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What changed in Alexander & Baldwin, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Alexander & Baldwin, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+295 added−304 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in Alexander & Baldwin, Inc.'s 2024 10-K

295 paragraphs added · 304 removed · 218 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn 2022, the Company completed the installation of a 1.3-megawatt rooftop photovoltaic system at Pearl Highlands Center, the Company's largest retail asset by GLA. In 2023, the Company completed the installation of a 0.5-megawatt photovoltaic system at Kakaako Commerce Center, the Company's second largest industrial asset by GLA.
Biggest changeAs 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 3 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.
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 1 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 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.
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 1 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.
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 diverse 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'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.
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 related to its other operations. 2 The Company is also subject to a number of tax laws and regulations that could materially impact its financial condition and results of operations.
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. 2 The Company is also subject to a number of tax laws and regulations that could materially impact its financial condition and results of operations.
In addition, the Company provides meaningful learning and development opportunities for employees to encourage both their 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.
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.
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 plants and 3 landscaping, among other initiatives.
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.
The Company’s website address is www.alexanderbaldwin.com. The information found on the Company's 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.
The Company’s website address is www.alexanderbaldwin.com. The information found on the Company's 5 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.
In 2023, the Company held 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.
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.
Results of the survey are reviewed 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.
Results of the survey are reviewed 4 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 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 ESG initiatives is available in the Company’s Corporate Responsibility Report (“CRR”), which can be found on the Company’s website.
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.
The Company's compensation and benefits program is designed to attract, reward, and retain talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of strategic goals, and create long-term value for our shareholders.
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.
Engagement, Community, and Culture The Company strives to keep its 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, monthly employee newsletters, and email updates.
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.
Employees have access to a 24-hours ethics hotline that allows for 5 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 ESG issues.
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.
ESG 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 ESG topics, including diversity and climate risk, at both its Nominating and Corporate Governance Committee meetings and Board meetings.
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 ESG and other topics. Available Information The Company files reports with the Securities and Exchange Commission (the “SEC”).
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”).
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 lower tax basis.
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.
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, assets, and liabilities that are subject to the Company's simplification and monetization effort.
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.
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 of over 1,000 megawatt-hour. • 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 our portfolio based on GLA.
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.
Pearl Highlands Center accounted for approximately 11.6%, 10.9%, and 10.8% of total Commercial Real Estate segment revenues for the three years ended December 31, 2023, 2022, and 2021, respectively. Kailua Retail accounted for approximately 10.4%, 10.7%, and 11.1% of total Commercial Real Estate segment revenues for the three years ended December 31, 2023, 2022, and 2021, respectively.
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.
Environmental, Social, and Governance While recent years have seen intense focus on Environmental, Social, and Governance topics ("ESG"), 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.
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.
As of December 31, 2023, the improved portfolio leased occupancy was at 94.7%, which is leased to a mix of national, regional, and local retailers and businesses.
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.
Discontinued Operations In November 2023, the Company completed the sale of its interests in Grace Pacific, a materials and construction company, and the Company-owned quarry land on Maui (collectively, the “Grace Disposal Group”).
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”).
For example, the Company frequently utilizes §1031 of the Internal Revenue Code of 1986, as amended (the "Code"), to obtain tax-deferral treatment when qualifying real estate assets are sold and the resulting proceeds are reinvested in replacement properties within the required time period.
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.
The Company also conducts a confidential, annual employee survey to better 4 understand employee perspectives on topics including employee experience, workplace culture, employee engagement and the direction and leadership of the Company. In 2023, the Company had an 82% participation rate.
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.
The Company provides employees with competitive total rewards packages that include, in addition to base compensation, meaningful benefits such as health (medical, dental and vision) and life insurance, paid time off, flexible spending reimbursements account, a corporate wellness program, gain sharing opportunities, and a 401(k) plan with a generous Company contribution and Company match.
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.
The Company's commercial real estate portfolio consists of 22 retail centers, 13 industrial assets, and four office properties, representing a total of 3.9 million square feet of gross leasable area ("GLA"), as well as 142.0 acres of commercial land in Hawai‘i, of which substantially all is leased pursuant to urban ground leases.
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.
Revenue Concentration As of December 31, 2023, the Company's three largest tenants by annualized base rent (“ABR”) were Albertsons Companies (including Safeway), Sam's Real Estate Business Trust, and CVS Corporation (including 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, 2023, 2022, and 2021.
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.
Social Responsibility - Human Capital Resources As "Partners for Hawai‘i," the Company is dedicated to its employees, collectively the A&B family, who are all critical in achieving its mission to serve the communities in which it lives and operates, and create value for all stakeholders.
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.
Recruitment, Development, and Retention The Company had 104 employees (including 3 part-time employees) as of December 31, 2023, compared to 141 employees (including 1 part-time employee) in its continuing operations in the prior year. Nearly 93.3% of our employees are based in Hawai'i, and the Company has maintained a hybrid onsite/remote work environment.
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 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 foster a diverse and inclusive environment by hosting in-person and virtual engagement activities through employee-led social and environmental councils, and in partnership with the human resources department; • Provides learning and development opportunities that support the advancement of employees; • Launched an employee-led wellness program to support the continued health and wellness of employees.
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.
To expand its reach for talent, the Company utilizes diverse resources to recruit employees that embody A&B's core values of integrity, collaboration, respect, decisiveness, adaptability, and accountability.
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 has two employee-led councils, social and environmental, which are comprised of diverse, cross-functional teams of individuals from all levels of the Company and focused on workplace culture and community impact. In 2021, the Company launched an employee-led wellness program to support the health and wellness of 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 Company strives to maintain an appropriate debt profile to include well-laddered debt maturities and minimized near-term maturing debt, favorable leverage ratios, a high proportion of fixed-rate debt and longer weighted-average maturity.
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.
Financial results from this segment are principally derived from real estate development and land sales, joint ventures, and other legacy business activities.
Financial results from this segment are principally derived from real estate development and unimproved land sales and joint venture activity.
The Company highlights the following additional achievements related to our environmental sustainability efforts: • 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.
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.
The Company seeks to attract, develop, and retain employees with diverse backgrounds and perspectives, and to support those employees in their pursuit to further their careers, provide for their families, enjoy their work, and give back.
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.
Our employees have an average tenure of approximately 7.5 years and, for the year ended December 31, 2023, our overall turnover rate was 9.3% (which is lower than the average of 19% for REITs belonging to the National Association or Real Estate Investment Trusts).
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.
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.
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.
Diversity, Equity, and Inclusion ("DEI") The Company believes that an equitable and inclusive environment with diverse teams 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.
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 diversity and inclusion initiatives. This commitment starts at the top, with its highly skilled and ethnically and gender diverse Board.
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 also recognizes the importance of maintaining outreach to further promote sustainability, as tenant practices beyond the Company's control comprise the vast majority of utility consumption and greenhouse gas ("GHG") emissions at our properties. In an effort to align its sustainability priorities with tenant activity, its leases contain terms that encourage sustainable practices.
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.
Today, the Company recognizes the risks that climate change poses to Hawai‘i's island community and business, and strives to own, operate, and develop properties with integrity, and in ways that are environmentally and socially responsible. Its employee-led environmental council develops and implements strategies to address sustainability and shape the Company's agenda for environmental stewardship.
