10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(MARK ONE)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

or

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to

Commission File Number 001-34856

The Howard Hughes Corporation

(Exact name of registrant as specified in its charter)

Delaware	36-4673192
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
13355 Noel Road, 22nd Floor, Dallas, Texas	75240
(Address of principal executive offices)	(Zip Code)
(214) 741‑7744 (Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class:	Name of Each Exchange on Which Registered:
Common Stock, $.01 par value	New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   YES [X]  NO [ ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   YES [ ]  NO [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   YES [X]  NO [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES [X]  NO [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   [X]	Accelerated filer   [  ]
Non-accelerated filer   [ ] (Do not check if a smaller reporting company)	Smaller reporting company   [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   YES [ ]  NO [X]

As of June 30, 2015, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $5.7 billion based on the closing sale price as reported on the New York Stock Exchange.

As of February 24, 2016, there were 39,714,838 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement relating to its 2016 Annual Meeting of Stockholders are incorporated by reference in Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K.  The registrant intends to file its Proxy Statement with the Securities and Exchange Commission within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.

TABLE OF CONTENTS

Item No.		Page Number
Part I
1.	Business	1
1A.	Risk Factors	20
1B.	Unresolved Staff Comments	28
2.	Properties	28
3.	Legal Proceedings	33
4.	Mine Safety Disclosure	33
Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	34
6.	Selected Financial Data	35
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
7A.	Quantitative and Qualitative Disclosures About Market Risk	70
8.	Financial Statements and Supplementary Data	70
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	71
9A.	Controls and Procedures	71
9B.	Other Information	73
Part III
10.	Directors, Executive Officers and Corporate Governance	73
11.	Executive Compensation	73
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	73
13.	Certain Relationships and Related Transactions, and Director Independence	73
14.	Principal Accountant Fees and Services	73
Part IV
15.	Exhibits and Financial Statement Schedule	73
Signatures		74

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this Annual Report on Form 10-K are forward-looking statements. Forward-looking statements give our current expectations relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to current or historical facts. These statements may include words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,”  “project,” “realize,” “should,” “transform,” “would,” and other statements of similar expression. Forward-looking statements should not be relied upon. They give our expectations about the future and are not guarantees. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements to materially differ from any future results, performance and achievements expressed or implied by such forward-looking statements. These forward-looking statements present our estimates and assumptions only as of the date of this Annual Report. Except as may be required by law, we undertake no obligation to modify or revise any forward-looking statements to reflect events or circumstances occurring after the date of this report.

Factors that could cause actual results to differ materially from those expressed or implied by forward-looking statements include:

· our inability to obtain operating and development capital, including our inability to obtain debt capital from lenders and the capital markets;

· slower growth in the national economy and adverse economic conditions in the homebuilding, condominium development and retail sectors;

· the continued negative impact of low oil prices on economic growth of, and demand for our properties in the Houston, Texas region;

· our inability to obtain rents sufficient to justify developing our properties and/or the inability of our tenants to pay their contractual rents;

· our directors may be involved or have interests in other businesses, including real estate activities and investments, which may compete with us;

· our inability to control certain of our properties due to the joint ownership of such property and our inability to successfully attract desirable strategic partners; and

· the other risks described in “Item 1A. Risk Factors.”

PART I

Throughout this Annual Report, references to the “Company”, “HHC”, “we” and “our” refer to The Howard Hughes Corporation and its consolidated subsidiaries, unless the context requires otherwise.

ITEM 1.  BUSINESS

OVERVIEW

Our mission is to be the preeminent developer of master planned communities and mixed-use properties. We create timeless places and extraordinary experiences that inspire people while driving sustainable, long-term growth and value for our shareholders. We specialize in the development of master planned communities (“MPCs”),  in the ownership, management and redevelopment of revenue-generating real estate assets(“Operating Assets”), and in the development of other real estate assets in the form of entitled and unentitled land and residential condominium developments(“Strategic Developments”).  We expect to drive income from the growth of our operating asset portfolio, through continued strategic project opportunities,  and from ongoing MPC land development and home site sales. We are focused on maximizing value from our assets, and we continue to acquire, develop and manage our assets to achieve this goal. We are headquartered in Dallas, Texas, and our assets are located across the United States.

In contrast to many publicly traded real estate companies which are limited in their activities because they have elected to be taxed as a real estate investment trust, we have no restrictions on our operating activities or the types of services that we can offer. We believe our structure provides the greatest flexibility for maximizing the value of our real estate portfolio. As of December 31, 2015, our consolidated mortgage, notes and loans payable equaled approximately 42.7% of our total assets, and we had $445.3 million of cash on hand.

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Our MPCs have won numerous awards for, among other things, design and community contribution. We expect the competitive position and desirable locations of our assets (which collectively comprise millions of square feet and thousands of acres of developable land), combined with their operations and long-term opportunity through entitlements, land, residential condominium and home site sales and project developments to drive our long-term growth.

We were incorporated in Delaware in 2010. Through our predecessors, we have been in business for several decades. We operate our business in three segments: MPC, Operating Assets and Strategic Developments. Financial information about each of our segments is presented in Note 17 – Segments of our audited financial statements on pages F-41 to F-44.

Recent Significant Transactions

The Club at Carlton Woods. OnSeptember 4, 2015, we sold The Club atCarlton Woods, the 36-hole golf and country club located in The Woodlands for net cash proceeds of $25.1 million and purchaser’s assumption of net liabilities of $4.0 million, resulting in a pre-tax gain of $29.1 million. We developed and operated the club as an amenity to help sell residential lots in a gated community. Most of the lots in the community have been sold, and the club had operating losses of $0.9 million and $4.4 million for the years ended December 31, 2015 and 2014, respectively.The sale of this asset will allow us to redeploy capital to our development activities.

Discovery Joint Venture. In the first quarter 2015, we entered into a joint venture with Discovery Land Company (“Discovery”) by contributing undeveloped land at an agreed upon value of $125.4 million, or $226,000 per acre. Discovery is a leading developer of private clubs and luxury communities. The joint venture intends to develop an exclusive luxury community on approximately 555 acres of undeveloped land within our Summerlin MPC. The community is named The Summit and will have approximately 270 homes, an 18-hole Tom Fazio-designed golf course and other amenities for residents.  Lot prices are expected to range from $2 million to $8 million. Discovery is the manager of the project and is responsible for funding development costs. The project will accelerate infrastructure improvements that will benefit our adjacent land, and accelerates the monetization of this land significantly ahead of our prior development plans. Development began in the second quarter 2015 and the first lot sales are expected to begin closing in 2016. Please refer to Note 5 –Real Estate and Other Affiliates for further description of this joint venture.

Seaport District Assemblage. During the first quarter 2015, we acquired a 58,000 square foot commercial building and air rights with total residential and commercial development rights of 196,133 square feet for $91.4million.  On December 29, 2014, in two separate transactions, we acquired a 48,000 square foot commercial building on a 15,744 square foot lot and certain air rights with total residential and commercial development rights of 621,651 square feet for $136.7 million. These combined acquisitions create a 42,694 square foot lot with 817,784 square feet of available development rights. These propertiesare collectively referred to as the Seaport District Assemblage and are located in close proximity to our South Street Seaport property.

Tax Indemnity Settlement. On December 12, 2014, as part of a tax indemnity andmutual release agreement (the “Settlement Agreement”) with General Growth Properties, Inc. (“GGP”) for a release of GGP’s obligation for reimbursement of taxes related to sales of certain MPC assets during years in which those assets were owned by GGP (Please refer to Note 9 – Income Taxes), we received $138.0 million in cash and six office buildings, referred to as 10-60 Columbia Corporate Center, consisting of 699,884 square feet located in downtown Columbia, Maryland valued at $130.0 million.

On December 15, 2014, we made a payment totaling $203.3 million to the IRS in satisfaction of a judgment entered by the Tax Court in favor of the IRS with respect to the MPC taxes and filed an appeal of the Tax Court’s decision to the Fifth Circuit Court of Appeals. The court affirmed the Tax Court ruling on October 27, 2015; consequently, we will no longer use thecompleted contract method of tax accounting at our Summerlin MPC.  All taxes and interest due related to this decision were paid when the appeal was filed. This ruling will accelerate the use of our tax attributes and change the timing of future tax payments.

Overview of Business Segments

The following describes our three business segments and provides a general description of each of the assets comprising these segments. This section should be referred to when reading “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” which contains financial and performance information for many of these assets.

Master Planned Communities. Our Master Planned Communities segment includes the development and sale of residential and commercial land, primarily in large-scale long-term projects. Our five master planned communities, listed according to total acreage,are: The Woodlands, Summerlin, Maryland, Bridgeland and The Woodlands Hills.

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Our master planned communities include over 12,000 acres of land remaining to be developed or sold. Residential sales, which are made primarily to homebuilders, include standard and custom parcels designated for detached and attached single and multi-family homes, ranging from entry-level to luxury homes. Commercial sales include land parcels designated for retail, office, resort, high density residential projects (e.g., condominiums and apartments), services and other for-profit activities, as well as those parcels designated for use by government, schools and other not-for-profit entities. Our strategy is to retain commercial landfor our own development unless we deem its intended use will not compete with our existing assets and current development plans.

Operating Assets. Our Operating Assets segment contains 52properties, investments and other assets that generate revenue, consisting of retail, office, multi-family and hospitality properties. Including properties in joint ventures, this segment includes 13 retail properties, 23 office properties, fivemulti-family buildings, two hospitality assets, and nine other operating assets and investments. We believe that there are opportunities to redevelop or reposition certain of these assetsto increase operating performance, includingseveral retail properties and some of the office properties located in Columbia, Maryland. These opportunities will require new capital investment and vary in complexity and scale. The redevelopment opportunities range from minimal disruption to the property to the partial or full demolition of existing structures for new construction.

Strategic Developments. Our Strategic Developments segment consists of 26 development projects. We believe most of these assets will require substantial future development to achieve their highest and best use. We are in various stages of creating or executing strategic plans for many of these assets based on market conditions and availability of capital. As of December 31, 2015, we had nine properties under construction and not yet placed into service, representing total estimated aggregate project costs totaling $1.6  billion. These projects include one Operating Asset, South Street Seaport, that is undergoing redevelopment and one multi-family property being developed in a joint venture. In addition to the permitting and approval process required in almost all large-scale real estate developments of this nature, we generally obtain construction financing to fund a majority of the costs associated with developing these assets.

The chart below presents our assets classified by reportable segment and predominant use at December 31, 2015:

MasterPlanned
Communities	OperatingAssets		Strategic Developments
	Retail	Office	Under Construction	Other
• Bridgeland	▪ Columbia Regional Building	▪ 10-70 Columbia Corporate Center	▪ Anaha	▪ Ae'o (e)
• Maryland	▪ Cottonwood Square	▪ Columbia Office Properties	▪ HHC 242 Self-Storage	▪ Alameda Plaza
• Summerlin (a)	▪ Creekside Village Green (c)	▪ 1725-35 Hughes Landing Boulevard (c)	▪ Lakeland Village Center	▪ AllenTowne
• The Woodlands	▪ Downtown Summerlin	▪ One Hughes Landing	▪ One Merriweather	▪ Bridges at Mint Hill
• The Woodlands Hills (b)	▪ Hughes Landing Retail (c)	▪ Two Hughes Landing	▪ Constellation (d)	▪ Century Plaza Mall
	▪ 1701 Lake Robbins	▪ 2201 Lake Woodlands Drive	▪ Three Hughes Landing	▪ Circle T Ranch and
	▪ Landmark Mall	▪ 9303 New Trails	▪ Waiea	Power Center (d)
	▪ Outlet Collection at Riverwalk	▪ 110 N. Wacker	▪ Waterway Square Hotel	▪ Cottonwood Mall
	▪ Park West	▪ One Summerlin (c)	(Westin)	▪ HHC 2978 Self-Storage
	▪ South Street Seaport	▪ 3831 Technology Forest Drive		▪ 80% Interest in Fashion
	(under construction)	▪ 3 Waterway Square		Show Air Rights
	▪ Ward Village	▪ 4 Waterway Square		▪ Kendall Town Center
	▪ 20/25 Waterway Avenue	▪ 1400 Woodloch Forest		▪ Lakemoor (Volo) Land
	▪ Waterway Garage Retail			▪ Maui Ranch Land
				▪ The Outlet Collection at Elk Grove (f)
	Multi-family	Other		▪ Parcel C (d)
	▪ Millennium Waterway Apartments	▪ Golf Courses at TPC Summerlin		▪ Seaport District Assemblage
	▪ Millennium Woodlands	and TPC Las Vegas		▪ Gateway Towers
	Phase II (e)	(participation interest)		▪ Ke Kilohana (g)
	▪ One Lakes Edge (c)	▪ Kewalo Basin Harbor		▪ West Windsor
	▪ 85 South Street	▪ Merriweather Post Pavilion
	▪ The Metropolitan Downtown	▪ Stewart Title of Montgomery
	Columbia (c) (d)	County, TX (d)
		▪ Summerlin Hospital Medical
	Hospitality	Center (d)
	▪ Hughes Landing Hotel (c)	▪ Summerlin Las Vegas
	(Embassy Suites)	Baseball Club (d)
	▪ The Woodlands Resort &	▪ The Woodlands Parking Garages
	Conference Center	▪ Woodlands Sarofim #1 (d)

(a) The Summerlin MPC includes The Summit, our Discovery joint venture.

(b) Formerly known as the Conroe MPC.

(c) Asset was placed in service and moved from the Strategic Developments segment to the Operating Assets segment during 2015.

(d) A non-consolidated investment. Refer to Note 5 – Real Estate and Other Affiliates.

(e) Formerly known as Ward Block M.

(f) Formerly known as Elk Grove Promenade.

(g) Formerly known as Ward Workforce Towers.

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Master Planned Communities

The development of master planned communities requires expertise in large-scale and long-range land use planning, residential and commercial real estate development and sales. These developments often require decades of investment and continual focus on the changing market dynamics surrounding the communities. We believe that the long-term value of our master planned communities remains strong because of their competitive positioning in their respective markets, our expertise and flexibility in land use planning and the fact that we have substantially completed the entitlement processes within the majority of our communities.

Our MPC segment consists of the development and sale of residential land and the development of commercial land to hold, develop or sell. Our master planned communities are located in and around Houston, Texas; Las Vegas, Nevada; and Columbia, Maryland. Residential revenues are generated primarily from the sale of finished lots and undeveloped superpads to residential homebuilders and developers. We also occasionally sell or lease land for commercial development when we deem its use will not compete with our existing properties or our strategy. Superpad sites are generally 20 to 25 acre parcels of unimproved land where we develop and construct the major utilities (water, sewer and storm drain) and roads to the borders of the parcel and the homebuilder completes the on-site utilities, roads and finished lots. Revenue is also generated through price participation with homebuilders. Revenues, net income and our ability to execute planned development are affected by factors such as: (1) the availability of construction and permanent mortgage financing to purchasers at acceptable interest rates; (2) consumer and business confidence; (3) regional economic conditions in the areas surrounding the projects, which includes levels of employment and homebuilder inventory; (4) availability of saleable land for particular uses; (5) our decisions to sell, develop or retain land; and (6) other factors generally affecting the homebuilder business and sales of residential properties. 

The following table summarizes our master planned communities, all of which are wholly-owned as of December 31, 2015:

				Remaining Saleable and			Remaining		Projected
		Total	Approx. No.	Developable Acres			Saleable		Community
		Gross	People Living	Residential	Commercial		Residential		Sell-Out
Community	Location	Acres (a)	in Community	(b)	(c)	Total	Lots (d)		Date
Bridgeland	Houston,TX	11,400	7,800	3,293	1,010	4,303	17,179	(e)	2036
Maryland	Columbia, MD	16,450	112,000	-	108	108	-		2022
Summerlin	Las Vegas, NV	22,500	105,000	4,036	830	4,866	40,000	(f)	2039
The Woodlands	Houston, TX	28,475	112,500	799	785	1,584	1,192		2025
The Woodlands Hills (g)	Conroe, TX	2,116	-	1,493	171	1,664	5,096		2028
Total		80,941	337,300	9,621	2,904	12,525	63,467

(a) Encompasses all of the land located within the borders of the master planned community, including parcels already sold, saleable parcels and non-saleable areas such as roads, parks and recreation areas, conservation areas and parcels acquired during the year.

(b) Includes standard, custom and high density residential land parcels.  Standard residential lots are designed for detached and attached single and multi-family homes, ranging from entry-level to luxury homes. Certain residential parcels are designated as custom lots as their premium price reflects a larger size and other distinguishing features such as location within a gated community, having golf course access or higher elevations. High density residential includes townhomes and condominiums.

(c) Designated for retail, office, resort, services and other for-profit activities, as well as those parcels allocated for use by government, schools, houses of worship and other not-for-profit entities.

(d) Remaining Saleable Residential Lots are estimates and include only lots that are intended for sale or joint venture. The mix of intended use on our remaining saleable and developable acres is primarily based on assumptions regarding entitlements and zoning of the remaining project and are likely to change over time as the master plan is refined.

(e) Remaining Saleable Residential Lots may decrease based on a revised land plan that is being finalized as of February 2016.

(f) Amount represents remaining entitlements, not necessarily the number of lots that will ultimately be developed and sold.

(g) Formerly known as the Conroe MPC. Total gross acres include 61 acres of land under contract to be acquired for $2.5 million in 2016.

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Houston, Texas MPCs

Bridgeland

Bridgeland was recognized as the 2015 Community of the Year by the Texas Association of Builders and received numerous awards at the 2015 Greater Houston Builders Association PRISM ceremony. The first residents moved into their homes in June 2006. When fully developed, we expect Bridgeland will contain more than 3,000 acres of waterways, lakes, trails, parks and open spaces, as well as an expansive Town Center that will provide employment and land for retail, educational and entertainment facilities. The MPC is being developed to eventually accommodate approximately 20,000 homes and 65,000 residents.

Bridgeland’s conceptual plan includes four villages, Lakeland Village, Parkland Village, Prairieland Village and Creekland Village, a 900-acre Town Center mixed-use district and a carefully designed network of trails totaling over 60 miles that will provide pedestrian connectivity to distinct residential villages and neighborhoods and access to recreational, educational, cultural, employment, retail, religious and other offerings. The Town Center will be located adjacent to the Grand Parkway, a 180-mile circumferential highway traversing seven counties and encircling the Greater Houston region, providing direct access to the Town Center and to future residential sections of Bridgeland. Additional segments of the Grand Parkway were completed in February 2016 and now connect Bridgeland to The Woodlands, the new ExxonMobil Campus and Houston’s George Bush Intercontinental Airport. The Woodlands senior management team members,  each of which have over 20 years of experience developing master planned communities, are leading the development and marketing of Bridgeland.

Bridgeland’s first five neighborhoods are located in Lakeland Village, which totals 2,275 acres and has many home sites that have views of the water, buried power lines to maximize the views of open space, fiber-optic technology, brick-lined terrace walkways and brick, stone and timber architecture. The prices of the homes range from approximately $250,000 to more than $1.0 million. Lakeland Village is approximately 85% complete and is anchored by a 6,000 square foot community center that features a water park with three swimming pools, two lighted tennis courts and a state-of-the-art fitness room. We are currently developing Lakeland Village Center, our first retail property in Bridgeland, which will be completed in the second quarter 2016. A grand promenade wrapping around Lake Bridgeland offers a boat dock, canoes, kayaks, sailboats and paddleboats. Design work is underway for Parkland Village, which totals 1,842 acres and will be the next phase of our development as Lakeland Village reaches build-out. Bridgeland has approximately 2,300 homes occupied by approximately 7,800 residents as of December 31, 2015.

The Woodlands

The Woodlands is a mixed-use, self-contained master planned community approximately 1.5 times the size of Manhattan, New York, located 27 miles north of Houston, Texas. The Woodlands provides an exceptional lifestyle and integrates recreational amenities, residential neighborhoods, commercial office space, retail shops and entertainment venues. Approximately 28% of The Woodlands is dedicated to green space, including parks, pathways, open spaces, golf courses and forest preserves.

The Woodlands has consistently ranked as one of the top master planned communities in the nation with regard to annual home sales. During its 41-year history, The Woodlands has won numerous awards, most recently being recognized as the Master Planned Community of the Year in 2015 by the Greater Houston Builders Association (GHBA), which is GHBA’s most coveted award. The Woodlands has led the way among master planned communities that practice environmental preservation.

Home site sales began in 1974. To maximize long term values, the development started with residential activity with land reserved for the eventual development of a town center containing office, retail, multi-family and hotel properties to serve the residents. Over time, the residential success created demand for commercial development. In recent years, the commercial and residential components have achieved significant appreciation in values and acceleration of development. Additionally, by virtue of the fact that we own most of the undeveloped available land in The Woodlands, we have substantial influence over the market.

As of December 31, 2015, there were approximately 41,850 homes occupied by approximately 112,000 residents and approximately 2,180 businesses providing employment for approximately 63,000 people. The population is projected to increase to approximately 131,000 by 2025.  We estimate that The Woodlands has a jobs to home ratio of approximately 1.5 to 1.0.  This ratio implies that many residents also work within The Woodlands, making it a more attractive place to live compared to purely residential communities by improving quality of life through short commute times. Since its inception, The

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Woodlands has sought to maintain a wide array of home choices and marketed that information to the realtor community as it is critical in providing guidance to the corporate relocation homebuyer. As a result of this effort, over the last ten years, The Woodlands has achieved an average of approximately 42% of new home sales attributable to “Outside of Houston Area” residents.

As of December 31, 2015, The Woodlands had 785 acres of land designated for commercial use remaining to be sold or developed. The Woodlands is well positioned to compete against other commercial developers in the area because we have the largest inventory of vacant commercial land available in the area and we offer virtually every product type being sought by our customers. We plan to develop most, if not all, of the future office, retail and apartment sites ourselves; however, some sites will be sold or ground leased to third parties for their own use when a compelling strategic or financially opportunisticreason exists to sell or lease the land. Examples include institutional projects such as churches, schools and medical facilities, including hospitals, medical office buildings, nursing homes and emergency clinics. Other uses that will in all likelihood be sold or leased include free standing fast food sites, gas station sites and day care sites. The mix of acreage designated for development versus sale or lease may change over time based on market conditions, projected demand, our view of the economic benefits of developing or selling and other factors.

The Woodlands has full or partial ownership interests in commercial properties totaling approximately 2.1 million square feet of office space (of which 1.8 million square feet are complete and 320,000 square feet are under construction), 437,821 square feet of retail and service space, 1,097 rental apartment units and 1,320 self-storage units (under construction). We also own and operate a 406-room resort and conference center facility, a 205-room Embassy Suites anda 302-room Westin Hotel (under construction).  The Westin is scheduled to open in March 2016 and the Embassy Suites opened on December 30, 2015. These commercial properties are more fully described under “Operating Assets.”

We believe the completion of The Grand Parkway linking The Woodlands and Bridgeland to the new ExxonMobil campus and the rest of the greater Houston area will be a further catalyst to attracting potential residents to our Houston master planned communities. Construction of the segments of The Grand Parkway that serve The Woodlands and Bridgeland was completed in February 2016.

The Woodlands Hills (formerly Conroe MPC)

Many of Houston’s prominent master planned communities are approaching build-out with few new communities to replace them.  As such, we believe that there is a significant opportunity to introduce another master planned community in the Far North Houston submarket.  The demand for this site was validated by research/demand studies from Robert Charles Lesser and Co. and MetroStudy, two well-known residential and commercial consulting firms.

The current land development plan for The Woodlands Hills includes 2,116 acres, of which 2,055 acres were acquired in 2014 and another 61 acres are under contract to close in 2016.  The land plan includes 1,493 acres dedicated to residential lot development and 171 acres dedicated to commercial and institutional land development. Planning for site development was underway during 2015, and we currently expect to begin water, sewer and drainage construction in the third quarter 2016 with the first lots sold in the fourth quarter 2017.

The Woodlands Hillsis well positioned to take advantage of its location, within the path of future development along I-45 north of The Woodlands and its close proximity to the ExxonMobil campus.  In addition, the new master planned community benefits from several east-west thoroughfares that provide convenient access to local and regional destinations such as Lake Conroe.We expect to deliver an amenity package to appeal to families. The amenities will include a park, village centers, pathways and common areas. The clubhouse will open in 2017 and serve as a marketing tool for the community. Commercial developments will be incorporated over time similar to Creekside Village Green in The Woodlands. The terrain features rolling hills and dense tree cover, appropriate for utilizing the reputation and brand of The Woodlands.

Maryland (Howard County, Maryland)

The Maryland community has no more remaining acreage for single family homes and represents primarily a commercial real estate development opportunity. It consists of four distinct communities known as Columbia, Gateway, Emerson and Fairwood. Columbia is the largest community and also where we believe the greatest commercial real estate development potential exists.

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Columbia

Columbia, located in Howard County, Maryland, is an internationally recognized model of a successful master planned community that began development in the 1960’s. Located between Baltimore and Washington, D.C., and encompassing 14,200 acres of land, Columbia offers a wide variety of living, business and recreational opportunities. The master planned community’s full range of housing options is located in nine distinct, self-contained villages and a Town Center. Columbia has an estimated 5,000 businesses, which occupy approximately 22.9 million square feet of space and provide more than 73,000 jobs. There is a wide variety of retail options encompassing approximately 8.0 million square feet of retail space.

In 2015, we began development of the Merriweather District and approximately 35 acres were transferred to our Strategic Developments segment. Please refer to our Strategic Developments section for our development plans relating to this acreage. Approximately 40 acres of additional undevelopable land remains in Columbia.

Gateway/Emerson/Fairwood

The remaining three communities (Gateway, Emerson and Fairwood) consist of 2,250 acres, with 108 acres remaining to be sold, all of which are entitled for commercial development. In addition, Fairwood owns a few undedicated open space parcels and 24 acres of unsubdivided land which cannot be developed as long as the nearby airport is operating.

Summerlin (Las Vegas, Nevada)

Spanning the western rim of the Las Vegas Valley and located approximately nine miles from downtown Las Vegas, our Summerlin Master Planned Community is comprised of planned and developed villages and offers suburban living with accessibility to the Las Vegas Strip. For much of its 26-year history, Summerlin has consistently ranked in the Robert Charles Lesser annual poll of Top-Selling Master Planned Communities in the nation, ranking 6th for 2015. With 23 public and private schools (K-12), four institutions of higher learning, nine golf courses, cultural facilities and health and medical centers, Summerlin is a fully integrated community. The first residents moved into their homes in 1991. As of December 31, 2015, there were approximately 41,800 homes in Summerlin. Summerlin’s population is expected to exceed 200,000 residents upon sell-out.  

Summerlin is comprised of hundreds of neighborhoods located in 20 developed villages, out of 30 planned, with more than 150 parks that are all connected by a 150-mile long trail system.  Summerlin is located adjacent to the Red Rock Canyon National Conservation Area, which has become a world-class hiking and rock climbing destination and attracts more than one million visitors annually. Summerlin contains approximately 2.1 million square feet of developed retail space and 3.3 million square feet of developed office space, in addition to the approximately 1.4 million square feet of retail and office space comprising our Downtown Summerlin development. In addition, there are three hotel properties owned by third parties containing approximately 1,400 hotel rooms within the MPC. The Downtown Summerlinarea contains approximately 400 acres designated for residential and commercial development. We own approximately 300 acres of this land with the remaining acreage anchored by The Red Rock Casino, Resort & Spa and Life Time Fitness. Our Downtown Summerlin development opened in October 2014 and 90.6% of the retail space was leased as of February 1, 2016. We believe that the opening of this project has significantly increased the desirability and value of our surrounding land due to the addition of retail, office, restaurant and entertainment amenities. Please refer to Downtown Summerlin under “Operating Assets” for a more complete description of this development.

Summerlin is divided into three separate regions known as Summerlin South, Summerlin West and Summerlin North. In Summerlin South, we are entitled to develop 740 acres of commercial property with no square footage restrictions, 493 of such acres, including our 106-acre Downtown Summerlin project, are either developed or committed to commercial development. The remaining 247 acres are under our control for future commercial development. We also have entitlements for an additional 17,000 residential units yet to be developed in Summerlin South. In Summerlin West, we are entitled to develop 5.85 million square feet of commercial space on up to 508 acres of which 100,000 square feet has already been developed into a grocery store anchored shopping center. We are also entitled to develop 30,000 residential units in Summerlin West.Approximately 7,000 units are existing homes or lots already sold to homebuilders, and 23,000 of which remain to be developed. The remaining 40,000 saleable residential lots represent Summerlin’s total entitlements, and utilization of these entitlements will be based on current and forecasted economic conditions.Summerlin North is fully developed and sold out.

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Operating Assets

In our Operating Assets segment, we own a variety of asset types including retail, office, multi-family, hospitality and other assets and investments that generate revenue.  Many of these assets have been developed by us since our spin-off in 2010. For certain of the remaining assets,primarily several of our retail properties and the Columbia office properties, we believe that there are opportunities to improve their operating performance through redevelopment or repositioning. These factors include, but are not limited to, the following: (1) existing and forecasted demographics surrounding the property; (2) competition related to existing and/or alternative uses; (3) existing entitlements of the property and our ability to change them; (4) compatibility of the physical site with proposed uses; and (5) environmental considerations, traffic patterns and access to the properties. We believe that, subject to obtaining all necessary consents and approvals, these assets have the potential for future growth by means of an improved tenant mix, additional gross leasable area (“GLA”), or repositioning of the asset for alternative use. Redevelopment plans for these assets may include office, retail or residential space, shopping centers, movie theaters, parking complexes and open space. Any future redevelopment may require that we obtain permits, licenses, consents and/or waivers from various parties. Our Operating Assets portfolio includes approximately 6.9 million square feet of retail and office, 804 wholly-owned multi-family units, 611 combined keys at hospitality properties, and other properties and investments as detailed on the following pages. This section contains a general description of each of the assets contained in our Operating Assets segment. For a detailed discussion of the financial performance of our Operating Assets please refer to “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Retail

Our retail portfolio includes approximately 3.5 million square feet and includes the following properties:

Columbia Regional Building (Columbia, Maryland)

The Columbia Regional Building, designed by Frank Gehry, was restored and redeveloped in 2014. The 88,556 square foot building re-opened with Columbia’s first Whole Foods Market. We believe that the redeveloped building continues to serve as a catalyst for future development in downtown Columbia.

Cottonwood Square (Salt Lake City, Utah)

Cottonwood Square is a 77,079 square foot community retail center situated in a high traffic area. This site is across from Cottonwood Mall, one of our Strategic Developments, which provides an opportunity for redevelopment synergies. For more information regarding our development activities, please refer to our Strategic Developments segment.

Downtown Summerlin (Las Vegas, Nevada)

Downtown Summerlin is an open-air retail, office and dining development comprised of approximately 1.6 million square feet thatwas opened in October 2014.  It consists of a Fashion Center with two department store anchor tenants, a pad for multiple small-shop retail stores, restaurants and an approximately 280,000 square foot marketplace consisting of big box and junior anchor retail space.

Landmark Mall (Alexandria, Virginia)

Anchored by Macy’s and Sears, Landmark Mall is an 879,262 square foot shopping mall located just nine miles southwest of Washington, D.C. The mall is located within one mile of public rail service on D.C.’s metro blue line. In 2013, we received unanimous rezoning approval from the City of Alexandria for Phase I of the redevelopment, which includes converting 11 acres of our 22-acre site, located within the center of the property between Macy’s and Sears, from a traditional enclosed mall to a vibrant outdoor mixed-use environment with street retail shops and restaurants and high density residential housing. Within Phase I we are developing plans for approximately 275,000 square feet of new retail space, including an upscale dine-in movie theater and up to 400 residential units. Prior to the commencement of construction, we must achieve internal pre-leasing targets, obtain building permits from the City of Alexandria, and consents from Macy’s and Sears.

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Outlet Collection at Riverwalk (New Orleans, Louisiana)

The Outlet Collection at Riverwalkis a 245,603 square foot urban upscale outlet center located along the Mississippi River in downtown New Orleans adjacent to the New Orleans Memorial Convention Center and the Audubon Aquarium of the Americas. We believe this is the nation’s first upscale outlet center located downtown in a major city. We redeveloped the center and reopened it in May 2014.

Park West (Peoria, Arizona)

Park West is a 249,177 square foot open-air shopping, dining and entertainment destination, which is approximately one mile northwest of the Arizona Cardinals’ football stadium and the Phoenix Coyote’s hockey arena. Park West has an additional 100,000 square feet of available development rights, which are permitted for retail, restaurant and hotel uses.Additionally, we own four parcels of land adjacent to our Park West property consisting of approximately 18 acres.

The Seaport District (New York, New York)

The Seaport District includes the entire South Street Seaport, encompasses the historic waterfront along the East River, and is bounded by the Brooklyn Bridge on the north, Wall Street on the south and Water Street on the west. The South Street Seaport is currently comprised of land and buildings located in an area we call the historic area and Pier 17. A significant portion of the property is subject to ground leases with the City of New York that expire in 2072. The historic area, (which is west of the FDR Drive) includes retail space in five buildings. Pier 17 is located east of FDR Drive and is under construction. Upon completion of the Seaport District First Project, as described below, South Street Seaport will have approximately 362,000 square feet of leasable space, substantially all of which will be retail,  restaurant and entertainment areas. The South Street Seaport is being rebranded to include the larger Seaport District as the company begins to reintroduce The Seaport District to New York City as the city’s Oldest New Neighborhood.

Seaport District First Project

In 2013, the City of New York executed the amended and restated ground lease for South Street Seaport and we provided a completion guarantee to New York City for the renovation and reconstruction of the existing Pier 17 Building (“Renovation Project”). Construction began in 2013 and is expected to conclude in 2017. The Renovation Project features a newly constructed pier and building and is designed to include upscale retail, restaurants and an outdoor entertainment venue in a vibrant open rooftop encompassing approximately 1.5 acres. The new Pier 17 building will be anchored by our partner, Jean-Georges Vongerichten who will open a flagship restaurant on the pier and, as part of the Second Project as described below, a food market in the adjacent to-be-reconstructed Tin Building. Additionally, we are repositioning a significant portion of the 180,000 square feet of retail space in the historic area.  We entered into a 20-year lease with iPic Entertainment for 46,000 square feet in the Fulton Market Building located in the historic area. iPic Theatres will serve as an anchor attraction for residents, workers and tourists, and we expect the historic area to be substantially repositioned by the end of 2016.

Seaport District Second Project

We began the public approval process on December 10, 2014 for our further redevelopment of the Seaport District, including up to approximately 700,000 square feet of additional space. During 2015, we halted the process due to a lack of community support for our initial proposal. Discussions regarding the location of the added development space are ongoing with the various interested parties. Separately, we have proposed a Minor Modification of the 2013 ULURP Approval for Pier 17 and the reconstruction of the Tin Building.  This Pier 17 Minor Modification includes the demolition of the Link Building and head house structure for the Pier 17 building, completion of the previously approved façade treatment along the western elevation of the building, and the installation of a reconfigured access drive.  The Tin Building reconstruction includes cataloguing important historical elements of the Tin Building, deconstructing the Tin Building, demolishing and reconstructing the platform pier and then reconstructing the Tin Building. Finally, the access drive would be extended around the Tin Building to create a one-way access drive for service and vehicular circulation.  We have previously announced that we have entered into a JV Partnership with Jean-Georges Vongerichten to operate a food market in the reconstructed Tin Building. We are still processing the necessary approval to move forward with the Pier 17 Minor Modifications and the Tin Building reconstruction and there can be no assurance that we will ultimately obtain the entitlements needed to move forward with this project. 

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The Woodlands, Texas

Our operating properties in The Woodlands include approximately 285,000 square feet of office and retail space. In addition, The Woodlands contains multi-family communities inclusive of 804 units and a resort and conference center and a hotel, with a combined 611 keys. The retail properties are described below with the other properties described in the sections following, corresponding to the related property type.

Creekside Village Green

Creekside Village Green is a 74,669 square foot center consisting of retail, restaurant and professional office space which was opened in January 2015. Creekside Village Green is located within Creekside Village Center, a 100-acre mixed-use commercial development that is anchored by an H-E-B grocery store. Creekside Village Center ultimately is planned to include 400,000 square feet of retail and office space, 800 units of multi-family, a  200 unit senior living facility and an 85,000 square foot campus within the Lone Star College System.

Hughes Landing Retail

Hughes Landing Retail is a 126,131 square foot retail component of Hughes Landing and consists of a 41,277 square foot grocery market, a  50,343 square foot restaurant row, and 34,511 square feet of additional retail space.

1701 Lake Robbins

1701 Lake Robbins is a 12,376 square foot retail building that we acquired in 2014.

20 & 25 Waterway Avenue

20 & 25 Waterway Avenue are two retail properties located in the Waterway Square commercial district in The Woodlands Town Center. The properties total 50,062 square feet.

Waterway Garage Retail

Waterway Garage Retail is attached to the Waterway Square Garage located within The Woodlands Town Center. The 21,513 square foot retail portion of the garage was completed in 2011.

Ward Village (Honolulu, Hawaii)

The operating properties of Ward Village are situated along Ala Moana Beach Park and are within one mile of Waikiki and downtown Honolulu. With over 350 tenants, the 1.3 million square foot project includes a 678,000 square foot shopping district containing seven specialty centers, approximately 140 retail shops, several restaurants and an entertainment center which includes a 16-screen movie theater. Ward Village is a vibrant neighborhood that offers unique retail experiences and will contain exceptional residences set among dynamic public open spaces and walkable streets.

Office

Our office portfolio includes approximately 3.3 million square feet and includes the following properties:

Columbia, Maryland

10-70 Columbia Corporate Center

10-60 Columbia Corporate Center is comprised of six adjacent office buildings totaling 716,998 square feet that were acquired as part of our Tax Indemnity Settlement with GGP in 2014. The project is located in Downtown Columbia, Maryland, 14 miles

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from the Baltimore Beltway and 17 miles from the Washington Beltway. Adjacent to 10-60 Columbia Corporate Center is 70 Columbia Corporate Center, a 170,741 square foot office building which we acquired in August 2012.

Columbia Office Properties

In addition to 10-70 Columbia Corporate Center described above, we own three office buildings and are the master tenant of a fourth office building located in Downtown Columbia, Maryland. The master lease under the fourth office building has a 2020 initial expiration and a 2060 final expiration date, including market renewal options. The buildings, which comprise 220,471 square feet, include: (1) the Columbia Association Building; (2) the Columbia Exhibit Building; (3) the Ridgley Building; and (4) American City Building (master tenant).

The Woodlands, Texas

Hughes Landing

Hughes Landing is a 66-acre mixed-use development situated along Lake Woodlands. The development is envisioned at full build-out to contain up to two million square feet of office space in 11 office buildings, approximately 200,000 square feet of retail and entertainment venues, 1,500 multi-family units and a 205-room hotel. To date, four office buildings have been completed and are further described below.

One Hughes Landing

One Hughes Landing is an eight-story,multi-tenant 197,719 square foot Class A office building located on 2.7 acres, including a 1,200 space parking garage shared with Two Hughes Landing.

Two Hughes Landing

Two Hughes Landing is an eight-story,multi-tenant 197,714 square foot Class A office building located on 3.6 acres, including a 1,200 space parking garage shared with One Hughes Landing.

1725 & 1735 Hughes Landing Boulevard

1725 & 1735 Hughes Landing Boulevard are two adjacent Class A office buildings. The building located at 1725 Hughes Landing Boulevard (West Building) is 13 stories and 331,067 square feet, and the building located at 1735 Hughes Landing Boulevard (East Building) is 12 stories and 318,170 square feet. A 2,617 space parking garage is located on the 4.3-acre site and is exclusive to these buildings.  We substantially completed construction during the fourth quarter 2015. ExxonMobil Corporation occupies the entire East Building under a lease expiring in November 2027, and 159,952 square feet , representing 48.7% of the West Building, under a lease expiring in December 2023.

2201 Lake Woodlands Drive

2201 Lake Woodlands Drive is a two-story,24,119 square foot, Class C office building located in the East Shore commercial district of The Woodlands.

9303 New Trails

9303 New Trails is a multi-tenant four-story, 97,553 square foot, Class B office building located within the Research Forest district of The Woodlands.

3831 Technology Forest Drive

3831 Technology Forest Drive isa 95,078 square foot,Class A office building located on a 5.7-acre land parcel and completed by us in the fourth quarter 2014.  Kiewit Energy Group occupies 100% of the building under a lease expiring in December 2024.  

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3 Waterway Square

3 Waterway Square is a nine-story, multi-tenant 232,021 square foot, Class A office building located in The Waterway Square District of The Woodlands Town Center.

4 Waterway Square

4 Waterway Square is a nine-story,multi-tenant 218,551 square foot, Class A office building located adjacent to 3 Waterway Square office building.

1400 Woodloch Forest Drive

1400 Woodloch Forest Drive is a 95,667 square foot, Class B office building located at the entrance to The Woodlands Town Center.

Woodlands Sarofim #1 Limited

We own a 20% interest in three office/industrial buildings located in The Woodlands Research Forest district within The Woodlands. The portfolio contains 129,790 square feet, and the various buildings were constructed between the late 1980s and 2002.

110 N. Wacker (Chicago, Illinois)

The property is a 226,000 square foot office building located at 110 N. Wacker Drive in downtown Chicago. We own a 100% interest in the operating profits and, upon a capital event, are entitled to an 11.0% preferred return on, and a return of our invested capital, after which any excess cash flow is evenly split with our partner. In 2014, we purchased the fee simple interest in the land underlying the office building for $12.3 million.

One Summerlin (Las Vegas, Nevada)

One Summerlin is a nine-storymulti-tenant Class A office building located in Downtown Summerlin. The property totals 206,279 square feet and was placed in service in the second quarter 2015.

Multi-family

Our multi-family portfolio is comprised of 804 wholly-owned units and 694 units included in joint venture projects and includes the following properties:

Millennium Waterway Apartments (The Woodlands, Texas)

Millennium Waterway Apartments is a 393-unit Class A apartment building located within The Woodlands Town Center.

Millennium Woodlands Phase II, LLC (The Woodlands, Texas)

We are an 81.43% partner in a joint venture with The Dinerstein Companies to develop and operate Millennium Woodlands Phase II, a 314-unit Class A multi-family complex in The Woodlands Town Center.

85 South Street (New York, New York)

In 2014, we acquired a 21-unit fully leased multi-family apartment building located near our South Street Seaport property. The building also contains approximately 13,000 square feet of ground floor retail space.

The Metropolitan Downtown Columbia (Columbia, Maryland)

In October 2011, we entered into a joint venture with a local multi-family developer, Kettler, Inc., (“Kettler”) to construct a 380-unit Class A apartment building with approximately 14,000 square feet of ground floor retail space in downtown Columbia, Maryland. We contributed a 4.2-acre site valued at $20.3 million and having a $3.0 million book value, in exchange for a 50%

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interest in the venture and our partner contributed cash for its interest. The joint venture began construction of The Metropolitan Downtown Columbia in February 2013 and was completed in the first quarter 2015. Our partner is responsible for property management services now that the property has been placed in service.  

One Lakes Edge (The Woodlands, Texas)

One Lakes Edge is an eight-story, Class A, property within Hughes Landing, comprised of 390 multi-family units (averaging 984 square feet per unit), 22,289 square feet of retail and an approximate 750 space parking garage, all situated on three acres of land. Additionally, the third floor of the property features a pool, courtyard and other amenities overlooking Lake Woodlands. The property was substantially completed in the second quarter 2015.

Hospitality

Our hospitality portfolio is comprised of 611 keys and includes the following properties:

Hughes Landing Hotel (Embassy Suites)

The Hughes Landing Hotel is a nine-story, 205-key, full-serviceEmbassy Suites by Hilton hotel located in Hughes Landing. The 172,000 square foot hotel has 3,350 square feet of meeting and event space, a business center, a full service bar and restaurant, a rooftop that overlooks Lake Woodlands,  a 24-hour fitness center and a 93,387 square foot parking garage containing 210 parking spaces. We completed construction and opened the hotel in the fourth quarter 2015.

The Woodlands Resort & Conference Center (The Woodlands, Texas)

The Woodlands Resort & Conference Center (“WRCC”) located approximately two miles south of The Woodlands Town Center consists of 406 keys and 90,000 square feet of meeting space, including 30,000 square feet currently leased by ExxonMobil.

A redevelopment and expansion that began in 2013 and was completed in 2014 included renovation of 222 existing guest rooms and construction of a new wing of 184 guest rooms and suites that replaced 218 rooms that were taken out of service and will eventually be demolished.  The redevelopment also included construction of a 1,000 foot lazy river, a new lobby, the revitalization of 60,000 square feet of meeting and event facilities, and a new free-standing restaurant, Robard’s Steakhouse, which is a 130-seat restaurant located at the resort overlooking the 18th hole of the Panther Trail Golf Courseand is operated by the hotel management.

Other Operating Assets and Investments

Golf Courses at TPC Summerlin and TPC Las Vegas, (participation interest) located in the Summerlin Master Planned Community (Las Vegas, Nevada)

We own a participation interest in TPC Summerlin and TPC Las Vegas. TPC Summerlin is an 18-hole private championship course designed by golf course architect Bobby Weed with player consultant Fuzzy Zoeller. TPC Las Vegas is an 18-hole public championship course designed by Bobby Weed with player consultant Raymond Floyd. These courses represent the only two golf courses in Nevada that are owned and operated by the Professional Golfers’ Association of America (the “PGA”).

We are entitled to receive residual payments from the PGA with respect to the two golf courses through October 31, 2021, the termination date of the agreement with the PGA. We receive 75% of the net operating profits for both courses and 90% of all profits from membership sales at TPC Summerlin until such time as the original investment in the courses of $23.5 million has been recouped, which is projected to occur no sooner than 2018. Once we have received payments from the PGA totaling $23.5 million, we are entitled to receive 20% of all net operating profits from the two courses through the termination date of the agreement. As of December 31, 2015, the remaining amount due onour investment is approximately $3.8 million and the investment has no book value.

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Kewalo Basin Harbor (Honolulu, Hawaii)

Kewalo Basin Harbor is a harbor that leases slips for charter, commercial fishing and recreational vessels. It is located in the heart of Honolulu across Ala Moana Boulevard from Ward Village. In August 2014, we entered into a 35-year lease with a 10-year extension option with the Hawaii Community Development Authority (“HCDA”) to make improvements, manage, and serve as the operator of Kewalo Basin Harbor. We will begin making capital improvementsin late 2016 which will be phased in over multiple years.

Merriweather Post Pavilion (Columbia, Maryland)

Designed by the renowned architect Frank Gehry, Merriweather Post Pavilion and its parking area sit on approximately 40 acres in the heart of Downtown Columbia, Maryland. The facility, which was opened in 1967, has a capacity of more than 15,000 people. In 2013, Rolling Stone magazine named Merriweather Post Pavilion the 4th best amphitheater in America.

Stewart Title of Montgomery County, TX (The Woodlands, Texas)

We own a 50% interest in Stewart Title, a real estate services company located in The Woodlands, which handles a majority of the residential and commercial land sale closings for The Woodlands.

Summerlin Hospital Medical Center (Las Vegas, Nevada)

We have an indirect ownership interest of approximately 5.0% in the Summerlin Hospital Medical Center. Our ownership interest entitles us to a pro rata share of the cumulative undistributed profit in the hospital and we typically receive a distribution one time per year during the first quarter. This medical center is a 454-bed hospital located on a 41-acre medical campus in our Summerlin MPC with 307,820 square feet of medical office space and a 1,247-space parking garage.

Clark County Las Vegas Stadium (formerly Summerlin Las Vegas Baseball Club) (Las Vegas, NV)

We are a 50% partner in a joint venture, Clark County Las Vegas Stadium, LLC, which owns the Las Vegas 51s, a Triple-A baseball team affiliated with the New York Mets. The team is a member of the Pacific Coast League and has been based in Las Vegas for 30 years. Our strategy is to pursue a relocation of the team to a stadium which we would then build in our Summerlin MPC. Discussions with the various interested parties are ongoing, and there can be no assurance that such a stadium will ultimately be built.

The Woodlands Parking Garages (The Woodlands, Texas)

The Woodlands Parking Garages comprise nearly 3,000 parking spaces in two separate parking structures. The Waterway Square Garage has 1,933 spaces and is located in The Woodlands Town Center. The Waterway Square Garage has excess parking capacity for future commercial development, including the Westin Hotel which is under construction. Woodloch Forest garage has approximately 1,000 total spaces with 300 spaces available for future adjacent office development.

Strategic Developments

This section contains a general description of each of the assets contained in our Strategic Developments segment. For a detailed discussion of Strategic Developments that are under construction, including estimated total development costs, completion to date, financing, pre-leasing, pre-sales and other relevant information, please refer to “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We continue to execute our strategic plans for developing several of these assets with construction either under way or pending. The remainder of these assets will require substantial future development to achieve their highest and best use.

Downtown Columbia Redevelopment District (Howard County, Maryland)

The Downtown Columbia market contains 2.7 million square feet of office space, of which we own 1.1 million square feet, located close to shopping, restaurants and entertainment venues. We believe that there is a significant opportunity to redevelop this area over future years.  Existing entitlements obtained in 2010 totaling approximately 13 million square feet for all of

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Downtown Columbia have densities up to 5,500 residential units, 4.3 million square feet of commercial office space, 1.3 million square feet of retail space and 640 hotel rooms. The majority of these entitlements exist on land, surface parking lots and other assets controlled by us. These entitlements have no expiration date under Maryland law.

Pursuant to a 2010 development agreement with GGP, we have a preferred residential and office development covenant that provides us the right of first offer for new development densities of residential and office within the Columbia Mall Ring Road. This covenant expires in 2030. The development agreement contains the key terms, conditions, responsibilities and obligations with respect to future development of this area within the greater Downtown Columbia Redevelopment District.

In 2015, we completed construction of The Metropolitan Downtown Columbia, a Class A multi-family building, which was the first building completed pursuant to the Downtown Columbia entitlements.

Merriweather District

Within the Downtown Columbia Redevelopment District is The Merriweather District, which contains 35 developable acres owned by us (including three acres currently under development) around the Merriweather Post Pavilion, an outdoor amphitheater and concert venue located south of the Columbia Mall. During the first quarter 2015 we received county approval of the final development plan (“FDP”) which allows development density up to 4.9 million square feet, to include office, residential and retail. In the fourth quarter 2015 we received county approval of the first site development plan (“SDP”) to be followed by building permits for the construction of the first office building in the Merriweather District, named One Merriweather. The approval also permits the development of a parking garage and another office building.

One Merriweather – One Merriweather will be an approximate 199,000 square foot, eight-story multi-tenant Class A office building, which includes 12,500 leasable square feet of retail and restaurant space situated on 1.3 acres of land in the Merriweather District. Adjacent to the building on 1.6 acres will be a nine-story parking garage which will contain approximately 1,129 spaces.  We began construction during the fourth quarter 2015 and anticipate completion of the project during the fourth quarter 2016.

Parcel C

In 2013, we entered into a joint venture agreement with Kettler to construct a 437-unit, Class A multi-family building with 29,000 square feet of ground floor retail. We contributed approximately five acres of land valued at $23.4 million and having an estimated book value of $4.0 million in exchange for a 50% interest in the joint venture. Construction began in January 2016.

Lakeland Village Center (Bridgeland, Texas)

Lakeland Village will be an 83,600 square foot traditional neighborhood retail/office center situated on eight acres within our Bridgeland MPC. It will be the community’s first village center. CVS Pharmacy will serve as the anchor tenant and the center will consist of ground-level retail, restaurant and professional office space organized within nine buildings, all totaling approximately 68,900 square feet.  We began construction in the second quarter 2015 and expect to complete the project in the second quarter 2016.

Constellation (formerly known as Summerlin Apartments) (Las Vegas, Nevada)

On January 24, 2014, we entered into a joint venture with a national multi-family real estate developer, The Calida Group (“Calida”), to construct, own and operate a 124-unit gated luxury apartment complex to be called Constellation located in Downtown Summerlin’s northeast corner, which we believe is unique to the area. We contributed a 4.5-acre parcel of land with an agreed value of $3.2 million in exchange for a 50% interest in the venture in February 2015 and our partner contributed cash for their 50% interest. Construction commenced in February 2015 with the first units being available for rent in the second quarter 2016 and project completed by the end of 2016.

The Outlet Collection at Elk Grove (Elk Grove, California)

The Outlet Collection at Elk Grove, formerly known as Elk Grove Promenade, was originally planned as a 1.1 million leasable square foot outdoor shopping center on approximately 100 acres. Located approximately 17 miles southeast of Sacramento,

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California, the location affords easy access and visibility from State Highway 99 at Grant Line Road. In October 2014, we received unanimous approval from the Elk Grove City Council for the development of The Outlet Collection at Elk Grove. The Outlet Collection at Elk Grove will be an upscale complex constructed on approximately 60 acres with more than 100 stores as well as numerous dining options, a 14-screen movie theater and public gathering spaces with best in class amenities. The first phase consists of reconfiguring the existing site and buildings to allow for up to 597,000 square feet of dining, shopping and entertainment. Commencement of construction is dependent on meeting internal pre-leasing hurdles for the project. Future phases will be constructed on the remaining 40 acres with a total potential development density that is now to up 1.2 million square feet, inclusive of the 597,000 square feet contemplated in the first phase.

The Woodlands (The Woodlands, Texas)

Alden Bridge Self-Storage Facilities

The Alden Bridge Self-Storage Facilities represent our first developments of this commercial property type and include a combined 1,320 units located on over seven acres.

HHC 242 Self-Storage Facility will be located on 4.0 acres in Alden Bridge, a neighborhood within The Woodlands, and will comprise670 units withinapproximately 82,000 square feet. We began construction during the third quarter 2015 and expect completion during the fourth quarter 2016.

HHC 2978 Self-Storage Facility will be located on 3.1 acres in Alden Bridge and will comprise650 units withinapproximately 79,000 square feet. We began construction in January 2016 and expect completion during the first quarter 2017.

Three Hughes Landing

Three Hughes Landing will be a 321,000 square foot, 12-story Class A office building with an adjacent parking garage containing approximately 1,062 spaces in Hughes Landing situated on four acres of land. We began construction during the third quarter 2014 and have completed the core and shell of the building. Construction of tenant improvements will be subject to future leasing activity.

Waterway Square Hotel (Westin)

The Waterway Square Hotel will be a 302-room Westin-branded hotel that we will own and manage. The hotel will contain more than 15,000 square feet of meeting space, an outdoor pool, WestinWORKOUT® studio, business center and all the brand’s signature amenities overlooking The Woodlands Waterway in Waterway Square. It will also feature a 150-seat restaurant, a lobby bar and a second level pool deck and bar, with direct access to The Fountains at Waterway Square. We began construction during the second quarter 2014 and expect completion of the project by the first quarter 2016.

Ward Village (Honolulu, Hawaii)

Ward Village is becoming a globally recognized urban master planned community offering unique retail experiences, exceptional residences and workforce housing set among dynamic open spaces and pedestrian friendly streets. Our master plan development agreement with the HCDA allows for up to 9.3 million square feet, including up to 7.6 million square feet of residential (approximately 4,000 condominium units which are initially estimated to average approximately 1,500 square feet per unit), and approximately 1.7 million square feet of retail, office, commercial and other uses.  Full build-out is estimated to occur over 12-15 years but will ultimately depend on market absorption and many other factors that are difficult to estimate. Ward Village has received LEED Neighborhood Development (LEED-ND) Platinum certification, making the master plan the nation’s largest LEED-ND Platinum certified project and the only LEED-ND Platinum project in the state of Hawaii. The LEED rating system is the foremost program for buildings, homes, and communities that are designed, constructed, maintained and operated for improved environmental and human health performance. LEED certification is important to many buyers and users of such facilities because it is a third party certification regarding the facility’s water efficiency, energy saving capability, indoor environmental quality, carbon dioxide emissions and resource preservation.

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IBM Building

The renovation of the IBM Building was completed in the first quarter 2014 and serves as a world class information center and sales gallery for the entire Ward Village Master Plan development. The sales center dedicates a section to telling the story of the history of the land, while another section showcases our vision for Ward Village.

Waiea

The first market rate tower, Waiea, meaning “water of life” in Hawaiian, is being developed on Ala Moana Boulevard, and will consist of 174 market rate condominium units for sale, six levels of parking and approximately 8,000 square feet of new retail space. The condominiums will consist of one, two and three-bedroom units, villas and penthouses ranging from approximately 1,100 to 10,000 square feet. Construction commenced in the second quarter 2014 with projected completion by the end of 2016.

Anaha

The second market rate tower, Anaha, meaning “reflection of light,” is located on Auahi Street and will consist of 317 market rate condominium units for sale, six levels of parking and approximately 16,000 square feet of new retail space. The condominiums will consist of studios, one, two and three-bedroom units, townhomes and penthouses ranging from approximately 450 to 6,500 square feet. Construction commenced in the fourth quarter 2014 with projected completion in mid-2017.

Ae‘o (formerly known as Ward Block M) 

The third market rate tower, Ae‘owill be a mixed-use residential tower behind the Ward Entertainment Center at the corner of Queen Street and Kamake’e Street. Ae‘o will include approximately 466 market rate units for sale,  a 55,000 square foot grocery market, and approximately 12,000 square feet of additional retail.  In response to market demand, this tower was designed with unit sizes averaging 836 square feet, smaller than the average 1,687 square feet unit sizes for Waiea and Anaha. Construction commenced in February 2016, with projected completion in 2018.

Ke Kilohana (formerly known as Ward Workforce Tower)

The workforce residential tower, Ke Kilohana, is planned for a site on Ward Avenue.  It will consist of 424 residential units, 375 of which will be offered to local Hawaiians who meet certain maximum income and net worth requirements at prices lower than market. It will also include six levels of parking and a  22,000 square feet of new retail space. We plan to commence sales in the first half of 2016 and commence construction in October 2016.

Gateway Towers

We received approval from the HCDA for the development of the Gateway Towers in 2015.The Gateway Towers will be located on Ala Moana Boulevard, and will consist of two residential towers with approximately 236 total units and 18,000 square feet of total retail. Additionally, the development plans include a one-acre park that will serve as the start of a four-acre village green which will open up a pedestrian connection from the heart of Ward Village to the center of Kewalo Basin Harbor that is leased by us.  Construction of the two towers will be subject to obtaining acceptable pre-sales and financing for the project.

Other Development Projects

ONE Ala Moana Tower Condominiums (Honolulu, Hawaii)

In October 2011, we and an entity jointly owned by two local developers, Kobayashi Group and The MacNaughton Group, formed a 50/50 joint venture to develop a luxury condominium tower above an existing parking structure at Ala Moana Center.  Construction of the 23-story, 206-unit tower consisting of one, two and three-bedroom units ranging from 760 to 4,100 square feet commenced in April 2013 and was completed and sold-out by early 2015.

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Alameda Plaza (Pocatello, Idaho)

Alameda Plaza is a 6.9-acre site located in Pocatello, Idaho at the intersection of Yellowstone Park Highway and Alameda Road.

AllenTowne (Allen, Texas)

AllenTowne consists of 238 acres located at the high-traffic intersection of Highway 121 and U.S. Highway 75 in Allen, Texas, 27 miles northeast of downtown Dallas. As market conditions evolve and opportunities develop, we will further evaluate how to best position the property.

Bridges at Mint Hill (Charlotte, North Carolina)

We own a 90.5% interest in a joint venture to develop a shopping center on property located southeast of Charlotte, North Carolina. The parcel is approximately 210 acres consisting of 120 developable acres and is zoned for approximately 1.3 million square feet of retail, hotel and commercial development.

Century Plaza (Birmingham, Alabama)

Century Plaza is located on the southeastern side of Birmingham, Alabama, on U.S. Route 78 (Crestwood Blvd.) near Interstate 20. The site consists of approximately 59 acres withapproximately 740,000 square feet of vacant GLA.

Circle T Ranch and Circle T Power Center (Westlake, Texas)

We are a 50% partner in a joint venture with Hillwood Properties, a local developer. The property is located at the intersection of Texas highways 114 and 170, which is 20 miles north of downtown Fort Worth, in Westlake, Texas. The Circle T Ranch parcel contains 128 acres while the Circle T Power Center parcel contains 151 acres.

Cottonwood Mall (Holladay, Utah)

Located 7.5 miles from downtown Salt Lake City, in the city of Holladay, Utah, Cottonwood Mall is a unique infill development opportunity. This redevelopment site is 54 acres and consists of a stand-alone department store. The project is entitled for 575,000 square feet of retail, 195,000 square feet of office and 614 residential units.

Fashion Show Air Rights (Las Vegas, Nevada)

We entered into a binding set of core principles with GGP pursuant to which we will have the right to acquire an 80% ownership interest in the air rights above the Fashion Show Mall located on the Las Vegas Strip for nominal consideration. This right is contingent upon the satisfaction of a number of conditions and does not become effective unless the existing loans of the Fashion Show Mall and The Shoppes at the Palazzo and related guarantees are settled in full by GGP.

Kendall Town Center (Kendall, Florida)

We own 70 acres that are entitled for 621,300 square feet of retail, 60,000 square feet of office space and a 50,000 square foot community center located within Kendall Town Center. Kendall Town Center is a 141-acre mixed-use site located at the intersection of North Kendall Drive and SW 158th, approximately 20 miles southwest of downtown Miami. Also included within Kendall Town Center are a 31-acre parcel owned by Baptist Hospital, which contains a 282,000 square foot hospital and a 62,000 square foot medical office building, a future 120-room hotel with ancillary office and retail space and a senior housing development on a 23-acre site. Land totaling 14 acres has also been deeded to the property owners association and three acres have been deeded to Miami-Dade County. We are developing a mixed-use program and site plan.

Lakemoor (Volo) Land (Lakemoor, Illinois)

This 40-acre vacant land parcel is located on Route 12 which is 50 miles north of Chicago in a growing suburb. The project has no utilities in place and is currently designated as farmland.

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Maui Ranch Land (Maui, Hawaii)

This site has nominal value and consists of two, non-adjacent, ten-acre undeveloped land-locked parcels located near the Kula Forest Preserve on the island of Maui, Hawaii. The land currently is zoned for native vegetation. There is no ground right-of-way access to the land and there currently is no infrastructure or utilities in the surrounding area.

Seaport District Assemblage (New York, New York)

The Seaport District Assemblage is comprised of a 48,000 square foot commercial building on a 15,744 square foot lot with certain air rights having total residential and commercial development rights of 621,651 square feet. During the first quarter 2015, we acquired a 58,000 square foot commercial building and air rights having total residential and commercial development rights of 196,133 square feet. The acquisitions, combined with adjacent property acquisitions in 2014, create a 42,694 square foot lot with 817,784 square feet of available development rights. These propertiesare collectively referred to as the Seaport District Assemblage and are located in close proximity to our South Street Seaport property. Please refer to “Item 1. – Overview, Recent Significant Transactions” for more information on the Assemblage.

West Windsor (West Windsor, NewJersey)

West Windsor is a former Wyeth Agricultural Research & Development Campus on Quakerbridge Road and U.S. Route One near Princeton, New Jersey. The land consists of 658 total acres comprised of two large parcels that are bisected by Clarksville Meadows Road and a third smaller parcel. Zoning, environmental and other development factors are currently being evaluated in conjunction with a development feasibility study of the site.

Competition

The nature and extent of our competition depends on the type of property involved. With respect to our master planned communities segment, we compete with other landholders and residential and commercial property developers in the development of properties within Las Vegas, Nevada; Houston, Texas and the Baltimore/Washington, D.C. markets. Significant factors which we believe allow us to compete effectively in this business include:

· the size and scope of our master planned communities;

· years of experience serving the industry;

· the recreational and cultural amenities available within the communities;

· the commercial centers in the communities, including the retail properties that we own and/or operate or may develop;

· our relationships with homebuilders;

· our level of debt relative to total assets; and

· the proximity of our developments to major metropolitan areas.

With respect to our Operating Assets segment, we primarily compete for retail and office tenants, and to a lesser extent, residential tenants. We believe the principal factors that retailers consider in making their leasing decisions include: (1) consumer demographics; (2) age, quality, design and location of properties; (3) neighboring real estate projects that have been developed by our predecessors or that we, in the future, may develop; (4) diversity of retailers and anchor tenants at shopping center locations; (5) management and operational expertise; and (6) rental rates.

With respect to our Strategic Developments segment, our direct competitors include other commercial property developers, retail mall development and operating companies, residential condominium developers and other owners of commercial real estate that engage in similar businesses.

Environmental Matters

Under various federal, state and local laws and regulations, an owner of real estate is liable for the costs of removal or remediation of certain hazardous or toxic substances on such real estate. These laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The costs of remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to promptly remediate such substances, may adversely affect the owner’s ability to sell such real estate or to obtain financing using such real estate as collateral.

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Substantially all of our properties have been subject to Phase I environmental assessments, which are intended to evaluate the environmental condition of the surveyed and surrounding properties. As of December 31, 2015, the assessments have not revealed any known environmental liability that we believe would have a material adverse effect on our overall business, financial condition or results of operations. Nevertheless, it is possible that these assessments do not reveal all environmental liabilities or that the conditions have changed since the assessments were prepared (typically at the time the property was purchased or encumbered with debt). Moreover, no assurances can be given that future laws, ordinances or regulations will not impose any material environmental liability on us, or the current environmental condition of our properties will not be adversely affected by tenants and occupants of the properties, by the condition of properties in the vicinity of our properties (such as the presence on such properties of underground storage tanks) or by third parties unrelated to us.

Future development opportunities may require additional capital and other expenditures to comply with federal, state and local statutes and regulations relating to the protection of the environment. In addition, there is a risk when redeveloping sites, that we might encounter previously unknown issues that require remediation or residual contamination warranting special handling or disposal, which could affect the speed of redevelopment. Where redevelopment involves renovating or demolishing existing facilities, we may be required to undertake abatement and/or the removal and disposal of building materials or other remediation or cleanup activities that contain hazardous materials. We cannot predict with any certainty the magnitude of any such expenditures or the long-range effect, if any, on our operations. Compliance with such laws has not had a material adverse effect on our current or past operating results or competitive position, but could have such an effect on our operating results or competitive position in the future.

Employees

As of December 31, 2015, we had approximately 1,000 employees.

Available Information

Our website address is www.howardhughes.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K are available and may be accessed free of charge through the Investors section of our website under the SEC Filings subsection, as soon as reasonably practicable after those documents are filed with, or furnished to, the SEC. Also available through our Investors section of our website are reports filed by our directors and executive officers on Forms 3, 4 and 5, and amendments to those reports. Our website and included or linked information on the website are not intended to be incorporated into this Annual Report on Form 10-K.

ITEM 1A. RISK FACTORS

The risks and uncertainties described below are those that we deem currently to be material, and do not represent all of the risks that we face. Additional risks and uncertainties not presently known to us or that we currently do not consider material may in the future become material and impair our business operations. If any of the following risks actually occur, our business could be materially harmed, and our financial condition and results of operations could be materially and adversely affected. Our business, prospects, financial condition or results of operations could be materially and adversely affected by the following:

Risks Related to our Business

Our performance is subject to risks associated with the real estate industry.

Our economic performance and the value of our properties are subject to developments that affect real estate generally and that are specific to our properties. If our properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow will be adversely affected. The following factors, among others, may adversely affect the income generated by our properties:

· downturns in the economic conditions at the national, regional or local levels, particularly a decline in one or more of our primary markets;

· competition from other master planned communities, retail properties, office properties or other commercial space;

· our ability to obtain substantial amounts of operating and development capital;

· increases in interest rates;

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· the availability of financing, including refinancing or extensions of existing mortgage debt, on acceptable terms, or at all;

· increased operating costs, including insurance expense, utilities, real estate taxes, state and local taxes and heightened security costs;

· fluctuating condominium prices and absorption rates;

· ability to lease new or redeveloped space;

· ability to re-let space as leases expire on similar or more favorable terms than the terms of the expiring lease;

· vacancies and changes in rental rates;

· declines in the financial condition of our tenants and our ability to collect rents from our tenants;

· declines in consumer confidence and spending that adversely affect our revenue from our retail properties;

· decrease in traffic to our retail properties due to the convenience of other retailing options such as the internet;

· natural disasters or terrorist acts which may result in uninsured or underinsured losses;

· adoption of more restrictive laws and government regulations, including more restrictive zoning, land use or environmental regulations and an increase in real estate taxes; and

· opposition from local community or political groups with respect to the development, construction or operations at a particular site.

Continued lower oil prices compared to average oil prices over the past several years have had, and may continue to have, a negative effect on the future economic growth of, and demand for our properties in, Texas where we have asset concentrations that are highly dependent on the energy sector.

In addition to general, regional and national economic conditions, our operating results are impacted by the economic conditions of the specific markets in which we have concentrations of properties. In certain regions where we have asset concentrations, such as the Houston, Texas region (home to a large number of energy companies), economic activity, growth and employment opportunities depend in part on the energy sector.

The Houston area has experienced a slowdown in economic growth due to low oil prices, which have decreased by over 70% since mid-2014.  In the event that oil pricesremain depressed for a sustained period, or decline further, demand may continue to decrease for housing and commercial space in The Woodlands, Bridgeland and The Woodlands Hills.  If we are unable to sell or lease our residential and commercial property in or near the Houston-area, or if we are unable to recover or replace revenue from a tenant that is no longer a going-concern, it could materially and adversely impact our business, financial condition and results of operations.

We are dependent on certain housing markets.

The housing market and the demand from builders for lots vary depending on location.  The success of our master planned communities business is heavily dependent on local housing markets in Las Vegas, Nevada and Houston, Texas, which in turn are dependent on the health and growth of the economies and availability of credit in these regions.

We may be unable to develop and expand our properties.

Our business objective includes the development and redevelopment of our properties, which we may be unable to do if we do not have or cannot obtain sufficient capital or government incentives, such as tax increment financing, to proceed with planned development, redevelopment or expansion activities. We may be unable to obtain anchor store, mortgage lender and property partner approvals that are required for any such development, redevelopment or expansion. We may abandon redevelopment or expansion activities already under way that we are unable to complete, which may result in charge-offs of costs previously capitalized. In addition, if redevelopment, expansion or reinvestment projects are unsuccessful, the investment in such projects may not be fully recoverable from future operations or sale resulting in impairment charges.

We may not be able to obtain permits required for development of our properties.

In the ordinary course of business, we are required to seek governmental permits for the development of our properties. Obtaining the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and costly undertakings.  Specifically, our land holdings at Bridgeland contain wetlands, some of which may be prohibited from development by law without the proper permits. Our inability to obtain such permits would make it more difficult to develop and sell residential or commercial lots at Bridgeland.

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We are exposed to risks associated with the development, redevelopment or construction of our properties.

Our development or redevelopment activities entail risks that could adversely impact our results of operations, cash flows and financial condition, including:

· increased construction costs for a project that exceeded our original estimates due to increases in materials, labor or other costs, which could make completion of the project less profitable because market rents may not increase sufficiently to compensate for the increased construction costs;

· construction delays or cost overruns, which may increase project development costs;

· claims for construction defects after a property has been developed;

· poor performance or nonperformance by any of our joint venture partners or other third parties on whom we rely;

· health and safety incidents and site accidents;

· compliance with building codes and other local regulations; and

· an inability to secure tenants necessary to support commercial projects or obtain construction financing for the development or redevelopment of our properties.

Development of properties entails a lengthy, uncertain and costly entitlement process.

Approval to develop real property entails an extensive entitlement process involving multiple and overlapping regulatory jurisdictions and often requires discretionary action by local governments. This process is often political and uncertain. Real estate projects must generally comply with local land development regulations and may need to comply with state and federal regulations. In addition, our competitors and local residents may challenge our efforts to obtain entitlements and permits for the development of properties. The process to comply with these regulations is usually lengthy and costly, may not result in the approvals we seek, and can be expected to materially affect our development activities.

Specifically, our redevelopment plans for the Seaport District are subject to a Uniform Land Use Review Procedure (“ULURP”) that requires approval by the New York City Council, the New York City Landmarks Preservation Commission and various other government agencies.  Our inability to obtain the ULURP could negatively affect our future redevelopment plans for the Seaport District. We had previously obtained a ULURP for the redevelopment of Pier 17.

Our development, construction and sale of condominiums are subject to state regulations and may be subject to claims from the condominium owners association at each project.

A portion of our business is dedicated to the formation and sale of condominiums. Condominiums are generally regulated by an agency of the state in which they are located or where the condominiums are marketed to be sold. In connection with our development of condominiums and offering of condominium units for sale, we must submit regulatory filings to various state agencies and engage in an entitlement process by which real property owned under one title is converted into individual units. Any responses or comments on our condominium filings may delay our ability to sell condominiums in certain states and other jurisdictions. Further, we will be required to transfer control of a condominium association's board of directors once we trigger one of several statutory thresholds, with the most likely triggers being tied to the sale of not less than a majority of units to third-party owners. Transfer of control can result in claims with respect to deficiencies in operating funds and reserves, constructions defects and other condominium-related matters by the condominium association and/or third-party condominium unit owners. Any material claims in these areas could negatively affect our reputation in condominium development and ultimately have a material adverse effect on our operations as a whole.

Purchasers may default on their obligations to purchase condominiums.

We enter into contracts for the sale of condominium units that generally provide for the payment of a substantial portion of the sales price at closing when a condominium unit is ready to be delivered and occupied. A significant amount of time may pass between the execution of a contract for the purchase of a condominium unit and the closing thereof. Defaults by purchasers to pay any remaining portions of the sales prices for condominium units under contract may have an adverse effect on our financial condition and results of operations.

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Our Master Planned Communities segment is highly dependent on homebuilders.

We are highly dependent on our relationships with homebuilders to purchase lots at our master planned communities. Our business will be adversely affected if homebuilders do not view our master planned communities as desirable locations for homebuilding operations. Also, some homebuilders may be unwilling or unable to close on previously committed lot purchases. As a result, we may sell fewer lots and may have lower sales revenues, which could have an adverse effect on our financial position and results of operations.

We are subject to the business, financial and operating risks common to the hotel business.

We own and manage three hotels - The Woodlands Resort and Conference Center, The WestinThe Woodlands andHughes Landing Embassy Suites.  Decreases in the demand for transient rooms and related lodging services, including a reduction in business or leisure travel and spending, and cancellations, deferrals or renegotiations of group business, such as industry conventions, could materially and adversely impact our business, financial condition and results of operations.

Our results of operations are subject to significant fluctuation by various factors that are beyond our control.

Our results of operations are subject to significant fluctuations by various factors that are beyond our control. Fluctuations in these factors may decrease or eliminate the income generated by a property, and include:

· the regional and local economy, which may be negatively impacted by material relocation by residents, industry slowdowns, plant closings, increased unemployment, lack of availability of consumer credit, levels of consumer debt, housing market conditions, adverse weather conditions, natural disasters and other factors;

· strength of the residential housing and condominium markets;

· local real estate conditions, such as an oversupply of, or a reduction in demand for, retail space or retail goods and the availability and creditworthiness of current and prospective tenants;

· perceptions by retailers or shoppers of the safety, convenience and attractiveness of the retail property;

· the convenience and quality of competing retail properties and other retailing options such as the internet;

· our ability to lease space, collect rent and attract new tenants;

· the decline of the reputation or perceived quality of the brands of our hotels; and

· tenant rental rates, which may decline for a variety of reasons, including the impact of co-tenancy provisions in lease agreements with certain tenants.

A decline in our results of operations could have a negative impact on the trading price of our common stock.

Our substantial indebtedness could adversely affect our business, prospects, financial condition or results of operations and prevent us from fulfilling our obligations under the notes.

We have a significant amount of indebtedness. On October 2, 2013, we issued $750.0 million aggregate principal amount of our 6.875% Senior Notes due 2021 (the “Senior Notes”) and received net cash proceeds of $739.6 million. As of December 31, 2015, our total consolidated debt was approximately $2.4 billion (excluding an undrawn balance of $32.2 million under our revolving facilities) of which $906.5 million was recourse to the Company. In addition, we have $11.9 million of recourse guarantees associated with undrawn construction financing commitments as of December 31, 2015. As of December 31, 2015, our share of the debt of our Real Estate and Other Affiliates was $64.8 million based upon our economic ownership. All of the debt of our Real Estate and Other Affiliates is non-recourse to us.

Subject to the limits contained in the indenture governing the Senior Notes and any limits under our other debt agreements, we may be able to incur substantial additional indebtedness from time to time, including project indebtedness at our subsidiaries. If we do so, the risks related to our level of indebtedness could intensify. Specifically, a high level of indebtedness could have important consequences to holders of the notes and equity holders, including:

· making it more difficult for us to satisfy our obligations with respect to the Senior Notes and our other debt;

· limiting our ability to obtain additional financing to fund future working capital, capital expenditures, debt service requirements, execution of our business strategy or other general corporate requirements, or requiring us to make non-strategic divestitures, particularly when the availability of financing in the capital markets is limited;

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· requiring a substantial portion of our cash flow to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flow available for working capital, capital expenditures, acquisitions, dividends and other general corporate purposes;

· increasing our vulnerability to general adverse economic and industry conditions, including increases in interest rates, particularly given that certain indebtedness bears interest at variable rates;

· limiting our ability to capitalize on business opportunities, reinvest in and develop properties, and to react to competitive pressures and adverse changes in government regulations;

· placing us at a disadvantage compared to other, less leveraged competitors;

· limiting our ability, or increasing the costs, to refinance indebtedness; and

· resulting in an event of default if we fail to satisfy our obligations under the Senior Notes or our other debt or fail to comply with the financial and other restrictive covenants contained in the indenture governing the Senior Notes or our other debt, which event of default could result in the Senior Notes and all of our debt becoming immediately due and payable and, in the case of our secured debt, could permit the lenders to foreclose on our assets securing such debt.

The indenture governing our Senior Notes contains, and our other debt agreements contain, restrictions which may limit our ability to operate our business.

The indenture governing our Senior Notes contains, and some of our other debt agreements contain, certain restrictions. These restrictions limit our ability or the ability of certain of our subsidiaries to, among other things:

· pay dividends on, redeem or repurchase capital stock or make other restricted payments;

· make investments;

· incur indebtedness or issue certain equity;

· create certain liens;

· incur obligations that restrict the ability of our subsidiaries to make dividend or other payments to us;

· consolidate, merge or transfer all or substantially all of our assets;

· enter into transactions with our affiliates; and

· create or designate unrestricted subsidiaries.

Additionally, certain of our debt agreements also contain various restrictive covenants, including minimum net worth requirements, maximum payout ratios on distributions, minimum debt yield ratios, minimum fixed charge coverage ratios, minimum interest coverage ratio and maximum leverage ratios.

The restrictions under the indenture and or other debt agreements could limit our ability to finance our future operations or capital needs, make acquisitions or pursue available business opportunities.

We may be required to take action to reduce our debt or act in a manner contrary to our business objectives to meet such ratios and satisfy the covenants in our debt agreements. Events beyond our control, including changes in economic and business conditions in the markets in which we operate, may affect our ability to do so. We may not be able to meet the ratios or satisfy the covenants in our debt agreements, and we cannot assure you that our lenders will waive any failure to do so. A breach of any of the covenants in, or our inability to maintain the required financial ratios under, our debt agreements could result in a default under such debt agreements, which could lead to that debt becoming immediately due and payable and, if such debt is secured, foreclosure on our assets that secure such debt. A breach of any of the covenants in, or our inability to maintain the required financial ratios under, our debt agreements also would prevent us from borrowing additional money under such agreements that include revolving lending facilities. A default under any of our debt agreements could, in turn, result in defaults under other obligations and result in other creditors accelerating the payment of other obligations and foreclosing on assets securing such obligations, if any.

Any such defaults could materially impair our financial condition and liquidity. In addition, if the lenders under any of our debt agreements or other obligations accelerate the maturity of those obligations, we cannot assure you that we will have sufficient assets to satisfy our obligations under the notes or our other debt. 

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We are subject to risks associated with hedging arrangements.

We enter into interest rate swap agreements and other interest rate hedging contracts, including caps and cash settled forward starting swaps, to mitigate or reduce our exposure to interest rate volatility or to satisfy lender requirements.  These agreements expose us to additional risks, including a risk that counterparties will not perform.There also could be significant costs and cash requirements involved to fulfill our obligations under a hedging agreement.  In addition, our hedging activities may not have the desired beneficial impact on our results of operations.

Significant competition could have an adverse effect on our business.

The nature and extent of the competition we face depends on the type of property. With respect to our master planned communities, we compete with other landholders and residential and commercial property developers in the development of properties within the Las Vegas, Nevada; Houston, Texas; and Baltimore/Washington, D.C. markets. A number of residential and commercial developers, some with greater financial and other resources, compete with us in seeking resources for development and prospective purchasers and tenants. Competition from other real estate developers may adversely affect our ability to attract purchasers and sell residential and commercial real estate, sell undeveloped rural land, attract and retain experienced real estate development personnel, or obtain construction materials and labor. These competitive conditions can make it difficult to sell land at desirable prices and can adversely affect our results of operations and financial condition.

There are numerous shopping facilities that compete with our operating retail properties in attracting retailers to lease space. In addition, retailers at these properties face continued competition from other retailers, including retailers at other regional shopping centers, outlet malls and other discount shopping centers, discount shopping clubs, catalog companies, internet sales and telemarketing. Competition of this type could adversely affect our results of operations and financial condition.

In addition, we will compete with other major real estate investors with significant capital for attractive investment and development opportunities. These competitors include REITs and private institutional investors.

Our business model includes entering into joint venture arrangements with strategic partners. This model may not be successful and our business could be adversely affected if we are not able to successfully attract desirable strategic partners or complete agreements with strategic partners or if our strategic partners fail to satisfy their obligations to the joint venture.

We currently have and intend to enter into future joint venture partnerships. These joint venture partners may bring local market knowledge and relationships, development experience, industry expertise, financial resources, financing capabilities, brand recognition and credibility or other competitive assets. In the future, we may not have sufficient resources, experience and/or skills to locate desirable partners. We also may not be able to attract partners who want to conduct business in the locations where our properties are located, and who have the assets, reputation or other characteristics that would optimize our development opportunities.

While we generally participate in making decisions for our jointly owned properties and assets, we might not always have the same objectives as the partner in relation to a particular asset, and we might not be able to formally resolve any issues that arise. In addition, actions by a partner may subject property owned by the joint venture to liabilities greater than those contemplated by the joint venture agreements, be contrary to our instructions or requests or result in adverse consequences. We cannot control the ultimate outcome of any decision made, which may be detrimental to our interests.

