American Assets Trust, Inc. (NYSE: AAT) (the “company”) today
reported financial results for its fourth quarter and year ended
December 31, 2022.
Fourth Quarter Highlights
- Net income
available to common stockholders of $9.6
million and $43.5
million for the three months and
year ended December 31, 2022, respectively,
or $0.16 and
$0.72 per diluted share,
respectively.
- Funds From
Operations ("FFO") increased 4%
and 17% year-over-year
to $0.56 and
$2.34 per diluted share for the
three months and year ended December 31,
2022, respectively, compared to the same periods
in 2021.
- Same-store
cash Net Operating Income ("NOI") increased
5.5% and
9.5% year-over-year for the
three months and year ended December 31,
2022, respectively, compared to the same periods
in 2021.
- Increasing
quarterly dividend 3% to $0.33 per share of common stock in the
first quarter of 2023 compared to the fourth quarter of
2022.
- Introducing
2023 annual guidance midpoint of $2.23 with a range of $2.16 to
$2.30 of FFO per diluted share.
- Leased
approximately 78,000 comparable
office square feet at an average straight-line basis and cash-basis
contractual rent increase
of 25% and
15%, respectively, during the
three months ended December 31,
2022.
- Leased
approximately 103,000 comparable
retail square feet at an average straight-line basis and cash-basis
contractual rent increase
of 13% and
14%, respectively, during the
three months ended December 31,
2022.
Amended and Restated Term Loan
Agreement
- In January 2023, our existing
term loan agreement was amended and restated to, among other
things, increase the fully drawn borrowings from $150 million to
$225 million, extend the maturity date from March 1, 2023 to
January 5, 2025 (with one, twelve-month extension option) and
transition from LIBOR to SOFR.
Financial Results
Net income attributable to common stockholders was
$9.6 million, or $0.16 per basic and diluted share for the three
months ended December 31, 2022 compared to $8.1 million, or
$0.14 per basic and diluted share for the three months ended
December 31, 2021. For the year ended December 31, 2022, net
income attributed to common stockholders was $43.5 million, or
$0.72 per basic and diluted share compared to $28.4 million, or
0.47 per basic and diluted share for the year ended December 31,
2021. The year-over-year increase in net income attributable to
common stockholders is primarily due to (i) a $4.3 million debt
extinguishment charge related to the repayment of the company's
Senior Guaranteed Notes, Series A on January 26, 2021, not incurred
in 2022, (ii) a $6.3 million net increase at Waikiki Beach Walk -
Embassy Suites due to increased tourism into Hawaii, (iii) a $4.4
million net increase in retail income due to new tenant leases
signed at Alamo Quarry Market and Del Monte Center and
COVID-related lease modifications that changed some tenants to
alternate rent or cash basis of revenue recognition (with some of
these tenants later reverting back to contractual basic monthly
rent), and (iv) a $2.1 million net increase in office related to
our recent acquisitions of Eastgate Office Park and Corporate
Campus East III in July 2021 and September 2021, respectively, and
Bel-Spring 520 in March 2022. These increases were offset by higher
stock-based compensation expense and employee-related costs
incurred in 2022.
During the fourth quarter of 2022, the company
generated FFO for common stock and common units of $42.3 million,
or $0.56 per diluted share and unit, compared to $40.8 million, or
$0.54 per diluted share and unit, for the fourth quarter of 2021.
The increase in FFO from the corresponding period in 2021 was
primarily due to an increase in revenue at our Waikiki Beach Walk -
Embassy SuitesTM, an increase in our retail segment related to new
tenant leases, tenants previously on alternate rent reverting back
to basic monthly rent and one-time real estate tax refunds related
to prior year tax assessment, and an increase in revenue and
average monthly base rent for our multifamily segment.
Additionally, there was an increase in FFO in 2022 from our recent
acquisitions of Corporate Campus East III in September 2021 and
Bel-Spring 520 in March 2022.
FFO is a non-GAAP supplemental earnings measure
which the company considers meaningful in measuring its operating
performance. A reconciliation of FFO to net income is attached to
this press release.
