Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 27, 2017 | |
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, 2017 | |
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 | 43,253,764 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Investment in real estate: | ||
Master Planned Community assets | $ 1,667,496 | $ 1,669,561 |
Buildings and equipment | 2,155,071 | 2,027,363 |
Land | 314,383 | 320,936 |
Less: accumulated depreciation | (303,887) | (245,814) |
Developments | 1,124,079 | 961,980 |
Net property and equipment | 4,957,142 | 4,734,026 |
Investment in Real Estate and Other Affiliates | 89,155 | 76,376 |
Net investment in real estate | 5,046,297 | 4,810,402 |
Cash and cash equivalents | 601,934 | 665,510 |
Accounts receivable, net | 9,654 | 10,038 |
Municipal Utility District receivables, net | 193,100 | 150,385 |
Deferred expenses, net | 76,692 | 64,531 |
Prepaid expenses and other assets, net | 796,019 | 666,516 |
Total assets | 6,723,696 | 6,367,382 |
Liabilities: | ||
Mortgages, notes and loans payable | 2,993,448 | 2,690,747 |
Deferred tax liabilities | 237,013 | 200,945 |
Warrant liabilities | 332,170 | |
Accounts payable and accrued expenses | 462,853 | 572,010 |
Total liabilities | 3,693,314 | 3,795,872 |
Commitments and Contingencies (see Note 15) | ||
Equity: | ||
Common stock: $.01 par value; 150,000,000 shares authorized, 43,222,932 shares issued and 43,185,718206,550 outstanding as of September 30, 2017 and 39,802,064 shares issued and 39,790,003 outstanding as of December 31, 2016 | 433 | 398 |
Additional paid-in capital | 3,295,586 | 2,853,269 |
Accumulated deficit | (258,629) | (277,912) |
Accumulated other comprehensive loss | (9,017) | (6,786) |
Treasury stock, at cost, 16,382 shares as of September 30, 2017 and 12,061 shares as of December 31, 2016, respectively | (1,763) | (1,231) |
Total stockholders' equity | 3,026,610 | 2,567,738 |
Noncontrolling interests | 3,772 | 3,772 |
Total equity | 3,030,382 | 2,571,510 |
Total liabilities and equity | $ 6,723,696 | $ 6,367,382 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
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 | 43,222,932 | 39,802,064 |
Common stock, shares outstanding | 43,206,550 | 39,790,003 |
Treasury stock, shares held | 16,382 | 12,061 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Condominium rights and unit sales | $ 113,852 | $ 115,407 | $ 342,208 | $ 362,613 |
Master Planned Community land sales | 54,906 | 44,128 | 177,531 | 147,168 |
Minimum rents | 44,654 | 44,910 | 136,053 | 128,255 |
Tenant recoveries | 11,586 | 11,657 | 34,627 | 33,108 |
Hospitality revenues | 17,776 | 14,088 | 57,190 | 46,126 |
Builder price participation | 5,472 | 4,483 | 14,613 | 15,631 |
Other land revenues | 4,561 | 4,053 | 19,606 | 12,225 |
Other rental and property revenues | 5,929 | 3,538 | 17,309 | 11,335 |
Total revenues | 258,736 | 242,264 | 799,137 | 756,461 |
Expenses: | ||||
Condominium rights and unit cost of sales | 86,531 | 83,218 | 253,209 | 237,759 |
Master Planned Community cost of sales | 29,043 | 21,432 | 88,288 | 66,128 |
Master Planned Community operations | 8,180 | 10,674 | 24,881 | 30,454 |
Other property operating costs | 21,354 | 16,535 | 60,153 | 47,513 |
Rental property real estate taxes | 7,678 | 7,033 | 21,765 | 21,110 |
Rental property maintenance costs | 3,380 | 3,332 | 10,016 | 9,217 |
Hospitality operating costs | 13,525 | 12,662 | 41,534 | 37,379 |
Provision for doubtful accounts | 448 | 1,940 | 1,728 | 4,629 |
Demolition costs | 175 | 256 | 303 | 1,218 |
Development-related marketing costs | 5,866 | 4,716 | 14,787 | 15,586 |
General and administrative | 22,362 | 21,128 | 63,423 | 61,505 |
Depreciation and amortization | 35,899 | 23,322 | 96,193 | 71,246 |
Total expenses | 234,441 | 206,248 | 676,280 | 603,744 |
Operating income before other items | 24,295 | 36,016 | 122,857 | 152,717 |
Other: | ||||
Provision for impairment | (35,734) | (35,734) | ||
Gains on sales of properties | 237 | 70 | 32,452 | 140,549 |
Other (loss) income, net | (160) | 432 | 750 | 9,858 |
Total other | 77 | (35,232) | 33,202 | 114,673 |
Operating income | 24,372 | 784 | 156,059 | 267,390 |
Interest income | 1,764 | 196 | 3,171 | 900 |
Interest expense | (17,241) | (16,102) | (49,547) | (48,628) |
Loss on redemption of senior notes due 2021 | (46,410) | |||
Warrant liability loss | (7,300) | (43,443) | (21,630) | |
Gain on acquisition of joint venture partner's interest | 27,087 | 5,490 | 27,087 | |
Equity in earnings from Real Estate and Other Affiliates | 7,467 | 13,493 | 25,821 | 35,700 |
Income before taxes | 16,362 | 18,158 | 51,141 | 260,819 |
Provision for income taxes | 5,846 | 10,162 | 31,846 | 102,088 |
Net income | 10,516 | 7,996 | 19,295 | 158,731 |
Net income attributable to noncontrolling interests | (12) | (23) | (12) | (23) |
Net income attributable to common stockholders | $ 10,504 | $ 7,973 | $ 19,283 | $ 158,708 |
Basic income per share: (in dollars per share) | $ 0.25 | $ 0.20 | $ 0.47 | $ 4.02 |
Diluted income per share: (in dollars per share) | $ 0.24 | $ 0.19 | $ 0.45 | $ 3.72 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Comprehensive income, net of tax: | |||||
Net income | $ 10,516 | $ 7,996 | $ 19,295 | $ 158,731 | |
Other comprehensive income (loss): | |||||
Interest rate swaps (a) | [1] | 180 | 497 | (2,070) | (14,876) |
Capitalized swap interest expense (b) | [2] | (40) | 154 | (161) | (163) |
Pension adjustment (c) | [3] | (317) | (890) | ||
Other comprehensive income (loss) | 140 | 334 | (2,231) | (15,929) | |
Comprehensive income | 10,656 | 8,330 | 17,064 | 142,802 | |
Comprehensive income attributable to noncontrolling interests | (12) | (23) | (12) | (23) | |
Comprehensive income attributable to common stockholders | $ 10,644 | $ 8,307 | $ 17,052 | $ 142,779 | |
[1] | Net of deferred tax expense of $0.1 million and $0.2 million for the three months ended September 30, 2017 and 2016, respectively. Amount is net of deferred benefit of $1.3 million and $8.1 million for the nine months ended September 30, 2017 and 2016, respectively. | ||||
[2] | The deferred tax impact was immaterial for the three months ended September 30, 2017 and 2016, respectively. Amount is net of deferred tax benefit of $0.1 million for the nine months ended September 30, 2017 and 2016, respectively. | ||||
[3] | Net of deferred tax benefit of $0.1 million and $0.5 million for the three and nine months ended September 30, 2016, respectively. |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Interest rate swaps, deferred tax expense | $ 100 | $ 200 | $ (1,300) | $ (8,100) |
Capitalized swap interest, deferred tax benefit | $ (100) | (100) | ||
Pension adjustment, tax | $ (100) | $ (543) |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Treasury Stock [Member] | Noncontrolling Interest [Member] | Total | |
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 subsidiary | (23) | (23) | ||||||
Interest rate swaps, net of tax | (14,876) | (14,876) | [1] | |||||
Pension adjustment, net of tax | (890) | (890) | ||||||
Capitalized swap interest, net of tax benefit | (163) | (163) | [2] | |||||
Stock plan activity | 8,512 | 8,512 | ||||||
Stock plan activity, shares | 136,198 | |||||||
Treasury stock activity | $ (1,295) | (1,295) | ||||||
Treasury stock activity, 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) | ||||||
Balance at the beginning of the period at Dec. 31, 2016 | $ 398 | 2,853,269 | (277,912) | (6,786) | $ (1,231) | 3,772 | 2,571,510 | |
Balance at the beginning of the period, shares at Dec. 31, 2016 | 39,802,064 | (12,061) | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 19,283 | 12 | 19,295 | |||||
Preferred dividend payment on behalf of subsidiary | (12) | (12) | ||||||
Interest rate swaps, net of tax | (2,070) | (2,070) | [1] | |||||
Capitalized swap interest, net of tax benefit | (161) | (161) | [2] | |||||
Issuance of management warrants | 50,000 | 50,000 | ||||||
Stock plan activity | $ 4 | 16,735 | $ (532) | 16,207 | ||||
Stock plan activity, shares | 368,415 | (4,321) | ||||||
Exercise of warrants | $ 31 | 375,582 | 375,613 | |||||
Exercise of warrants (in shares) | 3,052,453 | |||||||
Balance at the end of the period at Sep. 30, 2017 | $ 433 | $ 3,295,586 | $ (258,629) | $ (9,017) | $ (1,763) | $ 3,772 | $ 3,030,382 | |
Balance at the end of the period, shares at Sep. 30, 2017 | 43,222,932 | (16,382) | ||||||
[1] | Net of deferred tax expense of $0.1 million and $0.2 million for the three months ended September 30, 2017 and 2016, respectively. Amount is net of deferred benefit of $1.3 million and $8.1 million for the nine months ended September 30, 2017 and 2016, respectively. | |||||||
[2] | The deferred tax impact was immaterial for the three months ended September 30, 2017 and 2016, respectively. Amount is net of deferred tax benefit of $0.1 million for the nine months ended September 30, 2017 and 2016, respectively. |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Interest rate swaps, tax | $ (1,409) | $ (8,120) |
Pension adjustment, tax | 543 | |
Capitalized swap interest, tax (benefit) | $ (86) | $ (88) |
CONDENSED CONSOLIDATED STATEME9
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash Flows from Operating Activities: | ||
Net income | $ 19,295 | $ 158,731 |
Adjustments to reconcile net income to cash used in operating activities: | ||
Depreciation | 84,083 | 60,834 |
Amortization | 12,110 | 10,412 |
Amortization of deferred financing costs | 4,306 | 5,385 |
Amortization of intangibles other than in-place leases | (1,071) | (1,333) |
Straight-line rent amortization | (6,625) | (6,668) |
Deferred income taxes | 33,484 | 102,088 |
Restricted stock and stock option amortization | 4,954 | 6,324 |
Gains on sales of properties | (32,452) | (140,549) |
Gain on acquisition of joint venture partner's interest | (5,490) | (27,087) |
Warrant liability loss (gain) | 43,443 | 21,630 |
Loss on redemption of senior notes due 2021 | 46,410 | |
Equity in earnings from Real Estate and Other Affiliates, net of distributions | (20,200) | (21,952) |
Provision for doubtful accounts | 1,728 | 4,629 |
Master Planned Community land acquisitions | (1,415) | (69) |
Master Planned Community development expenditures | (136,745) | (106,501) |
Master Planned Community cost of sales | 78,424 | 60,600 |
Condominium development expenditures | (293,183) | (245,547) |
Condominium rights and unit cost of sales | 253,209 | 237,759 |
Provision for impairment | 35,734 | |
Percentage of completion revenue recognition from sale of condominium rights and unit sales | (342,208) | (362,613) |
Net changes: | ||
Accounts receivable | 1,602 | (33) |
Prepaid expenses and other assets | (11,143) | (753) |
Condominium deposits received | 250,352 | 440,076 |
Deferred expenses | (11,215) | (3,349) |
Accounts payable and accrued expenses | (36,607) | (19,019) |
Condominium deposits held in escrow | (250,352) | (440,076) |
Condominium deposits released from escrow | 187,540 | 17,574 |
Other, net | 245 | (4,510) |
Cash used in operating activities | (127,521) | (218,283) |
Cash Flows from Investing Activities: | ||
Property and equipment expenditures | (5,936) | (8,649) |
Operating property improvements | (12,591) | (12,184) |
Property developments and redevelopments | (258,850) | (301,843) |
Acquisition of partner's interest in Las Vegas 51s | (15,404) | |
Proceeds for reimbursement of development costs | 11,165 | 4,945 |
Proceeds from sales of properties | 36,560 | 378,257 |
Proceeds from insurance claims | 3,107 | |
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 | (3,579) | (10,947) |
Change in restricted cash | (3,854) | (215) |
Cash (used in) provided by investing activities | (252,489) | 65,916 |
Cash Flows from Financing Activities: | ||
Proceeds from mortgages, notes and loans payable | 1,433,437 | 422,661 |
Principal payments on mortgages, notes and loans payable | (1,130,337) | (62,996) |
Premium paid to redeem 2021 senior notes | (39,966) | |
Preferred dividend payment on behalf of REIT subsidiary | (12) | (23) |
Special Improvement District bond funds released from (held in) escrow | 6,099 | 6,258 |
Deferred financing costs | (13,305) | (4,678) |
Taxes paid on stock options exercised and restricted stock vested | (9,201) | (1,295) |
Stock options exercised | 19,719 | 180 |
Issuance of management warrants | 50,000 | |
Cash provided by financing activities | 316,434 | 360,107 |
Net change in cash and cash equivalents | (63,576) | 207,740 |
Cash and cash equivalents at beginning of period | 665,510 | 445,301 |
Cash and cash equivalents at end of period | 601,934 | 653,041 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 110,034 | 77,666 |
Interest capitalized | 55,895 | 46,198 |
Income taxes paid | (12,419) | 6,234 |
Non-Cash Transactions: | ||
Exercise of Sponsor and Management Warrants | 375,613 | |
Special Improvement District bond transfers associated with land sales | 9,864 | 5,528 |
Accrued interest on construction loan borrowing | 4,978 | 3,748 |
Capitalized stock compensation | 584 | 2,008 |
Millennium Six Pines Apartments | ||
Acquisitions | ||
Land | (11,225) | |
Building | (54,492) | |
Other assets | (1,261) | |
Mortgages, notes and loans payable | 37,700 | |
Other liabilities | $ (913) | |
Summerlin Las Vegas Baseball Club LLC [Member] | ||
Acquisitions | ||
Building | 87 | |
Developments | 65 | |
Accounts receivable | 633 | |
Other assets | 33,313 | |
Other liabilities | $ (2,294) |
BASIS OF PRESENTATION AND ORGAN
BASIS OF PRESENTATION AND ORGANIZATION | 9 Months Ended |
Sep. 30, 2017 | |
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 for the fiscal year ended December 31, 2016 (the “Annual Report”), filed on February 23, 2017 with the SEC. Certain amounts in 2016 have been reclassified to conform to the 2017 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, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017 and future years. 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, 2017 | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE 2 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The following is a summary of recently issued and other notable accounting pronouncements which relate to our business. In August 2017, the Financial Accounting Standards Board’s (“FASB”) issued Accounting Standards Update (“ASU”) 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities to enable entities to better portray the economic results of their risk management activities in its financial statements. The ASU expands an entity’s ability to hedge nonfinancial and financial risk components and reduce complexity in fair value hedges of interest rate risk and eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. The ASU also eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The effective date of the standard is for fiscal periods, and interim periods within those years, beginning after December 15, 2018. The new standard must be adopted using a modified retrospective approach with early adoption permitted. We are currently evaluating the potential impact of this ASU on our consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting to provide clarity and reduce the diversity in practice and cost and complexity when applying the guidance in Topic 718, Compensation–Stock Compensation. Stakeholders observed that the definition of the term “modification” is broad and that its interpretation results in diversity in practice. The ASU states that when an entity concludes that a change is not substantive, then modification accounting does not apply. The effective date of the standard is for fiscal periods, and interim periods within those years, beginning after December 15, 2017. The new standard must be adopted prospectively to an award modified on or after the adoption date. Early adoption is permitted. Once adopted, HHC will apply this guidance to any modifications made to either the stock option or restricted stock award plans. In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) . The standard defines an “in-substance non-financial asset” as a financial asset promised to a counterparty in a contract if substantially all the fair value of the assets is concentrated in nonfinancial assets. The ASU also provides guidance for accounting for partial sales of non-financial assets such as real estate. The effective date of the standard is for fiscal periods, and interim periods within those years, beginning after December 15, 2017. The new standard must be adopted retrospectively with early adoption permitted. We are currently evaluating the potential impact of this ASU on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04 , Intangibles – Goodwill and Other (Topic 350) . This standard is intended to simplify the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. Instead, an entity will perform only step one of its quantitative goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and then recognizing the impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. An entity will still have the option to perform a qualitative assessment for a reporting unit to determine if the quantitative step one impairment test is necessary. The effective date of the standard is for fiscal periods, and interim periods within those years, beginning after December 15, 2019. The new standard must be adopted prospectively with early adoption permitted. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements. In January 2017, the FASB formally issued, and we early adopted ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, as permitted, on a prospective basis. The standard provides criteria to determine when an integrated set of assets and activities is not a business. The criteria requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. However, to be considered a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Under the new guidance, the acquisition of a property with an in-place lease generally will no longer be accounted for as an acquisition of a business, but instead as an asset acquisition, meaning the transaction costs of such an acquisition will now be capitalized instead of expensed. Our adoption did not have a material impact on our accounting for acquisitions. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows – Restricted Cash , which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The effective date of the standard is for fiscal periods, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period, but any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. The new standard must be adopted retrospectively. ASU 2016-18 will impact our presentation of operating, investing and financing activities related to restricted cash on our consolidated statements of cash flows. In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control . The standard requires reporting entities to evaluate whether they should consolidate a variable interest entity (“VIE”) in certain situations involving entities under common control. Specifically, the standard changes the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a reporting entity that is a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The new standard was effective January 1, 2017, and must be adopted retrospectively. We currently have no VIEs involving entities under common control, and accordingly, adoption of this ASU had no impact on our consolidated financial statements. 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, including debt extinguishment costs, distributions from equity method investees and contingent consideration payments made after a business combination. 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. The new standard must be adopted retrospectively. ASU 2016-15 will impact our presentation of operating, investing and financing activities related to certain cash receipts and payments on our consolidated statements of cash flows. In June 2016, the FASB issued ASU 2016-13, 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 adoption of ASU 2016-13 on our consolidated financial statements but do not anticipate significant impact. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) 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. We adopted the ASU as of January 1, 2017, and it did not have a material impact on our accounting for excess tax benefits and tax deficiencies as our stock compensation plans, which permit net-share settlement, had minimal vesting and exercise activity prior to January 1, 2017. The new guidance requires entities to recognize all income tax effects of awards in the income statement when the awards vest or are settled, in contrast to prior guidance wherein such effects are recorded in additional paid-in capital (“APIC”). The amounts recorded in APIC prior to our adoption remain in APIC per the new standard. The new standard also allows an employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. Our plans allow us, at the employee’s request, to withhold shares with a fair value up to the amount of tax owed using the maximum statutory tax rate for the employee’s applicable jurisdiction. We elected to continue to estimate forfeitures as allowed by an election under the new guidance. Our condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016 present excess tax benefits as an operating activity and employee taxes paid as a financing activity as required by ASU 2016-09. In February 2016, the FASB issued ASU 2016-02, Leases . ASU 2016-02 is codified in Accounting Standards Codification (“ASC”) 842. The standard amends the existing accounting standards for lease accounting, including requiring lessees to recognize most 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 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. We anticipate a material increase to our assets and liabilities as we will be required to capitalize our ground leases, office leases and certain office equipment where we are the lessee. We will also be considering certain services that are considered non-lease components such as common area maintenance under the new guidance. Upon adoption of ASC 842, these services will be accounted for under ASU 2014-09, Revenues from Contracts with Customers (Topic 606) , which is further discussed below. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities which will require entities to recognize changes in equity investments with readily determinable fair values in net income. For equity investments without readily determinable fair values, the ASU permits the application of a measurement alternative using the cost of the investment, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer. The effective date of the standard is for fiscal periods, and interim periods within those years, beginning after December 15, 2017, and must be adopted via a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We are currently evaluating the potential impact of this ASU on our consolidated financial statements. In May 2014, the FASB and International Accounting Standards Board issued ASU 2014-09. 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. The ASU requires companies to identify performance obligations in the contract, estimate the amount of variable consideration to include in the transaction price and allocate 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. We have concluded 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. Adoption of the ASU will also impact the timing of recognition and classification of certain real estate selling costs, such as the costs related to our condominium model units. Currently, these selling costs are capitalized as real estate project costs and recognized as costs of sales on a percentage of completion basis in our consolidated financial statements. Under the new guidance, some of these costs may need to be expensed immediately or will be capitalized as property and equipment and depreciated over their estimated useful life. Entities have the option of using either a full retrospective or a modified retrospective approach. We have elected to apply a modified retrospective approach of adoption. We are continuing to evaluate the new guidance to determine all impacts to our consolidated financial statements. |
