Financial Data and Key Metrics Changes - In Q1 2026, the company originated $29.6 million in loans held for investment, a 1% increase from $29.4 million in the previous quarter [5] - Loan principal payments and payoffs decreased by 18% to $34.5 million from $42 million in the previous quarter [5] - Nonperforming assets increased to $1.9 million from $1.4 million in the previous quarter [6] - The allowance for credit losses to gross loans held for investment decreased to 56 basis points from 62 basis points [7] - Net interest margin increased by six basis points to 3% compared to 2.94% in the previous quarter [8] Business Line Data and Key Metrics Changes - Loans held for investment decreased by approximately $4 million, with declines in multifamily and commercial real estate loans, partially offset by an increase in single-family loans [6] - The weighted average rate of loans originated in September was 6.62%, compared to 5.2% for loans held for investment as of September 30, 2025 [9] Market Data and Key Metrics Changes - The company has approximately $107 million of loans repricing in December, expected to increase to a weighted average interest rate of 6.89% [10] - The average cost of deposits increased to 1.34%, while the cost of borrowing also increased to 4.59% [9] Company Strategy and Development Direction - The company is focusing on prudent adjustments to underwriting requirements to encourage higher loan origination volume [6] - The short-term strategy for balance sheet management is more growth-oriented than the previous fiscal year, with a disciplined loan growth approach [12] - The company aims to maintain cash dividends and has repurchased approximately 67,000 shares of common stock [13] Management's Comments on Operating Environment and Future Outlook - Management noted that real estate investors remain cautious due to market uncertainties, although there has been an increase in activity as mortgage interest rates decline [5] - The company expects modest or moderate net interest margin expansion in the upcoming quarters [20] - Management is optimistic about the potential for refinance activity due to declining mortgage interest rates [16] Other Important Information - Operating expenses remained unchanged at $7.6 million, representing a normalized run rate [12] - The company distributed $921,000 in cash dividends and repurchased approximately $1.1 million worth of common stock in the first quarter [14] Q&A Session Summary Question: Challenges in loan growth trajectory for 2026 - Management acknowledged hesitancy among borrowers in multifamily and commercial real estate due to higher mortgage rates, but noted that declining rates could present more opportunities [16] Question: Expectation for margin expansion - Management indicated that it is reasonable to expect margin expansion similar to the previous quarter, citing a growth in net interest margin from 2.74% to 3% over the past year [20] Question: Impact of lower interest rates on loan portfolio - Management explained that lower interest rates could lead to increased refinance activity, shortening the average life of the loan portfolio and potentially impacting credit loss provisions [22][24]

Core Insights - American Assets Trust, Inc. reported a net income of $4.5 million for Q3 2025, down from $16.7 million in Q3 2024, and a net income of $52.5 million for the nine months ended September 30, 2025, compared to $47.8 million for the same period in 2024 [4][5][26] - Funds from Operations (FFO) per diluted share were $0.49 for Q3 2025 and $1.53 for the nine months ended September 30, 2025, compared to $0.71 and $2.03 for the same periods in 2024 [5][27] - The company increased its 2025 FFO per diluted share guidance to a range of $1.93 to $2.01, reflecting a $0.02 increase over prior guidance [5][18] Financial Results - Total revenue for Q3 2025 was $109.6 million, down from $122.8 million in Q3 2024, while total revenue for the nine months ended September 30, 2025, was $326.1 million, compared to $344.4 million in the same period in 2024 [26] - The company recognized a $44.5 million gain on the sale of Del Monte Center, contributing to the increase in net income for the nine months ended September 30, 2025 [4][6] - Same-store cash Net Operating Income (NOI) decreased by 0.8% for Q3 2025 but increased by 0.6% for the nine months ended September 30, 2025, compared to the same periods in 2024 [5][13] Leasing Activity - The company leased 181,000 square feet of office space and 125,000 square feet of retail space during Q3 2025, with average straight-line and cash-basis contractual rent increases of 19% and 9% for office, and 21% and 4% for retail, respectively [5][9] - The total portfolio leased status as of September 30, 2025, was 81.9% for office, 97.9% for retail, and 89.7% for multifamily properties [9][10] Balance Sheet and Liquidity - As of September 30, 2025, the company had gross real estate assets of $3.7 billion and liquidity of $538.7 million, consisting of $138.7 million in cash and cash equivalents and $400 million available on its line of credit [16] - The company had only 1 out of 31 assets encumbered by a mortgage as of the reporting date [16] Dividends - The company declared dividends of $0.340 per share for both Q3 and Q4 2025, with the Q4 dividend scheduled to be paid on December 18, 2025 [17]

