Alexander & Baldwin, Inc. [ALEX] Filings

10-Q 1 alex-20240630.htm 10-Q alex-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________ to _________________

Commission file number 001-35492

ALEXANDER & BALDWIN, INC.

(Exact name of registrant as specified in its charter)


Hawaii			45-4849780
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

822 Bishop Street
P. O. Box 3440,	Honolulu,	Hawaii	96801
(Address of principal executive offices)			(Zip Code)

(808) 525-6611

(Registrant's telephone number, including area code)

N/A

(Former name, former address, and former

fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, without par value	ALEX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding as of June 30, 2024: 72,621,777

ALEXANDER & BALDWIN, INC.

FORM 10-Q

For the Quarterly Period Ended June 30, 2024

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets - As of June 30, 2024 and December 31, 2023

Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and Six Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Equity and Redeemable Noncontrolling Interest - Three and Six Months Ended June 30, 2024 and 2023

Notes to Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 5.

Other Information

Item 6.

Exhibit Index

Signature

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands; unaudited)


	June 30,		December 31,
	2024		2023
ASSETS
Real estate investments
Real estate property	$	1,610,927	$	1,609,013
Accumulated depreciation	(241,888)		(227,282)
Real estate property, net	1,369,039		1,381,731
Real estate developments	60,856		58,110
Investments in real estate joint ventures and partnerships	6,765		6,850
Real estate intangible assets, net	33,312		36,298
Real estate investments, net	1,469,972		1,482,989
Cash and cash equivalents	29,523		13,517
Restricted cash	236		236
Accounts receivable, net of allowances (credit losses and doubtful accounts) of $1,591 and $2,888 as of June 30, 2024, and December 31, 2023, respectively	4,580		4,533

Goodwill	8,729		8,729
Other receivables, net of allowances of $3,653 and $3,545 as of June 30, 2024, and December 31, 2023, respectively	13,666		23,601
Prepaid expenses and other assets	101,204		98,652
Assets held for sale	13,999		13,984
Total assets	$	1,641,909	$	1,646,241

LIABILITIES AND EQUITY
Liabilities:
Notes payable and other debt	$	469,804	$	463,964
Accounts payable	5,241		5,845

Accrued post-retirement benefits	8,216		9,972
Deferred revenue	71,243		70,353
Accrued and other liabilities	85,833		93,096

Total liabilities	640,337		643,230
Commitments and Contingencies (Note 7)
Equity:
Common stock - no par value; authorized, 225,000,000 shares; outstanding, 72,621,777 and 72,447,510 shares at June 30, 2024, and December 31, 2023, respectively	1,809,271		1,809,095
Accumulated other comprehensive income (loss)	5,208		3,250
Distributions in excess of accumulated earnings	(812,907)		(809,334)
Total shareholders' equity	1,001,572		1,003,011
Total liabilities and equity	$	1,641,909	$	1,646,241

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data; unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating Revenue:
Commercial Real Estate	$	49,208	$	49,533	$	98,096	$	97,403
Land Operations	1,839		3,583		14,153		6,103
Total operating revenue	51,047		53,116		112,249		103,506
Operating Costs and Expenses:
Cost of Commercial Real Estate	25,134		25,049		50,550		49,997
Cost of Land Operations	4,552		1,991		9,339		5,577
Selling, general and administrative	7,252		9,909		14,491		18,638

Total operating costs and expenses	36,938		36,949		74,380		74,212

Gain (loss) from disposals, net	2,125		—		2,148		1,117

Operating Income (Loss)	16,234		16,167		40,017		30,411
Other Income and (Expenses):
Income (loss) related to joint ventures	996		541		1,694		929


Interest and other income (expense), net (Note 2)	531		(61)		1,798		(141)
Interest expense	(5,929)		(5,857)		(11,439)		(10,898)
Income (Loss) from Continuing Operations Before Income Taxes	11,832		10,790		32,070		20,301
Income tax benefit (expense)	(99)		(2)		(99)		(7)
Income (Loss) from Continuing Operations	11,733		10,788		31,971		20,294
Income (loss) from discontinued operations, net of income taxes	(2,625)		4,206		(2,881)		8
Net Income (Loss)	9,108		14,994		29,090		20,302

Loss (income) attributable to discontinued noncontrolling interest	—		(1,661)		—		(1,633)
Net Income (Loss) Attributable to A&B Shareholders	$	9,108	$	13,333	$	29,090	$	18,669

Earnings (Loss) Per Share Available to A&B Shareholders:
Basic Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders	$	0.16	$	0.15	$	0.44	$	0.28
Discontinued operations available to A&B shareholders	(0.03)		0.03		(0.04)		(0.02)
Net income (loss) available to A&B shareholders	$	0.13	$	0.18	$	0.40	$	0.26

Diluted Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders	$	0.16	$	0.15	$	0.44	$	0.28
Discontinued operations available to A&B shareholders	(0.03)		0.03		(0.04)		(0.02)
Net income (loss) available to A&B shareholders	$	0.13	$	0.18	$	0.40	$	0.26

Weighted-Average Number of Shares Outstanding:
Basic	72,615		72,617		72,580		72,583
Diluted	72,692		72,832		72,674		72,798

Amounts Available to A&B Common Shareholders (Note 13):
Continuing operations available to A&B common shareholders	$	11,729	$	10,757	$	31,959	$	20,233
Discontinued operations available to A&B common shareholders	(2,625)		2,545		(2,881)		(1,625)
Net income (loss) available to A&B common shareholders	$	9,104	$	13,302	$	29,078	$	18,608

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars in thousands; unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net Income (Loss)	$	9,108	$	14,994	$	29,090	$	20,302
Other Comprehensive Income (Loss), net of tax:
Cash flow hedges:
Unrealized interest rate derivative gain (loss)	1,698		4,206		2,900		504
Reclassification adjustment to interest expense included in Net Income (Loss)	(469)		(450)		(942)		(797)







Other comprehensive income (loss), net of tax	1,229		3,756		1,958		(293)
Comprehensive Income (Loss)	10,337		18,750		31,048		20,009
Comprehensive (income) loss attributable to discontinued noncontrolling interest	—		(1,661)		—		(1,633)
Comprehensive Income (Loss) Attributable to A&B Shareholders	$	10,337	$	17,089	$	31,048	$	18,376

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands; unaudited)


