DALLAS--(BUSINESS WIRE)-- The Howard Hughes Corporation (NYSE:HHC):

Fourth Quarter Highlights

• Fourth quarter 2012 net income was $30.0 million, excluding the $(22.3) million non-cash warrant loss and $(8.6) million non-cash loss relating to a reduction in the tax indemnity receivable, compared to the fourth quarter 2011 net income of $30.6 million, excluding the $0.8 million non-cash warrant gain.
• Master Planned Community ("MPC") land sales were $62.3 million for the fourth quarter 2012 compared to $37.4 million for the fourth quarter 2011.
• Net operating income ("NOI") for our income-producing Operating Assets was $11.5 million for fourth quarter 2012, compared to $15.2 million in the fourth quarter of 2011. Fourth quarter 2012 results include the impact of Superstorm Sandy on South Street Seaport's NOI, generating a $(5.6) million negative variance compared to 2011. Substantially all of the lost income caused by the storm will be covered by insurance.
• Retired 6,083,333 Sponsor warrants for $80.5 million in cash and the issuance of 1,525,272 shares of common stock. As a result of the transactions, shareholders now own 10.1% more of the Company.
• ONE Ala Moana luxury condominium project in Honolulu, HI, launched pre-sales and sold all 206 units after 29 hours of public sales for approximately $1,170 per square foot. Construction of the tower is expected to begin in first half of 2013.
• Announced the master plan to transform Ward Centers in Honolulu, HI, into an urban master planned community called Ward Village, which when fully developed will contain over 4,000 condominium units and over one million square feet of retail and other commercial space. Phase One of the redevelopment will consist of two market rate, mixed-use residential towers totaling 500 units, one workforce housing tower containing at least 125 units and the renovation of the IBM building into a world-class sales center. The IBM building renovation is underway, and construction of the residential towers is expected to begin in 2014.
• Dillard's, Inc. and Macy's, Inc. committed to become anchor tenants for The Shops at Summerlin downtown mixed-use development in Las Vegas, NV. The 1.5 million square foot project is expected to begin construction in 2013.
• Obtained all approvals needed to begin construction of a 380-unit apartment building on Parcel D in Columbia, MD, and in February 2013 began construction.
• Began construction on One Hughes Landing, a 195,000 square foot Class A office building which is 28% pre-leased at The Woodlands in Houston, TX; part of the Hughes Landing mixed use development close to the Town Center.

Full Year Highlights

• 2012 net income was $77.0 million, excluding the $(185.0) million non-cash warrant loss and $(20.3) million non-cash loss relating to a reduction in the tax indemnity receivable, compared to the 2011 net income of $60.8 million, excluding the $101.6 million non-cash warrant gain and $(15.2) million of non-recurring charges.
• Generated $180.4 million in Master Planned Community land sales revenue for 2012, a $30.1 million increase from $150.3 million in 2011.
• NOI for our income-producing Operating Assets was $62.0 million for 2012, compared to $55.6 million in 2011.
• Began construction on two Class A office towers in The Woodlands, 3 Waterway and One Hughes Landing, containing approximately 427,000 square feet. 3 Waterway is 90% leased, and both buildings will be completed in 2013.
• August 2012 auction of 375 lots at The Woodlands generated an aggregate 49%, or $16.7 million, increase in price of the lots compared to the selling prices before the auction.
• Acquired our partner's equity interest in the 393-unit Millennium Waterway apartment property located in The Woodlands for $6.9 million, representing a $72 million purchase price for the building, with proceeds from a $55.6 million ten-year non-recourse mortgage at a 3.75% interest rate, generating $4.2 million of cash for the company. The property's stabilized annual NOI is approximately $4.9 million.
• Commenced construction on Millennium Woodlands Phase II, a 314-unit Class A apartment building located in The Woodlands, which is being developed through a joint venture with the same developer with whom we developed the Millennium Waterway apartments.
• Commenced Phase Two of the Ward Village Shops, part of Ward Centers in Honolulu, HI, a $26.2 million project to build 57,000 square feet of new retail space for Pier 1 Imports and Nordstrom Rack, whose relocation opens space for future redevelopment in Ward Village. The tenants are expected to take occupancy in late 2013 or early 2014 and should together contribute approximately $1.0 million of incremental annual NOI.
• TJ Maxx took occupancy of 36,000 square feet of newly completed space and Bed, Bath & Beyond will occupy 30,000 square feet at Ward Centers in early 2013. Both of these tenants are expected to contribute approximately $2.0 million of incremental combined annual NOI to Ward Centers.
• Completed the ground lease amendment with the Economic Development Corporation of the City of New York which permits the redevelopment of Pier 17. Obtained unanimous Landmarks Commission approval with the support of Community Board 1 for the design, and in February 2013, obtained City Planning Commission approval for the Pier 17 redevelopment.
• Announced the redevelopment of Riverwalk Marketplace into the first upscale urban outlet center in the U.S. Upon completion, the property will comprise approximately 250,000 square feet of retail space.
• Entered into agreements with Whole Foods Market and The Columbia Association to lease 77.9% of the approximately 88,000 square foot Columbia Regional Building, located in Downtown Columbia, MD. The redevelopment is expected to cost approximately $23.0 million and to generate approximately $1.8 million of annual NOI based on pre-leasing to date. This architecturally important building currently has $1.0 million of annual carrying costs. The restoration and redevelopment of the building will serve as a catalyst for future development in the Columbia Town Center area. Construction is expected to begin in the first quarter of 2013.
• Acquired 70 Columbia Corporate Center, a 169,590 square foot Class A office building in Columbia, MD, by assuming a $16.0 million non-recourse mortgage bearing interest at 4.25% and by providing a commitment to fund $5.0 million for leasing. Secured a 76,308 square foot tenant which will increase occupancy to 68.7% in 2013 and increase annual NOI to approximately $1.9 million.
• Completed $348.6 million of non-recourse financing commitments in 2012, the proceeds of which will primarily be used to fund vertical commercial and horizontal land development activities.
• On February 8, 2013, we closed a $95.0 million financing for the redevelopment of The Woodlands Resort and Conference Center. The loan refinanced a $36.1 million mortgage and will provide a majority of the capital for the $75.0 million redevelopment.

