American Assets Trust (AAT) Q3 2024 earnings summary

Executive summary

• Issued a 10-year, $525 million investment-grade bond at a 6.15% coupon, upsized due to strong demand, with proceeds used to refinance debt and for general corporate purposes, locking in favorable rates and addressing all debt maturities into early 2027.

• Net income attributable to common stockholders was $16.7 million for Q3 2024, up 41% year-over-year, and $47.8 million for the nine months ended September 30, 2024.

• Portfolio performance remains strong across office, retail, and multifamily segments, with high-quality assets in prime, high barrier-to-entry markets and stable occupancy rates.

• Significant lease termination and settlement fees, especially in the office segment, contributed to higher other property income.

• Declared a quarterly dividend of $0.335 per share for Q3 and Q4 2024, reflecting solid performance and board confidence.

Financial highlights

• Q3 2024 FFO was $0.71 per share, up 20% year-over-year, driven by an $11 million lease termination fee, offset by higher interest and operating expenses.

• Same-store cash NOI for all sectors increased 15.8% year-over-year in Q3; excluding the lease termination fee, office NOI would have declined.

• Q3 2024 rental income was $105.5 million, flat year-over-year; other property income surged to $17.3 million from $5.7 million, mainly due to lease termination fees.

• Liquidity at quarter-end was $933 million, including $533 million in cash and $400 million in revolver availability.

• Net income for Q3 2024 was $21.3 million, up from $15.1 million in Q3 2023.

Outlook and guidance

• 2024 FFO per share guidance raised to $2.51–$2.55, midpoint $2.53, up 1% from prior guidance, mainly due to retail outperformance.

• Excluding one-time items, adjusted 2024 FFO midpoint would be $2.24 per share.

• Guidance reflects current assumptions on leasing, rental rates, occupancy, and excludes future acquisitions or major capital events.

• Development pipeline includes future phases at La Jolla Commons, Lloyd Portfolio, and multifamily units at Lomas Santa Fe Plaza, with timing dependent on market conditions.

• 2025 FFO expected to be impacted by higher net interest expense from the new bond and reduced interest income as bond proceeds are used to refinance debt.