ALEX - Earnings call transcript Q3 2024 | Alexander & Baldwin, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Third Quarter 2024 Alexander & Baldwin Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, October 24, 2024. I would now like to turn the conference over to Aja Shimamura, Leasing Manager. Please go ahead.

Aja Shimamura

Thank you, operator. Aloha, and welcome to Alexander & Baldwin's Third Quarter 2024 Earnings Conference Call. Shimamura, team. am Aja the manager is Leasing A&B name and a I on My today A&B's me Financial With are Officer, and Lance Clayton Chief Parker; Chun. Chief Executive Officer,

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

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

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

referring the should company's information Exchange REIT Form and company factors The the of to risk of cause Forward-looking results assumptions these and and Form in limited today. included prevailing the company's the to most obligation company's forward-looking could status materials. Lance for subject off of company's our include, business open the during statements. non-GAAP are any risks, the supplemental To measures assets questions. With be call with and turn final factors of the statement of filings Commission. but return this uncertainties, and related will discussion presentation non-GAAP to those that, and related factors. We discussed for of other your statements financial factors other market financial do hand differ Please Clayton close, important XX-K, the forward-looking not that to, use over the or to are Lance. to to light regarding other materially Management these noncore in to third by implied to the the by reconciliations recent update today's XXXX will in a number will measures presentation remarks, evaluated the an and with it me certain a XX-Q conditions risk factors refer Lance then for quarter not matters. quarter, information timing of from its in our it undertake start be in Securities will overview business, events evaluation let the and call actual some up to expressed we statements. our and These alternatives and

Lance Parker

everyone by And fronts favorable and strong Thanks business at We company: Operationally, activity. on quarter. cost quarter, supported introduction, for balance to our Aloha. Last was structure Aja. performed in operational streamlining the the highlighted of well. focus job. I all joining the FFO us, sheet the NOI progress Great and finally, and X flexibility, strength made growth. portfolio excellence, higher, Year-over-year third and areas leasing

our facility, capital new sheet. revolver we balance when providing a important our to into to the tool And extending ATM maturity credit our program, entered recast XXXX. an Turning We to October, access in appropriate. of

this an provided which week Town From streamline rate of our we from call, providing sold at assets. acres million we to operations. we on our XX Oahu last closed Waipouli The July, liquidity the X.X%. perspective, Center, a the and XX,XXX-square-foot an land with growth us of opportunity announced sale an closed nonincome-producing on acquisition going-in capital to industrial in with asset opportunity on we earlier of acquisition a for recycle on additional and As cap us other of $XX.X off-market

of seeing, in of and uptick the we deals forward. transaction are a I'm this investment encouraged As result volume prospects about going our

these year full raising guidance. With we our again accomplishments, are

in basis, share starting by with by Marketplace. of Total executed anchor at portfolio. quarter, excluding with more team, our year same-store NOI reserves, Leasing portfolio, blended of same-store renewal an by of rest grew on X.X%, and details from the square X.X% me at GLA Aja spreads we to representing comparable Let more prior property of the leases feet driven XX collections primarily the our XXX,XXX than XX.X% grew Thanks X.X%. Queens' NOI, improved grew NOI a and

was SNO from was lower occupancy same end XX.X%, and Our compared last from we not does last points XX.X%, quarter flat occupancy related construction million same-store XX ABR period be lower when flat next of year. $X last from mention will million, the begin build-to-suit quarter the SNO SNO Maui last was to same should year. period to at I quarter and at also points flat than than end to about $X.X leased economic include quarter Business year. and XX basis at quarter which last $X.X early lower our added our Park, basis last million that Same-store year.

of shows and end growth of at the to On Unemployment personal was macroeconomic in front, published the X.X% the compared data the lowest at recently income XXth economic August X.X% country. average Hawaii the national in X.X%.

of ahead, of X% primarily XXXX, at by down to Looking Maui levels. is visitor GDP Hawaii's were compared lingering to year-to-date in forecasted the arrivals XXXX and X.X%. the the effects August driven currently X.X% average growth XX% U.S. XXXX be of compared wildfires to

turn a over of to arrivals watermark XXXX I'll visitor terms the a to that, Hawaii. With call As Clayton? in Clayton. reminder, high represented

