ALEX - Earnings call 4 2023 | Alexander & Baldwin, Inc.

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Operator

Good day, and welcome to the Fourth Quarter and Full Year 2023 Alexander & Baldwin Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Steve Swett, Investor Relations. Please go ahead, sir.

Stephen Swett

Thank you. Aloha, and welcome to Alexander & Baldwin's Fourth Quarter and Full Year 2023 Earnings Conference Call. A&B's Officer, Officer, Clayton are our Parker; today Financial Chief Chun. me Chief Lance Executive and With

We are participate also President portion of joined the by Kit Management, of is Millan, who available to call. in Q&A Asset the Senior Vice

fourth please on information at our website XXXX supplemental During our to quarter call, investors.alexanderbaldwin.com/supplements. refer available our

relevant involve please the statements facts and possible opportunities in positions. commence, made contemplated statements Such within number Private the of forward-looking of are are regarding Litigation a or the but assumed presentation as include Act forward-looking that statements future we future guarantees and from performance. by and could competitive speak operations, forward-looking the Before were statements. of risks this note growth statements that meaning forward-looking only Securities Form to those historical date results the uncertainties statements strategies, and statements not limited are actual cause of of not not to differ of are These XXXX business that materially results

implied light from not statements. the We subject important most any to Form SEC. the to, expressed with statements these this by the are discussed related prevailing alternatives certain factors. risks, other its other forward-looking assets and related update and events REIT company's assumptions statements. and of company timing cause factors undertake risk the number differ risk limited do evaluated should evaluation be and that in XX-Q information other obligation a XX-K, to These company's and could recent the to factors factors materially Forward-looking include, uncertainties, and to in presentation factors and noncore business, actual of or in The of the forward-looking Form of filings in business results company's to by not are the the those the but market conditions status the

Please an quarter XXXX non-GAAP quarter Lance the up refer an real regarding for will where then financial discuss presentation these earnings call and and Clayton our release. financial measures today's some and year, open use update to information of measures of Lance referring during today. non-GAAP matters. upon fourth will statement the supplemental on our and open in be will operations, to will Management closing press our included it return with questions. provide will estate we for up remarks, our your reconciliations overview

call over Now to the I'll turn Lance.

Lance Parker

Steve, pleased ended that everyone. and a I'm say to XXXX note. on aloha, Thanks, high

industrial points growth X.X%. Same-store well. ground FFO Our quarter, XX.X%, Same-store year-end In basis and at points XXX quarter. total was excluding of performed from X.X%. basis reserved previously $XX the growth same-store we $X.XX occupancy amounts fourth per occupancy was at NOI portfolio XXX Core than share. third and high-quality lease was quarter retail, growth assets NOI was of year-end economic the to of leased the XX.X%. million Same-store or NOI CRE was higher up collections X.X%, last achieved also

XXX,XXX square approximately and of new XX for with at our feet X.X%, renewal for and for XX.X% spreads improved X%. executed at property blended also We achieved in spreads portfolio leases leases spreads leases

growth CRE was For X.X%. NOI total the year,

collections of X.X% we ended revised and and amounts exceeding with leasing spreads X.X%, ground last of spreads up, growth FFO for and Leases renewal ground renewal was year. economic lease our was in executed and On reserved Renewals X% our in annual call, renewals. our $XX.X occupancy the per million between blended year in driven had Core in X points guidance at improved property leases same-store share. our NOI by Shopping of leases leases feet the portfolio of covered XXX basis for rent with improved and XX.X% The XXX,XXX metrics previously same-store we ABR million in earlier lease and NOI those our the property $X.XX spreads portfolio X% at approximately of portfolio We attributable X.X%. blended square leases leased base or excluding XXX was year NOI. primarily to City spreads annualized of X.X%, or $X.X at portfolio Center for of the new Windward spread resulted these SNO growth

