, we will continue to push price over pace as land is scarce and set to appreciate over time.

Commercial NOI

The growth in recurring NOI at The Woodlands since our inception has been remarkable. Total NOI for The Woodlands operating assets reached $95.6 million in 2018 and is expected to reach approximately $147.8 million at stabilization of the existing portfolio and those projects under construction.

In 2018, the annualized fourth quarter NOI of our multifamily portfolio was $14.7 million. We project this NOI to grow to $32.5 million upon stabilization of all assets currently under development. Download the 2018 Letter to Stakeholders to learn more.

Real estate, Houston, Tx Houston ariel view
The Woodlands lake view



Our office portfolio in The Woodlands consists of approximately 2.1 million square feet across 11 properties. Our office properties range in size and location to satisfy a broad range of tenant requirements. Our scale allows us to compete for tenants at every stage of a company’s life cycle, from small companies searching for affordable space to Fortune 100 corporations interested in state-of-the-art build-to-suit office space.


Our hospitality portfolio consists of 913 hotel rooms across three properties: The Woodlands Resort and Conference Center, The Westin Town Center and the Embassy Suites at Hughes Landing.

The Resort completed a significant renovation in 2015 and the Embassy Suites and Westin respectively opened in late 2015 and early 2016. We hired our new head of hospitality Mike Slosser in late 2016 and, despite the challenging market conditions, he and his senior team have continued to do an excellent job in improving the operations and sales at the hotels by increasing NOI by more than 70% from $13 million in 2016 to $24 million in 2018. At stabilization, we expect the portfolio’s NOI to reach $31.5 million.


Including our newest building currently under construction, we own five multi-family properties in The Woodlands that total 1,775 units. Similar to our office properties, our multi-family portfolio is uniquely positioned to serve a wide range of residents, from millennials moving into their first home after college to empty nesters looking for the best amenities a property has to offer.

In 2018, the annualized fourth quarter NOI of our multifamily portfolio was $14.7 million. We project this NOI to grow to $32.5 million upon stabilization of all assets currently under development.


Our retail portfolio consists of six properties totaling approximately 376,000 square feet. These properties are primarily located in Town Center and Hughes Landing and offer a variety of dining and shopping offerings from restaurants such as Truluck’s, Fogo de Chao and Del Frisco’s Grille to grocery stores such as Whole Foods Market. Our retail portfolio is 92% leased with an average remaining term of seven years. In 2018, total NOI from our retail portfolio in The Woodlands was approximately $9.6 million, which we project to stabilize at approximately $15.5 million.

As previously noted, for context, we acquired our former partner’s 47.5% equity ownership interest in The Woodlands in 2011 for $117.5 million, giving us 100% ownership of this MPC subject to $261 million of debt at that time. Since then, we have sold over 3,000 residential lots for approximately $425 million and 180 acres of commercial land for $145 million. Today, we value the remaining land in The Woodlands at $874 million on an uninflated/undiscounted basis. In addition, we have invested total capital of approximately $1 billion to develop or redevelop approximately 1.9 million square feet of office, 284,000 square feet of retail, 996 multi-family units, 913 hotel rooms and 1,438 units of self-storage, which collectively generate NOI of $73.4 million (annualized as of fourth quarter 2018) and $98.7 million of expected stabilized NOI equating to a stabilized yield of 10% on our total project costs. The Woodlands is a good example of how we can leverage our unique expertise, control supply, and create long term value for our shareholders.

You can learn more at

Swimming pool in The Woodlands, Tx Real estate in The Woodlands, TX
Bridgeland, Tx


Bridgeland is located northwest of Houston and southwest of The Woodlands. It contains 11,470 acres. Since construction began in 2004, our predecessors invested over $300 million into this asset. The master plan details more than 3,000 acres of open space and 900 acres of lakes, helping to differentiate the community and provide appeal to buyers. Today, Bridgeland is one of the best-selling communities in Texas and is home to more than 10,000 residents, which is expected to grow to approximately 65,000 residents at completion. With its location and mid-range price point, Bridgeland is accessible to a wider pool of the population than The Woodlands and had a very strong year of sales, with 620 residential lots sold in 2018 totaling $48 million in revenue. This represented a 58% increase compared to 2017 with price per acre up 2.1%. As other MPCs in the region exhaust their supply of residential lots, Bridgeland stands to continue benefit from the continued growth in greater Houston as future home owners are attracted to this master planned environment.

