American Assets Trust, Inc. Reports Third Quarter 2024 Financial Results
American Assets Trust (NYSE: AAT) reported strong Q3 2024 financial results with net income of $16.7 million ($0.28 per diluted share). Notable highlights include a 20% year-over-year increase in FFO to $0.71 per diluted share, and a 15.8% increase in same-store cash NOI. The company successfully leased approximately 58,000 office square feet and 125,000 retail square feet during Q3, with significant rent increases. AAT closed a $525 million public bond offering at 6.15% due 2034 and increased its 2024 FFO guidance to $2.51-$2.55 per share. The portfolio showed strong performance with office occupancy at 87%, retail at 94.5%, and multifamily at 90.3%.
American Assets Trust (NYSE: AAT) ha riportato risultati finanziari solidi per il terzo trimestre del 2024, con un reddito netto di 16,7 milioni di dollari (0,28 dollari per azione diluita). Tra i punti salienti si registra un aumento del 20% rispetto all'anno precedente nell'FFO a 0,71 dollari per azione diluita e un incremento del 15,8% nel NOI cash degli stessi negozi. L'azienda ha affittato con successo circa 58.000 piedi quadrati di uffici e 125.000 piedi quadrati di vendita al dettaglio durante il terzo trimestre, con significativi aumenti degli affitti. AAT ha chiuso un'offerta pubblica di obbligazioni da 525 milioni di dollari al 6,15% con scadenza nel 2034 e ha aumentato la sua guida FFO per il 2024 a 2,51-2,55 dollari per azione. Il portafoglio ha mostrato una forte performance con un'occupazione degli uffici dell'87%, del retail del 94,5% e del multifamiliare del 90,3%.
American Assets Trust (NYSE: AAT) reportó sólidos resultados financieros para el tercer trimestre de 2024, con un ingreso neto de 16.7 millones de dólares (0.28 dólares por acción diluida). Entre los aspectos destacados se incluye un aumento del 20% interanual en el FFO a 0.71 dólares por acción diluida, y un incremento del 15.8% en el NOI en efectivo de las mismas tiendas. La empresa arrendó aproximadamente 58,000 pies cuadrados de oficinas y 125,000 pies cuadrados de comercio al por menor durante el tercer trimestre, con aumentos significativos en los alquileres. AAT cerró una oferta pública de bonos de 525 millones de dólares a una tasa del 6.15% con vencimiento en 2034 y aumentó su guía de FFO para 2024 a 2.51-2.55 dólares por acción. La cartera mostró un sólido desempeño, con una ocupación de oficinas del 87%, del comercio minorista del 94.5% y multifamiliar del 90.3%.
American Assets Trust (NYSE: AAT)는 2024년 3분기 재무 결과를 보고하며 순이익이 1,670만 달러(희석 주당 0.28달러)에 달했다고 발표했습니다. 주요 하이라이트로는 FFO가 전년 대비 20% 증가하여 희석 주당 0.71달러에 달했으며, 같은 매장 현금 NOI가 15.8% 증가한 점이 있습니다. 회사는 3분기 동안 약 58,000 평방피트의 사무실 공간과 125,000 평방피트의 소매 공간을 성공적으로 임대하였으며, 임대료도 크게 상승했습니다. AAT는 2034년 만기 6.15%의 공공채권 발행을 5억 2,500만 달러로 마감했으며, 2024년 FFO 가이드를 주당 2.51-2.55달러로 상향 조정했습니다. 포트폴리오는 사무실 87%, 소매 94.5%, 다가구 90.3%의 강력한 점유율을 보여주었습니다.
American Assets Trust (NYSE: AAT) a annoncé de solides résultats financiers pour le troisième trimestre 2024, avec un revenu net de 16,7 millions de dollars (0,28 dollar par action diluée). Parmi les faits marquants, on note une augmentation de 20 % par rapport à l'année précédente du FFO à 0,71 dollar par action diluée, et une augmentation de 15,8 % du NOI en espèces des mêmes magasins. L'entreprise a réussi à louer environ 58 000 pieds carrés d'espace de bureau et 125 000 pieds carrés d'espace de vente au détail au cours du troisième trimestre, avec des augmentations de loyer significatives. AAT a clôturé une émission obligataire publique de 525 millions de dollars à 6,15 % arrivant à échéance en 2034 et a relevé son objectif de FFO pour 2024 à 2,51-2,55 dollars par action. Le portefeuille a montré de solides performances avec un taux d'occupation des bureaux de 87 %, du commerce de détail de 94,5 % et de multifamilial de 90,3 %.
