Exhibit 99.1 

 

 

About This Supplement Update

 

 

This periodic Supplement Update is designed to provide current and potential shareholders of Alexander & Baldwin, Inc. with additional information regarding the Company’s Real Estate operating segments. This information is supplemental to and does not replace the information provided to shareholders in the Company’s periodic filings with the Securities and Exchange Commission.

 

This Second Quarter 2016 Supplement updates Tables 7-15 of the Company’s First Quarter 2016 Real Estate Supplement.

 

Feedback and suggestions regarding the contents of this Supplement Update are welcomed, and should be directed to Suzy P. Hollinger, Director, Investor Relations, via telephone at (808) 525-8422 or via email to shollinger@abinc.com.

 

 

Alexander & Baldwin, Inc. │Real Estate Supplement Update

 

  

Index to Real Estate Supplement Update

(Unaudited)

Second Quarter 2016

 

Forward-Looking Statements	2
Basis of Presentation	2
Real Estate Leasing Segment – Asset Descriptions and Statistics	3
Property Detail – Hawaii (Table 7)	3
Property Detail – Mainland (Table 8)	5
Comparable % Occupancy Data by Geographic Region and Asset Class (Table 9)	6
Weighted Average Gross Leasable Area by Geographic Region and Asset Class (Table 10)	6
Occupancy Trend Analysis – Last Five Quarters (Table 11)	6
Real Estate Leasing Net Operating Income (NOI) (Table 12)	7
Real Estate Leasing Same Store NOI (Table 13)	7
Statement on Management’s Use of Non-GAAP Financial Measures	8
Reconciliation of Real Estate Leasing Operating Profit to NOI and Same Store NOI (Non-GAAP) (Table 14)	8
Portfolio Acquisitions and Dispositions	9
2016 and 2015 Improved Property Portfolio Acquisitions/Dispositions (Table 15)	9

 

 

Forward-Looking Statements

 

 

Statements in this Supplement Update that are not historical facts are “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. These forward-looking statements are not guarantees of future performance. This Supplement Update should be read in conjunction with pages 17-29 of Alexander & Baldwin, Inc.’s 2015 Form 10-K and other filings with the SEC through the date of this Supplement Update, which identify important factors that could affect the forward-looking statements in this Supplement Update. We do not undertake any obligation to update our forward-looking statements.

 

Basis of Presentation

 

 

The information contained in this Supplement Update does not purport to disclose all items required by accounting principles generally accepted in the United States of America (GAAP). The information contained in this Supplement Update is unaudited and should be read in conjunction with Alexander & Baldwin, Inc.’s 2015 Real Estate Supplement, 2015 Form 10-K and other filings with the SEC through the date of this Supplement Update.

 

Real Estate Leasing Segment – Asset Descriptions and Statistics

 

 

Table 7

Property Detail - Hawaii

 

Property		Number of properties at 06/30/16				Island		Gross leasable area at 06/30/16 (sq. ft.)				Leased1 (percent)				Outstanding debt ($ in 000s)				2Q2016 NOI2 ($ in 000s)				2Q2016 % NOI to total Hawaii portfolio
Retail:
Pearl Highlands Center			1			Oahu			415,200				95			$	90,943			$	2,519				13.8
Kailua Retail			16			Oahu			414,400				94				10,892				3,067				16.8
Waianae Mall			1			Oahu			170,300				86				-				526				2.9
Manoa Marketplace			1			Oahu			139,300				98				-				1,231				6.7
Kaneohe Bay Shopping Center3			1			Oahu			124,800				100				-				626				3.4
Waipio Shopping Center			1			Oahu			113,800				98				-				847				4.6
The Shops at Kukui'ula			1			Kauai			89,000				97				35,668				876				4.8
Lanihau Marketplace			1			Hawaii			88,300				98				-				494				2.7
Kunia Shopping Center			1			Oahu			60,600				82				-				441				2.4
Lahaina Square			1			Maui			50,200				76				-				127				0.7
Kahului Shopping Center			1			Maui			49,900				99				-				149				0.8
Napili Plaza			1			Maui			45,700				89				-				283				1.5
Gateway at Mililani Mauka			1			Oahu			34,900				91				-				422				2.3
Port Allen Marina Center			1			Kauai			23,600				84				-				125				0.7
Subtotal – Retail			29						1,820,000				94			$	137,503			$	11,733				64.1
Industrial:
Komohana Industrial Park4			1			Oahu			238,300				99			$	-			$	1,014				5.5
Kakaako Commerce Center			1			Oahu			206,000				79				-				492				2.7
Waipio Industrial			1			Oahu			158,400				100				-				617				3.4
P&L Building			1			Maui			104,100				100				-				329				1.8
Kailua Industrial/Other			6			Oahu			68,800				95				-				145				0.8
Port Allen			3			Kauai			63,800				100				-				159				0.9
Subtotal – Industrial			13						839,400				94			$	-			$	2,756				15.1
Office:
Kahului Office Building			1			Maui			59,600				81			$	-			$	341				1.9
Gateway at Mililani Mauka South5			1			Oahu			37,100				97				-				187				1.0
Kahului Office Center			1			Maui			33,400				88				-				182				1.0
Stangenwald Building			1			Oahu			27,100				90				-				117				0.6
Judd Building			1			Oahu			20,200				86				-				51				0.3
Maui Clinic Building6			1			Maui			16,600				31				-				(3	)			-
Lono Center			1			Maui			13,700				84				-				57				0.3
Subtotal – Office			7						207,700				82			$	-			$	932				5.1

