Executive Summary

Q2 2025 delivered strong results: net income rose to $25.1M ($0.35 diluted EPS), FFO to $35.2M ($0.48/share), and same‑store NOI growth reached 5.3% as occupancy improved to 95.8% .
CRE portfolio fundamentals remained healthy: comparable leasing spreads were 6.8% (retail 7.4%, industrial 4.7%), and leased occupancy increased 40 bps QoQ and 190 bps YoY .
Guidance raised: FY25 FFO per share to $1.35–$1.40 (from $1.17–$1.23), EPS to $0.91–$0.96 (from $0.68–$0.74), and same‑store NOI growth to 3.4%–3.8% (from 2.4%–3.2%) .
Land Operations contributed $13.9M operating profit, boosting total FFO; management highlighted resolution of legacy obligations and continued portfolio streamlining .
Watch items: CRE operating profit was modestly lower YoY ($22.2M vs $22.6M) and Q3 same‑store NOI expected to decelerate due to tough comps; Sam’s Club ~$20M TI will impact cash but be excluded from AFFO per management’s approach .

What Went Well and What Went Wrong

What Went Well

Same‑store NOI growth accelerated to 5.3% YoY on higher economic occupancy; CRE NOI rose to $33.6M (+6.3% YoY) .
Portfolio execution and internal growth: executed 52 leases ($6.1M ABR) and advanced two build‑to‑suit industrial projects (Maui, O‘ahu) with expected $3.8M combined stabilized NOI uplift over time; CEO: “our high‑quality portfolio continues to perform well…we are raising our guidance” .
Liquidity and leverage: $307.6M liquidity; net debt/TTM adjusted EBITDA at 3.3x; >95% debt fixed-rate, weighted avg interest 4.67% .

What Went Wrong

CRE operating profit modestly lower YoY ($22.2M vs $22.6M), despite stronger occupancy and NOI; leasing spreads eased vs prior quarters (6.8% vs 10.2% in Q1 and 14.0% in Q4) .
Q3 same‑store NOI growth expected to slow due to tough prior‑year comps (retroactive rent and property tax appeal benefits in Q3 2024) .
Large Sam’s Club TI (~$20M) to be paid in Q3; while excluded from AFFO by management, it is a cash outlay and drew analyst scrutiny on recurring vs non‑recurring classification .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Total Operating Revenue ($USD Millions)	$51.05	$53.74	$51.70
Net Income available to common ($USD Millions)	$9.10	$21.43	$25.13
Diluted EPS ($USD)	$0.13	$0.29	$0.35
FFO ($USD Millions)	$20.62	$26.35	$35.16
FFO per diluted share ($USD)	$0.28	$0.36	$0.48
FFO related to CRE & Corporate ($USD Millions)	$20.45	$21.50	$21.25
FFO per share related to CRE & Corporate ($USD)	$0.28	$0.30	$0.29
CRE Operating Revenue ($USD Millions)	$49.21	$51.04	$50.73
CRE Operating Profit ($USD Millions)	$22.61	$23.43	$22.21
Same‑Store NOI ($USD Millions)	$31.09	$32.39	$32.73
Same‑Store NOI Growth (%)	0.9%	4.2%	5.3%
Leased Occupancy (%)	93.9%	95.4%	95.8%

Segment breakdown:

Metric	Q2 2024	Q1 2025	Q2 2025
CRE Operating Revenue ($USD Millions)	$49.22	$51.04	$50.73
CRE Operating Profit ($USD Millions)	$22.61	$23.43	$22.21
Land Ops Operating Revenue ($USD Millions)	$1.84	$2.70	$0.97
Land Ops Operating Profit ($USD Millions)	$0.17	$4.85	$13.91
Total Operating Profit ($USD Millions)	$22.78	$28.28	$36.11

KPIs and trajectory:

KPI	Q4 2024	Q1 2025	Q2 2025
Comparable Leasing Spreads (Total)	14.0%	10.2%	6.8%
– Retail	15.2%	11.1%	7.4%
– Industrial	6.6%	9.5%	4.7%
Leased ABR PSF ($)	$29.97	$30.16	$30.12
Economic Occupancy (Total)	92.9%	93.9%	94.8%
Same‑Store NOI Growth (%)	2.4%	4.2%	5.3%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
EPS (GAAP) per diluted share	FY 2025	$0.68–$0.74	$0.91–$0.96	Raised
FFO per diluted share	FY 2025	$1.17–$1.23	$1.35–$1.40	Raised
FFO/share related to CRE & Corporate	FY 2025	$1.11–$1.16	$1.12–$1.16	Maintained (midpoint)
CRE Same‑Store NOI growth %	FY 2025	2.4%–3.2%	3.4%–3.8%	Raised
Dividend per share	Q3 2025	—	$0.225 declared; payable Oct 7, 2025	Maintained
G&A (qualitative)	FY 2025	Flat to down ~$0.01/share vs 2024 (commentary)	Reiterated	Maintained

