American Assets Trust, Inc. (NYSE: AAT) (the “company”) today
reported financial results for its fourth quarter and year ended
December 31, 2021.
Fourth Quarter Highlights
- Net income available to common
stockholders of $8.1 million and $28.4 million for the three months
and year ended December 31, 2021, respectively, or $0.14 and $0.47
per diluted share, respectively.
- Funds From Operations ("FFO")
increased 32% and 6% year-over-year to $0.54 and $2.00 per diluted
share for the three months and year ended December 31, 2021,
respectively, compared to the same periods in 2020.
- Same-store cash Net Operating
Income ("NOI") increased 20.0% and 10.3% year-over-year for the
three months and year ended December 31, 2021,
respectively.
- Increasing quarterly dividend
7% to $0.32 per share of common stock in the first quarter of 2022
compared to the fourth quarter of 2021.
- Introducing 2022 annual
guidance midpoint of $2.13 with a range of $2.09 to $2.17 of FFO
per diluted share, a 6.5% increase at midpoint over 2021 FFO per
diluted share.
- For the three months ended
December 31, 2021, we have collected 100% of office rents, 97%
of retail rents (including the retail component of Waikiki Beach
Walk) and 97% of multifamily rents, that were due during the fourth
quarter.
- Total collections increased to
98% in the three months ended December 31, 2021.
- Leased approximately 68,000
comparable office square feet at an average straight-line basis and
cash-basis contractual rent increase of 27% and 18%, respectively,
during the three months ended December 31, 2021.
- Leased approximately 60,000
comparable retail square feet at an average straight-line basis and
cash-basis contractual rent increase of 5% and decrease of 7%,
respectively, during the three months ended December 31,
2021.
Amended and Restated Credit
Facility
- In January 2022, the credit
facility was amended and restated to, among other things, increase
the borrowing capacity to $400 million, extend the maturity date
for revolving line of credit and $100 million term loan to January
5, 2026 and January 5, 2027, respectively and transition from LIBOR
to SOFR.
Financial ResultsNet income
attributable to common stockholders was $8.1 million, or $0.14 per
basic and diluted share for the three months ended
December 31, 2021 compared to $2.9 million, or $0.05 per basic
and diluted share for the three months ended December 31,
2020. For the year ended December 31, 2021, net income attributed
to common stockholders was $28.4 million, or $0.47 per basic and
diluted share compared to $27.7 million, or $0.46 per basic and
diluted share for the year ended December 31, 2020. The
year-over-year increase in net income attributable to common
stockholders is primarily due to (i) a $5.8 million net increase in
income at our Waikiki Beach Walk - Embassy Suites due to increased
tourism into Hawaii during the year ended December 31, 2021
compared to the year ended December 31, 2020, (ii) a $5.5 million
net increase in retail revenue due to tenants who changed to
alternate rent or cash basis of revenue recognition during the year
ended December 31, 2021 and the year ended December 31, 2020,(with
some of these tenants later reverting back to contractual basic
monthly rent) and (iii) an increase in office revenue due to higher
annualized base rents at La Jolla Commons, The Landmark at One
Market, City Center Bellevue and Torrey Point. These increases were
offset by (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, and (ii) a $5.1 million net increase in interest
expense primarily related to our $500 million public bond offering
at 3.375% issued in January 2021.
During the three months ended December 31, 2021,
the company generated FFO for common stock and common units of
$40.8 million, or $0.54 per diluted share and unit, compared to
$31.1 million, or $0.41 per diluted share and unit, for the three
months ended December 31, 2020. For the year ended December 31,
2021, the company generated FFO for common stock and common units
of $152.3 million, or $2.00 per diluted share and unit, compared to
$143.5 million, or $1.89 per diluted share and unit, for the year
ended December 31, 2020. The increase in FFO from the corresponding
period in 2020 was primarily due to an increase in revenue at our
Waikiki Beach Walk - Embassy Suites™, and an increase in revenue in
our retail segment and higher annualized base rents in our office
segment. Additionally, there was an increase in FFO from our two
new office acquisitions, Eastgate Office Park and Corporate Campus
East III each of which closed during the third quarter of 2021.
These increases were partially offset by the above described debt
extinguishment charge, increase in interest expense related to the
public bond offering.