 

Table 7 continued on the next page

 

 

Table 7

Property Detail - Hawaii (Continued from previous page)

 

Property		Number of properties at 06/30/16				Island		Gross leasable area at 06/30/16 (sq. ft.)				Leased1(percent)				Outstanding debt ($ in 000s)				2Q2016 NOI2 ($ in 000s)				2Q2016 % NOI to total Hawaii portfolio
Ground Leases
Kailua			19 acres			Oahu			-							$	-			$	817				4.4
Other Oahu			22 acres			Oahu			-								-				1,209				6.6
Neighbor Island			2,682 acres7			Neighbor Island			-								-				855				4.7
Subtotal - Ground Leases			2,723 acres						-							$	-			$	2,881				15.7
Total Hawaii			49						2,867,100				93			$	137,503			$	18,302				100.0

  

1

Represents the average percentage of space leased during the period referenced or A&B’s ownership period, whichever is shorter. Space is considered leased when a tenancy agreement has been fully executed or the space is revenue producing.

2

See page 8 for a statement regarding the Company’s use of non-GAAP financial measures and a reconciliation of Leasing operating profit to portfolio NOI.

3

Kaneohe Bay Shopping Center is a leasehold property.

4

Includes ground leased income.

5

The 18,415-square-foot expansion of the Gateway at Mililani office complex has been completed and was moved into the commercial portfolio in June.

6

Negative NOI and low occupancy related to repositioning of property.

7

Includes 64 ground leased urban acres.

 

Note:

For portfolio asset class and geographic occupancy see Table 9 on page 6. Gross leasable area is periodically adjusted based on remeasurement or reconfiguration of space.

 

 

Table 8

Property Detail - Mainland

 

Property		Number of properties at 06/30/16				Location		Gross leasable area at 06/30/16 (sq. ft.)				Leased1(percent)				Outstanding debt ($ in 000s)				2Q2016 NOI2 ($ in 000s)				2Q2016 % NOI to total Mainland portfolio
Retail:
Little Cottonwood Center			1			Sandy, UT			141,500				92			$	-			$	367				13.4
Royal MacArthur Center			1			Dallas, TX			44,900				93				-				209				7.6
Subtotal – Retail			2						186,400				92			$	-			$	576				21.0
Industrial:
Midstate Hayes			1			Visalia, CA			790,200				100			$	8,228			$	756				27.5
Sparks Business Center			1			Sparks, NV			396,100				96				-				467				17.0
Subtotal – Industrial			2						1,186,300				99			$	8,228			$	1,223				44.5
Office:
1800 and 1820 Preston Park			1			Plano, TX			198,800				87			$	-			$	359				13.1
Concorde Commerce Center			1			Phoenix, AZ			138,700				91				-				444				16.2
Deer Valley Financial Center			1			Phoenix, AZ			126,600				80				-				143				5.2
Subtotal – Office			3						464,100				91			$	-			$	946				34.5
Total Mainland			7						1,836,800				95			$	8,228			$	2,745				100.0

 

1

Represents the average percentage of space leased during the period referenced or A&B’s ownership period, whichever is shorter. Space is considered leased when a tenancy agreement has been fully executed or the space is revenue producing.

2

See page 8 for a statement regarding the Company’s use of non-GAAP financial measures and a reconciliation of Leasing operating profit to portfolio NOI.

  

Note:

For portfolio asset class and geographic occupancy see Table 9 on page 6. Gross leasable area is periodically adjusted based on remeasurement or reconfiguration of space.

