American Assets Trust, Inc. (NYSE: AAT) (the “company”) today
reported financial results for its fourth quarter and year ended
December 31, 2020.
Fourth Quarter Highlights
- Net income available to common stockholders of $2.9
million and $27.7 million for the three months and year ended
December 31, 2020, respectively, or $0.05 and $0.46 per diluted
share, respectively.
- Funds From Operations decreased 27% and 14%
year-over-year to $0.41 and $1.89 per diluted share for the three
months and year ended December 31, 2020, respectively, compared to
the same periods in 2019.
- Same-store cash NOI decreased 3.1% and 3.1%
year-over-year for the three months and year ended December 31,
2020, respectively. Excluding lease termination fees, same-store
cash NOI would have been (3.2)% and (3.7)% for the three months and
year ended December 31, 2020, respectively.
- For the three months ended December 31, 2020, we
have collected 99% of office rents, 82% of retail rents (including
the retail component of Waikiki Beach Walk) and 95% of multifamily
rents, that were due during the fourth quarter.
- Total collections increased to 92% in the fourth
quarter compared to 90% in the third quarter and 87% in the second
quarter.
- Leased approximately 22,000 comparable office square
feet at an average straight-line basis and cash-basis contractual
rent increase of 4% and 5%, respectively, during the three months
ended December 31, 2020.
- Leased approximately 147,000 comparable retail square
feet at an average straight-line basis and cash-basis contractual
rent decrease of 7% and 12%, respectively, during the three months
ended December 31, 2020.
Inaugural Public Bond Offering
- Closed inaugural public bond offering of $500 million
in principal amount of 3.375% senior unsecured notes due
2031.
- With proceeds from the inaugural public bond offering,
we repaid the $150 million Senior Guaranteed Notes, Series A, with
make-whole payment thereon, and the $100 million outstanding on our
revolving line of credit.
- As of January 31, 2021, cash on the balance sheet was
approximately $378.5 million with no debt obligations maturing
during the remainder of 2021.
Financial ResultsNet income attributable to
common stockholders was $2.9 million, or $0.05 per basic and
diluted share for the three months ended December 31, 2020
compared to $12.8 million, or $0.22 per basic and diluted share for
the three months ended December 31, 2019. For the year ended
December 31, 2020, net income attributed to common
stockholders was $27.7 million, or $0.46 per basic and diluted
share compared to $45.7 million, or $0.84 per basic and diluted
share for the year ended December 31, 2019. The
year-over-year decrease in net income attributable to common
stockholders is primarily due to the increase in collectability
related adjustments (bad debt reserve) of rent receivables of
approximately $16.7 million primarily at Alamo Quarry Market,
Carmel Mountain Plaza, Del Monte Center, and Waikiki Beach Walk
Retail due to, in large part, collection challenges with our movie
theatres, gyms, and a reduction in Hawaii tourism, a decrease in
lease termination fees at Carmel Mountain Plaza attributed to the
termination of our former ground lease, and 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, partially
offset by an incremental increase in revenue from the acquisition
of La Jolla Commons on June 20, 2019 and an increase in annualized
base rents at The Landmark at One Market, Lloyd District Portfolio,
City Center Bellevue, and Torrey Point.
During the fourth quarter of 2020, the company generated Funds
From Operations (“FFO”) for common stockholders of $31.1 million,
or $0.41 per diluted share, compared to $42.9 million, or $0.56 per
diluted share, for the fourth quarter of 2019. For the year ended
December 31, 2020, the company generated FFO for common
stockholders of $143.5 million, or $1.89 per diluted share,
compared to $155.4 million, or $2.20 per diluted share, for the
year ended December 31, 2019. The decrease in FFO from the
corresponding period in 2019 was primarily due to the above
described increase in reserve for collectability related
adjustments (bad debt reserve) of rent receivables, a decrease in
lease termination fees, 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:
|
December 31, 2020 |
September 30, 2020 |
December 31, 2019 |
Total
Portfolio |
|
|
|
Office |
93.0% |
93.8% |
95.0% |
Retail |
90.7% |
95.0% |
97.8% |
Multifamily |
86.2% |
87.5% |
92.8% |
Mixed-Use: |
|
|
|
Retail |
89.2% |
87.8% |
97.9% |
Hotel |
51.3% |
52.8% |
91.7% |
|
|
|
|
Same-Store
Portfolio |
|
|
|
Office (1) |
95.3% |
96.1% |
96.4% |
Retail (2) |
89.2% |
94.2% |
97.6% |
Multifamily |
86.2% |
87.5% |
92.8% |
(1) Same-store office leased percentages includes the 830
building at Lloyd District Portfolio which was placed into
operations on August 1, 2019 after renovating the building.
