Q1 2025 American Assets Trust Inc Earnings Call

Unknown Executive: Good morning and welcome to the American Assets 2025.

Good morning, and welcome to the American Assets Trust, Inc. 's first quarter 'twenty 25 earnings call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

Meliana Leverton: Paul Perkins I would now like to turn the call over to Meliana Leverton, Associate General Counsel of American Assets Trust. Thank you and good morning. The statements made on this earnings call include forward-looking statements based on current expectations, which statements are subject to risks and uncertainties discussed in the company's filings with the SEC.

Mel: I would now like to turn the call over to Mel.

Eitan: Eitan Associate General Counsel at American assets Trust. Please go ahead.

Eitan: Thank you and good morning. The statements made on this earnings call include forward looking statements based on current expectations, which statements are subject to risks and uncertainties discussed in the company's filings with the SEC you are cautioned not to place undue reliance on these forward looking statements as actual events could cause the company's results to differ materially from these two.

Meliana Leverton: You are cautioned not to place undue reliance on these forward-looking statements, as actual events could cause the company's results to differ materially from these forward-looking statements.

Eitan: Looking statements yesterday afternoon American assets Trust's earnings release, and supplemental information were furnished to the SEC on form 8-K.

Meliana Leverton: Yesterday afternoon, American Assets Trust's earnings release and supplemental information were furnished to the SEC on Form 8-K. Both are now available on the Investor section of its website, AmericanAssetsTrust.com.

Eitan: Now available on the investors section of its website American assets Trust Dot Com. It is now my pleasure to turn the call over to Adam <unk>, President and CEO of American assets Trust.

Adam Wyll: It is now my pleasure to turn the call over to Adam Wyll, President and CEO of American Assets Trust. Good morning, and thank you for joining us today. I want to begin by expressing my appreciation for your continued engagement and support. We're operating in an increasingly complex and unpredictable environment, and your trust in our team and strategy means a great deal. We remain grounded in our long-term approach, one centered on thoughtful capital allocation, operational discipline, and an enduring commitment to shareholder value. While market volatility and macroeconomic uncertainty continue to shape the landscape, we view this period as one that also presents meaningful opportunity.

Eitan: Good morning, and thank you for joining us today I want to begin by expressing my appreciation for your continued engagement and support we're operating in an increasingly complex and unpredictable environment and your trust in our team and strategy means a great deal.

Eitan: We remain grounded in our long term approach one centered on thoughtful capital allocation operational discipline, and an enduring commitment to shareholder value, while market volatility and macroeconomic uncertainty continue to shape. The landscape. We view. This period is one that also presents a meaningful opportunity our portfolio with its geographic.

Adam Wyll: Our portfolio, with its geographic concentration and high-growth supply-constrained coastal markets and its mix of office, retail, and multifamily assets, is built to weather cycles and emerge stronger through them. But let's acknowledge the current reality. The world is absorbing the new administration's policies, inflation remains sticky, interest rates are volatile, geopolitical uncertainty continues to affect sentiment, and the investment community is seeking clarity on the direction of the economy. In these moments, a steady hand and a long-term perspective are critical. We've taken deliberate steps to ensure we're positioned for resilience and growth, steps that include enhancing our assets, actively managing risk, and maintaining a balance sheet that allows us to be nimble in both offense and defense.

Eitan: Concentration in high growth supply constrained coastal markets and it's a mix of office retail and multifamily assets is built to weather cycles and emerged stronger throughout.

Eitan: But let's acknowledge the current reality the world is absorbing the new administrations policies inflation remained sticky interest rates are volatile geopolitical uncertainty continues to affect sentiment in the investment community is seeking clarity on the direction of the economy in these moments of steady hand, and a long term perspective are critical.

Eitan: We've taken deliberate steps to ensure we were positioned for resilience and growth steps and include enhancing our assets actively managing risk and maintaining a balance sheet that allows us to be nimble at both offense and defense.

Adam Wyll: Particularly as construction costs remain elevated and likely to continue to increase meaningfully, causing replacement costs to soar, we believe the relative value of our high-quality coastal assets will continue to appreciate, and this long-term positioning is central to how we allocate capital and manage risk. What sets American Assets Trust apart is not just the quality of our real estate, but also our ability to make measured, forward-looking decisions. Our team continues to pursue organic growth through leasing, value-add improvement and development, while actively recycling capital into assets with stronger long-term upside. and we're doing so with continued focus on reducing our leverage and maintaining strong liquidity, a combination we believe is essential in today's environment.

Eitan: Particularly as construction costs remain elevated and likely to continue to increase meaningfully, causing replacement cost or <unk>. We believe the relative value of our high quality coastal assets will continue to appreciate in this long term positioning is central to how we allocate capital and manage risk.

Eitan: What sense American assets Trust apart its not just the quality of our real estate, but also our ability to make measured forward looking decisions. Our team continues to pursue organic growth through leasing value add improvements in development, while actively recycling capital into assets with stronger long term upside.

Eitan: And we're doing so with continued focus on reducing our leverage and maintaining strong liquidity a combination. We believe is essential in today's environment.