The bankruptcy of one of the other investors in any of our joint ventures could materially and adversely affect the relevant property or properties. If this occurred, we would be precluded from taking some actions affecting the estate of the other investor without prior court approval which would, in most cases, entail prior notice to other parties and a hearing. At a minimum, the requirement to obtain court approval may delay the actions we would or might want to take. If the relevant joint venture through which we have invested in a property has incurred recourse obligations, the discharge in bankruptcy of one of the other investors might result in our ultimate liability for a greater portion of those obligations than would otherwise be required.

We may not realize the value of our tax assets.

Certain provisions of the Internal Revenue Code could limit our ability to fully utilize the tax assets if we were to experience a “change of control”. If such an event were to occur, the cash flow benefits we might otherwise have received would be

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eliminated. We currently have approximately $140.4million of federal net operating loss carryforwards, $25.0 million of which are subject to the separate return year limitation rules. A change of control could limit our ability to use our net operating losses prior to their expiration. 

Some of our directors are involved in other businesses including real estate activities and public and/or private investments and, therefore, may have competing or conflicting interests with us.

Certain of our directors have and may in the future have interests in other real estate business activities, and may have control or influence over these activities or may serve as investment advisors, directors or officers. These interests and activities, and any duties to third parties arising from such interests and activities, could divert the attention of such directors from our operations. Additionally, certain of our directors are engaged in investment and other activities in which they may learn of real estate and other related opportunities in their non-director capacities. Our Code of Business Conduct and Ethics applicable to our directors expressly provides, as permitted by Section 122(17) of the Delaware General Corporation Law (the “DGCL”), that our non-employee directors are not obligated to limit their interests or activities in their non-director capacities or to notify us of any opportunities that may arise in connection therewith, even if the opportunities are complementary to, or in competition with, our businesses. Accordingly, we have no expectation that we will be able to learn of or participate in such opportunities. If any potential business opportunity is expressly presented to a director exclusively in his or her director capacity, the director will not be permitted to pursue the opportunity, directly or indirectly through a controlled affiliate in which the director has an ownership interest, without the approval of the independent members of our board of directors.

Some of our properties are subject to potential natural or other disasters.

A number of our properties are located in areas which are subject to natural or other disasters, including hurricanes, floods, earthquakes and oil spills. Some of our properties, including Ward Village, South Street Seaport and the Outlet Collection at Riverwalk are located in coastal regions, and could be affected by increases in sea levels, the frequency or severity of hurricanes and tropical storms, or environmental disasters, whether such events are caused by global climate changes or other factors.

Some potential losses are not insured.

We carry comprehensive liability, fire, flood, earthquake, terrorism, extended coverage and rental loss insurance on all of our properties. We believe the policy specifications and insured limits of these policies are adequate and appropriate. There are some types of losses, including lease and other contract claims, which generally are not insured. If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital invested in a property, as well as the anticipated future revenue from the property. If this happens, we might remain obligated for any mortgage debt or other financial obligations related to the property.

Possible terrorist activity or other acts of violence could adversely affect our financial condition and results of operations.

Future terrorist attacks in the United States or other acts of violence may result in declining economic activity, which could harm the demand for goods and services offered by tenants and the value of our properties and might adversely affect the value of an investment in our securities. Such a resulting decrease in retail demand could make it difficult to renew or re-lease properties at lease rates equal to or above historical rates. Terrorist activities or violence also could directly affect the value of our properties through damage, destruction or loss, and the availability of insurance for such acts, or of insurance generally, might be lower or cost more, which could increase our operating expenses and adversely affect our financial condition and results of operations. To the extent that tenants are affected by future attacks, their businesses similarly could be adversely affected, including their ability to continue to meet obligations under their existing leases. These acts might erode business and consumer confidence and spending and might result in increased volatility in national and international financial markets and economies. Any one of these events might decrease demand for real estate, decrease or delay the occupancy of new or redeveloped properties, and limit access to capital or increase the cost of capital.

We may be subject to potential costs to comply with environmental laws.

Future development opportunities may require additional capital and other expenditures to comply with laws and regulations relating to the protection of the environment. Under various federal, state or local laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property and may be held liable to a governmental entity or to third parties for property damage or personal injuries and

26

for investigation and clean-up costs incurred by the parties in connection with the contamination. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of the hazardous or toxic substances. The presence of contamination or the failure to remediate contamination may adversely affect the owner's ability to sell or lease real estate or to borrow using the real estate as collateral. Other federal, state and local laws, ordinances and regulations require abatement or removal of asbestos-containing materials in the event of demolition or certain renovations or remodeling, the cost of which may be substantial for certain redevelopments, and also govern emissions of and exposure to asbestos fibers in the air. Federal and state laws also regulate the operation and removal of underground storage tanks. In connection with our ownership, operation and management of certain properties, we could be held liable for the costs of remedial action with respect to these regulated substances or tanks or related claims.

We cannot predict with any certainty the magnitude of any expenditures relating to the environmental compliance or the long-range effect, if any, on our operations. Compliance with such laws has not had a material adverse effect on our operating results or competitive position in the past, but could have such an effect on our operating results and competitive position in the future.

There is a risk of investor influence over our company that may be adverse to our best interests and those of our other stockholders.

Pershing Square Capital Management, L.P. (“Pershing Square”) beneficially owns 9.0% of our outstanding common stock (excluding shares issuable upon the exercise of warrants) as of December 31, 2015. Under the terms of our stockholder agreements, Pershing Square has the ability to designate three members of our board of directors.

Although Pershing Square has entered into a standstill agreement to limit its influence over us, the concentration of ownership of our outstanding common stock held by Pershing Square and other substantial stockholders may make some transactions more difficult or impossible without the support of these stockholders, or more likely with the support of these stockholders. The interests of our substantial stockholders could conflict with or differ from the interests of our other stockholders. For example, the concentration of ownership held by Pershing Square and other substantial stockholders, even if these stockholders are not acting in a coordinated manner, could allow Pershing Square and other substantial stockholders to influence our policies and strategy and could delay, defer or prevent a change of control or impede a merger, takeover or other business combination that may otherwise be favorable to us and our other stockholders.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our tenants and business partners and personally identifiable information of our employees on our networks. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks, and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings and liability under laws that protect the privacy of personal information, which could adversely affect our business.

Risks Related to Our Common Stock

Provisions in our certificate of incorporation, our by-laws, Delaware law, stockholders rights agreement and certain other agreements may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.

Our certificate of incorporation and bylaws contain the following limitations:

· the inability of our stockholders to act by written consent;

· restrictions on the ability of stockholders to call a special meeting without 15% or more of the voting power of the issued and outstanding shares entitled to vote generally in the election of our directors;

· rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; and

· the right of our board of directors to issue preferred stock without stockholder approval.

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We have also adopted a Section 382 rights agreement. Thisagreement assists in the preservation of our valuable tax attributes by acting as a deterrent to any person or group acquiring 4.99% or more of our outstanding common stock.  The term of the stockholders rights agreement generally expires on the earlier of March 14, 2018 or the final day of a taxable year of the Company to which the Board of Directors of the Company determines that no tax benefit may be carried forward. All of these provisions could limit the price that investors might be willing to pay in the future for shares of our common stock.

There also may be dilution of our common stock from the exercise of outstanding warrants, which may materially adversely affect the market price and negatively impact a holder’s investment.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

None.

ITEM 2.   PROPERTIES

Our principal executive offices are located in Dallas, Texas where we lease 34,932 square feet under an arrangement that expires in 2021. We also maintain offices at certain of our properties nationwide, including The Woodlands, Texas, Honolulu, Hawaii, Columbia, Maryland, Las Vegas, Nevada and New York, New York. We believe our present facilities are sufficient to support our operations.

The following table summarizes certain metrics of the retail properties within our Operating Assets segment as of December 31, 2015:

				Year Ended December 31, 2015
							Average Sum of
							Rent and
		Existing					Tenant		Year Built /
		Gross		Average Annual			Recoveries		Acquired /
		Leasable		Tenant Sales per			Per Square	Occupancy	Last
Retail Property	Location	Area		Square Foot (a)			Foot (b)	Cost (c)	Renovated
Columbia Regional Building	Columbia, MD	88,556		$	—	(d)	33	N/A	2014
Cottonwood Square	Salt Lake City, UT	77,079	(e)		—	(d)	23	N/A	2002
Creekside Village Green	The Woodlands, TX	74,669			—	(f)	47	N/A	2015
Downtown Summerlin	Las Vegas, NV	760,608	(g)		343		44	12.9%	2014
Hughes Landing Retail	The Woodlands, TX	126,131			—	(f)	52	N/A	2015
1701 Lake Robbins	The Woodlands, TX	12,376			—	(d)	51	N/A	2014
Landmark Mall	Alexandria, VA	440,325	(h)		—	(d)	—	N/A	2004
One Lakes Edge Retail	The Woodlands, TX	23,280			—	(f)	54	N/A	2015
Outlet Collection at Riverwalk	New Orleans, LA	245,603	(i)		409		48	11.8%	2014
Park West	Peoria, AZ	249,177			499		29	5.9%	2006
South Street Seaport	New York, NY	75,054	(j)		441		89	20.1%	2004
Ward Village	Honolulu, HI	1,273,645			537		61	12.1%	2002
20/25 Waterway Avenue	The Woodlands, TX	50,062			497		58	11.7%	2007 / 2009
Waterway Garage Retail	The Woodlands, TX	21,513			267		53	19.7%	2011
Total		3,518,078

(a) Average Annual Tenant Sales per Square Foot is calculated by the sum of all comparable sales for the year ended December 31, 2015 for tenants that are contractually obligated to report sales data, divided by the comparable square feet for the same period. When calculating comparable sales and comparable square feet, we include all tenants that have operated for the entire year and occupy less than 30,000 square feet. For the year ended December 31, 2015, tenant recoveries represented approximately 26.8% of total revenue for the above mentioned retail properties only. The impact of concessions, such as free rent and new tenant inducements, are not significant to our business.

(b) Average Sum of Rent and Recoverable Common Area Costs per Square Foot is calculated as the sum of total rent and tenant recoveries for the year ended December 31, 2015 for the tenant base used to calculate (a), divided by the total square feet occupied by the above mentioned tenant base.

(c) Occupancy Cost is calculated by dividing (b) Average Sum of Rent and Recoverable Common Area Costs per Square Foot by (a) Average Annual Tenant Sales per Square Foot.

(d) Tenants are not contractually obligated to report sales data.

(e) 41,612 square feet of the Existing Gross Leasable Area is part of a ground lease where we are the ground lessee. The ground lease payments are paid by the current tenant directly to the ground lessor.

(f) Twelve months of sales are not available for tenants at Creekside Village Green, Hughes Landing Retail, and One Lakes Edge Retail due to buildings opening in 2015.

(g) Excludes 387,000 square feet of anchors, 165,567 square feet of pad sites, and 235,179 square feet of office.

(h) Excludes 438,937 square feet that is owned and occupied by Sears and Macy's. We are preparing to redevelop this property.

(i) All of the project is on a ground lease where we are the ground lessee. With the opening of Nordstrom Rack in 2016, the property will be expanded to 260,059 square feet.

(j) Reflects square feet in service as of December 31, 2015. Upon completion of the redevelopment, South Street Seaport will be approximately 362,000 square feet.

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The following table summarizes certain metrics of our office assets within our Operating Assets Segment as of December 31, 2015:

Office Asset	Location	Existing Gross Leasable Area	Average Effective  Annual Rent per Square Foot (a)			Year Built /  Acquired
10-70 Columbia Corporate Center	Columbia, MD	870,739	$	25.4		2012 / 2014
Columbia Office Properties	Columbia, MD	220,471		22.7		1969 / 1972
One Hughes Landing	The Woodlands, TX	197,719		41.0		2013
Two Hughes Landing	The Woodlands, TX	197,714		31.5		2014
1725 Hughes Landing Boulevard	The Woodlands, TX	331,067		—	(b)	2015
1735 Hughes Landing Boulevard	The Woodlands, TX	318,170		—	(b)	2015
2201 Lake Woodlands Drive	The Woodlands, TX	24,119		—	(c)	1994
9303 New Trails	The Woodlands, TX	97,553		32.5		2008
One Summerlin	Las Vegas, NV	206,279		—	(d)	2015
110 N. Wacker	Chicago, IL	226,000		27.1		1957
3831 Technology Forest Drive	The Woodlands, TX	95,078		29.2		2014
3 Waterway Square	The Woodlands, TX	232,021		40.5		2013
4 Waterway Square	The Woodlands, TX	218,551		39.3		2010
1400 Woodloch Forest	The Woodlands, TX	95,667		27.9		1981
Total		3,331,148

(a) Average Effective Annual Rent per Square Foot is equal to the sum of base minimum rent and tenant reimbursements divided by the average occupied square feet. For the year ended December 31, 2015, tenant reimbursements represented approximately 26.8% of total revenue.

(b) The 1725-35 Hughes Landing Boulevard buildings were opened in the fourth quarter 2015; therefore, Average Effective Annual Rent per Square Foot data is not meaningful.

(c) 2201 Lake Woodlands Drive serves as temporary space for tenants relocating to permanent space; therefore, the Average Effective Annual Rent per Square Foot data is not meaningful.

(d) One Summerlin opened in the second quarter of 2015; therefore, Average Effective Annual Rent per Square Foot data is not meaningful.

The following table summarizes certain metrics of our multi-family, hospitality, and other Operating Assets (exclusive of owned retail and office properties) as of December 31, 2015:

Multi-family	Economic Ownership %		Asset Type	Units / Retail Square Feet	% Leased		Year Built /  Acquired
Millennium Waterway Apartments	100	%	Multi-family	393 units	84.5	%	2010
Millennium Woodlands Phase II, LLC	81	%	Multi-family	314 units	85.0	%	2014
One Lakes Edge	100	%	Multi-family	390 units/22,289 retail	55.6	%	2015
85 South Street	100	%	Multi-family	21units/13,000 retail	100.0	%	2014
The Metropolitan Downtown Columbia	50	%	Multi-family	380 units/14,000 retail	87.4	%	2015
Hospitality	Economic Ownership %		Asset Type	Keys / Retail Square Feet	% Leased		Year Built /  Acquired
Hughes Landing Hotel (Embassy Suites)	100	%	Hotel	205 keys	N/A		2015
The Woodlands Resort & Conference Center	100	%	Hotel	406 keys	N/A		2014	(a)
Other	Economic Ownership %		Asset Type	Square Feet / Acres	% Leased		Year Built /  Acquired
Golf Courses at TPC Summerlin and TPC Las Vegas	Participation		Golf	—	N/A		—
Kewalo Basin Harbor	Lease		Marina	55 acres	N/A		—
Merriweather Post Pavilion	100	%	Amphitheatre	—	N/A		1967
Stewart Title of Montgomery County, TX	50	%	Title Company	—	N/A		—
Summerlin Hospital Medical Center	5	%	Hospital	—	N/A		1997
Clark County Las Vegas Stadium	50	%	MinorLeague Team	—	N/A		—
The Woodlands Parking Garages	100	%	Garage	2,988	N/A		2008/2009	(b)
Woodlands Sarofim #1	20	%	Industrial	129,790	93.9	%	late 1980s

(a) The Woodlands Resort & Conference Center was built in 1974, expanded in 2002, and renovated in 2014.

(b) The Woodlands Parking Garages consist of two garages: Woodloch Forest Garage, built in 2008, and Waterway Square Garage, built in 2009.

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The following table summarizes our retail and office lease expirations:

Year		Number of Expiring Leases	Total Square Feet Expiring	Total Annualized Base Rent Expiring (Thousands)		% of Total Annual Gross Rent Expiring
2016	(a)	266	904,223	$	15,826	9.4%
2017		128	422,942		13,090	7.7%
2018		87	340,761		10,796	6.4%
2019		86	584,166		15,933	9.4%
2020		119	504,187		16,312	9.6%
2021		25	254,246		6,374	3.8%
2022		30	337,712		9,611	5.7%
2023		48	466,112		13,625	8.1%
2024		46	456,876		12,989	7.7%
2025		152	830,678		32,209	19.0%
2026+		52	1,027,092		22,426	13.3%
		1,039	6,128,995	$	169,191	100%

(a) Includes 146 specialty leases totaling 509,037 square feet which expire in less than 365 days.

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The following table sets forth the occupancy rates, for each of the last five years for our wholly-owned retail and office properties:

	At December 31, 2015		Annual Weighted Average Occupancy Rates (b)
	% Leased (a)	Occupancy	2015	2014		2013		2012	2011
Retail:
Columbia Regional Building (c)	77.4%	77.4%	77.4%	53.4%		—		—	—
Cottonwood Square	95.7%	95.7%	95.7%	94.4%		86.5%		74.1%	73.8%
Creekside Village Green (d)	80.7%	81.0%	77.5%	—		—		—	—
Downtown Summerlin (c) (e)	89.2%	77.2%	68.9%	56.7%		—		—	—
Hughes Landing Retail (d)	90.8%	81.0%	68.3%	—		—		—	—
1701 Lake Robbins (c)	100.0%	100.0%	100.0%	100.0%		—		—	—
Landmark Mall (f)	34.9%	33.6%	34.6%	61.7%		79.2%		75.0%	73.7%
Outlet Collection at Riverwalk (c)	100.0%	91.2%	91.3%	90.1%		56.2%		92.2%	89.9%
Park West	76.8%	65.6%	67.9%	74.4%		72.1%		65.1%	64.6%
South Street Seaport	92.1%	86.0%	86.3%	54.6%	(g)	46.5%	(g)	92.1%	89.7%
Ward Village	87.2%	87.2%	88.1%	90.4%		90.8%		89.5%	90.1%
20/25 Waterway Avenue	100.0%	100.0%	100.0%	99.4%		94.2%		95.6%	91.7%
Waterway Garage Retail	85.4%	85.4%	96.8%	91.6%		68.4%		24.8%	19.3%	(h)
Office:
10-60 Columbia Corporate Center (c) (i)	90.6%	87.9%	89.2%	93.0%		—		—	—
70 Columbia Corporate Center (j)	97.9%	97.9%	97.9%	96.8%		96.8%		—	—
Columbia Office Properties (i)	41.0%	41.0%	44.3%	44.4%		63.2%		76.6%	89.3%
One Hughes Landing (k)	100.0%	100.0%	100.0%	87.3%		36.1%		—	—
Two Hughes Landing (c)	94.2%	94.2%	71.8%	13.2%		—		—	—
1725 Hughes Landing Boulevard  (l)	48.6%	48.3%	48.3%	—		—		—	—
1735 Hughes Landing Boulevard  (l)	100.0%	100.0%	100.0%	—		—		—	—
2201 Lake Woodlands Drive (m)	—	—	3.8%	50.0%		66.7%		83.4%	100.0%
9303 New Trails	93.7%	93.7%	93.7%	94.6%		94.3%		99.0%	78.8%
110 N. Wacker	100.0%	100.0%	100.0%	100.0%		100.0%		100.0%	100.0%
One Summerlin	69.3%	44.2%	22.3%	—		—		—	—
3831 Technology Forest Drive (c)	100.0%	100.0%	100.0%	100.0%		—		—	—
3 Waterway Square (n)	100.0%	100.0%	100.0%	98.2%		84.9%		—	—
4 Waterway Square	100.0%	100.0%	100.0%	100.0%		100.0%		99.3%	59.8%
1400 Woodloch Forest	100.0%	100.0%	96.5%	83.0%		85.7%		100.0%	78.3%

(a) Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future.

(b) The differences between leased and occupied are primarily attributable to new tenants having pre-leased space but not yet moved in. Annual Weighted Average Occupancy Rates represent the weighted average square feet occupied during the year divided by total gross leasable area (“GLA”).

(c) Asset was placed in service or acquired in 2014.

(d) Creekside Village Green and Hughes Landing Retail were opened in the first and second quarter 2015, respectively.

(e) Excludes 387,000 square feet of anchors, 165,567 square feet of pad sites, and 235,179 square feet of office.

(f) Occupancy rates exclude 438,937 square feet that is owned and occupied by Sears and Macy's. Occupancy is declining as we prepare to redevelop this property.

(g) Occupancy rates in 2015, 2014 and 2013 reflect the impact of Superstorm Sandy. Additionally, occupancy rates in 2014 and 2013 reflect the impact of redevelopment efforts.

(h) Waterway Garage Retail opened in the third quarter 2011.

(i) These properties are older office properties that we believe we will eventually redevelop. Annual Weighted Average Occupancy Rates are computed based on the weighted average square feet of each office building.

(j) 70 Columbia Corporate Center was acquired during the third quarter of 2012.

(k) One Hughes Landing was placed in service during the third quarter 2014.

(l) 1725 Hughes Landing Boulevard and 1735 Hughes Landing Boulevard were placed in service in the fourth quarter 2015.

(m) Building is used as a temporary space for tenants relocating to new developments.

(n) 3 Waterway Square was placed in service during the second quarter 2013.

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The following table summarizes our Strategic Development projects as of December 31, 2015:

					Acquisition Year
	Location	Size / GLA		Size(Acres)
Strategic Developments Under Construction:
Anaha	Honolulu, HI	317 units / 16,000 retail		2	—
HHC 242 Alden Bridge Self-Storage	The Woodlands, TX	670 units		4	—
Lakeland Village Center	Bridgeland, TX	83,600		8	—
One Merriweather	Columbia, MD	199,000		3	—
Constellation	Las Vegas, NV	124 units		5	—
Three Hughes Landing	The Woodlands, TX	321,000		4	—
Waiea	Honolulu, HI	174 units / 8,000 retail		2	—
Waterway Square Hotel (Westin)	The Woodlands, TX	302 keys		1	—
Other Strategic Developments:
Ae‘o	Honolulu, HI	466 units / 67,000 retail		3	—
Alameda Plaza	Pocatello, ID	—	(a)	7	2002
AllenTowne	Allen, TX	—		238	2006
Bridges at Mint Hill	Charlotte, NC	—		210	2007
Century Plaza Mall	Birmingham, AL	740,000	(b)	59	1997
Circle T Ranch and Power Center	Dallas/ Ft. Worth, TX	—		279	2005
Commercial Land (c)	The Woodlands, TX	—		4	—
Cottonwood Mall	Holladay, UT	196,975		54	2002
Gateway Towers	Honolulu, HI	236 units / 18,000 retail		4	—
HHC 2978 Alden Bridge Self-Storage	The Woodlands, TX	650 units		3	—
80% Interest in Fashion Show Air Rights	Las Vegas, NV	—		—	2004
Ke Kilohana	Honolulu, HI	424 units / 22,000 retail		1	—
Kendall Town Center	Kendall, FL	—		70	2004
Lakemoor (Volo) Land	Lakemoor, IL	—		40	1995
Maui Ranch Land	Maui, HI	—		20	2002
Merriweather District Land (d)	Columbia, MD	—		32	—
Parcel C	Columbia, MD	437 units / 29,000 retail		5	2004
Seaport District Assemblage	New York, NY	817,784		—	—
The Outlet Collection at Elk Grove	Elk Grove, CA	—		100	2003
West Windsor	West Windsor, NJ	—		658	2004
Total				1,816

(a) Two remaining buildings were demolished in 2015.

(b) Century Plaza Mall square feet represents GLA for entire mall, which is vacant.

(c) Represents MPC land transferred to the Strategic Developments segment for future development at The Woodlands.

(d) Representsremaining land to be developed in the MerriweatherDistrict in Columbia, MD, in addition to the three acres currently under development at One Merriweather.

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ITEM 3.   LEGAL PROCEEDINGS

We, as part of our normal business activities, are a party to a number of legal proceedings. Management periodically assesses our liabilities and contingencies in connection with these matters based upon the latest information available. We disclose material pending legal proceedings pursuant to Securities and Exchange Commission rules and other pending matters as we may determine to be appropriate.

For more information on our legal proceedings, please refer to “Note 10 – Commitments and Contingencies” within our Audited Consolidated Financial Statements.

ITEM 4.   MINESAFETYDISCLOSURE

Notapplicable.

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PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The Company’s common stock is traded on the New York Stock Exchange (the “NYSE”) under the symbol “HHC”. The following table shows the high and low sales prices of the our common stock on the NYSE, as reported in the consolidated transaction reporting system for each quarter of fiscal 2015 and 2014.  

	Common Stock
	Price Range
	High		Low
Year Ended December 31, 2015
Fourth Quarter	$	128.97	$	108.49
Third Quarter	$	144.88	$	112.52
Second Quarter	$	159.12	$	142.06
First Quarter	$	155.26	$	115.11
Year Ended December 31, 2014
Fourth Quarter	$	151.86	$	119.30
Third Quarter	$	160.62	$	143.77
Second Quarter	$	158.11	$	136.73
First Quarter	$	147.72	$	116.22

No dividends have been declared or paid in 2015 or 2014. Any future determination related to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including future earnings, capital requirements, restrictions under debt agreements, financial condition and future prospects and other factors the board of directors may deem relevant.

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Number of Holders of Record

As of February 15, 2016, there were 2,189 stockholders of record of the Company’s common stock.

Performance Graph

The following performance graph compares the yearly dollar change in the cumulative total shareholder return on our common stock with the cumulative total returns of the NYSE Composite Index and the group of companies in the Morningstar Real Estate – General Index. The graph was prepared based on the following assumption:

· Dividends have been reinvested subsequent to the initial investment.

ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth the selected consolidated financial and other data of our business for the most recent five years. We were formed in 2010 to receive certain assets and liabilities of our predecessors in connection with their emergence from bankruptcy. We did not conduct any business and did not have any material assets or liabilities until our spin-off from GGP was completed on November 9, 2010.

Our selected historical data for 2015, 2014, 2013 and 2012, which is presented in accordance with GAAP is not comparable to 2011 due to the acquisition of our partner’s 47.5% economic interest in The Woodlands on July 1, 2011. As of the acquisition date, we consolidated The Woodlands’ financial results. Prior to the acquisition, we accounted for our investment in The Woodlands using the equity method.

The selected historical financial data as of December 31, 2015 and 2014 and for the years ended December 31, 2015, 2014, 2013 has been derived from our audited Consolidated Financial Statements, which are included in this Annual Report as referenced in the index on page F-1.

The selected historical financial data as of December 31, 2013, 2012, and 2011, and for the years ended December 31, 2012 and 2011 has been derived from our audited Consolidated Financial Statements which are not included in this Annual Report.

The historical results set forth below do not indicate results expected for any future periods. The selected financial data set forth below are qualified in their entirety by, and should be read in conjunction with, “Item 7- Management’s Discussion and

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Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes thereto included in this Annual Report on Form 10-K.

	Year Ended December 31,
(In thousands, except per share amounts)	2015		2014		2013		2012		2011
Operating Data:
Revenues	$	797,088	$	634,565	$	469,418	$	376,886	$	275,689
Depreciation and amortization		(98,997)		(55,958)		(33,845)		(24,429)		(16,782)
Other operating expenses		(579,327)		(411,885)		(324,359)		(279,992)		(231,442)
Interest income/(expense), net		(59,158)		(16,093)		(6,574)		8,473		9,876
Warrant liability gain (loss)		58,320		(60,520)		(181,987)		(185,017)		101,584
Gain on sale of The Club at Carlton Woods		29,073		-		-		-		-
Increase (reduction) in tax indemnity receivable		-		90		(1,206)		(20,260)		-
Loss on settlement of tax indemnity receivable		-		(74,095)		-		-		-
Equity in earnings from Real Estate and Other Affiliates		3,721		23,336		14,428		3,683		8,578
Provision for income taxes		(24,001)		(62,960)		(9,570)		(6,887)		18,325
Investment in real estate affiliate basis adjustment		-		-		-		-		(6,053)
Loss on early extinguishment of debt		-		-		-		-		(11,305)
Net income (loss)		126,719		(23,520)		(73,695)		(127,543)		148,470
Net income attributable to noncontrolling interests		-		(11)		(95)		(745)		(1,290)
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)	$	(128,288)	$	147,180
Basic earnings (loss) per share:	$	3.21	$	(0.60)	$	(1.87)	$	(3.36)	$	3.88
Diluted earnings (loss) per share:	$	1.60	$	(0.60)	$	(1.87)	$	(3.36)	$	1.17

	Year Ended December 31,
(In thousands)	2015		2014		2013		2012		2011
Cash Flow Data:
Operating activities	$	23,930	$	(58,315)	$	129,332	$	153,064	$	86,508
Investing activities		(575,568)		(746,456)		(294,325)		(81,349)		(39,680)
Financing activities		436,488		470,274		830,744		(70,084)		(103,944)

	As of December 31,
(In thousands)	2015		2014		2013		2012		2011
Balance Sheet Data:
Investments in real estate - cost (a)	$	4,832,443	$	4,170,242	$	3,085,854	$	2,778,775	$	2,648,520
Total assets		5,721,582		5,105,268		4,559,013		3,499,114		3,396,113
Total debt		2,443,962		1,978,807		1,505,768		684,384		602,997
Total equity		2,363,889		2,227,506		2,245,146		2,310,997		2,329,599

(a) Amount represents Investment in real estate and other affiliates excluding accumulated depreciation.

(b) Effective December 31, 2015, we adopted a new accounting standard regarding presentation of debt issuance costs, net, which resulted in a reclassification of $14.7 million, $8.9 million, $3.9 million and $3.5 million from Total Assets to Total Debt at December 31, 2014, 2013, 2012 and 2011, respectively.

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and the related notes filed as a part of this Annual Report. This discussion contains forward-looking statements that involve risks, uncertainties, assumptions and other factors, including those described in Part I, “Item 1A. Risk Factors” and elsewhere in this Annual Report. These factors could cause our actual results in 2016 and beyond to differ materially from those expressed in, or implied by, those forward-looking statements. You are cautioned not to place undue reliance on this information which speaks only as of the date of this report. We are not obligated to update this information, whether as a result of new information, future events or otherwise, except as may be required by law.

All references to numbered Notes are to specific Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K and which descriptions are incorporated into the applicable response by reference. Capitalized terms used, but not defined, in this Management’s Discussion and Analysis of Financial Condition and Results of Operation (“MD&A”) have the same meanings as in such Notes.

Overview

Our mission is to be the preeminent developer and operator of master planned communities and mixed-use and other real estate properties. We create timeless places and extraordinary experiences that inspire people while driving sustainable, long-term growth and value for our shareholders. We specialize in the development of master planned communities, the redevelopment or repositioning of real estate assets currently generating revenues, also called operating assets, and other strategic real estate opportunities in the form of residential condominium development, entitled and unentitled land and other development rights. Our assets are located across the United States.

We operate our business in three segments: Master Planned Communities (“MPCs”), Operating Assets and Strategic Developments. Unlike real estate companies that are limited in their activities because they have elected to be taxed as real estate investment trusts, we, have no corporate restrictions on our operating activities or types of services that we can offer. We believe our structure currently provides the greatest flexibility for maximizing the value of our real estate portfolio.

We believe several of our operating and strategic development assets require repositioning or redevelopment to maximize their value. Certain key assets are currently being developed or redeveloped, and we are continuing to develop plans for other strategic development assets, some of which had no formal plans previously established.

The development or redevelopment process for each specific asset is complex and takes several months to several years prior to the commencement of actual construction. We must study each local market, determine the highest and best use of the land and improvements, obtain entitlements and permits, complete architectural design, construction drawings and plans, secure tenant commitments and commit sources of capital. During this period, these activities generally have very little impact on our operations relative to the activity and effort involved in the development process. For our development and redevelopment projects discussed herein, the total estimated costs of a project exclude land value,unless otherwise noted.

Please refer to “Item 1 – Business” for a general description of each of the assets contained in our three business segments.

The following highlights significant milestones achieved by The Howard Hughes Corporation during 2015.  Each of these items is more fully described hereinafter:

· Increased condominium rights and unit sales revenue by $221.7 million, or 265.2%, to $305.3 million, compared to $83.6 million in 2014.

· Increased  net operating income from income-producing Operating Assets by  $43.5 million, or 58.7%, to $117.6 million in 2015 compared to $74.1 million in 2014.

· Sold The Club atCarlton Woods, a 36-hole golf and country club in The Woodlands, for net cash proceeds of $25.1 million and a gain on sale of $29.1 million.  The Club had operating losses of $(0.9) million and $(4.4) million for the years ended December  31, 2015 and 2014, respectively.

· Closed on ajoint venture with Discovery Land Company in Summerlin to develop The Summit, a 555-acre luxury golf course community, with first lot closings expected in first quarter 2016.

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· Announced a partnership with renowned chef and restaurateur Jean-Georges Vongerichten to bring two new, unique culinary experiences to theSeaport District. The projects will consist of a 40,000 square-foot, seafood-themed food market inside the Tin Building and a 10,000 square-foot restaurant in the rebuilt Pier 17. We also pre-leased 7,100 square feet in the historic district to McNally Jackson, a popular New York City-based independent bookstore.

· Began pre-sales for Ae‘o, a 466-unit condominium tower designed by Bohlin Cywinski Jackson to be located above a future Whole Foods Market flagship store, and the first of two Gateway Towers designed by Richard Meier & Partners, which consists of 125 luxury units. Both residential condominium towers are located at Ward Village.

The following development projects were completed in 2015 (all lease and occupancy percentage are as of February 1, 2016):  

· Hughes Landing Retail, a 126,131 square foot retail component of the Hughes Landing mixed-use development anchored by a  Whole Foods, which is90.7%leased.

· Creekside VillageGreen, a 74,669 square foot mixed-use project located in The Woodlands, which is 80.7%leased.

· The Metropolitan Downtown Columbia, a 380-unit apartment building in Columbia, Maryland which is88.4% leased.

· One Lakes Edge, an eight-story, Class A, multi-family project in Hughes Landing, which is58.5%leased.

· 1725 & 1735 Hughes Landing Boulevard, two office buildings totaling 649,237 square feet in The Woodlands which are 73.7% leased to ExxonMobil Corporation.

· Hughes Landing Hotel, a  205-key Embassy Suites by Hilton branded hotel located in Hughes Landing.

· One Summerlin, a nine-storyClass A office building located in Downtown Summerlin, which is 69.3% leased.

Development continued on the following projects in 2015:

· Waterway Square Hotel, a 302-key Westin Hotel located in The Woodlands Town Center that we expect to complete in the first quarter 2016.

· Waiea, a 174 unit condominium tower, that we expect to complete by the end of 2016. As of February 1, 2016, 90.8% of the units were under contract.These contracted sales represent 85.8% of the total residential square feet available for sale.

· Anaha, a 317 unit condominium tower, that we expect to complete in 2017. As of February 1, 2016, 87.7% of the units were under contract.These contracted sales represent 80.0% of the total residential square feet available for sale.

· Three Hughes Landing, a 321,000 square foot, Class A office building located in The Woodlands, available for lease.

Construction began on the following projects in 2015:

· One Merriweather, a 199,000 square feet, 8-story Class A office building, with 12,500 square feet of retail and restaurant space and an adjacent garage situated on 2.9 acres of land in the Merriweather District, a development in Downtown Columbia Maryland, that we expect to complete in December 2016.

· Constellation (formerly known as Summerlin Apartments),  a 124-unit gated luxury apartment joint venture development in Summerlin.We expect to have the initial units available for lease by the first quarter 2016.

· Lakeland Village Center, an 83,600 square foot CVS anchored neighborhood retail/office center, that we expect to complete by the second quarter 2016.

· One Alden Bridge Self-Storage Facility,  with 670self-storage units, located in The Woodlands, that we expect to complete by the fourth quarter 2016.

We acquired the following during 2015:

· The final components relating to the Seaport District Assemblage for $91.4million, inclusive of a 58,000 square foot commercial building and air rights with total residential and commercial development rights of 196,133 square feet.  These acquisitions, combined with adjacent property acquisitions in 2014, create a 42,694 square foot lot with 817,784 square feet of available development rights located in close proximity to our South Street Seaport property.

Real Estate Property Earnings Before Taxes

We use a number of operating measures for assessing operating performance of our communities, assets, properties and projects within our segments, some of which may not be common among all three of our segments. We believe that investors may find some operating measures more useful than others when separately evaluating each segment. One common operating measure used to assess operating results for our business segments is Real Estate Property Earnings Before Taxes (“REP EBT”). We

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believe REP EBT provides useful information about our operating performance because it excludes certain non-recurring and non-cash items, which we believe are not indicative of our core business. REP EBT may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.

REP EBT, as it relates to our business, is defined as net income (loss) excluding general and administrative expenses, corporate other income, corporate interest income, corporate interest and depreciation expense, provision for income taxes, warrant liability gain (loss) and the increase (reduction) in tax indemnity receivable. We present REP EBT because we use this measure, among others, internally to assess the core operating performance of our assets. We also present this measure because we believe certain investors use it as a measure of a company’s historical operating performance and its ability to service and incur debt. We believe that the inclusion of certain adjustments to net income (loss) to calculate REP EBT is appropriate to provide additional information to investors.  A reconciliation of REP EBT to consolidated net income (loss) as computed in accordance with GAAP has been presented in Note 17 – Segments.

REP EBT should not be considered as an alternative to GAAP net income (loss) attributable to common stockholders or GAAP net income (loss), as it has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of the limitations of this metric are that it does not include the following:

· cash expenditures, or future requirements for capital expenditures or contractual commitments;

· corporate general and administrative expenses;

· interest expense on our corporate debt;

· income taxes that we may be required to pay;

· any cash requirements for replacement of fully depreciated or amortized assets;and

· limitations on, or costs related to, transferring earnings from our Real Estate Affiliates to us.

Operating Assets Net Operating Income

We believe that net operating income (“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 rental and occupancy rates and operating costs. We define NOI as revenues (rental income, tenant recoveries and other revenue) less expenses (real estate taxes, repairs and maintenance, marketing and other property expenses). NOI excludes straight line rents and amortization of tenant incentives, net interest expense, ground rent amortization, demolition costs, amortization, depreciation, development-related marketing costs 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,which vary by property, such as lease structure, lease rates and tenant base have on our operating results, gross margins and investment returns.

Although we believe that NOI provides useful information to 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 net income (loss). For reference, and as an aid in understanding our computation of NOI, a reconciliation of Operating Assets NOI to Operating Assets REP EBT has been presented in the Operating Assets segment discussion below.

Results of Operations

Our revenues primarily are derived from the sale of individual lots at our master planned communities to homebuilders, from tenants at our operating assets in the form of fixed minimum rents, overage rent and recoveries of operating expenses, and from the sale of condominium units.

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The following table reflects our results of operations for the years ended December 31, 2015, 2014 and 2013, respectively:

	Year Ended December 31,						2015-2014		2014-2013
(In thousands, except per share amounts)	2015		2014		2013		Change		Change
Revenues
MPC segment revenues	$	229,865	$	363,295	$	274,770	$	(133,430)	$	88,525
Operating Assets segment revenues		259,306		186,290		160,586		73,016		25,704
Strategic Developments segment revenues		307,917		84,980		34,062		222,937		50,918
Total revenues	$	797,088	$	634,565	$	469,418	$	162,523	$	165,147
MPC segment REP EBT	$	114,366	$	221,181	$	130,978	$	(106,815)	$	90,203
Operating Assets segment REP EBT		(9,902)		(13,801)		(2,551)		3,899		(11,250)
Strategic Developments segment REP EBT		97,836		48,458		26,010		49,378		22,448
Total segment REP EBT (a)		202,300		255,838		154,437		(53,538)		101,401
General and administrative		(81,345)		(73,569)		(48,466)		(7,776)		(25,103)
Corporate interest expense, net		(52,995)		(30,819)		(10,575)		(22,176)		(20,244)
Warrant liability gain (loss)		58,320		(60,520)		(181,987)		118,840		121,467
Gain on sale of The Club at Carlton Woods		29,073		-		-		29,073		-
Increase (reduction) in tax indemnity receivable		-		90		(1,206)		(90)		1,296
Loss on settlement of tax indemnity receivable		-		(74,095)		-		74,095		(74,095)
Corporate other income, net		1,409		27,098		25,869		(25,689)		1,229
Corporate depreciation and amortization		(6,042)		(4,583)		(2,197)		(1,459)		(2,386)
Provision for income taxes		(24,001)		(62,960)		(9,570)		38,959		(53,390)
Net income (loss)		126,719		(23,520)		(73,695)		150,239		50,175
Net income attributable to noncontrolling interests		-		(11)		(95)		11		84
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)	$	150,250	$	50,259
Diluted income (loss) per share	$	1.60	$	(0.60)	$	(1.87)	$	2.20	$	1.27

(a) Total segment REP EBT includes depreciation and amortization expense.The following table shows the amounts included in segment REP EBT related to non-cash depreciation and amortization:

	Year Ended December 31,						2015-2014		2014-2013
	2015		2014		2013		Change		Change
Totalsegmentdepreciationandamortization	$	92,955	$	51,375	$	31,648	$	41,580	$	19,727

Non-cash total segment depreciation and amortization primarily relating to Operating Assets placed into service is significantly offsetting the net operating income generated from these properties because they typically will stabilize over the 12 – 24 month period after they are placed into service, but the full amount of their annual depreciation and amortization begins when they are placed into service.

Total revenues for the year ended December 31, 2015 increased compared to the year ended December 31, 2014 primarily due to higher revenues in our Operating Assets and Strategic Developments segments. Strategic Developments segment revenue increased due to recognition of revenue related to sales at our Waiea and Anaha condominium projects. Operating Assets segment revenue increased primarily due to the ongoing stabilization of Downtown Summerlin, Outlet Collection at Riverwalk, 10-60 Columbia Corporate Center, Two Hughes Landing, along with several other retail and office properties which opened in early 2015 and 2014. The MPC segment revenue decreases are due to a decline in both commercial and residential land sales in MPCsin 2015 as compared to 2014.  

Total revenues for the year ended December 31, 2014 increased compared to the same period in 2013 due to higher revenues in our MPC, Operating Assets and Strategic Developments segments. MPC segment revenue increased due to higher commercial land sales in The Woodlands and higher residential land sales in Bridgeland and Summerlin. Operating Assets segment revenue increased primarily due to the re-opening of the Outlet Collection at Riverwalk, the opening of Downtown Summerlin, increased leasing at Park West and Waterway Garage Retail, and 3 Waterway Square and One Hughes Landing having a full year of operations in 2014. Strategic Developments segment revenue increased primarily due to recognition of revenue related to beginning construction on Waiea.

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General and administrative expenses for the year ended December 31, 2015 increased compared to the same period in 2014. The increase is primarily due to $7.0 million of compensation costs related to average increased headcount in the period versus 2014 average headcount, $1.4 million of increased information technology costs due to system implementations and upgrades, $0.7 million of higher marketing and advertising costs and $0.5 million of higher travel costs. These increases are partially offset by a  $2.0 million decrease in amortization of non-cash stock based compensation because we are capitalizing a greater portion of this cost into ourdevelopments  based on overall development activity.  

General and administrative expenses for the year ended December 31, 2014 increased compared to the same period in 2013. The increase is primarily due to $11.4 million of increased headcount and compensation costs, which includes a $2.4 million increase in amortization of non-cash stock based compensation, $4.7 million of higher travel costs, $4.0 million of higher legal fees and settlements, $1.6 million of increased information technology costs due to system implementations and upgrades, $1.2 million of increased advertising and marketing costs, $0.8 million of additional consulting and professional fees and $1.4 million of other items.

The decrease in the provision for income taxes for the year ended December 31, 2015 compared to 2014 is attributable to a decrease of $48.0 million in operating income as compared to 2014,  interest expense on the uncertain tax position, and other permanent items. The increase in provision for income taxes for the year ended December 31, 2014 compared to 2013 is attributable to an increase of $55.5 million in operating income as compared to 2013, interest expense on the uncertain tax position, and other permanent items. Operating income on our Consolidated Statement of Operations was $118.8 million, $166.7 million and $111.2 million for the years ending December 31, 2015, 2014 and 2013, respectively.

We have significant permanent differences, primarily from warrant liability gains and losses, interest income on the tax indemnity receivable, and changes in valuation allowances that cause our effective tax rate to deviate greatly from statutory rates. The effective tax rate based upon actual operating results was 15.9% for the year ended December 31, 2015 compared to 159.7% for the year ended December 31, 2014. The changes in the tax rate were primarily attributable to the changes in the warrant liability, valuation allowance related to our deferred tax asset, unrecognized tax benefits and loss on settlement of tax indemnity receivable as well as other items which are permanent differences for tax purposes. If changes in the warrant liability, valuation allowance, unrecognized tax benefits, tax on Victoria Ward, loss on settlement of tax indemnity receivable and other material discrete adjustments to deferred tax liabilities were excluded from the effective tax rate computation, the effective tax rates would have been 31.2% and 36.3% for the years ended December 31, 2015 and 2014, respectively.

The improvement in Net income (loss) attributable to common stockholders for the year ended December 31, 2015 compared to the year ended December 31, 2014 is primarily due to a warrant liability gain, improved earnings in our Operating Assets segment, and significant growth in earnings from condominium rights and unit sales in our Strategic Developments segment, the absence in 2015 of any loss on settlement of the tax indemnity receivable as compared to 2014, and decreased provision for income taxes. These improvements were partially offset by lower earnings in our MPC segment, higher general and administrative expenses, and higher interest expense resulting from less capitalized interest and growth in our Mortgages, notes and loans payable.

The improvement in Net income (loss) attributable to common stockholders for the year ended December 31, 2014 compared to 2013 is primarily due to a lower warrant liability loss and higher earnings in our MPC and Strategic Developments segments. These improvements were partially offset by lower earnings in our Operating Assets segment, the loss on the settlement of the tax indemnity receivable, higher provision for income taxes, higher general and administrative expenses, and higher interest expense resulting from the issuance of $750.0 million of our 6.875% Senior Notes on October 2, 2013. The higher interest expense was partially offset by an increase in interest income related to our tax indemnity receivable due to the outcome of the Tax Court decision discussed in Note 9 – Income Taxes. The loss on settlement of tax indemnity receivable for the year ended December 31, 2014 is due to us entering into a settlement of the tax indemnity agreement on December 12, 2014. In consideration for the full release of the liability under the agreement, GGP paid us $138.0 million and conveyed six office buildings in Columbia, MD.

Please refer to the individual segment operations sections that follow for explanations of the segment variances.

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Master Planned Communities

Master Planned Communities Revenues and Expenses(*)

For the years ended December 31,

(In thousands, except %)

		Bridgeland									Maryland Communities									Summerlin									The Woodlands									The Woodlands Hills						Total MPC
(in thousands)	2015			2014			2013			2015			2014			2013			2015			2014			2013			2015			2014			2013			2015		2014		2013		2015			2014			2013
Land sales	$	20,385		$	38,330		$	13,610		$	-		$	-		$	13,000		$	123,171		$	118,815		$	116,928		$	43,843		$	167,954		$	107,679		$	-	$	-	$	-	$	187,399		$	325,099		$	251,217
Builder price participation		1,193			695			1,162			-			-			787			21,465			13,871			5,462			4,188			6,342			1,945			-		-		-		26,846			20,908			9,356
Minimum rents		-			-			-			-			-			2			842			818			779			-			-			-			-		-		-		842			818			781
Other land sale revenues		345			295			330			468			773			703			7,907			6,167			6,795			6,058			9,235			5,588			-		-		-		14,778			16,470			13,416
Total revenues		21,923			39,320			15,102			468			773			14,492			153,385			139,671			129,964			54,089			183,531			115,212			-		-		-		229,865			363,295			274,770
																																												-			-
Cost of sales - land		6,763			13,108			4,413			-			-			8,103			65,414			70,597			69,764			15,888			35,967			41,760			-		-		-		88,065			119,672			124,040
Land sales operations		4,963			3,702			3,947			776			736			1,146			11,207			10,062			9,729			17,523			17,432			16,004			4		-		-		34,473			31,932			30,826
Land sales real estate and business taxes		982			819			(19)			647			710			650			3,736			3,924			3,388			4,998			4,409			3,569			71		-		-		10,434			9,862			7,588
Provision (recovery) for doubtful accounts		-			-			-			-			-			-			-			(11)			-			-			-			-			-		-		-		-			(11)			-
Depreciation and amortization		387			128			-			21			31			6			112			118			20			120			120			6			-		-		-		640			397			32
Total expenses		13,095			17,757			8,341			1,444			1,477			9,905			80,469			84,690			82,901			38,529			57,928			61,339			75		-		-		133,612			161,852			162,486
																																												-			-
Operating income		8,828			21,563			6,761			(976)			(704)			4,587			72,916			54,981			47,063			15,560			125,603			53,873			(75)		-		-		96,253			201,443			112,284
Interest expense, net (a)		(8,780)			(8,906)			(6,890)			(33)			(86)			(1,664)			(14,241)			(15,077)			(16,180)			5,524			4,331			6,040			(583)		-		-		(18,113)			(19,738)			(18,694)
MPC REP EBT	$	17,608		$	30,469		$	13,651		$	(943)	(c)	$	(618)	(c)	$	6,251		$	87,157		$	70,058		$	63,243		$	10,036		$	121,272		$	47,833		$	508	$	-	$	-	$	114,366		$	221,181		$	130,978
Gross Margin % (b)		66.8	%		65.8	%		67.6	%		NM			NM			37.7	%		46.9	%		40.6	%		40.3	%		63.8	%		78.6	%		61.2	%		NM		NM		NM		53.0	%		63.2	%		50.6	%

(*)   For a reconciliation of MPC REP EBT to consolidated income (loss) before taxes, refer to Note 17 – Segments.

(a) Negative interest expense amounts relate to interest capitalized on debt assigned to our Operating Assets segment and corporate debt.

(b) Gross margin % is the ratio of Land sales less Cost of sales-land, divided by Land sales.

(c) The negative MPC REP EBT in Maryland is due to no land sales in 2015 or 2014; however, certain costs such as real estate taxes and administrative expenses continue to be incurred.

MPC revenues vary between periods based on economic conditions and several factors such as, but not limited to, location, availability of land for sale, development density and residential or commercial use. Gross margin for each MPC may vary from period to period based on the locations of the land sold and the related costs associated with developing the land sold.Reported results may differ significantly from actual cash flows generated principally because cost of sales for GAAP purposes is derived from margins calculated using carrying values, projected future improvements and other capitalized project costs in relation to projected future land sale revenues. Carrying values, generally, represent acquisition and development costs reduced by any previous impairment charges. Development expenditures are capitalized and generally not reflected in the Consolidated Statements of Operations in the current year.  

Builder price participation generally represents the amount collected in excess of the base lot price. The excess amount is calculated based on the actual home price, less the base lot price, multiplied by an agreed upon percentage stipulated in the land sales contract.

Cost of sales – land includes both actual and estimated future costs allocated based upon relative sales value to the lots or land parcels in each of the villages and neighborhoods in our MPCs.

Interest expense, net reflects the amount of interest that is capitalized at the project level.

Although our business does not involve the sale or resale of homes, we believe that net new home sales are an important indicator of future demand for our superpad sites and lots; therefore, we use this statistic where relevant in the discussion of our MPC operating results. Net new home sales reflect home sales made by homebuilders, less cancelations. Cancelations occur when a home buyer signs a contract to purchase a home, but later fails to qualify for a home mortgage or is unable to provide an adequate down payment to complete the home sale.

42

MPC Sales Summary
	Land Sales						Acres Sold			Number of Lots/Units			Price per acre						Price per lot
	Year Ending December 31,
($ In thousands)	2015		2014		2013		2015	2014	2013	2015	2014	2013	2015		2014			2013	2015		2014		2013
Bridgeland
Residential
Single family - detached	$	10,856	$	38,330	$	10,974	28.4	84.6	33.2	130	401	143	$	382	$	453	$	331	$	84	$	96	$	77
Commercial
Apartments		-		-		2,636	-	-	16.6	-	-	-		-		-		159		-		-		-
Not-for-profit		20,664		-		-	162.4	-	-	-	-	-		127		-		-		-		-		-
Total		31,520		38,330		13,610	190.8	84.6	49.8	130	401	143		165		453		273		84		96		77
$ Change		(6,810)		24,720			106.2	34.8		(271)	258			(288)		180				(12)		19
% Change		(17.8%)		181.6%			125.5%	69.9%		(67.6%)	180.4%			(63.5%)		65.9%				(12.5%)		24.7%
Maryland Communities
Residential
Townhomes		-		-		-	-	-	-	-	-	-		-		-		-		-		-		-
Commercial
Office and other		-		-		13,000	-	-	56.2	-	-	-		-		-		231		-		-		-
Apartments		-		-		-	-	-	-	-	-	-		-		-		-		-		-		-
Total		-		-		13,000	-	-	56.2	-	-	-		-		-		231		-		-		-
$ Change		NM		(13,000)			NM	(56.2)		NM	NM			NM		(231)				NM
% Change		NM		NM			NM	NM		NM	NM			NM		NM				NM
Summerlin
Residential
Superpad sites		92,219		115,447		83,191	177.7	241.7	257.3	555	1,148	1,164		519		478		323		166		101		71
Single family - detached		13,650		14,434		18,038	14.9	17.9	23.4	75	77	157		916		806		771		182		187		115
Custom lots		8,640		12,276		4,813	5.8	9.5	5.3	14	20	12		1,490		1,292		908		617		614		401
Commercial
Office and other		-		-		4,526	-	-	7.3	-	-	-		-		-		620		-		-		-
Retail		-		650		-	-	0.7	-	-	-	-		-		929		-		-		-		-
Not-for-profit		3,136		2,250		1,334	3.6	10.0	5.9	-	-	-		871		225		226		-		-		-
Other		800		-		575	16.7	-	17.2	-	-	-		48		-		33		-		-		-
Total		118,445		145,057		112,477	218.7	279.8	316.4	644	1,245	1,333		542		518		355		178		114		80
$ Change		(26,612)		32,580			(61.1)	(36.6)		(601)	(88)			24		163				64		34
% Change		(18.3%)		29.0%			(21.8%)	(11.6%)		(48.3%)	(6.6%)			4.6%		45.9%				56.1%		42.5%
The Woodlands
Residential
Single family - detached		27,161		73,669		100,142	42.9	99.9	162.8	160	393	589		633		737		615		170		187		170
Single family - attached		5,280		4,202		3,897	5.8	6.0	7.1	65	73	80		910		700		549		81		58		49
Commercial
Not-for-profit		733		-		-	5.0	-	-	-	-	-		147		-		-		-		-		-
Medical		8,422		70,550		-	5.0	58.9	-	-	-	-		1,684		1,198		-		-		-		-
Office and other		-		2,131		1,500	-	3.3	2.1	-	-	-		-		646		714		-		-		-
Retail		-		17,401		1,261	-	30.3	1.6	-	-	-		-		574		788		-		-		-
Other		2,247		-		135	2.4	-	0.7	-	-	-		936		-		193		-		-		-
Total		43,843		167,953		106,935	61.1	198.4	174.3	225	466	669		718		847		614		144		167		156
$ Change		(124,110)		61,018			(137.3)	24.1		(241)	(203)			(129)		233				(23)		11
% Change		(73.9%)		57.1%			(69.2%)	13.8%		(51.7%)	(30.3%)			(15.2%)		37.9%				(13.8%)		7.1%
Total acreage sales revenue		193,808		351,340		246,022	470.6	562.8	596.7	999	2,112	2,145
Deferred revenue		(27,179)		(37,173)		(12,451)
Special Improvement District revenue *		20,770		10,932		17,646
Total segment land sales revenue - GAAP basis	$	187,399	$	325,099	$	251,217

* - Applicable exclusively to Summerlin.

NM - Not meaningful.

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Houston

Houston is known as the energy capital of the world and is home to more than 5,000 energy-related firms. With crude oil prices dropping by over 70% since mid-2014, the Houston area has experienceda  significant slowdown in economic growth compared to prior years.The Woodlands and Bridgeland MPCs have been impacted by this through slower new home sales velocity, which has caused homebuilders tobecome more cautious in their acquisitions of residential lots. Due to these economic conditions, wehave experiencedlower residential land sales at our Houston MPCs and expect that trend to continue into 2016. The slowdown in economic growth in the Houston region may also impact the performance of the projects under construction in our Strategic Developments segment, and the Operating Assets segment may experience a further slowdown in leasing activities and a decrease in hospitality revenues. Despite the slowdown in land sales and commercial development activity, our Houston MPCs are well-positioned in the market to compete for residential and commercial customers due to their reputations, amenities and locations.

Bridgeland

For the year ended December 31, 2015, Bridgeland sold 28.4 residential acres compared to 84.6 acres in 2014 and 33.2 acres in 2013. The average price per residential acre for single-family – detached product decreased $71,000, or 15.7% to $382,000 for the year ended December 31, 2015 compared to $453,000 in 2014. The decrease for the year ended December 31, 2015 compared to 2014 is primarily due to homebuilders currently developing homes for sale on lots purchased during 2014and slower home sales velocity caused by lower oil prices. In this environment, homebuilders are more cautiously managing their land inventory levels by negotiatingtakedown contracts as opposed to bulk sales contracts, thereby deferring purchases into the future. Due to the 2014 lot inventory build-up by homebuildersand slowdown in the home sales market, we anticipate limited demand for lots at Bridgeland until a significant portion of this inventory is reduced through new home sales, which will likely continue through 2016. There were 199 new home sales at Bridgeland for the year ended December 31, 2015, representing a 197.0% increase, compared to 67 new home sales for the same period in 2014. The median new home price in Bridgeland decreased 9.1% to $409,000 for 2015 compared to a median new home price of $450,000 for the same period in 2014. The Grand Parkway, connecting our Bridgeland and The Woodlands communities,opened in February 2016, making Bridgeland well-positioned to be a viable option to meet the future demand for lots at a top-tier MPC.

The increase in Bridgeland land sales for the year ended December 31, 2014 compared to 2013 primarily related to the receipt of a wetlands permit in February 2014 from the U.S. Army Corps of Engineers, that allowed for new lot development. Accordingly, for the year ended December 31, 2014, Bridgeland sold 84.6 residential acres compared to 33.2 acres in 2013, and the average price per residential acre (single-family – detached) increased $122,000, or 36.9% to $453,000 for the year ended December 31, 2014 compared to $331,000 in 2013. Due to the delayed permitting and the resulting decrease in new home inventory available for sale, there were just 67 new home sales in Bridgeland for the year ended December 31, 2014. This represents a 66.5% decrease compared to 200 new home sales for the same period in 2013. The median new home price in Bridgeland increased 32.4% to $450,000 for 2014 compared to a median new home price of $340,000 for the same period in 2013.

The increase in not-for-profit land sales for the year ended December 31, 2015 compared to 2014 is due to three land sales in the last half of 2015 for a school site, a  church site and a  fire station totaling $20.7 million, of which $11.1 million was recorded as deferred income due to performance obligations related to these commercial sales. The work is expected to be completed by the end of June 2017 and includes construction of water, sewer, drainage and road improvements.

Bridgeland had no not-for-profit land sales for the years ending 2014 and 2013, respectively.

As of December 31, 2015, Bridgeland had 147 residential lots under contract, of which 70 lots are scheduled to close in the first half of 2016 for $7.8 million.

Builder price participation revenue increased for the year ended December 31, 2015 compared to 2014 at Bridgeland due to lots sold to homebuilders in 2014 and homes closed in 2015. Builder price participation revenue decreased for the year ended December 31, 2014 compared to 2013 at Bridgeland due to fewer home sales during 2014. Development of lots and model homes needed to be built in new sections while awaiting receipt of a wetlands permit.

Interest expense, net reflects the amount of interest that is capitalized at the project level. Interest expense, net decreased slightly for the year ended December 31, 2015 compared to 2014 at Bridgeland. Interest expense, net increased for the year ended

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December 31, 2014 compared to 2013 due to higher interest capitalization as a result of the increased level of development expenditures after receipt of the wetlands permit.

The Woodlands

For the year ended December 31, 2015, The Woodlands sold 48.7 residential acres compared to 105.9 acres and 169.9 acres in 2014 and 2013, respectively, and average price per residential acre (single-family – detached) decreased $104,000, or 14.1% to $633,000 in 2015 compared to $737,000 in 2014. The average price per residential acre was $615,000 in 2013.  

Gross margin decreased for the year ended December 31, 2015 compared to 2014 at The Woodlands due to the high volume of second quarter 2014 commercial land sales which hada higher profit margin.  Commercial land sales in 2015 represented 26.0% of total land sales and contributed 28.6% of the total gross margin while in 2014 commercial land sales were 53.6% of total land sales and contributed 65.0% of the total gross margin. Gross margin increased for the year ended December 31, 2014 compared to 2013 at The Woodlands due to the larger volume of commercial land sales in 2014.

The decrease in The Woodlands residential land sales for the year ended December 31, 2015 compared to 2014 was primarily due to increased homebuilder caution on expanding their land inventory because of slowing home sales caused by the uncertainty in the Houston market as a result of lower oil prices. There were 256 new home sales for the year ended December 31, 2015, representing a 45.3% decrease compared to 468 new home sales for the same period in 2014. The median new home price in The Woodlands was $562,000 in 2015 compared to a median new home price of $565,000 for the same period in 2014. The 468 new home sales for the year ended December 31, 2014 represents a 27.9% decrease compared to 649 new home sales for the same period in 2013. The $565,000 median new home price in The Woodlands increased 36.8% for 2014 compared to a median new home price of $413,000 for the same period in 2013.

Commercial land sales during 2014 included a $70.6 million land sale to the Houston Methodist The Woodlands Hospital System and three land sales of retail sites totaling $17.4 million. In 2015, commercial land sales totaled $11.4 million primarily relating to sales for medical facilities. The 2015 level of commercial land sales is more typical than the large sales in 2014. The increase in commercial land sales for the year ended December 31, 2014 compared to 2013 was primarily due tothe Houston Methodist The Woodlands Hospital System sale, and three other retail sitesales totaling $19.5 million.

Builder price participation decreased for the year ended December 31, 2015 compared to 2014 at The Woodlands due to fewer home sale closings.Builder price participation increased for the year ended December 31, 2014 compared to 2013 at The Woodlands due to home sales price appreciation since initial lot closing.

Other land revenues decreased for the year ended December 31, 2015 compared to 2014, primarily due to revenue from  a marketing contract in 2014. Other land revenues increased for the year ended December 31, 2014 compared to 2013 due to the marketing contract.

Land sales operations expenses increased slightly for the year ended December 31, 2015 compared to 2014. Land sales operations expense increased for the year ended December 31, 2014 compared to 2013 at The Woodlands due to higher commission and closing costs at The Woodlands for commercial land sales.

The Woodlands Hills (formerly Conroe MPC)

Planning for site development was underway during 2015 and we currently expect to begin water, sewer and drainage construction in the third quarter 2016. Actual construction start dates will be based on our evaluation of market conditions at that time.  Assuming these improvements are completed on schedule, the first lot sales are expected to begin in the fourth quarter 2017.  We believe that The Woodlands Hills MPC is well-positioned to generate demand in a low oil price environmentfor the following reasons: (i) it has a projected lower price point for all product types compared to The Woodlands; (ii)it benefits from The Woodlands’ brand reputation; and (iii)ithas afavorable location to major employment centers, such asThe Woodlands,with its medical and office centers,and the ExxonMobil campus located just south of The Woodlands.

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Maryland

There were no land sales for the year ended December 31, 2015 at Maryland. All of the residential land inventory was depleted by the end of 2013 and there were no commercial land sales in 2015 and 2014, respectively.

Our Maryland Communities contain approximately 108 commercial acres remaining to be sold in our Columbia, Gateway, Emerson and Fairwood communities. In December 2015, approximately 35 acres of the Columbia commercial acreage was transferred to our Strategic Developments segment as we began development of new residential units and commercial and retail space. The entitlements, which do not expire under Maryland law, will enable us to enhance the environment within the four communities and further support the approximate 112,000 residents.

As of December 31, 2015, we have approximately 108 commercial acres available for sale.We do not typically sell commercial land in our MPCs unless there are compelling and strategic reasons to do so.

Summerlin

Summerlin’s land sales for the year ended December 31, 2015 were lower compared to 2014 due to the timing of superpad delivery and commercial land sales.  Summerlin sold 21.8% fewer acres in 2015 than 2014.  However, the market remained strong in 2015.  Over one-third of the acreage sold in 2014 related to an approximate 106-acre bulk parcel of land sold for $44.8 million for an Age Qualified project, of which $33.5 million was deferred revenue in 2014 relating to contractual obligations on the sale. A portion of that deferred revenue was recognized in 2015, and the remainder will be recognized in future years.

Homebuilder demand for land in Summerlin continues to remain strong due to the positive economic conditions in the market.  The increase in land sales revenue for the year ended December 31, 2014 compared to 2013 was primarily due to increasing new home demand and low new home sales inventory coupled with a significant increase in the average price per superpad acre and the sale of considerably more custom lots than in the previous year.  Superpad sites are generally 20 to 25 acre parcels of unimproved land where we develop and construct the major utilities (water, sewer and storm drain) and roads to the borders of the parcel and the homebuilder completes the on-site utilities, roads, and finished lots.  The average price per superpad acre increased $41,000, or 8.6% to $519,000 for the year ended December 31, 2015, compared to $478,000 for the year ended December 31, 2014.  The average price per superpad acre increased $155,000, or 48.0% to $478,000 for the year ended December 31, 2014, compared to $323,000 for the year ended December 31, 2013.  The increases in the average price per superpad acre for the years ended December 31, 2015 and 2014 is primarily due to the continued strengthening of the local housing market.

Summerlin had 602 new home sales for the year ended December 31, 2015, representing a 37.8% increase compared to 437 new home sales for the same period in 2014. The median new home price in Summerlin increased 3.8% to $532,500 for 2015 compared to a median new home price of $513,000 for the same period in 2014.

Summerlin had 437 new home sales for the year ended December 31, 2014, representing a 22.8% decrease compared to 566 new home sales for the same period in 2013. The median new home price in Summerlin increased 49.6% to $513,000 for 2014 compared to a median new home price of $343,000 for the same period in 2013.

Builder price participation increased for the year ended December 31, 2015 compared to 2014 at Summerlin due to increased home sales closings at higher average prices.

Builder price participation increased for the year ended December 31, 2014 compared to 2013 at Summerlin due to home closings at higher average prices.

Gross margin increased for the year ended December 31, 2015 compared to 2014 at Summerlin due to increased land pricing driven by strong homebuilder demand.

Land development began on The Summit, our Discovery Land joint venture, in the second quarter 2015 and continues to progress on schedule based upon the initial plan as discussed in “Item 1. – Overview, Recent Significant Transactions.” As of December 31, 2015, the project has received buyer deposits totaling $44.8 million, representing $118.7 million in contracted land sales and we expect the first lot closings to begin in 2016. Please refer toNote 5 –Real Estate and Other Affiliates for a description of the joint venture.

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MPC Net Contribution

In addition to REP EBT for the MPCs, we believe that certain investors measure the value of the assets in this segment based on their contribution to liquidity and capital available for investment. MPC Net Contribution is defined as MPC REP EBT, plus MPC cost of sales, depreciation and amortization, and net collections from Special Improvement District (“SID”) bonds and Municipal Utility District (“MUD”) receivables, reduced by MPC development and acquisition expenditures. Although MPC Net Contribution can be computed from GAAP elements of income and cash flows, it is not a GAAP-based operational metric and should not be used to measure operating performance of the MPC assets as a substitute for GAAP measures of such performance. A reconciliation of REP EBT to consolidated net income (loss) as computed in accordance with GAAP is presented in Note 17 - Segments.

The following table sets forth the MPC Net Contribution for the years ended December 31, 2015, 2014 and 2013.

	Year Ended December 31,						2015-2014		2014-2013
(in thousands)	2015		2014		2013		Change		Change
MPC REP EBT (a)	$	114,366	$	221,181	$	130,978	$	(106,815)	$	90,203
Plus:
Cost of sales - land		88,065		119,672		124,040		(31,607)		(4,368)
Depreciation and amortization		640		397		32		243		365
MUD and SID collections, net (b)		20,345		57,854		(8,613)		(37,509)		66,467
Less:
MPC development expenditures		(197,020)		(140,735)		(133,590)		(56,285)		(7,145)
MPC land acquisitions (c)		(7,293)		(118,319)		(5,667)		111,026		(112,652)
MPC Net Contribution	$	19,103	$	140,050	$	107,180	$	(120,947)	$	32,870

(a) For a detailed breakdown of our Master Planned Communities segment EBT, refer to Note 17 – Segments.

(b) SID collections are shown net of SID transfers to buyers in the respective periods.

(c) The year ended December 31, 2014 includes $17.4 million non-monetary consideration relating to land sales of approximately 26 acres of commercial land in The Woodlands.

MPC Net Contribution decreased for the year ended December 31, 2015 compared to 2014 primarily due to a decline in sales at our Houston area MPCs and increased land development expenditures at Bridgeland, Summerlin and The Woodlands. The increased land development expenditures were offset by significantly lower land acquisitions. In 2014, a major land acquisition was completed for 2,055 acres in The Woodlands Hills. MPC Net Contribution increased for the year ended December 31, 2014 compared to 2013 due to increased land sales.

The following table sets forth MPC land inventory activity for the years ended December 31, 2015 and 2014.

MPC Land Inventory Activity
(In thousands)	Bridgeland		Maryland		Summerlin		The Woodlands		TheWoodlands Hills		Total MPC
Balance December 31, 2013	$	402,974	$	59,309	$	877,926	$	197,549	$	—	$	1,537,758
Acquisitions		—		—		—		19,806		98,513		118,319
Development expenditures (a)		48,070		2,040		54,164		35,697		764		140,735
Cost of Sales		(13,108)		—		(70,597)		(35,967)		—		(119,672)
MUD reimbursable costs (b)		(29,679)		—		—		(7,769)		—		(37,448)
Other		6,536		(2,984)		166		(2,354)		7		1,371
Balance December 31, 2014	$	414,793	$	58,365	$	861,659	$	206,962	$	99,284	$	1,641,063
Acquisitions		4,100		—		—		3,179		14		7,293
Development expenditures (a)		67,088		390		82,324		45,419		1,799		197,020
Cost of Sales		(6,763)		—		(65,414)		(15,888)		—		(88,065)
MUD reimbursable costs (b)		(41,709)		—		—		(16,796)		—		(58,505)
Transfer to Strategic Development		(370)		(36,578)		—		(1,002)		—		(37,950)
Other (c)		(1,919)		(34)		(14,293)		(1,775)		7		(18,014)
Balance December 31, 2015	$	435,220	$	22,143	$	864,276	$	220,099	$	101,104	$	1,642,842

(a)Development expenditures are inclusive of capitalized interest and property taxes.

(b)MUD reimbursable costs represent land development expenditures transferred to MUD Receivables.

(c)Primarily represents land contributed to the Discovery joint venture.

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Operating Assets

Operating assets typically generate rental revenues sufficient to cover their operating costs except when a substantial portion, or all, of the property is being redeveloped, vacated for development or in its initial lease-up phase. Variances between years in NOI typically result from changes in rental rates, occupancy, tenant mix and operating expenses. We view NOI as an important measure of the operating performance of our Operating Assets.

Total revenues and expenses for the Operating Assets segment are summarized as follows:

Operating Assets Revenues and Expenses (*)

	Year Ended December 31,						2015 - 2014		2014 - 2013
(In thousands)	2015		2014		2013		Change		Change
Minimum rents	$	149,064	$	95,807	$	80,124	$	53,257	$	15,683
Tenant recoveries		39,415		28,133		20,901		11,282		7,232
Hospitality revenues		45,374		37,921		39,201		7,453		(1,280)
Other rental and property revenues		25,453		24,429		20,360		1,024		4,069
Total revenues		259,306		186,290		160,586		73,016		25,704
										—
Other property operating costs		68,078		62,752		61,146		5,326		1,606
Rental property real estate taxes		21,856		14,860		12,065		6,996		2,795
Rental property maintenance costs		10,236		8,592		7,552		1,644		1,040
Hospitality expenses		34,839		31,829		29,454		3,010		2,375
Provision for doubtful accounts		3,998		1,399		835		2,599		564
Other income, net		(524)		—		—		(524)		—
Depreciation and amortization		89,075		49,272		31,427		39,803		17,845
Interest income		(37)		(151)		(135)		114		(16)
Interest expense		31,148		17,081		19,146		14,067		(2,065)
Equity in Earnings from Real Estate and Other Affiliates		(1,883)		(2,025)		(3,893)		142		1,868
Total operating expenses		256,786		183,609		157,597		73,177		26,012
Income (loss) before development expenses		2,520		2,681		2,989		(161)		(308)
Demolition costs		2,675		6,712		2,078		(4,037)		4,634
Development-related marketing costs		9,747		9,770		3,462		(23)		6,308
Total development expenses		12,422		16,482		5,540		(4,060)		10,942
		—						—		—
Operating Assets REP EBT	$	(9,902)	$	(13,801)	$	(2,551)	$	3,899	$	(11,250)

(*)For a reconciliation of Operating Assets REP EBT to consolidated income (loss) before taxes, refer to Note 17 - Segments.  

Minimum rents and tenant recoveries for the year ended December 31, 2015 compared to 2014 increased primarily due to increases of $31.4 million for our retail properties and $28.9 million for our office properties.  The increase for our retail properties was primarily due to the openings of Downtown Summerlin, the Outlet Collection at Riverwalk and the Columbia Regional Building in 2014 (“2014 Retail Openings”), the 2015 openings of Creekside Village Green and Hughes Landing Retail (“2015 Retail Openings”), and higher rental rates and increased occupancy at Ward Village.  The increase in our office properties was primarily due to the acquisition of the 10-60 Columbia Corporate Centeroffice buildingsin December 2014 (“2014 Office Acquisition”), and the openings of 3831 Technology Forest Drive and Two Hughes Landing in 2014 (“2014 Office Openings”), the openings of 1725 & 1735 Hughes Landing Boulevard and One Summerlin in 2015 (“2015 Office Openings”), and increases at One Hughes Landing due to increased leasing, since the opening in 2013. Minimum rents and tenant recoveries for the year ended December 31, 2014increased $22.9 million compared to 2013 primarily due to the strong growth in our retail and office properties of $7.1 million and $15.8 million, respectively.  The growth in our retail properties was primarily due to our 2014 Retail Openings. These increases were partially offset by lower minimum rents and recoveries at retail properties of $2.8 million related to the sale of Rio West in 2013 and the closing of Pier 17 at South Street Seaport for redevelopment. The growth in our office properties was primarily due to higher occupancy and a full year of operations in 2014 for 3 Waterway Square and One Hughes Landing, both of which opened in 2013.

Hospitality revenues increased in 2015 due to the completion of the redevelopment at The Woodlands Resort and Conference Center resulting in improved occupancy and increased room rates.  Hospitality revenues decreased in 2014 compared to 2013 due to the redevelopment of the property. 

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Other rental and property revenues consist primarily of other rental and special event revenue, percentage rents and lease termination fees. Other rental and property revenue in 2015 increased primarily due our 2014 Retail Openings,leasetermination fees at 10-60 Columbia Corporate Center, Ward Village and Two Hughes Landing,partiallyoffset by the sale of The Club at Carlton Woods in September 2015. Revenues for The Club at Carlton Woods were $9.9 million, $15.0 million and $14.3 million for the years ended 2015 up through the date of sale, 2014 and 2013, respectively. Other rental property revenues for our retail properties were $7.7 million, $5.4 million and $5.0 million for the years ended 2015, 2014, and 2013, respectively. Other rental property revenues for our office properties were $4.1 million, $1.5 million and $.07 million for the years ended 2015, 2014, and 2013, respectively

Other property operating costs and rental property maintenance costs for the year ended December 31, 2015 compared to 2014 increased due to increases of $8.4 million for our retail properties and $5.6 million for our office properties. The increase for our retail properties was primarily due to our 2015 and 2014 Retail Openings. The increase for our office properties was primarily due to our 2014 Office Acquisition and our 2014 Office Openings and our 2015 Office Openings. These increases were offset by lower expenses due to the sale of The Club at Carlton Woods during 2015.

Other property operating costs and rental property maintenance costs for the year ended December 31, 2014 compared to the same period in 2013 increased primarily due toan increase of $4.6 million for our office properties, offset by a decrease of $3.0 million for our retail properties. The decrease in retail costs was due to the sale of Rio West, the redevelopment of South Street Seaport and a 2013 write off at 20/25 Waterway offset by an increase from the 2014 Retail Openings.

Rental property real estate taxes for the year ended December 31, 2015 compared to 2014, increased $3.7million for our retail properties, and $2.4million for our office properties.  The increase for our retail properties was primarily due to our 2014 Retail Openings and an increasein 2015 related to a reduction in property taxes at Landmark Mall from a favorable tax settlement with the City of Alexandria which resulted in a credit for 2014.  The increase for our office properties was primarily due to our 2014 Office Acquisition, and our 2014 Office Openings and 2015 Office Openings. Rental property real estate taxes increased $2.8 million for the year ended December 31, 2014 compared to 2013. The increase is primarily due to increased higher tax value assessments for The Woodlands office properties, specifically 3 Waterway which opened in 2013, and One and Two Hughes Landing that both opened in 2014.

Provision for doubtful accounts increased for the year ended December 31, 2015 compared to 2014 due to collectability concerns with a few tenants at Downtown Summerlin and the Outlet Collection at Riverwalk.

Depreciation and amortization for the year ended December 31, 2015 compared to 2014 increased primarily from $19.5million for our retail properties, $15.5 million for our office properties and $2.3 million due to the completion of construction at The Woodlands Resort & Conference Center and the opening of One Lakes Edge. The increase for retail properties was primarily due to the 2015 Retail Openings and accelerated depreciation at Ward Village and Landmark Mall related to the planned redevelopment.  The increase for office properties is primarily due to our 2014 Office Acquisition and our 2014 Office Openings and 2015 Office Openings.Depreciation and amortizationexpense for the year ended December 31, 2014 compared to 2013 increased $13.5million for our retail properties, and $4.1million for our office properties due to the accelerated depreciation at Ward Village and Landmark Mall related to the planned redevelopment. Additionally, depreciation and amortization expenseincreased due to placing into service One Hughes Landing, 3 Waterway Square, Downtown Summerlin and the Outlet Collection at Riverwalk.

When a development property is placed into service, depreciation is calculated for the property ratably over the estimated useful lives of each of its components; however, most of our recently developed properties do not reach stabilized revenues and income for 12 to 24 months after being placed into service due to the timing of tenants taking occupancy and subsequent leasing of remaining unoccupied space during that period.  As a result, operating income, earnings before taxes and net income will not reflect the ongoing earnings potential of operating assets during this transition period to stabilization. Accordingly, we calculate Adjusted Operating Assets REP EBT, which excludes development-related demolition and marketing costs, which do not represent recurring costs for stabilized real estate properties.  If the depreciation and development-related costs were excluded, Adjusted Operating Assets REP EBT would have increased 76.3% and 51.0% for the years ended December 31, 2015 and 2014, respectively.

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The followingtablereconcilesAdjusted Operating Assets REP EBTtoOperating Assets REP EBT:

Reconciliation of Adjusted Operating Assets REP EBT to	Year Ended December 31,
Operating Assets REP EBT (in thousands)	2015		2014		2013
Adjusted Operating Assets REP EBT	$	91,595	$	51,953	$	34,416
Depreciation and amortization		(89,075)		(49,272)		(31,427)
Demolition costs		(2,675)		(6,712)		(2,078)
Development-related marketing costs		(9,747)		(9,770)		(3,462)
Operating Assets REP EBT	$	(9,902)	$	(13,801)	$	(2,551)

Interest expense increased for the year ended December 31, 2015 due tohigher loan balanceson properties acquired or put into service.  Thedecrease in interest expense for the year ended December 31, 2014 compared to 2013isprimarilydue to therefinancing of the70 Columbia Corporate Center mortgagewhich settled the participation right contained in the refinanced mortgage. The value of the lender’s participation right was settled for less than its estimated value recorded in our financials, resulting in a $3.4 million reduction of interest expense partially offset by higherinterest expensefrom mortgageson our 2014 Retail Openings and properties placed in service in 2013, including 3 Waterway Square and One Hughes Landing.

Equity in earnings from Real Estate and Other Affiliates for the year ended December 31, 2015 remained relatively flat compared to the same period in 2014. Equity in earnings from Real Estate and Other Affiliates decreasedfor the year ended December 31, 2014 compared to the same period in 2013primarilydue toa lower cash distribution from our Summerlin HospitalMedical Center investment, and our share of losses atMillenniumWoodlands Phase II as a result of the property’s start-up activities.

Development-related marketing costs for the year ended December 31, 2015 relate toa greater marketing initiative at South Street Seaportas we accelerate leasing efforts in advance of the completion of our first project.  Thecosts in 2014 relate to South Street Seaport, Downtown Summerlin and the Outlet Collection at Riverwalk.The development-related marketing costs for the year ended December 31, 2013 relateprimarilyto the SEE/CHANGE program at South Street Seaport.

Demolitioncosts decreased for the year ended December 31, 2015 versus 2014 due to the substantial completion of the demolition of Pier 17 and the Fulton Market Building at South Street Seaport which occurred in 2014. Demolition costs for 2013 related to the redevelopment of the Outlet Collection at Riverwalk, the Columbia Regional Building and Pier 17 at South Street Seaport.

