American Assets Trust, Inc. (NYSE: AAT) (the “company”) today
reported financial results for its second quarter ended
June 30, 2021.
Second Quarter Highlights
- Net income available to common
stockholders of $8.9 million and $10.2 million for the three and
six months ended June 30, 2021, respectively, or $0.15 and $0.17
per diluted share, respectively.
- Funds From Operations
increased 6% and decreased 14% year-over-year to $0.51 and $0.89
per diluted share for the three and six months ended June 30, 2021,
respectively, compared to the same periods in 2020.
- On a sequential basis, Funds
From Operations per diluted share increased 34% from the first to
the second quarter of 2021, from $0.38 to $0.51 per diluted
share.
- Same-store cash NOI increased
23.3% and 6.4% year-over-year for the three and six months ended
June 30, 2021, respectively. Excluding lease termination fees,
same-store cash NOI would have been 23.0% and 5.7% for the three
and six months ended June 30, 2021, respectively.
- For the three months ended
June 30, 2021, we have collected 99% of office rents, 92% of
retail rents (including the retail component of Waikiki Beach Walk)
and 94% of multifamily rents, that were due during the second
quarter.
- Total collections increased to
96% in the second quarter of 2021.
- Leased approximately 47,000
comparable office square feet at an average straight-line basis and
cash-basis contractual rent increase of 15% and increase of 9%,
respectively, during the three months ended June 30,
2021.
- Leased approximately 110,000
comparable retail square feet at an average straight-line basis and
cash-basis contractual rent decrease of 16% and decrease of 20%,
respectively, during the three months ended June 30,
2021.
Eastgate Office Park
- Closed on acquisition of
Eastgate Office Park on July 7, 2021, consisting of an
approximately 280,000 square foot, multi-tenant office campus in
the premier I-90 corridor submarket of Bellevue, Washington for
$125 million.
Financial ResultsNet income
attributable to common stockholders was $8.9 million, or $0.15 per
basic and diluted share for the three months ended June 30,
2021 compared to $7.7 million, or $0.13 per basic and diluted share
for the three months ended June 30, 2020. For the six months
ended June 30, 2021, net income attributed to common stockholders
was $10.2 million, or $0.17 per basic and diluted share compared to
$19.7 million, or $0.33 per basic and diluted share for the six
months ended June 30, 2020. The year-over-year decrease 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, (ii) a $2.4 million decrease in rental revenue for tenants
who were changed to cash basis of revenue recognition during 2020
as the collectability was determined to be no longer probable for
certain tenants at Alamo Quarry Market, Carmel Mountain Plaza, Del
Monte Center, The Shops at Kalakaua, and Waikiki Beach Walk Retail,
in large part due to, collection challenges with our movie theatres
and gyms and a reduction in Hawaii tourism, (iii) a decrease in
revenue at our Waikiki Beach Walk Retail and Embassy Suites Hotel
due to the COVID-19 pandemic causing a decline in occupancy, (iv)
increase in interest expense related to our $500 million public
bond offering at 3.375% issued in January of 2021. These decreases
were partially offset by an incremental increase in annualized base
rents at La Jolla Commons, City Center Bellevue, and Torrey Reserve
Campus.
During the second quarter of 2021, the company
generated Funds From Operations (“FFO”) for common stockholders of
$39.0 million, or $0.51 per diluted share, compared to $36.3
million, or $0.48 per diluted share, for the second quarter of
2020. For the six months ended June 30, 2021, the company generated
FFO for common stockholders of $68.1 million, or $0.89 per diluted
share, compared to $79.1 million, or $1.04 per diluted share, for
the six months ended June 30, 2020. The decrease in FFO from the
corresponding period in 2020 was primarily due to the above
described debt extinguishment charge, increase in interest expense
related to the $500 million public bond offering and a decrease in
rental revenue from tenants who were changed to cash basis of
revenue recognition, and a decrease in revenue at our Waikiki Beach
Walk Retail and Embassy Suites Hotel, partially offset by an
increase in revenue and annualized base rents in our office
segment.