Clayton Chun

Each year or a joint the This in XXXX share quarter XX income acres earlier compares of decreased $XXX,XXX that third collections XXXX of that third aloha, and quarter. to compares $X.XX Corporate for year. per $X.XX per share compared share the reserves CRE million. $XX.X $XXX,XXX FFO our consolidated the million legacy the quarter prior to FFO XXXX third expected same was we metrics for the XXXX. G&A as quarter in $X.XX year. per per was in or noted $X.XX these performance. share FFO million to Last CRE same to or per expenses G&A is Corporate-related in quarter per range Operations of the in as to and compared million within the metrics third for with increase in $X.X quarter, the share was period last same of quarter of $X.XX compared the higher sale X.X% of $XX.X XXXX. or everyone. Starting the quarter driven to the primarily of noncore share the and to indicated FFO land share or to or of $X.XX quarter AFFO to by higher $XX.X Lance, during and due stronger quarter by share be related that to primarily from third for Lance year. The per venture. million was $XX.X Land $X.XX Thanks, The million we was of approximately of Included from of of per FFO as last versus benefited per $X.XX $XXX,XXX million quarter third $XX.X Land Operations to XXXX. related last third share the in and $XX.X XXXX. $X.XX CRE

made expect structure, continued As to simplify a a $XX.X our focus now within we our million. XXXX be $XX G&A progress and and result range streamline million cost our of and of to

revolving XXXX third total our interest at of rates, X.XX%. to of weighted was Turning $XXX Operations G&A to operating of cash And expect our fourth primarily December. Net ended outstanding facility. compared $XX on higher Land period. With debt on reflects our Consistent to and liquidity at million, available respect credit EBITDA and rate declare profit in swaps, quarter we comparable paid share October we rate a quarter Board with practice, in and lower per liquidity was year-end. the the $XXX to this effect quarter a dividend, $X.XXXX metrics. over X.Xx XX.X% dividend the had to of balance and quarter up fixed adjusted made XX-month average dividend our approximately our of we interest X. our debt with At our X.Xx normal sheet we of million $XXX debt end, total million Including of a was and million

revolver X.XX%. When and ATM of our an As in of provides the and mortgage, mentioned our we $XX we at including notional to our X-month that starting maturity mention activity. maintain We'll We same with well weighted it that availability of week, call, in Pearl a We and our facility. capital Highlands as X.X existing second internal pay interest previous fix the the August million to mortgage, completed facility, amount with tool rate should the in million continue factoring have growth intend existing replaced agreement. quarter. share at the mortgage Center with revolver which capacity. efficiently ATM of have forward us a the swap, interest off access previously XXXX will the have extends we our average allocation of that ATM quarter use of effect together to years, our $XXX recast allocation a $XX matures Important external that shares markets planned rate program fixed to maturity effective program during important that extensions rate our grid the and in The authorization toolkit. Last earnings our swap X.X%. sell $XXX as debt of liquidity as have ability interest under million of program place revolver the any rate the we is on to weighted Highlands into the December. of secured Pearl with the third extended our pricing we our our note we XX% capital to new have by not ample an to in I X-year revolving a represents credit we borrowing payoff also million fund to impact a October put recast and will of provides the did X capital interest a will our average

XXXX efficiencies. guidance is same-store square operational tenant feet activity, related that NOI in our within reflects increased guidance including XX,XXX approximately noted increased between same-store of performance square within upon impact our third we NOI are quarter remainder As between again our our range year, We reserve our X.XX% X.XX% reversals NOI outlook the of expect excluding now growth based X.XX% Lance the to our mentioned, NOI the the range performance industrial the our impact leasing and for of fourth and quarter office It to XX,XXX and should vacancies, feet same-store improved and be growth, in guidance. and same-store X.XX%. The included raising portfolio and also portfolio.