We have reserved approximately 1,533 acres in Bridgeland for commercial development. Similar to The Woodlands, our strategy is to initially focus on bringing a critical mass of residents to the community and to then begin commercial development.

The community’s town center could ultimately have commercial density of several million square feet. As of December 31, 2018, we had 2,299 residential acres and 1,533 commercial acres remaining. Last year, we secured financing and began construction on Bridgeland’s first multi-family project, a 312-unit building that will open later this year.

We have high aspirations for Bridgeland. We expect it to eventually achieve average lot sales in excess of 1,000 lots per year. Accelerating our lot sales will ignite the virtuous cycle and pave the way for commercial development and meaningful growth in recurring income.

You can learn more at

Pedestrian Bridge in Bridgeland, TX

The Woodlands Hills

Located 13 miles north of The Woodlands and spanning approximately 2,000 acres, The Woodlands Hills is our newest master planned community. We broke ground in late 2017.

Set within a gently rolling terrain, The Woodlands Hills is expected to eventually include more than 5,000 homes. The first single-family home models opened in the first half of 2018 and we generated approximately $9 million in lot sales in our first year of sales. Sharing the same commitment to environmental preservation as The Woodlands and Bridgeland, the forested community of The Woodlands Hills will feature approximately 112 acres of open space including 20 neighborhood parks, and a 17-acre Village Park. An amenity center with event space and a fitness facility will highlight the recreation in The Woodlands Hills. The community will include nine-and-a-half miles of hike-and-bike trails, in addition to bike lanes along the major thoroughfares. A dynamic mix of retail is also planned.

We have 1,392 residential acres and 171 commercial acres remaining. The uninflated/undiscounted value of this land is approximately $478 million. We are looking forward to unlocking value at this asset.

You can learn more at

The Woodland Hills, Texas



Developed on land acquired by our legendary namesake himself in the 1950s, Summerlin was named after Hughes’ paternal grandmother and began selling homes in 1991. The 22,500-acre community is located nine miles west of the Las Vegas strip and is home to approximately 110,000 residents, which we expect to grow to more than 200,000 at full build-out. We have approximately 4,142 remaining saleable or developable acres, making us the largest private landowner in this land-constrained valley, where most of the land is owned by the Federal Government.

2018 was an exceptional year for Summerlin as the community benefited from the robust local economy and continued growth of our urban core. By adding amenities to Downtown Summerlin, we continued to further distinguish the community as the premier place to live in the region. Similar to Ward Village, Summerlin’s momentum continues to build on itself as our position in the market strengthens with each additional offering that we bring to our downtown.

Today, there is approximately $20 billion of commercial development in planning or underway in Las Vegas, including the new stadium for the Oakland Raiders, who will be relocating to the city in 2020. We believe that the Raider’s announcement is a sign of the desirability of the market and an indicator of the city’s future growth. Homes sales in 2018 increased 13% year over year in Las Vegas and 24.9% in Summerlin.

With more amenities than nearly any other community in the nation—25 schools, over 235 parks and 150 miles of trails, 14 houses of worships, and 10 golf courses—Summerlin is the place to live in the region, and as a result has benefited disproportionately from the economic recovery. In 2018, our market share increased from 10.8% to 11.9%, a result of Summerlin’s strong differentiation through design and having a vibrant urban core, Downtown Summerlin.

In 2018, we experienced our sixth year in a row of land sales exceeding $100 million with total residential and commercial land sales of approximately $147 million, a testament to Summerlin’s dominance in the market. Our average price per acre was $587,000, an increase of 1.7% from the previous year. Summerlin’s median new home prices increased by 2.0%. We have significant additional capacity at Summerlin with approximately 3,324 remaining saleable residential acres, and remaining entitlements for approximately 38,000 residential dwelling units, with a projected sell-out date of 2039.

Additionally, I am pleased to share that we successfully continued delivery of higher-density product in 2018, which has allowed us to capture a broader portion of the market while maintaining overall land prices. We intend to continue to add to our offerings in 2019 and beyond as we work to accelerate sales and increase the net present value of our land.

You can learn more at

Las Vegas Ballpark Las Vegas Ballpark

Downtown Summerlin

Downtown Summerlin’s strong momentum continues with the opening of a new state-of-the-art AAA baseball stadium in April 2019 that is home to the newly renamed Las Vegas Aviators, the completion of three new office buildings in 2018, and continued progress on our newest multi-family building that is slated to open in the second half of 2019.

