The Plantation House at Kukui ula Financial Community Meetings May 13-17, 2013
DISCLOSURE Waihonua Sales Office 36,000-acre Sugar Plantation Kai Malu Statements in this presentation 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 forwardlooking statement. Factors that could cause actual results to differ materially from those contemplated in the statements include, without limitation, those described on pages 18 to 28 of our 2012 Form 10-K and our other subsequent filings with the SEC. These forward looking statements are not guarantees of future performance. We do not undertake any obligation to update our forward-looking statements. 2
A&B: A PREMIER HAWAII REAL ESTATE & LAND COMPANY Hawaii market knowledge Focused Hawaii strategy Strong, established relationships Executing across the entire real estate development and management spectrum Kukui ula Kukui ula Plantation Plantation House House Financial strength Brand integrity Maui Business Park II 3
A&B: A PREMIER HAWAII REAL ESTATE & LAND COMPANY Unique assets & competitive strengths Tangible 87,000 acres primarily on Maui and Kauai 8 million square feet of high-quality commercial properties in Hawaii & Mainland Robust Hawaii development pipeline (fully entitled) of over 3,500 residential units and 100,000 square feet of commercial space 36,000-acre sugar plantation Strong balance sheet & ample debt capacity Intangible Deep experience, network & understanding of Hawaii Disciplined underwriting & investment Reputation for integrity, performance & commitment to the community 4
HAWAII LANDHOLDINGS As of December 31, 2012 KAUAI Wainiha Princeville Kauai 21,320 acres* Conservation 13,320 acres Agriculture 6,930 acres Urban/Entitled 1,070 acres* * Includes 960 acres at Kukui ula joint venture Lihue Poipu Kahului Maui 66,800 acres Conservation 15,850 acres Agriculture 50,400 acres Urban/Entitled 550 acres Kihei Wailea MAUI 5
HAWAII ECONOMY PERFORMING WELL YTD MARCH 31,2013, EXCEPT AS NOTED Visitor arrivals up 7% and expenditures up 8% following a record year in 2012 Construction turned the corner in 2012, growth forecasted for 2013 Private permits up 13% Oahu real estate strong March median prices Homes - $640,000, up 2% Condos - $340,000, up 9% March residential sales volumes Homes up 4% Condos up 22% Commercial markets remain stable Sources: Hawaii Dept. of Business, Economic Development & Tourism; UHERO Construction Forecast, March 29, 2013; Honolulu Board of Realtors; Colliers International (Hawaii) for industrial and office; CBRE for retail Data provided for informational purposes only; no endorsement of forecast implied. Maui Mall The Shops at Kukui ula 6
REAL ESTATE DEVELOPMENT & INVESTMENT STRATEGY Leverage market knowledge and expertise to: Entitle and develop core Hawaii lands Invest in high-returning real estate opportunities in Hawaii Utilize strategic joint ventures Complement traditional neighbor island focus with increased Oahu presence Brydeswood Wailea 7
EXPAND INVESTMENT IN URBAN HONOLULU ALEX + MATX S&P Mid Cap 400 Index S&P 500 Index 2011 separation announcement through year end 2012 (12/1/11 to 4/4/13) 54.2% 30.8% 29.1% 8
WAIHONUA AT KEWALO Description Location Honolulu, Oahu Acquisition date June 30, 2010 Zoning High-rise residential Units 341 (340 saleable) Floors 43 Status Construction and presales Estimated construction 2015 completion Average unit size 1,000 s.f. Average sales price per s.f. $725 Average cost per s.f. $550 to $600 Overview Extremely well located near shopping, restaurants and beaches Successful navigation of complex permitting process JV partners to provide half of $65M equity capital $120M construction loan General contractor is Hawaiian Dredging 302 binding ($33M in nonrefundable deposits) + 19 nonbinding sales as of May 8, 2013 9