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.
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Environmental Stewardship The Company understands the importance of environmental stewardship and throughout its history, has been a leader in generating renewable energy and worked to protect and preserve Hawai‘i's unique and precious land and water resources.
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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.
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Areas of focus include energy efficiency, climate change, water conservation, waste management, and sustainable transportation. The Company is committed to addressing climate risks and leading the effort to understand and mitigate potential risks and vulnerabilities associated with our real estate portfolio.
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As of December 31, 2023, the Company has converted the common area lighting to LED at 25 properties, installed EV charging stations at 14 properties, and entered into agreements to add EV charging stations at three additional properties within the next twelve months.
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As a result of the 2023 dispositions of the Grace Disposal Group and the Company's wholly-owned subsidiary Kahului Trucking & Storage, Inc. ("KT&S"), the Company no longer has any employees covered by collective bargaining agreements as of December 31, 2023. The Company recognizes that its employees drive the success of the Company and are one of its most valuable resources.
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Employees can access tools, activities, and online courses through the Company's wellness platform, and track their progress toward earning wellness incentives.
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As part of its commitment to DEI, the Company launched the Partners for Equality program in 2021, which highlights and champions DEI and social justice issues at the Company. Events are planned quarterly to include speakers, panels, educational materials, group discussions and appropriate community service projects.
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In 2023, the Company conducted a live, facilitated DEI training for managers to introduce basic concepts and facilitate discussion around common challenges to embracing DEI at work, responsibilities of a supervisor, and how managers can contribute to a culture of DEI.
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Workforce Demographics The following diversity representation data as of December 31, 2023 was gathered voluntarily and reflects the information provided by the participating respondents.
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Female Ethnically diverse State of Hawai'i 1 50 % 78 % A&B Board of Directors 29 % 57 % A&B Leadership 2 28 % 56 % A&B Total Workforce 57 % 74 % 1 Source: 2022 U.S.
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Census Bureau American Community Survey 1-Year Estimate 2 Leadership includes EEO-1 Senior Management Corporate Governance and Compliance The Company prioritizes sound principles of corporate governance.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSummary of risks related to our Commercial Real Estate segment • We are subject to a number of factors that could cause CRE segment profitability to decline. • 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. • Increases in operating expenses would adversely affect our operating results. • 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. • The value of our commercial properties is affected by a number of factors. • We may be unable to identify and complete acquisitions of properties that meet our criteria, which may impede our growth. • We face competition for the acquisition and development of real estate properties, which may impede our ability to grow our operations or may increase the cost of these activities. • We are subject to risks associated with real estate construction and development. • Commercial real estate investments are relatively illiquid. 7 Risks Related to 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.
Biggest changeSummary 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. 6 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.
Governmental entities have adopted or may adopt regulatory requirements related to our 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.
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.
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 17 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.
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.
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 ability to pay dividends and other distributions to shareholders.
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 13 ability to pay dividends and other distributions to shareholders.
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 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.
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 8 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.
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 16 terms, or at all.
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.
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 the sales or structures might otherwise be beneficial to us.
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, we could, in certain circumstances, be required to pay an excise or penalty tax, which could be significant in amount, in order to utilize one or more relief provisions under the Code to maintain qualification for taxation as a REIT.
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.
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 favorable terms), we may be adversely impacted.
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 9 favorable terms), we may be adversely impacted.
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. 9 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.
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. 16 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.
Identification of compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of 13 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.
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.
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.
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. 19 ITEM 1B.
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. 8 Complying with the REIT requirements may cause us to sell assets or forgo otherwise attractive investment opportunities.
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. 15 Complying with the REIT requirements may cause us to sell assets or forgo otherwise attractive investment opportunities.
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% investment tax surcharge.
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.
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.
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.
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 federal income tax consequences of such qualification.
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.
The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions that would be treated as sales for federal income tax purposes. A REIT’s net income from prohibited transactions is subject to a 100% penalty tax.
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 our trade or business.
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.
Our redevelopment and development-for-hold projects are subject to risks relating to our ability to complete our projects on time and on budget.
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.
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 information technology resources to support employees operating in a partially remote work environment.
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.
Additionally, more stringent requirements to obtain financing for buyers of commercial properties make it significantly more difficult for us to sell commercial properties and may negatively impact the sales prices and other terms of such sales.
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.
We rely extensively on information technology 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.
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.
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 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 federal income tax purposes. 6 • The ability of our board of directors to revoke our REIT qualification, without shareholder approval, may cause adverse consequences to our shareholders.
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.
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.
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.
Consequently, our distribution levels may fluctuate. 10 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 will continue to be subject to U.S. federal income taxes at regular corporate rates.
Consequently, our distribution levels may fluctuate. 17 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.
At the state level, the Hawai‘i State legislature has repeatedly considered, and could consider in the future, 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.
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.
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. Increases in operating expenses would adversely affect our operating results.
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.
In addition, natural disasters could damage our real estate holdings, 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.
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.
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. The value of our commercial properties is affected by a number of factors.
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.
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.
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.
Although we intend to market and sell non-strategic assets, many of the assets are relatively illiquid, and it may not be possible to dispose of such assets in a timely manner or on favorable terms, which could delay our strategic agenda and/or adversely affect our financial condition, operating results, cash flows and may result in additional non-cash impairment charges.
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.
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.
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.
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 costs that tenants currently pay, which would adversely affect our operating results.
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.
Deterioration in the credit environment may also impact us in other ways, including the credit or solvency of customers, vendors, 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.
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.
However, unreimbursed increased operating expenses may adversely affect the Company’s operating results and cash flows. 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.
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.
Factors that may adversely affect the portfolio’s profitability include, but are not limited to: (i) a significant number of our tenants are unable to meet their obligations; (ii) 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) the providing of lease concessions, such as free or discounted rents and tenant improvement allowances; and (vi) the discovery of hazardous or toxic substances, or other environmental, culturally-sensitive, or related issues at the 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.
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. Changes to federal, state or local law or regulations, including environmental laws and regulations, may adversely affect our business.
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.
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. Significant inflation and continuing increases in the inflation rate, could adversely affect our business and financial results.
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.
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.
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. 14 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.
Most of our leases require that tenants pay for a share of property taxes, insurance, and common area maintenance 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.
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.
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.
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.
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.
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.
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 an impairment loss if the fair value of those assets were below their carrying value.
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, I nstability in the financial industry could negatively impact our ability to sell our real estate holdings.
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. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
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. 18 Changes to federal, state or local law or regulations, including environmental laws and regulations, may adversely affect our business.
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. 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.
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.
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.
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.
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.
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.
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.
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.
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 could impose significant additional costs on us and adversely affect our financial condition and results of operations.
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.
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.
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.
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.
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 face competition for the acquisition and development of real estate properties, which may impede our ability to grow our operations or may increase the cost of these activities.
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.
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. 14 Our Commercial Real Estate and Land Operations segments 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.
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.
Political crises, public health crises and other events beyond our control may adversely impact our operations and profitability.
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.
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 could be adversely affected.
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 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.
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. 12 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.
