21
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [_______ to _______]
Commission file number 001-35492
Alexander & Baldwin, Inc.
(Exact name of registrant as specified in its charter)
Hawaii
45-4849780
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
822 Bishop Street
Post Office Box 3440, Honolulu, Hawaii 96801
(Address of principal executive offices and zip code)
808-525-6611
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, without par value
ALEX
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Aggregate market value of Common Stock held by non-affiliates computed by reference to the price at which the Common Stock was last sold, or the average
bid and asked price of such Common Stock, as of the last business day of the most recently completed second fiscal quarter June 30, 2024: $1,231,665,338
Number of shares of Common Stock outstanding as of latest practicable date (February 13, 2025): 72,711,414
Documents Incorporated By Reference
Portions of Registrant’s Proxy Statement for the 2025 Annual Meeting of Shareholders (Part III of Form 10-K)
TABLE OF CONTENTS
PART I
Page
Item 1.
Business ...................................................................................................................
1
Item 1A.
Risk Factors ..............................................................................................................
6
Item 1B.
Unresolved Staff Comments ....................................................................................
20
Item 1C.
Cybersecurity ...........................................................................................................
20
Item 2.
Description of Properties by Segment .....................................................................
21
Item 3.
Legal Proceedings ...................................................................................................
24
Item 4.
Mine Safety Disclosures ...........................................................................................
24
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities .......................................................................
25
Item 6.
Reserved ...................................................................................................................
26
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations ................................................................................................................
27
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk ..................................
43
Item 8.
Financial Statements and Supplementary Data ........................................................
44
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure .................................................................................................................
90
Item 9A.
Controls and Procedures ...........................................................................................
90
Item 9B.
Other Information .....................................................................................................
92
Item 9C.
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections ....................
92
PART III
Item 10.
Directors, Executive Officers and Corporate Governance .......................................
93
Directors ...................................................................................................................
93
Executive Officers ....................................................................................................
93
Corporate Governance ..............................................................................................
93
Code of Ethics ..........................................................................................................
94
Item 11.
Executive Compensation ..........................................................................................
94
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters .................................................................................................
94
Item 13.
Certain Relationships and Related Transactions, and Director Independence .........
94
Item 14.
Principal Accounting Fees and Services ...................................................................
94
PART IV
Item 15.
Exhibits and Financial Statement Schedules ............................................................
95
Financial Statements ................................................................................................
95
Financial Statement Schedules .................................................................................
96
Exhibits Required by Item 601 of Regulation S-K ...................................................
98
Item 16.
Form 10-K Summary ............................................................................................... 102
Signatures ............................................................................................................................................. 103
1
ALEXANDER & BALDWIN, INC.
FORM 10-K
Annual Report for the Fiscal Year
Ended December 31, 2024
PART I
ITEM 1. BUSINESS
Overview
Alexander & Baldwin, Inc. ("A&B," the "Company," "we," "our," or "us") is a fully integrated real estate investment trust
("REIT") whose history in Hawai‘i dates back to 1870. Over time, the Company has evolved from a 571-acre sugar plantation
on Maui to become one of Hawai‘i's premier commercial real estate companies and the owner of the largest grocery-anchored,
neighborhood shopping center portfolio in the state. The Company's commercial real estate portfolio is geographically focused
in Hawai‘i, where it benefits from its deep local roots, broad experience base, and strong relationships and reputation in the
islands.
The Company's commercial real estate portfolio consists of 21 retail centers, 14 industrial assets, and four office properties,
representing approximately four million square feet of gross leasable area ("GLA"), as well as 142 acres of commercial land in
Hawai‘i, of which substantially all is leased pursuant to urban ground leases. As of December 31, 2024, the improved portfolio
leased occupancy was at 94.6%, which is leased to a mix of national, regional, and local retailers and businesses.
Business Objectives and Strategies
The Company's business objective is to create long-term shareholder value and sustainable income by strategically acquiring,
managing, and enhancing a premier portfolio of commercial real estate properties in Hawai‘i . The Company intends to achieve
its objective through the following strategies:
Geographic Focus - The Company's commercial real estate strategy focuses on Hawai‘i, where it benefits from its broad
experience base, deep relationships and strong reputation in the islands. The Company believes the geographic focus on the
Hawai‘i market provides a foundation for strong financial and operational performance and future growth, including showing
resilience during economic down cycles.
•
High Barriers to Entry - The Hawai‘i market offers high value opportunities for the Company to pursue attractive
growth and position itself for long-term stability given its geographic location, high barriers to entry, and lack of
urban-entitled lands (at about 5% of land in the state). The entitlement process is lengthy and complex, taking between
9-15 years to complete.
•
Stable and Resilient Economy - The Hawai‘i economy benefits both directly and indirectly from stable and
consistently high levels of government spending compared to the U.S. Mainland due to Hawai‘i's strategic defense
location between the continental U.S. and Asia. The state also benefits from a tourism industry that holds a unique
brand that appeals to tourists from varying geographies (e.g., U.S. East Coast, U.S. West Coast, Canada, Asia, Europe).
•
Market Knowledge and Deep Local Roots - A&B’s management team is physically in the islands which provides direct
insight into the needs of the communities we serve. Being geographically focused allows A&B to create and cultivate
unique relationships that lead to value creating opportunities in leasing, vendor relationships, and growth.
Balance Sheet Management and Financing Strategy Positioned for External Growth - The Company intends to grow its
commercial real estate portfolio by pursuing accretive acquisitions in our preferred asset classes and other commercial property
investment opportunities when they are strategically consistent with the value creation objectives of the Company and we
believe they have attractive risk-adjusted returns relative to the Company’s cost of capital, while maintaining a moderate
leverage profile and flexible balance sheet. The Company strives to maintain an appropriate debt profile to include well-
laddered debt maturities, favorable leverage ratios, a high proportion of fixed-rate debt, and a general preference for unsecured
debt.
Increase Income and Optimize Returns through Internal Growth - The Company strives to be the landlord of choice by
providing desirable locations, quality properties, community amenities, and effective leasing and management of our
2
commercial properties; as well as create value through property development and redevelopment in order to increase recurring
income streams and optimize returns.
•
Development and Redevelopment - The Company employs strong investment, development, and asset management
teams to capitalize on embedded internal investment opportunities through the repositioning and redevelopment of
existing assets, as well as ground-up development of new commercial properties at an appropriate risk-adjusted return
on capital.
•
Leasing - With the Company’s in-house leasing capabilities and tenant demand in submarkets in which A&B operates,
the Company is positioned to achieve internal growth through increased rental rates on the renewal of expiring leases
or the leasing of space to new tenants at higher rental rates while limiting vacancy and down-time. Additionally, the
Company is able to drive incremental growth and enhance portfolio returns through attracting high-quality tenants and
managing the merchandising mix of our tenant base.
•
Property Management - The Company oversees all aspects of asset and property management including execution of
effective marketing and leasing strategies to attract quality tenants and increase occupancy and the effective and
efficient management of property operations focused on reducing operating expenses and maximizing property cash
flows over the long term, thereby enhancing the value of our properties.
Segment Reporting
The Company operates two segments: Commercial Real Estate ("CRE") and Land Operations. A description of the Company's
reportable segments is as follows:
•
Commercial Real Estate - This segment functions as a vertically integrated real estate investment company. The
Company's preferred asset classes include improved properties in retail and industrial spaces and also urban ground
leases. Its focus within improved retail properties, in particular, is on grocery-anchored neighborhood shopping centers
that meet the daily needs of Hawai‘i communities. Income from this segment is principally generated by owning,
operating and leasing real estate assets.
•
Land Operations - This segment includes the Company's legacy landholdings, joint venture investments, and liabilities
that are subject to the Company's simplification and monetization effort. Financial results from this segment are
principally derived from real estate development and unimproved land sales and joint venture activity.
Revenue Concentration
As of December 31, 2024, the Company's three largest tenants by annualized base rent (“ABR”) were Safeway, Sam's Club, and
Longs Drugs, and no single tenant accounted for more than 10% of total commercial real estate revenue in any of the three
years ended December 31, 2024, 2023, and 2022. Pearl Highlands Center accounted for approximately 11.1%, 11.6%, and
10.9% of total Commercial Real Estate segment revenues for the three years ended December 31, 2024, 2023, and 2022,
respectively. Kailua Retail accounted for approximately 10.5%, 10.4%, and 10.7% of total Commercial Real Estate segment
revenues for the three years ended December 31, 2024, 2023, and 2022, respectively.
Discontinued Operations
In November 2023, the Company completed the sale of its interests in Grace Pacific LLC, a materials and construction
company, Company-owned quarry land on Maui, and Grace Pacific’s 50% interest in a paving company (collectively, the
“Grace Disposal Group”). Refer to Note 20 – Sale of Business and Note 21 – Held for Sale and Discontinued Operations
included within the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Annual Report on Form 10-
K for additional information regarding the Grace Disposal Group, including the assets and liabilities divested and income from
discontinued operations.
Compliance with Government Regulations
The Company is subject to a number of federal, state and local laws and regulations. The CRE segment must comply with state
and local regulations surrounding the brokering of deals and the management of its commercial real estate portfolio. With
respect to land development in both its CRE and Land Operations segments, the Company is subject to laws and regulations
that affect the land development process, including zoning and permitted land uses which may impact the Company's
development costs. Additionally, the Company is subject to various other regulations such as Occupational Safety and Health
Administration regulations, Environmental Protection Agency regulations, and state and county permitting requirements.
3
The Company is also subject to a number of tax laws and regulations that could materially impact its financial condition and
results of operations. For example, the Company utilizes §1031 of the Internal Revenue Code of 1986, as amended (the
"Code"), to obtain tax-deferral treatment when it sells qualifying real estate assets and reinvests the resulting proceeds in
replacement properties within the required time period. This may occur when the Company sells bulk parcels of land in Hawai‘i
or commercial properties in Hawai‘i, many of which may have a low tax basis. Failure to comply with, or a repeal of, or
adverse amendment to, §1031 of the Code could impose significant additional costs on the Company in the event of a future
transaction with an associated gain.
Sustainability
While recent years have seen intense focus on sustainability topics, these principles have been an integral part of the Company's
corporate culture and values since its founding over 150 years ago. The Company's deep Hawai‘i roots offer the obligation and
privilege to exceed the baseline of corporate responsibility. The Company believes that doing what is right for its employees
and communities is critical in achieving its goal to deliver long-term growth and to create value for shareholders.
Additional information regarding the Company’s sustainability initiatives is available in the Company’s Corporate
Responsibility Report (“CRR”), which can be found on the Company’s website. Information on the Company’s website,
including its CRR, is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document
filed with the SEC.
Environmental Stewardship
The Company understands the importance of environmental stewardship and throughout its history, has worked to protect and
preserve Hawai‘i's unique and precious land and water resources. Today, the Company recognizes the risks that climate change
poses to Hawai‘i's island communities and businesses, and strives to own, operate, and develop properties in ways that
contribute to a more sustainable future. Its employee-led environmental council, which is comprised of a cross-functional team
of individuals from all levels of the Company, develops and implements strategies to address sustainability and environmental
stewardship, with a focus on energy efficiency, climate change, water conservation, waste management, and sustainable
transportation. The Company is committed to addressing climate risks, and mitigating potential risks and vulnerabilities
associated with its real estate portfolio. The Company also recognizes the importance of outreach to its tenants to promote
sustainability initiatives, as tenant practices are beyond the Company's control and are a significant contributor of utility
consumption and greenhouse gas ("GHG") emissions at its properties. The Company’s leases include terms that encourage
sustainable practices to align its sustainability priorities with tenant activity,
The Company highlights the following environmental sustainability achievements:
•
Implemented a CRE benchmarking program that compiles energy and water data in ENERGY STAR Portfolio
Manager. This enables the Company to better track and understand energy and water consumption throughout the CRE
portfolio. In addition, the Company collaborated with the City & County of Honolulu and other stakeholders to
establish a county-wide energy and water building benchmarking program.
•
The Company partnered with Carbon Lighthouse to increase energy efficiency and reduce GHG emissions within the
CRE portfolio. Under this partnership, approximately 22% of the Company's portfolio (based on GLA) has undergone
performance updates to lighting, heating, and cooling systems, driving energy reductions.
•
In 2022, the Company conducted comprehensive American Society of Heating, Refrigeration, and Air-Conditioning
Engineers (ASHRAE) Level 2 audits on eight properties, representing 1.1 million square feet of GLA, or nearly 30%
of its portfolio based on GLA. These audits provided data identifying feasible short-, mid-, and long-term energy
conservation and efficiency opportunities.
•
The Company continues to implement sustainable energy and conservation features at its properties, to include
installing energy efficient LED lighting, rooftop photovoltaic (“PV”) systems and electric vehicle (“EV”) charging
stations, as well as incorporating the use of cool roofs, water efficient fixtures and reclaimed water, pedestrian friendly
open spaces, ride and bike share transportation options, and native Hawaiian and environmentally friendly
landscaping, among other initiatives. As of December 31, 2024, the Company has converted the common area lighting
to LED at 31 properties, and installed EV charging stations at 14 properties.
•
As of December 31, 2024, the Company has completed the installation of three PV systems totaling 1.8-megawatts at
various Oahu properties, including a 1.3-megawatt rooftop system in 2022 at Pearl Highlands Center, the Company's
4
largest retail asset by GLA, and a 0.5-megawatt rooftop system in 2023 at Kaka‘ako Commerce Center, the Company's
second largest industrial asset by GLA.
Social Responsibility - Human Capital Resources
As "Partners for Hawai‘i," the Company is dedicated to its employees, collectively the A&B family, who play a vital role in
achieving our mission to serve the communities in which it lives and operates, while creating value for all stakeholders. The
Company strives to attract, develop, and retain employees with a wide range of backgrounds and perspectives, and supporting
them in their pursuit to advance their careers, provide for their families, enjoy their work, and give back to the community.
The Company does the following to support these efforts:
•
Offers a competitive compensation and benefits program;
•
Maintains a hybrid onsite/remote work environment with flexible scheduling and incentives for onsite work;
•
Utilizes leading industry software and other technology to facilitate communication, document management,
collaboration, and other business processes;
•
Brings the A&B family together and fosters an inclusive environment by hosting in-person and virtual engagement
activities through an employee-led social council, and well-being tools and resources through an employee-led
wellness program;
•
Invests in learning and development opportunities to support the personal and professional development of employees.
Recruitment, Development, and Retention
The Company had 99 employees (including 3 part-time employees) as of December 31, 2024, compared to 104 employees
(including 3 part-time employees) in the prior year. The Company has maintained a hybrid onsite/remote work environment and
93.9% of our employees are based in Hawai'i.
The Company recognizes that employees drive its success and are one of its most valuable resources. To expand its reach for
talent, the Company utilizes a variety of resources to recruit employees that embody A&B's core values of integrity,
collaboration, respect, decisiveness, adaptability, and accountability. The Company's compensation and benefits program is
designed to attract, reward, and retain talented individuals who possess the skills necessary to support its business objectives,
assist in the achievement of strategic goals, and create long-term value for shareholders. The Company provides employees
with competitive total rewards packages that include, in addition to base compensation, meaningful benefits such as health
(medical, dental, drug, and vision), life, long-term disability, and long-term care insurance, paid time off, flexible spending
reimbursement accounts, a corporate wellness program, gain sharing opportunities, and a 401(k) plan with a Company
contribution and Company match. Certain employees are eligible to receive annual incentive bonuses and long-term equity
awards tied to the value of the Company's common stock price. In addition, the Company provides meaningful learning and
development opportunities for employees to encourage both personal and professional growth, offering a wide variety of formal
and informal training programs and professional development stipends to be used towards qualified workshops, conferences,
forums, and classes. The Company also offers a tuition reimbursement program that is available to employees wishing to obtain
a qualified higher education degree.
The Company believes that a fair and competitive compensation and benefits program with both short-term and long-term
features aligns employee and shareholder interests by incentivizing business and individual performance (i.e., pay for
performance), motivating based on long-term company performance, and integrating compensation with its business plans. Our
employees have an average tenure of approximately 8.5 years and, for the year ended December 31, 2024, overall voluntary
turnover was 8.1% which is lower than the average of 11% for REITs participating in the 2024 National Association of Real
Estate Investment Trusts (“Nareit”) Compensation and Benefits Survey.
Engagement, Community, and Culture
The Company strives to keep employees engaged by communicating regularly through various channels, including town halls,
learning and development trainings, community and social events, and frequent communication through an employee intranet,
employee newsletters, and email updates. In 2023 and 2024, the Company held a collaboration and learning day, an all-day
event for employees that provided an opportunity to revitalize A&B’s corporate culture, foster connections with colleagues, and
enhance professional development. The Company also conducts a confidential, annual employee survey to better understand
employee perspectives on topics including employee experience, workplace culture, employee engagement and the direction
and leadership of the Company. In 2024, the Company had a 75% participation rate. Results of the survey are reviewed
5
carefully by senior leadership and have resulted in specific actions, including increased recognition programs and the
development of the Company’s vision, mission, and values statements.
The Company has a long history of giving back to the communities it serves and that its employees are a part of and it believes
that this commitment helps in its efforts to attract and retain talent. Further, the Company supports its employees' investments in
their communities through its matching gifts program (which matches its employees' personal gifts with Company contributions
to eligible community non-profit organizations); through its volunteer initiatives (which offers employees paid time off for
employee community service, as well as cash grants to such eligible organizations); and through corporate sponsorship of
charities supported by our employees.
The Company has an employee-led social council, which is comprised of cross-functional teams of individuals from all levels
of the Company and focused on workplace culture and community impact. The Company maintains an employee-led wellness
program to support the health and wellness of employees. The program provides support and resources to employees on a
variety of topics including mental, physical, and emotional health; sleep, fitness, and nutrition habits; stress and change-
management; self-care; financial well-being, and other wellness topics with programs, presentations, and challenges throughout
the year. Employees can access tools, activities, and online courses through a Company-sponsored wellness platform, and track
their progress toward earning wellness incentives.
Inclusion and Belonging
The Company believes that an inclusive environment fosters more creativity and produces more opportunities to create value
through its assets, people, and relationships, and is crucial to its efforts to attract and retain key talent. The Company is focused
on building an inclusive culture through a variety of initiatives. This commitment starts at the top, with Board members having
a wide range of experiences, skills and backgrounds.
Corporate Governance and Compliance
The Company prioritizes sound principles of corporate governance. The Company's Board of Directors, which is entirely
independent, with the exception of the Chief Executive Officer ("CEO"), stand for re-election every year and is comprised of a
group of directors with broad and complementary skill sets. The Company has been recognized with a "1" ranking, which is the
highest score available, in governance by Institutional Shareholder Services.
The Company is committed to conducting its business in accordance with the highest ethical standards. The Company has
adopted a Code of Ethics that applies to the CEO, Chief Financial Officer, and Controller, and a Code of Conduct which is
applicable to all directors, officers, and employees, establishing the importance of ethical behavior and compliance with all
federal, state, and local laws and regulations. All directors and employees sign and reaffirm their understanding of the Code of
Conduct on an annual basis. In order to ensure a fair workplace for our employees, the Company also has strict policies to
protect against unlawful discrimination and harassment. Employees have access to a 24-hours ethics hotline that allows for
anonymous reporting of suspected violations of the Code of Conduct, or other ethical or legal violations. The Audit Committee
receives a report on hotline calls at each meeting.
The Company's leadership team and the Board of Directors are committed to sustainability issues. Sustainability consideration
is a meaningful component of the Company's operating and strategic plans and is integrated into its operations and informs how
the Company pursues opportunities and manage risks. The Board of Directors provides oversight and receives regular reports
on sustainability topics, including climate risk, at both its Nominating and Corporate Governance Committee meetings and
Board meetings. The Company also values the views of its shareholders and regularly seeks input from its investors on
sustainability and other topics.
Available Information
The Company files reports with the Securities and Exchange Commission (the “SEC”). The reports and other information filed
include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reports and
information filed under the Securities Exchange Act of 1934 (the “Exchange Act”).
The SEC maintains a website at www.sec.gov, which contains reports, proxy and information statements, and other information
regarding the Company and other issuers that file electronically with the SEC.
The Company makes available, free of charge, on or through its Internet website, its annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after it electronically files such material with, or furnishes
it to, the SEC. The Company’s website address is www.alexanderbaldwin.com. The information found on the Company's
6
website, including the Company's CRR, is not incorporated by reference into this Annual Report on Form 10-K or in any other
report or document filed with the SEC.
ITEM 1A. RISK FACTORS
The risks described below could materially and adversely affect our shareholders and our results of operations, financial
condition, liquidity and cash flows. Moreover, we operate in a very competitive and rapidly changing environment. New risk
factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all
such risk factors on our business or the extent to which any factor, or combination of factors, may affect our business. You
should carefully consider the risks and uncertainties described below, together with all of the other information in this Form
10-K and the Company’s filings with the U.S. Securities and Exchange Commission.
Risk Factors Summary
Our business is subject to numerous risks and uncertainties and an investment in our common stock may involve various risks.
Such risks, including, but not limited to, the following summarized risks, should be carefully considered before making an
investment in our common stock:
Summary of risks related to our Business and Operations
•
Our business is geographically concentrated in Hawai‘i and is dependent upon regional and local economic conditions,
which may cause us to be more susceptible to adverse developments than if we owned a more geographically diverse
portfolio.
•
Significant inflation and related volatility could adversely affect our business and financial results.
•
An increase in fuel prices and energy costs may adversely affect our operating environment and costs.
•
Our remaining non-strategic assets that we intend to sell are relatively illiquid, and it may not be possible to dispose of
such assets in a timely manner or on favorable terms, which could adversely affect our financial condition, operating
results, cash flows and may result in additional non-cash impairment charges.
Summary of risks related to our Investments in Real Estate
•
There are risks relating to investments in real estate that could adversely affect our financial condition, cash flows,
results of operations, and ability to satisfy our debt service obligations and make distributions to our shareholders.
•
Commercial real estate investments are relatively illiquid.
•
Increases in real estate ownership costs and operating expenses, including property taxes, insurance, and common area
maintenance costs, would adversely affect our operating results.
•
The bankruptcy or loss of key tenants in our commercial real estate portfolio may adversely affect our cash flows and
profitability.
•
A shift in retail shopping from brick and mortar stores to online shopping may have an adverse impact on our cash
flow, financial condition and results of operations.
•
We may be unable to renew leases, lease vacant space, or re-lease space as leases expire, thereby increasing or
prolonging vacancies, which would adversely affect our financial condition, results of operations and cash flows.
•
Our retail centers may depend on anchor stores or major tenants to attract shoppers and could be adversely affected by
the loss of, or a store closure by, one or more of these tenants.
•
Certain of our leases at our retail centers contain “co-tenancy” or “go-dark” provisions, which, if triggered, may allow
tenants to pay reduced rent, cease operations, or terminate their leases, which could adversely affect our performance
or the value of the applicable retail property.
•
A decline in real estate values could result in impairment of the carrying values of our long-lived assets and have a
material and adverse effect on our operating results.
•
Instability in the financial industry could negatively impact our ability to sell our real estate holdings.
•
We are subject to risks associated with real estate construction and development.
•
Real estate development projects are subject to warranty and construction defect claims, in the ordinary course of
business, that can be significant.
•
We face competition for the acquisition, development, and management and leasing of real estate properties, which
may impede our ability to grow our operations or may increase the cost of these activities.
•
We may be unable to identify and complete acquisitions of properties that meet our criteria, which may impede our
growth.
7
Summary of risks related to our Financing
•
We may need to incur additional indebtedness, in the future, which could adversely affect our business, financial
condition, and ability to make distributions to our stockholders.
•
We may face potential difficulties in obtaining operating and development capital.
•
We may raise additional capital in the future on terms that are more stringent to us, which could provide holders of
new issuances rights, preferences and privileges that are senior to those currently held by our common shareholders, or
that could result in dilution of common stock ownership.
•
Failure to comply with certain restrictive financial covenants contained in our credit facilities could impose restrictions
on our business segments, capital availability or the ability to pursue other activities.
•
Covenants in our loan agreements may restrict our operations and adversely affect our financial condition and ability
to make distributions to our stockholders.
•
Increasing interest rates would increase our overall interest expense.
•
Hedging activity may expose us to risks, including the risks that a counterparty will not perform and that the hedge
will not yield the economic benefits we anticipate, which may adversely affect our financial condition, cash flows, and
results of operations.
Summary of risks related to our Business Continuity
•
Security breaches through cyber attacks or intrusions, or other significant disruptions of the Company's information
technology ("IT") networks, communications, and related systems could impair our ability to operate, adversely affect
our financial condition, and damage our reputation.
•
The Company's business and operations could suffer in the event of system failures or interruptions.
•
Weather, natural disasters and the impacts of climate change may adversely affect our business.
•
Political crises, public health crises and other events beyond our control may adversely impact our operations and
profitability.
Summary of risks related to our REIT Status
•
Because qualification as a REIT involves highly technical and complex provisions of the Code, there can be no
assurance that we will remain qualified as a REIT for U.S. federal income tax purposes.
•
U.S. federal, state and local legislative, judicial or regulatory tax changes could have an adverse effect on our
shareholders and us.
•
Complying with the REIT requirements may cause us to sell assets or forgo otherwise attractive investment
opportunities.
•
We may be required to borrow funds, sell assets or raise equity to satisfy our REIT distribution requirements, which
could adversely affect our ability to execute our business plan and grow.
•
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
•
The REIT ownership limitations and transfer restrictions contained in our articles of incorporation may restrict or
prevent certain transfers of our common stock, could have unintended antitakeover effects and may not be successful
in preserving our qualification for taxation as a REIT.
•
Our cash distributions are not guaranteed and may fluctuate.
•
Certain of our business activities may be subject to corporate-level income tax and other taxes, which would reduce
our cash flows, and would cause potential deferred and contingent tax liabilities.
•
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions that
would be treated as sales for U.S. federal income tax purposes.
•
The ability of our Board of Directors to revoke our REIT qualification, without shareholder approval, may cause
adverse consequences to our shareholders.
Summary of Regulatory and Legal Risks
•
Governmental entities have adopted or may adopt regulatory requirements that may restrict our development activity.
•
Governmental entities have adopted or may adopt regulatory requirements related to dams, reservoirs, and other water
infrastructure that may adversely affect our operations.
•
Changes to federal, state or local law or regulations, including environmental laws and regulations, may adversely
affect our business.
•
We are subject to, and may in the future be subject to, disputes, legal or other proceedings, or government inquiries or
investigations, that could have an adverse effect on us.
8
•
Unsuccessful efforts to secure a long-term lease for delivery of irrigation water related to a 2018 agricultural land sale
could materially affect our result of operations, financial condition, and cash flows.
Risks Related to Our Business and Operations
Our business is geographically concentrated in Hawai‘i and is dependent upon regional and local economic conditions,
which may cause us to be more susceptible to adverse developments than if we owned a more geographically diverse
portfolio.
Our business, including our portfolio of properties and operations, is located exclusively in Hawai‘i, which exposes us to
greater economic risks than if we owned a more geographically diverse portfolio. As a result, we are particularly susceptible to
adverse economic or other conditions and developments (such as periods of economic slowdown or recession, business layoffs
or downsizing, industry slowdowns, trade disputes, such as the imposition of new of increased sanctions or tariffs, changes in
the local or global tourism industry, relocations of businesses, increases in real estate and other taxes and the cost of complying
with governmental regulations or increased regulation, including as a result of executive orders), as well as to natural disasters
that occur in this market (such as hurricanes, wildfires, tropical storms, volcanic eruptions, and other events). If there is a
downturn in the economy or weakening of economic drivers in Hawai‘i, which include tourism, government, military and
consumer spending, public and private construction starts and spending, personal income growth, and employment, our
operations and our revenue and cash available for distribution, including cash available to pay distributions to our shareholders,
could be materially adversely affected. We cannot assure that this market will grow or that underlying real estate fundamentals
will be favorable to owners and operators of retail, industrial, or office properties. Any adverse economic or real estate
developments in Hawaii, or any decrease in demand for retail, industrial, or office space resulting from the regulatory
environment or business climate could adversely impact our financial condition, results of operations, cash flow, our ability to
satisfy our debt service obligations and our ability to pay distributions to shareholders.
Significant inflation and related volatility could adversely affect our business and financial results
High inflation, inflation volatility, and future inflation uncertainty could have a pronounced negative impact on operating
expenses, general and administrative costs, our mortgage and debt interest, development and redevelopment construction costs
(including tenant improvements and other capital projects), and real estate acquisition costs, as such costs and expenses could
increase at a rate higher than our rents. In recent periods, central banks have responded to rapidly rising inflation by tightening
monetary policies, which could create headwinds to economic growth. Despite recent rate cuts, previous rate hikes enacted by
the Federal Reserve have had a significant impact on interest rate indexes, such as SOFR. See “Risks Related to Financing”.
Most of our leases require tenants to pay an allocable portion of operating expenses, including common area maintenance, real
estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation.
While these provisions partially mitigate the impact of inflation, these provisions do not mitigate increases in operating
expenses that are not reimbursable. Increased inflation could also have an adverse effect on consumer spending, which could
impact our tenants’ sales and, in turn, our average rents, and in some cases, our percentage rents, where applicable. In addition,
renewals of leases or future leases may not be negotiated on current terms, in which event we may recover a smaller percentage
of our operating expenses.
An increase in fuel prices and energy costs may adversely affect our operating environment and costs.
Fuel prices have a direct impact on the health of the Hawai‘i economy. Increases in the price of fuel may result in higher
transportation costs to Hawai‘i and adversely affect visitor counts and the cost of goods shipped to Hawai‘i, thereby affecting
the strength of the Hawai‘i economy and its consumers. Increases in energy costs for our leased real estate portfolio are
typically recovered from lessees, although our share of energy costs increases as a result of lower occupancies, and higher
operating cost reimbursements impact the ability to increase underlying rents. Rising fuel prices also may increase the cost of
construction, including delivery costs to Hawai‘i, and the cost of materials that are petroleum-based, thus affecting our real
estate development projects and margins.
Our remaining non-strategic assets that we intend to sell are relatively illiquid, and it may not be possible to dispose of such
assets in a timely manner or on favorable terms, which could adversely affect our financial condition, operating results,
cash flows and may result in additional non-cash impairment charges.
Our ability to dispose of non-strategic assets on advantageous terms, including pricing, depends on factors beyond our control,
including but not limited to, competition from other sellers, insufficient infrastructure capacity or availability (e.g., water, sewer
and roads) for real estate assets, the availability of attractive financing for potential buyers and market conditions. As a result,
we may be unable to realize our strategy through dispositions, we may be unable to do so on advantageous terms, or we may
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not be able to execute the strategy in a timely manner, which could adversely affect our financial condition, operating results
and/or cash flows and may result in additional non-cash impairment charges.
In addition, many of the non-strategic assets are relatively illiquid. Illiquid assets typically experience greater price volatility, as
a ready market does not exist, and can be more difficult to value. In addition, validating third party pricing for illiquid assets
may be more subjective than more liquid assets. As a result, we may record additional non-cash impairment charges and/or
realize significantly less than the value at which we have previously recorded such assets.
Risks Related to Our Investments in Real Estate
There are risks relating to investments in real estate that could adversely affect our financial condition, cash flows, results of
operations, and ability to satisfy our debt service obligations and make distributions to our shareholders.
Real property investments are subject to multiple risks. Real estate values are affected by several factors, including changes in
the general economic climate, local conditions (such as an oversupply of space or a reduction in demand), the quality and
philosophy of management, competition from other available space, and the ability to provide adequate maintenance and
insurance and to control variable operating costs. Retail properties, in particular, may be affected by changing perceptions of
retailers or shoppers regarding the convenience and attractiveness of the property and by the overall climate for the retail
industry. Real estate values are also affected by such factors as government regulations, interest rate levels, the availability of
financing and potential liability under, and changes in, environmental, zoning, tax, and other laws. The majority of our income
is derived from rental income from real property. Our income and cash flow would be adversely affected if (i) a significant
number of our tenants are unable to meet their obligations; (ii) we incur increases in non-recoverable operating and ownership
costs; (iii) we are unable to lease space at our properties when the space becomes available; (iv) the rental rates upon a renewal
or a new lease are significantly lower than prior rents or do not increase sufficiently to cover increases in operating and
ownership costs; (v) increased lease concessions, such as free or discounted rents and tenant improvement allowances are
offered to tenants to secure deals; and (vi) there is a discovery of hazardous or toxic substances, or other environmental,
culturally-sensitive, or related issues at the property.
Declines in real estate values, among other factors, could result in a determination that the Company’s assets have been
impaired. If the Company determines that an impairment has occurred, the Company would be required to make an adjustment
to the net carrying value of the asset which could have an adverse effect on its results of operations in the period in which the
non-cash impairment charge is recorded.
Increases in real estate ownership costs and operating expenses, including property taxes, insurance, and common area
maintenance costs, would adversely affect our operating results.
Our operating expenses include, but are not limited to, property taxes, insurance, utilities, repairs, and the maintenance of the
common areas of our commercial real estate. We may experience increases in our operating expenses, some or all of which may
be out of our control. Most of our leases require that tenants pay for a share of property taxes, insurance, and common area
maintenance and utility costs. However, if any property is not fully occupied, or if recovery income from tenants is not
sufficient to cover operating expenses, then we could be required to expend our own funds for operating expenses. In addition,
we may be unable to renew leases or negotiate new leases with terms requiring our tenants to pay all the property tax,
insurance, and common area maintenance and utility costs that tenants currently pay, which would adversely affect our
operating results.
Commercial real estate investments are relatively illiquid.
Our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial and investment
conditions is limited. The real estate market is affected by many factors, such as general economic conditions, supply and
demand, availability of financing, interest rates and other factors that are beyond our control. We cannot be certain that we will
be able to sell any property for the price and other terms we seek, or that any price or other terms offered by a prospective
purchaser would be acceptable to us. We also cannot estimate with certainty the length of time needed to find a willing
purchaser and to complete the sale of a property. Factors that impede our ability to dispose of properties could adversely affect
our financial condition and operating results.
The bankruptcy or loss of key tenants in our commercial real estate portfolio may adversely affect our cash flows and
profitability.
We may derive significant cash flows and earnings from certain key tenants. If one or more of these tenants declares bankruptcy
or voluntarily vacates from the leased premise and we are unable to re-lease such space (or to re-lease it on comparable or more
10
favorable terms), we may be adversely impacted. Additionally, we may be further adversely impacted by an impairment or
“write-down” of intangible assets, such as lease-in-place value, favorable lease asset, or a deferred asset related to straight-line
lease rent, associated with a tenant bankruptcy or vacancy.
A shift in retail shopping from brick and mortar stores to online shopping may have an adverse impact on our cash flow,
financial condition and results of operations.
Although many of the retailers operating at our properties sell groceries and other necessity-based soft goods or provide
services, the shift to online shopping may cause declines in brick-and-mortar sales generated by certain of our tenants and/or
may cause certain of our tenants to reduce the size or number of their retail locations in the future. As a result, our cash flow,
financial condition and results of operations could be adversely affected.
We may be unable to renew leases, lease vacant space, or re-lease space as leases expire, thereby increasing or prolonging
vacancies, which would adversely affect our financial condition, results of operations and cash flows.
We may not be able to renew leases, lease vacant space, or re-let space as leases expire. In addition, we may need to offer
substantial rent abatements, tenant improvements, early termination rights, or below-market renewal options to retain existing
tenants or attract new tenants. If the rental rates for our properties decrease, our existing tenants do not renew their leases, or we
do not re-let our available space, our financial condition, results of operations, and cash flows would be adversely affected.
Our retail centers may depend on anchor stores or major tenants to attract shoppers and could be adversely affected by the
loss of, or a store closure by, one or more of these tenants.
Some of our retail centers are anchored by large tenants. At any time, our tenants may experience a downturn in their business
that may significantly weaken their financial condition. As a result, our tenants, including our anchor and other major tenants,
may fail to comply with their contractual obligations to us, seek concessions in order to continue operations, or declare
bankruptcy, any of which could result in the termination of such tenants’ leases and the loss of rental income attributable to the
terminated leases. In addition, certain of our tenants may cease operations while continuing to pay rent, which could decrease
customer traffic, thereby decreasing sales for our other tenants at the applicable retail property. In addition, mergers or
consolidations among retail establishments could result in the closure of existing stores or the duplication or geographic
overlapping of store locations, which could include stores at our retail centers.
Loss of, or a store closure by, an anchor store or major tenant could significantly reduce our occupancy level or the rent that we
receive from our retail centers. We may be unable to re-lease vacated space or to re-lease it on comparable or more favorable
terms, or at all. In the event of default by an anchor store or major tenant, we may experience delays and costs in enforcing our
rights as landlord to recover amounts due to us under the terms of our agreements with such parties.
Certain of our leases at our retail centers contain “co-tenancy” or “go-dark” provisions, which, if triggered, may allow
tenants to pay reduced rent, cease operations, or terminate their leases, which could adversely affect our performance or the
value of the applicable retail property.
Certain of the leases at our retail centers contain “co-tenancy” provisions that establish conditions related to a tenant’s
obligation to remain open, the amount of rent payable, or a tenant’s obligation to continue occupying space, including (i) the
presence of an anchor tenant, (ii) the continued operation of an anchor tenant’s store, and (iii) minimum occupancy levels at the
applicable property. If a co-tenancy provision is triggered by a failure of any of these conditions, a tenant could have the right to
cease operations, to terminate its lease early, or to a reduction of its rent. In addition, certain of the leases at our retail centers
contain “go-dark” provisions that allow the tenant to cease operations while continuing to pay rent. This could result in
decreased customer traffic at the property, thereby decreasing sales for our other tenants at such property, which may result in
our other tenants being unable to pay their minimum rents or expense recovery charges. Such provisions may also result in
lower rental revenue generated under the applicable leases. To the extent co-tenancy or go-dark provisions in our leases result in
lower revenue or tenant sales, tenants’ rights to terminate their leases early, or to a reduction of their rent, our performance
and/or the value of the applicable retail center could be adversely affected.
A decline in real estate values could result in impairment of the carrying values of our long-lived assets and have a material
and adverse effect on our operating results.