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, 2021 |
September 30, 2021 |
December 31, 2020 |
Total Portfolio |
|
|
|
Office |
90.4% |
90.2% |
93.0% |
Retail |
92.6% |
91.7% |
90.7% |
Multifamily |
96.0% |
97.1% |
86.2% |
Mixed-Use: |
|
|
|
Retail |
89.6% |
86.6% |
89.2% |
Hotel (1) |
66.4% |
77.9% |
51.3% |
|
|
|
|
Same-Store Portfolio |
|
|
Office (2) |
93.6% |
92.7% |
95.3% |
Retail |
92.6% |
91.7% |
90.7% |
Multifamily |
96.0% |
97.1% |
86.2% |
Mixed-Use: |
|
|
|
Retail |
89.6% |
86.6% |
89.2% |
Hotel (1) |
66.4% |
77.9% |
51.3% |
(1) Based on quarter-to-date average occupancy for
the three months ended December 31, 2021. The average daily rate
for the fourth quarter of 2021 was $215.30 per night and the
occupancy was 72.6%.(2) Same-store office leased percentages
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 and (iv) land held for development.
During the three months ended December 31, 2021,
the company signed 38 leases for approximately 225,700 square feet
of office and retail space, as well as 350 multifamily apartment
leases. Renewals accounted for 80% of the comparable office leases,
81% of the comparable retail leases, and 67% of the residential
leases.
Office and RetailOn a comparable space basis (i.e.
leases for which there was a former tenant) during the three months
ended December 31, 2021 and year ended December 31, 2021, 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 2021 |
10 |
68,000 |
17.9% |
$48.61 |
$41.21 |
26.5% |
FY 2021 |
42 |
190,000 |
8.2% |
$45.74 |
$42.27 |
14.2% |
|
|
|
|
|
|
|
|
Retail |
Q4 2021 |
16 |
60,000 |
(6.6)% |
$35.70 |
$38.23 |
5.2% |
FY 2021 |
85 |
333,000 |
(11.2)% |
$42.37 |
$47.71 |
(5.4)% |
MultifamilyThe average monthly base rent per leased
unit for multifamily properties for the three months ended
December, 2021 was $2,189 compared to an average monthly base rent
per leased unit of $2,245 for the three months ended December 31,
2020, which is a decrease of approximately 3%.
Same-Store Cash Net Operating
IncomeFor the three months and year ended December 31,
2021, same-store cash NOI increased 20.0% and 10.3%, respectively,
compared to the three months and year ended December 31, 2020. The
same-store cash NOI by segment was as follows (in thousands):
|
Three Months Ended (1) |
|
|
|
|
Year Ended
(2) |
|
|
|
|
December 31, |
|
|
|
|
December 31, |
|
|
|
|
2021 |
|
2020 |
|
Change |
|
2021 |
|
2020 |
|
Change |
Cash Basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Office (3) |
$ |
29,549 |
|
$ |
25,736 |
|
14.8 |
% |
|
$ |
114,498 |
|
$ |
106,354 |
|
7.7 |
% |
Retail (3) |
|
17,644 |
|
|
17,074 |
|
3.3 |
|
|
|
69,257 |
|
|
57,771 |
|
19.9 |
|
Multifamily |
|
8,183 |
|
|
6,816 |
|
20.1 |
|
|
|
28,921 |
|
|
28,605 |
|
1.1 |
|
Mixed-Use |
|
4,320 |
|
|
133 |
|
3,148.1 |
|
|
|
— |
|
|
— |
|
— |
|
Same-store Cash NOI (4) |
$ |
59,696 |
|
$ |
49,759 |
|
20.0 |
% |
|
$ |
212,676 |
|
$ |
192,730 |
|
10.3 |
% |
(1) Same-store portfolio includes
Waikiki Beach Walk-Embassy Suites™ and Waikiki Beach
Walk-Retail due to the significant spalling repair activity
completed in September 2020. 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
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) Waikiki Beach Walk-Embassy
Suites™ and Waikiki Beach Walk - Retail, due to significant
spalling repair activity which was completed in September 2020 and
(v) land held for development.(3) Same-store cash
NOI for the three months and year ended December 31, 2021
includes cash lease termination fees received of $0.1 million and
$0.8 million, respectively. (4) Excluding lease
termination fees for the three months and year ended
December 31, 2021, same-store cash NOI would have been 20.7%
and 11.2%, 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.
