American Assets Trust(US:AAT)2023-04-26 19:13Financial Data and Key Metrics Changes - The company reported Q1 2023 FFO per share of $0.66, an increase of approximately $0.10 from Q4 2022, primarily due to a nonrecurring litigation settlement and better performance from the multifamily and mixed-use portfolios [14][15][16] - Same-store cash NOI growth for Q1 2023 was approximately 6.5% year-over-year, with specific growth rates of 3.2% for office, 6% for retail, 13% for multifamily, and 19% for mixed-use [16][17] - The company updated its 2023 FFO per share guidance range to $2.23 to $2.33, reflecting a 2.2% increase from previous guidance [18][19] Business Line Data and Key Metrics Changes - The retail sector experienced a 9.5% increase in comparable leasing spreads on a cash basis for Q1 deals, and a 28% increase on a straight-line basis [8] - The multifamily portfolio saw a same-store cash NOI growth of 13% in Q1 2023 compared to Q1 2022, with net effective rents for new leases in San Diego now 30% above pre-COVID levels [9][10] - The office portfolio was 88% leased at the end of Q1, with a same-store portfolio at 91.4% leased, despite challenges from rightsizing and hybrid work [21][22] Market Data and Key Metrics Changes - The company noted that office utilization is gradually increasing, particularly in San Diego, while Bellevue is still impacted by hybrid work and tech layoffs [11][12] - The multifamily communities are performing well in strong demographic areas with low unemployment and high homeownership costs [9] Company Strategy and Development Direction - The company emphasizes asset class diversity to mitigate volatility, with a portfolio that includes high-quality office, retail, multifamily, and mixed-use properties [5][6] - Strategic investments in office properties are aimed at enhancing amenities to attract tenants and capture net absorption at premium rents [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds such as rising interest rates and tech layoffs but expressed confidence in the company's resilience due to its diversified portfolio and conservative balance sheet [4][5] - The company remains cautiously optimistic about future leasing opportunities and is focused on maintaining a strong liquidity position [17][19] Other Important Information - The Board of Directors approved a quarterly dividend of $0.33 per share for Q2, reflecting confidence in the company's growth potential [6] - The company plans to release its 2022 sustainability report in May, highlighting its commitments to environmental and social responsibility [13] Q&A Session Summary Question: Can you comment on foot traffic and physical occupancy on your office assets? - Management noted that trends are improving, with tenants wanting employees back in the office, and occupancy is increasing [24][25] Question: What is the outlook for the weighted average lease term? - The weighted average lease term is influenced by tenant size, but larger tenants are committing to longer leases, indicating a positive trend [26][27] Question: Are you targeting biotech or pharma tenants given recent VC financing issues? - The company does not specifically target these sectors but has some life science tenants that are primarily office-based [28] Question: How does the company view share repurchases in the current market? - Management indicated that stock repurchases are not currently on the agenda as the focus is on reducing net debt to EBITDA [29][30] Question: What is the company's stance on the proposed mileage tax in San Diego? - Management expressed skepticism about the proposal's likelihood of passing, viewing it as impractical [31][32]