We have significant investments in various commercial real estate properties. Declines in real estate values from weakness in
the real estate sector, especially in Hawai‘i, difficulty in obtaining or renewing financing, a prolonged economic slowdown or
recession, as well as competition and advances in technology, adverse changes in the regulatory environment, or other factors
leading to reduction in expected profitability, or changes in our investment and redevelopment strategy, among other factors,
11
may affect the fair value of these real estate assets. If the undiscounted cash flows of our commercial properties, or
redevelopment projects, were to decline below the carrying value of those assets, we would be required to recognize a non-cash
impairment loss if the fair value of those assets were below their carrying value,
Instability in the financial industry could negatively impact our ability to sell our real estate holdings.
Significant instability in the financial industry may result in declining property values and increasing defaults on loans. This, in
turn, could lead to increased regulations, tightened credit requirements, reduced liquidity and increased credit risk premiums for
virtually all borrowers. Fewer loan products and strict loan qualifications make it more difficult for borrowers to finance the
purchase of our development lots or unimproved land. Additionally, more stringent requirements to obtain financing for buyers
of commercial real estate properties make it significantly more difficult for us to sell commercial real estate properties and may
negatively impact the sales prices and other terms of such sales. Deterioration in the credit environment may also impact us in
other ways, including the credit or solvency of customers, vendors, tenants, or joint venture partners, the ability of partners to
fund their financial obligations to joint ventures and our access to mortgage financing for our own properties.
We are subject to risks associated with real estate construction and development.
Our redevelopment, development-for-hold, and development-for-sale projects are subject to risks relating to our ability to
complete our projects on time and on budget. Factors that may result in a development project exceeding budget or being
prevented from completion include, but are not limited to: (i) our inability to secure sufficient financing or insurance on
favorable terms, or at all; (ii) construction delays, defects, or cost overruns, which may increase project development costs; (iii)
an increase in commodity or construction costs, including labor costs; (iv) the discovery of hazardous or toxic substances, or
other environmental, culturally-sensitive, or related issues; (v) an inability to obtain, or a significant delay in obtaining, zoning,
construction, occupancy and other required governmental permits and authorizations; (vi) difficulty in complying with local,
city, county and state rules and regulations regarding permitting, zoning, subdivision, utilities, and water quality, as well as
federal rules and regulations regarding air and water quality and protection of endangered species and their habitats; (vii)
insufficient infrastructure capacity or availability (e.g., water, sewer and roads) to serve the needs of our projects; (viii) an
inability to secure tenants necessary to support the project or maintain compliance with debt covenants; (ix) failure to achieve
or sustain anticipated occupancy levels; (x) condemnation of all or parts of development or operating properties, which could
adversely affect the value or viability of such projects; and (xi) instability in the financial industry could reduce the availability
of financing.
Real estate development projects are subject to warranty and construction defect claims, in the ordinary course of business,
that can be significant.
In our development-for-sale projects, we are subject to warranty and construction defect claims arising in the ordinary course of
business. The amounts payable under these claims, both in legal fees and remedying any construction defects, can be significant
and could exceed the profits made from the project. As a consequence, we may maintain liability insurance, obtain indemnities
and certificates of insurance from contractors generally covering claims related to workmanship and materials, and create
warranty and other reserves for projects based on historical experience and qualitative risks associated with the type of project
built. Because of the uncertainties inherent in these matters, we cannot provide any assurance that our insurance coverage,
contractor arrangements and reserves will be adequate to address some or all of our warranty and construction defect claims in
the future. For example, contractual indemnities may be difficult to enforce, we may be responsible for applicable self-insured
retentions, and certain claims may not be covered by insurance or may exceed applicable coverage limits. Additionally, the
coverage offered, and the availability of liability insurance for construction defects, could be limited or costly. Accordingly, we
cannot provide any assurance that such coverage will be adequate, available at an acceptable cost, or available at all.
We face competition for the acquisition, development, and management and leasing of real estate properties, which may
impede our ability to grow our operations or may increase the cost of these activities.
There are numerous other developers, buyers, managers and owners of commercial and residential real estate and undeveloped
land that compete or may compete with us for management and leasing revenues, land for development, properties for
acquisition and disposition, and for tenants and purchasers of properties, including other REITs, private institutional investors,
and other owner-operators of commercial real estate. Larger REITs may enjoy competitive advantages that result from a lower
cost of capital. Intense competition may increase the market price we would have to pay to acquire properties or could lead to
increased supply of space, which could then increase vacancies, the need for increased tenant incentives, decreased rents, sales
prices or sales volume, or lack of development opportunities.
12
We may be unable to identify and complete acquisitions of properties that meet our criteria, which may impede our
growth.
Our business strategy involves the acquisition of retail, industrial, and other properties. These activities require us to identify
suitable acquisition candidates or investment opportunities that meet our criteria. We evaluate the market of available properties
and may attempt to acquire properties when strategic opportunities exist. We may be unable to acquire properties that we have
identified as potential acquisition opportunities due to various factors, including but not limited to, the inability to (i) negotiate
terms agreeable to the parties involved, (ii) satisfy conditions to closing, or (iii) finance the acquisition on favorable terms, or at
all. In addition, we may incur significant costs and divert management attention in connection with evaluating and negotiating
potential acquisitions, including ones that we are subsequently not able to complete. If we are unable to acquire properties on
favorable terms, or at all, our financial condition, results of operations, and cash flow, as well as our ability to grow could be
adversely affected.
Risks Related to Our Financing
We may need to incur additional indebtedness, in the future, which could adversely affect our business, financial condition,
and ability to make distributions to our stockholders.
We have obtained, and may continue to obtain, lines of credit, and other long-term financing that may be secured by our real
estate assets. In connection with executing our business strategies, we expect to evaluate additional acquisitions and strategic
investments, and we may elect to finance these endeavors by incurring additional indebtedness. We may also incur mortgage
debt on real estate assets that we already own as a source of liquidity. In addition, we may borrow as necessary to ensure that
we maintain our qualification as a REIT for U.S. federal income tax purposes, including borrowings to satisfy the REIT
requirement that we distribute at least 90% of our annual REIT taxable income to our stockholders (computed without regard to
the dividends-paid deduction and excluding net capital gain). However, we cannot guarantee that we will be able to obtain any
such borrowings on satisfactory terms. Additionally, if we have insufficient income to service any recourse debt obligations, our
lenders could institute proceedings against us to foreclose upon our assets.
High debt levels could have material adverse consequences for the Company, including hindering our ability to adjust to
changing market, industry, or economic conditions; limiting our ability to access the capital markets to refinance maturing debt
or to fund acquisitions; requiring the use of a substantial portion of our cash flows for the payment of principal and interest on
our debt, thereby limiting the amount of free cash flow available for future operations, acquisitions, distributions, stock
repurchases, or other uses; making us more vulnerable to economic or industry downturns, including interest rate increases; and
placing us at a competitive disadvantage compared to less leveraged competitors.
We may face potential difficulties in obtaining operating and development capital.
The successful execution of our strategy requires substantial amounts of operating and development capital. Sources of such
capital could include banks, life insurance companies, public and private offerings of debt or equity, including rights offerings,
sale of certain assets and joint venture partners. If our investment or credit profile deteriorates significantly, our access to the
debt or equity capital markets may become restricted, our cost of capital may increase, or we may not be able to refinance debt
at the same levels or on the same terms. Further, we rely on our ability to obtain and draw on a revolving credit facility to
support our operations. Volatility in the credit and financial markets or deterioration in our credit profile may prevent us from
accessing funds. There is no assurance that any capital will be available on terms acceptable to us, or at all, to satisfy our short
or long-term cash needs.
We may raise additional capital in the future on terms that are more stringent to us, which could provide holders of new
issuances rights, preferences and privileges that are senior to those currently held by our common shareholders, or that
could result in dilution of common stock ownership.
As noted above, the successful execution of our strategy requires substantial amounts of operating and development capital. If
our capital needs are not able to be filled through our existing liquidity sources (e.g., our revolving credit facility), we may
require additional capital. If we incur additional debt or raise equity, the terms of the debt or equity issued may give the holders
rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. The
terms of any new debt may also impose additional and more stringent restrictions on our operations than currently in place. If
we issue additional common equity, either through public or private offerings or rights offerings, existing common shareholders'
percentage ownership in us would decline if they do not participate on a ratable basis.
13
Failure to comply with certain restrictive financial covenants contained in our credit facilities could impose restrictions on
our business segments, capital availability or the ability to pursue other activities.
Our credit facilities and term debt contain certain restrictive financial covenants. If we breach any of the covenants and such
breach is not cured in a timely manner or waived by the lenders, and such event results in default, our access to credit may be
limited or terminated and the lenders could declare any outstanding amounts immediately due and payable. We further may be
limited in our ability to make distributions to our shareholders in event of default.
Covenants in our loan agreements may restrict our operations and adversely affect our financial condition and ability to
make distributions to our stockholders.
When providing financing, a lender may impose restrictions on us that affect operating policies and our ability to incur
additional debt. Our loan agreements may contain covenants that limit our ability to further mortgage a property. In addition,
loan agreements may limit our ability to enter into or terminate certain operating or lease agreements related to a property.
These or other limitations would decrease our operating flexibility and our ability to achieve our operating objectives, which
may adversely affect our financial condition and ability to make distributions to our stockholders.
Increasing interest rates would increase our overall interest expense.
Although a significant amount of our outstanding debt has fixed interest rates, we borrow funds at variable interest rates under
our revolving credit facility. Interest expense on our floating-rate debt increases as interest rates rise. Additionally, the interest
expense associated with fixed-rate debt could rise in future periods when the debt matures and is refinanced. Furthermore, the
value of our commercial real estate portfolio and the market price of our stock could decline if market interest rates increase
and investors seek alternative investments with higher distribution rates.
Hedging activity may expose us to risks, including the risks that a counterparty will not perform and that the hedge will not
yield the economic benefits we anticipate, which may adversely affect our financial condition, cash flows, and results of
operations.
From time to time, we manage our exposure to interest rate volatility by using interest rate hedging arrangements that involve
risk, including but not limited to, the risk that counterparties may fail to honor their obligations under these arrangements, that
these arrangements may not be effective in reducing our exposure to interest rate changes, and that we may be required to pay
the counterparty if interest rates decrease in the future below the hedged amount. There can be no assurance that our hedging
arrangements will qualify for hedge accounting or that our hedging activities will have the desired beneficial impact on our
results of operations. Should we desire to terminate a hedging agreement, there may be significant costs and cash requirements
involved to fulfill our obligations under the hedging agreement. Failure to hedge effectively against interest rate changes may
adversely affect our financial condition, cash flows, and results of operations.
Risks Related to Our Business Continuity
Security breaches through cyber attacks or intrusions, or other significant disruptions of the Company's information
technology ("IT") networks, communications, and related systems could impair our ability to operate, adversely affect our
financial condition, and damage our reputation.
We rely extensively on IT and communication systems to process transactions and to operate and manage our business and face
risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer
viruses, attachments to e-mails, persons inside the Company or persons with access to systems inside the Company. The risk of
a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign
governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and
intrusions from around the world have increased. The Company’s IT networks and related systems are essential to the operation
of its business and its ability to perform day-to-day operations. Furthermore, a significant subset of our employees partially
operate in a remote work environment, which may exacerbate certain risks to our businesses, including an increased risk of
cybersecurity attacks and increased risk of unauthorized dissemination of proprietary or confidential information.
Despite our implementation of security measures, there can be no assurance that our efforts to maintain the security and
integrity of our systems will be effective or that attempted security breaches or disruptions would not be successful or
damaging. A security breach or other significant disruption involving our systems could result in improper uses of our systems
and interruptions in our operations, which in turn could have a material adverse effect on our income, cash flow, results of
operations, financial condition, liquidity, the ability to service debt obligations, the market price of our common stock and our
14
ability to pay dividends and other distributions to shareholders. We may also incur significant costs to remedy damages caused
by security breaches.
These risks require continuous and likely increasing attention and other resources to identify and quantify these risks, upgrade,
and expand the Company’s technologies, systems and processes to adequately address them and provide periodic training for
the Company’s employees to assist them in detecting phishing, malware and other schemes. Such attention diverts time and
other resources from other activities and there is no assurance that the Company’s efforts will be effective. Additionally, the
Company relies on third-party service providers for certain aspects of the Company’s business. The Company can provide no
assurance that the networks and systems that the Company’s third-party vendors have established or use will be effective. As
the Company’s reliance on technology has increased, so have the risks posed to the Company’s information systems, both
internal and those provided by the Company and third-party service providers.
In the normal course of business, the Company and its service providers collect and retain certain personal information
provided by employees, tenants and vendors, and relies extensively on IT systems to process transactions and manage its
business. The Company can provide no assurance that the data security measures designed to protect confidential information
on the Company’s systems established by the Company and the Company’s service providers will be able to prevent
unauthorized access to this personal information or that attempted security breaches or disruptions would not be successful or
damaging.
The Company's business and operations could suffer in the event of system failures or interruptions.
The Company’s internal IT systems are vulnerable to damage from any number of sources, including computer viruses,
unauthorized access, energy blackouts, natural disasters, terrorism, war, telecommunication failures, reliability issues, and
integration and compatibility concerns. Further, we may experience failures caused by the intentional or inadvertent acts and
errors by our employees or vendors. The Company has implemented policies and procedures around its IT systems, including
security measures, employee training, system redundancies, and the existence of a disaster recovery plan. However, any system
failure or accident that causes interruptions in the Company’s operations could result in a material disruption to its business.
The Company may incur additional costs to remedy damages caused by such disruptions, as well as increased demand for IT
resources to support employees operating in a partially remote work environment.
Weather, natural disasters and the impacts of climate change may adversely affect our business.
As a result of climate change, we may experience extreme weather and changes in precipitation and temperature, including
natural disasters. Should the impact of climate change be significant or occur for lengthy periods of time, our financial
condition or results of operations would be adversely affected.
Our real estate assets are vulnerable to natural disasters, such as hurricanes, earthquakes, tsunamis, floods, sea level rise,
wildfires, tornadoes and unusually heavy or prolonged rain, which could cause personal injury and loss of life. In addition,
natural disasters could damage our real estate holdings, including dams and reservoirs within our Land Operations segment,
which could result in substantial repair or replacement costs to the extent not covered by insurance, a reduction in property
values, or a loss of revenue, and could have an adverse effect on our ability to develop, lease and sell properties. The occurrence
of natural disasters could also cause increases in property insurance rates and deductibles, which could reduce demand for, or
increase the cost of, owning or developing our properties.
We maintain casualty insurance under policies we believe to be adequate and appropriate. These policies are generally subject
to large retentions and deductibles. Some types of losses, such as losses resulting from physical damage to dams, generally are
not insured. In some cases, we retain the entire risk of loss because it is not economically prudent to purchase insurance
coverage or because of the perceived remoteness of the risk. Other risks are uninsured because insurance coverage may not be
commercially available. Finally, we retain all risk of loss that exceeds the limits of our insurance.
Political crises, public health crises and other events beyond our control may adversely impact our operations and
profitability.
Political crises (including but not limited to heightened security measures, war, actual or threatened terrorist attacks, efforts to
combat terrorism or other acts of violence) and public health crises (including, but not limited to, pandemics) may cause
consumer confidence and spending to decrease, or may affect the ability or willingness of tourists to travel to Hawai‘i, thereby
adversely affecting Hawai‘i’s economy and us. Further, as our business is concentrated in Hawai‘i, an attack on Hawai‘i as a
result of war or terrorism may severely or irreparably harm the Company.
15
Such events beyond our control could adversely affect trade and global and local economies and may lead to actions limiting
trade and population movement and the movement of goods through the supply chain, as well as other impacts to business and
consumer demand, which may adversely affect the Company’s business, operating results and financial condition.
Risks Related to Our REIT Status
Because qualification as a REIT involves highly technical and complex provisions of the Code, there can be no assurance
that we will remain qualified as a REIT for U.S. federal income tax purposes.
We have determined that we operated in compliance with the REIT requirements commencing with the taxable year ended
December 31, 2017. However, qualification as a REIT involves the application of highly technical and complex provisions of
the Code, for which there may be only limited judicial or administrative interpretations, and depends on our ability to meet, on
a continuing basis, various requirements concerning, among other things, the sources of our income, the nature of our assets,
the diversity of our share ownership and the amounts we distribute to our shareholders. Our ability to satisfy the asset tests
depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a
precise determination, and for which we will not obtain independent appraisals. The determination of various factual matters
and circumstances not entirely within our control can potentially affect our ability to continue to qualify as a REIT. In addition,
no assurance can be given that future legislation, regulations, administrative interpretations or court decisions will not
significantly change the requirements for qualification as a REIT or adversely affect the U.S. federal income tax consequences
of such qualification. In addition, our ability to satisfy the requirements to qualify as a REIT depends, in part, on the actions of
third parties, over which we have no control or only limited influence. Even a technical or inadvertent violation could
jeopardize our REIT qualification.
Although we intend to operate in a manner consistent with the REIT requirements, we cannot be certain that we will remain so
qualified. Under current law, if we fail to qualify as a REIT in any taxable year, we would not be allowed a deduction for
dividends paid to shareholders in computing our net taxable income. In addition, our taxable income would be subject to U.S.
federal and state income tax at the regular corporate rates. Also, unless we are entitled to relief under certain Code provisions,
we would also be disqualified from re-electing REIT status for the four taxable years following the year during which we failed
to qualify as a REIT. Cash available for distribution to our shareholders would be significantly reduced for each year in which
we do not qualify as a REIT. In that event, we would not be required to continue to make distributions.
Although we currently intend to continue to qualify as a REIT, it is possible that future economic, market, legal, tax or other
considerations may cause us, without the consent of our shareholders, to revoke the REIT election or to otherwise take action
that would result in disqualification.
U.S. federal, state and local legislative, judicial or regulatory tax changes could have an adverse effect on our shareholders
and us.
The present U.S. federal income tax treatment of REITs and their shareholders may be modified, possibly with retroactive
effect, by legislative, judicial or administrative action at any time, which could affect the U.S. federal income tax treatment of
an investment in us. The U.S. federal income tax rules dealing with REITs are constantly under review by persons involved in
the legislative process, the Internal Revenue Service ("IRS") and the U.S. Treasury Department, which results in statutory
changes as well as frequent revisions to regulations and interpretations. We cannot predict how changes in the tax laws might
affect our investors or us. Revisions in U.S. federal income tax laws and interpretations thereof could significantly and
negatively affect our ability to qualify as a REIT and the tax considerations relevant to an investment in us, or could cause us to
change our investments and commitments.
At the state level, the Hawai‘i State legislature has repeatedly considered, and is currently considering, legislation that would (i)
eliminate (i.e., repeal) the REIT dividends paid deduction for Hawai‘i State income tax purposes related to income generated in
Hawai‘i for a number of years or permanently, and/or (ii) mandate withholding of Hawai‘i State income tax on dividends paid
to out-of-state shareholders. These provisions could result in double taxation of REIT income in Hawai‘i under the Hawai‘i tax
code, reduce returns to shareholders and make our stock less attractive to investors, which could in turn lower the value of our
stock.
You are urged to consult with your tax advisor with respect to the status of legislative, regulatory or administrative
developments and proposals and their potential effect on an investment in our stock.
16
Complying with the REIT requirements may cause us to sell assets or forgo otherwise attractive investment opportunities.
To maintain our qualification as a REIT, we must continually satisfy various requirements concerning, among other things, the
nature of our assets, the sources of our income and the amounts we distribute to our shareholders. For example, we must ensure
that, at the end of each calendar quarter, at least 75% of the value of our total assets consists of some combination of “real estate
assets” (as defined in the Code), cash, cash items and U.S. government securities. The remainder of our investments (other than
government securities, qualified real estate assets and securities issued by a taxable REIT subsidiary ("TRS")) generally cannot
include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the
outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our total assets (other than
government securities, qualified real estate assets and securities issued by a TRS) can consist of the securities of any one issuer,
and no more than 20% of the value of our total assets can be represented by securities of one or more TRS. If we fail to comply
with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the
calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse
tax consequences. As a result, we may be required to sell assets or forgo otherwise attractive investment opportunities. These
actions could have the effect of reducing our income, amounts available for distribution to our shareholders and amounts
available for making payments on our indebtedness.
We may be required to borrow funds, sell assets or raise equity to satisfy our REIT distribution requirements, which could
adversely affect our ability to execute our business plan and grow.
We generally must distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends
paid deduction and excluding any net capital gains, to maintain our qualification as a REIT. To the extent that we satisfy this
distribution requirement and qualify as a REIT but distribute less than 100% of our REIT taxable income, including any net
capital gains, we will be subject to tax at ordinary corporate tax rates on the retained portion. In addition, we will be subject to a
4% nondeductible excise tax if the actual amount that we distribute to our shareholders in a calendar year is less than a
minimum amount specified under U.S. federal tax laws. We intend to make distributions to our shareholders to comply with the
REIT requirements of the Code and avoid corporate income tax and the 4% annual excise tax.
From time to time, we may generate taxable income greater than our cash flow as a result of differences in timing between the
recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of
reserves or required debt or amortization payments. If we do not have other funds available in these situations, we could be
required to borrow funds on unfavorable terms, sell assets at disadvantageous prices or distribute amounts that would otherwise
be invested in future acquisitions, to make distributions sufficient to enable us to pay out enough of our taxable income to
satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These
alternatives could increase our costs or reduce our equity or adversely impact our ability to raise short- and long- term debt.
Furthermore, the REIT distribution requirements may increase the financing we need to fund capital expenditures and further
growth and expansion initiatives. Thus, compliance with the REIT requirements may hinder our ability to grow, which could
adversely affect the value of our common stock.
Whether we issue equity, at what price and the amount and other terms of any such issuances will depend on many factors,
including alternative sources of capital, our then-existing leverage, our need for additional capital, market conditions and other
factors beyond our control. If we raise additional funds through the issuance of equity securities or debt convertible into equity
securities, the percentage of stock owned by our existing shareholders may be reduced. In addition, new equity securities or
convertible debt securities could have rights, preferences and privileges senior to those of our current shareholders, which could
substantially decrease the value of our securities owned by them. Depending on the share price we are able to obtain, we may
have to sell a significant number of shares to raise the capital we deem necessary to execute our long-term strategy, and our
shareholders may experience dilution in the value of their shares as a result.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
The maximum U.S. federal income tax rate applicable to income from “qualified dividends” payable to U.S. shareholders that
are individuals, trusts and estates is currently 20%, exclusive of the 3.8% net investment income tax. Dividends payable by
REITs, however, generally are not eligible for the reduced rates applicable to qualified dividends. Although these rules do not
adversely affect the taxation of REITs, the more favorable rates applicable to regular corporate qualified dividends could cause
investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than
investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the stock of
REITs, including our common stock. However, for taxable years that begin before January 1, 2026, shareholders that are
individuals, trusts or estates are generally entitled to a deduction equal to 20% of the aggregate amount of ordinary income
dividends received from a REIT, subject to certain limitations.
17
The REIT ownership limitations and transfer restrictions contained in our articles of incorporation may restrict or prevent
certain transfers of our common stock, could have unintended antitakeover effects and may not be successful in preserving
our qualification for taxation as a REIT.
For us to remain qualified for taxation as a REIT, among other requirements, not more than 50% of the value of outstanding
shares of our capital stock may be owned, beneficially or constructively, by five or fewer individuals (as defined in the Code to
include certain entities) at any time during the last half of each taxable year beginning with our 2018 taxable year. Also, such
shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a
proportionate part of a shorter taxable year beginning with our 2018 taxable year. In addition, a person actually or
constructively owning 10% or more of the vote or value of the shares of our capital stock could lead to a level of affiliation
between the Company and one or more of its tenants that could cause our revenues from such affiliated tenants to not qualify as
rents from real property. Our articles of incorporation include certain restrictions regarding transfers of our shares of capital
stock and ownership limits that are intended to assist us in satisfying these limitations, among other purposes.
Subject to certain exceptions, our articles of incorporation prohibit any shareholder from owning, beneficially or constructively,
more than (i) 9.8% in value of the outstanding shares of all classes or series of our capital stock or (ii) 9.8% in value or number,
whichever is more restrictive, of the outstanding shares of any class or series of our capital stock. Additionally, the constructive
ownership rules for these limits are complex and groups of related individuals or entities may be deemed a single owner and
consequently in violation of the share ownership limits. As a result, the acquisition of less than 9.8% of our outstanding
common stock (or the outstanding shares of any class or series of our stock) by an individual or entity could cause that
individual or entity, or another individual or entity, to own constructively in excess of the relevant ownership limits. Any
attempt to own or transfer shares of our common stock, or of any of our other capital stock in violation of these restrictions,
may result in the shares being automatically transferred to a charitable trust or may be void. As a result, if a violative transfer
were made, the recipient of the shares would not acquire any economic or voting rights attributable to the transferred shares.
The transfer restrictions and ownership limits may prevent certain transfers of our common stock. These restrictions and limits
may not be adequate in all cases, however, to prevent our qualification for taxation as a REIT from being jeopardized, including
under the affiliated tenant rule. Furthermore, there can be no assurance that we will be able to enforce the ownership limits. If
the restrictions in our articles of incorporation are not effective and, as a result, we fail to satisfy the REIT tax rules described
above, then absent an applicable relief provision, we will fail to remain qualified for taxation as a REIT.
The ownership limits contained in our articles of incorporation may have the effect of delaying, deterring or preventing a
change of control of us that might involve a premium price for our stock or otherwise be in the best interests of our
shareholders. As a result, the overall effect of the ownership limitations and transfer restrictions may be to render more difficult
or discourage any attempt to acquire us, even if such acquisition may be favorable to the interests of our shareholders. This
potential inability to obtain a premium could reduce the price of our common stock.
Our cash distributions are not guaranteed and may fluctuate.
A REIT generally is required to distribute at least 90% of its REIT taxable income to its shareholders (determined without
regard to the dividends paid deduction and excluding any net capital gains). Generally, we expect to distribute all, or
substantially all, of our REIT taxable income, including net capital gains, so as to not be subject to the income or excise tax on
undistributed REIT taxable income. Our Board of Directors, in its sole discretion, will determine on a quarterly basis the
amount of cash to be distributed to our shareholders based on a number of factors including, but not limited to, our results of
operations, cash flow and capital requirements, economic conditions, tax considerations, borrowing capacity and other factors,
including debt covenant restrictions, that may impose limitations on cash payments and plans for future acquisitions and
divestitures. Consequently, our distribution levels may fluctuate.
18
Certain of our business activities may be subject to corporate-level income tax and other taxes, which would reduce our cash
flows, and would cause potential deferred and contingent tax liabilities.
Our TRS assets and operations are subject to U.S. federal income taxes at regular corporate rates. We also may be subject to a
variety of other taxes, including payroll taxes and state, local, and foreign income, property, transfer and other taxes on assets
and operations. In addition, we could, in certain circumstances, be required to pay an excise or penalty tax, which could be
significant in amount, to utilize one or more relief provisions under the Code to maintain qualification for taxation as a REIT.
We also could incur a 100% excise tax on transactions with a TRS, if they are not conducted on an arm’s length basis, or we
also could be subject to tax in situations and on transactions not presently contemplated. Any of these taxes would decrease our
earnings and our available cash.
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions that would
be treated as sales for U.S. federal income tax purposes.
A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. The term “prohibited transaction” generally
includes a sale or other disposition of property (including mortgage loans, but other than foreclosure property, as discussed
below) that is held primarily for sale to customers in the ordinary course of a REIT's trade or business. We might be subject to
this tax if we were to dispose of or securitize loans in a manner that was treated as a prohibited transaction for U.S. federal
income tax purposes.
We intend to conduct our operations so that no asset that we own (or are treated as owning) will be treated as, or as having
been, held for sale to customers, and that a sale of any such asset will not be treated as having been in the ordinary course of our
business. As a result, we may choose not to engage in certain sales of loans at the REIT level, and may limit the structures we
utilize for our securitization transactions, even though such sales or structures might otherwise be beneficial to us. In addition,
whether property is held “primarily for sale to customers in the ordinary course of a trade or business” depends on the particular
facts and circumstances. No assurance can be given that any property that we sell will not be treated as property held for sale to
customers, or that we can comply with certain safe-harbor provisions of the Code that would prevent such treatment. The 100%
prohibited transaction tax does not apply to gains from the sale of property that is held through a TRS or other taxable
corporation, although such income will be subject to tax in the hands of the corporation at regular corporate rates. We intend to
structure our activities to prevent prohibited transaction characterization.
The ability of our Board of Directors to revoke our REIT qualification, without shareholder approval, may cause adverse
consequences to our shareholders.
Our articles of incorporation provide that the Board of Directors may revoke or otherwise terminate our REIT election, without
the approval of our shareholders, if it determines that it is no longer in our best interests to continue to qualify as a REIT. If we
cease to be a REIT, we will not be allowed a deduction for dividends paid to shareholders in computing our taxable income, and
we will be subject to U.S. federal income tax at regular corporate rates, which may have adverse consequences on our total
return to our shareholders.
Regulatory and Legal Risks
Governmental entities have adopted or may adopt regulatory requirements that may restrict our development activity.
We are subject to laws and regulations that affect the land development process, including zoning and permitted land uses.
Government entities have adopted or may approve regulations or laws that could negatively impact the availability of land and
development opportunities. It is possible that requirements will be imposed on developers that could adversely affect our ability
to develop projects in the affected markets or could require that we satisfy additional administrative and regulatory
requirements, which could delay development progress or increase the development costs to us.
Governmental entities have adopted or may adopt regulatory requirements related to dams, reservoirs, and other water
infrastructure that may adversely affect our operations.
We are subject to inspections and regulations that apply to certain of our dams, reservoirs, and other water infrastructure.
Certain of these facilities have deficiencies noted by the State of Hawai‘i, which we are working with the regulators to resolve.
It is possible that current or future requirements imposed on landowners and dam owners/operators may require that we satisfy
additional administrative and regulatory requirements and thereby increase the holding costs to us and/or decrease the
operational utility of the subject facilities.
19
Changes to federal, state or local law or regulations, including environmental laws and regulations, may adversely affect
our business.
We are subject to federal, state and local laws and regulations, including government rate, land use, environmental, climate-
related and tax laws and regulations. Compliance or noncompliance with, or changes to, the laws and regulations governing our
business, including as a result of executive orders, could impose significant additional costs on us and adversely affect our
financial condition and results of operations. For example, our real estate-related segments are subject to numerous federal,
state and local laws and regulations, which, if changed or not complied with, may adversely affect our business.
We frequently utilize §1031 of the Code to defer taxes when selling qualifying real estate and reinvesting the proceeds in
replacement properties. This often occurs when we sell bulk parcels of land in Hawai‘i or commercial properties in Hawai‘i, all
of which typically have a very low tax basis. A repeal of, or adverse amendment to, §1031 of the Code could impose significant
additional costs on us.
The Company’s operations and properties are subject to various federal, state and local laws and regulations concerning the
protection of the environment, including Occupational Safety and Health Administration regulations; Environmental Protection
Agency regulations; and state and county permits related to our operations. Under some environmental laws, a current or
previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a
property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or
personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws
often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the
release. The presence of contamination or the failure to remediate contamination may impair the Company’s ability to sell or
lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality
including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition,
renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal
of lead paint and certain electrical equipment containing polychlorinated biphenyls (“PCBs”) and underground storage tanks are
also regulated by federal and state laws. The Company is also subject to risks associated with human exposure to chemical or
biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected
to allergic or other health effects and symptoms in susceptible individuals. The Company could incur fines for environmental
compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or tanks or
related claims arising out of environmental contamination or human exposure to contamination at or from its properties.
Identification of compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of
contamination, discovery of additional sites, human exposure to the contamination or changes in cleanup or compliance
requirements could result in significant costs to the Company. Moreover, compliance with new laws or regulations such as
those related to climate change, including compliance with “green” building codes, or more stringent laws or regulations or
stricter interpretations of existing laws may require material expenditures by the Company.
We are subject to, and may in the future be subject to, disputes, legal or other proceedings, or government inquiries or
investigations, that could have an adverse effect on us.
The nature of our business exposes us to the potential for disputes, legal or other proceedings, or government inquiries or
investigations, relating to labor and employment matters, contractual disputes, personal injury and property damage,
environmental matters, construction litigation, business practices, and other matters, as discussed in the other risk factors
disclosed in this section. These disputes could harm our business by distracting our management from the operation of our
business. If these disputes develop into proceedings, these proceedings could result in significant expenditures or losses by us.
Further, as a real estate developer, we may face warranty and construction defect claims, as described under “Risks Related to
Our Investments in Real Estate.”
Unsuccessful efforts to secure a long-term lease for delivery of irrigation water related to a 2018 agricultural land sale could
materially affect our result of operations, financial condition, and cash flows.
It is crucial to have access to sufficient, reliable and affordable sources of water in order to conduct sustainable agricultural
activity. Water availability is critical to the successful implementation of farming plans on those lands purchased from us by
Mahi Pono Holdings LLC ("Mahi Pono") in conjunction with our sale of certain agricultural landholdings on Maui. As
described in our public filings associated with that sale, as well as Note 11 – Revenue and Contract Balances of Notes to
Consolidated Financial Statements, included in Part II, Item 8 of this report, if Mahi Pono is unable to secure sufficient water to
support the agricultural plans for which it purchased the lands, this could trigger certain financial obligations.
20
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurity, and in particular cybersecurity risk management, is an important part of operations and a focus area for the
Company. Cybersecurity risks are evaluated on an ongoing basis by the Company’s Technology department, both internally and
with the assistance of external firms.
The Company engages a national security firm to improve its cybersecurity posture and keep current with evolving
cybersecurity risks. The Company’s cybersecurity program is examined on a regular basis, and new procedures and tools are
adopted on an ongoing basis to address the changing cybersecurity landscape. The Company’s technology team gauges the
effectiveness of its tools with periodic testing and evaluations.
The Company’s Board of Directors oversees the overall risk management process, including cybersecurity risks, which it
administers in part through its Audit Committee. One of the Audit Committee’s responsibilities involves reviewing the
Company’s policies regarding risk assessment and risk management, including with respect to cybersecurity risks. Risk
oversight plays a role in all major decisions of the Company’s Board of Directors, and the evaluation of risk is a key part of its
decision-making process.
Cybersecurity risks are considered as part of the risk management process across all levels of the organization but are also
facilitated through a formal process in which the Company identifies significant risks through regular discussions with
management and also develops responses and mitigating actions to address such risks. In conjunction with the Company’s
Internal Audit department, management compiles a report of significant, enterprise risks that is shared with the Company’s
Board of Directors and its Audit Committee annually or as needed. In addition, cybersecurity and information security risks are
among the matters presented by the Chief Technology Officer (“CTO”) for discussion with the Company’s Board of Directors
annually and its Audit Committee quarterly or as needed. The CTO, who reports to the Chief Financial Officer, is responsible
for leading the assessment and management of cybersecurity risks. The Company's current CTO has more than twenty-five
years of experience in IT across diverse industries, and he has designed and led the approach for the modernization of the
Company's technology platforms and security posture since 2017.
As many security threats involve social engineering, the Company has a multifaceted security training program for its
employees. Mandatory cybersecurity training classes are administered semi-annually, and a security awareness assessment is
given annually. Tests of employees’ ability to thwart attacks are run successively throughout the year, and remedial refresher
courses are required when employees fail the tests. Compliance reporting on these programs is included in the annual review
process.
The Company does not believe that any risks from cybersecurity threats to date, including as a result of any previous
cybersecurity incidents of which the Company is aware, have materially affected or are reasonably likely to materially affect
the Company, including its business strategy, results of operations, or financial conditions. Refer to the risk factor captioned,
“Security breaches through cyber attacks or intrusions, or other significant disruptions of the Company's IT networks,
communications, and related systems could impair our ability to operate, adversely affect our financial condition, and damage
our reputation,” in Part I, Item IA. “Risk Factors” for additional description of cybersecurity risks and potential related impacts
on the Company.
21
ITEM 2. DESCRIPTION OF PROPERTIES BY SEGMENT
Commercial Real Estate
Asset classes
The Company owns and operates a portfolio of improved properties within three asset classes in Hawai‘i (retail, industrial and
office). The following table presents a summary of GLA square footage ("SF") by the improved property asset class and
location as of December 31, 2024:
Oahu
Maui
Kauai
Hawai‘i
Island
Total
Retail
1,711,300
284,100
228,600
222,000
2,446,000
Industrial
1,050,500
163,600
64,600
86,700
1,365,400
Office
37,100
108,600
—
—
145,700
Total
2,798,900
556,300
293,200
308,700
3,957,100
The Company also owns 142 acres of land in Hawai‘i, primarily on Oahu and Maui, of which substantially all is leased
pursuant to urban ground leases as of December 31, 2024.
Improved properties
Most of the Company's improved retail, industrial and office properties are located on Oahu and Maui, with a smaller number
of holdings on Hawai‘i (island) and Kauai. The occupancy for the improved properties portfolio (i.e., the percentage of square
footage leased and commenced to gross leasable space at the end of the period reported, "Leased Occupancy") was 94.6% as of
December 31, 2024, and 94.7% as of December 31, 2023. For properties in the portfolio, the Company presents annualized base
rent ("ABR") for each of its improved properties on a total and per-square-foot ("PSF") basis; ABR is calculated by multiplying
the current month's contractual base rent by twelve.