 

 

Table 9

Comparable % Occupancy Data by Geographic Region and Asset Class

		2Q 2016																2Q 2015																Percentage point change
Location		Retail				Industrial				Office				Total				Retail				Industrial				Office				Total				Retail				Industrial				Office				Total
Hawaii improved			94				94				82				93				94				94				83				93				-				-				(1	)			-
Mainland improved			92				99				91				95				94				99				92				95				(2	)			-				(1	)			-
Total			93				97				89				94				94				97				91				94				(1	)			-				(2	)			-

 

Table 10

Weighted Average Gross Leasable Area by Geographic Region and Asset Class

		2Q 2016 (in sq. ft.)																2Q 2015 (in sq. ft.)																Percentage Change
Location		Retail				Industrial				Office				Total				Retail				Industrial				Office				Total				Retail				Industrial				Office				Total
Hawaii improved			1,820,000				839,400				195,400				2,854,800				1,670,600				837,800				189,300				2,697,700				8.9				0.2				3.2				5.8
Mainland improved			186,400				1,186,300				736,400				2,109,100				186,300				1,186,300				956,600				2,329,200				0.1				-				(23.0	)			(9.4	)
Total			2,006,400				2,025,700				931,800				4,963,900				1,856,900				2,024,100				1,145,900				5,026,900				8.1				0.1				(18.7	)			(1.3	)

 

Table 11

Occupancy Trend Analysis – Last Five Quarters¹

		2Q2016												1Q2016												4Q2015												3Q2015												2Q2015
		Number of properties				Weighted average sq. ft.				Percent Leased				Number of properties				Weighted average sq. ft.				Percent Leased				Number of properties				Weighted average sq. ft.				Percent Leased				Number of properties				Weighted average sq. ft.				Percent Leased				Number of properties				Weighted average sq. ft.				Percent Leased
Retail			31				2,006,400				93				31				2,006,400				93				30				1,867,000				93				30				1,856,900				94				30				1,856,900				94
Industrial			15				2,025,700				97				15				2,025,700				97				15				2,024,100				98				15				2,024,100				97				15				2,024,100				97
Office			10				931,800				89				13				1,061,900				89				13				1,117,900				88				14				1,145,900				91				14				1,145,900				91
Total			56				4,963,900				94				59				5,094,000				94				58				5,009,000				94				59				5,026,900				95				59				5,026,900				94

 

1

Number of properties is as of quarter end.

 

Note:

Gross leasable area is periodically adjusted based on remeasurement of reconfiguration of space.

 

 

Table 12

Real Estate Leasing Net Operating Income (NOI)

(in millions)

		2Q 2016																2Q 2015																Percentage Change
Location		Retail				Industrial				Office				Total				Retail				Industrial				Office				Total				Retail				Industrial				Office				Total
Hawaii improved1		$	11.7			$	2.8			$	0.9			$	15.4			$	9.7			$	2.7			$	1.0			$	13.4				20.6				3.7				(10.0	)			14.9
Hawaii unimproved1			-				-				-				2.9				-				-				-				3.6				-				-				-				(19.4	)
Total Hawaii		$	11.7			$	2.8			$	0.9			$	18.3			$	9.7			$	2.7			$	1.0			$	17.0				20.6				3.7				(10.0	)			7.6
Mainland improved			0.6				1.2				2.2				4.0				0.7				1.2				2.5				4.4				(14.3	)			-				(12.0	)			(9.1	)
Total		$	12.3			$	4.0			$	3.1			$	22.3			$	10.4			$	3.9			$	3.5			$	21.4				18.3				2.6				(11.4	)			4.2

 

Table 13

Real Estate Leasing Same Store NOI²

(in millions)

		2Q 2016																2Q 2015																Percentage Change
Location		Retail				Industrial				Office				Total				Retail				Industrial				Office				Total				Retail				Industrial				Office				Total
Hawaii improved		$	9.4			$	2.8			$	0.7			$	12.9			$	8.9			$	2.7			$	0.8			$	12.4				5.6				3.7				(12.5	)			4.0
Hawaii unimproved1,3			-				-				-				3.2				-				-				-				3.8				-				-				-				(15.8	)
Total Hawaii		$	9.4			$	2.8			$	0.7			$	16.1			$	8.9			$	2.7			$	0.8			$	16.2				5.6				3.7				(12.5	)			(0.6	)
Mainland improved			0.6				1.2				0.9				2.7				0.7				1.1				0.9				2.7				(14.3	)			9.1				-				-
Total		$	10.0			$	4.0			$	1.6			$	18.8			$	9.6			$	3.8			$	1.7			$	18.9				4.2				5.3				(5.9	)			(0.5	)

 

1

Ground lease NOI from the Aikahi Park Shopping Center (APSC) was included in the calculation of same store NOI (Table 13) in Hawaii Unimproved as the ground lease was held in both the second quarter of 2015 and 2016. For purposes of calculating second quarter 2016 NOI (Table 12), both the NOI from ASPC tenant improvements and ground lease were included in Hawaii Improved Retail. Ground lease NOI for APSC in the second quarter of 2015 is included in Hawaii Unimproved for April 2015 and in Hawaii Improved as of May 2015.

