ALEXANDER & BALDWIN INC ALEX
February 29, 2012 - 7:59pm EST by
vandelay278
2012 2013
Price: 46.41 EPS $0.00 $0.00
Shares Out. (in M): 42 P/E 0.0x 0.0x
Market Cap (in $M): 1,945 P/FCF 0.0x 0.0x
Net Debt (in $M): 537 EBIT 0 0
TEV ($): 2,482 TEV/EBIT 0.0x 0.0x

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  • Sum Of The Parts (SOTP)
  • Shipping
  • Real Estate
 

Description

Alexander and Baldwin (ALEX) is a long as it is undervalued on a sum-of-the-parts basis.  The catalyst for value creation is coming up later this year in the form of a separation of the Company’s two main businesses, Matson, a Jones Act container shipping and logistics business and, A&B, a real estate leasing, development and agriculture business.  Once the separation occurs, it will be much easier for the street to value each piece of the company as there will be better disclosure and more analyst coverage.  In addition, the valuation of ALEX on a post-split basis should improve as shipping investors can focus on Matson and real estate investors can focus on A&B.

 

SUMMARY

Catalyst:              ALEX is splitting into separate publicly-traded shipping and real estate companies.

Timing:                Form 10 filing in late Mar 2012/early Apr; Split complete in 3Q 2012.

Valuation:           $58 - $75, Average Value = $66.50

Upside:                 25% - 62%

Key Risks:            Recession, weak shipping volumes/pricing, global trade war, weak demand for commercial RE, lack of RE sales, RE project delays/cancelations, low sugar prices

 

VALUATION

 

Sum of the Parts Valuation

Average

Low

High

Ocean   Transportation

$1,233mln

$1,160mln

$1,305mln

Logistics

$105

$80

$130

SSA   Terminals JV Interest

$249

$201

$297

Real   Estate Leasing

$588

$543

$633

Real   Estate Development

$675

$644

$723

Agribusiness

$105

$90

$120

Agricultural   Land

$323

$228

$418

ConservationLand

$35

$25

$45

Total Enterprise Value

$3,321

$2,971

$3,671

Less Net   Debt

($537)

($537)

($537)

Equity   Value

$2,784

$2,434

$3,134

Shares   Outstanding

41.9mln

41.9mln

41.9mln

Equity Value per Share

$66.50

$58.13

$74.85

 

DETAIL

ALEX comprises two very different companies:  1) Matson, a Jones Act container shipping and logistics company and 2) Alexander & Baldwin (A&B), a real estate leasing, development and agricultural business.

 

Matson

Matson comprises a few different businesses, 1) Ocean Transportation, 2) Logistics, 3) 35% ownership in SSA Terminals.

 

Ocean Transportation

  • Matson is the largest US West Coast to Hawaii container and auto carrier (67% market share).  The company also services Guam andMicronesiaand has an Asia transpacific service as well.       Matson’s primary competition is in theHawaiitrade is Horizon Lines and Pasha Hawaii Transport Lines.  Horizon is currently capital constrained and as such is in a relatively weakened position. Pasha is exclusively a car carrier (roll-on/roll-off vessels only) and as such only presents competition in the shipping of automobiles.  Since Horizon Lines has exited theGuamtrade, Matson is currently without competition there.  Regarding Matson’s transpacific service, the company competes with a long list of much larger global shipping companies but does so on the basis of on-time express delivery service.
  • Matson owns 17 Jones Act vessels consisting of 10 containerships, 3 combination container/roll-on/roll-off ships, one roll-on/roll-off barge and three container barges.  The average age of its fleet is 18-years.  In addition, Matson owns 33K containers and 14K container chassis.
  • In addition to its vessels and containers, Matson owns Matson Terminals which provides container stevedoring and other terminal services for Matson and other ocean carriers at its 105-acre marine terminal inHonolulu.
  • Future growth drivers include:  1) potential Hawaiian infrastructure  projects including the $5.3bln 20-mile Honolulu commuter rail project as well as another $500mln of “shovel-ready” infrastructure projects that were recently proposed by the Hawaiian Senate, 2) growth in Guam service as a result of troop relocation from Japan (now 4,700 troops instead of 8,000), 3) general growth in the Hawaiian economy from growing tourism expenditures which nearly reached all time highs in 2011, 4) lack of current Guam competition, 5) improved pricing in the Transpacific trade (where pricing is currently close to historic lows) where Matson operates an express China-Long Beach service as carriers accelerate the idling of capacity.   In addition, Matson plans to pay a dividend $0.50-$0.70 dividend post-split which should help to support the stock.

 

Financials

2005

2006

2007

2008

2009

2010

2011

Avg.

Revenue

$878.3

$945.8

$1,006.9

$1,023.7

$888.6

$1,016.5

$1,077.6

$976.8

EBITDA*

$155.9

$139.3

$165.4

$156.2

$108.3

$163.3

$126.0

$144.9

Margin

17.8%

14.7%

16.4%

15.3%

12.2%

16.1%

11.7%

14.8%

*excludes SSAT equity earnings and 50% of total ALEX Corporate Expenses

 

  • EBITDA used in valuation: $145mln (co should be able to do at least $145mln in annual EBITDA over a cycle, this number could be much higher if volumes recover and pricing in the transpacific trade improves)
  • EBITDA multiple: 8x – 9x (based on comps using 2012E EBITDA: KEX 8.6x, HOS 9.0x, SSW 9.0x, RLOG: 9.6x)
  • Enterprise Value: $1,160mln - $1,305mln

 

Logistics

  • Matson Logistics is the 9th largest US freight brokerage.
  • The company plans to expand its warehousing and distribution channel.
  • Average EBITDA since 2005 is $16mln vs. current EBITDA in the $8-10mln range so there is significant room for growth when the economy shows sustained improvement.

 

Financials

2005

2006

2007

2008

2009

2010

2011

Avg.

Revenue

$431.6

$444.2

$433.5

$436.0

$320.9

$355.6

$386.4

$401.2

EBITDA

$15.9

$22.3

$23.3

$20.8

$10.2

$10.4

$8.2

$15.9

Margin

3.7%

5.0%

5.4%

4.8%

3.2%

2.9%

2.1%

4.0%

 

  • EBITDA used in valuation: $10mln (conservatively assumes recovery to 2009-2010 levels)
  • Valuation Multiple: 8x - 13x (based on comps using 2012E EBITDA:  CHRW 13.1x, UTIW 8.2x, EXPD 10.9x, and HUBG 10.6x)
  • Enterprise Value: $80mln - $130mln

 

SSA Terminals JV

  • SSA Terminals is a JV between Matson and SSA Marine.   Matson owns 35% of the JV.
  • SSA Terminals provides terminal and stevedoring services at six terminals (two inSeattle, WA; two in Oakland, CA; and 2 inLong Beach,CA) to Matson and numerous international carriers.

