Good day and thank you for standing by. Welcome to the Howard Hughes Holdings second quarter 2025 earnings conference call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Joe Valane, General Counsel. Please go ahead. Good morning and welcome to Howard Hughes Holdings Inc. Hughes Holdings Inc. second quarter 2025 earnings call. With me today are Bill Ackman, Executive Chairman, David O’Reilly, Chief Executive Officer, and Carlos Olea, Chief Financial Officer. Before we begin, I would like to. Direct you to our website www.howardhughes.com where you can download both our second quarter earnings press release and our supplemental package. The earnings release and supplemental package include reconciliations of non-GAAP financial measures that will be discussed today in relation to their most directly comparable GAAP financial measures. Certain statements made today that are not in the present tense or that discuss the company's expectations are forward-looking statements within the meaning of the federal securities laws. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that these expectations will be achieved. Please see the forward-looking statement disclaimer. In our second quarter earnings press release. The risk factors are in our SEC filings. Filings for factors that could cause material. Differences between forward looking statements and actual results. We are not under any duty to update forward looking statements unless required by law. I will now turn the call over. To our CEO David O’Reilly. Thank you Joe and good morning. On our call today, I'm going to begin with a recap of the second quarter and cover segment highlights from the Master Planned Communities, Operating Assets and Strategic Developments. Carlos will review our updated full year guidance and balance sheet following our comments on the operating results for HHH. We'll hand the call over to Bill Ackman, our Executive Chairman, who will discuss HHH's future strategic direction before we open the lines for Q&A. As we discussed on our last earnings call, the second quarter marked a significant milestone for Howard Hughes Holdings Inc. with Pershing Square Capital Management investing $900 million in exchange for 9 million shares of HHH stock. These funds will be strategically used to transform Howard Hughes from a pure play real estate company to a premier diversified holding company. Before Bill discusses this in a few minutes, I'm going to shift to talk about the results for HHH's real estate development business, the Howard Hughes Corporation, in more detail. The second quarter was another exceptional quarter for Howard Hughes as our team delivered outstanding results across our business segments, highlighting the strong demand in our portfolio of Master Planned Communities and further solidifying our strong 2025 outlook. For the second quarter, we delivered adjusted operating cash flow of $91 million or $1.64 per diluted share. Our MPCs continued to see strong home builder demand, executing land sales at record prices per acre in both Summerlin and Bridgeland. Operating Assets also set a new record quarterly NOI across office and multifamily with solid year-over-year segment growth of 5% in Strategic Developments. Condo pre-sales remain strong at the La Nūve and we launched pre-sales at Malia and Alina, which are undoubtedly two of the most anticipated luxury residential towers ever to come to market in Honolulu. With these strong results, we are raising our full year guidance for adjusted operating cash flow driven by the current and expected strength in our MPC land sale business and Operating Asset NOI. Carlos will discuss guidance in a few minutes. Turning to our MPC segment, we delivered solid MPC EBT of $102 million in the second quarter, fueled by the sale of 111 acres of residential land across our communities at a new record high average price per acre of $1.35 million, a 29% increase over last year. Land sales were led by Summerlin with two super pad sales totaling 65 acres, achieving a record average price break of $1.6 million. We also sold two custom lots in Astra, Summerlin's newest luxury community, for an impressive average price of $7.7 million per acre. Looking at new home sales, we continue to see solid demand across our MPCs with a total of 487 homes sold in the second quarter. While this was a decline from last year, the reduction was due to a reduced new home inventory in Summerlin and regulatory delays in Bridgeland. As both of these issues are currently being resolved, we expect to see home sales for the second half of the year remain strong. While the national housing market has shown signs of softening during the quarter, our record price per acre highlights the strength and desirability of our MPCs. We're seeing steady demand for new homes across our communities. We believe this demand will drive home builders to look for more land to develop in our communities. This will drive what we expect to be a continued record residential land sales price per acre and MPC EBT for the full year. In 2025 in our Operating Assets segment we delivered NOI of $69 million representing a 5% increase compared to last year driven primarily by a record breaking quarterly NOI in our office and multifamily portfolios. Looking closer at office, we reported NOI of $35 million or 6% year-over-year increase. As we previously mentioned, this growth was primarily the result of last year's strong lease up activity at 9950 Woodloch Forest, 6100 Merriweather and 1700 Pavilion which ended the quarter 99%, 98% and 92% leased respectively. During the quarter we acquired Seven Waterway, a 186,000 square foot Class A office building and adjacent structured parking located in The Woodlands Town Center for approximately $16 million. This acquisition increases our already strong market share of The Woodlands Town Center submarket. With this market share, exceptional basis and net rents in the high 20s, this asset is expected to provide outsized risk adjusted returns upon stabilization. Our multifamily portfolio also performed well delivering record NOI of $17 million or a 19% increase year-over-year driven by strong lease up efforts at our recently completed assets and improved overall leasing at our stabilized properties which were 97% leased at quarter end. In our resale portfolio, NOI was $13 million, which reflected a 7% year-over-year reduction, primarily due to non-recurring collections of tenant reserves at Ward Village in the prior year. Excluding this impact, in 2024 our NOI would exceed a modest increase year-over-year. In Downtown Summerlin, we continue to make progress on our tenant upgrades and recently signed new leases with Diori and Paris Baguette. At quarter end, we had only five retail spaces available, most of which are currently in negotiations, representing only 17,000 square feet. Turning to our Strategic Developments, in the second quarter, condo pre-sales were solid with 17 units contracted, representing incremental future revenue of approximately $35 million. Nearly all of these pre-sales were at La Nūve, bringing this tower to 67% presold. We expect to break ground later this year with an anticipated delivery in 2028. Pre-sales at our condo projects under construction, which are 96% presold on average, were largely unchanged in the second quarter, and we remain on track to deliver Oolana workforce housing development