What changed in this filing

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Item 1. Financial Statements

2024-05-03 compared with 2023-10-27 · 198 added, 289 removed, 731 unchanged (40% of the section changed)

3 unchanged sentences

(In Thousands, Except Share Data)

September 30, December 31,

March 31, December 31,

Real estate, at cost

13 unchanged sentences

Unsecured notes payable, net 1,615,608 1,614,958

Unsecured line of credit, net — 34,057

Accounts payable and accrued expenses 65,292 61,312

5 unchanged sentences

stockholders’ equity

Common stock, $ 0.01 par value, 490,000,000 shares authorized, 60,724,630 and 60,718,653 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par value, 490,000,000 shares authorized, 60,894,491 and 60,895,786 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,470,823 1,469,206

10 unchanged sentences

(In Thousands, Except Shares and Per Share Data)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Rental income $ 105,021 $ 102,710

8 unchanged sentences

Interest expense, net ( 16,255 ) ( 15,729 )

Other income (expense), net 321 ( 180 ) 7,272 ( 523 )

Other income, net 10,329 6,679

NET INCOME 24,623 20,666

13 unchanged sentences

Net income $ 24,623 $ 20,666

Other comprehensive income - unrealized income on swap derivatives during the period 768 4,207 2,859 13,117

Other comprehensive income - unrealized income (loss) on swap derivatives during the period 1,392 ( 2,269 )

Reclassification of amortization of forward-starting swap included in interest expense ( 98 ) ( 854 )

22 unchanged sentences

Balance at March 31, 2024 60,894,491 $ 609 $ 1,470,823 $ ( 281,183 ) $ 9,304 $ ( 44,165 ) $ 1,155,388

Net income — — — 12,173 — 3,224 15,397

Issuance of restricted stock 10,348 — — — — — —

Forfeiture of restricted stock ( 3,553 ) — — — — — —

Dividends declared and paid — — — ( 20,039 ) — ( 5,340 ) ( 25,379 )

Stock-based compensation — — 2,110 — — — 2,110

Other comprehensive income - change in value of interest rate swaps — — — — 3,436 924 4,360

Reclassification of amortization of forward-starting swap included in interest expense — — — — ( 77 ) ( 21 ) ( 98 )

Balance at June 30, 2023 60,724,630 $ 607 $ 1,465,346 $ ( 262,745 ) $ 11,524 $ ( 38,616 ) $ 1,176,116

Net income — — — 11,967 — 3,168 15,135

Dividends declared and paid — — — ( 20,039 ) — ( 5,340 ) ( 25,379 )

Stock-based compensation — — 2,109 — — — 2,109

Other comprehensive income - change in value of interest rate swaps — — — — 605 163 768

Reclassification of amortization of forward-starting swap included in interest expense — — — — ( 78 ) ( 21 ) ( 99 )

Balance at September 30, 2023 60,724,630 $ 607 $ 1,467,455 $ ( 270,817 ) $ 12,051 $ ( 40,646 ) $ 1,168,650

American Assets Trust, Inc.

10 unchanged sentences

Stock-based compensation — — 2,035 — — 2,035

Shares withheld for employee taxes ( 416 ) — ( 15 ) — — — ( 15 )

Other comprehensive income - change in value of interest rate swaps — — — — 4,408 1,188 5,596

Other comprehensive loss - change in value of interest rate swaps — — — — ( 1,786 ) ( 483 ) ( 2,269 )

Reclassification of amortization of forward-starting swap included in interest expense — — — — ( 673 ) ( 181 ) ( 854 )

Balance at March 31, 2023 60,717,835 $ 607 $ 1,463,236 $ ( 254,879 ) $ 8,165 $ ( 37,403 ) $ 1,179,726

Net income — — — 10,736 2,852 13,588

Issuance of restricted stock 6,072 — — — — — —

Dividends declared and paid — — — ( 19,369 ) — ( 5,178 ) ( 24,547 )

Stock-based compensation — — 2,001 — — — 2,001

Other comprehensive income - change in value of interest rate swaps — — — — 2,610 704 3,314

Reclassification of amortization of forward-starting swap realized gains included in interest expense — — — — ( 216 ) ( 59 ) ( 275 )

Balance at June 30, 2022 60,528,115 $ 605 $ 1,456,747 $ ( 235,107 ) $ 9,457 $ ( 31,734 ) $ 1,199,968

Net income — — 12,927 3,442 16,369

Dividends declared and paid — — — ( 19,369 ) — ( 5,178 ) ( 24,547 )

Stock-based compensation — — 2,001 — — — 2,001

Other comprehensive income - change in value of interest rate swaps — — — — 3,314 893 4,207

Reclassification of amortization of forward-starting swap included in interest expense — — — — ( 217 ) ( 58 ) ( 275 )

Balance at September 30, 2022 60,528,115 $ 605 $ 1,458,748 $ ( 241,549 ) $ 12,554 $ ( 32,635 ) $ 1,197,723

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(In Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES

16 unchanged sentences

INVESTING ACTIVITIES

Acquisition of real estate — ( 45,167 )

Capital expenditures ( 10,939 ) ( 24,518 )

2 unchanged sentences

FINANCING ACTIVITIES

Issuance of secured notes payable — 75,000

Repayment of secured notes payable — ( 111,000 )

Proceeds from unsecured term loan — 225,000

Proceeds from unsecured line of credit — 36,000

Repayment of unsecured line of credit — ( 36,000 )

3 unchanged sentences

Shares withheld for employee taxes — —

Net cash used in financing activities ( 39,280 ) ( 77,351 )

Net increase (decrease) in cash and cash equivalents 40,397 ( 76,093 )

Net cash (used in) / provided by financing activities ( 25,821 ) 11,485

Net increase in cash and cash equivalents 15,665 37,757

Cash and cash equivalents, beginning of period 82,888 49,571

Cash and cash equivalents, end of period $ 98,553 $ 87,328

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statement of cash flows:

Nine Months Ended September 30,

Cash and cash equivalents $ 89,968 63,431

Restricted cash — —

Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows $ 89,968 $ 63,431

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(In Thousands, Except Unit Data)

September 30, December 31,

March 31, December 31,

Real estate, at cost

13 unchanged sentences

Unsecured notes payable, net 1,615,608 1,614,958

Unsecured line of credit, net — 34,057

Accounts payable and accrued expenses 65,292 61,312

3 unchanged sentences

Commitments and contingencies (Note 11)

Limited partners' capital, 16,181,537 and 16,181,537 units issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Limited partners' capital, 16,181,537 and 16,181,537 units issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

