DALLAS-The damage from Superstorm Sandy on Howard Hughes Corp.'s South Street Seaport continues impacting the company's earnings. During Q3 2013, HHC reported net income of $11.1 million, compared to Q3 2012's net income of $17.8 million. Net operating income also decreased year-over-year, dropping from $16.1 million to $10.5 million.Also impacting NOI is redevelopment of The Woodlands Resort and Conference center.
However, other metrics provide more upbeat news. For example, HHC opened the 197,000-square-foot, class A office building One Hughes Landing, which is already 92% leased, prompting groundbreaking on its sister building, Two Hughes Landing. Furthermore, HHC began construction activities pertaining to the Pier 17 redevelopment at South Street Seaport.
Other activities during Q3 included:
The extension and modification of The Woodlands Master Credit Facility to reduce its interest rate to LIBOR plus 2.75% with no minimum rate from LIBOR plus 4.00% with a 5.00% minimum rate. The final maturity was extended to August 2018 from March 2015.
The sale of Rio West Mall for net cash proceeds of $10.8 million, generating a $0.6 million pre-tax gain.
Issuance of $750 million of senior notes on October 2, 2013, raising $739.6 million of net cash proceeds. The notes bear interest at 6.875% and mature Oct. 1, 2021. Pro forma for the issuance, yielded approximately $950.4 million of unrestricted cash at Sept. 30.
"I am pleased with the accomplishments that our company has made on the development and capital markets fronts over the past few months," says David R. Weinreb, CEO of HHC. "The launch of construction activities at the South Street Seaport is an important milestone for the transformation of this irreplaceable asset. Our MPCs in Houston and Las Vegas continue to show the benefits of having the dominant and most desirable communities in their respective markets, with strong housing and commercial demand driving significant increases in land prices and revenues. The new capital raised in the corporate bond market provides us enormous flexibility in executing on and achieving our business plan."
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