Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 25, 2018 | |
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 | Mar. 31, 2018 | |
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 | 43,019,093 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Investment in real estate: | ||
Master Planned Community assets | $ 1,633,492 | $ 1,642,278 |
Buildings and equipment | 2,365,773 | 2,238,617 |
Less: accumulated depreciation | (325,026) | (321,882) |
Land | 273,444 | 277,932 |
Developments | 1,412,153 | 1,196,582 |
Net property and equipment | 5,359,836 | 5,033,527 |
Investment in Real Estate and Other Affiliates | 85,911 | 76,593 |
Net investment in real estate | 5,445,747 | 5,110,120 |
Cash and cash equivalents | 632,838 | 861,059 |
Restricted cash | 132,105 | 103,241 |
Accounts receivable, net | 14,384 | 13,041 |
Municipal Utility District receivables, net | 203,436 | 184,811 |
Notes receivable, net | 8,310 | 5,864 |
Deferred expenses, net | 90,839 | 80,901 |
Prepaid expenses and other assets, net | 210,327 | 370,027 |
Total assets | 6,737,986 | 6,729,064 |
Liabilities: | ||
Mortgages, notes and loans payable, net | 2,895,771 | 2,857,945 |
Deferred tax liabilities | 143,581 | 160,850 |
Accounts payable and accrued expenses | 619,271 | 521,718 |
Total liabilities | 3,658,623 | 3,540,513 |
Commitments and Contingencies (see Note 10) | ||
Equity: | ||
Preferred stock: $.01 par value; 50,000,000 shares authorized, none issued | 0 | 0 |
Common stock: $.01 par value; 150,000,000 shares authorized, 43,491,595 shares issued and 42,986,302 outstanding as of March 31, 2018 and 43,300,253 shares issued and 43,270,880 outstanding as of December 31, 2017 | 436 | 433 |
Additional paid-in capital | 3,310,421 | 3,302,502 |
Accumulated deficit | (175,879) | (109,508) |
Accumulated other comprehensive loss | (797) | (6,965) |
Treasury stock, at cost, 505,293 and 29,373 shares as of March 31, 2018 and December 31, 2017, respectively | (60,743) | (3,476) |
Total Stockholders' equity | 3,073,438 | 3,182,986 |
Noncontrolling interests | 5,925 | 5,565 |
Total equity | 3,079,363 | 3,188,551 |
Total liabilities and equity | $ 6,737,986 | $ 6,729,064 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 43,491,595 | 43,300,253 |
Common stock, shares outstanding (in shares) | 42,986,302 | 43,270,880 |
Treasury stock, shares held (in shares) | 505,293 | 29,373 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Condominium rights and unit sales | $ 10,837 | $ 80,145 |
Master Planned Community land sales | 46,565 | 53,481 |
Minimum rents | 49,395 | 46,326 |
Tenant recoveries | 12,760 | 11,399 |
Hospitality revenues | 23,061 | 19,711 |
Builder price participation | 5,081 | 4,661 |
Other land revenues | 4,131 | 10,582 |
Other rental and property revenues | 9,849 | 5,457 |
Total revenues | 161,679 | 231,762 |
Expenses: | ||
Condominium rights and unit cost of sales | 6,729 | 60,483 |
Master Planned Community cost of sales | 26,043 | 25,869 |
Master Planned Community operations | 10,325 | 9,394 |
Other property operating costs | 23,175 | 18,508 |
Rental property real estate taxes | 8,127 | 7,537 |
Rental property maintenance costs | 3,197 | 3,028 |
Hospitality operating costs | 15,567 | 13,845 |
Provision for doubtful accounts | 776 | 535 |
Demolition costs | 6,671 | 65 |
Development-related marketing costs | 6,078 | 4,205 |
General and administrative | 24,264 | 18,117 |
Depreciation and amortization | 28,188 | 25,524 |
Total expenses | 159,140 | 187,110 |
Operating income before other items | 2,539 | 44,652 |
Other: | ||
Gains on sales of properties | 0 | 32,215 |
Other income, net | 0 | 687 |
Total other | 0 | 32,902 |
Operating income | 2,539 | 77,554 |
Interest income | 2,076 | 622 |
Interest expense | (16,609) | (17,858) |
Loss on redemption of senior notes due 2021 | 0 | (46,410) |
Warrant liability loss | 0 | (12,562) |
Gain on acquisition of joint venture partner's interest | 0 | 5,490 |
Equity in earnings from Real Estate and Other Affiliates | 14,386 | 8,520 |
Income before taxes | 2,392 | 15,356 |
Provision for income taxes | 558 | 9,697 |
Net income | 1,834 | 5,659 |
Net income attributable to noncontrolling interests | (360) | 0 |
Net income attributable to common stockholders | $ 1,474 | $ 5,659 |
Basic income per share: (in dollars per share) | $ 0.03 | $ 0.14 |
Diluted income per share: (in dollars per share) | $ 0.03 | $ 0.13 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Condensed Consolidated Statement of Comprehensive Income | |||
Net income | $ 1,834 | $ 5,659 | |
Other comprehensive income (loss): | |||
Interest rate swaps | [1] | 8,045 | 433 |
Capitalized swap interest expense | [2] | 10 | (75) |
Adoption of ASU 2018-02 | [3] | (1,148) | 0 |
Adoption of ASU 2017-12 | [4] | (739) | 0 |
Other comprehensive income | 6,168 | 358 | |
Comprehensive income | 8,002 | 6,017 | |
Comprehensive income attributable to noncontrolling interests | (360) | 0 | |
Comprehensive income attributable to common stockholders | 7,642 | 6,017 | |
Interest rate swaps, deferred tax expense | $ 2,100 | 300 | |
Capitalized swap interest income, deferred tax benefit | $ 100 | ||
[1] | Amounts are shown net of deferred tax expense of $2.1 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively. | ||
[2] | The deferred tax impact was immaterial for the three months ended March 31, 2018. Amount is net of deferred tax benefit of $0.1 million for the three months ended March 31, 2017. | ||
[3] | The Company adopted Accounting Standards Update ("ASU") 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, as of January 1, 2018. See Note 2 - Accounting Policies and Pronouncements for further discussion. | ||
[4] | The Company adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, as of January 1, 2018. See Note 2 - Accounting Policies and Pronouncements for further discussion. |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) | Total Stockholders' Equity | Treasury Stock | Noncontrolling Interest | ||
Balance at the beginning of the period at Dec. 31, 2016 | $ 2,571,510 | $ 398 | $ 2,853,269 | $ (277,912) | $ (6,786) | $ 2,567,738 | $ (1,231) | $ 3,772 | ||
Balance at the beginning of the period (in shares) at Dec. 31, 2016 | 39,802,064 | |||||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2016 | (12,061) | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net income | 5,659 | 5,659 | 5,659 | |||||||
Interest rate swaps, net of tax | 433 | [1] | 433 | 433 | ||||||
Capitalized swap interest, net of tax | (75) | [2] | (75) | (75) | ||||||
Stock plan activity | 8,844 | $ 3 | 8,841 | 8,844 | ||||||
Stock plan activity (in shares) | 249,378 | |||||||||
Exercise of Warrants | $ 30,935 | $ 3 | 30,932 | 30,935 | ||||||
Exercise of warrants (in shares) | 272,598 | |||||||||
Adoption of ASU 2017-12 | [3] | $ 0 | ||||||||
Adoption of ASU 2018-02 | [4] | 0 | ||||||||
Balance at the end of the period at Mar. 31, 2017 | 2,617,306 | $ 404 | 2,893,042 | (272,253) | (6,428) | 2,613,534 | $ (1,231) | 3,772 | ||
Balance at the end of the period (in shares) at Mar. 31, 2017 | 40,324,040 | |||||||||
Balance at the end of the period (in shares) at Mar. 31, 2017 | (12,061) | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Cumulative effect of adjustment | (69,732) | (69,732) | (69,732) | |||||||
Balance at the beginning of the period at Dec. 31, 2017 | 3,188,551 | $ 433 | 3,302,502 | (109,508) | (6,965) | 3,182,986 | $ (3,476) | 5,565 | ||
Balance at the beginning of the period (in shares) at Dec. 31, 2017 | 43,300,253 | |||||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2017 | (29,373) | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net income | 1,834 | 1,474 | 1,474 | 360 | ||||||
Interest rate swaps, net of tax | 8,045 | [1] | 8,045 | 8,045 | ||||||
Capitalized swap interest, net of tax | 10 | [2] | 10 | 10 | ||||||
Stock plan activity | 7,922 | $ 3 | 7,919 | 7,922 | ||||||
Stock plan activity (in shares) | 191,342 | |||||||||
Preferred dividend payment on behalf of subsidiary | 0 | 0 | ||||||||
Adoption of ASU 2017-12 | (739) | [3] | 739 | (739) | ||||||
Adoption of ASU 2018-02 | (1,148) | [4] | 1,148 | (1,148) | ||||||
Repurchase of common shares (in shares) | (475,920) | |||||||||
Repurchase of common shares | (57,267) | (57,267) | $ (57,267) | |||||||
Balance at the end of the period at Mar. 31, 2018 | $ 3,079,363 | $ 436 | $ 3,310,421 | $ (175,879) | $ (797) | $ 3,073,438 | $ (60,743) | $ 5,925 | ||
Balance at the end of the period (in shares) at Mar. 31, 2018 | 43,491,595 | |||||||||
Balance at the end of the period (in shares) at Mar. 31, 2018 | (505,293) | |||||||||
[1] | Amounts are shown net of deferred tax expense of $2.1 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively. | |||||||||
[2] | The deferred tax impact was immaterial for the three months ended March 31, 2018. Amount is net of deferred tax benefit of $0.1 million for the three months ended March 31, 2017. | |||||||||
[3] | The Company adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, as of January 1, 2018. See Note 2 - Accounting Policies and Pronouncements for further discussion. | |||||||||
[4] | The Company adopted Accounting Standards Update ("ASU") 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, as of January 1, 2018. See Note 2 - Accounting Policies and Pronouncements for further discussion. |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Stockholders' Equity [Abstract] | ||
Interest rate swaps, tax | $ (2,126) | $ (254) |
Capitalized swap interest, tax (benefit) | $ 3 | $ 41 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net income | $ 1,834,000 | $ 5,659,000 |
Adjustments to reconcile net income to cash used in operating activities: | ||
Depreciation | 24,850,000 | 21,540,000 |
Amortization | 3,002,000 | 3,984,000 |
Amortization of deferred financing costs | 1,469,000 | 1,638,000 |
Amortization of intangibles other than in-place leases | 336,000 | (483,000) |
Straight-line rent amortization | (3,052,000) | (1,291,000) |
Deferred income taxes | 248,000 | 8,888,000 |
Restricted stock and stock option amortization | 2,684,000 | 1,906,000 |
Gains on sales of properties | 0 | (32,215,000) |
Gain on acquisition of joint venture partner's interest | 0 | (5,490,000) |
Warrant liability loss | 0 | 12,562,000 |
Loss on redemption of senior notes due 2021 | 0 | 46,410,000 |
Equity in earnings from Real Estate and Other Affiliates, net of distributions | (9,532,000) | (4,281,000) |
Provision for doubtful accounts | 776,000 | 535,000 |
Master Planned Community land acquisitions | (506,000) | (1,415,000) |
Master Planned Community development expenditures | (42,092,000) | (43,623,000) |
Master Planned Community cost of sales | 23,189,000 | 23,327,000 |
Condominium development expenditures | (78,964,000) | (86,279,000) |
Condominium rights and unit cost of sales | 6,729,000 | 60,483,000 |
Percentage of completion revenue recognition from sale of condominium rights and unit sales | 0 | (80,145,000) |
Net changes: | ||
Accounts and notes receivable | (6,100,000) | 3,178,000 |
Prepaid expenses and other assets | 1,590,000 | 16,509,000 |
Change in restricted cash operating accounts | 0 | 0 |
Condominium deposits received | 40,762,000 | 11,847,000 |
Deferred expenses | (3,759,000) | (1,682,000) |
Accounts payable and accrued expenses | (49,885,000) | (59,109,000) |
Other, net | 0 | 128,000 |
Cash used in operating activities | (86,421,000) | (97,419,000) |
Cash Flows from Investing Activities: | ||
Property and equipment expenditures | (1,295,000) | (2,559,000) |
Operating property improvements | (17,600,000) | (4,722,000) |
Property developments and redevelopments | (90,682,000) | (111,674,000) |
Acquisition of partner's interest in Las Vegas 51s | 0 | (15,404,000) |
Proceeds for reimbursement of development costs | 0 | 10,597,000 |
Proceeds from sales of properties | 0 | 36,000,000 |
Proceeds from Tax Increment Financings | 11,731,000 | 0 |
Distributions from Real Estate and Other Affiliates | 748,000 | 0 |
Note issued to Real Estate and Other Affiliates | (2,783,000) | 0 |
Proceeds from repayment of note to Real Estate Affiliate | 0 | (724,000) |
Maturity of long term investment | 0 | 3,455,000 |
Cash used in investing activities | (99,881,000) | (85,031,000) |
Cash Flows from Financing Activities: | ||
Proceeds from mortgages, notes and loans payable | 62,967,000 | 944,663,000 |
Principal payments on mortgages, notes and loans payable | (24,059,000) | (881,476,000) |
Premium paid to redeem 2021 senior notes | 0 | (39,966,000) |
Purchase of treasury stock | (57,267,000) | 0 |
Special Improvement District bond funds released from escrow | 230,000 | 581,000 |
Deferred financing costs and bond issuance costs, net | (163,000) | (9,215,000) |
Taxes paid on stock options exercised and restricted stock vested | (1,713,000) | (4,589,000) |
Stock options exercised | 6,950,000 | 11,271,000 |
Cash (used in) provided by financing activities | (13,055,000) | 21,269,000 |
Net change in cash, cash equivalents and restricted cash | (199,357,000) | (161,181,000) |
Cash, cash equivalents and restricted cash at beginning of period | 964,300,000 | 915,139,000 |
Cash, cash equivalents and restricted cash at end of period | 632,838,000 | |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 45,652,000 | 42,997,000 |
Interest capitalized | 17,500,000 | 16,305,000 |
Income taxes paid | 0 | 429,000 |
Non-Cash Transactions: | ||
Special Improvement District bond transfers associated with land sales | 2,854,000 | 2,542,000 |
Accrued interest on construction loan borrowing | 252,000 | 1,011,000 |
Capitalized stock compensation | 533,000 | 531,000 |
Acquisition of Las Vegas 51s | ||
Furniture and fixtures | 0 | 87 |
Summerlin Las Vegas Baseball Club LLC | ||
Acquisition of Las Vegas 51s | ||
Developments | 0 | 65,000 |
Accounts receivable | 0 | 633,000 |
Other assets | 0 | 33,313,000 |
Other liabilities | $ 0 | $ (2,294,000) |
BASIS OF PRESENTATION AND ORGAN
BASIS OF PRESENTATION AND ORGANIZATION | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND ORGANIZATION | 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, 2017 (the “Annual Report”), filed on February 26, 2018 with the SEC. Approximately $103.2 million in restricted cash was reclassified from Prepaid expenses and other assets, net at December 31, 2017 to conform to the 2018 presentation. In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows and equity for the interim periods have been included. The results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 and future fiscal 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 on Form 10-Q was filed. Impact of new accounting standard related to Revenue In May 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-09, Revenues from Contracts with Customers (Topic 606) . The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. HHC adopted Topic 606 and all its related amendments (the “New Revenue Standard”) as of January 1, 2018 (the “Adoption Date”) using the modified retrospective transition method. Accordingly, prior period amounts presented have not been adjusted. HHC recorded a cumulative effect adjustment of $69.7 million , net of taxes of $19.6 million , to increase Accumulated deficit as of the Adoption Date due to the impact of adopting Topic 606. As discussed in the Company's Annual Report, condominium rights and unit sales revenues were previously required to be recognized under the percentage of completion method. Under the new guidance, revenue and cost of sales for condominium units sold are not recognized until the construction is complete, the sale closes and the title to the property has transferred to the buyer (point in time). Additionally, certain real estate selling costs, such as the costs related to the Company's condominium model units, are either expensed immediately or capitalized as property and equipment and depreciated over their estimated useful life. The cumulative effect adjustments as of the Adoption Date consists of: • A decrease in Condominium receivables of $154.2 million , • An increase in Buildings and equipment, net, of $3.4 million , • An increase to Developments of $150.8 million , • An increase to Prepaid expenses and other assets of $5.6 million , • An increase to Accounts payable and accrued expenses of $95.0 million , • A decrease to Deferred tax liabilities of $19.6 million , and • An increase in Accumulated deficit of $69.7 million , net of taxes of $19.6 million . For the three months ended March 31, 2018 , the following financial statement line items are affected as a result of HHC's adoption of the New Revenue Standard: Three Months Ended March 31, 2018 Condensed Consolidated Balance Sheet Recognition Under Previous Guidance Impact of Adoption of ASC Topic 606 Recognition Under ASC Topic 606 Buildings and equipment, net $ 2,038,288 $ 2,459 $ 2,040,747 Developments 1,171,469 240,684 1,412,153 Deferred expenses, net 84,001 6,838 90,839 Prepaid expenses and other assets, net 487,731 (277,404 ) 210,327 Deferred tax liabilities 174,340 (30,759 ) 143,581 Accounts payable and accrued expenses 511,323 107,948 619,271 Accumulated deficit (71,266 ) (104,613 ) (175,879 ) Condensed Consolidated Statement of Operations Condominium rights and unit sales 153,702 (142,865 ) 10,837 Condominium rights and unit cost of sales 104,587 (97,858 ) 6,729 Depreciation and amortization 27,199 989 28,188 Operating income before other items 48,536 (45,997 ) 2,539 Provision for income taxes 11,674 (11,116 ) 558 Net income 36,714 (34,880 ) 1,834 Net income attributable to common stockholders 36,354 (34,880 ) 1,474 Condensed Consolidated Statement of Comprehensive Income Net income 36,714 (34,880 ) 1,834 Comprehensive income 42,882 (34,880 ) 8,002 Comprehensive income attributable to common stockholders 42,522 (34,880 ) 7,642 Condensed Consolidated Statement of Cash Flows Net income 36,714 (34,880 ) 1,834 Depreciation and amortization 27,199 989 28,188 Deferred income taxes 11,364 (11,116 ) 248 Condominium rights and unit cost of sales 104,587 (97,858 ) 6,729 Percentage of completion revenue recognition from sale of condominium rights and unit sales (142,865 ) 142,865 — See Note 2 - Accounting Policies and Pronouncements for further discussion of accounting policies impacted by the Company's adoption of the New Revenue Standard and disclosures required by the New Revenue Standard. |