22
As of December 31, 2024, the Company's commercial real estate improved property assets were as follows (dollars in
thousands, except PSF data):
Property
Island
Year Built/
Renovated
Current
GLA (SF)
Leased/Economic
Occupancy
ABR
ABR
PSF
Retail:
1
Pearl Highlands Center
Oahu
1992-1994
412,200
99.8%
99.7%
$
11,381 $
27.68
2
Kailua Retail
Oahu
1947-2014
326,200
96.3%
94.6%
12,789
41.87
3
Laulani Village
Oahu
2012
175,300
98.2%
97.5%
7,217
42.21
4
Waianae Mall
Oahu
1975
170,800
95.0%
80.9%
3,612
26.50
5
Manoa Marketplace
Oahu
1977, 2023
142,500
96.7%
94.7%
5,117
38.14
6
Queens' MarketPlace
Hawai‘i Island
2007
133,600
89.1%
81.0%
4,819
52.77
7
Kaneohe Bay Shopping Center
(Leasehold)
Oahu
1971
125,500
99.5%
98.0%
3,336
27.13
8
Hokulei Village
Kauai
2015
119,000
100.0%
97.2%
4,354
37.95
9
Pu‘unene Shopping Center
Maui
2017
118,000
78.4%
77.4%
4,811
52.69
10 Waipio Shopping Center
Oahu
1986, 2004
113,800
96.3%
96.3%
3,650
33.37
11 Aikahi Park Shopping Center
Oahu
1971, 2022
97,300
90.4%
90.4%
3,521
40.82
12 Lanihau Marketplace
Hawai‘i Island
1987
88,400
94.3%
94.3%
1,604
19.25
13 The Shops at Kukui`ula
Kauai
2009
86,000
96.7%
90.7%
4,100
53.27
14 Ho‘okele Shopping Center
Maui
2019
71,400
96.1%
96.1%
2,906
42.37
15 Kunia Shopping Center
Oahu
2004
60,600
89.3%
89.3%
2,293
42.38
16 Kahului Shopping Center
Maui
1951
49,100
84.1%
84.1%
783
18.98
17 Lau Hala Shops
Oahu
2018
46,300
98.3%
98.3%
2,661
58.53
18 Napili Plaza
Maui
1991
45,600
100.0%
100.0%
1,464
32.99
19 Gateway Mililani Mauka
Oahu
2008, 2013
34,900
91.7%
88.8%
1,985
64.08
20 Port Allen Marina Center
Kauai
2002
23,600
76.3%
72.5%
563
34.89
21 The Collection
Oahu
2017
5,900
100.0%
100.0%
358
60.68
Subtotal – Retail
2,446,000
95.2%
92.8%
$
83,324 $
37.18
Industrial:
1
Komohana Industrial Park
Oahu
1990
238,300
93.1%
93.2%
$
3,450 $
15.54
2
Kaka`ako Commerce Center
Oahu
1969
197,900
83.2%
82.1%
2,413
14.95
3
Waipio Industrial
Oahu
1988-1989
158,400
98.0%
98.0%
2,910
18.75
4
Opule Industrial
Oahu
2005-2006, 2018
151,500
100.0%
100.0%
2,706
17.86
5
P&L Warehouse
Maui
1970
104,100
94.2%
94.2%
1,633
16.64
6
Kapolei Enterprise Center
Oahu
2019
93,100
100.0%
100.0%
1,696
18.23
7
Honokohau Industrial
Hawai‘i Island
2004-2006, 2008
86,700
100.0%
100.0%
1,433
16.52
8
Waihona Industrial1
Oahu
1981-1988, 2001-
2008
81,500
100.0%
100.0%
1,588
19.49
9
Kailua Industrial / Other
Oahu
1951-1974
68,700
97.4%
95.8%
1,258
19.13
10 Port Allen Center
Kauai
1983, 1993
64,600
100.0%
100.0%
863
13.37
11 Harbor Industrial
Maui
1930
51,100
90.6%
90.6%
664
14.35
12 Kaomi Loop Industrial1
Oahu
2005
33,200
100.0%
100.0%
543
16.34
13 Kahai Street Industrial
Oahu
1973
27,900
100.0%
100.0%
407
14.60
14 Maui Lani Industrial
Maui
2010
8,400
100.0%
100.0%
160
19.05
Subtotal – Industrial
1,365,400
95.2%
95.0%
$
21,724 $
16.77
Office:
1
Kahului Office Building
Maui
1974
59,100
68.7%
56.3%
$
1,070 $
32.12
2
Gateway at Mililani Mauka South
Oahu
1992, 2006
37,100
100.0%
100.0%
1,869
50.32
3
Kahului Office Center
Maui
1991
35,800
88.5%
88.5%
1,046
32.95
4
Lono Center1
Maui
1973
13,700
49.6%
49.6%
190
33.32
Subtotal – Office
145,700
79.8%
74.7%
$
4,175 $
38.69
Total – Improved Portfolio
3,957,100
94.6%
92.9%
$ 109,223 $
29.97
1Property is currently not included in the same-store ("Same-Store") pool. The Same-Store pool excludes properties under development, and properties acquired or sold
during either of the comparable reporting periods. The Same-Store pool may also exclude properties that are fully or partially taken out of service for the purpose of
redevelopment or repositioning. Management judgment is involved in the classification of properties for exclusion from the same-store pool when they are no longer
considered stabilized due to redevelopment or other factors. Properties are moved into the Same-Store pool after one full calendar year of stabilized operation.
23
Ground leases
The Company's portfolio of commercial ground leases at December 31, 2024, was as follows (dollars in thousands):
Property Name
Location
(City, Island)
Acres
Property Type
Exp. Year
Current
ABR
1
Windward City Shopping Center
Kaneohe, Oahu
15.4
Retail
2035
$
3,886
2
Owner/Operator
Kapolei, Oahu
36.4
Industrial
2025
3,420
3
Owner/Operator
Honolulu, Oahu
9.0
Retail
2045
2,075
4
Kaimuki Shopping Center
Honolulu, Oahu
2.8
Retail
2040
2,039
5
S&F Industrial
Kahului, Maui
52.0
Industrial
2059
1,433
6
Owner/Operator
Kaneohe, Oahu
3.7
Retail
2048
1,059
7
Pali Palms Plaza
Kailua, Oahu
3.3
Office
2037
992
8
Windward Town and Country Plaza I
Kailua, Oahu
3.4
Retail
2062
963
9
Windward Town and Country Plaza II
Kailua, Oahu
2.2
Retail
2062
621
10
Kailua Post Office
Kailua, Oahu
1.2
Retail
2034
555
11
Owner/Operator
Kailua, Oahu
1.9
Retail
2034
470
12
Owner/Operator
Honolulu, Oahu
0.5
Retail
2028
394
13
Owner/Operator
Honolulu, Oahu
0.5
Retail
2028
370
14
Seven-Eleven Kailua Center
Kailua, Oahu
0.9
Retail
2033
336
15
Owner/Operator
Kahului, Maui
0.8
Retail
2026
280
16
Owner/Operator
Honolulu, Oahu
0.7
Industrial
2027
259
17
Owner/Operator
Kahului, Maui
0.8
Industrial
2025
249
18
Owner/Operator
Kahului, Maui
0.4
Retail
2027
190
19
Owner/Operator
Kailua, Oahu
0.4
Retail
2025
189
20
Owner/Operator
Kahului, Maui
0.9
Retail
2025
151
Remainder1
Various
4.8
Various
Various
938
Total - Ground Leases
142.0
$
20,869
1A portion of these properties are currently not included in the Same-Store pool. The Same-Store pool excludes properties under development, and properties acquired
or sold during either of the comparable reporting periods. The Same-Store pool may also exclude properties that are fully or partially taken out of service for the purpose
of redevelopment or repositioning. Management judgment is involved in the classification of properties for exclusion from the same-store pool when they are no longer
considered stabilized due to redevelopment or other factors. Properties are moved into the Same-Store pool after one full calendar year of stabilized operation.
Land Operations
The Company's Land Operations segment primarily consists of the Company's legacy landholdings and other legacy assets and
liabilities.
Real Estate Investments
At December 31, 2024, the Company's real estate investments related to its Land Operations segment were as follows:
(amounts in thousands, except acres data)
Acres
Carrying Value
Real estate investments
Core real estate investments
Maui Business Park II1
44
$
15,190
Non-core real estate investments
3,221
32,354
Investments in real estate joint ventures and partnerships
N/A
5,907
Total real estate investments, net
3,265
$
53,451
1 Includes 2.8 acres of existing and planned roads and easements not available for sale, and 12.5 acres under contract.
24
Core Real Estate Development-for-sale Projects
As of December 31, 2024, the Company's Land Operations segment has one remaining active, core real estate development-for-
sale project, Maui Business Park (Phase II) ("MBP II"). MBP II represents the second phase of the Company's Maui Business
Park project in Kahului, Maui, and is zoned for light industrial, retail, and office use. A summary of the Company's MBP II
project as of December 31, 2024, is as follows:
(in millions)
Project
Location
Product Type
Remaining
Sellable
Acres1
Acres Under
Contract2
Estimated
Total
Project Cost
Total Project
Costs Incurred
to Date
Maui Business Park II
Kahului, Maui
Light industrial lots
28.7
12.5
$
91
$
65
1 Remaining sellable acres may change due to updates in overall development plan that results in modification of planned roads and easements.
2 Includes 12.5 acres under contract with a delayed closing pending subdivision completion.
Sale of Legacy Businesses
In connection with the Company's simplification efforts, during the quarter ended June 30, 2022, the Company completed the
disposal of approximately 18,900 acres of primarily conservation and agricultural land on the island of Kauai and 100% of the
Company's ownership interest in McBryde Resources, Inc., the operator of hydroelectric power facilities on Kauai, to an
unrelated third party. Additionally, during the quarter ended March 31, 2023, the Company completed the sale of its ownership
interest in a legacy trucking and storage business on Maui.
ITEM 3. LEGAL PROCEEDINGS
The information set forth under the "Legal proceedings and other contingencies" section in Note 10 – Commitments and
Contingencies of Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report, is incorporated herein by
reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
25
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
The common stock of Alexander & Baldwin, Inc. ("A&B" or the "Company") is listed on the New York Stock Exchange under
the ticker symbol "ALEX". As of February 13, 2025, there were approximately 1,840 shareholders of record. In addition, Cede
& Co., which appears as a single record holder, represents the holdings of thousands of beneficial owners of the Company's
common stock.
Dividends
The Company elected to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes under the
Internal Revenue Code of 1986, as amended (the "Code"), commencing with its taxable year ended December 31, 2017. As a
REIT, the Company is generally required to distribute at least 90% of its REIT taxable income to its shareholders (determined
without regard to the dividends paid deduction and excluding any net capital gains). The Company has distributed and intends
to continue to distribute REIT taxable income, including net capital gains, to its shareholders that will enable the Company to
meet the distribution requirements applicable to REITs under the Code. The Company's Board of Directors, in its sole
discretion, will determine on a quarterly basis the amount of cash to be distributed to the Company's shareholders based on a
number of factors including, but not limited to, the Company's results of operations, cash flow and capital requirements,
economic conditions, tax considerations, borrowing capacity and other factors, including debt covenant restrictions, that may
impose limitations on cash payments and plans for future acquisitions and divestitures.
Issuer Purchases and Sales of Equity Securities
In October 2023, the Company's Board of Directors authorized the Company to repurchase up to $100.0 million of its common
stock beginning on January 1, 2024, and ending on December 31, 2025. During the quarter ended December 31, 2024, the
Company did not repurchase any shares of its common stock.
There were no unregistered equity securities sold by the Company during 2024 or 2023.
26
The graph below compares the cumulative total return on the Company’s common stock with that of the Standard & Poor's 500
Stock Index (“S&P 500”) and two industry peer group indices, FTSE Nareit All Equity REITs and FTSE Nareit Equity
Shopping Centers, from December 31, 2019, through December 31, 2024. The stock price performance graph assumes that an
investor invested $100 in each of the Company and the indices, and the reinvestment of any dividends. The comparisons in the
graph are provided in accordance with the SEC disclosure requirements and are not intended to forecast or be indicative of the
future performance of the Company's shares of common stock.
ITEM 6. RESERVED
27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward-Looking Statements
Statements in this Form 10-K that are not historical facts are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties that could cause actual results to
differ materially from those contemplated by the relevant forward-looking statements. These forward-looking statements
include, but are not limited to, statements regarding possible or assumed future results of operations, business strategies, growth
opportunities and competitive positions. Such forward-looking statements speak only as of the date the statements were made
and are not guarantees of future performance. Forward-looking statements are subject to a number of risks, uncertainties,
assumptions and other factors that could cause actual results and the timing of certain events to differ materially from those
expressed in or implied by the forward-looking statements. These factors include, but are not limited to, prevailing market
conditions and other factors related to the Company's REIT status and the Company's business, the evaluation of alternatives by
the Company related to its remaining legacy assets, and those discussed in Part I, Item 1A of this Form 10-K under the heading
"Risk Factors." The information in this Form 10-K should be evaluated in light of these important risk factors. The Company
does not undertake any obligation to update any forward-looking statements.
The risk factors discussed in "Risk Factors" could cause our results to differ materially from those expressed in forward-looking
statements. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not
expect to have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could
cause our results to differ materially from those expressed in forward-looking statements.
Introduction and Objective
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in
conjunction with the Consolidated Financial Statements and related Notes included in Part II, Item 8. Financial Statements and
Supplementary Data, of this Annual Report on Form 10-K, our Current Reports on Form 8-K and our other filings with the
Securities and Exchange Commission. This section generally discusses 2024 and 2023 items and year-to-year comparisons
between 2024 and 2023; and provides additional material information about the Company's business, recent developments and
financial condition; its results of operations at a consolidated and segment level; its liquidity and capital resources including an
evaluation of the amounts and certainty of cash flows from operations and from outside sources; and how certain accounting
principles, policies, and estimates affect its financial statements. Discussions of 2022 items and year-to-year comparisons
between 2023 and 2022 that are not included in this Form 10-K can be found in Management's Discussion and Analysis of
Financial Condition and Results of Operations in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year
ended December 31, 2023. MD&A is organized as follows:
•
Business Overview: This section provides a general description of the Company's business, as well as recent
developments that management believes are important in understanding its results of operations and financial
condition or in understanding anticipated future trends.
•
Consolidated Results of Operations: This section provides an analysis of the Company's consolidated results of
operations.
•
Analysis of Operating Revenue and Profit by Segment: This section provides an analysis of the Company's results of
operations by business segment.
•
Liquidity and Capital Resources: This section provides a discussion of the Company's liquidity, financial condition
and an analysis of its cash flows, including a discussion of the Company's ability to fund its future commitments and
ongoing operating activities in the short-term (i.e., over the next twelve months from the most recent fiscal period end)
and in the long-term (i.e., beyond the next twelve months) through internal and external sources of capital. It includes
an evaluation of the amounts and certainty of cash flows from operations and from outside sources.
•
Critical Accounting Estimates: This section identifies and summarizes the significant judgments or estimates on the
part of management in preparing the Company's consolidated financial statements that may materially impact the
Company's reported results of operations and financial condition.
Amounts in the MD&A section are rounded to the nearest thousand. Accordingly, a recalculation of totals and percentages, if
based on the reported data, may be slightly different.
28
Business Overview
Reportable segments
The Company operates two segments: Commercial Real Estate and Land Operations. A description of each of the Company's
reportable segments is as follows:
•
Commercial Real Estate ("CRE") - This segment functions as a vertically integrated real estate investment company
with core competencies in property management and in-house leasing (i.e., executing new and renegotiating renewal
lease arrangements, managing its properties' day-to-day operations and maintaining positive tenant relationships);
investments and acquisitions (i.e., identifying opportunities and acquiring properties); and construction and
development (i.e., designing and ground-up development of new properties or repositioning and redevelopment of
existing properties). The Company's preferred asset classes include improved properties in retail and industrial spaces,
and also urban ground leases. Its focus within improved retail properties, in particular, is on grocery-anchored
neighborhood shopping centers that meet the daily needs of Hawai‘i communities. Through its core competencies and
with its experience and relationships in Hawai‘i, the Company seeks to create special places that enhance the lives of
Hawai‘i residents and to provide venues and opportunities that enable its tenants to thrive. Income from this segment is
principally generated by owning, operating, and leasing real estate assets.
•
Land Operations - This segment includes the Company's legacy landholdings, joint venture investments, and liabilities
that are subject to the Company's simplification and monetization effort. Financial results from this segment are
principally derived from real estate development and unimproved land sales and joint venture activity.
Simplification strategy
As a REIT focused on Hawaii commercial real estate, the Company has pursued the monetization and disposition of legacy
assets and landholdings in order to simplify its business and allocate its capital resources to commercial real estate.
In November 2023, the Company completed the sale of its interests in Grace Pacific LLC, a materials and construction
company, Company-owned quarry land on Maui, and Grace Pacific's 50% interest in a paving company (collectively, the
"Grace Disposal Group"), marking the last major step in the Company's simplification efforts that began in 2016. The financial
results associated with the Grace Disposal Group are classified as discontinued operations in the consolidated statements of
operations and cash flows for years ended December 31, 2023 and 2022.
Related to the Land Operations segment, during the year ended December 31, 2024, the Company completed sales of
approximately 430 acres of legacy land holdings on Maui and Kauai for a total of $20.2 million. During the year ended
December 31, 2023, the Company completed sales of approximately 460 acres of legacy land holdings on Maui and Kauai for a
total of $12.3 million.
29
Consolidated Results of Operations
For an understanding of the significant factors that influenced our performance during fiscal 2024 and 2023, the following
analysis of the consolidated financial condition and results of operations of the Company and its subsidiaries should be read in
conjunction with the Consolidated Financial Statements and related Notes included in Part II, Item 8 of this Annual Report on
Form 10-K.
Favorable (Unfavorable) Change
(amounts in thousands, except percentage data and per share data)
2024
2023
$
%
Operating revenue
$
236,641 $
208,843 $
27,798
13.3 %
Cost of operations
(128,995)
(106,532)
(22,463)
(21.1) %
Selling, general and administrative
(29,822)
(34,028)
4,206
12.4 %
Impairment of assets
(256)
(4,768)
4,512
94.6 %
Gain (loss) from disposals, net
2,199
1,114
1,085
97.4 %
Operating income (loss)
79,767
64,629
15,138
23.4 %
Income (loss) related to joint ventures
4,556
1,872
2,684
143.4 %
Interest and other income (expense), net
3,023
(2,693)
5,716
NM
Interest expense
(23,169)
(22,963)
(206)
(0.9) %
Income tax benefit (expense)
(174)
(35)
(139)
4X
Income (loss) from continuing operations
64,003
40,810
23,193
56.8 %
Income (loss) from discontinued operations (net of income taxes)
(3,466)
(7,847)
4,381
55.8 %
Net income (loss)
60,537
32,963
27,574
83.7 %
(Income) loss attributable to discontinued noncontrolling interest
—
(3,151)
3,151
100.0 %
Net income (loss) attributable to A&B
$
60,537 $
29,812 $
30,725
103.1 %
Earnings per share:
Basic earnings (loss) per share - continuing operations
$
0.88 $
0.56 $
0.32
57.1 %
Basic earnings (loss) per share - discontinued operations
(0.05)
(0.15)
0.10
66.7 %
Basic earnings (loss) per share of common stock:
$
0.83 $
0.41 $
0.42
102.4 %
Diluted earnings (loss) per share - continuing operations
$
0.88 $
0.56 $
0.32
57.1 %
Diluted earnings (loss) per share - discontinued operations
(0.05)
(0.15)
0.10
66.7 %
Diluted earnings (loss) per share of common stock:
$
0.83 $
0.41 $
0.42
102.4 %
Continuing operations available to A&B common shareholders
$
63,980 $
40,704 $
23,276
57.2 %
Discontinued operations available to A&B common shareholders
(3,466)
(10,998)
7,532
68.5 %
Net income (loss) available to A&B common shareholders
$
60,514 $
29,706 $
30,808
103.7 %
Funds From Operations ("FFO")1
$
100,006 $
79,377 $
20,629
26.0 %
Adjusted FFO1
$
80,064 $
63,602 $
16,462
25.9 %
FFO per diluted share
$
1.37 $
1.09 $
0.28
25.7 %
Weighted average diluted shares outstanding (FFO)2
72,752
72,776
1 For definitions of capitalized terms and a discussion of management's use of non-GAAP financial measures and the required reconciliations of non-GAAP measures to
GAAP measures, refer to page 35.
2 May differ from figure used in the consolidated statements of operations based on differing dilutive effects for net income (loss) versus FFO/Adjusted FFO.
The causes of material changes in the consolidated statements of operations for the year ended December 31, 2024, as
compared to the year ended December 31, 2023, are described below or in the Analysis of Operating Revenue and Profit by
Segment sections below.
Operating revenue for 2024 increased 13.3%, or $27.8 million, to $236.6 million primarily due to higher revenues from the
Land Operations segment's land sales. During the current year, the Company sold approximately 430 acres of legacy land
holdings on Maui and Kauai, including an 81-acre residential-zoned parcel on Maui, as well as six development lots at Maui
Business Park and two industrial-zoned development lots on Oahu, compared to 460 acres of legacy land holdings on Maui and
Kauai and no development lots in the prior year.
30
Cost of operations for 2024 increased 21.1%, or $22.5 million, to $129.0 million, due primarily to the Land Operations
segment's higher cost of sales associated with the current year land sales.
Selling, general and administrative costs for 2024 decreased 12.4%, or $4.2 million, to $29.8 million due primarily to lower
personnel-related expenses and professional service fees.
Impairment of assets of $0.3 million during 2024 consisted of the abandonment of potential CRE development projects, and the
$4.8 million during 2023 consisted of the abandonment of potential CRE development projects and impairment of a CRE
improved property that was triggered by changes in expected holding period assumptions.
Gain (loss) on disposal of assets, net of $2.2 million for 2024 is related to the favorable resolution of contingent liabilities
related to a prior year sale of a legacy business and a gain recognized on the sale of one commercial real estate property. Gain
(loss) on disposal of assets, net of $1.1 million for 2023 was due to the sale of the Company's ownership interest in a legacy
trucking and storage business on Maui. Both of these legacy activities were part of the Land Operations segment.
Income (loss) related to joint ventures for the year ended December 31, 2024, increased 143.4%, or $2.7 million, to $4.6
million, due primarily to higher earnings from the Company's unconsolidated investment in a materials company.
Interest and other income (expense), net of $3.0 million for the year ended December 31, 2024, was due primarily to a gain on
the fair value adjustment for two forward interest rate swaps and interest income related to a note receivable that was collected
in 2024, partially offset by a one-time financing-related charge. Interest and other income (expense), net of $(2.7) million for
the year ended December 31, 2023 primarily reflected the de-designation of hedging relationships for two forward interest rate
swaps as of December 31, 2023, which resulted in the reclassification of $2.7 million of losses from Accumulated other
comprehensive income (loss).
Loss from discontinued operations (net of income taxes) of $3.5 million for the year ended December 31, 2024, relates to the
resolution of certain liabilities related to the Company's former sugar operations. Loss from discontinued operations (net of
income taxes) of $7.8 million for the year ended December 31, 2023, consists of the loss on disposal of $13.2 million related to
the sale of the Grace Disposal Group in November 2023, partially offset by $5.4 million in income from the Grace Disposal
Group operations in 2023 prior to disposal.
Income (loss) attributable to discontinued noncontrolling interest of $3.2 million for the year ended December 31, 2023, was
related to the Grace Disposal Group, which was sold in November 2023.
31
Analysis of Operating Revenue and Profit by Segment
The following analysis should be read in conjunction with the consolidated financial statements and related notes thereto.
Commercial Real Estate
Financial results
Results of operations for the years ended December 31, 2024 and 2023, were as follows:
Favorable (Unfavorable) Change
(amounts in thousands, except percentage data and acres; unaudited)
2024
2023
$
%
Commercial Real Estate operating revenue
$
197,365 $
193,971 $
3,394
1.7 %
Commercial Real Estate operating costs and expenses
(102,535)
(100,972)
(1,563)
(1.5) %
Selling, general and administrative
(5,372)
(7,008)
1,636
23.3 %
Intersegment operating revenue1
25
61
(36)
(59.0) %
Impairment of assets
(256)
(4,768)
4,512
94.6 %
Interest and other income (expense), net
184
(59)
243
NM
Commercial Real Estate operating profit (loss)
$
89,411
$
81,225 $
8,186
10.1 %
Net Operating Income ("NOI")2
$
127,478 $
123,292 $
4,186
3.4 %
Same-Store Net Operating Income ("Same-Store NOI")2
$
126,359 $
122,834 $
3,525
2.9 %
Gross Leasable Area ("GLA") in square feet ("SF") for improved
properties at end of period
3,957
3,934
23
0.6 %
Ground leases (acres at end of period)
142.0
142.0
—
— %
1 Intersegment operating revenue for Commercial Real Estate is primarily from the Land Operations segment and is eliminated in the consolidated results of
operations.
2 For a discussion of management's use of non-GAAP financial measures and the required reconciliations of non-GAAP measures to GAAP measures, refer to
page 35.
Commercial Real Estate operating revenue increased 1.7% or $3.4 million, to $197.4 million for the year ended December 31,
2024, as compared to the year ended December 31, 2023. Operating profit increased 10.1%, or $8.2 million, to $89.4 million
for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase in operating revenue
from the prior year was primarily driven by higher rents and recoveries from tenants, partially offset by lower percentage rent
revenue and higher net bad debt expense as compared to the prior year. The increase in operating profit from the prior year was
primarily driven by lower impairment of assets, higher revenues, and lower selling, general, and administrative expenses in the
current year, partially offset by higher property operating costs. For the year ended December 31, 2024, impairment of assets of
$0.3 million related to the abandonment of potential CRE development projects. For the year ended December 31, 2023,
impairment of assets of $4.8 million related to the abandonment of potential CRE development projects and changes in the
expected holding period assumptions for a CRE improved property.
Commercial Real Estate portfolio acquisitions, transfers, and dispositions
During the year ended December 31, 2024, the Company's acquisitions and dispositions of commercial real estate properties
were as follows (dollars in millions):
Acquisitions
Property
Location
Date
(Month/Year)
Purchase
Price
GLA (SF)
Waihona Industrial
Oahu
09/2024
$29.7
81,500
Dispositions
Property
Location
Date
(Month/Year)
Sales Price
GLA (SF)
Waipouli Town Center
Kauai
10/2024
$14.3
56,600
32
There were no transfers of CRE improved properties or ground lease interests in land during the year ended December 31,
2024.
Leasing activity
During the year ended December 31, 2024, the Company signed 60 new leases and 149 renewal leases for its improved
properties across its three asset classes, covering 630,300 square feet of GLA. The 60 new leases consist of 131,500 square feet
with an average annual base rent of $27.45 per-square-foot. Of the 60 new leases, 29 leases with a total GLA of 62,300 square
feet were considered comparable (i.e., leases executed for units that have been vacated in the previous 12 months for
comparable space and comparable lease terms) and, for these 29 leases, resulted in a 11.6% average base rent increase over
comparable expiring leases. The 149 renewal leases consist of 498,800 square feet with an average annual base rent of $31.04
per square foot. Of the 149 renewal leases, 126 leases with a total GLA of 375,000 were considered comparable and resulted in
a 11.7% average base rent increase over comparable expiring leases. The Company signed three new ground lease renewals
during the year ended December 31, 2024, of which one was considered comparable and resulted in a 28.8% base rent increase
over the comparable expiring lease.
Leasing activity summarized by asset class for the year ended December 31, 2024, was as follows:
Year Ended December 31, 2024
Leases
GLA (SF)
ABR2,4/SF
Rent Spread3
Retail
138
316,869
$42.82
13.5%
Industrial5
59
283,060
$16.59
7.4%
Office
12
30,391
$27.31
2.5%
Subtotal - Improved
209
630,320
$30.30
11.7%
Ground
3
N/A1
$0.6
28.8%
1 Not applicable for ground leases as such leases would not be comparable from a GLA (SF) perspective.
2Annualized Base Rent ("ABR") as is relates to new and renewal leases is the first monthly contractual base rent multiplied by 12. Base rent is presented without
consideration of percentage rent that may, in some cases, be significant.
3 Rent spread is calculated for comparable leases, a subset of the total population of leases for the period presented (described above).
4 Current ABR, in millions, is presented for ground leases.
5 During the three months ended December 31, 2024, the Company renewed a comparable industrial lease in which the leased premises includes warehouse and yard
space. Due to the yard space, GLA, ABR/SF, and rent spread are not comparable and are therefore, not presented.
Occupancy
The Company reports three types of occupancy: "Leased Occupancy," "Physical Occupancy," and "Economic Occupancy."
The Leased Occupancy percentage calculates the square footage leased (i.e., the space has been committed to by a lessee under
a signed lease agreement) as a percentage of total available improved property square footage as of the end of the period
reported.
The Physical Occupancy percentage calculates the square footage leased and commenced (i.e., measured when the lessee has
physical access to the space) as a percentage of total available improved property space at the end of the period reported.
The Economic Occupancy percentage calculates the square footage under leases for which the lessee is contractually obligated
to make lease-related payments (i.e., subsequent to the rent commencement date) to total available improved property square
footage as of the end of the period reported.
The Company's improved portfolio occupancy metrics as of December 31, 2024 and 2023, were as follows:
As of
Basis Point Change
December 31, 2024
December 31, 2023
Leased Occupancy
94.6%
94.7%
(10)
Physical Occupancy
93.7%
94.1%
(40)
Economic Occupancy
92.9%
93.0%
(10)
33
For further context, the Company's Leased Occupancy and Economic Occupancy metrics for its improved portfolio
summarized by asset class – and the corresponding occupancy metrics for a category of properties that were owned and
operated for the entirety of the prior calendar year and current period, to date ("Same-Store" as more fully described below) – as
of December 31, 2024 and 2023, were as follows:
Leased Occupancy
As of
December 31, 2024
December 31, 2023
Basis Point Change
Retail
95.2%
94.3%
90
Industrial
95.2%
96.8%
(160)
Office
79.8%
84.2%
(440)
Total Leased Occupancy
94.6%
94.7%
(10)
Economic Occupancy
As of
December 31, 2024
December 31, 2023
Basis Point Change
Retail
92.8%
92.1%
70
Industrial
95.0%
96.0%
(100)
Office
74.7%
82.8%
(810)
Total Economic Occupancy
92.9%
93.0%
(10)
Same-Store Leased Occupancy1
As of
December 31, 2024
December 31, 2023
Basis Point Change
Retail
95.2%
95.6%
(40)
Industrial
94.8%
96.7%
(190)
Office
82.9%
87.8%
(490)
Total Same-Store Leased Occupancy
94.6%
95.7%
(110)
Same-Store Economic Occupancy1
As of
December 31, 2024
December 31, 2023
Basis Point Change
Retail
92.8%
93.4%
(60)
Industrial
94.5%
95.9%
(140)
Office
77.3%
86.2%
(890)
Total Same-Store Economic Occupancy
92.8%
94.0%
(120)
1The Same-Store pool excludes properties under development, and properties acquired or sold during either of the comparable reporting periods. The Same-
Store pool may also exclude properties that are fully or partially taken out of service for the purpose of redevelopment or repositioning. Management
judgment is involved in the classification of properties for exclusion from the same-store pool when they are no longer considered stabilized due to
redevelopment or other factors. Properties are moved into the Same-Store pool after one full calendar year of stabilized operation.
Land Operations
Trends, events and uncertainties
The asset class mix of real estate sales in any given period can be diverse and may include developable subdivision lots,
undeveloped land or property sold under threat of condemnation. Further, the timing of property or parcel sales can
significantly affect operating results in a given period.
34
Operating profit reported in each period for the Land Operations segment does not necessarily follow a percentage of sales
trend because the cost basis of property sold can differ significantly between transactions. For example, the sale of undeveloped
land and vacant parcels in Hawai‘i may result in higher margins than the sale of developed property due to the low historical
cost basis of the Company's Hawai‘i landholdings.
As a result, direct year-over-year comparison of the Land Operations segment results may not provide a consistent, measurable
indicator of future performance. Further, Land Operations revenue trends, cash flows from the sales of real estate, and the
amount of real estate available for sale on the Company's consolidated balance sheet do not necessarily indicate future
profitability trends for this segment.
Financial results
Results of operations for the years ended December 31, 2024 and 2023, were as follows:
(amounts in thousands; unaudited)
2024
2023
Development sales revenue
$
18,328 $
—
Unimproved/other property sales revenue
20,265
12,325
Other operating revenue
683
2,547
Total Land Operations operating revenue
39,276
14,872
Land Operations operating costs and expenses
(26,460)
(5,560)
Selling, general and administrative
(1,310)
(1,792)
Intersegment operating charges, net1
(30)
(25)
Gain (loss) on disposal of assets, net
2,148
1,114
Earnings (loss) from joint ventures
4,556
1,872
Interest and other income (expense), net
742
349
Total Land Operations operating profit (loss)
$
18,922 $
10,830
1 Intersegment operating charges for Land Operations is primarily from the Commercial Real Estate segment and are eliminated in the consolidated results of
operations.
2024: Land Operations operating revenue of $39.3 million and operating costs and expenses of $26.5 million for the year ended
December 31, 2024, are primarily related to the sale of 430 acres of unimproved and other land holdings on Maui and Kauai for
$20.2 million, including an 81-acre residential-zoned parcel on Maui, as well as six development lots at Maui Business Park for
$10.2 million and two industrial-zoned development lots on Oahu for $8.1 million.
Land Operations operating profit of $18.9 million during the year ended December 31, 2024, is composed of the margins
resulting from land sales noted above, equity earnings from joint ventures of $4.6 million primarily related to the Company's
unconsolidated investment in a materials company, a gain from disposals of assets of $2.1 million due to the favorable
resolution of contingent liabilities related to the sale of a legacy business in a prior year, and charges related to legacy business
environmental remediation activities.
2023: Land Operations operating revenue of $14.9 million and operating costs and expenses of $5.6 million for the year ended
December 31, 2023, are primarily related to the sale of approximately 460 acres of unimproved and other land holdings on
Maui and Kauai for $12.3 million. Operating revenue and operating costs and expenses also include the Company's legacy
business activities in the Land Operations segment (primarily trucking and storage operations, prior to the disposal of the
Company's ownership interest in February 2023, and licensing and leasing of legacy lands).
Land Operations operating profit of $10.8 million for the year ended December 31, 2023, is primarily composed of the margins
resulting from land sales noted above, equity in earnings from joint ventures of $1.9 million primarily related to the Company's
unconsolidated investment in a materials company, and the gain on disposal of the Company's ownership interest in a legacy
trucking and storage business on Maui of $1.1 million.
35
Use of Non-GAAP Financial Measures
The Company uses non-GAAP measures when evaluating operating performance because management believes that they
provide additional insight into the Company's and segments' operating results, and/or the underlying business trends affecting
performance on a consistent and comparable basis from period to period. These measures generally are provided to investors as
an additional means of evaluating the performance of ongoing operations. The non-GAAP financial information presented
herein should be considered supplemental to, and not as a substitute for or superior to, financial measures calculated in
accordance with GAAP.
Funds from Operations and Adjusted Funds From Operations
FFO is presented by the Company as a widely used non-GAAP measure of operating performance for real estate companies.
FFO is computed in accordance with standards established by the National Association of Real Estate Investment Trusts
(“Nareit”) and is calculated as follows: net income (loss) available to A&B common shareholders (calculated in accordance
with GAAP), excluding (1) depreciation and amortization related to real estate, (2) gains and losses from the sale of certain real
estate assets, (3) gains and losses from change in control, (4) impairment write-downs of certain real estate assets and
investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by
the entity, and (5) income (loss) from discontinued operations related to legacy business operations.
Management believes that FFO serves as a supplemental measure to net income calculated in accordance with GAAP for
comparing its performance and operations to those of other REITs because it excludes items included in net income that do not
relate to or are not indicative of the Company’s operating and financial performance, such as depreciation and amortization
related to real estate, which assumes that the value of real estate assets diminishes predictably over time instead of fluctuating
with market conditions, and items that can make periodic or peer analysis more difficult, such as gains and losses from the sale
of CRE properties, impairment losses related to CRE properties, and income (loss) from discontinued operations. Management
believes that FFO more accurately provides an investor an indication of our ability to incur and service debt, make capital
expenditures and fund other needs.
The Company has been executing a simplification strategy to focus on the growth and expansion of its commercial real estate
portfolio in Hawai‘i by monetizing its legacy assets and operations. The sale of Grace Pacific, LLC and the Company-owned
quarry land on Maui in 2023 marked the culmination of the Company’s simplification strategy. Although the Company has
some remaining legacy assets to be monetized, investors and analysts now view the Company as a pure-play REIT. In order to
enhance comparability to other REITs, the Company provides an additional performance metric, Adjusted FFO, to further
adjust FFO to exclude the effects of certain items not related to ongoing property operations. Adjusted FFO is a widely
recognized measure of the property operations of REITs and may be more useful than FFO in evaluating the operating
performance of the Company’s properties over the long term, as well as enabling investors and analysts to assess performance
in comparison to other real estate companies.
Adjusted FFO is an additional supplemental non-GAAP measure of REITs' operating performance. It is calculated by adjusting
FFO to exclude share-based compensation, straight-line lease adjustments and other non-cash adjustments, such as amortization
of market lease adjustments, debt premium or discount and deferred financing cost amortization, maintenance capital
expenditures, leasing commissions, provision for current expected credit losses and other non-comparable and non-operating
items, including certain gains, losses, income, and expenses related to the Company’s legacy business operations and assets.
FFO and Adjusted FFO do not represent alternatives to net income calculated in accordance with GAAP and should not be
viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in
accordance with GAAP. In addition, FFO and Adjusted FFO do not represent and should not be considered alternatives to cash
generated from operating activities determined in accordance with GAAP, nor should they be used as measures of the
Company’s liquidity, or cash available to fund the Company’s needs or pay distributions. FFO and Adjusted FFO should be
considered only as supplements to net income as a measure of the Company’s performance.
The Company presents both non-GAAP measures and reconciles FFO to the most directly-comparable GAAP measure, Net
Income (Loss) available to A&B common shareholders, and FFO to Adjusted FFO. The Company's FFO and Adjusted FFO
may not be comparable to such metrics reported by other REITs due to possible differences in the interpretation of the current
Nareit definition used by such REITs. Reconciliations of net income (loss) available to A&B common shareholders to FFO and
Adjusted FFO for the years ended December 31, 2024 and 2023, are as follows (in thousands):
36
2024
2023
Net Income (Loss) available to A&B common shareholders
$
60,514
$
29,706
Depreciation and amortization of commercial real estate properties
36,077
36,490
Gain on the disposal of commercial real estate properties
(51)
—
Impairment losses - commercial real estate properties
—
2,183
(Income) loss from discontinued operations, net of income taxes
3,466
7,847
Income (loss) attributable to discontinued noncontrolling interest
—
3,151
FFO
100,006
79,377
Add (deduct) Adjusted FFO defined adjustments
Impairment losses - abandoned development costs
256
2,585
(Gain) loss on sale of legacy business1
(2,125)
(1,114)
Non-cash changes to liabilities related to legacy operations2
2,028
(3,965)
Provision for (reversal of) current expected credit losses
(628)
—
Legacy joint venture (income) loss3
(4,556)
(1,872)
(Gain) loss on fair value adjustments related to interest rate swaps
(3,675)
2,718
Non-recurring financing-related charges
2,350
—
Amortization of share-based compensation
4,795
6,081
Maintenance capital expenditures4
(15,103)
(13,651)
Leasing commissions paid
(1,272)
(1,380)
Straight-line lease adjustments
(2,736)
(5,067)
Amortization of net debt premiums or discounts and deferred financing costs
1,095
967
Favorable (unfavorable) lease amortization
(371)
(1,077)
Adjusted FFO
$
80,064
$
63,602
1 Amounts in 2024 are primarily due to the favorable resolution of contingent liabilities related to the prior year sale of a legacy business. Amounts in 2023 are related to gain on
disposal of the Company's ownership interest in a legacy trucking and storage business on Maui.
