Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 08, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Howard Hughes Corp | |
Entity Central Index Key | 1,498,828 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 39,838,975 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Investment in real estate: | ||
Master Planned Community assets | $ 1,660,523 | $ 1,642,842 |
Land | 314,400 | 322,462 |
Buildings and equipment | 1,900,172 | 1,772,401 |
Less: accumulated depreciation | (242,034) | (232,969) |
Developments | 976,209 | 1,036,927 |
Net property and equipment | 4,609,270 | 4,541,663 |
Investment in Real Estate and Other Affiliates | 78,890 | 57,811 |
Net investment in real estate | 4,688,160 | 4,599,474 |
Cash and cash equivalents | 653,041 | 445,301 |
Accounts receivable, net | 38,241 | 32,203 |
Municipal Utility District receivables, net | 171,691 | 139,946 |
Notes receivable, net | 69 | 1,664 |
Deferred expenses, net | 64,053 | 61,804 |
Prepaid expenses and other assets, net | 820,240 | 441,190 |
Property held for sale | 34,888 | |
Total assets | 6,470,383 | 5,721,582 |
Liabilities: | ||
Mortgages, notes and loans payable | 2,847,002 | 2,443,962 |
Deferred tax liabilities | 156,882 | 89,221 |
Warrant liabilities | 329,390 | 307,760 |
Uncertain tax position liability | 19,987 | 1,396 |
Accounts payable and accrued expenses | 603,237 | 515,354 |
Total liabilities | 3,956,498 | 3,357,693 |
Commitments and Contingencies (see Note 15) | ||
Equity: | ||
Common stock: $.01 par value; 150,000,000 shares authorized, 39,851,036 shares issued and 39,838,975 outstanding as of September 30, 2016 and 39,714,838 shares issued and outstanding as of December 31, 2015 | 398 | 398 |
Additional paid-in capital | 2,856,335 | 2,847,823 |
Accumulated deficit | (321,507) | (480,215) |
Accumulated other comprehensive loss | (23,818) | (7,889) |
Treasury stock, at cost, 12,061 and 0 shares as of September 30, 2016 and December 31, 2015, respectively | (1,295) | |
Total stockholders' equity | 2,510,113 | 2,360,117 |
Noncontrolling interests | 3,772 | 3,772 |
Total equity | 2,513,885 | 2,363,889 |
Total liabilities and equity | $ 6,470,383 | $ 5,721,582 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 39,851,036 | 39,714,838 |
Common stock, shares outstanding | 39,838,975 | 39,714,838 |
Treasury stock, shares held | 12,061 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues: | ||||
Condominium rights and unit sales | $ 115,407 | $ 78,992 | $ 362,613 | $ 200,362 |
Master Planned Community land sales | 44,128 | 45,423 | 147,168 | 138,937 |
Minimum rents | 44,910 | 37,814 | 128,255 | 109,997 |
Builder price participation | 4,483 | 6,680 | 15,631 | 20,285 |
Tenant recoveries | 11,657 | 10,706 | 33,108 | 31,074 |
Hospitality revenues | 14,088 | 11,772 | 46,126 | 35,256 |
Other land revenues | 2,595 | 4,617 | 8,387 | 11,055 |
Other rental and property revenues | 3,538 | 7,438 | 11,335 | 20,729 |
Total revenues | 240,806 | 203,442 | 752,623 | 567,695 |
Expenses and other income: | ||||
Condominium rights and unit cost of sales | 83,218 | 47,573 | 237,759 | 126,747 |
Master Planned Community cost of sales | 21,432 | 19,674 | 66,128 | 67,806 |
Master Planned Community operations | 9,216 | 10,349 | 26,616 | 32,295 |
Other property operating costs | 16,535 | 16,680 | 47,513 | 54,459 |
Rental property real estate taxes | 7,033 | 6,908 | 21,110 | 19,676 |
Rental property maintenance costs | 3,332 | 3,094 | 9,217 | 8,738 |
Hospitality costs | 12,662 | 8,767 | 37,379 | 26,738 |
Provision for doubtful accounts | 1,940 | 1,007 | 4,629 | 3,082 |
Demolition costs | 256 | 1,024 | 1,218 | 2,637 |
Development-related marketing costs | 4,716 | 7,639 | 15,586 | 19,476 |
General and administrative | 21,128 | 18,526 | 61,505 | 57,095 |
Other (income) expense, net | (432) | 659 | (9,858) | (1,204) |
Gain on sale of 80 South Street Assemblage | (70) | (140,549) | ||
Depreciation and amortization | 23,322 | 24,998 | 71,246 | 71,577 |
Provision for impairment | 35,734 | 35,734 | ||
Total expenses, net of other income | 240,022 | 166,898 | 485,233 | 489,122 |
Operating income | 784 | 36,544 | 267,390 | 78,573 |
Interest income | 196 | 109 | 900 | 516 |
Interest expense | (16,102) | (15,212) | (48,628) | (43,143) |
Warrant liability (loss) gain | (7,300) | 123,640 | (21,630) | 57,450 |
Gain on acquisition of joint venture partner’s interest | 27,087 | 27,087 | ||
Gain on sale of The Club at Carlton Woods | 29,073 | 29,073 | ||
Equity in earnings from Real Estate and Other Affiliates | 13,493 | 295 | 35,700 | 3,164 |
Income before taxes | 18,158 | 174,449 | 260,819 | 125,633 |
Provision for income taxes | 10,162 | 18,237 | 102,088 | 24,795 |
Net income | 7,996 | 156,212 | 158,731 | 100,838 |
Net (income) loss attributable to noncontrolling interests | (23) | 12 | (23) | |
Net income attributable to common stockholders | $ 7,973 | $ 156,224 | $ 158,708 | $ 100,838 |
Basic income per share: (in dollars per share) | $ 0.20 | $ 3.96 | $ 4.02 | $ 2.55 |
Diluted income per share: (in dollars per share) | $ 0.19 | $ 0.76 | $ 3.72 | $ 1.01 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Comprehensive income (loss), net of tax: | ||||
Net income | $ 7,996 | $ 156,212 | $ 158,731 | $ 100,838 |
Other comprehensive income (loss): | ||||
Interest rate swaps (a) | 497 | (411) | (14,876) | 297 |
Capitalized swap interest expense (b) | 154 | (42) | (163) | (154) |
Pension adjustment (c) | (317) | (890) | ||
Other comprehensive income (loss) | 334 | (453) | (15,929) | 143 |
Comprehensive income | 8,330 | 155,759 | 142,802 | 100,981 |
Comprehensive (income) loss attributable to noncontrolling interests | (23) | 12 | (23) | |
Comprehensive income attributable to common stockholders | $ 8,307 | $ 155,771 | $ 142,779 | $ 100,981 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Interest rate swaps, deferred tax expense | $ 200 | $ 200 | $ 8,100 | $ 800 |
Capitalized swap interest, deferred tax benefit | 0 | 100 | 100 | 100 |
Pension adjustment, tax | $ 100 | $ 0 | $ 543 | $ 0 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] | Noncontrolling Interest [Member] | Total |
Balance at the beginning of the period at Dec. 31, 2014 | $ 396 | $ 2,838,013 | $ (606,934) | $ (7,712) | $ 3,743 | $ 2,227,506 | |
Balance at the beginning of the period, shares at Dec. 31, 2014 | 39,638,094 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 100,838 | 100,838 | |||||
Adjustment to noncontrolling interest | 29 | 29 | |||||
Interest rate swaps, net of tax | 297 | 297 | |||||
Capitalized swap interest, net of tax benefit | (154) | (154) | |||||
Stock plan activity | $ 2 | 7,008 | 7,010 | ||||
Stock plan activity, shares | 76,744 | ||||||
Balance at the end of the period at Sep. 30, 2015 | $ 398 | 2,845,021 | (506,096) | (7,569) | 3,772 | 2,335,526 | |
Balance at the end of the period, shares at Sep. 30, 2015 | 39,714,838 | ||||||
Balance at the beginning of the period at Dec. 31, 2015 | $ 398 | 2,847,823 | (480,215) | (7,889) | 3,772 | 2,363,889 | |
Balance at the beginning of the period, shares at Dec. 31, 2015 | 39,714,838 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 158,708 | 23 | 158,731 | ||||
Preferred dividend payment on behalf of REIT subsidiary | (23) | (23) | |||||
Interest rate swaps, net of tax | (14,876) | (14,876) | |||||
Pension adjustment, net of tax | (890) | (890) | |||||
Capitalized swap interest, net of tax benefit | (163) | (163) | |||||
Stock plan activity | 8,512 | 8,512 | |||||
Stock plan activity, shares | 136,198 | ||||||
Treasury stock activity | $ (1,295) | (1,295) | |||||
Treasury stock activity (in shares) | (12,061) | ||||||
Balance at the end of the period at Sep. 30, 2016 | $ 398 | $ 2,856,335 | $ (321,507) | $ (23,818) | $ (1,295) | $ 3,772 | $ 2,513,885 |
Balance at the end of the period, shares at Sep. 30, 2016 | 39,851,036 | (12,061) |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY | ||
Interest rate swaps, tax | $ 8,120 | $ 800 |
Pension adjustment, net of tax | 543 | 0 |
Capitalized swap intererst, tax (benefit) | $ 88 | $ 83 |
CONDENSED CONSOLIDATED STATEME9
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows from Operating Activities: | ||
Net income (loss) | $ 158,731 | $ 100,838 |
Adjustments to reconcile net income (loss) to cash used in operating activities: | ||
Depreciation | 60,834 | 58,257 |
Amortization | 10,412 | 13,320 |
Amortization of deferred financing costs | 5,385 | 4,104 |
Amortization of intangibles other than in-place leases | (1,333) | 679 |
Straight-line rent amortization | (6,668) | (3,255) |
Deferred income taxes | 102,088 | 23,065 |
Restricted stock and stock option amortization | 6,324 | 5,269 |
Gain on disposition of assets | (140,549) | (29,073) |
Gain on acquisition of partner's interest in Millennium Six Pines Apartments | (27,087) | |
Warrant liability loss (gain) | 21,630 | (57,450) |
Equity in earnings from Real Estate and Other Affiliates, net of distributions | (21,952) | 1,426 |
Provision for doubtful accounts | 4,629 | 3,082 |
Master Planned Community land acquisitions | (69) | (6,028) |
Master Planned Community development expenditures | (106,501) | (129,298) |
Master Planned Community cost of sales | 60,600 | 65,692 |
Condominium development expenditures | (245,547) | (137,369) |
Condominium rights and unit cost of sales | 237,759 | 126,747 |
Provision for impairment | 35,734 | |
Deferred rental income | 37,472 | |
Percentage of completion revenue recognition from sale of condominium rights and unit sales | (362,613) | (200,362) |
Net changes: | ||
Accounts and notes receivable | (33) | (1,192) |
Prepaid expenses and other assets | (753) | (9,838) |
Condominium deposits received | 440,076 | 52,001 |
Deferred expenses | (3,349) | (5,562) |
Accounts payable and accrued expenses | (19,019) | 39,065 |
Condominium deposits held in escrow | (440,076) | (52,001) |
Condominium deposits released from escrow | 17,574 | 132,086 |
Other, net | (4,533) | 969 |
Cash provided by (used in) operating activities | (218,306) | 32,644 |
Cash Flows from Investing Activities: | ||
Property and equipment expenditures | (8,649) | (9,505) |
Operating property improvements | (12,184) | (5,856) |
Property developments and redevelopments | (301,843) | (488,713) |
Proceeds from grant to reimburse development costs | 4,945 | |
Proceeds from dispositions | 378,257 | 25,139 |
Proceeds from insurance claims | 3,107 | |
Investment in KR Holdings, LLC | 9,121 | |
Acquisition of partner's interest in Millennium Six Pines Apartments (net of cash acquired) | (3,105) | |
Distributions from Real Estate and Other Affiliates | 16,550 | |
Note issued to Real Estate Affiliate | (25,000) | |
Proceeds from repayment of note to Real Estate Affiliate | 25,000 | |
Investments in Real Estate and Other Affiliates, net | (10,947) | (635) |
Change in restricted cash | (215) | (1,568) |
Other | 1,263 | |
Cash provided by (used in) investing activities | 65,916 | (470,754) |
Cash Flows from Financing Activities: | ||
Proceeds from mortgages, notes and loans payable | 422,661 | 370,342 |
Principal payments on mortgages, notes and loans payable | (62,996) | (40,066) |
Special Improvement District bond funds held in escrow | 6,258 | |
Deferred financing costs | (4,678) | (1,970) |
Taxes paid on vested restricted stock | (1,295) | |
Stock Options Exercised | 180 | |
Cash provided by financing activities | 360,130 | 328,306 |
Net change in cash and cash equivalents | 207,740 | (109,804) |
Cash and cash equivalents at beginning of period | 445,301 | 560,451 |
Cash and cash equivalents at end of period | 653,041 | 450,647 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 77,666 | 60,805 |
Interest capitalized | 46,198 | 35,237 |
Income taxes paid | 6,234 | 2,593 |
Non-Cash Transactions: | ||
Special Improvement District bond transfers associated with land sales | 5,528 | 2,114 |
Property developments and redevelopments | (15,747) | |
Accrued interest on construction loan borrowing | 3,748 | 1,616 |
MPC Land contributed to Real Estate Affiliate | 15,234 | |
Special Improvement District bond transfer to Real Estate Affiliate | (1,518) | |
Capitalized stock compensation | 2,008 | $ 2,072 |
Acquisition of Millennium Six Pines Apartments | ||
Land | (11,225) | |
Building | (54,492) | |
Other assets | (1,261) | |
Mortgages, notes and loans payable | 37,700 | |
Other liabilities | $ (913) |
BASIS OF PRESENTATION AND ORGAN
BASIS OF PRESENTATION AND ORGANIZATION | 9 Months Ended |
Sep. 30, 2016 | |
BASIS OF PRESENTATION AND ORGANIZATION | |
BASIS OF PRESENTATION AND ORGANIZATION | NOTE 1 BASIS OF PRESENTATION AND ORGANIZATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), with intercompany transactions between consolidated subsidiaries eliminated. In accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as issued by the Securities and Exchange Commission (the “SEC”), these condensed consolidated financial statements do not include all of the information and disclosures required by GAAP for complete financial statements. Readers of this Quarterly Report on Form 10-Q (“Quarterly Report”) should refer to The Howard Hughes Corporation’s (“HHC” or the “Company”) audited Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K (the “Annual Report”) for the fiscal year ended December 31, 2015, filed on February 29, 2016 with the SEC. Certain amounts in 2015 have been reclassified to conform to 2016 presentation. In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income (loss), cash flows and equity for the interim periods have been included. The results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ended December 31, 2016. Management has evaluated for disclosure or recognition all material events occurring subsequent to the date of the condensed consolidated financial statements up to the date and time this Quarterly Report was filed. |
RECENTLY ISSUED ACCOUNTING PRON
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2016 | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE 2 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In August 2016, the FASB issued ASU 2016-15, “ Classification of Certain Cash Receipts and Cash Payments. ” The standard addresses how certain cash receipts and payments are presented and classified in the statement of cash flows. The effective date of this standard is for fiscal years, and interim periods within those years, beginning after December 15, 2017 with early adoption permitted. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements. In June 2016, the FASB issued ASU Financial Instruments—Credit Losses .” The standard modifies the impairment model for most financial assets, including trade accounts receivables and loans, and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. The effective date of the standard is for fiscal years, and for interim periods within those years, beginning after December 15, 2019 with early adoption permitted. We are currently evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “ Improvements to Employee Share-Based Payment Accounting .” The standard amends several aspects of accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. counting and to make a policy election to account for forfeitures as they occur. The effective date of this standard is for fiscal years, and interim periods within those years, beginning after December 15, 2016 with early adoption permitted. We are currently evaluating the impact of adopting ASU 2016-09 on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “ Leases .” ASU 2016-02, codified in Accounting Standards Codification (“ASC”) 842, amends the existing accounting standards for lease accounting, including requiring lessees to recognize mos t leases on their balance sheets and making targeted changes to lessor accounting. The effective date of this standard is for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. The new Leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after , the date of initial application. We are currently evaluating the impact of adopting ASU 2016-02 on our consolidated financial statements. In February 2015, the FASB issued ASU 2015-02, “ Consolidation (Topic 810) - Amendments to the Consolidation Analysis .” The standard modifies whether: (1) fees paid to a decision maker or service provider represent a variable interest; (2) a limited partnership or similar entity has the characteristics of a variable interest entity (“VIE”) per consolidation guidance in ASC 810-10-65; and (3) a reporting entity is the primary beneficiary of a VIE. The effective date of the standard is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 for public companies. We adopted the standard as of January 1, 2016, and there was no impact on our consolidated financial statements. In May 2014, the FASB and International Accounting Standards Board (“IASB”) issued ASU 2014-09 “ Revenues from Contracts with Customers (Topic 606) .” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The effective date of this standard is for fiscal years, and interim periods within those years, beginning after December 15, 2017 with early adoption permitted. Entities have the option of using either a full retrospective or a modified approach. Preliminary assessments of our revenue streams indicate that after adoption we will not be able to recognize revenue for condominium projects on a percentage of completion basis and generally revenue will be recognized when the units close and the title has transferred to the buyer. We are continuing to evaluate the new guidance to determine any other impacts on our consolidated financial statements, and we expect to select the implementation methodology by the filing of our annual report on 2016 Form 10-K. In August 2014, the FASB issued ASU 2014-15, “ Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern .” This ASU requires management to assess an entity’s ability to continue as a going concern. The effective date of this standard is for fiscal years, and interim periods within those years, beginning after December 15, 2016 with early adoption permitted. We do not expect the adoption of this ASU to have an impact on our consolidated financial statements. |
SPONSOR AND MANAGEMENT WARRANTS
SPONSOR AND MANAGEMENT WARRANTS | 9 Months Ended |
Sep. 30, 2016 | |
SPONSOR AND MANAGEMENT WARRANTS | |