that's 100% sold in the fourth quarter of this year. At the end of June, we launched pre-sales for Malia and Alina, Ward Village's 12th and 13th condo development. We've seen exceptional demand for these towers in a very short period of time, and we look forward to discussing these results as soon as the launch is completed and the presold units are beyond their rescission period. With that, I'll turn the call over to Carlos to discuss our updated full-year guidance and our balance sheet. Thank you David and good morning everyone. Today we are increasing our adjusted operating cash flow guidance driven by current and expected continued strength in our MPC and operating asset segments as well as reiterating our condo sales and G&A guidance for the year. As David mentioned earlier, this was an excellent quarter led by the outperformance of our MPC and operating asset segments and we now project our adjusted operating cash flow will range between $385 million and $435 million in 2025 with a midpoint of approximately $410 million or approximately $7.32 per share. This represents an increase of $60 million at the midpoint compared to the original guidance with a corresponding increase of 30% per share. Despite a higher share count resulting from the Pershing Square transaction in our MPC segment led by robust demand from homebuilders and continued low inventory of vacant developed lots, we now expect full year MPC EBT to be approximately $430 million at the midpoint reflecting an increase of $55 million compared to our prior guidance driven by strong anticipated super pad sales in Summerlin and improved residential lot deliveries in Bridgeland in the second half of the year. In operating assets, we are increasing full year guidance from our previous $262 million midpoint to $267 million led by the strong leasing activity of our office and multifamily portfolios. This guidance would represent a new full year record. We are reiterating both our cash G&A and condo sales guidance for the year. Cash G&A is expected to be in the range of $76 million- $86 million with a midpoint of $81 million. As always, our guidance excludes non-cash stock compensation and one-time items representing approximately $15 million and $10 million certain expenses respectively. Our guidance also excludes the Pershing Square variable advisory fee. However, it does include $10 million per Pershing Square base advisory fee which we have substantially offset by future savings resulting from a reduction in our workforce and other cost reduction initiatives we have recently implemented. Condo revenues remain projected at approximately $375 million for 2025 reflecting the scheduled closings at Alina in the fourth quarter with no gross profit expected from this workforce housing tower. Turning to our balance sheet, we had $1.4 billion of cash and $515 million of undrawn lines of credit. Combined, we had approximately $2 billion of available liquidity. Together with our strong guidance expectations for the full year, we are well positioned to further strengthen our balance sheet and deploy capital appropriately at the end of June. The remaining equity contribution needed to fund our current project, which will not all be spent in 2025, was approximately $239 million. From a debt perspective, we had $5.2 billion outstanding at quarter end, of which 92% was fixed or hedged at an average rate of 5.1%. During the quarter, we made meaningful headway on reducing our near term maturities, successfully completing two major financings that lower our 2025 maturities to $282 million. Notably, we extended the construction loan on our Marlowe multifamily properties to April 2027 and secured a new $75 million five year fixed rate mortgage for 1700 Pavilion, replacing a construction loan previously scheduled to. Mature later this year. With this extension completed, our remaining maturities for this year primarily consist of Meriwether, Row 6100 Meriwether, and Tonnage Reco. We expect all of this will be successfully refinanced during this year with advanced discussions already underway. Finally, we closed on a sale of MUD receivables during the quarter, generating cash proceeds of $180 million. These funds were used to pay down the Bridge Fund notes, reducing their balance to $85 million at quarter end and leaving $515 million available for drawing the facility. With that, I will now turn the call over to our Executive Chairman, Bill Ackman, to provide an update on Howard Hughes Holdings strategy. Thank you, Carlos. I'm here with Ryan Israel, who is our, as you know, our CIO. We wanted to give kind of a report on what we've been up to for the last few months. Since the transaction closed, our principal focus has been identifying and doing due diligence on a potential insurance company acquisition. Just to give you sort of context, if you look at Berkshire Hathaway, sort of, if you will, the model here. A major part of the success of Berkshire has come from the acquisition beginning in the 1960s of an insurance operation and the growth of that business over the ensuing 60 years. What's interesting about insurance, if they can cash generative business generally, you write premium, you receive cash up front that you can invest. If you run a profitable insurance operation and you invest the capital well, you can earn very attractive returns on equity. We want Howard Hughes to grow its intrinsic value per share at a high rate over a long period of time. The beauty of a successful insurance operation is it's a business where we can grow at a very nice rate over time without having to issue or raise equity capital in order to grow our business model. That's been a very high priority for us. If you were to examine Berkshire over the last 60 years, what's interesting is Buffett took a very different approach to the way he managed his insurance operation. A typical insurance company writes about as much premium as equity capital every year and then invests the float in fixed income investments principally, but uses a fair amount of leverage to get an attractive return. About three times the assets relative to equity is a typical balance sheet structure for insurance operation, with those assets invested principally in low risk fixed income securities. What Buffett did is he ran a very low leverage insurance company. Instead of writing premiums equal to equity every year, he has written premiums equal to about a third or anywhere between 20% and 40% of equity in any one year. Very underlevered in terms of the risks assumed and the insurance operation. He took 100% of that float from writing premium and invested in very short-term U.S. Treasuries, basically taking no risk on the insurance company float. He invested about 100% of the equity of the insurance operation in common stocks. Buffett's been a good stock picker. The result has been an insurance company that's earned well into a 20% return on equity over a very long period of time. The power of compounding has really led to the success of Berkshire Hathaway. It's really been driven off of the insurance operations and the investment operations associated with that business. We've taken a page from Berkshire Hathaway. We are looking to acquire a diversified insurance operation and we intend to run it in a similar fashion. Low leverage in terms of the premiums written relative to equity. Low leverage in terms of the amount