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Forward-Looking Statements
−Removed: We make statements in this report that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, ("the Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended, ("the Exchange Act").
+Added: We make statements in this report that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements.
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While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance.
−Removed: We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes.
−Removed: For a further discussion of these and other factors, see the section entitled “Item 1A.
+Added: We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, or new information, data or methods, future events or other changes.
+Added: For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Item 1A.
Risk Factors” contained herein and in our annual report on Form 10-K for the year ended December 31, 2022.
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We are a full service, vertically integrated and self-administered REIT that owns, operates, acquires and develops high quality retail, office, multifamily and mixed-use properties in attractive, high-barrier-to-entry markets in Southern California, Northern California, Washington, Oregon, Texas and Hawaii.
−Removed: As of September 30, 2022, our portfolio was comprised of twelve retail shopping centers;
+Added: As of March 31, 2023, our portfolio was comprised of twelve retail shopping centers;
twelve office properties;
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and six multifamily properties.
−Removed: Additionally, as of September 30, 2022, we owned land at three of our properties that we classified as held for development and/or construction in progress.
+Added: Additionally, as of March 31, 2023, we owned land at three of our properties that we classified as held for development and/or construction in progress.
Our core markets include San Diego, California;
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Rady or his affiliates, including the Ernest Rady Trust U/D/T March 13, 1983, or the Rady Trust, and did not have any operating activity until the consummation of our initial public offering on January 19, 2011.
−Removed: Our Company, as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.8% of our Operating Partnership as of September 30, 2022.
+Added: Our Company, as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.8% of our Operating Partnership as of March 31, 2023.
Accordingly, we consolidate the assets, liabilities and results of operations of our Operating Partnership.
−Removed: On March 8, 2022, we acquired Bel-Spring 520 in Bellevue, Washington, consisting of an approximately 93,000 square feet, multi-tenant office campus.
−Removed: The purchase price was $45.5 million, excluding closing costs and prorations.
−Removed: We acquired the property with cash on hand.
Critical Accounting Policies
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Information provided on a redevelopment same-store basis includes the results of properties undergoing significant redevelopment for the entirety or portion of both periods being compared.
−Removed: Same-store and redevelopment same-store are considered by management to be important measures because they assist in eliminating disparities due to the development, acquisition or disposition of properties during the particular period presented, and thus provides a more consistent performance measure for the comparison of the Company's stabilized and redevelopment properties, as applicable.
+Added: Same-store and redevelopment same-store are considered by management to be important measures because they assist in eliminating disparities due to the development, acquisition or disposition of properties during the particular period presented, and thus provide a more consistent performance measure for the comparison of the company's stabilized and redevelopment properties, as applicable.
Additionally, redevelopment same-store is considered by management to be an important measure because it assists in evaluating the timing of the start and stabilization of our redevelopment opportunities and the impact that these redevelopments have in enhancing our operating performance.
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In consideration of these measures, we generally remove properties from same-store properties when we see a decline in a property's annualized base rent, occupancy and operating income within the calendar year as a direct result of ongoing redevelopment, development or expansion activity.
−Removed: Acquired properties are classified
−Removed: into same-store properties once we have owned such properties for the entirety of comparable period(s) and the properties are not under significant development or expansion.
−Removed: Below is a summary of our same-store composition for the three and nine months ended September 30, 2022 and 2021.
−Removed: Waikiki Beach Walk Retail and Embassy Suites™ Hotel were reclassified to same-store properties when compared to the designation for the three and nine months ended September 30, 2021 due to significant spalling repair activity completed in the third quarter of 2020.
−Removed: Eastgate Office Park is classified as a non-same-store property, as it was acquired on July 7, 2021.
−Removed: Corporate Campus East III is also classified as a non-same-store property, as it was acquired on September 10, 2021.
−Removed: Bel-Spring 520 is also classified as a non-same-store property, as it was acquired on March 8, 2022.
−Removed: In our determination of same-store and redevelopment same-store properties for the three and nine months ended September 30, 2022, One Beach Street has been identified as a same-store redevelopment property due to significant redevelopment activity.
−Removed: Retail same-store net operating income increased approximately 5.1% for the nine months ended September 30, 2022 compared to the same period in 2021.
−Removed: Office same-store net operating income increased 3.1% for the nine months ended September 30, 2022 compared to the same period in 2021.
−Removed: Office redevelopment same-store net operating income increased 3.3% for the nine months ended September 30, 2022 compared to the same period in 2021.
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 2022 2021
+Added: Acquired properties are classified into same-store properties once we have owned such properties for the entirety of comparable period(s) and the properties are not under significant development or expansion.
+Added: Below is a summary of our same-store composition for the three months ended March 31, 2023 and 2022.
+Added: Bel-Spring 520 is classified as a non-same-store property, as it was acquired on March 8, 2022.
+Added: In our determination of same-store and redevelopment same-store properties for the three months ended March 31, 2023, One Beach Street has been identified as a same-store redevelopment property due to significant redevelopment activity.
+Added: Retail same-store net operating income increased approximately 4.7% for the three months ended March 31, 2023 compared to the same period in 2022.
+Added: Office same-store net operating income decreased (1.1)% for the three months ended March 31, 2023 compared to the same period in 2022.
+Added: Office redevelopment same-store net operating income decreased (1.4)% for the three months ended March 31, 2023 compared to the same period in 2022.
+Added: Three Months Ended March 31,
Same-Store 29 27
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Generally, our acquisitions are initially financed by available cash, mortgage loans and/or borrowings under our revolving line of credit, which may be repaid later with funds raised through the issuance of new equity or new long-term debt.
−Removed: We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it has and will impact our tenants and business partners.
−Removed: We are unable to predict the future impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows due to numerous uncertainties.
−Removed: These uncertainties include the scope, severity and duration of the pandemic (including as the pandemic evolves due to future mutations of the COVID-19 virus), the ongoing governmental, business and individual actions taken to contain the pandemic or mitigate its impact, the availability and adoption of COVID-19 vaccines and the direct and indirect economic effects of the pandemic and containment measures, among others.
−Removed: The outbreak of COVID-19 in many countries, including the United States, has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets.
−Removed: The global impact of the pandemic continues to rapidly evolve.
−Removed: Certain states and cities, including where we own properties, have development sites and where our principal place of business is located, have at various points in time, reacted by instituting quarantines, restrictions on travel, "stay-at-home" orders or “shelter in place” rules, social distancing measures, and restrictions on business operations and/or construction projects (including, required shut-downs in some instances).
−Removed: It is unclear how customers’ concerns about COVID-19 transmission and sensitivities to the transmission of other diseases will impact their willingness to visit certain of our tenants' businesses.
−Removed: As a result, the COVID-19 pandemic has negatively impacted almost every industry directly or indirectly, including industries in which the Company and our tenants operate, and may continue to do so.
−Removed: Further, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending as well as other unanticipated consequences remain unknown.
+Added: We continue to closely monitor the impact of COVID-19 on our business.
+Added: We are unable to predict the future impact that COVID-19 will have on our financial condition, results of operations and cash flows due to numerous uncertainties, including the scope, severity and duration of the virus (including future mutations), governmental, business and individual actions taken to stop its the spread or to mitigate its impact, the availability and adoption of COVID-19 vaccines, and the economic effects of the virus and containment measures, among others.
+Added: Although many measures aimed to stop the spread of COVID-19 have been lifted, we cannot predict whether they will be reinstated or whether more restrictive measures may be imposed.
+Added: It is also unclear whether customers’ concerns about the transmission of COVID-19 or other diseases will impact their willingness to visit certain of our tenants' businesses.
We believe our financial condition and liquidity are currently strong.
−Removed: Although there is uncertainty related to the COVID-19 pandemic’s impact on our future results, we believe our efficient business model and steps we have taken to strengthen our balance sheet will continue to allow us to manage our business through this evolving crisis.