Credit FacilityOn January 5, 2022,
our credit facility was amended and restated to, among other
things, increase the revolving line of credit from $350 million to
$400 million, extend the maturity date of the restated $400 million
revolving line of credit to January 5, 2026 (with two, six-month
extension options), and extend the maturity of the $100 million
term loan included within the credit facility to January 5, 2027
(with no further extension options). On January 14, 2022, the
company entered into interest rate swap agreements that are
intended to fix the interest rate associated with the 2022 Term
Loan A at approximately 2.80% through January 5, 2027, subject to
adjustments based on our consolidated leverage ratio.
Balance Sheet and LiquidityAt
December 31, 2021, the company had gross real estate assets of
$3.5 billion and liquidity of $489.5 million, comprised of cash and
cash equivalents of $139.5 million and $350.0 million of
availability on its line of credit. At December 31, 2021, the
company has only 1 out of 30 assets encumbered by a mortgage.
DividendsThe company declared
dividends on its shares of common stock of $0.30 per share for the
three months ended December 31, 2021. The dividends were paid on
December 23, 2021.
In addition, the company has declared a dividend on
its common stock of $0.32 per share for the first quarter of
2022. The dividend will be paid in cash on March 24, 2022
to stockholders of record on March 10, 2022.
COVID-19 Operational Update
Rent Collection for the Fourth Quarter of
2021(1)
|
October |
|
November |
|
December |
|
Q4 Average |
Office |
99.9% |
|
99.9% |
|
99.8% |
|
99.9% |
Retail |
98.3% |
|
97.9% |
|
97.2% |
|
97.8% |
Multifamily |
96.9% |
|
97.0% |
|
96.5% |
|
96.8% |
Mixed-Use (2) |
84.5% |
|
88.8% |
|
83.8% |
|
85.8% |
Average |
98.4% |
|
98.5% |
|
98.1% |
|
98.3% |
(1) Data as of January 26, 2022.(2) Includes only
the retail component of Waikiki Beach Walk.
Rent DeferralsAs of December 31, 2021, we have
entered into deferral agreements for $9 million of recurring rents
from the second quarter of 2020 through 2021, of which $8.6 million
of these deferral agreements were entered into in 2020. The
weighted average payback period of the deferral agreements are
approximately 40 months. Revenue from approximately 67% of tenants
with deferral agreements is recognized on a straight-line basis
comprising approximately 40% of the deferred amount. For the three
months ended December 31, 2021, we collected approximately 96% of
the $0.5 million of the deferred rent repayments due during the
period.
GuidanceThe company is introducing
2022 guidance for full year 2022 FFO per diluted share of $2.09 to
$2.17 per share, an increase of 6.5% at midpoint over 2021 FFO per
diluted share.
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 CallThe company will
hold a conference call to discuss the results for the three months
ended and year ended December 31, 2021 on Wednesday,
February 9, 2022 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 9286026. A telephonic replay of the
conference call will be available beginning at 2:00 p.m. PT on
Wednesday, February 9, 2022 through Wednesday,
February 16, 2022. To access the replay, dial 1-855-859-2056
and use the pass code 9286026. 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 three months ended and year ended December 31, 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)
|
December 31, 2021 |
|
December 31, 2020 |
Assets |
(unaudited) |