Downtown Summerlin’s success has been a key factor in increasing our market share, as our urban core has played a meaningful role in further distinguishing the community.

The first phase of Downtown Summerlin, totaling 1.4 million square feet and including the Downtown Summerlin retail and ONE Summerlin, was completed at the end of 2014. We continued to upgrade the tenant roster in the last several years, which has helped drive continued increases in traffic. In 2018, Downtown Summerlin welcomed approximately 18.4 million visitors, an 8.5% increase in year-over-year traffic, as well as sales of $615 per square foot, excluding pad sites and anchors. Overall, NOI for the first phase of Downtown Summerlin’s retail and office is on pace to grow from $26.3 million in 2018 to $32 million at stabilization.


In 2018, we completed construction of three new office buildings—two 90,000 square foot buildings for Aristocrat Technologies and Two Summerlin, a 145,000 square foot office building. We completed the Aristocrat build-to-suit in the second quarter. Two Summerlin was completed in the third quarter of 2018 and opened approximately 90% pre-leased, one of the fastest paces of pre-leasing in the Las Vegas office market in recent history. For context, our first office building in Downtown Summerlin, One Summerlin, took nearly twice the amount of time to reach the leasing levels of Two Summerlin. With both buildings close to being fully leased, there is no new office supply in the Summerlin submarket. Additionally, with our initial vision of creating a walkable and dynamic environment in Downtown Summerlin realized, we have quickly become the premier office environment in the market, achieving rates surpassing other sub markets in the region. Given current demand and the lack of new supply, we have begun designing a new office building, Three Summerlin, and anticipate commencing construction in 2019.


In 2018, Constellation, our 124-unit multifamily project, reached our projected stabilized NOI target of $2.2 million. Additionally, we remain on schedule and on budget to complete construction of Tanager, our 267 unit multi-family project, in the summer of 2019.

Sports and Entertainment

Following the opening in late 2017 of the practice facility for the NHL’s Vegas Golden Knights, we continued to make significant progress in 2018 in transforming Downtown Summerlin into a hub for sports and entertainment. In 2017, we acquired 100% ownership of the Las Vegas 51s and secured a 20-year naming rights agreement from the Las Vegas Convention and Visitors Authority that will pay us $4 million per year to finance a portion of the new stadium in Downtown Summerlin, Las Vegas Ballpark. This naming rights deal, the largest in minor league sports history, was a critical step in moving forward with the stadium, which opened to the public for its first game on April 9th. As an homage to Howard Hughes and his spirit of innovation, we named the team the Aviators.

The Las Vegas Ballpark is anticipated to attract more than 500,000 people to our downtown each year. We expect the ballpark to continue Downtown Summerlin’s momentum and further distinguish the community as a regional destination. Additionally, we believe the stadium will serve as a key amenity for residents while increasing the value of our remaining land holdings.

Future Development

We have future development entitlements of over five million square feet of additional residential, office and retail space in Downtown Summerlin. As evidenced by the accelerated pace of leasing for Two Summerlin, given the growing importance of entertainment and experience-led offerings, we are confident that Downtown Summerlin’s emergence as an entertainment and sports destination will continue to spur accelerated commercial development in Summerlin over the coming years.

You can learn more at

Downtown Summerlin Outdoor yoga at Downtown Summerlin

Downtown Columbia


Developed by Jim Rouse, considered the father of the MPC business, Columbia was among the first MPCs in the country. Its strategic position between Baltimore, MD, and Washington, D.C. enabled it to thrive. Today, it is home to more than 112,000 residents.While The Rouse Company sold all of the community’s single family residential inventory many years ago, the central core was reserved for the last stages of development so that it could become an urban-oriented business and cultural hub known today as Downtown Columbia. This strategy is consistent with The Woodlands, which created enormous value by reserving strategically located “town center” land for commercial development later in the life cycle of the MPC.

Downtown Columbia is located in Howard County, which has a population of approximately 321,000 residents and one of the nation’s most educated workforces. Because of its proximity to Fort George Meade, U.S. Cyber Command, and the National Security Agency, it is at the center of the growing cybersecurity industry. The county is also home to major research institutions such as Johns Hopkins Applied Physics Lab and a dense population of technology companies like Tenable, Department 13, SourceFire/Cisco, Micros/Oracle, Tresys, IronNet and IMPAQ International. As of December 2018, the Howard County unemployment rate was 2.7%. Median household income in Howard County is more than $115,576.

