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 ~~March 31,~~September 30, 2021


☐			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.)

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 ~~March 31,~~September 30, 2021: ~~72,469,682~~

72,529,953

ALEXANDER & BALDWIN, INC.

FORM 10-Q

For the Quarterly Period Ended ~~March 31,~~September 30, 2021

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets - As of ~~March 31,~~September 30, 2021 and December 31, 2020

Condensed Consolidated Statements of Operations - Three and Nine Months Ended ~~March 31,~~September 30, 2021 and 2020

Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and Nine Months Ended ~~March 31,~~September 30, 2021 and 2020

Condensed Consolidated Statements of Cash Flows - ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2021 and 2020

Condensed Consolidated Statements of Equity - Three and Nine Months Ended ~~March 31,~~September 30, 2021 and 2020

Notes to Condensed Consolidated Financial Statements

Item 2.

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

2122

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

3844

Item 4.

Controls and Procedures

3844

PART II. OTHER INFORMATION

Item 1.

Item 1A.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

3945

Item 4.

Mine Safety Disclosures

Item 6.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in millions; unaudited)


		March 31,		December 31,			September 30,		December 31,
		2021		2020			2021		2020
ASSETS	ASSETS					ASSETS
Real estate investments	Real estate investments					Real estate investments
Real estate property	Real estate property	$	1,557.2	$	1,549.7	Real estate property	$	1,569.3	$	1,549.7
Accumulated depreciation	Accumulated depreciation	(161.0)		(154.4)		Accumulated depreciation	(174.4)		(154.4)
Real estate property, net	Real estate property, net	1,396.2		1,395.3		Real estate property, net	1,394.9		1,395.3
Real estate developments	Real estate developments	73.6		75.7		Real estate developments	68.9		75.7
Investments in real estate joint ventures and partnerships	Investments in real estate joint ventures and partnerships	124.0		134.1		Investments in real estate joint ventures and partnerships	109.1		134.1
Real estate intangible assets, net	Real estate intangible assets, net	59.1		61.9		Real estate intangible assets, net	53.9		61.9
Real estate investments, net	Real estate investments, net	1,652.9		1,667.0		Real estate investments, net	1,626.8		1,667.0
Cash and cash equivalents	Cash and cash equivalents	32.0		57.2		Cash and cash equivalents	26.5		57.2
Restricted cash	Restricted cash	0.2		0.2		Restricted cash	0.2		0.2
Accounts receivable and retention, net of allowance for credit losses and allowance for doubtful accounts of $3.3 million and $3.3 million as of March 31, 2021 and December 31, 2020, respectively		33.2		43.5
Accounts receivable and retention, net of allowance for credit losses and allowance for doubtful accounts of $1.9 million and $3.3 million as of September 30, 2021 and December 31, 2020, respectively						Accounts receivable and retention, net of allowance for credit losses and allowance for doubtful accounts of $1.9 million and $3.3 million as of September 30, 2021 and December 31, 2020, respectively	24.4		43.5
Inventories	Inventories	27.2		18.4		Inventories	22.2		18.4
Other property, net	Other property, net	108.7		110.8		Other property, net	108.1		110.8
Operating lease right-of-use assets	Operating lease right-of-use assets	18.2		18.6		Operating lease right-of-use assets	21.2		18.6
Goodwill	Goodwill	10.5		10.5		Goodwill	10.5		10.5
Other receivables, net of allowance for credit losses and allowance for doubtful accounts of $3.6 million and $3.9 million as of March 31, 2021 and December 31, 2020, respectively		13.9		14.2
Other receivables, net of allowance for credit losses and allowance for doubtful accounts of $3.1 million and $3.9 million as of September 30, 2021 and December 31, 2020, respectively						Other receivables, net of allowance for credit losses and allowance for doubtful accounts of $3.1 million and $3.9 million as of September 30, 2021 and December 31, 2020, respectively	18.2		14.2
Prepaid expenses and other assets	Prepaid expenses and other assets	95.1		95.6		Prepaid expenses and other assets	105.4		95.6

Total assets	Total assets	$	1,991.9	$	2,036.0	Total assets	$	1,963.5	$	2,036.0

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Liabilities:	Liabilities:					Liabilities:
Notes payable and other debt	Notes payable and other debt	$	654.6	$	687.1	Notes payable and other debt	$	627.7	$	687.1
Accounts payable	Accounts payable	13.2		9.8		Accounts payable	11.4		9.8
Operating lease liabilities	Operating lease liabilities	18.5		18.4		Operating lease liabilities	21.4		18.4
Accrued pension and post-retirement benefits	Accrued pension and post-retirement benefits	34.9		34.7		Accrued pension and post-retirement benefits	33.5		34.7
Deferred revenue	Deferred revenue	68.7		66.9		Deferred revenue	69.8		66.9
Accrued and other liabilities	Accrued and other liabilities	95.7		116.5		Accrued and other liabilities	99.6		116.5

Total liabilities	Total liabilities	885.6		933.4		Total liabilities	863.4		933.4
Commitments and Contingencies (Note 8)	Commitments and Contingencies (Note 8)	0		0		Commitments and Contingencies (Note 8)	0		0
Redeemable Noncontrolling Interest	Redeemable Noncontrolling Interest	6.5		6.5		Redeemable Noncontrolling Interest	6.8		6.5
Equity:	Equity:					Equity:
Common stock - no par value; authorized, 150.0 million shares; outstanding, 72.5 million and 72.4 million shares at March 31, 2021 and December 31, 2020, respectively		1,806.2		1,805.5
Common stock - no par value; authorized, 150.0 million shares; outstanding, 72.5 million and 72.4 million shares at September 30, 2021 and December 31, 2020, respectively						Common stock - no par value; authorized, 150.0 million shares; outstanding, 72.5 million and 72.4 million shares at September 30, 2021 and December 31, 2020, respectively	1,809.0		1,805.5
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(56.0)		(60.0)		Accumulated other comprehensive income (loss)	(59.7)		(60.0)
Distributions in excess of accumulated earnings	Distributions in excess of accumulated earnings	(650.4)		(649.4)		Distributions in excess of accumulated earnings	(656.0)		(649.4)

Total equity	Total equity	1,099.8		1,096.1		Total equity	1,093.3		1,096.1
Total liabilities and equity	Total liabilities and equity	$	1,991.9	$	2,036.0	Total liabilities and equity	$	1,963.5	$	2,036.0

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Three Months Ended March 31,
2021 2020
Operating Revenue:
Commercial Real Estate $ 39.9 $ 43.4
Land Operations 17.1 11.0
Materials & Construction 24.0 26.4
Total operating revenue 81.0 80.8
Operating Costs and Expenses:
Cost of Commercial Real Estate 23.4 24.3
Cost of Land Operations 8.1 8.0
Cost of Materials & Construction 23.7 25.0
Selling, general and administrative 12.2 13.8
Total operating costs and expenses 67.4 71.1
Gain (loss) on disposal of commercial real estate properties, net 0.2 0.5
Gain (loss) on disposal of non-core assets, net 0.1 0
Total gain (loss) on disposal of assets, net 0.3 0.5
Operating Income (Loss) 13.9 10.2
Other Income and (Expenses):
Income (loss) related to joint ventures 3.4 3.2
Interest and other income (expense), net (Note 2) (0.3) 0.2
Interest expense (7.0) (7.8)
Income (Loss) from Continuing Operations Before Income Taxes 10.0 5.8
Income tax benefit (expense) (0.1) 0
Income (Loss) from Continuing Operations 9.9 5.8
Income (loss) from discontinued operations, net of income taxes 0.0 (0.2)
Net Income (Loss) 9.9 5.6
Loss (income) attributable to noncontrolling interest 0 0.6
Net Income (Loss) Attributable to A&B Shareholders $ 9.9 $ 6.2
Earnings (Loss) Per Share Available to A&B Shareholders:
Basic Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders $ 0.14 $ 0.09
Discontinued operations available to A&B shareholders 0.00 0.00
Net income (loss) available to A&B shareholders $ 0.14 $ 0.09
Diluted Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders $ 0.14 $ 0.09
Discontinued operations available to A&B shareholders 0.00 0.00
Net income (loss) available to A&B shareholders $ 0.14 $ 0.09
Weighted-Average Number of Shares Outstanding:
Basic 72.5 72.3
Diluted 72.6 72.5
Amounts Available to A&B Common Shareholders (Note 15):
Continuing operations available to A&B common shareholders $ 9.9 $ 6.4
Discontinued operations available to A&B common shareholders 0 (0.2)
Net income (loss) available to A&B common shareholders $ 9.9 $ 6.2


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating Revenue:
Commercial Real Estate	$	44.0	$	35.7	$	127.2	$	113.1
Land Operations	5.4		7.4		38.5		27.5
Materials & Construction	34.9		34.7		88.9		91.9
Total operating revenue	84.3		77.8		254.6		232.5
Operating Costs and Expenses:
Cost of Commercial Real Estate	24.1		23.5		71.0		71.8
Cost of Land Operations	4.7		12.9		23.4		23.8
Cost of Materials & Construction	31.8		30.2		84.2		83.4
Selling, general and administrative	12.6		11.7		37.2		34.5

Impairment of assets	—		—		—		5.6
Total operating costs and expenses	73.2		78.3		215.8		219.1
Gain (loss) on disposal of commercial real estate properties, net	—		—		0.2		0.5
Gain (loss) on disposal of non-core assets, net	—		9.0		0.2		9.0
Total gain (loss) on disposal of assets, net	—		9.0		0.4		9.5
Operating Income (Loss)	11.1		8.5		39.2		22.9
Other Income and (Expenses):
Income (loss) related to joint ventures	2.7		2.2		12.2		5.3

Interest and other income (expense), net (Note 2)	(0.2)		(0.4)		(1.0)		(0.6)
Interest expense	(6.5)		(7.1)		(20.2)		(22.7)
Income (Loss) from Continuing Operations Before Income Taxes	7.1		3.2		30.2		4.9
Income tax benefit (expense)	—		—		(0.1)		—
Income (Loss) from Continuing Operations	7.1		3.2		30.1		4.9
Income (loss) from discontinued operations, net of income taxes	(0.6)		—		(0.7)		(0.8)
Net Income (Loss)	6.5		3.2		29.4		4.1
Loss (income) attributable to noncontrolling interest	(0.1)		(0.2)		(0.3)		0.4
Net Income (Loss) Attributable to A&B Shareholders	$	6.4	$	3.0	$	29.1	$	4.5

Earnings (Loss) Per Share Available to A&B Shareholders:
Basic Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders	$	0.10	$	0.04	$	0.41	$	0.07
Discontinued operations available to A&B shareholders	(0.01)		—		(0.01)		(0.01)
Net income (loss) available to A&B shareholders	$	0.09	$	0.04	$	0.40	$	0.06

Diluted Earnings (Loss) Per Share of Common Stock:
Continuing operations available to A&B shareholders	$	0.10	$	0.04	$	0.41	$	0.07
Discontinued operations available to A&B shareholders	(0.01)		—		(0.01)		(0.01)
Net income (loss) available to A&B shareholders	$	0.09	$	0.04	$	0.40	$	0.06

Weighted-Average Number of Shares Outstanding:
Basic	72.5		72.4		72.5		72.3
Diluted	72.7		72.4		72.6		72.4
Amounts Available to A&B Common Shareholders (Note 15):
Continuing operations available to A&B common shareholders	$	6.9	$	3.0	$	29.7	$	5.3
Discontinued operations available to A&B common shareholders	(0.6)		—		(0.7)		(0.8)
Net income (loss) available to A&B common shareholders	$	6.3	$	3.0	$	29.0	$	4.5

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(amounts in millions; unaudited)


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Net Income (Loss)	Net Income (Loss)	$	9.9	$	5.6		Net Income (Loss)	$	6.5	$	3.2	$	29.4	$	4.1
Other Comprehensive Income (Loss), net of tax:	Other Comprehensive Income (Loss), net of tax:						Other Comprehensive Income (Loss), net of tax:
Cash flow hedges:	Cash flow hedges:						Cash flow hedges:
Unrealized interest rate hedging gain (loss)	Unrealized interest rate hedging gain (loss)	3.1		(6.9)			Unrealized interest rate hedging gain (loss)	0.2		(0.1)		1.9		(7.7)
Impact of reclassification adjustment to interest expense included in Net Income (Loss)	Impact of reclassification adjustment to interest expense included in Net Income (Loss)	0.3		0			Impact of reclassification adjustment to interest expense included in Net Income (Loss)	0.4		0.5		1.2		0.6
Employee benefit plans:	Employee benefit plans:						Employee benefit plans:

Actuarial gain (loss)							Actuarial gain (loss)	(4.7)		—		(4.7)		—
Amortization of net loss included in net periodic benefit cost	Amortization of net loss included in net periodic benefit cost	0.6		0.6			Amortization of net loss included in net periodic benefit cost	0.5		0.8		1.9		2.0

Income taxes related to other comprehensive income (loss)	Income taxes related to other comprehensive income (loss)	0		0			Income taxes related to other comprehensive income (loss)	—		—		—		—
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	4.0		(6.3)			Other comprehensive income (loss), net of tax	(3.6)		1.2		0.3		(5.1)
Comprehensive Income (Loss)	Comprehensive Income (Loss)	13.9		(0.7)			Comprehensive Income (Loss)	2.9		4.4		29.7		(1.0)
Comprehensive income (loss) attributable to noncontrolling interest		0		0.6
Comprehensive (income) loss attributable to noncontrolling interest							Comprehensive (income) loss attributable to noncontrolling interest	(0.1)		(0.2)		(0.3)		0.4
Comprehensive Income (Loss) Attributable to A&B Shareholders	Comprehensive Income (Loss) Attributable to A&B Shareholders	$	13.9	$	(0.1)		Comprehensive Income (Loss) Attributable to A&B Shareholders	$	2.8	$	4.2	$	29.4	$	(0.6)

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in millions; unaudited)

Three Months Ended March 31,
2021 2020
Cash Flows from Operating Activities:
Net income (loss) $ 9.9 $ 5.6
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Depreciation and amortization 12.6 13.6
Loss (gain) from disposals and asset transactions, net (0.3) (0.5)
Share-based compensation expense 1.4 1.5
Equity in (income) loss from affiliates, net of operating cash distributions (2.1) (2.9)
Changes in operating assets and liabilities:
Trade, contracts retention, and other contract receivables 5.4 7.0
Inventories (8.8) 0
Prepaid expenses, income tax receivable and other assets (1.0) 2.4
Development/other property inventory 2.2 (3.2)
Accrued pension and post-retirement benefits 0.9 0.6
Accounts payable 0.8 (3.5)
Accrued and other liabilities (0.4) (1.7)
Net cash provided by (used in) operations 20.6 18.9
Cash Flows from Investing Activities:
Capital expenditures for property, plant and equipment (5.2) (6.2)
Proceeds from disposal of assets 0.5 5.9
Payments for purchases of investments in affiliates and other investments (0.6) 0
Distributions of capital from investments in affiliates and other investments 15.7 3.2
Net cash provided by (used in) investing activities 10.4 2.9
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable and other debt 0 108.0
Payments of notes payable and other debt and deferred financing costs (37.7) (44.2)
Borrowings (payments) on line-of-credit agreement, net 4.0 51.4
Cash dividends paid (21.8) (13.8)
Proceeds from issuance (repurchase) of capital stock and other, net (0.7) (0.9)
Net cash provided by (used in) financing activities (56.2) 100.5
Cash, Cash Equivalents and Restricted Cash
Net increase (decrease) in cash, cash equivalents and restricted cash (25.2) 122.3
Balance, beginning of period 57.4 15.4
Balance, end of period $ 32.2 $ 137.7


	Nine Months Ended September 30,
	2021		2020
Cash Flows from Operating Activities:
Net income (loss)	$	29.4	$	4.1
Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:
Depreciation and amortization	37.7		40.5

Loss (gain) from disposals and asset transactions, net	(0.4)		(9.5)
Impairment of assets	—		5.6
Share-based compensation expense	4.4		4.4
Equity in (income) loss from affiliates, net of operating cash distributions	(10.1)		(5.0)
Changes in operating assets and liabilities:
Trade, contracts retention, and other contract receivables	9.5		(2.1)
Inventories	(3.8)		1.2
Prepaid expenses, income tax receivable and other assets	0.3		7.9
Development/other property inventory	0.4		1.4
Accrued pension and post-retirement benefits	(4.0)		2.0
Accounts payable	2.9		(5.2)
Accrued and other liabilities	0.9		(8.1)
Net cash provided by (used in) operations	67.2		37.2

Cash Flows from Investing Activities:

Capital expenditures for property, plant and equipment	(26.1)		(17.7)
Proceeds from disposal of assets	0.6		27.1
Payments for purchases of investments in affiliates and other investments	(0.8)		—
Distributions of capital and other receipts from investments in affiliates and other investments	40.2		11.1
Net cash provided by (used in) investing activities	13.9		20.5

Cash Flows from Financing Activities:
Proceeds from issuance of notes payable and other debt	128.0		173.0
Payments of notes payable and other debt and deferred financing costs	(192.2)		(105.3)
Borrowings (payments) on line-of-credit agreement, net	—		(8.7)

Cash dividends paid	(46.5)		(13.8)
Proceeds from issuance (repurchase) of capital stock and other, net	(1.1)		(1.0)

Net cash provided by (used in) financing activities	(111.8)		44.2

Cash, Cash Equivalents and Restricted Cash
Net increase (decrease) in cash, cash equivalents and restricted cash	(30.7)		101.9
Balance, beginning of period	57.4		15.4
Balance, end of period	$	26.7	$	117.3


Other Cash Flow Information:	Other Cash Flow Information:					Other Cash Flow Information:
Interest paid, net of capitalized interest	Interest paid, net of capitalized interest	$	(6.2)	$	(7.0)	Interest paid, net of capitalized interest	$	(18.4)	$	(15.1)
Income tax (payments)/refunds, net	Income tax (payments)/refunds, net	$	0.1	$	0.5	Income tax (payments)/refunds, net	$	0.4	$	0.5

Noncash Investing and Financing Activities:	Noncash Investing and Financing Activities:					Noncash Investing and Financing Activities:
Capital expenditures included in accounts payable and accrued and other liabilities	Capital expenditures included in accounts payable and accrued and other liabilities	5.5		2.6		Capital expenditures included in accounts payable and accrued and other liabilities	$	1.6	$	2.5

Operating lease liabilities arising from obtaining ROU assets						Operating lease liabilities arising from obtaining ROU assets	$	5.5	$	—
Finance lease liabilities arising from obtaining ROU assets						Finance lease liabilities arising from obtaining ROU assets	$	0.1	$	0.4

Reconciliation of cash, cash equivalents and restricted cash:	Reconciliation of cash, cash equivalents and restricted cash:					Reconciliation of cash, cash equivalents and restricted cash:
Beginning of the period:	Beginning of the period:					Beginning of the period:
Cash and cash equivalents	Cash and cash equivalents	$	57.2	$	15.2	Cash and cash equivalents	$	57.2	$	15.2
Restricted cash	Restricted cash	0.2		0.2		Restricted cash	0.2		0.2
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	57.4	$	15.4	Cash, cash equivalents and restricted cash	$	57.4	$	15.4

End of the period:	End of the period:					End of the period:
Cash and cash equivalents	Cash and cash equivalents	$	32.0	$	131.6	Cash and cash equivalents	$	26.5	$	117.1
Restricted cash	Restricted cash	0.2		6.1		Restricted cash	0.2		0.2
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	32.2	$	137.7	Cash, cash equivalents and restricted cash	$	26.7	$	117.3

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2021 and 2020

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


		Total Equity																							Total Equity
		Common Stock				Accumulated Other Compre- hensive Income (Loss)				(Distribution in Excess of Accumulated Earnings) Earnings Surplus			Non-Controlling Interest				Total			Redeem- able Non- Controlling Interest					Common Stock									Accumulated Other Compre- hensive Income (Loss)			(Distribution in Excess of Accumulated Earnings) Earnings Surplus			Non-Controlling Interest				Total				Redeem- able Non- Controlling Interest