ACCOUNTING POLICIES AND PRONOUN
ACCOUNTING POLICIES AND PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES AND PRONOUNCEMENTS | ACCOUNTING POLICIES AND PRONOUNCEMENTS The following is a summary of recently issued and other notable accounting pronouncements which relate to HHC's business. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The effective date of the standard is for fiscal periods, and interim periods within those years, beginning after December 15, 2018. The amendments must be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. Early adoption is permitted. The Company adopted ASU 2018-02 as of January 1, 2018, and an election was made to reclassify $1.1 million from accumulated other comprehensive income to retained earnings. In August 2017, the FASB issued 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 their 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 Consolidated Statements of Operations 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. The Company adopted ASU 2017-12 as of January 1, 2018 and, as a result, $0.7 million of ineffectiveness recognized prior to 2018 for its swaps was reclassified to Accumulated deficit from Accumulated other comprehensive income. 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. The Company adopted ASU 2017-09 as of January 1, 2018 and, as a result, 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. The Company adopted ASU 2017-05 as of January 1, 2018, and it did not have a material effect on the Company’s financial position or results of operations as the Company has no partial sales in the current period. 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. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. 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. As required, the Company adopted ASU 2016-18 retrospectively as of January 1, 2018, resulting in presentation of an additional $39.7 million in cash used in operating activities and $2.5 million in cash provided for investing activities for the three months ended March 31, 2017, related to an additional $37.2 million of changes in restricted cash on the consolidated statements of cash flows in the respective period. The nature of these restrictions relates primarily to escrowed condominium deposits and other amounts related to taxes, insurance, legally restricted security deposits and leasing costs held in escrow. 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. The Company adopted this standard retrospectively, as of January 1, 2018. ASU 2016-15 had no impact on the Company's presentation of operating, investing and financing activities related to certain cash receipts and payments on its consolidated statements of cash flows for the three months ended March 31, 2017. 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. The Company is currently evaluating the adoption of ASU 2016-13 on its consolidated financial statements. 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. The Company is currently evaluating the impact of adopting ASU 2016-02 on the consolidated financial statements. The Company anticipates a material increase to assets and liabilities as it will be required to capitalize its ground leases, office leases and certain office equipment leases where the Company is the lessee. 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 it must be adopted via a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company adopted the guidance as of January 1, 2018. As none of the Company's equity investments have readily determinable fair values, the adoption of this ASU does not have an impact on its consolidated financial statements. The New Revenue Standard and related policy updates As discussed in Note 1 - Basis of Presentation and Organization , as of the Adoption Date of the New Revenue Standard, revenues from contracts with customers (excluding lease-related revenues) are recognized when control of the promised goods or services is transferred to HHC's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The following table presents HHC revenues disaggregated by revenue source: Three Months Ended (In thousands) March 31, 2018 Revenues From contracts with customers Recognized at a point in time: Condominium rights and unit sales $ 10,837 Master Planned Community land sales 46,565 Hospitality revenues 23,061 Builder price participation 5,081 Total revenue from contracts with customers 85,544 Recognized at a point in time and/or over time: Other land revenues 4,131 Other rental and property revenues 9,849 Total other income 13,980 Rental and other income (lease-related revenues) Minimum rents 49,395 Tenant recoveries 12,760 Total rental income 62,155 Total revenues $ 161,679 Revenues by segment Master Planned Community Revenue $ 55,765 Operating Segment Revenue 91,258 Strategic Developments Revenue 14,656 Total revenues $ 161,679 Below is a discussion of the performance obligations, significant judgments and other required disclosures related to revenues from contracts with customers. Condominium Rights and Unit Sales Revenue from the sale of an individual unit in a condominium project is recognized at a point in time (i.e., the closing) when HHC satisfies the single performance obligation to construct a condominium project and transfer control of a completed unit to a buyer. The transaction price, which is the amount of consideration the Company receives upon delivery of the completed condominium unit to the buyer, is allocated to this single obligation and is received at closing less any amounts previously paid on deposit. The Company receives cash payments in the form of escrowed condominium deposits from customers who have contracted to purchase a condominium unit based on billing schedules established in HHC's condominium purchase agreement contracts. The Company holds these contract assets in Restricted cash, unless released from escrow in accordance with the escrow agreement and on approval of HHC's lender to fund construction of a project. A corresponding condominium contract deposit liability is established at the date of receipt, representing a portion of HHC's unsatisfied performance obligation at each reporting date. These deposits, along with the balance of the contract value, are recognized at closing upon satisfaction of HHC's performance obligation and transfer of title to the buyer. Condominium receivables, a conditional right to consideration for satisfaction of HHC's completed obligations, were established under legacy GAAP for condominium units for which revenue was previously recognized under the percentage of completion method. As of the Adoption Date, condominium receivables are recorded only in limited circumstances. Real estate project costs directly associated with a condominium project, which are HHC's costs to fulfill contracts with condominium buyers, are capitalized while all other costs are expensed as incurred. Total estimated project costs include direct costs such as the carrying value of the land, site planning, architectural, construction and financing costs, as well as indirect cost allocations. The allocations include costs which clearly relate to the specific project, including certain infrastructure and amenity costs which benefit the project as well as others, and are based upon the relative sales value of the units. Costs incurred to sell condominium units are evaluated for capitalization in accordance with ASC 340-40, and incremental costs of obtaining a contract and costs to fulfill a contract are capitalized only if the costs relate directly to a specifically identified contract, enhance resources to satisfy performance obligations in the future and are expected to be recovered. Master Planned Community Land Sales Revenues from land sales are recognized at a point in time when the land sale closing process is complete. The transaction price has both fixed and variable components, with the fixed price stipulated in the contract and representative of a single performance obligation. See Builder Price Participation ("BPP") below for a discussion of the variable component. The fixed transaction price, which is the amount of consideration received in full upon transfer of the land title to the buyer, is allocated to this single obligation and is received at closing of the land sale less any amounts previously paid on deposit. The Company receives cash payments in the form of land purchase deposits from homebuilders or other commercial buyers who have contracted to purchase land, and HHC holds any escrowed deposits in Restricted cash or Cash and cash equivalents based on the terms of the contract. In situations where the Company has completed the closing of a developed land parcel or superpad and consideration is paid in full, but a portion of HHC's performance obligation relating to the enhancement of the land is still unsatisfied, revenue related to HHC's obligation is recognized over time. The Company recognizes only the portion of the improved land sale where the improvements are fully satisfied based on a cost input method. The aggregate amount of the transaction price allocated to the unsatisfied obligation is recorded as deferred land sales and is presented in Accounts payable and accrued expenses. The Company measures the completion of HHC's unsatisfied obligation based on the costs remaining relative to the total cost at the date of closing. When developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold. In accordance with ASC 970-360-30-1, when developed land is sold, costs are allocated to each sold superpad or lot based upon the relative sales value. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated throughout the year, with adjustments being allocated prospectively to the remaining parcels available for sale. For certain parcels of land, including acquired parcels that the Company does not intend to develop or for which development was complete at the date of acquisition, the specific identification method is used to determine the cost of sales. Hospitality revenues Hospitality revenues are recognized at a point in time in accordance with the pattern of each related service. Lodging is recognized on daily increments, while retail services such as food and beverage are recognized at the point of sale. The transaction price is fixed, clearly stipulated and representative of a single performance obligation in all cases. The duration of all contracts with customers of HHC's hospitality lodging and related services is generally short. Builder Price Participation BPP is the variable component of the transaction price for Master Planned Community Land Sales. BPP is earned when a developer that acquired land from HHC develops and sells a home to an end user at a price higher than a predetermined breakpoint. The excess over the breakpoint is shared between HHC and the developer at the time of closing on the sale of the home based on a percentage previously agreed upon. The Company concluded that as of the Adoption Date and as of March 31, 2018, BPP was constrained and accordingly, the Company did not recognize an estimate of variable consideration. The Company's conclusion is based on the following factors: • BPP is highly susceptible to factors outside HHC's influence such as unemployment and interest rates; • The time between the sale of land to a developer and closing on a completed home can take up to three years; and • Historical experience is of little value when it comes to predicting future home prices. The Company evaluates contracts with homebuilders with respect to BPP at each reporting period to determine whether a change in facts and circumstances has eliminated the constraint and will record an estimate of BPP revenue, if applicable. Other land revenues - over time and point in time Other land revenues recognized over time include ground maintenance revenue, HOA fee revenue and revenue from providing exclusive cable and internet services at the Company's Master Planned Communities ("MPCs") for the benefit of the tenants and owners of the communities. These revenues are recognized over time, as time elapses. The amount of consideration and the duration are fixed, as stipulated in the related agreements, and represent a single performance obligation. Other land revenues also include transfer fees on the secondary sales of homes in the MPCs segment, forfeitures of earnest money deposits by buyers of HHC's condominium units, and other miscellaneous items. These items are recognized at a point in time when the real estate closing process is complete or HHC has a legal right to the respective fee or deposit. Other rental and property revenue - over time and point in time Other rental and property revenues related to contracts with customers is generally comprised of baseball related ticket sales, retail operations, advertising and sponsorships. Season ticket sales are recognized over time as games take place. Sponsorships generally cover a season and the related revenue is recognized over time, as time elapses. Single tickets and retail operations are recognized at a point in time, at the time of sale. In all cases, the transaction prices are fixed, stipulated in the ticket, contract, or product, and representative in each case of a single performance obligation. From time to time, the Company enters into advertising and sponsorship agreements that allow third parties to display their advertising and products at HHC's venues for a certain amount of time. Consideration for these services is fixed as specified in each respective agreement, is related to a single performance obligation in each case and HHC recognizes the related revenue over time, as time elapses. Contract Assets and Liabilities Contract assets are the Company's right to consideration in exchange for goods or services that have been transferred to a customer, excluding any amounts presented as receivable. Contract liabilities are the Company's obligation to transfer goods or services to a customer for which the Company has received consideration. The Company had no contract assets as of January 1, 2018 and as of March 31, 2018. The beginning and ending balances of contract liabilities and significant activity during the period is as follows: Contract (In thousands) Liabilities Balance as of January 1, 2018 $ 179,179 Consideration earned during the period (8,067 ) Consideration received during the period 44,043 Balance as of March 31, 2018 $ 215,155 Remaining Unsatisfied Performance Obligations The Company’s remaining unsatisfied performance obligations as of March 31, 2018 represent a measure of the total dollar value of work to be performed on contracts executed and in progress. These performance obligations are associated with contracts that generally are noncancellable by the customer after 30 days; however, purchasers of HHC's condominium units have the right to cancel the contract should the Company elect not to construct the condominium unit within a certain period of time or materially change the design of the condominium unit. The aggregate amount of the transaction price allocated to the Company's remaining unsatisfied performance obligations as of March 31, 2018 is $1.1 billion . The Company expects to recognize this amount as revenue over the following periods: (In thousands) Less than 1 year 1-2 years 3 years and thereafter Total remaining unsatisfied performance obligations $ 690,059 $ 202,716 $ 234,609 The Company’s remaining performance obligations are adjusted to reflect any known project cancellations, revisions to project scope and cost, and deferrals, as appropriate. These amounts exclude estimated amounts of variable consideration which are constrained, such as BPP, as discussed above. |
