Form 10-Q Alexander & Baldwin, For: Sep 30

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October 28, 2016 4:35 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2016



o	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 822 Bishop Street, Honolulu, Hawaii (Address of principal executive offices)	9680l 96813 (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)

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every

Interactive Data File required to be submitted and posted 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 and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Number of shares of common stock outstanding as of September 30, 2016: 49,019,748

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In millions, except per share amounts) (Unaudited)



	Quarter Ended September 30,						Nine Months Ended September 30,
	Quarter Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Operating Revenue:
Commercial real estate	$	32.9		$	33.0		$	102.3		$	100.5
Real estate development and sales	12.8			19.9			13.4			87.8
Materials and construction	52.1			51.0			144.8			165.3
Agribusiness	40.9			40.8			89.7			95.5
Total operating revenue	138.7			144.7			350.2			449.1
Operating Costs and Expenses:
Cost of commercial real estate	19.4			20.8			60.3			61.3
Cost of real estate development and sales	3.1			6.7			3.3			47.4
Cost of construction contracts and materials	41.0			40.7			114.9			134.1
Cost of agribusiness revenue	38.8			49.8			87.6			107.1
Selling, general and administrative	14.7			12.6			42.6			41.3
REIT evaluation costs	1.9			—			3.8			—
HC&S cessation costs	17.6			—			51.6			—
Gain on the sale of improved property	—			—			(8.0		)	(1.9		)
Total operating costs and expenses	136.5			130.6			356.1			389.3
Operating Income (Loss)	2.2			14.1			(5.9		)	59.8
Other Income and (Expense):
Income related to joint ventures	0.1			2.9			3.5			30.7
Reductions in solar investments	(0.2		)	(0.1		)	(9.7		)	(1.7		)
Interest income and other	0.5			0.4			1.6			0.8
Interest expense	(6.4		)	(6.5		)	(20.1		)	(20.2		)
Income (Loss) Before Income Taxes	(3.8		)	10.8			(30.6		)	69.4
Income tax expense (benefit)	(2.4		)	3.8			(21.6		)	26.4
Net Income (Loss)	(1.4		)	7.0			(9.0		)	43.0
Income attributable to noncontrolling interest	(0.5		)	(0.3		)	(1.1		)	(1.2		)
Net Income (Loss) Attributable to A&B Shareholders	$	(1.9	)	$	6.7		$	(10.1	)	$	41.8

Earnings (Loss) Per Share (Note 4):
Basic - Net income (loss) available to A&B shareholders	$	(0.03	)	$	0.11		$	(0.19	)	$	0.83
Diluted - Net income (loss) available to A&B shareholders	$	(0.03	)	$	0.11		$	(0.19	)	$	0.82

Weighted Average Number of Shares Outstanding:
Basic	49.0			48.9			49.0			48.8
Diluted	49.0			49.4			49.0			49.3

Cash dividends per share	$	0.06		$	0.05		$	0.18		$	0.15

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In millions) (Unaudited)



	Quarter Ended September 30,						Nine Months Ended September 30,
	Quarter Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net Income (Loss)	$	(1.4	)	$	7.0		$	(9.0	)	$	43.0
Other Comprehensive Income:
Unrealized interest rate hedging loss	—			—			(2.8		)	—
Reclassification adjustment for interest expense included in net loss	0.2			—			0.2			—
Defined benefit pension plans:
Net gain (loss) and prior service cost	—			—			—			(0.8		)
Amortization of prior service credit included in net periodic pension cost	(0.3		)	(0.4		)	(0.8		)	(1.0		)
Amortization of net loss included in net periodic pension cost	1.9			1.8			5.6			5.4
Income taxes related to other comprehensive income	(0.8		)	(0.5		)	(0.7		)	(1.4		)
Other Comprehensive Income	1.0			0.9			1.5			2.2
Comprehensive Income (Loss)	$	(0.4	)	$	7.9		$	(7.5	)	$	45.2
Comprehensive income attributable to noncontrolling interest	(0.5		)	(0.3		)	(1.1		)	(1.2		)
Comprehensive income (loss) attributable to A&B shareholders	$	(0.9	)	$	7.6		$	(8.6	)	$	44.0

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In millions) (Unaudited)



	September 30, 2016			December 31, 2015
ASSETS
Current Assets:
Cash and cash equivalents	$	5.8		$	1.3
Accounts and other notes receivable, net	38.4			38.6
Contracts retention	12.4			11.5
Costs and estimated earnings in excess of billings on uncompleted contracts	16.6			16.3
Inventories	47.3			55.9
Income tax receivable	11.5			14.0
Prepaid expenses and other assets	12.6			14.9
Total current assets	144.6			152.5
Investments in Affiliates	430.8			416.4
Real Estate Developments	192.6			183.5
Property – net	1,256.1			1,269.4
Intangible Assets - net	55.8			54.4
Goodwill	102.3			102.3
Other Assets	42.0			63.8
Total assets	$	2,224.2		$	2,242.3
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable and current portion of long-term debt	$	82.4		$	90.4
Accounts payable	30.1			35.5
Billings in excess of costs and estimated earnings on uncompleted contracts	2.7			2.6
Accrued interest	3.9			5.5
Indemnity holdback related to Grace acquisition	9.3			9.3
HC&S cessation related liabilities - current	16.9			6.4
Accrued and other liabilities	36.2			35.0
Total current liabilities	181.5			184.7
Long-term Liabilities:
Long-term debt	523.9			496.6
Deferred income taxes	184.2			202.1
Accrued pension and postretirement benefits	58.6			59.7
Other non-current liabilities	49.6			60.5
Total long-term liabilities	816.3			818.9
Commitments and Contingencies (Note 3)
Redeemable Noncontrolling Interest	11.6			11.6
Equity:
Common stock	1,156.2			1,151.7
Accumulated other comprehensive loss	(43.8		)	(45.3		)
Retained earnings	98.7			117.2
Total A&B shareholders' equity	1,211.1			1,223.6
Noncontrolling interest	3.7			3.5
Total equity	1,214.8			1,227.1
Total liabilities and equity	$	2,224.2		$	2,242.3

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In millions) (Unaudited)



	Nine Months Ended
	September 30,
	2016			2015
Cash Flows from Operating Activities:	$	48.4		$	115.3
Cash Flows from Investing Activities:
Capital expenditures for property, plant and equipment	(105.3		)	(34.9		)
Capital expenditures related to 1031 commercial property transactions	(6.2		)	(1.3		)
Proceeds from disposal of property and other assets	11.4			5.1
Proceeds from disposals related to 1031 commercial property transactions	59.3			25.2
Payments for purchases of investments in affiliates and investments	(36.0		)	(22.5		)
Proceeds from investments in affiliates	6.0			37.6
Change in restricted cash associated with 1031 transactions	16.2			(2.7		)
Net cash provided by (used in) investing activities	(54.6		)	6.5
Cash Flows from Financing Activities:
Proceeds from issuances of long-term debt	222.0			71.0
Payments of long-term debt and deferred financing charges	(191.1		)	(182.1		)
Payments under line-of-credit, net	(11.8		)	(0.4		)
Dividends paid	(8.8		)	(7.4		)
Distributions to non-controlling interest	(0.5		)	(1.1		)
(Tax withholding payments) proceeds from issuance of capital stock and other, net	0.9			(0.5		)
Net cash provided by (used in) financing activities	10.7			(120.5		)
Cash and Cash Equivalents:
Net increase for the period	4.5			1.3
Balance, beginning of period	1.3			2.8
Balance, end of period	$	5.8		$	4.1

Other Cash Flow Information:
Interest paid	$	(22.1	)	$	(23.3	)
Income taxes paid	$	—		$	(5.4	)
Non-cash Investing Activities:
Land contributed into real estate joint venture	$	—		$	9.6
Capital expenditures included in accounts payable and accrued expenses	$	7.7		$	3.7

See Notes to Condensed Consolidated Financial Statements.

ALEXANDER & BALDWIN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the nine months ended September 30, 2016 and 2015

(In millions) (Unaudited)



	Total Equity
						Accumulated													Redeem-
		Common				Other													able
		Stock				Compre-							Non-						Non-
			Stated			hensive				Retained			Controlling						Controlling
		Shares	Value				Loss			Earnings			interest			Total			interest
Balance, January 1, 2015		48.8	$	1,147.3			$	(44.4	)	$	101.0		$	10.9		$	1,214.8		$	—
Net income										41.8			1.2			43.0			—
Other comprehensive income, net of tax							2.2									2.2
Dividends paid on common stock ($0.15 per share)										(7.4		)				(7.4		)
Reclassification of redeemable noncontrolling interest													(8.5		)	(8.5		)	8.5
Adjustments to redemption value of redeemable noncontrolling interest										(1.3		)				(1.3		)	1.3
Share-based compensation			3.4													3.4
Shares issued or repurchased, net		0.1	(0.4		)					—						(0.4		)
Balance, September 30, 2015		48.9	$	1,150.3			$	(42.2	)	$	134.1		$	3.6		$	1,245.8		$	9.8



	Total Equity
					Accumulated												Redeem-
		Common			Other												able
		Stock			Compre-							Non-					Non-
			Stated		hensive				Retained			Controlling					Controlling
		Shares	Value			Loss			Earnings			interest		Total			interest
Balance, January 1, 2016		48.9	$	1,151.7		$	(45.3	)	$	117.2		$	3.5	$	1,227.1		$	11.6
Net (loss) income									(10.1		)	0.2		(9.9		)	0.9
Other comprehensive income, net of tax						1.5								1.5
Dividends paid on common stock ($0.18 per share)									(8.8		)			(8.8		)
Distributions to noncontrolling interest														—			(0.1		)
Adjustments to redemption value of redeemable noncontrolling interest									0.8			—		0.8			(0.8		)
Share-based compensation			3.1											3.1
Shares issued or repurchased, net		0.1	1.4						(0.4		)			1.0
Balance, September 30, 2016		49.0	$	1,156.2		$	(43.8	)	$	98.7		$	3.7	$	1,214.8		$	11.6

See Notes to Condensed Consolidated Financial Statements.

Alexander & Baldwin, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)


1.	DESCRIPTION OF BUSINESS

Alexander & Baldwin, Inc. ("A&B" or the "Company") is headquartered in Honolulu and operates four segments: Commercial Real Estate (formerly leasing); Real Estate Development and Sales; Agribusiness; and Materials and Construction.

Commercial Real Estate: The Commercial Real Estate segment owns, operates and manages retail, office and industrial properties in Hawaii and on the Mainland. The Commercial Real Estate segment also leases urban land in Hawaii to third-party lessees.

Real Estate Development and Sales: The Real Estate Development and Sales segment generates its revenue through the investment in and development and sale of land and commercial and residential properties in Hawaii and through the sale of properties in the Company's Commercial Real Estate portfolio.

Agribusiness: The Agribusiness segment produces bulk raw sugar, specialty food grade sugars and molasses; provides general trucking services, equipment maintenance and repair services; leases agricultural land to third parties; and generates and sells electricity to the extent not used in A&B’s Agribusiness operations. On December 31, 2015, the Company determined it would cease its Hawaiian Commercial & Sugar Company ("HC&S") sugar operations on Maui upon completion of its final harvest in 2016. See Note 14, "Cessation of HC&S Operations" ("Cessation") for further discussion regarding the Cessation and the related costs associated with such exit and disposal activities.

Materials and Construction: The Materials and Construction segment performs asphalt paving as prime contractor and subcontractor; imports and sells liquid asphalt; mines, processes and sells rock and sand aggregate; produces and sells asphaltic concrete and ready-mix concrete; provides and sells various construction- and traffic-control-related products; and manufactures and sells precast concrete products.


2.	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, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2015 and the notes thereto included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015 ("2015 Form 10-K"), and other subsequent filings with the U.S. Securities and Exchange Commission.

Rounding. Amounts in the condensed consolidated financial statements and notes are rounded to the nearest tenth of a million, but per-share calculations and percentages were determined based on amounts before rounding. Accordingly, a recalculation of some per-share amounts and percentages, if based on the reported data, may be slightly different.

New Accounting Pronouncements. In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest—Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in ASU 2015-03 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted this guidance in the first quarter of 2016. The impact of adopting the above guidance as of December 31, 2015 was as follows (in millions):



	Other assets			Total assets			Long-term debt			Total liabilities and equity
Previously reported	$	65.0		$	2,243.5		$	497.8		$	2,243.5
Debt Issuance Costs	(1.2		)	(1.2		)	(1.2		)	(1.2		)
Current presentation	$	63.8		$	2,242.3		$	496.6		$	2,242.3

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, lease arrangements exceeding a twelve month term must now be recognized as assets and liabilities on the balance sheet of the lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. In addition, ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. ASU 2016-02 is effective for financial statements issued for fiscal years beginning after December 15, 2018. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements and footnote disclosures.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718) (“ASU 2016-09”). ASU 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU 2016-09 is effective for financial statements issued for fiscal years beginning after December 15, 2016. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements and footnote disclosures.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) ("ASU 2016-15"). ASU 2016-15 is an update that addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice of cash receipts and cash payments presentation and classification in the statement of cash flows. ASU 2016-15 is effective for financial statements issued for fiscal years beginning after December 15, 2017. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements and footnote disclosures.


3.	COMMITMENTS AND CONTINGENCIES

Commitments, Guarantees and Contingencies: Commitments and financial arrangements not recorded on the Company's condensed consolidated balance sheet, excluding lease commitments that are disclosed in Note 9 of the Company’s 2015 Form 10-K, included the following (in millions) as of September 30, 2016:



Standby letters of credit¹	$	12.7
Bonds related to real estate and construction²	$	423.4

¹Consists of standby letters of credit, issued by the Company’s lenders under the Company’s revolving credit facilities, and relate primarily to the Company’s real estate activities. In the event the letters of credit are drawn upon, the Company would be obligated to reimburse the issuer of the letter of credit. None of the letters of credit has been drawn upon to date, and the Company believes it is unlikely that any of these letters of credit will be drawn upon.

²Represents bonds related to construction and real estate activities in Hawaii. Approximately $401.0 million is related to 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). In the event the bonds are drawn upon, the Company would be obligated to reimburse the surety that issued the bond. None of the bonds has been drawn upon to date, and the Company believes it is unlikely that any of these bonds will be drawn upon.

Indemnity Agreements: For certain real estate joint ventures, the Company may be obligated under bond indemnities to complete construction of the real estate development if the joint venture does not perform. These indemnities are designed to protect the surety in exchange for the issuance of surety bonds that cover joint venture construction activities, such as project amenities, roads, utilities, and other infrastructure, at its joint ventures. Under the indemnities, the Company and its 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 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. The recorded amounts of the indemnity liabilities were not material individually or in the aggregate.

Other than the above items and those described in the Company's 2015 Form 10-K, obligations of the Company’s non-consolidated 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: A&B owns 16,000 acres of watershed lands in East Maui that supply a significant portion of the irrigation water used by Hawaiian Commercial & Sugar Company (“HC&S”), a division of A&B that produces raw sugar. A&B also held four water licenses to another 30,000 acres owned by the State of Hawaii in East Maui which, over the last ten years, have supplied approximately 56 percent of the irrigation water used by HC&S. The last of these water license agreements expired in 1986, and all four agreements were then extended as revocable permits that were renewed annually. In 2001, a request was made by A&B to the State Board of Land and Natural Resources (the “BLNR”) to replace these revocable permits with a long-term water lease. Pending the conclusion by the BLNR of this contested case hearing on the request for the long-term lease, the BLNR has kept the existing permits on a holdover basis. Three parties filed a lawsuit on April 10, 2015 alleging that the BLNR has been unlawfully renewing the revocable permits on an annual basis. In January 2016, the court ruled that the BLNR lacked legal authority to keep the revocable permits in holdover status beyond one year.

On June 27, 2016, legislation giving the BLNR authority to grant holdover status of the revocable permits previously issued for a period not to exceed three years was signed into law by Hawaii's governor. The Company will continue to pursue a long-term lease of the state lands.

In addition to the above, on May 24, 2001, petitions were filed by a third party, requesting that the Commission on Water Resource Management of the State of Hawaii (“Water Commission”) establish interim instream flow standards (“IIFS”) in 27 East Maui streams that feed the Company’s irrigation system. The Water Commission initially took action on the petitions in 2008 and 2010, but the petitioners requested a contested case hearing to challenge the Water Commission's decisions on certain petitions. The Water Commission denied the contested case hearing request, but the petitioners successfully appealed the denial to the Hawaii Intermediate Court of Appeals, which ordered the Water Commission to grant the request. The Water Commission then authorized the appointment of a hearings officer for the contested case hearing, and on January 15, 2016, the hearings officer issued his recommended decision on the petitions. However, based on the announced closure of HC&S, the Water Commission has ordered the re-opening of the evidentiary portion of the hearing to address changes in the water needs of HC&S. The Water Commission has also ordered HC&S to refrain from diverting streams it is not currently diverting, and to work to remove diversions from the streams it has voluntarily committed to stop diverting. The Commission is not expected to issue a final decision on the petitions until at least the first quarter of 2017.

On March 9, 2016, two organizations filed a petition with the Water Commission to reconsider the IIFS established in 2014 for the four streams in West Maui in light of the announced closure of HC&S's sugar operations. Previously, the parties involved in the petition, along with HC&S and the County of Maui, had entered into a settlement agreement on the IIFS for the four streams, and the Water Commission approved the settlement in 2014. The Water Commission’s decision on the 2016 petition could require A&B to return more water to West Maui streams than the amount agreed to by the parties in the 2014 settlement. In a related proceeding, HC&S has applied for a water use permit to continue its use of water from these four West Maui streams for agricultural irrigation.

If the Company is not permitted to use sufficient quantities of stream waters, it could have a material adverse effect on the Company's pursuit of a diversified agricultural model in subsequent years.

In January 2013, the Environmental Protection Agency (“EPA”) finalized nationwide standards for controlling hazardous air pollutant emissions from industrial, commercial, institutional boilers and process heaters (the “Boiler MACT” rule), which apply to HC&S's three boilers at the Puunene Sugar Mill. The initial deadline for compliance with the Boiler

MACT rule was January 2016, with full compliance required by July 29, 2016. The Puunene Mill boilers have met the January compliance deadline, including applicable emissions limits and monitoring requirements. Due to the impending end to sugar operations, however, the Company entered into an Administrative Order on Consent with the EPA under which HC&S was able to forego certain remaining compliance obligations (specifically, requirements relating to initial performance testing) on the condition that the boilers are permanently shut down at the end of 2016.

A&B 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 A&B’s condensed consolidated financial statements as a whole.


4.	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.

The following table provides a reconciliation of net income (loss) to net income (loss) available to A&B shareholders (in millions):



	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Net income (loss)	$	(1.4	)	$	7.0		$	(9.0	)	$	43.0
Less: Income attributable to noncontrolling interest	(0.5		)	(0.3		)	(1.1		)	(1.2		)
Net income (loss) attributable to A&B shareholders	(1.9		)	6.7			$	(10.1	)	$	41.8
Less: Undistributed earnings (losses) allocated from redeemable noncontrolling interests	0.4			(1.3		)	0.9			(1.3		)
Net income (loss) available to A&B shareholders	$	(1.5	)	$	5.4		$	(9.2	)	$	40.5

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



	Quarter Ended		Nine Months Ended
	September 30,		September 30,
	2016	2015	2016	2015
Denominator for basic EPS – weighted average shares	49.0	48.9	49.0	48.8
Effect of dilutive securities:
Employee/director stock options and restricted stock units	—	0.5	—	0.5
Denominator for diluted EPS – weighted average shares	49.0	49.4	49.0	49.3

During each of the quarter and nine months ended September 30, 2016, anti-dilutive securities totaled 0.4 million shares. During the quarter and nine months ended September 30, 2015 there were no anti-dilutive securities outstanding.


5.	FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of receivables and short-term borrowings approximate their carrying values due to the short-term nature of the instruments. The Company’s cash and cash equivalents, consisting principally of cash on deposit, may from time to time include short-term money market funds. The fair values of these money market funds, based on market prices (level 2), approximate their carrying values due to their short-maturities. The carrying amount and fair value of the Company’s long-term debt at September 30, 2016 was $606.3 million and $630.7 million, respectively, and $587.0 million and $597.0 million at December 31, 2015, respectively. The fair value of long-term debt is calculated by discounting the future cash flows of the debt at rates based on instruments with similar risk, terms and maturities as compared to the Company’s existing debt arrangements (Level 2).


6.	INVENTORIES

Sugar inventories are stated at the lower of cost (first-in, first-out basis) or market value. Materials and supplies and Materials and Construction segment inventory are stated at the lower of cost (principally average cost, first-in, first-out basis) or market value.

Inventories at September 30, 2016 and December 31, 2015 were as follows (in millions):



	September 30, 2016		December 31, 2015
Sugar inventories	$	14.9	$	16.3
Asphalt	9.8		12.8
Processed rock, portland cement, and sand	12.3		12.2
Work in process	3.4		3.7
Retail merchandise	1.8		1.6
Parts, materials and supplies inventories	5.1		9.3
Total	$	47.3	$	55.9


7.	SHARE-BASED PAYMENT AWARDS

The following table summarizes the Company's stock option activity during 2016 (in thousands, except weighted average exercise price and weighted average contractual life):



	Options		Weighted Average Exercise Price		Weighted Average Contractual Life	Aggregate Intrinsic Value
Outstanding, January 1, 2016	1,098.6		$	18.81
Exercised	(172.1	)	$	23.68
Outstanding, September 30, 2016	926.5		$	17.91	3.3	$	18,788
Exercisable, September 30, 2016	926.5		$	17.91	3.3	$	18,788

The following table summarizes non-vested restricted stock unit activity during 2016 (in thousands, except weighted average grant-date fair value amounts):



	2012 Plan Restricted Stock Units		Weighted Average Grant-Date Fair Value
Outstanding, January 1, 2016	271.9		$	37.74
Granted	154.3		$	31.04
Vested	(69.0	)	$	38.00
Canceled	(56.3	)	$	39.28
Outstanding, September 30, 2016	300.9		$	33.96

A portion of the restricted stock unit awards are time-based awards that vest ratably over three years. The remaining portion of the awards represents market-based awards that cliff vest after two or three years, provided that the total shareholder return of the Company’s common stock over the relevant measurement period meets or exceeds pre-defined levels of relative total shareholder returns of the Standard & Poor’s MidCap 400 index and the Russell 2000 index.

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:



	2016 Grants	2015 Grants
Volatility of A&B common stock	26.3%	29.5%
Average volatility of peer companies	27.7%	34.2%
Risk-free interest rate	1.1%	0.7%

A summary of compensation cost related to share-based payments is as follows (in millions):



	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Share-based compensation expense (net of estimated forfeitures):
Restricted stock units	$	1.0		$	1.1		3.1			3.4
Total share-based compensation expense	1.0			1.1			3.1			3.4
Total recognized tax benefit	(0.5		)	(0.4		)	(1.1		)	(1.1		)
Share-based compensation expense (net of tax)	$	0.5		$	0.7		$	2.0		$	2.3


8.	RELATED PARTY TRANSACTIONS

Construction Contracts and Material Sales. The Company has contracts in the ordinary course of business, as a supplier, with members in entities in which the Company also is a member. Revenues earned from transactions with affiliates totaled approximately $1.8 million and $4.1 million for the quarters ended September 30, 2016 and 2015, respectively. Revenues earned from transactions with affiliates totaled approximately $6.0 million and $13.9 million for the nine months ended September 30, 2016 and 2015, respectively. Receivables from these affiliates were $0.5 million and $1.5 million at September 30, 2016 and 2015, respectively. Amounts due to these affiliates were $0.3 million and $0.1 million at September 30, 2016 and 2015, respectively.

Commercial Real Estate and Development. The Company has contracts in the ordinary course of business, as a lessor of property, with unconsolidated affiliates in which the Company has an interest, as well as with certain entities that are owned by a director of the Company. Revenues earned from these transactions were immaterial for each of the quarters and nine months ended September 30, 2016 and 2015. Receivables from these affiliates were immaterial as of September 30, 2016 and 2015.

During the quarter ended September 30, 2016 and 2015, the Company recorded developer fee revenues of approximately $0.2 million and $0.2 million related to management and administrative services provided to certain unconsolidated investments in affiliates. Developer fee revenues recorded for the nine months ended September 30, 2016 and 2015 were $0.7 million and $2.7 million, respectively.


9.	EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost recorded for the three months ended September 30, 2016 and 2015 were as follows (in millions):



	Pension Benefits						Post-retirement Benefits
	2016			2015			2016		2015
Service cost	$	0.8		$	0.8		$	—	$	—
Interest cost	2.2			2.0			0.2		0.1
Expected return on plan assets	(2.5		)	(2.8		)	—		—
Curtailment	(0.2		)	—			—		—
Amortization of prior service credit	(0.3		)	(0.2		)	—		—
Amortization of net loss	1.9			1.0			—		—
Net periodic benefit cost	$	1.9		$	0.8		$	0.2	$	0.1

The components of net periodic benefit cost recorded for the nine months ended September 30, 2016 and 2015 were as follows (in millions):



	Pension Benefits						Post-retirement Benefits
	2016			2015			2016		2015
Service cost	$	2.4		$	2.3		$	0.1	$	0.1
Interest cost	6.7			6.0			0.4		0.3
Expected return on plan assets	(7.5		)	(8.3		)	—		—
Curtailment	(0.7		)	—			—		—
Amortization of prior service credit	(0.8		)	(0.6		)	—		—
Amortization of net loss	5.5			4.5			0.1		0.1
Net periodic benefit cost	$	5.6		$	3.9		$	0.6	$	0.5


10.	ACQUISITIONS

Manoa Marketplace Acquisition. The Company applies the provisions of FASB ASC Topic No. 805, Business Combinations, ("ASC 805") to acquisitions. Under ASC 805, assets acquired and liabilities assumed are recorded at fair value. The excess of the purchase price over the net fair value of assets acquired and liabilities assumed is recorded as goodwill. The fair values of assets acquired and liabilities assumed are determined through the market, income or cost approaches, and the valuation approach is generally based on the specific characteristics of the asset or liability. Under the market approach, value is estimated using information from transactions in which other participants in the market have paid for reasonably similar assets that have been sold within a reasonable period from the valuation date. Adjustments are made to compensate for differences between reasonably similar assets and the item being valued. Under the income approach, the future cash flows expected to be received over the life of the asset, taking into account a variety of factors, such as long-term growth rates and the amount and timing of cash flows, are discounted to present value using a rate of return that accounts for the time value of money and investment risk factors. Under the cost approach, the Company estimates the cost to replace the asset with a new asset taking into consideration a variety of factors such as age, physical condition, functional obsolescence and economic obsolescence. The fair value of liabilities assumed is calculated as the net present value of estimated payments using prevailing market interest rates for liabilities with similar credit risk and terms.

On January 29, 2016 the Company consummated the purchase of the leasehold and leased fee interests in Manoa Marketplace, a multi-tenant neighborhood shopping center in Honolulu for $82.4 million through a 1031 transaction.

The allocation of purchase price to assets acquired and liabilities assumed is as follows (in millions):



Assets acquired:
Land	$	40.5
Building	36.8
In-place leases	7.0
Favorable leases	1.3
Total assets acquired	85.6

Total liabilities assumed	3.2

Net assets acquired	$	82.4

The finite-lived intangible assets related to in-place leases and favorable leases are amortized over their respective lease terms. As of the acquisition date, the weighted-average remaining lives of the in-place leases and favorable leases were approximately 5 and 3 years, respectively.

In connection with the Manoa Marketplace transaction, the Company incurred approximately $1.1 million of acquisition-related expenses during the nine months ended September 30, 2016. The costs are included in selling, general and administrative costs in the accompanying condensed consolidated statements of operations and are reported in the Development and Sales segment for segment reporting purposes.


