American Assets Trust, Inc. Reports Third Quarter 2024 Financial Results
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.
Funds from Operations ("FFO") per diluted share increased 20% and 10% year-over-year for the three and nine months ended September 30, 2024, respectively, to $0.71 and $2.03 per diluted share, respectively.
Increased 2024 FFO per diluted share guidance to a range of $2.51 to $2.55 with a midpoint of $2.53, a 1% increase over prior guidance.
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% and 10% 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 to $2.55 with a midpoint of $2.53, a 1% 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% and 8%, 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% and 4%, respectively, during the third quarter.
Closed a public bond offering of $525 million in principal amount of 6.15% 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 EndedSeptember 30,
Nine Months EndedSeptember 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 $7.9 million for the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to (i) a $10 million settlement payment received during the first quarter relating to building specifications for one of the existing buildings at our office project in University Town Center (San Diego), (ii) an $11 million increase in termination fees received at our Torrey Reserve Campus, (iii) a $2.3 million net increase in our multifamily segment primarily due to an overall increase in average monthly base rent and an increase in occupancy, (iv) a $2.0 million increase in interest and investment income attributed to higher yield on our average cash balance during the period and (v) a $1.0 million net increase in our retail segment due to new tenant leases signed, scheduled rent increases and an increase in cost recoveries. These increases were offset by (i) a $6.3 million net settlement payment received on January 3, 2023 related to certain building systems at our Hassalo on Eighth property, (ii) a $7.7 million net decrease in our office segment due to acceleration of assets related to a tenant vacating their space early at our Torrey Reserve Campus and lower occupancy and reduced annualized base rents within our Lloyd Portfolio, and (iii) higher net interest expense of approximately $2.4 million primarily due to the $525 million in principal amount of 6.15% senior notes due 2034 and the $100 million draw on our unsecured revolving line of credit, which was subsequently repaid with proceeds from the bond offering.
FFO increased $9.8 million for the three months ended September 30, 2024 compared to the same period in 2023, primarily due to a lease termination fee received at Torrey Reserve Campus, an increase in our multifamily segment due to higher occupancy and average monthly base rent and an increase in other income due to interest and investment income attributed to higher yield on our average cash balance during the period. These increases were offset by a decrease in our office segment due to lower occupancy and an increase in our interest expense as described above.
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
87.0%
86.6%
86.8%
Retail
94.5%
94.5%
94.4%
Multifamily
90.3%
90.0%
89.5%
Mixed-Use:
Retail
96.3%
95.7%
95.1%
Hotel
86.7%
88.1%
85.3%
Same-Store Portfolio
Office (1)
89.2%
88.8%
89.0%
Retail
94.5%
94.5%
94.4%
Multifamily
90.3%
90.0%
89.5%
Mixed-Use:
Retail
96.3%
95.7%
95.1%
Hotel
86.7%
88.1%
85.3%
(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 70% of the comparable office leases, 95% of the comparable retail leases, and 51% of the residential leases.
Office and Retail
The annualized base rent per leased square foot as of the end of the indicated quarter was as follows:
4th Quarter2023
1st Quarter2024
2nd Quarter2024
3rd Quarter2024
Office
Weighted Average Portfolio
$56.27
$55.72
$55.48
$56.39
Retail
Weighted Average Portfolio
$26.44
$26.65
$26.85
$27.29
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 Quarter2023
1st Quarter2024
2nd Quarter2024
3rd Quarter2024
Office
Cash Basis % Change Over Prior Rent
22.4%
7.9%
5.2%
7.8%
Straight-Line Basis % Change Over Prior Rent
30.1%
10.9%
14.5%
16.4%
Retail
Cash Basis % Change Over Prior Rent
6.8%
1.9%
5.8%
4.4%
Straight-Line Basis % Change Over Prior Rent
12.8%
22.3%
34.4%
18.7%
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:
NumberofLeasesSigned
ComparableLeased Sq.Ft.
AverageCash Basis% ChangeOver PriorRent
Average CashContractualRent Per Sq.Ft.
Prior AverageCashContractualRent Per Sq.Ft.
Straight-LineBasis %Change OverPrior Rent
Office
Q3 2024
10
58,000
7.8%
$62.04
$57.53
16.4%
Last 4 Quarters
41
214,000
8.6%
$56.60
$52.10
15.1%
Retail
Q3 2024
20
125,000
4.4%
$34.27
$32.81
18.7%
Last 4 Quarters
80
401,000
4.6%
$36.44
$34.85
21.5%
Multifamily
The average monthly base rent per leased unit as of the end of the indicated quarter was as follows:
4th Quarter2023
1st Quarter2024
2nd Quarter2024
3rd Quarter2024
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 15.8% and 6.6%, respectively, compared to the three and nine months ended September 30, 2023. The same-store cash NOI by segment was as follows (in thousands):
Three Months EndedSeptember 30,
Nine Months EndedSeptember 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 $0.5 million in non-recurring costs incurred in prior periods relating to construction in progress for then-prospective construction within our retail segment. Excluding such non-recurring costs, same-store cash NOI increased 6.9% for the nine months ended September 30, 2024, and same-store cash NOI by segment was as follows (in thousands):
Three Months EndedSeptember 30,
Nine Months EndedSeptember 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