Leasing
The portfolio leased status as of the end of the
indicated quarter was as
follows:
|
December 31, 2022 |
September 30, 2022 |
December 31, 2021 |
Total Portfolio |
|
|
|
Office |
88.9% |
90.7% |
90.4% |
Retail |
93.5% |
92.2% |
92.6% |
Multifamily |
91.8% |
93.0% |
96.0% |
Mixed-Use: |
|
|
|
Retail |
93.8% |
94.9% |
89.6% |
Hotel |
76.9% |
78.6% |
66.4% |
|
|
|
|
Same-Store Portfolio |
|
|
Office (1) |
92.5% |
93.7% |
92.8% |
Retail |
93.5% |
92.2% |
92.6% |
Multifamily |
91.8% |
93.0% |
96.0% |
Mixed-Use: |
|
|
|
Retail |
93.8% |
94.9% |
89.6% |
Hotel |
76.9% |
78.6% |
66.4% |
(1) |
Same-store office leased percentages includes (i) Eastgate Office
Park which was acquired on July 7, 2021 and (ii) Corporate Campus
East III which was acquired on September 10, 2021. Same-store
office leased percentages excludes (i) One Beach Street due to
significant redevelopment activity; (ii) Bel-Spring 520 which was
acquired on March 8, 2022; (iii) the 710 building at Lloyd District
Portfolio which was placed into operations on November 1, 2022
approximately one year after completing renovations of the building
and (iv) land held for development. |
During the fourth quarter of 2022, the company
signed 46 leases for approximately 243,700 square feet of office
and retail space, as well as 409 multifamily apartment leases.
Renewals accounted for 92% of the comparable office leases, 100% of
the comparable retail leases, and 70% of the residential
leases.
Office and RetailOn a comparable space basis (i.e.
leases for which there was a former tenant) during the fourth
quarter of 2022 and year ended December 31, 2022, our retail
and office 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 |
Q4 2022 |
13 |
78,000 |
15.4% |
$46.90 |
$40.65 |
25.0% |
FY 2022 |
43 |
353,000 |
17.1% |
$62.21 |
$53.11 |
21.7% |
|
|
|
|
|
|
|
|
Retail |
Q4 2022 |
20 |
103,000 |
14.3% |
$32.13 |
$28.11 |
12.8% |
FY 2022 |
69 |
320,000 |
5.1% |
$32.03 |
$30.48 |
17.2% |
MultifamilyThe average monthly base rent per leased
unit for our multifamily properties for the fourth quarter of 2022
was $2,516 compared to an average monthly base rent per leased unit
of $2,189 for the fourth quarter of 2021, which is an increase of
approximately 14.9%.
Same-Store Cash Net Operating
Income
For the three months and year ended December 31,
2022, same-store cash NOI increased 5.5% and 9.5%, respectively,
compared to the three months and year ended December 31, 2021. The
same-store cash NOI by segment was as follows (in thousands):
|
Three Months Ended (1) |
|
|
|
|
Year Ended
(2) |
|
|
|
|
December 31, |
|
|
|
|
December 31, |
|
|
|
|
|
2022 |
|
|
2021 |
|
Change |
|
|
2022 |
|
|
2021 |
|
Change |
Cash Basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Office |
$ |
33,865 |
|
$ |
31,927 |
|
6.1 |
% |
|
$ |
124,218 |
|
$ |
114,498 |
|
8.5 |
% |
Retail |
|
18,480 |
|
|
17,644 |
|
4.7 |
|
|
|
69,491 |
|
|
69,257 |
|
0.3 |
|
Multifamily |
|
8,271 |
|
|
8,183 |
|
1.1 |
|
|
|
32,224 |
|
|
28,921 |
|
11.4 |
|
Mixed-Use |
|
4,869 |
|
|
4,320 |
|
12.7 |
|
|
|
21,734 |
|
|
13,453 |
|
61.6 |
|
Same-store Cash NOI |
$ |
65,485 |
|
$ |
62,074 |
|
5.5 |
% |
|
$ |
247,667 |
|
$ |
226,129 |
|
9.5 |
% |
(1) |
Same-store portfolio includes (i) Eastgate Office Park which was
acquired on July 7, 2021 and (ii) Corporate Campus East III which
was acquired on September 10, 2021. Same-store portfolio excludes
(i) One Beach Street, due to significant redevelopment activity;
(ii) Bel-Spring 520 which was acquired on March 8, 2022; (iii) the
710 building at Lloyd District Portfolio which was placed into
operations on November 1, 2022, approximately one year after
completing renovations of the building and (iv) land held for
development. |
(2) |
Same-store portfolio excludes (i)
One Beach Street, due to significant redevelopment activity; (ii)
Eastgate Office Park which was acquired on July 7, 2021; (iii)
Corporate Campus East III which was acquired on September 10, 2021;
(iv) Bel-Spring 520 which was acquired on March 8, 2022; (v) the
710 building at Lloyd District Portfolio which was placed into
operations on November 1, 2022, approximately one year after
completing renovations of the building and (vi) land held for
development. |
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.