11.	ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2016 were as follows (in millions, net of tax):



	Employee Benefit Plans			Interest Rate Swap			Total
Beginning balance, January 1, 2016	$	(45.3	)	$	—		$	(45.3	)
Other comprehensive loss before reclassifications, net of tax	—			(1.6		)	(1.6		)
Amounts reclassified from accumulated other comprehensive loss, net of tax	3.0			0.1			3.1
Ending balance, September 30, 2016	$	(42.3	)	$	(1.5	)	$	(43.8	)

The reclassifications of other comprehensive income components out of accumulated other comprehensive loss for the quarter and nine months ended September 30, 2016 and 2015 were as follows (in millions):



	Quarter Ended September 30,						Nine Months Ended September 30,
Details about Other Comprehensive Income Components	2016			2015			2016			2015
Amounts reclassified for interest expense included in net loss	$	0.2		$	—		$	0.2		$	—
Actuarial gain (loss)*	—			—			—			(0.8		)
Amortization of defined benefit pension items reclassified to net periodic pension cost:
Net loss*	1.9			1.8			5.6			5.4
Prior service credit*	(0.3		)	(0.4		)	(0.8		)	(1.0		)
Total before income tax	1.8			1.4			5.0			3.6
Income taxes	(0.8		)	(0.5		)	(1.9		)	(1.4		)
Other comprehensive income net of tax	$	1.0		$	0.9		$	3.1		$	2.2

* These other comprehensive income components are included in the computation of net periodic pension cost (see Note 9 for additional details).


12.	INCOME TAXES

The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are applied in the calculation of tax credits, tax benefits and deductions, and in the calculation of certain deferred tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. Deferred tax assets and deferred tax liabilities are adjusted to the extent necessary to reflect tax rates expected to be in effect when the temporary differences reverse. Adjustments may be required to deferred tax assets and deferred tax liabilities due to changes in tax laws and audit adjustments by tax authorities. To the extent adjustments are required in any given period, the adjustments would be included within the tax provision in the condensed consolidated statements of operations or balance sheet.

During the second quarter, A&B invested $15.4 million in Waihonu Equity Holdings, LLC (“Waihonu”), an entity that operates two photovoltaic facilities with a combined capacity of 6.5 megawatts in Mililani, Oahu. The Company accounts for its investment in Waihonu under the equity method. The investment return from the Company's investment in Waihonu is principally composed of non-refundable federal and refundable state tax credits. The federal tax credits are accounted for using the flow through method, which reduces the provision for income taxes in the year that the federal tax credits first become available. During the second quarter of 2016, the Company recognized income tax benefits of approximately $8.7 million related to the non-refundable federal tax credits. During the quarter ended September 30, 2016, the Company recorded $2.9 million related to the refundable state tax credits in Income Tax Receivable, as well as a corresponding reduction to the carrying amount of its investment in Waihonu, in the condensed consolidated balance sheet.

For the quarter and nine month periods ended September 30, 2016 and 2015, the Company recorded non-cash reductions related to the Company's investments in Waihonu and KIUC Renewable Solutions Two ("KRS II"), a 12-megawatt solar farm on Kauai, in Reduction in Solar Investments in the accompanying condensed consolidated statement of operations as follows (in millions):



	Quarter Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Waihonu	$	—	$	—	$	8.7	$	—
KRS II	0.2		0.1		1.0		1.7
Total	$	0.2	$	0.1	$	9.7	$	1.7

The Company expects that future reductions to its investments in Waihonu and KRS II will be recognized as tax benefits are realized.

The Company's effective income tax rate for the nine months ended September 30, 2016 differed from the statutory rate primarily due to the non-refundable federal tax credits related to the Company's investment in Waihonu.

Subsequent to the separation from Matson, Inc. (formerly "Alexander & Baldwin Holding, Inc.") on June 30, 2012, the Company began reporting as a separate taxpayer. Upon separation, the Company's unrecognized tax benefits were reflected on Matson Inc.'s ("Matson") financial statements because Matson is considered the successor parent to the former Alexander & Baldwin, Inc. affiliated tax group. In connection with the separation, the Company entered into a Tax Sharing Agreement with Matson. As of September 30, 2016, the Company's liability for the indemnity to Matson in the event the Company's pre-separation unrecognized tax benefits are not realized was $0.1 million. As of September 30, 2016, the Company has not identified any material unrecognized tax positions.

The Company is subject to taxation by the United States and various state and local jurisdictions. As of September 30, 2016, the Company’s tax years 2012, 2013 and 2014 are open to examination by the tax authorities. In addition, tax year 2012, for which the Company was included in the consolidated tax group with Matson, is open to examination by the tax authorities in the Company's material jurisdictions. In addition, the 2011 tax year is also open to examination by California. The 2012 tax return for the Company on a standalone basis and the 2012 tax return for which the Company was included in the consolidated tax group with Matson are currently under examination by the Internal Revenue Service.


13.	Notes Payable and Long-Term Debt:

At September 30, 2016 and December 31, 2015, notes payable and long-term debt consisted of the following (in millions):



	2016			2015
Revolving Credit Loans, (2.2% for 2016 and 2.10% for 2015)	$	68.0		$	77.8
Term Loans:
3.90%, payable through 2024	71.5			75.0
6.90%, payable through 2020	65.0			75.0
3.88%, payable through 2027	50.0			50.0
5.55%, payable through 2026	46.0			47.0
5.53%, payable through 2024	28.5			31.5
5.56%, payable through 2026	25.0			25.0
4.35%, payable through 2026	22.0			23.4
4.15%, payable through 2024, secured by Pearl Highlands Center (a)	90.5			91.9
LIBOR plus 1.5%, payable through 2021, secured by Kailua Town Center III (b)	10.8			11.0
LIBOR plus 2.66%, payable through 2016, secured by The Shops at Kukui'ula (c)	35.2			37.0
LIBOR plus 2.63%, payable through 2016, secured by Kahala Estate Properties (d)	6.3			8.2
LIBOR plus 1.35%, payable through 2029, secured by Manoa Marketplace (f)	60.0			—
5.19%, payable through 2019	6.9			8.4
6.38%, payable through 2017, secured by Midstate Hayes	8.2			8.2
LIBOR plus 1.0%, payable through 2021, secured by asphalt terminal (e)	6.0			6.9
1.85%, payable through 2017	3.2			5.2
3.31%, payable through 2018	3.3			4.6
2.00%, payable through 2018	1.0			1.5
2.65%, payable through 2016	0.1			0.6
Subtotal	607.5			588.2
Less debt issuance costs	(1.2		)	(1.2		)
Total debt	606.3			587.0
Less current portion	(82.4		)	(90.4		)
Long-term debt	$	523.9		$	496.6


(a)	On December 1, 2014, the Company refinanced and increased the amount of the loan secured by Pearl Highlands Center.


(b)	Loan has a stated interest rate of LIBOR plus 1.5%, but is swapped through maturity to a 5.95% fixed rate.


(c)	Loan has an effective interest rate of 2.52% for 2016 and 2.83% for 2015.


(d)	Loan has an effective interest rate of 3.15% for 2016 and 2.82% for 2015.


(e)	Loan has a stated interest rate of LIBOR plus 1.0%, but is swapped through maturity to a 5.98% fixed rate.


(f)	Loan has a stated interest rate of LIBOR plus 1.35%, but is swapped through maturity to a 3.135% fixed rate.

On August 1, 2016, ABL Manoa Marketplace LF LLC, A&B Manoa LLC, ABL Manoa Marketplace LH LLC, and ABP Manoa Marketplace LH LLC (the "Borrowers"), wholly owned subsidiaries of the Company, entered into a $60 million mortgage loan agreement ("Loan") with First Hawaiian Bank ("FHB"). The Loan bears interest at LIBOR plus 1.35 percent and matures on August 1, 2029. The Loan requires interest-only payments for the first 36 months and principal and interest payments for the remaining 120 month term using a 25-year amortization period. A final principal payment of $41.7 million is due on August 1, 2029. The Company had previously entered into an interest rate swap with a notional amount of $60 million to fix the floating interest rate of a portion of the debt at an effective rate of 3.135 percent (see Note 16). The Loan is secured by Manoa Marketplace under a Mortgage, Security Agreement and Fixture Filing between the Borrowers and FHB, dated August 1, 2016.


14.	CESSATION OF HC&S SUGAR OPERATIONS

A summary of the pre-tax costs and remaining costs associated with the cessation is as follows (in millions):



	Charges Recognized During Quarter		Charges Recognized During YTD 2016		Cumulative Amount Recognized as of September 30, 2016		Range of Expected Remaining Cessation Charges				Total
							Low		High		Low		High
Employee severance benefits and related costs	$	1.7	$	6.7	$	20.1	$	2.9	$	7.4	$	23.0	$	27.5
Asset write-offs and accelerated depreciation	14.5		40.6		49.8		10.2		17.2		59.0		66.0
Property removal, restoration and other exit-related costs	1.4		4.3		4.3		9.7		14.2		15.0		19.5
Total cessation costs	$	17.6	$	51.6	$	74.2	$	22.8	$	38.8	$	97.0	$	113.0

A rollforward of the Cessation-related liabilities during the nine months ended September 30, 2016 is as follows (in millions):



	Employee Severance Benefits and Related Costs			Other Exit Costs¹			Total
Balance at December 31, 2015	$	13.4		$	4.1		$	17.5
Expense	7.1			1.2			8.3
Cash payments	(6.9		)	(1.2		)	(8.1		)
Change in estimates²	(0.5		)	—			(0.5		)
Balance at September 30, 2016	$	13.1		$	4.1		$	17.2

¹ Includes asset retirement obligations of $4.1 million.

²Changes in estimates primarily related to voluntary employee attrition which resulted in the forfeiture of severance and related benefits.

The Cessation-related liabilities were included in the accompanying condensed consolidated balance sheets as follows (in millions):



	Classification on Balance Sheet	September 30, 2016		December 31, 2015
Current:
Employee severance benefits and related costs	HC&S Cessation Related Liabilities - Current	$	13.1	$	5.8
Other exit costs	HC&S Cessation Related Liabilities - Current	3.8		0.6
Total current portion		16.9		6.4
Long-term:
Employee severance benefits and related costs	Other Non-Current Liabilities	—		7.6
Other exit costs	Other Non-Current Liabilities	0.3		3.5
Total long-term portion		0.3		11.1
Total Cessation-related liabilities		$	17.2	$	17.5

The Company expects that the activities related to the Cessation will be substantially completed by the end of 2016.

15. INVESTMENT IN AFFILIATES

The Company's investments in affiliates consisted of equity investments in limited liability companies. The Company has the ability to exercise significant influence over the operating and financial policies of these investments and, accordingly, accounts for its investments using the equity method of accounting. The Company’s operating results include its share of net earnings from its equity method investments. During 2015, the Company's Waihonua joint venture closed the remaining units and completed its project which resulted in $32.3 million of operating income and net income for the joint venture.


16.	DERIVATIVE INSTRUMENTS

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

During the second quarter of 2016, the Company entered into an interest rate swap agreement with a notional amount of $60.0 million which was designated as a cash flow hedge. The Company structured the interest rate swap agreement to hedge the variability of future interest payments due to changes in interest rates with regards to the Company's long-term debt. A summary of the key terms related to the Company's outstanding cash flow hedge as of September 30, 2016 is as follows (dollars in millions):



			Notional Amount		Fair Value at
Effective Date	Maturity Date	Interest Rate	September 30, 2016		September 30, 2016			December 31, 2015		Balance Sheet Classification
April 7, 2016	August 1, 2029	3.135%	$	60.0	$	(2.7	)	$	—	Other non-current liabilities

The Company assessed the effectiveness of the cash flow hedge at inception and will continue to do so on an ongoing basis. The effective portion of the changes in fair value of the cash flow hedge is recorded in accumulated other comprehensive loss and subsequently reclassified into interest expense as interest is incurred on the related-variable rate debt. When ineffectiveness exists, the ineffective portion of changes in fair value of the cash flow hedge is recognized in earnings in the period affected.

Non-designated Hedges

As of September 30, 2016, the Company has two interest rate swaps that have not been designated as cash flow hedges whose key terms are as follows (dollars in millions):



Effective			Notional Amount		Fair Value at						Balance Sheet
Date	Maturity Date	Interest Rate	September 30, 2016		September 30, 2016			December 31, 2015			Classification
January 1, 2014	September 1, 2021	5.95%	$	11.3	$	(1.8	)	$	(1.7	)	Other non-current liabilities
June 8, 2008	March 1, 2021	5.98%	$	6.4	$	(0.6	)	$	(0.8	)	Other non-current liabilities
Total			$	17.7	$	(2.4	)	$	(2.5	)

The following table represents the effect of the derivative instruments in the Company's condensed consolidated statements of operations (in millions):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2016			2015		2016			2015
Derivatives in Designated Cash Flow Hedging Relationships:
Amount of (gain) loss recognized in OCI on derivatives (effective portion)	$	—		$	—	$	2.8		$	—
Amount of (gain) loss reclassified from accumulated OCI into earnings under "interest expense" (ineffective portion and amount excluded from effectiveness testing)	(0.2		)	—		(0.2		)	—
Amount of (gain) loss on derivatives recognized in earnings under "interest expense" (ineffective portion and amount excluded from effectiveness testing)	—			—		—			—
Derivatives Not Designated as Cash Flow Hedges:
Amount of realized and unrealized loss on derivatives recognized in earnings under "interest income and other"	$	—		$	0.5	$	0.7		$	0.9

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 we 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.


17.	SEGMENT RESULTS

Segment results were as follows (in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue:
Real Estate:
Commercial real estate¹	$	32.9		$	33.0		$	102.3		$	100.5
Development and sales	12.8			19.9			74.1			108.8
Reconciling item²	—			—			(60.7		)	(21.0		)
Materials and construction¹	52.1			51.0			144.8			165.3
Agribusiness¹	40.9			40.8			89.7			95.5
Total revenue	$	138.7		$	144.7		$	350.2		$	449.1
Operating Profit (Loss):
Real Estate:
Commercial real estate	$	13.7		$	12.5		$	42.6		$	39.6
Development and sales	6.6			11.2			7.8			57.5
Materials and construction	5.6			7.5			18.5			21.7
Agribusiness operations	1.9			(9.0		)	1.7			(11.8		)
HC&S cessation costs³	(17.6		)	—			(51.6		)	—
Total operating profit	10.2			22.2			19.0			107.0
Interest expense	(6.4		)	(6.5		)	(20.1		)	(20.2		)
General corporate expenses	(5.5		)	(4.8		)	(16.0		)	(15.7		)
REIT evaluation costs	(1.9		)	—			(3.8		)	—
Reduction in solar investments⁴	(0.2		)	(0.1		)	(9.7		)	(1.7		)
Income (loss) before income taxes	(3.8		)	10.8			(30.6		)	69.4
Income tax expense (benefit)	(2.4		)	3.8			(21.6		)	26.4
Net income (loss)	(1.4		)	7.0			(9.0		)	43.0
Income attributable to noncontrolling interest	(0.5		)	(0.3		)	(1.1		)	(1.2		)
Net income (loss) attributable to A&B	$	(1.9	)	$	6.7		$	(10.1	)	$	41.8


¹	Inter-segment revenue during the each of the three and nine month periods ended September 30, 2016 and 2015 were immaterial.


²	Represents the sales of two California and one Utah property in June 2016 and a Colorado retail property in March 2015 and a Texas office building in June 2015 that are classified as "Gain on the sale of improved property" in the Condensed Consolidated Statements of Operations, but reflected as revenue for segment reporting purposes.


³	Costs related to the cessation of HC&S sugar operations. See Note 14.


⁴	Amounts represent reductions in the carrying values of the Company's solar investments. See Note 12.


18.	SUBSEQUENT EVENTS

On October 25, 2016, the Company's Board of Directors declared a quarterly cash dividend of $0.07 per share of outstanding common stock, which will be paid on December 1, 2016 to shareholders of record as of November 7, 2016.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis of the condensed consolidated financial condition and results of operations of Alexander & Baldwin, Inc. and its subsidiaries (collectively, the “Company”) 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, 2015 filed with the U.S. Securities and Exchange Commission ("SEC").

FORWARD-LOOKING STATEMENTS

Alexander & Baldwin, Inc. (“A&B” or the “Company”), from time to time, may make or may have made certain forward-looking statements, whether orally or in writing, such as forecasts and projections of the Company’s future performance or statements of management’s plans and objectives. These statements are “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be contained in, among other things, SEC filings, such as the Forms 10-K, 10-Q and 8-K, the Annual Report to Shareholders, press releases made by the Company, the Company’s web sites (including web sites of its subsidiaries), and oral statements made by the officers of the Company. Except for historical information contained in these written or oral communications, such communications contain forward-looking statements. New risk factors emerge from time to time and it is not possible for the Company to predict all such risk factors, nor can it assess the impact of all such risk factors on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements cannot be relied upon as a guarantee of future results and involve a number of risks and uncertainties that could cause actual results to differ materially from those projected in the statements, including, but not limited to the factors that are described in “Risk Factors” of the Company’s 2015 Annual Report on Form 10-K and other filings with the SEC. The Company is not required, and undertakes no obligation, to revise or update forward-looking statements or any factors that may affect actual results, whether as a result of new information, future events, or circumstances occurring after the date of this report.

INTRODUCTION

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying condensed consolidated financial statements and provides additional information about A&B’s business, recent developments, financial condition, liquidity and capital resources, cash flows, results of operations and how certain accounting principles, policies and estimates affect A&B’s financial statements. MD&A is organized as follows:


•	Business Overview: This section provides a general description of A&B’s business, as well as recent developments that the Company 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 A&B’s consolidated results of operations for the three and nine months ended September 30, 2016 and 2015.


•	Analysis of Operating Revenue and Profit by Segment: This section provides an analysis of A&B’s results of operations by business segment.


•	Liquidity and Capital Resources: This section provides a discussion of A&B’s financial condition and an analysis of A&B’s cash flows for the nine months ended September 30, 2016 and 2015, as well as a discussion of A&B’s ability to fund its future commitments and ongoing operating activities through internal and external sources of capital.


•	Outlook: This section provides a discussion of management’s general outlook about the Hawaii economy and the Company’s markets.


•	Other Matters: This section provides a summary of other matters, such as officer and management changes.

BUSINESS OVERVIEW

A&B, whose history in Hawaii dates back to 1870 that conducts business in four operating segments—Commercial Real Estate; Real Estate Development and Sales; Agribusiness; and Materials and Construction. On October 25, 2016, the Company's Board of Directors approved a plan to perform an in-depth exploration of a potential conversion of the Company to a real estate investment trust (REIT).

Commercial Real Estate: The Commercial Real Estate segment owns, operates and manages retail, office and industrial properties in Hawaii and on the Mainland. The Commercial real estate segment also leases urban land in Hawaii to third-party lessees.

Agribusiness: The Agribusiness segment produces bulk raw sugar, specialty food grade sugars and molasses; markets and distributes specialty food-grade sugars; provides general trucking services, equipment maintenance and repair services; leases agricultural land to third parties; and generates and sells electricity to the extent not used in A&B’s Agribusiness operations.

On December 31, 2015, the Company determined it would cease its HC&S sugar operation on Maui and transition to a diversified agribusiness model. The Company expects that the final harvest and the cessation-related activities will be substantially completed by the end of 2016.

Materials and Construction: The Materials and Construction segment performs asphalt paving as prime contractor and subcontractor; imports and sells liquid asphalt; mines, processes and sells basalt aggregate; produces and sells asphaltic and ready-mix concrete; provides and sells various construction- and traffic-control-related products and manufactures and sells precast concrete products.

CONSOLIDATED RESULTS OF OPERATIONS

Consolidated – Third quarter of 2016 compared with 2015



	Quarter Ended September 30,
(dollars in millions)	2016			2015			Change
Operating revenue	$	138.7		$	144.7		(4.1	)%
Operating costs and expenses	136.5			130.6			4.5	%
Operating income (loss)	2.2			14.1			(84.4	)%
Other income (expense)	(6.0		)	(3.3		)	81.8	%
Income (loss) before income taxes	(3.8		)	10.8			NM
Income tax expense (benefit)	(2.4		)	3.8			NM
Net income (loss)	(1.4		)	7.0			NM
Income attributable to noncontrolling interest	(0.5		)	(0.3		)	66.7	%
Net income (loss) attributable to A&B	$	(1.9	)	$	6.7		NM

Basic earnings (loss) per share available to A&B	$	(0.03	)	$	0.11		NM
Diluted earnings (loss) per share available to A&B	$	(0.03	)	$	0.11		NM

The Company's consolidated operating revenue decreased $6.0 million, or 4.1%, to $138.7 million for the third quarter of 2016 as compared to the third quarter of 2015, reflecting a decline in revenue for Real Estate Development of $7.1 million, partially offset by an increase in Materials and Construction revenue of $1.1 million.

Consolidated operating costs and expenses for the third quarter of 2016 decreased $5.9 million, or 4.5%, to $136.5 million compared to the third quarter of 2015. Agribusiness operating expenses were lower than the third quarter of 2015, but were offset by costs related to the cessation of the HC&S sugar operations. The reasons for the operating cost and expense changes are described below, by business segment, in the Analysis of Operating Revenue and Profit by Segment. Operating costs and expenses for the third quarter of 2016 also included costs of $1.9 million related to the Company's evaluation of a potential REIT conversion.

The Company's other income (expense) was $(6.0) million in the third quarter of 2016 compared to $(3.3) million in the third quarter of 2015. The change in other income (expense) was primarily due to lower income from joint ventures in the third quarter of 2016, as compared to the same quarter in 2015.

The Company recorded income tax benefit of $2.4 million on a pre-tax loss of $3.8 million for the third quarter of 2016. The Company's effective tax rate for the third quarter of 2016 differs from the statutory rate primarily due to the impact of the

federal tax credits from the Waihonu solar investment. During the third quarter of 2015, the Company recorded an income tax expense of $3.8 million and $10.8 million of pre-tax income.

Consolidated – First nine months of 2016 compared with 2015



	Nine Months Ended September 30,
(dollars in millions)	2016			2015			Change
Operating revenue	$	350.2		$	449.1		(22.0	)%
Operating costs and expenses	356.1			389.3			(8.5	)%
Operating income (loss)	(5.9		)	59.8			NM
Other income (expense)	(24.7		)	9.6			NM
Income (loss) before income taxes	(30.6		)	69.4			NM
Income tax expense (benefit)	(21.6		)	26.4			NM
Net income (loss)	(9.0		)	43.0			NM
Income attributable to noncontrolling interest	(1.1		)	(1.2		)	(8.3	)%
Net income (loss) attributable to A&B	$	(10.1	)	$	41.8		NM

Basic earnings (loss) per share available to A&B	$	(0.19	)	$	0.83		NM
Diluted earnings (loss) per share available to A&B	$	(0.19	)	$	0.82		NM

The Company's consolidated operating revenue decreased by $98.9 million, or 22.0%, to $350.2 million for the first nine months of 2016 as compared to the first nine months of 2015, reflecting a decline in revenue in each of the Real Estate Development and Sales, Materials and Construction, and Agribusiness segments. The reasons for the revenue changes are described below, by business segment, in the Analysis of Operating Revenue and Profit by Segment.

Consolidated operating costs and expenses for the first nine months of 2016 decreased by $33.2 million, or 8.5%, to $356.1 million compared to the first nine months of 2015. The overall decrease was primarily attributed to the Real Estate Development and Sales and the Materials and Construction operating segments, offset by an overall increase in costs for the Agribusiness segment due to the cessation of the HC&S sugar operations. The reasons for the operating cost and expense changes are described below, by business segment, in the Analysis of Operating Revenue and Profit by Segment. Operating costs and expenses for the first nine months of 2016 also included costs of $3.8 million related to the Company's evaluation of a REIT conversion.

Other income (expense) was $(24.7) million in the first nine months of 2016 compared to $9.6 million in the first nine months of 2015. The change was primarily attributable to $30.7 in earnings from joint ventures, primarily from the closing of unit sales at Waihonua, the Company's high-rise condominium joint venture project, in 2015, partially offset by larger reduction in solar investments in 2016.

The Company recorded an income tax benefit of $21.6 million on a pre-tax loss of $30.6 million for the first nine months of 2016, which included $8.6 million of non-refundable federal tax credits related to the Company's Waihonu solar investment. The Company's effective tax rate for the first half of 2016 differs from the statutory rate primarily due to the impact of the federal tax credits from the Waihonu solar investment. During the first nine months of 2015, the Company recorded income tax expense of $26.4 million on $69.4 million pre-tax income.

ANALYSIS OF OPERATING REVENUE AND PROFIT BY SEGMENT

REAL ESTATE INDUSTRY

Impact of Property Sales Mix on Operating Results: Direct year-over-year comparison of the real estate development and sales results may not provide a consistent, measurable indicator of future performance because results from period to period are significantly affected by the mix and timing of property sales. Operating results, by virtue of each project’s asset class, geography and timing are inherently variable. Earnings from joint venture investments are not included in segment revenue, but are included in operating profit. The mix of real estate sales in any year or quarter can be diverse and can include developed residential real estate, commercial properties, developable subdivision lots, undeveloped land, and property sold under threat of condemnation. The sale of undeveloped land and vacant parcels in Hawaii generally provides higher margins than does the sale of developed and commercial property, due to the low historical-cost basis of A&B’s Hawaii land.

Consequently, real estate sales revenue trends, cash flows from the sales of real estate, and the amount of real estate held for sale on the Company's balance sheet do not necessarily indicate future profitability trends for this segment. Additionally, the operating profit reported in each quarter does not necessarily follow a percentage of sales trend because the cost basis of property sold can differ significantly between transactions.

Commercial Real Estate – Third quarter of 2016 compared with 2015



	Quarter Ended September 30,
(dollars in millions)	2016			2015			Change
Commercial Real Estate segment operating revenue	$	32.9		$	33.0		(0.3	)%
Commercial Real Estate segment operating costs and expenses	(18.9		)	(20.3		)	(6.9	)%
Selling, general and administrative	(0.4		)	(0.4		)	—	%
Other income	0.1			0.2			(50.0	)%
Commercial Real Estate operating profit	$	13.7		$	12.5		9.6	%
Operating profit margin	41.6		%	37.9		%
Operating Profit by location
Hawaii	$	12.9		$	11.2		15.2	%
Mainland	0.8			1.3			(38.5	)%
Total	$	13.7		$	12.5		9.6	%
Net Operating Income¹
Hawaii	$	18.5		$	16.4		12.8	%
Mainland	2.6			4.0			(35.0	)%
Total	$	21.1		$	20.4		3.4	%
Leasable Space (million sq. ft.) at period end
Hawaii - improved	2.9			2.7
Mainland - improved	1.8			2.3
Total improved	4.7			5.0
Hawaii urban ground leases (acres)	105			106


¹	Refer to pages 25 for a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures.

Commercial Real Estate revenue of $32.9 million for the third quarter of 2016 approximated 2015. The increases in Hawaii same-store rents were offset by the cumulative impact of timing of sales and acquisitions subsequent to the third quarter of 2015. "Same-store" refers to properties that were owned throughout the entire duration of both periods under comparison, including stabilized properties. Stabilized properties refer to commercial properties developed by the Company that have achieved 80 percent economic occupancy in each of the periods presented for comparison.

Operating profit and net operating income ("NOI") for the third quarter of 2016 increased 9.6% and 3.4%, respectively, than the third quarter of 2015, primarily due to increases in same-store rents and the timing of sales and acquisitions. Tenant improvement costs and leasing commissions were $1.2 million and $1.6 million for the three months ended September 30, 2016 and 2015, respectively.

The Company's commercial portfolio's weighted average occupancy summarized by geographic location and property type for the quarter ended September 30, 2016 was as follows:



Weighted average occupancy - percent	Hawaii	Mainland	Total
Retail	94%	93%	94%
Industrial	95%	91%	93%
Office	83%	87%	86%
Total	93%	90%	92%

Leasable space was approximately 4.7 million square feet as of September 30, 2016. The table below identifies sales and acquisitions between October 1, 2015 and September 30, 2016:



Dispositions			Acquisitions
Date	Property	Leasable sq. ft.	Date	Property	Leasable sq. ft.
12-15	Union Bank	84,000	1-16	Manoa Marketplace	139,300
6-16	Ninigret Office Park	185,500
6-16	Gateway Oaks	59,700
6-16	Prospect Park	163,300
	Total Dispositions	492,500		Total Improved Acquisitions	139,300

Same-store occupancy during the third quarter of 2016 was 92% as compared to 94% in 2015.