−Removed: We continue to manage all aspects of our business including, but not limited to, monitoring the financial health of our tenants, vendors, and other third-party relationships, and developing new opportunities for growth.
−Removed: Due to the constantly changing nature of the COVID-19 pandemic, we cannot reasonably estimate with any degree of certainty the future impact the pandemic may have on our results of operations, financial position, and liquidity.
+Added: Although there is uncertainty related to COVID-19’s impact on our future results, we believe our efficient business model and steps we have taken to strengthen our balance sheet will continue to allow us to manage our business through this evolving crisis.
Our same-store growth is primarily driven by increases in rental rates on new leases and lease renewals and changes in portfolio occupancy.
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Furthermore, we believe the locations of our properties and diversified portfolio will mitigate some of the potentially negative impact of the current economic environment.
−Removed: However, in the short-term due to the COVID-19 pandemic, we have seen a meaningful negative impact on certain of our tenants' operations and ability to pay rent, primarily in the retail sector;
−Removed: any reduction in our tenants' abilities to pay base rent, percentage rent or other charges, including as a result of the COVID-19 pandemic, will adversely affect our financial condition and results of operations.
−Removed: During the three months ended September 30, 2022, we signed 13 office leases for a total of 59,461 square feet of office space including 43,061 square feet of comparable renewal office space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash and GAAP basis of 23.7% and 34.7%, respectively.
+Added: However, in the short-term due to COVID-19, we have seen a meaningful negative impact on certain of our tenants' operations and ability to pay rent, primarily in the retail sector;
+Added: any reduction in our tenants' abilities to pay base rent, percentage rent or other charges, including as a result of COVID-19, will adversely affect our financial condition and results of operations.
+Added: During the three months ended March 31, 2023, we signed 15 office leases for a total of 79,862 square feet of office space including 56,139 square feet of comparable renewal office space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash and GAAP basis of 10.1% and 22.5%, respectively.
New office leases for comparable spaces were signed for 2,256 square feet at an average rental rate increase on a cash and GAAP basis of 23.2% and 20.6%, respectively.
Renewals for comparable office spaces were signed for 53,883 square feet at an average rental rate increase on a cash and GAAP basis of 9.7% and 22.6%, respectively.
−Removed: Tenant improvements and incentives were $40 per square foot of office space for comparable new leases for the three months ended September 30, 2022, mainly due to a tenant at City Center Bellevue.
−Removed: During the three months ended September 30, 2022, we signed 21 retail leases for a total of 79,033 square feet of retail space including 71,469 square feet of comparable renewal retail space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash basis of 6.8% and increase on a GAAP basis of 27.7%, respectively.
−Removed: New retail leases for comparable spaces were signed for 5,007 square feet at an average rental rate decrease on a cash basis of (1.1)%.
−Removed: Renewals for comparable retail spaces were signed for 66,462 square feet at an average rental rate increase on a cash basis of 7.8% and increase on a GAAP basis of 15.0%, respectively.
−Removed: Tenant improvements and incentives were $24.22 per square foot of retail space for comparable new leases for the three months ended September 30, 2022, mainly due to tenants at Alamo Quarry Market.
+Added: Tenant improvements and incentives were $57.1 per square foot of office space for comparable new leases for the three months ended March 31, 2023, mainly due to a tenant at Solana Crossing.
+Added: During the three months ended March 31, 2023, we signed 16 retail leases for a total of 35,589 square feet of retail space including 30,756 square feet of comparable renewal retail space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash and GAAP basis of 9.5% and 27.7%, respectively.
+Added: New retail leases for comparable spaces were signed for 1,598 square feet at an average rental rate increase on a cash basis of 48.5%.
+Added: Renewals for comparable retail spaces were signed for 29,158 square feet at an average rental rate increase on a cash and GAAP basis of 8.3% and 22.7%, respectively.
+Added: Tenant improvements and incentives were $9.39 per square foot of retail space for comparable new leases for the three months ended March 31, 2023, mainly due to a tenant at Waikele Center.
The rental increases associated with comparable spaces generally include all leases signed in arms-length transactions reflecting market leverage between landlords and tenants during the period.
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We cease capitalization on the portion substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with any remaining portion under construction.
−Removed: We capitalized external and internal costs related to both development and redevelopment activities combined of $16.2 million and $14.8 million for the three months ended September 30, 2022 and 2021, respectively, and $61.6 million and $34.6 million for the nine months ended September 30, 2022 and 2021, respectively.
−Removed: We capitalized external and internal costs related to other property improvements combined of $10.4 million and $8.8 million for the three months ended September 30, 2022 and 2021, respectively, and $29.5 million and $31.7 million for the nine months ended September 30, 2022 and 2021, respectively.
+Added: We capitalized external and internal costs related to both development and redevelopment activities combined of $9.6 million and $22.7 million for the three months ended March 31, 2023 and 2022, respectively.
+Added: We capitalized external and internal costs related to other property improvements combined of $12.4 million and $8.9 million for the three months ended March 31, 2023 and 2022, respectively.
Interest costs on developments and major redevelopments are capitalized as part of developments and redevelopments not yet placed in service.
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If the time period for capitalizing interest is extended, however, more interest is capitalized, thereby decreasing interest expense and increasing net income during that period.
−Removed: We capitalized interest costs related to development activities of $1.6 million and $0.8 million for the three months ended September 30, 2022 and 2021, respectively, and $4.1 million and $2.0 million for the nine months ended September 30, 2022 and 2021, respectively.
+Added: We capitalized interest costs related to development activities of $1.8 million and $1.2 million for the three months ended March 31, 2023 and 2022, respectively.
Results of Operations
For our discussion of results of operations, we have provided information on a total portfolio and same-store basis.
−Removed: Comparison of the three months ended September 30, 2022 to the three months ended September 30, 2021
−Removed: The following summarizes our consolidated results of operations for the three months ended September 30, 2022 compared to our consolidated results of operations for the three months ended September 30, 2021.
−Removed: As of September 30, 2022, our operating portfolio was comprised of 31 retail, office, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,112 residential units (including 122 RV spaces) and a 369-room hotel.
−Removed: Additionally, as of September 30, 2022, we owned land at three of our properties that we classified as held for development and/or construction in progress.
−Removed: As of September 30, 2021, our operating portfolio was comprised of 30 retail, office, multifamily and mixed-use properties with an aggregate of
−Removed: approximately 7.1 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,112 residential units (including 122 RV spaces) and a 369-room hotel.
−Removed: Additionally, as of September 30, 2021, we owned land at three of our properties that we classified as held for development and/or construction in progress.
−Removed: The following table sets forth selected data from our unaudited consolidated statements of comprehensive income for the three months ended September 30, 2022 and 2021 (dollars in thousands):
−Removed: Three Months Ended September 30, Change %
+Added: Comparison of the three months ended March 31, 2023 to the three months ended March 31, 2022
+Added: The following summarizes our consolidated results of operations for the three months ended March 31, 2023 compared to our consolidated results of operations for the three months ended March 31, 2022.
+Added: As of March 31, 2023, our operating portfolio was comprised of 31 retail, office, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,110 residential units (including 120 RV spaces) and a 369-room hotel.
+Added: Additionally, as of March 31, 2023, we owned land at three of our properties that we classified as held for development and/or construction in progress.
+Added: As of March 31, 2022, our operating portfolio was comprised of 31 retail, office, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,110 residential units (including 120 RV spaces) and a 369-room hotel.
+Added: Additionally, as of March 31, 2022, we owned land at three of our properties that we classified as held for development and/or construction in progress.