REAL ESTATE AND OTHER AFFILIATE
REAL ESTATE AND OTHER AFFILIATES | 3 Months Ended |
Mar. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
REAL ESTATE AND OTHER AFFILIATES | REAL ESTATE AND OTHER AFFILIATES The Company's investments in Real Estate and Other Affiliates that are reported in accordance with the equity and cost methods are as follows: Economic/Legal Ownership Carrying Value Share of Earnings/Dividends March 31, December 31, March 31, December 31, Three Months Ended March 31, ($ in thousands) 2018 2017 2018 2017 2018 2017 Equity Method Investments Master Planned Communities: The Summit (a) — % — % $ 57,015 $ 45,886 $ 11,128 $ 5,280 Operating Assets: Las Vegas 51s, LLC (b) 100 % 100 % — — — (152 ) Constellation (b) 100 % 100 % — — — 64 The Metropolitan Downtown Columbia (c) 50 % 50 % — — 80 57 Stewart Title of Montgomery County, TX 50 % 50 % 3,579 3,673 82 26 Woodlands Sarofim #1 20 % 20 % 2,697 2,696 20 7 m.flats/TEN.M (d) 50 % 50 % 5,648 6,521 (937 ) — Strategic Developments: Circle T Ranch and Power Center 50 % 50 % 4,456 4,455 — — HHMK Development 50 % 50 % 10 10 — — KR Holdings 50 % 50 % — 749 672 11 33 Peck Slip 35 % 35 % 8,651 8,651 — (156 ) 82,056 72,641 11,045 5,137 Cost method investments 3,855 3,952 3,341 3,383 Investment in Real Estate and Other Affiliates $ 85,911 $ 76,593 $ 14,386 $ 8,520 (a) Please refer to the schedules below and elsewhere in this Quarterly Report for relevant financial statement information. (b) HHC acquired this joint venture partner’s interest in 2017 and has fully consolidated the assets and liabilities of the entity. (c) The Metropolitan Downtown Columbia was in a deficit position of $3.1 million and $2.6 million at March 31, 2018 and December 31, 2017, respectively, due to distributions from operating cash flows in excess of basis. This deficit balance is presented in Accounts payable and accrued expenses at March 31, 2018 and December 31, 2017. (d) Property was transferred from Strategic Developments to Operating Assets during the three months ended March 31, 2018. As of March 31, 2018, HHC is not the primary beneficiary of any of the joint ventures listed above because it does not have the power to direct activities that most significantly impact the economic performance of the joint ventures, and therefore, the Company reports its interests in accordance with the equity method. As of March 31, 2018, approximately $187.6 million of indebtedness was secured by the properties owned by HHC's Real Estate and Other Affiliates of which HHC's share was approximately $86.8 million based upon economic ownership. All of this indebtedness is without recourse to HHC. HHC is the primary beneficiary of three variable interest entities ("VIEs") which are consolidated in the financial statements. The creditors of the consolidated VIEs do not have recourse to the Company. As of March 31, 2018 , the carrying values of the assets and liabilities associated with the operations of the consolidated VIEs were $22.8 million and $1.2 million , respectively. As of December 31, 2017 , the carrying values of the assets and liabilities associated with the operations of the consolidated VIEs were $24.8 million and $2.7 million , respectively. The assets of the VIEs are restricted for use only by the particular VIEs and are not available for the Company's general operations. During the first quarter of 2015, HHC formed DLV/HHPI Summerlin, LLC (“The Summit”), a joint venture with Discovery Land Company (“Discovery”), 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 , or $226,000 per acre. Discovery is required to fund up to a maximum of $30.0 million of cash as its capital contribution, and the Company has 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 the Company receives its capital contribution of $125.4 million and a 5.0% preferred return on such capital contribution, 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 equally. Given the nature of the venture’s capital structure and the provisions for the liquidation of assets, the Company's share of the venture’s income-producing activities is recognized based on the Hypothetical Liquidation Book Value ("HLBV") method. Under this method, HHC recognizes income or loss based on the change in its 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: March 31, December 31, (In millions) 2018 2017 Total Assets $ 189.8 $ 166.9 Total Liabilities 131.9 118.9 Total Equity 57.9 48.0 Three Months Ended March 31, (In millions) 2018 2017 Revenues (a) $ 23.4 $ 11.5 Net income 11.1 5.3 Gross Margin 13.3 6.5 (a) Revenues related to land sales at the joint venture are recognized on a percentage of completion basis as The Summit follows the private company timeline for implementation of the New Revenue Standard of January 1, 2019. The Company has evaluated this impact and concluded that it is not material to HHC's consolidated financial statements. |
RECENT TRANSACTIONS
RECENT TRANSACTIONS | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
RECENT TRANSACTIONS | RECENT TRANSACTIONS On April 30, 2018, the Company closed on a $494.5 million construction loan for 110 North Wacker. The loan initially bears interest at LIBOR plus 3.00% and has an initial maturity date of April 30, 2022. On April 30, 2018, HHC executed a joint venture agreement with USAA. After execution of the joint venture agreement, HHC will own 32.70% of the joint venture's equity capital. On February 23, 2018, the Company repurchased 475,920 shares of HHC common stock, par value $0.01 per share, in a private transaction with an unaffiliated entity at a purchase price of $120.33 per share, or approximately $57.3 million in the aggregate. The repurchase transaction was consummated on February 21, 2018 and was funded with cash on hand. The shares were added to the Company's treasury stock upon repurchase. |
IMPAIRMENT
IMPAIRMENT | 3 Months Ended |
Mar. 31, 2018 | |
Asset Impairment Charges [Abstract] | |
IMPAIRMENT | IMPAIRMENT The Company reviews its long-lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. With respect to the Investment in Real Estate and Other Affiliates, a series of operating losses of an underlying asset or other factors may indicate that a decrease in value has occurred which is other‑than‑temporary. The investment in each Real Estate and Other Affiliate is evaluated periodically and as deemed necessary for recoverability and valuation declines that are other‑than‑temporary. No impairment charges were recorded during the three months ended March 31, 2018 or during the year ended December 31, 2017 . The Company periodically evaluates its strategic alternatives with respect to each of its properties and may revise its strategy from time to time, including its intent to hold an asset on a long-term basis or the timing of potential asset dispositions. These changes in strategy could result in impairment charges in future periods. |
OTHER ASSETS AND LIABILITIES
OTHER ASSETS AND LIABILITIES | 3 Months Ended |
Mar. 31, 2018 | |
OTHER ASSETS AND LIABILITIES | |
OTHER ASSETS AND LIABILITIES | OTHER ASSETS AND LIABILITIES Prepaid Expenses and Other Assets The following table summarizes the significant components of Prepaid expenses and other assets: March 31, December 31, (In thousands) 2018 2017 Straight-line rent $ 42,188 $ 39,136 Intangibles 34,465 34,802 Special Improvement District receivable 26,371 26,430 Below-market ground leases 18,562 18,647 Security and escrow deposits 16,888 16,949 Equipment, net of accumulated depreciation of $7.1 million and $6.9 million, respectively 16,798 16,955 Prepaid expenses 12,247 11,731 Other 11,873 19,242 In-place leases 9,805 10,821 Interest rate swap derivative assets 9,011 4,470 Tenant incentives and other receivables 8,208 8,482 Federal income tax receivable 2,198 2,198 Above-market tenant leases 1,495 1,648 Condominium deposits 218 — Condominium receivables — 158,516 Total prepaid expenses and other assets $ 210,327 $ 370,027 The $159.7 million net decrease primarily relates to the following decreases : a $158.5 million decrease in Condominium receivables of which $154.2 million relates to the adoption of the New Revenue Standard; a $ 7.4 million decrease in Other and $1.0 million decrease in In-place leases . These decreases were partially offset by the following increases : a $4.5 million increase in Interest rate swap derivative assets ; $3.1 million increase in Straight-line rent due to additional Operating Assets placed in service during the quarter; and $0.5 million increase in Prepaid expenses . Accounts Payable and Accrued Expenses The following table summarizes the significant components of Accounts payable and accrued expenses: March 31, December 31, (In thousands) 2018 2017 Construction payables $ 244,192 $ 217,838 Condominium deposit liabilities 196,337 55,975 Deferred income 52,758 53,337 Other 27,552 34,699 Accounts payable and accrued expenses 26,328 35,887 Tenant and other deposits 19,681 18,937 Accrued payroll and other employee liabilities 18,246 41,236 Straight-line ground rent liability 15,399 14,944 Accrued real estate taxes 11,271 22,289 Accrued interest 7,507 20,322 Interest rate swaps — 5,961 Above-market ground leases — 293 Total accounts payable and accrued expenses $ 619,271 $ 521,718 The $97.6 million net increase in total accounts payable and accrued expenses primarily relates to the following increases : $140.4 million increase in Condominium deposit liabilities and $26.4 million increase in Construction payables for the towers under construction at Ward Village as the projects move toward completion; and $1.2 million in other increases . These increases are partially offset by a decrease of $23.0 million in Accrued payroll and other employee liabilities due to payment in the first quarter of 2018 of annual incentive bonus for 2017; a decrease of $12.8 million in Accrued interest primarily due to lower interest accrual activity relating to the issuance of the $1.0 billion, 5.375% senior notes due 2025 ("2025 Notes") at a lower rate than the 6.875% senior notes; an $11.0 million decrease in Accrued real estate taxes ; a $9.6 million decrease in Accounts payable and accrued expenses ; a $7.1 million decrease in Other ; a $ 6.0 million decrease in Interest rate swaps ; and $0.9 million in other decreases. |
MORTGAGES, NOTES AND LOANS PAYA
MORTGAGES, NOTES AND LOANS PAYABLE | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
MORTGAGES, NOTES AND LOANS PAYABLE | MORTGAGES, NOTES AND LOANS PAYABLE Mortgages, notes and loans payable are summarized as follows: March 31, December 31, (In thousands) 2018 2017 Fixed-rate debt: Unsecured 5.375% Senior Notes $ 1,000,000 $ 1,000,000 Secured mortgages, notes and loans payable 497,960 499,299 Special Improvement District bonds 24,528 27,576 Variable-rate debt: Mortgages, notes and loans payable (a) 1,392,732 1,350,914 Unamortized bond issuance costs (6,701 ) (6,898 ) Deferred financing costs (12,748 ) (12,946 ) Total mortgages, notes and loans payable, net $ 2,895,771 $ 2,857,945 (a) As more fully described in Note 9 - Derivative Instruments and Hedging Activities , $409.4 million and $428.3 million of variable‑rate debt has been swapped to a fixed-rate for the term of the related debt as of March 31, 2018 and December 31, 2017 , respectively. Certain of the Company's 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 percentage of the loan balance. As of March 31, 2018 , land, buildings and equipment and developments with a net book value basis of $ 3.8 billion have been pledged as collateral for HHC mortgages, notes and loans payable. As of March 31, 2018 , the Company was in compliance with all of its financial covenants included in the debt agreements governing its indebtedness. 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 the Company 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 the Company previously paid with respect to such proportionate share of the bond. In the three months ended March 31, 2018 , no new SID bonds were issued and $2.9 million in obligations were assumed by buyers. Financing Activity On April 30, 2018, the Company closed on a $494.5 million construction loan for 110 North Wacker. The loan initially bears interest at LIBOR plus 3.00% and steps up or down based on various leasing thresholds. On April 13, 2018, the Company repaid the $11.8 million loan for Lakeland Village Center at Bridgeland. On March 27, 2018, the Company closed on a $44.1 million construction loan for Downtown Summerlin Apartments, bearing interest at one-month LIBOR plus 2.25% with an initial maturity date of October 1, 2021 and one , three -year extension option. On January 25, 2018, the Company closed on a $15.5 million construction loan for Lake Woodlands Crossing Retail, a project located in The Woodlands, Texas. The loan bears interest at LIBOR plus 1.80% , matures on January 25, 2023, and has an initial maximum recourse of 50% of the outstanding balance prior to completion of construction, at which point the repayment guarantee will reduce to 15% provided the project is 90% leased. On January 19, 2018, the Company paid off the $18.9 million mortgage loan for 110 North Wacker and settled the related swap liability of $0.3 million . On January 5, 2018, the Company modified and extended the $65.5 million Three Hughes Landing facility. The loan bears interest at one-month LIBOR plus 2.60% with an initial maturity of December 5, 2018, and two , one -year extension options. |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | 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 the Company's assets and liabilities that are measured at fair value on a recurring basis: March 31, 2018 December 31, 2017 Fair Value Measurements Using Fair Value Measurements Using (In thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash equivalents $ 50,272 $ 50,272 $ — $ — $ 50,135 $ 50,135 $ — $ — Interest rate swap derivative assets 9,011 — 9,011 — 4,470 — 4,470 — Liabilities: Interest rate swap derivative liabilities — — — — 5,961 — 5,961 — 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. In 2010 and 2011, the Company entered into warrant agreements (the "Sponsor Warrants and Management Warrants") with various parties to purchase shares of HHC common stock. As discussed further in Note 13 – Warrants , all Sponsor and Management warrants granted prior to 2016, which were accounted for as warrant liabilities, had been exercised as of December 31, 2017. The following table presents a rollforward of the valuation of the Company's Warrant liabilities: (In thousands) 2018 2017 Balance as of January 1 $ — $ 332,170 Warrant liability loss (a) — 12,562 Exercises of Sponsor and Management Warrants — (30,935 ) Balance as of March 31 $ — $ 313,797 (a) For 2017 , this amount represents losses recognized related to each Sponsor and Management Warrant prior to the respective exercise date. 