Commercial Real Estate – First nine months of 2016 compared with 2015



	Nine Months Ended September 30,
(dollars in millions)	2016			2015			Change
Commercial Real Estate segment revenue	$	102.3		$	100.5		1.8	%
Commercial Real Estate segment operating costs and expenses	(58.8		)	(60.4		)	(2.6	)%
Selling, general and administrative	(1.2		)	(1.3		)	(7.7	)%
Other income	0.3			0.8			(62.5	)%
Commercial Real Estate operating profit	$	42.6		$	39.6		7.6	%
Operating profit margin	41.6		%	39.4		%
Operating Profit by location
Hawaii	$	38.7		$	34.8		11.2	%
Mainland	3.9			4.8			(18.8	)%
Total	$	42.6		$	39.6		7.6	%
Net Operating Income¹
Hawaii	$	55.3		$	49.7		11.3	%
Mainland	10.5			13.0			(19.2	)%
Total	$	65.8		$	62.7		4.9	%


¹	Refer to pages 25 for a discussion of management's use of a non-GAAP financial measure and the required reconciliation of non-GAAP measures to GAAP measures.

Commercial Real Estate segment revenue for the first nine months of 2016 was 1.8% higher than 2015, primarily due to the timing of sales and acquisitions activity and higher Hawaii same-store rents.

Operating profit and NOI were 7.6% and 4.9% higher, respectively, for the first nine months of 2016, as compared to same period last year primarily due to the timing of sales and acquisitions and higher same store rents. Tenant improvement costs and leasing commissions were $5.1 million and $7.0 million for the first nine months of 2016 and 2015, respectively.

The Company's commercial portfolio's weighted average occupancy summarized by geographic location and property type for the nine months ended September 30, 2016 was as follows:



Weighted average occupancy - percent	Hawaii	Mainland	Total
Retail	94%	93%	94%
Industrial	95%	96%	96%
Office	82%	89%	88%
Total	93%	94%	93%

Same store occupancy for the nine months ended September 30, 2016 was 93%, as compared to 94% in 2015.

Use of Non-GAAP Financial Measures

The Company calculates NOI as operating profit, adjusted for general and administrative expenses, straight-line rental adjustments, interest income, interest expense, depreciation and amortization, and gains on sales of interests in real estate. NOI is considered by management to be an important and appropriate supplemental performance metric because management believes it helps both investors and management understand the ongoing core operations of our Commercial Real Estate segment excluding corporate and financing-related costs and noncash depreciation and amortization. NOI is an unlevered operating performance metric of our properties and allows for a useful comparison of the operating performance of individual assets or groups of assets. This measure thereby provides an operating perspective not immediately apparent from GAAP income (loss) from operations or net income (loss). NOI should not be considered as an alternative to GAAP net income, as an indicator of the Company's financial performance, or as an alternative to cash flow from operating activities as a measure of the Company's liquidity. Other real estate companies may use different methodologies for calculating NOI, and accordingly, the Company's presentation of NOI may not be comparable to other real estate companies. The Company believes that the Commercial real estate segment's operating profit is the most directly comparable GAAP measurement to NOI. A reconciliation of Commercial Real Estate segment operating profit to Commercial Real Estate segment NOI is as follows:

Reconciliation of Commercial Real Estate Operating Profit to NOI



	Quarter Ended September 30,
(dollars in millions)				2016								2015
	Hawaii			Mainland		Total			Hawaii			Mainland		Total			Change
Commercial Real Estate segment operating profit	$	12.9		$	0.8	$	13.7		$	11.2		$	1.3	$	12.5		9.6	%
Adjustments:
Depreciation and amortization	5.4			1.6		7.0			5.0			2.4		7.4			(5.4	)%
Straight-line lease adjustments	(0.5		)	0.1		(0.4		)	(0.8		)	—		(0.8		)	(50.0	)%
General and administrative expenses	0.7			0.1		0.8			1.0			0.3		1.3			(38.5	)%
Commercial Real Estate segment NOI	$	18.5		$	2.6	$	21.1		$	16.4		$	4.0	$	20.4		3.4	%



	Nine Months Ended September 30,
(dollars in millions)				2016								2015
	Hawaii			Mainland		Total			Hawaii			Mainland		Total			Change
Commercial real estate segment operating profit	$	38.7		$	3.9	$	42.6		$	34.8		$	4.8	$	39.6		7.6	%
Adjustments:
Depreciation and amortization	15.9			5.8		21.7			14.3			7.5		21.8			(0.5	)%
Straight-line lease adjustments	(1.9		)	0.3		(1.6		)	(2.1		)	—		(2.1		)	(23.8	)%
General and administrative expenses	2.6			0.5		3.1			2.4			0.7		3.1			—	%
Other	—			—		—			0.3			—		0.3			(100.0	)%
Commercial real estate segment NOI	$	55.3		$	10.5	$	65.8		$	49.7		$	13.0	$	62.7		4.9	%

Real Estate Development and Sales – Third quarter of 2016 compared with 2015



	Quarter Ended September 30,
(dollars in millions)	2016			2015
Improved property sales revenue	$	—		$	—
Development sales revenue	3.3			19.6
Unimproved/other property sales revenue	9.5			0.3
Total Real Estate Development and Sales segment operating revenue	12.8			19.9
Cost of Real Estate Development and Sales	(3.1		)	(6.7		)
Operating expenses	(4.3		)	(3.6		)
Earnings (loss) from joint ventures	0.6			1.6
Other income	0.6			—
Total Real Estate Development and Sales operating profit	$	6.6		$	11.2

Real Estate Development and Sales – First nine months of 2016 compared with 2015



	Nine Months Ended September 30,
(dollars in millions)	2016			2015
Improved property sales revenue¹	$	60.7		$	21.0
Development sales revenue	3.3			71.5
Unimproved/other property sales revenue	10.1			16.3
Total Real Estate Development and Sales segment operating revenue	74.1			108.8
Cost of Real Estate Development and Sales	(55.7		)	(67.4		)
Operating expenses	(12.8		)	(11.1		)
Earnings from joint ventures	1.0			26.2
Other income	1.2			1.0
Total Real Estate Development and Sales operating profit	$	7.8		$	57.5


¹	Represents the sales of commercial properties that are classified as "Gain on the sale of improved property" in the Condensed Consolidated Statements of Operations, but reflected as revenue for segment reporting purposes.

Third quarter 2016: Real Estate Development and Sales operating revenue and operating profit were $12.8 million and $6.6 million, respectively. Sales included a Maui parcel and a residential property on Oahu. Operating profit also included the following joint venture unit sales: six units on Hawaii Island and one unit on Kauai, partially offset by joint venture expenses.

Third quarter 2015: Real Estate Development and Sales operating revenue and operating profit were $19.9 million and $11.2 million, respectively. Results included the sale of 11.0 acres at Maui Business Park Phase II to Lowe’s. Operating profit also included the following joint venture sales: seven units on Hawaii Island and 5 units on Kauai, partially offset by joint venture expenses.

First nine months 2016: Real Estate Development and Sales operating revenue and operating profit were $74.1 million and $7.8 million, respectively. Sales included two office properties in California, one office property in Utah, a Maui parcel, and a residential property on Oahu. Operating profit also included nine units on Hawaii Island and eight units on Kauai, partially offset by joint venture expenses.

First nine months 2015: Real Estate Development and Sales operating revenue and operating profit, were $108.8 million and $57.5 million, respectively. Sales included five residential properties on Oahu, an office property in Texas, 17.4 acres at Maui Business Park Phase II, five Maui parcels, a parcel in Santa Barbara, California, and a retail property in Colorado. Operating profit also included joint venture sales of all remaining units at the 340-unit Waihonua condominium on Oahu (12 units closed in December 2014), 14 units on Kauai, 11 units on Hawaii Island, and one unit on Maui, partially offset by joint venture expenses.

MATERIALS AND CONSTRUCTION

Materials and Construction - Third quarter of 2016 compared with 2015



	Quarter Ended September 30,
(dollars in millions)	2016			2015			Change
Revenue	$	52.1		$	51.0		2.2	%
Operating profit	$	5.6		$	7.5		(25.3	)%
Operating profit margin	10.7		%	14.7		%
Depreciation and amortization	$	2.9		$	3.0		(3.3	)%
Aggregate used and sold (tons in thousands)	158.1			180.5			(12.4	)%
Asphaltic concrete placed (tons in thousands)	126.9			106.9			18.7	%
Backlog^1,2 at period end	$	242.5		$	243.1		(0.2	)%

Backlog represents the amount of revenue that the Grace Pacific and Maui Paving, LLC, a 50-percent-owned unconsolidated affiliate, expect to realize on contracts awarded or government contracts in which the Grace Pacific has been confirmed to be the lowest bidder and formal communication of the award is perfunctory. 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. Maui Paving's backlog at September 30, 2016 and 2015 was $19.1 million and $18.9 million, respectively.


²	As of each of the quarters ended September 30, 2016 and 2015, backlog included $0.2 million and $0.4 million, respectively, of contractual revenue with related parties.

Materials and Construction revenue for the third quarter of 2016 increased $1.1 million, or 2.2%, as compared to the third quarter of 2015, primarily due to higher paving volume and higher aggregate sales prices per ton, partially offset by lower aggregate tons sold. Revenue during the third quarter of 2016 reflected approximately 158.1 thousand tons of aggregate used and sold and 126.9 thousand tons of asphaltic concrete placed, as compared to 180.5 thousand tons of aggregate used and sold and 106.9 thousand tons of asphaltic concrete placed during 2015. During the third quarter of 2016, Materials and Construction experienced 78.5 crew days that were rained out, as compared to 79 days during the third quarter of 2015. Backlog at the end of September 30, 2016 was $242.5 million, compared to $266.8 million as of June 30, 2016. The decrease in backlog from the second quarter of 2016 is primarily due to completed and billed work during the period. Backlog reasonably expected to be filled in the current fiscal year is $27.3 million.

Operating profit decreased $1.9 million, or 25.3%, for the third quarter of 2016 as compared to the third quarter of 2015, primarily due to a non-cash impairment of $1.6 million related noncash write-down of a surplus vacant parcel held by an unconsolidated affiliate.

Materials and Construction - First nine months of 2016 compared with 2015



	Nine Months Ended September 30,
(dollars in millions)	2016			2015			Change
Revenue	$	144.8		$	165.3		(12.4	)%
Operating profit	$	18.5		$	21.7		(14.7	)%
Operating profit margin	12.8		%	13.1		%
Depreciation and amortization	$	8.8		$	8.8		—	%
Aggregate used and sold (tons in thousands)	500.9			649.9			(22.9	)%
Asphaltic concrete placed (tons in thousands)	331.7			338.8			(2.1	)%

Materials and Construction revenue for the first nine months of 2016 decreased $20.5 million, or 12.4%, as compared to the first nine months of 2015, primarily due to lower paving volume due to adverse weather and the pace of notices to proceed, lower aggregate sales volume, and lower asphalt revenue per ton and volume, partially offset by higher aggregate sales prices per ton. Revenue during the first nine months of 2016 reflected approximately 500.9 tons of aggregate used and sold and 331.7 tons of asphaltic concrete placed. During the first nine months of 2016, Materials and Construction experienced 159 crew days that were rained out, as compared to 118 days during the first nine months of 2015. Materials and Construction revenue was $165.3 million for the first nine months of 2015, reflecting 649.9 tons of aggregate used and sold and 338.8 tons of asphaltic concrete placed.

Operating profit was $18.5 million for the first nine months of 2016, compared to $21.7 million for the first nine months of 2015. The decrease in operating profit is related principally to decreased paving activity and lower aggregate and other construction-related material sales volume, as well as a non-cash impairment of $1.6 million related noncash write-down of a surplus vacant parcel held by an unconsolidated affiliate, partially offset by increased aggregate production efficiencies and aggregate pricing.

AGRIBUSINESS

The quarterly results of the Agribusiness segment are subject to fluctuations from a number of factors, including the timing of sugar deliveries, which typically commence after the first quarter of each year. Additionally, each delivery is generally priced independently, which could result in significant variations in margins between deliveries. Accordingly, quarterly results are not indicative of the results that may be achieved for a full year.

Agribusiness – Third quarter of 2016 compared with 2015



	Quarter Ended September 30,
(dollars in millions)	2016			2015			Change
Revenue	$	40.9		$	40.8		0.2	%
Operating profit (loss), excluding cessation costs	$	1.9		$	(9.0	)	NM
Cessation costs	$	(17.6	)	$	—		NM
Tons sugar produced	53,300			42,500			25.4	%
Tons sugar sold (raw and specialty sugar)	60,000			58,000			3.4	%

Agribusiness revenue for the third quarter of 2016 approximated the third quarter of 2015.

Agribusiness operating profit for the third quarter of 2016, excluding sugar cessation costs was $1.9 million as compared to an operating loss of $9.0 million for the third quarter of 2015. The variance from the prior year is primarily due to lower raw sugar production costs, partially offset by lower power margins. During the quarter ended September 30, 2016, the Agribusiness segment also recognized charges of $17.6 million related to the cessation of the HC&S sugar operations, which consisted of accelerated depreciation, severance and employee benefits, and other exit-related costs.

Tons of sugar produced for the third quarter of 2016 was 25.4% higher than the third quarter of 2015 primarily due to a greater number of acres harvested during the third quarter of 2016 as compared to 2015.

Agribusiness – First nine months of 2016 compared with 2015



	Nine Months Ended September 30,
(dollars in millions)	2016			2015			Change
Revenue	$	89.7		$	95.5		(6.1	)%
Operating profit (loss), excluding cessation costs	$	1.7		$	(11.8	)	NM
Cessation costs	$	(51.6	)	$	—		NM
Tons sugar produced	114,700			98,700			16.2	%
Tons sugar sold (raw and specialty sugar)	112,500			126,000			(10.7	)%

Agribusiness revenue for the first nine months of 2016 decreased $5.8 million, or 6.1%, as compared to the first nine months of 2015. The decrease was primarily due to lower sugar and power sales in 2016 as compared to 2015, partially offset by higher charter revenue and molasses sales.

Operating profit for the first nine months of 2016 was $1.7 million as compared to an operating loss of $11.8 million for the first nine months of 2015, primarily due to higher sugar margins during 2016, resulting from lower production costs. During the first nine months of 2016, the Agribusiness segment also recognized charges of $51.6 million related to the cessation of the HC&S sugar operations, which consisted of accelerated depreciation, severance and employee benefits, and other exit-related costs.

Tons of sugar produced during the nine months ended September 30, 2016 was 16.2% higher than in the nine months ended September 30, 2015, primarily due to an increase in the number of acres harvested. Sugar volume sold during the first nine months of 2016 was approximately 13,500 tons lower, or 10.7%, primarily due to one less raw sugar voyage completed during the first nine months of 2016 as compared to 2015.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s primary liquidity needs have historically been to support working capital requirements and fund capital expenditures and real estate developments. A&B’s principal sources of liquidity have been cash flows provided by operating activities, available cash and cash equivalent balances, and borrowing capacity under its various credit facilities.

A&B’s operating income is generated by its subsidiaries. There are no material restrictions on the ability of A&B’s subsidiaries to pay dividends or make other distributions to A&B. A&B regularly evaluates investment opportunities, including development projects, joint venture investments, share repurchases, business acquisitions and other strategic transactions to increase shareholder value. A&B cannot predict whether or when it may enter into acquisitions or joint ventures or what impact any such transactions could have on A&B’s results of operations, cash flows or financial condition. A&B’s cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section entitled “Risk Factors” of the Company’s 2015 Annual Report on Form 10-K.

Cash Flows: Cash flows from operating activities totaled $48.4 million for the nine months ended September 30, 2016 as compared to $115.3 million for the nine months ended September 30, 2015. The decrease in cash flows from operating activities is primarily attributed to lower operating revenue from the Real Estate Development and Sales segment which resulted in a decrease in real estate development sales proceeds of $60.0 million for the nine months of 2016 as compared to the nine months of 2015.

Cash flows used in investing activities totaled $54.6 million during the first nine months of 2016, as compared to cash flows provided by investing activities of $6.5 million during the first nine months of 2015. The decrease in cash flows from investing activities was primarily due to higher capital expenditures during 2016 as a result of the acquisition of Manoa Marketplace, as well as higher proceeds related to the return of investment capital during 2015, which resulted from the completion of the Company's Waihonua condominium joint venture project.

Capital expenditures for the first nine months of 2016 totaled $105.3 million as compared to $34.9 million for the first nine months of 2015. Net cash flows used in investing activities for capital expenditures were as follows:



	Nine Months Ended September 30,
(dollars in millions)	2016		2015		Change
Quarrying and paving	$	7.1	$	5.3	34.0	%
Commercial real estate property acquisitions and improvements¹	88.1		12.0		7X
Tenant improvements	3.0		5.4		(44.4	)%
Agribusiness and other	7.1		12.2		(41.8	)%
Total capital expenditures²	$	105.3	$	34.9	3X


¹	2016 amounts include $82.4 million related to the acquisition of Manoa Marketplace.


²	Capital expenditures for real estate developments to be held and sold as real estate development inventory are classified in the condensed consolidated statement of cash flows as operating activities.

Cash flows from financing activities were $10.7 million for the first nine months of 2016, as compared to cash flows used in financing activities of $120.5 million during the first nine months of 2015. The change from the prior year was primarily due to an increase in amounts borrowed under the Company's revolving senior credit facility during the nine months ended September 30, 2016, principally related to the reverse 1031 acquisition of Manoa Marketplace.

The Company believes that funds generated from results of operations, available cash and cash equivalents, and available borrowings under credit facilities will be sufficient to finance the Company’s business requirements for the next fiscal year, including working capital, capital expenditures, and potential acquisitions and stock repurchases. 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.

Sources of Liquidity: Additional sources of liquidity for the Company, consisting of cash and cash equivalents, receivables, and inventory related to materials & construction and sugar operations, totaled $101.4 million at September 30, 2016, a decrease of $2.6 million from December 31, 2015, primarily due to a decrease of $4.4 million in quarry and sugar inventories, as well as a decrease of $3.4 million in other receivables, partially offset by a $4.5 million increase in cash and cash equivalents.

The Company also has revolving credit facilities that provide additional sources of liquidity for working capital requirements or investment opportunities on a short-term as well as longer-term basis. Total debt as of September 30, 2016 was $606.3 million compared to $587.0 million as of December 31, 2015. The increase in debt of 3.3% during the first nine months of 2016 was primarily attributed to funding of real estate development investments and ongoing projects, commercial real estate improvements, maintenance capital expenditures, and financing of the Company's $15.4 million investment in the Waihonu solar investment. As of September 30, 2016, the Company had a total borrowing availability of $269.3 million under its revolving credit facilities.

Balance Sheet: The Company's working capital deficit increased by $4.7 million, or 14.6%, from $32.2 million as of December 31, 2015 to $36.9 million as of September 30, 2016. The increase in the working capital deficit is primarily due to a decrease in inventories and an increase in cessation related accruals, partially offset by decreases in current portion of long-term debt and accounts payable and an increase in cash and cash equivalents.

At September 30, 2016, the Company believes it was in compliance with all of its covenants under its credit facilities. While there can be no assurance that the Company will remain in compliance with its covenants, the Company expects that it will remain in compliance.

Tax-Deferred Real Estate Exchanges: Sales - During the third quarter of 2016, the Company had no sales that qualified for tax-deferral treatment under Internal Revenue Code Section 1031.

Purchases - During the first quarter of 2016, the Company acquired both the leasehold and leased fee interests of Manoa Marketplace, a retail center on Oahu for $82.4 million. The proceeds from the sales of the three Mainland properties that were completed during the second quarter have been applied to the Manoa Marketplace acquisition under a reverse 1031 transaction that qualifies for tax-deferral treatment under Internal Revenue Code 1031.

Proceeds from 1031 tax-deferred sales are held in escrow pending future use to purchase new real estate assets. The proceeds from 1033 condemnations are held by the Company until the funds are redeployed. As of September 30, 2016, there were $1.2 million of cash proceeds related to tax-deferred sales that have been designated for reinvestment.

Commitments, Contingencies and Off-balance Sheet Arrangements: A description of other commitments, contingencies, and off-balance sheet arrangements at September 30, 2016, and herein incorporated by reference, is included in Note 3 to the condensed consolidated financial statements of Item 1 in this Form 10-Q.

OUTLOOK

All of the forward-looking statements made herein are qualified by the inherent risks of the Company’s operations and the markets it serves, as more fully described on pages 17 to 29 of the Company’s 2015 Form 10-K and other filings with the SEC.

There are two primary sources of periodic economic forecasts and data for the State of Hawaii: The University of Hawaii Economic Research Organization (UHERO) and the State’s Department of Business, Economic Development and Tourism (DBEDT). Much of the economic information included herein has been derived from economic reports available on UHERO’s and DBEDT’s websites, which provide more complete information about the status of, and forecast for, the Hawaii economy. Information below on Oahu residential re-sales is published by the Honolulu Board of Realtors and Title Guaranty of Hawaii, Incorporated. Information below on the Oahu commercial real estate market is provided by Colliers International (Hawaii). Bankruptcy filing information cited below is published by the U.S. Bankruptcy Court District of Hawaii. Information below on foreclosures is from the Hawaii State Judiciary. Certain statistics can be volatile due to the relatively small size of the market and/or low number of transactions, including neighbor island residential resale prices and volumes, and bankruptcy and foreclosure filings.

The Company’s overall outlook assumes steady growth for the U.S. and Hawaii economies. The Hawaii economy is projected to produce real growth of 1.9 percent in 2016, and is expected to continue to grow at a similar pace for the next several years.

The primary driver of growth for the Hawaii economy is tourism, which set an all-time record for visitor arrivals and expenditures for a fourth consecutive year in 2015. Year-to-date through August 2016, arrivals and expenditures increased by 2.6 percent and 3.0 percent, respectively, compared to the same period last year.

Another important driver of the economy is construction. UHERO projects the value of real private building permits to decrease by 16.3 percent for the full year due to short-term volatility related to high-rise construction after several years of growth. Condo projects are approved with a single large permit, and as a result there can be large variances in the value of building authorizations depending on how many buildings happen to receive their permit in a given time period. UHERO expects the value of real private building permits to grow in 2017.

The median resale price for a single family home on Oahu year-to-date through September 2016 was $732,000, up 5.2 percent compared to the same period last year, and the median resale price of an Oahu condominium was $386,000, up 8.7 percent. Days on market for the same period remained low at 17 days for homes and 19 days for condominiums. Single-family resale prices on Maui improved 8.5 percent year-to-date through September 2016, while sales volumes were modestly lower, compared to the same period last year. Single-family resale prices and sales on Kauai were positive through September of 2016.

Oahu commercial real estate performance for the third quarter is detailed in the table below. Industrial and office vacancy trended lower for the third quarter of 2016 compared to the third quarter of 2015. Retail vacancy rates were higher for the third quarter of 2016, due to the closure of four Sports Authority stores on Oahu, as well as the opening of International Marketplace in Waikiki where more than 60 percent of the available space is under negotiation or construction. Average asking rents have increased for all asset classes.



Property Type	Vacancy Rate for the Quarter Ended September 30, 2016	Vacancy Rate for the Quarter Ended September 30, 2015	Percentage Point Change	Average Asking Rent Per Square Foot Per Month for the Quarter Ended September 30, 2016		Average Asking Rent Per Square Foot Per Month for the Quarter Ended September 30, 2015		Percent Change
Retail	5.5%	3.7%	1.8%	$	3.94	$	3.82	3.1	%
Industrial	1.8%	2.2%	(0.4)%	$	1.19	$	1.16	2.6	%
Office	12.4%	13.2%	(0.8)%	$	1.71	$	1.67	2.4	%

Unemployment in September 2016 was 3.3 percent, down from 3.4 percent in September 2016, and below the national unemployment rate of 5.0 percent. Bankruptcy filings year to date through September 2016 were down by 12.3 percent compared to the same period of 2015. Foreclosures were down by 4.8 percent through August 2016 compared to last year.

As a result of favorable experience so far this year, full-year pre-tax operating losses and cessation costs are expected to be at the favorable end of their previously provided ranges—$(5)-$(15) million and $(75)-$(90) million, respectively.

There are no updates to the Company's previously provided outlook for its Commercial Real Estate, Development and Sales or Materials and Construction segments.

OTHER MATTERS

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 2015 Form 10-K.

Critical Accounting Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, upon which the 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 A&B’s financial statements were described in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s 2015 Form 10-K.

Dividends: On October 25, 2016, the Company's Board of Directors declared a quarterly cash dividend of $0.07 per share of outstanding common stock, which will be paid on December 1, 2016 to shareholders of record as of November 7, 2016.

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, 2015. There has been no material change in the quantitative and qualitative disclosures about market risk since December 31, 2015.

ITEM 4. CONTROLS AND PROCEDURES


(a)	Disclosure Controls and Procedures

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated 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 Securities Exchange Act of 1934, as amended (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 the end of such period, the Company's disclosure controls and procedures are effective.

(b) Changes in Internal Control Over Financial Reporting

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth under the “Legal Proceedings and Other Contingencies” section in Note 3 of Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report, is incorporated herein by reference.

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

Issuer Purchases of Equity Securities



Period	Total Number of Shares Purchased¹	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1-31, 2016	—	$—	—	—
August 1 - 31, 2016	47,346	$40.53	—	—
September 1 - 30, 2016	—	$—	—	—


¹	Represents shares accepted in satisfaction of tax withholding obligations arising upon option exercises.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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.

ITEM 5. OTHER INFORMATION

On October 25, 2016, the Board approved the request of Stanley M. Kuriyama, to transition from executive Chairman of the Board of Directors, to non-executive Chairman of the Board, effective January 1, 2017. For 2017, as Chairman of the Board of Directors, Mr. Kuriyama will receive annual cash compensation of $85,000 and be eligible to receive an equity grant in the amount of $135,000.

ITEM 6. EXHIBITS


10.a.(xxxiv)	Promissory Note by ABL Manoa Marketplace LF LLC, A&B Manoa LLC, ABL Manoa Marketplace LH LLC, and ABP Manoa Marketplace LH LLC to First Hawaiian Bank, dated August 1, 2016.


10.a.(xxxv)	Mortgage, Security Agreement and Fixture Filing by ABL Manoa Marketplace LF LLC, A&B Manoa LLC, ABL Manoa Marketplace LH LLC, and ABP Manoa Marketplace LH LLC to First Hawaiian Bank, dated August 1, 2016.


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.

101

The following information from Alexander & Baldwin, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and September 30, 2015, (ii) Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2016 and September 30, 2015, (iii) Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015, (iv) Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016 and September 30, 2015, (v) Condensed Consolidated Statements of Equity for the nine months ended September 30, 2016 and September 30, 2015, and (vi) the Notes to the Condensed Consolidated Financial Statements.


95	Mine Safety Disclosure

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.
		(Registrant)



Date:	October 28, 2016	/s/ Paul K. Ito
		Paul K. Ito
		Senior Vice President,
		Chief Financial Officer and Treasurer

EXHIBIT INDEX


10.a.(xxxiv)	Promissory Note by ABL Manoa Marketplace LF LLC, A&B Manoa LLC, ABL Manoa Marketplace LH LLC, and ABP Manoa Marketplace LH LLC to First Hawaiian Bank, dated August 1, 2016.


10.a.(xxxv)	Mortgage, Security Agreement and Fixture Filing by ABL Manoa Marketplace LF LLC, A&B Manoa LLC, ABL Manoa Marketplace LH LLC, and ABP Manoa Marketplace LH LLC to First Hawaiian Bank, dated August 1, 2016.


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.