|
|
Real estate, at cost |
|
|
|
|
|
Operating real estate |
$ |
3,389,726 |
|
|
$ |
3,155,280 |
|
Construction in progress |
|
139,098 |
|
|
|
91,047 |
|
Held for development |
|
547 |
|
|
|
547 |
|
|
|
3,529,371 |
|
|
|
3,246,874 |
|
Accumulated depreciation |
|
(847,390 |
) |
|
|
(754,140 |
) |
Real estate, net |
|
2,681,981 |
|
|
|
2,492,734 |
|
Cash and cash equivalents |
|
139,524 |
|
|
|
137,333 |
|
Restricted cash |
|
— |
|
|
|
1,716 |
|
Accounts receivable, net |
|
7,445 |
|
|
|
6,938 |
|
Deferred rent receivables, net |
|
82,724 |
|
|
|
72,476 |
|
Other assets, net |
|
106,253 |
|
|
|
106,112 |
|
Total assets |
$ |
3,017,927 |
|
|
$ |
2,817,309 |
|
Liabilities and equity |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Secured notes payable, net |
$ |
110,965 |
|
|
$ |
110,923 |
|
Unsecured notes payable, net |
|
1,538,238 |
|
|
|
1,196,677 |
|
Unsecured line of credit, net |
|
— |
|
|
|
99,151 |
|
Accounts payable and accrued expenses |
|
64,531 |
|
|
|
59,262 |
|
Security deposits payable |
|
7,855 |
|
|
|
6,590 |
|
Other liabilities and deferred credits, net |
|
86,215 |
|
|
|
91,300 |
|
Total liabilities |
|
1,807,804 |
|
|
|
1,563,903 |
|
Commitments and contingencies |
|
|
|
|
|
Equity: |
|
|
|
|
|
American Assets Trust, Inc. stockholders' equity |
|
|
|
|
|
Common stock, $0.01 par value, 490,000,000 shares authorized,
60,525,580 and 60,476,292 shares issued and outstanding at December
31, 2021 and December 31, 2020, respectively |
|
605 |
|
|
|
605 |
|
Additional paid-in capital |
|
1,453,272 |
|
|
|
1,445,644 |
|
Accumulated dividends in excess of net income |
|
(217,785 |
) |
|
|
(176,560 |
) |
Accumulated other comprehensive income |
|
2,872 |
|
|
|
1,753 |
|
Total American Assets Trust, Inc. stockholders' equity |
|
1,238,964 |
|
|
|
1,271,442 |
|
Noncontrolling interests |
|
(28,841 |
) |
|
|
(18,036 |
) |
Total equity |
|
1,210,123 |
|
|
|
1,253,406 |
|
Total liabilities and equity |
$ |
3,017,927 |
|
|
$ |
2,817,309 |
|
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, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenue: |
|
|
|
|
|
|
|
Rental income |
$ |
97,635 |
|
|
$ |
78,253 |
|
|
$ |
360,208 |
|
|
$ |
330,312 |
|
Other property income |
|
4,112 |
|
|
|
3,094 |
|
|
|
15,620 |
|
|
|
14,261 |
|
Total revenue |
|
101,747 |
|
|
|
81,347 |
|
|
|
375,828 |
|
|
|
344,573 |
|
Expenses: |
|
|
|
|
|
|
|
Rental expenses |
|
25,064 |
|
|
|
20,421 |
|
|
|
86,980 |
|
|
|
79,178 |
|
Real estate taxes |
|
11,184 |
|
|
|
10,444 |
|
|
|
42,794 |
|
|
|
41,941 |
|
General and administrative |
|
9,305 |
|
|
|
6,644 |
|
|
|
29,879 |
|
|
|
26,581 |
|
Depreciation and amortization |
|
30,479 |
|
|
|
27,423 |
|
|
|
116,306 |
|
|
|
108,292 |
|
Total operating expenses |
|
76,032 |
|
|
|
64,932 |
|
|
|
275,959 |
|
|
|
255,992 |
|
Operating income |
|
25,715 |
|
|
|
16,415 |
|
|
|
99,869 |
|
|
|
88,581 |
|
Interest expense |
|
(14,998 |
) |
|
|
(13,335 |
) |
|
|
(58,587 |
) |
|
|
(53,440 |
) |
Loss on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
(4,271 |
) |
|
|
— |
|
Other (expense) income, net |
|
(239 |
) |
|
|
708 |
|
|
|
(418 |
) |
|
|
447 |
|
Net income |
|
10,478 |
|
|
|
3,788 |
|
|
|
36,593 |
|
|
|
35,588 |
|
Net income attributable to restricted shares |
|
(147 |
) |
|
|
(123 |
) |
|
|
(564 |
) |
|
|
(383 |
) |
Net income attributable to unitholders in the Operating
Partnership |
|
(2,194 |
) |
|
|
(767 |
) |
|
|
(7,653 |
) |
|
|
(7,545 |
) |
Net income attributable to American Assets Trust, Inc.