Adam Wyll: During Q1, our performance was in line with our initial guidance with FFO per diluted share of $0.52 and same store cash NOI up 3% over the same period last year.

Eitan: During Q1, our performance was in line with our initial guidance with S. F O per diluted share of 52 cents and same store cash NOI up 3% over the same period last year. This performance reflects the continued strength of our operating portfolio and validates the proactive measures we've taken over the past year to improve asset quality.

Adam Wyll: This performance reflects the continued strength of our operating portfolio and validates the proactive measures we've taken over the past year to improve asset quality and align our capital structure for long-term stability.

Eitan: And align our capital structure for long term stability, Bob will go into more details in a few minutes.

Adam Wyll: Bob will go into more details in a few minutes.

Adam Wyll: Turning to segment updates, with respect to our office portfolio, we're cautiously optimistic about the ongoing shift in office dynamics, albeit economic uncertainty remains a headwind, particularly with job and wage growth being crucial drivers for the office sector. Nevertheless, as companies continue to evolve their in-office strategies, we're seeing increased touring and proposal activity for our high-quality space. In fact, the return to office momentum has continued at steady improvement according to analyst reports, with average days in the office for Fortune 100 companies improving incrementally to 3.7 days in Q1 compared to 3.4 days in Q4. Our office portfolio ended Q1 at 85.5% leased or 87.6% leased excluding one beach, and another quarter where we've hit our all-time high for average base rents across our office portfolio.

Eitan: Turning to segment updates with respect to our office portfolio were cautiously optimistic about the ongoing shift in office dynamics, albeit economic uncertainty remains a headwind, particularly with job and wage growth being crucial drivers for the office sector.

Eitan: The last those companies continue to evolve their in office strategies, we're seeing increased touring and proposal activity for our high quality space. In fact, the return to office momentum has continued its steady improvement. According to analyst reports with average days on the office for Fortune 100 companies improving incremental eight to $3 seven days in Q.

Eitan: One compared to 3.4 days in Q4.

Eitan: Our office portfolio ended Q1 at 85, 5% leased or 87, 6% leased excluding one beach and another quarter, where we've had our all time high for average base rents across our office portfolio.

Adam Wyll: Office leasing activity totaled approximately 140,000 square feet, with spreads on comparable spaces increasing 8% on a cash basis and 15% on a straight line. Evidence that rents for modern, well-located, best-in-class space will garner an outsized share of demand.

Eitan: Office leasing activity totaled approximately 140000 square feet with spreads on comparable space is increasing 8% on a cash basis and 15% on a straight line basis, evidenced that rents for modern well located best in class space will garner an outsize share of demand.

Adam Wyll: Among the Quarters Office Highlights We signed a 16,000 square foot lease for the top floor penthouse of La Jolla Commons 3 with rent in line with our development pro forma, and a 29,000 square foot lease at Timber Ridge in suburban Bellevue, bringing Timber Ridge to 97%. We've entered Q2 with momentum, including 27,000 square feet of executed leases and another 88,000 square feet in documentation. Additionally, we are seeing an uptick in touring and prospect interest, not just at La Jolla Commons 3, but also from multiple potential users at 1 Beach Street in San Francisco. While still early, this activity is an encouraging step toward potential lease discussion.

Eitan: Among the quarters office highlights.

Eitan: We signed a 16000 square foot lease for the top floor penthouse of La Jolla Commons III with rents in line with our development pro forma.

Eitan: And the 29000 square foot lease at timber ridge in suburban Bellevue, bringing timber reached a 97% leased.

Eitan: We've entered Q2 with momentum, including 27000 square feet of executed leases and another 88000 square feet and documentation.

Eitan: Additionally, we are seeing an uptick in touring and prospect interest not just at La Jolla Commons three but also from multiple potential users at one Beach Street in San Francisco.

Eitan: While still early this activity is an encouraging step toward potential lease discussions in any case, our office strategy remains focused on optimizing occupancy enhancing the tenant experience, including their employees wellbeing and productivity and also capturing upside through incremental increases in office utilization.

Adam Wyll: In any case, our office strategy remains focused on optimizing occupancy, enhancing the tenant experience, including their employees' well-being and productivity, and also capturing upside through incremental increases in office utilization. We continue to believe that the Class A office market is well-positioned for a multi-year recovery, particularly in high-barrier coastal markets where demand is returning. As employers seek to attract and retain talent, the role of the office continues to evolve as a tool for collaboration, culture, and productivity.

Eitan: We continue to believe that the class a office market is well positioned for a multiyear recovery, particularly in high barrier coastal markets, where demand is returning as employers seek to attract and retain talent. The role of the office continues to evolve as a tool for collaboration culture and productivity.

Adam Wyll: Returning to retail, our portfolio has continued to perform well. Representing approximately 26% of our NOI, this segment has demonstrated notable durability. The portfolio ended the quarter 97% leased and similar to our office portfolio, our retail portfolio reached an all-time high average base rent in Q1. We executed over 158,000 square feet of new and renewal leases in Q1, with spreads on comparable spaces, excluding Del Monte Center, which we sold in Q1, increasing by 13% on a cash basis and 21% on a straight line. Collections remain strong and the retail tenants on our reserve list have all paid in full through Q1.