Intense competition 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. Additionally, our tenants may face increased competition and/or shifts in market preferences and demand that adversely impact their performance, ability to pay rent or even their business viability.
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. 11 We may be unable to identify and complete acquisitions of properties that meet our criteria, which may impede our growth.
We have significant investments in various commercial real estate properties. Weakness in the real estate sector, especially in Hawai‘i, difficulty in obtaining or renewing financing, and changes in our investment and redevelopment strategy, among other factors, may affect the fair value of these real estate assets.
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, 10 may affect the fair value of these real estate assets.
Further, as a real estate developer, we may face warranty and construction defect claims, as described below under “Risks Relating to Our Land Operations Segment.” Impairment in the carrying value of long-lived assets could negatively affect our operating results.
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.
Risks Related to Our Business Changes in economic conditions, particularly in Hawai‘i, may adversely affect our Commercial Real Estate and Land Operations segments. Our business, including our assets and operations, is concentrated in Hawai‘i, which exposes us to more concentrated risks than if our assets and operations were more geographically diverse.
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.
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 units in our projects.
Fewer loan products and strict loan qualifications make it more difficult for borrowers to finance the purchase of our development lots or unimproved land.
A weakening of economic drivers in Hawai‘i, which include tourism, military and consumer spending, public and private construction starts and spending, personal income growth, and employment, or the weakening of consumer confidence, market demand, or economic conditions on the Mainland and elsewhere, may adversely affect the level of real estate leasing activity in Hawai‘i, the demand for or sale of Hawai‘i real estate.
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.
Increased inflation could also adversely affect us by increasing construction costs, including tenant improvements and capital projects, and operating costs. Many of the Company's leases require tenants to pay an allocable portion of operating expenses, including common area maintenance, real estate taxes and insurance, resulting in a mitigating impact on increased costs and operating expenses due to inflation.
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.
We compete with many other entities for the acquisition of commercial real estate and land suitable for new developments, 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.
Larger REITs may enjoy competitive advantages that result from a lower cost of capital.
We have determined that we operated in compliance with the REIT requirements commencing with the taxable year ended December 31, 2017.
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.
Removed
Summary of risks related to our business • Changes in economic conditions, particularly in Hawai‘i, may adversely affect our Commercial Real Estate and Land Operations segments. • We may face new or increased competition. • Although we intend to market and sell non-strategic assets, many of the assets are relatively illiquid, and it may not be possible to dispose of such assets in a timely manner or on favorable terms, which could delay our strategic agenda and/or adversely affect our financial condition, operating results, cash flows and may result in additional non-cash impairment charges. • 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. • Increasing interest rates would increase our overall interest expense. • Significant inflation and continuing increases in the inflation rate, could adversely affect our business and financial results. • An increase in fuel prices and energy costs may adversely affect our operating environment and costs. • Changes to federal, state or local law or regulations, including environmental laws and regulations, may adversely affect our business. • 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. • 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. • Impairment in the carrying value of long-lived assets could negatively affect our operating results.
Added
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.
Removed
In addition, the IRS and any state or local tax authority may successfully assert liabilities against us for corporate income taxes for taxable years prior to the time we qualified as a REIT, in which case we will owe these taxes plus applicable interest and penalties, if any.
Added
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.
Removed
Moreover, any increase in taxable income for these pre-REIT periods will likely result in an increase in pre-REIT accumulated earnings and profits, which could cause us to pay an additional taxable distribution to our shareholders after the relevant determination.
Added
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. 7 • 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.
Removed
In addition, an increase in interest rates or other factors could reduce the market value of our real estate holdings, as well as increase the cost of buyer financing that may reduce the demand for our real estate assets. 11 We may face new or increased competition.
Added
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.
Removed
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.
Added
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).
Removed
We further may be limited in our ability to make distributions to our shareholders in event of default. 12 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 credit facility.
Added
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.
Removed
Recent substantial increases in the rate of inflation and potential future elevated rates of inflation, both real and anticipated, may impact our results of operations. In a highly inflationary environment, we may be unable to raise rental rates at or above the rate of inflation, which could reduce our profit margins.
Added
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.
Removed
Drought, greater than normal rainfall, hurricanes, earthquakes, tsunamis, floods, sea level rise, wildfires, other natural disasters, agricultural pestilence, or negligence or intentional malfeasance by individuals, may also adversely impact the conditions of the land and thereby harm the prospects for the Land Operations segment and our land infrastructure and facilities, including dams and reservoirs.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+0 added−0 removed7 unchanged
Biggest changeMandatory cybersecurity training classes are administered semi-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. In addition, security awareness assessment is required as part of the annual employee review process.
Biggest changeMandatory 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 engages a national security firm in an effort 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 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.
Refer to the risk factor captioned, “Security breaches through cyber attacks or intrusions, or other significant disruptions of the Company's information 19 technology ("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.
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.
The Company's current CTO has more than twenty years of experience managing technology initiatives in diverse industries, and he 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.
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.
The Company’s technology team tests the effectiveness of its tools with periodic exercises, such as an extensive, simulated attack exercise. The Company’s Board of Directors oversees the overall risk management process, including cybersecurity risks, which it administers in part through its Audit Committee.
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.