actively We assets. options are these pursuing and for re-leasing repositioning

While encouraged vacancies we continue to prospects. XXXX, we these expect into are by the

XXXX per to We FFO per cost CRE now and $X.XX between raising range share ranging to to and are The of reductions. improved guidance our primarily the $X.XX due FFO per share. for and guidance higher FFO from FFO also to consists corporate-related share expect $X.XX G&A $X.XX year NOI

We to increasing quarter FFO $X.XX our also sales joint that a reflecting per share, second are guidance and These $X.XX Operations Land during of sale our addition call. mentioned are XX-acre Kamalani venture. land earnings range to to the land a from in legacy we earnings

will XXXX AFFO I are turn primarily a to to FFO. With Lance share of call raising his remarks. the range over in improvements to our closing due $X.XX we the also to per that, $X.XX Finally, for guidance

Lance Parker

ensure quarter acquisition Thanks, the commercial year. with call on pleased estate questions. we and to our note, maturity Clayton. I We of have and strong ATM open to outlook have the through the for now portfolio, on this the that the access our credit industrial we taken markets we'll real facility. On closed remainder capital in steps and extending results revolving an our off-market accomplished to ample what program am that achieved up

Operator

question [Operator comes Mehta the line Global Alliance Instructions] Your from from Partners. first of Gaurav

Gaurav Mehta

spreads on ask your last rent higher renewal to and that in than quarters. you wanted few came new I

were you to Just more that color some what hoping on seeing front. on get

Kit Millan

This is problem. No here. Kit Sure. Millan

seeing had exceptional So our to quarter. had XX the And demand the well is had small we've as a think I new out point a of leasing to to in-line really we're that bay long as retail industrial. we I leasing which related And both that's couple things pointing one, in deals, is, highest healthy team space really want a for number time.

back you deal our an Clayton lot anchor deal lot driven In those terms And spreads, of been impact spread this -- of retail was last the of last which for that -- of a of the were deal, part we've for the Marketplace. as a and in particular, year and if at the Queens' more out quarter large by mentioned, was with one seeing the the that earlier balance spreads consistent of one other year. part what

Gaurav Mehta

Okay.

was Second ask to wanted on question I the you guidance.

talked I think about properties. industrial more Hoping expected for move-outs those on office color tenants. some and to in you XQ, get both some

Lance Parker

Lance. tenants in of this joining. that Gaurav, is QX. move-outs It's driving for X Thanks expected that the sort are really --

industrial office side. one on X the So the side and on

On the expecting back Center. Commerce industrial of side, to we full floor Kaka'ako are a receive our

Honolulu. So that traditional the will building floor back note warehouse this we're space. have is that getting multistory is I a in urban we more

some that And we existing do have so dialogue in already in. prospects we're

we fact by we recapture to before we're these that expect carry need space. conversations the mention the did encouraged into to vacancies actually in Clayton through We're XXXX. that Although

an in we're property opportunity. square a smaller industrial our Komohana so Oahu. one Kapolei It's backfill The discussions for XX,XXX in space. Similarly, second over about West feet, is a in in

Maui. confident facility was within I we're relocated lastly, built office island feel on our that. of feet back And new of a the That building So getting Park. about that our Maui bank XX,XXX Kahului Business then a at office and space about square

that backfill that We for are tenants although space. the would of office as I with the potential there'd status us in conversations expect just backfill given time to market, some be well, there

Operator

question comes Stevenson line Your from the next Janney. Rob of from

Robert Stevenson

And I'm was from talk expense this going the there? any goes about vacancy you there and Town there away given disposition? drag a in the bit you the to Waipouli notable can Center the Lance, that positively now butcher impacts to little -- proceeds proceeds addition

Lance Parker

thanks the Rob, And for the pronunciation. nailed you question. off, first

industrial underperforming, I great out So very say recycle on I was of that a into strategic was, place asset. a It that will it us Waipouli. deal. off-market think, for to unique job opportunity

to it over the good And question, drag on your a take was was there of specific So I'll expenses. use I the this guess Kit any proceeds. if on with regards to