Downtown Columbia’s masterplan provides us with the ability to develop approximately 13 million square feet comprised of over 5,500 residential units, 4.3 million square feet of office, 1.3 million square feet of retail, and 640 hotel rooms. 2017 was a milestone year for Downtown Columbia with the county closing the first tranche ($48 million) of a $90 million TIF Bond Authorization, which will ultimately provide for a variety of public improvements and unlock the potential to develop 4.9 million square feet in the Merriweather District, which has been our central focus.


Over the last several years, we acquired 10-70 Corporate Center , One Mall North and the Sterrett Building  to become the dominant office landlord in Downtown Columbia, owning approximately 64.6% of the supply in the market. This provides us with a level of control that will only continue to strengthen as we bring new product online.

In the Merriweather District, we have completed two office buildings, One and Two Merriweather, which were the first new office buildings to be built in Columbia in more than a decade. The two buildings are 84.6% leased and respectively anchored by MedStar Health, the region’s largest healthcare company, and Pearson PLC, an international education company. Last year, we broke ground on 6100 Merriweather Drive, a 307,000 square-foot office building that will be completed later this year. Tenable, a leader in the cybersecurity industry, is the lead anchor for the building and will be a great addition to Downtown Columbia. The building is currently 46.76% pre-leased.

In the aggregate and including 6100 Merriweather Drive, our office portfolio in Columbia totals 1.7 million square feet and generated $19.5 million of NOI based on the 2018 annualized fourth quarter results. At stabilization, the current portfolio is expected to generate $35.5 million.


Our existing Columbia multi-family portfolio totals 817 units developed in a joint venture with a local partner, Kettler, Inc. (“Kettler”). The first multi-family development, The Metropolitan Downtown Columbia, a 380-unit complex, reached full occupancy in 2016. Our 50% share of the NOI from The Metropolitan is $2.7 million and is expected to increase to $2.9 million upon full stabilization.

In 2016, we began construction on the 437-unit m.flats/TEN.M project adjacent to The Metropolitan, Downtown Columbia. We contributed five acres of land to the project valued at approximately $23.4 million. Additionally, we invested $9 million of capital to ready the land for development. At stabilization, we will generate at share $3.8 million in NOI on these buildings. In 2018, we broke ground on Area 3 multi-family, our first self-developed multi-family building in Columbia.  The 382-unit building is on schedule to open in 2020.


We successfully repurposed the former Rouse Company Headquarters, designed by architecture giant Frank Gehry, into a dynamic Whole Foods-anchored destination in fall 2014. The Area 3 multi-family building referenced above will contain 57,000 square feet of retail that is expected to open in 2020 along with additional street level retail in the Merriweather District. Our Columbia retail portfolio totals over 89,199 square feet and will generate $2.2 million of stabilized NOI.

Future Growth

Downtown Columbia is a significant value creation opportunity for the company. We continue to make progress in transforming Downtown Columbia’s entitlements into recurring cash flow. In 2018, we achieved another milestone in obtaining Howard County Final Development Plan (FDP) approval for One million square feet of density in Lakefront Core and commenced an FDP for a Health and Wellness District with an incremental 1.5 – 2.0 million square feet of development in the northern part of the Lakefront District. As of year-end 2018, we had 96 commercial acres remaining in Downtown Columbia.

As we continue to position Columbia as an attractive hub for companies in the healthcare, cybersecurity, and educational sectors, I am confident that over the next decade Downtown Columbia will become a thriving environment much like Hughes Landing.

We are proud to be honoring Rouse’s legacy in creating Downtown Columbia and reimagining the community for a new generation of residents and office workers.

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Seaport District

Seaport Village

Located in the heart of Lower Manhattan, the Seaport, one of the city’s only privately controlled districts, is well positioned to become one of New York City’s most vibrant destinations.


Since 2001, Lower Manhattan has experienced a dramatic transformation.

Changing Office Landscape

The third largest business district in the country has seen a shift in its office population as Lower Manhattan has become a hub for companies in the creative, media, advertising, and technology sectors. More than 530 companies have relocated to Lower Manhattan since 2005, including Condé Nast, Time, Gucci, and Spotify to name a few.