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:
|
June 30, 2021 |
March 31, 2021 |
June 30, 2020 |
Total Portfolio |
|
|
|
Office |
90.3% |
|
91.4% |
|
94.4% |
|
Retail |
91.1% |
|
90.8% |
|
94.7% |
|
Multifamily |
87.8% |
|
91.9% |
|
85.1% |
|
Mixed-Use: |
|
|
|
Retail |
89.2% |
|
88.2% |
|
95.7% |
|
Hotel (1) |
67.2% |
|
47.5% |
|
46.4% |
|
|
|
|
|
Same-Store Portfolio |
|
|
Office (2) |
92.6% |
|
93.7% |
|
96.4% |
|
Retail |
91.1% |
|
90.8% |
|
94.7% |
|
Multifamily |
87.8% |
|
91.9% |
|
85.1% |
|
(1) Based on quarter-to-date average occupancy for
the three months ended June 30, 2021. The rate for the month of
June 2021 was $316.18 and the occupancy was 82.9%.(2) Same-store
office leased percentages excludes One Beach Street due to
significant redevelopment activity.
During the second quarter of 2021, the company
signed 44 leases for approximately 171,500 square feet of office
and retail space, as well as 511 multifamily apartment leases.
Renewals accounted for 62% of the comparable office leases, 77% of
the comparable retail leases, and 44% of the residential
leases.
Office and RetailOn a comparable space basis (i.e.
leases for which there was a former tenant) during the second
quarter of 2021 and trailing four quarters ended June 30,
2021, our retail and office leasing spreads are shown below:
|
|
Number of Leases Signed |
Comparable Leased Sq. Ft. |
Average CashBasis % 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 |
Q2 2021 |
13 |
47,000 |
|
9.3% |
|
|
|
$47.16 |
|
$43.16 |
|
14.7% |
|
|
Last 4 Quarters |
43 |
190,000 |
|
4.1% |
|
|
|
$45.02 |
|
$43.26 |
|
7.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
Q2 2021 |
26 |
110,000 |
|
(20.3)% |
|
|
|
$47.42 |
|
$59.48 |
|
(15.7)% |
|
|
Last 4 Quarters |
89 |
374,000 |
|
(13.7)% |
|
|
|
$38.53 |
|
$44.63 |
|
(9.0)% |
|
|
MultifamilyThe average monthly base rent per leased
unit for same-store properties for the second quarter of 2021 was
$2,187 compared to an average monthly base rent per leased unit of
$2,152 for the second quarter of 2020, which is an increase of
approximately 2%.
Same-Store Cash Net Operating
IncomeFor the three and six months ended June 30, 2021,
same-store cash NOI decreased 23.3% and 6.4%, respectively,
compared to the three and six months ended June 30, 2020. The
same-store cash NOI by segment was as follows (in thousands):
|
Three Months Ended (1) |
|
|
|
|
Six Months Ended (1) |
|
|
|
|
June 30, |
|
|
|
|
June 30, |
|
|
|
|
2021 |
|
2020 |
|
Change |
|
2021 |
|
2020 |
|
Change |
Cash Basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Office (2) |
$ |
30,088 |
|
|
$ |
26,897 |
|
|
11.9 |
|
|
|
|
$ |
56,886 |
|
|
$ |
53,591 |
|
|
6.1 |
|
|
% |
Retail (2) |
17,142 |
|
|
9,257 |
|
|
85.2 |
|
|
% |
|
31,859 |
|
|
27,660 |
|
|
15.2 |
|
|
|
Multifamily |
6,651 |
|
|
7,555 |
|
|
(12.0 |
) |
|
|
|
13,454 |
|
|
14,821 |
|
|
(9.2 |
) |
|
|
Mixed-Use |
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
Same-store Cash NOI (3) |
$ |
53,881 |
|
|
$ |
43,709 |
|
|
23.3 |
|
|
% |
|
$ |
102,199 |
|
|
$ |
96,072 |
|
|
6.4 |
|
|
% |
(1) Same-store portfolio excludes
(i) One Beach Street due to significant redevelopment activity;
(ii) Waikiki Beach Walk - Embassy Suites™ and Waikiki Beach Walk -
Retail, due to significant spalling repair activity; and (iii) land
held for development.(2) Same-store cash NOI for
the three and six months ended June 30, 2021 includes cash
lease termination fees received of $0.5 million and $0.6 million,
respectively. (3) Excluding lease termination fees
for the three and six months ended June 30, 2021, same-store
cash NOI would have been 23.0% and 5.7%, respectively.
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.
Balance Sheet and LiquidityAt
June 30, 2021, the company had gross real estate assets of
$3.3 billion and liquidity of $718.3 million, comprised of cash and
cash equivalents of $368.3 million and $350.0 million of
availability on its line of credit, which the company believes is
sufficient to meet the company's short-term liquidity requirements.
At June 30, 2021, the company has only 1 out of 28 assets
encumbered by a mortgage. The company has no debt obligations
maturing during the remainder of 2021.
DividendsThe company declared
dividends on its shares of common stock of $0.28 per share for the
second quarter of 2021. The dividends were paid on June 24,
2021.
