MAUI LAND & PINEAPPLE CO INC 10-K

Item 1. BUSINESS   Overview   Maui Land & Pineapple Company, Inc. is a Hawaii corporation and the successor to a business organized in 1909. Depending upon the context, the terms “Company,” “we,” “our,” and “us,” refer to either Maui Land & Pineapple Company, Inc. alone, or to Maui Land & Pineapple Company, Inc. and its subsidiaries collectively. The Company consists of a landholding and operating parent company, its principal subsidiary, Kapalua Land Company, Ltd., and certain other subsidiaries.   We own approximately 23,000 acres of land on the island of Maui, Hawaii and develop, sell, and manage residential, resort, commercial, agricultural and industrial real estate through the following business segments:   • Real Estate— Our real estate operations consist of land planning and entitlement, development and sales activities. This segment also included the operations of Kapalua Realty Company, Ltd., a general brokerage real estate company located in the Kapalua Resort through August 2020.   • Leasing—Our leasing operations include commercial, agricultural, and industrial land and property leases, licensing of our registered trademarks and trade names, management of potable and non-potable water systems in West and Upcountry Maui, and stewardship and conservation efforts.   • Resort Amenities—We manage the operations of the Kapalua Club, a private, non-equity club program providing our members special programs, access, and other privileges at certain amenities at the Kapalua Resort.   For additional information and operating results related to the above business segments refer to the section entitled “General Development of Business” in this Item 1 and in Note 10 to our financial statements set forth in Item 8 of this Annual Report.   General Development of Business   Real Estate   Our Real Estate segment includes all land planning, entitlement, development and sales activities of our landholdings on Maui. Our principal real estate development is the Kapalua Resort, a master-planned, destination resort and residential community located in West Maui encompassing approximately 3,000 acres. The following is a summary of our landholdings in acres as of December 31, 2021:       West Maui     Upcountry Maui     Total   Fully entitled urban     900       -       900   Agricultural zoned     10,800       2,100       12,900   Conservation/watershed     9,000       -       9,000         20,700       2,100       22,800     Revenues from our Real Estate segment totaled $3.4 million, or approximately 27% of our total operating revenues for the year ended December 31, 2021.   Real Estate Planning and Entitlements – Appropriate entitlements must be obtained for land that is intended for development. Securing proper land entitlements is a process that requires obtaining county, state and federal approvals, which can take many years to complete and entails a variety of risks. The entitlement process requires that we satisfy all conditions and restrictions imposed in connection with such governmental approvals, including, among other things, construction of infrastructure improvements, payment of impact fees – for conditions such as schools, public parks and traffic mitigation – restrictions on permitted uses of the land, and provision of affordable housing. We actively work with the community, regulatory agencies, and legislative bodies at all levels of government in an effort to obtain necessary entitlements consistent with the needs of the community.   1 Table of Contents   We have approximately 1,200 acres of land on Maui that are in various stages of the development process. The following is a summary of our development projects as of December 31, 2021:     Location   Approximate Number of Acres   Zoned for Planned Use   Anticipated Completion Dates   Kapalua Resort     900   Yes    2022 - 2039   Hali’imaile Town     300   No    2029 - 2034     We are engaged in planning, permitting and entitlement activities for our development projects, and we intend to proceed with construction and sales of the following projects, among others, when internal and external factors permit:     • Kapalua Resort: We began development of the Kapalua Resort in the early 1970’s. Today, the Kapalua Resort is an internationally recognized world-class destination resort and residential community. We presently have entitlements to develop a variety of projects in the Kapalua Resort. Two that are currently planned include Kapalua Mauka and Kapalua Central Resort.           Kapalua Mauka is a long-term expansion project of the Kapalua Resort which is located directly upslope of the existing resort development. As presently planned, it encompasses 800 acres and includes up to 639 residential units with extensive amenities, including up to 27 additional holes of golf. State and County land use entitlements have been secured for this project.           Kapalua Central Resort is a commercial town center and residential community located in the core of the Kapalua Resort. It is comprised of 46 acres and is planned to include up to 61,000 square feet of commercial space and 196 condominium and multi-family residential units. State and County land use entitlements have been secured for this project.   In December 2021, we entered into an agreement to sell our Kapalua Resort property for $40.0 million. The closing of the transaction is contingent upon, among other things, the satisfaction of certain customary closing conditions. Terms of the agreement include a due diligence period of 120 days and a closing date no later than March 31, 2022.     • Hali`imaile Town: An expansion of an existing plantation town in Upcountry Maui, this project is contemplated to be a holistic traditional community with agriculture and sustainability as core design elements. The project includes 290 acres classified as “Small Town” in the long-range County of Maui Island Plan. This designation allows the potential for residential, industrial and commercial development at a moderate density. We are in the early stages of this project’s development and securing State and County land use entitlements are expected to take several years.   Projected development costs are expected to be financed by debt financing, private investment, joint ventures with other development or construction companies, or a combination of these methods.   The price and market for luxury and other real estate in Maui are highly cyclical and influenced significantly by interest rates, the general real estate markets in the mainland United States and specifically the West Coast, the popularity of Hawaii as a vacation destination and second-home market, the general condition of the economy in the United States and Asia, and the relationship of the dollar to foreign currencies. Our Real Estate segment faces substantial competition from other landowners and developers on the island of Maui, as well as in other parts of Hawaii and the mainland United States.   Leasing   Our Leasing segment operations include commercial, industrial, and agricultural leases of land and property, licensing of our registered trademarks and trade names, sales of potable and non-potable water in West and Upcountry Maui, and grants related to stewardship and conservation efforts.   Revenues from our Leasing segment totaled $8.1 million, or approximately 65% of our total operating revenues for the year ended December 31, 2021.   2 Table of Contents   Commercial and Industrial Leases – We are the owner and lessor of approximately 184,000 square feet of commercial, retail and light industrial properties, including restaurants, retail outlets, office buildings, warehouses and Kapalua Resort activities. The following summarizes information related to our commercial and industrial leases as of December 31, 2021:       Total     Average     Lease       Square     Occupancy     Expiration       Footage     Percentage     Dates   Kapalua Resort     57,000       93%      2022 - 2048   Other West Maui     14,000       93%      2024 - 2034   Upcountry Maui     113,000       91%      2022 - 2030     Agricultural Leases – We are the lessor of approximately 6,000 acres of diversified agriculture, renewable energy, eco tours, and activities land leases in West and Upcountry Maui.   Trademark and Trade Name Licensing – We currently have licensing agreements for the use of our registered Kapalua and other trademarks and trade names with several different companies, mainly in conjunction with our agricultural, commercial and industrial leases.   Potable and Non-Potable Water Systems – We own and operate several potable water wells, non-potable irrigation water ditches, reservoirs and transmission systems serving the Kapalua Resort, the County of Maui, and agricultural users in West and Upcountry Maui.   Stewardship and Conservation – We manage the conservation of a 9,000-acre nature and watershed preserve in West Maui. A portion of our stewardship and conservation efforts is subsidized by the State of Hawaii, the County of Maui, and other organizations.   Our Leasing segment operations are highly sensitive to economic conditions including tourism and consumer spending levels and faces substantial competition from other property owners in Maui and Hawaii. The amount of rainfall and the level of development in the Kapalua Resort area also affect the demand for our potable and non-potable water.   Resort Amenities   Our Resort Amenities segment includes the operations of the Kapalua Club, a private, non-equity club providing its members special programs, access and other privileges at certain of the amenities at the Kapalua Resort including a 30,000 square foot full-service spa and a private pool-side dining beach club.   Revenues from our Resort Amenities segment totaled $0.9 million, or approximately 8% of our total operating revenues for the year ended December 31, 2021.   The viability of the Kapalua Club is principally dependent on the overall appeal and success of the Kapalua Resort. The resort faces competition from other resort destination communities on Maui and other parts of Hawaii.   Employees   As of December 31, 2021, we had nine employees, none of whom are members of a collective bargaining group.   A Code of Business Conduct and Ethics applies to all directors and employees. We also utilize an ethics reporting email and voice system which is monitored by the Audit Committee of the Board of Directors.   An executive compensation program is designed and administered by the Compensation Committee of the Board of Directors. The program includes annual and long-term incentive compensation plans for certain of the Company’s executive officers. Payouts are payable in common stock and are based on achieving predetermined thresholds under various performance measurements. An advisory vote of shareholders is cast annually on the compensation paid to our named executive officers.   Available Information   Our internet address is www.mauiland.com . Information about the Company is also available on www.kapalua.com. Reference in this Annual Report to these website addresses does not constitute incorporation by reference of the information contained on the websites. We make available free of charge on or through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also make available through our website all filings of our executive officers and directors on Forms 3, 4 and 5 pursuant to Section 16 of the Exchange Act. These filings are also available on the SEC’s website at www.sec.gov.   3 Table of Contents