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 was 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, dividend yield and, as appropriate, a discount for lack of marketability. Generally, an increase in expected volatility would increase the fair value of the liability. The impact of the volatility on fair value diminished as the market value of the stock increased above the strike price. As the period of restriction lapsed, the marketability discount reduced to zero and increased the fair value of the warrants. The estimated fair values of the Company's financial instruments that are not measured at fair value on a recurring basis are as follows: March 31, 2018 December 31, 2017 (In thousands) Fair Value Hierarchy Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Assets: Cash and restricted cash Level 1 $ 714,671 $ 714,671 $ 914,165 $ 914,165 Accounts receivable, net (a) Level 3 14,384 14,384 13,041 13,041 Notes receivable, net (b) Level 3 8,310 8,310 5,864 5,864 Liabilities: Fixed-rate debt (c) Level 2 1,522,490 1,507,840 1,526,875 1,554,766 Variable-rate debt (c) Level 2 1,392,732 1,392,732 1,350,914 1,350,914 (a) Accounts receivable, net is shown net of an allowance of $7.2 million and $9.3 million at March 31, 2018 and December 31, 2017 , respectively. (b) Notes receivable, net is shown net of an allowance of $ 0.1 million at March 31, 2018 and December 31, 2017 . (c) Excludes related unamortized financing costs. The fair value of the Company's 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 7 – Mortgages, Notes and Loans Payable in the Company's 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 the Company's 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 the Company's 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. The fair value of the notes receivable is based on the fair value of the collateral which exceeds the carrying basis of the notes as of March 31, 2018. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to interest rate risk related to its variable interest rate debt, and it manages this risk by utilizing interest rate derivatives. To add stability to interest costs by reducing the Company's exposure to interest rate movements, the Company uses interest rate swaps and caps as part of its 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 the Company's fixed‑rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up‑front premium. The Company's 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 change 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 within the same income statement line item being hedged. During the three months ended March 31, 2017 , the ineffective portion recorded in Other income, net was $0.7 million . As discussed in Note 2 - Accounting Policies and Pronouncements , the Company reclassified this ineffectiveness to Accumulated deficit as of January 1, 2018, upon adoption of ASU 2017-12. Assessments of hedge effectiveness are performed quarterly using regression analysis. HHC is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company evaluates counterparty credit risk through monitoring the creditworthiness of counterparties, which includes review of debt ratings and financial performance. To mitigate its credit risk, the Company enters into agreements with counterparties that are considered credit-worthy, such as large financial institutions with favorable credit ratings. As of March 31, 2018 and 2017 , 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 certain terms of the Company's derivative contracts: Fixed Fair Value Asset (Liability) Interest Effective Maturity March 31, December 31, (In thousands) Balance Sheet Location Notional Rate Date Date 2018 2017 Currently-paying contracts: Interest Rate Swap (a) Accounts payable and accrued expenses $ 18,926 2.96 % 5/10/2011 10/31/2019 $ — $ (286 ) Interest Rate Swap (b) Prepaid expenses and other assets, net 40,000 1.66 % 5/6/2015 5/1/2020 571 299 Interest Rate Swap (b) Prepaid expenses and other assets, net 119,359 1.14 % 10/3/2016 9/12/2021 5,313 4,007 Interest Rate Cap (c) Prepaid expenses and other assets, net 75,000 5.00 % 9/1/2017 8/31/2019 6 — Interest Rate Cap (d) Prepaid expenses and other assets, net 230,000 2.50 % 12/22/2016 12/23/2019 469 164 Interest Rate Swap (b) Prepaid expenses and other assets, net 50,000 2.65 % 12/31/2017 12/31/2027 541 (1,124 ) Interest Rate Swap (b) Prepaid expenses and other assets, net 100,000 2.68 % 12/31/2017 12/31/2027 830 (2,509 ) Interest Rate Swap (b) Prepaid expenses and other assets, net 100,000 2.62 % 12/31/2017 12/31/2027 1,281 (2,042 ) Total fair value derivative assets $ 9,011 $ 4,470 Total fair value derivative liabilities $ — $ (5,961 ) (a) On January 19, 2018 HHC repaid in full the $18.9 million mortgage loan for 110 North Wacker and settled the related swap liability of $0.3 million . (b) Denotes derivatives designated as hedging instruments. (c) Denotes a derivative contract that is not currently designated as a hedging instrument. Interest (income) expense included in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 related to this contract is not material. (d) Denotes a derivative contract that is not currently designated as a hedging instrument. Interest (income) expense of 0.3 million is included in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 related to this contract. The tables below present the effect of the Company's derivative financial instruments on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017 : Amount of Loss Recognized in AOCI on Derivative (In thousands) Three Months Ended Derivatives in Cash Flow Hedging Relationships 2018 2017 Interest rate swaps $ 8,261 $ 235 Amount of Loss Reclassified from AOCI into Operations (In thousands) Three Months Ended March 31, Location of Loss Reclassified from AOCI into Operations 2018 2017 Interest expense $ (216 ) $ 198 Total Interest Expense Presented in the Results of Operations in which the Effects of Cash Flow Hedges are Recorded (In thousands) Three Months Ended March 31, Interest Expense Presented in Results of Operations 2018 2017 Interest expense $ 16,609 $ 17,858 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES In the normal course of business, from time to time, the Company is involved in legal proceedings relating to the ownership and operations of its 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 HHC's consolidated financial position, results of operations or liquidity. As of March 31, 2018 and December 31, 2017 , the Company had outstanding letters of credit totaling $13.8 million at each period end and surety bonds totaling $92.9 million and $88.5 million , respectively. These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations. The Company leases land or buildings at certain properties from third parties. Rental payments are expensed as incurred and, to the extent applicable, have been straight-lined over the term of the lease. Contractual rental expense, including participation rent, was $2.6 million and $2.1 million for the three months ended March 31, 2018 and 2017 , respectively. The amortization of above and below‑market ground leases and straight‑line rents included in the contractual rent amount was not significant. The Company has entered into guaranty agreements as part of certain development projects. In conjunction with the execution of the ground lease for Seaport District NYC, the Company executed a completion guaranty for the redevelopment of Pier 17. As part of the Funding Agreement for the Downtown Columbia Redevelopment District TIF bonds, one of HHC's wholly-owned subsidiaries has agreed to complete certain defined public improvements and to indemnify Howard County, Maryland. The Company has guaranteed these obligations, with a limit of $1.0 million , expiring 36 months after bond issuance. The Company is also required to satisfy repayments of the TIF bonds to the extent that increases in taxes do not cover debt service payments. The Company evaluates the likelihood of future performance under these guarantees and did not record an obligation as of March 31, 2018 and December 31, 2017. |
STOCK-BASED PLANS
STOCK-BASED PLANS | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED PLANS | STOCK BASED PLANS The Company's stock based plans are described and informational disclosures are provided in the Notes to the Consolidated Financial Statements included in the Company's Annual Report. Stock Options The following table summarizes the Company's stock option plan activity for the three months ended March 31, 2018 : Stock Options Weighted Average Exercise Price Stock Options outstanding at December 31, 2017 783,182 $ 90.22 Granted 230,000 124.96 Exercised (93,766 ) 65.90 Forfeited (23,200 ) 117.11 Expired — — Stock Options outstanding at March 31, 2018 896,216 $ 100.98 Compensation costs related to stock options were $0.7 million for the three months ended March 31, 2018 , of which $0.3 million were capitalized to development projects. Compensation costs related to stock options were $0.8 million for the three months ended March 31, 2017 , of which $0.3 million were capitalized to development projects. Restricted Stock The following table summarizes restricted stock activity for the three months ended March 31, 2018 : Restricted Stock Weighted Average Grant Date Fair Value Restricted stock outstanding at December 31, 2017 354,519 $ 89.00 Granted 130,115 84.37 Vested — — Forfeited (3,489 ) 78.53 Restricted stock outstanding at March 31, 2018 481,145 $ 87.83 Compensation costs related to restricted stock awards were $2.0 million for the three months ended March 31, 2018, of which $0.3 million were capitalized to development projects. Compensation costs related to restricted stock awards were $1.4 million for the three months ended March 31, 2017 , of which $0.3 million were capitalized to development projects. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company has significant permanent differences, primarily from stock compensation deductions and non-deductible executive compensation, that cause the effective tax rate to deviate from statutory rates. The effective tax rate, based upon actual operating results, was 27.4% for the three months ended March 31, 2018 , compared to 63.1% for the three months ended March 31, 2017 . The change in the tax rate was primarily attributable to changes in the federal income tax rate due to the passage of the Tax Cuts and Jobs Act, non-deductible executive compensation, warrant liability in 2017, valuation allowance related to HHC's deferred tax assets, stock compensation deduction and other items which are permanent differences for tax purposes. The decrease in deferred tax liabilities between December 31, 2017 and March 31, 2018 is due primarily to the cumulative effect adjustment of $89.3 million on adoption of ASU 2014-09 Revenues from Contracts with Customers (Topic 606), resulting in a $19.6 million decrease in the deferred tax liability. |
WARRANTS
WARRANTS | 3 Months Ended |
Mar. 31, 2018 | |
Other Liabilities [Abstract] | |
WARRANTS | WARRANTS In 2010 and 2011, the Company entered into warrant agreements with various parties to purchase shares of HHC common stock. The Sponsor Warrants and Management Warrants were exercised and settled in 2017. Prior to their exercise, the fair values for the Sponsor Warrants and Management Warrants were recorded as liabilities in the Company's Consolidated Balance Sheets because the holders of these warrants could require the Company to settle such warrants in cash upon a change of control. The fair values prior to their settlement in 2017 were estimated using an option pricing model and Level 3 inputs due to the unavailability of comparable market data, as further discussed in Note 8 – Fair Value in the Company's Condensed Consolidated Financial Statements. Decreases and increases in the fair value of the Sponsor and Management Warrants prior to their settlements were recognized as warrant liability gains or losses in the Condensed Consolidated Statements of Operations. On October 7, 2016, the Company entered into a warrant agreement with its Chief Financial Officer, David R. O’Reilly, prior to his appointment to the position. Upon exercise of his warrant, Mr. O’Reilly may acquire 50,125 shares of common stock at an exercise price of $112.08 per share. Mr. O’Reilly’s 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 and October 4, 2017, the Company also entered into new warrant agreements with its Chief Executive Officer, David R. Weinreb and President, Grant Herlitz to acquire 1,965,409 shares and 87,951 shares of common stock for the purchase price of $50.0 million and $2.0 million , respectively. Mr. Weinreb’s new warrant becomes exercisable on June 15, 2022, at an exercise price of $124.64 per share, and Mr. Herlitz’s new 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. The purchase prices paid by the respective executives for the O’Reilly Warrant and Mr. Weinreb’s and Mr. Herlitz’s new warrants, which qualify as equity instruments, are included within additional paid-in capital in the Condensed Consolidated Balance Sheets at March 31, 2018 and December 31, 2017. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following tables summarize changes in Accumulated Other Comprehensive Income (Loss) by component, all of which are presented net of tax: Three Months Ended March 31, (In thousands) 2018 2017 Balance as of January 1 $ (6,965 ) $ (6,786 ) Other comprehensive income before reclassifications 8,271 160 Loss (gain) reclassified from accumulated other comprehensive loss to net income (loss) (216 ) 198 Adjustment related to adoption of ASU 2018-02 (1,148 ) — Adjustment related to adoption of ASU 2017-12 (739 ) — Net current-period other comprehensive income 6,168 358 Balance as of March 31 $ (797 ) $ (6,428 ) The following table summarizes 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 Three Months Ended March 31, (In thousands) Statements of Operations 2018 2017 Losses on cash flow hedges Interest expense $ (273 ) $ 316 Interest rate swap contracts Provision for income taxes 57 (118 ) Total reclassifications of loss (income) for the period Net of tax $ (216 ) $ 198 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 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 the Company's EPS calculations is summarized as follows: Three Months Ended March 31, (In thousands, except per share amounts) 2018 2017 Basic EPS: Numerator: Net income $ 1,834 $ 5,659 Net income attributable to noncontrolling interests (360 ) — Net income attributable to common stockholders $ 1,474 $ 5,659 Denominator: Weighted average basic common shares outstanding 42,976 39,799 Diluted EPS: Numerator: Net income attributable to common stockholders $ 1,474 $ 5,659 Denominator: Weighted average basic common shares outstanding 42,976 39,799 Restricted stock and stock options 218 317 Warrants 169 2,641 Weighted average diluted common shares outstanding 43,363 42,757 Basic income per share: $ 0.03 $ 0.14 Diluted income per share: $ 0.03 $ 0.13 The diluted EPS computation for the three months ended March 31, 2018 excludes 409,100 stock options, because their inclusion would have been anti-dilutive. The diluted EPS computation for the three months ended March 31, 2018 excludes 224,420 shares of restricted stock because market conditions included in the restricted stock awards have not been met. The diluted EPS computation for the three months ended March 31, 2017 excludes 328,500 stock options, because their inclusion would have been anti-dilutive. The diluted EPS computation for the three months ended March 31, 2017 excludes 170,847 shares of restricted stock because performance conditions included in the restricted stock awards have not been met. |
SEGMENTS
SEGMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
