Alexander & Baldwin (ALEX) 8-K About This Supplement Update

Exhibit 99.1 

 

About This Supplement Update

 

This periodic Supplement Update is designed to provide current and potential shareholders of Alexander & Baldwin, Inc. with additional information regarding the Company’s Real Estate operating segments. This information is supplemental to and does not replace the information provided to shareholders in the Company’s periodic filings with the Securities and Exchange Commission.

This Second Quarter 2016 Supplement updates Tables 7-15 of the Company’s First Quarter 2016 Real Estate Supplement.

Feedback and suggestions regarding the contents of this Supplement Update are welcomed, and should be directed to Suzy P. Hollinger, Director, Investor Relations, via telephone at (808) 525-8422 or via email to shollinger@abinc.com.

Alexander & Baldwin, Inc. │Real Estate Supplement Update

 

Index to Real Estate Supplement Update

(Unaudited)

Second Quarter 2016

Forward-Looking Statements	2
Basis of Presentation	2
Real Estate Leasing Segment – Asset Descriptions and Statistics	3
Property Detail – Hawaii (Table 7)	3
Property Detail – Mainland (Table 8)	5
Comparable % Occupancy Data by Geographic Region and Asset Class (Table 9)	6
Weighted Average Gross Leasable Area by Geographic Region and Asset Class (Table 10)	6
Occupancy Trend Analysis – Last Five Quarters (Table 11)	6
Real Estate Leasing Net Operating Income (NOI) (Table 12)	7
Real Estate Leasing Same Store NOI (Table 13)	7
Statement on Management’s Use of Non-GAAP Financial Measures	8
Reconciliation of Real Estate Leasing Operating Profit to NOI and Same Store NOI (Non-GAAP) (Table 14)	8
Portfolio Acquisitions and Dispositions	9
2016 and 2015 Improved Property Portfolio Acquisitions/Dispositions (Table 15)	9

1 

Forward-Looking Statements

 

Statements in this Supplement Update that are not historical facts are “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. These forward-looking statements are not guarantees of future performance. This Supplement Update should be read in conjunction with pages 17-29 of Alexander & Baldwin, Inc.’s 2015 Form 10-K and other filings with the SEC through the date of this Supplement Update, which identify important factors that could affect the forward-looking statements in this Supplement Update. We do not undertake any obligation to update our forward-looking statements.

Basis of Presentation

 

The information contained in this Supplement Update does not purport to disclose all items required by accounting principles generally accepted in the United States of America (GAAP). The information contained in this Supplement Update is unaudited and should be read in conjunction with Alexander & Baldwin, Inc.’s 2015 Real Estate Supplement, 2015 Form 10-K and other filings with the SEC through the date of this Supplement Update.

2 

Real Estate Leasing Segment – Asset Descriptions and Statistics

 

Table 7

Property Detail - Hawaii

Property	Number of properties at 06/30/16		Island	Gross leasable area at 06/30/16 (sq. ft.)		Leased1 (percent)		Outstanding debt ($ in 000s)		2Q2016 NOI2 ($ in 000s)			2Q2016 % NOI to total Hawaii portfolio
Retail:
Pearl Highlands Center		1	Oahu		415,200		95	$	90,943	$	2,519			13.8
Kailua Retail		16	Oahu		414,400		94		10,892		3,067			16.8
Waianae Mall		1	Oahu		170,300		86		-		526			2.9
Manoa Marketplace		1	Oahu		139,300		98		-		1,231			6.7
Kaneohe Bay Shopping Center3		1	Oahu		124,800		100		-		626			3.4
Waipio Shopping Center		1	Oahu		113,800		98		-		847			4.6
The Shops at Kukui'ula		1	Kauai		89,000		97		35,668		876			4.8
Lanihau Marketplace		1	Hawaii		88,300		98		-		494			2.7
Kunia Shopping Center		1	Oahu		60,600		82		-		441			2.4
Lahaina Square		1	Maui		50,200		76		-		127			0.7
Kahului Shopping Center		1	Maui		49,900		99		-		149			0.8
Napili Plaza		1	Maui		45,700		89		-		283			1.5
Gateway at Mililani Mauka		1	Oahu		34,900		91		-		422			2.3
Port Allen Marina Center		1	Kauai		23,600		84		-		125			0.7
Subtotal – Retail		29			1,820,000		94	$	137,503	$	11,733			64.1
Industrial:
Komohana Industrial Park4		1	Oahu		238,300		99	$	-	$	1,014			5.5
Kakaako Commerce Center		1	Oahu		206,000		79		-		492			2.7
Waipio Industrial		1	Oahu		158,400		100		-		617			3.4
P&L Building		1	Maui		104,100		100		-		329			1.8
Kailua Industrial/Other		6	Oahu		68,800		95		-		145			0.8
Port Allen		3	Kauai		63,800		100		-		159			0.9
Subtotal – Industrial		13			839,400		94	$	-	$	2,756			15.1
Office:
Kahului Office Building		1	Maui		59,600		81	$	-	$	341			1.9
Gateway at Mililani Mauka South5		1	Oahu		37,100		97		-		187			1.0
Kahului Office Center		1	Maui		33,400		88		-		182			1.0
Stangenwald Building		1	Oahu		27,100		90		-		117			0.6
Judd Building		1	Oahu		20,200		86		-		51			0.3
Maui Clinic Building6		1	Maui		16,600		31		-		(3	)		-
Lono Center		1	Maui		13,700		84		-		57			0.3
Subtotal – Office		7			207,700		82	$	-	$	932			5.1