 

Financials

2005

2006

2007

2008

2009

2010

2011

Avg.

Equity Earn

$17.1

$13.3

$10.7

$5.2

$6.2

$12.8

$8.6

$10.6

 

  • Equity Earnings used in valuation: $10.6mln (2005 to 2011 annual average equity earnings)
  • Valuation Multiple: 19x - 28x (based on comps: DPW LN 19.3x 2012E EPS, HPHT SP 23.7x 2012E EPS, and FPT LN deal done at 27.6x 2010 Adj. EPS)
  • Value of JV Interest: $201mln - $297mln

 

A&B

A&B is in the real estate leasing, property development, and agricultural products business.  In addition, A&B owns approximately 87,000 acres of land that is currently designated for either agricultural use (58,000 acres) or conservation (29,000 acres) in Hawaii most of which is on the islands of Maui (approx 67,000 acres) and Kauai (approx 20,000 acres).

 

Real Estate Leasing

  • Diversified portfolio of retail, office and industrial properties with a total of 7.9mln square feet of leasable space inHawaiiand numerous states on the US Mainland.  The company’s Hawaiian leasing portfolio consists of 1.4mln square feet of Gross Leasable Area (GLA) on approximately 150 acres and its Mainland portfolio consists of 6.5mln square feet of GLA on approximately 480 acres.
  • As of year-end 2011, A&B’s Hawaiian portfolio of properties is 91% leased and its Mainland portfolio of properties is 92% leased.
  • A&B plans to re-focus its commercial real estate portfolio on Hawaiian properties over time.  This will be a positive as management’s has a competitive advantage in Hawaiian real estate.

 

Financials

2005

2006

2007

2008

2009

2010

2011

Avg.

Revenue

$89.7

$100.6

$108.5

$107.8

$103.2

$94.4

$100.1

$100.6

Op Inc*

$31.7

$39.2

$38.0

$37.3

$32.3

$23.7

$29.2

$33.0

Taxes@38%*

($12.0)

($14.9)

($14.4)

($14.2)

($12.3)

($9.0)

($11.1)

($12.5)

Net Income

$19.6

$24.3

$23.5

$23.1

$20.0

$14.7

$18.1

$20.5

Plus D&A

$12.4

$14.1

$15.7

$17.9

$19.5

$20.3

$21.6

$17.2

Unlev NOIAT

$32.0

$38.4

$39.2

$41.0

$39.5

$35.0

$39.7

$37.8

*Op Inc is after 50% Corp Exp Allocation, 38% tax rate=average tax rate over last 7 years

 

Per-property Valuation Comparable Transactions

Property

Prop Type

Date

Price

GLA

Price/SF

KomohanaIndustrial Park

Hawaii- Industrial

7/20/10

$37.7mln

238K SF

$158/SF

PacificGuardianTower

Hawaii- Office

10/27/09

$37.9mln

130K SF

$290/SF

MililaniShopping Center

Hawaii- Retail

1/25/10

$50.3mln

180K SF

$280/SF

Midstate   99 Dist Ctr. (CA)

Mainland –   Industrial

11/1/08

$35.2mln

790K SF

$45/SF

Beltway   Antoine Bus Ctr. (TX)

Mainland –   Industrial

8/15/11

$37.5mln

383K SF

$98/SF

SiemensBuilding(WA)

Mainland –   Office

9/14/11

$19.7mln

147K SF

$134/SF

ParkPlaza  (CA)

Mainland –   Office

10/6/11

$12.7mln

73K SF

$174/SF

WestbirdPlaza(FL)

Mainland –   Retail

9/9/10

$17.6mln

100K SF

$176/SF

WestburyPlaza(NY)

Mainland –   Retail

10/29/09

$104mln

400K SF

$260/SF

CulverCenter(CA)

Mainland –   Retail

10/6/11

$115mln

217K SF

$531/SF

 

Per-property Valuation of A&B Leasing Portfolio

HAWAII

Industrial

Office

Retail

MAINLAND

Industrial

Office

Retail

Tot GLA

565K SF

167K SF

692K SF

Total GLA

4.5mln SF

1.2mln SF

866K SF

Value/SF

$147/SF

$188/SF

$283/SF

Value/SF

$51/SF

$120/SF

$176/SF

Est.Value

$82.9mln

$31.4mln

$195.7mln

Est. Value

$229.6mln

$145.3mln

$152.5mln

 

  • Unlevered After-Tax NOI used in Valuation: $38mln (based on 7-year average of $37.8mln)
  • Cap Rates: 6.0% - 7.0%
  • Cap Rate Valuation of A&B Real Estate Leasing Business:  $543mln – $633mln.
  • Per-property valuation of the A&B Real Estate Leasing portfolio: $837mln less approximately $200mln in cumulative deferred taxes as a result of 1031 tax-deferred exchanges: $637mln

 

Real Estate Sales

  • The Real Estate Sales business generates its revenue through the development and sale of commercial and residential and other properties including raw land.
  • Current development assets include projects in various stages of development on Maui, Kauai, Oahu, the BigIslandand the Mainland.
  • Earnings from this business are somewhat lumpy and unpredictable, as such, a per-property valuation is most appropriate.  In our valuations, we made assumptions for everything from construction cost per square foot, development costs per lot, sale prices per square foot and lot, how many years before a project begins to sell product, how many years until the project is sold out, and discount rates.  Our assumptions were based on conversations with the company, company-provided documents, as well as independent primary research and conversations with property appraisers, property valuation consultants, and construction cost consultants.  Using our assumptions, we calculated the after-tax profitability of each property which we then discounted over an appropriate period of time.  Since many of A&B’s properties are still in the planning stage, our discounting conservatively assumes that cash flows don’t start for many years on those properties.  Please note that given the inherent uncertainty in the real estate development business, some of the projects listed below may never be developed which why we provide the valuation per acre so one can gauge what value we are placing on the underlying land on a per acre basis.