101

The following information from Alexander & Baldwin, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and September 30, 2015, (ii) Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and nine months ended September 30, 2016 and September 30, 2015, (iii) Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015, (iv) Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2016 and September 30, 2015, (v) Condensed Consolidated Statements of Equity for the nine months ended September 30, 2016 and September 30, 2015 and (vi) the Notes to the Condensed Consolidated Financial Statements.


95	Mine Safety Disclosure

LAND COURT SYSTEM REGULAR SYSTEM

AFTER RECORDATION RETURN: BY MAIL ( ) PICK UP ( )

TO: First Hawaiian Bank

999 Bishop Street

Honolulu, HI 96813

Attn: Commercial Real Estate Division

______________________________________________________________________________

Pages: 53

Tax Map Keys: (1) 2-9-022-001, 005, 009, 012 and 030

MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING

THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING (this “Mortgage”) is made as of August 1, 2016, by ABL MANOA MARKETPLACE LF LLC, a Hawaii limited liability company (“ABL-LF”), A&B MANOA LLC, a Hawaii limited liability company (“ABML”), ABL MANOA MARKETPLACE LH LLC, a Hawaii limited liability company (“ABL-LH”), and ABP MANOA MARKETPLACE LH LLC, a Hawaii limited liability company (“ABP-LH”), all of whose mailing address is 822 Bishop Street, Honolulu, Hawaii 96813, to FIRST HAWAIIAN BANK, a Hawaii corporation, whose mailing address is 999 Bishop Street, Honolulu, Hawaii 96813 (hereinafter called the “Mortgagee”). ABL-LF, ABML, ABL-LH, and ABP-LH is each individually referred to herein as a “Borrower Entity” and are collectively referred to herein as the “Mortgagor”.

WITNESSETH THAT

1.Granting Clauses. The Mortgagor does hereby mortgage to the Mortgagee and grant to the Mortgagee a mortgage lien on and security interest in, all of the following-described properties, in each case to the full extent of the Mortgagor’s right, title and interest therein, whether now held or hereafter acquired by the Mortgagor (collectively, the “Mortgaged Properties”):

5902411.4

(a)all the land and easements described in Exhibit A attached hereto and made a part hereof, together with all easements, rights, privileges, licenses, tenements, hereditaments and appurtenances in any way now or hereafter relating or appertaining thereto (collectively, the “Land”);

(b)that certain lease (under which the ABL-LH and ABP-LH are the lessee (in such capacity, the “Lessee”) and ABL-LF and ABML are the lessor (in such capacity, the “Lessor”)), more particularly described in Exhibit A hereto (the “Lease”), together with all rights and privileges created thereunder, including without limitation, all modifications, extensions, and renewals of the Lease and all rights to renew or extend the term thereof, all other options, privileges and rights granted and demised to Mortgagor, all of the right and privilege of Mortgagor to terminate, cancel, abridge, surrender, merge, modify or amend the Lease, and any all possessory rights of Mortgagor and other rights or privileges of possession, including Mortgagor’s right to elect to remain in possession of the demised premises pursuant to Section 365(h)(1) of the Bankruptcy Code, 11 U.S.C. § 101, et seq., as the same may be amended (the “Bankruptcy Code”), and together with all easements, rights, privileges, licenses, tenements, hereditaments and appurtenances in any way now or hereafter related or appertaining thereto;

(c)all buildings, infrastructure and improvements now or hereafter located on the Land or any part thereof (the “Improvements,” and, together with the Land, the “Premises”);

(d)all offers to lease, leases, subleases, and rental agreements (collectively, the “Tenant Leases”), agreements of sale, sale contracts, management contracts or other agreements now or hereafter entered into pertaining to the Premises or the Improvements located thereon or any part thereof;

(e)all present and future rents, royalties, profits, revenues, income, deposits, accounts, receivables or other benefits arising from the use, operation or sale of the Premises or any part thereof, including all present and future rents and receivables under the Tenant Leases (collectively, the “Income Stream”)

(f)all furniture, furnishings, fixtures, equipment and building materials of every nature, now or at any time hereafter attached to or located on or within or used or to be used in any way in connection with the construction, use, operation or occupation of the Premises or any part thereof (collectively, the “Equipment”);

(g)all contract rights relating to the development, construction, operation, maintenance or use of the Premises and all drawings, plans, specifications, file materials, operating and maintenance manuals and records, warranties, guaranties, appraisals, data and software relating to the Premises and/or the Equipment, and all permits, certificates, approvals and authorizations, however characterized, issued or furnished (whether necessary or not) for the development, construction, operation or use of the Premises, including, without limitation, subdivision approvals, building or use permits, certificates of occupancy and certificates of operation;

(h)any and all additional, other or further right, title and interest which the Mortgagor may at any time acquire in or to the above described properties and the proceeds thereof;

(i)all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, proceeds of insurance and condemnation or other awards or payments in respect thereof; and

(j)with respect to all of the foregoing, all accessions thereto, renewals and replacements thereof, substitutions therefore and proceeds thereof.

SUBJECT, HOWEVER, to the encumbrances (the “Encumbrances”) described in Exhibit A;

2.Secured Obligations. This Mortgage secures the following (all indebtedness and other obligations referred to in this Section 2 are herein collectively called the “Secured Obligations”):

(a)The repayment of a loan (the “Loan”) made by the Mortgagee to the Mortgagor in the principal sum of SIXTY MILLION AND NO/100 DOLLARS ($60,000,000.00), pursuant to the terms of that certain unrecorded Loan Agreement of even date herewith, by and between the Mortgagor and the Mortgagee (the provisions of such Loan Agreement and any renewals, extensions or modifications thereof being incorporated herein by reference, being secured herein, and being hereafter referenced to as the “Loan Agreement”) and which Loan is evidenced by that certain promissory note in the amount of $60,000,000.00 of even date herewith, executed by the Mortgagor, as maker, and made payable to the Mortgagee, the provisions of such note and any renewals, extensions or modifications thereof being incorporated herein by reference, being secured hereby and being hereinafter referred to as the “Note”;

(b)The observance and performance by the Mortgagor of all covenants, provisions, terms and agreements on the part of the Mortgagor to be observed or performed under this Mortgage, including, but not limited to, the payment by the Mortgagor to the Mortgagee of all sums expended or advanced by the Mortgagee pursuant to the provisions of this Mortgage;

(c)The observance and performance by the Mortgagor of all covenants, provisions, terms and agreements on the part of the Mortgagor to be observed or performed under the Loan Agreement and under all of the other “Loan Documents” (as defined in the Loan Agreement) and any renewals, extensions or modifications thereof, including (i) all “Swap Contracts” (as defined in the Loan Agreement) and any renewals, extensions or modifications thereof;

(d)The payment by the Mortgagor to the Mortgagee of all other sums now or hereafter loaned or advanced from time to time subsequent to the date of this Mortgage by the Mortgagee to the Mortgagor pursuant to any provision of the Loan Documents, expended by the

Mortgagee for the account of the Mortgagor pursuant to any provision of the Loan Documents, or otherwise owing by the Mortgagor to the Mortgagee pursuant to any provision of the Loan Documents. The maximum aggregate principal amount of the future advances is $120,000,000.00;

(e)Payment of all other sums agreed or provided to be paid by the Mortgagor under this Mortgage and under any of the other Loan Documents, including, without limitation, the repayment of any future or additional advances or costs, including real property taxes, insurance premiums, lease rent and reasonable attorney’s fees which the Mortgagee may (but is not obligated to) make or incur in accordance with terms of this Mortgage or any of the Loan Documents;

(f)The observance and performance by the “Guarantors” (as defined in the Loan Agreement) of all covenants, agreements, obligations and conditions required to be observed and performed by the Guarantors under that certain “Carve-Out Guaranty” (as defined in the Loan Agreement); and

(g)The observance and performance of all other covenants, provisions, terms and agreements on the part of any party other than the Mortgagee to be observed or performed pursuant to any and all of the Loan Documents.

3.Events of Default. As used in this Mortgage, the terms “Default” and “Event of Default” have the meaning given to it in the Loan Agreement.

4.Mortgagee’s Rights and Remedies Upon Default. Subject in all events to the terms of this Mortgage and until the happening of an Event of Default, the Mortgagor shall be permitted to use and possess the Mortgaged Properties, but only in the ordinary course of its business as now conducted. However, if any Event of Default shall occur and be continuing:

(a)Acceleration. The Mortgagee may, without notice, declare the entire unpaid amount of the Secured Obligations to be immediately due and payable.

(b)Entry. The Mortgagee may, to the extent permitted by law, (i) peaceably enter the Premises, take possession thereof, and exclude the Mortgagor and its agents and servants therefrom, (ii) use, operate, manage and control the Premises and Equipment, (iii) maintain, protect and restore the Mortgaged Properties and make all repairs and alterations thereof and additions and improvements thereto as the Mortgagee may deem reasonably necessary, (iv) collect and receive the Income Stream and out of the same pay all reasonable expenses incurred by the Mortgagee in connection with the exercise of its rights and remedies hereunder, and apply the remainder thereof to the payment of other Secured Obligations, and the Mortgagor shall surrender the Mortgaged Properties to the Mortgagee.

(c)Sale. The Mortgagee may, with or without entry, sell the Mortgaged Properties or any part thereof at one or more sales, as an entity or in parcels, and at such time or times and place or places and upon such terms and after such notice thereof, as may be required by law, or institute and prosecute judicial proceedings for the partial or complete foreclosure of

this Mortgage and/or the specific performance of any one or more of the Secured Obligations and/or the enforcement of any other appropriate legal right or equitable remedy, including foreclosure by power of sale or nonjudicial foreclosure, as the Mortgagee may elect.

(d)Receiver. Pending such proceedings, the Mortgagee shall be entitled to the appointment without bond of a receiver or receivers of the Mortgaged Properties, or any part thereof, without regard to the value of the Mortgaged Properties or the solvency of any person liable for the payment, observance or performance of the Secured Obligations and regardless of whether the Mortgagee has an adequate remedy at law.

(e)Personal Property. The Mortgagee may elect to treat any part of the Mortgaged Properties which consists of a right in action or of property that can be severed from the Premises without causing structural damage thereto as personal property, and exercise as to such property all rights, remedies and privileges with respect to repossession, retention, sale and disposition of proceeds as are accorded to a secured party under the Uniform Commercial Code in effect in the State of Hawaii.

(f)Power of Attorney. At any sale(s) made by virtue of this Section 4 (a “Foreclosure Sale”), the Mortgagee, or an officer of any court empowered to do so, may execute and deliver to the purchaser(s) a good and sufficient instrument or instruments conveying, assigning or transferring all of the Mortgagor’s estate, right, title and interest in and to the properties and rights sold, and, for such purposes, the Mortgagee is hereby appointed as the attorney in fact of the Mortgagor, in its name and stead, to make all necessary conveyances, assignments, transfers and deliveries of the properties so sold, and the Mortgagee may substitute one or more persons with like power, and the Mortgagor hereby ratifies and confirms all that the Mortgagee or its substitute shall lawfully do by virtue hereof. This power of attorney is coupled with an interest and is irrevocable.

(g)Adjournment. The Mortgagee may adjourn from time to time any Foreclosure Sale, by announcement at the time and place appointed for such sale or for such adjourned sale(s) and, except as otherwise required by law, the Mortgagee, without further notice or publication, may make such sale at the time and place to which the same shall have been adjourned.

(h)Mortgagee as Purchaser. At any Foreclosure Sale the Mortgagee may be the purchaser and, upon compliance with the terms of sale, may hold, retain, possess and dispose of the properties so purchased in its absolute right without further accountability, and the Mortgagee, in lieu of paying cash for the properties so purchased, may make settlement for the purchase price by crediting against the purchase price all or any part of the unpaid amount of the Secured Obligations, after deducting from the sales price the expenses of the sale and costs of the foreclosure proceeding and any other sums that Mortgagee may be authorized to deduct therefrom.

(i)Application of Proceeds. The Mortgagee may apply the proceeds of any Foreclosure Sale, first, to the payment of all costs and expenses of the sale(s) and all proceedings in connection therewith, including reasonable fees of legal counsel, second, to the payment or

reimbursement to the Mortgagee of any disbursements made by the Mortgagee for taxes, assessments or other charges prior to the lien of this Mortgage which the Mortgagee shall deem it advisable to pay, third, to the payment or reimbursement to the Mortgagee of all other reasonable disbursements made by the Mortgagee as authorized by this Mortgage or any of the other Loan Documents, fourth, to the payment in such order as the Mortgagee may designate of the remainder of the Secured Obligations, and fifth, the remainder, if any, shall be paid over to the Mortgagor, or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct.

(j)Waiver. Neither the Mortgagor nor any person claiming through or under it, to the extent the Mortgagor may lawfully so agree, shall set up, claim or seek to take advantage of any statute of limitation, appraisement, valuation, stay, extension or redemption laws in order to prevent or hinder the enforcement or foreclosure of this Mortgage; and the Mortgagor, for itself and all who may claim through or under it, hereby waives, to the full extent that it may lawfully do so, the benefit of all such laws and any and all rights to have the Mortgaged Properties (or any part thereof or interest therein) marshaled upon any foreclosure of this Mortgage. To the extent permissible by law, the Mortgagor and any person claiming through or under it hereby waives and releases any right of redemption, if any, which may exist after the exercise of Mortgagee’s power of sale under Section 4(c), (e), (f), (g) and (h) above. The Mortgagor and any person claiming through or under it also waives and releases any right which it may have after the exercise of the Mortgagee’s power of sale under Section 4(c), (e), (f), (g) and (h) above to assert that the sale should be set aside, is void or otherwise invalid because the sale price was less than or disproportionate to the fair market value of the property sold or acquired by Mortgagee.

Initialed for Mortgagee: /s/ GL Initialed for Mortgagor: /s/ NNSC /s/ PKI /s/ DIH

(k)Remedies. The Mortgagee shall have the right to enforce one or more remedies hereunder, or any other remedy the Mortgagee may have, successively or concurrently, including the right to foreclose this Mortgage with respect to any portion of the Mortgaged Properties, without thereby impairing the lien of this Mortgage on the remainder of the Mortgaged Properties or affecting other remedies of the Mortgagee in respect thereof.

(l)No Waivers by Mortgagee. No failure on the Mortgagee’s part to exercise, and no course of dealing with respect to, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Mortgagee of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy. The remedies herein provided are cumulative with, and not exclusive of, any other remedies provided by the other Loan Documents or by law.

(m)Waiver of Jury Trial. THE MORTGAGOR AND THE MORTGAGEE HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BEFORE A JURY IN CONNECTION WITH ANY DISPUTE, PROCEEDING OR CLAIM ARISING OUT OF, OR IN ANY WAY RELATED TO, THE LOAN, THIS MORTGAGE OR ANY OF THE OTHER LOAN DOCUMENTS.

Initialed for Mortgagee: GL Initialed for Mortgagor: /s/ NNSC /s/ PKI /s/ DIH

5.Mortgagor’s Representations, Warranties and Covenants. The Mortgagor represents and warrants to and covenants with the Mortgagee as follows:

(a)Incorporation by Reference. The Mortgagor hereby restates and incorporates herein by reference the warranties and representations made by the Mortgagor in the Loan Agreement.

(b)Title. The Mortgagor represents and warrants that it has good right and lawful authority to execute this Mortgage and that it owns or holds all of the Mortgaged Properties, in each case subject to no lien, security interest or other encumbrance except for (i) the Encumbrances, (ii) liens for real property taxes and assessments not yet due and payable, and (iii) liens and security interests created by this Mortgage and the remainder of the Loan Documents.

(c)Further Acts. The Mortgagor will, at its own expense, within five (5) days after the Mortgagee’s written request therefor, execute and deliver such further documents and do such further acts as may be reasonably necessary to carry out the purposes of this Mortgage and to perfect the lien and security interests hereby created against the Mortgaged Properties and any and all additions thereto, substitutions therefor and renewals and replacements thereof. The Mortgagor also authorizes the Mortgagee to file any financing statements and amendments thereto and continuations thereof, describing any of the Mortgaged Properties and any and all additions thereto, substitutions therefor and renewals and replacements thereof.

(d)Permits and Laws. The Mortgagor shall (i) maintain in full force and effect all governmental permits, consents, approvals, licenses and franchises (“Permits”) now or hereafter required by any governmental agency or authority to operate or use and occupy the Premises and Equipment for their intended purposes, and (ii) comply with all requirements set forth in (A) the Permits, all requirements of any law, ordinance, rule or regulation (“Laws”) applicable to the Mortgagor or all or any part of the Mortgaged Properties, and all applicable requirements of any recorded deed of restrictions, declaration or, covenant or encumbrance running with the land or otherwise, now or hereafter in force (“Recorded Instruments”). The Mortgagor shall not initiate or consent to any change in the zoning or any other permitted use classification of the Premises without the Mortgagee’s prior written consent. The Mortgagor shall indemnify the Mortgagee, its directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the Mortgagor’s failure to comply with the provisions of this paragraph or any other provision of this Mortgage concerning compliance with Permits, Laws and Recorded Instruments, including, without limitation: (i) all foreseeable consequential damages; (ii) the

costs of any required or necessary remediation or compliance; and (iii) all reasonable costs and expenses incurred by the Mortgagee in connection with clauses (i) and (ii) including, without limitation, reasonable fees of legal counsel. The indemnification provision of this paragraph shall survive (A) the repayment of the Secured Obligations, (B) any foreclosure of this Mortgage, and (C) any deed or assignment of the Mortgaged Properties in lieu of foreclosure, but shall not apply to any loss, damage, cost, expense or liability directly arising out of the Mortgagee’s gross negligence or willful misconduct.

(e)Maintenance. The Mortgagor shall maintain the Premises and Equipment (or cause the Premises and Equipment to be maintained) in good operating order, condition and repair. The Premises shall not be demolished or materially altered, nor shall any of the Equipment be removed therefrom, without the Mortgagee’s prior written consent, except that items constituting Equipment may without such consent be removed if immediately replaced (free from security interests of or reservations of title by third parties) with similar items of Equipment having a value and utility for their intended purposes that is not less than the value and such utility of the Equipment so removed.

(f)Taxes, Liens, etc. The Mortgagor shall pay and discharge, from time to time when they become due, all taxes and assessments imposed upon or assessed against the Mortgaged Properties or any part thereof, PROVIDED, HOWEVER, that nothing contained in this section shall be deemed to require the Mortgagor to pay or cause to be paid such taxes and assessments so long as Mortgagor in good faith by appropriate action, diligently pursued, shall contest or cause to be contested, the validity thereof (provided the lien of this Mortgage shall not be threatened, diminished or impaired nor shall there be any reasonable probability thereof). Mortgagor will, upon request, deposit copies of receipts therefor with the Mortgagee no later than five (5) days prior to the final date such taxes or assessments may be paid without penalty. The Mortgagor will not permit any mechanics’, materialmen’s, tax, judgment or other lien or security interest to be hereafter created and remain on the Mortgaged Properties, except liens of real property taxes or assessments not yet due and payable; provided, however, that the Mortgagor shall have up to but not more than ten (10) days in which to cure or otherwise discharge or release (by bonding around such lien or in such other manner as Mortgagor may elect) any mechanics’ or materialmen’s lien encumbering the Mortgaged Properties or any part thereof.

(g)Waste. The Mortgagor will not suffer any waste or any unlawful, improper or offensive use of the Mortgaged Properties or any act or negligence whereby the Mortgaged Properties or any interest therein shall become liable to seizure, attachment or forfeiture, or the lien and security interest created hereby shall be impaired.

(h)Inspection. Representatives of the Mortgagee shall have the right to enter and inspect the Mortgaged Properties at all reasonable times, upon reasonable advance notice to the Mortgagor.

(i)Insurance Coverage. The Mortgagor will, in respect of all insurable properties now or hereafter constituting any portion of the Mortgaged Properties and in respect of all insurable activities of the Mortgagor, procure and maintain (or cause to be procured

and maintained), at all times during the effectiveness of this Mortgage, insurance in such forms and covering such risks and hazards and in such amounts as are reasonably satisfactory to the Mortgagee. Such insurance shall include:

(i)property insurance under an Insurance Service Office (“ISO”) Building and Personal Property coverage form with a Special Cause of Loss form attached (or the equivalent), in amounts not less than the full insurable replacement value of all such insurable properties, and for all causes of loss, including hurricane and windstorm, and including the following endorsements, if requested by the Mortgagee: (1) replacement cost coverage, (2) agreed value, and (3) building ordinance coverage insuring against contingent liability from the operation of Laws concerning the Improvements on or about the Premises, demolition of such Improvements and increased cost of construction of such Improvements. Additionally, if required by the Mortgagee, the Mortgagor shall procure a difference-in-conditions policy to include earthquake, backup of sewers and broad collapse coverage with a limit of liability determined to be prudent by the Mortgagee;

(ii)while insurable properties are under construction, a builder’s risk policy, completed value form, non-reporting, with an amount of coverage equal to 100% of the estimated replacement cost of the Improvements upon completion of construction, written on (or provide coverage equal to the coverage provided by) an ALS 1972 policy (including earthquake and flood coverage, if available), or its equivalent;

(iii)commercial general liability insurance (occurrence form), including coverage, to the extent reasonably available, for premises/operations, independent contractors, contractual liability, bodily injury, personal injury, employees as additional insureds and broad form property damage, naming the Mortgagee as an additional insured;

(iv)flood insurance, if and to the extent required by law, naming the Mortgagee as a loss payee; and

(v)rental income insurance, in amounts sufficient to cover net income from the Mortgaged Properties during any period of six (6) consecutive months.

(j)Insurance Policies. All insurance policies required by this Mortgage shall (i) prohibit cancellation by the insurer without at least thirty (30) days’ prior written notice to the Mortgagee, and (ii) provide that the insurance shall not be invalidated as to the Mortgagee by any act or neglect of any person owning or leasing the Mortgaged Properties, or by foreclosure proceeding or notice of sale or sale by deed or assignment in lieu of foreclosure or by any other change in the title or ownership of the Mortgaged Properties, and (iii) constitute primary insurance. All property insurance policies required by this Mortgage shall be carried in the name

of the Mortgagor, shall contain a standard mortgagee clause (without contribution) in favor of the Mortgagee, and provide that losses thereunder shall be adjusted with the insurer by the Mortgagor, but with payments made jointly to the Mortgagor and the Mortgagee. In the event of loss or physical damage to the Mortgaged Properties, the Mortgagor shall give immediate notice thereof to the Mortgagee, and the Mortgagee may make proof of the loss if the same is not made promptly by the Mortgagor. Upon the execution of this Mortgage and thereafter not less than ten (10) days prior to the expiration dates of expiring policies, originals of all policies of such insurance (or certificates thereof in form acceptable to the Mortgagee) shall be deposited with the Mortgagee. If the Mortgagor fails to carry any such insurance or fails to deliver the policies (or certificates) to the Mortgagee, then the Mortgagee, at its option but without being obligated to do so, may procure such insurance from year to year and pay the premiums therefor, and the Mortgagor will reimburse the Mortgagee on demand for premiums so paid, with interest thereon from the time of payment at the “Default Rate” (as defined in the Note), and the same shall be secured by this Mortgage. All insurance required by the preceding paragraph (i) shall be issued by insurance companies licensed and authorized to do business in Hawaii and having a rating by A.M. Best of A-VIII or better, or otherwise acceptable to the Mortgagee. The Mortgagee shall not be responsible for the collection of any insurance proceeds or for the insolvency of any insurer or insurance underwriter. The Mortgagor may obtain the insurance required hereunder from any insurance company of the Mortgagor’s choice that is acceptable to the Mortgagee, which acceptance shall not be unreasonably withheld. The Mortgagee’s non-acceptance of an insurer shall not be deemed unreasonable if it is based upon reasonable standards, uniformly applied, relating to the extent of coverage required and the financial soundness and services of the insurer. Such standards shall not discriminate against any particular insurer nor shall such standards call for rejection of an insurance contract because the contract contains coverage in addition to that required under this Mortgage.

With respect only to the portion of the Mortgaged Properties that is subject to the lease with Safeway Inc., a Delaware corporation (“Safeway”), dated July 31, 2004 (the “Safeway Lease”), the requirements for insurance policies hereunder shall be deemed satisfied so long as the Safeway Lease remains effective and Safeway maintains insurance equivalent to that required hereunder with respect to the remainder of the Mortgaged Properties or as required under the Safeway Lease as of the date of this Mortgage. The insurance provided by Safeway shall contain a standard mortgagee clause (without contribution) in favor of the Mortgagee and providing that payments for losses shall be made jointly to the insured and the Mortgagee. With regard to such insurance provided by Safeway, Mortgagor shall deliver to Mortgagee copies of policies or certificates thereof acceptable to the Mortgagee, and renewal policies or certificates thereof acceptable to the Mortgagee shall be delivered no less than ten (10) days prior to the end of the then-current term.

(k)Condemnation Awards. Should all or any part of the Mortgaged Properties be taken by eminent domain, the Mortgagor, forthwith upon payment thereof, will cause to be deposited with the Mortgagee the Mortgagor’s share of the award for any Mortgaged Properties so taken, to the extent of the unpaid balance of the Secured Obligations. In the event of any such taking (other than a taking for governmental occupancy for a limited or specified

period), the Mortgagee shall release the properties so taken upon receipt by and deposit with the Mortgagee of the proceeds of such award so recovered by the Mortgagor.

(l)Use of Insurance and Condemnation Proceeds. All insurance proceeds received by the Mortgagor or the Mortgagee on account of damage to or destruction of any Mortgaged Properties and the Mortgagor’s share of all proceeds of any award for any Mortgaged Properties taken by eminent domain received by the Mortgagee, less the cost, if any, incurred by the Mortgagee with respect thereto, shall be applied to the restoration of any damaged Premises or Equipment; provided, however, at the option of the Mortgagee such proceeds may be applied to the payment of the Secured Obligations. If any such proceeds are to be applied to the payment of the cost of repairing, restoring or rebuilding the Mortgaged Properties so damaged or destroyed or taken (the “work”), such proceeds shall be applied from time to time as the work progresses, subject to such reasonable conditions as may be imposed by the Mortgagee to insure the lien-free completion of the work; and, on completion of the work and payment in full therefor, or on any failure on the part of the Mortgagor promptly to commence or continue the work, the amount of any such proceeds then or thereafter in the hands of the Mortgagor or the Mortgagee shall be applied to the payment of the Secured Obligations. Nothing herein contained shall prevent the Mortgagee from applying at any time the whole or any part of such proceeds to the curing, either in whole or in part, of any Event of Default.

(m)Transfer Restrictions. The Mortgagor, without having obtained the Mortgagee’s prior written consent thereto, which consent may be withheld by the Mortgagee in its sole and absolute discretion, shall not sell, transfer, or assign to any other person (including by way of an agreement of sale or similar instrument), or further mortgage, or otherwise encumber, the Mortgaged Properties or any part thereof or interest therein; provided, however, that (i) so long as no Event of Default has occurred and is continuing, the Mortgagor may, without such consent, execute, deliver and modify Tenant Leases (but only on market terms and in the ordinary course of the Mortgagor’s business, and if requested by the Mortgagee, pursuant to a form of tenant lease approved by the Mortgagee); (ii) if requested by the Mortgagee, such Tenant Leases shall be fully subordinate to the lien of this Mortgage; (iii) as further security for the payment, observance and performance of the Secured Obligations, the Mortgagor shall have assigned to the Mortgagee all rentals payable under the Tenant Leases by means of an assignment of rents, acceptable to the Mortgagee in form and in content; and (iv) upon request from time to time Mortgagee, Mortgagor shall provide the Mortgagee true and correct and complete copies of any such Tenant Leases. Any sale, assignment, transfer, conveyance, pledge, exchange or encumbrance by any member of the Mortgagor of its interest in the Mortgagor pursuant to which the present members of the Mortgagor shall fail to own and control 100% of the membership interests in the Mortgagor shall be deemed to be a transfer or assignment of the Mortgagor’s interest in the Mortgaged Properties for the purposes of this paragraph.