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Operating Assets NOI and REP EBT

	Year Ended December 31,						2015 - 2014		2014 - 2013
(In thousands)	2015		2014		2013		Change		Change
Retail
Columbia Regional (a)	$	1,342	$	268	$	—	$	1,074	$	268
Cottonwood Square		677		647		451		30		196
Creekside Village Green (b)		824		—		—		824		—
Downtown Summerlin (b)		10,117		810		(62)		9,307		872
Hughes Landing Retail (b)		1,468		—		—		1,468		—
1701 Lake Robbins (c)		399		185		—		214		185
Landmark Mall (d)		(347)		953		491		(1,300)		462
Outlet Collection at Riverwalk (e)		6,450		528		(618)		5,922		1,146
Park West (f)		1,812		2,058		1,608		(246)		450
Ward Village (g)		25,566		24,255		24,144		1,311		111
20/25 Waterway Avenue		1,883		1,505		1,640		378		(135)
Waterway Garage Retail		690		809		370		(119)		439
Total Retail		50,881		32,018		28,024		18,863		3,994
Office
10-70 Columbia Corporate Center (h)		12,375		2,351		757		10,024		1,594
Columbia Office Properties		450		496		465		(46)		31
One Hughes Landing (i)		5,262		4,443		(139)		819		4,582
Two Hughes Landing (j)		4,489		157		—		4,332		157
1725 Hughes Landing Boulevard (b)		(208)		—		—		(208)		—
1735 Hughes Landing Boulevard (b)		(34)		—		—		(34)		—
2201 Lake Woodlands Drive (k)		(144)		141		(167)		(285)		308
9303 New Trails		1,898		1,860		1,679		38		181
110 N. Wacker		6,100		6,077		6,023		23		54
One Summerlin (b)		(206)		—		—		(206)		—
3831 Technology Forest Drive (l)		1,956		(1)		—		1,957		(1)
3 Waterway Square		6,288		6,181		2,059		107		4,122
4 Waterway Square		5,766		5,756		5,886		10		(130)
1400 Woodloch Forest		1,621		1,191		1,160		430		31
Total Office		45,613		28,652		17,723		16,961		10,929
Hughes Landing Hotel (Embassy Suites) (b)		(25)		—		—		(25)		—
85 South Street (m)		494		(188)		—		682		(188)
Millennium Waterway Apartments (n)		4,169		4,386		4,457		(217)		(71)
One Lakes Edge (b)		982		—		—		982		—
The Woodlands Resort & Conference Center (o)		10,560		6,092		10,167		4,468		(4,075)
Total Retail, Office, Multi-family, and Hospitality		112,674		70,960		60,371		41,714		10,589
The Woodlands Ground leases (p)		1,190		458		444		732		14
The Woodlands Parking Garages		(508)		(598)		(749)		90		151
Other Properties		3,857		2,116		708		1,741		1,408
Total Other		4,539		1,976		403		2,563		1,573
Operating Assets NOI - Consolidated and Owned		117,213		72,936		60,774		44,277		12,162
Redevelopments
South Street Seaport (b)		(2,692)		(593)		(5,665)		(2,099)		5,072
Total Operating Asset Redevelopments		(2,692)		(593)		(5,665)		(2,099)		5,072
Dispositions
The Club at Carlton Woods (b)		(942)		(4,410)		(5,241)		3,468		831
Rio West Mall		—		77		790		(77)		(713)
Total Operating Asset Dispositions		(942)		(4,333)		(4,451)		3,391		118
Total Operating Assets NOI - Consolidated		113,579		68,010		50,658		45,569		17,352
Straight-line lease amortization (q)		7,391		1,064		1,759		6,327		(695)
Demolition costs		(2,675)		(6,712)		(2,078)		4,037		(4,634)
Development-related marketing costs		(9,747)		(9,770)		(3,462)		23		(6,308)
Depreciation and amortization		(89,075)		(49,272)		(31,427)		(39,803)		(17,845)
Write-off of lease intangibles and other		(671)		(2,216)		(2,883)		1,545		667
Other income, net		524		—		—		524		—
Equity in earnings from Real Estate and Other Affiliates		1,883		2,025		3,893		(142)		(1,868)
Interest, net		(31,111)		(16,930)		(19,011)		(14,181)		2,081
Total Operating Assets REP EBT (r)	$	(9,902)	$	(13,801)	$	(2,551)	$	3,899	$	(11,250)

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	Year Ended December 31,						2015 - 2014		2014 - 2013
(In thousands)	2015		2014		2013		Change		Change
Operating Assets NOI - Equity and Cost Method Investments
Millennium Woodlands Phase II	$	1,414	$	(84)	$	(74)	$	1,498	$	(10)
Stewart Title Company		2,007		2,659		2,514		(652)		145
Summerlin Baseball Club		305		(153)		(13)		458		(140)
The Metropolitan Downtown Columbia (b)		1,194		—		—		1,194		—
Woodlands Sarofim # 1		1,496		1,516		1,417		(20)		99
Total NOI - equity investees		6,416		3,938		3,844		2,478		94
Adjustments to NOI (s)		(3,069)		(1,112)		(77)		(1,957)		(1,035)
Equity Method Investments REP EBT		3,347		2,826		3,767		521		(941)
Less: Joint Venture Partner's Share of REP EBT		(3,211)		(2,450)		(2,377)		(761)		(73)
Equity in earnings from Real Estate and Other Affiliates		136		376		1,390		(240)		(1,014)
Distributions from Summerlin Hospital Investment (t)		1,747		1,649		2,503		98		(854)
Segment equity in earnings from Real Estate and Other Affiliates	$	1,883	$	2,025	$	3,893	$	(142)	$	(1,868)
Company's Share of Equity Method Investments NOI
Millennium Woodlands Phase II	$	1,151	$	(68)	$	—	$	1,219	$	(68)
Stewart Title Company		1,004		1,330		1,257		(326)		73
Summerlin Baseball Club		153		(77)		(7)		230		(70)
The Metropolitan Downtown Columbia (b)		597		—		—		597		—
Woodlands Sarofim # 1		299		303		283		(4)		20
Total NOI - equity investees	$	3,204	$	1,488	$	1,533	$	1,716	$	(45)

	Economic	Year Ended December 31, 2015
(In thousands)	Ownership	Debt		Cash
Millennium Woodlands Phase II	81.43%	$	37,700	$	2,017
Stewart Title Company	50.00%		—		365
Summerlin Baseball Club	50.00%		—		1,110
The Metropolitan Downtown Columbia (b)	50.00%		63,069		3,050
Woodlands Sarofim # 1	20.00%		5,922		667

(a) Stabilized annual NOI of $2.2 million is expected by the end of 2017.

(b) Please refer to discussion in the following section regarding this item.

(c) Property was acquired in July 2014.

(d) The negative NOI in 2015 is due to a decline in occupancy as the property loses tenants in anticipation of its redevelopment. The higher 2014 NOI is due to a one-time favorable property tax settlement with the City of Alexandria of $0.7 million that occurred in the first quarter 2014.

(e) Property was re-opened May 2014 after an extensive redevelopment and includes the city’s first Nordstrom Rack and Neiman Marcus Last Call. Stabilized annual NOI of $7.5 million is expected by early 2017 based on leases in place as of December 31, 2015.

(f) NOI decreased for the year ended December 31, 2015, due to the loss of a 18,339 square foot tenant. The space was subsequently released with no additional tenant improvements required.

(g) NOI increase is primarily due to higher rental rates and increased occupancy.

(h) In December 2014, we acquired 10–60 Columbia Corporate Center comprised of six adjacent office buildings totaling 716,998 square feet. We acquired 70 Columbia Corporate Center in 2012.

(i) NOI increase for the years ended December 31, 2015 and 2014 relate to continued increase in occupancy and stabilization of the property.  

(j) Building was placed in service at the end of 2014. NOI increased for the year ended December 31, 2015 due primarily to increased occupancy and a $2.0 millionlease termination fee.

(k) The decrease in NOI is directly related to the decrease in occupancy from 100% occupied in August 2014 to unoccupied as of December 31, 2015. The building is used as temporary space.

(l) Building was placed in service in 2014 and is 100% leased to a single tenant.

(m) Building was acquired in October 2014 and is 100% occupied.

(n) The decrease in NOI is due to the decrease in occupancy from 91.0% at December 31, 2014 to 84.5% at December 31, 2015.

(o) The property underwent an extensive renovation project in 2014 which resulted in lower NOI. The renovation project was completed in late 2014 and the 2015 NOI has increased due to the higher revenue per available room (“RevPAR”) resulting from the new and upgraded rooms.

(p) The increase in NOI is from new ground leases executed in 2015.

(q) The net change in straight-line lease amortization for the year ended December 31, 2015 compared to the same periods in 2014 is primarily due to new leases at Downtown Summerlin and 10-60 Columbia Corporate Center purchased in December 2014.

(r) For a detailed breakdown of our Operating Asset segment REP EBT, please refer to Note 17 - Segments in the Condensed Consolidated Financial Statements.

(s) Adjustments to NOI include straight-line rent and market lease amortization, demolition costs, depreciation and amortization and non-real estate taxes. The increases are primarily due to placing Millennium Woodlands Phase II in service during the third quarter 2014 and placing The Metropolitan Downtown Columbia in service in 2015.

(t) Distributions from the Summerlin Hospital are typically made one time per year in the first quarter.

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Reconciliation of Operating Assets Segment Equity in Earnings

	Year Ended December 31,
(In thousands)	2015		2014		2013
Equity Method investments	$	136	$	376	$	1,390
Cost basis investment		1,747		1,649		2,503
Operating Assets segment Equity in earnings from Real Estate and Other Affiliates		1,883		2,025		3,893
Strategic Developments segment Equity in earnings from Real Estate and Other Affiliates (a)		1,838		21,311		10,535
Equity in earnings from Real Estate and Other Affiliates	$	3,721	$	23,336	$	14,428

(a) The Strategic Developments Equity in earnings from Real Estate and Other Affiliatesis  primarily related to our ONE Ala Moana joint venture which was completed in 2014, with sales closed out in 2015. Please refer to Note 5 –Real Estate and Other Affiliates for further description of this joint venture.

Retail Properties

Retail NOI for the year ended December 31,2015 increased $18.9 millioncomparedto2014 primarilydueto additional revenues related to our 2014 Retail Openings and our 2015 Retail Openings and increased leasing at Ward Village.

The following table summarizes the leases we executed at our retail properties during the year ended December 31, 2015:

\
			Square Feet			Per Square Foot						(In thousands)
Retail Properties (a)	Total Executed	Avg. Lease Term (Months)	Total Leased	Associated with Tenant Improvements	Associated with Leasing Commissions	Avg. Starting Rents per Annum		Total Tenant Improvements		Total Leasing Commissions		Avg. Annual Starting Rents		Tenant Improvements		Leasing Commissions
Pre-leased (b)	23	105	119,824	118,324	70,866	$	27.59	$	74.25	$	10.36	$	3,306	$	8,786	$	734
Comparable - Renewal (c)	30	38	166,691	86,676	4,480		39.74		23.07		1.61		6,625		2,000		7
Comparable - New (d)	3	60	7,277	7,277	—		28.42		14.51		—		207		106		—
Non-comparable (e)	69	89	365,428	304,765	272,473		32.72		94.04		9.82		11,958		28,661		2,677
Total			659,220	517,042	347,819							$	22,096	$	39,553	$	3,418

(a) Excludes executed leases with a term of 12 months or less totaling 96,017 square feet.

(b) Pre-leased information is associated with projects under development at December 31, 2015.

(c) Comparable - Renewal information is associated with stabilized assets whereby the space was occupied by the same tenant within 12 months prior to the executed agreement. These leases represent an increase in cash rents from $36.57 per square foot to $39.74 per square foot, or 8.7% over previous rents.

(d) Comparable - New information is associated with stabilized assets whereby the space was occupied by a different tenant within 12 months prior to the executed agreement. These leases represent a increase in cash rents from $25.99 per square foot to $28.42 per square foot, or 9.3% over previous rents.

(e) Non-comparable information is associated with assets whereby the square footage was previously vacant for more than 12 months or has never been occupied.

Creekside Village Green

In the first quarter 2015, we substantially completed Creekside Village Green andmovedthe asset into our Operating Assets segment. Total development costs are expected to be approximately $19 million, of which we have incurred $17.2 million as of December 31, 2015. As ofFebruary 1, 2016, 80.7% ofthe project has been leased. We expect to reach stabilized annual NOI of $1.9 million by the end of 2017.

Downtown Summerlin

As of February 1, 2016, the retail portion of Downtown Summerlin is90.6% leased and the office building, One Summerlin, is 69.3% leased, of which 12.4% is leased by our regional MPC and operations teams. We currently expect the property to reach stabilized annual NOIof$32.0 millionby the end of 2018. This downward revision from $37.2 million in prior periods was caused by our decision to contract for lower economic rents with certain tenants in order to optimize the retail and restaurant mix to achieve the greatest long-term value for the project and our adjacent developable land. To the extent our tenants generate better than expected revenues in their stores, actual stabilized NOI could be higher than projected because many of our leases allow us to participate in revenues above a certain threshold. Total estimated development costs are approximately $418 million, of which we have incurred $404.6 million as of December 31, 2015. The remaining costs to be incurred are primarily for tenant improvements and leasing. The project is financed by a $311.8 million construction loan. The loan has an initial rate of one-month LIBOR plus 2.25% with an initial maturity date of July 15, 2017, with two, one-year extension options.

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Hughes Landing Retail

In the second quarter 2015, we substantially completed Hughes Landing Retail and reclassified the asset to our Operating Assetssegment. Total development costs are expected to be approximately $36 million, of which we have incurred $32.6 million as of December 31, 2015. The project is financed by a $36.6 million non-recourse construction loan bearing interest at one-month LIBOR plus 1.95% with an initial maturity date of December 20, 2016, with two, one-year extension options. As ofFebruary 1, 2016, 90.7% of the project has been leased. We expect to reach stabilized annual NOI of $3.5 million by the end of the first quarter 2016.

Office Properties

All of the office properties listed in the Operating Assets NOI and REP EBT table, except for 110 N. Wacker and One Summerlin, are located in Columbia, Maryland and in The Woodlands, Texas.Leases related to our office properties, except those located in Columbia, Maryland, are generally triple net leases. Triple net leases typically require tenants to pay their pro-rata share of the majority of property operating costs, such as real estate taxes, utilities and insurance, as well as their own direct space maintenance.

Office property NOI increased $17.0 million to $45.6 million for the year ended December 31, 2015, as compared to $28.7 million in 2014. The increase is due primarily to the 2014 Office Acquisition in Columbia and a full year of operations at Two Hughes Landing and 3 Waterway in The Woodlands.

The following table summarizes our executed office property leases during the year ended December 31, 2015:

			Square Footage			Per Square Foot						(In thousands)
Office Properties (a)	Total Executed	Avg. Lease Term (Months)	Total Leased	Associated with Tenant Improvements	Associated with Leasing Commissions	Avg. Starting Rents per Annum		Total Tenant Improvements		Total Leasing Commissions		Avg. Annual Starting Rents		Tenant Improvements		Leasing Commissions
Pre-leased (b)	5	104	139,296	139,296	131,824	$	32.61	$	73.78	$	2.85	$	4,543	$	10,278	$	376
Comparable - Renewal (c)	10	34	45,075	19,765	19,537		27.86		14.06		1.96		1,256		278		38
Comparable - New (d)	1	36	2,202	2,202	2,202		27.50		20.00		5.15		61		44		11
Non-comparable (e)	27	61	147,012	124,474	82,311		29.77		43.12		13.87		4,377		5,367		1,141
Total			333,585	285,737	235,874							$	10,237	$	15,967	$	1,566

(a) Excludes one executed lease with a term of 12 months or less.

(b) Pre-leased information is associated with projects under development at December 31, 2015.

(c) Comparable - Renewal information is associated with stabilized assets whereby the space was occupied by the same tenant within 12 months prior to the executed agreement. These leases represent an increase in cash rents from $25.55 per square foot to $27.86 per square foot, or 9.1% over previous rents.

(d) Comparable - New information is associated with stabilized assets whereby the space was occupied by a different tenant within 12 months prior to the executed agreement. This lease represents a decrease in cash rents from $30.62 per square foot to $27.50 per square foot, or (10.2%) over previous rents.

(e) Non-comparable information is associated with assets whereby the square footage was previously vacant for more than 12 months or has never been occupied.

1725 & 1735 Hughes Landing Boulevard

Construction began during the fourth quarter 2013 and the project was substantially completed and moved to our Operating Assets segment in the fourth quarter of 2015.  ExxonMobil also began occupying their space in October 2015. Total development costs are expected to be approximately $213 million, which includes $61.1 million of tenant improvements that are being reimbursed by ExxonMobil. As of December 31, 2015, we have incurred $180.6 million of development costs, and we have been reimbursed for $58.1 million of ExxonMobil’s reimbursable tenant improvement costs. ExxonMobil has pre-leasedthe318,170 square foot1735Hughes Landing Boulevard building for 12 years, and 159,952 square feetof the total 331,067 square foot1725Hughes Landing Boulevardbuildingfor eight years.  We expect to reach stabilized annual NOI, based on ExxonMobil’s current 478,000 square foot commitment and assuming lease of the remaining space,of approximately $14.0 million in 2018.In August2015, ExxonMobil elected not to exercise its option to lease the remainder of the1725Hughes Landing Boulevardbuilding, but maintains a right of first refusal for a new lease of this space and any other vacant multi-tenant office building space in the Hughes Landingdevelopmentfor up to two yearsprior tothe end ofitslease term. The project is financed by a $143.0 million non-recourse construction loan bearing interest at one-month LIBOR plus 1.90% with an initial maturity date ofJune30, 2018, with a one-year extension option. In accordance with the terms of the loan agreement, the interest rate was reduced to LIBOR plus 1.65% when ExxonMobil occupied its space.

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Multi-family

One Lakes Edge

In the second quarter 2015, we substantially completed One Lakes Edge located at Hughes Landing in The Woodlands and reclassified the asset to our Operating Assets segment. Total development costs were approximately $88 million, of which we have incurred $82.2 million as of December 31, 2015. The project is financed by a $73.5 million non-recourse construction loan bearing interest atone-month LIBOR plus 2.50% with an initial maturity date of November 25, 2016, with two, one-year extension options.  As of February 1, 2016,58.5% of the units are leased. We expect the apartments to reach stabilized annual NOI of $7.5million in 2017.

Hospitality

Hughes Landing Hotel (Embassy Suites)

In the fourth quarter 2014, we began construction of an Embassy Suites by Hilton hotel in Hughes Landing. We substantially completed and opened the hotel in December 2015, and we reclassified the asset to our Operating Assets segment. Total development costs are expected to be approximately $46 million, of which we have incurred $40.7 million as of December 31, 2015.We expect to reachprojectedannual NOI of approximately $4.5 million in 2018. The project is financed by a $37.1 million non-recourse construction loan bearing interest at one-month LIBOR plus 2.50% with an initial maturity date of October 2, 2018, with two, one-year extension options.

Other

The Club at Carlton Woods

OnSeptember 4, 2015, the Company sold The Club atCarlton Woods, its 36-hole golf and country club in The Woodlands, for net cash proceeds of $25.1 million and purchaser’s assumption of net liabilities of $4.0 million, resulting in a pre-tax gain of $29.1 million.The property was developed and operated by us as an amenity to help sell residential lots in a gated community in The Woodlands. Most of the lots have been sold, and the sale of this non-core asset has allowed us to redeploy capital to our development activities.

Other Properties

The properties that are included in our Other Properties description in our Operating Assets NOI and REP EBT table include the Golf Courses at TPC Summerlin and TPC Las Vegas, Kewalo Basin Harbor, Merriweather Post Pavilion, as well as our share of any NOI related to our equity investments. Total redevelopment costs for Kewalo Basin Harbor are expected to be approximately $15 million, of which we have incurred $1.3 million of development costs as of December 31, 2015.  

Partially Owned

The Metropolitan Downtown Columbia (formerly known as Parcel D)

The Metropolitan Downtown Columbia venture, in which we are a 50% partner with Kettler, Inc., completed construction of The Metropolitan Downtown Columbia and the property was movedinto our Operating Assets segment during the first quarter of 2015. Total development costs, including land value, are expected to be $97 million, of which the venture has incurred $95.9million as of December 31, 2015. The joint venture obtained a $64.1 million non-recourse construction loan. The loan bears interest at one-month LIBOR plus 2.40% and matures in July 2020.  As ofFebruary 1, 2016,88.4% of the units have been leased.  We expect thepropertyto reach stabilized annual NOI of $7.0 million by the end of 2016, of which our share would be $3.5 million.

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Redevelopments

The Seaport District

Seaport District First Project

In 2013, the City of New York executed the amended and restated ground lease for South Street Seaport and we provided a completion guarantee to the City for the renovation and reconstruction of the existing Pier 17 Building (“Renovation Project”). Construction began in 2013 and is expected to substantially conclude in 2017. The Renovation Project features a newly constructed pier and building and is designed to include upscale retail, restaurants and an outdoor entertainment venue on a vibrant open rooftop encompassing approximately 1.5 acres. Additionally, we are repositioning a significant portion of the 180,000 square feet of retail space in the historic area. In 2014, we entered into a 20-year lease with iPic Entertainment for 46,000 square feet in the Fulton Market Building located in the historic area. iPic Theatres will serve as an anchor attraction for residents, workers and tourists, and we expect the historic area to be substantially repositioned by the end of 2016. We have incurred $192.6 million of development costs on this project which include $9.9 million of demolition costs and $12.0 million of development-related marketing costs,net of insurance proceeds received of $47.9 million as of December 31, 2015.

In the third quarter 2015, we formed a partnership with renowned Chef and Restaurateur Jean-Georges Vongerichten to bring two new, unique culinary experiences to the Seaport District. Subject to obtaining the requisite approvals from the Cityas discussed in the Seaport District Second Project below,Jean-Georges will introduce a 40,000 square foot food market in the Tin Building.  A 10,000 square foot flagship seafood restaurant willalsobe located within the new Pier 17 building. We also executed a lease with McNally Jackson Books for a 7,100 square foot store in Schermerhorn Row in the historical district.We expect that these important leasing transactions will accelerate pre-leasing activity for our first project in advance of its completion date.

Due to the complex nature of the Pier 17 reconstruction, historic area renovation, the Superstorm Sandy remediation and leasing of the vacant space, our estimates of the total costs for the first project will likely be revised as the development progresses.  The total current cost estimate for the project is $514 million, net of $47.9 million of insurance proceeds received and applied toward our development expenditures (discussed further below).  A significant portion of the increase in estimated costs, compared to prior years includes adiscretionaryamount that will ultimately be determined based on the structure and economics of the leases and operating agreements with, and mix of, prospective tenants in the first project.  The current estimate also includes design revisions required by New York City due to flood zone designation changes required by FEMA subsequent to Superstorm Sandy, changes to the Pier17building that would have either been required expenditures in the future or will make it operationally more efficient, enhancement of the initial design, and adjustments for increases in construction costs. 

Seaport District Second Project

The public approval process we began on December10,2014 forourfurtherredevelopmentoftheSeaportDistrict,includinguptoapproximately700,000squarefeetofadditionalspace, was suspended in early 2015, and we currently have no timetable for resuming that public process.Ourcurrentproposalincludes a Minor Modification of the 2013 ULURP Approval for Pier 17 and the reconstruction of the Tin Building.  This Pier 17 Minor Modification includes the demolition of the Link Building and head house structure for the Pier 17 building, completion of the previously approved façade treatment along the western elevation of the building, and the installation of a reconfigured access drive.  The Tin Building reconstruction includes cataloguing important historical elements of the Tin Building, deconstructing the Tin Building, demolishing and reconstructing the platform pier and then reconstructing the Tin Building. Finally, the access drive would be extended around the Tin Building to create a one-way access drive for service and vehicular circulation.  The joint venture partnership with Jean-Georges Vongerichten to operate a food market in the reconstructed Tin Building is contingent upon receiving the approvals described herein. We are still processing the necessary approval to move forward with the Pier 17 Minor Modifications and the Tin Building reconstruction and there can be no assurance that we will ultimately obtain the entitlements needed to move forward with this project.

Superstorm Sandy Insurance Recoveries

On October 29, 2012, as a result of Superstorm Sandy, the historic area of South Street Seaport (area west of the FDR Drive) suffered significant damage due to flooding.  We have collected $47.9 million in insurance proceeds through December 31,  

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2015 and the claim is in litigationbecause we are seeking recoveries greater than what the insurance companies have paid to date.We recognized $0.3 million,  $24.6 million and $12.2 million of insurance recoveries during the years ended December 31, 2015, 2014 and 2013, respectively in Other Income, net.  Insurance recoveries are excluded from NOI. There can be no assurance that we will recover any additional insurance proceeds.

Strategic Developments

Our Strategic Development assets generally require substantial future development to achieve their highest and best use. Most of the properties and projects in this segment generate no revenues with the exception of our condominium projectsfor which we use percentage of completion accounting to recognize revenues during the construction phase. Our expenses relating to these assets are primarily related to costs associated with selling condominiums, marketing costs associated with our strategic developments, operational costs associated with the IBM buildingthat servesas a world class information center and sales gallery for the entire Ward Village Master Plan development, carrying costs, such as property taxes and insurance, and other ongoing costs relating to maintaining the assets in their current condition. If we decide to redevelop or develop a Strategic Development asset, we would expect thatwith the exception of the residential portion of our condominium projects,upon completion of development, the asset would be reclassified to the Operating Assets segment when the asset is placed in service and NOI would become an important measure of its operating performance.

Total revenue and expenses for the Strategic Development segment are summarized as follows:

Strategic Developments Revenues and Expenses (*)

	Year Ended December 31,						2015 - 2014		2014 - 2013
(in thousands)	2015		2014		2013		Change		Change
Minimum rents	$	899	$	609	$	763	$	290	$	(154)
Condominium rights and unit sales		305,284		83,565		32,969		221,719		50,596
Other land, rental and property revenues		1,734		806		330		928		476
Total revenues		307,917		84,980		34,062		222,937		50,918
Condominium rights and unit cost of sales		191,606		49,995		16,572		141,611		33,423
Rental and other property operations		7,431		7,372		8,304		59		(932)
Provision for doubtful accounts		32		16		-		16		16
Demolition costs		622		22		-		600		22
Development-related marketing costs		15,719		13,013		1,449		2,706		11,564
Depreciation and amortization		3,240		1,706		189		1,534		1,517
Other expense/(income)		104		(2,373)		(3,609)		2,477		1,236
Total expenses		218,754		69,751		22,905		149,003		46,846
Operating Income		89,163		15,229		11,157		73,934		4,072
Interest (income) expense, net (a)		(6,835)		(11,918)		(4,318)		5,083		(7,600)
Equity in Earnings from Real Estate and Other Affiliates		(1,838)		(21,311)		(10,535)		19,473		(10,776)
Strategic Developments EBT	$	97,836	$	48,458	$	26,010	$	49,378	$	22,448

(*)For a reconciliation of Strategic Developments EBT to consolidated income (loss) before taxes, please refer to Note 17 - Segments.

(a) Negative interest expense amounts are due to interest capitalized in our Strategic Developments segment related to Operating Assets segment debt and the Senior Notes.

Condominium rights and unit sales for the year ended December 31, 2015, include $305.3million of revenue primarily related to our Waiea and Anaha Condominium projects. We began recognizing revenue for the Waiea and Anaha Condominium projects in the fourth quarter 2014 and the second quarter 2015, respectively. The increase in condominium rights and unit salesin2015 as compared to 2014 is primarily due to recognizing revenue on our WaieaCondominium project for one full year in 2015 as compared to one quarter in 2014 and recognizing revenue on our Anaha Condominum project for three quarters in 2015.The increase in condominium rights and unit salesin2014 as compared to 2013 is primarily due to recognizing revenue on our ONE Ala Moana project for one full year in 2014, as compared to two quarters in 2013, and recognizing revenue on our

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Waiea Condominum project in the fourth quarter 2014. This increase was offset by $18.8 millionof lowerrevenue from the sale of our condominium rights to the joint venture which developed ONE Ala Moana. ONE Ala Moana was developed in a non-consolidated joint venture, and the revenues recognized by us relate to the gain on sale of our land to the joint venture. All other income from selling units at ONE Ala Moana was recognized through equity in earnings from non-consolidated subsidiaries and affiliates. The condominium rights and unit sales for the year ended December 31, 2013 represent partial recognition of the gainrelating to thesale of the condominium rights to the joint venture,in which we have a 50% interest.

Other land, rental and property revenues increased in 2015 as compared to prior years primarily as the result of income earned for development management services related to the build out of the ExxonMobil space at 1725 & 1735 Hughes Landing Boulevard.

Condominium rights and unit costs of sales primarily represent development and construction costs relating to the revenues recognized on Waiea and Anaha sales in 2015 and Waiea sales in 2014. The book value of condominium rights sold to the ONE Ala Moana joint venture were recorded as cost of sales in 2015, 2014 and 2013.

Development-related marketing costs are costs that we incur to enhance the Howard Hughes brand name, generate demand for our development and redevelopment projects and sustain consumer and industry relationships. For the year ended December 31, 2015, these costs were primarily attributable to strategic development projects at Ward Village, The Woodlands, South Street Seaport and Downtown Columbia. These increases are due to a $5.6 million increase at Ward Village, which primarily related to our Ward Gateway and Ae‘o (formerly Block M) projects (described hereafter), and $0.8 million increase at our Woodlands projects. These costs were offset by $3.8 million in lower costs related to the opening of our Downtown Summerlin project in the fourth quarter 2014. The increasein development-related marketingcostsin 2014 as compared to 2013 is primarilycaused byincreased marketing efforts at Ward Village,DowntownSummerlin, South StreetSeaport andour Downtown Columbia Redevelopment Project.

Depreciation and amortization increased for the year ended December 31, 2015 compared to 2014, and compared to 2013, as a result of beginning depreciation on the IBM Building renovations, which were placed in service during the end of first quarter 2014. 

Other expense (income) primarily consists of the sale of land parcels (at our various projects) to joint ventures in which we are a partner to third parties. Revenues vary year to year depending on the number of parcels sold and the selling price.

Net interest (income) expense decreased for the year ended December 31, 2015 as compared to December 31, 2014 due to completing projects and placing them in service. Net interest (income) expense increased for the year ended December 31, 2014 as compared to December 31, 2013 due to higher capitalized interest from more projects being under construction than in 2013. In addition, Equity in Earnings from Real Estate and Other Affiliates represents our share of the profit from the ONE Ala Moana condominium venture. Equity in earnings during the year ended December 31, 2015 is lower as the project was substantially complete as of December 31, 2014. As of December 31, 2015, all the units had been sold and closed.

The following describes the status of our active Strategic Development projects as of December 31, 2015:

Bridgeland

Lakeland Village Center

In the second quarter 2015, we began construction of Lakeland Village Center, a CVS anchored neighborhood retail center. Completion is expected in the second quarter 2016. Total development costs are expected to be approximately$16million, and we have incurred $9.1 million as of December 31, 2015. We expect to reach stabilized annual NOI of approximately $1.7 million in 2018. On May 15, 2015, we closed on a $14.0 million non-recourse construction loan bearing interest at one-month LIBOR plus 2.35% with an initial maturity date of May 15, 2018, with two, one-year extension options. As of February 1, 2016, the project is 32.9% pre-leased.

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Downtown Columbia Redevelopment District

Merriweather District

During the first quarter 2015 we received county approval of our development plan which allows new development density for up to 4.9 million square feet, to include office, residential and retail. In the fourth quarter 2015, we received county approval for the construction of the first office building in the Merriweather District – One Merriweather. The approval also allows for thedevelopment of another office building and a garage serving both office buildings.

One Merriweather – We began construction of One Merriweather, a Class A office building and an adjacent garage during the fourth quarter 2015 and anticipate completion of the project during the fourth quarter 2016. Total estimated development costs are approximately $78 million, inclusive of approximately $15 million of development costs related to the parking garage. As of December 31, 2015 we have incurred development costs of $7.1 million. As of February 1, 2016, 49.0% of the building is pre-leased to MedStar Health, the largest healthcare provider in the region. We expect to reach stabilized annual NOI of approximately $5.1 million in 2020.  On February 25, 2016,we closed on a $49.9 million non-recourse construction loan for this project, bearing interest at one-month LIBOR plus 2.15% with an initial maturity date of February 25, 2020, with a one-year extension option.

Parcel C

The Parcel C venture located in Columbia, Maryland, of which we are a 50% partner with Kettler, began construction on a 437-unit, Class A apartment building with 29,000 square feet of ground floor retail in January 2016. We anticipate the first units will be available for rent in the first quarter 2017. We expect the property to reach projected annual stabilized NOI of approximately $8.1 million in 2019, of which our share would be $4.0 million. The development site is adjacent to The Metropolitan Downtown Columbia. In January 2016, we also closed on an $88.0 million non-recourse construction loan which bears interest at one-month LIBOR plus 2.40% and has an initial maturity in February, 2020, with  three one-year extension options.  Total development costs are expected to be approximately $108 million, of which the venture had incurred $3.3 million as of December 31, 2015. Our partner will provide construction and property management services. Our total investment in this project was $7.1 million as of December 31, 2015.

Constellation (formerly known as Summerlin Apartments)

We entered into a joint venture with Calida to construct, own and operate a 124-unit gated luxury apartment development in Summerlin. We are a 50% partner with Calida and unanimous consent of the partners is required for all major decisions. The venture commenced construction in February 2015 and plans to open the project in stages, with the first units being available for rent in the first quarter 2016. We expect to reach projected annual stabilized NOI of approximately $2.3 million in 2018, of which our share would be $1.1 million. Total estimated costs are $24 million, including land value, of which the venture had incurred $12.8 million as of December 31, 2015. The project is financed by a $15.8 million construction loan. The loan bears interest at one month LIBOR plus 2.50% and matures in February of 2018, with two, one-year extension options. Upon a sale of the property, we are entitled to 50% of the proceeds up to an amount determined by applying a 7.0% capitalization rate to the joint venture’s NOI and then 100% of proceeds above that amount.

The Woodlands

Hughes Landing

Construction has been completed onfour office buildings, one hotel, one multi-family project and one retail project. Accordingly, One Hughes Landing,Two Hughes Landing, 1725 & 1735 Hughes Landing Boulevard, Hughes Landing Hotel (Embassy Suites), One Lakes Edge and Hughes Landing Retailwere transferred to the Operating Assets segment during 2015.

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Three Hughes Landing – During the third quarter 2014, we began construction of Three Hughes Landing, a Class A office building, and completion of the project is dependent on lease-up and tenant build-out. Total estimated development costs are approximately $90 million, of which we have incurred $52.6 million as of December 31, 2015. The remaining development costs to be incurred relate to completion of the building shell and estimated leasing and tenant buildout costs. The project is currently 2.4% pre-leased, and leasing activities have been much slower than our experience with One and Two Hughes Landing because of the economic slowdown in Houston caused by low oil prices; however, we believe that its location within the highly desirable Hughes Landing development positions this building well compared to other office buildings to ultimately attract high quality tenants,but at a slower pace in current market conditions compared to prior periods. We underwrote the project to reach projected annual stabilized NOI of approximately $7.6 million in 2018; however, the actual amount of NOI and year of stabilization will depend greatly on the Houston economic conditions.  The project is financed by a $65.5 million non-recourse construction loan bearing interest at one-month LIBOR plus 2.35% with an initial maturity date of December 5, 2017, with two, one-year extension options.

Waterway Square Hotel (Westin) –  In the second quarter 2014, we began construction of the Waterway Square Hotel, a Westin-branded hotel that we will own and manage. We expect to complete and open the hotel in March 2016. Total development costs are expected to be approximately $97 million, of which we have incurred $78.0 million as of December 31, 2015. We expect to reach projected annual NOI of approximately $10.5 million in 2018 assuming more stable local market conditions than we are currently experiencing due to the dramatic decline in oil prices. This hotel is well-located adjacent to several office buildings in The Woodlands Town Center and should benefit from the embedded business demand in the area. The project is financed by a $69.3 million construction loan bearing interest at one-month LIBOR plus 2.65% with an initial maturity date of August 6, 2018, with a one-year extension option.

Alden Bridge Self-Storage Facilities

The Alden Bridge Self-Storage Facilities represent our first developments of this commercial property type and include a combined 1,320 units located on over seven acres.

We began construction on HHC 242 Self Storage Facility located in Alden Bridge, a neighborhood within The Woodlands, in the third quarter 2015 and anticipate completion during the fourth quarter 2016. Thisfacility is located on 4.0 acresandwill comprise670 units aggregatingapproximately 82,000 square feet. Total estimated costs are approximately $8.6 million, of which we have incurred $0.7 million asof December 31, 2015.We expect to reach stabilized annual NOI of approximately $0.8million in2020. On October 23, 2015,we closed on a $6.7 million non-recourse construction loan for this facility, bearing interest at one-month LIBOR plus 2.60% with an initial maturity date of October 2019, with two one-year extension options. 

We began construction on HHC 2978 Self Storage Facility, also located in Alden Bridge, in January 2016 and anticipate completion during the first quarter 2017. Thisfacility is located on 3.1 acresandwill comprise650 units aggregating approximately 79,000 square feet. Total estimated costs are approximately $8.5 million, of which we have incurred $0.2 million asof December 31, 2015.We expect to reach stabilized annual NOI of approximately $0.8million in2020. On January 27, 2016,we closed on a $6.4 million non-recourse construction loan for this facility, bearing interest at one-month LIBOR plus 2.60% with an initial maturity date of January 2020, with two, one-year extension options. 

Ward Village

In the fourth quarter 2012, we announced plans to transform the property into a vibrant neighborhood offering unique retail experiences, dining and entertainment, along with exceptional residences and workforce housing set among open public spaces and pedestrian-friendly streets.

In the first quarter 2014, we completed the renovation of the IBM Building.In February 2014, we began public presales for Waiea and Anaha, the first two mixed-use market rate residential towers.  In July 2015, we began public presales for Ae‘o and the first Gateway Tower, the third and fourth mixed-use market rate residential towers.Sales contracts are subject to a 30-day rescission period, and the buyers are required to make a deposit equal to 5% of the purchase price at signing and an additional 5% deposit 30 days later at which point their total deposit of 10% of the purchase price becomes non-refundable. Buyers are then required to make an additional 10% deposit within approximately 90 days of our receipt of the second deposit.

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Waiea-  In the second quarter 2014, we began construction on Waiea, and we expect to complete the condominium tower by the end of 2016. As of February 1, 2016, 158 of the 174 total units were under contract. These contracted sales represent 90.8% of total units and 85.8% of the total residential square feet available for sale.Total development costs are expected to be approximately $403 million, excluding land value, which includes $6.3 million of development-related marketing costs that are being expensed as incurred. As of December 31, 2015, we have incurred $198.7 million of development costs of which $5.5 million were development-related marketing costs. During the fourth quarter 2014, we met all the necessary requirements to begin recognizing revenue on the percentage of completion basis. As of December 31, 2015, the project was approximately 50.0% complete. OnDecember 17, 2015we announced that world renowned restaurateur Nobu Matsuhisa will relocate his restaurant, Nobu, from its current Waikiki location to an approximately 8,000 square foot space at the base of Waiea.

Anaha – In the fourth quarter 2014, we began construction of Anaha, and we expect to complete the condominium tower during the second quarter 2017. As of February 1, 2016, 278 of the 317 total units were under contract. These contracted sales represent 87.7% of total units and 80.0% of the total residential square feet available for sale. Total development costs are expected to be approximately $401 million, excluding land value, which includes $5.8 million of development-related marketing costs that are being expensed as incurred. As of December 31, 2015, we have incurred $106.4 million of development costs of which $4.8 million were development-related marketing costs. During the second quarter 2015, we met all the necessary requirements to begin recognizing revenue on the percentage of completion basis. As of December 31, 2015, the project was approximately 26.8% complete. As of February 1, 2016, 73.1% of the retail space at Anaha is pre-leased and is anchored by Hawaii restaurant, Merriman’s. 

On November 6, 2014 we closed on a $600.0 million non-recourse construction loan cross-collateralized by Waiea and Anaha bearing interest at one-month LIBOR plus 6.75% with an initial maturity date of November 6, 2017, with two, one-year extension options.

Ae‘o (formerly known as Ward Block M) – Construction of the 389,000 square foot Ae‘o  tower and the 54,000 square foot Whole Foods Market, located on the same block, commenced in February 2016, with completion scheduled in 2018. Initial total estimated costs are $430 million. As of February 1, 2016, 207 of the 466 total units were under contract, representing 44.4% of total units and 37.2% of the total residential square feet available for sale. We have incurred $18.8 million of development costs on this project as of December 31, 2015.

Ke Kilohana (formerly known as Ward Workforce Tower) - We continue to finalize plans and a project budget for the development and sale of this tower. We submitted condominium documents to the Hawaii Real Estate Commission and anticipate approval early in 2016. As of December 31, 2015, we have incurred $8.3 million of development costs on this project. Additionally, onJuly 29, 2015we announced plans to bring an approximately 22,000 square-foot Longs Drugs to the ground floor of Ke Kilohana.

Gateway Towers – Construction of the two towers will be subject to obtaining an acceptable level of pre-sales and financing for the project. Pre-sales for the first residential tower containing 125 units began in July 2015. We expect contracted unit sales in this tower to be much slower than Waiea, Anaha and Ae‘o because the pricing and marketing of these units is targeted towards a smaller segment of the market. We have incurred $14.3 million of pre-development costs for the first tower as of December 31, 2015 and are finalizing the project budget. We continue pre-development activities for the development of the second tower and have incurred $12.5 million as of December 31, 2015.

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The following table summarizes our projects under construction, and related debt, for Operating Assets and Strategic Developments as of December 31, 2015. During January 2016, we began construction and received financing for HHC 2978 Alden Bridge, the second self-storage facility in The Woodlands. Projects that are substantially complete and which have been placed into service are included in the following table if the project had more than $1 million of estimated costs remaining to be incurred. Typically, these amounts represent budgeted tenant allowance capital to bring the asset to stabilized occupancy. Projects that are substantially complete and therefore have been placed in service in the Operating Assets segment may still require some capital for remaining tenant build-out.

(In thousands) Announced Project	Total Estimated Costs (a)	Costs Paid Through December 31, 2015 (b)	Estimated Remaining to be Spent	Buyer Deposits/  Tenant Reimbursements	Buyer Deposits/  Tenant Reimbursements Drawn Through December 31, 2015	Remaining Buyer Deposits/Tenant Reimbursements to be Drawn	Committed/ Allocated Debt (c)	Amount Drawn Through December 31, 2015	Remaining Debt to be Drawn	Estimated Costs Remaining in Excess of Remaining Financing to be Drawn (d)		Estimated Completion Date
Operating Assets	(A)	(B)	(A) - (B) = (C)	(D)	(E)	(D) - (E) = (F)	(G)	(H)	(G) - (H) = (I)	(C) - (F) - (I) = (J)
South Street Seaport	514,083	143,127	370,956	-	-	-	-	-	-	370,956	(e)	2017
Downtown Summerlin	418,304	395,758	22,546	-	-	-	311,800	289,804	21,996	550	(f)	Complete
Hughes Landing Retail	36,207	30,179	6,028	-	-	-	36,575	28,726	7,849	(1,821)	(g)	Complete
One Lakes Edge	88,494	81,897	6,597	-	-	-	73,525	67,517	6,008	589	(h)	Complete
1725-35 Hughes Landing Boulevard	213,466	167,869	45,597	61,102	58,083	3,019	132,474	89,677	42,797	(219)	(i)	Complete
Hughes Landing Hotel (Embassy Suites)	46,363	35,289	11,074	-	-	-	32,413	20,064	12,349	(1,275)	(j)	Complete
Total Operating Assets	1,316,917	854,119	462,798	61,102	58,083	3,019	586,787	495,788	90,999	368,780
Strategic Developments
Waterway Square Hotel (Westin)	97,380	63,625	33,755	-	-	-	69,334	33,361	35,973	(2,218)		Q1 2016
Three Hughes Landing	90,162	48,620	41,542	-	-	-	65,455	23,268	42,187	(645)	(k)	2016
Lakeland Village Center	16,274	6,616	9,658	-	-	-	14,000	-	14,000	(4,342)	(l)	Q2 2016
HHC 242 Self-Storage	8,488	566	7,922	-	-	-	6,658	-	6,658	1,264	(m)	Q4 2016
One Merriweather	78,187	3,013	75,174	-	-	-	-	-	-	75,174		Q4 2016
Waiea	403,440	157,404	246,036	114,570	112,405	2,165	253,461	21,726	231,735	12,136	(n)	Q4 2016
Anaha	401,314	87,207	314,107	70,678	65,319	5,359	315,124	6,091	309,033	(285)	(n)	Q2 2017
Total Strategic Developments	1,095,245	367,051	728,194	185,248	177,724	7,524	724,032	84,446	639,586	81,084
Combined Total at December 31, 2015	$ 2,412,162	$ 1,221,170	$ 1,190,992	$ 246,350	$ 235,807	$ 10,543	$ 1,310,819	$ 580,234	$ 730,585	$ 449,864
					One Merriweather Anticipated Financing					(49,929)
					Est. Costs to be funded net of financing assuming closing on pending financing					$ 399,935

(a) Total Estimated Costs represent all costs to be incurred on the project which include construction costs, demolition costs, marketing costs, capitalized leasing, payroll or project development fees, deferred financing costs and advances for certain accrued costs from lenders and excludes land costs and capitalized corporate interest allocated to the project.  Total Estimated Costs for Waiea Condominiums and Anaha Condominiums exclude infrastructure and amenity cost allocations related to Ward Village.

(b) Costs Paid Through December 31, 2015 include construction costs, demolition costs, marketing costs, capitalized leasing, payroll or project development fees, deferred financing costs and advances for certain accrued costs from lenders.

(c) Committed/ Allocated  Debt details:

· 1725-35 Hughes Landing Boulevard hasconstruction financing of $143.0 million. The amount above includes construction costs and excludes $5.2 million of operating reserves and $5.6 million of interest reserves to be utilized after the asset is placed in service.

· Hughes Landing Hotel has construction financing of $37.1 million. The amount above includes $32.4 million of construction costs and excludes $2.0 million for garage expansion and a  $2.7 million earn out commitment when a 12% debt yield is achieved.

(d) Negative balances represent cash to be received in excess of Estimated Remaining to be Spent.  These items are primarily related to December costs that were paid by us but not yet reimbursed by the lender. We expect to receive funds from our lenders for these costs in the future.  Positive balances represent cash that remains to be invested or amounts drawn in advance of costs paid.

(e) South Street Seaport Total Estimated Costs and Costs Paid Through December 31, 2015 are net of $47.9 million of insurance proceeds received.  We anticipate seeking financing for this project in the future.

(f) Downtown Summerlin was placed in service in October 2014.

(g) Hughes Landing Retail was placed in service in March 2015.

(h) One Lakes Edge was placed in service in April 2015.

(i) 1725-35 Hughes Landing Boulevard Total Estimated Costs include approximately $61 million of tenant improvements that will be reimbursed directly by ExxonMobil, of which $58.1 million has been received as of December 31, 2015.  These Tenant Reimbursements are shown above as an additional source of funds for project costs.  Asset was placed in service in November 2015.

(j) Hughes Landing Hotel was placed in service in December 2015.

(k) The Three Hughes Landing building shell is substantially complete.  Final completion of the building is dependent upon lease-up and tenant build-out.

(l) Lakeland Village Center has pending loan draws which will be released when pre-leasing has reached 30%.  Asset is currently 29% pre-leased.

(m) Alden Bridge Self-Storage financing of $6.7 million was completed in October 2015.  Project has not reached equity requirements.

(n) Both Waiea and Anaha currently have nonrefundable Buyer Deposits that are required to be utilized to fund project costs prior to drawing on the loan.  When additional Buyer Deposits are received from additional unit sales, those deposits are also required to be used for project costs once the rescission period passes.  Based on actual sales as of December 31, 2015, we anticipate only utilizing approximately $569 million of the total $600 million committed debt for both projects.  If all the remaining condominium units are sold, we currently estimate a total of approximately $53 million of additional buyer deposits that could be available to fund project costs, thereby further reducing the total amount needed to be drawn from the committed construction loan.

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The following table represents our capitalized internal costs by segment for the years ended December 31, 2015, 2014 and 2013:  

	Capitalized Internal Costs						Capitalized Internal Costs Related to Compensation Costs
	Year Ended December 31,						Year Ended December 31,
(In millions)	2015		2014		2013		2015		2014		2013
MPC segment	$	9.5	$	7.1	$	8.9	$	7.3	$	4.5	$	5.6
Operating Assets segment		10.1		9.3		5.1		7.5		7.5		4.3
Strategic Developments segment		19.8		15.1		4.4		15.1		12.1		3.7
Total	$	39.4	$	31.5	$	18.4	$	29.9	$	24.1	$	13.6

Capitalized internal costs (which include compensation costs) have increased among all of our segments, primarily due to higher staff allocations as a result of more development/redevelopment in all three segments.

Impairments

We evaluate our real estate assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Recoverability in this context means that the expected cumulative undiscounted future cash flows of an asset are less than its carrying value. The recoverability analysis, as an accounting concept, considers hold periods, but ignores when the future cash flows are expected to be received within that hold period and whether we currently expect to receive an above or below market rate of return over our anticipated holding period. If expected cumulative undiscounted cash flows are less than the carrying value, then we are required to record the asset at the lower of its carrying value or fair value. The process for deriving fair value involves discounting the expected future cash flows at a rate of return that we believe an investor would require based on the risk profile of the cash flows and returns available in the market for other investments having similar risk. We may also use other inputs such as appraisals and recent transactions for comparable properties, if appropriate. Book value for assets that have been recently impaired from an accounting perspective may more likely reflect market value than book values of assets that have not been impaired; consequently, unimpaired assets may be expected to generate above or below market returns relative to their respective book values. The lower book basis resulting from an impairment charge increases reported profitability from the asset in future periods, but has no impact on cash flow. For the years ended December 31, 2015, 2014 and 2013, we evaluated whether impairment indicators existed at all of our assets. In most instances, we concluded no impairment indicators were present. When indicators of impairment were present, we reconsidered expected cash flows and concluded that there were no impairments.

Liquidity and Capital Resources

Our primary sources of cash include cash flows from land sales in our MPC segment, cash generated from our operating assets, deposits from condo sales, first mortgage financings secured by our assets and the corporate bond markets. To a lesser extent, we also may generate cash for reinvestment through sales of non-core assets. Our primary uses of cash include working capital, overhead, debt service, property improvements, acquisitions and development costs. We believe that our sources of cash, including existing cash on hand, will provide sufficient liquidity to meet our existing non-discretionary obligations and anticipated ordinary course operating expenses for at least the next twelve months. The development and redevelopment opportunities in our Operating Assets and Strategic Developments segments are capital intensive and will require significant additional funding. In addition, we typically must provide completion guarantees to lenders in connection with their providing financing for our developments. We also provided a completion guarantee to the City of New York for the Pier 17 Renovation Project. Currently we have chosen not to finance the Renovation Project for strategic reasons. However, we currently intend to raise additional capitalthrough a mix of construction, bridge and long-term financings, by entering into joint venture arrangements and by selling non-core assets at the appropriate time.

Total outstanding debt was $2.4 billion as of December 31, 2015. Our share of the debt of our Real Estate Affiliates, which is non-recourse to us, totaled $64.8 million. Please refer to Note 8 – Mortgages, Notes and Loans Payable to our Consolidated Financial Statements for a table showing our debt maturity dates.

The following table summarizes our net debt on a segment basis as of December 31, 2015. Net debt is defined as  mortgages, notes and loans payable, including our ownership shareof debt of our Real Estate and Other Affiliates, reduced by short-term

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liquidity sources to satisfy such obligations such as our ownership share of cash and cash equivalents and SID and MUD receivables. Although net debt is not a recognized GAAP financial measure, it is readily computable from existing GAAP information and we believe, as with our other non-GAAP measures, that such information is useful to our investors and other users of our financial statements.

(In thousands) Segment Basis (a)	Master Planned Communities		Operating Assets			Strategic Developments			Segment Totals		Non- Segment Amounts		Total December 31, 2015
Mortgages, notes and loans payable	$	282,889	$	1,390,410	(b)	$	85,877	(c)	$	1,759,176	$	762,027	$	2,521,203
Less: cash and cash equivalents		(157,533)		(112,641)	(d)		(67,695)	(e)		(337,869)		(135,643)		(473,512)
Special Improvement District receivables		(72,558)		—			—			(72,558)		—		(72,558)
Municipal Utility District receivables		(139,946)		—			—			(139,946)		—		(139,946)
Net Debt	$	(87,148)	$	1,277,769		$	18,182		$	1,208,803	$	626,384	$	1,835,187

(a) Please refer to Note 17 - Segments.

(b) Includes our $63.4 million share of debt of our Real Estate and Other Affiliates in Operating Assets segment (Woodlands Sarofim #1, The Metropolitan Downtown Columbia and Millennium Woodlands Phase II, LLC).

(c) Includes our $1.4 million share of debt of our Real Estate and Other Affiliates in Strategic Developments segment (Constellation).

(d) Includes our $4.0 million share of cash and cash equivalents of our Real Estate and Other Affiliates in Operating Assets segment (Woodlands Sarofim #1,  Clark County Las Vegas Stadium, LLC, Millennium Woodlands Phase II, LLC, The Metropolitan Downtown Columbia and Stewart Title).

(e) Includes our $2.4 million share of cash and cash equivalents of our Real Estate and Other Affiliates in Strategic Developments segment (KR Holdings, LLC, HHMK Development, LLC,  Parcel C and Constellation).

Cash Flows

Operating Activities

The cash flows and earnings generated from each business segment’s activities will likely vary significantly from year to year given the changing nature of our development focus.  Condominium deposits received from contracted units offset by other various cash uses related to condominium development and sales activities are a substantial portion of our operating activities in 2015.  Operating cash continued to be utilized in 2015 to fund ongoing development expenditures in our Strategic Development and MPC segments, consistent with prior years.

The cash flows and earnings from the MPC business can be much more variable than from our operating assets because the MPC business generates revenues from land sales rather than recurring contractual revenues from operating leases. MPC Land sales are a substantial portion of our cash flows from operating activities and are partially offset by development costs associated with the land sales business and acquisitions of land that is intended to ultimately be developed and sold.

Net cash provided by operating activities was $23.9 million for the year ended December 31, 2015 compared to net cash used in operating activities of $58.3 million for the year ended December 31, 2014.

The $82.2 million net increase in cash in 2015 was primarily related to the following:

Increases in operating cash flow:

· Release of condominium buyer deposits from escrow of $177.7 million;

· Decreased MPC land acquisitions of $93.6 million compared to 2014;

· Decreased leasing costs of $24.9 million primarily from the opening at Downtown Summerlin;

· NOI contribution of $45.6 million primarily from property openings and acquisitions in 2014;

· Deferred rental income payments of $46.4 million from ExxonMobil;

· Note repayment from a homebuilder at Summerlin of $20.2 million;

· Greater builder price participation collections of $5.9 million; and

· The net $65.3 cash impact in 2014 of the Tax Indemnity Settlement and payment to the IRS which reduced 2014 operating cash flow. 

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Decreases in operating cash flow:

· Greater Condominium and MPC expenditures of $171.6 million;

· Decreased MPC Land sales of $136.3 million;

· Decreased MUD collections of $31.1 million;

· Distributions from ONE Ala Moana joint venture in 2014 of $28.1 million;

· Absence in 2015 of the collection of $27.9 million of insurance proceeds from Superstorm Sandy received in 2014, of which $15.0 million was included in operating activities;

· Higher interest payments of $14.1 million due to a higher debt balance; and

· Other miscellaneous items of $1.2 million.

The $187.6 million net decrease in cash provided by operating activities for the year ended December 31, 2014 compared to the same period in 2013 was primarily due to the following:

Decreases in operating cash flow:

· Greater MPC land acquisitions of $106.6 million;

· Greater interest, leasing, development-related marketing and general and administrative expenses of $110.7 million;

· Greater MPC development and condominium expenditures of $61.9 million; and

· A net $65.3 cash impact in 2014 of the Tax Indemnity Settlement and payment to the IRS which reduced 2014 operating cash flow. 

Increases in operating cash flow:

· $56.5 million of increased MPC land sales;

· $54.5 million of increased MUD collections;

· $28.1 million of increased distributions from our Real Estate Affiliates for the year ended December 31, 2014 compared to the same period in 2013; and

· $47.5 million of cash proceeds from the sale of our ONE Ala Moana condominium air rights into a joint venture in 2013 which did not recur in 2014.

Investing Activities

Net cash used in investing activities was $575.6 million, $746.5 million, and $294.3 million for the years ended December 31, 2015, 2014 and 2013, respectively. Cash used for property developments expenditures and operating property improvements, was $602.4 million, $773.8 million, and $270.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. The decreased development expenditures in 2015 compared to 2014 relate primarily to lower development spending as compared to the prior year on construction of South Street Seaport, 3831 Technology Forest Drive, One Lakes Edge, Two Hughes Landing, Three Hughes Landing, 1725-35 Hughes Landing Boulevard, Waterway Square Hotel, Hughes Landing Hotel, and others. The development expenditures were offset by cash provided by investing activities for the year ended December 31, 2015 relating to the sale of The Club at Carlton Woods, which generated cash proceeds of $25.1 million.

The increased development expenditures in 2014 compared to 2013 relate primarily to the construction of Downtown Summerlin, Hughes Landing office and retail properties, 3 Waterway Square, Ward Village, South Street Seaport, Columbia Office Properties, and the Outlet Collection at Riverwalk.

Financing Activities

Net cash provided by financing activities was $436.5 million for the year ended December 31, 2015. The net proceeds from new loan borrowings and refinancing activities were slightly offset by scheduled amortization payments on our debt and were used to partially fund development activity at our condominium and other development projects.  In 2015, cash provided by financing activities included loan proceeds of $583.8 million from new borrowings or refinancings of existing debt relating to Bridgeland and The Woodlands MPCs, The Woodlands Resort and Conference Center, Two Hughes Landing, 10-60 Columbia Corporate Center, 1725-1735 Hughes Landing Boulevard, Hughes Landing Hotel (Embassy Suites), The Westin The

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Woodlands, Hughes Landing Retail, One Lakes Edge and 3831 Technology Forest. Additionally, we issued $54 million in SID bonds to benefit our Summerlin MPC, of which $39.2 million remains held in escrow as of December 31, 2015.

Net cash provided by financing activities was $470.3 million for the year ended December 31, 2014. Cash provided by financing activities for 2014 included loan proceeds of $597.6 million from the issuance of mortgages, notes and loans payable. The proceeds partially funded development activity at the Bridgeland MPC, 3 Waterway Square, Two Hughes Landing, One Lakes Edge, 1725-35 Hughes Landing Boulevard, and Downtown Summerlin, and refinanced existing debt to extend maturities and to take advantage of lower interest rates. Comparatively, for the year ended December 31, 2013, we received loan proceeds of $380.5 million from the issuance of mortgages, notes and loans payable and $739.6 million from issuance of our Senior Notes. The proceeds partially funded development activity at the Bridgeland MPC, 3 Waterway Square, One Hughes Landing and Downtown Summerlin, and refinanced existing debt to extend maturities and to take advantage of lower interest rates.

Principal payments on mortgages, notes and loans payable were $103.8 million, $120.2 million and $279.7 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Contractual Cash Obligations and Commitments

The following table aggregates our contractual cash obligations and commitments as of December 31, 2015:

(In thousands)	Less than 1 year		1-3 Years		3-5 Years		More than 5 Years		Total
Mortgages, notes and loans payable (a)	$	272,269	$	381,134	$	615,623	$	1,187,328	$	2,456,354
Interest payments (b)		108,018		198,118		155,042		112,134		573,312
Ground lease and other leasing commitments		8,766		18,109		15,485		304,660		347,020
Total	$	389,053	$	597,361	$	786,150	$	1,604,122	$	3,376,686

(a) Based on final maturity, inclusive of extension options.

(b) Interest is based on the borrowings that are presently outstanding and current floating interest rates.

We lease land or buildings at certain properties from third parties. Rental payments are expensed as incurred and have been, to the extent applicable, straight-lined over the term of the lease. Contractual rental expense, including participation rent, was $8.3 million, $7.3 million and $6.3 million for 2015, 2014 and 2013, respectively. The amortization of above and below-market ground leases and straight-line rents included in the contractual rent amount were not significant.

Off-Balance Sheet Financing Arrangements

We do not have any material off-balance sheet financing arrangements. Although we have interests in certain property owning non-consolidated ventures which have mortgage financing, the financings are non-recourse to us and totaled $109.6 million as of December 31, 2015.

Seasonality

Generally, revenues from our Operating Assets segment, Master Planned Communities segment and Strategic Developments segment are not subject to seasonal variations; however, rental revenues for certain retail tenants are subject to overage rent terms, which are based on tenant sales. These retail tenants are generally subject to seasonal variations, with a significant portion of their sales and earnings occurring during the last two months of the year. As such, our rental income is typically higher in the fourth quarter of each year.

Critical Accounting Policies

Critical accounting policies are those that are both significant to the overall presentation of our financial condition and results of operations and require management to make difficult, complex or subjective judgments. Our critical accounting policies are those applicable to the following:

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Acquisitions of Properties

We account for the acquisition of real estate properties constituting a business in accordance with ASC 805 Business Combinations. This methodology requires that assets acquired and liabilities assumed be recorded at their fair values on the date of acquisition.

The fair-value of tangible assets of an acquired property (which includes land, buildings, and improvements) is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, buildings and improvements based on management’s determination of the fair-value of these assets. The “as-if-vacant” values are derived from several sources which primarily include a discounted cash flow analysis using discount and capitalization rates based on recent comparable market transactions, where available.

The value of acquired intangible assets consisting of in-place and above-market and below-market leases is recorded based on a variety of considerations. In-place lease considerations include, but are not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases (i.e. the market cost to execute a lease, including leasing commissions and tenant improvements); (2) the value associated with lost revenue related to tenant reimbursable operating costs incurred during the assumed lease-up period (i.e. real estate taxes, insurance and certain other operating expenses); and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Above-market and below-market leases are valued at the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (1) the contractual amounts to be paid pursuant to the in-place lease; and (2) management’s estimate of current market lease rates, measured over the remaining non-cancelable lease term, including any below market renewal option periods.

Impairment – Properties, Developments and Master Planned Communities Assets

We review our real estate assets, including Operating Assets, land held for development and sale and developments in progress, for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Impairment indicators for our Master Planned Communities segment are assessed separately for each community and in certain circumstances, regions or projects within the community, and include, but are not limited to, significant decreases in sales pace and decreasing average selling prices. We also monitor local economic conditions and other factors that may reduce demand expectations.  

Impairment indicators for development costs incurred during the beginning stages of a potential development and developments in progress are assessed by project and include, but are not limited to, significant changes in projected completion dates, revenues or cash flows, development costs, market factors and feasibility.

Impairment indicators for our Operating Assets segment are assessed separately for each property and include, but are not limited to, significant decreases in net operating income, significant decreases in occupancy or low occupancy and significant net operating losses.

Impairment indicators for our Strategic Developments segment are assessed separately for each property and include, but are not limited to, significant decreases in comparable property sale prices.

If an indicator of potential impairment exists, the asset is tested for recoverability by comparing its carrying amount to the estimated future undiscounted cash flow. Significant assumptions used in the estimation of future undiscounted cash flow include, for the master planned communities, estimates of future lot sales, costs to complete and sales pace, and for properties in our Operating Assets segment and Strategic Developments segment, future market rents, renewals and capital expenditures. Historical experience in such matters and future economic projections were used to establish these assumptions. These significant assumptions are estimates and are subject to uncertainty. Actual results could differ from these estimates. A real estate asset is considered to be impaired when its carrying amount cannot be recovered through estimated future undiscounted cash flows and the carrying value is more than the fair value. To the extent an impairment provision is necessary, the excess of the carrying amount of the asset over its estimated fair value is charged to operations. In addition, the impairment is allocated proportionately to adjust the carrying amount of the asset. The adjusted carrying amount for operating assets, which represents

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the new cost basis of the asset, is depreciated over the remaining useful life of the asset. The adjusted carrying amount for master planned communities is recovered through future land sales.

Deferred Taxes and Tax Contingencies

Deferred income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates currently in effect. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards.

A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. An increase or decrease in the valuation allowance that results from a change in circumstances, and which causes a change in our judgment about the realizability of the related deferred tax asset, is included in the deferred tax provision. There are events or circumstances that could occur in the future that could limit the benefit of deferred tax assets. In addition, we recognize and report interest and penalties, if necessary, related to uncertain tax positions within our provision for income tax expense.

In two of our Master Planned Communities gains with respect to land sales whether for commercial use or for single family residences, are reported for tax purposes on the percentage of completion method. Under the percentage of completion method, a gain is recognized for tax purposes as costs are incurred in satisfaction of contractual obligations. The method used for determining the percentage complete for income tax purposes is different than that used for financial statement purposes.

As of December 31, 2015 and 2014, we had gross deferred tax assets totaling $327.4 million and $335.7 million and gross deferred tax liabilities of $396.6 million and $379.7 million, respectively. We have established a valuation allowance in the amount of $20.0 million and $18.2 million as of December 31, 2015 and 2014, respectively, against certain deferred tax assets for which it is more likely than not that such deferred tax assets will not be realized.

The deferred tax liability associated with the master planned communities is largely attributable to the difference between the basis and value determined as of the date of the acquisition by our predecessors of The Rouse Company (“TRC”) in 2004 adjusted for sales that have occurred since that time. The cash cost related to this deferred tax liability is dependent upon the sales price of future land sales and the method of accounting used for income tax purposes. The deferred tax liability related to deferred income is the difference between the income tax method of accounting and the financial statement method of accounting for prior sales of land in our master planned communities.

One of our consolidated entities, Victoria Ward, Limited, was formerly taxed as a REIT.  Consequently, prior to 2014 deferred taxes were not recorded on book and tax basis differences of Victoria Ward, Limited as it was believed these differences would ultimately be realized with no taxes due. In connection with the planned condominium development of Victoria Ward, the Company decided to revoke its REIT election because it would likely no longer be able to qualify for REIT status. As a result,we concluded that the book and tax basis differences in the land and buildings of Victoria Ward, Limited would be realized after such revocation of REIT status and Victoria Ward would then be taxed at the applicable corporate tax rates. Consequently, deferred tax liabilities of $46.9 million were recorded in 2014 due to the excess book over tax basis relating to land and buildings. As planned, the Company revoked its REIT election for Victoria Ward, Limited effective January 1, 2015.

Two of our subsidiaries were involved in a dispute with the IRS related to sales of certain assets in our Master Planned Communities segment.  The case was heard by the Tax Court in November 2012 and the court filed its ruling in favor of the IRS on June 2, 2014.  We appealed the decision and on October 27, 2015 the Court of Appeals upheld the Tax Court ruling, consequently we are required to change our method of tax accounting for certain transactions, which could affect the timing of our future tax payments.  Please refer to Note 9 – Income Taxes for additional information.

Capitalization of Development and Leasing Costs

We capitalize costs related to our development and leasing activities. Development costs, like planning, engineering, design and construction that are directly related to a development project are capitalized. Capitalization commences when the development activities begin and ceases when a project is completed, put on hold or we decide to not move forward with a project. Capitalized

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costs related to a project where we have determined not to move forward are expensed. Additionally, certain internal costs like payroll are capitalized and allocated to projects based on the amount of time employees spend on a project. We also will capitalize real estate taxes and allocated interest costs associated with development once construction commences. Leasing costs like commissions or tenant improvements are capitalized and amortized over the life of the lease or average life of a group of leases if appropriate. We do not capitalize any internal leasing costs.

Revenue Recognition and Related Matters

Land Sales Revenue

Revenues from land sales are recognized using the full accrual method at closing, when title has passed to the buyer, adequate consideration for the land has been received and we have no continuing involvement with the property. Revenue that is not recognized under the full accrual method is deferred and recognized when the required obligations are met. Revenue related to builder price participation rights is recognized as the underlying homes are sold by homebuilders.

When developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold through completion. In accordance with ASC 970-360-30-1, when developed land is sold, costs are allocated to each sold superpad or lot based upon the relative sales value of each superpad or lot. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated throughout the year, with adjustments being allocated prospectively to the remaining parcels available for sale. For certain parcels of land, however, the specific identification method is used to determine the cost of sales, including acquired parcels that we do not intend to  develop or for which development was complete at the date of acquisition.

Rental Revenue

Revenue associated with our operating assets includes minimum rent, percentage rent in lieu of fixed minimum rent, tenant recoveries and overage rent.

Minimum rent revenues are recognized on a straight‑line basis over the terms of the related leases. Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants. Minimum rent revenues also include amortization related to above and below‑market tenant leases on acquired properties.

Recoveries from tenants are stipulated in the leases and are generally computed based upon a formula related to real estate taxes, insurance and other real estate operating expenses and are generally recognized as revenues in the period the related costs are incurred.

Overage rent is recognized on an accrual basis once tenant sales exceed contractual thresholds contained in the lease and is calculated by multiplying the tenant sales in excess of the minimum amount by a percentage defined in the lease.

If the lease provides for tenant improvements, we determine whether the tenant improvements are owned by the tenant or by us. When we are the owner of the tenant improvements, we begin to recognize revenue when the improvements are substantially complete. When the tenant is the owner of the tenant improvements, any tenant allowance funded by us is treated as a lease incentive and amortized as an adjustment to rental revenue over the lease term.

Condominium Rights and Unit Sales

Revenue recognition for contracted individual units in a condominium project are accounted for under the percentage of completion method when the following criteria are met: i) construction is beyond a preliminary stage; ii) buyer is unable to require a refund of its deposit, except for non‑delivery of the unit; iii) sufficient units are sold to assure that it will not revert to a rental property; iv) sales prices are collectible; and v) aggregate sales proceeds and costs can be reasonably estimated. Those units that do not meet the criteria use the full accrual method or deposit method which defers revenue recognition until the unit is closed.

Revenue recognized on the percentage-of-completion method is based upon the ratio of project costs incurred to date compared to total estimated project cost. Total estimated project costs include direct costs such as the carrying value of our land, site

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planning, architectural, construction costs, financing costs and indirect cost allocations for certain infrastructure and amenity costs which benefit the project based upon the relative sales value of the units. Changes in estimated project costs impact the amount of revenue and profit recognized on a percentage of completion basis during the period in which they are determined.  Revenue recognized in excess of amounts collected from buyers is classified as Condominium receivables and amounts collected from buyers in excess of revenue recognized to date are classified as Condominium deposits liability.

Recently Issued Accounting Pronouncements and Developments

Please refer to Note 1 - Summary of Significant Accounting Policies for additional information about new accounting pronouncements.

Inflation

Revenue from our Operating Assets may be impacted by inflation. In addition, materials and labor costs relating to our development activities may significantly increase in an inflationary environment. Finally, inflation poses a risk to us due to the possibility of future increases in interest rates in the context of loan refinancings.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to interest rate risk with respect to our variable rate financings such that increases in interest rates will increase our payments under these debt agreements.  Increases in interest rates could make it more difficult to refinance our floating and fixed rate debt when due. As of December 31, 2015, we had $1.3billion of variable rate debt outstanding of which $209.5 million has been swapped to a fixed-rate. We also entered into $250.0 million notional amount of forward starting swaps effective December 31, 2017 at a weighted-average swap rate of 2.65%. The purpose of these swaps is to hedge interest rate risk with respect to an anticipated future long term financing of one of our Operating Assets. Approximately $192.7 million of the $1.1 billion of total variable rate debt that has not been swapped to a fixed rate is represented by the Master Credit Facility at The Woodlands. Due to the revolving nature of this type of debt, it is generally inefficient to use interest rate swaps as a hedging instrument; rather, we have purchased an interest rate cap having a $100.0 million notional amount for this facility to mitigate our exposure to rising interest rates. We also did not swap to a fixed rate $95.7 million of the outstanding balance on the Victoria Ward financing because it is structured to permit partial repayments to release collateral for redevelopment. Due to the uncertain timing of such partial repayments, hedging this portion of the outstanding balance is inefficient. As of December 31, 2015, annual interest costs would increase approximately $11.0 million for every 1.00% increase in floating interest rates. Generally, a significant portion of our interest costs are capitalized due to the level of assets we currently have under development; therefore, the impact of a change in our interest rate on our consolidated statements of operations and consolidated statements of comprehensive income (loss) is expected to be minimal in the near term, but we would incur higher payments. For additional information concerning our debt and management’s estimation process to arrive at a fair value of our debt as required by GAAP, please refer to the Liquidity and Capital Resources section of “Item 7– Management’s Discussion and Analysis of Financial Condition and Results of Operations”, Note 2 – Summary of Significant Accounting Policies to our Consolidated Financial Statements, Note 8 – Mortgages, Notes and Loans Payable and Note 13 – Derivative Instruments and Hedging Activities. We intend to manage a portion of our variable interest rate exposure by using interest rate swaps and caps.

The following table summarizes principal cash flows on our debt obligations and related weighted-average interest rates by expected maturity dates as of December 31, 2015:

	Contractual Maturity Date
	2016		2017		2018		2019		2020		Thereafter		Total
(In thousands)
Mortgages, notes and loans payable	$	272,269	$	38,464	$	342,670	$	504,135	$	111,488	$	1,187,328	$	2,456,354
Weighted - average interest rate		4.57%		4.57%		4.92%		5.70%		5.94%		4.28%

ITEM 8.  FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA

Information with respect to this Item is set forth beginning on page F-1. See “Item 15 – Exhibits and Financial Schedule” below.

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ITEM 9.  CHANGES IN ANDDISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our reports to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by SEC rules, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2015, the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures were effective as of December 31, 2015.

Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting during the period covered by this report that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining a system of internal control over financial reporting designed to provide reasonable assurance that transactions are executed in accordance with management authorization and that such transactions are properly recorded and reported in the financial statements, and that records are maintained so as to permit preparation of the financial statements in accordance with U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of the Company’s internal control over financial reporting utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013 Framework). Management concluded, based on its assessment, that The Howard Hughes Corporation’s internal control over financial reporting was effective as of December 31, 2015. Ernst & Young, LLP, an independent registered public accounting firm, has audited the Company’s internal control over financial reporting as of December 31, 2015, as stated in their report which is included in this Annual Report on Form 10-K.

71

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

The Howard Hughes Corporation

We have audited The Howard Hughes Corporation’s (the Company) internal control over financial reporting as of December 31, 2015 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). The Howard Hughes Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, The Howard Hughes Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of The Howard Hughes Corporation as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended December 31, 2015 of The Howard Hughes Corporation and our report dated February 29, 2016 expressed an unqualified opinion thereon.  

/s/ Ernst & Young LLP

Dallas, TX

February 29, 2016

72

ITEM 9B.  OTHER INFORMATION

None.

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 is incorporated by reference to the relevant information included in our proxy statement for our 2016 Annual Meeting of Stockholders.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference to the relevant information included in our proxy statement for our 2016 Annual Meeting of Stockholders.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 is incorporated by reference to the relevant information included in our proxy statement for our 2016 Annual Meeting of Stockholders.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is incorporated by reference to the relevant information included in our proxy statement for our 2016 Annual Meeting of Stockholders.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 is incorporated by reference to the relevant information included in our proxy statement for our 2016 Annual Meeting of Stockholders. 

PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULE

(a) Financial Statements and Financial Statement Schedule.

The Consolidated Financial Statements and Schedule listed in the accompanying Index to Consolidated Financial Statements and Financial Statement Schedule are filed as part of this Annual Report. No additional financial statement schedules are presented since the required information is not present or not present in amounts sufficient to require submission of the schedule or because the information required is enclosed in the Consolidated Financial Statements and notes thereto.

(b) Exhibits.

73

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE HOWARD HUGHES CORPORATION

/s/ David R. Weinreb
David R. Weinreb
Chief Executive Officer	February 29, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
*	Chairman of the Board and Director	February 29, 2016
William Ackman
/s/ David R. Weinreb	Director and Chief Executive Officer	February 29, 2016
David R. Weinreb	(Principal Executive Officer)
/s/ Andrew C. Richardson	Chief Financial Officer (Principal Financial and Accounting Officer)	February 29, 2016
Andrew C. Richardson
*	Director	February 29, 2016
Adam Flatto
*	Director	February 29, 2016
Jeffrey Furber
*	Director	February 29, 2016
Gary Krow
*	Director	February 29, 2016
Allen Model
*	Director	February 29, 2016
R. Scot Sellers
*	Director	February 29, 2016
Steven Shepsman
*	Director	February 29, 2016
Burton M. Tansky
*	Director	February 29, 2016
Mary Ann Tighe
*/s/ David R. Weinreb
David R. Weinreb
Attorney-in-fact

74

THE HOWARD HUGHES CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE

Consolidated Financial Statements	Page Number
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2015 and 2014	F-3
Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013	F-4
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2015, 2014 and 2013	F-5
Consolidated Statements of Equity for the years ended December 31, 2015, 2014 and 2013	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013	F-7
Notes to Consolidated Financial Statements	F-9
Financial Statement Schedule
Schedule III – Real Estate and Accumulated Depreciation	F-45

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

The Howard Hughes Corporation

We have audited the accompanying consolidated balance sheets of The Howard Hughes Corporation (the Company) as of December 31, 2015 and 2014, and the related consolidated statements of operations,comprehensive income (loss), equity and cash flows for each of the three years in the period ended December 31, 2015. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Howard Hughes Corporation at December 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 29, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP
Dallas, TX
February 29, 2016

F-2

THE HOWARD HUGHES CORPORATION

CONSOLIDATED BALANCE SHEETS

	December 31,
(In thousands, except share amounts)	2015		2014
Assets:
Investment in real estate:
Master Planned Community assets	$	1,642,842	$	1,641,063
Land		322,462		317,211
Buildings and equipment		1,772,401		1,243,979
Less: accumulated depreciation		(232,969)		(157,182)
Developments		1,036,927		914,303
Net property and equipment		4,541,663		3,959,374
Investment in Real Estate and Other Affiliates		57,811		53,686
Net investment in real estate		4,599,474		4,013,060
Cash and cash equivalents		445,301		560,451
Accounts receivable, net		32,203		28,190
Municipal Utility District receivables, net		139,946		104,394
Notes receivable, net		1,664		28,630
Deferred expenses, net		61,804		60,407
Prepaid expenses and other assets, net		441,190		310,136
Total assets	$	5,721,582	$	5,105,268
Liabilities:
Mortgages, notes and loans payable	$	2,443,962	$	1,978,807
Deferred tax liabilities		89,221		62,205
Warrant liabilities		307,760		366,080
Uncertain tax position liability		1,396		4,653
Accounts payable and accrued expenses		515,354		466,017
Total liabilities		3,357,693		2,877,762
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, 39,714,838 shares issued and outstanding as of December 31, 2015 and 39,638,094 shares issued and outstanding as of December 31, 2014		398		396
Additional paid-in capital		2,847,823		2,838,013
Accumulated deficit		(480,215)		(606,934)
Accumulated other comprehensive loss		(7,889)		(7,712)
Total stockholders' equity		2,360,117		2,223,763
Noncontrolling interests		3,772		3,743
Total equity		2,363,889		2,227,506
Total liabilities and equity	$	5,721,582	$	5,105,268

See Notes to Consolidated Financial Statements.

F-3

THE HOWARD HUGHES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
(In thousands, except per share amounts)	2015		2014		2013
Revenues:
Condominium rights and unit sales	$	305,284	$	83,565	$	32,969
Master Planned Community land sales		187,399		325,099		251,217
Minimum rents		150,805		97,234		81,668
Builder price participation		26,846		20,908		9,356
Tenant recoveries		39,542		28,353		21,068
Hospitality revenues		45,374		37,921		39,201
Other land revenues		14,803		16,503		13,416
Other rental and property revenues		27,035		24,982		20,523
Total revenues		797,088		634,565		469,418
Expenses:
Condominium rights and unit cost of sales		191,606		49,995		16,572
Master Planned Community cost of sales		88,065		119,672		124,040
Master Planned Community operations		44,907		41,794		38,414
Other property operating costs		72,751		67,034		65,723
Rental property real estate taxes		24,138		17,407		14,291
Rental property maintenance costs		10,712		9,135		8,083
Hospitality expenses		34,839		31,829		29,454
Provision for doubtful accounts		4,030		1,404		836
Demolition costs		3,297		6,734		2,078
Development-related marketing costs		25,466		22,783		5,880
General and administrative		81,345		73,569		48,466
Other income, net		(1,829)		(29,471)		(29,478)
Depreciation and amortization		98,997		55,958		33,845
Total expenses		678,324		467,843		358,204
Operating income		118,764		166,722		111,214
Interest income		586		22,531		3,185
Interest expense		(59,744)		(38,624)		(9,759)
Warrant liability gain (loss)		58,320		(60,520)		(181,987)
Gain on sale of The Club at Carlton Woods		29,073		—		—
Increase (reduction) in tax indemnity receivable		—		90		(1,206)
Loss on settlement of tax indemnity receivable		—		(74,095)		—
Equity in earnings from Real Estate and Other Affiliates		3,721		23,336		14,428
Income (loss) before taxes		150,720		39,440		(64,125)
Provision for income taxes		24,001		62,960		9,570
Net income (loss)		126,719		(23,520)		(73,695)
Net income attributable to noncontrolling interests		—		(11)		(95)
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)
Basic income (loss) per share:	$	3.21	$	(0.60)	$	(1.87)
Diluted income (loss) per share:	$	1.60	$	(0.60)	$	(1.87)

See Notes to Consolidated Financial Statements. 

F-4

THE HOWARD HUGHES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Year Ended December 31,
(In thousands)	2015		2014		2013
Comprehensive income (loss), net of tax:
Net income (loss)	$	126,719	$	(23,520)	$	(73,695)
Other comprehensive income (loss):
Interest rate swaps (a)		40		1,003		2,542
Capitalized swap interest expense (b)		(217)		(493)		(1,189)
Other comprehensive income (loss)		(177)		510		1,353
Comprehensive income (loss)		126,542		(23,010)		(72,342)
Comprehensive income attributable to noncontrolling interests		—		(11)		(95)
Comprehensive income (loss) attributable to common stockholders	$	126,542	$	(23,021)	$	(72,437)

(a) Net of deferred tax expense of $1.0 million,$0.2 million and $0.5 million for the years ended December 31, 2015,  2014 and 2013, respectively.

(b) Net of deferred tax benefit of $0.1million, $0.2 million and $0.6 million for the years ended December 31, 2015,  2014 and 2013, respectively.

See Notes to Consolidated Financial Statements.

F-5

THE HOWARD HUGHES CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

								Accumulated
				Additional				Other
		Common		Paid-In		Accumulated		Comprehensive		Noncontrolling		Total
(In thousands, except shares)	Shares	Stock		Capital		Deficit		Income(Loss)		Interests		Equity
Balance January 1, 2013	39,498,912	$	395	$	2,824,031	$	(509,613)	$	(9,575)	$	5,759	$	2,310,997
Net income (loss)			—		—		(73,790)		—		95		(73,695)
Adjustment to noncontrolling interest			—		—		—		—		720		720
Preferred dividend payment on behalf of subsidiary			—		—		—		—		(12)		(12)
Interest rate swaps, net of tax ($486)			—		—		—		2,542		—		2,542
Capitalized swap interest, net of tax $635			—		—		—		(1,189)		—		(1,189)
Stock plan activity	77,432		1		5,782		—		—		—		5,783
Balance, December 31, 2013	39,576,344	$	396	$	2,829,813	$	(583,403)	$	(8,222)	$	6,562	$	2,245,146
Net income (loss)			—		—		(23,531)		—		11		(23,520)
Distribution to noncontrolling interest			—		—		—		—		(2,818)		(2,818)
Preferred dividend payment on behalf of subsidiary			—		—		—		—		(12)		(12)
Interest rate swaps, net of tax $184			—		—		—		1,003		—		1,003
Capitalized swap interest, net of tax $199			—		—		—		(493)		—		(493)
Stock plan activity	61,750		—		8,200		—		—		—		8,200
Balance, December 31, 2014	39,638,094	$	396	$	2,838,013	$	(606,934)	$	(7,712)	$	3,743	$	2,227,506
Net income (loss)			—		—		126,719		—		—		126,719
Adjustment to noncontrolling interest			—		—		—		—		29		29
Interest rate swaps, net of tax of  $966			—		—		—		40		—		40
Capitalized swap interest, net of tax of  $74			—		—		—		(217)		—		(217)
Stock plan activity	76,744		2		9,810		—		—		—		9,812
Balance, December 31, 2015	39,714,838	$	398	$	2,847,823	$	(480,215)	$	(7,889)	$	3,772	$	2,363,889

See Notes to Consolidated Financial Statements.

