ALEX - Alexander & Baldwin: An Attractive Valuation If You Don't Mind The Low Leverage

2024-06-14 09:51:34 ET

Summary

• Alexander & Baldwin is a diversified REIT with heavy retail exposure, exclusively concentrated in Hawaii.
• An opportunistic land sale boosted Q1 2024 AFFO. Net operating income likewise increased 4.1% Y/Y.
• Net debt accounts for only 27% of enterprise value - perhaps an amount too low if we are at the bottom of the real estate cycle.
• The company has some 3,405 acres remaining in its Land Operations segment - a source of further liquidity.
• The market-implied cap rate stands at about 7.2% while occupancy is at 94%, up 0.1% Y/Y.

Introduction

Alexander & Baldwin ( ALEX ) has underperformed the Vanguard Real Estate Index Fund ETF ( VNQ ) so far in 2024, as the shares are down in the low-double digits against a 5% decline in the benchmark ETF:

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