+Added: The following table sets forth selected data from our unaudited consolidated statements of comprehensive income for the three months ended March 31, 2023 and 2022 (dollars in thousands):
+Added: Three Months Ended March 31, Change %
Rental income $ 102,710 $ 96,986 $ 5,724 6 %
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Depreciation and amortization (29,901) (30,412) 511 (2)
−Removed: Interest expense (14,454) (14,722) 268 (2)
+Added: Interest expense, net (15,729) (14,666) (1,063) 7
Other (expense) income, net 6,679 (162) 6,841 (4,223)
+Added: Total other, net (47,950) (52,382) 4,432 (8)
Net income 20,666 13,514 7,152 53
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Total property revenue consists of rental revenue and other property income.
−Removed: Total property revenue increased $12.7 million, or 13%, to $111.0 million for the three months ended September 30, 2022 compared to $98.3 million for the three months ended September 30, 2021.
−Removed: The percentage leased was as follows for each segment as of September 30, 2022 and 2021:
+Added: Total property revenue increased $6.3 million, or 6%, to $107.8 million for the three months ended March 31, 2023 compared to $101.5 million for the three months ended March 31, 2022.
+Added: The percentage leased was as follows for each segment as of March 31, 2023 and 2022:
Percentage Leased (1)
−Removed: September 30,
Office 88.1 % 91.5 %
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95.0 % 94.3 %
−Removed: (1) The percentage leased includes the square footage under lease, including leases which may not have commenced as of September 30, 2022 or 2021, as applicable.
+Added: (1) The percentage leased includes the square footage under lease, including leases which may not have commenced as of March 31, 2023 or 2022, as applicable.
(2) Includes the retail portion of the mixed-use property only.
−Removed: The increase in total property revenue was attributable primarily to the new acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520, the increase in occupancy and rate at Waikiki Beach Walk Embassy Suites™, the increase in occupancy and annualized base rent in our multifamily portfolio and factors discussed below.
+Added: The increase in total property revenue was attributable primarily to the new acquisition of Bel-Spring 520, the increase in occupancy and rate at Waikiki Beach Walk Embassy Suites™, the increase in monthly base rents in our multifamily portfolio and factors discussed below.
Rental revenues .
Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents.
−Removed: Rental revenue increased $11.7 million, or 12%, to $105.5 million for the three months ended September 30, 2022 compared to $93.8 million for the three months ended September 30, 2021.
+Added: Rental revenue increased $5.7 million, or 6%, to $102.7 million for the three months ended March 31, 2023 compared to $97.0 million for the three months ended March 31, 2022.
Rental revenue by segment was as follows (dollars in thousands):
Total Portfolio Same-Store Portfolio (1)
−Removed: Three Months Ended September 30, Change % Three Months Ended September 30, Change %
+Added: Three Months Ended March 31, Change % Three Months Ended March 31, Change %
2023 2022 2023 2022
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(i) One Beach Street, due to significant redevelopment activity;
−Removed: (ii) Eastgate Office Park, which was acquired on July 7, 2021;
−Removed: (iii) Corporate Campus East III, which was acquired on September 10, 2021;
−Removed: (iv) Bel-Spring 520, which was acquired on March 8, 2022 and (v) land held for development.
−Removed: Total office rental revenue increased $5.8 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to the recent acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520, which accounted for $1.7 million of the increase.
−Removed: The increase in total office rental revenue is partially offset by the decrease in rental revenue at One Beach Street due to expiration of leases to allow for the modernization of the property.
−Removed: Same-store office rental revenue increased by $3.7 million due to higher occupancy at La Jolla Commons and Torrey Reserve Campus, and higher annualized base rent at La Jolla Commons and The Landmark at One Market.
−Removed: Additionally, there was an increase in cost recoveries of $1.3 million and an increase of $1.2 million related to accelerated revenue recognition of tenant improvement overages due to the tenant vacating their space sooner than original lease terms.
−Removed: Total retail rental revenue increased $1.1 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to approximately $0.4 million for new tenant leases and previous tenants on alternate rent reverting back to basic monthly rent.
−Removed: Additionally, there was an increase in cost recoveries of $0.7 million as COVID-related rent concessions were provided during 2020 and 2021.
−Removed: Multifamily revenue increased $1.4 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to an overall increase in average monthly base rent of $2,372 for the three months ended September 30, 2022 compared to $2,090 for the three months ended September 30, 2021.
−Removed: This increase was primarily related to Pacific Ridge Apartments, Loma Palisades and Hassalo on Eighth - Residential.
−Removed: Total mixed-use rental revenue increased $3.4 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to lifting of COVID-19 travel restrictions, which led to an increase in average occupancy and revenue per available room to 84.2% and $335 for the three months ended September 30, 2022, respectively, compared to 77.9% and $240 for three months ended September 30, 2021, respectively.
−Removed: The retail portion of our mixed-use property had an increase in revenue of $0.1 million.
+Added: (ii) Bel-Spring 520, which was acquired on March 8, 2022;
+Added: (iii) the 710 building at Lloyd District Portfolio which was placed into operations on November 1, 2022, approximately one year after completing renovations of the building and (iv) land held for development.
+Added: Total office rental revenue increased $1.3 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to the recent acquisition of Bel-Spring 520, which accounted for $0.6 million of the increase.
+Added: Same-store office rental revenue increased by $0.7 million due to higher occupancy at Torrey Reserve Campus, and higher annualized base rents at La Jolla Commons and The Landmark at One Market.
+Added: Total retail rental revenue increased $0.8 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to new tenant leases and prior tenants on alternate rent reverting back to basic monthly rent.
+Added: These increases were primarily related to Carmel Mountain Plaza, Alamo Quarry Market, Del Monte Center and Lomas Santa Fe Plaza.
+Added: Multifamily revenue increased $1.6 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to an overall increase in average monthly base rent, with an overall decrease in occupancy.
+Added: Average monthly base rent and occupancy was $2,514 and 93.0%, respectively for the three months ended March 31, 2023 compared to $2,217 and 95.1%, respectively for the three months ended March 31, 2022.
+Added: Total mixed-use rental revenue increased $2.0 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to lifting of COVID-19 travel restrictions, which led to an increase in average occupancy and revenue per available room to 81.9% and $302 for the three months ended March 31, 2023, respectively, compared to 72.8% and $243 for three months ended March 31, 2022, respectively.
Other property income .
−Removed: Other property income increased $1.1 million, or 24%, to $5.6 million for the three months ended September 30, 2022 compared to $4.5 million for the three months ended September 30, 2021.
+Added: Other property income increased $0.6 million, or 12%, to $5.0 million for the three months ended March 31, 2023 compared to $4.5 million for the three months ended March 31, 2022.
Other property income by segment was as follows (dollars in thousands):
Total Portfolio Same-Store Portfolio
−Removed: Three Months Ended September 30, Change % Three Months Ended September 30, Change %
+Added: Three Months Ended March 31, Change % Three Months Ended March 31, Change %
2023 2022 2023 2022
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$ 5,044 $ 4,484 $ 560 12 % $ 5,037 $ 4,456 $ 581 13 %
−Removed: Multifamily other property income increased by $0.3 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to an increase in security deposits earned and meter income at Loma Palisades and Pacific Ridge Apartments.
−Removed: Mixed-use other property income increased by $0.7 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to increased tourism and hotel occupancy which led to an increase in other room rental income and excise tax at the hotel portion of our mixed-use property.
+Added: Office other property income increased by $0.1 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to an increase in parking garage income at Lloyd Portfolio, City Center Bellevue and First & Main.
+Added: Mixed-use other property income increased by $0.4 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to increased tourism and hotel occupancy which led to an increase in other room rental income and excise tax at the hotel portion of our mixed-use property.
Property Expenses
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Total property expenses consist of rental expenses and real estate taxes.
−Removed: Total property expenses increased $6.8 million, or 21%, to $39.9 million, for the three months ended September 30, 2022 compared to $33.1 million for the three months ended September 30, 2021.