During term. begin a objectives a Park. The square XXXX. national clear-height to in us tenant, and construction pre-leased second completed the warehouse permitting number for space strategic that quarter, of long well for we XX,XXX is foot We Maui center the is also XX position fourth a half and Business began distribution to at the anticipated of

when to realize ABR of the $X expect becomes million asset economic. We

XXX-kilowatt XXXX. We in This about at photovoltaic with of follows first Center. installation system incremental PV our our live last Kaka'ako of $XXX,XXX also went second provided the rooftop Highland year, Pearl portfolio system which successful Center NOI at is our rooftop the Commerce in system and

various centers sharing We rollout at in are to online. as systems and forward portfolio are look in our brought other stages additional of more

second, completed to Pacific initiatives; we the is Grace million. finally, our simplify can growth through growing transactions Most fund can X the balance commercial of for fully these our and of of significant X we for utilize can focus Grace Sale on notably, sheet $XX real reporting strength estate our reasons: first, we sale a metrics. combined portfolio; we

third accomplishments property in to a off-market year, the Kaua'i and our achievements Industrial, Marketplace the of earlier These quarter. completion Loop the the including second foot our in our square acquisition add quarter fourth of XX,XXX in refresh quarter in the from Manoa

down grocery-anchored primarily slightly X.X%. from higher at Xx benefit XXX,XXX from Japan but XXXX, end than compared There were XX points XXXX, X.X% -- national X.X but pre-pandemic year XX% the Our about of to and were X/X XXXX, exceeded improving environment earlier was year levels. from average prepandemic in the still lower centers in million basis in the Unemployment economic and XXXX. Hawaii. at were of portfolio here the pre-pandemic Visitors in XXXX the XXXX, from from statewide a than There visitors up nearly million continues to levels only of X.X of neighborhood of U.S. Mainland visitors levels.

said often visitor dependent but were the last the grocery-anchored sales months have XXXX tourism. has portfolio where the on true XXXX, in have stable. is to Maui This our wildfires, X that benefits in with remained but X not of We down proven arrivals -- our tenant from, X of X compared

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

Clayton Chun

available continuing share. Starting or shareholders operations Thanks, Each $XXX,XXX these was $X.XX FFO $X.X or to share. our the $X.XX quarter Income per for was shareholders aloha, consolidated Net diluted FFO Lance, or $X.XX per share. million available and per million metrics from per of XXXX $X.XX share. previous or million fourth diluted everyone. XXXX. Core $XX.X of of metrics loss or to years the $X.X $X.XX benefited with quarter million fourth in collections was share. approximately $XX of diluted from of reserved was for amounts per diluted

in per comparative amounts in of was purposes, the diluted $XXX,XXX or collections of fourth XXXX, $X.XX quarter For reserved share. years previous

or was net share. available million shareholders $X.XX to $XX.X operations share. $X.XX For million per from per Income shareholders available or income to diluted continuing the diluted was full year, $XX.X

or diluted Core $XX.X million was diluted FFO share, was FFO $X.XX per million or and per share. $X.XX $XX.X

$X.X Our in share diluted to per $X.X or million reserved collections or share prior years full $X.XX of year $X.XX results XXXX. amounts XXXX were impacted per of in compared million in by diluted

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

was The of fourth million gain was Operations. Adjusted million of sale Land in property in million in EBITDA to the that due quarter quarter was change in to to XXXX in Full million unimproved Operations $XX.X the compared The adjusted of recognized primarily fourth $X.X Turning related XXXX. is lower XXXX, before. year the in quarter compared Land in XXXX. $XX $XX.X as the Operations due XXXX to primarily compares the occurred XXXX to the Land adjusted EBITDA to which of XXXX. year sales higher McBryde same EBITDA to

Turning to G&A.