					Shares							Stated Value																Shares				Stated Value
Balance, January 1, 2020	Balance, January 1, 2020	72.3	$	1,800.1				$	(48.8)						$	(626.2)						$	3.6			$	1,128.7			$	6.3		Balance, January 1, 2020			72.3						$	1,800.1			$	(48.8)			$	(626.2)	$	3.6	$	1,128.7	$	6.3
Cumulative impact of adoption of ASC 326	Cumulative impact of adoption of ASC 326	—	—			—				(4.0)			(0.1)						(4.1)			—		Cumulative impact of adoption of ASC 326				—				—				—			(4.0)			(0.1)				(4.1)				—
Net income (loss)	Net income (loss)	—	—			—				6.2			(0.5)				5.7			(0.1)		Net income (loss)			—				—					—			4.5			(0.5)				4.0				0.1
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—	—			(6.3)				—			—				(6.3)			—		Other comprehensive income (loss), net of tax			—				—					(5.1)			—			—				(5.1)				—
Dividend on common stock ($0.19 per share)	Dividend on common stock ($0.19 per share)	—	—			—				(13.8)			—				(13.8)			—		Dividend on common stock ($0.19 per share)			—				—					—			(13.8)			—				(13.8)				—

Disposal of M&C subsidiary																						Disposal of M&C subsidiary			—				—					—			—			(3.0)				(3.0)				—

Share-based compensation	Share-based compensation	—	1.5			—				—			—				1.5			—		Share-based compensation			—				4.4					—			—			—				4.4				—
Shares issued or repurchased, net	Shares issued or repurchased, net	0	0			—				(0.9)			—				(0.9)			—		Shares issued or repurchased, net			0.1				—					—			(0.9)			—				(0.9)				—
Balance, March 31, 2020		72.3	$	1,801.6		$	(55.1)			$	(638.7)		$	3.0			$	1,110.8		$	6.2
Balance, September 30, 2020																						Balance, September 30, 2020			72.4				$	1,804.5				$	(53.9)		$	(640.4)		$	—			$	1,110.2			$	6.4

		Total Equity																							Total Equity
		Common Stock				Accumulated Other Compre- hensive Income (Loss)				(Distribution in Excess of Accumulated Earnings) Earnings Surplus			Non-Controlling Interest				Total			Redeem- able Non- Controlling Interest					Common Stock									Accumulated Other Compre- hensive Income (Loss)			(Distribution in Excess of Accumulated Earnings) Earnings Surplus			Non-Controlling Interest				Total				Redeem- able Non- Controlling Interest

					Shares							Stated Value																Shares				Stated Value
Balance, January 1, 2021	Balance, January 1, 2021	72.4	$	1,805.5				$	(60.0)						$	(649.4)						$	0			$	1,096.1			$	6.5		Balance, January 1, 2021			72.4						$	1,805.5			$	(60.0)			$	(649.4)	$	—	$	1,096.1	$	6.5

Net income (loss)	Net income (loss)	—	—			—				9.9			0						9.9			0		Net income (loss)				—				—				—			29.1			—				29.1				0.3
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—	—			4.0				—			—				4.0			—		Other comprehensive income (loss), net of tax			—				—					0.3			—			—				0.3				—
Dividend on common stock ($0.15 per share)		—	—			—				(10.9)			—				(10.9)			—
Dividend on common stock ($0.49 per share)																						Dividend on common stock ($0.49 per share)			—				—					—			(35.7)			—				(35.7)				—

Share-based compensation	Share-based compensation	—	1.4			—				—			—				1.4			—		Share-based compensation			—				4.4					—			—			—				4.4				—
Shares issued or repurchased, net	Shares issued or repurchased, net	0.1	(0.7)			—				0			—				(0.7)			—		Shares issued or repurchased, net			0.1				(0.9)					—			—			—				(0.9)				—
Balance, March 31, 2021		72.5	$	1,806.2		$	(56.0)			$	(650.4)		$	0			$	1,099.8		$	6.5
Balance, September 30, 2021																						Balance, September 30, 2021			72.5				$	1,809.0				$	(59.7)		$	(656.0)		$	—			$	1,093.3			$	6.8

See Notes to Condensed Consolidated Financial Statements

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended September 30, 2021 and 2020

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


	Total Equity
	Common Stock			Accumulated Other Compre- hensive Income (Loss)		(Distribution in Excess of Accumulated Earnings) Earnings Surplus		Non-Controlling Interest		Total		Redeem- able Non- Controlling Interest

	Shares	Stated Value
Balance, July 1, 2020	72.3	$	1,803.1	$	(55.1)	$	(643.4)	$	—	$	1,104.6	$	6.2
Net income (loss)	—	—		—		3.0		—		3.0		0.2
Other comprehensive income (loss), net of tax	—	—		1.2		—		—		1.2		—



Share-based compensation	—	1.4		—		—		—		1.4		—
Shares issued or repurchased, net	0.1	—		—		—		—		—		—
Balance, September 30, 2020	72.4	$	1,804.5	$	(53.9)	$	(640.4)	$	—	$	1,110.2	$	6.4

	Total Equity
	Common Stock			Accumulated Other Compre- hensive Income (Loss)		(Distribution in Excess of Accumulated Earnings) Earnings Surplus		Non-Controlling Interest		Total		Redeem- able Non- Controlling Interest

	Shares	Stated Value
Balance, July 1, 2021	72.5	$	1,807.5	$	(56.1)	$	(649.2)	$	—	$	1,102.2	$	6.7

Net income (loss)	—	—		—		6.4		—		6.4		0.1
Other comprehensive income (loss), net of tax	—	—		(3.6)		—		—		(3.6)		—
Dividend on common stock ($0.18 per share)	—	—		—		(13.2)		—		(13.2)		—



Share-based compensation	—	1.6		—		—		—		1.6		—
Shares issued or repurchased, net	—	(0.1)		—		—		—		(0.1)		—
Balance, September 30, 2021	72.5	$	1,809.0	$	(59.7)	$	(656.0)	$	—	$	1,093.3	$	6.8

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 real estate investment trust ("REIT") headquartered in Honolulu, Hawai‘i. The Company operates in 3 segments: Commercial Real Estate ("CRE"); Land Operations; and Materials & Construction ("M&C"). As of ~~March 31,~~September 30, 2021, the Company owns a portfolio of commercial real estate improved properties in Hawai‘i consisting of 22 retail centers, 10 industrial assets and 4 office properties, representing a total of 3.9 million square feet of gross leasable area, as well as a portfolio of ground leases in Hawai‘i representing ~~152.0~~146.0 acres. 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, 2020 and 2019, and the related consolidated statements of operations, comprehensive income (loss), cash flows and equity for each of the three years ended December 31, 2020, 2019 and 2018, respectively, and the notes thereto included in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2020 ("2020 Form 10-K"), and other subsequent filings with the U.S. Securities and Exchange Commission ("SEC").

Segment Reclassifications: ~~Certain amounts presented~~The Company continually monitors its reportable segments for changes in facts and circumstances to determine whether changes in the ~~prior periods~~identification or aggregation of operating segments are necessary. In the first quarter of 2021, the Company updated its reportable segments. Consequently, the segment disclosures in this filing have been ~~reclassified~~recast to reflect these changes and therefore differ from prior year quarterly filings to conform to the current year presentation ~~due to a change in reportable segments in the current period~~ resulting from athe reorganization of a component of the Company historically included in the results of Land Operations that will now be included in the results of Materials & Construction. Refer to Note 18 for additional information.

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

2. SUMMARY OF 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 2020 Form 10-K. There have not been any changes to the Company's significant accounting policies as described in the Company's 2020 Form 10-K.

Recently issued accounting pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-04, Reference Rate Reform, establishing ASC Topic 848, and amended the standard thereafter ("ASC 848"). ASC 848 provides optional practical expedients and exceptions related to the impacts of reference rate reform that affect certain debt, leases, derivatives and other contracts if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. Reference rate reform has not had a material impact on any of the Company's existing contracts. Therefore, the Company has not elected to apply any of the optional practical expedients and exceptions under ASC 848 as of the current date. The Company will assess future changes in its contracts and the impact of electing to apply the optional practical expedients and exceptions provided by ASC 848 as they occur, but ~~does not expect~~expects their application will not have a material effect on its financial position or results of operations.

Interest and other income (expense), net

Interest and other income (expense), net for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 included the following (in millions):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Interest income	Interest income	$	0.3	$	0.6		Interest income	$	0.2	$	0.2	$	0.8	$	1.0
Pension and postretirement benefit (expense)	Pension and postretirement benefit (expense)	(0.6)		(0.7)			Pension and postretirement benefit (expense)	(0.7)		(0.6)		(2.1)		(1.9)

Other income (expense), net	Other income (expense), net	0		0.3			Other income (expense), net	0.3		—		0.3		0.3
Interest and other income (expense), net	Interest and other income (expense), net	$	(0.3)	$	0.2		Interest and other income (expense), net	$	(0.2)	$	(0.4)	$	(1.0)	$	(0.6)

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 nine months ended ~~March 31,~~September 30, 2021 and 2020 is as follows (in millions):

Three Months Ended March 31,
2021 2020
Revenues $ 69.9 $ 52.0
Operating costs and expenses 63.0 39.9
Gross Profit (Loss) $ 6.9 $ 12.1
Income (Loss) from Continuing Operations1
$ 3.9 $ 7.6
Net Income (Loss)1
$ 3.7 $ 7.6
1 Includes earnings from equity method investments held by the investee.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	60.6	$	43.3	$	188.9	$	133.6
Operating costs and expenses	58.3		36.9		167.2		110.9
Gross Profit (Loss)	$	2.3	$	6.4	$	21.7	$	22.7
Income (Loss) from Continuing Operations1	$	1.0	$	6.0	$	10.0	$	14.0
Net Income (Loss)1	$	(0.5)	$	5.7	$	9.1	$	13.5

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

4. INVENTORIES

Inventories are stated at the lower of cost (principally first-in, first-out basis) or net realizable value. Inventories as of ~~March 31,~~September 30, 2021 and December 31, 2020 were as follows (in millions):


	September 30,		December 31,
	2021		2020
Asphalt	$	7.1	$	4.2
Processed rock and sand	8.0		7.9
Work in progress	3.6		3.2
Retail merchandise	2.1		2.1
Parts, materials and supplies inventories	1.4		1.0
Total	$	22.2	$	18.4

March 31, December 31,
2021 2020
Asphalt $ 12.1 $ 4.2
Processed rock and sand 8.4 7.9
Work in progress 3.6 3.2
Retail merchandise 2.1 2.1
Parts, materials and supplies inventories 1.0 1.0
Total $ 27.2 $ 18.4

5. FAIR VALUE MEASUREMENTS

The fair value of the Company's cash and cash equivalents, accounts receivable, net and short-term borrowings approximate their carrying values due to the short-term nature of the instruments.

The fair value of the Company's notes receivable approximates the carrying amount of ~~$9.5~~$14.1 million as of ~~March 31,~~September 30, 2021. The fair value and carrying amount of these notes was $11.5 million at December 31, 2020. 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 classified as a Level 3 measurement in the fair value hierarchy.

At ~~March 31,~~September 30, 2021, the carrying amount of the Company's notes payable and other debt was ~~$654.6~~$627.7 million and the corresponding fair value was ~~$677.4~~$644.9 million. At December 31, 2020, the carrying amount of the Company's notes payable and other debt was $687.1 million, and the corresponding fair value was $704.1 million. The fair value of debt is calculated by discounting the future cash flows of the debt at market rates ~~based on~~for instruments with similar risk, terms and maturities as compared to the Company's existing debt arrangements ~~(Level 3).~~and classified as a Level 3 measurement in the fair value hierarchy.

The Company records its interest rate swaps at fair value. The fair values of the Company's interest rate swaps ~~(Level 2 measurements)~~ 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 7 for fair value information regarding the Company's derivative instruments). The fair values of the Company's interest rate swaps are classified as a Level 2 measurement in the fair value hierarchy.

6. NOTES PAYABLE AND OTHER DEBT

At ~~March 31,~~September 30, 2021 and December 31, 2020, notes payable and total debt consisted of the following (dollars in millions):


	Interest Rate (%)	Maturity Date	Principal Outstanding
			September 30, 2021		December 31, 2020
Secured:
Kailua Town Center	(1)	2021	$	—	$	9.8
Kailua Town Center #2	3.15%	2021	—		4.5
Heavy Equipment Financing	(2)	(2)	2.2		3.2
Laulani Village	3.93%	2024	60.5		61.3
Pearl Highlands	4.15%	2024	80.0		81.4
Manoa Marketplace	(3)	2029	56.6		57.9
Subtotal			$	199.3	$	218.1
Unsecured:

Bank syndicated loan	(4)	2021	$	—	$	50.0
Series A Note	5.53%	2024	21.3		28.4
Series J Note	4.66%	2025	10.0		10.0
Series B Note	5.55%	2026	45.0		46.0
Series C Note	5.56%	2026	13.0		22.0
Series F Note	4.35%	2026	15.2		19.7
Series H Note	4.04%	2026	50.0		50.0
Series K Note	4.81%	2027	34.5		34.5
Series G Note	3.88%	2027	29.6		29.6
Series L Note	4.89%	2028	18.0		18.0
Series I Note	4.16%	2028	25.0		25.0
Term Loan 5	4.30%	2029	25.0		25.0
Subtotal			$	286.6	$	358.2
Revolving Credit Facilities:
GLP Asphalt revolving credit facility	(5)	2022	$	—	$	—
A&B Revolver	(6)	2025	142.0		111.0
Subtotal			$	142.0	$	111.0
Total debt (contractual)			$	627.9	$	687.3
Unamortized debt premium (discount)			(0.2)		(0.2)
Total debt (carrying value)			$	627.7	$	687.1

(1) Loan had a stated interest rate of LIBOR plus 1.50%, but was swapped through maturity to a 5.95% fixed rate. Loan was repaid in full in September 2021.
(2) Loans have a weighted average stated interest rate of approximately 2.87% and stated maturity dates ranging from 2021 to 2024.
(3) Loan has a stated interest rate of LIBOR plus 1.35%, but is swapped through maturity to a 3.14% fixed rate.
(4) Loan had a stated interest rate of LIBOR plus 1.80%, based on a pricing grid, and its LIBOR component was swapped through maturity. Loan was repaid in full in August 2021.
(5) Loan has a stated interest rate of LIBOR plus 1.25%.
(6) Loan has a stated interest rate of LIBOR plus 1.05% based on a pricing grid. $50.0 million is swapped through February 2023 to a 2.40% fixed rate.

Interest Rate (%) Maturity Date Principal Outstanding
March 31, 2021 December 31, 2020
Secured:
Kailua Town Center (1) 2021 $ 9.7 $ 9.8
Kailua Town Center #2 3.15% 2021 4.4 4.5
Heavy Equipment Financing (2) (2) 2.8 3.2
Laulani Village 3.93% 2024 61.1 61.3
Pearl Highlands 4.15% 2024 80.9 81.4
Manoa Marketplace (3) 2029 57.5 57.9
Subtotal $ 216.4 $ 218.1
Unsecured:
Bank syndicated loan (4) 2023 $ 50.0 $ 50.0
Series A Note 5.53% 2024 28.4 28.4
Series J Note 4.66% 2025 10.0 10.0
Series B Note 5.55% 2026 45.0 46.0
Series C Note 5.56% 2026 22.0 22.0
Series F Note 4.35% 2026 19.7 19.7
Series H Note 4.04% 2026 50.0 50.0
Series K Note 4.81% 2027 34.5 34.5
Series G Note 3.88% 2027 29.6 29.6
Series L Note 4.89% 2028 18.0 18.0
Series I Note 4.16% 2028 25.0 25.0
Term Loan 5 4.30% 2029 25.0 25.0
Subtotal $ 357.2 $ 358.2
Revolving Credit Facilities:
GLP Asphalt revolving credit facility (5) 2021 $ 1.2 $ 0
A&B Revolver (6) 2022 80.0 111.0
Subtotal $ 81.2 $ 111.0
Total Debt (contractual) $ 654.8 $ 687.3
Unamortized debt premium (discount) (0.2) (0.2)
Total debt (carrying value) $ 654.6 $ 687.1
(1) Loan has a stated interest rate of LIBOR plus 1.50%, but is swapped through maturity to a 5.95% fixed rate.
(2) Loans have a weighted average stated interest rate of approximately 3.0% and stated maturity dates ranging from 2021 to 2024.
(3) Loan has a stated interest rate of LIBOR plus 1.35%, but is swapped through maturity to a 3.14% fixed rate.
(4) Loan has a stated interest rate of LIBOR plus 1.80%, based on a pricing grid, and its LIBOR component is swapped through maturity (total rate currently at 3.15% based on the spread calculated by the pricing grid).
(5) Loan has a stated interest rate of LIBOR plus 1.25%.
(6) Loan has a stated interest rate of LIBOR plus 1.85% based on a pricing grid.

On August 31, 2021, the Company entered into a Third Amended and Restated Credit Agreement ("A&B Revolver") with Bank of America N.A, as administrative agent, First Hawaiian Bank, KeyBank National Association, Wells Fargo Bank, National Association, and other lenders party thereto, which amended and restated the existing $450.0 million committed revolving credit facility ("Revolving Credit Facility"). The A&B Revolver increased the total revolving commitments to $500.0 million, extended the term of the facilities to August 2025, and includes 2 six-month extension options. In addition, the A&B Revolver amended certain covenants and reduced the interest rates and fees charged under the financials-based pricing grid of the Revolving Credit Facility.

On August 31, 2021, concurrent with the closing of the A&B Revolver, the Company drew $50.0 million on the A&B Revolver and repaid the Bank Syndicated Loan in full, plus accrued interest, and satisfied all obligations thereto. The LIBOR component of this loan was swapped through maturity under a designated hedging relationship. The Company has committed to maintaining a $50.0 million draw on the A&B Revolver until February 27, 2023, the maturity date of the interest rate swap, in order to maintain an effective hedging relationship.

On August 31, 2021, the Company also entered into separate agreements with Prudential Investment Management, Inc. and AIG Asset Management to amend certain covenants related to the Prudential Private Shelf Facility and AIG Private Shelf Facility, respectively. All other terms of these agreements remain substantially unchanged.

7. DERIVATIVE INSTRUMENTS

The Company is exposed to interest rate risk related to its variable-rate interest debt. The Company balances its cost of debt and exposure to interest rates primarily through its mix of fixed-rate and variable-rate 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

The Company has 2 interest rate swap agreements designated as cash flow hedges whose key terms are as follows (dollars in millions):


Effective	Effective	Maturity	Fixed Interest	Notional Amount at		Asset (Liability) Fair Value at				Classification on	Effective	Maturity	Fixed Interest	Notional Amount at		Asset (Liability) Fair Value at				Classification on
Date	Date	Date	Rate	March 31, 2021		March 31, 2021		December 31, 2020		Balance Sheet	Date	Date	Rate	September 30, 2021		September 30, 2021		December 31, 2020		Balance Sheet
4/7/2016	4/7/2016	8/1/2029	3.14%	$	57.5	$	(1.6)	$	(4.8)	Accrued and other liabilities	4/7/2016	8/1/2029	3.14%	$	56.6	$	(2.2)	$	(4.8)	Accrued and other liabilities
2/13/2020	2/13/2020	2/27/2023	3.15%	$	50.0	$	(1.1)	$	(1.3)	Accrued and other liabilities	2/13/2020	2/27/2023	3.15%	$	50.0	$	(0.8)	$	(1.3)	Accrued and other liabilities

Liabilities related to the interest rate swap are presented within Accrued and other liabilities, and assets are presented within Prepaid expenses and other assets in the condensed consolidated balance ~~sheets.~~sheets, as applicable. The changes in fair value of the cash flow ~~hedge~~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.