( 47,190 ) ( 46,936 )

General partner's capital, 60,724,630 and 60,718,653 units issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

General partner's capital, 60,894,491 and 60,895,786 units issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

1,190,249 1,189,576

6 unchanged sentences

(In Thousands, Except Shares and Per Unit Data)

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Rental income $ 105,021 $ 102,710

8 unchanged sentences

Interest expense, net ( 16,255 ) ( 15,729 )

Other income (expense), net 321 ( 180 ) 7,272 ( 523 )

Other income, net 10,329 6,679

NET INCOME 24,623 20,666

13 unchanged sentences

Net income $ 24,623 $ 20,666

Other comprehensive income - unrealized income on swap derivatives during the period 768 4,207 2,859 13,117

Other comprehensive income - unrealized income (loss) on swap derivatives during the period 1,392 ( 2,269 )

Reclassification of amortization of forward-starting swap included in interest expense ( 98 ) ( 854 )

18 unchanged sentences

Balance at March 31, 2024 16,181,537 $ ( 47,190 ) 60,894,491 $ 1,190,249 $ 12,329 $ 1,155,388

Net income — 3,224 — 12,173 — 15,397

Issuance of restricted units — — 10,348 — — —

Forfeiture of restricted units — — ( 3,553 ) — — —

Distributions — ( 5,340 ) — ( 20,039 ) — ( 25,379 )

Stock-based compensation — — — 2,110 — 2,110

Other comprehensive income - change in value of interest rate swap — — — — 4,360 4,360

Reclassification of amortization of forward-starting swap realized gains included in interest expense — — — — ( 98 ) ( 98 )

Balance at June 30, 2023 16,181,537 $ ( 42,242 ) $ 60,724,630 $ 1,203,208 $ 15,150 $ 1,176,116

Net income — 3,168 — 11,967 — 15,135

Distributions — ( 5,340 ) — ( 20,039 ) — ( 25,379 )

Stock-based compensation — — — 2,109 — 2,109

Other comprehensive income - change in value of interest rate swap — — — — 768 768

Reclassification of amortization of forward-starting swap included in interest expense — — — — ( 99 ) ( 99 )

Balance at September 30, 2023 16,181,537 $ ( 44,414 ) 60,724,630 $ 1,197,245 $ 15,819 $ 1,168,650

Limited Partners' Capital (1)

7 unchanged sentences

Stock-based compensation — — — 2,035 — 2,035

Units withheld for employee taxes — — ( 416 ) ( 15 ) — ( 15 )

Other comprehensive income - change in value of interest rate swap — — — — 5,596 5,596

Other comprehensive loss - change in value of interest rate swap — — — — ( 2,269 ) ( 2,269 )

Reclassification of amortization of forward starting swaps included in interest expense — — — — ( 854 ) ( 854 )

Balance at March 31, 2023 16,181,537 $ ( 40,126 ) 60,717,835 $ 1,208,964 $ 10,888 $ 1,179,726

Net income — 2,852 — 10,736 — 13,588

Issuance of restricted units — — 6,072 — — —

Forfeiture of restricted units — — — — — —

Distributions — ( 5,178 ) — ( 19,369 ) — ( 24,547 )

Stock-based compensation — — — 2,001 — 2,001

Other comprehensive income - change in value of interest rate swap — — — — 3,314 3,314

Reclassification of amortization of forward-starting swap realized gains included in interest expense — — — — ( 275 ) ( 275 )

Balance at June 30, 2022 16,181,537 $ ( 34,806 ) 60,528,115 $ 1,222,245 $ 12,529 $ 1,199,968

Net income — 3,442 — 12,927 — 16,369

Distributions — ( 5,178 ) — ( 19,369 ) — ( 24,547 )

Stock-based compensation — — — 2,001 — 2,001

Other comprehensive income - change in value of interest rate swap — — — — 4,207 4,207

Reclassification of amortization of forward-starting swap included in interest expense — — — — ( 275 ) ( 275 )

Balance at September 30, 2022 16,181,537 $ ( 36,542 ) 60,528,115 $ 1,217,804 $ 16,461 $ 1,197,723

(1) Consists of limited partnership interests held by third parties.

4 unchanged sentences

(Unaudited, In Thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES

16 unchanged sentences

INVESTING ACTIVITIES

Acquisition of real estate — ( 45,167 )

Capital expenditures ( 10,939 ) ( 24,518 )

2 unchanged sentences

FINANCING ACTIVITIES

Issuance of secured notes payable — 75,000

Repayment of secured notes payable — ( 111,000 )

Proceeds from unsecured term loan — 225,000

Proceeds from unsecured line of credit — 36,000

Repayment of unsecured line of credit — ( 36,000 )

2 unchanged sentences

Distributions ( 25,821 ) ( 25,377 )

Shares withheld for employee taxes — ( 15 )

Net cash used in financing activities ( 39,280 ) ( 77,351 )

Net increase (decrease) in cash and cash equivalents 40,397 ( 76,093 )

Net cash (used in) / provided by financing activities ( 25,821 ) 11,485

Net increase in cash and cash equivalents 15,665 37,757

Cash and cash equivalents, beginning of period 82,888 49,571

Cash and cash equivalents, end of period $ 98,553 $ 87,328

Nine Months Ended September 30,

Cash and cash equivalents $ 89,968 $ 63,431

Restricted cash — —

Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows $ 89,968 $ 63,431

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

Notes to Consolidated Financial Statements

September 30, 2023

March 31, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

We are a full service, vertically integrated, and self-administered REIT with approximately 230 employees providing substantial in-house expertise in asset management, property management, property development, leasing, tenant improvement construction, acquisitions, repositioning, redevelopment and financing.

As of September 30, 2023, we owned or had a controlling interest in 31 office, retail, multifamily and mixed-use operating properties, the operations of which we consolidate.

Additionally, as of September 30, 2023, we owned land at three of our properties that we classify as held for development and/or construction in progress.

As of March 31, 2024, we owned or had a controlling interest in 31 office, retail, multifamily and mixed-use operating properties, the operations of which we consolidate.

Additionally, as of March 31, 2024, we owned land at three of our properties that we classify as held for development and/or construction in progress.