The Howard Hughes Corporation (NYSE:HHC) or (the "Company") today announced its results for the fourth quarter and full year 2012.

The Howard Hughes Corporation achieved important milestones and accomplishments for 2012 within each of its business segments. Master planned community land sales increased $30.1 million to $180.4 million on a "same property" basis for the year ended December 31, 2012, a 20.0% increase over 2011. Net operating income from our income-producing operating assets increased by $6.4 million to $62.0 million for 2012 compared to 2011. The increase is net of a $(3.4) million fourth quarter 2012 NOI loss at the South Street Seaport due to Superstorm Sandy, compared to $2.2 million of NOI in fourth quarter 2011. We also completed the lease amendment with the City of New York to permit the redevelopment of Pier 17 at South Street Seaport. The Landmarks Commission and City Planning Commission each unanimously approved our redevelopment plans.

At Ward Centers, we announced our vision for the redevelopment of the 60-acre property into a world-class urban master planned community called Ward Village, and also entered into leases with major tenants which will add approximately $3.0 million of incremental annual NOI to the property by early 2014. For more information regarding the Ward Village development, please visit www.avisionforward.com. In early 2013, we intend to begin redevelopment on Riverwalk Marketplace to transform it into the first upscale outlet center in the U.S. located in an urban location.

Several development projects are underway or are expected to be launched in 2013. ONE Ala Moana condominium project sold out after 29 hours of public sales and should begin development in the first half of 2013. The 380-unit apartment project at the Columbia Town Center, which we are developing with local partners, began construction in February 2013. We have 427,000 square feet of Class A office space under construction at The Woodlands with a 2013 delivery date; and our Millennium Woodlands Phase II joint venture at The Woodlands began construction on a 314-unit apartment building in 2012. We are also pre-leasing The Shops at Summerlin now that we have obtained commitments from Macy's and Dillard's for 180,000 and 200,000 square feet, respectively, created a catalyst for leasing the remainder of the 1.5 million square foot mixed use project.

For a more complete description of the status of our developments, please refer to Item 7 beginning on page 38 of The Howard Hughes Corporation Consolidated and Combined Financial Statements contained in our Form 10-K for the year ended December 31, 2012.

Fourth quarter 2012 net income attributable to common stockholders includes a $(22.3) million warrant loss and a $(8.6) million loss relating to a reduction in the tax indemnity receivable. Excluding these non-cash charges, net income attributable to common stockholders was $30.0 million, or $0.77 per diluted common share. Excluding the $0.8 million warrant gain, net income attributable to common stockholders was $30.6 million, or $0.80 per diluted common share for the three months ended December 31, 2011.