Kit Millan

I that anchor lost at So couple ago. leakage given bit of there CAM property, what of the our occupancy we would obviously, major say there years quite a is a since was

portfolio. eliminate some of that overall drag does So in it sense, the on the

Robert Stevenson

of I guess, is that given Is increase -- guidance? that nonmaterial Clayton, in was material? it impacted that positively something asset? the that that was sort Or

Clayton Chun

Yes.

tied disposition acquisition had earlier, Waipouli that our announced as that cold was industrial way we far as that the So facility. itself, storage the had we viewed the was it to

viewed And was opportunity it of so effectively, end at this was day, a recycling the the capital for us accretive. that we of

And so part our for thesis of doing that deal. that was

Robert Stevenson

islands? What Okay. it needles been? relative for sell willing How viewing where seeing does any across you it's pipeline the are guys Are the you like the transactional guys in look of the to pickup people Is hunting assets in days today? these sort haystack? still market acquisition to

Lance Parker

just not encouraged based of the seeing foot square for I we'll does be the looks you more the that points did. that industrial We deal we're the to by were remainder comments to fact next QX. certainly XX,XXX this the some at made remain we the earlier top on year it's we're And year. deals last into the on I'm that specific of if heading but acquisitions, that say encouraged I'd the Rob, that we opportunities, more raised, that I the both, not additional continued obviously execute about were of the seeing I year, our any that some at able quarter guidance through improved able contemplate funnel of little to top has a find what would Yes. while bit funnel say getting.

Robert Stevenson

leasing meaningful there on move-outs this then any at XXXX that are be front, we that earnings leases point, models need to And following update known we the thinking are as here? Okay. about

Lance Parker

just we into We've those same want portfolio. supplement. to the into and this about did we got GLA on basis into made of we ABR to this overall about the That's of years and as XXXX. vacancies. from We the No. anticipated a move-outs our occur about X look We've expect But the year, the visibility all about WALT information including on just comments roll X quarter in basis. XX% provide an got an have head the we that

pretty So feeling XXXX. good about

Robert Stevenson

I one. guess And Okay. then last

to new quarter, tenant that Is On in the of the thinking as XX,XXX have or revenue a that what tenants build-out revenue? in we of over it a paying square before about a feet thinking like in of and X-month about -- thinking else those sort be bulk get the leases when X-month be should start that of you of can how do should How you producing that anything take sort space there? when lag, lag? terms starts of that we

Kit Millan

very That's good a question.

the because a me with industrial side industrial to side Let easier lot is the start predict.

to type time We of of of lot So year of but in it bit quite actually on a quarters XX industrial a on build-outs bit space. X tend quite the months frame. rent. right work, permitted take a Retail, typical restaurant months it the or up of to away, not take it's X can within is turn a space on a turn don't to often depends really industrial very If permit long, work the with work, can general.

X some with just depends on the in the it's retail really turn can we So a a to If minor regular on it months. X side. build-out, in in-line cases, retail rent

Operator

line Alexander Sandler. the comes from Goldfarb Piper Your next of question from

Alexander Goldfarb

So just X questions.

Rob's First, sort question. of circling to back

the for acquisition market Pearl sounds pay you're ATM, think off. you about As be it also using tough. doesn't it like sound balance the remains for sheet Highland talk because And didn't purposes ATM used that it the like the to we about to

the just patience message. seems So to be

large the ATM? across, come that are you via probably like ATM. do to something this think about how more a would asset or implement Or guys sales an would But the pop? think we at a were you this that of say, do use if you going or of Is or you portfolio, million $XX how sort? one-off So that land something use sales acquisitions be to let's otherwise, funded is

Clayton Chun

it's Clayton. Alex, Yes.

the ATM, the third utilize look of we for activities that our that So the tool occurred And The that toolkit. in quarter. for purposes includes we right ATM on refinancing our well. not at that did allocation for a capital the the ATM draw you're way ATM, as it's effectively or

it the And source that opportunities as there's a the market to in we're of will so debt. different that trading the to the not extent for we're to ATM, way to we is financing, the hesitate so. our it at stock consider utilize To to where extent going evaluate do level the arise, ATM makes includes but financing a which sense that by options, of us going

