American Assets Trust, Inc. (NYSE: AAT) (the “company”) today
reported financial results for its third quarter ended
September 30, 2019.
Third Quarter Highlights
- Net income available to common stockholders of $12.9
million and $32.9 million for the three and nine months ended
September 30, 2019, respectively, or $0.22 and $0.63 per diluted
share, respectively
- Funds From Operations increased 8% and 1%
year-over-year to $0.57 and $1.63 per diluted share for the three
and nine months ended September 30, 2019, respectively, compared to
the same periods in 2018
- Same-store cash NOI increased 1.6% and decreased 1.0%
year-over-year for the three and nine months ended September 30,
2019, respectively, compared to the same periods in
2018
- Increasing quarterly dividend 7% to $0.30 per share of
common stock in the fourth quarter of 2019 compared to the third
quarter of 2019
- Introducing 2020 annual guidance midpoint of $2.42 with
a range of $2.38 to $2.46 of FFO per diluted share, a 9% increase
over the revised 2019 annual guidance midpoint; excluding 2019
lease termination fees, the increase is 13% over the revised 2019
annual guidance midpoint
- 2020 same-store cash NOI estimated to increase
approximately 9% over the 2019 full year same-store cash NOI
forecast based on an approximately 4.0% same-store cash NOI
increase in retail, an approximately 14.0% same-store cash NOI
increase in office and an approximately 3.5% same-store cash NOI
increase in multifamily
- Leased approximately 71,000 comparable office square
feet at an average straight-line basis and cash-basis contractual
rent increase of 29% and 12%, respectively, during the three months
ended September 30, 2019
- Leased approximately 30,000 comparable retail square
feet at an average straight-line basis and cash-basis contractual
rent increase of 9% and 3%, respectively, during the three months
ended September 30, 2019
- Closed a privately placed debt offering of $150 million
of eleven-year senior guaranteed notes, due July 30, 2030, with a
fixed interest rate of 3.91% and an effective interest rate of
3.88% net of settlement of a treasury lock contract
Financial Results
Net income attributable to common stockholders was $12.9
million, or $0.22 per basic and diluted share for the three months
ended September 30, 2019 compared to $10.4 million, or $0.22 per
basic and diluted share for the three months ended September 30,
2018. For the nine months ended September 30, 2019, net income
attributable to common stockholders was $32.9 million, or $0.63 per
basic and diluted share compared to $13.0 million, or $0.28 per
basic and diluted share, for the nine months ended September 30,
2018. The year-over-year increase is primarily due to a decrease in
depreciation expense at Waikele Center attributed to the
redevelopment of the former Kmart space, an increase in lease
termination fees at Carmel Mountain Plaza attributed to the
termination of our former ground lease, and an increase in
annualized base rents at The Landmark at One Market, City Center
Bellevue, and Lloyd District Portfolio.
During the third quarter of 2019, the company generated funds
from operations (“FFO”) for common stockholders of $43.0 million,
or $0.57 per diluted share, compared to $34.1 million, or $0.53 per
diluted share, for the third quarter of 2018. For the nine
months ended September 30, 2019, the company generated FFO for
common stockholders of $112.5 million, or $1.63 per
diluted share, compared to $103.8 million,
or $1.62 per diluted share, for the nine months
ended September 30, 2018. The increase in FFO from the
corresponding periods in 2018 was primarily due to the increase in
annualized base rents at The Landmark at One Market, City Center
Bellevue, and Lloyd District Portfolio, an increase in lease
termination fees at Carmel Mountain Plaza attributed to the
termination of our former ground lease, and the acquisition of La
Jolla Commons on June 20, 2019 partially offset by the expiration
of the Kmart lease at Waikele Center on June 30, 2018.
