Maui Land & Pineapple Company, Inc. (NYSE:MLP) is a unique real estate and asset management company that has been quietly building value for over a century. With a storied history dating back to 1909, this Delaware-based firm owns and manages a diverse portfolio of over 22,400 acres of land and 247,000 square feet of commercial real estate on the island of Maui, Hawaii.
Business Overview and History Maui Land & Pineapple Company's origins can be traced back to 1909 when it was established as a Hawaii corporation. The company has built a legacy of innovation through conservation, agriculture, community building, and land management on the island of Maui. Much of the company's landholdings were acquired between 1911 and 1932, with the majority located in West Maui.
The company owns and operates various commercial properties, including restaurants, retail spaces, and light industrial facilities, primarily within the Kapalua Resort and Haliimaile Town. Over the years, Maui Land & Pineapple has faced several challenges. In 2009, the company froze pension benefits under its defined benefit pension plan, and in 2011, it discontinued all future vesting of additional benefits. The Board of Directors approved the termination of both the defined benefit pension plan and the non-qualified retirement plan in 2023.
In December 2018, the State of Hawaii Department of Health issued a Notice and Finding of Violation and Order related to alleged wastewater effluent violations at the company's Upcountry Maui wastewater treatment facility. The company is actively working to resolve this issue through an approved corrective action plan.
Despite these challenges, Maui Land & Pineapple has remained committed to its mission of strategic asset management and community stewardship. The company has made efforts to maximize the productivity of its commercial properties and agricultural lands, with a focus on increasing occupancy and diversifying its tenant mix. Additionally, Maui Land & Pineapple has been actively involved in conservation efforts, including the management of the Puu Kukui Watershed, which provides a significant portion of the water consumed in West Maui.
In April 2023, Maui Land & Pineapple underwent a leadership transition, appointing a new Chief Executive Officer and Chairman of the Board. This new management team brings extensive experience in large-scale real estate portfolio management, including master planning, community building, and asset optimization. Under their guidance, the company has embarked on a renewed mission to strategically maximize the use of its diverse assets, with the goal of creating added value for shareholders and improving the quality of life on Maui.
The company continues to make strategic investments to reposition its commercial properties and activate its large landholdings to address community needs and deliver long-term value. In October 2024, Maui Land & Pineapple entered into an agreement to lease 50 acres of land to the State of Hawaii to support temporary housing for individuals and families displaced by the 2023 Maui wildfires.
Financial Highlights and Ratios Maui Land & Pineapple's financial performance has been impacted by the challenges faced by the Maui community in the aftermath of the devastating wildfires that occurred in August 2023. For the fiscal year ended December 31, 2023, the company reported a net loss of $3.08 million, with total operating revenues decreasing to $10.9 million, down from $20.96 million in the previous year. Adjusted EBITDA showed a loss of $529,000, compared to a gain of $12.065 million in 2022.
Financials Despite these headwinds, the company's balance sheet remains relatively strong, with total cash and investments convertible to cash standing at $8.835 million as of December 31, 2023, down from $11.492 million in the prior year. Net property and equipment increased slightly to $16.059 million from $15.878 million in the same period.
For the most recent quarter (Q3 2024), Maui Land & Pineapple reported revenue of $3.03 million, representing a year-over-year growth of 44.3%. This increase was primarily due to improved occupancy rates and the return of tourism to pre-pandemic levels, partially offset by the lingering impact of the Maui wildfires in August 2023 on tourism-based tenants. The company reported a net loss of $2.24 million for the quarter.
Liquidity Key financial ratios for Maui Land & Pineapple as of September 30, 2024, include: - Current Ratio: 2.86 - Quick Ratio: 2.86 - Debt-to-Equity Ratio: 0.22
These ratios indicate the company's strong liquidity position and relatively low leverage. Additionally, Maui Land & Pineapple has a $15 million revolving line of credit facility with First Hawaiian Bank, of which $12 million was available as of September 30, 2024. The facility matures on December 31, 2025, and has an interest rate of the bank's prime rate minus 1.12 percentage points.
Operational Highlights and Strategies Maui Land & Pineapple's renewed focus under its new leadership team is centered around strategically maximizing the use of its vast land and commercial property portfolio. In 2024, the company completed a comprehensive review of its assets and developed a strategic plan to address the critical needs of the Maui community, including the provision of land for housing and agriculture, as well as the revitalization of its commercial centers.