(n)Appearances. The Mortgagee may appear in and defend any action or proceeding purporting to affect the security hereof, including but not limited to, insurance and condemnation proceedings, and in such event the Mortgagee shall be allowed and paid, and the Mortgagor hereby agrees to pay on demand, all the Mortgagee’s reasonable expenses, including cost of evidence of title and attorneys’ fees in a reasonable amount, incurred in such action or proceeding in which the Mortgagee may appear.

(o)Tax and Rent Deposits. If an Event of Default has occurred and is continuing, the Mortgagor shall deposit with the Mortgagee monthly in advance, together with and in addition to any other payments then payable under the Loan Documents, a sum equal to the full amount of all real property taxes and assessments and rents under the Lease next due on the Mortgaged Properties (all as estimated by the Mortgagee) less all sums already paid therefor, divided by the number of months to elapse before one month prior to the date when such taxes, assessments and rents will become due and payable. The Mortgagee may commingle such sums with deposits of others and may invest such sums for the Mortgagee’s sole benefit, without any obligation to pay interest thereon to the Mortgagor except as may be required by law, and the Mortgagee may from time to time expend such sums, or any part thereof, to pay said taxes, assessments and rents as and when the same become due and payable. If the total of such deposits shall exceed the amount necessary to pay said taxes, assessments and rents such excess may, at the Mortgagee’s option, be released to the Mortgagor or applied to any of the Secured Obligations. If, however, the total of such deposits shall not be sufficient to pay said taxes, assessments and rents when the same shall become due and payable, then the Mortgagor shall make up the deficiency on or before the date when payment of such taxes, assessments and rents shall be due. If at any time the Mortgagor shall tender to the Mortgagee full payment of the Secured Obligations, the Mortgagee shall, in computing the amount thereof, credit to the account of the Mortgagor any balance remaining in the deposits accumulated under the provisions of this paragraph. As further security for the Secured Obligations, the Mortgagor grants to the Mortgagee a security interest in all funds accumulated under the provisions of this paragraph.

(p)Reappraisals. The Mortgagee shall have the right to obtain, at the Mortgagor’s expense, reappraisals of the Premises, from any licensed or certified appraiser designated by the Mortgagee, from time to time, whenever a reappraisal may be (i) required by any Law applicable to the conduct of the Mortgagee’s business, or (ii) requested or directed by any governmental authority charged with the administration of such Law or the Mortgagee’s compliance therewith, whether or not such request or direction has the force of law, or (iii) required by the Mortgagee at its reasonable discretion.

(q)ADA Compliance. So long as this Mortgage remains outstanding, the Mortgagor will, at its own cost and expense, in respect of the Premises and in respect of the Mortgagor’s business activities at or within the Premises: (i) comply with all requirements of the federal Americans With Disabilities Act (“ADA”) and the rules promulgated thereunder (“Rules”), to the extent applicable to the Mortgagor’s ownership, management, operation, leasing, use, construction, reconstruction, repair, remodeling, rehabilitation or alteration of the Premises, or any part thereof; (ii) immediately provide to the Mortgagee written notice (and immediately provide to the Mortgagee copies) of any and all notices of actual, potential or alleged violations of the ADA or Rules and any and all governmental investigations or regulatory actions instituted or threatened, regarding the ADA or Rules; and (iii) furnish to the Mortgagee, from time to time whenever reasonably requested by the Mortgagee, a Compliance Assessment, in form reasonably acceptable to the Mortgagee, made by an architect or engineer having a good repute for skill and experience in the field of ADA compliance and otherwise reasonably acceptable to the Mortgagee, except as expressly provided in Section 3.20 of the Loan Agreement. In the event that the Mortgagee or a purchaser of the Premises at foreclosure (or by

conveyance in lieu of foreclosure) incurs any compliance expenses or other expenses (including reasonable fees of legal counsel) or liabilities as a result of the failure of the Premises to comply with the requirements of the ADA and the Rules at the date of the Mortgagee’s or the purchaser’s acquisition thereof, the Mortgagor shall indemnify the Mortgagee and the purchaser against all reasonable expenses and liabilities so incurred by the Mortgagee or the purchaser; and the indemnification provisions of this sentence shall survive said foreclosure (or conveyance in lieu of foreclosure).

(r)Mortgagee’s Expenses. Whether or not an Event of Default shall have occurred, the Mortgagor covenants that it will pay or reimburse to the Mortgagee, on demand, all expenses, including reasonable fees of legal counsel, incurred by the Mortgagee in connection with the administration and enforcement of the Secured Obligations, including fees and costs incurred in any bankruptcy proceeding or relief from the automatic stay of any bankruptcy proceeding, the investigation and policing of any Event of Default, the negotiation, documentation and administration of any loan “work out” proposal (whether or not effectuated), the foreclosure of this Mortgage and sale of the Mortgaged Properties, the release of this Mortgage and the exercise of any other rights or remedies provided to the Mortgagee by this Mortgage or any of the other Loan Documents, together with interest thereon from the date of demand until payment is made at the Default Rate, the payment or reimbursement of which expenses, with interest thereon at the Default Rate, shall be included among the Secured Obligations and secured by this Mortgage.

(s)Financial Information. The Mortgagor will keep and maintain accurate and proper books of record and accounts in accordance with generally accepted accounting principles or sound accounting practice. The Mortgagee’s representatives shall have the right to examine the books of account of the Mortgagor and to discuss the affairs, finances and accounts of the Mortgagor and to be informed as to the same by the Mortgagor and its officers, employees or agents, all at such reasonable times and intervals as the Mortgagee may desire. The Mortgagor will furnish to the Mortgagee or will cause to be furnished to the Mortgagee, in form and detail acceptable to the Mortgagee, the financial reports required under the Loan Documents, and upon request by the Mortgagee, such financial and supporting data as the Mortgagee may reasonably require with respect to the financial condition of the Mortgagor and any guarantor of the Secured Obligations and the status and operation of the Premises.

(t)Mortgagee’s Right of Set-Off. Upon the occurrence of any Event of Default or if the Mortgagee shall be served with garnishee process or levy in which the Mortgagor shall be named as defendant, whether or not an Event of Default shall have occurred and be continuing at the time, the Mortgagee may, but shall not be required to, set off any indebtedness owing by the Mortgagee to the Mortgagor against any indebtedness secured hereby, without first resorting to the Mortgaged Properties and without prejudice to any other rights or remedies of the Mortgagee or the lien of this Mortgage on the Mortgaged Properties.

(u)Release. Mortgagee reserves the right, at any time, to release portions of the Mortgaged Properties, including, but not limited to, all or portions of the Land or the leasehold estate created by the Lease, with or without consideration, at Mortgagee’s election, without waiving or affecting any of its rights hereunder or under the Note or the other Loan

Documents and any such release shall not affect Mortgagee’s rights in connection with the portion of the Mortgaged Properties not so released.

(v)Bankruptcy Rights. The lien of this Mortgage shall attach to all of the Mortgagor’s rights and remedies at any time arising under or pursuant to Subsection 365(h) of the Bankruptcy Code, including, without limitation, all of Mortgagor’s rights to remain in possession of the property under the Lease.

(w)Loss, Destruction, etc. of a Note. The Mortgagor will, in the event any Note shall be mutilated, destroyed, lost or stolen, deliver to the Mortgagee, in substitution therefor, a new Note containing the same terms and conditions as the mutilated, destroyed, lost or stolen Note with a notation thereon of the unpaid principal and accrued unpaid interest. The Mortgagor shall be furnished with satisfactory evidence of the mutilation, destruction, loss or theft of the Note and also such security or indemnity as may be reasonably requested by the Mortgagor; PROVIDED, HOWEVER, that if the original lender named in the applicable Note is still at such time the “Lender” under such Note, an unqualified indemnity from such original Lender named therein shall be deemed to be satisfactory security for indemnification.

(x)Mortgagee Not Obligated to Perform. Neither the acceptance of this Mortgage by the Mortgagee, nor the exercise of any rights hereunder by the Mortgagee, shall be construed in any way as an assumption by the Mortgagee of any obligations, responsibilities or duties of the Mortgagor arising from the Mortgaged Properties assigned hereunder or otherwise bind the Mortgagee to the performance of any obligations respecting the Premises or Equipment, it being expressly understood that the Mortgagee shall not be obligated to perform, observe or discharge any obligation, responsibility, duty, or liability of the Mortgagor under any of the Mortgaged Properties, including, but not limited to, appearing in or defending any action, expending any money or incurring any expenses in connection therewith.

6.Lease and Tenant Leases.

(a)Perform Obligations. The Mortgagor shall (i) pay all rents, additional rents and other sums required to be paid by the Mortgagor under and pursuant to the provisions of the Lease as and when the same shall become due, (ii) promptly and faithfully observe, perform and comply with all of the terms, covenants and provisions of the Lease and the Tenant Leases on the part of the Mortgagor to be observed, performed and complied with, at the times set forth therein, and do all things necessary to preserve unimpaired its rights under the Lease and the Tenant Leases, and (iii) immediately notify Mortgagee of any default of any notice of default given or received by either the Lessor or Lessee with respect to the any of the terms, covenants or conditions of the Lease and deliver to Mortgagee a true copy of each such notice.

(b)No Modification or Termination. Mortgagor shall not, without the prior written consent of Mortgagee, surrender the leasehold estate created by the Lease or terminate or cancel the Lease or modify, change, supplement, alter or amend the Lease, in any respect, either orally or in writing, and the Mortgagor hereby assigns to Mortgagee, as further security for the payment of the Secured Obligations and for the performance and observance of the terms, covenants and conditions of this Mortgage, all of the rights, privileges and prerogatives of the

Mortgagor to surrender the leasehold estate created by the Lease or to terminate, cancel, modify, change, supplement, alter or amend the Lease, and any such surrender of the leasehold estates created by the Lease or termination, cancellation, modification, change, supplement, alteration or amendment of the Lease without the prior written consent of Mortgagee shall be void and of no force and effect.

(c)Lessor and Lessee Estoppel Certificates. Mortgagor shall, within ten (10) days after written request by Mortgagee, furnish to Mortgagee estoppel certificates signed by the then-current Lessor and Lessee under the Lease, together with such supporting information and evidence as Mortgagee may reasonably require which is in the possession or control of Mortgagor, concerning the Lessor’s and the Lessee’s due observance, performance and compliance with the terms, covenants and provisions of the Lease. Provided, however, so long as the Mortgagor includes all of the Lessors and Lessees under the Lease, Mortgagee shall not request such estoppel certificates, but further provided, however, that no part of the foregoing shall be construed to require Mortgagee to consent to any change in the identities of the Lessor and Lessee under the Lease.

(d)Cure of Lease Defaults. If either Lessor or Lessee shall default in the performance or observance of any term, covenant or condition of the Lease on its part to be performed or observed (“Lease Default”), including, without limitation, any default in the payment of rent, additional rent or other charges or impositions payable by the Lessee, then, in each and every case, without limiting the generality of the other provisions of this Mortgage and without waiving or releasing Mortgagor from any of its obligations hereunder, Mortgagee shall have the right, but shall be under no obligation, at its option and without notice, to pay any sums or perform any act or take any action as may be appropriate to cause the default or defaults to be remedied and all of the terms, covenants and conditions of the Lease on the part of the Lessee or Lessor to be performed or observed, to the end that the rights of Mortgagor in, to and under the Lease shall be kept unimpaired and free from default, even though the existence of such event of default or the nature thereof be questioned or denied by Mortgagor or by any party on behalf of Mortgagor.

(e)Right to Enter. In the event of a Lease Default, Mortgagee and any person designated by Mortgagee shall have, and are hereby granted, the right to enter upon the demised property at any time and from time to time for the purpose of taking any such action.

(f)Reimbursement. Mortgagor shall, on demand, reimburse Mortgagee for all advances made and reasonable expenses incurred by Mortgagee in curing any Lease Default (including, without limitation, reasonable attorneys’ fees and disbursements), together with interest thereon at the Default Rate from the date that an advance is made or expense is incurred to and including the date the same is paid, and such monies so expended by Mortgagee with interest thereon shall be part of the Secured Obligations.

(g)No Subordination. Mortgagor will not subordinate or consent to the subordination of the Lease to any mortgage, security deed, lease or other interest on or in the fee interest in all or any part of the property demised under the Lease, unless, in each such case, the written consent of Mortgagee shall have been first had and obtained.

(h)New Lease. If the Lease is for any reason whatsoever terminated prior to the natural expiration of its term, and if, pursuant to any provisions of the Lease or otherwise, Mortgagee or its designee shall acquire from the Lessor another lease of the property demised under the Lease, the Lessee shall have no right, title or interest in or to such other lease or the leasehold estate created thereby.

(i)Mortgagee Obligations under Lease. Mortgagee shall have no liability or obligation under the Lease by reason of its acceptance of this Mortgage. Mortgagee shall be liable for the obligations of the Lessor or Lessee arising under the Lease for only that period of time which Mortgagee is in possession of the property demised under the Lease or has acquired, by foreclosure or otherwise, and is holding all of Lessor’s or Lessee’s right, title and interest therein.

(j)No Release of Mortgagor. No release or forbearance of any of Mortgagor’s obligations under the Lease, pursuant to the Lease or otherwise, shall release Mortgagor from any of its obligations under this Mortgage or the other Loan Documents.

(k)Enforce Lessor’s and Tenants’ Obligations; Provision of Information; Notice of Default. The Mortgagor shall enforce the obligations of the Lessor and Lessee under the Lease and the tenants under the Tenant Leases to the end that the Mortgagor may enjoy all of the rights granted to it under the Lease and the Tenant Leases. The Mortgagor shall provide the Mortgagee with (i) all requests for the Lessor’s or Lessee’s consent under the Lease, (ii) all material notices (including notices of default as above-described) given to or received by the Lessor or Lessee with respect to the Lease and all material notices (including all notices of default) given to or received by the Mortgagor with respect to any Tenant Lease, (iii) all material responses or material communications with respect to the requests described in (i) or the notices described in (ii), and (iv) any approvals or consents given by the Lessor or Lessee under the Lease.

(l)Mortgagee’s Participation in Lease Proceedings. Mortgagor shall give Mortgagee immediate notice of the commencement of any litigation, arbitration or appraisal proceeding to which Lessee or Lessor is a party or of which Mortgagor has been otherwise notified concerning the provisions of the Lease. Mortgagee shall have the right to intervene and participate in any such proceeding if such proceeding, if adversely determined, would be reasonably expected to have a material adverse effect on Mortgagor or the Mortgaged Properties and Mortgagor shall confer with Mortgagee and its attorneys and experts and cooperate with them to the extent which Mortgagee deems reasonably necessary for the protection of Mortgagee. Upon the request of Mortgagee, Mortgagor will exercise all rights of arbitration conferred upon it by the Lease. If at any time such proceeding shall have commenced, Mortgagor shall be in material default in the performance or observance of any covenant, condition or other requirement of the Lease on the part of Mortgagor to be performed or observed or a default shall have occurred hereunder, Mortgagee shall have, and is hereby granted, the sole and exclusive right to designate and appoint on behalf of Mortgagor, the arbitrator or arbitrators, or appraiser, in such proceeding.

(m)Notice to Lessor of Mortgage. Lessor consents to the execution and delivery of this Mortgage of the Lease and acknowledges the name and address of the Mortgagee and receipt of a copy of this Mortgage.

(n)Tenant Leases. Mortgagor shall cause each Tenant Lease hereafter made and shall use its diligent efforts to cause each renewal of any existing Tenant Lease to provide that (i) in the event of the termination of the Lease where Mortgagee exercises the right to a new lease, the Tenant Lease shall not terminate or be terminable by the tenant; (ii) in the event of any action for the foreclosure of this Mortgage, the Tenant Lease shall not terminate or be terminable by the subtenant unless the tenant is specifically named and joined in any such action and unless a judgment is obtained therein against the tenant; and (iii) in the event that the Lease is terminated as in clause (i), the tenant shall attorn to the purchaser at the sale of the Mortgaged Properties on such foreclosure.

(o)Rejection of Lease. If the Lease is terminated for any reason in the event of the rejection or disaffirmance of the Lease pursuant to the Bankruptcy Code or any other law affecting creditor’s rights, (i) Mortgagor, immediately after obtaining notice thereof, shall give written notice thereof to Mortgagee, (ii) Mortgagor, without the prior written consent of Mortgagee, shall not elect to treat the Lease as terminated pursuant to Section 365(h) of the Bankruptcy Code or any comparable federal or state statute or law, and any election by Mortgagor made without such consent shall be void, and (iii) this Mortgage and all the liens, terms, covenants and conditions of this Mortgage shall extend to and cover the Lessee’s possessory rights under Section 365(h) of the Bankruptcy Code and to any claim for damages due to the rejection of the Lease or other termination of the Lease. In addition, the Mortgagor hereby irrevocably assigns to Mortgagee, the Lessee’s rights to remain in possession of the property under the Lease and to offset against the rent reserved in the Lease under Section 365(h) of the Bankruptcy Code the amount of any damages caused by the nonperformance by the Lessor of any of its obligations under the Lease in the event any case, proceeding or other action is commenced by or against the Lessor under the Lease under the Bankruptcy Code or any comparable federal or state statute or law, provided that Mortgagee shall not exercise such rights and shall permit the Lessee to exercise such rights with the prior written consent of Mortgagee, not to be unreasonably withheld or delayed, unless an Event of Default shall have occurred and be continuing.

(p)Assignment of Rights in Bankruptcy. The Mortgagor hereby assigns to Mortgagee, (i) the Mortgagor’s right to reject the Lease under Section 365 of the Bankruptcy Code or any comparable federal or state statute or law with respect to any case, proceeding or other action commenced by or against the Mortgagor under the Bankruptcy Code or comparable federal or state statute or law, and (ii) the Mortgagor’s right to seek an extension of the 60-day period within which the Mortgagor must accept or reject the Lease under Section 365 of the Bankruptcy Code or any comparable federal or state statute or law; provided that Mortgagee shall not exercise any such right, and shall permit the Mortgagor to exercise such rights with the prior written consent of Mortgagee, not to be unreasonably withheld or delayed, unless an Event of Default shall have occurred and be continuing. Further, if the Mortgagor shall desire to so reject the Lease, the Mortgagor shall give Mortgagee not less than ten (10) days prior written notice of the date on which Mortgagor shall apply to the bankruptcy court for authority to reject

the Lease. Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10-day period a notice stating that (i) Mortgagee demands that the Mortgagor assume and assign the Lease to Mortgagee pursuant to Section 365 of the Bankruptcy Code and (ii) Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under the Lease. If Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject the Lease and shall comply with the demand provided for in clause (i) of the preceding sentence within thirty (30) days after the notice shall have been given, subject to the performance by Mortgagee of the covenant provided for in clause (ii) of the preceding sentence.

7.Miscellaneous.

(a)Notices. All notices, requests, demands or documents which are required or permitted to be given or served hereunder shall be in writing and personally delivered, or sent by registered or certified mail addressed, or by facsimile or email with confirming hard copy of such facsimile or email sent, as follows:

To Mortgagor at: In care of

Alexander & Baldwin, LLC

822 Bishop Street

Honolulu, Hawaii 96813

Attention: Paul K. Ito

Telephone No.: (808) 525-6611

Facsimile No.: (808) 525-6652

Email: [email protected]

with a copy to: Alexander & Baldwin, LLC

822 Bishop Street

Honolulu, Hawaii 96813

Attention: Nelson N.S. Chun

Telephone No.: (808) 525-6622

Facsimile No.: (808) 525-6616

Email: [email protected]


To Mortgagee at:	First Hawaiian Bank

999 Bishop Street

Honolulu, Hawaii 96813

Attn: Commercial Real Estate Division

Facsimile No. (808) 525-8141

Email: [email protected]


with copy to:	Goodsill Anderson Quinn & Stifel

999 Bishop Street, Suite 1600

Honolulu, Hawaii 96813

Attention: Leighton Yuen, Esq.

Facsimile No. (808) 441-1235

Email: [email protected]

The addresses may be changed from time to time by the addressee by serving notice as heretofore provided. Service of such notice or demand shall be deemed complete on the date of actual delivery as shown by the addressee’s registry or certification receipt or at the expiration of the second day after the date of mailing, whichever is earlier in time.

The Mortgagor hereby irrevocably authorizes the Mortgagee to accept facsimile (“FAX”) transmissions of such notices, requests, demands and documents, provided such transmission is signed by Paul K. Ito. The Mortgagor shall and does hereby hold the Mortgagee harmless from, and indemnify the Mortgagee against, any loss, cost, expense, claim or demand which may be incurred by or asserted against the Mortgagee by virtue of the Mortgagee acting upon any such notices, requests, demands or documents transmitted in accordance with the above provisions. Any such FAX transmission shall, at the Mortgagee’s request, be separately confirmed by telephone conference between the Mortgagee and the person described above, and shall be followed by transmission of the actual “hard copy” of the notice, request, demand or document in question.

(b)Successors. As and when used herein, the term “Mortgagee” shall include First Hawaiian Bank and its successors and assigns including Participants as described below; the term “Mortgagor” shall include the named Mortgagor and its successors and permitted assigns; and the term “person” shall include person, partnership, association, trust, corporation and limited liability company.

(c)Governing Law. This Mortgage shall be governed by and construed under the laws of the State of Hawaii.

(d)Captions. The captions or headings of sections or paragraphs contained in this Mortgage are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Mortgage.

(e)Counterparts. This Mortgage may be executed in any number of copies, and by the parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument but all of which together shall constitute one and the same agreement.

8.Mortgagee’s Right to Sell Participations in the Loan. The Mortgagee may at any time sell, assign, transfer, negotiate, grant participations in, or otherwise dispose of, to any one or more other lenders (hereinafter called “Participants”) all or any part of the indebtedness of the Mortgagor at any time outstanding under any of the Loan Documents, in accordance with the Loan Agreement. The Mortgagor acknowledges and agrees that any such disposition will give rise to an obligation of the Mortgagor to each Participant and that, in such event, each Participant

shall, for all purposes hereof, be entitled to the benefits of the Loan Documents and all other documents, instruments and agreements therein described, as its interest may appear. The Mortgagor shall, from time to time at the request of the Mortgagee, execute and deliver, or cause to be executed and delivered, to the Mortgagee or to such party or parties (including any Participant) as the Mortgagee may designate, any and all such further instruments as may in the reasonable opinion of the Mortgagee be necessary or desirable to give full force and effect to such disposition, including, but not limited to such estoppel certificates or other instruments as may be requested from the Mortgagor to evidence the continuing validity of the Loan Documents and the absence of any default by the Mortgagee thereunder. Notwithstanding the foregoing, the Mortgagor acknowledges that no Participant shall be deemed a direct lender or co-lender with the Mortgagee.

9.Fixture Filing. This Mortgage also constitutes a fixture filing under Article 9 of the Hawaii Uniform Commercial Code, as amended; it covers goods that are or are to become fixtures in the Premises.

10.Security Agreement and Financing Statement Under Uniform Commercial Code. This Mortgage shall constitute a security agreement and financing statement under the Hawaii Uniform Commercial Code, as amended, and the Mortgagor, as debtor, hereby grants to the Mortgagee, as secured party, a security interest in any or all of the Mortgaged Properties, including but not limited to, the Equipment, in addition to a mortgage lien upon the same as part of the Premises. The Mortgagor will assist in the preparation of and will execute from time to time, alone or with the Mortgagee, and deliver, file and record any financing or continuation statements, mortgages or other instruments, and do such further acts as the Mortgagee may request to establish, maintain and perfect the security interest of the Mortgagee in the Mortgaged Properties, including, but not limited to, the Equipment, and all renewals, additions, substitutions, improvements to the same and the proceeds thereof, and otherwise to protect the same against the rights and interests of third parties. The terms of this Mortgage shall be deemed commercially reasonable within the meaning of the Hawaii Uniform Commercial Code, as amended.

11.Joint and Several Liability. Except as otherwise specifically provided in the Loan Documents, all of the Borrower Entities and any other persons and entities encompassed by the term “Mortgagor” shall be jointly and severally liable for all obligations, covenants, warranties and representations of the Mortgagor under this Mortgage. Except as otherwise specifically and explicitly provided herein or in a Loan Document, all waivers, acknowledgments, consents, approvals, representations, warranties, and other actions given, taken or agreed upon by the Mortgagor hereunder shall be considered to be given or taken or agreed upon by each Borrower Entity individually and by all of the Borrower Entities collectively, and shall be binding upon the Borrower Entities jointly and severally and their respective successors and assigns.

[SIGNATURES ON NEXT PAGE]

IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage, Security Agreement and Fixture Filing to be duly executed as of the date first above written.

ABL MANOA MARKETPLACE LF LLC, a Hawaii limited liability company

By Alexander & Baldwin, LLC

Its Sole Manager

By /s/ Nelson N. S. Chun

Nelson N. S. Chun

Its Senior Vice President and

Chief Legal Officer

By /s/ Paul K. Ito

Paul K. Ito

Its Senior Vice President,

Chief Financial Officer & Treasurer

“ABL-LF”

A&B MANOA LLC,

a Hawaii limited liability company

By A & B Properties, Inc.

Its Sole Manager

By /s/ Paul K. Ito

Paul K. Ito

Its Treasurer

By /s/ David I Haverly

David I. Haverly

Its Senior Vice President

“ABML”

Signature page to Mortgage, Security Agreement and Fixture Filing

ABL MANOA MARKETPLACE LH LLC,

a Hawaii limited liability company

By Alexander & Baldwin, LLC

Its Sole Manager

By /s/ Nelson N. S. Chun

Nelson N. S. Chun

Its Senior Vice President and

Chief Legal Officer

By /s/ Paul K. Ito

Paul K. Ito

Its Senior Vice President,

Chief Financial Officer & Treasurer

“ABL-LH”

ABP MANOA MARKETPLACE LH LLC,

a Hawaii limited liability company

By A & B Properties, Inc.

Its Sole Manager

By /s/ Paul K. Ito

Paul K. Ito

Its Treasurer

By /s/ David I Haverly

David I. Haverly

Its Senior Vice President

“ABP-LH”

“Mortgagor”

Signature page to Mortgage, Security Agreement and Fixture Filing

STATE OF HAWAII )

) SS.

CITY & COUNTY OF HONOLULU )

On this the 27th day of July, 2016, before me personally appeared Nelson N. S. Chun qpersonally known to me -OR- ýproved to me on the basis of satisfactory evidence who, being by me duly sworn or affirmed, did say that such person executed the foregoing instrument as the free act and deed of such person, and if applicable in the capacities shown, having been duly authorized to execute such instrument in such capacities.

/s/ Camille D. Adams

Printed Name: Camille D. Adams

Notary Public, State of Hawaii

My Commission Expires: April 9, 2018

NOTARY CERTIFICATION

(Hawaii Administrative Rule § 5-11-8)

Document Identification or Description : Mortgage, Security Agreement and Fixture Filing

Date of Document : August 1, 2016 Number of Pages 53

First Circuit

(Jurisdiction of notarial act)

/s/ Camille D. Adams

Signature of Notary

Camille D. Adams

Type or Print Name of Notary

July 27, 2016

Date of Notary Certificate (Official Stamp or Seal)

STATE OF HAWAII )

) SS.

CITY & COUNTY OF HONOLULU )

On this the 27th day of July, 2016, before me personally appeared Paul K. Ito qpersonally known to me -OR- ýproved to me on the basis of satisfactory evidence who, being by me duly sworn or affirmed, did say that such person executed the foregoing instrument as the free act and deed of such person, and if applicable in the capacities shown, having been duly authorized to execute such instrument in such capacities.

/s/ Camille D. Adams

Printed Name: Camille D. Adams

Notary Public, State of Hawaii

My Commission Expires: April 9, 2018

NOTARY CERTIFICATION

(Hawaii Administrative Rule § 5-11-8)

Document Identification or Description : Mortgage, Security Agreement and Fixture Filing

Date of Document : August 1, 2016 Number of Pages 53

First Circuit

(Jurisdiction of notarial act)

/s/ Camille D. Adams

Signature of Notary

Camille D. Adams

Type or Print Name of Notary

July 27, 2016

Date of Notary Certificate (Official Stamp or Seal)

STATE OF HAWAII )

) SS.

