Alexander & Baldwin Inc., the state’s second- largest retail property owner, continues to achieve solid results from its commercial real estate portfolio and finished the first quarter with 93.9% total leased occupancy.
The Honolulu-based company reported Thursday after the market closed that its commercial real estate operating profit grew 1% from the year-earlier quarter to $20.9 million and that its same-store net operating income, which covers properties held at least one year, increased 2.2% to $30.4 million.
“Our first-quarter results reflect a great start to the year for A&B’s commercial real estate business,” A&B CEO Chris Benjamin said in a conference call with analysts. “Our high-quality retail, industrial and ground lease assets again produced strong results, continuing the trends we saw last year.”
However, A&B’s net income in the quarter fell 49.5% to $5.3 million, or 7 cents a share, compared with $10.5 million, or 14 cents a share, in the year-earlier quarter. The company’s total revenue decreased 14.9% to $50.4 million from $59.2 million. Commercial real estate revenue rose 3.5% to $47.9 million from $46.3 million.
Benjamin said the company’s growth efforts are continuing and that earlier this week the company closed on an off-market acquisition of a 33,000-square-foot industrial property in Kapolei for $9.5 million. The transaction was structured as a sale-leaseback to a water bottling and storage operator.
“(We) are tracking a steady pipeline of potential opportunities,” said Benjamin, who will retire June 30 and be replaced by President and Chief Operating Officer Lance Parker, who also will retain the president title. “While the interest rate environment has slowed the deal market, we remain disciplined and expect that our deep local roots and ample liquidity will serve as competitive advantages, allowing us to move quickly as opportunities arise across our target markets and preferred asset classes.”
Benjamin, who will serve as a consultant through the end of this year after his retirement, said A&B also advanced its redevelopment efforts at Manoa Marketplace and that the site is on track for completion in the third quarter of 2023.
Grace Pacific, an A&B holding and the state’s largest asphalt paving contractor, is still on the selling block. Benjamin said A&B is actively involved with a particular bidder in its quest to sell Grace Pacific.
“The process of marketing Grace continues, but we’re unable to provide a more specific update today,” Benjamin told analysts. “I should note that Grace got off to a slow start to the year due to project commencement delays and a very rainy quarter. But our April tons paved exceeded the entire first quarter, so we’ve got good momentum now.”
A&B has owned Grace Pacific since Oct. 1, 2013, when it purchased the company for $235 million to aid A&B in infrastructure development and replacement work.
A&B said that during the first quarter it executed 49 leases, covering approximately 139,300 square feet of gross leasable area.
Eleven of those leases were related to properties in Kailua, including Aikahi Park Shopping Center, totaling approximately 24,000 square feet of GLA. Three leases totaling approximately 32,000 square feet of GLA were at Laulani Village in Ewa Beach.
Most of Kailua’s commercial core and 22 shopping centers around the state make up much of A&B’s retail real estate holdings.
Individual properties include Kaneohe Bay Shopping Center, Aikahi Park Shopping Center, Pearl Highlands Center, Manoa Marketplace, Waianae Mall, Kunia Shopping Center, Waipio Shopping Center, Laulani Village, Kahului Shopping Center, Pu‘unene Shopping Center and Queens’ MarketPlace.
In all, A&B owns nearly 4 million square feet of retail, industrial and office space statewide.
A&B maintained its quarterly dividend at 22 cents a share. It will be payable July 5 to shareholders of record as of the close of business June 16.
A&B’s stock rose 13 cents to $19.25 Thursday before the results were released.
FIRST-QUARTER NET
$5.3 million
YEAR-EARLIER NET
$10.5 million
