Alexander & Baldwin, Inc. ((ALEX)) has held its Q4 earnings call. Read on for the main highlights of the call.
In the recent earnings call, Alexander & Baldwin, Inc. conveyed a generally positive sentiment, reflecting strong financial performance and effective cost management strategies. The company highlighted its success in reducing costs and implementing effective leasing strategies, although it acknowledged challenges such as tenant bankruptcies and slight declines in economic occupancy and same-store NOI growth.
Strong FFO and AFFO Increase
The company reported a notable increase in Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) for the fourth quarter. FFO rose by $0.03 to $0.30 per share, while AFFO increased by $0.02 to $0.19 per share compared to the same quarter last year. For the full year, FFO was $1.37 per share, marking a $0.28 increase from the previous year.
Significant Reduction in G&A Expenses
Alexander & Baldwin achieved significant cost efficiency by reducing General and Administrative (G&A) expenses by $4.2 million or 12.4% in 2024 compared to 2023. This reduction played a crucial role in enhancing the company’s overall financial performance.
Successful Leasing Activity
The company executed 209 leases totaling 630,000 square feet in 2024, demonstrating robust leasing activity. The leasing spreads were strong, with a 14% increase in Q4 and 11.7% for the year, highlighting effective leasing strategies.
Improvement in Capital Structure
Alexander & Baldwin made significant improvements in its capital structure by refinancing $130 million of mortgage debt with unsecured debt at fixed rates. The company also extended the maturity date on its revolving credit facility to 2028 and established a new at-the-market share program.
Decline in Economic Occupancy
The earnings call noted a slight decline in economic occupancy, which stood at 92.9% at the end of the quarter. This represented a 10 basis point decrease from the last quarter and the same period last year, primarily due to industrial and office vacancies.
Tenant Bankruptcy Impact
The bankruptcy of Liberated Brands impacted the company, affecting approximately $450,000 of annual base rent. The space is expected to be liquidated around mid-year 2025, posing a challenge for the company.
Deceleration in Same Store NOI Growth
The company provided guidance for same-store NOI growth in 2025, expecting it to range between 2.4% and 3.2%. This represents a slight deceleration from the performance in 2024.
Forward-Looking Guidance
Looking ahead to 2025, Alexander & Baldwin has set several strategic priorities. The company expects same-store NOI growth to range between 2.4% and 3.2%, with FFO projected to be between $1.13 and $1.20 per share. Additionally, CRE and corporate-related FFO is anticipated to fall between $1.11 and $1.16 per share. The company also plans to enhance revenue through leasing, increase occupancy in its industrial portfolio, develop land assets, and maintain cost efficiency.
In summary, Alexander & Baldwin’s earnings call reflected a positive outlook with strong financial performance and effective cost management. Despite challenges such as tenant bankruptcies and slight declines in economic occupancy, the company remains focused on strategic priorities for 2025, including improving revenue and maintaining cost efficiency.