For the year ended December 31, 2012, net loss attributable to common stockholders was $(128.3) million compared with net income attributable to common stockholders of $147.2 million for the year ended December 31, 2011. Excluding the $(185.0) million warrant loss and $(20.3) million loss relating to a reduction in the tax indemnity receivable, net income attributable to common stockholders for the year ended December 31, 2012, was $77.0 million, or $2.02 per diluted common share, compared with net income attributable to common stockholders of $60.8 million, excluding the $101.6 million warrant gain, a $(11.3) million after-tax loss from refinancing mortgage debt carried on our books at a discount, and a non-cash $(3.8) million after-tax loss to adjust the basis of our equity investment in The Woodlands prior to its consolidation, or $1.56 per diluted common share, for the year ended December 31, 2011.

Beginning with the acquisition of our former partner's 47.5% interest in The Woodlands on July 1, 2011, we consolidated the financial results of The Woodlands. Prior to the acquisition, we accounted for our interest in The Woodlands as an unconsolidated real estate affiliate using the equity method; consequently, our statement of operations for the twelve months ended December 31, 2012, is not comparable to the same period in 2011.

If The Woodlands acquisition had occurred on January 1, 2011, total revenues of the Company for the year ended December 31, 2011, would have been approximately $357.5 million, on a pro forma basis, compared to $376.9 million for the year ended December 31, 2012. The principal reason for the $19.4 million increase in revenues, on a pro forma basis, is increases in Master Planned Community land sales, Minimum rents, and Resort and conference center revenues. For a more complete comparison of operating results between periods, please refer Item 7 beginning on page 38 of The Howard Hughes Corporation Consolidated and Combined Financial Statements contained in our Form 10-K for the year ended December 31, 2012

David R. Weinreb, CEO of The Howard Hughes Corporation, stated, "During 2012, we made tremendous progress in advancing the development of our most important assets. Our master planned communities also generated strong performance, and the Las Vegas housing market, where our Summerlin MPC is located, appears to be in a sustainable and strengthening recovery. We have the balance sheet, financial and human capital to realize the full potential of our irreplaceable assets."

Mr. Weinreb continued, "2013 will be a pivotal year, as we begin construction on several of our new developments and redevelopments, such as the South Street Seaport. I believe that our visibility in the markets will increase significantly as construction activities begin, and we will be able to provide more financial information about each project as they get underway."

Business Segment Operating Results

For comparative purposes, Master Planned Communities land sales and Operating Assets NOI relating to The Woodlands, and a discussion of results as if we consolidated The Woodlands during the year ended December 31, 2011, are presented in this earnings release in our Supplemental Information. For a reconciliation of Operating Assets NOI to Operating Assets real estate property earnings before taxes ("REP EBT"), Operating Assets REP EBT to GAAP-basis income (loss), and segment-basis MPC land sales revenue to GAAP-basis land sales revenue, refer to the Supplemental Information contained in this earnings release.

Master Planned Communities Summary

Land sales in our MPC segment, excluding deferred land sales and other revenue, increased $24.9 million, or 66.6%, to $62.3 million for the three months ended December 31, 2012, as compared to the three months ended December 31, 2011. The increase in revenues was primarily caused by a $23.6 million increase in residential land sales at The Woodlands. Approximately 78% of The Woodlands lot sales in the fourth quarter 2012 were a result of the auctions we held in August 2012. The auction resulted in a $50.4 million aggregate sales price for the 375 lots offered representing a $16.7 million, or 49%, increase in price compared to sales prices prior to the auction. The auction also resulted in an acceleration of homebuilder closings on the lots. Higher sales of non-core commercial land at The Woodlands increased commercial revenues by $3.6 million.

For the year ended December 31, 2012, land sales, excluding deferred land sales and other revenue, increased $30.1 million to $180.4 million compared to the year ended December 31, 2011, primarily due to the residential lot auction at The Woodlands, $5.2 million of increased sales at Bridgeland and a $5.1 million increase in commercial land sales, respectively.

The Houston, TX, economy remains strong. The expected influx in 2014 and 2015 of 10,000 employees to ExxonMobil's three million square foot corporate campus which is under construction just south of The Woodlands is driving demand for residential housing and commercial space at The Woodlands and Bridgeland. The latest phase of construction on the greater Houston area's perimeter loop, the Grand Parkway, will bisect the Bridgeland community and will connect the ExxonMobil campus, the airport and the Energy Corridor, which we believe will serve as another catalyst for growth.