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:
|
September 30, 2019 |
June 30, 2019 |
September 30, 2018 |
Total
Portfolio |
|
|
|
Retail |
98.0 |
% |
97.5 |
% |
98.5 |
% |
Office |
94.7 |
% |
93.7 |
% |
91.4 |
% |
Multifamily |
90.5 |
% |
92.6 |
% |
92.3 |
% |
Mixed-Use: |
|
|
|
Retail |
98.0 |
% |
98.2 |
% |
95.9 |
% |
Hotel |
92.1 |
% |
91.7 |
% |
93.6 |
% |
|
|
|
|
Same-Store
Portfolio |
|
|
Retail (1) |
97.7 |
% |
97.1 |
% |
98.3 |
% |
Office (2) |
95.5 |
% |
95.0 |
% |
93.5 |
% |
Multifamily |
90.5 |
% |
92.6 |
% |
92.3 |
% |
|
(1) Same-store
retail leased percentages exclude Waikele Center, due to
significant redevelopment activity.(2) 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 Torrey
Point, which was placed into operations and became available for
occupancy in August 2018 and La Jolla Commons, which was acquired
on June 20, 2019. Torrey Point and La Jolla Commons will be
included in same-store office leased percentages commencing in the
fourth quarter of 2019 and third quarter of 2020,
respectively. |
During the third quarter of 2019, the company signed 43 leases
for approximately 133,300 square feet of retail and office space,
as well as 610 multifamily apartment leases. Renewals
accounted for 89% of the comparable retail leases, 64% of the
comparable office leases and 52% of the residential leases.
Retail and OfficeOn a comparable space basis (i.e. leases for
which there was a former tenant) during the third quarter 2019 and
trailing four quarters ended September 30, 2019, 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 |
Retail |
Q3 2019 |
19 |
30,000 |
|
2.8 |
% |
|
$59.44 |
$57.81 |
|
9.3 |
% |
|
Last 4 Quarters |
61 |
181,000 |
|
3.7 |
% |
|
$46.40 |
$44.73 |
|
10.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Office |
Q3 2019 |
14 |
71,000 |
|
12.0 |
% |
|
$51.95 |
$46.40 |
|
29.2 |
% |
|
Last 4 Quarters |
47 |
494,000 |
|
45.5 |
% |
|
$73.75 |
$50.70 |
|
69.3 |
% |
|
MultifamilyThe average monthly base rent per leased unit for
same-store properties for the third quarter of 2019 was $2,073
compared to an average monthly base rent per leased unit of $2,053
for the third quarter of 2018, an increase of approximately 1%.
Same-Store Cash Net Operating IncomeFor the
three and nine months ended September 30, 2019, same-store cash NOI
increased 1.6% and decreased 1.0%, respectively, compared to the
three and nine months ended September 30, 2018. The same-store cash
NOI by segment was as follows (in thousands):
|
Three Months Ended (2) |
|
|
|
|
Nine Months Ended (2) |
|
|
|
|
September 30, |
|
|
|
|
September 30, |
|
|
|
|
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
Cash
Basis: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail (1) |
$ |
15,221 |
|
|
$ |
16,024 |
|
|
(5.0 |
) |
|
% |
|
$ |
44,878 |
|
|
$ |
46,677 |
|
|
(3.9 |
) |
|
% |
Office (1) |
19,132 |
|
|
17,307 |
|
|
10.5 |
|
|
|
|
56,027 |
|
|
55,995 |
|
|
0.1 |
|
|
|
Multifamily |
7,367 |
|
|
7,741 |
|
|
(4.8 |
) |
|
|
|
23,353 |
|
|
22,848 |
|
|
2.2 |
|
|
|
Mixed-Use |
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
|
Same-store Cash NOI (3) |
$ |
41,720 |
|
|
$ |
41,072 |
|
|
1.6 |
|
|
% |
|
$ |
124,258 |
|
|
$ |
125,520 |
|
|
(1.0 |
) |
|
% |
(1) Same-store cash NOI for the three and nine months
ended September 30, 2018 includes cash lease termination fees
received of $0.3 million and $3.3 million, respectively. However,
the lease termination fees for 2019 recognized at Carmel Mountain
Plaza during the first quarter 2019 were non-cash lease termination
fees. Excluding lease termination fees for the three and nine
months ended September 30, 2019, Office same-store cash NOI would
have 6.5% and 3.7%, respectively.
(2) Same-store portfolio excludes (i) Waikele Center due
to significant redevelopment activity; (ii) Torrey Point, which was
placed into operations and became available for occupancy in August
2018; (iii) La Jolla Commons, which was acquired on June 20, 2019;
(iv) Waikiki Beach Walk - Embassy Suites™ and Waikiki Beach Walk -
Retail, due to significant spalling repair activity; and (v) land
held for development.
