Alexander & Baldwin, Inc.

Alexander & Baldwin, Inc. (A&B) is a leading Hawaii-based real estate company. It primarily focuses on Commercial Real Estate and Land Operations, owning and managing a portfolio of retail, industrial, and office properties, predominantly across the Hawaiian islands. A&B also actively engages in land development and sales. As a significant and long-standing landowner in Hawaii, A&B holds a unique market position.

1. Business Overview

Alexander & Baldwin, Inc. (A&B) is a Hawaii-based real estate company with a long, established history in the state. Its core business involves owning, operating, and developing a diversified portfolio of commercial properties, including retail, industrial, and office assets, primarily located on the Hawaiian islands. Beyond its income-producing commercial real estate, A&B also manages substantial landholdings. It engages in land development, sells developed parcels, and conducts other land-related activities such as agricultural leases and water sales. The company is actively transforming its strategy to become a pure-play commercial real estate company focused exclusively on Hawaii.

2. Financial Performance

A&B's financial results for 2025 showed modest growth in key areas. The company generated total revenue of $160 million in 2025, a slight increase from $155 million in 2024.

• Net Income from Continuing Operations rose to $15 million in 2025, up from $14 million in 2024. This translated to Earnings Per Share (EPS) from continuing operations of $0.25 in 2025, compared to $0.23 in 2024.
• Net Income from Discontinued Operations decreased to $1 million in 2025 from $2 million in 2024. This reduction reflects the company's ongoing strategy to divest non-core assets.
• Total Net Income for the year was $16 million in 2025 ($0.27 EPS), consistent with $16 million in 2024 ($0.26 EPS). The reduction in discontinued operations income largely offset the modest growth in continuing operations, leading to a slight increase in EPS.

Land Operations revenue streams presented varied results:

• Development Sales (e.g., sales of developed parcels or projects) increased by 10% to $11 million in 2025 from $10 million in 2024, indicating successful project execution.
• Unimproved Other Property Sales (raw land sales) declined by 50% to $1 million in 2025 from $2 million in 2024, suggesting either a slowdown or a strategic reduction in this segment.
• Other Operations (Land), which includes revenue from agricultural leases, water sales, and other land-related services, grew to $5 million in 2025 from $4 million in 2024.

3. Risk Factors

Operating primarily in Hawaii, A&B faces a unique and often complex set of risks:

• Regulatory and Environmental Challenges: Hawaii's stringent land use, water rights, and environmental regulations significantly impact A&B's remaining land and development operations. The historical issues with water leases for East Maui Irrigation Company (EMI), though EMI was sold, highlight these substantial regulatory and environmental hurdles, which can extend project timelines and increase costs.
• Economic Dependence on Tourism: Hawaii's economy relies heavily on tourism. Any downturns in this sector could negatively affect tenant demand, rental rates, and property values across A&B's commercial real estate portfolio.
• Interest Rate Fluctuations: As a real estate company with substantial debt, A&B is exposed to interest rate risks. Rising interest rates could increase borrowing costs and impact property valuations.
• Competition: A&B competes with other real estate developers and investors in Hawaii, which could influence acquisition opportunities and rental income.
• Natural Disasters: Operating in Hawaii exposes A&B to risks from natural disasters such as hurricanes, tsunamis, and volcanic activity, which could cause property damage and business interruptions.
• Real Estate Market Conditions: Fluctuations in the Hawaiian real estate market, including property values, rental rates, and occupancy levels, could materially affect the company's financial results and asset valuations.
• Litigation Risks: As a significant landowner and developer, A&B is subject to various legal proceedings, including those related to land use, environmental matters, and property rights. These could result in significant costs or adverse outcomes.

4. Management Discussion & Analysis (MD&A) Highlights

Management's discussion highlights a pivotal year for A&B, marked by the continued execution of its strategic transformation. The modest increase in total revenue and net income from continuing operations demonstrates the resilience of its core commercial real estate portfolio and successful development sales, even within a challenging economic environment. Growth in real estate investments underscores management's commitment to expanding and enhancing its income-producing asset base.

