Alexander & Baldwin, Inc.

Good afternoon, ladies and gentlemen, and welcome to the third quarter 2024 Alexander and Baldwin Earnings Conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, October 24, 2024. I would now like to turn the conference over to Aja Shimomura, Leasing Manager. Please go ahead.

Thank you, Operator. Aloha and welcome to Alexander and Baldwin's third quarter 2024 earnings conference call. My name is Aja Shimomura, and I am a manager on the A&B leasing team. With me today are A&B's Chief Executive Officer, Lance Parker, and Chief Financial Officer, Clayton Schein. We are 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 third quarter 2024 supplemental information available on our website at investors.alexanderbaldwin.com. Before we commence, please note that statements in this presentation that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involved 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 of 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 non-core assets and business, and the risk factors discussed in the company's most recent Form 10-K, Form 10-Q, and other filings with the Securities and Exchange Commission. The information in this presentation 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 statement regarding the use of these non-GAAP measures and reconciliations included in our 2024 third quarter supplemental information materials. Last, we'll start today's presentation with an overview of the quarter, then hand it off to Clayton for a discussion of financial matters. To close, Lance will return for some final remarks, and we will open it up for your questions. With that, let me turn the call over to Lance.

Thanks for the introduction, Asia. Great job. And to everyone joining us, aloha. Last quarter, I highlighted four areas of focus at the company. Operational excellence, balance sheet strength and flexibility, streamlining our business and cost structure, and finally, growth. We made progress on all fronts in the third quarter. Operationally, the portfolio performed well. Year-over-year FFO was higher, supported by favorable NOI and strong leasing activity. Turning to our balance sheet, we entered into a new ATM program, providing an important tool to access capital when appropriate. And in October, we recast our credit facility, extending the maturity of our revolver to 2028. As we announced in our last call, we closed on the sale of 81 acres of land in July, providing us with additional liquidity and an opportunity to streamline our operations. From a growth perspective, we closed on the off-market acquisition of an 81,500 square foot industrial asset on Oahu for $29.7 million at a going-in cap rate of 5.4%. The acquisition provided us with an opportunity to recycle capital from Waipole Town Center, which we sold earlier this week, and other non-income producing assets. As a result of this transaction and the uptick in volume of deals we are seeing, I'm encouraged about our investment prospects going forward. With these accomplishments, we are again raising our full-year guidance. Let me share more details from the quarter, starting with our portfolio. Total NOI grew by 4.4%, same-store NOI grew by 4.1%, and same-store NOI, excluding collections of prior year reserves, grew at 4.7%. Thanks to Asia and the rest of the leasing team, we executed 71 leases in our improved property portfolio, representing more than 182,000 square feet of GLA, with blended spreads of 15.3% on a comparable basis, driven primarily by an anchor renewal at Queen's Marketplace. Our same-store leased occupancy was 94.8%, flat from last quarter, and 80 basis points lower from the same period last year. Same-store economic occupancy at quarter end was 93.7%, also flat from last quarter, and 10 basis points lower than the same period last year. F&O at quarter end was $1.9 million. flat compared to last quarter and $1.1 million lower than last year. I should mention that our S&O does not include about $1 million of AVR related to our build-a-suit at Maui Business Park, which will be added to S&O when we begin construction early next year. On the macroeconomic front, recently published economic data in Hawaii shows personal income growth at 5.5%. Unemployment at the end of August was 2.9% compared to the national average of 4.2% and the 10th lowest in the country. Looking ahead, Hawaii's GDP growth is forecasted to be 2% in 2025 compared to the U.S. average of 1.8%. August year-to-date visitor arrivals were down 2.2% compared to 2023. driven primarily by the lingering effects of the Maui wildfires, and currently at 88% of 2019 levels. As a reminder, 2019 represented a high watermark in terms of visitor arrivals to Hawaii. With that, I'll turn the call over to Clayton.