CITY & COUNTY OF HONOLULU )

On this the 27th day of July, 2016, before me personally appeared David I. Haverly qpersonally known to me -OR- ýproved to me on the basis of satisfactory evidence who, being by me duly sworn or affirmed, did say that such person executed the foregoing instrument as the free act and deed of such person, and if applicable in the capacities shown, having been duly authorized to execute such instrument in such capacities.

/s/ Camille D. Adams

Printed Name: Camille D. Adams

Notary Public, State of Hawaii

My Commission Expires: April 9, 2018

NOTARY CERTIFICATION

(Hawaii Administrative Rule § 5-11-8)

Document Identification or Description : Mortgage, Security Agreement and Fixture Filing

Date of Document : August 1, 2016 Number of Pages 53

First Circuit

(Jurisdiction of notarial act)

/s/ Camille D. Adams

Signature of Notary

Camille D. Adams

Type or Print Name of Notary

July 27, 2016

Date of Notary Certificate (Official Stamp or Seal)

EXHIBIT A

-ITEM FIRST:-

ITEM I (Lot G-1) is covered by Tax Map Keys: (1) 2-9-022-030 and (1) 2-9-022-009.

ITEM II (Lot G-2) is covered by Tax Map Key: (1) 2-9-022-012.

ITEM III (Lot G-3) is covered by Tax Map Keys: (1) 2-9-022-001 and 005.

ITEM IV (Access Easement) is covered by Tax Map Key: (1) 2-9-026: Por. 014.

-ITEM I:-

All of that certain parcel of land (being portion(s) of the land(s) described in and covered by Lot 4 of Royal Patent Grant Number 642 to Charles Kanaina) situate, lying and being on the southeasterly side of East Manoa Road at Kolowalu, Kaloaluiki, and Kanaloa, Manoa Valley, Honolulu, City and County of Honolulu, State of Hawaii, being LOT G-1, as shown on Subdivision Map approved by City and County of Honolulu, on January 15, 1976, and thus bounded and described:

Beginning at the west corner of this parcel of land on the southeasterly side of East Manoa Road, the coordinates of which referred to Government Survey Triangulation Station "AKAKA" being 3,696.92 feet south and 3,255.86 feet west and running by azimuths measured clockwise from true South:


1.	239° 27' 93.00 feet along the southeasterly side of East Manoa Road;


2.	329° 39' 104.32 feet along the remainder of Lot 4 of Grant 642 to Charles Kanaina;


3.	59° 39' 93.00 feet along the remainder of Lot 4 of Grant 642 to Charles Kanaina;


4.	149° 39' 104.00 feet along Grant 6166 to Trustees of Kawaiahao Church to the point of beginning and containing an area of 9,687 square feet, more or less.

-ITEM II:-

All of that certain parcel of land (being portion(s) of the land(s) described in and covered by Lots 4 and 5 of Royal Patent Grant Number 642 to Charles Kanaina, Royal Patent Number 3034, Land Commission Award Number 11307 to Kea, and Royal Patent Number 2831, Land Commission Award Number 1909 to Kai for Kaianui) situate, lying and being on the southeasterly

5934838.6

side of East Manoa Road at Kolowalu, Kaloaluiki and Kanaloa, Manoa Valley, Honolulu, City and County of Honolulu, State of Hawaii, being LOT G-2, as shown on Subdivision Map approved by City and County of Honolulu, on January 15, 1976, and thus bounded and described as per survey dated October 22, 1975, to-wit:

Beginning at the north corner of this parcel of land on the southeasterly side of East Manoa Road, the coordinates of which referred to Government Survey Triangulation Station "AKAKA" being 3,544.90 feet south and 3,002.57 feet west and running by azimuths measured clockwise from true South:


1.	328° 40' 87.00 feet along remainder of L. C. Aw. 1909 to Kai for Kaianui;


2.	302° 00' 58.76 feet along remainder of L. C. Aw. 1909 to Kai for Kaianui;

Thence along remainder of L. C. Aw. 1909 to Kai for Kaianui, on a curve to the right with a radius of 36.00 feet, the chord azimuth and distance being:


3.	330° 07' 30" 33.94 feet;


4.	358° 15' 187.86 feet along remainder of L. C. Aw. 1090 to Kai for Kaianui;


5.	36° 42' 132.40 feet along remainders of L. C. Aw. 1909 to Kai for Kaianui and Lot 4 of Grant 642 to Charles Kanaina;


6.	59° 50' 223.50 feet along remainders of Lot 4 of Grant 642 to Charles Kanaina, L. C. Aw. 11307 to Kea and Lot 5 of Grant 642 to Charles Kanaina;


7.	149° 50' 145.08 feet along the remainders of Lot 5 and Grant 642 to Charles Kanaina and L. C. Aw. 11307 to Kea;


8.	59° 50' 84.42 feet along remainders of L. C. Aw. 11307 to Kea and Lot 5 of Grant 642 to Charles Kanaina;


9.	145° 00' 105.40 feet along remainder of Grant 642 to Charles Kanaina;


10.	265° 40' 37.88 feet along Grant 6166 to Trustees of Kawaiahao Church;


11.	251° 30' 67.50 feet along Grant 6166 to Trustees of Kawaiahao Church;


12.	234° 50' 40.00 feet along Grant 6166 to Trustees of Kawaiahao Church;


13.	228° 15' 37.00 feet along Grant 6166 to Trustees of Kawaiahao Church;


14.	246° 40' 28.00 feet along Grant 6166 to Trustees of Kawaiahao Church;


15.	149° 39' 54.54 feet along Grant 6166 to Trustees of Kawaiahao Church;


16.	239° 39' 93.00 feet along remainder of Lot 4 of Grant 642 to Charles Kanaina;


17.	149° 39' 104.32 feet along remainder of Lot 4 of Grant 642 to Charles Kanaina;


18.	239° 27' 50.03 feet along the southeasterly side of East Manoa Road;


19.	238° 40' 152.34 feet along the southeasterly side of East Manoa Road to the point of beginning and containing an area of 130,373 square feet, more or less.

-ITEM III:-

All of that certain parcel of land situate, lying and being on the southeasterly side of East Manoa Road at Kolowalu, Kaloaluiki, and Kanaloa, Manoa Valley, Honolulu, City and County of Honolulu, State of Hawaii, being LOT G-3, as shown on Subdivision Map approved by City and County of Honolulu, on January 15, 1976, comprising of the following:

-PARCEL FIRST:-

LOT 1, area 18,103 square feet, more or less, as shown on Map 3, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 648 of the Trustees under the Will and of the Estate of Bathsheba M. Allen, deceased.

Being land described in Transfer Certificate of Title No. 1,110,607 issued to ABL MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, as to an undivided 36% interest,

and ABP MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, as to an undivided 64% interest, as Tenants in Common.

-PARCEL SECOND:-

LOT 2, area 304 square feet, more or less, as shown on Map 3, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 650 of the Trustees under the Will and of the Estate of Bathsheba M. Allen, deceased.

Being land described in Transfer Certificate of Title No. 1,110,607 issued to ABL MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, as to an undivided 36% interest, and ABP MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, as to an undivided 64% interest, as Tenants in Common.

-PARCEL THIRD:-

LOTS: 1, area 8,749 square feet,

3, area 9,739 square feet, more or less, as shown on Map 2, and

2-B, area 1,625 square feet, more or less, as shown on Map 3;

said maps being filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 649 of the Trustees under the Will and of the Estate of Bathsheba M. Allen, deceased.

-PARCEL FOURTH:-

LOT 1-B, area 8,651 square feet, more or less, as shown on Map 4, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 650 of the Trustees under the Will and of the Estate of Bathsheba M. Allen, deceased.

-PARCEL FIFTH:-

LOT 2-A, area 47 square feet, more or less, as shown on Map 3, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 649 of the Trustees under the Will and of the Estate of Bathsheba M. Allen, deceased.

-PARCEL SIXTH:-

All of that certain parcel of land (being all of the land(s) described in and covered by Land Patent Grant Number S-14,121 to Richard Q.Y. Wong, Lot 6 of Royal Patent Grant Number 642 to Charles Kanaina, and portion(s) of Royal Patent Number 2590, Land Commission Award Number 1926, Apana 1 to Nanauki, Lots 4, 5 and 8 of Royal Patent Grant Number 642 to Charles Kanaina, Royal Patent Number 3034, Land Commission Award Number 11307 to Kea, Royal Patent Number 2831, Land Commission Award Number 1909 to Kai for Kaianui).

Said above Parcels First through Sixth of Item III are portions of LOT G-3, as shown on Subdivision Map approved by City and County of Honolulu, on January 15, 1976, situate, lying and being on the Southeasterly side of East Manoa Road at Kolowalu, Kaloaluiki, and Kanaloa, Manoa Valley, Honolulu, City and County of Honolulu, State of Hawaii, having perimeter description as follows:


1.	328° 40' 80.00 feet along remainder of L.C. Aw. 1909 to Kai for Kaianui;


2.	Thence along remainder of L.C. Aw. 1909 to Kai for Kaianui, on a curve to the left with a radius of 40.00 feet, the chord azimuth and distance being:

315° 20' 18.45 feet;


3.	302° 00' 35.86 feet along remainder of L.C. Aw. 1909 to Kai for Kaianui;


4.	238° 40' 115.08 feet along remainder of L.C. Aw. 1909 to Kai for Kaianui;


5.	326° 16' 30" 10.84 feet along Government Land;


6.	11° 30' 62.23 feet along Government Land;


7.	34° 00' 79.20 feet along Government Land;


8.	358° 15' 300.30 feet along Government Land;


9.	8° 19' 30.00 feet along Government Land;


10.	254° 40' 7.00 feet along Government Land;


11.	328° 33' 122.75 feet along Government Land;


12.	339° 09' 106.41 feet along Government Land;


13.	55° 00' 424.35 feet along Lot 2 of Land Court Application 648, Government Land, remainder of L.C. Aw. 11307 to Kea and Lot 3 of Land Court Application 650;


14.	145° 00' 177.50 feet along Lot 1-C of Land Court Application 650, remainder of Lot 8 of Grant 642 to Charles Kanaina, Lot 1-A-1-A of Land Court Application 650, and remainder of L.C. Aw. 1926, Ap. 1 to Nanauki;


15.	55° 00' 60.00 feet along remainder of L.C. Aw. 1926, Ap. 1 to Nanauki;


16.	145° 00' 102.50 feet along remainder of L.C. Aw. 1926, Ap. 1 to Nanauki;


17.	55° 00' 26.99 feet along remainder of L.C. Aw. 1926, Ap. 1 to Nanauki;


18.	145° 00' 159.38 feet along remainder of L.C. Aw. 1926, Ap. 1 to Nanauki;


19.	55° 00' 124.83 feet along remainders of L.C. Aw. 1926, Ap. 1 to Nanauki and Lot 8 of Grant 642 to Charles Kanaina;


20.	199° 48' 28.46 feet along L.C. Aw. 11306, Ap. 2 to Kalama;


21.	181° 38' 30" 78.66 feet along remainder of Lot 8 of Grant 642 to Charles Kanaina;


22.	172° 24' 93.50 feet along remainder of L.C. Aw. 1926, Ap. 1 to Nanauki;


23.	208° 00' 40.00 feet along Lot 7 of Grant 642 to Charles Kanaina;


24.	218° 30' 16.00 feet along Lot 7 of Grant 642 to Charles Kanaina;


25.	232° 05' 30.00 feet along Lot 7 of Grant 642 to Charles Kanaina;


26.	156° 03' 34.80 feet along Lot 7 of Grant 642 to Charles Kanaina;


27.	243° 30' 60.74 feet along Grant 6166 to Trustees of Kawaiahao Church;


28.	265° 40' 50.12 feet along Grant 6166 to Trustees of Kawaiahao Church;


29.	325° 00' 105.40 feet along remainder of Lot 5 of Grant 642 to Charles Kanaina;


30.	239° 50' 84.42 feet along remainders of Lot 5 of Grant 642 to Charles Kanaina and L.C. Aw. 11307 to Kea;


31.	329° 50' 145.08 feet along remainders of L.C. Aw. 11307 to Kea and Lot 5 of Grant 642 to Charles Kanaina;


32.	239° 50' 223.50 feet along remainder of Lot 5 of Grant 642 to Charles Kanaina, L.C. Aw. 11307 to Kea and Lot 4 of Grant 642 to Charles Kanaina;


33.	216° 42' 132.40 feet along remainders of Lot 4 of Grant 642 to Charles Kanaina and L.C. Aw. 1909 to Kai for Kaianui;


34.	178° 15' 187.86 feet along remainder of L.C. Aw. 1909 to Kai for Kaianui;


35.	Thence along remainder of L.C. Aw. 1909 to Kai for Kaianui, on a curve to the left with a radius of 36.00 feet, the chord azimuth and distance being:

150° 07' 30" 33.94 feet;


36.	122° 00' 58.76 feet along remainder of L.C. Aw. 1909 to Kai for Kaianui;


37.	148° 40' 87.00 feet along remainder of L.C. Aw. 1909 to Kai for Kaianui;


38.	238° 40' 28.00 feet along the Southeasterly side of East Manoa Road to the point of beginning and containing an area of 273,722 square feet, more or less.

-AS TO ITEMS I, II AND III:-

BEING THE PREMISES ACQUIRED BY WARRANTY DEED AND ASSIGNMENT OF LESSOR'S INTEREST IN LEASE


GRANTOR	: MANOA SHOPPING CENTER, INC., a Hawaii corporation, and WATER BUFFALO LLC, a Hawaii limited liability company


GRANTEE	: ABL MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, as Tenant in Severalty, as to an undivided 36% interest, and ABP MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, as Tenant in Severalty, as to an undivided 64% interest, as Tenants in Common


DATED	: January 29, 2016


FILED	: Land Court Document No. T-9524070


RECORDED	: Document No. A-58720453

-Note:- Filed with the Department of Commerce and Consumer Affairs of the State of Hawaii (Business Registration), is the merger of ABP MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, into A&B MANOA LLC, a Hawaii limited liability company, on July 12, 2016, as set forth in CERTIFICATE OF MERGER filed as Land Court Document No. T-9692427, and recorded as Document No. A-60400763.

-ITEM IV:-

A non-exclusive access easement for the right, privilege and authority to construct, reconstruct, improve, repair and maintain a roadway and drive-thru facility over and across an easement designated as "Perpetual Non-Exclusive Access Easement" set forth in GRANT OF EASEMENT dated April 10, 1985, recorded in Liber 18715 at Page 334; and subject to the terms and provisions contained therein. Said easement is more particularly described as follows:

Beginning at the north corner of this parcel of land and on the east boundary of Royal Patent 2831, Land Commission Award 1909 to Kai for Kaianui, the coordinates of said point of beginning referred to Government Survey Triangulation Station "AKAKA" being 3706.66 feet South and 2846.10 feet West, thence running by azimuths measured clockwise from True South:


1.	328° 40' 36.50 feet along the remainder of Manoa Stream;


2.	Thence along the remainder of Manoa Stream on a curve to the right with a radius of 50.00 feet, the chord azimuth and distance being:

13° 09' 06" 70.07 feet;


3.	178° 15' 14.83 feet along R.P. 2831, L.C. Aw, 1909 to Kai for Kaianui;


4.	Thence along the remainder of Manoa Stream on a curve to the left with a radius of 38.00 feet, the chord azimuth and distance being:

187° 25' 22" 47.58 feet;


5.	148° 40' 15.36 feet along the remainder of Manoa Stream;


6.	178° 15' 24.31 feet along R.P. 2831, L.C. Aw. 1909 to Kai for Kaianui to the point of beginning and containing an area of 1,087 square feet, more or less.

ASSIGNMENT OF EASEMENT dated effective as of October 30, 2015, from MANOA SHOPPING CENTER, INC., a Hawaii corporation, as "Assignor", to A&B MANOA LLC, a Hawaii limited liability company, as "Assignee", recorded as Document No. A-58720451.

CONSENT TO ASSIGNMENT OF GRANT OF EASEMENT, by the STATE OF HAWAII, by its Board of Land and Natural Resources, dated January 29, 2016, recorded as Document No. A‑58720452.

SUBJECT, HOWEVER, to the following:


1.	Mineral and water rights of any nature.


2.	-AS TO ITEM I (LOT G-1):-

(A) GRANT


TO	: CITY AND COUNTY OF HONOLULU


DATED	: September 8, 1943


RECORDED	: Liber 1785 Page 260


GRANTING	: right and easement for sewer purposes over and across the land described herein

(B) GRANT


TO	: HAWAIIAN ELECTRIC COMPANY, INC. and GTE HAWAIIAN TELEPHONE COMPANY INCORPORATED, now known as HAWAIIAN TELCOM, INC.


DATED	: July 22, 1964


RECORDED	: Liber 4865 Page 228


GRANTING	: an easement for utility purposes as shown on the map attached thereto


3.	-AS TO ITEM II (LOT G-2):-

(A) GRANT


TO	: CITY AND COUNTY OF HONOLULU


DATED	: September 8, 1943


RECORDED :	Liber 1785 Page 260


GRANTING :	right and easement for sewer purposes over and across the land described herein

(B) GRANT


TO	: CITY AND COUNTY OF HONOLULU


DATED	: October 7, 1943


RECORDED :	Liber 1788 Page 4


GRANTING :	an easement for underground sewer purposes, more particularly described therein

Said above Grant has been amended by instrument dated March 19, 1965, recorded in Liber 5041 at Page 415.


-Note:-	Cancellation of a portion of Sewer Easement having an area of 4,915 square feet, as recorded in Liber 5041 at Page 415, as shown on the Subdivision Map approved by City and County of Honolulu, on January 15, 1976.


TO	: HAWAIIAN ELECTRIC COMPANY, INC. and GTE HAWAIIAN TELEPHONE COMPANY INCORPORATED, now known as HAWAIIAN TELCOM, INC.


DATED	: July 22, 1964


RECORDED :	Liber 4865 Page 228

GRANTING : an easement for utility purposes

(D) DESIGNATION OF EASEMENT “S-2”

PURPOSE : sewer


SHOWN	: on Subdivision Map approved by City and County of Honolulu on

March 4, 2016, DPP File No. 2015/SUB-179


4.	-AS TO ITEM III, PARCEL FIRST (LOT 1 OF Land Court Application No. 648):-


(A)	Location of the boundary of Manoa Stream and the effect, if any, upon the area of the land described herein, and the free flowage thereof.


(B)	PARCEL 41, containing an area of 409 square feet, more or less, acquired by the CITY AND COUNTY OF HONOLULU, by Final Order of Condemnation dated January 22, 1982, filed as Land Court Document No. 1102506, recorded in Liber 16137 at Page 448.


5.	-AS TO ITEM III, PARCEL SIXTH (TMKS: (1) 2-9-022-POR. 001 AND (1) 2-9-022‑POR. 005):-


(A)	Location of the boundary of Manoa Stream and the effect, if any, upon the area of the land described herein, and the free flowage thereof.

(B) The terms and provisions contained in the following:

INSTRUMENT : LAND PATENT GRANT NO. S-14,121

DATED : November 8, 1963

The foregoing includes, but is not limited to, matters relating to reservation of an easement, area 111 square feet, more or less, for sewer purposes.


(C)	GRANT


TO	: CITY AND COUNTY OF HONOLULU


DATED	: September 8, 1943


RECORDED	: Liber 1785 Page 260


GRANTING	: right and easement for sewer purposes over and across the land described herein


-Note:-	Cancellation of a portion of Sewer Easement as shown on the Subdivision Map approved by City and County of Honolulu, on March 4, 2016, DPP File No. 2015/SUB-179.

(D) GRANT


TO	: CITY AND COUNTY OF HONOLULU


DATED	: October 7, 1943


RECORDED	: Liber 1788 Page 4


GRANTING	: an easement for underground sewer purposes, more particularly described therein

Said above Grant has been amended by instrument dated March 19, 1965, recorded in Liber 5041 at Page 415.


-Note:-	Cancellation of a portion of Sewer Easement having an area of 4,915 square feet, as recorded in Liber 5041 at Page 415, as shown on the Subdivision Map approved by City and County of Honolulu, on January 15, 1976.

(E) GRANT


TO	: CITY AND COUNTY OF HONOLULU and the BOARD OF WATER SUPPLY


DATED	: September 6, 1978


RECORDED	: Liber 13216 Page 186


GRANTING	: a right and easement for water pipeline purposes over Easement

"W‑1", area 1,805 square feet, more particularly described therein

(F) DESIGNATION OF EASEMENT “S-2”

PURPOSE : sewer


SHOWN	: on Subdivision Map approved by City and County of Honolulu on

March 4, 2016, DPP File No. 2015/SUB-179

(G) DESIGNATION OF EASEMENT “S-3”

PURPOSE : sewer


SHOWN	: on Subdivision Map approved by City and County of Honolulu on

March 4, 2016, DPP File No. 2015/SUB-179

(H) DESIGNATION OF EASEMENT “W-1”

PURPOSE : water


SHOWN	: on Subdivision Map approved by City and County of Honolulu on

March 4, 2016, DPP File No. 2015/SUB-179


6.	The terms and provisions contained in the following:


INSTRUMENT:	DECLARATION OF ESTABLISHMENT OF RESTRICTIONS AND EASEMENTS


DATED	: May 16, 1977


FILED	: Land Court Document No. 820265


RECORDED	: Liber 12245 Page 21


7.	UNRECORDED LEASE


LESSOR	: MANOA SHOPPING CENTER, INC., a Hawaii corporation


LESSEE	: MANOA MARKETPLACE-PARTNERS, a limited partnership


DATED	: March 15, 1974


TERM	: fifty-five (55) years commencing on March 16, 1974 and ending on March 15, 2029

Above Lease was amended by unrecorded AMENDMENT OF LEASE dated May 20, 1977, effective as of January 15, 1977; re: (i) substituting MANOA SHOPPING CENTER, INC. and RICHARD QUAN YAU WONG, as "Lessor", and VALLEY MARKETPLACE-PARTNERS, a registered Hawaii general partnership, as "Lessee", (ii) amending the term of lease for fifty-two (52) years and two (2) months commencing January 15, 1977 and ending on and including March 14, 2029.

A MEMORANDUM OF LEASE is dated May 20, 1977, effective as of January 15, 1977, filed as Land Court Document Nos. 820263 through 820264, recorded in Liber 12245 at Page 1.

OPTION TO AMEND LEASE dated January 17, 2003, filed as Land Court Document No. 2903602, recorded as Document No. 2003-049537.

ABOVE LEASE AMENDED BY INSTRUMENT


DATED	: August 7, 2003


FILED	: Land Court Document No. 2978017


RECORDED	: Document No. 2003-171865


RE	: lease rent

ABOVE LEASE AMENDED BY INSTRUMENT


DATED	: March 29, 2005, but effective as of August 1, 2004


FILED	: Land Court Document No. 3250040


RECORDED	: Document No. 2005-066123


CONSENT	: to include LOT G-2

Above Lease was amended by unrecorded AMENDMENT OF LEASE dated June 3, 2016, effective as of January 29, 2016; re: (i) extending the term of the Lease from March 14, 2029, to and including December 31, 2046, and (b) amending and restating the description of the property demised by the Lease by deleting Exhibit "A" attached to the Lease and replacing it with the Exhibit "A" attached to the Amendment.

MEMORANDUM OF AMENDMENT TO GROUND LEASE AND AMENDMENT OF MEMORANDUM OF LEASE dated June 3, 2016, but effective as of January 29, 2016, filed as Land Court Document No. T-9650267, and recorded as Document No. A‑59980991.

JOINDER AND CONSENT made by A&B MANOA LLC, a Hawaii limited liability company, dated July 21, 2016, filed as Land Court Document No. T-9699371, recorded as Document No. A-60471215.

THE LESSEE'S INTEREST BY MESNE ASSIGNMENTS ASSIGNED


ASSIGNOR	: MANOA MARKETPLACE LLC, a Delaware limited liability company


ASSIGNEE :	ABL MANOA MARKETPLACE LH LLC, a Hawaii limited liability company, as Tenant in Severalty, as to an undivided thirty percentage (30%) interest, and ABP MANOA MARKETPLACE LH LLC, a Hawaii limited liability company, as Tenant in Severalty, as to the remaining undivided seventy percentage (70%) interest, as Tenants in Common


DATED	: January 29, 2016


FILED	: Land Court Document No. T-9524073


RECORDED :	Document No. A-58720456


CONSENT	: Given by ABL MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, and ABP MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, by instrument dated January 29, 2016, filed as Land Court Document No. T-9524074, recorded as Document No. A-58720457


8.	-AS TO ITEM IV (ACCESS EASEMENT):-


(A)	The terms and provisions contained in GRANT OF EASEMENT dated April 10, 1985, recorded in Liber 18715 at Page 334, including but not limited to matters

relating to consent required by the State of Hawaii for any sale, assignment, lease, mortgage or other transfer.


(B)	-AS TO "NON-EXCLUSIVE ACCESS EASEMENT" as set forth in GRANT OF EASEMENT recorded in Liber 18715 at Page 334:-

Location of the boundary of Manoa Stream and the effect, if any, upon the area of the land described herein, and the free flowage thereof.


9.	Any rights or interests which may exist or arise by reason of the following facts shown on ALTA/ACSM Survey prepared by Erik S. Kaneshiro, Land Surveyor, with Austin, Tsutsumi and Associates, Inc., dated July 10, 2015, revised September 15, 2015, September 25, 2015, January 8, 2016, January 15, 2016, and January 27, 2016:


(A)	Guard Rail running along the easterly side of Access Easement (Item IV) crosses into Neighboring Parcel 14, (Manoa Stream) by as much as 2.8 feet for a distance of 69.7 feet.


(B)	Signs and parking stall curb along the easterly side of Subject Lot (Item III, Parcel Sixth) crosses into Neighboring Parcel 14 (Manoa Stream) by as much as 8.2 feet for a distance of 56.4 feet.


(C)	Rip Rap along the easterly side of Subject Lot (Item III, Parcel Sixth) crosses into Neighboring Parcel 14 (Manoa Stream) by as much as 20 feet for a distance of 137 feet.


(D)	Realigned sewerline with Lot G-3 (Item III) is not within recorded easement.


(E)	Sewerline within Lot G-3 (Item III) is within Easement as recorded in Liber 5041, at Page 415, also shows cancellation of said easement as shown on the Subdivision Map approved by the City and County of Honolulu, on January 15, 1976.


(F)	Concrete step along the westerly side of Subject Lot (Item III, Parcel Sixth) crosses into Neighboring Parcel 15 by as much as 0.9 feet for a distance of 3.2 feet.


(G)	CRM wall running along the northwesterly side of Subject Lot (Item II) extends into Neighboring Parcel 8 by as much as 0.3 feet for a distance of 57.3 feet.


(H)	End of CRM wall at the northwesterly corner of Subject Lot (Item I) extends into Subject Lot (Item I) from Neighboring Parcel 8 by as much as 1.5 feet.

(I) Various buildings cross over various easements listed as follows:

(1) Item I: two story CMU building over utility easement.

(2) Item II: single story CMU building over sewer easements.

(3) Item II: single story CMU building over utility easement.

(4) Item III, Parcel Sixth: single story CMU building over sewer easement.


(J)	Item III, Parcel Sixth: building from Item III, Lot G-3 crosses into Item II, Lot G-2.

(K) Easement W-1 does not cover existing waterline and fire hydrant.


