Core Viewpoint - The article emphasizes the importance of dividend investing in quality blue-chip stocks, Business Development Companies (BDCs), and Real Estate Investment Trusts (REITs) for building a sustainable retirement income [1]. Group 1: Investment Strategy - The company focuses on a buy-and-hold investment strategy, prioritizing quality over quantity in its portfolio [1]. - The aim is to help lower and middle-class workers build investment portfolios that consist of high-quality, dividend-paying companies [1]. Group 2: Personal Background - The analyst is a Navy veteran with a decade of experience in investment banking, specializing in industry and company research [1]. - The analyst plans to supplement retirement income through dividends within the next 5-7 years [1].

Group 1 - The article emphasizes that now is an opportune time for income investors due to many stocks being available at bargain valuations, suggesting a focus on acquiring quality assets at lower prices [2] - The investment strategy highlighted involves targeting income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1] - The author has a long position in American Assets Trust (AAT), indicating a positive outlook on the company's stock performance [3] Group 2 - The article is positioned as an informational resource rather than financial advice, encouraging readers to conduct their own due diligence before making investment decisions [4] - Seeking Alpha clarifies that past performance does not guarantee future results and that the views expressed may not represent the platform as a whole [5]

Financial Performance - Total revenue for Q1 2025 was $108.607 million, a decrease of 1.96% from $110.695 million in Q1 2024[23] - Operating income increased significantly to $71.972 million, compared to $30.549 million in the same period last year, reflecting a growth of 135.5%[23] - Net income attributable to American Assets Trust, Inc. stockholders was $42.535 million, up from $19.260 million in Q1 2024, representing a year-over-year increase of 109.5%[23] - Earnings per common share (basic and diluted) for Q1 2025 was $0.70, compared to $0.32 in Q1 2024, marking a 118.75% increase[23] - Net income for Q1 2025 was $54,107,000, a significant increase of 119% compared to $24,623,000 in Q1 2024[31] - Total revenue decreased to $108,607,000 in Q1 2025, down 1.9% from $110,695,000 in Q1 2024, primarily due to a decline in rental income[31] - Operating income rose to $71,972,000 in Q1 2025, compared to $30,549,000 in Q1 2024, reflecting a substantial increase of 135%[31] - Net income for the three months ended March 31, 2025, was $54.1 million, a significant increase from $24.6 million in the same period of 2024, representing a growth of 119%[38] - The company declared a dividend of $0.340 per common share, slightly up from $0.335 in the previous year[23] - Distributions per unit increased slightly to $0.340 in Q1 2025 from $0.335 in Q1 2024[31] Assets and Liabilities - Total assets decreased to $2.968 billion as of March 31, 2025, down from $3.273 billion at the end of 2024, a decline of 9.3%[21] - Total liabilities decreased to $1.815 billion from $2.149 billion, a reduction of 15.5%[21] - Cash and cash equivalents significantly decreased to $143.915 million from $425.659 million, a decline of 66.1%[21] - Total assets decreased to $2,967,788,000 as of March 31, 2025, from $3,273,365,000 at the end of 2024[29] - Total liabilities decreased to $1,815,428,000 as of March 31, 2025, down from $2,149,044,000 at the end of 2024[29] - Cash and cash equivalents at the end of the period were $143.9 million, up from $98.6 million at the end of Q1 2024, marking a 46% increase[38] Cash Flow and Financing Activities - Net cash provided by operating