 

Property

Acres /Units

After-Tax Profit

Total Acres

AvgVal /Acre

Value Range

Wailea   developments

317 units

$374K/unit

96

$1.082mln

$102-106mln

Wailea   acreage

83 acres

$620K/acre

83

$620K

$52-$52mln

OtherMauiResidential

718 units

$145K/unit

81

$1.013mln

$79-$85mln

KahuluiTownCtr-retail only

1 unit

$11.6mln

5

$2.058mln

$10-$10mln

MauiBusiness  Park

179 acres

$930K/acre

179

$444K

$71-$88mln

Kukui’ula   (inclcom.center)*

785 units*

$614K/unit

737

$323K

$214-$262mln

Brydeswood

24 units

$525K/unit

352

$32K

$11-$11mln

Waihonua   at Kewalo

345 units

$189K/unit

1.7

$34mln

$57-$59mln

Ka Milo at   Mauna Lani

57 units

$155K/unit

15.3

$510K

$8-$8mln

OtherHawaiiProperties

Various

Various

NA

Various

$3-$3mln

Mainland   projects

6 Props

$14.1M/prop

569

$68K

$38-$39mln

*Assumed 70% economic interest in Kukui’ula JV

 

  • Valuation range based on per-property valuations: $644mln - $723mln

 

Agribusiness

  • A&B’s Agribusiness unit comprises Hawaiian Commercial & Sugar Company (“HC&S”) a 34,700 acre Maui sugar plantation; a 3,000 acre coffee plantation on Kauai now leased to Massimo Zanetti Beverage (MZB) which plans to market, sell and distribute the Kauai Coffee brand throughout the US; Kahului Trucking and Storage, Inc and Kauai Commercial Company which both provide several types of trucking services.
  • HC&S and McBryde Sugar Company produce electricity for internal use and for sale to the local electric utility companies.  HC&S produces power by burning bagasse (the residual fiber of the sugar cane plant) and by hydroelectric generation.  McBryde produces power solely by hydroelectric generation.  HC&S and McBryde sell approximately 80,000 – 90,000 MWHs of power per year to the local electric utility.
  • Growth drivers include increased sugar demand resulting in sustained high sugar prices, improved farming practices resulting in higher sugar production per acre, and new power generation initiatives like the plans to develop a 6 megawatt solar project on Kauaiin partnership with the Kauai Island Utility Cooperative.

 

Financials

2005

2006

2007

2008

2009

2010

2011

Avg.

Revenue

$123.2

$127.4

$123.7

$124.3

$107.0

$163.9

$161.7

$133.0

EBITDA

$20.6

$17.0

$10.9

($1.4)

($15.9)

$18.8

$34.1

$12.0

Margin

16.7%

13.3%

8.8%

-1.1%

-14.9%

11.5%

21.1%

9.0%

 

  • EBITDA used in valuation: $15mln (slightly better than the 7-yr avg. as operations appear to have improved yet substantially below the avg. EBITDA for 2010 and 2011)
  • Valuation Multiple: 6x - 8x (no comps;6x=low growth cyclical mult, 8x possible growth mult)
  • Enterprise Value: $90mln - $120mln

 

Undeveloped Land

  • A&B owns approximately 87,080 acres of undeveloped land (land not in the current development pipeline) primarily on the islands of Maui andKauai.  Of the total, 29,170 acres are designated as watershed / conservation land, 34,700 acres are currently farmed by HC&S for sugar production, 3,000 acres are leased to MZB for coffee production, 9,260 acres are leased to third parties, and 10,950 acres are classified as “Other agricultural, pasture and misc. purposes.”
  • A&B has been creating value from its real estate holdings by entitling, developing and selling its land for decades and it will continue to do so.  The hard part is calculating the rate at which this will happen and how much land will be developed.  We approached this problem by making some fairly conservative foundational assumptions:  1) the entitlement process in Hawaii takes a very long time, at least a decade if not longer for any given development, and 2) only a small fraction of this land will ever be developed.
  • Based on the above, we put together a DCF using the following assumptions:
  1. Only 15% of the Agricultural land, or 8,687 acres will ever be developed.
  2. The net sale price after entitlement/development costs for each acre will be $900,000 (this is pre-tax).
  3. Cash flows from property sales won’t start for another 10 years and will end in 100 years.
  4. The annual after-tax cash flow from property sales is $53.9mln based on the above.
  5. Discount rates of 7.0% - 10.0%
  • Valuation of Agricultural Land: $228mln - $418mln ($3,943 - $7,211 per agricultural acre).
  • Valuation of Conservation Land: $25mln - $45mln ($845 - $1,548 per conservation acre).  This is based on the above assumptions and only assumes 5% of the land is developed over 150 years.  We thought about valuing this land at zero but that would not be correct as this land does have some value.

 

Catalyst

    sort by    

    Description

    Alexander and Baldwin (ALEX) is a long as it is undervalued on a sum-of-the-parts basis.  The catalyst for value creation is coming up later this year in the form of a separation of the Company’s two main businesses, Matson, a Jones Act container shipping and logistics business and, A&B, a real estate leasing, development and agriculture business.  Once the separation occurs, it will be much easier for the street to value each piece of the company as there will be better disclosure and more analyst coverage.  In addition, the valuation of ALEX on a post-split basis should improve as shipping investors can focus on Matson and real estate investors can focus on A&B.

     

    SUMMARY

    Catalyst:              ALEX is splitting into separate publicly-traded shipping and real estate companies.

    Timing:                Form 10 filing in late Mar 2012/early Apr; Split complete in 3Q 2012.

    Valuation:           $58 - $75, Average Value = $66.50

    Upside:                 25% - 62%

    Key Risks:            Recession, weak shipping volumes/pricing, global trade war, weak demand for commercial RE, lack of RE sales, RE project delays/cancelations, low sugar prices

     

    VALUATION

     

    Sum of the Parts Valuation

    Average

    Low

    High

    Ocean   Transportation

    $1,233mln

    $1,160mln

    $1,305mln

    Logistics

    $105

    $80

    $130

    SSA   Terminals JV Interest

    $249

    $201

    $297

    Real   Estate Leasing

    $588

    $543

    $633

    Real   Estate Development

    $675

    $644

    $723

    Agribusiness

    $105

    $90

    $120

    Agricultural   Land

    $323

    $228

    $418

    ConservationLand

    $35

    $25

    $45

    Total Enterprise Value

    $3,321

    $2,971

    $3,671

    Less Net   Debt

    ($537)

    ($537)

    ($537)

    Equity   Value

    $2,784

    $2,434

    $3,134

    Shares   Outstanding

    41.9mln

    41.9mln

    41.9mln

    Equity Value per Share

    $66.50

    $58.13

    $74.85

     

    DETAIL

    ALEX comprises two very different companies:  1) Matson, a Jones Act container shipping and logistics company and 2) Alexander & Baldwin (A&B), a real estate leasing, development and agricultural business.

