Alexander & Baldwin, Inc.

Good afternoon, and welcome to the Alexander and Baldwin Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode, and should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that today's event is being recorded. I would now like to turn the conference over to Steve Sweat of Investor Relations. Please go ahead, sir.

Thank you. Aloha and welcome to our call to discuss Alexander and Baldwin's second quarter 2023 earnings. With me today for our earnings call are A&B's Chief Executive Officer Lance Parker and our Chief Financial Officer Clayton Shun. We're also joined by Kit Millen, Senior Vice President of Asset Management, who is available to participate in the Q&A portion of the call. During our call, please refer to our second quarter 2023 supplemental information available on our website at investors.alexanderbaldwin.com forward slash supplements. Before we commence, please note that the statements in this call that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that 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 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 results of operations, liquidity, and financial condition, and the evaluation of alternatives by the company related to its materials and construction business, as well as other factors discussed in the company's most recent Form 10-Q and other filings with the SEC. The information in this call and presentations should be evaluated in light of these important risk factors. We do not undertake any obligation to update the company's forward-looking statements. Management will be referring to non-GAAP financial measures during our call today. Please refer to our statements regarding the use of these non-GAAP measures and reconciliations included in our second quarter 2023 supplement. Lance will open up today's presentation with an overview of the quarter and provide an update on real estate operations. And then Clayton will discuss financial matters. Lance will return for some closing remarks, but whereupon we will open it up for your questions. With that, let me turn it over to Lance.

Thank you, Steve, and aloha, everyone. Beginning with our commercial real estate portfolio, in the second quarter, we again generated excellent results for our shareholders. Our portfolio, consisting of high-quality retail, industrial, and ground lease assets, produced strong results and continued our momentum from the first quarter in 2022. DRE revenue was up 7.6% in the second quarter compared to the year-ago quarter, driven primarily by higher base rent, the impact of removing certain tenants from cash basis revenue recognition, and higher expense recoveries. Same store NOI was up 4.6% accelerating from the first quarter. These strong results reflect the quality of our diversified portfolio and the focused efforts of our team. Our performance continues to benefit from a robust local economy. Hawaii added nearly 20,000 jobs over the past 12 months an increase of 2.7%. Non-farm wages increased 2.7% in June 2023 as compared to the prior year. And the unemployment rate at the end of June adjusted for seasonality was 3%, continuing its downward trend. Throughout our market, we are seeing solid economic activity across most sectors, including the large construction and tourism industries. As we have said before, Our portfolio is generally community-based and less dependent on tourist activity, but tourism supports the state's overall economy. Turning to our CRE portfolio leasing metrics, same-store leased occupancy at quarter end was 94.3%, a decrease of 30 basis points from 12 months earlier. Same-store retail leased occupancy was up 90 basis points to 94%, And same store industrial leased occupancy was down 260 basis points to 95.8%. As we noted last quarter, the decrease in overall portfolio and industrial leased occupancy year over year was primarily due to an expected tenant move out at Kaka'ako Commerce Center in the first quarter of 2023. Same store economic occupancy at quarter end was 92.3%, down 20 basis points from 12 months earlier Same store retail economic occupancy was up 120 basis points to 91.8%, and same store industrial economic occupancy was down 330 basis points to 94%. Annualized base rent attributable to signed but not opened, or S&O, leases at quarter end were $3.1 million. This compares to $3 million from 12 months earlier and $2.3 million last quarter. During the second quarter, we executed 72 leases in our improved property portfolio for approximately 220,000 square feet and achieved blended spreads of 5.8%, with spreads for industrial leases at 6.6% and spreads for retail leases at 5.6%. This activity included 20 leases related to properties located in Kailua, including Ikahi Park Shopping Center, totaling approximately 31,000 square feet of GLA and $1.3 million of AVR. One lease at Pearl Highland Center, totaling approximately 35,000 square feet of GLA and $1 million of AVR. And four leases at Queens Marketplace, totaling approximately 13,700 square feet of GLA and $700,000 of AVR. In addition to improve property activity, we also executed the ground lease renewal at Windward City Shopping Center, which renewed on a fair market value reset to $3.9 million from $2.8 million for a spread of 39%. We are pleased with the continued pace of leasing activity and pipeline of active deals. Turning to growth, as previously noted, During the quarter, we acquired a 33,200-square-foot industrial property in a sale-leaseback transaction for $9.5 million, or approximately $286 per square foot. The property is 24-foot clear heights, dock-high loading, and is located in the Kapolei Submarket on Oahu in close proximity to our other industrial assets. Based on the 10-year lease, the going-in cash cap rate is 5.6%, with 3% annual increases in base rent. Our investment team continues to pursue opportunities that are complementary to our portfolio. Similar to other markets in the country, we have seen wide bid ask spreads, but we continue to remain disciplined and believe our deep market knowledge will help us execute nimbly when accretive opportunities arise. In the meantime, we continue to pursue value creation opportunities within our portfolio. Our refresh at Manoa Marketplace, the only grocery-anchored neighborhood center in the Manoa area, remains on track for completion in the third quarter. We believe this refresh, focused mainly on cosmetic improvements to enhance customer experience, will result in higher rental rates over time. We continue to evaluate additional opportunities within our portfolio for capital deployment to drive long-term growth in cash flow and value. With that, I'll turn the call over to Clayton for financial details. Clayton?