A summary of the properties owned by us is as follows:

Carmel Country Plaza Gateway Marketplace Alamo Quarry Market

Carmel Mountain Plaza Del Monte Center Hassalo on Eighth - Retail

South Bay Marketplace Geary Marketplace

Lomas Santa Fe Plaza The Shops at Kalakaua

Solana Beach Towne Centre Waikele Center

La Jolla Commons One Beach Street Corporate Campus East III

3 unchanged sentences

The Landmark at One Market Eastgate Office Park

Carmel Country Plaza Gateway Marketplace Alamo Quarry Market

Carmel Mountain Plaza Del Monte Center Hassalo on Eighth - Retail

South Bay Marketplace Geary Marketplace

Lomas Santa Fe Plaza The Shops at Kalakaua

Solana Beach Towne Centre Waikele Center

Loma Palisades Hassalo on Eighth - Residential

11 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

Basis of Presentation

18 unchanged sentences

The following table provides supplemental disclosures related to the Consolidated Statements of Cash Flows (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental cash flow information

10 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

Significant Accounting Policies

We describe our significant accounting policies in Note 1 to the consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023.

There have been no changes to our significant accounting policies during the nine months ended September 30, 2023.

There have been no changes to our significant accounting policies during the three months ended March 31, 2024.

Segment Information

12 unchanged sentences

The collectability of receivables is affected by numerous different factors including current economic conditions, the impact of tenant bankruptcies, the status of collectability of current cash rents receivable, tenants' recent and historical financial and operating results, changes in our tenants' credit ratings, communications between our operating personnel and tenants, the extent of security deposits and letters of credit held with respect to tenants, and the ability of tenants to perform under the terms of their lease agreement.

The provision for doubtful accounts at September 30, 2023 and December 31, 2022 was approximately $ 1.3 million and $ 2.1 million, respectively.

Rent Concessions – COVID-19

Due to the impacts of COVID-19, from 2020 through 2022 we provided lease concessions to certain tenants, primarily within the retail segment, in the form of rent deferrals and abatements.

We assess each lease concession and determine whether it represents a lease modification under Accounting Standards Codification Topic 842, Leases ("ASC 842").

The provision for doubtful accounts at March 31, 2024 and December 31, 2023 was approximately $ 1.4 million and $ 1.4 million, respectively.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848), which provides companies with optional practical expedients to ease the accounting burden for contract modifications associated with transitioning away from LIBOR and other interbank offered rates that have been or are expected to be discontinued as part of reference rate reform.

For hedges, the guidance generally allows changes to the reference rate and other critical terms without having to de-designate the hedging relationship, and permits the shortcut method to continue to be applied.

For contract modifications, changes in the reference rate or other critical terms will be treated as a continuation of the prior contract.

This guidance is generally only available until December 31, 2024.

We are still evaluating the impact of reference rate reform and whether we will apply any of these practical expedients.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures.

The pronouncement requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss.

The pronouncement will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024.

We are currently evaluating the impact this pronouncement will have on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures .

This pronouncement requires enhanced income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

This pronouncement is effective for annual periods in fiscal years beginning after December 15, 2024, and should be applied either prospectively or retrospectively.

We are currently evaluating the impact this pronouncement will have on our disclosures.

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

ACQUIRED IN-PLACE LEASES AND ABOVE/BELOW MARKET LEASES

The following summarizes our acquired lease intangibles and leasing costs, which are included in other assets and other liabilities and deferred credits, as of September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023 December 31, 2022

The following summarizes our acquired lease intangibles and leasing costs, which are included in other assets and other liabilities and deferred credits, as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

In-place leases $ 51,456 $ 51,575

24 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.

However, as of September 30, 2023 we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative position and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivative.

However, as of March 31, 2024 we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative position and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivative.

As a result, we have determined that our derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy.

A summary of our financial liabilities that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

6 unchanged sentences

The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments.

The carrying values of our term loans set forth below are deemed to be at fair value since the outstanding debt is directly tied to monthly Secured Overnight Financing Rate (“SOFR”) contracts.

The carrying values of our term loans set forth below are deemed to be at fair value since the outstanding debt is directly tied to monthly SOFR.

A summary of the carrying amount and fair value of our secured financial instruments, all of which are based on Level 2 inputs, is as follows (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Carrying Value Fair Value Carrying Value Fair Value

3 unchanged sentences

Senior unsecured notes, net $ 492,952 $ 406,635 $ 492,694 $ 405,860

Unsecured line of credit, net $ — $ — $ 34,057 $ 36,000

DERIVATIVE AND HEDGING ACTIVITIES

5 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

The following is a summary of the terms of our outstanding interest rate swaps as of September 30, 2023 (dollars in thousands):

March 31, 2024

The following is a summary of the terms of our outstanding interest rate swaps as of March 31, 2024 (dollars in thousands):

Swap Counterparty Notional Amount Effective Date Maturity Date Fair Value

13 unchanged sentences

Other assets consist of the following (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Leasing commissions, net of accumulated amortization of $ 49,662 and $ 47,978 , respectively

12 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

OTHER LIABILITIES AND DEFERRED CREDITS

Other liabilities and deferred credits consist of the following (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Acquired below market leases, net $ 15,785 $ 16,537

Prepaid rent and deferred revenue 16,451 17,261

Interest rate swap liability — 196

Deferred compensation 2,622 2,627

10 unchanged sentences

however, American Assets Trust, Inc.

has guaranteed the Operating Partnership's obligations under the (i) amended and restated credit facility, (ii) term loans, (iii) senior guaranteed notes, and (iv) senior unsecured notes.

has guaranteed the Operating Partnership's obligations under the (i) 3.375 %

senior notes, (ii) senior guaranteed notes, (iii) third amended and restated credit facility, and (iv) amended and restated term

loan agreement, each discussed below.

Debt of American Assets Trust, L.P.

Secured notes payable

The following table is a summary of our total secured notes payable outstanding as of September 30, 2023 and December 31, 2022 (in thousands):

The following table is a summary of our total secured notes payable outstanding as of March 31, 2024 and December 31, 2023 (in thousands):

Principal Balance as of Stated Interest Rate Stated Maturity Date

Description of Debt September 30, 2023 December 31, 2022 as of September 30, 2023

Description of Debt March 31, 2024 December 31, 2023 as of March 31, 2024

City Center Bellevue (1)

7 unchanged sentences

Certain loans require the Operating Partnership to comply with various financial covenants.

As of September 30, 2023, the Operating Partnership was in compliance with these financial covenants.

As of March 31, 2024, the Operating Partnership was in compliance with these financial covenants.