activities was $36,869,000 in Q1 2025, down from $54,778,000 in Q1 2024[37] - The company reported a net cash used in financing activities of $351.3 million in Q1 2025, compared to $25.8 million in Q1 2024, indicating a substantial increase in financing outflows[38] - Cash paid for interest, net of amounts capitalized, rose to $34.0 million in Q1 2025 compared to $21.2 million in Q1 2024, an increase of 60%[50] - The company recorded an income tax expense of $0.4 million for the three months ended March 31, 2025, compared to $0.3 million for the same period in 2024[134] Real Estate and Property Management - Gain on sale of real estate was $44.476 million in Q1 2025, compared to no gain in Q1 2024, indicating successful asset management strategies[23] - The company owned or had a controlling interest in 31 properties as of March 31, 2025, maintaining a diversified portfolio across office, retail, multifamily, and mixed-use segments[42] - The company reported a gain on the sale of real estate amounting to $44,476 million in Q1 2025, with no comparable gain in Q1 2024[166] - The company has a proactive leasing and capital improvement program to enhance property attractiveness[145] - The company operates in four reportable segments: retail real estate, office real estate, multifamily real estate, and mixed-use real estate[160] Rental Income and Expenses - Total rental income was $102.951 million, a decrease of 2.0% from $105.021 million in the same period of 2024[153] - Total rental expenses increased to $30.300 million for the three months ended March 31, 2025, compared to $29.841 million in 2024, reflecting a rise of 1.5%[154] - Rental expenses for total property in Q1 2025 were $10,874 million, an increase of 7.3% from $10,135 million in Q1 2024[166] - Office tenants accounted for 46.8% of total revenues, while retail tenants accounted for 22.7%, indicating a significant concentration in these sectors[141] - Minimum future rentals from noncancelable operating leases total $1.155 billion, with $184.004 million expected in 2025[146] Debt and Interest Rates - Total interest costs incurred increased to $20.2 million in Q1 2025 from $18.3 million in Q1 2024, reflecting a rise of 10%[50] - The company had $1.6 billion of fixed-rate debt outstanding as of March 31, 2025, with an estimated fair value of $1.5 billion[260] - Variable rate debt outstanding as of March 31, 2025, was $100 million, all subject to interest rate swaps, effectively hedging against interest rate fluctuations[261] - The company estimates that cash flow hedges in place will reduce interest expense by approximately $1.0 million over the next twelve months[79] - The effective interest rate on the 6.150% Senior Notes is approximately 6.209% per annum after accounting for treasury lock contracts and debt discounts[94] Capital Expenditures and Investments - Capital expenditures for Q1 2025 totaled $17,230 million, an increase of 29.3% from $13,292 million in Q1 2024[169] - The company acquired Genesee Park, a 192-unit apartment community, for $67.9 million on February 28, 2025[64] - For the period of acquisition through March 31, 2025, Genesee Park generated revenues of $359,000 and incurred operating expenses of $518,000, resulting in an operating loss of $159,000[65] Compliance and Agreements - The Operating Partnership was in compliance with all financial covenants related to the 3.375% and 6.150% Senior Notes as of March 31, 2025[95] - The Operating Partnership entered into an interest rate swap agreement to fix the interest rate on Term Loan A at approximately 2.70% through January 5, 2027[109] - As of March 31, 2025, the Operating Partnership was in compliance with all covenants of the Third Amended and Restated Credit Facility[111]

