ALEXANDER & BALDWIN, INC.’S REAL ESTATE SUPPLEMENT UPDATE
FIRST QUARTER 2015
(Unaudited)
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 First Quarter 2015 Supplement updates Tables 7-15 of the Company’s 2014 Real Estate Supplement.
The information contained in this Supplement Update is unaudited and should be read in conjunction with the Company’s 2014 Real Estate Supplement, 2014 Form 10-K and other filings with the SEC through the date of this Supplement Update.
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)
FIRST QUARTER 2015
|
| |
| Forward-Looking Statements | |
| Basis of Presentation | |
| Real Estate Leasing Segment – Asset Descriptions and Statistics | |
| Property Detail – Hawaii (Table 7) | |
| Property Detail – Mainland (Table 8) | |
Comparable % Occupancy Data by Geographic Region and
Asset Class (Table 9) | |
Weighted Average Gross Leasable Area by Geographic
Region and Asset Class (Table 10) | |
| Occupancy Analysis Trend – Last Five Quarters (Table 11) | |
| Real Estate Leasing Net Operating Income (NOI) (Table 12) | |
| Real Estate Leasing Same Store NOI (Table 13) | |
| Statement on Management’s Use of Non-GAAP Financial Measures | |
Reconciliation of Real Estate Leasing Operating Profit to NOI and
Same Store NOI (Table 14) | |
| Portfolio Acquisitions and Dispositions | |
| 2015 and 2014 Improved Property Portfolio Acquisitions/Dispositions (Table 15) | |
| | |
| | |
| | |
| | |
| | |
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 17-30 of Alexander & Baldwin, Inc.’s 2014 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 2014 Real Estate Supplement, 2014 Form 10-K and other filings with the SEC through the date of this Supplement Update.
Real Estate Leasing Segment – Asset Descriptions and Statistics
TABLE 7
PROPERTY DETAIL - HAWAII
|
| | | | | | | | | | | | | | | |
| Property | Number of properties at 3/31/15 | Island | Gross leasable area at 3/31/15 (sq. ft.) | Leased1 (percent) | Outstanding
debt
($ in 000s) | 1Q 2015 NOI2 ($ in 000s) | 1Q 2015 % NOI to total Hawaii portfolio |
| Retail: | | | | | | | |
| Pearl Highlands Center | 1 |
| Oahu | 415,400 |
| 97 |
| $ | 93,130 |
| $ | 2,411 |
| 14.8 |
|
| Kailua Retail | 15 |
| Oahu | 316,300 |
| 96 |
| 11,133 |
| 2,422 |
| 14.9 |
|
| Waianae Mall | 1 |
| Oahu | 170,300 |
| 89 |
| 18,939 |
| 672 |
| 4.1 |
|
Kaneohe Bay Shopping Center3 | 1 |
| Oahu | 125,100 |
| 99 |
| — |
| 551 |
| 3.4 |
|
| Waipio Shopping Center | 1 |
| Oahu | 113,800 |
| 95 |
| — |
| 800 |
| 4.9 |
|
| Lanihau Marketplace | 1 |
| Hawaii | 88,300 |
| 99 |
| — |
| 447 |
| 2.8 |
|
| The Shops at Kukui'ula | 1 |
| Kauai | 78,900 |
| 92 |
| 39,628 |
| 687 |
| 4.2 |
|
| Kunia Shopping Center | 1 |
| Oahu | 60,400 |
| 93 |
| — |
| 584 |
| 3.6 |
|
