Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Fourth Quarter and Full-Year 2022 Alexander & Baldwin Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please also note, this event is being recorded.

I would now like to turn the conference over to Steve Swett. Please go ahead.

Steve Swett

you. Thank to full-year discuss XXXX welcome fourth & call and quarter earnings. our and Alexander to Baldwin's Aloha, With me Chief today Chun. Chief Parker; Executive for Chief our earnings Chris and our call Benjamin; President Officer, and Financial Operating Lance Officer, Officer, Clayton are A&B's

we meaning statements this and of of Securities Reform presentation note the call the are forward-looking XXXX that historical cause statements. actual materially could relevant differ contemplated Act a that risks are Private uncertainties not facts please number that statements commence, and Before to in forward-looking that within of those involve the Litigation results from by

These forward-looking guarantees forward-looking of only made as of limited results operations, not statements statements business the and of strategies, are the statements regarding speak date and not statements Such to, possible growth were future or positions. future but include, assumed opportunities performance. are competitive

Forward-looking and events statements other in a could and to those statements. from by that cause or of timing assumptions uncertainties, expressed implied the the number risks, are differ materially subject forward-looking actual of results factors to certain

are to Company's Company's be SEC. risk undertake in statements. recent XX-K, financial but evaluation and update obligation alternatives evaluated include, Company's the Materials its Form the important of by as discussed as results market Company most business the in well to, liquidity and light forward-looking REIT these limited factors the related do factors information These to conditions and factors. Company's The the operations, of to related business, condition other this the status, not presentation prevailing filings in and and other not the of factors & with Construction any Form XX-Q We call other should

and presentation of Investors measures is measures be during will our of our Slides at www.alexanderbaldwin.com. today's are available at statement in Included call the from section non-GAAP download the for these presentation a regarding appendix non-GAAP of reconciliations. use this financial today. our slides to Management website referring

will over open He Chris a presentation up and for whereupon on strategic the the turn some will presentation Lance up open questions. matters. to an discuss your operations, for today's will return update update. remarks, Chris closing financial will estate we with call for Clayton will then real

over With me Chris. turn let that, the call to

Chris Benjamin

Steve, for listeners. fourth afternoon good Thanks, and business. The estate was to quarter excellent commercial our another real A&B's quarter

industrial ground strong and Our results. properties retail, produced high-quality again lease

We a also volume booked the of sales quarter. land solid in

Grace commitment the as Perhaps of most operation our exit a in reclassified to importantly, we light have discontinued business.

financials our complete, the simplification So while is strategic not in advancing, new step final business and reflect is that our yet major process simplified our will model. henceforth

for grew X.X% per twice-increased quarter real results share seen end $XX.X outstanding our fourth to NOI continued full-year. trends our million, by $X.XX year. and which high and to per FFO guidance increased XX.X% FFO of up year-over-year, will XX.X% but Same-Store increased earlier Lance more let the was details range. our performance, estate in me and X%. core the summarize exceeded on share, we revenue our had Clayton quarter fourth Our the Commercial provide the Core

adjusted X.X and XXX sale and land up acres year of of XXXX, the land EBITDA we the points. basis XX,XXX $XX We XX.X%, X.X%. occupancy at XX%, from up basis Maui approximately with generated of leased XXX,XXX was from and square economic million of achieved signed XX renewal leasing In Business end of new spreads and During the the year, feet XXX ended operations, acres of we leases, Park. occupancy blended noncore representing points

portfolio with at support to our from the level. $X.XX ratio the a XX.X% quarterly remains reflect supported the year-end to balance driven estate by of EBITDA of net in and Hawaii's $X.XX end trailing months X.Xx. of our adjusted debt-to-total per We three debt ongoing to growth improvement of XXXX economy. strength and dividend These market And retail strong during sheet consolidated growth per times results by segment and poised capitalization year raised with our current at a cash the XX share primarily the commercial share our real