Amended and Restated Term Loan
Agreement
On January 5, 2023, our term loan agreement was
amended and restated to, among other things, increase the
fully-drawn borrowings from $150 million to $225 million, extend
the maturity date from March 1, 2023 to January 5, 2025 (with one,
twelve-month extension option) and transition borrowings to the
Secured Overnight Financing Rate (SOFR), and away from LIBOR. The
$225 million term loan is unsecured. Prior to amending and
restating the term loan agreement, the company entered into
interest rate swaps that are intended to fix the interest rate on
the $225 million term loan at approximately 5.47% for the first
year of the amended and restated term loan and 5.57% for the second
year of the amended and restated term loan, subject to adjustments
based on the company’s consolidated leverage ratio.
Balance Sheet and Liquidity
At December 31, 2022, the company had gross
real estate assets of $3.7 billion and liquidity of $413.6 million,
comprised of cash and cash equivalents of $49.6 million and $364.0
million of availability on its line of credit. At December 31,
2022, the company has only 1 out of 31 assets encumbered by a
mortgage.
On January 6, 2023, we repaid in full the
$36 million outstanding balance on our revolving line of
credit under our Third Amended and Restated Credit Facility.
Dividends
The company declared dividends on its shares of
common stock of $0.32 per share for the fourth quarter of 2022. The
dividends were paid on December 22, 2022.
In addition, the company has declared a dividend on
its common stock of $0.33 per share for the first quarter of
2023. The dividend will be paid in cash on March 23, 2023
to stockholders of record on March 9, 2023.
Guidance
The company is introducing 2023 guidance for full
year 2023 FFO per diluted share of $2.16 to $2.30 per share, with a
midpoint of $2.23.
The company's guidance excludes any impact from
future acquisitions, dispositions, equity issuances or repurchases,
debt financings or repayments. Management will discuss the
company's guidance in more detail on tomorrow's earnings call. 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 three months ended and year ended
December 31, 2022 on Wednesday, February 8, 2023 at 8:00
a.m. Pacific Time (“PT”). To participate in the event by telephone,
please dial 1-833-630-1956 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 three months and year ended December 31, 2022 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
InformationAmerican Assets Trust,
Inc.Consolidated Balance
Sheets(In Thousands, Except Share
Data)
|
December 31, 2022 |
|
December 31, 2021 |
Assets |
(unaudited) |
|
|
Real estate, at cost |
|
|
|
|
|
Operating real estate |
$ |
3,468,537 |
|
|
$ |
3,389,726 |
|
Construction in progress |
|
202,385 |
|
|
|
139,098 |
|
Held for development |
|
547 |
|
|
|
547 |
|
|
|
3,671,469 |
|
|
|
3,529,371 |
|
Accumulated depreciation |
|
(936,913 |
) |
|
|
(847,390 |
) |
Real estate, net |
|
2,734,556 |
|
|
|
2,681,981 |
|
Cash and cash equivalents |
|
49,571 |
|
|
|
139,524 |
|
Accounts receivable, net |
|
7,848 |
|
|
|
7,445 |
|
Deferred rent receivables, net |
|
87,192 |
|
|
|
82,724 |
|
Other assets, net |
|
108,714 |
|
|
|
106,253 |
|
Total assets |
$ |
2,987,881 |
|
|
$ |
3,017,927 |
|
Liabilities and equity |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Secured notes payable, net |
$ |
74,578 |
|
|
$ |
110,965 |
|
Unsecured notes payable, net |
|
1,539,453 |
|
|
|
1,538,238 |
|
Unsecured line of credit, net |
|
34,057 |
|
|
|
— |
|
Accounts payable and accrued expenses |
|
65,992 |
|
|
|
64,531 |
|
Security deposits payable |
|
8,699 |
|
|
|
7,855 |
|
Other liabilities and deferred credits, net |
|
79,577 |
|
|
|
86,215 |
|
Total liabilities |
|
1,802,356 |
|
|
|
1,807,804 |
|
Commitments and contingencies |
|
|
|
|
|
Equity: |
|
|
|
|
|
American Assets Trust, Inc. stockholders' equity |
|
|
|
|
|
Common stock, $0.01 par value, 490,000,000 shares authorized,