(3) Excluding lease termination fees for the three and
nine months ended September 30, 2019, same-store cash NOI would
have been 0.6% and 1.0%, 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
September 30, 2019, the company had gross real estate assets
of $3.2 billion and liquidity of $465.6 million, comprised of cash
and cash equivalents of $115.6 million and $350.0 million of
availability on its line of credit.
For the quarter ended September 30, 2019, we issued 234,814
shares of common stock through our at-the-market equity program at
a weighted average price per share of $47.23, resulting in net
proceeds of $10.9 million. We intend to use the proceeds primarily
to fund development activities at Lloyd District Portfolio, Waikele
Center and La Jolla Commons.
DividendsThe company declared dividends on its
shares of common stock of $0.28 per share for the third quarter of
2019. The dividends were paid on September 26, 2019.
In addition, the company has declared a dividend on its common
stock of $0.30 per share for the fourth quarter of 2019, which is a
7% increase over the prior quarterly dividend per share. The
dividend will be paid on December 26, 2019 to stockholders of
record on December 12, 2019.
GuidanceThe company tightened its guidance
range for full year 2019 FFO per diluted share of $2.20 to $2.24
per share from the prior guidance of $2.18 to $2.26 per share.
Additionally, the company is introducing its guidance for full
year 2019 FFO per diluted share of $2.38 to $2.46 per share, an
increase of 9% from the revised 2019 annual guidance midpoint;
excluding 2019 lease termination fees, the increase is 13% over the
revised 2019 annual guidance midpoint. The company's guidance
excludes any impact from future acquisitions, dispositions, equity
issuances or repurchases, future 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 third quarter of
2019 on Wednesday, October 30, 2019 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 2047236. A telephonic
replay of the conference call will be available beginning at 2:00
p.m. PT on Wednesday, October 30, 2019 through Wednesday,
November 6, 2019. To access the replay, dial
1-855-859-2056 and use the pass code 2047236. 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 third quarter 2019 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) |
|
|
|
|
September 30, 2019 |
|
December 31, 2018 |
Assets |
(unaudited) |
|
|
|
Real estate, at cost |
|
|
|
|
|
Operating real estate |
$ |
3,082,598 |
|
|
|
$ |
2,549,571 |
|
|
Construction in progress |
|
73,340 |
|
|
|
|
71,228 |
|
|
Held for development |
|
547 |
|
|
|
|
9,392 |
|
|
|
|
3,156,485 |
|
|
|
|
2,630,191 |
|
|
Accumulated depreciation |
|
(642,188 |
) |
|
|
|
(590,338 |
) |
|
Net real estate |
|
2,514,297 |
|
|
|
|
2,039,853 |
|
|
Cash and cash equivalents |
|
115,568 |
|
|
|
|
47,956 |
|
|
Restricted cash |
|
10,494 |
|
|
|
|
9,316 |
|
|
Accounts receivable, net |
|
9,561 |
|
|
|
|
9,289 |
|
|
Deferred rent receivables, net |
|
47,361 |
|
|
|
|
39,815 |
|
|
Other assets, net |