of assets relative to equity. You know, call it one and a half times versus three times for a typical insurer, investing 100% of the float in short-term U.S. Treasuries and taking no risk on kind of float balances and then investing common stocks in very high quality, durable growth companies of the kind that Pershing Square has identified and invested in over time. One sort of interesting question would be, why don't more insurance companies operate this way. The answer is, what was unique to Buffett is he brought investment skills that really are generally absent, certainly on the common stock side of an insurance operation. Insurance companies today really focus on maximizing the profitability of their insurer. I would say the asset side of the balance sheet is a bit of an afterthought. Part of that is insurance companies have difficulty recruiting kind of best-in-class talent to run a successful investment operation, particularly one that invests in equities. One of the things that we bring to this transaction with Howard Hughes is an investment operation. That investment operation comes for free, if you will, to the insurance subsidiary. The plan would be we acquire insurer, we run it at a low leverage insurer. We're conservative, extremely conservative in the way we invest the insurance company float. Pershing Square, Pershing Square team invests the assets of that insurance, the assets equal to about the equity of the insurer in a common stock portfolio that we manage for the company for free. We are looking at a number of potential transactions. We hope to be in a position if we find the right company at the right price to have a transaction we can announce, we would hope by the fall at which point, obviously we'll be able to share sort of more information. We have our annual meeting will be on September 30. We're hosting it this year in New York City. It will be at the Pershing Square Signature Center on 42nd Street. It's a theater complex for Signature Theater. It'll be in the morning and we really encourage you to attend. We're going to give a very detailed presentation on our plans for the insurance operation. We're going to talk more about the overall strategy of the company. David O’Reilly is going to update shareholders who are kind of less familiar with the real estate story of Howard Hughes We've had some, you know, as we spent more time thinking about the business, we think we will be able to kind of present some metrics that, you know, people should be focusing on as we kind of build this company over time to kind of measure our progress and measure our success over time. I really encourage you to come to that meeting. We're also going to have an open Q and A session where Ryan, myself, David, will be available to answer really any questions you have. I think it'll be really a fun, interesting session. I really think it would be a great way for you to learn more about our plans going forward. One last comment with respect to, I sort of failed to mention as I described our plans for the insurance company, one of the other benefits that this insurance operation Berkshire Hathaway had is it was part of a diversified holding company. The result of that is that incremental credit support that came from the holding company gave the insurance operation more flexibility in terms of its ability to invest its assets. We believe we offer something quite similar here in the sense that, one, we have Howard Hughes as the owner of this insurance subsidiary and a completely unrelated business that will start to spin off substantial amounts of cash over time, really unrelated to the insurance operation. Howard Hughes Holdings Inc. itself is owned 47% by the Pershing Square funds, namely Pershing Square Holdings, which is an A minus rated company with about $15 billion of equity, and the Pershing Square Management Company, which is a basically unlevered business, very profitable, unlevered business that is not currently rated, although we do intend to rate the business, but was valued in a transaction last year at about $10.5 billion. You have about $25 billion of equity in terms of the 47% owner of Howard Hughes, very high, you know, credit worthy enterprise and unrelated business to insurance. Howard Hughes itself owning, you know, hopefully an insurance operation in the relative short term that we will run in a similar fashion, similar approach that Berkshire Hathaway has taken over time in terms of low leverage on both the asset and liability side of the balance sheet and a higher return strategy with respect to the assets of the company. With that, we would be happy to open it up for questions. Operator, you can take the questions, please. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Alexander Goldfarb from Piper Sandler. Hey, morning down there. Two questions. The first one's going to be on the MPC business and then I'll get to the bigger picture. David, your land sales, the volumes have increased despite what we're all reading about challenges in the single family market. Obviously you have the premium product that you guys sell, but there's also a wider array. Can you just give some more? Granularity on, you know, it's impressive what you guys deliver, but still against the higher interest rates, housing affordability, et cetera. You know what, how do. We think about your properties, the price points, the diversity of buyers versus what's going on in the broader market. Your confidence that this can endure, can continue to endure even in the face of elevated interest rates and all the macro concerns. Good morning, Alex. Yeah, it is a question, it's a great question and one that we've spent a lot of time discussing. We go through in excruciating detail our communities with the teams and track, as you know, home sales within our communities maniacally. We see those home sales as a leading indicator for what the homebuilders will need in land purchases on a go forward basis. To date, our home sales have been incredibly resilient and I think that is due to the quality of assets that we have. Our MPCs have the best schools, amenity, quality of life. They're attractive for residents and homebuilders. The homebuilders are building homes and they sell at a premium relative to those areas around them. As a result, our land remains incredibly attractive. You know, our communities, I've been saying for years, we're not immune, but we're insulated and there's always a flight to quality. In markets when there is, you know, perhaps a little bit of a reduction in price in homes, now's my chance to get into Bridgeland, now's my chance to get into Summerlin. We see residents continue to come in and buy homes. The home prices that we're seeing the transactions at vary across the spectrum. In Bridgeland, our homes are in the $300,000- $500,000 range. In Summerlin, they're in the $400,000- $10 million range. We're seeing it with your first-time homebuyer, your move-up homebuyer, and your luxury buyer. It has been pretty consistent across the board. It has been even somewhat surprising to those of us in the room, given the national headlines. I wake up, I read the headlines, I think, oh my God, today's the day the music stops. Gosh darn it if the report doesn't come in on Monday morning that says we sold another 20 homes in each of our communities, which is an incredible pace. We're thrilled with the results. We