As of December 31, 2021, the Company does not consolidate the investments below as it does not have the power to direct the activities that most significantly impact the economic performance of the ventures and does not have a controlling interest in these investments. As a result, the Company reports its interests in accordance with the equity method. As of December 31, 2021, these ventures had mortgage financing totaling $671.5 million, with the Company’s proportionate share of this debt totaling $295.5 million. All of this indebtedness is without recourse to the Company, with the exception of $100.6 million related to 110 North Wacker.


	Economic/Legal Ownership				Carrying Value				Share of Earnings/Dividends
	December 31,		December 31		December 31,		December 31		Year Ended Year Ended December 31,
thousands except percentages	2021		2020		2021		2020		2021		2020		2019
Equity Method Investments
Operating Assets
110 North Wacker (a)(b)	see below		see below		$	194,999	$	261,143	$	(74,309)	$	(13,896)	$	—
The Metropolitan Downtown Columbia (c)	50.0	%	50.0	%	—		—		582		765		694
Stewart Title of Montgomery County, TX	50.0	%	50.0	%	4,185		3,924		1,860		1,250		1,105
Woodlands Sarofim #1	20.0	%	20.0	%	3,215		3,120		96		125		125
m.flats/TEN.M (d)	50.0	%	50.0	%	—		1,247		974		666		(1,875)
Master Planned Communities
The Summit (e)	see below		see below		41,536		96,300		59,407		17,845		28,336
Trillium (e)	50.0	%	—	%	59,080		—		(8)		—		—
Seaport
Mr. C Seaport (f)	—	%	—	%	—		—		—		(6,900)		(1,980)
The Lawn Club (e)	see below		see below		447		—		—		—		—
Ssäm Bar (Momofuku) (e)	see below		see below		5,852		7,101		(1,988)		(2,392)		(612)
Strategic Developments
Circle T Ranch and Power Center (g)	—	%	—	%	—		—		—		2,463		950
HHMK Development	50.0	%	50.0	%	10		10		—		—		—
KR Holdings	50.0	%	50.0	%	127		347		(221)		(69)		263
West End Alexandria (e)	see below		see below		56,546		—		—		—		—
110 North Wacker (a)	see below		see below		—		—		—		267,518		—
					365,997		373,192		(13,607)		267,375		27,006
Other equity investments (h)					3,952		3,953		3,755		3,724		3,623
Investments in real estate and other affiliates					$	369,949	$	377,145	$	(9,852)	$	271,099	$	30,629

(a)During the third quarter of 2020, 110 North Wacker was completed and placed in service. This triggered a reconsideration event that resulted in the deconsolidation of 110 North Wacker and the recognition of the retained equity method investment at fair market value. The $267.5 million gain on deconsolidation was recorded in the Strategic Developments segment and the equity method investment was transferred from the Strategic Development segment to the Operating Asset segment. Refer to the discussion below for additional details.

(c)The Metropolitan Downtown Columbia was in a deficit position of $11.3 million at December 31, 2021, and $5.0 million at December 31, 2020, due to distributions from operating cash flows in excess of basis. These deficit balances are presented in Accounts payable and accrued expenses at December 31, 2021 and 2020. The increase in the deficit balance is primarily due to a $5.0 million distribution in the third quarter of 2021.

(h)Other equity investments represent equity investments not accounted for under the equity method. The Company elected the measurement alternative as these investments do not have readily determinable fair values. See Note 1 - Summary of Significant Accounting Policies for additional information. There were no impairments, or upward or downward adjustments to the carrying amounts of these securities either during current year 2021, or cumulatively.

110 North Wacker The Company formed a partnership with a local developer (the Partnership) during the second quarter of 2017. During the second quarter of 2018, the Partnership executed an agreement with USAA related to 110 North Wacker (collectively, the local developer and USAA are the Partners) to construct and operate the building at 110 North Wacker (the Venture).