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

Unsecured notes payable

The following table is a summary of the Operating Partnership's total unsecured notes payable outstanding as of September 30, 2023 and December 31, 2022 (in thousands):

The following table is a summary of the Operating Partnership's total unsecured notes payable outstanding as of March 31, 2024 and December 31, 2023 (in thousands):

Description of Debt Principal Balance as of Stated Interest Rate Stated Maturity Date

September 30, 2023 December 31, 2022 as of September 30, 2023

March 31, 2024 December 31, 2023 as of March 31, 2024

Term Loan A $ 100,000 $ 100,000 Variable (1)

13 unchanged sentences

July 30, 2030

3.375 % Senior Unsecured Notes

3.375 % Senior Notes

500,000 500,000 3.38 % February 1, 2031

5 unchanged sentences

(2) On January 5, 2023, we extended Term Loan B and Term Loan C to a maturity date of January 5, 2025 with one , twelve-month extension option and increased the fully drawn borrowings thereunder to $ 150 million and $ 75 million, respectively.

(3) The Operating Partnership entered into an interest rate swap agreement that is intended to fix the interest rate associated with Term Loan B as follows, in each case subject to adjustments based on our consolidated leverage ratio:

(a) from March 1, 2018 through November 30, 2022, the effective interest rate associated with Term Loan B was approximately 2.65 % (and such interest rate swap agreement was terminated as of November 30, 2022) and (b) from January 5, 2023 through January 4, 2025, the effective interest rate associated with Term Loan B is approximately 5.47 % for the first year (January 5, 2023 through January 4, 2024) and 5.57 % for the second year (January 5, 2024 through January 4, 2025) of Term Loan B.

Note that variable interest was paid on Term Loan B from December 1, 2022 through January 4, 2023 at 5.32 % as there were no interest rate swap agreements in place during such time period on Term Loan B.

(4) The Operating Partnership has entered into an interest rate swap agreement that is intended to fix the interest rate associated with Term Loan C as follows, in each case subject to adjustments based on our consolidated leverage ratio:

(a) from March 1, 2018 through November 30, 2022, the effective interest rate associated with Term Loan C was approximately 2.64 % (and such interest rate swap agreement was terminated as of November 30, 2022) and (b) from January 5, 2023 through January 4, 2025, the effective interest rate associated with Term Loan C is approximately 5.47 % for the first year (January 5, 2023 through January 4, 2024) and 5.57 % for the second year (January 5, 2024 through January 4, 2025) of Term Loan C.

Note that variable interest was paid on Term Loan C from December 1, 2022 through January 4, 2023 at 5.32 % as there were no interest rate swap agreements in place during such time period on Term Loan C.

(3) The Operating Partnership entered into interest rate swap agreements that are intended to fix the effective interest rate associated with Term Loan B and Term Loan C, subject to adjustments based on our consolidated leverage ratio, at, 5.47 % from January 5, 2023 to January 4, 2024 and at 5.57 % from January 5, 2024 to January 4, 2025.

(4) The Operating Partnership entered into a treasury lock contract on May 31, 2017, which was settled on June 23, 2017 at a loss of approximately $ 0.5 million.

The treasury lock contract was deemed to be a highly effective cash flow hedge;

accordingly, the effective interest rate is approximately 3.85 % per annum.

The treasury lock contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 3.85 % per annum.

(5) The Operating Partnership entered into forward-starting interest rate swap contracts on March 29, 2016 and April 7, 2016, which were settled on January 18, 2017 at a gain of approximately $ 10.4 million.

Each of the forward-starting interest swap rate contracts were deemed to be a highly effective cash flow hedge;

accordingly, the effective interest rate is approximately 3.87 % per annum.

The forward-starting interest swap rate contracts were deemed to be highly effective cash flow hedges, accordingly, the effective interest rate is approximately 3.87 % per annum.

(6) The Operating Partnership entered into a treasury lock contract on April 25, 2017, which was settled on May 11, 2017 at a gain of approximately $ 0.7 million.

The treasury lock contract was deemed to be a highly effective cash flow hedge;

accordingly, the effective interest rate is approximately 4.18 % per annum.

The treasury lock contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 4.18 % per annum.

(7) The Operating Partnership entered into a treasury lock contract on June 20, 2019, which was settled on July 17, 2019 at a gain of approximately $ 0.5 million.

The treasury lock contract was deemed to be a highly effective cash flow hedge;

accordingly, the effective interest rate is approximately 3.88 % per annum.

The treasury lock contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 3.88 % per annum.

3.375 % Senior Notes

On January 26, 2021, the Operating Partnership issued $ 500 million of senior unsecured notes (the " 3.375 % Senior Notes") that mature February 1, 2031 and bear interest at 3.375 % per annum.

The 3.375 % Senior Notes were priced at 98.935 % of the principal amount with a yield to maturity of 3.502 %.

The net proceeds of the 3.375 % Senior Notes, after the issuance discount, underwriting fees, and other costs were approximately $ 489.7 million, which were primarily used to (i) prepay our $ 150 million Senior Guaranteed Notes, Series A, with a make-whole payment (as defined in the Note Purchase Agreement for the Series A Notes) thereon of approximately $ 3.9 million, on January 26, 2021, (ii) repay our $ 100 million then outstanding balance under our then-existing revolver loan on January 26, 2021, (iii) fund the development of the La Jolla Commons III office building and (iv) for general corporate purposes.

The 3.375 % Senior Notes include a number of customary financial covenants, including:

• A maximum aggregate debt ratio of 60 %,

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

Senior Unsecured Notes

On January 26, 2021, the Operating Partnership issued $ 500 million of senior unsecured notes (the " 3.375 % Senior Notes") that mature February 1, 2031 and bear interest at 3.375 % per annum.

The 3.375 % Senior Notes were priced at 98.935 % of the principal amount with a yield to maturity of 3.502 %.

The net proceeds of the 3.375 % Senior Notes, after the issuance discount, underwriting fees, and other costs were approximately $ 489.7 million, which were primarily used to (i) prepay our $ 150 million Senior Guaranteed Notes, Series A, with a make-whole payment (as defined in the Note Purchase Agreement for the Series A Notes) thereon of approximately $ 3.9 million, on January 26, 2021, (ii) repay our $ 100 million then outstanding balance under our Revolver Loan on January 26, 2021, (iii) fund the development of the La Jolla Commons III office building and (iv) for general corporate purposes.

Certain unsecured loans and notes require the Operating Partnership to comply with various financial covenants.

As of September 30, 2023, the Operating Partnership was in compliance with these financial covenants.

Amended Term Loan Agreement

On January 9, 2018, we entered into the Third Amendment to the Term Loan Agreement (as so amended, the "Term Loan Agreement"), which maintains the seven years $ 150 million unsecured term loan (referred to herein as Term Loan B and Term Loan C) to the Operating Partnership that matures on March 1, 2023 (the “$150mm Term Loan”).