American Assets Trust (AAT) Q1 2025 Earnings Call April 30, 2025 11:00 AM ET Company Participants None - ExecutiveAdam Wyll - President & CEORobert Barton - Executive VP, Treasurer & CFOAntara Nag-Chaudhuri - Senior Equity Research Associate Conference Call Participants None - Analyst Operator Good morning, and welcome to the American Assets Trust, Inc. First Quarter twenty twenty five Earnings Call. All participants will be in listen only mode. I would now like to turn the call over to Meliana Leverton, As ...

Financial Data and Key Metrics Changes - The company reported FFO per diluted share of $0.52 for Q1 2025, a decrease of approximately $0.03 compared to Q4 2024, primarily due to the impact of the Del Monte Center disposition [16] - Same store cash NOI increased by 3.1% year over year in Q1 2025, with all sectors reporting positive growth except for the mixed-use sector [16][17] - The company ended Q1 with liquidity of approximately $544 million, including $144 million in cash and cash equivalents [20] Business Line Data and Key Metrics Changes - The office portfolio's same store NOI increased by 5.4% in Q1 2025, driven by the expiration of a rent abatement [17] - The retail portfolio's same store NOI also increased by 5.4%, supported by new leases and contractual rent escalations [17] - The multifamily portfolio's NOI was flat year over year, primarily due to lower rental income in Portland, while San Diego properties showed growth [17][12] - The mixed-use portfolio's NOI declined by approximately 11.6%, mainly due to lower occupancy at the Embassy Suites Waikiki [17] Market Data and Key Metrics Changes - The office portfolio ended Q1 at 85.5% leased, with an increase in average base rents [8] - The retail portfolio ended the quarter 97% leased, with strong collections and an all-time high average base rent [10] - The San Diego multifamily properties ended the quarter approximately 95% leased, with a blended rent increase of 2% [12] Company Strategy and Development Direction - The company focuses on thoughtful capital allocation, operational discipline, and enhancing asset quality to ensure long-term stability [4][5] - The strategy includes pursuing organic growth through leasing and value-add improvements while maintaining strong liquidity [6] - Recent capital recycling includes the sale of Del Monte Center and the acquisition of Genesee Parks Apartments, aligning with the strategy to concentrate on core markets [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the complex operating environment, including inflation, interest rate volatility, and geopolitical uncertainty, but sees opportunities for growth [5] - The company remains cautiously optimistic about the office sector's recovery, particularly in high barrier coastal markets [9] - Management reaffirms full-year 2025 guidance of $1.87 to $2.10 per FFO share, reflecting confidence in the portfolio's strength [21][22] Other Important Information - The Board approved a quarterly dividend of $0.34 per share for Q2, reflecting confidence in the company's outlook [14][15] - The company aims to maintain a long-term net debt to EBITDA ratio of 5.5 times or below [20] Q&A Session Summary Question: Update on Bellevue assets and occupancy - Management noted significant leasing activity in Bellevue, with recent leases bringing properties closer to market vacancy rates [26][28] Question: Impact of Proposition 1A on tenant interest in Downtown Seattle - Increased inbound tenant inquiries were noted, with Bellevue outperforming in the current market [30] Question: Plans for redeploying proceeds from Del Monte Center sale - The company is actively looking for additional acquisitions but is also comfortable holding cash for liquidity during economic uncertainty [32][33] Question: Update on leasing pipeline at La Jolla - The UTC submarket remains tight, with ongoing leasing efforts and new amenities expected to drive activity [34][38]

Financial Data and Key Metrics Changes - The company reported FFO per diluted share of $0.52 for Q1 2025, a decrease of approximately $0.03 compared to Q4 2024, primarily due to the impact of the Del Monte Center disposition [18][6] - Same store cash NOI increased by 3.1% year over year across all sectors, with positive growth reported in all sectors except mixed-use [18][19] - The company ended Q1 with liquidity of approximately $544 million, including $144 million in cash and $400 million available on a revolving line of credit [22] Business Line Data and Key Metrics Changes - The office portfolio's same store NOI increased by 5.4% in Q1 2025, driven by the expiration of a rent abatement [18][19] - The retail portfolio's same store NOI also increased by 5.4%, supported by new leases and contractual rent escalations [19] - The multifamily portfolio's NOI was flat year over year, primarily due to lower rental income in Portland, while San Diego properties showed growth [19][12] - The mixed-use portfolio's NOI declined by approximately 11.6%, mainly due to lower occupancy at the Embassy Suites Waikiki [19][20] Market Data and Key Metrics Changes - The office portfolio ended Q1 at 85.5% leased, with an increase in leasing activity and average base rents reaching an all-time high [9][11] - The retail portfolio ended the quarter 97% leased, with strong collections and an all-time high average base rent [11][12] - The multifamily properties in San Diego ended the quarter approximately 95% leased, with a blended rent increase of 2% [12][13] Company Strategy and Development Direction - The company is focused on thoughtful capital allocation, operational discipline, and enhancing asset quality to ensure long-term stability [5][6] - Recent strategic initiatives include the sale of Del Monte Center and the acquisition of Genesee Parks Apartments, aimed at concentrating capital in core markets [14][15] - The company aims to maintain a balance sheet that allows for flexibility in both offensive and defensive strategies [6][22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the ongoing shift in office dynamics, despite economic uncertainty [7][10] - The company remains focused on reducing leverage and maintaining strong liquidity, which is deemed essential in the current environment [6][22] - Management acknowledged potential challenges in leasing activity due to economic uncertainty but remains committed to monitoring market conditions closely [14][26] Other Important Information - The Board approved a quarterly dividend of $0.34 per share for Q2, reflecting confidence in the company's outlook [16][17] - The company aims to achieve and maintain a long-term net debt to EBITDA ratio of 5.5 times or below [22] Q&A Session Summary Question: Update on Bellevue assets and occupancy - Management noted significant leasing momentum in Bellevue, with recent leases bringing occupancy to 97% at Timber Ridge and ongoing interest in other properties [30][32] Question: Impact of Proposition 1A on tenant interest - Management observed increased inbound tenant inquiries in Bellevue, indicating a positive response to the proposition [34] Question: Plans for redeploying proceeds from Del Monte Center sale - The company is actively looking for additional acquisitions but is also comfortable holding cash on the balance sheet amid economic uncertainty [36][37] Question: Update on leasing pipeline at La Jolla - The UTC submarket remains tight, with ongoing proposals and construction of amenities expected to boost leasing activity [38][41]

