AAT — American Assets Trust, Inc.

Summary of American Assets Trust Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Funds from Operations (FFO): $0.51 per diluted share, up $0.04 from Q4 2025.
• Net Income: $0.08 per share.
• Same-store Cash Net Operating Income (NOI): Flat year-over-year across all sectors.
• Office Portfolio: 84.5% leased; same-store office cash NOI flat year-over-year.
• Retail Portfolio: 98% leased; same-store cash NOI down 0.7%.
• Multifamily Portfolio: Same-store cash NOI increased 3% year-over-year; 96% leased overall.
• Liquidity: Approximately $518 million, including $118 million in cash.
• Dividend: Quarterly dividend of $0.34 per share approved, with a payout ratio of approximately 111%.

2. Strategic Updates and Business Highlights

• Successfully recast and upsized the unsecured credit facility from $400 million to $500 million, extending maturity to April 2030, enhancing financial flexibility.
• Continued focus on office leasing, with approximately 237,000 square feet of office leases executed at cash leasing spreads of 4.8%.
• Retail portfolio remains strong with high leasing demand and affluent trade areas.
• Investment in technology to improve operations and tenant experience, with a focus on AI capabilities.
• Waikiki Beach Walk showed steady results despite mixed tourism conditions.

3. Forward Guidance and Outlook

• Reaffirmed full-year FFO guidance of $1.96 to $2.10 per share, with a midpoint of $2.03.
• Expected payout ratio 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.
• Targeting office portfolio occupancy of mid-80% by year-end, with potential for upside if leasing momentum continues.

4. Bad News, Challenges, or Points of Concern

• Office Portfolio: Genentech's decision to vacate 67,000 square feet in Q4 2026 was not anticipated, impacting occupancy targets.
• Retail NOI: Declined due to known vacancies, though these have been addressed with new leases.
• Multifamily Market: Competitive supply landscape in San Diego and Portland presents challenges for occupancy and rent growth.
• Tourism in Hawaii: Mixed performance at Embassy Suites Waikiki, with occupancy improvements offset by lower average daily rates (ADR) and rising operating expenses. The recovery in tourism is slower than expected, particularly with reduced Japanese tourist numbers.

5. Notable Q&A Insights

• Office Leasing: Positive developments noted with 28,000 square feet of new leases in documentation, and 60,000 square feet of expansions from existing tenants.
• La Jolla Commons: Strong leasing activity with proposals out for multiple full-floor users, indicating a positive outlook for this property.
• One Beach Street: Shifted focus to smaller tenants after a larger opportunity did not materialize; optimism remains for future leasing success.
• Tourism Demand: The recovery in Waikiki is gradual, with international tourism still below pre-pandemic levels, impacting overall performance.

Overall, American Assets Trust reported stable financial results in Q1 2026, with strategic initiatives aimed at enhancing leasing activity and operational efficiency. However, challenges in the office and tourism sectors pose risks to achieving full-year targets.