The company operates through three main segments:
1. Land Development and Sales: This segment includes the planning, entitlement, development, and sale of real estate inventory. During the nine months ended September 30, 2024, Maui Land & Pineapple had one sale of real estate for $200,000, which was for a land easement in West Maui. This was an increase from the nine months ended September 30, 2023, when there were no real estate sales. The company is currently evaluating its commercial assets and land holdings to determine the best utilization of its assets in West Maui and Upcountry Maui to increase value. Prior to the Maui wildfires in August 2023, there was a shortage of primary housing supply on Maui, and the company had prioritized getting land into productive use to meet these critical needs. The loss of over 2,000 homes and 3,000 jobs in the wildfires has accelerated these efforts.
2. Leasing: This segment includes revenues and expenses from real property leasing activities, license fees and royalties for the use of certain of the company's trademarks and brand names by third parties, and the cost of maintaining real estate assets, including watershed conservation activities. Operating revenues from leasing activities for the three months ended September 30, 2024, were $2.73 million, a significant increase from $1.93 million in the same period in 2023. This increase was primarily due to higher rental income from commercial, industrial, and agricultural leases, as well as increased licensing fees and revenue from potable and non-potable water system sales. The company has been focused on re-tenanting and re-merchandising the tenant mix in its three commercial centers to increase occupancy and revenues.
3. Resort Amenities and Other: This segment includes the operations of the Kapalua Club, a private, non-equity club that provides its members special programs and access to certain amenities at the Kapalua Resort. Operating revenues for this segment were $299,000 for the three months ended September 30, 2024, up from $170,000 in the same period in 2023, primarily due to new memberships being sold for the first time since 2019. The Kapalua Club was restructured in 2023 to better align club dues and expenses.
Key initiatives across these segments include:
1. Land Development and Sales: The company has identified several parcels of land, both improved and unimproved, that are categorized as "remnant" or "non-strategic" and are being marketed for sale. These sales are expected to generate near-term revenue and help fund ongoing development and improvement projects.
2. Active Planning and Improvements: Maui Land & Pineapple is actively planning and making improvements to several of its land holdings, including the Kapalua Resort area, Haliimaile Ranch, and the Honokeana Homes project, which will provide land for temporary housing in response to the 2023 wildfires.
3. Long-Term Leasing and Asset Management: The company is focusing on leasing its unimproved agricultural and conservation lands for diversified uses, such as farming, ranching, and watershed management. This strategy is aimed at increasing the productivity and cash flow from these assets over the long term.
4. Commercial Property Repositioning: Maui Land & Pineapple is actively repositioning and improving the tenant mix and occupancy of its commercial properties in the Kapalua Resort, Haliimaile Town, and the Alaeloa Business Park. These efforts are designed to enhance the variety and quality of experiences in the company's town centers, while also increasing stable cash flow from its leasing operations.
Risks and Challenges Maui Land & Pineapple faces several key risks and challenges, including:
1. Macroeconomic and Tourism Impacts: As a Maui-based company, Maui Land & Pineapple is highly exposed to the overall health of the Hawaiian tourism industry and the broader macroeconomic conditions that can impact travel and consumer spending.
2. Environmental and Natural Disaster Risks: The company's land and assets are susceptible to the impacts of natural disasters, such as the devastating wildfires that occurred in 2023, as well as the potential effects of climate change and other environmental factors.
3. Regulatory and Permitting Challenges: Developing land and real estate in Hawaii can be a complex and time-consuming process, often requiring various approvals and permits from state and local authorities.
4. Competition in the Real Estate Market: Maui Land & Pineapple operates in a competitive real estate market, with other developers and landowners vying for opportunities to acquire, develop, and lease properties on the island.
Outlook and Conclusion Despite the challenges faced in 2023, Maui Land & Pineapple's renewed focus under its new leadership team, coupled with its substantial land and asset portfolio, positions the company well for long-term growth and value creation. The company's strategic initiatives to maximize the productivity and cash flow of its diverse holdings, while also addressing the critical needs of the Maui community, could unlock significant hidden value for shareholders.
As Maui Land & Pineapple continues to execute on its plan and navigate the ongoing recovery from the 2023 wildfires, investors will be closely watching the company's ability to generate consistent and growing cash flow from its leasing operations, as well as the successful development and sale of its land holdings. With a strong balance sheet, a clear strategic vision, and an experienced management team, Maui Land & Pineapple appears poised to unlock the true value of its premier land and asset portfolio in the years to come.
The company's performance is subject to trends in the Hawaii real estate and tourism industries, given its position as a landowner and commercial property operator in Maui. While specific industry-wide CAGR data is not disclosed, the company's strategic focus on addressing community needs, such as housing and agriculture, aligns with the broader trends and challenges facing the island.