American Assets Trust (NYSE: AAT) berichtete über starke finanzielle Ergebnisse im dritten Quartal 2024 mit einem Nettogewinn von 16,7 Millionen US-Dollar (0,28 US-Dollar pro verwässerter Aktie). Zu den bemerkenswerten Höhepunkten gehört ein Anstieg des FFO um 20% im Vergleich zum Vorjahr auf 0,71 US-Dollar pro verwässerter Aktie und ein Anstieg des Cash NOI in denselben Geschäften um 15,8%. Das Unternehmen hat im dritten Quartal erfolgreich etwa 58.000 Quadratfuß Büroflächen und 125.000 Quadratfuß Einzelhandelsflächen vermietet, mit erheblichen Mietsteigerungen. AAT schloss eine öffentliche Anleiheplatzierung über 525 Millionen US-Dollar zu 6,15%, fällig 2034, ab und hob die FFO-Prognose für 2024 auf 2,51-2,55 US-Dollar pro Aktie an. Das Portfolio zeigte eine starke Leistung mit einer Bürobeteiligung von 87%, im Einzelhandel 94,5% und im Mehrfamilienbereich 90,3%.
- FFO per diluted share increased 20% year-over-year to $0.71
- Same-store cash NOI increased 15.8% year-over-year
- Raised 2024 FFO guidance to $2.51-$2.55 per share
- Secured $525 million bond offering for debt refinancing
- Office leasing spreads showed 16.4% increase on straight-line basis
- Retail leasing spreads showed 18.7% increase on straight-line basis
- Mixed-use hotel occupancy declined from 88.1% to 86.7% quarter-over-quarter
- Office same-store cash NOI would be -3.7% excluding one-time lease termination fee
- Higher interest expense due to new 6.15% senior notes
Insights
Strong Q3 results with significant improvements across key metrics. Net income reached
Notable strengths include successful leasing activity with
The portfolio shows resilience with high occupancy rates:
The portfolio's performance indicates strong market positioning in key sectors. Office leasing remains resilient despite broader market challenges, with positive leasing spreads and improved occupancy rates. The
Retail segment shows particular strength with
The strategic debt refinancing through the bond offering positions AAT well for upcoming maturities while maintaining financial flexibility. Having only 1 of 31 assets encumbered by mortgage provides significant operational flexibility and potential for future financing options.
Net income available to common stockholders of
Funds from Operations ("FFO") per diluted share increased
Increased 2024 FFO per diluted share guidance to a range of
SAN DIEGO, Oct. 29, 2024 (GLOBE NEWSWIRE) -- American Assets Trust, Inc. (NYSE: AAT) (the “company”) today reported financial results for its third quarter ended September 30, 2024.
Third Quarter Highlights
- Net income available to common stockholders of
$16.7 million and$47.8 million for the three and nine months ended September 30, 2024, respectively, or$0.28 and$0.79 per diluted share, respectively. - FFO increased
20% and10% year-over-year to$0.71 and$2.03 per diluted share for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. - Same-store cash Net Operating Income ("NOI") increased 15.8% and 6.6% year-over-year for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.
- Increased 2024 FFO per diluted share guidance to a range of
$2.51 t o$2.55 with a midpoint of$2.53 , a1% increase over the prior 2024 guidance midpoint of$2.51 . - Leased approximately 58,000 comparable office square feet at an average straight-line basis and cash-basis contractual rent increase of
16% and8% , respectively, during the third quarter. - Leased approximately 125,000 comparable retail square feet at an average straight-line basis and cash-basis contractual rent increase of
19% and4% , respectively, during the third quarter. - Closed a public bond offering of
$525 million in principal amount of6.15% senior notes due 2034, with a portion of the proceeds used to repay amounts outstanding on our unsecured revolving line of credit under the company's third amended and restated credit facility and the remainder intended to be used to repay certain upcoming debt maturities and for working capital and general corporate purposes.
