Alexander & Baldwin, Inc. Reports Third Quarter 2024 Results
HONOLULU, Oct. 24, 2024 /PRNewswire/ -- Alexander & Baldwin, Inc. (NYSE:ALEX) ("A&B" or "Company"), a Hawai'i-based owner, operator and developer of high-quality commercial real estate in Hawai'i, today announced net income available to A&B common shareholders of $19.0 million, or $0.26 per diluted share, and Commercial Real Estate ("CRE") operating profit of $22.8 million for the third quarter of 2024.
Q3 2024 Highlights
Funds From Operations ("FFO") of $28.2 million, or $0.39 per diluted share / Adjusted FFO of $23.4 million, or $0.32 per diluted share
CRE Same-Store Net Operating Income ("NOI") growth of 4.1% / CRE Same-Store NOI growth of 4.7% excluding collections of prior year reserves
Leased occupancy as of September 30, 2024, was 94.0%
Comparable blended leasing spreads for the improved portfolio were 15.3%
Closed on the acquisition of an 81,500 square foot food and distribution facility.
Lance Parker, president and chief executive officer, stated: "I am pleased with our performance during the third quarter. Our portfolio continued to demonstrate organic growth and leasing demand was healthy, as evidenced by our CRE and Corporate FFO performance. Additionally, Land Operations generated strong FFO during the quarter. As a result, we are again raising our 2024 guidance. We also completed the acquisition of an industrial asset on Oahu, and took steps to ensure we have the tools available to support growth, including establishing a new at-the-market ("ATM") equity offering program to replace our previous program that expired and also took meaningful steps in the third quarter that enabled us to recast our revolving credit facility in the fourth quarter, extending our maturity date into 2028."
Financial Results for Q3 2024
Net income available to A&B common shareholders and diluted earnings per share available to A&B shareholders for the third quarter of 2024 were $19.0 million and $0.26 per diluted share, respectively, compared to $14.6 million and $0.20 per diluted share in the same quarter of 2023.
FFO and FFO per diluted share for the third quarter of 2024 were $28.2 million and $0.39 per diluted share, respectively, compared to $21.2 million and $0.29 per diluted share in the same quarter of 2023.
CRE and Corporate-related FFO per diluted share for the third quarter of 2024 was $0.28 per diluted share compared to $0.25 per diluted share in the same quarter of 2023.
Adjusted FFO and Adjusted FFO per diluted share for the third quarter of 2024 were $23.4 million and $0.32 per diluted share, respectively, compared to $17.4 million and $0.24 per diluted share in the same quarter of 2023.
Selling, general and administrative expense decreased by $0.2 million, or 1.7%, to $7.4 million, from $7.6 million in the same quarter of 2023.
CRE Highlights for Q3 2024
CRE operating revenue for the third quarter of 2024 increased by $1.2 million, or 2.4%, to $49.4 million, from $48.2 million in the same quarter of 2023.
CRE operating profit for the third quarter of 2024 increased by $2.2 million, or 10.6%, to $22.8 million, from $20.6 million in the same quarter of 2023.
CRE NOI for the third quarter of 2024 increased by $1.4 million, or 4.4%, to $32.4 million, from $31.0 million in the same quarter of 2023.
CRE Same-Store NOI for the third quarter of 2024 increased by $1.3 million, or 4.1%, to $32.2 million, from $30.9 million in the same quarter of 2023.
Collections of prior year reserves in the third quarter of 2024 were $0.3 million compared to $0.5 million in the same quarter of 2023.
During the third quarter of 2024, the Company executed a total of 71 improved-property leases, covering approximately 182,100 square feet of gross leasable area ("GLA").
Comparable leasing spreads in our improved property portfolio were 15.3% for the third quarter of 2024, which included 18.2% for retail spaces and 9.9% for industrial spaces.
Leasing activity related to our improved property portfolio during the third quarter of 2024 included:
Six leases at Queens' Marketplace totaling approximately 30,000 square feet of GLA and $2.3 million of annualized base rent ("ABR").