SPONSOR AND MANAGEMENT WARRANTS | NOTE 3 SPONSOR AND MANAGEMENT WARRANTS On November 9, 2010, we issued warrants to purchase shares of our common stock to certain of our sponsors (the “Sponsor Warrants”). The exercise price for the warrants of $50.00 per share and the number of shares of common stock underlying each warrant are subject to adjustment for future stock dividends, splits or reverse splits of our common stock or certain other events. The 1,916,667 of Sponsor Warrants outstanding are exercisable at any time and expire on November 9, 2017. In November 2010 and February 2011, we entered into certain agreements (the “Management Warrants”) with David R. Weinreb, our Chief Executive Officer, Grant Herlitz, our President, and Andrew C. Richardson, our former Chief Financial Officer, in each case prior to his appointment to such position to purchase shares of our common stock. The Management Warrants represent 2,862,687 underlying shares, which may be adjusted pursuant to a net settlement option, were issued pursuant to such agreements at fair value in exchange for a combined total of approximately $19.0 million in cash from such executives at the commencement of their respective employment. Mr. Weinreb and Mr. Herlitz’s warrants have exercise prices of $42.23 per share and Mr. Richardson’s warrants have an exercise price of $54.50 per share. Generally, the Management Warrants become exercisable in November 2016 and expire in February 2018. As of September 30, 2016, the estimated $124.3 million fair value for the Sponsor Warrants representing warrants to purchase 1,916,667 shares and the estimated $205.1 million fair value for the Management Warrants representing warrants to purchase 2,862,687 shares have been recorded as liabilities because the holders of these warrants could require us to settle such warrants in cash upon a change of control. The estimated fair values for the outstanding Sponsor Warrants and Management Warrants were $123.1 million and $184.7 million, respectively, as of December 31, 2015. The fair values were estimated using an option pricing model and Level 3 inputs due to the unavailability of comparable market data, as further discussed in Note 7 – Fair Value of Financial Instruments . Decreases and increases in the fair value of the Sponsor Warrants and the Management Warrants are recognized as either warrant liability gains or losses, respectively, in the condensed consolidated statements of operations. On October 7, 2016, we entered into a management warrant agreement with our new Chief Financial Officer, David R. O’Reilly, prior to his appointment to the position. This warrant represents 50,125 underlying shares with an exercise price of $112.08 per share and was issued at fair value in exchange for $1.0 million in cash. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 4 EARNINGS PER SHARE Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted‑average number of common shares outstanding. Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of all potentially dilutive common shares. The dilutive effect of options and nonvested stock issued under stock‑based compensation plans is computed using the “treasury stock” method. The dilutive effect of the Sponsor Warrants and Management Warrants is computed using the if‑converted method. Gains associated with the changes in the fair value of the Sponsor Warrants and Management Warrants are excluded from the numerator in computing diluted earnings per share because inclusion of such gains in the computation would be anti‑dilutive. Information related to our EPS calculations is summarized as follows: Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except per share amounts) 2016 2015 2016 2015 Basic EPS: Numerator: Net income $ $ $ $ Net (income) loss attributable to noncontrolling interests — Net income attributable to common stockholders $ $ $ $ Denominator: Weighted average basic common shares outstanding Diluted EPS: Numerator: Net income attributable to common stockholders $ $ $ $ Less: Warrant liability gain — — Adjusted net income attributable to common stockholders $ $ $ $ Denominator: Weighted average basic common shares outstanding Restricted stock and stock options Warrants Weighted average diluted common shares outstanding Basic income per share: $ $ $ $ Diluted income per share: $ $ $ $ The diluted EPS computation for the three and nine months ended September 30, 2016 excludes 343,500 and 404,000 stock options, respectively, because their inclusion would have been anti-dilutive. The diluted EPS computation for the three and nine months ended September 30, 2016 excludes 153,781 shares of restricted stock, respectively, because performance conditions have not been met. The diluted EPS computation for the three and nine months ended September 30, 2015 excludes 147,538 and 124,122 stock options, respectively, because their inclusion would have been anti-dilutive. |
RECENT TRANSACTIONS
RECENT TRANSACTIONS | 9 Months Ended |
Sep. 30, 2016 | |
RECENT TRANSACTIONS | |
RECENT TRANSACTIONS | NOTE 5 RECENT TRANSACTIONS On July 20, 2016, we acquired our joint venture partner’s 18.57% interest in the 314-unit Millennium Six Pines Apartments (formerly known as Millennium Woodlands Phase II, LLC) for $4.0 million resulting in the dissolution of the joint venture. Simultaneously with the buyout, we replaced the joint venture’s existing $37.7 million construction loan with a $42.5 million fixed rate loan at 3.39% maturing August 1, 2028. Total assets of $67.9 million and liabilities of $42.7 million, including the fixed rate loan noted above, were consolidated into our financial statements at fair value as of the acquisition date. In accordance with GAAP, we recognized a gain of $27.1 million in conjunction with this acquisition relating to the step-up to fair value of the assets acquired. Prior to the acquisition, we accounted for our investment in Millennium Six Pines Apartments under the equity method. We now own 100% of this Class A multi-family property located in The Woodlands Town Center. Included in the Consolidated Statements of Operations for the three and nine months ended September 30, 2016 are revenues of $1.1 million and a pre-tax net loss of $0.2 million since the acquisition date. On June 1, 2016, the Circle T Ranch joint venture sold approximately 74 acres. Our financial results for the nine months ended September 30, 2016 reflect $10.5 million of pre-tax income on this transaction. On March 16, 2016, we sold the 80 South Street Assemblage (“80 South Street”) for net cash proceeds of $378.3 million, resulting in a pre-tax gain of $140.5 million. 80 South Street was comprised of a 42,694 square foot lot with certain air rights, providing total residential and commercial development rights of 817,784 square feet that had been acquired over the course of 2014 and 2015. On September 4, 2015, the Company sold The Club at Carlton Woods, its 36-hole golf and country club in The Woodlands, for net cash proceeds of $25.1 million, and purchaser’s assumption of net liabilities of $4.0 million, resulting in a pre-tax gain of $29.1 million. The property was comprised of total assets of $20.9 million and total liabilities of $24.9 million. The property was developed and operated by us as an amenity for selling residential lots in a gated community in The Woodlands. Most of the lots have been sold, and the sale of this asset allowed us to redeploy capital to our development activities. |
IMPAIRMENT
IMPAIRMENT | 9 Months Ended |
Sep. 30, 2016 | |
IMPAIRMENT | |
IMPAIRMENT | NOTE 6 IMPAIRMENT We review our real estate assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. GAAP related to the impairment or disposal of long‑lived assets requires that if impairment indicators exist and expected undiscounted cash flows generated by the asset over our anticipated holding period are less than its carrying amount, an impairment provision should be recorded to write down the carrying amount of the asset to its fair value. The impairment analysis does not consider the timing of future cash flows and whether the asset is expected to earn an above or below market rate of return. During the third quarter 2016, we implemented a plan to sell Park West, a 249,177 square foot open-air shopping, dining and entertainment destination in Peoria, Arizona that is one of our non-core operating assets. As of September 30, 2016, the property met the criteria to be classified as held for sale. Those criteria specify that the asset must be available for immediate sale in its present condition, sale of the asset must be probable and its transfer expect to qualify for recognition as a completed sale within one year. A sale will allow us to redeploy the net cash proceeds from this unleveraged asset into our existing developments. Consistent with prior financial statements where we noted that a decrease by 10% of the estimated undiscounted cash to be received from this property would result in an impairment, we have recognized a $35.7 million impairment charge due to our shorter anticipated holding period. The $34.9 million net carrying value of Park West, after the impairment, represents our best estimate of its current fair market value. There can be no assurance that we will ultimately recover this amount through a sale. The following table summarizes our provision for impairment: Provision for impairment as of September 30, Impaired Asset Location Method of Determining Fair Value 2016 2015 (In thousands) Operating Assets: Park West Peoria, AZ Discounted cash flow analysis using capitalization rate of 6.75% $ $ — Each investment in Real Estate and Other Affiliates as discussed in Note 8 – Real Estate and Other Affiliates is evaluated periodically for recoverability and valuation declines that are other-than-temporary. If the decrease in value of our investment in a Real Estate and Other Affiliate is deemed to be other-than-temporary, our investment in such Real Estate and Other Affiliate is reduced to its estimated fair value. No impairment charges were recorded for any of our investments in Real Estate and Other Affiliates during the three and nine months ended September 30, 2016 or September 30, 2015. |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE | |
FAIR VALUE | NOTE 7 FAIR VALUE ASC 820, Fair Value Measurement , emphasizes that fair value is a market-based measurement that should be determined using assumptions market participants would use in pricing an asset or liability. The standard establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring assets or liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the asset or liability. Assets or liabilities with readily available active quoted prices, or for which fair value can be measured from actively quoted prices, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The following table presents the fair value measurement hierarchy levels required under ASC 820 for each of our assets and liabilities that are measured at fair value on a recurring basis: September 30, 2016 December 31, 2015 Fair Value Measurements Using Fair Value Measurements Using (In thousands) Total Quoted Prices Significant Significant Total Quoted Prices Significant Significant Assets: Cash equivalents $ $ $ — $ — $ $ $ — $ — Liabilities: Warrants — — — — Interest Rate Swaps and Caps — — — — Cash equivalents consist of registered money market mutual funds which invest in United States treasury securities that are valued at the net asset value of the underlying shares in the funds as of the close of business at the end of each period. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates derived from observable market interest rate curves. The valuation of warrants is based on an option pricing model, utilizing inputs which are classified as Level 3 due to the unavailability of comparable market data. The following table presents a rollforward of the valuation of our Sponsor and Management warrants: (In thousands) 2016 2015 Balance as of January 1 $ $ Warrant liability loss (gain) (a) Balance as of September 30 $ $ (a) All gains/losses during 2016 and 2015 were unrealized. Changes in the fair value of the Sponsor and Management Warrants are recognized in net income as a warrant liability gain or loss. The inputs to the valuation model include the fair value of stock related to the warrants, exercise price and term of the warrants, expected volatility, risk-free interest rate and dividend yield and, with respect to the Management Warrants, a discount for lack of marketability. Generally, an increase in expected volatility would increase the fair value of the liability, while a decrease in expected volatility would decrease the fair value of the liability, but the impact of the volatility on fair value diminishes as the market value of the stock increases above the strike price. As the period of restriction lapses, the marketability discount reduces to zero and increases the fair value of the warrants. The significant unobservable inputs used in the fair value measurement of our warrants as of September 30, 2016 and December 31, 2015 are as follows: Unobservable Inputs Expected (a) Marketability (b) September 30, 2016 26.9% 2.0% - 5.0% December 31, 2015 27.4% 10.0% - 12.0% (a) Based on our implied equity volatility. (b) Represents the discount rate for lack of marketability of the Management Warrants. The following table includes a non-financial asset that was measured at fair value on a non-recurring basis as a result of the property being impaired: (In thousands) Total Fair Value Measurement Quoted Prices in Significant Significant Total (Loss) - Nine Months Operating Assets: Park West (a) $ $ — $ — $ $ (a) The fair value was determined based on a discounted cash flow analysis using a capitalization rate of 6.75% and is shown net of transaction costs. The estimated fair values of our financial instruments that are not measured at fair value on a recurring basis are as follows: September 30, 2016 December 31, 2015 (In thousands) Fair Value Hierarchy Carrying Estimated Value Carrying Estimated Assets: Cash Level 1 $ $ $ $ Notes receivable, net (a) Level 3 Liabilities: Fixed-rate debt Level 2 $ $ $ $ Variable-rate debt Level 2 (a) Notes receivable are shown net of an allowance of $0.2 million as of September 30, 2016 and $0.2 million as of December 31, 2015. Notes receivable are carried at net realizable value which approximates fair value. The estimated fair values are based on certain factors, such as current interest rates, terms of the note and credit worthiness of the borrower. The fair value of fixed-rate debt in the table above, not including our Senior Notes (please refer to Note 9 – Mortgages, Notes and Loans Payable ), was estimated based on a discounted future cash payment model, which includes risk premiums and a risk free rate derived from the current London Interbank Offered Rate (“LIBOR”) or U.S. Treasury obligation interest rates. The discount rates reflect our judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and credit quality would be if credit markets were operating efficiently and assuming that the debt is outstanding through maturity. The fair values of our Senior Notes, included in fixed-rate debt in the table above, are based upon the last trade price closest to the end of the period presented. The carrying amounts for our variable-rate debt approximate fair value given that the interest rates are variable and adjust with current market rates for instruments with similar risks and maturities. The carrying amounts of cash and cash equivalents and accounts receivable approximate fair value because of the short‑term maturity of these instruments. |
REAL ESTATE AND OTHER AFFILIATE
REAL ESTATE AND OTHER AFFILIATES | 9 Months Ended |
Sep. 30, 2016 | |
REAL ESTATE AND OTHER AFFILIATES | |
REAL ESTATE AND OTHER AFFILIATES | NOTE 8 REAL ESTATE AND OTHER AFFILIATES In the ordinary course of business, we enter into partnerships or joint ventures primarily for the development and operations of real estate assets that are referred to as “Real Estate and Other Affiliates.” These partnerships or joint ventures are accounted for in accordance with FASB ASC 810 Consolidation . In accordance with ASC 810, we assess our joint ventures at inception to determine if any meet the qualifications of a variable interest entity (VIE). We consider a partnership or joint venture a VIE if: (a) the total equity investment is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the entity); or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or their rights to receive the expected residual returns of the entity, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Upon the occurrence of certain events outlined in ASC 810, we reassess our initial determination of whether the partnership or joint venture is a VIE. We perform a qualitative assessment of each VIE to determine if we are the primary beneficiary, as required by ASC 810. A company has a controlling financial interest and must consolidate the VIE if it has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s performance, and (2) “benefits,” defined as the obligation to absorb the losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE. The variable interest model requires a reporting entity to reevaluate whether an entity is a VIE upon the occurrence of certain significant events as listed in ASC 810-10-35-4, including any event that changes the design of the entity and calls into question the entity’s sufficiency of equity at risk or characteristics of a controlling financial interest (i.e. amendments to legal governing documents, returns or additions of equity, curtailments or modifications to activities in a way that impacts the equity at risk, etc.). We account for investments in joint ventures which are not VIEs where we own a non-controlling interest and investments in joint ventures deemed to be VIEs for which we are not considered to be the primary beneficiary but have significant influence using the equity method. We use the cost method to account for investments where we do not have significant influence over the joint venture’s operations and financial policies. Generally, the operating agreements with respect to our Real Estate Affiliates provide that assets, liabilities and funding obligations are shared in accordance with our ownership percentages. Our investments in Real Estate and Other Affiliates that are reported on the equity and cost methods are as follows: Economic/Legal Ownership Carrying Value Share of Earnings/Dividends September 30, December 31, September 30, December 31, Three Months Ended Nine Months Ended ($ in Thousands) 2016 2015 2016 2015 2016 2015 2016 2015 Equity Method Investments Master Planned Communities: The Summit (a) — — $ $ $ $ — $ $ — Operating Assets: Grandview SHG, LLC (a) % — % — — — Millennium Six Pines Apartments (b) (c) % % — — Stewart Title % % Clark County Las Vegas Stadium, LLC (c) % % The Metropolitan Downtown Columbia (d) % % Woodlands Sarofim % % Strategic Developments: Circle T Ranch and Power Center (a) % % — — — Constellation (a) (c) % % — — — — HHMK Development (c) % % — — — KR Holdings (c) % % m.flats (formerly Parcel C) (a) (c) % % — — — — Cost method investments — — Investment in Real Estate and Other Affiliates $ $ $ $ $ $ (a) Please refer to the discussion below for a description of the joint venture ownership structure. (b) As of July 20, 2016, we acquired our joint venture partner’s interest in Millennium Six Pines Apartments (formerly known as Millennium Woodlands Phase II, LLC) and have fully consolidated the assets and liabilities of the entity. See Note 5 – Recent Transactions for additional information regarding this transaction. The investment balance was in a $1.8 million deficit position and reported in Accounts payable and accrued expenses as of December 31, 2015. (c) Equity method variable interest entity (“VIE”). The m.flats joint venture was a VIE as of December 31, 2015, but