SEGMENTS | SEGMENTS The Company has three business segments which offer different products and services. HHC's three segments are managed separately because each requires different operating strategies or management expertise and are reflective of management’s operating philosophies and methods. As further discussed in Item 2, the one common operating measure used to assess operating results for our business segments is earnings before taxes ("EBT"). HHC's segments or assets within such segments could change in the future as development of certain properties commences or other operational or management changes occur. The Company does not distinguish or group the combined operations on a geographic basis. Furthermore, all operations are within the United States. The Company's reportable segments are as follows: • Master Planned Communities – 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, and properties with an opportunity to redevelop, reposition or sell to improve segment performance or to recycle capital. • Strategic Developments – includes 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, the Company moved the Seaport District NYC assets under construction and related activities to the Strategic Developments segment from the Operating Assets segment. Seaport District NYC operating properties and related operating results remain presented within the Operating Assets segment. Segment operating results are as follows: Three Months Ended March 31, 2018 2017 2018 2017 2018 2017 2018 2017 (In thousands) Operating MPC Strategic Consolidated Total revenues $ 91,258 $ 82,087 $ 55,765 $ 68,706 $ 14,656 $ 80,969 $ 161,679 $ 231,762 Total operating expenses: 44,806 40,237 36,368 35,265 12,767 68,130 93,941 143,632 Segment operating income 46,452 41,850 19,397 33,441 1,889 12,839 67,738 88,130 Depreciation and amortization (25,173 ) (22,789 ) (81 ) (92 ) (1,065 ) (668 ) (26,319 ) (23,549 ) Interest (expense) income, net (16,687 ) (14,524 ) 6,392 5,557 7,524 4,604 (2,771 ) (4,363 ) Equity in earnings from Real Estate and Other Affiliates 2,583 3,385 11,128 5,280 672 (145 ) 14,382 8,520 Gains on sales of properties — — — — 32,215 — 32,215 Segment EBT $ 7,175 $ 7,922 $ 36,836 $ 44,186 $ 9,020 $ 48,845 $ 53,030 $ 100,953 Corporate expenses and other items 51,196 95,294 Net income $ 1,834 $ 5,659 Net income attributable to noncontrolling interests (360 ) — Net income attributable to common stockholders $ 1,474 $ 5,659 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: March 31, December 31, (In thousands) 2018 2017 Master Planned Communities $ 2,000,369 $ 1,999,090 Operating Assets 2,585,774 2,489,177 Strategic Developments 1,624,168 1,511,612 Total segment assets 6,210,311 5,999,879 Corporate and other 527,675 729,185 Total assets $ 6,737,986 $ 6,729,064 The increase in the Operating Assets segment asset balance as of March 31, 2018 compared to December 31, 2017 is primarily due to placing NEP Imaging Group, LLC's studio at Seaport District NYC and One Merriweather in service. These increases were partially offset by the transfer of 110 North Wacker to Strategic Developments in January 2018. The increase in the Strategic Developments segment asset balance as of March 31, 2018 compared to December 31, 2017 is primarily due to the transfer of 110 North Wacker into the segment and increased development expenditures for Ward condominium projects under construction. |
ACCOUNTING POLICIES AND PRONO25
ACCOUNTING POLICIES AND PRONOUNCEMENTS ACCOUNTING POLICIES AND PRONOUNCEMENTS (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Accounting Policies and Pronouncements | In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments . The standard addresses how certain cash receipts and payments are presented and classified in the statement of cash flows, 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. The Company adopted this standard retrospectively, as of January 1, 2018. ASU 2016-15 had no impact on the Company's presentation of operating, investing and financing activities related to certain cash receipts and payments on its consolidated statements of cash flows for the three months ended March 31, 2017. 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. The Company is currently evaluating the adoption of ASU 2016-13 on its consolidated financial statements. 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. The Company is currently evaluating the impact of adopting ASU 2016-02 on the consolidated financial statements. The Company anticipates a material increase to assets and liabilities as it will be required to capitalize its ground leases, office leases and certain office equipment leases where the Company is the lessee. 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 it must be adopted via a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company adopted the guidance as of January 1, 2018. As none of the Company's equity investments have readily determinable fair values, the adoption of this ASU does not have an impact on its consolidated financial statements. The following is a summary of recently issued and other notable accounting pronouncements which relate to HHC's business. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, that allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The effective date of the standard is for fiscal periods, and interim periods within those years, beginning after December 15, 2018. The amendments must be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. Early adoption is permitted. The Company adopted ASU 2018-02 as of January 1, 2018, and an election was made to reclassify $1.1 million from accumulated other comprehensive income to retained earnings. In August 2017, the FASB issued 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 their 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 Consolidated Statements of Operations 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. The Company adopted ASU 2017-12 as of January 1, 2018 and, as a result, $0.7 million of ineffectiveness recognized prior to 2018 for its swaps was reclassified to Accumulated deficit from Accumulated other comprehensive income. 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. The Company adopted ASU 2017-09 as of January 1, 2018 and, as a result, 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. The Company adopted ASU 2017-05 as of January 1, 2018, and it did not have a material effect on the Company’s financial position or results of operations as the Company has no partial sales in the current period. 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. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. 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 |
BASIS OF PRESENTATION AND ORG26
BASIS OF PRESENTATION AND ORGANIZATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Financial Statement Line Items Affected As Result Of New Revenue Recognition Standard | For the three months ended March 31, 2018 , the following financial statement line items are affected as a result of HHC's adoption of the New Revenue Standard: Three Months Ended March 31, 2018 Condensed Consolidated Balance Sheet Recognition Under Previous Guidance Impact of Adoption of ASC Topic 606 Recognition Under ASC Topic 606 Buildings and equipment, net $ 2,038,288 $ 2,459 $ 2,040,747 Developments 1,171,469 240,684 1,412,153 Deferred expenses, net 84,001 6,838 90,839 Prepaid expenses and other assets, net 487,731 (277,404 ) 210,327 Deferred tax liabilities 174,340 (30,759 ) 143,581 Accounts payable and accrued expenses 511,323 107,948 619,271 Accumulated deficit (71,266 ) (104,613 ) (175,879 ) Condensed Consolidated Statement of Operations Condominium rights and unit sales 153,702 (142,865 ) 10,837 Condominium rights and unit cost of sales 104,587 (97,858 ) 6,729 Depreciation and amortization 27,199 989 28,188 Operating income before other items 48,536 (45,997 ) 2,539 Provision for income taxes 11,674 (11,116 ) 558 Net income 36,714 (34,880 ) 1,834 Net income attributable to common stockholders 36,354 (34,880 ) 1,474 Condensed Consolidated Statement of Comprehensive Income Net income 36,714 (34,880 ) 1,834 Comprehensive income 42,882 (34,880 ) 8,002 Comprehensive income attributable to common stockholders 42,522 (34,880 ) 7,642 Condensed Consolidated Statement of Cash Flows Net income 36,714 (34,880 ) 1,834 Depreciation and amortization 27,199 989 28,188 Deferred income taxes 11,364 (11,116 ) 248 Condominium rights and unit cost of sales 104,587 (97,858 ) 6,729 Percentage of completion revenue recognition from sale of condominium rights and unit sales (142,865 ) 142,865 — |
ACCOUNTING POLICIES AND PRONO27
ACCOUNTING POLICIES AND PRONOUNCEMENTS ACCOUNTING POLICIES AND PRONOUNCEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Revenue | The following table presents HHC revenues disaggregated by revenue source: Three Months Ended (In thousands) March 31, 2018 Revenues From contracts with customers Recognized at a point in time: Condominium rights and unit sales $ 10,837 Master Planned Community land sales 46,565 Hospitality revenues 23,061 Builder price participation 5,081 Total revenue from contracts with customers 85,544 Recognized at a point in time and/or over time: Other land revenues 4,131 Other rental and property revenues 9,849 Total other income 13,980 Rental and other income (lease-related revenues) Minimum rents 49,395 Tenant recoveries 12,760 Total rental income 62,155 Total revenues $ 161,679 Revenues by segment Master Planned Community Revenue $ 55,765 Operating Segment Revenue 91,258 Strategic Developments Revenue 14,656 Total revenues $ 161,679 |
Schedule of Contract with Customer, Asset and Liability | The beginning and ending balances of contract liabilities and significant activity during the period is as follows: Contract (In thousands) Liabilities Balance as of January 1, 2018 $ 179,179 Consideration earned during the period (8,067 ) Consideration received during the period 44,043 Balance as of March 31, 2018 $ 215,155 |
Schedule of Remaining Unsatisfied Performance Obligations | The Company expects to recognize this amount as revenue over the following periods: (In thousands) Less than 1 year 1-2 years 3 years and thereafter Total remaining unsatisfied performance obligations $ 690,059 $ 202,716 $ 234,609 |
REAL ESTATE AND OTHER AFFILIA28
REAL ESTATE AND OTHER AFFILIATES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summary of Investments in Real Estate and Other Affiliates | Relevant financial statement information for The Summit is summarized as follows: March 31, December 31, (In millions) 2018 2017 Total Assets $ 189.8 $ 166.9 Total Liabilities 131.9 118.9 Total Equity 57.9 48.0 Three Months Ended March 31, (In millions) 2018 2017 Revenues (a) $ 23.4 $ 11.5 Net income 11.1 5.3 Gross Margin 13.3 6.5 (a) Revenues related to land sales at the joint venture are recognized on a percentage of completion basis as The Summit follows the private company timeline for implementation of the New Revenue Standard of January 1, 2019. The Company has evaluated this impact and concluded that it is not material to HHC's consolidated financial statements. The Company's investments in Real Estate and Other Affiliates that are reported in accordance with the equity and cost methods are as follows: Economic/Legal Ownership Carrying Value Share of Earnings/Dividends March 31, December 31, March 31, December 31, Three Months Ended March 31, ($ in thousands) 2018 2017 2018 2017 2018 2017 Equity Method Investments Master Planned Communities: The Summit (a) — % — % $ 57,015 $ 45,886 $ 11,128 $ 5,280 Operating Assets: Las Vegas 51s, LLC (b) 100 % 100 % — — — (152 ) Constellation (b) 100 % 100 % — — — 64 The Metropolitan Downtown Columbia (c) 50 % 50 % — — 80 57 Stewart Title of Montgomery County, TX 50 % 50 % 3,579 3,673 82 26 Woodlands Sarofim #1 20 % 20 % 2,697 2,696 20 7 m.flats/TEN.M (d) 50 % 50 % 5,648 6,521 (937 ) — Strategic Developments: Circle T Ranch and Power Center 50 % 50 % 4,456 4,455 — — HHMK Development 50 % 50 % 10 10 — — KR Holdings 50 % 50 % — 749 672 11 33 Peck Slip 35 % 35 % 8,651 8,651 — (156 ) 82,056 72,641 11,045 5,137 Cost method investments 3,855 3,952 3,341 3,383 Investment in Real Estate and Other Affiliates $ 85,911 $ 76,593 $ 14,386 $ 8,520 (a) Please refer to the schedules below and elsewhere in this Quarterly Report for relevant financial statement information. (b) HHC acquired this joint venture partner’s interest in 2017 and has fully consolidated the assets and liabilities of the entity. (c) The Metropolitan Downtown Columbia was in a deficit position of $3.1 million and $2.6 million at March 31, 2018 and December 31, 2017, respectively, due to distributions from operating cash flows in excess of basis. This deficit balance is presented in Accounts payable and accrued expenses at March 31, 2018 and December 31, 2017. (d) Property was transferred from Strategic Developments to Operating Assets during the three months ended March 31, 2018. |
OTHER ASSETS AND LIABILITIES (T
OTHER ASSETS AND LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
OTHER ASSETS AND LIABILITIES | |
Summary of the significant components of prepaid expenses and other assets | The following table summarizes the significant components of Prepaid expenses and other assets: March 31, December 31, (In thousands) 2018 2017 Straight-line rent $ 42,188 $ 39,136 Intangibles 34,465 34,802 Special Improvement District receivable 26,371 26,430 Below-market ground leases 18,562 18,647 Security and escrow deposits 16,888 16,949 Equipment, net of accumulated depreciation of $7.1 million and $6.9 million, respectively 16,798 16,955 Prepaid expenses 12,247 11,731 Other 11,873 19,242 In-place leases 9,805 10,821 Interest rate swap derivative assets 9,011 4,470 Tenant incentives and other receivables 8,208 8,482 Federal income tax receivable 2,198 2,198 Above-market tenant leases 1,495 1,648 Condominium deposits 218 — Condominium receivables — 158,516 Total prepaid expenses and other assets $ 210,327 $ 370,027 |
Summary of the significant components of accounts payable and accrued expenses | The following table summarizes the significant components of Accounts payable and accrued expenses: March 31, December 31, (In thousands) 2018 2017 Construction payables $ 244,192 $ 217,838 Condominium deposit liabilities 196,337 55,975 Deferred income 52,758 53,337 Other 27,552 34,699 Accounts payable and accrued expenses 26,328 35,887 Tenant and other deposits 19,681 18,937 Accrued payroll and other employee liabilities 18,246 41,236 Straight-line ground rent liability 15,399 14,944 Accrued real estate taxes 11,271 22,289 Accrued interest 7,507 20,322 Interest rate swaps — 5,961 Above-market ground leases — 293 Total accounts payable and accrued expenses $ 619,271 $ 521,718 |
MORTGAGES, NOTES AND LOANS PA30
MORTGAGES, NOTES AND LOANS PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Summary of mortgages, notes and loans payable | Mortgages, notes and loans payable are summarized as follows: March 31, December 31, (In thousands) 2018 2017 Fixed-rate debt: Unsecured 5.375% Senior Notes $ 1,000,000 $ 1,000,000 Secured mortgages, notes and loans payable 497,960 499,299 Special Improvement District bonds 24,528 27,576 Variable-rate debt: Mortgages, notes and loans payable (a) 1,392,732 1,350,914 Unamortized bond issuance costs (6,701 ) (6,898 ) Deferred financing costs (12,748 ) (12,946 ) Total mortgages, notes and loans payable, net $ 2,895,771 $ 2,857,945 (a) As more fully described in Note 9 - Derivative Instruments and Hedging Activities , $409.4 million and $428.3 million of variable‑rate debt has been swapped to a fixed-rate for the term of the related debt as of March 31, 2018 and December 31, 2017 , respectively. |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities Measured on a Recurring Basis | The following table presents the fair value measurement hierarchy levels required under ASC 820 for each of the Company's assets and liabilities that are measured at fair value on a recurring basis: March 31, 2018 December 31, 2017 Fair Value Measurements Using Fair Value Measurements Using (In thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash equivalents $ 50,272 $ 50,272 $ — $ — $ 50,135 $ 50,135 $ — $ — Interest rate swap derivative assets 9,011 — 9,011 — 4,470 — 4,470 — Liabilities: Interest rate swap derivative liabilities — — — — 5,961 — 5,961 — |
Rollforward of Sponsor and Management Warrants | The following table presents a rollforward of the valuation of the Company's Warrant liabilities: (In thousands) 2018 2017 Balance as of January 1 $ — $ 332,170 Warrant liability loss (a) — 12,562 Exercises of Sponsor and Management Warrants — (30,935 ) Balance as of March 31 $ — $ 313,797 (a) For 2017 , this amount represents losses recognized related to each Sponsor and Management Warrant prior to the respective exercise date. 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. |