10.	-AS TO ITEM III (LOT G-3):-

The terms and provisions contained in the following:


INSTRUMENT	: ENCROACHMENT AGREEMENT


DATED	: January 29, 2016


FILED	: Land Court Document No. T-9524069


RECORDED	: Document No. A-58720446


PARTIES	: MANOA SHOPPING CENTER, INC., a Hawaii corporation, and WATER BUFFALO LLC, a Hawaii manager-managed limited liability company, "First Party", DORIS MEE LAI KURANISHI, wife of Sidney A. Kuranishi, "Second Party", and MANOA MARKETPLACE LLC, a Delaware member-managed limited liability company, "Lessee"


RE	: concrete step


11.	-AS TO ITEM II (LOT G-2):-

The terms and provisions contained in the following:


INSTRUMENT	: ENCROACHMENT AGREEMENT


DATED	: January 29, 2016


RECORDED	: Document No. A-58720447


PARTIES	: MANOA SHOPPING CENTER, INC., a Hawaii corporation, "First Party", THE TRUSTEES OF KAWAIAHAO CHURCH, "Second Party", HAWAII PERFORMING ARTS COMPANY, LTD., a Hawaii non-profit corporation, "HPAC", and MANOA MARKETPLACE LLC, a Delaware member-managed limited liability company, "Lessee"


RE	: concrete rubble masonry wall


12.	-AS TO ITEM I (LOT G-1):-

The terms and provisions contained in the following:


INSTRUMENT	: ENCROACHMENT AGREEMENT


DATED	: January 29, 2016


RECORDED	: Document No. A-58720448


PARTIES	: MANOA SHOPPING CENTER, INC., a Hawaii corporation and WATER BUFFALO LLC, a Hawaii manager-managed limited liability company, "First Party", THE TRUSTEES OF KAWAIAHAO CHURCH, "Second Party", HAWAII PERFORMING ARTS COMPANY, LTD., a Hawaii non-profit corporation, "HPAC", and MANOA MARKETPLACE LLC, a Delaware member-managed limited liability company, "Lessee"


RE	: concrete rubble masonry wall

-ITEM SECOND:-

ITEM I (Lot G-1) is covered by Tax Map Keys: (1) 2-9-022-030 and (1) 2-9-022-009.

ITEM II (Lot G-2) is covered by Tax Map Key: (1) 2-9-022-012.

ITEM III (Lot G-3) is covered by Tax Map Keys: (1) 2-9-022-001 and 005.

ITEM IV (Access Easement) is covered by Tax Map Key: (1) 2-9-026: Por. 014.

UNRECORDED LEASE


LESSOR	: MANOA SHOPPING CENTER, INC., a Hawaii corporation


LESSEE	: MANOA MARKETPLACE-PARTNERS, a limited partnership


DATED	: March 15, 1974


TERM	: fifty-five (55) years commencing on March 16, 1974 and ending on March 15, 2029

A MEMORANDUM OF LEASE is dated May 20, 1977, effective as of January 15, 1977, filed as Land Court Document Nos. 820263 through 820264, recorded in Liber 12245 at Page 1.

OPTION TO AMEND LEASE dated January 17, 2003, filed as Land Court Document No. 2903602, recorded as Document No. 2003-049537.

ABOVE LEASE AMENDED BY INSTRUMENT


DATED	: August 7, 2003


FILED	: Land Court Document No. 2978017


RECORDED	: Document No. 2003-171865


RE	: lease rent

ABOVE LEASE AMENDED BY INSTRUMENT


DATED	: March 29, 2005, but effective as of August 1, 2004


FILED	: Land Court Document No. 3250040


RECORDED	: Document No. 2005-066123


CONSENT	: to include LOT G-2

JOINDER AND CONSENT made by A&B MANOA LLC, a Hawaii limited liability company, dated July 21, 2016, filed as Land Court Document No. T-9699371, recorded as Document No. A-60471215.

THE LESSEE'S INTEREST BY MESNE ASSIGNMENTS ASSIGNED


ASSIGNOR	: MANOA MARKETPLACE LLC, a Delaware limited liability company


ASSIGNEE	: ABL MANOA MARKETPLACE LH LLC, a Hawaii limited liability company, as to an undivided 30% interest, and ABP MANOA MARKETPLACE LH LLC, a Hawaii limited liability company, as to an undivided 70% interest, as Tenants in Common


DATED	: January 29, 2016


FILED	: Land Court Document No. T-9524073


RECORDED	: Document No. A-58720456


CONSENT	: Given by Lessor, by instrument dated January 29, 2016, filed as Land Court Document No. T-9524074, recorded as Document No. A-58720457

Lessor's interest has been assigned to ABL MANOA MARKETPLACE LF LLC, a Hawaii

limited liability company, as to an undivided 36% interest, and ABP MANOA MARKETPLACE

LF LLC, a Hawaii limited liability company, as to an undivided 64% interest, as Tenants in

Common, by WARRANTY DEED AND ASSIGNMENT OF LESSOR'S INTEREST IN

LEASE of MANOA SHOPPING CENTER, INC., a Hawaii corporation, and WATER

BUFFALO LLC, a Hawaii limited liability company, dated January 29, 2016, filed as Land

Court Document No. T-9524070, recorded as Document No. A-58720453.


-Note:-	Filed with the Department of Commerce and Consumer Affairs of the State of Hawaii (Business Registration), is the merger of ABP MANOA MARKETPLACE LF LLC, a Hawaii limited liability company, into A&B MANOA LLC, a Hawaii limited liability company, on July 12, 2016, as set forth in CERTIFICATE OF MERGER filed as Land Court Document No. T-9692427, and recorded as Document No. A-60400763.

Said Lease, as amended, demises the following property:

Item I: the property described under Item I in ITEM FIRST above;

Item II: the property described under Item II in ITEM FIRST above;

Item III: the property described under Item III in ITEM FIRST above, including without limitation, Parcels First through Sixth therein;

Item IV: the access easement described under Item IV in ITEM FIRST above.

SUBJECT, HOWEVER, to the following:


1.	Mineral and water rights of any nature.


2.	-AS TO ITEM I (LOT G-1):-

(A) GRANT


TO	: CITY AND COUNTY OF HONOLULU


DATED	: September 8, 1943


RECORDED	: Liber 1785 Page 260


GRANTING	: right and easement for sewer purposes over and across the land described herein

(B) GRANT


TO	: HAWAIIAN ELECTRIC COMPANY, INC. and GTE HAWAIIAN TELEPHONE COMPANY INCORPORATED, now known as HAWAIIAN TELCOM, INC.


DATED	: July 22, 1964


RECORDED	: Liber 4865 Page 228


GRANTING	: an easement for utility purposes as shown on the map attached thereto


3.	-AS TO ITEM II (LOT G-2):-

(A) GRANT


TO	: CITY AND COUNTY OF HONOLULU


DATED	: September 8, 1943


RECORDED	: Liber 1785 Page 260


GRANTING	: right and easement for sewer purposes over and across the land described herein

(B) GRANT


TO	: CITY AND COUNTY OF HONOLULU


DATED	: October 7, 1943


RECORDED	: Liber 1788 Page 4


GRANTING	: an easement for underground sewer purposes, more particularly described therein

Said above Grant has been amended by instrument dated March 19, 1965, recorded in Liber 5041 at Page 415.


-Note:-	Cancellation of a portion of Sewer Easement having an area of 4,915 square feet, as recorded in Liber 5041 at Page 415, as shown on the Subdivision Map approved by City and County of Honolulu, on January 15, 1976.


TO	: HAWAIIAN ELECTRIC COMPANY, INC. and GTE HAWAIIAN TELEPHONE COMPANY INCORPORATED, now known as HAWAIIAN TELCOM, INC.


DATED	: July 22, 1964


RECORDED	: Liber 4865 Page 228


GRANTING	: an easement for utility purposes

(D) DESIGNATION OF EASEMENT “S-2”

PURPOSE : sewer


SHOWN	: on Subdivision Map approved by City and County of Honolulu on

March 4, 2016, DPP File No. 2015/SUB-179


4.	-AS TO ITEM III, PARCEL FIRST (LOT 1 OF Land Court Application No. 648):-


(A)	Location of the boundary of Manoa Stream and the effect, if any, upon the area of the land described herein, and the free flowage thereof.


(B)	PARCEL 41, containing an area of 409 square feet, more or less, acquired by the CITY AND COUNTY OF HONOLULU, by Final Order of Condemnation dated January 22, 1982, filed as Land Court Document No. 1102506, recorded in Liber 16137 at Page 448.


5.	-AS TO ITEM III, PARCEL SIXTH (TMKS: (1) 2-9-022-POR. 001 AND (1) 2-9-022-POR. 005):-


(A)	Location of the boundary of Manoa Stream and the effect, if any, upon the area of the land described herein, and the free flowage thereof.

(B) The terms and provisions contained in the following:

INSTRUMENT : LAND PATENT GRANT NO. S-14,121

DATED : November 8, 1963

The foregoing includes, but is not limited to, matters relating to reservation of an easement, area 111 square feet, more or less, for sewer purposes.


TO	: CITY AND COUNTY OF HONOLULU


DATED	: September 8, 1943


RECORDED	: Liber 1785 Page 260


GRANTING	: right and easement for sewer purposes over and across the land described herein


-Note:-	Cancellation of a portion of Sewer Easement as shown on the Subdivision Map approved by City and County of Honolulu, on March 4, 2016, DPP File No. 2015/SUB-179.

(D) GRANT


TO	: CITY AND COUNTY OF HONOLULU


DATED	: October 7, 1943


RECORDED	: Liber 1788 Page 4


GRANTING	: an easement for underground sewer purposes, more particularly described therein

Said above Grant has been amended by instrument dated March 19, 1965, recorded in Liber 5041 at Page 415.


-Note:-	Cancellation of a portion of Sewer Easement having an area of 4,915 square feet, as recorded in Liber 5041 at Page 415, as shown on the Subdivision Map approved by City and County of Honolulu, on January 15, 1976.

(E) GRANT


TO	: CITY AND COUNTY OF HONOLULU and the BOARD OF WATER SUPPLY


DATED	: September 6, 1978


RECORDED	: Liber 13216 Page 186


GRANTING	: a right and easement for water pipeline purposes over Easement "W-1", area 1,805 square feet, more particularly described therein

(F) DESIGNATION OF EASEMENT “S-2”

PURPOSE : sewer


SHOWN	: on Subdivision Map approved by City and County of Honolulu on

March 4, 2016, DPP File No. 2015/SUB-179

(G) DESIGNATION OF EASEMENT “S-3”

PURPOSE : sewer


SHOWN	: on Subdivision Map approved by City and County of Honolulu on

March 4, 2016, DPP File No. 2015/SUB-179

(H) DESIGNATION OF EASEMENT “W-1”

PURPOSE : water


SHOWN	: on Subdivision Map approved by City and County of Honolulu on

March 4, 2016, DPP File No. 2015/SUB-179


6.	-AS TO ITEM IV (ACCESS EASEMENT):-


(A)	The terms and provisions contained in GRANT OF EASEMENT dated April 10, 1985, recorded in Liber 18715 at Page 334, including but not limited to matters relating to consent required by the State of Hawaii for any sale, assignment, lease, mortgage or other transfer.


(B)	-AS TO "NON-EXCLUSIVE ACCESS EASEMENT" as set forth in GRANT OF EASEMENT recorded in Liber 18715 at Page 334:-

Location of the boundary of Manoa Stream and the effect, if any, upon the area of the land described herein, and the free flowage thereof.


7.	The terms and provisions contained in the following:


INSTRUMENT	: DECLARATION OF ESTABLISHMENT OF RESTRICTIONS AND EASEMENTS


DATED	: May 16, 1977


FILED	: Land Court Document No. 820265


RECORDED	: Liber 12245 Page 21


8.	UNRECORDED LEASE


LESSOR	: WALLACE T. YANAGI, MASARU YOKOUCHI and MANOA MARKETPLACE-PARTNERS, a Hawaii limited partnership, all doing business as VALLEY MARKETPLACE-PARTNERS, a Hawaii general partnership


LESSEE	: LONGS DRUG STORES, INC., a California corporation


DATED	: March 14, 1977


TERM	: commencing on September 27, 1978, and ending February 29, 2004 with option to extend for two(2) additional successive periods of ten (10) years each following the expiration of the initial term

A SHORT FORM MEMO OF LEASE is dated April 23, 1981, recorded in Liber 15730 at Page 500.

Leasing and demising those premises containing an area of 26,684 square feet, designated as Building 4, being a portion of the Manoa Marketplace Shopping Center situate at Honolulu, Hawaii.

Said instrument is not filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii.

(Not noted on Transfer Certificate(s) of Title referred to herein.)

Unrecorded First Amendment to Lease dated January 11, 1980, and Second Amendment to lease dated January 12, 1990.

Said Lease, as amended, is subject to any matters arising from or affecting the same.


9.	The covenants and restrictions referenced in SHORT FORM MEMO OF LEASE dated April 23, 1981, recorded in Liber 15730 at Page 500, including but not limited to, matters relating to restrictions on permissible use of common areas and operations on any portion of the Shopping Center.


10.	UNRECORDED LEASE


LESSOR	: M/V INVESTMENT PARTNERS, a Hawaii general partnership


LESSEE	: HAWAIIAN WIRELESS, INC., a Delaware corporation


DATED	: March 26, 1997


TERM	: Initial Term of five (5) years commencing on May 1, 1997, with four (4) separate options to extend the term for five (5) years each

A MEMORANDUM OF LEASE is dated March 27, 1997, filed as Land Court Document No. 2422060, recorded as Document No. 97-164875. (Not noted on Transfer Certificate(s) of Title No. 535,041.)

Leasing and demising an eight (8) foot by ten (10) foot space on the ground level in the back of Building 5 of Manoa Marketplace for a mobile telecommunications facility, together with space for the installation, maintenance and operation of up to three (3) cellular antennas on the rooftop of Building 5, together with space for the placement of cables from the ground space to the rooftop space.

Said Lease is subject to the following:

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT


MORTGAGOR	: HAWAIIAN WIRELESS, INC., a Delaware corporation


MORTGAGEE	: ERICSSON, INC., a Delaware corporation


DATED	: March 26, 1997


FILED	: Land Court Document No. 2422061


RECORDED	: Document No. 97-164876


AMOUNT	: $40,000,000.00


CONSENT	: Given by M/V INVESTMENT PARTNERS, Lessor, by instrument dated March 26, 1997, filed as Land Court Document No. 2422062, recorded as Document No. 97-164877.

ABOVE MORTGAGE ASSIGNED


TO	: ERICSSON PROJECT FINANCE AKTIEBOLAG, a Sweden corporation


DATED	: September 7, 1999


FILED	: Land Court Document No. 2584595


RECORDED	: Document No. 99-171635

(Not noted on Transfer Certificate(s) of Title No. 535,041.)

Said Lease is subject to any other matters arising from or affecting the same.


11.	UNRECORDED LEASE


LESSOR	: M/V INVESTMENT PARTNERS, a Hawaii general partnership


LESSEE	: SAFEWAY INC., a Delaware corporation


DATED	: effective as of August 1, 2004

TERM

: Original Term of fifteen (15) years commencing on August 1, 2004 and expiring on March 14, 2019, with options for Tenant to extend said term for two (2) separate and additional periods, the first of which would be four (4) years and eleven months after the expiration of the Original Term, and the second of which Extension Terms shall be for a period of five (5) years and one and one half (1.5) months after the expiration of the previous Extension Term

A SHOPPING CENTER LEASE SHORT FORM is dated as of February 28, 2005, filed as Land Court Document No. 3250041, recorded as Document No. 2005-066124.

Leasing and demising a portion of the Manoa Marketplace Shopping Center as shown on the map attached to Shopping Center Lease Short Form.

Said Lease is subject to any matters arising from or affecting the same.


12.	The covenants and restrictions referenced in SHOPPING CENTER LEASE SHORT FORM dated February 28, 2005, filed as Land Court Document No. 3250041, recorded as Document No. 2005-066124, including but not limited to, matters relating to restrictions on permissible use of common area and operations on any portions of The Shopping Center or Extended Shopping Center.


13.	MEMORANDUM OF LEASE


LESSOR	: MANOA MARKETPLACE, LLC, successor in interest by mesne conveyances to Valley Marketplace-Partners


LESSEE	: McDONALD'S CORPORATION, a Delaware corporation, successor in interest to McDonald's of Hawaii Development Company


DATED	: March 8, 2011


RECORDED	: Document No. A-43940127


TERM	: ending on December 31, 2015 with an option to extend the term of the lease at the expiration of the original term for 1 period of 5 years aggregating 5 years.

Said instrument is not filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii.

The rentals to be paid by Tenant and all of the obligations and rights of Landlords and Tenant are set forth in Unrecorded Ground Lease dated June 7, 1978, as amended by unrecorded Amendment to Leases dated December 30, 2008, April 2, 2009, April 5, 2010, September 30, 2010, November 11, 2010, December 23, 2010, and January 28, 2011.

NON-DISTURBANCE AND ATTORNMENT AGREEMENT (FEE OWNER), dated March 8, 2011, recorded as Document No. 2011-117783.

Said Lease is subject to any matters arising from or affecting the same.


14.	Any rights or interests which may exist or arise by reason of the following facts shown on ALTA/ACSM Survey prepared by Erik S. Kaneshiro, Land Surveyor, with Austin, Tsutsumi and Associates, Inc., dated July 10, 2015, revised September 15, 2015, September 25, 2015, January 8, 2016, January 15, 2016, and January 27, 2016:


(A)	Guard Rail running along the easterly side of Access Easement (Item IV) crosses into Neighboring Parcel 14, (Manoa Stream) by as much as 2.8 feet for a distance of 69.7 feet.


(B)	Signs and parking stall curb along the easterly side of Subject Lot (Item III, Parcel Sixth) crosses into Neighboring Parcel 14 (Manoa Stream) by as much as 8.2 feet for a distance of 56.4 feet.


(C)	Rip Rap along the easterly side of Subject Lot (Item III, Parcel Sixth) crosses into Neighboring Parcel 14 (Manoa Stream) by as much as 20 feet for a distance of 137 feet.


(D)	Realigned sewerline with Lot G-3 (Item III) is not within recorded easement.


(E)	Sewerline within Lot G-3 (Item III) is within Easement as recorded in Liber 5041, at Page 415, also shows cancellation of said easement as shown on the Subdivision Map approved by the City and County of Honolulu, on January 15, 1976.


(F)	Concrete step along the westerly side of Subject Lot (Item III, Parcel Sixth) crosses into Neighboring Parcel 15 by as much as 0.9 feet for a distance of 3.2 feet.


(G)	CRM wall running along the northwesterly side of Subject Lot (Item II) extends into Neighboring Parcel 8 by as much as 0.3 feet for a distance of 57.3 feet.


(H)	End of CRM wall at the northwesterly corner of Subject Lot (Item I) extends into Subject Lot (Item I) from Neighboring Parcel 8 by as much as 1.5 feet.


(I)	Various buildings cross over various easements listed as follows:

(1) Item I: two story CMU building over utility easement.

(2) Item II: single story CMU building over sewer easements.

(3) Item II: single story CMU building over utility easement.

(4) Item III, Parcel Sixth: single story CMU building over sewer easement.


(J)	Item III, Parcel Sixth: building from Item III, Lot G-3 crosses into Item II, Lot G-2.


(K)	Easement W-1 does not cover existing waterline and fire hydrant.


15.	-AS TO ITEM III (LOT G-3):-

The terms and provisions contained in the following:


INSTRUMENT	: ENCROACHMENT AGREEMENT


DATED	: January 29, 2016


FILED	: Land Court Document No. T-9524069


RECORDED	: Document No. A-58720446


PARTIES	: MANOA SHOPPING CENTER, INC., a Hawaii corporation, and WATER BUFFALO LLC, a Hawaii manager-managed limited liability company, "First Party", DORIS MEE LAI KURANISHI, wife of Sidney A. Kuranishi, "Second Party", and MANOA

MARKETPLACE LLC, a Delaware member-managed limited liability company, "Lessee"


RE	: concrete step


16.	-AS TO ITEM II (LOT G-2):-

The terms and provisions contained in the following:


INSTRUMENT	: ENCROACHMENT AGREEMENT


DATED	: January 29, 2016


RECORDED	: Document No. A-58720447


PARTIES	: MANOA SHOPPING CENTER, INC., a Hawaii corporation, "First Party", THE TRUSTEES OF KAWAIAHAO CHURCH, "Second Party", HAWAII PERFORMING ARTS COMPANY, LTD., a Hawaii non-profit corporation, "HPAC", and MANOA MARKETPLACE LLC, a Delaware member-managed limited liability company, "Lessee"


RE	: concrete rubble masonry wall


17.	-AS TO ITEM I (LOT G-1):-

The terms and provisions contained in the following:


INSTRUMENT	: ENCROACHMENT AGREEMENT


DATED	: January 29, 2016


RECORDED	: Document No. A-58720448


PARTIES	: MANOA SHOPPING CENTER, INC., a Hawaii corporation and WATER BUFFALO LLC, a Hawaii manager-managed limited liability company, "First Party", THE TRUSTEES OF KAWAIAHAO CHURCH, "Second Party", HAWAII PERFORMING ARTS COMPANY, LTD., a Hawaii non-profit corporation, "HPAC", and MANOA MARKETPLACE LLC, a Delaware member-managed limited liability company, "Lessee"


RE	: concrete rubble masonry wall

End of Exhibit A

PROMISSORY NOTE

Honolulu, Hawaii

US $60,000,000.00 Effective Date: August 1, 2016

FOR VALUE RECEIVED, the undersigned, ABL MANOA MARKETPLACE LF LLC, a Hawaii limited liability company (“ABL-LF”), A&B MANOA LLC, a Hawaii limited liability company (“ABML”), ABL MANOA MARKETPLACE LH LLC, a Hawaii limited liability company (“ABL-LH”), and ABP MANOA MARKETPLACE LH LLC, a Hawaii limited liability company (“ABP-LH”) (each individually, a “Borrower Entity” and collectively, the “Borrower”) promise to pay to the order of FIRST HAWAIIAN BANK, a Hawaii corporation (the “Lender”), the principal sum of SIXTY MILLION AND NO/100 DOLLARS (US $60,000,000.00) with interest thereon from the Effective Date, computed on the principal balance from time to time outstanding at the applicable interest rate determined as set forth below. This Note evidences a term loan (the “Loan”) made available by the Lender to the Borrower and governed by, among other things, that certain Loan Agreement dated the Effective Date (the “Loan Agreement”). Capitalized terms not specifically defined herein shall have the same meaning as provided in the Loan Agreement.

1.Term. The term of the Loan shall begin on the Effective Date and shall consist of a thirty‑six (36) month interest only payment period ending on July 31, 2019 (the “Interest Only Period”), followed by a one hundred twenty (120) month principal and interest payment period ending on the Maturity Date (the “Amortization Period”).

2. Interest. From the Effective Date of this Promissory Note through the end of the Interest Only Period, interest shall accrue at a rate per annum equal to one and 35/100 percentage points (1.35%) (the “Margin”) higher than the “LIBOR Rate” (as hereinafter defined), and shall be adjusted monthly on the first Business Day of each calendar month during the term of the Loan (each such date being referred to as an “Interest Adjustment Date”), to a rate equal to the LIBOR Rate in effect on such date, plus the Margin.

Interest shall be computed on the basis of a year of 360 days, and the actual number of days elapsed.

As used herein, the term “LIBOR Rate” shall mean the offered rate of interest which appears on the Bloomberg Official BBAM LIBOR Rates page as of 11:00 a.m. London Time on the day that is two (2) LIBOR Banking Days prior to the next Interest Adjustment Date, for deposits, in U.S. Dollars, for a period of one (1) month (“LIBOR”); provided that the LIBOR Rate shall not be less than zero, and if the above described offered rate of interest is a negative number, the LIBOR Rate will be zero. A “LIBOR Banking Day” means a day on which London banks are open for business for trading inter-bank U.S. Dollar deposits.

If any law or regulation, or any change therein, shall make it unlawful for interest to be calculated using the LIBOR Rate, the Borrower shall have no right to have interest based on the LIBOR Rate, and interest on the outstanding principal balance shall automatically, upon notice given by the Lender to the Borrower, accrue at a fluctuating rate per annum equal to the

5839894.12

WSJ Prime Rate in effect from time to time plus the WSJ Margin. Each change in such fluctuating rate shall take effect simultaneously with the effective date of the corresponding change in the WSJ Prime Rate. “WSJ Prime Rate” shall mean the prime rate as reported in the money rates column of the “Wall Street Journal” on the date of determination or on the last preceding Business Day. If the Wall Street Journal shall cease reporting such prime rate, then WSJ Prime Rate shall mean the lending rate of interest announced publicly by First Hawaiian Bank from time to time as its “prime interest rate”, which rate shall not necessarily be the best or lowest rate charged by First Hawaiian Bank from time to time (herein referred to as the “Prime Rate”). “WSJ Margin” shall mean the amount by which the interest rate specified in this Agreement which would be charged on the principal balance in the absence of default exceeds the WSJ Prime Rate. At any particular date, the WSJ Margin shall be determined as of last preceding date upon which the interest rate for the Loan is determined using the LIBOR Rate, and the WSJ Margin shall not in any event be less than zero.

In addition, if no rates appear on the Bloomberg Official BBAM LIBOR Rates page for deposits, in U.S. Dollars, for a period of one (1) month, interest shall accrue at a fluctuating rate per annum equal to the WSJ Prime Rate in effect from time to time plus the WSJ Margin, until the first Business Day of the calendar month next following the date after one or more rates do appear on the Bloomberg Official BBAM LIBOR Rates page for deposits, in U.S. Dollars, for a period of one (1) month.

3. Payments.

(A) Time and Amount of Payments. The Borrower shall make monthly payments of principal and interest as follows:


(i)	During the Interest Only Period, the Borrower shall make monthly payments of accrued interest only on the first Business Day of each calendar month and continuing on the first Business Day of each and every calendar month thereafter to and including July 31, 2019.

(ii)

During the Amortization Period, the Borrower shall make monthly payments of accrued interest plus principal payments on the first Business Day of each calendar month and continuing on the first Business Day of each and every calendar month thereafter until paid in full, which principal payments shall be in accordance with the payment schedule (“the Payment Schedule”) attached to this Note as Attachment “1”.

(B) Method and Application of Payments. All payments on this Note shall be made at the offices of the Lender located at 999 Bishop Street, Honolulu, Hawaii 96813, or to such other place as the holder of this Note may designate from time to time. All payments on this Note shall be payable only in lawful money of the United States of America. All sums received by the Lender shall be applied first to advances made by the Lender or costs incurred by the Lender, then to late payment charges, then to interest, and then to principal; provided, however, that in an Event of Default, the Lender shall be entitled to allocate all payments

received by the Lender to principal, interest, late payment charges, advances and/or costs in such order as the Lender may elect. The receipt of a check shall not, in itself, constitute payment hereunder unless and until the check is honored.

(C) Maturity Date. The unpaid principal balance, together with any accrued interest thereon as well as all other unpaid fees, charges, and expenses due hereunder or under any instrument or document securing this Note, shall be due and payable in full, without notice or demand, on August 1, 2029 (the “Maturity Date”), unless sooner due as provided in Section 6 below.

(D) Balloon Payment. The monthly payments of principal during the Amortization Period are lower than the amount needed to pay the loan in full by the Maturity Date. This means that on the Maturity Date, the Borrower will still owe some part of the principal. A single payment, called a “balloon payment”, equal to the unpaid part of the principal, plus any interest and other charges then due, must be paid by the Borrower on the Maturity Date. The Lender will have no obligation to refinance the Loan at that time. The Borrower will, therefore, be required to make payment out of other assets that the Borrower may own, or the Borrower will have to find a lender, which may be the Lender or some other lender, willing to lend the Borrower the money. If the Borrower refinances the Loan at maturity, the Borrower may have to pay some or all of the closing costs normally associated with a new loan, even if the Borrower obtains refinancing from the Lender.

4. Prepayment. The Borrower shall have the option to prepay principal in whole or in part, plus all accrued interest without a prepayment charge, provided that a minimum of three (3) business days’ notice is given to the Lender, and provided that the Borrower shall be liable for any swap termination or adjustment costs. No amounts repaid or prepaid may be re-borrowed. All such prepayments shall be applied to accrued but unpaid interest before being applied to principal. Partial prepayments shall be applied against payments of the most remote maturity. Until the Loan is paid in full (principal and interest), no optional prepayment shall be credited to or relieve the Borrower to any extent from its obligation thereafter to pay any monthly installment of interest, any monthly installment of principal, any required payment, or any other payment required under the Loan.