Effective as of March 1, 2018, borrowings under the Term Loan Agreement with respect to the $150mm Term Loan bear interest at floating rates equal to, at the Operating Partnership’s option, either (1) LIBOR, plus a spread which ranges from 1.20 % to 1.70 % based on the Operating Partnership’s consolidated leverage ratio, or (2) a base rate equal to the highest of (a) 0 %, (b) the prime rate, (c) the federal funds rate plus 50 bps or (d) the Eurodollar rate plus 100 bps, in each case plus a spread which ranges from 0.70 % to 1.35 % based on the Operating Partnership’s consolidated leverage ratio.

Additionally, the Operating Partnership may elect for borrowings to bear interest based on a ratings-based pricing grid as per the Operating Partnership’s then-applicable investment grade debt ratings under the terms set forth in the Term Loan Agreement.

On January 5, 2023, we entered into the Amended and Restated Term Loan Agreement, which increased the aggregate unsecured borrowings from $ 150 million to $ 225 million and extended the maturity date of Term Loan B and Term Loan C from March 1, 2023 to January 5, 2025, with one , twelve-month extension option, subject to certain conditions.

Borrowings under the Amended and Restated Term Loan Agreement bear interest at floating rates equal to, at the Operating Partnership’s option, either (1) the applicable SOFR, plus a SOFR adjustment and a spread (based on the Operating Partnership’s consolidated leverage ratio and applicable year of Term Loan B and Term Loan C) ranging from 1.20 % to 1.90 %, or (2) a base rate equal to the highest of (a) 0 %, (b) the prime rate, (c) the federal funds rate plus 50 bps and (d) the one-month SOFR, plus a SOFR adjustment and 100 bps, plus, in each case, a spread (based on the Operating Partnership’s consolidated leverage ratio and applicable year of the Term Loan B and Term Loan C) ranging from 0.20 % to 0.90 %.

Additionally, the Operating Partnership may elect for borrowings to bear interest based on a ratings-based pricing grid based on the Operating Partnership’s then-applicable investment grade debt ratings under the terms set forth in the Amended and Restated Term Loan Agreement.

Prior to entering into the Amended and Restated Term Loan Agreement, the Operating Partnership entered into interest rate swap agreements that are intended to fix the interest rate associated with Term Loan B and Term Loan C at approximately (1) 5.47 % for the first year of Term Loan B and Term Loan C and (2) 5.57 % for the second year of Term Loan B and Term Loan C, subject to adjustments based on the company’s consolidated leverage ratio.

Third Amended and Restated Credit Facility

On January 9, 2018, we entered into a second amended and restated credit agreement (the "Second Amended and Restated Credit Facility").

The Second Amended and Restated Credit Facility provides for aggregate, unsecured borrowing of $ 450 million, consisting of a revolving line of credit of $ 350 million (the "Revolver Loan") and a term loan of $ 100 million (the "Term Loan A").

The Second Amended and Restated Credit Facility had an accordion feature that allowed us to increase the availability thereunder up to an additional $ 250 million, subject to meeting specified requirements and obtaining additional commitments from lenders.

March 31, 2024

• A minimum debt service ratio of 1.5 x,

• A maximum secured debt ratio of 40 %,

• A minimum maintenance of total unencumbered assets of 150 %.

As of March 31, 2024, the Operating Partnership was in compliance with all then in-place 3.375 % Senior Notes covenants.

Senior Guaranteed Notes

On October 31, 2014, the Operating Partnership entered into a note purchase agreement (the "Note Purchase Agreement") with a group of institutional purchasers that provided for the private placement of an aggregate of $ 350 million of senior guaranteed notes, of which (i) $ 150 million are designated as 4.04 % Senior Guaranteed Notes, Series A, due October 31, 2021 (the “Series A Notes”), (ii) $ 100 million are designated as 4.45 % Senior Guaranteed Notes, Series B, due February 2, 2025 (the “Series B Notes”) and (iii) $ 100 million are designated as 4.50 % Senior Guaranteed Notes, Series C, due April 1, 2025 (the “Series C Notes”).

The Series A Notes were issued on October 31, 2014, the Series B Notes were issued on February 2, 2015 and the Series C Notes were issued on April 2, 2015.

The Series A Notes, the Series B Notes and the Series C Notes will pay interest quarterly on the last day of January, April, July and October until their respective maturities.

On January 26, 2021, we repaid the entirety of the $ 150.0 million Series A Notes with a make-whole payment (as defined in the Note Purchase Agreement) of approximately $ 3.9 million.

On March 1, 2017, the Operating Partnership entered into a Note Purchase Agreement for the private placement of $ 250 million of 4.29 % Senior Guaranteed Notes, Series D, due March 1, 2027 (the "Series D Notes").

The Series D Notes were issued on March 1, 2017 and pay interest quarterly on the last day of January, April, July and October until their respective maturities.

On May 23, 2017, the Operating Partnership entered into a Note Purchase Agreement for the private placement of $ 100 million of 4.24 % Senior Guaranteed Notes, Series E, due May 23, 2029 (the "Series E Notes").

The Series E Notes were issued on May 23, 2017 and pay interest semi-annually on the 23rd of May and November until their respective maturities.

On July 19, 2017, the Operating Partnership entered into a Note Purchase Agreement for the private placement of $ 100 million of 3.78 % Senior Guaranteed Notes, Series F, due July 19, 2024 (the "Series F Notes").

The Series F Notes were issued on July 19, 2017 and pay interest semi-annually on the 31st of January and July until their respective maturities.

On July 30, 2019, the Operating Partnership entered into a Note Purchase Agreement for the private placement of $ 150 million of 3.91 % Senior Guaranteed Notes, Series G, due July 30, 2030 (the "Series G Notes" and collectively with the Series A Notes, Series B Notes, Series C Notes, Series D Notes, Series E Notes, and Series G Notes are referred to herein as, the “Notes".) The Series G Notes were issued on July 30, 2019 and pay interest semi-annually on the 30th of July and January until their maturity.

The Operating Partnership may prepay at any time all, or from time to time any part of, the Notes, in an amount not less than 5 % of the aggregate principal amount of any series of the Notes then outstanding in the case of a partial prepayment, at 100 % of the principal amount so prepaid plus a make-whole amount.

The Note Purchase Agreements contain a number of customary financial covenants, including, without limitation, tangible net worth thresholds, secured and unsecured leverage ratios and fixed charge coverage ratios.

