Work continues recently on the Alexander & Baldwin joint venture Keala o Wailea condominium development. The project near the entrance to Wailea off Piilani Highway is scheduled to have 70 luxury two- and three-bedroom condos. During a conference call with investors last week, A&B officials reported that 19 units have closed for sale so far this year with another 48 units in binding contracts and two in nonbinding contracts. • The Maui News / MATTHEW THAYER photo

While Alexander & Baldwin continues work to diversify its Maui agricultural lands, redeploying 4,500 acres of former sugar cane lands last year, the company sees progress as slow, difficult and unlikely to turn a profit, A&B President and Chief Executive Officer Chris Benjamin told investors in a telephone conference call last week.

“In diversified agriculture, we’re working actively with farmers, ranchers and others to convert our former plantation lands into productive uses,” Benjamin said. “We hope to approach the halfway mark in that effort by the end of the year, but we do acknowledge that the process is difficult and may not happen according to our desired timeline. The transition of the plantation to diversified agriculture is not expected to result in material income. However, it should reduce the cost of stewarding these lands.”

In 2016, the company shut down its 36,000-acre Hawaiian Commercial & Sugar Co. plantation and laid off 660 workers. Of the total acreage, 27,000 acres carry the designation of important agricultural lands.

A&B’s conference call came shortly after the company announced it had purchased the Pu’unene Shopping Center as part of a $254 million, three-property deal with California-based Terramar Retail Centers.

The deal was A&B’s largest commercial real estate transaction since it acquired its Kailua, Oahu, properties in 2013, and it was a major step toward the company completing its conversion to a real estate investment trust, which Benjamin called a “landmark achievement and major undertaking.”

The company plans to use money gained from selling its seven remaining U.S. Mainland assets by the second half of this year to pay for its Terramar acquisitions. Then, the company will be 100 percent invested in Hawaii, Benjamin said.

“We are a stronger, more focused company today and, while I acknowledged in our last call that this is a long road we’re on, we’ve been passing the mile markers at a steady pace.”

Benjamin noted that A&B stock has “tumbled lately for reasons I can’t explain,” but “obviously we’ve been caught up in broader trends. But, from where I sit, we’ve continually advanced our strategy and delivered outstanding performance from our commercial real estate portfolio in a Hawaii market that remains robust and in which we are uniquely and favorably positioned.”

The company reported net income of $211.9 million, or $4.31 per share, for the fourth quarter, compared to $600,000 in net income, or 1 cent per share, for the last quarter of 2016. For all of 2017, the company had net income of $230.5 million, or $4.63 per share. In 2016, it posted a net loss of $8.4 million, or 18 cents per share.

The 113,000-square-foot Puunene center was completed this year and is 60 percent leased, Benjamin said. The center is anchored by Target, and other existing or signed tenants include Ulta Beauty, Starbucks, Petco, Maui Tacos, Massage Envy, Planet Fitness and Verizon.

A&B assumed $62 million in mortgage debt as part of the deal with Terramar.

Meanwhile, leasing and planning work has begun for the Ho’okele Shopping Center, “which we are developing from the ground up on our land holdings adjacent to the Maui Business Park,” Benjamin said. Safeway has been announced as the anchor tenant for that project, with an opening targeted for 2019.

“Given the quality and geographic breadth of our (commercial real estate) portfolio we are the lessor of choice for retailers wanting to enter Hawaii and participate in the high quality retail in our state,” he said.

A&B officials noted that grocers in Hawaii produce income of nearly $800 per square foot, on average, while retailers generate income of well over $1,000 per square foot.

In other A&B Maui land developments last year:

• 36 Kamalani subdivision units sold for $13 million. (Officials noted there have been nine more closings so far this year, along with 44 binding commitments for units.)

• 713 agriculturally zoned acres sold on Maui and Kauai for approximately $20 million.

• Six Maui Business Park lots, totaling 3.1 acres, sold for $6 million.

• 19 units closed for sale so far this year at the Keala o Wailea 70-unit joint venture project, with another 48 units in binding contracts and two in nonbinding contracts.

A&B’s stock (ALEX) closed at $23.82 per share Monday, up 24 cents, or a little more than 1 percent, from the previous closing price of $23.58.

* Brian Perry can be reached at bperry@mauinews.com.