     

    Matson

    Matson comprises a few different businesses, 1) Ocean Transportation, 2) Logistics, 3) 35% ownership in SSA Terminals.

     

    Ocean Transportation

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Revenue

    $878.3

    $945.8

    $1,006.9

    $1,023.7

    $888.6

    $1,016.5

    $1,077.6

    $976.8

    EBITDA*

    $155.9

    $139.3

    $165.4

    $156.2

    $108.3

    $163.3

    $126.0

    $144.9

    Margin

    17.8%

    14.7%

    16.4%

    15.3%

    12.2%

    16.1%

    11.7%

    14.8%

    *excludes SSAT equity earnings and 50% of total ALEX Corporate Expenses

     

     

    Logistics

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Revenue

    $431.6

    $444.2

    $433.5

    $436.0

    $320.9

    $355.6

    $386.4

    $401.2

    EBITDA

    $15.9

    $22.3

    $23.3

    $20.8

    $10.2

    $10.4

    $8.2

    $15.9

    Margin

    3.7%

    5.0%

    5.4%

    4.8%

    3.2%

    2.9%

    2.1%

    4.0%

     

     

    SSA Terminals JV

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Equity Earn

    $17.1

    $13.3

    $10.7

    $5.2

    $6.2

    $12.8

    $8.6

    $10.6

     

     

    A&B

    A&B is in the real estate leasing, property development, and agricultural products business.  In addition, A&B owns approximately 87,000 acres of land that is currently designated for either agricultural use (58,000 acres) or conservation (29,000 acres) in Hawaii most of which is on the islands of Maui (approx 67,000 acres) and Kauai (approx 20,000 acres).

     

    Real Estate Leasing

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Revenue

    $89.7

    $100.6

    $108.5

    $107.8

    $103.2

    $94.4

    $100.1

    $100.6

    Op Inc*

    $31.7

    $39.2

    $38.0

    $37.3

    $32.3

    $23.7

    $29.2

    $33.0

    Taxes@38%*

    ($12.0)

    ($14.9)

    ($14.4)

    ($14.2)

    ($12.3)

    ($9.0)

    ($11.1)

    ($12.5)

    Net Income

    $19.6

    $24.3

    $23.5

    $23.1

    $20.0

    $14.7

    $18.1

    $20.5

    Plus D&A

    $12.4

    $14.1

    $15.7

    $17.9

    $19.5

    $20.3

    $21.6

    $17.2

    Unlev NOIAT

    $32.0

    $38.4

    $39.2

    $41.0

    $39.5

    $35.0

    $39.7

    $37.8

    *Op Inc is after 50% Corp Exp Allocation, 38% tax rate=average tax rate over last 7 years

     

    Per-property Valuation Comparable Transactions

    Property

    Prop Type

    Date

    Price

    GLA

    Price/SF

    KomohanaIndustrial Park

    Hawaii- Industrial

    7/20/10

    $37.7mln

    238K SF

    $158/SF

    PacificGuardianTower

    Hawaii- Office

    10/27/09

    $37.9mln

    130K SF

    $290/SF

    MililaniShopping Center

    Hawaii- Retail

    1/25/10

    $50.3mln

    180K SF

    $280/SF

    Midstate   99 Dist Ctr. (CA)

    Mainland –   Industrial

    11/1/08

    $35.2mln

    790K SF

    $45/SF

    Beltway   Antoine Bus Ctr. (TX)

    Mainland –   Industrial

    8/15/11

    $37.5mln

    383K SF

    $98/SF

    SiemensBuilding(WA)

    Mainland –   Office

    9/14/11

    $19.7mln

    147K SF

    $134/SF

    ParkPlaza  (CA)

    Mainland –   Office

    10/6/11

    $12.7mln

    73K SF

    $174/SF

    WestbirdPlaza(FL)

    Mainland –   Retail

    9/9/10

    $17.6mln

    100K SF

    $176/SF

    WestburyPlaza(NY)

    Mainland –   Retail

    10/29/09

    $104mln

    400K SF

    $260/SF

    CulverCenter(CA)

    Mainland –   Retail

    10/6/11

    $115mln

    217K SF

    $531/SF

     

    Per-property Valuation of A&B Leasing Portfolio

    HAWAII

    Industrial

    Office

    Retail

    MAINLAND

    Industrial

    Office

    Retail

    Tot GLA

    565K SF

    167K SF

    692K SF

    Total GLA

    4.5mln SF

    1.2mln SF

    866K SF

    Value/SF

    $147/SF

    $188/SF

    $283/SF

    Value/SF

    $51/SF

    $120/SF

    $176/SF

    Est.Value

    $82.9mln

    $31.4mln

    $195.7mln

    Est. Value

    $229.6mln

    $145.3mln

    $152.5mln

     

     

    Real Estate Sales

     

    Property

    Acres /Units

    After-Tax Profit

    Total Acres

    AvgVal /Acre

    Value Range

    Wailea   developments

    317 units

    $374K/unit

    96

    $1.082mln

    $102-106mln

    Wailea   acreage

    83 acres

    $620K/acre

    83

    $620K

    $52-$52mln

    OtherMauiResidential

    718 units

    $145K/unit

    81

    $1.013mln

    $79-$85mln

    KahuluiTownCtr-retail only

    1 unit

    $11.6mln

    5

    $2.058mln

    $10-$10mln

    MauiBusiness  Park

    179 acres

    $930K/acre

    179

    $444K

    $71-$88mln

    Kukui’ula   (inclcom.center)*

    785 units*

    $614K/unit

    737

    $323K

    $214-$262mln

    Brydeswood

    24 units

    $525K/unit

    352

    $32K

    $11-$11mln

    Waihonua   at Kewalo

    345 units

    $189K/unit

    1.7

    $34mln

    $57-$59mln

    Ka Milo at   Mauna Lani

    57 units

    $155K/unit

    15.3

    $510K

    $8-$8mln

    OtherHawaiiProperties

    Various

    Various

    NA

    Various

    $3-$3mln

    Mainland   projects

    6 Props

    $14.1M/prop

    569

    $68K

    $38-$39mln

    *Assumed 70% economic interest in Kukui’ula JV

     

     

    Agribusiness

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Revenue

    $123.2

    $127.4

    $123.7

    $124.3

    $107.0

    $163.9

    $161.7

    $133.0

    EBITDA

    $20.6

    $17.0

    $10.9

    ($1.4)

    ($15.9)

    $18.8

    $34.1

    $12.0

    Margin

    16.7%

    13.3%

    8.8%

    -1.1%

    -14.9%

    11.5%

    21.1%

    9.0%

     

     

    Undeveloped Land

    1. Only 15% of the Agricultural land, or 8,687 acres will ever be developed.
    2. The net sale price after entitlement/development costs for each acre will be $900,000 (this is pre-tax).
    3. Cash flows from property sales won’t start for another 10 years and will end in 100 years.
    4. The annual after-tax cash flow from property sales is $53.9mln based on the above.
    5. Discount rates of 7.0% - 10.0%

     

    Catalyst

    Messages


    SubjectRE: you beat me to it
    Entry03/01/2012 09:03 AM
    Membervandelay278
    I had a feeling that others were thinking of writing this up just given the timing of the split.  Definitely interested in hearing your thoughts.