Subject to the terms of the Note Purchase Agreement and the Notes, upon certain events of default, including, but not limited to, (i) a default in the payment of any principal, Make-Whole Amount or interest under the Notes, and (ii) a default in the payment of certain other indebtedness by us or our subsidiaries, the principal, accrued and unpaid interest, and the make-whole amount on the outstanding Notes will become due and payable at the option of the purchasers.

The Operating Partnership's obligations under the Notes are fully and unconditionally guaranteed by the Operating Partnership and certain of the Operating Partnership's subsidiaries.

Certain loans require the Operating Partnership to comply with various financial covenants, including the maintenance of minimum debt coverage ratios.

As of March 31, 2024, the Operating Partnership was in compliance with all loan covenants.

American Assets Trust, Inc.

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Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

Borrowings under the Second Amended and Restated Credit Agreement initially bore interest at floating rates equal to, at our option, either (1) LIBOR, plus a spread which ranges from (a) 1.05 % to 1.50 % (with respect to the Revolver Loan) and (b) 1.30 % to 1.90 % (with respect to Term Loan A), in each case based on our consolidated leverage ratio, or (2) a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 50 bps or (c) LIBOR plus 100 bps, plus a spread which ranges from (i) 0.10 % to 0.50 % (with respect to the Revolver Loan) and (ii) 0.30 % to 0.90 % (with respect to Term Loan A), in each case based on our consolidated leverage ratio.

On January 9, 2019, we entered into the first amendment (“First Amendment”) to the Second Amended and Restated Credit Facility, which extended the maturity date of Term Loan A to January 9, 2021, subject to three , one year extension options.

In October 2020, we exercised an option to extend the maturity date of Term Loan A to January 9, 2022, subject to certain conditions.

Additionally, in connection with the First Amendment, borrowings under the Second Amended and Restated Credit Facility with respect to Term Loan A bore interest at floating rates equal to, at our option, either (1) LIBOR, plus a spread which ranges from 1.20 % to 1.70 % based on our consolidated total leverage ratio, or (2) a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 50 bps or (c) the Eurodollar rate plus 100 bps, in each case plus a spread which ranges from 0.20 % to 0.70 % based on our consolidated total leverage ratio.

The foregoing rates were intended to be more favorable than previously contained in the Second Amended and Restated Credit Facility (prior to entry into the First Amendment) with respect to Term Loan A.

On January 5, 2022, we entered into the Third Amended and Restated Credit Facility, which provides for aggregate, unsecured borrowings of up to $ 500 million, consisting of a revolving line of credit of $ 400 million (the “2022 Revolver Loan”) and a term loan of $ 100 million (the “2022 Term Loan A”).

The Third Amended and Restated Credit Facility has an accordion feature that allowed us to increase the availability thereunder up to an additional $ 400 million, subject to meeting specified requirements and obtaining additional commitments from lenders.

March 31, 2024

Third Amended and Restated Credit Facility

On January 5, 2022, the Operating Partnership entered into the third amended and restated credit facility (the “Third Amended and Restated Credit Facility”) , which amended and restated our then-existing credit facility.

The Third Amended and Restated Credit Facility provides for aggregate, unsecured borrowings of up to $ 500 million, consisting of a revolving line of credit of $ 400 million (the “Revolver Loan”) and a term loan of $ 100 million (“Term Loan A”).

The Revolver Loan initially matures on January 5, 2026, subject to two , six-month extension options.

The 2022 Term Loan A matures on January 5, 2027, with no further extension options.

Borrowings under the Third Amended and Restated Credit Agreement bear interest at floating rates equal to, at the Operating Partnership’s option, either (1) the applicable SOFR, plus the applicable SOFR Adjustment, and a spread which ranges from (a) 1.05 % to 1.50 % (with respect to the 2022 Revolver Loans) and (b) 1.20 % to 1.70 % (with respect to the 2022 Term Loan A), in each case based on our consolidated leverage ratio, or (2) a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 50 bps, (c) the Term SOFR Screen Rate with a term of one month plus 100 bps and (d) 1.00 %, plus a spread which ranges from (i) 0.10 % to 0.50 % (with respect to the 2022 Revolver Loan) and (ii) 0.20 % to 0.70 % (with respect to the 2022 Term Loan A), in each case based on our consolidated leverage ratio.

On January 14, 2022, the Operating Partnership entered into two interest rate swap agreements that are intended to fix the interest rate associated with the 2022 Term Loan A at approximately 2.70 % through January 5, 2027, subject to adjustments based on our consolidated leverage ratio.

At September 30, 2023, there were no amounts outstanding under the 2022 Revolver Loan and we had incurred approximately $ 1.5 million of net debt issuance costs which are recorded in other assets, net on the consolidated balance sheet.

For the nine months ended September 30, 2023, the weighted average interest rate on the 2022 Revolver Loan was 6.12 %.

Additionally, the Third Amended and Restated Credit Facility includes a number of customary financial covenants, including:

• A maximum leverage ratio (defined as total indebtedness net of certain cash and cash equivalents to total asset value) of 60 %;

Term Loan A matures on January 5, 2027, with no further extension options.

As of March 31, 2024, the entirety of the principal amount of Term Loan A was outstanding, there were no amounts outstanding under the Revolver Loan, and the Operating Partnership had incurred approximately $ 1.13 million of net debt issuance costs which are recorded in other assets, net on the consolidated balance sheet.

For the three months ended March 31, 2024, the weighted average interest rate on the Revolver Loan was 6.54 %.

Borrowings under the Third Amended and Restated Credit Agreement bear interest at floating rates equal to, at the Operating Partnership’s option, either (1) the applicable SOFR, plus the applicable SOFR Adjustment and a spread which ranges from (a) 1.05 %- 1.50 % (with respect to the Revolver Loan) and (b) 1.20 % to 1.70 % (with respect to Term Loan A), in each case based on our consolidated leverage ratio, or (2) a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 50 bps, (c) the Term SOFR Screen Rate with a term of one month plus 100 bps and (d) 1.00 %, plus a spread which ranges from (i) 0.10 %- 0.50 % (with respect to the Revolver Loan) and (ii) 0.20 % to 0.70 % (with respect to Term Loan A), in each case based on our consolidated leverage ratio.

On January 14, 2022, the Operating Partnership entered into an interest rate swap agreement intended to fix the interest rate associated with the Term Loan A at approximately 2.70 % through January 5, 2027, subject to adjustments based on our consolidated leverage ratio.