The following table represents the pre-tax effect of the derivative instruments in the Company's condensed consolidated statement of comprehensive income (loss) during the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 (in millions):


							Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020			2021		2020		2021		2020
Derivatives in Designated Cash Flow Hedging Relationships:	Derivatives in Designated Cash Flow Hedging Relationships:					Derivatives in Designated Cash Flow Hedging Relationships:
Amount of gain (loss) recognized in OCI on derivatives	Amount of gain (loss) recognized in OCI on derivatives	$	3.1	$	(6.9)	Amount of gain (loss) recognized in OCI on derivatives	$	0.2	$	(0.1)	$	1.9	$	(7.7)
Impact of reclassification adjustment to interest expense included in Net Income (Loss)	Impact of reclassification adjustment to interest expense included in Net Income (Loss)	$	0.3	$	0	Impact of reclassification adjustment to interest expense included in Net Income (Loss)	$	0.4	$	0.5	$	1.2	$	0.6

As of ~~March 31,~~September 30, 2021, the Company expects to reclassify ~~$1.5~~$1.6 million of net gains (losses) on derivative instruments from accumulated other comprehensive income to earnings during the next 12 months.

Non-designated Hedges

~~As of March 31, 2021, the Company has 1~~The Company's single interest rate swap that ~~has~~was not ~~been~~ designated as a cash flow hedge ~~whose key~~matured on September 1, 2021. Key terms ~~are~~were as follows (dollars in millions):

Effective

Maturity

Fixed Interest

Notional Amount at

Asset (Liability) Fair Value at

Classification on

Effective

Maturity

Fixed Interest

Notional Amount at

Asset (Liability) Fair Value at

Classification on

Date

Rate

March 31, 2021

December 31, 2020

Balance Sheet

Date

Rate

September 30, 2021

December 31, 2020

Balance Sheet

1/1/2014

9/1/2021

5.95%

9.7

(0.2)

(0.3)

Accrued and other liabilities

1/1/2014

9/1/2021

5.95%

—

(0.3)

Accrued and other liabilities

The Company records gains or losses related to interest rate swaps that have not been designated as cash flow hedges in Interest and other income (expense), net in its condensed consolidated statements of operations. ~~The~~During the three and nine months ended September 30, 2021, the Company recognized a gain of $0.1 million ~~in the three months ended March 31, 2021~~ and ~~a loss of $0.1~~$0.3 million, ~~in the three months ended March 31, 2020~~respectively, related to changes in fair value. During the three and nine months ended September 30, 2020, the Company recognized a gain of $0.1 million and $0.1 million, respectively.

The Company measures all of its interest rate swaps at fair value. The fair values of the Company's interest rate swaps ~~(Level 2)~~ 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. The fair values of the Company's interest rate swaps are classified as a Level 2 measurement in the fair value hierarchy.

8. COMMITMENTS AND CONTINGENCIES

Commitments and other financial arrangements

The Company has various financial commitments and other arrangements including standby letters of credit and bonds that are not recorded as liabilities on the Company's condensed consolidated balance sheet as of ~~March 31,~~September 30, 2021:

•Standby letters of credit issued by the Company's lenders under the Company's revolving credit facilities totaled $1.1 million as of ~~March 31,~~September 30, 2021. These letters of credit primarily relate to the Company's workers' compensation plans and construction activities; if drawn upon, the Company would be obligated to reimburse the issuer.

•Bonds related to the Company's construction and real estate activities totaled ~~$250.7~~$275.2 million as of ~~March 31,~~September 30, 2021. Approximately ~~$231.4~~$255.9 million represents the face value of construction bonds issued by third party sureties (bid, performance and payment bonds), and the remainder is related to 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. As of ~~March 31,~~September 30, 2021, the Company's maximum remaining exposure, in the event of defaults on all existing contractual construction obligations, was approximately ~~$46.5~~$82.2 million.

The Company also provides certain bond indemnities and guarantees of indebtedness for certain of its unconsolidated affiliates that it accounts for as equity method investments (e.g., real estate joint ventures).

•Bond indemnities are provided for the benefit of the surety in exchange for the issuance of surety bonds and cover joint venture construction activities (such as project amenities, roads, utilities, and other infrastructure). Under such bond indemnities, the Company and the joint venture partners agree to indemnify the surety bond issuer from all losses and expenses arising from the failure of the joint venture to complete the specified bonded construction; the Company may be obligated to complete construction of the joint ventures' construction projects if the joint venture does not perform. The maximum potential amount of aggregate future payments is a function of the amount covered by outstanding bonds at the time of default by the joint venture, reduced by the amount of work completed to date.

•Guarantees of indebtedness may be provided by the Company for the benefit of financial institutions providing credit to unconsolidated equity method investees. As of ~~March 31,~~September 30, 2021, the Company had ~~one~~1 arrangement with third party lenders that provided for a limited guarantee on any outstanding amounts related to an unconsolidated equity method investee's line of credit; related to borrowings on such line of credit by the equity method investee, there was ~~NaN~~none outstanding as of ~~March 31,~~September 30, 2021.

The recorded amounts of the bond indemnities and guarantee of indebtedness were not material individually or in the aggregate. Other than those described above, obligations of the Company's joint ventures do not have recourse to the Company, and the Company's "at-risk" amounts are limited to its investment.

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 also held 4 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 4 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. NaN 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 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 3 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. No decision has yet been rendered by the Supreme Court of Hawai‘i.

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 4 East Maui water revocable permits for another one-year period through December 31, 2020; on November 13, 2020, the BLNR considered and approved a renewal of the ~~four~~4 revocable permits for an additional year, through December 31, 2021.

On December 7, 2018, a contested case request filed by the Sierra Club (regarding the BLNR's November 2018 approval of the 2019 revocable permits) was denied by the BLNR. On January 7, 2019, Sierra Club filed a lawsuit in the circuit court of the first circuit in Hawai‘i against BLNR, A&B and EMI, seeking to invalidate the 2019 ~~extension~~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. The time to appeal has not yet run. The court is separately considering ~~but has not yet ruled upon,~~ a lawsuit filed by the Sierra Club appealing the BLNR’s decision to deny them a contested case hearing on the 2021 revocable ~~permits.~~permits, which were granted by the BLNR on or about November 13, 2020. On May 28, 2021, the court issued an interim decision that the Sierra Club’s due process rights were violated and ordered the BLNR to hold a contested case hearing on the 2021 permits, and that the permits should 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 BLNR is moving to hold the 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.

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, the outcomes of which, in the opinion of management after consultation with counsel, 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.

9. REVENUE AND CONTRACT BALANCES

The Company generates revenue through its Commercial Real Estate, Land Operations and Materials & Construction 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 10 for further discussion of lessor income recognition. The Land Operations and Materials & Construction segments generate 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 nine months ended ~~March 31,~~September 30, 2021 and 2020 was as follows (in millions):

Three Months Ended March 31,
2021 2020
Revenues:
     Commercial Real Estate $ 39.9 $ 43.4
     Land Operations:
Development sales revenue 0 3.6
Unimproved/other property sales revenue 11.3 2.1
Other operating revenue 5.8 5.3
Land Operations1
17.1 11.0
     Materials & Construction1
24.0 26.4
Total revenues $ 81.0 $ 80.8
1As described elsewhere in this Form 10-Q, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
Commercial Real Estate	$	44.0	$	35.7	$	127.2	$	113.1
Land Operations:
Development sales revenue	—		2.0		11.2		7.9
Unimproved/other property sales revenue	0.6		—		11.9		3.7
Other operating revenue	4.8		5.4		15.4		15.9
Land Operations1	5.4		7.4		38.5		27.5
Materials & Construction1	34.9		34.7		88.9		91.9
Total revenues	$	84.3	$	77.8	$	254.6	$	232.5

1As described elsewhere in this Form 10-Q, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.

Timing of revenue recognition may differ from the timing of invoicing to customers. Certain construction contracts include retainage provisions that are customary in the industry (i.e., are not for financing purposes) and are included in Accounts receivable and contracts retention, net. The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance of the project work or products by the customers. Within Prepaid expenses and other assets, the Company records assets for "costs and estimated earnings in excess of billings on uncompleted contracts" which represent amounts earned and reimbursable under contracts, but have a conditional right for billing and payment, such as achievement of milestones or completion of the project. When events or conditions indicate that it is probable that the amounts outstanding become unbillable, the transaction price and associated contract asset is reduced. Within Accrued and other liabilities, the Company records liabilities for "billings in excess of costs and estimated earnings on uncompleted contracts" which represent billings to customers on contracts in advance of work performed, including advance payments negotiated as a contract condition. Generally, unearned project-related costs will be earned over the next twelve months.

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in millions):

March 31, 2021 December 31, 2020
Accounts receivable $ 30.7 $ 39.5
Contracts retention 5.8 7.3
Allowances (credit losses and doubtful accounts) (3.3) (3.3)
Accounts receivable and retention, net $ 33.2 $ 43.5
Costs and estimated earnings in excess of billings on uncompleted contracts $ 4.0 $ 2.3
Billings in excess of costs and estimated earnings on uncompleted contracts $ 5.4 $ 8.5
Variable consideration1
$ 62.0 $ 62.0
Other deferred revenue $ 6.7 $ 4.9
1Variable 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.


	September 30, 2021		December 31, 2020
Accounts receivable	$	21.4	$	39.5
Contracts retention	4.9		7.3
Allowances (credit losses and doubtful accounts)	(1.9)		(3.3)
Accounts receivable and retention, net of allowance for credit losses and allowance for doubtful accounts	$	24.4	$	43.5
Costs and estimated earnings in excess of billings on uncompleted contracts	$	8.4	$	2.3
Billings in excess of costs and estimated earnings on uncompleted contracts	$	5.2	$	8.5
Variable consideration1	$	62.0	$	62.0
Other deferred revenue	$	7.8	$	4.9

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 nine months ended ~~March 31,~~September 30, 2021, the Company recognized revenue of approximately ~~$5.5~~$0.7 million and $7.2 million, respectively, related to the Company's contract liabilities reported as of January 1, 2021. For the three and nine months ended ~~March 31,~~September 30, 2020, the Company recognized revenue of approximately ~~$4.5~~$1.2 million and $7.2 million, respectively, related to the Company's contract liabilities reported as of January 1, 2020.

Regarding other information related to the Company's contracts with customers, the amount of revenue recognized from performance obligations satisfied in prior periods (e.g., due to changes in transaction price) was not material in any of the periods presented. Further, the total amount of the transaction price allocated to either wholly unsatisfied or partially satisfied performance obligations was ~~$123.5~~$156.5 million and $120.8 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. Of the amount presented as of ~~March 31,~~September 30, 2021, the Company expects to recognize as revenue approximately ~~45%~~55% - ~~50%~~60% of the

remaining contract consideration allocated to either wholly unsatisfied or partially satisfied performance obligations over the next twelve months, with the remaining recognized thereafter.

10. LEASES - THE COMPANY AS LESSOR

The Company leases land and buildings to third parties under operating leases. Such activity is primarily composed of operating leases within its CRE segment.

Under various circumstances and on a case-by-case basis, the Company may offer certain of its tenants rent relief arrangements (for example, those offered during the year ended December 31, 2020 and in the current period due to the continuing impacts of the coronavirus pandemic that was first reported in Wuhan, China, in December 2019, henceforth, "COVID-19") in the form of rent deferrals or other relief modifications that result in changes to fixed contractual lease payments for specified ~~months.~~months and arrangements could continue based upon COVID-19 developments. Such other relief modifications may include changing the nature of payments from fixed to variable (i.e., variable based on a percentage of the tenant's sales, typically subject to a minimum "floor" amount) or, in some cases, payment forgiveness. Consistent with lease accounting guidance and interpretations provided by the FASB for rent relief arrangements specifically related to COVID-19, the Company elected to treat such eligible lease concessions (i.e., such rent deferrals, fixed-to-variable modifications or payment forgiveness arrangements that do not result in a substantial increase in the rights of the lessor or obligations of the lessee) outside of the lease accounting modification framework.

For such eligible rent deferrals, the Company accounts for the event as if no changes to the lease contract were made and continues to record lease receivables and recognize income during the deferral period. For the eligible other relief modifications mentioned above that resulted in reductions to fixed contractual lease payments the Company reports, for periods covered by the modification, reduced rental income (i.e., revenue) equal to the agreed-upon amounts (offset by any variable lease payments).

The Company continues to assess collectability on all such amounts due under leases and only recognizes revenue to the extent such amounts are probable of collection (or payment is received). The following table provides information about reductions in revenue for other relief modifications and other adjustments, CRE accounts receivable and unbilled straight-line lease receivables for which the Company assessed that the tenant's future payment of amounts due under leases was not probable (i.e., those due to general circumstances or those primarily due to COVID-19), as well as reductions (or increases) of revenue related to the allowance for doubtful accounts for other impacted operating lease receivables during the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 (in millions):

Three Months Ended March 31,
2021 2020
Impact to billed accounts receivable $ 1.3 $ 0.7
Impact to straight-line lease receivables 0.3 (0.1)
Total revenue reductions (increases) - tenant collectability assessments $ 1.6 $ 0.6
Provision for allowance for doubtful accounts1
0.2 (0.1)
Total revenue reductions (increases) $ 1.8 $ 0.5
1 Related to other impacted operating lease receivables.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Tenant collectability assessments and allowances for doubtful accounts
Impact to billed accounts receivable	$	0.1	$	4.0	$	0.2	$	8.4
Impact to straight-line lease receivables	—		1.6		0.2		3.8
Total revenue reductions (increases) - tenant collectability assessments	$	0.1	$	5.6	$	0.4	$	12.2
Provision for allowance for doubtful accounts1	(0.2)		0.7		(1.2)		3.4
Total revenue reductions (increases) - tenant collectability assessments and allowance for doubtful accounts	$	(0.1)	$	6.3	$	(0.8)	$	15.6

Other relief modifications and other adjustments2	$	0.5	$	2.7	$	5.9	$	3.5
Total revenue reductions (increases) related to adjustments, assessments and provisions	$	0.4	$	9.0	$	5.1	$	19.1

Total revenue reductions (increases) impacting billed accounts receivable only3	$	0.4	$	7.4	$	4.9	$	15.3
1 Related to other impacted operating lease receivables.
2 Primarily related to COVID-19, but may include other adjustments (e.g., adjustments due to tenant bankruptcies).
3 Excludes the impact to unbilled straight-line lease receivables.

As a result of COVID-19, certain tenants experiencing economic difficulties have sought and may continue to seek current and future rent relief, which may be provided in the form of additional rent deferrals or other relief modifications, among other possible agreements. The Company is evaluating each request on a case-by-case basis and will apply lease accounting guidance (including the interpretations specifically related to COVID-19) consistently to leases with similar characteristics and similar circumstances. The future impact of any potential rent concessions in the context of lease accounting guidance and related interpretations is dependent upon the extent of relief granted to tenants as a result of COVID-19 in future periods and the elections made by the Company at the time of entering into such agreements.

The historical cost of, and accumulated depreciation on, leased property as of ~~March 31,~~September 30, 2021 and December 31, 2020 were as follows (in millions):

March 31, 2021 December 31, 2020
Leased property - real estate $ 1,532.5 $ 1,525.3
Less: Accumulated depreciation (162.4) (152.2)
Property under operating leases, net $ 1,370.1 $ 1,373.1


	September 30, 2021		December 31, 2020
Leased property - real estate	$	1,542.1	$	1,525.3
Less: Accumulated depreciation	(176.0)		(152.2)
Property under operating leases, net	$	1,366.1	$	1,373.1

Total rental income (i.e., revenue) under these operating leases during the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 relating to lease payments and variable lease payments were as follows (in millions):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Lease payments	Lease payments	$	29.6	$	30.2		Lease payments	$	30.7	$	23.0	$	89.6	$	73.9
Variable lease payments	Variable lease payments	11.7		1.4			Variable lease payments	14.8		13.3		41.3		41.3
Total rental income	Total rental income	$	41.3	$	31.6		Total rental income	$	45.5	$	36.3	$	130.9	$	115.2

Contractual future lease payments to be received on non-cancelable operating leases as of ~~March 31,~~September 30, 2021 were as follows (in millions):

2021 $ 89.2
2022 110.9
2023 99.9
2024 86.6
2025 74.2
2026 60.5
Thereafter 448.6
Total future lease payments to be received $ 969.9



2021	$	29.8
2022	113.8
2023	103.6
2024	91.6
2025	78.3
2026	64.0
Thereafter	472.0
Total future lease payments to be received	$	953.1

11. LEASES - THE COMPANY AS LESSEE

There have been no material changes from the Company's leasing activities as a lessee described in Note 15 to the consolidated financial statements included in Item 8 of the Company's 2020 Form 10-K. The following table provides information about the Company's operating lease costs and finance lease costs recognized during the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 (in millions):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Operating lease cost	Operating lease cost	$	1.1	$	1.2		Operating lease cost	$	1.2	$	1.2	$	3.5	$	3.5
Finance lease cost	Finance lease cost	$	0.3	$	0.3		Finance lease cost	$	0.5	$	0.4	$	1.1	$	1.0

12. SHARE-BASED PAYMENT AWARDS

The 2012 Incentive Compensation Plan ("2012 Plan") allows for the granting of stock options, restricted stock units and common stock. The shares of common stock authorized to be issued under the 2012 Plan may be drawn from the shares of the Company's authorized but unissued common stock or from shares of its common stock that the Company acquires, including shares purchased on the open market or private transactions. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, the Company granted approximately ~~342,700~~376,600 and 279,400 of restricted stock unit awards, ~~with a weighted average~~respectively. The weighted-average grant date fair value of ~~$16.50~~the time-based and market-based performance share units granted under the 2012 ~~Plan. During~~Plan during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020 ~~the Company granted approximately 225,700 restricted stock units with a weighted average grant date fair value of $24.59 under the 2012 Plan.~~was $16.63 and $22.26, respectively.

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


	2021 Grants	2020 Grants
Volatility of A&B common stock	47.2%	22.6%
Average volatility of peer companies	49.6%	23.2%
Risk-free interest rate	0.2%	1.3%

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 millions):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Share-based expense:	Share-based expense:						Share-based expense:
Time-based and market-based restricted stock units	Time-based and market-based restricted stock units	$	1.4	$	1.5		Time-based and market-based restricted stock units	$	1.6	$	1.4	$	4.4	$	4.4

13. EMPLOYEE BENEFIT PLANS

On February 23, 2021, the Company’s Board of Directors approved a plan to effect the termination of the A&B Retirement Plan for Salaried Employees of Alexander & Baldwin, LLC and the Pension Plan for Employees of A&B Agricultural Companies (collectively, the “Defined Benefit Plans”), ~~to be~~which became effective on May 31, 2021.

~~In addition, the Board of Directors authorized~~ As a result, the Company ~~to take~~has proceeded with the following steps ~~to prepare for~~in connection with the termination of the tax-qualified Defined Benefit Plans:

•In April 2021, the Company amended the plan agreements of the Defined Benefit Plans ~~which are tax-qualified, including:~~

a.~~Prepare and execute any necessary amendments to the Defined Benefit Plans and/or restatements regarding the termination of the Defined Benefit Plans, including amending the Defined Benefit Plans~~in order to provide for a limited lump-sum window for eligible participants;

b.•~~Prepare and file an~~The Company filed the Application for Determination ~~for Terminating Plan~~Upon Termination with the Internal Revenue Service ~~(“IRS”~~("IRS") in April 2021, and the Company received a favorable determination notice for ~~a determination as to~~federal tax purposes from the ~~tax-qualified status of the Defined Benefit Plans at the time of termination; and~~IRS in July 2021;

c.•~~Prepare and file all~~The Company is preparing the appropriate notices and documents to file related to the termination of the Defined Benefit Plans and wind-down with the Pension Benefit Guaranty Corporation (the “PBGC”), the U.S. Department of Labor, ~~the Internal Revenue Service,~~ the trustee and any other appropriate parties.

