The Howard Hughes Corporation Reports Fourth Quarter And Full Year 2011 Results

The Howard Hughes Corporation (NYSE: HHC) today announced its results for the fourth quarter and full year 2011. The fourth quarter 2011 results include the consolidated results for The Woodlands, and the full year 2011 results include the consolidated results for The Woodlands for the six months ended December 31, 2011.

The Howard Hughes Corporation’s results for 2011 include notable accomplishments within each of its business segments. The master planned communities generated land sale revenues of $150.3 million for the year ended December 31, 2011, a 20.9% increase over 2010. Net operating income from our income-producing operating assets increased by 10.8% to $55.6 million for 2011 compared to 2010. We also entered into a non-binding letter of intent with the City of New York which, subject to certain conditions, provides for future amendments to our lease with the City to permit us to redevelop Pier 17 at the South Street Seaport. In our strategic developments segment we entered into three joint ventures during 2011 to explore development of our condominium rights in Honolulu, Hawaii, to develop a 375 unit apartment building in Columbia, Maryland, and to develop a mall in Charlotte, North Carolina. Each of these achievements is more fully described below and in Notes 6 and 14 to the Company’s Form 10-K for the year ended December 31, 2011.

For the three months ended December 31, 2011, net income attributable to common stockholders was $31.4 million, compared with net loss of $(4.6) million for the three months ended December 31, 2010. Excluding the $0.8 million warrant gain, net income attributable to common stockholders for the three months ended December 31, 2011 was $30.6 million, or $0.80 per diluted common share. For the three months ended December 31, 2010 net income includes a $(140.9) million warrant loss, $(326.8) million after-tax impairment charges, $(14.2) million of after-tax restructuring charges and a $510.0 million tax benefit related to the spinoff. Excluding these items, net loss attributable to common stockholders for the three months ended December 31, 2010 was $(32.7) million, or $(0.87) per diluted common share.

For the year ended December 31, 2011, net income attributable to common stockholders was $147.2 million, compared with net loss of $(69.4) million for the year ended December 31, 2010. Full year 2011 net income includes a $101.6 million non-cash gain relating to the decrease in estimated value of outstanding warrants during the year, a $(11.3) million after-tax loss from refinancing mortgage debt carried on our books at a discount, and a non-cash $(3.9) million after-tax loss to adjust the basis of our equity investment in The Woodlands prior to its consolidation. For the year ended December 31, 2010, net loss attributable to common stockholders was $(69.4) million. Full year 2010 net loss includes a $(140.9) million non-cash loss relating to the increase in estimated value of outstanding warrants from their November 2010 issue date to December 31, 2010, $(327.2) million after-tax impairment charges, $(57.3) million after-tax restructuring charges and a $510.0 million tax benefit from the spinoff. Excluding these items, net income (loss) attributable to common stockholders for the years ended December 31, 2011 and 2010 was $60.8 million, or $1.56 per diluted common share, and $(54.0) million, or $(1.43) per diluted common share, respectively.

Diluted income (loss) per common share for the three months ended December 31, 2011 and 2010 was $0.80 and $(0.12), respectively. Diluted income (loss) per common share for the years ended December 31, 2011 and 2010 was $1.17 and $(1.84) per common share, respectively.

For a more complete description of impairments recorded in 2010, please refer to Item 7 beginning on page 36 and Footnotes 2 and 4 to The Howard Hughes Consolidated and Combined Financial Statements contained in the Company’s Form 10-K for the year ended December 31, 2011.

On July 1, 2011, we acquired our partner’s 47.5% economic interest (represented by a 57.5% legal interest) in The Woodlands master planned community for $117.5 million. For comparative purposes, MPC land sales and Operating Assets NOI relating to The Woodlands are presented in our Supplemental Information and discussion of results as if we owned 100% of The Woodlands during the periods being compared. We also include the commercial real estate assets of The Woodlands in the Operating Assets segment for all periods presented. These properties had been included in the MPC segment in periods prior to July 1, 2011. For a reconciliation of Operating Assets NOI to Operating Assets earnings before taxes (EBT), Operating Assets EBT to GAAP-basis loss from continuing operations, and segment-basis MPC land sales revenue to GAAP-basis land sales revenue, please refer to the Supplemental Information contained in this earnings release.