see continued strength for the balance of the year. The record price per acre I think speaks to the quality of our communities, the desirability of our land. At the end of the day, that land we have is the precious raw material that the homebuilders need to stay in business and remain profitable. If you have the opportunity to buy land as a homebuilder in a cuspy market where you're not sure if you can generate a great margin or buy land in Summerlin, that for 25 years has demonstrated success and outperformance, I still believe that those homebuilders will buy land in our communities. Okay, and then the second question is for Bill. Bill, when we met with you a few months ago, you spoke about, you know, the potential for, you know, creating your own insurance entity, hiring an individual and creating homegrown. It sounds like now you're thinking more on acquiring an outside entity. One is your thoughts on homegrown versus acquiring. Two, as you ramp up the Howard Hughes and that investment, you know, cash flows, it almost sounds like from the outside, like we should think about this to be two to three years before those cash flows really start to ferment. Just curious if we should be thinking longer or you think that the accretion could be sooner. Sure. Our thinking on building versus buying is if we can find the right asset and we're, I would say, increasingly confident we can. There are a number of potential transactions of a size and a, I think, quality that would be a great start for us. It's going to come down to terms and price and work. I think we've got a number of potential things that we're looking at. That gives us some confidence there's a deal to be done and there's a big advantage to starting from truly scratch. The issues in terms of licensing, building an organization, technology. It's not, let's put it this way, it's not a running start. If we actually buy an existing well run insurance operation, then you're often off the ground and running immediately. Our expectation based on things that we're looking at is this would be a material transaction to Howard Hughes. Assuming we do one of the transactions we're looking at, meaning it would very quickly represent an important part of the business and a successfully run insurance operation. The way that we identified is a business that can consistently over time earn, I would say, returns on equity that are meaningfully higher than even the best run kind of real estate operations. We do expect insurance in the relative intermediate term to become very material to the company to the point that people will probably stop thinking about Howard Hughes as a real estate company with a little insurance operation. I think they'll think of it in the way that we, you know, so our business plan as a, perhaps an insurance holding company or a diversified holding company with a major insurance operation, but that's the business plan. It's all subject to our ability to find the right company, the right price, and that we won't know until we get a transaction done. I would say we are cautiously optimistic that there are a number of potential candidates and we're working hard to do a transaction. Okay. If I could just add, when we think about the earnings potential, we should think about a significant part coming from the insurance business or that the stock portfolio is going to be more the generation of the earnings contribution. Sure. Going to the Berkshire Hathaway model, I would say the investment part of the insurance operation has been materially more important to the profitability of the insurer than the insurance company itself. I think when you run as a, if you will, a pedal to the metal in Berkshire Hathaway's insurance operation, it comes from the fact that he's investing in assets that can earn equity-type returns. The insurance company itself is focused on profitability. The typical insurance operation is pretty aggressive in making as much money as possible from insurance and using leverage to get an adequate return on assets. We think this approach is both lower risk and kind of higher return. I think the way you should look at the insurance operation over time is, how are we going to, if we had $1 billion of equity invested in insurance, let's say, and we can compound that equity at 20% or more over time, it will become very, very material to the overall intrinsic value of Howard Hughes I think that's the way to look at it. As opposed to earnings, I think you're going to want to focus on the growth in the equity value of this insurance company over time. Howard Hughes has tried over time to come up with a per share kind of cash flow or earnings metric to try to fit in with other conventional real estate companies that have an FFO or other metrics. I think that's frankly a mistake. I don't know that the market's actually really given us credit for that. We're going to come back, we're working with the team on giving you some kind of KPIs that you can think about in looking at our business. If you think about Howard Hughes today, obviously the most straightforward part of the business is net operating income we generate from a portfolio of real estate assets. We have a condo business that you can think of in a fairly straightforward way. We've got a certain amount of profits we're going to generate from each of these various towers over time. We have land holdings, both commercial and residential. The intrinsic value of Howard Hughes Holdings Inc. depends on growing the cash flows from the real estate operation, and they relate to what price we're monetizing land and what the value of our remaining holdings are. Those are kind of the key sort of metrics that we're going to look at. We think people, over time, particularly as the insurance operation becomes a bigger part of the business, will be focused on overall the growth of the intrinsic value of the company over years, as opposed to a quarterly metric of cash. That, I think, is very challenging to do for business. As you know, that has. Everything from land sales to development stabilized assets. Having covered Howard Hughes for a long time, I can appreciate that. Thank you, Bill. Thank you, David. Sure. Thank you. One moment for our next question. Our next question comes from the line of Ray Zong from JPMorgan. Hi, good morning. Thanks for taking my question. My first question is on the leverage side, Bill. As you look at the leverage as of today for Howard Hughes and the target that you're trying to go after, how should we think about pro forma on leverage? Given that, what are the deal size that you think we should be expecting? Would it be 100% stake or something in something, or smaller stake but a larger company? How should we think about that? Sure. We think that Howard Hughes's real estate operation is kind of appropriately financed, and we don't intend to lever it up in any kind of material way. We like the business the way it's being managed today. We have today excess cash of certainly the $900 million and maybe another $100 or couple hundred million of excess cash in the overall company, called $1 billion. That's sort of in the realm of the amount of capital that we would intend to use if we were to invest in an insurance operation. If that business, if the check size was larger, we would raise capital or partner with other Pershing Square affiliates in doing a transaction. The goal