At Summerlin, existing inventory levels for both new and resale homes continue to decline resulting in improved pricing. In the Las Vegas market, 44,902 homes were sold in 2012, the third-best year on record, and the median single family home price increased 24.2%, according to the Greater Las Vegas Association of Realtors. In addition, the number of single-family homes available for sale on the Multiple Listing Service at December 31, 2012, declined 24.1% from the prior year, representing an approximate five-week supply of inventory. Summerlin sold 38 and 109 residential lots during the three months ended December 31, 2012 and 2011, respectively, and sold 400 and 421 residential lots during the years ended December 31, 2012 and 2011, respectively. Summerlin's pipeline remains robust, with 110 residential lots under contract representing approximately $9.3 million of sales revenue as of December 31, 2012, if all sales are completed. In addition, Summerlin has an outparcel in escrow representing $2.6 million of sales revenue.

Operating Assets Summary

NOI from the combined retail, office and resort and conference center and multi-family properties was $11.5 million for the three months ended December 31, 2012, compared to NOI of $15.2 million for the three months ended December 31, 2011. This includes our share of NOI of our non-consolidated ventures of $0.3 million for the three months ended December 31, 2012, and $2.1 million for the three months ended December 31, 2011. The $3.8 million decrease in NOI in the fourth quarter 2012 compared to the fourth quarter 2011 is primarily attributable to the negative impact of Superstorm Sandy at South Street Seaport. The Uplands portion of the property suffered damage due to flooding, but the Pier 17 structure was not damaged. Remediation efforts are ongoing, and the property is only partially operating. We believe that our insurance will cover substantially all of the cost of repairing the property and will also compensate us for any income that has been lost as a result of the storm.

The South Street Seaport had a fourth quarter 2012 NOI loss of $(3.4) million, compared to NOI of $2.2 million for fourth quarter 2011. This $(5.6) million negative variance was partially offset by a $4.1 million combined increase at 4 Waterway Square, 9303 New Trails, 1400 Woodloch Forest, Millennium Waterway apartments, and the Woodlands Resort and Conference Center, all located at The Woodlands, due to several properties reaching stabilized NOI and improved occupancy and operating results compared to 2011.

NOI from the combined retail, office and resort and conference center and multi-family properties was $62.0 million for the year ended December 31, 2012, compared to NOI of $55.6 million for the year ended December 31, 2011. This includes our share of NOI of our non-consolidated ventures of $2.8 million for the year ended December 31, 2012, and $3.9 million for the year ended December 31, 2011. The $6.4 million increase in NOI in 2012 compared to 2011 is primarily attributable to a combined increase of $11.9 million at 4 Waterway Square, 9303 New Trails, 1400 Woodloch Forest, Millennium Waterway apartments, and the Woodlands Resort and Conference Center, all located at The Woodlands, partially offset by the decrease at South Street Seaport caused by Superstorm Sandy.

Strategic Developments Summary

In December 2012, our ONE Ala Moana condominium development joint venture launched pre-sales and sold all 206 units after 29 hours of public sales for an average selling price of $1,170 per square foot. We expect to close on the first mortgage construction financing and to begin construction during the first half of 2013. Upon closing the construction loan, the venture will fully draw on the $40.0 million of committed mezzanine loans, and we will sell our condominium rights to the venture at a $47.5 million valuation.

During 2012, we sold 11.5 acres at Alameda Plaza consisting of 104,705 square feet of mostly vacant retail space for $4.5 million. Our net earnings recognized on the sale were $2.0 million. We are continuing to explore the sale of the remaining 10.5 acres consisting of 85,636 square feet of mostly vacant retail space.

Subsequent Event

On February 8, 2013, we closed on a $95.0 million non-recourse loan which refinanced the existing $36.1 million mortgage on The Woodlands Resort and Conference Center and will fund the majority of the costs of the $75.0 million redevelopment of the property. The new loan bears interest at LIBOR plus 3.50%, has a three-year initial term and contains three one-year extension options. We believe that the redevelopment will enable the property to meet increasing demand for world-class hospitality driven by the strength of the Houston economy. The redevelopment will replace 206 rooms originally built in the 1970s with 184 new guest rooms and suites, and will renovate 222 existing guest rooms and suites. The project also includes construction of a 1,000-foot lazy river amenity, a 120-seat prime steakhouse and restaurant and the renovation and expansion of the arrival areas and conference center space. The entire facility will continue to operate during the redevelopment, and the rooms being replaced will not be taken out of service until the new rooms are completed.