primarily the of Full $X.X reduction fourth and quarter million which fourth in $XX.X G&A continued million simplified to streamlining We on focus due overhead quarter fourth company. the year G&A compared as to and $XX.X operations $XX our full fourth discontinued G&A was XXXX. XXXX. for expenses, is of the XXXX million quarter compared in personnel-related the quarter $X.X we've XXXX, The our For were million of lower Grace year from was the million expenses in it primarily in in Pacific, reflects November. XXXX, reported to to of a loss related sold

balance million up debt debt end, quarter At we our available million $XXX XX X.Xx of X.Xx Approximately liquidity cash adjusted credit of and months compared Net our was is to rate. our to $XX was total revolving of on trailing Turning debt million, liquidity outstanding consolidated metrics. in and $XXX XXXX. in million made sheet had approximately total $XXX fixed XX% EBITDA facility. to and

reminder, a to metric included sale nonrecurring XXXX As transaction. the related McBryde income the

million To with note. we mortgage May. rate asset, refinance an address $XX this, to have secured this fixed that's of our We matures by Laulani which debt the Village intend unsecured

We finalized. are will provide more information details as

$XX.XX stock During average repurchased price XX,XXX at shares the an per of approximately of quarter, we share.

of on an paid the With share. declared share per $X.XXXX XXX,XXX January first on quarter dividend year, that a payable of to we quarter full For and Board average our fourth shares price share at April dividend dividend, per we a repurchased per respect $XX.XX X, is our X. $X.XXXX

to sale Before Grace metrics. simplifying of we with I are the as mentioned, turn reporting guidance, Lance our

same-store be of real report general as in company Operations expected or of we more meant FFO NOI and will no a our in to focused company's will believe corporate sold continue to estate amounts, and was reserved going We than collections the forward. to less Core excluding NOI transactions we with commercial guide but CRE business same-store FFO impactful longer is Land XXXX. reflective guide Grace Core to to and reflect past, previously FFO the operating But performance. results

We will also begin to guiding reporting AFFO. and

the previously X% X% X%. and same-store growth So NOI to with said, to reserved of of amounts we excluding that same-store NOI being X% range of growth in expect collections

guiding range of are per to in $X.XX the range $X.XX $X.XX We per $X.XX of share AFFO the and in to share. per share to FFO

quarterly to timing the Land of While quarterly vary our providing due may items, certain guidance, Operations activities. we metrics are including not

should previous it to portfolio resets value not XXXX of NOI, case expecting following in in be Our was respect any incorporates fair ground noted during key the With XXXX assumptions. market our significant are the leases as years. we that same-store lease guidance

Our lower guidance our primarily assets tenant from NOI outs. move at also reflects office nonstrategic

more for us decrease better use and to forward. cannot in reposition at information higher going office-related this believe will assets time, resulting move-outs NOI from we we provide tenant the While enable short-term these

FFO attributed on reflecting FFO comment Land of related $X.XX a last, completed per And XXXX sales Operations, to included commercial In of primarily to land guidance. our on real during XXXX, that our $X.XX margin estate. $X.XX FFO share the and of FFO

our we $X.XX per and of FFO real reflecting in in anticipate commercial $X.XX expect of in per XX%. of primarily that to to growing from company our between XXXX, For reflect a which composition total XXXX to X% share portion estate we growth share per XXXX, the business share $X.XX FFO rate

for will that, With call Lance remarks. his closing I the turn over to

Lance Parker

demonstrated Thanks, The again quarter and and ground outstanding retail, the strength team Clayton. our of of lease the our assets. industrial quality fourth

do real growing are about positioned estate to excited are We focusing portfolio well commercial our on and so.

estate is internal engaging will the our us support with Park. liquidity sheet redevelopment and build-to-suit pursuing Business to opportunities provides that, with at up these like And team With open call we'll questions. opportunities. real Maui We now our industrial our importantly, efforts. source the external to local to needed And balance be investments owners development

Operator

Janney. from with question Stevenson first comes Our Instructions] [Operator Rob

Robert Stevenson

of and Just the the question I sort between Clayton, midpoint look you fourth the difference guidance that point? core the anything of If assets operationally this drag the to out? the the sales FFO you're quarter, a implying the or that of or sort a Grace anything in the main whether coming property that else $X.XX-ish, 'XX at on the NOI lower posted Is in office Pacific and or that guidance. from be expecting there not $X.XX of other sort at sort on NOI earnings of is it's

