Q3 2024 Alexander & Baldwin Inc Earnings Call

Operator: All lines are in listen only mode.

Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Following the presentation, we will conduct a question and answer session. If at any time. During this call you require immediate assistance. Please press star zero for the operator.

Operator: This call is being recorded on Thursday, October 24, 2024.

Aja Shimamura: I would now like to turn the conference over to Aja Shimamura, Leasing Manager. Please go ahead.

Speaker Change: 2020-24, I would now like to turn the conference over to Ajay Shimamura, Leasing Manager. Please go ahead.

Aja Shimamura: Thank you, operator. Aloha and welcome to Alexander & Baldwin third quarter 2024 earnings conference call. My name is Aja Shimamura and I am a manager on the A&B leasing team. With me today are A&B's Chief Executive Officer Lance Parker and Chief Financial Officer Clayton Chun. We are also joined by Kit Millan, Senior Vice President of Asset Management, who is available to participate in the Q&A portion of the call.

Ajay Shimamura: Thank you, operator. A little hand welcome to Alexandra and Baldwin's third quarter 2020-4 earnings conference call. My name is Asia Schema Mora and I am a manager on the A&B Lee Sinti. With me today, our A&B's Chief Executive Officer, Lance Parker, and Chief Financial Officer, Clayton Chun.

Ajay Shimamura: We are also joined by Kit Millen, Senior Vice President of Asset Management, who is available to purchase the P and the Q&A portion of the call.

Aja Shimamura: During our call, please refer to our third quarter 2024 supplemental information available on our website at investors.alexanderbaldwin.com slash supplement.

Ajay Shimamura: During our call, please refer to our third quarter 2024 supplemental information available on our website at investors. Got Alexander Baldwin.com slash supplements.

Aja Shimamura: Before we commence, please note that 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, and involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. These four looking statements include but are not limited to statements regarding possible or assumed future results of operations, business strategies, growth opportunities and competitive positions. Such forward-looking statements speak only as of the date of the statements were made and are not guarantees of future performance.

Ajay Shimamura: Before we commence, please note that statements in this presentation that are not historical facts are forgulating statements.

Ajay Shimamura: Within the meaning of the private securities litigation reform act of 1995, and involves a number of risks and uncertainties that can cause actual results to differ materially from those contemplated by the relevant for looking statements.

Ajay Shimamura: These four-looking statements include, but are not limited to statements regarding possible or assumed future results of operations, business strategies, growth opportunities and competitive positions.

Ajay Shimamura: Such forward-looking statements speak only as of the date of the statement for me and are not guaranteed a future performance.

Aja Shimamura: Forward-looking statements are subject to a number of risks, uncertainties, assumptions, and other factors that could cause actual results and the timing of certain events to differ materially from those expressed in or implied by the forward-looking statement. These factors include, but are not limited to, prevailing market conditions and other factors related to the company's REIT status and the company's business, the evaluation of alternatives by the company related to its non-core assets and business, and the risk factors discussed in the company's most recent Form 10-K, Form 10-Q and other filings with the Securities and Exchange Commission. The information in this presentation should be evaluated in light of these important risk factors.

Ajay Shimamura: For looking statements, our subject to a number of risks on certainties, assumptions, and other factors that could cause actual results on the timing of certain events to differ materially from those expressed in or implied by the for looking statements.

Ajay Shimamura: These factors include, but are not limited to prevailing market conditions and other factors related to the company's reef status and the company's business.

Ajay Shimamura: The evaluation of alternatives by the company related to a non-corrosive and business, and the risk factors discussed in the company's most recent form 10K for 10K and other filing with the Securities and Exchange Commission.

Ajay Shimamura: The information and this presentation should be evaluated in light of these important risk factors. We do not undertake any obligation to update the company's forward-looking statement.

Aja Shimamura: We do not undertake any obligation to update the company's forward-looking statement.

Aja Shimamura: Management will be referring to non-GAAP financial measures during our call today. Please refer to our statement regarding the use of these non-GAAP measures and reconciliations included in our 2024 Third Quarter Supplemental Information Materials.

Ajay Shimamura: Management will be referring to non-gap financial measures during our call today. Please refer to our statement regarding the use of these non-gap measures and reconciliation included in our 2024-304 Supplemental Information Materials.

Aja Shimamura: Lance will start today's presentation with an overview of the quarter, then hand it off to Clayton for a discussion of financial matters. To close, Lance will return for some final remarks, and we will open it up for your questions.

Speaker Change: Lance will start today's presentation with an overview of the quarter that hands it off to Clayton for a discussion of financial matters. To close, Lance will return for some final remarks and we will open it up for your questions. With that, we need to end the call over to Lance.

Lance Parker: With that, let me turn the call over to Lance. Thanks for the introduction, Aja. Great job. And to everyone joining us, aloha. Last quarter, I highlighted four areas of focus at the company. Operational Excellence, Balance Sheet Strength and Flexibility, Streamlining our Business and Cost Structure, and finally, Growth. We made progress on all fronts in the third quarter. Operationally, the portfolio performed well. Year for year, FFO was higher, supported by favorable NOI and strong leasing activity. Turning to our balance sheet, we entered into a new ATM program, providing an important tool to access capital when appropriate, and in October, we retasked our credit facility, extending the maturity of our revolver to 2028.

Lance: Thanks for the introduction, he's a great job, and to everyone joining us, Aloha.

Lance: Last quarter, I highlighted four areas of focus at the company, operational excellence, balance sheet strength and flexibility, streamlining our business and cost structure, and finally growth.

Lance: We made progress from all fronts in the third quarter.

Lance: Operationally, the portfolio performed well. Year for year FFO was higher, supported by favorable and aligned strong leasing activity.

Lance: Turning to our balance sheet, we entered into a new ATM program, providing an important tool to access capital when appropriate. And in October, we recast our credit facility extending the maturity of our revolver to 2028.

Lance Parker: As we announced in our last call, we closed on the sale of 81 acres of land in July, providing us with additional liquidity and an opportunity to streamline our operations. From a growth perspective, we closed on the off market acquisition of an 81,500 square foot industrial asset on Oahu for $29.7 million at a going in cap rate of 5.4%. The acquisition provided us with an opportunity to recycle capital from Waipole Town Center, which we sold earlier this week and other non-income producing assets. As a result of this transaction and the uptick in volume of deals we are seeing, I am encouraged about our investment prospects going forward.

Lance: As we announced in our last call, we closed on the sale of 81 acres of land in July, providing us with additional liquidity and an opportunity to streamline our operations.

Lance: From a growth perspective, we close on the off-market acquisition of an 81,500 square foot industrial asset on a wall, for $29.7 million, that a going in cap rate of $5.4%.

Lance: The acquisition provided us with an opportunity to recycle capital from my Poli Town Center, which we sold earlier this week and other non-income producing assets.

