Selling a few resort home properties on the neighbor islands and an industrial park in California drove first-quarter profit higher at Alexander & Baldwin Inc., the firm announced Thursday.
The Honolulu-based company reported earning $5 million in the January-March period, up from $2.8 million in the same period last year.
On a percentage basis the gain was big, but year-ago net income was affected by a one-time $1.2 million expense tied to A&B spinning off former subsidiary Matson Navigation Co. Without that expense, year-ago net income for the quarter would have been $4 million.
A&B said revenue was little changed at $41.5 million in the recent period compared with $41.2 million a year ago.
Three main divisions of A&B — commercial real estate leasing, real estate sales and agriculture — all contributed to the company’s improved bottom line.
The biggest contributor was real estate sales. A&B said operating profit for this division was $2.4 million in the first quarter, up from $900,000 a year earlier. The recent results largely stemmed from the sale of a California industrial park and five residential properties at three A&B development projects on Maui, Hawaii island and Kauai.
Operating profit from leasing commercial real estate such as office buildings and shopping centers was $10.9 million in the recent quarter, up from $10.7 million a year earlier.
In agriculture, which includes Hawaiian Commercial & Sugar Co. on Maui, operating profit was $3.8 million in the recent quarter, up from $3.5 million a year earlier. The increase was primarily from higher sales of electricity linked to HC&S operations and a solar farm A&B began operating on Kauai in December.
Since spinning off Matson, A&B launched a strategy to boost its real estate development pipeline, especially on Oahu, and to buy more commercial property in Hawaii financed by selling commercial property on the mainland.
Stan Kuriyama, A&B chairman and chief executive officer, told stock analysts on a conference call Thursday that the company is making progress on the effort.
"We continue to expand our development pipeline," he said. "We are also gaining traction on our long-term strategy to migrate our commercial portfolio from the mainland to Hawaii."
A&B development projects include the Waihonua condominium tower in Kakaako, which is under construction. The company said it sold another 47 units in the 340-unit tower this year, bringing total sales to 321, of which 302 are under binding contracts. (A&B will not recognize revenue from condo tower sales until the project is completed.)
Another big A&B project is The Collection at 600 Ala Moana Boulevard, a planned condo tower complex with 470 residential units and some retail shops and restaurants. A&B announced this project last month. Sales are projected to commence this summer.
"We’re seeing and participating in strong performance in the primary residential market on Oahu," Chris Benjamin, A&B’s president and chief operating officer, said on the conference call.
Efforts to fulfill the company’s commercial property investment strategy include the purchase of Waianae Mall in January, and plans to buy Napili Shopping Center on Maui in a deal expected to close by the end of next month. However, an effort to buy a Honolulu office building called Clifford Center has fallen through.
A&B said it decided not to proceed with the office building purchase from another Honolulu company, Pacific Office Properties Trust Inc., after completing detailed research on the property and deal terms.
The strategy to spin off Matson and concentrate largely on real estate has improved the value of A&B stock, which rose from a low of $25.17 on June 29, the day the Matson split took effect, to a high of $36.52 on March 7. On Thursday, shares of A&B stock closed at $34.01 before the earnings announcement.