About the Howard Hughes Corporation

The Howard Hughes Corporation owns, manages and develops commercial, residential and mixed-use real estate throughout the United States. Our properties include master planned communities, commercial mixed-use, retail and office 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 under the ticker symbol "HHC" and is headquartered in Dallas, Texas. For more 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," "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 The Howard Hughes Corporation's filings with the Securities and Exchange Commission, including its Quarterly and Annual Reports. 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 STATEMENTS OF OPERATIONS
		Three Months Ended December 31,								Twelve Months Ended December 31,
		2012				2011				2012				2011
		(In thousands, except per share amounts)
Revenues:
Master Planned Community land sales		$	62,408			$	38,918			$	182,643			$	114,610
Builder price participation			1,539				1,465				5,747				3,816
Minimum rents			20,012				18,080				82,621				71,178
Tenant recoveries			5,419				4,786				23,351				19,323
Condominium unit sales			-				2,572				267				22,067
Resort and conference center revenues			9,828				8,544				39,782				15,744
Other land revenues			4,640				4,040				18,073				13,133
Other rental and property revenues			4,521				6,688				24,402				15,818
Total revenues			108,367				85,093				376,886				275,689
Expenses:
Master Planned Community cost of sales			26,202				18,201				89,298				70,108
Master Planned Community operations			9,544				11,334				40,506				33,647
Rental property real estate taxes			3,060				2,477				13,643				10,270
Rental property maintenance costs			2,351				1,798				8,655				7,076
Other property operating costs			16,729				16,136				63,035				50,549
Condominium unit cost of sales			-				743				96				14,465
Resort and conference center operations			7,362				6,868				29,112				13,220
Provision for (recovery of) doubtful accounts			939				(409	)			1,224				(235	)
General and administrative			8,527				11,186				34,423				32,342
Depreciation and amortization			6,711				3,190				24,429				16,782
Total expenses			81,425				71,524				304,421				248,224
Operating income			26,942				13,569				72,465				27,465
Interest income			2,389				2,779				9,437				9,876
Interest expense			(321	)			-				(964	)			-
Warrant liability gain (loss)			(22,293	)			822				(185,017	)			101,584
Reduction in tax indemnity receivable			(8,605	)			-				(20,260	)			-
Equity in earnings from Real Estate Affiliates			251				791				3,683				8,578
Investment in Real Estate Affiliate basis adjustment			-				-								(6,053	)
Early extinguishment of debt			-				-				-				(11,305	)
Income (loss) before taxes			(1,637	)			17,961				(120,656	)			130,145
Provision (benefit) for income taxes			(816	)			(13,981	)			6,887				(18,325	)
Net income (loss)			(821	)			31,942				(127,543	)			148,470
Net income attributable to noncontrolling interests			(108	)			(513	)			(745	)			(1,290	)
Net income (loss) attributable to common stockholders		$	(929	)		$	31,429			$	(128,288	)		$	147,180
Basic earnings (loss) per share:		$	(0.01	)		$	0.83			$	(3.36	)		$	3.88
Diluted earnings (loss) per share:		$	(0.01	)		$	0.80			$	(3.36	)		$	1.17