|
91,677 |
|
|
|
|
52,021 |
|
|
Total assets |
$ |
2,788,958 |
|
|
|
$ |
2,198,250 |
|
|
Liabilities and
equity |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Secured notes payable, net |
$ |
162,159 |
|
|
|
$ |
182,572 |
|
|
Unsecured notes payable, net |
|
1,195,525 |
|
|
|
|
1,045,863 |
|
|
Unsecured line of credit, net |
|
— |
|
|
|
|
62,337 |
|
|
Accounts payable and accrued expenses |
|
63,205 |
|
|
|
|
46,616 |
|
|
Security deposits payable |
|
7,855 |
|
|
|
|
8,844 |
|
|
Other liabilities and deferred credits, net |
|
61,990 |
|
|
|
|
49,547 |
|
|
Total liabilities |
|
1,490,734 |
|
|
|
|
1,395,779 |
|
|
Commitments and contingencies |
|
|
|
|
|
Equity: |
|
|
|
|
|
American Assets Trust, Inc. stockholders' equity |
|
|
|
|
|
Common stock, $0.01 par value, 490,000,000 shares authorized,
59,956,972 and 47,335,409 shares issued and outstanding at
September 30, 2019 and December 31, 2018, respectively |
|
599 |
|
|
|
|
474 |
|
|
Additional paid-in capital |
|
1,450,816 |
|
|
|
|
920,661 |
|
|
Accumulated dividends in excess of net income |
|
(139,307 |
) |
|
|
|
(128,778 |
) |
|
Accumulated other comprehensive income |
|
5,162 |
|
|
|
|
10,620 |
|
|
Total American Assets Trust, Inc. stockholders' equity |
|
1,317,270 |
|
|
|
|
802,977 |
|
|
Noncontrolling interests |
|
(19,046 |
) |
|
|
|
(506 |
) |
|
Total equity |
|
1,298,224 |
|
|
|
|
802,471 |
|
|
Total liabilities and
equity |
$ |
2,788,958 |
|
|
|
$ |
2,198,250 |
|
|
|
|
|
|
American Assets Trust,
Inc.Unaudited Consolidated Statements of
Operations(In Thousands, Except Shares and Per
Share Data) |
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue: |
|
|
|
|
|
|
|
Rental income |
$ |
93,147 |
|
|
|
$ |
78,079 |
|
|
|
$ |
249,634 |
|
|
|
$ |
231,172 |
|
|
Other property income |
5,215 |
|
|
|
4,428 |
|
|
|
18,160 |
|
|
|
17,090 |
|
|
Total revenue |
98,362 |
|
|
|
82,507 |
|
|
|
267,794 |
|
|
|
248,262 |
|
|
Expenses: |
|
|
|
|
|
|
|
Rental expenses |
23,989 |
|
|
|
21,383 |
|
|
|
66,611 |
|
|
|
62,685 |
|
|
Real estate taxes |
10,942 |
|
|
|
8,787 |
|
|
|
29,263 |
|
|
|
25,961 |
|
|
General and administrative |
6,479 |
|
|
|
5,176 |
|
|
|
18,495 |
|
|
|
16,139 |
|
|
Depreciation and amortization |
26,568 |
|
|
|
19,886 |
|
|
|
69,733 |
|
|
|
86,033 |
|
|
Total operating expenses |
67,978 |
|
|
|
55,232 |
|
|
|
184,102 |
|
|
|
190,818 |
|
|
Operating
income |
30,384 |
|
|
|
27,275 |
|
|
|
83,692 |
|
|
|
57,444 |
|
|
Interest expense |
(13,734 |
) |
|
|
(12,879 |
) |
|
|
(40,212 |
|
) |
|
(39,387 |
) |
|
Gain on sale of real estate |
— |
|
|
|
— |
|
|
|
633 |
|
|
|
— |
|
|
Other income (expense), net |
(131 |
) |
|
|
(125 |
) |
|
|
(410 |
|
) |
|
(64 |
) |
|
Net
income |
16,519 |
|
|
|
14,271 |
|
|
|
43,703 |
|
|
|
17,993 |
|
|
Net income attributable to restricted shares |
(92 |
) |
|
|
(71 |
) |
|
|
(277 |
) |
|
|
(215 |
) |
|
Net income attributable to unitholders in the Operating
Partnership |
(3,565 |
) |
|
|
(3,806 |
) |
|
|
(10,553 |
) |
|
|
(4,765 |
) |
|
Net income attributable to American Assets Trust, Inc.