Downtown Honolulu Ala Moana Center Waihonua Ward Retail Centers The Collection at 600 Ala Moana site Ala Moana Beach Park 10
470 units in urban Honolulu 400-unit high-rise 16 3-bedroom townhomes 54 low-rise flats Retail and dining options Presales this summer A&B benefits from long-term option structure to acquire site Views from Kaka ako high-rise site 11
ADVANCE PROJECTS TO MEET RISING DEMAND The Golf Course at Kukui ula 12
KUKUI ULA Description Location Poipu, Kauai Acquisition date Historic lands Acres 1,000 (950 remaining; 630 saleable) Units/homes Up to 1,500 Status Sales and marketing, vertical construction Estimated construction 2030 completion Targeted sales price per s.f. $30-$130 (land) Overview Incomparable product with limited competition All resort amenities completed Offsite infrastructure complete for [450] additional lots Attractive price points relative to other luxury resort communities in Hawaii Positive sales momentum building: Increased overall sales activity Good market response to built product Increased vertical construction Increased 3 rd party developer interest Overall, 90 lots closed; 80 available as of May 10, 2013 13
WAILEA WAILEA (MAUI) Kai Malu 3 units closed in 2013 2 units under binding contract for $1.1M and $1.2M 5 units remain to be sold Advancing plans for additional inventory 14
MAUI BUSINESS PARK Phase I established Maui Business Park as the primary retail center in Maui Phase II comprises 155 acres Safeway announced intent to purchase 24 acres adjacent to MBP for a Target-anchored retail center 15
LEASING STRATEGY Active portfolio management Maximize cash flow to support development activities Optimize asset values Reinvest land and commercial property sales proceeds, on a taxadvantaged basis, into commercial property investments having favorable growth prospects Opportunistic migration of portfolio to Hawaii over time Pace of future sales dictated by availability of suitable Hawaii replacement investment opportunities 16
HAWAII COMMERCIAL PORTFOLIO AS OF MARCH 31, 2013, EXCEPT AS NOTED Number of properties 23 Square feet Industrial Office Retail 565K 187K 871K Total 1.6M Occupancy (YTD March 2013) 92% Outstanding debt Portfolio NOI (2012) NOI from Hawaii ground leases (2012) Total Hawaii NOI (2012) Portfolio NOI to total portfolio NOI (2012) $20.5M $23.3M $3.5M $26.8M 42% 17
MAINLAND COMMERCIAL PORTFOLIO AS OF MARCH 31, 2013, EXCEPT AS NOTED Number of properties 23 Number of properties: 24 Square feet Industrial 4.3M Number of states: 8 Office 1.3M Square feet: Retail 0.7M Retail 730K Industrial 4,470K Office 1,300K $27.8M 6.5M Total 6.3M Occupancy (YTD March 2013) 95% Outstanding debt NOI (2012) $36.3M 2011 occupancy 92% NOI to total portfolio (2012) 58% 18
ACQUISITIONS WAIANAE MALL 170,300- square foot, retail center on Oahu Acquisition price: $29.8M, including assumption of $19.7M WAIANAE loan Mall Proceeds from non-core land sale in July New lease brings occupancy up to 93% (up from 79%) NAPILI 46,000-square foot, retail center Located in Kapalua, HI Expect to reinvest Northpoint sales proceeds in Napili 19
LAND STEWARDSHIP STRATEGY Employ lands at highest and best use Identify and pursue entitlements, developments and transactions that enhance the value of raw landholdings Optimize cash flow to cover the cost of maintaining land and infrastructure Target renewable energy growth for strategically located land parcels 36,000-acre HC&S sugar plantation 20