F-6

THE HOWARD HUGHES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(In thousands)	2015		2014		2013
Cash Flows from Operating Activities:
Net income (loss)	$	126,719	$	(23,520)	$	(73,695)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation		82,275		50,683		29,637
Amortization		16,722		5,275		4,208
Amortization of deferred financing costs		5,734		4,378		2,952
Amortization of intangibles other than in-place leases		462		668		213
Straight-line rent amortization		(4,985)		—		(3,652)
Deferred income taxes		21,152		65,010		8,352
Restricted stock and stock option amortization		7,284		8,200		5,782
Gain on disposition of assets		(29,073)		(2,373)		(8,483)
Warrant liability (gain) loss		(58,320)		60,520		181,987
Reduction (increase) in tax indemnity receivable		—		(90)		1,206
Interest income related to tax indemnity		—		(21,510)		(2,078)
Loss on settlement of tax indemnity receivable		—		74,095		—
Equity in earnings from Real Estate and Other Affiliates, net of distributions		1,182		11,222		(7,121)
Provision for doubtful accounts		4,030		1,404		836
Master Planned Community land acquisitions		(7,293)		(100,913)		(5,667)
Master Planned Community development expenditures		(197,020)		(140,735)		(133,590)
Master Planned Community cost of sales		69,104		110,885		112,695
Condominium development expenditures		(191,313)		(75,990)		(21,213)
Condominium and other cost of sales		191,606		49,995		16,572
Deferred rental income		46,366		—		—
Proceeds from sale of condominium rights		—		—		47,500
Percentage of completion revenue recognition from sale of condominium rights and units		(305,284)		(83,565)		(32,969)
Non-monetary consideration relating to land sale		—		(17,406)		—
Proceeds received on settlement of tax indemnity receivable		—		138,000		—
Payment to IRS relating to tax court decision		—		(203,298)		—
Net changes:
Accounts and notes receivable		50,228		45,209		5,935
Prepaid expenses and other assets		(1,869)		(6,311)		(1,591)
Condominium deposits received		81,881		139,187		—
Deferred expenses		(11,743)		(36,641)		(19,364)
Accounts payable and accrued expenses		29,867		37,213		20,333
Condominium deposits held in escrow		(81,881)		(139,187)		—
Condominium deposits released from escrow		177,724		—		—
Other, net		375		(8,720)		547
Cash provided by (used in) operating activities		23,930		(58,315)		129,332
Cash Flows from Investing Activities:
Property and equipment expenditures		(15,439)		(8,521)		(31,768)
Operating property improvements		(8,409)		(6,299)		(17,231)
Property developments and redevelopments		(578,506)		(759,003)		(221,071)
Proceeds from dispositions		25,139		11,953		10,814
Proceeds from insurance claims		—		12,901		—
Acquisition of properties		—		(21,555)		—
Proceeds from sales of investment in Real Estate Affiliates		—		—		13,270
Investment in Summerlin Las Vegas Baseball Club, LLC		—		—		(10,350)
Distributions from (investment in) KR Holdings, LLC		9,121		9,386		(16,750)
Investments in Real Estate and Other Affiliates, net		(2,171)		(6,248)		(4,035)
Change in restricted cash		(6,580)		20,930		(17,204)
Other		1,277		—		—
Cash used in investing activities		(575,568)		(746,456)		(294,325)
Cash Flows from Financing Activities:
Proceeds from mortgages, notes and loans payable		583,822		597,553		1,120,102
Principal payments on mortgages, notes and loans payable		(103,808)		(120,182)		(279,721)
Deferred financing costs		(4,285)		(7,085)		(6,594)
Preferred dividend payment on behalf of REIT subsidiary		—		(12)		(12)
Distributions (contributions) to noncontrolling interests		—		—		(3,031)
Special Improvement District bonds held in escrow		(39,241)		—		—
Cash provided by financing activities		436,488		470,274		830,744
Net change in cash and cash equivalents		(115,150)		(334,497)		665,751
Cash and cash equivalents at beginning of period		560,451		894,948		229,197
Cash and cash equivalents at end of period	$	445,301	$	560,451	$	894,948

F-7

THE HOWARD HUGHES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(In thousands)	2015		2014		2013
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	99,296	$	84,497	$	30,600
Interest capitalized		47,221		46,513		37,470
Income taxes paid		3,318		204,898		2,268
Non-Cash Transactions:
Special Improvement District bond transfers associated with land sales		18,775		8,786		14,376
Property developments and redevelopments		2,530		38,567		85,609
Accrued interest on construction loan borrowing		2,863		4,785		—
MPC Land contributed to Real Estate Affiliates		15,234		—		—
Special Improvement District bond transfers to Real Estate Affiliates		(1,518)		—		—
Capitalized stock compensation		2,526		—		—
Distribution of land to noncontrolling interests		—		2,818		—
Acquisition of 1701 Lake Robbins:
Land		—		(1,663)		—
Building		—		(3,725)		—
Other assets		—		(848)		—
Mortgages, notes and loans payable		—		4,600		—
Other liabilities		—		152		—
Acquisition of 10-60 Columbia Corporate Center:
Land		—		(23,404)		—
Building		—		(79,247)		—
Other assets		—		(28,997)		—
Other liabilities		—		1,648		—
Acquisition of 85 South Street:
Building		—		(3,979)		—
Below market lease obligation		—		3,979		—

See Notes to Consolidated Financial Statements.

F-8

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The Howard Hughes Corporation’s (“HHC” or the “Company”) mission is to be the preeminent developer and operator of Master Planned Communities and mixed‑use properties. We specialize in the development of master planned communities, the development of residential condominiums, and the ownership, management and development or repositioning of real estate assets currently generating revenues, also called operating assets, as well as other strategic real estate opportunities in the form of entitled and unentitled land and other development rights, also called strategic developments. We are a Delaware corporation that was formed on July 1, 2010. Unless the context otherwise requires, references to “we,” “us” and “our” refer to HHC and its subsidiaries.

Management has evaluated all material events occurring subsequent to the date of the Consolidated Financial Statements up to the date and time this Annual Report is filed.

Principles of Consolidation and Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), with all intercompany balances eliminated. The presentation includes the accounts of the Company, and those entities in which we have a controlling financial interest. The noncontrolling equity holders’ share of the assets, liabilities and operations are reflected in noncontrolling interests within permanent equity. The Company also consolidates certain variable interest entities (“VIEs”) in accordance with Accounting Standards Codification (“ASC”) 810 Consolidation (“ASC 810”)  (see “Investment in Real Estate and Other Affiliates” below). At December 31, 2015, the Company adopted Accounting Standards Update (“ASU”) 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs,” and began presenting the carrying value of its debt net of the debt issuance costs, as discussed further below.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The estimates and assumptions include, but are not limited to, revenue recognition accounted for under the percentage of completion method, capitalization of development costs, provision for income taxes, recoverable amounts of receivables and deferred tax assets, initial valuations of tangible and intangible assets acquired and the related useful lives of assets upon which depreciation and amortization is based. Estimates and assumptions have also been made with respect to future revenues and costs, the fair value of warrants, debt and options granted. Actual results could differ from these and other estimates.

Investment in Real Estate

Master Planned Community Assets, Land, Buildings and Equipment

Real estate assets are stated at cost less any provisions for impairments. Expenditures for significant improvements to our assets are capitalized. Tenant improvements relating to our operating assets are capitalized and depreciated over the shorter of their economic lives or the lease term. Maintenance and repair costs are charged to expense when incurred.

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We periodically review the estimated useful lives of properties. Depreciation or amortization expense is computed using the straight‑line method based upon the following estimated useful lives:

Asset Type	Years
Buildings and improvements	10- 45
Equipment, tenant improvements and fixtures	5 - 10
Computer hardware and software, and vehicles	3 - 5

From time to time, we may reassess the development strategies for certain buildings and improvements which results in changes to our estimate of their remaining useful lives. As a result, we recognized an additional $17.1 million, or $0.40 per diluted share, $10.8 million, or $0.27 per diluted share, and $1.2 million, or $0.03 per diluted share, in depreciation expense during the years ended December 31, 2015, 2014 and 2013, respectively, due to the change in useful lives of these buildings and improvements. The increased depreciation expense was caused by development plans which included the demolition of certain pre-existing buildings and improvements, thereby resulting in a reduction to their useful lives.

Developments

Development costs, which generally include legal and professional fees and other directly‑related third‑party costs associated with specific development properties, are capitalized as part of the property being developed. In the event that management no longer has the ability or intent to complete a development, the costs previously capitalized are evaluated for impairment.

Construction and improvement costs incurred in connection with the development of new properties or the redevelopment of existing properties are capitalized, including certain employee personnel costs. Real estate taxes, interest and insurance costs incurred during construction periods are also capitalized. Capitalized interest costs are based on qualified expenditures and interest rates in place during the construction period. Demolition costs associated with these redevelopments are expensed as incurred.

Our Developments are made up of the following categories:

	December 31,
(In thousands)	2015		2014
Land & improvements	$	182,843	$	164,280
Development costs		728,984		667,228
Condominium projects		125,100		82,795
Total Developments	$	1,036,927	$	914,303

Investment in Real Estate and Other Affiliates

In the ordinary course of business, we enter into partnerships or joint ventures primarily for the development and operation of real estate assets which are referred to as “Real Estate Affiliates”. These partnerships or joint ventures are typically characterized by a non‑controlling ownership interest with decision making and distribution of expected gains and losses being generally proportionate to the ownership interest. We evaluate these partnerships and joint ventures for consolidation in accordance with ASC 810.

We assess our joint ventures at inception to determine if any meet the qualifications of a variable interest entity (“VIE”). We consider a partnership or joint venture a VIE if: (a) the total equity investment is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the entity); or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or their rights to receive the expected residual returns of the entity, and

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Upon the occurrence of certain events outlined in ASC 810, we reassess our initial determination of whether the partnership or joint venture is a VIE.

We also perform a qualitative assessment of each VIE to determine if we are the primary beneficiary. Under ASC 810, a company concludes that it is the primary beneficiary and consolidates the VIE if the company has both (a) the power to direct the economically significant activities of the entity and (b) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The company considers the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties in determining if the company is the primary beneficiary. As required by ASC 810, management’s assessment of whether the company is the primary beneficiary of a VIE is continuously performed.

We account for VIEs for which we are not considered to be the primary beneficiary, but have significant influence, using the equity method and investments in VIEs where we do not have significant influence on the joint venture’s operating and financial policies using the cost method.

We account for investments in joint ventures where we own a non‑controlling interest using the equity method, and investments in joint ventures where we have virtually no influence on the joint venture’s operating and financial policies using the cost method. For cost method investments, we recognize earnings to the extent of distributions received from such investments.

Under the equity method, the cost of our investment is adjusted for our share of the equity in earnings or losses of such Real Estate Affiliates from the date of investment and reduced by distributions received. Generally, the operating agreements with respect to our Real Estate Affiliates provide that assets, liabilities and funding obligations are shared in accordance with our ownership percentages. We generally also share in the profit and losses, cash flows and other matters relating to our Real Estate Affiliates in accordance with our respective ownership percentages. For certain equity method investments, when the preferences on profit sharing on liquidation rights and priorities differ from the ownership percentages, we consider ASC 970 and apply the Hypothetical Liquidation Book Value (“HLBV”) method. Under this method, we recognize income or loss based on the change in our underlying share of the venture’s net assets on a hypothetical liquidation basis as of the reporting date.

Acquisitions of Properties

We account for the acquisition of real estate properties constituting a business in accordance with ASC 805 Business Combinations (“ASC 805”). This methodology requires that assets acquired and liabilities assumed be recorded at their fair values on the date of acquisition.

Costs directly related to purchase of land or other property acquisitions are considered additions to the purchase price and increase the cost basis recorded for the Investment in Real Estate.  Acquisition costs related to the acquisition of a business are expensed as incurred.

The fair value of tangible assets of an acquired property (which includes land, buildings, and improvements) is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, buildings and improvements based on management’s determination of the fair value of these assets. The “as-if-vacant” values are derived from several sources which primarily include a discounted cash flow analysis using discount and capitalization rates based on recent comparable market transactions, where available.

The fair value of acquired intangible assets consisting of in-place, above-market and below-market leases is recorded based on a variety of considerations. In-place lease considerations include, but are not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases (i.e., the market cost to execute a lease, including leasing commissions and tenant improvements); (2) the value associated with lost revenue related to tenant reimbursable operating costs incurred during the assumed lease-up period (i.e., real estate taxes, insurance and certain other operating expenses); and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Above-market and

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

below-market leases are valued at the present value, using a discount rate that reflects the risks associated with the leases acquired, of the difference between (1) the contractual amounts to be paid pursuant to the in-place lease; and (2) management’s estimate of current market lease rates, measured over the remaining non-cancelable lease term, including any below market renewal option periods.

Impairment

We review our real estate assets (including those held by our Real Estate Affiliates), operating assets, land held for development and sale, and developments for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  GAAP related to the impairment or disposal of long‑lived assets requires that if impairment indicators exist and that expected undiscounted cash flows generated by the asset are less than its carrying amount, an impairment provision should be recorded to write down the carrying amount of the asset to its fair value. The impairment analysis does not consider the timing of future cash flows and whether the asset is expected to earn an above or below market rate of return.

Impairment indicators for our assets or projects within our Master Planned Communities segment are assessed separately and include, but are not limited to, significant decreases in sales pace or average selling prices, significant increases in expected land development and construction costs or cancellation rates, and projected losses on expected future sales. Master Planned Community assets have extended life cycles that may last 20 to 40 years, or longer, and have few long‑term contractual cash flows. Further, Master Planned Community assets generally have minimal to no residual values because of their liquidating characteristics. Master Planned Community development periods often occur through several economic cycles. Subjective factors such as the expected timing of property development and sales, optimal development density and sales strategy impact the timing and amount of expected future cash flows and fair value.

Impairment indicators for our Operating Assets segment are assessed separately for each property and include, but are not limited to, significant decreases in net operating income, significant decreases in occupancy, ongoing low occupancy and significant net operating losses.

Impairment indicators for development costs in our Strategic Developments segment, which are typically costs incurred during the beginning stages of a potential development, and developments in progress are assessed by project and include, but are not limited to, significant changes in projected completion dates, revenues or cash flows, development costs, market factors, significant decreases in comparable property sale prices and feasibility.

The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy, pricing, development costs, sales pace and capitalization rates, and estimated holding periods for the applicable assets. Although the estimated fair value of certain assets may be exceeded by the carrying amount, a real estate asset is only considered to be impaired when its carrying amount is not expected to be recovered through estimated future undiscounted cash flows. To the extent an impairment provision is necessary, the excess of the carrying amount of the asset over its estimated fair value is expensed to operations. In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset. The adjusted carrying amount, which represents the new cost basis of the asset, is depreciated over the remaining useful life of the asset or, for Master Planned Communities, is expensed as a cost of sales when land is sold. Assets that have been impaired will in the future have lower depreciation and cost of sale expenses. The impairment will have no impact on cash flow.

With respect to our Investment in Real Estate and Other Affiliates, a series of operating losses of an underlying asset or other factors may indicate that a decrease in value has occurred which is other‑than‑temporary. The investment in each Real Estate and Other Affiliate is evaluated periodically and as deemed necessary for recoverability and valuation declines that are other‑than‑temporary. If the decrease in value of an Investment in a Real Estate and Other Affiliate is deemed to be other‑than‑temporary, our investment is reduced to its estimated fair value. In addition to the property‑specific impairment analysis that we perform on the underlying assets of the investment, we also consider the ownership, distribution preferences, limitations, and rights to sell and repurchase our ownership interests.

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash and Cash Equivalents

Cash and Cash Equivalents consist of highly-liquid investments with maturities at date of purchase of three months or less and are deposited with major banks throughout the United States. Such deposits are in excess of FDIC limits and are placed with high quality institutions in order to minimize concentration of counterparty credit risk.

Revenue Recognition and Related Matters

Land Sales Revenue

Revenues from land sales are recognized using the full accrual method at closing, when title has passed to the buyer, adequate consideration for the land has been received and we have no continuing involvement with the property. Revenue that is not recognized under the full accrual method is deferred and recognized when the required obligations are met. Revenue related to builder price participation rights is recognized as the underlying homes are sold by homebuilders.

When developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold through completion. In accordance with ASC 970-360-30-1, when developed land is sold, costs are allocated to each sold superpad or lot based upon the relative sales value of each superpad or lot. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated throughout the year, with adjustments being allocated prospectively to the remaining parcels available for sale. For certain parcels of land, however, the specific identification method is used to determine the cost of sales, including acquired parcels that we do not intend to develop or for which development was complete at the date of acquisition.

Rental Revenue

Revenue associated with our operating assets includes minimum rent, percentage rent in lieu of fixed minimum rent, tenant recoveries and overage rent.

Minimum rent revenues are recognized on a straight‑line basis over the terms of the related leases when collectability is reasonably assumed and the tenant has taken possession of, or controls, the physical use of the leased asset. Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants. Minimum rent revenues also include amortization related to above and below‑market tenant leases on acquired properties.

Recoveries from tenants are stipulated in the leases, are generally computed based upon a formula related to real estate taxes, insurance and other real estate operating expenses, and are generally recognized as revenues in the period the related costs are incurred.

Overage rent is recognized on an accrual basis once tenant sales exceed contractual thresholds contained in the lease and is calculated by multiplying the tenant sales in excess of the minimum amount by a percentage defined in the lease.

If the lease provides for tenant improvements, we determine whether the tenant improvements are owned by the tenant or by us. When we are the owner of the tenant improvements, rental revenue begins when the improvements are substantially complete. When the tenant is the owner of the tenant improvements, any tenant allowance funded by us is treated as a lease incentive and amortized as an adjustment to rental revenue over the lease term.

Condominium Rights and Unit Sales

Revenue recognition for contracted individual units in a condominium project are accounted for under the percentage of completion method when the following criteria are met: (a) construction is beyond a preliminary stage; (b) buyer is unable to require a refund of its deposit, except for non‑delivery of the unit; (c) sufficient units are sold to assure that it will not revert to a rental property; (d) sales prices are collectible; and (e) aggregate sales proceeds and costs can be reasonably estimated. Those

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

units that do not meet the criteria use the full accrual method or deposit method which defers revenue recognition until the unit is closed.

Revenue recognized on the percentage-of-completion method is based upon the ratio of project costs incurred to date compared to total estimated project cost. Total estimated project costs include direct costs such as the carrying value of our land, site planning, architectural, construction costs, financing costs and indirect cost allocations for certain infrastructure and amenity costs which benefit the project based upon the relative sales value of the units. Changes in estimated project costs impact the amount of revenue and profit recognized on a percentage of completion basis during the period in which they are determined. Revenue recognized in excess of amounts collected from buyers is classified as Condominium receivables and amounts collected from buyers in excess of revenue recognized to date are classified as Condominium deposits liability.

Hospitality Revenue

Revenue from our hospitality properties is primarily related to room rentals and food and beverage sales and is recognized as services are performed.

Other Income

Other income for the year ended December 31, 2015 primarily relates to a $0.3 million gain on insurance recoveries related to casualty losses at South Street Seaport from Superstorm Sandy and $0.5 million related to our participation interest in the golf courses at TPC Summerlin and TPC Las Vegas.

Other income for the year ended December 31, 2014 primarily relates to a $27.0 million gain on insurance recoveries related to casualty losses at South Street Seaport from Superstorm Sandy and $2.4 million related to the sale of the Redlands Promenade property.

Other income for the year ended December 31, 2013 includes a $12.2 million gain on insurance recoveries relating to South Street Seaport, an $8.5 million gain recognized on the sale of our Head Acquisition, LP interest, a $4.5 million favorable legal settlement relating to the British Petroleum oil spill in the Gulf of Mexico in 2010, a $1.0 million gain from the sale of Alameda Plaza, a $0.7 million gain on the sale of The Metropolitan Downtown Columbia (formerly known as Parcel D) into a joint venture and a $0.6 million gain from the sale of Rio West Mall.

Marketing and Advertising

Our Strategic Development, Operating Assets and Master Planned Community segments incur various marketing and advertising costs as part of their development, branding, leasing or sales initiatives. These costs include special events, broadcasts, direct mail and online digital and social media programs, and they are expensed as incurred.

Accounts Receivable

Accounts receivable includes tenant rents, tenant recoveries, other receivables, and straight‑line rent receivables.

Straight‑line rent receivables represent rental revenues recognized in excess of amounts currently due under lease agreements. Such amounts totaling $22.2 million as of December 31, 2015 and $13.5 million as of December 31, 2014, are included in Accounts receivable, net in our Consolidated Balance Sheets.

We record allowances against our receivables that we consider uncollectible. These allowances are reviewed periodically and are adjusted based on management’s estimate of receivables that will not be realized in subsequent periods. We also maintain an allowance for receivables arising from the straight‑lining of rents. Management exercises judgment in establishing these allowances and considers payment history, current credit status and if the tenant is currently occupying the space in developing

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

these estimates. The allowance against our straight‑line rent receivable is based on historical experience with early lease terminations, as well as specific review of significant tenants and tenants that are having known financial difficulties.

The following table summarizes the changes in allowance for doubtful accounts against our accounts receivables:

(In thousands)	2015		2014		2013
Balance as of January 1	$	7,619	$	7,390	$	8,914
Provision for doubtful accounts		4,030		1,404		836
Write-offs		(7,243)		(1,175)		(2,360)
Balance as of December 31,	$	4,406	$	7,619	$	7,390

The significant increase in write-offs in the allowance for doubtful accounts in the year ended December 31, 2015 relate to uncollectible receivables from a tenant at an operating property that vacated its space.

Municipal Utility District Receivables

In Houston, Texas, certain development costs are reimbursable through the creation of Municipal Utility Districts (“MUDs”, also known as Water Control and Improvement Districts) receivables, which are separate political subdivisions authorized by Article 16, Section 59 of the Texas Constitution and governed by the Texas Commission on Environmental Quality (“TCEQ”). MUDs are formed to provide municipal water, waste water, drainage services, recreational facilities and roads to those areas where they are currently unavailable through the regular city services. Typically, the developer advances funds for the creation of the facilities, which must be designed, bid and constructed in accordance with the City of Houston’s and TCEQ requirements.

The developer initiates the MUD process by filing the applications for the formation of the MUD, and once the applications have been approved, a Board of Directors is elected for the MUD and given the authority to issue ad valorem tax bonds and the authority to tax residents. The MUD Board authorizes and approves all MUD development contracts and pay requests. MUD bond sale proceeds are used to reimburse the developer for its construction costs, including interest. MUD taxes are used to pay the debt service on the bonds and the operating expenses of the MUD. The Company estimates the costs it believes will be eligible for reimbursement as MUD receivables. Our MUD receivables are pledged as security to creditors under the debt facilities relating to our Bridgeland and The Woodlands MPCs. MUD receivables are shown net of an allowance of $0.9 million and $5.8 million for the years ending December 31, 2015 and 2014, in the accompanying Consolidated Balance Sheets. The significant decrease in the allowance for MUD receivables at December 31, 2015 as compared to December 31, 2014 relates to a large MUD reimbursement at The Woodlands MPC during 2015. The MUD receivable had previously been considered unrecoverable.

Notes Receivable

Notes receivable include amounts due from homebuilders primarily at our Summerlin Master Planned Community, and a note from General Growth Properties (“GGP”).  The GGP note had a balance of $0.2 million and $6.7 million as of December 31, 2015 and 2014, respectively. The GGP note is fully amortizing, carries an interest rate of 4.41%, and cash payments under the note were approximately $6.5 million per year through the end of 2015. Our Summerlin MPC Community held a $20.2 million note from a national homebuilder relating to a 2014 land sale bearing interest at 0.39%, which matured in November 2015, and payment was received in full.

Also included in Notes receivable are notes receivable from various tenants, net of an allowance for uncollectible notes receivable. We estimate the allowance for uncollectible notes receivable based on our assessment of expected receipts of future cash flows with consideration given to any collateral securing the respective note.

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

Deferred income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates currently in effect. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards.

A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. An increase or decrease in the valuation allowance that results from a change in circumstances, and which causes a change in our judgment about the realizability of the related deferred tax asset, is included in the deferred tax provision. There are events or circumstances that could occur in the future that could limit the benefit of deferred tax assets. In addition, we recognize and report interest and penalties, if necessary, related to uncertain tax positions within our provision for income tax expense.

In our Master Planned Communities, gains with respect to land sales whether for commercial use or for single family residences are reported for tax purposes either on the modified accrual method or on the percentage-of-completion method. Under the percentage-of-completion method, a gain is recognized for tax purposes as costs are incurred in satisfaction of contractual obligations. The method used for determining the percentage complete for income tax purposes is different than that used for financial statement purposes.

Deferred Expenses

Deferred expenses consist principally of leasing costs. Deferred leasing costs are amortized to amortization expense using the straight‑line method over periods that approximate the related lease terms. Deferred expenses in our Consolidated Balance Sheets are shown net of accumulated amortization of $10.8 million and $6.4 million as of December 31, 2015 and 2014, respectively.

Deferred financing fees are amortized to interest expense over the terms of the respective financing agreements using the effective interest method (or other methods which approximate the effective interest method).

In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs.” This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The standard requires a retrospective application to reflect the period-specific effects of applying the new guidance. We adopted this guidance on December 31, 2015.  The adoption of this ASU only impacted the presentation of deferred financing costs previously included in Deferred expenses, net, now included in Mortgage, notes, and loans payable on the Consolidated Balance Sheets and as of December 31, 2014,  $14.7 million in Deferred financing costs, net have been reclassified from Deferred expenses, net to Mortgages, notes and loans payable.

Stock Plans

We apply the provisions of ASC 718 Stock Compensation (“ASC 718”) in our accounting and reporting for stock‑based compensation. ASC 718 requires all share‑based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. All unvested options outstanding under our option plans have grant prices equal to the market price of the Company’s stock on the dates of grant. Compensation cost for restricted stock is determined based on the fair market value of the Company’s stock at the date of grant.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, ‘‘Leases.’’ ASU 2016-02, codified in ASC 842, amends the existing

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the impact of adopting the new leases standard on our Consolidated Financial Statements.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810) - Amendments to the Consolidation Analysis.” The standard eliminates the deferral of FAS 167, which allowed reporting entities with interests in certain investment funds to follow previous consolidation guidance in FIN 46(R), per ASC 810-10-65-2(a). The standard modifies whether: (1) fees paid to a decision maker or service provider represent a variable interest; (2) a limited partnership or similar entity has the characteristics of a VIE; and (3) a reporting entity is the primary beneficiary of a VIE. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 for public companies, and early adoption is permitted. We do not expect adoption to have a material impact on our Consolidated Financial Statements.

In May 2014, the FASB and the International Accounting Standards Board (“IASB”) issued ASU 2014-09 “Revenues from Contracts with Customers (Topic 606).”The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The effective date of this standard will be for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted after December 15, 2016. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in the ASU. We are currently evaluating the new guidance to determine the impact it may have on our Consolidated Financial Statements.

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15, “Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” Before the issuance of this ASU, there was no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. This guidance is expected to reduce the diversity in the timing and content of footnote disclosures. This ASU requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards as specified in the guidance. This ASU becomes effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter. Early adoption is permitted. We do not expect the adoption of this ASU to have an impact on our Consolidated Financial Statements.

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. The new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. We adopted this guidance and there has been no impact from the adoption on our historical Consolidated Financial Statements because we have not had any discontinued operations.

NOTE 2   EARNINGS PER SHARE

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted‑average number of common shares outstanding. Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of all potentially dilutive common shares. The dilutive effect of options and nonvested stock issued under stock‑based compensation plans is computed using the “treasury stock” method. The dilutive effect of the Sponsors Warrants and Management Warrants is computed using the if‑converted method. Gains associated with the changes in the fair value of the Sponsors Warrants and Management Warrants are excluded from the

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

numerator in computing diluted earnings per share because inclusion of such gains in the computation would be anti‑dilutive.

Information related to our EPS calculations is summarized as follows:

	Year ended December 31,
(In thousands, except per share amounts)	2015		2014		2013
Basic EPS:
Numerator:
Net income (loss)	$	126,719	$	(23,520)	$	(73,695)
Net income attributable to noncontrolling interests		—		(11)		(95)
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)
Denominator:
Weighted average basic common shares outstanding		39,470		39,464		39,449
Diluted EPS:
Numerator:
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)
Less: Warrant liabilitygain		(58,320)		—		—
Adjusted net income (loss) attributable to common stockholders	$	68,399	$	(23,531)	$	(73,790)
Denominator:
Weighted average basic common shares outstanding		39,470		39,464		39,449
Restricted stock and stock options		411		—		—
Warrants		2,873		—		—
Weighted average diluted common shares outstanding		42,754		39,464		39,449
Basic income (loss) per share:	$	3.21	$	(0.60)	$	(1.87)
Diluted income (loss) per share:	$	1.60	$	(0.60)	$	(1.87)

The diluted EPS computation as of December 31, 2015 excludes 141,776 stock options as their inclusion would have been anti‑dilutive.

The diluted EPS computation as of December 31, 2014 excludes 1,046,940 stock options, 172,690 shares of restricted stock, 1,916,667 shares of common stock underlying the Sponsor Warrants and 2,862,687 shares of common stock underlying the Management Warrants because their inclusion would have been anti‑dilutive.

The diluted EPS computation as of December 31, 2013 excludes 965,440 stock options, 122,334 shares of restricted stock, 1,916,667 shares of common stock underlying the Sponsor Warrants, and 2,862,687 shares of common stock underlying the Management Warrants because their inclusion would have been anti‑dilutive.

NOTE 3  SPONSOR AND MANAGEMENT WARRANTS

On November 9, 2010, we issued warrants to purchase shares of our common stock to certain of our sponsors (the “Sponsor Warrants”). The exercise price for the warrants of $50.00 per share and the number of shares of common stock underlying each warrant are subject to adjustment for future stock dividends, splits or reverse splits of our common stock or certain other events. The 1,916,667 of Sponsor Warrants outstanding are exercisable at any time and expire on November 9, 2017.

In November 2010 and February 2011, we entered into certain agreements (the “Management Warrants”) with David R. Weinreb, our Chief Executive Officer, Grant Herlitz, our President, and Andrew C. Richardson, our Chief Financial Officer, in each case prior tohis appointment tosuch position to purchase shares of our common stock. The Management Warrants represent 2,862,687 underlying shares, which may be adjusted pursuant to a net settlement option, and were issued pursuant to such agreements at fair value in exchange for a combined total of approximately $19.0 million in cash from such executives at the commencement of their respective employment. Mr. Weinreb and Mr. Herlitz’s warrants have exercise prices of $42.23

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

per share and Mr. Richardson’s warrants have an exercise price of $54.50 per share. Generally, the Management Warrants become exercisable in November 2016 and expire in February 2018.

As of December 31, 2015, the estimated $123.1 million fair value for the Sponsor Warrants representing warrants to purchase 1,916,667 shares and the estimated $184.7 million fair value for the Management Warrants representing warrants to purchase 2,862,687 shares are recorded as liabilities because the holders of these warrants could require us to settle such warrants in cash upon a change of control. The estimated fair values for the outstanding Sponsor Warrants and Management Warrants were $157.1 million and $209.0 million, respectively, as of December 31, 2014. The fair values are estimated using an option pricing model and Level 3 inputs due to the unavailability of comparable market data, as further discussed in Note 7 – Fair Value of Financial Instruments. Decreases and increases in the fair value of the Sponsor Warrants and the Management Warrants are recognized as warrant liability gains or losses, respectively, in the Consolidated Statements of Operations.

NOTE 4  ACQUISITIONS AND DISPOSITIONS

OnSeptember 4, 2015, we sold The Club atCarlton Woods, its 36-hole golf and country club in The Woodlands, for net cash proceeds of $25.1 million, and purchaser’s assumption of net liabilities of $4.0 million, resulting in a pre-tax gain of $29.1 million. The property was comprised of total assets of $20.9 million and total liabilities of $24.9 million. Most of the lots have been sold, and the sale of this asset has allowed us to redeploy capital to our development activities.

In the first quarter 2015, we acquired a 58,000 square foot commercial building and air rights with total residential and commercial development rights of 196,133 square feet for $91.4 million. The acquisitions, when combined with adjacent property acquisitions of $136.7 million made in 2014, create a 42,694 square foot lot with 817,784 square feet of available development rights. These properties are collectively referred to as the Seaport District Assemblage and are located in close proximity to our South Street Seaport property.

On December 12, 2014, as part of the settlement with GGP relating to the Tax Matters Agreement, we acquired from GGP six unencumbered office buildings consisting of 699,884 square feet of space located in downtown Columbia, Maryland valued at $130.0 million. The fair value approximated the agreed upon value and was allocated $79.2 million to buildings, $23.4 million to land, and $27.4 million to intangible lease assets consisting of $25.2 million for in-place leases, $3.8 million for above-market leases and $1.6 million for below-market leases. We incurred $1.5 million in acquisition costs, and these costs were included in other property operating costs. The office buildings, titled 10-60 Columbia Corporate Center, are included in our Operating Assets segment.

In 2014, we acquired 2,055 acres of undeveloped land located in Conroe, Texas for $98.5 million, which is included in The Woodlands Hills MPC. 

In October 2014, we acquired 85 South Street, an eight story 60,000 square foot multi-family property located two blocks south of Pier 17 and within the Seaport District for $20.1 million. The purchase price approximated fair value and was allocated $8.1 million to the building, $15.9 million to the land, and $(3.9) million for below-market leases. This multi-family apartment building is included in our Operating Assets segment.

In July 2014, we acquired 1701 Lake Robbins, a 12,376 square foot retail building located in The Woodlands for $5.7 million. The purchase price included the assumption of a mortgage of $4.6 million. The purchase price approximated fair value and was allocated $3.7 million to the building, $1.7 million to the land, and $0.2 million of intangible lease assets consisting of $0.3 million for in-place leases and $(0.1) million for below-market leases. This retail building is included in our Operating Assets segment.

In July 2014, we acquired 100% of the fee simple interest in the land underlying our 110 N. Wacker office building located in downtown Chicago, Illinois for $12.3 million.

On September 30, 2013, we sold the Rio West Mall, a 521,194 square foot shopping center on 50 acres of land, located in

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Gallup, New Mexico for $12.0 million. The sale includes our ground lease interest, all buildings, structures and improvements, machinery, equipment and furnishings, and all leases and security deposits. The pre‑tax gain recognized on the sale was $0.6 million.

NOTE 5 REAL ESTATE AND OTHER AFFILIATES

Our investment in real estate and other affiliates which are reported on the equity and cost methods are as follows:

	Economic/Legal Ownership				Carrying Value				Share of Earnings/Dividends
	December 31,		December 31,		December 31,		December 31,		Year Ended December 31,
($ in Thousands)	2015		2014		2015		2014		2015		2014		2013
Equity Method Investments
Master Planned Communities:
Discovery	—	(a)	—	(a)	$	12,052	$	—	$	—	$	—	$	N/A
Operating Assets:
Millennium Woodlands Phase II, LLC (b) (c)	81.43	%	81.43	%		—		1,023		(1,165)		(1,012)		—
Stewart Title	50.00	%	50.00	%		3,715		3,869		996		1,301		1,223
Clark County Las Vegas Stadium, LLC (c) (d)	50.00	%	50.00	%		11,050		10,548		152		(88)		(13)
The Metropolitan Downtown Columbia (e)	50.00	%	50.00	%		4,872		4,800		(13)		—		—
Woodlands Sarofim	20.00	%	20.00	%		2,588		2,595		166		175		180
Strategic Developments:
Circle T Ranch and Power Center	50.00	%	50.00	%		9,128		9,004		—		—		—
HHMK Development (c)	50.00	%	50.00	%		10		10		549		2,120		732
Millennium Woodlands Phase II, LLC (b) (c)	81.43	%	81.43	%		—		—		—		(279)		(74)
KR Holdings (c)	50.00	%	50.00	%		689		9,183		1,289		19,470		9,877
Parcel C (c)	50.00	%	50.00	%		7,070		8,737		—		—		—
Constellation (f)	50.00	%	50.00	%		2,685		—		—		—		N/A
						53,859		49,769		1,974		21,687		11,925
Cost method investments						3,952		3,917		1,747		1,649		2,503
Investment in Real Estate and Other Affiliates					$	57,811	$	53,686	$	3,721	$	23,336	$	14,428

N/A – Not applicable or not owned in the respective period.

(a) See discussion below for a description of the joint venture ownership structure.

(b) Millennium Woodlands Phase II, LLC was placed into service in the beginning of the third quarter 2014. The investment balance is in a deficit position, which is reported in Other liabilities. We expect to recover the deficit when the property reaches stabilized occupancy.

(c) Equity method variable interest entity (“VIE”).

(d) Formerly known as the Summerlin Las Vegas Baseball Club, LLC.

(e) The Metropolitan Downtown Columbia was placed into service in the first quarter 2015.

(f) Formerly known as Summerlin Apartments, LLC.

We are not the primary beneficiary of any of the VIEs listed above because we do not have the power to direct activities that most significantly impact the economic performance of such joint ventures and therefore we report our interests on the equity method. Our maximum exposure to loss as a result of these investments is limited to the aggregate carrying value of the investment as we have not provided any guarantees or otherwise made firm commitments to fund amounts on behalf of these VIEs. The aggregate carrying value of the unconsolidated VIEs was $21.5 million and $29.5 million as of December 31, 2015 and 2014, respectively, and was classified as Investment in Real Estate and Other Affiliates, in the Consolidated Balance Sheets. As of December 31, 2015 and 2014, approximately $109.6 million and $89.4 million, respectively, of indebtedness was secured by the properties owned by our Real Estate and Other Affiliates of which our share was approximately $64.8 million and $54.6 million as of December 31, 2015 and 2014, respectively, based upon our economic ownership. All of this indebtedness is without recourse to us.

The Company is the primary beneficiary of one VIE which is consolidated in the financial statements. The creditors of the consolidated VIE do not have recourse to the Company. As of December 31, 2015, the carrying values of the assets and liabilities associated with the operations of the consolidated VIE were $21.5 million and $1.1 million, respectively. As of December 31, 2014, the carrying values of the assets and liabilities associated with operations of the consolidated VIE were $21.1 million and $0.6 million, respectively. The assets of the VIE are restricted for use only by the particular VIE and are not available for our general operations.

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our recent significant investments in Real Estate Affiliates and the related accounting considerations are described below.

The Summit (formerly known as Discovery)

During the first quarter 2015, we formed DLV/HHPI Summerlin, LLC (“The Summit”) in a joint venture with Discovery Land Company (“Discovery”), and we contributed land with a book basis of $13.4 million and transferred Special Improvement District (“SID”) bonds related to such land with a carrying value of $1.3 million to the joint venture at the agreed upon capital contribution value of $125.4 million, or $226,000 per acre. Discovery is required to fund up to a maximum of $30.0 million cash as their capital contribution and we have no further capital obligations. The gains on the contributed land will be recognized in Equity in earnings from Real Estate and Other Affiliates as the joint venture sells lots. 

After receipt of our capital contribution and a 5.0% preferred return, Discovery is entitled to a 5.0% return on its capital contribution plus cash distributions by the joint venture until it has received two times its equity contribution. Any further cash distributions are shared 50/50. Discovery is the manager on the project, and development began in the second quarter 2015 with the first lot closings expected to begin by the first quarter 2016. Given the nature of the venture’s capital structure and the provisions for the liquidation of assets, our share of the venture’s income producing activities will be recognized based on the HLBV method. Please refer to Note 1 – Summary of Significant Accounting Policies for a description of the HLBV method.

ONE Ala Moana Condominium Project

KR Holdings is a 50/50 joint venture that was formed to develop a 206-unit luxury condominium tower at the ONE Ala Moana Center in Honolulu, Hawaii. As of December 31, 2015, all of the units available for sale have been sold and closed.

Parcel C

On October 4, 2013, we entered into a joint venture agreement with a local developer, Kettler, Inc. (“Kettler”), to construct a 437-unit, Class A apartment building with 31,000 square feet of ground floor retail on Parcel C in downtown Columbia, Maryland. We contributed approximately five acres of land having an approximate book value of $4.0 million to the joint venture. Our land was valued at $23.4 million or $53,500 per constructed unit. When the venture closes on the construction loan and upon completion of certain other conditions, including obtaining completed site development and construction plans and an approved project budget, our partner will be required to contribute cash to the venture.

Constellation (formerly known as Summerlin Apartments)

On January 24, 2014, we entered into a joint venture with a national multi-family real estate developer, The Calida Group (“Calida”), to construct, own and operate a 124-unit gated luxury apartment development in Summerlin. We and our partner each own 50% of the venture, and unanimous consent of the partners is required for all major decisions. This project represents the first residential development in Summerlin’s 400-acre downtown. In the first quarter 2015, we contributed a 4.5-acre parcel of land with an agreed value of $3.2 million in exchange for a 50% interest in the venture. Our partner contributed $3.2 million of cash for their 50% interest, acts as the development manager, funded all pre-development activities, obtained construction financing in the first quarter 2015 and provided guarantees required by the lender. In the fourth quarter 2015, we contributed an additional $1.0 million to the joint venture to fund development costs. Upon a sale of the property, we are entitled to 50% of the proceeds up to, and 100% of the proceeds in excess of, an amount determined by applying a 7.0% capitalization rate to net operating income. The venture commenced construction in February 2015 and will complete the project in phases, with the first units expected to become available for rent by second quarter 2016.

The Metropolitan Downtown Columbia

On October 27, 2011, we entered into a joint venture, Parcel D Development, LLC (“Parcel D”), with Kettler to construct a 380-unit Class A apartment building with ground floor retail space in downtown Columbia, Maryland. We and our partner each own50% of the venture, and unanimous consent of the partners is required for all major decisions. On July 11, 2013, the joint

F-21

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

venture closed a$64.1 million construction loan, which is non‑recourse to us, and $63.1million is outstanding as of December 31, 2015. The loan bears interest at one-month LIBOR plus 2.40% and matures in July 2020. At loan closing, our land contribution was valued at $20.3 million, or $53,500 per unit, and Kettler contributed $13.3 million in cash, of which $7.0 million was distributed to us. Both we and Kettler made additional contributions of $3.1 million to the joint venture in accordance with the loan agreement, thus increasing our total capital account to $16.4 million.The venture substantially completed construction of The Metropolitan Downtown Columbia during the first quarter of 2015, and the property was reclassified into our Operating Assets segment.

NOTE 6  IMPAIRMENT

There were no impairment charges for the years ended December 31, 2015, 2014 and 2013. We frequently evaluate our strategic alternatives with respect to each of our properties and may revise our strategy from time to time, including our intent to hold the asset on a long-term basis or the timing of potential asset dispositions. For example, we may decide to sell property that is held for use, and the sale price may be less than the carrying amount. As a result, changes in strategy could result in impairment charges in future periods.

NOTE 7  FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC820, Fair Value Measurement, emphasizes that fair value is a market-based measurement that should be determined on the assumptions market participants would use in pricing an asset or liability. The standard establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring assets or liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the asset or liability. Assets or liabilities with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree or judgment used in measuring fair value.

The following table presents the fair value measurement hierarchy levels required under ASC 820 for each of our assets and liabilities that are measured at fair value on a recurring basis:

	December 31, 2015								December 31, 2014
	Fair Value Measurements Using								Fair Value Measurements Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	18	$	18	$	—	$	—	$	75,027	$	75,027	$	—	$	—
Liabilities:
Warrants		307,760		—		—		307,760		366,080		—		—		366,080
Interest rate swaps		4,217		—		4,217		—		3,144		—		3,144		—

Cash equivalents consist of registered money market mutual funds which invest in United States treasury securities that are valued at the net asset value of the underlying shares in the funds as of the close of business at the end of each period.

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates derived from observable market interest rate curves.

The valuation of warrants is based on an option pricing valuation model, utilizing inputs which are classified as Level 3 due to the unavailability of comparable market data.The following table presents a rollforward of the valuation of our Sponsor and Management Warrants:

F-22

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		December 31,
(In thousands)	2015		2014		2013
Beginning of year	$	366,080	$	305,560	$	123,573
Warrant liability (gain) loss (a)		(58,320)		60,520		181,987
End of year	$	307,760	$	366,080	$	305,560

(a) All (gains) and losses during 2015, 2014, and 2013, were unrealized. Changes in the fair value of the Sponsor Warrants and the Management Warrants are recognized in net income as a warrant liability gain or loss.

The inputs to the valuation model include the fair value of stock related to the warrants, exercise price and term of the warrants, expected volatility, risk-free interest rate and dividend yield and, with respect to the Management Warrants, a discount for lack of marketability.An increase in expected volatility would increase the fair value of the liability, while a decrease in expected volatility would decrease the fair value of the liability. As the period of restriction lapses, the marketability discount reduces to zero and increases the fair value of the warrants.

The significant unobservable inputs used in the fair value measurement of our warrants, are as follows:

	UnobservableInputs
	Expected Volatility(a)	Marketability Discount(b)
December 31, 2015	27.4%	10.0% - 12.0%
December 31, 2014	24.5%	18.0% - 20.0%

(a) Based on our implied equity volatility.

(b) Represents the discount rate for lack of marketability of the Management Warrants which decreases as the current date approaches the dates of contractual expiration of the marketability restrictions.

The estimated fair values of our financial instruments that are not measured at fair value on a recurring basis are as follows:

		December 31, 2015				December 31, 2014
(In thousands)	FairValueHierarchy	Carrying Amount		Estimated FairValue		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1	$	445,283	$	445,283	$	485,424	$	485,424
Notes receivable, net (a)	Level 3		1,664		1,664		28,630		28,630
Liabilities:
Fixed-rate debt	Level 2	$	1,141,381	$	1,137,166	$	1,030,554	$	1,050,333
Variable-rate debt	Level 2		1,314,973		1,314,973		962,916		962,916

(a) Notes receivable is shown net of an allowance of $0.2 million and $0.5 million at December 31, 2015 and 2014, respectively.

Notes receivable are carried at net realizable value which approximates fair value. The estimated fair values are based on certain factors, such as current interest rates, terms of the note and credit worthiness of the borrower.

The fair value of fixed-rate debt in the table above, not including our Senior Notes (as defined in Note 8 – Mortgages, Notes and Loans Payable), was estimated based on a discounted future cash payment model, which includes risk premiums and a risk free rate derived from the current London Interbank Offered Rate (“LIBOR”) or U.S. Treasury obligation interest rates. The discount rates reflect our judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and credit quality would be if credit markets were operating efficiently and assuming that the debt is outstanding through maturity. The fair value of our Senior Notes, included in fixed rate debt in the table above, was estimated based upon its most recent trade price.

F-23

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts for our variable-rate debt approximate fair value given that the interest rates are variable and adjust with current market rates for instruments with similar risks and maturities.

The carrying amounts of cash and cash equivalents and accounts receivable approximate fair value because of the short‑term maturity of these instruments.

NOTE 8 MORTGAGES, NOTES AND LOANS PAYABLE

Mortgages, notes and loans payable are summarized as follows:

	December 31,
(In thousands)	2015		2014
Fixed-rate debt:
Collateralized mortgages, notes and loans payable	$	1,087,642	$	1,008,165
Special Improvement District bonds		53,739		22,389
Variable-rate debt:
Collateralized mortgages, notes and loans payable (a)		1,314,973		962,916
Deferred Financing Costs, net of accumulated    amortization of $12.7 million and $6.9 million, respectively		(12,392)		(14,663)
Total mortgages, notes and loans payable	$	2,443,962	$	1,978,807

(a) As more fully described below, $209.5 million of variable‑rate debt has been swapped to a fixed rate for the term of the related debt.

F-24

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents our mortgages, notes, and loans payable by property:

					Maximum		Carrying Value
		Interest			Facility		December 31,		December 31,
($ In thousands)	Maturity (a)	Rate			Amount		2015		2014
Master Planned Communities
Bridgeland Land Loan	November 2022	4.60	%	(b)	$	65,000	$	40,072	$	15,874
Bridgeland Development Loan	N/A	5.00	%					—		10
Summerlin South SID Bonds - S108	December 2016	5.95	%					—		563
Summerlin South SID Bonds - S124	December 2019	5.95	%					159		236
Summerlin South SID Bonds - S128	December 2020	6.05	%					534		623
Summerlin South SID Bonds - S128C	December 2030	6.05	%					4,856		5,274
Summerlin South SID Bonds - S132	December 2020	6.00	%					1,676		2,936
Summerlin South SID Bonds - S151	June 2025	6.00	%					4,534		6,211
Summerlin South SID Bonds - S159	June 2035	6.00	%					9,020		—
Summerlin West SID Bonds - S808/S810	April 2031	6.00	%					1,047		2,805
Summerlin West SID Bonds - S812	October 2035	6.00	%					28,328		—
The Woodlands Master Credit Facility	August 2018	3.11	%	(b)		200,000		192,663		176,663
Master Planned Communities Total								282,889		211,195
Operating Assets
10-60 Columbia Corporate Centers	May 2022	2.76	%	(b)(d)				80,000		—
70 Columbia Corporate Center	July 2019	2.61	%	(b)				20,000		20,000
Columbia Regional Building	March 2018	2.36	%	(b)		23,008		22,188		20,513
Downtown Summerlin	July 2019	2.61	%	(b)		311,800		289,804		229,153
Downtown Summerlin SID Bonds - S108	December 2016	5.95	%					235		310
Downtown Summerlin SID Bonds - S128	December 2030	6.05	%					3,350		3,431
One Hughes Landing	December 2029	4.30	%					52,000		52,000
Two Hughes Landing	December 2030	4.20	%					48,000		19,992
1725-35 Hughes Landing Boulevard	June 2019	2.01	%	(b)		143,000		89,677		47,513
Hughes Landing Hotel	October 2020	2.86	%	(b)		37,100		20,064		—
Hughes Landing Retail	December 2018	2.31	%	(b)		36,575		28,726		17,424
1701 Lake Robbins	April 2017	5.81	%					4,600		4,600
Millennium Waterway Apartments	June 2022	3.75	%					55,584		55,584
110 N. Wacker	October 2019	5.21	%	(e)				26,481		29,000
9303 New Trails	December 2023	4.88	%					12,734		13,074
One Lake's Edge	November 2018	2.86	%	(b)		73,525		67,517		40,787
Outlet Collection at Riverwalk	October 2018	3.11	%	(b)		64,400		56,100		47,118
3831 Technology Forest Drive	March 2026	4.50	%					22,759		—
The Woodlands Resort & Conference Center	December 2020	3.11	%	(b)				85,000		76,027
Ward Village	September 2016	3.42	%	(b)(c)		250,000		238,716		238,716
20/25 Waterway Avenue	May 2022	4.79	%					14,112		14,330
3 Waterway Square	August 2028	3.94	%					52,000		52,000
4 Waterway Square	December 2023	4.88	%					37,293		38,289
Capital lease obligations	various	3.60	%					52		135
Operating Assets Total								1,326,992		1,019,996
Strategic Developments
HHC 242 Self Storage Facility	October 2021	2.96	%	(b)		6,658		—		—
Lakeland Village Center	May 2020	2.71	%	(b)		14,000		—		—
Three Hughes Landing	December 2019	2.71	%	(b)		65,455		23,268		—
Waiea and Anaha Condominiums	November 2019	7.11	%	(b)		600,000		27,817		—
Waterway Square Hotel	August 2019	3.01	%	(b)		69,300		33,361		—
Strategic Developments Total								84,446		—
Other Corporate Financing Arrangements	June 2018	3.00	%					18,794		19,968
Senior Notes	October 2021	6.88	%					750,000		750,000
Unamortized underwriting fees								(6,767)		(7,689)
Deferred Financing Costs, net of accumulated amortization of $12.7 million and $6.9 million, respectively							(12,392)			(14,663)
Total mortgages, notes, and loans payable							$	2,443,962	$	1,978,807

(a) Maturity date includes any extension periods that can be exercised at our option and are subject to customary extension terms such as minimum debt service coverage, minimum occupancy levels and other performance criteria.

(b) The interest rate presented is based on the one month LIBOR rate which was 0.36% at December 31, 2015.

(c) $143.0 million of the outstanding principal balance is swapped to a 3.81% fixed rate to maturity. As of December 31, 2015, there is no undrawn availability on this facility.

(d) $40.0 million of the outstanding principal balance is swapped to a 3.41% fixed rate to maturity.

(e) The $26.5 million outstanding principal balance is swapped to a 5.21% fixed rate to maturity.

The weighted average interest rate on our mortgages, notes and loans payable, excluding interest rate hedges, was 4.44% and 4.61% as of December 31, 2015 and 2014, respectively.

F-25

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All of the mortgage debt is secured by the individual properties as listed in the table above and is non-recourse to HHC, except for:

(i) $750.0 million of Senior Notes;

(ii) $311.8 million financing for the Downtown Summerlin development with an initial maximum recourse of 35.0% assuming the loan is fully drawn, which will reduce to 15.0% upon completion of the project and achievement of a 1.15:1.0 debt service coverage ratio.  The recourse further reduces to 10% upon achievement of a 1.25:1.0 debt service coverage ratio, a 90% occupancy level, and average tenant sales of at least $500.00 per net rentable square foot;

(iii) $64.4 million of construction financing for the Outlet Collection at Riverwalk with an initial maximum recourse of 50%, which will be reduced to 25.0% upon completion of the project and the achievement of an 11.0% debt yield and a minimum level of tenant sales per square foot for twelve months;

(iv) $20.4 million of Other Corporate Financing Arrangements; and

(v) $7.0 million parent guarantee associated with the 110 N. Wacker mortgage.

The Woodlands Master Credit Facility and The Woodlands Resort & Conference Center loans are recourse to the entities that directly own The Woodlands operations. Certain of our loans contain provisions which grant the lender a security interest in the operating cash flow of the property that represents the collateral for the loan. Such provisions are not expected to impact our operations in 2016. Certain mortgage notes may be prepaid, but may be subject to a prepayment penalty equal to a yield-maintenance premium, defeasance, or a percentage of the loan balance. As of December 31, 2015, land, buildings and equipment and developments with a cost basis of $2.3 billion have been pledged as collateral for our mortgages, notes and loans payable.

The following table summarizes the contractual obligations relating to our mortgages, notes and loans payable as of December 31, 2015 based on final maturity dates:

	Mortgages,notes
	and loans payable
(In thousands)	principal payments
2016	$	272,269
2017		38,464
2018		342,670
2019		504,135
2020		111,488
Thereafter		1,187,328
Total	$	2,456,354

As of December 31, 2015, we were in compliance with all of the financial covenants related to our debt agreements.

Master Planned Communities

The Woodlands Master Credit Facility was amended and restated on July 31, 2015 to a $200.0 million maximum facility amount consisting of a $100.0 million term loan and a $100.0 million revolver (together, the “TWL Facility”). The TWL Facility bears interest at one-month LIBOR plus 2.75% and has an August 2016 initial maturity date with two,  one–year extension options. The extension options require a reduction of the total commitment to $175.0 million for the first extension and semi-annual principal payments of $25.0 million during the second extension period. The TWL Facility also contains certain covenants that, among other things, require the maintenance of specified financial ratios, limit the incurrence of additional recourse indebtedness at The Woodlands, and limit distributions from The Woodlands to us based on a loan‑to‑value test. The amendment also modified certain covenants to allow for more construction loan guarantees by the entities that directly own The Woodlands than would otherwise have been permitted by the prior facility. As of December 31, 2015, there was$7.3 million remaining to be drawn based on the collateral value underlying the facility.

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On November 9, 2015, we refinanced $15.2 million of existing debt related to both the Bridgeland Land Loan and the Bridgeland Development Loan. The refinanced loan bears interest at one-month LIBOR plus 3.15%, with a 4.60% floor rate, and has an initial maturity date of November 2020 with two,  one-year extension options. The proceeds are intended to provide working capital at Bridgeland for development efforts to meet the demand of homebuilders for finished lots in the community.

The Summerlin Master Planned Community uses SID bonds to finance certain common infrastructure improvements. These bonds are issued by the municipalities and, although unrated, are secured by the assessments on the land. The majority of proceeds from each bond issued is held in a construction escrow and disbursed to us as infrastructure projects are completed, inspected by the municipalities and approved for reimbursement. Accordingly, the SID bonds have been classified as debt, and the Summerlin Master Planned Community pays the debt service on the bonds semi‑annually. As Summerlin sells land, the buyers assume a proportionate share of the bond obligation at closing, and the residential sales contracts provide for the reimbursement of the principal amounts that we previously paid with respect to such proportionate share of the bond. In 2015, $54.0 million in new SIDs were issued to finance our Summerlin MPC projects and are being held in a third-party escrow account. Subsequent to issuance, $16.7 million in bond obligations were assumed by buyers relating to 2015 and 2014 land sales.

Operating Assets

On December 30, 2015, we refinanced our $95.0 million construction financing for The Woodlands Resort & Conference Center with an $85.0 million mortgage. The loan bears interest at LIBOR plus 2.75% and has an initial maturity date of December 30, 2018, with two,  one-year extension options.

On November 24, 2015, we refinanced a$41.2 million construction financing and closed on a new $48.0 million loan for Two Hughes Landing. The loan bears fixed interest at 4.20% and matures in  December 2030.  

On May 6, 2015, we closed on an $80.0 million non-recourse mortgage financing for the 10-60 Columbia Corporate Center office buildings. The loan bears interest at LIBOR plus 1.75% and has an initial maturity date of May 6, 2020, with two,  one-year extension options.

On March 25, 2015, we closed on a $23.0 million non-recourse mortgage financing for 3831 Technology Forest Drive. The loan bears fixed interest at 4.50% and matures on March 24, 2026.

On November 10, 2014, we closed on a refinanced$52.0 million loan for One Hughes Landing. The loan bears fixed interest at 4.30% and matures on December 1, 2029.

On October 3, 2014, we closed on a $37.1 million construction financing for our Hughes Landing Hotel. The loan bears interest at one-month LIBOR plus 2.50%. The loan has an initial maturity of October 2018, with two,  one-year extension options.

On July 18, 2014, we assumed a $4.6 million non-recourse mortgage loan at 1701 Lake Robbins. The loan bears fixed interest at 5.81% and has a maturity date of April 2017.

On July 15, 2014, we closed a $311.8 million financing for the construction of Downtown Summerlin development bearing interest at one-month LIBOR plus 2.25%. The loan has an initial maturity date of July 15, 2017, with two,  one-year extension options. The loan has an initial maximum recourse of 35.0% assuming the loan is fully drawn, which will reduce to 15.0% upon completion of the project and achievement of a 1.15:1.0 debt service coverage ratio.  The recourse further reduces to 10% upon achievement of a 1.25:1.0 debt service coverage ratio, a 90% occupancy level, and average tenant sales of at least $500.00 per net rentable square foot. Upon completion of the project and achievement of a 1.25x debt service coverage ratio, 90.0% occupancy and a minimum level of tenant sales per square foot for 12 months, the recourse amount will decrease to 10.0% of the outstanding principal. Due to the recent opening, we have not met these criteria.

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On June 30, 2014, we closed on a $143.0 million non-recourse construction financing for 1725 & 1735 Hughes Landing Boulevard bearing interest at one-month LIBOR plus 1.65%. The loan has an initial maturity date of June 30, 2018, with a one-year extension option.

On April 15, 2014, we paid $17.0 million cash in full satisfaction of the $16.0 million participating loan that we assumed as part of the acquisition of 70 Columbia Corporate Center(“70 CCC”) in August 2012. The non-recourse, interest only promissory note was due to mature on August 31, 2017, and included a participation right to the lender for 30.0% of the appreciation in the market value of the property after our 10.0% cumulative preferred return and repayment of the outstanding debt and our contributed equity. The final payment included approximately $0.7 million for this participation right based upon the appraised value of the property. On June 27, 2014, we closed on a new $20.0 million loan for 70 CCC  that bears interest at one-month LIBOR plus 2.25% and has an initial maturity date of July 2017 with two,  one-year extension options.

On December 20, 2013, we closed on a $36.6 million non‑recourse loan for the construction of Hughes Landing Retail, a 123,000 square foot retail component of Hughes Landing bearing interest at one-month LIBOR plus 1.95%. The loan has an initial maturity date of December 20, 2016, with two,  one–year extension options.

On November 25, 2013, we closed on a $73.5 million non‑recourse loan for the construction of an eight‑story, Class A, multi‑family project within Hughes Landing called One Lakes Edge. The loan bears interest at one-month LIBOR plus 2.50% with an initial maturity date of November 25, 2016, with two,  one–year extension options.

On October 24, 2013, we closed on a $64.4 million partial recourse construction loan for the Outlet Collection at Riverwalk. The loan bears interest at one-month LIBOR plus 2.75%, with an initial maturity date of October 24, 2016 with two,  one–year extension options. The initial recourse amount of 50.0% will be reduced to 25.0% upon completion of the project and the achievement of an 11.0% debt yield and a minimum level of tenant sales per square foot for 12 months. Due to the recent opening, we have not met these criteria.

On August 2, 2013, we refinanced the existing $43.3 million construction loan on 3 Waterway Square, an 11-story, 232,000 square foot office building in The Woodlands, with a non-recourse first mortgage financing totaling $52.0 million. The loan bears interest at 3.94% and matures on August 11, 2028.

On March 15, 2013, we closed on a non‑recourse financing totaling $23.0 million for the redevelopment of the Columbia Regional Building, a retail building located in Columbia, Maryland. The loan bears interest at one-month LIBOR plus 2.00%. The loan matures on March 15, 2016, and has two,  one–year extension options.

Strategic Developments

On February 25, 2016,we closed on a $49.9 million non-recourse construction loan for One Merriweather, bearing interest at one-month LIBOR plus 2.15% with an initial maturity date of February 25, 2020, with a one-year extension option.

On January 27, 2016, we closed on a $6.4 million non-recourse construction loan for the HHC 2978 Self-Storage Facility, bearing interest at one-month LIBOR plus 2.60% with an initial maturity date of January 2020, with two one-year extension options.

On October 23, 2015, we closed on a $6.7 million non-recourse construction loan for the HHC 242 Self-Storage Facility, bearing interest at one-month LIBOR plus 2.60% with an initial maturity date of October 2019, with twoone-year extension options.

On May 15, 2015, we closed on a $14.0 million non-recourse construction loan for Lakeland Village Center, bearing interest at one-month LIBOR plus 2.35% with an initial maturity date of May 2018, with two one-year extension options.

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THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On December 5, 2014, we closed on a $65.5 million non-recourse financing for the construction of Three Hughes Landing. The loan bears interest at one-month LIBOR plus 2.35%. The loan has an initial maturity date of December 5, 2017 with two,  one-year extension options.

On November 6, 2014, we closed on a $600.0 million non-recourse construction loan for the Waiea and Anaha Condominium towers bearing interest at one-month LIBOR plus 6.75%. The loan has an initial maturity date of November 6, 2017, with two,  one-year extension options.

On August 6, 2014, we closed on a $69.3 million non-recourse construction financing for the Waterway Hotel bearing interest at one-month LIBOR plus 2.65%. The loan has an initial maturity of August 2018, with a one-year extension option. The development will be a 302-room Westin-branded hotel that will be owned and managed by us.

Corporate

On October 2, 2013, we issued $750.0 million in aggregate principal amount of 6.875% Senior Notes due 2021 (the “Senior Notes”) and received approximately $741.3 million of net cash proceeds. Interest is payable semiannually, on April 1 and October 1 of each year starting in April 2014. At any time prior to October 1, 2016, we may redeem up to 35% of the Senior Notes at a price equal to 106.875% using the proceeds from equity offerings. We may redeem all or part of the Senior Notes at any time on or after October 1, 2016 with a declining call premium thereafter to maturity. The Senior Notes contain customary terms and covenants for non‑investment grade senior notes and have no maintenance covenants.

NOTE 9  INCOME TAXES

The provision for (benefit from) income taxes for the years ended December 31, 2015, 2014 and 2013 were as follows:

(In thousands)	2015		2014		2013
Current	$	2,849	$	(2,050)	$	1,218
Deferred		21,152		65,010		8,352
Total	$	24,001	$	62,960	$	9,570

Income tax expense is computed by applying the Federal corporate tax rate for the years ended December 31, 2015, 2014 and 2013 and is reconciled to the provision for income taxes as follows:

(In thousands)	2015		2014		2013
Tax at statutory rate on earnings from continuing operations before income taxes	$	52,751	$	13,800	$	(22,477)
Increase (decrease) in valuation allowance, net		1,742		5,602		(88,826)
State income taxes, net of Federal income tax benefit		267		1,320		1,562
Tax at statutory rate on REIT entity earnings not subject to Federal income taxes		-		(512)		(2,648)
Tax (benefit) expense from change in rates and other permanent differences		(7,361)		(12,193)		4,339
Set up deferred tax liability related to captive REIT		-		(1,068)		53,973
Non-deductible warrant liability (gain) loss		(20,412)		21,182		63,695
Non-taxable interest income		-		18,373		(363)
Uncertain tax position (benefit) expense, excluding interest		(2,483)		2,395		(1,034)
Uncertain tax position interest, net of Federal income tax benefit		(503)		14,061		1,349
Income tax expense	$	24,001	$	62,960	$	9,570

Realization of a deferred tax benefit is dependent upon generating sufficient taxable income in future periods. Our net operating loss carry‑forwards are currently scheduled to expire in subsequent years through 2035. Some of the net operating loss carry‑forward amounts are subject to the separate return limitation year rules (“SRLY”). It is possible that we could, in the

F-29

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

future, experience a change in control pursuant to Section 382 that could put limits on the benefit of deferred tax assets. On February 27, 2012, we entered into a Section 382 Rights Agreement, with a three-year term, to protect us from such an event and protect our deferred tax assets. On February 26, 2015, the Board of Directors extended the term of the Section 382 Rights Agreement to March 14, 2018 and our stockholders approved the terms on May 21, 2015.

As of December 31, 2015, the amounts and expiration dates of operating loss and tax credit carryforwards for tax purposes are as follows:

			Expiration
(In thousands)	Amount		Date
Net operating loss carryforwards - Federal	$	52,571	2024-2035
Net operating loss carryforwards - State		175,346	2016-2035
Tax credit carryforwards - Federal AMT		3,667	n/a

As of December 31, 2015 and 2014, we had gross deferred tax assets totaling $327.4 million and $335.7 million, and gross deferred tax liabilities of $396.6 million and $379.7 million, respectively. We have established a valuation allowance in the amount of $20.0 million and $18.2 million as of December 31, 2015 and 2014, respectively, against certain deferred tax assets for which it is more likely than not that such deferred tax assets will not be realized.

Deferred tax assets related to our investment in Head Acquisition, LP in the amount of $76.4 million that we previously believed had only a remote possibility of realization were recorded in 2012 due to tax planning that made realization possible.  Due to the uncertainty that the tax planning would result in the realization of the deferred tax asset we established a 100% valuation allowance.  During the fourth quarter 2013, the tax planning was successfully implemented and over 90% of the deferred tax asset was realized and the remaining amount will likely be realized in future years; therefore, we determined that it was appropriate to release the entire valuation allowance in 2013.

The tax effects of temporary differences and carry‑forwards included in the net deferred tax liabilities at December 31, 2015 and 2014 are summarized as follows:

(In thousands)	2015		2014
Deferred tax assets:
Operating and Strategic Development properties, primarily differences in basis of assets and liabilities	$	213,090	$	201,303
Interest deduction carryforwards		79,781		80,520
Operating loss and tax credit carryforwards		34,499		53,851
Total deferred tax assets		327,370		335,674
Valuation allowance		(19,960)		(18,218)
Total net deferred tax assets	$	307,410	$	317,456
Deferred tax liabilities:
Property associated with Master Planned Communities,  primarily differences in the tax basis of land assets and treatment  of interest and other costs	$	(218,842)	$	(212,093)
Operating and Strategic Development properties, primarily differences in basis of assets and liabilities		(42,860)		(47,355)
Deferred income		(134,929)		(120,213)
Total deferred tax liabilities		(396,631)		(379,661)
Net deferred tax liabilities	$	(89,221)	$	(62,205)

The deferred tax liability associated with the Master Planned Communities is largely attributable to the difference between the basis and value determined as of the date of the acquisition by our predecessors in 2004 adjusted for sales that have occurred since that time. The cash cost related to this deferred tax liability is dependent upon the sales price of future land sales and the method of accounting used for income tax purposes. The deferred tax liability related to deferred income is the difference

F-30

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

between the income tax method of accounting and the financial statement method of accounting for prior sales of land in our Master Planned Communities.

One of our consolidated entities, Victoria Ward, Limited, was formerly taxed as a REIT.  Consequently, deferred taxes were not recorded on book and tax basis differences of Victoria Ward, Limited as it was believed these differences would ultimately be realized with no taxes due. In connection with the planned condominium development of Victoria Ward, the Company decided to revoke its REIT election and consequently, the Company believed that the book and tax basis differences in the land and buildings of Victoria Ward, Limited would be realized after such time REIT status is revoked and would then be taxed at the applicable corporate tax rates. As a result of these events, deferred tax liabilities of $46.9 million were recorded in 2014 due to the excess book over tax basis relating to land and buildings. As planned, the Company revoked its REIT election effective January 1, 2015.

Although we believe our tax returns are correct, the final determination of tax examinations and any related litigation could be different than what was reported on the returns. In our opinion, we have made adequate tax provisions for years subject to examination. Generally, we are currently open to audit under the statute of limitations by the Internal Revenue Service as well as state taxing authorities for the years ended December 31, 2009 through 2014.

Two of our subsidiaries were involved in a dispute with the IRS relating to years in which those subsidiaries were owned by GGP, and in connection therewith, GGP provided us with an indemnity against certain potential tax liabilities. Pursuant to the Tax Matters Agreement with GGP, GGP had indemnified us from and against 93.75% of any and all losses, claims, damages, liabilities and reasonable expenses to which we become subject (the “Tax Indemnity”), in each case solely to the extent directly attributable to certain taxes related to sales of certain assets in our Master Planned Communities segment prior to March 31, 2010 (“MPC Taxes”), in an amount up to $303.8 million, plus interest and penalties related to these amounts (the “Indemnity Cap”) so long as GGP controlled the action in the United States Tax Court (the “Tax Court”) related to the dispute with the IRS.

On May 6, 2011, GGP filed Tax Court petitions on behalf of the two former REIT subsidiaries of GGP seeking a redetermination of federal income tax for the years 2007 and 2008.  The petitions sought to overturn determinations by the IRS that the taxpayers were liable for combined deficiencies totaling $144.1 million.  The case was heard by the Tax Court in November 2012 and filed their ruling in favor of the IRS on June 2, 2014.  On December 15, 2014, the Company paid the MPC Taxes and filed an appeal of the decision to the Fifth Circuit Court of Appeals.  The appeal sought to overturn the decision and allow the Company to continue to use its method of tax accounting for the sale of assets in the Company’s Master Planned Communities Segment.  On October 27, 2015 the Court of Appeals upheld the Tax Court ruling, consequently we are required to change our method of tax accounting for certain transactions, which shall affect the timing of our future tax payments.

In December 2014, we entered into a tax indemnity and mutual release agreement with GGP (the “Settlement Agreement”) pursuant to which, in consideration of the full satisfaction of GGP’s obligation for reimbursement of taxes related to certain assets in our Master Planned Communities segment prior to March 31, 2010, and interest, GGP (i) made a cash payment to us in the amount of $138.0 million and (ii) conveyed to us fee simple interest in six office properties and related parking garages located in Columbia, Maryland, known as 10-60 Columbia Corporate Center, for an agreed upon total value of $130.0 million.  Under the Settlement Agreement, the Company controlled the Tax Matter, including the right to decide whether to further appeal the decision.

As a result of the settlement, we recorded a net $74.0 million non-cash charge representing the difference between the $268.0 million value of the consideration received from GGP and the receivable recorded on our books.  When we were spun-off from GGP in 2010, we recognized a receivable from GGP equal to the amount of the indemnity cap. However, the Tax Matters Agreement stipulated that a certain tax asset on our books related to deferred interest deductions be used to reduce GGP’s indemnity obligation to us, when utilized in our tax returns.  As a result, we had reduced the indemnity receivable as we utilized the tax asset. Going forward, we now will receive 100% of the benefit of the tax asset, which totaled $81.5 million and $85.1 million before netting against an unrecognized tax benefit per ASU 2013-11 (described below), at December 31, 2015 and 2014, respectively.

F-31

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We apply the generally accepted accounting principle related to accounting for uncertainty in income taxes, which prescribes a recognition threshold that a tax position is required to meet before recognition in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.

In 2014, we adopted the guidance in ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The impact of adoption on the financial statements in 2014 was a reclassification of $39.0 million between Deferred tax assets and Uncertain tax position liability and $2.5 million between Income tax receivable and Uncertain tax position liability.

We recognize and report interest and penalties, if applicable, within our provision for income tax expense. We recognized potential interest expense related to the unrecognized tax benefits of $0.1 million, $21.6 million and $2.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. At December 31, 2015, we had total unrecognized tax benefits of $36.5 million, excluding interest of $0.3 million, of which none would impact our effective tax rate. At December 31, 2014 and 2013, we had total unrecognized tax benefits of $184.2 million and $90.5 million, respectively, excluding interest, of which none would impact our effective tax rate.  A reconciliation of the change in our unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 is as follows:

(In thousands)	2015		2014		2013
Unrecognized tax benefits, opening balance	$	184,200	$	90,532	$	95,917
Gross increases - tax positions in prior period		-		93,668		9,162
Gross decreases - tax positions in prior periods		(147,676)		-		(14,547)
Unrecognized tax benefits, ending balance	$	36,524	$	184,200	$	90,532

Periodically we make payments to taxing jurisdictions which reduce our uncertain tax benefits but are not included in the reconciliation above, as the position is not yet settled. The amount of such payments that reduced our uncertain tax benefit was zero at December 31, 2015, $144.1 million at December 31, 2014 and zero at December 31, 2013. During 2015, the Tax Court ruling regarding MPC Taxes was upheld by the appellate court and we do not intend to further challenge the position, resulting in a $144.1 million reduction to our unrecognized tax benefit in the reconciliation above.

Based on our assessment of the expected outcome of existing examinations or examinations that may commence, or as a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits, excluding accrued interest, for tax positions taken regarding previously filed tax returns will materially change from those recorded at December 31, 2015. As of December 31, 2015, there is approximately $36.5 million of unrecognized tax benefits, excluding accrued interest, which due to the reasons above, could significantly increase or decrease during the next twelve months.

NOTE 10  COMMITMENTS AND CONTINGENCIES

In the normal course of business, from time to time, we are involved in legal proceedings relating to the ownership and operations of our properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a material effect on our consolidated financial position, results of operations or liquidity.

We had outstanding letters of credit and surety bonds totaling $86.1 million and $53.7 million as of December 31, 2015 and 2014, respectively. These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.

We lease land or buildings at certain properties from third parties. Rental payments are expensed as incurred and have, to the extent applicable, been straight‑lined over the term of the lease. Contractual rental expense, including participation rent, was $9.1 million, $7.3 million and $6.3 million for 2015, 2014 and 2013, respectively. The amortization of above and below‑market ground leases and straight‑line rents included in the contractual rent amount was not significant.

F-32

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our obligations for minimum rentals under non-cancelable operating leases are as follows:

											Subsequent
(In thousands)	2016		2017		2018		2019		2020		/ Other		Total
Ground lease and other leasing commitments	$	8,766	$	9,391	$	8,718	$	7,741	$	7,744	$	304,660	$	347,020

South Street Seaport

On June 27, 2013, the City of New York executed the amended and restated ground lease for South Street Seaport. The restated lease terms provide for annual fixed rent of $1.2 million starting July 1, 2013 with an expiration of December 30, 2072, including our options to extend. The rent escalates at 3.0% compounded annually. On July 1, 2048 the base rent will be adjusted to the higher of the fair market value or the then base rent. In addition to the annual base rent of $1.2 million, we are required to make annual payments of $210,000 as additional rent through the term of the lease. The additional rent escalates annually at the Consumer Price Index. We are entitled to a total rent credit of $1.5 million, to be taken monthly over a 30-month period. Simultaneously with the execution of the lease, we executed a completion guaranty for the redevelopment of Pier 17. The completion guaranty requires us to perform certain obligations under the lease, including the commencement of construction by October 1, 2013 with a scheduled completion date in 2017.

In the fourth quarter 2012, the historic area of South Street Seaport suffered damage due to flooding as a result of Superstorm Sandy. Reconstruction efforts are ongoing and the property is only partially operating. We have received $47.9 million in insurance proceeds through December 31, 2015 related to our claim and recognized Other income of $0.3 million and $24.6 for the years ended December 31, 2015 and 2014 for the amounts received during that period. While we continue to litigate our claim for additional insurance proceeds, there can be no assurance that we will recover any additional amounts.

NOTE 11 OTHER ASSETS AND LIABILITIES

The following table summarizes the significant components of Prepaid expenses and other assets:

	December 31,		December 31,
(In thousands)	2015		2014
Condominium receivables (a)	$	191,037	$	—
Condominium deposits		55,749		151,592
Special Improvement District receivable		72,558		33,318
In-place leases		22,139		32,715
Below-market ground leases		19,325		19,663
Above-market tenant leases		3,581		4,656
Equipment, net of accumulated depreciation of $3.9 million and $2.4 million, respectively		18,772		20,284
Security and escrow deposits		17,599		9,829
Tenant incentives and other receivables		10,480		14,264
Prepaid expenses		8,474		9,196
Federal income tax receivable		11,972		8,629
Intangibles		4,045		3,593
Uncertain tax position asset		112		383
Other		5,347		2,014
	$	441,190	$	310,136

(a) Of the total Condominium receivables, $168.3 million are expected to be collected in 2016 and $22.7 million are expected to be collected in 2017.

The $131.1 million increase as of December 31, 2015 compared to 2014 primarily relates to a $191.0 million increase in condominium receivables, representing revenue recognized in excess of buyer deposits received for our Waiea and Anaha

F-33

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

projects, partially offset by a net $95.8 million decrease in condominium deposits at Ward Village due to utilization of deposits for construction costs. Special improvement district receivables increased by $39.2 million primarily due to closing on new SID bonds in the fourth quarter 2015, the proceeds of which are held in escrow by a third party and will be used to reimburse us for a portion of the development costs incurred in our Summerlin MPC. Security and escrow deposits increased $7.8 million primarily due to escrowed funds relating to an investment in a hotel property. The $10.6 million decrease related to in-place leases is attributable to the amortization of intangibles primarily related to leases associated with the 10-60 Columbia Corporate Center assets acquired in December 2014.

The following table summarizes the significant components of Accounts payable and accrued expenses:

	December 31,		December 31,
(In thousands)	2015		2014
Construction payables	$	185,731	$	170,935
Deferred income		113,122		65,675
Condominium deposits		50,192		82,150
Accounts payable and accrued expenses		33,928		34,154
Accrued payroll and other employee liabilities		31,271		25,838
Tenant and other deposits		31,193		12,756
Accrued interest		16,504		14,791
Accrued real estate taxes		15,134		9,903
Interest rate swaps liability		4,217		3,144
Above-market ground leases		2,113		2,272
Membership deposits		—		21,023
Other		31,949		23,376
	$	515,354	$	466,017

Accounts payable and accrued expenses increased by $49.3 million. The increase reflects increases of $47.4 million of deferred income related to deferred rental income on our ExxonMobil lease in The Woodlands and two commercial land sales in our Bridgeland MPC, $18.4 million in tenant and other deposits primarily due to the rent credits at 1725-35 Hughes Landing Boulevard, and $14.8 million in construction payables primarily due to continued development activities at Ward Village, 1725-35 Hughes Landing Boulevard, South Street Seaport, Waterway Hotel, Hughes Landing Hotel and Three Hughes Landing. These increases are partially offset by a decrease of $32.0 million in the condominium deposit liability for the two towers at Ward Village due to the revenue recognized during the period, and a $21.0 million decrease in membership deposit liability resulting from the sale of The Club at Carlton Woods.

F-34

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 INTANGIBLES

The following table summarizes our intangible assets and liabilities:

	Gross		Accumulated		Net
	Asset		(Amortization)		Carrying
(In thousands)	(Liability)		/ Accretion		Amount
As of December 31, 2015
Tenant leases:
In-place value	$	39,129	$	(16,990)	$	22,139
Above-market		5,333		(1,752)		3,581
Below-market		(6,163)		1,350		(4,813)
Ground leases:
Above-market		(3,545)		1,432		(2,113)
Below-market		23,096		(3,771)		19,325
As of December 31, 2014
Tenant leases:
In-place value	$	39,634	$	(6,919)	$	32,715
Above-market		5,342		(686)		4,656
Below-market		(6,184)		296		(5,888)
Ground leases:
Above-market		(3,545)		1,273		(2,272)
Below-market		23,096		(3,433)		19,663

The tenant in-place, above-market and below-market lease intangible assets and the above-market and below-market ground lease intangible assets resulted from real estate acquisitions. The in‑place value and above-market value of tenant leases are included in Prepaid expenses and other assets in our Consolidated Balance Sheets and are amortized over periods that approximate the related lease terms. The above‑market and below‑market tenant and ground leases are included in Prepaid expenses and other assets and Accounts payable and accrued expenses, respectively, as detailed in Note 11 – Other Assets and Other Liabilities and are amortized over the remaining non‑cancelable terms of the respective leases.

Amortization/accretion of these intangible assets and liabilities decreased our pre-tax income (excluding the impact of noncontrolling interest and the provision for income taxes) by $10.3 million in 2015, $1.8 million in 2014 and $3.1 million in 2013.

Future amortization/accretion is estimated to decrease pre-tax income (excluding the impact of noncontrolling interest and the provision for income taxes) by $8.4 million in 2016,  $8.0 million in 2017,  $5.0 million in 2018,  $0.8 million in 2019,  $0.4 million in 2020, and $15.5 million thereafter.