on completion of the financing in the first quarter 2016, we determined the entity was no longer a VIE. (d) The Metropolitan Downtown Columbia was placed in service in the first quarter 2015. We are not the primary beneficiary of any of the VIEs listed above because we do not have the power to direct activities that most significantly impact the economic performance of such joint ventures and therefore we report our interests using the equity method. Our maximum exposure to loss as a result of these investments is limited to the aggregate carrying value of the investment as we have not provided any guarantees or otherwise made firm commitments to fund amounts on behalf of these VIEs. The aggregate carrying value of the unconsolidated VIEs was $14.8 million and $21.5 million as of September 30, 2016 and December 31, 2015, and was classified as Investment in Real Estate and Other Affiliates in the condensed consolidated balance sheets. As of September 30, 2016, approximately $123.6 million of indebtedness was secured by the properties owned by our Real Estate and Other Affiliates of which our share was approximately $54.7 million based upon our economic ownership. All of this indebtedness is without recourse to us. We are the primary beneficiary of one VIE which is consolidated in the financial statements. The creditors of the consolidated VIE do not have recourse to us. As of September 30, 2016, the carrying values of the assets and liabilities associated with the operations of the consolidated VIE were $21.7 million and $1.4 million, respectively. As of December 31, 2015, the carrying values of the assets and liabilities associated with the operations of the consolidated VIE were $21.5 million and $1.1 million, respectively. The assets of the VIE are restricted for use only by the particular VIE and are not available for our general operations. Our recent significant investments in Real Estate Affiliates and the related accounting considerations are described below. The Summit During the first quarter 2015, we formed DLV/HHPI Summerlin, LLC (“The Summit”) a joint venture with Discovery Land Company (“Discovery”). At formation, we contributed land with a book basis of $13.4 million and transferred Special Improvement District (“SID”) bonds related to such land with a carrying value of $1.3 million to the joint venture at an agreed upon capital contribution value of $125.4 million, or $226,000 per acre. Discovery is required to fund up to a maximum of $30.0 million cash as its capital contribution, and we have no further capital obligations. The gain on the contributed land is being recognized in Equity in earnings from Real Estate and Other Affiliates as the joint venture sells lots. After receipt of our capital contribution and a 5.0% preferred return, Discovery is entitled to cash distributions by the joint venture until it has received two times its equity contribution. Any further cash distributions are shared 50/50. Discovery is the manager of the project, and development began in the second quarter 2015. As of September 30, 2016, the project has contracted for approximately $216.6 million in land sales, of which $119.8 million in lot closings were completed through the third quarter 2016, resulting in Equity in earnings to us of $22.6 million as of the nine months ended September 30, 2016. Given the nature of the venture’s capital structure, our share of the venture’s income producing activities is recognized based on the Hypothetical Liquidation Book Value (“HLBV”) method, which is an amount equal to the change in our underlying share of the hypothetical distribution assuming all of the venture’s net assets were liquidated at book value. Grandview SHG, LLC In January 2016, we entered into a joint venture with Grandview SHG, LLC (“Grandview”), which purchased a hotel located at 33 Peck Slip in the Seaport District of New York. We advanced a bridge loan of $25.0 million at a 5.0% interest rate to the joint venture at closing to expedite the acquisition, which was repaid in full in June 2016. In the second quarter 2016, upon completion of a refinancing of the property with a $36.0 million redevelopment loan, we made an additional capital contribution of $2.3 million. Our total investment in the joint venture is $8.1 million as of September 30, 2016. Circle T Ranch and Power Center On June 1, 2016, the Circle T Ranch joint venture sold approximately 74 acres. See Note 5 – Recent Transactions for additional information regarding this transaction. m.flats On October 4, 2013, we entered into a joint venture agreement with a local developer, Kettler, Inc. (“Kettler”), to construct an apartment complex with ground floor retail in Downtown Columbia, Maryland. We contributed approximately five acres of land having a book value of $4.0 million to the joint venture and subsequently incurred an additional $3.1 million in capitalized development costs for a total book value contribution of $7.1 million. Our land was valued at $23.4 million, or $53,500 per constructed unit. In January 2016, the venture closed on an $88.0 million construction loan which is non-recourse to us and bears interest at one-month LIBOR plus 2.40% with an initial maturity date of February 2020, with three, one-year extension options. At loan closing, Kettler contributed $16.1 million in cash, of which $7.3 million was distributed to us. This transaction was accounted for as a partial sale of the land for which we recognized a net profit of $0.2 million in the nine months ended September 30, 2016. We also contributed $3.9 million and $6.3 million in the three and nine months ended September 30, 2016, respectively, into this joint venture. Constellation On January 24, 2014, we entered into a joint venture with a national multi-family real estate developer, The Calida Group (“Calida”), to construct, own and operate a 124-unit gated luxury apartment development in Downtown Summerlin. We and our partner each own 50% of the venture, and unanimous consent of the partners is required for all major decisions. This project represents the first residential development in Summerlin’s 400-acre downtown. In the first quarter 2015, we contributed a 4.5-acre parcel of land with an agreed value of $3.2 million in exchange for a 50% interest in the venture. Our partner contributed $3.2 million of cash for their 50% interest. Additionally, our partner is the development manager, funded all pre-development activities, obtained construction financing in the first quarter 2015 and provided guarantees required by the lender. The project is financed by a $15.8 million construction loan with an outstanding balance of $11.9 million as of September 30, 2016. The loan is non-recourse to us. In the fourth quarter 2015, we contributed an additional $1.0 million to the joint venture to fund development costs. Upon a sale of the property, we are entitled to 50% of the proceeds up to, and 100% of the proceeds in excess of, an amount determined by applying a 7.0% capitalization rate to net operating income. The venture commenced construction in February 2015 and is being completed in phases. New tenants began to take occupancy in the third quarter 2016. As of September 30, 2016, the project is 14.5% occupied and 42.7% leased. |
MORTGAGES, NOTES AND LOANS PAYA
MORTGAGES, NOTES AND LOANS PAYABLE | 9 Months Ended |
Sep. 30, 2016 | |
MORTGAGES, NOTES AND LOANS PAYABLE | |
MORTGAGES, NOTES AND LOANS PAYABLE | NOTE 9 MORTGAGES, NOTES AND LOANS PAYABLE Mortgages, notes and loans payable are summarized as follows: September 30, December 31, (In thousands) 2016 2015 Fixed-rate debt: Collateralized mortgages, notes and loans payable $ $ Special Improvement District bonds Variable-rate debt: Collateralized mortgages, notes and loans payable (a) Deferred Financing Costs, net of accumulated amortization of $ 16.1 million and $12.7 million, respectively Total mortgages, notes and loans payable $ $ (a) As more fully described below, $183.0 million and $209.5 million of variable‑rate debt has been swapped to a fixed-rate for the term of the related debt as of September 30, 2016 and December 31, 2015, respectively. The following table presents our mortgages, notes, and loans payable by property: Maximum Carrying Value Interest Facility September 30, December 31, ($ In thousands) Maturity (a) Rate Amount 2016 2015 Master Planned Communities Bridgeland Credit Facility November 2022 % (b) $ $ $ Summerlin South SID Bonds - S124 December 2019 % Summerlin South SID Bonds - S128 December 2020 % Summerlin South SID Bonds - S128C December 2030 % Summerlin South SID Bonds - S132 December 2020 % Summerlin South SID Bonds - S151 June 2025 % Summerlin South SID Bonds - S159 June 2035 % Summerlin West SID Bonds - S808/S810 April 2031 % — Summerlin West SID Bonds - S812 October 2035 % The Woodlands Master Credit Facility August 2018 % (b) Master Planned Communities Total Operating Assets 10-60 Columbia Corporate Centers May 2022 % (b)(c) 70 Columbia Corporate Center July 2019 % (b) Columbia Regional Building March 2018 % (b) Downtown Summerlin July 2019 % (b) Downtown Summerlin SID Bonds - S108 December 2016 % Downtown Summerlin SID Bonds - S128 December 2030 % Embassy Suites at Hughes Landing October 2020 % (b) One Hughes Landing December 2029 % Two Hughes Landing December 2030 % Three Hughes Landing December 2019 % (b) 1725-35 Hughes Landing Boulevard June 2019 % (b) Hughes Landing Retail December 2018 % (b) 1701 Lake Robbins April 2017 % Lakeland Village Center May 2020 % (b) — Millennium Waterway Apartments June 2022 % Millennium Six Pines Apartments August 2028 % — 110 N. Wacker October 2019 % (d) 9303 New Trails December 2023 % One Lakes Edge November 2018 % (b) Outlet Collection at Riverwalk October 2018 % (b) 3831 Technology Forest Drive March 2026 % The Westin at The Woodlands August 2019 % (b) The Woodlands Resort & Conference Center December 2020 % (b) Ward Village September 2023 % (b)(e) 20/25 Waterway Avenue May 2022 % 3 Waterway Square August 2028 % 4 Waterway Square December 2023 % Capital lease obligations various % Operating Assets Total Strategic Developments HHC 242 Self Storage Facility October 2021 % (b) — HHC 2978 Self Storage Facility January 2022 % (b) — Merriweather Post Pavilion October 2021 % (b) — One Merriweather February 2021 % (b) — Waiea and Anaha Condominiums (f) November 2019 % (b) Strategic Developments Total Other Corporate Financing Arrangements June 2018 % Senior Notes October 2021 % Unamortized underwriting fees Deferred Financing Costs, net Total mortgages, notes, and loans payable $ $ (a) Maturity date includes any extension periods that can be exercised at our option at the initial maturity date, subject to customary extension terms that based on current property performance projections, we expect to meet. Such terms may include but are not limited to minimum debt service coverage, minimum occupancy levels and other performance criteria. In certain cases due to property performance not meeting covenants, we may have to paydown a portion of the loan in order to obtain the extension. (b) The interest rate presented is based on the one month LIBOR rate, which was 0.53% at September 30, 2016. (c) $40.0 million of the outstanding principal balance is swapped to a 3.41% fixed-rate through maturity. (d) The $23.6 million outstanding principal balance is swapped to a 5.21% fixed-rate through maturity. (e) $119.4 million of the outstanding principal balance is swapped to a 3.64% fixed-rate through maturity. (f) Waiea and Anaha have available financing for up to $600 million in the form of a non-recourse construction loan cross-collateralized by the condominium towers bearing interest at one-month LIBOR plus 6.75% with an initial maturity date of November 6, 2017, and two, one-year extension options. In August 2016, the original financing agreement was modified. The previous agreement did not allow for distributions until Anaha was delivered and the loan was fully repaid. The modification allowed for an immediate advance on the loan of $50.0 million, returning a substantial portion of the project’s prior cash equity contribution to us and allows for an additional distribution of up to $113 million from Waiea’s bulk closing in November 2016. The balance of Waiea sales proceeds will be applied to the loan balance as well as fund any construction costs remaining for Waiea. The interest rate and maturity date remained unchanged. The weighted average interest rate on our mortgages, notes and loans payable, excluding interest rate hedges, was 4.68% and 4.44% as of September 30, 2016 and December 31, 2015, respectively. All of the mortgage debt is secured by the individual properties listed in the table above and is non-recourse to HHC, except for: (i) $750.0 million of Senior Notes; (ii) $311.8 million financing for the Downtown Summerlin development which has an initial maximum recourse of 35% of the outstanding balance, which will reduce to 15.0% upon completion of the project and achievement of a 1.15:1.0 debt service coverage ratio. The recourse further reduces to 10% upon achievement of a 1.25:1.0 debt service coverage ratio, a 90% occupancy level, and average tenant sales of at least $500.00 per net rentable square foot. As of September 30, 2016, 35% of the outstanding loan balance remains recourse to HHC; (iii) $64.4 million of construction financing for the Outlet Collection at Riverwalk with an initial maximum recourse of 50% of the outstanding balance, which will be reduced to 25.0% upon completion of the project and the achievement of an 11.0% debt yield and a minimum level of tenant sales per square foot for twelve months. As of September 30, 2016, 50% of the outstanding loan balance remains recourse to HHC; (iv) $16.2 million of Other Corporate Financing Arrangements; and (v) $7.0 million of the 110 N. Wacker mortgage. Certain of our loans contain provisions which grant the lender a security interest in the operating cash flow of the property that represents the collateral for the loan. Certain mortgage notes may be prepaid but may be subject to a prepayment penalty equal to a yield maintenance premium, defeasance, or a percentage of the loan balance. As of September 30, 2016, land, buildings and equipment and developments with a net book value basis of $3.0 billion have been pledged as collateral for our mortgages, notes and loans payable. As of September 30, 2016, we were in compliance with all of the financial covenants related to our debt agreements. Master Planned Communities On November 9, 2015, we refinanced $15.2 million of existing debt in connection with closing on a modification which increased the Bridgeland Credit Facility to $65.0 million. The facility bears interest at three-month LIBOR plus 3.15%, with a 4.60% floor, and has an initial maturity date of November 2020 with two, one-year extension options. The proceeds are providing working capital at Bridgeland for development efforts necessary to meet the demand of homebuilders for finished lots in the community. The Woodlands Master Credit Facility was amended and restated on July 31, 2015 to a $200.0 million maximum facility amount consisting of a $100.0 million term loan and a $100.0 million revolver (together, the “TWL Facility”). The TWL Facility bears interest at one-month LIBOR plus 2.75% and had an August 2016 initial maturity date with two, one–year extension options. In July 2016, we exercised our first one-year extension option, which reduced the total commitment to $175.0 million. Semi-annual principal payments of $25.0 million begin on December 31, 2016 and continue through the second, optional one-year extension period. The TWL Facility and The Woodlands Resort & Conference Center loans are recourse to the entities that directly own The Woodlands operations. The TWL Facility also contains certain covenants that, among other things, require the maintenance of specified financial ratios, limit the incurrence of additional recourse indebtedness at The Woodlands, and limit distributions from The Woodlands to us based on a loan‑to‑value test. The amendment also modified certain covenants to allow for more construction loan guarantees by the entities that directly own The Woodlands than would otherwise have been permitted by the prior facility. The Summerlin MPC uses SID bonds to finance certain common infrastructure improvements. These bonds are issued by the municipalities and are secured by the assessments on the land. The majority of proceeds from each bond issued is held in a construction escrow and disbursed to us as infrastructure projects are completed, inspected by the municipalities and approved for reimbursement. Accordingly, the SID bonds have been classified as debt, and the Summerlin MPC pays the debt service on the bonds semi‑annually. As Summerlin sells land, the buyers assume a proportionate share of the bond obligation at closing, and the residential sales contracts provide for the reimbursement of the principal amounts that we previously paid with respect to such proportionate share of the bond. In the nine months ended September 30, 2016, no new SID bonds were issued and $5.5 million in obligations were assumed by buyers. Operating Assets On September 12, 2016, we amended and restated the $238.7 million first mortgage secured by Ward Village. The non-recourse term loan bears interest at one-month LIBOR plus 2.50% with an initial maturity date of September 12, 2021, with two, one-year extension options. $119.4 million of the outstanding principal balance is swapped to a 3.64% fixed-rate through maturity. There was no undrawn availability on this loan as of September 30, 2016. Strategic Developments On October 7, 2016 we closed on a $33.2 million non-recourse construction loan for Two Merriweather, bearing interest at one-month LIBOR plus 2.5% with an initial maturity date of October 7, 2020 and a one-year extension option. On February 25, 2016, we closed on a $49.9 million non-recourse construction loan for One Merriweather. The loan bears interest at one-month LIBOR plus 2.15% with an initial maturity date of February 25, 2020, with a one-year extension option. On January 27, 2016, we closed on a $6.4 million non-recourse construction loan for the HHC 2978 Self-Storage Facility, bearing interest at one-month LIBOR plus 2.60% with an initial maturity date of January 2020, with two, one-year extension options. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2016 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 10 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We are exposed to interest rate risk related to our variable interest rate debt, and we manage this risk by utilizing interest rate derivatives. Our objective in using interest rate derivatives is to add stability to interest costs by reducing our exposure to interest rate movements. To accomplish this objective, we use interest rate swaps, forward-starting swaps, and caps as part of our interest rate risk management strategy. As of September 30, 2016, we had interest rate swaps with gross notional amounts of $326.0 million and a $100.0 million interest rate cap, all of which were designated as effective cash flow hedges of interest rate risk. We also have $250.0 million in gross notional amounts of forward-starting interest rate swaps that become effective December 31, 2017 to hedge a portion of anticipated future fixed-rate debt issuance. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company’s fixed‑rate payments over the life of the agreements without exchange of the underlying notional amount. The forward-starting interest rate swaps are designated as cash flow hedges of the variability of the anticipated interest rate of our long-term financing needs at our Downtown Summerlin property. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up‑front premium. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and nine months ended September 30, 2016 and September 30, 2015, the ineffective portion recorded in earnings was insignificant. If the derivative contracts are terminated prior to their maturity, the amounts previously recorded in AOCI are recognized into earnings over the period that the hedged transaction impacts earnings. If the hedging relationship is discontinued because it is probable that the forecasted transaction will not occur according to the original strategy, any related amounts previously recorded in AOCI are recognized in earnings immediately. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on our variable‑rate debt. Over the next 12 months, we estimate that an additional $1.9 million will be reclassified to interest expense. The table below presents the fair value of our derivative financial instruments, which are included in accounts payable and accrued liabilities in the condensed consolidated balance sheets: September 30, December 31, (In thousands) 2016 2015 Interest Rate Swaps & Caps $ $ Forward-Starting Swaps Total derivatives designated as hedging instruments $ $ The tables below present the effect of our derivative financial instruments on the condensed consolidated statements of operations for the three and nine months ended September 30, 2016 and 2015: Three Months Ended September 30, Three Months Ended September 30, 2016 2015 Location of Loss 2016 2015 (In thousands) Amount of (Loss) Amount of (Loss) Reclassified Amount of (Loss) Amount of (Loss) Interest Rate Swaps & Caps $ $ Interest Expense $ $ Forward-Starting Swaps — Interest Expense — — $ $ $ $ Nine Months Ended September 30, Nine Months Ended September 30, 2016 2015 Location of Loss 2016 2015 (In thousands) Amount of (Loss) Amount of (Loss) Reclassified Amount of (Loss) Amount of (Loss) Interest Rate Swaps & Caps $ $ Interest Expense $ $ Forward-Starting Swaps — Interest Expense — — $ $ $ $ |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES | |
INCOME TAXES | NOTE 11 INCOME TAXES Unrecognized tax benefits pursuant to uncertain tax positions were $35.4 million and $36.5 million as of September 30, 2016 and December 31, 2015, respectively, none of which would impact our effective tax rate. We have significant permanent differences, primarily from warrant liability gains and losses and changes in valuation allowances that cause our effective tax rate to deviate from statutory rates. The effective tax rates, based upon actual operating results, were 56.0% and 39.1% for the three and nine months ended September 30, 2016 compared to 10.5% and 19.7% for the three and nine months ended September 30, 2015. The changes in the tax rates were primarily attributable to changes in the warrant liability, valuation allowance related to our deferred tax assets, as well as other items which are permanent differences for tax purposes. The increase in deferred tax liabilities between December 31, 2015 and September 30, 2016 is due primarily to the utilization of federal tax assets used to offset both the tax gain on the sale of the 80 South Street Assemblage and other sources of operating income. |
STOCK-BASED PLANS
STOCK-BASED PLANS | 9 Months Ended |
Sep. 30, 2016 | |
STOCK-BASED PLANS | |
STOCK-BASED PLANS | NOTE 12 STOCK BASED PLANS Our stock based plans are described and informational disclosures are provided in the Notes to the Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2015. Stock Options The following table summarizes our stock option plan: Stock Weighted Stock Options outstanding at December 31, 2015 $ Granted Exercised Forfeited Stock Options outstanding at September 30, 2016 Compensation costs related to stock options were $1.2 million and $3.5 million for the three and nine months ended September 30, 2016, respectively, of which $0.3 million and $1.1 million were capitalized to development projects during the same periods. Stock option costs were $1.2 million and $2.9 million for the three and nine months ended September 30, 2015, respectively, of which $0.6 million and $1.5 million were capitalized to development projects during the same periods. Restricted Stock The following table summarizes restricted stock activity: Restricted Weighted Restricted stock outstanding at December 31, 2015 $ Granted Vested Forfeited Restricted Stock outstanding at September 30, 2016 Compensation costs related to restricted stock awards was $1.2 million and $4.4 million for the three and nine months ended September 30, 2016, respectively, of which $0.3 million and $0.9 million were capitalized to development projects during the same periods. Compensation costs related to restricted stock awards was $1.5 million and $4.0 million for the three and nine months ended September 30, 2015, respectively, of which $0.2 million and $0.6 million were capitalized to development projects during the same periods. |
OTHER ASSETS AND LIABILITIES
OTHER ASSETS AND LIABILITIES | 9 Months Ended |
Sep. 30, 2016 | |
OTHER ASSETS AND LIABILITIES | |
OTHER ASSETS AND LIABILITIES | NOTE 13 OTHER ASSETS AND LIABILITIES Prepaid Expenses and Other Assets The following table summarizes the significant components of Prepaid expenses and other assets. September 30, December 31, (In thousands) 2016 2015 Condominium receivables (a) $ $ Condominium deposits Special Improvement District receivable In-place leases Below-market ground leases Above-market tenant leases Equipment, net of accumulated depreciation of $4. 9 million and $3.9 million, respectively Security and escrow deposits Tenant incentives and other receivables Prepaid expenses Federal income tax receivable Intangibles Uncertain tax position asset Other $ $ (a) Approximately $32.3 million are expected to be collected in 2016 and $137.3 million are expected to be collected in 2017, based upon anticipated closings of the respective condominium projects. The $379.1 million net increase primarily relates to the following: A $422.5 million increase in condominium deposits due to cash buyers remitting the remaining balance of the sales prices in full prior to closing as required in the sales contracts; $3.3 million increase in prepaid expenses; and $0.1 million in other increases. These increases were partially offset by the following decreases: a $21.4 million decrease in condominium receivables due primarily to remittance of the remaining balance of the sales price in full by cash buyers prior to closing; a net $7.2 million decrease in security and escrow deposits mostly attributable to our January 2016 investment in the Grandview SHG, LLC joint venture; a $6.3 million decrease in SID receivable due to reimbursement for construction expenditures; a decrease of $5.9 million relating primarily to the amortization of in-place leases; a net decrease in other prepaids of $1.9 million; and a $4.1 million decrease in various other accounts. Accounts Payable and Accrued Expenses The following table summarizes the significant components of Accounts payable and accrued expenses. September 30, December 31, (In thousands) 2016 2015 Construction payables $ $ Deferred income Condominium deposit liabilities Accounts payable and accrued expenses Tenant and other deposits Accrued interest Accrued payroll and other employee liabilities Accrued real estate taxes Interest rate swaps Straight-line ground rent liability (a) Above-market ground leases Other $ $ (a) Straight-line ground rent was previously reported in Other. Total accounts payable and accrued expenses increased by $87.9 million primarily due to the following: A $56.1 million increase in condominium deposits liability due to starting sales at Ke Kilohana and continued sales and additional deposit requirements at Ae ' o; an increase of $8.3 million in accounts payable and accrued expenses; an increase of $23.6 million in interest rate swaps liability primarily due to a decrease in fair value of the forward-starting swaps; an increase of $12.5 million in accrued interest primarily due to six months of accrued interest at September 30, 2016 as compared to three months of accrued interest at December 2015 for our Senior Notes; $4.7 million increase in accrued real estate taxes; and $4.9 million in other immaterial accounts. These increases are partially offset by the following: decrease of $13.0 million in deferred income due to the recognition of income on projects as the performance obligations are fulfilled; decrease of $7.0 million in accrued payroll and other employee liabilities primarily due to the payment of bonuses in the first quarter 2016; and $2.2 million in other immaterial decreases. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NOTE 14 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (“AOCI”) The following table summarizes AOCI for the period indicated: For the Three Months Ended September 30, 2016 For the Three Months Ended September 30, 2015 Balance as of June 30 $ $ Other comprehensive loss before reclassifications Loss reclassified from accumulated other comprehensive loss to net income (loss) Net current-period other comprehensive income (loss) Balance as of September 30 $ $ For the Nine Months Ended September 30, 2016 For the Nine Months Ended September 30, 2015 Balance as of December 31 $ $ Other comprehensive loss before reclassifications Loss reclassified from accumulated other comprehensive loss to net income (loss) Net current-period other comprehensive loss Balance as of September 30 $ $ The following table summarizes the amounts reclassified out of AOCI for the period indicated: Amounts reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended For the Nine Months Ended Affected line item in the Accumulated Other Comprehensive Income (Loss) Components September 30, 2016 September 30, 2016 Statement of Operations Losses on cash flow hedges $ $ Interest expense Interest rate swap contracts Provision for income taxes Total reclassifications for the period $ $ Net of tax Amounts reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended For the Nine Months Ended Affected line item in the Accumulated Other Comprehensive Income (Loss) Components September 30, 2015 September 30, 2015 Statement of Operations Losses on cash flow hedges $ $ Interest expense Interest rate swap contracts Provision for income taxes Total reclassifications for the period $ $ Net of tax |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 15 COMMITMENTS AND CONTINGENCIES In the normal course of business, from time to time, we are involved in legal proceedings relating to the ownership and operations of our properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a material effect on our consolidated financial position, results of operations or liquidity. We had outstanding letters of credit and surety bonds totaling $116.0 million and $86.1 million as of September 30, 2016 and December 31, 2015, respectively. These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations. On June 27, 2013, the City of New York executed the amended and restated ground lease for South Street Seaport. The restated lease terms provide for annual fixed base rent of $1.2 million starting July 1, 2013 with an expiration of December 30, 2072, including our options to extend. The rent escalates at 3.0% compounded annually. On July 1, 2048 the base rent will be adjusted to the higher of the fair market value or the then base rent. In addition to the annual base rent, we are required to make annual payments of $210,000 for the esplanade as additional rent through the term of the lease. The additional rent escalates annually at the Consumer Price Index. Simultaneously with the execution of the lease, we executed a completion guaranty for the redevelopment of Pier 17 by 2017. In the fourth quarter 2012, the historic area of South Street Seaport suffered damage due to flooding as a result of Superstorm Sandy. Reconstruction efforts are ongoing and the property has only partially operated over the last three years. We have received $54.1 million in insurance proceeds, and we recognized Other income of $6.2 million and $0.3 million for the nine months ended September 30, 2016 and September 30, 2015, respectively, for the receipt of insurance proceeds related to our claim. This matter is currently being litigated, and there can be no assurance that we will collect additional insurance proceeds. |
SEGMENTS
SEGMENTS | 9 Months Ended |
Sep. 30, 2016 | |
SEGMENTS | |
SEGMENTS | NOTE 16 SEGMENTS We have three business segments which offer different products and services. Our three segments are managed separately because each requires different operating strategies and management expertise and are reflective of management’s operating philosophies and methods. In addition, our segments or assets within such segments could change in the future as development of certain properties commences or other operational or management changes occur. All operations are within the United States, and we do not distinguish or group our combined operations on a geographic basis. Our reportable segments are as follows: · Master Planned Communities (“MPCs”) – includes the development and sale of land, in large‑scale, long‑term community development projects in and around Las Vegas, Nevada; Houston, Texas; and Columbia, Maryland. · Operating Assets – includes retail, office, hospitality and multi-family properties along with other real estate investments. These assets are currently generating revenues and are comprised of commercial real estate properties developed or acquired by us, and properties where we believe there is an opportunity to redevelop, reposition or sell to improve segment performance or to recycle capital. · Strategic Developments – includes our residential condominium and commercial property projects currently under development and all other properties held for development which have no substantial operations. The assets included in each segment as of September 30, 2016, are contained in the following chart: Master Planned Strategic Communities Operating Assets Developments Retail Office Under Construction • Bridgeland ▪ Columbia Regional Building ▪ 10-70 Columbia Corporate Center ▪ Ae'o • Maryland ▪ Cottonwood Square ▪ Columbia Office Properties ▪ Anaha • Summerlin ▪ Creekside Village Green (b) ▪ 1725-35 Hughes Landing Boulevard (b) ▪ Circle T Ranch and • The Woodlands ▪ Downtown Summerlin ▪ One Hughes Landing Power Center (a) • The Woodlands Hills ▪ Hughes Landing Retail (b) ▪ Two Hughes Landing (b) ▪ Constellation (a) ▪ 1701 Lake Robbins ▪ Three Hughes Landing (c) ▪ HHC 242 Self-Storage ▪ Lakeland Village Center (c) ▪ 2201 Lake Woodlands Drive ▪ HHC 2978 Self-Storage Other ▪ Landmark Mall ▪ 9303 New Trails ▪ Ke Kilohana • The Summit (a) ▪ Outlet Collection at Riverwalk ▪ 110 N. Wacker ▪ m.flats (formerly Parcel C) (a) ▪ Park West ▪ ONE Summerlin (b) ▪ One Merriweather ▪ South Street Seaport ▪ 3831 Technology Forest Drive ▪ Two Merriweather (under construction) ▪ 3 Waterway Square ▪ Waiea ▪ Ward Village ▪ 4 Waterway Square ▪ 20/25 Waterway Avenue ▪ 1400 Woodloch Forest Other ▪ Waterway Garage Retail ▪ Alameda Plaza ▪ AllenTowne Multi-family Other ▪ Bridges at Mint Hill ▪ Millennium Waterway Apartments ▪ Clark County Las Vegas Stadium (a) ▪ Century Plaza Mall ▪ Millennium Six Pines Apartments ▪ Kewalo Basin Harbor ▪ Cottonwood Mall ▪ One Lakes Edge (b) ▪ Merriweather Post Pavilion ▪ 80% Interest in Fashion ▪ 85 South Street ▪ Stewart Title of Montgomery Show Air Rights ▪ The Metropolitan Downtown County, TX (a) ▪ Gateway Towers Columbia (a) (b) ▪ Summerlin Hospital Medical ▪ Kendall Town Center Center (a) ▪ Lakemoor (Volo) Land Hospitality ▪ The Woodlands Parking Garages ▪ Maui Ranch Land ▪ Embassy Suites at Hughes Landing (b) ▪ Woodlands Sarofim #1 (a) ▪ The Outlet Collection at Elk Grove ▪ Grandview SHG, LLC (a) ▪ West Windsor ▪ The Westin at The Woodlands (c) ▪ The Woodlands Resort & Conference Center (a) A non-consolidated investment. Refer to Note 8 – Real Estate and Other Affiliates . (b) Asset was placed in service and moved from the Strategic Developments segment to the Operating Assets segment during 2015. (c) Asset was placed in service and moved from the Strategic Developments segment to the Operating Assets segment during 2016. Our segments are managed separately, therefore, we use different operating measures to assess operating results and allocate resources among the segments. The one common operating measure used to assess operating results for the business segments is Real Estate Property Earnings Before Taxes (“REP EBT”), which represents the operating revenues of the properties less property operating expenses and adjustments for interest, as further described below. We believe that REP EBT provides useful information about the operating performance of all of our properties. REP EBT, as it relates to our business, is defined as net income (loss) excluding general and administrative expenses, corporate other income, corporate interest income, corporate interest and depreciation expense, provision for income taxes, warrant liability gain (loss), gains or losses on sales of operating properties and gain on acquisition of joint venture partner’s interest. We present REP EBT because we use this measure, among others, internally to assess the core operating performance of our assets. We also present this measure because we believe certain investors use it as a measure of a company’s historical operating performance and its ability to service and obtain financing. We believe that the inclusion of certain adjustments to net income (loss) to calculate REP EBT is appropriate to provide additional information to investors. Segment operating results are as follows: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2016 2015 2016 2015 Master Planned Communities Land sales $ $ $ $ Builder price participation Minimum rents Other land revenues Other rental and property revenues Total revenues Cost of sales – land Land sales operations Land sales real estate and business taxes Depreciation and amortization Interest income Interest expense (*) Equity in earnings in Real Estate and Other Affiliates — — Total expenses, net of other income MPC EBT Operating Assets Minimum rents Tenant recoveries Hospitality revenues Other rental and property revenues Total revenues Other property operating costs Real estate taxes Rental property maintenance costs Hospitality costs Provision