SPONSOR AND MANAGEMENT WARRANTS
SPONSOR AND MANAGEMENT WARRANTS | 9 Months Ended |
Sep. 30, 2017 | |
SPONSOR AND MANAGEMENT WARRANTS | |
SPONSOR AND MANAGEMENT WARRANTS | NOTE 3 WARRANTS On November 9, 2010, we entered into warrant agreements at an exercise price of $50.00 per share to purchase 1,916,667 shares of our common stock (the “Sponsor Warrants”) to certain funds of Pershing Square Capital Management, L.P. (“Pershing Square”). In November 2010 and February 2011, we entered into certain warrant 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 2,367,985, 315,731 and 178,971 shares, respectively, of our common stock. The Management Warrants were granted 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 became exercisable in November 2016 and had an exercise price of $42.23 per share, and Mr. Richardson’s warrants became exercisable in February 2017 and had an exercise price of $54.50 per share. Pershing Square exercised its Sponsor Warrants on June 30, 2017, resulting in a net issuance of 1,136,517 shares in accordance with the warrant provisions. Mr. Herlitz exercised his Management Warrants in early January 2017, resulting in the net issuance of 198,184 shares in accordance with the warrant provisions. Mr. Herlitz also donated 6,850 shares to a charitable trust, which were net share settled for 4,400 shares in accordance with the warrant provisions. In February, March and June 2017, Mr. Richardson exercised his Management Warrants, resulting in the net issuance of 98,549 shares in accordance with the warrant provisions. In June 2017, Mr. Weinreb exercised his Management Warrants, resulting in the net issuance of 1,614,803 shares in accordance with the warrant provisions. As of September 30, 2017, all Sponsor Warrants and Management Warrants have been exercised. The fair values for the Sponsor Warrants and Management Warrants as of December 31, 2016 were 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 $123.5 million and $208.7 million, respectively, as of December 31, 2016. 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 in our Condensed Consolidated Financial Statements. Decreases and increases in the fair value of the Sponsor and Management Warrants were recognized as warrant liability gains or losses in the Condensed Consolidated Statements of Operations. On October 7, 2016, we entered into a warrant agreement with our new Chief Financial Officer, David R. O’Reilly (the “O’Reilly Warrant”), prior to his appointment to the position. Upon exercise of the O’Reilly Warrant, Mr. O’Reilly may acquire 50,125 shares of common stock at an exercise price of $112.08 per share. The O’Reilly Warrant was issued at fair value in exchange for a $1.0 million payment in cash from Mr. O’Reilly. The O’Reilly Warrant becomes exercisable on April 6, 2022, subject to earlier exercise upon certain change in control, separation and termination provisions. On June 16, 2017, we also entered into a new warrant agreement (the “Weinreb Warrant”) with Mr. Weinreb to acquire 1,965,409 shares of common stock for the purchase price of $50.0 million. On August 29, 2017, Mr. Weinreb paid the $50.0 million purchase price in cash in accordance with the terms of the warrant agreement. The Weinreb Warrant becomes exercisable on June 15, 2022, at an exercise price of $124.64 per share, subject to earlier exercise upon certain change in control, separation and termination provisions. The O’Reilly Warrant and the Weinreb Warrant, which qualify as equity instruments, are included within additional paid-in capital in the Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016. On October 4, 2017, we entered into a new warrant agreement with Mr. Herlitz to acquire 87,951 shares of common stock for the purchase price of $2.0 million (the “Herlitz Warrant”). The Herlitz Warrant becomes exercisable on October 3, 2022, at an exercise price of $117.01 per share, subject to earlier exercise upon certain change in control, separation and termination provisions. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2017 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 4 EARNINGS PER SHARE Basic earnings per share (“EPS”) is computed by dividing net income 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 warrants is computed using the if‑converted method prior to their exercise. 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) 2017 2016 2017 2016 Basic EPS: Numerator: Net income $ 10,516 $ 7,996 $ 19,295 $ 158,731 Net income attributable to noncontrolling interests (12) (23) (12) (23) Net income attributable to common stockholders $ 10,504 $ 7,973 $ 19,283 $ 158,708 Denominator: Weighted average basic common shares outstanding $ 42,845 $ 39,502 $ 40,860 $ 39,489 Diluted EPS: Numerator: Net income attributable to common stockholders $ 10,504 $ 7,973 $ 19,283 $ 158,708 Denominator: Weighted average basic common shares outstanding 42,845 39,502 40,860 39,489 Restricted stock and stock options 420 366 455 338 Warrants 2 2,892 1,783 2,892 Weighted average diluted common shares outstanding 43,267 42,760 43,098 42,719 Basic income per share: $ 0.25 $ 0.20 $ 0.47 $ 4.02 Diluted income per share: $ 0.24 $ 0.19 $ 0.45 $ 3.72 The diluted EPS computation for the three and nine months ended September 30, 2017 excludes 311,500 and 317,000 stock options, respectively, because their inclusion would have been anti-dilutive. The diluted EPS computation for the three and nine months ended September 30, 2017 excludes 185,573 shares of restricted stock, because market conditions have not been met. 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. |
RECENT TRANSACTIONS
RECENT TRANSACTIONS | 9 Months Ended |
Sep. 30, 2017 | |
RECENT TRANSACTIONS | |
RECENT TRANSACTIONS | NOTE 5 RECENT TRANSACTIONS On May 4, 2017, we announced that Bank of America will serve as the lead anchor tenant to the 51-story, Class A downtown office building at 110 North Wacker Drive in Chicago, Illinois. The lease accounts for more than a third of the Goettsch-designed 1.35 million square-foot high-rise. Construction is scheduled to start in the spring of 2018, with a late 2020 opening expected. In conjunction with this transaction, on April 28, 2017, we exercised our termination option in the current lease with the tenant who occupies the existing 110 North Wacker building. The tenant will continue to occupy the building until January 2018 but will no longer pay the $6.1 million annual rent or any operating expenses which were previously paid 100% by the tenant. On March 16, 2017, we offered, sold and issued $800.0 million in aggregate principal amount of 5.375% senior notes due March 15, 2025 (the “2025 Notes”) to Qualified Institutional Buyers (as defined in the Securities Act of 1933) in accordance with Rule 144A and non-U.S. persons in accordance with Regulation S and completed a tender offer and consent solicitation for any and all of our $750.0 million existing 6.875% senior notes due October 1, 2021. We used the net proceeds from the sale of our 2025 Notes to redeem all of the 6.875% senior notes and to pay related transaction fees and expenses. On June 12, 2017, we issued an additional $200.0 million of the 2025 Notes at a premium to par of 2.25%. We used a portion of the proceeds to repay construction financings and fund ongoing development projects and general corporate needs. Interest on the 2025 Notes is paid semi-annually, on March 15th and September 15th of each year, beginning on September 15, 2017. At any time prior to March 15, 2020, we may redeem all or a portion of the 2025 Notes at a redemption price equal to 100% of the principal plus a “make-whole” declining call premium. At any time prior to March 15, 2020, we may also redeem up to 35% of the 2025 Notes at a price of 105.375% with net cash proceeds of certain equity offerings, plus accrued and unpaid interest. The 2025 Notes contain customary terms and covenants and have no financial maintenance covenants. On March 1, 2017 (the “Acquisition Date”), we acquired our joint venture partner’s 50.0% interest in the Las Vegas 51s minor league baseball team for $16.4 million and became the sole owner of this Triple-A baseball team. We recognized a gain of $5.4 million in Gain on acquisition of joint venture partner's interest in conjunction with this acquisition relating to the step-up to fair value of the assets acquired. The estimated fair values of the assets acquired and liabilities assumed disclosed as of March 31, 2017 were provisional as they were pending final determinations of the fair value of the intangible assets existing as of the Acquisition Date. Using the income approach, the final adjustments made as of September 30, 2017 to the allocated fair values included a $0.4 million contingent liability recorded in Accounts payable and accrued expenses per the terms of the purchase agreement relating to a credit for the use of seats in a future stadium for the team, if and when constructed by us, and an adjustment to allocate $7.9 million to finite-lived intangibles, which have a weighted average amortization period of 11 years, and $24.9 million to indefinite-lived intangibles, primarily related to the franchise relationship agreement, all of which is recorded in Prepaid expenses and other assets, net. Accordingly, the adjusted values of assets acquired and liabilities assumed and consolidated into our financial statements total $36.0 million and $3.2 million, respectively, and are included in our Operating Assets segment. Prior to the acquisition, we accounted for our investment in the Las Vegas 51s under the equity method within Investment in Real Estate and Other Affiliates and recognized a loss of $0.2 million in equity in earnings for the nine months ended September 30, 2017. Included in the Condensed Consolidated Statements of Operations from the Acquisition Date through September 30, 2017 are revenues of $6.8 million and pre-tax net income from operations of $0.5 million. |
IMPAIRMENT
IMPAIRMENT | 9 Months Ended |
Sep. 30, 2017 | |
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. Impairment or disposal of long‑lived assets in accordance with ASC 360 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. 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 during the three and nine months ended September 30, 2017. During the third quarter of 2016, we implemented a plan to sell Park West, a non-core, 249,177 square foot open-air shopping, dining and entertainment destination in Peoria, Arizona and recognized a $35.7 million impairment charge during the third quarter of 2016 due to our shorter than previously anticipated holding period. The $34.9 million net carrying value of Park West, after the impairment, represented our best estimate of its current fair market value at September 30, 2016. On December 29, 2016, we sold Park West for $32.5 million, recognized a loss of $1.1 million, net of transaction costs, in conjunction with the sale and redeployed the net cash proceeds from this unleveraged asset into our existing developments. The following table summarizes our provision for impairment: Provision for impairment as of September 30, Impaired Asset Location Method of Determining Fair Value 2017 2016 (In thousands) Operating Assets: Park West Peoria, AZ Discounted cash flow analysis using capitalization rate of 6.75% $ — $ 35,734 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 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, 2017 December 31, 2016 Fair Value Measurements Using Fair Value Measurements Using (In thousands) Total Quoted Prices Significant Significant Total Quoted Prices Significant Significant Assets: Cash equivalents $ 50,041 $ 50,041 $ — $ — $ 18 $ 18 $ — $ — Interest rate swap derivative assets 3,244 — 3,244 — — — — — Liabilities: Interest rate swap derivative liabilities 7,742 — 7,742 — (149) — (149) — Warrants — — — — 332,170 — — 332,170 Cash equivalents consist of registered money market mutual funds which are invested in United States Treasury bills 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 following table presents a rollforward of the valuation of our Sponsor Warrants and Management Warrants: (In thousands) 2017 2016 Balance as of January 1 $ 332,170 $ Warrant liability loss (a) 43,443 21,630 Exercises of Sponsor and Management Warrants (375,613) — Balance as of September 30 $ — $ (a) Represents losses recognized during 2017 relating to each warrant prior to the respective exercise date. For 2016, represents unrealized losses recorded for outstanding warrants at the end of the period. Changes in the fair value of the Sponsor Warrants and Management Warrants prior to exercise were recognized in net income as a warrant liability gain or loss. The valuation of warrants is based on an option pricing valuation model, utilizing inputs which were classified as Level 3 due to the unavailability of comparable market data. The inputs to the valuation model included 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. Generally, an increase in expected volatility would increase 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. All Sponsor and Management Warrants were exercised as of September 30, 2017. The significant unobservable inputs used in the fair value measurement of our warrant liabilities as of December 31, 2016 were as follows: Unobservable Inputs Expected Marketability September 30, 2017 (c) N/A N/A December 31, 2016 31.0% 0.0% - 1.0% (a) Based on our implied equity volatility. (b) Represents the discount rate for lack of marketability of the Management Warrants which decreases as the current date approaches the dates of contractual expiration of the marketability restrictions. (c) See Note 3 – Warrants for additional information. The estimated fair values of our financial instruments that are not measured at fair value on a recurring basis are as follows: September 30, 2017 December 31, 2016 (In thousands) Fair Value Carrying Estimated Carrying Estimated Assets: Cash Level 1 $ 551,893 $ 551,893 $ 665,492 $ 665,492 Accounts receivable, net (a) Level 3 9,654 9,654 10,038 10,038 Liabilities: Fixed-rate debt (b) Level 2 $ 1,508,746 $ 1,529,282 $ 1,184,141 $ 1,224,573 Variable-rate debt (b) Level 2 1,505,534 1,505,534 1,524,319 1,524,319 (a) Accounts receivable, net, is shown net of an allowance of $8.6 million and $7.9 million at September 30, 2017 and December 31, 2016, respectively. (b) Excludes related unamortized financing costs. The fair value of our 2025 Notes, included in fixed-rate debt in the table above, is based upon the trade price closest to the end of the period presented. The fair value of other fixed-rate debt in the table above (please refer to Note 9 – Mortgages, Notes and Loans Payable in our Condensed Consolidated Financial Statements), was estimated based on a discounted future cash payment model, which includes risk premiums and a risk free rate derived from the current London Interbank Offered Rate (“LIBOR”) or U.S. Treasury obligation interest rates. The discount rates reflect our judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and credit quality would be if credit markets were operating efficiently and assuming that the debt is outstanding through maturity. The carrying amounts for our variable-rate debt approximate fair value given that the interest rates are variable and adjust with current market rates for instruments with similar risks and maturities. The carrying amounts of cash and cash equivalents and accounts receivable approximate fair value because of the short‑term maturity of these instruments. |
REAL ESTATE AND OTHER AFFILIATE
REAL ESTATE AND OTHER AFFILIATES | 9 Months Ended |
Sep. 30, 2017 | |
REAL ESTATE AND OTHER AFFILIATES | |
REAL ESTATE AND OTHER AFFILIATES | NOTE 8 REAL ESTATE AND OTHER AFFILIATES Our investments in Real Estate and Other Affiliates that are reported in accordance with the equity and cost methods are as follows: Share of Earnings/Dividends Economic/Legal Ownership Carrying Value Three Months Ended Nine Months Ended September 30, December 31, September 30, December 31, September 30, September 30, ($ in thousands) 2017 2016 2017 2016 2017 2016 2017 2016 Equity Method Investments Master Planned Communities: The Summit (a) — % — % $ 54,203 $ 32,653 $ 6,480 $ 13,700 $ 21,552 $ 22,574 Operating Assets: Las Vegas 51s, LLC (b) 100.00 50.00 — 11,062 — 2 (152) 297 Constellation (a) (c) 50.00 50.00 2,175 2,730 107 — (215) — The Metropolitan Downtown Columbia (d) 50.00 50.00 — (1,064) 82 (351) 356 (863) Millennium Six Pines Apartments (e) 100.00 100.00 — — — 9 — 44 Stewart Title of Montgomery County, TX 50.00 50.00 3,834 3,611 113 221 322 477 Woodlands Sarofim #1 20.00 20.00 2,688 2,683 15 26 45 121 Strategic Developments: Circle T Ranch and Power Center (a) 50.00 50.00 5,106 4,956 650 — 650 10,498 HHMK Development 50.00 50.00 10 10 — — — — KR Holdings 50.00 50.00 744 707 20 3 36 12 m.flats/TEN.M (a) 50.00 50.00 6,849 6,379 — — — — 33 Peck Slip (a) (f) 35.00 35.00 9,139 8,243 — (117) (156) (76) 84,748 71,970 7,467 13,493 22,438 33,084 Cost method investments 4,407 4,406 — — 3,383 2,616 Investment in Real Estate and Other Affiliates $ 89,155 $ 76,376 $ 7,467 $ 13,493 $ 25,821 $ 35,700 (a) Please refer to the discussion below for a description of the joint venture ownership structure. (b) On March 1, 2017, we acquired our joint venture partner’s interest and have fully consolidated the assets and liabilities of the entity. (c) Equity method VIE as of September 30, 2017. Constellation and Las Vegas 51s were also VIEs as of December 31, 2016. (d) The Metropolitan Downtown Columbia was in a deficit position of $2.0 million at September 30, 2017 and December 31, 2016 due to distributions from operating cash flows in excess of basis. This deficit balance is presented in Accounts payable and accrued expenses at September 30, 2017. (e) On July 20, 2016, we acquired our joint venture partner’s interest in Millennium Six Pines Apartments and fully consolidated the assets and liabilities of the entity. (f) The 33 Peck Slip hotel was closed in December 2016 for redevelopment and was transferred to the Strategic Developments segment as of January 1, 2017. The prior year share of earnings for the three and nine months ended September 30, 2016 was recorded in the Operating Assets segment but is reflected here for comparative purposes. As of September 30, 2017, we are not the primary beneficiary of the Constellation VIE listed above because we do not have the power to direct activities that most significantly impact the economic performance of the joint venture, and therefore, we report our interests in accordance with the equity method. Our maximum exposure to loss as a result of this investment 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 this VIE. The aggregate carrying value of unconsolidated VIEs (inclusive of Las Vegas 51s at December 31, 2016, prior to our acquisition) was $2.2 million and $13.8 million as of September 30, 2017 and December 31, 2016, respectively, and was classified as Investment in Real Estate and Other Affiliates in the Condensed Consolidated Balance Sheets. As of September 30, 2017, approximately $190.1 million of indebtedness was secured by the properties owned by our Real Estate and Other Affiliates of which our share was approximately $88.0 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, 2017, the carrying values of the assets and liabilities associated with the operations of the consolidated VIE were $21.9 million and $1.5 million, respectively. As of December 31, 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. The assets of the VIE are restricted for use only by the particular VIE and are not available for our general operations. Activity for our significant investments in Real Estate Affiliates and the related accounting considerations are described below. The Summit During the first quarter of 2015, we formed DLV/HHPI Summerlin, LLC (“The Summit”) in a joint venture with Discovery Land Company (“Discovery”), and 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 the agreed upon capital contribution value of $125.4 million (“Our Capital Contribution”), or $226,000 per acre. Discovery is required to fund up to a maximum of $30.0 million of cash as their capital contribution and we have no further capital obligations. The gains on the contributed land will be 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 on the project, and development began in the second quarter of 2015. Given the nature of the venture’s capital structure and the provisions for the liquidation of assets, our share of the venture’s income-producing activities will be recognized based on the Hypothetical Liquidation Book Value (“HLBV”) method. Under this method, we recognize equity in earnings from the joint venture based on the change in our underlying share of the venture’s net assets on a hypothetical liquidation basis as of the reporting date. Relevant financial statement information for The Summit is summarized as follows: September 30, December 31, (in thousands) 2017 2016 Total Assets $ $ Total Liabilities Total Equity Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2017 2016 2017 2016 Revenues (a) $ $ $ $ Net income Gross Margin (a) Revenues related to land sales at the joint venture are recognized on a percentage of completion basis. Constellation On January 24, 2014, we entered into a joint venture with a national multi-family real estate developer, The Calida Group, to construct, own and operate a 124-unit gated luxury apartment development in 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 of 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 of 2015 and provided guarantees required by the lender. The project is financed by a $15.8 million construction loan which is fully drawn as of September 30 , 2017. The loan is non-recourse to us. In the fourth quarter of 2015, we each 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 of 2016. This venture was moved to the Operating Assets segment in the fourth quarter of 2016. As of September 30 , 2017, the project is 87.9% occupied and 95.2% leased. m.flats/TEN.M 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 and $7.3 million was distributed to us, of which we subsequently reinvested $6.3 million in the project in 2016. We accounted for this transaction as a partial sale of the land for which we recognized a net profit of $0.2 million at December 31, 2016. 