THE HOWARD HUGHES CORPORATION
CONSOLIDATED BALANCE SHEETS
		December 31,				December 31,
		2012				2011
Assets:		(In thousands, except share amounts)
Investment in real estate:
Master Planned Community assets		$	1,563,122			$	1,602,437
Land			252,593				234,190
Buildings and equipment			657,268				545,343
Less: accumulated depreciation			(112,491	)			(91,605	)
Developments in progress			273,613				207,760
Net property and equipment			2,634,105				2,498,125
Investment in Real Estate Affiliates			32,179				58,790
Net investment in real estate			2,666,284				2,556,915
Cash and cash equivalents			229,197				227,566
Accounts receivable, net			13,905				20,089
Municipal Utility District receivables, net			89,720				86,599
Notes receivable, net			27,953				35,354
Tax indemnity receivable, including interest			319,622				331,771
Deferred expenses, net			12,891				10,338
Prepaid expenses and other assets, net			143,470				130,961
Total assets		$	3,503,042			$	3,399,593
Liabilities:
Mortgages, notes and loans payable		$	688,312			$	606,477
Deferred tax liabilities			77,147				75,966
Warrant liabilities			123,573				127,764
Uncertain tax position liability			132,492				129,939
Accounts payable and accrued expenses			170,521				129,848
Total liabilities			1,192,045				1,069,994
Commitments and Contingencies (see Note 10)
Equity:
Preferred stock: $.01 par value; 50,000,000 shares authorized, none issued			-				-
Common stock: $.01 par value; 150,000,000 shares authorized,
39,498,912 shares issued and outstanding as of December 31, 2012, and
37,945,707 shares issued and outstanding as of December 31, 2011			395				379
Additional paid-in capital			2,824,031				2,711,109
Accumulated deficit			(509,613	)			(381,325	)
Accumulated other comprehensive loss			(9,575	)			(5,578	)
Total stockholders' equity			2,305,238				2,324,585
Noncontrolling interests			5,759				5,014
Total equity			2,310,997				2,329,599
Total liabilities and equity		$	3,503,042			$	3,399,593
Supplemental Information
December 31, 2012

As our three segments, Master Planned Communities, Operating Assets and Strategic Developments, are managed separately, we use different operating measures to assess operating results and allocate resources among these three segments. The one common operating measure used to assess operating results for our business segments is real estate property earnings before taxes ("REP EBT"), which represents the operating revenues of the properties less property operating expenses. REP EBT, as it relates to our business, is defined as net income (loss) excluding general and administrative expenses, corporate interest income and depreciation expense, provision (benefit) for income taxes, warrant liability gain (loss), the reduction in tax indemnity receivable, equity in earnings from Real Estate Affiliates and Investment in Real Estate Affiliate basis adjustment. We present REP EBT because we use this measure, among others, internally to assess the core operating performance of our assets. However, REP EBT should not be considered as an alternative to GAAP net income (loss) attributable to common stockholders or GAAP net income (loss).

Reconciliation of REP EBT to GAAP-net income (loss)				Three Months Ended December 31,								Twelve Months Ended December 31,
				2012				2011				2012				2011
				(In thousands)								(In thousands)
Real estate property EBT:
Segment basis				$	34,759			$	25,972			$	109,705			$	62,197
Real Estate Affiliates					(251	)			287				(3,683	)			(12,210	)
					34,508				26,259				106,022				49,987
General and administrative					(8,527	)			(11,186	)			(34,423	)			(32,342	)
Corporate interest income, net					3,339				1,286				10,153				8,595
Warrant liability gain (loss)					(22,293	)			822				(185,017	)			101,584
Benefit (provision) for income taxes					816				13,981				(6,887	)			18,325
Reduction in tax indemnity receivable					(8,605	)			-				(20,260	)			-
Equity in earnings from Real Estate Affiliates					251				791				3,683				8,578
Investment in Real Estate Affiliate basis adjustment					-				-				-				(6,053	)
Corporate depreciation					(308	)			(11	)			(814	)			(204	)
Net income (loss)				$	(819	)		$	31,942			$	(127,543	)		$	148,470

MPC Sales Summary
			Land Sales								Acres Sold					Number of Lots/Units					Price per acre							Price per lot
			Three Months Ended December 31, 2012
($ In thousands)			2012				2011				2012		2011			2012		2011			2012			2011				2012			2011
Columbia
Residential
Single family - detached			$	-			$	-			-		-			-		-			$	-		$	-			$	-		$	-
Townhomes				-				2,227			-		0.8			-		15				-			2,784				-			148
Commercial
Apartments				-				-			-		-			-		-				-			-				-			-
				-				2,227			-		0.8			-		15				-			2,784				-			148
Bridgeland
Residential
Single family - detached				4,692				2,861			16.6		11.0			76		58				283			260				62			49
Commercial
Not-for-profit				-				-			-		-			-		-				-			-				-			-
				4,692				2,861			16.6		11.0			76		58				283			260				62			49
Summerlin
Residential
Single family - detached				3,126				4,743			4.3		21.1			37		107				727			225				84			44
Custom lots				380				679			0.5		1.0			1		2				760			679				380			340
Commercial
Retail				-				-			-		-			-		-				-			-				-			-
Not-for-profit				-				-			-		-			-		-				-			-				-			-
				3,506				5,422			4.8		22.1			38		109				730			245				92			50
The Woodlands
Residential
Single family - detached				44,776				20,839			90.4		60.6			381		216				495			344				118			96
Single family - attached				-				348			-		0.7			-		12				-			497				-			29
Commercial
Office and other				2,632				4,413			3.8		10.8			-		-				693			409				-			-
Retail				6,654				1,250			17.2		1.5			-		-				387			833				-			-
Other				-				-			-		-			-		-				-			-				-			-
				54,062				26,850			111.4		73.6			381		228				485			365				118			93
Total acreage sales revenue				62,260				37,360			132.8		107.5			495		410
Deferred revenue				(222	)			164
Special Improvement District revenue				370				1,392
Total segment land sale revenues				62,408				38,916
Less: Real Estate Affiliates land sales revenue				-				-
Total land sales revenue - GAAP basis			$	62,408			$	38,916

