SEGMENTS

9 Months Ended

Sep. 30, 2019

The Company has four business segments which offer different products and services. HHC's four segments are managed separately because each requires different operating strategies or management expertise and are reflective of management’s operating philosophies and methods. As further discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, one common operating measure used to assess operating results for the Company's business segments is earnings before taxes ("EBT"). The Company's segments or assets within such segments could change in the future as development of certain properties commences or other operational or management changes occur. All operations are within the United States. The Company's reportable segments are as follows:


•	Operating Assets – consists of retail, office, hospitality and multi-family properties along with other real estate investments. These assets are currently generating revenues and are comprised of commercial real estate properties recently developed or acquired, and properties with an opportunity to redevelop, reposition or sell to improve segment performance or to recycle capital.


•	MPC – consists of 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.


•	Seaport District - consists of approximately 450,000 square feet of restaurant, retail and entertainment properties situated in three primary locations in New York, New York: Pier 17, Historic Area/Uplands and Tin Building. While the latter is still under development and will comprise about 53,000 square feet when completed, the two operating locations consist

of third-party tenants, tenants either directly or jointly owned and operated by the Company, and businesses owned and operated by the Company under licensing agreements.


•	Strategic Developments – consists of residential condominium and commercial property projects currently under development and all other properties held for development which have no substantial operations.

Effective January 1, 2019, the Company moved the Seaport District out of its existing segments and into a stand-alone segment for disclosure purposes. The respective segment earnings and total segment assets presented in the Condensed Consolidated Financial Statements and elsewhere in this Quarterly Report have been adjusted in all periods reported to reflect this change. See the Seaport District section of Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.

Segment operating results are as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019			2018			2019			2018
Operating Assets Segment EBT
Total revenues	$	104,223		$	87,462		$	305,395		$	264,017
Total operating expenses	(47,950		)	(43,373		)	(139,589		)	(126,372		)
Segment operating income	56,273			44,089			165,806			137,645
Depreciation and amortization	(28,844		)	(26,470		)	(84,890		)	(74,028		)
Interest expense, net	(21,645		)	(18,891		)	(60,695		)	(52,886		)
Other (loss) income, net	63			(2,767		)	1,186			(2,603		)
Equity in earnings (losses) from real estate and other affiliates	441			(76		)	3,195			1,507
Selling profit from sales-type leases	13,537			—			13,537			—
Segment EBT	19,825			(4,115		)	38,139			9,635

MPC Segment EBT
Total revenues	92,287			143,135			216,042			261,665
Total operating expenses	(45,169		)	(70,237		)	(114,075		)	(143,608		)
Segment operating income	47,118			72,898			101,967			118,057
Depreciation and amortization	(88		)	(78		)	(334		)	(245		)
Interest income, net	8,550			6,626			24,376			19,826
Other income, net	534			18			601			18
Equity in earnings from real estate and other affiliates	4,523			9,454			18,859			34,682
Segment EBT	60,637			88,918			145,469			172,338

Seaport District Segment EBT
Total revenues	23,130			14,601			43,051			22,612
Total operating expenses	(27,330		)	(21,989		)	(59,735		)	(31,965		)
Segment operating loss	(4,200		)	(7,388		)	(16,684		)	(9,353		)
Depreciation and amortization	(6,767		)	(2,309		)	(19,713		)	(6,506		)
Interest (expense) income, net	(4,984		)	1,471			(8,440		)	8,466
Other loss, net	—			(120		)	(147		)	(120		)
Equity in losses from real estate and other affiliates	(705		)	(452		)	(1,788		)	(692		)
Loss on sale or disposal of real estate	—			—			(6		)	—
Segment EBT	(16,656		)	(8,798		)	(46,778		)	(8,205		)



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019			2018			2019			2018
Strategic Developments Segment EBT
Total revenues	11,515			11,962			451,873			51,550
Total operating expenses	(11,327		)	(13,553		)	(382,341		)	(60,892		)
Segment operating income	188			(1,591		)	69,532			(9,342		)
Depreciation and amortization	(2,070		)	(472		)	(4,386		)	(2,650		)
Interest income, net	3,002			2,848			9,499			9,794
Other income (loss), net	354			(450		)	664			(77		)
Equity in earnings (loss) from real estate and other affiliates	283			(315		)	581			3,797
Gain on sale or disposal of real estate, net	24,201			—			24,057			—
Segment EBT	25,958			20			99,947			1,522

Consolidated Segment EBT
Total revenues	231,155			257,160			1,016,361			599,844
Total operating expenses	(131,776		)	(149,152		)	(695,740		)	(362,837		)
Segment operating income	99,379			108,008			320,621			237,007
Depreciation and amortization	(37,769		)	(29,329		)	(109,323		)	(83,429		)
Interest expense, net	(15,077		)	(7,946		)	(35,260		)	(14,800		)
Other income (loss), net	951			(3,319		)	2,304			(2,782		)
Equity in earnings from real estate and other affiliates	4,542			8,611			20,847			39,294
Gain on sale or disposal of real estate, net	24,201			—			24,051			—
Selling profit from sales-type leases	13,537			—			13,537			—
Consolidated segment EBT	89,764			76,025			236,777			175,290

Corporate income, expenses and other items	(59,721		)	(52,178		)	(161,481		)	(155,488		)
Net income	30,043			23,847			75,296			19,802
Net income attributable to noncontrolling interests	(285		)	(482		)	(240		)	(51		)
Net income attributable to common stockholders	$	29,758		$	23,365		$	75,056		$	19,751

The assets by segment and the reconciliation of total segment assets to the Total assets in the Condensed Consolidated Balance Sheets are summarized as follows:



	September 30,		December 31,
(In thousands)	2019		2018
Operating Assets	$	2,923,083	$	2,562,257
Master Planned Communities	2,204,507		2,076,678
Seaport District	918,589		839,522
Strategic Developments	1,452,738		1,538,917
Total segment assets	7,498,917		7,017,374
Corporate	448,998		338,425
Total assets	$	7,947,915	$	7,355,799