ACCELERATED PROGRESS IN REAL ESTATE SINCE SEPARATION Oahu focus Waihonua Artist Rendering ONE Ala Moana Kai Malu The Collection at 600 Ala Moana Waianae Mall Building inventory Kukui ula vertical program Acceleration of Wailea projects Continuing development of other projects Migration of commercial portfolio to Hawaii Waihonua Kunia Shopping Center Kukui ula 21
CONDENSED BALANCE SHEET DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNT OR AS NOTED Assets 3/31/13 12/31/12 Current assets 75 63 Investments in affiliates 324 320 Real estate developments 148 144 Property, net 862 839 Other assets 81 71 Total 1,490 1,437 Liabilities & Shareholders Equity 3/31/13 12/31/12 Current liabilities excluding debt 49 54 Long-term debt including current portion 290 235 Deferred income taxes 148 153 Accrued pension and post-retirement benefits 59 59 Other long-term liabilities 23 22 Shareholders equity 921 914 Total 1,490 1,437 Available borrowing capacity $306M Debt to debt + equity 24% Debt to total assets 19% 22
WHY A&B? Unique assets & competitive strengths Proven track record Embedded growth opportunities in a development pipeline positioned for market recovery Healthy balance sheet & liquidity Hawaii economy at a positive inflection point Best public company vehicle for capitalizing on Hawaii s upside and creating long-term shareholder value 23
Appendix 24
ROBUST PIPELINE Product Type Planned units, lots or sf Current Status Gateway at Mililani Mauka Retail 28,400 sf Gateway South Office 20,000 sf KAUAI MAUI OAHU BI ONE Ala Moana Primary Res. 206 units The Collection Primary Res. 470 units Waihonua Primary Res. 341 units Wailea MF-11 Resort Res. 60 units Wailea MF-19 Resort Res. 9 lots Additional Wailea Resort Res. 400-600 units Haliimaile Primary Res. 170 lots Aina O Kane Primary Res. 103 units Kahului Town Center Retail/Primary Res. 440 units, 225,000 sf Maui Business Park II Commercial 131 lots on 155 salable acres Kukui ula Resort Res. up to 1,500 units on 640 saleable acres Brydeswood Primary Res. 24 lots Ka Milo at Mauna Lani Resort Res. 137 units Entitled Constructed Under Construction Marketing for Sale or Lease 25
GATEWAY AT MILILANI MAUKA Description Gateway at Gateway South Mililani Mauka Location Mililani, Oahu Mililani, Oahu Acquisition Date December 2011 June 2012 Stabilized NOI (postdevelopment) $1.0 million $1.4 M Zoning B-1 Business B-1 Business Acres 4.35 4.2 GLA (in sq. ft.) 5,900 (existing) 28,400 (future) 18,700 (existing) 20,000 (future) Occupancy 100% 100% 26
MAUI BUSINESS PARK II Description Location Kahului, Maui Acquisition date Historic lands Zoning Light industrial Acres 179 (155 saleable) Lots 131 Status Construction and marketing Estimated construction 2019 completion Targeted sales price per s.f. $38-$60 Overview Well-located in Central Maui, near Kahului Airport, Harbor and Maui s primary residential district Adjacent to MBPI (76 acres), which A&B transformed into Maui s primary retail destination Primary source of Maui s commercial development for the next 15 years 4-acre parcel sold to Costco in January 2012 for $38 per square foot; $3.7 million of margin recognized in 2Q12 Sale of 24-acre adjacent parcel to Safeway for a Target-anchored retail development 27
INVESTMENTS ONE ALA MOANA TOWER 206-unit ultra luxury residential condominium project Premium location at Ala Moana Center Average unit price: $1.6M A&B to make $20M preferred investment with profit participation 100% pre-sold under binding contracts Construction underway Anticipate delivery of units at the end of 2014 Artist rendering subject to change Artist rendering subject to change 28