5. Late Charge. If any monthly installment payment shall not have been paid within ten (10) days after the same becomes due and payable, the Lender, in addition to its other remedies, may collect, and the Borrower shall pay on demand, a late charge equal to five percent (5%) of the amount overdue.

6. Default. If an Event of Default, as defined in the Loan Agreement, shall occur (this Note, the Loan Agreement and all other agreements and security instruments referred to therein as “Loan Documents”, being hereinafter called the “Loan Documents”), then, and in any such event, the Lender shall have the option to declare the unpaid principal sum of this Note, together with all interest accrued thereon, and all fees, charges and other sums payable under the Loan Documents, to be immediately due and payable, and such principal sum and interest, and all such fees, charges and other sums, shall thereupon become and be due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, and, upon such maturity, by acceleration or otherwise, the unpaid principal balance, all accrued

but unpaid interest, and all such fees, charges and other sums, shall thereafter bear interest until fully paid at a rate per annum equal to four percentage points (4.0%) higher than the higher of: (a) the rate that would otherwise be in effect from time to time under this Note; or (b) the fluctuating Prime Rate (the “Default Rate”). Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of the same or any subsequent default.

7. Reasonableness of Default Charges. The Borrower acknowledges that nonpayment of any monthly payment when due and nonpayment at maturity (whether or not resulting from acceleration due to an Event of Default under the Loan Documents) will result in damages to the holder of this Note by reason of the additional expenses incurred in servicing the indebtedness evidenced by this Note and/or by reason of the loss to the holder of the use of the money due and frustration to the holder in meeting its other commitments. The Borrower also acknowledges and agrees that the occurrence of any other Event of Default under the Loan Documents will result in damages to the holder by reason of the detriment caused thereby. The Borrower further acknowledges that it is and will be extremely difficult and impracticable to ascertain the extent of such damages caused by nonpayment of any sums when due or resulting from any other event of default under the Loan Documents. The Borrower and the holder agree that a reasonable estimate of such damages must be based in part upon the duration of the default and that the late charge specified above with respect to delinquent payments and the Default Rate of interest prescribed above with respect to the amount due and payable after maturity or acceleration or any other Event of Default under the Loan Documents would not unreasonably compensate the holder for such damages.

8. Costs. If this Note is not paid when due, whether at maturity or by acceleration, the Borrower promises to pay all costs and expenses of collection (including, but not limited to, attorneys’ fees) and all expenses incurred in connection with the protection or realization of the collateral or enforcement of any guaranty, incurred by the Lender on account of such collection, whether or not suit is filed hereon.

9. Waiver. The Borrower, and any endorsers or guarantors of this Note, severally waive diligence, presentment, protest and demand and also notice of protest, demand, dishonor and nonpayment of this Note, and expressly agree that this Note, or any payment hereunder, may be extended from time to time, and consent to the acceptance of further security or the release of any security for this Note, all without notice to any endorsers or guarantors hereof. No extension of time for the payment of this Note, or any installment hereof, made by agreement by the Lender with any person now or hereafter liable for the payment of this Note, shall affect the original liability under this Note or the Borrower, even if the Borrower shall not be a party to such agreement.

10. Joint and Several Liability and Limited Recourse. Subject to limitations on recourse contained in Section 6.2 of the Loan Agreement, all of the Borrower Entities and any other persons and entities encompassed by the term “Borrower” shall be jointly and severally liable for the obligations, covenants, warranties and representations of the Borrower hereunder. Except as otherwise specifically and explicitly provided herein, all waivers, acknowledgments, consents, approvals, representations, warranties, and other actions given, taken or agreed upon by the Borrower hereunder shall be considered to be given or taken or agreed upon by each Borrower Entity individually and by all of the Borrower Entities collectively, and shall be

binding upon the Borrower Entities jointly and severally and their respective successors and assigns.

Recourse under this Note shall be limited to the Mortgaged Property, Collateral, and Assigned Property, and any other collateral that may be granted to the Lender from time to time. Notwithstanding the foregoing, nothing contained in this Note shall limit the liability of the Borrower for damages and losses arising directly or indirectly from the matters described in Section 6.2 of the Loan Agreement.

11. Applicable Law. This Note shall be governed and controlled as to validity, enforcement, interpretation, construction, effect and in all other respects by the laws and decisions of the State of Hawaii.

The Borrower hereby submits to the jurisdiction of the courts of the State of Hawaii and agrees that any judgment of the courts of the State of Hawaii, including any in personam judgment, shall be deemed to have the same force and effect as that obtained from the courts in the jurisdiction in which the Borrower resides. The Borrower hereby waives any right which the Borrower may have to transfer or change the venue of any litigation brought against the Borrower by the Lender in accordance with this paragraph.

12. Maximum Interest Rate. All agreements between the Borrower and the Lender are expressly limited so that in no contingency or event whatsoever, whether by reason of advancement of the proceeds hereof, acceleration of the maturity of the unpaid principal balance hereof or otherwise, shall the amount paid or agreed to be paid to the Lender for the use, forbearance or detention of the money to be advanced hereunder exceed the highest lawful rate permissible under any law which a court of competent jurisdiction may deem applicable hereto. If, for any reason whatsoever, performance, when due, of any provision of this Note or of any mortgage, security agreement or other agreement securing this Note would result in exceeding the highest lawful rate of interest which a court of competent jurisdiction may deem applicable hereto, then ipso facto, the interest rate hereunder shall be reduced to such highest lawful rate. If, notwithstanding the foregoing limitations, any excess interest shall at the maturity of this Note be determined to have been received, the same shall be deemed to have been held as additional security. The foregoing provisions shall never be suspended or waived and shall control every other provision of all agreements between the Lender and the Borrower.

13. Loan Not Assumable. The Borrower understands and agrees that the Loan evidenced by this Note is personal to the Borrower and may not be assumed by or assigned to any other person or entity. The identity of the Borrower (including each Borrower Entity) is material to the Lender and therefore, the Lender, in its sole discretion, may withhold its consent to any request for assumption/assignment of the Loan for any reason or no reason.

14. No Waiver by the Lender. No single or partial release of any power hereunder, or under any mortgage, security agreement or other agreement securing this Note, shall preclude any other or further exercise thereof or the exercise of any other power. The Lender shall at all times have the right to proceed against any portion of the security for this Note in such order and manner as the Lender may deem fit, without waiving any rights with respect to any other

security. No delays or omission on the part of the Lender in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note.

15. Notices. All notices, requests, demands or documents that are required or permitted to be given or served hereunder shall be in writing and personally delivered, or sent by registered or certified mail addressed, or by facsimile or email with confirming hard copy of such facsimile or email sent, as follows:

To Borrower at: In care of

Alexander & Baldwin, LLC

822 Bishop Street

Honolulu, HI 96813

Attn: Paul K. Ito

Facsimile No.: (808) 525-6652

Email: [email protected]


with a copy to:	Alexander & Baldwin, LLC

822 Bishop Street

Honolulu, Hawaii 96813

Attention: Nelson N.S. Chun

Telephone No.: (808) 525-6622

Facsimile No.: (808) 525-6616

Email: [email protected]


To Lender at:	First Hawaiian Bank

999 Bishop Street

Honolulu, Hawaii 96813

Attn: Commercial Real Estate Division, George Leong

Facsimile No.: (808) 525-8141

Email: [email protected]


with copy to:	Goodsill Anderson Quinn & Stifel

999 Bishop Street, Suite 1600

Honolulu, Hawaii 96813

Attention: Leighton Yuen, Esq.

Facsimile No. (808) 441-1235

Email: [email protected]

The Borrower hereby irrevocably authorizes the Lender to accept facsimile (“FAX”) transmissions of such notices, requests, demands and documents, provided such transmission is signed by Paul K. Ito. The Borrower shall and does hereby hold the Lender

harmless from, and indemnify the Lender against, any loss, cost, expense, claim or demand which may be incurred by or asserted against the Lender by virtue of the Lender acting upon any such notices, requests, demands or documents transmitted in accordance with the above provisions. Any such FAX transmission shall, at the Lender’s request, be separately confirmed by telephone conference between the Lender and the person described above, and shall be followed by transmission of the actual “hard copy” of the notice, request, demand or document in question.

16. Severability. If any provision of this Note shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof.

17. Successors and Assigns. This Note and all of the obligations hereunder shall be the joint and several obligations of all makers of this Note (referred to jointly and severally as the “Borrower” in this Note). This Note shall be binding upon and inure to the benefit of the Borrower and the Lender and their respective successors and assigns. It is understood and agreed that the Lender may assign this Note to any person or entity without notice to or the consent of the Borrower.

18. Paragraph Headings. The headings of the paragraphs herein are for convenience and reference only and shall not be considered as defining or limiting in any way the scope or intent of any provision of this Note.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, this instrument has been duly executed as of the day and year first above written.

ABL MANOA MARKETPLACE LF LLC,

a Hawaii limited liability company

By Alexander & Baldwin, LLC

Its Sole Manager

By /s/ Nelson N.S. Chun

Nelson N. S. Chun

Its Senior Vice President and

Chief Legal Officer

By /s/ Paul K. Ito

Paul K. Ito

Its Senior Vice President,

Chief Financial Officer & Treasurer

A&B MANOA LLC,

a Hawaii limited liability company

By A & B Properties, Inc.

Its Sole Manager

By /s/ Paul K. Ito

Paul K. Ito

Its Treasurer

By /s/ David I Haverly

David I. Haverly

Its Senior Vice President

ABL MANOA MARKETPLACE LH LLC,

a Hawaii limited liability company

By Alexander & Baldwin, LLC

Its Sole Manager

By /s/ Nelson N.S. Chun

Nelson N. S. Chun

Its Senior Vice President and

Chief Legal Officer

By /s/ Paul K. Ito

Paul K. Ito

Its Senior Vice President,

Chief Financial Officer & Treasurer

ABP MANOA MARKETPLACE LH LLC,

a Hawaii limited liability company

By A & B Properties, Inc.

Its Sole Manager

By /s/ Paul K. Ito

Paul K. Ito

Its Treasurer

By /s/ David I Haverly

David I. Haverly

Its Senior Vice President

“Borrower”

STATE OF HAWAII )

) SS.

CITY & COUNTY OF HONOLULU )

/s/ Camille D. Adams

Printed Name: Camille D. Adams

Notary Public, State of Hawaii

My Commission Expires: April 9, 2018

NOTARY CERTIFICATE STATEMENT

Document Identification or Description: Promissory Note

ýDoc. Date: August 1, 2016 or ¨ Undated at time of notarization.

No. of Pages: 16

Jurisdiction: First Circuit (in which notarial act is performed)

/s/ Camille D. Adams July 27, 2016

Signature of Notary Date of Notarization &

Certification Statement

Camille D. Adams

Printed Name of Notary (Official Stamp or Seal)

STATE OF HAWAII )

) SS.

CITY & COUNTY OF HONOLULU )

/s/ Camille D. Adams

Printed Name: Camille D. Adams

Notary Public, State of Hawaii

My Commission Expires: April 9, 2018

NOTARY CERTIFICATE STATEMENT

Document Identification or Description: Promissory Note

ýDoc. Date: August 1, 2016 or ¨ Undated at time of notarization.

No. of Pages: 16

Jurisdiction: First Circuit (in which notarial act is performed)

/s/ Camille D. Adams July 27, 2016

Signature of Notary Date of Notarization &

Certification Statement

Camille D. Adams

Printed Name of Notary (Official Stamp or Seal)

STATE OF HAWAII )

) SS.

CITY & COUNTY OF HONOLULU )

/s/ Camille D. Adams

Printed Name: Camille D. Adams

Notary Public, State of Hawaii

My Commission Expires: April 9, 2018

NOTARY CERTIFICATE STATEMENT

Document Identification or Description: Promissory Note

ýDoc. Date: August 1, 2016 or ¨ Undated at time of notarization.

No. of Pages: 16

Jurisdiction: First Circuit (in which notarial act is performed)

/s/ Camille D. Adams July 27, 2016

Signature of Notary Date of Notarization &

Certification Statement

Camille D. Adams

Printed Name of Notary (Official Stamp or Seal)

ATTACHMENT “1”

PAYMENT SCHEDULE FOR PRINCIPAL (DPI005903)



Calculation Period		USD Notional Amount		USD Notional Adjustment
(from and including to, but excluding)				(at end of period)
Start Date	End Date
01-Aug-16	01-Sep-16		$60,000,000.00		$0.00
01-Sep-16	03-Oct-16		$60,000,000.00		$0.00
03-Oct-16	01-Nov-16		$60,000,000.00		$0.00
01-Nov-16	01-Dec-16		$60,000,000.00		$0.00
01-Dec-16	03-Jan-17		$60,000,000.00		$0.00
03-Jan-17	01-Feb-17		$60,000,000.00		$0.00
01-Feb-17	01-Mar-17		$60,000,000.00		$0.00
01-Mar-17	03-Apr-17		$60,000,000.00		$0.00
03-Apr-17	01-May-17		$60,000,000.00		$0.00
01-May-17	01-Jun-17		$60,000,000.00		$0.00
01-Jun-17	03-Jul-17		$60,000,000.00		$0.00
03-Jul-17	01-Aug-17		$60,000,000.00		$0.00
01-Aug-17	01-Sep-17		$60,000,000.00		$0.00
01-Sep-17	02-Oct-17		$60,000,000.00		$0.00
02-Oct-17	01-Nov-17		$60,000,000.00		$0.00
01-Nov-17	01-Dec-17		$60,000,000.00		$0.00
01-Dec-17	02-Jan-18		$60,000,000.00		$0.00
02-Jan-18	01-Feb-18		$60,000,000.00		$0.00
01-Feb-18	01-Mar-18		$60,000,000.00		$0.00
01-Mar-18	02-Apr-18		$60,000,000.00		$0.00
02-Apr-18	01-May-18		$60,000,000.00		$0.00
01-May-18	01-Jun-18		$60,000,000.00		$0.00
01-Jun-18	02-Jul-18		$60,000,000.00		$0.00
02-Jul-18	01-Aug-18		$60,000,000.00		$0.00
01-Aug-18	04-Sep-18		$60,000,000.00		$0.00
04-Sep-18	01-Oct-18		$60,000,000.00		$0.00
01-Oct-18	01-Nov-18		$60,000,000.00		$0.00
01-Nov-18	03-Dec-18		$60,000,000.00		$0.00
03-Dec-18	02-Jan-19		$60,000,000.00		$0.00
02-Jan-19	01-Feb-19		$60,000,000.00		$0.00
01-Feb-19	01-Mar-19		$60,000,000.00		$0.00
01-Mar-19	01-Apr-19		$60,000,000.00		$0.00
01-Apr-19	01-May-19		$60,000,000.00		$0.00
01-May-19	03-Jun-19		$60,000,000.00		$0.00
03-Jun-19	01-Jul-19		$60,000,000.00		$0.00



01-Jul-19	01-Aug-19	$60,000,000.00	$0.00
01-Aug-19	03-Sep-19	$60,000,000.00	$131,643.74
03-Sep-19	01-Oct-19	$59,868,356.26	$131,643.74
01-Oct-19	01-Nov-19	$59,736,712.52	$131,643.74
01-Nov-19	02-Dec-19	$59,605,068.78	$131,643.74
02-Dec-19	02-Jan-20	$59,473,425.04	$131,643.74
02-Jan-20	03-Feb-20	$59,341,781.30	$131,643.74
03-Feb-20	02-Mar-20	$59,210,137.56	$131,643.74
02-Mar-20	01-Apr-20	$59,078,493.82	$131,643.74
01-Apr-20	01-May-20	$58,946,850.08	$131,643.74
01-May-20	01-Jun-20	$58,815,206.34	$131,643.74
01-Jun-20	01-Jul-20	$58,683,562.60	$131,643.74
01-Jul-20	03-Aug-20	$58,551,918.86	$131,643.74
03-Aug-20	01-Sep-20	$58,420,275.12	$137,666.18
01-Sep-20	01-Oct-20	$58,282,608.94	$137,666.18
01-Oct-20	02-Nov-20	$58,144,942.76	$137,666.18
02-Nov-20	01-Dec-20	$58,007,276.58	$137,666.18
01-Dec-20	04-Jan-21	$57,869,610.40	$137,666.18
04-Jan-21	01-Feb-21	$57,731,944.22	$137,666.18
01-Feb-21	01-Mar-21	$57,594,278.04	$137,666.18
01-Mar-21	01-Apr-21	$57,456,611.86	$137,666.18
01-Apr-21	03-May-21	$57,318,945.68	$137,666.18
03-May-21	01-Jun-21	$57,181,279.50	$137,666.18
01-Jun-21	01-Jul-21	$57,043,613.32	$137,666.18
01-Jul-21	02-Aug-21	$56,905,947.14	$137,666.18
02-Aug-21	01-Sep-21	$56,768,280.96	$142,097.83
01-Sep-21	01-Oct-21	$56,626,183.13	$142,097.83
01-Oct-21	01-Nov-21	$56,484,085.30	$142,097.83
01-Nov-21	01-Dec-21	$56,341,987.47	$142,097.83
01-Dec-21	03-Jan-22	$56,199,889.64	$142,097.83
03-Jan-22	01-Feb-22	$56,057,791.81	$142,097.83
01-Feb-22	01-Mar-22	$55,915,693.98	$142,097.83
01-Mar-22	01-Apr-22	$55,773,596.15	$142,097.83
01-Apr-22	02-May-22	$55,631,498.32	$142,097.83
02-May-22	01-Jun-22	$55,489,400.49	$142,097.83
01-Jun-22	01-Jul-22	$55,347,302.66	$142,097.83
01-Jul-22	01-Aug-22	$55,205,204.83	$142,097.83
01-Aug-22	01-Sep-22	$55,063,107.00	$146,266.52
01-Sep-22	03-Oct-22	$54,916,840.48	$146,266.52
03-Oct-22	01-Nov-22	$54,770,573.96	$146,266.52
01-Nov-22	01-Dec-22	$54,624,307.44	$146,266.52
01-Dec-22	03-Jan-23	$54,478,040.92	$146,266.52
03-Jan-23	01-Feb-23	$54,331,774.40	$146,266.52



01-Feb-23	01-Mar-23	$54,185,507.88	$146,266.52
01-Mar-23	03-Apr-23	$54,039,241.36	$146,266.52
03-Apr-23	01-May-23	$53,892,974.84	$146,266.52
01-May-23	01-Jun-23	$53,746,708.32	$146,266.52
01-Jun-23	03-Jul-23	$53,600,441.80	$146,266.52
03-Jul-23	01-Aug-23	$53,454,175.28	$146,266.52
01-Aug-23	01-Sep-23	$53,307,908.76	$150,627.88
01-Sep-23	02-Oct-23	$53,157,280.88	$150,627.88
02-Oct-23	01-Nov-23	$53,006,653.00	$150,627.88
01-Nov-23	01-Dec-23	$52,856,025.12	$150,627.88
01-Dec-23	02-Jan-24	$52,705,397.24	$150,627.88
02-Jan-24	01-Feb-24	$52,554,769.36	$150,627.88
01-Feb-24	01-Mar-24	$52,404,141.48	$150,627.88
01-Mar-24	01-Apr-24	$52,253,513.60	$150,627.88
01-Apr-24	01-May-24	$52,102,885.72	$150,627.88
01-May-24	03-Jun-24	$51,952,257.84	$150,627.88
03-Jun-24	01-Jul-24	$51,801,629.96	$150,627.88
01-Jul-24	01-Aug-24	$51,651,002.08	$150,627.88
01-Aug-24	03-Sep-24	$51,500,374.20	$155,886.25
03-Sep-24	01-Oct-24	$51,344,487.95	$155,886.25
01-Oct-24	01-Nov-24	$51,188,601.70	$155,886.25
01-Nov-24	02-Dec-24	$51,032,715.45	$155,886.25
02-Dec-24	02-Jan-25	$50,876,829.20	$155,886.25
02-Jan-25	03-Feb-25	$50,720,942.95	$155,886.25
03-Feb-25	03-Mar-25	$50,565,056.70	$155,886.25
03-Mar-25	01-Apr-25	$50,409,170.45	$155,886.25
01-Apr-25	01-May-25	$50,253,284.20	$155,886.25
01-May-25	02-Jun-25	$50,097,397.95	$155,886.25
02-Jun-25	01-Jul-25	$49,941,511.70	$155,886.25
01-Jul-25	01-Aug-25	$49,785,625.45	$155,886.25
01-Aug-25	02-Sep-25	$49,629,739.20	$160,246.82
02-Sep-25	01-Oct-25	$49,469,492.38	$160,246.82
01-Oct-25	03-Nov-25	$49,309,245.56	$160,246.82
03-Nov-25	01-Dec-25	$49,148,998.74	$160,246.82
01-Dec-25	02-Jan-26	$48,988,751.92	$160,246.82
02-Jan-26	02-Feb-26	$48,828,505.10	$160,246.82
02-Feb-26	02-Mar-26	$48,668,258.28	$160,246.82
02-Mar-26	01-Apr-26	$48,508,011.46	$160,246.82
01-Apr-26	01-May-26	$48,347,764.64	$160,246.82
01-May-26	01-Jun-26	$48,187,517.82	$160,246.82
01-Jun-26	01-Jul-26	$48,027,271.00	$160,246.82
01-Jul-26	03-Aug-26	$47,867,024.18	$160,246.82
03-Aug-26	01-Sep-26	$47,706,777.36	$166,520.25



01-Sep-26	01-Oct-26	$47,540,257.11	$166,520.25
01-Oct-26	02-Nov-26	$47,373,736.86	$166,520.25
02-Nov-26	01-Dec-26	$47,207,216.61	$166,520.25
01-Dec-26	04-Jan-27	$47,040,696.36	$166,520.25
04-Jan-27	01-Feb-27	$46,874,176.11	$166,520.25
01-Feb-27	01-Mar-27	$46,707,655.86	$166,520.25
01-Mar-27	01-Apr-27	$46,541,135.61	$166,520.25
01-Apr-27	03-May-27	$46,374,615.36	$166,520.25
03-May-27	01-Jun-27	$46,208,095.11	$166,520.25
01-Jun-27	01-Jul-27	$46,041,574.86	$166,520.25
01-Jul-27	02-Aug-27	$45,875,054.61	$166,520.25
02-Aug-27	01-Sep-27	$45,708,534.36	$171,548.11
01-Sep-27	01-Oct-27	$45,536,986.25	$171,548.11
01-Oct-27	01-Nov-27	$45,365,438.14	$171,548.11
01-Nov-27	01-Dec-27	$45,193,890.03	$171,548.11
01-Dec-27	03-Jan-28	$45,022,341.92	$171,548.11
03-Jan-28	01-Feb-28	$44,850,793.81	$171,548.11
01-Feb-28	01-Mar-28	$44,679,245.70	$171,548.11
01-Mar-28	03-Apr-28	$44,507,697.59	$171,548.11
03-Apr-28	01-May-28	$44,336,149.48	$171,548.11
01-May-28	01-Jun-28	$44,164,601.37	$171,548.11
01-Jun-28	03-Jul-28	$43,993,053.26	$171,548.11
03-Jul-28	01-Aug-28	$43,821,505.15	$171,548.11
01-Aug-28	01-Sep-28	$43,649,957.04	$177,098.90
01-Sep-28	02-Oct-28	$43,472,858.14	$177,098.90
02-Oct-28	01-Nov-28	$43,295,759.24	$177,098.90
01-Nov-28	01-Dec-28	$43,118,660.34	$177,098.90
01-Dec-28	02-Jan-29	$42,941,561.44	$177,098.90
02-Jan-29	01-Feb-29	$42,764,462.54	$177,098.90
01-Feb-29	01-Mar-29	$42,587,363.64	$177,098.90
01-Mar-29	02-Apr-29	$42,410,264.74	$177,098.90
02-Apr-29	01-May-29	$42,233,165.84	$177,098.90
01-May-29	01-Jun-29	$42,056,066.94	$177,098.90
01-Jun-29	02-Jul-29	$41,878,968.04	$177,098.90
02-Jul-29	01-Aug-29	$41,701,869.14	$41,701,869.14

EXHIBIT 31.1

CERTIFICATION

I, Christopher J. Benjamin, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Alexander & Baldwin, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



		By /s/ Christopher J. Benjamin
		Christopher J. Benjamin
		President and Chief Executive Officer
Date:	October 28, 2016

EXHIBIT 31.2

CERTIFICATION

I, Paul K. Ito, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of Alexander & Baldwin, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



		By /s/ Paul K. Ito
		Paul K. Ito, Senior Vice President,
		Chief Financial Officer and Treasurer
Date:	October 28, 2016

EXHIBIT 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

In connection with the Quarterly Report on Form 10-Q of Alexander & Baldwin, Inc. (the "Company") for the quarterly period ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Christopher J. Benjamin, as President and Chief Executive Officer of the Company, and Paul K. Ito, as Senior Vice President, Chief Financial Officer, and Treasurer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Christopher J. Benjamin
Name:	Christopher J. Benjamin
Title:	President and Chief Executive Officer
Date:	October 28, 2016



/s/ Paul K. Ito
Name:	Paul K. Ito
Title:	Senior Vice President, Chief Financial Officer and Treasurer
Date:	October 28, 2016

Exhibit 95

MINE SAFETY DISCLOSURE

The operation of Grace Pacific LLC’s Makakilo Quarry (the “Quarry”) is subject to regulation by the federal Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects the Quarry on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Whenever MSHA issues a citation or order, it also generally proposes a civil penalty, or fine, related to the alleged violation. Citations or orders can be contested and appealed, and as part of that process, are often reduced in severity and amount, and are sometimes dismissed.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Company is required to present information regarding certain mining safety and health citations which MSHA has issued with respect to its mining operation in its periodic reports filed with the Securities and Exchange Commission (the “SEC”). We have provided information below in response to the rules and regulations of the SEC issued under Section 1503(a) of the Dodd-Frank Act.

The Dodd-Frank Act and the subsequent implementing regulation issued by the SEC require disclosure of the following categories of violations, orders and citations: (1) Section 104 S&S Citations, which are citations issued for violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard; (2) Section 104(b) Orders, which are orders issued upon a follow up inspection where the inspector finds the violation previously cited has not been totally abated in the prescribed time period; (3) Section 104(d) Citations and Orders, which are issued upon violations of mandatory health or safety standards caused by an unwarrantable failure of the operator to comply with the standards; (4) Section 110(b)(2) Violations, which result from the reckless and repeated failure to eliminate a known violation; (5) Section 107(a) Orders, which are given when MSHA determines that an imminent danger exists and results in an order of immediate withdrawal from the area of the mine affected by the condition; and (6) written notices from MSHA of a pattern of violations-or the potential to have such pattern-of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of mine health or safety hazards under Section 104(e). In addition, the Dodd-Frank Act requires the disclosure of the total dollar value of proposed assessments from MSHA under the Mine Act and the total number of mining related fatalities. This information for the Quarry for the quarter ended September 30, 2016 is as follows:



Total Number of S&S Citations	0
Mine Act § 104(b) Orders	0
Mine Act § 104(d) Citations and Orders	0
Mine Act § 110(b)(2) Violations	0
Mine Act § 107(a) Orders	0
Total Dollar Value of Proposed MSHA Assessments	228.00*
Total Number of Mining Related Fatalities	0
Received Written Notice of Pattern of Violation under Mine Act §104(e) (yes/no)	0
Received Written Notice of Potential to Have Pattern under Mine Act §104(e) (yes/no)	0

As of September 30, 2016, there were no pending legal actions before the Federal Mine Safety and Health Review Commission involving the Quarry. No legal actions were instituted during the quarter ended September 30, 2016 and no legal actions were resolved during the quarter ended September 30, 2016.

*Penalties for citations issued during the April 1 through June 30, 2016 reporting period were assessed and paid during the July through September 30, 2016 reporting period.

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Form 10-Q Alexander & Baldwin, For: Sep 30

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