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Alexander & Baldwin: Say Aloha to Hawaiian Real Estate

Through acquisitions and build-outs, the company should have an exciting several years ahead as it begins to monetize its properties. Here are things to watch:

  • Waihonua high-rise condos to open 2015. Property was acquired in 2010 with an expected 340 units. All of the units have been sold as of October 1st.
  • ONE Ala Moana to open late 2014. With average prices of $1.6 million, all 206 properties have sold.
  • New Hawaii Island joint venture with Brookfield Homes, 10 of 137 units have sold already

Aside from its real estate assets, the company's natural materials segment continues to look  promising. In October, Alexander & Baldwin acquired Grace Pacific. The acquisition connects the company to the largest asphalt paving contractor in Hawaii and will strengthen Alexander & Baldwins dominance in the island state market.

The company's natural materials segment consists of:

  • Hawaii Commercial & Sugar Company, 36,000 acres of sugar and molasses in Maui
  • Maui Brand sugar
  • Hawaii's only precast concrete building materials manufacturer
  • Coffee assets of 4,000 acres, which are currently leased
  • Hawaii's leading infrastructure company
  • seven hot-mix asphalt plants, maintains a 60% market share in the state
  • 50% market share in asphalt paving for Hawaii

Alexander & Baldwin's fields are among some of the highest yielding agricultural assets in the country. Sugar prices legged in 2012 and 2013, but are beginning to look stronger going forward. Hawaii is increasing its spending on infrastructure and roads. The states roads rank bad compared to other states and Alexander & Baldwin should be the clear winner in any progress made on improvements to roads across the state.

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Shares of Alexander & Baldwin closed at $37.64 Monday. The current stock price is around the mid-point of the last 52 weeks ($27.94 to $46.23). Shares are now up 26% in 2013 and 43% since the spin-off from Masco in June 2012. The spin-off was done to unlock value. While investors have sent shares up, I believe there is plenty more upside left.

In fact, Alexander & Baldwin could increase its share price further by splitting up its real estate business from its commercial assets. The series of acquisitions, along with several new project to open in the next three years, and a construction boom in Hawaii provide plenty of upside.

At the time of publication the author held no positions in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Chris Katje has been fascinated with the stock market since a young age. That passion turned into a freelance writing career that began in 2008. Mr. Katje has seen his work appear on Seeking Alpha, the Motley Fool, The Street, and Variety. Chris's annual top ten stock picks list continues to beat the market and grow in popularity. You can follow Chris on Twitter (@chriskatje).
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