In addition, the company has declared a dividend on
its common stock of $0.30 per share for the third quarter of
2021. The dividend will be paid in cash on September 23,
2021 to stockholders of record on September 9, 2021. The
company increased the dividend from $0.28 per share in the second
quarter of 2021 based on the company's rent collection in the
second quarter and better than anticipated revenue at Waikiki Beach
Walk - Embassy Suites Hotel.
COVID-19 Operational Update
Rent Collection for the Second Quarter of 2021 and
July 2021(1)
|
April |
|
|
May |
|
|
June |
|
|
Q2 Average |
|
|
July |
|
Office |
99.3% |
|
|
99.3% |
|
|
99.1% |
|
|
99.3% |
|
|
99.0% |
|
Retail |
94.3% |
|
|
94.2% |
|
|
95.6% |
|
|
94.7% |
|
|
93.1% |
|
Multifamily |
94.3% |
|
|
93.8% |
|
|
94.6% |
|
|
94.2% |
|
|
91.1% |
|
Mixed-Use (2) |
69.7% |
|
|
71.6% |
|
|
72.4% |
|
|
71.2% |
|
|
63.4% |
|
Average |
95.9% |
|
|
96.0% |
|
|
96.5% |
|
|
96.1% |
|
|
94.8% |
|
(1) Data as of July 15, 2021.(2) Includes only the
retail portion of Waikiki Beach Walk Retail and Embassy Suites
Hotel.
Rent DeferralsAs of June 30, 2021, we have entered
into deferral agreements for $8.2 million of recurring rents
related to the second quarter of 2020 through the second quarter of
2021. The weighted average payback period of the deferral
agreements is approximately 38 months. Revenue from approximately
66% of tenants with deferral agreements is recognized on a
straight-line basis comprising approximately 42% of the deferred
amount. For the second quarter of 2021, we collected approximately
94% of the $0.8 million of the deferred rent repayments due during
the period.
Conference CallThe company will
hold a conference call to discuss the results for the second
quarter of 2021 on Wednesday, July 28, 2021 at 8:00 a.m.
Pacific Time (“PT”). To participate in the event by telephone,
please dial 1-877-868-5513 and use the pass code 8731469. A
telephonic replay of the conference call will be available
beginning at 2:00 p.m. PT on Wednesday, July 28, 2021 through
Wednesday, August 4, 2021. To access the replay, dial
1-855-859-2056 and use the pass code 8731469. 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
InformationSupplemental financial information regarding
the company's second quarter 2021 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)
|
June 30, 2021 |
|
December 31, 2020 |
Assets |
(unaudited) |
|
|
|
Real estate, at cost |
|
|
|
|
|
Operating real estate |
$ |
3,171,449 |
|
|
|
$ |
3,155,280 |
|
|
Construction in progress |
|
115,546 |
|
|
|
|
91,047 |
|
|
Held for development |
|
547 |
|
|
|
|
547 |
|
|
|
|
3,287,542 |
|
|
|
|
3,246,874 |
|
|
Accumulated depreciation |
|
(801,482 |
) |
|
|
|
(754,140 |
) |
|
Real estate, net |
|
2,486,060 |
|
|
|
|
2,492,734 |
|
|
Cash and cash equivalents |
|
368,266 |
|
|
|
|
137,333 |
|
|
Restricted cash |
|
1,716 |
|
|
|
|
1,716 |
|
|
Accounts receivable, net |
|
6,582 |
|
|
|
|
6,938 |
|
|
Deferred rent receivables, net |
|
77,674 |
|
|
|
|
72,476 |
|
|
Other assets, net |
|
105,233 |
|
|
|
|
106,112 |
|
|
Total assets |
$ |
3,045,531 |
|
|
|
$ |
2,817,309 |
|
|
Liabilities and equity |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Secured notes payable, net |
$ |
110,944 |
|
|
|
$ |
110,923 |
|
|
Unsecured notes payable, net |
|
1,537,307 |
|
|
|
|
1,196,677 |
|
|
Unsecured line of credit, net |
|
— |
|
|
|
|
99,151 |
|
|
Accounts payable and accrued expenses |
|
80,291 |
|
|
|
|
59,262 |
|
|
Security deposits payable |
|
6,728 |
|
|
|
|
6,590 |
|
|
Other liabilities and deferred credits, net |
|
83,115 |
|
|
|
|
91,300 |
|
|
Total liabilities |
|
1,818,385 |
|
|
|
|
1,563,903 |
|
|
Commitments and contingencies |
|
|
|
|
|
Equity: |
|
|
|
|
|
American Assets Trust, Inc. stockholders' equity |
|
|
|
|
|
Common stock, $0.01 par value, 490,000,000 shares authorized,
60,474,866 and 60,476,292 shares issued and outstanding at June 30,
2021 and December 31, 2020, respectively |
|
605 |
|
|
|
|
605 |
|
|
Additional paid-in capital |
|
1,448,612 |
|
|
|
|
1,445,644 |
|
|
Accumulated dividends in excess of net income |
|
(199,956 |
) |
|
|
|
(176,560 |
) |
|
Accumulated other comprehensive income |
|
2,122 |
|
|
|
|
1,753 |
|
|
Total American Assets Trust, Inc. stockholders' equity |
|
1,251,383 |
|
|
|
|
1,271,442 |
|
|
Noncontrolling interests |
|
(24,237 |
) |
|
|
|
(18,036 |
) |
|
Total equity |
|
1,227,146 |
|
|
|
|
1,253,406 |
|
|
Total liabilities and equity |
$ |
3,045,531 |
|
|
|
$ |
2,817,309 |
|
|
|
|
|
|
|
|
|
|
|
|
American Assets Trust,
Inc.Unaudited Consolidated Statements of
Operations(In Thousands, Except Shares and Per
Share Data)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenue: |
|
|
|
|
|
|
|
Rental income |
$ |
87,639 |
|
|
|
$ |
79,230 |
|
|
|
$ |
168,769 |
|
|
|
$ |
171,300 |
|
|
Other property income |
4,170 |
|
|
|
2,879 |
|
|
|
7,026 |
|
|
|
7,552 |
|
|
Total revenue |
91,809 |
|
|
|
82,109 |
|
|
|
175,795 |
|
|
|
178,852 |
|
|
Expenses: |
|
|
|
|
|
|
|
Rental expenses |
20,204 |
|
|
|
16,981 |
|
|
|
38,450 |
|
|
|
39,549 |
|
|
Real estate taxes |
10,612 |
|
|
|
8,961 |
|
|
|
21,966 |
|
|
|
20,006 |
|
|
General and administrative |
6,924 |
|
|
|
6,679 |
|
|
|
13,747 |
|
|
|
13,499 |
|
|
Depreciation and amortization |
27,646 |
|
|
|
26,493 |
|
|
|
55,147 |
|
|
|
53,955 |
|
|
Total operating expenses |
65,386 |
|
|
|
59,114 |
|
|
|
129,310 |
|
|
|
127,009 |
|
|
Operating income |
26,423 |
|
|
|
22,995 |
|
|
|
46,485 |
|
|
|
51,843 |
|
|
Interest expense |
(14,862 |
) |
|
|
(13,331 |
) |
|
|
(28,867 |
) |
|
|
(26,803 |
) |
|
Early extinguishment of debt |
— |
|
|
|
— |
|
|
|
(4,271 |
) |
|
|
— |
|
|
Other income (expense), net |
(74 |
) |
|
|
162 |
|
|
|
(127 |
) |
|
|
270 |
|
|
Net income |
11,487 |
|
|
|
9,826 |
|
|
|
13,220 |
|
|
|
25,310 |
|
|
Net income attributable to restricted shares |
(135 |
) |
|
|
(69 |
) |
|
|
(272 |
) |
|
|
(173 |
) |
|
Net income attributable to unitholders in the Operating
Partnership |
(2,411 |
) |
|
|
(2,101 |
) |
|
|
(2,750 |
) |
|
|
(5,413 |
) |
|
Net income
attributable to American Assets Trust, Inc.