Financial Results
| (Unaudited, amounts in thousands, except per share data) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Net income attributable to American Assets Trust, Inc. stockholders | $ | 16,657 | $ | 11,778 | $ | 47,821 | $ | 39,897 | ||||
| Basic and diluted income attributable to common stockholders per share | $ | 0.28 | $ | 0.20 | $ | 0.79 | $ | 0.66 | ||||
| FFO attributable to common stock and common units | $ | 54,655 | $ | 44,817 | $ | 155,416 | $ | 140,231 | ||||
| FFO per diluted share and unit | $ | 0.71 | $ | 0.59 | $ | 2.03 | $ | 1.84 | ||||
Net income attributable to common stockholders increased
FFO increased
FFO is a non-GAAP supplemental earnings measure which the company considers meaningful in measuring its operating performance. A reconciliation of net income to FFO is attached to this press release.
Leasing
The portfolio leased status as of the end of the indicated quarter was as follows:
| September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||
| Total Portfolio | ||||||
| Office | ||||||
| Retail | ||||||
| Multifamily | ||||||
| Mixed-Use: | ||||||
| Retail | ||||||
| Hotel | ||||||
| Same-Store Portfolio | ||||||
| Office (1) | ||||||
| Retail | ||||||
| Multifamily | ||||||
| Mixed-Use: | ||||||
| Retail | ||||||
| Hotel | ||||||
| (1) Same-store office leased percentages exclude One Beach Street due to significant redevelopment activity and land held for development. | ||||||
During the third quarter of 2024, the company signed 37 leases for approximately 239,200 square feet of office and retail space, as well as 559 multifamily apartment leases. Renewals accounted for
Office and Retail
The annualized base rent per leased square foot as of the end of the indicated quarter was as follows:
| 4th Quarter 2023 | 1st Quarter 2024 | 2nd Quarter 2024 | 3rd Quarter 2024 | ||||||
| Office | Weighted Average Portfolio | ||||||||
| Retail | Weighted Average Portfolio | ||||||||
On a comparable basis (i.e., leases for which there was a former tenant) our office and retail leasing spreads as of the end of the indicated quarter are shown below:
| 4th Quarter 2023 | 1st Quarter 2024 | 2nd Quarter 2024 | 3rd Quarter 2024 | ||||||
| Office | Cash Basis % Change Over Prior Rent | ||||||||
| Straight-Line Basis % Change Over Prior Rent | |||||||||
| Retail | Cash Basis % Change Over Prior Rent | ||||||||
| Straight-Line Basis % Change Over Prior Rent | |||||||||
On a comparable basis (i.e., leases for which there was a former tenant) during the third quarter of 2024 and trailing four quarters ended September 30, 2024, our office and retail leasing spreads are shown below:
| Number of Leases Signed | Comparable Leased Sq. Ft. | Average Cash Basis % Change Over Prior Rent | Average Cash Contractual Rent Per Sq. Ft. | Prior Average Cash Contractual Rent Per Sq. Ft. | Straight-Line Basis % Change Over Prior Rent | ||||||
| Office | Q3 2024 | 10 | 58,000 | ||||||||
| Last 4 Quarters | 41 | 214,000 | |||||||||
| Retail | Q3 2024 | 20 | 125,000 | ||||||||
| Last 4 Quarters | 80 | 401,000 | |||||||||
Multifamily
The average monthly base rent per leased unit as of the end of the indicated quarter was as follows:
| 4th Quarter 2023 | 1st Quarter 2024 | 2nd Quarter 2024 | 3rd Quarter 2024 | |||||||||
| Average Monthly Base Rent per Leased Unit | $ | 2,619 | $ | 2,685 | $ | 2,711 | $ | 2,739 | ||||
Same-Store Cash Net Operating Income
For the three and nine months ended September 30, 2024, same-store cash NOI increased
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||
| Cash Basis: | ||||||||||||||||||
| Office | $ | 45,171 | $ | 35,405 | 27.6 | % | $ | 114,415 | $ | 104,698 | 9.3 | % | ||||||