The neighborhood has become one of the fastest growing residential areas in the city, with the population south of Chambers street growing from 15,000 in 2001 to more than 62,000 today, with more than 3,500 residential units planned or under construction. Given its high millennial composition, the neighborhood’s median age is in the low 30’s with high average household income exceeding $224,000.


With the opening of the Fulton Transit Center in 2014 (a 5-7 minute walk from the Seaport) and the World Trade Transportation Hub in 2016 (a 10-minute walk from the Seaport), Lower Manhattan has never been easier to access. Combined, these two transport links serve more than 500,000 daily commuters and nearly every subway line in Manhattan stops at one of these two centers. Given that the Seaport is near the first stop into Manhattan from Brooklyn, with Brooklyn’s recent resurgence, Lower Manhattan has in many ways become the new center of New York City.


As the city’s birthplace and original commercial hub, the Seaport has a rich history that along with its architecture and stunning views make it one of the most unique areas in New York City. We decided to build on the Seaport’s distinct attributes and create a destination that would stand out and reconnect New Yorkers to the storied asset. When we inherited the Seaport in 2010, we recognized the opportunity to create an anchor for the thriving Lower Manhattan community while embracing the waterfront and historic cultural fabric of the locale. The Seaport’s distinct architecture and unmatched views of the Brooklyn Bridge have always made it a highly visited tourist attraction, welcoming approximately 12 million tourists annually prior to the redevelopment. However, our focus has been to create a destination that will bring New Yorkers back to the district. Anticipating the growth of e-commerce and the challenges traditional retail would face, we knew that in order to be successful and stand the test of time we would have to curate unique offerings across food, fashion, and entertainment that do not exist anywhere else in the city…leveraging the Seaport’s history and creating what we call a Port of Discovery. We applied our expertise in master planned communities and place making to bring similar holistic planning principles in creating a vibrant and integrated district. This has helped us differentiate the Seaport from other new retail destinations downtown, which have been successful in their own right but are essentially enclosed malls compared to the Seaport, which is open-air and an experience and entertainment driven destination.

The Seaport District spans over 450,000 square feet of offerings across Pier 17, the Tin Building, and the Historic District.  Additionally, we have an interest in the 66-room Mr. C hotel and own the 250 Water Street parking lot.

Pier 17 at night Pier 17 rooftop concert
Concerts and skating at Pier 17

Pier 17

Pier 17 Rooftop

The Pier 17 rooftop is an acre and a half (more than 60,000 square feet) including a restaurant with two outdoor patios, R17, along with a completely versatile venue that can hold approximately 3,400 people standing or 2,400 people seated. The venue is home to a concert series running from May to September and is also able to accommodate a wide range of uses from community open space to private events, fashion shows, movie premieres, product launches such as Car Shows…as well as a beach club, and even a tennis match or a basketball game with over 1,000 spectators. The rooftop is one of the only spaces in the city where you can see the Statue of Liberty, Brooklyn Bridge, and the Empire State Building from the same location.

As mentioned above, we hosted our inaugural concert series this past summer with our exclusive booking partner, Live Nation. Our lineup included a wide range of diverse talent from Amy Schumer, Kings of Leon, Diana Ross, Sting, acclaimed DJ Deadmau5, and a surprise performance by Carrie Underwood on July 4th. In early 2019, Pier 17 was named best new concert venue in North America at the prestigious Pollstar awards. We have also hosted a gamut of other activations such as cinema nights, fitness classes, and more. Content is becoming a critical part of success in the media sectors and the Seaport is well-positioned to benefit from this with its one-of-a-kind setting for television broadcasts and recordings. In late February, we announced our initial 2019 concert lineup, which will include performances from a wide range of artists including Billie Eilish, Ringo Starr, and the Steve Miller Band.

In the winter months, the rooftop is transformed into the Pier Winterland, an aspirational winter experience designed by David Rockwell that includes New York’s only rooftop ice rink, a column free private event space that can hold over 500 people, and additional food and beverage offerings. R17 transforms into a cocktail den with 60 seats. We opened the Winterland and R17 in mid-December and were pleased with the traffic to the rooftop given that the rest of the building is under construction.

Levels 3 and 4

The third and fourth floors of Pier 17 consist of approximately 147,000 square feet that will ultimately be a mix of creative office space, broadcast studio space, a catering kitchen to service the roof and other parts of the property for large-scale events, and a state-of-the-art green room that will also used as event space when we do not have a concert on the rooftop.

