Howard Hughes Holdings Inc.HHH
Howard Hughes Holdings Inc. Fair Value Disclosure
10. Fair Value | ||
ASC 820, Fair Value Measurement (ASC 820), emphasizes that fair value is a market-based measurement that should be determined using assumptions market participants would use in pricing an asset or liability. The standard establishes a hierarchical disclosure framework that 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 of judgment used in measuring fair value.
The following table presents the fair value measurement hierarchy levels required under ASC 820 for the Company’s assets and liabilities that are measured at fair value on a recurring basis.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements Using | Fair Value Measurements Using | ||||||||||||||||||||||||||||||||||||||||||||||
| 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) | |||||||||||||||||||||||||||||||||||||||
| Interest rate derivative assets | $ | 3,113 | $ | — | $ | 3,113 | $ | — | $ | 9,082 | $ | — | $ | 9,082 | $ | — | |||||||||||||||||||||||||||||||
| Interest rate derivative liabilities | 689 | — | 689 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
The fair values of interest rate derivatives 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 estimated fair values of the Company’s financial instruments that are not measured at fair value on a recurring basis are as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| thousands | Fair Value Hierarchy | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash | Level 1 | $ | 2,097,158 | $ | 2,097,158 | $ | 998,503 | $ | 998,503 | ||||||||||||||||||||
| Accounts receivable, net (a) | Level 3 | 134,122 | 134,122 | 105,185 | 105,185 | ||||||||||||||||||||||||
| Notes receivable, net (b) | Level 3 | 2,932 | 2,932 | 870 | 870 | ||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||
| Fixed-rate debt (c) | Level 2 | 3,923,855 | 3,794,729 | 3,769,529 | 3,495,298 | ||||||||||||||||||||||||
| Variable-rate debt (c) | Level 2 | 1,220,359 | 1,220,359 | 1,398,908 | 1,398,908 | ||||||||||||||||||||||||
(a)Accounts receivable, net is shown net of an allowance of $7.2 million at December 31, 2025, and $8.2 million at December 31, 2024. Refer to Note 1 - Presentation of Financial Statements and Significant Accounting Policies for additional information on the allowance.
(b)Notes receivable, net is shown net of an immaterial allowance at December 31, 2025, and December 31, 2024.
(c)Excludes related unamortized financing costs.
The carrying amounts of Cash and restricted cash, Accounts receivable, net, and Notes receivable, net approximate fair value because of the short‑term maturity of these instruments.
The fair value of the Company’s senior unsecured notes, included in fixed-rate debt in the table above, is based upon the trade price closest to the end of the period presented. The fair value of other fixed-rate debt in the table above was estimated based on a discounted future cash payment model, which includes risk premiums and risk-free rates derived from the Secured Overnight Financing Rate (SOFR) or U.S. Treasury obligation interest rates as of December 31, 2025. Refer to Note 9 - Mortgages, Notes, and Loans Payable, Net for additional information. The discount rates reflect the Company’s 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 carrying amounts for the Company’s 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 below table includes a non-financial asset received as consideration in a land swap transaction and measured at fair value on a non-recurring basis:
| Fair Value Measurements Using | ||||||||||||||||||||||||||
| thousands | Segment | Total Fair Value Measurement | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||
| Town Green (a) | Strategic Developments | $ | 28,900 | $ | — | $ | — | $ | 28,900 | |||||||||||||||||
(a)The fair value was determined based on an independent property appraisal using market‑participant assumptions as of June 2025. Refer to Note 5 - Acquisitions and Dispositions for additional information.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 27, 2024 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.