Alexander & Baldwin Holdings Inc
Alexander & Baldwin — Investor Presentation (January 2022)
39 slides from Alexander & Baldwin's investor presentation, Jan 10, 2022
Slide 1: January 2022 Investor Presentation: Advancing Simplification, Pivoting to Growth
J a n u a r y 2 0 2 2 I n v e s t o r P r e s e n t a t i o n A d v a n c i n g S i m p l i f i c a t i o n , P i v o t i n g t o G r o w t h
Slide 2: Safe Harbor Statement
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 that involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the
Slide 3: Advancing Simplification, Pivoting to Growth
3Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i S U P E R I O R M A R K E T F U N D A M E N T A L S Dynamic, Growing Market with Structural Limitations on New Supply H I G H - Q U A L I T Y P O R T F O L I O Irreplaceable Assets with Embedded Growth Opportunities S I M P L I F I C A T I O N N
Slide 4: Hawai'i Market: Superior Long-Term Fundamentals
4Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i Strong Consumer Demand Due to Favorable Market Metrics 2.8% JOB GROWTH 3.0% INCOME GROWTH HAWAI‘I MARKET: SUPERIOR LONG-TERM FUNDAMENTALS D Y N A M I C M A R K E T W I T H S U B S T A N T I A L B A R R I E R S T O E N T R Y Source: Green Street A
Slide 5: Irreplaceable Assets
I R R E P L A C E A B L E A S S E T S Strategically located portfolio of high-quality, needs-based retail, industrial and ground lease assets Largest portfolio of grocery-anchored, neighborhood shopping centers in Hawai‘i The “one-stop shop” for new market entrants with both retail and light industr
Slide 6: Irreplaceable Assets with Embedded Growth Upside
Return of 10% on repositioning capital spent and current leased occupancy of 99.8%. Return of 11% on repositioning capital spent and current leased occupancy of 100%. Estimated return of 9% on repositioning capital spend and current leased occupancy of 94.0%. I R R E P L A C E A B L E A S S E T S W
Slide 7: Simplification Nearing Completion
7Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i Well-positioned for continued simplification and expect to achieve vision, in near term, of becoming a pure-play Hawai‘i CRE company. Steady monetization of non-core assets has strengthened balance sheet and enabled a renewed focus on CRE growth.
Slide 8: Strong Balance Sheet
8Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i During Q3 2021, to ensure A&B has all the necessary tools to maximize shareholder value as a REIT: After closing the recast credit facility, no material debt maturities until 2024 TOTAL LIQUIDITY I $383M CASH I $26M UNDRAWN REVOLVER I $357M $26 M
Slide 9: Active Investments Team
9Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i A C T I V E I N V E S T M E N T S T E A M New industrial acquisition announced, with additional acquisitions expected 1 5 0 - Y E A R H I S T O R Y Successfully operating in high-performing, high barrier to entry Hawai‘i market H A W A I ‘ I “ S
Slide 10: Commitment to Corporate Responsibility
10Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i COMMITMENT TO CORPORATE RESPONSIBILITY IMPROVING HAWAI‘I’S COMMUNITIES AND CREATING VALUE FOR STAKEHOLDERS AS PARTNERS FOR HAWAI‘I Proactive ESG agenda implemented over past several years, consistent with Company’s DNA and local commitment Publi
Slide 11: Business Overview
11Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i Number of Properties Retail (“Needs-Based”) Industrial Ground Lease Office 86 22 10 50 4 Total GLA (Sq. Ft.)1 Retail Industrial Office Ground Leases 3.9 M 2.5M 1.2M 0.1M 146 acres Portfolio Leased Occupancy % Portfolio Economic Occupancy % 94.6%
Slide 12: Strong Q3 2021 CRE Results
STRONG Q3 2021 CRE RESULTS C R E P O R T F O L I O C O N T I N U E S T O P E R F O R M V E R Y W E L L NOI up nearly 30% year-over-year due to greatly improved tenant performance, including impact of reversals of reserves S T R O N G L E A S I N G A C T I V I T Y W I T H R E C O R D N E W L E A S E
Slide 13: Revised 2021 Guidance
13Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i The Company increased its annual 2021 guidance to reflect its improved outlook REVISED GUIDANCE • Core FFO per diluted share • CRE Same-Store NOI $0.88 to $0.92 10% to 12% R E V I S E D $0.81 to $0.87 7% to 10% P R I O R Note: See appendix for a