Land sales in our Master Planned Communities (MPC) segment, excluding deferred land sales and other revenue, were $36.8 million and $150.3 million for the three months and year ended December 31, 2011. These amounts represent a decrease of $11.4 million and an increase of $26.0 million, for the same periods in 2010. Bridgeland and The Woodlands residential revenues increased by 10.5% and 15.2%, respectively, for 2011 compared to 2010. These communities benefited from a strong Houston, TX economic environment driven primarily by the energy sector. ExxonMobil is constructing a campus facility on 400 acres just south of The Woodlands and its estimated three million square feet of commercial space is expected to increase demand for housing and office space for companies providing services to ExxonMobil. In October 2011, we announced the construction of a 192,000 square foot Class A office building in The Woodlands Town Center. Due to high demand and a shortage in class A office space, in January 2012 we increased the planned size of the building to 232,774 square feet.

Summerlin generated $30.9 million of residential revenues for the year ended December 31, 2011 compared to $11.2 million in 2010. The Las Vegas, NV housing market remains challenging due to continued poor local economic conditions and housing prices that have experienced some of the nationally largest declines from their peak in 2007. During the last four months of 2011, builders defaulted on contracts to acquire approximately 268 lots at Summerlin due to slower than expected home sales; however, builder activity has recently begun to increase. Year to date through February 28, 2012, Summerlin has entered into residential lot sale contracts with four homebuilders for 153 lots and two superpad sites representing approximately $22.5 million of revenues if all of the sales are completed. Approximately $21.2 million of the sales are scheduled to occur in 2012, with the remaining $1.3 million scheduled for 2013.

Net operating income (NOI) from the combined retail, office and resort and conference center properties, including our share of the NOI of our non-consolidated ventures of this segment, was $15.4 million and $55.6 million for the three months and year ended December 31, 2011, respectively, compared with $12.4 million and $50.2 million for the same periods in 2010. These assets are collectively referred to as our “income-producing Operating Assets.” Our Operating Assets segment includes the commercial real estate properties of The Woodlands. Four properties at The Woodlands are expected to reach stabilized NOI in 2012. If these properties had been stabilized as of January 1, 2011, our income-producing Operating Assets NOI would have been approximately $62.5 million for the year ended December 31, 2011 based on our expected operations at stabilization. Other commercial properties, including two parking garages, ground leases and a private golf and country club located at The Woodlands, generated $(1.9) million and $(4.5) million of NOI losses for the fourth quarter and full year 2011, respectively, compared with NOI of $0.2 million and an NOI loss of $(1.2) million for the same periods in 2010.

The Howard Hughes Corporation entered into joint ventures with local partners to develop three properties owned by us. We entered into a joint venture equally owned with our partner to explore the development of a condominium tower above the Nordstrom parking garage at Ala Moana shopping center in Honolulu, HI. The venture values our condominium rights at $47.5 million, a 107.4% premium to our $22.9 million net book value as of December 31, 2011. We also entered into an equally owned joint venture with a developer to build an apartment building on approximately 4.2 acres we own in the Columbia Town Center. The venture values our land at approximately $20.1 million, a 570.0% premium to our $3.0 million net book value as of December 31, 2011. The partners will both be responsible for pre-development activities for these ventures. Development of both of these properties, and realization of the value of our contributed assets, is dependent on a number of factors, including obtaining construction financing and approvals needed to begin construction.

During 2011 we also formed a venture with the owner of land adjacent to the Bridges at Mint Hill property to jointly develop a mall on our combined sites. Both parties will contribute their respective properties into the venture by October 31, 2012, and we will be responsible for funding pre-development costs. Actual construction for each of the three projects described above is not expected to occur until 2013.

In December 2011, we entered into a non-binding letter of intent with the New York City Economic Development Corp., which will enable us to pursue redevelopment plans for the South Street Seaport. The City of New York is the lessor and the letter of intent describes the terms of future amendments to the lease, which must be finalized by June 30, 2012. The amendments will be effective upon achievement of certain development milestones, but generally will become effective after all approvals have been obtained to begin construction. Once they are finalized, the lease amendments will, among other things, eliminate any supplemental or participation rent the City would be entitled to under the existing lease and also will permit us, subject to obtaining necessary approvals from other constituencies, to renovate the Pier 17 building. Construction must begin prior to June 30, 2013.

