Howard Hughes Corp. turns a profit as it recognizes condo revenue

Close to $150 million in condominium sales revenue from four towers in Kakaako helped the developer of Ward Village turn a profit in the second quarter.

Howard Hughes Corp. also reported on Monday that it sold 35 more Ward Village condos in the April-June period.

David Weinreb, the company’s CEO, said in a statement that the sales results show “strong momentum” at Ward Village, where Hughes Corp. expects to begin building a new luxury tower called Gateway Cylinder later this year and start sales for a more moderately priced tower called A‘ali‘i this month.

Texas-based Hughes Corp. completed its first Ward Village tower, Waiea, in November and has three under construction — Anaha, Ae‘o, and Ke Kilohana.

Most of the additional sales in the second quarter were at Ae‘o, where a Whole Foods Market will be the anchor retail tenant. Since April 18, there were 29 more units sold in the building, bringing total sales to 321 out of 466 units. Ae‘o is 32 percent built and projected for completion in late 2018.

At Anaha, a tower to be anchored by a Peter Merriman restaurant, there was one more sale since April 18. Of 317 units, 302 have been sold. This tower is 91 percent complete and slated to open by the end of the year.

There were two more sales at Waiea, bringing the total number of units sold to 165 out of 174.

At Ke Kilohana, a tower with mostly below-market prices that broke ground in October, there were no new sales in the second quarter. All 375 below-market units were sold last year at auction. There also are 49 market-priced units being made available in increments. Of these units, 12 were previously sold and eight are available now from the $860,000s. Ke Kilohana is 21 percent complete and slated for completion in 2019.

Ward Village condo sale revenue in the second quarter totaled $148 million, but that isn’t wholly or only from the 35 recent sales. Hughes Corp. recognizes a portion of revenue from all pending condo sales in relation to how much of a tower has been built. Such sales won’t actually be completed with customers paying the developer, beyond initial deposits, until a tower is finished.

Hughes Corp. did not break down revenue by project, but noted that the second quarter was the first time the company recognized any revenue from Ae‘o. Starting next year, Hughes Corp. will discontinue this accounting practice known as “percentage of completion” and shift to recognizing condo sale revenue only when a tower is completed and sales close.

The company’s total revenue in the quarter was $309 million, up from $274 million a year earlier. Profit for Hughes Corp. was $3.1 million in the second quarter, down from $7 million a year earlier.