Eitan: Turning to retail our portfolio has continued to perform well representing approximately 26% of our NOI. This segment has demonstrated notable durability.

Eitan: The portfolio ended the quarter at 97% leased and similar to our office portfolio. Our retail portfolio reached an all time high average base rent in Q1.

Eitan: We executed over 158000 square feet of new and renewal leases in Q1 with spreads on comparable spaces, Excluding del Monte Center, which we sold in Q1, increasing by 13% on a cash basis and 21% on a straight line basis collections remained strong and the retail tenants on our reserve list of all paid in full through Q.

Adam Wyll: Meanwhile, though there may be some cracks in consumer spending in light of the ever-changing macro environment and the likely higher price of goods, we continue to believe that demographics surrounding our retail assets allow for a more resilient consumer spending base, relatively speaking, supported by healthy employment levels and continued strength in the housing market. To the extent consumer spending impacts our percentage rents, I just wanted to point out that our budgeted percentage rents comprise less than 1% of our total retail revenue.

Eitan: One.

Eitan: Meanwhile, though there may be some cracks in consumer spending in light of the ever changing macro environment and the likely higher price of goods. We continue to believe the demographics surrounding our retail assets allow for a more resilient consumer spending base relatively speaking supported by healthy employment levels and continued strength in the housing markets.

Eitan: To the extent consumer spending impacts our percentage rents I just wanted to point out that our budgeted percentage rents comprise less than 1% of our total of.

Eitan: Of our total retail revenue.

Adam Wyll: Meanwhile, our multifamily portfolio also continues to perform, supported by favorable fundamentals and our focus on supply-constrained coastal submarkets. In San Diego, our communities end of the quarter approximately 95% leased with a blended rent increase of 2% and minimal concession. Same store cash NOI for our San Diego multifamily increased 3.5% year over year, with net effective rents in Q1 coming in almost 2% above Q1 2024 level. In San Diego, affordability constraints continue to limit homeownership, supporting sustained rental demand and expectations of continued rent growth over the years.

Eitan: Meanwhile, our multifamily portfolio also performed supported by favorable favorable fundamentals and our focus on supply constrained coastal submarkets in San Diego our communities ended the quarter approximately 95% leased with a blended rent increase of 2% and minimal concessions same store cash NOI for our San Diego multi.

Eitan: Family increased three 5% year over year with net effective rents in Q1 coming in almost 2% above Q1 2024 levels.

Eitan: And San Diego affordability constraints continue to limit homeownership supporting sustained rental demand and expectations. That's continued rent growth over the years to come.

Adam Wyll: In Portland, Haslo and Ape ended Q1 at approximately 90% leased, with blended rent growth of 3% and net effective rents about flat year over year. As previously mentioned, while the Portland market is still digesting recent supply, we are hopeful for a pickup in activity this spring and for vacancy to decline later in 2025, setting the stage for stronger long-term rent growth.

Eitan: Portland has low on eight ended Q1 at approximately 90% leased with blended rent growth of 3% and net effective rents about flat year over year as previously mentioned, while the Portland market is still digesting recent supply we are hopeful for a pickup in activity. This spring for vacancy to decline later on.

Eitan: 2025, setting the stage for stronger long term rent growth.

Adam Wyll: Lastly, on portfolio updates, our mixed-use portfolio, Waikiki Beachwalk, recorded an 11% decrease in NOI compared to the same quarter last year, primarily attributable to our embassy suites, with average paid occupancy of 85%, about 6% lower than budget, and REVPAR about 11% lower than budget, due to a decrease in domestic tourism and rate competition in Waikiki.

Eitan: Lastly on portfolio updates are mixed use portfolio Waikiki Beach walk recorded an 11% decrease in NOI compared to the same quarter last year, primarily attributable to our embassy suites with average paid occupancy of 85% about 6% lower than budget and revpar of about 11% lower.

Eitan: And budget due to a decrease in domestic tourism and rate competition in Waikiki.

Adam Wyll: Nevertheless, in Q1, our hotel performed at the top of its comp set in Waikiki in terms of occupancy, rep bar, and ADR. Naturally, near-term economic uncertainty may impact leasing activity across our portfolio.

Eitan: The last in Q1, our hotel performed at the top of its comp set in Waikiki in terms of occupancy Revpar and ADR.

Eitan: Actually near term economic uncertainty may impact of leasing activity across our portfolio, we're closely monitoring whether businesses well reassess their plans this year and how retailers will respond either pausing are moving forward with strategic initiatives given the current environment of low vacancy and limited new supply in our markets.

Adam Wyll: We're closely monitoring whether businesses will reassess their plans this year and how retailers will respond, either pausing or moving forward with strategic initiatives given the current environment of low vacancy and limited new supply in our market.

Adam Wyll: Now turning to strategic initiatives, we have recently recycled capital in a manner consistent with our long-term strategy.