2 Primarily related to environmental reserves associated with legacy business activities in the Land Operations segment.
3 Includes joint ventures engaged in legacy business activities within the Land Operations segment.
4 Includes ongoing maintenance capital expenditures only.
Net Operating Income and Same-Store Net Operating Income
NOI is a non-GAAP measure used internally in evaluating the unlevered performance of the Company's Commercial Real
Estate portfolio. Management believes NOI provides useful information to investors regarding the Company's financial
condition and results of operations because it reflects only the contract-based income that is realizable (i.e., assuming
collectability is deemed probable) and direct property-related expenses paid or payable in cash that are incurred at the property
level, as well as trends in occupancy rates, rental rates and operating costs. When compared across periods, NOI can be used to
determine trends in earnings of the Company's properties as this measure is not affected by non-contract-based revenue (e.g.,
straight-line lease adjustments required under GAAP and amortization of lease incentives and favorable/unfavorable lease
assets/liabilities); by non-cash expense recognition items (e.g., the impact of depreciation related to capitalized costs for
improved properties and building/tenant space improvements, amortization of leasing commissions, or impairments); or by
other income, expenses, gains, or losses that do not directly relate to the Company's ownership and operations of the properties
(e.g., indirect selling, general, administrative and other expenses, as well as lease termination income and interest and other
income (expense), net). Management believes the exclusion of these items from Commercial Real Estate operating profit (loss)
is useful because it provides a performance measure of the revenue and expenses directly involved in owning and operation real
estate assets. NOI should not be viewed as a substitute for, or superior to, financial measures calculated in accordance with
GAAP.
The Company reports NOI and Occupancy on a Same-Store basis, which includes the results of properties that were owned,
operated, and stabilized for the entirety of the prior calendar year and current reporting period, year-to-date. The Same-Store
pool excludes properties under development, and properties acquired or sold during either of the comparable reporting periods.
The Same-Store pool may also exclude properties that are fully or partially taken out of service for the purpose of
redevelopment or repositioning. Management judgment is involved in the classification of properties for exclusion from the
37
same-store pool when they are no longer considered stabilized due to redevelopment or other factors. Properties are moved into
the Same-Store pool after one full calendar year of stabilized operation.
Management believes that reporting on a Same-Store basis provides investors with additional information regarding the
operating performance of comparable assets separate from other factors (such as the effect of developments, redevelopments,
acquisitions or dispositions).
The Company's methods of calculating non-GAAP measures may differ from methods employed by other companies and thus
may not be comparable to such other companies. Reconciliations of CRE operating profit (loss) to NOI for the years ended
December 31, 2024 and 2023, are as follows (in thousands):
2024
2023
CRE Operating Profit
$
89,411
$
81,225
Depreciation and amortization
36,093
36,490
Straight-line lease adjustments
(2,736)
(5,067)
Favorable (unfavorable) lease amortization
(371)
(1,077)
Termination fees and other
(347)
(90)
Interest and other (income) expense, net
(184)
59
Impairment of assets
256
4,768
Selling, general and administrative
5,356
6,984
NOI
$
127,478
$
123,292
Less: NOI from acquisitions, dispositions and other adjustments
(1,119)
(458)
Same-store NOI
$
126,359
$
122,834
38
Liquidity and Capital Resources
Overview
The Company's principal sources of liquidity to meet its business requirements and plans, both in the short-term (i.e., the next
twelve months from December 31, 2024) and long-term (i.e., beyond the next twelve months), have generally been cash
provided by operating activities; available cash and cash equivalents; and borrowing capacity under its credit facility. The
Company's primary liquidity needs for its business requirements and plans have generally been funding shareholder
distributions, known contractual obligations, and capital expenditures (including recent commercial real estate acquisitions and
real estate developments); and supporting working capital needs.
The Company's ability to retain outstanding borrowings and utilize remaining amounts available under its revolving credit
facility will depend on its continued compliance with the applicable financial covenants and other terms of the Company's notes
payable and other debt arrangements. The Company was in compliance with its financial covenants for all outstanding balances
as of December 31, 2024, and intends to operate in compliance with these covenants or seek to obtain waivers or modifications
to these financial covenants to enable the Company to maintain compliance in the future. However, due to various uncertainties
and factors outside of Management's control, the Company may be unable to continue to maintain compliance with certain of
its financial covenants. Failure to maintain compliance with its financial covenants or obtain waivers or agree to modifications
with its lenders would have a material adverse impact on the Company's financial condition.
Based on its current outlook, the Company believes that funds generated from cash provided by operating activities; available
cash and cash equivalent balances; and borrowing capacity under its credit facility will be sufficient to meet the needs of the
Company's business requirements and plans both in the short-term (i.e., the next twelve months from December 31, 2024) and
long-term (i.e., beyond the next twelve months). There can be no assurance, however, that the Company will continue to
generate cash flows at or above current levels or that it will be able to maintain its ability to borrow under its available credit
facilities. As the circumstances underlying its current outlook may change, the Company will continue to actively monitor the
situation and may take further actions that it determines is in the best interest of its business, financial condition and liquidity
and capital resources.
Known contractual obligations
A description of material contractual commitments as of December 31, 2024, is included in Note 8 – Notes Payable and Other
Debt, Note 9 – Derivative Instruments, Note 13 – Leases - The Company as a Lessee, and Note 15 – Employee Benefit Plans of
the Notes to Consolidated Financial Statements and Part II, Item 8 of this report, and is herein incorporated by reference.
In addition, contractual interest payments for Notes payable and other debt in the short-term (i.e., over the next twelve months
from December 31, 2024) and long-term (i.e., beyond the next twelve months) is estimated to be $22.5 million and
$68.5 million, respectively (includes amounts based on contractual/fixed swap interest rates applied to future principal balances
based on repayment schedules for secured and unsecured debt and also estimated interest on the revolving credit facility based
on the outstanding balance and the rates in effect as of December 31, 2024).
The Company expects that its short-term capital expenditures for contractual commitments related to development projects and
building and tenant improvements (i.e., over the next twelve months from December 31, 2024) is estimated to be $41.5 million.
The largest of such amounts pertain to contracts for one commercial real estate tenant improvement allowance for $19.7 million
and one commercial real estate development project for $10.2 million. The Company expects that its long-term capital
expenditures for contractual commitments related to development projects and building and tenant improvements (i.e., beyond
the next twelve months from December 31, 2024) is not material. Refer to Other capital resource matters below for additional
discussion of the Company's total anticipated capital expenditures for 2025.
A description of other commitments, contingencies and off-balance sheet arrangements as of December 31, 2024, is included in
Note 10 – Commitments and Contingencies of Notes to Consolidated Financial Statements, included in Part II, Item 8 of this
report, and is herein incorporated by reference.
Sources of liquidity
As noted above, one of the Company's principal sources of liquidity has been operating cash flows from continuing operations,
which were $102.1 million for the year ended December 31, 2024, primarily driven by cash generated from CRE operations
and monetization of assets within the Land Operations segment. The Company's cash flows from continuing operations
provided by operating activities for the year ended December 31, 2024, reflects an increase of $26.6 million from the prior year
amount of $75.5 million, due primarily to higher cash proceeds from unimproved and development land sales in 2024 as
39
compared to 2023. Cash proceeds from current year unimproved and development land sales increased by $14.4 million from
$7.9 million for the year ended December 31, 2023, to $22.3 million for the year ended December 31, 2024. Additionally, for
the year ended December 31, 2024, the Company collected $3.9 million in financing receivables related to unimproved and
development land sales that occurred in prior years. Total cash flows in future periods may be subject to variation from the
Land Operations segment due to the varying activity in completing development and unimproved/other property sales.
The Company's operating income (loss) and cash flows provided by operating activities is generated by its subsidiaries. There
are no material restrictions on the ability of the Company's wholly owned subsidiaries to pay dividends or make other
distributions to the Company.
The Company's other primary sources of liquidity include its cash and cash equivalents of $33.4 million as of December 31,
2024, and the Company's revolving credit and term facilities, which provide liquidity and flexibility on a short-term (i.e., the
next twelve months from December 31, 2024), as well as long-term basis. With respect to the revolving credit facility, as of
December 31, 2024, the Company had $150.0 million of borrowings outstanding, no letters of credit issued against, and
$300.0 million of available capacity (with a term through October 17, 2028, with two six-month extension options).
On August 13, 2024, the Company entered into an at-the-market equity distribution agreement, or ATM Agreement, pursuant to
which it may sell common stock up to an aggregate sales price of $200.0 million. Sales of common stock, if any, made pursuant
to the ATM Agreement may be sold in negotiated transactions or transactions that are deemed to be “at the market” offerings, as
defined in Rule 415 of the Securities Act of 1933, as amended. Actual sales will depend on a variety of factors including market
conditions, the trading price of the Company's common stock, capital needs, and the Company's determination of the
appropriate sources of funding to meet such needs. As of December 31, 2024, the Company has not sold any shares under the
at-the-market offering program, nor has any obligation to sell the shares under the at-the-market offering program.
Other uses (or sources) of liquidity
The Company may use (or, in some periods, generate) cash through various investing activities or financing activities. Cash
used in investing activities from continuing operations was $31.1 million for the year ended December 31, 2024, as compared
to cash used in investing activities from continuing operations of $27.6 million for the year ended December 31, 2023. The year
ended December 31, 2024, included capital expenditures for continuing operations of $50.8 million, which included the
purchase of a Commercial Real Estate property for $29.8 million, partially offset by $19.0 million in cash proceeds from the
disposal of a Commercial Real Estate property and two development lots. The acquisition was structured as a partial like-kind
exchange in accordance with Code §1031. The year ended December 31, 2023, included capital expenditures for continuing
operations of $31.2 million, which included the purchase of a Commercial Real Estate property for $9.5 million, partially offset
by $3.4 million in cash proceeds from the disposal of assets. The 2023 acquisition was structured as a partial like-kind
exchange in accordance with Code §1031 and also utilized involuntary conversion funds in accordance with Code §1033.
The Company primarily uses cash in investing activities for capital expenditures related to its CRE segment. For the year ended
December 31, 2024, nearly all of the Company's capital expenditures for property, plant and equipment of $50.8 million related
to the CRE segment. The Company further differentiates capital expenditures as follows (based on management's perspective
on discretionary versus non-discretionary areas of spending for its CRE business):
•
Ongoing Maintenance Capital Expenditures: Costs necessary to maintain building value, the current income stream,
and position in the market.
•
Discretionary Capital Expenditures: Property acquisition, development and redevelopment activity, and tenant
improvements to generate income and cash flow growth.
•
Capitalized Indirect Costs: Certain costs related to the development and redevelopment of real estate properties,
including: pre-construction costs; real estate taxes; insurance; construction costs; attributable interest expense; and
salaries and related costs of personnel directly involved.
40
Capital expenditures for continuing operations are summarized as follows for the years ended:
(in thousands, unaudited)
2024
2023
Capital expenditures for real estate
Ongoing maintenance capital expenditures
Building/area improvements
$
10,193
$
10,482
Tenant space improvements
4,910
3,169
Total ongoing maintenance capital expenditures for real estate
15,103
13,651
Discretionary capital expenditures
Property acquisitions
29,826
9,464
Development and redevelopment1
2,518
5,840
Tenant space improvements - nonrecurring
449
84
Total discretionary capital expenditures for real estate
32,793
15,388
Capitalized indirect costs
2,784
2,050
Total capital expenditures for real estate1
50,680
31,089
Corporate and other capital expenditures
97
61
Total Capital Expenditures1
$
50,777
$
31,150
1 Excludes capital expenditures for real estate developments to be held and sold as real estate development inventory, which are classified in the consolidated statement of cash flows
as operating activities and are excluded from the tables above.
The Company regularly evaluates investment opportunities, including development-for-hold projects, commercial real estate
acquisitions, joint venture investments, share repurchases, business acquisitions, and other strategic transactions to increase
shareholder value. In 2025, the Company expects that its capital expenditures, not including potential commercial real estate
property acquisitions, will be approximately $60.0 million - $70.0 million. Should investment opportunities in excess of the
amounts budgeted arise, the Company believes it has adequate sources of liquidity to fund these investments.
Cash used in financing activities for continuing operations was $62.0 million for the year ended December 31, 2024, a decrease
from cash used in financing activities for continuing operations of $79.8 million for the year ended December 31, 2023. Cash
used in financing activities is primarily composed of dividend payments and net proceeds from and payments of notes payable
and other debt, which totaled $65.0 million and $107.0 million during the year ended December 31, 2024, respectively.
Partially offsetting these cash outflows were net borrowings on the Company line-of-credit agreement of $113.0 million during
the year ended December 31, 2024.
Cash flows provided by and used in discontinued operations relates primarily to the Grace Disposal Group. As a result of its
disposition in the year ended December 31, 2023, cash flows related to the Grace Disposal Group will not recur. For the year
ended December 31, 2024, cash used in operating activities for discontinued operations of $4.1 million was composed of cash
outflows for the resolution of liabilities from the Company’s former sugar operations. During the same period, cash provided by
investing activities from discontinued operations of $15.0 million was from the collection in full of a promissory note issued as
part of the consideration for the Grace Disposal Group sale in 2023. During the year ended December 31, 2023, cash used in
operating, investing, and financing activities for discontinued operations, excluding the Grace Disposal Group sales proceeds,
was $8.4 million, $1.5 million, and $15.1 million, respectively, and were primarily related to funding working capital needs,
acquisition of machinery and equipment, and borrowings and payments on line-of credit-agreements.
Other capital resource matters
The Company utilizes §1031 or §1033 of the Code to obtain tax-deferral treatment when qualifying real estate assets are sold or
become subject to involuntary conversion and the resulting proceeds are reinvested in replacement properties within the
required time period. Proceeds from potential tax-deferred sales under §1031 of the Code are held in escrow (and presented as
part of Restricted cash on the consolidated balance sheets) pending future reinvestment or are returned to the Company for
general use if eligibility for tax-deferral treatment based on the required time period lapses. The proceeds from involuntary
conversions under §1033 of the Code are held by the Company until the funds are redeployed.
During the year ended December 31, 2024, the Company completed three transactions that gave rise to cash proceeds from
sales or involuntary conversion activity that qualified under §1031 or §1033 of the Code and, over the same period, completed
one acquisition utilizing eligible/available proceeds from tax-deferred sales or involuntary conversions.
41
As of December 31, 2024, the Company has no funds from tax-deferred sales that are available for use and have not been
reinvested under §1031 of the Code. In addition, the Company held no funds from tax-deferred involuntary conversions that
had not yet been reinvested under §1033 of the Code as of December 31, 2024.
Trends, events and uncertainties
General economic conditions and consumer spending patterns can negatively impact our operating results. Unfavorable local,
regional, national, or global economic developments or uncertainties, including market volatility, supply chain and labor
constraints, inflationary pressures, travel restrictions, war, natural disasters or effects of climate change, or a prolonged
economic downturn could adversely affect our business. The impact of an elevated federal funds rate for a prolonged period,
has resulted in a tightening of credit and contributed to volatility in the banking, technology, and housing industries. The
ultimate extent of the impact that these trends and events will have on the Company's business, financial condition, results of
operations and liquidity and capital resources will largely depend on future developments, including the resulting impact on
economic growth/recession, the impact on travel and tourism behavior and the impact on consumer confidence and
discretionary and non-discretionary spending, all of which are highly uncertain and cannot be reasonably predicted.
Critical Accounting Estimates
The Company’s significant accounting policies are described in Note 2 – Significant Accounting Policies of Notes to
Consolidated Financial Statements, included in Part II, Item 8 of this report. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States, upon which the MD&A is based, requires that
management exercise judgment when making estimates and assumptions about future events that may affect the amounts
reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with
certainty and actual results may differ from those critical accounting estimates. These differences could be material.
Management considers an accounting estimate to be critical if: (i) it requires assumptions to be made that were uncertain at the
time the estimate was made; and (ii) changes in the estimate, or the use of different estimating methods that could have been
selected and could have a material impact on the Company’s consolidated results of operations or financial condition. The
critical accounting estimates inherent in the preparation of the Company’s financial statements are described below.
Purchase Price Allocation of Acquired Real Estate
In accordance with Accounting Standards Codification 805, Business Combinations, acquisitions of real estate properties
generally do not meet the definition of a business and are treated as asset acquisitions. Upon the acquisition of a property,
management assesses the fair value of acquired tangible and intangible assets and liabilities (including land, buildings, tenant
improvements, above-market and below-market leases, acquired in-place leases, other identified intangible assets and assumed
liabilities) and allocates the purchase price to the acquired assets and assumed liabilities on a relative fair value basis. All
expenses related to an acquisition are capitalized and allocated among the identified assets. Generally, the most significant
portion of the allocation is to building and land, and requires the use of market-based estimates and assumptions.
In estimating the fair value of tangible and intangible assets acquired and liabilities assumed, management uses various
valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, analysis of
recent comparable sales transactions, estimates of replacement costs net of depreciation, and other available market
information. Estimates of future cash flows are based on a number of factors including historical operating results, known
trends, and market and economic conditions. Management determines capitalization rates based on recent transactions and other
market data and adjusts, if necessary, based on a property's specific characteristics. The fair value of land is generally based on
relevant market data, such as a comparison of a property's site to similar parcels that have recently been sold or are available on
the market for sale.
Acquired above-market and below-market leases are recorded at their fair values (using a discount rate that reflects the risks
associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to each in-
place lease and (2) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a
period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market
fixed rate renewal options for below-market leases. Acquired in-place lease values are recorded based on an evaluation of the
specific characteristics of each tenant’s lease. Factors to be considered include estimates of carrying costs during hypothetical
expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying
costs, real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected
lease-up periods are included in the estimate, as appropriate. In estimating costs to execute similar leases, leasing commissions,
legal and other related expenses are included, as appropriate. Management also considers an allocation of purchase price of
other acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including,
42
but not limited to, the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations
of lease renewals.
Impairment
Long-lived assets held and used, including finite-lived intangible assets, are reviewed for possible impairment when events or
circumstances indicate that the carrying value may not be recoverable. In such an evaluation, the estimated future undiscounted
cash flows generated by the asset are compared with the amount recorded for the asset to determine if its carrying value is not
recoverable. If this review determines that the recorded value will not be recovered, the amount recorded for the asset is
reduced to estimated fair value. These asset impairment analyses are highly subjective because they require management to
make assumptions and apply considerable judgments to, among other things, estimates of the timing and amount of future cash
flows, the cash flow projection period, uncertainty about future events, including changes in economic conditions, changes in
operating performance, discount rates, changes in the use of the assets and ongoing costs of maintenance and improvements of
the assets, and thus, the accounting estimates may change from period to period. If management uses different assumptions or if
different conditions occur in future periods, the Company’s financial condition or its future financial results could be materially
impacted.
Assets held for sale are carried at the lower of their carrying values or estimated fair values less costs to sell. The fair value of a
disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any
remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value.
The estimates of fair value consider matters such as contracts, the results of negotiations with prospective purchasers, broker
quotes, or recent comparable sales. These estimates are subject to revision as market conditions, and our assessment of such
conditions, change.
During the year ended December 31, 2023, one CRE improved property met the criteria for classification as held for sale. As a
result, the Company measured the property held for sale at its fair value less costs to sell and accordingly recorded impairment
of $2.2 million in 2023. Also during the years ended December 31, 2024 and 2023, the Company recorded an impairment
charge of $0.3 million and $2.6 million, respectively, related to the abandonment of potential development projects.
New Accounting Pronouncements
See Note 2 – Significant Accounting Policies of Notes to Consolidated Financial Statements, included in Part II, Item 8 of this
report, for a full description of the impact of recently issued accounting standards, which is incorporated herein by reference,
including the expected dates of adoption and estimated effects on the Company's results of operations and financial condition.
43
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to changes in interest rates, primarily as a result of its borrowing activities used to maintain liquidity
and to fund business operations. In order to manage its exposure to changes in interest rates, the Company utilizes a balanced
mix of debt maturities, along with both fixed-rate and variable-rate debt. The Company further manages its exposure to interest
rate risk through interest rate swaps on its variable-rate debt. The nature and amount of the Company’s fixed-rate and variable-
rate debt can be expected to fluctuate as a result of future business requirements, market conditions and other factors.
As of December 31, 2024, the Company’s fixed-rate debt (after the effects of interest rate swaps), excluding debt premium or
discount and debt issuance costs, consisted of $455.2 million in principal term notes and other instruments. As of December 31,
2024, the Company’s variable-rate debt under its revolving credit facilities was $20.0 million. Other than in default, the
Company does not have an obligation, nor the option in some cases, to prepay its fixed-rate debt prior to maturity and, as a
result, interest rate fluctuations and the resulting changes in fair value would not have an impact on the Company’s financial
condition or results of operations unless the Company was required to refinance such debt.
The table below summarizes the Company's estimated exposure to interest rate risk over each of the next five years and
thereafter based on the expected remaining principal obligation as of the beginning of each period and the related interest rates
based on the Company's debt obligations as of December 31, 2024 (dollars in thousands). The table has limited predictive value
as average interest rates for variable-rate debt included in the table represent rates that existed as of December 31, 2024, and are
subject to change. Furthermore, the table below incorporates only those exposures that existed as of December 31, 2024, and
does not consider exposures or positions that may arise of expire after that date.
Fair Value at
Expected Remaining Obligation as of Beginning of Year
December 31,
2025
2026
2027
2028
2029
Thereafter
2024
Liabilities
Fixed-rate debt
$ 455,184
$ 414,734
$ 345,459
$ 304,368
$ 128,062
$ 60,000
$
448,400
Weighted average interest rate on
remaining fixed-rate principal
4.63 %
4.60 %
4.70 %
4.70 %
4.75 %
6.09 %
Variable-rate debt1
$ 20,000
$ 20,000
$ 20,000
$ 20,000
$
—
$
—
$
20,000
Weighted average interest rate on
remaining variable principal2
5.48 %
5.48 %
5.48 %
5.48 %
— %
— %
Fair Value at
Expected Remaining Notional as of Beginning of Year
December 31,
2025
2026
2027
2028
2029
Thereafter
2024
Interest rate swap agreements3
Variable to fixed remaining notional
and fair value of swap asset (liability)
$ 180,877
$ 178,989
$ 177,041
$ 175,023
$ 172,942
$ 130,000
$
7,378
Average pay fixed rate
4.37 %
4.38 %
4.40 %
4.41 %
4.43 %
4.85 %
Average receive rate2
5.61 %
5.61 %
5.61 %
5.61 %
5.60 %
5.58 %
1 Estimated variable-rate principal is based on the amounts outstanding and the contractual maturity date of the revolving credit facility as of December 31,
2024. Actual principal outstanding may be greater or less than the amounts indicated.
2 Estimated interest rates on variable-rate debt are determined based on the rate in effect on December 31, 2024. Actual interest rates may be greater or less
than the amounts indicated.
3 The Company's interest rate derivatives are designated as cash flow hedges with changes in the fair value of the asset or liability recorded to accumulated
other comprehensive income. Refer to Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report, for further discussion.
As of December 31, 2023, the Company had $427.1 million of fixed-rate debt outstanding and $37.0 million of variable-rate
debt outstanding with weighted average interest rates of 4.2% and 6.5%, respectively, and the aggregate fair value of its interest
rate derivatives for variable to fixed interest rate swaps, including two forward interest rate swaps, was an asset of $1.4 million.
Also, from time to time, the Company may invest its excess cash in higher yield accounts. Such deposits may be in excess of
Federal Deposit Insurance Corporation ("FDIC") limits and are placed with high-quality institutions in order to minimize
concentration of counterparty credit risk.
With respect to exposure to changes in interest rates, the Company will continue to actively monitor the economic situation and
its impact on interest rates and may take further actions that it determines is in the best interest of its business, financial
condition and liquidity and capital resources.
44
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) ............................
45
Consolidated Balance Sheets ............................................................................................................
47
Consolidated Statements of Operations ............................................................................................
48
Consolidated Statements of Comprehensive Income (Loss) .............................................................
49
Consolidated Statements of Cash Flows ...........................................................................................
50
Consolidated Statements of Equity and Redeemable Noncontrolling Interest ..................................
52
Notes to Consolidated Financial Statements .....................................................................................
53
1.
Background and Basis of Presentation ............................................................................
53
2.
Significant Accounting Policies ......................................................................................
54
3.
Real Estate Property, Net ...............................................................................................
61
4.
Real Estate Acquisitions and Dispositions ......................................................................
62
5.
Investments in Affiliates ................................................................................................
63
6.
Other Receivables and Allowances and Other Reserves .................................................
64
7.
Fair Value Measurements ................................................................................................
65
8.
Notes Payable and Other Debt ........................................................................................
67
9.
Derivative Instruments ....................................................................................................
69
10.
Commitments and Contingencies ...................................................................................
71
11.
Revenue and Contract Balances ......................................................................................
73
12.
Leases - The Company as a Lessor .................................................................................
74
13.
Leases - The Company as a Lessee .................................................................................
75
14.
Share-based Payment Awards .........................................................................................
76
15.
Employee Benefit Plans ..................................................................................................
77
16.
Income Taxes ..................................................................................................................
80
17.
Earnings Per Share ("EPS") ............................................................................................
83
18.
Accumulated Other Comprehensive Income (Loss) .......................................................
83
19.
Segment Information.......................................................................................................
84
20.
Sale of Business ..............................................................................................................
87
21.
Held for Sale and Discontinued Operations ....................................................................
89
22.
Subsequent Events ..........................................................................................................
90
45
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Alexander & Baldwin, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Alexander & Baldwin, Inc. and subsidiaries (the
"Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income
(loss), equity and redeemable noncontrolling interest, and cash flows, for each of the three years in the period ended December
31, 2024, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of
America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 28, 2025, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Real Estate Acquisitions and Dispositions – Acquisition of Real Estate Properties— Refer to Notes 2 and 4 to the
financial statements
Critical Audit Matter Description
Acquisitions of real estate properties are evaluated to determine if they should be accounted for as asset acquisitions or business
combinations. For asset acquisitions, the Company estimates the fair value of acquired tangible assets (e.g., land, buildings, and
tenant improvements), identifiable intangible assets (e.g., in-place leases and favorable leases) and liabilities (e.g., unfavorable
leases and assumed debt) based on an evaluation of available information at the date of the acquisition. Based on these
estimates, the Company allocates the purchase consideration to the acquired assets and assumed liabilities. In estimating the fair
value of the tangible and intangible assets acquired and liabilities assumed, the Company uses various valuation methods, such
as estimated cash flow projections using appropriate discount and capitalization rates and analyzes market information such as
recent comparable sales transactions, estimates of replacement costs net of depreciation, and other available market
information. During the year ended December 31, 2024, the Company completed the acquisition of a commercial real estate
46
property for a total purchase price of $29.8 million, which included costs related to the acquisition, and accounted for this
acquisition as an asset acquisition. The purchase price for the assets acquired and the liabilities assumed was allocated to them
based on the estimated relative fair values.
We identified the acquisition of real estate properties as a critical audit matter because of the significant estimates management
makes to determine the fair value of assets acquired and liabilities assumed. This required a high degree of auditor judgment
and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to
evaluate the reasonableness of management’s valuation method used, management’s selection of discount rates and
capitalization rates, and management’s consideration of recent comparable sales transactions and other available market
information.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the acquisition of real estate properties by the Company included the following, among others:
◦
We tested the effectiveness of controls over the acquisition of real estate properties, including management’s
controls (1) over the valuation method used, (2) over the selection of discount rates and capitalization rates,
and (3) over the consideration of recent comparable sales transactions and other available market information
used in estimating the fair value of assets acquired and liabilities assumed.
◦
With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation method,
(2) discount and capitalization rates used in the valuation model, and (3) recent comparable sales transactions
and other available market information by comparing them to external market sources and testing the
mathematical accuracy of the calculation.
/s/ Deloitte & Touche LLP
Honolulu, Hawai‘i
February 28, 2025
We have served as the Company's auditor since 1950.
47
ALEXANDER & BALDWIN, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 31,
December 31,
2024
2023
ASSETS
Real estate investments
Real estate property
$
1,670,879
$
1,609,013
Accumulated depreciation
(255,641)
(227,282)
Real estate property, net
1,415,238
1,381,731
Real estate developments
46,423
58,110
Investments in real estate joint ventures and partnerships
5,907
6,850
Real estate intangible assets, net
31,176
36,298
Real estate investments, net
1,498,744
1,482,989
Cash and cash equivalents
33,436
13,517
Restricted cash
236
236
Accounts receivable, net of allowances (credit losses and doubtful accounts) of $1,701
and $2,888 as of December 31, 2024 and 2023, respectively
3,697
4,533
Goodwill
8,729
8,729
Other receivables, net of allowance (credit losses and doubtful accounts) of $2,393 and
$3,545 as of December 31, 2024 and 2023, respectively
16,696
23,601
Prepaid expenses and other assets
108,894
98,652
Assets held for sale
—
13,984
Total assets
$
1,670,432
$
1,646,241
LIABILITIES AND EQUITY
Liabilities:
Notes payable and other debt
$
474,837
$
463,964
Accounts payable
4,529
5,845
Accrued post-retirement benefits
7,582
9,972
Deferred revenue
72,462
70,353
Accrued and other liabilities
107,479
93,096
Total liabilities
666,889
643,230
Commitments and Contingencies (Note 10)
Equity:
Common stock - no par value; authorized, 225,000,000 shares; outstanding 72,633,866
and 72,447,510 shares at December 31, 2024 and 2023, respectively
1,811,582
1,809,095
Accumulated other comprehensive income (loss)
6,134
3,250
Distributions in excess of accumulated earnings
(814,173)
(809,334)
Total shareholders' equity
1,003,543
1,003,011
Total liabilities and equity
$
1,670,432
$
1,646,241
See Notes to Consolidated Financial Statements.
48
ALEXANDER & BALDWIN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
Year Ended December 31,
2024
2023
2022
Operating Revenue:
Commercial Real Estate
$
197,365 $
193,971 $
187,224
Land Operations
39,276
14,872
43,329
Total operating revenue
236,641
208,843
230,553
Operating Costs and Expenses:
Cost of Commercial Real Estate
102,535
100,972
98,717
Cost of Land Operations
26,460
5,560
34,202
Selling, general and administrative
29,822
34,028
35,869
Impairment of assets
256
4,768
—
Total operating costs and expenses
159,073
145,328
168,788
Gain (loss) on disposal of commercial real estate properties
51
—
—
Gain (loss) on disposal of assets, net
2,148
1,114
53,954
Total gain (loss) on disposal of assets, net
2,199
1,114
53,954
Operating Income (Loss)
79,767
64,629
115,719
Other Income and (Expenses):
Income (loss) related to joint ventures
4,556
1,872
1,592
Pension termination
—
—
(76,907)
Interest and other income (expense), net (Note 2)
3,023
(2,693)
399
Interest expense
(23,169)
(22,963)
(21,991)
Income (Loss) from Continuing Operations Before Income Taxes
64,177
40,845
18,812
Income tax benefit (expense)
(174)
(35)
18,252
Income (Loss) from Continuing Operations
64,003
40,810
37,064
Income (loss) from discontinued operations, net of income taxes
(3,466)
(7,847)
(86,644)
Net Income (Loss)
60,537
32,963
(49,580)
Loss (income) attributable to discontinued noncontrolling interest
—
(3,151)
(1,077)
Net Income (Loss) Attributable to A&B Shareholders
$
60,537 $
29,812 $
(50,657)
Earnings (Loss) Per Share Available to A&B Shareholders:
Basic Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders
$
0.88 $
0.56 $
0.51
Discontinued operations available to A&B shareholders
(0.05)
(0.15)
(1.21)
Net income (loss) available to A&B shareholders
$
0.83 $
0.41 $
(0.70)
Diluted Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders
$
0.88 $
0.56 $
0.50
Discontinued operations available to A&B shareholders
(0.05)
(0.15)
(1.20)
Net income (loss) available to A&B shareholders
$
0.83 $
0.41 $
(0.70)
Weighted-Average Number of Shares Outstanding:
Basic
72,606
72,559
72,636
Diluted
72,752
72,776
72,787
Amounts Available to A&B Common Shareholders (Note 17):
Continuing operations available to A&B common shareholders
$
63,980 $
40,704 $
36,875
Discontinued operations available to A&B common shareholders
(3,466)
(10,998)
(87,721)
Net income (loss) available to A&B common shareholders
$
60,514 $
29,706 $
(50,846)
See Notes to Consolidated Financial Statements.
49
ALEXANDER & BALDWIN, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands)
Year Ended December 31,
2024
2023
2022
Net Income (Loss)
$
60,537
$
32,963
$
(49,580)
Other Comprehensive Income (Loss), net of tax:
Cash flow hedges:
Unrealized interest rate derivative gain (loss)
4,100
296
4,876
Reclassification of interest rate derivative loss (gain) to interest and other income
(expense), net included in Net Income (Loss)
—
2,718
(497)
Reclassification adjustment to interest expense included in Net Income (Loss)
(1,764)
(1,680)
469
Employee benefit plans:
Actuarial gain (loss)
534
109
17,021
Amortization of net loss included in net periodic benefit cost
—
—
1,941
Settlement recognition of net loss (gain)
14
—
—
Amortization of prior service credit included in net periodic benefit cost
—
—
91
Pension termination
—
—
76,907
Income taxes related to other comprehensive income (loss)
—
—
(18,295)
Other comprehensive income (loss), net of tax
2,884
1,443
82,513
Comprehensive Income (Loss)
63,421
34,406
32,933
Comprehensive (income) loss attributable to discontinued noncontrolling interest
—
(3,151)
(1,077)
Comprehensive Income (Loss) Attributable to A&B Shareholders
$
63,421
$
31,255
$
31,856
See Notes to Consolidated Financial Statements.
50
ALEXANDER & BALDWIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
Year Ended December 31,
2024
2023
2022
Cash Flows from Operating Activities:
Net income (loss)
$
60,537
$
32,963
$
(49,580)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Loss (income) from discontinued operations
3,466
7,847
86,644
Depreciation and amortization
36,312
36,791
38,022
Provision for (reversal of) credit losses
(628)
—
—
Deferred income taxes
—
—
(18,091)
Loss (gain) from disposals, net
(2,199)
(1,114)
(53,950)
Impairment of assets
256
4,768
4,966
Loss (gain) on de-designated interest rate swap valuation adjustment
(3,675)
2,718
—
Share-based compensation expense
4,795
6,081
4,913
Loss (income) related to joint ventures, net of operating cash distributions
(1,179)
(1,822)
(883)
Pension termination
—
—
76,907
Changes in operating assets and liabilities:
Trade and other receivables
35
120
(3,858)
Prepaid expenses and other assets
(424)
(894)
(1,749)
Development/other property inventory
6,464
(3,474)
10,489
Accrued post-retirement benefits
(1,841)
(5)
(27,101)
Accounts payable
(1,047)
1,130
778
Accrued and other liabilities
1,239
(9,622)
(333)
Operating cash flows from continuing operations
102,111
75,487
67,174
Operating cash flows from discontinued operations
(4,120)
(8,395)
(33,218)
Net cash provided by (used in) operations
97,991
67,092
33,956
Cash Flows from Investing Activities:
Capital expenditures for acquisitions
(29,826)
(9,464)
—
Capital expenditures for property, plant and equipment
(20,951)
(21,686)
(21,683)
Proceeds from disposal of assets
18,955
3,439
73,089
Payments for purchases of investments in affiliates and other investments
(306)
(342)
(522)
Distributions of capital and other receipts from investments in affiliates and other investments
1,013
451
68
Investing cash flows from continuing operations
(31,115)
(27,602)
50,952
Investing cash flows from discontinued operations
15,000
34,705
(6,396)
Net cash provided by (used in) investing activities
(16,115)
7,103
44,556
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable and other debt
60,000
—
—
Payments of notes payable and other debt and deferred financing costs
(166,994)
(35,082)
(23,175)
Borrowings (payments) on line-of-credit agreement, net
113,000
25,000
(38,000)
Cash dividends paid
(64,980)
(64,265)
(57,724)
Repurchases of common stock and other payments
(2,983)
(5,403)
(7,264)
Financing cash flows from continuing operations
(61,957)
(79,750)
(126,163)
Financing cash flows from discontinued operations
—
(15,101)
11,011
Net cash provided by (used in) financing activities
(61,957)
(94,851)
(115,152)
Cash, Cash Equivalents, Restricted Cash, and Cash included in Assets Held for Sale
Net increase (decrease) in cash, cash equivalents, restricted cash, and cash included in
assets held for sale
19,919
(20,656)
(36,640)
Balance, beginning of period
13,753
34,409
71,049
Balance, end of period
$
33,672
$
13,753
$
34,409
51
ALEXANDER & BALDWIN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(amounts in thousands)
Year Ended December 31,
2024
2023
2022
Other Cash Flow Information:
Interest paid, net of capitalized interest, for continuing operations
$
22,125
$
22,638
$
21,407
Interest paid, net of capitalized interest, for discontinued operations
$
—
$
553
$
210
Income tax (payments)/refunds, net
$
31
$
(17)
$
1,014
Noncash Investing and Financing Activities from continuing operations:
Capital expenditures included in accounts payable and accrued and other liabilities
$
21,738
$
2,122
$
327
Operating lease liabilities arising from obtaining ROU assets
$
—
$
—
$
677
Finance lease liabilities arising from obtaining ROU assets
$
152
$
1,728
$
2,585
Dividends declared but unpaid at end of period
$
17,032
$
16,758
$
16,290
Increase (decrease) in escrow and other receivables from dispositions
$
3,250
$
15,000
$
862
Noncash Investing and Financing Activities from discontinued operations:
Capital expenditures included in liabilities associated with assets held for sale
$
—
$
—
$
112
Operating lease liabilities arising from obtaining ROU assets
$
—
$
—
$
20,211
Finance lease liabilities arising from obtaining ROU assets
$
—
$
—
$
1,079
Reconciliation of cash, cash equivalents, restricted cash, and cash included in assets held
for sale:
Beginning of the period:
Cash and cash equivalents
$
13,517
$
33,262
$
65,417
Restricted cash
236
998
1,015
Cash included in assets held for sale
—
149
4,617
Cash, cash equivalents, restricted cash, and cash included in assets held for sale
$
13,753
$
34,409
$
71,049
End of the period:
Cash and cash equivalents
$
33,436
$
13,517
$
33,262
Restricted cash
236
236
998
Cash included in assets held for sale
—
—
149
Cash, cash equivalents, restricted cash, and cash included in assets held for sale
$
33,672
$
13,753
$
34,409
See Notes to Consolidated Financial Statements.