NOTE 13 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to interest rate risk related to our variable interest rate debt, and we manage this risk by utilizing interest rate derivatives. Our objectives in using interest rate derivatives are to add stability to interest costs by reducing our exposure to interest rate movements. To accomplish this objective, we use interest rate swaps and caps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company’s fixed‑rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up‑front premium.

F-35

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the years ended December 31, 2015, 2014 and 2013, the ineffective portion recorded in earnings was insignificant.

As of December 31, 2015 and 2014, we had gross notional amounts of $209.5 million and $172.0 million respectively for three interest rate swaps and a $100.0 million interest rate cap. All derivative contracts held are designated as cash flow hedges of interest rate risk. The fair value of the interest rate cap derivative was insignificant.

In December 2015, we entered into three forward-starting, three-month LIBOR-indexed, pay-fixed, receive-variable, interest rate swap agreements with notional amounts totaling $250 million which will require fixed-rate interest payments ranging from 2.623% to 2.675% for ten years after the contracts are effective in December 2017. These contracts will be settled for cash on their effective dates based on their fair market values at that time. These transactions are designated as cash flow hedges of the variability of the anticipated underlying benchmark interest rate on an anticipated future long term financing of our Downtown Summerlin property.

If the interest rate swap agreements are terminated prior to their maturity, the amounts previously recorded in AOCI are recognized into earnings over the period that the hedged transaction impacts earnings. If the hedging relationship is discontinued because it is probable that the forecasted transaction will not occur according to the original strategy, any related amounts previously recorded in AOCI are recognized in earnings immediately.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on our variable‑rate debt. Over the next 12 months, we estimate that an additional $1.7 million will be reclassified to interest expense.

The table below presents the fair value of our derivative financial instruments which are included in accounts payable and accrued liabilities in the Consolidated Balance Sheets:

	As of December 31,
(In thousands)	2015		2014
Interest Rate Swaps Liability	$	4,217	$	3,144

The tables below present the effect of our derivative financial instruments on the Consolidated Statements of Operations for the years ended December 31, 2015 and 2014:

	Year Ended December 31,					Year Ended December 31,
	2015		2014		Location of Loss	2015		2014
(In thousands) Cash Flow Hedges	Amount of Loss Recognized in OCI		Amount of Loss Recognized in OCI		Reclassified from AOCI into Earnings	Amount of Loss Reclassified from AOCI into Earnings		Amount of Loss Reclassified from AOCI into Earnings
Interest Rate Swaps	$	(1,705)	$	(1,192)	Interest Expense	$	(1,745)	$	(2,195)

F-36

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizeschanges in Accumulated Other Comprehensive Income (Loss) by component (a):

Balance as of January 1, 2014	$	(8,222)
Other comprehensive income (loss) before reclassifications		(1,685)
Loss reclassified from accumulated other comprehensive loss to net income (loss)		2,195
Net current-period other comprehensive income (loss)		510
Balance as of December 31, 2014		(7,712)
Other comprehensive income (loss) before reclassifications		(1,922)
Loss reclassified from accumulated other comprehensive loss to net income (loss)		1,745
Net current-period other comprehensive income (loss)		(177)
Balance as of December 31, 2015	$	(7,889)

(a) All amounts are net of tax.

The following table summarizes the amounts reclassified out of AOCI:

		Amountsreclassified from Accumulated Other
		Comprehensive Income (Loss)
		For the Year Ended		For the Year Ended
AccumulatedOther Comprehensive Income (Loss) Components	Affected line item in the Statement of Operations	December 31, 2015		December 31, 2014
Gains and losses on cash flow hedges
Interest rate swap contracts	Interest expense	$	2,797	$	2,502
	Provision for income taxes		(1,052)		(307)
Total reclassifications for the period	Net of tax	$	1,745	$	2,195

NOTE 15 STOCK BASED PLANS

On November 9, 2010 (the “Effective Date”), HHC adopted The Howard Hughes Corporation 2010 Equity Incentive Plan (the “Equity Plan”). Pursuant to the Equity Plan, 3,698,050 shares of HHC common stock were reserved for issuance. The Equity Plan provides for grants of options, stock appreciation rights, restricted stock, other stock‑based awards and performance‑based compensation (collectively, “the Awards”). Directors, employees and consultants of HHC and its subsidiaries and affiliates are eligible for awards. The Equity Plan is administered by the Compensation Committee of the Board of Directors (“Committee”). Option grant amounts are awarded by the Committee.

Compensation costs for share‑based payment arrangements totaled $9.8 million, $8.2million and $5.7 million, of which $2.5 million, $0 and $0 were capitalized for the years ending December 31, 2015, 2014, and 2013, respectively. As of December 31, 2015, there were a maximum of 2,318,033 shares available for future grant under our various stock plans.

F-37

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

The following tables summarize stock option activity:

				Weighted Average		Aggregate
		Weighted Average		Remaining		Intrinsic
	Shares	Exercise Price		ContractualTerm		Value
				(Inyears)
Stock options outstanding at January 1, 2013	861,940	$	59.17
Granted	132,100		99.38
Exercised	-		-
Forfeited	(28,600)		62.40
Expired	-		-
Stock options outstanding at December 31, 2013	965,440	$	64.57
Granted	116,500		144.26
Exercised	-		-
Forfeited	(35,450)		87.45
Expired	-		-
Stock options outstanding at December 31, 2014	1,046,490	$	72.61
Granted	117,000		134.24
Exercised	-		-
Forfeited	(77,450)		103.84
Expired	-		-
Stock options outstanding at December 31, 2015	1,086,040	$	77.11	6.3	$	43,927,338
Stock options exercisable at December 31, 2015	3,400	$	60.03	4.2	$	180,646
Remaining unvested options outstanding and expected to vest	1,071,365	$	76.68	4.2	$	43,679,612

Information related to stock options outstanding as of December 31, 2015 is summarized below:

				Weighted Average
				Remaining
	Number	Weighted Average		Contractual Term	Number
Range of Exercise Prices	Outstanding	Exercise Price		(In years)	Exercisable
$46.49 - $55.82	48,500		$ 52.74	5.6	-
$57.77 - $60.33	569,400		57.94	5.2	3,400
$61.64 - $69.75	169,240		66.17	6.2	-
$81.80 - $110.50	107,400		98.35	7.4	-
$112.64 - $151.72	191,500		138.05	9.0	-
	1,086,040		$ 77.11	6.2	3,400

F-38

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value on the grant date and the significant assumptions used in the Black‑Scholes option‑pricing model are as follows:

	As of December 31,
	2015			2014			2013
Grant date fair value	$	44.45		$	48.65		$	28.04
Expected life of options (in years)		7.5			7.5			7.3
Risk-free interest rate		2.0	%		2.2	%		1.8	%
Expected volatility		26.1	%		25.7	%		22.0	%
Expected annual dividend per share		-			-			-

The computation of the expected volatility assumption used in the Black‑Scholes calculations is based on the median asset volatility of comparable companies as of each of the grant dates.

Generally, options granted vest over requisite service periods or on a graduated scale based on total shareholder returns, expire ten years after the grant date and generally do not become exercisable until their restrictions on exercise lapses after the five –year anniversary of the grant date. For options that vest based on shareholder returns, the grant date fair values are calculated using a Monte-Carlo approach which simulates our stock price on the corresponding vesting dates before applying the Black Scholes model.

The balance of unamortized stock option expense as of December 31, 2015 is $11.1 million, which is expected to be recognized over a weighted‑average period of 3.2  years. Net of amounts capitalized relating to our developments, $2.6 million, $4.3 million and $3.5 million for the years ended December 31, 2015, 2014 and 2013, respectively, of expense associated with stock options are included in General and administrative expense in the accompanying Consolidated Statements of Operations.

Restricted Stock

Restricted stock awards issued under the Equity Plan provide that shares awarded may not be sold or otherwise transferred until restrictions have lapsed as established by the Committee. In addition to the granting of restricted stock to certain members of management, we award restricted stock to our non‑employee directors as part of their annual retainer. The management awards vest over five years, and the restriction on the non‑employee director shares lapse on the date of our annual meeting of shareholders, or June 1st of the award year, whichever is earlier.

Generally, upon termination of employment or directorship, restricted stock units and restricted shares which have not vested are forfeited.

F-39

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes restricted stock activity:

		Weighted Average
		Grant Date
	Shares	FairValue
Restricted stock outstanding at January 1, 2013	57,933	$	65.72
Granted	77,434		79.77
Vested	(13,033)		60.15
Restricted stock outstanding at December 31, 2013	122,334	$	75.21
Granted	61,750		126.38
Vested	(11,394)		97.72
Restricted stock outstanding at December 31, 2014	172,690	$	92.02
Granted	81,581	$	121.81
Vested	(7,546)		147.56
Forfeited	(4,169)		101.33
Restricted stock outstanding at December 31, 2015	242,556	$	100.15

The grant date fair value of the restricted stock is based on the closing sales price of our common stock on the grant date. For restricted stock awards that vest based on shareholder returns, the grant date fair values are calculated using a Monte-Carlo approach which simulates our stock price on the corresponding vesting dates before applying the Black Scholes model.

Net of amounts capitalized relating to our developments, we recognized compensation expense of $4.7 million, $3.9 million and $2.2 million for the years ended December 31, 2015, 2014 and 2013, respectively, included in General and Administrative expense related to restricted stock awards in the accompanying Consolidated Statements of Operations. The fair value of restricted stock that vested during 2015 was $1.1 million. The balance of unamortized restricted stock expense as of December 31, 2015 was $14.3 million, which is expected to be recognized over a weighted‑average period of 3.23 years.

NOTE 16 RENTALS UNDER OPERATING LEASES

We receive rental income from the leasing of retail, office, multi-family and other space under operating leases. Such operating leases are with a variety of tenants. The minimum future rentals based on operating leases of our consolidated properties held as of December 31, 2015 are as follows:

	Total
	Minimum
Year	Rent (In thousands)
2016	$	146,983
2017		139,518
2018		131,145
2019		124,208
2020		104,295
Subsequent		477,247

Minimum future rentals exclude amounts which are payable by certain tenants based upon a percentage of their gross sales or as reimbursement of operating expenses and amortization of above-market and below‑market tenant leases.

Percentage rent in lieu of fixed minimum rent recognized from tenants for the years ended December 31, 2015, 2014 and 2013 was $3.5 million, $2.9 million and $2.2 million, respectively.

F-40

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Overage rent of approximately $3.6 million, $2.4 million, and $2.6 million for 2015, 2014 and 2013, respectively, are included in Other rental and property revenues in our Consolidated Statements of Operations.

NOTE 17 SEGMENTS

We have three business segments which offer different products and services. Our three segments are managed separately because each requires different operating strategies or management expertise and are reflective of management’s operating philosophies and methods. In addition, our segments or assets within such segments could change in the future as development of certain properties commences or other operational or management changes occur. We do not distinguish or group our combined operations on a geographic basis. Furthermore, all operations are within the United States. Our reportable segments are as follows:

· Master Planned Communities (“MPCs”) – includes the development and sale of land, in large‑scale, long‑term community development projects in and around Las Vegas, Nevada; Houston, Texas; and Columbia, Maryland.

· Operating Assets – includes retail, office, hospitality and multi-family properties along with other real estate investments. The Club at Carlton Woods was also included in Operating Assets until its sale on September 4, 2015. These assets are currently generating revenues, and are comprised of commercial real estate properties recently developed or acquired by us, and properties where we believe there is an opportunity to redevelop, reposition, or sell to improve segment performance or to recycle capital.

· Strategic Developments – includes our residential condominium and commercial property projects currently under development and all other properties held for development which have no substantial operations.

Our segments are managed separately, therefore we use different operating measures to assess operating results and allocate resources among the segments. The one common operating measure used to assess operating results for the business segments is Real Estate Property Earnings Before Taxes (“REP EBT”) which represents the operating revenues of the properties less property operating expenses and adjustments for interest, as further described below. We believe that REP EBT provides useful information about the operating performance of all of our properties.

REP EBT, as it relates to our business, is defined as net income (loss) excluding general and administrative expenses, corporate other income, corporate interest income, corporate interest and depreciation expense, provision for income taxes, warrant liability gain (loss), loss on settlement of tax indemnity receivable, and the change in tax indemnity receivable. We present REP EBT because we use this measure, among others, internally to assess the core operating performance of our assets. We also present this measure because we believe certain investors use it as a measure of a company’s historical operating performance and its ability to service and incur debt. We believe that the inclusion of certain adjustments to net income (loss) to calculate REP EBT is appropriate to provide additional information to investors.

F-41

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Segment operating results are as follows:

	Year Ended December 31,
(In thousands)	2015		2014		2013
Master Planned Communities
Land sales	$	187,399	$	325,099	$	251,217
Builder price participation		26,846		20,908		9,356
Minimum rents		842		818		781
Other land revenues		14,778		16,470		13,416
Total revenues		229,865		363,295		274,770
Cost of sales – land		88,065		119,672		124,040
Land sales operations		34,443		31,932		30,826
Land sales real estate and business taxes		10,464		9,862		7,588
Provision for (recovery of) doubtful accounts		—		(11)		—
Depreciation and amortization		640		397		32
Interest income		(60)		(118)		(16)
Interest expense (*)		(18,053)		(19,620)		(18,678)
Total expenses		115,499		142,114		143,792
MPC EBT		114,366		221,181		130,978
Operating Assets
Minimum rents		149,064		95,807		80,124
Tenant recoveries		39,415		28,133		20,901
Hospitality revenues		45,374		37,921		39,201
Other rental and property revenues		25,453		24,429		20,360
Total revenues		259,306		186,290		160,586
Other property operating costs		68,078		62,752		61,146
Rental property real estate taxes		21,856		14,860		12,065
Rental property maintenance costs		10,236		8,592		7,552
Hospitality expenses		34,839		31,829		29,454
Provision for doubtful accounts		3,998		1,399		835
Demolition costs		2,675		6,712		2,078
Development-related marketing costs		9,747		9,770		3,462
Depreciation and amortization		89,075		49,272		31,427
Other income		(524)		—		—
Interest income		(37)		(151)		(135)
Interest expense		31,148		17,081		19,146
Equity in Earnings from Real Estate and Other Affiliates		(1,883)		(2,025)		(3,893)
Total expenses		269,208		200,091		163,137
Operating Assets EBT		(9,902)		(13,801)		(2,551)
Strategic Developments
Minimum rents		899		609		763
Tenant recoveries		127		220		167
Condominium rights and unit sales		305,284		83,565		32,969
Other land revenues		25		33		—
Other rental and property revenues		1,582		553		163
Total revenues		307,917		84,980		34,062
Condominium rights and unit cost of sales		191,606		49,995		16,572
Other property operating costs		4,673		4,282		5,547
Real estate taxes		2,282		2,547		2,226
Rental property maintenance costs		476		543		531
Provision for doubtful accounts		32		16		—
Demolition costs		622		22		—
Development-related marketing costs		15,719		13,013		1,449
Depreciation and amortization		3,240		1,706		189
Other expense/(income)		104		(2,373)		(3,609)
Interest income		(202)		—		—
Interest expense (*)		(6,633)		(11,918)		(4,318)
Equity in Earnings from Real Estate and Other Affiliates		(1,838)		(21,311)		(10,535)
Total expenses		210,081		36,522		8,052
Strategic Developments EBT		97,836		48,458		26,010
REP EBT	$	202,300	$	255,838	$	154,437

(*)Negative interest expense amounts are due to interest capitalized in our Master Planned Communities and Strategic Developments segments related to Operating Assets segment debt and the Senior Notes.

F-42

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following reconciles REP EBT to GAAP income (loss) before taxes:

Reconciliation of  REP EBT to GAAP	Year Ended December 31,
income (loss) before taxes	2015		2014		2013
(In thousands)
REP EBT	$	202,300	$	255,838	$	154,437
General and administrative		(81,345)		(73,569)		(48,466)
Corporate interest income/(expense), net		(52,995)		(30,819)		(10,575)
Warrant liability gain (loss)		58,320		(60,520)		(181,987)
Gain on sale of The Club at Carlton Woods		29,073		-		-
Increase (reduction) in tax indemnity receivable		-		90		(1,206)
Loss on settlement of tax indemnity receivable		-		(74,095)		-
Corporate other income, net		1,409		27,098		25,869
Corporate depreciation and amortization		(6,042)		(4,583)		(2,197)
Income (loss) before taxes	$	150,720	$	39,440	$	(64,125)

The following reconciles segment revenues to GAAP consolidated revenues:

Reconciliation of Segment Basis Revenues to	Year Ended December 31,
GAAP Revenues (In thousands)	2015		2014		2013
Master Planned Communities	$	229,865	$	363,295	$	274,770
Operating Assets		259,306		186,290		160,586
Strategic Developments		307,917		84,980		34,062
Total revenues	$	797,088	$	634,565	$	469,418

The assets by segment and the reconciliation of total segment assets to the total assets in the Consolidated Balance Sheets are summarized as follows:

	December 31,
(In thousands)	2015		2014
Master Planned Communities	$	2,022,524	$	1,875,550
Operating Assets		2,365,724		1,926,192
Strategic Developments		1,138,695		876,246
Total segment assets		5,526,943		4,677,988
Corporate and other		194,639		427,280
Total assets	$	5,721,582	$	5,105,268

The increase in the Operating Assets segment asset balance as of December 31, 2015 of $439.5 million compared to 2014 is primarily due to placing Hughes Landing Hotel, One Lakes Edge, Creekside Village, The Metropolitan Downtown Columbia, One Summerlin and Hughes Landing Retail in service and additional development and leasing costs at Downtown Summerlin.

The $262.4 million increase in the Strategic Developments segment asset balance as of December 31, 2015 compared to December 31, 2014 is primarily due to the following:

Increases in asset balance

· $603.1 million of development expenditures relating to the 80 South Street Assemblage, 1725 Hughes Landing Boulevard, 1735 Hughes Landing Boulevard, Waterway Square Hotel (Westin), Three Hughes Landing, Hughes Landing Hotel (Embassy Suites), the Merriweather District, and our Ward Village condominium projects;

· $191.0 million in condominium receivables due to percent complete revenue recognition in excess of buyers deposits;

· Receipt of $47.8 million in condominium buyer deposits at Ae`o and Gateway Towers; and

· Proceeds of $24.5 million from our construction financings at Ward Village, Waterway Hotel (Westin) and Hughes Landing Hotel (Embassy Suites).

F-43

THE HOWARD HUGHES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reductions in asset balance

· $278.8 million resulting from the transfer of 1725 Hughes Landing Boulevard, 1735 Hughes Landing Boulevard, Hughes Landing Hotel, Hughes Landing Retail, One Lakes Edge and Creekside Village to the Operating Assets segment;

· Cost of sales of $120.1 million for Waiea and $70.6 million for Anaha; and

· $144.1 million resulting from condominium buyer deposits used for the development of Waiea and Anaha.

Corporate and other assets as of December 31, 2015 consist primarily of cash and cash equivalents. The $232.6million decrease at December 31, 2015 compared to December 31, 2014 is primarily due to cash used to fund further development and redevelopment efforts within our Operating Assets and MPC segments.

NOTE 18 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	2015
		First		Second		Third		Fourth
(In thousands, except share amounts)		Quarter		Quarter		Quarter		Quarter
Total revenues		$	155,090	$	209,163	$	203,442	$	229,393
Operating income			16,457		25,572		36,544		40,191
Net income (loss)			(105,959)		50,585		156,212		25,881
Net income (loss) attributable to common stockholders			(105,959)		50,573		156,224		25,881
Earnings (loss) per share:
Basic			(2.68)		1.28		3.96		0.65
Diluted (a)			(2.68)		0.18		0.76		0.59
Weighted average shares outstanding:
Basic			39,465		39,468		39,473		39,473
Diluted			39,465		43,197		42,913		42,743

	2014
		First		Second		Third		Fourth
(In thousands, except share amounts)		Quarter		Quarter		Quarter		Quarter
Total revenues		$	98,653	$	209,631	$	119,228	$	207,053
Operating income			13,947		91,781		23,850		37,144
Net income (loss)			(86,331)		(14,733)		45,615		31,929
Net income (loss) attributable to common stockholders			(86,316)		(14,760)		45,615		31,930
Earnings (loss) per share:
Basic			(2.19)		(0.37)		1.16		0.81
Diluted (a)			(2.19)		(0.37)		0.48		(1.18)
Weighted average shares outstanding:
Basic			39,454		39,458		39,465		39,464
Diluted			39,454		39,458		43,171		43,027

a) Diluted earnings per share includes the impact of warrants, in the money options and restricted stock. Net income was also adjusted for the warrant gain during the period, where applicable.

F-44

SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2015

				Initial Cost (b)				Costs Capitalized Subsequent to Acquisition (c)				Gross Amounts at Which Carried at Close of Period (d)
						Buildings				Buildings				Buildings							Date
						and				and				and				Accumulated		Date of	Acquired /
Asset	Location	Encumbrances (a)		Land		Improvements		Land (e)		Improvements (e) (f)		Land		Improvements (f)		Total		Depreciation (g)		Construction	Completed
Ae`o	Honolulu, HI	$	-	$	-	$	16,294	$	-	$	-	$	-	$	16,294	$	16,294	$	-	2015	—
Alameda Plaza	Pocatello, ID		-		740		2,060		(740)		(1,793)		-		267		267		-	—	2002
Alden Bridge Self-Storage	The Woodlands, TX		-		-		1,679		-		-		-		1,679		1,679		-	2015	—
AllenTowne	Dallas, TX		-		25,575		-		(25,575)		25,475		-		25,475		25,475		-	—	2006
Anaha	Honolulu, HI		6,091		-		30,555		-		6,174		-		36,729		36,729		-	—	—
Bridgeland	Cypress, TX		40,077		257,222		-		177,998		1,268		435,220		1,268		436,488		709	—	2004
Bridges at Mint Hill	Charlotte, NC		-		-		-		-		21,470		-		21,470		21,470		-	—	2007
Century Plaza Mall	Birmingham, AL		-		3,164		28,514		(3,164)		(24,279)		-		4,235		4,235		-	—	1997
Circle T Ranch and Power Center	Dallas/Fort Worth, TX		-		-		-		-		(10)		-		(10)		(10)		-	—	2005
10 - 70 Columbia Corporate Center	Howard County, MD		100,000		24,685		94,824		-		7,733		24,685		102,557		127,242		4,665	—	2004
Columbia Office Properties	Howard County, MD		-		1,575		28,447		-		4,168		1,575		32,615		34,190		14,101	—	2004
Columbia Regional Building (e)	Howard County, MD		22,188		-		28,865		-		337		-		29,202		29,202		2,079	—	2014
Cottonwood Mall	Salt Lake City, UT		-		7,613		42,987		(7,613)		(21,626)		-		21,361		21,361		-	—	2002
Cottonwood Square	Salt Lake City, UT		-		1,558		4,339		-		923		1,558		5,262		6,820		1,844	—	2002
Creekside Village Green	The Woodlands, TX		-		-		-		1,323		15,732		1,323		15,732		17,055		279	—	—
Downtown Summerlin	Las Vegas, NV		293,389		-		-		30,855		364,100		30,855		364,100		394,955		12,715	—	2004
Hughes Landing Hotel (Embassy Suites)	The Woodlands, TX		20,064		-		6,752		1,818		33,012		1,818		39,764		41,582		109	—	—
Hughes Landing Retail	The Woodlands, TX		28,726		-		-		4,186		31,735		4,186		31,735		35,921		521	—	—
One Hughes Landing	The Woodlands, TX		52,000		-		-		1,678		35,029		1,678		35,029		36,707		3,212	—	2012
Two Hughes Landing	The Woodlands, TX		48,000		-		-		1,269		32,483		1,269		32,483		33,752		1,678	—	—
Three Hughes Landing	The Woodlands, TX		23,268		-		13,008		-		41,405		-		54,413		54,413		-	—	—
1725 Hughes Landing Boulevard	The Woodlands, TX		-		1,351		36,764		-		-		1,351		36,764		38,115		446	—	—
1735 Hughes Landing Boulevard	The Woodlands, TX		89,677		3,709		123,846		-		(3,044)		3,709		120,802		124,511		826	—	2015
IBM Building	Honolulu, HI		-		3,326		23,123		-		8,201		3,326		31,324		34,650		5,576	—	2014
Ke Kilohana	Honolulu, HI		-		-		5,114		-		5,152		-		10,266		10,266		-	2015	—
Kendall Town Center	Miami, FL		-		-		-		-		18,797		-		18,797		18,797		-	—	2004
Kewalo Basin Harbor	Honolulu, HI		-		-		1,735		-		-		-		1,735		1,735		-	2015	—
1701 Lake Robbins	The Woodlands, TX		4,600		1,663		3,725		-		8		1,663		3,733		5,396		133	—	2014
2201 Lake Woodlands Drive	The Woodlands, TX		-		3,755		-		-		-		3,755		-		3,755		-	—	2011
One Lake's Edge	The Woodlands, TX		67,517		-		-		1,057		80,765		1,057		80,765		81,822		1,455	—	—
Lakeland Village Center	Cypress, TX		-		-		11,135		-		-		-		11,135		11,135		-	2015	—
Lakemoor (Volo) Land	Volo, IL		-		320		-		(320)		321		-		321		321		-	—	1995
Landmark Mall	Alexandria, VA		-		28,396		67,235		(19,408)		(34,773)		8,988		32,462		41,450		12,743	—	2003
Maryland Communities	Howard County, MD		-		457,552		-		(435,462)		197		22,090		197		22,287		127	—	2004
Merriweather Post Pavilion	Columbia, MD		-		1,571		67,510		-		1,646		1,571		69,156		70,727		37	2015	—
Millennium Waterway Apartments	The Woodlands, TX		55,584		15,917		56,002		-		222		15,917		56,224		72,141		8,234	—	2012
9303 New Trails	The Woodlands, TX		12,734		1,929		11,915		-		2,042		1,929		13,957		15,886		2,048	—	2011
110 N. Wacker	Chicago, IL		26,481		-		29,035		12,249		5,498		12,249		34,533		46,782		14,242	—	1997
Outlet Collection at Elk Grove	Elk Grove, CA		-		-		-		-		12,865		-		12,865		12,865		4	—	2003
Outlet Collection at Riverwalk	New Orleans, LA		56,100		-		94,513		-		(3,623)		-		90,890		90,890		7,990	—	2004
Park West	Peoria, AZ		-		16,526		77,548		1,201		1,427		17,727		78,975		96,702		23,725	—	—
Seaport District Assemblage	New York, NY		-		-		243,610		-		3,691		-		247,301		247,301		-	—	2014/2015
85 South Street	New York, NY		-		15,913		8,137		-		42		15,913		8,179		24,092		760	—	2014
South Street Seaport	New York, NY		-		-		7,884		-		220,088		-		227,972		227,972		959	—	2004
Summerlin	Las Vegas, NV		50,154		990,179		-		(125,903)		1,019		864,276		1,019		865,295		533	—	2004
3831 Technology Forest	The Woodlands, TX		22,759		514		14,194		-		1,819		514		16,013		16,527		859	—	2014
The Club at Carlton Woods	The Woodlands, TX		-		13,796		457		(13,796)		(457)		-		-		-		-	—	—
The Metropolitan Downtown Columbia	Columbia, MD		-		-		-		-		-		-		-		-		-	—	—
The Woodlands	The Woodlands, TX		192,710		267,996		9,814		(43,726)		5,569		224,270		15,383		239,653		1,887	—	2011
The Woodlands Hills	Conroe, TX		-		99,284		-		1,820		-		101,104		-		101,104		-	—	2014
The Woodlands Parking Garages	The Woodlands, TX		-		5,857		-		1,529		11,269		7,386		11,269		18,655		508	—	2011
The Woodlands Resort & Conference Center	The Woodlands, TX		85,000		13,258		37,983		-		73,701		13,258		111,684		124,942		7,823	—	2011
Waiea	Honolulu, HI		21,726		-		20,812		-		20,510		-		41,322		41,322		-	—	—
Ward Gateway Towers	Honolulu, HI		-		-		28,450		-		-		-		28,450		28,450		-	2015	—
Ward Village	Honolulu, HI		238,716		164,007		89,321		(32,411)		170,218		131,596		259,539		391,135		68,360	—	2002
Waterway Garage Retail	The Woodlands, TX		-		1,342		4,255		(1)		1,348		1,341		5,603		6,944		759	—	2011
3 Waterway Square	The Woodlands, TX		52,000		748		-		-		42,329		748		42,329		43,077		5,310	—	2012
4 Waterway Square	The Woodlands, TX		37,293		1,430		51,553		-		6,985		1,430		58,538		59,968		9,110	—	2011
Waterway Square Hotel	The Woodlands, TX		33,361		-		22,473		-		55,936		-		78,409		78,409		-	—	—
20/25 Waterway Avenue	The Woodlands, TX		14,112		2,346		8,871		-		767		2,346		9,638		11,984		1,447	—	2011
West Windsor	Princeton, NJ		-		-		-		53		24,101		53		24,101		24,154		-	—	2004
1400 Woodloch Forest	The Woodlands, TX		-		-		-		1,570		14,079		1,570		14,079		15,649		7,098	—	1981
Corporate	Various		762,027		885		1,027		(885)		30,912		-		31,939		31,939		8,058	—	—
	Deferred financing costs		(12,392)		-		-		-		-		-		-		-		-
		$	2,443,962	$	2,435,702	$	1,456,365	$	(470,398)	$	1,352,963	$	1,965,304	$	2,809,328	$	4,774,632	$	232,969

(a) See description of mortgages, notes and loans payable in Note 8 of the Consolidated Financial Statements.

(b) Initial cost for projects undergoing development or redevelopment is cost at end of first complete calendar year subsequent to opening.

(c) For retail and other properties, costs capitalized subsequent to acquisitions is net of cost of disposals or other property write‑downs. For MPCs, costs capitalized subsequent to acquisitions are net of the cost of land sales.

F-45

(d) The aggregate cost of land, building and improvements for federal income tax purposes is approximately $4.0 billion.

(e) Reductions in Land reflect transfers to Buildings and Improvements for projects which we are internally developing.

(f) Includes all amounts related to Developments.

(g) Depreciation is computed based upon the following estimated lives:

	Years
Building and improvements	10 - 45
Equipment, tenant improvements and fixtures	5 - 10
Computer hardware and software, and vehicles	3 - 5

Reconciliation of Real Estate
(In thousands)	2015		2014		2013
Balance at beginning of year	$	4,116,556	$	3,024,833	$	2,746,596
Change in Land		95,095		296,147		90,124
Additions		834,346		973,833		352,141
Dispositions and write-offs and land and condominium costs of sales		(271,365)		(178,257)		(164,028)
Balance at end of year	$	4,774,632	$	4,116,556	$	3,024,833

Reconciliation of Accumulated Depreciation
(In thousands)	2015		2014		2013
Balance at beginning of year	$	157,182	$	111,728	$	112,491
Depreciation Expense		82,275		50,683		29,637
Dispositions and write-offs		(6,488)		(5,229)		(30,400)
Balance at end of year	$	232,969	$	157,182	$	111,728

F-46

Exhibit No.	Description of Exhibit
3.1	Amended and Restated Certificate of Incorporation of The Howard Hughes Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed November 12, 2010)
3.2	Amended and Restated Bylaws of The Howard Hughes Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed November 12, 2010)
3.3	Certificate of Designations of Series A Junior Participating Preferred Stock, filed with the Secretary of State of Delaware on February 29, 2012 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed February 29, 2012
4.1	Section 382 Rights Agreement, dated as of February 27, 2012, by and between The Howard Hughes Corporation and Computershare Trust Company, N.A., as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed February 29, 2012)
4.2	Amendment No. 1, dated as of February 26, 2015, to the Section 382 Rights Agreement, dated as of February 27, 2012, by and between The Howard Hughes Corporation and Computershare Trust Company, N.A., as rights agent (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed March 3, 2015)
10.1	Tax Matters Agreement, dated November 9, 2010, between The Howard Hughes Corporation and General Growth Properties, Inc. (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed November 12, 2010)
10.2	Form of indemnification agreement for directors and certain executive officers of The Howard Hughes Corporation (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K, filed November 12, 2010)
10.3	Warrant Agreement, dated November 9, 2010, between The Howard Hughes Corporation and Mellon Investor Services LLC (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K, filed November 12, 2010)
10.4	Letter Agreement, dated November 9, 2010, between The Howard Hughes Corporation and Pershing Square Capital Management, L.P. (incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K, filed November 12, 2010)
10.5	Registration Rights Agreement, dated November 9, 2010, between The Howard Hughes Corporation and Pershing Square Capital Management, L.P., Blackstone Real Estate Partners VI L.P., Blackstone Real Estate Partners (AIV) VI L.P., Blackstone Real Estate Partners VI.F L.P., Blackstone Real Estate Partners VI.TE.1 L.P., Blackstone Real Estate Partners VI.TE.2 L.P., Blackstone Real Estate Holdings VI L.P., and Blackstone GGP Principal Transaction Partners L.P. (incorporated by reference to Exhibit 99.4 to the Company’s Current Report on Form 8-K, filed November 12, 2010)
10.6*+	Form of Restricted Stock Agreement for Nonemployee Directors under The Howard Hughes Corporation 2010 Amended and Restated Incentive Plan
10.7*+	Form of Restricted Stock Agreement for Executive Officers under the Howard Hughes Corporation Amended and Restated 2010 Incentive Plan
10.8*	Employment Agreement, dated as of November 22, 2010, between The Howard Hughes Corporation and David R. Weinreb (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed November 29, 2010)
10.9*	Amendment No.1 to Employment Agreement, dated as of August 17, 2012, between The Howard Hughes Corporation and David R. Weinreb (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed November 9, 2012)

10.10*	Amendment No. 2 to Employment Agreement, dated as of December 17, 2013, between The Howard Hughes Corporation and David R. Weinreb (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 17, 2013)
10.11*	Warrant Purchase Agreement, dated November 22, 2010, between The Howard Hughes Corporation and David R. Weinreb (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed November 29, 2010)
10.12*	Amendment No.1 to the Warrant Purchase Agreement dated as of August 23, 2011, between The Howard Hughes Corporation and David R. Weinreb (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K, filed February 29, 2012)
10.13*	Employment Agreement, dated as of November 22, 2010, between The Howard Hughes Corporation and Grant Herlitz (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed November 29, 2010)
10.14*	Warrant Purchase Agreement, dated November 22, 2010, between The Howard Hughes Corporation and Grant Herlitz (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed November 29, 2010)
10.15*	Warrant Purchase Agreement, dated February 25, 2011, between The Howard Hughes Corporation and Andrew C. Richardson (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed March 3, 2011)
10.16*	Employment Agreement, dated as of February 25, 2011, between The Howard Hughes Corporation and Andrew C. Richardson (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed March 3, 2011)
10.18	Loan agreement dated as of September 29, 2011, by and among Victoria Ward, Limited along with certain Victoria Ward, Limited’s subsidiaries, as borrowers, Wells Fargo Bank, National Association, as Administrative Agent and lead lender, CIBC, First Hawaiian Bank, Bank of Hawaii and Central Pacific Bank, as lenders, and Wells Fargo Securities, L.L.C., as Sole Lead Arranger and Sole Bookrunner (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed October 4, 2011)
10.19	Loan Agreement dated as of July 15, 2014, by and among The Shops at Summerlin North, LP, The Shops at Summerlin South, LP, Wells Fargo Bank, National Association, as Administrative Agent and lead lender, U.S. Bank National Association, as Syndication Agent and a lender, the other lending institutions party thereto, and Wells Fargo Securities, L.L.C., as sole Lead Arranger and Sole Bookrunner. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed July 16, 2014)
10.20	Loan Agreement dated as of November 6, 2014 by and among 1108 Auahi, LLC and 1118 Ala Moana, LLC and BREDS II Mortgage Corp. (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K, filed March 2, 2015)

10.21*	The Howard Hughes Corporation 2010 Amended and Restated Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 14, 2012)
10.22*	Form of The Howard Hughes Corporation Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed September 17, 2014)
10.23	Settlement of Tax Indemnity and Mutual Release Agreement dates as of December 12, 2014, by and between The Howard Hughes Corporation, a Delaware Corporation, and General Growth Properties, Inc., a Delaware Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 18, 2014)
21.1+	List of Subsidiaries
23.1+	Consent of Ernst & Young LLP
24.1+	Power of Attorney
31.1+	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2+	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS+	XBRL Instance Document
101.SCH+	XBRL Taxonomy Extension Schema Document
101.CAL+	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB+	XBRL Taxonomy Extension Label Linkbase Document
101.PRE+	XBRL Taxonomy Extension Presentation  Linkbase Document
101.DEF+	XBRL Taxonomy Extension Definition Linkbase Document

*Management contract, compensatory plan or arrangement

+Filed herewith

Attached is Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013, (ii) the Consolidated Balance Sheets at December 31, 2015 and 2014, (iii) the Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013, (iv) the Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2015, 2014 and 2013.

EX-10.6

Exhibit 10.6

THE HOWARD HUGHES CORPORATION

RESTRICTED STOCK AGREEMENT FOR NONEMPLOYEE DIRECTORS

WHEREAS,  [Insert Name] (the “Grantee”) is a director of The Howard Hughes Corporation (and its successors, the “Company”);

WHEREAS, the grant of Restricted Stock was authorized by the Compensation Committee of the Board (the “Compensation Committee”) on [Insert Date] (the “Date of Grant”); and

WHEREAS, pursuant to the Company’s Amended and Restated 2010 Incentive Plan (the “Plan”), and subject to the terms and conditions thereof and the terms and conditions of this agreement (the “Agreement”), the Company has granted to the Grantee as of the Date of Grant the right to receive [Insert Amount] shares of common stock of the Company (the “Restricted Shares”).

NOW, THEREFORE, the Company and the Grantee hereby agree as follows:

1. Rights of Grantee.  The Restricted Shares subject to this grant shall be fully paid and nonassessable and shall be either: (i) represented by certificates held in custody by the Company until all restrictions thereon have lapsed, together with a stock power or powers executed by the Grantee in whose name such certificates are registered, endorsed in blank and covering such Restricted Shares; or (ii) held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Restricted Shares, and endorsed with an appropriate legend referring to the restrictions hereinafter set forth.  The Gran6tee shall have the right to vote the Restricted Shares.  Upon vesting of the Restricted Shares pursuant to the terms and conditions of this Agreement, the Grantee: (x) shall receive cash dividends or cash distributions, if any, paid or made by the Company with respect to common shares after the Date of Grant and prior to the vesting of the Restricted Shares; and (y) shall receive any additional Restricted Shares that the Grantee may become entitled to receive by virtue of a Restricted Share dividend, a merger or reorganization in which the Company is the surviving corporation or any other change in the capital structure of the Company.

2. Restrictions on Transfer of Restricted Shares.  The Restricted Shares subject to this grant may not be assigned, exchanged, pledged, sold, transferred or otherwise disposed of by the Grantee, except to the Company, until the Restricted Shares have become nonforfeitable in accordance with Sections 3 and 4 hereof; provided,  however, that the Grantee’s rights with respect to such Restricted Shares may be transferred by will or pursuant to the laws of descent and distribution.  Any purported transfer in violation of the provisions of this Section 2 shall be null and void, and the purported transferee shall obtain no rights with respect to such Restricted Shares.

Vesting of Restricted Shares.  Subject to the terms and conditions of Sections 4 and 5 hereof, the Restricted Shares covered by this Agreement shall become nonforfeitable as follows: 100% of the Restricted Shares covered by this Agreement on the earlier of: (i) the date of the Company’s annual meeting of stockholders in [Insert Immediately Following Year]; or (ii) June

3.

1, [Insert Immediately Following Year] (in either case, such date, the "Vesting Date"); provided that the Grantee continuously serves as a director of the Company until the Vesting Date.

4. Accelerated Vesting of Restricted Shares.  Notwithstanding the provisions of Section 3 hereof, the Restricted Shares covered by this Agreement or any substitute award may become nonforfeitable earlier than the time provided in such section if any of the following circumstances apply:

(a) Death or Disability:  The Grantee dies while serving as a director of the Company or the Grantee's service as a director of the Company is terminated because the Grantee becomes Disabled.  For purposes of this Agreement, "Disabled" shall mean as a result of injury or sickness, the Grantee is unable for period of 180 days to perform with reasonable continuity his or her duties as a director of the Company in the usual or customary way.

(b) Change of Control:  A Change of Control of the Company occurs while the Grantee is a director of the Company and, in connection with such Change of Control, the successor corporation does not Assume the award under this Agreement or the Grantee does not continue to serve as a director of the successor corporation (or, if the successor corporation is a subsidiary, the parent corporation).  If the successor corporation Assumes the award under this Agreement and the Grantee continues to serve as a director of the successor corporation (or, if the successor corporation is a subsidiary, the parent corporation) until the Vesting Date, then no such acceleration shall apply.

For purposes of this Agreement, the award under this Agreement shall be deemed "Assumed" following a Change of Control if the following conditions are met:

(i) the award is converted into a replacement award covering a number of shares of the entity effecting the Change of Control (or a successor or parent corporation), as determined in a manner substantially similar to the treatment of an equal number of Restricted Shares covered by the award; provided, that to the extent that any portion of the consideration received by holders of the Company common stock in the Change of Control transaction is not in the form of the common stock of such entity (or a successor or parent corporation), the number of shares covered by the replacement award shall be based on the average of the high and low selling prices of the common stock of such entity (or a successor or parent corporation) on the established stock exchange on the trading day immediately preceding the date of the Change of Control;

(ii) the replacement award contains provisions for scheduled vesting and treatment on termination of employment that are no less favorable to the Grantee than the underlying award being replaced, and all other terms of the replacement award (other than the security and number of shares represented by the replacement award) are substantially similar to the underlying award; and

2

3

(iii) the security represented by the replacement award is of a class that is publicly held and widely traded on an established stock exchange.

5. Forfeiture of Awards.  Except to the extent the Grantee’s rights to receive the Restricted Shares covered by this Agreement have become nonforfeitable pursuant to Sections 3 or 4 hereof, the Grantee’s rights to receive the Restricted Shares covered by this Agreement shall be forfeited automatically and without further notice on the date that the Grantee ceases to serve as a director of the Company prior to the Vesting Date for any reason other than as described in Section 4.  In the event that the Grantee becomes an employee of the Company or any of its subsidiaries immediately upon ceasing to be a director of the Company, the Restricted Shares held by the Grantee on such date will not be affected and the Grantee’s service as an employee shall be treated as service as a director for purposes of this Agreement.

6. Retention of Shares.  During the period in which the restrictions on transfer and risk of forfeiture provided in Sections 2 and 5 above are in effect, the Restricted Shares covered by this grant shall be either: (a) represented by certificates retained by the Company, together with the accompanying stock power signed by the Grantee and endorsed in blank; or (b) held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Restricted Shares, and endorsed with an appropriate legend referring to the restrictions set forth herein.

7. Compliance with Law.  The Company shall make reasonable efforts to comply with all applicable federal and state securities laws; provided,  however, that notwithstanding any other provision of this Agreement, the Company shall not be obligated to issue any of the Restricted Shares covered by this Agreement if the issuance thereof would result in violation of any such law.

8. Compliance with Section 409A of the Code.  To the extent applicable, it is intended that this Agreement and the Plan comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Grantee.  This Agreement and the Plan shall be administered in a manner consistent with this intent.  Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as amended, and will also include any proposed, temporary or final regulations, or any other guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

9. Amendments.  Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided,  however, that no amendment shall adversely affect the rights of the Grantee under this Agreement without the Grantee’s consent; further,  provided, that the Grantee’s consent shall not be required to an amendment that is deemed necessary by the Company to ensure compliance with Section 409A of the Code or the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any regulations promulgated thereunder, including as a result of the implementation of any recoupment policy the Company adopts to comply with the requirements set forth in the Dodd-Frank Act.

10. Severability.  In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated

4

shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

11. Relation to Plan.  This Agreement is subject to the terms and conditions of the Plan.  In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan.  The Compensation Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein or in the plan, have the right to determine any questions which arise in connection with the grant of Restricted Shares.

12. Successors and Assigns.  Without limiting Section ‎2 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.

13. Governing Law.  This Agreement is made under, and shall be construed in accordance with, the internal substantive laws of the State of Delaware without giving effect to the principles of conflict of laws thereof.

[Remainder of Page Intentionally Left Blank, Signature Page to Follow]

5

Executed in the name and on behalf of the Company, as of the __ day of _____. 201_.

THE HOWARD HUGHES CORPORATION
By:
	Name:
	Title:

The undersigned hereby acknowledges receipt of an executed original of this Agreement and accepts the right to receive the Restricted Shares or other securities covered hereby, subject to the terms and conditions of the Plan and the terms and conditions herein above set forth.

GRANTEE

Name:

Date:

6

EX-10.7

Exhibit 10.7

THE HOWARD HUGHES CORPORATION

RESTRICTED STOCK AGREEMENT

WHEREAS,  [Insert Name](the “Grantee”) is an employee of The Howard Hughes Corporation (and its successors, the “Company”);

WHEREAS, the grant of Restricted Stock was authorized by the Compensation Committee of the Board (the “Compensation Committee”) on [Insert Date];

WHEREAS, the date of grant is [Insert Date] (“Date of Grant”); and

WHEREAS, pursuant to The Howard Hughes Corporation Amended and Restated 2010 Incentive Plan (the “Plan”), and subject to the terms and conditions thereof and the terms and conditions of this agreement (this “Agreement”), the Company has granted to Grantee as of the Date of Grant the right to receive [Insert Amount]shares of common stock of the Company (the “Restricted Shares”).

NOW, THEREFORE, the Company and Grantee hereby agree as follows:

1. Rights of Grantee.  The Restricted Shares subject to this grant shall be fully paid and nonassessable and shall be either: (i) represented by certificates held in custody by the Company until all restrictions thereon have lapsed, together with a stock power or powers executed by Grantee in whose name such certificates are registered, endorsed in blank and covering such Restricted Shares; or (ii) held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Restricted Shares, and endorsed with an appropriate legend referring to the restrictions hereinafter set forth.  Grantee shall have the right to vote the Restricted Shares.  Upon vesting of the Restricted Shares hereunder, the Grantee: (x) shall receive cash dividends or cash distributions, if any, paid or made by the Company with respect to common shares after the Date of Grant and prior to the vesting of the Restricted Stock; and (y) shall receive any additional Restricted Shares that Grantee may become entitled to receive by virtue of a Restricted Share dividend, a merger or reorganization in which the Company is the surviving corporation or any other change in the capital structure of the Company.

2. Restrictions on Transfer of Restricted Shares.  The Restricted Shares subject to this grant may not be assigned, exchanged, pledged, sold, transferred or otherwise disposed of by Grantee, except to the Company, until the Restricted Shares have become nonforfeitable in accordance with Sections 3 and 4 hereof.  Any purported transfer in violation of the provisions of this Section 2 of this Agreement shall be null and void, and the purported transferee shall obtain no rights with respect to such Shares.

3. Vesting of Restricted Shares.  Subject to the terms and conditions of Section  4 of this Agreement, the Restricted Shares covered by this Agreement shall become nonforfeitable as follows:

1

(a) 50% of the Restricted Shares covered by this Agreement shall vest on December 31,2018; and (b) 50% of the Restricted Shares covered by this Agreement shall vest in accordance with the vesting scheduled based on the total shareholder return as set forth on Exhibit A (the “Company-based Vesting Component”).  Notwithstanding anything to the contrary set forth in this Agreement, in the event that Grantee’s employment relationship with the Company or a Subsidiary is terminated by the Company or a Subsidiary for any reason, except for cause, and Grantee has been employed by the Company or a Subsidiary continuously for a period of at least forty-eight (48) months from December 31, 2014then: (a) 50% of the Restricted Shares covered by this Agreement shall vest on December 31,2019; and (b) a percentage of the Company-based Vesting Component shall vest on December 31, 2019based on the total shareholder return from the Date of Grant to the date of termination in accordance with the schedule set forth on Exhibit A.

4. Forfeiture of Awards.  Except to the extent Grantee’s rights to receive the Restricted Shares (and any dividends declared thereunder) covered by this Agreement have become nonforfeitable pursuant to Section  3 of this Agreement, Grantee’s rights to receive the Restricted Shares covered by this Agreement shall be forfeited automatically and without further notice on the date that Grantee ceases to be in the employee of the Company or a Subsidiary prior to December 31, 2019.

5. Retention of Shares.  During the period in which the restrictions on transfer and risk of forfeiture provided in Sections 3 and 4 of this Agreement are in effect, the Restricted Shares covered by this grant shall be either: (a) represented by certificates retained by the Company, together with the accompanying stock power signed by Grantee and endorsed in blank; or (b) held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Restricted Shares, and endorsed with an appropriate legend referring to the restrictions set forth herein.

6. Compliance with Law.  The Company shall make reasonable efforts to comply with all applicable federal and state securities laws; provided,  however, that notwithstanding any other provision of this Agreement, the Company shall not be obligated to issue any of the Restricted Shares covered by this Agreement if the issuance thereof would result in violation of any such law.

7. Compliance with Section 409A of the Code.  To the extent applicable, it is intended that this Agreement and the Plan comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to Grantee.  This Agreement and the Plan shall be administered in a manner consistent with this intent.  Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as amended, and will also include any proposed, temporary or final regulations, or any other guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

8. Amendments.  Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided,  however, that no amendment shall adversely affect the rights of Grantee under this Agreement without Grantee’s consent; further,  provided, that Grantee’s consent shall not be required to an amendment that is deemed necessary by the Company to ensure compliance with Section 409A of the Code or the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any regulations

2

promulgated thereunder, including as a result of the implementation of any recoupment policy the Company adopts to comply with the requirements set forth in the Dodd-Frank Act.

9. Severability.  In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.

10. Relation to Plan.  This Agreement is subject to the terms and conditions of the Plan.  In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Plan.  The Compensation Committee acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein or in the plan, have the right to determine any questions which arise in connection with the grant of Restricted Shares.

11. Successors and Assigns.  Without limiting Section ‎2 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of Grantee, and the successors and assigns of the Company.

12. Governing Law.  This Agreement is made under, and shall be construed in accordance with, the internal substantive laws of the State of Delaware without giving effect to the principles of conflict of laws thereof.

[Remainder of Page Intentionally Left Blank, Signature Page to Follow]

Executed in the name and on behalf of the Company, as of the ___ day of ___________, 2015.

THE HOWARD HUGHES CORPORATION
By:
	Name:
	Title:

The undersigned Grantee hereby acknowledges receipt of an executed original of this Agreement and accepts the right to receive the Restricted Shares or other securities covered hereby, subject to the terms and conditions of the Plan and the terms and conditions herein above set forth.

GRANTEE

Name:

Date:

3

EXHIBIT A

COMPANY-BASED VESTING SCHEDULE

Total Shareholder Return	Vesting %
0.00% to 120.38%	0%
120.39% to 140.92%	25%
140.93% to 162.82%	50%
162.83% to 200.11%	75%
200.12% +	100%

The Company-based Vesting Component of each Award shall vest on December 31, 2019 according to the schedule above; provided, that the Company achieves the corresponding total shareholder return (“TSR”) target.  TSR is calculated using the following formula: TSR = (Price_end – Price_begin + Dividends) / Price_begin. $73.02, the closing price per share of the Company as of December 31, 2012, shall be used as the Price_begin for the purpose of calculating TSR.  A TSR target is deemed satisfied if the highest 30 trading day volume weighted average share price (which shall be based on the daily closing price of the Company’s common stock as reported in the consolidated transaction reporting system) represents a TSR that meets or exceeds such target during the period from January 1, 2019 through December 31, 2019.

By way of example, if the highest 30 trading day volume weighted average share price of Company stock equals $ 200.56 (inclusive of dividends, if any) during the period between January 1, 2019 and December 31, 2019 (which represents a TSR of 174.66% using the following formula: ($ 200.56-$73.02)/$73.02), then 75% of the Company-based Vesting Component of an Award shall vest on December 31, 2019; provided, that all other vesting requirements are met.

The Compensation Committee may make adjustments to the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events, including without limitation, stock splits, stock dividends, spinoffs or other similar events, or as a result of changes in

5

applicable laws, regulations or accounting principles, to prevent dilution or enlargement of the benefits or increase in intended benefits or potential intended benefits provided by an Award; provided, that such adjustments shall be consistent with the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) with regard to Awards subject to Section 162(m) of the Code.

The term “Award” shall have the meaning set forth in The Howard Hughes Corporation 2010 Amended and Restated Incentive Plan.  All other capitalized terms used herein without definition shall have the meanings assigned to them in the Nonqualified Employee Stock Option Agreement to which this Exhibit A is attached.

________________________

1. If a Grantee is terminated by the Company for any reason, except for cause after 48 months of employment from December 31, 2014, as provided in Section 3 of the Agreement, prior to the passing of 30 trading days in 2019, the Company shall use the volume weighted average share price for the first 30 trading days of 2019 when calculating TSR.

6

EX-21.1

Exhibit 21.1

THE HOWARD HUGHES CORPORATION

LIST OF SUBSIDIARIES

Entity	Jurisdiction
10 CCC, LLC	Delaware
10/20/30 CCC Parking Deck, LLC	Delaware
20 CCC, LLC	Delaware
30 CCC, LLC	Delaware
40 CCC, LLC	Delaware
40 CCC Parking Deck, LLC	Delaware
50 CCC, LLC	Delaware
50/60/70 CCC Parking Deck, LLC	Delaware
60 CCC, LLC	Delaware
70 CC, LLC	Delaware
3 Waterway Holdings, LLC	Texas
4 Waterway Holdings, LLC	Delaware
20 & 25 Waterway Holdings, LLC	Delaware
70 CC, LLC	Delaware
80 South, LLC	Delaware
85 South Street LLC	Delaware
110 Holding, LLC	Delaware
110 Wacker, LLC	Delaware
117 Beekman Street Holdings, LLC	Delaware
170 John Street Holdings, LLC	Delaware
170 Retail Associates, Ltd.	Texas
170 Retail Holding, LLC	Delaware
988 Halekauwila, LLC	Delaware

2

Entity	Jurisdiction
1108 Auahi, LLC	Delaware
1118 Ala Moana, LLC	Delaware
1240 Ala Moana, LLC	Delaware
3831 TF Holding Company, LLC	Delaware
1701 Lake Robbins, LLC	Delaware
9303 New Trails Holdings, LLC	Delaware
ACB Parking Business Trust	Maryland
Alameda Plaza, LLC	Delaware
AllenTowne Mall, LLC	Delaware
American City Building Business Trust	Maryland
Anaha Management Development Company, LLC	Delaware
Angels Entertainment, LLC	Delaware
Beverage Operations, Inc.	Texas
Bridgeland Construction, LLC	Delaware
Bridgeland Development, LP	Maryland
Bridgeland GP, LLC	Delaware
Bridgeland Holding Company, Inc.	Delaware
Bridgeland Management Development Company, LLC	Delaware
Bridges at Mint Hill, LLC	Delaware
Bridges at Mint Hill Member, LLC	Delaware
Carlton Woods Holdings, LLC	Delaware
Century Plaza L.L.C.	Delaware
Clark County Las Vegas Stadium, LLC	Delaware
Clover Acquisitions LLC	Delaware
	Delaware
Cottonwood Mall, LLC	Delaware
Cottonwood Square, LLC	Delaware

3

Entity	Jurisdiction
Crescent Area 1-A Holdings, LLC	Delaware
Crescent Area 1-B Holdings, LLC	Delaware
Crescent Area 1 – Parking Deck 1, LLC	Delaware
CS Apartments Holding Company, LLC	Delaware
CSPV Holdings, LLC	Delaware
Cypress LA, LLC	Delaware
Discovery Property Company, LLC	Delaware
DLV/HHPI Summerlin, LLC	Delaware
Elk Grove Management Development Company, LLC	Delaware
Elk Grove Town Center L.L.C.	Delaware
Elk Grove Town Center, L.P.	Delaware
Emerson Land Business Trust	Maryland
Emerson Land, LLC	Delaware
Fairwood Commercial Development Holding, LP	Maryland
Fairwood Commercial Development Limited Partnership	Maryland
Fairwood Commercial Front Foot Benefit Company, LLC	Maryland
Fulton Seafood Market, LLC	Delaware
FV-93 Limited	Texas
Gateway Overlook III Business Trust	Maryland
GG DR, L.L.C.	Illinois
Greengate Mall, Inc.	Pennsylvania
Harper’s Choice Business Trust	Maryland
Hexalon Real Estate, LLC	Delaware
HF Holding Company, LLC	Delaware
HF Management Development Company, LLC	Delaware
HH Hawaii Development Company, LLC	Delaware

4

Entity	Jurisdiction
HH New York Development Company, LLC	Delaware
HH One Hughes Landing, LLC	Delaware
HH Two Hughes Landing, LLC	Texas
HH Wacker Acquisition Company, LLC	Delaware
HHC 242 Self-Storage, LLC	Delaware
HHC 2978 Self-Storage, LLC	Delaware
HHC-Alameda Development Manager, LLC	Delaware
HHC 33 Peck Slip Holdings, LLC	Delaware
HHC Travel, LLC	Delaware
HHC Two Hughes Landing, LLC	Delaware
HHC Ventures, LLC	Delaware
HHMK Development, LLC	Delaware
HL Amenities Holdings, LLC	Delaware
HL Beverage Company, LLC	Delaware
HL Champion Holding Company, LLC	Delaware
HL Multi-Family Holdings, LLC	Delaware
HL Restaurant Row, LLC	Delaware
HL Retail Row, LLC	Delaware
HL-Hotel Holding Company, LLC	Delaware
Howard Hughes Management, Co. LLC	Delaware
Howard Hughes Management Services Company, LLC	Delaware
Howard Hughes Properties, Inc.	Nevada
HRD Parking Deck Business Trust	Maryland
HRD Parking, Inc.	Maryland
Kai Investments, LLC	Delaware
Kapiolani Residential LLC	Delaware
Kendall Management Development Company, LLC	Delaware

5

Entity	Jurisdiction
Kewalo Harbor Development Company, LLC	Delaware
Kewalo Harbor Management Company, LLC	Delaware
Kewalo Harbor, LLC	Hawaii
Kewalo Makai, LLC	Hawaii
KR Holdings, LLC	Delaware
Lakeland Village Holding Company, LLC	Delaware
Land Trust No. 89433	Hawaii
Land Trust No. 89434	Hawaii
Land Trust No. FHB-TRES 200601	Hawaii
Land Trust No. FHB-TRES 200602	Hawaii
Landmark Mall L.L.C.	Delaware
Landmark Management Development Company, LLC	Delaware
LRVC Business Trust	Maryland
Marginal Street Development, LLC	Delaware
Merchantwired Interest, Inc.	Maryland
Merchant Wired, LLC	Delaware
Merriweather Post Business Trust	Maryland
Millennium Woodlands Phase II, LLC	Delaware
Millennium Woodlands Phase II Member, LLC	Delaware
Natick Residence LLC	Delaware
Oakland Ridge Industrial Development Corporation	Maryland
One Hughes Landing, LLC	Delaware
Parcel C Business Trust	Maryland
Parcel C Development LLC	Delaware
Parcel C Property LLC	Delaware
Parcel D Business Trust	Maryland

6

Entity	Jurisdiction
Parcel D Development LLC	Delaware
Parcel D Property LLC	Delaware
Parke West, LLC	Delaware
Pier 17 HHC Member, LLC	Delaware
Pier 17 Seafood Restaurant, LLC	Delaware
Price Development TRS, Inc.	Delaware
Princeton Land, LLC	Delaware
Princeton Management Development Company, LLC	Delaware
Red Rock Investment, LLC	Nevada
Redlands Land Acquisition Company, LLC	Delaware
Redlands Land Acquisition Company, LP	Delaware
Rio West L.L.C.	Delaware
Riva Row Woodlands Member, LLC	Delaware
Riverwalk Marketplace (New Orleans), LLC	Delaware
Riverwalk Operating Company, LLC	Delaware
SAV Nevada, LLC	Delaware
Seaport Development Holdings, LLC	Delaware
Seaport Management Development Company, LLC	Delaware
Seaport Marketplace Theatre, LLC	Maryland
Seaport Marketplace, LLC	Maryland
Seaport Phase 1 Holdings, LLC	Delaware
South Street Seaport Limited Partnership	Maryland
Stewart Title of Montgomery County Inc.	Texas
Stone Lake, LLC	Maryland
Summerlin Baseball Club Member, LLC	Delaware
Summerlin Centre, LLC	Delaware
Summerlin Centre Apartments, LLC	Delaware

7

Entity	Jurisdiction
Summerlin Corporation	Delaware
Summerlin Development, LLC	Delaware
Summerlin Development Management Company, LLC	Delaware
Summerlin Hospital Medical Center, L.P.	Delaware
Summerlin Las Vegas Baseball Club, LLC	Delaware
Summerlin North GP, LLC	Delaware
Summerlin Operating Company, LLC	Delaware
Summerlin Restaurant, LLC	Delaware
Summerlin South GP, LLC	Delaware
The Downtown Columbia Partnership, Inc.	Maryland
The Howard Hughes Company, LLC	Delaware
The Howard Hughes Corporation	Delaware
The Howard Research And Development Corporation	Maryland
The Hughes Corporation	Delaware
The Shops At Summerlin North, LP	Delaware
The Shops at Summerlin South, LP	Delaware
The Woodlands Beverage, Inc.	Texas
The Woodlands Brokerage, LLC	Texas
The Woodlands Commercial Brokerage Company, L.P.	Texas
The Woodlands Commercial Properties Company, LP	Texas
The Woodlands Corporation	Delaware
The Woodlands Custom Residential Sales, LLC	Texas
The Woodlands Custom Sales, LP	Texas
The Woodlands GL Holdings, LLC	Delaware
The Woodlands Holding Company, Inc.	Delaware
The Woodlands Hotel Management Company, LLC	Delaware

8

Entity	Jurisdiction
The Woodlands Land Development Company, L.P.	Texas
The Woodlands Management Development Company, LLC	Delaware
The Woodlands Operating Company, L.P.	Texas
Three Hughes Landing, LLC	Delaware
Town Center Development Company GP, L.L.C.	Texas
Town Center Development Company, L.P.	Texas
Town Center East Business Trust	Maryland
Town Center East Parking Lot Business Trust	Maryland
TWC Commercial Properties, LLC	Delaware
TWC Commercial Properties LP	Delaware
TWC Land Development, LLC	Delaware
TWC Land Development LP	Delaware
TWC Operating, LLC	Delaware
TWC Operating LP	Delaware
TWCPC Holdings GP, L.L.C.	Texas
TWCPC Holdings, L.P.	Texas
TWLDC Holdings GP, L.L.C.	Texas
TWLDC Holdings, L.P.	Texas
Victoria Ward Center L.L.C.	Delaware
Victoria Ward Entertainment Center L.L.C.	Delaware
Victoria Ward Services, Inc.	Delaware
Victoria Ward, Limited	Delaware
Volo Land, LLC	Delaware
VW Condominium Development, LLC	Delaware
Waiea Management Development Company, LLC	Delaware
Ward Condominium Holdings, LLC	Delaware
Ward Gateway Tower #1, LLC	Delaware

9

Entity	Jurisdiction
Ward Gateway Tower #2, LLC	Delaware
Ward Gateway-Industrial-Village, LLC	Delaware
Ward Management Development Company, LLC	Delaware
Ward Plaza-Warehouse, LLC	Delaware
Ward Village CK Holdings, LLC	Delaware
Ward Village Holding Company	Delaware
Ward Village Operating Company, LLC	Delaware
Ward Village Properties, LLC	Delaware
Waterway Ave Partners, L.L.C.	Texas
Waterway Coffee Holdings, LLC	Delaware
Waterway Condo Holdings, LLC	Delaware
Waterway Hotel Beverage Company, LLC	Delaware
Waterway Hotel Holdings, LLC	Delaware
WECCR General Partnership	Texas
WECCR, Inc.	Texas
West Kendall Holdings, LLC	Maryland
Westlake Retail Associates, Ltd.	Texas
Westlake Retail Holding, LLC	Delaware
Wincopin Restaurant Business Trust	Maryland
Woodlands Acquisition, LLC	Texas
Woodlands Office Equities-95, LLC	Texas
Woodlands Sarofim #1, Ltd.	Texas
WPC 17-RRA, LLC	Delaware
WRCC Holdings, LLC	Delaware

10

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1)Registration Statement (Form S-3 No. 333-184466), of The Howard Hughes Corporation, and

(2) Registration Statements (Form S-8 No. 333-170431, Form S-8 No. 333-170432, Form S-8 No. 333-171909, and Form S-8 No. 333-171910) pertaining to the 2010 Amended and Restated Incentive Planof The Howard Hughes Corporation;

of our reports dated February 29, 2016, with respect to the consolidated financial statements and schedule of The Howard Hughes Corporation, and the effectiveness of internal control over financial reporting of The Howard Hughes Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2015.

/s/ Ernst & Young LLP

Dallas, Texas
February 29, 2016

EX-24.1

Exhibit 24.1

POWEROFATTORNEY

Each of the undersigned hereby constitutes and appoints David R. Weinreb as the undersigned's true and lawful attorney and agent, with full power of substitution and resubstitution for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K of The Howard Hughes Corporation for the year ended December 31, 2015 and any and all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney and agent full power and authority to do any and all acts and things necessary or advisable to be done, as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

/s/ William Ackman	/s/ R. Scot Sellers
William Ackman	R. Scot Sellers
/s/ Adam Flatto	/s/ Steven Shepsman
Adam Flatto	Steven Shepsman
/s/ Jeffrey Furber	/s/ Burton M. Tansky
Jeffrey Furber	Burton M. Tansky
/s/ Gary Krow	/s/ Mary Ann Tighe
Gary Krow	Mary Ann Tighe
/s/ Allen Model
Allen Model

Dated: February 29, 2016.

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David R. Weinreb, certify that:

1. I have reviewed this Annual Report on Form 10-K of The Howard Hughes Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 29, 2016

/s/ David R. Weinreb

David R. Weinreb

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I Andrew C. Richardson, certify that:

1. I have reviewed this Annual Report on Form 10-K of The Howard Hughes Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February  29, 2016

/s/ Andrew C. Richardson

Andrew C. Richardson

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. 1350 ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Annual Report on Form 10-K of The Howard Hughes Corporation, a Delaware Corporation (the “Company”), for the period ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers, in their capacity as officers, of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for periods expressed in the report.

/s/ DAVID R. WEINREB

David R. Weinreb

Chief Executive Officer

February  29, 2016

/s/ ANDREW C. RICHARDSON

Andrew C. Richardson

Chief Financial Officer

February  29, 2016

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Document and Entity Information - USD ($) $ in Billions	12 Months Ended
	Dec. 31, 2015	Feb. 24, 2016	Jun. 30, 2015
Document and Entity Information
Entity Registrant Name	Howard Hughes Corp
Entity Central Index Key	0001498828
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 5.7
Entity Common Stock, Shares Outstanding		39,714,838
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Investment in real estate:
Master Planned Community assets	$ 1,642,842	$ 1,641,063
Land	322,462	317,211
Buildings and equipment	1,772,401	1,243,979
Less: accumulated depreciation	(232,969)	(157,182)
Developments	1,036,927	914,303
Net property and equipment	4,541,663	3,959,374
Investment in Real Estate and Other Affiliates	57,811	53,686
Net investment in real estate	4,599,474	4,013,060
Cash and cash equivalents	445,301	560,451
Accounts receivable, net	32,203	28,190
Municipal Utility District receivables, net	139,946	104,394
Notes receivable, net	1,664	28,630
Deferred Costs	61,804	60,407
Prepaid expenses and other assets, net	441,190	310,136
Total assets	5,721,582	5,105,268
Liabilities:
Mortgages, notes and loans payable	2,443,962	1,978,807
Deferred tax liabilities	89,221	62,205
Warrant liabilities	307,760	366,080
Uncertain tax position liability	1,396	4,653
Accounts payable and accrued expenses	515,354	466,017
Total liabilities	$ 3,357,693	$ 2,877,762
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, 39,714,838 shares issued and outstanding as of December 31, 2015 and 39,638,094 shares issued and outstanding as of December 31, 2014	$ 398	$ 396
Additional paid-in capital	2,847,823	2,838,013
Accumulated deficit	(480,215)	(606,934)
Accumulated other comprehensive loss	(7,889)	(7,712)
Total stockholders' equity	2,360,117	2,223,763
Noncontrolling interests	3,772	3,743
Total equity	2,363,889	2,227,506
Total liabilities and equity	$ 5,721,582	$ 5,105,268

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	39,714,838	39,638,094
Common stock, shares outstanding	39,714,838	39,638,094

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Revenues:
Condominium rights and unit sales	$ 305,284	$ 83,565	$ 32,969
Master Planned Community land sales	187,399	325,099	251,217
Minimum rents	150,805	97,234	81,668
Builder price participation	26,846	20,908	9,356
Tenant recoveries	39,542	28,353	21,068
Hospitality revenues	45,374	37,921	39,201
Other land revenues	14,803	16,503	13,416
Other rental and property revenues	27,035	24,982	20,523
Total revenues	797,088	634,565	469,418
Expenses:
Condominium rights and unit cost of sales	191,606	49,995	16,572
Master Planned Community cost of sales	88,065	119,672	124,040
Master Planned Community operations	44,907	41,794	38,414
Other property operating costs	72,751	67,034	65,723
Rental property real estate taxes	24,138	17,407	14,291
Rental property maintenance costs	10,712	9,135	8,083
Hospitality expenses	34,839	31,829	29,454
Provision for doubtful accounts	4,030	1,404	836
Demolition costs	3,297	6,734	2,078
Development-related marketing costs	25,466	22,783	5,880
General and administrative	81,345	73,569	48,466
Other income	(1,829)	(29,471)	(29,478)
Depreciation and amortization	98,997	55,958	33,845
Total expenses	678,324	467,843	358,204
Operating income	118,764	166,722	111,214
Interest income	586	22,531	3,185
Interest expense	(59,744)	(38,624)	(9,759)
Warrant liability gain (loss)	58,320	(60,520)	(181,987)
Gain on sale of The Club at Carlton Woods	29,073
Increase (reduction) in tax indemnity receivable		90	(1,206)
Loss on settlement of tax indemnity receivable		(74,095)
Equity in earnings from Real Estate and Other Affiliates	3,721	23,336	14,428
Income (loss) before taxes	150,720	39,440	(64,125)
Provision for income taxes	24,001	62,960	9,570
Net income (loss)	126,719	(23,520)	(73,695)
Net income attributable to noncontrolling interests		(11)	(95)
Net income (loss) attributable to common stockholders	$ 126,719	$ (23,531)	$ (73,790)
Basic income (loss) per share: (in dollars per share)	$ 3.21	$ (0.60)	$ (1.87)
Diluted income (loss) per share: (in dollars per share)	$ 1.60	$ (0.60)	$ (1.87)

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Comprehensive income (loss), net of tax:
Net income (loss)		$ 126,719	$ (23,520)	$ (73,695)
Other comprehensive income (loss):
Interest rate swaps	[1]	40	1,003	2,542
Capitalized swap interest expense	[2]	(217)	(493)	(1,189)
Other comprehensive income (loss)		(177)	510	1,353
Comprehensive income (loss)		126,542	(23,010)	(72,342)
Comprehensive (income) loss attributable to noncontrolling interests			(11)	(95)
Comprehensive income (loss) attributable to common stockholders		$ 126,542	$ (23,021)	$ (72,437)

[1] Net of deferred tax expense of $1.0 million, $0.2 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

[2] Net of deferred tax benefit of $0.1 million, $0.2 million and $0.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Interest rate swaps, deferred tax expense	$ 1.0	$ 0.2	$ 0.5
Capitalized swap interest, deferred tax benefit	$ 0.1	$ 0.2	$ 0.6

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Noncontrolling Interest [Member]	Total
Balance at the beginning of the period at Dec. 31, 2012	$ 395	$ 2,824,031	$ (509,613)	$ (9,575)	$ 5,759	$ 2,310,997
Balance (in shares) at Dec. 31, 2012	39,498,912
Increase (Decrease) in Stockholders' Equity
Net income (loss)			(73,790)		95	(73,695)
Adjustment to noncontrolling interest					720	720
Preferred dividend payment on behalf of subsidiary					(12)	(12)
Interest rate swaps, net of tax $966, $184, and $(486) for the year ended December 2015, 2014 and 2013, respectively				2,542		2,542	[1]
Capitalized swap interest, net of tax $74, $199, and $635 and for the year ended December 2015, 2014 and 2013, respectively				(1,189)		(1,189)	[2]
Stock plan activity	$ 1	5,782				5,783
Stock plan activity (in shares)	77,432
Balance at the end of the period at Dec. 31, 2013	$ 396	2,829,813	(583,403)	(8,222)	6,562	2,245,146
Balance (in shares) at Dec. 31, 2013	39,576,344
Increase (Decrease) in Stockholders' Equity
Net income (loss)			(23,531)		11	(23,520)
Distribution to noncontrolling interest					(2,818)	(2,818)
Preferred dividend payment on behalf of subsidiary					(12)	(12)
Interest rate swaps, net of tax $966, $184, and $(486) for the year ended December 2015, 2014 and 2013, respectively				1,003		1,003	[1]
Capitalized swap interest, net of tax $74, $199, and $635 and for the year ended December 2015, 2014 and 2013, respectively				(493)		(493)	[2]
Stock plan activity		8,200				8,200
Stock plan activity (in shares)	61,750
Balance at the end of the period at Dec. 31, 2014	$ 396	2,838,013	(606,934)	(7,712)	3,743	2,227,506
Balance (in shares) at Dec. 31, 2014	39,638,094
Increase (Decrease) in Stockholders' Equity
Net income (loss)			126,719			126,719
Adjustment to noncontrolling interest					29	29
Interest rate swaps, net of tax $966, $184, and $(486) for the year ended December 2015, 2014 and 2013, respectively				40		40	[1]
Capitalized swap interest, net of tax $74, $199, and $635 and for the year ended December 2015, 2014 and 2013, respectively				(217)		(217)	[2]
Stock plan activity	$ 2	9,810				9,812
Stock plan activity (in shares)	76,744
Balance at the end of the period at Dec. 31, 2015	$ 398	$ 2,847,823	$ (480,215)	$ (7,889)	$ 3,772	$ 2,363,889
Balance (in shares) at Dec. 31, 2015	39,714,838

[1] Net of deferred tax expense of $1.0 million, $0.2 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

[2] Net of deferred tax benefit of $0.1 million, $0.2 million and $0.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Interest rate swaps, tax	$ 966	$ 184	$ (486)
Capitalized swap intererst, tax (benefit)	$ 74	$ 199	$ 635

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Cash Flows from Operating Activities:
Net income (loss)	$ 126,719	$ (23,520)	$ (73,695)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation	82,275	50,683	29,637
Amortization	16,722	5,275	4,208
Amortization of deferred financing costs	5,734	4,378	2,952
Amortization of intangibles other than in-place leases	462	668	213
Straight-line rent amortization	(4,985)		(3,652)
Deferred income taxes	21,152	65,010	8,352
Restricted stock and stock option amortization	7,284	8,200	5,782
Gain on disposition of assets	(29,073)	(2,373)	(8,483)
Warrant liability (gain) loss	(58,320)	60,520	181,987
Reduction (increase) in tax indemnity receivable		(90)	1,206
Interest income related to tax indemnity		(21,510)	(2,078)
Loss on settlement of tax indemnity receivable		74,095
Equity in earnings from Real Estate and Other Affiliates, net of distributions	1,182	11,222	(7,121)
Provision for doubtful accounts	4,030	1,404	836
Master Planned Community land acquisitions	(7,293)	(100,913)	(5,667)
Master Planned Community development expenditures	(197,020)	(140,735)	(133,590)
Master Planned Community cost of sales	69,104	110,885	112,695
Condominium development expenditures	(191,313)	(75,990)	(21,213)
Condominium and other cost of sales	191,606	49,995	16,572
Deferred rental income	46,366
Proceeds from sale of condominium rights			47,500
Percentage of completion revenue recognition from sale of condominium rights and units	(305,284)	(83,565)	(32,969)
Non-monetary consideration related to land transactions		(17,406)
Proceeds received on settlement of tax indemnity receivable		138,000
Payment to IRS relating to tax court decision		(203,298)
Net changes:
Accounts and notes receivable	50,228	45,209	5,935
Prepaid expenses and other assets	(1,869)	(6,311)	(1,591)
Condominium deposits received	81,881	139,187
Deferred expenses	(11,743)	(36,641)	(19,364)
Accounts payable and accrued expenses	29,867	37,213	20,333
Condominium deposits held in escrow	(81,881)	(139,187)
Condominium deposits released from escrow	177,724
Other, net	375	(8,720)	547
Cash provided by (used in) operating activities	23,930	(58,315)	129,332
Cash Flows from Investing Activities:
Property and equipment expenditures	(15,439)	(8,521)	(31,768)
Operating property improvements	(8,409)	(6,299)	(17,231)
Property developments and redevelopments	(578,506)	(759,003)	(221,071)
Proceeds from Sale of Real Estate	25,139	11,953	10,814
Proceeds from insurance claims		12,901
Proceeds from sales of investment in Real Estate Affiliates			13,270
Investments in Real Estate and Other Affiliates, net	(2,171)	(6,248)	(4,035)
Change in restricted cash	(6,580)	20,930	(17,204)
Other	1,277
Cash used in investing activities	(575,568)	(746,456)	(294,325)
Cash Flows from Financing Activities:
Proceeds from mortgages, notes and loans payable	583,822	597,553	1,120,102
Principal payments on mortgages, notes and loans payable	(103,808)	(120,182)	(279,721)
Deferred financing costs	(4,285)	(7,085)	(6,594)
Preferred dividend payment on behalf of REIT subsidiary		(12)	(12)
Distributions (contributions) to noncontrolling interests			(3,031)
Special Improvement District bonds held in escrow	(39,241)
Cash provided by financing activities	436,488	470,274	830,744
Net change in cash and cash equivalents	(115,150)	(334,497)	665,751
Cash and cash equivalents at beginning of period	560,451	894,948	229,197
Cash and cash equivalents at end of period	445,301	560,451	894,948
Supplemental Disclosure of Cash Flow Information:
Interest paid	99,296	84,497	30,600
Interest capitalized	47,221	46,513	37,470
Income taxes paid	3,318	204,898	2,268
Non-Cash Transactions:
Special Improvement District bond transfers associated with land sales	18,775	8,786	14,376
Property developments and redevelopments	2,530	38,567	85,609
MPC Land contributed to Real Estate Affiliate	15,234
Acquisition of 1701 Lake Robbins:
Building		(3,979)
Below market lease obligation		3,979
70 Columbia Corporate Center
Non-Cash Transactions:
Special Improvement District bond transfers to Real Estate Affiliates	(1,518)
Capitalized stock compensation	2,526
Distribution of land to noncontrolling interests		2,818
1701 Lake Robbins
Acquisition of 1701 Lake Robbins:
Land		(1,663)
Building		(3,725)
Other assets		(848)
Mortgages, notes and loans payable		4,600
Other liabilities		152
10-60 Columbia Corporate Center
Acquisition of 1701 Lake Robbins:
Land		(23,404)
Building		(79,247)
Other assets		(28,997)
Other liabilities		(1,648)
85 South Street
Cash Flows from Investing Activities:
Acquisition of properties		(21,555)
Non-Cash Transactions:
Accrued interest included in construction loan payable	2,863	4,785
KR Holdings LLC
Cash Flows from Investing Activities:
Distribution from (investment in) KR Holdings, LLC	$ 9,121	$ 9,386	(16,750)
Summerlin Las Vegas Baseball Club LLC
Cash Flows from Investing Activities:
Investments in Real Estate and Other Affiliates, net			$ (10,350)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The Howard Hughes Corporation’s (“HHC” or the “Company”) mission is to be the preeminent developer and operator of Master Planned Communities and mixed‑use properties. We specialize in the development of master planned communities, the development of residential condominiums, and the ownership, management and development or repositioning of real estate assets currently generating revenues, also called operating assets, as well as other strategic real estate opportunities in the form of entitled and unentitled land and other development rights, also called strategic developments. We are a Delaware corporation that was formed on July 1, 2010. Unless the context otherwise requires, references to “we,” “us” and “our” refer to HHC and its subsidiaries.

Management has evaluated all material events occurring subsequent to the date of the Consolidated Financial Statements up to the date and time this Annual Report is filed.

Principles of Consolidation and Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), with all intercompany balances eliminated. The presentation includes the accounts of the Company, and those entities in which we have a controlling financial interest. The noncontrolling equity holders’ share of the assets, liabilities and operations are reflected in noncontrolling interests within permanent equity. The Company also consolidates certain variable interest entities (“VIEs”) in accordance with Accounting Standards Codification (“ASC”) 810 Consolidation (“ASC 810”)  (see “Investment in Real Estate and Other Affiliates” below). At December 31, 2015, the Company adopted Accounting Standards Update (“ASU”) 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs,” and began presenting the carrying value of its debt net of the debt issuance costs, as discussed further below.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The estimates and assumptions include, but are not limited to, revenue recognition accounted for under the percentage of completion method, capitalization of development costs, provision for income taxes, recoverable amounts of receivables and deferred tax assets, initial valuations of tangible and intangible assets acquired and the related useful lives of assets upon which depreciation and amortization is based. Estimates and assumptions have also been made with respect to future revenues and costs, the fair value of warrants, debt and options granted. Actual results could differ from these and other estimates.

Investment in Real Estate

Master Planned Community Assets, Land, Buildings and Equipment

Real estate assets are stated at cost less any provisions for impairments. Expenditures for significant improvements to our assets are capitalized. Tenant improvements relating to our operating assets are capitalized and depreciated over the shorter of their economic lives or the lease term. Maintenance and repair costs are charged to expense when incurred.

We periodically review the estimated useful lives of properties. Depreciation or amortization expense is computed using the straight‑line method based upon the following estimated useful lives:

Asset Type	Years
Buildings and improvements	10- 45
Equipment, tenant improvements and fixtures	5 - 10
Computer hardware and software, and vehicles	3 - 5

From time to time, we may reassess the development strategies for certain buildings and improvements which results in changes to our estimate of their remaining useful lives. As a result, we recognized an additional $17.1 million, or $0.40 per diluted share, $10.8 million, or $0.27 per diluted share, and $1.2 million, or $0.03 per diluted share, in depreciation expense during the years ended December 31, 2015, 2014 and 2013, respectively, due to the change in useful lives of these buildings and improvements. The increased depreciation expense was caused by development plans which included the demolition of certain pre-existing buildings and improvements, thereby resulting in a reduction to their useful lives.

