American Assets Trust(AAT) - 2025 Q2 - Quarterly Results

Financial Highlights Consolidated Balance Sheets 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 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 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][16] Corporate Guidance 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] Same-Store Net Operating Income (NOI) 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 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 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 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 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] Property Revenue and Operating Expenses 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 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 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] Market Capitalization 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] Summary of Development Opportunities 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] Portfolio Data Property Report 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 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 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 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 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 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 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 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] Top Tenants - Retail 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] Appendix Glossary of Terms 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][130][131] - Reconciliations are provided for non-GAAP measures to their nearest GAAP equivalents, such as Net Income to NOI and Net Income to EBITDA[128][132][134] - 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]