| Lahaina Square | 1 |
| Maui | 50,200 |
| 79 |
| — |
| 157 |
| 1.0 |
|
| Kahului Shopping Center | 1 |
| Maui | 49,700 |
| 99 |
| — |
| 131 |
| 0.8 |
|
| Napili Plaza | 1 |
| Maui | 45,700 |
| 87 |
| — |
| 264 |
| 1.6 |
|
| Port Allen Marina Center | 1 |
| Kauai | 23,600 |
| 76 |
| — |
| 111 |
| 0.7 |
|
| Gateway at Mililani Mauka | 1 |
| Oahu | 18,900 |
| 87 |
| — |
| 264 |
| 1.6 |
|
| Subtotal – Retail | 27 |
| | 1,556,600 |
| 94 |
| $ | 162,830 |
| 9,501 |
| 58.4 |
|
| | | | | | | | |
| Industrial: | | | | | | | |
Komohana Industrial Park4 | 1 |
| Oahu | 238,300 |
| 100 |
| $ | — |
| $ | 994 |
| 6.1 |
|
| Kakaako Commerce Center | 1 |
| Oahu | 204,400 |
| 90 |
| — |
| 541 |
| 3.3 |
|
| Waipio Industrial | 1 |
| Oahu | 158,400 |
| 99 |
| — |
| 541 |
| 3.3 |
|
| P&L Building | 1 |
| Maui | 104,100 |
| 96 |
| — |
| 299 |
| 1.8 |
|
| Kailua Industrial/Other | 6 |
| Oahu | 68,800 |
| 99 |
| — |
| 157 |
| 1.0 |
|
| Port Allen | 3 |
| Kauai | 63,800 |
| 87 |
| — |
| 140 |
| 0.9 |
|
| Subtotal – Industrial | 13 |
| | 837,800 |
| 96 |
| $ | — |
| $ | 2,672 |
| 16.4 |
|
| | | | | | | | |
| Office: | | | | | | | |
| Kahului Office Building | 1 |
| Maui | 59,600 |
| 83 |
| $ | — |
| $ | 365 |
| 2.2 |
|
| Kahului Office Center | 1 |
| Maui | 33,400 |
| 90 |
| — |
| 187 |
| 1.2 |
|
| Stangenwald Building | 1 |
| Oahu | 27,100 |
| 88 |
| — |
| 95 |
| 0.6 |
|
| Judd Building | 1 |
| Oahu | 20,200 |
| 64 |
| — |
| 31 |
| 0.2 |
|
| Gateway at Mililani Mauka South | 1 |
| Oahu | 18,700 |
| 100 |
| — |
| 166 |
| 1.0 |
|
| Maui Clinic Building | 1 |
| Maui | 16,600 |
| 53 |
| — |
| 35 |
| 0.2 |
|
| Lono Center | 1 |
| Maui | 13,700 |
| 89 |
| — |
| 60 |
| 0.4 |
|
| Subtotal – Office | 7 |
| | 189,300 |
| 82 |
| $ | — |
| $ | 939 |
| 5.8 |
|
| Table 7 continued on the next page. |
|
| | | | | | | | | | | | | | | |
| Property | Number of properties at 3/31/15 | Island | Gross leasable area at 3/31/15 (sq. ft.) | Leased1 (percent) | Outstanding
debt
($ in 000s) | 1Q 2015 NOI2 ($ in 000s) | 1Q 2015 % NOI to total Hawaii portfolio |
| | | | | | | | |
| Ground Leases | | | | | | | |
| Kailua | 28 acres |
| Oahu | — |
| | $ | — |
| $ | 1,065 |
| 6.5 |
|
| Other Oahu | 23 acres |
| Oahu | — |
| | — |
| 1,203 |
| 7.4 |
|
| Neighbor Island | 2,818 acres5 |
| Neighbor Island | — |
| | — |
| 900 |
| 5.5 |
|
| Subtotal - Ground Leases | 2,869 acres |
| | — |
| | $ | — |
| $ | 3,168 |
| 19.4 |
|
| Total Hawaii | 47 |
| | 2,583,700 |
| 94 |
| $ | 162,830 |
| $ | 16,280 |
| 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 NOI for the total portfolio. |
| |
3 | Kaneohe Bay Shopping Center is a leasehold property. |
| |
4 | Includes ground leased income. |
| |
5 | Represents 64 of 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.