During 2011 the Company completed $334.0 million of new committed financings replacing approximately $252.2 million of mortgage debt and creating approximately $73.6 million of additional cash and borrowing capacity. At December 31, 2011, The Howard Hughes Corporation had $227.6 million of cash and $34.2 million of undrawn borrowing availability under a revolving credit facility at The Woodlands.

David R. Weinreb, CEO of The Howard Hughes Corporation, stated, “2011 was a critical year where we laid the foundation for many of the opportunities that we anticipate executing on in this coming year and beyond. During this past year we filled out the Company’s senior leadership by assembling a deep bench of talented professionals including several key hires to our development team.”

Mr. Weinreb continued, “We made meaningful progress on the pre-development of a number of our assets. We also entered into joint ventures with several well-recognized partners to initiate design and development of our properties where we felt their involvement would significantly enhance value. Additionally, our investment in The Woodlands master planned community will prove to be an outstanding investment given its high quality platform and the fact that we are now able to leverage the experience of its talented management team at our Bridgeland master planned community. I look forward to sharing more specific details with regard to our progress as development plans are completed.”

On February 27, 2012, the Company adopted a shareholder rights plan designed to protect shareholder value by preserving the value of certain of the Company’s deferred tax assets generated by net operating losses and other tax attributes. The rights plan was adopted to reduce the likelihood of an “ownership change,” as defined in Section 382 of the Internal Revenue Code. Generally, an “ownership change” would occur if the percentage of the Company’s stock owned by one or more “five percent stockholders” increased by more than fifty percentage points at any time during the prior three-year period. An ownership change could substantially limit the Company’s ability to use its net operating losses and other deferred tax assets. The rights plan is intended to act as a deterrent to any person acquiring 4.99% or more of the Company’s outstanding shares without the approval of the Company’s Board of Directors. The rights plan is intended to work in tandem with the restrictions related to the acquisition of 4.99% or more of the Company’s common stock, which are currently set forth in the Company’s Amended and Restated Certificate of Incorporation. Similar rights plans have been adopted in the past several years by a number of companies holding significant deferred tax assets.

ABOUT THE HOWARD HUGHES CORPORATION

The Howard Hughes Corporation owns, manages and develops commercial, residential and mixed-use real estate throughout the country. Created from a selected subset of 34 assets previously held by General Growth Properties, the company’s properties include master planned communities, operating properties, development opportunities and other unique assets spanning 18 states from New York to Hawaii. The Howard Hughes Corporation is traded on the New York Stock Exchange as HHC, and is headquartered in Dallas, Texas. For more information about HHC, 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” or similar words, 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 The Howard Hughes Corporation’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2011 and its Quarterly Reports on Form 10-Q. The Howard Hughes Corporation cautions you not to place undue reliance on the forward-looking statements contained in this release. The Howard Hughes Corporation 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.
 
 
THE HOWARD HUGHES CORPORATION
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
 
    Three Months Ended     Year Ended
December 31, December 31,
  2011       2010     2011       2010  
(In thousands, except per share amounts)
Revenues:
Master Planned Community land sales $ 38,716 $ 23,372 $ 113,502 $ 38,058
Builder price participation 553 781 3,816 4,124
Minimum rents 18,080 16,577 71,178 66,926
Tenant recoveries 4,830 4,676 19,368 18,567
Condominium unit sales 2,572 1,139 22,067 1,139
Resort and conference center revenues 8,544 - 15,744 -
Other land revenues 6,759 1,271 14,141 5,384
Other rental and property revenues   4,823     3,024     15,875     8,521  
Total revenues   84,877     50,840     275,691     142,719  
Operating Expenses:
Master Planned Community cost of sales 18,199 16,387 70,108 23,388
Master Planned Community operations 10,659 5,388 28,270 29,041
Rental property real estate taxes 3,506 3,369 11,571 14,530
Rental property maintenance costs 2,027 1,729 7,493 6,495
Condominium unit cost of sales 743 1,000 14,465 1,000
Resort and conference center operations 6,756 - 13,108 -
Other property operating costs 15,218 9,698 51,247 36,893
Provision for doubtful accounts (590 ) 681 - 1,782
General and administrative 11,601 9,076 35,182 21,538
Provisions for impairment - 502,778 - 503,356
Depreciation and amortization   3,190     4,028     16,782     16,563  
Total expenses   71,309     554,134     248,226     654,586  
 