A significant strategic action was the Divestiture of East Maui Irrigation Company (EMI) in June 2025. This move represents a major step in streamlining operations, reducing exposure to complex water rights litigation and regulatory burdens, and focusing capital on core real estate assets. A&B expects to redeploy proceeds from this sale into its commercial property portfolio or use them for debt reduction, aligning with the company's capital allocation strategy.

Management continues to optimize the portfolio through asset dispositions, including a "CRE Improved Property" and a "Company Occupied Building" held for sale. These actions aim to sharpen the focus on income-generating commercial properties and improve overall portfolio efficiency. The increase in development sales within Land Operations suggests management's continued focus on value creation through strategic development projects that complement their commercial real estate holdings, indicating a disciplined approach to leveraging their land assets.

The increase in unsecured debt, while secured debt decreased, suggests management seeks greater financial flexibility. This flexibility could fund new acquisitions or development projects as part of its strategic pivot. The consistent generation of cash flow from operations demonstrates the underlying business strength to fund its activities. Management focuses on leveraging its unique market position in Hawaii to drive long-term shareholder value through a more focused and efficient business model.

5. Financial Health

A&B's financial position reflects growth in its core assets alongside an increase in overall debt:

• Real Estate Investments: A&B's primary asset base, real estate investments, grew to $1 billion by the end of 2025, up from $950 million at the end of 2024. This indicates continued investment in its property portfolio.
• Total Debt and Lease Obligations: Total borrowings and lease commitments increased slightly to $600 million in 2025 from $580 million in 2024.
  • Secured debt decreased to $100 million from $110 million, indicating a reduction in asset-backed financing.
  • Unsecured debt increased to $450 million from $420 million, suggesting A&B increasingly relies on corporate-level debt, potentially for greater financial flexibility or to fund new acquisitions.
  • Its revolving credit facility remained stable at $50 million.
• Operating Lease Liabilities: Commitments for leased properties increased slightly to $55 million from $50 million.
• Retained Earnings: The company's accumulated profits, retained for reinvestment or future use, grew to $200 million in 2025 from $190 million in 2024, signaling financial stability and a capacity for internal funding.
• Cash and Cash Equivalents: As of year-end 2025, A&B held $45 million in cash and cash equivalents, providing liquidity for operations and potential investments.
• Cash Flow from Operations: The company generated $70 million in cash flow from operations in 2025, a key indicator of its ability to fund business activities from its core earnings.

6. Future Outlook

A&B's future outlook is shaped by its strategic pivot towards becoming a pure-play commercial real estate company in Hawaii. The company is clearly moving towards a more focused business model, aiming to reduce complexity, enhance operational efficiency, and potentially improve investor clarity. Future growth will likely come from optimizing its existing commercial portfolio through active management and redevelopment, strategic acquisitions of high-quality commercial properties within Hawaii, and selective development projects that align with its core real estate focus. The successful execution of its divestiture strategy, particularly the redeployment of capital from the EMI sale, will be critical to funding these growth initiatives and enhancing long-term shareholder value. Management anticipates a continued focus on strengthening its balance sheet and maintaining financial flexibility to capitalize on market opportunities.

7. Competitive Position

Alexander & Baldwin, Inc. holds a unique and strong competitive position within the Hawaiian real estate market. As a significant and long-standing landowner in Hawaii, the company benefits from a deep understanding of local market dynamics, the regulatory environment, and community relationships. This extensive land base, coupled with its established presence, creates a high barrier to entry for new competitors. A&B's diversified portfolio of retail, industrial, and office properties across the islands provides broad exposure to the local economy and reduces reliance on any single property type or submarket. While facing competition from other real estate developers and investors, A&B differentiates itself through its local expertise, established portfolio, and strategic focus on the Hawaiian market. Its ongoing strategic transformation aims to further sharpen this competitive edge by concentrating resources on its core commercial real estate operations.