TABLE 8
PROPERTY DETAIL - MAINLAND
|
| | | | | | | | | | | | | | | |
| Property | Number of properties at 3/31/15 | Location | Gross leasable area at 3/31/15 (sq. ft.) | Leased1 (percent) | Outstanding
debt
($ in 000s) | 1Q 2015 NOI2 ($ in 000s) | 1Q 2015 % NOI to total Mainland portfolio |
| Retail: | | | | | | | |
| Little Cottonwood Center | 1 |
| Sandy, UT | 141,500 |
| 94 |
| $ | — |
| $ | 353 |
| 7.8 |
|
| Royal MacArthur Center | 1 |
| Dallas, TX | 44,800 |
| 94 |
| — |
| 245 |
| 5.4 |
|
| Subtotal – Retail | 2 |
| | 186,300 |
| 91 |
| $ | — |
| $ | 598 |
| 13.2 |
|
| | | | | | | | |
| Industrial: | | | | | | | |
| Midstate Hayes | 1 |
| Visalia, CA | 790,200 |
| 100 |
| $ | 8,261 |
| $ | 754 |
| 16.6 |
|
| Sparks Business Center | 1 |
| Sparks, NV | 396,100 |
| 100 |
| — |
| 486 |
| 10.7 |
|
| Subtotal – Industrial | 2 |
| | 1,186,300 |
| 100 |
| $ | 8,261 |
| $ | 1,240 |
| 27.3 |
|
| | | | | | | | |
| Office: | | | | | | | |
| Concorde Commerce Center | 1 |
| Phoenix, AZ | 138,700 |
| 94 |
| $ | — |
| $ | 460 |
| 10.1 |
|
| Deer Valley Financial Center | 1 |
| Phoenix, AZ | 126,600 |
| 75 |
| — |
| 188 |
| 4.1 |
|
| Gateway Oaks | 1 |
| Sacramento, CA | 59,700 |
| 92 |
| — |
| 75 |
| 1.7 |
|
| Ninigret Office Park | 1 |
| Salt Lake City, UT | 185,500 |
| 100 |
| — |
| 448 |
| 9.9 |
|
| 1800 and 1820 Preston Park | 1 |
| Plano, TX | 198,800 |
| 89 |
| — |
| 480 |
| 10.5 |
|
| 2868 Prospect Park | 1 |
| Sacramento, CA | 163,300 |
| 100 |
| — |
| 531 |
| 11.7 |
|
| San Pedro Plaza | 1 |
| San Antonio, TX | 171,900 |
| 68 |
| — |
| 173 |
| 3.8 |
|
| Union Bank | 1 |
| Everett, WA | 84,000 |
| 100 |
| — |
| 350 |
| 7.7 |
|
| Subtotal – Office | 8 |
| | 1,128,500 |
| 89 |
| $ | — |
| $ | 2,705 |
| 59.5 |
|
| | | | | | | | |
| Total Mainland | 12 |
| | 2,501,100 |
| 94 |
| $ | 8,261 |
| $ | 4,543 |
| 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 NOI for the total portfolio. |
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.
TABLE 9
COMPARABLE % OCCUPANCY DATA BY GEOGRAPHIC REGION AND ASSET CLASS
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 1Q 2015 | 1Q 2014 | Percentage point change |
| Location | Retail | Industrial | Office | Total | Retail | Industrial | Office | Total | Retail | Industrial | Office | Total |
| Hawaii improved | 94 |
| 96 |
| 82 |
| 94 |
| 93 |
| 99 |
| 81 |
| 94 |
| 1 |
| (3 | ) | 1 |
| — |
|
| Mainland improved | 91 |
| 100 |
| 89 |
| 94 |
| 90 |
| 100 |
| 87 |
| 93 |
| 1 |
| — |
| 2 |
| 1 |
|
| Total | 94 |
| 98 |
| 88 |
| 94 |
| 93 |
| 100 |
| 86 |
| 93 |
| 1 |
| (2 | ) | 2 |
| 1 |
|
TABLE 10
WEIGHTED AVERAGE GROSS LEASABLE AREA BY GEOGRAPHIC REGION AND ASSET CLASS1 |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 1Q 2015 (in sq. ft.) | 1Q 2014 (in sq. ft.) | Percentage Change |