33 Peck Slip In January 2016, we entered into a joint venture to purchase a hotel located at 33 Peck Slip in the Seaport District of New York with a capital contribution of $6.0 million. 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 of 2016, upon completion of a refinancing of the property with a $36.0 million redevelopment loan, we made additional capital contributions of $2.3 million in 2016 and $0.7 million in 2017. The 33 Peck Slip hotel was closed in December 2016 for redevelopment and was transferred to the Strategic Developments segment. Our total investment in the joint venture is $9.1 million as of September 30 , 2017. Circle T Ranch and Power Center On June 1, 2016, the Westlake Retail Associates venture closed on a 72-acre land sale with an affiliate of Charles Schwab Corporation. The nine months ended September 30, 2016 reflects the recognition of $10.5 million in Equity in earnings from Real Estate and Other Affiliates resulting from the land sale. |
MORTGAGES, NOTES AND LOANS PAYA
MORTGAGES, NOTES AND LOANS PAYABLE | 9 Months Ended |
Sep. 30, 2017 | |
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) 2017 2016 Fixed-rate debt: Collateralized mortgages, notes and loans payable $ 1,476,480 $ 1,140,118 Special Improvement District bonds 32,266 44,023 Variable-rate debt: Collateralized mortgages, notes and loans payable (a) 1,505,534 1,524,319 Unamortized bond issuance costs (7,089) (5,779) Deferred financing costs (13,743) (11,934) Total mortgages, notes and loans payable $ 2,993,448 $ 2,690,747 (a) As more fully described below, $179.3 million and $182.1 million of variable‑rate debt has been swapped to a fixed-rate for the term of the related debt as of September 30 , 2017 and December 31, 2016, respectively. The following table presents our mortgages, notes, and loans payable by property, presented within each segment in order of extended maturity date: Maximum Carrying Value Initial / Extended Interest Facility September 30, December 31, ($ in thousands) Maturity (a) Rate Amount 2017 2016 Master Planned Communities Summerlin South SID Bonds - S124 December 2019 % $ 104 $ 123 Summerlin South SID Bonds - S128 December 2020 % 390 440 Summerlin South SID Bonds - S132 December 2020 % 1,082 1,268 The Woodlands Master Credit Facility April 2020 / April 2021 % (b) $ 180,000 150,000 150,000 Bridgeland Credit Facility November 2020 / November 2022 % (b) 65,000 65,000 65,000 Summerlin South SID Bonds - S151 June 2025 % 3,964 4,159 Summerlin South SID Bonds - S128C December 2030 % 4,467 4,600 Summerlin South SID Bonds - S159 June 2035 % 2,353 2,389 Summerlin West SID Bonds - S812 October 2035 % 17,019 27,459 Master Planned Communities Total 244,379 255,438 Operating Assets 1701 Lake Robbins April 2017 % — 4,600 Outlet Collection at Riverwalk October 2017 / October 2018 % (b) 54,325 54,325 55,778 1725-35 Hughes Landing Boulevard June 2018 / June 2019 % (b) 143,000 115,999 105,647 The Westin at The Woodlands (c) August 2018 / August 2019 % (b) 57,946 57,946 58,077 110 North Wacker October 2019 % (e) 19,870 22,704 Three Hughes Landing (c) December 2017 / December 2019 % (b) 65,455 43,661 35,053 Lakeland Village Center at Bridgeland May 2018 / May 2020 % (b) 14,000 11,292 9,979 Embassy Suites at Hughes Landing October 2018 / October 2020 % (b) 37,100 31,245 29,461 The Woodlands Resort & Conference Center December 2018 / December 2020 % (b) 67,000 70,000 One Merriweather February 2020 / February 2021 % (b) 49,900 41,271 23,588 Downtown Summerlin September 2020 / September 2021 % (b) (d) 275,885 275,883 302,981 HHC 242 Self-Storage October 2019 / October 2021 % (b) 6,658 6,137 3,708 HHC 2978 Self-Storage Facility January 2020 / January 2022 % (b) 6,368 5,521 1,715 70 Columbia Corporate Center May 2020 / May 2022 % (b)(f) 20,000 20,000 One Mall North May 2020 / May 2022 % (b)(f) 14,463 — 10-60 Columbia Corporate Centers May 2020 / May 2022 % (b)(f)(g) 80,000 20/25 Waterway Avenue May 2022 % 13,708 13,886 Millennium Waterway Apartments June 2022 % 55,344 55,584 Ward Village September 2021 / September 2023 % (b)(h) 238,718 238,718 9303 New Trails December 2023 % 12,098 12,378 4 Waterway Square December 2023 % 35,431 36,249 3831 Technology Forest Drive March 2026 % 22,088 22,383 Kewalo Basin Harbor September 2027 % (b) 11,562 — — Millennium Six Pines Apartments August 2028 % 42,500 42,500 3 Waterway Square August 2028 % 50,647 51,590 One Hughes Landing December 2029 % 52,000 52,000 Downtown Summerlin SID Bonds - S128 December 2030 % 2,887 3,350 Two Hughes Landing December 2030 % 48,000 48,000 One Lakes Edge March 2029 / March 2031 % 69,440 68,874 Hughes Landing Retail December 2036 % 35,000 35,000 Columbia Regional Building February 2037 % 25,000 22,188 Other — 235 Capital lease obligations Various % — 1 Operating Assets Total 1,547,474 1,526,227 Strategic Developments Waiea and Anaha (i) November 2017 / November 2019 % (b) 410,000 195,269 160,847 Ke Kilohana December 2019 / December 2020 % (b) 142,656 — — Two Merriweather October 2020 / October 2021 % (b) 33,156 11,932 — Ae`o December 2019 / December 2021 % (b) 230,000 1 — 100 Fellowship Drive May 2022 % (b) 51,426 1 — Strategic Developments Total 207,203 160,847 Other corporate financing arrangements July 2018 % 15,224 15,948 Senior Notes October 2021 % — 750,000 Senior Notes March 2025 % 1,000,000 — Unamortized bond issuance costs (7,089) (5,779) Deferred financing costs (13,743) (11,934) Total mortgages, notes, and loans payable $ 2,993,448 $ 2,690,747 (a) Maturity dates presented include initial maturity date as well as the extended or final maturity date as contractually stated. Extension periods generally can be exercised at our option at the initial maturity date, subject to customary extension terms that are based on property performance at the initial maturity date. Such extension terms may include, but are not limited to, minimum debt service coverage, minimum occupancy levels or condominium sales levels, as applicable and other performance criteria. In certain cases due to property performance not meeting covenants, we may have to pay down 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 1.23% at September 30, 2017. (c) Based on current performance of Three Hughes Landing and The Westin at The Woodlands, a paydown may be required in order to exercise the extension options. (d) On July 14, 2017, the Downtown Summerlin loan’s original maturity date of July 2017 was modified to be September 13, 2020, at which time we made a $30.0 million paydown on the facility and further extended the new maturity date and extension date. Additionally, the interest rate was reduced from LIBOR plus 2.25% to LIBOR plus 2.15%. (e) The $19.9 million outstanding principal balance is swapped to a 5.21% fixed-rate through maturity. (f) These three notes are part of one master facility, with all three respective properties collateralizing the total $114.5 million indebtedness. (g) $40.0 million of the outstanding principal balance is swapped to a 3.41% fixed-rate through maturity. (h) $119.4 million of the outstanding principal balance is swapped to a 3.64% fixed-rate through maturity. (i) The Waiea and Anaha facility was repaid in full on October 27, 2017. The weighted average interest rate on our mortgages, notes and loans payable, excluding interest rate hedges, was 4.64% and 4.71% as of September 30, 2017 and December 31, 2016, respectively. Except for the items listed below, all of the mortgage debt is secured by the individual properties listed in the table above and is non-recourse to HHC: (i) $1.0 billion of Senior Notes; (ii) $275.9 million financing for the Downtown Summerlin development which has maximum recourse of 35% of the outstanding balance, which will reduce to 15.0% upon 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 , 2017, 35% of the outstanding loan balance remains recourse to HHC; (iii) $27.2 million, or 50% of the Outlet Collection at Riverwalk outstanding loan balance is recourse to HHC; (iv) $15.2 million of Other Corporate Financing Arrangements; and (v) $19.9 million of the 110 North 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 subject to a prepayment penalty equal to a yield maintenance premium, defeasance, or a percentage of the loan balance. As of September 30, 2017, land, buildings and equipment and developments with a net book value basis of $3.5 billion have been pledged as collateral for our mortgages, notes and loans payable. As of September 30, 2017, we were in compliance with all financial covenants included in the debt agreements governing our indebtedness. Master Planned Communities 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 began 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. On April 27, 2017, TWL Facility was refinanced to increase the facility by $30.0 million for a total of $180.0 million, providing the ability to fund the development of Creekside Park Apartments or for other corporate purposes. The new facility bears interest at one-month LIBOR plus 2.75% with an initial maturity date of April 27, 2020 and a one-year extension option. 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, 2017, no new SID bonds were issued and $9.9 million in obligations were assumed by buyers. Operating Assets On October 24, 2017, we exercised our one-year extension option on our $54.3 million Outlet Collection at Riverwalk facility which extended the maturity date to October 24, 2018. On September 13, 2017, we modified and extended our $311.8 million Downtown Summerlin facility with a $30.0 million paydown. The modified loan has a maximum facility of $275.9 million and bears interest at one-month LIBOR plus 2.15% with a maturity of September 13, 2020, with one, one-year extension option. On August 11, 2017, we closed on a construction loan totaling $11.6 million for Kewalo Harbor, located in Honolulu, Hawai‘i, to be used for improvements benefitting our Ward Village development. The loan bears interest at one-month LIBOR plus 2.75% with a maturity of September 1, 2027. As of September 30, 2017, we had not drawn any proceeds under this loan. On June 27, 2017, we modified our $94.5 million non-recourse mortgage financing for the 10-60 Columbia Corporate Center and One Mall North office buildings with a $114.5 million loan. This amendment added 70 Columbia Corporate Center, a 170,741 square foot office building in Columbia, Maryland, to the collateral pool and allowed us to draw $20.0 million and fully repay the outstanding balance of the existing indebtedness on the 70 Columbia Corporate Center note. On April 6, 2017, we paid off a $4.6 million maturing mortgage loan that we assumed as part of the acquisition of 1701 Lake Robbins in July 2014. On January 19, 2017, we closed on a non-recourse financing totaling $25.0 million replacing the $23.0 million construction loan on the Columbia Regional Building, a retail building located in Columbia, Maryland. The loan, which matures on February 11, 2037, bears interest at 4.48% and is interest only for two years, then begins amortizing on a 30-year basis. On November 25, 2016, we amended and extended our $73.5 million construction loan for One Lakes Edge with a $71.9 million mortgage. Contemporaneously with this amendment, we made a $3.0 million principal reduction payment as required by the loan agreement. The loan bears interest at one-month LIBOR plus 3.50%. On February 23, 2017, we refinanced the One Lakes Edge construction loan with a $69.4 million Fannie Mae loan with an initial maturity of March 2029 and two, one year-extensions. The new loan has a fixed rate of 4.50% and is interest only for four years, then begins amortizing on a 30-year basis. Strategic Developments As of October 27, 2017, we repaid the $195.3 million outstanding on our construction loan relating to Waiea and Anaha in conjunction with closing on the sales of units at Anaha. On October 19, 2017, we closed on a construction loan totaling $64.6 million to be used for Aristocrat and Two Summerlin . The loan bears interest at Wall Street Journal Prime plus 0.40% with a maturity of October 19, 2022. On May 31, 2017, we closed on a $51.4 million construction loan for 100 Fellowship Drive, located in The Woodlands. The loan bears interest at one-month LIBOR plus 1.50% with a maturity of May 31, 2022. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2017 | |
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. To add stability to interest costs by reducing our exposure to interest rate movements, we use interest rate swaps, forward-starting swaps, and caps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our fixed‑rate payments over the life of the agreements without exchange of the underlying notional amount. Forward-starting interest rate swaps were designated as cash flow hedges of the variability of anticipated future fixed-rate debt issuance for 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. Our interest rate caps are not currently designated as hedges, and therefore, any gain or loss is recognized in current period earnings. These derivatives are recorded on a gross basis at fair value. The effective portion of changes in the fair value of derivatives designated and qualifying 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 , 2017 and 2016 the ineffective portion recorded was insignificant. Assessments of hedge effectiveness are performed quarterly using regression analysis and the measurement of hedge ineffectiveness is based on the hypothetical derivative method. We are exposed to credit risk in the event of non-performance by our derivative counterparties. We evaluate counterparty credit risk through monitoring the creditworthiness of counterparties, which includes review of debt ratings and financial performance. To mitigate its credit risk, we enter into agreements with counterparties we consider credit-worthy, such as large financial institutions with favorable credit ratings. As of September 30, 2017 and 2016, there were no termination events or events of default related to the interest rate swaps. 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. The following table summarizes details related to our derivative contracts: Fixed Fair Value Asset (Liability) Notional Interest Effective Maturity September 30, December 31, (In thousands) Balance Sheet Location Amount Rate Date Date 2017 2016 Currently-paying contracts: Interest Rate Swap (a) Accounts payable and accrued expenses $ % 5/10/2011 10/31/2019 $ (427) $ (740) Interest Rate Swap (a) Prepaid expenses and other assets, net 5/6/2015 5/1/2020 30 (143) Interest Rate Swap (a) Prepaid expenses and other assets, net 10/3/2016 9/12/2021 3,069 3,368 Interest Rate Cap (b) Accounts payable and accrued expenses 75,000 9/1/2017 8/31/2019 — — Interest Rate Cap (c) Prepaid expenses and other assets, net 12/22/2016 12/23/2019 145 768 Forward-starting contracts: Interest Rate Swap (a) Accounts payable and accrued expenses 12/31/2017 12/31/2027 (1,452) (610) Interest Rate Swap (a) Accounts payable and accrued expenses 12/31/2017 12/31/2027 (3,165) (1,479) Interest Rate Swap (a) Accounts payable and accrued expenses 12/31/2017 12/31/2027 (2,698) (1,015) Total fair value derivative assets $ 3,244 $ 4,136 Total fair value derivative liabilities $ (7,742) $ (3,987) (a) Denotes derivatives designated as hedging instruments. (b) As of December 31, 2016, our $100.0 million interest rate cap with a 5.00% interest rate and an August 31, 2017 maturity date was in place and matured as scheduled. A new interest rate cap was entered into as detailed above and is not currently designated as a hedging instrument. Interest (income) expense included in the condensed consolidated statement of operations for the three months ended September 30, 2017 related to this contract is not material. (c) Denotes derivative contract that could not be designated as a hedging instrument as of September 30, 2017 as this cap hedges debt that is not yet drawn. Interest (income) expense of $(0.1) million is included in the condensed consolidated statement of operations for the three months ended September 30, 2017, related to this contract. Interest (income) expense of $(0.6) million is included in the condensed consolidated statement of operations for the nine months ended September 30, 2017, related to this contract. The tables below present the effect of our derivative financial instrument on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016: Amount of Loss Recognized Amount of Loss Recognized in AOCI on Derivative in AOCI on Derivative (Effective Portion) (Effective Portion) Three Months Ended September 30, Nine Months Ended September 30, Derivatives in Cash Flow Hedging Relationships 2017 2016 2017 2016 Interest rate swaps $ (7) $ (203) $ (272) $ (1,409) Forward-Starting Swaps — 344 (2,316) (14,566) $ (7) $ 141 $ (2,588) $ (15,975) Amount of Loss Reclassified from Amount of Loss Reclassified from AOCI into Operations AOCI into Operations (Effective Portion) (Effective Portion) Three Months Ended September 30, Nine Months Ended September 30, Location of Loss Reclassified from AOCI into Operations 2017 2016 2017 2016 Interest expense $ (68) $ (356) $ (399) $ (1,099) |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
INCOME TAXES | |
INCOME TAXES | NOTE 11 INCOME TAXES We have significant permanent differences, primarily from warrant liability gains and losses, stock compensation deductions 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 35.8% and 62.3% for the three and nine months ended September 30, 2017, respectively, compared to 56.0% and 39.1% for the three and nine months ended September 30, 2016, respectively. The changes in the tax rates were primarily attributable to changes in the warrant liability, valuation allowance related to our deferred tax assets, stock compensation deduction and other items which are permanent differences for tax purposes. The increase in deferred tax liabilities between December 31, 2016 and September 30, 2017 is due primarily to the utilization of federal tax assets to offset income before taxes exclusive of the warrant liability loss. |
STOCK-BASED PLANS
STOCK-BASED PLANS | 9 Months Ended |
Sep. 30, 2017 | |
