Alexander & Baldwin increases lease occupancy and seeks to sell Grace Pacific

Alexander & Baldwin Inc., the state’s second-largest commercial property owner, improved its lease occupancy levels in the second quarter to near pre-pandemic levels and said its board had begun a formal marketing process to sell Grace Pacific, the state’s largest asphalt. paving contractor, to “a more natural owner”.

Honolulu-based real estate investment trust A&B said Thursday its net income available to common shareholders fell 68.8% to $4 million, or 5 cents per share, from $12.8 million, or 18 cents per share, in the prior year quarter.

The company, however, said its total occupancy rate improved to 94.6% and robust rental activity continued during the period.

“We executed 76 leases, with comparable rental spreads of 11.9% for new leases and 5.4% for lease renewals,” said A&B President and CEO Chris Benjamin. , in a press release.

He added that the company’s high-quality commercial real estate portfolio continued to deliver “excellent results, building on our strong start to the year.”

He said the company’s strong and flexible balance sheet has allowed A&B to remain active in seeking opportunities in its target markets and preferred asset classes to expand its commercial real estate portfolio.

“The continued strong performance of our CRE platform facilitated a third consecutive quarterly dividend increase and another positive revision to our guidance,” he said.

On Tuesday, A&B announced that it was increasing its dividend for the third consecutive quarter. The increase of 2 cents per share, to 22 cents per share, will be payable Oct. 5 to shareholders of record at the close of business Sept. 19. A&B said the third consecutive dividend increase “reflects CRE’s strong second quarter results and expected performance for the remainder of 2022.”

A&B said Grace Pacific’s financial results in A&B’s Materials and Construction segment were below expectations, primarily due to the timing of key projects, the impacts of COVID-19 on its workforce and cost inflationary pressure,” Benjamin told analysts on the company’s conference call.

He said, however, that A&B “made good progress in ramping up paving operations at the end of the quarter and securing new work, which positions us well for the remainder of the year.”

Benjamin said Grace Pacific is now the material non-core asset for the loan that A&B still holds.

“This is a compelling company with a long history, a strong market position and many competitive advantages,” he said. “We hope to find a strategic buyer for whom Grace is a more natural choice.”

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

Funds from operations, which measures cash flow from a REIT’s operations and is used to assess operating performance, was $13.2 million, or 18 cents per share, last quarter, versus $22.3 million, or 31 cents per share, over the prior year period.

Total operating revenue decreased 1.3% to $88.1 million.

A&B said in the second quarter it completed the sale of approximately 18,900 acres of primarily conservation and agricultural land in Kauai.

Most of Kailua’s commercial core and the state’s 22 malls make up a large portion of A&B’s commercial real estate holdings.

Individual properties include Kaneohe Bay Mall, Aikahi Park Mall, Pearl Highlands Mall, Manoa Market, Waianae Mall, Kunia Mall, Waipio Mall, Laulani Village, Kahului Mall, Pu’unene Mall and Queens Market.

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

Lower income

Second quarter net

$4 million

Net of the previous year

$12.8 million

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