60,718,653 and 60,525,580 shares issued and outstanding at December
31, 2022 and December 31, 2021, respectively |
|
607 |
|
|
|
605 |
|
Additional paid-in capital |
|
1,461,201 |
|
|
|
1,453,272 |
|
Accumulated dividends in excess of net income |
|
(251,167 |
) |
|
|
(217,785 |
) |
Accumulated other comprehensive income |
|
10,624 |
|
|
|
2,872 |
|
Total American Assets Trust, Inc. stockholders' equity |
|
1,221,265 |
|
|
|
1,238,964 |
|
Noncontrolling interests |
|
(35,740 |
) |
|
|
(28,841 |
) |
Total equity |
|
1,185,525 |
|
|
|
1,210,123 |
|
Total liabilities and equity |
$ |
2,987,881 |
|
|
$ |
3,017,927 |
|
American Assets Trust,
Inc.Unaudited Consolidated Statements of
Operations(In Thousands, Except Shares and Per
Share Data)
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue: |
|
|
|
|
|
|
|
Rental income |
$ |
101,037 |
|
|
$ |
97,635 |
|
|
$ |
402,507 |
|
|
$ |
360,208 |
|
Other property income |
|
4,963 |
|
|
|
4,112 |
|
|
|
20,141 |
|
|
|
15,620 |
|
Total revenue |
|
106,000 |
|
|
|
101,747 |
|
|
|
422,648 |
|
|
|
375,828 |
|
Expenses: |
|
|
|
|
|
|
|
Rental expenses |
|
29,209 |
|
|
|
25,064 |
|
|
|
107,645 |
|
|
|
86,980 |
|
Real estate taxes |
|
10,595 |
|
|
|
11,184 |
|
|
|
44,788 |
|
|
|
42,794 |
|
General and administrative |
|
9,013 |
|
|
|
9,305 |
|
|
|
32,143 |
|
|
|
29,879 |
|
Depreciation and amortization |
|
30,110 |
|
|
|
30,479 |
|
|
|
123,338 |
|
|
|
116,306 |
|
Total operating expenses |
|
78,927 |
|
|
|
76,032 |
|
|
|
307,914 |
|
|
|
275,959 |
|
Operating income |
|
27,073 |
|
|
|
25,715 |
|
|
|
114,734 |
|
|
|
99,869 |
|
Interest expense, net |
|
(14,565 |
) |
|
|
(14,998 |
) |
|
|
(58,232 |
) |
|
|
(58,587 |
) |
Loss on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,271 |
) |
Other (expense) income, net |
|
(102 |
) |
|
|
(239 |
) |
|
|
(625 |
) |
|
|
(418 |
) |
Net income |
|
12,406 |
|
|
|
10,478 |
|
|
|
55,877 |
|
|
|
36,593 |
|
Net income attributable to restricted shares |
|
(184 |
) |
|
|
(147 |
) |
|
|
(648 |
) |
|
|
(564 |
) |
Net income attributable to unitholders in the Operating
Partnership |
|
(2,593 |
) |
|
|
(2,194 |
) |
|
|
(11,723 |
) |
|
|
(7,653 |
) |
Net income
attributable to American Assets Trust, Inc.
stockholders |
$ |
9,629 |
|
|
$ |
8,137 |
|
|
$ |
43,506 |
|
|
$ |
28,376 |
|
|
|
|
|
|
|
|
|
Net income per share |
|
|
|
|
|
|
|
Basic income attributable to common stockholders per share |
$ |
0.16 |
|
|
$ |
0.14 |
|
|
$ |
0.72 |
|
|
$ |
0.47 |
|
Weighted average shares of common stock outstanding - basic |
|
60,072,517 |
|
|
|
60,002,303 |
|
|
|
60,048,970 |
|
|
|
59,990,740 |
|
|
|
|
|
|
|
|
|
Diluted income attributable to common stockholders per share |
$ |
0.16 |
|
|
$ |
0.14 |
|
|
$ |
0.72 |
|
|
$ |
0.47 |
|
Weighted average shares of common stock outstanding - diluted |
|
76,254,054 |
|
|
|
76,183,840 |
|
|
|
76,230,507 |
|
|
|
76,172,277 |
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
$ |
0.32 |
|
|
$ |
0.30 |
|
|
$ |
1.28 |
|
|
$ |
1.16 |
|
Reconciliation of Net Income to Funds From
OperationsThe 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 |
|
Year Ended |
|
December 31, 2022 |
|
December 31, 2022 |
Funds From Operations (FFO) |
|
|
|
|
|
Net income |
$ |
12,406 |
|
|
$ |
55,877 |
|
Depreciation and amortization of real estate assets |
|
30,110 |
|
|
|
123,338 |
|
FFO, as defined by NAREIT |
$ |
42,516 |
|
|
$ |
179,215 |
|
Less: Nonforfeitable dividends on restricted stock awards |
|
(182 |
) |
|
|
(641 |
) |
FFO attributable to common stock and units |
$ |
42,334 |
|
|
$ |
178,574 |
|
FFO per diluted share/unit |
$ |
0.56 |
|
|
$ |
2.34 |
|
Weighted average number of common shares and units, diluted |
|
76,256,916 |
|
|
|
76,233,814 |
|
Reconciliation of Same-Store Cash NOI to
Net IncomeThe company's reconciliation of Same-Store Cash
NOI to Net Income is as follows (in thousands, unaudited):
|
Three Months Ended (1) |
|
Year Ended
(2) |
|
December 31, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Same-store cash NOI |
|
65,485 |
|
|
$ |
62,074 |
|