Company Performance - American Assets Trust (AAT) reported quarterly funds from operations (FFO) of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.45 per share, but down from $0.71 per share a year ago, indicating a 26.76% year-over-year decline [1] - The company achieved an FFO surprise of 15.56% for the quarter, having previously reported an FFO of $0.55 per share against an expectation of $0.50 per share, resulting in a 10% surprise [1][2] - Revenues for the quarter were $108.61 million, surpassing the Zacks Consensus Estimate by 2.37%, although this represents a decrease from $110.7 million in the same quarter last year [2] Market Outlook - American Assets Trust shares have declined approximately 27.6% since the beginning of the year, contrasting with a 6% decline in the S&P 500 [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the outlook for FFO [3][4] - Current consensus FFO estimate for the upcoming quarter is $0.49 on revenues of $109.83 million, and for the current fiscal year, it is $1.94 on revenues of $437.04 million [7] Industry Context - The REIT and Equity Trust - Retail industry, to which American Assets Trust belongs, is currently ranked in the top 29% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in estimate revisions, which can impact investor sentiment [5][6]

Financial Performance - Total revenue for Q1 2025 was $108.607 million, a decrease of 1% from $110.695 million in Q1 2024[13] - Net income attributable to American Assets Trust, Inc. stockholders was $42.535 million, up 109% from $19.260 million in the same period last year[13] - Funds from Operations (FFO) for Q1 2025 were $40.125 million, down 27% from $54.840 million in Q1 2024[14] - FFO per diluted share was $0.52, a decrease from $0.71 in Q1 2024[14] - EBITDA for Q1 2025 was $57,990, down from $70,766 in Q1 2024, reflecting a decrease of approximately 18%[120] - Total Net Operating Income (NOI) for Q1 2025 was $67,302, slightly down from $69,608 in Q1 2024, a decrease of about 3.7%[124] - Cash NOI for Q1 2025 was $66,962, compared to $66,479 in Q1 2024, indicating a modest increase of 0.7%[126] Assets and Liabilities - Cash and cash equivalents decreased to $143.915 million from $425.659 million at the end of Q4 2024[12] - Total assets as of March 31, 2025, were $2.968 billion, down from $3.273 billion at the end of 2024[12] - Total liabilities decreased to $1.815 billion from $2.149 billion at the end of 2024[12] - The company reported total outstanding debt of $1,700,000,000 as of March 31, 2025, with a total debt to total capitalization ratio of 52.2%[58] - The company’s total unencumbered assets grossed $3,741,620,000, providing a cushion against debt obligations[58] Real Estate Performance - The portfolio consists of 4.1 million square feet of office space, contributing 63% to Net Operating Income (NOI), and 2.4 million square feet of retail space, contributing 37% to NOI[5] - Total real estate rental revenue for the three months ended March 31, 2025, was $108,607,000, an increase from the previous period[20] - Same-store cash NOI for the same period was $66,626,000, reflecting a 3.1% increase compared to $64,645,000 in the prior year[26] - The office segment reported a same-store cash NOI of $35,318,000, up 5.4% from $33,515,000 in the previous year[26] - Retail same-store cash NOI increased by 5.4% to $16,383,000 from $15,551,000[26] - Mixed-use segment experienced a decline in same-store cash NOI by 11.6%, down to $5,363,000 from $6,066,000[26] - The total real estate expenses for the same period amounted to $41,305,000, with same-store expenses at $39,582,000[20] - The net operating income (NOI) for the total portfolio was $67,302,000, with same-store NOI at $66,930,000[20] Dividends and Capital Expenditures - Dividends declared and paid in Q1 2025 were $26.288 million, compared to $25.821 million in Q1 2024[14] - Total capital expenditures for the first quarter of 2025 amounted to $17,230,000, with the office portfolio accounting for $14,311,000 of this total[49] Tenant and Lease Information - The company has 4,077,376 square feet of office space expiring, representing 61.9% of total base rent at an average of $44.53 per square foot[103] - The company has signed leases not commenced totaling 86,998 square feet, which is 2.1% of total space[104] - The total number of leases signed in the first quarter of 2025 was 19, covering 139,616 square feet, with a weighted average lease term of 8.2 months[86] - The total annualized base rent for signed but not commenced leases as of March 31, 2025, is projected to be $4,639,340[84] - The average contractual rent per square foot for new leases in Q4 2024 was $129.08, with a significant annual change of 10.6%[90] Development Projects - The La Jolla Commons project in San Diego has an estimated stabilized yield of 6.5% - 7.5% with a total estimated investment of $175 million and 213,000 square feet[67] - The company is developing multiple retail and multifamily projects, including the Waikele Center in Honolulu with 120,000 square feet[68] - The company has incurred $130.1 million in costs to date for the La Jolla Commons project, with stabilization expected by 2026/2027[67] Market Conditions and Future Outlook - The company anticipates continued market expansion with a focus on increasing occupancy rates and optimizing rental income from expiring leases[102] - The company is exploring various development opportunities that may be subject to market conditions and approvals[66]

