American Assets Trust(US:AAT)2025-08-01 18:37PART I. FINANCIAL INFORMATION Item 1. Financial Statements 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. 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. 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 company323542 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 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 million70 - On February 25, 2025, the company sold Del Monte Center for $123.5 million, recognizing a gain of approximately $44.5 million72 - 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 Notes95105117 - The company declared and paid dividends of $0.340 per share/unit in both Q1 and Q2 2025126 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 Management discusses decreased property revenue due to a property sale, solid liquidity despite debt repayments, and non-GAAP performance Results of Operations 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 period185245246 - The decrease in H1 2025 other income was primarily due to a one-time $10.0 million net settlement payment received in H1 2024159253 Liquidity and Capital Resources 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 Partnership256 - The Operating Partnership held $143.7 million in cash and cash equivalents as of June 30, 2025267 - Short-term liquidity requirements are expected to be met through net cash from operations and borrowings under the credit facility268 - No shares of common stock were sold through the company's $250 million ATM equity program during the six months ended June 30, 2025123265 Non-GAAP Financial Measures 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 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 billion288 - A 1.0% increase in interest rates would decrease the fair value of the fixed-rate debt by approximately $47.7 million288 - The company's $100.0 million of variable-rate debt is effectively fixed through interest rate swap agreements, mitigating risk from interest rate fluctuations289290 Item 4. Controls and Procedures 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 effective292296 - No material changes to internal control over financial reporting occurred during the quarter for either entity293297 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not party to any material legal proceedings - The company reports no material legal proceedings as of the filing date298 Item 1A. Risk Factors 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 costs299 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None300 Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported - None301 Item 5. Other Information 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, 2025303