52
ALEXANDER & BALDWIN, INC.
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
(amounts in thousands, except per share data)
Total Equity
Common Stock
Accumulated
Other
Comprehensive
Income (Loss)
(Distribution
in Excess of
Accumulated
Earnings)
Earnings
Surplus
Total
Redeemable
Non-
Controlling
Interest
Shares
Stated Value
Balance, January 1, 2022
72,543
$ 1,810,542
$
(80,706)
$
(663,159) $ 1,066,677
$
6,904
Net income (loss)
—
—
—
(50,657)
(50,657)
1,082
Other comprehensive income (loss), net of tax
—
—
82,513
—
82,513
—
Dividend on common stock ($0.83 per share)
—
—
—
(60,833)
(60,833)
—
Share-based compensation
—
4,913
—
—
4,913
—
Shares issued (repurchased), net
(80)
(7,054)
—
146
(6,908)
—
Balance, December 31, 2022
72,463
$ 1,808,401
$
1,807
$
(774,503) $ 1,035,705
$
7,986
Net income (loss)
—
—
—
29,812
29,812
3,151
Other comprehensive income (loss), net of tax
—
—
1,443
—
1,443
—
Dividend on common stock ($0.8825 per
share)
—
—
—
(64,617)
(64,617)
—
Disposal of subsidiary
—
—
—
—
—
(9,952)
Distributions to noncontrolling interest
—
—
—
—
—
(1,185)
Share-based compensation
—
6,081
—
—
6,081
—
Shares issued (repurchased), net
(15)
(5,387)
—
(26)
(5,413)
—
Balance, December 31, 2023
72,448
$ 1,809,095
$
3,250
$
(809,334) $ 1,003,011
$
—
Net income (loss)
—
—
—
60,537
60,537
—
Other comprehensive income (loss), net of
tax
—
—
2,884
—
2,884
—
Dividend on common stock ($0.8925 per
share)
—
—
—
(65,254)
(65,254)
—
Share-based compensation
—
4,795
—
—
4,795
—
Shares issued (repurchased), net
186
(2,308)
—
(122)
(2,430)
—
Balance, December 31, 2024
72,634
$ 1,811,582
$
6,134
$
(814,173) $ 1,003,543
$
—
See Notes to Consolidated Financial Statements.
53
Alexander & Baldwin, Inc.
Notes to Consolidated Financial Statements
1.
Background and Basis of Presentation
Description of Business: Alexander & Baldwin, Inc. ("A&B" or the "Company") is a fully integrated real estate investment trust
("REIT") headquartered in Honolulu, Hawai‘i, whose history in Hawai‘i dates back to 1870. Over time, the Company has
evolved from a 571-acre sugar plantation on Maui to become one of Hawai‘i's premier commercial real estate companies and
the owner of the largest grocery-anchored, neighborhood shopping center portfolio in the state. As of December 31, 2024, the
Company owns a portfolio of commercial real estate improved properties in Hawai‘i consisting of 21 retail centers, 14
industrial assets and four office properties, representing a total of four million square feet of gross leasable area, as well as 142
acres of commercial land in Hawai‘i, of which substantially all is leased pursuant to urban ground leases.
The Company operates in two segments: Commercial Real Estate and Land Operations. A description of each of the Company's
reportable segments is as follows:
•
Commercial Real Estate ("CRE") - This segment functions as a vertically integrated real estate investment company
with core competencies in property management and in-house leasing (i.e., executing new and renegotiating renewal
lease arrangements, managing its properties' day-to-day operations and maintaining positive tenant relationships);
investments and acquisitions (i.e., identifying opportunities and acquiring properties); and construction and
development (i.e., designing and ground-up development of new properties or repositioning and redevelopment of
existing properties). The Company's preferred asset classes include improved properties in retail and industrial spaces,
and also urban ground leases. Its focus within improved retail properties, in particular, is on grocery-anchored
neighborhood shopping centers that meet the daily needs of Hawai‘i communities. Through its core competencies and
with its experience and relationships in Hawai‘i, the Company seeks to create special places that enhance the lives of
Hawai‘i residents and to provide venues and opportunities that enable its tenants to thrive. Income from this segment is
principally generated by owning, operating, and leasing real estate assets.
•
Land Operations - This segment includes the Company's legacy landholdings, joint venture investments, and liabilities
that are subject to the Company's simplification and monetization effort. Financial results from this segment are
principally derived from real estate development and unimproved land sales and joint venture activity.
Basis of Presentation and Principles of Consolidation: The accompanying Consolidated Financial Statements are prepared in
accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") as outlined in the Financial
Accounting Standard Board ("FASB") Accounting Standards Codification (the "Codification" or "ASC"), and are presented in
our reporting and functional currency, the U.S. dollar. The Codification is the single source of authoritative accounting
principles applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP.
The consolidated financial statements include the accounts of the Company (including all wholly-owned subsidiaries), as well
as all other entities in which the Company has a controlling financial interest. Intercompany transactions and balances have
been eliminated in consolidation. Significant investments in businesses, partnerships, and limited liability companies in which
the Company does not have a controlling financial interest, but the Company has the ability to exercise significant influence,
are accounted for using the equity method.
A controlling financial interest in an entity may be established (i) through the Company holding a majority voting interest or (ii)
if the Company is the primary beneficiary of an entity that qualifies as a variable interest entity ("VIE"), as defined in the
Codification. The Company evaluates all partnerships, joint ventures and other arrangements with variable interests to
determine if the entity or arrangement qualifies as a VIE. VIEs are entities where investors lack sufficient equity at risk for the
entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one
of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic
performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the
entity. If the entity or arrangement qualifies as a VIE and the Company is determined to be the primary beneficiary, the
Company is required to consolidate the assets, liabilities, and results of operations of the VIE. The Company reevaluates
whether an entity is a VIE as needed (i.e., when assessing reconsideration events that result in changes in the factors mentioned
above) as part of determining if the consolidation or equity method treatment remains appropriate. As of December 31, 2024,
the Company had an interest in various unconsolidated joint ventures that the Company accounts for using the equity
method. Obligations of the Company's joint ventures do not have recourse to the Company and the Company's maximum
exposure is limited to its investment.
54
Use of Estimates: The preparation of the consolidated financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the amounts reported. Estimates and assumptions are used for, but not limited to: (i)
asset impairments, including intangible assets and goodwill, (ii) purchase price allocations with respect to commercial real
estate asset acquisitions, (iii) litigation and contingencies, (iv) postretirement benefits, (v) recoverable amounts of accounts and
other receivables, (vi) valuation of derivatives and their effectiveness as hedges, (vii) income taxes, and (viii) valuation of
market-based and performance-based restricted stock units. Future results could be materially affected if actual results differ
from these estimates and assumptions.
Rounding: Amounts in the consolidated financial statements and notes are rounded to the nearest thousand. Accordingly, a
recalculation of some per-share amounts and percentages, if based on the reported data, may result in differences.
Discontinued Operations: In November 2023, the Company completed the sale of its interests in Grace Pacific LLC ("Grace
Pacific"), a materials and construction company, Company-owned quarry land on Maui, and Grace Pacific's 50% interest in a
paving company (collectively, the “Grace Disposal Group”). The financial results associated with the Grace Disposal Group are
classified as discontinued operations in the consolidated statements of operations and cash flows for the years ended December
31, 2023 and 2022. Refer to Note 21 – Held for Sale and Discontinued Operations for additional information. All footnotes
exclude discontinued operations unless otherwise noted.
Reclassifications: Certain amounts presented in the prior year have been reclassified to conform to the current year presentation
(e.g., captions previously presented in the prior years that, in the currently presented periods, are less than five percent of total
assets or total liabilities were combined in the current year consolidated balance sheets). Operating lease right-of-use assets,
which was previously reported separately on the consolidated balance sheets, is now presented in Prepaid expenses and other
assets for all periods presented. Operating lease liabilities and Liabilities associated with assets held for sale, which were
previously reported separately on the consolidated balance sheets, are now presented in Accrued and other liabilities for all
periods presented.
Segment Reclassifications: The Company continually monitors its reportable segments for changes in facts and circumstances
to determine whether changes in the identification or aggregation of operating segments are necessary. Refer to Note 19 –
Segment Information for additional information.
2.
Significant Accounting Policies
Real estate property, net: Real estate property, net primarily represents long-lived physical assets associated with the CRE
segment's leasing activity (e.g., improved property leases and ground leases); it also includes landholdings and related assets in
the Land Operations segment that the Company holds for either possible future development or future monetization as part of
its simplification strategy. The balance primarily consists of land, buildings, and improvements and is recorded at cost, net of
accumulated depreciation.
Expenditures for additions, improvements, and other enhancements to real estate properties are capitalized, and minor
replacements, maintenance, and repairs that do not improve or extend asset lives are charged to expense as incurred. When
assets related to real estate properties are retired or otherwise disposed of, the related cost and accumulated depreciation is
removed from the accounts and any resulting gain or loss is included in results of operations for the respective period.
Certain costs are capitalized related to the development and redevelopment of real estate properties, including pre-construction
costs; real estate taxes; insurance; construction costs; attributable interest expense; and salaries and related costs of personnel
directly involved. Additionally, the Company makes estimates as to the probability of certain development and redevelopment
projects being completed. If the Company determines the development or redevelopment is no longer probable of completion,
the Company expenses all capitalized costs which are not recoverable. Cash flows related to capitalized costs are classified as
investing activities in the consolidated statements of cash flows.
Acquisitions of real estate properties: Acquisitions of real estate properties are evaluated to determine if they should be
accounted for as asset acquisitions or business combinations (acquisitions of real estate properties are generally considered
asset acquisitions). Under asset acquisition accounting, the Company estimates the fair value of acquired tangible assets (e.g.,
land, buildings, and tenant improvements), identifiable intangible assets (e.g., in-place leases and favorable leases) and
liabilities (e.g., unfavorable leases and assumed debt) based on an evaluation of available information at the date of the
acquisition. Based on these estimates, the purchase consideration is allocated to the acquired assets and assumed liabilities.
Transaction costs incurred during the acquisition process are capitalized as a component of the purchase consideration. Upon
the closing of a business combination, after identifying all tangible and intangible assets and liabilities, the excess consideration
paid over the fair value of the assets and liabilities acquired and assumed, respectively, represents goodwill and transaction
costs are expensed as incurred.
55
In estimating the fair value of the tangible and intangible assets acquired and liabilities assumed, the Company considers
information obtained about each property as a result of its due diligence and marketing and leasing activities and uses various
valuation methods, such as estimated cash flow projections using appropriate discount and capitalization rates, analysis of
recent comparable sales transactions, estimates of replacement costs net of depreciation, and other available market
information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.
Values for favorable leases acquired and unfavorable leases assumed are estimated based on the present value (using a discount
rate reflecting the risks associated with leases acquired) of the difference between: (i) the contractual amounts to be paid
pursuant to the leases negotiated and in-place at the time of acquisition and (ii) management’s estimate of fair market lease rates
for the property or an equivalent property, measured over a period equal to the remaining term of the lease for favorable leases
and the initial term plus the estimated term of any below-market, fixed-rate renewal options for unfavorable leases. The assets
recognized and liabilities assumed are amortized to revenue over the related lease term plus renewal options the lessee is
reasonably certain to exercise, as appropriate.
The purchase price is further allocated to in-place lease values and tenant relationship values based on management's evaluation
of the specific characteristics of the acquired lease portfolio and the Company's overall relationship with the anchor tenants.
Such amounts are amortized to expense over the remaining lease term.
Real estate developments: Real estate developments represent certain costs capitalized and presented in the Land Operations
segment that relate to (i) active real estate development projects and other land intended for sale or (ii) potential future real
estate development projects intended for lease that would be part of future CRE segment operations. For potential future real
estate development projects intended for lease, when management with the relevant authority has approved expenditures for
activities clearly associated with the development and construction of a CRE segment project, the capitalized costs associated
with such project (e.g., historical cost of land and any land improvement) will be included in Real estate property, net in the
accompanying consolidated balance sheets.
Certain costs capitalized relating to active real estate development projects intended for sale may include pre-construction costs
(e.g., costs related to land acquisition); construction costs (e.g., grading, roads, water and sewage systems, landscaping and
project amenities); direct overhead costs (e.g., insurance and real estate taxes); capitalized interest; and salaries and related
costs of personnel directly involved.
For development projects, capitalized costs are allocated using the direct method for expenditures that are specifically
associated with the unit being sold and the relative-sales-value method for expenditures that benefit the entire project. Direct
overhead costs incurred after the development project is substantially complete and ready to be marketed are charged to selling,
general and administrative expense as incurred. All indirect overhead costs are charged to selling, general and administrative
costs as incurred.
Cash flows related to active real estate development projects and other land intended for sale are classified as operating
activities in the consolidated statements of cash flows.
Capitalized Interest: Interest costs on developments, major redevelopments, and other projects that meet certain criteria are
capitalized as part of real estate development and redevelopment projects that have not yet been placed into service.
Capitalization of interest commences when development activities and expenditures begin and end when the asset is
substantially complete and ready for its intended use or ready to be marketed.
Depreciation and Amortization: Depreciation and amortization is computed using the straight-line method over the estimated
useful lives of the assets. Estimated useful lives of property are as follows:
Classification
Range of Life (in years)
Building and improvements
10 to 40
Leasehold improvements
Lesser of useful life or lease term
Water, power and sewer systems
5 to 50
Machinery and equipment
2 to 35
Other property improvements
3 to 35
Intangible Assets: Real estate intangible assets are included in Real estate intangible assets, net in the accompanying
consolidated balance sheets and are generally related to the acquisition of commercial real estate properties. In the event a lease
or leases with a tenant have been, or are expected to be, terminated early, the Company evaluates the remaining useful lives of
depreciable or amortizable assets of the associated assets related to the lease terminated (i.e., tenant improvements, above and
below market lease intangibles, in-place lease value and leasing commissions). Based upon consideration of the facts and
56
circumstances surrounding the termination, the Company may accelerate the depreciation and amortization of such associated
assets.
Cash and Cash Equivalents: Cash equivalents consist of highly liquid investments with a maturity of three months or less at the
date of purchase. The Company carries these investments at cost, which approximates fair value.
Restricted Cash: The Company's restricted cash is related to cash held in trust for a self-funded workers compensation policy.
Allowance for Credit Losses: The Company estimates its allowance for credit losses for financial assets, primarily accounts
receivable and notes receivable, which are included in accounts receivable and other receivables on the consolidated balance
sheets, within the scope of ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326"). The allowance for credit losses
are deducted from the respective financial asset's amortized cost basis on the consolidated balance sheets.
The general allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist for
multiple financial instruments. If similar risk characteristics do not exist, the Company measures the general allowance for
credit losses on an individual instrument basis. The determination of whether a particular financial instrument should be
included in a pool can change over time. If a financial asset’s risk characteristics change, the Company evaluates whether it is
appropriate to continue to keep the financial instrument in its existing pool or evaluate it individually. The Company develops
expected credit loss estimates for an asset or pool of assets by factoring historical loss information; information on both current
conditions and reasonable and supportable forecasts of future conditions that may not be reflected in historical loss information;
and other relevant credit quality information for the respective assets.
For financial instruments where the borrower is experiencing financial difficulty based on the Company’s assessment at the
reporting date and the repayment is expected to be provided substantially through the sale of the collateral, the Company may
elect to use as a practical expedient the fair value of the collateral at the reporting date when determining the provision for
credit losses. In accordance with the practical expedient approach, the provision for credit loss is the difference between the fair
value of the underlying collateral, less costs to sell, and the carrying value of the respective loan. The fair value of the
underlying collateral is determined by using methods such as discounted cash flow, the market approach, or direct capitalization
approach. The key unobservable inputs used to determine the fair value of the underlying collateral may vary depending on the
information available and market conditions as of the valuation date. If any portion of a loan balance is deemed uncollectible,
that amount is written-off.
Financing receivables are placed on nonaccrual status when management determines that the collectibility of contractual
amounts is not reasonably assured. When a financing receivable is designated as nonaccrual, interest is only recognized as
income when payment has been received. Generally, the Company returns a financing receivable to accrual status when all
delinquent payments become current under the terms of the applicable agreement and collectibility of the remaining contractual
payments is reasonably assured.
Allowance for Doubtful Accounts: Allowances for doubtful accounts are established by management based on estimates of
collectability. Estimates of collectability are principally based on an evaluation of the current financial condition of the
Company’s customers and their payment history, which are regularly monitored by the Company.
Other receivables, net: Other receivables, net are primarily composed of notes receivable recorded at cost less allowances for
credit losses.
Goodwill: The Company reviews goodwill for impairment at the reporting unit level annually or more frequently if events or
changes in circumstances indicate potential impairment. The first step in testing goodwill for impairment is to perform a
qualitative assessment to determine if events or circumstances have occurred that indicate it is more likely than not that the fair
value of the assets of the reporting unit, including goodwill, are less than their carrying values. If, after assessing the totality of
events or circumstances, it is determined that it is more likely than not that the fair value of a reporting unit is greater than the
carrying amount, then a quantitative goodwill impairment test is not performed. If the qualitative assessment does not indicate
that it is more likely than not that the fair value of a reporting unit is greater than the carrying amount, then a quantitative
goodwill impairment test is performed by comparing the fair value of the reporting unit to its carrying value, including the
associated goodwill.
The fair value of a reporting unit is estimated using an income approach that is based on a discounted cash flow analysis. The
discounted cash flow approach relies on a number of assumptions, including future macroeconomic conditions, market factors
specific to the reporting unit, the amount and timing of estimated future cash flows to be generated by the business over an
extended period of time and a discount rate that considers the risks related to the amount and timing of the cash flows, among
others. The Company classifies these fair value measurements as Level 3. If the results of the Company's test indicates that a
57
reporting unit's estimated fair value is less than its carrying value, an impairment charge is recognized for the amount by which
the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that
reporting unit.
The Company's goodwill balance as of December 31, 2024 and 2023, was $8.7 million and is attributable to the CRE reporting
unit, which is also a reportable segment.
Assets and Liabilities Held for Sale: Assets and liabilities to be disposed of by sale ("disposal groups") are reclassified as held
for sale when all the held for sale criteria have been met and are included in Assets held for sale and Accrued and other
liabilities on our consolidated balance sheets, respectively. Generally, disposal groups are classified as held for sale when they
are under contract for sale and the applicable due diligence period has expired prior to the end of the reporting period. Disposal
groups are measured at the lower of carrying value or fair value less costs to sell and are not depreciated or amortized. The fair
value of a disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any
remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value.
Assets and liabilities associated with one CRE improved property were reclassified as held for sale in the consolidated balance
sheet as of December 31, 2023. This property was sold in 2024. As of December 31, 2024, the Company had no assets and
liabilities classified as held for sale.
Self-Insured Liabilities: The Company is self-insured for certain losses that include, but are not limited to, workers’
compensation, general liability, real and personal property, and real estate construction warranty and defect claims. When
feasible, the Company obtains third-party insurance coverage to limit its exposure to these claims. When estimating its self-
insured liabilities, the Company considers a number of factors, including historical claims experience, demographic factors, and
valuations provided by independent third-parties.
Redeemable Noncontrolling Interest: The Company had a 70% ownership interest in GLP Asphalt through its ownership of
Grace Pacific, which was sold in November 2023. The noncontrolling interest in GLP Asphalt was eligible for redemption for
cash at the option of the noncontrolling interest holder at a redemption value, which was derived from a specified formula in the
GLP Asphalt operating agreement (i.e., other than fair value).
Noncontrolling interests in subsidiaries that are redeemable for cash or other assets outside of the Company’s control at other
than fair value are classified as mezzanine equity, outside of equity and liabilities. Such amounts are adjusted at each reporting
date to the higher of (1) the amount resulting from the initial carrying amount, increased or decreased for cumulative amounts
of the noncontrolling interest holder's share of net income or loss, share of other comprehensive income or loss and dividends
and (2) the redemption value on each annual balance sheet date. The resulting changes in the carrying value, increases or
decreases, are recorded with corresponding adjustments against earnings surplus or, in the absence of earnings surplus, common
stock.
Fair Value Measurements: ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), as amended, establishes a
fair value hierarchy, which requires the Company to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. The hierarchy places the highest priority on unadjusted quoted market prices in
active markets for identical assets or liabilities (Level 1 measurements) and assigns the lowest priority to unobservable inputs
(Level 3 measurements). The three levels of inputs within the hierarchy are defined as follows:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities,
quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market
data.
Level 3: Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market
participants would use in pricing an asset or liability.
If the technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy, the lowest level of
significant input determines the placement of the entire fair value measurement in the hierarchy.
Revenue Recognition and Leases - The Company as a Lessor: Sources of revenue for the Company primarily include leasing of
commercial real asset assets and sales of real estate development and unimproved land. The Company generates revenue from
its two distinct segments:
58
Commercial Real Estate: The Commercial Real Estate segment owns, operates, leases, and manages a portfolio of retail, office,
and industrial properties in Hawai‘i; it also leases urban land in Hawai‘i to third-party lessees. Commercial Real Estate revenue
is recognized under lease accounting guidance with the Company as lessor.
The Company reviews its contracts to determine if they qualify as a lease. A contract is determined to be a lease when the right
to substantially all of the economic benefits and to direct the use of an identified asset is transferred to a customer over a
defined period of time for consideration. During this review, the Company evaluates among other items, asset specification,
substitution rights, purchase options, operating rights and control over the asset during the contract period.
The Company has lease agreements with lease and non-lease components, which are generally accounted for separately under
ASC Topic 606, Revenue from Contracts with Customers. The Company has elected the practical expedient to not separate non-
lease components from lease components for all classes of underlying assets where the component follows the same timing and
pattern as the lease component and the lease component is classified as an operating lease. Non-lease components included in
rental revenue primarily consist of tenant reimbursements for common area maintenance and other services paid for by the
lessor and utilized by the lessee. Under the practical expedient, the Company accounts for the single, combined component
under leasing guidance as the lease component is the predominant component in the contract.
Rental revenue is primarily derived from operating leases and, therefore, is generally recognized on a straight-line basis over
the term of the lease. Fixed contractual payments from the Company's leases are recognized on a straight-line basis over the
terms of the respective leases. Straight-line rental revenue commences when the customer assumes control of the leased
premises. The accrued straight-line receivable represents the amount by which straight-line rental revenue exceeds rents
currently billed in accordance with lease agreements. Certain of the Company's lease agreements include terms for contingent
rental revenue (e.g., percentage rents based on tenant sales volume) and tenant reimbursed property operating costs, which are
both accounted for as variable payments.
Certain of the Company's leases include termination and/or extension options. Termination options allow the customer to
terminate the lease prior to the end of the lease term under specific circumstances. The Company's extension options, which are
exercised at the lessee's discretion, contain rent at fixed rates or require a re-negotiation at market rates. Initial direct costs,
primarily commissions, related to the leasing of properties are capitalized on the balance sheet and amortized over the lease
term. All other costs to negotiate or arrange a lease are expensed as incurred.
Accounts receivable related to leases are regularly evaluated for collectability, considering factors including, but not limited to,
the credit quality of the customer, historical trends of the customer, and changes in customer payment terms. Upon
determination that the collectability of a customer receivable is not probable, the Company will reverse the receivable and any
accrued straight-line receivable and record a corresponding reduction of revenue previously recognized. Subsequent revenue is
recorded on a cash basis until collectability on related billings becomes probable. Upon determination that portions of a tenant's
receivables are not probable of collection (e.g., due to current conditions impacting specific amounts), the Company will record
an allowance for doubtful accounts for the recorded operating lease receivable and record a corresponding adjustment of
revenue previously recognized.
Land Operations: Revenues from the Land Operations segment are principally derived from real estate development and
unimproved land sales. Revenues from real estate sales are recognized at the point in time when control of the underlying goods
is transferred to the customer and the payment is due (generally on the closing date).
On a consolidated basis, in addition to disclosing amounts recorded as contract assets or contract liabilities in its consolidated
balance sheets, the Company discloses information about the amount of contract consideration allocated to either wholly
unsatisfied or partially satisfied performance obligations (see Note 11 – Revenue and Contract Balances). Related to this
disclosure, the Company has elected to not disclose information about the amount of contract consideration allocated to
remaining performance obligations for certain contracts that have original expected durations of one year or less. This may
occur with contracts for sales of real estate that are executed as of the end of the period with control of the underlying assets to
be transferred to the customer subsequent to the end of the period. The closing date of such transactions will generally occur
within one year or less of the contract execution date.
Leases - The Company as Lessee: The Company determines if an arrangement is a lease at inception by considering whether
that arrangement conveys the right to use an identified asset for a period of time in exchange for consideration. The Company
evaluates whether a lease is a finance or operating lease using the criteria established in ASC Topic 842, Leases. Right-of-use
assets (ROU assets) and lease liabilities related to operating leases are included in Prepaid expenses and other assets and
Accrued and other liabilities, respectively, in the Company's consolidated balance sheets. ROU assets and lease liabilities
related to finance leases are included in Real estate property, net and Notes payable and other debt, respectively, in the
Company's consolidated balance sheets. Operating lease expense is recognized on a straight-line basis over the lease term.
59
Finance lease ROU assets are amortized on a straight-line basis over the shorter of the useful life of the asset or the lease term
or using the useful life of the asset if the financing lease contains a purchase option that is reasonably certain to be exercised.
Interest expense on the finance lease liability is recognized using the effective interest rate method and is presented within
Interest expense in the Company’s consolidated statements of operations.
ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the
obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement
date based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an
implicit rate and are not readily determinable, the Company uses its incremental borrowing rate based on the estimated rate of
interest for collateralized borrowing over a similar term of the lease payments at commencement date. ROU assets also include
any lease payments made at or before the commencement date and excludes any lease incentives received. Lease terms may
include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
In connection with its application of the lease guidance, the Company has evaluated the lease and non-lease components within
its leases where it is the lessee and has elected, for all classes of underling assets, the practical expedient to present lease and
non-lease components in its lease agreements as one component. The Company has also elected, for all classes of underlying
assets, to not recognize lease liabilities and lease assets for leases with a term of 12 months or less.
Impairment of Long-Lived Assets Held and Used and Finite-Lived Intangible Assets: Long-lived assets held and used, including
finite-lived intangible assets, are reviewed for possible impairment when events or circumstances indicate that the carrying
value may not be recoverable. In such an evaluation, the estimated future undiscounted cash flows generated by the asset are
compared with the amount recorded for the asset to determine if its carrying value is not recoverable. If this review determines
that the recorded value will not be recovered, the amount recorded for the asset is reduced to estimated fair value. In evaluating
the fair value of long-lived asset groups, significant estimates and considerable judgments are involved. These long-lived asset
impairment analyses are highly subjective because they require management to make assumptions and apply considerable
judgments to, among other things, estimates of the timing and amount of future cash flows, the cash flow projection period,
uncertainty about future events, including changes in economic conditions, changes in operating performance, changes in the
use of the assets and ongoing costs of maintenance and improvements of the assets, appropriate discount rates based on the
perceived risks, and thus, the accounting estimates may change from period to period. Refer to Note 7 – Fair Value
Measurements for further discussion.
Impairment of Investments in Affiliates: The Company reviews its investments in unconsolidated affiliates accounted for under
the equity method for impairment whenever there are any indicators that the value may be impaired or that its carrying value
may not be recoverable. To the extent indicators suggest that a loss in value may have occurred, the Company will evaluate
both quantitative and qualitative factors to determine if the loss in value is other than temporary. If a potential loss in value is
determined to be other than temporary, the Company will recognize an impairment loss measured as the excess of the carrying
value of the investment over the estimated fair value, which is recorded in impairment loss in the consolidated statement of
operations. Significant estimates are involved in estimating fair value that are highly subjective and include considerable
judgment, including the Company's current and future evaluation of general economic and market conditions, estimates
regarding the timing and amount of future cash flows, including revenue, and cost of sales, and appropriate discount rates based
on the perceived risks, among others. Changes in these and other assumptions could affect the fair value of the unconsolidated
affiliate. The Company classifies these fair value measurements as Level 3.
Share-Based Compensation: The Company records compensation expense for all share-based payment awards made to
employees and directors. The Company’s various equity plans are more fully described in Note 14 – Share-based Payment
Awards.
Employee Benefit Plans: The Company provides a wide range of benefits to current employees, including a defined
contribution plan and health and welfare benefits, as well as post-employment benefits to qualified retired employees. The
Company records amounts relating to certain benefit plans based on various actuarial assumptions, including, but not limited to
discount rates, assumed rates of return, assumed salary increases, health care cost rate trends, and significant demographic
assumptions. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions
based on current economic conditions and trends. The Company believes that the assumptions utilized in recording obligations
under the Company’s plans, which are presented in Note 15 – Employee Benefit Plans, are reasonable based on its experience
and on advice from its independent actuaries; however, differences in actual experience or changes in the assumptions may
materially affect the Company’s financial position or results of operations.
60
Interest and other income (expense), net for the years ended December 31, 2024, 2023, and 2022, included the following (in
thousands):
2024
2023
2022
Post-retirement benefit (expense)
$
(426)
$
(526)
$
(621)
Interest income
2,191
431
280
Gain (loss) on fair value adjustments related to interest rate swaps
3,675
—
—
Financing charges
(2,350)
—
—
Reclassification of interest rate derivative gain (loss) from Accumulated Other
Comprehensive Income (Loss)
—
(2,718)
497
Other income (expense), net
(67)
120
243
Interest and other income (expense), net
$
3,023
$
(2,693) $
399
Income Taxes: The Company makes certain estimates and judgments in determining income tax expense for financial statement
purposes. These estimates and judgments are applied in the calculation of tax credits, tax benefits and deductions, and in the
calculation of certain deferred tax assets and liabilities, which arise from differences in the timing of recognition of revenue and
expense for tax and financial statement purposes. Deferred tax assets and deferred tax liabilities are adjusted to the extent
necessary to reflect tax rates expected to be in effect when the temporary differences reverse. Adjustments may be required to
deferred tax assets and deferred tax liabilities due to changes in tax laws and audit adjustments by tax authorities. To the extent
adjustments are required in any given period, the adjustments would be included within the tax provision in the accompanying
consolidated statements of operations. The Company records a valuation allowance to reduce its deferred tax assets to an
amount it believes is more-likely-than-not to be realized. Changes in the valuation allowance would be included within the tax
provision in the period of adjustment. Refer to Note 16 – Income Taxes for further discussion.
Discontinued Operations: The Company reports disposal groups as discontinued operations in the consolidated statements of
operations when the criteria are met. The Company's loss from discontinued operations for the year ended December 31, 2024
primarily relates to the resolution of cessation related claim liabilities associated with the Company's former sugar operations.
The Company’s loss from discontinued operations for the years ended December 31, 2023 and 2022, included net loss on
disposition, revenues, and expenses associated with the Grace Disposal Group, in addition to expenses associated with the
resolution of liabilities from the Company’s former sugar operations. The results of operations are presented as discontinued
operations in the consolidated statements of operations. Refer to Note 21 – Held for Sale and Discontinued Operations for
additional information.
Earnings Per Share (“EPS”): Basic and diluted earnings per share are computed and disclosed in accordance with ASC Topic
260, Earnings Per Share. The Company utilizes the two-class method to compute earnings available to common shareholders.
Under the two-class method, earnings are adjusted by accretion amounts to redeemable noncontrolling interests recorded at
redemption value. The adjustments represent in-substance dividend distributions to the noncontrolling interest holder as the
holder has a contractual right to receive a specified amount upon redemption. As a result, earnings are adjusted to reflect this in-
substance distribution that is different from other common shareholders. In addition, the Company allocates net earnings to
each class of common stock and participating security as if all of the net earnings for the period had been distributed. The
Company's participating securities consist of time-based restricted unit awards that contain a non-forfeitable right to receive
dividends and, therefore, are considered to participate in earnings with common shareholders. Basic earnings per common share
excludes dilution and is calculated by dividing net earnings allocated to common shares by the weighted-average number of
common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable
to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential
dilutive effect of non-participating share-based awards.
61
Recently adopted accounting pronouncements
In November 2023, the FASB issued ASU No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through enhanced
disclosures about significant segment expenses. In addition, the amendments in the ASU enhance interim disclosure
requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new
segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. ASU
2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after
December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The
Company adopted ASU 2023-07 during the fourth quarter of 2024. The adoption of this standard did not have a material
impact on the Company's financial position or results of operations and did not have a significant impact on its disclosures
(refer to Note 19 – Segment Information).
Recently issued accounting pronouncements
In October 2023, the FASB issued ASU No. 2023-06 ("ASU 2023-06"), Disclosure Improvements - Codification Amendment in
Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU modified the disclosure and presentation
requirements of a variety of codification topics by aligning them with the SEC’s regulations. The amendments to the various
topics should be applied prospectively, and the effective date will be determined for each individual disclosure based on the
effective date of the SEC’s removal of the related disclosure. If the SEC has not removed the applicable requirements from
Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. Early adoption is prohibited. The
Company does not expect the amendments of this accounting standard update to have a material impact on its consolidated
financial statements and related disclosures.
In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income
Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate
reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15,
2024, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting
standard update on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03 ("ASU 2024-03"), Income Statement - Reporting Comprehensive
Income - Expense Disaggregation Disclosures. This ASU requires a public business entity to disclose specific information
about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. The objective
of the disclosure requirements is to provided disaggregated information about a public business entity's expenses to help
investors (a) better understand the entity's performance, (b) better assess the entity's prospects for future cash flows, and (c)
compare an entity's performance over time and with that of other entities. ASU 2024-03 is effective for annual periods
beginning after December 15, 2026, on either a prospective basis to financial statements issued for reporting periods after the
effect date, or on a retrospective basis to any or all prior periods presented in the financial statements. Early adoption is
permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial
statements and related disclosures.
3.
Real Estate Property, Net
Real estate property, net as of December 31, 2024 and 2023, includes the following (in thousands):
2024
2023
Land
$
787,242 $
781,129
Buildings
764,803
736,550
Other property improvements
118,834
91,334
Subtotal
1,670,879
1,609,013
Accumulated depreciation
(255,641)
(227,282)
Real estate property, net
$
1,415,238 $
1,381,731
As noted in Note 2 – Significant Accounting Policies, the Company may capitalize a portion of interest costs incurred to long-
lived assets for developments, major redevelopments and other projects that meet certain criteria. Total interest costs incurred
were $23.5 million, $23.5 million, and $22.5 million in 2024, 2023, and 2022, respectively. Capitalized interest costs related to
development activities were $0.3 million, $0.5 million, and $0.5 million in 2024, 2023, and 2022, respectively.
Depreciation expense for the years ended December 31, 2024, 2023, and 2022, was $29.9 million, $29.2 million, and $29.4
million, respectively.
62
4.
Real Estate Acquisitions and Dispositions
Acquisitions
The following table summarizes our real estate acquisition activity for the years ended December 31, 2024 and 2023, which
were accounted for as asset acquisitions (dollars in thousands). There was one acquisition for each of the years ended December
31, 2024 and 2023.
2024
2023
Number of properties acquired1
1
1
Contract price
$
29,666 $
9,475
Total price of acquisitions2
$
29,826 $
9,464
1 The 2024 acquisition was structured as a partial like-kind exchange in accordance with Code §1031. The 2023 acquisition was
structured as a partial like-kind exchange in accordance with Code §1031 and also utilized involuntary conversion funds in accordance
with Code §1033.
2 Total price of acquisition includes transaction costs and closing costs and credits.
The aggregate purchase price of the assets acquired during the years ended December 31, 2024 and 2023, was allocated as
follows (in thousands):
Fair value of assets acquired
2024
2023
Assets acquired:
Land
$
8,723 $
3,032
Property and improvements
20,978
6,058
In-place leases
1,051
374
Total assets acquired
$
30,752 $
9,464
Liabilities assumed:
Unfavorable leases
$
926 $
—
Total liabilities assumed
926
—
Net assets acquired
$
29,826 $
9,464
As of the acquisition dates, the weighted-average amortization periods of in-place leases was approximately 12.8 years and 10.0
years for assets acquired during the years ended December 31, 2024 and 2023, respectively.
Dispositions
There was one disposition for the year ended December 31, 2024, related to the one retail property within the Commercial Real
Estate segment that was classified as held for sale as of December 31, 2023. There were no dispositions for the year ended
December 31, 2023. The following table summarizes our real estate disposition activity for the year ended December 31, 2024
(dollars in thousands).
2024
Number of properties disposed
1
Contract Price
$
14,250
Gain/(loss) on disposal1
$
51
1As of December 31, 2023, this property met the criteria for classification as held for sale and accordingly, was measured at
its fair value less costs to sell, resulting in an impairment charge of $2.2 million for the year ended December 31, 2023. The
Company recognized a gain on disposal of $0.1 million when the property was sold during the year ended December 31,
2024.
63
Intangible assets, net
Real estate intangible assets, net and other intangible assets included in Prepaid expenses and other assets as of December 31,
2024 and 2023, were as follows (in thousands):
2024
2023
In-place leases
$
73,624
$
73,786
Favorable leases
14,363
15,049
Accumulated amortization of in-place leases
(47,544)
(43,637)
Accumulated amortization of favorable leases
(9,267)
(8,900)
Real estate intangible assets, net
$
31,176
$
36,298
Other intangible assets
$
594
$
594
Accumulated amortization of other intangible assets
(594)
(594)
Other intangible assets, net
$
—
$
—
Total intangible asset amortization expense was $5.8 million, $7.1 million, and $8.1 million for the years ended December 31,
2024, 2023, and 2022, respectively. Estimated amortization expenses related to intangible assets over the next five years are as
follows (in thousands):
Estimated
Amortization
2025
$
5,332
2026
3,776
2027
3,585
2028
2,785
2029
2,486
5.
Investments in Affiliates
The Company has investments in affiliates through its Land Operations segments. The Company's investments in affiliates
consist of equity investments in limited liability companies that operate or develop real estate and joint ventures that engage in
materials-related activities and renewable energy. The Company does not have a controlling financial interest, but has the
ability to exercise significant influence over the operating and financial policies of these investments and, accordingly, accounts
for its investments using the equity method of accounting. Operating results presented in the Company's consolidated
statements of operations include the Company's proportionate share of net income (loss) from its equity method investments.