Slide 14: Simplification Efforts
SIMPLIFICATION EFFORTS • Strong progress made in advancing strategic simplification efforts, with total proceeds of $203M in 2021 • Monetization of non-core assets has strengthened balance sheet and enabled a renewed focus on CRE growth • Expectation of continued simplification progress in 2022, nea
Slide 15: Materials & Construction
15Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i MATERIALS & CONSTRUCTION • Generated positive Adjusted EBITDA in Q3 2021, reflecting progression of improving results each quarter in 2021 as paving projects commence • Optimistic outlook supported by significant uptick in trend of backlog turni
Slide 16: Commercial Real Estate
C O M M E R C I A L R E A L E S T A T E 16Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i
Slide 17: Portfolio Composition of Irreplaceable Assets
17Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i Strategically diversified portfolio of primarily grocery- anchored, community-based retail and services well positioned for an evolving market as people’s lives increasingly are centered around their neighborhoods. PORTFOLIO COMPOSITION OF IRREP
Slide 18: High-Quality Assets
18Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i HIGH-QUALITY ASSETS A B R B Y A N C H O R E D P R O P E R T Y T Y P E Warehouse Club 13% Strip Retail 7% Ground Lease 15% Industrial 16% Office 4% Total Portfolio ABR by Anchored Property Type 1: Includes Shadow-Anchored Grocer/ Pharmacy 45%1 Gr
Slide 19: High-Quality Tenants
19Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i HIGH-QUALITY TENANTS 1: Excludes ground leases. The leased premises in the GP/RM Prestress, LLC lease is yard space and therefore, not included in GLA. 2: Dollars in thousands. 3: Current status as of September 30, 2021. Top Ten Tenants Tenant1
Slide 20: Ground Leases: Secure, with Upside
K A I M U K I S H O P P I N G C E N T E R Kaimuki Shopping Center ground lease FMV reset resulted in a 29% ABR increase with additional contract steps in years 3 and 7. H A R T Honolulu County ground lease contractual step-up resulted in a 34% ABR increase. W I N D W A R D C I T Y S H O P P I N G C
Slide 21: Redevelopment & Repositioning
21Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i • Reached substantial completion of central shops • Tenant build-out and additional refresh work continues, with target stabilization in Q4 2022 AIKAHI PARK SHOPPING CENTER MANOA MARKETPLACE • Next property in repositioning pipeline • Well-locat
Slide 22: Competitive Advantage at Maui Business Park II
22Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i C O M P E T I T I V E A D V A N T A G E A T M A U I B U S I N E S S P A R K I I GROUND-UP DEVELOPMENT OF COMMERCIAL ASSETS I N D U S T R I A L Highly desirable commercial and light industrial development given proximity to Kahului Airport, Kahul
Slide 23: CRE Growth via Acquisitions
Alexander & Baldwin – Partners for Hawaii 23Alexander & Baldwin I NYSE: ALEX 23Partners for Hawai’i Structure can provide unique diversification, liquidity and estate benefits to sellers UPREIT • Anchored & strip retail centers • Industrial/flex warehouses • Mixed-use urban with retail components Lo
Slide 24: Post-Q3 2021 Acquisitions: Kalihi Kai Industrial
POST-Q3 2021 ACQUISITIONS: K A L I H I K A I I N D U S T R I A L • 42K sf warehouse and 29K sf industrial yard • Utilized §1033 funds set to expire at year end • Aligns with desire to expand industrial footprint, given strong industrial fundamentals PIVOTING TO GROWTH 24Alexander & Baldwin I NYSE: A
Slide 25: Post-Q3 2021 Acquisitions: Kapolei Business Park West Lots
POST-Q3 2021 ACQUISITIONS: K A P O L E I B U S I N E S S P A R K W E S T L O T S 25Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i • Two lots totaling approximately 3 acres of industrial land • Well-located within Oahu submarket where most new industrial product is being developed • Utilized §1
Slide 26: Pearl Highlands Center Sustainability Initiative