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 Annual Report. Stock Options The following table summarizes our stock option plan activity for the nine months ended September 30, 2017: Stock Weighted Stock Options outstanding at December 31, 2016 1,176,640 $ 78.87 Granted 54,000 119.18 Exercised (357,247) 58.45 Forfeited (47,000) 104.82 Expired (1,000) 57.77 Stock Options outstanding at September 30, 2017 825,393 88.89 Compensation costs related to stock options were $0.6 million and $1.6 million for the three and nine months ended September 30, 2017, respectively, of which $0.2 million and $0.4 million of costs were capitalized to development projects during the same periods. 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. Restricted Stock The following table summarizes restricted stock activity for the nine months ended September 30, 2017: Restricted Weighted Restricted stock outstanding at December 31, 2016 289,112 $ 88.88 Granted 124,621 87.11 Vested (23,629) 84.20 Forfeited (31,370) 85.56 Restricted stock outstanding at September 30, 2017 358,734 88.86 Compensation expense related to restricted stock awards were $1.2 million and $4.1 million for the three and nine months ended September 30, 2017, respectively, of which $(0.3) million related to forfeitures and $0.2 million were capitalized to development projects during the same periods. 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. |
OTHER ASSETS AND LIABILITIES
OTHER ASSETS AND LIABILITIES | 9 Months Ended |
Sep. 30, 2017 | |
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) 2017 2016 Condominium deposits $ 320,097 $ 193,197 Condominium receivables (a) 213,158 210,219 Special Improvement District receivable 55,841 61,603 Straight-line rent 36,365 31,518 In-place leases 11,209 16,015 Below-market ground leases 18,732 18,986 Above-market tenant leases 1,786 2,457 Equipment, net of accumulated depreciation of $6.5 million and $4.9 million, respectively 17,364 17,556 Security and escrow deposits 48,277 61,304 Tenant incentives and other receivables 8,976 8,773 Prepaid expenses 13,197 11,177 Federal income tax receivable 8,513 15,763 Intangibles 35,368 4,046 Interest rate swap derivative assets 3,244 — Other 3,892 13,902 $ 796,019 $ 666,516 (a) We expect $140.5 million of the Condominium receivables outstanding at September 30, 2017 to be collected in 2017 upon closing Anaha and the remaining contracted units at Waiea. Of the remaining, $71.4 million related to Ae`o will be collected in 2018, and $1.3 million relating to Ke Kilohana will be collected in 2019. The $129.5 million net increase primarily relates to the following increases: a $126.9 million increase in condominium deposits recorded with respect to sales at Anaha, Ae`o and Ke Kilohana; a $31.3 million increase in intangibles primarily due to our acquisition of our partner’s 50.0% interest in the Las Vegas 51s; $4.8 million increase in straight-line rent due to additional Operating Assets placed in service during the year; $3.2 million increase in derivative asset; a $2.9 million increase in condominium receivables recorded with respect to sales recognized on a percentage of completion basis and $2.4 million in other increases related to prepaid expenses and tenant incentives and other receivables due to various tenant activities. These increases were partially offset by the following decreases: a $13.0 million decrease in security and escrow deposits due primarily to the utilization of escrowed sales proceeds to fund remaining construction costs at Waiea; a $10.0 million decrease in Other assets primarily relating to third party reimbursements received for improvements made on the Merriweather Post Pavilion in 2016; a $7.3 million decrease in federal income tax receivable due to the receipt of an IRS tax refund; a $5.8 million decrease in Special Improvement District receivables due to reimbursements received related to our Summerlin MPC; a $4.8 million decrease in in-place leases and $1.1 million in other decreases related to Below-market ground leases, Above-market tenant leases and Equipment, net. Accounts Payable and Accrued Expenses The following table summarizes the significant components of Accounts payable and accrued expenses: September 30, December 31, (In thousands) 2017 2016 Construction payables $ 183,585 $ 207,917 Condominium deposit liabilities 64,457 117,015 Deferred income 49,053 85,158 Accounts payable and accrued expenses 33,466 33,050 Tenant and other deposits 19,506 28,559 Accrued interest 8,256 16,897 Accrued payroll and other employee liabilities 26,685 36,937 Accrued real estate taxes 21,525 16,726 Interest rate swaps 7,742 (149) Straight-line ground rent liability 14,493 13,126 Above-market ground leases 587 1,762 Other 33,498 15,012 $ 462,853 $ 572,010 The $109.2 million net decrease in total accounts payable and accrued expenses primarily relates to the following decreases: $52.6 million in condominium deposit liabilities for the towers under construction at Ward Village as the projects move toward completion; $36.1 million in deferred income recognized in conjunction with revenue previously deferred at our Summerlin and Bridgeland MPCs; $24.3 million in construction payables; $10.3 million in accrued payroll and other employee liabilities due to payment in both the first quarters of annual incentive bonuses for 2016 and 2015, respectively; $9.1 million in tenant and other deposits due primarily to amortization of a tenant’s prepaid rent; $8.6 million in accrued interest due to lower interest accrual activity relating to the issuance of the 2025 Notes at a lower rate than the 6.875% senior notes and $1.2 million in other decreases related to above-market ground leases. These decreases are partially offset by an increase of $18.5 million in other liabilities; an increase of $7.9 million in interest rate swaps liability primarily due to a decrease in fair value of the forward-starting swaps; a $4.8 million increase in accrued real estate taxes due to timing of payments; and $1.8 million in other increases related to accounts payable and accrued expenses and straight-line ground rent liability. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2017 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NOTE 14 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (“AOCI”) The following tables summarize changes in Accumulated Other Comprehensive Income (Loss) by component, all of which are presented net of tax: For the Three Months Ended September 30, (In thousands) 2017 2016 Balance as of June 30 $ (9,157) $ (24,152) Other comprehensive income (loss) before reclassifications 72 (22) Loss reclassified from accumulated other comprehensive loss to net income (loss) 68 356 Net current-period other comprehensive income (loss) 140 334 Balance as of September 30 $ (9,017) $ (23,818) For the Nine Months Ended September 30, (In thousands) 2017 2016 Balance as of January 1 $ (6,786) $ (7,889) Other comprehensive loss before reclassifications (2,630) (17,028) Loss reclassified from accumulated other comprehensive loss to net income (loss) 399 1,099 Net current-period other comprehensive loss (2,231) (15,929) Balance as of September 30 $ (9,017) $ (23,818) The following tables summarize the amounts reclassified out of AOCI: Amounts reclassified from Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss) Components Affected line items in the For the Three Months Ended (In thousands) Statements of Operations September 30, 2017 September 30, 2016 Losses on cash flow hedges Interest expense $ $ 558 Interest rate swap contracts Provision for income taxes (40) (202) Total reclassifications of loss (income) for the period Net of tax $ 68 $ 356 Amounts reclassified from Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss) Components Affected line items in the For the Nine Months Ended (In thousands) Statements of Operations September 30, 2017 September 30, 2016 Losses on cash flow hedges Interest expense $ $ 1,752 Interest rate swap contracts Provision for income taxes (237) (653) Total reclassifications for the period Net of tax $ 399 $ 1,099 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
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 totaling $13.8 million and $6.5 million and surety bonds totaling $95.0 million and $112.4 million as of September 30, 2017 and December 31, 2016, 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 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 toward maintenance of the East River 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. On January 11, 2017, we executed an amendment of the lease which, pursuant to our lease option, added an additional premise to the lease and modified other related provisions. The 2017 amendment provides for an appraisal update to be performed on completion of construction for the purposes of determining any additional rent. |
SEGMENTS
SEGMENTS | 9 Months Ended |
Sep. 30, 2017 | |
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 or 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. We do not distinguish or group our combined operations on a geographic basis. Furthermore, all operations are within the United States. 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 recently 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. Effective January 1, 2017, we moved the South Street Seaport assets under construction and related activities to the Strategic Developments segment from the Operating Assets segment. South Street Seaport operating properties and related operating results remain presented within the Operating Assets segment. The respective segment earnings and total segment assets presented in our interim financial statements and elsewhere in this Quarterly Report have been adjusted in all periods reported to reflect this change. The assets included in each segment as of September 30, 2017, are contained as follows: 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 ▪ One Hughes Landing ▪ Aristocrat • The Woodlands ▪ Downtown Summerlin ▪ Two Hughes Landing ▪ Creekside Park Apartments • The Woodlands Hills ▪ Hughes Landing Retail ▪ Three Hughes Landing (b) ▪ 100 Fellowship Drive ▪ 1701 Lake Robbins ▪ 1725-35 Hughes Landing Boulevard ▪ Ke Kilohana Other ▪ Lakeland Village Center at Bridgeland (b) ▪ 2201 Lake Woodlands Drive ▪ Two Merriweather • The Summit (a) ▪ Outlet Collection at Riverwalk ▪ One Mall North ▪ Two Summerlin ▪ South Street Seaport - Historic District / Uplands ▪ One Merriweather (d) ▪ m.flats/TEN.M (a) ▪ Ward Village Retail ▪ 110 North Wacker ▪ 33 Peck Slip (a) (f) ▪ 20/25 Waterway Avenue ▪ 9303 New Trails ▪ South Street Seaport - Pier 17 (f) ▪ Waterway Garage Retail ▪ ONE Summerlin ▪ Waiea ▪ 3831 Technology Forest Drive Multi-family ▪ 3 Waterway Square Other ▪ Constellation (a) (b) ▪ 4 Waterway Square ▪ AllenTowne ▪ Millennium Waterway Apartments ▪ 1400 Woodloch Forest ▪ American City Building ▪ Millennium Six Pines Apartments (c) ▪ Bridges at Mint Hill ▪ One Lakes Edge Other ▪ Century Plaza Mall ▪ 85 South Street ▪ HHC 242 Self-Storage (d) ▪ Circle T Ranch and Power Center (a) ▪ The Metropolitan Downtown ▪ HHC 2978 Self-Storage (d) ▪ Cottonwood Mall Columbia (a) ▪ Las Vegas 51s (e) ▪ Downtown Summerlin Apartments ▪ Kewalo Basin Harbor ▪ The Elk Grove Collection (g) Hospitality ▪ Stewart Title of Montgomery ▪ 80% Interest in Fashion ▪ Embassy Suites at Hughes Landing County, TX (a) Show Air Rights ▪ The Westin at The Woodlands (b) ▪ Summerlin Hospital Medical ▪ Kendall Town Center ▪ The Woodlands Resort & Center (a) ▪ Lake Woodlands Crossing Retail Center Conference Center ▪ The Woodlands Parking Garages ▪ Landmark Mall (f) ▪ 2000 Woodlands Parkway ▪ Maui Ranch Land ▪ Woodlands Sarofim #1 (a) ▪ Merriweather Apartments ▪ South Street Seaport - Tin Building ▪ Three Merriweather ▪ West Windsor (a) A non-consolidated investment. Refer to Note 8 – Real Estate and Other Affiliates in our Condensed Consolidated Financial Statements. (b) Asset was placed in service and moved from the Strategic Developments segment to the Operating Assets segment during 2016. (c) Asset was held as a joint venture until our acquisition of our partner’s 18.57% interest on July 20, 2016. (d) Asset was placed in service and moved from the Strategic Developments segment to the Operating Assets segment during 2017. (e) Asset was held as a joint venture until our acquisition of our partner’s 50% interest on March 1, 2017. (f) Asset is in redevelopment and moved from the Operating Assets segment to the Strategic Developments segment during 2017. (g) Formerly known as The Outlet Collection at Elk Grove . 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 Earnings Before Taxes (“EBT”), which represents the operating revenues of the properties less property operating expenses and adjustments for interest, as further described below. We believe that EBT provides useful information about the operating performance of all of our properties. EBT, as it relates to each business segment, represents the revenues less expenses of each segment, including interest income, interest expense, and equity in earnings of real estate and other affiliates. EBT excludes corporate expenses and other items that are not allocable to the segments. We present 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 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) 2017 2016 2017 2016 Master Planned Communities Land sales $ 54,906 $ 44,128 $ 177,531 $ 147,168 Builder price participation 5,472 4,483 14,613 15,631 Minimum rents — 95 (8) 376 Other land revenues 4,551 4,043 19,575 12,195 Other rental and property revenues — 13 — 33 Total revenues 64,929 52,762 211,711 175,403 Cost of sales – land 29,043 21,432 88,288 66,128 Land sales operations 8,180 10,674 24,881 30,454 Provision for doubtful accounts — — 2 — Depreciation and amortization 76 72 247 236 Interest income 8 (5) (1) (26) Interest expense (*) (6,363) (5,248) (17,901) (15,591) Equity in (earnings) loss in Real Estate and Other Affiliates (6,480) (13,700) (21,552) (22,574) Total expenses 24,464 13,225 73,964 58,627 MPC segment EBT 40,465 39,537 137,747 116,776 Operating Assets Minimum rents 44,579 44,736 135,564 127,663 Tenant recoveries 11,491 11,652 34,257 33,089 Hospitality revenues 17,776 14,088 57,190 46,126 Other rental and property revenues 5,687 3,471 16,487 10,974 Total revenues 79,533 73,947 243,498 217,852 Other property operating costs 17,473 15,611 51,041 43,524 Rental property real estate taxes 7,098 6,406 19,975 19,257 Rental property maintenance costs 3,288 3,247 9,601 8,893 Hospitality operating costs 13,525 12,662 41,534 37,379 Provision for doubtful accounts 453 1,940 1,728 4,566 Demolition costs 34 — 162 — Provision for impairment — 35,734 — 35,734 Development-related marketing costs 1,067 457 2,317 902 Depreciation and amortization 33,885 20,732 88,918 64,546 Other income, net 249 (11) 265 (3,126) Interest income 3 (3) — (19) Interest expense (*) 15,937 12,905 46,004 36,987 Equity in (earnings) loss in Real Estate and Other Affiliates (317) 210 (3,739) (2,616) Total expenses 92,695 109,890 257,806 246,027 Operating Assets segment EBT (13,162) (35,943) (14,308) (28,175) Strategic Developments Minimum rents 75 79 497 216 Tenant recoveries 95 5 370 19 Condominium rights and unit sales 113,852 115,407 342,208 362,613 Other land revenues 10 10 31 30 Other rental and property revenues 242 54 822 328 Total revenues 114,274 115,555 343,928 363,206 Condominium rights and unit cost of sales 86,531 83,218 253,209 237,759 Other property operating costs 3,881 924 9,112 3,989 Rental property real estate taxes 580 627 1,790 1,853 Rental property maintenance costs 92 85 415 324 Provision for doubtful accounts (5) — (2) 63 Demolition costs 141 256 141 1,218 Development-related marketing costs 4,799 4,259 12,470 14,684 Depreciation and amortization 18 659 1,177 1,978 Other income, net (122) (298) (137) (542) Interest income (30) (140) (124) (271) Interest expense (*) (6,953) (4,866) (18,197) (12,710) Equity in (earnings) loss in Real Estate and Other Affiliates (670) (3) (530) (10,510) Gains on sales of properties (237) (70) (32,452) (140,549) Total expenses 88,025 84,651 226,872 97,286 Strategic Developments segment EBT 26,249 30,904 117,056 265,920 Total consolidated segment EBT $ 53,552 $ 34,498 $ 240,495 $ 354,521 (*) 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 EBT to income before taxes: Reconciliation of EBT to income before taxes Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 MPC segment EBT $ 40,465 $ 39,537 $ 137,747 $ 116,776 Operating Assets segment EBT (13,162) (35,943) (14,308) (28,175) Strategic Developments segment EBT 26,249 30,904 117,056 265,920 Total consolidated segment EBT 53,552 34,498 240,495 354,521 Corporate and other items: General and administrative (22,362) (21,128) (63,423) (61,505) Corporate interest expense, net (12,875) (13,263) (36,595) (39,358) Warrant liability loss — (7,300) (43,443) (21,630) Gain on acquisition of joint venture partner's interest — 27,087 5,490 27,087 Loss on redemption of senior notes due 2021 — — (46,410) — Corporate other (expense) income, net (33) 123 878 6,190 Corporate depreciation and amortization (1,920) (1,859) (5,851) (4,486) Total Corporate and other items (37,190) (16,340) (189,354) (93,702) Income before taxes $ 16,362 $ 18,158 $ 51,141 $ 260,819 The following reconciles segment revenues to consolidated revenues: Reconciliation of Segment Basis Revenues to Revenues Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Master Planned Communities $ 64,929 $ 52,762 $ 211,711 $ 175,403 Operating Assets 79,533 73,947 243,498 217,852 Strategic Developments 114,274 115,555 343,928 363,206 Total revenues $ 258,736 $ 242,264 $ 799,137 $ 756,461 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) 2017 2016 Master Planned Communities $ 2,054,621 $ 1,982,639 Operating Assets 2,450,306 2,344,949 Strategic Developments 1,708,327 1,451,460 Total segment assets 6,213,254 5,779,048 Corporate and other 510,442 588,334 Total assets $ 6,723,696 $ 6,367,382 The increase in the Operating Assets segment asset balance as of September 30, 2017 compared to December 31, 2016 is primarily due to placing One Merriweather, HHC 242 and HHC 2978 Self-Storage in service as well as the acquisition of our joint venture partner’s 50% interest in the Las Vegas 51s. These increases were partially offset by the transfer of Landmark Mall and our investment in 33 Peck Slip to Strategic Developments in January 2017. The increase in the Strategic Developments segment asset balance as of September 30, 2017 compared to December 31, 2016 is primarily due to the transfers of Landmark Mall and 33 Peck Slip into the segment and increased development expenditures primarily at South Street Seaport and our Ward condominium projects under construction . |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
EARNINGS PER SHARE | |
Summary of EPS calculations | Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except per share amounts) 2017 2016 2017 2016 Basic EPS: Numerator: Net income $ 10,516 $ 7,996 $ 19,295 $ 158,731 Net income attributable to noncontrolling interests (12) (23) (12) (23) Net income attributable to common stockholders $ 10,504 $ 7,973 $ 19,283 $ 158,708 Denominator: Weighted average basic common shares outstanding $ 42,845 $ 39,502 $ 40,860 $ 39,489 Diluted EPS: Numerator: Net income attributable to common stockholders $ 10,504 $ 7,973 $ 19,283 $ 158,708 Denominator: Weighted average basic common shares outstanding 42,845 39,502 40,860 39,489 Restricted stock and stock options 420 366 455 338 Warrants 2 2,892 1,783 2,892 Weighted average diluted common shares outstanding 43,267 42,760 43,098 42,719 Basic income per share: $ 0.25 $ 0.20 $ 0.47 $ 4.02 Diluted income per share: $ 0.24 $ 0.19 $ 0.45 $ 3.72 |
IMPAIRMENT (Tables)
IMPAIRMENT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
IMPAIRMENT | |
Summary of Impaired Asset | Provision for impairment as of September 30, Impaired Asset Location Method of Determining Fair Value 2017 2016 (In thousands) Operating Assets: Park West Peoria, AZ Discounted cash flow analysis using capitalization rate of 6.75% $ — $ 35,734 |
FAIR VALUE OF FINANCIAL INSTR28
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Summary of Assets and Liabilities Measured on a Recurring Basis | September 30, 2017 December 31, 2016 Fair Value Measurements Using Fair Value Measurements Using (In thousands) Total Quoted Prices Significant Significant Total Quoted Prices Significant Significant Assets: Cash equivalents $ 50,041 $ 50,041 $ — $ — $ 18 $ 18 $ — $ — Interest rate swap derivative assets 3,244 — 3,244 — — — — — Liabilities: Interest rate swap derivative liabilities 7,742 — 7,742 — (149) — (149) — Warrants — — — — 332,170 — — 332,170 |
Rollforward of Sponsor and Management Warrants | (In thousands) 2017 2016 Balance as of January 1 $ 332,170 $ Warrant liability loss (a) 43,443 21,630 Exercises of Sponsor and Management Warrants (375,613) — Balance as of September 30 $ — $ (a) Represents losses recognized during 2017 relating to each warrant prior to the respective exercise date. For 2016, represents unrealized losses recorded for outstanding warrants at the end of the period. Changes in the fair value of the Sponsor Warrants and Management Warrants prior to exercise were 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 Marketability September 30, 2017 (c) N/A N/A December 31, 2016 31.0% 0.0% - 1.0% (a) Based on our implied equity volatility. (b) Represents the discount rate for lack of marketability of the Management Warrants which decreases as the current date approaches the dates of contractual expiration of the marketability restrictions. (c) See Note 3 – Warrants for additional information. |
Summary of assets and liabilities that were measured at fair value on a non-recurring basis | September 30, 2017 December 31, 2016 (In thousands) Fair Value Carrying Estimated Carrying Estimated Assets: Cash Level 1 $ 551,893 $ 551,893 $ 665,492 $ 665,492 Accounts receivable, net (a) Level 3 9,654 9,654 10,038 10,038 Liabilities: Fixed-rate debt (b) Level 2 $ 1,508,746 $ 1,529,282 $ 1,184,141 $ 1,224,573 Variable-rate debt (b) Level 2 1,505,534 1,505,534 1,524,319 1,524,319 (a) Accounts receivable, net, is shown net of an allowance of $8.6 million and $7.9 million at September 30, 2017 and December 31, 2016, respectively. (b) Excludes related unamortized financing costs. |