Lance Parker

Thanks the question. for

to business. guidance main our real respect our around growth what and have we XXXX conveying estate Land is between the our fact pertains to that's Operations. XXXX with in so continued And FFO, The for commercial guidance difference that

generated was transactions. And we land the margin so for where that's had various that some in XXXX sale

looking forward into be impact And expecting less year, this that XXXX so . so. to we're margin

Robert Stevenson

stages you the and look that spreads anything Okay. And on, to completed the it, you in how sort thinking above-market leasing Are of push or mix strong? it or got going in into call That's expirations, you're similarly that guys have 'XX? is either spreads? the How when 'XX or is the in whatever lease X% be up? taking be pull 'XX looking property or would final here versus almost that anything helpful. thus negotiations then the you're stuff that expecting portfolio a 'XX the in at leases leasing that about Is there should we down far

Lance Parker

Rob, it's Lance.

in of me roll Let sort in sort deliberate on were answer of the terms portfolio. expirations, it one did quite laddering to the thing Kit at of were give lease over turn maybe looking say The just before I out for. role want question you looking very you I the we to not details and our to

that jump good, thing the page And really supplement that, of expiration. X we're feeling in I how some to insight to the can about sort the did . want a may next maybe into highlight over we're smooth spreads. years you off provide about that thinking with having not pretty one is X So Kit,

Kit Millan

Sure.

from that consistent services, demand I et We've down in interest the across all retail vet started QSRs, like clinics, say is So still off can has strong what categories, services cetera. seen community year XXXX. strong

year very So another we overall. leasing solid expect

In terms we've in exactly very project is of seen XXXX, but spreads, we last difficult produced consistent recently been year. what to going has what happen with to it's what

Robert Stevenson

there the a you talk more at negotiated might available are Is property assets, bit -- you the potential this the sale it what in Can a about deal acquisitions year? the guys either of overview impediments little and/or and what one across to is give last just an see then guys of sale privately you it -- markets of and you're impacting out at you seeing be greater as desk potential are And tight? me. on seeing do in? equally can little interested is your as islands you marketed on expecting Is point? What you debt Okay. being this volume terms transactions being coming least for to it Is that for for transactions of bit mainland? -- of sort

Lance Parker

type questions of saying yes questions, Sure. by some were the of I'll start or to to that yes those extent that all no them.

I seeing assets Capital terms are markets perspective, remains not deals. a expecting impacting versus market still lot So be challenged. marketed the with think of we mean from dislocation pricing is a trading for. we're some should sellers in of what what

the Now are that reality off-market. said, acquisitions the typically done our is majority of

Grace that year to for sale that. with big our dedicated and now the so a milestone. resources the behind We fact simplification reason some completing had And of last that us, of was

opportunities loose everyone find state. to turned really these within source now have We and looking off-market and the

I that, expect more result And as see a so flow. of deal simply would to

growth get prospects, of addition of portfolio internal growth And assets, to opportunities, repositioning external for add starting and to adding we photovoltaic, whether in portfolio. our start the Park over mine Maui NOI which the that, actually meaningful add to existing there, top line it's to we pleased build-to-suit our continue some I'd really Rob, on to then Business were is at to the

comes we're sort to on portfolio. really -- all of cylinders it looking the increasing when to So fire

Operator

Sandler. Goldfarb next Piper question with from comes Alexander Our

Alexander Goldfarb

here. questions few a just So

on It's stuff the -- below on But had on of the company, things Street were and a First, of this guidance. that in the historically. what expecting. going was at the company in We're Grace a you were $X midpoint going for looking and lot fairness, year. other we

sort by that we estate you company. new of not baseline? all of real hit a on you company the the the what year Is that dollar consider this if a pure-play is Or now anything would impacted will? sort So have having cylinders, maybe

Clayton Chun

Alex, Clayton.