Lance: As a result of this transaction and the uptick and volume of deals we are seeing, I'm encouraged about our investment prospects going forward. With these accomplishments we are again raising our full-year guidance.

Lance Parker: With these accomplishments, we are again raising our full year guidance. Let me share more details from the quarter, starting with our portfolio. Total NOI grew by 4.4%. Same store NOI grew by 4.1%, and same store NOI excluding collections of prior year reserves grew at 4.7%. Thanks to Aja and the rest of the leasing team, we executed 71 leases in our improved property portfolio, representing more than 182,000 square feet of GLA, with blended spreads of 15.3% on a comparable basis. Driven primarily by Anchor Renewal at Queen's Marketplace. Our same store lease occupancy was 94.8%, flat from last quarter, and 80 basis points lower from the same period last year.

Lance: Let me share more details from the quarter starting with our portfolio.

Speaker Change: Bottle NLI Group by 4.4% Same store NLI Group by 4.1% In same store NLI, excluding collections of prior year reserves Group at 4.7%.

Speaker Change: Thanks to Asia and the rest of the leasing team, we executed 71 leases in our improved property portfolio. Representing more than 182,000 square feet of GLA, with blended spreads of 15.3% on a comparable basis.

Speaker Change: Driven primarily by anchor renewal at Queen's Marketplace.

Speaker Change: Our same store at least occupancy was 94.8% flat from last quarter and 80 basis points lower from the same period last year.

Lance Parker: Same store economic occupancy at quarter end was 93.7%, also flat from last quarter and 10 basis points lower than the same period last year. S&O at quarter end was $1.9 million, flat compared to last quarter, and $1.1 million lower than last year. I should mention that our S&O does not include about $1 million of AVR related to our bill to suit at Maui Business Park, which will be added to S&O when we begin construction early next year. On the macroeconomic front, recently published economic data in Hawaii shows personal income grows at 5.5%. Unemployment at the end of August was 2.9%, compared to the national average of 4.2%, and the 10th lowest in the country.

Speaker Change: Same store, economic occupancy at quarter-end was 93.7% Also flat from last quarter, and 10 basis points lower than the same period last year.

Speaker Change: That's an old, at quarter-end was $1.9 million. Flat compared to that quarter, and $1.1 million lower than last year.

Speaker Change: I should mention that our SNO does not include about $1 million of AVR related to our build-to-suits at Maui Business Park, which will be added to SNO when we begin construction early next year.

Speaker Change: On the macro-economic front, recently published economic data in Hawaii shows personal income growth at 5.5%.

Speaker Change: On employment at the end of August was 2.9% compared to the national average of 4.2% and the tenth lowest in the country.

Lance Parker: Looking ahead, Hawaii's GDP growth is forecasted to be 2% in 2025 compared to the US average of 1.8%. August year to date visitor arrivals were down 2.2% compared to 2023, driven primarily by the lingering effects of the Maui wildfires and currently at 88% of 2019 levels. As a reminder, 2019 represented a high watermark in terms of visitor arrivals to Hawaii.

Speaker Change: Looking ahead, Hawaii GDP growth is forecasted to be 2% and 2025 compared to the US average of 1.8%.

Speaker Change: August, year-to-day visitor arrivals were down 2.2% compared to 2023.

Speaker Change: Driven primarily by the lingering effects of the Maui wildfires, and currently at 88% of 2019 levels. As a reminder, 2019 represented a high watermark in terms of visitor arrivals to Hawaii.

Clayton Chun: With that, I'll turn the call over to Clayton. Clayton?

Clayton Chun: Thanks, Lance, and aloha, everyone. Starting with our consolidated metrics for the third quarter, FFO was $28.2 million, or 39 cents per share, as compared to $21.2 million, or 29 cents per share in the same quarter last year. included within FFO was $0.28 per share related to CRE and corporate and that compares to $0.25 per share for the third quarter of 2023. The increase in CRE and corporate related FFO was driven primarily by stronger CRE performance. FFO related to land operation was $0.11 per share during the third quarter of 2024 as compared to $0.04 per share in the same quarter last year.

Speaker Change: With that, I'll turn the call over to Clayton Clayton.

Clayton: Thanks Lance and Aloha everyone, starting with our consolidated metrics for the third quarter. SFO is $28.2 million or $39 per share as compared to $21.2 million or $29 per share in the same quarter last year.

Clayton: Included within FFO was 28 cents per share related to Siri and corporate, and that compares to 25 cents per share for the third quarter of 2023.

Clayton: The increase in theory and corporate related FFO was driven primarily by stronger theory performance.

Clayton: FF-4 related to land operation was 11 cents per share during the third quarter of 2024 as compared to four cents per share in the same quarter last year.

Clayton Chun: The higher land operations FFO in the quarter is due primarily to the sale of 81 acres of non-core land that Lance noted earlier, and higher income from a legacy joint venture. SFO was $23.4 million or 32 cents per share for the third quarter of 2024. This compares to $17.4 million or 24 cents per share in the same period last year. Each of these metrics for the third quarter of 2024 benefited from collections of prior year reserves of approximately $300,000 or a penny per share versus $500,000 in the third quarter of 2023. G&A expenses decreased by $200,000 or 1.7% to $7.4 million as compared to the third quarter of 2023.

Clayton: The higher land operations that's up to the quarter is due primarily to the sale of 81 acres of non-court land that Lance noted earlier and higher income from a legacy joint venture.

Clayton: ASFO is 23.4 million dollars or 32 cents per share for the third quarter of 2024. This compares to $17.4 million or 24 cents per share in the same period last year.

Clayton: Each of these metrics for the third quarter of 2024 benefited from collections of prior year reserves of approximately $300,000 for a penny per share versus $500,000 in the third quarter of 2023.

Clayton: G&A expenses decrease by $200,000 or $1.7% to $7.4 million as compared to the third quarter of 2023.

Clayton Chun: Last quarter, we indicated that we expected 2024 GNA to be in the range of $29.5 million to $31.5 million. As a result of our continued focus and progress made to simplify and streamline our cost structure, we now expect our 2024 G&A to be within a range of $29 million and $30.5 million.

Clayton: Last quarter we indicated that we expected 2024 G&A to be in the range of $29.5 million to $31.5 million.

Clayton: As a result of our continued focus and progress made to simplify and streamline our cost rupture, we now expect our 2024 G&A to be within a range of $29 million and $30.5 million.

Clayton Chun: Turning to our Balance Sheet and Liquidity Metrics. At quarter end, total bet outstanding was $472 million, and we had total liquidity of $446 million, made up of approximately $18 million of cash. and $428 million available on a revolving credit facility. including the effect of our interest rate swaps, 96.8% of our debt was at fixed rates and we ended the quarter with a weighted average interest rate of 4.58%. Net debt to adjusted EBITDA was 3.6 times compared to 4.2 times at 2023 year end. And this primarily reflects higher operating profit in land operations and lower G&A over the 12-month comparable period.