MPC Sales Summary
		Land Sales									Acres Sold					Number of Lots/Units					Price per acre							Price per lot
		Year Ended December 31, 2012
($ In thousands)		2012				2011					2012		2011			2012		2011			2012			2011				2012			2011
Columbia
Residential
Single family - detached		$	-			$	1,480				-		1.4			-		7			$	-		$	1,040			$	-		$	211
Townhomes			4,156				5,538				1.2		1.8			28		39				3,463			3,077				148			142
Commercial
Apartments			5,300				-				18.7		-			-		-				283			-				-			-
			9,456				7,018				19.9		3.2			28		46				475			2,193				148			153
Bridgeland
Residential
Single family - detached			21,875				16,707				80.5		63.2			389		318				272			265				56			53
Commercial
Not-for-profit			-				-				-		-			-		-				-			-				-			-
			21,875				16,707				80.5		63.2			389		318				272			265				56			53
Summerlin
Residential
Single family - detached			26,899				30,247				75.9		83.5			390		419				354			362				69			72
Custom lots			4,141				679				5.3		1.0			10		2				781			694				414			340
Commercial
Retail			784				-				1.0		-			-		-				784			-				-			-
Not-for-profit			-				3,616				-		16.1			-		-				-			225				-			-
			31,824				34,542				82.2		100.6			400		421				387			343				78			73
The Woodlands
Residential
Single family - detached			100,235				76,362				241.6		210.4			979		826				415			363				102			92
Single family - attached			-				1,235				-		3.0			-		46				-			409				-			27
Commercial
Office and other			9,069				6,213				14.2		14.0			-		-				639			449				-			-
Retail			7,904				6,365				18.4		12.0			-		-				430			547				-			-
Other			50				1,839				0.8		5.0			-		-				63			348				-			-
			117,258				92,014				275.0		244.4			979		872				426			376				102			89
Total acreage sales revenue			180,413				150,281				457.6		411.4			1,796		1,657
Deferred revenue			(2,092	)			5,680
Special Improvement District revenue			4,322				5,420
Total segment land sale revenues			182,643				161,381
Less: Real Estate Affiliates land sales revenue			-				(46,771	)
Total land sales revenue - GAAP basis		$	182,643			$	114,610

Operating Assets Net Operating Income

The Company believes that NOI is a useful supplemental measure of the performance of our Operating Assets because it 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. 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). NOI also excludes straight line rents, property specific net interest expense, depreciation, ground rent, other amortization expenses, and equity in earnings from Real Estate Affiliates.

We use NOI to evaluate our operating performance on a property-by-property basis because NOI allows us to evaluate the impact that factors such as lease structure, lease rates and tenant base, which vary by property, have on our operating results, gross margins and investment returns.

Although we believe that NOI provides useful information to the investors about the performance of our Operating Assets due to the exclusions noted above, NOI should only be used as an alternative measure of the financial performance of such assets and not as an alternative to GAAP operating income (loss) or net income (loss) available to common stockholders.