| Retail | 19,892 | 18,596 | 7.0 | 56,256 | 54,402 | 3.4 | ||||||||||||
| Multifamily | 8,292 | 7,957 | 4.2 | 27,045 | 25,450 | 6.3 | ||||||||||||
| Mixed-Use | 6,309 | 6,808 | (7.3 | ) | 18,375 | 18,173 | 1.1 | |||||||||||
| Same-store Cash NOI (1) | $ | 79,664 | $ | 68,766 | 15.8 | % | $ | 216,091 | $ | 202,723 | 6.6 | % | ||||||
| (1) Same-store office portfolio excludes One Beach Street due to significant redevelopment activity and land held for development. | ||||||||||||||||||
Same-Store Cash Net Operating Income - Excluding Construction in Progress Write-off
During the first quarter of 2024, the company wrote off
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||
| Cash Basis | ||||||||||||||||||
| Office | $ | 45,171 | $ | 35,405 | 27.6 | % | $ | 114,415 | $ | 104,698 | 9.3 | % | ||||||
| Retail | 19,892 | 18,596 | 7.0 | 56,779 | 54,402 | 4.4 | ||||||||||||
| Multifamily | 8,292 | 7,957 | 4.2 | 27,045 | 25,450 | 6.3 | ||||||||||||
| Mixed-Use | 6,309 | 6,808 | (7.3 | ) | 18,375 | 18,173 | 1.1 | |||||||||||
| Same-store Cash NOI - Excluding Construction in Progress Write-off | $ | 79,664 | $ | 68,766 | 15.8 | % | $ | 216,614 | $ | 202,723 | 6.9 | % | ||||||
Office same-store cash NOI increased due to the lease termination fee received during the three months ended September 30, 2024 at our Torrey Reserve Campus. Excluding the one-time lease termination fee, office same-store cash NOI would be (3.7)% and (1.3)% for the three and nine months ended September 30, 2024, respectively.
Same-store cash NOI is a non-GAAP supplemental earnings measure which the company considers meaningful in measuring its operating performance. A reconciliation of same-store cash NOI to net income is attached to this press release.
Balance Sheet and Liquidity
At September 30, 2024, the company had gross real estate assets of
On September 17, 2024, the company closed a public bond offering of
Dividends
The company declared dividends on its shares of common stock of
In addition, the company has declared a dividend on its common stock of
Guidance
The company increased its 2024 FFO per diluted share guidance to a range of
Management will discuss the company's revised guidance in more detail during tomorrow's earnings call. Except as discussed during the call, the company's revised guidance excludes any impact from future acquisitions, dispositions, equity issuances or repurchases, debt financing or repayments. The foregoing estimates are forward-looking and reflect management's view of current and future market conditions, including certain assumptions with respect to leasing activity, rental rates, occupancy levels, interest rates, credit spreads and the amount and timing of acquisition and development activities. The company's actual results may differ materially from these estimates.
Conference Call
The company will hold a conference call to discuss the results for the third quarter of 2024 on Wednesday, October 30, 2024 at 8:00 a.m. Pacific Time (“PT”). To participate in the event by telephone, please dial 1-833-816-1162 and ask to join the American Assets Trust, Inc. conference call. A live on-demand audio webcast of the conference call will be available on the company's website at www.americanassetstrust.com. A replay of the call will also be available on the company's website.
Supplemental Information
Supplemental financial information regarding the company's third quarter 2024 results may be found on the "Financial Reporting" tab of the “Investors” page of the company's website at www.americanassetstrust.com. This supplemental information provides additional detail on items such as property occupancy, financial performance by property and debt maturity schedules.