	Six Months Ended June 30,
	2024		2023
Cash Flows from Operating Activities:
Net income (loss)	$	29,090	$	20,302
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Loss (income) from discontinued operations	2,881		(8)
Depreciation and amortization	17,979		18,334
Deferred income taxes	—		(203)
Loss (gain) from disposals, net	(2,148)		(1,117)

Loss (gain) on de-designated interest rate swap valuation adjustment	(3,675)		—
Share-based compensation expense	2,388		4,260
Loss (income) related to joint ventures, net of operating cash distributions	(934)		(914)

Changes in operating assets and liabilities:
Trade and other receivables	(834)		(557)
Prepaid expenses and other assets	1,299		2,124
Development/other property inventory	(675)		(1,499)
Accrued post-retirement benefits	(1,756)		(15)
Accounts payable	(983)		58
Accrued and other liabilities	(3,023)		(2,850)
Operating cash flows from continuing operations	39,609		37,915
Operating cash flows from discontinued operations	(1,244)		(28,696)
Net cash provided by (used in) operations	38,365		9,219
Cash Flows from Investing Activities:
Capital expenditures for acquisitions	—		(9,464)
Capital expenditures for property, plant and equipment	(8,011)		(7,170)
Proceeds from disposal of assets	41		2,953
Payments for purchases of investments in affiliates and other investments	(124)		(120)
Distributions of capital and other receipts from investments in affiliates and other investments	1		—
Investing cash flows from continuing operations	(8,093)		(13,801)
Investing cash flows from discontinued operations	15,000		1,335
Net cash provided by (used in) investing activities	6,907		(12,466)
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable and other debt	60,000		—
Payments of notes payable and other debt and deferred financing costs	(74,303)		(19,300)
Borrowings (payments) on line-of-credit agreement, net	20,000		54,000

Cash dividends paid	(32,631)		(48,233)
Repurchases of common stock and other payments	(2,332)		(2,392)
Financing cash flows from continuing operations	(29,266)		(15,925)
Financing cash flows from discontinued operations	—		(5,190)
Net cash provided by (used in) financing activities	(29,266)		(21,115)

Cash, Cash Equivalents, Restricted Cash, and Cash included in Assets Held for Sale
Net increase (decrease) in cash, cash equivalents, restricted cash, and cash included in assets held for sale	16,006		(24,362)
Balance, beginning of period	13,753		34,409
Balance, end of period	$	29,759	$	10,047


	Six Months Ended June 30,
	2024		2023
Other Cash Flow Information:
Interest paid, net of capitalized interest, for continuing operations	$	10,447	$	11,641
Interest paid, net of capitalized interest, for discontinued operations	$	—	$	374
Income tax (payments)/refunds, net	$	(4)	$	44

Noncash Investing and Financing Activities from continuing operations:
Capital expenditures included in accounts payable and accrued and other liabilities	$	2,555	$	690


Dividends declared but unpaid at end of period	$	16,670	$	431

Increase (decrease) in escrow and other receivables from dispositions	$	—	$	298


Noncash Investing and Financing Activities from discontinued operations:
Capital expenditures included in liabilities associated with assets held for sale	$	—	$	61





Reconciliation of cash, cash equivalents, restricted cash, and cash included in assets held for sale:
Beginning of the period:
Cash and cash equivalents	$	13,517	$	33,262
Restricted cash	236		998
Cash included in assets held for sale	—		149
Cash, cash equivalents, restricted cash, and cash included in assets held for sale	$	13,753	$	34,409

End of the period:
Cash and cash equivalents	$	29,523	$	8,162
Restricted cash	236		236
Cash included in assets held for sale	—		1,649
Cash, cash equivalents, restricted cash, and cash included in assets held for sale	$	29,759	$	10,047

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND

REDEEMABLE NONCONTROLLING INTEREST

For the Three Months Ended June 30, 2024 and 2023

(amounts in thousands, except per share data; unaudited)


	Total Equity
	Common Stock			Accumulated Other Comprehensive Income (Loss)		(Distribution in Excess of Accumulated Earnings) Earnings Surplus		Total		Redeemable Non- Controlling Interest

	Shares	Stated Value
Balance, April 1, 2023	72,593	$	1,807,610	$	(2,242)	$	(785,364)	$	1,020,004	$	7,613
Net income (loss)	—	—		—		13,333		13,333		1,661
Other comprehensive income (loss), net of tax	—	—		3,756		—		3,756		—
Dividend on common stock ($0.22 per share)	—	—		—		(16,070)		(16,070)		—


Share-based compensation	—	2,684		—		—		2,684		—
Shares issued (repurchased), net	32	—		—		—		—		—
Balance, June 30, 2023	72,625	$	1,810,294	$	1,514	$	(788,101)	$	1,023,707	$	9,274

	Total Equity
	Common Stock			Accumulated Other Comprehensive Income (Loss)		(Distribution in Excess of Accumulated Earnings) Earnings Surplus		Total		Redeemable Non- Controlling Interest

	Shares	Stated Value
Balance, April 1, 2024	72,592	$	1,808,009	$	3,979	$	(805,662)	$	1,006,326	$	—
Net income (loss)	—	—		—		9,108		9,108		—
Other comprehensive income (loss), net of tax	—	—		1,229		—		1,229		—
Dividend on common stock ($0.2225 per share)	—	—		—		(16,353)		(16,353)		—

Share-based compensation	—	1,262		—		—		1,262		—
Shares issued (repurchased), net	30	—		—		—		—		—
Balance, June 30, 2024	72,622	$	1,809,271	$	5,208	$	(812,907)	$	1,001,572	$	—

See Notes to Condensed Consolidated Financial Statements

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY AND

REDEEMABLE NONCONTROLLING INTEREST

For the Six Months Ended June 30, 2024 and 2023

(amounts in thousands, except per share data; unaudited)


	Total Equity
	Common Stock			Accumulated Other Comprehensive Income (Loss)		(Distribution in Excess of Accumulated Earnings) Earnings Surplus		Total		Redeemable Non- Controlling Interest

	Shares	Stated Value
Balance, January 1, 2023	72,463	$	1,808,401	$	1,807	$	(774,503)	$	1,035,705	$	7,986
Net income (loss)		—		—		18,669		18,669		1,633
Other comprehensive income (loss), net of tax		—		(293)		—		(293)		—
Dividend on common stock ($0.44 per share)		—		—		(32,258)		(32,258)		—

Distributions to noncontrolling interest	—	—		—		—		—		(345)

