Group 1 - iREIT+HOYA Capital focuses on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1] - Publicly traded REITs can experience significant volatility, with price swings of 20% in a single year being common, unlike the private market [2] Group 2 - The article emphasizes the importance of defensive stocks for medium- to long-term investment horizons [2]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201%2E%20Financial%20Statements) The company presents unaudited consolidated financial statements for the REIT and its operating partnership for the period ended June 30, 2025 [Consolidated Financial Statements of American Assets Trust, Inc.](index=6&type=section&id=Consolidated%20Financial%20Statements%20of%20American%20Assets%20Trust%2C%20Inc%2E) Net income rose 53% due to a real estate sale, while total assets decreased to $2.96 billion following the sale and debt repayment Consolidated Balance Sheet Highlights (AAT, Inc.) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Real estate, net | $2,634,394 | $2,587,486 | +$46,908 | | Cash and cash equivalents | $143,736 | $425,659 | -$281,923 | | Total Assets | $2,955,676 | $3,273,365 | -$317,689 | | Total Liabilities | $1,821,831 | $2,149,044 | -$327,213 | | Total Equity | $1,133,845 | $1,124,321 | +$9,524 | Consolidated Income Statement Highlights (AAT, Inc.) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $107,933 | $110,890 | $216,540 | $221,585 | | Gain on sale of real estate | $0 | $0 | $44,476 | $0 | | Net Income | $7,121 | $15,294 | $61,228 | $39,917 | | Net Income Attributable to AAT, Inc. | $5,456 | $11,904 | $47,991 | $31,164 | | EPS, diluted | $0.09 | $0.20 | $0.79 | $0.52 | Consolidated Cash Flow Highlights - Six Months Ended June 30 (AAT, Inc.) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $86,040 | $114,060 | | Net cash provided by (used in) investing activities | $9,619 | ($30,424) | | Net cash used in financing activities | ($377,582) | ($51,644) | [Consolidated Financial Statements of American Assets Trust, L.P.](index=11&type=section&id=Consolidated%20Financial%20Statements%20of%20American%20Assets%20Trust%2C%20L%2EP%2E) The Operating Partnership's financials mirror the parent REIT, with the key distinction being the presentation of Partners' Capital - The L.P.'s balance sheet, income statement, and cash flow statement are **identical to AAT, Inc.'s on a consolidated basis**, as the L.P. holds substantially all the assets and debt of the company[32](index=32&type=chunk)[35](index=35&type=chunk)[42](index=42&type=chunk) Partners' Capital as of June 30, 2025 (AAT, L.P.) | Capital Component | Amount (in thousands) | | :--- | :--- | | Limited partners' capital | ($51,560) | | General partner's capital | $1,181,316 | | Accumulated other comprehensive income | $4,089 | | **Total capital** | **$1,133,845** | [Notes to Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key events include a $67.9 million acquisition, a $123.5 million property sale, and significant debt repayments of over $325 million - On February 28, 2025, the company acquired Genesee Park, a 192-unit apartment community in San Diego, for **$67.9 million**[70](index=70&type=chunk) - On February 25, 2025, the company sold Del Monte Center for **$123.5 million**, recognizing a gain of approximately **$44.5 million**[72](index=72&type=chunk) - During the first half of 2025, the company repaid the **$225 million** aggregate balance on Term Loan B and Term Loan C, and the **$100 million** balance on its Series C Senior Guaranteed Notes[95](index=95&type=chunk)[105](index=105&type=chunk)[117](index=117&type=chunk) - The company declared and paid dividends of **$0.340 per share/unit** in both Q1 and Q2 2025[126](index=126&type=chunk) Segment Profit (Six Months Ended June 30) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Office | $70,386 | $73,055 | -3.6% | | Retail | $34,317 | $36,380 | -5.7% | | Multifamily | $19,275 | $18,884 | +2.1% | | Mixed-Use | $10,934 | $11,831 | -7.6% | | **Total** | **$134,912** | **$140,150** | **-3.7%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses decreased property revenue due to a property sale, solid liquidity despite debt repayments, and non-GAAP performance [Results of Operations](index=42&type=section&id=Results%20of%20Operations) H1 2025 net income rose 53% on a property sale gain, though total property revenue declined 2% due to the same sale and office weakness Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Property Revenues | $107,933 | $110,890 | -2.7% | | Total Property Operating Income | $67,610 | $70,542 | -4.2% | | Net Income | $7,121 | $15,294 | -53.5% | H1 2025 vs H1 2024 Performance | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Property Revenues | $216,540 | $221,585 | -2.3% | | Gain on sale of real estate | $44,476 | $0 | N/A | | Total Property Operating Income | $134,912 | $140,150 | -3.7% | | Net Income | $61,228 | $39,917 | +53.4% | - Same-store retail operating income **increased 5.5%** for the six months ended June 30, 2025, compared to 2024, while same-store office operating income **decreased 2.1%** over the same period[185](index=185&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) - The decrease in H1 2025 other income was primarily due to a one-time **$10.0 million net settlement payment** received in H1 2024[159](index=159&type=chunk)[253](index=253&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains solid liquidity through operations and its credit facility, holding $143.7 million in cash as of June 30, 2025 - The