Financial Information
American Assets Trust, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share Data)
| September 30, 2024 | December 31, 2023 | |||||||
| Assets | (unaudited) | |||||||
| Real estate, at cost | ||||||||
| Operating real estate | $ | 3,564,563 | $ | 3,502,251 | ||||
| Construction in progress | 205,692 | 239,030 | ||||||
| Held for development | 487 | 487 | ||||||
| 3,770,742 | 3,741,768 | |||||||
| Accumulated depreciation | (1,098,477 | ) | (1,036,453 | ) | ||||
| Real estate, net | 2,672,265 | 2,705,315 | ||||||
| Cash and cash equivalents | 533,004 | 82,888 | ||||||
| Accounts receivable, net | 8,809 | 7,624 | ||||||
| Deferred rent receivables, net | 89,772 | 89,210 | ||||||
| Other assets, net | 92,468 | 99,644 | ||||||
| Total assets | $ | 3,396,318 | $ | 2,984,681 | ||||
| Liabilities and equity | ||||||||
| Liabilities: | ||||||||
| Secured notes payable, net | $ | 74,736 | $ | 74,669 | ||||
| Unsecured notes payable, net | 2,034,843 | 1,614,958 | ||||||
| Accounts payable and accrued expenses | 74,067 | 61,312 | ||||||
| Security deposits payable | 9,111 | 8,880 | ||||||
| Other liabilities and deferred credits, net | 65,600 | 71,187 | ||||||
| Total liabilities | 2,258,357 | 1,831,006 | ||||||
| Commitments and contingencies | ||||||||
| Equity: | ||||||||
| American Assets Trust, Inc. stockholders' equity | ||||||||
| Common stock, authorized, 60,901,583 and 60,895,786 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | 609 | 609 | ||||||
| Additional paid-in capital | 1,474,554 | 1,469,206 | ||||||
| Accumulated dividends in excess of net income | (293,037 | ) | (280,239 | ) | ||||
| Accumulated other comprehensive income | 4,475 | 8,282 | ||||||
| Total American Assets Trust, Inc. stockholders' equity | 1,186,601 | 1,197,858 | ||||||
| Noncontrolling interests | (48,640 | ) | (44,183 | ) | ||||
| Total equity | 1,137,961 | 1,153,675 | ||||||
| Total liabilities and equity | $ | 3,396,318 | $ | 2,984,681 | ||||
American Assets Trust, Inc.
Unaudited Consolidated Statements of Operations
(In Thousands, Except Shares and Per Share Data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue: | ||||||||||||||||
| Rental income | $ | 105,549 | $ | 105,494 | $ | 315,664 | $ | 312,105 | ||||||||
| Other property income | 17,261 | 5,704 | 28,731 | 16,568 | ||||||||||||
| Total revenue | 122,810 | 111,198 | 344,395 | 328,673 | ||||||||||||
| Expenses: | ||||||||||||||||
| Rental expenses | 31,361 | 29,912 | 90,707 | 86,128 | ||||||||||||
| Real estate taxes | 11,044 | 11,399 | 33,133 | 34,117 | ||||||||||||
| General and administrative | 9,068 | 8,880 | 26,647 | 26,488 | ||||||||||||
| Depreciation and amortization | 33,529 | 29,868 | 94,757 | 89,592 | ||||||||||||
| Total operating expenses | 85,002 | 80,059 | 245,244 | 236,325 | ||||||||||||
| Operating income | 37,808 | 31,139 | 99,151 | 92,348 | ||||||||||||
| Interest expense, net | (18,229 | ) | (16,325 | ) | (50,773 | ) | (48,422 | ) | ||||||||
| Other income, net | 1,739 | 321 | 12,857 | 7,272 | ||||||||||||
| Net income | 21,318 | 15,135 | 61,235 | 51,198 | ||||||||||||
| Net income attributable to restricted shares | (194 | ) | (189 | ) | (585 | ) | (568 | ) | ||||||||
| Net income attributable to unitholders in the Operating Partnership | (4,467 | ) | (3,168 | ) | (12,829 | ) | (10,733 | ) | ||||||||
| Net income attributable to American Assets Trust, Inc. stockholders | $ | 16,657 | $ | 11,778 | $ | 47,821 | $ | 39,897 | ||||||||
| Net income per share | ||||||||||||||||
| Basic income attributable to common stockholders per share | $ | 0.28 | $ | 0.20 | $ | 0.79 | $ | 0.66 | ||||||||
| Weighted average shares of common stock outstanding - basic | 60,320,269 | 60,150,681 | 60,314,377 | 60,147,189 | ||||||||||||
| Diluted income attributable to common stockholders per share | $ | 0.28 | $ | 0.20 | $ | 0.79 | $ | 0.66 | ||||||||
| Weighted average shares of common stock outstanding - diluted | 76,501,806 | 76,332,218 | 76,495,914 | 76,328,726 | ||||||||||||
| Dividends declared per common share | $ | 0.335 | $ | 0.330 | $ | 1.005 | $ | 0.990 | ||||||||
Reconciliation of Net Income to Funds From Operations
The company's FFO attributable to common stockholders and operating partnership unitholders and reconciliation to net income is as follows (in thousands except shares and per share data, unaudited):