short a we that I did years to episodic of estate the this past, various corporate businesses. of noncore think in attributed commercial have noise answer our that and more reflective was the going in Whereas we that is of had FFO, to real forward. sales and lot is

is prepared the Operations reflective of that the XXXX entirety not impact so CRE just in had. more Land mentioned its having And in significant and remarks, as

Alexander Goldfarb

saying that costs? of some you're the So masking Land was Operations

Clayton Chun

-- the greater was portion of a that of the FFO, what saying some it FFO. Masking I'm is for

the of Land did So in not whereas for our is the composition FFO Operations past, more XXXX, have that case. the

Alexander Goldfarb

also Okay. what's better. And then office mentioned higher bit and we mentioned was you Obviously, there, but for weak. you a know on going all repurposing

this you Is office office better knocking thinking that. down on for you are higher more bit like are use? buildings? [indiscernible] Or an to a about about what doing? Or resi is like thinking Just and what conversion,

Lance Parker

exploring Alex. open We're different to options,

know, portfolio. X in Oahu got X you One only Maui. of in and is are the our as we've island within office So properties neighbor here

seeing both where from so it's you're sit it's assets, a whether be our in vacancy And quite the the sort in that's softness, frankly, an with us, And were we NOI, same that where capital will opportunity recycling and really where X redevelopment, coming signaling opportunity block. a of on whether sale. particular, there X user through through Maui for is

Just be that I are couple occupancy, going there's of with different think exploring options throughout where given to we're XXXX. a we

Alexander Goldfarb

Okay.

the you discussion point, around development. that I than we've this guys guess land on it's rather Park, to before, X office had So where Maui. have Maui especially doing assets sold Business

but and rather it's you more right that. sell harder grow, sometimes selling selling the it's keep to I parcels, is -- like If obviously, invest office than and land selling get decision to capital,

is I'm growth there just assets may is you about the you if company selling? as think the more think everything to is being And about of forward. portfolio, beyond XXX% going trying it see Or portfolio the current think that X you you these about As want? now, that it

Lance Parker

Sure.

sure to it's we get the that that we make important message a net are buyer. I think

So grow we want to the company.

look that recycle But may something to we buyer, the as will extent into various of the at our all said, some grower to of capital there other being by a the sources be portfolio. certainly capital, goal to that be opportunities. our to that a Now relative net better cost return, consider of we of means, significantly is

Alexander Goldfarb

final And just question. then a Okay.

entity zoning I was some that buyback that, like you there I a there didn't guarantee, that ago, access necessarily sold something think get or but like think whatever. years the part was didn't a of was a there property, water water you The -- and was few or sale. the or

curious think is you case and that Just how to to able new the achieve owner if that chance won't proceeding they back property that there's that any in their goals company. be comes which

Lance Parker

Trying to referring of company. back to specifically what think in you're terms the of to coming property

Alexander Goldfarb

or that of you the you -- had buyer, to water could assets they -- And rights on some sort back said, some guys that think if didn't they there of a get were There you. time, it were sell I think, some could sold I they think, over project. the rights guarantee, I and course

Lance Parker

do And perspective are So we to a feel the on certain . like outcomes. sheet reserves sheet assuming I'm it that obligations referring you're to. potential we properly say related some reserved sales. we probably any from that to for are I balance for prior we -- guess we have suffice have what balance that, that's

Operator

Our with JMP. next comes from question Mitch Citizens Germain

Mitch Germain

that kind you of consider Is Was them? like When when the you should redemption, that used occurring? I there. guess, of timing the receive that The proceeds Grace debt I December?

Lance Parker

year, then of for the December. that was there related was to we received And was cash of received in we note. million that had proceeds promissory from transaction, million this that the $XX January $XX repaid in the So Grace

applied So million, so was that all the was net against in $XX debt. that

Mitch Germain

about Is the revolver. to that balance think So the it on the paid it? way

Lance Parker

down applied the it go revolver, did to was It -- towards Mitch. . or

Mitch Germain

late December January so and we And assumptions X early then are the should...

