American Assets Trust, Inc. Q4 FY2024 earnings call

• Committed to disciplined decision-making for long-term growth, with high-quality assets, robust balance sheet, and agile platform. 2024 marked highest FFO per share since IPO, record total revenue, NOI, aggregate dividends >$103M, and record average monthly base rents.
• Focus on organic growth: lease-up/stabilization of new developments, maximizing rental rates, expense management, mixed-use multifamily densification.
• Portfolio strategy: entered agreement to sell Del Monte Center in Monterey, CA, expected to close late Feb; in escrow on multifamily community in San Diego with upside potential, expected to close late Feb; board approved 1.5% increase in quarterly dividend to $0.34 per share for Q1.

Office

• Closed the year at 85% leased, a decrease of 200 basis points from prior quarter, primarily due to remeasurement of properties, $11M termination in Q3 2024, and tenant downsizing/attrition. Q4 office leasing activity saw ~2% increase on cash basis and 11% on straight-line basis. Q1 has strong momentum with 105k sq ft in lease documentation, including 53k sq ft net absorption. Exposure to GSA tenants is less than 5% of total office square footage. ~8% of office portfolio scheduled for lease rollovers in 2025 with average deal size 7k sq ft.

Retail

• Represents 27% of portfolio, 95% leased in 2024 with 5% same-store NOI growth. Q4 transactions had positive leasing spreads (6.5% cash basis, 31% straight-line basis). Monitoring tenants like Petco, Michaels, and Angelica Theaters. Two Party City locations closing will constrain 2025 same-store retail NOI.

Multifamily

• Same-store cash NOI growth over 6% in 2024. San Diego multifamily communities had lease percentage decrease, net effective rents increased. Extended master lease with University of San Diego for over 100 units until summer 2029. Portland multifamily saw blended increase, expects new completions to slow in 2025 with vacancy rates declining potentially leading to rent growth later.

• 2025 FFO per share guidance range $1.87 to $2.01, midpoint $1.94, ~24% decrease from 2024 actual $2.58.
• Reasons for decrease include non-recurring termination fees, litigation income not recurring, same-store cash NOI changes, credit reserves, interest expense increase, G&A increase, other income decrease, GAAP adjustments, Del Monte disposition, and multifamily acquisition impact.
• Embassy Suites Hotel Waikiki expected revenue up ~5%, operating expenses up 7%, average occupancy up ~2%, ADR up ~4%, RevPAR up ~6%.

• Credit reserves included in guidance, ~$0.05 per FFO share, with ~$0.02 allocated to office and ~$0.03 to retail. Monitoring certain tenants in unpredictable economic environment, including Petco, Michaels, and Angelica Theater.

Q: Todd Thomas with KeyBanc Capital Markets asked about the $0.30 of upside from assets and cadence of FFO.

A: Bob Barton and Steve Center discussed leasing activity and timing of rent commencement for assets like Timber Ridge and La Jolla Commons.

Q: Haendel St. Juste with Mizuho asked about rationale for selling Del Monte Center, dividend increase, and credit reserves.

A: Adam Wyll and Bob Barton discussed strategic focus on operational efficiencies, dividend increase based on confidence in portfolio, and details on credit reserves monitoring tenants.

Q: Dylan Burzinski with Green Street asked about Party City boxes and office activity.

A: Chris Sullivan and Steve Center discussed backfilling Party City spaces and office leasing activity trends.

Q: Ronald Kamdem with Morgan Stanley asked about same-store office/retail performance and leverage trend.

A: Bob Barton and Adam Wyll provided details on same-store cash NOI changes and leverage position.