Operating income (loss) 13,568 (503,294 ) 27,465 (511,867 )
 
Interest income 2,779 251 9,876 369
Interest expense - (534 ) - (2,422 )
Early extinguishment of debt - - (11,305 ) -
Warrant liability gain (loss) 822 (140,900 ) 101,584 (140,900 )
Investment in real estate affiliate basis adjustment - - (6,053 ) -
Equity in earnings (loss) from Real Estate Affiliates   791     3,019     8,578     9,413  
Income (loss) before taxes and reorganization items 17,960 (641,458 ) 130,145 (645,407 )
Benefit from income taxes 13,980 651,062 18,325 633,459
Reorganization items   -     (14,153 )   -     (57,282 )
Net income (loss) from continuing operations 31,940 (4,549 ) 148,470 (69,230 )
Discontinued operations - loss on dispositions   -     -     -     -  
Net income (loss) 31,940 (4,549 ) 148,470 (69,230 )
Net (income) loss attributable to noncontrolling interests   (513 )   (81 )   (1,290 )   (201 )
Net income (loss) attributable to common stockholders $ 31,427   $ (4,630 ) $ 147,180   $ (69,431 )
 
Basic Income (Loss) Per Share: $ 0.83 $ (0.12 ) $ 3.88 $ (1.84 )
Diluted Income (Loss) Per Share: $ 0.80 $ (0.12 ) $ 1.17 $ (1.84 )
 
Comprehensive Income (Loss), Net of Tax:
Net income (loss) $ 31,940 $ (4,369 ) $ 148,470 $ (69,230 )
Other comprehensive income (loss):
Interest rate swap (579 ) - (3,351 ) -
Capitalized swap interest (472 ) - (600 ) -
Pension plan adjustment   -     117     -     117  
Other comprehensive income (loss)   (1,051 )   117     (3,951 )   117  
Comprehensive income (loss) 30,889 (4,252 ) 144,519 (69,113 )
Comprehensive (income) loss attributable to noncontrolling interests   (513 )   (81 )   (1,290 )   (201 )
Comprehensive income (loss) attributable to common stockholders $ 30,376   $ (4,333 ) $ 143,229   $ (69,314 )
 
 
THE HOWARD HUGHES CORPORATION
CONSOLIDATED BALANCE SHEETS
 
    December 31,     December 31,
  2011     2010  
Assets: (In thousands, except share amounts)
Investment in real estate:
Master Planned Community assets $ 1,600,074 $ 1,350,648
Land 236,363 180,976
Buildings and equipment 556,786 336,950
Less: accumulated depreciation (92,494 ) (78,931 )
Developments in progress   195,034     293,403  
Net property and equipment 2,495,763 2,083,046
Investment in Real Estate Affiliates   64,958     149,543  
Net investment in real estate 2,560,721 2,232,589
Cash and cash equivalents 227,566 284,682
Accounts receivable, net 15,644 8,154
Municipal Utility District receivables 86,599 28,103
Notes receivable, net 35,354 38,954
Tax indemnity receivable, including interest 331,771 323,525
Deferred expenses, net 10,338 6,619
Prepaid expenses and other assets   127,156     100,081  
Total assets $ 3,395,149   $ 3,022,707  
 
Liabilities:
Mortgages, notes and loans payable $ 606,477 $ 318,660
Deferred tax liabilities 75,966 78,680
Warrant liabilities 127,764 227,348
Uncertain tax position liability 129,939 140,076
Accounts payable and accrued expenses   125,404     78,836  
Total liabilities   1,065,550     843,600  
 
Commitments and Contingencies (see Note 14 )
 
Stockholders' Equity:
Preferred stock: $.01 par value; 50,000,000 shares authorized, none issued - -
Common stock: $.01 par value; 150,000,000 shares authorized,
37,945,707 shares issued and outstanding as of December 31, 2011 and
37,904,506 shares issued and outstanding as of December 31, 2010 379 379
Additional paid-in capital 2,711,109 2,708,036
Accumulated deficit (381,325 ) (528,505 )
Accumulated other comprehensive loss   (5,578 )   (1,627 )
Total stockholders' equity 2,324,585 2,178,283
Noncontrolling interests   5,014     824  
Total equity   2,329,599     2,179,107  
Total liabilities and equity $ 3,395,149   $ 3,022,707  
 