Eitan: Now turning to strategic initiatives, we have recently recycled capital in a manner consistent with our long term strategy in February we closed on the sale of del Monte Center in Monterrey. As previously mentioned this transaction aligns with our long term strategy to concentrate capital in core markets, where we benefit from operational scale and long term growth prospects.

Adam Wyll: In February, we closed on the sale of Del Monte Center in Monterey. As previously mentioned, this transaction aligns with our long-term strategy to concentrate capital in core markets where we benefit from operational scale and long-term growth prospects. And just days later, we closed on the acquisition of Genesee Parks Apartments, a nearly 200-unit multifamily community in San Diego. This property offers a rare opportunity to unlock substantial value through both operational improvements and long-term redevelopment potential. With rents well below market, we've already begun to realize upside with vacant units leasing at or above our projected pro forma rents, generally a 40% increase on vacant units from average in-place rents, and renewals capped at an approximate 8.5% increase per all of which reinforces our underwriting, and the property is currently at 97%.

Eitan: And just days later, we closed on the acquisition of Genesee Parks apartments, and nearly 200 unit multifamily community in San Diego.

Eitan: This property offers a rare opportunity to unlock substantial value through both operational improvements and long term redevelopment potential with rents well below market, we've already begun to realize upside with vacant units leasing at or above our projected pro forma rents generally a 40% increase on vacant units from average.

Eitan: In place rents and renewals captain at approximate eight 5% increase per California law, all of which reinforces our underwriting. The property is currently at 97% leased the properties location in fundamentals make it an ideal fit for our platform.

Adam Wyll: The properties, location, and fundamentals make it an ideal fit for our platform.

Adam Wyll: Finally, I am pleased to share that the Board has approved a quarterly dividend of $0.34 per share for Q2. This reflects our confidence in the company's outlook and reinforces our commitment to delivering long-term returns to our shareholders.

Eitan: Finally, I'm pleased to share that the board has approved a quarterly dividend of <unk> 34 cents per share for Q2. This reflects our confidence in the company's outlook and reinforces our commitment to delivering long term returns to our shareholders. The dividend will be paid on June 19th to shareholders of record as of June 5th and.

Adam Wyll: The dividend will be paid on June 19th to shareholders of record as of June 5th.

Adam Wyll: In closing, I want to reiterate that while these are complex times, our strategy is clear, our portfolio is well-positioned, and our team remains focused and forward-thinking. We'll continue to operate with discipline, flexibility, and a deep commitment to delivering sustainable value.

Eitan: In closing I want to reiterate that while these are complex times. Our strategy is clear our portfolio is well positioned and our team remains focused and forward thinking we will continue to operate with discipline and flexibility and a deep commitment to delivering sustainable value.

Adam Wyll: With that, I'll turn it over to Bob to walk through our financial results and guidance in more detail. Thanks, Adam.

Eitan: With that I'll turn it over to Bob to walk through our financial results and guidance in more detail.

Bob: Thanks, Adam and good morning, everyone.

Bob Barton: Good morning, everyone. Last night, we reported first quarter 2025 FFO per share of 52 cents. first quarter 2025 net income attributable to common stockholders per share with seven First quarter 2025 FFO decreased by approximately three cents to 52 cents per share compared to Q4 2024, primarily due to the impact of the Del Monte Center disposition on February 25, 2025, which contribute to a reduction of approximately three cents per FFO share. Same-store cash NOI for all sectors combined increased by 3.1% year-over-year in the first quarter of 2025. compared to the same period in 2004. All sectors reported positive same-store cash NOI growth during the quarter with the exception of the mixed-use sector, as we'll discuss in a moment.

Eitan: Last night, we reported first quarter 2025.

Eitan: Per share of <unk> 52 cents first quarter 2025, net income attributable to common stockholders per share was <unk> 70 cents.

Eitan: First quarter 2025, <unk> decreased by approximately three cents.

Eitan: The 52 cents per share compared to Q4, 'twenty 'twenty four primarily due to the impact of the del Monte Center disposition on February 25th one.

Eitan: 125, which contribute to a reduction of approximately three cents for.

Eitan: Sure.

Eitan: Our same store cash NOI for all sectors combined increased by three 1% year over year in the first quarter of 'twenty five.

Eitan: Compared to the same period in 24, all sectors reported positive same store cash NOI growth during the quarter with the exception of the mixed use sector as I'll discuss in a moment.

Bob Barton: Breaking it out by segment, our same store office portfolio's NOI increased by 5.4%. Q125, primarily due to the expiration of a contractual rent abatement related to a lease renewal at our landmark. at One Market Street Properties. Our Same Store Retail Portfolio's NOI increased by 5.4% in Q125, primarily driven by the expiration of a contractual renovatement for a new tenant at Carmel Mountain Plaza. The commencement of new leases and contractual rent escalations at both Alamo Quarry and Carmel Mountain Plaza. Additionally, the year-over-year comparison benefited from a one-time write-off of construction and progress expenses recorded in Q1-24, which did not reoccur in Q1-23.