+Added: Total property expenses increased $3.6 million, or 10%, to $39.1 million, for the three months ended March 31, 2023 compared to $35.6 million for the three months ended March 31, 2022.
Rental Expenses.
−Removed: Rental expenses increased $5.0 million, or 21%, to $28.4 million for the three months ended September 30, 2022 compared to $23.5 million for the three months ended September 30, 2021.
+Added: Rental expenses increased $3.4 million, or 14%, to $27.5 million for the three months ended March 31, 2023 compared to $24.1 million for the three months ended March 31, 2022.
Rental expense by segment was as follows (dollars in thousands):
Total Portfolio Same-Store Portfolio
−Removed: Three Months Ended September 30, Change % Three Months Ended September 30, Change %
+Added: Three Months Ended March 31, Change % Three Months Ended March 31, Change %
2023 2022 2023 2022
4 unchanged sentences
$ 27,506 $ 24,145 $ 3,361 14 % $ 27,089 $ 23,930 $ 3,159 13 %
−Removed: Office rental expense increased $1.5 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to $0.5 million related to the recent acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520.
−Removed: Same-store office rental expenses increased $1.0 million due to an increase in repairs and maintenance services, utilities expenses and facility services and other operating expenses as the "stay-at home" orders issued by state and local governments related to the COVID-19 pandemic were relaxed in 2021 and our tenants' employees have started returning to the office in-person.
−Removed: Retail rental expense increased $0.4 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to an increase in repairs and maintenance, facilities services and insurance expenses, as restrictions on business operations from orders issued by state and local governments related to the COVID-19 pandemic were eased during the first half of 2021.
−Removed: Multifamily rental expense increased $0.6 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to an increase in repairs and maintenance and facilities services.
−Removed: Mixed-use rental expense increased $2.5 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to an increase in hotel room expenses and general excise tax expenses at the hotel portion of our mixed-use property and in increase in repairs and maintenance at the retail portion of our mixed-use property.
−Removed: These increases are in line with increased tourism and higher hotel occupancy as travel restrictions to Hawaii have been relaxed.
+Added: Office rental expense increased $1.3 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to $0.2 million related to the recent acquisition of Bel-Spring 520.
+Added: Same-store office rental expenses increased $1.1 million due to an increase in repairs and maintenance services, utilities expenses and facility services and other operating expenses as our tenants' employees have started returning to the office in-person.
+Added: Multifamily rental expense increased $0.4 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to an increase in repairs and maintenance, facilities services and employee related costs.
+Added: Mixed-use rental expense increased $1.6 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to an increase in hotel room expenses, general excise tax expenses and employee related costs at the hotel portion of our mixed-use property and general excise tax expense and employee related costs at the retail portion of our mixed-use property.
+Added: These increases are in line with increased tourism and higher hotel occupancy as travel restrictions to Hawaii have been relaxed since the three months ended March 31, 2022.
Real Estate Taxes.
−Removed: Real estate taxes increased $1.8 million, or 19%, to $11.5 million for the three months ended September 30, 2022 compared to $9.6 million for the three months ended September 30, 2021.
+Added: Real estate taxes increased $0.2 million, or 2%, to $11.6 million for the three months ended March 31, 2023 compared to $11.4 million for the three months ended March 31, 2022.
Real estate tax expense by segment was as follows (dollars in thousands):
Total Portfolio Same-Store Portfolio
−Removed: Three Months Ended September 30, Change % Three Months Ended September 30, Change %
+Added: Three Months Ended March 31, Change % Three Months Ended March 31, Change %
2023 2022 2023 2022
4 unchanged sentences
$ 11,632 $ 11,429 $ 203 2 % $ 11,505 $ 11,363 $ 142 1 %
−Removed: Office real estate taxes increased $0.1 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to the recent acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520.
−Removed: Retail real estate taxes increased $1.7 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to a one-time real estate tax refund received during the third quarter of 2021 for approximately $1.6 million at Alamo Quarry Market for the tax assessments for 2019 through 2020.
−Removed: Multifamily real estate taxes increased $0.1 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due an increase in tax assessments for Hassalo on Eighth - Residential.
+Added: Office real estate taxes increased $0.2 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to the recent acquisition of Bel-Spring 520 and increase in property value assessments at Eastgate Office Park and Corporate Campus East III.
+Added: Retail real estate taxes decreased $0.1 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to a one-time real estate tax refund received during the three months ended March 31, 2023 for Carmel Mountain Plaza and Geary Marketplace for prior tax assessments years.
+Added: Mixed-use real estate taxes increased $0.1 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due an increase in property value assessments.
Property Operating Income
−Removed: Property operating income increased $5.9 million, or 9%, to $71.1 million for the three months ended September 30, 2022, compared to $65.2 million for the three months ended September 30, 2021.
+Added: Property operating income increased $2.7 million, or 4%, to $68.6 million for the three months ended March 31, 2023, compared to $65.9 million for the three months ended March 31, 2022.
Property operating income by segment was as follows (dollars in thousands):
Total Portfolio Same-Store Portfolio
−Removed: Three Months Ended September 30, Change % Three Months Ended September 30, Change %
+Added: Three Months Ended March 31, Change % Three Months Ended March 31, Change %
2023 2022 2023 2022
4 unchanged sentences
$ 68,616 $ 65,896 $ 2,720 4 % $ 68,370 $ 65,950 $ 2,420 4 %
−Removed: Total office property operating income increased $4.3 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to the recent acquisitions of Eastgate Office Park, Corporate Campus East III, Bel-Spring 520, which had incremental property operating income of approximately $1.2 million during the period.
−Removed: The increase in total office property operating income is partially offset by a decrease at One Beach Street of approximately $0.4 million due to expiration of leases to allow for the modernization of the property.
−Removed: Same-store property operating income increased $2.8 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, primarily due to higher cost recoveries and higher occupancy at La Jolla Commons and Torrey Reserve Campus, and higher annualized base rent at La Jolla Commons and The Landmark at One Market.
−Removed: Additionally, there was an increase in cost recoveries of $1.3 million and an increase of $1.2 million related to accelerated revenue recognition of tenant improvement overages due to the tenant vacating their space sooner than original lease terms.
−Removed: Total retail property operating income decreased $0.9 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to an increase in real estate taxes of $1.7 million related to a one-time real estate tax refund of approximately $1.6 million at Alamo Quarry Market received during the third quarter of 2021 relating to the calendar years 2019 through 2020, and an increase in rental expenses of $0.4 million related to repairs and maintenance and facilities services.
−Removed: These decreases were partially offset by a $1.1 million increase in revenue related to new tenant leases, previous tenants on alternate rent reverting back to basic monthly rent and increase in cost recoveries as COVID-related rent concessions were provided during 2020 and 2021.
−Removed: Total multifamily property operating income increased $1.0 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to an overall increase in average monthly base rent of
−Removed: $2,372 for the three months ended September 30, 2022 compared to $2,090 for the three months ended September 30, 2021.
+Added: Same-store office property operating income decreased $0.4 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022, primarily due to higher rental expenses of $1.1 million as our tenants' employees have started returning to the office in-person and higher real estate taxes.
+Added: These increases in expenses are offset by higher parking income and increase in rental revenue due to higher occupancy at Torrey Reserve Campus, and higher annualized base rents at La Jolla Commons and The Landmark at One Market.
+Added: Total retail property operating income increased $0.8 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to new tenant leases and prior tenants on alternate rent reverting back to basic monthly rent.
+Added: Additionally, real estate taxes decreased primarily due to a one-time real estate tax refunds received during the three months ended March 31, 2023 for Carmel Mountain Plaza and Geary Marketplace.
+Added: Total multifamily property operating income increased $1.2 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to an overall increase in average monthly base rent of $2,514 for the three months ended March 31, 2023 compared to $2,217 for the three months ended March 31, 2022.