stockholders |
$ |
8,137 |
|
|
$ |
2,898 |
|
|
$ |
28,376 |
|
|
$ |
27,660 |
|
|
|
|
|
|
|
|
|
Net income per share |
|
|
|
|
|
|
|
Basic income attributable to common stockholders per share |
$ |
0.14 |
|
|
$ |
0.05 |
|
|
$ |
0.47 |
|
|
$ |
0.46 |
|
Weighted average shares of common stock outstanding - basic |
|
60,002,303 |
|
|
|
59,951,055 |
|
|
|
59,990,740 |
|
|
|
59,806,309 |
|
|
|
|
|
|
|
|
|
Diluted income attributable to common stockholders per share |
$ |
0.14 |
|
|
$ |
0.05 |
|
|
$ |
0.47 |
|
|
$ |
0.46 |
|
Weighted average shares of common stock outstanding - diluted |
|
76,183,840 |
|
|
|
76,132,592 |
|
|
|
76,172,277 |
|
|
|
76,119,763 |
|
|
|
|
|
|
|
|
|
Dividends declared per common share |
$ |
0.30 |
|
|
$ |
0.25 |
|
|
$ |
1.16 |
|
|
$ |
1.00 |
|
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, 2021 |
|
December 31, 2021 |
Funds From Operations (FFO) |
|
|
|
|
|
Net income |
$ |
10,478 |
|
|
$ |
36,593 |
|
Depreciation and amortization of real estate assets |
|
30,479 |
|
|
|
116,306 |
|
FFO, as defined by NAREIT |
$ |
40,957 |
|
|
$ |
152,899 |
|
Less: Nonforfeitable dividends on restricted stock awards |
|
(145 |
) |
|
|
(557 |
) |
FFO attributable to common stock and units |
$ |
40,812 |
|
|
$ |
152,342 |
|
FFO per diluted share/unit |
$ |
0.54 |
|
|
$ |
2.00 |
|
Weighted average number of common shares and units, diluted |
|
76,186,698 |
|
|
|
76,175,004 |
|
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, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Same-store cash NOI |
$ |
59,696 |
|
|
$ |
49,759 |
|
|
$ |
212,676 |
|
|
$ |
192,730 |
|
Non-same-store cash NOI |
|
2,087 |
|
|
|
(184 |
) |
|
|
17,318 |
|
|
|
3,624 |
|
Tenant improvement reimbursements (3) |
|
139 |
|
|
|
137 |
|
|
|
406 |
|
|
|
5,399 |
|
Cash NOI |
$ |
61,922 |
|
|
$ |
49,712 |
|
|
$ |
230,400 |
|
|
$ |
201,753 |
|
Non-cash revenue and other operating expenses (4) |
|
3,577 |
|
|
|
770 |
|
|
|
15,654 |
|
|
|
21,701 |
|
General and administrative |
|
(9,305 |
) |
|
|
(6,644 |
) |
|
|
(29,879 |
) |
|
|
(26,581 |
) |
Depreciation and amortization |
|
(30,479 |
) |
|
|
(27,423 |
) |
|
|
(116,306 |
) |
|
|
(108,292 |
) |
Interest expense |
|
(14,998 |
) |
|
|
(13,335 |
) |
|
|
(58,587 |
) |
|
|
(53,440 |
) |
Loss on early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
(4,271 |
) |
|
|
Other (expense) income, net |
|
(239 |
) |
|
|
708 |
|
|
|
(418 |
) |
|
|
447 |
|
Net income |
$ |
10,478 |
|
|
$ |
3,788 |
|
|
$ |
36,593 |
|
|
$ |
35,588 |
|
|
|
|
|
|
|
|
|
Number of properties included in same-store analysis |
|
27 |
|
|
|
25 |
|
|
|
26 |
|
|
|
24 |
|
(1) Same-store portfolio includes
Waikiki Beach Walk-Embassy Suites™ and Waikiki Beach
Walk-Retail due to the significant spalling repair activity
completed in September 2020. 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
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) Waikiki Beach Walk-Embassy
Suites™ and Waikiki Beach Walk - Retail, due to significant
spalling repair activity which was completed in September 2020 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, 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 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 3.9 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 2,112 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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