The Third Amended and Restated Credit Facility includes a number of customary financial covenants, including:

• A maximum leverage ratio (defined as total indebtedness net of certain cash and cash equivalents to total asset

value) of 60 %,

• A maximum secured leverage ratio (defined as total secured debt to secured total asset value) of 40 %,

• A minimum fixed charge coverage ratio (defined as consolidated earnings before interest, taxes, depreciation and amortization to consolidated fixed charges) of 1.50 x;

• A minimum fixed charge coverage ratio (defined as consolidated earnings before interest, taxes, depreciation and

amortization to consolidated fixed charges) of 1.50 x,

• A minimum unsecured interest coverage ratio of 1.75 x,

• A maximum unsecured leverage ratio of 60 %;

• A maximum unsecured leverage ratio of 60 %, and

• Recourse indebtedness at any time cannot exceed 15 % of total asset value.

The Third Amended and Restated Credit Facility provides that our annual distributions may not exceed the greater of (1) 95 % of our funds from operation ("FFO") or (2) the amount required for us to (a) qualify and maintain our REIT status and (b) avoid the payment of federal or state income or excise tax.

The Third Amended and Restated Credit Facility also provides that our annual distributions may not exceed the greater of (1) 95 % of our funds from operations (“FFO”) or (2) the amount required for us to (a) qualify and maintain our REIT status and (b) avoid the payment of federal or state income or excise tax.

If certain events of default exist or would result from a distribution, we may be precluded from making distributions other than those necessary to qualify and maintain our status as a REIT.

As of March 31, 2024, the Operating Partnership was in compliance with all then in-place Third Amended and Restated Credit Facility covenants.

Amended and Restated Term Loan Agreement

On January 5, 2023, we entered into the amended and restated term loan agreement (the “Amended and Restated Term Loan Agreement”), which amended and restated our then-existing term loan agreement.

The Amended and Restated Term Loan Agreement provides to the Operating Partnership a term loan of $ 150 million (“Term Loan B”) and a term loan of $ 75 million (“Term Loan C”), each maturing on January 5, 2025, with one , twelve-month extension option, subject to certain conditions.

As of March 31, 2024, the entirety of the principal amounts of Term Loan B and Term Loan C were outstanding.

American Assets Trust, Inc.

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Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

As of September 30, 2023, the Operating Partnership was in compliance with the financial covenants in the Third Amended and Restated Credit Facility.

March 31, 2024

leverage ratio and applicable year of Term Loan B and Term Loan C) ranging from 0.20 % to 0.90 %.

The Amended and Restated Term Loan Agreement contains a number of customary financial covenants, including, without limitation, tangible net worth thresholds, secured and unsecured leverage ratios and fixed charge coverage ratios.

Subject to the terms of the Amended and Restated Term Loan Agreement, upon certain events of default, including, but not limited to, (i) a default in the payment of any principal or interest under Term Loan B or Term Loan C, and (ii) a default in the payment of certain other indebtedness of the Operating Partnership, the company or their subsidiaries, the principal and accrued and unpaid interest and prepayment penalties on the outstanding Term Loan B or Term Loan C will become due and payable at the option of the lenders.

PARTNERS' CAPITAL OF AMERICAN ASSETS TRUST, L.P.

Noncontrolling interests in our Operating Partnership are interests in the Operating Partnership that are not owned by us.

Noncontrolling interests consisted of 16,181,537 common units (the “noncontrolling common units”), and represented approximately 21.2 % of the ownership interests in our Operating Partnership at September 30, 2023.

Common units and shares of our common stock have essentially the same economic characteristics in that common units and shares of our common stock share equally in the total net income or loss distributions of our Operating Partnership.

Investors who own common units have the right to cause our Operating Partnership to redeem any or all of their common units for cash equal to the then-current market value of one share of our common stock, or, at our election, shares of our common stock on a one -for-one basis.

During the nine months ended September 30, 2023, no common units were converted into shares of our common stock.

During the three months ended March 31, 2024, no common units were converted into shares of our common stock.

Earnings Per Unit of the Operating Partnership

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The impact of unvested Operating Partnership unit awards on EPU has been calculated using the two-class method whereby earnings are allocated to the unvested Operating Partnership unit awards based on distributions and the unvested Operating Partnership units’ participation rights in undistributed earnings.

The calculation of diluted EPU for the three months ended September 30, 2023 and 2022 does not include the weighted average of 573,949 and 483,110 unvested outstanding Operating Partnership units, respectively, as these equity securities are either considered contingently issuable or the effect of including these equity securities was anti-dilutive to income from continuing operations and net income attributable to the unitholders.

The calculation of diluted EPU for the nine months ended September 30, 2023 and 2022 does not include the weighted average of 573,070 and 483,895 unvested outstanding Operating Partnership units, respectively, as these equity securities are either considered contingently issuable or the effect of including these equity securities was anti-dilutive to income from continuing operations and net income attributable to the unitholders.

The calculation of diluted EPU for the three months ended March 31, 2024 and 2023 does not include the weighted average of 585,210 and 573,253 unvested outstanding Operating Partnership units, respectively, as these equity securities are either considered contingently issuable or the effect of including these equity securities was anti-dilutive to income from continuing operations and net income attributable to the unitholders.

EQUITY OF AMERICAN ASSETS TRUST, INC.

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The sales of shares of our common stock made through the ATM equity program, as amended, are made in "at-the-market" offerings as defined in Rule 415 of the Securities Act of 1933, as amended.

For the nine months ended September 30, 2023, no shares of common stock were sold through the ATM equity program.

We intend to use the net proceeds from the ATM equity program to fund our development or redevelopment activities, repay amounts outstanding from time to time under our revolving line of credit or other debt financing obligations, fund potential acquisition opportunities and/or for general corporate purposes.

As of September 30, 2023, we had the capacity to issue up to $ 250 million in shares of our common stock under our current ATM equity program.

Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of our common stock and our capital needs.

As of September 30, 2023, we have no obligation to sell the remaining shares available for sale under the ATM equity program.

For the three months ended March 31, 2024, no shares of common stock were sold through the ATM equity program.

American Assets Trust, Inc.

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Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

The following table lists the dividends declared and paid on our shares of common stock and noncontrolling common units during the nine months ended September 30, 2023:

March 31, 2024

As of March 31, 2024, we had the capacity to issue up to $ 250 million in shares of our common stock under our current ATM equity program.

Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of our common stock and our capital needs.

As of March 31, 2024, we have no obligation to sell the remaining shares available for sale under the ATM equity program.

The following table lists the dividends declared and paid on our shares of common stock and noncontrolling common units during the three months ended March 31, 2024:

Period Amount per

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First Quarter 2024 $ 0.335 January 1, 2024 to March 31, 2024 March 21, 2024

Second Quarter 2023 $ 0.33 April 1, 2023 to June 30, 2023 June 22, 2023

Third Quarter 2023 $ 0.33 July 1, 2023 to September 30, 2023 September 21, 2023

Taxability of Dividends

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The guidance also defines a fair value-based method of accounting for an employee stock award or similar equity instrument.

