Howard Hughes Holdings Inc. Closes on Refinancing of 9950 Woodloch Forest Drive in the Woodlands®

Rhea-AI Summary

Howard Hughes Holdings (NYSE: HHH) has refinanced its 601,000 sq ft Class A office tower at 9950 Woodloch Forest Drive in The Woodlands. This $130 million, five-year, non-recourse loan carries a fixed interest rate of 7.075% and amortizes over 30 years. This refinancing addresses 24% of the company's 2025 debt maturities. The office tower, previously vacant, is now 98% leased, reflecting high demand for office space in The Woodlands, where 90% of HHH's office portfolio is leased. CFO Carlos Olea praised the capital markets team's efforts in securing the loan amidst challenging conditions.

Positive

• Refinancing of $130 million loan with a fixed rate of 7.075%.
• The refinancing addresses 24% of 2025 debt maturities.
• 9950 Woodloch Forest Drive, previously vacant, is now 98% leased.
• 90% of HHH's office portfolio in The Woodlands is leased, indicating strong demand.
• Successfully obtained refinancing despite challenging capital markets for office assets.

Negative

• Fixed interest rate at 7.075% could imply higher interest expenses compared to lower rates.
• The refinancing of a non-recourse loan indicates potential risk transfer to the lender, which may reflect underlying asset risk.
• High lease rates may not sustain if market conditions change, impacting future revenue stability.

Insights

Financial Analyst

Howard Hughes Holdings Inc. has successfully refinanced a significant portion of its debt with a $130 million loan at a fixed interest rate of 7.075% for the next five years. This move effectively manages their largest debt maturity in the next two years, which represents 24% of the company’s 2025 debt maturities. This refinancing is important for the company to maintain liquidity and financial stability in a challenging capital markets environment.

From a financial perspective, the fixed rate of 7.075% is relatively high, reflecting the current tight conditions in the capital markets, especially for office assets. However, securing this loan mitigates risks associated with refinancing in a possibly more adverse future interest rate environment.

The office tower’s occupancy rate of 98% is impressive and significantly de-risks the asset, providing steady rental income to cover debt service. This high occupancy rate also highlights the demand for office space in The Woodlands, which bodes well for the company's broader real estate portfolio.

Real Estate Market Analyst

The occupancy rate of 98% for the 9950 Woodloch Forest Drive office tower is a strong indicator of the health of the commercial real estate market in The Woodlands. This area appears to be attractive to businesses, likely due to its amenity-rich environment and proximity to a skilled talent pool. The successful leasing of this building from being completely empty before the pandemic to near full occupancy now demonstrates Howard Hughes Holdings Inc.'s effective property management and strategic leasing efforts.

The Woodlands' 90% overall office portfolio occupancy further underscores the desirability of this submarket, which is a positive sign for current and potential investors. Continuous high demand for office space in this area could lead to increased property values and attractive rental yields over time.

THE WOODLANDS, Texas, June 13, 2024 (GLOBE NEWSWIRE) -- Howard Hughes Holdings Inc. (NYSE: HHH) announced today the closing on the refinancing of 9950 Woodloch Forest Drive, the 601,000-square-foot Class A office tower in The Woodlands^®. The five-year, non-recourse $130 million loan bears interest at a fixed rate of 7.075% and amortizes on a 30-year schedule. This refinancing addresses HHH’s largest debt maturity in the next two years, representing 24% of the company’s 2025 debt maturities.

“9950 Woodloch Forest Drive was empty when we acquired it just prior to the pandemic and the fact that the building is now 98% leased speaks to the strong demand we are seeing for office and commercial space in The Woodlands, where 90% of our office portfolio is leased,” said Carlos Olea, Chief Financial Officer of Howard Hughes. “This refinancing speaks to the tremendous efforts of our capital markets team and our ability to execute in a challenging capital markets environment, particularly for office assets.”

Across the company’s national portfolio, Howard Hughes communities continue to reflect strong momentum as companies look to relocate and expand into amenity-rich, business-friendly environments in pursuit of today’s target talent pool attracted by a high quality of life.

About Howard Hughes Holdings Inc.
Howard Hughes Holdings Inc. owns, manages, and develops commercial, residential, and mixed-use real estate throughout the U.S. Its award-winning assets include the country’s preeminent portfolio of master planned communities, as well as operating properties and development opportunities including: the Seaport in New York City; Downtown Columbia^® in Maryland; The Woodlands^®, Bridgeland^® and The Woodlands Hills^® in the Greater Houston, Texas area; Summerlin^® in Las Vegas; Ward Village^® in Honolulu, Hawaiʻi; and Teravalis™ in the Greater Phoenix, Arizona area. The Howard Hughes portfolio is strategically positioned to meet and accelerate development based on market demand, resulting in one of the strongest real estate platforms in the country. Dedicated to innovative placemaking, the company is recognized for its ongoing commitment to design excellence and to the cultural life of its communities. Howard Hughes Holdings Inc. is traded on the New York Stock Exchange as HHH. For additional information visit www.howardhughes.com.

Safe Harbor Statement
Statements made in this press release that are not historical facts, including statements accompanied by words such as “will,” “believe,” “expect,” “enables,” “realize,” “plan,” “intend,” “assume,” “transform” and other words of similar expression, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s expectations, estimates, assumptions, and projections as of the date of this release and are not guarantees of future performance. Actual results may differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ materially are set forth as risk factors in Howard Hughes Holdings Inc.’s filings with the Securities and Exchange Commission, including its Quarterly and Annual Reports. Howard Hughes Holdings Inc. cautions you not to place undue reliance on the forward-looking statements contained in this release. Howard Hughes Holdings Inc. does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

Contacts:
Howard Hughes Holdings Inc.
Cristina Carlson, 646-822-6910
Senior Vice President, Head of Corporate Communications
cristina.carlson@howardhughes.com 

Investor Relations Contact
Howard Hughes Holdings Inc.
Eric Holcomb, 281-475-2144
Senior Vice President, Investor Relations
eric.holcomb@howardhughes.com 

FAQ

What is the significance of Howard Hughes Holdings' refinancing of 9950 Woodloch Forest Drive?

The refinancing addresses 24% of HHH's 2025 debt maturities with a $130 million loan at a fixed rate of 7.075%.

What is the interest rate for Howard Hughes Holdings' new loan?

The fixed interest rate for the $130 million loan is 7.075%.

How did the occupancy rate of 9950 Woodloch Forest Drive change?

The occupancy rate increased to 98% from being empty before HHH's acquisition.

How much of HHH’s office portfolio in The Woodlands is leased?

90% of HHH's office portfolio in The Woodlands is currently leased.