would be for the company we acquired to be controlled by Howard Hughes. Yeah, that's an important element. Ryan wants to add something. Go ahead. To clarify just your question, we don't need to own 100%, as Bill mentioned, we would like to own more than 50% of it for control. When we talk about raising capital, one of the values that we believe Pershing Square is providing to Howard Hughes in our arrangement is we have the ability, and it has been demonstrated over time at Pershing Square, to be able to raise capital externally. We have a large and deep network. Of partners who have partnered with us. Very successfully in the past. We have the opportunity, if we were to decide to do a larger transaction beyond the cash on the balance sheet, we could partner in a way that would be very accretive to our huge shareholders while at the same time still allowing us to be able to control the entity in terms of the daily operations. Yeah. Just to further to Ryan's point, if we were to buy a business insurance operation for $1.5 billion, a $1 billion check written by Howard Hughes and let's say $500 million by a co-investment sort of vehicle. It's an attractive co-investment for someone where Howard Hughes is sort of the likely ultimate buyer when the company sort of gets to a scale where it can buy out sort of the minority partner. There is an interesting potential partnership opportunity. We're not talking about buying a $5 billion asset and owning 20% of it. What we're really focused on is something order of magnitude in the $1 billion, $2 billion-ish. You know, kind of, you know, whatever. It could be $1 billion to theoretically $3 billion. Something along those lines where Howard Hughes is sort of the control owner. Gotcha. Understood, thank you. The second question is on us as Bill and your team has gotten into the day to day in the organization. What are the things that you guys have changed so far? Obviously on the G&A side we see that, maybe just give us some thoughts on things that you have changed and what else are you looking at to change at this point? Should we expect this is more or less the stable status? You also mentioned the mix of it moving forward. Strategically you want a bigger part of the business mix to be towards insurance. Does that change the remainder real estate portfolio? Do you look for changing the mix between Operating Assets, MPC, and condo? How should we think about those as well looking out? Sure. I would say we've changed nothing with respect to Howard Hughes real estate operation. I do think it would be helpful. The G&A initiative was something that David had sort of underway in planning prior to our transaction. There is a very thoughtful, I would say, strategic logic for the changes that were made organizationally. I think it'd be useful for David, maybe you describe where those G&A savings came from, why we made those changes. We don't. We don't have any plans to change the way Howard Hughes operates. We really like, obviously, we've been involved with this business for 14 years. We've had a board presence. I was Chair for, whatever, 13 or something of those years. We're very happy with where the real estate business is and the way it's currently being managed. I think the only difference today versus before would be, maybe if some of the world's greatest MPC assets showed up, you know, across the street. I mean, across the street, like, I don't know, some other market, like another, you know, Phoenix type transaction were to show up. I would say we're less likely to do that today. We feel like we have enough exposure to the MPC business, but there's a ton of work to do in the existing assets. The idea is just to continue to develop the Howard Hughes communities, these small cities, and make them the most desirable places to live in America. The fact that the home sales performance, lot sales performance, kind of speaks in a more, as a maybe increasingly challenged residential market, kind of speaks to the power of those communities. No real change to that business, and the team's doing a great job of running it. David, maybe you should comment on some of the changes you've made organizationally and why, how they generated G&A benefits. Absolutely, Bill. It's a good question, Ray. I appreciate it. What we really did is we took a step back long before the Pershing Square announcement was made in terms of how we operate this business. Given the changing market environment where development returns are tighter, costs are up, rents have not kept up with it, we thought about a rationalization of the overall organization and a focus of that development platform into more rifle shot opportunities where we can generate the highest and best risk adjusted returns rather than taking a more scatter plot approach. As a result, we centralized a lot of our development expertise here in the corporate office, taking a lot of the developers out of the regions, knowing that there would be fewer projects to do on a go forward basis. At the end of the day, when you think about it this way, there was a point in time where we had multifamily developers, office developers, retail developers in multiple regions. It became largely redundant because the velocity of development, as you noted in our results, has slowed. We've been able to centralize and bring that talent into one place where we can use that talent across regions, partner with our regional presidents to execute, and I think operate in a much more efficient way, delivering greater free cash flow to the bottom line. I don't want it to be lost on our investors and our analysts that in Carlos's prepared remarks, we left our G&A guidance unchanged despite the transaction with Pershing and the inclusion of their fixed fee in that G&A guidance. I think our ability to do that and maintain G&A neutrality and get the ability to leverage the incredible amount of expertise that's at Pershing Square shouldn't be lost on our investors. I think it's an incredible benefit. Yeah. The other thing I would say, you know, it's a bit, you know, investing in real estate development and running a profitable insurance company have sort of the same thing in common. You want to do business when the returns are attractive and you want to step away when they're not. The problem of having kind of, you know, soup to nut development teams at each of these various locations is if you're a developer, you just want to do stuff and that's when people get into trouble in real estate development. It's also not great to have headquarters always turning down transactions you propose because they don't offer attractive enough returns. You can actually have an absolutely best-in-class team. You can take the best and brightest of all the various regions and centralize them in one location. You can take the skills like, you know, we have an incredible marketing team that has run the condo program, for example, in Hawaii, led by Bonnie. When Howard Hughes decided to build a condo in the Woodlands, we had all of that expertise and development expertise that we could apply to what is going to be an enormously successful, what is already enormously successful development in the Woodlands. There's a G&A savings and it actually makes it a much more attractive place to work in the sense that in our various developments, there's probably always going to be something interesting to do in a