Financial Data and Key Metrics Changes - The third quarter net loss was $26.2 million or $0.15 per share, while the FFO totaled $28 million or $0.16 per diluted share, exceeding consensus estimates by $0.01 [20] - The capital ratio was 10.9%, slightly above the 2025 business plan range, with a target range of 9% to 10% [5][8] - The FFO payout ratio for the third quarter was 93.8% [27] Business Line Data and Key Metrics Changes - The quarterly tenant retention rate was 68%, with leasing activity approximating 343,000 square feet [3] - Third quarter net absorption totaled 21,000 square feet, with occupancy at 88.8% and leased at 90.4% [4] - The operating portfolio leasing pipeline remains solid at 1.7 million square feet, including 72,000 square feet in advanced stages of negotiations [6] Market Data and Key Metrics Changes - In Philadelphia, occupancy was 94% and leased at 96%, while Boston was at 77% occupied and 78% leased [4] - The life science sector in the city is expected to drive growth, supported by a strong regional healthcare ecosystem [11] - The Austin market saw a 70% increase in leasing activity compared to Q2, with 1 million square feet leased in Q3 [11] Company Strategy and Development Direction - The company aims to stabilize development projects and improve earnings while reducing overall leverage [30][13] - The focus is on high-quality, highly amenitized buildings, with a strong preference for these types of assets in the market [9] - The company plans to maintain minimal balances on its line of credit to ensure ample liquidity [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the real estate market sentiment continues to improve, with increasing demand for high-quality buildings [9] - The company anticipates a significant increase in NOI from the consolidation of 3025 JFK, expected to grow from $8 million to over $20 million in the first quarter of 2026 [25] - The board's decision to reduce the dividend was based on the need for sustainable cash flow and capital conservation [66] Other Important Information - The company issued $300 million of bonds due January 2031, generating $296 million in gross proceeds [8] - The average cost of bond debt is slightly above 6%, with $900 million of outstanding bonds having coupons above 8% [9] - The company has sold $73 million of properties at an average cap rate of 6.9% [16] Q&A Session Summary Question: Could you go over in more detail how we should think about the timing and process of the recapitalizations? - Management explained that recapitalizations are designed to eliminate high-cost capital structures and improve earnings by bringing high-quality, stabilized assets onto the balance sheet [32] Question: Can you clarify the leasing prospects at Uptown ATX? - Management indicated that the leasing pipeline includes both spec suites and full-floor users, with a focus on capturing Class A tenants [42][46] Question: Why did the company decide to issue unsecured notes and take out the CMBS debt? - The decision was based on the opportunity to unencumber assets, improve UAP, and reset rates in the debt capital markets [53] Question: Could you provide detail on the board's decision to reduce the dividend? - The board considered operating cash flow, refinancing requirements, and the need for capital conservation, concluding that the reduced dividend is sustainable [66]

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].

Core Insights - CoStar Group reported $781.3 million in revenue for Q2 2025, a year-over-year increase of 15.3% and an EPS of $0.17, up from $0.15 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $771.67 million by 1.25%, while the EPS surpassed the consensus estimate of $0.14 by 21.43% [1] Revenue Breakdown - Total Revenues: $270.9 million, exceeding the estimated $267.89 million by analysts, representing a 7.1% increase year-over-year [4] - Information Services Revenues: $39.3 million, surpassing the estimated $36.74 million, reflecting a 17.7% year-over-year increase [4] - Other Marketplaces Revenues: $74.7 million, significantly higher than the estimated $50.2 million, marking a 139.4% year-over-year change [4] - LoopNet Revenues: $75.7 million, slightly above the estimated $74.65 million, with an 8.5% increase year-over-year [4] - Residential Revenues: $28.4 million, below the estimated $31.02 million, but still showing an 8.4% year-over-year increase [4] - Multifamily Revenues: $292.3 million, slightly below the estimated $293.26 million, with a 10.6% year-over-year increase [4] Stock Performance - CoStar's shares have returned +6.2% over the past month, outperforming the Zacks S&P 500 composite's +5.9% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Company Overview and Strategy - American Assets Trust (AAT) was founded by Ernest Rady and has a 58+ year history[8] - Adam Wyll was named the new CEO in 2025[8] - The company successfully raised $489 million through a follow-on equity offering[8] Financial Performance and Growth - Total revenue in 2025 is estimated to be $432 million[8] - Funds From Operations (FFO) per share in 2025 is estimated to be $194[8] - Net Operating Income (NOI) grew at a CAGR of 67% from IPO to 2024[8] - Total Revenue grew at a CAGR of 63% from IPO to 2024[8] - Dividends grew at a CAGR of 62% from 2011 to 2024[8] - FFO per share grew at a CAGR of 40% from IPO to 2024[8] Portfolio Composition - The portfolio consists of 41 million square feet of retail space and 25 million square feet of office space[11] - The portfolio includes 2302 multifamily units and 369 hotel suites[11] - By sector, Cash NOI is comprised of 52% Office, 26% Retail, 14% Multifamily, and 8% Mixed-Use[11] - By region/state, Cash NOI is comprised of 47% Southern California, 13% Northern California, 13% Hawaii, 12% Washington, 9% Oregon, and 6% Texas[11] Liquidity and Debt Profile - The company has approximately $144 million in cash on hand[16] - The company has $400 million available on its line of credit[16] - The company's total liquidity is approximately $544 million[16] - The company's total weighted average fixed interest rate is 45%[17] - The weighted average term to maturity is 59 years[17]

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 [18] Market Data and Key Metrics Changes - The office portfolio ended Q1 at 85.5% leased, with an increase in average base rents and an 8% increase in cash basis spreads [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 [5][6] - The strategy includes pursuing organic growth through leasing and value-add improvements while maintaining strong liquidity [6][14] - 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 [4][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 is closely monitoring economic conditions and tenant performance, particularly in the multifamily and retail segments [23] Q&A Session Summary Question: Update on Bellevue assets and occupancy outlook - Management highlighted recent leasing activity, including a 29,000 square foot lease at Timber Ridge, bringing it to 97% leased, and ongoing negotiations for additional leases [27][28] Question: Impact of Proposition 1A on tenant interest in Downtown Seattle - Management noted increased inbound tenant inquiries in Bellevue, partly due to the proposition, indicating a positive trend [30] Question: Plans for redeploying proceeds from Del Monte Center sale - Management confirmed they are actively looking for additional acquisitions but are also comfortable holding cash for liquidity during economic uncertainty [32][33] Question: Update on leasing pipeline and market conditions in La Jolla - Management reported a tight submarket with a direct vacancy of 7.4%, and ongoing efforts to enhance leasing activity through new amenities and spec suites [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 [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]