Share-based compensation		4,260		—		—		4,260		—
Shares issued (repurchased), net	162	(2,367)		—		(9)		(2,376)		—
Balance, June 30, 2023	72,625	$	1,810,294	$	1,514	$	(788,101)	$	1,023,707	$	9,274

	Total Equity
	Common Stock			Accumulated Other Comprehensive Income (Loss)		(Distribution in Excess of Accumulated Earnings) Earnings Surplus		Total		Redeemable Non- Controlling Interest

	Shares	Stated Value
Balance, January 1, 2024	72,448	$	1,809,095	$	3,250	$	(809,334)	$	1,003,011	$	—
Net income (loss)	—	—		—		29,090		29,090		—
Other comprehensive income (loss), net of tax	—	—		1,958		—		1,958		—
Dividend on common stock ($0.445 per share)	—	—		—		(32,543)		(32,543)		—



Share-based compensation	—	2,388		—		—		2,388		—
Shares issued (repurchased), net	174	(2,212)		—		(120)		(2,332)		—
Balance, June 30, 2024	72,622	$	1,809,271	$	5,208	$	(812,907)	$	1,001,572	$	—

See Notes to Condensed Consolidated Financial Statements

Alexander & Baldwin, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Background and Basis of Presentation

Description of Business: Alexander & Baldwin, Inc. ("A&B" or the "Company") is a fully integrated real estate investment trust ("REIT") headquartered in Honolulu, Hawai‘i, whose history in Hawai‘i dates back to 1870. Over time, the Company has evolved from a 571-acre sugar plantation on Maui to become one of Hawai‘i's premier commercial real estate companies and the owner of the largest grocery-anchored, neighborhood shopping center portfolio in the state. The Company operates in two segments: Commercial Real Estate ("CRE") and Land Operations. As of June 30, 2024, the Company's commercial real estate portfolio resides entirely in Hawai‘i and consists of 22 retail centers, 13 industrial assets and four office properties, representing a total of 3.9 million square feet of gross leasable area ("GLA"), as well as 142.0 acres of commercial land, of which substantially all is leased pursuant to urban ground leases. Throughout this quarterly report on Form 10-Q, references to "we," "our," "us" and "our Company" refer to Alexander & Baldwin, Inc., together with its consolidated subsidiaries.

Basis of Presentation: The interim condensed consolidated financial statements are unaudited. Because of the nature of the Company's operations, the results for interim periods are not necessarily indicative of results to be expected for the year. While these condensed consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated balance sheets as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and equity and redeemable noncontrolling interest for each of the three years ended December 31, 2023, 2022, and 2021, respectively, and the notes thereto included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2023 ("2023 Form 10-K"), and other subsequent filings with the U.S. Securities and Exchange Commission ("SEC").

Reclassifications: Certain amounts presented in the prior year have been reclassified to conform to the current year presentation (e.g., captions previously presented in the prior years that, in the currently presented periods, are less than five percent of total assets or total liabilities were combined in the current year condensed consolidated balance sheets). Operating lease right-of-use assets, which was previously reported separately on the condensed consolidated balance sheets, is now presented in Prepaid expenses and other assets for all periods presented. Operating lease liabilities and Liabilities associated with assets held for sale, which were previously reported separately on the condensed consolidated balance sheets, are now presented in Accrued and other liabilities for all periods presented.

Rounding: Amounts in the condensed consolidated financial statements and notes are rounded to the nearest thousand. Accordingly, a recalculation of some per-share amounts and percentages, if based on the reported data, may result in differences.

2. Significant Accounting Policies

The Company's significant accounting policies are described in Note 2 to the consolidated financial statements included in Item 8 of the Company's 2023 Form 10-K. Changes to the Company's significant accounting policies are included herein.

Recently issued accounting pronouncements

In October 2023, the FASB issued ASU No. 2023-06 ("ASU 2023-06"), Disclosure Improvements - Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations. The amendments to the various topics should be applied prospectively, and the effective date will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. Early adoption is prohibited. The Company does not expect the amendments of this accounting standard update to have a material impact on its consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments in the ASU enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

Interest and other income (expense), net

Interest and other income (expense), net for the three and six months ended June 30, 2024 and 2023, included the following (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Interest income	$	512	$	103	$	743	$	193
Post-retirement benefit (expense)	(106)		(169)		(213)		(345)


Gain (loss) on fair value adjustments related to interest rate swaps	—		—		3,675		—
Financing charges	—		—		(2,350)		—

Other income (expense), net	125		5		(57)		11
Interest and other income (expense), net	$	531	$	(61)	$	1,798	$	(141)

3. Investments in Affiliates

The Company's investments in affiliates principally consist of equity investments in limited liability companies in which the Company has the ability to exercise significant influence over the operating and financial policies of these investments. Accordingly, the Company accounts for its investments using the equity method of accounting.

Operating results presented in the Company's condensed consolidated financial statements include the Company's proportionate share of net income (loss) from its equity method investments. Summarized financial information of entities accounted for by the equity method on a combined basis for the three and six months ended June 30, 2024 and 2023, is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues	$	45,666	$	40,694	$	85,036	$	78,629
Operating costs and expenses	39,288		35,669		74,687		70,103
Gross Profit (Loss)	$	6,378	$	5,025	$	10,349	$	8,526
Income (Loss) from Continuing Operations1	$	1,751	$	464	$	1,051	$	(827)
Net Income (Loss)1	$	1,751	$	464	$	1,051	$	(827)

1 Includes earnings from equity method investments held by the investee.

During the six months ended June 30, 2024 and 2023, Income (loss) related to joint ventures was $1.7 million and $0.9 million, respectively, and return on investment operating cash distributions was $0.8 million and zero, respectively.

4. Fair Value Measurements

Recurring Fair Value Measurements

The following tables present the fair value of those assets and (liabilities) measured on a recurring basis as of June 30, 2024 and December 31, 2023, (in thousands):


		Fair Value Measurements at
		June 30, 2024
	Consolidated Balance Sheet Location	Total		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Derivative financial instruments - interest rate swaps	Prepaid expenses and other assets	$	7,046	$	—	$	7,046	$	—


		Fair Value Measurements at
		December 31, 2023
	Consolidated Balance Sheet Location	Total		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Derivative financial instruments - interest rate swaps	Prepaid expenses and other assets	$	4,142	$	—	$	4,142	$	—
Liabilities
Derivative financial instruments - interest rate swaps	Accrued and other liabilities	$	(2,718)	$	—	$	(2,718)	$	—

Derivative Financial Instruments: The Company records its interest rate swaps at fair value. The fair values of the Company's interest rate swaps are classified as Level 2 measurements in the fair value hierarchy and are based on the estimated amounts that the Company would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs (refer to Note 6 – Derivative Instruments for fair value information regarding the Company's derivative instruments).