Item 2. Properties

Properties — owned and leased real estate

10 edited+4 added−2 removed3 unchanged
Biggest changeFor 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. 21 As of December 31, 2023, 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% 99.5% $ 10,993 $ 26.78 2 Kailua Retail Oahu 1947-2014 326,100 95.8% 94.9% 12,534 41.04 3 Laulani Village Oahu 2012 175,300 98.3% 97.5% 6,844 40.04 4 Waianae Mall Oahu 1975 170,800 93.0% 91.9% 3,893 25.09 5 Manoa Marketplace Oahu 1977, 2023 142,000 97.4% 92.3% 4,646 36.12 6 Queens' MarketPlace Hawai‘i Island 2007 134,000 90.3% 82.9% 4,684 48.81 7 Kaneohe Bay Shopping Center (Leasehold) Oahu 1971 125,500 98.0% 97.2% 3,194 26.18 8 Hokulei Village Kauai 2015 119,000 99.2% 99.2% 4,259 37.12 9 Pu`unene Shopping Center Maui 2017 118,000 78.4% 72.1% 4,323 51.55 10 Waipio Shopping Center Oahu 1986, 2004 113,800 98.4% 98.4% 3,574 32.56 11 Aikahi Park Shopping Center Oahu 1971, 2022 97,300 92.5% 88.6% 3,487 40.94 12 Lanihau Marketplace Hawai‘i Island 1987 88,300 97.2% 92.1% 1,500 18.45 13 The Shops at Kukui`ula Kauai 2009 85,900 98.5% 86.3% 3,488 48.07 14 Ho`okele Shopping Center Maui 2019 71,400 96.1% 96.1% 2,861 41.72 15 Kunia Shopping Center Oahu 2004 60,600 93.4% 91.7% 2,259 40.66 16 Waipouli Town Center (1) Kauai 1980 56,600 39.8% 36.6% 449 21.72 17 Kahului Shopping Center Maui 1951 50,900 84.5% 84.5% 777 18.05 18 Lau Hala Shops Oahu 2018 46,300 100.0% 100.0% 2,690 58.14 19 Napili Plaza Maui 1991 45,600 100.0% 98.7% 1,398 31.96 20 Gateway Mililani Mauka Oahu 2008, 2013 34,900 90.5% 88.8% 1,823 60.58 21 Port Allen Marina Center Kauai 2002 23,600 91.9% 91.9% 593 31.28 22 The Collection Oahu 2017 5,900 100.0% 100.0% 348 58.98 Subtotal – Retail 2,504,000 94.3% 92.1% $ 80,617 $ 35.53 Industrial: 23 Komohana Industrial Park Oahu 1990 238,300 100.0% 100.0% $ 3,602 $ 15.12 24 Kaka`ako Commerce Center Oahu 1969 197,900 83.3% 82.8% 2,428 14.98 25 Waipio Industrial Oahu 1988-1989 158,400 100.0% 99.4% 2,860 18.17 26 Opule Industrial Oahu 2005-2006, 2018 151,500 100.0% 100.0% 2,627 17.34 27 P&L Warehouse Maui 1970 104,100 100.0% 100.0% 1,663 15.97 28 Kapolei Enterprise Center Oahu 2019 93,100 100.0% 100.0% 1,657 17.81 29 Honokohau Industrial Hawai‘i Island 2004-2006, 2008 86,700 100.0% 98.0% 1,355 15.95 30 Kailua Industrial / Other Oahu 1951-1974 69,000 98.0% 89.3% 1,256 20.39 31 Port Allen Center Kauai 1983, 1993 64,600 93.3% 93.3% 802 13.29 32 Harbor Industrial Maui 1930 51,100 94.9% 94.9% 634 13.08 33 Kaomi Loop Industrial (1) Oahu 2005 33,200 100.0% 100.0% 527 15.85 34 Kahai Street Industrial Oahu 1973 27,900 100.0% 100.0% 365 13.09 35 Maui Lani Industrial (1) Maui 2010 8,400 100.0% 100.0% 156 18.57 Subtotal – Industrial 1,284,200 96.8% 96.0% $ 19,932 $ 16.19 Office: 36 Kahului Office Building Maui 1974 59,100 79.7% 77.0% $ 1,553 $ 34.15 37 Gateway at Mililani Mauka South Oahu 1992, 2006 37,100 100.0% 100.0% 1,816 48.89 38 Kahului Office Center Maui 1991 35,800 88.5% 87.2% 998 31.97 39 Lono Center Maui 1973 13,700 49.6% 49.6% 190 33.32 Subtotal – Office 145,700 84.2% 82.8% $ 4,557 $ 38.12 Total – Hawai‘i Improved Portfolio 3,933,900 94.7% 93.0% $ 105,106 $ 29.04 (1) Property is currently not included in the same-store ("Same-Store") pool, which management uses in the calculation of certain non-GAAP metrics at an improved property or ground lease level.
Biggest changeFor 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. 21 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 Industrial 1 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 Industrial 1 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 Center 1 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 1 Property is currently not included in the same-store ("Same-Store") pool.
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 Kauai and Hawai‘i (island).
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.
Additionally, during the quarter ended March 31, 2023, the Company completed the sale of its ownership interest in KT&S, a legacy trucking and storage business on Maui.
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.
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 94.7% as of December 31, 2023, and 95.0% as of December 31, 2022.
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.
Land Operations The Company's Land Operations segment primarily consists of the Company's non-commercial real estate landholdings and other legacy assets and liabilities.
Land Operations The Company's Land Operations segment primarily consists of the Company's legacy landholdings and other legacy assets and liabilities.
The following table presents a summary of GLA square footage ("SF") by the improved property asset class and location as of December 31, 2023: Oahu Maui Kauai Hawai‘i Island Total Retail 1,710,700 285,900 285,100 222,300 2,504,000 Industrial 969,300 163,600 64,600 86,700 1,284,200 Office 37,100 108,600 — — 145,700 Total 2,717,100 558,100 349,700 309,000 3,933,900 The Company also owns 142.0 acres of land in Hawai‘i, of which substantially all is leased pursuant to urban ground leases as of December 31, 2023.
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.
A summary of the Company's MBP II project as of December 31, 2023, is as follows: (in millions) Project Location Product Type Total Acres Remaining Sellable Acres 1 Acres Under Contract 2 Estimated Total Project Cost Total Project Costs Incurred to Date Maui Business Park (Phase II) Kahului, Maui Light industrial lots 46.7 34.2 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 The Company has entered into an agreement with a third party for the sale of 12.5 acres which will close upon subdivision completion and is therefore excluded from remaining sellable acres.
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 Acres 1 Acres Under Contract 2 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.
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 3,300 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 Pu'unene, Maui 52.0 Heavy Industrial 2059 1,275 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 MTM 1 555 11 Owner/Operator Kailua, Oahu 1.9 Retail 2034 450 12 Owner/Operator Honolulu, Oahu 0.5 Retail 2028 385 13 Owner/Operator Honolulu, Oahu 0.5 Parking 2028 359 14 Owner/Operator Kahului, Maui 0.8 Retail 2026 272 15 Seven-Eleven Kailua Center Kailua, Oahu 0.9 Retail 2033 263 16 Owner/Operator Honolulu, Oahu 0.7 Industrial 2027 252 17 Owner/Operator Kahului, Maui 0.8 Industrial 2025 238 18 Owner/Operator Kahului, Maui 0.4 Retail 2027 186 19 Owner/Operator Kailua, Oahu 0.4 Retail 2025 183 20 Owner/Operator Kahului, Maui 0.9 Retail 2025 146 Remainder 2 Various 4.8 Various Various 875 Total - Ground Leases 142.0 $ 20,374 (1) Lease is currently month-to-month.
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 Remainder 1 Various 4.8 Various Various 938 Total - Ground Leases 142.0 $ 20,869 1 A portion of these properties are currently not included in the Same-Store pool.
Real Estate Investments At December 31, 2023, the Company's real estate investments related to its Land Operations segment were as follows: (amounts in millions, except acres data) Acres Carrying Value Real estate investments Core real estate investments Kapolei Business Park West 3 $ 6.2 Maui Business Park II 1 50 20.4 Non-core real estate investments Other real estate development 192 37.7 Agricultural land 2,680 0.2 Urban land, not in active development 16 — Conservation & preservation 764 0.9 Investments in real estate joint ventures and partnerships N/A 6.9 Total real estate investments, net 3,705 $ 72.3 1 Includes 12.5 acres which is currently under contract with a delayed closing pending subdivision completion. 23 Core Real Estate Development-for-sale Projects As of December 31, 2023, the Company's Land Operations segment has one remaining active, core real estate development-for-sale project, Maui Business Park (Phase II) ("MBP II").
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 II 1 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. 23 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").
Refer to page 35 for a discussion of non-GAAP financial measures and the required reconciliations of non-GAAP measures to GAAP measures. 22 Ground leases The Company's portfolio of commercial ground leases at December 31, 2023, was as follows (dollars in thousands): Property Name Location (City, Island) Acres Property Type Exp.
Properties are moved into the Same-Store pool after one full calendar year of stabilized operation. 22 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.