Developments

Development costs, which generally include legal and professional fees and other directly‑related third‑party costs associated with specific development properties, are capitalized as part of the property being developed. In the event that management no longer has the ability or intent to complete a development, the costs previously capitalized are evaluated for impairment.

Construction and improvement costs incurred in connection with the development of new properties or the redevelopment of existing properties are capitalized, including certain employee personnel costs. Real estate taxes, interest and insurance costs incurred during construction periods are also capitalized. Capitalized interest costs are based on qualified expenditures and interest rates in place during the construction period. Demolition costs associated with these redevelopments are expensed as incurred.

Our Developments are made up of the following categories:

	December 31,
(In thousands)	2015		2014
Land & improvements	$	182,843	$	164,280
Development costs		728,984		667,228
Condominium projects		125,100		82,795
Total Developments	$	1,036,927	$	914,303

Investment in Real Estate and Other Affiliates

In the ordinary course of business, we enter into partnerships or joint ventures primarily for the development and operation of real estate assets which are referred to as “Real Estate Affiliates”. These partnerships or joint ventures are typically characterized by a non‑controlling ownership interest with decision making and distribution of expected gains and losses being generally proportionate to the ownership interest. We evaluate these partnerships and joint ventures for consolidation in accordance with ASC 810.

We assess our joint ventures at inception to determine if any meet the qualifications of a variable interest entity (“VIE”). We consider a partnership or joint venture a VIE if: (a) the total equity investment is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the entity); or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or their rights to receive the expected residual returns of the entity, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Upon the occurrence of certain events outlined in ASC 810, we reassess our initial determination of whether the partnership or joint venture is a VIE.

We also perform a qualitative assessment of each VIE to determine if we are the primary beneficiary. Under ASC 810, a company concludes that it is the primary beneficiary and consolidates the VIE if the company has both (a) the power to direct the economically significant activities of the entity and (b) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The company considers the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties in determining if the company is the primary beneficiary. As required by ASC 810, management’s assessment of whether the company is the primary beneficiary of a VIE is continuously performed.

We account for VIEs for which we are not considered to be the primary beneficiary, but have significant influence, using the equity method and investments in VIEs where we do not have significant influence on the joint venture’s operating and financial policies using the cost method.

We account for investments in joint ventures where we own a non‑controlling interest using the equity method, and investments in joint ventures where we have virtually no influence on the joint venture’s operating and financial policies using the cost method. For cost method investments, we recognize earnings to the extent of distributions received from such investments.

Under the equity method, the cost of our investment is adjusted for our share of the equity in earnings or losses of such Real Estate Affiliates from the date of investment and reduced by distributions received. Generally, the operating agreements with respect to our Real Estate Affiliates provide that assets, liabilities and funding obligations are shared in accordance with our ownership percentages. We generally also share in the profit and losses, cash flows and other matters relating to our Real Estate Affiliates in accordance with our respective ownership percentages. For certain equity method investments, when the preferences on profit sharing on liquidation rights and priorities differ from the ownership percentages, we consider ASC 970 and apply the Hypothetical Liquidation Book Value (“HLBV”) method. Under this method, we recognize income or loss based on the change in our underlying share of the venture’s net assets on a hypothetical liquidation basis as of the reporting date.

Acquisitions of Properties

We account for the acquisition of real estate properties constituting a business in accordance with ASC 805 Business Combinations (“ASC 805”). This methodology requires that assets acquired and liabilities assumed be recorded at their fair values on the date of acquisition.

Costs directly related to purchase of land or other property acquisitions are considered additions to the purchase price and increase the cost basis recorded for the Investment in Real Estate.  Acquisition costs related to the acquisition of a business are expensed as incurred.

The fair value of tangible assets of an acquired property (which includes land, buildings, and improvements) is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, buildings and improvements based on management’s determination of the fair value of these assets. The “as-if-vacant” values are derived from several sources which primarily include a discounted cash flow analysis using discount and capitalization rates based on recent comparable market transactions, where available.

The fair value of acquired intangible assets consisting of in-place, above-market and below-market leases is recorded based on a variety of considerations. In-place lease considerations include, but are not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases (i.e., the market cost to execute a lease, including leasing commissions and tenant improvements); (2) the value associated with lost revenue related to tenant reimbursable operating costs incurred during the assumed lease-up period (i.e., real estate taxes, insurance and certain other operating expenses); and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Above-market and below-market leases are valued at the present value, using a discount rate that reflects the risks associated with the leases acquired, of the difference between (1) the contractual amounts to be paid pursuant to the in-place lease; and (2) management’s estimate of current market lease rates, measured over the remaining non-cancelable lease term, including any below market renewal option periods.

Impairment

We review our real estate assets (including those held by our Real Estate Affiliates), operating assets, land held for development and sale, and developments for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  GAAP related to the impairment or disposal of long‑lived assets requires that if impairment indicators exist and that expected undiscounted cash flows generated by the asset are less than its carrying amount, an impairment provision should be recorded to write down the carrying amount of the asset to its fair value. The impairment analysis does not consider the timing of future cash flows and whether the asset is expected to earn an above or below market rate of return.

Impairment indicators for our assets or projects within our Master Planned Communities segment are assessed separately and include, but are not limited to, significant decreases in sales pace or average selling prices, significant increases in expected land development and construction costs or cancellation rates, and projected losses on expected future sales. Master Planned Community assets have extended life cycles that may last 20 to 40 years, or longer, and have few long‑term contractual cash flows. Further, Master Planned Community assets generally have minimal to no residual values because of their liquidating characteristics. Master Planned Community development periods often occur through several economic cycles. Subjective factors such as the expected timing of property development and sales, optimal development density and sales strategy impact the timing and amount of expected future cash flows and fair value.

Impairment indicators for our Operating Assets segment are assessed separately for each property and include, but are not limited to, significant decreases in net operating income, significant decreases in occupancy, ongoing low occupancy and significant net operating losses.

Impairment indicators for development costs in our Strategic Developments segment, which are typically costs incurred during the beginning stages of a potential development, and developments in progress are assessed by project and include, but are not limited to, significant changes in projected completion dates, revenues or cash flows, development costs, market factors, significant decreases in comparable property sale prices and feasibility.

The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy, pricing, development costs, sales pace and capitalization rates, and estimated holding periods for the applicable assets. Although the estimated fair value of certain assets may be exceeded by the carrying amount, a real estate asset is only considered to be impaired when its carrying amount is not expected to be recovered through estimated future undiscounted cash flows. To the extent an impairment provision is necessary, the excess of the carrying amount of the asset over its estimated fair value is expensed to operations. In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset. The adjusted carrying amount, which represents the new cost basis of the asset, is depreciated over the remaining useful life of the asset or, for Master Planned Communities, is expensed as a cost of sales when land is sold. Assets that have been impaired will in the future have lower depreciation and cost of sale expenses. The impairment will have no impact on cash flow.

With respect to our Investment in Real Estate and Other Affiliates, a series of operating losses of an underlying asset or other factors may indicate that a decrease in value has occurred which is other‑than‑temporary. The investment in each Real Estate and Other Affiliate is evaluated periodically and as deemed necessary for recoverability and valuation declines that are other‑than‑temporary. If the decrease in value of an Investment in a Real Estate and Other Affiliate is deemed to be other‑than‑temporary, our investment is reduced to its estimated fair value. In addition to the property‑specific impairment analysis that we perform on the underlying assets of the investment, we also consider the ownership, distribution preferences, limitations, and rights to sell and repurchase our ownership interests.

Cash and Cash Equivalents

Cash and Cash Equivalents consist of highly-liquid investments with maturities at date of purchase of three months or less and are deposited with major banks throughout the United States. Such deposits are in excess of FDIC limits and are placed with high quality institutions in order to minimize concentration of counterparty credit risk.

Revenue Recognition and Related Matters

Land Sales Revenue

Revenues from land sales are recognized using the full accrual method at closing, when title has passed to the buyer, adequate consideration for the land has been received and we have no continuing involvement with the property. Revenue that is not recognized under the full accrual method is deferred and recognized when the required obligations are met. Revenue related to builder price participation rights is recognized as the underlying homes are sold by homebuilders.

When developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold through completion. In accordance with ASC 970-360-30-1, when developed land is sold, costs are allocated to each sold superpad or lot based upon the relative sales value of each superpad or lot. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated throughout the year, with adjustments being allocated prospectively to the remaining parcels available for sale. For certain parcels of land, however, the specific identification method is used to determine the cost of sales, including acquired parcels that we do not intend to develop or for which development was complete at the date of acquisition.

Rental Revenue

Revenue associated with our operating assets includes minimum rent, percentage rent in lieu of fixed minimum rent, tenant recoveries and overage rent.

Minimum rent revenues are recognized on a straight‑line basis over the terms of the related leases when collectability is reasonably assumed and the tenant has taken possession of, or controls, the physical use of the leased asset. Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants. Minimum rent revenues also include amortization related to above and below‑market tenant leases on acquired properties.

Recoveries from tenants are stipulated in the leases, are generally computed based upon a formula related to real estate taxes, insurance and other real estate operating expenses, and are generally recognized as revenues in the period the related costs are incurred.

Overage rent is recognized on an accrual basis once tenant sales exceed contractual thresholds contained in the lease and is calculated by multiplying the tenant sales in excess of the minimum amount by a percentage defined in the lease.

If the lease provides for tenant improvements, we determine whether the tenant improvements are owned by the tenant or by us. When we are the owner of the tenant improvements, rental revenue begins when the improvements are substantially complete. When the tenant is the owner of the tenant improvements, any tenant allowance funded by us is treated as a lease incentive and amortized as an adjustment to rental revenue over the lease term.

Condominium Rights and Unit Sales

Revenue recognition for contracted individual units in a condominium project are accounted for under the percentage of completion method when the following criteria are met: (a) construction is beyond a preliminary stage; (b) buyer is unable to require a refund of its deposit, except for non‑delivery of the unit; (c) sufficient units are sold to assure that it will not revert to a rental property; (d) sales prices are collectible; and (e) aggregate sales proceeds and costs can be reasonably estimated. Those units that do not meet the criteria use the full accrual method or deposit method which defers revenue recognition until the unit is closed.

Revenue recognized on the percentage-of-completion method is based upon the ratio of project costs incurred to date compared to total estimated project cost. Total estimated project costs include direct costs such as the carrying value of our land, site planning, architectural, construction costs, financing costs and indirect cost allocations for certain infrastructure and amenity costs which benefit the project based upon the relative sales value of the units. Changes in estimated project costs impact the amount of revenue and profit recognized on a percentage of completion basis during the period in which they are determined. Revenue recognized in excess of amounts collected from buyers is classified as Condominium receivables and amounts collected from buyers in excess of revenue recognized to date are classified as Condominium deposits liability.

Hospitality Revenue

Revenue from our hospitality properties is primarily related to room rentals and food and beverage sales and is recognized as services are performed.

Other Income

Other income for the year ended December 31, 2015 primarily relates to a $0.3 million gain on insurance recoveries related to casualty losses at South Street Seaport from Superstorm Sandy and $0.5 million related to our participation interest in the golf courses at TPC Summerlin and TPC Las Vegas.

Other income for the year ended December 31, 2014 primarily relates to a $27.0 million gain on insurance recoveries related to casualty losses at South Street Seaport from Superstorm Sandy and $2.4 million related to the sale of the Redlands Promenade property.

Other income for the year ended December 31, 2013 includes a $12.2 million gain on insurance recoveries relating to South Street Seaport, an $8.5 million gain recognized on the sale of our Head Acquisition, LP interest, a $4.5 million favorable legal settlement relating to the British Petroleum oil spill in the Gulf of Mexico in 2010, a $1.0 million gain from the sale of Alameda Plaza, a $0.7 million gain on the sale of The Metropolitan Downtown Columbia (formerly known as Parcel D) into a joint venture and a $0.6 million gain from the sale of Rio West Mall.

Marketing and Advertising

Our Strategic Development, Operating Assets and Master Planned Community segments incur various marketing and advertising costs as part of their development, branding, leasing or sales initiatives. These costs include special events, broadcasts, direct mail and online digital and social media programs, and they are expensed as incurred.

Accounts Receivable

Accounts receivable includes tenant rents, tenant recoveries, other receivables, and straight‑line rent receivables.

Straight‑line rent receivables represent rental revenues recognized in excess of amounts currently due under lease agreements. Such amounts totaling $22.2 million as of December 31, 2015 and $13.5 million as of December 31, 2014, are included in Accounts receivable, net in our Consolidated Balance Sheets.

We record allowances against our receivables that we consider uncollectible. These allowances are reviewed periodically and are adjusted based on management’s estimate of receivables that will not be realized in subsequent periods. We also maintain an allowance for receivables arising from the straight‑lining of rents. Management exercises judgment in establishing these allowances and considers payment history, current credit status and if the tenant is currently occupying the space in developing these estimates. The allowance against our straight‑line rent receivable is based on historical experience with early lease terminations, as well as specific review of significant tenants and tenants that are having known financial difficulties.

The following table summarizes the changes in allowance for doubtful accounts against our accounts receivables:

(In thousands)	2015		2014		2013
Balance as of January 1	$	7,619	$	7,390	$	8,914
Provision for doubtful accounts		4,030		1,404		836
Write-offs		(7,243)		(1,175)		(2,360)
Balance as of December 31,	$	4,406	$	7,619	$	7,390

The significant increase in write-offs in the allowance for doubtful accounts in the year ended December 31, 2015 relate to uncollectible receivables from a tenant at an operating property that vacated its space.

Municipal Utility District Receivables

In Houston, Texas, certain development costs are reimbursable through the creation of Municipal Utility Districts (“MUDs”, also known as Water Control and Improvement Districts) receivables, which are separate political subdivisions authorized by Article 16, Section 59 of the Texas Constitution and governed by the Texas Commission on Environmental Quality (“TCEQ”). MUDs are formed to provide municipal water, waste water, drainage services, recreational facilities and roads to those areas where they are currently unavailable through the regular city services. Typically, the developer advances funds for the creation of the facilities, which must be designed, bid and constructed in accordance with the City of Houston’s and TCEQ requirements.

The developer initiates the MUD process by filing the applications for the formation of the MUD, and once the applications have been approved, a Board of Directors is elected for the MUD and given the authority to issue ad valorem tax bonds and the authority to tax residents. The MUD Board authorizes and approves all MUD development contracts and pay requests. MUD bond sale proceeds are used to reimburse the developer for its construction costs, including interest. MUD taxes are used to pay the debt service on the bonds and the operating expenses of the MUD. The Company estimates the costs it believes will be eligible for reimbursement as MUD receivables. Our MUD receivables are pledged as security to creditors under the debt facilities relating to our Bridgeland and The Woodlands MPCs. MUD receivables are shown net of an allowance of $0.9 million and $5.8 million for the years ending December 31, 2015 and 2014, in the accompanying Consolidated Balance Sheets. The significant decrease in the allowance for MUD receivables at December 31, 2015 as compared to December 31, 2014 relates to a large MUD reimbursement at The Woodlands MPC during 2015. The MUD receivable had previously been considered unrecoverable.

Notes Receivable

Notes receivable include amounts due from homebuilders primarily at our Summerlin Master Planned Community, and a note from General Growth Properties (“GGP”).  The GGP note had a balance of $0.2 million and $6.7 million as of December 31, 2015 and 2014, respectively. The GGP note is fully amortizing, carries an interest rate of 4.41%, and cash payments under the note were approximately $6.5 million per year through the end of 2015. Our Summerlin MPC Community held a $20.2 million note from a national homebuilder relating to a 2014 land sale bearing interest at 0.39%, which matured in November 2015, and payment was received in full.

Also included in Notes receivable are notes receivable from various tenants, net of an allowance for uncollectible notes receivable. We estimate the allowance for uncollectible notes receivable based on our assessment of expected receipts of future cash flows with consideration given to any collateral securing the respective note.

Income Taxes

Deferred income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates currently in effect. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards.

A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. An increase or decrease in the valuation allowance that results from a change in circumstances, and which causes a change in our judgment about the realizability of the related deferred tax asset, is included in the deferred tax provision. There are events or circumstances that could occur in the future that could limit the benefit of deferred tax assets. In addition, we recognize and report interest and penalties, if necessary, related to uncertain tax positions within our provision for income tax expense.

In our Master Planned Communities, gains with respect to land sales whether for commercial use or for single family residences are reported for tax purposes either on the modified accrual method or on the percentage-of-completion method. Under the percentage-of-completion method, a gain is recognized for tax purposes as costs are incurred in satisfaction of contractual obligations. The method used for determining the percentage complete for income tax purposes is different than that used for financial statement purposes.

Deferred Expenses

Deferred expenses consist principally of leasing costs. Deferred leasing costs are amortized to amortization expense using the straight‑line method over periods that approximate the related lease terms. Deferred expenses in our Consolidated Balance Sheets are shown net of accumulated amortization of $10.8 million and $6.4 million as of December 31, 2015 and 2014, respectively.

Deferred financing fees are amortized to interest expense over the terms of the respective financing agreements using the effective interest method (or other methods which approximate the effective interest method).

In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs.” This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The standard requires a retrospective application to reflect the period-specific effects of applying the new guidance. We adopted this guidance on December 31, 2015.  The adoption of this ASU only impacted the presentation of deferred financing costs previously included in Deferred expenses, net, now included in Mortgage, notes, and loans payable on the Consolidated Balance Sheets and as of December 31, 2014,  $14.7 million in Deferred financing costs, net have been reclassified from Deferred expenses, net to Mortgages, notes and loans payable.

Stock Plans

We apply the provisions of ASC 718 Stock Compensation (“ASC 718”) in our accounting and reporting for stock‑based compensation. ASC 718 requires all share‑based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. All unvested options outstanding under our option plans have grant prices equal to the market price of the Company’s stock on the dates of grant. Compensation cost for restricted stock is determined based on the fair market value of the Company’s stock at the date of grant.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, ‘‘Leases.’’ ASU 2016-02, codified in ASC 842, amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the impact of adopting the new leases standard on our Consolidated Financial Statements.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810) - Amendments to the Consolidation Analysis.” The standard eliminates the deferral of FAS 167, which allowed reporting entities with interests in certain investment funds to follow previous consolidation guidance in FIN 46(R), per ASC 810-10-65-2(a). The standard modifies whether: (1) fees paid to a decision maker or service provider represent a variable interest; (2) a limited partnership or similar entity has the characteristics of a VIE; and (3) a reporting entity is the primary beneficiary of a VIE. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 for public companies, and early adoption is permitted. We do not expect adoption to have a material impact on our Consolidated Financial Statements.

In May 2014, the FASB and the International Accounting Standards Board (“IASB”) issued ASU 2014-09 “Revenues from Contracts with Customers (Topic 606).”The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The effective date of this standard will be for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted after December 15, 2016. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in the ASU. We are currently evaluating the new guidance to determine the impact it may have on our Consolidated Financial Statements.

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15, “Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” Before the issuance of this ASU, there was no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. This guidance is expected to reduce the diversity in the timing and content of footnote disclosures. This ASU requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards as specified in the guidance. This ASU becomes effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter. Early adoption is permitted. We do not expect the adoption of this ASU to have an impact on our Consolidated Financial Statements.

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. The new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. We adopted this guidance and there has been no impact from the adoption on our historical Consolidated Financial Statements because we have not had any discontinued operations.

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EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2015

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 2   EARNINGS PER SHARE

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted‑average number of common shares outstanding. Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of all potentially dilutive common shares. The dilutive effect of options and nonvested stock issued under stock‑based compensation plans is computed using the “treasury stock” method. The dilutive effect of the Sponsors Warrants and Management Warrants is computed using the if‑converted method. Gains associated with the changes in the fair value of the Sponsors Warrants and Management Warrants are excluded from the numerator in computing diluted earnings per share because inclusion of such gains in the computation would be anti‑dilutive.

Information related to our EPS calculations is summarized as follows:

	Year ended December 31,
(In thousands, except per share amounts)	2015		2014		2013
Basic EPS:
Numerator:
Net income (loss)	$	126,719	$	(23,520)	$	(73,695)
Net income attributable to noncontrolling interests		—		(11)		(95)
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)
Denominator:
Weighted average basic common shares outstanding		39,470		39,464		39,449
Diluted EPS:
Numerator:
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)
Less: Warrant liabilitygain		(58,320)		—		—
Adjusted net income (loss) attributable to common stockholders	$	68,399	$	(23,531)	$	(73,790)
Denominator:
Weighted average basic common shares outstanding		39,470		39,464		39,449
Restricted stock and stock options		411		—		—
Warrants		2,873		—		—
Weighted average diluted common shares outstanding		42,754		39,464		39,449
Basic income (loss) per share:	$	3.21	$	(0.60)	$	(1.87)
Diluted income (loss) per share:	$	1.60	$	(0.60)	$	(1.87)

The diluted EPS computation as of December 31, 2015 excludes 141,776 stock options as their inclusion would have been anti‑dilutive.

The diluted EPS computation as of December 31, 2014 excludes 1,046,940 stock options, 172,690 shares of restricted stock, 1,916,667 shares of common stock underlying the Sponsor Warrants and 2,862,687 shares of common stock underlying the Management Warrants because their inclusion would have been anti‑dilutive.

The diluted EPS computation as of December 31, 2013 excludes 965,440 stock options, 122,334 shares of restricted stock, 1,916,667 shares of common stock underlying the Sponsor Warrants, and 2,862,687 shares of common stock underlying the Management Warrants because their inclusion would have been anti‑dilutive.

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SPONSORS AND MANAGEMENT WARRANTS

12 Months Ended

Dec. 31, 2015

SPONSORS AND MANAGEMENT WARRANTS

SPONSORS AND MANAGEMENT WARRANTS

NOTE 3  SPONSOR AND MANAGEMENT WARRANTS

On November 9, 2010, we issued warrants to purchase shares of our common stock to certain of our sponsors (the “Sponsor Warrants”). The exercise price for the warrants of $50.00 per share and the number of shares of common stock underlying each warrant are subject to adjustment for future stock dividends, splits or reverse splits of our common stock or certain other events. The 1,916,667 of Sponsor Warrants outstanding are exercisable at any time and expire on November 9, 2017.

In November 2010 and February 2011, we entered into certain agreements (the “Management Warrants”) with David R. Weinreb, our Chief Executive Officer, Grant Herlitz, our President, and Andrew C. Richardson, our Chief Financial Officer, in each case prior tohis appointment tosuch position to purchase shares of our common stock. The Management Warrants represent 2,862,687 underlying shares, which may be adjusted pursuant to a net settlement option, and were issued pursuant to such agreements at fair value in exchange for a combined total of approximately $19.0 million in cash from such executives at the commencement of their respective employment. Mr. Weinreb and Mr. Herlitz’s warrants have exercise prices of $42.23 per share and Mr. Richardson’s warrants have an exercise price of $54.50 per share. Generally, the Management Warrants become exercisable in November 2016 and expire in February 2018.

As of December 31, 2015, the estimated $123.1 million fair value for the Sponsor Warrants representing warrants to purchase 1,916,667 shares and the estimated $184.7 million fair value for the Management Warrants representing warrants to purchase 2,862,687 shares are recorded as liabilities because the holders of these warrants could require us to settle such warrants in cash upon a change of control. The estimated fair values for the outstanding Sponsor Warrants and Management Warrants were $157.1 million and $209.0 million, respectively, as of December 31, 2014. The fair values are estimated using an option pricing model and Level 3 inputs due to the unavailability of comparable market data, as further discussed in Note 7 – Fair Value of Financial Instruments. Decreases and increases in the fair value of the Sponsor Warrants and the Management Warrants are recognized as warrant liability gains or losses, respectively, in the Consolidated Statements of Operations.

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ACQUISITIONS AND DISPOSITIONS

12 Months Ended

Dec. 31, 2015

ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS AND DISPOSITIONS

NOTE 4  ACQUISITIONS AND DISPOSITIONS

OnSeptember 4, 2015, we sold The Club atCarlton Woods, its 36-hole golf and country club in The Woodlands, for net cash proceeds of $25.1 million, and purchaser’s assumption of net liabilities of $4.0 million, resulting in a pre-tax gain of $29.1 million. The property was comprised of total assets of $20.9 million and total liabilities of $24.9 million. Most of the lots have been sold, and the sale of this asset has allowed us to redeploy capital to our development activities.

In the first quarter 2015, we acquired a 58,000 square foot commercial building and air rights with total residential and commercial development rights of 196,133 square feet for $91.4 million. The acquisitions, when combined with adjacent property acquisitions of $136.7 million made in 2014, create a 42,694 square foot lot with 817,784 square feet of available development rights. These properties are collectively referred to as the Seaport District Assemblage and are located in close proximity to our South Street Seaport property.

On December 12, 2014, as part of the settlement with GGP relating to the Tax Matters Agreement, we acquired from GGP six unencumbered office buildings consisting of 699,884 square feet of space located in downtown Columbia, Maryland valued at $130.0 million. The fair value approximated the agreed upon value and was allocated $79.2 million to buildings, $23.4 million to land, and $27.4 million to intangible lease assets consisting of $25.2 million for in-place leases, $3.8 million for above-market leases and $1.6 million for below-market leases. We incurred $1.5 million in acquisition costs, and these costs were included in other property operating costs. The office buildings, titled 10-60 Columbia Corporate Center, are included in our Operating Assets segment.

In 2014, we acquired 2,055 acres of undeveloped land located in Conroe, Texas for $98.5 million, which is included in The Woodlands Hills MPC. 

In October 2014, we acquired 85 South Street, an eight story 60,000 square foot multi-family property located two blocks south of Pier 17 and within the Seaport District for $20.1 million. The purchase price approximated fair value and was allocated $8.1 million to the building, $15.9 million to the land, and $(3.9) million for below-market leases. This multi-family apartment building is included in our Operating Assets segment.

In July 2014, we acquired 1701 Lake Robbins, a 12,376 square foot retail building located in The Woodlands for $5.7 million. The purchase price included the assumption of a mortgage of $4.6 million. The purchase price approximated fair value and was allocated $3.7 million to the building, $1.7 million to the land, and $0.2 million of intangible lease assets consisting of $0.3 million for in-place leases and $(0.1) million for below-market leases. This retail building is included in our Operating Assets segment.

In July 2014, we acquired 100% of the fee simple interest in the land underlying our 110 N. Wacker office building located in downtown Chicago, Illinois for $12.3 million.

On September 30, 2013, we sold the Rio West Mall, a 521,194 square foot shopping center on 50 acres of land, located in Gallup, New Mexico for $12.0 million. The sale includes our ground lease interest, all buildings, structures and improvements, machinery, equipment and furnishings, and all leases and security deposits. The pre‑tax gain recognized on the sale was $0.6 million.

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REAL ESTATE AND OTHER AFFILIATES

12 Months Ended

Dec. 31, 2015

REAL ESTATE AND OTHER AFFILIATES

REAL ESTATE AND OTHER AFFILIATES

NOTE 5 REAL ESTATE AND OTHER AFFILIATES

Our investment in real estate and other affiliates which are reported on the equity and cost methods are as follows:

	Economic/Legal Ownership				Carrying Value				Share of Earnings/Dividends
	December 31,		December 31,		December 31,		December 31,		Year Ended December 31,
($ in Thousands)	2015		2014		2015		2014		2015		2014		2013
Equity Method Investments
Master Planned Communities:
Discovery	—	(a)	—	(a)	$	12,052	$	—	$	—	$	—	$	N/A
Operating Assets:
Millennium Woodlands Phase II, LLC (b) (c)	81.43	%	81.43	%		—		1,023		(1,165)		(1,012)		—
Stewart Title	50.00	%	50.00	%		3,715		3,869		996		1,301		1,223
Clark County Las Vegas Stadium, LLC (c) (d)	50.00	%	50.00	%		11,050		10,548		152		(88)		(13)
The Metropolitan Downtown Columbia (e)	50.00	%	50.00	%		4,872		4,800		(13)		—		—
Woodlands Sarofim	20.00	%	20.00	%		2,588		2,595		166		175		180
Strategic Developments:
Circle T Ranch and Power Center	50.00	%	50.00	%		9,128		9,004		—		—		—
HHMK Development (c)	50.00	%	50.00	%		10		10		549		2,120		732
Millennium Woodlands Phase II, LLC (b) (c)	81.43	%	81.43	%		—		—		—		(279)		(74)
KR Holdings (c)	50.00	%	50.00	%		689		9,183		1,289		19,470		9,877
Parcel C (c)	50.00	%	50.00	%		7,070		8,737		—		—		—
Constellation (f)	50.00	%	50.00	%		2,685		—		—		—		N/A
						53,859		49,769		1,974		21,687		11,925
Cost method investments						3,952		3,917		1,747		1,649		2,503
Investment in Real Estate and Other Affiliates					$	57,811	$	53,686	$	3,721	$	23,336	$	14,428

N/A – Not applicable or not owned in the respective period.

(a) See discussion below for a description of the joint venture ownership structure.

(b) Millennium Woodlands Phase II, LLC was placed into service in the beginning of the third quarter 2014. The investment balance is in a deficit position, which is reported in Other liabilities. We expect to recover the deficit when the property reaches stabilized occupancy.

(c) Equity method variable interest entity (“VIE”).

(d) Formerly known as the Summerlin Las Vegas Baseball Club, LLC.

(e) The Metropolitan Downtown Columbia was placed into service in the first quarter 2015.

(f) Formerly known as Summerlin Apartments, LLC.

We are not the primary beneficiary of any of the VIEs listed above because we do not have the power to direct activities that most significantly impact the economic performance of such joint ventures and therefore we report our interests on the equity method. Our maximum exposure to loss as a result of these investments is limited to the aggregate carrying value of the investment as we have not provided any guarantees or otherwise made firm commitments to fund amounts on behalf of these VIEs. The aggregate carrying value of the unconsolidated VIEs was $21.5 million and $29.5 million as of December 31, 2015 and 2014, respectively, and was classified as Investment in Real Estate and Other Affiliates, in the Consolidated Balance Sheets. As of December 31, 2015 and 2014, approximately $109.6 million and $89.4 million, respectively, of indebtedness was secured by the properties owned by our Real Estate and Other Affiliates of which our share was approximately $64.8 million and $54.6 million as of December 31, 2015 and 2014, respectively, based upon our economic ownership. All of this indebtedness is without recourse to us.

The Company is the primary beneficiary of one VIE which is consolidated in the financial statements. The creditors of the consolidated VIE do not have recourse to the Company. As of December 31, 2015, the carrying values of the assets and liabilities associated with the operations of the consolidated VIE were $21.5 million and $1.1 million, respectively. As of December 31, 2014, the carrying values of the assets and liabilities associated with operations of the consolidated VIE were $21.1 million and $0.6 million, respectively. The assets of the VIE are restricted for use only by the particular VIE and are not available for our general operations.

Our recent significant investments in Real Estate Affiliates and the related accounting considerations are described below.

The Summit (formerly known as Discovery)

During the first quarter 2015, we formed DLV/HHPI Summerlin, LLC (“The Summit”) in a joint venture with Discovery Land Company (“Discovery”), and we contributed land with a book basis of $13.4 million and transferred Special Improvement District (“SID”) bonds related to such land with a carrying value of $1.3 million to the joint venture at the agreed upon capital contribution value of $125.4 million, or $226,000 per acre. Discovery is required to fund up to a maximum of $30.0 million cash as their capital contribution and we have no further capital obligations. The gains on the contributed land will be recognized in Equity in earnings from Real Estate and Other Affiliates as the joint venture sells lots. 

After receipt of our capital contribution and a 5.0% preferred return, Discovery is entitled to a 5.0% return on its capital contribution plus cash distributions by the joint venture until it has received two times its equity contribution. Any further cash distributions are shared 50/50. Discovery is the manager on the project, and development began in the second quarter 2015 with the first lot closings expected to begin by the first quarter 2016. Given the nature of the venture’s capital structure and the provisions for the liquidation of assets, our share of the venture’s income producing activities will be recognized based on the HLBV method. Please refer to Note 1 – Summary of Significant Accounting Policies for a description of the HLBV method.

ONE Ala Moana Condominium Project

KR Holdings is a 50/50 joint venture that was formed to develop a 206-unit luxury condominium tower at the ONE Ala Moana Center in Honolulu, Hawaii. As of December 31, 2015, all of the units available for sale have been sold and closed.

Parcel C

On October 4, 2013, we entered into a joint venture agreement with a local developer, Kettler, Inc. (“Kettler”), to construct a 437-unit, Class A apartment building with 31,000 square feet of ground floor retail on Parcel C in downtown Columbia, Maryland. We contributed approximately five acres of land having an approximate book value of $4.0 million to the joint venture. Our land was valued at $23.4 million or $53,500 per constructed unit. When the venture closes on the construction loan and upon completion of certain other conditions, including obtaining completed site development and construction plans and an approved project budget, our partner will be required to contribute cash to the venture.

Constellation (formerly known as Summerlin Apartments)

On January 24, 2014, we entered into a joint venture with a national multi-family real estate developer, The Calida Group (“Calida”), to construct, own and operate a 124-unit gated luxury apartment development in Summerlin. We and our partner each own 50% of the venture, and unanimous consent of the partners is required for all major decisions. This project represents the first residential development in Summerlin’s 400-acre downtown. In the first quarter 2015, we contributed a 4.5-acre parcel of land with an agreed value of $3.2 million in exchange for a 50% interest in the venture. Our partner contributed $3.2 million of cash for their 50% interest, acts as the development manager, funded all pre-development activities, obtained construction financing in the first quarter 2015 and provided guarantees required by the lender. In the fourth quarter 2015, we contributed an additional $1.0 million to the joint venture to fund development costs. Upon a sale of the property, we are entitled to 50% of the proceeds up to, and 100% of the proceeds in excess of, an amount determined by applying a 7.0% capitalization rate to net operating income. The venture commenced construction in February 2015 and will complete the project in phases, with the first units expected to become available for rent by second quarter 2016.

The Metropolitan Downtown Columbia

On October 27, 2011, we entered into a joint venture, Parcel D Development, LLC (“Parcel D”), with Kettler to construct a 380-unit Class A apartment building with ground floor retail space in downtown Columbia, Maryland. We and our partner each own50% of the venture, and unanimous consent of the partners is required for all major decisions. On July 11, 2013, the joint venture closed a$64.1 million construction loan, which is non‑recourse to us, and $63.1million is outstanding as of December 31, 2015. The loan bears interest at one-month LIBOR plus 2.40% and matures in July 2020. At loan closing, our land contribution was valued at $20.3 million, or $53,500 per unit, and Kettler contributed $13.3 million in cash, of which $7.0 million was distributed to us. Both we and Kettler made additional contributions of $3.1 million to the joint venture in accordance with the loan agreement, thus increasing our total capital account to $16.4 million.The venture substantially completed construction of The Metropolitan Downtown Columbia during the first quarter of 2015, and the property was reclassified into our Operating Assets segment.

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IMPAIRMENT

12 Months Ended

Dec. 31, 2015

IMPAIRMENT

IMPAIRMENT

NOTE 6  IMPAIRMENT

There were no impairment charges for the years ended December 31, 2015,  2014 and 2013. We frequently evaluate our strategic alternatives with respect to each of our properties and may revise our strategy from time to time, including our intent to hold the asset on a long-term basis or the timing of potential asset dispositions. For example, we may decide to sell property that is held for use, and the sale price may be less than the carrying amount. As a result, changes in strategy could result in impairment charges in future periods.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2015

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 7  FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC820, Fair Value Measurement, emphasizes that fair value is a market-based measurement that should be determined on the assumptions market participants would use in pricing an asset or liability. The standard establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring assets or liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the asset or liability. Assets or liabilities with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree or judgment used in measuring fair value.

The following table presents the fair value measurement hierarchy levels required under ASC 820 for each of our assets and liabilities that are measured at fair value on a recurring basis:

	December 31, 2015								December 31, 2014
	Fair Value Measurements Using								Fair Value Measurements Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	18	$	18	$	—	$	—	$	75,027	$	75,027	$	—	$	—
Liabilities:
Warrants		307,760		—		—		307,760		366,080		—		—		366,080
Interest rate swaps		4,217		—		4,217		—		3,144		—		3,144		—

Cash equivalents consist of registered money market mutual funds which invest in United States treasury securities that are valued at the net asset value of the underlying shares in the funds as of the close of business at the end of each period.

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates derived from observable market interest rate curves.

The valuation of warrants is based on an option pricing valuation model, utilizing inputs which are classified as Level 3 due to the unavailability of comparable market data.The following table presents a rollforward of the valuation of our Sponsor and Management Warrants:

		December 31,
(In thousands)	2015		2014		2013
Beginning of year	$	366,080	$	305,560	$	123,573
Warrant liability (gain) loss (a)		(58,320)		60,520		181,987
End of year	$	307,760	$	366,080	$	305,560

(a) All (gains) and losses during 2015, 2014, and 2013, were unrealized. Changes in the fair value of the Sponsor Warrants and the Management Warrants are recognized in net income as a warrant liability gain or loss.

The inputs to the valuation model include the fair value of stock related to the warrants, exercise price and term of the warrants, expected volatility, risk-free interest rate and dividend yield and, with respect to the Management Warrants, a discount for lack of marketability.An increase in expected volatility would increase the fair value of the liability, while a decrease in expected volatility would decrease the fair value of the liability. As the period of restriction lapses, the marketability discount reduces to zero and increases the fair value of the warrants.

The significant unobservable inputs used in the fair value measurement of our warrants, are as follows:

	UnobservableInputs
	Expected Volatility(a)	Marketability Discount(b)
December 31, 2015	27.4%	10.0% - 12.0%
December 31, 2014	24.5%	18.0% - 20.0%

(a) Based on our implied equity volatility.

(b) Represents the discount rate for lack of marketability of the Management Warrants which decreases as the current date approaches the dates of contractual expiration of the marketability restrictions.

The estimated fair values of our financial instruments that are not measured at fair value on a recurring basis are as follows:

		December 31, 2015				December 31, 2014
(In thousands)	FairValueHierarchy	Carrying Amount		Estimated FairValue		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1	$	445,283	$	445,283	$	485,424	$	485,424
Notes receivable, net (a)	Level 3		1,664		1,664		28,630		28,630
Liabilities:
Fixed-rate debt	Level 2	$	1,141,381	$	1,137,166	$	1,030,554	$	1,050,333
Variable-rate debt	Level 2		1,314,973		1,314,973		962,916		962,916

(a) Notes receivable is shown net of an allowance of $0.2 million and $0.5 million at December 31, 2015 and 2014, respectively.

Notes receivable are carried at net realizable value which approximates fair value. The estimated fair values are based on certain factors, such as current interest rates, terms of the note and credit worthiness of the borrower.

The fair value of fixed-rate debt in the table above, not including our Senior Notes (as defined in Note 8 – Mortgages, Notes and Loans Payable), was estimated based on a discounted future cash payment model, which includes risk premiums and a risk free rate derived from the current London Interbank Offered Rate (“LIBOR”) or U.S. Treasury obligation interest rates. The discount rates reflect our judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and credit quality would be if credit markets were operating efficiently and assuming that the debt is outstanding through maturity. The fair value of our Senior Notes, included in fixed rate debt in the table above, was estimated based upon its most recent trade price.

The carrying amounts for our variable-rate debt approximate fair value given that the interest rates are variable and adjust with current market rates for instruments with similar risks and maturities.

The carrying amounts of cash and cash equivalents and accounts receivable approximate fair value because of the short‑term maturity of these instruments.

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MORTGAGES, NOTES AND LOANS PAYABLE

12 Months Ended

Dec. 31, 2015

MORTGAGES, NOTES AND LOANS PAYABLE

MORTGAGES, NOTES AND LOANS PAYABLE

NOTE 8 MORTGAGES, NOTES AND LOANS PAYABLE

Mortgages, notes and loans payable are summarized as follows:

	December 31,
(In thousands)	2015		2014
Fixed-rate debt:
Collateralized mortgages, notes and loans payable	$	1,087,642	$	1,008,165
Special Improvement District bonds		53,739		22,389
Variable-rate debt:
Collateralized mortgages, notes and loans payable (a)		1,314,973		962,916
Deferred Financing Costs, net of accumulated    amortization of $12.7 million and $6.9 million, respectively		(12,392)		(14,663)
Total mortgages, notes and loans payable	$	2,443,962	$	1,978,807

(a) As more fully described below, $209.5 million of variable‑rate debt has been swapped to a fixed rate for the term of the related debt.

The following table presents our mortgages, notes, and loans payable by property:

					Maximum		Carrying Value
		Interest			Facility		December 31,		December 31,
($ In thousands)	Maturity (a)	Rate			Amount		2015		2014
Master Planned Communities
Bridgeland Land Loan	November 2022	4.60	%	(b)	$	65,000	$	40,072	$	15,874
Bridgeland Development Loan	N/A	5.00	%					—		10
Summerlin South SID Bonds - S108	December 2016	5.95	%					—		563
Summerlin South SID Bonds - S124	December 2019	5.95	%					159		236
Summerlin South SID Bonds - S128	December 2020	6.05	%					534		623
Summerlin South SID Bonds - S128C	December 2030	6.05	%					4,856		5,274
Summerlin South SID Bonds - S132	December 2020	6.00	%					1,676		2,936
Summerlin South SID Bonds - S151	June 2025	6.00	%					4,534		6,211
Summerlin South SID Bonds - S159	June 2035	6.00	%					9,020		—
Summerlin West SID Bonds - S808/S810	April 2031	6.00	%					1,047		2,805
Summerlin West SID Bonds - S812	October 2035	6.00	%					28,328		—
The Woodlands Master Credit Facility	August 2018	3.11	%	(b)		200,000		192,663		176,663
Master Planned Communities Total								282,889		211,195
Operating Assets
10-60 Columbia Corporate Centers	May 2022	2.76	%	(b)(d)				80,000		—
70 Columbia Corporate Center	July 2019	2.61	%	(b)				20,000		20,000
Columbia Regional Building	March 2018	2.36	%	(b)		23,008		22,188		20,513
Downtown Summerlin	July 2019	2.61	%	(b)		311,800		289,804		229,153
Downtown Summerlin SID Bonds - S108	December 2016	5.95	%					235		310
Downtown Summerlin SID Bonds - S128	December 2030	6.05	%					3,350		3,431
One Hughes Landing	December 2029	4.30	%					52,000		52,000
Two Hughes Landing	December 2030	4.20	%					48,000		19,992
1725-35 Hughes Landing Boulevard	June 2019	2.01	%	(b)		143,000		89,677		47,513
Hughes Landing Hotel	October 2020	2.86	%	(b)		37,100		20,064		—
Hughes Landing Retail	December 2018	2.31	%	(b)		36,575		28,726		17,424
1701 Lake Robbins	April 2017	5.81	%					4,600		4,600
Millennium Waterway Apartments	June 2022	3.75	%					55,584		55,584
110 N. Wacker	October 2019	5.21	%	(e)				26,481		29,000
9303 New Trails	December 2023	4.88	%					12,734		13,074
One Lake's Edge	November 2018	2.86	%	(b)		73,525		67,517		40,787
Outlet Collection at Riverwalk	October 2018	3.11	%	(b)		64,400		56,100		47,118
3831 Technology Forest Drive	March 2026	4.50	%					22,759		—
The Woodlands Resort & Conference Center	December 2020	3.11	%	(b)				85,000		76,027
Ward Village	September 2016	3.42	%	(b)(c)		250,000		238,716		238,716
20/25 Waterway Avenue	May 2022	4.79	%					14,112		14,330
3 Waterway Square	August 2028	3.94	%					52,000		52,000
4 Waterway Square	December 2023	4.88	%					37,293		38,289
Capital lease obligations	various	3.60	%					52		135
Operating Assets Total								1,326,992		1,019,996
Strategic Developments
HHC 242 Self Storage Facility	October 2021	2.96	%	(b)		6,658		—		—
Lakeland Village Center	May 2020	2.71	%	(b)		14,000		—		—
Three Hughes Landing	December 2019	2.71	%	(b)		65,455		23,268		—
Waiea and Anaha Condominiums	November 2019	7.11	%	(b)		600,000		27,817		—
Waterway Square Hotel	August 2019	3.01	%	(b)		69,300		33,361		—
Strategic Developments Total								84,446		—
Other Corporate Financing Arrangements	June 2018	3.00	%					18,794		19,968
Senior Notes	October 2021	6.88	%					750,000		750,000
Unamortized underwriting fees								(6,767)		(7,689)
Deferred Financing Costs, net of accumulated amortization of $12.7 million and $6.9 million, respectively							(12,392)			(14,663)
Total mortgages, notes, and loans payable							$	2,443,962	$	1,978,807

(a) Maturity date includes any extension periods that can be exercised at our option and are subject to customary extension terms such as minimum debt service coverage, minimum occupancy levels and other performance criteria.

(b) The interest rate presented is based on the one month LIBOR rate which was 0.36% at December 31, 2015.

(c) $143.0 million of the outstanding principal balance is swapped to a 3.81% fixed rate to maturity. As of December 31, 2015, there is no undrawn availability on this facility.

(d) $40.0 million of the outstanding principal balance is swapped to a 3.41% fixed rate to maturity.

(e) The $26.5 million outstanding principal balance is swapped to a 5.21% fixed rate to maturity.

The weighted average interest rate on our mortgages, notes and loans payable, excluding interest rate hedges, was 4.44% and 4.61% as of December 31, 2015 and 2014, respectively.

All of the mortgage debt is secured by the individual properties as listed in the table above and is non-recourse to HHC, except for:

(i) $750.0 million of Senior Notes;

(ii) $311.8 million financing for the Downtown Summerlin development with an initial maximum recourse of 35.0% assuming the loan is fully drawn, which will reduce to 15.0% upon completion of the project and achievement of a 1.15:1.0 debt service coverage ratio.  The recourse further reduces to 10% upon achievement of a 1.25:1.0 debt service coverage ratio, a 90% occupancy level, and average tenant sales of at least $500.00 per net rentable square foot;

(iii) $64.4 million of construction financing for the Outlet Collection at Riverwalk with an initial maximum recourse of 50%, which will be reduced to 25.0% upon completion of the project and the achievement of an 11.0% debt yield and a minimum level of tenant sales per square foot for twelve months;

(iv) $20.4 million of Other Corporate Financing Arrangements; and

(v) $7.0 million parent guarantee associated with the 110 N. Wacker mortgage.

The Woodlands Master Credit Facility and The Woodlands Resort & Conference Center loans are recourse to the entities that directly own The Woodlands operations. Certain of our loans contain provisions which grant the lender a security interest in the operating cash flow of the property that represents the collateral for the loan. Such provisions are not expected to impact our operations in 2016. Certain mortgage notes may be prepaid, but may be subject to a prepayment penalty equal to a yield-maintenance premium, defeasance, or a percentage of the loan balance. As of December 31, 2015, land, buildings and equipment and developments with a cost basis of $2.3 billion have been pledged as collateral for our mortgages, notes and loans payable.

The following table summarizes the contractual obligations relating to our mortgages, notes and loans payable as of December 31, 2015 based on final maturity dates:

	Mortgages,notes
	and loans payable
(In thousands)	principal payments
2016	$	272,269
2017		38,464
2018		342,670
2019		504,135
2020		111,488
Thereafter		1,187,328
Total	$	2,456,354

As of December 31, 2015, we were in compliance with all of the financial covenants related to our debt agreements.

Master Planned Communities

The Woodlands Master Credit Facility was amended and restated on July 31, 2015 to a $200.0 million maximum facility amount consisting of a $100.0 million term loan and a $100.0 million revolver (together, the “TWL Facility”). The TWL Facility bears interest at one-month LIBOR plus 2.75% and has an August 2016 initial maturity date with two,  one–year extension options. The extension options require a reduction of the total commitment to $175.0 million for the first extension and semi-annual principal payments of $25.0 million during the second extension period. The TWL Facility also contains certain covenants that, among other things, require the maintenance of specified financial ratios, limit the incurrence of additional recourse indebtedness at The Woodlands, and limit distributions from The Woodlands to us based on a loan‑to‑value test. The amendment also modified certain covenants to allow for more construction loan guarantees by the entities that directly own The Woodlands than would otherwise have been permitted by the prior facility. As of December 31, 2015, there was$7.3 million remaining to be drawn based on the collateral value underlying the facility.

On November 9, 2015, we refinanced $15.2 million of existing debt related to both the Bridgeland Land Loan and the Bridgeland Development Loan. The refinanced loan bears interest at one-month LIBOR plus 3.15%, with a 4.60% floor rate, and has an initial maturity date of November 2020 with two,  one-year extension options. The proceeds are intended to provide working capital at Bridgeland for development efforts to meet the demand of homebuilders for finished lots in the community.

The Summerlin Master Planned Community uses SID bonds to finance certain common infrastructure improvements. These bonds are issued by the municipalities and, although unrated, are secured by the assessments on the land. The majority of proceeds from each bond issued is held in a construction escrow and disbursed to us as infrastructure projects are completed, inspected by the municipalities and approved for reimbursement. Accordingly, the SID bonds have been classified as debt, and the Summerlin Master Planned Community pays the debt service on the bonds semi‑annually. As Summerlin sells land, the buyers assume a proportionate share of the bond obligation at closing, and the residential sales contracts provide for the reimbursement of the principal amounts that we previously paid with respect to such proportionate share of the bond. In 2015, $54.0 million in new SIDs were issued to finance our Summerlin MPC projects and are being held in a third-party escrow account. Subsequent to issuance, $16.7 million in bond obligations were assumed by buyers relating to 2015 and 2014 land sales.

Operating Assets

On December 30, 2015, we refinanced our $95.0 million construction financing for The Woodlands Resort & Conference Center with an $85.0 million mortgage. The loan bears interest at LIBOR plus 2.75% and has an initial maturity date of December 30, 2018, with two,  one-year extension options.

On November 24, 2015, we refinanced a$41.2 million construction financing and closed on a new $48.0 million loan for Two Hughes Landing. The loan bears fixed interest at 4.20% and matures in  December 2030.  

On May 6, 2015, we closed on an $80.0 million non-recourse mortgage financing for the 10-60 Columbia Corporate Center office buildings. The loan bears interest at LIBOR plus 1.75% and has an initial maturity date of May 6, 2020, with two,  one-year extension options.

On March 25, 2015, we closed on a $23.0 million non-recourse mortgage financing for 3831 Technology Forest Drive. The loan bears fixed interest at 4.50% and matures on March 24, 2026.

On November 10, 2014, we closed on a refinanced$52.0 million loan for One Hughes Landing. The loan bears fixed interest at 4.30% and matures on December 1, 2029.

On October 3, 2014, we closed on a $37.1 million construction financing for our Hughes Landing Hotel. The loan bears interest at one-month LIBOR plus 2.50%. The loan has an initial maturity of October 2018, with two,  one-year extension options.

On July 18, 2014, we assumed a $4.6 million non-recourse mortgage loan at 1701 Lake Robbins. The loan bears fixed interest at 5.81% and has a maturity date of April 2017.

On July 15, 2014, we closed a $311.8 million financing for the construction of Downtown Summerlin development bearing interest at one-month LIBOR plus 2.25%. The loan has an initial maturity date of July 15, 2017, with two,  one-year extension options. The loan has an initial maximum recourse of 35.0% assuming the loan is fully drawn, which will reduce to 15.0% upon completion of the project and achievement of a 1.15:1.0 debt service coverage ratio.  The recourse further reduces to 10% upon achievement of a 1.25:1.0 debt service coverage ratio, a 90% occupancy level, and average tenant sales of at least $500.00 per net rentable square foot. Upon completion of the project and achievement of a 1.25x debt service coverage ratio, 90.0% occupancy and a minimum level of tenant sales per square foot for 12 months, the recourse amount will decrease to 10.0% of the outstanding principal. Due to the recent opening, we have not met these criteria.

On June 30, 2014, we closed on a $143.0 million non-recourse construction financing for 1725 & 1735 Hughes Landing Boulevard bearing interest at one-month LIBOR plus 1.65%. The loan has an initial maturity date of June 30, 2018, with a one-year extension option.

On April 15, 2014, we paid $17.0 million cash in full satisfaction of the $16.0 million participating loan that we assumed as part of the acquisition of 70 Columbia Corporate Center(“70 CCC”) in August 2012. The non-recourse, interest only promissory note was due to mature on August 31, 2017, and included a participation right to the lender for 30.0% of the appreciation in the market value of the property after our 10.0% cumulative preferred return and repayment of the outstanding debt and our contributed equity. The final payment included approximately $0.7 million for this participation right based upon the appraised value of the property. On June 27, 2014, we closed on a new $20.0 million loan for 70 CCC  that bears interest at one-month LIBOR plus 2.25% and has an initial maturity date of July 2017 with two,  one-year extension options.

On December 20, 2013, we closed on a $36.6 million non‑recourse loan for the construction of Hughes Landing Retail, a 123,000 square foot retail component of Hughes Landing bearing interest at one-month LIBOR plus 1.95%. The loan has an initial maturity date of December 20, 2016, with two,  one–year extension options.

On November 25, 2013, we closed on a $73.5 million non‑recourse loan for the construction of an eight‑story, Class A, multi‑family project within Hughes Landing called One Lakes Edge. The loan bears interest at one-month LIBOR plus 2.50% with an initial maturity date of November 25, 2016, with two,  one–year extension options.

On October 24, 2013, we closed on a $64.4 million partial recourse construction loan for the Outlet Collection at Riverwalk. The loan bears interest at one-month LIBOR plus 2.75%, with an initial maturity date of October 24, 2016 with two,  one–year extension options. The initial recourse amount of 50.0% will be reduced to 25.0% upon completion of the project and the achievement of an 11.0% debt yield and a minimum level of tenant sales per square foot for 12 months. Due to the recent opening, we have not met these criteria.

On August 2, 2013, we refinanced the existing $43.3 million construction loan on 3 Waterway Square, an 11-story, 232,000 square foot office building in The Woodlands, with a non-recourse first mortgage financing totaling $52.0 million. The loan bears interest at 3.94% and matures on August 11, 2028.

On March 15, 2013, we closed on a non‑recourse financing totaling $23.0 million for the redevelopment of the Columbia Regional Building, a retail building located in Columbia, Maryland. The loan bears interest at one-month LIBOR plus 2.00%. The loan matures on March 15, 2016, and has two,  one–year extension options.

Strategic Developments

On February 25, 2016,we closed on a $49.9 million non-recourse construction loan for One Merriweather, bearing interest at one-month LIBOR plus 2.15% with an initial maturity date of February 25, 2020, with a one-year extension option.

On January 27, 2016, we closed on a $6.4 million non-recourse construction loan for the HHC 2978 Self-Storage Facility, bearing interest at one-month LIBOR plus 2.60% with an initial maturity date of January 2020, with twoone-year extension options.

On October 23, 2015, we closed on a $6.7 million non-recourse construction loan for the HHC 242 Self-Storage Facility, bearing interest at one-month LIBOR plus 2.60% with an initial maturity date of October 2019, with twoone-year extension options.

On May 15, 2015, we closed on a $14.0 million non-recourse construction loan for Lakeland Village Center, bearing interest at one-month LIBOR plus 2.35% with an initial maturity date of May 2018, with two one-year extension options.

On December 5, 2014, we closed on a $65.5 million non-recourse financing for the construction of Three Hughes Landing. The loan bears interest at one-month LIBOR plus 2.35%. The loan has an initial maturity date of December 5, 2017 with two,  one-year extension options.

On November 6, 2014, we closed on a $600.0 million non-recourse construction loan for the Waiea and Anaha Condominium towers bearing interest at one-month LIBOR plus 6.75%. The loan has an initial maturity date of November 6, 2017, with two,  one-year extension options.

On August 6, 2014, we closed on a $69.3 million non-recourse construction financing for the Waterway Hotel bearing interest at one-month LIBOR plus 2.65%. The loan has an initial maturity of August 2018, with a one-year extension option. The development will be a 302-room Westin-branded hotel that will be owned and managed by us.

Corporate

On October 2, 2013, we issued $750.0 million in aggregate principal amount of 6.875% Senior Notes due 2021 (the “Senior Notes”) and received approximately $741.3 million of net cash proceeds. Interest is payable semiannually, on April 1 and October 1 of each year starting in April 2014. At any time prior to October 1, 2016, we may redeem up to 35% of the Senior Notes at a price equal to 106.875% using the proceeds from equity offerings. We may redeem all or part of the Senior Notes at any time on or after October 1, 2016 with a declining call premium thereafter to maturity. The Senior Notes contain customary terms and covenants for non‑investment grade senior notes and have no maintenance covenants.

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INCOME TAXES

12 Months Ended

Dec. 31, 2015

INCOME TAXES

INCOME TAXES

NOTE 9  INCOME TAXES

The provision for (benefit from) income taxes for the years ended December 31, 2015,  2014 and 2013 were as follows:

(In thousands)	2015		2014		2013
Current	$	2,849	$	(2,050)	$	1,218
Deferred		21,152		65,010		8,352
Total	$	24,001	$	62,960	$	9,570

Income tax expense is computed by applying the Federal corporate tax rate for the years ended December 31, 2015,  2014 and 2013 and is reconciled to the provision for income taxes as follows:

(In thousands)	2015		2014		2013
Tax at statutory rate on earnings from continuing operations before income taxes	$	52,751	$	13,800	$	(22,477)
Increase (decrease) in valuation allowance, net		1,742		5,602		(88,826)
State income taxes, net of Federal income tax benefit		267		1,320		1,562
Tax at statutory rate on REIT entity earnings not subject to Federal income taxes		-		(512)		(2,648)
Tax (benefit) expense from change in rates and other permanent differences		(7,361)		(12,193)		4,339
Set up deferred tax liability related to captive REIT		-		(1,068)		53,973
Non-deductible warrant liability (gain) loss		(20,412)		21,182		63,695
Non-taxable interest income		-		18,373		(363)
Uncertain tax position (benefit) expense, excluding interest		(2,483)		2,395		(1,034)
Uncertain tax position interest, net of Federal income tax benefit		(503)		14,061		1,349
Income tax expense	$	24,001	$	62,960	$	9,570

Realization of a deferred tax benefit is dependent upon generating sufficient taxable income in future periods. Our net operating loss carry‑forwards are currently scheduled to expire in subsequent years through 2035. Some of the net operating loss carry‑forward amounts are subject to the separate return limitation year rules (“SRLY”). It is possible that we could, in the future, experience a change in control pursuant to Section 382 that could put limits on the benefit of deferred tax assets. On February 27, 2012, we entered into a Section 382 Rights Agreement, with a three-year term, to protect us from such an event and protect our deferred tax assets. On February 26, 2015, the Board of Directors extended the term of the Section 382 Rights Agreement to March 14, 2018 and our stockholders approved the terms on May 21, 2015.

As of December 31, 2015, the amounts and expiration dates of operating loss and tax credit carryforwards for tax purposes are as follows:

			Expiration
(In thousands)	Amount		Date
Net operating loss carryforwards - Federal	$	52,571	2024-2035
Net operating loss carryforwards - State		175,346	2016-2035
Tax credit carryforwards - Federal AMT		3,667	n/a

As of December 31, 2015 and 2014, we had gross deferred tax assets totaling $327.4 million and $335.7 million, and gross deferred tax liabilities of $396.6 million and $379.7 million, respectively. We have established a valuation allowance in the amount of $20.0 million and $18.2 million as of December 31, 2015 and 2014, respectively, against certain deferred tax assets for which it is more likely than not that such deferred tax assets will not be realized.

Deferred tax assets related to our investment in Head Acquisition, LP in the amount of $76.4 million that we previously believed had only a remote possibility of realization were recorded in 2012 due to tax planning that made realization possible.  Due to the uncertainty that the tax planning would result in the realization of the deferred tax asset we established a 100% valuation allowance.  During the fourth quarter 2013, the tax planning was successfully implemented and over 90% of the deferred tax asset was realized and the remaining amount will likely be realized in future years; therefore, we determined that it was appropriate to release the entire valuation allowance in 2013.

The tax effects of temporary differences and carry‑forwards included in the net deferred tax liabilities at December 31, 2015 and 2014 are summarized as follows:

(In thousands)	2015		2014
Deferred tax assets:
Operating and Strategic Development properties, primarily differences in basis of assets and liabilities	$	213,090	$	201,303
Interest deduction carryforwards		79,781		80,520
Operating loss and tax credit carryforwards		34,499		53,851
Total deferred tax assets		327,370		335,674
Valuation allowance		(19,960)		(18,218)
Total net deferred tax assets	$	307,410	$	317,456
Deferred tax liabilities:
Property associated with Master Planned Communities,  primarily differences in the tax basis of land assets and treatment  of interest and other costs	$	(218,842)	$	(212,093)
Operating and Strategic Development properties, primarily differences in basis of assets and liabilities		(42,860)		(47,355)
Deferred income		(134,929)		(120,213)
Total deferred tax liabilities		(396,631)		(379,661)
Net deferred tax liabilities	$	(89,221)	$	(62,205)

The deferred tax liability associated with the Master Planned Communities is largely attributable to the difference between the basis and value determined as of the date of the acquisition by our predecessors in 2004 adjusted for sales that have occurred since that time. The cash cost related to this deferred tax liability is dependent upon the sales price of future land sales and the method of accounting used for income tax purposes. The deferred tax liability related to deferred income is the difference between the income tax method of accounting and the financial statement method of accounting for prior sales of land in our Master Planned Communities.

One of our consolidated entities, Victoria Ward, Limited, was formerly taxed as a REIT.  Consequently, deferred taxes were not recorded on book and tax basis differences of Victoria Ward, Limited as it was believed these differences would ultimately be realized with no taxes due. In connection with the planned condominium development of Victoria Ward, the Company decided to revoke its REIT election and consequently, the Company believed that the book and tax basis differences in the land and buildings of Victoria Ward, Limited would be realized after such time REIT status is revoked and would then be taxed at the applicable corporate tax rates. As a result of these events, deferred tax liabilities of $46.9 million were recorded in 2014 due to the excess book over tax basis relating to land and buildings. As planned, the Company revoked its REIT election effective January 1, 2015.

Although we believe our tax returns are correct, the final determination of tax examinations and any related litigation could be different than what was reported on the returns. In our opinion, we have made adequate tax provisions for years subject to examination. Generally, we are currently open to audit under the statute of limitations by the Internal Revenue Service as well as state taxing authorities for the years ended December 31, 2009 through 2014.

Two of our subsidiaries were involved in a dispute with the IRS relating to years in which those subsidiaries were owned by GGP, and in connection therewith, GGP provided us with an indemnity against certain potential tax liabilities. Pursuant to the Tax Matters Agreement with GGP, GGP had indemnified us from and against 93.75% of any and all losses, claims, damages, liabilities and reasonable expenses to which we become subject (the “Tax Indemnity”), in each case solely to the extent directly attributable to certain taxes related to sales of certain assets in our Master Planned Communities segment prior to March 31, 2010 (“MPC Taxes”), in an amount up to $303.8 million, plus interest and penalties related to these amounts (the “Indemnity Cap”) so long as GGP controlled the action in the United States Tax Court (the “Tax Court”) related to the dispute with the IRS.

On May 6, 2011, GGP filed Tax Court petitions on behalf of the two former REIT subsidiaries of GGP seeking a redetermination of federal income tax for the years 2007 and 2008.  The petitions sought to overturn determinations by the IRS that the taxpayers were liable for combined deficiencies totaling $144.1 million.  The case was heard by the Tax Court in November 2012 and filed their ruling in favor of the IRS on June 2, 2014.  On December 15, 2014, the Company paid the MPC Taxes and filed an appeal of the decision to the Fifth Circuit Court of Appeals.  The appeal sought to overturn the decision and allow the Company to continue to use its method of tax accounting for the sale of assets in the Company’s Master Planned Communities Segment.  On October 27, 2015 the Court of Appeals upheld the Tax Court ruling, consequently we are required to change our method of tax accounting for certain transactions, which shall affect the timing of our future tax payments.

In December 2014, we entered into a tax indemnity and mutual release agreement with GGP (the “Settlement Agreement”) pursuant to which, in consideration of the full satisfaction of GGP’s obligation for reimbursement of taxes related to certain assets in our Master Planned Communities segment prior to March 31, 2010, and interest, GGP (i) made a cash payment to us in the amount of $138.0 million and (ii) conveyed to us fee simple interest in six office properties and related parking garages located in Columbia, Maryland, known as 10-60 Columbia Corporate Center, for an agreed upon total value of $130.0 million.  Under the Settlement Agreement, the Company controlled the Tax Matter, including the right to decide whether to further appeal the decision.

As a result of the settlement, we recorded a net $74.0 million non-cash charge representing the difference between the $268.0 million value of the consideration received from GGP and the receivable recorded on our books.  When we were spun-off from GGP in 2010, we recognized a receivable from GGP equal to the amount of the indemnity cap. However, the Tax Matters Agreement stipulated that a certain tax asset on our books related to deferred interest deductions be used to reduce GGP’s indemnity obligation to us, when utilized in our tax returns.  As a result, we had reduced the indemnity receivable as we utilized the tax asset. Going forward, we now will receive 100% of the benefit of the tax asset, which totaled $81.5 million and $85.1 million before netting against an unrecognized tax benefit per ASU 2013-11 (described below), at December 31, 2015 and 2014, respectively.

We apply the generally accepted accounting principle related to accounting for uncertainty in income taxes, which prescribes a recognition threshold that a tax position is required to meet before recognition in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.

In 2014, we adopted the guidance in ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The impact of adoption on the financial statements in 2014 was a reclassification of $39.0 million between Deferred tax assets and Uncertain tax position liability and $2.5 million between Income tax receivable and Uncertain tax position liability.

We recognize and report interest and penalties, if applicable, within our provision for income tax expense. We recognized potential interest expense related to the unrecognized tax benefits of $0.1 million, $21.6 million and $2.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. At December 31, 2015, we had total unrecognized tax benefits of $36.5 million, excluding interest of $0.3 million, of which none would impact our effective tax rate. At December 31, 2014 and 2013, we had total unrecognized tax benefits of $184.2 million and $90.5 million, respectively, excluding interest, of which none would impact our effective tax rate.  A reconciliation of the change in our unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 is as follows:

(In thousands)	2015		2014		2013
Unrecognized tax benefits, opening balance	$	184,200	$	90,532	$	95,917
Gross increases - tax positions in prior period		-		93,668		9,162
Gross decreases - tax positions in prior periods		(147,676)		-		(14,547)
Unrecognized tax benefits, ending balance	$	36,524	$	184,200	$	90,532

Periodically we make payments to taxing jurisdictions which reduce our uncertain tax benefits but are not included in the reconciliation above, as the position is not yet settled. The amount of such payments that reduced our uncertain tax benefit was zero at December 31, 2015, $144.1 million at December 31, 2014 and zero at December 31, 2013. During 2015, the Tax Court ruling regarding MPC Taxes was upheld by the appellate court and we do not intend to further challenge the position, resulting in a $144.1 million reduction to our unrecognized tax benefit in the reconciliation above.

Based on our assessment of the expected outcome of existing examinations or examinations that may commence, or as a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits, excluding accrued interest, for tax positions taken regarding previously filed tax returns will materially change from those recorded at December 31, 2015. As of December 31, 2015, there is approximately $36.5 million of unrecognized tax benefits, excluding accrued interest, which due to the reasons above, could significantly increase or decrease during the next twelve months.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2015

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 10  COMMITMENTS AND CONTINGENCIES

In the normal course of business, from time to time, we are involved in legal proceedings relating to the ownership and operations of our properties. In management’s opinion, the liabilities, if any, that may ultimately result from such legal actions are not expected to have a material effect on our consolidated financial position, results of operations or liquidity.

We had outstanding letters of credit and surety bonds totaling $86.1 million and $53.7 million as of December 31, 2015 and 2014, respectively. These letters of credit and bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.

We lease land or buildings at certain properties from third parties. Rental payments are expensed as incurred and have, to the extent applicable, been straight‑lined over the term of the lease. Contractual rental expense, including participation rent, was $9.1 million, $7.3 million and $6.3 million for 2015,  2014 and 2013, respectively. The amortization of above and below‑market ground leases and straight‑line rents included in the contractual rent amount was not significant.

Our obligations for minimum rentals under non-cancelable operating leases are as follows:

											Subsequent
(In thousands)	2016		2017		2018		2019		2020		/ Other		Total
Ground lease and other leasing commitments	$	8,766	$	9,391	$	8,718	$	7,741	$	7,744	$	304,660	$	347,020

South Street Seaport

On June 27, 2013, the City of New York executed the amended and restated ground lease for South Street Seaport. The restated lease terms provide for annual fixed rent of $1.2 million starting July 1, 2013 with an expiration of December 30, 2072, including our options to extend. The rent escalates at 3.0% compounded annually. On July 1, 2048 the base rent will be adjusted to the higher of the fair market value or the then base rent. In addition to the annual base rent of $1.2 million, we are required to make annual payments of $210,000 as additional rent through the term of the lease. The additional rent escalates annually at the Consumer Price Index. We are entitled to a total rent credit of $1.5 million, to be taken monthly over a 30-month period. Simultaneously with the execution of the lease, we executed a completion guaranty for the redevelopment of Pier 17. The completion guaranty requires us to perform certain obligations under the lease, including the commencement of construction by October 1, 2013 with a scheduled completion date in 2017.

In the fourth quarter 2012, the historic area of South Street Seaport suffered damage due to flooding as a result of Superstorm Sandy. Reconstruction efforts are ongoing and the property is only partially operating. We have received $47.9 million in insurance proceeds through December 31, 2015 related to our claim and recognized Other income of $0.3 million and $24.6 for the years ended December 31, 2015 and 2014 for the amounts received during that period. While we continue to litigate our claim for additional insurance proceeds, there can be no assurance that we will recover any additional amounts.

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OTHER ASSETS AND LIABILITIES

12 Months Ended

Dec. 31, 2015

OTHER ASSETS AND LIABILITIES

OTHER ASSETS AND LIABILITIES

NOTE 11 OTHER ASSETS AND LIABILITIES

The following table summarizes the significant components of Prepaid expenses and other assets:

	December 31,		December 31,
(In thousands)	2015		2014
Condominium receivables (a)	$	191,037	$	—
Condominium deposits		55,749		151,592
Special Improvement District receivable		72,558		33,318
In-place leases		22,139		32,715
Below-market ground leases		19,325		19,663
Above-market tenant leases		3,581		4,656
Equipment, net of accumulated depreciation of $3.9 million and $2.4 million, respectively		18,772		20,284
Security and escrow deposits		17,599		9,829
Tenant incentives and other receivables		10,480		14,264
Prepaid expenses		8,474		9,196
Federal income tax receivable		11,972		8,629
Intangibles		4,045		3,593
Uncertain tax position asset		112		383
Other		5,347		2,014
	$	441,190	$	310,136

(a) Of the total Condominium receivables, $168.3 million are expected to be collected in 2016 and $22.7 million are expected to be collected in 2017.

The $131.1 million increase as of December 31, 2015 compared to 2014 primarily relates to a $191.0 million increase in condominium receivables, representing revenue recognized in excess of buyer deposits received for our Waiea and Anaha projects, partially offset by a net $95.8 million decrease in condominium deposits at Ward Village due to utilization of deposits for construction costs. Special improvement district receivables increased by $39.2 million primarily due to closing on new SID bonds in the fourth quarter 2015, the proceeds of which are held in escrow by a third party and will be used to reimburse us for a portion of the development costs incurred in our Summerlin MPC. Security and escrow deposits increased $7.8 million primarily due to escrowed funds relating to an investment in a hotel property. The $10.6 million decrease related to in-place leases is attributable to the amortization of intangibles primarily related to leases associated with the 10-60 Columbia Corporate Center assets acquired in December 2014.

The following table summarizes the significant components of Accounts payable and accrued expenses:

	December 31,		December 31,
(In thousands)	2015		2014
Construction payables	$	185,731	$	170,935
Deferred income		113,122		65,675
Condominium deposits		50,192		82,150
Accounts payable and accrued expenses		33,928		34,154
Accrued payroll and other employee liabilities		31,271		25,838
Tenant and other deposits		31,193		12,756
Accrued interest		16,504		14,791
Accrued real estate taxes		15,134		9,903
Interest rate swaps liability		4,217		3,144
Above-market ground leases		2,113		2,272
Membership deposits		—		21,023
Other		31,949		23,376
	$	515,354	$	466,017

Accounts payable and accrued expenses increased by $49.3 million. The increase reflects increases of $47.4 million of deferred income related to deferred rental income on our ExxonMobil lease in The Woodlands and two commercial land sales in our Bridgeland MPC, $18.4 million in tenant and other deposits primarily due to the rent credits at 1725-35 Hughes Landing Boulevard, and $14.8 million in construction payables primarily due to continued development activities at Ward Village, 1725-35 Hughes Landing Boulevard, South Street Seaport, Waterway Hotel, Hughes Landing Hotel and Three Hughes Landing. These increases are partially offset by a decrease of $32.0 million in the condominium deposit liability for the two towers at Ward Village due to the revenue recognized during the period, and a $21.0 million decrease in membership deposit liability resulting from the sale of The Club at Carlton Woods.

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INTANGIBLES

12 Months Ended

Dec. 31, 2015

INTANGIBLES

INTANGIBLES

NOTE 12 INTANGIBLES

The following table summarizes our intangible assets and liabilities:

	Gross		Accumulated		Net
	Asset		(Amortization)		Carrying
(In thousands)	(Liability)		/ Accretion		Amount
As of December 31, 2015
Tenant leases:
In-place value	$	39,129	$	(16,990)	$	22,139
Above-market		5,333		(1,752)		3,581
Below-market		(6,163)		1,350		(4,813)
Ground leases:
Above-market		(3,545)		1,432		(2,113)
Below-market		23,096		(3,771)		19,325
As of December 31, 2014
Tenant leases:
In-place value	$	39,634	$	(6,919)	$	32,715
Above-market		5,342		(686)		4,656
Below-market		(6,184)		296		(5,888)
Ground leases:
Above-market		(3,545)		1,273		(2,272)
Below-market		23,096		(3,433)		19,663

The tenant in-place, above-market and below-market lease intangible assets and the above-market and below-market ground lease intangible assets resulted from real estate acquisitions. The in‑place value and above-market value of tenant leases are included in Prepaid expenses and other assets in our Consolidated Balance Sheets and are amortized over periods that approximate the related lease terms. The above‑market and below‑market tenant and ground leases are included in Prepaid expenses and other assets and Accounts payable and accrued expenses, respectively, as detailed in Note 11 – Other Assets and Other Liabilities and are amortized over the remaining non‑cancelable terms of the respective leases.

Amortization/accretion of these intangible assets and liabilities decreased our pre-tax income (excluding the impact of noncontrolling interest and the provision for income taxes) by $10.3 million in 2015,  $1.8 million in 2014 and $3.1 million in 2013.

Future amortization/accretion is estimated to decrease pre-tax income (excluding the impact of noncontrolling interest and the provision for income taxes) by $8.4 million in 2016,  $8.0 million in 2017,  $5.0 million in 2018,  $0.8 million in 2019,  $0.4 million in 2020, and $15.5 million thereafter.

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

12 Months Ended

Dec. 31, 2015

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

NOTE 13 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We are exposed to interest rate risk related to our variable interest rate debt, and we manage this risk by utilizing interest rate derivatives. Our objectives in using interest rate derivatives are to add stability to interest costs by reducing our exposure to interest rate movements. To accomplish this objective, we use interest rate swaps and caps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company’s fixed‑rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up‑front premium.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the years ended December 31, 2015,  2014 and 2013, the ineffective portion recorded in earnings was insignificant.

As of December 31, 2015 and 2014, we had gross notional amounts of $209.5 million and $172.0 million respectively for three interest rate swaps and a $100.0 million interest rate cap. All derivative contracts held are designated as cash flow hedges of interest rate risk. The fair value of the interest rate cap derivative was insignificant.

In December 2015, we entered into three forward-starting, three-month LIBOR-indexed, pay-fixed, receive-variable, interest rate swap agreements with notional amounts totaling $250 million which will require fixed-rate interest payments ranging from 2.623% to 2.675% for ten years after the contracts are effective in December 2017. These contracts will be settled for cash on their effective dates based on their fair market values at that time. These transactions are designated as cash flow hedges of the variability of the anticipated underlying benchmark interest rate on an anticipated future long term financing of our Downtown Summerlin property.

If the interest rate swap agreements are terminated prior to their maturity, the amounts previously recorded in AOCI are recognized into earnings over the period that the hedged transaction impacts earnings. If the hedging relationship is discontinued because it is probable that the forecasted transaction will not occur according to the original strategy, any related amounts previously recorded in AOCI are recognized in earnings immediately.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on our variable‑rate debt. Over the next 12 months, we estimate that an additional $1.7 million will be reclassified to interest expense.

The table below presents the fair value of our derivative financial instruments which are included in accounts payable and accrued liabilities in the Consolidated Balance Sheets:

	As of December 31,
(In thousands)	2015		2014
Interest Rate Swaps Liability	$	4,217	$	3,144

The tables below present the effect of our derivative financial instruments on the Consolidated Statements of Operations for the years ended December 31, 2015 and 2014:

	Year Ended December 31,					Year Ended December 31,
	2015		2014		Location of Loss	2015		2014
(In thousands) Cash Flow Hedges	Amount of Loss Recognized in OCI		Amount of Loss Recognized in OCI		Reclassified from AOCI into Earnings	Amount of Loss Reclassified from AOCI into Earnings		Amount of Loss Reclassified from AOCI into Earnings
Interest Rate Swaps	$	(1,705)	$	(1,192)	Interest Expense	$	(1,745)	$	(2,195)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

12 Months Ended

Dec. 31, 2015

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 14 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizeschanges in Accumulated Other Comprehensive Income (Loss) by component (a):

Balance as of January 1, 2014	$	(8,222)
Other comprehensive income (loss) before reclassifications		(1,685)
Loss reclassified from accumulated other comprehensive loss to net income (loss)		2,195
Net current-period other comprehensive income (loss)		510
Balance as of December 31, 2014		(7,712)
Other comprehensive income (loss) before reclassifications		(1,922)
Loss reclassified from accumulated other comprehensive loss to net income (loss)		1,745
Net current-period other comprehensive income (loss)		(177)
Balance as of December 31, 2015	$	(7,889)

(a) All amounts are net of tax.

The following table summarizes the amounts reclassified out of AOCI:

		Amountsreclassified from Accumulated Other
		Comprehensive Income (Loss)
		For the Year Ended		For the Year Ended
AccumulatedOther Comprehensive Income (Loss) Components	Affected line item in the Statement of Operations	December 31, 2015		December 31, 2014
Gains and losses on cash flow hedges
Interest rate swap contracts	Interest expense	$	2,797	$	2,502
	Provision for income taxes		(1,052)		(307)
Total reclassifications for the period	Net of tax	$	1,745	$	2,195

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STOCK-BASED PLANS

12 Months Ended

Dec. 31, 2015

STOCK-BASED PLANS

STOCK-BASED PLANS

NOTE 15 STOCK BASED PLANS

On November 9, 2010 (the “Effective Date”), HHC adopted The Howard Hughes Corporation 2010 Equity Incentive Plan (the “Equity Plan”). Pursuant to the Equity Plan, 3,698,050 shares of HHC common stock were reserved for issuance. The Equity Plan provides for grants of options, stock appreciation rights, restricted stock, other stock‑based awards and performance‑based compensation (collectively, “the Awards”). Directors, employees and consultants of HHC and its subsidiaries and affiliates are eligible for awards. The Equity Plan is administered by the Compensation Committee of the Board of Directors (“Committee”). Option grant amounts are awarded by the Committee.

Compensation costs for share‑based payment arrangements totaled $9.8 million, $8.2million and $5.7 million, of which $2.5 million, $0 and $0 were capitalized for the years ending December 31, 2015,2014, and 2013, respectively. As of December 31, 2015, there were a maximum of 2,318,033 shares available for future grant under our various stock plans.

Stock Options

The following tables summarize stock option activity:

				Weighted Average		Aggregate
		Weighted Average		Remaining		Intrinsic
	Shares	Exercise Price		ContractualTerm		Value
				(Inyears)
Stock options outstanding at January 1, 2013	861,940	$	59.17
Granted	132,100		99.38
Exercised	-		-
Forfeited	(28,600)		62.40
Expired	-		-
Stock options outstanding at December 31, 2013	965,440	$	64.57
Granted	116,500		144.26
Exercised	-		-
Forfeited	(35,450)		87.45
Expired	-		-
Stock options outstanding at December 31, 2014	1,046,490	$	72.61
Granted	117,000		134.24
Exercised	-		-
Forfeited	(77,450)		103.84
Expired	-		-
Stock options outstanding at December 31, 2015	1,086,040	$	77.11	6.3	$	43,927,338
Stock options exercisable at December 31, 2015	3,400	$	60.03	4.2	$	180,646
Remaining unvested options outstanding and expected to vest	1,071,365	$	76.68	4.2	$	43,679,612

Information related to stock options outstanding as of December 31, 2015 is summarized below:

				Weighted Average
				Remaining
	Number	Weighted Average		Contractual Term	Number
Range of Exercise Prices	Outstanding	Exercise Price		(In years)	Exercisable
$46.49 - $55.82	48,500		$ 52.74	5.6	-
$57.77 - $60.33	569,400		57.94	5.2	3,400
$61.64 - $69.75	169,240		66.17	6.2	-
$81.80 - $110.50	107,400		98.35	7.4	-
$112.64 - $151.72	191,500		138.05	9.0	-
	1,086,040		$ 77.11	6.2	3,400

The fair value on the grant date and the significant assumptions used in the Black‑Scholes option‑pricing model are as follows:

	As of December 31,
	2015			2014			2013
Grant date fair value	$	44.45		$	48.65		$	28.04
Expected life of options (in years)		7.5			7.5			7.3
Risk-free interest rate		2.0	%		2.2	%		1.8	%
Expected volatility		26.1	%		25.7	%		22.0	%
Expected annual dividend per share		-			-			-

The computation of the expected volatility assumption used in the Black‑Scholes calculations is based on the median asset volatility of comparable companies as of each of the grant dates.

Generally, options granted vest over requisite service periods or on a graduated scale based on total shareholder returns, expire ten years after the grant date and generally do not become exercisable until their restrictions on exercise lapses after the five –year anniversary of the grant date. For options that vest based on shareholder returns, the grant date fair values are calculated using a Monte-Carlo approach which simulates our stock price on the corresponding vesting dates before applying the Black Scholes model.

The balance of unamortized stock option expense as of December 31, 2015 is $11.1 million, which is expected to be recognized over a weighted‑average period of 3.2 years. Net of amounts capitalized relating to our developments, $2.6 million, $4.3 million and $3.5 million for the years ended December 31, 2015, 2014 and 2013, respectively, of expense associated with stock options are included in General and administrative expense in the accompanying Consolidated Statements of Operations.