REAL ESTATE AND OTHER AFFILIA29
REAL ESTATE AND OTHER AFFILIATES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Investments in Real Estate and Other Affiliates | Share of Earnings/Dividends Economic/Legal Ownership Carrying Value Three Months Ended Nine Months Ended September 30, December 31, September 30, December 31, September 30, September 30, ($ in thousands) 2017 2016 2017 2016 2017 2016 2017 2016 Equity Method Investments Master Planned Communities: The Summit (a) — % — % $ 54,203 $ 32,653 $ 6,480 $ 13,700 $ 21,552 $ 22,574 Operating Assets: Las Vegas 51s, LLC (b) 100.00 50.00 — 11,062 — 2 (152) 297 Constellation (a) (c) 50.00 50.00 2,175 2,730 107 — (215) — The Metropolitan Downtown Columbia (d) 50.00 50.00 — (1,064) 82 (351) 356 (863) Millennium Six Pines Apartments (e) 100.00 100.00 — — — 9 — 44 Stewart Title of Montgomery County, TX 50.00 50.00 3,834 3,611 113 221 322 477 Woodlands Sarofim #1 20.00 20.00 2,688 2,683 15 26 45 121 Strategic Developments: Circle T Ranch and Power Center (a) 50.00 50.00 5,106 4,956 650 — 650 10,498 HHMK Development 50.00 50.00 10 10 — — — — KR Holdings 50.00 50.00 744 707 20 3 36 12 m.flats/TEN.M (a) 50.00 50.00 6,849 6,379 — — — — 33 Peck Slip (a) (f) 35.00 35.00 9,139 8,243 — (117) (156) (76) 84,748 71,970 7,467 13,493 22,438 33,084 Cost method investments 4,407 4,406 — — 3,383 2,616 Investment in Real Estate and Other Affiliates $ 89,155 $ 76,376 $ 7,467 $ 13,493 $ 25,821 $ 35,700 (a) Please refer to the discussion below for a description of the joint venture ownership structure. (b) On March 1, 2017, we acquired our joint venture partner’s interest and have fully consolidated the assets and liabilities of the entity. (c) Equity method VIE as of September 30, 2017. Constellation and Las Vegas 51s were also VIEs as of December 31, 2016. (d) The Metropolitan Downtown Columbia was in a deficit position of $2.0 million at September 30, 2017 and December 31, 2016 due to distributions from operating cash flows in excess of basis. This deficit balance is presented in Accounts payable and accrued expenses at September 30, 2017. (e) On July 20, 2016, we acquired our joint venture partner’s interest in Millennium Six Pines Apartments and fully consolidated the assets and liabilities of the entity. (f) The 33 Peck Slip hotel was closed in December 2016 for redevelopment and was transferred to the Strategic Developments segment as of January 1, 2017. The prior year share of earnings for the three and nine months ended September 30, 2016 was recorded in the Operating Assets segment but is reflected here for comparative purposes. |
The Summit | |
Summary of Investments in Real Estate and Other Affiliates | September 30, December 31, (in thousands) 2017 2016 Total Assets $ $ Total Liabilities Total Equity Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2017 2016 2017 2016 Revenues (a) $ $ $ $ Net income Gross Margin (a) Revenues related to land sales at the joint venture are recognized on a percentage of completion basis. |
MORTGAGES, NOTES AND LOANS PA30
MORTGAGES, NOTES AND LOANS PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
MORTGAGES, NOTES AND LOANS PAYABLE | |
Summary of mortgages, notes and loans payable | September 30, December 31, (In thousands) 2017 2016 Fixed-rate debt: Collateralized mortgages, notes and loans payable $ 1,476,480 $ 1,140,118 Special Improvement District bonds 32,266 44,023 Variable-rate debt: Collateralized mortgages, notes and loans payable (a) 1,505,534 1,524,319 Unamortized bond issuance costs (7,089) (5,779) Deferred financing costs (13,743) (11,934) Total mortgages, notes and loans payable $ 2,993,448 $ 2,690,747 (a) As more fully described below, $179.3 million and $182.1 million of variable‑rate debt has been swapped to a fixed-rate for the term of the related debt as of September 30 , 2017 and December 31, 2016, respectively. |
Schedule of mortgages, notes and loans payable by property | Maximum Carrying Value Initial / Extended Interest Facility September 30, December 31, ($ in thousands) Maturity (a) Rate Amount 2017 2016 Master Planned Communities Summerlin South SID Bonds - S124 December 2019 % $ 104 $ 123 Summerlin South SID Bonds - S128 December 2020 % 390 440 Summerlin South SID Bonds - S132 December 2020 % 1,082 1,268 The Woodlands Master Credit Facility April 2020 / April 2021 % (b) $ 180,000 150,000 150,000 Bridgeland Credit Facility November 2020 / November 2022 % (b) 65,000 65,000 65,000 Summerlin South SID Bonds - S151 June 2025 % 3,964 4,159 Summerlin South SID Bonds - S128C December 2030 % 4,467 4,600 Summerlin South SID Bonds - S159 June 2035 % 2,353 2,389 Summerlin West SID Bonds - S812 October 2035 % 17,019 27,459 Master Planned Communities Total 244,379 255,438 Operating Assets 1701 Lake Robbins April 2017 % — 4,600 Outlet Collection at Riverwalk October 2017 / October 2018 % (b) 54,325 54,325 55,778 1725-35 Hughes Landing Boulevard June 2018 / June 2019 % (b) 143,000 115,999 105,647 The Westin at The Woodlands (c) August 2018 / August 2019 % (b) 57,946 57,946 58,077 110 North Wacker October 2019 % (e) 19,870 22,704 Three Hughes Landing (c) December 2017 / December 2019 % (b) 65,455 43,661 35,053 Lakeland Village Center at Bridgeland May 2018 / May 2020 % (b) 14,000 11,292 9,979 Embassy Suites at Hughes Landing October 2018 / October 2020 % (b) 37,100 31,245 29,461 The Woodlands Resort & Conference Center December 2018 / December 2020 % (b) 67,000 70,000 One Merriweather February 2020 / February 2021 % (b) 49,900 41,271 23,588 Downtown Summerlin September 2020 / September 2021 % (b) (d) 275,885 275,883 302,981 HHC 242 Self-Storage October 2019 / October 2021 % (b) 6,658 6,137 3,708 HHC 2978 Self-Storage Facility January 2020 / January 2022 % (b) 6,368 5,521 1,715 70 Columbia Corporate Center May 2020 / May 2022 % (b)(f) 20,000 20,000 One Mall North May 2020 / May 2022 % (b)(f) 14,463 — 10-60 Columbia Corporate Centers May 2020 / May 2022 % (b)(f)(g) 80,000 20/25 Waterway Avenue May 2022 % 13,708 13,886 Millennium Waterway Apartments June 2022 % 55,344 55,584 Ward Village September 2021 / September 2023 % (b)(h) 238,718 238,718 9303 New Trails December 2023 % 12,098 12,378 4 Waterway Square December 2023 % 35,431 36,249 3831 Technology Forest Drive March 2026 % 22,088 22,383 Kewalo Basin Harbor September 2027 % (b) 11,562 — — Millennium Six Pines Apartments August 2028 % 42,500 42,500 3 Waterway Square August 2028 % 50,647 51,590 One Hughes Landing December 2029 % 52,000 52,000 Downtown Summerlin SID Bonds - S128 December 2030 % 2,887 3,350 Two Hughes Landing December 2030 % 48,000 48,000 One Lakes Edge March 2029 / March 2031 % 69,440 68,874 Hughes Landing Retail December 2036 % 35,000 35,000 Columbia Regional Building February 2037 % 25,000 22,188 Other — 235 Capital lease obligations Various % — 1 Operating Assets Total 1,547,474 1,526,227 Strategic Developments Waiea and Anaha (i) November 2017 / November 2019 % (b) 410,000 195,269 160,847 Ke Kilohana December 2019 / December 2020 % (b) 142,656 — — Two Merriweather October 2020 / October 2021 % (b) 33,156 11,932 — Ae`o December 2019 / December 2021 % (b) 230,000 1 — 100 Fellowship Drive May 2022 % (b) 51,426 1 — Strategic Developments Total 207,203 160,847 Other corporate financing arrangements July 2018 % 15,224 15,948 Senior Notes October 2021 % — 750,000 Senior Notes March 2025 % 1,000,000 — Unamortized bond issuance costs (7,089) (5,779) Deferred financing costs (13,743) (11,934) Total mortgages, notes, and loans payable $ 2,993,448 $ 2,690,747 (a) Maturity dates presented include initial maturity date as well as the extended or final maturity date as contractually stated. Extension periods generally can be exercised at our option at the initial maturity date, subject to customary extension terms that are based on property performance at the initial maturity date. Such extension terms may include, but are not limited to, minimum debt service coverage, minimum occupancy levels or condominium sales levels, as applicable and other performance criteria. In certain cases due to property performance not meeting covenants, we may have to pay down 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 1.23% at September 30, 2017. (c) Based on current performance of Three Hughes Landing and The Westin at The Woodlands, a paydown may be required in order to exercise the extension options. (d) On July 14, 2017, the Downtown Summerlin loan’s original maturity date of July 2017 was modified to be September 13, 2020, at which time we made a $30.0 million paydown on the facility and further extended the new maturity date and extension date. Additionally, the interest rate was reduced from LIBOR plus 2.25% to LIBOR plus 2.15%. (e) The $19.9 million outstanding principal balance is swapped to a 5.21% fixed-rate through maturity. (f) These three notes are part of one master facility, with all three respective properties collateralizing the total $114.5 million indebtedness. (g) $40.0 million of the outstanding principal balance is swapped to a 3.41% fixed-rate through maturity. (h) $119.4 million of the outstanding principal balance is swapped to a 3.64% fixed-rate through maturity. (i) The Waiea and Anaha facility was repaid in full on October 27, 2017. |
DERIVATIVE INSTRUMENTS AND HE31
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
Summary of fair value of the Company's derivative financial instruments | Fixed Fair Value Asset (Liability) Notional Interest Effective Maturity September 30, December 31, (In thousands) Balance Sheet Location Amount Rate Date Date 2017 2016 Currently-paying contracts: Interest Rate Swap (a) Accounts payable and accrued expenses $ % 5/10/2011 10/31/2019 $ (427) $ (740) Interest Rate Swap (a) Prepaid expenses and other assets, net 5/6/2015 5/1/2020 30 (143) Interest Rate Swap (a) Prepaid expenses and other assets, net 10/3/2016 9/12/2021 3,069 3,368 Interest Rate Cap (b) Accounts payable and accrued expenses 75,000 9/1/2017 8/31/2019 — — Interest Rate Cap (c) Prepaid expenses and other assets, net 12/22/2016 12/23/2019 145 768 Forward-starting contracts: Interest Rate Swap (a) Accounts payable and accrued expenses 12/31/2017 12/31/2027 (1,452) (610) Interest Rate Swap (a) Accounts payable and accrued expenses 12/31/2017 12/31/2027 (3,165) (1,479) Interest Rate Swap (a) Accounts payable and accrued expenses 12/31/2017 12/31/2027 (2,698) (1,015) Total fair value derivative assets $ 3,244 $ 4,136 Total fair value derivative liabilities $ (7,742) $ (3,987) (a) Denotes derivatives designated as hedging instruments. (b) As of December 31, 2016, our $100.0 million interest rate cap with a 5.00% interest rate and an August 31, 2017 maturity date was in place and matured as scheduled. A new interest rate cap was entered into as detailed above and is not currently designated as a hedging instrument. Interest (income) expense included in the condensed consolidated statement of operations for the three months ended September 30, 2017 related to this contract is not material. (c) Denotes derivative contract that could not be designated as a hedging instrument as of September 30, 2017 as this cap hedges debt that is not yet drawn. Interest (income) expense of $(0.1) million is included in the condensed consolidated statement of operations for the three months ended September 30, 2017, related to this contract. Interest (income) expense of $(0.6) million is included in the condensed consolidated statement of operations for the nine months ended September 30, 2017, related to this contract. |
Summary of effect of the Company's derivative financial instruments on the Condensed Consolidated Statements of Operations | Amount of Loss Recognized Amount of Loss Recognized in AOCI on Derivative in AOCI on Derivative (Effective Portion) (Effective Portion) Three Months Ended September 30, Nine Months Ended September 30, Derivatives in Cash Flow Hedging Relationships 2017 2016 2017 2016 Interest rate swaps $ (7) $ (203) $ (272) $ (1,409) Forward-Starting Swaps — 344 (2,316) (14,566) $ (7) $ 141 $ (2,588) $ (15,975) Amount of Loss Reclassified from Amount of Loss Reclassified from AOCI into Operations AOCI into Operations (Effective Portion) (Effective Portion) Three Months Ended September 30, Nine Months Ended September 30, Location of Loss Reclassified from AOCI into Operations 2017 2016 2017 2016 Interest expense $ (68) $ (356) $ (399) $ (1,099) |
STOCK-BASED PLANS (Tables)
STOCK-BASED PLANS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
STOCK-BASED PLANS | |
Summary of stock option plan activity | Stock Weighted Stock Options outstanding at December 31, 2016 1,176,640 $ 78.87 Granted 54,000 119.18 Exercised (357,247) 58.45 Forfeited (47,000) 104.82 Expired (1,000) 57.77 Stock Options outstanding at September 30, 2017 825,393 88.89 |
Summary of restricted stock activity | Restricted Weighted Restricted stock outstanding at December 31, 2016 289,112 $ 88.88 Granted 124,621 87.11 Vested (23,629) 84.20 Forfeited (31,370) 85.56 Restricted stock outstanding at September 30, 2017 358,734 88.86 |
OTHER ASSETS AND LIABILITIES (T
OTHER ASSETS AND LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
OTHER ASSETS AND LIABILITIES | |
Summary of the significant components of prepaid expenses and other assets | September 30, December 31, (In thousands) 2017 2016 Condominium deposits $ 320,097 $ 193,197 Condominium receivables (a) 213,158 210,219 Special Improvement District receivable 55,841 61,603 Straight-line rent 36,365 31,518 In-place leases 11,209 16,015 Below-market ground leases 18,732 18,986 Above-market tenant leases 1,786 2,457 Equipment, net of accumulated depreciation of $6.5 million and $4.9 million, respectively 17,364 17,556 Security and escrow deposits 48,277 61,304 Tenant incentives and other receivables 8,976 8,773 Prepaid expenses 13,197 11,177 Federal income tax receivable 8,513 15,763 Intangibles 35,368 4,046 Interest rate swap derivative assets 3,244 — Other 3,892 13,902 $ 796,019 $ 666,516 (a) We expect $140.5 million of the Condominium receivables outstanding at September 30, 2017 to be collected in 2017 upon closing Anaha and the remaining contracted units at Waiea. Of the remaining, $71.4 million related to Ae`o will be collected in 2018, and $1.3 million relating to Ke Kilohana will be collected in 2019. |
Summary of the significant components of accounts payable and accrued expenses | September 30, December 31, (In thousands) 2017 2016 Construction payables $ 183,585 $ 207,917 Condominium deposit liabilities 64,457 117,015 Deferred income 49,053 85,158 Accounts payable and accrued expenses 33,466 33,050 Tenant and other deposits 19,506 28,559 Accrued interest 8,256 16,897 Accrued payroll and other employee liabilities 26,685 36,937 Accrued real estate taxes 21,525 16,726 Interest rate swaps 7,742 (149) Straight-line ground rent liability 14,493 13,126 Above-market ground leases 587 1,762 Other 33,498 15,012 $ 462,853 $ 572,010 |
ACCUMULATED OTHER COMPREHENSI34
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Summary of AOCI | For the Three Months Ended September 30, (In thousands) 2017 2016 Balance as of June 30 $ (9,157) $ (24,152) Other comprehensive income (loss) before reclassifications 72 (22) Loss reclassified from accumulated other comprehensive loss to net income (loss) 68 356 Net current-period other comprehensive income (loss) 140 334 Balance as of September 30 $ (9,017) $ (23,818) For the Nine Months Ended September 30, (In thousands) 2017 2016 Balance as of January 1 $ (6,786) $ (7,889) Other comprehensive loss before reclassifications (2,630) (17,028) Loss reclassified from accumulated other comprehensive loss to net income (loss) 399 1,099 Net current-period other comprehensive loss (2,231) (15,929) Balance as of September 30 $ (9,017) $ (23,818) |
Summary of the amounts reclassified out of AOCI | Amounts reclassified from Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss) Components Affected line items in the For the Three Months Ended (In thousands) Statements of Operations September 30, 2017 September 30, 2016 Losses on cash flow hedges Interest expense $ $ 558 Interest rate swap contracts Provision for income taxes (40) (202) Total reclassifications of loss (income) for the period Net of tax $ 68 $ 356 Amounts reclassified from Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss) Components Affected line items in the For the Nine Months Ended (In thousands) Statements of Operations September 30, 2017 September 30, 2016 Losses on cash flow hedges Interest expense $ $ 1,752 Interest rate swap contracts Provision for income taxes (237) (653) Total reclassifications for the period Net of tax $ 399 $ 1,099 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENTS | |
Summary of segment operating results | Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Master Planned Communities Land sales $ 54,906 $ 44,128 $ 177,531 $ 147,168 Builder price participation 5,472 4,483 14,613 15,631 Minimum rents — 95 (8) 376 Other land revenues 4,551 4,043 19,575 12,195 Other rental and property revenues — 13 — 33 Total revenues 64,929 52,762 211,711 175,403 Cost of sales – land 29,043 21,432 88,288 66,128 Land sales operations 8,180 10,674 24,881 30,454 Provision for doubtful accounts — — 2 — Depreciation and amortization 76 72 247 236 Interest income 8 (5) (1) (26) Interest expense (*) (6,363) (5,248) (17,901) (15,591) Equity in (earnings) loss in Real Estate and Other Affiliates (6,480) (13,700) (21,552) (22,574) Total expenses 24,464 13,225 73,964 58,627 MPC segment EBT 40,465 39,537 137,747 116,776 Operating Assets Minimum rents 44,579 44,736 135,564 127,663 Tenant recoveries 11,491 11,652 34,257 33,089 Hospitality revenues 17,776 14,088 57,190 46,126 Other rental and property revenues 5,687 3,471 16,487 10,974 Total revenues 79,533 73,947 243,498 217,852 Other property operating costs 17,473 15,611 51,041 43,524 Rental property real estate taxes 7,098 6,406 19,975 19,257 Rental property maintenance costs 3,288 3,247 9,601 8,893 Hospitality operating costs 13,525 12,662 41,534 37,379 Provision for doubtful accounts 453 1,940 1,728 4,566 Demolition costs 34 — 162 — Provision for impairment — 35,734 — 35,734 Development-related marketing costs 1,067 457 2,317 902 Depreciation and amortization 33,885 20,732 88,918 64,546 Other income, net 249 (11) 265 (3,126) Interest income 3 (3) — (19) Interest expense (*) 15,937 12,905 46,004 36,987 Equity in (earnings) loss in Real Estate and Other Affiliates (317) 210 (3,739) (2,616) Total expenses 92,695 109,890 257,806 246,027 Operating Assets segment EBT (13,162) (35,943) (14,308) (28,175) Strategic Developments Minimum rents 75 79 497 216 Tenant recoveries 95 5 370 19 Condominium rights and unit sales 113,852 115,407 342,208 362,613 Other land revenues 10 10 31 30 Other rental and property revenues 242 54 822 328 Total revenues 114,274 115,555 343,928 363,206 Condominium rights and unit cost of sales 86,531 83,218 253,209 237,759 Other property operating costs 3,881 924 9,112 3,989 Rental property real estate taxes 580 627 1,790 1,853 Rental property maintenance costs 92 85 415 324 Provision for doubtful accounts (5) — (2) 63 Demolition costs 141 256 141 1,218 Development-related marketing costs 4,799 4,259 12,470 14,684 Depreciation and amortization 18 659 1,177 1,978 Other income, net (122) (298) (137) (542) Interest income (30) (140) (124) (271) Interest expense (*) (6,953) (4,866) (18,197) (12,710) Equity in (earnings) loss in Real Estate and Other Affiliates (670) (3) (530) (10,510) Gains on sales of properties (237) (70) (32,452) (140,549) Total expenses 88,025 84,651 226,872 97,286 Strategic Developments segment EBT 26,249 30,904 117,056 265,920 Total consolidated segment EBT $ 53,552 $ 34,498 $ 240,495 $ 354,521 (*) 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. |
Reconciliation of EBT to GAAP income (loss) before taxes | Reconciliation of EBT to income before taxes Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 MPC segment EBT $ 40,465 $ 39,537 $ 137,747 $ 116,776 Operating Assets segment EBT (13,162) (35,943) (14,308) (28,175) Strategic Developments segment EBT 26,249 30,904 117,056 265,920 Total consolidated segment EBT 53,552 34,498 240,495 354,521 Corporate and other items: General and administrative (22,362) (21,128) (63,423) (61,505) Corporate interest expense, net (12,875) (13,263) (36,595) (39,358) Warrant liability loss — (7,300) (43,443) (21,630) Gain on acquisition of joint venture partner's interest — 27,087 5,490 27,087 Loss on redemption of senior notes due 2021 — — (46,410) — Corporate other (expense) income, net (33) 123 878 6,190 Corporate depreciation and amortization (1,920) (1,859) (5,851) (4,486) Total Corporate and other items (37,190) (16,340) (189,354) (93,702) Income before taxes $ 16,362 $ 18,158 $ 51,141 $ 260,819 |
Schedule of reconciliation of segment revenue to GAAP consolidated revenues | Reconciliation of Segment Basis Revenues to Revenues Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Master Planned Communities $ 64,929 $ 52,762 $ 211,711 $ 175,403 Operating Assets 79,533 73,947 243,498 217,852 Strategic Developments 114,274 115,555 343,928 363,206 Total revenues $ 258,736 $ 242,264 $ 799,137 $ 756,461 |
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) 2017 2016 Master Planned Communities $ 2,054,621 $ 1,982,639 Operating Assets 2,450,306 2,344,949 Strategic Developments 1,708,327 1,451,460 Total segment assets 6,213,254 5,779,048 Corporate and other 510,442 588,334 Total assets $ 6,723,696 $ 6,367,382 |
SPONSORS AND MANAGEMENT WARRANT
SPONSORS AND MANAGEMENT WARRANTS (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 29, 2017 | Jun. 30, 2017 | Oct. 07, 2016 | Jun. 30, 2017 | Jan. 31, 2017 | Feb. 28, 2011 | Sep. 30, 2017 | Oct. 04, 2017 | Jun. 16, 2017 | Dec. 31, 2016 | Nov. 09, 2010 |
Sponsors and Management Warrants | |||||||||||