    SubjectA&B
    Entry03/01/2012 09:54 AM
    Memberdeerwood

    Nicely presented. I have been following ALEX for a while and agree there is a lot of underappreciated value here. When the terms of the separation were announced, there was some disappointment that they are not going to be structuring A&B as a REIT. Given the initial cash flow profile of the segment I understand management’s reasoning. Depending on the rate of property sales, however, it looks like they could convert within 1-2 years. I would be curious to know your thoughts here. Thank you for posting.    


    SubjectAnother perspective
    Entry03/01/2012 01:18 PM
    Membermm202
    A colleague of mine who manages about $5B and is a long time resident of Hawaii had this to say about ALEX today when I shared your analysis with him:
     

    First their investment in kukui ula is 850 million. There are very little sales and it is their biggest investment. Shipping is very soft plus a new ship will be in the Hawaii trade next year from Pasha.

     

    They are also cutting their dividend in half. Jones act may be challenged this year killing the economy. Allan Doane the largest holder and the architect of all there mistakes is selling large.

     

    Large blocks of stock. Never seen valuations that high. No one will ever buy them. 

    Alexander and Baldwin (ALEX) is a long as it is undervalued on a sum-of-the-parts basis.  The catalyst for value creation is coming up later this year in the form of a separation of the Company’s two main businesses, Matson, a Jones Act container shipping and logistics business and, A&B, a real estate leasing, development and agriculture business.  Once the separation occurs, it will be much easier for the street to value each piece of the company as there will be better disclosure and more analyst coverage.  In addition, the valuation of ALEX on a post-split basis should improve as shipping investors can focus on Matson and real estate investors can focus on A&B.

     

    SUMMARY

    Catalyst:              ALEX is splitting into separate publicly-traded shipping and real estate companies.

    Timing:                Form 10 filing in late Mar 2012/early Apr; Split complete in 3Q 2012.

    Valuation:           $58 - $75, Average Value = $66.50

    Upside:                 25% - 62%

    Key Risks:            Recession, weak shipping volumes/pricing, global trade war, weak demand for commercial RE, lack of RE sales, RE project delays/cancelations, low sugar prices

     

    VALUATION

     

    Sum of the Parts Valuation

    Average

    Low

    High

    Ocean   Transportation

    $1,233mln

    $1,160mln

    $1,305mln

    Logistics

    $105

    $80

    $130

    SSA   Terminals JV Interest

    $249

    $201

    $297

    Real   Estate Leasing

    $588

    $543

    $633

    Real   Estate Development

    $675

    $644

    $723

    Agribusiness

    $105

    $90

    $120

    Agricultural   Land

    $323

    $228

    $418

    ConservationLand

    $35

    $25

    $45

    Total Enterprise Value

    $3,321

    $2,971

    $3,671

    Less Net   Debt

    ($537)

    ($537)

    ($537)

    Equity   Value

    $2,784

    $2,434

    $3,134

    Shares   Outstanding

    41.9mln

    41.9mln

    41.9mln

    Equity Value per Share

    $66.50

    $58.13

    $74.85

     

    DETAIL

    ALEX comprises two very different companies:  1) Matson, a Jones Act container shipping and logistics company and 2) Alexander & Baldwin (A&B), a real estate leasing, development and agricultural business.

     

    Matson

    Matson comprises a few different businesses, 1) Ocean Transportation, 2) Logistics, 3) 35% ownership in SSA Terminals.

     

    Ocean Transportation

    • Matson is the largest US West Coast to Hawaii container and auto carrier (67% market share).  The company also services Guam andMicronesiaand has an Asia transpacific service as well.       Matson’s primary competition is in theHawaiitrade is Horizon Lines and Pasha Hawaii Transport Lines.  Horizon is currently capital constrained and as such is in a relatively weakened position. Pasha is exclusively a car carrier (roll-on/roll-off vessels only) and as such only presents competition in the shipping of automobiles.  Since Horizon Lines has exited theGuamtrade, Matson is currently without competition there.  Regarding Matson’s transpacific service, the company competes with a long list of much larger global shipping companies but does so on the basis of on-time express delivery service.
    • Matson owns 17 Jones Act vessels consisting of 10 containerships, 3 combination container/roll-on/roll-off ships, one roll-on/roll-off barge and three container barges.  The average age of its fleet is 18-years.  In addition, Matson owns 33K containers and 14K container chassis.
    • In addition to its vessels and containers, Matson owns Matson Terminals which provides container stevedoring and other terminal services for Matson and other ocean carriers at its 105-acre marine terminal inHonolulu.
    • Future growth drivers include:  1) potential Hawaiian infrastructure  projects including the $5.3bln 20-mile Honolulu commuter rail project as well as another $500mln of “shovel-ready” infrastructure projects that were recently proposed by the Hawaiian Senate, 2) growth in Guam service as a result of troop relocation from Japan (now 4,700 troops instead of 8,000), 3) general growth in the Hawaiian economy from growing tourism expenditures which nearly reached all time highs in 2011, 4) lack of current Guam competition, 5) improved pricing in the Transpacific trade (where pricing is currently close to historic lows) where Matson operates an express China-Long Beach service as carriers accelerate the idling of capacity.   In addition, Matson plans to pay a dividend $0.50-$0.70 dividend post-split which should help to support the stock.