The Partnership was determined to be a VIE, and as the Company has the power to direct the activities of the Partnership that most significantly impact its economic performance, the Company is considered the primary beneficiary and consolidates the Partnership. Additionally, the noncontrolling interest holder has the right to require the Company to purchase its interest in the Partnership if the Venture has not been sold or refinanced (with distributions made to the local developer and Company sufficient to repay all capital contributions), at the later of (1) the third anniversary of the issuance of the certificate of occupancy for the project or (2) the fifth anniversary of the effective date of the Partnership's LLC agreement. Therefore, the local developer’s redeemable noncontrolling interest in the Partnership is presented as temporary equity on the Consolidated Balance Sheets. As of December 31, 2021, the time restriction has not been met, and the Company believes it is not probable that the put will be redeemed. As such, the redeemable noncontrolling interest is measured at the initial carrying value plus net income (loss) attributable to the noncontrolling interest and is not adjusted to fair value.


thousands	Redeemable Noncontrolling Interest
Balance as of December 31, 2019	$	—
Reclassification of redeemable noncontrolling interest to temporary equity	6,091
Net income (loss) attributable to noncontrolling interest	22,881
Share of investee's other comprehensive income	142
Balance as of December 31, 2020	$	29,114

Net income (loss) attributable to noncontrolling interest	(7,431)
Share of investee's other comprehensive income	817
Balance as of December 31, 2021	$	22,500

Upon execution of the Venture in the second quarter of 2018, the Company contributed land with a carrying value of $33.6 million and an agreed upon fair value of $85.0 million, the local developer contributed $5.0 million in cash and USAA contributed $64.0 million in cash. USAA was required to fund up to $105.6 million in addition to its initial contribution. HHC and the local developer also had additional cash funding requirements and contributed $9.8 million and $1.1 million, respectively, during 2018. The Company and its Partners entered into a construction loan agreement further described in Note 7 - Mortgages, Notes and Loans Payable, Net. Any further cash funding requirements by the Partnership were eliminated when the construction loan increased on May 23, 2019. Concurrently with the increase in the construction loan, USAA agreed to fund an additional $8.8 million, for a total commitment of $178.4 million. No changes were made to the rights of either the Company or the Partners under the construction loan agreement.

The Company concluded that the Venture was within the scope of the VIE model, and that it was the primary beneficiary of the Venture during the development phase of the project because it had the power to direct activities that most significantly impact the Venture’s economic performance, however, upon the building’s completion, the Company expected to recognize the investment under the equity method. As the primary beneficiary of the VIE during the development phase, the Company has consolidated 110 North Wacker and its underlying entities since the second quarter of 2018. During the third quarter of 2020, 110 North Wacker was completed and placed in service, triggering a reconsideration event. Upon development completion, the Company concluded it is no longer the primary beneficiary and as such, should no longer consolidate the Venture. As there have been no changes to the structure and control of the Partnership with the local developer, the Company will continue to consolidate the Partnership.

As of September 30, 2020, the Company derecognized all assets, liabilities and noncontrolling interest related to the Venture that were previously consolidated and recognized an equity method investment of $273.6 million based on the fair value of its interest in 110 North Wacker. The Company recognized a gain of $267.5 million attributable to the initial fair value step-up at the time of deconsolidation, which is included in Equity in earnings (losses) from real estate and other affiliates on the Consolidated Statements of Operations and reported in the Strategic Developments segment for the year ended December 31, 2020. The Company utilized a third-party appraiser to measure the fair value of 110 North Wacker on an as-is basis at September 30, 2020, using the discounted cash flow approach and sales comparison approach, based on current market assumptions. Also as a result of the deconsolidation, the Company recognized an additional $15.4 million attributable to the recognition of previously eliminated development management fees, which is included in Other land, rental and property revenues on the Consolidated Statements of Operations and reported in the Strategic Developments segment for the year ended December 31, 2020. The remaining equity method investment was transferred from the Strategic Development segment to the Operating Asset segment as of September 30, 2020.

Given the nature of the Venture’s capital structure and the provisions for the liquidation of assets, the Company’s share of the Venture’s income-producing activities is recognized based on the Hypothetical Liquidation at Book Value (HLBV) method. Under this method, the Company recognizes income or loss in Equity in earnings from real estate and other affiliates based on the change in its underlying share of the Venture’s net assets on a hypothetical liquidation basis as of the reporting date. After USAA receives a 9.0% preferred return on its capital contribution, the Partnership is entitled to cash distributions from the Venture until it receives a 9.0% return on its capital account, calculated as the initial land contribution of $85.0 million and cash contribution of $5.0 million, plus subsequent cash contributions and less subsequent cash distributions. Subsequently, USAA is entitled to cash distributions equal to 11.11% of the amount distributed to the Partnership that resulted in a 9.0% return. Thereafter, the Partnership and USAA are entitled to distributions pari passu to their profit ownership interests of 90% and 10%, respectively.