Non-Recurring Fair Value

Certain financial and nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. The Company’s process for identifying and recording impairment is discussed in Note 2 to the consolidated financial statements included in Item 8 of the Company's 2023 Form 10-K.

Impairment of Assets Held for Sale, net: As of June 30, 2024 and December 31, 2023, one CRE improved property met the criteria for classification as held for sale and accordingly, was measured at its fair value less costs to sell, resulting in an impairment charge of $2.2 million recorded during the year ended December 31, 2023. During the three and six months ended June 30, 2024, the Company recorded no additional fair value adjustment related to assets and liabilities held for sale. The Company classifies these fair value measurements as Level 3 in the fair value hierarchy because they are determined using significant unobservable inputs such as management assumptions about expected sales proceeds from third parties.

The following table presents the fair value hierarchy and quantitative information about the significant unobservable inputs used to determine the fair value of long-lived assets held and used and assets held for sale, net for which a nonrecurring fair value adjustment was recorded (in thousands):


	Fair Value Measurements at										Quantitative Information about
	December 31, 2023										Level 3 Fair Value Measurements
	Total		Quoted Prices in Active Markets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)		Valuation Technique/ Unobservable Inputs	Weighted Average Discount Rate
Assets held for sale, net1,2	$	14,209	$	—	$	—	$	14,209	$	(2,183)	Contract value	N/A


Total	$	14,209	$	—	$	—	$	14,209	$	(2,183)

1 Assets or liabilities are presented in Assets held for sale or Accrued and other liabilities, respectively, in the Condensed Consolidated Balance Sheets. Impairment loss was recorded during year ended December 31, 2023, in Impairment of assets in the Consolidated Statements of Operations.
2 Assets held for sale of $14.0 million, net, excluding estimated selling costs of $0.3 million.

Financial Assets and Liabilities not Measured at Fair Value

Financial assets and liabilities that are not measured at fair value on our condensed consolidated balance sheets include cash and cash equivalents, restricted cash, accounts and notes receivable, net and notes payable and other debt. The fair value of the Company's cash and cash equivalents, restricted cash, accounts receivable, net and short-term borrowings approximate their carrying values due to the short-term nature of the instruments, and are classified as Level 1 measurement in the fair value hierarchy.

The fair value of the Company's notes receivable approximated the carrying amount of $10.0 million and $20.8 million as of June 30, 2024 and December 31, 2023, respectively. The fair value of these notes is estimated using a discounted cash flow analysis in which the Company uses unobservable inputs such as market interest rates determined by the loan-to-value and market capitalization rates related to the underlying collateral at which management believes similar loans would be made, and is classified as a Level 3 measurement in the fair value hierarchy.

At June 30, 2024, the carrying amount of the Company's notes payable and other debt was $469.8 million and the corresponding fair value was $459.8 million. At December 31, 2023, the carrying amount of the Company's notes payable and other debt was $464.0 million and the corresponding fair value was $452.5 million. The fair value of debt is calculated by discounting the future cash flows of the debt at rates based on instruments with similar risk, terms and maturities as compared to the Company's existing debt arrangements, and is classified as a Level 3 measurement in the fair value hierarchy.

5. Notes Payable and Other Debt

As of June 30, 2024 and December 31, 2023, notes payable and other debt consisted of the following (dollars in thousands):


	Interest Rate (%)	Maturity Date		Principal Outstanding
				June 30, 2024		December 31, 2023
Secured:
Laulani Village	3.93%	2024		$	—	$	57,798
Pearl Highlands	4.15%	2024		74,004		75,137
Photovoltaic Financing	(1)	(1)		3,929		4,073
Manoa Marketplace	(2)	2029		51,802		52,705
Subtotal				$	129,735	$	189,713
Unsecured:
Series A Note	5.53%	2024		$	7,125	$	7,125
Series J Note	4.66%	2025		10,000		10,000
Series B Note	5.55%	2026		18,000		27,000
Series C Note	5.56%	2026		9,000		9,000
Series F Note	4.35%	2026		9,625		9,650
Series H Note	4.04%	2026		50,000		50,000
Series K Note	4.81%	2027		34,500		34,500
Series G Note	3.88%	2027		17,125		22,125
Series L Note	4.89%	2028		18,000		18,000
Series I Note	4.16%	2028		25,000		25,000
Series M Note	6.09%	2032		60,000		—
Term Loan 5	4.30%	2029		25,000		25,000
Subtotal				$	283,375	$	237,400
Revolving Credit Facilities:
A&B Revolver	(3)	2025	(4)	57,000		37,000

Total debt (contractual)				$	470,110	$	464,113
Unamortized debt premium (discount)				$	79	$	—
Unamortized debt issuance costs				(385)		(149)
Total debt (carrying value)				$	469,804	$	463,964

(1) Financing leases have a weighted average discount rate of 4.75% and maturity dates ranging from 2027 to 2028.
(2) Loan has a stated interest rate of SOFR plus 1.35%. Loan is swapped through maturity to a 3.14% fixed rate.
(3) Loan has a stated interest rate of SOFR plus 1.05% based on a pricing grid, plus a SOFR adjustment of 0.10%. Beginning May 1, 2024, $57.0 million is swapped through maturity to a 4.78% fixed rate.
(4) A&B Revolver has two six-month optional term extensions.

On April 15, 2024, the Company entered into an agreement (the "Prudential Agreement") with PGIM, Inc. and its affiliates ("Prudential") for an unsecured note purchase and private shelf facility that enables the Company to issue notes in an aggregate amount up to $300.0 million, less the sum of all principal amounts then outstanding on any notes issued by the Company or any of its subsidiaries to Prudential and the amounts of any notes that are committed under the Prudential Agreement for a period of three years from execution of the agreement. In addition, on April 15, 2024, the Company issued a $60.0 million note (the "Series M Note") under the Prudential Agreement, and used proceeds from the note to pay off the debt secured by Laulani Village that matured on May 1, 2024. The Series M Note has a coupon rate of 6.09%, paid semiannually, and matures in full on April 15, 2032.

6. Derivative Instruments

The Company is exposed to interest rate risk related to its variable-rate interest debt. From time to time, the Company may use interest rate swaps to manage its exposure to interest rate risk.