company's (AAT, Inc.) primary source of funding for dividends is **distributions received from the Operating Partnership**[256](index=256&type=chunk) - The Operating Partnership held **$143.7 million in cash and cash equivalents** as of June 30, 2025[267](index=267&type=chunk) - Short-term liquidity requirements are expected to be met through **net cash from operations and borrowings under the credit facility**[268](index=268&type=chunk) - **No shares of common stock were sold** through the company's $250 million ATM equity program during the six months ended June 30, 2025[123](index=123&type=chunk)[265](index=265&type=chunk) [Non-GAAP Financial Measures](index=56&type=section&id=Non-GAAP%20Financial%20Measures) The company reports Q2 2025 FFO of $39.9 million, or $0.52 per diluted share, and provides reconciliations for NOI and FFO NOI to Net Income Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Net operating income (NOI) | $67,610 | $134,912 | | General and administrative | ($8,850) | ($18,162) | | Depreciation and amortization | ($32,782) | ($63,276) | | Interest expense, net | ($19,784) | ($38,564) | | Gain on sale of real estate | $0 | $44,476 | | Other income, net | $927 | $1,842 | | **Net income** | **$7,121** | **$61,228** | Funds from Operations (FFO) Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Net income | $7,121 | $61,228 | | Plus: Real estate depreciation and amortization | $32,782 | $63,276 | | Less: Gain on sale of real estate | $0 | ($44,476) | | **Funds from operations (FFO)** | **$39,903** | **$80,028** | | FFO per diluted share/unit | $0.52 | $1.04 | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=58&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rates, with $1.6 billion in fixed-rate debt and $100 million in fully hedged variable-rate debt - As of June 30, 2025, the company had **$1.6 billion of fixed-rate debt** outstanding with an estimated fair value of $1.5 billion[288](index=288&type=chunk) - A **1.0% increase in interest rates** would decrease the fair value of the fixed-rate debt by approximately **$47.7 million**[288](index=288&type=chunk) - The company's **$100.0 million of variable-rate debt is effectively fixed** through interest rate swap agreements, mitigating risk from interest rate fluctuations[289](index=289&type=chunk)[290](index=290&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures for both the REIT and its L.P. were effective as of June 30, 2025 - The CEO and CFO concluded that as of June 30, 2025, the disclosure controls and procedures for both American Assets Trust, Inc. and American Assets Trust, L.P. were **effective**[292](index=292&type=chunk)[296](index=296&type=chunk) - **No material changes** to internal control over financial reporting occurred during the quarter for either entity[293](index=293&type=chunk)[297](index=297&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=60&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is not party to any material legal proceedings - The company reports **no material legal proceedings** as of the filing date[298](index=298&type=chunk) [Item 1A. Risk Factors](index=60&type=section&id=Item%201A%2E%20Risk%20Factors) A new risk factor was added concerning the potential adverse effects of international trade policies and tariffs - A new risk factor was added regarding the potential negative impact of **changes in trade policies, including tariffs**, on tenants' ability to pay rent, leasing demand, and property development costs[299](index=299&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported during the period - None[300](index=300&type=chunk) [Item 3. Defaults Upon Senior Securities](index=61&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[301](index=301&type=chunk) [Item 5. Other Information](index=61&type=section&id=Item%205%2E%20Other%20Information) No officers or directors adopted or terminated Rule 10b5-1 trading plans during the second quarter of 2025 - No officers or directors adopted or terminated any **Rule 10b5-1 trading plans** during the three months ended June 30, 2025[303](index=303&type=chunk)

Core Insights - American Assets Trust (AAT) reported a flat Funds from Operations (FFO) per diluted share of $0.52 for Q2 2025, with a slight decline in FFO when excluding lease termination fees [26][31][32] - The company is experiencing mixed performance across its portfolio, with same-store cash Net Operating Income (NOI) approximately flat year-over-year, while specific segments like multifamily and mixed-use are facing declines [5][28][31] Financial Performance - Same-store multifamily portfolio's NOI declined by 3.9%, attributed to lower rental income at Hasselhoe on Eighth and higher operating expenses at Pacific Ridge [5][28] - Same-store mixed-use portfolio's NOI decreased by approximately 5%, primarily due to lower than anticipated Average Daily Rate (ADR) at Embassy Suites Waikiki [5][28] - Retail segment cash NOI grew by 4.5%, with the portfolio ending the quarter 98% leased and executing over 220,000 square feet in new or renewal leases [9][16] Leasing Activity - The office portfolio ended the quarter 82% leased, with same-store office at 87% leased, completing 102,000 square feet of leasing [9][12] - Increased demand from technology and AI tenants is driving the leasing pipeline, particularly in the San Francisco office market [7][10] - The company has a pipeline of potential incremental FFO of $0.30 per share, mainly related to leasing up vacant office space [7][31] Market Conditions - The hotel segment