Warrant liabilities | $ 332,170 | ||||||||||
Issuance of management warrants | $ 50,000 | ||||||||||
Sponsors Warrants [Member] | |||||||||||
Sponsors and Management Warrants | |||||||||||
Exercise price (in dollars per share) | $ 50 | ||||||||||
Warrants outstanding | 1,916,667 | ||||||||||
Warrants exercised | 1,136,517 | ||||||||||
Warrant liabilities | 123,500 | ||||||||||
Management Warrants [Member] | |||||||||||
Sponsors and Management Warrants | |||||||||||
Proceeds from issuance of Management warrants | $ 19,000 | ||||||||||
Warrant liabilities | $ 208,700 | ||||||||||
Management Warrants [Member] | Chief Executive Officer [Member] | |||||||||||
Sponsors and Management Warrants | |||||||||||
Underlying shares associated with warrant | 2,367,985 | ||||||||||
Exercise price (in dollars per share) | $ 124.64 | $ 117.01 | |||||||||
Total warrant price | $ 2,000 | $ 50,000 | |||||||||
Number of shares called by warrants (in shares) | 87,951 | 1,965,409 | |||||||||
Proceeds from issuance of Management warrants | $ 50,000 | ||||||||||
Number of shares of common stock under warrants exercised | 1,614,803 | ||||||||||
Management Warrants [Member] | President [Member] | |||||||||||
Sponsors and Management Warrants | |||||||||||
Underlying shares associated with warrant | 315,731 | ||||||||||
Exercise price (in dollars per share) | $ 42.23 | ||||||||||
Number of shares donated to charitable trust | 6,850 | ||||||||||
Number of shares issued as per warrant provision for which share settled | 4,400 | ||||||||||
Warrants exercised | 198,184 | ||||||||||
Management Warrants [Member] | Chief Financial Officer [Member] | |||||||||||
Sponsors and Management Warrants | |||||||||||
Underlying shares associated with warrant | 178,971 | 98,549 | |||||||||
Exercise price (in dollars per share) | $ 112.08 | $ 54.50 | |||||||||
Number of shares called by warrants (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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator: | ||||
Net income | $ 10,516 | $ 7,996 | $ 19,295 | $ 158,731 |
Net income attributable to noncontrolling interests | (12) | (23) | (12) | (23) |
Net income attributable to common stockholders | $ 10,504 | $ 7,973 | $ 19,283 | $ 158,708 |
Denominator: | ||||
Weighted average basic common shares outstanding | 42,845 | 39,502 | 40,860 | 39,489 |
Numerator: | ||||
Net income attributable to common stockholders | $ 10,504 | $ 7,973 | $ 19,283 | $ 158,708 |
Denominator: | ||||
Weighted average basic common shares outstanding | 42,845 | 39,502 | 40,860 | 39,489 |
Restricted stock and stock options (in shares) | 420 | 366 | 455 | 338 |
Warrants (in shares) | 2 | 2,892 | 1,783 | 2,892 |
Weighted average diluted common shares outstanding | 43,267 | 42,760 | 43,098 | 42,719 |
Basic income per share: (in dollars per share) | $ 0.25 | $ 0.20 | $ 0.47 | $ 4.02 |
Diluted income per share: (in dollars per share) | $ 0.24 | $ 0.19 | $ 0.45 | $ 3.72 |
EARNINGS PER SHARE - (Narrative
EARNINGS PER SHARE - (Narrative) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Employees Directors and Consultants Stock Options | ||||
Antidilutive securities excluded from computation of diluted earnings per share | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 311,500 | 343,500 | 317,000 | 404,000 |
Restricted Stock | ||||
Antidilutive securities excluded from computation of diluted earnings per share | ||||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 185,573 | 153,781 | 185,573 | 153,781 |
RECENT TRANSACTIONS (Details)
RECENT TRANSACTIONS (Details) ft² in Thousands, $ in Thousands | May 04, 2017USD ($)ft² | Mar. 16, 2017USD ($) | Mar. 01, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Jun. 12, 2017USD ($) |
Recent transactions | ||||||||
Equity in earnings from Real Estate and Other Affiliates | $ 7,467 | $ 13,493 | $ 25,821 | $ 35,700 | ||||
Revenues since the acquisition date | 258,736 | 242,264 | 799,137 | 756,461 | ||||
Pre-tax net loss since the acquisition date | $ 16,362 | $ 18,158 | 51,141 | 260,819 | ||||
Proceeds from sales of properties | $ 36,560 | $ 378,257 | ||||||
5.375% senior notes due March 15, 2025 | ||||||||
Recent transactions | ||||||||
Aggregate principal amount of debt issued | $ 800,000 | $ 200,000 | ||||||
Interest rate (as a percent) | 5.375% | |||||||
Debt instrument, issuance at premium to par | 2.25% | |||||||
Redemption price percentage at which Notes can be redeemed | 105.375% | |||||||
Senior Notes 6.875 Percent Due 2021 | ||||||||
Recent transactions | ||||||||
Aggregate principal amount of debt issued | $ 750,000 | |||||||
Interest rate (as a percent) | 6.875% | 6.875% | 6.875% | |||||
Redemption price percentage of principal | 100.00% | |||||||
Las Vegas 51s LLC | ||||||||
Recent transactions | ||||||||
Economic/Legal Ownership | 50.00% | |||||||
Payment to acquire JV partner's interest | $ 16,400 | |||||||
Assets acquired and consolidated into financial statements | 36,000 | |||||||
Liabilities assumed and consolidated into financial statements | 3,200 | |||||||
Gain recognized from acquisition | 5,400 | |||||||
Contingent liability recorded per the terms of the purchase agreement | $ 400 | $ 400 | ||||||
Adjustment to allocate from identified finite-lived intangibles | 24,900 | $ 24,900 | ||||||
Acquired intangible assets weighted average amortization period | 11 years | |||||||
Equity in earnings from Real Estate and Other Affiliates | $ 200 | |||||||
Revenues since the acquisition date | $ 6,800 | |||||||
Pre-tax net loss since the acquisition date | 500 | |||||||
110 N Wacker Drive | ||||||||
Recent transactions | ||||||||
Rent expense not borne by tenant | $ 6,100 | |||||||
Operating leases, rent expense, percentage | 100.00% | |||||||
Area of Land | ft² | 1,350 | |||||||
Las Vegas 51s LLC | ||||||||
Recent transactions | ||||||||
Adjustment to allocate to finite-lived intangibles | $ 7,900 | $ 7,900 | ||||||
Maximum | 5.375% senior notes due March 15, 2025 | ||||||||
Recent transactions | ||||||||
Redemption price percentage of principal | 35.00% |
IMPAIRMENT (Details)
IMPAIRMENT (Details) | Dec. 29, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($)ft² | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($)ft² |
Gain recognized on the sale of Redlands Promenade | $ 32,452,000 | $ 140,549,000 | |||
Capitalization rate (as a percent) | 6.75% | ||||
Impairment on real estate | $ 0 | $ 0 | $ 0 | $ 0 | |
Park West | |||||
Area of Real Estate Property | ft² | 249,177 | 249,177 | |||
Net carrying value | $ 34,900,000 | $ 34,900,000 | |||
Provision for impairment | $ 35,734,000 | ||||
Park West | Disposal by Sale | |||||
Gain recognized on the sale of Redlands Promenade | $ 1,100,000 | ||||
Proceeds from Sale of Real Estate | $ 32,500,000 |
FAIR VALUE OF FINANCIAL INSTR41
FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets and Liabiliites Measured on a Recurring Basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Interest rate swaps | $ 149 | |
Liabilities | ||
Interest rate swaps | $ 7,742 | |
Warrants | 332,170 | |
Recurring | ||
Assets: | ||
Cash equivalents | 50,041 | 18 |
Liabilities | ||
Warrants | 332,170 | |
Recurring | Level 1 | ||
Assets: | ||
Cash equivalents | 50,041 | 18 |
Recurring | Level 3 | ||
Liabilities | ||
Warrants | 332,170 | |
Interest rate swap contracts | Recurring | ||
Assets: | ||
Interest rate swaps | 3,244 | 149 |
Liabilities | ||
Interest rate swaps | 7,742 | |
Interest rate swap contracts | Recurring | Level 2 | ||
Assets: | ||
Interest rate swaps | 3,244 | $ 149 |
Liabilities | ||
Interest rate swaps | $ 7,742 |
FAIR VALUE OF FINANCIAL INSTR42
FAIR VALUE OF FINANCIAL INSTRUMENTS (Reconciliation of Warrants Using Level 3 Inputs) (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) | |||
Exercises of Sponsor and Management Warrants | $ 375,613 | ||
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 | Level 3 | |||
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 | 332,170 | $ 307,760 | $ 307,760 |
Warrant liability loss | 43,443 | 21,630 | |
Exercises of Sponsor and Management Warrants | $ (375,613) | ||
Balance at the end of the period | $ 329,390 | $ 332,170 | |
Expected Volatility (as a percent) | 31.00% | ||
Warrant | Minimum | Level 3 | |||
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) | 0.00% | ||
Warrant | Maximum | Level 3 | |||
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) | 1.00% |
FAIR VALUE OF FINANCIAL INSTR43
FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets and Liabiliites Measured on a Nonrecurring Basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Liabilities: | ||
Allowance, Accounts receivable | $ 8,600 | $ 7,900 |
Recurring | ||
Assets: | ||
Cash | 50,041 | 18 |
Recurring | Level 1 | ||
Assets: | ||
Cash | 50,041 | 18 |
Recurring | Level 1 | Carrying Amount | ||
Assets: | ||
Cash | 551,893 | 665,492 |
Recurring | Level 1 | Estimated Fair Value | ||
Assets: | ||
Cash | 551,893 | 665,492 |
Recurring | Level 2 | Carrying Amount | ||
Liabilities: | ||
Fixed-rate debt | 1,508,746 | 1,184,141 |
Variable-rate debt | 1,505,534 | 1,524,319 |
Recurring | Level 2 | Estimated Fair Value | ||
Liabilities: | ||
Fixed-rate debt | 1,529,282 | 1,224,573 |
Variable-rate debt | 1,505,534 | 1,524,319 |
Recurring | Level 3 | Carrying Amount | ||
Assets: | ||
Accounts receivable, net | 9,654 | 10,038 |
Recurring | Level 3 | Estimated Fair Value | ||
Assets: | ||
Accounts receivable, net | $ 9,654 | $ 10,038 |
REAL ESTATE AND OTHER AFFILIA44
REAL ESTATE AND OTHER AFFILIATES (Summary of Investments in Real Estate and Other Affiliates) (Details) $ in Thousands | Mar. 01, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Investment in Real Estate and Other Affiliates | ||||||
Carrying Value | $ 89,155 | $ 89,155 | $ 76,376 | |||
Share of Earnings/Dividends | 7,467 | $ 13,493 | 25,821 | $ 35,700 | ||
Aggregate carrying value of unconsolidated VIEs | 2,200 | $ 2,200 | 13,800 | |||
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 | 21,900 | $ 21,900 | 21,700 | |||
Carrying values of the liabilities associated with the operations of the consolidated VIEs | 1,500 | 1,500 | 1,400 | |||
Cost-method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Carrying Value | 4,407 | 4,407 | 4,406 | |||
Share of Earnings/Dividends | 3,383 | 2,616 | ||||
Las Vegas 51s LLC | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 50.00% | |||||
Share of Earnings/Dividends | $ 200 | |||||
Circle T Ranch and Power Center [Member] | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Share of Earnings/Dividends | 10,500 | |||||
Accounts Payable and Accrued Liabilities | The Metropolitan Downtown Columbia [Member] | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Investment balance | (2,000) | (2,000) | ||||
Master Planned Communities | The Summit | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Carrying Value | 54,203 | 54,203 | $ 32,653 | |||
Share of Earnings/Dividends | $ 6,480 | 13,700 | $ 21,552 | 22,574 | ||
Operating Assets | Las Vegas 51s LLC | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 100.00% | 100.00% | 50.00% | |||
Carrying Value | $ 11,062 | |||||
Share of Earnings/Dividends | 2 | $ (152) | 297 | |||
Operating Assets | Constellation [Member] | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | |||
Carrying Value | $ 2,175 | $ 2,175 | $ 2,730 | |||
Share of Earnings/Dividends | $ 107 | $ (215) | ||||
Operating Assets | The Metropolitan Downtown Columbia [Member] | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | |||
Carrying Value | $ (1,064) | |||||
Share of Earnings/Dividends | $ 82 | (351) | $ 356 | (863) | ||
Operating Assets | Millennium Six Pines Apartments | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 100.00% | 100.00% | 100.00% | |||
Share of Earnings/Dividends | 9 | 44 | ||||
Operating Assets | Stewart Title of Montgomery County, TX [Member] | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | |||
Carrying Value | $ 3,834 | $ 3,834 | $ 3,611 | |||
Share of Earnings/Dividends | $ 113 | 221 | $ 322 | 477 | ||
Operating Assets | Woodlands Sarofim 1 [Member] | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 20.00% | 20.00% | 20.00% | |||
Carrying Value | $ 2,688 | $ 2,688 | $ 2,683 | |||
Share of Earnings/Dividends | 15 | 26 | 45 | 121 | ||
Strategic Developments | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Carrying Value | 84,748 | 84,748 | $ 71,970 | |||
Share of Earnings/Dividends | $ 7,467 | 13,493 | $ 22,438 | 33,084 | ||
Strategic Developments | Circle T Ranch and Power Center [Member] | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | |||
Carrying Value | $ 5,106 | $ 5,106 | $ 4,956 | |||
Share of Earnings/Dividends | $ 650 | $ 650 | 10,498 | |||
Strategic Developments | HHMK Development LLC [Member] | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | |||
Carrying Value | $ 10 | $ 10 | $ 10 | |||
Strategic Developments | KR Holdings LLC [Member] | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | |||
Carrying Value | $ 744 | $ 744 | $ 707 | |||
Share of Earnings/Dividends | $ 20 | 3 | $ 36 | 12 | ||
Strategic Developments | m.flats/TEN.M | Equity Method Investments | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 50.00% | 50.00% | 50.00% | |||
Carrying Value | $ 6,849 | $ 6,849 | $ 6,379 | |||
Strategic Developments | 33 Peck Slip (Grandview SHG, LLC) [Member] | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Economic/Legal Ownership | 35.00% | 35.00% | 35.00% | |||
Carrying Value | $ 9,139 | $ 9,139 | $ 8,243 | |||
Share of Earnings/Dividends | $ (117) | (156) | $ (76) | |||
Unconsolidated Properties [Member] | ||||||
Investment in Real Estate and Other Affiliates | ||||||
Secured debt | 190,100 | 190,100 | ||||
Share of the entity in secured debt | $ 88,000 | $ 88,000 |
REAL ESTATE AND OTHER AFFILIA45
REAL ESTATE AND OTHER AFFILIATES (Narrative) (Details) | Jun. 01, 2016a | Jan. 24, 2014USD ($)aitem | Oct. 04, 2013USD ($)a | Jan. 31, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Mar. 31, 2015USD ($)item | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Real Estate and Other Affiliates | |||||||||||
Gain recognized on the sale of Redlands Promenade | $ 32,452,000 | $ 140,549,000 | |||||||||
Equity in earnings | $ 7,467,000 | $ 13,493,000 | 25,821,000 | 35,700,000 | |||||||
The Summit | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Preferred return, on capital (as a percent) | 5.00% | ||||||||||
Entitlement of distribution by joint venture (in times) | item | 2 | ||||||||||
Return on capital contributions (as a percent) | 100.00% | ||||||||||
Total assets | 163,600 | 163,600 | $ 151,300 | ||||||||
Total liabilities | 107,300 | 107,300 | 116,500 | ||||||||
Equity | 56,300 | 56,300 | 34,800 | ||||||||
Revenues | 14,200 | 24,700 | 46,300 | 41,600 | |||||||
Gross margin | 6,500 | 13,700 | 21,600 | 22,600 | |||||||
Net income | 7,700 | 14,600 | 26,400 | 25,100 | |||||||
33 Peck Slip (Grandview SHG, LLC) [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Payments to Acquire Interest in Joint Venture | 700,000 | 2,300,000 | |||||||||
Capital contribution | $ 6,000,000 | ||||||||||
Investment in joint venture | $ 9,100,000 | $ 9,100,000 | |||||||||
33 Peck Slip (Grandview SHG, LLC) [Member] | Bridge Loan [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Interest rate margin (as a percent) | 5.00% | ||||||||||
Amount of bridge loan | $ 25,000,000 | ||||||||||
33 Peck Slip (Grandview SHG, LLC) [Member] | Construction Loan Payable [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Redevelopment loan | $ 36,000,000 | 36,000,000 | |||||||||
m.flats/TEN.M | |||||||||||
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 | ||||||||||
Total book value contribution | 7,100,000 | ||||||||||
Transaction value, per constructed unit of land contributed to joint venture | $ 53,500 | ||||||||||
Distribution of the cash contributed by joint venture partner | 7,300,000 | ||||||||||
Contribution made till date | 6,300,000 | ||||||||||
Gain recognized on the sale of Redlands Promenade | $ 200,000 | ||||||||||
m.flats/TEN.M | Kettler Inc | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Payments to Acquire Interest in Joint Venture | 16,100,000 | ||||||||||
m.flats/TEN.M | Construction Loan Payable [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Non-recourse construction loan | $ 88,000,000 | ||||||||||
Option to extend, term | 1 year | ||||||||||
Constellation [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Number of units in Class A apartment building to be constructed | item | 124 | ||||||||||
Area Of Land In Downtown Summerlin | a | 400 | ||||||||||
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 | ||||||||||
Percentage of ownership interest of partners in joint venture | 50.00% | ||||||||||
Percent Share of Proceeds Upon Sale Of Property | 50.00% | ||||||||||
Percentage of proceeds in excess of an amount determined by applying a specified capitalization rate to NOI | 100.00% | ||||||||||
Capitalization rate (as a percent) | 7.00% | ||||||||||
Percentage of project occupied | 87.90% | 87.90% | |||||||||
Percentage of project leased | 95.20% | 95.20% | |||||||||
Constellation [Member] | Calida Group [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Percentage of ownership interest of partners in joint venture | 50.00% | ||||||||||
Payments to Acquire Interest in Joint Venture | $ 3,200,000 | ||||||||||
Constellation [Member] | Bridge Loan [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Non-recourse construction loan | $ 15,800,000 | ||||||||||
Circle T Ranch and Power Center [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Area of land sold | a | 72 | ||||||||||
Equity in earnings | $ 10,500,000 | ||||||||||
Equity Method Investments | The Summit | |||||||||||
Real Estate and Other Affiliates | |||||||||||
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, price per acre | 226,000 | ||||||||||
Fair value of the land contributed to joint venture | 13,400,000 | ||||||||||
Equity Method Investments | The Summit | Maximum | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Maximum capital contribution required | $ 30,000,000 | ||||||||||
Equity Method Investments | Constellation [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Future contribution required | $ 1,000,000 | ||||||||||
One Month LIBOR | m.flats/TEN.M | Construction Loan Payable [Member] | |||||||||||
Real Estate and Other Affiliates | |||||||||||
Interest rate margin (as a percent) | 2.40% |
MORTGAGES, NOTES AND LOANS PA46
MORTGAGES, NOTES AND LOANS PAYABLE (Summary of Mortgages, Notes and Loans Payable) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Unamortized bond issuance costs | $ (7,089) | $ (5,779) |
Deferred Financing Costs | (13,743) | (11,934) |
Total mortgages, notes and loans payable | 2,993,448 | 2,690,747 |
Collateralized mortgages, notes and loans payable | ||
Debt Instrument [Line Items] | ||
Fixed-rate debt: | 1,476,480 | 1,140,118 |
Variable-rate debt: | 1,505,534 | 1,524,319 |
Amount of variable-rate debt swapped to fixed rate | 179,300 | 182,100 |
Special Improvement District bonds | ||
Debt Instrument [Line Items] | ||
Fixed-rate debt: | $ 32,266 | $ 44,023 |
MORTGAGES, NOTES AND LOANS PA47
MORTGAGES, NOTES AND LOANS PAYABLE (Schedule of Debt by Property) (Details) | Oct. 31, 2017USD ($) | Oct. 24, 2017 | Oct. 19, 2017USD ($) | Sep. 13, 2017USD ($)item | Aug. 11, 2017USD ($) | Jul. 14, 2017USD ($) | Jul. 13, 2017 | May 31, 2017USD ($) | Apr. 27, 2017USD ($) | Apr. 06, 2017USD ($) | Mar. 16, 2017USD ($) | Feb. 23, 2017USD ($)Option | Jan. 19, 2017USD ($) | Nov. 25, 2016USD ($) | Aug. 31, 2016item | Jul. 31, 2016USD ($) | Jul. 31, 2015USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2017USD ($)item | Sep. 30, 2016USD ($) | Jun. 27, 2017USD ($)ft² | Jun. 12, 2017USD ($) | Jan. 31, 2016item |
Mortgages, notes and loans payable | |||||||||||||||||||||||
Unamortized bond issuance costs | $ (5,779,000) | $ (7,089,000) | |||||||||||||||||||||
Deferred Financing Costs | (11,934,000) | (13,743,000) | |||||||||||||||||||||
Total mortgages, notes and loans payable | $ 2,690,747,000 | 2,993,448,000 | |||||||||||||||||||||
Repayments of debt | $ 1,130,337,000 | $ 62,996,000 | |||||||||||||||||||||
Weighted average interest rate (as a percent) | 4.71% | 4.64% | |||||||||||||||||||||
Net cash proceeds received from issuance | $ 1,433,437,000 | 422,661,000 | |||||||||||||||||||||
Wall Street Journal Prime | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Variable rate basis | Wall Street Journal Prime | ||||||||||||||||||||||
Other Corporate Financing Arrangements | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.00% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 15,948,000 | $ 15,224,000 | |||||||||||||||||||||
Other Corporate Financing Arrangements | Recourse Debt | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 15,200,000 | ||||||||||||||||||||||
Senior Notes 6.875 Percent Due 2021 | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 6.88% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 750,000,000 | ||||||||||||||||||||||
Aggregate principal amount of debt issued | $ 750,000,000 | ||||||||||||||||||||||
Fixed interest rate (as a percent) | 6.875% | 6.875% | |||||||||||||||||||||
Senior Notes 6.875 Percent Due 2021 | Recourse Debt | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 1,000,000,000 | ||||||||||||||||||||||
5.375% senior notes due March 15, 2025 | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 5.38% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 1,000,000,000 | ||||||||||||||||||||||
Aggregate principal amount of debt issued | $ 800,000,000 | $ 200,000,000 | |||||||||||||||||||||
Fixed interest rate (as a percent) | 5.375% | ||||||||||||||||||||||
Redemption price percentage at which Notes can be redeemed | 105.375% | ||||||||||||||||||||||
