AAT — American Assets Trust, Inc.

Summary of American Assets Trust, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• FFO per Share: $0.47 for Q4; $2.00 for the full year, exceeding initial expectations by 3%.
• Net Income: $0.05 per share for Q4; $0.92 per share for the full year.
• Same-Store NOI: Increased by 0.5% year-over-year; office segment up 2.3%, retail up 1.2%, multifamily down 3.2%, and mixed-use down 6.7%.
• Occupancy Rates: Office portfolio at 83% leased; same-store office portfolio at 86%, up 150 basis points from Q3.
• Liquidity: Approximately $529 million, including $129 million in cash and $400 million available on the revolving line of credit.
• Leverage: Net debt to EBITDA at 6.9x trailing 12-month basis, with a target of 5.5x.

2. Strategic Updates and Business Highlights

• Office Leasing: Continued improvement in leasing activity, particularly in high-quality Class A spaces. Executed 23 leases totaling over 193,000 square feet in Q4 with positive cash leasing spreads of 6.6%.
• Retail Performance: Strong stability with 98% leased, supported by low vacancy rates and healthy sales.
• Multifamily Challenges: Ended the year at 95.5% leased, facing pressure from new supply in competitive markets.
• Hotel Operations: Waikiki Beach Walk faced softer tourism, impacting rates and occupancy, but management remains optimistic about long-term recovery.
• Dividend: Quarterly dividend maintained at $0.34 per share, with expectations for improved coverage as developments stabilize.

3. Forward Guidance and Outlook

• 2026 FFO Guidance: Expected range of $1.96 to $2.10 per share, with a midpoint of $2.03, reflecting a 1.5% increase over 2025.
• Same-Store NOI Growth: Anticipated growth of over 2% in 2026, with office expected to increase by 3.3%.
• Leasing Targets: Aim to end 2026 with 86% to 88% leased across the office portfolio, with a focus on converting active leasing prospects into signed leases.

4. Bad News, Challenges, or Points of Concern

• Multifamily Segment: Decline in NOI due to elevated new supply and competitive pricing pressures, with expectations for a slow recovery.
• Hotel Performance: Softer tourism trends in Waikiki impacted occupancy and revenue per available room (RevPAR), which decreased year-over-year.
• Market Sentiment: Management expressed frustration with the current share price, which does not reflect the intrinsic value of the assets.
• Credit Reserves: $0.04 per share reserved for potential tenant defaults, indicating caution in the current economic environment.

5. Notable Q&A Insights

• Leasing Activity: Management highlighted a significant increase in leasing activity, particularly in high-quality tenants across various sectors, including technology and finance.
• Balance Sheet Strategy: Plans to reduce leverage to 5.5x through internal cash flow from leasing up new developments.
• Asset Sales: Open to strategic asset sales if they reflect long-term value, but will not sell at a discount merely to improve liquidity.
• Market Dynamics: Management noted that while office leasing carries higher capital burdens, they expect conditions to normalize as occupancy improves.

Overall, American Assets Trust demonstrated resilience in its financial performance amidst a challenging environment, with a focus on strategic leasing and maintaining high-quality assets, while also preparing for potential headwinds in the multifamily and hotel segments.