As mentioned earlier, ESPN opened their studios in early April and we signed Nike to a 23,000 square foot lease in the fall. We will deliver Nike the space this spring and expect them to move in later this year. In addition to the ESPN transaction being a great economic opportunity for the company, one of the benefits of having ESPN broadcast from the Seaport is that they announce they are “Live from the Seaport District” before each program and feature an aerial of the property while referencing our sponsors.

We have approximately 86,000 square feet of prime office space remaining. While it has taken us longer than we would have liked, we have had very robust demand from a number of potential users and have been in active negotiations with the same potential tenant for the majority of the remaining space for several quarters. In addition, we are not just looking to fill the space with any tenant, but rather are interested in finding the right tenant that is synergistic and aligns with our vision for the Seaport.

One other highlight of Pier 17 is that we wired the façade on levels three and four (as well as the stage) to light up in an infinite mix of colors –what we call the Pier 17 light band. The light band is used for key seasonal and philanthropic activations as well as for marketing and branding opportunities for our sponsors.

Pier Village

The Pier Village is an extension of the city grid system out on the water and will feature six two-story boxes that will house dining concepts from some of the world’s leading restaurateurs, including a seafood restaurant by Jean-Georges that will open late spring, the newest Momofuku concept by David Chang, the New York location of Malibu Farm, and a pop up waterfront  lounge that will all open this summer, along with an Italian chophouse by award-winning chef Andrew Carmellini. Similar to the Jean Georges restaurant, which was ready at the end of last year, which we decided to open in the spring because we felt that would be best for the business due to the lower seasonal traffic at Seaport in the colder months until a critical mass is reached.  Carmellini’s restaurant will be completed by year and, depending on what is best for the business, we will determine whether to open it before year end or in the spring of 2020.

The Pier Village totals approximately 62,000 square feet and has approximately 32,000 square feet of remaining space, which does not include the Pier Village lobby that we expect will become a vibrant central gathering place. The remaining space is primarily made up of one box opposite Jean Georges and the second floor of the box above Malibu Farm. The box opposite Jean Georges will likely be used as banquet space and an extension of the Pier Village Lobby, leaving the second floor of the other box available that we have decided to hold on to until we open the remaining restaurants in the Pier Village, at which point we will determine the best use for the box.

Tin Building

The Tin Building will encompass approximately 53,000 square feet, housing a food experience that we anticipate will rival the most extraordinary food markets in the world. Operated by Chef Jean-Georges , with the core and shell designed by acclaimed architect Greg Pasquarelli, Principal of Shop Architects and interiors designed by award winning designers Roman & Williams. The market will pay homage to the original Fulton Fish Market that opened at the Seaport in the early 1800’s. The existing building has been carefully deconstructed, removed from its deteriorated platform, and will be rebuilt 30 feet back from the FDR  to restore its visibility and move it above the flood plain.

Given the historic nature of the building and its location on the water, the process has been  extensive and time consuming. The food hall is fully leased and slated for completion late next year, assuming we receive all the necessary approvals.

Historic District

The historic district consists of approximately 184,000 square feet of which approximately 139,000 is leased. We have strong demand among potential office users for the approximately 30,000 square foot space on the third floor of the Fulton Market Building.

Additionally, Abercrombie will be vacating their approximately 17,000 square foot space in the spring.  While in the short term this will have an impact on our income, more importantly long term it will  provide us with an opportunity to remerchandise that corner with tenants that are more in line with our vision for the district.

Our first cornerstone tenant to open in the revitalized district was iPic Theaters, which opened in October 2016 in the Fulton Market Building. The iPic at the Seaport is currently iPic’s only Manhattan location and consistently ranked as one of the top cinemas in the city. Despite the Seaport being under construction for most of its first two years of operation, the theater is the highest grossing location in iPic’s portfolio, generating per screen revenue comparable to some of the most successful theaters in the country.