Table 7 continued on the next page

3 

Table 7

Property Detail - Hawaii (Continued from previous page)

Property	Number of properties at 06/30/16		Island	Gross leasable area at 06/30/16 (sq. ft.)		Leased1(percent)		Outstanding debt ($ in 000s)		2Q2016 NOI2 ($ in 000s)		2Q2016 % NOI to total Hawaii portfolio
Ground Leases
Kailua		19 acres	Oahu		-			$	-	$	817		4.4
Other Oahu		22 acres	Oahu		-				-		1,209		6.6
Neighbor Island		2,682 acres7	Neighbor Island		-				-		855		4.7
Subtotal - Ground Leases		2,723 acres			-			$	-	$	2,881		15.7
Total Hawaii		49			2,867,100		93	$	137,503	$	18,302		100.0

¹ Represents the average percentage of space leased during the period referenced or A&B’s ownership period, whichever is shorter. Space is considered leased when a tenancy agreement has been fully executed or the space is revenue producing.

² See page 8 for a statement regarding the Company’s use of non-GAAP financial measures and a reconciliation of Leasing operating profit to portfolio NOI.

³ Kaneohe Bay Shopping Center is a leasehold property.

⁴ Includes ground leased income.

⁵ The 18,415-square-foot expansion of the Gateway at Mililani office complex has been completed and was moved into the commercial portfolio in June.

⁶ Negative NOI and low occupancy related to repositioning of property.

⁷ Includes 64 ground leased urban acres.

Note:  For portfolio asset class and geographic occupancy see Table 9 on page 6. Gross leasable area is periodically adjusted based on remeasurement or reconfiguration of space.

4 

Table 8

Property Detail - Mainland

Property	Number of properties at 06/30/16		Location	Gross leasable area at 06/30/16 (sq. ft.)		Leased1(percent)		Outstanding debt ($ in 000s)		2Q2016 NOI2 ($ in 000s)		2Q2016 % NOI to total Mainland portfolio
Retail:
Little Cottonwood Center		1	Sandy, UT		141,500		92	$	-	$	367		13.4
Royal MacArthur Center		1	Dallas, TX		44,900		93		-		209		7.6
Subtotal – Retail		2			186,400		92	$	-	$	576		21.0
Industrial:
Midstate Hayes		1	Visalia, CA		790,200		100	$	8,228	$	756		27.5
Sparks Business Center		1	Sparks, NV		396,100		96		-		467		17.0
Subtotal – Industrial		2			1,186,300		99	$	8,228	$	1,223		44.5
Office:
1800 and 1820 Preston Park		1	Plano, TX		198,800		87	$	-	$	359		13.1
Concorde Commerce Center		1	Phoenix, AZ		138,700		91		-		444		16.2
Deer Valley Financial Center		1	Phoenix, AZ		126,600		80		-		143		5.2
Subtotal – Office		3			464,100		91	$	-	$	946		34.5
Total Mainland		7			1,836,800		95	$	8,228	$	2,745		100.0

¹ Represents the average percentage of space leased during the period referenced or A&B’s ownership period, whichever is shorter. Space is considered leased when a tenancy agreement has been fully executed or the space is revenue producing.

² See page 8 for a statement regarding the Company’s use of non-GAAP financial measures and a reconciliation of Leasing operating profit to portfolio NOI.

Note:  For portfolio asset class and geographic occupancy see Table 9 on page 6. Gross leasable area is periodically adjusted based on remeasurement or reconfiguration of space.