12 leases related to properties located in Kailua, including Aikahi Park Shopping Center, totaling approximately 26,000 square feet of GLA and $0.9 million of ABR.
Five leases at Waipio Shopping Center totaling approximately 16,000 square feet of GLA and $0.7 million of ABR.
One lease at Komohana Industrial Park totaling approximately 31,000 square feet of GLA and $0.5 million of ABR.
Overall leased occupancy was 94.0% as of September 30, 2024, an increase of 10 basis points compared to June 30, 2024, and a decrease of 60 basis points compared to September 30, 2023.
Leased occupancy in the retail portfolio was 92.9% as of September 30, 2024, an increase of 10 basis points compared to June 30, 2024, and a decrease of 110 basis points compared to September 30, 2023.
Leased occupancy in the industrial portfolio was 97.4% as of September 30, 2024, an increase of 30 basis points compared to June 30, 2024, and an increase of 60 basis points compared to September 30, 2023.
Same-Store leased occupancy was 94.8% as of September 30, 2024, flat compared to June 30, 2024, and a decrease of 80 basis points compared to September 30, 2023.
Same-Store leased occupancy in the retail portfolio was 94.1% as of September 30, 2024, an increase of 10 basis points compared to June 30, 2024, and a decrease of 130 basis points compared to September 30, 2023.
Same-Store leased occupancy in the industrial portfolio was 97.2% as of September 30, 2024, an increase of 20 basis points compared to June 30, 2024, and an increase of 50 basis points compared to September 30, 2023.
CRE Investment Activity for Q3 2024
On September 20, 2024, the Company closed on the off-market acquisition of an 81,500-square-foot distribution facility for $29.7 million. The facility is fully leased to Hansen Distribution Group, a broadline food service subsidiary of C&S Wholesale Grocers and was an opportunity to recycle capital from Waipouli Town Center which was sold in October 2024.
The permitting process continues for the 29,550-square-foot warehouse and distribution center at Maui Business Park II. The single-user space includes 32' clear height and can accommodate up to 14 dock-high loading bays. Construction of this pre-leased space will begin in early 2025, with an in-service date expected in late 2025.
Land Operations
Land Operations operating profit was $7.9 million for the quarter ended September 30, 2024, compared to an operating profit of $2.9 million for the quarter ended September 30, 2023. The increase in operating profit from the prior year quarter is due primarily to higher unimproved land and development lot sales, including an 81-acre parcel on Maui and one Maui Business Park lot, as well as higher legacy joint venture income in the third quarter of 2024 as compared to the same quarter in 2023.
Balance Sheet, Capital Markets Activities, and Liquidity
As of September 30, 2024, the Company had an equity market capitalization of $1.4 billion and $472.2 million in total debt, for a total market capitalization of approximately $1.9 billion. The Company's debt-to-total market capitalization was 25.3% as of September 30, 2024. The Company's debt has a weighted-average maturity of 2.9 years.
Including the effects of interest rate swaps, at quarter end, the Company had a weighted-average interest rate of 4.58% and 96.8% of the Company's debt was at fixed rates.
In the third quarter of 2024, the Company's previously established ATM equity offering program (the "2021 ATM") expired. On August 13, 2024, the Company established a new ATM (the "2024 ATM") to issue and sell common stock up to an aggregate offering price of $200.0 million. The Company did not sell any shares under the 2021 ATM or 2024 ATM in the current year.
As of September 30, 2024, the Company had total liquidity of $445.9 million, consisting of cash on hand of $17.9 million and $428.0 million available on its revolving line of credit.
Net Debt to Trailing Twelve Months ("TTM") Consolidated Adjusted EBITDA was 3.6 times as of September 30, 2024, with TTM Consolidated Adjusted EBITDA of $124.8 million for the period ended September 30, 2024.