Restricted Stock

Restricted stock awards issued under the Equity Plan provide that shares awarded may not be sold or otherwise transferred until restrictions have lapsed as established by the Committee. In addition to the granting of restricted stock to certain members of management, we award restricted stock to our non‑employee directors as part of their annual retainer. The management awards vest over five years, and the restriction on the non‑employee director shares lapse on the date of our annual meeting of shareholders, or June 1st of the award year, whichever is earlier.

Generally, upon termination of employment or directorship, restricted stock units and restricted shares which have not vested are forfeited.

The following table summarizes restricted stock activity:

		Weighted Average
		Grant Date
	Shares	FairValue
Restricted stock outstanding at January 1, 2013	57,933	$	65.72
Granted	77,434		79.77
Vested	(13,033)		60.15
Restricted stock outstanding at December 31, 2013	122,334	$	75.21
Granted	61,750		126.38
Vested	(11,394)		97.72
Restricted stock outstanding at December 31, 2014	172,690	$	92.02
Granted	81,581	$	121.81
Vested	(7,546)		147.56
Forfeited	(4,169)		101.33
Restricted stock outstanding at December 31, 2015	242,556	$	100.15

The grant date fair value of the restricted stock is based on the closing sales price of our common stock on the grant date. For restricted stock awards that vest based on shareholder returns, the grant date fair values are calculated using a Monte-Carlo approach which simulates our stock price on the corresponding vesting dates before applying the Black Scholes model.

Net of amounts capitalized relating to our developments, we recognized compensation expense of $4.7 million, $3.9 million and $2.2 million for the years ended December 31, 2015, 2014 and 2013, respectively, included in General and Administrative expense related to restricted stock awards in the accompanying Consolidated Statements of Operations. The fair value of restricted stock that vested during 2015 was $1.1 million. The balance of unamortized restricted stock expense as of December 31, 2015 was $14.3 million, which is expected to be recognized over a weighted‑average period of 3.23 years.

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RENTALS UNDER OPERATING LEASES

12 Months Ended

Dec. 31, 2015

RENTALS UNDER OPERATING LEASES

RENTALS UNDER OPERATING LEASES

NOTE 16 RENTALS UNDER OPERATING LEASES

We receive rental income from the leasing of retail, office, multi-family and other space under operating leases. Such operating leases are with a variety of tenants. The minimum future rentals based on operating leases of our consolidated properties held as of December 31, 2015 are as follows:

	Total
	Minimum
Year	Rent (In thousands)
2016	$	146,983
2017		139,518
2018		131,145
2019		124,208
2020		104,295
Subsequent		477,247

Minimum future rentals exclude amounts which are payable by certain tenants based upon a percentage of their gross sales or as reimbursement of operating expenses and amortization of above-market and below‑market tenant leases.

Percentage rent in lieu of fixed minimum rent recognized from tenants for the years ended December 31, 2015,  2014 and 2013 was $3.5 million, $2.9 million and $2.2 million, respectively.

Overage rent of approximately $3.6 million, $2.4 million, and $2.6 million for 2015,  2014 and 2013, respectively, are included in Other rental and property revenues in our Consolidated Statements of Operations.

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SEGMENTS

12 Months Ended

Dec. 31, 2015

SEGMENTS

SEGMENTS

NOTE 17 SEGMENTS

We have three business segments which offer different products and services. Our three segments are managed separately because each requires different operating strategies or management expertise and are reflective of management’s operating philosophies and methods. In addition, our segments or assets within such segments could change in the future as development of certain properties commences or other operational or management changes occur. We do not distinguish or group our combined operations on a geographic basis. Furthermore, all operations are within the United States. Our reportable segments are as follows:

· Master Planned Communities (“MPCs”) – includes the development and sale of land, in large‑scale, long‑term community development projects in and around Las Vegas, Nevada; Houston, Texas; and Columbia, Maryland.

· Operating Assets – includes retail, office, hospitality and multi-family properties along with other real estate investments. The Club at Carlton Woods was also included in Operating Assets until its sale on September 4, 2015. These assets are currently generating revenues, and are comprised of commercial real estate properties recently developed or acquired by us, and properties where we believe there is an opportunity to redevelop, reposition, or sell to improve segment performance or to recycle capital.

· Strategic Developments – includes our residential condominium and commercial property projects currently under development and all other properties held for development which have no substantial operations.

Our segments are managed separately, therefore we use different operating measures to assess operating results and allocate resources among the segments. The one common operating measure used to assess operating results for the business segments is Real Estate Property Earnings Before Taxes (“REP EBT”) which represents the operating revenues of the properties less property operating expenses and adjustments for interest, as further described below. We believe that REP EBT provides useful information about the operating performance of all of our properties.

REP EBT, as it relates to our business, is defined as net income (loss) excluding general and administrative expenses, corporate other income, corporate interest income, corporate interest and depreciation expense, provision for income taxes, warrant liability gain (loss), loss on settlement of tax indemnity receivable, and the change in tax indemnity receivable. We present REP EBT because we use this measure, among others, internally to assess the core operating performance of our assets. We also present this measure because we believe certain investors use it as a measure of a company’s historical operating performance and its ability to service and incur debt. We believe that the inclusion of certain adjustments to net income (loss) to calculate REP EBT is appropriate to provide additional information to investors.

Segment operating results are as follows:

	Year Ended December 31,
(In thousands)	2015		2014		2013
Master Planned Communities
Land sales	$	187,399	$	325,099	$	251,217
Builder price participation		26,846		20,908		9,356
Minimum rents		842		818		781
Other land revenues		14,778		16,470		13,416
Total revenues		229,865		363,295		274,770
Cost of sales – land		88,065		119,672		124,040
Land sales operations		34,443		31,932		30,826
Land sales real estate and business taxes		10,464		9,862		7,588
Provision for (recovery of) doubtful accounts		—		(11)		—
Depreciation and amortization		640		397		32
Interest income		(60)		(118)		(16)
Interest expense (*)		(18,053)		(19,620)		(18,678)
Total expenses		115,499		142,114		143,792
MPC EBT		114,366		221,181		130,978
Operating Assets
Minimum rents		149,064		95,807		80,124
Tenant recoveries		39,415		28,133		20,901
Hospitality revenues		45,374		37,921		39,201
Other rental and property revenues		25,453		24,429		20,360
Total revenues		259,306		186,290		160,586
Other property operating costs		68,078		62,752		61,146
Rental property real estate taxes		21,856		14,860		12,065
Rental property maintenance costs		10,236		8,592		7,552
Hospitality expenses		34,839		31,829		29,454
Provision for doubtful accounts		3,998		1,399		835
Demolition costs		2,675		6,712		2,078
Development-related marketing costs		9,747		9,770		3,462
Depreciation and amortization		89,075		49,272		31,427
Other income		(524)		—		—
Interest income		(37)		(151)		(135)
Interest expense		31,148		17,081		19,146
Equity in Earnings from Real Estate and Other Affiliates		(1,883)		(2,025)		(3,893)
Total expenses		269,208		200,091		163,137
Operating Assets EBT		(9,902)		(13,801)		(2,551)
Strategic Developments
Minimum rents		899		609		763
Tenant recoveries		127		220		167
Condominium rights and unit sales		305,284		83,565		32,969
Other land revenues		25		33		—
Other rental and property revenues		1,582		553		163
Total revenues		307,917		84,980		34,062
Condominium rights and unit cost of sales		191,606		49,995		16,572
Other property operating costs		4,673		4,282		5,547
Real estate taxes		2,282		2,547		2,226
Rental property maintenance costs		476		543		531
Provision for doubtful accounts		32		16		—
Demolition costs		622		22		—
Development-related marketing costs		15,719		13,013		1,449
Depreciation and amortization		3,240		1,706		189
Other expense/(income)		104		(2,373)		(3,609)
Interest income		(202)		—		—
Interest expense (*)		(6,633)		(11,918)		(4,318)
Equity in Earnings from Real Estate and Other Affiliates		(1,838)		(21,311)		(10,535)
Total expenses		210,081		36,522		8,052
Strategic Developments EBT		97,836		48,458		26,010
REP EBT	$	202,300	$	255,838	$	154,437

(*)Negative interest expense amounts are due to interest capitalized in our Master Planned Communities and Strategic Developments segments related to Operating Assets segment debt and the Senior Notes.

The following reconciles REP EBT to GAAP income (loss) before taxes:

Reconciliation of  REP EBT to GAAP	Year Ended December 31,
income (loss) before taxes	2015		2014		2013
(In thousands)
REP EBT	$	202,300	$	255,838	$	154,437
General and administrative		(81,345)		(73,569)		(48,466)
Corporate interest income/(expense), net		(52,995)		(30,819)		(10,575)
Warrant liability gain (loss)		58,320		(60,520)		(181,987)
Gain on sale of The Club at Carlton Woods		29,073		-		-
Increase (reduction) in tax indemnity receivable		-		90		(1,206)
Loss on settlement of tax indemnity receivable		-		(74,095)		-
Corporate other income, net		1,409		27,098		25,869
Corporate depreciation and amortization		(6,042)		(4,583)		(2,197)
Income (loss) before taxes	$	150,720	$	39,440	$	(64,125)

The following reconciles segment revenues to GAAP consolidated revenues:

Reconciliation of Segment Basis Revenues to	Year Ended December 31,
GAAP Revenues (In thousands)	2015		2014		2013
Master Planned Communities	$	229,865	$	363,295	$	274,770
Operating Assets		259,306		186,290		160,586
Strategic Developments		307,917		84,980		34,062
Total revenues	$	797,088	$	634,565	$	469,418

The assets by segment and the reconciliation of total segment assets to the total assets in the Consolidated Balance Sheets are summarized as follows:

	December 31,
(In thousands)	2015		2014
Master Planned Communities	$	2,022,524	$	1,875,550
Operating Assets		2,365,724		1,926,192
Strategic Developments		1,138,695		876,246
Total segment assets		5,526,943		4,677,988
Corporate and other		194,639		427,280
Total assets	$	5,721,582	$	5,105,268

The increase in the Operating Assets segment asset balance as of December 31, 2015 of $439.5 million compared to 2014 is primarily due to placing Hughes Landing Hotel, One Lakes Edge, Creekside Village, The Metropolitan Downtown Columbia, One Summerlin and Hughes Landing Retail in service and additional development and leasing costs at Downtown Summerlin.

The $262.4 million increase in the Strategic Developments segment asset balance as of December 31, 2015 compared to December 31, 2014 is primarily due to the following:

Increases in asset balance

· $603.1 million of development expenditures relating to the 80 South Street Assemblage, 1725 Hughes Landing Boulevard, 1735 Hughes Landing Boulevard, Waterway Square Hotel (Westin), Three Hughes Landing, Hughes Landing Hotel (Embassy Suites), the Merriweather District, and our Ward Village condominium projects;

· $191.0 million in condominium receivables due to percent complete revenue recognition in excess of buyers deposits;

· Receipt of $47.8 million in condominium buyer deposits at Ae`o and Gateway Towers; and

· Proceeds of $24.5 million from our construction financings at Ward Village, Waterway Hotel (Westin) and Hughes Landing Hotel (Embassy Suites).

Reductions in asset balance

· $278.8 million resulting from the transfer of 1725 Hughes Landing Boulevard, 1735 Hughes Landing Boulevard, Hughes Landing Hotel, Hughes Landing Retail, One Lakes Edge and Creekside Village to the Operating Assets segment;

· Cost of sales of $120.1 million for Waiea and $70.6 million for Anaha; and

· $144.1 million resulting from condominium buyer deposits used for the development of Waiea and Anaha.

Corporate and other assets as of December 31, 2015 consist primarily of cash and cash equivalents. The $232.6million decrease at December 31, 2015 compared to December 31, 2014 is primarily due to cash used to fund further development and redevelopment efforts within our Operating Assets and MPC segments.

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QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

12 Months Ended

Dec. 31, 2015

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

NOTE 18 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	2015
		First		Second		Third		Fourth
(In thousands, except share amounts)		Quarter		Quarter		Quarter		Quarter
Total revenues		$	155,090	$	209,163	$	203,442	$	229,393
Operating income			16,457		25,572		36,544		40,191
Net income (loss)			(105,959)		50,585		156,212		25,881
Net income (loss) attributable to common stockholders			(105,959)		50,573		156,224		25,881
Earnings (loss) per share:
Basic			(2.68)		1.28		3.96		0.65
Diluted (a)			(2.68)		0.18		0.76		0.59
Weighted average shares outstanding:
Basic			39,465		39,468		39,473		39,473
Diluted			39,465		43,197		42,913		42,743

	2014
		First		Second		Third		Fourth
(In thousands, except share amounts)		Quarter		Quarter		Quarter		Quarter
Total revenues		$	98,653	$	209,631	$	119,228	$	207,053
Operating income			13,947		91,781		23,850		37,144
Net income (loss)			(86,331)		(14,733)		45,615		31,929
Net income (loss) attributable to common stockholders			(86,316)		(14,760)		45,615		31,930
Earnings (loss) per share:
Basic			(2.19)		(0.37)		1.16		0.81
Diluted (a)			(2.19)		(0.37)		0.48		(1.18)
Weighted average shares outstanding:
Basic			39,454		39,458		39,465		39,464
Diluted			39,454		39,458		43,171		43,027

a) Diluted earnings per share includes the impact of warrants, in the money options and restricted stock. Net income was also adjusted for the warrant gain during the period, where applicable.

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SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

12 Months Ended

Dec. 31, 2015

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2015

				Initial Cost (b)				Costs Capitalized Subsequent to Acquisition (c)				Gross Amounts at Which Carried at Close of Period (d)
						Buildings				Buildings				Buildings							Date
						and				and				and				Accumulated		Date of	Acquired /
Asset	Location	Encumbrances (a)		Land		Improvements		Land (e)		Improvements (e) (f)		Land		Improvements (f)		Total		Depreciation (g)		Construction	Completed
Ae`o	Honolulu, HI	$	-	$	-	$	16,294	$	-	$	-	$	-	$	16,294	$	16,294	$	-	2015	—
Alameda Plaza	Pocatello, ID		-		740		2,060		(740)		(1,793)		-		267		267		-	—	2002
Alden Bridge Self-Storage	The Woodlands, TX		-		-		1,679		-		-		-		1,679		1,679		-	2015	—
AllenTowne	Dallas, TX		-		25,575		-		(25,575)		25,475		-		25,475		25,475		-	—	2006
Anaha	Honolulu, HI		6,091		-		30,555		-		6,174		-		36,729		36,729		-	—	—
Bridgeland	Cypress, TX		40,077		257,222		-		177,998		1,268		435,220		1,268		436,488		709	—	2004
Bridges at Mint Hill	Charlotte, NC		-		-		-		-		21,470		-		21,470		21,470		-	—	2007
Century Plaza Mall	Birmingham, AL		-		3,164		28,514		(3,164)		(24,279)		-		4,235		4,235		-	—	1997
Circle T Ranch and Power Center	Dallas/Fort Worth, TX		-		-		-		-		(10)		-		(10)		(10)		-	—	2005
10 - 70 Columbia Corporate Center	Howard County, MD		100,000		24,685		94,824		-		7,733		24,685		102,557		127,242		4,665	—	2004
Columbia Office Properties	Howard County, MD		-		1,575		28,447		-		4,168		1,575		32,615		34,190		14,101	—	2004
Columbia Regional Building (e)	Howard County, MD		22,188		-		28,865		-		337		-		29,202		29,202		2,079	—	2014
Cottonwood Mall	Salt Lake City, UT		-		7,613		42,987		(7,613)		(21,626)		-		21,361		21,361		-	—	2002
Cottonwood Square	Salt Lake City, UT		-		1,558		4,339		-		923		1,558		5,262		6,820		1,844	—	2002
Creekside Village Green	The Woodlands, TX		-		-		-		1,323		15,732		1,323		15,732		17,055		279	—	—
Downtown Summerlin	Las Vegas, NV		293,389		-		-		30,855		364,100		30,855		364,100		394,955		12,715	—	2004
Hughes Landing Hotel (Embassy Suites)	The Woodlands, TX		20,064		-		6,752		1,818		33,012		1,818		39,764		41,582		109	—	—
Hughes Landing Retail	The Woodlands, TX		28,726		-		-		4,186		31,735		4,186		31,735		35,921		521	—	—
One Hughes Landing	The Woodlands, TX		52,000		-		-		1,678		35,029		1,678		35,029		36,707		3,212	—	2012
Two Hughes Landing	The Woodlands, TX		48,000		-		-		1,269		32,483		1,269		32,483		33,752		1,678	—	—
Three Hughes Landing	The Woodlands, TX		23,268		-		13,008		-		41,405		-		54,413		54,413		-	—	—
1725 Hughes Landing Boulevard	The Woodlands, TX		-		1,351		36,764		-		-		1,351		36,764		38,115		446	—	—
1735 Hughes Landing Boulevard	The Woodlands, TX		89,677		3,709		123,846		-		(3,044)		3,709		120,802		124,511		826	—	2015
IBM Building	Honolulu, HI		-		3,326		23,123		-		8,201		3,326		31,324		34,650		5,576	—	2014
Ke Kilohana	Honolulu, HI		-		-		5,114		-		5,152		-		10,266		10,266		-	2015	—
Kendall Town Center	Miami, FL		-		-		-		-		18,797		-		18,797		18,797		-	—	2004
Kewalo Basin Harbor	Honolulu, HI		-		-		1,735		-		-		-		1,735		1,735		-	2015	—
1701 Lake Robbins	The Woodlands, TX		4,600		1,663		3,725		-		8		1,663		3,733		5,396		133	—	2014
2201 Lake Woodlands Drive	The Woodlands, TX		-		3,755		-		-		-		3,755		-		3,755		-	—	2011
One Lake's Edge	The Woodlands, TX		67,517		-		-		1,057		80,765		1,057		80,765		81,822		1,455	—	—
Lakeland Village Center	Cypress, TX		-		-		11,135		-		-		-		11,135		11,135		-	2015	—
Lakemoor (Volo) Land	Volo, IL		-		320		-		(320)		321		-		321		321		-	—	1995
Landmark Mall	Alexandria, VA		-		28,396		67,235		(19,408)		(34,773)		8,988		32,462		41,450		12,743	—	2003
Maryland Communities	Howard County, MD		-		457,552		-		(435,462)		197		22,090		197		22,287		127	—	2004
Merriweather Post Pavilion	Columbia, MD		-		1,571		67,510		-		1,646		1,571		69,156		70,727		37	2015	—
Millennium Waterway Apartments	The Woodlands, TX		55,584		15,917		56,002		-		222		15,917		56,224		72,141		8,234	—	2012
9303 New Trails	The Woodlands, TX		12,734		1,929		11,915		-		2,042		1,929		13,957		15,886		2,048	—	2011
110 N. Wacker	Chicago, IL		26,481		-		29,035		12,249		5,498		12,249		34,533		46,782		14,242	—	1997
Outlet Collection at Elk Grove	Elk Grove, CA		-		-		-		-		12,865		-		12,865		12,865		4	—	2003
Outlet Collection at Riverwalk	New Orleans, LA		56,100		-		94,513		-		(3,623)		-		90,890		90,890		7,990	—	2004
Park West	Peoria, AZ		-		16,526		77,548		1,201		1,427		17,727		78,975		96,702		23,725	—	—
Seaport District Assemblage	New York, NY		-		-		243,610		-		3,691		-		247,301		247,301		-	—	2014/2015
85 South Street	New York, NY		-		15,913		8,137		-		42		15,913		8,179		24,092		760	—	2014
South Street Seaport	New York, NY		-		-		7,884		-		220,088		-		227,972		227,972		959	—	2004
Summerlin	Las Vegas, NV		50,154		990,179		-		(125,903)		1,019		864,276		1,019		865,295		533	—	2004
3831 Technology Forest	The Woodlands, TX		22,759		514		14,194		-		1,819		514		16,013		16,527		859	—	2014
The Club at Carlton Woods	The Woodlands, TX		-		13,796		457		(13,796)		(457)		-		-		-		-	—	—
The Metropolitan Downtown Columbia	Columbia, MD		-		-		-		-		-		-		-		-		-	—	—
The Woodlands	The Woodlands, TX		192,710		267,996		9,814		(43,726)		5,569		224,270		15,383		239,653		1,887	—	2011
The Woodlands Hills	Conroe, TX		-		99,284		-		1,820		-		101,104		-		101,104		-	—	2014
The Woodlands Parking Garages	The Woodlands, TX		-		5,857		-		1,529		11,269		7,386		11,269		18,655		508	—	2011
The Woodlands Resort & Conference Center	The Woodlands, TX		85,000		13,258		37,983		-		73,701		13,258		111,684		124,942		7,823	—	2011
Waiea	Honolulu, HI		21,726		-		20,812		-		20,510		-		41,322		41,322		-	—	—
Ward Gateway Towers	Honolulu, HI		-		-		28,450		-		-		-		28,450		28,450		-	2015	—
Ward Village	Honolulu, HI		238,716		164,007		89,321		(32,411)		170,218		131,596		259,539		391,135		68,360	—	2002
Waterway Garage Retail	The Woodlands, TX		-		1,342		4,255		(1)		1,348		1,341		5,603		6,944		759	—	2011
3 Waterway Square	The Woodlands, TX		52,000		748		-		-		42,329		748		42,329		43,077		5,310	—	2012
4 Waterway Square	The Woodlands, TX		37,293		1,430		51,553		-		6,985		1,430		58,538		59,968		9,110	—	2011
Waterway Square Hotel	The Woodlands, TX		33,361		-		22,473		-		55,936		-		78,409		78,409		-	—	—
20/25 Waterway Avenue	The Woodlands, TX		14,112		2,346		8,871		-		767		2,346		9,638		11,984		1,447	—	2011
West Windsor	Princeton, NJ		-		-		-		53		24,101		53		24,101		24,154		-	—	2004
1400 Woodloch Forest	The Woodlands, TX		-		-		-		1,570		14,079		1,570		14,079		15,649		7,098	—	1981
Corporate	Various		762,027		885		1,027		(885)		30,912		-		31,939		31,939		8,058	—	—
	Deferred financing costs		(12,392)		-		-		-		-		-		-		-		-
		$	2,443,962	$	2,435,702	$	1,456,365	$	(470,398)	$	1,352,963	$	1,965,304	$	2,809,328	$	4,774,632	$	232,969

(a) See description of mortgages, notes and loans payable in Note 8 of the Consolidated Financial Statements.

(b) Initial cost for projects undergoing development or redevelopment is cost at end of first complete calendar year subsequent to opening.

(c) For retail and other properties, costs capitalized subsequent to acquisitions is net of cost of disposals or other property write‑downs. For MPCs, costs capitalized subsequent to acquisitions are net of the cost of land sales.

(d) The aggregate cost of land, building and improvements for federal income tax purposes is approximately $4.0 billion.

(e) Reductions in Land reflect transfers to Buildings and Improvements for projects which we are internally developing.

(f) Includes all amounts related to Developments.

(g) Depreciation is computed based upon the following estimated lives:

	Years
Building and improvements	10 - 45
Equipment, tenant improvements and fixtures	5 - 10
Computer hardware and software, and vehicles	3 - 5

Reconciliation of Real Estate
(In thousands)	2015		2014		2013
Balance at beginning of year	$	4,116,556	$	3,024,833	$	2,746,596
Change in Land		95,095		296,147		90,124
Additions		834,346		973,833		352,141
Dispositions and write-offs and land and condominium costs of sales		(271,365)		(178,257)		(164,028)
Balance at end of year	$	4,774,632	$	4,116,556	$	3,024,833

Reconciliation of Accumulated Depreciation
(In thousands)	2015		2014		2013
Balance at beginning of year	$	157,182	$	111,728	$	112,491
Depreciation Expense		82,275		50,683		29,637
Dispositions and write-offs		(6,488)		(5,229)		(30,400)
Balance at end of year	$	232,969	$	157,182	$	111,728

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

Principles of Consolidation and Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), with all intercompany balances eliminated. The presentation includes the accounts of the Company, and those entities in which we have a controlling financial interest. The noncontrolling equity holders’ share of the assets, liabilities and operations are reflected in noncontrolling interests within permanent equity. The Company also consolidates certain variable interest entities (“VIEs”) in accordance with Accounting Standards Codification (“ASC”) 810 Consolidation (“ASC 810”)  (see “Investment in Real Estate and Other Affiliates” below). At December 31, 2015, the Company adopted Accounting Standards Update (“ASU”) 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs,” and began presenting the carrying value of its debt net of the debt issuance costs, as discussed further below.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The estimates and assumptions include, but are not limited to, revenue recognition accounted for under the percentage of completion method, capitalization of development costs, provision for income taxes, recoverable amounts of receivables and deferred tax assets, initial valuations of tangible and intangible assets acquired and the related useful lives of assets upon which depreciation and amortization is based. Estimates and assumptions have also been made with respect to future revenues and costs, the fair value of warrants, debt and options granted. Actual results could differ from these and other estimates.

I

Investment in Real Estate

Investment in Real Estate

Master Planned Community Assets, Land, Buildings and Equipment

Real estate assets are stated at cost less any provisions for impairments. Expenditures for significant improvements to our assets are capitalized. Tenant improvements relating to our operating assets are capitalized and depreciated over the shorter of their economic lives or the lease term. Maintenance and repair costs are charged to expense when incurred.

We periodically review the estimated useful lives of properties. Depreciation or amortization expense is computed using the straight‑line method based upon the following estimated useful lives:

Asset Type	Years
Buildings and improvements	10- 45
Equipment, tenant improvements and fixtures	5 - 10
Computer hardware and software, and vehicles	3 - 5

From time to time, we may reassess the development strategies for certain buildings and improvements which results in changes to our estimate of their remaining useful lives. As a result, we recognized an additional $17.1 million, or $0.40 per diluted share, $10.8 million, or $0.27 per diluted share, and $1.2 million, or $0.03 per diluted share, in depreciation expense during the years ended December 31, 2015, 2014 and 2013, respectively, due to the change in useful lives of these buildings and improvements. The increased depreciation expense was caused by development plans which included the demolition of certain pre-existing buildings and improvements, thereby resulting in a reduction to their useful lives.

Developments

Development costs, which generally include legal and professional fees and other directly‑related third‑party costs associated with specific development properties, are capitalized as part of the property being developed. In the event that management no longer has the ability or intent to complete a development, the costs previously capitalized are evaluated for impairment.

Construction and improvement costs incurred in connection with the development of new properties or the redevelopment of existing properties are capitalized, including certain employee personnel costs. Real estate taxes, interest and insurance costs incurred during construction periods are also capitalized. Capitalized interest costs are based on qualified expenditures and interest rates in place during the construction period. Demolition costs associated with these redevelopments are expensed as incurred.

Our Developments are made up of the following categories:

	December 31,
(In thousands)	2015		2014
Land & improvements	$	182,843	$	164,280
Development costs		728,984		667,228
Condominium projects		125,100		82,795
Total Developments	$	1,036,927	$	914,303

Real Estate and Other Affiliates

Investment in Real Estate and Other Affiliates

In the ordinary course of business, we enter into partnerships or joint ventures primarily for the development and operation of real estate assets which are referred to as “Real Estate Affiliates”. These partnerships or joint ventures are typically characterized by a non‑controlling ownership interest with decision making and distribution of expected gains and losses being generally proportionate to the ownership interest. We evaluate these partnerships and joint ventures for consolidation in accordance with ASC 810.

We assess our joint ventures at inception to determine if any meet the qualifications of a variable interest entity (“VIE”). We consider a partnership or joint venture a VIE if: (a) the total equity investment is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the entity); or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or their rights to receive the expected residual returns of the entity, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Upon the occurrence of certain events outlined in ASC 810, we reassess our initial determination of whether the partnership or joint venture is a VIE.

We also perform a qualitative assessment of each VIE to determine if we are the primary beneficiary. Under ASC 810, a company concludes that it is the primary beneficiary and consolidates the VIE if the company has both (a) the power to direct the economically significant activities of the entity and (b) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The company considers the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties in determining if the company is the primary beneficiary. As required by ASC 810, management’s assessment of whether the company is the primary beneficiary of a VIE is continuously performed.

We account for VIEs for which we are not considered to be the primary beneficiary, but have significant influence, using the equity method and investments in VIEs where we do not have significant influence on the joint venture’s operating and financial policies using the cost method.

We account for investments in joint ventures where we own a non‑controlling interest using the equity method, and investments in joint ventures where we have virtually no influence on the joint venture’s operating and financial policies using the cost method. For cost method investments, we recognize earnings to the extent of distributions received from such investments.

Under the equity method, the cost of our investment is adjusted for our share of the equity in earnings or losses of such Real Estate Affiliates from the date of investment and reduced by distributions received. Generally, the operating agreements with respect to our Real Estate Affiliates provide that assets, liabilities and funding obligations are shared in accordance with our ownership percentages. We generally also share in the profit and losses, cash flows and other matters relating to our Real Estate Affiliates in accordance with our respective ownership percentages. For certain equity method investments, when the preferences on profit sharing on liquidation rights and priorities differ from the ownership percentages, we consider ASC 970 and apply the Hypothetical Liquidation Book Value (“HLBV”) method. Under this method, we recognize income or loss based on the change in our underlying share of the venture’s net assets on a hypothetical liquidation basis as of the reporting date.

Acquisition of Properties

Acquisitions of Properties

We account for the acquisition of real estate properties constituting a business in accordance with ASC 805 Business Combinations (“ASC 805”). This methodology requires that assets acquired and liabilities assumed be recorded at their fair values on the date of acquisition.

Costs directly related to purchase of land or other property acquisitions are considered additions to the purchase price and increase the cost basis recorded for the Investment in Real Estate.  Acquisition costs related to the acquisition of a business are expensed as incurred.

The fair value of tangible assets of an acquired property (which includes land, buildings, and improvements) is determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land, buildings and improvements based on management’s determination of the fair value of these assets. The “as-if-vacant” values are derived from several sources which primarily include a discounted cash flow analysis using discount and capitalization rates based on recent comparable market transactions, where available.

The fair value of acquired intangible assets consisting of in-place, above-market and below-market leases is recorded based on a variety of considerations. In-place lease considerations include, but are not necessarily limited to: (1) the value associated with avoiding the cost of originating the acquired in-place leases (i.e., the market cost to execute a lease, including leasing commissions and tenant improvements); (2) the value associated with lost revenue related to tenant reimbursable operating costs incurred during the assumed lease-up period (i.e., real estate taxes, insurance and certain other operating expenses); and (3) the value associated with lost rental revenue from existing leases during the assumed lease-up period. Above-market and below-market leases are valued at the present value, using a discount rate that reflects the risks associated with the leases acquired, of the difference between (1) the contractual amounts to be paid pursuant to the in-place lease; and (2) management’s estimate of current market lease rates, measured over the remaining non-cancelable lease term, including any below market renewal option periods.

Impairment

Impairment

We review our real estate assets (including those held by our Real Estate Affiliates), operating assets, land held for development and sale, and developments for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  GAAP related to the impairment or disposal of long‑lived assets requires that if impairment indicators exist and that expected undiscounted cash flows generated by the asset are less than its carrying amount, an impairment provision should be recorded to write down the carrying amount of the asset to its fair value. The impairment analysis does not consider the timing of future cash flows and whether the asset is expected to earn an above or below market rate of return.

Impairment indicators for our assets or projects within our Master Planned Communities segment are assessed separately and include, but are not limited to, significant decreases in sales pace or average selling prices, significant increases in expected land development and construction costs or cancellation rates, and projected losses on expected future sales. Master Planned Community assets have extended life cycles that may last 20 to 40 years, or longer, and have few long‑term contractual cash flows. Further, Master Planned Community assets generally have minimal to no residual values because of their liquidating characteristics. Master Planned Community development periods often occur through several economic cycles. Subjective factors such as the expected timing of property development and sales, optimal development density and sales strategy impact the timing and amount of expected future cash flows and fair value.

Impairment indicators for our Operating Assets segment are assessed separately for each property and include, but are not limited to, significant decreases in net operating income, significant decreases in occupancy, ongoing low occupancy and significant net operating losses.

Impairment indicators for development costs in our Strategic Developments segment, which are typically costs incurred during the beginning stages of a potential development, and developments in progress are assessed by project and include, but are not limited to, significant changes in projected completion dates, revenues or cash flows, development costs, market factors, significant decreases in comparable property sale prices and feasibility.

The cash flow estimates used both for determining recoverability and estimating fair value are inherently judgmental and reflect current and projected trends in rental, occupancy, pricing, development costs, sales pace and capitalization rates, and estimated holding periods for the applicable assets. Although the estimated fair value of certain assets may be exceeded by the carrying amount, a real estate asset is only considered to be impaired when its carrying amount is not expected to be recovered through estimated future undiscounted cash flows. To the extent an impairment provision is necessary, the excess of the carrying amount of the asset over its estimated fair value is expensed to operations. In addition, the impairment provision is allocated proportionately to adjust the carrying amount of the asset. The adjusted carrying amount, which represents the new cost basis of the asset, is depreciated over the remaining useful life of the asset or, for Master Planned Communities, is expensed as a cost of sales when land is sold. Assets that have been impaired will in the future have lower depreciation and cost of sale expenses. The impairment will have no impact on cash flow.

With respect to our Investment in Real Estate and Other Affiliates, a series of operating losses of an underlying asset or other factors may indicate that a decrease in value has occurred which is other‑than‑temporary. The investment in each Real Estate and Other Affiliate is evaluated periodically and as deemed necessary for recoverability and valuation declines that are other‑than‑temporary. If the decrease in value of an Investment in a Real Estate and Other Affiliate is deemed to be other‑than‑temporary, our investment is reduced to its estimated fair value. In addition to the property‑specific impairment analysis that we perform on the underlying assets of the investment, we also consider the ownership, distribution preferences, limitations, and rights to sell and repurchase our ownership interests.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and Cash Equivalents consist of highly-liquid investments with maturities at date of purchase of three months or less and are deposited with major banks throughout the United States. Such deposits are in excess of FDIC limits and are placed with high quality institutions in order to minimize concentration of counterparty credit risk.

Revenue Recognition and Related Matters

Revenue Recognition and Related Matters

Land Sales Revenue

Revenues from land sales are recognized using the full accrual method at closing, when title has passed to the buyer, adequate consideration for the land has been received and we have no continuing involvement with the property. Revenue that is not recognized under the full accrual method is deferred and recognized when the required obligations are met. Revenue related to builder price participation rights is recognized as the underlying homes are sold by homebuilders.

When developed residential or commercial land is sold, the cost of sales includes actual costs incurred and estimates of future development costs benefiting the property sold through completion. In accordance with ASC 970-360-30-1, when developed land is sold, costs are allocated to each sold superpad or lot based upon the relative sales value of each superpad or lot. For purposes of allocating development costs, estimates of future revenues and development costs are re-evaluated throughout the year, with adjustments being allocated prospectively to the remaining parcels available for sale. For certain parcels of land, however, the specific identification method is used to determine the cost of sales, including acquired parcels that we do not intend to develop or for which development was complete at the date of acquisition.

Rental Revenue

Revenue associated with our operating assets includes minimum rent, percentage rent in lieu of fixed minimum rent, tenant recoveries and overage rent.

Minimum rent revenues are recognized on a straight‑line basis over the terms of the related leases when collectability is reasonably assumed and the tenant has taken possession of, or controls, the physical use of the leased asset. Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants. Minimum rent revenues also include amortization related to above and below‑market tenant leases on acquired properties.

Recoveries from tenants are stipulated in the leases, are generally computed based upon a formula related to real estate taxes, insurance and other real estate operating expenses, and are generally recognized as revenues in the period the related costs are incurred.

Overage rent is recognized on an accrual basis once tenant sales exceed contractual thresholds contained in the lease and is calculated by multiplying the tenant sales in excess of the minimum amount by a percentage defined in the lease.

If the lease provides for tenant improvements, we determine whether the tenant improvements are owned by the tenant or by us. When we are the owner of the tenant improvements, rental revenue begins when the improvements are substantially complete. When the tenant is the owner of the tenant improvements, any tenant allowance funded by us is treated as a lease incentive and amortized as an adjustment to rental revenue over the lease term.

Condominium Rights and Unit Sales

Revenue recognition for contracted individual units in a condominium project are accounted for under the percentage of completion method when the following criteria are met: (a) construction is beyond a preliminary stage; (b) buyer is unable to require a refund of its deposit, except for non‑delivery of the unit; (c) sufficient units are sold to assure that it will not revert to a rental property; (d) sales prices are collectible; and (e) aggregate sales proceeds and costs can be reasonably estimated. Those units that do not meet the criteria use the full accrual method or deposit method which defers revenue recognition until the unit is closed.

Revenue recognized on the percentage-of-completion method is based upon the ratio of project costs incurred to date compared to total estimated project cost. Total estimated project costs include direct costs such as the carrying value of our land, site planning, architectural, construction costs, financing costs and indirect cost allocations for certain infrastructure and amenity costs which benefit the project based upon the relative sales value of the units. Changes in estimated project costs impact the amount of revenue and profit recognized on a percentage of completion basis during the period in which they are determined. Revenue recognized in excess of amounts collected from buyers is classified as Condominium receivables and amounts collected from buyers in excess of revenue recognized to date are classified as Condominium deposits liability.

Hospitality Revenue

Revenue from our hospitality properties is primarily related to room rentals and food and beverage sales and is recognized as services are performed.

Other Income

Other income for the year ended December 31, 2015 primarily relates to a $0.3 million gain on insurance recoveries related to casualty losses at South Street Seaport from Superstorm Sandy and $0.5 million related to our participation interest in the golf courses at TPC Summerlin and TPC Las Vegas.

Other income for the year ended December 31, 2014 primarily relates to a $27.0 million gain on insurance recoveries related to casualty losses at South Street Seaport from Superstorm Sandy and $2.4 million related to the sale of the Redlands Promenade property.

Accounts Receivable

Accounts Receivable

Accounts receivable includes tenant rents, tenant recoveries, other receivables, and straight‑line rent receivables.

Straight‑line rent receivables represent rental revenues recognized in excess of amounts currently due under lease agreements. Such amounts totaling $22.2 million as of December 31, 2015 and $13.5 million as of December 31, 2014, are included in Accounts receivable, net in our Consolidated Balance Sheets.

We record allowances against our receivables that we consider uncollectible. These allowances are reviewed periodically and are adjusted based on management’s estimate of receivables that will not be realized in subsequent periods. We also maintain an allowance for receivables arising from the straight‑lining of rents. Management exercises judgment in establishing these allowances and considers payment history, current credit status and if the tenant is currently occupying the space in developing these estimates. The allowance against our straight‑line rent receivable is based on historical experience with early lease terminations, as well as specific review of significant tenants and tenants that are having known financial difficulties.

The following table summarizes the changes in allowance for doubtful accounts against our accounts receivables:

(In thousands)	2015		2014		2013
Balance as of January 1	$	7,619	$	7,390	$	8,914
Provision for doubtful accounts		4,030		1,404		836
Write-offs		(7,243)		(1,175)		(2,360)
Balance as of December 31,	$	4,406	$	7,619	$	7,390

Municipal Utility District receivables

Municipal Utility District Receivables

In Houston, Texas, certain development costs are reimbursable through the creation of Municipal Utility Districts (“MUDs”, also known as Water Control and Improvement Districts) receivables, which are separate political subdivisions authorized by Article 16, Section 59 of the Texas Constitution and governed by the Texas Commission on Environmental Quality (“TCEQ”). MUDs are formed to provide municipal water, waste water, drainage services, recreational facilities and roads to those areas where they are currently unavailable through the regular city services. Typically, the developer advances funds for the creation of the facilities, which must be designed, bid and constructed in accordance with the City of Houston’s and TCEQ requirements.

The developer initiates the MUD process by filing the applications for the formation of the MUD, and once the applications have been approved, a Board of Directors is elected for the MUD and given the authority to issue ad valorem tax bonds and the authority to tax residents. The MUD Board authorizes and approves all MUD development contracts and pay requests. MUD bond sale proceeds are used to reimburse the developer for its construction costs, including interest. MUD taxes are used to pay the debt service on the bonds and the operating expenses of the MUD. The Company estimates the costs it believes will be eligible for reimbursement as MUD receivables. Our MUD receivables are pledged as security to creditors under the debt facilities relating to our Bridgeland and The Woodlands MPCs. MUD receivables are shown net of an allowance of $0.9 million and $5.8 million for the years ending December 31, 2015 and 2014, in the accompanying Consolidated Balance Sheets. The significant decrease in the allowance for MUD receivables at December 31, 2015 as compared to December 31, 2014 relates to a large MUD

Notes Receivable

Notes Receivable

Notes receivable include amounts due from homebuilders primarily at our Summerlin Master Planned Community, and a note from General Growth Properties (“GGP”).  The GGP note had a balance of $0.2 million and $6.7 million as of December 31, 2015 and 2014, respectively. The GGP note is fully amortizing, carries an interest rate of 4.41%, and cash payments under the note were approximately $6.5 million per year through the end of 2015. Our Summerlin MPC Community held a $20.2 million note from a national homebuilder relating to a 2014 land sale bearing interest at 0.39%, which matured in November 2015, and payment was received in full.

Also included in Notes receivable are notes receivable from various tenants, net of an allowance for uncollectible notes receivable. We estimate the allowance for uncollectible notes receivable based on our assessment of expected receipts of future cash flows with consideration given to any collateral securing the respective note.

Income Taxes

Income Taxes

Deferred income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates currently in effect. Deferred income taxes also reflect the impact of operating loss and tax credit carryforwards.

A valuation allowance is provided if we believe it is more likely than not that all or some portion of the deferred tax asset will not be realized. An increase or decrease in the valuation allowance that results from a change in circumstances, and which causes a change in our judgment about the realizability of the related deferred tax asset, is included in the deferred tax provision. There are events or circumstances that could occur in the future that could limit the benefit of deferred tax assets. In addition, we recognize and report interest and penalties, if necessary, related to uncertain tax positions within our provision for income tax expense.

I

Deferred Expenses

In our Master Planned Communities, gains with respect to land sales whether for commercial use or for single family residences are reported for tax purposes either on the modified accrual method or on the percentage-of-completion method. Under the percentage-of-completion method, a gain is recognized for tax purposes as costs are incurred in satisfaction of contractual obligations. The method used for determining the percentage complete for income tax purposes is different than that used for financial statement purposes.

Deferred Expenses

Deferred expenses consist principally of leasing costs. Deferred leasing costs are amortized to amortization expense using the straight‑line method over periods that approximate the related lease terms. Deferred expenses in our Consolidated Balance Sheets are shown net of accumulated amortization of $10.8 million and $6.4 million as of December 31, 2015 and 2014, respectively.

Deferred financing fees are amortized to interest expense over the terms of the respective financing agreements using the effective interest method (or other methods which approximate the effective interest method).

Stock Plans

Stock Plans

We apply the provisions of ASC 718 Stock Compensation (“ASC 718”) in our accounting and reporting for stock‑based compensation. ASC 718 requires all share‑based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. All unvested options outstanding under our option plans have grant prices equal to the market price of the Company’s stock on the dates of grant. Compensation cost for restricted stock is determined based on the fair market value of the Company’s stock at the date of grant.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, ‘‘Leases.’’ ASU 2016-02, codified in ASC 842, amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the impact of adopting the new leases standard on our Consolidated Financial Statements.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810) - Amendments to the Consolidation Analysis.” The standard eliminates the deferral of FAS 167, which allowed reporting entities with interests in certain investment funds to follow previous consolidation guidance in FIN 46(R), per ASC 810-10-65-2(a). The standard modifies whether: (1) fees paid to a decision maker or service provider represent a variable interest; (2) a limited partnership or similar entity has the characteristics of a VIE; and (3) a reporting entity is the primary beneficiary of a VIE. The effective date of the standard will be for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 for public companies, and early adoption is permitted. We do not expect adoption to have a material impact on our Consolidated Financial Statements.

In May 2014, the FASB and the International Accounting Standards Board (“IASB”) issued ASU 2014-09 “Revenues from Contracts with Customers (Topic 606).”The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The effective date of this standard will be for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted after December 15, 2016. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in the ASU. We are currently evaluating the new guidance to determine the impact it may have on our Consolidated Financial Statements.

In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15, “Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” Before the issuance of this ASU, there was no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. This guidance is expected to reduce the diversity in the timing and content of footnote disclosures. This ASU requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards as specified in the guidance. This ASU becomes effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter. Early adoption is permitted. We do not expect the adoption of this ASU to have an impact on our Consolidated Financial Statements.

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. The new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. We adopted this guidance and there has been no impact from the adoption on our historical Consolidated Financial Statements because we have not had any discontinued operations.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of estimated useful lives

Asset Type	Years
Buildings and improvements	10- 45
Equipment, tenant improvements and fixtures	5 - 10
Computer hardware and software, and vehicles	3 - 5

Schedule of categories of developments

	December 31,
(In thousands)	2015		2014
Land & improvements	$	182,843	$	164,280
Development costs		728,984		667,228
Condominium projects		125,100		82,795
Total Developments	$	1,036,927	$	914,303

Summary of changes in allowance for doubtful accounts against accounts receivables

(In thousands)	2015		2014		2013
Balance as of January 1	$	7,619	$	7,390	$	8,914
Provision for doubtful accounts		4,030		1,404		836
Write-offs		(7,243)		(1,175)		(2,360)
Balance as of December 31,	$	4,406	$	7,619	$	7,390

Summary of information related to the entity's EPS calculations

	Year ended December 31,
(In thousands, except per share amounts)	2015		2014		2013
Basic EPS:
Numerator:
Net income (loss)	$	126,719	$	(23,520)	$	(73,695)
Net income attributable to noncontrolling interests		—		(11)		(95)
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)
Denominator:
Weighted average basic common shares outstanding		39,470		39,464		39,449
Diluted EPS:
Numerator:
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)
Less: Warrant liabilitygain		(58,320)		—		—
Adjusted net income (loss) attributable to common stockholders	$	68,399	$	(23,531)	$	(73,790)
Denominator:
Weighted average basic common shares outstanding		39,470		39,464		39,449
Restricted stock and stock options		411		—		—
Warrants		2,873		—		—
Weighted average diluted common shares outstanding		42,754		39,464		39,449
Basic income (loss) per share:	$	3.21	$	(0.60)	$	(1.87)
Diluted income (loss) per share:	$	1.60	$	(0.60)	$	(1.87)

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EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2015

EARNINGS PER SHARE

Summary of information related to the entity's EPS calculations

	Year ended December 31,
(In thousands, except per share amounts)	2015		2014		2013
Basic EPS:
Numerator:
Net income (loss)	$	126,719	$	(23,520)	$	(73,695)
Net income attributable to noncontrolling interests		—		(11)		(95)
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)
Denominator:
Weighted average basic common shares outstanding		39,470		39,464		39,449
Diluted EPS:
Numerator:
Net income (loss) attributable to common stockholders	$	126,719	$	(23,531)	$	(73,790)
Less: Warrant liabilitygain		(58,320)		—		—
Adjusted net income (loss) attributable to common stockholders	$	68,399	$	(23,531)	$	(73,790)
Denominator:
Weighted average basic common shares outstanding		39,470		39,464		39,449
Restricted stock and stock options		411		—		—
Warrants		2,873		—		—
Weighted average diluted common shares outstanding		42,754		39,464		39,449
Basic income (loss) per share:	$	3.21	$	(0.60)	$	(1.87)
Diluted income (loss) per share:	$	1.60	$	(0.60)	$	(1.87)

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REAL ESTATE AND OTHER AFFILIATES (Tables)

12 Months Ended

Dec. 31, 2015

REAL ESTATE AND OTHER AFFILIATES

Schedule of information related to investments in real estate and other affiliates

	Economic/Legal Ownership				Carrying Value				Share of Earnings/Dividends
	December 31,		December 31,		December 31,		December 31,		Year Ended December 31,
($ in Thousands)	2015		2014		2015		2014		2015		2014		2013
Equity Method Investments
Master Planned Communities:
Discovery	—	(a)	—	(a)	$	12,052	$	—	$	—	$	—	$	N/A
Operating Assets:
Millennium Woodlands Phase II, LLC (b) (c)	81.43	%	81.43	%		—		1,023		(1,165)		(1,012)		—
Stewart Title	50.00	%	50.00	%		3,715		3,869		996		1,301		1,223
Clark County Las Vegas Stadium, LLC (c) (d)	50.00	%	50.00	%		11,050		10,548		152		(88)		(13)
The Metropolitan Downtown Columbia (e)	50.00	%	50.00	%		4,872		4,800		(13)		—		—
Woodlands Sarofim	20.00	%	20.00	%		2,588		2,595		166		175		180
Strategic Developments:
Circle T Ranch and Power Center	50.00	%	50.00	%		9,128		9,004		—		—		—
HHMK Development (c)	50.00	%	50.00	%		10		10		549		2,120		732
Millennium Woodlands Phase II, LLC (b) (c)	81.43	%	81.43	%		—		—		—		(279)		(74)
KR Holdings (c)	50.00	%	50.00	%		689		9,183		1,289		19,470		9,877
Parcel C (c)	50.00	%	50.00	%		7,070		8,737		—		—		—
Constellation (f)	50.00	%	50.00	%		2,685		—		—		—		N/A
						53,859		49,769		1,974		21,687		11,925
Cost method investments						3,952		3,917		1,747		1,649		2,503
Investment in Real Estate and Other Affiliates					$	57,811	$	53,686	$	3,721	$	23,336	$	14,428

N/A – Not applicable or not owned in the respective period.

(a) See discussion below for a description of the joint venture ownership structure.

(b) Millennium Woodlands Phase II, LLC was placed into service in the beginning of the third quarter 2014. The investment balance is in a deficit position, which is reported in Other liabilities. We expect to recover the deficit when the property reaches stabilized occupancy.

(c) Equity method variable interest entity (“VIE”).

(d) Formerly known as the Summerlin Las Vegas Baseball Club, LLC.

(e) The Metropolitan Downtown Columbia was placed into service in the first quarter 2015.

Formerly known as Summerlin Apartments, LLC

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2015

FAIR VALUE OF FINANCIAL INSTRUMENTS

Schedule of assets and liabilities that are measured at fair value on a recurring basis

	December 31, 2015								December 31, 2014
	Fair Value Measurements Using								Fair Value Measurements Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	18	$	18	$	—	$	—	$	75,027	$	75,027	$	—	$	—
Liabilities:
Warrants		307,760		—		—		307,760		366,080		—		—		366,080
Interest rate swaps		4,217		—		4,217		—		3,144		—		3,144		—

Schedule of reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3)

		December 31,
(In thousands)	2015		2014		2013
Beginning of year	$	366,080	$	305,560	$	123,573
Warrant liability (gain) loss (a)		(58,320)		60,520		181,987
End of year	$	307,760	$	366,080	$	305,560

All (gains) and losses during 2015, 2014, and 2013, were unrealized. Changes in the fair value of the Sponsor Warrants and the Management Warrants are recognized in net income as a warrant liability gain or loss.

Schedule of significant unobservable input used in the fair value measurement of warrants designated as Level 3

	UnobservableInputs
	Expected Volatility(a)	Marketability Discount(b)
December 31, 2015	27.4%	10.0% - 12.0%
December 31, 2014	24.5%	18.0% - 20.0%

(a) Based on our implied equity volatility.

Represents the discount rate for lack of marketability of the Management Warrants which decreases as the current date approaches the dates of contractual expiration of the marketability restrictions.

Schedule of estimated fair values of the Company's financial instruments that are not measured at fair value on a recurring basis

		December 31, 2015				December 31, 2014
(In thousands)	FairValueHierarchy	Carrying Amount		Estimated FairValue		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents	Level 1	$	445,283	$	445,283	$	485,424	$	485,424
Notes receivable, net (a)	Level 3		1,664		1,664		28,630		28,630
Liabilities:
Fixed-rate debt	Level 2	$	1,141,381	$	1,137,166	$	1,030,554	$	1,050,333
Variable-rate debt	Level 2		1,314,973		1,314,973		962,916		962,916

(a) Notes receivable is shown net of an allowance of $0.2 million and $0.5 million at December 31, 2015 and 2014, respectively.

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MORTGAGES, NOTES AND LOANS PAYABLE (Tables)

12 Months Ended

Dec. 31, 2015

MORTGAGES, NOTES AND LOANS PAYABLE

Summary of mortgages, notes and loans payable

	December 31,
(In thousands)	2015		2014
Fixed-rate debt:
Collateralized mortgages, notes and loans payable	$	1,087,642	$	1,008,165
Special Improvement District bonds		53,739		22,389
Variable-rate debt:
Collateralized mortgages, notes and loans payable (a)		1,314,973		962,916
Deferred Financing Costs, net of accumulated    amortization of $12.7 million and $6.9 million, respectively		(12,392)		(14,663)
Total mortgages, notes and loans payable	$	2,443,962	$	1,978,807

(a) As more fully described below, $209.5 million of variable‑rate debt has been swapped to a fixed rate for the term of the related debt.

Schedule of mortgages, notes and loans payable by property

					Maximum		Carrying Value
		Interest			Facility		December 31,		December 31,
($ In thousands)	Maturity (a)	Rate			Amount		2015		2014
Master Planned Communities
Bridgeland Land Loan	November 2022	4.60	%	(b)	$	65,000	$	40,072	$	15,874
Bridgeland Development Loan	N/A	5.00	%					—		10
Summerlin South SID Bonds - S108	December 2016	5.95	%					—		563
Summerlin South SID Bonds - S124	December 2019	5.95	%					159		236
Summerlin South SID Bonds - S128	December 2020	6.05	%					534		623
Summerlin South SID Bonds - S128C	December 2030	6.05	%					4,856		5,274
Summerlin South SID Bonds - S132	December 2020	6.00	%					1,676		2,936
Summerlin South SID Bonds - S151	June 2025	6.00	%					4,534		6,211
Summerlin South SID Bonds - S159	June 2035	6.00	%					9,020		—
Summerlin West SID Bonds - S808/S810	April 2031	6.00	%					1,047		2,805
Summerlin West SID Bonds - S812	October 2035	6.00	%					28,328		—
The Woodlands Master Credit Facility	August 2018	3.11	%	(b)		200,000		192,663		176,663
Master Planned Communities Total								282,889		211,195
Operating Assets
10-60 Columbia Corporate Centers	May 2022	2.76	%	(b)(d)				80,000		—
70 Columbia Corporate Center	July 2019	2.61	%	(b)				20,000		20,000
Columbia Regional Building	March 2018	2.36	%	(b)		23,008		22,188		20,513
Downtown Summerlin	July 2019	2.61	%	(b)		311,800		289,804		229,153
Downtown Summerlin SID Bonds - S108	December 2016	5.95	%					235		310
Downtown Summerlin SID Bonds - S128	December 2030	6.05	%					3,350		3,431
One Hughes Landing	December 2029	4.30	%					52,000		52,000
Two Hughes Landing	December 2030	4.20	%					48,000		19,992
1725-35 Hughes Landing Boulevard	June 2019	2.01	%	(b)		143,000		89,677		47,513
Hughes Landing Hotel	October 2020	2.86	%	(b)		37,100		20,064		—
Hughes Landing Retail	December 2018	2.31	%	(b)		36,575		28,726		17,424
1701 Lake Robbins	April 2017	5.81	%					4,600		4,600
Millennium Waterway Apartments	June 2022	3.75	%					55,584		55,584
110 N. Wacker	October 2019	5.21	%	(e)				26,481		29,000
9303 New Trails	December 2023	4.88	%					12,734		13,074
One Lake's Edge	November 2018	2.86	%	(b)		73,525		67,517		40,787
Outlet Collection at Riverwalk	October 2018	3.11	%	(b)		64,400		56,100		47,118
3831 Technology Forest Drive	March 2026	4.50	%					22,759		—
The Woodlands Resort & Conference Center	December 2020	3.11	%	(b)				85,000		76,027
Ward Village	September 2016	3.42	%	(b)(c)		250,000		238,716		238,716
20/25 Waterway Avenue	May 2022	4.79	%					14,112		14,330
3 Waterway Square	August 2028	3.94	%					52,000		52,000
4 Waterway Square	December 2023	4.88	%					37,293		38,289
Capital lease obligations	various	3.60	%					52		135
Operating Assets Total								1,326,992		1,019,996
Strategic Developments
HHC 242 Self Storage Facility	October 2021	2.96	%	(b)		6,658		—		—
Lakeland Village Center	May 2020	2.71	%	(b)		14,000		—		—
Three Hughes Landing	December 2019	2.71	%	(b)		65,455		23,268		—
Waiea and Anaha Condominiums	November 2019	7.11	%	(b)		600,000		27,817		—
Waterway Square Hotel	August 2019	3.01	%	(b)		69,300		33,361		—
Strategic Developments Total								84,446		—
Other Corporate Financing Arrangements	June 2018	3.00	%					18,794		19,968
Senior Notes	October 2021	6.88	%					750,000		750,000
Unamortized underwriting fees								(6,767)		(7,689)
Deferred Financing Costs, net of accumulated amortization of $12.7 million and $6.9 million, respectively							(12,392)			(14,663)
Total mortgages, notes, and loans payable							$	2,443,962	$	1,978,807

(a) Maturity date includes any extension periods that can be exercised at our option and are subject to customary extension terms such as minimum debt service coverage, minimum occupancy levels and other performance criteria.

(b) The interest rate presented is based on the one month LIBOR rate which was 0.36% at December 31, 2015.

(c) $143.0 million of the outstanding principal balance is swapped to a 3.81% fixed rate to maturity. As of December 31, 2015, there is no undrawn availability on this facility.

(d) $40.0 million of the outstanding principal balance is swapped to a 3.41% fixed rate to maturity.

The $26.5 million outstanding principal balance is swapped to a 5.21% fixed rate to maturity.

Schedule of maturities of long-term debt

	Mortgages,notes
	and loans payable
(In thousands)	principal payments
2016	$	272,269
2017		38,464
2018		342,670
2019		504,135
2020		111,488
Thereafter		1,187,328
Total	$	2,456,354

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

INCOME TAXES

Schedule of provision for (benefit from) income taxes

(In thousands)	2015		2014		2013
Current	$	2,849	$	(2,050)	$	1,218
Deferred		21,152		65,010		8,352
Total	$	24,001	$	62,960	$	9,570

Schedule of reconciliation of income tax expense computed by applying the Federal corporate tax rate to the provision for income taxes

(In thousands)	2015		2014		2013
Tax at statutory rate on earnings from continuing operations before income taxes	$	52,751	$	13,800	$	(22,477)
Increase (decrease) in valuation allowance, net		1,742		5,602		(88,826)
State income taxes, net of Federal income tax benefit		267		1,320		1,562
Tax at statutory rate on REIT entity earnings not subject to Federal income taxes		-		(512)		(2,648)
Tax (benefit) expense from change in rates and other permanent differences		(7,361)		(12,193)		4,339
Set up deferred tax liability related to captive REIT		-		(1,068)		53,973
Non-deductible warrant liability (gain) loss		(20,412)		21,182		63,695
Non-taxable interest income		-		18,373		(363)
Uncertain tax position (benefit) expense, excluding interest		(2,483)		2,395		(1,034)
Uncertain tax position interest, net of Federal income tax benefit		(503)		14,061		1,349
Income tax expense	$	24,001	$	62,960	$	9,570

Schedule of amounts and expiration dates of operating loss and tax credit carryforwards

			Expiration
(In thousands)	Amount		Date
Net operating loss carryforwards - Federal	$	52,571	2024-2035
Net operating loss carryforwards - State		175,346	2016-2035
Tax credit carryforwards - Federal AMT		3,667	n/a

Summary of tax effects of temporary differences and carry-forwards included in net deferred tax liabilities

(In thousands)	2015		2014
Deferred tax assets:
Operating and Strategic Development properties, primarily differences in basis of assets and liabilities	$	213,090	$	201,303
Interest deduction carryforwards		79,781		80,520
Operating loss and tax credit carryforwards		34,499		53,851
Total deferred tax assets		327,370		335,674
Valuation allowance		(19,960)		(18,218)
Total net deferred tax assets	$	307,410	$	317,456
Deferred tax liabilities:
Property associated with Master Planned Communities,  primarily differences in the tax basis of land assets and treatment  of interest and other costs	$	(218,842)	$	(212,093)
Operating and Strategic Development properties, primarily differences in basis of assets and liabilities		(42,860)		(47,355)
Deferred income		(134,929)		(120,213)
Total deferred tax liabilities		(396,631)		(379,661)
Net deferred tax liabilities	$	(89,221)	$	(62,205)

Schedule of reconciliation of Unrecognized Tax Benefits

(In thousands)	2015		2014		2013
Unrecognized tax benefits, opening balance	$	184,200	$	90,532	$	95,917
Gross increases - tax positions in prior period		-		93,668		9,162
Gross decreases - tax positions in prior periods		(147,676)		-		(14,547)
Unrecognized tax benefits, ending balance	$	36,524	$	184,200	$	90,532

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2015

COMMITMENTS AND CONTINGENCIES

Summary of contractual obligations relating to the entity's long-term commitments

											Subsequent
(In thousands)	2016		2017		2018		2019		2020		/ Other		Total
Ground lease and other leasing commitments	$	8,766	$	9,391	$	8,718	$	7,741	$	7,744	$	304,660	$	347,020

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OTHER ASSETS AND LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2015

OTHER ASSETS AND LIABILITIES

Summary of the significant components of prepaid expenses and other assets

	December 31,		December 31,
(In thousands)	2015		2014
Condominium receivables (a)	$	191,037	$	—
Condominium deposits		55,749		151,592
Special Improvement District receivable		72,558		33,318
In-place leases		22,139		32,715
Below-market ground leases		19,325		19,663
Above-market tenant leases		3,581		4,656
Equipment, net of accumulated depreciation of $3.9 million and $2.4 million, respectively		18,772		20,284
Security and escrow deposits		17,599		9,829
Tenant incentives and other receivables		10,480		14,264
Prepaid expenses		8,474		9,196
Federal income tax receivable		11,972		8,629
Intangibles		4,045		3,593
Uncertain tax position asset		112		383
Other		5,347		2,014
	$	441,190	$	310,136

Summary of the significant components of accounts payable and accrued expenses

	December 31,		December 31,
(In thousands)	2015		2014
Construction payables	$	185,731	$	170,935
Deferred income		113,122		65,675
Condominium deposits		50,192		82,150
Accounts payable and accrued expenses		33,928		34,154
Accrued payroll and other employee liabilities		31,271		25,838
Tenant and other deposits		31,193		12,756
Accrued interest		16,504		14,791
Accrued real estate taxes		15,134		9,903
Interest rate swaps liability		4,217		3,144
Above-market ground leases		2,113		2,272
Membership deposits		—		21,023
Other		31,949		23,376
	$	515,354	$	466,017

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INTANGIBLES (Tables)

12 Months Ended

Dec. 31, 2015

INTANGIBLES

Summary of intangible assets and liabilities

	Gross		Accumulated		Net
	Asset		(Amortization)		Carrying
(In thousands)	(Liability)		/ Accretion		Amount
As of December 31, 2015
Tenant leases:
In-place value	$	39,129	$	(16,990)	$	22,139
Above-market		5,333		(1,752)		3,581
Below-market		(6,163)		1,350		(4,813)
Ground leases:
Above-market		(3,545)		1,432		(2,113)
Below-market		23,096		(3,771)		19,325
As of December 31, 2014
Tenant leases:
In-place value	$	39,634	$	(6,919)	$	32,715
Above-market		5,342		(686)		4,656
Below-market		(6,184)		296		(5,888)
Ground leases:
Above-market		(3,545)		1,273		(2,272)
Below-market		23,096		(3,433)		19,663

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2015

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Summary of fair value of the Company's derivative financial instruments which are included in accounts payable and accrued liabilities in the Consolidated Balance Sheet

	As of December 31,
(In thousands)	2015		2014
Interest Rate Swaps Liability	$	4,217	$	3,144

Summary of effect of the Company's derivative financial instruments on the Condensed Consolidated Statements of Operations

	Year Ended December 31,					Year Ended December 31,
	2015		2014		Location of Loss	2015		2014
(In thousands) Cash Flow Hedges	Amount of Loss Recognized in OCI		Amount of Loss Recognized in OCI		Reclassified from AOCI into Earnings	Amount of Loss Reclassified from AOCI into Earnings		Amount of Loss Reclassified from AOCI into Earnings
Interest Rate Swaps	$	(1,705)	$	(1,192)	Interest Expense	$	(1,745)	$	(2,195)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

12 Months Ended

Dec. 31, 2015

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Summary of AOCI

Balance as of January 1, 2014	$	(8,222)
Other comprehensive income (loss) before reclassifications		(1,685)
Loss reclassified from accumulated other comprehensive loss to net income (loss)		2,195
Net current-period other comprehensive income (loss)		510
Balance as of December 31, 2014		(7,712)
Other comprehensive income (loss) before reclassifications		(1,922)
Loss reclassified from accumulated other comprehensive loss to net income (loss)		1,745
Net current-period other comprehensive income (loss)		(177)
Balance as of December 31, 2015	$	(7,889)

(a) All amounts are net of tax.

Summary of the amounts reclassified out of AOCI

		Amountsreclassified from Accumulated Other
		Comprehensive Income (Loss)
		For the Year Ended		For the Year Ended
AccumulatedOther Comprehensive Income (Loss) Components	Affected line item in the Statement of Operations	December 31, 2015		December 31, 2014
Gains and losses on cash flow hedges
Interest rate swap contracts	Interest expense	$	2,797	$	2,502
	Provision for income taxes		(1,052)		(307)
Total reclassifications for the period	Net of tax	$	1,745	$	2,195

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STOCK-BASED PLANS (Tables)

12 Months Ended

Dec. 31, 2015

STOCK-BASED PLANS

Summary of stock option plan activity

				Weighted Average		Aggregate
		Weighted Average		Remaining		Intrinsic
	Shares	Exercise Price		ContractualTerm		Value
				(Inyears)
Stock options outstanding at January 1, 2013	861,940	$	59.17
Granted	132,100		99.38
Exercised	-		-
Forfeited	(28,600)		62.40
Expired	-		-
Stock options outstanding at December 31, 2013	965,440	$	64.57
Granted	116,500		144.26
Exercised	-		-
Forfeited	(35,450)		87.45
Expired	-		-
Stock options outstanding at December 31, 2014	1,046,490	$	72.61
Granted	117,000		134.24
Exercised	-		-
Forfeited	(77,450)		103.84
Expired	-		-
Stock options outstanding at December 31, 2015	1,086,040	$	77.11	6.3	$	43,927,338
Stock options exercisable at December 31, 2015	3,400	$	60.03	4.2	$	180,646
Remaining unvested options outstanding and expected to vest	1,071,365	$	76.68	4.2	$	43,679,612

Schedule of information related to stock options outstanding

				Weighted Average
				Remaining
	Number	Weighted Average		Contractual Term	Number
Range of Exercise Prices	Outstanding	Exercise Price		(In years)	Exercisable
$46.49 - $55.82	48,500		$ 52.74	5.6	-
$57.77 - $60.33	569,400		57.94	5.2	3,400
$61.64 - $69.75	169,240		66.17	6.2	-
$81.80 - $110.50	107,400		98.35	7.4	-
$112.64 - $151.72	191,500		138.05	9.0	-
	1,086,040		$ 77.11	6.2	3,400

Schedule of fair value on grant date and the significant assumptions used in Black-Scholes option-pricing model

	As of December 31,
	2015			2014			2013
Grant date fair value	$	44.45		$	48.65		$	28.04
Expected life of options (in years)		7.5			7.5			7.3
Risk-free interest rate		2.0	%		2.2	%		1.8	%
Expected volatility		26.1	%		25.7	%		22.0	%
Expected annual dividend per share		-			-			-

Summary of restricted stock activity

		Weighted Average
		Grant Date
	Shares	FairValue
Restricted stock outstanding at January 1, 2013	57,933	$	65.72
Granted	77,434		79.77
Vested	(13,033)		60.15
Restricted stock outstanding at December 31, 2013	122,334	$	75.21
Granted	61,750		126.38
Vested	(11,394)		97.72
Restricted stock outstanding at December 31, 2014	172,690	$	92.02
Granted	81,581	$	121.81
Vested	(7,546)		147.56
Forfeited	(4,169)		101.33
Restricted stock outstanding at December 31, 2015	242,556	$	100.15

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RENTALS UNDER OPERATING LEASES (Tables)

12 Months Ended

Dec. 31, 2015

RENTALS UNDER OPERATING LEASES

Schedule of minimum future rentals under operating leases

	Total
	Minimum
Year	Rent (In thousands)
2016	$	146,983
2017		139,518
2018		131,145
2019		124,208
2020		104,295
Subsequent		477,247

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SEGMENTS (Tables)

12 Months Ended

Dec. 31, 2015

SEGMENTS

Schedule of segment operating results

	Year Ended December 31,
(In thousands)	2015		2014		2013
Master Planned Communities
Land sales	$	187,399	$	325,099	$	251,217
Builder price participation		26,846		20,908		9,356
Minimum rents		842		818		781
Other land revenues		14,778		16,470		13,416
Total revenues		229,865		363,295		274,770
Cost of sales – land		88,065		119,672		124,040
Land sales operations		34,443		31,932		30,826
Land sales real estate and business taxes		10,464		9,862		7,588
Provision for (recovery of) doubtful accounts		—		(11)		—
Depreciation and amortization		640		397		32
Interest income		(60)		(118)		(16)
Interest expense (*)		(18,053)		(19,620)		(18,678)
Total expenses		115,499		142,114		143,792
MPC EBT		114,366		221,181		130,978
Operating Assets
Minimum rents		149,064		95,807		80,124
Tenant recoveries		39,415		28,133		20,901
Hospitality revenues		45,374		37,921		39,201
Other rental and property revenues		25,453		24,429		20,360
Total revenues		259,306		186,290		160,586
Other property operating costs		68,078		62,752		61,146
Rental property real estate taxes		21,856		14,860		12,065
Rental property maintenance costs		10,236		8,592		7,552
Hospitality expenses		34,839		31,829		29,454
Provision for doubtful accounts		3,998		1,399		835
Demolition costs		2,675		6,712		2,078
Development-related marketing costs		9,747		9,770		3,462
Depreciation and amortization		89,075		49,272		31,427
Other income		(524)		—		—
Interest income		(37)		(151)		(135)
Interest expense		31,148		17,081		19,146
Equity in Earnings from Real Estate and Other Affiliates		(1,883)		(2,025)		(3,893)
Total expenses		269,208		200,091		163,137
Operating Assets EBT		(9,902)		(13,801)		(2,551)
Strategic Developments
Minimum rents		899		609		763
Tenant recoveries		127		220		167
Condominium rights and unit sales		305,284		83,565		32,969
Other land revenues		25		33		—
Other rental and property revenues		1,582		553		163
Total revenues		307,917		84,980		34,062
Condominium rights and unit cost of sales		191,606		49,995		16,572
Other property operating costs		4,673		4,282		5,547
Real estate taxes		2,282		2,547		2,226
Rental property maintenance costs		476		543		531
Provision for doubtful accounts		32		16		—
Demolition costs		622		22		—
Development-related marketing costs		15,719		13,013		1,449
Depreciation and amortization		3,240		1,706		189
Other expense/(income)		104		(2,373)		(3,609)
Interest income		(202)		—		—
Interest expense (*)		(6,633)		(11,918)		(4,318)
Equity in Earnings from Real Estate and Other Affiliates		(1,838)		(21,311)		(10,535)
Total expenses		210,081		36,522		8,052
Strategic Developments EBT		97,836		48,458		26,010
REP EBT	$	202,300	$	255,838	$	154,437

(*)Negative interest expense amounts are due to interest capitalized in our Master Planned Communities and Strategic Developments segments related to Operating Assets segment debt and the Senior Notes.