| Three Months Ended September 30, 2024 | Nine Months Ended September 30, 2024 | |||||||
| Funds From Operations (FFO) | ||||||||
| Net income | $ | 21,318 | $ | 61,235 | ||||
| Depreciation and amortization of real estate assets | 33,529 | 94,757 | ||||||
| FFO, as defined by NAREIT | $ | 54,847 | $ | 155,992 | ||||
| Less: Nonforfeitable dividends on restricted stock awards | (192 | ) | (576 | ) | ||||
| FFO attributable to common stock and units | $ | 54,655 | $ | 155,416 | ||||
| FFO per diluted share/unit | $ | 0.71 | $ | 2.03 | ||||
| Weighted average number of common shares and units, diluted | 76,505,676 | 76,499,208 | ||||||
Reconciliation of Same-Store Cash NOI to Net Income
The company's reconciliation of Same-Store Cash NOI to Net Income is as follows (in thousands, unaudited):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Same-store cash NOI - Excluding construction in progress write-off | $ | 79,664 | $ | 68,766 | $ | 216,614 | $ | 202,723 | ||||||||
| Construction in progress write-off (1) | — | — | (523 | ) | — | |||||||||||
| Same-store cash NOI (2) | 79,664 | 68,766 | 216,091 | $ | 202,723 | |||||||||||
| Non-same-store cash NOI | (596 | ) | (339 | ) | (1,288 | ) | (834 | ) | ||||||||
| Tenant improvement reimbursements (3) | 279 | 260 | 598 | 599 | ||||||||||||
| Cash NOI | $ | 79,347 | $ | 68,687 | $ | 215,401 | $ | 202,488 | ||||||||
| Non-cash revenue and other operating expenses (4) | 1,058 | 1,200 | 5,154 | 5,940 | ||||||||||||
| General and administrative | (9,068 | ) | (8,880 | ) | (26,647 | ) | (26,488 | ) | ||||||||
| Depreciation and amortization | (33,529 | ) | (29,868 | ) | (94,757 | ) | (89,592 | ) | ||||||||
| Interest expense, net | (18,229 | ) | (16,325 | ) | (50,773 | ) | (48,422 | ) | ||||||||
| Other income, net | 1,739 | 321 | 12,857 | 7,272 | ||||||||||||
| Net income | $ | 21,318 | $ | 15,135 | $ | 61,235 | $ | 51,198 | ||||||||
| Number of properties included in same-store analysis | 30 | 30 | 30 | 29 | ||||||||||||
| (1) | During the first quarter of 2024, the company wrote off prospective construction within our retail segment. |
| (2) | Same-store office portfolio excludes One Beach Street due to significant redevelopment activity and land held for development. |
| (3) | Tenant improvement reimbursements are excluded from same-store cash NOI to provide a more accurate measure of operating performance. |
| (4) | Represents adjustments related to the straight-line rent income recognized during the period offset by cash received during the period and the provision for bad debts recorded for deferred rent receivable balances, the amortization of above (below) market rents, the amortization of lease incentives paid to tenants, the amortization of other lease intangibles, and straight-line rent expense for our lease of the Annex at The Landmark at One Market. |
Reported results are preliminary and not final until the filing of the company's Form 10-Q with the Securities and Exchange Commission and, therefore, remain subject to adjustment.
Use of Non-GAAP Information
Funds from Operations
The company calculates FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures.
FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the company's operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year-over-year, captures trends in occupancy rates, rental rates and operating costs. The company also believes that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the company's operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the company's properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the company's properties, all of which have real economic effects and could materially impact the company's results from operations, the utility of FFO as a measure of the company's performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the NAREIT definition as the company does, and, accordingly, the company's FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the company's performance. FFO should not be used as a measure of the company's liquidity, nor is it indicative of funds available to fund the company's cash needs, including the company's ability to pay dividends or service indebtedness. FFO also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.
