Operating profit grows for A&B’s agribusiness

Alexander & Baldwin’s second-quarter report released last week revealed some Maui nuggets of information, including an $8.3 million operating profit for its agribusiness sector led by Hawaiian Commercial & Sugar Co. and the closing of the $19 million acquisition of the Napili Plaza shopping complex.

The operating profit for agribusiness was up $1.3 million from the April-to-June quarter of 2012, “principally due to higher charter income and molasses margins that were partially offset by lower power and specialty sugar margins resulting from lower prices and volumes,” the Aug. 8 news release from the company said.

Sugar prices at HC&S, the lone surviving sugar plantation in the state, are locked in for deliveries in the second half of the year, and prices are lower than the first half, the news release said. As a result, the company expects agribusiness to break even in the second half of the year.

Agribusiness generated $43.5 million in revenue for the quarter, up 9 percent from last year, the report said.

HC&S produced 66,400 tons of sugar for the quarter, up 15.5 percent from the 2012 second quarter, but sales of raw and specialty sugar decreased 1.7 percent to 40,700 tons.

The company’s agribusiness sector is led by the 36,000-acre HC&S. It also includes Maui Brand, a specialty sugar company; McBryde Resources, which supports co-op agriculture on A&B’s 4,000 acres on Kauai and operates hydroelectric plants; A&B Fleet Services, which provides trucking, parts and repair services on the Big Island, Maui and Kauai; and the 134-year-old Kahului Trucking & Storage.

The purchase of the 46,000-square-foot Napili Plaza, which the company completed in May, is part of A&B’s recent moves to divest itself of retail properties on the Mainland and to invest the sale money into Hawaii properties and to increase its stake as a retail property owner/operator in Hawaii.

In fact, $16 million from the sale of Northpoint Industrial in Fullerton, Calif., was used for the $19 million purchase of Napili Plaza, which the company once owned.

Built by Maui Land & Pineapple Co. in the early 1990s, the company sold the Napili Plaza on 4 acres to A&B in 2003 for $7.1 million. In 2007, A&B sold the shopping center to Festival Retail Fund 1 for $17.5 million.

A&B purchased the shopping center from Jupiter Holdings LLC, with a Newport Beach, Calif., address, according to county and state property tax and business records. The Napili Plaza was 92 percent leased for the quarter, A&B said.

Stanley Kuriyama, A&B chairman and chief executive officer, said in the news release that the company has announced or completed more than $65 million in new Hawaii investments “that will support future value creation,” citing the acquisition of the Napili Plaza, the 415,000-square-foot Pearl Highlands Center, and Grace Pacific Corp., a natural materials and paving company.

When Pearl Highlands is added to A&B, the company will become the second largest retail property owner/operator in the state, he said. The company’s gross leaseable area in Hawaii will grow 25 percent and the retail area will jump 45 percent.

Proceeds from the pending sale of a 24-acre parcel adjacent to Maui Business Park to a subsidiary of Safeway for the development of Maui’s first Target store and other commercial properties are expected to be reinvested in Pearl Highlands on a tax-deferred basis, Kuriyama said.

In the company’s inventory of Maui leaseable area is the 185,700-square-foot Maui Mall in Kahului, which was 92 percent leased for the quarter; the 58,400-square-foot Kahului Office Building, 80 percent leased; the 50,200-square-foot Lahaina Square, 68 percent leased; and the 48,700-square-foot Kahului Shopping Center, 87 percent leased.

The company’s real estate development and sales sector logged a $0.7 million loss for the quarter. Sales for the quarter included three units at the Kai Malu project in Wailea with one currently under contract for $1.2 million. Five units have closed this year for between $1 million and $1.4 million. Four units remain for sale.

Overall, A&B showed a $5 million net income for the quarter (11 cents per diluted share), compared to a loss of $4.4 million in the same quarter last year (10 cents per diluted share) when the company was separating Matson Navigation into its own company.

Revenue for the second quarter was $71.1 million, lower than the $72.1 million in the same quarter in 2012.

* Lee Imada can be reached at leeimada@mauinews.com.