The Company’s carrying value of investments in affiliates totaled $39.0 million and $38.5 million as of December 31, 2024 and
2023, respectively, which is recorded in Investments in real estate joint ventures and partnerships and within Prepaid expenses
and other assets on the Consolidated Balance Sheets. The amounts of the Company’s investment as of December 31, 2024 and
2023, that represent undistributed earnings of investments in affiliates was approximately $9.3 million and $7.9 million,
respectively. Dividends and distributions from unconsolidated affiliates totaled $4.4 million in 2024, $0.5 million in 2023, and
$0.8 million in 2022. During the three years ended December 31, 2024, 2023, and 2022, Income (loss) related to joint ventures
was $4.6 million, $1.9 million and $1.6 million, respectively, and return on investment operating cash distributions was $3.4
million, $0.1 million and $0.7 million, respectively.
A summary of combined assets and liabilities reported by such entities accounted for by the equity method as of December 31,
2024 and 2023, were as follows (in thousands):
2024
2023
Current assets
$
55,793
$
63,615
Non-current assets
183,976
259,727
Total assets
$
239,769
$
323,342
Current liabilities
$
29,840
$
39,520
Non-current liabilities
95,326
143,686
Total liabilities
$
125,166
$
183,206
64
A summary of combined operating results reported by such entities accounted for by the equity method for each of the years
ended December 31, 2024, 2023, and 2022, were as follows (in thousands):
2024
2023
2022
Revenues
$
159,656 $
154,423
$
129,968
Operating costs and expenses
138,747
137,431
118,397
Gross Profit (Loss)
$
20,909 $
16,992
$
11,571
Income (Loss) from Continuing Operations1
$
12,139
$
(1,528)
$
1,589
Net Income (Loss)1
$
12,139
$
(1,528)
$
1,325
1Includes earnings from equity method investments held by the investee.
6.
Other Receivables and Allowances and Other Reserves
Other Receivables
The following table is a summary of the Company's other receivables (in thousands):
December 31,
2024
December 31,
2023
Financing receivables
$
15,859
$
24,344
Other receivables1
3,230
2,802
Other receivables, gross
19,089
27,146
Less: Allowance for credit losses
(2,393)
(3,545)
Other receivables, net of allowances
$
16,696
$
23,601
1 Escrow receivables primarily related to the Land Operations segment.
Allowances and Other Reserves
The Company reduces recorded amounts for accounts receivable and other financial assets included in other receivables by
various allowances and reserve accounts. The following table presents the balances and activity (including reclassifications) in
the various allowance and reserve accounts related to the Company's accounts receivable and financial assets included in other
receivables for the three years ended December 31, 2024, 2023, and 2022, (in thousands):
Allowance for
Credit Losses
for Financing
Receivables
Secured by
Real Estate
Allowance for
Credit Losses
for Tenant
Related
Financing
Receivables
Total
Allowance for
Credit Losses
for Financing
Receivables
Allowance for
Doubtful
Accounts on
Accounts
Receivable
Balance, January 1, 2022
$
2,474 $
— $
2,474 $
770
Provision (release) - charged against income
178
—
178
234
Write-offs or other - charged against allowance1
—
—
—
1,443
Balance, December 31, 2022
$
2,652 $
— $
2,652 $
2,447
Provision (release) - charged against income
262
(218)
44
754
Write-offs or other - charged against allowance1
—
849
849
(313)
Balance, December 31, 2023
$
2,914 $
631 $
3,545 $
2,888
Provision (release) - charged against income
(1,359)
375
(984)
139
Write-offs or other - charged against allowance1
—
(168)
(168)
(1,326)
Balance, December 31, 2024
$
1,555 $
838 $
2,393 $
1,701
1 Write-offs or other activity (e.g., reclassifications of fully reserved balances from cash basis treatment).
Refer to Note 12 – Leases - The Company as a Lessor for discussion on current period charges related to the Company's
assessment of collectability on amounts due under leases. Note that under ASC Topic 842, Leases, such charges and reserve
activity reflect a reversal of the revenue and receivable balance originally recorded.
The allowance for credit losses for financing receivables related to collateral-dependent receivables are from the sales of
unimproved legacy property, development parcels, or commercial real estate assets that involve a financing component. The
collectability of each of the financing receivables is assessed each reporting period using specific information, including among
other factors, the credit quality of the counterparties in the transactions, as well as reasonable and supportable forecasts of
future conditions that impact the collectability of the receivable.
65
The allowance for credit losses for financing receivables related to the Commercial Real Estate segment notes receivables from
tenants are from to rent relief arrangements with existing tenants and delinquent rent from terminated tenants. The Company
evaluates the collectability of the Commercial Real Estate notes receivable each reporting period based on a combination of
credit quality indicators, including, but not limited to, payment status, historical loan charge-offs, and financial strength of the
borrower and guarantors.
Included below is a summary of the amortized cost basis of our financing receivables, included in other receivables, and credit
quality indicator, summarized by year of origination, as well as a summary of our gross write offs by year of origination (in
thousands):
Year of Origination
Balance as of
2024
2023
2022
2021
2020
Prior
December 31, 2024
Secured
$ 10,974 $
2,483
$
—
$
— $
— $
1,555
$
15,012
Unsecured
453
—
302
30
62
—
847
Total notes receivable
$ 11,427
$
2,483
$
302
$
30 $
62 $
1,555
$
15,859
Year-to-date gross write-offs
—
—
50
—
118
—
168
7.
Fair Value Measurements
Recurring Fair Value Measurements
The Company records its interest rate swaps at fair value. The fair values of the Company's interest rate swaps are classified as
Level 2 measurements in the fair value hierarchy and are based on the estimated amounts that the Company would receive or
pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related
observable inputs (refer to Note 9 – Derivative Instruments for fair value information regarding the Company's derivative
instruments).
The following tables present the fair value of those assets and (liabilities) measured on a recurring basis as of December 31,
2024 and 2023, (in thousands):
Fair Value Measurements at
December 31, 2024
Consolidated Balance Sheet
Location
Total
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Derivative financial instruments - interest
rate swaps
Prepaid expenses and other assets
$
7,378
$
—
$
7,378 $
—
Fair Value Measurements at
December 31, 2023
Consolidated Balance Sheet
Location
Total
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Derivative financial instruments - interest
rate swaps
Prepaid expenses and other assets
$
4,142
$
—
$
4,142 $
—
Liabilities
Derivative financial instruments - interest
rate swaps
Accrued and other liabilities
$
(2,718) $
—
$
(2,718) $
—
66
Non-Recurring Fair Value
Certain financial and nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair
value adjustments in certain circumstances, such as when there is evidence of impairment. The Company’s process for
identifying and recording impairment is discussed in Note 2 – Significant Accounting Policies.
Impairment of Long-lived Assets Held and Used and Finite-Lived Intangible Assets: During the years ended December 31, 2024
and 2023, the Company did not recognize any impairment of long-lived assets held and used or finite-lived intangible assets.
The Company classifies these fair value measurements as Level 3 in the fair value hierarchy because they involve significant
unobservable inputs such as cash flow projections, discount rates, and management assumptions.
Impairment of Assets Held for Sale: As of December 31, 2023, one CRE improved property met the criteria for classification as
held for sale and accordingly, was measured at its fair value less costs to sell, resulting in an impairment charge of $2.2 million
for the year ended December 31, 2023. The property was sold during the year ended December 31, 2024. The Company
classifies these fair value measurements as Level 3 in the fair value hierarchy because they are determined using significant
unobservable inputs such as management assumptions about expected sales proceeds from third parties.
The following tables present quantitative information about the significant unobservable inputs used to determine the fair value
of long-lived assets held and used and assets held for sale, net for the year ended December 31, 2023, (in thousands):
Level 3 Fair Value Measurements
Total
Total Gains
(Losses)
Valuation Technique/
Unobservable Inputs
Weighted
Average
Discount Rate
December 31, 2023
Assets held for sale, net1,2
$
14,209
$
(2,183)
Contract value
N/A
Total
$
14,209
$
(2,183)
1 Assets or liabilities are presented in Assets held for sale or Accrued and other liabilities, respectively, in the Consolidated Balance Sheets. Impairment loss related to the
CRE improved property recognized in 2023 is presented in Impairment of Assets in the Consolidated Statements of Operations.
2 Consists of assets held for sale related to the CRE improved property of $14.0 million, net of liabilities associated with assets held for sale of $0.1 million, and excludes
estimated selling costs of $0.3 million.
Abandoned development costs: During the years ended December 31, 2024 and 2023, the Company recorded an impairment
charge of $0.3 million and $2.6 million, respectively, related to the abandonment of potential CRE development projects, which
is presented in Impairment of assets in the Consolidated Statements of Operations.
Financial Assets and Liabilities not Measured at Fair Value
Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash and cash
equivalents, restricted cash, accounts and notes receivable, net and notes payable and other debt. The fair value of the
Company's cash and cash equivalents, restricted cash, accounts receivable, net and short-term borrowings approximate their
carrying values due to the short-term nature of the instruments, which is classified as Level 1 measurement in the fair value
hierarchy.
The fair value of the Company's notes receivable approximated the carrying amount of $13.1 million and $20.8 million as of
December 31, 2024 and 2023. The fair value of these notes is estimated using a discounted cash flow analysis in which the
Company uses unobservable inputs such as market interest rates determined by the loan-to-value and market capitalization rates
related to the underlying collateral at which management believes similar loans would be made, and is classified as a Level 3
measurement in the fair value hierarchy.
At December 31, 2024, the carrying amount of the Company's notes payable and other debt was $474.8 million and the
corresponding fair value was $468.4 million. At December 31, 2023, the carrying amount of the Company's notes payable and
other debt was $464.0 million and the corresponding fair value was $452.5 million. The fair value of debt is calculated by
discounting the future cash flows of the debt at rates based on instruments with similar risk, terms and maturities as compared
to the Company's existing debt arrangements, and is classified as a Level 3 measurement in the fair value hierarchy.
67
8.
Notes Payable and Other Debt
As of December 31, 2024 and 2023, Notes payable and other debt consisted of the following (in thousands):
Principal Outstanding
Debt
Interest Rate (%)
Maturity Date
December 31, 2024
December 31, 2023
Secured:
Laulani Village
3.93%
2024
$
—
$
57,798
Pearl Highlands
4.15%
2024
—
75,137
Photovoltaic Financing
(1)
(1)
3,932
4,073
Manoa Marketplace
(2)
2029
50,877
52,705
Subtotal
$
54,809
$
189,713
Unsecured:
Series A Note
5.53%
2024
—
7,125
Series J Note
4.66%
2025
10,000
10,000
Series B Note
5.55%
2026
18,000
27,000
Series C Note
5.56%
2026
7,000
9,000
Series F Note
4.35%
2026
7,250
9,650
Series H Note
4.04%
2026
50,000
50,000
Series K Note
4.81%
2027
34,500
34,500
Series G Note
3.88%
2027
15,625
22,125
Series L Note
4.89%
2028
18,000
18,000
Series I Note
4.16%
2028
25,000
25,000
Term Loan 5
4.30%
2029
25,000
25,000
Series M Note
6.09%
2032
60,000
—
Subtotal
$
270,375
$
237,400
Revolving Credit Facilities:
A&B Revolver
(3)
2028
(4)
150,000
37,000
Subtotal
$
150,000
$
37,000
Total debt (contractual)
$
475,184
$
464,113
Unamortized debt issuance costs
(347)
(149)
Total debt (carrying value)
$
474,837
$
463,964
(1) Financing leases have a weighted average discount rate of 4.74% and maturity dates ranging from 2027 to 2029
(2) Loan has a stated interest rate of SOFR plus 1.35%. Loan is swapped through maturity to a 3.14% fixed rate.
(3) Loan has a stated interest rate of SOFR plus 1.05% based on pricing grid, plus a SOFR adjustment of 0.10%. Beginning May 1, 2024, $57.0 million is swapped through maturity
to a 4.78% fixed rate. Beginning December 9, 2024, $73.0 million is swapped through maturity to a 4.73% fixed rate.
(4) A&B Revolver has two six-month optional term extensions.
The Company's notes payable and other debt is categorized between debt instruments secured by real estate improved
properties or other assets ("Secured Debt"), unsecured notes payable and other term loans ("Unsecured Debt") and borrowings
under revolving credit facilities ("Revolving Credit Facilities") which includes the existing revolving credit facility used for
general Company purposes ("A&B Revolver").
Secured Debt
Laulani Village: In connection with asset acquisitions of commercial real estate improved properties made in the year ended
December 31, 2018, the Company assumed a $62.0 million mortgage loan secured by Laulani Village that matured on May 1,
2024, and had an interest rate of 3.93%. The loan was paid in full on May 1, 2024.
Pearl Highlands: In connection with the acquisition of Pearl Highlands Center in September 2013, the Company assumed a
$59.3 million mortgage loan secured by the property. In December 2014, the loan was refinanced to increase the amount of the
loan to $92.0 million (bearing interest at 4.15%). The loan was paid in full on December 9, 2024.
Manoa Marketplace: In 2016, the Company, through wholly-owned subsidiaries, entered into a $60.0 million mortgage loan
agreement secured by Manoa Marketplace with First Hawaiian Bank ("FHB"). The loan bears interest at a LIBOR-based rate,
plus 1.35% and requires principal and interest payments over the term with a final principal payment of $41.7 million due on
August 1, 2029. In 2023, the Company entered into a note modification agreement with FHB which transitioned the interest
rate on the Manoa Marketplace mortgage loan from LIBOR to a benchmark based on SOFR effective August 1, 2023. All other
terms of the agreement remain substantially unchanged. The Company had previously entered into an interest rate swap
agreement with a notional amount equal to the principal amount on the debt to fix the LIBOR-based variable interest rate on the
68
related periodic interest payments at an effective rate of 3.14% (refer to Note 9 – Derivative Instruments). The interest rate
swap agreement was also modified concurrently in 2023 to transition the variable interest rate from LIBOR to a benchmark
based on SOFR.
Assets Pledged as Collateral: The gross book value of the commercial real estate assets pledged as collateral described above at
December 31, 2024, was $89.0 million.
Unsecured Debt
Prudential Series Notes: In December 2015, the Company entered into an agreement (the "Prudential Agreement") with
Prudential Investment Management, Inc. and its affiliates (collectively, "Prudential") for an unsecured note purchase and private
shelf facility that enabled the Company to issue notes in an aggregate amount up to $450.0 million, less the sum of all principal
amounts then outstanding on any notes issued by the Company or any of its subsidiaries to Prudential and the amounts of any
notes that are committed under the Prudential Agreement. The Prudential Agreement (which amended and renewed a then-
existing agreement) had an issuance period that ended in December 2018 and contained certain restrictive covenants for the
notes issued under the Prudential Agreement. On August 31, 2021, the Company entered into an agreement with Prudential to
amend certain covenants related to the Prudential Private Shelf Facility.
On April 15, 2024, the Company entered into an agreement (the "Third Amended Prudential Agreement") with Prudential for an
unsecured note purchase and private shelf facility that enables the Company to issue notes in an aggregate amount up to $300.0
million, less the sum of all principal amounts then outstanding on any notes issued by the Company or any of its subsidiaries to
Prudential and the amounts of any notes that are committed under the Third Amended Prudential Agreement for a period of
three years from execution of the agreement. On December 17, 2024, the Company entered into an agreement with Prudential
to further amend certain covenants related to the Prudential Private Shelf Facility. All other terms of this agreement remain
substantially unchanged. Borrowings under the uncommitted shelf facility bear interest at rates that were determined at the time
of borrowing.
In addition, on April 15, 2024, the Company issued a $60.0 million note (the "Series M Note") under the Third Amended
Prudential Agreement, and used proceeds from the note to pay off the debt secured by Laulani Village that matured on May 1,
2024. The Series M Note has a coupon rate of 6.09%, paid semiannually, and matures in full on April 15, 2032.
Term Loan 5: In November 2017, the Company entered into a rate lock commitment to draw $25.0 million under its Note
Purchase and Private Shelf Agreement with AIG Asset Management (U.S.), LLC (the "AIG Private Shelf Facility"). Under the
commitment, the Company drew $25.0 million in December 2017. The note bears interest at 4.30% and matures on
December 20, 2029. Interest only is paid semi-annually and the principal balance is due at maturity. On August 31, 2021, the
Company entered into an agreement with AIG Asset Management to amend certain covenants related to the AIG Private Shelf
Facility. All other terms of this agreement remain substantially unchanged.
Revolving credit facility
A&B Revolver: On October 17, 2024, the Company entered into a Fourth Amended and Restated Credit Agreement ("A&B
Revolver") with Bank of America N.A, as administrative agent, First Hawaiian Bank, KeyBank National Association, Wells
Fargo Bank, National Association, and other lenders party thereto, which amended and restated the Company's existing
$500.0 million committed revolving credit facility under the Third Amended and Restated Credit Agreement ("2021 A&B
Revolver"). The A&B Revolver decreased the total revolving commitments to $450.0 million, extended the term of the facility
to October 2028 with two six-month extension options, and amended certain covenants (see below).
At December 31, 2024, the Company had $150.0 million of revolving credit borrowings outstanding with no letters of credit
issued against the facility, and $300.0 million remained available.
Covenants under 2024 A&B Revolver, Prudential Series Notes, and Term Loan 5 (subsequent to amendments)
The principal financial covenants are as follows:
•
Maximum ratio of secured debt to total adjusted asset value of 0.40:1.00.
•
Under the 2024 A&B Revolver and the Prudential Series Notes - Minimum shareholders' equity amount of
$751.1 million plus 75% percent of the net proceeds received from equity issuances after June 30, 2024.
•
Under the Term Loan 5 - Minimum shareholders' equity amount of $865.6 million plus 75% percent of the net
proceeds received from equity issuances after June 30, 2021.
•
Minimum unencumbered interest coverage ratio of 1.75:1.00.
69
Debt principal payments
At December 31, 2024, debt principal payments and maturities during the next five years and thereafter and the corresponding
amount of unamortized deferred financing costs or debt discounts or premiums were as follows (in thousands):
Scheduled Principal Payments
2025
2026
2027
2028
2029
Thereafter
Total
Principal
(Unamortized
Debt Issue
Cost)/
(Discount)
Premium
Total
Secured debt
$ 2,200 $ 2,275 $ 3,966 $ 3,306 $43,062 $
— $
54,809
$
(95) $ 54,714
Unsecured debt
38,250 67,000 37,125 43,000 25,000
60,000
270,375
(252) 270,123
Revolving credit facilities
—
—
— 150,000
—
—
150,000
—
150,000
Total Notes payable and other debt
$40,450 $69,275 $41,091 $196,306 $68,062 $
60,000 $ 475,184
$
(347) $ 474,837
9.
Derivative Instruments
The Company is exposed to interest rate risk related to its variable-rate debt. The Company balances its cost of debt and
exposure to interest rates primarily through its mix of fixed-rate and variable-rate debt. From time to time, the Company may
use interest rate swaps to manage its exposure to interest rate risk.
Interest Rate Swaps
As of December 31, 2024, the Company had three interest rate swap agreements, all of which were designated as cash flow
hedges. The key terms of the agreements are as follows (dollars in thousands):
Effective
Maturity
Fixed Interest
Notional Amount at
Asset (Liability) Fair Value at
Date
Date
Rate
December 31, 2024
December 31, 2024
December 31, 2023
Interest Rate Swap Agreements
4/7/2016
8/1/2029
3.14%
$
50,877
$
4,310
$
4,142
5/1/2024
12/9/2031
4.88%
$
57,000
$
1,254
$
(1,144)
12/9/2024
12/9/2031
4.83%
$
73,000
$
1,814
$
(1,574)
70
In 2022, the Company entered into two forward starting interest rate swap agreements with notional amounts of $57.0 million
and $73.0 million in order to hedge interest rate fluctuations related to $130.0 million of future financing aligned with the
effective and maturity dates listed. The Company designated the hedging relationships of these two forward interest swap
agreements as cash flow hedges at their inception. In December 2023, the Company de-designated the forward interest swap
agreements as it was determined that underlying cash flows related to the designated hedging relationships were no longer
probable of occurring. As a result, for the year ended December 31, 2023, the Company reclassified from Accumulated other
comprehensive income (loss) and recognized in Interest and other income (expense), net a $2.7 million loss related to the fair
value adjustment of the de-designated hedging relationships. Subsequent changes in fair value of the forward interest rate swaps
were recorded in earnings until, on February 29, 2024, the Company re-designated the hedging relationships of both forward
interest rate swaps in anticipation of future financing. The Company recorded a gain on forward interest rate swap valuation
adjustment of $3.7 million during the year ended December 31, 2024, that occurred prior to the date of re-designation. Cash
settlements related to the $57.0 million notional amount interest rate swap began on May 1, 2024. Cash settlements related to
the $73.0 million notional amount interest rate swap began on December 9, 2024.
Assets related to the interest rate swaps are presented within Prepaid expenses and other assets and liabilities related to interest
rate swaps are presented within Accrued and other liabilities in the consolidated balance sheets as of December 31, 2024 and
December 31, 2023.
Designated Hedging Instruments
For derivative instruments that are designated and qualify as cash flow hedges, changes in fair value of the cash flow hedges are
recorded in Accumulated other comprehensive income (loss) and subsequently reclassified into Interest expense as interest is
incurred on the related variable-rate debt. Periodic cash interest settlements related to cash flow hedges are presented as
operating cash flows in the Company's consolidated statements of cash flows.
Terminated and De-Designated Hedging Instruments
When it is probable that a forecasted hedged transaction will not occur, hedge accounting is discontinued, and amounts deferred
in Accumulated Other Comprehensive Income are recognized immediately. For derivatives not designated as hedging
instruments, including de-designated hedges, changes in fair value are recorded in Interest and other income (expense), net.
During the year ended December 31, 2023, the Company reclassified from Accumulated other comprehensive income (loss) and
recognized in Interest and other income (expense), net a $2.7 million loss related to de-designated hedging relationships.
During the year ended December 31, 2022, the Company reclassified from Accumulated other comprehensive income (loss) and
recognized in Interest and other income (expense), net a $0.5 million gain related to a terminated hedging relationship.
Statement of Comprehensive Income (Loss) Derivative Instruments Impact
The following table represents the pre-tax effect of the derivative instruments in the Company's consolidated statements of
comprehensive income (loss) during the three years ended December 31, 2024, 2023, and 2022, (in thousands):
2024
2023
2022
Information regarding derivatives designated as hedging instruments
Amount of gain (loss) recognized in OCI on derivatives
$
4,100 $
296 $
4,876
Impact of reclassification adjustment to interest expense included in Net Income
(Loss)
$
(1,764)
$
(1,680) $
469
Information regarding derivatives terminated and de-designated hedging
instruments
Reclassification of interest rate derivative loss (gain) to interest and other income
(expense), net included in Net Income (Loss)
$
— $
2,718
$
(497)
As of December 31, 2024, the Company expects to reclassify $2.4 million of net gains (losses) on derivative instruments from
accumulated other comprehensive income to earnings during the next 12 months.
71
10.
Commitments and Contingencies
Commitments and other financial arrangements
Bonds related to the Company's real estate activities totaled $17.0 million as of December 31, 2024, and represent commercial
bonds issued by third party sureties (permit, subdivision, license and notary bonds), which are not recorded as liabilities on the
Company's consolidated balance sheets as of December 31, 2024. If drawn upon, the Company would be obligated to reimburse
the surety that issued the bond for the amount of the bond, reduced for the work completed to date.
Legal proceedings and other contingencies
Prior to the sale of approximately 41,000 acres of agricultural land on Maui to Mahi Pono Holdings, LLC ("Mahi Pono") in
December 2018, the Company, through East Maui Irrigation Company, LLC ("EMI"), also owned approximately 16,000 acres
of watershed lands in East Maui and held four water licenses to approximately 30,000 acres owned by the State of Hawai‘i in
East Maui. The sale to Mahi Pono included the sale of a 50% interest in EMI (which closed February 1, 2019), and provided for
the Company and Mahi Pono, through EMI, to jointly continue the existing process to secure a long-term lease from the State
for delivery of irrigation water to Mahi Pono for use in Central Maui.
The last of these water license agreements expired in 1986, and all four agreements were then extended as revocable permits
that were renewed annually. In 2001, a request was made to the State Board of Land and Natural Resources (the "BLNR") to
replace these revocable permits with a long-term water lease. Pending the completion by the BLNR of a contested case hearing
it ordered to be held on the request for the long-term lease, the BLNR has kept the existing permits on a holdover
basis. Three parties (Healoha Carmichael; Lezley Jacintho; and Na Moku Aupuni O Ko‘olau Hui) filed a lawsuit on April 10,
2015, (the "Initial Lawsuit") alleging that the BLNR has been renewing the revocable permits annually rather than keeping
them in holdover status. The lawsuit challenged the BLNR’s decision to continue the revocable permits for calendar year 2015
and asked the court to void the revocable permits and to declare that the renewals were illegally issued without preparation of
an environmental assessment ("EA"). In December 2015, the BLNR decided to reaffirm its prior decisions to keep the permits
in holdover status. This decision by the BLNR was challenged by the three parties. In January 2016, the court ruled in the Initial
Lawsuit that the renewals were not subject to the EA requirement, but that the BLNR lacked legal authority to keep the
revocable permits in holdover status beyond one year (the "Initial Ruling"). The Initial Ruling was appealed to the Intermediate
Court of Appeals ("ICA") of the State of Hawai‘i.
In May 2016, while the appeal of the Initial Ruling was pending, the Hawai‘i State Legislature passed House Bill 2501, which
specified that the BLNR has the legal authority to issue holdover revocable permits for the disposition of water rights for a
period not to exceed three years. The governor signed this bill into law as Act 126 in June 2016. Pursuant to Act 126, the annual
authorization of the existing holdover permits was sought and granted by the BLNR in December 2016, November 2017 and
November 2018 for calendar years 2017, 2018 and 2019. No extension of Act 126 was approved by the Hawai‘i State
Legislature in 2019.
In June 2019, the ICA vacated the Initial Ruling, effectively reversing the determination that the BLNR lacked authority to keep
the revocable permits in holdover status beyond one year (the "ICA Ruling"). The ICA remanded the case back to the trial court
to determine whether the holdover status of the permits was both (a) "temporary" and (b) in the best interest of the State, as
required by statute. The plaintiffs filed a motion with the ICA for reconsideration of its decision, which was denied on July 5,
2019. On September 30, 2019, the plaintiffs filed a request with the Supreme Court of Hawai‘i to review and reverse the ICA
Ruling. On November 25, 2019, the Supreme Court of Hawai‘i granted the plaintiffs' request to review the ICA Ruling and, on
May 5, 2020, oral argument was held.
On October 11, 2019, the BLNR took up the renewal of all the existing water revocable permits in the state, acting under the
ICA Ruling, and approved the continuation of the four East Maui water revocable permits for another one-year period through
December 31, 2020. On November 13, 2020, the BLNR approved another renewal of such permits through December 31, 2021.
On March 2, 2022, the Supreme Court of Hawai’i vacated the ICA’s ruling relating to the BLNR's decision to continue the
revocable permits for the calendar year 2015, holding that Hawaii Revised Statutes Chapter 343 (the Hawaii Environmental
Policy Act) did apply to the permits. The court remanded the matter back to the Circuit Court to determine if any exceptions
would apply and, if not, how HRS Chapter 343 should be applied in light of the steps taken by A&B/EMI toward the long-term
water lease. The Supreme Court of Hawai’i also determined that the BLNR had the statutory authority to continue the permits
for more than one year, but required the BLNR to make findings of fact and conclusions of law determining that the action
would serve the best interests of the State. On remand, the Carmichael Plaintiffs filed a motion for partial summary judgment
asking the Circuit Court to conclude that the BLNR and A&B/EMI violated HRS Chapter 343 when the BLNR continued the
revocable permits for calendar year 2015. On December 21, 2023, the Circuit Court entered its order granting in part and
72
denying in part the motion for partial summary judgment, determining that the BLNR and A&B/EMI had violated HRS Chapter
343 when the BLNR continued the revocable permits for calendar year 2015, but denying the plaintiffs’ request for a
declaration that A&B/EMI had no authority to divert any water until a final environmental impact statement had been accepted.
Also on remand, the Carmichael Plaintiffs sought and were granted leave to file an amended complaint asserting a claim for
unjust enrichment against A&B/EMI. The plaintiffs assert that they had a superior right to the water diverted by EMI from at
least 2015 until September 2021 when BLNR accepted the final environmental impact statement for the long-term water lease,
and EMI lacked the authority to divert water during that time period. In December 2023, the Carmichael Plaintiffs filed their
amended complaint. On February 11, 2025, the Circuit Court entered its order granting A&B/EMI’s motion for summary
judgment as to the plaintiffs’ unjust enrichment claim. A final judgment has not yet been entered.
In the companion case brought by Na Moku Aupuni O Ko‘olau Hui challenging the BLNR’s decision to continue the revocable
permits for calendar year 2016, Na Moku filed a motion asking for a decision on appeal and requesting that the Circuit Court
limit the current diversion of water pursuant to the revocable permits and order the BLNR to allow Na Moku to intervene in the
contested case hearing ordered by the Circuit Court in the Sierra Club litigation addressed below. On January 2, 2024, the
Circuit Court entered its order granting Na Moku’s request to invalidate the BLNR’s decision reaffirming the holdover status of
the revocable permits for calendar year 2016 and denying Na Moku’s request to (1) impose a cap on the current amount of
water diverted pursuant to the revocable permits, (2) order the BLNR to allow Na Moku to intervene in Sierra Club’s contested
case hearing; and (3) declare that A&B/EMI had no legal authority to divert water pursuant to then-valid revocable permits. In
January 2024, the circuit court entered final judgment in this case.
In a separate matter, on December 7, 2018, a contested case request filed by the Sierra Club (contesting the BLNR's November
2018 approval of the 2019 revocable permits) was denied by the BLNR. On January 7, 2019, the Sierra Club filed a lawsuit in
the circuit court of the first circuit in Hawai‘i against the BLNR, A&B and EMI, seeking to invalidate the 2019 and 2020
holdovers of the revocable permits for, among other things, failure to perform an EA. The lawsuit also sought to enjoin
A&B/EMI from diverting more than 25 million gallons a day until a permit or lease is properly issued by the BLNR, and for the
imposition of certain conditions on the revocable permits by the BLNR. The count seeking to invalidate the revocable permits
based on the failure to perform an EA was dismissed by the court, based on the ICA Ruling in the Initial Lawsuit. The Sierra
Club’s lawsuit was amended to include a challenge to the BLNR’s renewal of the revocable permits for calendar year 2020.
After a full trial on the merits held beginning in August of 2020, the court ruled, on April 6, 2021, against the Sierra Club on its
lawsuit challenging the 2019 and 2020 revocable permits. On February 17, 2022, the Sierra Club filed its notice of appeal
challenging the decision on the August 2020 trial. The court separately considered a lawsuit filed by the Sierra Club appealing
the BLNR’s decision to deny it a contested case hearing on the 2021 revocable permits, which were granted by the BLNR on or
about November 13, 2020. In that case, on May 28, 2021, the court issued an interim decision that the Sierra Club’s due process
rights were violated, ordered the BLNR to hold a contested case hearing on the 2021 permits, and that the permits would be
vacated. On July 30, 2021, the court modified its ruling to say that the permits would not be invalidated, but left in place
pending the outcome of the contested case hearing. The contested case hearing was held by the BLNR in December 2021 to
address the continuation of the revocable permits for both calendar years 2021 and 2022 and the BLNR issued a decision on
June 30, 2022. On December 27, 2021, while BLNR’s decision in the contested case hearing was pending, the court further
modified its ruling to allow the permits to remain in place until the earlier of May 1, 2022, the date on which the BLNR renders
a substantive decision on the continuation of the permits for calendar year 2022, or further order of the court. On April 26,
2022, the court orally granted an extension of the May 1, 2022 deadline to the earlier of June 15, 2022, or the date on which the
BLNR renders a substantive decision on the continuation of the permits for calendar year 2022, or as may be further ordered by
the court. On June 1, 2022, the court granted an extension of the June 15, 2022 deadline to the earlier of July 15, 2022 or the
date on which the BLNR renders a substantive decision on the continuation of the permits for calendar year 2022 or as may be
further ordered by the court. On June 30, 2022, the BLNR issued its final decision on the contested case hearing on the permits
for calendar years 2021 and 2022, approving the continuation of the permits through the end of calendar year 2022. The
Company and the BLNR appealed the court’s determination that the Sierra Club was entitled to a contested case hearing on the
2021 revocable permits. At the request of Sierra Club, the Intermediate Court of Appeals held oral argument on the matter on
December 13, 2023. On April 12, 2024, the ICA issued its opinion holding that the Sierra Club was not entitled to a contested
case hearing, the circuit court erred by modifying the permits, and the Sierra Club was not entitled to attorneys’ fees and costs.
The Sierra Club filed an application with the Supreme Court of Hawai’i for a writ of certiorari challenging the ICA’s opinion.
On July 11, 2024, the Supreme Court of Hawai’i entered its order accepting Sierra Club's application for a writ of certiorari. In
July 2022, the Sierra Club filed a separate appeal challenging the BLNR’s June 30, 2022 decision on the contested case hearing
on the permits for calendar years 2021 and 2022. On March 31, 2023, the court entered its decision on appeal, dismissing the
appeal as moot. On January 29, 2024, the court entered final judgment in this case. On February 8, 2024, the Sierra Club filed a
notice of appeal with the Hawaii Intermediate Court of Appeals, and on December 24, 2024, the court reversed the dismissal,
finding the case not moot and remanding the matter to the Circuit Court for consideration of the merits of the appeal. On
February 10, 2025, Sierra Club filed with the Hawaii Supreme Court, an application for a writ of certiorari, arguing that the ICA
73
erred in remanding the matter back to the Circuit Court rather than deciding the merits of the appeal itself. The time to file
responses to the application has not yet passed.
On November 10, 2022, the BLNR voted to continue the revocable permits for calendar year 2023 and, at that same meeting,
denied the Sierra Club’s oral request for a contested case hearing. The Sierra Club subsequently submitted a written request to
the BLNR for a contested case hearing on the continuation of the revocable permits, which the BLNR denied on December 9,
2022. On November 29, 2022, the Sierra Club filed an appeal of the BLNR’s decisions to deny its oral request for a contested
case hearing and to continue the revocable permits for 2023 and on December 15, 2022, the Sierra Club amended its appeal to
also challenge the BLNR’s denial of its written request for a contested case hearing. On June 16, 2023, the Circuit Court
entered its Decision on Appeal; and Interim Modification of Permits Pursuant to HRS 91-14(g) in which the court concluded
that the Sierra Club was again entitled to a contested case hearing on the continuation of the revocable permits for calendar year
2023. The court also modified the BLNR’s decision to continue the revocable permits by reducing the cap to 31.5 million
gallons per day. A&B/EMI filed motions to increase the modified cap and for leave to take an immediate appeal. On August 11,
2023, the court entered its order denying A&B/EMI’s motion for leave to take an immediate appeal. On September 8, 2023, the
court entered its ruling denying without prejudice A&B/EMI’s motion to increase the modified cap. On August 17, 2023, Sierra
Club filed its First Motion to Modify Permits, asking the court to impose conditions on the revocable permits requiring
A&B/EMI to determine the water needs of the County of Maui Fire Department and to line one reservoir, which the court
granted in part, ordering the parties to meet with the County of Maui Fire Department to discuss the Department’s water needs.
In January 2024, the court entered final judgment in this case. In February 2024, A&B/EMI and BLNR filed separate notices of
appeal with the Hawaii Intermediate Court of Appeals.
On December 8, 2023, the BLNR issued a new revocable permit to the Company for calendar year 2024. On that same date,
after the BLNR voted to grant the new revocable permit to the Company, Sierra Club made an oral request for a contested case
hearing and, on December 18, 2023, filed a written request for the same. On December 13, 2024, the BLNR denied Sierra
Club’s requests for a contested case hearing.
On December 13, 2024, the BLNR issued a new revocable permit to the Company for calendar year 2025. On that same date,
prior to the BLNR’s vote to grant the new revocable permit to the Company, Sierra Club made an oral and written request for a
contested case hearing, and Na Moku Aupuni O Ko‘olau Hui made an oral request for a contested case hearing. The BLNR
voted to deny both requests.
On January 9, 2025, Sierra Club filed an appeal of the BLNR’s decision denying its request for a contested case hearing as well
as challenging the merits of the BLNR’s decision to issue the new revocable permit for calendar year 2025. On January 10,
2025, Na Moku Aupuni O Ko‘olau Hui filed an appeal of the BLNR’s decision denying its oral request for a contested case
hearing as well as challenging the merits of the BLNR’s decision to issue the new revocable permit for calendar year 2025.
In connection with A&B’s obligation to continue the existing process to secure a long-term water lease from the State, A&B
and EMI will defend against the remaining claims made by the Sierra Club and/or Na Moku Aupuni O Ko‘olau Hui.
In addition to the litigation described above, the Company is a party to, or may be contingently liable in connection with, other
legal actions arising in the normal conduct of its businesses. While the outcomes of such litigation and claims cannot be
predicted with certainty, in the opinion of management after consultation with counsel, the reasonably possible losses would not
have a material effect on the Company's consolidated financial statements as a whole.
Further note that certain of the Company's properties and assets may become the subject of other types of claims and
assessments at various times (e.g., environmental matters based on normal operations of such assets). Depending on the facts
and circumstances surrounding such potential claims and assessments, the Company records an accrual if it is deemed probable
that a liability has been incurred and the amount of loss can be reasonably estimated/valued as of the date of the financial
statements.
11.
Revenue and Contract Balances
The Company generates revenue through its Commercial Real Estate and Land Operations segments. Through its Commercial
Real Estate segment, the Company owns and operates a portfolio of commercial real estate properties and generates income
(i.e., revenue) as a lessor through leases of such assets. Refer to Note 12 – Leases - The Company as a Lessor for further
discussion of lessor income recognition. The Land Operations segment generates revenue from contracts with customers. The
Company further disaggregates revenue from contracts with customers by revenue type when appropriate if the Company
believes disaggregation best depicts how the nature, amount, timing and uncertainty of the Company's revenue and cash flows
are affected by economic factors. Revenue by type for the years ended December 31, 2024, 2023, and 2022, was as follows (in
thousands):
74
2024
2023
2022
Revenues:
Commercial Real Estate
$
197,365 $
193,971 $
187,224
Land Operations:
Development sales revenue
18,328
—
8,084
Unimproved/other property sales revenue
20,265
12,325
19,905
Other operating revenue
683
2,547
15,340
Land Operations
39,276
14,872
43,329
Total revenues
$
236,641 $
208,843 $
230,553
Timing of revenue recognition may differ from the timing of invoicing to customers.