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Revenue

    $878.3

    $945.8

    $1,006.9

    $1,023.7

    $888.6

    $1,016.5

    $1,077.6

    $976.8

    EBITDA*

    $155.9

    $139.3

    $165.4

    $156.2

    $108.3

    $163.3

    $126.0

    $144.9

    Margin

    17.8%

    14.7%

    16.4%

    15.3%

    12.2%

    16.1%

    11.7%

    14.8%

    *excludes SSAT equity earnings and 50% of total ALEX Corporate Expenses

     

    • EBITDA used in valuation: $145mln (co should be able to do at least $145mln in annual EBITDA over a cycle, this number could be much higher if volumes recover and pricing in the transpacific trade improves)
    • EBITDA multiple: 8x – 9x (based on comps using 2012E EBITDA: KEX 8.6x, HOS 9.0x, SSW 9.0x, RLOG: 9.6x)
    • Enterprise Value: $1,160mln - $1,305mln

     

    Logistics

    • Matson Logistics is the 9th largest US freight brokerage.
    • The company plans to expand its warehousing and distribution channel.
    • Average EBITDA since 2005 is $16mln vs. current EBITDA in the $8-10mln range so there is significant room for growth when the economy shows sustained improvement.

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Revenue

    $431.6

    $444.2

    $433.5

    $436.0

    $320.9

    $355.6

    $386.4

    $401.2

    EBITDA

    $15.9

    $22.3

    $23.3

    $20.8

    $10.2

    $10.4

    $8.2

    $15.9

    Margin

    3.7%

    5.0%

    5.4%

    4.8%

    3.2%

    2.9%

    2.1%

    4.0%

     

    • EBITDA used in valuation: $10mln (conservatively assumes recovery to 2009-2010 levels)
    • Valuation Multiple: 8x - 13x (based on comps using 2012E EBITDA:  CHRW 13.1x, UTIW 8.2x, EXPD 10.9x, and HUBG 10.6x)
    • Enterprise Value: $80mln - $130mln

     

    SSA Terminals JV

    • SSA Terminals is a JV between Matson and SSA Marine.   Matson owns 35% of the JV.
    • SSA Terminals provides terminal and stevedoring services at six terminals (two inSeattle, WA; two in Oakland, CA; and 2 inLong Beach,CA) to Matson and numerous international carriers.

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Equity Earn

    $17.1

    $13.3

    $10.7

    $5.2

    $6.2

    $12.8

    $8.6

    $10.6

     

    • Equity Earnings used in valuation: $10.6mln (2005 to 2011 annual average equity earnings)
    • Valuation Multiple: 19x - 28x (based on comps: DPW LN 19.3x 2012E EPS, HPHT SP 23.7x 2012E EPS, and FPT LN deal done at 27.6x 2010 Adj. EPS)
    • Value of JV Interest: $201mln - $297mln

     

    A&B

    A&B is in the real estate leasing, property development, and agricultural products business.  In addition, A&B owns approximately 87,000 acres of land that is currently designated for either agricultural use (58,000 acres) or conservation (29,000 acres) in Hawaii most of which is on the islands of Maui (approx 67,000 acres) and Kauai (approx 20,000 acres).

     

    Real Estate Leasing

    • Diversified portfolio of retail, office and industrial properties with a total of 7.9mln square feet of leasable space inHawaiiand numerous states on the US Mainland.  The company’s Hawaiian leasing portfolio consists of 1.4mln square feet of Gross Leasable Area (GLA) on approximately 150 acres and its Mainland portfolio consists of 6.5mln square feet of GLA on approximately 480 acres.
    • As of year-end 2011, A&B’s Hawaiian portfolio of properties is 91% leased and its Mainland portfolio of properties is 92% leased.
    • A&B plans to re-focus its commercial real estate portfolio on Hawaiian properties over time.  This will be a positive as management’s has a competitive advantage in Hawaiian real estate.

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Revenue

    $89.7

    $100.6

    $108.5

    $107.8

    $103.2

    $94.4

    $100.1

    $100.6

    Op Inc*

    $31.7

    $39.2

    $38.0

    $37.3

    $32.3

    $23.7

    $29.2

    $33.0

    Taxes@38%*

    ($12.0)

    ($14.9)

    ($14.4)

    ($14.2)

    ($12.3)

    ($9.0)

    ($11.1)

    ($12.5)

    Net Income

    $19.6

    $24.3

    $23.5

    $23.1

    $20.0

    $14.7

    $18.1

    $20.5

    Plus D&A

    $12.4

    $14.1

    $15.7

    $17.9

    $19.5

    $20.3

    $21.6

    $17.2

    Unlev NOIAT

    $32.0

    $38.4

    $39.2

    $41.0

    $39.5

    $35.0

    $39.7

    $37.8

    *Op Inc is after 50% Corp Exp Allocation, 38% tax rate=average tax rate over last 7 years

     

    Per-property Valuation Comparable Transactions

    Property

    Prop Type

    Date

    Price

    GLA

    Price/SF

    KomohanaIndustrial Park

    Hawaii- Industrial

    7/20/10

    $37.7mln

    238K SF

    $158/SF

    PacificGuardianTower

    Hawaii- Office

    10/27/09

    $37.9mln

    130K SF

    $290/SF

    MililaniShopping Center

    Hawaii- Retail

    1/25/10

    $50.3mln

    180K SF

    $280/SF

    Midstate   99 Dist Ctr. (CA)

    Mainland –   Industrial

    11/1/08

    $35.2mln

    790K SF

    $45/SF

    Beltway   Antoine Bus Ctr. (TX)

    Mainland –   Industrial

    8/15/11

    $37.5mln

    383K SF

    $98/SF

    SiemensBuilding(WA)

    Mainland –   Office

    9/14/11

    $19.7mln

    147K SF

    $134/SF

    ParkPlaza  (CA)

    Mainland –   Office

    10/6/11

    $12.7mln

    73K SF

    $174/SF

    WestbirdPlaza(FL)

    Mainland –   Retail

    9/9/10

    $17.6mln

    100K SF

    $176/SF

    WestburyPlaza(NY)

    Mainland –   Retail

    10/29/09

    $104mln

    400K SF

    $260/SF

    CulverCenter(CA)

    Mainland –   Retail

    10/6/11

    $115mln

    217K SF

    $531/SF

     

    Per-property Valuation of A&B Leasing Portfolio

    HAWAII

    Industrial

    Office

    Retail

    MAINLAND

    Industrial

    Office

    Retail

    Tot GLA

    565K SF

    167K SF

    692K SF

    Total GLA

    4.5mln SF

    1.2mln SF

    866K SF

    Value/SF

    $147/SF

    $188/SF

    $283/SF

    Value/SF

    $51/SF

    $120/SF

    $176/SF

    Est.Value

    $82.9mln

    $31.4mln

    $195.7mln

    Est. Value

    $229.6mln

    $145.3mln

    $152.5mln

     