ORGANIZATION AND REPORTING SEGMENTS Alexander & Baldwin A&B Properties, Inc. Hawaiian Commercial & Sugar Company (a division) Other Agriculture Companies Leasing and management of commercial properties and unimproved land Entitlement and sales of raw land Production and sale of sugar/molasses Production and sale of electricity Sales of commercial properties Development and sales of properties Production and sale of electricity Provision of services to agricultural lessees RE Leasing Segment RE Sales Segment Agribusiness Segment 29
MANAGEMENT S USE OF NON-GAAP FINANCIAL MEASURES The Company presents NOI, which is a non-gaap measure derived from real estate revenues (determined in accordance with GAAP, less straight-line rental adjustments) minus property operating expenses (determined in accordance with GAAP). NOI does not have any standardized meaning prescribed by GAAP, and therefore, may differ from definitions of NOI used by other companies. NOI should not be considered as an alternative to net income (determined in accordance with GAAP) 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. NOI is commonly used as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. NOI excludes general and administrative expenses, straight-line rental adjustments, interest income, interest expense, depreciation and amortization, and gains on sales of interests in real estate. The Company believes that the Real Estate Leasing segment s operating profit after subtracting discontinued operations is the most directly comparable GAAP measurement to NOI. A required reconciliation of Real Estate Leasing operating profit to Real Estate Leasing segment NOI is presented on the next slide. 30
RECONCILIATION LEASING OPERATING PROFIT TO NOI DOLLARS IN MILLIONS Year Ended December 31, 2012 Real estate leasing segment operating profit before discontinued operations 41.6 Less amounts reported in discontinued operations (0.7) Real estate leasing segment operating profit after subtracting discontinued operations Adjustments: 40.9 Depreciation and amortization 22.2 FASB 13 straight-line lease adjustments (3.6) General and administrative expenses 2.9 Discontinued operations 0.7 Real estate leasing segment NOI 63.1 31
KEY HAWAII ECONOMIC INDICATORS Indicator (% Change YOY, except unemployment rate) Real Gross Domestic Product 2010 2011 2012 2013F 2014F 2015F DBEDT DBEDT DBEDT UHERO DBEDT UHERO DBEDT UHERO DBEDT 1.4 (0.2) 1.6 3.5 2.6 4.1 2.5 3.6 2.3 Visitor Arrivals 7.7 4.0 9.6 6.5 5.4 2.1 2.5 1.5 2.0 Real Personal Income 0.9 1.9 1.9 2.4 2.6 2.9 2.9 2.6 2.7 Unemployment Rate 6.9 6.7 6.0 5.1 NF 4.6 NF 4.3 NF NF: Not forecasted Sources: University of Hawaii Economic Research Organization (UHERO), State Forecast, February 15, 2013 http://www.uhero.hawaii.edu/; Hawaii Department of Business, Economic Development & Tourism (DBEDT), 1Q2013 Report http://hawaii.gov/dbedt. Data provided for informational purposes only; no endorsement implied. 32
HAWAII ECONOMIC INDICATORS YTD MARCH 2013, EXCEPT AS INDICATED % Change From YTD March 2012 Unemployment rate (March) 5.1 (17.7) Visitors Arrivals (millions) 2.1 7.1 Expenditures (billions) $3.9 7.6 Oahu building permits (millions) $477 50.1 Oahu residential real estate resales Median home prices $600,000 (2.7) Home volumes 1,336 2.4 Home months of inventory (March) 2.4 (40.0) Median condo prices $332,000 7.1 Condo volumes 983 15.8 Condo months of inventory (March) 2.7 (40.0) Sources: Hawaii Tourism Authority, Monthly Visitor Statistics, April 25, 2013; DBEDT Monthly Economic Indicators, March 2013; Title Guaranty Sales of Existing Homes & Condominiums Report, March 2013; Honolulu Board of Realtors, March 2013; Hawaii Department of Labor and Industrial Relations. Data provided for informational purposes only; no endorsement implied. 33
