Alexander & Baldwin(US:ALEX)2023-03-03 20:45Financial Data and Key Metrics Changes - For Q4 2022, the company reported income from continuing operations available to shareholders of $16.2 million or $0.22 per diluted share, with fourth quarter FFO at $25.3 million or $0.35 per diluted share, and core FFO at $22.2 million or $0.31 per diluted share [19][20] - For the full year 2022, income from continuing operations available to shareholders was $36.9 million or $0.50 per diluted share, with FFO at $73.4 million or $1.01 per diluted share, and core FFO at $82.2 million or $1.13 per diluted share [19][20] - Core FFO increased 18.3% year-over-year, and core FFO per share was up 17.7% [8] Business Line Data and Key Metrics Changes - Commercial real estate revenue grew 7.5% year-over-year, with Same-Store NOI increasing by 6% [8] - In Q4 2022, CRE revenue was up 4.8% year-over-year, and NOI increased by 1.3% [13][20] - The company executed 61 leases for approximately 130,000 square feet during Q4, achieving spreads of 3.2% for new leases and 5.7% for renewal leases [15][20] Market Data and Key Metrics Changes - Domestic visitor arrivals in Hawaii exceeded pre-pandemic levels for each month of 2022, with international visitors returning to approximately 50% of 2019 levels [10] - The unemployment rate in Hawaii was 3.2% in December 2022, below the national rate of 3.5% [10] Company Strategy and Development Direction - The company is focused on simplifying its business model by exiting the Grace Pacific operation, which has been classified as a discontinued operation [7][21] - The management is pursuing acquisition opportunities that complement the current portfolio while also focusing on internal growth through development and redevelopment projects [17] - The company aims to strengthen its ESG programs and enhance disclosures to shareholders, including renewable energy projects [12] Management Comments on Operating Environment and Future Outlook - Management noted that while there are economic headwinds, the portfolio is primarily needs-based and has lower exposure to at-risk tenants [41] - The company expects to continue seeing top-line growth for tenants despite potential cost pressures [42] - Guidance for full-year 2023 core FFO is projected between $1.08 to $1.13 per share, reflecting anticipated Same-Store NOI growth [24] Other Important Information - The company raised its quarterly cash dividend three times during the year, from $0.18 to $0.22 per share [9] - The balance sheet remains strong, with a debt-to-total market capitalization ratio of 25.8% at year-end [9][22] Q&A Session Summary Question: Comments on Grace Pacific exit and cash recycling - Management indicated that while there is some cash expected to be redeployed from the Grace exit, it will not be a significant amount [27][28] Question: Guidance for core FFO and differences from NAREIT - Management clarified that the guidance provided is considered clean and reflects all anticipated one-time costs, including executive transition expenses [29][31] Question: Retail sector exposure to economic headwinds - Management stated that their portfolio is more needs-based and has lower exposure to at-risk tenants, with ongoing conversations with tenants indicating increased sales despite cost pressures [41][42] Question: Capital allocation priorities - Management emphasized a disciplined approach to capital allocation, focusing on opportunities that are accretive across retail, industrial, and ground lease sectors [44][45]