Except for retirees currently receiving payments under the Defined Benefit Plans, participants will have the choice of receiving a single lump sum payment or an annuity from a highly-rated insurance company that will pay and administer future benefit payments. The amount of any lump sum payment will equal the actuarial-equivalent present value of the participant’s accrued benefit under the applicable pension plan as of the distribution date. Annuity payments to current retirees will continue under their current elections, but will be administered by the selected insurance company.

The Company will recognize a gain/loss upon settlement of the Defined Benefit Plans when the following three criteria have been met: (1) an irrevocable action to terminate the Defined Benefit Plans have occurred, (2) the Company is relieved of the primary responsibility of the Defined Benefit Plans, and (3) the significant risks related to the obligations of the Defined Benefit Plans and the assets used to effect the settlement is eliminated for the Company.

Components of the net periodic benefit cost for the Company's pension and post-retirement plans for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 are shown below (in millions):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Service cost	Service cost	$	0.2	$	0.2		Service cost	$	0.4	$	0.2	$	1.0	$	0.6
Interest cost	Interest cost	1.7		1.7			Interest cost	1.5		1.7		4.1		5.2
Expected return on plan assets	Expected return on plan assets	(1.7)		(1.7)			Expected return on plan assets	(1.3)		(1.7)		(3.8)		(5.1)
Amortization of net loss	Amortization of net loss	0.6		0.6			Amortization of net loss	0.5		0.8		1.9		2.0

Net periodic benefit cost	Net periodic benefit cost	$	0.8	$	0.8		Net periodic benefit cost	$	1.1	$	1.0	$	3.2	$	2.7

The Company ~~has~~ made ~~0 contributions~~a contribution of $6.7 million to its defined benefit pension plans during the ~~three months~~quarter ended ~~March 31,~~September 30, 2021 and ~~expects~~does not expect to make 0any additional contributions in the current fiscal year.

14. INCOME TAXES

The Company has been organized and operates in a manner that enables it to qualify, and believes it will continue to qualify, as a REIT for federal income tax purposes. The Company’s effective tax rate for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 differed from the effective tax rate for the same period in 2020, primarily due to the taxable built-in gain on a REIT land sale in the first quarter of 2021.

As of ~~March 31,~~September 30, 2021, tax years 2017 and later are open to audit by the tax authorities. The Company believes ~~that~~ the result of any potential audits will not have a material adverse effect on its results of operations, financial condition, or liquidity.

15. 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 millions):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Income (loss) from continuing operations	Income (loss) from continuing operations	$	9.9	$	5.8		Income (loss) from continuing operations	$	7.1	$	3.2	$	30.1	$	4.9
Exclude: (Income) loss attributable to noncontrolling interest	Exclude: (Income) loss attributable to noncontrolling interest	0		0.6			Exclude: (Income) loss attributable to noncontrolling interest	(0.1)		(0.2)		(0.3)		0.4
Income (loss) from continuing operations attributable to A&B shareholders	Income (loss) from continuing operations attributable to A&B shareholders	9.9		6.4			Income (loss) from continuing operations attributable to A&B shareholders	7.0		3.0		29.8		5.3
Distributions and allocations to participating securities							Distributions and allocations to participating securities	(0.1)		—		(0.1)		—
Exclude: (Increase) decrease in carrying value of redeemable non-controlling interest							Exclude: (Increase) decrease in carrying value of redeemable non-controlling interest	—		—		—		—

Distributions and allocations to participating securities		0		0
Income (loss) from continuing operations available to A&B common shareholders	Income (loss) from continuing operations available to A&B common shareholders	9.9		6.4			Income (loss) from continuing operations available to A&B common shareholders	6.9		3.0		29.7		5.3
Income (loss) from discontinued operations available to A&B common shareholders	Income (loss) from discontinued operations available to A&B common shareholders	0		(0.2)			Income (loss) from discontinued operations available to A&B common shareholders	(0.6)		—		(0.7)		(0.8)
Net income (loss) available to A&B common shareholders	Net income (loss) available to A&B common shareholders	$	9.9	$	6.2		Net income (loss) available to A&B common shareholders	$	6.3	$	3.0	$	29.0	$	4.5

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

Three Months Ended March 31,
2021 2020
Denominator for basic EPS - weighted average shares outstanding 72.5 72.3
Effect of dilutive securities:
Stock options and restricted stock unit awards 0.1 0.2
Denominator for diluted EPS - weighted average shares outstanding 72.6 72.5


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Denominator for basic EPS - weighted average shares outstanding	72.5	72.4	72.5	72.3
Effect of dilutive securities:
Stock options and restricted stock unit awards	0.2	—	0.1	0.1

Denominator for diluted EPS - weighted average shares outstanding	72.7	72.4	72.6	72.4

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

Three Months Ended March 31,
2021 2020
Number of anti-dilutive securities 0.3 0.1


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Number of anti-dilutive securities	—	0.5	—	0.4

16. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) principally includes amortization of deferred pension and postretirement costs. The components of Accumulated other comprehensive loss, net of taxes, were as follows as of ~~March 31,~~September 30, 2021 and December 31, 2020 (in millions):

March 31, 2021 December 31, 2020
Employee benefit plans:
Pension plans $ (48.3) $ (48.9)
Post-retirement plans (3.6) (3.6)
Non-qualified benefit plans (0.8) (0.8)
Total employee benefit plans (52.7) (53.3)
Interest rate swap (3.3) (6.7)
Accumulated other comprehensive income (loss) $ (56.0) $ (60.0)


	September 30, 2021		December 31, 2020
Employee benefit plans:
Pension plans	$	(51.7)	$	(48.9)
Post-retirement plans	(3.6)		(3.6)
Non-qualified benefit plans	(0.8)		(0.8)
Total employee benefit plans	(56.1)		(53.3)
Interest rate swap	(3.6)		(6.7)
Accumulated other comprehensive income (loss)	$	(59.7)	$	(60.0)

The changes in Accumulated other comprehensive income (loss) by component for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 were as follows (in millions, net of taxes):


		Employee Benefit Plans		Interest Rate Swap		Total			Employee Benefit Plans		Interest Rate Swap		Total
Balance, January 1, 2021	Balance, January 1, 2021	$	(53.3)	$	(6.7)	$	(60.0)	Balance, January 1, 2021	$	(53.3)	$	(6.7)	$	(60.0)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	0		3.1		3.1		Other comprehensive income (loss) before reclassifications	(4.7)		1.9		(2.8)
Amounts reclassified from accumulated other comprehensive income (loss)1	Amounts reclassified from accumulated other comprehensive income (loss)1	0.6		0.3		0.9		Amounts reclassified from accumulated other comprehensive income (loss)1	1.9		1.2		3.1
Taxes on other comprehensive income (loss)	Taxes on other comprehensive income (loss)	0		0		0		Taxes on other comprehensive income (loss)	—		—		—
Other comprehensive income (loss), net of taxes	Other comprehensive income (loss), net of taxes	0.6		3.4		4.0		Other comprehensive income (loss), net of taxes	(2.8)		3.1		0.3
Balance, March 31, 2021		$	(52.7)	$	(3.3)	$	(56.0)
Balance, September 30, 2021								Balance, September 30, 2021	$	(56.1)	$	(3.6)	$	(59.7)

1 Amounts reclassified from Accumulated other comprehensive income 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 related to employee benefit plan items are presented as part of Interest and other income (expense), net in the condensed consolidated statements of operations.

17. RELATED PARTY TRANSACTIONS

The Company changed the composition of its reportable segments during the current year, which caused reported amounts (i.e., related party revenue) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes. Refer to Note 18 for additional information.

Construction Contracts and Material Sales. The Company entered into contracts in the ordinary course of business, as a supplier, with affiliate entities that require accounting under the equity method due to the Company's financial interests in such entities (refer to Note 3) and also with affiliate parties that are members in entities in which the Company also is a member and holds a controlling financial interest. Related to the periods during which the relationship existed, revenues earned from transactions with such affiliates were ~~$1.4~~$2.8 million and ~~$0.7~~$4.1 million for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively, and $7.5 million and $6.7 million for the nine months ended September 30, 2021, and 2020, respectively. Expenses recognized from transactions with such affiliates were $0.3 million and $0.2 million for the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively, and $0.9 million and $1.1 million for the nine months ended September 30, 2021, and 2020, respectively. Receivables from these affiliates were ~~$0.8~~$1.8 million and $0.9 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. Amounts due to these affiliates were ~~$0.1~~$0.3 million and $0.3 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

Land Operations. ~~During the three months ended March 31, 2021 and 2020, the~~The Company ~~recognized $1.5 million and $0.8 million, respectively, related to revenue for~~provides materials and services ~~provided~~ to certain unconsolidated investments in ~~affiliates and~~affiliates. The Company also recognizes interest earned on notes receivables from such related parties. Revenues earned from transactions with these affiliates were $0.3 million for the three months ended September 30, 2021 and less than $0.1 million for the three months ended September 30, 2020. During the nine months ended September 30, 2021 and 2020, revenues earned from transactions with these affiliates were $1.8 million and $0.5 million, respectively. Receivables from service arrangements with these affiliates were less than $0.1 million as of ~~March 31,~~September 30, 2021 and December 31, 2020. Notes receivable from related parties were held at carrying values of ~~$7.6~~$5.7 million and $9.5 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively, related to a construction loan secured by a mortgage on real property with ~~one~~1 of the Company's joint ventures.

1920

18. 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. As noted above, the Company operates and reports on 3 segments: Commercial Real Estate; Land Operations; and Materials & Construction.

During the first quarter ended March 31, 2021, the ~~Company changed~~chief operating decision maker began reviewing the segments structure of its internal organization in a manner that caused the composition of its reportable segments to change. Specifically, the change resulted from a reorganization to present the activity and results of operations of Company-owned quarries on the island of Maui (utilized and operated by third parties who pay for such extraction rights under operating agreements), which historically have been included in the results of Land Operations ~~that will~~and are now be included in the results of Materials & Construction. The corresponding information for all historical periods has been restated and resulted in changes in segment Operating Revenue and Operating Profit (Loss) ~~of $0.5 million (from~~, from Land Operations to Materials & ~~Construction)~~Construction, of $0.3 million during the three months ended ~~March 31,~~September 30, 2020 and $1.5 million during the nine months ended September 30, 2020. The Company continues to maintain its 3 reportable segments and the changes are reclassifications within these existing segments.

Reportable segment information for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 is summarized below (in millions):

Three Months Ended March 31,
2021 2020
Operating Revenue:
Commercial Real Estate $ 39.9 $ 43.4
Land Operations1
17.1 11.0
Materials & Construction1
24.0 26.4
Total operating revenue 81.0 80.8
Operating Profit (Loss):
Commercial Real Estate2
15.4 18.1
Land Operations1,3
11.4 4.5
Materials & Construction1
(4.0) (3.3)
Total operating profit (loss) 22.8 19.3
Gain (loss) on disposal of commercial real estate properties, net 0.2 0.5
Interest expense (7.0) (7.8)
Corporate and other expense (6.0) (6.2)
Income (Loss) from Continuing Operations Before Income Taxes $ 10.0 $ 5.8
1As described above, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.
2 Commercial Real Estate segment operating profit (loss) includes intersegment operating revenue, primarily from the Materials & Construction segment, and is eliminated in the condensed consolidated statements of operations.
3 Land Operations segment operating profit (loss) includes equity in earnings (losses) from the Company's various equity method investments (primarily real estate joint ventures).


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating Revenue:
Commercial Real Estate	$	44.0	$	35.7	$	127.2	$	113.1
Land Operations1	5.4		7.4		38.5		27.5
Materials & Construction1	34.9		34.7		88.9		91.9
Total operating revenue	84.3		77.8		254.6		232.5
Operating Profit (Loss):
Commercial Real Estate2	19.0		11.0		53.0		37.9
Land Operations1,3	1.7		3.1		22.3		11.6
Materials & Construction1	(0.3)		1.6		(6.2)		(8.6)
Total operating profit (loss)	20.4		15.7		69.1		40.9
Gain (loss) on disposal of commercial real estate properties, net	—		—		0.2		0.5
Interest expense	(6.5)		(7.1)		(20.2)		(22.7)
Corporate and other expense	(6.8)		(5.4)		(18.9)		(13.8)
Income (Loss) from Continuing Operations Before Income Taxes	$	7.1	$	3.2	$	30.2	$	4.9

1As described above, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.
2 Commercial Real Estate segment operating profit (loss) includes intersegment operating revenue, primarily from the Materials & Construction segment, and is eliminated in the condensed consolidated statements of operations.
3 Land Operations segment operating profit (loss) includes equity in earnings (losses) from the Company's various equity method investments (primarily real estate joint ventures).

19. SUBSEQUENT EVENTS

On ~~April 27,~~October 28, 2021, the ~~Company's Board~~Company completed the acquisitions of ~~Directors declared a cash dividend of $0.16 per share of outstanding common stock, payable~~2 industrial properties on ~~July 6, 2021 to shareholders of record as of the close of business on June 28, 2021.~~Oahu for $10.8 million paid in cash. The Company has not completed its initial purchase price allocations.

2021

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis of the consolidated financial condition and results of operations of Alexander & Baldwin, Inc. ("A&B" or the "Company") and its subsidiaries should be read in conjunction with the condensed consolidated financial statements and related notes thereto included in Item 1 of this Form 10-Q and the Company's Annual Report on Form 10-K for the year ended December 31, 2020 ("2020 Form 10-K") filed with the U.S. Securities and Exchange Commission ("SEC").

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.

Forward-Looking Statements

Statements in this Form 10-Q that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding possible or assumed future results of operations, business strategies, growth opportunities and competitive positions, as well as the rapidly changing challenges with, and the Company's plans and responses to, the coronavirus ~~2019~~pandemic ("COVID-19") ~~pandemic~~ and related economic disruptions. Such forward-looking statements speak only as of the date the statements were made and are not guarantees of future performance. Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from those expressed in or implied by the forward-looking statements. These factors include, but are not limited to, prevailing market conditions and other factors related to the Company's REIT status and the Company's business, risks associated with COVID-19 and its impact on the Company's businesses, results of operations, liquidity and financial condition, the evaluation of alternatives by the Company related to its materials and construction business and by the Company's joint venture related to the development of Kukui‘ula, and the risk factors discussed in the Company's most recent Form 10-K, Form 10-Q and other filings with the SEC. The information in this Form 10-Q should be evaluated in light of these important risk factors. We do not undertake any obligation to update the Company's forward-looking statements.

Introduction and Objective

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") provides additional material information about the Company's business, recent developments and financial condition; its results of operations at a consolidated and segment level; its liquidity and capital resources including an evaluation of the amounts and certainty of cash flows from operations and from outside sources; and how certain accounting principles, policies and estimates affect its financial statements. MD&A is organized as follows:

•Business Overview: This section provides a general description of the Company's business, as well as recent developments that management believes are important in understanding its results of operations and financial condition or in understanding anticipated future trends.

•Consolidated Results of Operations: This section provides an analysis of the Company's consolidated results of operations for the three and nine months ended ~~March 31,~~September 30, 2021 as compared to the corresponding period of the preceding fiscal year.

•Analysis of Operating Revenue and Profit by Segment: This section provides an analysis of the Company's results of operations by business segment for the three and nine months ended ~~March 31,~~September 30, 2021 as compared to the corresponding period of the preceding fiscal year.

•Use of Non-GAAP Financial Measures: This section provides a discussion of the Company's non-GAAP financial measures included in this report and presents quantitative reconciliations between the non-GAAP financial measures and the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. It also describes why the Company believes that presentation of the non-GAAP financial measure provides useful information to investors regarding the Company's financial condition and results of operations and, to the extent material, describes additional purposes for which the Company uses the non-GAAP financial measures.

•Liquidity and Capital Resources: This section provides a discussion of any material changes in the Company's liquidity, financial condition and cash flows, including a discussion of any material changes in the Company's ability to fund its future commitments and ongoing operating activities in the short-term (i.e., over the next twelve months

from the most recent fiscal period end) and in the long-term (i.e., beyond the next twelve months) through internal and

external sources of capital, as compared to the end of preceding fiscal year ended December 31, 2020. It includes an evaluation of the amounts and certainty of cash flows from operations and from outside sources.

•Other Matters: This section identifies and summarizes other matters to be discussed in Item 2 of this report including any changes in the significant judgments or estimates on the part of management in preparing the Company's consolidated financial statements that may materially impact the Company's reported results of operations and financial condition from the end of the preceding fiscal year ended December 31, 2020, the potential impact of recently issued accounting pronouncements and other miscellaneous matters as needed.

Amounts in the MD&A are rounded to the nearest tenth of a million. Accordingly, a recalculation of totals and percentages, if based on the reported data, may be slightly different.

Business Overview

Reportable segments

The Company operates three segments: Commercial Real Estate; Land Operations; and Materials & Construction. A description of each of the Company's reporting segments is as follows:

•Commercial Real Estate ("CRE") - This segment functions as a vertically integrated real estate investment company with core competencies in investments and acquisitions (i.e., identifying opportunities and acquiring properties); construction and development (i.e., designing and ground-up development of new properties or repositioning and redevelopment of existing properties); and in-house leasing and property management (i.e., executing new and renegotiating renewal lease arrangements, managing its properties' day-to-day operations and maintaining positive tenant relationships). The Company's preferred asset classes include improved properties in retail and industrial spaces and also urban ground leases. Its focus within improved retail properties, in particular, is on grocery-anchored neighborhood shopping centers that meet the daily needs of Hawai‘i ~~citizens.~~communities. Through its core competencies and with its experience and relationships in Hawai‘i, the Company seeks to create special places that enhance the lives of Hawai‘i residents and to provide venues and opportunities that enable its tenants to thrive. Income from this segment is principally generated by owning, operating and leasing real estate assets.

•Land Operations - This segment includes the Company's legacy assets and landholdings that are subject to the Company's simplification and monetization effort. Financial results from this segment are principally derived from real estate development and land sales, income/loss from real estate joint ventures, hydroelectric energy and other legacy business activities.

•Materials & Construction ("M&C") - This segment operates as one of Hawai‘i's largest asphalt paving contractor and is one of the state's largest natural materials and infrastructure construction ~~companies. Such activities are~~companies, primarily ~~conducted~~conducting business through its wholly-owned subsidiary, Grace Pacific LLC ("Grace Pacific"), a materials and construction company in Hawai‘i. The M&C segment also includes the Company-owned quarry land on Maui, as well as the Company’s unconsolidated joint venture interest in a materials company.

Simplification strategy

As a result of its conversion to a REIT, ~~and consequent de-emphasis of non-REIT operating businesses,~~ the Company has ~~established~~pursued a strategy ~~to simplify its business, which includes ongoing efforts~~ to accelerate the monetization of ~~land and related~~non-core assets and ~~also includes evaluating~~businesses, primarily included in the Land Operations and Materials & Construction segments, in an overall effort to simplify the Company and focus its resources and capital on commercial real estate operations.

As the Company evaluates strategic ~~options~~alternatives for the eventual monetization of some or all of its Materials & Construction ~~businesses.~~businesses, any potential transaction related to the Materials & Constructions businesses, either together as a group or individually, would be dependent upon a number of external factors that may be beyond the Company's control, including, among other factors, market conditions, industry trends and the interest of third parties. There can be no assurance that the exploration of strategic alternatives will result in any agreements or transactions, or that, if completed, any agreements or transactions will be successful or on attractive terms. Accordingly, there can be no assurance that any of the options evaluated will be pursued or completed. Further, there can be no assurance that the outcome of the evaluation of strategic alternatives or any potential transaction or transactions will result in the Company being able to recover the carrying value of the Materials & Construction businesses or related disposal group.