Cash Flow Hedges of Interest Rate Risk

As of June 30, 2024, the Company had three interest rate swap agreements, all three of which were designated as cash flow hedges. The key terms are as follows (dollars in thousands):


Effective	Maturity	Fixed Interest	Notional Amount at		Asset (Liability) Fair Value at
Date	Date	Rate	June 30, 2024		June 30, 2024		December 31, 2023
Interest Rate Swap Agreements
4/7/2016	8/1/2029	3.14%	$	51,802	$	4,848	$	4,142
5/1/2024	12/9/2031	4.88%	$	57,000	$	1,136	$	(1,144)
Forward-Starting Interest Rate Swap Agreement
12/9/2024	12/9/2031	4.83%	$	73,000	$	1,062	$	(1,574)

The asset related to the interest rate swaps and forward interest rate swap as of June 30, 2024, is presented within Prepaid expenses and other assets in the condensed consolidated balance sheets. The asset related to the interest rate swap and liabilities related to the interest rate swap and forward interest rate swap as of December 31, 2023, are presented within Prepaid expenses and other assets and Accrued and other liabilities, respectively, in the condensed consolidated balance sheets. Changes in fair value of designated cash flow hedges are recorded in Accumulated other comprehensive income (loss) and subsequently reclassified into interest expense as interest is incurred on the related variable-rate debt. Changes in fair value of undesignated cash flow hedges, including de-designated hedges, are recorded in Interest and other income (expense), net.

In 2022, the Company entered into two forward starting interest rate swap agreements with notional amounts of $57.0 million and $73.0 million in order to hedge interest rate fluctuations related to $130.0 million of future financing aligned with the effective and maturity dates listed. The Company designated the hedging relationships of these two forward interest swap agreements as cash flow hedges at their inception. In December 2023, the Company de-designated the forward interest swap agreements as it was determined that underlying cash flows related to the designated hedging relationships were no longer probable of occurring. As a result, for the year ended December 31, 2023, the Company reclassified from Accumulated other comprehensive income (loss) and recognized in Interest and other income (expense), net a $2.7 million loss related to the fair value adjustment of the de-designated hedging relationships. Subsequent changes in fair value of the forward interest rate swaps were recorded in earnings until, on February 29, 2024, the Company re-designated the hedging relationships of both forward interest rate swaps in anticipation of future financing. The Company recorded a gain on forward interest rate swap valuation adjustment of $3.7 million during the six months ended June 30, 2024, that occurred prior to the date of re-designation. Cash settlements related to the $57.0 million notional amount interest rate swap began on May 1, 2024. As of June 30, 2024, there was one forward-starting interest rate swap remaining.

Statement of Comprehensive Income (Loss) Derivative Instruments Impact

The following table represents the pre-tax effect of the derivative instruments in the Company's condensed consolidated statements of comprehensive income (loss) during the three and six months ended June 30, 2024 and 2023, (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Information regarding derivatives designated as hedging instruments
Amount of gain (loss) recognized in OCI on derivatives	$	1,698	$	4,206	$	2,900	$	504
Impact of reclassification adjustment to interest expense included in Net Income (Loss)	$	(469)	$	(450)	$	(942)	$	(797)

As of June 30, 2024, the Company expects to reclassify $3.1 million of net gains (losses) on derivative instruments from accumulated other comprehensive income to earnings during the next 12 months.

7. Commitments and Contingencies

Commitments and other financial arrangements

Bonds related to the Company's real estate activities totaled $18.7 million as of June 30, 2024, and represent commercial bonds issued by third party sureties (permit, subdivision, license and notary bonds). If drawn upon, the Company would be obligated to reimburse the surety that issued the bond for the amount of the bond, reduced for the work completed to date.

Legal proceedings and other contingencies

Prior to the sale of approximately 41,000 acres of agricultural land on Maui to Mahi Pono Holdings, LLC ("Mahi Pono") in December 2018, the Company, through East Maui Irrigation Company, LLC ("EMI"), also owned approximately 16,000 acres of watershed lands in East Maui and held four water licenses to approximately 30,000 acres owned by the State of Hawai‘i in East Maui. The sale to Mahi Pono included the sale of a 50% interest in EMI (which closed February 1, 2019), and provided for the Company and Mahi Pono, through EMI, to jointly continue the existing process to secure a long-term lease from the State for delivery of irrigation water to Mahi Pono for use in Central Maui.

The last of these water license agreements expired in 1986, and all four agreements were then extended as revocable permits that were renewed annually. In 2001, a request was made to the State Board of Land and Natural Resources (the "BLNR") to replace these revocable permits with a long-term water lease. Pending the completion by the BLNR of a contested case hearing it ordered to be held on the request for the long-term lease, the BLNR has kept the existing permits on a holdover basis. Three parties (Healoha Carmichael; Lezley Jacintho; and Na Moku Aupuni O Ko‘olau Hui) filed a lawsuit on April 10, 2015, (the "Initial Lawsuit") alleging that the BLNR has been renewing the revocable permits annually rather than keeping them in holdover status. The lawsuit challenged the BLNR’s decision to continue the revocable permits for calendar year 2015 and asked the court to void the revocable permits and to declare that the renewals were illegally issued without preparation of an environmental assessment ("EA"). In December 2015, the BLNR decided to reaffirm its prior decisions to keep the permits in holdover status. This decision by the BLNR was challenged by the three parties. In January 2016, the court ruled in the Initial Lawsuit that the renewals were not subject to the EA requirement, but that the BLNR lacked legal authority to keep the revocable permits in holdover status beyond one year (the "Initial Ruling"). The Initial Ruling was appealed to the Intermediate Court of Appeals ("ICA") of the State of Hawai‘i.

In May 2016, while the appeal of the Initial Ruling was pending, the Hawai‘i State Legislature passed House Bill 2501, which specified that the BLNR has the legal authority to issue holdover revocable permits for the disposition of water rights for a period not to exceed three years. The governor signed this bill into law as Act 126 in June 2016. Pursuant to Act 126, the annual authorization of the existing holdover permits was sought and granted by the BLNR in December 2016, November 2017 and November 2018 for calendar years 2017, 2018, and 2019. No extension of Act 126 was approved by the Hawai‘i State Legislature in 2019.