Clayton: Turning to our balance sheet and liquidity metrics.

Clayton: At quarter-run, total bet outstanding was $472 million, and we had total liquidity of $446 million, made up of approximately $18 million of cash.

Clayton: and $428 million available on a revolving credit facility.

Clayton: including the effect of our interest rates, Wops, 96.8% of our debt was at fixed rates and we ended to the quarter with the weighted average interest rate of 4.58%.

Clayton: Net that to adjusted EPDA was 3.6 times compared to 4.2 times at 2023 year-end. And this primarily reflects higher operating profit in land operations and lower G&A over the 12 month comparable period.

Clayton Chun: With respect to our dividend, we paid a third quarter dividend of 22.25 cents per share on October 7th. Consistent with our normal practice, we expect our board to declare a fourth quarter dividend in December.

Clayton: With respect to our dividend, we paid a third quarter dividend of 22 and a quarter since per share on October 7. Consistent with our normal practice, we expect our board to declare a fourth quarter dividend in December.

Clayton Chun: As mentioned in our second quarter earnings call, we put into place a $200 million ATM program in August that replaced our previously existing facility. We did not sell any shares under our new ATM program during the third quarter. The ATM program provides us with the ability to efficiently access the capital markets and together with our existing share authorization, represents an important capital allocation tool in our capital allocation toolkit.

Clayton: As mentioned in our second quarter of earnings call, we put in a place of $200 million ATM program in August that replaced our previously existing facility.

Clayton: We did not sell any shares under our new ATM program during the third quarter.

Clayton: The ATAM program provides us with the ability to efficiently access the capital markets and together with our existing share optimization represents an important capital allocation tool in our capital allocation toolkit.

Clayton Chun: Last week, we completed a recast of our revolving credit facility, which extends the maturity of our revolver to October of 2028 with two six-month extensions, and it provides $450 million of borrowing capacity. Important to note is that we maintain the same pricing grid as our previous agreement.

Clayton: Last week, we completed a recast of our revolving credit facility, which extends the maturity of our revolver to October of 2028 with two six-month extensions and it provides $450 million of baron capacity.

Clayton: Important to note is that we maintain the same pricing grid as our previous agreement.

Clayton Chun: I should also mention that we have a $73 million mortgage secured by Pearl Highland Center that matures in December. We intend to use availability on a revolver to pay off the mortgage. And we have a seven year forward starting interest rate swap with a $73 million notion amount that will fix the interest at an effective rate of 4.73%. When factoring in the impact of the revolver recast, as well as the planned payoff of the Pearl Highlands mortgage, including the effect of the interest rate swap, we will have 97% of our debt fixed at a weighted average interest rate of 4.7%.

Clayton: I should also mention that we have a $73 million dollar moral gain secured by Pearl Highlands Center that matures in December.

Clayton: We intend to use availability on a revolver to pay off the mortgage, and we have a seven-year Ford starting interest rate swap with a $73 million-dollar notion amount that will fix the interest at an effective rate of 4.73%.

Clayton: When factoring into impact of the revolver recast, as well as the plan payoff of the Pearl Highlands mortgage, including the effect of the interest rates law, we will have 97% of our debt fixed that awaited average interest rate of 4.7%.

Clayton Chun: We'll have our weighted average maturity extended to 3.9 years, and we will continue to have ample liquidity to fund our internal and external growth activities.

Clayton: We'll have our weighted average maturity extended to 3.9 years and we will continue to have ample liquidity to fund our internal and external growth activity.

Clayton Chun: As Lance mentioned, based upon our performance in the third quarter and our improved outlook for the remainder of the year, we are again raising our guidance. We now expect our 2024 same-store NOI growth to range between 1.75% and 2.75%, and same-store NOI growth excluding reserve reversals to range between 2.25% and 3.15%. The increased same-store NOI guidance reflects the impact of leasing activity, tenant performance, and operational efficiency. It should be noted that also included in our increased same store NOI guidance is the impact of fourth quarter related vacancies, including approximately 50,000 square feet within our industrial portfolio and 13,000 square feet within our office portfolio.

Speaker Change: As Lance mentioned, based upon our performance in the third quarter and our improved outlook for the remainder of the year, we are again raising our guidance.

Speaker Change: We now expect our 2024 St. St. Anoide Growth to range between 1.75% and 2.75%.

Speaker Change: and St. St. N. O. I. growth excluding reserve reversals to range between 2.25% and 3.15%. The increased St. O. I. guidance reflects the impact of leasing activity, tenant performance, and operational efficiencies.

Speaker Change: It should be noted that also included in our increased St. Thor NOI guidance is the impact of fourth quarter related vacancies, including approximately 50,000 square feet within our industrial portfolio and 13,000 square feet within our office portfolio.

Clayton Chun: We are actively pursuing, releasing, and repositioning options for these assets. While we expect these vacancies to continue into 2025, we are encouraged by the process.

Speaker Change: We are actively pursuing releasing and repositioning options for these assets.

Speaker Change: While we expect these vacancies to continue into 2025, we are encouraged by the prospects.

Clayton Chun: We are also raising our FFO guidance for the year and now expect 2024 FFO to range between $1.27 per share to $1.35 per share. The improved FFO guidance consists of higher theory and corporate related FFO ranging from $1.07 to $1.11. since per share due primarily to NOI and GNA cost reduction. We are also increasing our land operations FFO guidance to a range of $0.20 to $0.24 per share, reflecting earnings from land sales and a legacy joint venture. These are in addition to the 81 acre Kamalani land sale that we mentioned during our second quarter earnings call.

Speaker Change: We are also raising our FFO guidance for the year and now expect 2024 FFO to raise between $1.27 per share to a $1.35 per share.

Speaker Change: The improved FFO guidance consists of higher-serie and corporate-related FFO ranging from $1.7 to $1.11 Since Persher, do primarily to analyze and gna cost reductions.

Speaker Change: We are also increasing our land operations at the Pope guidance to a range of 20 cents to 24 cents per share, reflecting earnings from land sales and a legacy joint venture.

Speaker Change: These are in addition to the 81-acre Kamala-Ney Lance sale that we mentioned during our second quarter earnings call.

Clayton Chun: Finally, we are also raising our 2024 AFFO guidance to a range of $1.05 to $1.12 per share, due primarily to the improvements in FFO.

Speaker Change: Finally, we are also raising our 2024 AFFO guidance to arrange the dollar five to a dollar 12th per share, due primarily to the improvements in AFFO.

Lance Parker: With that, I will turn the call over to Lance for his closing remarks. Thanks, Clayton. I am pleased with what we accomplished this quarter and the outlook for the remainder of the year. We achieved strong results in our commercial real estate portfolio. closed on an off-market industrial acquisition and have taken steps to ensure that we have ample access to capital markets through our ATM program and extending the maturity on our revolving credit facility.

