ML&P profits — and debt — down in 2017

CEO: With paydown on debt, company has turned a corner

On its financial sheet, Maui Land & Pineapple Co. did not perform as well in 2017 as in 2016 while still showing a $10.9 million profit, but CEO Warren Haruki emphasized that the 115-year old Kapalua-based company had turned a corner.

“With the significant paydown of our debt in early 2017, it marked the culmination of a more than five-year process of restructuring our business,” Haruki said as ML&P released its fourth-quarter and 2017 annual report last week.

The company had more than $135 million in bank loans “with almost all of our assets pledged as collateral, and loan covenants which severely restricted our ability to finance our development efforts and operations,” he said.

The company has come a long way since its bleak 2013 annual report, in which its auditor expressed “serious doubt” in ML&P’s ability to continue as a going concern. The company logged a $1.2 million net loss that year and $4.6 million the previous year.

Much of the company’s recent struggles stemmed from the Residences of Kapalua Bay luxury condos, which was completed in 2009 at the beginning of the Great Recession with financing from Lehman Brothers, which went bankrupt. ML&P was a partner in the development, which ended up being foreclosed on with the company on the hook for obligations associated with the project.

“As part of this process, we selectively sold noncore assets, retired 99 percent of our bank debt and were able to secure long-term financing capabilities,” Haruki said. “These moves provide the foundation and liquidity we need to achieve sustained growth for MLP in the future.”

As of the end of the year, the company cleared off all of its older loans, leaving a $15 million revolving line of credit with First Hawaiian Bank, the annual report said. Only $1.2 million of the line had been tapped; it is collateralized by the 800-acre Kapalua Makua project and 30,000 square feet of commercial leased space in the Kapalua Resort.

In fact, four real estate sales in 2016-17 resulted in $36 million going to pay down company loans, the report showed.

“Our business initiatives for the next 12 months include investing in our operating infrastructure and continued planning and entitlement efforts on our development projects,” the report said.

ML&P has 1,200 acres in various stages of the development process, including Kapalua Mauka and Kapalua Central Resort, and further into the future, Hali’imaile Town, the report said.

Kapalua Mauka is located above the existing Kapalua Resort and includes up to 639 residential units and up to 27 holes of golf. The project has state and county land-use zoning and permits.

Kapalua Central Resort is a commercial town center and residential community in the middle of the Kapalua Resort. On 46 acres, the project includes 61,000 square feet of commercial space and 188 condo and multifamily units. This project also has its state and county land entitlements.

Parts of these projects could be completed as early next year, the report indicated.

The Haliimaile project is more long term with anticipated completion dates of 2029 to 2034, the report said. The company is “in the early stages of this project’s development” and still needs to secure land use approvals, which are expected to take several years. The 300-acre project is an expansion of the existing plantation town with agriculture and sustainability at its core.

Real estate sales have driven company income totals in recent years. In 2017, the segment registered $14.6 million in revenues, 60 percent of the company’s revenues. That was down from $37 million in 2016.

ML&P sold the 15-acre Kapalua Golf Academy practice course for $7.6 million to the owner of the Kapalua Plantation and Bay courses in February 2017. The company realized a gain of $6.4 million with $5.6 million used to pay down the First Hawaiian loan.

The company sold three properties in 2016 including a 5-acre, 42-unit workforce housing project in West Maui for $3 million; the 304-acre Pulelehua working-class community for $15 million; and the 3.4-acre Kapalua Village Center for $18 million.

ML&P reported net income of $10.9 million for 2017, or 57 cents a share, down from $21.8 million, or $1.15 per share, in 2016. Revenues were $24.4 million in 2017, compared to $47.4 million the year before.

While showing a profit for the year, ML&P logged a net loss of $900,000 in the fourth quarter of 2017. It recorded net income of $7.4 million in the quarter in 2016.

Operating revenues totaled $2.5 million and $20.3 million during the fourth quarters of 2017 and 2016, respectively.

The report noted ML&P’s stock volatility in 2017, trading from $6.95 to $27.80 a share. The company stock was trading at $11.70 a share Friday.

The company indicated that it could fend off third parties with affiliates owning more than 60 percent of ML&P stock, the report said. The company is planning not to offer dividends.

ML&P owns about 23,000 acres of land and includes real estate, leasing, utilities and resort amenities operations. The company was in the pineapple business for 97 years, shutting down operations in 2009 and selling the Kahului Cannery land in 2013.

* Lee Imada can be reached at