~~Moreover, related~~

Related to its unconsolidated equity method investments in joint venture development projects at Kukui‘ula, the Company continues its evaluation of opportunities to monetize these investments, ~~or,~~as well as in conjunction with the joint venture partners, ~~its evaluation~~and has entered into an agreement with a third party regarding the sale of ~~a range of alternative strategies~~certain assets related to ~~accelerate the monetization of the land~~these projects, which is expected to close in the ~~joint venture projects.~~fourth quarter. Any potential transaction related to either the investments or the assets within the joint venture projects would be dependent upon a number of external factors that may be beyond the Company's and/or joint venture projects' control, including, among other factors, market conditions, industry trends and the interest of third parties in the Kukui‘ula development projects. In addition, the pending sale of certain project assets is subject to a number of closing conditions. Accordingly, there can be no assurance that any of the options evaluated, including through the pending transaction referred to above will be ~~pursued or~~ completed. Further, there can be no assurance that the outcome of the evaluation of strategic alternatives or any potential transaction will result in the Company being able to maintain the carrying value of the Kukui‘ula joint venture development projects.

Termination of certain employee benefit plans

•In April 2021, the Company amended the plan agreements of the Defined Benefit Plans ~~which are tax-qualified, including:~~

In 2022, ~~after~~upon receiving approval from the IRS and the PBGC and following completion of the limited lump-sum offering, the Company expects to make an additional cash contribution in order to fully fund the Defined Benefit Plans on a plan termination basis, followed by the purchase of annuity contracts to transfer its remaining liabilities under the Defined Benefit Plans. These additional cash contributions are expected to range between ~~$25~~$32 million and ~~$40~~$47 million. However, the actual amount of this cash contribution requirement will depend upon the nature and timing of participant settlements, interest rates, as well as prevailing market conditions. In addition, the Company expects to recognize pre-tax non-cash pension settlement charges ~~totaling between~~in the range of $80 million ~~and $90~~to $95 million, related to actuarial losses currently in Accumulated other comprehensive income (loss) in the consolidated balance sheets, upon settlement of the obligations of the Defined Benefit Plans. These charges are currently expected to occur in 2022, with the specific timing and final amounts dependent upon completion of the activities enumerated above.

Coronavirus ~~outbreak~~disease pandemic

In December 2019, COVID-19 was first reported in Wuhan, China, and on March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has adversely impacted the global economy and ~~has~~ contributed to significant volatility in financial markets. ~~Considerable uncertainty continues to surround~~Uncertainty from COVID-19 ~~and its~~remains, including the effects on the population, as well as the effectiveness of any responses taken by government authorities and the availability, efficacy and ~~efficacy~~public acceptance of vaccinations and therapeutic treatments for COVID-19. ~~The~~During 2020, the pandemic ~~resulted in~~caused a significant ~~decline~~disruption to the Hawai‘i economy and the Company's tenants, which in ~~Hawai‘i tourism and an increase in business closures; it has~~turn significantly impacted the Company's business due largely to the extreme hardships facing its retail tenants. The ultimate extent of the impact that the COVID-19 pandemic will have on the Company's business, financial condition, results of operations and liquidity and capital resources will largely depend on future developments, including the duration and spread of the outbreak, the severity of economic disruptions and resulting impact on economic growth/recession, the response by all levels of government in their efforts to contain the outbreak and to mitigate the economic disruptions, the impact on travel and tourism behavior and the impact on consumer confidence and spending, all of which are highly uncertain and cannot be reasonably predicted.business.

As of April 16, 2021, all of the Company's properties within its CRE portfolio remain open and substantially all of its existing tenants remain open and operating in some capacity. Further, as of this date, the CRE portfolio tenants have paid approximately 87% of their first quarter billings (which includes base rents and recoveries from tenants). Within this population, the Company's grocer tenants (designated as essential businesses and located within its grocery-anchored neighborhood shopping centers), have paid approximately 94% of their first quarter billings.

As a result of financial hardships from the COVID-19 pandemic, certain tenants ~~experiencing economic difficulties~~ have sought ~~and may continue to seek current and future~~ rent relief from the Company, which ~~may be~~has been provided in the form of rent deferrals ~~which has varied~~(varying in terms of applicable months covered and the repayment ~~period (e.g., repaid in 2020 or to be repaid over 2021)~~period) or other relief modifications, including modifying the

nature of rent payments from fixed to variable (i.e., variable based on a percentage of the tenant's sales, typically subject to a minimum "floor" amount) or, in some cases, payment forgiveness.

As it pertains to rent deferrals, as of March 31, 2021, since the Company began providing rent relief arrangements as a result of COVID-19, the Company has agreed to rent deferrals with tenants which has impacted total billings of $7.1 million (net of amounts subsequently forgiven under other relief modifications) and has subsequently collected $3.6 million of these amounts from tenants. The remaining $3.5 million outstanding has been subject to the Company's ongoing assessments of uncollectable tenant billings, pursuant to which the Company records adjustments to revenue based on changes in the assessments during the period (further described below).

During the three and nine months ended ~~March 31,~~September 30, 2021 and 2020, the reductions (or increases) to revenue that the Company has recorded as result of other relief modifications and other adjustments, as well as those recorded based on its assessments of uncollectable tenant billings were as follows (in millions):


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
Other relief modifications and other adjustments1	Other relief modifications and other adjustments1	$	2.5	$	0.1			Other relief modifications and other adjustments1	$	0.5	$	2.7	$	5.9	$	3.5

Tenant collectability assessments and allowance for doubtful accounts	Tenant collectability assessments and allowance for doubtful accounts							Tenant collectability assessments and allowance for doubtful accounts
Impact to billed accounts receivable	Impact to billed accounts receivable	$	1.3	$	0.7			Impact to billed accounts receivable	$	0.1	$	4.0	$	0.2	$	8.4
Impact to straight-line lease receivables	Impact to straight-line lease receivables	0.3		(0.1)				Impact to straight-line lease receivables	—		1.6		0.2		3.8
Total revenue reductions (increases) - tenant collectability assessments	Total revenue reductions (increases) - tenant collectability assessments	1.6		0.6				Total revenue reductions (increases) - tenant collectability assessments	0.1		5.6		0.4		12.2
Provision for allowance for doubtful accounts2	Provision for allowance for doubtful accounts2	0.2		(0.1)				Provision for allowance for doubtful accounts2	(0.2)		0.7		(1.2)		3.4
Total revenue reductions (increases) for assessments and provisions	Total revenue reductions (increases) for assessments and provisions	$	1.8	$	0.5			Total revenue reductions (increases) for assessments and provisions	$	(0.1)	$	6.3	$	(0.8)	$	15.6

Total revenue reductions (increases) related to adjustments, assessments and provisions	Total revenue reductions (increases) related to adjustments, assessments and provisions	$	4.3	$	0.6			Total revenue reductions (increases) related to adjustments, assessments and provisions	$	0.4	$	9.0	$	5.1	$	19.1
Total revenue reductions (increases) impacting billed accounts receivable only3	Total revenue reductions (increases) impacting billed accounts receivable only3	$	4.0	$	0.7			Total revenue reductions (increases) impacting billed accounts receivable only3	$	0.4	$	7.4	$	4.9	$	15.3

1 Primarily related to COVID-19, but may include other adjustments (e.g., adjustments due to tenant bankruptcies).	1 Primarily related to COVID-19, but may include other adjustments (e.g., adjustments due to tenant bankruptcies).					1 Primarily related to COVID-19, but may include other adjustments (e.g., adjustments due to tenant bankruptcies).
2 Related to other impacted operating lease receivables.	2 Related to other impacted operating lease receivables.					2 Related to other impacted operating lease receivables.
3 Excludes the impact to unbilled straight-line lease receivables.	3 Excludes the impact to unbilled straight-line lease receivables.					3 Excludes the impact to unbilled straight-line lease receivables.

During the nine months ended September 30, 2021, government-mandated restrictions in response to the pandemic, including travel restrictions, quarantine requirements, prohibitions on public gatherings and stay-at-home orders have eased relative to those in place during 2020, which resulted in increased tourism in Hawai‘i. As the local economy has recovered in 2021, the Company experienced higher levels of rent collections and lower net bad debt and cash basis charges for uncollectible rent in its commercial real estate operations for the three and nine months ended September 30, 2021 in relation to the prior year comparable periods. As of October 15, 2021, all of the Company's properties within its CRE portfolio remain open and substantially all of its existing tenants remain open and operating in some capacity. Further, as of October 15, 2021, the CRE portfolio tenants have paid approximately 94% of Q3 2021 contractual rent amounts owed (which includes base rents and recoveries from tenants) and approximately 95% of their year-to-date contractual rent.

Despite the improved financial results during the nine months ended September 30, 2021, the Company's ongoing financial performance, including future rent collections, may be negatively impacted by any surges in COVID-19 and the discovery of new COVID-19 variants or delays in the administration or effectiveness of COVID-19 vaccines. The ultimate extent the recovery will have on the Company and its operations will largely depend on these future developments, including federal, state, and local governments’ responses to additional outbreaks and any implementation of additional restrictions on tenant businesses as a result thereof. Should restrictions be reinstated by various levels of government in their efforts to contain any outbreaks, there is uncertainty and unpredictability as to the severity of economic disruption and resulting impact on economic growth/recession, the impact on travel and tourism behavior and the impact on consumer confidence and spending.

The Company’s financial results for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 were significantly impacted by the COVID-19 ~~pandemic resulting in reductions in operating profit and its non-GAAP performance measures.~~pandemic. As such, the comparability of the Company’s results of operations for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 to future periods may be limited.

Consolidated Results of Operations

The following analysis of the consolidated financial condition and results of operations of the Company and its subsidiaries should be read in conjunction with the condensed consolidated financial statements and related notes thereto.

Financial results - ~~First~~Third quarter of 2021 compared with 2020

(amounts in millions, except percentage data and per share data; unaudited) Three Months Ended March 31, 2021 vs 2020
2021 2020 $ %
Operating revenue $ 81.0 $ 80.8 $ 0.2 0.2 %
Cost of operations (55.2) (57.3) 2.1 (3.7) %
Selling, general and administrative (12.2) (13.8) 1.6 (11.6) %
Gain (loss) on disposal of assets, net 0.3 0.5 (0.2) (40.0) %
Operating income (loss) 13.9 10.2 3.7 36.3 %
Income (loss) related to joint ventures 3.4 3.2 0.2 6.3 %
Interest and other income (expense), net (0.3) 0.2 (0.5) (250.0) %
Interest expense (7.0) (7.8) 0.8 (10.3) %
Income tax benefit (expense) (0.1) — (0.1) — %
Income (loss) from continuing operations 9.9 5.8 4.1 70.7 %
Discontinued operations (net of income taxes) — (0.2) 0.2 (100.0) %
Net income (loss) 9.9 5.6 4.3 76.8 %
(Income) loss attributable to noncontrolling interest — 0.6 (0.6) (100.0) %
Net income (loss) attributable to A&B $ 9.9 $ 6.2 $ 3.7 59.7 %
Basic Earnings (Loss) Per Share of Common Stock:
Basic earnings (loss) per share - continuing operations $ 0.14 $ 0.09 $ 0.05 55.6 %
Basic earnings (loss) per share - discontinued operations 0.00 0.00 — NM
$ 0.14 $ 0.09 $ 0.05 55.6 %
Diluted Earnings (Loss) Per Share of Common Stock:
Diluted earnings (loss) per share - continuing operations $ 0.14 $ 0.09 $ 0.05 55.6 %
Diluted earnings (loss) per share - discontinued operations 0.00 0.00 — NM
$ 0.14 $ 0.09 $ 0.05 55.6 %
Continuing operations available to A&B common shareholders $ 9.9 $ 6.4 $ 3.5 54.7 %
Discontinued operations available to A&B common shareholders — (0.2) 0.2 (100.0) %
Net income (loss) available to A&B common shareholders $ 9.9 $ 6.2 $ 3.7 59.7 %
Funds From Operations ("FFO")1
$ 19.2 $ 15.9 $ 3.3 20.8 %
Core FFO1
$ 15.4 $ 18.3 $ (2.9) (15.8) %
FFO per diluted share $ 0.26 $ 0.22 $ 0.04 18.2 %
Core FFO per diluted share $ 0.21 $ 0.25 $ (0.04) (16.0) %
Weighted average diluted shares outstanding (FFO/Core FFO)2
72.6 72.5
1 For definitions of capitalized terms and a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures, refer to page 31.
2 May differ from figure used in the consolidated statements of operations based on differing dilutive effects for net income (loss) versus FFO/Core FFO.


(amounts in millions, except percentage data and per share data; unaudited)	Three Months Ended September 30,				2021 vs 2020
	2021		2020		$		%
Operating revenue	$	84.3	$	77.8	$	6.5	8.4	%
Cost of operations	(60.6)		(66.6)		6.0		(9.0)	%
Selling, general and administrative	(12.6)		(11.7)		(0.9)		7.7	%


Gain (loss) on disposal of assets, net	—		9.0		(9.0)		NM
Operating income (loss)	11.1		8.5		2.6		30.6	%
Income (loss) related to joint ventures	2.7		2.2		0.5		22.7	%

Interest and other income (expense), net	(0.2)		(0.4)		0.2		(50.0)	%
Interest expense	(6.5)		(7.1)		0.6		(8.5)	%

Income (loss) from continuing operations	7.1		3.2		3.9		121.9	%
Discontinued operations (net of income taxes)	(0.6)		—		(0.6)		NM
Net income (loss)	6.5		3.2		3.3		103.1	%
(Income) loss attributable to noncontrolling interest	(0.1)		(0.2)		0.1		(50.0)	%
Net income (loss) attributable to A&B	$	6.4	$	3.0	$	3.4	113.3	%

Basic Earnings (Loss) Per Share of Common Stock:
Basic earnings (loss) per share - continuing operations	$	0.10	$	0.04	$	0.06	150.0	%
Basic earnings (loss) per share - discontinued operations	(0.01)		0.00		(0.01)		NM
	$	0.09	$	0.04	$	0.05	125.0	%
Diluted Earnings (Loss) Per Share of Common Stock:
Diluted earnings (loss) per share - continuing operations	$	0.10	$	0.04	$	0.06	150.0	%
Diluted earnings (loss) per share - discontinued operations	(0.01)		0.00		(0.01)		NM
	$	0.09	$	0.04	$	0.05	125.0	%

Continuing operations available to A&B common shareholders	$	6.9	$	3.0	$	3.9	130.0	%
Discontinued operations available to A&B common shareholders	(0.6)		—		(0.6)		NM
Net income (loss) available to A&B common shareholders	$	6.3	$	3.0	$	3.3	110.0	%


Funds From Operations ("FFO")1	$	15.5	$	12.5	$	3.0	24.0	%
Core FFO1	$	17.9	$	11.6	$	6.3	54.3	%

FFO per diluted share	$	0.21	$	0.17	$	0.04	23.5	%
Core FFO per diluted share	$	0.25	$	0.16	$	0.09	56.3	%
Weighted average diluted shares outstanding (FFO/Core FFO)2	72.7		72.4

1 For definitions of capitalized terms and a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures, refer to page 37.
2 May differ from figure used in the consolidated statements of operations based on differing dilutive effects for net income (loss) versus FFO/Core FFO.

The causes of material changes in the condensed consolidated statements of operations for the three months ended ~~March 31,~~September 30, 2021 as compared to the three months ended ~~March 31,~~September 30, 2020 are described below or in the Analysis of Operating Revenue and Profit by Segment sections below.

Operating revenue for the third quarter ended September 30, 2021 increased 8.4%, or $6.5 million, to $84.3 million, due primarily to higher revenues from the Commercial Real Estate segment, partially offset by lower revenues from the Land Operations segment.

~~Operating revenue~~Cost of operations for the ~~first~~third quarter ended ~~March 31,~~September 30, 2021 ~~increased 0.2%~~decreased 9.0%, or ~~$0.2~~$6.0 million, to ~~$81.0~~$60.6 million, due primarily to ~~higher revenue from~~a decrease in costs incurred by the Land Operations segment, partially offset by ~~lower revenue from each of~~higher costs incurred by the Commercial Real Estate and Materials & Construction segments.

Selling, general and administrative for the third quarter ended September 30, 2021 increased 7.7%, or $0.9 million, to $12.6 million, primarily due to higher personnel-related expenses and professional service fees resulting from the pension termination process and debt refinancing, partially offset by lower costs incurred in the Commercial Real Estate, Land Operations and Materials & Construction segments.

Gain (loss) on disposal of assets, net of $9.0 million for the third quarter ended September 30, 2020 was primarily driven by the consummation of the sale of assets related to the Company's solar power facility in Port Allen on Kauai.

Financial results - First Nine Months of 2021 compared with 2020


(amounts in millions, except percentage data and per share data; unaudited)	Nine Months Ended September 30,				2021 vs 2020
	2021		2020		$		%
Operating revenue	$	254.6	$	232.5	$	22.1	9.5	%
Cost of operations	(178.6)		(179.0)		0.4		(0.2)	%
Selling, general and administrative	(37.2)		(34.5)		(2.7)		7.8	%
Impairment of assets	—		(5.6)		5.6		(100.0)	%
Gain (loss) on disposal of assets, net	0.4		9.5		(9.1)		(95.8)	%
Operating income (loss)	39.2		22.9		16.3		71.2	%
Income (loss) related to joint ventures	12.2		5.3		6.9		130.2	%

Interest and other income (expense), net	(1.0)		(0.6)		(0.4)		66.7	%
Interest expense	(20.2)		(22.7)		2.5		(11.0)	%
Income tax benefit (expense)	(0.1)		—		(0.1)		NM
Income (loss) from continuing operations	30.1		4.9		25.2		514.3	%
Discontinued operations (net of income taxes)	(0.7)		(0.8)		0.1		(12.5)	%
Net income (loss)	29.4		4.1		25.3		617.1	%
(Income) loss attributable to noncontrolling interest	(0.3)		0.4		(0.7)		(175.0)	%
Net income (loss) attributable to A&B	$	29.1	$	4.5	$	24.6	546.7	%

Basic Earnings (Loss) Per Share of Common Stock:
Basic earnings (loss) per share - continuing operations	$	0.41	$	0.07	$	0.34	485.7	%
Basic earnings (loss) per share - discontinued operations	(0.01)		(0.01)		—		—	%
	$	0.40	$	0.06	$	0.34	566.7	%
Diluted Earnings (Loss) Per Share of Common Stock:
Diluted earnings (loss) per share - continuing operations	$	0.41	$	0.07	$	0.34	485.7	%
Diluted earnings (loss) per share - discontinued operations	(0.01)		(0.01)		—		—	%
	$	0.40	$	0.06	$	0.34	566.7	%

Continuing operations available to A&B common shareholders	$	29.7	$	5.3	$	24.4	460.4	%
Discontinued operations available to A&B common shareholders	(0.7)		(0.8)		0.1		(12.5)	%
Net income (loss) available to A&B common shareholders	$	29.0	$	4.5	$	24.5	544.4	%


Funds From Operations ("FFO")1	$	57.0	$	34.3	$	22.7	66.2	%
Core FFO1	$	51.9	$	43.0	$	8.9	20.7	%

FFO per diluted share	$	0.79	$	0.47	$	0.32	68.1	%
Core FFO per diluted share	$	0.71	$	0.59	$	0.12	20.3	%
Weighted average diluted shares outstanding (FFO/Core FFO)2	72.6		72.4

1 For definitions of capitalized terms and a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures, refer to page 37.
2 May differ from figure used in the consolidated statements of operations based on differing dilutive effects for net income (loss) versus FFO/Core FFO.

The causes of material changes in the condensed consolidated statements of operations for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 are described below or in the Analysis of Operating Revenue and Profit by Segment sections below.

Operating revenue for the nine months ended September 30, 2021 increased 9.5%, or $22.1 million, to $254.6 million, primarily due to higher revenues from the Commercial Real Estate and Land Operations segments, partially offset by lower revenue from the Materials & Construction segment.

Cost of operations for the ~~first quarter~~nine months ended ~~March 31,~~September 30, 2021 decreased ~~3.7%,~~0.2% or ~~$2.1~~0.4 million, to ~~$55.2~~$178.6 million, primarily due ~~primarily~~ to decreases in costs incurred by the Commercial Real Estate and Land Operations segments, partially offset by an increase in costs incurred by the Materials & Construction ~~and Commercial Real Estate segments.~~segment.

