A&B moving forward with repurposing of sugar cane land

Hawaiian Commercial & Sugar Co. equipment is lined up in front of shuttered Puunene Mill on Thursday afternoon. Alexander & Baldwin shut down sugar operations in December. A&B President and Chief Executive Officer Chris Benjamin told investors Thursday that agricultural diversification on former sugar land is “coming along well” but that there is no expectation of profits from those operations in the near term. -- The Maui News / MATTHEW THAYER photo

The Maui News

While agricultural diversification of Alexander & Baldwin’s 36,000 acres of former sugar lands on Maui is “coming along well,” there’s no expectation that the effort will be profitable in the near term, A&B President and Chief Executive Officer Chris Benjamin told investors Thursday.

“In fact, we may continue to have some modest net expenses as we work on repurposing the sugar lands,” he said in a conference call. “But we’re making good progress in discussions with several interested tenants who will help keep these lands in active agriculture.”

He referred to a recent announcement that A&B had entered into a partnership with Oakland, Calif.-based TerViva, a seed oil-producing company to produce biofuel from pongamia trees on 250 acres on Maui.

“If successful, the partnership could expand up to 2,000 acres,” he said.

Benjamin said the company also is working on trials with cattle grazing and other energy crops on Maui.

“Our objective is to deploy as much of our former sugar plantation lands as possible in viable agricultural uses as quickly as possible,” he said.

The company reported $2.4 million of after-tax income from discontinued Hawaiian Commercial & Sugar Co. operations, while the results of the first quarter of 2016 included a $10.8 million after-tax loss related to the sugar plantation’s shutdown, which was completed in December.

A&B announced income of $4.4 million, or 9 cents per diluted share, for the first quarter of 2017. That’s compared with $3.7 million, or 8 cents per diluted share, in the first quarter of 2016.

Results for this year’s first quarter included $3.7 million of after-tax costs ($4.8 million, pretax), which was related to the evaluation of real estate investment trust conversion.

Revenue for the company’s first quarter was $93.2 million, compared with $91.4 million for the same period last year.

“The increase in revenue is attributable to increased development and parcel sales, partially offset by lower materials and construction sales revenue and lower commercial real estate revenue,” A&B said.

A&B’s development of the Ho’okele Shopping Center, a 94,000-square-foot, 8.9-acre Safeway-anchored retail center in Kahului, was mentioned along with the La Hala Shops and Pearl Highlands Center on Oahu as part of “our strategic objective of increasing recurring earnings from our commercial portfolio,” Benjamin said.

In its commercial real estate segment, the company reported selling the 16,600-square-foot Maui Clinic Building for $3.4 million in January. The company also closed a sale of a Maui Business Park property for $2.4 million, and it sold an urban-zoned vacant property of 0.8 acre for $1.6 million.

A&B reported there were two Maui industrial tenants (both in the P&L Building on Papa Place) who chose not to renew their leases.

The company’s commercial properties increased operating profit 9.2 percent to $14.3 million in the year’s first quarter, compared with $13.1 million in last year’s first quarter. Occupancy of A&B’s commercial properties was “stable” at 94 percent, the company said.