for doubtful accounts Demolition costs Provision for impairment — — Development-related marketing costs Depreciation and amortization Other income, net — — Interest income Interest expense Equity in earnings from Real Estate and Other Affiliates Total expenses, net of other income Operating Assets EBT Strategic Developments Minimum rents Tenant recoveries Condominium rights and unit sales Other land revenues Other rental and property revenues Total revenues Condominium rights and unit cost of sales Other property operating costs Real estate taxes Rental property maintenance costs Provision for doubtful accounts — Demolition costs Development-related marketing costs Depreciation and amortization Other income, net Interest income Interest expense (*) Equity in earnings from Real Estate and Other Affiliates Gain on sale of 80 South Street Assemblage — — Total expenses, net of other income Strategic Developments EBT REP EBT $ $ $ $ (*) Negative interest expense amounts are due to interest capitalized in our Master Planned Communities and Strategic Developments segments related to Operating Assets segment debt and the Senior Notes. The following reconciles REP EBT to GAAP income (loss) before taxes: Reconciliation of REP EBT to GAAP income (loss) before taxes Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2016 2015 2016 2015 REP EBT $ $ $ $ General and administrative Corporate interest expense, net Warrant liability gain (loss) Corporate other income expense, net Gain on sale of The Club at Carlton Woods — — Gain on acquisition of joint venture partner’s interest — — Corporate depreciation and amortization Income before taxes $ $ $ $ The following reconciles segment revenues to GAAP consolidated revenues: Reconciliation of Segment Basis Revenues to GAAP Revenues Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2016 2015 2016 2015 Master Planned Communities $ $ $ $ Operating Assets Strategic Developments Total revenues $ $ $ $ The assets by segment and the reconciliation of total segment assets to the total assets in the condensed consolidated balance sheets are summarized as follows: September 30, December 31, (In thousands) 2016 2015 Master Planned Communities $ $ Operating Assets Strategic Developments Total segment assets Corporate and other Total assets $ $ The $176.1 million increase in the Strategic Developments segment asset balance as of September 30, 2016 compared to December 31, 2015 is primarily due to the receipt of cash for the remaining sales price from cash buyers at Waiea prior to closing. The increase in the Operating Assets segment asset balance as of September 30, 2016 of $215.0 million compared to December 31, 2015 is primarily due to the buyout of our partner’s interest in Millennium Six Pines Apartments (formerly known as Millennium Woodlands Phase II, LLC) , placing in service The Westin at The Woodlands, Three Hughes Landing, Lakeland Village Center and additional development expenditures at South Street Seaport. The $353.5 million increase in the Corporate and other asset balance as of September 30, 2016 compared to December 31, 2015 is primarily due to the proceeds from the 80 South Street sale in March 2016. The development costs were reported in the Strategic Developments segment at year end and the cash is reported in Corporate and other as of September 30, 2016. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
EARNINGS PER SHARE | |
Summary of information related to the entity's EPS calculations | Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except per share amounts) 2016 2015 2016 2015 Basic EPS: Numerator: Net income $ $ $ $ Net (income) loss attributable to noncontrolling interests — Net income attributable to common stockholders $ $ $ $ Denominator: Weighted average basic common shares outstanding Diluted EPS: Numerator: Net income attributable to common stockholders $ $ $ $ Less: Warrant liability gain — — Adjusted net income attributable to common stockholders $ $ $ $ Denominator: Weighted average basic common shares outstanding Restricted stock and stock options Warrants Weighted average diluted common shares outstanding Basic income per share: $ $ $ $ Diluted income per share: $ $ $ $ |
IMPAIRMENT (Tables)
IMPAIRMENT (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
IMPAIRMENT | |
Schedule for provision for impairment | Provision for impairment as of September 30, Impaired Asset Location Method of Determining Fair Value 2016 2015 (In thousands) Operating Assets: Park West Peoria, AZ Discounted cash flow analysis using capitalization rate of 6.75% $ $ — |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE | |
Schedule of assets and liabilities that are measured at fair value on a recurring basis | September 30, 2016 December 31, 2015 Fair Value Measurements Using Fair Value Measurements Using (In thousands) Total Quoted Prices Significant Significant Total Quoted Prices Significant Significant Assets: Cash equivalents $ $ $ — $ — $ $ $ — $ — Liabilities: Warrants — — — — Interest Rate Swaps and Caps — — — — |
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) | (In thousands) 2016 2015 Balance as of January 1 $ $ Warrant liability loss (gain) (a) Balance as of September 30 $ $ (a) All gains/losses during 2016 and 2015 were unrealized. Changes in the fair value of the Sponsor and Management Warrants are recognized in net income as a warrant liability gain or loss. |
Schedule of significant unobservable inputs used in the fair value measurement of warrants designated as Level 3 | Unobservable Inputs Expected (a) Marketability (b) September 30, 2016 26.9% 2.0% - 5.0% December 31, 2015 27.4% 10.0% - 12.0% (a) Based on our implied equity volatility. (b) Represents the discount rate for lack of marketability of the Management Warrants. |
Summary of assets and liabilities that were measured at fair value on a non-recurring basis | (In thousands) Total Fair Value Measurement Quoted Prices in Significant Significant Total (Loss) - Nine Months Operating Assets: Park West (a) $ $ — $ — $ $ (a) The fair value was determined based on a discounted cash flow analysis using a capitalization rate of 6.75% and is shown net of transaction costs. |
Schedule of estimated fair values of the Company's financial instruments that are not measured at fair value on a recurring basis | September 30, 2016 December 31, 2015 (In thousands) Fair Value Hierarchy Carrying Estimated Value Carrying Estimated Assets: Cash Level 1 $ $ $ $ Notes receivable, net (a) Level 3 Liabilities: Fixed-rate debt Level 2 $ $ $ $ Variable-rate debt Level 2 (a) Notes receivable are shown net of an allowance of $0.2 million as of September 30, 2016 and $0.2 million as of December 31, 2015. |
REAL ESTATE AND OTHER AFFILIA29
REAL ESTATE AND OTHER AFFILIATES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
REAL ESTATE AND OTHER AFFILIATES | |
Summary of Investments in Real Estate and Other Affiliates | Economic/Legal Ownership Carrying Value Share of Earnings/Dividends September 30, December 31, September 30, December 31, Three Months Ended Nine Months Ended ($ in Thousands) 2016 2015 2016 2015 2016 2015 2016 2015 Equity Method Investments Master Planned Communities: The Summit (a) — — $ $ $ $ — $ $ — Operating Assets: Grandview SHG, LLC (a) % — % — — — Millennium Six Pines Apartments (b) (c) % % — — Stewart Title % % Clark County Las Vegas Stadium, LLC (c) % % The Metropolitan Downtown Columbia (d) % % Woodlands Sarofim % % Strategic Developments: Circle T Ranch and Power Center (a) % % — — — Constellation (a) (c) % % — — — — HHMK Development (c) % % — — — KR Holdings (c) % % m.flats (formerly Parcel C) (a) (c) % % — — — — Cost method investments — — Investment in Real Estate and Other Affiliates $ $ $ $ $ $ (a) Please refer to the discussion below for a description of the joint venture ownership structure. (b) As of July 20, 2016, we acquired our joint venture partner’s interest in Millennium Six Pines Apartments (formerly known as Millennium Woodlands Phase II, LLC) and have fully consolidated the assets and liabilities of the entity. See Note 5 – Recent Transactions for additional information regarding this transaction. The investment balance was in a $1.8 million deficit position and reported in Accounts payable and accrued expenses as of December 31, 2015. (c) Equity method variable interest entity (“VIE”). The m.flats joint venture was a VIE as of December 31, 2015, but on completion of the financing in the first quarter 2016, we determined the entity was no longer a VIE. (d) The Metropolitan Downtown Columbia was placed in service in the first quarter 2015. |
MORTGAGES, NOTES AND LOANS PA30
MORTGAGES, NOTES AND LOANS PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
MORTGAGES, NOTES AND LOANS PAYABLE | |
Summary of mortgages, notes and loans payable | September 30, December 31, (In thousands) 2016 2015 Fixed-rate debt: Collateralized mortgages, notes and loans payable $ $ Special Improvement District bonds Variable-rate debt: Collateralized mortgages, notes and loans payable (a) Deferred Financing Costs, net of accumulated amortization of $ 16.1 million and $12.7 million, respectively Total mortgages, notes and loans payable $ $ (a) As more fully described below, $183.0 million and $209.5 million of variable‑rate debt has been swapped to a fixed-rate for the term of the related debt as of September 30, 2016 and December 31, 2015, respectively. |
Schedule of mortgages, notes and loans payable by property | Maximum Carrying Value Interest Facility September 30, December 31, ($ In thousands) Maturity (a) Rate Amount 2016 2015 Master Planned Communities Bridgeland Credit Facility November 2022 % (b) $ $ $ Summerlin South SID Bonds - S124 December 2019 % Summerlin South SID Bonds - S128 December 2020 % Summerlin South SID Bonds - S128C December 2030 % Summerlin South SID Bonds - S132 December 2020 % Summerlin South SID Bonds - S151 June 2025 % Summerlin South SID Bonds - S159 June 2035 % Summerlin West SID Bonds - S808/S810 April 2031 % — Summerlin West SID Bonds - S812 October 2035 % The Woodlands Master Credit Facility August 2018 % (b) Master Planned Communities Total Operating Assets 10-60 Columbia Corporate Centers May 2022 % (b)(c) 70 Columbia Corporate Center July 2019 % (b) Columbia Regional Building March 2018 % (b) Downtown Summerlin July 2019 % (b) Downtown Summerlin SID Bonds - S108 December 2016 % Downtown Summerlin SID Bonds - S128 December 2030 % Embassy Suites at Hughes Landing October 2020 % (b) One Hughes Landing December 2029 % Two Hughes Landing December 2030 % Three Hughes Landing December 2019 % (b) 1725-35 Hughes Landing Boulevard June 2019 % (b) Hughes Landing Retail December 2018 % (b) 1701 Lake Robbins April 2017 % Lakeland Village Center May 2020 % (b) — Millennium Waterway Apartments June 2022 % Millennium Six Pines Apartments August 2028 % — 110 N. Wacker October 2019 % (d) 9303 New Trails December 2023 % One Lakes Edge November 2018 % (b) Outlet Collection at Riverwalk October 2018 % (b) 3831 Technology Forest Drive March 2026 % The Westin at The Woodlands August 2019 % (b) The Woodlands Resort & Conference Center December 2020 % (b) Ward Village September 2023 % (b)(e) 20/25 Waterway Avenue May 2022 % 3 Waterway Square August 2028 % 4 Waterway Square December 2023 % Capital lease obligations various % Operating Assets Total Strategic Developments HHC 242 Self Storage Facility October 2021 % (b) — HHC 2978 Self Storage Facility January 2022 % (b) — Merriweather Post Pavilion October 2021 % (b) — One Merriweather February 2021 % (b) — Waiea and Anaha Condominiums (f) November 2019 % (b) Strategic Developments Total Other Corporate Financing Arrangements June 2018 % Senior Notes October 2021 % Unamortized underwriting fees Deferred Financing Costs, net Total mortgages, notes, and loans payable $ $ (a) Maturity date includes any extension periods that can be exercised at our option at the initial maturity date, subject to customary extension terms that based on current property performance projections, we expect to meet. Such terms may include but are not limited to minimum debt service coverage, minimum occupancy levels and other performance criteria. In certain cases due to property performance not meeting covenants, we may have to paydown a portion of the loan in order to obtain the extension. (b) The interest rate presented is based on the one month LIBOR rate, which was 0.53% at September 30, 2016. (c) $40.0 million of the outstanding principal balance is swapped to a 3.41% fixed-rate through maturity. (d) The $23.6 million outstanding principal balance is swapped to a 5.21% fixed-rate through maturity. (e) $119.4 million of the outstanding principal balance is swapped to a 3.64% fixed-rate through maturity. (f) Waiea and Anaha have available financing for up to $600 million in the form of a non-recourse construction loan cross-collateralized by the condominium towers bearing interest at one-month LIBOR plus 6.75% with an initial maturity date of November 6, 2017, and two, one-year extension options. In August 2016, the original financing agreement was modified. The previous agreement did not allow for distributions until Anaha was delivered and the loan was fully repaid. The modification allowed for an immediate advance on the loan of $50.0 million, returning a substantial portion of the project’s prior cash equity contribution to us and allows for an additional distribution of up to $113 million from Waiea’s bulk closing in November 2016. The balance of Waiea sales proceeds will be applied to the loan balance as well as fund any construction costs remaining for Waiea. The interest rate and maturity date remained unchanged. |
DERIVATIVE INSTRUMENTS AND HE31
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
Summary of fair value of the Company's derivative financial instruments which are included in accounts payable and accrued liabilities in the Consolidated Balance Sheet | September 30, December 31, (In thousands) 2016 2015 Interest Rate Swaps & Caps $ $ Forward-Starting Swaps Total derivatives designated as hedging instruments $ $ |
Summary of effect of the Company's derivative financial instruments on the Condensed Consolidated Statements of Operations | Three Months Ended September 30, Three Months Ended September 30, 2016 2015 Location of Loss 2016 2015 (In thousands) Amount of (Loss) Amount of (Loss) Reclassified Amount of (Loss) Amount of (Loss) Interest Rate Swaps & Caps $ $ Interest Expense $ $ Forward-Starting Swaps — Interest Expense — — $ $ $ $ Nine Months Ended September 30, Nine Months Ended September 30, 2016 2015 Location of Loss 2016 2015 (In thousands) Amount of (Loss) Amount of (Loss) Reclassified Amount of (Loss) Amount of (Loss) Interest Rate Swaps & Caps $ $ Interest Expense $ $ Forward-Starting Swaps — Interest Expense — — $ $ $ $ |
STOCK-BASED PLANS (Tables)
STOCK-BASED PLANS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
STOCK-BASED PLANS | |
Summary of stock option plan activity | Stock Weighted Stock Options outstanding at December 31, 2015 $ Granted Exercised Forfeited Stock Options outstanding at September 30, 2016 |
Summary of restricted stock activity | Restricted Weighted Restricted stock outstanding at December 31, 2015 $ Granted Vested Forfeited Restricted Stock outstanding at September 30, 2016 |
OTHER ASSETS AND LIABILITIES (T
OTHER ASSETS AND LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
OTHER ASSETS AND LIABILITIES | |
Summary of the significant components of prepaid expenses and other assets | September 30, December 31, (In thousands) 2016 2015 Condominium receivables (a) $ $ Condominium deposits Special Improvement District receivable In-place leases Below-market ground leases Above-market tenant leases Equipment, net of accumulated depreciation of $4. 9 million and $3.9 million, respectively Security and escrow deposits Tenant incentives and other receivables Prepaid expenses Federal income tax receivable Intangibles Uncertain tax position asset Other $ $ (a) Approximately $32.3 million are expected to be collected in 2016 and $137.3 million are expected to be collected in 2017, based upon anticipated closings of the respective condominium projects. |
Summary of the significant components of accounts payable and accrued expenses | September 30, December 31, (In thousands) 2016 2015 Construction payables $ $ Deferred income Condominium deposit liabilities Accounts payable and accrued expenses Tenant and other deposits Accrued interest Accrued payroll and other employee liabilities Accrued real estate taxes Interest rate swaps Straight-line ground rent liability (a) Above-market ground leases Other $ $ (a) Straight-line ground rent was previously reported in Other. |
ACCUMULATED OTHER COMPREHENSI34
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Summary of AOCI | For the Three Months Ended September 30, 2016 For the Three Months Ended September 30, 2015 Balance as of June 30 $ $ Other comprehensive loss before reclassifications Loss reclassified from accumulated other comprehensive loss to net income (loss) Net current-period other comprehensive income (loss) Balance as of September 30 $ $ For the Nine Months Ended September 30, 2016 For the Nine Months Ended September 30, 2015 Balance as of December 31 $ $ Other comprehensive loss before reclassifications Loss reclassified from accumulated other comprehensive loss to net income (loss) Net current-period other comprehensive loss Balance as of September 30 $ $ |
Summary of the amounts reclassified out of AOCI | Amounts reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended For the Nine Months Ended Affected line item in the Accumulated Other Comprehensive Income (Loss) Components September 30, 2016 September 30, 2016 Statement of Operations Losses on cash flow hedges $ $ Interest expense Interest rate swap contracts Provision for income taxes Total reclassifications for the period $ $ Net of tax Amounts reclassified from Accumulated Other Comprehensive Income (Loss) For the Three Months Ended For the Nine Months Ended Affected line item in the Accumulated Other Comprehensive Income (Loss) Components September 30, 2015 September 30, 2015 Statement of Operations Losses on cash flow hedges $ $ Interest expense Interest rate swap contracts Provision for income taxes Total reclassifications for the period $ $ Net of tax |
SEGMENTS (Tables)
SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
SEGMENTS | |