Operating Assets NOI and REP EBT
		Three Months Ended December 31,								Year Ended December 31,
		2012				2011				2012				2011
		(In thousands)								(In thousands)
Operating Assets NOI
Retail
Ward Centers		$	5,310			$	5,032			$	22,045			$	21,481
South Street Seaport			(3,446	)			2,246				639				5,650
Rio West Mall			255				356				1,250				1,319
Landmark Mall			261				110				923				737
Riverwalk Marketplace			(352	)			79				221				418
Cottonwood Square			112				81				432				380
Park West			91				86				830				576
20/25 Waterway Avenue			340				408				1,582				1,310
Waterway Garage Retail			95				1				97				7
Total Retail			2,666				8,399				28,019				31,878
Office
110 N. Wacker			1,519				1,597				6,073				6,115
Columbia Office Properties			606				987				2,304				2,649
70 Columbia Corporate Center			148				-				140				-
4 Waterway Square			1,404				537				5,544				1,639
9303 New Trails			384				(110	)			1,819				742
1400 Woodloch Forest			793				-				1,995				649
2201 Lake Woodlands Drive			32				83				53				332
Total Office			4,886				3,094				17,928				12,126
Millennium Waterway Apartments (a)			1,182				-				2,589				-
The Woodlands Resort and Conference Center			2,465				1,676				10,670				7,726
Total Retail, Office, Multi-family, Resort and Conference Center			11,199				13,169				59,206				51,730
The Club at Carlton Woods			(859	)			(1,193	)			(4,242	)			(5,126	)
The Woodlands Parking Garages			(399	)			(298	)			(1,128	)			(1,204	)
The Woodlands Ground leases			115				91				404				403
Other Properties			666				357				1,703				1,530
Total Other			(477	)			(1,043	)			(3,263	)			(4,397	)
Total Operating Assets NOI- Consolidated			10,722				12,126				55,943				47,333
Straight-line lease amortization			(704	)			(400	)			(736	)			918
Provisions for impairment			-				-				-				-
Ground Rent			-				-
Early extinguishment of debt			-				-				-				(11,305	)
Depreciation and amortization			(6,349	)			(3,141	)			(23,318	)			(20,309	)
Equity in earnings from Real Estate Affiliates			251				787				3,683				3,926
Interest, net			(4,865	)			(1,397	)			(16,104	)			(12,775	)
Less: Partners' share of Operating Assets REP EBT			-				1,492				-				425
Total Operating Assets REP EBT (b)		$	(945	)		$	9,467			$	19,468			$	8,213
Operating Assets NOI - Equity and Cost Method Investments
Millennium Waterway Apartments (a)		$	-			$	1,830			$	1,768			$	2,571
Woodlands Sarofim # 1			84				351				621				1,489
Stewart Title (title company)			543				402				1,876				1,069
Forest View/Timbermill Apartments (c)			(70	)			509				487				1,826
Total NOI - equity investees			557				3,092				4,752				6,955
Adjustments to NOI (d)			(3	)			(114	)			(1,476	)			(3,862	)
Equity Method Investments REP EBT			554				2,978				3,276				3,093
Less: Joint Venture Partner's Share of REP EBT			(303	)			(2,156	)			(1,969	)			(3,061	)
Equity in earnings (loss) from Real Estate Affiliates			251				822				1,307				32
Distributions from Summerlin Hospital Investment			-				(35	)			2,376				3,894
Segment equity in earnings from Real Estate Affiliates		$	251			$	787			$	3,683			$	3,926
Company's Share of Equity Method Investments NOI
Millennium Waterway Apartments (a)		$	-			$	1,529			$	1,477			$	2,148
Woodlands Sarofim # 1			17				70				124				298
Stewart Title (title company)			271				201				938				535
Forest View/Timbermill Apartments (c)			(35	)			254				244				913
Total NOI - equity investees		$	253			$	2,054			$	2,783			$	3,894
		Economic								December 31, 2012
		Ownership								Debt				Cash
										(In thousands)
Woodlands Sarofim #1			20.00	%							6,882				811
Stewart Title(title company)			50.00	%							-				426
Forest View/Timbermill Apartments (c)			50.00	%						not applicable					1,258
(a) On May 31, 2012, we acquired our partner's interest in the 393-unit Millennium Waterway Apartments. NOI for periods prior to June 1, 2012, is included in Operating Assets NOI - Equity and Cost Method Investment.
(b) For a detailed breakdown of our Operating Asset segment REP EBT, refer to Note 17 in the Consolidated and Combined Financial Statements. Such amounts in prior periods include The Woodlands as if consolidated.
(c) On April 19, 2012, the joint ventures owning the Forest View and Timbermill Apartments completed their sale to a third party. Our share of the distributable cash after repayment of debt and transaction expenses was $8.6 million.
(d) Adjustments to NOI include straight-line and market lease amortization, depreciation and amortization and non-real estate taxes.

Source: The Howard Hughes Corporation