| Location | Retail | Industrial | Office | Total | Retail | Industrial | Office | Total | Retail | Industrial | Office | Total |
| Hawaii improved | 1,556,600 |
| 837,800 |
| 189,300 |
| 2,583,700 |
| 1,553,400 |
| 633,400 |
| 189,000 |
| 2,375,800 |
| 0.2 |
| 32.3 |
| 0.2 |
| 8.8 |
|
| Mainland improved | 217,300 |
| 1,186,300 |
| 1,128,500 |
| 2,532,100 |
| 232,800 |
| 1,186,300 |
| 1,127,100 |
| 2,546,200 |
| (6.7 | ) | — |
| 0.1 |
| (0.6 | ) |
| Total | 1,773,900 |
| 2,024,100 |
| 1,317,800 |
| 5,115,800 |
| 1,786,200 |
| 1,819,700 |
| 1,316,100 |
| 4,922,000 |
| (0.7 | ) | 11.2 |
| 0.1 |
| 3.9 |
|
TABLE 11
OCCUPANCY ANALYSIS TREND – LAST FIVE QUARTERS2 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1Q 2015 | 4Q 2014 | 3Q 2014 | 2Q 2014 | 1Q 2014 |
| | 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 | 29 |
| 1,773,900 |
| 94 |
| 30 |
| 1,786,200 |
| 93 |
| 30 |
| 1,786,200 |
| 92 |
| 30 |
| 1,786,200 |
| 92 |
| 30 |
| 1,786,200 |
| 93 |
|
| Industrial | 15 |
| 2,024,100 |
| 98 |
| 15 |
| 1,887,900 |
| 99 |
| 14 |
| 1,819,700 |
| 99 |
| 14 |
| 1,819,700 |
| 98 |
| 14 |
| 1,819,700 |
| 100 |
|
| Office | 15 |
| 1,317,800 |
| 88 |
| 15 |
| 1,316,100 |
| 88 |
| 15 |
| 1,316,100 |
| 88 |
| 15 |
| 1,316,100 |
| 88 |
| 15 |
| 1,316,100 |
| 86 |
|
| Total | 59 |
| 5,115,800 |
| 94 |
| 60 |
| 4,990,200 |
| 94 |
| 59 |
| 4,922,000 |
| 94 |
| 59 |
| 4,922,000 |
| 93 |
| 59 |
| 4,922,000 |
| 93 |
|
1 Number of properties is as of quarter end.
Note: Gross leasable area is periodically adjusted based on remeasurement of reconfiguration of space.
TABLE 12
REAL ESTATE LEASING NET OPERATING INCOME (NOI)
(in millions)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1Q 2015 | 1Q 2014 | Percentage Change |
| Location | Retail | Industrial | Office | Total | Retail | Industrial | Office | Total | Retail | Industrial | Office | Total |
| Hawaii improved | $ | 9.5 |
| $ | 2.7 |
| $ | 0.9 |
| $ | 13.1 |
| $ | 9.2 |
| $ | 2.1 |
| $ | 0.7 |
| $ | 12.0 |
| 3.3 |
| 28.6 |
| 28.6 |
| 9.2 |
|
| Hawaii unimproved | — |
| — |
| — |
| 3.2 |
| — |
| — |
| — |
| 3.2 |
| — |
| — |
| — |
| — |
|
| Total Hawaii | $ | 9.5 |
| $ | 2.7 |
| $ | 0.9 |
| $ | 16.3 |
| $ | 9.2 |
| $ | 2.1 |
| $ | 0.7 |
| $ | 15.2 |
| 3.3 |
| 28.6 |
| 28.6 |
| 7.2 |
|
| Mainland improved | 0.7 |
| 1.2 |
| 2.7 |
| 4.6 |
| 0.6 |
| 1.2 |
| 2.6 |
| 4.4 |
| 16.7 |
| — |
| 3.8 |
| 4.5 |
|
| Total | $ | 10.2 |
| $ | 3.9 |
| $ | 3.6 |
| $ | 20.9 |
| $ | 9.8 |
| $ | 3.3 |
| $ | 3.3 |
| $ | 19.6 |
| 4.1 |
| 18.2 |
| 9.1 |
| 6.6 |
|
TABLE 13
REAL ESTATE LEASING SAME STORE NOI1
(in millions)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1Q 2015 | 1Q 2014 | Percentage Change |
| Location | Retail | Industrial | Office | Total | Retail | Industrial | Office | Total | Retail | Industrial | Office | Total |