In June 2019, the ICA vacated the Initial Ruling, effectively reversing the determination that the BLNR lacked authority to keep the revocable permits in holdover status beyond one year (the "ICA Ruling"). The ICA remanded the case back to the trial court to determine whether the holdover status of the permits was both (a) "temporary" and (b) in the best interest of the State, as required by statute. The plaintiffs filed a motion with the ICA for reconsideration of its decision, which was denied on July 5, 2019. On September 30, 2019, the plaintiffs filed a request with the Supreme Court of Hawai‘i to review and reverse the ICA Ruling. On November 25, 2019, the Supreme Court of Hawai‘i granted the plaintiffs' request to review the ICA Ruling and, on May 5, 2020, oral argument was held.

On October 11, 2019, the BLNR took up the renewal of all the existing water revocable permits in the state, acting under the ICA Ruling, and approved the continuation of the four East Maui water revocable permits for another one-year period through December 31, 2020. On November 13, 2020, the BLNR approved another renewal of such permits through December 31, 2021.

On March 2, 2022, the Supreme Court of Hawai’i vacated the ICA’s ruling relating to the BLNR's decision to continue the revocable permits for the calendar year 2015, holding that Hawaii Revised Statutes Chapter 343 (the Hawaii Environmental Policy Act) did apply to the permits. The court remanded the matter back to the Circuit Court to determine if any exceptions would apply and, if not, how HRS Chapter 343 should be applied in light of the steps taken by A&B/EMI toward the long-term water lease. The Supreme Court of Hawai’i also determined that the BLNR had the statutory authority to continue the permits for more than one year, but required the BLNR to make findings of fact and conclusions of law determining that the action would serve the best interests of the State. On remand, the Carmichael Plaintiffs filed a motion for partial summary judgment asking the Circuit Court to conclude that the BLNR and A&B/EMI violated HRS Chapter 343 when the BLNR continued the revocable permits for calendar year 2015. On December 21, 2023, the Circuit Court entered its order granting in part and denying in part the motion for partial summary judgment, determining that the BLNR and A&B/EMI had violated HRS Chapter

343 when the BLNR continued the revocable permits for calendar year 2015, but denying the plaintiffs’ request for a declaration that A&B/EMI had no authority to divert any water until a final environmental impact statement had been accepted.

Also on remand, the Carmichael Plaintiffs sought and were granted leave to file an amended complaint asserting a claim for unjust enrichment against A&B/EMI. The plaintiffs assert that they had a superior right to the water diverted by EMI from at least 2015 until September 2021 when BLNR accepted the final environmental impact statement for the long-term water lease, and EMI lacked the authority to divert water during that time period. In December 2023, the Carmichael Plaintiffs filed their amended complaint.

In the companion case brought by Na Moku Aupuni O Ko‘olau Hui challenging the BLNR’s decision to continue the revocable permits for calendar year 2016, Na Moku filed a motion asking for a decision on appeal and requesting that the Circuit Court limit the current diversion of water pursuant to the revocable permits and order the BLNR to allow Na Moku to intervene in the contested case hearing ordered by the Circuit Court in the Sierra Club litigation addressed below. On January 2, 2024, the Circuit Court entered its order granting Na Moku’s request to invalidate the BLNR’s decision reaffirming the holdover status of the revocable permits for calendar year 2016 and denying Na Moku’s request to (1) impose a cap on the current amount of water diverted pursuant to the revocable permits, (2) order the BLNR to allow Na Moku to intervene in Sierra Club’s contested case hearing; and (3) declare that A&B/EMI had no legal authority to divert water pursuant to then-valid revocable permits. In January 2024, the circuit court entered final judgment in this case.

In a separate matter, on December 7, 2018, a contested case request filed by the Sierra Club (contesting the BLNR's November 2018 approval of the 2019 revocable permits) was denied by the BLNR. On January 7, 2019, the Sierra Club filed a lawsuit in the circuit court of the first circuit in Hawai‘i against the BLNR, A&B and EMI, seeking to invalidate the 2019 and 2020 holdovers of the revocable permits for, among other things, failure to perform an EA. The lawsuit also sought to enjoin A&B/EMI from diverting more than 25 million gallons a day until a permit or lease is properly issued by the BLNR, and for the imposition of certain conditions on the revocable permits by the BLNR. The count seeking to invalidate the revocable permits based on the failure to perform an EA was dismissed by the court, based on the ICA Ruling in the Initial Lawsuit. The Sierra Club’s lawsuit was amended to include a challenge to the BLNR’s renewal of the revocable permits for calendar year 2020. After a full trial on the merits held beginning in August of 2020, the court ruled, on April 6, 2021, against the Sierra Club on its lawsuit challenging the 2019 and 2020 revocable permits. On February 17, 2022, the Sierra Club filed its notice of appeal challenging the decision on the August 2020 trial. The court separately considered a lawsuit filed by the Sierra Club appealing the BLNR’s decision to deny it a contested case hearing on the 2021 revocable permits, which were granted by the BLNR on or about November 13, 2020. In that case, on May 28, 2021, the court issued an interim decision that the Sierra Club’s due process rights were violated, ordered the BLNR to hold a contested case hearing on the 2021 permits, and that the permits would be vacated. On July 30, 2021, the court modified its ruling to say that the permits would not be invalidated, but left in place pending the outcome of the contested case hearing. The contested case hearing was held by the BLNR in December 2021 to address the continuation of the revocable permits for both calendar years 2021 and 2022 and the BLNR issued a decision on June 30, 2022. On December 27, 2021, while the BLNR’s decision in the contested case hearing was pending, the court further modified its ruling to allow the permits to remain in place until the earlier of May 1, 2022, the date on which the BLNR renders a substantive decision on the continuation of the permits for calendar year 2022, or further order of the court. On April 26, 2022, the court orally granted an extension of the May 1, 2022 deadline to the earlier of June 15, 2022, or the date on which the BLNR renders a substantive decision on the continuation of the permits for calendar year 2022, or as may be further ordered by the court. On June 1, 2022, the court granted an extension of the June 15, 2022 deadline to the earlier of July 15, 2022 or the date on which the BLNR renders a substantive decision on the continuation of the permits for calendar year 2022 or as may be further ordered by the court. On June 30, 2022, the BLNR issued its final decision on the contested case hearing on the permits for calendar years 2021 and 2022, approving the continuation of the permits through the end of calendar year 2022. The Company and the BLNR appealed the court’s determination that the Sierra Club was entitled to a contested case hearing on the 2021 revocable permits. At the request of the Sierra Club, the Intermediate Court of Appeals held oral argument on the matter on December 13, 2023. On April 12, 2024, the ICA issued its opinion holding that the Sierra Club was not entitled to a contested case hearing, the circuit court erred by modifying the permits, and the Sierra Club was not entitled to attorneys’ fees and costs. The Sierra Club filed an application with the Hawaii Supreme Court for a writ of certiorari challenging the ICA’s opinion. That application is still pending. In July 2022, the Sierra Club filed a separate appeal challenging the BLNR’s June 30, 2022 decision on the contested case hearing on the permits for calendar years 2021 and 2022. On March 31, 2023, the court entered its decision on appeal, dismissing the appeal as moot. On January 29, 2024, the court entered final judgment in this case. On February 8, 2024, the Sierra Club filed a notice of appeal with the Hawaii Intermediate Court of Appeals.