certain property type. We get a G&A savings, we get a best-in-class team, we leverage all the learnings from the various communities and there's less pressure, you know, to do business. Ryan, you want to add something? Yeah, and I'll just add, I think one of the most important things that we're focused on now and where you will ultimately see over time the value creation from the addition of the Pershing Square team to Howard Hughes is in capital allocation broadly. As both David mentioned in his comments on real estate and taking a rifle approach to get to the highest return projects, as Bill mentioned, we are opening the aperture. Aperture in the ways in which we can deploy capital. We've put a lot of capital on the balance sheet three months ago that can be deployed. If you think about it now going forward, we have an opportunity to take the highest return real estate projects and be able to focus on those, take the excess cash that may have otherwise been deployed towards somewhat attractive but still lower returning real estate projects and put those towards other things. Every time you write an insurance policy, that is a capital allocation decision. The way you invest the cash from the float, that's a capital allocation decision. We have historically had in our Pershing Square Capital Management investment strategy, arguably among the highest returns that you could find amongst most capital allocation strategies. Insurance gives us a pathway to continue that. In addition, we have the ability to ultimately over time look to acquire other businesses which will both provide a diversification of cash flows beyond insurance and real estate, but at the same time give us another arrow in our quiver to be able to take advantage of high return opportunities. If you look at, as Bill Ackman had mentioned, Berkshire Hathaway as an example, we think one of the reasons why Berkshire Hathaway has been so attractive is that there were a number of ways in which they could deploy a lot of capital into the highest return opportunity at that moment. That's really the value that we're trying to add to Howard Hughes Holdings Inc. as we transition it to a diversified holding company. Yeah, one, we're sort of the other benefit we have is we own 47% of the company. We are under no pressure to deliver an outcome next quarter this year. We can as a result be super thoughtful about how we think about deploying capital. That carries over to the entire Howard Hughes. sort of organization. You know, if you, as a pure play real estate community developer, all the cash that we generated over time, we really had no place to put it other than in our various communities or in buying a new sort of MPC. Now we have the whole world, if you will, as our oyster. The reason why we're focusing on insurance first is a well-run insurance operation is a great platform for a successful investment strategy. Our favorite version of Howard Hughes. is we build this very, very valuable company and the shares outstanding don't change or if anything, they shrink over time. The ability to do that is much greater in insurance than if we were running around doing acquisitions one deal at a time. Over time the goal is as the real estate operation generates more and more cash, we'll have more cash for investment. The holding company, the insurance operation itself, we expect to generate a lot of cash that will be reinvested in equities, at least beyond the piece that we need to put aside for the insurance business, you know, the claims, potential claims in the future. That's how we build a company that's very valuable on a per share basis. Thank you so much for, from all three of you, this is very thoughtful. Thank you so much. Sure. Thank you. One moment for our next question. Our next question comes from the line of John Kim from BMO Capital Markets. Thank you, Bill. In your commentary earlier, I think you mentioned that you were looking at a number of potential transactions. I just wanted to clarify that ultimately you'll just be acquiring one insurance company and not a series of acquisitions. Secondly, for the companies that you're considering to acquire, do they already operate the way that you prefer in terms of being conservative and levered, or do you anticipate changing how they're run? If that's the case, how difficult. Is that to implement? Sure. What we're focused on now is buying one business run by an excellent management team that's done a very good job in the writing business over time. All of the companies we're looking at are operated as conventional insurance companies, I would say, in terms of the amount of premium they write relative to capital and the way they invest their assets. Our plan would be to change that over time. Berkshire is pretty much, it's almost unique. There are a couple of other examples of insurers that have taken kind of a somewhat similar approach. I think it's the exemplar sort of example. It helps enormously. There are very few insurance companies that are part of diversified holding companies, basically, and that's why the targets we're looking at are operated conventionally, I would say. Okay, that's helpful. Maybe turning to David, you talked about the record price per acre that you achieved this quarter. In page 23 of your supplement, you have an estimated price per acre, and that didn't change sequentially for Summerlin or Bridgeland. Is that policy not to change that figure since it's an estimate, or do you anticipate that number going up? John, I think conservatism is always the best policy. It's as incredible as our results have been this quarter and the past several quarters. For me to try to extrapolate that to the moon over the next 30 years, I think would be a little bit cavalier. We take a conservative approach. We don't use one quarter's results to impact the future per sale acres on a daily basis. We look on a trailing 12, trailing 24 months, and if we feel that it's appropriate to apply that price breaker across the remaining, we will. Okay, if I could just squeeze one more in. On Ritz Carlton, the condo sales have sort of stalled over the last couple quarters. Intentionally, actually. Let me jump in there. Okay. It's largely because of me. The team sold out the first half of the project despite raising prices on a weekly basis because of demand. I said, look, this is a unique, incredible asset. It's really an amazing, I would say, the highest end equivalent of the best of New York City type projects. I see us selling at prices that seem to me really, really cheap. I said, look, let's just sell half and let's deliver the product and then we'll get the price that we deserved. I made the mistake of stepping off the board and not being Chairman anymore, and David snuck out another 20% of the project because that's his instinct. The bottom line is we could sell the entire project out if we wanted to, but our goal is to maximize the profitability for the project. I guess the current approach is if someone desperately wants to buy something, maybe we find a way to make a deal with them. We think that since again, it's a first of its kind in the Woodlands and really, truly breaking new ground here, we're definitely leaving a lot of money on the table in the initial units that we've sold. It's still prudent to do so. I'm obviously supportive of everything that management has done so far, but it behooves us to