Speaker Change: With that, I will turn the call over to Lance first closing remarks. Thanks Clayton.

Lance: I am pleased with what we have accomplished this quarter in the outlook for the remainder of the year. We achieved strong results in our commercial real estate portfolio.

Lance: Close an off-market industrial acquisition and have taken steps to ensure that we have ample access to capital markets through our ATM program and extending the maturity on our revolving credit facility. On that note, we'll now open the call-up to questions.

Operator: On that note, we'll now open the call up to questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question.

Speaker Change: Thank you, ladies and gentlemen, you will now begin the question and answer session. Should you have a question, please press the star, follow by the number one on your touch filling filling, you will hear a call that your hand has been raised.

Speaker Change: should you wish to decline on the polling process, please press the star, followed by the number two. If you're using a speaker's phone, please lift the hampset before pressing any keys. One moment please for your first question.

Gaurav Mehta: Your first question comes from the line of Gaurav Mehta from Alliance Global Partners. Your line is now open. Please go ahead.

Speaker Change: Your first question comes from the line of Gurura Mapa from Alliance Global Partners. Your line is now open, please go ahead.

Gaurav Mehta: Yeah, thank you.

Kit Millan: I wanted to ask you on your new and renewal rent spread that came in higher than last few quarters. Just hoping to get some more color on what you were seeing on that front.

Speaker Change: Thank you.

Gurura Mapa: I wanted to ask you on your new and renewal rent spreads that came in higher than last few orders. Just hoping to get some more color on what you were seeing on that front.

Kit Millan: Sure, no problem.

Gaurav Mehta: This is Kit Millan here. So our leasing team has a really exceptional quarter. And I think a couple things that I want to point out related to leasing is number one, we had 23 new deals, which is the highest we've had in a long time. And that's really pointing to the healthy demand we're seeing for both retail inline space as well as small bay industrial. In terms of our spreads, as Clayton mentioned, you know, a lot of those a lot of that large spread this quarter was driven by one deal in particular, which was an anchor deal at Queens Marketplace.

Speaker Change: Sure, no problem. This is Kit Millen here. So our leasing team has a really exceptional quarter.

Speaker Change: and I think a couple things that I want to point out related to leasing is number one we had 23 new deals which is the highest we've had in a long time and that's really pointing to the healthy demand we're seeing for both retail and line space as well as small bay and industrial.

Speaker Change: In terms of our spread

Speaker Change: As Clayton mentioned, a lot of that large spread this quarter was driven by one deal on particular which was an anchor deal at Queen's Marketplace.

Lance Parker: And if you back out the impact of that and one other retail deal, the spreads were more consistent with what we've been seeing for the balance for the earlier part of the year, and the last part of last year.

Gaurav Mehta: Okay, second question I wanted to ask you was on the guidance. I think you talked about some expected move out in 4Q, both for industrial and office property, hoping to get some more color on on those tenants.

Speaker Change: Okay, second question I wanted to ask you, goes on the guy again.

Speaker Change: I think you talked about some, expecting move outs in 4Q, both for industrial and office property, hoping to get some more color on those tenants.

Lance Parker: Hey, Gaurav. This is Lance. How are you? Good. Thanks for joining.

Speaker Change: The Gros, this is Lance, how are you?

Lance Parker: It's really three tenants that are sort of driving that The expected move out in Q4, so two on the industrial side and one on the office side. On the industrial side, we are expecting to receive back a full floor of our Kaka'ako Commerce Center. So this is a multi-story building that we have in urban Honolulu. I will note that the floor we're getting back is more traditional warehouse space. And so we do have some existing prospects that we're already in dialogue in. Although Clayton did mention that, you know, we we need to expect these vacancies to carry through into 2025.

Speaker Change: Good.

Speaker Change: Good, thanks for joining.

Speaker Change: It's really three tenants that are sort of driving that...

Speaker Change: The expected move-outs in Q4, so 2 in the industrial side and 1 in the office side.

Speaker Change: On the industrial side we are expecting to receive back a full floor of our Coca-Cola Aquacommer Center.

Speaker Change: So this is a multi-story building that we have in Urban Honolulu. I will note that the floor we're getting back is more traditional warehouse space. And so we do have some existing prospects that we're already in dialogue in.

Speaker Change: Although Clayton did mention that we need to expect these vacancies to carry through into 2025. We're encouraged by the fact that we're in conversations before we actually recaptured this space.

Lance Parker: We're encouraged by the fact that we're in conversations before we actually recapture the space.

Lance Parker: The second one is an industrial over in our Komo Hana property in Kapolei in West O'ahu. It's about 16,000 square feet, so a smaller space. Similarly, we're in discussions for a backfill opportunity, so feel confident about that.

Speaker Change: The second one is an industrial over in our Komohana property in Kabul, and West of Watt, who was about 16,000 square feet, so a smaller space. Similarly, we're in discussions for a backfill opportunity, so feel confident about that.

Lance Parker: And then lastly, we're getting about 13,000 square feet of office space back at our Haului office building on the island of Maui. That was a bank that relocated and built a new facility within our Maui business park. We are in conversations with potential backfill tenants there as well, although just given the status of the office market, I would extend, I would expect that there'd be some time for us to backfill that space.

Speaker Change: And then lastly, we're getting about 13,000 square feet of office space back at our Halloween office building on the island of Maui. That was a bank that relocated and built a new facility within our Maui Business Park.

Speaker Change: We are in conversations with potential backfill tenants there as well, although just given the status of the office market, I would expect that there would be some time for us to backfill that space.

Gaurav Mehta: Okay, thank you. That's all I had.

Speaker Change: i

Speaker Change: Okay, thank you, that's all I had.

Rob Stevenson: Your next question comes from the line of Rob Stevenson from Jenny. Your line is now open. Please go ahead.

Speaker Change: Your next question comes from the line of Rob Stevenson from Jenny. Your line is open, please go ahead.

Rob Stevenson: Good afternoon, guys. Lance, can you talk a little bit about the proceeds from the, I'm going to butcher this, YPOLI town center disposition? And was there any notable expense drag, given the vacancy there that now goes away and positively impacts you in addition to the proceeds there?

Speaker Change: Good afternoon guys.

Rob Stevenson: Lance, can you talk a little bit about the proceeds from the, I'm going to butcher this, why poli, town center disposition, and was there any notable expense drag given the vacancy there that now goes away and positively impacts you in addition to the proceeds there.

Lance Parker: Hey, Rob. Thanks for the question. And first off, you nailed the pronunciation. It's a great job on YPOLI. I will say, you know, that was a, I think, a unique opportunity for us to recycle out of that asset. It was underperforming, placed it into a very strategic off-market industrial deal. So it was a good use of the proceeds.

Lance: Hey Rob, thanks for the question and first off, you nailed the pronunciation so great job on White Holy.