XXXX. visitor Domestic for each month levels pre-pandemic exceeded arrivals of

economy. Additionally, the aid XXXX gradual will now approximately visitors, levels, return back to further of international XX% of Hawaii's

continue unemployment As in dependent less community-based but rate Hawaii we've in resurgence said tourism and rate construction before, Hawaii's our and economy the X.X%. X.X% robust unemployment with strong of December tourist below the the portfolio industry activity, national is to on support a state's generally XXXX

that time marketing the including process. the long has year. profitability, to us real have engaged it debt to the transfer to returned markets, we to this it business achieving Grace disposition and The impairment fourth a remain with achieve commercial believe operations conditions, gives have flexibility the With in recognized but to sale, I doesn't to Pacific has part on simplification the Grace sought. related as But model. and quarter in our estate goal we helped the challenging the we simply market discontinued Grace of for continue regard team not our in management come fit to focused

including programs a to annual third responsibility XXXX report. to continued We our and strengthen enhanced well-received our ESG in disclosures corporate shareholders,

portfolio renewable was Highlands properties. across advancing owning, of additional completed photovoltaic Center, energy Our managing projects of support XXXX in Pearl system late and sustainable we our at the in operating generation are goal and first rooftop

talented I've pleasure announced, want to we his regard had as with of leadership the X for think as extremely on estate run transition Hawaii real cannot better to President a congratulate I the July CEO of promotion recently Lance Lance A&B as a experienced I XX and January to Finally, commercial of of and X. is executive, person an real He estate to working company. and with nearly years.

while remain on operations. growing efforts, in the focused leads estate will I transition, and our completing we team commercial running While simplification real the Lance

Now I'll Lance. to over turn the call Lance?

Lance Parker

fourth Aloha, was NOI revenue in with was up last year. up up X.X% and to Beginning well to everyone. words, operations, quarter. our Chris, in CRE continued portfolio X.X% quarter your kind X.X%. compared the year-over-year, Same-Store Thank you was and CRE for fourth NOI the perform

quarter fourth of NOI was in Overall was This of to XXXX. compared at approximately increase year-end basis leased were of prior of to from leased up an points leased period retail months and $XXX,XXX the industrial $XXX,XXX quarter of Same-Store XX XXX basis XX quarter reserve of XX%, occupancy points represents the difference recovery occupancy basis the and In points same Same-Store basis XX.X%, up from occupancy leased $XXX,XXX growth. there earlier. XXX about was fourth XX.X%, XX XXXX. XXXX, points occupancy Same-Store

XXX points for on was totaling to XX included XXX for spreads from Retail renewal XX.X%, leases earlier. activity Kaka'ako leases. new points Center, XX.X%. to achieved leases economic X.X% executed leases six approximately Commerce including XX at was feet square basis square leases This and and XX,XXX economic fourth XX,XXX during occupancy Kailua, was quarter-end totaling of and properties related XX.X%, Shopping industrial months up XX occupancy in approximately up Park XXX,XXX We square basis Center, at located X.X% quarter to Aikahi feet. and approximately Economic occupancy the XXX up basis points feet

occupancy, quarter with We overall solid of a performance of deals in pipeline and and prospects. are following we resulted robust pleased leased active leasing another have our portfolio XX% that

resulting in than traffic, than reporting fourth higher to most Our of our drove rather rents, percentage and our tenants results strong higher This, experiencing expected. in are foot quarter reversals. well-located sales, significantly properties are rents greater base addition rent elevated

portfolio. are With to opportunities acquisition our investment that team regard our complementary to growth, current is pursuing

in this improve EV neighborhoodcenter slowed due redevelopment, opportunities progressing has can will lighting, the help activity and we the timing fixtures and our continue disciplined such significant better and the pursue markets to at parking growth we of deep Marketplace transaction While building The control or rates, and while believe opportunities. where meantime, financial sustainable stalls. investment to changes us elements, refresh unlock internal relationships visitor including experience and is Manoa as market yields. incorporating ample LED water-efficient development approach knowledge, we design well-located our and interest remain to and creative in In liquidity to

sales. our to Turning land

During $XX quarter, acres X.X noncore sold Maui for Business and of Park approximately the million. we at total approximately acres of fourth X,XXX land proceeds

we segment. $XX.X quarter, of adjusted the EBITDA Land For Operations our million within recorded

turn financial Clayton? details. over call the for now to Clayton I'll

Clayton Chun

results. aloha, and with Starting Lance, Thanks, financial our everyone.