 

Supplemental Information

December 31, 2011

As our three segments, Master Planned Communities, Operating Assets and Strategic Developments, are managed separately, different operating measures are utilized to assess operating results and allocate resources. The one common operating measure used to assess operating results for our business segments is real estate property earnings before taxes (“EBT”) which represents the operating revenues of the properties less property operating expenses. We have defined EBT as net income (loss) from continuing operations excluding general and administrative expenses, corporate interest income and depreciation expense, investment in real estate basis adjustment, benefit from income taxes, warrant liability gain (loss), reorganization items and the effect of the previously mentioned items within our equity in earnings (loss) from Real Estate Affiliates. Management believes that EBT provides useful information about the operating performance of all our assets, projects and property. However, EBT should not be considered as an alternative to GAAP net income (loss) attributable to common stockholders or GAAP net income (loss) from continuing operations.
       

Three Months Ended December 31,

Year Ended December 31,
(In thousands)   2011       2010     2011       2010  
Reconciliation of EBT to GAAP-basis
income (loss) from continuing operations
Real estate property EBT:
Master Planned Communities $ 20,663 $ (394,637 ) $ 50,805 $ (379,993 )
Operating Assets 6,369 (77,693 ) 9,502 (72,394 )
Strategic Developments   472     (18,901 )   3,311     (26,370 )
Segment EBT $ 27,504 $ (491,231 ) $ 63,618 $ (478,757 )
Real Estate Affiliates   -     (3,252 )   (11,803 )   (13,803 )
27,504 (494,483 ) 51,815 (492,560 )
General and administrative (11,601 ) (9,076 ) (35,182 ) (21,538 )
Interest income 465 - 9,607 199
Warrant liability gain (loss) 822 (140,900 ) 101,584 (140,900 )
Benefit from income taxes 13,980 651,062 18,325 633,459
Equity in earnings (loss) from Real Estate Affiliates 782 3,019 8,578 9,413
Investment in real estate affiliate basis adjustment -

-
(6,053 )

-
Reorganization items - (14,153 ) - (57,282 )
Corporate depreciation   (12 )   (18 )   (204 )   (21 )
Net income (loss) from continuing operations $ 31,940   $ (4,549 ) $ 148,470   $ (69,230 )
 
 

MPC Sales Summary
 
MPC Sales Summary for the Three Months Ended December 31,
 
          Land Sales     Acres Sold     Number of Lots/Units     Price per acre     Price per lot
Three Months Ended December 31
2011   2010 2011   2010 2011   2010 2011   2010 2011   2010
($ in thousands)

Residential Land Sales
Columbia Single family - detached $ - $ 2,400 0.0 1.9 0 12 - 1,275 - 200
Townhomes 2,227 3,031 0.7 1.7 15 29 N/A N/A 148 105
 
Bridgeland Single family - detached 2,861 4,730 10.7 17.3 58 80 269 274 49 59
 
Summerlin Single family - detached 4,744 8,909 21.1 17.0 107 95 225 524 44 94
Custom lots 679 890 1.0 0.9 2 2 693 1,000 340 445
 
The Woodlands Single family - detached 20,290 17,854 60.6 40.8 216 172 335 437 94 104
Single family - attached   348   75   0.8 0.0 12 0 463 - 29 -
Subtotal 31,149 37,890 94.8 79.5 410 390
 

Commercial Land Sales
Bridgeland Worship Sites - 1,600 - 20.0 - - - 80 - -
 
The Woodlands Office and other 4,412 0 10.7 - - - 414 - - -
Apartments and assisted living 0 4,879 - 12.5 - - - 392 - -
Retail 1,250 1,500 1.2 5.5 - - 1,068 275 - -
Hotel   0   2,331   - 3.2 - - - 719 - -
Subtotal   5,662   10,310   11.8 41.2
Total acreage sales revenue 36,811 48,200
Deferred revenue 264 1,089
Deferred revenue - Woodlands 249 (55 )
Special Improvement District Revenue   1,392   722  
Total segment Land sale revenues 38,716 49,956
Less: Real Estate Affiliates land sales revenue   0   (26,584 )
Total land sales revenue - GAAP basis   38,716   23,372  
 