Eitan: Breaking it out by segment, our same store office portfolios NOI increased by five 4% in Q1, 'twenty five primarily due to the expiration of our contractual rent abatement related to a lease renewal at our landmark.

At one market Street property.

Eitan: Our same store retail portfolios NOI increased by five 4% in Q1, 'twenty by primarily driven by the exploration of a contractual renovate but for a new tenant at Carmel Mountain Plaza.

Eitan: The commencement of new leases and contractual rent escalations at both Alamo Quarry and Carmel Mountain Plaza.

Eitan: Additionally, the year over year comparison benefited from a one time write off of construction progress expenses recorded in Q1, 24, which did not reoccur in Q1 25.

Bob Barton: Our same-store multifamily portfolio's NOI was flat at Q125 compared to the prior year period, primarily due to lower rental income at our Haslo and 8 property in Portland, offsetting our same-store growth from our San Diego multifamily property. And our mixed-use portfolio's NOI declined by approximately 11.6% in Q1'25, compared to the same period in Q'24, primarily driven by lower-than-anticipated occupancy at the Embassy Suites, Waikiki. specifically. Number one, paid occupancy for Q125 was approximately 85% compared to 90% in Q124. Number two, Repar for Q125 was $298, down 7% from Q125. Our ADR for Q125 was $353, down 1% from Q124.

Eitan: Our same store multifamily portfolio's NOI was flat Q1, 25 compared to the prior year period, primarily due to lower rental income that or a hassle and eight property in Portland, offsetting our same store growth from our San Diego multifamily properties.

Eitan: And our mixed use portfolios NOI declined by approximately 11, 6% in Q1 'twenty compared to the same periods in 'twenty, four primarily driven by lower than anticipated occupancy at the embassy suites Waikiki specifically.

Eitan: Number one hey, the occupancy for Q1, 'twenty five was approximately 85% compared to 90% in Q1 24.

Eitan: Number two revpar for Q1, 'twenty five was $298 down 7% from Q1 24.

Eitan: Our ADR through Q1, 'twenty five was $353 down 1% from Q1 24.

Bob Barton: And lastly, net operating income for Q1'25 was approximately $2.6 million compared to $3.4 million in Q1'25. It is our understanding that virtually all hotels in Oahu are having similar results. However, as Adam mentioned earlier, we continue to outperform our comp set in Waikiki by both occupancy, ADR, and rep. We're also seeing that domestic mainland travelers are rethinking travel to Hawaii due to rising costs in airfare and hotel rates. Many travelers are opting for international vacations due to the strong U.S. current. and more are taking all-inclusive cruise. But regardless of the near-term economic uncertainty, the charm, aloha spirit, and safety and security in Oahu.

Eitan: And lastly, net operating income for Q1, 'twenty five was approximately $2 6 million compared to $3 4 million in Q1 24.

Eitan: It is our understanding that virtually all hotels into what Oahu are having similar results.

Eitan: However, as Adam mentioned earlier, we continue to outperform our comps.

Eitan: Waikiki by both occupancy ADR and Revpar.

Eitan: We're also seeing that domestic mainland travelers are rethinking travel to Hawaii due to rising cost of airfare and hotel rates.

Eitan: Many travelers are opting for international vacations due to the strong U S currency.

Eitan: And more are taking all inclusive cruises, but regardless of the near term economic uncertainty the charm Aloha spirit, It safety and security in Milwaukee.

Bob Barton: and other Hawaiian islands are not going away.

Eitan: And the other Hawaiian islands are not going away. We believe this is just a moment in time.

Bob Barton: We believe this is just a moment in time.

Bob Barton: Let's talk about liquidity. At the end of the first quarter, we had liquidity of approximately $544 million, comprised of approximately $144 million in cash and cash equipped $400 million of availability on a revolving line of credit. Additionally, as of the end of the first quarter, our leverage, which we measure in terms of net debt to EBITDA, was 6.2 times on a trailing 12-month period.

Eitan: Let's talk about liquidity at the end of the first quarter, we had liquidity of approximately 544 million.

Eitan: List of approximately $144 million in cash and cash equivalents and 400 million of availability on our revolving line of credit.

Eitan: Additionally, as at the end of the first quarter, our leverage which we measure in terms of net debt to EBITDA was six two times on a trailing 12 month basis, and six seven times on a quarter annualized basis.

Bob Barton: and 6.7 times on a quarter annualized. Note that subsequent to year-end, we repaid our Term Loan B, Term Loan C, and Series C notes totaling $325 million in the aggregate without penalty or premium, utilizing cash on hand, and now we have no debt maturities until 2027.

Eitan: Note that subsequent to year end, we repaid our term loan B term loan C. N series C notes totaling $325 million in the aggregate without penalty or premium utilizing cash on hand.

Eitan: Now we have no debt maturities until 2027.

Bob Barton: Our objective is to achieve and maintain long-term net debt, even five and a half times or below. Our interest coverage and fixed charge coverage ratio entered the quarter at 3.2 times on a trailing 12-month basis.

