Alexander & Baldwin, Inc. (ALEX Q4 FY2023 earnings call

Management Statement and Operational Highlights:

• Lance Parker highlighted strong CRE portfolio performance, including same-store NOI growth, lease executions (50 leases in Q4 for ~114,000 sq ft with blended spreads of 7.8%), and strategic objectives like permitting a 30,000 sq ft warehouse at Maui Business Park, completing the sale of Grace Pacific for $60 million, and implementing rooftop photovoltaic systems.
• Clayton Chun discussed financial metrics: net loss available to shareholders $3.5 million in Q4 2023, FFO $19.9 million, core FFO $21 million; full year net income $29.7 million, FFO $79.4 million, core FFO $85.3 million. He also mentioned balance sheet details, share repurchases, dividend payments, and guidance on FFO and AFFO.

Segment Performance:

• Commercial Real Estate (CRE): In the fourth quarter of 2023, total NOI growth was 4.7%, same-store NOI growth was 4.3%, and same-store NOI growth excluding collections of previously reserved amounts was 4.8%. Core FFO was $21 million or $0.29 per share. At year-end, same-store leased occupancy was 95.5% and same-store economic occupancy was 93.8%. For the full year, total CRE NOI growth was 4.7%, same-store NOI growth was 4.3%, same-store NOI growth excluding collections of previously reserved amounts was 6.8%, and core FFO was $85.3 million or $1.17 per share.
• Land Operations: Adjusted EBITDA was $6.3 million in the fourth quarter of 2023 compared to $10.7 million in Q4 2022. Full year 2023 land operations adjusted EBITDA was $10.8 million vs $67 million in 2022, primarily due to lower sales of unimproved property.

Guidance:

• Same-store NOI growth expected in the range of 1% to 2% and same-store NOI growth excluding collections of previously reserved amounts in the range of 2% to 3%.
• FFO guidance in the range of $0.95 per share to $1.05 per share and AFFO in the range of $0.80 to $0.90 per share.
• FFO composition shift as land operations impact is less, with FFO primarily reflecting commercial real estate business going forward.

Risks:

• Market conditions and other factors related to the company’s business, including evaluation of alternatives for non-core assets.
• Risks associated with forward-looking statements, such as actual results differing from contemplated by forward-looking statements.
• Challenges related to debt refinancing, including the need to refinance a $58 million debt secured by Laulani Village maturing in May.

Question and Answer: Q: Rob Stevenson asked about earnings guidance, leasing spreads, and potential assets.

A: Clayton Chun explained guidance reflects commercial real estate focus, Lance Parker and Kit Millan discussed strong leasing demand and off-market acquisition prospects.

Q: Alexander Goldfarb inquired about guidance, office repositioning, and portfolio growth.

A: Lance Parker talked about office asset repositioning options and intent to be a net buyer of the portfolio.

Q: Mitch Germain asked about debt redemption, capital plan, and balance sheet.

A: Lance Parker provided details on debt repayment and refinancing plans.

Q: Brendan McCarthy asked about distressed opportunities, abandonment costs, and G&A.

A: Clayton Chun and Lance Parker addressed non-cash charges and G&A reduction due to headcount simplification