Earnings Call Themes & Trends

Topic	Previous (Q4 2024)	Previous (Q1 2025)	Current (Q2 2025)	Trend
Leasing spreads	14.0% overall; retail 15.2%	10.2% overall; retail 11.1%	6.8% overall; retail 7.4%; normalizing without outliers	Moderating but healthy
Occupancy	94.6% leased; retail 95.2%; industrial 95.2%	95.4% leased; industrial 97.3%	95.8% leased; industrial 98.2%	Improving
SNO / pipeline	Build‑to‑suit Maui under way	75‑year ground lease at Maui BP; ~$0.7M ABR expected	SNO ~$5.8M ABR; major components from Maui and Komohana BTS; timing in 12–18 months	Building; phased recognition
Transaction market	—	—	“Market starting to open up” across asset classes; pricing sensitive; acquisitions likely but limited FY25 impact	Constructive
Guidance cadence	Initial FY25 guide set	Raised EPS/FFO ranges modestly	Raised EPS/FFO/SS NOI further; note non‑cash straight‑line ground lease impact in CRE FFO	Positive revisions
Tariffs/inflation on projects	—	—	Forward‑priced steel to mitigate tariffs; watch cost inflation, emphasize execution speed	Managed risk
Cash/Capex & AFFO	—	—	~$20M Sam’s Club TI in Q3; excluded from AFFO per management	One‑off, debated

Management Commentary

CEO: “Our high‑quality portfolio continues to perform well, and as a result, we are raising our guidance…making meaningful progress constructing our build‑to‑suit warehouse on Maui and signing another build‑to‑suit lease on Oahu” .
CFO: “We reported Q2 CRE and corporate‑related FFO per share of $0.29…FFO for the total company was $0.48 per share…we are raising our guidance…we expect lower same‑store NOI growth rate in the third quarter due to strong Q3 results in 2024” .
CFO on straight‑line impact: “Ground lease where we’re taking back improvements…straight‑line rent flows through FFO but doesn’t affect NOI; excluding that, CRE & corporate FFO guidance would be ~$0.01 higher” .
CFO on Sam’s Club TI: “It’s about $20 million…paid in Q3…considered non‑recurring and excluded from AFFO” .
CEO on acquisitions: “Market is starting to open up…we’re seeing opportunities across asset classes…optimistic we’ll place additional capital before year‑end, with limited earnings impact in 2025” .
CEO on tourism/macro: “May visitation +1% and YTD +2.8%; U.S. West up >5%; Japan slightly down; Canada down ~8% in May; domestic makes up the difference” .

Q&A Highlights

Transaction market and capital deployment: pipeline improving; focus on off‑market sourcing and mid‑size deals where A&B’s local platform is differentiated .
Leasing spreads normalization: Q2 spreads lacked prior‑quarter “outliers”; overall deal volume and ABR strong; fundamentals drive spreads more than mark‑to‑market opportunities .
SNO timing: major BTS components (Maui, Komohana) go economic in 2026–2027; broader SNO expected to convert over 12–18 months .
AFFO treatment of large TI: ~$20M Sam’s Club TI excluded from AFFO; analysts questioned recurring nature; management emphasized long‑term lease extension and atypical nature within A&B’s maintenance capex patterns .
Same‑store NOI outlook: temporary deceleration in Q3 due to tough comps (retro rent, tax appeal) in Q3 2024; Q4 more in line with 1H trends .
Leverage and capital allocation: current net debt/adj EBITDA 3.3x (below 5–6x target range); preference to deploy proceeds to growth when attractive .

Estimates Context

Pre‑release Q2 2025 consensus was not available via our dataset; we provide forward consensus for context.

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue ($USD Millions)	$50.69*	$50.76*	$51.29*
Primary EPS ($USD)	$0.15*	$0.13*	$0.165*
FFO / Share (REIT) ($USD)	$0.282*	$0.262*	$0.292*
Revenue – # of Estimates	3*	3*	3*
Primary EPS – # of Estimates	2*	2*	2*

Values retrieved from S&P Global.*

Implications: With FY25 guidance raised and near‑term same‑store NOI moderating in Q3 on comps, Street may lift FY25 FFO/EPS assumptions toward the upper end of the new ranges, while quarterly trajectories could reflect the phasing of SNO and BTS assets .

Key Takeaways for Investors

Guidance raise (EPS, FFO, SS NOI) is the primary positive catalyst; CRE fundamentals and occupancy momentum support the outlook .
Expect quarterly cadence variability: Q3 same‑store NOI deceleration on comps, then re‑acceleration into Q4 per management commentary .
Watch the cash impact of the ~$20M Sam’s Club TI in Q3; although excluded from AFFO, it affects near‑term cash and liquidity sufficiency (still robust at $307.6M) .
Industrial BTS projects add >150K sf of GLA and are pre‑leased; NOI contributions begin in 2026–2027, underpinning medium‑term growth .
Balance sheet flexibility (3.3x net debt/TTM adj EBITDA; mostly fixed‑rate) positions A&B to pursue selective acquisitions as Hawai‘i deal flow improves .
CRE operating profit softness YoY despite occupancy gains suggests some near‑term margin pressure; focus on leasing spreads, expense control, and SG&A trajectory (flat to down vs 2024) .
Dividends maintained at $0.225/share; stability supports income profile while internal growth and portfolio optimization drive NAV over time .

Alexander & Baldwin, Inc. (ALEX)·Q2 2025 Earnings Summary