5 

Table 9

Comparable % Occupancy Data by Geographic Region and Asset Class

	2Q 2016								2Q 2015								Percentage point change
Location	Retail		Industrial		Office		Total		Retail		Industrial		Office		Total		Retail			Industrial		Office			Total
Hawaii improved		94		94		82		93		94		94		83		93		-			-		(1	)		-
Mainland improved		92		99		91		95		94		99		92		95		(2	)		-		(1	)		-
Total		93		97		89		94		94		97		91		94		(1	)		-		(2	)		-

Table 10

Weighted Average Gross Leasable Area by Geographic Region and Asset Class

	2Q 2016 (in sq. ft.)								2Q 2015 (in sq. ft.)								��	Percentage Change
Location	Retail		Industrial		Office		Total		Retail		Industrial		Office		Total			Retail		Industrial		Office			Total
Hawaii improved		1,820,000		839,400		195,400		2,854,800		1,670,600		837,800		189,300		2,697,700			8.9		0.2		3.2			5.8
Mainland improved		186,400		1,186,300		736,400		2,109,100		186,300		1,186,300		956,600		2,329,200			0.1		-		(23.0	)		(9.4	)
Total		2,006,400		2,025,700		931,800		4,963,900		1,856,900		2,024,100		1,145,900		5,026,900			8.1		0.1		(18.7	)		(1.3	)

Table 11

Occupancy Trend Analysis – Last Five Quarters¹

	2Q2016						1Q2016						4Q2015						3Q2015						2Q2015
	Number of properties		Weighted average sq. ft.		Percent Leased		Number of properties		Weighted average sq. ft.		Percent Leased		Number of properties		Weighted average sq. ft.		Percent Leased		Number of properties		Weighted average sq. ft.		Percent Leased		Number of properties		Weighted average sq. ft.		Percent Leased
Retail		31		2,006,400		93		31		2,006,400		93		30		1,867,000		93		30		1,856,900		94		30		1,856,900		94
Industrial		15		2,025,700		97		15		2,025,700		97		15		2,024,100		98		15		2,024,100		97		15		2,024,100		97
Office		10		931,800		89		13		1,061,900		89		13		1,117,900		88		14		1,145,900		91		14		1,145,900		91
Total		56		4,963,900		94		59		5,094,000		94		58		5,009,000		94		59		5,026,900		95		59		5,026,900		94

¹ Number of properties is as of quarter end.

Note:  Gross leasable area is periodically adjusted based on remeasurement of reconfiguration of space.

6 

Table 12

Real Estate Leasing Net Operating Income (NOI)

(in millions)

	2Q 2016								2Q 2015								Percentage Change
Location	Retail		Industrial		Office		Total		Retail		Industrial		Office		Total		Retail			Industrial		Office			Total
Hawaii improved1	$	11.7	$	2.8	$	0.9	$	15.4	$	9.7	$	2.7	$	1.0	$	13.4		20.6			3.7		(10.0	)		14.9
Hawaii unimproved1		-		-		-		2.9		-		-		-		3.6		-			-		-			(19.4	)
Total Hawaii	$	11.7	$	2.8	$	0.9	$	18.3	$	9.7	$	2.7	$	1.0	$	17.0		20.6			3.7		(10.0	)		7.6
Mainland improved		0.6		1.2		2.2		4.0		0.7		1.2		2.5		4.4		(14.3	)		-		(12.0	)		(9.1	)
Total	$	12.3	$	4.0	$	3.1	$	22.3	$	10.4	$	3.9	$	3.5	$	21.4		18.3			2.6		(11.4	)		4.2

Table 13

Real Estate Leasing Same Store NOI²

(in millions)

	2Q 2016								2Q 2015								Percentage Change
Location	Retail		Industrial		Office		Total		Retail		Industrial		Office		Total		Retail			Industrial		Office			Total
Hawaii improved	$	9.4	$	2.8	$	0.7	$	12.9	$	8.9	$	2.7	$	0.8	$	12.4		5.6			3.7		(12.5	)		4.0
Hawaii unimproved1,3		-		-		-		3.2		-		-		-		3.8		-			-		-			(15.8	)
Total Hawaii	$	9.4	$	2.8	$	0.7	$	16.1	$	8.9	$	2.7	$	0.8	$	16.2		5.6			3.7		(12.5	)		(0.6	)
Mainland improved		0.6		1.2		0.9		2.7		0.7		1.1		0.9		2.7		(14.3	)		9.1		-			-
Total	$	10.0	$	4.0	$	1.6	$	18.8	$	9.6	$	3.8	$	1.7	$	18.9		4.2			5.3		(5.9	)		(0.5	)

¹ Ground lease NOI from the Aikahi Park Shopping Center (APSC) was included in the calculation of same store NOI (Table 13) in Hawaii Unimproved as the ground lease was held in both the second quarter of 2015 and 2016. For purposes of calculating second quarter 2016 NOI (Table 12), both the NOI from ASPC tenant improvements and ground lease were included in Hawaii Improved Retail. Ground lease NOI for APSC in the second quarter of 2015 is included in Hawaii Unimproved for April 2015 and in Hawaii Improved as of May 2015.