For per diluted income $X.XX million quarter, from share. Fourth reported share. Core we million diluted of shareholders the continuing FFO $XX.X or share. fourth $XX.X operations million $XX.X FFO was or available per quarter to diluted $X.XX per was $X.XX or

of metrics of of fourth XXXX for $XXX,XXX these collections $XXX,XXX XXXX. from approximately reserved compared benefited fourth each quarter in amounts quarter a the in the to of previously As XXXX note, of

full-year the diluted of core For FFO $X.XX was continuing the $X.XX operations $XX.X from $X.XX or per diluted million $XX.X diluted was available per full-year shareholders share, XXXX, or million share. share. for reported we to or $XX.X and FFO million per income

our to comparisons For XXXX, results, earnings see additional including on please package. and information release supplemental details our

Let me segment. turn to Commercial now Estate Real our

CRE For our $XXX,XXX NOI portfolio base rent by by the of prior fourth or certain $XX.X year. the tenants period same to $X.X over removing million reflects X.X% quarter tenants The $XX.X compared from driven increase basis or designation. cash year-ago from last million X.X% higher the the increased the million. to increased CRE year revenues the to strength quarter, and impact of quarter and

EBITDA quarter adjusted compared generated The in of Our fourth year in quarter decrease volume as EBITDA in to adjusted segment to prior million partly was sales attributable Land the the Operations $XX.X XXXX of of fourth quarter. lower year-over-year XXXX. the

million line the with quarter of and For $X.X XXXX were fourth expectations. compared the expenses G&A XXXX, of to quarter $XX.X in million fourth in

million. moved fourth As we to discontinued an $XX.X quarter Chris disposition intent of during complete our impairment this triggered into which noted, year, to a due the Grace operations Pacific

$XX metrics. our cash we to XXXX, on facility. of debt total $XXX.X outstanding available Turning and of our $XXX had and revolving $XXX sheet million, of balance including December credit million total million approximately million line liquidity was and XX, liquidity At

two million negotiated is to of that of fourth the end year forward of scheduled future refinance A&B the be into mature with used we that and X.XX% rate existing in million $XXX to financing. starting interest be on the blended During XXXX. to provide fixed is towards of The entered interest rate a debt quarter, swaps financing expected will $XXX

excludes XX adjusted X.Xx. operations end, Grace, trailing EBITDA to consolidated which to land net months and net XX was debt trailing core EBITDA, X.Xx, months quarter adjusted whereas debt At was

debt-to-total capitalization Our XX.X% stood market year-end. at at

repurchased XX,XXX price we an note, share. the quarter shares per of approximately $XX.XX during of at average stock You'll

provides have As recently plan before, declared dividend, fourth an our from our a January use to dividend Board of share. time. share time we stated which per a respect additional $X.XX X, With first repurchase we paid allocation of dividend per quarter on tool, quarter capital share $X.XX our may to and we XXXX

turning Finally, guidance. to

core FFO $X.XX to to supported a range excluding with by guidance are of is within growth We XXXX within range outlook providing share. This NOI full-year for initial our a $X.XX X% per of Same-Store of in nature. CRE X% range year guidance factors and within prior reversals, nonrecurring is X.X%. that to CRE couple XXXX X% I that reserve a a Same-Store are our range should growth, by mention of impacted NOI

results due First, higher collections included are our million prior reversals for than year our $X.X to reserves of about expectations XXXX that XXXX.

of FFO the by approximately items impact NOI guidance points. expenses Second, million our guidance Combined, core million by management our approximately Same-Store these and transition. $X.XX our about approximately $X incorporates per totaling share basis to guidance $X.X due XXX G&A-related

With his closing call for Chris remarks. the turn I'll over to that,

Chris Benjamin

and estate quarter in complementary our deepen of opportunities and fourth occupancy remain in The market again portfolio that of Clayton. commercial real our the portfolio. with growth. to existing active high Hawaii the pursuit Thanks, quality our growth are presence solid demonstrated that We

to commercial shutdown of a XXXX been plantation land XXXX real sale ties fuel has strengths our ahead, Hawaii transformation long business sale a XXX-year-old the many the are company. the diversified success underlying we a strong sheet systematically and into real XXXX balance will sugar the have a as our process estate have to from look of focus, the company. changes of It we focused transformed Kukui'ula, commercial and conglomerate that and As estate growth been our deep

But we level. the in and team have the real next my best than resources else we've done, estate opinion, the anything built, more important positioning them to in are business the take Hawaii with to

to properties, We amazing not make you Day Investor March. will our details see hope amazing it are to hosting the meet screen. our team. to I in The be And can but an Honolulu just on

With the that, we'll open questions. now your for call

Operator

will question first Piper the And from Instructions] [Operator Goldfarb from Alexander be Sandler.