Same-store office leased percentages excludes One Beach Street due
to significant redevelopment activity.
(2) Same-store retail leased percentages exclude Waikele Center,
due to significant redevelopment activity.
During the fourth quarter of 2020, the company signed 33 leases
for approximately 174,100 square feet of office and retail space,
as well as 369 multifamily apartment leases. Renewals
accounted for 100% of the comparable office leases, 95% of the
comparable retail leases, and 60% 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 2020
and trailing four quarters ended December 31, 2020, our retail
and office leasing spreads are shown below:
|
|
Number of LeasesSigned |
Comparable LeasedSq. Ft. |
Average Cash Basis %Change Over Prior Rent |
Average CashContractual RentPer Sq. Ft. |
Prior Average CashContractual RentPer Sq. Ft. |
Straight-Line Basis% Change OverPrior Rent |
Office |
Q4 2020 |
7 |
22,000 |
5.0% |
$46.36 |
$44.13 |
3.6% |
Last 4 Quarters |
33 |
298,000 |
18.6% |
$47.30 |
$39.90 |
21.9% |
|
|
|
|
|
|
|
|
Retail |
Q4 2020 |
22 |
147,000 |
(11.6)% |
$31.75 |
$35.90 |
(6.6)% |
Last 4 Quarters |
69 |
303,000 |
(7.4)% |
$32.22 |
$34.77 |
(2.4)% |
|
|
|
|
|
|
|
MultifamilyThe average monthly base rent per leased unit for
same-store properties for the fourth quarter of 2020 was $2,245
compared to an average monthly base rent per leased unit of $2,089
for the fourth quarter of 2019, which is an increase of
approximately 7%.
Same-Store Cash Net Operating IncomeFor the
three months and year ended December 31, 2020, same-store cash NOI
decreased 3.1% and 3.1%, respectively, compared to the three months
and year ended December 31, 2019. The same-store cash NOI by
segment was as follows (in thousands):
|
Three Months Ended (1) |
|
|
|
|
Year Ended (2) |
|
|
|
|
December 31, |
|
|
|
|
December 31, |
|
|
|
|
2020 |
|
2019 |
|
Change |
|
2020 |
|
2019 |
|
Change |
Cash
Basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Office (3) |
$ |
25,736 |
|
|
$ |
24,988 |
|
|
3.0 |
|
|
|
|
$ |
80,967 |
|
|
$ |
72,095 |
|
|
12.3 |
|
|
% |
Retail (3) |
13,783 |
|
|
15,897 |
|
|
(13.3 |
) |
|
% |
|
48,513 |
|
|
60,774 |
|
|
(20.2 |
) |
|
|
Multifamily |
6,816 |
|
|
6,937 |
|
|
(1.7 |
) |
|
|
|
28,605 |
|
|
30,291 |
|
|
(5.6 |
) |
|
|
Mixed-Use |
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
Same-store Cash NOI (4) |
$ |
46,335 |
|
|
$ |
47,822 |
|
|
(3.1 |
) |
|
% |
|
$ |
158,085 |
|
|
$ |
163,160 |
|
|
(3.1 |
) |
|
% |
(1) Same-store portfolio excludes (i) Waikele Center due
to significant redevelopment activity; (ii) One Beach Street due to
significant redevelopment activity; (iii) Waikiki Beach Walk -
Embassy Suites™ and Waikiki Beach Walk - Retail, due to significant
spalling repair activity; and (iv) land held for
development.(2) Same-store portfolio excludes (i) Waikele
Center due to significant redevelopment activity; (ii) La Jolla
Commons, which was acquired on June 20, 2019; (iii) One Beach
Street due to significant redevelopment activity; (iv) Waikiki
Beach Walk - Embassy Suites™ and Waikiki Beach Walk - Retail, due
to significant spalling repair activity; and (v) land held for
development.(3) Same-store cash NOI for the three months and
year ended December 31, 2020 includes cash lease termination
fees received of $0.4 million and $2.1 million, respectively.
Excluding lease termination fees for the three months and year
ended December 31, 2020, office same-store cash NOI would have
been 3.2% and 12.6%, respectively.(4) Excluding lease
termination fees for the three months and year ended
December 31, 2020, same-store cash NOI would have been (3.2)%
and (3.7)%, 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 December 31,
2020, the company had gross real estate assets of $3.2 billion and
liquidity of $387.3 million, comprised of cash and cash equivalents
of $137.3 million and $250.0 million of availability on its line of
credit, which the company believes is sufficient to meet the
company's short-term liquidity requirements. At December 31,
2020, the company has only 1 out of 28 assets encumbered by a
mortgage. After the repayment of the $150 million Senior Guaranteed
Notes, Series A on January 26, 2021, the company has no debt
obligations maturing during the remainder of 2021.
DividendsThe company declared dividends on its
shares of common stock of $0.25 per share for the fourth quarter of
2020. The dividends were paid on December 24, 2020.
In addition, the company has declared a dividend on its common
stock of $0.28 per share for the first quarter of 2021. The
dividend will be paid in cash on March 25, 2021 to
stockholders of record on March 11, 2021. The company
increased the dividend from $0.25 per share in the fourth quarter
of 2020 to $0.28 per share in the first quarter of 2021 based on
the company's rent collection in the fourth quarter.
COVID-19 Operational Update
OperationsAs of December 31, 2020, we have entered into
lease modifications that resulted in COVID-19 adjustments
(including rent deferrals and other monetary lease concessions) for
approximately 2.6% of the rent originally contracted for the three
months ended December 31, 2020. Furthermore, as of
December 31, 2020 and specific to the impact of COVID-19 on
our retail sector (including the retail component of Waikiki Beach
Walk Retail and Embassy Suites Hotel) for the three months ended
December 31, 2020, we have recorded an allowance for doubtful
accounts against accounts receivable of approximately 12% and an
allowance for doubtful accounts against deferred rent receivables
(straight-line rent receivables) of approximately 19%.
Rent Collection for the Fourth Quarter of 2020 and January
2021(1)
|
October |
|
November |
|
December |
|
Q4 Average |
|
January |
Office |
99.0% |
|
98.9% |
|
98.6% |
|
98.8% |
|
98.5% |
Retail |
87.4% |
|
89.4% |
|
88.1% |
|
88.3% |
|
86.3% |
Multifamily |
95.3% |
|
95.0% |
|
95.4% |
|
95.2% |
|
95.0% |
Mixed-Use (2) |
32.4% |
|
36.6% |
|
36.9% |
|
35.3% |
|
36.9% |
Average |
91.8% |
|
92.5% |
|
92.1% |
|
92.1% |
|
91.2% |
(1) Data as of February 6, 2021.(2) Includes only the retail
portion of Waikiki Beach Walk Retail and Embassy Suites Hotel.
Rent DeferralsAs of December 31, 2020, we have entered into
deferral agreements for $8.6 million of recurring rents related to
the second, third, and fourth quarters of 2020. The weighted
average payback period of the deferral agreements is approximately
42 months. Revenue from approximately 68% of tenants with deferral
agreements is recognized on a straight-line basis comprising
approximately 40% of the deferred amount.
Conference CallThe company will hold a
conference call to discuss the results for the fourth quarter and
year end 2020 on Wednesday, February 10, 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
4228256. A telephonic replay of the conference call will be
available beginning at 2:00 p.m. PT on Wednesday, February 10,
2021 through Wednesday, February 17, 2021. To access the
replay, dial 1-855-859-2056 and use the pass code 4228256. 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 fourth quarter and year end
2020 results may be found on 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, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
Real estate, at cost |
|
|
|
|
|
Operating real estate |
$ |
3,155,280 |
|
|
$ |
3,096,886 |
|
Construction in progress |
|
91,047 |
|
|
|
91,264 |
|
Held for development |
|
547 |
|
|
|
547 |
|
|
|
3,246,874 |
|
|
|
3,188,697 |
|
Accumulated depreciation |
|
(754,140 |
) |
|
|
(665,222 |
) |
Net real estate |
|
2,492,734 |
|
|
|
2,523,475 |
|
Cash and cash equivalents |
|
137,333 |
|
|
|
99,303 |
|
Restricted cash |
|
1,716 |
|
|
|
10,148 |
|
Accounts receivable, net |
|
6,938 |
|
|
|
12,016 |
|
Deferred rent receivables, net |
|
72,476 |
|
|
|
52,171 |
|
Other assets, net |
|
106,112 |
|
|
|
93,220 |
|
Total assets |
$ |
2,817,309 |
|
|
$ |
2,790,333 |
|
Liabilities and
equity |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Secured notes payable, net |
$ |
110,923 |
|
|
$ |
161,879 |
|
Unsecured notes payable, net |
|
1,196,677 |
|
|
|
1,195,780 |
|
Unsecured line of credit, net |
|
99,151 |
|
|
|
— |
|
Accounts payable and accrued expenses |
|
59,262 |
|
|
|
62,576 |
|
Security deposits payable |
|
6,590 |
|
|
|
8,316 |
|
Other liabilities and deferred credits, net |
|
91,300 |
|
|
|
68,110 |
|
Total liabilities |
|
1,563,903 |
|
|
|
1,496,661 |
|
Commitments and contingencies |
|
|
|
|
|
Equity: |
|
|
|
|
|
American Assets Trust, Inc. stockholders' equity |
|
|
|
|
|
Common stock, $0.01 par value, 490,000,000 sharesauthorized,
60,476,292 and 60,068,228 shares issued andoutstanding at December
31, 2020 and December 31, 2019,respectively |
|
605 |
|
|
|
601 |
|
Additional paid-in capital |
|
1,445,644 |
|
|
|
1,452,014 |
|
Accumulated dividends in excess of net income |
|
(176,560 |
) |
|
|
(144,378 |
) |
Accumulated other comprehensive income |
|
1,753 |
|
|
|
5,680 |
|
Total American Assets Trust, Inc. stockholders' equity |
|
1,271,442 |
|
|
|
1,313,917 |
|
Noncontrolling interests |
|
(18,036 |
) |
|
|
(20,245 |
) |
Total equity |
|
1,253,406 |
|
|
|
1,293,672 |
|
Total liabilities and
equity |
$ |
2,817,309 |
|
|
$ |
2,790,333 |
|
|
|
|
|
|
|
|
|
American Assets Trust, Inc.Unaudited
Consolidated Statements of Operations(In
Thousands, Except Shares and Per Share Data)
|
Three Months EndedDecember 31, |
|
Year Ended December 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue: |
|
|
|
|
|
|
|
Rental income |
$ |
78,253 |
|
|
$ |
94,231 |
|
|
$ |
330,312 |
|
|
$ |
343,865 |
|
Other property income |
3,094 |
|
|
4,716 |
|
|
14,261 |
|
|
22,876 |
|
Total revenue |
81,347 |
|
|
98,947 |
|
|
344,573 |
|
|
366,741 |
|
Expenses: |
|
|
|
|
|
|
|
Rental expenses |
20,421 |
|
|
25,356 |
|
|
79,178 |
|
|
91,967 |
|
Real estate taxes |
10,444 |
|
|
10,750 |
|
|
41,941 |
|
|
40,013 |
|
General and administrative |
6,644 |
|
|
6,376 |
|
|
26,581 |
|
|
24,871 |
|
Depreciation and amortization |
27,423 |
|
|
26,472 |
|
|
108,292 |
|
|
96,205 |
|
Total operating expenses |
64,932 |
|
|
68,954 |
|
|
255,992 |
|
|
253,056 |
|
Operating
income |
16,415 |
|
|
29,993 |
|
|
88,581 |
|
|
113,685 |
|
Interest expense |
(13,335 |
) |
|
(13,796 |
) |
|
(53,440 |
) |
|
(54,008 |
) |
Gain on sale of real estate |
— |
|
|
— |
|
|
— |
|
|
633 |
|
Other income (expense), net |
708 |
|
|
288 |
|
|
447 |
|
|
(122 |
) |
Net
income |
3,788 |
|
|
16,485 |
|
|
35,588 |
|
|
60,188 |
|
Net income attributable to restricted shares |
(123 |
) |
|
(104 |
) |
|
(383 |
) |
|
(381 |
) |
Net income attributable to unitholders in the Operating
Partnership |
(767 |
) |
|
(3,536 |
) |
|
(7,545 |
) |
|
(14,089 |
) |
Net income attributable to American Assets Trust, Inc.
stockholders |
$ |
2,898 |
|
|
$ |
12,845 |
|
|
$ |
27,660 |
|
|
$ |
45,718 |
|
|
|
|
|
|
|
|
|
Net income per
share |
|
|
|
|
|
|
|
Basic income attributable to common stockholders per share |
$ |
0.05 |
|
|
$ |
0.22 |
|
|
$ |
0.46 |
|
|
$ |
0.84 |
|
Weighted average shares of common stock outstanding - basic |
59,951,055 |
|
|
59,663,771 |
|
|
59,806,309 |
|
|
54,110,949 |
|
|
|
|
|
|
|
|
|
Diluted income attributable to common stockholders per share |
$ |
0.05 |
|
|
$ |
0.22 |
|
|
$ |
0.46 |
|
|
$ |
0.84 |
|
Weighted average shares of common stock outstanding - diluted |
76,132,592 |
|
|
76,054,319 |
|
|
76,119,763 |
|
|
70,786,132 |
|
|
|
|
|
|
|
|
|
Dividends declared per
common share |
$ |
0.25 |
|
|
$ |
0.30 |
|
|
$ |
1.00 |
|
|
$ |
1.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2020 |
|
December 31, 2020 |
Funds From Operations
(FFO) |
|
|
|
|
|
Net income |
$ |
3,788 |
|
|
$ |
35,588 |
|
Depreciation and amortization
of real estate assets |
|
27,423 |
|
|
|
108,292 |
|
FFO, as defined by NAREIT |
$ |
31,211 |
|
|
$ |
143,880 |
|
Less: Nonforfeitable dividends
on restricted stock awards |
|
(122 |
) |
|
|
(377 |
) |
FFO attributable to common
stock and units |
$ |
31,089 |
|
|
$ |
143,503 |
|
FFO per diluted
share/unit |
$ |
0.41 |
|
|
$ |
1.89 |
|
Weighted average number of
common shares and units, diluted |
|
76,132,963 |
|
|
|
76,122,842 |
|
|
|
|
|
|
|
|
|
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, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Same-store cash NOI |
46,335 |
|
|
$ |
47,822 |
|
|
$ |
158,085 |
|
|
$ |
163,160 |
|
Non-same-store cash NOI |
3,240 |
|
|
8,607 |
|
|
38,438 |
|
|
48,628 |
|
Tenant improvement reimbursements (3) |
137 |
|
|
3,498 |
|
|
5,230 |
|
|
11,945 |
|
Cash NOI |
$ |
49,712 |
|
|
$ |
59,927 |
|
|
$ |
201,753 |
|
|
$ |
223,733 |
|
Non-cash revenue and other operating expenses (4) |
770 |
|
|
2,914 |
|
|
21,701 |
|
|
11,028 |
|
General and administrative |
(6,644 |
) |
|
(6,376 |
) |
|
(26,581 |
) |
|
(24,871 |
) |
Depreciation and amortization |
(27,423 |
) |
|
(26,472 |
) |
|
(108,292 |
) |
|
(96,205 |
) |
Interest expense |
(13,335 |
) |
|
(13,796 |
) |
|
(53,440 |
) |
|
(54,008 |
) |
Gain on sale of real estate |
— |
|
|
— |
|
|
— |
|
|
633 |
|
Other income (expense), net |
708 |
|
|
288 |
|
|
447 |
|
|
(122 |
) |
Net income |
$ |
3,788 |
|
|
$ |
16,485 |
|
|
$ |
35,588 |
|
|
$ |
60,188 |
|
|
|
|
|
|
|
|
|
Number of properties included in same-store analysis |
25 |
|
25 |
|
24 |
|
24 |
(1) Same-store portfolio includes the 830 building at
Lloyd District Portfolio which was placed into operations on August
1, 2019 after renovating the building. Same-store portfolio
excludes (i) Waikele Center, due to significant redevelopment
activity; (ii) One Beach Street, due to significant redevelopment
activity; (iii) Waikiki Beach Walk - Embassy Suites™ and Waikiki
Beach Walk - Retail, due to significant spalling repair activity;
and (iv) land held for development.(2) Same-store portfolio
includes the 830 building at Lloyd District Portfolio which was
placed into operations on August 1, 2019 after renovating the
building. Same-store portfolio excludes (i) Waikele Center, due to
significant redevelopment activity; (ii) La Jolla Commons, which
was acquired on June 20, 2019; (iii) One Beach Street, due to
significant redevelopment activity; (iv) Waikiki Beach Walk -
Embassy Suites™ and Waikiki Beach Walk - Retail, due to significant
spalling repair activity; and (v) 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, the amortization of above (below)
market rents, the amortization of lease incentives paid to tenants,
the amortization of other lease intangibles, lease termination fees
at Carmel Mountain Plaza, 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, 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 3.4 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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