In September 2018, we celebrated the opening of iconic retailer 10 Corso Como’s first US location in the Fulton Market Building. Founded in Milan in 1991 by style visionary and former fashion editor Carla Sozzani, 10 Corso Como is the world’s original concept store and emulates a living magazine with its experiential environment and wide range of offerings that include a restaurant, bar, art gallery, fashion, home goods, design objects, books and more (To learn more visit 10 Corso Como’s opening generated significant press coverage and instantly transformed the Seaport into one of the top fashion and creative destinations in the city. One writer referred to the Seaport District as New York’s newest fashion hub. We also welcomed a host of other experience driven tenants, including Sarah Jessica Parker’s only permanent store in New York, Cynthia Rowley, By Chloe, Big Gay Ice Cream, Scotch and Soda, Dita, Cobble and Co, and Lobster Go Go.

Jean-Georges ESPN studios
10 Corso Como feature in The New York Times

Sponsorship / Events

Because of its unique appeal to consumers, sponsorship will be an integral part of the Seaport and our Strategic Partnerships group has been active in completing long term sponsorship deals with many national brands. We have completed deals with Lincoln, Heineken, Chase, Pepsi and Ticketmaster, totaling approximately $6 million annually. This still leaves the largest sponsorship opportunities available, such as the rooftop naming rights. We are currently in discussions with a potential naming rights partner and expect our sponsorship revenue to continue to be a meaningful and growing income stream for the property.

Additionally, over the years, we have experienced robust demand for event space, particularly among fashion brands, with brands like Fendi, Facebook, Goop, and Louis Vuitton hosting major events at the Seaport. These are a few examples of tenants that have paid us hundreds of thousands of dollars to use our event spaces for short periods of time.

New Market Site / Development Rights

As mentioned in my letter, we are working closely with the City as to how to best use these development rights, including potential use of the 250 Water street parking lot.

Given the unique nature of the Seaport District, it needs to be seen and experienced in order to understand its ultimate potential and I encourage each of our shareholders to pay it a visit as it continues its transformation.


We continue to expect to deliver a stabilized yield of 6% to 8% on the total costs of the development or approximately $731 million net of insurance proceeds. The range of stabilized yields at the Seaport  is wider than our other developments because its cash flows are more volatile than those for our other projects and the ultimate results may in fact fall outside of the expected range. In the near term, we are opening and stabilizing a range of new businesses and due to this fact as well as the factors above, the quarterly results of the Seaport will be less predictable than our other operating real estate assets with traditional lease structures.

Until our full vision has been realized and a critical mass of the key offerings are open, it will be difficult to generate the traffic and sales we need to achieve our stabilized projections. Our projected stabilization date is the end of 2022, largely as a result of the timing of the construction, interior finish work and the time needed to stabilize the Jean Georges food hall in the Tin Building.  The Seaport will incur losses over the next few years until the district is fully open. Due to the recent opening of various businesses , we incurred a net operating loss of approximately $6 million at the project in 2018. A loss was expected and was included in our original development budget but because generally accepted accounting principles do not allow for capitalization of these opening costs, we have to expense them as incurred. Financially, we also expect losses in 2019 as we anticipate that the pre-opening costs of new business openings in the Pier Village will more than offset the increased revenue from rental income of our leased space.

Having said all that, we are steadfast in our vision and that we are best positioning the Seaport District  for long term financial success. We are confident we will have ultimately created a much more profitable development with our approach than leasing the space to traditional retailers. The Seaport is an iconic and irreplaceable part of Manhattan that cannot be recreated.

As such,  if we ever did decide to sell, we believe the property would realize a historically low cap rate with a significant spread relative to our return on cost yields. Similar to other scarce assets with limited competition, we believe the Seaport has the opportunity for outsized appreciation over time compared to other assets given its unique and iconic qualities.

We have much additional work to do to realize our vision, but we have built the foundation for a truly unique asset that will position us to take advantage of the way the world is changing and evolving, in light of the growing importance of content and the desire of technology and retail brands seeking to engage with consumers in a more meaningful and experience-driven way.

Pier 17 rooftop at dusk

Ward Village

Ward Village tower infographic

Ward Village

With every passing year and each new tower that we complete, Ward Village’s appeal and our competitive advantage in the market continue to grow stronger. 2018 was a powerful example of our strategy and vision for Ward Village coming to life in full force. We delivered our third residential building, A’eo, and began construction on our fifth building, ‘A’ali’i. With its innovative design and turn-key offerings, ‘A’ali’i generated the fastest pace of sales of any building we have ever developed at Ward Village, with approximately 80% of the homes pre-sold in 12 months of sales prior to breaking ground in October. In the aggregate, as of March 31, we were approximately 93% sold on the five buildings either delivered or under construction and 88% pre-sold on the building’s currently under construction.