PEARL HIGHLANDS CENTER 26Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i • Commenced construction of 1.3-megawatt rooftop photovoltaic system • Sized to offset 100% of common area energy and provide additional power to select tenants • Beginning of broader rooftop solar initiative across CRE po
Slide 27: COVID Update
27Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i C O V I D U P D A T E
Slide 28: Hawai'i Cautiously Manages COVID
28Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i • Though case counts are elevated due to Omicron surge, key metric of hospitalizations are less than half the rate compared to Delta variant • Hawai‘i maintains status as a leading state in total population vaccination rate • Effective January 1
Slide 29: CRE Recovery
29Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i CRE RECOVERY rt ers for Hawai‘i $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $21.5 $22.5 $23.5 $24.5 $25.5 $26.5 $27.5 $28.5 $29.5 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 C o vi d -R el at ed N O I C h ar ge s, N et ( $ M ) N O I ( $ M ) C
Slide 30: CRE Bad Debt Reserve
30Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i CRE BAD DEBT RESERVE Q 3 2 0 2 1 Resort Retail 20% Retail Non-Resort 69% Industrial 9% Office 1% Ground Leases 1% Resort Retail 5% Retail Non- Resort 60% Industrial 16% Office 4% Ground Leases 15% Q3 2021 Bad Debt Reserve Q3 2021 ABR - Portfolio
Slide 31: Commitment to Corporate Responsibility
C O M M I T M E N T T O C O R P O R A T E R E S P O N S I B I L I T Y Partners for Hawai’i 31Alexander & Baldwin I NYSE: ALEX
Slide 32: Supporting Our Communities
32Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i SUPPORTING OUR COMMUNITIES A&B allocated 20% of its annual giving budget in 2020 to support non-profits on the frontline of COVID-19 relief and to provide stability to those most affected by the impacts of this pandemic in key communities, worki
Slide 33: Board of Directors Update
33Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i BOARD OF DIRECTORS UPDATE ALIGNED WITH COMMITMENT TO PRINCIPLES OF ESG Eric Yeaman Independent Director Since 2012 Chairman of the Board since October 1, 2020 Doug Pasquale Lead Independent Director Since 2018 Highly respected young leader in Ha
Slide 34: Advancing Simplification, Pivoting to Growth
34Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i S U P E R I O R M A R K E T F U N D A M E N T A L S Dynamic, Growing Market with Structural Limitations on New Supply H I G H - Q U A L I T Y P O R T F O L I O Irreplaceable Assets with Embedded Growth Opportunities S I M P L I F I C A T I O N N
Slide 35: Appendix
A P P E N D I X 35Alexander & Baldwin I NYSE: ALEXPartners for Hawai’i
Slide 36: Reconciliation of GAAP to Non-GAAP Measures: CRE NOI
36Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i RECONCILIATION OF GAAP TO NON- GAAP MEASURES DOLLARS IN MILLIONS CRE NET OPERATING INCOME Three Months Ended Sept. 30, 2021 Three Months Ended Sept. 30, 2020 Change CRE Operating Profit (Loss) $19.0 $11.0 $8.0 Plus: Depreciation and amortization
Slide 37: Reconciliation of Net Income to FFO and Core FFO
37Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i RECONCILIATION OF NET INCOME (LOSS) AVAILABLE TO A&B COMMON SHAREHOLDERS TO FFO AND CORE FFO DOLLARS IN MILLIONS FUNDS FROM OPERATIONS (FFO) AND CORE FFO Three Months Ended Sept. 30, 2021 Three Months Ended Sept. 30, 2020 Net income (loss) avail
Slide 38: Reconciliation of Core FFO from CRE Operating Profit
38Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i RECONCILIATION OF CORE FFO STARTING FROM COMMERCIAL REAL ESTATE OPERATING PROFIT DOLLARS IN MILLIONS CORE FUNDS FROM OPERATIONS (CORE FFO) Three Months Ended Sept. 30, 2021 Three Months Ended Sept. 30, 2020 CRE Operating Profit $19.0 $11.0 Depre
Slide 39: Reconciliation of Net Income to Consolidated Adjusted EBITDA
39Alexander & Baldwin I NYSE: ALEXPartners for Hawai‘i RECONCILIATION OF CONSOLIDATED NET INCOME TO CONSOLIDATED ADJUSTED EBITDA DOLLARS IN MILLIONS CONSOLIDATED ADJUSTED EBITDA TTM Sept. 30, 2021 TTM Sept. 30, 2020 Net Income (Loss) $30.5 $9.1 Depreciation and amortization 50.5 54.4 Interest expens
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