Alexander Goldfarb

-- everyone is Okay. the analyst year. numbers year question and And been question fun second Obviously, XXXX. [ around then every this this is, you've of time up ] bringing

we guys it, don't spoken how the Looking about have operations about a if that think use we don't at number. more, in even is base there's and also think would G&A base a that sort But like would $X an be you some maybe that previously Or like $X.XX will. or you I from that you the base such land, of do then above and the growth? core $X.XX next -- with exit should we associated FFO, if land XXXX of think be of know obviously, of Because million I let's assuming $X.XX, away to sort goes that's it's and benefit beyond? that the element should year land then to that know. $X.XX, call also some be I will which entirely, there sound if year it's business, of expectation million next $X

Clayton Chun

Yes.

I'll that. So This is take Clayton again.

guidance guidance, with in this a the Alex, position to So XXXX not call. respect to we're on provide

by you bringing to that Land up are does that Operations and comment sales true. episodic respect continue the to with influenced that it is think the I remain land fact

for that, we're parts either at results. I guess of on Land or providing but the leave it guidance not Operations I'll so this And any call company's

Alexander Goldfarb

you're I as But until the to Okay. doesn't here sit exit guess, Clayton, year, land. today sound it you looking of end going like the

like It year by will land sound some It doesn't there sort carryover that still there So be sounds be contribution. in next should will exiting like some it generate like. of is into this what fully you're year next some year. sounds

Clayton Chun

it, So the it way operations, in results Land presented be Operations, as if discontinued statements which for that we we've not. exit it's our financial our reported were to would

point from have entire we're part at an exit of that not it's -- And planning perspective, business. to of this that so the

Lance Parker

an will short be perspective. going So might could think any into continue what to FFO Alex, to one way we that for that terms providing be be and But expect Land Ops therefore, year. to guidance stop heading or signaling is opportunity about there of like it, in XXXX, next again, there we're be from of to

Alexander Goldfarb

next Yes. just to from you year funding have you into how wait, we continued positioned have addition, but No, think land understand potential sales. heading I'm in guys trying are I to about

Lance Parker

add in a for costs And us in section we of while business. will business, that priority remaining section remains do opportunity that the there the also I there of is embedded are because that that, recognize

not is this for burner a back us. issue that's something so And

will quite structure. but the driving also, to monetize frankly, We for continue and down cost reinvestment, liquidity provide

Operator

from of Your next the question Mitch Germain Citizens JMP. comes from line

Mitch Germain

look look congrats you deals similar last of like been deal your to opportunities shopping Lance, at it look couple you i.e., -- in center does this Or the seeing are you when the well? industrial? your on acquired, pipeline, some arena you as at When quarter. what have your

Lance Parker

really of bit specific would add have to And It's allocation Mitch, classes. part is a shared our we've opportunistic. specific across in that also the past, I'd a target I don't that comments the encouraging similar say we're we for or seeing me to everything. asset little that going additional be

We're I has for but good getting been not sign. just over the additional there we're market. think, to the last X is just looks starting activity so quarters, us, that again, in more fact see And a the

heading indicators looking positive all are these or forward. So

Mitch Germain

Okay. I have that consider there's That's same-store, think move-outs, some number? conservatism everything Last growth that but X-ish I for super asked. move-outs if of been kind the meaningful your impact helpful. baked year, the on me, When percent same-store fourth X in referencing has you else Or like one will seems guys quarter? you're are of into those

Lance Parker

I -- or it would and I'll high Clayton I Kit full provide should then -- either answer we results if a We open the were this end that say, want guidance. at to stated color. at the some were beginning up trying level of focus additional at they some quarter-to-quarter the expecting or and to really CRE to year year that episodic we in on of

bit So full slowdown a to implied of guidance. felt numbers consistent we year-to-date suggest the But performance, QX, year and given enough again, or with that's in comfortable raise our a full expectations. year for would

Clayton Chun

Yes. overall also going where into I same-store quarter type quarter. fourth -- The from if some, NOI And could were results that fourth It's the for last just Mitch, NOI taking our guidance I benefits contributed of expectations on there QX. same-store account is add to into nonrecurring the Clayton. year's guess, this

Mitch Germain

Got you. Got then And you. Clayton...

