Hawaii retail property owner A&B boosts portfolio

Dave Segal, The Honolulu Star-Advertiser
·3 min read

Mar. 1—Alexander & Baldwin Inc., the state's second-largest retail property owner, achieved a strong showing from its commercial real estate portfolio in the fourth quarter and finished 2022 with 95 % total leased occupancy.

Alexander & Baldwin Inc., the state's second-largest retail property owner, achieved a strong showing from its commercial real estate portfolio in the fourth quarter and finished 2022 with 95 % total leased occupancy.

However, the Honolulu-based company reported Tuesday that it took a $71.6 million loss in the fourth quarter as a result of classifying Grace Pacific, the state's largest asphalt paving contractor, as a discontinued operation.

A &B, which is seeking to sell Grace Pacific, endured an after-tax, fourth-quarter loss of $87.9 million due to divesting Grace Pacific from its operations. In the year-earlier quarter, A &B had a profit of $6.1 million.

"We made meaningful progress in advancing our strategic agenda during the year as we closed on the sale of approximately 20, 200 acres of non-core land holdings, " said A &B CEO Chris Benjamin, who is retiring June 30 and being replaced as CEO by Lance Parker, the current president and chief operating officer.

Benjamin will serve as a consultant through the end of 2023 to ensure a smooth transition and complete various aspects of A &B's simplification strategy. Parker will retain his president title.

"While we haven't yet sold Grace Pacific, we took the decisive step in the fourth quarter of committing to a plan to sell and classifying the business as a discontinued operation, " Benjamin said. "With our business simplification process nearly complete, we are focused on utilizing our strong balance sheet to expand our premier CRE portfolio.

Redevelopment options within our portfolio, as well as a pipeline of potential acquisitions, give us confidence that we will be able to capitalize on opportunities across our target markets and preferred asset classes."

A &B has owned Grace Pacific since Oct. 1, 2013, when it purchased the company for $235 million to aid A &B in infrastructure development and replacement work.

In the fourth quarter of 2022, A &B's commercial real estate revenue increased by $2.2 million, or 4.8 %, to $48.4 million, as compared with $46.2 million in the year-earlier quarter. Commercial real estate revenue increased $13.1 million, or 7.5 %, to $187.2 million for full-year 2022, compared with $174.1 million in 2021.

"Our high-quality portfolio of grocery-anchored retail, industrial and ground lease assets continued to perform well in the fourth quarter, closing out a year of exceptional results, " Benjamin said.

A &B said that during the fourth quarter it executed 61 leases, covering approximately 129, 500 square feet of gross leasable area. There were 261 leases executed in 2022, covering approximately 777, 800 square feet of GLA.

Significant leases executed during the fourth quarter included 15 leases related to properties in Kailua, including Aikahi Park Shopping Center, totaling approximately 23, 000 square feet of gross leasing area ; and six leases at Kakaako Commerce Center totaling approximately 21, 000 square feet of gross leasing area.

During 2022, A &B's commercial real estate net operating income increased 6.3 % over 2021 to $117.8 million.

Most of Kailua's commercial core and 22 shopping centers around the state make up much of A &B's retail real estate holdings.

Individual properties include Kaneohe Bay Shopping Center, Aikahi Park Shopping Center, Pearl Highlands Center, Manoa Marketplace, Waianae Mall, Kunia Shopping Center, Waipio Shopping Center, Laulani Village, Kahului Shopping Center, Pu 'u ­nene Shopping Center and Queens' MarketPlace.

In all, A &B owns nearly 4 million square feet of retail, industrial and office space statewide.

A &B also maintained its quarterly dividend at 22 cents a share. It will be payable April 4 to shareholders of record as of the close of business March 17.

A &B's stock dipped 1 cent to $18.67 Tuesday before the results were released.

FOURTH-QUARTER LOSS $71.6 million YEAR-EARLIER NET $6.1 million