+Added: Average occupancy decreased to 93.0% for the three months ended March 31, 2023 compared to 95.1% for the three months ended March 31, 2022.
This increase in revenue was partially offset by an increase in rental expenses related to repairs and maintenance and facilities services.
−Removed: Total mixed-use property operating income increased $1.6 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily due to the return of tourism and related increase in hotel occupancy as travel to Hawaii has increased through 2022.
−Removed: This led to an increase in average occupancy and revenue per available room to 84.2% and $335, respectively, for the three months ended September 30, 2022, compared to 77.9% and $240, respectively, for three months ended September 30, 2021.
−Removed: This also led to an increase in other room rental income and excise tax at the hotel portion of our mixed-use property and an increase in parking garage income at the retail portion of our mixed-use property.
−Removed: These increases were offset by higher hotel room expenses and general excise tax expenses at the hotel portion of our mixed-use property and higher repairs and maintenance expenses at the retail portion of our mixed-use property during the period.
−Removed: General and Administrative.
−Removed: General and administrative expenses increased to $8.4 million for the three months ended September 30, 2022, compared to $6.8 million for the three months ended September 30, 2021.
−Removed: This increase was primarily due to an increase in stock-based compensation expense and employee-related costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits.
−Removed: Depreciation and Amortization.
−Removed: Depreciation and amortization expense increased to $31.7 million for the three months ended September 30, 2022, compared to $30.7 million for the three months ended September 30, 2021.
−Removed: This increase was primarily due to $0.5 million related to the recent acquisition of Bel-Spring 520.
−Removed: Additionally, there was higher depreciation and amortization at City Center Bellevue due to acceleration of depreciation on assets related to tenant vacating space during the current quarter.
−Removed: This increase was offset by a decrease at One Beach Street due to acceleration of certain assets during the first quarter of 2021 related to the modernization of the building and a decrease at Carmel Mountain Plaza due to acceleration of assets related to tenants vacating space during the third quarter of 2021.
−Removed: Interest Expense.
−Removed: Interest expense decreased by $0.3 million, or 2%, to $14.5 million for the three months ended September 30, 2022, compared to $14.7 million for the three months ended September 30, 2021.
−Removed: This decrease was primarily due to an increase in capitalized interest related to our development projects, partially offset by an increase in interest expense related to our Term Loan A, which changed from an unhedged variable interest rate to a fixed interest rate at the beginning of 2022 as we entered into two interest rate swaps agreements to lock the rate against future fluctuations.
−Removed: Interest expense also increased due to the draw on our revolving line of credit and related amortization of loan fees.
−Removed: Other (Expense) Income, Net.
−Removed: Other expense, net increased $0.1 million, or 246%, to other expense, net of $0.2 million for the three months ended September 30, 2022, compared to other expense, net of $0.1 million for the three months ended September 30, 2021 primarily due to the decrease in interest and investment income attributed to the lower yield on our average cash balance during the period and an increase in income tax for our taxable REIT subsidiary.
−Removed: Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021
−Removed: The following summarizes our consolidated results of operations for the nine months ended September 30, 2022 compared to our consolidated results of operations for the nine months ended September 30, 2021.
−Removed: The following table sets forth selected data from our unaudited consolidated statements of income for the nine months ended September 30, 2022 and 2021 (dollars in thousands):
−Removed: Nine Months Ended September 30, Change %
−Removed: Rental income $ 301,470 $ 262,573 $ 38,897 15 %
−Removed: Other property income 15,178 11,508 3,670 32
−Removed: Total property revenues 316,648 274,081 42,567 16
−Removed: Rental expenses 78,436 61,916 16,520 27
−Removed: Real estate taxes 34,193 31,610 2,583 8
−Removed: Total property expenses 112,629 93,526 19,103 20
−Removed: Total property income 204,019 180,555 23,464 13
−Removed: General and administrative (23,130) (20,574) (2,556) 12
−Removed: Depreciation and amortization (93,228) (85,827) (7,401) 9
−Removed: Interest expense (43,667) (43,589) (78) —
−Removed: Loss on early extinguishment of debt — (4,271) 4,271 100
−Removed: Other (expense) income, net (523) (179) (344) 192
−Removed: Net income 43,471 26,115 17,356 66
−Removed: Net income attributable to restricted shares (464) (417) (47) 11
−Removed: Net income attributable to unitholders in the Operating Partnership
−Removed: (9,130) (5,459) (3,671) 67
−Removed: Net income attributable to American Assets Trust, Inc.
−Removed: $ 33,877 $ 20,239 $ 13,638 67 %
−Removed: Total property revenues .
−Removed: Total property revenue consists of rental revenue and other property income.
−Removed: Total property revenue increased $42.6 million, or 16%, to $316.6 million for the nine months ended September 30, 2022 compared to $274.1 million for the nine months ended September 30, 2021.
−Removed: The percentage leased was as follows for each segment as of September 30, 2022 and 2021:
−Removed: Percentage Leased (1)
−Removed: September 30,
−Removed: Office 90.7 % 90.2 %
−Removed: Retail 92.2 % 91.7 %
−Removed: Multifamily 93.0 % 97.1 %
−Removed: Mixed-Use (2)
−Removed: 94.9 % 86.6 %
−Removed: (1) The percentage leased includes the square footage under lease, including leases which may not have commenced as of September 30, 2022 or September 30, 2021, as applicable.
−Removed: (2) Includes the retail portion of the mixed-use property only.
−Removed: The increase in total property revenue was attributable primarily to the factors discussed below.
−Removed: Rental revenues .
−Removed: Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents.
−Removed: Rental revenue increased $38.9 million, or 15%, to $301.5 million for the nine months ended September 30, 2022 compared to $262.6 million for the nine months ended September 30, 2021.
−Removed: Rental revenue by segment was as follows (dollars in thousands):
−Removed: Total Portfolio Same-Store Portfolio (1)
−Removed: Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
−Removed: 2022 2021 2022 2021
−Removed: Office $ 149,689 $ 133,092 $ 16,597 12 $ 136,257 $ 130,681 $ 5,576 4
−Removed: Retail 73,839 68,183 5,656 8 73,839 68,183 5,656 8
−Removed: Multifamily 39,804 35,864 3,940 11 39,804 35,864 3,940 11
−Removed: Mixed-Use 38,138 25,434 12,704 50 38,138 25,434 12,704 50
−Removed: $ 301,470 $ 262,573 $ 38,897 15 % $ 288,038 $ 260,162 $ 27,876 11 %
−Removed: (1) For this table and the tables following, the same-store portfolio excludes:
−Removed: (i) One Beach Street, due to significant redevelopment activity;
−Removed: (ii) Eastgate Office Park which was acquired on July 7, 2021;
−Removed: (iii) Corporate Campus East III which was acquired on September 10, 2021;
−Removed: (iv) Bel-Spring 520, which was acquired on March 8, 2022 and (v) land held for development.
−Removed: Total office rental revenue increased $16.6 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 due to the new acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520 which accounted for $10.6 million of the increase.
−Removed: The increase in total office rental revenue is partially offset by the decrease in rental revenue at One Beach Street of $0.3 million due to expiration of leases to allow for the modernization of the property.
−Removed: Same store office rental revenue increased by $5.6 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to higher annualized base rents at La Jolla Commons and higher occupancy at La Jolla Commons, First & Main and Torrey Reserve Campus.
−Removed: Additionally, there was an increase of $1.4 million related to cost recoveries at La Jolla Commons, First & Main and The Landmark at One Market and an increase of $1.1 million related to accelerated revenue recognition of tenant improvement overages due to the tenant vacating their space sooner than original lease terms.