Schedule of reconciliation of REP EBT to GAAP-basis net income (loss)

Reconciliation of  REP EBT to GAAP	Year Ended December 31,
income (loss) before taxes	2015		2014		2013
(In thousands)
REP EBT	$	202,300	$	255,838	$	154,437
General and administrative		(81,345)		(73,569)		(48,466)
Corporate interest income/(expense), net		(52,995)		(30,819)		(10,575)
Warrant liability gain (loss)		58,320		(60,520)		(181,987)
Gain on sale of The Club at Carlton Woods		29,073		-		-
Increase (reduction) in tax indemnity receivable		-		90		(1,206)
Loss on settlement of tax indemnity receivable		-		(74,095)		-
Corporate other income, net		1,409		27,098		25,869
Corporate depreciation and amortization		(6,042)		(4,583)		(2,197)
Income (loss) before taxes	$	150,720	$	39,440	$	(64,125)

Schedule of reconciliation of segment revenue to GAAP-basis consolidated revenues

Reconciliation of Segment Basis Revenues to	Year Ended December 31,
GAAP Revenues (In thousands)	2015		2014		2013
Master Planned Communities	$	229,865	$	363,295	$	274,770
Operating Assets		259,306		186,290		160,586
Strategic Developments		307,917		84,980		34,062
Total revenues	$	797,088	$	634,565	$	469,418

Summary of assets by segment and the reconciliation of total segment assets to the total assets in the Condensed Consolidated Balance Sheets

	December 31,
(In thousands)	2015		2014
Master Planned Communities	$	2,022,524	$	1,875,550
Operating Assets		2,365,724		1,926,192
Strategic Developments		1,138,695		876,246
Total segment assets		5,526,943		4,677,988
Corporate and other		194,639		427,280
Total assets	$	5,721,582	$	5,105,268

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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables)

12 Months Ended

Dec. 31, 2015

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Schedule of quarterly financial information

	2015
		First		Second		Third		Fourth
(In thousands, except share amounts)		Quarter		Quarter		Quarter		Quarter
Total revenues		$	155,090	$	209,163	$	203,442	$	229,393
Operating income			16,457		25,572		36,544		40,191
Net income (loss)			(105,959)		50,585		156,212		25,881
Net income (loss) attributable to common stockholders			(105,959)		50,573		156,224		25,881
Earnings (loss) per share:
Basic			(2.68)		1.28		3.96		0.65
Diluted (a)			(2.68)		0.18		0.76		0.59
Weighted average shares outstanding:
Basic			39,465		39,468		39,473		39,473
Diluted			39,465		43,197		42,913		42,743

	2014
		First		Second		Third		Fourth
(In thousands, except share amounts)		Quarter		Quarter		Quarter		Quarter
Total revenues		$	98,653	$	209,631	$	119,228	$	207,053
Operating income			13,947		91,781		23,850		37,144
Net income (loss)			(86,331)		(14,733)		45,615		31,929
Net income (loss) attributable to common stockholders			(86,316)		(14,760)		45,615		31,930
Earnings (loss) per share:
Basic			(2.19)		(0.37)		1.16		0.81
Diluted (a)			(2.19)		(0.37)		0.48		(1.18)
Weighted average shares outstanding:
Basic			39,454		39,458		39,465		39,464
Diluted			39,454		39,458		43,171		43,027

a) Diluted earnings per share includes the impact of warrants, in the money options and restricted stock. Net income was also adjusted for the warrant gain during the period, where applicable.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Investment in Real Estate) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Developments
Land & improvements	$ 182,843	$ 164,280
Development costs	728,984	667,228
Condominium rights	125,100	82,795
Total Developments	$ 1,036,927	$ 914,303
Minimum | Master Planned Communities
Useful lives of assets
Estimated useful lives	20 years
Residual value	$ 0
Maximum | Master Planned Communities
Useful lives of assets
Estimated useful lives	40 years
Building and Building Improvements | Minimum
Useful lives of assets
Estimated useful lives	10 years
Building and Building Improvements | Maximum
Useful lives of assets
Estimated useful lives	45 years
Equipment Tenant Improvements and Fixtures | Minimum
Useful lives of assets
Estimated useful lives	5 years
Equipment Tenant Improvements and Fixtures | Maximum
Useful lives of assets
Estimated useful lives	10 years
Computer, Hardware and Software and Vehicles | Minimum
Useful lives of assets
Estimated useful lives	3 years
Computer, Hardware and Software and Vehicles | Maximum
Useful lives of assets
Estimated useful lives	5 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Depreciation) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Depreciation due to change in estimated useful life	$ 82,275	$ 50,683	$ 29,637
Service Life
Depreciation due to change in estimated useful life	$ 17,100	$ 10,800	$ 1,200
Additional depreciation weighted average common shares	$ 0.40	$ 0.27	$ 0.03

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Acquisitions) (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Gain on Business Interruption Insurance Recovery	$ 0.3
Gain (Loss) Related to Litigation Settlement			$ 4.5
Rental Revenue
Straight-line rent receivables	22.2	$ 13.5
The Metropolitan Downtown Columbia
Gain from sale			0.7
TPC Summerlin and TPC Las Vegas
Participation fee, other income	$ 0.5
South Street Seaport
Gain on Business Interruption Insurance Recovery		27.0	12.2
Alameda Plaza
Pre-tax gain recognized on the sale			1.0
Head Acquisition LP
Gain from sale			8.5
Rio West
Gain from sale			$ 0.6
Redlands Promenade
Gain from sale		$ 2.4

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Receivables and Taxes) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Allowance for doubtful accounts and notes receivable
Notes receivable, net	$ 1,664	$ 28,630
Changes in allowance for doubtful accounts and notes receivable accounts
Balance at the beginning of the period	7,619	7,390	$ 8,914
Provision for doubtful accounts	4,030	1,404	836
Write-offs	(7,243)	(1,175)	(2,360)
Balance at the end of the period	4,406	7,619	$ 7,390
Municipal Utility District receivables
Receivables net of allowances	900	$ 5,800
Summerlin
Allowance for doubtful accounts and notes receivable
Notes receivable, net	20,200
Note receivable from homebuilder, interest rate (as a percent)		39.00%
General Growth Properties
Allowance for doubtful accounts and notes receivable
Notes receivable, net	$ 200	$ 6,700
Note receivable from homebuilder, interest rate (as a percent)	441.00%
Cash payments under the note receivable	$ 6,500

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Deferred Expenses) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred leasing cost accumulated amortization	$ 10,800	$ 6,400
Deferred Costs	61,804	60,407
Mortgages, notes and loans payable	$ 2,443,962	1,978,807
Accounting Standards Update 2015-03
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred Costs		(14,700)
Mortgages, notes and loans payable		$ 14,700

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EARNINGS PER SHARE - EPS Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Numerator:
Net income (loss)	$ 25,881	$ 156,212	$ 50,585	$ (105,959)	$ 31,929	$ 45,615	$ (14,733)	$ (86,331)	$ 126,719	$ (23,520)	$ (73,695)
Net income attributable to noncontrolling interests										(11)	(95)
Net income (loss) attributable to common stockholders	$ 25,881	$ 156,224	$ 50,573	$ (105,959)	$ 31,930	$ 45,615	$ (14,760)	$ (86,316)	$ 126,719	$ (23,531)	$ (73,790)
Denominator:
Weighted average basic common shares outstanding	39,473,000	39,473,000	39,468,000	39,465,000	39,464,000	39,465,000	39,458,000	39,454,000	39,470	39,464	39,449
Numerator:
Net income (loss) attributable to common stockholders									$ 126,719	$ (23,531)	$ (73,790)
Warrant Liability Gain									58,320
Adjusted net income (loss) attributable to common stockholders									$ 68,399	$ (23,531)	$ (73,790)
Denominator:
Weighted average basic common shares outstanding	39,473,000	39,473,000	39,468,000	39,465,000	39,464,000	39,465,000	39,458,000	39,454,000	39,470	39,464	39,449
Restricted stock and stock options (in shares)									411
Warrants (in shares)									2,873
Weighted average diluted common shares outstanding	42,743,000	42,913,000	43,197,000	39,465,000	43,027,000	43,171,000	39,458,000	39,454,000	42,754	39,464	39,449
Basic income (loss) per share: (in dollars per share)	$ 0.65	$ 3.96	$ 1.28	$ (2.68)	$ 0.81	$ 1.16	$ (0.37)	$ (2.19)	$ 3.21	$ (0.60)	$ (1.87)
Diluted income (loss) per share: (in dollars per share)	$ 0.59	$ 0.76	$ 0.18	$ (2.68)	$ (1.18)	$ 0.48	$ (0.37)	$ (2.19)	$ 1.60	$ (0.60)	$ (1.87)

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EARNINGS PER SHARE - Antidilutive Securities (Details) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Stock Options
Antidilutive securities excluded from computation of diluted earnings per share
Antidilutive securities excluded from computation of diluted earnings per share (in shares)	141,776	1,046,940	965,440
Restricted Stock
Antidilutive securities excluded from computation of diluted earnings per share
Antidilutive securities excluded from computation of diluted earnings per share (in shares)		172,690	122,334
Sponsors Warrants
Antidilutive securities excluded from computation of diluted earnings per share
Antidilutive securities excluded from computation of diluted earnings per share (in shares)		1,916,667	1,916,667
Management Warrants
Antidilutive securities excluded from computation of diluted earnings per share
Antidilutive securities excluded from computation of diluted earnings per share (in shares)		2,862,687	2,862,687

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SPONSORS AND MANAGEMENT WARRANTS (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	12 Months Ended
	Feb. 28, 2011	Dec. 31, 2015	Dec. 31, 2014	Nov. 09, 2010
Sponsors and Management Warrants
Warrant liabilities		$ 307,760	$ 366,080
Sponsors Warrants
Sponsors and Management Warrants
Exercise price (in dollars per share)				$ 50.00
Warrants exercised		1,916,667
Issuance of warrants to purchase common stock (in shares)		1,916,667
Warrant liabilities		$ 123,100	157,100
Management Warrants
Sponsors and Management Warrants
Issuance of warrants to purchase common stock (in shares)	2,862,687	2,862,687
Proceeds from issuance of Management warrants	$ 19,000
Warrant liabilities		$ 184,700	$ 209,000
Management Warrants | Chief Executive Officer
Sponsors and Management Warrants
Exercise price (in dollars per share)	$ 42.23
Management Warrants | President
Sponsors and Management Warrants
Warrants exercised	42.23
Management Warrants | Chief Financial Officer
Sponsors and Management Warrants
Exercise price (in dollars per share)	$ 54.50

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ACQUISITIONS AND DISPOSITIONS (Acquisitions) (Details) $ in Thousands			1 Months Ended		3 Months Ended	12 Months Ended
	Sep. 04, 2015 USD ($)	Dec. 12, 2014 USD ($) ft² building	Oct. 31, 2014 USD ($) ft² item	Jul. 31, 2014 USD ($) ft²	Mar. 31, 2015 USD ($) ft²	Dec. 31, 2015 USD ($) ft²	Dec. 31, 2014 USD ($)	Mar. 31, 2014 ft²
Acquisitions
Gain on sale of The Club at Carlton Woods						$ 29,073
Seaport District Assemblage
Acquisitions
Area of real estate property acquired (in square foot) | ft²					58,000			42,694
South Street Seaport
Acquisitions
Area of real estate property acquired with total development rights | ft²					196,133			817,784
Purchase price					$ 91,400		$ 136,700
Conroe, Texas
Acquisitions
Area of real estate property acquired (in square foot) | ft²						2,055
Purchase price						$ 98,500
85 South Street
Acquisitions
Area of real estate property acquired (in square foot) | ft²			60,000
Purchase price			$ 20,100
Buildings acquired consolidated			8,100
Land acquired consolidated			$ 15,900
Number of story acquired | item			8
1701 Lake Robbins
Acquisitions
Area of real estate property acquired (in square foot) | ft²				12,376
Purchase price				$ 5,700
Buildings acquired consolidated				3,700
Land acquired consolidated				1,700
Intangible lease assets acquired consolidated				200
Assumption of Mortgage included in the purchase price				$ 4,600
110 N Wacker
Acquisitions
Fee interest percentage				100.00%
Fee interest purchased				$ 12,300
Leases, Acquired-in-Place | 1701 Lake Robbins
Acquisitions
Intangible lease assets acquired consolidated				300
Below Market Leases | 85 South Street
Acquisitions
Intangible lease assets acquired consolidated			$ (3,900)
Below Market Leases | 1701 Lake Robbins
Acquisitions
Intangible lease assets acquired consolidated				$ (100)
The Club at Carlton Woods | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
Acquisitions
Proceeds from dispositions	$ 25,100
Liabilities assumed by purchaser	4,000
Gain on sale of The Club at Carlton Woods	29,100
Total assets	20,900
Total liabilities	$ 24,900
General Growth Properties
Acquisitions
Area of real estate property acquired with total development rights | ft²		699,884
Number of buildings | building		6
Purchase price		$ 130,000
Buildings acquired consolidated		79,200
Land acquired consolidated		23,400
Intangible lease assets acquired consolidated		27,400
General Growth Properties | Leases, Acquired-in-Place
Acquisitions
Intangible lease assets acquired consolidated		25,200
General Growth Properties | Above Market Leases
Acquisitions
Intangible lease assets acquired consolidated		3,800
General Growth Properties | Below Market Leases
Acquisitions
Intangible lease assets acquired consolidated		$ 1,600

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ACQUISITIONS AND DISPOSITIONS (Rio West Disposal) (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2013 USD ($) ft² a	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Recent transactions
Proceeds from sale of property		$ 25,139	$ 11,953	$ 10,814
Rio West | Disposal By Sale
Recent transactions
Area of property sold (in square feet) | ft²	521,194
Area of site (in acres) | a	50
Proceeds from sale of property	$ 12,000
Pre-tax gain recognized on the sale	$ 600

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REAL ESTATE AND OTHER AFFILIATES (Details)				3 Months Ended		12 Months Ended
	Jan. 24, 2014 USD ($) a item	Oct. 04, 2013 USD ($) ft² a item	Jul. 11, 2013 USD ($)	Dec. 31, 2015 USD ($)	Mar. 31, 2015 USD ($) $ / a	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Oct. 27, 2011
Investment in Real Estate and Other Affiliates
Carrying Value				$ 57,811,000		$ 57,811,000	$ 53,686,000
Share of Earnings/Dividends						3,721,000	23,336,000	$ 14,428,000
Aggregate carrying value of unconsolidated VIEs				21,500,000		$ 21,500,000	29,500,000
Number of variable interest entities in which entity is primary beneficiary | item						1
Carrying values of the assets associated with the operations of the consolidated VIEs				21,500,000		$ 21,500,000	21,100,000
Carrying values of the liabilities associated with the operations of the consolidated VIEs				1,100,000		1,100,000	600,000
Book value of land contributed to joint venture				322,462,000		322,462,000	317,211,000
Area of land contributed to the joint venture (in acres) | a	4.5
Fair value of the land contributed to joint venture	$ 3,200,000
Percentage of ownership interest of partners in joint venture	50.00%
Mortgages, notes and loans payable				2,443,962,000		2,443,962,000	1,978,807,000
Outstanding debt				2,456,354,000		2,456,354,000
Proceeds from Sale of Real Estate						25,139,000	11,953,000	10,814,000
Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Carrying Value				53,859,000		53,859,000	49,769,000
Share of Earnings/Dividends						1,974,000	21,687,000	11,925,000
Cost-method Investments [Member]
Investment in Real Estate and Other Affiliates
Carrying Value				3,952,000		3,952,000	3,917,000
Share of Earnings/Dividends						$ 1,747,000	$ 1,649,000	2,503,000
Discovery Land | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Book value of land contributed to joint venture					$ 13,400,000
SID Bonds Transferred to Joint Venture					1,300,000
Transaction value of the land contributed to joint venture					$ 125,400,000
Preferred return, on capital (as a percent)					5.00%
Return on capital contributions (as a percent)					5.00%
Entitlement of distribution by joint venture (in times) | item						2
Value of land contributed to joint venture (in dollars per acre) | $ / a					226,000
Discovery Land | Equity Method Investments [Member] | Maximum
Investment in Real Estate and Other Affiliates
Maximum capital contribution required					$ 30,000,000
The Metropolitan Downtown Columbia
Investment in Real Estate and Other Affiliates
Cash contributed by joint venture partner			$ 13,300,000
Fair value of the land contributed to joint venture			20,300,000
Percentage of ownership interest of partners in joint venture									50.00%
Mortgages, notes and loans payable			64,100,000
Transaction value, per constructed unit of land contributed to joint venture			53,500
Distribution of the cash contributed by joint venture partner			7,000,000
Additional improvements made in the venture			16,400,000
Future contribution required			$ 3,100,000
The Metropolitan Downtown Columbia | Construction Loan Payable
Investment in Real Estate and Other Affiliates
Outstanding debt				63,100,000		$ 63,100,000
Interest rate margin (as a percent)			2.40%
Parcel C
Investment in Real Estate and Other Affiliates
Transaction value of the land contributed to joint venture		$ 23,400,000
Number of units in Class A apartment building to be constructed | item		437
Area of real estate property to be constructed (in square feet) | ft²		31,000
Area of land contributed to the joint venture (in acres) | a		5
Fair value of the land contributed to joint venture		$ 4,000,000
Transaction value, per constructed unit of land contributed to joint venture		$ 53,500
Constellation
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)	50.00%
Number of units in Class A apartment building to be constructed | item	124
Area Of Land In Downtown Summerlin | a	400
Percent share of proceeds upon sale of property	50
Percentage of proceeds in excess of an amount determined by applying a specified capitalization rate to NOI	100.00%
Capitalization rate (as a percent)	7.00%
Constellation | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Future contribution required				1,000,000
Master Planned Communities | Discovery Land
Investment in Real Estate and Other Affiliates
Carrying Value				$ 12,052,000		$ 12,052,000
Operating Assets | Millennium Woodlands Phase II LLC | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				81.43%		81.43%	81.43%
Carrying Value							$ 1,023,000
Share of Earnings/Dividends						$ (1,165,000)	$ (1,012,000)
Operating Assets | Stewart Title | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				50.00%		50.00%	50.00%
Carrying Value				$ 3,715,000		$ 3,715,000	$ 3,869,000
Share of Earnings/Dividends						$ 996,000	$ 1,301,000	1,223,000
Operating Assets | Clark County Las Vegas Stadium, LLC | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				50.00%		50.00%	50.00%
Carrying Value				$ 11,050,000		$ 11,050,000	$ 10,548,000
Share of Earnings/Dividends						$ 152,000	$ (88,000)	(13,000)
Operating Assets | The Metropolitan Downtown Columbia | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				50.00%		50.00%	50.00%
Carrying Value				$ 4,872,000		$ 4,872,000	$ 4,800,000
Share of Earnings/Dividends						$ (13,000)
Operating Assets | Woodlands Sarofim 1 | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				20.00%		20.00%	20.00%
Carrying Value				$ 2,588,000		$ 2,588,000	$ 2,595,000
Share of Earnings/Dividends						$ 166,000	$ 175,000	180,000
Strategic Developments | Millennium Woodlands Phase II LLC | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				81.43%		81.43%	81.43%
Share of Earnings/Dividends							$ (279,000)	(74,000)
Strategic Developments | Circle T | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				50.00%		50.00%	50.00%
Carrying Value				$ 9,128,000		$ 9,128,000	$ 9,004,000
Strategic Developments | HHMK Development LLC | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				50.00%		50.00%	50.00%
Carrying Value				$ 10,000		$ 10,000	$ 10,000
Share of Earnings/Dividends						$ 549,000	$ 2,120,000	732,000
Strategic Developments | KR Holdings LLC | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				50.00%		50.00%	50.00%
Carrying Value				$ 689,000		$ 689,000	$ 9,183,000
Share of Earnings/Dividends						$ 1,289,000	$ 19,470,000	$ 9,877,000
Strategic Developments | Parcel C | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				50.00%		50.00%	50.00%
Carrying Value				$ 7,070,000		$ 7,070,000	$ 8,737,000
Strategic Developments | Constellation | Equity Method Investments [Member]
Investment in Real Estate and Other Affiliates
Economic interest (as a percent)				50.00%		50.00%	50.00%
Carrying Value				$ 2,685,000		$ 2,685,000
Unconsolidated Properties
Investment in Real Estate and Other Affiliates
Secured debt				109,600,000		109,600,000	$ 89,400,000
Share of the entity in secured debt				$ 64,800,000		$ 64,800,000	$ 54,600,000
One Month LIBOR
Investment in Real Estate and Other Affiliates
Variable rate basis			one-month LIBOR

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IMPAIRMENT (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
IMPAIRMENT
Impairment charges	$ 0.0	$ 0.0	$ 0.0

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets and Liabiliites Measured on a Recurring Basis) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets:
Cash equivalents	$ 18	$ 75,027
Liabilities
Warrants	307,760	366,080
Interest rate swaps	4,217	3,144
Level 1
Assets:
Cash equivalents	18	75,027
Level 2
Liabilities
Interest rate swaps	4,217	3,144
Level 3
Liabilities
Warrants	$ 307,760	$ 366,080

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Reconciliation of Warrants Using Level 3 Inputs) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Level 3
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3)
Marketability discount due to lapses of restriction period	$ 0
Warrant
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3)
Expected Volatility (as a percent)	27.40%	24.50%
Warrant | Level 3
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3)
Balance at the beginning of the period	$ 366,080	$ 305,560	$ 123,573
Warrant liability (gain)/loss	(58,320)	60,520	181,987
Balance at the end of the period	$ 307,760	$ 366,080	$ 305,560
Warrant | Minimum | Level 3
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3)
Discount for lack of marketability (as a percent)	10.00%	18.00%
Warrant | Maximum | Level 3
Reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3)
Discount for lack of marketability (as a percent)	12.00%	20.00%

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets and Liabiliites Measured on a Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets:
Cash and cash equivalents	$ 18	$ 75,027
Liabilities:
Allowance, notes receivable	200	500
Nonrecurring | Reported Value Measurement
Assets:
Cash and cash equivalents	445,283	485,424
Notes receivable, net	1,664	28,630
Liabilities:
Fixed-rate debt	1,141,381	1,030,554
Variable-rate debt	1,314,973	962,916
Nonrecurring | Estimate of Fair Value Measurement
Assets:
Cash and cash equivalents	445,283	485,424
Notes receivable, net	1,664	28,630
Liabilities:
Fixed-rate debt	1,137,166	1,050,333
Variable-rate debt	$ 1,314,973	$ 962,916

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MORTGAGES, NOTES AND LOANS PAYABLE (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Mortgages, notes and loans payable
Deferred Financing Costs:	$ (12,392)	$ (14,663)
Mortgages, notes and loans payable	2,443,962	1,978,807
Deferred Financing Costs, accumulated amortization	12,700	6,900
Long-term debt-principal payments
2016	272,269
2017	38,464
2018	342,670
2019	504,135
2020	111,488
Thereafter	1,187,328
Total	2,456,354
Secured Debt
Mortgages, notes and loans payable
Fixed-rate debt:	1,087,642	1,008,165
Variable-rate debt:	1,314,973	962,916
Amount of variable-rate debt swapped to fixed rate	209,500
Bonds
Mortgages, notes and loans payable
Fixed-rate debt:	$ 53,739	$ 22,389

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MORTGAGES, NOTES AND LOANS PAYABLE - (Schedule of Debt by Property) (Details)																							12 Months Ended
	Feb. 25, 2016 USD ($)	Jan. 27, 2016 USD ($) item	Dec. 30, 2015 USD ($) item	Nov. 09, 2015 USD ($) item	May. 15, 2015 USD ($)	May. 06, 2015 USD ($) item	Dec. 05, 2014 USD ($) item	Nov. 06, 2014 USD ($) item	Oct. 03, 2014 USD ($) item	Aug. 06, 2014 USD ($) room	Jul. 18, 2014 USD ($)	Jul. 15, 2014 USD ($) item	Jun. 30, 2014 USD ($)	Jun. 27, 2014 USD ($) item	Apr. 15, 2014 USD ($)	Dec. 20, 2013 USD ($) ft² item	Nov. 25, 2013 USD ($) item	Oct. 24, 2013 USD ($) item	Oct. 23, 2013 USD ($) item	Oct. 02, 2013 USD ($)	Jul. 11, 2013	Mar. 15, 2013 USD ($)	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Nov. 24, 2015 USD ($)	Mar. 25, 2015 USD ($)	Nov. 10, 2014 USD ($)	Aug. 02, 2013 USD ($) ft² item
Mortgages, notes and loans payable
Unamortized underwriting fees																							$ (6,767,000)	$ (7,689,000)
Deferred Financing Costs:																							(12,392,000)	(14,663,000)
Deferred Financing Costs, accumulated amortization																							$ 12,700,000	$ 6,900,000
Weighted average interest rate (as a percent)																							4.44%	4.61%
Land, buildings and equipment and developments in progress pledged as collateral																							$ 2,300,000,000
Total mortgages, notes and loans payable																							2,443,962,000	$ 1,978,807,000
Net cash proceeds																							$ 583,822,000	597,553,000	$ 1,120,102,000
One Month LIBOR
Mortgages, notes and loans payable
Variable rate basis (as a percent)																							0.36%
Variable rate basis																					one-month LIBOR
Other Corporate Financing Arrangements
Mortgages, notes and loans payable
Interest rate (as a percent)																							3.00%
Mortgages, notes, and loans payable, gross																							$ 18,794,000	19,968,000
Other Corporate Financing Arrangements | Recourse Debt
Mortgages, notes and loans payable
Mortgages, notes, and loans payable, gross																							$ 20,400,000
Senior Notes 6.875 Percent Due 2021
Mortgages, notes and loans payable
Interest rate (as a percent)																							6.88%
Mortgages, notes, and loans payable, gross																							$ 750,000,000	750,000,000
Fixed interest rate (as a percent)																				6.875%
Total mortgages, notes and loans payable																				$ 750,000,000
Maximum percentage of Notes that can be redeemed using proceeds from equity offerings at any time prior to October 1, 2016																				35.00%
Percentage of principal amount at which Notes can be redeemed																				106.875%
Net cash proceeds																				$ 741,300,000
Senior Notes 6.875 Percent Due 2021 | Recourse Debt
Mortgages, notes and loans payable
Mortgages, notes, and loans payable, gross																							$ 750,000,000
Bridgeland | Revolving Credit Facility
Mortgages, notes and loans payable
Facility Amount				$ 15,200,000
Number of extension options | item				2
Option to extend, term				1 year
Bridgeland | Revolving Credit Facility | One Month LIBOR
Mortgages, notes and loans payable
Variable rate basis (as a percent)				3.15%
Fixed interest rate (as a percent)				4.60%
Summerlin
Mortgages, notes and loans payable
Maximum recourse upon completion of the project and achievement of debt service coverage ratio																							15.00%
Maximum percentage recourse upon achievement of conditions																							10.00%
Debt service coverage ratio to be achieved for reduction in maximum recourse																							1.15
Debt service coverage ratio to be achieved for further reduction in maximum recourse																							1.25
Minimum average tenant sales per net rentable square foot to be achieved for further reduction in maximum recourse																							$ 500.00
Occupancy percentage																							90.00%
Recourse on loan (as a percent)																							35.00%
Total mortgages, notes and loans payable																							$ 311,800,000
Columbia Regional Building
Mortgages, notes and loans payable
Total mortgages, notes and loans payable																						$ 23,000,000
Outlet at Riverwalk Properties | Construction Loan Payable
Mortgages, notes and loans payable
Interest rate margin (as a percent)																		2.75%
Number of extension options | item																		2
Option to extend, term																		1 year
Total mortgages, notes and loans payable																		$ 64,400,000
Master Planned Communities
Mortgages, notes and loans payable
Mortgages, notes, and loans payable, gross																							$ 282,889,000	211,195,000
Master Planned Communities | Bridgeland | Term Loan
Mortgages, notes and loans payable
Interest rate margin (as a percent)																							2.75%
Master Planned Communities | Bridgeland | Land Loan
Mortgages, notes and loans payable
Interest rate (as a percent)																							4.60%
Mortgages, notes, and loans payable, gross																							$ 40,072,000	15,874,000
Net worth required to be maintained																							$ 65,000,000
Master Planned Communities | Bridgeland | Development Loan
Mortgages, notes and loans payable
Interest rate (as a percent)																							5.00%
Mortgages, notes, and loans payable, gross																								10,000
Master Planned Communities | Summerlin | Bonds
Mortgages, notes and loans payable
New SIDs issued																							$ 54,000,000
Bond obligation																							$ 16,700,000
Master Planned Communities | Summerlin South | S108
Mortgages, notes and loans payable
Interest rate (as a percent)																							5.95%
Mortgages, notes, and loans payable, gross																								563,000
Master Planned Communities | Summerlin South | S124
Mortgages, notes and loans payable
Interest rate (as a percent)																							5.95%
Mortgages, notes, and loans payable, gross																							$ 159,000	236,000
Master Planned Communities | Summerlin South | S128
Mortgages, notes and loans payable
Interest rate (as a percent)																							6.05%
Mortgages, notes, and loans payable, gross																							$ 534,000	623,000
Master Planned Communities | Summerlin South | S128C
Mortgages, notes and loans payable
Interest rate (as a percent)																							6.05%
Mortgages, notes, and loans payable, gross																							$ 4,856,000	5,274,000
Master Planned Communities | Summerlin South | S132
Mortgages, notes and loans payable
Interest rate (as a percent)																							6.00%
Mortgages, notes, and loans payable, gross																							$ 1,676,000	2,936,000
Master Planned Communities | Summerlin South | S151
Mortgages, notes and loans payable
Interest rate (as a percent)																							6.00%
Mortgages, notes, and loans payable, gross																							$ 4,534,000	6,211,000
Master Planned Communities | Summerlin South | S152
Mortgages, notes and loans payable
Interest rate (as a percent)																							6.00%
Mortgages, notes, and loans payable, gross																							$ 9,020,000
Master Planned Communities | Summerlin West | S808 or 810
Mortgages, notes and loans payable
Interest rate (as a percent)																							6.00%
Mortgages, notes, and loans payable, gross																							$ 1,047,000	2,805,000
Master Planned Communities | Summerlin West | S812
Mortgages, notes and loans payable
Interest rate (as a percent)																							6.00%
Mortgages, notes, and loans payable, gross																							$ 28,328,000
Master Planned Communities | Woodlands Properties
Mortgages, notes and loans payable
Number of extension options | item																							2
Master Planned Communities | Woodlands Properties | Line of Credit
Mortgages, notes and loans payable
Interest rate (as a percent)																							3.11%
Mortgages, notes, and loans payable, gross																							$ 192,663,000	176,663,000
Undrawn and available borrowing capacity																							$ 7,300,000
Option to extend, term																							1 year
Net worth required to be maintained																							$ 200,000,000
Maximum facility amount at first extension option																							175,000,000
Maximum facility amount at second extension option																							25,000,000
Master Planned Communities | Woodlands Properties | Term Loan
Mortgages, notes and loans payable
Facility Amount																							100,000,000
Master Planned Communities | Woodlands Properties | Revolving Credit Facility
Mortgages, notes and loans payable
Facility Amount																							100,000,000
Operating Assets
Mortgages, notes and loans payable
Outstanding balance																							40,000,000
Mortgages, notes, and loans payable, gross																							$ 1,326,992,000	1,019,996,000
Fixed interest rate per swap (as a percent)																							3.41%
Operating Assets | Capital Lease Obligations
Mortgages, notes and loans payable
Interest rate (as a percent)																							3.60%
Mortgages, notes, and loans payable, gross																							$ 52,000	135,000
Operating Assets | Shops at Summerlin Centre | One Month LIBOR
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.61%
Mortgages, notes, and loans payable, gross																							$ 289,804,000	229,153,000
Net worth required to be maintained																							$ 311,800,000
Operating Assets | Shops at Summerlin Centre | S108
Mortgages, notes and loans payable
Interest rate (as a percent)																							5.95%
Mortgages, notes, and loans payable, gross																							$ 235,000	310,000
Operating Assets | Shops at Summerlin Centre | S124
Mortgages, notes and loans payable
Interest rate (as a percent)																							6.05%
Mortgages, notes, and loans payable, gross																							$ 3,350,000	3,431,000
Operating Assets | 10-60 Columbia Corporate Center
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.76%
Mortgages, notes, and loans payable, gross																							$ 80,000,000
Interest rate margin (as a percent)						1.75%
Number of extension options | item						2
Option to extend, term						1 year
Total mortgages, notes and loans payable						$ 80,000,000
Operating Assets | 70 Columbia Corporate Center
Mortgages, notes and loans payable
Variable rate basis														one-month LIBOR
Interest rate margin (as a percent)														2.25%
Cash paid in full satisfaction of loan assumed as part of the acquisition															$ 17,000,000
Loans Assumed															$ 16,000,000
Lender participation right (as a percent)															30.00%
Percentage of cumulative preferred return on the property															10.00%
Participation right payment															$ 700,000
Number of extension options | item														2
Option to extend, term														1 year
Total mortgages, notes and loans payable														$ 20,000,000
Operating Assets | 70 Columbia Corporate Center | Line of Credit
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.61%
Mortgages, notes, and loans payable, gross																							$ 20,000,000	20,000,000
Operating Assets | Columbia Regional Building
Mortgages, notes and loans payable
Variable rate basis																						one-month LIBOR
Interest rate margin above specified limit (as a percent)																							2.00%
Extension period at borrower's option																							1 year
Number of extension options | item																							2
Operating Assets | Columbia Regional Building | Line of Credit
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.36%
Mortgages, notes, and loans payable, gross																							$ 22,188,000	20,513,000
Net worth required to be maintained																							$ 23,008,000
Operating Assets | One Hughes Landing
Mortgages, notes and loans payable
Interest rate (as a percent)																							4.30%
Mortgages, notes, and loans payable, gross																							$ 52,000,000	52,000,000
Fixed interest rate (as a percent)																												4.30%
Total mortgages, notes and loans payable																												$ 52,000,000
Operating Assets | Two Hughes Landing
Mortgages, notes and loans payable
Interest rate (as a percent)																							4.20%
Mortgages, notes, and loans payable, gross																							$ 48,000,000	19,992,000		$ 48,000,000
Fixed interest rate (as a percent)																										4.20%
Total mortgages, notes and loans payable																										$ 41,200,000
Operating Assets | 1725-35 Hughes Landing Boulevard
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.01%
Mortgages, notes, and loans payable, gross																							$ 89,677,000	47,513,000
Net worth required to be maintained																							$ 143,000,000
Operating Assets | Hughes Landing Hotel
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.86%
Mortgages, notes, and loans payable, gross																							$ 20,064,000
Net worth required to be maintained																							$ 37,100,000
Operating Assets | Hughes Landing Retail
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.31%
Mortgages, notes, and loans payable, gross																							$ 28,726,000	17,424,000
Net worth required to be maintained																							$ 36,575,000
Operating Assets | 1701 Lake Robbins
Mortgages, notes and loans payable
Interest rate (as a percent)																							5.81%
Mortgages, notes, and loans payable, gross																							$ 4,600,000	4,600,000
Loans Assumed											$ 4,600,000
Fixed interest rate (as a percent)											5.81%
Operating Assets | Millennium Waterway Apartments
Mortgages, notes and loans payable
Interest rate (as a percent)																							3.75%
Mortgages, notes, and loans payable, gross																							$ 55,584,000	55,584,000
Operating Assets | 110 N Wacker
Mortgages, notes and loans payable
Interest rate (as a percent)																							5.21%
Mortgages, notes, and loans payable, gross																							$ 26,481,000	29,000,000
Fixed interest rate per swap (as a percent)																							5.21%
Corporate recourse guarantee amount																							$ 7,000,000
Operating Assets | 9303 New Trails
Mortgages, notes and loans payable
Interest rate (as a percent)																							4.88%
Mortgages, notes, and loans payable, gross																							$ 12,734,000	13,074,000
Operating Assets | Outlet Collection at Riverwalk
Mortgages, notes and loans payable
Interest rate (as a percent)																							3.11%
Mortgages, notes, and loans payable, gross																							$ 56,100,000	47,118,000
Variable rate basis																		one-month LIBOR
Decrease in exposure of outstanding principal (as a percent)																							25.00%
Percentage of debt yield to draw additional loan proceeds																							11.00%
Net worth required to be maintained																							$ 64,400,000
Recourse on loan (as a percent)																							50.00%
Operating Assets | 3831 Technology Forest Drive
Mortgages, notes and loans payable
Interest rate (as a percent)																							4.50%
Mortgages, notes, and loans payable, gross																							$ 22,759,000
Fixed interest rate (as a percent)																											4.50%
Total mortgages, notes and loans payable																											$ 23,000,000
Operating Assets | The Woodlands Resort and Conference Center
Mortgages, notes and loans payable
Interest rate (as a percent)																							3.11%
Mortgages, notes, and loans payable, gross			$ 85,000,000																				$ 85,000,000	76,027,000
Interest rate margin (as a percent)			2.75%
Number of extension options | item			2
Option to extend, term			1 year
Total mortgages, notes and loans payable			$ 95,000,000
Operating Assets | Ward Village
Mortgages, notes and loans payable
Interest rate (as a percent)																							3.42%
Outstanding balance																							$ 143,000,000
Mortgages, notes, and loans payable, gross																							$ 238,716,000	238,716,000
Fixed interest rate per swap (as a percent)																							3.81%
Undrawn and available borrowing capacity																							$ 0
Net worth required to be maintained																							250,000,000
Maximum facility amount at first extension option																							$ 200,000,000
Operating Assets | 2025 Waterway Avenue
Mortgages, notes and loans payable
Interest rate (as a percent)																							4.79%
Mortgages, notes, and loans payable, gross																							$ 14,112,000	14,330,000
Operating Assets | 3 Waterway Square
Mortgages, notes and loans payable
Interest rate (as a percent)																							3.94%
Mortgages, notes, and loans payable, gross																							$ 52,000,000	52,000,000					$ 52,000,000
Fixed interest rate (as a percent)																													3.94%
Number of stories of building to be constructed with loan proceeds | item																													11
Area of office building to be constructed using proceeds from loan | ft²																													232,000
Total mortgages, notes and loans payable																													$ 43,300,000
Operating Assets | 4 Waterway Square
Mortgages, notes and loans payable
Interest rate (as a percent)																							4.88%
Mortgages, notes, and loans payable, gross																							$ 37,293,000	38,289,000
Operating Assets | One Lakes Edge
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.86%
Mortgages, notes, and loans payable, gross																							$ 67,517,000	$ 40,787,000
Net worth required to be maintained																							73,525,000
Operating Assets | Outlet at Riverwalk Properties | Construction Loan Payable | Recourse Debt
Mortgages, notes and loans payable
Mortgages, notes, and loans payable, gross																							$ 64,400,000
Maximum percent recourse																							50.00%
Maximum percentage recourse upon achievement of conditions																							25.00%
Debt yield to achieve the reduced maximum percentage recourse																							11.00%
Time period of minimum level of tenant sales needed to achieve the reduced maximum percent recourse																							12 months
Strategic Developments
Mortgages, notes and loans payable
Mortgages, notes, and loans payable, gross																							$ 84,446,000
Strategic Developments | Summerlin
Mortgages, notes and loans payable
Variable rate basis												one-month LIBOR
Interest rate margin (as a percent)												2.25%
Maximum percentage recourse upon achievement of conditions												10.00%
Time period of minimum level of tenant sales needed to achieve the reduced maximum percent recourse												12 months
Debt instruments debt services coverage ratio												1.25
Number of extension options | item												2
Option to extend, term												1 year
Total mortgages, notes and loans payable												$ 311,800,000
Strategic Developments | Summerlin | Minimum
Mortgages, notes and loans payable
Percentage of occupancy after lease is executed												90.00%
Strategic Developments | Hughes Landing Hotel
Mortgages, notes and loans payable
Variable rate basis									one-month LIBOR
Interest rate margin (as a percent)									2.50%
Number of extension options | item									2
Option to extend, term									1 year
Total mortgages, notes and loans payable									$ 37,100,000
Strategic Developments | Hughes Landing Retail
Mortgages, notes and loans payable
Variable rate basis																one-month LIBOR
Interest rate margin (as a percent)																1.95%
Extension period at borrower's option																1 year
Number of extension options | item																2
Total mortgages, notes and loans payable																$ 36,600,000
Area of real estate property to be constructed (in square feet) | ft²																123,000
Strategic Developments | Alden Bridge Self Storage Facility
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.96%
Outstanding balance																							$ 6,658,000
Strategic Developments | Alden Bridge Self Storage Facility | Construction Loan Payable
Mortgages, notes and loans payable
Interest rate margin (as a percent)																			2.60%
Number of extension options | item																			2
Option to extend, term																			1 year
Total mortgages, notes and loans payable																			$ 6,700,000
Strategic Developments | Alden Bridge Self Storage Facility | Construction Loan Payable | One Month LIBOR
Mortgages, notes and loans payable
Variable rate basis																			one-month LIBOR
Strategic Developments | Lakeland Village Center
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.71%
Net worth required to be maintained																							$ 14,000,000
Strategic Developments | Lakeland Village Center | Construction Loan Payable
Mortgages, notes and loans payable
Interest rate margin (as a percent)					2.35%
Total mortgages, notes and loans payable					$ 14,000,000
Strategic Developments | Lakeland Village Center | Construction Loan Payable | One Month LIBOR
Mortgages, notes and loans payable
Variable rate basis					one-month LIBOR
Strategic Developments | Three Hughes Landing
Mortgages, notes and loans payable
Interest rate (as a percent)																							2.71%
Mortgages, notes, and loans payable, gross																							$ 23,268,000
Variable rate basis							one-month LIBOR
Interest rate margin (as a percent)							2.35%
Number of extension options | item							2
Option to extend, term							1 year
Net worth required to be maintained																							$ 65,455,000
Total mortgages, notes and loans payable							$ 65,500,000
Strategic Developments | One Lakes Edge
Mortgages, notes and loans payable
Variable rate basis																	one-month LIBOR
Interest rate margin (as a percent)																	2.50%
Total mortgages, notes and loans payable																	$ 73,500,000
Strategic Developments | Waiea And Anaha Condominiums
Mortgages, notes and loans payable
Interest rate (as a percent)																							7.11%
Mortgages, notes, and loans payable, gross																							$ 27,817,000
Variable rate basis								one-month LIBOR
Interest rate margin (as a percent)								6.75%
Number of extension options | item								2
Option to extend, term								1 year
Net worth required to be maintained																							$ 600,000,000
Total mortgages, notes and loans payable								$ 600,000,000
Strategic Developments | Waterway Square Hotel
Mortgages, notes and loans payable
Interest rate (as a percent)																							3.01%
Mortgages, notes, and loans payable, gross																							$ 33,361,000
Net worth required to be maintained																							$ 69,300,000
Strategic Developments | Waterway Hotel
Mortgages, notes and loans payable
Variable rate basis										one-month LIBOR
Interest rate margin (as a percent)										2.65%
Option to extend, term										1 year
Number of rooms in property securing debt (in rooms) | room										302
Total mortgages, notes and loans payable										$ 69,300,000
Strategic Developments | Hughes Landing Multi Family
Mortgages, notes and loans payable
Number of extension options | item																	2
Option to extend, term																	1 year
Strategic Developments | Two Office Buildings
Mortgages, notes and loans payable
Variable rate basis													one-month LIBOR
Interest rate margin (as a percent)													1.65%
Option to extend, term													1 year
Total mortgages, notes and loans payable													$ 143,000,000
Strategic Developments | One Merriweather | Construction Loan Payable
Mortgages, notes and loans payable
Option to extend, term	1 year
Total mortgages, notes and loans payable	$ 49,900,000
Strategic Developments | One Merriweather | Construction Loan Payable | One Month LIBOR
Mortgages, notes and loans payable
Variable rate basis (as a percent)	2.15%
Variable rate basis	one-month LIBOR
Strategic Developments | HHC 2978 Self Storage Facility [Member] | Construction Loan Payable
Mortgages, notes and loans payable
Variable rate basis		one-month LIBOR
Number of extension options | item		2
Option to extend, term		1 year
Total mortgages, notes and loans payable		$ 6,400,000
Strategic Developments | HHC 2978 Self Storage Facility [Member] | Construction Loan Payable | One Month LIBOR
Mortgages, notes and loans payable
Interest rate margin (as a percent)		2.60%

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INCOME TAXES (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($) property	Dec. 31, 2013 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	May. 06, 2011 USD ($)
Provision for (benefit from) income taxes
Current	$ 2,849	$ (2,050)	$ 1,218
Deferred taxes	21,152	65,010	8,352
Provision for (benefit from) income taxes	24,001	62,960	9,570
Reconciliation of income tax expense computed by applying the Federal corporate tax rate to the provision for income taxes
Tax at statutory rate on earnings from continuing operations before income taxes	52,751	13,800	(22,477)
Increase (decrease) in valuation allowance, net	1,742	5,602	(88,826)
State income taxes, net of Federal income tax benefit	267	1,320	1,562
Tax at statutory rate on REIT entity earnings not subject to Federal income taxes		(512)	(2,648)
Tax (benefit) expense from change in rates and other permanent differences	(7,361)	(12,193)	4,339
Set up deferred tax liability related to captive REIT		(1,068)	53,973
Non-deductible warrant liability (gain) loss	(20,412)	21,182	63,695
Non-taxable interest income		18,373	(363)
Uncertain tax position (benefit) expense, excluding interest	(2,483)	2,395	(1,034)
Uncertain tax position interest, net of Federal income tax benefit	(503)	14,061	1,349
Provision for (benefit from) income taxes	24,001	62,960	$ 9,570
Tax credit carryforwards - Federal AMT				$ 3,667
Additional Disclosures
Gross deferred tax assets				327,370	$ 335,674
Gross deferred tax liabilities				396,631	379,661
Valuation allowance				19,960	18,218
Deferred Tax Assets Valuation Allowance Percentage							100.00%
Percentage of deferred tax asset realized on successful implementation of tax planning			90.00%
Deferred tax assets:
Operating and Strategic Development properties, primary differences in basis of assets and liabilities				213,090	201,303
Interest deduction carryforwards				79,781	80,520
Operating loss and tax credit carryforwards				34,499	53,851
Total deferred tax assets				327,370	335,674
Valuation allowance				(19,960)	(18,218)
Total net deferred tax assets				307,410	317,456
Deferred tax liabilities:
Property Associated with Master Planned Communities, primarily differences in the tax basis of land assets and treatment of interest and other costs				(218,842)	(212,093)
Operating and Strategic Development properties, primarily differences in basis of assets and liabilities				(42,860)	(47,355)
Deferred income				(134,929)	(120,213)
Total deferred tax liabilities				(396,631)	(379,661)
Net deferred tax liabilities				(89,221)	(62,205)
Proceeds From Settlement Of Tax Indemnity Receivable		138,000
Interest expense related to unrecognized tax benefits	100	21,600	$ 2,100
Unrecognized tax benefits, excluding interest	184,200	90,532	95,917	36,524	184,200	$ 90,532	$ 95,917
Accrued interest related to unrecognized tax benefits				300
Unrecognized tax benefits that would impact effective tax rate				0	0	$ 0
Unrecognized tax benefits
Unrecognized Tax Benefits, Beginning Balance	184,200	90,532	95,917
Gross increases - tax positions in prior period		93,668	9,162
Gross decreases - tax positions in prior periods	(147,676)		(14,547)
Unrecognized Tax Benefits, Ending Balance	36,524	184,200	90,532
Reduction in uncertain tax benefits due to payments	$ 0	144,100	$ 0
Unrecognized tax benefits, excluding accrued interest, which could significantly increase or decrease during the next twelve months				36,500
Deferred Tax Liabilities
Deferred tax liabilities:
Reclassification of uncertain tax position liability		39,000
Income Tax Receivable
Deferred tax liabilities:
Reclassification of uncertain tax position liability		2,500
State and Local Jurisdiction
Reconciliation of income tax expense computed by applying the Federal corporate tax rate to the provision for income taxes
Net operating loss carryforwards				175,346
Internal Revenue Service (IRS)
Reconciliation of income tax expense computed by applying the Federal corporate tax rate to the provision for income taxes
Net operating loss carryforwards				52,571
Head Acquisition LP
Additional Disclosures
Deferred tax assets previously believed to have had only a remote possibility of realization recorded in the current period							$ 76,400
General Growth Properties
Deferred tax liabilities:
Percentage of certain taxes indemnified by related party	93.75%
Amount of combined deficiencies determined by the IRS sought to be overturned by the petition filed								$ 144,100
Proceeds From Settlement Of Tax Indemnity Receivable		$ 138,000
Number of office properties from settlement | property		6
Value Of Buildings Received From Settlement Of Tax Indemnity Receivable		$ 130,000
Non-cash charges	$ 74,000
Consideration received	$ 268,000
Percentage of deferred tax assets liabilities	100.00%
Unrecognized tax benefits, excluding interest	$ 85,100	85,100		$ 81,500	85,100
Unrecognized tax benefits
Unrecognized Tax Benefits, Beginning Balance	85,100
Unrecognized Tax Benefits, Ending Balance	81,500	$ 85,100
General Growth Properties | Maximum
Deferred tax liabilities:
Amount of certain taxes indemnified by related party	$ 303,800
Victoria Ward Limited
Deferred tax liabilities:
Deferred Tax Liabilities Excess Book Over Tax Basis					$ 46,900

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COMMITMENTS AND CONTINGENCIES (Minimum Rentals Under Non-Cancelable Operating Leases) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
COMMITMENTS AND CONTINGENCIES
Amount of outstanding letters of credit and surety bonds	$ 86,100	$ 53,700
Contractual rental expense, including participation rent	9,100	$ 7,300	$ 6,300
Ground lease payments
2016	8,766
2017	9,391
2018	8,718
2019	7,741
2020	7,744
Subsequent/Other	304,660
Total	$ 347,020

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COMMITMENTS AND CONTINGENCIES (Summary of South Street Seaport Contingencies) (Details) - USD ($)		12 Months Ended		39 Months Ended
	Jun. 27, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015
Commitments
Pre-tax gain recognized in Other (income)/expense		$ 300,000
South Street Seaport Ground Lease
Commitments
Annual fixed rent	$ 1,200,000
Annual rent escalation rate (as a percent)	3.00%
Additional annual rent payments to be made through the term of the lease	$ 210,000
Rent credit to be received		$ 1,500,000		$ 1,500,000
Maximum period for rent credit		30 months
Damage Due to Flooding
Commitments
Insurance recoveries collected				$ 47,900,000
Pre-tax gain recognized in Other (income)/expense		$ 300,000	$ 24,600,000

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OTHER ASSETS AND LIABILITIES (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($)
Prepaid Expenses and Other Assets
Condominium receivables	$ 191,037
Condominium deposits	55,749	$ 151,592
Special Improvement District receivable	72,558	33,318
Equipment, net of accumulated depreciation of $3.5 million and $2.4 million, respectively	18,772	20,284
Security and escrow deposits	17,599	9,829
Tenant incentives and other receivables	10,480	14,264
Prepaid expenses	8,474	9,196
Federal income tax receivable	11,972	8,629
Intangibles	4,045	3,593
Uncertain tax position asset	112	383
Other	5,347	2,014
Total prepaid expenses and other assets	441,190	310,136
Accumulated depreciation on other equipment	3,900	2,400
2016	168,300
2017	22,700
Increase in security and escrow deposits	7,800
Increase (decrease) in acquired in-place leases	10,600
Accounts Payable and Accrued Expenses
Construction payables	185,731	170,935
Condominium deposits	50,192	82,150
Accounts payable and accrued expenses	33,928	34,154
Accrued payroll and other employee liabilities	31,271	25,838
Tenant and other deposits	31,193	12,756
Accrued interest	16,504	14,791
Accrued real estate taxes	15,134	9,903
Interest rate swaps liability	4,217	3,144
Membership deposits		21,023
Other	31,949	23,376
Total accounts payable and accrued expenses	515,354	466,017
Increase in accounts payable and accrued expenses	49,300
Prepaid Expenses and Other Current Assets
Prepaid Expenses and Other Assets
Increase in prepaid expenses and other assets	131,100
Increase (decrease) in condominium deposits	191,000
Increase in tenant and other receivables	39,200
Accounts Payable and Accrued Liabilities
Accounts Payable and Accrued Expenses
Increase in tenant and other deposits	$ 18,400
Ward Village
Accounts Payable and Accrued Expenses
Number of new market rate towers | item	2
Increase in construction payable	$ 14,800
Increase in condominium deposits	32,000
Ward Village | Prepaid Expenses and Other Current Assets
Prepaid Expenses and Other Assets
Increase (decrease) in condominium deposits	95,800
Accounts Payable and Accrued Expenses
Increase in deferred income	47,400
The Club at Carlton Woods
Accounts Payable and Accrued Expenses
Increase in membership deposits	21,000
Leases, Acquired-in-Place
Prepaid Expenses and Other Assets
Net carrying amount	22,139	32,715
Ground Leases below Market
Prepaid Expenses and Other Assets
Net carrying amount	19,325	19,663
Tenant Leases above Market
Prepaid Expenses and Other Assets
Net carrying amount	3,581	4,656
Ground Leases above Market | Accounts Payable and Accrued Liabilities
Accounts Payable and Accrued Expenses
Deferred income	113,122	65,675
Above-market ground leases	$ 2,113	$ 2,272

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INTANGIBLES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Intangible assets and liabilities
Amortization/accretion of intangible assets and liabilities	$ 10,300	$ 1,800	$ 3,100
Estimated future amortization
2016	8,400
2017	8,000
2018	5,000
2019	800
2020	400
Thereafter	15,500
Leases, Acquired-in-Place
Intangible assets and liabilities
Gross Assets	39,129	39,634
Accumulated Amortization	(16,990)	(6,919)
Net Carrying Amount	22,139	32,715
Tenant Leases above Market
Intangible assets and liabilities
Gross Assets	5,333	5,342
Accumulated Amortization	(1,752)	(686)
Net Carrying Amount	3,581	4,656
Tenant Leases below Market
Intangible assets and liabilities
Gross Liability	(6,163)	(6,184)
Accumulated Accretion	1,350	296
Net Carrying Amount	(4,813)	(5,888)
Ground Leases above Market
Intangible assets and liabilities
Gross Liability	(3,545)	(3,545)
Accumulated Accretion	1,432	1,273
Net Carrying Amount	(2,113)	(2,272)
Ground Leases below Market
Intangible assets and liabilities
Gross Assets	23,096	23,096
Accumulated Amortization	(3,771)	(3,433)
Net Carrying Amount	$ 19,325	$ 19,663

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Details) $ in Millions	1 Months Ended	12 Months Ended
	Dec. 31, 2015 USD ($) item	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($) item
Interest Rate Swap
Derivative instruments and hedging activities
Gross notional amounts of cash flow hedges	$ 250.0	$ 250.0
Number of derivative agreements entered into | item	3
Number of derivative instruments held | item	3	3	3
Interest low Rate (as a percent)	2.623%	2.623%
Interest high Rate (as a percent)	2.675%	2.675%
Term of contract (in years)	10 years
Estimated additional amount to be reclassified as an increase to interest expense		$ 1.7
Interest Rate Swap | Cash Flow Hedging
Derivative instruments and hedging activities
Gross notional amounts of cash flow hedges	$ 209.5	$ 209.5	$ 172.0
Interest Rate Cap | Cash Flow Hedging
Derivative instruments and hedging activities
Gross notional amounts of cash flow hedges			$ 100.0

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Schedule of Financial Instruments Included in Balance Sheet) (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Interest Rate Swap | Designated as Hedging Instrument | Accounts Payable and Accrued Liabilities
Fair value of derivative instruments
Derivative liabilities	$ 4,217	$ 3,144

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Impact of Financial Instruments on Statement of Operations) (Details) - Cash Flow Hedging - Interest Rate Swap - Interest Expense - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Effect of the Company's derivative financial instruments on the income statement
Amount of Gain (Loss) Recognized in OCI	$ (1,705)	$ (1,192)
Amount of Gain (Loss) Reclassified from AOCI into Earnings	$ (1,745)	$ (2,195)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Schedule of Changes in Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance at the beginning of the period	$ (7,712)	$ (8,222)
Other comprehensive income (loss) before reclassifications	(1,922)	(1,685)
Loss reclassified from accumulated other comprehensive loss to net income (loss)	1,745	2,195
Other comprehensive income (loss)	(177)	510	$ 1,353
Balance at the end of the period	$ (7,889)	$ (7,712)	$ (8,222)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Summary of Amounts Reclassified Out of AOCI) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reclassifications out of accumulated other comprehensive income (loss)
Provision for income taxes									$ (24,001)	$ (62,960)	$ (9,570)
Net income (loss)	$ 25,881	$ 156,212	$ 50,585	$ (105,959)	$ 31,929	$ 45,615	$ (14,733)	$ (86,331)	126,719	(23,520)	$ (73,695)
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Income
Reclassifications out of accumulated other comprehensive income (loss)
Provision for income taxes									(1,052)	(307)
Net income (loss)									1,745	2,195
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Interest Rate Swap | Reclassification out of Accumulated Other Comprehensive Income
Reclassifications out of accumulated other comprehensive income (loss)
Interest expense									$ 2,797	$ 2,502

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STOCK-BASED PLANS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Nov. 09, 2010
Stock Options
Shares of common stock reserved for issuance				3,698,050
Maximum number of shares available for future grant	2,318,033
Stock options outstanding at the beginning of the period (in shares)	1,046,490	965,440	861,940
Granted (in shares)	117,000	116,500	132,100
Forfeited (in shares)	(77,450)	(35,450)	(28,600)
Stock options outstanding at the end of the period (in shares)	1,086,040	1,046,490	965,440
Stock options exercisable at the end of the period (in shares)	3,400
Remaining unvested options outstanding and expected to vest (in shares)	1,071,365
Weighted Average Exercise Price
Stock options outstanding at the beginning of the period (in dollars per share)	$ 72.61	$ 64.57	$ 59.17
Granted (in dollars per share)	134.24	144.26	99.38
Forfeited (in dollars per share)	103.84	87.45	62.40
Stock options outstanding at the end of the period (in dollars per share)	77.11	$ 72.61	$ 64.57
Stock options exercisable at the end of the period (in dollars per share)	60.03
Stock options expected to vest at the end of the period (in dollars per share)	$ 76.68
Weighted average remaining contractual term of stock options outstanding	6 years 3 months 18 days
Weighted average remaining contractual term of stock options exercisable	4 years 2 months 12 days
Weighted average remaining contractual term of stock options expected to vest	4 years 2 months 12 days
Aggregate intrinsic value	$ 43,927,338
Aggregate intrinsic value of stock options exercisable	180,646
Aggregate intrinsic value of stock options expected to vest	$ 43,679,612
Significant assumptions used in Black-Scholes option-pricing model
Expiration period	10 years
Stock based compensation expense	$ 7,284,000	$ 8,200,000	$ 5,782,000
Minimum
Significant assumptions used in Black-Scholes option-pricing model
Exercisable period	5 years
Stock Options
Stock Options
Share based compensation costs capitalized	$ 2,500,000	$ 0	$ 0
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 77.11
Number Outstanding (in shares)	1,086,040
Weighted Average Remaining Contractual Term	6 years 2 months 12 days
Number Exercisable (in shares)	3,400
Significant assumptions used in Black-Scholes option-pricing model
Weighted average grant date fair value (in dollars per share)	$ 44.45	$ 48.65	$ 28.04
Weighted-average expected life of options	7 years 6 months	7 years 6 months	7 years 3 months 18 days
Weighted-average risk-free interest rate (as a percent)	2.00%	2.20%	1.80%
Weighted-average expected volatility (as a percent)	26.10%	25.70%	22.00%
Unamortized stock option expense	$ 11,100,000
Stock based compensation expense	9,800,000	$ 8,200,000	$ 5,700,000
Stock Options | General and Administrative Expense
Significant assumptions used in Black-Scholes option-pricing model
Stock based compensation expense	$ 2,600,000	$ 4,300,000	$ 3,500,000
Stock Options | $46.49 - 55.82
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 52.74
Number Outstanding (in shares)	48,500
Weighted Average Remaining Contractual Term	5 years 7 months 6 days
Stock Options | $46.49 - 55.82 | Minimum
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 46.49
Stock Options | $46.49 - 55.82 | Maximum
Exercise price range of stock options
Exercise Price (in dollars per share)	55.82
Stock Options | $57.77 - 60.33
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 57.94
Number Outstanding (in shares)	569,400
Weighted Average Remaining Contractual Term	5 years 2 months 12 days
Number Exercisable (in shares)	3,400
Stock Options | $57.77 - 60.33 | Minimum
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 57.77
Stock Options | $57.77 - 60.33 | Maximum
Exercise price range of stock options
Exercise Price (in dollars per share)	60.33
Stock Options | $61.64 - 69.75
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 66.17
Number Outstanding (in shares)	169,240
Weighted Average Remaining Contractual Term	6 years 2 months 12 days
Stock Options | $61.64 - 69.75 | Minimum
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 61.64
Stock Options | $61.64 - 69.75 | Maximum
Exercise price range of stock options
Exercise Price (in dollars per share)	69.75
Stock Options | $81.80 - 110.50
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 98.35
Number Outstanding (in shares)	107,400
Weighted Average Remaining Contractual Term	7 years 4 months 24 days
Stock Options | $81.80 - 110.50 | Minimum
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 81.80
Stock Options | $81.80 - 110.50 | Maximum
Exercise price range of stock options
Exercise Price (in dollars per share)	110.50
Stock Options | $112.64 - 151.72
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 138.05
Number Outstanding (in shares)	191,500
Weighted Average Remaining Contractual Term	9 years
Stock Options | $112.64 - 151.72 | Minimum
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 112.64
Stock Options | $112.64 - 151.72 | Maximum
Exercise price range of stock options
Exercise Price (in dollars per share)	$ 151.72

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STOCK-BASED PLANS (Summary of Restricted Stock Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Weighted Average Grant Date Fair Value
Stock based compensation expense	$ 7,284	$ 8,200	$ 5,782
Restricted stock and stock option amortization	$ 7,284	$ 8,200	$ 5,782
Stock Options
Weighted Average Grant Date Fair Value
Weighted-average period for recognition of unamortized restricted stock expense	3 years 2 months 12 days
Restricted Stock
Restricted stock activity
Vesting period	5 years
Restricted stock outstanding at the beginning of the period (in shares)	172,690	122,334	57,933
Granted (in shares)	81,581	61,750	77,434
Vested (in shares)	(7,546)	(11,394)	(13,033)
Forfeited (in shares)	(4,169)
Restricted stock outstanding at the end of the period (in shares)	242,556	172,690	122,334
Weighted Average Grant Date Fair Value
Restricted stock outstanding at the beginning of the period (in dollars per share)	$ 92.02	$ 75.21	$ 65.72
Granted (in dollars per share)	121.81	126.38	79.77
Vested (in dollars per share)	147.56	97.72	60.15
Forfeited (in dollars per share)	101.33
Restricted stock outstanding at the end of the period (in dollars per share)	$ 100.15	$ 92.02	$ 75.21
Stock based compensation expense		$ 3,900	$ 2,200
Restricted stock and stock option amortization		$ 3,900	$ 2,200
Fair value of restricted stock vested	$ 1,100
Unamortized restricted stock expense	$ 14,300
Weighted-average period for recognition of unamortized restricted stock expense	3 years 2 months 23 days
Restricted Stock | General and Administrative Expense
Weighted Average Grant Date Fair Value
Stock based compensation expense	$ 4,700
Restricted stock and stock option amortization	$ 4,700

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RENTALS UNDER OPERATING LEASES (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Total Minimum Rent
2016	$ 146,983
2017	139,518
2018	131,145
2019	124,208
2020	104,295
Subsequent	477,247
Percentage rent in lieu of fixed minimum rent	3,500	$ 2,900	$ 2,200
Overage rent	$ 3,600	$ 2,400	$ 2,600

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SEGMENTS (Summary of Segment Operating Results) (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Sep. 30, 2014 USD ($)	Jun. 30, 2014 USD ($)	Mar. 31, 2014 USD ($)	Dec. 31, 2015 USD ($) segment	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Segments reporting
Number of reportable segments | segment									3
Land sales									$ 187,399	$ 325,099	$ 251,217
Builder price participation									26,846	20,908	9,356
Minimum rents									150,805	97,234	81,668
Tenant recoveries									39,542	28,353	21,068
Condominium rights and unit sales									305,284	83,565	32,969
Other land revenues									14,803	16,503	13,416
Hospitality revenues									45,374	37,921	39,201
Other rental and property revenues									27,035	24,982	20,523
Total revenues	$ 229,393	$ 203,442	$ 209,163	$ 155,090	$ 207,053	$ 119,228	$ 209,631	$ 98,653	797,088	634,565	469,418
Cost of sales - land									88,065	119,672	124,040
Other property operating costs									72,751	67,034	65,723
Rental property real estate taxes									24,138	17,407	14,291
Rental property maintenance costs									10,712	9,135	8,083
Hospitality expenses									34,839	31,829	29,454
Provision for (recovery of) doubtful accounts									4,030	1,404	836
Demolition costs									3,297	6,734	2,078
Development-related marketing costs									25,466	22,783	5,880
Depreciation and amortization									98,997	55,958	33,845
Other expense (income)									(1,829)	(29,471)	(29,478)
Interest income									(586)	(22,531)	(3,185)
Equity in Earnings from Real Estate and Other Affiliates									(3,721)	(23,336)	(14,428)
REP EBT									202,300	255,838	154,437
Operating Segments
Segments reporting
REP EBT									202,300	255,838	154,437
Operating Segments | Master Planned Communities
Segments reporting
Land sales									187,399	325,099	251,217
Builder price participation									26,846	20,908	9,356
Minimum rents									842	818	781
Other land revenues									14,778	16,470	13,416
Total revenues									229,865	363,295	274,770
Cost of sales - land									88,065	119,672	124,040
Land sales operations									34,443	31,932	30,826
Land sales real estate and business taxes									10,464	9,862	7,588
Provision for (recovery of) doubtful accounts										(11)
Depreciation and amortization									640	397	32
Interest income									(60)	(118)	(16)
Interest expense									(18,053)	(19,620)	(18,678)
Total expenses									115,499	142,114	143,792
REP EBT									114,366	221,181	130,978
Operating Segments | Operating Assets
Segments reporting
Minimum rents									149,064	95,807	80,124
Tenant recoveries									39,415	28,133	20,901
Hospitality revenues									45,374	37,921	39,201
Other rental and property revenues									25,453	24,429	20,360
Total revenues									259,306	186,290	160,586
Other property operating costs									68,078	62,752	61,146
Rental property real estate taxes									21,856	14,860	12,065
Rental property maintenance costs									10,236	8,592	7,552
Hospitality expenses									34,839	31,829	29,454
Provision for (recovery of) doubtful accounts									3,998	1,399	835
Demolition costs									2,675	6,712	2,078
Development-related marketing costs									9,747	9,770	3,462
Depreciation and amortization									89,075	49,272	31,427
Other expense (income)									(524)
Interest income									(37)	(151)	(135)
Interest expense									31,148	17,081	19,146
Equity in Earnings from Real Estate and Other Affiliates									(1,883)	(2,025)	(3,893)
Total expenses									269,208	200,091	163,137
REP EBT									(9,902)	(13,801)	(2,551)
Operating Segments | Strategic Developments
Segments reporting
Minimum rents									899	609	763
Tenant recoveries									127	220	167
Condominium rights and unit sales									305,284	83,565	32,969
Other land revenues									25	33
Other rental and property revenues									1,582	553	163
Total revenues									307,917	84,980	34,062
Condominium rights and unit cost of sales									191,606	49,995	16,572
Other property operating costs									4,673	4,282	5,547
Rental property real estate taxes									2,282	2,547	2,226
Rental property maintenance costs									476	543	531
Provision for (recovery of) doubtful accounts									32	16
Demolition costs									622	22
Development-related marketing costs									15,719	13,013	1,449
Depreciation and amortization									3,240	1,706	189
Other expense (income)									104	(2,373)	(3,609)
Interest income									(202)
Interest expense									(6,633)	(11,918)	(4,318)
Equity in Earnings from Real Estate and Other Affiliates									(1,838)	(21,311)	(10,535)
Total expenses									210,081	36,522	8,052
REP EBT									$ 97,836	$ 48,458	$ 26,010

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SEGMENTS (Reconciliation of REP EBT to Income (Loss) Before Taxes) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reconciliation of REP EBT to GAAP net income (loss)
REP EBT									$ 202,300	$ 255,838	$ 154,437
General and administrative									(81,345)	(73,569)	(48,466)
Warrant liability gain (loss)									58,320	(60,520)	(181,987)
Gain on sale of The Club at Carlton Woods									29,073
Increase (reduction) in tax indemnity receivable										90	(1,206)
Loss on settlement of tax indemnity receivable										(74,095)
Corporate other income (expense), net									1,829	29,471	29,478
Corporate depreciation and amortization									(98,997)	(55,958)	(33,845)
Net income (loss)	$ 25,881	$ 156,212	$ 50,585	$ (105,959)	$ 31,929	$ 45,615	$ (14,733)	$ (86,331)	126,719	(23,520)	(73,695)
Corporate, Non-Segment
Reconciliation of REP EBT to GAAP net income (loss)
Corporate interest income/(expense), net									(52,995)	(30,819)	(10,575)
Warrant liability gain (loss)									58,320	(60,520)	(181,987)
Gain on sale of The Club at Carlton Woods									29,073
Corporate other income (expense), net									1,409	27,098	25,869
Corporate depreciation and amortization									(6,042)	(4,583)	(2,197)
Net income (loss)									150,720	39,440	(64,125)
Operating Segments
Reconciliation of REP EBT to GAAP net income (loss)
REP EBT									202,300	255,838	154,437
Operating Segments | Consolidated Properties
Reconciliation of REP EBT to GAAP net income (loss)
General and administrative									$ (81,345)	$ (73,569)	$ (48,466)

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SEGMENTS (Reconciliation of Segment Revenue to Consolidated Revenue) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reconciliation of Segment Basis Revenues to GAAP Revenues
Total revenues	$ 229,393	$ 203,442	$ 209,163	$ 155,090	$ 207,053	$ 119,228	$ 209,631	$ 98,653	$ 797,088	$ 634,565	$ 469,418
Master Planned Communities | Operating Segments
Reconciliation of Segment Basis Revenues to GAAP Revenues
Total revenues									229,865	363,295	274,770
Operating Assets | Operating Segments
Reconciliation of Segment Basis Revenues to GAAP Revenues
Total revenues									259,306	186,290	160,586
Strategic Developments | Operating Segments
Reconciliation of Segment Basis Revenues to GAAP Revenues
Total revenues									$ 307,917	$ 84,980	$ 34,062

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SEGMENTS (Summary of Assets by Segment and Reconciliation of Segment Assets to Total Assets) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reconciliation of total segment assets to total assets
Assets	$ 5,721,582	$ 5,105,268
Additional information
Condominium receivables	191,037
Operating Assets
Additional information
Increase (decrease) in assets	439,500
Strategic Developments
Additional information
Increase (decrease) in assets	262,400
Condominium receivables	191,000
Transfer of property	278,800
Strategic Developments | 80 South Street
Additional information
Development expenditures	603,100
Strategic Developments | Ward Village
Additional information
Proceeds from construction financing	24,500
Strategic Developments | Ward Gateway Towers
Additional information
Deposits collected on the sale of condominium units	47,800
Strategic Developments | Waiea
Additional information
Condominium rights and unit cost of sales	120,100
Strategic Developments | Anaha Condominiums
Additional information
Condominium rights and unit cost of sales	70,600
Strategic Developments | Waiea and Anaha Condominiums
Additional information
Condominium buyer deposit	144,100
Operating Segments
Reconciliation of total segment assets to total assets
Assets	5,526,943	4,677,988
Operating Segments | Master Planned Communities
Reconciliation of total segment assets to total assets
Assets	2,022,524	1,875,550
Operating Segments | Operating Assets
Reconciliation of total segment assets to total assets
Assets	2,365,724	1,926,192
Operating Segments | Strategic Developments
Reconciliation of total segment assets to total assets
Assets	1,138,695	876,246
Additional information
Condominium rights and unit cost of sales	191,606	49,995	$ 16,572
Corporate, Non-Segment
Reconciliation of total segment assets to total assets
Assets	194,639	$ 427,280
Additional information
Increase (decrease) in assets	$ (232,600)

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QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Total revenues	$ 229,393	$ 203,442	$ 209,163	$ 155,090	$ 207,053	$ 119,228	$ 209,631	$ 98,653	$ 797,088	$ 634,565	$ 469,418
Operating income	40,191	36,544	25,572	16,457	37,144	23,850	91,781	13,947	118,764	166,722	111,214
Net income (loss)	25,881	156,212	50,585	(105,959)	31,929	45,615	(14,733)	(86,331)	126,719	(23,520)	(73,695)
Net income (loss) attributable to common stockholders	$ 25,881	$ 156,224	$ 50,573	$ (105,959)	$ 31,930	$ 45,615	$ (14,760)	$ (86,316)	$ 126,719	$ (23,531)	$ (73,790)
EARNINGS PER SHARE
Basic earnings (loss) per share: (in dollars per share)	$ 0.65	$ 3.96	$ 1.28	$ (2.68)	$ 0.81	$ 1.16	$ (0.37)	$ (2.19)	$ 3.21	$ (0.60)	$ (1.87)
Diluted earnings (loss) per share: (in dollars per share)	$ 0.59	$ 0.76	$ 0.18	$ (2.68)	$ (1.18)	$ 0.48	$ (0.37)	$ (2.19)	$ 1.60	$ (0.60)	$ (1.87)
Weighted average shares outstanding:
Basic (in shares)	39,473,000	39,473,000	39,468,000	39,465,000	39,464,000	39,465,000	39,458,000	39,454,000	39,470	39,464	39,449
Diluted (in shares)	42,743,000	42,913,000	43,197,000	39,465,000	43,027,000	43,171,000	39,458,000	39,454,000	42,754	39,464	39,449

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Schedule III - REAL ESTATE AND ACCUMLATED DEPRECIATION - Information by property (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	$ 2,443,962
Initial Cost
Land	2,435,702
Buildings and Improvements	1,456,365
Costs Capitalized Subsequent to Acquisition
Land	(470,398)
Building and Improvements	1,352,963
Gross Amounts at Which Carried at Close of Period
Land	1,965,304
Building and Improvements	2,809,328
Total	4,774,632	$ 4,116,556	$ 3,024,833	$ 2,746,596
Accumulated Depreciation	232,969	157,182	$ 111,728	$ 112,491
Deferred Finance Costs, Net	(12,392)	$ (14,663)
Aggregate cost of land, building and improvements for federal income tax purposes	4,000,000
Ae'o
Initial Cost
Buildings and Improvements	16,294
Gross Amounts at Which Carried at Close of Period
Building and Improvements	16,294
Total	16,294
Alameda Plaza
Initial Cost
Land	740
Buildings and Improvements	2,060
Costs Capitalized Subsequent to Acquisition
Land	(740)
Building and Improvements	(1,793)
Gross Amounts at Which Carried at Close of Period
Building and Improvements	267
Total	267
Alden Bridge Self Storage
Initial Cost
Buildings and Improvements	1,679
Gross Amounts at Which Carried at Close of Period
Building and Improvements	1,679
Total	1,679
Allentowne
Initial Cost
Land	25,575
Costs Capitalized Subsequent to Acquisition
Land	(25,575)
Building and Improvements	25,475
Gross Amounts at Which Carried at Close of Period
Building and Improvements	25,475
Total	25,475
Anaha Condominiums
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	6,091
Initial Cost
Buildings and Improvements	30,555
Costs Capitalized Subsequent to Acquisition
Building and Improvements	6,174
Gross Amounts at Which Carried at Close of Period
Building and Improvements	36,729
Total	36,729
Bridgeland
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	40,077
Initial Cost
Land	257,222
Costs Capitalized Subsequent to Acquisition
Land	177,998
Building and Improvements	1,268
Gross Amounts at Which Carried at Close of Period
Land	435,220
Building and Improvements	1,268
Total	436,488
Accumulated Depreciation	709
Bridges at Mint Hill LLC
Costs Capitalized Subsequent to Acquisition
Building and Improvements	21,470
Gross Amounts at Which Carried at Close of Period
Building and Improvements	21,470
Total	21,470
Century Plaza
Initial Cost
Land	3,164
Buildings and Improvements	28,514
Costs Capitalized Subsequent to Acquisition
Land	(3,164)
Building and Improvements	(24,279)
Gross Amounts at Which Carried at Close of Period
Building and Improvements	4,235
Total	4,235
Circle T
Costs Capitalized Subsequent to Acquisition
Building and Improvements	(10)
Gross Amounts at Which Carried at Close of Period
Building and Improvements	(10)
Total	(10)
70 Columbia Corporate Center
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	100,000
Initial Cost
Land	24,685
Buildings and Improvements	94,824
Costs Capitalized Subsequent to Acquisition
Building and Improvements	7,733
Gross Amounts at Which Carried at Close of Period
Land	24,685
Building and Improvements	102,557
Total	127,242
Accumulated Depreciation	4,665
Columbia Offices
Initial Cost
Land	1,575
Buildings and Improvements	28,447
Costs Capitalized Subsequent to Acquisition
Building and Improvements	4,168
Gross Amounts at Which Carried at Close of Period
Land	1,575
Building and Improvements	32,615
Total	34,190
Accumulated Depreciation	14,101
Columbia Regional Building
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	22,188
Initial Cost
Buildings and Improvements	28,865
Costs Capitalized Subsequent to Acquisition
Building and Improvements	337
Gross Amounts at Which Carried at Close of Period
Building and Improvements	29,202
Total	29,202
Accumulated Depreciation	2,079
Cottonwood Mall
Initial Cost
Land	7,613
Buildings and Improvements	42,987
Costs Capitalized Subsequent to Acquisition
Land	(7,613)
Building and Improvements	(21,626)
Gross Amounts at Which Carried at Close of Period
Building and Improvements	21,361
Total	21,361
Cottonwood Square
Initial Cost
Land	1,558
Buildings and Improvements	4,339
Costs Capitalized Subsequent to Acquisition
Building and Improvements	923
Gross Amounts at Which Carried at Close of Period
Land	1,558
Building and Improvements	5,262
Total	6,820
Accumulated Depreciation	1,844
Creekside Park Village Center
Costs Capitalized Subsequent to Acquisition
Land	1,323
Building and Improvements	15,732
Gross Amounts at Which Carried at Close of Period
Land	1,323
Building and Improvements	15,732
Total	17,055
Accumulated Depreciation	279
Shops at Summerlin Centre
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	293,389
Costs Capitalized Subsequent to Acquisition
Land	30,855
Building and Improvements	364,100
Gross Amounts at Which Carried at Close of Period
Land	30,855
Building and Improvements	364,100
Total	394,955
Accumulated Depreciation	12,715
Hughes Landing Hotel
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	20,064
Initial Cost
Buildings and Improvements	6,752
Costs Capitalized Subsequent to Acquisition
Land	1,818
Building and Improvements	33,012
Gross Amounts at Which Carried at Close of Period
Land	1,818
Building and Improvements	39,764
Total	41,582
Accumulated Depreciation	109
Hughes Landing Retail
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	28,726
Costs Capitalized Subsequent to Acquisition
Land	4,186
Building and Improvements	31,735
Gross Amounts at Which Carried at Close of Period
Land	4,186
Building and Improvements	31,735
Total	35,921
Accumulated Depreciation	521
One Hughes Landing
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	52,000
Costs Capitalized Subsequent to Acquisition
Land	1,678
Building and Improvements	35,029
Gross Amounts at Which Carried at Close of Period
Land	1,678
Building and Improvements	35,029
Total	36,707
Accumulated Depreciation	3,212
Two Hughes Landing
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	48,000
Costs Capitalized Subsequent to Acquisition
Land	1,269
Building and Improvements	32,483
Gross Amounts at Which Carried at Close of Period
Land	1,269
Building and Improvements	32,483
Total	33,752
Accumulated Depreciation	1,678
Three Hughes Landing
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	23,268
Initial Cost
Buildings and Improvements	13,008
Costs Capitalized Subsequent to Acquisition
Building and Improvements	41,405
Gross Amounts at Which Carried at Close of Period
Building and Improvements	54,413
Total	54,413
Hughes Landing Boulevard 1725
Initial Cost
Land	1,351
Buildings and Improvements	36,764
Gross Amounts at Which Carried at Close of Period
Land	1,351
Building and Improvements	36,764
Total	38,115
Accumulated Depreciation	446
Hughes Landing Boulevard 1735
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	89,677
Initial Cost
Land	3,709
Buildings and Improvements	123,846
Costs Capitalized Subsequent to Acquisition
Building and Improvements	(3,044)
Gross Amounts at Which Carried at Close of Period
Land	3,709
Building and Improvements	120,802
Total	124,511
Accumulated Depreciation	826
IBM Building
Initial Cost
Land	3,326
Buildings and Improvements	23,123
Costs Capitalized Subsequent to Acquisition
Building and Improvements	8,201
Gross Amounts at Which Carried at Close of Period
Land	3,326
Building and Improvements	31,324
Total	34,650
Accumulated Depreciation	5,576
Ke Kilohana
Initial Cost
Buildings and Improvements	5,114
Costs Capitalized Subsequent to Acquisition
Building and Improvements	5,152
Gross Amounts at Which Carried at Close of Period
Building and Improvements	10,266
Total	10,266
Kendall Town Center
Costs Capitalized Subsequent to Acquisition
Building and Improvements	18,797
Gross Amounts at Which Carried at Close of Period
Building and Improvements	18,797
Total	18,797
Kewalo Basin Harbor
Initial Cost
Buildings and Improvements	1,735
Gross Amounts at Which Carried at Close of Period
Building and Improvements	1,735
Total	1,735
1701 Lake Robbins
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	4,600
Initial Cost
Land	1,663
Buildings and Improvements	3,725
Costs Capitalized Subsequent to Acquisition
Building and Improvements	8
Gross Amounts at Which Carried at Close of Period
Land	1,663
Building and Improvements	3,733
Total	5,396
Accumulated Depreciation	133
Lake Woodlands Drive 2201
Initial Cost
Land	3,755
Gross Amounts at Which Carried at Close of Period
Land	3,755
Total	3,755
One Lakes Edge
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	67,517
Costs Capitalized Subsequent to Acquisition
Land	1,057
Building and Improvements	80,765
Gross Amounts at Which Carried at Close of Period
Land	1,057
Building and Improvements	80,765
Total	81,822
Accumulated Depreciation	1,455
Lakeland Village Center
Initial Cost
Buildings and Improvements	11,135
Gross Amounts at Which Carried at Close of Period
Building and Improvements	11,135
Total	11,135
Lakemoor Volo Land
Initial Cost
Land	320
Costs Capitalized Subsequent to Acquisition
Land	(320)
Building and Improvements	321
Gross Amounts at Which Carried at Close of Period
Building and Improvements	321
Total	321
Landmark Mall
Initial Cost
Land	28,396
Buildings and Improvements	67,235
Costs Capitalized Subsequent to Acquisition
Land	(19,408)
Building and Improvements	(34,773)
Gross Amounts at Which Carried at Close of Period
Land	8,988
Building and Improvements	32,462
Total	41,450
Accumulated Depreciation	12,743
Maryland Communities
Initial Cost
Land	457,552
Costs Capitalized Subsequent to Acquisition
Land	(435,462)
Building and Improvements	197
Gross Amounts at Which Carried at Close of Period
Land	22,090
Building and Improvements	197
Total	22,287
Accumulated Depreciation	127
Merriweather Post Pavilion
Initial Cost
Land	1,571
Buildings and Improvements	67,510
Costs Capitalized Subsequent to Acquisition
Building and Improvements	1,646
Gross Amounts at Which Carried at Close of Period
Land	1,571
Building and Improvements	69,156
Total	70,727
Accumulated Depreciation	37
Millennium Waterway Apartments
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	55,584
Initial Cost
Land	15,917
Buildings and Improvements	56,002
Costs Capitalized Subsequent to Acquisition
Building and Improvements	222
Gross Amounts at Which Carried at Close of Period
Land	15,917
Building and Improvements	56,224
Total	72,141
Accumulated Depreciation	8,234
9303 New Trails
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	12,734
Initial Cost
Land	1,929
Buildings and Improvements	11,915
Costs Capitalized Subsequent to Acquisition
Building and Improvements	2,042
Gross Amounts at Which Carried at Close of Period
Land	1,929
Building and Improvements	13,957
Total	15,886
Accumulated Depreciation	2,048
110 N Wacker
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	26,481
Initial Cost
Buildings and Improvements	29,035
Costs Capitalized Subsequent to Acquisition
Land	12,249
Building and Improvements	5,498
Gross Amounts at Which Carried at Close of Period
Land	12,249
Building and Improvements	34,533
Total	46,782
Accumulated Depreciation	14,242
Outlet Collection at Elk Grove
Costs Capitalized Subsequent to Acquisition
Building and Improvements	12,865
Gross Amounts at Which Carried at Close of Period
Building and Improvements	12,865
Total	12,865
Accumulated Depreciation	4
Outlet Collection at Riverwalk
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	56,100
Initial Cost
Buildings and Improvements	94,513
Costs Capitalized Subsequent to Acquisition
Building and Improvements	(3,623)
Gross Amounts at Which Carried at Close of Period
Building and Improvements	90,890
Total	90,890
Accumulated Depreciation	7,990
Park West
Initial Cost
Land	16,526
Buildings and Improvements	77,548
Costs Capitalized Subsequent to Acquisition
Land	1,201
Building and Improvements	1,427
Gross Amounts at Which Carried at Close of Period
Land	17,727
Building and Improvements	78,975
Total	96,702
Accumulated Depreciation	23,725
Seaport District Assemblage
Initial Cost
Buildings and Improvements	243,610
Costs Capitalized Subsequent to Acquisition
Building and Improvements	3,691
Gross Amounts at Which Carried at Close of Period
Building and Improvements	247,301
Total	247,301
85 South Street
Initial Cost
Land	15,913
Buildings and Improvements	8,137
Costs Capitalized Subsequent to Acquisition
Building and Improvements	42
Gross Amounts at Which Carried at Close of Period
Land	15,913
Building and Improvements	8,179
Total	24,092
Accumulated Depreciation	760
South Street Seaport
Initial Cost
Buildings and Improvements	7,884
Costs Capitalized Subsequent to Acquisition
Building and Improvements	220,088
Gross Amounts at Which Carried at Close of Period
Building and Improvements	227,972
Total	227,972
Accumulated Depreciation	959
Summerlin
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	50,154
Initial Cost
Land	990,179
Costs Capitalized Subsequent to Acquisition
Land	(125,903)
Building and Improvements	1,019
Gross Amounts at Which Carried at Close of Period
Land	864,276
Building and Improvements	1,019
Total	865,295
Accumulated Depreciation	533
3831 Technology Forest
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	22,759
Initial Cost
Land	514
Buildings and Improvements	14,194
Costs Capitalized Subsequent to Acquisition
Building and Improvements	1,819
Gross Amounts at Which Carried at Close of Period
Land	514
Building and Improvements	16,013
Total	16,527
Accumulated Depreciation	859
The Club at Carlton Woods
Initial Cost
Land	13,796
Buildings and Improvements	457
Costs Capitalized Subsequent to Acquisition
Land	(13,796)
Building and Improvements	(457)
Woodlands Properties
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	192,710
Initial Cost
Land	267,996
Buildings and Improvements	9,814
Costs Capitalized Subsequent to Acquisition
Land	(43,726)
Building and Improvements	5,569
Gross Amounts at Which Carried at Close of Period
Land	224,270
Building and Improvements	15,383
Total	239,653
Accumulated Depreciation	1,887
The Woodlands Hills
Initial Cost
Land	99,284
Costs Capitalized Subsequent to Acquisition
Land	1,820
Gross Amounts at Which Carried at Close of Period
Land	101,104
Total	101,104
Woodlands Parking Garages
Initial Cost
Land	5,857
Costs Capitalized Subsequent to Acquisition
Land	1,529
Building and Improvements	11,269
Gross Amounts at Which Carried at Close of Period
Land	7,386
Building and Improvements	11,269
Total	18,655
Accumulated Depreciation	508
The Woodlands Resort and Conference Center
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	85,000
Initial Cost
Land	13,258
Buildings and Improvements	37,983
Costs Capitalized Subsequent to Acquisition
Building and Improvements	73,701
Gross Amounts at Which Carried at Close of Period
Land	13,258
Building and Improvements	111,684
Total	124,942
Accumulated Depreciation	7,823
Waiea
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	21,726
Initial Cost
Buildings and Improvements	20,812
Costs Capitalized Subsequent to Acquisition
Building and Improvements	20,510
Gross Amounts at Which Carried at Close of Period
Building and Improvements	41,322
Total	41,322
Ward Gateway Towers
Initial Cost
Buildings and Improvements	28,450
Gross Amounts at Which Carried at Close of Period
Building and Improvements	28,450
Total	28,450
Ward Village
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	238,716
Initial Cost
Land	164,007
Buildings and Improvements	89,321
Costs Capitalized Subsequent to Acquisition
Land	(32,411)
Building and Improvements	170,218
Gross Amounts at Which Carried at Close of Period
Land	131,596
Building and Improvements	259,539
Total	391,135
Accumulated Depreciation	68,360
Waterway Garage Retail
Initial Cost
Land	1,342
Buildings and Improvements	4,255
Costs Capitalized Subsequent to Acquisition
Land	(1)
Building and Improvements	1,348
Gross Amounts at Which Carried at Close of Period
Land	1,341
Building and Improvements	5,603
Total	6,944
Accumulated Depreciation	759
3 Waterway Square
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	52,000
Initial Cost
Land	748
Costs Capitalized Subsequent to Acquisition
Building and Improvements	42,329
Gross Amounts at Which Carried at Close of Period
Land	748
Building and Improvements	42,329
Total	43,077
Accumulated Depreciation	5,310
4 Waterway Square
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	37,293
Initial Cost
Land	1,430
Buildings and Improvements	51,553
Costs Capitalized Subsequent to Acquisition
Building and Improvements	6,985
Gross Amounts at Which Carried at Close of Period
Land	1,430
Building and Improvements	58,538
Total	59,968
Accumulated Depreciation	9,110
Waterway Square Hotel
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	33,361
Initial Cost
Buildings and Improvements	22,473
Costs Capitalized Subsequent to Acquisition
Building and Improvements	55,936
Gross Amounts at Which Carried at Close of Period
Building and Improvements	78,409
Total	78,409
2025 Waterway Avenue
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	14,112
Initial Cost
Land	2,346
Buildings and Improvements	8,871
Costs Capitalized Subsequent to Acquisition
Building and Improvements	767
Gross Amounts at Which Carried at Close of Period
Land	2,346
Building and Improvements	9,638
Total	11,984
Accumulated Depreciation	1,447
West Windsor
Costs Capitalized Subsequent to Acquisition
Land	53
Building and Improvements	24,101
Gross Amounts at Which Carried at Close of Period
Land	53
Building and Improvements	24,101
Total	24,154
Woodloch Forest 1400
Costs Capitalized Subsequent to Acquisition
Land	1,570
Building and Improvements	14,079
Gross Amounts at Which Carried at Close of Period
Land	1,570
Building and Improvements	14,079
Total	15,649
Accumulated Depreciation	7,098
Corporate Segment
REAL ESTATE AND ACCUMULATED DEPRECIATION
Encumbrances	762,027
Initial Cost
Land	885
Buildings and Improvements	1,027
Costs Capitalized Subsequent to Acquisition
Land	(885)
Building and Improvements	30,912
Gross Amounts at Which Carried at Close of Period
Building and Improvements	31,939
Total	31,939
Accumulated Depreciation	$ 8,058

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Schedule III - REAL ESTATE AND ACCUMLATED DEPRECIATION (Reconciliation of Real Estate and Accumulated Depreciation) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reconciliation of Real Estate
Balance at beginning of year	$ 4,116,556	$ 3,024,833	$ 2,746,596
Change in land	95,095	296,147	90,124
Additions	834,346	973,833	352,141
Dispositions and write-offs and land costs of sales	(271,365)	(178,257)	(164,028)
Balance at end of year	4,774,632	4,116,556	3,024,833
Reconciliation of Accumulated Depreciation
Balance at beginning of year	157,182	111,728	112,491
Depreciation expense	82,275	50,683	29,637
Dispositions and write-offs	(6,488)	(5,229)	(30,400)
Balance at end of year	$ 232,969	$ 157,182	$ 111,728
Building and Building Improvements | Minimum
REAL ESTATE AND ACCUMULATED DEPRECIATION
Estimated useful lives of assets	10 years
Building and Building Improvements | Maximum
REAL ESTATE AND ACCUMULATED DEPRECIATION
Estimated useful lives of assets	45 years
Equipment Tenant Improvements and Fixtures | Minimum
REAL ESTATE AND ACCUMULATED DEPRECIATION
Estimated useful lives of assets	5 years
Equipment Tenant Improvements and Fixtures | Maximum
REAL ESTATE AND ACCUMULATED DEPRECIATION
Estimated useful lives of assets	10 years
Computer, Hardware and Software and Vehicles | Minimum
REAL ESTATE AND ACCUMULATED DEPRECIATION
Estimated useful lives of assets	3 years
Computer, Hardware and Software and Vehicles | Maximum
REAL ESTATE AND ACCUMULATED DEPRECIATION
Estimated useful lives of assets	5 years