    • Unlevered After-Tax NOI used in Valuation: $38mln (based on 7-year average of $37.8mln)
    • Cap Rates: 6.0% - 7.0%
    • Cap Rate Valuation of A&B Real Estate Leasing Business:  $543mln – $633mln.
    • Per-property valuation of the A&B Real Estate Leasing portfolio: $837mln less approximately $200mln in cumulative deferred taxes as a result of 1031 tax-deferred exchanges: $637mln

     

    Real Estate Sales

    • The Real Estate Sales business generates its revenue through the development and sale of commercial and residential and other properties including raw land.
    • Current development assets include projects in various stages of development on Maui, Kauai, Oahu, the BigIslandand the Mainland.
    • Earnings from this business are somewhat lumpy and unpredictable, as such, a per-property valuation is most appropriate.  In our valuations, we made assumptions for everything from construction cost per square foot, development costs per lot, sale prices per square foot and lot, how many years before a project begins to sell product, how many years until the project is sold out, and discount rates.  Our assumptions were based on conversations with the company, company-provided documents, as well as independent primary research and conversations with property appraisers, property valuation consultants, and construction cost consultants.  Using our assumptions, we calculated the after-tax profitability of each property which we then discounted over an appropriate period of time.  Since many of A&B’s properties are still in the planning stage, our discounting conservatively assumes that cash flows don’t start for many years on those properties.  Please note that given the inherent uncertainty in the real estate development business, some of the projects listed below may never be developed which why we provide the valuation per acre so one can gauge what value we are placing on the underlying land on a per acre basis.

     

    Property

    Acres /Units

    After-Tax Profit

    Total Acres

    AvgVal /Acre

    Value Range

    Wailea   developments

    317 units

    $374K/unit

    96

    $1.082mln

    $102-106mln

    Wailea   acreage

    83 acres

    $620K/acre

    83

    $620K

    $52-$52mln

    OtherMauiResidential

    718 units

    $145K/unit

    81

    $1.013mln

    $79-$85mln

    KahuluiTownCtr-retail only

    1 unit

    $11.6mln

    5

    $2.058mln

    $10-$10mln

    MauiBusiness  Park

    179 acres

    $930K/acre

    179

    $444K

    $71-$88mln

    Kukui’ula   (inclcom.center)*

    785 units*

    $614K/unit

    737

    $323K

    $214-$262mln

    Brydeswood

    24 units

    $525K/unit

    352

    $32K

    $11-$11mln

    Waihonua   at Kewalo

    345 units

    $189K/unit

    1.7

    $34mln

    $57-$59mln

    Ka Milo at   Mauna Lani

    57 units

    $155K/unit

    15.3

    $510K

    $8-$8mln

    OtherHawaiiProperties

    Various

    Various

    NA

    Various

    $3-$3mln

    Mainland   projects

    6 Props

    $14.1M/prop

    569

    $68K

    $38-$39mln

    *Assumed 70% economic interest in Kukui’ula JV

     

    • Valuation range based on per-property valuations: $644mln - $723mln

     

    Agribusiness

    • A&B’s Agribusiness unit comprises Hawaiian Commercial & Sugar Company (“HC&S”) a 34,700 acre Maui sugar plantation; a 3,000 acre coffee plantation on Kauai now leased to Massimo Zanetti Beverage (MZB) which plans to market, sell and distribute the Kauai Coffee brand throughout the US; Kahului Trucking and Storage, Inc and Kauai Commercial Company which both provide several types of trucking services.
    • HC&S and McBryde Sugar Company produce electricity for internal use and for sale to the local electric utility companies.  HC&S produces power by burning bagasse (the residual fiber of the sugar cane plant) and by hydroelectric generation.  McBryde produces power solely by hydroelectric generation.  HC&S and McBryde sell approximately 80,000 – 90,000 MWHs of power per year to the local electric utility.
    • Growth drivers include increased sugar demand resulting in sustained high sugar prices, improved farming practices resulting in higher sugar production per acre, and new power generation initiatives like the plans to develop a 6 megawatt solar project on Kauaiin partnership with the Kauai Island Utility Cooperative.

     

    Financials

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    Avg.

    Revenue

    $123.2

    $127.4

    $123.7

    $124.3

    $107.0

    $163.9

    $161.7

    $133.0

    EBITDA

    $20.6

    $17.0

    $10.9

    ($1.4)

    ($15.9)

    $18.8

    $34.1

    $12.0

    Margin

    16.7%

    13.3%

    8.8%

    -1.1%

    -14.9%

    11.5%

    21.1%

    9.0%

     

    • EBITDA used in valuation: $15mln (slightly better than the 7-yr avg. as operations appear to have improved yet substantially below the avg. EBITDA for 2010 and 2011)
    • Valuation Multiple: 6x - 8x (no comps;6x=low growth cyclical mult, 8x possible growth mult)
    • Enterprise Value: $90mln - $120mln

     

    Undeveloped Land

    • A&B owns approximately 87,080 acres of undeveloped land (land not in the current development pipeline) primarily on the islands of Maui andKauai.  Of the total, 29,170 acres are designated as watershed / conservation land, 34,700 acres are currently farmed by HC&S for sugar production, 3,000 acres are leased to MZB for coffee production, 9,260 acres are leased to third parties, and 10,950 acres are classified as “Other agricultural, pasture and misc. purposes.”
    • A&B has been creating value from its real estate holdings by entitling, developing and selling its land for decades and it will continue to do so.  The hard part is calculating the rate at which this will happen and how much land will be developed.  We approached this problem by making some fairly conservative foundational assumptions:  1) the entitlement process in Hawaii takes a very long time, at least a decade if not longer for any given development, and 2) only a small fraction of this land will ever be developed.
    • Based on the above, we put together a DCF using the following assumptions:
    1. Only 15% of the Agricultural land, or 8,687 acres will ever be developed.
    2. The net sale price after entitlement/development costs for each acre will be $900,000 (this is pre-tax).
    3. Cash flows from property sales won’t start for another 10 years and will end in 100 years.
    4. The annual after-tax cash flow from property sales is $53.9mln based on the above.
    5. Discount rates of 7.0% - 10.0%
    • Valuation of Agricultural Land: $228mln - $418mln ($3,943 - $7,211 per agricultural acre).
    • Valuation of Conservation Land: $25mln - $45mln ($845 - $1,548 per conservation acre).  This is based on the above assumptions and only assumes 5% of the land is developed over 150 years.  We thought about valuing this land at zero but that would not be correct as this land does have some value.