The Lawn Club On January 19, 2021, the Company formed HHC Lawn Games, LLC with The Lawn Club NYC, LLC (Endorphin Ventures), to construct and operate an immersive indoor and outdoor restaurant that includes an extensive area of indoor grass, a stylish clubhouse bar and a wide variety of lawn games. This concept is expected to open in the summer of 2022. Under the terms of the agreement, the Company will fund 80% of the cost to construct the restaurant, and Endorphin Ventures will contribute the remaining 20%. The Company also entered into a lease agreement with HHC Lawn Games, LLC (Lease Agreement) to lease 20,000 square feet of the Fulton Market Building for this venture. The Company will report its ownership interest in accordance with the equity method.

Available cash will be distributed 80% to the Company and 20% to Endorphin Ventures until each member’s unreturned capital account has been reduced to zero. Distributions will then be allocated 60% to the Company and 40% to Endorphin Ventures until the amounts paid to the Company under the Lease Agreement and the aggregate amounts distributed to the Company equal $100 per square foot of the property on an annual basis. Any remaining cash will be distributed equally between both members. Given the nature of The Lawn Club’s capital structure and the provisions for the liquidation of assets, the Company’s share of The Lawn Club’s income-producing activities will be recognized based on the HLBV method.

Ssäm Bar (formerly Bar Wayō) During the first quarter of 2016, the Company formed Pier 17 Restaurant C101, LLC (Bar Wayō) with MomoPier, LLC (Momofuku), an affiliate of the Momofuku restaurant group, to construct and operate a restaurant and bar at Pier 17 in the Seaport. Under the terms of the agreement, the Company will fund 89.75% of the costs to construct the restaurant, and Momofuku will contribute the remaining 10.25%. In 2021, Bar Wayō was rebranded as the Ssäm Bar.

As of December 31, 2021 and 2020, Ssäm Bar is classified as a VIE because the equity holders, as a group, lack the characteristics of a controlling financial interest. The carrying value of Ssäm Bar as of December 31, 2021, is $5.9 million and is classified as Investments in real estate and other affiliates in the Consolidated Balance Sheets. The Company’s maximum exposure to loss as a result of these investments is limited to the aggregate carrying value of the investments as the Company has not provided any guarantees or otherwise made firm commitments to fund amounts on behalf of this VIE.

After each member receives a 10% preferred return on its capital contributions, available cash will be allocated 75% to the Company and 25% to Momofuku, until each member’s unreturned capital account has been reduced to zero. Any remaining cash will be distributed 50% to each of the members. Given the nature of the Ssäm Bar’s capital structure and the provisions for the liquidation of assets, the Company’s share of the Ssäm Bar’s income-producing activities is recognized based on the HLBV method.

The Summit During the first quarter of 2015, the Company formed DLV/HHPI Summerlin, LLC (The Summit) with Discovery Land Company (Discovery). The Company contributed land with a carrying value of $13.4 million and transferred SID bonds related to such land with a carrying value of $1.3 million to The Summit at the agreed upon capital contribution value of $125.4 million, or $226,000 per acre and has no further capital obligations. Discovery is required to fund up to a maximum of $30.0 million of cash as their capital contribution, of which $3.8 million has been contributed. The gains on the contributed land are recognized in Equity in earnings from real estate and other affiliates as The Summit sells lots.

As of December 31, 2021, the Company has received cash distributions equal to its capital contribution of $125.4 million and a 5.0% preferred return on such capital contribution, and Discovery has received cash distributions equal to two times its equity contribution. Any further cash distributions and income producing activities will be recognized according to equity ownership with HHC receiving 50% and Discovery receiving 50%. As of December 31, 2021, HHC has received $179.1 million in total distributions and Discovery has received $27.0 million in total distributions.

Trillium In the fourth quarter of 2021, simultaneous with the Douglas Ranch land acquisition, the Company entered into a Limited Liability Company Agreement (LLC Agreement) with JDM Partners and El Dorado Holdings to form Trillium Development Holding Company, LLC (Trillium) for the purpose of developing the first village within the new Douglas Ranch MPC in Phoenix’s West Valley. Refer to Note 3 - Acquisitions and Dispositions for additional details on the Douglas Ranch acquisition.