|
$ |
247,667 |
|
|
$ |
226,129 |
|
Non-same-store cash NOI |
|
180 |
|
|
|
(291 |
) |
|
|
10,352 |
|
|
|
3,865 |
|
Tenant improvement reimbursements(3) |
|
134 |
|
|
|
139 |
|
|
|
3,082 |
|
|
|
406 |
|
Cash NOI |
$ |
65,799 |
|
|
$ |
61,922 |
|
|
$ |
261,101 |
|
|
$ |
230,400 |
|
Non-cash revenue and other operating expenses(4) |
|
397 |
|
|
|
3,577 |
|
|
|
9,114 |
|
|
|
15,654 |
|
General and administrative |
|
(9,013 |
) |
|
|
(9,305 |
) |
|
|
(32,143 |
) |
|
|
(29,879 |
) |
Depreciation and amortization |
|
(30,110 |
) |
|
|
(30,479 |
) |
|
|
(123,338 |
) |
|
|
(116,306 |
) |
Interest expense, net |
|
(14,565 |
) |
|
|
(14,998 |
) |
|
|
(58,232 |
) |
|
|
(58,587 |
) |
Loss on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,271 |
) |
Other (expense) income, net |
|
(102 |
) |
|
|
(239 |
) |
|
|
(625 |
) |
|
|
(418 |
) |
Net income |
$ |
12,406 |
|
|
$ |
10,478 |
|
|
$ |
55,877 |
|
|
$ |
36,593 |
|
|
|
|
|
|
|
|
|
Number of properties included in same-store analysis |
|
29 |
|
|
|
27 |
|
|
|
27 |
|
|
|
26 |
|
(1) |
Same-store portfolio includes (i) Eastgate Office Park which was
acquired on July 7, 2021 and (ii) Corporate Campus East III which
was acquired on September 10, 2021. Same-store portfolio excludes
(i) One Beach Street, due to significant redevelopment activity;
(ii) Bel-Spring 520 which was acquired on March 8, 2022; (iii) the
710 building at Lloyd District Portfolio which was placed into
operations on November 1, 2022, approximately one year after
completing renovations of the building and (iv) land held for
development. |
(2) |
Same-store portfolio excludes (i)
One Beach Street, due to significant redevelopment activity; (ii)
Eastgate Office Park which was acquired on July 7, 2021; (iii)
Corporate Campus East III which was acquired on September 10, 2021;
(iv) Bel-Spring 520 which was acquired on March 8, 2022; (v) the
710 building at Lloyd District Portfolio which was placed into
operations on November 1, 2022, approximately one year after
completing renovations of the building and (vi) 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; net change in lease
receivables (solely with respect to Q2 2020 through Q4 2021), 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-K with the Securities and
Exchange Commission and, therefore, remain subject to
adjustment.
Use of Non-GAAP InformationFunds
from OperationsThe 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 IncomeThe 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, net change in lease receivables (solely with
respect to Q2 2020 through Q4 2021), 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 50 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 StatementsThis
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: 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; adverse economic or real estate developments in
our markets; our failure to generate sufficient cash flows to
service our outstanding indebtedness; defaults on, early
terminations of or non-renewal of leases by tenants, including
significant tenants; difficulties in identifying properties to
acquire and completing acquisitions; difficulties in completing
dispositions; our failure to successfully operate acquired
properties and operations; our inability to develop or redevelop
our properties due to market conditions; fluctuations in interest
rates and increased operating costs; risks related to joint venture
arrangements; our failure to obtain necessary outside financing;
on-going litigation; general economic conditions; financial market
fluctuations; risks that affect the general retail, office,
multifamily and mixed-use environment; the competitive environment
in which we operate; decreased rental rates or increased vacancy
rates; 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 us 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 TrustRobert F. BartonExecutive
Vice President and Chief Financial Officer858-350-2607
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