Financial Results - Net income available to common stockholders for the first quarter of 2025 was $42.5 million, or $0.70 per diluted share, an increase from $19.3 million, or $0.32 per diluted share, in the same period of 2024 [5][24] - Funds from Operations (FFO) per diluted share, excluding lease termination fees and litigation income, decreased 10% year-over-year to $0.52 for the first quarter of 2025, compared to $0.58 in the first quarter of 2024 [5][6] - Same-store cash Net Operating Income (NOI) increased by 3.1% year-over-year for the first quarter of 2025 [5][13] Disposition and Acquisition Activity - The company completed the sale of Del Monte Center for $123.5 million on February 25, 2025 [5] - The acquisition of Genesee Park, a 192-unit apartment community in San Diego, was completed for $67.9 million on February 28, 2025 [5] Leasing Activity - Approximately 44,000 square feet of office space were leased with average contractual rent increases of 15% on a straight-line basis and 8% on a cash basis during the first quarter [5] - Approximately 156,000 square feet of retail space were leased with average contractual rent increases of 21% on a straight-line basis and 13% on a cash basis during the first quarter [5] - The portfolio leased status as of March 31, 2025, showed office occupancy at 85.5%, retail at 97.4%, and multifamily at 90.0% [8] Balance Sheet and Liquidity - As of March 31, 2025, the company had gross real estate assets of $3.7 billion and liquidity of $543.9 million, which includes $143.9 million in cash and cash equivalents [15] - The company had only 1 out of 31 assets encumbered by a mortgage as of March 31, 2025 [15] Dividends - The company declared dividends of $0.340 per share for the first quarter of 2025, which were paid on March 20, 2025 [17] - A similar dividend of $0.340 per share has been declared for the second quarter of 2025, payable on June 19, 2025 [17] Guidance - The company affirms its guidance for full year 2025 FFO per diluted share in the range of $1.87 to $2.01, with a midpoint of $1.94 [18]

Group 1 - The trade war between the U.S. and China is intensifying, with China now imposing 125% tariffs on U.S. goods, an increase from the previous 84% [1] Group 2 - The ongoing tariffs have caused significant disruption in the overall market in recent weeks [1]