Cash Net Operating Income
The company uses NOI internally to evaluate and compare the operating performance of the company's properties. The company believes cash NOI provides useful information to investors regarding the company's financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level, and when compared across periods, can be used to determine trends in earnings of the company's properties as this measure is not affected by (1) the non-cash revenue and expense recognition items, (2) the cost of funds of the property owner, (3) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP or (4) general and administrative expenses and other gains and losses that are specific to the property owner. The company believes the exclusion of these items from net income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating the company's properties as well as trends in occupancy rates, rental rates and operating costs. Cash NOI is a measure of the operating performance of the company's properties but does not measure the company's performance as a whole. Cash NOI is therefore not a substitute for net income as computed in accordance with GAAP.
Cash NOI is a non-GAAP financial measure of performance. The company defines cash NOI as operating revenues (rental income, tenant reimbursements, lease termination fees, ground lease rental income and other property income) less property and related expenses (property expenses, ground lease expense, property marketing costs, real estate taxes and insurance), adjusted for non-cash revenue and operating expense items such as straight-line rent, amortization of lease intangibles, amortization of lease incentives and other adjustments. Cash NOI also excludes general and administrative expenses, depreciation and amortization, interest expense, other nonproperty income and losses, acquisition-related expense, gains and losses from property dispositions, extraordinary items, tenant improvements, and leasing commissions. Other REITs may use different methodologies for calculating cash NOI, and accordingly, the company's cash NOI may not be comparable to the cash NOIs of other REITs.
About American Assets Trust, Inc.
American Assets Trust, Inc. is a full service, vertically integrated and self-administered real estate investment trust ("REIT"), headquartered in San Diego, California. The company has over 55 years of experience in acquiring, improving, developing and managing premier office, retail, and residential properties throughout the United States in some of the nation’s most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Washington, Oregon, Texas and Hawaii. The company's office portfolio comprises approximately 4.1 million rentable square feet, and its retail portfolio comprises approximately 3.1 million rentable square feet. In addition, the company owns one mixed-use property (including approximately 94,000 rentable square feet of retail space and a 369-room all-suite hotel) and 2,110 multifamily units. In 2011, the company was formed to succeed to the real estate business of American Assets, Inc., a privately held corporation founded in 1967 and, as such, has significant experience, long-standing relationships and extensive knowledge of its core markets, submarkets and asset classes. For additional information, please visit www.americanassetstrust.com.
Forward Looking Statements
This press release may contain forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: adverse economic or real estate developments in our markets; defaults on, early terminations of or non-renewal of leases by tenants, including significant tenants; decreased rental rates or increased vacancy rates; our failure to generate sufficient cash flows to service our outstanding indebtedness; fluctuations in interest rates and increased operating costs; our failure to obtain necessary outside financing; our inability to develop or redevelop our properties due to market conditions; investment returns from our developed properties may be less than anticipated; general economic conditions; financial market fluctuations; risks that affect the general office, retail, multifamily and mixed-use environment; the competitive environment in which we operate; system failures or security incidents through cyber attacks; the impact of epidemics, pandemics, or other outbreaks of illness, disease or virus (such as the outbreak of COVID-19 and its variants) and the actions taken by government authorities and others related thereto, including the ability of our company, our properties and our tenants to operate; difficulties in identifying properties to acquire and completing acquisitions; our failure to successfully operate acquired properties and operations; risks related to joint venture arrangements; on-going and/or potential litigation; difficulties in completing dispositions; conflicts of interests with our officers or directors; lack or insufficient amounts of insurance; environmental uncertainties and risks related to adverse weather conditions and natural disasters; other factors affecting the real estate industry generally; limitations imposed on our business and our ability to satisfy complex rules in order for American Assets Trust, Inc. to continue to qualify as a REIT, for U.S. federal income tax purposes; and changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates and taxation of REITs. While forward-looking statements reflect the company's good faith beliefs, assumptions and expectations, they are not guarantees of future performance. For a further discussion of these and other factors that could cause the company's future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company's most recent annual report on Form 10-K, and other risks described in documents subsequently filed by the company from time to time with the Securities and Exchange Commission. The company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes.
Source: American Assets Trust, Inc.
Investor and Media Contact:
American Assets Trust
Robert F. Barton
Executive Vice President and Chief Financial Officer
858-350-2607
FAQ
What was AAT's net income per share in Q3 2024?
How much did AAT's FFO increase in Q3 2024?
What is AAT's updated FFO guidance for 2024?
What was AAT's office occupancy rate in Q3 2024?