Summary of assets and liabilities that were measured at fair value on a non-recurring basis | The estimated fair values of the Company's financial instruments that are not measured at fair value on a recurring basis are as follows: March 31, 2018 December 31, 2017 (In thousands) Fair Value Hierarchy Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Assets: Cash and restricted cash Level 1 $ 714,671 $ 714,671 $ 914,165 $ 914,165 Accounts receivable, net (a) Level 3 14,384 14,384 13,041 13,041 Notes receivable, net (b) Level 3 8,310 8,310 5,864 5,864 Liabilities: Fixed-rate debt (c) Level 2 1,522,490 1,507,840 1,526,875 1,554,766 Variable-rate debt (c) Level 2 1,392,732 1,392,732 1,350,914 1,350,914 (a) Accounts receivable, net is shown net of an allowance of $7.2 million and $9.3 million at March 31, 2018 and December 31, 2017 , respectively. (b) Notes receivable, net is shown net of an allowance of $ 0.1 million at March 31, 2018 and December 31, 2017 . (c) Excludes related unamortized financing costs. |
DERIVATIVE INSTRUMENTS AND HE32
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of fair value of the Company's derivative financial instruments | The following table summarizes certain terms of the Company's derivative contracts: Fixed Fair Value Asset (Liability) Interest Effective Maturity March 31, December 31, (In thousands) Balance Sheet Location Notional Rate Date Date 2018 2017 Currently-paying contracts: Interest Rate Swap (a) Accounts payable and accrued expenses $ 18,926 2.96 % 5/10/2011 10/31/2019 $ — $ (286 ) Interest Rate Swap (b) Prepaid expenses and other assets, net 40,000 1.66 % 5/6/2015 5/1/2020 571 299 Interest Rate Swap (b) Prepaid expenses and other assets, net 119,359 1.14 % 10/3/2016 9/12/2021 5,313 4,007 Interest Rate Cap (c) Prepaid expenses and other assets, net 75,000 5.00 % 9/1/2017 8/31/2019 6 — Interest Rate Cap (d) Prepaid expenses and other assets, net 230,000 2.50 % 12/22/2016 12/23/2019 469 164 Interest Rate Swap (b) Prepaid expenses and other assets, net 50,000 2.65 % 12/31/2017 12/31/2027 541 (1,124 ) Interest Rate Swap (b) Prepaid expenses and other assets, net 100,000 2.68 % 12/31/2017 12/31/2027 830 (2,509 ) Interest Rate Swap (b) Prepaid expenses and other assets, net 100,000 2.62 % 12/31/2017 12/31/2027 1,281 (2,042 ) Total fair value derivative assets $ 9,011 $ 4,470 Total fair value derivative liabilities $ — $ (5,961 ) (a) On January 19, 2018 HHC repaid in full the $18.9 million mortgage loan for 110 North Wacker and settled the related swap liability of $0.3 million . (b) Denotes derivatives designated as hedging instruments. (c) Denotes a derivative contract that is not currently designated as a hedging instrument. Interest (income) expense included in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 related to this contract is not material. (d) Denotes a derivative contract that is not currently designated as a hedging instrument. Interest (income) expense of 0.3 million is included in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 related to this contract. |
Summary of effect of the Company's derivative financial instruments on the Condensed Consolidated Statements of Operations | The tables below present the effect of the Company's derivative financial instruments on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017 : Amount of Loss Recognized in AOCI on Derivative (In thousands) Three Months Ended Derivatives in Cash Flow Hedging Relationships 2018 2017 Interest rate swaps $ 8,261 $ 235 Amount of Loss Reclassified from AOCI into Operations (In thousands) Three Months Ended March 31, Location of Loss Reclassified from AOCI into Operations 2018 2017 Interest expense $ (216 ) $ 198 Total Interest Expense Presented in the Results of Operations in which the Effects of Cash Flow Hedges are Recorded (In thousands) Three Months Ended March 31, Interest Expense Presented in Results of Operations 2018 2017 Interest expense $ 16,609 $ 17,858 |
STOCK-BASED PLANS (Tables)
STOCK-BASED PLANS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of stock option plan activity | The following table summarizes the Company's stock option plan activity for the three months ended March 31, 2018 : Stock Options Weighted Average Exercise Price Stock Options outstanding at December 31, 2017 783,182 $ 90.22 Granted 230,000 124.96 Exercised (93,766 ) 65.90 Forfeited (23,200 ) 117.11 Expired — — Stock Options outstanding at March 31, 2018 896,216 $ 100.98 |
Summary of restricted stock activity | The following table summarizes restricted stock activity for the three months ended March 31, 2018 : Restricted Stock Weighted Average Grant Date Fair Value Restricted stock outstanding at December 31, 2017 354,519 $ 89.00 Granted 130,115 84.37 Vested — — Forfeited (3,489 ) 78.53 Restricted stock outstanding at March 31, 2018 481,145 $ 87.83 |
ACCUMULATED OTHER COMPREHENSI34
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Summary of AOCI | The following tables summarize changes in Accumulated Other Comprehensive Income (Loss) by component, all of which are presented net of tax: Three Months Ended March 31, (In thousands) 2018 2017 Balance as of January 1 $ (6,965 ) $ (6,786 ) Other comprehensive income before reclassifications 8,271 160 Loss (gain) reclassified from accumulated other comprehensive loss to net income (loss) (216 ) 198 Adjustment related to adoption of ASU 2018-02 (1,148 ) — Adjustment related to adoption of ASU 2017-12 (739 ) — Net current-period other comprehensive income 6,168 358 Balance as of March 31 $ (797 ) $ (6,428 ) |
Summary of the amounts reclassified out of AOCI | The following table summarizes 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 Three Months Ended March 31, (In thousands) Statements of Operations 2018 2017 Losses on cash flow hedges Interest expense $ (273 ) $ 316 Interest rate swap contracts Provision for income taxes 57 (118 ) Total reclassifications of loss (income) for the period Net of tax $ (216 ) $ 198 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Summary of EPS calculations | Information related to the Company's EPS calculations is summarized as follows: Three Months Ended March 31, (In thousands, except per share amounts) 2018 2017 Basic EPS: Numerator: Net income $ 1,834 $ 5,659 Net income attributable to noncontrolling interests (360 ) — Net income attributable to common stockholders $ 1,474 $ 5,659 Denominator: Weighted average basic common shares outstanding 42,976 39,799 Diluted EPS: Numerator: Net income attributable to common stockholders $ 1,474 $ 5,659 Denominator: Weighted average basic common shares outstanding 42,976 39,799 Restricted stock and stock options 218 317 Warrants 169 2,641 Weighted average diluted common shares outstanding 43,363 42,757 Basic income per share: $ 0.03 $ 0.14 Diluted income per share: $ 0.03 $ 0.13 |
SEGMENTS (Tables)
SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of segment operating results | Segment operating results are as follows: Three Months Ended March 31, 2018 2017 2018 2017 2018 2017 2018 2017 (In thousands) Operating MPC Strategic Consolidated Total revenues $ 91,258 $ 82,087 $ 55,765 $ 68,706 $ 14,656 $ 80,969 $ 161,679 $ 231,762 Total operating expenses: 44,806 40,237 36,368 35,265 12,767 68,130 93,941 143,632 Segment operating income 46,452 41,850 19,397 33,441 1,889 12,839 67,738 88,130 Depreciation and amortization (25,173 ) (22,789 ) (81 ) (92 ) (1,065 ) (668 ) (26,319 ) (23,549 ) Interest (expense) income, net (16,687 ) (14,524 ) 6,392 5,557 7,524 4,604 (2,771 ) (4,363 ) Equity in earnings from Real Estate and Other Affiliates 2,583 3,385 11,128 5,280 672 (145 ) 14,382 8,520 Gains on sales of properties — — — — 32,215 — 32,215 Segment EBT $ 7,175 $ 7,922 $ 36,836 $ 44,186 $ 9,020 $ 48,845 $ 53,030 $ 100,953 Corporate expenses and other items 51,196 95,294 Net income $ 1,834 $ 5,659 Net income attributable to noncontrolling interests (360 ) — Net income attributable to common stockholders $ 1,474 $ 5,659 |
Summary of assets by segment and the reconciliation of total segment assets to the total assets in the Condensed Consolidated Balance Sheets | 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: March 31, December 31, (In thousands) 2018 2017 Master Planned Communities $ 2,000,369 $ 1,999,090 Operating Assets 2,585,774 2,489,177 Strategic Developments 1,624,168 1,511,612 Total segment assets 6,210,311 5,999,879 Corporate and other 527,675 729,185 Total assets $ 6,737,986 $ 6,729,064 |
BASIS OF PERSENTATION AND ORGAN
BASIS OF PERSENTATION AND ORGANIZATION (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid expenses and other assets, net increase (decrease) as result of ASU adoption | $ 210,327 | $ 370,027 | |
Increase in accumulated deficit | 175,879 | 109,508 | |
Decrease in deferred tax liability | (143,581) | (160,850) | |
Condominium receivables | 0 | (158,516) | |
Net property and equipment | 5,359,836 | 5,033,527 | |
Developments | 1,412,153 | 1,196,582 | |
Accounts payable and accrued expenses | 619,271 | 521,718 | |
Revenue recognized in period | 8,067 | ||
Accounting Standards Update 2016-18 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid expenses and other assets, net increase (decrease) as result of ASU adoption | $ (103,200) | ||
Accounting Standards Update 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid expenses and other assets, net increase (decrease) as result of ASU adoption | (277,404) | $ 5,600 | |
Increase in accumulated deficit | 104,613 | 69,700 | |
Decrease in deferred tax liability | 30,759 | 19,600 | |
Condominium receivables | (154,200) | 154,200 | |
Net property and equipment | 3,400 | ||
Developments | 240,684 | 150,800 | |
Accounts payable and accrued expenses | $ 107,948 | $ 95,000 |
BASIS OF PERSENTATION AND ORG38
BASIS OF PERSENTATION AND ORGANIZATION (Schedule of Financial Statement Line Items Affected As Result Of New Revenue Recognition Standard) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Condensed Consolidated Balance Sheet | ||||
Buildings and equipment, net | $ 2,040,747 | |||
Developments | 1,412,153 | $ 1,196,582 | ||
Deferred expenses, net | 90,839 | 80,901 | ||
Prepaid expenses and other assets, net | 210,327 | 370,027 | ||
Deferred tax liabilities | 143,581 | 160,850 | ||
Accounts payable and accrued expenses | 619,271 | 521,718 | ||
Accumulated deficit | (175,879) | $ (109,508) | ||
Condensed Consolidated Statement of Operations | ||||
Condominium rights and unit sales | 10,837 | $ 80,145 | ||
Condominium rights and unit cost of sales | 6,729 | 60,483 | ||
Depreciation and amortization | 28,188 | 25,524 | ||
Operating income before other items | 2,539 | 44,652 | ||
Provision for income taxes | 558 | 9,697 | ||
Net income | 1,834 | 5,659 | ||
Net income attributable to common stockholders | 1,474 | 5,659 | ||
Condensed Consolidated Statement of Comprehensive Income | ||||
Comprehensive income | 8,002 | 6,017 | ||
Comprehensive income attributable to common stockholders | 7,642 | 6,017 | ||
Condensed Consolidated Statement of Cash Flows | ||||
Deferred income taxes | 248 | 8,888 | ||
Percentage of completion revenue recognition from sale of condominium rights and unit sales | 0 | $ (80,145) | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||
Condensed Consolidated Balance Sheet | ||||
Buildings and equipment, net | 2,459 | |||
Developments | 240,684 | $ 150,800 | ||
Deferred expenses, net | 6,838 | |||
Prepaid expenses and other assets, net | (277,404) | 5,600 | ||
Deferred tax liabilities | (30,759) | (19,600) | ||
Accounts payable and accrued expenses | 107,948 | 95,000 | ||
Accumulated deficit | (104,613) | $ (69,700) | ||
Condensed Consolidated Statement of Operations | ||||
Condominium rights and unit sales | (142,865) | |||
Condominium rights and unit cost of sales | (97,858) | |||
Depreciation and amortization | 989 | |||
Operating income before other items | (45,997) | |||
Provision for income taxes | (11,116) | |||
Net income | (34,880) | |||
Net income attributable to common stockholders | (34,880) | |||
Condensed Consolidated Statement of Comprehensive Income | ||||
Comprehensive income | (34,880) | |||
Comprehensive income attributable to common stockholders | (34,880) | |||
Condensed Consolidated Statement of Cash Flows | ||||
Deferred income taxes | (11,116) | |||
Percentage of completion revenue recognition from sale of condominium rights and unit sales | 142,865 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Condensed Consolidated Balance Sheet | ||||
Buildings and equipment, net | 2,038,288 | |||
Developments | 1,171,469 | |||
Deferred expenses, net | 84,001 | |||
Prepaid expenses and other assets, net | 487,731 | |||
Deferred tax liabilities | 174,340 | |||
Accounts payable and accrued expenses | 511,323 | |||
Accumulated deficit | (71,266) | |||
Condensed Consolidated Statement of Operations | ||||
Condominium rights and unit sales | 153,702 | |||
Condominium rights and unit cost of sales | 104,587 | |||
Depreciation and amortization | 27,199 | |||
Operating income before other items | 48,536 | |||
Provision for income taxes | 11,674 | |||
Net income | 36,714 | |||
Net income attributable to common stockholders | 36,354 | |||
Condensed Consolidated Statement of Comprehensive Income | ||||
Comprehensive income | 42,882 | |||
Comprehensive income attributable to common stockholders | 42,522 | |||
Condensed Consolidated Statement of Cash Flows | ||||
Deferred income taxes | 11,364 | |||
Percentage of completion revenue recognition from sale of condominium rights and unit sales | $ (142,865) |
ACCOUNTING POLICIES AND PRONO39
ACCOUNTING POLICIES AND PRONOUNCEMENTS (Narrative) (Details) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification out of AOCI to retained earnings | [1] | $ 1,148,000 | $ 0 | ||
Decrease to accumulated other comprehensive income | 797,000 | $ 6,965,000 | |||
Cumulative effect of adjustment, accumulated deficit | (69,732,000) | ||||
Reclassification of cash used in operating activities | 86,421,000 | 97,419,000 | |||
Reclassification of cash used in investing activities | 99,881,000 | 85,031,000 | |||
Increase in restricted cash | 0 | 0 | |||
Contract assets | $ 0 | $ 0 | |||
Accounting Standard Update 2017-12 | New Accounting Pronouncement, Early Adoption, Effect | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Decrease to accumulated other comprehensive income | $ 700,000 | ||||
Cumulative effect of adjustment, accumulated deficit | $ 700,000 | ||||
Accounting Standards Update 2016-18 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reclassification of cash used in operating activities | 39,700,000 | ||||
Reclassification of cash used in investing activities | 2,500,000 | ||||
Increase in restricted cash | $ 37,200,000 | ||||
[1] | The Company adopted Accounting Standards Update ("ASU") 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, as of January 1, 2018. See Note 2 - Accounting Policies and Pronouncements for further discussion. |
ACCOUNTING POLICIES AND PRONO40
ACCOUNTING POLICIES AND PRONOUNCEMENTS (Schedule of Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Minimum rents | $ 49,395 | $ 46,326 |
Tenant recoveries | 12,760 | 11,399 |
Total rental income | 62,155 | |
Total revenues | 161,679 | $ 231,762 |
Recognized at a point in time: | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 85,544 | |
Recognized at a point in time and/or over time: | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 13,980 | |
MPC | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 55,765 | |
Operating | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 91,258 | |
Strategic | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 14,656 | |
Condominium rights and unit sales | Recognized at a point in time: | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 10,837 | |
Master Planned Community land sales | Recognized at a point in time: | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 46,565 | |
Hospitality revenues | Recognized at a point in time: | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 23,061 | |
Builder price participation | Recognized at a point in time: | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 5,081 | |
