AAT — American Assets Trust, Inc.

Summary of American Assets Trust Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Funds from Operations (FFO): Reported at $0.51 per diluted share, an increase of $0.04 from Q4 2025.
• Net Income: Attributable to common stockholders was $0.08 per share.
• Same-store Cash NOI: Flat year-over-year across all sectors.
• Retail Portfolio: 98% leased with average base rents reaching a record $30 per square foot.
• Multifamily Portfolio: Same-store cash NOI increased by 3% year-over-year; overall occupancy at 96%.
• Balance Sheet: Liquidity of approximately $518 million, with a net debt-to-EBITDA ratio of 6.9x.
• Dividend: Quarterly dividend of $0.34 per share approved, with a payout ratio of approximately 111%.

2. Strategic Updates and Business Highlights

• Credit Facility: Successfully recast and upsized unsecured credit facility to $600 million, enhancing financial flexibility.
• Office Portfolio: 84.5% leased overall, with a focus on high-quality, well-located buildings. Executed 237,000 square feet of office leases with cash leasing spreads of 4.8%.
• Retail Performance: Strong tenant health and leasing demand, with less than 3% of retail square footage expiring in 2026.
• Multifamily Strategy: Focus on maintaining occupancy and optimizing pricing in a competitive supply environment.
• Technology Investments: Initiatives to improve operational efficiency and tenant experience through technology and AI capabilities.

3. Forward Guidance and Outlook

• 2026 FFO Guidance: Reaffirmed range of $1.96 to $2.10 per share, with a midpoint of $2.03.
• Occupancy Goals: Targeting 85% to 88% leased across the office portfolio by year-end, although recent tenant move-outs may affect this target.
• Payout Ratio Expectations: Anticipated to trend in the low to mid-90% range for the remainder of the year, with a full-year estimate in the upper 90% range.

4. Bad News, Challenges, or Points of Concern

• Office Portfolio Vacancies: The unexpected move-out of Genentech (67,000 square feet) in Q4 2026 may hinder occupancy targets.
• Retail NOI Decline: Slight decline of 0.7% due to temporary vacancies from former tenants, although re-leasing efforts are underway.
• Mixed-use Performance: NOI declined 2.7% year-over-year, impacted by lower average daily rates (ADR) at Embassy Suites Waikiki.
• Tourism Recovery: Slow recovery in tourism demand, particularly from Japanese tourists, affecting hotel performance.

5. Notable Q&A Insights

• Office Leasing Pipeline: Approximately 244,000 square feet of signed leases not yet commenced, with $0.07 per share expected to contribute to 2026 guidance.
• La Jolla Commons: Strong leasing traction with proposals for full and multi-floor users, indicating a positive outlook for this asset.
• One Beach Street: Shift in focus to smaller tenants following a larger opportunity that did not materialize, with ongoing spec suite build-out expected to attract demand.
• Tourism Trends: The hotel segment remains sensitive to international tourism dynamics, with a notable decline in Japanese tourist presence impacting overall performance.

Overall, American Assets Trust reported stable financial results and maintained a positive outlook despite facing challenges in office leasing and tourism recovery. The company is focused on strategic initiatives to enhance its portfolio and operational efficiency while navigating a mixed economic environment.