MPC Sales Summary for the Year Ended December 31,
                                   
Land Sales Acres Sold Number of Lots/Units Price per acre Price per lot
Year Ended December 31,
2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
($ in thousands)

Residential Land Sales
Columbia Single family - detached $ 1,480 $ 2,400 1.4 1.9 7 12 $ 1,040 $ 1,275 $ 211 $ 200
Townhomes 5,538 3,031 1.8 1.7 39 29 - - 142 105
 
Bridgeland Single family - detached 16,707 15,123 63.2 58.2 318 289 265 259 53 52
 
Summerlin Single family - detached 30,247 8,909 83.5 17.0 419 95 362 519 72 94
Custom lots 679 2,253 1.0 1.9 2 4 694 1,204 340 563
 
The Woodlands Single family - detached 76,362 66,272 210.4 181.3 826 737 363 366 92 90
Single family - attached   1,235     1,063   3.0 3.5 46 52 409 304 27 20
Subtotal 132,248 99,051 364.3 265.5 1,657 1,218
 

Commercial Land Sales
Summerlin Not-for-profit 3,616 - 16.1 - - - 225 - - -
 
Bridgeland Not-for-profit - 1,600 - 20.0 - - - 80 - -
 
The Woodlands Office and other 6,213 10,597 14.0 21.3 - - 449 497 - -
Apartments and assisted living 1,839 4,879 5.0 12.5 - - 348 392 - -
Retail 6,365 5,843 12.0 20.2 - - 547 290 - -
Hotel   -     2,331   - 3.2 - - - 719 - -
Subtotal   18,033     25,250   47.1 77.2
Total acreage sales revenue 150,281 124,301
Deferred revenue (481 ) 3,994
Deferred revenue - Woodlands 6,161 -
Special Improvement District revenue   5,420     749  
Total segment Land sale revenues 161,381 129,044
Less: Real Estate Affiliates land sales revenue   (47,879 )   (90,986 )
Total land sales revenue - GAAP basis $ 113,502   $ 38,058  
 
 

Operating Assets Net Operating Income (“NOI”)

The Company believes that NOI is a useful supplemental measure of the performance of its Operating Assets. We define NOI as property specific revenues (rental income, tenant recoveries and other income) less expenses (real estate taxes, repairs and maintenance, marketing and other property expenses) and excluding the operations of properties held for disposition. NOI also excludes straight line rents, market lease amortization, impairments, depreciation and other amortization expense. Other real estate companies may use different methodologies for calculating NOI, and accordingly, the NOI of our Operating Assets may not be comparable to other real estate companies.

The Company also believes that NOI provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating real estate properties and the impact on operations from trends in occupancy rates, rental rates, and operating costs. This measure thereby provides an operating perspective not immediately apparent from GAAP continuing operations or net income attributable to common stockholders. The Company uses NOI to evaluate its operating performance on a property-by-property basis because NOI allows the Company to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on the Company’s operating results, gross margins and investment returns. NOI should only by used as an alternative measure of the financial performance of such assets and not as an alternative to GAAP income (loss) from continuing operations, operating income (loss) or net income (loss) available to common stockholders.

 
    Net Operating Income (NOI) Three     Net Operating Income (NOI)
Months Ended December 31, Year Ended December 31,
  2011       2010     2011       2010  
(In thousands)
Operating Assets
 
Retail
Ward Centers $ 5,032 $ 5,761 $ 21,481 $ 22,980
South Street Seaport (a) 2,244 1,029 (b) 5,650 4,238
Rio West Mall (a) 356 417 1,319 1,897
Landmark Mall (a) 110 396 737 1,619
Riverwalk Marketplace (a) 80 254 418 579
Cottonwood Square 81 111 380 484
Park West 86 111 576 366
20/25 Waterway Avenue 406 216 1,310 674
Waterway Garage Retail   -     -     7     -  
Total Retail 8,395 8,295 31,878 32,837
Office
110 N. Wacker 1,529 2,039 6,115 6,628
Columbia Office Properties (c) 918 602 2,649 2,657
4 Waterway Square 538 175 1,639 15
9303 New Trails (d) 249 108 742 706
1400 Woodloch Forest - 274 649 1,036
2201 Lake Woodlands Drive   83     83     332     322  
Total Office 3,317 3,281 12,126 11,364
 