Alexander Goldfarb

your congrats I means final call, and earnings NAREITs. First, Chris, guess no on this more

luck. next Lance, so good going NAREITs looks to to So unfortunately, like have endure for you're few years, the

questions two here. So

the resolving appreciate impairment Appreciate appreciate First, topic on -- but obviously, at of exit you for approved are management least sort to move Grace. prior that guys the Board on. not the Grace

like to basis, off another reinvest doesn't reinvestment if there's seem proceeds a $XX wrote it From you much million.

perspective, safe business? in to is recycled actually difference ongoing amount which GAAP from recycling a you anticipate, say be to treatment So the it healthy of actual is Or that the a versus can case that into a much there's it is there not cash cash recycle? proceeds

Chris Benjamin

Alex. Thanks, This Chris. is

Let me respond.

just First in Investor call, June until I'm seeing of and Day. and earnings one our XX, look for March clarify, one to more to we around -- all, NAREIT forward so so you more

So yet. done me you're with not

is the some consistent our needle that it's in I I respect going of with a whole -- would able probably to and we're balance But to Company. would what Grace, with But the It's not grow that add we sheet redeploy, it's because be be midst lot to not of you're delevering can and say position while partly huge thinking. to expect be to still to it's the ballpark -- a But strengthening there's process. going I'd mover. cash say strengthening I the not insignificant of additional our

Alexander Goldfarb

this Okay. year, $X.XX FFO, And guys $X.XX. you core have coming guidance the then for to for

what I clean One, that here. pure simply core question two-part present why of would to a legacy you're FFO core continuing a transition to to there. you sort NAREIT report you'd that So just the think, you've curious and cleanup just a and play, the nothing given story there's And to report NAREIT. between are want as deltas tremendous in done,

sort is are is odd of in is, costs to of that $X.XX there transition that sort numbers rate? are second a number. $X.XX Or items run not A&B $X.XX the The items, post-Grace new it's whether other $X.XX good to executive such the some sort that of or

Chris Benjamin

Yes.

is I'll it Clayton. then So to Alex, and let me kick start, This Chris.

fully FFO, an some legacy So resolve things sales on a obligations are generally all, some you're that be there of absolutely we first some post-closing them way These there because that, frankly, is things that, they're to like with right are that reserved. of are drive either values, could a lot respect have perspective, working can could if of be positive. economics, prior at not from FFO business that But activity. still core versus drags. and some And then that non-core operating obligations through. could better we do we And

Clayton until process, more benefit I the X. get difference the So think past the both. we the of disclosing specifics I'll end in simplification some any on let there is around And comment between still

as is after provided, number, the the word sort number say we that used is -- FFO the that of that anticipate. that net core guidance as all would that a you is I And a consideration one-timers we of far clean good.

is So a be that, the that we outcome. et management think -- actual with consistent should transition, cetera, that

to have that. wouldn't You adjust further

Clayton? So

Clayton Chun

Right.

more little add just could I a if color. So

and main of operations that aspects is business. well is consolidated land all distinction taking so FFO -- the is the So inclusive as FFO as between A&B, and and core of FFO

core intent to And the real gone so is business, have on which estate. as simplification we our FFO, through our was process, core focusing commercial provide

at once for but purposes, with us we it's then core FFO, be a and comparative us on of you on focus will will that the behind meaningful convergence be really and behind where So point largely focus will also simplification is a FFO. us, still our FFO, see core from Grace to FFO for point

past that... FFO. have we some so noise why comparative Hopefully, and FFO, for still with on focused the we reasons So core that's in

Alexander Goldfarb

core so delta between -- FFO? the Clayton, it $X.XX? FFO Is NAREIT and $X.XX, what is me like just let So

Clayton Chun

year, the noncore largely about is had impact reflecting -- And think and a -- $X -- it's for between we that million event, I FFO core the basis, it share and So FFO. the delta really was $X it the full from in million any so of per about about so business. to translates

Alexander Goldfarb

it's just how well? referring So understand Or you to as much... were trying I'm -- that million only 'XX for to was 'XX? $X