stockholders |
$ |
12,862 |
|
|
|
$ |
10,394 |
|
|
|
$ |
32,873 |
|
|
|
$ |
13,013 |
|
|
|
|
|
|
|
|
|
|
Net income per
share |
|
|
|
|
|
|
|
Basic income attributable to common stockholders per share |
$ |
0.22 |
|
|
|
$ |
0.22 |
|
|
|
$ |
0.63 |
|
|
|
$ |
0.28 |
|
|
Weighted average shares of common stock outstanding - basic |
59,441,887 |
|
|
|
46,959,752 |
|
|
|
52,239,668 |
|
|
|
46,945,095 |
|
|
|
|
|
|
|
|
|
|
Diluted income attributable to common stockholders per share |
$ |
0.22 |
|
|
|
$ |
0.22 |
|
|
|
$ |
0.63 |
|
|
|
$ |
0.28 |
|
|
Weighted average shares of common stock outstanding - diluted |
75,832,435 |
|
|
|
64,137,360 |
|
|
|
69,010,772 |
|
|
|
64,133,584 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per
common share |
$ |
0.28 |
|
|
|
$ |
0.27 |
|
|
|
$ |
0.84 |
|
|
|
$ |
0.81 |
|
|
|
|
|
|
|
|
|
|
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 |
|
Nine Months Ended |
|
September 30, 2019 |
|
September 30, 2019 |
Funds From Operations
(FFO) |
|
|
|
|
|
Net income |
$ |
16,519 |
|
|
|
$ |
43,703 |
|
|
Depreciation and amortization
of real estate assets |
|
26,568 |
|
|
|
|
69,733 |
|
|
Gain on sale of real
estate |
|
— |
|
|
|
|
(633 |
) |
|
FFO, as defined by NAREIT |
$ |
43,087 |
|
|
|
$ |
112,803 |
|
|
Less: Nonforfeitable dividends
on restricted stock awards |
|
(88 |
) |
|
|
|
(273 |
) |
|
FFO attributable to common
stock and units |
$ |
42,999 |
|
|
|
$ |
112,530 |
|
|
FFO per diluted
share/unit |
$ |
0.57 |
|
|
|
$ |
1.63 |
|
|
Weighted average number of
common shares and units, diluted |
|
75,833,650 |
|
|
|
|
69,012,122 |
|
|
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) |
|
Nine Months Ended (1) |
|
September 30, |
|
September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Same-store cash NOI |
$ |
41,720 |
|
|
|
$ |
41,072 |
|
|
|
$ |
124,258 |
|
|
|
$ |
125,520 |
|
|
Non-same-store cash NOI |
14,488 |
|
|
|
9,041 |
|
|
|
31,599 |
|
|
|
29,677 |
|
|
Tenant improvement reimbursements (2) |
1,054 |
|
|
|
263 |
|
|
|
7,949 |
|
|
|
4,220 |
|
|
Cash NOI |
$ |
57,262 |
|
|
|
$ |
50,376 |
|
|
|
$ |
163,806 |
|
|
|
$ |
159,417 |
|
|
Non-cash revenue and other operating expenses (3) |
6,169 |
|
|
|
1,961 |
|
|
|
8,114 |
|
|
|
199 |
|
|
General and administrative |
(6,479 |
) |
|
|
(5,176 |
) |
|
|
(18,495 |
) |
|
|
(16,139 |
) |
|
Depreciation and amortization |
(26,568 |
) |
|
|
(19,886 |
) |
|
|
(69,733 |
) |
|
|
(86,033 |
) |
|
Interest expense |
(13,734 |
) |
|
|
(12,879 |
) |
|
|
(40,212 |
) |
|
|
(39,387 |
) |
|
Gain on sale of real estate |
— |
|
|
|
— |
|
|
|
633 |
|
|
|
— |
|
|
Other income (expense), net |
(131 |
) |
|
|
(125 |
) |
|
|
(410 |
) |
|
|
(64 |
) |
|
Net income |
$ |
16,519 |
|
|
|
$ |
14,271 |
|
|
|
$ |
43,703 |
|
|
|
$ |
17,993 |
|
|
|
|
|
|
|
|
|
|
Number of properties included in same-store analysis |
24 |
|
24 |
|
24 |
|
23 |
|
(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) Torrey Point, which was
placed into operations and became available for occupancy in August
2018; (iii) La Jolla Commons, which was acquired on June 20, 2019;
(iv) Waikiki Beach Walk - Embassy Suites™ and Waikiki Beach Walk -
Retail, due to significant spalling repair activity and (v) 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; 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-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, 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 retail, office 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 retail portfolio
comprises approximately 3.1 million rentable square feet, and its
office portfolio comprises approximately 3.4 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. 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 annual report on Form 10-K
filed on February 15, 2019, 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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