Core Insights - The article discusses the investment landscape in the real estate sector, particularly focusing on the performance and outlook of various real estate investment trusts (REITs) and housing-related companies [2][3]. Group 1: Company Insights - Hoya Capital Research & Index Innovations is affiliated with Hoya Capital Real Estate, which provides investment advisory services and focuses on publicly traded securities in the real estate industry [2]. - The commentary emphasizes that the information provided is for educational purposes and does not constitute investment advice or recommendations for specific securities [2][3]. Group 2: Industry Insights - The real estate sector is highlighted as having unique risks associated with investments in real estate companies and housing industry companies, which may not be suitable for all investors [2]. - The article notes that past performance of market data does not guarantee future results, indicating the inherent volatility and unpredictability of the real estate market [3].

Core Insights - The article promotes a platform called "The Dividend Dogcatcher," which focuses on small-cap dividend stocks, particularly those in the S&P 600 index [1] - It highlights a live video series called "Underdog Daily Dividend Show," where potential investment candidates are discussed [1] - The article encourages audience engagement by inviting comments on favorite or curious stock tickers for future reports [1] Summary by Categories - **Investment Focus** - The emphasis is on small-cap dividend stocks, specifically within the S&P 600 index [1] - The platform aims to identify and highlight potential investment opportunities in this segment [1] - **Engagement and Community** - The article encourages interaction through social media, specifically Facebook, to discuss stock tickers [1] - It invites users to participate in the selection of stocks for future analysis by commenting on their interests [1]

Core Points - American Assets Trust, Inc. will announce its third quarter 2025 earnings on October 28, 2025, after market close [1] - A conference call for the earnings will be held on October 29, 2025, at 8:00 a.m. PT [1] - The conference call can be accessed by dialing 1 (833) 816-1162 [1] Company Overview - American Assets Trust, Inc. is a vertically integrated and self-administered real estate investment trust (REIT) based in San Diego, California [3] - The company has over 55 years of experience in acquiring, improving, developing, and managing office, retail, and residential properties across the United States [3] - The office portfolio comprises approximately 4.3 million rentable square feet, while the retail portfolio includes about 2.4 million rentable square feet [3] - The company also 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] - American Assets Trust was formed in 2011, succeeding the real estate business of American Assets, Inc., which was founded in 1967 [3]

Group 1 - The REIT sector is expected to benefit from lower base rates in the coming months, providing relief as REITs typically rely on debt for growth [1] Group 2 - The article emphasizes the importance of conducting due diligence and encourages investors to build portfolios of high-quality, dividend-paying companies [2] - The author expresses a personal investment philosophy focused on buy-and-hold strategies, particularly in blue-chip stocks, BDCs, and REITs [2]

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]

Core Viewpoint - American Assets Trust emphasizes its commitment to maintaining a strong balance sheet and creating long-term value for shareholders, regardless of market cycles [5]. Group 1: Company Overview - American Assets Trust, Inc. is listed on NYSE under the ticker AAT and held its Q2 2025 earnings call on July 30, 2025 [1]. - Key participants in the earnings call included the CEO, President, and Secretary Adam Wyll, and Executive Chairman Ernest Sylvan Rady [1]. Group 2: Earnings Call Highlights - The earnings release and supplemental information were submitted to the SEC and are available on the company's investor website [4]. - The company aims to stay nimble and thoughtful in its investment strategy, focusing on high-quality assets [5].

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]

Company Performance - American Assets Trust (AAT) reported quarterly funds from operations (FFO) of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.49 per share, but down from $0.60 per share a year ago, indicating a FFO surprise of +6.12% [1] - The company posted revenues of $107.93 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.73%, compared to $110.89 million in revenues a year ago [2] - Over the last four quarters, the company has surpassed consensus FFO estimates four times and topped consensus revenue estimates three times [2] Stock Outlook - The stock has underperformed, losing about 24.1% since the beginning of the year, while the S&P 500 has gained 8.6% [3] - The current consensus FFO estimate for the coming quarter is $0.50 on revenues of $110.86 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 in the top 38% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]