Eitan: Our objective is to achieve and maintain long term net debt to EBITDA of five and a half times or below.

Eitan: Our interest coverage and fixed charge coverage ratio ended the quarter at three two times on a trailing 12 month basis.

Bob Barton: Let's talk about our 25 guidance. We are reaffirming our full year 25 guidance range of $1.87 to $2.01 per FFO share with a midpoint of $1.94 per FFO share, underscoring our confidence in the strength and stability of our diversified portfolio. This outlook reflects the continued momentum across our core sectors, supported by steady leasing activity, contractual rent increase, and Disciplined Operational Execution.

Eitan: Let's talk about our 25 guidance, we are reaffirming our full year 25 guidance range of 187 to $2.01 or F. F O share with a midpoint of $1 94 for F. F O share underscoring our confidence in the strength and stability of our <unk>.

Eitan: Diversified portfolio.

Eitan: This outlook reflects the continued momentum across our core sectors supported by steady leasing activity contractual rent increases and disciplined operational execution.

Bob Barton: Our guidance assumptions. continue to reflect a relatively healthy operating environment, sustained tenant demand, and thoughtful risk management. Based on our first quarter results and our current visibility into the balance of the year, we believe we are reasonably positioned to achieve our full year objectives.

Eitan: Our guidance assumptions.

Eitan: Continued to reflect a relatively.

Eitan: Healthy operating environment sustained tenant demand and thoughtful risk manager.

Eitan: Based on our first quarter results and our current visibility into the balance of the year. We believe we are reasonably positioned to achieve our full year objectives. Moreover, while the reaffirmed guidance reflects our best estimate as of today's call. We acknowledged the potential to perform towards the upper end of the range.

Bob Barton: Moreover, while the reaffirmed guidance reflects our best estimate as of today's call, we acknowledge the potential to perform towards the upper end of the And to achieve that, several factors would need to align favorably. First, the majority of the office and retail tenants for whom we have established credit reserves must continue to meet their rent obligations through the year. As of Q1 2025, we have approximately four cents per share of FFO reserved for tenants deemed at risk based on a probability weighted approach. on that amount, approximately 1 cent. for FFO Chair relates to office tenants and three cents to retail.

And to achieve that several factors would need to align favorably.

Eitan: The majority of the office of retail tenants for whom we have established credit.

Eitan: Reserves must continue to meet their rent obligations through the year.

Eitan: As of Q1 2025, we have approximately four cents per share about basketball reserved for tenants deemed at risk based on a probability weighted approach.

Eitan: Of that amount approximately one.

Eitan: Or F F O share relates to office tenants and three cents to retail.

Bob Barton: Second, our multifamily segment would need to exceed expectations driven by improved occupancy. Continued Rent Growth or Better Than Forecasted Expense Third, a meaningful recovery in tourism would support stronger performance. at our Embassy Suites property. We remain cautiously optimistic that both domestic and international travel will improve either later this year or in the years ahead. Together these levers represent upside potential and we will continue to monitor each closely as you are progressing.

Eitan: Second our multifamily.

Eitan: Segment would need to exceed the expectations driven by improved occupancy continued rent growth or better than forecasted expense.

Eitan: But.

Eitan: Third a meaningful recovery in tourism would support stronger performance.

Eitan: At our embassy suites property.

Eitan: We remain cautiously optimistic that both domestic and international travel will improve either later this year or in the years ahead.

Eitan: Together these levers represent upside potential and we will continue to monitor each closely as year progresses.

Bob Barton: As a reminder, our guidance and these prepared remarks exclude the impact of any future acquisitions, dispositions, equity issuances, or repurposing. and Debt Refinancings or Repayments. We remain committed to transparency and will continue to provide clear insights into our quarterly results and the key assumptions that inform our outcomes.

Eitan: As a reminder, our guidance in these prepared remarks exclude it the impact of any future acquisitions dispositions equity issuances or repurchases and debt refinancings or repayments, except for those already disclosed we remain committed to transparency and will continue to provide clear insights into our.

Eitan: Quarterly results and the key assumptions that infor.

Bob Barton: Additionally, please note that any non-GAAP financial metrics discussed today, such as Net Operating Income, or NOI, are reconciled to the most directly comparable GAAP measures in our earnings release and supplemental materials.

Eitan: Additionally, please note that any non-GAAP financial metrics discussed today, such as net operating income or NOI are reconciled to the most directly comparable GAAP measures in our earnings release and supplemental materials.

Unknown Executive: I'll now turn the call back over to the operator for Q&A.

Eitan: I'll now turn the call back over to the operator for Q&A.

Unknown Executive: We will now begin the question and answer session.

Eitan: We will now begin the question answer session to ask a question you May Press Star then one on your telephone keypad.

Unknown Executive: To ask a question, you may press star then. Please pick up your At any time your question has been addressed and you would like to withdraw your question, please press star then 2.

Eitan: Please pickup your handset before pressing the keys.

Eitan: If at any time your question has been addressed and you would like to.

Eitan: Question. Please press Star then two.

Unknown Executive: At this time, we will pause momentarily to assemble.