Removed
(2) A portion of these properties is currently not included in the Same-Store pool, which management uses in the calculation of certain non-GAAP metrics at an improved property or ground lease level. Refer to page 35 for a discussion of non-GAAP financial measures and the required reconciliations of non-GAAP measures to GAAP measures.
Added
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.
Removed
MBP II activity during the year ended December 31, 2023 , included the transfer of 2.4 acres slated for a build-to-suit development to the Commercial Real Estate segment.
Added
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.
Added
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.
Added
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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 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.
Biggest changeITEM 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. 24 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn 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. The following summarizes the Company's purchases of equity securities and use of proceeds for the fourth quarter of fiscal year 2023.
Biggest changeIssuer 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.
Dividends The Company elected to be taxed as a real estate investment trust ("REIT") for US federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its taxable year ended December 31, 2017.
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.
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 14, 2024, there were approximately 1,771 shareholders of record.
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.
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, 2018, through December 31, 2023.
There were no unregistered equity securities sold by the Company during 2024 or 2023. 25 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.
Removed
Issuer Purchases of Equity Securities In October 2021, the Company's Board of Directors reauthorized the Company to repurchase up to $150 million of its common stock beginning on January 1, 2022, and ending on December 31, 2023.
Removed
During the quarter ended December 31, 2023, the Company repurchased 89,781 shares of our common stock in the open market for an aggregate purchase price, including commissions, of $1.5 million. These shares were retired upon repurchase. On December 31, 2023, $142.4 million expired under the stock repurchase program.
Removed
Issuer Purchases of Equity Securities Execution Date Total Number of Shares Purchased Average Price Paid per Share¹ Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2 (in thousands) October 1-31, 2023 89,781 $ 16.34 458,501 $ 142,400 November 1-30, 2023 — $ — 458,501 $ 142,400 December 1-31, 2023 — $ — 458,501 $ — Total 89,781 16.34 458,501 $ — 1 The average price paid per share includes $0.02 commission fee per share. 2 The share repurchase plan beginning on January 1, 2022, expired on December 31, 2023.
Removed
A new plan authorizing the Company to repurchase up to $100.0 million of its common stock began on January 1, 2024. 25 There were no unregistered equity securities sold by the Company during 2023 or 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeReconciliations of net income (loss) to FFO and Core FFO for the years ended December 31, 2023 and 2022, are as follows (in millions): 2023 2022 Net income (loss) available to A&B common shareholders $ 29.7 $ (50.8) Depreciation and amortization of commercial real estate properties 36.5 36.5 Impairment losses - CRE properties 2.2 — Loss from discontinued operations, net of income taxes 7.8 86.6 Income (loss) attributable to discontinued noncontrolling interest 3.2 1.1 FFO $ 79.4 $ 73.4 Exclude items not related to core business: Land Operations operating (profit) loss (10.8) 1.4 Income tax expense (benefit) — (18.3) Pension termination - CRE and Corporate — 14.7 Impairment losses - abandoned development costs 2.6 — Interest rate derivative fair value adjustment 2.7 — Non-core business interest expense 11.4 11.0 Core FFO $ 85.3 $ 82.2 36 Reconciliations of Core FFO starting from CRE operating profit for the years ended December 31, 2023 and 2022, are as follows (in millions): 2023 2022 CRE Operating Profit $ 81.2 $ 81.5 Depreciation and amortization of commercial real estate properties 36.5 36.5 Corporate and other expense (28.2) (39.3) Core business interest expense (11.6) (11.0) Impairment losses - CRE properties 2.2 — Impairment losses - abandoned development costs 2.6 — Interest rate derivative fair value adjustment 2.7 — Distributions to participating securities (0.1) (0.2) Pension termination - CRE and Corporate — 14.7 Core FFO $ 85.3 $ 82.2 Reconciliations of CRE operating profit (loss) to NOI for the years ended December 31, 2023 and 2022, are as follows (in millions): 2023 2022 CRE Operating Profit (Loss) $ 81.2 $ 81.5 Plus: Depreciation and amortization 36.5 36.5 Less: Straight-line lease adjustments (5.1) (6.3) Less: Favorable/(unfavorable) lease amortization (1.1) (1.1) Less: Termination income (0.1) (0.1) Plus: Other (income)/expense, net 0.1 0.5 Plus: Impairment of assets 4.8 — Plus: Selling, general, administrative and other expenses 7.0 6.8 NOI 123.3 117.8 Less: NOI from acquisitions and dispositions (0.9) (0.4) Same-Store NOI $ 122.4 $ 117.4 37 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, 2023) 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.
Biggest changeReconciliations 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 37 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.
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 investments and acquisitions (i.e., identifying opportunities and acquiring properties); construction and development (i.e., designing and ground-up development of new properties or repositioning and redevelopment of existing properties); and in-house leasing and property management (i.e., executing new and renegotiating renewal lease arrangements, managing its properties' day-to-day operations and maintaining positive tenant relationships).
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).
Impairment of assets of $4.8 million for the year ended December 31, 2023, related to the abandonment of potential CRE development projects and changes in the expected holding period assumptions for a CRE improved property.
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.
For example, the sale of undeveloped 33 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.
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.
These measures generally are provided to investors as an additional means of evaluating the performance of ongoing core 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.
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.
This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022; 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.
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.
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, 2023) and long-term (i.e., beyond the next twelve months).
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).
To emphasize, 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.
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.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 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, 2022.
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.
As of December 31, 2023, 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.
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.
A description of other commitments, contingencies and off-balance sheet arrangements as of December 31, 2023, 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.
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.
Further, Land Operations revenue trends, cash flows from the sales of real estate, and the amount of real estate held for sale on the Company's consolidated balance sheet do not necessarily indicate future profitability trends for this segment.
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.
The Company was in compliance with its financial covenants for all outstanding balances as of December 31, 2023, 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.
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.
The Company reports NOI and Occupancy on a Same-Store basis, which includes the results of properties that were owned and operated for the entirety of the prior calendar year and current reporting period, year-to-date. The Same-Store pool excludes properties under development or redevelopment and also excludes properties acquired or sold during either of the comparable reporting periods.
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.
Amounts in the MD&A section are rounded to the nearest tenth of a million. Accordingly, a recalculation of totals and percentages, if based on the reported data, may be slightly different. 27 Business Overview Reportable segments The Company operates two segments: Commercial Real Estate and Land Operations.
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. 27 Business Overview Reportable segments The Company operates two segments: Commercial Real Estate and Land Operations.
The ultimate extent of the impact that inflation 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.
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.
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, assets, and liabilities that are subject to the Company's simplification and monetization effort.
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.
Impairment of assets of $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.
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.
Known contractual obligations A description of material contractual commitments as of December 31, 2023, is included in Note 8 – Notes Payable and Other Debt, 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.
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.
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.
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.
On August 13, 2021, 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 $150.0 million.
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.
In November 2023, the Company completed the sale of its interests in Grace Pacific, a materials and construction company, and the Company-owned quarry land on Maui (collectively, the "Grace Disposal Group"), marking the last major step in the Company's simplification efforts that began in 2016.
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 Company's other primary sources of liquidity include its cash and cash equivalents of $13.5 million as of December 31, 2023, 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, 2023), as well as long-term basis.