Lance: I will say that was a unique opportunity for us to recycle out of that asset. It was underperforming, placed it into a very strategic off-market industrial deal. So it was a good use of the proceeds.

Kit Millan: And I guess with regards specific to your question, I'll take this over to Kit on if there was any drag on the expenses. So what I would say is given the occupancy at that property, obviously there was quite a bit of CAM leakage since we lost our major anchor there a couple of years ago. So in that sense, it does eliminate some of the drag on the overall portfolio. I guess, Clayton, was that is that material, that's something that positively impacted the increase in guidance?

Lance: and I guess with regards specific to your question I'll take this over to Kit on if there was any drag on the expenses. So what I would say is given the occupancy.

Speaker Change: At that property, obviously there was quite a bit of cam leak, since we lost our major anchor there a couple of years ago. So in that sense, it does eliminate some of the drag on the overall portfolio.

Speaker Change: I guess Clayton was at material that something that positively impacted the increase in guidance or was it sort of non-material given that asset.

Clayton Chun: Or was it sort of non material, given that asset? Yeah, so as far as YPOLI itself, the way that we had viewed the disposition was that it was tied to our acquisition that we had announced earlier.

Speaker Change: Yeah, so as far as white poly itself, the way that we had viewed the disposition was that it was tied to our acquisition that we had announced earlier.

Clayton Chun: The It's cold storage industrial facility. And so effectively, this was a recycling of capital opportunity for us that we viewed, at the end of the day, it was accretive. And so that was part of our, our thesis for doing that deal. Okay.

Speaker Change: It's called Stores Industrial Facility. And so effectively, this was a recycling of capital opportunity for us that we viewed at the end of the day. It was a creative, and so that was part of our thesis for doing that deal.

Lance Parker: What is the acquisition pipeline look like today? Are you guys seeing any pickup in people willing to sell assets across the islands? Is it, you know, still hunting for needles in the haystack? How are you guys sort of viewing the transactional market these days, relative to where it's been? Yeah, I'd say specific to the points you raised, it's a little bit of both, Rob, but I'm certainly more encouraged by the looks that we're getting. You know, I made some comments earlier last quarter about the fact that we were seeing more deals at the top of the funnel.

Speaker Change: Okay.

Speaker Change: What is the acquisition pipeline look like today? Are you guys seeing any pickup in people willing to sell assets across the islands? Is it still hunting for needles in the haystack? How are you guys sort of viewing the transactional market these days? Relative to where it's been.

Speaker Change: Yeah, I'd say specific to the point you raise, it's a little bit of both raw, but I'm certainly more encouraged by the looks that we're getting.

Speaker Change: I made some comments earlier last quarter about the fact that we were seeing more deals the top of the funnel.

Lance Parker: That has continued through Q3. We were obviously able to execute on the 82,000 square foot industrial deal that we did.

Speaker Change: That has continued through Q3. We were obviously able to execute on

Lance Parker: And while I would say that our improved guidance for the remainder of the year does not contemplate any additional acquisitions, I remain encouraged that just based on what we're seeing at the top of the funnel, that we'll be able to find some opportunities, if not this year, heading into next year. Okay.

Speaker Change: The 82,000 square foot industrial deal that we did.

Speaker Change: and while I would say that our improved guidance for the remainder of the year does not contemplate any additional acquisitions. I remain encouraged that just based on what we're seeing at the top of the funnel that we'll be able to find some opportunities if not this year heading into next year.

Lance Parker: And then on the leasing front, at this point, are there any meaningful 2025 leases that are known move outs that we need to be thinking about as we update models following earnings here? No, we did, you know, we did want to provide just the visibility into the move outs that we expect to occur this quarter and head into 2025. But as we look into the year, you know, just we have all this information in our supplement, we've got about 10% of roll anticipated from a GLA basis. And about the same on an ABR basis, that's including the comments we made about those three vacancies.

Speaker Change: Okay, and then on the leasing front, at this point, are there any meaningful 2025 leases that are known move-outs that we need to be thinking about as we update models following earnings here?

Speaker Change: No, we did, you know, we did want to provide just the visibility into the move-out that we expect to occur this quarter and head into 2025.

Speaker Change: But as we look into the year, you know, just we have all this information in our supplement, we've got about 10% of role anticipated from a GLA basis.

Speaker Change: and about the same on an ABR basis that's including the comments we made about those three vacancies. We've got an overall wall of about six years on the portfolio, so feeling pretty good about 20, 25.

Lance Parker: We've got, you know, we've got an overall wealth of about six years on the portfolio. So feeling pretty good about 2025.

Lance Parker: Okay.

Kit Millan: And then I guess last one, on the 35,000 square feet of new leases in the quarter, how should we be thinking about when the bulk of that sort of starts producing revenue when you get a tenant in there? Is that a sort of thinking about it as like a six-month lag, a nine-month lag? How should we be thinking of that in terms of build-out or anything else that you have to do before those tenants can take over that space and start paying revenue? That's a very good question.

Speaker Change: Okay, and then I guess last one on the 35,000 square feet of new leases in the quarter, what? How should we be thinking about when the bulk of that sort of starts producing revenue when you get a tenant in there? Is that a sort of thinking about it as like a six month lag, a nine month lag? How should we be thinking of that, you know, in terms of build out or anything else that you have to do before those tenants can take over that space and start paying revenue?

Kit Millan: Let me start with the industrial side, because the industrial side is a lot easier to predict. So industrial build outs don't tend to take very long. Not a lot of permit work in general. We can often turn on industrial right away, but within six months is the typical timeframe.

Speaker Change: That's a very good question. Let me start with the industrial side because the industrial side is a lot easier to predict.

Speaker Change: So Industrial Buildout.

Speaker Change: Don't tend to take very long. Not a lot of permit work in general. We can often turn on industrial right away, but within six months is the typical timeframe. Retail that really depends on the type of space. If it's a rough, rough space with a...

Kit Millan: Retail, it really depends on the type of space. If it's a restaurant space with Quite a bit of work, quite a bit of permitted work. It can actually take up to three quarters of a year or 12 months to turn on the rent. So it really just depends on the retail side. If it's if it's a regular inline retail with a minor build out, in some cases, we can turn on the rent in three to six months.

Speaker Change: Quite a bit of work, quite a bit of permitted work. It can actually take up to three quarters of a year or 12 months.

Speaker Change: to turn on the red, so it really just depends on the retail side. If it's a regular in-line retail with a minor build-out, in some cases we can turn on the red in through to six months.

Gaurav Mehta: Okay, that's helpful.

Gaurav Mehta: Thanks guys, appreciate the time tonight. Thanks for having us, Rob.

Speaker Change: Okay, that's all. Thanks guys. Appreciate the time tonight.

Alexander Goldfarb: Your next question comes from the line of Alexander Goldfarb from Piper Sandler. Your line is now open. Please go ahead.

Speaker Change: Your next question comes from the light of Alexander Goldfarb from Piper Sandler. Your line is not open, please go ahead.