Selling, general and administrative for the ~~first quarter~~nine months ended ~~March 31,~~September 30, 2021 ~~decreased 11.6%~~increased 7.8%, or ~~$1.6~~$2.7 million, to ~~$12.2~~$37.2 million, due primarily ~~due~~ to higher corporate personnel-related expenses and professional service fees, partially offset by lower ~~personnel-related costs.~~costs incurred in the Commercial Real Estate, Land Operations and Materials & Construction segments.

Gain (loss) on disposal of assets, net of $0.4 million for the nine months ended September 30, 2021 was primarily driven by the sale of residual, non-core land parcels on Maui. Gain (loss) on disposal of assets, net of $9.5 million for the nine months ended September 30, 2020 was primarily driven by the consummation of the sale of assets related to the Company's solar power facility in Port Allen on Kauai.

2629

Analysis of Operating Revenue and Profit by Segment

The following analysis should be read in conjunction with the consolidated financial statements and related notes thereto.

Commercial Real Estate

Financial results - ~~First~~Third quarter of 2021 compared with 2020

Results of operations for the ~~first~~third quarter ended ~~March 31,~~September 30, 2021 and 2020 were as follows:

(amounts in millions, except percentage data and acres; unaudited) Three Months Ended March 31, 2021 vs 2020
2021 2020 $ %
Commercial Real Estate operating revenue $ 39.9 $ 43.4 $ (3.5) (8.1) %
Commercial Real Estate operating costs and expenses (23.4) (24.3) 0.9 (3.7) %
Selling, general and administrative (1.5) (2.1) 0.6 (28.6) %
Intersegment operating revenue, net1
0.3 0.7 (0.4) (57.1) %
Interest and other income (expense), net 0.1 0.4 (0.3) (75.0) %
Commercial Real Estate operating profit (loss) $ 15.4 $ 18.1 $ (2.7) (14.9) %
Operating profit (loss) margin 38.6 % 41.7 %
Net Operating Income ("NOI")2
$ 25.3 $ 28.9 $ (3.6) (12.4) %
Same-Store Net Operating Income ("Same-Store NOI")2
$ 24.7 $ 28.3 $ (3.6) (12.6) %
Gross leasable area ("GLA") in square feet ("SF") for improved properties at end of period 3.9 3.9 — —%
Ground leases (acres at end of period) 152.0 153.7 (1.7) (1.1) %
1 Intersegment operating revenue, net for Commercial Real Estate is primarily from the Materials & Construction segment and is eliminated in the consolidated results of operations.
2 For a discussion of management's use of a non-GAAP financial measures and the required reconciliation of non-GAAP measures to GAAP measures, refer to page 31.


(amounts in millions, except percentage data and acres; unaudited)	Three Months Ended September 30,						2021 vs 2020
	2021			2020			$		%
Commercial Real Estate operating revenue	$	44.0		$	35.7		$	8.3	23.2	%
Commercial Real Estate operating costs and expenses	(24.1)			(23.5)			(0.6)		2.6	%
Selling, general and administrative	(1.6)			(1.7)			0.1		(5.9)	%
Intersegment operating revenue, net1	0.3			0.5			(0.2)		(40.0)	%

Interest and other income (expense), net	0.4			—			0.4		NM
Commercial Real Estate operating profit (loss)	$	19.0		$	11.0		$	8.0	72.7	%
Operating profit (loss) margin	43.2		%	30.8		%

Net Operating Income ("NOI")2	$	28.1		$	21.6		$	6.5	30.2	%

Same-Store Net Operating Income ("Same-Store NOI")2	$	27.4		$	21.1		$	6.3	29.7	%
Gross leasable area ("GLA") in square feet ("SF") for improved properties at end of period	3.9			3.9			—		—	%
Ground leases (acres at end of period)	146.0			153.7			(7.7)		(5.0)	%

1 Intersegment operating revenue, net for Commercial Real Estate is primarily from the Materials & Construction segment and is eliminated in the consolidated results of operations.
2 For a discussion of management's use of a non-GAAP financial measures and the required reconciliation of non-GAAP measures to GAAP measures, refer to page 37.

Commercial Real Estate operating revenue ~~decreased 8.1%~~increased 23.2% or ~~$3.5~~$8.3 million, to ~~$39.9~~$44.0 million for the ~~first~~third quarter ended ~~March 31,~~September 30, 2021, as compared to the ~~first~~third quarter ended ~~March 31,~~September 30, 2020. Operating profit ~~decreased 14.9%~~increased 72.7%, or ~~$2.7~~$8.0 million, to ~~$15.4~~$19.0 million for the ~~first~~third quarter ended ~~March 31,~~September 30, 2021, as compared to the ~~first~~third quarter ended ~~March 31,~~September 30, 2020. The ~~decrease~~increase in operating revenue and operating profit from the prior year is due primarily to lower reductions to revenue related to uncollectible tenant billings and other rent relief modifications provided to tenants as a result of rent collections (total net revenue reduction of $0.4 million during the third quarter ended September 30, 2021, as compared to $9.0 million during the comparable prior period, inclusive of unbilled straight-line lease receivables). Operating costs and expenses for the quarter ended September 30, 2021 increased by $0.6 million as compared to the prior year due primarily to higher property operating costs as a result of increased traffic at our properties and tenants' increasing operations.

Financial results - First Nine Months of 2021 compared with 2020

Operating results for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020, were as follows:


	Nine Months Ended September 30,						2021 vs. 2020
(amounts in millions, except percentage data; unaudited)	2021			2020			$		%
Commercial Real Estate operating revenue	$	127.2		$	113.1		$	14.1	12.5	%
Commercial Real Estate operating costs and expenses	(71.0)			(71.8)			0.8		(1.1)	%
Selling, general and administrative	(4.8)			(5.6)			0.8		(14.3)	%
Intersegment operating revenue, net1	1.0			1.9			(0.9)		(47.4)	%

Interest and other income (expense), net	0.6			0.3			0.3		100.0	%
Commercial Real Estate operating profit (loss)	$	53.0		$	37.9		$	15.1	39.8	%
Operating profit (loss) margin	41.7		%	33.5		%

Net Operating Income ("NOI")2	$	81.9		$	72.7				12.7	%

Same-Store Net Operating Income ("Same-Store NOI")2	$	79.9		$	71.0				12.5	%
1 Intersegment operating revenue, net for Commercial Real Estate is primarily from the Materials & Construction segment and is eliminated in the consolidated results of operations.
2 For a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures, refer to page 37.

Commercial Real Estate operating revenue increased 12.5% or $14.1 million, to $127.2 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. Operating profit increased 39.8%, or $15.1 million, to $53.0 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. The increase in operating revenue and operating profit from the prior year is primarily driven by lower reductions into revenue ~~that the Company has recorded~~related to uncollectible tenant billings and other rent relief modifications provided to tenants as a result of ~~other relief modifications and other adjustments, as well as those recorded based on its assessments of uncollectable tenant billings~~rent collections (totals of ~~$4.3~~$5.1 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, as compared to ~~$0.6~~$19.1 million during the comparable prior ~~year~~ period, inclusive of ~~the impact to~~ unbilled straight-line lease receivables). ~~Such impact was~~Operating costs and expenses for the nine months ended September 30, 2021 decreased by $0.8 million due primarily to lower lease origination amortization charges, partially offset by a decrease in operating costs and expenses of $0.9 million due to variable operational costs and other activity at its commercial real estate properties due to COVID-19, as well as lower selling, general and administrative expenses, which decreased $0.6 million from the prior year's quarter primarily driven by lower personnel cost.higher property taxes.

Commercial Real Estate portfolio acquisitions and dispositions

There were no acquisitions of CRE improved properties or ground lease interests in land during the three and nine months ended ~~March 31,~~September 30, 2021.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company had the following disposition related to a parcel of land (which was subject to a ground lease in the CRE segment) that was sold in conjunction with a larger, non-core asset sale in the Land Operations segment (dollars in millions):

Dispositions

Property

Location

Date
(Month/Year)

Sales Price

GLA (SF)

Residual Maui land

Maui, HI

2/21

0.3

N/A

Leasing activity

During the ~~first~~third quarter ended ~~March 31,~~September 30, 2021, the Company signed 1134 new leases and 4046 renewal leases for its improved properties across its ~~three~~retail, industrial, and office asset classes, covering ~~121,600~~220,700 square feet of GLA. The 1134 new leases consist of ~~15,800~~90,900 square feet with an average annual base rent of ~~$37.89~~$27.16 per-square-foot. Of the 1134 new leases, ~~four~~ten leases with a total GLA of ~~5,300~~47,700 square feet were considered comparable (i.e., renewals, for the same units, or new leases executed for units that have been vacated in the previous 12 months for comparable space and comparable lease terms) and, for these ~~four~~ten leases, resulted in ~~a 23.2%~~an 8.7% average base rent increase over comparable expiring leases. The 4046 renewal leases consist of ~~105,800~~129,800 square feet with an average annual base rent of ~~$21.92~~$26.56 per square foot. Of the 4046 renewal leases, 2236 leases with a total GLA of ~~72,000~~81,100 square feet were considered comparable and resulted in a 0.2% average base rent decrease over comparable expiring leases.

Leasing activity summarized by asset class for the three and nine months ended ~~March 31,~~September 30, 2021 ~~was~~were as follows:


		Three Months Ended March 31, 2021				Three Months Ended September 30, 2021				Nine Months Ended September 30, 2021
		Leases	GLA	ABR/SF	Rent Spread1			Leases	GLA	ABR/SF	Rent Spread1	Leases	GLA	ABR/SF	Rent Spread1
Retail	Retail	32	54,402	$37.30	3.0%		Retail	56	91,436	$40.52	1.2%	141	244,423	$37.66	5.1%
Industrial	Industrial	16	64,709	$12.39	(0.2)%		Industrial	20	123,610	$15.84	5.5%	54	226,808	$14.82	3.9%
Office	Office	3	2,460	$34.83	—%		Office	4	5,646	$44.78	(4.7)%	11	16,883	$34.77	(0.8)%

1 Rent spread is calculated as percentage change in ABR in the first year of a signed lease relative to the ABR in the last year of the prior lease for comparable leases, a subset of the total population of leases for the period presented (described above).							1 Rent spread is calculated as percentage change in ABR in the first year of a signed lease relative to the ABR in the last year of the prior lease for comparable leases, a subset of the total population of leases for the period presented (described above).

1~~Rent spread is calculated for comparable leases, a subset of the total population of leases for the period presented (described above).~~

Occupancy

The Company has historically (through the period ended December 31, 2020) reported occupancy on a physical basis (i.e., based on timing of when the lessee has physical access to the space, henceforth, “Physical Occupancy”). Beginning in the period ended March 31, 2021, to provide additional transparency regarding the status of the spaces available in its improved properties, the Company presents two differentreports three types of ~~occupancy ("Leased~~occupancy: "Leased Occupancy", "Physical Occupancy," and "Economic ~~Occupancy").~~Occupancy."

The Leased Occupancy percentage calculates the square footage leased (i.e., the space has been committed to by a lessee under a signed lease agreement) as a percentage of total available improved property ~~space~~square footage as of the end of the period reported.

The Physical Occupancy percentage calculates the square footage leased and commenced (i.e., measured when the lessee has physical access to the space) as a percentage of total available improved property space at the end of the period reported.

The Economic Occupancy percentage calculates the square footage under leases for which the lessee is contractually obligated to make lease-related payments (i.e., subsequent to the rent commencement date) to total available improved property ~~space~~square footage as of the end of the period reported.

The Company's improved portfolio occupancy metrics as of ~~March 31,~~September 30, 2021 and 2020 were as follows:


		As of	As of	Basis Point Change		As of	As of	Basis Point Change
		March 31, 2021	March 31, 2020			September 30, 2021	September 30, 2020
Leased Occupancy	Leased Occupancy	93.8%	94.9%	(110)	Leased Occupancy	94.6%	94.2%	40
Physical Occupancy	Physical Occupancy	93.1%	94.7%	(160)	Physical Occupancy	94.0%	93.5%	50
Economic Occupancy	Economic Occupancy	92.4%	93.8%	(140)	Economic Occupancy	92.0%	92.9%	(90)

For further context, the Company's Leased Occupancy and Economic Occupancy metrics for its improved portfolio summarized by asset class – and the corresponding occupancy metrics for a category of properties that were owned and operated for the entirety of the prior calendar year and current period, to date ("Same-Store" as more fully described below) – as of ~~March 31,~~September 30, 2021 and 2020 were as follows:


Leased Occupancy
	As of	As of	Basis Point Change
	September 30, 2021	September 30, 2020
Retail	93.2%	92.4%	80
Industrial	98.0%	97.8%	20
Office	90.2%	92.3%	(210)
Total Improved Portfolio	94.6%	94.2%	40


Leased Occupancy
Economic Occupancy					Economic Occupancy
		As of	As of	Basis Point Change		As of	As of	Basis Point Change
		March 31, 2021	March 31, 2020			September 30, 2021	September 30, 2020
Retail	Retail	91.9%	93.7%	(180)	Retail	89.5%	90.5%	(100)
Industrial	Industrial	97.8%	97.4%	40	Industrial	97.4%	97.8%	(40)
Office	Office	93.0%	94.3%	(130)	Office	89.3%	92.3%	(300)
Total Improved Portfolio	Total Improved Portfolio	93.8%	94.9%	(110)	Total Improved Portfolio	92.0%	92.9%	(90)


Same-Store Leased Occupancy
	As of	As of	Basis Point Change
	September 30, 2021	September 30, 2020
Retail	93.1%	92.4%	70
Industrial	98.0%	97.8%	20
Office	90.2%	92.3%	(210)
Total Improved Portfolio	94.6%	94.2%	40

Economic Occupancy
As of As of Basis Point Change
March 31, 2021 March 31, 2020
Retail 89.9% 92.4% (250)
Industrial 97.7% 97.4% 30
Office 91.2% 87.5% 370
Total Improved Portfolio 92.4% 93.8% (140)


Same-Store Economic Occupancy
	As of	As of	Basis Point Change
	September 30, 2021	September 30, 2020
Retail	89.6%	90.5%	(90)
Industrial	97.4%	97.8%	(40)
Office	89.3%	92.3%	(300)
Total Improved Portfolio	92.1%	92.9%	(80)

Same-Store Leased Occupancy
As of As of Basis Point Change
March 31, 2021 March 31, 2020
Retail 91.8% 93.7% (190)
Industrial 97.8% 97.4% 40
Office 93.0% 94.3% (130)
Total Improved Portfolio 93.8% 94.9% (110)

Same-Store Economic Occupancy
As of As of Basis Point Change
March 31, 2021 March 31, 2020
Retail 89.9% 92.4% (250)
Industrial 97.7% 97.4% 30
Office 91.2% 87.5% 370
Total Improved Portfolio 92.4% 93.8% (140)

Land Operations

Trends, events and uncertainties

The ~~asset class mix~~composition of real estate sales in any given period can be diverse and has historically included developed residential real estate, developable subdivision lots, undeveloped land, and/or property sold under threat of condemnation. Further, the timing of property or parcel sales has affected and can significantly affect operating results in a given period.

Additionally, the operating profit reported in each period does not necessarily follow a percentage of sales trend because the cost basis of property sold can differ significantly between transactions. For example, the sale of undeveloped land and vacant parcels in Hawai‘i may result in higher margins than the sale of developed property due to the low historical cost basis of the Company's land owned in Hawai‘i.

As a result, direct year-over-year comparison of the Land Operations segment results may not provide a consistent, measurable indicator of future performance. Further, Land Operations revenue trends, cash flows from the sales of real estate, and the amounts of real estate developments for sale on the Company's condensed consolidated balance sheet do not necessarily indicate future profitability trends for this segment.

Financial results - ~~First~~Third quarter of 2021 compared with 2020

Results of operations for the ~~first~~third quarter ended ~~March 31,~~September 30, 2021 and 2020 were as follows:


		Three Months Ended March 31,					Three Months Ended September 30,
(amounts in millions; unaudited)	(amounts in millions; unaudited)	2021		2020		(amounts in millions; unaudited)	2021		2020
Development sales revenue	Development sales revenue	$	—	$	3.6	Development sales revenue	$	—	$	2.0
Unimproved/other property sales revenue	Unimproved/other property sales revenue	11.3		2.1		Unimproved/other property sales revenue	0.6		—
Other operating revenue1	Other operating revenue1	5.8		5.3		Other operating revenue1	4.8		5.4
Total Land Operations operating revenue2	Total Land Operations operating revenue2	17.1		11.0		Total Land Operations operating revenue2	5.4		7.4
Land Operations operating costs and expenses3	Land Operations operating costs and expenses3	(8.2)		(8.1)		Land Operations operating costs and expenses3	(4.6)		(12.9)
Selling, general and administrative	Selling, general and administrative	(0.9)		(1.2)		Selling, general and administrative	(0.9)		(1.3)
Gain (loss) on disposal of assets, net	Gain (loss) on disposal of assets, net	0.1		—		Gain (loss) on disposal of assets, net	—		8.9
Earnings (loss) from joint ventures	Earnings (loss) from joint ventures	3.6		3.0		Earnings (loss) from joint ventures	2.4		1.3
Interest and other income (expense), net	Interest and other income (expense), net	(0.3)		(0.2)		Interest and other income (expense), net	(0.6)		(0.3)
Total Land Operations operating profit (loss)2	Total Land Operations operating profit (loss)2	$	11.4	$	4.5	Total Land Operations operating profit (loss)2	$	1.7	$	3.1

1 Other operating revenue includes revenue related to trucking, renewable energy and diversified agriculture.
1 Other operating revenue includes legacy land licensing and leasing, trucking service, and renewable energy.						1 Other operating revenue includes legacy land licensing and leasing, trucking service, and renewable energy.
2 As described elsewhere in this Form 10-Q, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.	2 As described elsewhere in this Form 10-Q, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.					2 As described elsewhere in this Form 10-Q, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.
3 Includes intersegment operating charges primarily from CRE that are eliminated in the consolidated results of operations.	3 Includes intersegment operating charges primarily from CRE that are eliminated in the consolidated results of operations.					3 Includes intersegment operating charges primarily from CRE that are eliminated in the consolidated results of operations.

~~First~~Third quarter of 2021: Land Operations revenue during the third quarter ended ~~March 31,~~September 30, 2021 was $5.4 million, primarily consisting of revenue related to the Company's legacy business activities in the Land Operations segment (primarily legacy land licensing and leasing, trucking service, and renewable energy), as well as sales of unimproved land parcels on the islands of Kauai and Maui.

Land Operations operating profit of $1.7 million during the third quarter ended September 30, 2021 was primarily composed of the margins from the legacy land licensing and leasing, and trucking services. Earnings from joint ventures of $2.4 million during the third quarter ended September 30, 2021 was primarily driven by unit sales at the Kukui‘ula joint venture projects (discussion of cash distributed to the Company from the joint venture projects is included in the Liquidity and Capital Resources sectionbelow).

Third quarter of 2020: Operating revenue was $7.4 million and included the sales of two development parcels at Maui Business Park. Revenue also included other operating revenues related to the Company's legacy business activities in the Land Operations segment (e.g., legacy land licensing and leasing, trucking service, and renewable energy).

Further, during the third quarter ended September 30, 2020, the Company executed a purchase and sale agreement and consummated the sale of assets related to its solar power facility in Port Allen on Kauai for purchase consideration (measured at the date of disposal) of approximately $17.1 million. In connection with the sale, the Company recorded a gain on disposal of approximately $8.9 million.

Land Operations operating profit of $3.1 million during the third quarter ended September 30, 2020 was due primarily to the margins realized for the sales activity previously described, as well as profits generated from the operations of the segment's other legacy business activities.