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.
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 year ended December 31, 2023, the Company recorded an impairment charge of $2.6 million related to the abandonment of potential CRE development projects.
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.
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, 2023) and long-term (i.e., beyond the next twelve months) is estimated to be $19.0 million and $32.9 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 rate in effect as of December 31, 2023).
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).
National Association of Real Estate Investment Trusts ("Nareit") defines FFO 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 that are incidental to CRE.
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.
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 $75.5 million for the year ended December 31, 2023, primarily driven by cash generated from the CRE operations (the Company's core business) and monetization of assets within the Land Operations segment.
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.
FFO is presented by the Company as a widely used non-GAAP measure of operating performance for real estate companies.
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.
Interest and other income (expense), net for 2023 decreased $3.1 million to a net expense of $2.7 million due primarily to 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) to Interest and other income (expense), net .
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) .
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.
Further, the timing of property or parcel sales can significantly affect operating results in a given period. 33 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.
Cash used in financing activities for continuing operations was $79.8 million for the year ended December 31, 2023, a decrease from cash used in financing activities for continuing operations of $126.2 million for the year ended December 31, 2022.
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.
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); by non-cash expense recognition items (e.g., the impact of depreciation and amortization expense or impairments); or by other expenses or 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).
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).
Cash used in investing activities from continuing operations was $27.6 million for the year ended December 31, 2023, as compared to cash provided by investing activities from continuing operations of $51.0 million for the year ended December 31, 2022.
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.
Of the 83 new leases, 35 leases with a total GLA of 67,400 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 35 leases, resulted in a 8.0% average base rent increase over comparable expiring leases.
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.
Gain (loss) on disposal of assets, net of $1.1 million for 2023 was primarily due to the sale of the Company's ownership interest in a legacy trucking and storage business on Maui.
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.
During the year ended December 31, 2023, the Company completed no 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.
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. 40 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.
With respect to the revolving credit facility, as of December 31, 2023, the Company had $37.0 million of borrowings outstanding, no letters of credit issued against, and $463.0 million of available capacity (with a term through August 29, 2025, with two six-month extension options).
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).
The Company signed six new ground lease renewals during the year ended December 31, 2023, of which two were considered comparable and resulted in a 37.8% base rent increase over the comparable expiring lease.
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 During the year ended December 31, 2023, the Company signed 83 new leases and 150 renewal leases for its improved properties across its three asset classes, covering 623,600 square feet of GLA. The 83 new leases consist of 181,300 square feet with an average annual base rent of $30.37 per-square-foot.
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.
The Company 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).
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).
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.
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.
Commercial Real Estate Financial results Results of operations for the years ended December 31, 2023 and 2022, were as follows: Favorable (Unfavorable) Change (amounts in millions, except percentage data and acres; unaudited) 2023 2022 $ % Commercial Real Estate operating revenue $ 194.0 $ 187.2 $ 6.8 3.6 % Commercial Real Estate operating costs and expenses (101.0) (98.7) (2.3) (2.3) % Selling, general and administrative (7.0) (6.8) (0.2) (2.9) % Intersegment operating revenue, net 1 0.1 0.3 (0.2) (66.7) % Impairment of assets (4.8) — (4.8) — % Pension termination — (0.7) 0.7 100.0 % Interest and other income (expense), net (0.1) 0.2 (0.3) NM Commercial Real Estate operating profit (loss) $ 81.2 $ 81.5 $ (0.3) (0.4) % Net Operating Income ("NOI") 2 $ 123.3 $ 117.8 $ 5.5 4.7 % Same-Store Net Operating Income ("Same-Store NOI") 2 $ 122.4 $ 117.4 $ 5.0 4.3 % Gross Leasable Area ("GLA") in square feet ("SF") for improved properties at end of period 3.9 3.9 — — % Ground leases (acres at end of period) 142.0 140.7 1.3 0.9 % 1 Intersegment operating revenue, net 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 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 revenue 1 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 .
The 150 renewal leases consist of 442,300 square feet with an average annual base rent of $31.76 per square foot. Of the 150 renewal leases, 113 leases with a total GLA of 254,300 were considered comparable and resulted in a 7.6% 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.
Commercial Real Estate operating revenue increased 3.6% or $6.8 million, to $194.0 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022. Operating profit decreased 0.4%, or $0.3 million, to $81.2 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
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 assets and liabilities associated with the Grace Disposal Group were classified as held for sale in the consolidated balance sheet as of December 31, 2022, and financial results are classified as discontinued operations in the consolidated statements of operations and cash flows for all periods presented.
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.
Simplification strategy As a REIT focused on Hawaii commercial real estate, the Company has pursued the monetization and disposition of legacy, non-core assets and landholdings in order to simplify its business and allocate its capital resources to commercial real estate.
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.
Related to the Land Operations segment, during the year ended December 31, 2023, the Company completed the sale of approximately 460 acres of land holdings on Maui and Kauai for $12.3 million.
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.
In addition, FFO does not represent cash generated from operating activities in accordance with GAAP, nor does it represent cash available to pay distributions and should not be considered as an alternative to cash flow from operating activities, determined in accordance with GAAP, as a measure of the Company’s liquidity.
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.
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 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.
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.
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.
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. 28 Consolidated Results of Operations For an understanding of the significant factors that influenced our performance during fiscal 2023 and 2022, 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.
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. 28 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.
The Company's improved portfolio occupancy metrics as of December 31, 2023 and 2022, were as follows: As of As of Basis Point Change December 31, 2023 December 31, 2022 Leased Occupancy 94.7% 95.0% (30) Physical Occupancy 94.1% 94.2% (10) Economic Occupancy 93.0% 93.6% (60) 32 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, 2023 and 2022, were as follows: Leased Occupancy As of As of December 31, 2023 December 31, 2022 Basis Point Change Retail 94.3% 93.8% 50 Industrial 96.8% 98.4% (160) Office 84.2% 88.2% (400) Total Leased Occupancy 94.7% 95.0% (30) Economic Occupancy As of As of December 31, 2023 December 31, 2022 Basis Point Change Retail 92.1% 91.7% 40 Industrial 96.0% 98.2% (220) Office 82.8% 87.7% (490) Total Economic Occupancy 93.0% 93.6% (60) Same-Store Leased Occupancy 1 As of As of December 31, 2023 December 31, 2022 Basis Point Change Retail 95.6% 95.0% 60 Industrial 96.7% 98.4% (170) Office 84.2% 88.2% (400) Total Same-Store Leased Occupancy 95.5% 95.8% (30) Same-Store Economic Occupancy 1 As of As of December 31, 2023 December 31, 2022 Basis Point Change Retail 93.4% 93.0% 40 Industrial 95.9% 98.2% (230) Office 82.8% 87.7% (490) Total Same-Store Economic Occupancy 93.8% 94.4% (60) 1 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 .
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) 32 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 Occupancy 1 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 Occupancy 1 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) 1 The Same-Store pool excludes properties under development, and properties acquired or sold during either of the comparable reporting periods.
The Company's FFO and Core 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. NOI is a non-GAAP measure used internally in evaluating the unlevered performance of the Company's Commercial Real Estate portfolio.
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.