Alexander Goldfarb: Hey, I guess good day. I think it's still good morning out there. So just two questions.

Alexander Goldfarb: Hey, I guess good day, Sam's still good morning out there. It's so just two questions first.

Clayton Chun: First, sort of circling back to Rob's question, as we think about the ATM, it doesn't sound like you're using the ATM for balance sheet purposes, because you didn't talk about it to be used for the Pearl Highland, you know, to pay that off. And it also sounds like, you know, the acquisition market remains tough. So, you know, just patient seems to be the message. So how do we think or how do you guys think about the ATM? Is this something that you would use, like 20 million at a pop? Or is this more of, you know, an implement that if you were to come across, let's say a large portfolio, you would use the ATM, but otherwise, you know, one off acquisitions are probably going to be funded via asset sales or land, land sales or something of that sort.

Alexander Goldfarb: I'm sort of circling back to Rob's question.

Alexander Goldfarb: As we think about the ATM, it doesn't sound like they're using the ATM for balance sheet purposes because you didn't talk about it to be used for the Pearl, Highland, you know, to pay that off. And it also sounds like...

Alexander Goldfarb: The other acquisition market remains tough.

Alexander Goldfarb: So, you know, just patient seems to be the message.

Speaker Change: So, how do we think, or how do you guys think about the ATM? Is this something that you would use, like 20 million at a top? Or is this more, you know, an implement that if you were to come across and say a large portfolio, you would use the ATM but otherwise.

Speaker Change: You know, one-off acquisitions are probably gonna be funded via asset sales or land sales or something that sort.

Clayton Chun: Hi, Alex, Clayton.

Clayton Chun: So for the ATM, you're right that we did not draw on the ATM or utilize the ATM for the third quarter. And that includes for purposes of our refinancing activities that occurred as well.

Speaker Change: Yep.

Alex Clayton: Alex Clayton, so for...

Alex Clayton: The ATM.

Alex Clayton: You're right that we did not.

Alex Clayton: Draw on the ATM, or utilize the ATM for the third quarter.

Alex Clayton: and that includes for purposes of refinancing activities that occurred as well.

Clayton Chun: The way that we look at the ATM, it's effectively a tool in our capital allocation toolkit. And so to the extent that there's opportunities in the market that arise, we will consider the ATM as a source of financing. You know, we're going to evaluate the different options, which includes financing it by way of debt. To the extent that our stock is trading at a level where it makes sense for us to utilize the ATM, we're not going to hesitate to do so.

Alex Clayton: The way that we look at the ATM, it's effectively a tool in our capital allocation toolkit. And so to the extent that there's opportunities in the market that arise, we will consider the ATM as a source of financing, but...

Alex Clayton: We're going to evaluate the different options, which includes financing it by way of death.

Alex Clayton: To the extent that our stock is trading at a level where it makes sense for us to utilize a channel where we're not going to hesitate to do so.

Alexander Goldfarb: Okay, and then the second question is, and, you know, everyone, every analyst fund question around this time of year is 2025. Obviously, you've been bringing up numbers this year, looking at the core business, let's call it $1.10, to use an even number.

Speaker Change: Okay, and then the second question isn't...

Speaker Change: You know, everyone, every analyst's son, question around this time of year is 2025. Obviously you've been bringing up numbers this year, looking at the core business, let's call it a dollar ten, it's used an even number.

Clayton Chun: $1.10 sort of the base that we should think about 2025 and then obviously some expectation of growth or should we be assuming that there will be some element of land in next year such that I don't know if it's five cents ten cents maybe it's more I don't know but how do we think about next year from sort of a base operations and then the above and beyond because they also think you guys have spoken previously that if you exit land entirely there's like four or five million of gna that goes away that's associated with land which would also sound like that would be a benefit to the base ffo if you will Yeah, so I'll take that as Clayton again.

Speaker Change: is a dollar ten sort of the base that we should think about 2025 and then obviously some expectation of growth, or should we be assuming that there will be some element of land in next year such that I don't know if it's five cents, ten cents.

Speaker Change: Maybe it's more I don't know, but how do we think about next year from sort of a base?

Speaker Change: Operations and then the above and beyond because they also think.

Speaker Change: You guys have spoken previously that if you exit land entirely there's like 4,5 million of GNA that goes away that's associated with land, which would also sound like that would be a benefit to the base FSO as well.

Clayton Chun: So with respect to the 2025 guidance, Alex, we're not in a position to provide guidance on on this call. I think the comment that you are bringing up with respect to land operations and, and the fact that it is influenced by episodic land sales that that does continue to remain true. And so, um, you know, I guess I'll leave it at that. But we're not providing guidance on this call for, for either land operations or, or any parts of the company's results.

Speaker Change: Yeah, so I'll tell you that this is Clayton again. So with respect to the 2025 guidance, Alex, we're not in a position to provide guidance on this call, I think.

Speaker Change: The comment that you are bringing up with respect to land operations and the fact that it is influenced by episodic land sales that does continue to remain true. And so...

Speaker Change: I guess I'll leave it at that but we're not providing guidance on this call for either land operations or any parts of

Clayton Chun: Okay, but Clayton, I guess, as you sit here today, looking till the end of the year, it doesn't sound like you're going to exit land.

Speaker Change: The company's results. Okay, but Clayton, I guess as you said here today, looking till the end of the year, it doesn't sound like you're going to exit land, so there still be some land in next year as what it sounds like.

Clayton Chun: So there will still be some land in next year is what it sounds. It doesn't sound like you're fully exiting by this year. It sounds like there'll be some carryover into next year that should generate some sort of contribution.

Speaker Change: It doesn't sound like you're fully exiting by this year's sound like there'll be some carryover into next year that should generate some sort of contribution.

Clayton Chun: We so the way that we've reported our results for land operations, if we were to exit it, it would be presented In our financial statements is discontinued operations, which it's not. And so from that perspective, it's it, you know, we're not planning at this point to have an exit of that entire part of the business. So one way to think about it, Alex might be is that there will continue to be a land ops heading into 2025. And therefore, there could be opportunity from an FFO perspective. But again, we're going to stop short of, of signaling or providing any guidance in terms of what we expect that to be like for next year.

Speaker Change: We've reported our results for land operations. If we were to exit it, it would be presented.

Speaker Change: In our financial statements, is discontinued operations, which it's not. And so from that perspective, it's, you know, we're not planning at this point to have an exit of that entire part of the business.

Speaker Change: So the one way to think about it, Alex, might be that there will continue to be a land ops heading into 2025, and therefore there could be opportunity from an FFO perspective. But again, we're going to stop short of signaling or providing any guidance in terms of what we expect that to be like for next year.

Clayton Chun: Yeah, no, I understand we have to wait, but I'm just trying to think about how you guys are positioned heading into next year. In addition, you have funding, you have funding potential from continued land sales.

