Hawaii’s second-largest retail property landlord, Alexander & Baldwin Inc., is shifting into real estate acquisition mode as its finances strengthen in the improving local economy.
Honolulu-based A&B announced the pivot toward enlarging its portfolio of real estate rented to tenants Thursday as part of a financial report showing a dramatic improvement in second-quarter earnings.
A&B reported earning $13 million in the April-June period, which compared with a $4.7 million loss in the same three months of 2020 as the company’s rent collections were depressed by tenants hurt by effects of the coronavirus pandemic.
“Our second-quarter results reflect continued strong performance by our commercial real estate business and the robust recovery of the state’s economy as job growth accelerates and tourist activity returns to 2019 levels,” Chris Benjamin, A&B’s president and CEO, said in a statement.
Benjamin said improving finances and expected continued sales of noncore A&B real estate assets, which include industrial land on Maui and resort land on Kauai, have led the company to pivot toward growing its portfolio of real estate producing income from tenant rent.
A&B owns about 4 million square feet of retail, industrial and office space statewide.
Major retail property owned by the company includes most of the commercial core of Kailua and 22 retail centers. This collection includes Pearl Highlands Center, Kaneohe Bay Shopping Center, Aikahi Park Shopping Center, Laulani Village, Kunia Shopping Center, Waipio Shopping Center, Kahului Shopping Center, Pu‘unene Shopping Center, Queens’ MarketPlace, Manoa Marketplace and Waianae Mall.
The company historically was more of a real estate development firm that also owned ocean cargo transportation firm Matson Inc. and Maui sugar plantation Hawaiian Commercial & Sugar Co.
A&B largely built up its local retail property portfolio over the past decade in conjunction with spinning off Matson in 2012, closing HC&S in 2016 and selling its Maui farmland in 2018.
During the second quarter A&B generated $18.6 million in operating profit from the real estate it leases to tenants, up from $8.9 million in the same period of 2020.
The company also generated $9.1 million in second- quarter operating profit from noncore real estate sales, up from $4 million a year earlier. The recent sales included 6.3 acres of land at Maui Business Park and 14 units at the residential resort development project Kukui‘ula on Kauai, in which A&B is a joint- venture partner.
Another part of A&B, road paving and rock quarry company Grace Pacific, produced an operating loss of $1.9 million in the second quarter, compared with a $6.9 million operating loss a year earlier. A&B has previously pursued selling Grace, which it bought in 2013, and continues to evaluate “strategic options” for this subsidiary.
Shares of A&B stock closed Thursday at $19.35 before the earnings announcement. Shares over the prior 52 weeks have closed between $10.33 on Sept. 23 and $20.14 on June 8.
A&B’s board increased the company’s stock by 2 cents, to 18 cents per share, which will be payable Oct. 4 to shareholders of record as of the close of business Sept. 17.
SECOND-QUARTER NET
$13 million
YEAR-EARLIER LOSS
$4.7 million