Lance Parker

. $XX time in then million at in closed cash yes, December million and the was was we So $XX deal January. that received the

Mitch Germain

any pricing a in I was buyback of curious portfolio, just curious the I'm your of it you you. of your debt, about if But good or kind the thoughts some way capital the about have sales put using is thinking I'm mean probably obviously, about plan. forward, to any land given really potential Got about proceeds. you're the how going those monetization tiny.

Lance Parker

Sure.

footprint have, to lands respect the with smaller So ago. was remaining that a is noncore years than it we it much

acres land now of point we're that remaining. at noncore so we it's And a where have under X,XXX

be we And will so opportunistically monetizing.

meanwhile, the proceeds opportunities. debt. would we to the come intent applying be with any towards repayment of be do But growth that so that eventually our the CRE And into recycle in, it would in

Mitch Germain

you. with Got I'm guess the sticking sheet. balance And I

due, mortgages. Did got them way into you the of think were say that? be coming tranches that note? X combined both about You've of to Is unsecured going X debt a to

Clayton Chun

No.

have other mortgages, so pointed was I what X So in the referencing May matures and that was you we -- there's December. matures -- in that one as out, do

And what so the one. earlier was referencing was I

million. And so that $XX was about

Mitch Germain

Okay. then. Later on

Clayton Chun

Yes.

regards want So variety the we're with we mortgage around what to with a that's options in coming looking December, due that. to of at do

available. And provide that it becomes additional we'll on so as detail

Mitch Germain

one Last me. you. Got for

Just year land it flat-ish kind for little of to a seems speak to bit the contribution drag. of a -- maybe is like

of with how what creates it your drag just -- couple just So a additional talk expenses get decline full. numbers? over of pennies you from no of kind carry that to maybe just Is that

Lance Parker

the right on you're track. Mitch,

so these have. that associated noncore with And remaining effectively, have we costs we assets do carrying

extent result in is And so that to no would land activity, just that carrying being then those the sale there. there costs

Operator

from comes question with Sidoti. Brendan next McCarthy Our

Brendan Michael McCarthy

seeing on them of as the opportunities about follow-up seeing environment. market a bit. any dried And out like, distressed earlier just little obviously, an in? up asset if off, a are start It there? so, acquisition you question classes are the kind sounds But what To you has

Lance Parker

not order, activity, is relative opportunities characterize fact that to which as So the up. of less we markets, that we sort don't distressed say typically relationships. It's and in lead . higher the lot necessarily but a That's may a U.S. to there basis distressed here have say these would classes typically of that to distress, other or that it's than probably not you may I'm say competitive see situations areas. more not may market office have advantage in we're I'd we I asset to marketplace. levered larger But a I'd see our we us. marketed a maybe some aren't view drying that on of sure here other just said, portfolios the in why Brendan, reverse other being lot been,

Brendan Michael McCarthy

it. That's Got helpful.

a the Just a portion question the here. quick on in item statements line FFO of

there saw cost abandonment was I -- to from? think $X.X related that development a million I or abandoned I'm million sorry, $X.X was What development.

Clayton Chun

Brendan, we the noncash for that million of development What was thinking during as item of quarter, costs, have as charges Clayton. it's it the the did the was abandonment $X and some quarter. you're far

And was effectively charge balance noncash a sheet. cleaning just we were as up our so that

Brendan Michael McCarthy

count me I on lower know G&A more you One lower the personnel just for company? it. Is at personnel, lower due for was XXXX. head that lower just mentioned the Got that to believe. expense I expenses or

Lance Parker

Yes.

to we're been company, which we've simplify our So we've able as the simplifying ways identifying been also overhead. in overall

And a so that. it's think of reflection I

Operator

[Operator any Instructions] Steve back turn like remarks. over question-and-answer our conference would to to This I the session. Swett closing concludes for

Stephen Swett

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

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

Operator

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

You may disconnect. now

Alexander & Baldwin (ALEX) 28 Feb 242023 Q4 Earnings call transcript