Alex Clayton: Yeah, no, I understand we have to wait, but I'm just trying to think about how you guys are positioned, heading into an exterior edition, yeah, funding potential from continued Lancers.

Clayton Chun: Thank you. And I will, and I will add that that, you know, remains a priority for us because we do recognize, you know, while there is opportunity remaining in that section of the business, there are also costs embedded in that section of the business. And so this is not something that's a backburner issue for us. We will continue to monetize and provide liquidity for reinvestment, but also, quite frankly, driving down the cost structure.

Speaker Change: and I will, and I will add that, you know, remains a priority for us because we do recognize, you know, while there is opportunity remaining in that section of the business.

Speaker Change: They're also cost embedded in that section of the business. And so there's not something that's a back burner issue for us. We will continue to monetize and provide liquidity for reinvestment but also quite frankly, driving down the cost structure.

Operator: Thank you. Operator, do we have any other questions on the line?

Speaker Change: Thank you.

Speaker Change: The End

Speaker Change: The End

Speaker Change: The End

Mitch Germain: Your next question comes from the line of Mitch Germain from Citizens JMP. Your line is now open. Please go ahead.

Speaker Change: I have heard that do we have any other questions on the line?

Speaker Change: Your next question comes from the line of Mitch Dermain from Citizen JMP. Dr. Linne is not open, please go ahead.

Mitch Germain: Thanks, Lance when you look at your, congrats on the deal this quarter, when you look at your pipeline. Does it look similar to what you acquired, i.e. like the last couple of deals have been industrial, or are you seeing some opportunities in the shopping center arena?

Mitch Dermain: Thanks. Lance, when you look at your congrats on the deal with the quarter, when you look at your pipeline.

Mitch Dermain: Does it look similar to what you acquired? I mean, you'll last couple of years, but industrial ore, are you seeing some opportunities in the shopping center arena as well?

Lance Parker: Hey, Mitch. I'd say the additional encouraging part for me is that we're seeing a little bit of everything. And I would also add that, you know, similar to comments that we've shared in the past, we don't have a specific allocation or target across our specific asset classes. It's really going to be opportunistic. And so just the fact that we're getting more looks over the last two quarters, again, I think is a good sign. We're starting to see not just for us, but there has been additional activity in the market. So, you know, these are all positive indicators heading or looking forward.

Mitch Dermain: Image.

Speaker Change: I say the additional encouraging part for me is that we're seeing a little bit of everything.

Speaker Change: and I would also add that in a similar to comments that we've shared in the past, we don't have a specific allocation or target across our specific asset classes. It's really going to be opportunistic.

Speaker Change: and suggests the fact that we're getting more looks over the last two quarters. Again, I think it's a good sign. We're starting to see not just for us, but there has been additional activity in the market. So, you know, these are all positive indicators, having, or looking forward.

Lance Parker: Okay, that's super helpful.

Mitch Germain: Last one for me, everything else has been asked.

Mitch Germain: When I consider your same store, you're referencing three move-outs, but, you know, if I kind of think you guys are three-ish percent of the year, you know, Seems like there's some conservatism baked into that number, or would those move-outs have that meaningful impact on same-sex growth in the fourth quarter?

Speaker Change: Okay, that's super helpful. Last one from the, everything else I've been asked. When I consider your same store, your referencing green moveouts, but you know if I kind of think you guys are three years for some of the year, you know.

Speaker Change: seems like there's some conservatism baked into that number or those moveouts have that meaningful impact on Steve Swett, and what quarter.

Lance Parker: You know, I would, I'll answer this at a high level, and then open it up to either Clayton or Kit if they want to provide some additional color. We stated at the end of or I should say at the beginning of the year that we were expecting some episodic results in CRE quarter to quarter and that we were really trying to focus on full year guidance. So, implies in the numbers would suggest a bit of a slowdown for Q4, and that's consistent with our expectations, but again, given full year or year-to-date performance, you know, we felt comfortable enough to raise full year guidance.

Speaker Change: I would ask you this at a high level and then open it up to either Clayton or Kid if they want to provide some additional color.

Speaker Change: We stated at the end of the year that we were expecting some.

Speaker Change: Episodic results in CRA quarter-to-quarter and that we were really trying to focus on full-year guidance.

Speaker Change: So, implied in the numbers would suggest a bit of a slowdown for Q4 and that's consistent with our expectations. But again, given full year for a quarter year to date performance, we've felt comfortable enough to raise full year guidance.

Clayton Chun: Yeah, and if I could just add on, hi Mitch, this is Clayton. The same store NOI guidance For the fourth quarter, it's also taking into account the results from last year's fourth quarter, where there were some, I guess, non-recurring type of benefits that contributed to our overall same-story NOI expectations going into Q4. Gotcha, gotcha.

Speaker Change: Yeah, and if I can just add on my matches as Clayton, the same story and a wide guidance.

Speaker Change: For the fourth quarter, it's also taking into account the results from last year's fourth quarter where there were some, uh, I guess, non-recurring type of benefits that contributed to our overall same story and why expectations going into Q4.

Mitch Germain: But then Clayton. Yeah, I did want to go ahead. Sorry. No, it's good. That's perfect. It's exactly what I needed.

Speaker Change: Gotcha, got you. But they've been cleaning. Yeah, I did want to go ahead. Sorry. No, that's perfect. It's exactly what I needed. And then it kind of should I consider like a clean FFO number for the quarter, you know, kind of backing out like

Mitch Germain: And then it how should I consider like a clean FFO number for the quarter you know kind of backing out like The what we characterize to be somewhat non-recurring items in the land bucket, you know, what's what's kind of a clean FFO number for the. Yeah, so, Mitch, when we think about FFO, we've been intentional in presenting the bifurcation of our FFO between the CRE corporate and land operations, recognizing that the land operations business has episodic results. And so for purposes of, of stripping out those one time FFO related to land sales itself, you would get to the CRE corporate where we did.

Speaker Change: What we characterized to be somewhat non-recurring items in the land bucket. You know, what's kind of a clean, affifilver number for the quarter here?

Speaker Change: Yeah, so Mitch, when we think about FFO, we've been intentional in presenting the bifurcation of our FFO between the Siri corporate and land operations, recognizing that.

Speaker Change: The Land Operations Business has episodic results.

Speaker Change: and so for purposes of stripping out those one-time FFO related to land sales itself, you would get to the Siri corporate where we did, and I guess that's the way to think about it in terms of...

Clayton Chun: And I guess that's the way to think about it in terms of, you know, consistent FFO going forward.

Mitch Germain: Gotcha, I guess I was kind of thinking your full year number included some land contributions. So, you know, I was, I was almost thinking, you know, taking that into account how much other contribution, you know, was was gain related, if you know what I mean. I was a quick follow on that.

Speaker Change: You know, consistent FFO going forward.