is facing challenges due to lower paid occupancy and RevPAR amid ongoing softness in domestic leisure demand and heightened rate competition in Waikiki [5][22] - Liquidity remains strong with total available liquidity of $544 million, consisting of $144 million in cash and $400 million in revolver availability [30] - The company is holding surplus cash for opportunistic deployment, favoring acquisitions in multifamily or retail segments over office investments [7][31] Guidance and Outlook - Full-year 2025 FFO guidance has been increased to a range of $1.89 to $2.01 per share, with a midpoint of $1.95, reflecting steady momentum across core sectors [31][32] - The guidance assumes stable conditions, with potential upside depending on rent collections, multifamily performance, and tourism recovery in Hawaii [31][32][33] - Management remains optimistic about the long-term strength of the portfolio despite current market challenges [25][33]

American Assets Trust, Inc. (NYSE:AAT) Q2 2025 Earnings Call July 30, 2025 11:00 AM ET Thank you and good morning. The statements made on this earnings call include forward-looking statements based on current expectations, which statements are subject to risks and uncertainties discussed in the company's filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements as actual events could cause the company's results to differ materially from these forward-looking sta ...

Financial Data and Key Metrics Changes - FFO per diluted share for Q2 2025 was $0.52, with same store cash NOI approximately flat for the quarter and up 1.4% year to date compared to the prior year [5][15] - The office portfolio ended the quarter 82% leased, with the same store office portfolio at 87% leased [5] - Same store cash NOI for all sectors combined was approximately flat year over year in 2025 compared to the same period in 2024 [16] Business Line Data and Key Metrics Changes - Retail portfolio ended the quarter 98% leased, with same store cash NOI growth of 4.5% [8] - Executed over 220,000 square feet of new and renewal leases in Q2, with spreads increasing over 7% on a cash basis and 22% on a straight line basis [8] - Multifamily portfolio ended the quarter approximately 94% leased, with rent increases of 7% on renewals and 4% on new leases, resulting in a blended rent increase of 6% [10] Market Data and Key Metrics Changes - The San Diego market showed strong demand, with two major real estate firms choosing the company's properties for their new headquarters [7] - The hotel segment in Waikiki experienced a 15% decline in NOI due to lower paid occupancy and RevPAR amid ongoing softness in domestic leisure demand [12] - The Japanese yen remains around $1.47 to the US dollar, impacting tourism demand from Japan [19] Company Strategy and Development Direction - The company aims to maintain balance sheet strength and create long-term value for shareholders while navigating elevated interest rates and inflation [4] - Focus remains on driving occupancy, enhancing tenant experience, and positioning the portfolio to perform well under current utilization patterns [7] - The company is exploring opportunities in multifamily and retail sectors while avoiding office acquisitions for the time being [59][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strength of Hawaii's tourism market despite current challenges [19] - The company is optimistic about the potential recovery in tourism and expects improved performance at the Embassy Suites property [22] - Guidance for full year 2025 was increased to a range of $1.89 to $2.01 per FFO share, reflecting steady momentum across core sectors [20] Other Important Information - The Board approved a quarterly dividend of $0.34 per share for Q3, reflecting confidence in long-term stability and cash flows [13] - The company published its 2024 sustainability report, highlighting progress in environmental, social, and governance initiatives [13] Q&A Session Summary Question: Any changes to the same store NOI growth outlook for the various segments? - Management indicated they are still on track and hope to outperform current guidance, with some segments potentially outperforming while others may underperform [26][27] Question: Discuss the leasing pipeline and interest level for La Jolla Commons 3 and 1 Beach. - Increased touring activity and prospects were noted, with plans to develop parking and amenities to meet demand [28][29] Question: Commentary on the multifamily portfolio and new lease spreads. - Management acknowledged challenges in Portland due to excess supply but noted stability in San Diego, with expectations for growth later this year [44][45] Question: Demand drivers for the hotel in Hawaii and future expectations. - Management highlighted the impact of the Japanese yen on tourism demand and expressed cautious optimism for recovery next year [49][51] Question: Plans for utilizing cash on the balance sheet for acquisitions. - The company is actively looking for opportunities, particularly in multifamily and retail, while maintaining a cautious approach [58][59]

American Assets Trust (AAT) came out with quarterly funds from operations (FFO) of $0.52 per share, beating the Zacks Consensus Estimate of $0.49 per share. This compares to FFO of $0.6 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of +6.12%. A quarter ago, it was expected that this real estate investment trust would post FFO of $0.45 per share when it actually produced FFO of $0.52, delivering a surprise of +15.56%. Over the last ...