Financial Results - First Nine Months of 2021 compared with 2020


	Nine Months Ended September 30,
(amounts in millions; unaudited)	2021		2020
Development sales revenue	$	11.2	$	7.9
Unimproved/other property sales revenue	11.9		3.7
Other operating revenue1	15.4		15.9
Total Land Operations operating revenue2	38.5		27.5
Land Operations operating costs and expenses3	(23.4)		(24.0)
Selling, general and administrative	(2.8)		(3.6)
Gain (loss) on disposal of assets, net	0.1		8.9
Earnings (loss) from joint ventures	11.3		3.6
Interest and other income (expense), net	(1.4)		(0.8)
Total Land Operations operating profit (loss)2	$	22.3	$	11.6
1 Other operating revenue includes revenue related to trucking, renewable energy and diversified agriculture.
2 As described elsewhere in this Form 10-Q, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.
3 Includes intersegment operating charges primarily from CRE that are eliminated in the consolidated results of operations.

First nine months of 2021: Land Operations revenue during the nine months ended September 30, 2021 was $38.5 million and included the sale of ~~unimproved/other properties, notably a residential lot in Hali‘imaile on the island of~~development parcels at Maui Business Park, as well as ~~lots~~unimproved and ~~parcels to buyers (Grove Ranch~~other land sales on the islands of Kauai and ~~Valley Isle Produce) on~~ Maui. Revenue also included other operating revenue related to the Company's legacy business activities in the Land Operations segment (primarily trucking service and renewable energy).

Land Operations operating profit of ~~$11.4~~$22.3 million during the ~~first quarter~~nine months ended ~~March 31,~~September 30, 2021 was ~~primarily~~ composed of the margins on the ~~aforementioned~~ sales ~~activity,~~noted above, as well as profits generated from the operations of the segment's other legacy business activities. Earnings from joint ventures of ~~$3.6~~$11.3 million during the ~~first quarter~~nine months ended ~~March 31,~~September 30, 2021 was primarily driven by profitable closings at the Kukui‘ula joint venture projects in the period (discussion of cash distributed to the Company from the joint venture projects is included below).

First ~~quarter~~nine months of 2020:~~Operating~~ Land Operations revenue was ~~$11.0~~$27.5 million and included the ~~impact~~sales of ~~current period~~ development ~~sales~~parcels at Maui Business Park II and an unimproved land ~~sale~~sales on the ~~island~~islands of ~~Kauai.~~Kauai and Maui. Revenue also included other operating revenues related to the Company's legacy business activities in the Land Operations segment (e.g., trucking service, renewable energy, and diversified agribusiness operations).

~~Land Operations operating~~Operating profit of ~~$4.5~~$11.6 million during the ~~first quarter~~nine months ended ~~March 31,~~September 30, 2020 was composed of the margins on the ~~Maui Business Park II development lot and Kauai unimproved property,~~sales noted above, as well as ~~income/loss from real estate joint ventures and~~profits generated from the operations of the ~~Land Operations~~ segment's other legacy business activities. Other drivers of operating profit during the period included favorable outcomes for contingent liabilities recorded as part of the sale of agricultural land on Maui in 2018 that were resolved in 2020.

3035

Materials & Construction

Financial results - ~~First~~Third quarter of 2021 compared with 2020

Results of operations for the ~~first~~third quarter ended ~~March 31,~~September 30, 2021 and 2020 were as follows:

(dollars in millions; unaudited) Three Months Ended March 31, 2021 vs 2020
2021 2020 $ %
Materials & Construction
Operating revenue1
$ 24.0 $ 26.4 $ (2.4) (9.1)%
Operating costs and expenses (23.7) (25.0) 1.3 (5.2)%
Selling, general and administrative (3.9) (4.5) 0.6 (13.3)%
Intersegment operating charges, net2
(0.2) (0.6) 0.4 (66.7)%
Income (loss) related to joint ventures (0.2) 0.3 (0.5) (166.7)%
Interest and other income (expense), net — 0.1 (0.1) (100.0)%
Materials & Construction operating profit (loss)1
$ (4.0) $ (3.3) $ (0.7) 21.2%
Operating margin percentage (16.7) % (12.5) %
Depreciation and amortization $ 2.6 $ 2.8 $ (0.2) (7.1)%
Backlog at period end3
$ 127.2 $ 62.1 $ 65.1 104.8%
1 As described elsewhere in this Form 10-Q, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.
2 Intersegment operating charges, net for Materials & Construction represent amounts primarily from the Commercial Real Estate segment and are eliminated in the consolidated results of operations.
3 Backlog represents the total amount of revenue that Grace Pacific and Maui Paving, LLC, a 50-percent-owned unconsolidated affiliate, expect to realize on contracts awarded. Backlog primarily consists of asphalt paving and, to a lesser extent, Grace Pacific’s consolidated revenue from its construction-and traffic control-related products. Backlog includes estimated revenue from the remaining portion of contracts not yet completed, as well as revenue from approved change orders. The length of time that projects remain in backlog can span from a few days for a small volume of work to 36 months for large paving contracts and contracts performed in phases. This amount includes opportunity backlog consisting of government contracts in which Grace Pacific has been confirmed to be the lowest bidder and formal communication of the award is perfunctory at the time of this disclosure (such amounts were $51.9 million and $6.4 million as of March 31, 2021 and 2020, respectively. Circumstances outside the Company's control such as procurement or technical protests may arise that prevent the finalization of such contracts. Maui Paving's backlog as of March 31, 2021 and 2020 was $3.7 million and $7.6 million, respectively.


(dollars in millions; unaudited)	Three Months Ended September 30,						2021 vs 2020
	2021			2020			$		%
Materials & Construction
Operating revenue1	$	34.9		$	34.7		$	0.2	0.6%
Operating costs and expenses	(31.8)			(30.2)			(1.6)		5.3%
Selling, general and administrative	(3.5)			(3.6)			0.1		(2.8)%
Intersegment operating charges, net2	(0.1)			(0.3)			0.2		(66.7)%

Gain (loss) on disposal of assets, net	—			0.1			(0.1)		NM
Income (loss) related to joint ventures	0.2			0.8			(0.6)		(75.0)%
Interest and other income (expense), net	—			0.1			(0.1)		NM
Materials & Construction operating profit (loss)1	$	(0.3)		$	1.6		$	(1.9)	(118.8)%
Operating margin percentage	(0.9)		%	4.6		%

Depreciation and amortization	$	2.6		$	2.8		$	(0.2)	(7.1)%


Backlog at period end3	$	193.5		$	114.0		$	79.5	69.7%

1 As described elsewhere in this Form 10-Q, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.
2 Intersegment operating charges, net for Materials & Construction represent amounts primarily from the Commercial Real Estate segment and are eliminated in the consolidated results of operations.
3 Backlog represents the total amount of revenue that Grace Pacific, Maui Paving, LLC and Goodfellow Grace Pacific A J.V. expect to realize on contracts awarded. Both Maui Paving and Goodfellow Grace Pacific are a 50-percent-owned unconsolidated affiliates. Backlog primarily consists of asphalt paving and, to a lesser extent, Grace Pacific’s consolidated revenue from its construction-and traffic control-related products and services. Backlog includes estimated revenue from the remaining portion of contracts not yet completed, as well as revenue from approved change orders. The length of time that projects remain in backlog can span from a few days for a small volume of work to 36 months, or longer, for large paving contracts and contracts performed in phases. This amount includes opportunity backlog consisting of contracts in which Grace Pacific has been confirmed to be the lowest bidder at the time of this disclosure (such amounts were $85.2 million and $57.4 million as of September 30, 2021 and 2020, respectively). Circumstances outside the Company's control such as procurement or technical protests, and/or changes in the availability of project funding, among others, may arise that prevent the finalization of such contracts. Maui Paving's backlog as of September 30, 2021 and 2020 was $12.8 million and $7.3 million, respectively. Goodfellow Grace Pacific's backlog as of September 30, 2021 was $24.2 million. There was no backlog related to Goodfellow Grace Pacific as of September 30, 2020.

Materials & Construction revenue was ~~$24.0~~$34.9 million for the ~~first~~third quarter ended ~~March 31,~~September 30, 2021, compared to ~~$26.4~~$34.7 million for the ~~first~~third quarter ended ~~March 31,~~September 30, 2020. Operating loss was ~~$4.0~~$0.3 million for the ~~first~~third quarter ended ~~March 31,~~September 30, 2021, compared to operating ~~loss~~profit of ~~$3.3~~$1.6 million for the ~~first~~third quarter ended ~~March 31,~~September 30, 2020. During the quarter ended ~~March 31,~~September 30, 2021, the segment operating loss was due primarily ~~driven by low~~to lower paving volumes ~~driven by the timing of projects~~ and ~~inclement weather in the period,~~margins, partially offset by ~~robust materials (i.e., construction aggregate) production~~higher quarry volumes and ~~sales.~~margins. During the quarter ended ~~March 31,~~September 30, 2020, the segment operating ~~loss~~profit was primarily driven by ~~project delays resulting~~positive results from ~~inclement weather, government agency-imposed delays and the then-emerging impacts of COVID-19 (including travel restrictions and resource availability for projects on neighbor islands).~~Grace paving operations.

The Company is continuing to monitor the performance of the M&C segment in the context of the overall industry and economy as impacted by the COVID-19 pandemic. However, based on the inherent uncertainty in the general economic environment, there can be no assurance that the carrying values associated with the long-lived assets and goodwill will be recoverable and impairments on such long-lived assets and goodwill may be required.

~~Backlog at March 31,~~As of September 30, 2021 and 2020, backlog was ~~$127.2~~$193.5 million (as a result of the disposal of GPRM at the end of the second quarter ended June 30, 2020, this metric excludes backlog related to GPRM). On a comparable basis (i.e., adjusted to exclude GPRM backlog of $19.9and $114.0 million, ~~as of March 31, 2020), backlog increased from $62.1 million at March 31, 2020.~~respectively. The increase in backlog from September 30, 2020 to September 30, 2021 was primarily driven by an increase in the amount of marketed bid opportunities ~~and an improvement in the rate of bids~~ won by the ~~Company.~~Grace Pacific.

Financial Results - First Nine Months of 2021 compared with 2020


(dollars in millions, tons delivered in thousands; unaudited)	Nine Months Ended September 30,						2021 vs 2020
	2021			2020			$ Change		Change
Materials & Construction
Operating revenue1	$	88.9		$	91.9		$	(3.0)	(3.3)%
Operating costs and expenses	(84.2)			(83.4)			(0.8)		1.0%
Selling, general and administrative	(11.3)			(12.0)			0.7		(5.8)%
Intersegment operating charges, net2	(0.7)			(1.6)			0.9		(56.3)%
Impairment of assets	—			(5.6)			5.6		(100.0)%
Gain (loss) on disposal of assets, net	0.1			0.1			—		—%
Income (loss) related to joint ventures	0.9			1.7			(0.8)		(47.1)%
Interest and other income (expense), net	0.1			0.3			(0.2)		(66.7)%
Materials & Construction operating profit (loss)1	$	(6.2)		$	(8.6)		$	2.4	(27.9)%
Operating margin percentage	(7.0)		%	(9.4)		%
Impairment of assets	$	—		$	5.6		$	(5.6)	(100.0)%
Depreciation and amortization	$	8.1		$	8.2		$	(0.1)	(1.2)%




1 As described elsewhere in this Form 10-Q, during the current year, the Company changed the composition of its reportable segments which caused reported amounts (i.e., revenue and operating profit) in the historical period to be reclassified from Land Operations to Materials & Construction. All comparable information for the historical periods has been restated to reflect the impact of these changes.
2 Intersegment operating charges, net for Materials & Construction is primarily from the Commercial Real Estate segment and are eliminated in the consolidated results of operations.

Materials & Construction revenue was $88.9 million for the nine months ended September 30, 2021, compared to $91.9 million for the nine months ended September 30, 2020. Operating loss was $6.2 million for the nine months ended September 30, 2021, compared to operating loss of $8.6 million for the nine months ended September 30, 2020. During the nine months ended September 30, 2021, the segment operating loss was primarily driven by low paving volumes due to project delays and government agency contracting decisions. During the nine months ended September 30, 2020, the segment operating loss of $8.6 million was primarily driven by the write-down of $5.6 million (based on fair value less cost to sell) related to GPRM, a formerly-held subsidiary of Grace Pacific, that was recorded in advance of the sale and disposal consummated at the close of the quarter ended June 30, 2020. The remaining operating loss was primarily due to the impact of low paving volumes due in part to project delays and the impact of COVID-19 (including travel restrictions and resource availability for projects on neighboring islands).

Use of Non-GAAP Financial Measures

The Company uses non-GAAP measures when evaluating operating performance because management believes that they provide additional insight into the Company's and segments' core operating results, and/or the underlying business trends affecting performance on a consistent and comparable basis from period to period. These measures generally are provided to

investors as an additional means of evaluating the performance of ongoing core operations. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for or superior to, financial measures calculated in accordance with GAAP.

FFO is presented by the Company as a widely used non-GAAP measure of operating performance for real estate companies. FFO is defined by the National Association of Real Estate Investment Trusts ("Nareit") December 2018 Financial Standards White Paper as follows: net income (calculated in accordance with GAAP), excluding (1) depreciation and amortization related to real estate, (2) gains and losses from the sale of certain real estate assets, (3) gains and losses from change in control and (4) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

The Company believes that, subject to the following limitations, FFO provides a supplemental measure to net income (calculated in accordance with GAAP) for comparing its performance and operations to those of other REITs. FFO does not represent an alternative to net income calculated in accordance with GAAP. In addition, FFO does not represent cash generated from operating activities in accordance with GAAP, nor does it represent cash available to pay distributions and should not be considered as an alternative to cash flow from operating activities, determined in accordance with GAAP, as a measure of the Company’s liquidity. The Company presents different forms of FFO:

•"Core FFO" represents a non-GAAP measure relevant to the operating performance of the Company's commercial real estate business (i.e., its core business). Core FFO is calculated by adjusting CRE operating profit to exclude items noted above (i.e., depreciation and amortization related to real estate included in CRE operating profit) and to make further adjustments to include expenses not included in CRE operating profit but that are necessary to accurately reflect the operating performance of its core business (i.e., corporate expenses and interest expense attributable to this core business) or to exclude items that are non-recurring, infrequent, unusual and unrelated to the core business operating performance (i.e., not likely to recur within two years or has not occurred within the prior two years). The Company believes such adjustments facilitate the comparable measurement of the Company's core operating performance over time. The Company believes that Core FFO, which is a supplemental non-GAAP financial measure, provides an additional and useful means to assess and compare the operating performance of REITs.

•FFO represents the Nareit-defined non-GAAP measure for the operating performance of the Company as a whole. The Company's calculation refers to net income (loss) available to A&B common shareholders as its starting point in the calculation of FFO.

The Company presents both non-GAAP measures and reconciles each to the most directly-comparable GAAP measure as well as reconciling FFO to Core FFO. The Company's FFO and Core FFO may not be comparable to FFO non-GAAP measures reported by other REITs. These other REITs may not define the term in accordance with the current Nareit definition or may interpret the current Nareit definition differently.

NOI is a non-GAAP measure used internally in evaluating the unlevered performance of the Company's Commercial Real Estate portfolio. The Company believes NOI provides useful information to investors regarding the Company's financial condition and results of operations because it reflects only the contract-based income and cash-based expense items that are incurred at the property level. When compared across periods, NOI can be used to determine trends in earnings of the Company's properties as this measure is not affected by non-contract-based revenue (e.g., straight-line lease adjustments required under GAAP); by non-cash expense recognition items (e.g., the impact of depreciation and amortization expense or impairments); or by other expenses or gains or losses that do not directly relate to the Company's ownership and operations of the properties (e.g., indirect selling, general, administrative and other expenses, as well as lease termination income). The Company believes the exclusion of these items from operating profit (loss) is useful because the resulting measure captures the contract-based revenue that is realizable (i.e., assuming collectability is deemed probable) and the direct property-related expenses paid or payable in cash that are incurred in operating the Company's Commercial Real Estate portfolio, as well as trends in occupancy rates, rental rates and operating costs. NOI should not be viewed as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

NOI represents total Commercial Real Estate contract-based operating revenue that is realizable (i.e., assuming collectability is deemed probable) less the direct property-related operating expenses paid or payable in cash. The calculation of NOI excludes the impact of depreciation and amortization (e.g., depreciation related to capitalized costs for improved properties, other capital expenditures for building/area improvements and tenant space improvements, as well as amortization of leasing commissions); straight-line lease adjustments (including amortization of lease incentives); amortization of favorable/unfavorable lease assets/liabilities; lease termination income; interest and other income (expense), net; selling, general, administrative and other expenses (not directly associated with the property); and impairment of commercial real estate assets.

The Company reports NOI and Occupancy on a Same-Store basis, which includes the results of properties that were owned and operated for the entirety of the prior calendar year and current reporting period, year-to-date. The Same-Store pool excludes properties under development or redevelopment and also excludes properties acquired or sold during either of the comparable reporting periods. While there is management judgment involved in classifications, new developments and redevelopments are moved into the Same-Store pool after one full calendar year of stabilized operation. Properties included in held for sale are excluded from Same-Store.

The Company believes that reporting on a Same-Store basis provides investors with additional information regarding the operating performance of comparable assets separate from other factors (such as the effect of developments, redevelopments, acquisitions or dispositions).

To emphasize, the Company's methods of calculating non-GAAP measures may differ from methods employed by other companies and thus may not be comparable to such other companies.

Reconciliations of net income (loss) available to A&B common shareholders to FFO and Core FFO for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 are as follows (in millions):

Three Months Ended March 31,
2021 2020
Net income (loss) available to A&B common shareholders $ 9.9 $ 6.2
Depreciation and amortization of commercial real estate properties 9.5 10.2
Gain on the disposal of commercial real estate properties, net (0.2) (0.5)
FFO $ 19.2 $ 15.9
Exclude items not related to core business:
Land Operations Operating Profit (11.4) (4.5)
Materials & Construction Operating (Profit) Loss 4.0 3.3
Loss from discontinued operations — 0.2
Income (loss) attributable to noncontrolling interest — (0.6)
Income tax expense (benefit) 0.1 —
Non-core business interest expense 3.5 4.0
Core FFO $ 15.4 $ 18.3


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss) available to A&B common shareholders	$	6.3	$	3.0	$	29.0	$	4.5
Depreciation and amortization of commercial real estate properties	9.2		9.5		28.2		30.3
Gain on the disposal of commercial real estate properties, net	—		—		(0.2)		(0.5)

FFO	$	15.5	$	12.5	$	57.0	$	34.3
Exclude items not related to core business:
Land Operations Operating (Profit)	(1.7)		(3.1)		(22.3)		(11.6)
Materials & Construction Operating (Profit) Loss	0.3		(1.6)		6.2		8.6
Loss from discontinued operations	0.6		—		0.7		0.8
Income (loss) attributable to noncontrolling interest	0.1		0.2		0.3		(0.4)
Income tax expense (benefit)	—		—		0.1		—
Non-core business interest expense	3.1		3.6		9.9		11.3
Core FFO	$	17.9	$	11.6	$	51.9	$	43.0

Reconciliations of Core FFO starting from CRE operating profit for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 are as follows (in millions):

Three Months Ended March 31,
2021 2020
CRE Operating Profit $ 15.4 $ 18.1
Depreciation and amortization of commercial real estate properties 9.5 10.2
Corporate and other expense (6.0) (6.2)
Core business interest expense (3.5) (3.8)
Core FFO $ 15.4 $ 18.3


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
CRE Operating Profit	$	19.0	$	11.0	$	53.0	$	37.9
Depreciation and amortization of commercial real estate properties	9.2		9.5		28.2		30.3
Corporate and other expense	(6.8)		(5.4)		(18.9)		(13.8)
Core business interest expense	(3.5)		(3.5)		(10.4)		(11.4)
Core FFO	$	17.9	$	11.6	$	51.9	$	43.0

Reconciliations of Commercial Real Estate operating profit to Commercial Real Estate NOI for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 are as follows (in millions):


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
Commercial Real Estate Operating Profit (Loss)	Commercial Real Estate Operating Profit (Loss)	$	15.4	$	18.1		Commercial Real Estate Operating Profit (Loss)	$	19.0	$	11.0	$	53.0	$	37.9
Plus: Depreciation and amortization	Plus: Depreciation and amortization	9.5		10.2			Plus: Depreciation and amortization	9.2		9.5		28.2		30.3
Less: Straight-line lease adjustments	Less: Straight-line lease adjustments	(0.8)		(0.8)			Less: Straight-line lease adjustments	(1.1)		0.6		(2.9)		1.1
Less: Favorable/(unfavorable) lease amortization	Less: Favorable/(unfavorable) lease amortization	(0.2)		(0.3)			Less: Favorable/(unfavorable) lease amortization	(0.1)		(0.1)		(0.5)		(0.8)

Less: Termination income							Less: Termination income	(0.1)		(1.1)		(0.1)		(1.1)
Plus: Other (income)/expense, net	Plus: Other (income)/expense, net	(0.1)		(0.4)			Plus: Other (income)/expense, net	(0.4)		—		(0.6)		(0.3)

Plus: Selling, general, administrative and other expenses	Plus: Selling, general, administrative and other expenses	1.5		2.1			Plus: Selling, general, administrative and other expenses	1.6		1.7		4.8		5.6
Commercial Real Estate NOI	Commercial Real Estate NOI	25.3		28.9			Commercial Real Estate NOI	28.1		21.6		81.9		72.7
Less: NOI from acquisitions, dispositions, and other adjustments	Less: NOI from acquisitions, dispositions, and other adjustments	(0.6)		(0.6)			Less: NOI from acquisitions, dispositions, and other adjustments	(0.7)		(0.5)		(2.0)		(1.7)
Same-Store NOI	Same-Store NOI	$	24.7	$	28.3		Same-Store NOI	$	27.4	$	21.1	$	79.9	$	71.0

Liquidity and Capital Resources

Overview

The Company's principal sources of liquidity to meet its business requirements and plans both in the short-term (i.e., the next twelve months from ~~March 31,~~September 30, 2021) and long-term (i.e., beyond the next twelve months) have generally been cash provided by operating activities; available cash and cash equivalents; and borrowing capacity under its various credit facilities. The Company's primary liquidity needs for its business requirements and plans have generally been supporting its known contractual obligations and also funding capital expenditures; shareholder distributions; and working capital needs.