Schedule of segment operating results | Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2016 2015 2016 2015 Master Planned Communities Land sales $ $ $ $ Builder price participation Minimum rents Other land revenues Other rental and property revenues Total revenues Cost of sales – land Land sales operations Land sales real estate and business taxes Depreciation and amortization Interest income Interest expense (*) Equity in earnings in Real Estate and Other Affiliates — — Total expenses, net of other income MPC EBT Operating Assets Minimum rents Tenant recoveries Hospitality revenues Other rental and property revenues Total revenues Other property operating costs Real estate taxes Rental property maintenance costs Hospitality costs Provision for doubtful accounts Demolition costs Provision for impairment — — Development-related marketing costs Depreciation and amortization Other income, net — — Interest income Interest expense Equity in earnings from Real Estate and Other Affiliates Total expenses, net of other income Operating Assets EBT Strategic Developments Minimum rents Tenant recoveries Condominium rights and unit sales Other land revenues Other rental and property revenues Total revenues Condominium rights and unit cost of sales Other property operating costs Real estate taxes Rental property maintenance costs Provision for doubtful accounts — Demolition costs Development-related marketing costs Depreciation and amortization Other income, net Interest income Interest expense (*) Equity in earnings from Real Estate and Other Affiliates Gain on sale of 80 South Street Assemblage — — Total expenses, net of other income Strategic Developments EBT REP EBT $ $ $ $ (*) Negative interest expense amounts are due to interest capitalized in our Master Planned Communities and Strategic Developments segments related to Operating Assets segment debt and the Senior Notes. |
Schedule of reconciliation of REP EBT to GAAP-basis net income (loss) | Reconciliation of REP EBT to GAAP income (loss) before taxes Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2016 2015 2016 2015 REP EBT $ $ $ $ General and administrative Corporate interest expense, net Warrant liability gain (loss) Corporate other income expense, net Gain on sale of The Club at Carlton Woods — — Gain on acquisition of joint venture partner’s interest — — Corporate depreciation and amortization Income before taxes $ $ $ $ |
Schedule of reconciliation of segment revenue to GAAP-basis consolidated revenues | Reconciliation of Segment Basis Revenues to GAAP Revenues Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2016 2015 2016 2015 Master Planned Communities $ $ $ $ Operating Assets Strategic Developments Total revenues $ $ $ $ |
Summary of assets by segment and the reconciliation of total segment assets to the total assets in the Condensed Consolidated Balance Sheets | September 30, December 31, (In thousands) 2016 2015 Master Planned Communities $ $ Operating Assets Strategic Developments Total segment assets Corporate and other Total assets $ $ |
SPONSORS AND MANAGEMENT WARRANT
SPONSORS AND MANAGEMENT WARRANTS (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 07, 2016 | Feb. 28, 2011 | Sep. 30, 2016 | Dec. 31, 2015 | Nov. 09, 2010 |
Sponsors and Management Warrants | |||||
Warrant liabilities | $ 329,390 | $ 307,760 | |||
Sponsors Warrants | |||||
Sponsors and Management Warrants | |||||
Exercise price (in dollars per share) | $ 50 | ||||
Warrants outstanding | 1,916,667 | ||||
Issuance of warrants to purchase common stock (in shares) | 1,916,667 | ||||
Warrant liabilities | $ 124,300 | 123,100 | |||
Management Warrants | |||||
Sponsors and Management Warrants | |||||
Issuance of warrants to purchase common stock (in shares) | 2,862,687 | 2,862,687 | |||
Proceeds from issuance of Management warrants | $ 19,000 | ||||
Warrant liabilities | $ 205,100 | $ 184,700 | |||
Management Warrants | Chief Executive Officer | |||||
Sponsors and Management Warrants | |||||
Exercise price (in dollars per share) | $ 42.23 | ||||
Management Warrants | President | |||||
Sponsors and Management Warrants | |||||
Exercise price (in dollars per share) | 42.23 | ||||
Management Warrants | Chief Financial Officer | |||||
Sponsors and Management Warrants | |||||
Exercise price (in dollars per share) | $ 54.50 | ||||
Subsequent Event | Management Warrants | Chief Financial Officer | |||||
Sponsors and Management Warrants | |||||
Exercise price (in dollars per share) | $ 112.08 | ||||
Issuance of warrants to purchase common stock (in shares) | 50,125 | ||||
Proceeds from issuance of Management warrants | $ 1,000 |
EARNINGS PER SHARE - (Informati
EARNINGS PER SHARE - (Information Related to EPS Calculation) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Numerator: | ||||
Net income | $ 7,996 | $ 156,212 | $ 158,731 | $ 100,838 |
Net (income) loss attributable to noncontrolling interests | (23) | 12 | (23) | |
Net income attributable to common stockholders | $ 7,973 | $ 156,224 | $ 158,708 | $ 100,838 |
Denominator: | ||||
Weighted average basic common shares outstanding | 39,502 | 39,473 | 39,489 | 39,469 |
Numerator: | ||||
Net income attributable to common stockholders | $ 7,973 | $ 156,224 | $ 158,708 | $ 100,838 |
Less: Warrant Liability Gain | (123,640) | (57,450) | ||
Adjusted net income attributable to common stockholders | $ 7,973 | $ 32,584 | $ 158,708 | $ 43,388 |
Denominator: | ||||
Weighted average basic common shares outstanding | 39,502 | 39,473 | 39,489 | 39,469 |
Restricted stock and stock options (in shares) | 366 | 405 | 338 | 415 |
Warrants (in shares) | 2,892 | 3,035 | 2,892 | 3,035 |
Weighted average diluted common shares outstanding | 42,760 | 42,913 | 42,719 | 42,919 |
Basic income per share: (in dollars per share) | $ 0.20 | $ 3.96 | $ 4.02 | $ 2.55 |
Diluted income per share: (in dollars per share) | $ 0.19 | $ 0.76 | $ 3.72 | $ 1.01 |
EARNINGS PER SHARE - (Narrative
EARNINGS PER SHARE - (Narrative) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stock Options | ||||
Antidilutive securities excluded from computation of diluted earnings per share | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 343,500 | 147,538 | 404,000 | 124,122 |
Restricted Stock | ||||
Antidilutive securities excluded from computation of diluted earnings per share | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 153,781 | 153,781 |
RECENT TRANSACTIONS (Details)
RECENT TRANSACTIONS (Details) $ in Thousands | Jul. 20, 2016USD ($) | Jun. 01, 2016a | Mar. 16, 2016ft² | Sep. 04, 2015USD ($) | Jun. 30, 2016a | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) |
Recent transactions | |||||||||
Revenues since the acquisition date | $ 240,806 | $ 203,442 | $ 752,623 | $ 567,695 | |||||
Pre-tax net loss since the acquisition date | 18,158 | 174,449 | 260,819 | 125,633 | |||||
Area of land sold | ft² | 42,694 | ||||||||
Proceeds from dispositions | 378,257 | 25,139 | |||||||
Pre-tax gain recognized on sale of property | 140,549 | 29,073 | |||||||
Equity in earnings from Real Estate and Other Affiliates | $ 13,493 | $ 295 | $ 35,700 | $ 3,164 | |||||
Air rights with total residential and commercial development rights (in square feet) | ft² | 817,784 | ||||||||
Millennium Six Pines Apartments | |||||||||
Recent transactions | |||||||||
Voting interest acquired (as a percent) | 18.57% | 100.00% | 100.00% | ||||||
Payment to acquire JV partner's interest | $ 4,000 | ||||||||
Fixed loan | $ 42,500 | ||||||||
Interest rate (as a percent) | 3.39% | ||||||||
Assets acquired and consolidated into financial statements | $ 67,900 | ||||||||
Liabilities assumed and consolidated into financial statements | 42,700 | ||||||||
Gain recognized from acquisition | 27,100 | ||||||||
Revenues since the acquisition date | $ 1,100 | $ 1,100 | |||||||
Pre-tax net loss since the acquisition date | $ 200 | 200 | |||||||
Millennium Six Pines Apartments | Joint Venture | |||||||||
Recent transactions | |||||||||
Construction loan | $ 37,700 | ||||||||
Circle T Ranch | |||||||||
Recent transactions | |||||||||
Area of land sold | a | 74 | 74 | |||||||
Equity in earnings from Real Estate and Other Affiliates | $ 10,500 | ||||||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | The Club at Carlton Woods | |||||||||
Recent transactions | |||||||||
Liabilities assumed by purchaser | $ 4,000 | ||||||||
Assets of disposal group | 20,900 | ||||||||
Liabilities of disposal group | $ 24,900 |
IMPAIRMENT (Details)
IMPAIRMENT (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)ft² | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)ft² | Sep. 30, 2015USD ($) | |
Net carrying value | $ 34,888 | $ 34,888 | ||
Capitalization rate (as a percent) | 6.75% | 6.75% | 6.75% | 6.75% |
Provision for impairment | $ 35,734 | $ 35,734 | ||
Impairment on real estate | $ 0 | $ 0 | $ 0 | $ 0 |
Park West | ||||
Area of real estate property acquired (in square foot) | ft² | 249,177 | 249,177 | ||
Decrease in estimated undiscounted cash to be received (as a percent) | 10.00% | |||
Provision for impairment | $ 35,734 |
FAIR VALUE (Assets and Liabilii
FAIR VALUE (Assets and Liabiliites Measured on a Recurring Basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Liabilities | ||
Warrants | $ 329,390 | $ 307,760 |
Interest Rate Swaps & Caps | 27,794 | 4,217 |
Recurring | ||
Assets: | ||
Cash equivalents | 18 | 18 |
Liabilities | ||
Warrants | 329,390 | 307,760 |
Interest Rate Swaps & Caps | 27,794 | 4,217 |
Recurring | Level 1 | ||
Assets: | ||
Cash equivalents | 18 | 18 |
Recurring | Level 2 | ||
Liabilities | ||
Interest Rate Swaps & Caps | 27,794 | 4,217 |
Recurring | Level 3 | ||
Liabilities | ||
Warrants | $ 329,390 | $ 307,760 |
FAIR VALUE (Reconciliation of W
FAIR VALUE (Reconciliation of Warrants Using Level 3 Inputs) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Level 3 | |||
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) | |||
Marketability discount due to lapses of restriction period | $ 0 | ||
Warrant | |||
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) | |||
Balance at the beginning of the period | 307,760 | $ 366,080 | $ 366,080 |
Warrant liability loss (gain) | 21,630 | (57,450) | |
Balance at the end of the period | $ 329,390 | $ 308,630 | $ 307,760 |
Expected Volatility (as a percent) | 26.90% | 27.40% | |
Warrant | Minimum | |||
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) | |||
Discount for lack of marketability (as a percent) | 2.00% | 10.00% | |
Warrant | Maximum | |||
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) | |||
Discount for lack of marketability (as a percent) | 5.00% | 12.00% |
FAIR VALUE (Fair value of Impai
FAIR VALUE (Fair value of Impaired Non-Financial Asset on a Non-Recurring Basis) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Fair value of derivative instruments | |||
Total (Loss) - Nine Months | $ (35,734) | $ (35,734) | |
Capitalization rate (as a percent) | 6.75% | 6.75% | 6.75% |
Estimate of Fair Value Measurement | |||
Fair value of derivative instruments | |||
Park West | $ 34,888 | $ 34,888 | |
Level 3 | |||
Fair value of derivative instruments | |||
Park West | $ 34,888 | $ 34,888 |
FAIR VALUE (Financial Instrumen
FAIR VALUE (Financial Instruments Not Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Liabilities: | ||
Allowance, notes receivable | $ 200 | $ 200 |
Recurring | ||
Assets: | ||
Cash | 18 | 18 |
Level 1 | Recurring | ||
Assets: | ||
Cash | 18 | 18 |
Level 1 | Recurring | Reported Value Measurement | ||
Assets: | ||
Cash | 653,023 | 445,283 |
Level 1 | Recurring | Estimate of Fair Value Measurement | ||
Assets: | ||
Cash | 653,023 | 445,283 |
Level 2 | Recurring | Reported Value Measurement | ||
Liabilities: | ||
Fixed-rate debt | 1,146,863 | 1,141,381 |
Variable-rate debt | 1,712,561 | 1,314,973 |
Level 2 | Recurring | Estimate of Fair Value Measurement | ||
Liabilities: | ||
Fixed-rate debt | 1,190,015 | 1,137,166 |
Variable-rate debt | 1,712,561 | 1,314,973 |
Level 3 | Recurring | Reported Value Measurement | ||
Assets: | ||
Notes receivable, net | 69 | 1,664 |
Level 3 | Recurring | Estimate of Fair Value Measurement | ||
Assets: | ||
Notes receivable, net | $ 69 | $ 1,664 |
REAL ESTATE AND OTHER AFFILIA45
REAL ESTATE AND OTHER AFFILIATES (Summary of Investments in Real Estate and Other Affiliates) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Investment in Real Estate and Other Affiliates | |||||
Carrying Value | $ 78,890 | $ 78,890 | $ 57,811 | ||
Share of Earnings/Dividends | 13,493 | $ 295 | 35,700 | $ 3,164 | |
Aggregate carrying value of unconsolidated VIEs | 14,800 | $ 14,800 | 21,500 | ||
Number of variable interest entities in which entity is primary beneficiary | item | 1 | ||||
Carrying values of the assets associated with the operations of the consolidated VIEs | 21,700 | $ 21,700 | 21,500 | ||
Carrying values of the liabilities associated with the operations of the consolidated VIEs | 1,400 | 1,400 | 1,100 | ||
Cost Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Carrying Value | 4,347 | 4,347 | 3,952 | ||
Share of Earnings/Dividends | 2,616 | 1,747 | |||
The Summit | |||||
Investment in Real Estate and Other Affiliates | |||||
Share of Earnings/Dividends | 22,600 | ||||
Millennium Six Pines Apartments | Accounts Payable and Accrued Expenses | |||||
Investment in Real Estate and Other Affiliates | |||||
Investment balance | 1,800 | ||||
Circle T Ranch | |||||
Investment in Real Estate and Other Affiliates | |||||
Share of Earnings/Dividends | 10,500 | ||||
Master Planned Communities | The Summit | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Carrying Value | 34,626 | 34,626 | $ 12,052 | ||
Share of Earnings/Dividends | $ 13,700 | $ 22,574 | |||
Operating Assets | Grandview SHG, LLC | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 35.00% | 35.00% | |||
Carrying Value | $ 8,061 | $ 8,061 | |||
Share of Earnings/Dividends | $ (117) | $ (76) | |||
Operating Assets | Millennium Six Pines Apartments | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 100.00% | 100.00% | 81.43% | ||
Share of Earnings/Dividends | $ 9 | (177) | $ 44 | (1,327) | |
Operating Assets | Stewart Title | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | ||
Carrying Value | $ 3,592 | $ 3,592 | $ 3,715 | ||
Share of Earnings/Dividends | $ 221 | 163 | $ 477 | 659 | |
Operating Assets | Clark County Las Vegas Stadium | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | ||
Carrying Value | $ 11,348 | $ 11,348 | $ 11,050 | ||
Share of Earnings/Dividends | $ 2 | 105 | $ 297 | 389 | |
Operating Assets | The Metropolitan Downtown Columbia | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | ||
Carrying Value | $ (539) | $ (539) | $ 4,872 | ||
Share of Earnings/Dividends | $ (351) | 140 | $ (863) | (268) | |
Operating Assets | Woodlands Sarofim 1 | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 20.00% | 20.00% | 20.00% | ||
Carrying Value | $ 2,674 | $ 2,674 | $ 2,588 | ||
Share of Earnings/Dividends | 26 | 58 | 121 | 133 | |
Strategic Developments | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Carrying Value | 74,543 | 74,543 | $ 53,859 | ||
Share of Earnings/Dividends | $ 13,493 | 295 | $ 33,084 | 1,417 | |
Strategic Developments | Circle T Ranch | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | ||
Carrying Value | $ 4,956 | $ 4,956 | $ 9,128 | ||
Share of Earnings/Dividends | $ 10,498 | ||||
Strategic Developments | Constellation | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | ||
Carrying Value | $ 2,685 | $ 2,685 | $ 2,685 | ||
Strategic Developments | HHMK Development LLC | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | ||
Carrying Value | $ 10 | $ 10 | $ 10 | ||
Share of Earnings/Dividends | 549 | ||||
Strategic Developments | KR Holdings LLC | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | ||
Carrying Value | $ 761 | $ 761 | $ 689 | ||
Share of Earnings/Dividends | $ 3 | $ 6 | $ 12 | $ 1,282 | |
Strategic Developments | m.flats (formerly Parcel C) | Equity Method Investments [Member] | |||||
Investment in Real Estate and Other Affiliates | |||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | ||
Carrying Value | $ 6,369 | $ 6,369 | $ 7,070 | ||
Unconsolidated Properties | |||||
Investment in Real Estate and Other Affiliates | |||||
Secured debt | 123,600 | 123,600 | |||
Share of the entity in secured debt | $ 54,700 | $ 54,700 |
REAL ESTATE AND OTHER AFFILIA46
REAL ESTATE AND OTHER AFFILIATES (Narrative) (Details) | Jun. 01, 2016a | Mar. 16, 2016ft² | Jan. 24, 2014USD ($)aitem | Oct. 04, 2013USD ($)a | Jun. 30, 2016a | Jan. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Mar. 31, 2015USD ($)item$ / a | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) |
Real Estate and Other Affiliates | ||||||||||||
Book value of land contributed to joint venture | $ 314,400,000 | $ 322,462,000 | $ 314,400,000 | |||||||||
Area of land sold | ft² | 42,694 | |||||||||||
Land sales | 44,128,000 | $ 45,423,000 | 147,168,000 | $ 138,937,000 | ||||||||
Equity in earnings | 13,493,000 | $ 295,000 | 35,700,000 | $ 3,164,000 | ||||||||
The Summit | ||||||||||||
Real Estate and Other Affiliates | ||||||||||||
Book value of land contributed to joint venture | $ 13,400,000 | |||||||||||
SID Bonds transferred to a joint venture | 1,300,000 | |||||||||||
Transaction value of the land contributed to joint venture | $ 125,400,000 | |||||||||||
Value of land contributed to joint venture (in dollars per acre) | $ / a | 226,000 | |||||||||||
Preferred return, on capital (as a percent) | 5.00% | |||||||||||
Entitlement of distribution by joint venture (in times) | item | 2 | |||||||||||
Land sales | 216,600,000 | |||||||||||
Amount of lot closing completed | 119,800,000 | |||||||||||
Equity in earnings | 22,600,000 | |||||||||||
The Summit | Maximum | ||||||||||||
Real Estate and Other Affiliates | ||||||||||||
Maximum capital contribution required | $ 30,000,000 | |||||||||||
Grandview SHG, LLC | ||||||||||||
Real Estate and Other Affiliates | ||||||||||||
Investment in joint venture | 8,100,000 | 8,100,000 | ||||||||||
Amount of bridge loan | 25,000,000 | 25,000,000 | ||||||||||
Redevelopment loan | 36,000,000 | 36,000,000 | ||||||||||
Additional capital contribution | 2,300,000 | $ 2,300,000 | ||||||||||
Grandview SHG, LLC | Bridge Loan [Member] | ||||||||||||
Real Estate and Other Affiliates | ||||||||||||
Interest rate margin (as a percent) | 5.00% | |||||||||||
Circle T Ranch | ||||||||||||
Real Estate and Other Affiliates | ||||||||||||
Area of land sold | a | 74 | 74 | ||||||||||
Equity in earnings | $ 10,500,000 | |||||||||||
m.flats (formerly Parcel C) | ||||||||||||
Real Estate and Other Affiliates | ||||||||||||
Transaction value of the land contributed to joint venture | $ 23,400,000 | |||||||||||
Area of land contributed to the joint venture (in acres) | a | 5 | |||||||||||
Fair value of the land contributed to joint venture | $ 4,000,000 | |||||||||||
Additional capitalized development costs incurred resulting from contribution of land | 3,100,000 | |||||||||||
Transaction value, per constructed unit of land contributed to joint venture | 53,500 | |||||||||||
Non-recourse construction loan | $ 88,000,000 | |||||||||||
Cash contributed by joint venture partner | 16,100,000 | |||||||||||
Distribution of the cash contributed by joint venture partner | $ 7,300,000 | |||||||||||
Profit on partial sale of land | 200,000 | |||||||||||
Total book value contribution | $ 7,100,000 | |||||||||||
Contribution made till date | 3,900,000 | 6,300,000 | ||||||||||
m.flats (formerly Parcel C) | Construction Loan Payable | ||||||||||||
Real Estate and Other Affiliates | ||||||||||||
Option to extend, term | 1 year | |||||||||||
Constellation | ||||||||||||
Real Estate and Other Affiliates | ||||||||||||
Area of land contributed to the joint venture (in acres) | a | 4.5 | |||||||||||