For the year ended December 31, 2022, cash used in operating and investing activities for discontinued operations was $33.2 million and $6.4 million, respectively, while cash provided by financing activities was $11.0 million. Cash flows from discontinued operations was primarily related to funding working capital needs, acquisition of machinery and equipment, and borrowings and payments on line-of credit-agreements.
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.
The Company's calculation refers to net income (loss) available to A&B common shareholders as its starting point in the calculation of FFO. The Company presents both non-GAAP measures and reconciles each to the most directly-comparable GAAP measure as well as reconciling FFO to Core FFO.
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.
As a result of the disposition of the Grace Disposal Group, cash flows related to discontinued operations will not recur. Prior to the disposition in the year ended December 31, 2023, cash used in operating, investing, and financing activities for discontinued operations, excluding sales proceeds, was $8.4 million, $1.5 million, and $15.1 million, respectively.
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.
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.
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.
Cash proceeds from unimproved and development 38 land sales decreased by $18.1 million from $26.0 million for the year ended December 31, 2022, to $7.9 million for the year ended December 31, 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.
The Company primarily uses cash in investing activities for capital expenditures related to its CRE segment. For the year ended December 31, 2023, all of the Company's capital expenditures for property, plant and equipment of $31.2 million related to the 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 rapid increase in the federal funds rate resulted in a tightening of credit and contributed to volatility in the banking, technology, and real estate industries.
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.
Leasing activity summarized by asset class for the year ended December 31, 2023, was as follows: Year Ended December 31, 2023 Leases GLA (SF) ABR 2,4 /SF Rent Spread 3 Retail 157 360,771 $41.85 7.8% Industrial 65 247,591 $16.13 7.5% Office 11 15,241 $30.54 4.4% Subtotal - Improved 233 623,603 $31.36 7.7% Ground 6 N/A 1 $5.0 37.8% 1 Not applicable for ground leases as such leases would not be comparable from a GLA (SF) perspective. 2 Annualized Base Rent ("ABR") is the current month's contractual base rent multiplied by 12.
Leasing activity summarized by asset class for the year ended December 31, 2024, was as follows: Year Ended December 31, 2024 Leases GLA (SF) ABR 2,4 /SF Rent Spread 3 Retail 138 316,869 $42.82 13.5% Industrial 5 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/A 1 $0.6 28.8% 1 Not applicable for ground leases as such leases would not be comparable from a GLA (SF) perspective. 2 Annualized Base Rent ("ABR") as is relates to new and renewal leases is the first monthly contractual base rent multiplied by 12.
The Company's cash flows from continuing operations provided by operating activities for the year ended December 31, 2023, reflects an increase of $8.3 million from the prior year amount of $67.2 million, due primarily to the cash contributions made to and in conjunction with the termination of the Company's Defined Benefit Plans in 2022 that did not recur in 2023, partially offset by lower cash proceeds from unimproved and development land sales in 2023 as compared to 2022.
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 38 compared to 2023.
Cash used in financing activities is primarily composed of dividend payments and payments of notes payable and other debt, which totaled $64.3 million and $35.1 million during the year ended December 31, 2023, respectively. Partially offsetting these cash outflows were net borrowings on the Company line-of-credit agreement of $25.0 million during 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.
Revenue also included other operating revenue related to the Company's legacy business activities in the Land Operations segment (primarily trucking services and licensing and leasing of non-core legacy lands).
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).
These factors include, but are not limited to, 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.
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 year ended December 31, 2023, included capital expenditures for continuing operations of $31.2 million, partially offset by $3.4 million in cash proceeds from the disposal of assets.
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.
New developments and redevelopments are moved into the Same-Store pool after one full calendar year of stabilized operation. 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.
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.
Financial results Results of operations for the years ended December 31, 2023 and 2022, were as follows: (amounts in millions; unaudited) 2023 2022 Development sales revenue $ — $ 8.1 Unimproved/other property sales revenue 12.3 19.9 Other operating revenue 2.6 15.3 Total Land Operations operating revenue 14.9 43.3 Land Operations operating costs and expenses (5.6) (34.2) Selling, general and administrative (1.8) (3.5) Intersegment operating charges, net 1 — (0.3) Gain (loss) on disposal of assets, net 1.1 54.0 Earnings (loss) from joint ventures 1.9 1.6 Pension termination — (62.2) Interest and other income (expense), net 0.3 (0.1) Total Land Operations operating profit (loss) $ 10.8 $ (1.4) 1 Intersegment operating charges for Land Operations is primarily from the Commercial Real Estate segment and are eliminated in the consolidated results of operations. 2023: Land Operations revenue of $14.9 million during the year ended December 31, 2023, was primarily driven by the sale of approximately 460 acres of unimproved and other land holdings on Maui and Kauai for $12.3 million.
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, net 1 (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.
The Company made no acquisitions during the year ended December 31, 2022. 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.
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.
The Company believes the exclusion of these items from operating profit (loss) is useful because the resulting measure captures the contract-based revenue that is realizable (i.e., assuming collectability is deemed probable) and the direct property-related expenses paid or payable in cash that are incurred in operating the Company's Commercial Real Estate portfolio, as well as trends in occupancy rates, rental rates and operating costs.
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.
As of December 31, 2023, 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, 2023.
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.
Additionally, during the year ended December 31, 2022, the segment incurred a settlement charge of $62.2 million in connection with the termination of the Defined Benefit Plans. 34 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' core operating results, and/or the underlying business trends affecting performance on a consistent and comparable basis from period to period.
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. 34 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.
Loss from discontinued operations (net of income taxes) of $86.6 million for the year ended December 31, 2022, primarily consists of impairment of $89.8 million recorded in 2022, upon the Grace Disposal Group's classification as held for sale and measurement at its fair value less costs to sell. 30 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.
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. 30 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.