| Hawaii improved | $ | 9.5 |
| $ | 2.1 |
| $ | 0.9 |
| $ | 12.5 |
| $ | 9.0 |
| $ | 2.1 |
| $ | 0.7 |
| $ | 11.8 |
| 5.6 |
| — |
| 28.6 |
| 5.9 |
|
| Hawaii unimproved | — |
| — |
| — |
| 3.2 |
| — |
| — |
| — |
| 3.2 |
| — |
| — |
| — |
| — |
|
| Total Hawaii | $ | 9.5 |
| $ | 2.1 |
| $ | 0.9 |
| $ | 15.7 |
| $ | 9.0 |
| $ | 2.1 |
| $ | 0.7 |
| $ | 15.0 |
| 5.6 |
| — |
| 28.6 |
| 4.7 |
|
| Mainland improved | 0.7 |
| 1.2 |
| 2.7 |
| 4.6 |
| 0.6 |
| 1.2 |
| 2.6 |
| 4.4 |
| 16.7 |
| — |
| 3.8 |
| 4.5 |
|
| Total | $ | 10.2 |
| $ | 3.3 |
| $ | 3.6 |
| $ | 20.3 |
| $ | 9.6 |
| $ | 3.3 |
| $ | 3.3 |
| $ | 19.4 |
| 6.3 |
| — |
| 9.1 |
| 4.6 |
|
1 Same Store NOI relates to properties that were operated throughout the duration of both periods under comparison.
Note: See page 8 for a statement on 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.
Statement on Management’s Use of Non-GAAP Financial Measures
Net operating income (NOI) is a non-GAAP measure derived from real estate revenues (determined in accordance with GAAP, less straight-line rental adjustments) minus property operating expenses (determined in accordance with GAAP). NOI does not have any standardized meaning prescribed by GAAP, and therefore, may differ from definitions of NOI used by other companies. NOI should not be considered as an alternative to net income (determined in accordance with GAAP) 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. NOI is commonly used as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. NOI excludes general and administrative expenses, straight-line rental adjustments, interest income, interest expense, depreciation and amortization, and gains on sales of interests in real estate. The Company believes that the Real Estate Leasing segment’s operating profit after discontinued operations is the most directly comparable GAAP measurement to NOI. A reconciliation of Real Estate Leasing 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 NOI (NON-GAAP)
(in millions)
|
| | | | | | |
| | 1Q 2015 | 1Q 2014 |
| Real Estate Leasing segment operating profit before discontinued operations | $ | 13.2 |
| $ | 11.8 |
|
| Less amounts reported in discontinued operations | — |
| (0.3 | ) |
| Real Estate Leasing segment operating profit after subtracting discontinued operations | $ | 13.2 |
| $ | 11.5 |
|
| Adjustments: | | |
| Depreciation and amortization | $ | 7.2 |
| $ | 7.1 |
|
| Straight-line lease adjustments | (0.6 | ) | (0.5 | ) |
| General and administrative expense | 1.1 |
| 1.2 |
|
| Discontinued operations | — |
| 0.3 |
|
| Real Estate Leasing total NOI | $ | 20.9 |
| $ | 19.6 |
|
| Acquisitions/ disposition and other adjustments | (0.6 | ) | (0.2 | ) |
Real Estate Leasing segment same store NOI1 | $ | 20.3 |
| $ | 19.4 |
|
| |
1 | NOI related to properties that were operated throughout the duration of both periods under comparison. |
Portfolio Acquisitions and Dispositions
TABLE 15
2015 PROPERTY PORTFOLIO ACQUISITIONS/DISPOSITIONS |
| | | | | | |
| Property disposed in 2015 | Disposition date
(month/year) | Disposition price
(in millions) | Gross leasable area (sq. ft.) | Leased percentage at disposition |
| Wilshire Shopping Center | 3/15 | $ | 4 |
| 46,500 | 72 |
2014 PROPERTY PORTFOLIO ACQUISITIONS/DISPOSITIONS |
| | | | | | | |
| Property acquired in 2014 | Acquisition date
(month/year) | Acquisition price
(in millions) | Gross leasable area (sq. ft.) | Leased percentage
at acquisition |
| Kakaako Commerce Center | 12/14 | $ | 39 |
| 204,400 | 90 |
|
|
| | | | | | | |
| Property disposed in 2014 | Disposition date
(month/year) | Disposition price
(in millions) | Gross leasable area (sq. ft.) | Leased percentage at disposition |
| Maui Mall | 1/14 | $ | 64 |
| 185,700 | 97 |
|