Eitan: We will pause momentarily to assemble our roster.

Speaker Change: Our first question comes from Brent <unk> with Green Street Advisors. Please go ahead.

Brittany Pyre: Brittany Pyre Hey, good morning, everyone. Thanks for taking the question. Quick call on your Bellevue assets. I know you all just went through a pretty significant renovation program there. So if you could provide some color on maybe what the pipeline is looking for those assets and any probability that they see an uptick in occupancy sometime this year, that'd be helpful. Thanks.

Brent: Hey, good morning, everyone. Thanks for taking the question a quick call on your Bellevue assets I know you. All just went through a pretty significant renovation program. There. So if you could provide some color on maybe what the pipeline is looking for those assets than any probability that they see in and out.

Brent: Taken occupancy sometime this year that'd be helpful. Thanks.

Steve Center: Ernie, we'll have Steve Center, our head of office, respond to that. Sure. And Adam mentioned in his remarks, we just did a 29,000 foot lease at timber. Ridge, which takes that property on the I-5 Flank corridor to 97% lease. And in addition, we've got a deal we're close to letter of intent on for another 16,000 feet at Bell Springs, which would take the I-520 corridor, those 253,000 feet of assets to 11.6% vacancy, which is well below the current market 20% for the east side. So, and there's additional velocity there as well at what's now called 14 Acres or Eastgate.

Speaker Change: There are any will have Steve center, our head of office respond about sure Adam mentioned in his remarks, we just did a 29000 foot lease at timber.

Speaker Change: Which takes that property on the white point corridor to 97% leased.

Speaker Change: In addition, we've got a deal where close to letter of intent on for another 16000 feet at Bell Springs.

Speaker Change: With that take the I 20 corridor or those 253000 feet of assets too.

Speaker Change: 11, 6% vacancy, which as well.

Speaker Change: Below the current market at 20% for the east side so.

Speaker Change: And there there's additional velocity there as well at what's now called 14 acres or Eastgate.

Steve Center: We're in leases on a 17,000 foot deal and another 5,900 foot deal, and we have several other prospects and that that project was just completed in terms of the renovation. So we're seeing leasing momentum pick up there as well. And then at City Center Bellevue, we're sitting at about 91% leased and we've got multiple prospects that would take that even higher. In fact, we're in proposals that would take to it to the vacancies. We'd be about 95% leased with the pending proposal. So we're looking pretty good in Bellevue as well.

Speaker Change: We're in leases on that 17000 foot deal and another 5900 foot deal and we have several other prospects in that that project was just completed in terms of the renovations. So we're seeing leasing momentum pick up there as well.

Speaker Change: And then at City Center, Bellevue, where we're sitting at about a 91% leased and we've got multiple prospects that would take that even higher in fact.

Speaker Change: We're in proposals.

Speaker Change: So it would take to it to the vacancies would be about 95% leased with a pending proposal, so where we're looking pretty good in Bellevue.

Speaker Change: Yeah.

Steve Center: And then maybe one follow up. I know downtown Seattle passed the Proposition 1A earlier this year. Has that caused an increase in, you know, inbound, you know, interest from tenants? Or has that been a, you know, an immaterial event?

Speaker Change: And then maybe one follow up I know downtown Seattle passed the proposition one a earlier this year has that caused an increase in inbound.

Speaker Change: No interest from tenants or has that been a not.

Speaker Change: And material event.

Steve Center: That's a good question. It actually came up in our we had leasing calls for both of our Bellevue teams yesterday and it did come up we're seeing increased inbound tenant tour and inquiry activity because in part because of issues like that. Bellevue is outperforming. So yeah, it's valid and it's driving tenants to consider Bellevue.

Speaker Change: No. That's a good question and it actually came up and we have leasing calls for both a bar bell.

Speaker Change: Bellevue teams yesterday and it did come up we're seeing increased inbound tenant tours and inquiry activity because of in part because of issues like that Bellevue is outperforming.

Speaker Change: So yeah, it's it's it's valid and it's driving tenants to consider Bellevue.

Steve Center: Great, thanks for the time.

Speaker Change: Great. Thanks for the time.

Todd Thomas: Our next question comes from Todd Thomas with Keybanc Capital markets. Please go ahead.

Antara Nag: Todd Thomas Hi, good morning. This is Antara Natchadorian for Todd Thomas. Just a quick one for me. I know the company sold Del Monte Center for around $124 million and reinvested Genesee Park Apartments for about $68 million. Are you pursuing additional acquisitions to redeploy the remaining proceeds from Del Monte? And is there anything else on the acquisition side that you could tell us about?

Todd Thomas: Hi, Good morning. This is Jerry on for Todd Thomas Just a quick one for me I know the company is telecom Monte center for around $124 million and reinvested the proceeds into the Genesee Park apartments for about 68 million are you pursuing additional acquisitions to redeploy the remaining proceeds from them all day.

Todd Thomas: And are there is there anything else on the acquisition side that you could talk about.