Favorable (Unfavorable) Change (amounts in millions, except percentage data and per share data) 2023 2022 $ % Operating revenue $ 208.9 $ 230.5 $ (21.6) (9.4) % Cost of operations (106.6) (132.9) 26.3 19.8 % Selling, general and administrative (34.0) (35.9) 1.9 5.3 % Impairment of assets (4.8) — (4.8) — % Gain (loss) on disposal of non-core assets, net 1.1 54.0 (52.9) (98.0) % Operating income (loss) 64.6 115.7 (51.1) (44.2) % Income (loss) related to joint ventures 1.9 1.6 0.3 18.8 % Pension termination — (76.9) 76.9 100.0 % Interest and other income (expense), net (2.7) 0.4 (3.1) NM Interest expense (23.0) (22.0) (1.0) (4.5) % Income tax benefit (expense) — 18.3 (18.3) (100.0) % Income (loss) from continuing operations 40.8 37.1 3.7 10.0 % Income (loss) from discontinued operations (net of income taxes) (7.8) (86.6) 78.8 91.0 % Net income (loss) 33.0 (49.5) 82.5 NM (Income) loss attributable to discontinued noncontrolling interest (3.2) (1.1) (2.1) (190.9) % Net income (loss) attributable to A&B $ 29.8 $ (50.6) $ 80.4 NM Earnings per share: Basic earnings (loss) per share - continuing operations $ 0.56 $ 0.51 $ 0.05 9.8 % Basic earnings (loss) per share - discontinued operations (0.15) (1.21) 1.06 87.6 % Basic earnings (loss) per share of common stock: $ 0.41 $ (0.70) $ 1.11 NM Diluted earnings (loss) per share - continuing operations $ 0.56 $ 0.50 $ 0.06 12.0 % Diluted earnings (loss) per share - discontinued operations (0.15) (1.20) 1.05 87.5 % Diluted earnings (loss) per share of common stock: $ 0.41 $ (0.70) $ 1.11 NM Continuing operations available to A&B common shareholders $ 40.7 $ 36.9 $ 3.8 10.3 % Discontinued operations available to A&B common shareholders (11.0) (87.7) 76.7 87.5 % Net income (loss) available to A&B common shareholders $ 29.7 $ (50.8) $ 80.5 NM Funds From Operations ("FFO") 1 $ 79.4 $ 73.4 $ 6.0 8.2 % Core FFO 1 $ 85.3 $ 82.2 $ 3.1 3.8 % FFO per diluted share $ 1.09 $ 1.01 $ 0.08 7.9 % Core FFO per diluted share $ 1.17 $ 1.13 $ 0.04 3.5 % Weighted average diluted shares outstanding (FFO/Core FFO) 2 72.8 72.8 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/Core FFO. 29 The causes of material changes in the consolidated statements of operations for the year ended December 31, 2023, as compared to the year ended December 31, 2022, are described below or in the Analysis of Operating Revenue and Profit by Segment sections below.
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 FFO 1 $ 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 largest of such amounts pertain to one tenant improvement project totaling $19.7 million to be spent over the next twelve months.
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 increase in segment operating revenue for the year ended December 31, 2023, was primarily driven by higher base rents and recoveries from tenants. Operating costs and expenses increased 2.3% or $2.3 million to $101.0 million for the year ended December 31, 2023, as compared to the prior year due primarily to higher property operating costs and property taxes.
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.
Capital expenditures for continuing operations are summarized as follows for the years ended: (in millions, unaudited) 2023 2022 CRE property acquisitions, development and redevelopment $ 16.4 $ 6.8 Building/area improvements (Maintenance Capital Expenditures) 11.4 10.7 Tenant space improvements (Maintenance Capital Expenditures) 3.3 3.9 Tenant space improvements - nonrecurring (Maintenance Capital Expenditures) 0.1 — Land Operations and Corporate — 0.3 Total capital expenditures for continuing operations 1 $ 31.2 $ 21.7 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. 39 The year ended December 31, 2023, included cash outlays of $21.7 million related to capital expenditures for property, plant and equipment, and $9.5 million related to the Company's acquisition of a commercial real estate asset.
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. 39 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 redevelopment 1 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 estate 1 50,680 31,089 Corporate and other capital expenditures 97 61 Total Capital Expenditures 1 $ 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.
NOI should not be viewed as a substitute for, or superior to, financial measures calculated in accordance with GAAP. 35 NOI represents total Commercial Real Estate contract-based operating revenue that is realizable (i.e., assuming collectability is deemed probable) less the direct property-related operating expenses paid or payable in cash.
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.
Commercial Real Estate portfolio acquisitions, transfers, and dispositions During the year ended December 31, 2023, the Company's acquisitions and transfers of commercial real estate properties were as follows (dollars in millions): Acquisitions Property Location Date (Month/Year) Purchase Price GLA (SF) Kaomi Loop Industrial Oahu, HI 05/2023 $9.5 33,200 Transfers In Property Location Date (Month/Year) Purchase Price GLA (SF) Maui Business Park II - 2.4 acre parcel for build-to-suit development Kahului, Maui 12/2023 N/A 1 N/A 2 1 Represents an intercompany transaction.
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 31 There were no transfers of CRE improved properties or ground lease interests in land during the year ended December 31, 2024.
The critical accounting estimates inherent in the preparation of the Company’s financial statements are described below.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during future periods, our hedging strategies at that time, and actual interest rates. 43 Fair Value at Expected Remaining Obligation as of Beginning of Year December 31, 2024 2025 2026 2027 2028 Thereafter 2023 Liabilities Fixed-rate debt $ 427.1 $ 265.1 $ 224.6 $ 155.4 $ 114.3 $ 68.0 $ 414.9 Weighted average interest rate on remaining fixed-rate principal 4.23 % 4.24 % 4.12 % 4.11 % 3.91 % 3.57 % Variable-rate debt 1 $ 37.0 $ 37.0 $ — $ — $ — $ — $ 37.6 Weighted average interest rate on remaining variable principal 2 6.50 % 6.50 % — % — % — % — % Fair Value at Expected Remaining Notional as of Beginning of Year December 31, 2024 2025 2026 2027 2028 Thereafter 2023 Interest rate swap agreements 3 Variable to fixed remaining notional and fair value of swap asset (liability) $ 52.7 $ 50.9 $ 49.0 $ 47.1 $ 45.1 $ 43.0 $ 4.1 Average pay fixed rate 3.14 % 3.14 % 3.14 % 3.14 % 3.14 % 3.14 % Average receive rate 2 6.70 % 6.70 % 6.70 % 6.70 % 6.70 % 6.70 % Fair Value at Expected Remaining Notional as of Beginning of Year December 31, 2024 2025 2026 2027 2028 Thereafter 2023 Forward interest rate swap agreements Variable to fixed remaining notional and fair value of swap asset (liability) $ 130.0 $ 130.0 $ 130.0 $ 130.0 $ 130.0 $ 130.0 $ (2.7) Weighted average pay fixed rate — % 4.85 % 4.85 % 4.85 % 4.85 % 4.85 % Weighted average receive rate 2 — % 6.60 % 6.60 % 6.60 % 6.60 % 6.60 % 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, 2023.
Biggest changeFair 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 debt 1 $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ — $ — $ 20,000 Weighted average interest rate on remaining variable principal 2 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 agreements 3 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 rate 2 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.
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
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. 43
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, 2023, and are subject to change.
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.
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, 2023.
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.
Furthermore, the table below incorporates only those exposures that existed as of December 31, 2023, and does not consider exposures or positions that may arise of expire after that date.
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.
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, 2023 (dollars in millions).
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).
As of December 31, 2023, the Company’s fixed-rate debt (after the effects of interest rate swaps), excluding debt premium or discount and debt issuance costs, consisted of $427.1 million in principal term notes and other instruments. As of December 31, 2023, the Company’s variable-rate debt under its revolving credit facilities was $37.0 million.
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.
As of December 31, 2022, the Company had $460.4 million of fixed-rate debt outstanding and $12.0 million of variable-rate debt outstanding with weighted average interest rates of 4.3% and 5.4%, 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 $2.7 million.
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.
Actual interest rates may be greater or less than the amounts indicated. 3 Certain of 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.
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.
Also, from time to time, the Company may invest its excess cash in Federal Deposit Insurance Corporation ("FDIC") insured higher yield accounts and short-term money market funds that purchase government securities or corporate debt securities. As of December 31, 2023 and 2022, the amount invested in such financial instruments was immaterial.
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.
Removed
Refer to Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report, for further discussion.

Other ALEX 10-K year-over-year comparisons