−Removed: Retail rental revenue increased $5.7 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to approximately $3.6 million for new tenant leases signed and tenants previously on alternate rent reverting back to basic monthly rent, including certain tenants who were changed to alternate rent or to cash basis of revenue recognition during 2020 and 2021 as the collectability of rent was determined to be no longer probable for certain tenants.
−Removed: Additionally, there was an increase in cost recoveries of $2.0 million as COVID-related rent concessions were provided during 2020 and 2021.
−Removed: Multifamily revenue increased $3.9 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an overall increase in occupancy and average monthly base rent of 93.4% and $2,294, respectively for the nine months ended September 30, 2022 compared to 90.6% and $2,149, respectively for the nine months ended September 30, 2021.
−Removed: Mixed-use rental revenue increased $12.7 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an increase of $11.2 million related to the Waikiki Beach Walk hotel portion of our mixed use property.
−Removed: This increase was due to the lifting of COVID-19 travel restrictions, which led to an increase in average occupancy and revenue per available room to 78.6% and $286 for the nine months ended September 30, 2022, respectively, compared to 64.3% and $175 for the nine months ended September 30, 2021, respectively.
−Removed: Waikiki Beach Walk retail portion increased $1.5 million as tenants were changed to alternate rent or to cash basis of revenue recognition during 2020 and 2021 as the collectability of rent was determined to be no longer probable for certain tenants.
−Removed: Other property income .
−Removed: Other property income increased $3.7 million, or 32%, to $15.2 million for the nine months ended September 30, 2022 compared to $11.5 million for the nine months ended September 30, 2021.
−Removed: Other property income by segment was as follows (dollars in thousands):
−Removed: Total Portfolio Same-Store Portfolio
−Removed: Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
−Removed: 2022 2021 2022 2021
−Removed: Office $ 3,723 $ 3,375 $ 348 10 $ 3,440 $ 3,030 $ 410 14
−Removed: Retail 1,034 1,113 (79) (7) 1,034 1,113 (79) (7)
−Removed: Multifamily 3,047 2,512 535 21 3,047 2,512 535 21
−Removed: Mixed-Use 7,374 4,508 2,866 64 7,374 4,508 2,866 64
−Removed: $ 15,178 $ 11,508 $ 3,670 32 % $ 14,895 $ 11,163 $ 3,732 33 %
−Removed: Office other property income increased $0.3 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an increase in parking garage income at Lloyd Portfolio, City Center Bellevue and First & Main, partially offset by lease termination and settlement fees received at One Beach and City Center Bellevue during 2021.
−Removed: Retail other property income decreased $0.1 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to the lease termination fees received at Alamo Quarry Market and Del Monte Center during 2021.
−Removed: Multifamily other property income increased $0.5 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily to an increase in parking garage income at Hassalo on Eighth - Residential, an increase in meter income at Loma Palisades and Pacific Ridge Apartments and an increase in security deposits earned at Pacific Ridge Apartments.
−Removed: Total mixed-use other property income increased $2.9 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an increase in other room rental income and rent excise tax at the hotel portion and an increase in parking garage income and rent excise tax at the retail portion of our mixed-use property.
−Removed: Property Expenses
−Removed: Total Property Expenses.
−Removed: Total property expenses consist of rental expenses and real estate taxes.
−Removed: Total property expenses increased by $19.1 million, or 20%, to $112.6 million for the nine months ended September 30, 2022, compared to $93.5 million for the nine months ended September 30, 2021.
−Removed: This increase in total property expenses was attributable primarily to the factors discussed below .
−Removed: Rental Expenses.
−Removed: Rental expenses increased $16.5 million, or 27%, to $78.4 million for the nine months ended September 30, 2022, compared to $61.9 million for the nine months ended September 30, 2021.
−Removed: Rental expense by segment was as follows (dollars in thousands):
−Removed: Total Portfolio Same-Store Portfolio
−Removed: Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
−Removed: 2022 2021 2022 2021
−Removed: Office $ 26,581 $ 21,457 $ 5,124 24 $ 23,289 $ 20,427 $ 2,862 14
−Removed: Retail 12,073 11,005 1,068 10 12,073 11,005 1,068 10
−Removed: Multifamily 13,840 12,043 1,797 15 13,840 12,043 1,797 15
−Removed: Mixed-Use 25,942 17,411 8,531 49 25,942 17,411 8,531 49
−Removed: $ 78,436 $ 61,916 $ 16,520 27 % $ 75,144 $ 60,886 $ 14,258 23 %
−Removed: Office rental expenses increased $5.1 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to $2.3 million related to the recent acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520.
−Removed: Same-store office rental expenses increased $2.9 million due to an increase in repairs and maintenance services, utilities expenses, facility services and other operating expenses as the "stay-at home" orders issued by state and local governments related to the COVID-19 pandemic were relaxed in 2021 and our tenants' employees have started returning to the office in-person.
−Removed: Retail rental expenses increased $1.1 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an increase in repairs and maintenance, facilities services, utilities expenses insurance expenses and marketing expenses in the period, as restrictions on business operations from orders issued by state and local governments related to the COVID-19 pandemic were eased during the first half of 2021.
−Removed: Multifamily rental expenses increased $1.8 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an increase in utilities expenses, facilities services and repairs and maintenance, related to electrical, plumbing and painting services.
−Removed: Additionally, there was an increase in property-level personnel compensation expenses and insurance expenses.
−Removed: Total mixed-use rental expenses increased $8.5 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an increase in hotel room expenses, personnel expenses and excise tax expenses at the hotel portion of our mixed-use property during the period.
−Removed: These increases are due to tourism and an increase in hotel occupancy as the COVID-19 vaccine has become more widely available and travel restrictions to Hawaii have been relaxed.
−Removed: Real Estate Taxes.
−Removed: Real estate tax expense increased $2.6 million, or 8%, to $34.2 million for the nine months ended September 30, 2022 compared to $31.6 million for the nine months ended September 30, 2021.
−Removed: Real estate tax expense by segment was as follows (dollars in thousands):
−Removed: Total Portfolio Same-Store Portfolio
−Removed: Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
−Removed: 2022 2021 2022 2021
−Removed: Office $ 15,363 $ 14,572 $ 791 5 $ 14,265 $ 14,197 $ 68 —
−Removed: Retail 10,892 8,917 1,975 22 10,892 8,917 1,975 22
−Removed: Multifamily 5,331 5,154 177 3 5,331 5,154 177 3
−Removed: Mixed-Use 2,607 2,967 (360) (12) 2,607 2,967 (360) (12)
−Removed: $ 34,193 $ 31,610 $ 2,583 8 % $ 33,095 $ 31,235 $ 1,860 6 %
−Removed: Office real estate taxes increased $0.8 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to the recent acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520.
−Removed: Retail real estate taxes increased $2.0 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to a one-time real estate tax refund received during the third quarter of 2021 for approximately $1.6 million at Alamo Quarry Market for the tax assessments for 2019 through 2020.
−Removed: Additionally, there was a decrease in the overall tax bill of $0.4 million at Alamo Quarry Market for the year 2021
−Removed: Multifamily real estate taxes increased $0.2 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an increase in tax assessments for Hassalo on Eighth - Residential.
−Removed: Mixed-use real estate taxes decreased $0.4 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to the COVID-19 pandemic and its financial burden on the hospitality industry, as a result of which the Honolulu County reduced the tax burden for hotels for 2021 through 2022.
−Removed: Property Operating Income
−Removed: Property operating income increased $23.5 million, or 13%, to $204.0 million for the nine months ended September 30, 2022, compared to $180.6 million for the nine months ended September 30, 2021.
−Removed: Property operating income by segment was as follows (dollars in thousands):
−Removed: Total Portfolio Same-Store Portfolio
−Removed: Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
−Removed: 2022 2021 2022 2021
−Removed: Office $ 111,468 $ 100,438 $ 11,030 11 $ 102,143 $ 99,087 $ 3,056 3
−Removed: Retail 51,908 49,374 2,534 5 51,908 49,374 2,534 5
−Removed: Multifamily 23,680 21,179 2,501 12 23,680 21,179 2,501 12
−Removed: Mixed-Use 16,963 9,564 7,399 77 16,963 9,564 7,399 77
−Removed: $ 204,019 $ 180,555 $ 23,464 13 % $ 194,694 $ 179,204 $ 15,490 9 %
−Removed: Total office property operating income increased $11.0 million during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to the recent acquisitions of Eastgate Office Park, Corporate Campus East III, and Bel-Spring 520, which had incremental property operating income of approximately $7.7 million during the period.
−Removed: The increase in total office property operating income is partially offset by the decrease at One Beach Street of $0.3 million due to expiration of leases to allow for the modernization of the property.
−Removed: Same-store property operating income increased $3.1 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to higher cost recoveries and higher occupancy at La Jolla Commons and Torrey Reserve Campus, and higher annualized base rent at La Jolla Commons and an increase of $1.1 million related to accelerated revenue recognition of tenant improvement overages due to the tenant vacating their space sooner than original lease terms..
−Removed: These increases were partially offset by higher operating expenses our tenants' employees have started returning to the office in-person.
−Removed: Total retail property operating income increased $2.5 million during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to approximately $3.6 million for new tenant leases signed and tenants previously on alternate rent reverting back to basic monthly rent, including certain tenants who were changed to alternate rent or to cash basis of revenue recognition during 2020 and 2021 as the collectability of rent was determined to be no longer probable.
−Removed: Additionally, there was an increase in cost recoveries of $2.0 million as COVID-related rent concessions were provided during 2020 and 2021.
−Removed: These increases were partially offset by higher real estate taxes related to a one-time real estate tax refund of approximately $1.6 million for Alamo Quarry Market received during the third quarter of 2021 relating to the calendar years 2019 through 2020, and an overall increase in rental expenses of $1.1 million related to repairs and maintenance and facilities services.
−Removed: Total multifamily property operating income increased $2.5 million during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an overall increase in occupancy and average monthly base rent of 93.4% and $2,294, respectively, for the nine months ended September 30, 2022 compared to 90.6% and $2,149, respectively for the nine months ended September 30, 2021.
−Removed: These increases were partially offset by higher utilities expenses and repairs and maintenance.
−Removed: Total mixed-use property operating income increased $7.4 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily due to an increase of $5.5 million related to the Waikiki Beach Walk hotel portion of our mixed use property.
−Removed: This increase was due to the lifting of COVID-19 travel restrictions, which led to an increase in average occupancy and revenue per available room to 78.6% and $286 for the nine months ended September 30, 2022, respectively, compared to 64.3% and $175 for the nine months ended September 30, 2021, respectively.
−Removed: Additionally, there was an increase of $1.9 million at the retail portion of our mixed-use property related to parking garage income and tenants who were changed to alternate rent or to cash basis of revenue recognition during 2020 and 2021 as the collectability of rent was determined to be no longer probable for certain tenants.
+Added: Total mixed-use property operating income increased $0.8 million for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to increase in tourism and related increase in hotel occupancy.
+Added: This led to an increase in average occupancy and revenue per available room to 81.9% and $302, respectively, for the three months ended March 31, 2023, compared to 72.8% and $243, respectively, for three months ended March 31, 2022.
+Added: This also led to an increase in other room rental income and excise tax at the hotel portion of our mixed-use property.
+Added: These increases were offset by higher hotel room expenses, general excise tax expenses and employee related costs at both the hotel and retail portions of our mixed-use property.
General and Administrative.
−Removed: General and administrative expenses increased $2.6 million, or 12%, to $23.1 million for the nine months ended September 30, 2022, compared to $20.6 million for the nine months ended September 30, 2021.
−Removed: This increase was primarily due to stock-based compensation expense and employee-related costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits.
+Added: General and administrative expenses increased to $9.0 million for the three months ended March 31, 2023, compared to $7.1 million for the three months ended March 31, 2022.
+Added: This increase was primarily due to an increase in stock-based compensation expense, general legal expenses and employee-related costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits.
Depreciation and Amortization.
−Removed: Depreciation and amortization expense increased $7.4 million, or 9%, to $93.2 million for the nine months ended September 30, 2022, compared to $85.8 million for the nine months ended September 30, 2021.
−Removed: increase was primarily due to a $5.9 million increase related to the recent acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520.
−Removed: Additionally, there was an increase in depreciation and amortization at The Landmark at One Market due to building and tenant improvements that were put into service in 2021 and an increase in depreciation at City Center Bellevue due to the acceleration of depreciation related to tenant vacating space in the current quarter.
−Removed: These increases were offset by lower depreciation and amortization at One Beach due to the modernization of the property and depreciation of assets, which was accelerated in 2021.
−Removed: Interest Expense.
−Removed: Interest expense increased $0.1 million, or 0%, to $43.7 million for the nine months ended September 30, 2022 compared to $43.6 million for the nine months ended September 30, 2021.
−Removed: This increase was primarily due to the closing of our 3.375% Senior Notes offering on January 26, 2021.
−Removed: Additionally, an increase in interest expense related to our Term Loan A, which changed from an unhedged variable interest rate to a fixed interest rate at the beginning of 2022, as we entered into two interest rate swaps agreements to lock the rate against future fluctuation.
+Added: Depreciation and amortization expense decreased to $29.9 million for the three months ended March 31, 2023, compared to $30.4 million for the three months ended March 31, 2022.
+Added: This was due to acceleration of assets related to tenants vacating space during the three months ended March 31, 2022 at City Center Bellevue, Eastgate Office Park and Corporate Campus East III.
+Added: This decrease was partially offset by new building and tenant improvement assets put into service in 2022 at Bel-Spring 520, First & Main and Torrey Reserve Campus.
+Added: Interest Expense, net.
+Added: Interest expense increased by $1.1 million, or 7%, to $15.7 million for the three months ended March 31, 2023, compared to $14.7 million for the three months ended March 31, 2022.
+Added: This increase was primarily due to higher interest on our $225 million Amended and Restated Term Loan Agreement and related amortization of loan fees.
These increases were offset by an increase in capitalized interest related to our development projects.
−Removed: Loss on Early Extinguishment of Debt.
−Removed: Early extinguishment of debt expense decreased $4.3 million for the nine months ended September 30, 2022 due to the repayment of the Senior Guaranteed Notes, Series A, with make-whole payments thereon, on January 26, 2021.
Other (Expense) Income, Net.
−Removed: Other expense, net increased $0.3 million, or 192%, to other expense, net of $0.5 million for the nine months ended September 30, 2022, compared to other expense, net of $0.2 million for the nine months ended September 30, 2021 primarily due to the decrease in interest and investment income attributed to the lower yield on our average cash balance during the period and an increase in income tax for our taxable REIT subsidiary.
+Added: Other income, net increased $6.8 million, or 4,223%, to other income, net of $6.7 million for the three months ended March 31, 2023, compared to other expense, net of $0.2 million for the three months ended March 31, 2022,primarily due to the net settlement payment of approximately $6.3 million received on January 3, 2023 related to certain building systems at our Hassalo on Eighth property and an increase of $0.4 million in interest and investment income attributed to higher yield on our average cash balance during the period.
Liquidity and Capital Resources of American Assets Trust, Inc.
9 unchanged sentences
The company’s principal source of funding for its dividend payments is distributions it receives from the Operating Partnership.
−Removed: As of September 30, 2022, the company owned an approximate 78.8% partnership interest in the Operating Partnership.
+Added: As of March 31, 2023, the company owned an approximate 78.8% partnership interest in the Operating Partnership.
The remaining approximately 21.2% are owned by non-affiliated investors and certain of the company's directors and executive officers.
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We believe the Operating Partnership’s sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured line of credit, are adequate for it to make its distribution payments to the company and, in turn, for the company to make its dividend payments to its stockholders.
−Removed: As of September 30, 2022, the company has determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months.
+Added: As of March 31, 2023, the company has determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months.
However, we cannot assure you that the Operating Partnership’s sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including its ability to make distribution payments to the company.
The unavailability of capital could adversely affect the Operating Partnership’s ability to pay its distributions to the company, which would in turn, adversely affect the company’s ability to pay cash dividends to its stockholders.
−Removed: The COVID-19 pandemic has temporarily impacted, and is expected to continue to temporarily impact some of our tenants' ability or willingness to remit rent payments due to the tenants' operations being affected by state and local stay-at-home orders.
Our short-term liquidity requirements consist primarily of funds to pay for future dividends expected to be paid to the company’s stockholders, operating expenses and other expenditures directly associated with our properties, interest expense and scheduled principal payments on outstanding indebtedness, general and administrative expenses, funding construction projects, capital expenditures, tenant improvements and leasing commissions.
17 unchanged sentences
The sale of shares of our common stock made through the ATM equity program are made in "at-the-market" offerings as defined in Rule 415 of the Securities Act of 1933, as amended.
−Removed: For the three months ended September 30, 2022, no shares of common stock were sold through the ATM equity program.
+Added: For the three months ended March 31, 2023, no shares of common stock were sold through the ATM equity program.
We intend to use the net proceeds to fund development or redevelopment activities, repay amounts outstanding from time to time under our amended and restated credit facility or other debt financing obligations, fund potential acquisition opportunities and/or for general corporate purposes.
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must generally make annual distributions to its stockholders of at least 90% of its net taxable income.
−Removed: As of September 30, 2022, we held $63.4 million in cash and cash equivalents.
+Added: As of March 31, 2023, we held $87.3 million in cash and cash equivalents.
Our short-term liquidity requirements consist primarily of operating expenses and other expenditures associated with our properties, regular debt service requirements, dividend payments to American Assets Trust, Inc.'s stockholders required to maintain its REIT status, distributions to our unitholders, capital expenditures and, potentially, acquisitions.
13 unchanged sentences
under its ATM equity program or through an underwritten public offering.
−Removed: Although there is no intent at this time, if market conditions deteriorate or fail to improve, including as a result of the COVID-19 pandemic, we may also delay the timing of future development and redevelopment projects as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy.
−Removed: The COVID-19 pandemic has impacted, and is expected to continue to impact, the timing of future development and redevelopment projects due to, among other things, capital requirements and permitting delays caused by local government shutdowns or reduced operations.
+Added: Although there is no intent at this time, if market conditions deteriorate or fail to improve, we may also delay the timing of future development and redevelopment projects as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy.
In January 2021, the Operating Partnership filed a universal shelf registration on Form S-3 ASR with the SEC which provided for the registration of an unspecified amount of debt securities by the Operating Partnership.
3 unchanged sentences
We currently do not have any off-balance sheet arrangements.
−Removed: Comparison of the nine months ended September 30, 2022 to the nine months ended September 30, 2021
−Removed: Cash, cash equivalents, and restricted cash were $63.4 million and $173.6 million at September 30, 2022 and 2021, respectively.
−Removed: Net cash provided by operating activities increased $11.3 million to $140.9 million for the nine months ended September 30, 2022 compared to $129.6 million for the nine months ended September 30, 2021.
−Removed: The increase in cash from operations was primarily due to the increase in rental revenue from the hotel portion of our mixed-use property, our recent acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520 and changes in operating assets and liabilities.
−Removed: Net cash used in investing activities decreased $123.7 million to $139.6 million for the nine months ended September 30, 2022 compared to $263.3 million for the nine months ended September 30, 2021.
−Removed: The decrease in cash used was primarily due to our newest acquisition of Bel-Spring 520 on March 8, 2022, and increased capital expenditures at La Jolla Commons III and One Beach Street, compared to the cash used for the nine months ended September 30, 2021 related to our acquisitions of Eastgate Office Park and Corporate Campus East III.
−Removed: Net cash used in financing activities increased $245.7 million to $77.4 million for the nine months ended September 30, 2022 compared to cash provided by financing activities of $168.3 million for the nine months ended September 30, 2021.
−Removed: The increase in cash used in financing activities was primarily due to quarterly dividends for 2022 and debt issuance costs related to our Third Amended and Restated Credit Facility.
−Removed: The cash provided by financing activities through the third quarter of 2021 was related to the issuance of the 3.375% Senior Notes on January 26, 2021, partially offset by the repayment of the outstanding balance on the revolving line of credit and the Senior Guaranteed Notes, Series A on January 26, 2021.
+Added: Comparison of the three months ended March 31, 2023 to the three months ended March 31, 2022
+Added: Cash, cash equivalents, and restricted cash were $87.3 million and $73.6 million at March 31, 2023 and 2022, respectively.
+Added: Net cash provided by operating activities increased $12.8 million to $52.0 million for the three months ended March 31, 2023 compared to $39.1 million for the three months ended March 31, 2022.
+Added: The increase in cash from operations was primarily due to the net settlement received related to certain building systems at our Hassalo on Eighth, increase in rental revenue in multifamily and the hotel portion of our mixed-use property, and changes in operating assets and liabilities.
+Added: Net cash used in investing activities decreased $51.6 million to $25.7 million for the three months ended March 31, 2023 compared to $77.3 million for the three months ended March 31, 2022.
+Added: The decrease in cash used was primarily due to our newest acquisition of Bel-Spring 520 on March 8, 2022, and decrease in capital expenditures at La Jolla Commons III and One Beach Street.
+Added: Net cash provided by financing activities increased $39.3 million to $11.5 million for the three months ended March 31, 2023 compared to cash used in financing activities of $27.8 million for the three months ended March 31, 2022.
+Added: The increase in cash provided by financing activities was primarily due to the term loan agreement that was amended and restated, among other things, to increase the fully drawn borrowings from $150 million to $225 million.
+Added: This was partially offset by the repayment of the outstanding balance on the revolving line of credit.
Net Operating Income
17 unchanged sentences
Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, our NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as we do.
−Removed: The following is a reconciliation of our NOI to net income for the three and nine months ended September 30, 2022 and 2021 computed in accordance with GAAP (in thousands):
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 2022 2021
+Added: The following is a reconciliation of our NOI to net income for the three months ended March 31, 2023 and 2022 computed in accordance with GAAP (in thousands):
+Added: Three Months Ended March 31,
Net operating income $ 68,616 $ 65,896
2 unchanged sentences
(29,901) (30,412)
−Removed: Interest expense (14,454) (14,722) (43,667) (43,589)
−Removed: Loss on early extinguishment of debt — — — (4,271)
+Added: Interest expense, net (15,729) (14,666)
Other (expense) income, net 6,679 (162)
12 unchanged sentences
FFO also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.
−Removed: The following table sets forth a reconciliation of our FFO for the three and nine months ended September 30, 2022 to net income, the nearest GAAP equivalent (in thousands, except per share and share
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: The following table sets forth a reconciliation of our FFO for the three months ended March 31, 2023 to net income, the nearest GAAP equivalent (in thousands, except per share and share data):
+Added: Three Months Ended March 31,
Funds from Operations (FFO)
6 unchanged sentences
Weighted average number of common shares and units, diluted (1)
−Removed: 76,226,946 76,224,480
(1) The weighted average common shares used to compute FFO per diluted share include unvested restricted stock awards that are subject to time vesting, which were excluded from the computation of diluted EPS, as the vesting of the restricted stock awards is dilutive in the computation of FFO per diluted share but is anti-dilutive for the computation of diluted EPS for the period.
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.