Antara Nag: Hi, Antara. Good question. So we are keeping our eyes on what's being marketed in our various markets and the asset classes that we're looking at primarily multifamily and retail. But at the same time, having that cash on the balance sheet, the leftovers, if you will, from Del Monte, in this kind of market environment gives us a little bit more comfort on the balance sheet and liquidity side. So that we're still actively looking at deals and underwriting them. We're also comfortable keeping that cash on the balance sheet right now as we kind of navigate through this economic uncertainty.

Speaker Change: Hi, I'm sorry. Good question. So we are keeping our eyes on what's being marketed.

Speaker Change: In our various markets and the asset classes that we're looking at primarily multifamily and retail but at the same time, having that cash on the balance sheet the AR.

Speaker Change: Leftovers, if you will from del Monte and this kind of market environment gives us a little bit more comfort on the balance sheet and liquidity side. So that were so actively looking at deals and underwriting them. We're also comfortable keeping that cash on the balance sheet right now as we kind of navigate through this economic uncertainty.

Antara Nag: So to speak of any other acquisitions right now, there's nothing to chat about. Got it.

Speaker Change: So to speak of any other acquisitions right now there's nothing to chat about at this point, Okay got it and then just another one I saw that you pushed back the timeframe for stabilization at La Jolla. So could you give us any additional update on the leasing pipeline any any color on the market.

Antara Nag: And then just another one.

Antara Nag: I saw that you pushed back the time frame for stabilization at La Jolla. So could you give us any additional update on the leasing pipeline? Any color on the market?

Steve Center: Sure, Steve. Sure. The sub market, the UTC, or University Town Center, sub market remains tight. Class A direct vacancy is 7.4%, and if you net out tower three from that, the remainder is 4.6% direct vacant. That being said, it's not a big tenant market at this point. It's a smaller tenant market, full floor and below, except for a few examples, one of which we're in proposals on two floor deal. We're competing with a renewal, where the renewing space would be 68,400 feet in our Our lease would be 41,000 feet. Our workplace are highly efficient. It's a law firm, it would be going they've been in their space 10 years and they'd be going from you know, partners having bigger offices, such as having smaller offices to a one size office fits all, which is the initiative that's being put forth on the West Coast for this major law firm.

Speaker Change: Sure sure.

Speaker Change: The Submarket the U T C or University town Center Submarket remains tight.

Speaker Change: Class a direct vacancy of seven 4% and if you net out tower three from that the remainder is four 6% direct vacancy that being said, it's not a big tenant market at this point, it's a smaller tenant market full floor and below.

Speaker Change: Except for a few examples one of which were in proposals to floor deal.

Speaker Change: We're competing with a renewal where the renewing space would be 68400 feet and are.

Our lease would be 41000 feet. Our fourth place are highly efficient. It's a law firm. It would be go on they've been in their space 10 years, maybe going from partners, having bigger offices, such as having smaller offices to a one one size office, that's all which is the initiative that's being put forth in the west coast for this major law.

Steve Center: So it's, you know, we're competing for it. We're more efficient. We offer building top signage that they don't. We have podium parking directly under the building versus the parking structure. We have better amenities. And so we'll see if we can overcome the inertia that goes with renewals.

Speaker Change: Firm.

Speaker Change: So we're competing for it we're more efficient we offer building top side is that they don't we have podium parking directly under the building versus the parking structure, we have better amenities and so we'll see if we can overcome the inertia that goes with renewals.

Steve Center: And we'll see how that plays out.

Speaker Change: And we'll see how that plays out. In addition, we are building spec suites on the entire fourth floor those will be completed in November and we will see.

Steve Center: In addition, we are building spec suites on the entire fourth floor. Those will be completed in November, and we will see leasing activity pick up with completion of those suites. Plus, we've got amenities under construction. We've got a 7,000-foot conference center under construction. We've got the restaurant, the white table restaurant under construction. We've got the cafe under construction. So when those amenities are complete, spec suites are done. We expect leasing to accelerate. Got it.

Speaker Change: Leasing activity picked up with completion of those suites, plus we've got amenities under construction. We've got a 7000 foot conference center under construction, we've got the restaurant the white tablecloth restaurant under construction, we've got the cafe under construction. So when those amenities are complete spec suites are gone we expect leasing to.

Speaker Change: Yeah.

Speaker Change: Got it thank you.

Unknown Executive: This concludes our question and answer session.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Adam Weil for any closing remarks.

Adam Wyll: Adam Wyll, Steve Center, Dylan Burzinski, Antara Nag, Jerry Gammieri, American Assets Thank you for taking the time to join us today. While we're encouraged by our progress this quarter, we remain mindful of the broader operating environment and continue to manage the business with discipline and a long term perspective.

Speaker Change: Thank you for taking the time to join US today, while we're encouraged by our progress this quarter, we remain mindful of the broader operating environment and continue to manage the business with discipline and a long term perspective so.

Unknown Executive: So we appreciate your continued support and look forward to updating you again next quarter. Thank you.

Speaker Change: So we appreciate your continued support and look forward to updating you again next quarter.

Thank you.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation. You may now

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.