leave a nice piece of the project as it gets, as people can actually see the finished product. Are the remaining units a higher floor or higher price point generally? I'd say the remaining units represent a good sample set of the overall units of the building. It's not as if the smaller units are left or the penthouses are left. I think we've sold a great range of units from the smaller all the way up to some of the penthouses. What remains is a representative sample set of the overall building. Basically, every time David sells a unit, I tell him he sold it at too cheap a price. Every time he hasn't sold a unit, I tell him he's not selling quickly enough. That's the nature of our relationship. Great caller, thanks. It's like in trading where you tell the trader, oh, we should have bought it here and I would have sold it here. It's a good way to keep management, their feet on the fire, so to speak. Thank you. One moment for our next question. Our next question comes from the line of Peter Abramowicz from Jefferies. Yes, thank you very much for that. Thank you for taking the questions. Maybe just kind of a philosophical question, if I could, for Bill. I guess what would you say to some of the common pushback from the market and from investors on the complexity of the Howard Hughes story? It's maybe been a concern over time and been a challenge that some of the feedback from the investment community is that it can be hard to underwrite or people struggle with some of the parts stories and the long duration of capital required for unlocking value, the lack of comps. Certainly, Berkshire is a good model to follow, but is a bit of a unicorn in its success story in the public market. I guess just kind of philosophically, how do you get the market comfortable with some of those challenges that still exist in the stock? What would you say to some of that pushback? Sure. I completely understand it and it's something we struggled with as an independent public company focused on this business. Ultimately, I think we collectively and certainly at Pershing Square, came to the conclusion that we're never going to be able to get the kind of respect we deserve, if you will, for management's accomplishments and the quality of our assets as a pure play real estate company. I think that's driven as much by complexity as actually the market assigning a very high cost of capital to a business that's in real estate development, land sales, condominium development, and multi-geography. It's unique and doesn't pay a dividend, etc. We sort of said, you know what, we're never going to overcome this. What you should do instead is embrace the complexity, so to speak. What I mean by that is, you know, Howard Hughes, the core real estate business is a phenomenal business. You'll understand that business even more over the next three, four, five years as it starts generating a ton of cash and then even more so over a longer period of time. We don't want to double down in that business and just keep redeploying capital and buying more MPCs because it's a story that will never properly be told. What we want to do instead, while you're right, the examples of successful diversified holding companies are limited, we do believe that we have the kind of necessary collection of skills, assets, and a starting base to do so. If you look at Berkshire Hathaway's success, a big part of it came from the fact that Buffett himself owned half the shares outstanding. We could take a very long-term view. We own 47% shares outstanding. The second thing that Buffett brought to the table is he was a very talented investor, proven talented investor in the stock market, investing in common stocks. We bring that. We've got a 21-year record at Pershing Square of generating in excess of a 20% compound return over that period of time and 27%, 28% compounded since we've had permanent capital over the last almost kind of eight years. That's a unicorn record at least investing in common stocks, and we bring that to the table to this company. We spent a lot of time studying Berkshire Hathaway over time, and without Berkshire Hathaway's insurance operation, it wouldn't have been a particularly interesting business. That is the key part of our strategy here. We're cautiously optimistic, as I mentioned, that we can start in a good place with a good asset, with a great team, and build a profitable insurance operation. We're going to manage that insurance company's investment portfolio for free. Now, I want to very carefully distinguish. You've seen there are many examples of regular way insurance companies that invest their assets principally in fixed income securities. There are a bunch of hedge funds, I would say, that kind of either built or acquired insurance companies for the purpose of creating permanent capital to invest in their funds. The track record of those entities. Is poor, I would say generally. The reason for that is, one, they didn't focus as much as they should have on actually having best-in-class teams running the insurance operation. Two, they invested their assets in their funds and charged high fees. It was really a fee-generating AUM kind of exercise. What we're doing here is the assets of Howard Hughes's insurance operation are going to be invested directly in common stocks, not in Pershing Square funds, not charge fees. In fact, it will be the lowest cost investment operation of any insurance company because we literally will be doing that as part of our overall arrangement with Howard Hughes. One of the interesting benefits to the management team that runs our insurance operation is the benefit of Pershing Square's investment acumen without any cost associated with it. That actually obviously is beneficial to the ability to run that company profitably. While there's no guarantee we're going to be successful taking this approach, I think we have the sufficient degree of ownership and understanding of the existing base business. We've got a balance sheet that will enable us to do initial transaction. The company has vastly more resources that it could afford because it has the entire Pershing Square organization working alongside Howard Hughes at a cost that is a fraction of what it costs. These are significant competitive advantages. I would say unlike Berkshire Hathaway, our base business is a vastly more attractive one. Buffett had, in effect, a liquidating insurance company that was his base asset, which was basically a textile operation. He redeployed that capital fairly quickly over time into much better businesses. We have the benefit of a real estate operation that we really like. As long as we don't buy another Master Planned Community, which we don't intend to, it will generate a lot of cash that we can redeploy in other businesses. I think as this becomes a more diversified company, the very high cost of capital that shareholders assigned to the company is going to come down. Just from a technical perspective, I would say the universe of investors who want to invest in a pure play MPC company, we know those are the investors that have come and gone over time that have owned Howard Hughes over the last 14 years. The universe of investors that can invest in a diversified holding company is thousand x the scale or infinite relative to what are willing to invest in a diversified holding company. It takes only a small number of Berkshire Hathaway