[Financial Highlights](index=4&type=section&id=FINANCIAL%20HIGHLIGHTS) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets stood at $2.96 billion, a decrease from $3.27 billion at the end of 2024, primarily driven by a reduction in cash and cash equivalents and the sale of real estate assets Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$2,955,676** | **$3,273,365** | | Net real estate | $2,634,394 | $2,587,486 | | Cash and cash equivalents | $143,736 | $425,659 | | Real estate assets held for sale | $— | $77,519 | | **Total Liabilities** | **$1,821,831** | **$2,149,044** | | Unsecured notes payable, net | $1,611,829 | $1,935,756 | | **Total Equity** | **$1,133,845** | **$1,124,321** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For the second quarter of 2025, total revenues were $107.9 million, a slight decrease from $110.9 million in the same period of 2024, while net income attributable to stockholders significantly dropped to $5.5 million ($0.09 per diluted share) compared to $11.9 million ($0.20 per diluted share) in Q2 2024 Q2 Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenue | $107,933 | $110,890 | | Operating Income | $25,978 | $30,794 | | Net Income Attributable to Stockholders | $5,456 | $11,904 | | Diluted EPS | $0.09 | $0.20 | Six Months Statement of Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenue | $216,540 | $221,585 | | Gain on sale of real estate | $44,476 | $— | | Net Income Attributable to Stockholders | $47,991 | $31,164 | | Diluted EPS | $0.79 | $0.52 | [Funds From Operations (FFO), FFO As Adjusted & Funds Available for Distribution](index=7&type=section&id=Funds%20From%20Operations%20%28FFO%29%2C%20FFO%20As%20Adjusted%20%26%20Funds%20Available%20for%20Distribution) In Q2 2025, Funds from Operations (FFO) attributable to common stock and units decreased to $39.7 million, or $0.52 per diluted share, from $46.1 million, or $0.60 per share, in Q2 2024, while Funds Available for Distribution (FAD) also declined to $27.4 million from $34.8 million year-over-year FFO and FAD Comparison (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | FFO attributable to common stock and common units | $39,723 | $46,113 | | FFO per diluted share/unit | $0.52 | $0.60 | | FAD | $27,353 | $34,812 | | Dividends declared and paid per share/unit | $0.340 | $0.335 | - Adjusted FFO per share for Q2 2025 was **$0.51**, excluding **$0.8 million** in lease termination fees[13](index=13&type=chunk)[16](index=16&type=chunk) [Corporate Guidance](index=9&type=section&id=Corporate%20Guidance) The company has revised its full-year 2025 guidance, updating the FFO per diluted share range to $1.89 - $2.01, a slight adjustment from the prior guidance of $1.87 - $2.01, accounting for a gain on sale of real estate and updated depreciation estimates Revised 2025 FFO Guidance | Metric | Prior 2025 Guidance Range | Revised 2025 Guidance Range | | :--- | :--- | :--- | | FFO per diluted share | $1.87 - $2.01 | $1.89 - $2.01 | - The revised guidance excludes any impact from potential future acquisitions, dispositions, equity transactions, or debt financing/repayments, unless discussed on the earnings call[22](index=22&type=chunk) [Same-Store Net Operating Income (NOI)](index=10&type=section&id=Same-Store%20Net%20Operating%20Income%20%28NOI%29) For the second quarter of 2025, total same-store Net Operating Income (NOI) was $68.3 million, leading to a same-store cash NOI of $67.0 million after adjustments, with the office segment being the largest contributor at $36.3 million Q2 2025 Same-Store NOI and Cash NOI by Segment (in thousands) | Segment | Same-store NOI | Same-store cash NOI | | :--- | :--- | :--- | | Office | $36,321 | $35,501 | | Retail | $17,113 | $16,891 | | Multifamily | $9,275 | $8,881 | | Mixed-Use | $5,620 | $5,681 | | **Total** | **$68,329** | **$66,954** | Six Months 2025 Same-Store NOI and Cash NOI by Segment (in thousands) | Segment | Same-store NOI | Same-store cash NOI | | :--- | :--- | :--- | | Office | $72,217 | $70,819 | | Retail | $33,444 | $33,274 | | Multifamily | $18,664 | $18,444 | | Mixed-Use | $10,934 | $11,045 | | **Total** | **$135,259** | **$133,582** | [Same-Store Cash NOI Comparison excluding Redevelopment](index=12&type=section&id=Same-Store%20Cash%20NOI%20Comparison%20excluding%20Redevelopment) In Q2 2025, total same-store cash NOI (excluding redevelopment) decreased by 0.3% compared to Q2 2024, driven by declines in the Multifamily (-3.9%) and Mixed-Use (-5.3%) segments, which offset a strong 4.5% growth in the Retail segment Same-Store Cash NOI Change (YoY) - Q2 2025 vs Q2 2024 | Segment | Change | | :--- | :--- | | Office | (0.6)% | | Retail | 4.5% | | Multifamily | (3.9)% | | Mixed-Use | (5.3)% | | **Total** | **(0.3)%** | [Same-Store Cash NOI Comparison with Redevelopment](index=13&type=section&id=Same-Store%20Cash%20NOI%20Comparison%20with%20Redevelopment) When including redevelopment properties, the total same-store cash NOI for Q2 2025 decreased by 0.4% year-over-year, with the Office segment's decline slightly increasing to -0.9% while other segments remained unchanged Same-Store Cash NOI with Redevelopment Change (YoY) - Q2 2025 vs Q2 2024 | Segment | Change | | :--- | :--- | | Office | (0.9)% | | Retail | 4.5% | | Multifamily | (3.9)% | | Mixed-Use | (5.3)% | | **Total** | **(0.4)%** | [Cash NOI By Region](index=14&type=section&id=Cash%20NOI%20By%20Region) For the second quarter of 2025, Southern California was the largest regional contributor to cash NOI, generating $31.4 million, followed by Hawaii with $8.8 million and Washington with $8.2 million, with the Office portfolio being the primary driver in Southern California, Oregon, and Washington Q2 2025 Cash NOI by Region (in thousands) | Region | Office | Retail | Multifamily | Mixed-Use | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Southern California | $14,195 | $9,160 | $8,002 | $— | $31,357 | | Northern California | $7,225 | $314 | $— | $— | $7,539 | | Hawaii | $— | $3,070 | $— | $5,681 | $8,751 | | Oregon | $4,716 | $162 | $1,305 | $— | $6,183 | | Texas | $— | $4,157 | $— | $— | $4,157 | | Washington | $8,184 | $— | $— | $— | $8,184 | | **Total Cash NOI** | **$34,320** | **$16,863** | **$9,307** | **$5,681** | **$66,171** | [Cash NOI Breakdown](index=15&type=section&id=Cash%20NOI%20Breakdown) This section provides a visual breakdown of the company's Cash Net Operating Income (NOI) for the second quarter ended June 30, 2025, illustrating the portfolio's diversification by geographic region and property segment - The report includes charts illustrating the portfolio's diversification by geographic region and property segment based on Cash NOI for Q2 2025[52](index=52&type=chunk) [Property Revenue and Operating Expenses](index=16&type=section&id=Property%20Revenue%20and%20Operating%20Expenses) This section provides a detailed property-by-property breakdown of revenue, expenses, and cash NOI for Q2 2025, with the Office portfolio generating the highest total cash NOI at $34.4 million, followed by the Retail portfolio at $16.9 million Q2 2025 Cash NOI by Portfolio (in thousands) | Portfolio | Base Rent | Cash NOI | | :--- | :--- | :--- | | Office Portfolio | $45,137 | $34,427 | | Retail Portfolio | $17,383 | $16,863 | | Multifamily Portfolio | $16,673 | $9,307 | | Mixed-Use Portfolio | $12,517 | $5,681 | | **Total** | **$91,710** | **$66,171** | [Segment Capital Expenditures](index=19&type=section&id=Segment%20Capital%20Expenditures) In Q2 2025, the company invested a total of $23.1 million in capital expenditures, with the Office portfolio accounting for the majority of this spending at $19.9 million, including $11.7 million allocated to tenant improvements and leasing commissions Q2 2025 Capital Expenditures by Segment (in thousands) | Segment | Tenant Improvements & Leasing Commissions | Capital Expenditures | Total Capital Expenditures | | :--- | :--- | :--- | :--- | | Office Portfolio | $8,874 | $11,679 | $19,858 | | Retail Portfolio | $727 | $1,061 | $1,197 | | Multifamily Portfolio | $— | $977 | $1,471 | | Mixed-Use Portfolio | $185 | $530 | $530 | | **Total** | **$9,786** | **$14,247** | **$23,056** | [Summary of Outstanding Debt](index=20&type=section&id=Summary%20of%20Outstanding%20Debt) As of June 30, 2025, the company had $1.7 billion in total outstanding debt, comprising $75 million in secured notes and $1.625 billion in unsecured notes with a weighted average interest rate of 4.42% for unsecured notes Outstanding Debt Summary (in thousands) | Debt Type | Amount Outstanding | Weighted Avg. Interest Rate | | :--- | :--- | :--- | | Secured Notes Payable | $75,000 | 5.08% | | Unsecured Notes Payable | $1,625,000 | 4.42% | | Unsecured Line of Credit | $— | N/A | - The weighted average term to maturity for the company's fixed-rate debt is **5.6 years**[72](index=72&type=chunk) [Market Capitalization](index=21&type=section&id=Market%20Capitalization) As of June 30, 2025, American