Subsequent to quarter end, the Company amended its revolving credit facility, which extends the term of the facility to October 2028 with two six-month extension options and provides for $450.0 million of borrowing capacity. The interest rate under the amended revolving credit facility remains unchanged from the prior facility at a rate of SOFR plus 1.15%, based on a pricing grid and a SOFR adjustment.
The Company paid a third quarter 2024 dividend of $0.2225 per share on October 7, 2024.
Consistent with historical practice, the Company's Board plans to declare a fourth quarter 2024 dividend in December 2024, with payment in January 2025.
2024 Full-Year Guidance
The Company revised its 2024 Full-Year guidance as follows:
2024 Guidance
Q3 YTD
Revised
Prior
Net Income (Loss) available to A&B commonshareholders per diluted share
$0.66
$0.74 to $0.82
$0.64 to $0.73
FFO per diluted share
$1.07
$1.27 to $1.35
$1.17 to $1.26
Adjusted FFO per diluted share
$0.91
$1.05 to $1.12
$0.99 to $1.08
CRE Same-Store NOI growth %
3.0 %
1.75% to 2.75%
1.25% to 2.25%
CRE Same-Store NOI growth %,
excluding collections of prior year reserves
3.4 %
2.25% to 3.15%
2.10% to 3.10%
FFO per diluted share guidance is comprised of:
2024 Guidance
Q3 YTD
Revised
Prior
FFO per share related to CRE and Corporate
$0.85
$1.07 to $1.11
$1.04 to $1.08
FFO per share related to Land Operations
$0.22
$0.20 to $0.24
$0.13 to $0.18
FFO per diluted share
$1.07
$1.27 to $1.35
$1.17 to $1.26
ABOUT ALEXANDER & BALDWIN
Alexander & Baldwin, Inc. (NYSE:ALEX) (A&B) is the only publicly-traded real estate investment trust to focus exclusively on Hawai'i commercial real estate and is the state's largest owner of grocery-anchored, neighborhood shopping centers. A&B owns, operates and manages approximately four million square feet of commercial space in Hawai'i, including 21 retail centers, 14 industrial assets and four office properties, as well as 142 acres of ground lease assets. Over its 154-year history, A&B has evolved with the state's economy and played a leadership role in the development of the agricultural, transportation, tourism, construction, residential and commercial real estate industries.
Learn more about A&B at www.alexanderbaldwin.com.
Contact:
Jordan Hino
(808) 525-8475
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIESSEGMENT DATA & OTHER FINANCIAL INFORMATION(amounts in thousands, except per share data; unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Operating Revenue:
Commercial Real Estate
$ 49,381
$ 48,232
$ 147,477
$ 145,635
Land Operations
12,563
4,263
26,716
10,366
Total operating revenue
61,944
52,495
174,193
156,001
Operating Profit (Loss):
Commercial Real Estate
22,829
20,649
67,421
64,206
Land Operations
7,881
2,878
15,980
4,485
Total operating profit (loss)
30,710
23,527
83,401
68,691
Interest expense
(5,680)
(6,077)
(17,119)
(16,975)
Corporate and other expense
(5,651)
(5,445)
(14,833)
(19,410)
Income (Loss) from Continuing Operations Before Income Taxes
19,379
12,005
51,449
32,306
Income tax benefit (expense)
(75)
—
(174)
(7)
Income (Loss) from Continuing Operations
19,304
12,005
51,275
32,299
Income (loss) from discontinued operations, net of income taxes
(300)
3,894
(3,181)
3,902
Net Income (Loss)
19,004
15,899
48,094
36,201
Loss (income) attributable to discontinued noncontrolling interest
—
(1,250)
—
(2,883)
Net Income (Loss) Attributable to A&B Shareholders
$ 19,004
$ 14,649
$ 48,094
$ 33,318
Basic Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders
$ 0.27
$ 0.16
$ 0.71
$ 0.44
Discontinued operations available to A&B shareholders
(0.01)
0.04
(0.05)
0.02
Net income (loss) available to A&B shareholders
$ 0.26
$ 0.20
$ 0.66
$ 0.46