The Woodlands Resort and Conference Center   1,675     465     7,726     4,379  
Total Retail, Office, Resort and Conference Center 13,387 12,041 51,730 48,580
 
The Club at Carlton Woods (1,193 ) 276 (5,126 ) (3,885 )
The Woodlands Parking Garages (296 ) (519 ) (1,204 ) (1,049 )
The Woodlands Ground leases 93 74 403 337
Other Properties   (499 )   320     1,410     3,396  
Total Other   (1,895 )   151     (4,517 )   (1,201 )
Total Operating Assets NOI   11,492     12,192     47,213     47,379  
 
Straight-line and lease amortization (166 ) (325 ) 918 183
Provisions for impairment - (80,401 ) - (80,923 )
Early extinguishment of debt - - (11,305 ) -
Depreciation and amortization (3,141 ) (5,931 ) (20,309 ) (23,461 )
Equity in earnings from Real Estate Affiliates 384 (324 ) 3,926 (338 )
Interest, net (2,200 ) (3,529 ) (10,850 ) (17,179 )
Less: Partners' share of Operating Assets EBT   -     625     (91 )   1,945  
Operating assets EBT (100% Owned) $ 6,369   $ (77,693 ) $ 9,502   $ (72,394 )
 
    Net Operating Income (NOI)     Net Operating Income (NOI)
Three Months Ended December 31, Year Ended December 31,
  2011       2010     2011       2010  
Operating Assets NOI
- Equity and Cost Method Investments
Millennium Waterway Apartments $ 1,830 $ (133 ) $ 2,571 $ (157 )
Woodlands Sarofim # 1 351 395 1,489 1,572
Stewart Title (title company) 402 438 1,069 1,222
Forest View/Timbermill Apartments   509     412     1,826     1,610  

Total NOI - equity investees ofDecember 31, 2011
3,092 1,112 6,955 4,247
 
Adjustments to NOI (e)   (114 )   203     (3,862 )   (1,937 )
Equity Method Investments EBT 2,978 1,315 3,093 2,310
Less: Joint Venture Partner's Share of EBT   (2,156 )   (1,626 )   (3,061 )   (2,648 )

Equity in earnings from Real EstateAffiliates
  822     (311 )   32     (338 )
 

Distributions from Summerlin HospitalInvestment
  -     -     3,894     -  
 

Equity in earnings from Real EstateAffiliates
$ 822   $ (311 ) $ 3,926   $ (338 )
 
 
Company Share of Equity Method Investments NOI
Millennium Waterway Apartments $ 1,529 $ (111 ) $ 2,148 $ (131 )
Woodlands Sarofim # 1 70 79 298 314
Stewart Title (title company) 201 219 535 611
Forest View/Timbermill Apartments   255     206     913     805  

Total NOI - equity investees ofDecember 31, 2011 (c)
$ 2,055   $ 393   $ 3,894   $ 1,599  
 
 
Economic December 31, 2011
Ownership Debt Cash
(In thousands)
Millennium Waterway Apartments 83.55 % $ 47,175 $ 2,733

Woodlands Sarofim # 1
20.00 % 7,087 811

Stewart Title (title company)
50.00 % - 426
Forest View/Timbermill Apartments 50.00 % 5,708 1,258
(a)   Straight-line non-cash ground rent amortization was excluded from 2010 and 2009 amounts to conform to the 2011 presentation and to be consistent with the exclusion of straight-line revenues.
(b) Includes a provision for bad debt of $1.2 million related to a single tenant.
(c)

Amounts relating to an operating lease in which we are the lessee and the related sublease income totaling $0.1 million and less than $0.1 million for 2010 and 2009, respectively, and which were included in Columbia Operating Properties for 2011, 2010 and 2009, were reclassified to general and administrative expenses to conform to 2011 presentation.
(d) Since November 2009, a portion of The Woodlands' staff has occupied from approximately 5,900 square feet to almost 10,000 square feet of this building.
(e) Adjustments to NOI include straight-line and market lease amortization, depreciation and amortization and non-real estate taxes.

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