As discussed in Note 6 in this report, the Company amended its revolving credit facility in August 2021, increasing the total revolving commitments to $500 million and extending the term of ~~March 31,~~the facilities to 2025. As of September 30, 2021, there have otherwise been no material changes in the Company's ability to generate and obtain adequate amounts of cash to meet its business requirements and plans in the short-term and long-term from the end of the preceding fiscal year ended December 31, 2020.

Known contractual obligations

A description of material contractual commitments is contained in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the 2020 Form 10-K, and relates to the Company's Notes payable and other debt, Operating lease liabilities and Accrued pension and post-retirement benefits. In addition, a description of other material cash requirements, including capital expenditures, is provided in Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of the 2020 Form 10-K, and includes contractual interest payments for Notes payable and other debt as well as amounts to be spent on contractual non-cancellable purchase obligations (that specifies all significant terms, including fixed or minimum quantities to be purchased, pricing structure and approximate timing of the transaction that are not recorded as liabilities in the consolidated balance sheet).

As of ~~March 31,~~September 30, 2021, there have been no material changes in the Company's known contractual obligations from the end of the preceding fiscal year ended December 31, 2020. Refer to Note 6, Note 11 and Note 13 in this report for further discussion.

As noted above, regarding the approved plan to effect the termination of the Defined Benefit Plans, in 2022, after receiving approval from the IRS and the PBGC and following completion of the limited lump-sum offering, the Company expects to make an additional cash contribution in order to fully fund the Defined Benefit Plans on a plan termination basis, followed by the purchase of annuity contracts to transfer its remaining liabilities under the Defined Benefit Plans. These additional cash contributions are expected to range between ~~$25~~$32 million and ~~$40~~$47 million. However, the actual amount of this cash contribution requirement will depend upon the nature and timing of participant settlements, interest rates, as well as prevailing market conditions.

Further, a description of other commitments, contingencies and off-balance sheet arrangements is contained in the Notes to Consolidated Financial Statements included in Part II, Item 8 of the 2020 Form 10-K. As of ~~March 31,~~September 30, 2021, there have been no material changes in the Company's other commitments, contingencies and off-balance sheet arrangements from the end of the preceding fiscal year ended December 31, 2020. Refer to Note 8 in this report for further discussion.

Sources of liquidity

As noted above, one of the Company's principal sources of liquidity has been cash flows provided by operations, which were ~~$20.6~~$67.2 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, primarily driven in the current year by cash generated from the ~~CRE~~Commercial Real Estate segment (the Company's core business). Total cash flows provided by operations ~~did not fluctuate materially from~~increased as compared to the prior year comparable period ($~~18.9~~37.2 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2020)~~, but,~~ primarily due to the aforementioned higher cash collections generated from the Commercial Real Estate segment, as well as higher cash flows provided by operations from the Land Operations and Materials & Construction segments. Total cash flows in future periods, may be subject to variation from the Land Operations segment due to the varying activity in completing sales on remaining non-core assets as part of the Company's continued execution on its simplification strategy.

The Company's other primary sources of liquidity ~~include~~includes its cash ~~and cash equivalents~~on-hand of ~~$32.0~~$26.5 million as of ~~March 31,~~September 30, 2021 and the Company's revolving credit and term facilities, which provide liquidity and flexibility on a short-term (i.e., the next twelve months from ~~March 31,~~September 30, 2021), as well as long-term basis. On August 31, 2021, the Company amended the existing $450.0 million committed revolving credit facility, which increased the total revolving commitments to $500.0 million, extended the term of the facilities to August 2025, and includes two six-month extension options. In addition, there were favorable amendments to certain covenants and reductions to the interest rates and fees charged. With respect to the revolving credit facility for general A&B purposes, as of ~~March 31,~~September 30, 2021, the Company had ~~$80.0~~$142.0 million of borrowings outstanding, $1.1 million letters of credit issued against and ~~$368.9~~$356.9 million of available capacity on such revolving credit facility (which currently has a term through August 29, 2025 plus two six-month optional extensions).

On August 13, 2021, the Company entered into an equity distribution agreement, or ATM Agreement, pursuant to which we may sell, from time to time, up to an aggregate sales price of $150.0 million of our common stock. Sales of common stock, if any, made pursuant to the ATM Agreement may be sold in negotiated transactions or transactions that are deemed to be “at the market” offerings, as defined in Rule 415 of the Securities Act of 1933, as amended. Actual sales will depend on a variety of factors including market conditions, the trading price of our common stock, our capital needs, and our determination of the appropriate sources of funding to meet such needs. As of September ~~15, 2022). Further, other~~30, 2021, we have sold no shares under the at-the-market offering program. As of September 30, 2021, the Company has capitalized $0.2 million of stock issuance fees that were incurred in conjunction with this offering. We have no obligation to sell the shares available for sale under the at-the-market offering program.

Other sources of liquidity for the Company include trade receivables, contracts retention, and inventories (excluding parts, materials and supplies), totaling ~~$59.4~~$45.2 million at ~~March 31,~~September 30, 2021. As of ~~March 31,~~September 30, 2021, there were no material changes to the Company's other primary sources of liquidity from the end of the preceding fiscal year ended December 31, 2020.

Other uses (or sources) of liquidity

The Company may use (or, in some periods, generate) cash through various investing activities or financing activities. Net cash provided by investing activities was ~~$10.4~~$13.9 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, as compared to net cash provided by investing activities of ~~$2.9~~$20.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2020. ~~The increase is net~~Net cash provided by investing activities during the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was primarily driven by $40.2 million in distributions from the Company's land development joint ventures, ~~(primarily at~~including $34.3 million in distributions from its Kukui‘ula joint venture ~~projects), including a $10.0~~projects. The nine months ended September 30, 2020 included cash proceeds from the disposal of property, investments and other assets of $27.1 million ~~distribution~~(which was primarily driven by the consummation of sales related to ~~a large land parcel sale closed by~~ the ~~main joint venture project~~Company's solar power facility in ~~the period.~~Port Allen on Kauai and also its former GPRM subsidiary), and cash returns of $11.1 million received from investments in affiliates and other investments.

Cash used in investing activities during the period is primarily composed of capital expenditures. InDuring the ~~three~~nine months ended ~~March 31,~~September 30, 2021 the Company had capital expenditures for property, plant and equipment of ~~$5.2~~$26.1 million. As it relates to the CRE segment (i.e., its core business), the Company differentiates capital expenditures as follows (based on management's perspective on discretionary versus non-discretionary areas of spending for its CRE business):

•Growth Capital Expenditures: Property acquisition, development and redevelopment activity to generate income and cash flow growth.

•Maintenance Capital Expenditures: Activity necessary to maintain building value, the current income stream and position in the market.

Capital expenditures for the respective periods for all segments were as follows:


		Three Months Ended March 31,						Nine Months Ended September 30,
(dollars in millions; unaudited)	(dollars in millions; unaudited)	2021		2020		Change	(dollars in millions; unaudited)	2021		2020		Change
CRE property acquisitions, development and redevelopment	CRE property acquisitions, development and redevelopment	$	3.2	$	3.5	(8.6)%	CRE property acquisitions, development and redevelopment	$	14.3	$	8.1	76.5%
Building/area improvements (Maintenance Capital Expenditures)	Building/area improvements (Maintenance Capital Expenditures)	1.2		1.3		(7.7)%	Building/area improvements (Maintenance Capital Expenditures)	5.2		3.8		36.8%
Tenant space improvements (Maintenance Capital Expenditures)	Tenant space improvements (Maintenance Capital Expenditures)	0.2		0.7		(71.4)%	Tenant space improvements (Maintenance Capital Expenditures)	1.9		2.1		(9.5)%
Quarrying and paving	Quarrying and paving	0.6		0.2		200.0%	Quarrying and paving	2.8		2.6		7.7%
Agribusiness and other	Agribusiness and other	—		0.5		(100.0)%	Agribusiness and other	1.9		1.1		72.7%
Total capital expenditures¹		$	5.2	$	6.2	(16.1)%
Total capital expenditures1							Total capital expenditures1	$	26.1	$	17.7	47.5%

1 Excludes capital expenditures for real estate developments to be held and sold as real estate development inventory, which are classified in the condensed consolidated statement of cash flows as operating activities and are excluded from the tables above.

Given the uncertainty around the duration and economic impact of the COVID-19 pandemic, the Company isdid not ~~able to~~ project capital expenditures for 2021 related to any of its segments. However, for the nine months ended September 30, 2021, ~~the Company anticipates activity~~capital expenditures related to property acquisitions, development and redevelopment and building/area improvements and tenant space improvements ~~to be higher than 2020 expenditures.~~

exceeded expenditures for the twelve months ended December 31, 2020.

Net cash flows used in financing activities was ~~$56.2~~$111.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, as compared to net cash provided by financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 of ~~$100.5~~$44.2 million. The change in cash flows from financing activities in 2021 as compared to 2020 was due primarily to the prior year ~~activity (the~~impacts of the COVID-19 pandemic in which the Company ~~drawing $120~~drew $120.0 million on its credit facility as a safeguard and suspended the second and third quarter dividends. During the nine months ended September 30, 2020, the Company's net cash outlays related to financing activities were due primarily to ~~uncertainty caused by~~its net borrowings of notes payable and other debt and deferred financing costs of $59.0 million, as well as cash dividend payments totaling $13.8 million. During the ~~COVID-19 pandemic during~~nine months ended September 30, 2021, the ~~first quarter ended March 31, 2020)~~Company's net cash outlays related to financing activities were due primarily to its net repayments of notes payable and other debt and deferred financing costs of $64.2 million, as ~~compared to current year activity (most notably, the Company making a $31 million payment on its credit facility in the quarter ended March 31, 2021 in addition to the timing of~~well as cash dividend ~~payments).~~payments totaling $46.5 million.

Other capital resource matters

The Company frequently utilizes §1031 orand §1033 of the Internal Revenue Code of 1986, as amended (the "Code"), to obtain tax-deferral treatment when qualifying real estate assets are sold or become subject to involuntary conversion and the resulting proceeds are reinvested in replacement properties within the required time period. Proceeds from potential tax-deferred sales under §1031 of the Code are held in escrow (and presented as part of Restricted cash on the consolidated balance sheets) pending future reinvestment or are returned to the Company for general use if eligibility for tax-deferral treatment based on the required time period lapses. The proceeds from involuntary conversions under §1033 of the Code are held by the Company until the funds are redeployed.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, the Company did not complete any transactions that would give rise to cash proceeds from sales or involuntary conversion activity that qualified under §1031 or §1033 of the Code. Further, during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, there were no acquisitions utilizing eligible/available proceeds from tax-deferred sales or involuntary conversions.

As of ~~March 31,~~September 30, 2021, there are no amounts from tax-deferred sales that are available for use and have not been reinvested under §1031 of the Code. As of ~~March 31,~~September 30, 2021, the Company holds approximately $14.3 million from tax-deferred involuntary conversions that had not yet been reinvested under §1033 of the Code.

Trends, events and uncertainties

As noted above, the COVID-19 pandemic ~~has~~ adversely impacted the global economy; ~~has~~ contributed to significant volatility in financial markets; and ~~both its near-term and long-term~~continued uncertainty of the resulting economic ~~impacts remain uncertain.~~impact remains. This uncertainty includes the potential need for additional capital resources to maintain the ~~Company's~~ business ~~and operations during~~in the event of a ~~period~~widespread decline of ~~potential declining or delayed rent payments~~cash receipts from CRE tenants and/or ~~potential declining revenue~~cash flow from ~~its~~ other ~~businesses.~~businesses as a result of a deterioration in the Hawaii economy due to the Covid-19 pandemic.

The Company's ability to retain outstanding borrowings and utilize remaining amounts available under its revolving credit facility will depend on its continued compliance with the applicable financial covenants and other terms of the Company's notes payable and other debt arrangements. The Company was in compliance with its financial covenants for all outstanding balances as of ~~March 31,~~September 30, 2021. However, as a result of the various uncertainties and factors surrounding COVID-19, the Company may be unable to continue to maintain compliance with certain of its financial covenants. Failure to maintain compliance with its financial covenants or obtain waivers or agree to modifications with its lenders would have a material adverse impact on the Company's financial condition. The Company intends to closely monitor the impact of COVID-19 on its business and intends to operate in compliance with these covenants or seek to obtain waivers or modifications to these financial covenants to enable the Company to maintain compliance.

Based on its current outlook, the Company believes that funds generated from cash provided by operating activities; available cash and cash equivalent balances; and borrowing capacity under its various credit facilities will be sufficient to meet the needs of the Company's business requirements and plans both in the short-term (i.e., the next twelve months from ~~March 31,~~September 30, 2021) and long-term (i.e., beyond the next twelve months). There can be no assurance, however, that the Company will continue to generate cash flows at or above current levels or that it will be able to maintain its ability to borrow under its available credit facilities. As the circumstances underlying its current outlook may change, the Company will continue to actively monitor the situation and may take further actions that it determines is in the best interest of its business, financial condition and liquidity and capital resources.

Other Matters

Critical accounting estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, upon which Management's Discussion and Analysis is based, requires that management exercise judgment when making estimates and assumptions about future events that may affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty and actual results will,

inevitably, differ from those critical accounting estimates. These differences could be material. The most significant accounting estimates inherent in the preparation of the Company's financial statements were described in Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's 2020 Form 10-K.

New accounting pronouncements

Refer to Notes to Consolidated Financial Statements, included in Part 1, Item 1 of this report, for a full description of the impact of recently issued accounting standards, which is incorporated herein by reference, including the expected dates of adoption and estimated effects on the Company's results of operations and financial condition.

3743

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information concerning market risk is incorporated herein by reference to Item 7A of the Company's Form 10-K for the fiscal year ended December 31, 2020. There have been no material changes in the quantitative and qualitative disclosures about market risk since December 31, 2020.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~March 31,~~September 30, 2021, the Company’s disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company's fiscal ~~first~~third quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

3844

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth under the "Legal Proceedings and Other Contingencies" section in Note 8 of Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report, is incorporated herein by reference.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in Item 1A. "Risk Factors" in the Company's most recent annual report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no equity securities sold by the Company during the period covered by this report that were not registered under the Securities Act.

In February 2020, the Company's Board of Directors authorized the Company to repurchase up to $150 million of its common stock beginning on February 25, 2020 and ending on December 31, 2021. In October 2021, the Company's Board of Directors reauthorized the Company to repurchase up to $150 million of its common stock beginning on January 1, 2022 and ending on December 31, 2023. There were no purchases or repurchases of equity securities made by or on behalf of the Company ~~during the period covered by this report.~~in 2021 or 2020 under such plan.

ITEM 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulations S-K (17 CFR 229.104) is included in Exhibit 95 to this periodic report on Form 10-Q.

3945

ITEM 6. EXHIBITS

EXHIBIT INDEX

10. Material Contracts

~~10.b.1.(xl)~~10.1 Alexander & Baldwin, Inc. ~~2021~~ Executive ~~Simplification Incentive Program, effective February 22,~~Severance Plan, A mended and R estated as of January 1, 202 2 .

10.2 Third Amended and Restated Credit Agreement by and among Alexander & Baldwin, Inc., Alexander & Baldwin Investments, LLC, A&B II, LLC, Grace Pacific LLC, Bank of America N.A., First Hawaiian Bank, KeyBank National Association, Wells Fargo Bank, National Association, and other lenders party thereto, dated August 31, 2021.

~~10.b.1.(xxx)~~10.3 Third Amendment ~~No. 2~~ to Second Amended and Restated Note Purchase and Private Shelf Agreement by and among Alexander & Baldwin, Inc. ~~One-Year Performance Improvement Incentive Plan, effective January 1, 2018.~~

~~10.b.1.(xxxiv)~~ ~~Amendment No. 3 to the~~, Alexander & Baldwin, LLC, Prudential Investment Management, Inc. ~~Excess Benefits Plan, effective as~~, and certain affiliates of ~~April 1, 2020.~~Prudential Investment Management, Inc., dated August 31, 2021.

*10.4 ~~All exhibits listed under 10.b.1. are management contracts or compensatory plans or arrangements.~~Note Purchase and Private Shelf Agreement by and among Alexander & Baldwin, Inc., Alexander & Baldwin, LLC, AIG Asset Management (U.S.), LLC., and certain affiliates of AIG Asset Management (U.S.), LLC, dated December 20, 2017.

10.5 Second Amendment to Note Purchase and Private Shelf Agreement by and among Alexander & Baldwin, Inc., Alexander & Baldwin, LLC, AIG Asset Management (U.S.), LLC., and certain affiliates of AIG Asset Management (U.S.), LLC, dated August 31, 2021.

31.1 Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

95 Mine Safety Disclosure.

101 The following information from Alexander & Baldwin, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended ~~March 31,~~September 30, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2021 and December 31, 2020; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020; (iv) Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020; (v) Condensed Consolidated Statements of Equity for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020; and (vi) Notes to Condensed Consolidated Financial Statements.

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						ALEXANDER & BALDWIN, INC.



~~April 30,~~November 5, 2021						By: /s/ Brett A. Brown
						Brett A. Brown
						Executive Vice President and Chief Financial Officer


~~April 30,~~November 5, 2021						By: /s/ Clayton K.Y. Chun
						Clayton K.Y. Chun
						Senior Vice President, Chief Accounting Officer and Controller

4147



2021	$	89.2
2022	110.9
2023	99.9
2024	86.6
2025	74.2
2026	60.5
Thereafter	448.6
Total future lease payments to be received	$	969.9