The following table provides information about receivables, contract assets and contract liabilities from contracts with
customers as of December 31, 2024 and 2023 (in thousands):
2024
2023
Accounts receivable
$
5,398 $
7,421
Allowances (credit losses and doubtful accounts)
(1,701)
(2,888)
Accounts receivable, net of allowance for credit losses and allowance for doubtful
accounts
$
3,697 $
4,533
Variable consideration1
$
62,000 $
62,000
Prepaid rent
6,077
4,985
Other deferred revenue
4,385
3,368
Deferred revenue
$
72,462 $
70,353
1 Variable consideration deferred as of the end of the periods related to amounts received in the sale of agricultural land on Maui in 2018 that, under revenue
recognition guidance, could not be included in the transaction price.
For the year ended December 31, 2024, the Company recognized $0.1 million related to the Company's variable consideration
and other deferred revenue reported as of December 31, 2023. For the year ended December 31, 2023, the Company did not
recognize any revenue related to the Company's variable consideration and other deferred revenue reported as of December 31,
2022.
On December 17, 2018, A&B entered into a Purchase and Sale Agreement and Escrow Instructions (the "PSA") with Mahi
Pono (the "Buyer") related to the sale of agricultural land on Maui. In connection with the sale, the Company deferred
approximately $62.0 million of revenue related to certain performance obligations involving securing adequate water to support
the Buyer's agricultural plans for the land, through an agreement with the State of Hawai‘i to provide rights to access state
water for agricultural irrigation (“State Water Lease”), as well as ensuring that the Buyer has continued access to water prior to
the issuance of the State Water Lease. Under the terms of the PSA, the Company may be required to remit amounts up to
$62.0 million to the Buyer to the extent performance obligations are not met (recorded as deferred revenue of $62.0 million as
of December 31, 2024 and 2023).
Regarding other information related to the Company's contracts with customers, the amount of revenue recognized from
performance obligations satisfied in prior periods (e.g., due to changes in transaction price) was not material in any of the
periods presented.
12.
Leases - The Company as a Lessor
The Company leases real estate property to tenants under operating leases. Such activity is primarily composed of operating
leases within its CRE segment.
The historical cost of, and accumulated depreciation on, leased property as of December 31, 2024 and 2023, was as follows (in
thousands):
2024
2023
Leased property - real estate
$
1,638,098
$
1,607,919
Less: accumulated depreciation
(255,483)
(228,714)
Property under operating leases - net1
$
1,382,615
$
1,379,205
1Property under operating leases as of December 31, 2023 includes leased property included in assets held for sale.
75
Total rental income (i.e., revenue) under these operating leases relating to lease payments and variable lease payments were as
follows (in thousands):
2024
2023
2022
Lease payments
$
135,666 $
134,323 $
130,849
Variable lease payments
63,376
60,836
58,517
Revenues deemed uncollectible, net
(1,316)
(552)
754
Total rental income
$
197,726 $
194,607 $
190,120
Contractual future lease payments to be received on non-cancelable operating leases as of December 31, 2024, were as follows
(in thousands):
2025
$
135,064
2026
121,899
2027
108,725
2028
92,133
2029
74,232
Thereafter
560,122
Total future lease payments to be received
$
1,092,175
13.
Leases - The Company as a Lessee
Principal non-cancelable operating leases include land that have lease terms that expire through 2031. Management expects that
in the normal course of business, most operating leases will be renewed or replaced by other similar leases. The Company has
equipment under finance leases with terms that expire through 2029.
Lease expense for operating leases that provide for future escalations are accounted for on a straight-line basis. For the years
ended December 31, 2024, 2023, and 2022, lease expense under operating and finance leases was as follows (in thousands):
2024
2023
2022
Lease cost - operating and finance leases
Operating lease cost
$
1,915 $
2,017 $
2,692
Finance lease cost:
Amortization of right-of-use assets
292
199
52
Interest on lease liabilities
188
110
27
Total lease cost - operating and finance leases
$
2,395 $
2,326 $
2,771
Other amounts relating to leases segregated between those for finance and operating leases include the following for the years
ended December 31, 2024, 2023, and 2022 (dollars in thousands):
2024
2023
2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases
$
1,869
$
1,990
$
2,663
Operating cash outflows from finance leases
$
188
$
110
$
27
Financing cash flows from finance leases
$
292
$
199
$
52
Other details:
Weighted-average remaining lease term (years) - operating leases
6.5
2.5
3.0
Weighted-average remaining lease term (years) - finance leases
3.3
4.2
4.8
Weighted-average discount rate - operating leases
4.4 %
4.4 %
4.2 %
Weighted-average discount rate - finance leases
4.7 %
4.8 %
4.1 %
76
Future lease payments under non-cancelable operating and finance leases as of December 31, 2024, were as follows (in
thousands):
Operating
Leases
Finance
Leases
2025
$
102
$
491
2026
102
491
2027
102
2,085
2028
102
1,296
2029
102
125
Thereafter
151
—
Total lease payments
$
661
$
4,488
Less: Interest
(538)
(556)
Total lease liabilities
$
123
$
3,932
Information for operating and finance leases as of the years ended December 31, 2024 and 2023, were as follows (in
thousands):
Consolidated Balance Sheet Location
2024
2023
Assets
ROU assets - operating leases
Prepaid expenses and other assets
$
148 $
1,702
ROU assets - finance leases
Real estate property, net
$
4,202 $
4,195
Liabilities
Lease liabilities - operating leases
Accrued and other liabilities
$
123 $
1,088
Lease liabilities - finance leases
Notes payable and other debt
$
3,932 $
4,073
14.
Share-based Payment Awards
On April 26, 2022, shareholders approved the Alexander & Baldwin, Inc. 2022 Omnibus Incentive Plan ("2022 Plan"). The
2022 Plan serves as the successor to the 2012 Incentive Compensation Plan ("2012 Plan") and allows for the granting of stock
options, stock appreciation rights, stock awards, restricted stock units, dividend equivalent rights, and other awards. The 2012
Plan allowed for the granting of stock options, stock appreciation rights, stock awards, and restricted stock units, including an
automatic grant program for non-employee directors. All awards outstanding under the 2012 Plan remain subject to the terms of
the 2012 Plan. Effective April 26, 2022, no additional shares will be issued under the 2012 Plan. The shares of common stock
authorized to be issued under the 2022 Plan are to be drawn from the shares of the Company's authorized but unissued common
stock or from shares of its common stock that the Company acquired, including shares purchased on the open market or private
transactions.
The 2022 Plan allows for the granting of up to 3.2 million shares in the form of stock options, restricted stock units or common
stock, subject to adjustment for shares under the 2022 Plan or 2012 Plan that expire or are forfeited, canceled, or terminated for
any reason prior to the issuance of the shares. This includes 2.5 million new shares and 0.7 million shares that carried over from
the 2012 Plan. As of December 31, 2024, there were 2.8 million remaining shares available for future grants.
Under the 2022 Plan, shares of common stock or restricted stock units may be granted as time-based awards, market-based
awards, or performance-based awards.
At each annual shareholder meeting, non-employee directors will receive an award of restricted stock units that entitle the
holder to an equivalent number of shares of common stock upon vesting. The following table summarizes non-vested restricted
stock unit activity for the year ended December 31, 2024, (in thousands, except weighted-average grant-date fair value
amounts):
77
Restricted
Stock Units
Weighted-Average
Grant-date
Fair Value
Outstanding, January 1
624.9
$
21.18
Granted
356.5
$
17.73
Vested
(324.8)
$
19.13
Canceled
(79.8)
$
20.53
Outstanding, December 31
576.8
$
20.29
The time-based restricted stock units granted to employees vest ratably over a period of three years, except for the time-based
restricted stock units granted to the former Chief Executive Officer in 2023, which were issued one year from the award date.
The time-based restricted stock units granted to non-employee directors vest over a one-year period. The market-based
restricted stock units cliff vest over three years, provided that the total shareholder return of the Company's common stock over
the relevant period meets or exceeds pre-defined levels of total shareholder returns relative to indices, as defined. The
performance-based restricted stock units cliff vest over three years, based on the probability of achieving certain performance
metrics.
As of December 31, 2024, there was $5.9 million of total unrecognized compensation cost related to non-vested restricted stock
units granted under the 2022 Plan and 2012 Plan; that cost is expected to be recognized over a remaining weighted-average
period of 1.8 years.
The fair value of the Company's time-based and performance-based awards was determined using the Company's stock price on
the grant date. The fair value of the Company's market-based awards was estimated using the Company's stock price on the date
of grant and the probability of vesting using a Monte Carlo simulation. The Monte Carlo simulation was performed with the
following weighted-average assumptions:
2024 Grants
2023 Grants
2022 Grants
Volatility of A&B common stock
27.4%
31.8% - 49.1%
47.7%
Average volatility of peer companies
29.9%
33.6% - 48.2%
51.1%
Risk-free interest rate
4.0%
3.8% - 4.5%
1.4%
The weighted-average grant date fair value of the restricted stock units granted in 2024, 2023, and 2022, was $17.73, $21.82,
and $25.56, respectively. No compensation cost is recognized for actual forfeitures of restricted stock awards if an employee is
terminated prior to rendering the requisite service period. The Company recognized no tax benefit upon vesting for the years
ended December 31, 2024, 2023, and 2022.
The Company recognizes compensation cost net of actual forfeitures of restricted stock awards. A summary of compensation
cost related to share-based payments is as follows for the years ended December 31, 2024, 2023, and 2022, (in thousands):
2024
2023
2022
Share-based expense:
Restricted stock units
$
4,795 $
6,081 $
4,913
Total share-based expense
4,795
6,081
4,913
Total recognized tax benefit
—
—
—
Share-based expense (net of tax)
$
4,795 $
6,081 $
4,913
Fair value of stock vested
$
5,649 $
9,120 $
5,600
15.
Employee Benefit Plans
The Company provides a wide range of benefits to existing employees, including a defined contribution plan and health and
welfare benefits, as well as post-employment benefits to qualified retired employees. The Company does not pre-fund post-
employement health care plans and has the right to modify or terminate certain of these plans in the future. Certain groups of
retirees pay a portion of the post-employment benefit costs.
78
Pension Plan Termination: On February 23, 2021, the Company’s Board of Directors approved a plan to effect the termination
of the A&B Retirement Plan for Salaried Employees of Alexander & Baldwin, LLC and the Pension Plan for Employees of
A&B Agricultural Companies (collectively, the “Defined Benefit Plans”), which became effective on May 31, 2021. On
June 30, 2022, the Company completed the termination of the Defined Benefit Plans by meeting the following criteria: (1) an
irrevocable action to terminate the Defined Benefit Plans had occurred, (2) the Company was relieved of the primary
responsibility of the Defined Benefit Plans, and (3) the significant risks related to the obligations of the Defined Benefit Plans
and the assets used to effect the settlement was eliminated for the Company.
During the year ended December 31, 2022, the Company made cash contributions of $28.7 million to defined benefit plans, and
in connection with the Defined Benefit Plans termination process, recorded a pre-tax settlement charge of $76.9 million within
Pension termination in the consolidated statements of operations, which represents the acceleration of deferred charges
previously included within accumulated other comprehensive loss and the impact of remeasuring the plan assets and obligations
at termination. In addition, the Company recorded an income tax benefit of $18.3 million during the year ended December 31,
2022, to reclassify the tax effects in accumulated other comprehensive loss upon completion of the termination of the Defined
Benefit Plans.
Benefit Obligations, Plan Assets and Funded Status of the Plans: The measurement date for the Company’s benefit plan
disclosures is December 31 of each year. The status of the unfunded accumulated post-retirement benefit plans as of December
31, 2024 and 2023, and are shown below (in thousands):
Other Post-retirement
Benefits
Non-qualified Plan Benefits
2024
2023
2024
2023
Change in Benefit Obligation
Benefit obligation at beginning of year
$
7,847 $
8,061 $
2,125 $
2,019
Service cost
29
69
—
—
Interest cost
386
420
26
106
Plan participants’ contributions
569
596
—
—
Actuarial (gain) loss
(533)
(113)
(19)
—
Benefits paid
(1,193)
(1,186)
—
—
Settlement
—
—
(1,655)
—
Benefit obligation at end of year
$
7,105 $
7,847 $
477 $
2,125
Change in Plan Assets
Fair value of plan assets at beginning of year
$
— $
— $
— $
—
Employer contributions
624
590
1,655
—
Participant contributions
569
596
—
—
Benefits paid
(1,193)
(1,186)
—
—
Settlement
—
—
(1,655)
—
Fair value of plan assets at end of year
$
— $
— $
— $
—
Funded Status (Recognized Liability1)
$
(7,105) $
(7,847)
$
(477)
$
(2,125)
1 Presented as Accrued pension and post-retirement benefits in the accompanying consolidated balance sheets as of December 31, 2024 and 2023.
Estimated Benefit Payments: The estimated future benefit payments for the next ten years are as follows (in thousands):
2025
2026
2027
2028
2029
2030-2034
Estimated Benefit Payments
Post-retirement Benefits
$
617 $
586 $
572 $
557 $
545 $
2,476
Non-qualified Plan Benefits
—
481
—
—
—
—
Total
$
617 $
1,067 $
572 $
557 $
545 $
2,476
Net Benefit Cost Recognized and Amounts Recognized in Other Comprehensive Income: Components of the net periodic benefit
cost and other amounts recognized in other comprehensive income (loss) for the defined benefit pension plans and the post-
retirement health care and life insurance benefit plans during the years ended December 31, 2024, 2023, and 2022, are shown
below (in thousands):
79
Pension Benefits
Other Post-retirement
Benefits
Non-qualified Plan
Benefits
Components of Net Periodic Benefit Cost
2024
2023
2022
2024
2023
2022
2024
2023
2022
Service cost
$
—
$
—
$ 1,384
$
29
$
69
$
74
$
—
$
—
$
—
Interest cost
—
—
739
386
420
400
26
106
99
Expected return on plan assets
—
—
(2,649)
—
—
—
—
—
—
Amortization of net loss
—
—
1,749
—
—
103
—
—
89
Amortization of prior service cost
—
—
91
—
—
—
—
—
—
Settlement loss (gain)
—
—
—
—
—
—
14
—
—
Pension termination
—
—
76,653
—
—
125
—
—
129
Net periodic benefit cost
$
—
$
— $77,967 $ 415
$ 489 $ 702
$
40
$ 106
$ 317
Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income (Loss)
Net gain (loss)
$
—
$14,424 $ 532
$ 143 $ 2,170
$
2
$ (34) $ 427
Amortization of net loss1
—
—
1,749
—
—
103
—
—
89
Amortization of prior service credit1
—
—
91
—
—
—
—
—
—
Settlement recognition of net loss (gain)
—
—
—
—
—
—
14
—
—
Pension termination1
—
—
76,653
—
—
125
—
—
129
Income taxes related to other comprehensive income
(loss)1
—
(18,295)
—
—
(50)
—
50
Total recognized in Other comprehensive income (loss)
—
—
74,622
532
143 2,348
16
(34)
695
Total recognized in net periodic benefit cost and
Other comprehensive income (loss)
$
—
$
—
$
(3,345) $ 117
$ (346) $ 1,646
$ (24)
$ (140) $ 378
1 Represents amortization or recognition of balances previously recorded to Accumulated other comprehensive income (loss) in the consolidated balance
sheets and recognized as a component of net periodic benefit cost.
Other components of net periodic benefit costs (other than the service cost component) are recorded in Interest and other
income (expense), net in the consolidated statements of operations.
Amounts recognized on the consolidated balance sheets in accumulated other comprehensive income (loss) as of December 31,
2024 and 2023, were as follows (in thousands):
Other Post-retirement
Benefits
Non-qualified Plan Benefits
2024
2023
2024
2023
Net gain (loss), net of taxes
$
(382) $
150 $
15 $
31
Unrecognized prior service credit (cost), net of taxes
—
—
—
—
Total Accumulated other comprehensive income (loss)
$
(382) $
150 $
15 $
31
80
Unrecognized gains and losses of the post-retirement benefit plans are amortized over the average future lifetime of inactive
participants in excess of a 10% corridor. Although current health costs are expected to increase, the Company attempts to
mitigate these increases by maintaining caps on certain of its benefit plans, using lower cost health care plan options where
possible, requiring that certain groups of employees pay a portion of their benefit costs, self-insuring for certain insurance
plans, encouraging wellness programs for employees, and implementing measures to mitigate future benefit cost increases.
Assumptions in Plan Accounting: The weighted average assumptions used to determine benefit information during the years
ended December 31, 2024, 2023, and 2022, were as follows:
Other Post-retirement Benefits
Non-qualified Plan Benefits
2024
2023
2022
2024
2023
2022
Weighted Average Assumptions
Discount rate to determine benefit obligations
5.66%
5.15%
5.41%
5.26%
5.19%
5.24%
Discount rate to determine net cost
5.15%
5.41%
3.51%
5.19%
5.24%
1.68%
Rate of compensation increase
0.5%-3.0%
0.5%-3.0%
0.5%-3.0%
N/A
N/A
N/A
Expected return on plan assets
N/A
N/A
N/A
N/A
N/A
N/A
Interest crediting rates
N/A
N/A
N/A
2.15%
2.15%
2.15%
Initial health care cost trend rate
6.70%
6.20%
5.90%
N/A
N/A
N/A
Ultimate rate
4.00%
4.00%
4.00%
N/A
N/A
N/A
Year ultimate rate is reached
2048
2045
2045
N/A
N/A
N/A
A&B Defined Contribution Plans: The Company sponsors defined contribution plans that qualify under Section 401(k) of the
Code and provides matching contributions of up to 3% of eligible compensation. The Company’s matching contributions
expensed under these plans totaled $0.5 million, $0.5 million, and $0.6 million for the years ended December 31, 2024, 2023,
and 2022, respectively. The Company also provides a non-elective contribution of 3% of the participant's annual eligible
compensation made by the Company into the participant's defined contribution plan. The Company's contribution expensed
under this non-elective component of the defined contribution plan totaled $0.5 million, $0.7 million, and $0.7 million for the
years ended December 31, 2024, 2023, and 2022, respectively. Lastly, the Company maintains profit sharing plans and, if a
minimum threshold of Company performance is achieved, provides contributions of 1% to 5%, depending upon Company
performance above the minimum threshold. There were $0.6 million, $0.5 million and $0.8 million of profit sharing
contribution expenses recognized in the years ended December 31, 2024, 2023, and 2022, respectively.
16.
Income Taxes
The Company is organized and operates in a manner that enables it to qualify as a REIT for U.S. federal income tax purposes
beginning with the Company's taxable year ended December 31, 2017. The Company's taxable REIT subsidiary ("TRS") files
separate income tax returns as a C corporation. The Company also files separate income tax returns in various states.
As a REIT, the Company will generally be allowed a deduction for dividends that it pays, and therefore, will not be subject to
U.S. federal corporate income tax on its taxable income that is currently distributed to shareholders. The Company may be
subject to certain state gross income and franchise taxes, as well as taxes on any undistributed income and federal and state
corporate taxes on any income earned by its TRS.
Distributions with respect to the Company’s common stock can be characterized for U.S. federal income tax purposes as
ordinary income, capital gains, unrecaptured section 1250 gains, return of capital, or a combination thereof. Taxable
distributions paid for the years ended December 31, 2024, 2023, and 2022, were classified as ordinary income.
81
The income tax expense (benefit) on income (loss) from continuing operations for the years ended December 31, 2024, 2023,
and 2022, consisted of the following (in thousands):
2024
2023
2022
Current:
Federal
$
170
$
(9)
$
(17,963)
State
4
44
(289)
Total Current
$
174 $
35
$
(18,252)
Deferred:
Federal
$
— $
— $
—
State
—
—
—
Total Deferred
$
— $
— $
—
Income tax expense (benefit)
$
174 $
35
$
(18,252)
Income tax expense (benefit) for the years ended December 31, 2024, 2023, and 2022, differs from amounts computed by
applying the statutory federal rate to income from continuing operations before income taxes for the following reasons (in
thousands):
2024
2023
2022
Computed federal income tax expense (benefit)
$
13,477 $
8,577
$
3,951
State income taxes
485
45
(1,549)
Changes in valuation allowances
(3,523)
986
5,336
REIT rate differential
(10,553)
(9,325)
(7,824)
Nontaxable or nondeductible items
124
(96)
22
Share-based compensation
(4)
(152)
(120)
Effective rate differences between current and deferred taxes
95
—
408
Pension termination
—
—
(18,295)
Other, net
73
—
(181)
Income tax expense (benefit)
$
174 $
35
$
(18,252)
The change in the Company's reconciliation from its statutory rate to effective tax rate for the year ended December 31, 2024,
as compared to the year ended December 31, 2023, is primarily due to changes in the valuation allowance on deferred tax assets
due to the sale of the Grace Disposal Group in the year ended December 31, 2023 and an overall increase in pretax book
income for the year ended December 31, 2024.
82
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax
liabilities as of December 31, 2024 and 2023, were as follows (in thousands):
2024
2023
Deferred tax assets:
Employee benefits
$
4,051
$
4,391
Capitalized costs
1,290
1,329
Joint ventures and other investments
5,810
6,020
Impairment and amortization
622
679
Solar investment benefits
14,814
15,212
Insurance and other reserves
6,517
6,002
Disallowed interest expense
9,075
10,509
Net operating losses
53,795
61,089
Property
5,348
610
Other
8,140
3,246
Total deferred tax assets
$
109,462
$
109,087
Valuation allowance
(108,021)
(109,087)
Total net deferred tax assets
$
1,441
$
—
Deferred tax liabilities:
Interest rate swap
$
1,110
$
—
Other
331
—
Total deferred tax liabilities
$
1,441
$
—
Net deferred tax assets (liabilities)
$
—
$
—
Federal tax credit carryforwards at December 31, 2024, totaled $8.3 million, of which $8.1 million will expire in 2036 and
$0.2 million will expire in 2039. State tax credit carryforwards at December 31, 2024, totaled $6.9 million and may be carried
forward indefinitely under state law. As of December 31, 2024, the Company had gross federal net operating loss carryforwards
of $193.2 million ($40.6 million tax-effected) that can be carried forward indefinitely under federal law. As of December 31,
2024, the Company had state net operating loss carryforwards of $262.3 million ($13.2 million tax-effected) that can be carried
forward indefinitely.
A valuation allowance must be provided if it is more likely than not that some portion or all of the deferred tax assets will not
be realized, based upon consideration of all positive and negative evidence. Sources of evidence include, among other things, a
history of pretax earnings or losses, expectations of future results, tax planning opportunities and appropriate tax law.
Due to the recent losses the Company has generated in its TRS, the Company believes that it is more likely than not that its U.S.
federal and state deferred tax assets will not be realized as of December 31, 2024. The Company recorded a decrease in the
valuation allowance of $1.1 million on its net U.S. federal and state deferred tax assets for the current period. Should the
Company determine that it would be able to realize its deferred tax assets in the foreseeable future, an adjustment to the
deferred tax assets may cause a material increase to income in the period such determination is made. Significant management
judgment is required in determining the period in which reversal of a valuation allowance should occur. The net change to the
valuation allowance recorded during each of the years ended December 31, 2024, 2023, and 2022, was as follows (in
thousands):
Balance at
Beginning of Year
Net Change
Balance at End
of Year
2024
$
109,087
$
(1,066) $
108,021
2023
$
109,827
$
(740) $
109,087
2022
$
109,585
$
242
$
109,827
The Company receives an income tax benefit for exercised stock options calculated as the difference between the fair market
value of the stock issued at the time of exercise and the option exercise price, tax-effected. The Company also receives an
income tax benefit for restricted stock units when they vest, measured as the fair market value of the stock issued at the time of
vesting, tax-effected. Due to the Company's valuation allowance in the respective periods, there were no net tax benefits
recognized from share-based transactions for the years ended December 31, 2024, 2023, and 2022.
83
The Company recognizes accrued interest and penalties on income taxes as a component of income tax expense. As of
December 31, 2024, accrued interest and penalties were not material. The Company has not identified any material
unrecognized tax positions and as such has no related interest or penalty accruals.
As of December 31, 2024, tax years 2021 and later are open to audit by the tax authorities. The Company does not believe that
the result of any potential audits will have a material adverse effect on its results of operations, financial condition or liquidity.
17.
Earnings Per Share ("EPS")
Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common shares by
the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated
by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the
period, as adjusted for the potential dilutive effect of non-participating share-based awards, as well as adjusted by the number of
additional shares, if any, that would have been outstanding had the potentially dilutive common shares been issued.
The following table provides a reconciliation of income (loss) from continuing operations to net income (loss) for the years
ended December 31, 2024, 2023, and 2022 (in thousands):
2024
2023
2022
Income (loss) from continuing operations
$
64,003
$
40,810
$
37,064
Distributions and allocations to participating securities
(23)
(106)
(189)
Income (loss) from continuing operations available to A&B shareholders
63,980
40,704
36,875
Income (loss) from discontinued operations available to A&B shareholders
(3,466)
(7,847)
(86,644)
Exclude: Loss (income) attributable to discontinued noncontrolling interest
—
(3,151)
(1,077)
Net income (loss) available to A&B common shareholders
$
60,514
$
29,706
$
(50,846)
The number of shares used to compute basic and diluted earnings per share for the years ended December 31, 2024, 2023, and
2022:
2024
2023
2022
Denominator for basic EPS - weighted average shares outstanding
72,606
72,559
72,636
Effect of dilutive securities:
Restricted stock unit awards
146
217
151
Denominator for diluted EPS - weighted average shares outstanding
72,752
72,776
72,787
The number of anti-dilutive securities, excluded from the calculation of diluted earnings per common share, during the years
ended December 31, 2024, 2023, and 2022 (in thousands):
2024
2023
2022
Number of anti-dilutive securities
2
73
70
18.
Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive loss, net of taxes, were as follows for the years ended December 31,
2024 and 2023 (in thousands):
2024
2023
Employee benefit plans:
Post-retirement plans
$
382
$
(150)
Non-qualified benefit plans
(15)
(31)
Total employee benefit plans
367
(181)
Interest rate swaps
5,767
3,431
Accumulated other comprehensive income (loss)
$
6,134 $
3,250
84
The changes in accumulated other comprehensive income (loss) by component for the years ended December 31, 2024, 2023,
and 2022 were as follows (in thousands, net of tax):
Employee
Benefit Plans
Interest Rate
Swap
Total
Balance, January 1, 2022
$
(77,955)
$
(2,751)
$
(80,706)
Other comprehensive income (loss) before reclassifications, net of taxes of $0
17,021
4,876
21,897
Amounts reclassified from accumulated other comprehensive income (loss), net of
taxes of $0
78,939
(28)
78,911
Taxes on other comprehensive income (loss)
(18,295)
—
(18,295)
Balance, December 31, 2022
$
(290) $
2,097 $
1,807
Other comprehensive income (loss) before reclassifications, net of taxes of $0
109
296
405
Amounts reclassified from accumulated other comprehensive income (loss), net of
taxes of $0
—
1,038
1,038
Balance, December 31, 2023
$
(181) $
3,431 $
3,250
Other comprehensive income (loss) before reclassifications, net of taxes of $0
534
4,100
4,634
Amounts reclassified from accumulated other comprehensive income (loss), net of
taxes of $0
14
(1,764)
(1,750)
Balance, December 31, 2024
$
367 $
5,767 $
6,134
The reclassifications of other comprehensive income (loss) components out of accumulated other comprehensive income (loss)
for the years ended December 31, 2024, 2023, and 2022, were as follows (in thousands):
2024
2023
2022
Cash flow hedges:
Unrealized interest rate derivative gain (loss)
$
4,100 $
296 $
4,876
Reclassification adjustment to interest expense included in Net Income (Loss)
(1,764)
(1,680)
469
Reclassification of interest rate derivative loss (gain) to interest and other income
(expense), net included in Net Income (Loss)
—
2,718
(497)
Employee benefit plans:
Actuarial gain (loss)
534
109
17,021
Amortization of defined benefit pension items reclassified to net periodic pension
cost:
Net loss1
—
—
1,941
Settlement recognition of net loss (gain)1
14
—
—
Amortization of prior service credit1
—
—
91
Pension termination
—
—
76,907
Total before income tax
$
2,884 $
1,443 $
100,808
Income taxes related to other comprehensive income (loss)
—
—
(18,295)
Other comprehensive income (loss), net of tax
$
2,884 $
1,443 $
82,513
1 This accumulated other comprehensive income (loss) component is included in the computation of net periodic pension cost (refer to Note 15 – Employee
Benefit Plans).
85
19.
Segment Information
Operating segments are components of an enterprise that engage in business activities from which it may earn revenues and
incur expenses, whose operating results are regularly reviewed by the chief operating decision maker ("CODM") to make
decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial
information is available. The Company's CODM is the chief executive officer.
The accounting policies of the operating segments are described in Note 2 – Significant Accounting Policies. The Company
measures and evaluates operating segments based on operating profit, exclusive of gain (loss) on disposal of commercial real
estate properties, interest expense, general corporate expenses and income taxes. The CODM uses segment operating profit in
the annual budgeting and forecasting process and considers budget-to-actual and period-over-period variances on a monthly or
quarterly and year-to-date basis when evaluating segment performance and making decisions about allocating resources to the
segments. Revenues related to transactions between reportable segments have been eliminated in consolidation. Transactions
between reportable segments are accounted for on the same basis as transactions with unrelated third parties.
The Company currently operates and reports on two segments: Commercial Real Estate and Land Operations. The following is
a brief description of our operating and reportable segments, including information about each segment's revenues, expenses,
operating profit, and cash flows:
•
Commercial Real Estate: The CRE segment owns, operates and manages a portfolio of retail, industrial and office
properties in Hawai‘i totaling four million square feet of gross leasable area. The Company also owns approximately
142 acres of commercial land in Hawai‘i, of which substantially all is leased pursuant to urban ground leases.
•
Land Operations: The Land Operations segment generates its revenues from real estate development and land sales,
income/loss from joint ventures, and other legacy business activities in Hawai‘i. Historically, this segment also
generated revenues from the sale of hydroelectric energy until the disposal of McBryde Resources Inc. during 2022,
and trucking and storage services until the disposal of Kahului Trucking & Storage, Inc. during 2023.
Segment information for the years ended December 31, 2024, 2023, and 2022, is summarized below (in thousands):
2024
2023
2022
Commercial Real Estate
Revenue from external customers
$
197,365
$
193,971
$
187,224
Intersegment revenue
25
61
279
Total segment revenue
197,390
194,032
187,503
Less:
Operating costs and expenses
51,760
49,635
48,208
Property taxes
14,698
14,871
14,037
Depreciation and amortization
36,093
36,490
36,499
Selling, general, and administrative
5,356
6,984
6,788
Impairment of assets1
256
4,768
—
Other segment items2
(184)
59
508
Commercial Real Estate segment operating profit
$
89,411
$
81,225
$
81,463
Land Operations
Revenue from external customers
$
39,276
$
14,872
$
43,329
Total segment revenue
39,276
14,872
43,329
Less:3
Development cost of sales
12,592
—
3,810
Unimproved/other property land cost of sales
7,323
1,759
2,792
Other operating costs and expenses
4,547
7,791
18,678
Expense (income) from changes to liabilities related to legacy operations
2,028
(3,965)
4,200
Selling, general, and administrative
1,310
1,792
3,532
(Gain) loss from disposals, net
(2,148)
(1,114)
(53,954)
Loss (earnings) from joint ventures
(4,556)
(1,872)
(1,586)
Other segment items4
(742)
(349)
67,208
Land Operations segment operating profit
$
18,922
$
10,830
$
(1,351)
Operating Profit (Loss)
86
Commercial Real Estate
$
89,411
$
81,225
$
81,463
Land Operations
18,922
10,830
(1,351)
Total operating profit (loss)
108,333
92,055
80,112
Gain (loss) on disposal of commercial real estate properties
51
—
—
Interest expense
(23,169)
(22,963)
(21,991)
Corporate and other expense5
(21,038)
(28,247)
(39,309)
Income (Loss) from Continuing Operations Before Income Taxes
$
64,177
$
40,845
$
18,812
1 Commercial Real Estate impairment for the year ended December 31, 2024 includes $0.3 million of impairment - abandoned development costs. For the year ended
December 31, 2023, it includes $2.2 million of impairment - CRE properties and $2.6 million of impairment - abandoned development costs.
2 Commercial Real Estate other segment items includes interest income and gain (loss) on fixed asset disposals. For the year ended December 31, 2022, Commercial Real
Estate other segment items also includes pension termination charges of $0.7 million.
3 The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. Intersegment expenses were
immaterial for the years ended December 31, 2024 and 2023 and $0.3 million for the year ended December 31, 2022, and are included within other operating costs and
expenses.
4 Land Operations other segment items includes interest income related to seller financing receivables from the sales of unimproved legacy property or development
parcels and expenses related to non-qualified plan and other post-retirement benefits related to legacy operations. For the year ended December 31, 2022, Land Operations
other segment items also includes pension termination charges of $62.2 million.
5 Corporate and other expense includes pension termination charges of $14.0 million for the year ended December 31, 2022, related to the 2022 termination of the defined
benefit plans.
87
2024
2023
2022
Identifiable Assets:
Commercial Real Estate
$
1,516,058
$
1,493,826
$
1,499,946
Land Operations1
98,751
112,408
112,043
Total reportable segment assets
$
1,614,809
$
1,606,234
$
1,611,989
Corporate and unallocated assets2
55,623
40,007
175,315
Total assets
$
1,670,432
$
1,646,241
$
1,787,304
Capital Expenditures:
Commercial Real Estate3
$
50,680
$
31,089
$
21,373
Land Operations4
28
1
258
Total reportable segment capital expenditures
$
50,708
$
31,090
$
21,631
Corporate
69
60
52
Total capital expenditures
$
50,777
$
31,150
$
21,683
Depreciation and Amortization:
Commercial Real Estate
$
36,093
$
36,490
$
36,499
Land Operations
11
35
1,200
Total reportable segment depreciation and amortization
36,104
36,525
37,699
Corporate
208
266
323
Total depreciation and amortization
$
36,312
$
36,791
$
38,022
Revenue
Commercial Real Estate
$
197,390
$
194,032
$
187,503
Land Operations
39,276
14,872
43,329
Total reportable segment revenue
236,666
208,904
230,832
Corporate
—
—
—
Elimination of intersegment revenue
(25)
(61)
(279)
Total revenue
$
236,641
$
208,843
$
230,553
Interest Income
Commercial Real Estate
$
51
$
—
$
—
Land Operations
1,060
387
280
Total reportable segment interest income
$
1,111
$
387
$
280
Corporate
1,080
44
—
Total interest income
$
2,191
$
431
$
280
Interest Expense
Commercial Real Estate
$
5,341
$
7,303
$
7,462
Land Operations
—
—
—
Total reportable segment interest expense
$
5,341
$
7,303
$
7,462
Corporate
17,828
15,660
14,529
Total interest expense
$
23,169
$
22,963
$
21,991
1 The Land Operations segment includes assets related to the Company's investment in various joint ventures. As a result of the change in the composition of the Land
Operations segment in 2022, as noted above, total identifiable assets increased $23.4 million as of December 31, 2022.
2 Unallocated assets includes assets held for sale related to the Grace disposal group as of December 31, 2022. The Company had assets held for sale included in
unallocated assets as of as of December 31, 2024 and December 31, 2023.
3 Represents gross capital additions to the commercial real estate portfolio, including real estate acquisitions and gross tax deferred property purchases, but excluding the
assumption of debt, that are reflected as non-cash transactions in the consolidated statements of cash flows.
4 Excludes expenditures for real estate developments held for sale, which are classified as cash flows from operating activities within the consolidated statements of cash
flows, and excludes investment in joint ventures classified as cash flows from investing activities.
88
20.
Sale of Business
Grace Disposal Group
On November 15, 2023, the Company sold the Grace Disposal Group to Nan, Inc., an unrelated third party, for total
consideration of $57.5 million, which consisted of cash proceeds of $42.5 million and a $15.0 million promissory note. The
promissory note had a maturity date of January 5, 2024, and did not accrue interest. The note was paid in full in January 2024.
In connection with the sale, the Company recognized a net loss on disposition of $13.2 million for the year ended December 31,
2023, which is presented within Income (loss) from discontinued operations, net of income taxes in the consolidated statements
of operations. In addition, the Company was released by Grace Pacific's third-party sureties from all indemnity obligations
relating to Grace Pacific's construction bonds (bid, performance and payment bonds). The financial results associated with the
Grace Disposal Group are classified as discontinued operations in the consolidated statements of operations and cash flows for
the years ended December 31, 2023 and 2022.
McBryde Legacy Business
On June 30, 2022, the Company sold to Brue Baukol Capital Partners, an unrelated third party, approximately 18,900 acres of
primarily conservation and agricultural land on the island of Kauai and 100% of the Company's ownership interest in McBryde
Resources, Inc., the operator of hydroelectric power facilities on Kauai, in exchange for cash proceeds and escrow receivables
of $73.9 million and $0.9 million, respectively. In connection with the sale, the Company recognized a net gain of $54.0 million
for the year ended December 31, 2022, which is presented within Gain (loss) on disposal of assets, net in the consolidated
statements of operations. The disposal was not considered individually significant and does not qualify for presentation and
disclosure as a discontinued operation. The $0.9 million escrow receivable was collected in full during the year ended
December 31, 2024.
89
21.
Held for Sale and Discontinued Operations
In November 2023, the Company entered into a disposition agreement with an unrelated third party for the sale of Waipouli
Town Center, a retail property within the Commercial Real Estate segment. In order to allow time for the Company to identify
suitable replacement property, the Company had up to one year from the agreement execution date to close the transaction, at
its option. The Company determined that the property met the criteria to be classified as held for sale as of the agreement
execution date of November 15, 2023, but would not be considered discontinued operations as it neither represented a strategic
shift, nor would have a material impact on the Company's operations and financial results. Accordingly, the Company measured
the assets and liabilities associated with the property at fair value less any costs to sell as of December 31, 2023, and recorded
impairment of $2.2 million in the fourth quarter of 2023. The impairment charge is presented in Impairment of assets in the
consolidated statements of operations for the year ended December 31, 2023. As of December 31, 2023, the assets and
liabilities associated with Waipouli Town Center are presented in the consolidated balance sheets as Assets held for sale and
Accrued and other liabilities, respectively. On October 21, 2024, the Company completed the disposition of Waipouli Town
Center.