Fair value of the land contributed to joint venture | $ 3,200,000 | |||||||||||
Non-recourse construction loan | $ 15,800,000 | $ 11,900,000 | $ 11,900,000 | |||||||||
Number of units in Class A apartment building to be constructed | item | 124 | |||||||||||
Area Of Land In Downtown Summerlin | a | 400 | |||||||||||
Percentage of ownership interest of partners in joint venture | 50.00% | |||||||||||
Future contribution required | $ 1,000,000 | |||||||||||
Percentage of proceeds in excess of an amount determined by applying a specified capitalization rate to NOI | 100.00% | |||||||||||
Percent share of proceeds upon sale of property | 50 | |||||||||||
Capitalization rate (as a percent) | 7.00% | |||||||||||
Percentage of project occupied | 14.50% | 14.50% | ||||||||||
Percentage of project leased | 42.70% | 42.70% | ||||||||||
One Month LIBOR | m.flats (formerly Parcel C) | Construction Loan Payable | ||||||||||||
Real Estate and Other Affiliates | ||||||||||||
Interest rate margin (as a percent) | 2.40% |
MORTGAGES, NOTES AND LOANS PA47
MORTGAGES, NOTES AND LOANS PAYABLE (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Mortgages, notes and loans payable | ||
Deferred Financing Costs, net of accumulated amortization | $ (12,420) | $ (12,392) |
Total mortgages, notes and loans payable | 2,847,002 | 2,443,962 |
Deferred financing Costs, accumulated amortization | 16,100 | 12,700 |
Secured Debt | ||
Mortgages, notes and loans payable | ||
Fixed-rate debt: | 1,100,148 | 1,087,642 |
Variable-rate debt: | 1,712,559 | 1,314,973 |
Amount of variable-rate debt swapped to fixed rate | 183,000 | 209,500 |
Bonds | ||
Mortgages, notes and loans payable | ||
Fixed-rate debt: | $ 46,715 | $ 53,739 |
MORTGAGES, NOTES AND LOANS PA48
MORTGAGES, NOTES AND LOANS PAYABLE (Schedule of Debt by Property) (Details) | Oct. 07, 2016USD ($)Option | Sep. 12, 2016Option | Feb. 25, 2016 | Jan. 27, 2016 | Nov. 09, 2015USD ($)item | Jul. 31, 2015USD ($) | Sep. 30, 2016USD ($)Optionitem | Sep. 30, 2016USD ($)Optionitem | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) |
Mortgages, notes and loans payable | ||||||||||
Unamortized underwriting fees | $ (6,033,000) | $ (6,033,000) | $ (6,767,000) | |||||||
Deferred Financing Costs, net | (12,420,000) | (12,420,000) | (12,392,000) | |||||||
Total mortgages, notes and loans payable | 2,847,002,000 | 2,847,002,000 | 2,443,962,000 | |||||||
Deferred financing Costs, accumulated amortization | $ 16,100,000 | $ 16,100,000 | $ 12,700,000 | |||||||
Weighted average interest rate (as a percent) | 4.68% | 4.68% | 4.44% | |||||||
Net cash proceeds received from issuance | $ 422,661,000 | $ 370,342,000 | ||||||||
One Month LIBOR | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Variable rate basis (as a percent) | 0.53% | |||||||||
Senior Notes 6.875 Percent Due 2021 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 6.88% | 6.88% | ||||||||
Mortgages, notes, and loans payable, gross | $ 750,000,000 | $ 750,000,000 | $ 750,000,000 | |||||||
Woodlands Properties | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Land, buildings and equipment and developments in progress pledged as collateral | 3,000,000,000 | 3,000,000,000 | ||||||||
Master Planned Communities | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Mortgages, notes, and loans payable, gross | $ 282,973,000 | $ 282,973,000 | 282,889,000 | |||||||
Debt refinanced | $ 15,200,000 | |||||||||
Number of extension options | item | 2 | |||||||||
Option to extend, term | 1 year | |||||||||
Interest rate (as a percent) | 4.60% | |||||||||
Master Planned Communities | Three Month LIBOR | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate margin (as a percent) | 3.15% | |||||||||
Master Planned Communities | Bridgeland Credit Facility | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 4.60% | 4.60% | ||||||||
Facility Amount | $ 65,000,000 | $ 65,000,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 64,843,000 | $ 64,843,000 | 40,072,000 | |||||||
Master Planned Communities | The Woodlands Master Credit Facility | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.28% | 3.28% | ||||||||
Facility Amount | $ 175,000,000 | $ 175,000,000 | ||||||||
Mortgages, notes, and loans payable, gross | 175,000,000 | 175,000,000 | 192,663,000 | |||||||
Master Planned Communities | Summerlin | Bonds | ||||||||||
Mortgages, notes and loans payable | ||||||||||
New SIDs issued | 0 | 0 | ||||||||
Bond obligation | $ 5,500,000 | $ 5,500,000 | ||||||||
Master Planned Communities | Summerlin South | S124 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 5.95% | 5.95% | ||||||||
Mortgages, notes, and loans payable, gross | $ 141,000 | $ 141,000 | 159,000 | |||||||
Master Planned Communities | Summerlin South | S128 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 6.05% | 6.05% | ||||||||
Mortgages, notes, and loans payable, gross | $ 478,000 | $ 478,000 | 534,000 | |||||||
Master Planned Communities | Summerlin South | S128C | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 6.05% | 6.05% | ||||||||
Mortgages, notes, and loans payable, gross | $ 4,737,000 | $ 4,737,000 | 4,856,000 | |||||||
Master Planned Communities | Summerlin South | S132 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 6.00% | 6.00% | ||||||||
Mortgages, notes, and loans payable, gross | $ 1,480,000 | $ 1,480,000 | 1,676,000 | |||||||
Master Planned Communities | Summerlin South | S151 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 6.00% | 6.00% | ||||||||
Mortgages, notes, and loans payable, gross | $ 4,349,000 | $ 4,349,000 | 4,534,000 | |||||||
Master Planned Communities | Summerlin South | S159 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 6.00% | 6.00% | ||||||||
Mortgages, notes, and loans payable, gross | $ 4,486,000 | $ 4,486,000 | 9,020,000 | |||||||
Master Planned Communities | Summerlin West | S808 or 810 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 6.00% | 6.00% | ||||||||
Mortgages, notes, and loans payable, gross | 1,047,000 | |||||||||
Master Planned Communities | Summerlin West | S812 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 6.00% | 6.00% | ||||||||
Mortgages, notes, and loans payable, gross | $ 27,459,000 | $ 27,459,000 | 28,328,000 | |||||||
Master Planned Communities | Woodlands Properties | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Number of extension options | item | 2 | 2 | ||||||||
Master Planned Communities | Woodlands Properties | Line of Credit | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Facility Amount | $ 200,000,000 | $ 200,000,000 | ||||||||
Interest rate margin (as a percent) | 2.75% | |||||||||
Option to extend, term | 1 year | |||||||||
Maximum facility amount at second extension option | $ 25,000,000 | 25,000,000 | ||||||||
Master Planned Communities | Woodlands Properties | Term Loan | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Facility Amount | $ 100,000,000 | |||||||||
Master Planned Communities | Woodlands Properties | Revolving Credit Facility | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Facility Amount | $ 100,000,000 | |||||||||
Operating Assets | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Mortgages, notes, and loans payable, gross | $ 1,509,891,000 | $ 1,509,891,000 | 1,383,621,000 | |||||||
Operating Assets | Capital Lease Obligations | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.60% | 3.60% | ||||||||
Mortgages, notes, and loans payable, gross | $ 3,000 | $ 3,000 | 52,000 | |||||||
Operating Assets | Downtown Summerlin | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.78% | 2.78% | ||||||||
Facility Amount | $ 311,800,000 | $ 311,800,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 299,448,000 | $ 299,448,000 | $ 289,804,000 | |||||||
Operating Assets | Downtown Summerlin | Recourse Debt | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Maximum percent recourse | 35.00% | |||||||||
Maximum recourse upon completion of the project and achievement of debt service coverage ratio | 15.00% | |||||||||
Maximum percentage recourse upon achievement of conditions | 10.00% | |||||||||
Debt service coverage ratio to be achieved for reduction in maximum recourse | 1.15 | |||||||||
Debt service coverage ratio to be achieved for further reduction in maximum recourse | 1.25 | |||||||||
Minimum average tenant sales per net rentable square foot to be achieved for further reduction in maximum recourse | $ 500 | |||||||||
Occupancy percentage | 90.00% | 90.00% | ||||||||
Operating Assets | Downtown Summerlin | S128 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 6.05% | 6.05% | ||||||||
Mortgages, notes, and loans payable, gross | $ 3,350,000 | $ 3,350,000 | $ 3,350,000 | |||||||
Operating Assets | Downtown Summerlin | S108 | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 5.95% | 5.95% | ||||||||
Mortgages, notes, and loans payable, gross | $ 235,000 | $ 235,000 | 235,000 | |||||||
Operating Assets | The Woodlands Resort and Conference Center | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.28% | 3.28% | ||||||||
Mortgages, notes, and loans payable, gross | $ 85,000,000 | $ 85,000,000 | 85,000,000 | |||||||
Operating Assets | 10-60 Columbia Corporate Center | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.84% | 2.84% | ||||||||
Mortgages, notes, and loans payable, gross | $ 80,000,000 | $ 80,000,000 | 80,000,000 | |||||||
Operating Assets | 10-60 Columbia Corporate Center | Interest Rate Swap | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Outstanding balance | $ 40,000,000 | $ 40,000,000 | ||||||||
Fixed interest rate per swap (as a percent) | 3.41% | 3.41% | ||||||||
Operating Assets | 70 Columbia Corporate Center | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.78% | 2.78% | ||||||||
Mortgages, notes, and loans payable, gross | $ 20,000,000 | $ 20,000,000 | 20,000,000 | |||||||
Operating Assets | Columbia Regional Building | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.53% | 2.53% | ||||||||
Facility Amount | $ 23,008,000 | $ 23,008,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 22,188,000 | $ 22,188,000 | 22,188,000 | |||||||
Operating Assets | Embassy Suites at Hughes Landing | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.03% | 3.03% | ||||||||
Facility Amount | $ 37,100,000 | $ 37,100,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 29,231,000 | $ 29,231,000 | 20,064,000 | |||||||
Operating Assets | One Hughes Landing | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 4.30% | 4.30% | ||||||||
Mortgages, notes, and loans payable, gross | $ 52,000,000 | $ 52,000,000 | 52,000,000 | |||||||
Operating Assets | Two Hughes Landing | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 4.20% | 4.20% | ||||||||
Mortgages, notes, and loans payable, gross | $ 48,000,000 | $ 48,000,000 | 48,000,000 | |||||||
Operating Assets | Three Hughes Landing | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.88% | 2.88% | ||||||||
Facility Amount | $ 65,455,000 | $ 65,455,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 34,208,000 | $ 34,208,000 | 23,268,000 | |||||||
Operating Assets | 1725-35 Hughes Landing Boulevard | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.18% | 2.18% | ||||||||
Facility Amount | $ 143,000,000 | $ 143,000,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 105,044,000 | $ 105,044,000 | 89,677,000 | |||||||
Operating Assets | Hughes Landing Retail | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.48% | 2.48% | ||||||||
Facility Amount | $ 36,575,000 | $ 36,575,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 34,467,000 | $ 34,467,000 | 28,726,000 | |||||||
Operating Assets | 1701 Lake Robbins | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 5.81% | 5.81% | ||||||||
Mortgages, notes, and loans payable, gross | $ 4,600,000 | $ 4,600,000 | 4,600,000 | |||||||
Operating Assets | Lakeland Village Center | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.88% | 2.88% | ||||||||
Facility Amount | $ 14,000,000 | $ 14,000,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 9,167,000 | $ 9,167,000 | ||||||||
Operating Assets | Millennium Waterway Apartments | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.75% | 3.75% | ||||||||
Mortgages, notes, and loans payable, gross | $ 55,584,000 | $ 55,584,000 | 55,584,000 | |||||||
Operating Assets | Millennium Six Pines Apartments | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.39% | 3.39% | ||||||||
Mortgages, notes, and loans payable, gross | $ 42,500,000 | $ 42,500,000 | ||||||||
Operating Assets | 110 N Wacker | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 5.21% | 5.21% | ||||||||
Mortgages, notes, and loans payable, gross | $ 23,648,000 | $ 23,648,000 | 26,481,000 | |||||||
Operating Assets | 110 N Wacker | Interest Rate Swap | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Fixed interest rate per swap (as a percent) | 5.21% | 5.21% | ||||||||
Operating Assets | 110 N Wacker | Recourse Debt | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Corporate recourse guarantee amount | 7,000,000 | |||||||||
Operating Assets | 9303 New Trails | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 4.88% | 4.88% | ||||||||
Mortgages, notes, and loans payable, gross | $ 12,468,000 | $ 12,468,000 | 12,734,000 | |||||||
Operating Assets | One Lakes Edge | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.78% | 2.78% | ||||||||
Facility Amount | $ 73,525,000 | $ 73,525,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 71,874,000 | $ 71,874,000 | 67,517,000 | |||||||
Operating Assets | Outlet Collection at Riverwalk | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.28% | 3.28% | ||||||||
Facility Amount | $ 64,400,000 | $ 64,400,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 56,100,000 | $ 56,100,000 | 56,100,000 | |||||||
Operating Assets | 3831 Technology Forest | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 4.50% | 4.50% | ||||||||
Mortgages, notes, and loans payable, gross | $ 22,480,000 | $ 22,480,000 | 22,759,000 | |||||||
Operating Assets | The Westin at the Woodlands | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.18% | 3.18% | ||||||||
Facility Amount | $ 69,300,000 | $ 69,300,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 57,223,000 | $ 57,223,000 | 33,361,000 | |||||||
Operating Assets | Ward Village | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.33% | 3.33% | ||||||||
Mortgages, notes, and loans payable, gross | $ 238,716,000 | $ 238,716,000 | 238,716,000 | |||||||
Number of extension options | Option | 2 | |||||||||
Option to extend, term | 1 year | |||||||||
Operating Assets | Ward Village | Interest Rate Swap | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Outstanding balance | $ 119,400,000 | $ 119,400,000 | ||||||||
Fixed interest rate per swap (as a percent) | 3.64% | 3.64% | ||||||||
Operating Assets | Ward Village | One Month LIBOR | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate margin (as a percent) | 2.50% | |||||||||
Operating Assets | 20/25 Waterway Avenue | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 4.79% | 4.79% | ||||||||
Mortgages, notes, and loans payable, gross | $ 13,944,000 | $ 13,944,000 | 14,112,000 | |||||||
Operating Assets | 3 Waterway Square | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.94% | 3.94% | ||||||||
Mortgages, notes, and loans payable, gross | $ 51,898,000 | $ 51,898,000 | 52,000,000 | |||||||
Operating Assets | 4 Waterway Square | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 4.88% | 4.88% | ||||||||
Mortgages, notes, and loans payable, gross | $ 36,515,000 | $ 36,515,000 | $ 37,293,000 | |||||||
Operating Assets | Outlet at Riverwalk Properties | Construction Loan Payable | Recourse Debt | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Maximum percent recourse | 50.00% | |||||||||
Maximum percentage recourse upon achievement of conditions | 25.00% | |||||||||
Debt yield to achieve the reduced maximum percentage recourse | 11.00% | |||||||||
Time period of minimum level of tenant sales needed to achieve the reduced maximum percent recourse | 12 months | |||||||||
Strategic Developments | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Mortgages, notes, and loans payable, gross | $ 306,402,000 | $ 306,402,000 | $ 27,817,000 | |||||||
Strategic Developments | HHC 242 Self Storage Facility | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.13% | 3.13% | ||||||||
Facility Amount | $ 6,658,000 | $ 6,658,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 2,573,000 | $ 2,573,000 | ||||||||
Strategic Developments | HHC 2978 Self Storage Facility | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.13% | 3.13% | ||||||||
Facility Amount | $ 6,368,000 | $ 6,368,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 384,000 | $ 384,000 | ||||||||
Option to extend, term | 1 year | |||||||||
Strategic Developments | HHC 2978 Self Storage Facility | One Month LIBOR | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate margin (as a percent) | 2.60% | |||||||||
Strategic Developments | Merriweather Post Pavilion | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.53% | 2.53% | ||||||||
Facility Amount | $ 9,500,000 | $ 9,500,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 2,416,000 | $ 2,416,000 | ||||||||
Strategic Developments | One Merriweather | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 2.68% | 2.68% | ||||||||
Facility Amount | $ 49,900,000 | $ 49,900,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 13,746,000 | $ 13,746,000 | ||||||||
Option to extend, term | 1 year | |||||||||
Strategic Developments | One Merriweather | One Month LIBOR | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate margin (as a percent) | 2.15% | |||||||||
Strategic Developments | Waiea And Anaha Condominiums | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 7.28% | 7.28% | ||||||||
Facility Amount | $ 600,000,000 | $ 600,000,000 | ||||||||
Mortgages, notes, and loans payable, gross | $ 287,283,000 | $ 287,283,000 | 27,817,000 | |||||||
Number of extension options | Option | 2 | 2 | ||||||||
Option to extend, term | 1 year | |||||||||
Immediate advance on loan after modification of agreement | $ 50,000,000 | $ 50,000,000 | ||||||||
Maximum additional borrowing amount | $ 113,000,000 | $ 113,000,000 | ||||||||
Strategic Developments | Waiea And Anaha Condominiums | One Month LIBOR | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate margin (as a percent) | 6.75% | |||||||||
Strategic Developments | Two Merriweather | Subsequent Event | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Mortgages, notes, and loans payable, gross | $ 33,200,000 | |||||||||
Number of extension options | Option | 1 | |||||||||
Strategic Developments | Two Merriweather | One Month LIBOR | Subsequent Event | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate margin (as a percent) | 2.50% | |||||||||
Corporate | Other Financing Arrangements | ||||||||||
Mortgages, notes and loans payable | ||||||||||
Interest rate (as a percent) | 3.00% | 3.00% | ||||||||
Mortgages, notes, and loans payable, gross | $ 16,189,000 | $ 16,189,000 | $ 18,794,000 |
DERIVATIVE INSTRUMENTS AND HE49