     


    SubjectRE: A&B
    Entry03/01/2012 06:31 PM
    Membervandelay278

    Thanks for the question and I hope I am answering it and if I am not please re-ask it and I will try again.  I’m not a REIT expert so you should do your own work on this but I believe that the property development business (and agribusiness for that matter) is not REIT-able as the income from that business is not passive (this is also what the company has told me).  The company considered a taxable REIT subsidiary (TRS) structure but decided that it would be too complicated and not worth the effort.  I’m not sure if I agree with this or not but that is beside the point as the company has decided that the C corp structure is the way to go.  So, in order to convert to a REIT in the future one of a couple of things must happen.

    1)      The income from the development and agricultural businesses must decline substantially in relation to the leasing business.  I think this is what you’re thinking.

    2)      The income from the leasing business must grow substantially in relation to the development and agricultural businesses.

    3)      The company must form a TRS and put the development and agribusiness units into the TRS.

    Regarding points 1 and 2.  I don’t see it happening any time soon as the company’s leasing business NOI has been relatively stable for the last six or seven years and the current development pipeline should be producing income for the next decade at least.  For example, it will take 10+ years for Kukui’ula to sell out and the company believes it will take at least that long for Maui Business Park to sell out not to mention the 80 acres in Wailea that are not even in planning.

    Regarding point 3.  This is possible at some point in the future but probably not for a while as the company has already decided that a TRS wasn’t desirable unless the company gets pressured by shareholders to do so.

    Having said that, I’m not sure what the best structure for the RE business is.  On the one hand, the added complexity of a TRS sounds like a reasonable tradeoff for the tax benefits of a REIT structure.  On the other hand, I wonder if a REIT with a TRS with a volatile property development business and a somewhat unpredictable farming business would garner the best multiple.

    I’m interested to hear your thoughts.


    SubjectRE: Another perspective
    Entry03/01/2012 06:34 PM
    Membervandelay278

    Thanks for your (or your colleague’s) perspective.  It is always good to hear the bear case, or at least part of it, it keeps us honest.

     

    “First their investment in kukui ula is 850 million.”

    ALEX’s investment to date in Kukui’ula is somewhere around $250mln not $850mln.  ALEX has put in $250mln to date, DMB, their JV partner in the project, has put in around $180mln to date.  The total project cost for Kukui’ula is estimated to be around $810mln.  We will know the exact numbers when ALEX release’s its 2011 real estate supplement in about a month.  As such, somewhere around $420mln of the projected total development cost of Kukui’ula has been funded which leave around $390mln of future funding requirements.  If you assume that ALEX contributes 70-80% of the balance of the funding requirement, then they will need to contribute an additional $273mln - $312mln to the project for a total capital contribution of between $523mln - $562mln, again, not $850mln.  Also, the future capital contributions will be funded as needed meaning that as the inventory of developed lots draws down, they will need additional capital to develop more lots.  However, as lots are sold, the JV will use the proceeds to fund the development of additional lots.  

     

    “There are very little sales and it is their biggest investment”

    To date, out of a projected total of 1,200 lots over the life of the Kukui’ula project, 178 lots have been developed, 85 have sold and 81 have closed leaving 93 lots in inventory, 1,022 to be developed and a total of 1,115 to be sold.  Most of the sales happened a few of years ago so your colleague is correct that sales have been slow recently.  To attempt to factor this into our valuation, we assumed that it takes another 20 years to sell out at Kukui’ula.  While we believe that 20 years to sell the remaining lots is conservative, if you change that to 25 years, it cuts the overall company valuation by $30mln or about $0.72.

     

    “Shipping is very soft plus a new ship will be in the Hawaii trade next year from Pasha.”

    Yes, Pasha is bringing a new ship online in the 2013 time frame.  It is a combo roll on/roll off and container ship.  If overallHawaiivolumes stay constant then Matson will likely lose share in theHawaiitrade.

     

    “They are also cutting their dividend in half.”

    ALEX has stated that they plan to pay a $0.50 - $0.70 annual dividend on the Matson shares and no dividend on the A&B shares.  ALEX’s current annual dividend is $1.26 so yes, $0.60 is about half of $1.26.  Assuming Matson trades at $30 (the midpoint of our Matson valuation) the dividend yield would be 2% versus the current ALEX dividend yield of 2.7%, a 26% reduction in yield for those who only wish to own Matson shares.  For those who want a dividend on their A&B shares, for the time being, you’re out of luck.

     

    “Jones act may be challenged this year killing the economy.”

    Give me a year when the Jones Act hasn’t been challenged.

     

    “Allan Doane the largest holder and the architect of all there mistakes is selling large. Large blocks of stock.”

    Yes, Allen Doane has been selling over the last couple of years since his retirement on 1/1/10.  As 3/11/10, he held 268K shares and 685K options (2.3% of outstanding).  As of 3/10/11, he held 189K shares and 534K options (1.7% of outstanding).  As of 2/23/12, I believe he held 114K shares in trust and around 495K options (1.5% of outstanding). 

     

    “Never seen valuations that high.”

    The stock was trading at $54.50 last April.

     

    “No one will ever buy them.”

    I try not to say “never” too often but regardless, a take out of ALEX, or one of its components post split, is not part of our thesis.


    SubjectRE: Author Exit Recommendation
    Entry07/18/2013 02:20 PM
    Membervandelay278
    Not sure why this is the case but VIC's stated return for this position is incorrect.  The return in this position from 3/1/12 to now is 60% [ALEX split into ALEX and MATX since my writeup - ALEX current price of $45.73 + MATX current price of $28.32 = $74.05 / $46.41 writeup price = 60%].  I feel that with post-split ALEX+post split MATX trading at $74.05 which is only $0.80 below my high target price of $74.85 and up 60% from the level at the time of my writeup, this is a decent exit point.

    SubjectAnybody following?
    Entry01/11/2016 12:00 PM
    Memberstraw1023

    Due to price drop and shutting down sugar cane, this has become interesting again. Looks a bit like CTO as they transition from raw land to develpments to income-producing properties while avoiding taxes via 1031 exchanges. And like CTO (if it remains standalone), they should eventually transition to a REIT (which was the hope a few years ago when they spun off).

    At $32, TEV is about $2.2bn (including pension liability). Properties generating over $80mm NOI.

    They are shutting down the loss-producing sugar cane so agribusiness should stop being a negative-value drag.

    They paid $300mm for Grace.

    They have $400mm book value of JV investments.

    They have $200mm development projects (but this has the underlying land at $0).

     

    Basically, at this price, getting the land (both under projects and raw) for free IF (big IF) we value property income as a REIT. I am only now diving in and catching up to developments since 2013 but wondering if anyone else looking at ALEX at these prices.

     

     

     

     

     

     

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