Other land revenues | Recognized at a point in time and/or over time: | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 4,131 | |
Other rental and property revenues | Recognized at a point in time and/or over time: | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | $ 9,849 |
ACCOUNTING POLICIES AND PRONO41
ACCOUNTING POLICIES AND PRONOUNCEMENTS (Schedule of Contract with Cistomer, Asset and Liability) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Change In Contract With Customer, Liability [Roll Forward] | |
Beginning balance | $ 179,179 |
Consideration earned during the period | (8,067) |
Consideration received during the period | 44,043 |
Ending balance | $ 215,155 |
ACCOUNTING POLICIES AND PRONO42
ACCOUNTING POLICIES AND PRONOUNCEMENTS (Schedule of Remaining Unsatisfied Performance Obligations) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, expected timing of satisfaction period | 1 year |
Remaining performance obligation | $ 690,059 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, expected timing of satisfaction period | 2 years |
Remaining performance obligation | $ 234,609 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 1,100,000 |
REAL ESTATE AND OTHER AFFILIA43
REAL ESTATE AND OTHER AFFILIATES (Summary of Investments in Real Estate and Other Affiliates) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Investment in Real Estate and Other Affiliates | |||
Carrying Value | $ 85,911 | $ 76,593 | |
Share of Earnings/Dividends | 14,386 | $ 8,520 | |
Cost method investments | |||
Investment in Real Estate and Other Affiliates | |||
Carrying Value | 3,855 | 3,952 | |
Share of Earnings/Dividends | 3,341 | 3,383 | |
Accounts payable and accrued expenses | The Metropolitan Downtown Columbia | |||
Investment in Real Estate and Other Affiliates | |||
Investment deficit position | $ 3,100 | $ 2,600 | |
MPC | The Summit | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 0.00% | 0.00% | |
Carrying Value | $ 57,015 | $ 45,886 | |
Share of Earnings/Dividends | $ 11,128 | 5,280 | |
Operating | Las Vegas 51s LLC | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 100.00% | 100.00% | |
Carrying Value | $ 0 | $ 0 | |
Share of Earnings/Dividends | $ 0 | (152) | |
Operating | Constellation | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 100.00% | 100.00% | |
Carrying Value | $ 0 | $ 0 | |
Share of Earnings/Dividends | $ 0 | 64 | |
Operating | The Metropolitan Downtown Columbia | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 50.00% | 50.00% | |
Carrying Value | $ 0 | $ 0 | |
Share of Earnings/Dividends | $ 80 | 57 | |
Operating | Stewart Title of Montgomery County, TX | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 50.00% | 50.00% | |
Carrying Value | $ 3,579 | $ 3,673 | |
Share of Earnings/Dividends | $ 82 | 26 | |
Operating | Woodlands Sarofim 1 | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 20.00% | 20.00% | |
Carrying Value | $ 2,697 | $ 2,696 | |
Share of Earnings/Dividends | $ 20 | 7 | |
Operating | m.flats/TEN.M | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 50.00% | 50.00% | |
Carrying Value | $ 5,648 | $ 6,521 | |
Share of Earnings/Dividends | (937) | 0 | |
Strategic | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Carrying Value | 82,056 | $ 72,641 | |
Share of Earnings/Dividends | $ 11,045 | 5,137 | |
Strategic | Circle T Ranch and Power Center | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 50.00% | 50.00% | |
Carrying Value | $ 4,456 | $ 4,455 | |
Share of Earnings/Dividends | $ 0 | 0 | |
Strategic | HHMK Development | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 50.00% | 50.00% | |
Carrying Value | $ 10 | $ 10 | |
Share of Earnings/Dividends | $ 0 | 0 | |
Strategic | KR Holdings | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 50.00% | 50.00% | |
Carrying Value | $ 0 | $ 749 | |
Share of Earnings/Dividends | $ 672 | 11 | |
Strategic | 33 Peck Slip | Equity Method Investments | |||
Investment in Real Estate and Other Affiliates | |||
Economic/Legal Ownership | 35.00% | 35.00% | |
Carrying Value | $ 8,651 | $ 8,651 | |
Share of Earnings/Dividends | $ 0 | $ (156) |
REAL ESTATE AND OTHER AFFILIA44
REAL ESTATE AND OTHER AFFILIATES (Narrative) (Details) | 3 Months Ended | ||
Mar. 31, 2018USD ($)item | Mar. 31, 2015USD ($)item | Dec. 31, 2017USD ($) | |
Real Estate and Other Affiliates | |||
Number of variable interest entities in which entity is primary beneficiary | item | 3 | ||
Carrying values of the assets associated with the operations of the consolidated VIEs | $ 22,800,000 | $ 24,800,000 | |
Carrying values of the liabilities associated with the operations of the consolidated VIEs | 1,200,000 | $ 2,700,000 | |
The Summit | |||
Real Estate and Other Affiliates | |||
Preferred return on capital | 5.00% | ||
Cash distribution entitlement by the joint venture | item | 2 | ||
Equity Method Investments | The Summit | |||
Real Estate and Other Affiliates | |||
Contribution of property | $ 13,400,000 | ||
SID bonds transferred to joint venture | 1,300,000 | ||
Transaction value of land contributed to joint venture | 125,400,000 | ||
Transactional value per acre of land contributed to joint venture | 226,000 | ||
Maximum | Equity Method Investments | The Summit | |||
Real Estate and Other Affiliates | |||
Maximum contribution required to joint venture by co-venturer | $ 30,000,000 | ||
Unconsolidated Properties | |||
Real Estate and Other Affiliates | |||
Secured debt real estate affiliates | 187,600,000 | ||
Share of entity in secured debt | $ 86,800,000 |
REAL ESTATE AND OTHER AFFILIA45
REAL ESTATE AND OTHER AFFILIATES (Relevant Financial Information) (Details) - The Summit - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Real Estate and Other Affiliates | |||
Total Assets | $ 189.8 | $ 166.9 | |
Total Liabilities | 131.9 | 118.9 | |
Total Equity | 57.9 | $ 48 | |
Revenues | 23.4 | $ 11.5 | |
Expenses | 11.1 | 5.3 | |
Net income | $ 13.3 | $ 6.5 |
RECENT TRANSACTIONS (Details)
RECENT TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 30, 2018 | Feb. 23, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||||
Common stock repurchased during period (in shares) | 475,920 | |||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Common stock repurchased price per share (in dollars per share) | $ 120.33 | |||
Repurchase of common shares | $ 57,300 | $ 57,267 | ||
Subsequent Event | Wacker110 N | Construction Loans | ||||
Debt Instrument [Line Items] | ||||
Loan amount | $ 494,500 | |||
Ownership interest in joint venture real estate | 32.70% | |||
London Interbank Offered Rate (LIBOR) | Subsequent Event | Wacker110 N | Construction Loans | ||||
Debt Instrument [Line Items] | ||||
Interest rate margin (as a percent) | 3.00% |
IMPAIRMENT (Details)
IMPAIRMENT (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Asset Impairment Charges [Abstract] | ||
Impairment on real estate | $ 0 | $ 0 |
OTHER ASSETS AND LIABILITIES (D
OTHER ASSETS AND LIABILITIES (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Prepaid Expenses and Other Assets | |||
Straight-line rent | $ 42,188,000 | $ 39,136,000 | |
Security and escrow deposits | 16,888,000 | 16,949,000 | |
Equipment, net of accumulated depreciation of $7.1 million and $6.9 million, respectively | 16,798,000 | 16,955,000 | |
Prepaid expenses | 12,247,000 | 11,731,000 | |
Other | 11,873,000 | 19,242,000 | |
Interest rate swap derivative assets | 9,011,000 | 4,470,000 | |
Tenant incentives and other receivables | 8,208,000 | 8,482,000 | |
Federal income tax receivable | 2,198,000 | 2,198,000 | |
Condominium deposits | 218,000 | 0 | |
Condominium receivables | 0 | 158,516,000 | |
Total prepaid expenses and other assets | 210,327,000 | 370,027,000 | |
Accumulated depreciation on other equipment | 7,100,000 | 6,900,000 | |
Decrease in prepaid expenses and other assets | 159,700,000 | ||
Decrease in condominium receivables | 158,500,000 | ||
Decrease in other assets | 7,400,000 | ||
Decrease in in-place leases | 1,000,000 | ||
Increase in derivative assets | 4,500,000 | ||
Increase in straight line rent | 3,100,000 | ||
Increase in prepaid expense | 500,000 | ||
Accounts Payable and Accrued Liabilities [Abstract] | |||
Construction payables | 244,192,000 | 217,838,000 | |
Condominium deposit liabilities | 196,337,000 | 55,975,000 | |
Deferred income | 52,758,000 | 53,337,000 | |
Other | 27,552,000 | 34,699,000 | |
Accounts payable and accrued expenses | 26,328,000 | 35,887,000 | |
Tenant and other deposits | 19,681,000 | 18,937,000 | |
Accrued payroll and other employee liabilities | 18,246,000 | 41,236,000 | |
Straight-line ground rent liability | 15,399,000 | 14,944,000 | |
Accrued real estate taxes | 11,271,000 | 22,289,000 | |
Accrued interest | 7,507,000 | 20,322,000 | |
Interest rate swaps | 0 | 5,961,000 | |
Above-market ground leases | 0 | 293,000 | |
Accounts payable and accrued expenses | 619,271,000 | 521,718,000 | |
Increase in accounts payable and accrued expenses | 97,600,000 | ||
Increase in condominium deposits liability | 140,400,000 | ||
Increase in construction payables | 26,400,000 | ||
Other increases | 1,200,000 | ||
Decrease in accrued payroll and other employee liabilities | 23,000,000 | ||
Decrease in accrued interest | 12,800,000 | ||
Decrease in accrued real estate taxes | 11,000,000 | ||
Decrease in accounts payable and accrued expenses | 9,600,000 | ||
Decrease in other | 7,100,000 | ||
Decrease in interest rate swap liability | 6,000,000 | ||
Decreases in other | $ 900,000 | ||
Senior Notes 6.875 Percent Due 2021 | |||
Accounts Payable and Accrued Liabilities [Abstract] | |||
Interest rate (as a percent) | 6.875% | ||
Leases, Acquired-in-Place | |||
Prepaid Expenses and Other Assets | |||
Intangibles | $ 34,465,000 | 34,802,000 | |
Net carrying amount | 9,805,000 | 10,821,000 | |
Ground Leases below Market | |||
Prepaid Expenses and Other Assets | |||
Special Improvement District receivable | 26,371,000 | 26,430,000 | |
Net carrying amount | 18,562,000 | 18,647,000 | |
Ground Leases above Market | |||
Prepaid Expenses and Other Assets | |||
Net carrying amount | 1,495,000 | $ 1,648,000 | |
Unsecured 5.375% Senior Notes | 5.375% Senior Note Due 2025 | |||
Accounts Payable and Accrued Liabilities [Abstract] | |||
Loan amount | $ 1,000,000,000 | ||
Interest rate (as a percent) | 5.375% | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | |||
Prepaid Expenses and Other Assets | |||
Condominium receivables | $ 154,200,000 | $ (154,200,000) | |
Total prepaid expenses and other assets | (277,404,000) | 5,600,000 | |
Accounts Payable and Accrued Liabilities [Abstract] | |||
Accounts payable and accrued expenses | $ 107,948,000 | $ 95,000,000 |
MORTGAGES, NOTES AND LOANS PA49
MORTGAGES, NOTES AND LOANS PAYABLE (Summary of Mortgages, Notes and Loans Payable) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 16, 2017 |
Debt Instrument [Line Items] | |||
Mortgages, notes and loans payable | $ 1,392,732 | $ 1,350,914 | |
Unamortized bond issuance costs | (6,701) | (6,898) | |
Deferred financing costs | (12,748) | (12,946) | |
Total mortgages, notes and loans payable | 2,895,771 | 2,857,945 | |
Unsecured 5.375% Senior Notes | |||
Debt Instrument [Line Items] | |||
Fixed-rate debt: | $ 1,000,000 | 1,000,000 | |
Interest rate (as a percent) | 5.375% | 5.375% | |
Secured mortgages, notes and loans payable | |||
Debt Instrument [Line Items] | |||
Fixed-rate debt: | $ 497,960 | 499,299 | |
Amount of variable-rate debt swapped to fixed rate | 409,400 | 428,300 | |
Special Improvement District bonds | |||
Debt Instrument [Line Items] | |||
Fixed-rate debt: | $ 24,528 | $ 27,576 |
MORTGAGES, NOTES AND LOANS PA50
MORTGAGES, NOTES AND LOANS PAYABLE (Narrative) (Details) | Apr. 30, 2018USD ($) | Apr. 13, 2018USD ($) | Mar. 27, 2018USD ($)extention_option | Jan. 25, 2018USD ($) | Jan. 19, 2018USD ($) | Jan. 05, 2018USD ($)extention_option | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) |
Mortgages, notes and loans payable | |||||||||
Land, buildings and equipment and developments in progress pledged as collateral | $ 3,800,000,000 | ||||||||
Repayments on mortgage loan | 24,059,000 | $ 881,476,000 | |||||||
Settlement of swap liability | 0 | $ 5,961,000 | |||||||
Downtown Summerlin Apartments | Construction Loans | |||||||||
Mortgages, notes and loans payable | |||||||||
Loan amount | $ 44,100,000 | ||||||||
Number of extension options | extention_option | 1 | ||||||||
Term of extension option | 3 years | ||||||||
Downtown Summerlin Apartments | Construction Loans | London Interbank Offered Rate (LIBOR) | |||||||||
Mortgages, notes and loans payable | |||||||||
Interest rate margin (as a percent) | 2.25% | ||||||||
Wacker110 N | |||||||||
Mortgages, notes and loans payable | |||||||||
Repayments on mortgage loan | $ 18,900,000 | ||||||||
Settlement of swap liability | $ 300,000 | ||||||||
Three Hughes Landing | |||||||||
Mortgages, notes and loans payable | |||||||||
Number of extension options | extention_option | 2 | ||||||||
Term of extension option | 1 year | ||||||||
Long-term line of credit | $ 65,500,000 | ||||||||
Three Hughes Landing | One Month LIBOR | |||||||||
Mortgages, notes and loans payable | |||||||||
Interest rate margin (as a percent) | 2.60% | ||||||||
Lake Woodlands Crossing Retail | Construction Loans | |||||||||
Mortgages, notes and loans payable | |||||||||
Loan amount | $ 15,500,000 | ||||||||
Interest rate margin (as a percent) | 1.80% | ||||||||
Maximum recourse percentage upon achievement of conditions | 50.00% | ||||||||
Recourse percentage | 15.00% | ||||||||
Occupancy percentage | 90.00% | ||||||||
MPC | Summerlin | Special Improvement District bonds | |||||||||
Mortgages, notes and loans payable | |||||||||
New SIDs issued | 0 | ||||||||
Bond obligation | $ 2,900,000 | ||||||||
Subsequent Event | Lakeland Village Center | |||||||||
Mortgages, notes and loans payable | |||||||||
Repayments on mortgage loan | $ 11,800,000 | ||||||||
Subsequent Event | Wacker110 N | Construction Loans | |||||||||
Mortgages, notes and loans payable | |||||||||
Loan amount | $ 494,500,000 | ||||||||
Subsequent Event | Wacker110 N | Construction Loans | London Interbank Offered Rate (LIBOR) | |||||||||
Mortgages, notes and loans payable | |||||||||
Interest rate margin (as a percent) | 3.00% |
FAIR VALUE (Assets and Liabilii
FAIR VALUE (Assets and Liabiliites Measured on a Recurring Basis) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Liabilities: | ||
Interest rate swap derivative liabilities | $ 0 | $ 5,961 |
Recurring | ||
Assets: | ||
Cash equivalents | 50,272 | 50,135 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Cash equivalents | 50,272 | 50,135 |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Recurring | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Interest rate swap contracts | Recurring | ||
Assets: | ||
Interest rate swap derivative assets | 9,011 | 4,470 |
Liabilities: | ||
Interest rate swap derivative liabilities | 0 | 5,961 |
Interest rate swap contracts | Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Interest rate swap derivative assets | 0 | 0 |
Liabilities: | ||
Interest rate swap derivative liabilities | 0 | 0 |
Interest rate swap contracts | Recurring | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Interest rate swap derivative assets | 9,011 | 4,470 |
Liabilities: | ||
Interest rate swap derivative liabilities | 0 | 5,961 |
Interest rate swap contracts | Recurring | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Interest rate swap derivative assets | 0 | 0 |
Liabilities: | ||
Interest rate swap derivative liabilities | $ 0 | $ 0 |
FAIR VALUE (Reconciliation of W
FAIR VALUE (Reconciliation of Warrants Using Level 3 Inputs) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) | ||
Exercises of Sponsor and Management Warrants | $ 30,935,000 | |
Significant Unobservable Inputs (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 | Significant Unobservable Inputs (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 | 0 | 332,170,000 |
Warrant liability loss | 0 | 12,562,000 |
Exercises of Sponsor and Management Warrants | 0 | (30,935,000) |
Balance at the end of the period | $ 0 | $ 313,797,000 |
FAIR VALUE (Assets and Liabilit
FAIR VALUE (Assets and Liabilites Measured on a Nonrecurring Basis) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Assets: | ||||