On November 10, 2022, the BLNR voted to continue the revocable permits for calendar year 2023 and, at that same meeting, denied the Sierra Club’s oral request for a contested case hearing. The Sierra Club subsequently submitted a written request to the BLNR for a contested case hearing on the continuation of the revocable permits, which the BLNR denied on December 9, 2022. On November 29, 2022, the Sierra Club filed an appeal of the BLNR’s decisions to deny its oral request for a contested

case hearing and to continue the revocable permits for 2023 and on December 15, 2022, the Sierra Club amended its appeal to also challenge the BLNR’s denial of its written request for a contested case hearing. On June 16, 2023, the Circuit Court entered its Decision on Appeal; and Interim Modification of Permits Pursuant to HRS 91-14(g) in which the court concluded that the Sierra Club was again entitled to a contested case hearing on the continuation of the revocable permits for calendar year 2023. The court also modified the BLNR’s decision to continue the revocable permits by reducing the cap to 31.50 million gallons per day. A&B/EMI filed motions to increase the modified cap and for leave to take an immediate appeal. On August 11, 2023, the court entered its order denying A&B/EMI’s motion for leave to take an immediate appeal. On September 8, 2023, the court entered its ruling denying without prejudice A&B/EMI’s motion to increase the modified cap. On August 17, 2023, Sierra Club filed its First Motion to Modify Permits, asking the court to impose conditions on the revocable permits requiring A&B/EMI to determine the water needs of the County of Maui Fire Department and to line one reservoir, which the court granted in part, ordering the parties to meet with the County of Maui Fire Department to discuss the Department’s water needs. In January 2024, the court entered final judgment in this case. In February 2024, A&B/EMI and BLNR filed separate notices of appeal with the Hawaii Intermediate Court of Appeals.

On December 8, 2023, the BLNR issued a new revocable permit to the Company for calendar year 2024. On that same date, after the BLNR voted to grant the new revocable permit to the Company, Sierra Club made an oral request for a contested case hearing and, on December 18, 2023, filed a written request for the same. The BLNR has not decided on Sierra Club’s requests for a contested case hearing.

In connection with A&B’s obligation to continue the existing process to secure a long-term water lease from the State, A&B and EMI will defend against the remaining claims made by the Sierra Club.

In addition to the litigation described above, the Company is a party to, or may be contingently liable in connection with, other legal actions arising in the normal conduct of its businesses. While the outcomes of such litigation and claims cannot be predicted with certainty, in the opinion of management after consultation with counsel, the reasonably possible losses would not have a material effect on the Company's consolidated financial statements as a whole.

Further note that certain of the Company's properties and assets may become the subject of other types of claims and assessments at various times (e.g., environmental matters based on normal operations of such assets). Depending on the facts and circumstances surrounding such potential claims and assessments, the Company records an accrual if it is deemed probable that a liability has been incurred and the amount of loss can be reasonably estimated/valued as of the date of the financial statements.

8. Revenue and Contract Balances

The Company generates revenue through its Commercial Real Estate and Land Operations segments. Through its Commercial Real Estate segment, the Company owns and operates a portfolio of commercial real estate properties and generates income (i.e., revenue) as a lessor through leases of such assets. Refer to Note 9 – Leases - The Company as a Lessor for further discussion of lessor income recognition. The Land Operations segment generates revenue from contracts with customers. The Company further disaggregates revenue from contracts with customers by revenue type when appropriate if the Company believes disaggregation best depicts how the nature, amount, timing, and uncertainty of the Company's revenue and cash flows are affected by economic factors. Revenue by type for the three and six months ended June 30, 2024 and 2023, was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues:
Commercial Real Estate	$	49,208	$	49,533	$	98,096	$	97,403
Land Operations:
Development sales revenue	1,681		—		4,136		—
Unimproved/other property sales revenue	—		3,200		9,625		4,050
Other operating revenue	158		383		392		2,053
Land Operations	1,839		3,583		14,153		6,103
Total revenues	$	51,047	$	53,116	$	112,249	$	103,506

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers as of June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024		December 31, 2023
Accounts receivable	$	6,171	$	7,421
Allowances (credit losses and doubtful accounts)	(1,591)		(2,888)
Accounts receivable, net of allowance for credit losses and allowance for doubtful accounts	$	4,580	$	4,533

Variable consideration1	$	62,000	$	62,000
Prepaid rent	5,848		4,985
Other deferred revenue	3,395		3,368
Deferred revenue	$	71,243	$	70,353

1 Variable consideration deferred as of the end of the periods related to amounts received in the sale of agricultural land on Maui in 2018 that, under revenue recognition guidance, could not be included in the transaction price.

For the three and six months ended June 30, 2024, the Company did not recognize any revenue related to the Company's variable consideration and other deferred revenue reported as of December 31, 2023.

9. Leases - The Company as a Lessor

The Company leases real estate property to tenants under operating leases. Such activity is primarily composed of operating leases within its CRE segment.

The historical cost of, and accumulated depreciation on, leased property as of June 30, 2024, and December 31, 2023, were as follows (in thousands):


	June 30, 2024		December 31, 2023
Leased property - real estate	$	1,615,031	$	1,607,919
Less: accumulated depreciation	(243,329)		(228,714)
Property under operating leases - net1	$	1,371,702	$	1,379,205
1Property under operating leases as of June 30, 2024, and December 31, 2023, includes leased property included in Assets held for sale.

