Near sellout of Kakaako condo tower helps drive A&B profits

Alexander & Baldwin Inc. is getting close to putting a sold-out sign on The Collection condominium tower, which is in an early stage of construction in Kaka­ako.

The company announced Monday that it has binding sales contracts for 90 percent, or about 419 units, at the 464-unit project and that the "vast majority" of buyers are local residents.

Honolulu-based A&B began selling most Collection units in August 2013, and all units except 16 townhouses adjacent to the tower have been made available for sale.

Construction on The Collection, on the site of a former Comp­USA store at the corner of South Street and Ala Moana Boulevard, began in October.

The update was included in an announcement Monday of A&B’s 2014 financial results that didn’t include net income figures due to a tax calculation issue.

"The company is not reporting net income at this time because it requires additional time to finalize its financial statements for the year ended Dec. 31, 2014, following an extended review of its deferred income tax accounts," the company said in a news release.

A&B added that adjustments resulting from the extended review are not expected to have a material impact on earnings.

A&B reported operating profit, which excludes tax expenses, of $91.1 million last year, up from $64.7 million the year before.

Revenue totaled $630.4 million last year, down from $734.4 million in 2013.

Higher operating profit was primarily driven by real estate sales and A&B’s asphalt contracting subsidiary Grace Pacific.

One drag on operating profit last year came from A&B’s agribusiness operations, which primarily consist of Maui sugar plantation Hawaiian Commercial & Sugar Co. This business segment reported an operating loss of $11.8 million compared with an operating profit of $10.7 million in 2013.

A&B’s revenue was higher in 2013 than 2014 largely because the company sold a lot of commercial real estate on the mainland in 2013 to generate proceeds to buy much of Kai­lua’s commercial core and the Pearl Highlands Center retail complex. A&B also sold 24 acres on Maui in 2013 for the development of a retail center anchored by Target.

The revenue decline last year was significantly offset by higher revenue from Grace Pacific last year. A&B bought Grace in October 2013, which meant that Grace contributed revenue to A&B for 12 months last year versus three months in 2013.

Condo unit sales at The Collection didn’t factor into A&B revenue or operating income during the last two years because the company recognizes revenue and income when a tower is completed and sales close. For The Collection, that is expected next year.

Another A&B condo tower project in Kaka­ako, Wai­ho­nua at Kewalo, was completed last year, though only 12 unit sales closed last year in the 340-unit project. The balance of the sold-out Wai­ho­nua units were completed in January and brought the project "to a very successful conclusion," A&B said.