Cash and restricted cash | $ 764,943 | $ 964,300 | $ 753,958 | $ 915,139 |
Liabilities: | ||||
Variable-rate debt: | 1,392,732 | 1,350,914 | ||
Allowance for doubtful accounts | 7,200 | 9,300 | ||
Allowance for notes receivable | 100 | 100 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Carrying Amount | ||||
Assets: | ||||
Cash and restricted cash | 714,671 | 914,165 | ||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Estimated Fair Value | ||||
Assets: | ||||
Cash and restricted cash | 714,671 | 914,165 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Carrying Amount | ||||
Liabilities: | ||||
Fixed-rate debt: | 1,522,490 | 1,526,875 | ||
Variable-rate debt: | 1,392,732 | 1,350,914 | ||
Recurring | Significant Other Observable Inputs (Level 2) | Estimated Fair Value | ||||
Liabilities: | ||||
Fixed-rate debt: | 1,507,840 | 1,554,766 | ||
Variable-rate debt: | 1,392,732 | 1,350,914 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Carrying Amount | ||||
Assets: | ||||
Accounts receivable, net | 14,384 | 13,041 | ||
Notes receivable, net | 8,310 | 5,864 | ||
Recurring | Significant Unobservable Inputs (Level 3) | Estimated Fair Value | ||||
Assets: | ||||
Accounts receivable, net | 14,384 | 13,041 | ||
Notes receivable, net | $ 8,310 | $ 5,864 |
DERIVATIVE INSTRUMENTS AND HE54
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Summary of the Notional Amount and Fair Value of Derivatives) (Details) - USD ($) $ in Thousands | Jan. 19, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Fair value of derivative instruments | ||||
Hedge ineffectiveness recorded in other income | $ 700 | |||
Total fair value derivative assets | $ 9,011 | $ 4,470 | ||
Total fair value derivative liabilities | 0 | (5,961) | ||
Repayments on mortgage loan | 24,059 | $ 881,476 | ||
Interest rate swap contracts | Designated as Hedging Instrument | Accounts payable and accrued expenses | Fixed Interest Rate 2.96%, Maturing October 2019 | ||||
Fair value of derivative instruments | ||||
Notional | $ 18,926 | |||
Fixed Interest Rate | 2.96% | |||
Total fair value derivative assets | $ 0 | |||
Total fair value derivative liabilities | (286) | |||
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 | $ 40,000 | |||
Fixed Interest Rate | 1.66% | |||
Total fair value derivative assets | $ 571 | 299 | ||
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 | $ 119,359 | |||
Fixed Interest Rate | 1.14% | |||
Total fair value derivative assets | $ 5,313 | 4,007 | ||
Interest rate swap contracts | Designated as Hedging Instrument | Prepaid expenses and other assets, net | Fixed Interest Rate 2.65%, Maturing December 2027 | ||||
Fair value of derivative instruments | ||||
Notional | $ 50,000 | |||
Fixed Interest Rate | 2.65% | |||
Total fair value derivative assets | $ 541 | |||
Total fair value derivative liabilities | (1,124) | |||
Interest rate swap contracts | Designated as Hedging Instrument | Prepaid expenses and other assets, net | Fixed Interest Rate 2.68%, Maturing December 2027 | ||||
Fair value of derivative instruments | ||||
Notional | $ 100,000 | |||
Fixed Interest Rate | 2.68% | |||
Total fair value derivative assets | $ 830 | |||
Total fair value derivative liabilities | (2,509) | |||
Interest rate swap contracts | Designated as Hedging Instrument | Prepaid expenses and other assets, net | Fixed Interest Rate 2.62%, Maturing December 2027 | ||||
Fair value of derivative instruments | ||||
Notional | $ 100,000 | |||
Fixed Interest Rate | 2.62% | |||
Total fair value derivative assets | $ 1,281 | |||
Total fair value derivative liabilities | (2,042) | |||
Interest Rate Cap | Designated as Hedging Instrument | Prepaid expenses and other assets, net | Fixed Interest Rate5.00 Maturing August2019 | ||||
Fair value of derivative instruments | ||||
Notional | $ 75,000 | |||
Fixed Interest Rate | 5.00% | |||
Total fair value derivative assets | $ 6 | 0 | ||
Interest Rate Cap | Not Designated as Hedging Instrument, Economic Hedge | Accounts payable and accrued expenses | Fixed Interest Rate 2.50%, Maturing December 2019 | ||||
Fair value of derivative instruments | ||||
Interest (income) expense | 300 | |||
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 | $ 230,000 | |||
Fixed Interest Rate | 2.50% | |||
Total fair value derivative assets | $ 469 | $ 164 | ||
Wacker110 N | ||||
Fair value of derivative instruments | ||||
Total fair value derivative liabilities | $ (300) | |||
Repayments on mortgage loan | $ 18,900 |
DERIVATIVE INSTRUMENTS AND HE55
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Impact of Financial Instruments on Statement of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Effect of the Company's derivative financial instruments on the income statement | ||
Interest expense | $ 16,609 | $ 17,858 |
Interest Expense | ||
Effect of the Company's derivative financial instruments on the income statement | ||
Amount of Loss Reclassified from AOCI into Operations | (216) | 198 |
Cash Flow Hedging | Interest rate swap contracts | ||
Effect of the Company's derivative financial instruments on the income statement | ||
Amount of Loss Recognized in AOCI on Derivative | $ 8,261 | $ 235 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Commitments | |||
Outstanding letters of credit | $ 13.8 | $ 13.8 | |
Amount of outstanding surety bonds | 92.9 | $ 88.5 | |
Rent expense | 2.6 | $ 2.1 | |
Guarantee Obligations | Downtown Columbia | |||
Commitments | |||
Loss contingency guaranteed amount limit | $ 1 | ||
Period for guarantee after bond issue | 36 months |
STOCK-BASED PLANS (Summary of S
STOCK-BASED PLANS (Summary of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Weighted Average Exercise Price | ||
Stock based compensation expense | $ 2,684 | $ 1,906 |
Employees Directors and Consultants Stock Options | ||
Stock Options | ||
Stock options outstanding at the beginning of the period (in shares) | 783,182 | |
Granted (in shares) | 230,000 | |
Exercised (in shares) | (93,766) | |
Forfeited (in shares) | (23,200) | |
Expired (in shares) | 0 | |
Stock options outstanding at the end of the period (in shares) | 896,216 | |
Weighted Average Exercise Price | ||
Stock options outstanding at the beginning of the period (in dollars per share) | $ 90.22 | |
Granted (in dollars per share) | 124.96 | |
Exercised (in dollars per share) | 65.90 | |
Forfeited (in dollars per share) | 117.11 | |
Expired (in dollars per share) | 0 | |
Stock options outstanding at the end of the period (in dollars per share) | $ 100.98 | |
Stock based compensation expense | $ 700 | 800 |
Share based compensation costs capitalized | $ 300 | $ 300 |
STOCK-BASED PLANS (Summary of R
STOCK-BASED PLANS (Summary of Restricted Stock Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Weighted Average Grant Date Fair Value | ||
Stock based compensation expense | $ 2,684 | $ 1,906 |
Restricted Stock | ||
Restricted stock activity | ||
Restricted stock outstanding at the beginning of the period (in shares) | 354,519 | |
Granted (in shares) | 130,115 | |
Vested (in shares) | 0 | |
Forfeited (in shares) | (3,489) | |
Restricted stock outstanding at the end of the period (in shares) | 481,145 | |
Weighted Average Grant Date Fair Value | ||
Restricted stock outstanding at the beginning of the period (in dollars per share) | $ 89 | |
Granted (in dollars per share) | 84.37 | |
Vested (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 78.53 | |
Restricted stock outstanding at the end of the period (in dollars per share) | $ 87.83 | |
Stock based compensation expense | $ 2,000 | 1,400 |
Share based compensation costs capitalized | $ 300 | $ 300 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate (as a percent) | 27.40% | 63.10% | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of adjustment | $ (69,732) | |||
Deferred tax liabilities | $ (143,581) | $ (160,850) | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect of adjustment | $ 89,300 | |||
Deferred tax liabilities | $ 30,759 | $ 19,600 |
WARRANTS (Details)
WARRANTS (Details) - Management Warrants - USD ($) $ / shares in Units, $ in Millions | Oct. 07, 2016 | Oct. 04, 2017 | Jun. 16, 2017 |
Chief Financial Officer | |||
Class of Warrant or Right [Line Items] | |||
Number of shares called by warrants (in shares) | 50,125 | ||
Exercise price (in dollars per share) | $ 112.08 | ||
Proceeds from issuance of Management warrants | $ 1 | ||
Chief Executive Officer | |||
Class of Warrant or Right [Line Items] | |||
Number of shares called by warrants (in shares) | 1,965,409 | ||
Exercise price (in dollars per share) | $ 124.64 | ||
Total warrant price | $ 50 | ||
President | |||
Class of Warrant or Right [Line Items] | |||
Number of shares called by warrants (in shares) | 87,951 | ||
Exercise price (in dollars per share) | $ 117.01 | ||
Total warrant price | $ 2 |
ACCUMULATED OTHER COMPREHENSI61
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Summary of Changes in Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at the beginning of the period | $ 3,188,551 | $ 2,571,510 | |
Other comprehensive income before reclassifications | 8,271 | 160 | |
Loss (gain) reclassified from accumulated other comprehensive loss to net income (loss) | (216) | 198 | |
Adjustment related to adoption of ASU 2018-02 | [1] | (1,148) | 0 |
Adjustment related to adoption of ASU 2017-12 | [2] | (739) | 0 |
Net current-period other comprehensive income | 6,168 | 358 | |
Balance at the end of the period | 3,079,363 | 2,617,306 | |
Accumulated Other Comprehensive (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at the beginning of the period | (6,965) | (6,786) | |
Adjustment related to adoption of ASU 2018-02 | (1,148) | ||
Adjustment related to adoption of ASU 2017-12 | (739) | ||
Balance at the end of the period | $ (797) | $ (6,428) | |
[1] | The Company adopted Accounting Standards Update ("ASU") 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, as of January 1, 2018. See Note 2 - Accounting Policies and Pronouncements for further discussion. | ||
[2] | The Company adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, as of January 1, 2018. See Note 2 - Accounting Policies and Pronouncements for further discussion. |
ACCUMULATED OTHER COMPREHENSI62
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Summary of Amounts Reclassified Out of AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Reclassifications out of accumulated other comprehensive income (loss) | ||
Loss (gain) reclassified from accumulated other comprehensive loss to net income (loss) | $ (216) | $ 198 |
Reclassification out of Accumulated Other Comprehensive Income | ||
Reclassifications out of accumulated other comprehensive income (loss) | ||
Loss (gain) reclassified from accumulated other comprehensive loss to net income (loss) | (216) | 198 |
Interest rate swap contracts | Reclassification out of Accumulated Other Comprehensive Income | Provision For Income Taxes | ||
Reclassifications out of accumulated other comprehensive income (loss) | ||
Loss (gain) reclassified from accumulated other comprehensive loss to net income (loss) | 57 | (118) |
Losses on cash flow hedges | Reclassification out of Accumulated Other Comprehensive Income | Interest Expense | ||
Reclassifications out of accumulated other comprehensive income (loss) | ||
Loss (gain) reclassified from accumulated other comprehensive loss to net income (loss) | $ (273) | $ 316 |
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 | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Numerator: | ||
Net income | $ 1,834 | $ 5,659 |
Net income attributable to noncontrolling interests | (360) | 0 |
Net income attributable to common stockholders | $ 1,474 | $ 5,659 |
Denominator: | ||
Weighted average basic common shares outstanding (in shares) | 42,976 | 39,799 |
Numerator: | ||
Net income attributable to common stockholders | $ 1,474 | $ 5,659 |
Denominator: | ||
Weighted average basic common shares outstanding (in shares) | 42,976 | 39,799 |
Restricted stock and stock options (in shares) | 218 | 317 |
Warrants (in shares) | 169 | 2,641 |
Weighted average diluted common shares outstanding (in shares) | 43,363 | 42,757 |
Basic income per share: (in dollars per share) | $ 0.03 | $ 0.14 |
Diluted income per share: (in dollars per share) | $ 0.03 | $ 0.13 |
EARNINGS PER SHARE - (Narrative
EARNINGS PER SHARE - (Narrative) (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
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) | 409,100 | 328,500 |
Restricted Stock | ||
Antidilutive securities excluded from computation of diluted earnings per share | ||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 224,420 | 170,847 |
SEGMENTS (Summary of Segment Op
SEGMENTS (Summary of Segment Operating Results) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | |
Segments reporting | ||
Number of reportable segments | segment | 3 | |
Total revenues | $ 161,679 | $ 231,762 |
Total operating expenses: | 159,140 | 187,110 |
Operating income before other items | 2,539 | 44,652 |
Depreciation and amortization | (28,188) | (25,524) |
Equity in earnings from Real Estate and Other Affiliates | 14,386 | 8,520 |
Gains on sales of properties | 0 | 32,215 |
Segment EBT | 2,392 | 15,356 |
Net income | 1,834 | 5,659 |
Net income attributable to noncontrolling interests | (360) | 0 |
Net income attributable to common stockholders | 1,474 | 5,659 |
Operating | ||
Segments reporting | ||
Total revenues | 91,258 | |
MPC | ||
Segments reporting | ||
Total revenues | 55,765 | |
Strategic | ||
Segments reporting | ||
Total revenues | 14,656 | |
Operating Segments | ||
Segments reporting | ||
Total revenues | 161,679 | 231,762 |
Total operating expenses: | 93,941 | 143,632 |
Operating income before other items | 67,738 | 88,130 |
Depreciation and amortization | (26,319) | (23,549) |
Interest (expense) income, net | (2,771) | (4,363) |
Equity in earnings from Real Estate and Other Affiliates | 14,382 | 8,520 |
Gains on sales of properties | 0 | 32,215 |
Segment EBT | 53,030 | 100,953 |
Operating Segments | Operating | ||
Segments reporting | ||
Total revenues | 91,258 | 82,087 |
Total operating expenses: | 44,806 | 40,237 |
Operating income before other items | 46,452 | 41,850 |
Depreciation and amortization | (25,173) | (22,789) |
Interest (expense) income, net | (16,687) | (14,524) |
Equity in earnings from Real Estate and Other Affiliates | 2,583 | 3,385 |
Gains on sales of properties | 0 | |
Segment EBT | 7,175 | 7,922 |
Operating Segments | MPC | ||
Segments reporting | ||
Total revenues | 55,765 | 68,706 |
Total operating expenses: | 36,368 | 35,265 |
Operating income before other items | 19,397 | 33,441 |
Depreciation and amortization | (81) | (92) |
Interest (expense) income, net | 6,392 | 5,557 |
Equity in earnings from Real Estate and Other Affiliates | 11,128 | 5,280 |
Gains on sales of properties | 0 | 0 |
Segment EBT | 36,836 | 44,186 |
Operating Segments | Strategic | ||
Segments reporting | ||
Total revenues | 14,656 | 80,969 |
Total operating expenses: | 12,767 | 68,130 |
Operating income before other items | 1,889 | 12,839 |
Depreciation and amortization | (1,065) | (668) |
Interest (expense) income, net | 7,524 | 4,604 |
Equity in earnings from Real Estate and Other Affiliates | 672 | (145) |
Gains on sales of properties | 0 | 32,215 |
Segment EBT | 9,020 | 48,845 |
Corporate expenses and other items | ||
Segments reporting | ||
Corporate expenses and other items | $ 51,196 | $ 95,294 |
SEGMENTS (Summary of Assets by
SEGMENTS (Summary of Assets by Segment and Reconciliation of Segment Assets to Total Assets) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Reconciliation of total segment assets to total assets | ||
Assets | $ 6,737,986 | $ 6,729,064 |
Operating Segments | ||
Reconciliation of total segment assets to total assets | ||
Assets | 6,210,311 | 5,999,879 |
Operating Segments | MPC | ||
Reconciliation of total segment assets to total assets | ||
Assets | 2,000,369 | 1,999,090 |
Operating Segments | Operating | ||
Reconciliation of total segment assets to total assets | ||
Assets | 2,585,774 | 2,489,177 |
Operating Segments | Strategic | ||
Reconciliation of total segment assets to total assets | ||
Assets | 1,624,168 | 1,511,612 |
Corporate and other | ||
Reconciliation of total segment assets to total assets | ||
Assets | $ 527,675 | $ 729,185 |