Downtown Summerlin | LIBOR | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Variable rate basis | LIBOR | LIBOR | |||||||||||||||||||||
Interest rate margin (as a percent) | 2.15% | 2.25% | |||||||||||||||||||||
Downtown Summerlin | Recourse Debt | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 275,900,000 | ||||||||||||||||||||||
Woodlands Properties | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Land, buildings and equipment and developments in progress pledged as collateral | 3,500,000,000 | ||||||||||||||||||||||
m.flats/TEN.M | Construction Loan Payable [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Number of extension options | item | 3 | ||||||||||||||||||||||
Master Planned Communities | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 255,438,000 | $ 244,379,000 | |||||||||||||||||||||
Master Planned Communities | The Woodlands Master Credit Facility | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Facility Amount | $ 200,000,000 | ||||||||||||||||||||||
Variable rate basis | One-month LIBOR | ||||||||||||||||||||||
Interest rate margin (as a percent) | 2.75% | ||||||||||||||||||||||
Number of extension options | item | 2 | ||||||||||||||||||||||
Option to extend, term | 1 year | 1 year | |||||||||||||||||||||
Master Planned Communities | Term Loan [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Facility Amount | $ 100,000,000 | ||||||||||||||||||||||
Master Planned Communities | Revolving Credit Facility [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Facility Amount | $ 180,000,000 | $ 100,000,000 | |||||||||||||||||||||
Maximum additional borrowing amount | $ 30,000,000 | ||||||||||||||||||||||
Extension period at borrower's option | 1 year | ||||||||||||||||||||||
Master Planned Communities | Revolving Credit Facility [Member] | One Month LIBOR | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Variable rate basis | one | ||||||||||||||||||||||
Interest rate margin (as a percent) | 2.75% | ||||||||||||||||||||||
Master Planned Communities | Bridgeland | Bridgeland Credit Facility | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.60% | ||||||||||||||||||||||
Facility Amount | $ 65,000,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 65,000,000 | 65,000,000 | |||||||||||||||||||||
Master Planned Communities | Summerlin | Special Improvement District bonds | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
New SIDs issued | 0 | ||||||||||||||||||||||
Bond obligation | $ 9,900,000 | ||||||||||||||||||||||
Master Planned Communities | Summerlin South | S124 [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 5.95% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 123,000 | $ 104,000 | |||||||||||||||||||||
Master Planned Communities | Summerlin South | S128 [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 7.30% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 440,000 | $ 390,000 | |||||||||||||||||||||
Master Planned Communities | Summerlin South | S132 [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 6.00% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 1,268,000 | $ 1,082,000 | |||||||||||||||||||||
Master Planned Communities | Summerlin South | S151 [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 6.00% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 4,159,000 | $ 3,964,000 | |||||||||||||||||||||
Master Planned Communities | Summerlin South | S128C [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 6.05% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 4,600,000 | $ 4,467,000 | |||||||||||||||||||||
Master Planned Communities | Summerlin South | S159 | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 6.00% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 2,389,000 | $ 2,353,000 | |||||||||||||||||||||
Master Planned Communities | Summerlin West | S812 | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 6.00% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 27,459,000 | $ 17,019,000 | |||||||||||||||||||||
Master Planned Communities | Woodlands Properties | The Woodlands Master Credit Facility | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Option to extend, term | 1 year | ||||||||||||||||||||||
Outstanding principal balance of debt that is swapped to fixed rate through maturity | $ 175,000,000 | ||||||||||||||||||||||
Maximum facility amount at second extension option | $ 25,000,000 | ||||||||||||||||||||||
Master Planned Communities | The Woodlands Master | The Woodlands Master Credit Facility | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.98% | ||||||||||||||||||||||
Facility Amount | $ 180,000,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 150,000,000 | 150,000,000 | |||||||||||||||||||||
Operating Assets | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 1,526,227,000 | $ 1,547,474,000 | |||||||||||||||||||||
Operating Assets | One Month LIBOR | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 1.23% | ||||||||||||||||||||||
Variable rate basis | one-month LIBOR | ||||||||||||||||||||||
Operating Assets | Other | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 235,000 | ||||||||||||||||||||||
Operating Assets | Capital Lease Obligations [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.60% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 1,000 | ||||||||||||||||||||||
Operating Assets | Downtown Summerlin | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.38% | ||||||||||||||||||||||
Facility Amount | $ 275,900,000 | $ 275,885,000 | |||||||||||||||||||||
Outstanding balance | $ 311,800,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 302,981,000 | $ 275,883,000 | |||||||||||||||||||||
Repayments of debt | $ 30,000,000 | ||||||||||||||||||||||
Operating Assets | Downtown Summerlin | One Month LIBOR | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Variable rate basis | one-month LIBOR | ||||||||||||||||||||||
Interest rate margin (as a percent) | 2.15% | ||||||||||||||||||||||
Operating Assets | Downtown Summerlin | Recourse Debt | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Maximum percent recourse | 35.00% | ||||||||||||||||||||||
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% | ||||||||||||||||||||||
Decrease in exposure of outstanding principal (as a percent) | 15.00% | ||||||||||||||||||||||
Recourse on loan (as a percent) | 35.00% | ||||||||||||||||||||||
Operating Assets | Downtown Summerlin | S128 [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 6.05% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 3,350,000 | $ 2,887,000 | |||||||||||||||||||||
Operating Assets | Downtown Summerlin | Downtown Summerlin Credit Facility [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Number of extension options | item | 1 | ||||||||||||||||||||||
Option to extend, term | 1 year | ||||||||||||||||||||||
Operating Assets | 1701 Lake Robbins | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 5.81% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 4,600,000 | ||||||||||||||||||||||
Repayments of debt | $ 4,600,000 | ||||||||||||||||||||||
Operating Assets | 1725-35 Hughes Landing Boulevard | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 2.88% | ||||||||||||||||||||||
Facility Amount | $ 143,000,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 105,647,000 | $ 115,999,000 | |||||||||||||||||||||
Operating Assets | 70 Columbia Corporate Center | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.23% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 20,000,000 | $ 20,000,000 | |||||||||||||||||||||
Immediate advance on loan after modification of agreement | $ 20,000,000 | ||||||||||||||||||||||
Area of real estate property acquired (in square foot) | ft² | 170,741 | ||||||||||||||||||||||
Operating Assets | The Westin at the woodlands | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.88% | ||||||||||||||||||||||
Facility Amount | $ 57,946,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 58,077,000 | $ 57,946,000 | |||||||||||||||||||||
Operating Assets | 110 N Wacker Drive | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 5.21% | ||||||||||||||||||||||
Outstanding balance | $ 19,900,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 22,704,000 | $ 19,870,000 | |||||||||||||||||||||
Fixed interest rate per swap (as a percent) | 5.21% | ||||||||||||||||||||||
Operating Assets | 110 N Wacker Drive | Recourse Debt | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 19,900,000 | ||||||||||||||||||||||
Operating Assets | Outlet Collection at Riverwalk | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.98% | ||||||||||||||||||||||
Facility Amount | $ 54,325,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 55,778,000 | 54,325,000 | |||||||||||||||||||||
Option to extend, term | 1 year | ||||||||||||||||||||||
Operating Assets | Outlet Collection at Riverwalk | Construction Loan Payable [Member] | Recourse Debt | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 27,200,000 | ||||||||||||||||||||||
Recourse on loan (as a percent) | 50.00% | ||||||||||||||||||||||
Operating Assets | Three Hughes Landing | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.58% | ||||||||||||||||||||||
Facility Amount | $ 65,455,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 35,053,000 | $ 43,661,000 | |||||||||||||||||||||
Operating Assets | Lakeland Village Center | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.58% | ||||||||||||||||||||||
Facility Amount | $ 14,000,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 9,979,000 | $ 11,292,000 | |||||||||||||||||||||
Operating Assets | Embassy Suites at Hughes Landing | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.73% | ||||||||||||||||||||||
Facility Amount | $ 37,100,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 29,461,000 | $ 31,245,000 | |||||||||||||||||||||
Operating Assets | Resort and Conference Center | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.48% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 70,000,000 | $ 67,000,000 | |||||||||||||||||||||
Operating Assets | One Merriweather | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.38% | ||||||||||||||||||||||
Facility Amount | $ 49,900,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 23,588,000 | $ 41,271,000 | |||||||||||||||||||||
Operating Assets | HHC 242 Self Storage Facility | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.83% | ||||||||||||||||||||||
Facility Amount | $ 6,658,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 3,708,000 | $ 6,137,000 | |||||||||||||||||||||
Operating Assets | 10-60 Columbia Corporate Center | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.20% | ||||||||||||||||||||||
Outstanding balance | $ 40,000,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 80,000,000 | $ 80,000,000 | |||||||||||||||||||||
Fixed interest rate per swap (as a percent) | 3.41% | ||||||||||||||||||||||
Operating Assets | Waterway Square 2025 | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.79% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 13,886,000 | $ 13,708,000 | |||||||||||||||||||||
Operating Assets | Millennium Waterway Apartments | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.75% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 55,584,000 | $ 55,344,000 | |||||||||||||||||||||
Operating Assets | Ward Village | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.69% | ||||||||||||||||||||||
Outstanding balance | $ 119,400,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 238,718,000 | $ 238,718,000 | |||||||||||||||||||||
Fixed interest rate per swap (as a percent) | 3.64% | ||||||||||||||||||||||
Operating Assets | New Trails 9303 [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.88% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 12,378,000 | $ 12,098,000 | |||||||||||||||||||||
Operating Assets | Waterway 4 [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.88% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 36,249,000 | $ 35,431,000 | |||||||||||||||||||||
Operating Assets | 3831 Technology Forest | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.50% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 22,383,000 | $ 22,088,000 | |||||||||||||||||||||
Operating Assets | Kewalo Basin Harbor | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.98% | ||||||||||||||||||||||
Facility Amount | $ 11,562,000 | ||||||||||||||||||||||
Aggregate principal amount of debt issued | $ 11,600,000 | ||||||||||||||||||||||
Operating Assets | Kewalo Basin Harbor | One Month LIBOR | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Variable rate basis | one-month LIBOR | ||||||||||||||||||||||
Interest rate margin (as a percent) | 2.75% | ||||||||||||||||||||||
Operating Assets | Millennium Six Pines Apartments | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.39% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 42,500,000 | $ 42,500,000 | |||||||||||||||||||||
Operating Assets | Waterway Square 3 [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.94% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 51,590,000 | $ 50,647,000 | |||||||||||||||||||||
Operating Assets | One Lakes Edge | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.50% | ||||||||||||||||||||||
Facility Amount | $ 73,500,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 71,900,000 | 68,874,000 | $ 69,440,000 | ||||||||||||||||||||
Repayments of debt | $ 3,000,000 | ||||||||||||||||||||||
Operating Assets | One Lakes Edge | One Month LIBOR | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Variable rate basis | One-month LIBOR | ||||||||||||||||||||||
Interest rate margin (as a percent) | 3.50% | ||||||||||||||||||||||
Operating Assets | One Lakes Edge | Fannie Mae | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Aggregate principal amount of debt issued | $ 69,400,000 | ||||||||||||||||||||||
Number of extension options | Option | 2 | ||||||||||||||||||||||
Option to extend, term | 1 year | ||||||||||||||||||||||
Fixed interest rate (as a percent) | 4.50% | ||||||||||||||||||||||
Interest Period | 4 years | ||||||||||||||||||||||
Amortization Period | 30 years | ||||||||||||||||||||||
Operating Assets | One Hughes Landing [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.30% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 52,000,000 | $ 52,000,000 | |||||||||||||||||||||
Operating Assets | Two Hughes Landing [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.20% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 48,000,000 | $ 48,000,000 | |||||||||||||||||||||
Operating Assets | Hughes Landing Retail [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.50% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 35,000,000 | $ 35,000,000 | |||||||||||||||||||||
Operating Assets | Columbia Regional Building [Member] | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.48% | 4.48% | |||||||||||||||||||||
Facility Amount | $ 23,000,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 22,188,000 | $ 25,000,000 | |||||||||||||||||||||
Aggregate principal amount of debt issued | $ 25,000,000 | ||||||||||||||||||||||
Interest Period | 2 years | ||||||||||||||||||||||
Amortization Period | 30 years | ||||||||||||||||||||||
Operating Assets | 100 Fellowship Drive | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Facility Amount | $ 51,400,000 | ||||||||||||||||||||||
Operating Assets | 100 Fellowship Drive | One Month LIBOR | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Variable rate basis | one | ||||||||||||||||||||||
Interest rate margin (as a percent) | 1.50% | ||||||||||||||||||||||
Operating Assets | HHC 2978 Self-Storage Facility | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.83% | ||||||||||||||||||||||
Facility Amount | $ 6,368,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 1,715,000 | $ 5,521,000 | |||||||||||||||||||||
Operating Assets | One Mall North | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.48% | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 14,463,000 | ||||||||||||||||||||||
Operating Assets | 10-60 Columbia and One mall north Building | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Aggregate principal amount of debt issued | $ 94,500,000 | ||||||||||||||||||||||
Operating Assets | One mall north Building,10-60 and 70 Columbia corporate Center | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Facility Amount | $ 114,500,000 | ||||||||||||||||||||||
Number of notes in master facility | item | 3 | ||||||||||||||||||||||
Number of master facilities | item | 1 | ||||||||||||||||||||||
Land, buildings and equipment and developments in progress pledged as collateral | $ 114,500,000 | ||||||||||||||||||||||
Strategic Developments | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | 160,847,000 | $ 207,203,000 | |||||||||||||||||||||
Strategic Developments | Summerlin | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Aggregate principal amount of debt issued | $ 64,600,000 | ||||||||||||||||||||||
Strategic Developments | Summerlin | Wall Street Journal Prime | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate margin (as a percent) | 0.40% | ||||||||||||||||||||||
Strategic Developments | Waiea And Anaha Condominiums | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 7.98% | ||||||||||||||||||||||
Facility Amount | $ 410,000,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 160,847,000 | $ 195,269,000 | |||||||||||||||||||||
Repayments of debt | $ 195,300,000 | ||||||||||||||||||||||
Strategic Developments | Ke Kilohana | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 4.48% | ||||||||||||||||||||||
Facility Amount | $ 142,656,000 | ||||||||||||||||||||||
Strategic Developments | Two Merriweather | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 3.73% | ||||||||||||||||||||||
Facility Amount | $ 33,156,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 11,932,000 | ||||||||||||||||||||||
Strategic Developments | Ae'o | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 5.23% | ||||||||||||||||||||||
Facility Amount | $ 230,000,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 1,000 | ||||||||||||||||||||||
Strategic Developments | 100 Fellowship Drive | |||||||||||||||||||||||
Mortgages, notes and loans payable | |||||||||||||||||||||||
Interest rate (as a percent) | 2.73% | ||||||||||||||||||||||
Facility Amount | $ 51,426,000 | ||||||||||||||||||||||
Mortgages, notes, and loans payable, gross | $ 1,000 |
DERIVATIVE INSTRUMENTS AND HE48
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Summary of the Notional Amount and Fair Value of Derivatives) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Fair value of derivative instruments | |||||
Total fair value derivative assets | $ 3,244 | $ 3,244 | $ 4,136 | ||
Total fair value derivative liabilities | (7,742) | (7,742) | (3,987) | ||
Interest Expense. | 17,241 | $ 16,102 | 49,547 | $ 48,628 | |
Interest rate swap contracts | Designated as Hedging Instrument | Accounts Payable and Accrued Liabilities | Fixed Interest Rate 2.96%, Maturing October 2019 | |||||
Fair value of derivative instruments | |||||
Notional Amount | $ 19,870 | $ 19,870 | |||
Fixed Interest Rate | 2.96% | 2.96% | |||
Total fair value derivative liabilities | $ (427) | $ (427) | (740) | ||
Interest rate swap contracts | Designated as Hedging Instrument | Accounts Payable and Accrued Liabilities | Fixed Interest Rate 2.65%, Maturing December 2027 | |||||
Fair value of derivative instruments | |||||
Notional Amount | $ 50,000 | $ 50,000 | |||
Fixed Interest Rate | 2.65% | 2.65% | |||
Total fair value derivative liabilities | $ (1,452) | $ (1,452) | (610) | ||
Interest rate swap contracts | Designated as Hedging Instrument | Accounts Payable and Accrued Liabilities | Fixed Interest Rate 2.68%, Maturing December 2027 | |||||
Fair value of derivative instruments | |||||
Notional Amount | $ 100,000 | $ 100,000 | |||
Fixed Interest Rate | 2.68% | 2.68% | |||
Total fair value derivative liabilities | $ (3,165) | $ (3,165) | (1,479) | ||
Interest rate swap contracts | Designated as Hedging Instrument | Accounts Payable and Accrued Liabilities | Fixed Interest Rate 2.62%, Maturing December 2027 | |||||
Fair value of derivative instruments | |||||
Notional Amount | $ 100,000 | $ 100,000 | |||
Fixed Interest Rate | 2.62% | 2.62% | |||
Total fair value derivative liabilities | $ (2,698) | $ (2,698) | (1,015) | ||
Interest rate swap contracts | Designated as Hedging Instrument | Prepaid expenses and other assets, net | Fixed Interest Rate 1.66%, Maturing May 2020 | |||||
Fair value of derivative instruments | |||||
Notional Amount | $ 40,000 | $ 40,000 | |||
Fixed Interest Rate | 1.66% | 1.66% | |||
Total fair value derivative assets | $ (30) | $ (30) | |||
Total fair value derivative liabilities | (143) | ||||
Interest rate swap contracts | Designated as Hedging Instrument | Prepaid expenses and other assets, net | Fixed Interest Rate 1.14%, Maturing September 2021 | |||||
Fair value of derivative instruments | |||||
Notional Amount | $ 119,359 | $ 119,359 | |||
Fixed Interest Rate | 1.14% | 1.14% | |||
Total fair value derivative assets | $ 3,069 | $ 3,069 | 3,368 | ||
Interest Rate Cap | Designated as Hedging Instrument | Accounts Payable and Accrued Liabilities | Fixed Interest Rate 5.00%, Maturing August 2017 | |||||
Fair value of derivative instruments | |||||
Notional Amount | $ 100,000 | ||||
Fixed Interest Rate | 5.00% | ||||
Interest Rate Cap | Designated as Hedging Instrument | Accounts Payable and Accrued Liabilities | Fixed Interest Rate 5.00 Maturing August 2019 | |||||
Fair value of derivative instruments | |||||
Notional Amount | $ 75,000 | $ 75,000 | |||
Fixed Interest Rate | 5.00% | 5.00% | |||
Interest Rate Cap | Not Designated as Hedging Instrument, Economic Hedge | Accounts Payable and Accrued Liabilities | Fixed Interest Rate 2.50%, Maturing December 2019 | |||||