Within the 3,029-acre Trillium development located in the greater Phoenix, Arizona area (Trillium Property), JDM Partners owned approximately 2,579 acres and El Dorado Holdings owned approximately 450 acres. Simultaneously with the LLC Agreement, all parties executed the Contribution and Purchase Agreement under which the Company acquired a 50% interest in the land owned by JDM Partners and a 50% interest in the land owned by El Dorado Holdings for $59.0 million, and immediately contributed its ownership interest in the property to Trillium in exchange for a 50% equity interest. At the same time, JDM Partners contributed its remaining 50% interest in the land and El Dorado Holdings contributed its remaining 50% interest in the land to Trillium in exchange for the remaining equity interest. Subsequent to these contributions, member equity interest in Trillium was 50% for the Company, 42.5% for JDM Partners and 7.5% for El Dorado Holdings. The Company will report its ownership interest in accordance with the equity method. Under the terms of the agreement, all future capital contributions, cash distributions and the recognition of income producing activities will be pro rata based on economic ownership interest. The first Trillium land sales are expected to occur in the first half of 2022.

West End Alexandria In the fourth quarter of 2021, the Company entered into an Asset Contribution Agreement with Foulger-Pratt Development, LLC (Foulger-Pratt) and Seritage SRC Finance (Seritage). Prior to this agreement, Foulger-Pratt owned 100% interest in Landmark Land Holdings, LLC (West End Alexandria). Pursuant to this agreement, the Company conveyed its 33-acre Landmark Mall property with an agreed upon fair value of $56.0 million and Seritage conveyed an additional 19 acres of land with an agreed upon fair value of $30 million to West End Alexandria in exchange for equity interest. Additionally, Foulger-Pratt agreed to contribute $10 million to West End Alexandria. Subsequent to these conveyances and contributions, each member received an equity interest proportionate to the agreed upon values, defined as 58.33% for the Company, 31.25% for Seritage, and 10.42% for Foulger-Pratt.

Development plans for the remaining 41 acre property includes approximately four million square feet of residential, retail, commercial, and entertainment offerings integrated into a cohesive neighborhood with a central plaza, a network of parks and public transportation. Demolition is set to begin in Spring 2022, with completion of the first buildings expected in 2025.

Each member is entitled to a 10% return on their respective capital contributions, which is allocated pro rata in accordance with their respective percentage interest. Next, 20% to Foulger-Pratt, and 80% to all members in accordance with their respective percentage interests, until each member has received an internal rate of return of 15% on its capital contributions. After which 100% will be allocated to Foulger-Pratt equal to any unreturned contributions made by Foulger-Pratt to cover controllable cost overruns. Lastly, 30% to Foulger-Pratt, and 70% to all members pro rata in accordance with their respective percentage interests. Given the nature of the venture’s capital structure and the provisions for the liquidation of assets, the Company’s share of income-producing activities is recognized based on the HLBV method.


thousands	The Summit (a)(b)(c)			110 North Wacker (d)			Other Investments (e)
Balance Sheet
December 31, 2021
Total Assets		$	225,133		$	707,005		$	510,756
Total Liabilities		169,814			515,665			233,368
Total Equity		55,319			191,340			277,388

December 31, 2020
Total Assets		$	310,855		$	634,274		$	247,742
Total Liabilities		209,968			415,452			166,418
Total Equity		100,887			218,822			81,324

Income Statement
Year ended December 31, 2021
Revenues		$	302,174		$	38,699		$	36,964
Gross Margin		116,641			n/a			n/a
Operating Income		n/a			8,525			20,305
Net income (loss)		95,604			(36,556)			10,856

Year Ended December 31, 2020
Revenues		$	148,822		$	5,333		$	36,450
Gross Margin		29,012			n/a			n/a
Operating Income		n/a			(3,148)			17,100
Net income (loss)		21,924			(8,236)			11,220

Year Ended December 31, 2019
Revenues		$	120,337		$	—		$	42,778
Gross Margin		32,205			n/a			n/a
Operating Income		n/a			—			16,085
Net income (loss)		26,298			—			5,162

(a)The Summit adopted ASU 2014-09, Revenues from Contracts with Customers (Topic 606) effective in the fourth quarter of 2019 using the modified retrospective transition method. Therefore, for 2019, revenues allocated to each of The Summit’s performance obligations is recognized over time based on an input measure of progress. Prior period amounts have not been adjusted and are recognized on a percentage of completion basis. The Summit’s adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements.