American Assets Trust, Inc. 10-K

ITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES American Assets Trust, Inc. Market Information and Holders Shares of American Assets Trust, Inc.'s common stock are listed on the NYSE under the symbol “AAT”. On February 4, 2022, we had 81 stockholders of record of our common stock. Certain shares are held in “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. American Assets Trust, L.P. There is no established trading market for American Assets Trust, L.P.'s operating partnership units. As of February 4, 2022, we had 20 holders of record of American Assets Trust, L.P.'s operating partnership units, including American Assets Trust, Inc. Distribution Policy We pay and intend to continue to pay regular quarterly dividends to holders of our common stock and unitholders of our Operating Partnership and to make dividend distributions that will enable us to meet the distribution requirements applicable to REITs and to eliminate or minimize our obligation to pay income and excise taxes. Dividend amounts depend on our available cash flows, financial condition and capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as our board of directors deems relevant. Recent Sales of Unregistered Equity Securities No unregistered equity securities were sold by us during 2021. Purchases of Equity Securities by the Issuer and Affiliated Purchasers No equity securities were purchased by us during 2021. Equity Compensation Plan Information Information about our equity compensation plans is incorporated by reference in Item 12 of Part III of this annual report on Form 10-K. 40 Stock Performance Graph The information below shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act. The graph below compares the cumulative total return on the company’s common stock with that of the Standard & Poor's 500 Stock Index, or S&P 500 Index, and an industry peer group, SNL US REIT Equity Index from December 31, 2016 through December 31, 2021. The stock price performance graph assumes that an investor invested $100 in each of American Assets Trust, Inc. and these indices, and the reinvestment of any dividends. The comparisons in the graph are provided in accordance with the SEC disclosure requirements and are not intended to forecast or be indicative of the future performance of American Assets Trust, Inc. shares of common stock. 41 ITEM 6. SELECTED FINANCIAL DATA The following tables set forth, on a historical basis, selected financial and operating data. The financial information has been derived from our consolidated balance sheets and statements of operations. You should read the following summary selected financial data in conjunction with “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data.” The following data is in thousands, except per share and share data. American Assets Trust, Inc. Year Ended December 31, 2021 2020 2019 2018 2017 Statement of Operations Data: Revenue: Rental income $ 360,208 $ 330,312 $ 343,865 $ 309,537 $ 298,803 Other property income 15,620 14,261 22,876 21,330 16,180 Total revenues 375,828 344,573 366,741 330,867 314,983 Expenses: Rental expenses 86,980 79,178 91,967 86,482 84,006 Real estate taxes 42,794 41,941 40,013 34,973 32,671 General and administrative 29,879 26,581 24,871 22,784 21,382 Depreciation and amortization 116,306 108,292 96,205 107,093 83,278 Total operating expenses 275,959 255,992 253,056 251,332 221,337 Operating income 99,869 88,581 113,685 79,535 93,646 Interest expense (58,587) (53,440) (54,008) (52,248) (53,848) Loss on early extinguishment of debt (4,271) — — — — Gain on sale of real estate — — 633 — — Other income (expense), net (418) 447 (122) (85) 334 Net income 36,593 35,588 60,188 27,202 40,132 Net income attributable to restricted shares (564) (383) (381) (311) (241) Net income attributable to unitholders in the Operating Partnership (7,653) (7,545) (14,089) (7,205) (10,814) Net income attributable to American Assets Trust, Inc. stockholders $ 28,376 $ 27,660 $ 45,718 $ 19,686 $ 29,077 Net income attributable to common stockholders per share Basic earnings per share $ 0.47 $ 0.46 $ 0.84 $ 0.42 $ 0.62 Diluted earnings per share $ 0.47 $ 0.46 $ 0.84 $ 0.42 $ 0.62 Weighted average shares of common stock outstanding - basic 59,990,740 59,806,309 54,110,949 46,950,812 46,715,520 Weighted average shares of common stock outstanding - diluted 76,172,277 76,119,763 70,786,132 64,136,559 64,087,250 Dividends declared per share $ 1.16 $ 1.00 $ 1.14 $ 1.09 $ 1.05 42 American Assets Trust, Inc. Year Ended December 31, 2021 2020 2019 2018 2017 Balance Sheet Data: Net real estate $ 2,681,981 $ 2,492,734 $ 2,523,475 $ 2,039,853 $ 2,076,707 Total assets 3,017,927 2,817,309 2,790,333 2,198,250 2,259,864 Notes payable and line of credit 1,649,203 1,406,751 1,357,659 1,290,772 1,325,020 Total liabilities 1,807,804 1,563,903 1,496,661 1,395,779 1,415,720 Stockholders' equity 1,238,964 1,271,442 1,313,917 802,977 833,710 Noncontrolling interests (28,841) (18,036) (20,245) (506) 10,434 Total equity 1,210,123 1,253,406 1,293,672 802,471 844,144 Total liabilities and equity 3,017,927 2,817,309 2,790,333 2,198,250 2,259,864 Other Data: Funds from operations (FFO) (1) $ 152,899 $ 143,880 $ 155,760 $ 134,295 $ 123,410 FFO attributable to common stock and units 152,342 143,503 155,384 133,990 123,174 (1) We present FFO because we consider FFO an important supplemental measure of our operating performance and we believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT. FFO represents net income (loss) (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 our 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. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, accordingly, our 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 our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our 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. The following table sets forth a reconciliation of our FFO to net income, the nearest GAAP equivalent, for the periods presented (in thousands) Year Ended December 31, 2021 2020 2019 2018 2017 Net income $ 36,593 $ 35,588 $ 60,188 $ 27,202 $ 40,132 Plus: Real estate depreciation and amortization 116,306 108,292 96,205 107,093 83,278 Less: Gain on sale of real estate — — (633) — — Funds from operations, as defined by NAREIT 152,899 143,880 155,760 134,295 123,410 Less: Nonforfeitable dividends on restricted stock awards (557) (377) (376) (305) (236) FFO attributable to common stock and units $ 152,342 $ 143,503 $ 155,384 $ 133,990 $ 123,174 43