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2016USD ($) | |
Interest Rate Swap | |
Derivative instruments and hedging activities | |
Estimated additional amount to be reclassified as an increase to interest expense | $ 1.9 |
Interest Rate Swap | Cash Flow Hedging | |
Derivative instruments and hedging activities | |
Gross notional amounts of cash flow hedges | 326 |
Interest Rate Cap | Cash Flow Hedging | |
Derivative instruments and hedging activities | |
Gross notional amounts of cash flow hedges | 100 |
Forward Starting Swaps | Cash Flow Hedging | |
Derivative instruments and hedging activities | |
Gross notional amounts of cash flow hedges | $ 250 |
DERIVATIVE INSTRUMENTS AND HE50
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Financial Instruments Included in Balance Sheet) (Details) - Designated as Hedging Instrument - Accounts Payable and Accrued Expenses - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair value of derivative instruments | ||
Derivative liabilities | $ 27,794 | $ 4,217 |
Interest Rate Swaps & Caps | ||
Fair value of derivative instruments | ||
Derivative liabilities | 3,035 | 2,292 |
Forward Starting Swaps | ||
Fair value of derivative instruments | ||
Derivative liabilities | $ 24,759 | $ 1,925 |
DERIVATIVE INSTRUMENTS AND HE51
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Impact of Financial Instruments on Statement of Operations) (Details) - Cash Flow Hedging - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Recognized in OCI | $ 141 | $ (877) | $ (15,975) | $ (979) |
Amount of Gain (Loss) Reclassified from AOCI into Earnings | (356) | (466) | (1,099) | (1,276) |
Interest Expense | ||||
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Reclassified from AOCI into Earnings | (356) | (466) | (1,099) | (1,276) |
Interest Rate Swaps & Caps | ||||
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Recognized in OCI | (203) | $ (877) | (1,409) | $ (979) |
Forward Starting Swaps | ||||
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Recognized in OCI | $ 344 | $ (14,566) |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
INCOME TAXES | |||||
Unrecognized tax benefits, excluding interest | $ 35.4 | $ 35.4 | $ 36.5 | ||
Effective tax rate (as a percent) | 56.00% | 10.50% | 39.10% | 19.70% |
STOCK-BASED PLANS (Summary of S
STOCK-BASED PLANS (Summary of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Weighted Average Exercise Price | ||||
Stock based compensation costs | $ 6,324 | $ 5,269 | ||
Stock Options | ||||
Stock Options | ||||
Share based compensation costs capitalized | $ 300 | $ 600 | $ 1,100 | 1,500 |
Stock options outstanding at the beginning of the period (in shares) | 1,086,040 | |||
Granted (in shares) | 146,000 | |||
Exercised (in shares) | (3,000) | |||
Forfeited (in shares) | (51,000) | |||
Stock options outstanding at the end of the period (in shares) | 1,178,040 | 1,178,040 | ||
Weighted Average Exercise Price | ||||
Stock options outstanding at the beginning of the period (in dollars per share) | $ 77.11 | |||
Granted (in dollars per share) | 108.93 | |||
Exercised (in dollars per share) | 60.33 | |||
Forfeited (in dollars per share) | 125.62 | |||
Stock options outstanding at the end of the period (in dollars per share) | $ 78.96 | $ 78.96 | ||
Stock based compensation costs | $ 1,200 | $ 1,200 | $ 3,500 | $ 2,900 |
STOCK-BASED PLANS (Summary of R
STOCK-BASED PLANS (Summary of Restricted Stock Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Weighted Average Grant Date Fair Value | ||||
Stock based compensation costs | $ 6,324 | $ 5,269 | ||
Restricted Stock | ||||
Restricted stock activity | ||||
Restricted stock outstanding at the beginning of the period (in shares) | 242,556 | |||
Granted (in shares) | 136,198 | |||
Vested (in shares) | (37,670) | |||
Forfeited (in shares) | (4,985) | |||
Restricted stock outstanding at the end of the period (in shares) | 336,099 | 336,099 | ||
Weighted Average Grant Date Fair Value | ||||
Restricted stock outstanding at the beginning of the period (in dollars per share) | $ 100.15 | |||
Granted (in dollars per share) | 67.80 | |||
Vested (in dollars per share) | 83.47 | |||
Forfeited (in dollars per share) | 86.48 | |||
Restricted stock outstanding at the end of the period (in dollars per share) | $ 89.11 | $ 89.11 | ||
Stock based compensation costs | $ 1,200 | $ 1,500 | $ 4,400 | 4,000 |
Share based compensation costs capitalized | $ 300 | $ 200 | $ 900 | $ 600 |
OTHER ASSETS AND LIABILITIES (D
OTHER ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Prepaid Expenses and Other Assets | |||||
Condominium receivables | $ 169,642 | $ 169,642 | $ 191,037 | ||
Condominium deposits | 478,251 | 478,251 | 55,749 | ||
Special Improvement District receivable | 66,300 | 66,300 | 72,558 | ||
Equipment, net of accumulated depreciation of $4.3 million and $3.9 million, respectively | 17,930 | 17,930 | 18,772 | ||
Tenant incentives and other receivables | 8,811 | 8,811 | 10,480 | ||
Security and escrow deposits | 10,381 | 10,381 | 17,599 | ||
Prepaid expenses | 11,743 | 11,743 | 8,474 | ||
Federal income tax receivable | 11,564 | 11,564 | 11,972 | ||
Intangibles | 4,085 | 4,085 | 4,045 | ||
Uncertain tax position asset | 256 | 256 | 112 | ||
Other | 3,447 | 3,447 | 5,347 | ||
Total prepaid expenses and other assets | 820,240 | 820,240 | 441,190 | ||
Accumulated depreciation on other equipment | 4,900 | 4,900 | 3,900 | ||
Condominium receivable expected to be collected in 2016 | 32,300 | 32,300 | |||
Condominium receivable expected to be collected in 2017 | 137,300 | 137,300 | |||
Reimbursement from a tenant | 11,657 | $ 10,706 | 33,108 | $ 31,074 | |
Accounts Payable and Accrued Expenses | |||||
Construction payables | 188,501 | 188,501 | 185,731 | ||
Deferred income | 104,686 | 104,686 | 117,730 | ||
Condominium deposit liabilities | 106,258 | 106,258 | 50,192 | ||
Accounts payable and accrued expenses | 42,179 | 42,179 | 33,928 | ||
Tenant and other deposits | 33,740 | 33,740 | 34,894 | ||
Accrued interest | 29,014 | 29,014 | 16,504 | ||
Accrued payroll and other employee liabilities | 24,313 | 24,313 | 31,271 | ||
Accrued real estate taxes | 19,875 | 19,875 | 15,134 | ||
Interest rate swaps | 27,794 | 27,794 | 4,217 | ||
Straight-line ground rent liability (a) | 12,962 | 12,962 | 10,757 | ||
Above-market ground leases | 1,994 | 1,994 | 2,113 | ||
Other | 11,921 | 11,921 | 12,883 | ||
Total accounts payable and accrued expenses | 603,237 | 603,237 | 515,354 | ||
Prepaid Expenses and Other Current Assets | |||||
Prepaid Expenses and Other Assets | |||||
Increase in prepaid expenses and other assets | 379,100 | ||||
Increase in prepaid expense | 3,300 | ||||
Other increases | 4,100 | 100 | |||
Decrease in condominium receivables | 21,400 | ||||
Decrease in SID receivable | 6,300 | ||||
Decrease due to amortization of in-place leases | 5,900 | ||||
Reimbursement from a tenant | 1,900 | ||||
Accounts Payable and Accrued Expenses | |||||
Prepaid Expenses and Other Assets | |||||
Construction payables | 12,500 | ||||
Accounts Payable and Accrued Expenses | |||||
Increase in accounts payable and accrued expenses | 87,900 | ||||
Increase in condominium deposits liability | 56,100 | ||||
Increase in interest rate swap liability | 23,600 | ||||
Increase in accrued payroll and other employee liabilities | (7,000) | ||||
Increase in accrued real estate taxes | 4,700 | ||||
Other immaterial increases | 4,900 | ||||
Decrease in deferred income | 13,000 | ||||
Other immaterial decreases | (2,200) | ||||
Grandview SHG, LLC | Prepaid Expenses and Other Current Assets | |||||
Prepaid Expenses and Other Assets | |||||
Decrease in security and escrow deposits | (7,200) | ||||
Summerlin | Accounts Payable and Accrued Expenses | |||||
Accounts Payable and Accrued Expenses | |||||
Increase in accounts payable and accrued expenses | 8,300 | ||||
Ward Village | Prepaid Expenses and Other Current Assets | |||||
Prepaid Expenses and Other Assets | |||||
Increase (decrease) in condominium deposits | 422,500 | ||||
Leases, Acquired-in-Place | |||||
Prepaid Expenses and Other Assets | |||||
Net carrying amount | 16,254 | 16,254 | 22,139 | ||
Ground Leases below Market | |||||
Prepaid Expenses and Other Assets | |||||
Net carrying amount | 19,071 | 19,071 | 19,325 | ||
Tenant Leases above Market | |||||
Prepaid Expenses and Other Assets | |||||
Net carrying amount | $ 2,505 | $ 2,505 | $ 3,581 |
ACCUMULATED OTHER COMPREHENSI56
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Summary of Changes in Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Balance at the beginning of the period | $ (24,152) | $ (7,116) | $ (7,889) | $ (7,712) |
Other comprehensive income (loss) before reclassifications | (22) | (919) | (17,028) | (1,133) |
Loss reclassified from accumulated other comprehensive loss to net income (loss) | 356 | 466 | 1,099 | 1,276 |
Other comprehensive income (loss) | 334 | (453) | (15,929) | 143 |
Balance at the end of the period | $ (23,818) | $ (7,569) | $ (23,818) | $ (7,569) |
ACCUMULATED OTHER COMPREHENSI57
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Summary of Amounts Reclassified Out of AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Reclassifications out of accumulated other comprehensive income (loss) | ||||
Provision for income taxes | $ (10,162) | $ (18,237) | $ (102,088) | $ (24,795) |
Net income | 7,996 | 156,212 | 158,731 | 100,838 |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassifications out of accumulated other comprehensive income (loss) | ||||
Interest expense | 558 | 746 | 1,752 | 2,046 |
Net income | 356 | 466 | 1,099 | 1,276 |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Interest Rate Swap | Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassifications out of accumulated other comprehensive income (loss) | ||||
Provision for income taxes | $ (202) | $ (280) | $ (653) | $ (770) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Jun. 27, 2013 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Commitments | |||||
Amount of outstanding letters of credit and surety bonds | $ 116,000,000 | $ 116,000,000 | $ 86,100,000 | ||
South Street Seaport Ground Lease | |||||
Commitments | |||||
Annual fixed rent | $ 1,200,000 | ||||
Annual rent escalation rate (as a percent) | 3.00% | ||||
Additional annual rent payments to be made through the term of the lease | $ 210,000 | ||||
Damage Due to Flooding | South Street Seaport Ground Lease | |||||
Commitments | |||||
Insurance recoveries collected | $ 6,200,000 | $ 300,000 | $ 54,100,000 |
SEGMENTS (Summary of Segment Op
SEGMENTS (Summary of Segment Operating Results) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)segment | Sep. 30, 2015USD ($) | |
Segments reporting | ||||
Number of reportable segments | segment | 3 | |||
Land sales | $ 44,128 | $ 45,423 | $ 147,168 | $ 138,937 |
Builder price participation | 4,483 | 6,680 | 15,631 | 20,285 |
Minimum rents | 44,910 | 37,814 | 128,255 | 109,997 |
Other land revenues | 2,595 | 4,617 | 8,387 | 11,055 |
Other rental and property revenues | 3,538 | 7,438 | 11,335 | 20,729 |
Total revenues | 240,806 | 203,442 | 752,623 | 567,695 |
Tenant recoveries | 11,657 | 10,706 | 33,108 | 31,074 |
Condominium rights and unit sales | 115,407 | 78,992 | 362,613 | 200,362 |
Hospitality revenues | 14,088 | 11,772 | 46,126 | 35,256 |
Cost of sales - land | 21,432 | 19,674 | 66,128 | 67,806 |
Other property operating costs | 16,535 | 16,680 | 47,513 | 54,459 |
Rental property real estate taxes | 7,033 | 6,908 | 21,110 | 19,676 |
Rental property maintenance costs | 3,332 | 3,094 | 9,217 | 8,738 |
Hospitality costs | 12,662 | 8,767 | 37,379 | 26,738 |
Provision for (recovery of) doubtful accounts | 1,940 | 1,007 | 4,629 | 3,082 |
Demolition costs | 256 | 1,024 | 1,218 | 2,637 |
Provision for impairment | 35,734 | 35,734 | ||
Development-related marketing costs | 4,716 | 7,639 | 15,586 | 19,476 |
Depreciation and amortization | 23,322 | 24,998 | 71,246 | 71,577 |
Other (income) expense, net | (432) | 659 | (9,858) | (1,204) |
Interest income | (196) | (109) | (900) | (516) |
Equity in earnings from Real Estate and Other Affiliates | (13,493) | (295) | (35,700) | (3,164) |
Gain on sale of 80 South Street Assemblage | (70) | (140,549) | ||
REP EBT | 34,498 | 55,190 | 354,521 | 139,178 |
Operating Segments | ||||
Segments reporting | ||||
REP EBT | 34,498 | 55,190 | 354,521 | 139,178 |
Operating Segments | Master Planned Communities | ||||
Segments reporting | ||||
Land sales | 44,128 | 45,423 | 147,168 | 138,937 |
Builder price participation | 4,483 | 6,680 | 15,631 | 20,285 |
Minimum rents | 95 | 171 | 376 | 601 |
Other land revenues | 2,585 | 4,612 | 8,357 | 11,038 |
Other rental and property revenues | 13 | 23 | 33 | 30 |
Total revenues | 51,304 | 56,909 | 171,565 | 170,891 |
Cost of sales - land | 21,432 | 19,674 | 66,128 | 67,806 |
Land sales operations | 6,797 | 7,293 | 19,603 | 24,593 |
Land sales real estate and business taxes | 2,419 | 3,056 | 7,013 | 7,702 |
Depreciation and amortization | 72 | 89 | 236 | 279 |
Interest income | (5) | (14) | (26) | (45) |
Interest expense | (5,248) | (4,210) | (15,591) | (13,656) |
Equity in earnings from Real Estate and Other Affiliates | (13,699) | (22,573) | ||
Total expenses | 11,768 | 25,888 | 54,790 | 86,679 |
REP EBT | 39,536 | 31,021 | 116,775 | 84,212 |
Operating Segments | Operating Assets | ||||
Segments reporting | ||||
Minimum rents | 44,736 | 37,565 | 127,663 | 108,574 |
Other rental and property revenues | 3,471 | 7,400 | 10,974 | 20,645 |
Total revenues | 73,947 | 67,422 | 217,852 | 195,426 |
Tenant recoveries | 11,652 | 10,685 | 33,089 | 30,951 |
Hospitality revenues | 14,088 | 11,772 | 46,126 | 35,256 |
Other property operating costs | 15,611 | 15,659 | 43,559 | 51,495 |
Rental property real estate taxes | 6,406 | 6,447 | 19,257 | 17,956 |
Rental property maintenance costs | 3,247 | 2,968 | 8,893 | 8,380 |
Hospitality costs | 12,662 | 8,767 | 37,379 | 26,738 |
Provision for (recovery of) doubtful accounts | 1,940 | 975 | 4,566 | 3,050 |
Demolition costs | 16 | 798 | 494 | 2,411 |
Provision for impairment | 35,734 | 35,734 | ||
Development-related marketing costs | 1,950 | 2,367 | 5,038 | 7,381 |
Depreciation and amortization | 20,732 | 22,936 | 64,546 | 64,585 |
Other (income) expense, net | (13) | (3,126) | ||
Interest income | (3) | (10) | (19) | (29) |
Interest expense | 9,772 | 8,002 | 29,041 | 22,124 |
Equity in earnings from Real Estate and Other Affiliates | 209 | (289) | (2,617) | (1,333) |
Total expenses | 108,263 | 68,620 | 242,745 | 202,758 |
REP EBT | (34,316) | (1,198) | (24,893) | (7,332) |
Operating Segments | Strategic Developments | ||||
Segments reporting | ||||
Minimum rents | 79 | 78 | 216 | 822 |
Other land revenues | 10 | 5 | 30 | 17 |
Other rental and property revenues | 54 | 29 | 328 | 68 |
Total revenues | 115,555 | 79,111 | 363,206 | 201,378 |
Tenant recoveries | 5 | 7 | 19 | 109 |
Condominium rights and unit sales | 115,407 | 78,992 | 362,613 | 200,362 |
Condominium rights and unit cost of sales | 83,218 | 47,573 | 237,759 | 126,747 |
Other property operating costs | 924 | 1,021 | 3,954 | 2,964 |
Rental property real estate taxes | 627 | 461 | 1,853 | 1,720 |
Rental property maintenance costs | 85 | 126 | 324 | 358 |
Provision for (recovery of) doubtful accounts | 32 | 63 | 32 | |
Demolition costs | 240 | 226 | 724 | 226 |
Development-related marketing costs | 2,766 | 5,272 | 10,548 | 12,095 |
Depreciation and amortization | 659 | 528 | 1,978 | 2,145 |
Other (income) expense, net | (298) | 435 | (542) | 101 |
Interest income | (140) | (21) | (271) | (188) |
Interest expense | (1,731) | (1,903) | (4,764) | (5,289) |
Equity in earnings from Real Estate and Other Affiliates | (3) | (6) | (10,510) | (1,831) |
Gain on sale of 80 South Street Assemblage | (70) | (140,549) | ||
Total expenses | 86,277 | 53,744 | 100,567 | 139,080 |
REP EBT | $ 29,278 | $ 25,367 | $ 262,639 | $ 62,298 |
SEGMENTS (Reconciliation of REP
SEGMENTS (Reconciliation of REP EBT to Income (Loss) Before Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Reconciliation of REP EBT to GAAP net income (loss) | ||||
REP EBT | $ 34,498 | $ 55,190 | $ 354,521 | $ 139,178 |
General and administrative | (21,128) | (18,526) | (61,505) | (57,095) |
Corporate interest expense, net | 16,102 | 15,212 | 48,628 | 43,143 |
Warrant liability (loss) gain | (7,300) | 123,640 | (21,630) | 57,450 |
Corporate other income, net | 432 | (659) | 9,858 | 1,204 |
Gain on sale of The Club at Carlton Woods | 29,073 | 29,073 | ||
Gain on acquisition of joint venture partner’s interest | 27,087 | 27,087 | ||
Corporate depreciation and amortization | (23,322) | (24,998) | (71,246) | (71,577) |
Income before taxes | 18,158 | 174,449 | 260,819 | 125,633 |
Corporate | ||||
Reconciliation of REP EBT to GAAP net income (loss) | ||||
Corporate interest expense, net | (13,263) | (13,262) | (39,358) | (39,709) |
Corporate other income, net | 123 | (222) | 6,190 | 1,304 |
Corporate depreciation and amortization | (1,859) | (1,444) | (4,486) | (4,568) |
Operating Segments | ||||
Reconciliation of REP EBT to GAAP net income (loss) | ||||
REP EBT | $ 34,498 | $ 55,190 | $ 354,521 | $ 139,178 |
SEGMENTS (Reconciliation of Seg
SEGMENTS (Reconciliation of Segment Revenue to Consolidated Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Reconciliation of Segment Basis Revenues to GAAP Revenues | ||||
Total revenues | $ 240,806 | $ 203,442 | $ 752,623 | $ 567,695 |
Master Planned Communities | Operating Segments | ||||
Reconciliation of Segment Basis Revenues to GAAP Revenues | ||||
Total revenues | 51,304 | 56,909 | 171,565 | 170,891 |
Operating Assets | Operating Segments | ||||
Reconciliation of Segment Basis Revenues to GAAP Revenues | ||||
Total revenues | 73,947 | 67,422 | 217,852 | 195,426 |
Strategic Developments | Operating Segments | ||||
Reconciliation of Segment Basis Revenues to GAAP Revenues | ||||
Total revenues | $ 115,555 | $ 79,111 | $ 363,206 | $ 201,378 |
SEGMENTS (Summary of Assets by
SEGMENTS (Summary of Assets by Segment and Reconciliation of Segment Assets to Total Assets) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Reconciliation of total segment assets to total assets | ||
Assets | $ 6,470,383 | $ 5,721,582 |
Operating Assets | ||
Additional information | ||
Increase (decrease) in assets | 215,000 | |
Strategic Developments | ||
Additional information | ||
Increase (decrease) in assets | 176,100 | |
Operating Segments | ||
Reconciliation of total segment assets to total assets | ||
Assets | 5,922,196 | 5,526,943 |
Operating Segments | Master Planned Communities | ||
Reconciliation of total segment assets to total assets | ||
Assets | 2,026,761 | 2,022,524 |
Operating Segments | Operating Assets | ||
Reconciliation of total segment assets to total assets | ||
Assets | 2,580,682 | 2,365,724 |
Operating Segments | Strategic Developments | ||
Reconciliation of total segment assets to total assets | ||
Assets | 1,314,753 | 1,138,695 |
Corporate | ||
Reconciliation of total segment assets to total assets | ||
Assets | 548,187 | $ 194,639 |
Additional information | ||
Increase (decrease) in assets | $ 353,500 |