² Same Store NOI relates to properties that were operated throughout the duration of both periods under comparison.

³ A one-time retro-active rent increase billing of the APSC ground rent resulted in a net NOI increase of approximately $600,000 which is reflected in the second quarter of 2015. This one-time adjustment was included in Same Store NOI.

Note:  See page 8 for a statement regarding the Company’s use of non-GAAP financial measures and a reconciliation of Leasing operating profit to Real Estate Leasing NOI and Real Estate Leasing same store NOI.

7 

Statement on Management’s Use of Non-GAAP Financial Measures

 

The Company calculates NOI as operating profit from continuing operations, less general and administrative expenses, straight-line rental adjustments, interest income, interest expense, depreciation and amortization, and gains on sales of interests in real estate. NOI is considered by management to be an important and appropriate supplemental performance metric because management believes it helps both investors and management understand the ongoing core operations of our properties excluding corporate and financing-related costs and noncash depreciation and amortization. NOI is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. This measure thereby provides an operating perspective not immediately apparent from GAAP income (loss) from operations or net income (loss). NOI should not be considered as an alternative to GAAP net income as an indicator of the Company's financial performance, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. Other real estate companies may use different methodologies for calculating NOI, and accordingly, the Company's presentation of NOI may not be comparable to other real estate companies. The Company believes that the Real Estate Leasing segment's operating profit from continuing operations is the most directly comparable GAAP measurement to NOI. The Company also calculates NOI for properties that were owned throughout the entire duration of both periods under comparison and refers to this calculation as “same-store NOI.” A reconciliation of Real Estate Leasing segment operating profit to Real Estate Leasing segment NOI and same-store NOI is as follows:

Table 14

Reconciliation of Real Estate Operating Profit to NOI and Same Store NOI¹ (Non-GAAP)

(in millions)

	2Q 2016			2Q 2015
Real Estate Leasing segment operating profit	$	14.8		$	13.9
Adjustments:
Depreciation and amortization	$	7.3		$	7.2
Straight-line lease adjustments		(0.7	)		(0.7	)
General and administrative expenses		0.9			0.7
Other		-			0.3
Real Estate Leasing segment NOI	$	22.3		$	21.4
Acquisitions/ disposition and other adjustments		(3.5	)		(2.5	)
Real Estate Leasing segment same store NOI1	$	18.8		$	18.9

¹ NOI related to properties that were operated throughout the duration of both periods under comparison.

8 

Portfolio Acquisitions and Dispositions

 

Table 15

2016 Property Portfolio Acquisitions/Dispositions

Property disposed in 2016	Disposition date (month/year)	Disposition price (in millions)		Gross leasable area (sq. ft.)		Leased percentage at disposition
Ninigret Office Park	6/16	$	30		185,500		100
Gateway Oaks	6/16		8		59,700		92
Prospect Park	6/16		22		163,300		100
Total		$	60		408,500

Property acquired in 2016	Acquisition date (month/year)	Acquisition price (in millions)		Gross leasable area (sq. ft.)		Leased percentage at acquisition
Manoa Marketplace	1/16	$	82		139,300		99

2015 Property Portfolio Acquisitions/Dispositions

Property acquired in 2015	Acquisition date (month/year)	Acquisition price (in millions)		Gross leasable area (sq. ft.)		Leased percentage at acquisition
Aikahi Park Shopping Center - Improved Property1	5/15	$	2		98,000		86

Property disposed in 2015	Disposition date (month/year)	Disposition price (in millions)		Gross leasable area (sq. ft.)		Leased percentage at disposition
Union Bank	12/15	$	10		84,000		53
San Pedro Plaza	5/15		17		171,900		69
Wilshire Shopping Center	3/15		4		46,500		72
Total		$	31	$	302,400

¹ On May 1, 2015, the Company acquired the leasehold improvements of the Aikahi Park Shopping Center in Kailua. The Company has owned the ground lease under the improved property since its initial acquisition of the Kailua Town Portfolio in December 2013.

9