Assets Trust had a total enterprise value of approximately $3.1 billion, with an equity market capitalization of $1.5 billion, maintaining investment-grade credit ratings with a stable outlook from Fitch, Moody's, and S&P Market Capitalization and Leverage (as of June 30, 2025) | Metric | Value (in thousands, except ratios) | | :--- | :--- | | Equity market capitalization | $1,527,366 | | Total debt | $1,700,000 | | Total enterprise value | $3,083,630 | | Total debt/Total enterprise value | 55.1% | | Net debt/Adjusted EBITDA (TTM) | 6.3x | - The company holds stable, investment-grade credit ratings: **BBB** from Fitch, **Baa3** from Moody's, and **BBB-** from Standard & Poor's[70](index=70&type=chunk) [Summary of Development Opportunities](index=22&type=section&id=Summary%20of%20Development%20Opportunities) The company has identified several potential development and redevelopment opportunities to create future value, including retail expansion, multifamily development on existing retail sites, and a significant mixed-use urban village project, all in various preliminary stages and subject to approvals and market conditions - Key development opportunities include: - Development of a **120,000 sq. ft.** retail building at Waikele Center in Honolulu - Development of multifamily units at Lomas Santa Fe Plaza, Solana Beach Towne Centre, and Carmel Mountain Plaza - A high-density, transit-oriented, mixed-use urban village at the Lloyd Portfolio in Portland, with potential for over **three million square feet**[75](index=75&type=chunk) [Portfolio Data](index=23&type=section&id=PORTFOLIO%20DATA) [Property Report](index=24&type=section&id=Property%20Report) As of June 30, 2025, the company's office portfolio of 4.3 million sq. ft. was 82.0% leased with an annualized base rent of $198.0 million, while the retail portfolio of 2.4 million sq. ft. was 97.7% leased, generating $69.9 million in annualized base rent Portfolio Summary (as of June 30, 2025) | Portfolio | Size (Sq. Ft. / Units) | Percentage Leased | Annualized Base Rent | | :--- | :--- | :--- | :--- | | Office | 4,283,607 sq. ft. | 82.0% | $197,977,456 | | Retail | 2,420,247 sq. ft. | 97.7% | $69,919,281 | | Multifamily | 2,302 units | 88.1% | $66,483,024 | [Office Leasing Summary](index=27&type=section&id=Office%20Leasing%20Summary) During Q2 2025, the company signed 13 comparable office leases totaling 69,363 square feet, resulting in a 2.0% decrease in cash basis rents but a 9.6% increase on a straight-line basis compared to prior rents, with a weighted average lease term of 6.8 years Q2 2025 Comparable Office Leasing Activity | Metric | Value | | :--- | :--- | | Number of Leases Signed | 13 | | Square Feet Signed | 69,363 | | Cash Basis % Change Over Prior Rent | (2.0)% | | Straight-Line Basis % Change Over Prior Rent | 9.6% | | Weighted Average Lease Term (Years) | 6.8 | [Retail Leasing Summary](index=28&type=section&id=Retail%20Leasing%20Summary) In Q2 2025, the company executed 30 comparable retail leases covering 213,073 square feet, achieving a 7.4% increase in rent on a cash basis and a 21.9% increase on a straight-line basis compared to prior rents, with a weighted average lease term of 5.8 years Q2 2025 Comparable Retail Leasing Activity | Metric | Value | | :--- | :--- | | Number of Leases Signed | 30 | | Square Feet Signed | 213,073 | | Cash Basis % Change Over Prior Rent | 7.4% | | Straight-Line Basis % Change Over Prior Rent | 21.9% | | Weighted Average Lease Term (Years) | 5.8 | [Multifamily Leasing Summary](index=29&type=section&id=Multifamily%20Leasing%20Summary) As of the end of Q2 2025, the total multifamily portfolio was 88.1% leased, a decrease from 90.0% in the previous quarter, with an average monthly base rent per leased unit of $2,732, and includes the newly acquired Genesee Park, which was 95.3% leased Total Multifamily Portfolio Leasing Summary | Quarter | Percentage Leased | Average Monthly Base Rent per Leased Unit | | :--- | :--- | :--- | | 2nd Quarter 2025 | 88.1% | $2,732 | | 1st Quarter 2025 | 90.0% | $2,699 | [Mixed-Use Leasing Summary](index=31&type=section&id=Mixed-Use%20Leasing%20Summary) For Q2 2025, the retail portion of the mixed-use portfolio was 95.0% leased with an annualized base rent of $110 per square foot, while the hotel portion achieved an average occupancy of 86.0% with an average daily rate (ADR) of $355, resulting in a Revenue per Available Room (RevPAR) of $305 Q2 2025 Mixed-Use Portfolio Summary | Portion | Metric | Value | | :--- | :--- | :--- | | Retail | Percentage Leased | 95.0% | | Retail | Annualized Base Rent per Leased Sq. Ft. | $110 | | Hotel | Average Occupancy | 86.0% | | Hotel | Average Daily Rate | $355 | | Hotel | RevPAR | $305 | [Lease Expirations](index=32&type=section&id=Lease%20Expirations) The lease expiration schedule, assuming no options are exercised, shows that 9.8% of office square footage and 13.5% of retail square footage are set to expire in 2027, with a significant portion of office leases (20.1%) expiring in 2029, highlighting a staggered maturity profile across the portfolio Lease Expirations by Year (% of Segment Sq. Ft., No Options Exercised) | Year | Office | Retail | Mixed-Use (Retail) | | :--- | :--- | :--- | :--- | | 2025 | 4.5% | 1.8% | 3.4% | | 2026 | 8.4% | 6.6% | 7.2% | | 2027 | 9.8% | 13.5% | 5.9% | | 2028 | 13.0% | 18.5% | 15.3% | | 2029 | 20.1% | 17.6% | 14.6% | [Portfolio Leased Statistics](index=34&type=section&id=Portfolio%20Leased%20Statistics) Comparing portfolio occupancy year-over-year, the overall office portfolio's leased percentage decreased from 86.6% at June 30, 2024, to 82.0% at June 30, 2025, while the retail portfolio's occupancy improved from 94.5% to 97.7% over the same period Overall Portfolio Leased Percentage Comparison | Property Type | At June 30, 2025 | At June 30, 2024 | | :--- | :--- | :--- | | Office Properties | 82.0% | 86.6% | | Retail Properties | 97.7% | 94.5% | | Multifamily Properties | 88.1% | 90.0% | [Top Tenants - Office](index=35&type=section&id=Top%20Tenants%20-%20Office) The company's office portfolio shows significant concentration among its top tenants, with Google LLC being the largest contributor at 14.0% of total office annualized base rent, and the top 10 office tenants collectively accounting for 46.2% of the total office annualized base rent Top 3 Office Tenants by Annualized Base Rent | Tenant | % of Total Office Annualized Base Rent | | :--- | :--- | | 1. Google LLC | 14.0% | | 2. LPL Holdings, Inc. | 10.6% | | 3. Autodesk, Inc. | 6.9% | - The top 10 office tenants represent **46.2%** of the total office portfolio's annualized base rent[117](index=117&type=chunk) [Top Tenants - Retail](index=36&type=section&id=Top%20Tenants%20-%20Retail) The retail portfolio's tenant base is more diversified compared to the office portfolio, with Lowe's as the largest retail tenant accounting for 5.9% of total retail annualized base rent, and the top 10 retail tenants representing 25.9% of the total retail annualized base rent Top 3 Retail Tenants by Annualized Base Rent | Tenant | % of Total Retail Annualized Base Rent | | :--- | :--- | | 1. Lowe's | 5.9% | | 2. Sprouts Farmers Market | 3.2% | | 3. Marshalls | 2.7% | - The top 10 retail tenants represent **25.9%** of the total retail portfolio's annualized base rent[121](index=121&type=chunk) [Appendix](index=37&type=section&id=APPENDIX) [Glossary of Terms](index=38&type=section&id=Glossary%20of%20Terms) This section provides definitions for key non-GAAP financial measures and other terms used throughout the supplemental report, including explanations and reconciliations for metrics such as EBITDA, FFO, FAD, NOI, and Cash NOI, and clarifies portfolio classifications for comparative analysis - The glossary defines key non-GAAP metrics used to measure operating performance, such as **Funds From Operations (FFO)**, **Funds Available for Distribution (FAD)**, **Net Operating Income (NOI)**, and **Cash NOI**[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - Reconciliations are provided for non-GAAP measures to their nearest GAAP equivalents, such as **Net Income to NOI** and **Net Income to EBITDA**[128](index=128&type=chunk)[132](index=132&type=chunk)[134](index=134&type=chunk) - The report clarifies the composition of the '**Same-Store**' portfolio, which excludes properties under significant redevelopment, recently acquired properties, or those held for sale, to allow for more accurate period-over-period performance comparisons[136](index=136&type=chunk)