VISITOR ARRIVALS AND EXPENDITURES YTD MARCH 2013 Visitor Arrivals (in Millions) 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 Arrivals: 7.1% Expenditures: 7.6% 20 18 16 14 12 10 8 6 Visitor Expenditures ($ in Billions) Visitor Expenditures Visitor Arrivals Source: DBEDT Quarterly Statistical & Economic Report, 1 st Quarter 2013 http://hawaii.gov/dbedt; Hawaii Tourism March 2013 Visitor Highlights http://www.hawaiitourismauthority.org Data provided for informational purposes only; no endorsement of forecast implied. 34
HAWAII AND U.S. UNEMPLOYMENT RATE Percent 10.0 9.0 8.0 7.0 6.0 5.0 Hawaii Average Unemployment March 2013 5.1% March 2012 6.2% 4.0 3.0 2.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F2014F2015F Hawaii U.S. Sources: DBEDT Quarterly Statistical & Economic Report, 1 st Quarter 2013 http://hawaii.gov/dbedt; UHERO State Forecast Update, February 15, 2013 http://www.uhero.hawaii.edu/; United States Department of Labor, Unemployment Data; Bloomberg Composite Forecast as of May 7, 2013 Data provided for informational purposes only; no endorsement of forecast implied. 35
HAWAII REAL ESTATE OVERVIEW YTD MARCH 2013 RESIDENTIAL REAL ESTATE RESALES County Single Family Homes Condominiums Sales % Change from 2012 Median Price % Change from 2012 Sales % Change from 2012 Median Price % Change from 2012 Hawaii 370 (1) 271,500 18 139 7 250,000 3 Kauai 89 9 489,000 9 60 (6) 297,500 4 Maui 208 (1) 517,500 17 264 (13) 368,950 9 Oahu 669 7 600,000 (3) 983 16 332,000 7 Total 1,336 2 1,453 8 Source: Title Guaranty Sales of Existing Homes & Condominiums Report, March 2013; Honolulu Board of Realtors Data provided for informational purposes only; no endorsement implied. 36
HAWAII REAL ESTATE OVERVIEW - OAHU OAHU SINGLE FAMILY HOMES AND CONDO RESALES (QUARTERLY DATA) 800,000 2,500 Median Price 700,000 600,000 500,000 400,000 300,000 200,000 2,000 1,500 1,000 500 Sales Volume 100,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1 Oahu- SFH Median Price Oahu - SFH Sales Volume Oahu- Condo Median Price Oahu- Condo Sales Volume 0 Source: Title Guaranty Sales of Existing Homes & Condominiums report, Honolulu Board of Realtors March 2013. Data provided for informational purposes only; no endorsement implied. 37
HAWAII COMMERCIAL REAL ESTATE OVERVIEW YTD MARCH 31, 2013, EXCEPT AVERAGE ASKING RENT AND OPERATING EXPENSES AS OF 3/31/13 Market Retail Industrial Office Trends Positive growth trend continues Occupancy growth and strong upward pressure on rents Occupancy growth, rents stable and nominal improvement by year end Oahu Commercial Market Statistics Retail Industrial Office Net absorption (sq. ft.) 84,114 43,107 25,623 Vacancy rate 5.1% 3.6% 12.9% Average asking rent per square foot per month (NNN) $4.36 $0.99 $1.54 Average operating expense per square foot $1.34 $0.36 $0.31 Source: Colliers International (Hawaii) for Industrial and office; CBRE www.cbre.com for retail Data provided for informational purposes only; no endorsement implied. 38
TOTAL BUILDING PERMITS AND GENERAL EXCISE CONTRACTING TAX BASE* 6,000 12,000 Total Building Permits ($ in Millions) 5,000 4,000 3,000 2,000 1,000 10,000 8,000 6,000 4,000 2,000 GE Contracting Tax Base ($ in Millions) - - Total Building Permits GE Contracting Tax Base * In 2012 dollars Source: UHERO, Hawaii Construction Forecast Update, March 29, 2013 and UHERO data portal Data provided for informational purposes only; no endorsement implied. 39