Alexander & Baldwin(ALEX) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported FFO of $28.2 million or $0.39 per share for Q3 2024, compared to $21.2 million or $0.29 per share in the same quarter last year, reflecting a significant year-over-year increase [10] - AFFO for Q3 2024 was $23.4 million or $0.32 per share, up from $17.4 million or $0.24 per share in Q3 2023, indicating strong operational performance [10] - G&A expenses decreased by $200,000 or 1.7% to $7.4 million compared to Q3 2023, with revised expectations for 2024 G&A now ranging between $29 million and $30.5 million [11][12] Business Line Data and Key Metrics Changes - Total NOI grew by 4.4%, with same-store NOI increasing by 4.1%, and same-store NOI excluding collections of prior year reserves growing at 4.7% [7] - The company executed 71 leases representing over 182,000 square feet of GLA with blended spreads of 15.3%, driven by strong leasing activity [8] - Same-store leased occupancy remained flat at 94.8% from the previous quarter, while same-store economic occupancy was also flat at 93.7% [8] Market Data and Key Metrics Changes - Hawaii's personal income growth was reported at 5.5%, with an unemployment rate of 2.9%, significantly lower than the national average of 4.2% [9] - Visitor arrivals to Hawaii were down 2.2% year-to-date compared to 2023, primarily due to the impact of the Maui wildfires, currently at 88% of 2019 levels [9] Company Strategy and Development Direction - The company is focusing on operational excellence, balance sheet strength, streamlining business and cost structure, and growth opportunities [6] - The acquisition of an 81,500 square foot industrial asset for $29.7 million at a cap rate of 5.4% reflects the company's strategy to recycle capital and enhance its portfolio [7] - The company raised its full-year guidance for same-store NOI growth and FFO, indicating confidence in future performance [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about investment prospects due to increased deal volume and operational efficiencies [7] - The company anticipates some vacancies in Q4 but remains encouraged by ongoing discussions for backfill opportunities [22][23] - Management highlighted the importance of maintaining liquidity and access to capital markets through the new ATM program and credit facility recast [12][14] Other Important Information - The company completed the sale of 81 acres of non-core land, enhancing liquidity and streamlining operations [7] - The company has a $200 million ATM program in place, which has not yet been utilized, providing flexibility for future capital needs [12][36] Q&A Session Summary Question: Insights on new and renewal rent spreads - The leasing team had a strong quarter with 23 new deals, indicating healthy demand for retail and industrial spaces, although one significant deal influenced the spread [19][20] Question: Guidance on expected move-outs in Q4 - Three tenants are expected to move out, with ongoing discussions for backfill opportunities, although some vacancies may persist into 2025 [21][22][23] Question: Proceeds from Waipouli Town Center disposition - The disposition was viewed as a strategic recycling of capital, eliminating drag on expenses from the underperforming asset [26][28] Question: Acquisition pipeline and market conditions - The company is seeing more opportunities in the market, with an optimistic outlook for potential acquisitions [29] Question: Clean FFO number for the quarter - The company presented a bifurcation of FFO between CRE corporate and land operations, emphasizing the episodic nature of land operations [48][49] Question: Legacy joint venture impact - The legacy joint venture is a passive investment that does not require significant management and is expected to have minimal impact on Q4 guidance [53][56] Question: SG&A efficiency improvements - The company has focused on process improvements and simplification to lower overall G&A expenses [57] Question: Decision to utilize the revolver for Pearl Highlands mortgage - The decision to refinance the Pearl Highlands mortgage using the revolver was based on favorable interest rate conditions [58][59]