In December 2022, the Company's Board of Directors authorized Management to complete a sale of the Grace Disposal Group.
In conjunction with the Board's authorization, the Company concluded that the Grace Disposal Group met the criteria for
classification as held for sale and discontinued operations as of December 31, 2022, as it represented a strategic shift and was
expected to have a material impact on the Company's operations and financial results. Accordingly, the results of operations
associated with the Grace Disposal Group are presented as discontinued operations in the consolidated statements of operations
and cash flows for the years ended December 31, 2023 and 2022. As a result of the Grace Disposal Group's classification as
held for sale, the assets and liabilities associated with the Grace Disposal Group were measured at fair value less any costs to
sell as of December 31, 2022, and impairment of $89.8 million was recorded in the fourth quarter of 2022.
Refer to Note 7 – Fair Value Measurements for additional discussion of the inputs used to determine the fair value of assets held
for sale.
The following table presents information related to the major classes of assets and liabilities that were classified as held for sale
in the consolidated balance sheet as of December 31, 2023 (in thousands):
2023
Real estate investments
Real estate property
$
17,556
Accumulated depreciation
(1,817)
Real estate property, net
15,739
Real estate intangible assets, net
307
Real estate investments, net
16,046
Prepaid expenses and other assets
121
Less: Impairment recognized on classification as held for sale
(2,183)
Total Assets held for sale
$
13,984
Accrued and other liabilities
55
Total Liabilities associated with assets held for sale1
$
55
1Liabilities associated with assets held for sale is presented in Accrued and other liabilities on the Consolidated Balance Sheets as of December 31, 2023.
90
The following table summarizes income (loss) from discontinued operations included in the Consolidated Statements of
Operations for the three years ended December 31, 2024, 2023, and 2022, (in thousands):
20241
2023
2022
Revenue
$
— $
201,162 $
171,231
Cost of sales1
(62)
(178,115)
(153,547)
Selling, general and administrative1
(3,404)
(15,753)
(14,492)
Impairment of assets
—
—
(89,818)
Gain (loss) on disposal of assets, net
—
(13,242)
60
Operating income (loss) from discontinued operations1
(3,466)
(5,948)
(86,566)
Income (loss) related to joint ventures
—
(1,465)
(411)
Interest and other income (expense), net
—
77
596
Interest expense
—
(496)
(263)
Income (loss) from discontinued operations before income taxes1
(3,466)
(7,832)
(86,644)
Income tax benefit (expense) attributable to discontinued operations
—
(15)
—
Income (loss) from discontinued operations1
(3,466)
(7,847)
(86,644)
Loss (income) attributable to discontinued noncontrolling interest
—
(3,151)
(1,077)
Income (loss) from discontinued operations attributable to A&B Shareholders1
$
(3,466)
$
(10,998)
$
(87,721)
1Includes $3.5 million, $0.1 million, and $0.4 million in costs associated with the resolution of liabilities from the Company’s former sugar operations for the years ended
December 31, 2024, 2023, and 2022, respectively.
Related Party Transactions within Discontinued Operations and Held for Sale: The Company entered into contracts in the
ordinary course of business, as a supplier, with affiliate entities that required accounting under the equity method due to the
Company's financial interests in such entities and also with affiliate parties that are members in entities in which the Company
also was a member and held a controlling financial interest. Related to the periods during which such relationships existed,
revenues earned from transactions with such affiliates were $13.7 million and $16.9 million for the years ended December 31,
2023 and 2022, respectively. Expenses recognized from transactions with such affiliates were $4.4 million and $4.8 million for
the years ended December 31, 2023 and 2022, respectively. These related party relationships were terminated in conjunction
with the sale of the Grace disposal group in 2023, and as such, revenues earned and expenses incurred from transactions with
previously affiliated entities are not considered related party transactions for the year ended December 31, 2024.
22.
Subsequent Events
On February 25, 2025, the Company's Board of Directors declared a cash dividend of $0.2250 per share of outstanding
common stock, payable on April 7, 2025, to shareholders of record as of the close of business on March 14, 2025.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the Company's
Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2024, the Company’s disclosure
controls and procedures were effective.
Internal Control Over Financial Reporting
There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) during the Company's fiscal fourth quarter that have materially affected, or
are reasonably likely to materially affect, the Company's internal control over financial reporting.
91
Management’s Annual Report on Internal Control Over Financial Reporting
The management of Alexander & Baldwin, Inc. has the responsibility for establishing and maintaining adequate internal control
over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s principal executive
and principal financial officers and effected by the Company’s board of directors, management and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the United States of America and includes those
policies and procedures that:
•
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets of the Company;
•
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the United States of America, and that
receipts and expenditures of the Company are being made only in accordance with authorizations of management
and directors of the Company; and
•
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting only provides reasonable assurance with respect to
financial statement presentation and preparation and cannot provide absolute assurance that all control issues and instances of
fraud, if any, will be detected. Management does not expect that the Company’s internal controls will prevent or detect all errors
and all fraud. Additionally, the design of a control system must consider the benefits of the controls relative to their costs.
Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework (2013). Based on its assessment, management believes that, as
of December 31, 2024, the Company’s internal control over financial reporting was effective.
The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report on the
Company’s internal control over financial reporting. That report appears below.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Alexander & Baldwin, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Alexander & Baldwin, Inc. and subsidiaries (the “Company”) as
of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our
report dated February 28, 2025, expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
92
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Honolulu, Hawai‘i
February 28, 2025
ITEM 9B. OTHER INFORMATION
Effective as of February 25, 2025, the Company’s Board of Directors amended and restated the Bylaws of Alexander &
Baldwin, Inc. to increase the maximum age of eligibility for a director from 72 years to 75 years.
Rule 10b5-1 Trading Arrangements
None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule
10b5-1 trading arrangement (as each term is defined in Item 408 of Regulation S-K) during the quarter ended December 31,
2024.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
93
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
For information about the directors of A&B, see the section captioned “Election of Directors” in A&B’s proxy statement for the
2025 Annual Meeting of Shareholders (“A&B’s 2025 Proxy Statement”), which section is incorporated herein by reference.
Executive Officers
As of February 13, 2025, the name of each executive officer of A&B (in alphabetical order), age (in parentheses), and present
and prior positions with A&B and business experience for the past five years are given below.
Generally, the term of office of executive officers is at the pleasure of the Board of Directors. For a discussion of change in
control agreements between A&B and certain of A&B’s executive officers, and the Executive Severance Plan, see the
subsections captioned “Other Potential Post-Employment Payments” in A&B’s 2025 Proxy Statement, which subsections are
incorporated herein by reference.
References within this section to A&B include the Company and Alexander & Baldwin, Inc. prior to the Holding Company
Merger, which was completed on November 8, 2017 in order to facilitate the Company's conversion to a REIT. Also, references
to “A&B Predecessor” are to Alexander & Baldwin, Inc. prior to its separation from Matson, Inc. on June 29, 2012.
Meredith J. Ching (68)
Executive Vice President, External Affairs, of A&B, 3/18-present; Senior Vice President, External Affairs, of A&B,
6/12-3/18; Senior Vice President, Government & Community Relations, of A&B Predecessor, 6/07-6/12; first joined A&B
Predecessor in 1982.
Clayton K. Y. Chun (47)
Executive Vice President, Chief Financial Officer and Treasurer of A&B, 12/22-present; Senior Vice President of
A&B, 2/19-11/22; Chief Accounting Officer of A&B, 1/18-11/22; Vice President of A&B, 3/18-1/19; Controller of A&B, 9/15-
11/22.
Derek T. Kanehira (59)
Senior Vice President, Human Resources, of A&B, 5/20-present; Vice President and Director of HR Services, Hawaii
Employers Council, 1/17-4/20; Vice President and Director of Human Resources, Hawaii National Bank, 5/13-1/17.
Scott G. Morita (56)
Vice President and Corporate Counsel of A&B, 11/21-present; Associate General Counsel of A&B, 7/18-10/21;
Partner, Schlack Ito, 3/13-6/18.
Lance K. Parker (51)
Chief Executive Officer of A&B, 7/23-present; President of A&B, 1/23-present; Chief Operating Officer of A&B,
11/21-6/23; President of A&B Properties Hawai‘i, LLC ("ABP"), 9/15-present; Executive Vice President of A&B, 3/18-1/23;
Chief Real Estate Officer of A&B, 10/17-11/21; Senior Vice President of ABP, 6/13-8/15; first joined A&B Predecessor in
2004.
Anthony J. Tommasino (41)
Vice President and Controller of A&B, 10/22-present; Director, Financial Reporting and Technical Accounting, 6/21-
9/22; Director, Corporate Accounting, The Gas Company, LLC, 3/20-6/21; Senior Manager, Deloitte & Touche LLP, 9/13-3/20.
Corporate Governance
For information about the Audit Committee of the A&B Board of Directors, see the section captioned “Board of Directors
Information” in A&B’s 2025 Proxy Statement, which section is incorporated herein by reference.
94
Code of Ethics
For information about A&B’s Code of Ethics, see the subsection captioned “Code of Ethics” in A&B’s 2025 Proxy Statement,
which subsection is incorporated herein by reference.
Insider Trading Policy
For information about A&B’s Insider Trading Policy, see the subsection captioned “Insider Trading Policy” in A&B’s 2025
Proxy Statement, which subsection is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
See the section captioned “Executive Compensation” and the subsection captioned “Compensation of Directors” in A&B’s
2025 Proxy Statement, which section and subsection are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
See the section captioned “Shareholders' Security Ownership” and the subsection titled “Security Ownership of Directors and
Executive Officers” in A&B’s 2025 Proxy Statement, which section and subsection are incorporated herein by reference.
Securities Authorized for Issuance Under Equity Compensation Plans
Securities authorized for issuance under equity compensation plans at December 31, 2024, included:
Plan Category
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding securities
reflected in column (a))
(a)
(b)
(c)1
Equity compensation plans approved
by security holders
—
$0.00
2,776,091
1 Under the 2022 Incentive Compensation Plan, 2,776,091 shares may be issued either as restricted stock grants, restricted stock unit grants, or stock option
grants.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
See the section captioned “Election of Directors” and the subsection captioned “Relationships and Transactions” in A&B’s
2025 Proxy Statement, which section and subsection are incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information concerning principal accountant fees and services appears in the section captioned “Ratification of Appointment of
Independent Registered Public Accounting Firm” in A&B’s 2025 Proxy Statement, which section is incorporated herein by
reference.
95
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements
The financial statements are set forth in Item 8 of Part II above.
96
Financial Statement Schedules
SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION
Alexander & Baldwin, Inc.
December 31, 2024
(in millions)
Initial Cost
Costs Capitalized
Subsequent to Acquisition
Gross Amounts of Which Carried at
Close of Period
Description
Encum-
brances (1)
Land
Buildings
and
Improvements
Improvements
Carrying
Costs
Land
Buildings
and
Improvements
Total (2)
Accumulated
Depreciation
(3)
Date of
Construction
Date
Acquired/
Completed
Commercial Real Estate Segment
Retail :
Pearl Highlands Center (HI)
$
2.2 $
43.4 $
96.2 $
38.2 $
— $
43.6 $
134.2 $
177.8 $
(38.4)
1992-1994
2013
Kailua Retail Other (HI)
0.1
85.1
73.8
23.8
—
88.2
94.5
182.7
(31.3)
Various
2013
Laulani Village (HI)
—
43.4
64.3
3.8
—
43.5
68.0
111.5
(13.9)
2012
2018
Waianae Mall (HI)
—
17.4
10.1
11.3
—
18.2
20.6
38.8
(7.2)
1975
2013
Manoa Marketplace (HI)
50.9
43.3
35.9
24.3
—
45.2
58.3
103.5
(11.8)
1977
2016
Queens' Marketplace (HI)
—
20.4
58.9
3.4
—
20.7
62.0
82.7
(10.0)
2007
2019
Kaneohe Bay Shopping Ctr. (HI)
—
—
13.4
5.2
—
1.6
17.0
18.6
(10.0)
1971
2001
Hokulei Street (HI)
—
16.9
36.5
3.2
—
17.0
39.6
56.6
(8.6)
2015
2018
Puunene Shopping Center (HI)
—
24.8
28.6
9.6
—
26.1
36.9
63.0
(10.1)
2017
2018
Waipio Shopping Center (HI)
—
24.0
7.6
2.5
—
24.5
9.6
34.1
(3.9)
1986, 2004
2009
Aikahi Park Shopping Center
(HI)
—
23.5
6.7
21.2
—
26.1
25.3
51.4
(7.8)
1971
2015
Lanihau Marketplace (HI)
—
9.4
13.2
4.6
—
11.3
15.9
27.2
(6.7)
1987
2010
The Shops at Kukui'ula (HI)
—
8.9
30.1
9.2
—
9.5
38.7
48.2
(12.3)
2009
2013
Ho'okele (HI)
—
—
—
31.5
—
13.5
18.0
31.5
(5.1)
2017
2019
Kunia Shopping Center (HI)
—
2.7
10.6
3.0
—
3.0
13.3
16.3
(6.9)
2004
2002
Kahului Shopping Center (HI)
—
—
—
3.4
—
0.6
2.8
3.4
(2.1)
1951
1951
Lau Hala Shops (HI)
—
—
—
41.5
—
15.2
26.3
41.5
(7.0)
2018
2018
Napili Plaza (HI)
—
9.4
8.0
3.6
—
10.0
11.0
21.0
(3.7)
1991
2003, 2013
Gateway at Mililani Mauka (HI)
—
7.3
4.7
7.1
—
7.8
11.3
19.1
(3.6)
2008, 2013
2011
Port Allen Marina Ctr. (HI)
—
—
3.4
1.2
—
—
4.6
4.6
(2.9)
2002
1971
The Collection (HI)
—
0.4
2.2
0.9
—
0.4
3.1
3.5
(0.8)
2017
2018
Industrial :
Komohana Industrial Park (HI)
—
25.2
10.8
2.4
—
25.4
13.0
38.4
(5.1)
1990
2010
Kaka`ako Commerce Center (HI)
1.6
16.9
20.6
5.9
—
16.9
26.5
43.4
(5.9)
1969
2014
Waipio Industrial (HI)
—
19.6
7.7
1.7
—
19.7
9.3
29.0
(3.6)
1988-1989
2009
Opule Industrial (HI)
—
10.9
27.1
—
—
10.9
27.1
38.0
(4.3)
2005-2006,
2018
2018
P&L Warehouse (HI)
—
—
—
1.8
—
0.1
1.7
1.8
(1.0)
1970
1970
Kapolei Enterprise Center (HI)
—
7.9
16.8
0.7
—
7.9
17.5
25.4
(3.3)
2019
2019
Honokohau Industrial (HI)
—
5.0
4.8
0.2
—
5.0
5.0
10.0
(1.1)
Various
2017
Waihona Industrial (HI)
—
9.0
20.7
—
—
9.0
20.7
29.7
(0.2)
1981, 1988
2024
Kailua Industrial / Other (HI)
—
10.5
2.0
1.1
—
10.6
3.0
13.6
(1.0)
Various
2013
Port Allen (HI)
—
—
0.7
2.8
—
0.1
3.4
3.5
(2.5)
1983, 1993
1983-1993
Harbor Industrial (HI)
—
0.1
—
1.3
—
0.1
1.3
1.4
(1.2)
1930
2018
Kaomi Loop (HI)
—
3.3
5.8
—
—
3.3
5.8
9.1
(0.3)
2005
2023
Kahai Street Industrial (HI)
—
4.4
2.0
—
—
4.4
2.0
6.4
(0.1)
1973
2021
Maui Lani Industrial (HI)
—
0.2
0.3
—
—
0.2
0.3
0.5
—
2010
2011-2014
Office :
Kahului Office Building (HI)
—
1.0
0.4
8.5
—
1.2
8.7
9.9
(7.8)
1974
1989
Gateway at Mililani Mauka South
(HI)
—
7.0
3.5
7.5
—
7.0
11.0
18.0
(3.3)
1992, 2006
2012
Kahului Office Center (HI)
—
—
—
4.9
—
—
4.9
4.9
(4.2)
1991
1991
Lono Center (HI)
—
—
1.4
1.6
—
—
3.0
3.0
(2.0)
1973
1991
Other :
Oahu Ground Leases (HI)
—
235.5
0.1
0.7
—
235.7
0.6
236.3
(0.1)
—
—
Other miscellaneous investments
—
2.5
0.1
7.7
—
2.5
7.8
10.3
(4.3)
—
—
Total
$
54.8 $
739.3 $
629.0 $
301.3 $
— $
786.0 $
883.6 $ 1,669.6 $
(255.4)
97
Description (amounts in
millions)
Encumbrances
(1)
Land
Buildings
and
Improvements
Improvements
Carrying Costs
Land
Buildings
and
Improvements
Total (2)
Accumulated
Depreciation
(3)
Land Operations Segment
Maui Business Park II
$
— $
— $
— $
15.2 $
— $
— $
15.2 $
15.2 $
—
Wailea
—
24.5
—
9.5
(3.1)
21.9
9.0
30.9
—
Other non-core landholdings
—
5.9
—
0.7
(5.2)
1.2
0.4
1.6
(0.2)
Total
$
— $
30.4 $
— $
25.4 $
(8.3) $
23.1 $
24.6 $
47.7 $
(0.2)
(1) See Note 8 – Notes Payable and Other Debt to the consolidated financial statements.
(2) The aggregate tax basis, at December 31, 2024, for the Commercial Real Estate segment and Land Operations segment assets was approximately $704.3
million.
(3) Depreciation is computed based upon the following estimated useful lives:
Building and improvements:
10 – 40 years
Leasehold improvements:
lesser of useful life or lease term
Other property improvements:
3 – 35 years
Reconciliation of Real Estate (in thousands)
2024
2023
2022
Balance at beginning of year
$ 1,667,123
$ 1,658,791
$ 1,653,165
Additions and improvements
70,609
32,953
24,534
Dispositions, retirements and other adjustments
(20,174)
(19,853)
(13,948)
Impairment of assets
(256)
(4,768)
(4,960)
Balance at end of year
$ 1,717,302
$ 1,667,123
$ 1,658,791
Reconciliation of Accumulated Depreciation (in thousands)
2024
2023
2022
Balance at beginning of year
$
227,282
$
202,264
$
180,528
Depreciation expense
29,715
28,847
28,580
Dispositions, retirements and other adjustments
(1,356)
(3,829)
(6,844)
Balance at end of year
$
255,641
$
227,282
$
202,264
98
Exhibits Required by Item 601 of Regulation S-K
Exhibits not filed herewith are incorporated by reference to the exhibit number and previous filing shown in
parentheses. All previous exhibits were filed with the Securities and Exchange Commission in Washington, D.C. Exhibits filed
pursuant to the Securities Exchange Act of 1934 were filed under file number 001-34187. Shareholders may obtain copies of
exhibits for a copying and handling charge of $0.15 per page by writing to Alyson J. Nakamura, Corporate Secretary,
Alexander & Baldwin, Inc., P. O. Box 3440, Honolulu, Hawai‘i 96801.
2.
Plan of acquisition, reorganization, arrangement, liquidation or succession.
2.a. Agreement and Plan of Merger, dated as of July 10, 2017, by and among Alexander & Baldwin, Investments, LLC
(formerly Alexander & Baldwin, Inc.), Alexander & Baldwin, Inc. (formerly Alexander & Baldwin REIT Holdings,
Inc.) and A&B REIT Merger Corporation (Exhibit 2.1 to Form 8-K, dated July 12, 2017).
3.
Articles of incorporation and bylaws.
3.a. Amended and Restated Articles of Incorporation of Alexander & Baldwin, Inc., effective as of November 8, 2017
(Exhibit 3.1 to Form 8-K, dated November 8, 2017).
3.b. Amended and Restated Bylaws of Alexander & Baldwin, Inc., effective as of February 25, 2025 (Exhibit 3.b to
Form 10-K for the year ended December 31, 2024).
4.
Instruments defining the rights of security holders.
4.a. Description of Capital Stock (Exhibit 4.1 to Form 8-K, dated November 8, 2017).
4.b. Form of Company Common Stock Certificate (Exhibit 4.2 to Form 8-K, dated November 8, 2017).
4.c. Description of Registrant's Securities (Exhibit 4.c. to Form 10-K for the year ended December 31, 2019).
10.
Material contracts.
10.a.
(i) Third Amended and Restated Credit Agreement by and among Alexander & Baldwin, Inc., Alexander & Baldwin
Investments, LLC, A&B II, LLC, Grace Pacific LLC, Bank of America N.A., First Hawaiian Bank, KeyBank National
Association, Wells Fargo Bank, National Association, and other lenders party thereto, dated August 31, 2021 (Exhibit
10.1 to Form 8-K, dated August 31, 2021).
(ii) First Amendment to Third Amended and Restated Credit Agreement by and among Alexander & Baldwin, Inc.,
Alexander & Baldwin Investments, LLC, A&B II, LLC, Grace Pacific LLC, Bank of America N.A., First Hawaiian
Bank, KeyBank National Association, Wells Fargo Bank, National Association, and other lenders party thereto dated
April 28, 2023 (Exhibit 10.a.(v) to Form 10-Q for the quarter ended March 31, 2023).
(iii) Fourth Amended and Restated Credit Agreement by and among Alexander & Baldwin, Inc., Alexander & Baldwin
Investments, LLC, Alexander & Baldwin, LLC, Alexander & Baldwin, LLC, Series R, Alexander & Baldwin, LLC,
Series T, Alexander & Baldwin, LLC, Series M, Bank of America N.A., First Hawaiian Bank, KeyBank National
Association, Wells Fargo Bank, National Association, and other lenders party thereto, dated October 17, 2024 (Exhibit
10.1 to Form 8-K, dated October 21, 2024).
(iv) Second Amended and Restated Note Purchase and Private Shelf Agreement among Alexander & Baldwin, Inc.,
Alexander & Baldwin, LLC, Prudential Investment Management, Inc., and certain affiliates of Prudential Investment
Management, Inc., dated December 10, 2015 (Exhibit 10.a.(xx) to Form 10-K for the year ended December 31, 2015).
(v) Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement by and among
Alexander & Baldwin, Inc., Alexander & Baldwin, LLC, Prudential Investment Management, Inc., and certain
affiliates of Prudential Investment Management, Inc., dated September 15, 2017 (Exhibit 10.2 to Form 8-K, dated
September 19, 2017)
(vi) Joinder Agreement, by Alexander & Baldwin, Inc. (formerly Alexander & Baldwin REIT Holdings, Inc.), dated
November 8, 2017, to Second Amended and Restated Note Purchase and Private Shelf Agreement, dated December
10, 2015, as amended, between Alexander & Baldwin, LLC, Alexander & Baldwin, Inc., and the other Guarantors
99
party thereto, on the one hand, and the Purchasers party thereto, on the other hand (Exhibit 10.a.(xvii) to Form 10-K
for the year ended December 31, 2017).
(vii) Second Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement, by and
among Alexander & Baldwin, Inc., Alexander & Baldwin, LLC, Alexander & Baldwin, LLC, Series R, Alexander &
Baldwin, LLC, Series T, Alexander & Baldwin, LLC, Series M, Prudential Investment Management, Inc., and certain
affiliates of Prudential Investment Management, Inc., dated January 8, 2018 (Exhibit 10.a.(xviii) to Form 10‑K for the
year ended December 31, 2017).
(viii) Series J Senior Notes (No. J-1 through No. J-8) by Alexander & Baldwin, LLC, Alexander & Baldwin, LLC,
Series R, Alexander & Baldwin, LLC, Series T, and Alexander & Baldwin, LLC, Series M in favor of The Prudential
Insurance Company of America, dated April 18, 2018 (Exhibit 10.a.(xix) to Form 10-Q for the quarter ended March
31, 2018).
(ix) Series K Senior Notes (No. K-1 through No. K-8) by Alexander & Baldwin, LLC, Alexander & Baldwin, LLC,
Series R, Alexander & Baldwin, LLC, Series T, and Alexander & Baldwin, LLC, Series M in favor of The Prudential
Insurance Company of America, dated April 18, 2018 (Exhibit 10.a.(xx) to Form 10-Q for the quarter ended March 31,
2018).
(x) Series L Senior Notes (No. L-1 through No. L-8) by Alexander & Baldwin, LLC, Alexander & Baldwin, LLC,
Series R, Alexander & Baldwin, LLC, Series T, and Alexander & Baldwin, LLC, Series M in favor of The Prudential
Insurance Company of America, dated April 18, 2018 (Exhibit 10.a.(xxi) to Form 10-Q for the quarter ended March
31, 2018).
(xi) Third Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement among
Alexander & Baldwin, Inc., Alexander & Baldwin, LLC, Prudential Investment Management, Inc., and certain
affiliates of Prudential Investment Management, Inc., dated August 31, 2021 (Exhibit 10.2 to Form 8-K, dated August
31, 2021).
(xii) Third Amended and Restated Note Purchase and Private Shelf Agreement among Alexander & Baldwin, Inc.,
Alexander & Baldwin, LLC, PGIM, Inc., and certain affiliates of PGIM, Inc., dated April 15, 2024 (Exhibit 10.a.(xvii)
to Form 10-Q for the quarter ended March 31, 2024).
(xiii) First Amendment to Third Amended and Restated Note Purchase and Private Shelf Agreement among Alexander
& Baldwin, Inc., Alexander & Baldwin, LLC, PGIM, Inc., and certain affiliates of PGIM, Inc., dated December 17,
2024 (Exhibit 10.a.(xiii) to Form 10-K for the year ended December 31, 2024).
(xiv) Note Purchase and Private Shelf Agreement among Alexander & Baldwin, Inc., Alexander & Baldwin, LLC,
AIG Asset Management (U.S.), LLC, and certain affiliates of AIG Asset Management (U.S.), LLC, dated December
20, 2017 (Exhibit 10.4 to Form 10-Q for the quarter ended September 30, 2021).
(xv) First Amendment to Note Purchase and Private Shelf Agreement among Alexander & Baldwin, Inc., Alexander &
Baldwin, LLC, AIG Asset Management (U.S.), LLC, and certain affiliates of AIG Asset Management (U.S.), LLC,
dated March 5, 2018 (Exhibit 10.a.(xxviii) to Form 10-K for the year ended December 31, 2021).
(xvi) Second Amendment to Note Purchase and Private Shelf Agreement among Alexander & Baldwin, Inc.,
Alexander & Baldwin, LLC, AIG Asset Management (U.S.), LLC, and certain affiliates of AIG Asset Management
(U.S.), LLC, dated August 31, 2021 (Exhibit 10.3 to Form 8-K, dated August 31, 2021).
(xvii) Loan Assumption and Amendment to Loan Documents, among PHSC Holdings, LLC, ABP Pearl Highlands
LLC, Pearl Highlands LLC, and The Northwestern Mutual Life Insurance Company, dated September 17, 2013
(Exhibit 10.a.(xxii) to Form 10-Q for the quarter ended September 30, 2013).
(xviii) Promissory Note between ABP Pearl Highlands LLC and The Northwestern Mutual Life Insurance Company,
dated November 20, 2014 (Exhibit 10.1 to Form 8-K, dated December 1, 2014).
(xix) Mortgage and Security Agreement between ABP Pearl Highlands LLC and The Northwestern Mutual Life
Insurance Company, dated November 20, 2014 (Exhibit 10.2 to Form 8-K, dated December 1, 2014).
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(xx) Promissory Note by ABL Manoa Marketplace LF LLC, A&B Manoa LLC, ABL Manoa Marketplace LH LLC,
and ABP Manoa Marketplace LH LLC to First Hawaiian Bank, dated August 1, 2016 (Exhibit 10.a.(xxxiv) to Form
10-Q for the quarter ended September 30, 2016).
(xxi) Mortgage, Security Agreement and Fixture Filing by ABL Manoa Marketplace LF LLC, A&B Manoa LLC, ABL
Manoa Marketplace LH LLC, and ABP Manoa Marketplace LH LLC to First Hawaiian Bank, dated August 1, 2016
(Exhibit 10.a.(xxxv) to Form 10-Q for the quarter ended September 30, 2016).
(xxii) Limited Liability Company Agreement of Alexander & Baldwin Investments, LLC, dated as of November 8,
2017 (Exhibit 10.1 to Form 8-K, dated November 8, 2017).
(xxiii) Promissory Note by TRC Laulani Village, LLC in favor of The Northwestern Mutual Life Insurance Company,
dated April 10, 2014 (Exhibit 10.a.(xxxiv) to Form 10-Q for the quarter ended March 31, 2018).
(xxiv) Loan Assumption and Amendment to Loan Documents, among TRC Laulani Village, LLC, ABP E1 LLC, ABP
ER1 LLC, and The Northwestern Mutual Life Insurance Company, dated February 23, 2018 (Exhibit 10.a.(xxxv) to
Form 10-Q for the quarter ended March 31, 2018).
(xxv) Purchase and Sale Agreement and Escrow Instructions by Alexander & Baldwin, LLC, Series R, Alexander &
Baldwin, LLC, Series T, and A & B Properties Hawaii, LLC, Series R, and Mahi Pono Holdings, LLC, dated
December 17, 2018 (Exhibit 10.1 to Form 8-K, dated December 20, 2018).
*10.b.1. (i) Alexander & Baldwin, Inc. 2012 Incentive Compensation Plan (Exhibit 99.1 to Form S-8 filed on June 29,
2012).
(ii) Amendment No. 1 to Alexander & Baldwin, Inc. 2012 Incentive Compensation Plan, effective as of January 24,
2017 (Exhibit 10.b.1.(ii) to Form 10-K for the year ended December 31, 2016).
(iii) Alexander & Baldwin, Inc. Amended and Restated 2012 Incentive Compensation Plan, as assumed (Exhibit 99.1
to Post-Effective Amendment No. 1 to Form S-8 filed on November 8, 2017).
(iv) Alexander & Baldwin, Inc. Amended and Restated 2012 Incentive Compensation Plan, as assumed on November
8, 2017, as further amended and restated effective January 23, 2018 (Exhibit 10.b.1.(iv) to Form 10-Q for the quarter
ended September 30, 2018).
(v) Amendment No. 1 to Alexander & Baldwin, Inc. Amended and Restated 2012 Incentive Compensation Plan,
effective April 26, 2021 (Exhibit 10.b.1.(v) to Form 10-Q for the quarter ended June 30, 2021).
(vi) Form of Notice of Stock Option Grant (Exhibit 99.2 to Form S-8 filed on June 29, 2012).
(vii) Form of Stock Option Agreement for Executive Employees (Exhibit 99.4 to Form S-8 filed on June 29, 2012).
(viii) Form of Notice of Time-Based Restricted Stock Unit Grant (Exhibit 10.b.1.(iv) to Form 10-K for the year ended
December 31, 2012).
(ix) Form of Notice of Time-Based Restricted Stock Unit Grant (Exhibit 10.b.1(viii) to Form 10-K for the year ended
December 31, 2019).
(x) Form of Time-Based Restricted Stock Unit Agreement for Executive Employees (Exhibit 10.b.1.(v) to Form 10-K
for the year ended December 31, 2012).
(xi) Form of Restricted Stock Unit Agreement for Non-Employee Directors (Exhibit 99.8 to Form S-8 filed on June
29, 2012).
(xii) Form of Restricted Stock Unit Agreement for Non-Employee Directors (Deferral Election) (Exhibit 99.9 to Form
S-8 filed on June 29, 2012).
(xiii) Form of Notice of Performance-Based Restricted Stock Unit Grant (Exhibit 99.10 to Form S-8 filed on June 29,
2012).
(xiv) Form of Performance-Based Restricted Stock Unit Agreement for Executive Employees (Exhibit 99.12 to
Form S-8 filed on June 29, 2012).
101
(xv) Form of Performance-Based Restricted Stock Unit Agreement for Executive Employees (Exhibit 10.b.1.(xv) to
Form 10-K for the year ended December 31, 2024).
(xvi) Form of Notice of Award of Performance Share Units (Exhibit 10.b.1.(xix) to Form 10-K for the year ended
December 31, 2014).
(xvii) Form of Notice of Award of Performance Share Units (Exhibit 10.b.1.(xxv) to Form 10-K for the year ended
December 31, 2021).
(xviii) Form of Performance Share Unit Award Agreement (Exhibit 10.b.1.(xx) to Form 10-K for the year ended
December 31, 2014).
(xix) Form of Letter Agreement (Exhibit 10.1 to Form 8-K, dated June 28, 2012).
(xx) Form of Letter Agreement (current participants) (Exhibit 10.b.1(xxviii) to Form 10-Q for the quarter ended
March 31, 2022).
(xxi) Form of Letter Agreement (prospective participants) (Exhibit 10.b.1(xxix) to Form 10-Q for the quarter ended
March 31, 2022).
(xxii) Alexander & Baldwin, Inc. Executive Severance Plan, amended and restated as of January 1, 2024 (Exhibit
10.b.1(xxxi) to Form 10-K for the year ended December 31, 2023).
(xxiii) Alexander & Baldwin, Inc. One-Year Performance Improvement Incentive Plan (Exhibit 10.3 to Form 8-K,
dated January 28, 2013).
(xxiv) Amendment No. 1 to Alexander & Baldwin, Inc. One-Year Performance Improvement Incentive Plan, dated
July 29, 2014 (Exhibit 10.b.1(xxii) to Form 10-Q for the quarter ended September 30, 2014).
(xxv) Amendment No. 2 to Alexander & Baldwin, Inc. One-Year Performance Improvement Incentive Plan, effective
January 1, 2018 (Exhibit 10.b.1(xxx) to Form 10-Q for the quarter ended March 31, 2021).
(xxvi) Alexander & Baldwin, Inc. Excess Benefits Plan, amended and restated effective November 1, 2023 (Exhibit
10.b.1(xxxix) to Form 10-K, for the year ended December 31, 2023).
(xxvii) Alexander & Baldwin, Inc. Deferred Compensation Plan for Outside Directors, effective November 1, 2023
(Exhibit 10.b.1(xli) to Form 10-K for the year ended December 31, 2023).
(xxviii) Alexander & Baldwin, Inc. Retirement Plan for Outside Directors (Exhibit 10.b.1(xxiii) to Form 10‑Q for the
quarter ended June 30, 2012).
(xxix) Amendment No. 1 to the Alexander & Baldwin, Inc. Retirement Plan for Outside Directors, effective as of
March 1, 2013 (Exhibit 10.b.1(xxvi) to Form 10‑Q for the quarter ended March 31, 2013).
(xxx) 2023 Alexander & Baldwin Nonqualified Defined Contribution Plan Adoption Agreement (Exhibit 10.b.1(xlvii)
to Form 10-K for the year ended December 31, 2023).
(xxxi) Alexander & Baldwin 2024 Amended and Restated Deferred Compensation Plan (Exhibit 10.b.1(xlix) to Form
10-K for the year ended December 31, 2023).
(xxxii) Alexander & Baldwin, Inc. 2021 Executive Simplification Incentive Program, effective February 22, 2021
(Exhibit 10.b.1(xl) to Form 10-Q for the quarter ended March 31, 2021).
(xxxiii) Alexander & Baldwin, Inc. 2022 Omnibus Incentive Plan (Appendix A to Proxy Statement filed on March 15,
2022).
(xxxiv) Form of Restricted Stock Unit Agreement for Non-Employee Directors (Exhibit 10.b.1(xlvii) to Form 10-Q
for the quarter ended March 31, 2022).
(xxxv) Form of Notice of Time-Based Restricted Stock Unit Grant (Exhibit 10.b.1(xlviii) to Form 10-Q for the quarter
ended September 30, 2022).
102
(xxxvi) Form of Time-Based Restricted Stock Unit Agreement for Executive Employees (Exhibit 10.b.1.(xlix) to
Form 10-Q for the quarter ended September 30, 2022).
(xxxvii) Form of Notice of Performance-Based Restricted Stock Unit Grant (Exhibit 10.b.1.(l) to Form 10-Q for the
quarter ended September 30, 2022).
(xxxviii) Form of Performance-Based Restricted Stock Unit Agreement for Executive Employees (Exhibit 10.b.1.(li)
to Form 10-Q for the quarter ended September 30, 2022).
*All exhibits listed under 10.b.1. are management contracts or compensatory plans or arrangements.
19. Alexander & Baldwin, Inc. General Policy Bulletin: Insider Trading, Speculative Transactions and Hedging.
21.1 Alexander & Baldwin, Inc. Subsidiaries as of February 1, 2025.
23.1 Consent of Deloitte & Touche LLP dated February 28, 2025.
31.1 Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32. Certification of Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to 906 of the Sarbanes-Oxley Act of 2002.
97. Policy relating to recovery of erroneously awarded compensation.
97.1 Alexander & Baldwin, Inc. Amended and Restated Policy Regarding Recoupment of Certain Compensation,
adopted October 24, 2023 and effective October 2, 2023 (Exhibit 97.1 to Form 10-K for the year ended December 31,
2023).
101. The following information from Alexander & Baldwin, Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 2024, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated
Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income
(Loss), (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, and (vi) Notes to
Consolidated Financial Statements.
104. Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).
ITEM 16. FORM 10-K SUMMARY
None.
103
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ALEXANDER & BALDWIN, INC.
(Registrant)
February 28, 2025
By: /s/ Lance K. Parker
Lance K. Parker
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Eric K. Yeaman
Chairman of the Board
February 28, 2025
Eric K. Yeaman
/s/ Lance K. Parker
President, Chief Executive Officer
February 28, 2025
Lance K. Parker
and Director
/s/ Clayton K.Y. Chun
Executive Vice President,
February 28, 2025
Clayton K.Y. Chun
Chief Financial Officer and Treasurer
/s/ Anthony J. Tommasino
Vice President and Controller
February 28, 2025
Anthony J. Tommasino
/s/ Shelee Kimura
Director
February 28, 2025
Shelee Kimura
/s/ Diana M. Laing
Director
February 28, 2025
Diana M. Laing
/s/ John T. Leong
Director
February 28, 2025
John T. Leong
/s/ Thomas A. Lewis, Jr.
Director
February 28, 2025
Thomas A. Lewis, Jr.
/s/ Douglas M. Pasquale
Lead Independent
February 28, 2025
Douglas M. Pasquale
Director