Total rental income (i.e., revenue) under these operating leases during the three and six months ended June 30, 2024 and 2023, relating to lease payments and variable lease payments were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Lease payments	$	33,565	$	34,034	$	67,177	$	67,128
Variable lease payments	16,102		15,423		31,751		31,067
Revenues deemed uncollectible, net	(385)		224		(597)		(500)
Total rental income	$	49,282	$	49,681	$	98,331	$	97,695

Contractual future lease payments to be received on non-cancelable operating leases as of June 30, 2024, were as follows (in thousands):


	June 30, 2024
2024	65,822
2025	122,701
2026	108,982
2027	96,277
2028	80,498
2029	62,794
Thereafter	512,584
Total future lease payments to be received	$	1,049,658

10. Leases - The Company as a Lessee

There have been no material changes from the Company's leasing activities as a lessee described in Note 13 to the consolidated financial statements included in Item 8 of the Company's 2023 Form 10-K. The following table provides information about the Company's operating lease costs and finance lease costs recognized during the three and six months ended June 30, 2024 and 2023, (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease cost	$	471	$	473	$	948	$	1,069
Finance lease cost:
Amortization of right-of-use assets	73		50		144		85
Interest on lease liabilities	47		38		95		52
Total lease cost - operating and finance leases	$	591	$	561	$	1,187	$	1,206

11. Share-based Payment Awards

The 2022 Incentive Compensation Plan ("2022 Plan") allows for the granting of stock options, stock appreciation rights, stock awards, restricted stock units, dividend equivalent rights, and other awards. The shares of common stock authorized to be issued under the 2022 Plan are to be drawn from the shares of the Company's authorized but unissued common stock or from shares of its common stock that the Company acquired, including shares purchased on the open market or private transactions.

During the six months ended June 30, 2024, the Company granted approximately 353,700 of restricted stock unit awards with a weighted average grant date fair value of $17.71. During the six months ended June 30, 2023, the Company granted approximately 345,100 of restricted stock unit awards with a weighted average grant date fair value of $22.01.

The fair value of the Company's time-based and performance-based awards was determined using the Company's stock price on the grant date. The fair value of the Company's market-based awards was estimated using the Company's stock price on the date of grant and the probability of vesting using a Monte Carlo simulation. The Monte Carlo simulation was performed with the following weighted-average assumptions:


	2024 Grants	2023 Grants
Volatility of A&B common stock	27.4%	49.1%
Average volatility of peer companies	29.9%	48.2%
Risk-free interest rate	4.0%	3.8%

The Company recognizes compensation cost net of actual forfeitures of time-based or market-based awards. A summary of compensation cost related to share-based payments is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Share-based expense:
Time-based and market-based restricted stock units	$	1,262	$	2,684	$	2,388	$	4,260

12. Income Taxes

The Company has been organized and operates in a manner that enables it to qualify, and management believes it will continue to qualify, as a REIT for federal income tax purposes.

As of June 30, 2024, tax years 2020 and later are open to audit by the tax authorities. Management believes the result of any potential audits will not have a material adverse effect on its results of operations, financial condition, or liquidity.

13. Earnings Per Share ("EPS")

Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocated to common shares by the weighted-average number of common shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating share-based awards as well as adjusted by the number of additional shares, if any, that would have been outstanding had the potentially dilutive common shares been issued.

The following table provides a reconciliation of income (loss) from continuing operations to net income (loss) from continuing operations available to A&B common shareholders and net income (loss) available to A&B common shareholders (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Income (loss) from continuing operations	$	11,733	$	10,788	$	31,971	$	20,294


Distributions and allocations to participating securities	(4)		(31)		(12)		(61)
Income (loss) from continuing operations available to A&B shareholders	11,729		10,757		31,959		20,233
Income (loss) from discontinued operations	(2,625)		4,206		(2,881)		8
Exclude: Loss (income) attributable to discontinued noncontrolling interest	—		(1,661)		—		(1,633)
Net income (loss) available to A&B common shareholders	$	9,104	$	13,302	$	29,078	$	18,608

The number of shares used to compute basic and diluted earnings per share is as follows (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Denominator for basic EPS - weighted average shares outstanding	72,615	72,617	72,580	72,583
Effect of dilutive securities:
Restricted stock unit awards	77	215	94	215

Denominator for diluted EPS - weighted average shares outstanding	72,692	72,832	72,674	72,798

The number of anti-dilutive securities, excluded from the calculation of diluted earnings per common share, consisted of the following (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Number of anti-dilutive securities	190	57	202	57

14. Accumulated Other Comprehensive Income (Loss)

For the six months ended June 30, 2024, other comprehensive income (loss) principally includes unrealized interest rate hedging gains and losses and associated reclassification adjustments to interest expense. The components of Accumulated other comprehensive income (loss), net of taxes, were as follows as of June 30, 2024, and December 31, 2023, (in thousands):


	June 30, 2024		December 31, 2023
Post-retirement plans	$	(133)	$	(150)
Non-qualified benefit plans	(48)		(31)
Interest rate swaps	5,389		3,431
Accumulated other comprehensive income (loss)	$	5,208	$	3,250

The changes in Accumulated other comprehensive income (loss) by component for the six months ended June 30, 2024, were as follows (in thousands, net of taxes):


	Employee Benefit Plans		Interest Rate Swap		Total
Balance, January 1, 2024	$	(181)	$	3,431	$	3,250
Other comprehensive income (loss) before reclassifications, net of taxes of $0	—		2,900		2,900
Amounts reclassified from accumulated other comprehensive income (loss)1	—		(942)		(942)

Other comprehensive income (loss), net of taxes	—		1,958		1,958
Balance, June 30, 2024	$	(181)	$	5,389	$	5,208

1 Amounts reclassified from Accumulated other comprehensive income (loss) related to interest rate swap settlements are presented as an adjustment to Interest expense in the Condensed Consolidated Statements of Operations. Amounts reclassified from Accumulated other comprehensive income (loss) related to employee benefit plan items are presented as part of Interest and other income (expense), net in the Condensed Consolidated Statements of Operations.

15. Segment Results

Operating segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker (its Chief Executive Officer) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company operates and reports on two segments: Commercial Real Estate and Land Operations.

Reportable segment information for the three and six months ended June 30, 2024 and 2023, is summarized below (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating Revenue:
Commercial Real Estate	$	49,208	$	49,533	$	98,096	$	97,403
Land Operations	1,839		3,583		14,153		6,103
Total operating revenue	51,047		53,116		112,249		103,506
Operating Profit (Loss):
Commercial Real Estate1	22,611		22,680		44,592		43,557
Land Operations	168		1,699		8,099		1,607
Total operating profit (loss)	22,779		24,379		52,691		45,164

Interest expense	(5,929)		(5,857)		(