Alexander & Baldwin will close a $40 million, 24-acre Kahului land sale today to make way for the development of national retailer Target, A&B Chairman and Chief Executive Officer Stan Kuriyama said Thursday while announcing the company's third-quarter operating and financial results.
The land sale amounts to $1.65 million an acre, he said, noting that it follows a September sale of 209 acres in Waikapu, at $25,000 an acre, to Maui County for its Central Maui regional park complex.
"Most of the proceeds from these two sales will also be reinvested in the acquisition of the Pearl Highlands Center," Kuriyama said. The closing of the sale on Oahu was in September.
The Pearl Highlands Center purchase made A&B Hawaii's second-largest owner of retail properties in the state, he said.
The largest is General Growth Properties, which owns Whalers Village in Kaanapali and Ala Moana Center on Oahu, among other properties.
In April, Property Development Centers, a wholly owned real estate subsidiary of Safeway Inc., announced it had reached a deal with A&B to purchase the property at the corner of Puunene Avenue and Hookele Street, near the Zippy's restaurant.
PDC said it would, in turn, sell 12 acres to Target, which will serve as the center's anchor retailer.
A&B's real estate operations performed well in the third quarter, Kuriyama said, highlighting the company's purchase of 27 properties in Kahala, one of Oahu's "premier residential neighborhoods."
Chris Benjamin, A&B president and chief operating officer, said that the company spent time "cleaning up and readying" the Kahala properties for sale. As of Thursday, four lots had sold, and the company was evaluating offers or had sales in various stages of contracting, he said.
On Maui in the third quarter, A&B sold six units at its 150-unit Kai Malu at Wailea project, with units going for $1 million to $1.4 million, Benjamin said. The company is seeking Maui County regulatory approval for a 70-unit condominium project in Wailea, and it has the ability to do another 75-unit development, if there's enough market demand, he said.
Overall, A&B's adjusted net income for the third quarter was $5.6 million, or 13 cents per share, compared with adjusted net income of $13.8 million, or 32 cents per share, in the same quarter in 2012, the company said.
"Our net income also reflects a $7 million decline in agribusiness operating profit compared with last year's third quarter, which was anticipated and resulted from one less sugar voyage and lower sugar prices," Kuriyama said.
A&B also completed on Oct. 1 the purchase of the Grace Pacific construction company, which earlier had been announced for a combination of stock and cash valued at $235 million.
"We expect (Grace) to be an important generator of earnings and cash for the company," Kuriyama said in a conference call.
With its acquisition of Grace Pacific, A&B was "extending and enhancing our community building capabilities to encompass infrastructure work, for which a steady and growing need exists in Hawaii," Kuriyama said in a written statement. "With Grace, we increase our ability to leverage Hawaii's improving economy and real estate markets, and materially strengthen our financial profile and flexibility, while also enabling us to initiate a modest quarterly dividend."
A&B's agribusiness operating profit for the third quarter was $2.2 million, compared to $9.1 million last year, the company's third-quarter report stated. The lower profits were "principally due to lower raw sugar margins resulting from one less sugar voyage and lower sugar prices in the third quarter of this year compared with last year."
"Power and molasses sales margins were also lower in the quarter," according to the report. The company expects to break even with its agribusiness segment in the second half of this year, generating a loss for the fourth quarter.
In the third quarter, Hawaiian Commercial & Sugar Co. produced 64,000 tons of sugar, down 18.2 percent from the 78,200 tons produced in the third quarter of 2012. The company's tons of sugar sold fell 50.6 percent from 72,400 tons in 2012 to 35,800 tons this year.
For the first nine months of the year, the picture's not as ugly. Tons of sugar produced were down slightly at 0.8 percent to 138,600 tons, while tons of sugar sold dropped 33.4 percent to 72,200.
Sugar prices increased modestly in the third quarter, Benjamin said.
A&B remained "hopeful" that sugar prices would continue their upward trend, he said.
* Brian Perry can be reached at firstname.lastname@example.org.