stockholders |
$ |
8,941 |
|
|
|
$ |
7,656 |
|
|
|
$ |
10,198 |
|
|
|
$ |
19,724 |
|
|
|
|
|
|
|
|
|
|
Net income per share |
|
|
|
|
|
|
|
Basic income attributable to common stockholders per share |
$ |
0.15 |
|
|
|
$ |
0.13 |
|
|
|
$ |
0.17 |
|
|
|
$ |
0.33 |
|
|
Weighted average shares of common stock outstanding - basic |
59,985,787 |
|
|
|
59,724,139 |
|
|
|
59,985,065 |
|
|
|
59,723,605 |
|
|
|
|
|
|
|
|
|
|
Diluted income attributable to common stockholders per share |
$ |
0.15 |
|
|
|
$ |
0.13 |
|
|
|
$ |
0.17 |
|
|
|
$ |
0.33 |
|
|
Weighted average shares of common stock outstanding - diluted |
76,167,324 |
|
|
|
76,114,687 |
|
|
|
76,166,602 |
|
|
|
76,114,153 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
$ |
0.28 |
|
|
|
$ |
0.20 |
|
|
|
$ |
0.56 |
|
|
|
$ |
0.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Six Months Ended |
|
June 30, 2021 |
|
June 30, 2021 |
Funds From Operations (FFO) |
|
|
|
|
|
Net income |
$ |
11,487 |
|
|
|
$ |
13,220 |
|
|
Depreciation and amortization of real estate assets |
|
27,646 |
|
|
|
|
55,147 |
|
|
FFO, as defined by NAREIT |
$ |
39,133 |
|
|
|
$ |
68,367 |
|
|
Less: Nonforfeitable dividends on restricted stock awards |
|
(134 |
) |
|
|
|
(269 |
) |
|
FFO attributable to common stock and units |
$ |
38,999 |
|
|
|
$ |
68,098 |
|
|
FFO per diluted share/unit |
$ |
0.51 |
|
|
|
$ |
0.89 |
|
|
Weighted average number of common shares and units, diluted |
|
76,167,246 |
|
|
|
|
76,166,158 |
|
|
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
(1) |
|
June 30, |
|
June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Same-store cash NOI |
53,881 |
|
|
|
$ |
43,709 |
|
|
|
$ |
102,199 |
|
|
|
$ |
96,072 |
|
|
Non-same-store cash NOI |
4,628 |
|
|
|
(1,463 |
) |
|
|
6,022 |
|
|
|
2,867 |
|
|
Tenant improvement reimbursements (2) |
220 |
|
|
|
202 |
|
|
|
291 |
|
|
|
2,998 |
|
|
Cash NOI |
$ |
58,729 |
|
|
|
$ |
42,448 |
|
|
|
$ |
108,512 |
|
|
|
$ |
101,937 |
|
|
Non-cash revenue and other operating expenses (3) |
2,264 |
|
|
|
13,719 |
|
|
|
6,867 |
|
|
|
17,360 |
|
|
General and administrative |
(6,924 |
) |
|
|
(6,679 |
) |
|
|
(13,747 |
) |
|
|
(13,499 |
) |
|
Depreciation and amortization |
(27,646 |
) |
|
|
(26,493 |
) |
|
|
(55,147 |
) |
|
|
(53,955 |
) |
|
Interest expense |
(14,862 |
) |
|
|
(13,331 |
) |
|
|
(28,867 |
) |
|
|
(26,803 |
) |
|
Early extinguishment of debt |
— |
|
|
|
— |
|
|
|
(4,271 |
) |
|
|
|
Other income (expense), net |
(74 |
) |
|
|
162 |
|
|
|
(127 |
) |
|
|
270 |
|
|
Net income |
$ |
11,487 |
|
|
|
$ |
9,826 |
|
|
|
$ |
13,220 |
|
|
|
$ |
25,310 |
|
|
|
|
|
|
|
|
|
|
Number of properties included in same-store analysis |
26 |
|
24 |
|
26 |
|
24 |
(1) Same-store portfolio excludes
(i) One Beach Street, due to significant redevelopment activity;
(ii) Waikiki Beach Walk - Embassy Suites™ and Waikiki Beach Walk -
Retail, due to significant spalling repair activity; and (iii) land
held for development.(2) Tenant improvement
reimbursements are excluded from same-store cash NOI to provide a
more accurate measure of operating
performance.(3) 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, 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-Q 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, or 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 cash net
operating income ("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, 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, or 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, Oregon, Washington, Texas and
Hawaii. The company's office portfolio comprises
approximately 3.7 million rentable square feet, and its retail
portfolio comprises approximately 3.1 million square feet. In
addition, the company owns one mixed-use property (including
approximately 97,000 rentable square feet of retail space and a
369-room all-suite hotel) and 2,112 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.
While forward-looking statements reflect the company's good faith
beliefs, assumptions and expectations, they are not guarantees of
future performance. Currently, one of the most significant risk
factors, is the potential adverse effect of the current COVID-19
pandemic on the financial condition, results of operations, cash
flows and performance of the company, its tenants and guests, the
real estate market and the global economy and financial markets.
The extent to which COVID-19 impacts the company, its tenants and
guests will depend on future developments, which are highly
uncertain and cannot be predicted with confidence, including the
scope, severity and duration of the pandemic, the actions taken to
contain the pandemic or mitigate its impact, and the direct and
indirect economic effects of the pandemic and containment measures,
among others. 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
American Assets (NYSE:AAT)
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