Fair value of derivative instruments | |||||
Interest (income) expense | $ (100) | $ (600) | |||
Interest Rate Cap | Not Designated as Hedging Instrument, Economic Hedge | Prepaid expenses and other assets, net | Fixed Interest Rate 2.50%, Maturing December 2019 | |||||
Fair value of derivative instruments | |||||
Notional Amount | $ 230,000 | $ 230,000 | |||
Fixed Interest Rate | 2.50% | 2.50% | |||
Total fair value derivative assets | $ 145 | $ 145 | $ 768 |
DERIVATIVE INSTRUMENTS AND HE49
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Impact of Financial Instruments on Statement of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Interest Expense | ||||
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Reclassified from AOCI into Earnings | $ (68) | $ (356) | $ (399) | $ (1,099) |
Cash Flow Hedging | ||||
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Recognized in OCI | (7) | 141 | (2,588) | (15,975) |
Cash Flow Hedging | Interest rate swap contracts | ||||
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Recognized in OCI | $ (7) | (203) | (272) | (1,409) |
Cash Flow Hedging | Forward Starting Swaps | ||||
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Recognized in OCI | $ 344 | $ (2,316) | $ (14,566) |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
INCOME TAXES | ||||
Effective tax rate (as a percent) | 35.80% | 56.00% | 62.30% | 39.10% |
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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Weighted Average Exercise Price | ||||
Stock based compensation expense | $ 4,954 | $ 6,324 | ||
Employees Directors and Consultants Stock Options | ||||
Stock Options | ||||
Share based compensation costs capitalized | $ 200 | $ 300 | $ 400 | 1,100 |
Stock options outstanding at the beginning of the period (in shares) | 1,176,640 | |||
Granted (in shares) | 54,000 | |||
Exercised (in shares) | (357,247) | |||
Forfeited (in shares) | (47,000) | |||
Expired (in shares) | (1,000) | |||
Stock options outstanding at the end of the period (in shares) | 825,393 | 825,393 | ||
Weighted Average Exercise Price | ||||
Stock options outstanding at the beginning of the period (in dollars per share) | $ 78.87 | |||
Granted (in dollars per share) | 119.18 | |||
Exercised (in dollars per share) | 58.45 | |||
Forfeited (in dollars per share) | 104.82 | |||
Expired (in dollars per share) | 57.77 | |||
Stock options outstanding at the end of the period (in dollars per share) | $ 88.89 | $ 88.89 | ||
Stock based compensation expense | $ 600 | $ 1,200 | $ 1,600 | $ 3,500 |
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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Weighted Average Grant Date Fair Value | ||||
Stock based compensation expense | $ 4,954 | $ 6,324 | ||
Restricted Stock | ||||
Restricted stock activity | ||||
Restricted stock outstanding at the beginning of the period (in shares) | 289,112 | |||
Granted (in shares) | 124,621 | |||
Vested (in shares) | (23,629) | |||
Forfeited (in shares) | (31,370) | |||
Restricted stock outstanding at the end of the period (in shares) | 358,734 | 358,734 | ||
Weighted Average Grant Date Fair Value | ||||
Restricted stock outstanding at the beginning of the period (in dollars per share) | $ 88.88 | |||
Granted (in dollars per share) | 87.11 | |||
Vested (in dollars per share) | 84.20 | |||
Forfeited (in dollars per share) | 85.56 | |||
Restricted stock outstanding at the end of the period (in dollars per share) | $ 88.86 | $ 88.86 | ||
Stock based compensation expense | $ 1,200 | $ 1,200 | $ 4,100 | 4,400 |
Share based compensation costs capitalized | (300) | 300 | 200 | 900 |
Employees Directors and Consultants Stock Options | ||||
Weighted Average Grant Date Fair Value | ||||
Stock based compensation expense | 600 | 1,200 | 1,600 | 3,500 |
Share based compensation costs capitalized | $ 200 | $ 300 | $ 400 | $ 1,100 |
OTHER ASSETS AND LIABILITIES (D
OTHER ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Mar. 16, 2017 | Mar. 01, 2017 | Dec. 31, 2016 | |
Prepaid Expenses and Other Assets | |||||||
Condominium deposits | $ 320,097 | $ 320,097 | $ 193,197 | ||||
Condominium receivables | 213,158 | 213,158 | 210,219 | ||||
SID receivables | 55,841 | 55,841 | 61,603 | ||||
Straight-line rent | 36,365 | 36,365 | 31,518 | ||||
Equipment, net of accumulated depreciation of $4.9 million and $3.9 million, respectively | 17,364 | 17,364 | 17,556 | ||||
Security and escrow deposits | 48,277 | 48,277 | 61,304 | ||||
Tenant incentives and other receivables | 8,976 | 8,976 | 8,773 | ||||
Prepaid expenses | 13,197 | 13,197 | 11,177 | ||||
Federal income tax receivable | 8,513 | 8,513 | 15,763 | ||||
Intangibles | 35,368 | 35,368 | 4,046 | ||||
Interest rate swap derivative asset | 3,244 | 3,244 | |||||
Other | 3,892 | 3,892 | 13,902 | ||||
Total prepaid expenses and other assets | 796,019 | 796,019 | 666,516 | ||||
Accumulated depreciation on other equipment | 6,500 | 6,500 | 4,900 | ||||
Reimbursement from a tenant | 11,586 | $ 11,657 | 34,627 | $ 33,108 | |||
Accounts Payable and Accrued Expenses | |||||||
Construction payables | 183,585 | 183,585 | 207,917 | ||||
Deferred income | 49,053 | 49,053 | 85,158 | ||||
Condominium deposit liabilities | 64,457 | 64,457 | 117,015 | ||||
Accounts payable and accrued expenses | 33,466 | 33,466 | 33,050 | ||||
Tenant and other deposits | 19,506 | 19,506 | 28,559 | ||||
Accrued interest | 8,256 | 8,256 | 16,897 | ||||
Accrued payroll and other employee liabilities | 26,685 | 26,685 | 36,937 | ||||
Accrued real estate taxes | 21,525 | 21,525 | 16,726 | ||||
Interest Rate Swaps | (149) | ||||||
Interest rate swaps | 7,742 | 7,742 | |||||
Straight-line ground rent liability | 14,493 | 14,493 | 13,126 | ||||
Above-market ground leases | 587 | 587 | 1,762 | ||||
Other | 33,498 | 33,498 | 15,012 | ||||
Total accounts payable and accrued expenses | $ 462,853 | $ 462,853 | 572,010 | ||||
Senior Notes 6.875 Percent Due 2021 | |||||||
Accounts Payable and Accrued Expenses | |||||||
Interest rate (as a percent) | 6.88% | 6.88% | |||||
Interest rate (as a percent) | 6.875% | 6.875% | 6.875% | ||||
Las Vegas 51s LLC | |||||||
Prepaid Expenses and Other Assets | |||||||
Voting interest acquired (as a percent) | 50.00% | ||||||
Prepaid expenses and other assets, net | |||||||
Prepaid Expenses and Other Assets | |||||||
Increase in prepaid expenses and other assets | $ 129,500 | ||||||
Increase (Decrease) in condominium receivables | 2,900 | ||||||
Increase (Decrease) in straight line rent | 4,800 | ||||||
Increase (decrease) in derivative assets | 3,200 | ||||||
Increase (Decrease) in in-place leases | (4,800) | ||||||
decrease in federal income tax receivable | (7,300) | ||||||
Increase (decrease) in tenant incentives and other receivables | 2,400 | ||||||
Decrease in other receivables | 1,100 | ||||||
Prepaid expenses and other assets, net | Las Vegas 51s LLC | |||||||
Prepaid Expenses and Other Assets | |||||||
Increase (decrease) in intangibles | $ 31,300 | ||||||
Voting interest acquired (as a percent) | 50.00% | 50.00% | |||||
Accounts Payable and Accrued Liabilities | |||||||
Accounts Payable and Accrued Expenses | |||||||
Decrease in accounts payable and accrued expenses | $ (109,200) | ||||||
Decrease in construction payables | (24,300) | ||||||
Decrease in accrued payroll and other employee liabilities | (10,300) | ||||||
Increase in other liabilities | (18,500) | ||||||
Decrease in accrued real estate taxes | 4,800 | ||||||
Decrease in tenant and other deposits | (9,100) | ||||||
Other immaterial decreases | (1,200) | ||||||
Increase in accrued interest | (8,600) | ||||||
Increase in interest rate swap liability | 7,900 | ||||||
Other immaterial increases | 1,800 | ||||||
Waiea And Anaha Condominiums | |||||||
Prepaid Expenses and Other Assets | |||||||
Condominium receivables | $ 140,500 | 140,500 | |||||
Ae'o | |||||||
Prepaid Expenses and Other Assets | |||||||
Condominium receivables | 71,400 | 71,400 | |||||
Ke Kilohana | |||||||
Prepaid Expenses and Other Assets | |||||||
Condominium receivables | 1,300 | 1,300 | |||||
Anaha Aeo And Ke Kilohana | Prepaid expenses and other assets, net | |||||||
Prepaid Expenses and Other Assets | |||||||
Increase (decrease) in condominium deposits | 126,900 | ||||||
Waiea | Prepaid expenses and other assets, net | |||||||
Prepaid Expenses and Other Assets | |||||||
Increase (Decrease) in security and escrow deposits | (13,000) | ||||||
Merriweather Post Pavilion | Prepaid expenses and other assets, net | |||||||
Prepaid Expenses and Other Assets | |||||||
Increase (Decrease) in other assets | (10,000) | ||||||
Summerlin | Prepaid expenses and other assets, net | |||||||
Prepaid Expenses and Other Assets | |||||||
decrease in Special Improvement District receivables | (5,800) | ||||||
Ward Village | Accounts Payable and Accrued Liabilities | |||||||
Accounts Payable and Accrued Expenses | |||||||
Decrease in condominium deposits liability | (52,600) | ||||||
Summerlin And Bridgeland MPCs | Accounts Payable and Accrued Liabilities | |||||||
Accounts Payable and Accrued Expenses | |||||||
Decrease in deferred income | (36,100) | ||||||
Leases, Acquired-in-Place | |||||||
Prepaid Expenses and Other Assets | |||||||
Net carrying amount | 11,209 | 11,209 | 16,015 | ||||
Ground Leases below Market | |||||||
Prepaid Expenses and Other Assets | |||||||
Net carrying amount | 18,732 | 18,732 | 18,986 | ||||
Ground Leases above Market | |||||||
Prepaid Expenses and Other Assets | |||||||
Net carrying amount | $ 1,786 | $ 1,786 | $ 2,457 |
ACCUMULATED OTHER COMPREHENSI54
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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||||
Balance at the beginning of the period | $ (9,157) | $ (24,152) | $ (6,786) | $ (7,889) |
Other comprehensive income (loss) before reclassifications | 72 | (22) | (2,630) | (17,028) |
Loss reclassified from accumulated other comprehensive loss to net income (loss) | 68 | 356 | 399 | 1,099 |
Other comprehensive income (loss) | 140 | 334 | (2,231) | (15,929) |
Balance at the end of the period | $ (9,017) | $ (23,818) | $ (9,017) | $ (23,818) |
ACCUMULATED OTHER COMPREHENSI55
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Summary of Amounts Reclassified Out of AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Reclassifications out of accumulated other comprehensive income (loss) | ||||
Loss reclassified from accumulated other comprehensive loss to net income (loss) | $ 68 | $ 356 | $ 399 | $ 1,099 |
Reclassification out of Accumulated Other Comprehensive Income | ||||
Reclassifications out of accumulated other comprehensive income (loss) | ||||
Loss reclassified from accumulated other comprehensive loss to net income (loss) | 68 | 356 | 399 | 1,099 |
Interest rate swap contracts | Reclassification out of Accumulated Other Comprehensive Income | Provision For Income Taxes | ||||
Reclassifications out of accumulated other comprehensive income (loss) | ||||
Loss reclassified from accumulated other comprehensive loss to net income (loss) | (40) | (202) | (237) | (653) |
Losses on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Income | Interest Expense | ||||
Reclassifications out of accumulated other comprehensive income (loss) | ||||
Loss reclassified from accumulated other comprehensive loss to net income (loss) | $ 108 | $ 558 | $ 636 | $ 1,752 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Jun. 27, 2013 | Sep. 30, 2017 | Dec. 31, 2016 |
Commitments | |||
Letters of Credit Outstanding, Amount | $ 13,800,000 | $ 6,500,000 | |
Amount of outstanding surety bonds | $ 95,000,000 | $ 112,400,000 | |
South Street Seaport Ground Lease [Member] | |||
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 |
SEGMENTS (Summary of Segment Op
SEGMENTS (Summary of Segment Operating Results) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | Mar. 01, 2017 | Jul. 20, 2016 | |
Segments reporting | ||||||
Number of reportable segments | segment | 3 | |||||
Land sales | $ 54,906 | $ 44,128 | $ 177,531 | $ 147,168 | ||
Builder price participation | 5,472 | 4,483 | 14,613 | 15,631 | ||
Minimum rents | 44,654 | 44,910 | 136,053 | 128,255 | ||
Other land revenues | 4,561 | 4,053 | 19,606 | 12,225 | ||
Other rental and property revenues | 5,929 | 3,538 | 17,309 | 11,335 | ||
Total revenues | 258,736 | 242,264 | 799,137 | 756,461 | ||
Tenant recoveries | 11,586 | 11,657 | 34,627 | 33,108 | ||
Condominium rights and unit sales | 113,852 | 115,407 | 342,208 | 362,613 | ||
Hospitality revenues | 17,776 | 14,088 | 57,190 | 46,126 | ||
Cost of sales - land | 29,043 | 21,432 | 88,288 | 66,128 | ||
Other property operating costs | 21,354 | 16,535 | 60,153 | 47,513 | ||
Rental property real estate taxes | 7,678 | 7,033 | 21,765 | 21,110 | ||
Rental property maintenance costs | 3,380 | 3,332 | 10,016 | 9,217 | ||
Hospitality operating costs | 13,525 | 12,662 | 41,534 | 37,379 | ||
Provision for doubtful accounts | 448 | 1,940 | 1,728 | 4,629 | ||
Demolition costs | 175 | 256 | 303 | 1,218 | ||
Provision for impairment | 35,734 | |||||
Development-related marketing costs | 5,866 | 4,716 | 14,787 | 15,586 | ||
Depreciation and amortization | 35,899 | 23,322 | 96,193 | 71,246 | ||
Other income, net | (77) | 35,232 | (33,202) | (114,673) | ||
Interest income | (1,764) | (196) | (3,171) | (900) | ||
Equity in (earnings) loss from Real Estate and Other Affiliates | (7,467) | (13,493) | (25,821) | (35,700) | ||
Gain on sale of 80 South Street Assemblage | (237) | (70) | (32,452) | (140,549) | ||
Loss on redemption of senior notes due 2021 | 46,410 | |||||
Operating Segments | ||||||
Segments reporting | ||||||
REP segment EBT | 53,552 | 34,498 | 240,495 | 354,521 | ||
Operating Segments | Master Planned Communities | ||||||
Segments reporting | ||||||
Land sales | 54,906 | 44,128 | 177,531 | 147,168 | ||
Builder price participation | 5,472 | 4,483 | 14,613 | 15,631 | ||
Minimum rents | 95 | (8) | 376 | |||
Other land revenues | 4,551 | 4,043 | 19,575 | 12,195 | ||
Other rental and property revenues | 13 | 33 | ||||
Total revenues | 64,929 | 52,762 | 211,711 | 175,403 | ||
Cost of sales - land | 29,043 | 21,432 | 88,288 | 66,128 | ||
Land sales operations | 8,180 | 10,674 | 24,881 | 30,454 | ||
Provision for doubtful accounts | 2 | |||||
Depreciation and amortization | 76 | 72 | 247 | 236 | ||
Interest income | 8 | (5) | (1) | (26) | ||
Interest expense | (6,363) | (5,248) | (17,901) | (15,591) | ||
Equity in (earnings) loss from Real Estate and Other Affiliates | (6,480) | (13,700) | (21,552) | (22,574) | ||
Total expenses | 24,464 | 13,225 | 73,964 | 58,627 | ||
REP segment EBT | 40,465 | 39,537 | 137,747 | 116,776 | ||
Operating Segments | Operating Assets | ||||||
Segments reporting | ||||||
Minimum rents | 44,579 | 44,736 | 135,564 | 127,663 | ||
Other rental and property revenues | 5,687 | 3,471 | 16,487 | 10,974 | ||
Total revenues | 79,533 | 73,947 | 243,498 | 217,852 | ||
Tenant recoveries | 11,491 | 11,652 | 34,257 | 33,089 | ||
Hospitality revenues | 17,776 | 14,088 | 57,190 | 46,126 | ||
Other property operating costs | 17,473 | 15,611 | 51,041 | 43,524 | ||
Rental property real estate taxes | 7,098 | 6,406 | 19,975 | 19,257 | ||
Rental property maintenance costs | 3,288 | 3,247 | 9,601 | 8,893 | ||
Hospitality operating costs | 13,525 | 12,662 | 41,534 | 37,379 | ||
Provision for doubtful accounts | 453 | 1,940 | 1,728 | 4,566 | ||
Demolition costs | 34 | 162 | ||||
Provision for impairment | 35,734 | 35,734 | ||||
Development-related marketing costs | 1,067 | 457 | 2,317 | 902 | ||
Depreciation and amortization | 33,885 | 20,732 | 88,918 | 64,546 | ||
Other income, net | 249 | (11) | 265 | (3,126) | ||
Interest income | 3 | (3) | (19) | |||
Interest expense | 15,937 | 12,905 | 46,004 | 36,987 | ||
Equity in (earnings) loss from Real Estate and Other Affiliates | (317) | 210 | (3,739) | (2,616) | ||
Total expenses | 92,695 | 109,890 | 257,806 | 246,027 | ||
REP segment EBT | (13,162) | (35,943) | (14,308) | (28,175) | ||
Operating Segments | Strategic Developments | ||||||
Segments reporting | ||||||
Minimum rents | 75 | 79 | 497 | 216 | ||
Other land revenues | 10 | 10 | 31 | 30 | ||
Other rental and property revenues | 242 | 54 | 822 | 328 | ||
Total revenues | 114,274 | 115,555 | 343,928 | 363,206 | ||
Tenant recoveries | 95 | 5 | 370 | 19 | ||
Condominium rights and unit sales | 113,852 | 115,407 | 342,208 | 362,613 | ||
Condominium rights and unit cost of sales | 86,531 | 83,218 | 253,209 | 237,759 | ||
Other property operating costs | 3,881 | 924 | 9,112 | 3,989 | ||
Rental property real estate taxes | 580 | 627 | 1,790 | 1,853 | ||
Rental property maintenance costs | 92 | 85 | 415 | 324 | ||
Provision for doubtful accounts | (5) | (2) | 63 | |||
Demolition costs | 141 | 256 | 141 | 1,218 | ||
Development-related marketing costs | 4,799 | 4,259 | 12,470 | 14,684 | ||
Depreciation and amortization | 18 | 659 | 1,177 | 1,978 | ||
Other income, net | (122) | (298) | (137) | (542) | ||
Interest income | (30) | (140) | (124) | (271) | ||
Interest expense | (6,953) | (4,866) | (18,197) | (12,710) | ||
Equity in (earnings) loss from Real Estate and Other Affiliates | (670) | (3) | (530) | (10,510) | ||
Gain on sale of 80 South Street Assemblage | (237) | (70) | (32,452) | (140,549) | ||
Total expenses | 88,025 | 84,651 | 226,872 | 97,286 | ||
REP segment EBT | $ 26,249 | $ 30,904 | $ 117,056 | $ 265,920 | ||
Millennium Six Pines Apartments | ||||||
Segments reporting | ||||||
Voting interest acquired (as a percent) | 18.57% | |||||
Las Vegas 51s LLC | ||||||
Segments reporting | ||||||
Voting interest acquired (as a percent) | 50.00% |
SEGMENTS (Reconciliation of EBT
SEGMENTS (Reconciliation of EBT to Income (Loss) Before Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Reconciliation of REP EBT to GAAP net income (loss) | ||||
General and administrative | $ (22,362) | $ (21,128) | $ (63,423) | $ (61,505) |
Warrant liability loss | (7,300) | (43,443) | (21,630) | |
Gain on acquisition of joint venture partner’s interest | 27,087 | 5,490 | 27,087 | |
Loss on redemption of senior notes due 2021 | (46,410) | |||
Corporate other (expense) income, net | 77 | (35,232) | 33,202 | 114,673 |
Corporate depreciation and amortization | (35,899) | (23,322) | (96,193) | (71,246) |
Operating Expenses | (234,441) | (206,248) | (676,280) | (603,744) |
Income before taxes | 16,362 | 18,158 | 51,141 | 260,819 |
Corporate, Non-Segment | ||||
Reconciliation of REP EBT to GAAP net income (loss) | ||||
General and administrative | (22,362) | (21,128) | (63,423) | (61,505) |
Corporate interest expense, net | (12,875) | (13,263) | (36,595) | (39,358) |
Warrant liability loss | (7,300) | (43,443) | (21,630) | |
Gain on acquisition of joint venture partner’s interest | 27,087 | 5,490 | 27,087 | |
Loss on redemption of senior notes due 2021 | (46,410) | |||
Corporate other (expense) income, net | (33) | 123 | 878 | 6,190 |
Corporate depreciation and amortization | (1,920) | (1,859) | (5,851) | (4,486) |
Operating Expenses | (37,190) | (16,340) | (189,354) | (93,702) |
Operating Segments | ||||
Reconciliation of REP EBT to GAAP net income (loss) | ||||
REP EBT | 53,552 | 34,498 | 240,495 | 354,521 |
Master Planned Communities | Operating Segments | ||||
Reconciliation of REP EBT to GAAP net income (loss) | ||||
REP EBT | 40,465 | 39,537 | 137,747 | 116,776 |
Corporate depreciation and amortization | (76) | (72) | (247) | (236) |
Operating Assets | Operating Segments | ||||
Reconciliation of REP EBT to GAAP net income (loss) | ||||
REP EBT | (13,162) | (35,943) | (14,308) | (28,175) |
Corporate other (expense) income, net | (249) | 11 | (265) | 3,126 |
Corporate depreciation and amortization | (33,885) | (20,732) | (88,918) | (64,546) |
Strategic Developments | Operating Segments | ||||
Reconciliation of REP EBT to GAAP net income (loss) | ||||
REP EBT | 26,249 | 30,904 | 117,056 | 265,920 |
Corporate other (expense) income, net | 122 | 298 | 137 | 542 |
Corporate depreciation and amortization | $ (18) | $ (659) | $ (1,177) | $ (1,978) |
SEGMENTS (Reconciliation of Seg
SEGMENTS (Reconciliation of Segment Revenue to Consolidated Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Reconciliation of Segment Basis Revenues to GAAP Revenues | ||||
Total revenues | $ 258,736 | $ 242,264 | $ 799,137 | $ 756,461 |
Master Planned Communities | Operating Segments | ||||
Reconciliation of Segment Basis Revenues to GAAP Revenues | ||||
Total revenues | 64,929 | 52,762 | 211,711 | 175,403 |
Operating Assets | Operating Segments | ||||
Reconciliation of Segment Basis Revenues to GAAP Revenues | ||||
Total revenues | 79,533 | 73,947 | 243,498 | 217,852 |
Strategic Developments | Operating Segments | ||||
Reconciliation of Segment Basis Revenues to GAAP Revenues | ||||
Total revenues | $ 114,274 | $ 115,555 | $ 343,928 | $ 363,206 |
SEGMENTS (Summary of Assets by
SEGMENTS (Summary of Assets by Segment and Reconciliation of Segment Assets to Total Assets) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Reconciliation of total segment assets to total assets | ||
Assets | $ 6,723,696 | $ 6,367,382 |
Operating Segments | ||
Reconciliation of total segment assets to total assets | ||
Assets | 6,213,254 | 5,779,048 |
Operating Segments | Master Planned Communities | ||
Reconciliation of total segment assets to total assets | ||
Assets | 2,054,621 | 1,982,639 |
Operating Segments | Operating Assets | ||
Reconciliation of total segment assets to total assets | ||
Assets | 2,450,306 | 2,344,949 |
Operating Segments | Strategic Developments | ||
Reconciliation of total segment assets to total assets | ||
Assets | 1,708,327 | 1,451,460 |
Corporate, Non-Segment | ||
Reconciliation of total segment assets to total assets | ||
Assets | $ 510,442 | $ 588,334 |