With the opening in 2018 of Oahu’s flagship Whole Foods, acclaimed restaurant Merrimans, and central gathering place Victoria Ward Park, Ward Village has become a vibrant neighborhood and our vision for the community is more tangible than ever before. We continue to differentiate Ward through thoughtful design, dynamic public spaces, art and culture, sustainability, and unique food and beverage offerings. Our aspiration is for Ward Village to be recognized as one of the most dynamic urban master plans, not just in Honolulu, but around the world. As mentioned earlier, in 2017, Architectural Digest named it the “Best Planned Community in the U.S.” and as you can see by our sales results, our homeowners agree—through the end of March and including our pre-sales at Koula we had sold or contracted to sell more than 2,300 homes, totaling over $2.6 billion in sales.

Located in the heart of Honolulu between Downtown and Waikiki a few blocks from Ala Moana Shopping Center (one of the most productive retail destinations in the world), Ward Village has entitlements that allow for up to 9.3 million square feet of mixed-use development. At full buildout, we expect the community to include more than 4,500 homes and up to 1.7 million square feet of retail, industrial and office space.

Ward Village is rather unique as a development given that it has been generating $20+ million annually of recurring income from its existing retail and industrial space, most of which will be redeveloped as part of the master plan and replaced with new retail and commercial space. It is rare to have a development opportunity that produces cash flow at this scale throughout the course of redevelopment.

Due to a scarcity of supply in the market, Honolulu continues to be very attractive for residential development. From 2008 to 2014, Oahu had the lowest levels of new home deliveries since World War II. Despite significant development activity in the last few years, the island is far behind the 3,500 new homes needed annually just to keep pace with the local population growth (not including demand from the Mainland U.S. and Asia).

The undersupply of housing is a direct result of high barriers to entry that prevent other developers from building more homes, including a limited supply of fee-simple land, difficulty obtaining entitlements, high construction costs and limited access to capital. To that end, we believe we have distinct advantages over other developers as we already own arguably the best residential development site, have entitlements in place, and have access to contractor resources that others do not given our position as the largest mixed-use developer on the island. Similar to our MPC segment, the scale of this development thwarts competition in the marketplace and and creates a competitive advantage in sales, marketing, and community engagement as well as in securing labor and financing.

Art and Culture

In addition to purchasing and displaying significant pieces of art in front of our residential buildings, we were the title sponsor and home of the inaugural Honolulu Biennial in 2017—featuring works from more than thirty artists from Asia Pacific and the United States. We renewed our sponsorship and are also the home of the 2019 biennial this spring (the art is on display from March 8 to May 5). This illustrates how we create culture in our communities and how our impact extends beyond the walls of our properties.

Another example of how we have made important contributions to the community beyond our development activities is the creation of the Ward Village Foundation. To date, we have committed to giving more than $2.5 million to local causes important to the community and have already contributed nearly $2 million to local non-profits since the foundation’s inception in 2014.


As the largest LEED-ND Platinum certified neighborhood development in the country and the only one in Hawaii, Ward Village is at the forefront of sustainable community development.

Light Garden Exhibition in Ward Village, Hawaii


Given the strong sales momentum at A’ali’i and Koula along with Ward Village’s reputation and scale, we believe that there is opportunity to increase the pace of development and we are currently studying bringing two more buildings to market. To put the impact of accelerating sales at Ward Village into context, assuming average revenue of $500- $550 Million per tower and a 30% sales margin excluding our basis in the land, each tower we pre-sell and develop generates approximately $150M – $165M in profit. As you can see, if we are able to sell and develop at an increased pace, it would have a substantial impact on our ability to accelerate the creation of value at Ward Village.

We mitigate risk on these transactions by requiring a substantial amount of pre-sales with 20% non-refundable deposits from qualified buyers and with non, or limited, recourse construction financing. We have averaged sales prices per foot of approximately $1,550 on our market-rate buildings over a wide range of product. We have over six million square feet of residential development entitlements remaining. The more than one million square feet of retail in our master plan is expected to achieve net rents between $50 and $75 per foot. Given our proximity to the very successful Ala Moana Center, we expect the retail of the development to grow into a valuable source of recurring income.

Overall, we are very pleased with the tremendous progress made at Ward Village in 2018 and with the bright prospects ahead as our competitive advantages and differentiation continue to strengthen.

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