American Assets Trust (AAT) Q2 2024 earnings summary

Executive summary

• Delivered strong operating performance across all segments in Q2 2024, exceeding expectations despite challenging commercial real estate sentiment, especially in office.

• CEO succession announced: Adam Wyll to become CEO in January 2025, with Ernest Rady moving to executive chairman.

• Portfolio consists of 31 office, retail, multifamily, and mixed-use properties in high-barrier markets across CA, WA, OR, TX, and HI, with strong occupancy: office 86.6%, retail 94.5%, multifamily 90.0%, mixed-use 95.7% as of June 30, 2024.

• Board approved a quarterly dividend of $0.335 per share for Q2 and Q3 2024.

Financial highlights

• Q2 2024 total revenue was $110.9 million, up 1% year-over-year; net income attributable to common stockholders was $11.9 million ($0.20 per share); FFO was $46.1 million ($0.60 per diluted share).

• For the first half of 2024, total revenue was $221.6 million (+2% YoY), net income attributable to stockholders was $31.2 million (+11% YoY), and FFO was $100.8 million ($1.32 per diluted share).

• Same-store cash NOI grew 2.1% year-over-year in Q2; retail same-store NOI up 3.2%, multifamily up 9.5%, mixed-use up 2.2%, office flat.

• Paid occupancy at Embassy Suites Waikiki was 86% in Q2, up from 84% last year; RevPAR $317, ADR $367.

• Dividends declared per common share were $0.335 for Q2 and Q3 2024, up from $0.330 in Q2 2023.

Outlook and guidance

• 2024 FFO per share guidance raised to $2.48–$2.54 (midpoint $2.51), a 9.6% increase from prior guidance, partly due to an $11 million lease termination fee to be recognized in Q3.

• Guidance increase driven by outperformance in retail, office, multifamily, lower G&A, higher interest income, and lease termination fee.

• Guidance excludes impacts from future acquisitions, dispositions, equity issuances, or major debt changes.

• Management seeks growth through same-store performance, development/redevelopment, and selective acquisitions in core markets.

• 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.