shareholders, if you will, a tiny percentage of a trillion dollar market cap to decide to be interested in Howard Hughes to buy the 53% of the float that's not held by us for the stock to do very well over time. We think while there has been some pretty material exit from the shareholder base of kind of dedicated pure play real estate investors, those investors have been replaced by investors who are betting on kind of the diversified holding company story. What we intend to do here is what causes the stock price to go up over time. I think if we execute on what we hope to, and starting with a great insurance operation, we start to deploy that capital intelligently, people start to see results. They realize this is no longer the old Howard Hughes We're going to attract a much broader base of investors. I think that becomes a pretty attractive stock story. Yeah, I appreciate that. Certainly, we post, you know, 20% to 20+% ROE on an annual basis. I think that solves a lot of problems. So. Thank you for the color there. Just more kind of a micro question on the real estate side. David, could you just talk about the kind of leasing demand for the office asset you just acquired in the Woodlands, how that's sort of shaping up? Yeah, no, it's a great question. We couldn't be more excited because this is an asset that I'm looking out the window and I can see here, right on the heart of the Waterway. It's the first office building you come to as you exit 45, and it's a pristine Class A building that is entirely empty. It is the only vacancy in the Waterway submarket of the Woodlands, as we've leased up all of the other assets that we've had almost entirely full. It's a market where we're able to achieve on a building like that, high 20 net rents with a basis today of around $80 a foot. After we put in TI's, we'll still be sub $200. We think it's an outstanding opportunity to generate risk-adjusted returns and allow us to meet the existing demand that we see in this submarket that we just currently can't accommodate because our assets in the submarket are full. We're meeting the demand of office tenants that want to be in the submarket. We're doing it at an outstanding basis. I think that we have a really good opportunity here to lease this thing up quickly, similar to how we did this building here, 9950, that we acquired, you know, if you recall, right before the pandemic. All right, that's all for me. Thanks for taking the time. Thanks, Peter. Thank you. One moment for our next question. Our next question comes from the line of Josh Kaffen. Hello. Good morning. I just had a question about the macro hedging. Regarding hedging strategies. How will the positions be constructed? For example, in the scenario of the. CDS trades that Pershing held, if HHH Was to be in this situation now. Would the trade execute through both of. Them or how would the sizing of those positions be constructed? For future acquisitions, would similar approaches be used? Thank you. Sure. I think it's a very good question. One of the things that Pershing Square has done over time with respect to our investment portfolio is the bulk of our assets have been invested in common stocks of high quality, durable growth companies. Periodically, I would say episodically, we've identified what I would describe as black swan type risk in the market or cases where we've got a very, I would say, variant view on interest rates or commodity prices or currencies and the market offers us the opportunity in the form of an option-like instrument to make a large profit relative to our investment if the expected or the potential risk were to occur. We've used that to kind of hedge risk and in some cases a little more opportunistically just to make money. If we were to identify such a risk and we thought it appropriate for Howard Hughes to hedge that risk, we would size a similar sized hedge in Howard Hughes by buying either an interest rate option or credit default swap at Howard Hughes, like we do in the Pershing Square portfolio. We'd size it relative to what we think is appropriate in light of how much equity or how much exposure we have to that particular kind of risk. That would also be a strategy within the insurance company investment portfolio that we would operate similarly. Yeah, I think the key to think about that, as Bill mentioned, is when we buy these typically options or option-like instruments, if the risk that we're worried about doesn't come to fruition and the option doesn't pay off, we sized into an amount where we like to think about it is effectively you don't notice it in the aggregate results because the amount of money you can lose will be small enough. At the same time, if the risk that we're worried about actually comes to fruition, the payoff from a relatively small investment will be large enough where it will have a very material impact. Those are really the only types of investments we make where they're very asymmetric. When we're hedging something, if it doesn't work out, it will not be a material negative impact to the Howard Hughes business, but it would be a very material positive if that risk were to come to fruition. That would be the key. How we size these, what we call asymmetric hedges, is the way that we have historically done them inside of Pershing Square. To give a very real life sort of example of this, at the February 2020 board meeting for Howard Hughes, I told the board, one, I didn't actually travel to Dallas because I was concerned about the COVID pandemic becoming much more serious over the next several weeks. I said it's time to hunker down because things are going to get complicated. What we were doing at Pershing Square Capital Management at the time is we were buying hand over fist, credit default swaps, investment grade CDS as a very low risk way to hedge a potential deterioration in the credit markets and or deterioration in the equity markets. Howard Hughes was not in a position to do so, didn't have the expertise, wasn't set up in order to be able to write that insurance, didn't have arrangements in place with various financial institutions. Howard Hughes didn't participate. We made a very large amount of money on a very small amount of premium investment. That's a $27 million premium. We made $2.6 billion ultimately in profit from that trade. If we could have done $10 million for Howard Hughes or if we had done $5 million for Howard Hughes at the same time, Howard Hughes would not have had to do a $600 million equity offering a month later. It's maybe a very real life example of what we'd hope to achieve in the future. Awesome. Thank you, Bill. Thank you, Ryan. Thanks. Thank you. At this time, I would like to turn the conference back over to David O’Reilly for closing remarks. Once again, thank you all for joining us. If there are additional questions or thoughts, we are always available to answer those. I'll close by reiterating what Bill mentioned earlier, that we'd like to invite everyone to join us on September 30th in New York City for the annual shareholder meeting. It will be on 42nd Street in Manhattan. Information, details, and your ability to register will be available as soon as our proxy is filed, beginning on August 18th on the Investor Relations page of our website, HowardHughes.com. Thank you again. This concludes today's conference call. Thank you for participating. You may now disconnect.