Clayton Chun

correct. Yes,

referring So XXXX. I'm to

a expecting and think delta, it be smaller we're to at or I $X you're For looking so. million maybe XXXX,

Alexander Goldfarb

Okay.

includes the executive And transition. Okay. that

Clayton Chun

executive That includes the transition.

we two of impact which those $X So the question your have about was I guidance, significant purposes million. did had factors for referenced, G&A around of that the

of of million Additionally, reserve you had the that's reversals impact for $X.X the in our guidance embedded FFO. core

Operator

And the next from from is Mitch question Securities. JMP Germain

Mitchell Germain

as to Congrats Lance and Chris, on phase. next the you, well

Chris Benjamin

Thanks, Mitch.

Mitchell Germain

be curious, I'm the you headwinds? and does in? creep you whether of retail begin store the economic of sector, tenants, Or own curious closings that of are it supply-constrained able some some those And headwinds. about or some to to of that nature given I'm given about hearing materialize markets some the bankruptcies in, the we're avoid

Lance Parker

Mitch, past, to is identified as our portfolio this typically about doesn't and is we've Lance, remarks. are the our tenants the that of exposure watch congratulatory have would also some say more for I needs-based, for talked list. and much as mainland thanks the in portfolio

don't lower we say And list, have generally I watch a so those. identify we while would to exposure

bankruptcy a a sort and retain them one at them and able in Regal. continue risk that portfolio our them a to national of only be to basis on tenant we will work as We we perspective, there. expect From with the do center, have really tenant is

not in the immune say a survey to fourth I'd we did on local/regional headwinds. the quarter. We basis, are economic tenants

them with We have conversations often.

margin. on We that to labor in speak seeing and side. increased prepared sales hearing increased just the did, revenue -- remarks, about costs I labor pressures on are other my are we

just challenges continue a our costs. with top recognize we but tenants lot some of be growth there for to so could line And that see

the no wouldn't I If any opposite. And just different, the expect we would anything, risk increased within that portfolio. certainly so we're I but say would say

Mitchell Germain

of in main one of Obviously, consider active the ground. you your options, view main priority retail what kind allocation. for investment on a consider even more of you -- terms -- of terms capital with or sectors I'm in me capital do you kind And going Obviously, the how this you're just stock of the where to like buyback. point. at But curious the two about regards priorities forward? industrial, allocation how even see Great.

Clayton Chun

Yes.

want a our is perspective, we from disciplined. be approach -- capital So allocation we to

a grow it our our that although deploying disciplined going we're so that be we're going to as and evaluate estate sure the portfolio, is we objective to towards in way, investment options that commercial And it we're real to make accretive. will do opportunities

it's investment And would so ground I from that retail expand. an whether we of that -- those opportunities, are our perspective asset food say industrial, leases, to we're groups seeking are class all

You did had that have the mentioned the repurchases repurchases, we did we share quarter. fact amount some during modest and of have a

from that And we evaluating that, where so we of perspective available a could to that, sure is tool was place the our that cash, understood, to us. that's make wanted

allocation. be going judicious we so And are we just how in to approach capital

Lance Parker

of And Mitch, from retail. would NOI the add, I just level, generated is our X/X asset at

that the in landlord are XX%. like there. growth But the and we asset so we for class at the terms ground look in Similarly, lease We have leader sector. industrial largest we grow still of appetite within market lot, space an increased a to and

just really Clayton's basis. then returns risk-adjusted it's and opportunistic. making disciplined approach, point, decisions so on thinking that And based about more to And

Operator

question-and-answer to the Swett over concludes conference to remarks. closing I turn would this our any back like Steve gentlemen, and Ladies session. for

Steve Swett

joining all today. thank us you for and Thank you, Chad,

a you have and us please have at e-mail or investorrelations@abhi.com. Aloha, questions, XXX-XXXX follow-up at any feel call us free (XXX) day. great If to

Operator

concluded. conference today's Thank The sir. you you, now has for presentation. Thank attending

may disconnect. now You

Steve Swett	Investor Relations
Chris Benjamin	Chief Executive Officer
Lance Parker	President and Chief Operating Officer
Clayton Chun	Chief Financial Officer
Alexander Goldfarb	Piper Sandler
Mitch Germain	JMP Securities

Alexander & Baldwin (ALEX) 28 Feb 232022 Q4 Earnings call transcript