American Assets Trust, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Strategic Initiatives: Sold Del Monte Center in February, acquired Genesee Parts Apartments (nearly 200-unit multifamily in SD), Board approved Q2 dividend of $0.34 per share.
• Liquidity: End of Q1 liquidity ~$544M, net debt to EBITDA 6.2x trailing 12-month, no debt maturities until 2027.
• Q1 Performance: FFO per diluted share $0.52, same-store cash NOI up 3%, in line with initial guidance.

Segment Performance

• Office Portfolio: FFO per diluted share in Q1 was $0.52, same-store cash NOI up 3% over last year. Office portfolio ended Q1 at 85.5% leased (87.6% excluding One Beach), with average base rents at all-time high. Leasing activity totaled ~140,000 square feet, spreads on comparable spaces up 8% cash and 15% straight-line. Notable leases include 16,000 sq ft at La Jolla Commons 3 and 29,000 sq ft at Timber Ridge (97% leased).
• Retail Portfolio: Represents ~26% of NOI, ended Q1 at 97% leased, with all-time high average base rent. Executed over 158,000 sq ft of new/renewal leases, spreads up 13% cash and 21% straight-line.
• Multifamily Portfolio: San Diego communities 95% leased, blended rent increase 2%, same-store cash NOI up 3.5%. Portland's Hassalo on Eighth 90% leased, blended rent growth 3%, net effective rents flat YOY.
• Mixed-Use Portfolio (Waikiki Beach Walk): NOI down 11% YOY due to lower occupancy at Embassy Suites (85% paid occupancy, RevPAR down 11%).

Guidance

• Reaffirmed full-year 2025 FFO per share guidance range $1.87 to $2.01, midpoint $1.94. Upside potential factors include tenants meeting rent obligations, multifamily exceeding expectations, and tourism recovery.

Risks

• Near-term economic uncertainty may impact leasing activity. Geopolitical uncertainty, sticky inflation, volatile interest rates.

Question and Answer

• Q: Color on Bellevue assets pipeline and impact of Downtown Seattle Proposition 1A. A: Steve Center mentioned 29,000 sq ft lease at Timber Ridge (97% leased), letter of intent on 16,000 sq ft at Bell Springs, leasing momentum at East Gate. Proposition 1A caused increased inbound tenant tour/inquiry activity in Bellevue.
• Q: Additional update on La Jolla leasing pipeline. A: UTC submarket tight, Class A direct vacancy 7.4%, competing for law firm lease, building spec suites, amenities under construction.