Alexander & Baldwin, Inc. Q3 FY2024 earnings call

Operational Excellence

• Portfolio performed well with higher FFO supported by favorable NOI and strong leasing activity.

Balance Sheet Strength

• Entered a new ATM program and recast credit facility, extending revolver maturity to 2028.
• Sold 81 acres of land in July for additional liquidity.

Growth

• Closed on off-market acquisition of an 81,500 square foot industrial asset on Oahu for $29.7 million.

Cost Structure

• G&A expenses decreased, with 2024 G&A expected to be between $29 million and $30.5 million due to cost simplification and streamlining.

Total NOI grew by 4.4%, same-store NOI grew by 4.1% and same-store NOI excluding collections of prior year reserves grew at 4.7%. FFO was $28.2 million or $0.39 per share in Q3 2024 compared to $21.2 million or $0.29 per share in Q3 2023. CRE and corporate-related FFO was $0.28 per share in Q3 2024 vs $0.25 per share in Q3 2023. Land operations FFO was $0.11 per share in Q3 2024 vs $0.04 per share in Q3 2023, driven by land sale and legacy joint venture. AFFO was $23.4 million or $0.32 per share in Q3 2024 compared to $17.4 million or $0.24 per share in Q3 2023. G&A expenses decreased by $200,000 or 1.7% to $7.4 million in Q3 2024.

Same-Store NOI

• Raised full-year same-store NOI growth guidance to 1.75%-2.75% and same-store NOI growth excluding reserve reversals to 2.25%-3.15%.

FFO

• Raised 2024 FFO guidance to range between $1.27 per share to $1.35 per share.

AFFO

• Raised 2024 AFFO guidance to range between $1.5 to $1.12 per share.

• Prevailing market conditions and REIT status-related factors.
• Evaluation of alternatives for non-core assets.
• Risks discussed in Form 10-K, Form 10-Q, and other SEC filings.

Q: On new and renewal rent spreads, can you provide color?

A: Kit Millan said leasing team had strong quarter with 23 new deals, large spread driven by anchor deal at Queens’ Marketplace, with spreads more consistent excluding that deal.

Q: On expected move outs in 4Q, can you provide details?

A: Lance Parker said three tenants driving move outs: full floor recapture at Kakaako Commerce Center, 16,000 sq ft at Komohana property, and 13,000 sq ft office space back at Kailua office building.

Q: On proceeds from Waipouli Town Center disposition and expense impact?

A: Lance Parker said it was a good use of proceeds, Kit Millan noted occupancy loss led to cam leakage but disposition eliminated drag.

Q: On acquisition pipeline and leasing lag?

A: Clayton Chun said acquisition market has more looks, Lance Parker said industrial leases can start revenue in 6 months, retail depends on build out (up to 12 months).

Q: On ATM usage and 2025 guidance?

A: Clayton Chun said ATM is a capital allocation tool, no guidance provided for 2025 yet but land operations will continue to be monetized.

Q: On legacy joint venture impact and SG&A efficiency?

A: Clayton Chun explained legacy joint venture is passive, Brendan McCarthy was told SG&A efficiency from process improvements and company simplification.

Q: On Pearl Highlands mortgage and revolver use?

A: Clayton Chun said revolver used to refinance mortgage with forward starting interest rate swap to lock in rate.