Core Viewpoint - American Assets Trust, Inc. reported its financial results for the second quarter ended June 30, 2025, showing a decrease in net income and funds from operations (FFO) compared to the same periods in 2024, while providing an updated guidance for FFO per diluted share for 2025 [2][4][18]. Financial Results - Net income available to common stockholders was $5.5 million for the three months and $48.0 million for the six months ended June 30, 2025, translating to $0.09 and $0.79 per diluted share, respectively [5][24]. - FFO excluding lease termination fees and litigation income was $0.51 and $1.03 per diluted share for the three and six months ended June 30, 2025, compared to $0.60 and $1.19 for the same periods in 2024 [5][26]. - The company reported a $21.3 million increase in net income for the six months ended June 30, 2025, primarily due to a $44.5 million gain on the sale of Del Monte Center [4][7]. Leasing Activity - The company leased approximately 69,000 office square feet with an average straight-line rent increase of 10% and a cash-basis rent decrease of 2% during the second quarter [5][10]. - For retail, approximately 213,000 square feet were leased with a straight-line rent increase of 22% and a cash-basis increase of 7% [5][10]. - The portfolio leased status as of June 30, 2025, showed office occupancy at 82.0%, retail at 97.7%, and multifamily at 88.1% [9]. Guidance - The company increased its 2025 FFO per diluted share guidance to a range of $1.89 to $2.01, with a midpoint of $1.95, reflecting an approximate 1% increase over prior guidance [2][18]. Balance Sheet and Liquidity - As of June 30, 2025, the company had gross real estate assets of $3.7 billion and liquidity of $543.7 million, consisting of $143.7 million in cash and $400.0 million available on its line of credit [16][23]. Dividends - The company declared dividends of $0.340 per share for the second quarter of 2025, with a similar dividend declared for the third quarter to be paid on September 18, 2025 [17].

Company Overview - American Assets Trust, Inc. is a full-service, vertically integrated, and self-administered real estate investment trust (REIT) headquartered in San Diego, California with over 55 years of experience in acquiring, improving, developing, and managing premier office, retail, and residential properties across the United States [3] - The company's office portfolio comprises approximately 4.1 million rentable square feet, while its retail portfolio includes about 2.4 million rentable square feet [3] - Additionally, the company owns one mixed-use property with approximately 94,000 rentable square feet of retail space and a 369-room all-suite hotel, along with 2,302 multifamily units [3] Upcoming Earnings Announcement - The company will announce its second quarter 2025 earnings in a press release after the market closes on Tuesday, July 29, 2025 [1] - A conference call for the second quarter 2025 earnings will be held on Wednesday, July 30, 2025, at 8:00 a.m. Pacific Time [1] - Access to the conference call can be obtained by dialing 1 (833) 816-1162 and requesting to join the American Assets Trust, Inc. Conference Call [1] Webcast Information - A live on-demand audio webcast of the conference call will be available in the "Investor Relations" section of the company's website [2] - A replay of the webcast will be accessible on the company's website approximately one hour after the conclusion of the conference call [2]

Core Insights - The article discusses the resurgence of office REITs as major cities begin to recover from the pandemic and return to office mandates, highlighting potential investment opportunities in this sector [3][4][5]. Group 1: Market Trends - Major cities like Boston, New York, and San Francisco are experiencing a return to pre-pandemic commuting patterns, which is positively impacting office REITs [3][4]. - Office REITs, previously struggling due to COVID-19, are now seeing renewed interest as companies mandate employees to return to the office [5]. Group 2: Specific REIT Analysis - Alexander's (ALX) has a yield of 8.2% but faces high single-tenant risk, with Bloomberg accounting for nearly 60% of its rental revenue [7][8][9]. - Easterly Government Properties (DEA) has a yield of 8.1% but recently cut its dividend by about one-third, raising concerns about its financial stability [12][14]. - Highwoods Properties (HIW) offers a safer investment with a 6.4% yield and a low FFO payout ratio of 60%, indicating strong dividend coverage [15][16]. - American Assets Trust (AAT) has a yield of 6.7% and has resumed dividend growth after a cut during COVID, with dividends representing 70% of projected 2025 FFO [17][18]. - Brandywine Realty Trust (BDN) has a high yield of 14.4% but is facing challenges due to development projects and declining FFO, raising concerns about its dividend sustainability [19][21].