Alexander & Baldwin Q1 2025 slides: raises FFO guidance after strong NOI growth

Published 24/04/2025, 21:14
Alexander & Baldwin Q1 2025 slides: raises FFO guidance after strong NOI growth

Alexander & Baldwin Holdings Inc (NYSE:ALEX) released its first quarter 2025 earnings presentation on April 24, revealing stronger-than-expected performance that prompted management to raise its full-year FFO guidance. The Hawaii-focused real estate investment trust reported solid same-store NOI growth of 4.2% and strategic progress on its portfolio optimization initiatives.

Quarterly Performance Highlights

Alexander & Baldwin reported net income of $21.4 million ($0.29 per diluted share) for Q1 2025, compared to $19.97 million ($0.28 per diluted share) in the same period last year. Funds from operations (FFO) came in at $26.3 million ($0.36 per diluted share), while FFO related to commercial real estate (CRE) and corporate activities reached $21.5 million ($0.30 per diluted share).

The company achieved impressive leasing metrics with 95.4% leased occupancy as of March 31, 2025, and 93.9% economic occupancy. Leasing spreads for new and renewal leases were robust at 10.2%, demonstrating strong demand for the company’s Hawaii commercial properties.

As shown in the following quarterly highlights slide:

"We’re pleased with our first quarter results, which reflect the strength of our Hawaii-focused commercial real estate portfolio," said Lance Parker, President and CEO of Alexander & Baldwin, according to the presentation. "Our 4.2% same-store NOI growth demonstrates the resilience of our assets and the effectiveness of our operational strategy."

Strategic Initiatives

A key accomplishment in the quarter was the execution of a 75-year ground lease with a self-storage developer at Maui Business Park, which will provide approximately $0.7 million in net operating income with 2.5% annual increases. This strategic move transferred a 5-acre non-income producing lot into the company’s income-generating CRE portfolio.

The details of this strategic ground lease are illustrated in the following slide:

The company also made progress on streamlining its business by selling 90 acres of primarily agriculture-zoned land in the first quarter and reaching a favorable resolution of certain contingent liabilities at a legacy joint venture. These initiatives contributed $0.06 of Land Operations FFO per diluted share.

As shown in the following accomplishments slide:

Detailed Financial Analysis

Alexander & Baldwin maintained a solid balance sheet with net debt to TTM Consolidated Adjusted EBITDA ratio of 3.6x, unchanged from Q4 2024. The company’s weighted-average interest rate was 4.65% at quarter end, with 97.1% of debt at fixed rates, providing stability in the current interest rate environment.

Total (EPA:TTEF) debt stood at $453 million, with 94% unencumbered, while total liquidity was $324 million, including $17 million in cash and $307 million in undrawn revolving credit capacity. The company paid a first quarter dividend of $0.225 per share on April 7, 2025, and declared the same amount for the second quarter, payable on July 9, 2025.

The following slide illustrates the company’s balance sheet and capital markets position:

The company’s financial results show improvement across key metrics, with a detailed breakdown of FFO by segment presented in this slide:

First quarter 2025 G&A expenses decreased by $0.2 million to $7.0 million, representing a 3.4% reduction compared to the same period in 2024. This continues the company’s trend of cost control, following a $4.2 million (12.4%) reduction in G&A expenses for full-year 2024, as noted in the previous earnings report.

Forward-Looking Statements

Based on the strong first quarter performance, Alexander & Baldwin raised its full-year 2025 FFO guidance to $1.17-$1.23 per diluted share, up from the previous guidance of $1.13-$1.20. The company also increased its net income guidance to $0.68-$0.74 per diluted share, compared to the initial guidance of $0.64-$0.71.

The company maintained its guidance for FFO related to CRE and Corporate at $1.11-$1.16 per diluted share and Same-Store NOI growth of 2.4%-3.2%.

The updated guidance is detailed in the following slide:

Alexander & Baldwin’s stock closed at $16.71 on April 24, 2025, up 0.42% from the previous day’s close of $16.64. The stock has traded between $15.70 and $20.30 over the past 52 weeks, suggesting potential upside if the company continues to execute on its strategic initiatives and deliver on its raised guidance.

The company’s focus on Hawaii commercial real estate, portfolio optimization, and cost structure improvements positions it well for continued growth, despite the challenging macroeconomic environment. With a high percentage of fixed-rate debt and strong leasing spreads, Alexander & Baldwin appears well-positioned to navigate potential interest rate volatility while capitalizing on the strong demand for commercial real estate in Hawaii.

Full presentation:

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