Speaker Change: Gotcha, I guess I was kind of thinking your full year number included some land contribution. So, you know, I was almost thinking, you know, taking that into account how much other contribution, you know, was gain related.

Speaker Change: The End.

Mitch Germain: I don't have it, it's pulled offline. Yeah. Okay.

Speaker Change: It was a quick follow-in there.

Speaker Change: I don't know what I'm going to do.

Mitch Germain: Thanks.

Mitch Germain: Thanks Mitch.

Speaker Change: Thanks.

Operator: As a reminder, if you wish to ask a question, please press star followed by the number one.

Speaker Change: Thanks, Mitch.

Speaker Change: As you remember, if you wish to ask a question, please press star, follow by the number one. So your next question comes from the line of Randon McCarthy from C.D. Your line is now open, please go ahead.

Brendan Mccarthy: So your next question comes from the line of Brendan McCarthy from CDOTI. Your line is now open. Please go ahead.

Brendan Mccarthy: Great, thanks.

Clayton Chun: Hey, Clayton. Hey, Lance. Thanks for taking these questions.

Clayton Chun: Just wanted to ask if you can provide some additional color on that legacy joint venture that had an impact in the land ops segment this quarter. Yeah.

Randon McCarthy: Great, thanks. Hey Clayton, hey Lance, thanks for taking these questions. Just wanted to ask if you can provide some additional color on that legacy joint venture that had an impact in the land ops segment in the quarter.

Clayton Chun: Hi, Brendan. It's Clayton. So the joint venture is an investment that was made a while back going on like 10 years or so. So this is before we had converted to a REIT. And so it's a passive investment that we have. And frankly, at this point, it's really not requiring much in the way of management time, nor has it resulted in any contributions from a cash flow perspective. Got it. Thanks, Clayton.

Randon McCarthy: i

Randon McCarthy: Yeah, I'm Brendan Swett and so...

Speaker Change: The joint venture is an investment that was made a while back going on like 10 years or so. So this is before we had converted to a read. And so it's a passive investment that we have and frankly at this point it's really not.

Speaker Change: Required much in the way of management, time, Lord of the Reduce, has it resulted in any contributions from a cash flow perspective.

Clayton Chun: I guess looking out to or looking at the updated 24 guidance, that guidance obviously assumes very minimal, if any, benefit from that investment in Q4. Yes, so for the fourth quarter guidance that or the full year guidance, it does incorporate the fourth quarter for which for land operations as a whole, we were expecting that to be break-even, more or less. Okay, okay.

Speaker Change: God, thanks, Clayton, then.

Speaker Change: I guess looking out to, or looking at the updated 24 guidance, that guidance obviously assumes very minimal if any benefit from that investment in Q4.

Speaker Change: i

Speaker Change: Yes, so for the fourth quarter guidance that, or the full year guidance, it does incorporate the fourth quarter for which for land operations as a whole. We were expecting that to be break even more or less.

Clayton Chun: And I wanted to look at SG&A. Can you just remind us where these efficiency improvements have come from? And I guess what really drove the expected change for the total amount for 2024? Yeah. So, as we had mentioned on previous calls, G&A, as well as our overall cost structure, continues to remain a priority, and we've been focusing on seeking improvements to enable us to lower our overall run rate, G&A and otherwise. And so, what we're seeing is the benefits of the implementation of various process improvements and, frankly, the simplification of the overall company itself. So, it's a combination of a number of different types of cost categories, whether that's personnel, consultants, and the like.

Speaker Change: Okay, okay, and I wanted to look at SGNA. Can you just remind us where the efficiency improvement have come from? And I guess what really drove the or the expected change for the total amount for 2024.

Speaker Change: i

Speaker Change: Yeah. So as we had mentioned on previous calls, G&A as well as our overall cost structure, continues to remain a priority and we've been focusing on seeking improvements.

Speaker Change: to enable us to lower overall runway, GNA and otherwise. And so...

Speaker Change: What we're seeing is the benefits of the implementation of various process improvements and frankly the simplification of the overall company itself.

Speaker Change: So it's a combination of a number of different types of cost categories, whether that's personnel, consultants and the like.

Brendan Mccarthy: Great, thanks for that. That's helpful.

Clayton Chun: And I'll ask one more question just on the Pearl Highlands asset, the the mortgage coming due. Can you walk us through the decision to kind of utilize the revolver there? And was that always the plan? Or were there kind of different financing conversations at? Yeah, so as we were considering the Pearl Highlands mortgage that that's maturing in December, we were evaluating different options. Ultimately, we had settled with utilizing the revolver to refinance it and that was taking into account a forward starting interest rate swap that we have. And so our strategy was to utilize the swap that had a notional amount of or has a notional amount of $73 million and it effectively enables us to lock in the interest rate at a fixed rate of 4.73%.

Speaker Change: Great, thanks for that, that's helpful. And all of a one more question just on the Pearl Highlands asset, the mortgage coming deal.

Speaker Change: Can you walk through the decision to kind of utilize the revolver there? Was that always the plan or were there kind of different financing conversations at?

Speaker Change: Yep, so as we were considering the Pro-Hylens mortgage that's maturing in December.

Speaker Change: We were evaluating different options. Ultimately, we had settled with

Speaker Change: utilizing the revolver to refinance it and that it was taking into account.

Speaker Change: A Ford-Starting Interest Readswap that we have, and so our strategy was to utilize the...

Speaker Change: Swap that had an optional amount of, or has an optional amount of 73 million, and effectively enables us to lock in the interest rate at a fixed rate of 4.73%.

Clayton Chun: So we feel comfortable about utilizing the revolver to match that up with the swap. And so that's effectively how we got to the conclusion.

Speaker Change: So we feel comfortable about utilizing the revolver to match that up with the Swap and it's a bit of that, effectively, how we got to the conclusion.

Brendan Mccarthy: Great.

Brendan Mccarthy: Thanks, Clayton.

Brendan Mccarthy: That's all for me. Thanks, everybody. Thanks, Brendan.

Speaker Change: Great, thanks Clayton, that's all for me, thanks everybody.

Clayton Chun: Again, as a reminder, if you wish to ask a question, please press star followed by the number 1. There are no further questions at this time. Please continue, Mr. Clayton.

Speaker Change: Again, as a reminder, if you wish to ask a question, please press star, followed by the number one.

Speaker Change: The End

Speaker Change: There are no further questions at this time, please continue Mr. Clayton Chun.

Clayton Chun: Thank you, Operator, and thank you all for joining us today.

Clayton Chun: If you have any follow-up questions, please feel free to call us at 808-525-8475 or email us at investorrelationsatabhi.com.

Clayton Chun: Thank you, operator, and thank you all for joining us today. If you have any follow up questions, please feel free to call us at 8-0-8-525-8475 or email us at investorrelationsatabh.com. Aloha and have a great day.

Clayton Chun: Aloha, and have a great day.

Clayton Chun: The End.

Clayton Chun: The End.