2

Same Store NOI relates to properties that were operated throughout the duration of both periods under comparison.

3

A one-time retro-active rent increase billing of the APSC ground rent resulted in a net NOI increase of approximately $600,000 which is reflected in the second quarter of 2015. This one-time adjustment was included in Same Store NOI.

 

Note:

See page 8 for a statement regarding the Company’s use of non-GAAP financial measures and a reconciliation of Leasing operating profit to Real Estate Leasing NOI and Real Estate Leasing same store NOI.

 

 

Statement on Management’s Use of Non-GAAP Financial Measures

 

 

The Company calculates NOI as operating profit from continuing operations, less general and administrative expenses, straight-line rental adjustments, interest income, interest expense, depreciation and amortization, and gains on sales of interests in real estate. NOI is considered by management to be an important and appropriate supplemental performance metric because management believes it helps both investors and management understand the ongoing core operations of our properties excluding corporate and financing-related costs and noncash depreciation and amortization. NOI is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. This measure thereby provides an operating perspective not immediately apparent from GAAP income (loss) from operations or net income (loss). NOI should not be considered as an alternative to GAAP net income as an indicator of the Company's financial performance, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. Other real estate companies may use different methodologies for calculating NOI, and accordingly, the Company's presentation of NOI may not be comparable to other real estate companies. The Company believes that the Real Estate Leasing segment's operating profit from continuing operations is the most directly comparable GAAP measurement to NOI. The Company also calculates NOI for properties that were owned throughout the entire duration of both periods under comparison and refers to this calculation as “same-store NOI.” A reconciliation of Real Estate Leasing segment operating profit to Real Estate Leasing segment NOI and same-store NOI is as follows:

 

Table 14

Reconciliation of Real Estate Operating Profit to NOI and Same Store NOI¹ (Non-GAAP)

(in millions)

		2Q 2016				2Q 2015
Real Estate Leasing segment operating profit		$	14.8			$	13.9
Adjustments:
Depreciation and amortization		$	7.3			$	7.2
Straight-line lease adjustments			(0.7	)			(0.7	)
General and administrative expenses			0.9				0.7
Other			-				0.3
Real Estate Leasing segment NOI		$	22.3			$	21.4
Acquisitions/ disposition and other adjustments			(3.5	)			(2.5	)
Real Estate Leasing segment same store NOI1		$	18.8			$	18.9

 

1

NOI related to properties that were operated throughout the duration of both periods under comparison.

 

 

Portfolio Acquisitions and Dispositions

 

 

Table 15

2016 Property Portfolio Acquisitions/Dispositions

Property disposed in 2016		Disposition date (month/year)		Disposition price (in millions)				Gross leasable area (sq. ft.)				Leased percentage at disposition
Ninigret Office Park		6/16		$	30				185,500				100
Gateway Oaks		6/16			8				59,700				92
Prospect Park		6/16			22				163,300				100
Total				$	60				408,500

 

Property acquired in 2016

Acquisition date (month/year)

Acquisition price (in millions)

Gross leasable area (sq. ft.)

Leased percentage at acquisition

Manoa Marketplace

1/16

$

82

139,300

99

 

2015 Property Portfolio Acquisitions/Dispositions

Property acquired in 2015

Acquisition date (month/year)

Acquisition price (in millions)

Gross leasable area (sq. ft.)

Leased percentage at acquisition

Aikahi Park Shopping Center - Improved Property1

5/15

$

2

98,000

86

 

Property disposed in 2015		Disposition date (month/year)		Disposition price (in millions)				Gross leasable area (sq. ft.)				Leased percentage at disposition
Union Bank		12/15		$	10				84,000				53
San Pedro Plaza		5/15			17				171,900				69
Wilshire Shopping Center		3/15			4				46,500				72
Total				$	31			$	302,400

 

1

On May 1, 2015, the Company acquired the leasehold improvements of the Aikahi Park Shopping Center in Kailua. The Company has owned the ground lease under the improved property since its initial acquisition of the Kailua Town Portfolio in December 2013.