Clayton Chun

want yes. Yes, -- ahead. I Go did to

Sorry.

Mitch Germain

kind quarter out what kind the number like clean of FFO FFO nonrecurring going somewhat characterize perfect. a that's bucket. a consider -- That's quarter, What's to what And number backing I here? of I how should needed. we items for the then be in the for to No, exactly I like land was clean

Clayton Chun

Yes.

in we've presenting CRE, intentional has the bifurcation when of and between about the Operations our results. that Land FFO, think Mitch, we episodic recognizing Operations, business been the Land FFO Corporate So

did sales so FFO forward. that's I for Corporate in to the terms CRE, it FFO you to get way about purposes guess we -- onetime consistent And the related of land out and to would think stripping those where itself, of going

Mitch Germain

I some I kind included number year was Got thinking contribution. you. your land of full guess

I that contribution much gain almost So into I mean? what other know was thinking was taking related, you if how account,

Clayton Chun

I wasn't quite following that.

Mitch Germain

Yes. [indiscernible].

Clayton Chun

Okay.

Operator

Sidoti. the from Your of Instructions] comes next Brendan question McCarthy [Operator line from

Brendan Michael McCarthy

this can additional to provide in Ops wanted that if some legacy color you had that Just on the segment an venture ask Land joint impact quarter.

Clayton Chun

Clayton. Yes. Brendan, it's

venture is so. that joint back years made XX going a like was while the on or So investment an

So this a is before REIT. we to converted had

we a of cash much passive does really required investment so it's any way perspective. management that the time at point, nor in resulted a this in And has not it it And have. contributions flow it's frankly, -- from

Brendan Michael McCarthy

to that benefit -- or guidance, minimal, updated And any, investment obviously assumes guidance 'XX looking at from the Got it. out looking if in that I very guess QX.

Clayton Chun

Yes.

So for the guidance more year as guidance, the to that whole, incorporate that for quarter a which or we does full it fourth for be fourth or Operations expecting were quarter breakeven Land the -- less.

Brendan Michael McCarthy

Okay.

wanted Okay. really guess, efficiency And I expected the SG&A. come change us have I from? the where these or amount remind -- to drove improvements look at Can just you for And the what total for XXXX?

Clayton Chun

Yes.

to calls, our we've and us been overall rate and priority, to as G&A to G&A our lower otherwise. cost remain a So had seeking focusing as continues structure run previous improvements on mentioned as on well enable we overall

frankly, And so the various implementation of overall what is of benefits the the itself. company the we're and of seeing process improvements, simplification

cost whether like. categories, that's the a of of types combination a personnel, and consultants So number different it's of

Brendan Michael McCarthy

there helpful. coming question mortgage due. one always That's Highlands you I'll Can more through And were on different the just And Great. kind ask asset, Or there? was kind the the the walk had? financing the Pearl plan? of of revolver decision conversations utilize us that to

Clayton Chun

Yes.

refinance and the have. it with was were a evaluating in to different options. revolver settled that had were forward considering taking it, we Highlands mortgage starting we the as So that's we utilizing Ultimately, account December, interest we into maturing Pearl rate swap

it of swap a rate in to X.XX%. amount had of or to lock that interest was amount And $XX fixed has a the notional of so notional at a enables utilize our rate effectively strategy us million, the -- and

up the comfortable feel the with we utilizing swap. to So about match that revolver

the so we that's And conclusion. got effectively to how

Operator

There continue, no Instructions] this at Mr. Please [Operator further time. are Chun. questions Clayton

Clayton Chun

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

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

Alexander & Baldwin (ALEX) 24 Oct 242024 Q3 Earnings call transcript