The following table summarizes the activity of restricted stock awards during the nine months ended September 30, 2023:

The following table summarizes the activity of restricted stock awards during the three months ended March 31, 2024:

Units Weighted Average Grant Date Fair Value

Nonvested at January 1, 2024 585,865 $ 17.95

Granted 10,348 19.33

Vested ( 6,072 ) 32.94

Forfeited ( 1,295 ) 17.32

Nonvested at September 30, 2023 573,949 $ 20.87

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $ 2.1 million and $ 2.0 million in noncash compensation expense for the three months ended September 30, 2023 and 2022, respectively, which is included in general and administrative expenses on the consolidated statements of comprehensive income.

We recognized $ 6.3 million and $ 5.5 million in noncash compensation expense for the nine months ended September 30, 2023 and 2022, respectively.

Unrecognized compensation expense was $ 5.8 million at September 30, 2023.

Nonvested at March 31, 2024 584,570 $ 17.95

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $ 1.6 million and $ 2.0 million in noncash compensation expense for the three months ended March 31, 2024 and 2023, respectively, which is included in general and administrative expenses on the consolidated statements of comprehensive income.

Unrecognized compensation expense was $ 7.1 million at March 31, 2024.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

Earnings Per Share

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The two-class method is an earnings allocation methodology whereby EPS for each class of common stock and participating security is calculated according to dividends declared and participation rights in undistributed earnings.

The weighted average unvested shares outstanding, which are considered participating securities, were 573,949 and 483,110 for the three months ended September 30, 2023 and 2022, respectively, and 573,070 and 483,895 for the nine months ended September 30, 2023 and 2022, respectively.

The weighted average unvested shares outstanding, which are considered participating securities, were 585,210 and 573,253 for the three months ended March 31, 2024 and 2023, respectively.

Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares as these unvested shares have nonforfeitable dividend equivalent rights.

Diluted EPS is calculated by dividing the net income applicable to common stockholders for the period by the weighted average number of common and dilutive instruments outstanding during the period using the treasury stock method.

For the three and nine months ended September 30, 2023 and 2022, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable.

For the three months ended March 31, 2024 and 2023, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable.

Additionally, the unvested restricted stock awards subject to time vesting are anti-dilutive for all periods presented, and accordingly, have been excluded from the weighted average common shares used to compute diluted EPS.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

The computation of basic and diluted EPS is presented below (dollars in thousands, except share and per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Net income $ 24,623 $ 20,666

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Income from operations attributable to unitholders in the Operating Partnership

3,168 3,442 10,733 9,130

Net income attributable to common stockholders—diluted

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Additionally, we classify certain state taxes as income taxes for financial reporting purposes in accordance with ASC Topic 740, Income Taxes .

A deferred tax asset is included in our consolidated balance sheets of $ 0.7 million and $ 0.7 million, and a deferred tax liability is included in our consolidated balance sheets of $ 0.8 million and $ 0.9 million as of September 30, 2023 and December 31, 2022, respectively, in relation to real estate asset basis differences of property subject to state taxes based on income and certain prepaid expenses of our TRS.

Income tax expense is recorded in other (expense) income, net on our consolidated statements of comprehensive income.

For the three and nine months ended September 30, 2023, we recorded income tax expense of $ 0.3 million and $ 0.8 million, respectively.

For the three and nine months ended September 30, 2022, we recorded income tax expense of $ 0.2 million and $ 0.6 million, respectively.

A deferred tax asset is included in our consolidated balance sheets of $ 0.9 million and $ 0.9 million, and a deferred tax liability is included in our consolidated balance sheets of $ 0.8 million and $ 0.8 million as of March 31, 2024 and December 31,

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

2023, respectively, in relation to real estate asset basis differences of property subject to state taxes based on income and certain prepaid expenses of our TRS.

Income tax expense is recorded in other income, net on our consolidated statements of comprehensive income.

For the three months ended March 31, 2024, we recorded income tax expense of $ 0.3 million.

For the three months ended March 31, 2023, we recorded income tax expense of $ 0.3 million.

COMMITMENTS AND CONTINGENCIES

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provided that the aggregate management fee payable to Outrigger for any year shall not exceed 3.5 % of the hotel's gross revenues for such fiscal year.

Pursuant to the terms of the hotel management agreement, if the agreement is terminated in certain instances, including upon a transfer by us of the hotel or upon a default by us under the hotel management agreement, we would be required to pay a cancellation fee calculated by multiplying (1) the management fees for the previous 12 months by (2) four , three , two or one , if the agreement is terminated in the twelfth, thirteenth, fourteenth or fifteenth year, respectively, of its term.

The hotel management agreement may not be terminated by us or by Outrigger without cause.

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This management agreement can be terminated by us at any time and for any reason on 30 days' notice without any cancellation or termination fees.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

A wholly owned subsidiary of our Operating Partnership, WBW Hotel Lessee LLC, entered into a franchise license agreement with Embassy Suites Franchise LLC, the franchisor of the brand “Embassy Suites™,” to obtain the non-exclusive right to operate the hotel under the Embassy Suites TM brand for 20 years.

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In addition, we must pay to Embassy Suites Franchise LLC a monthly franchise royalty fee equal to 5.0 % of the hotel's gross room revenue, as well as a monthly program fee equal to 4.0 % of the hotel's gross room revenue.

If the franchise license is terminated due to our failure to make required improvements or to otherwise comply with its terms, we may be liable to the franchisor for a termination payment, which could be as high as $ 7.4 million based on operating performance through September 30, 2023.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

If the franchise license is terminated due to our failure to make required improvements or to otherwise comply with its terms, we may be liable to the franchisor for a termination payment, which could be as high as $ 7.9 million based on operating performance through March 31, 2024.

Our Del Monte Center property has ongoing environmental remediation related to ground water contamination.

The environmental issue existed at purchase and remains in remediation.

The final stages of the remediation will include routine, long term ground monitoring by the appropriate regulatory agency over the next five to seven years .

The final stages of the remediation will include routine, long term ground monitoring by the appropriate regulatory agency over the next several years.

The work performed is financed through an escrow account funded by the seller upon purchase of Del Monte Center.

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Fifteen of our consolidated properties are located in Southern California, which exposes us to greater economic risks than if we owned a more geographically diverse portfolio.

Tenants in the retail industry accounted for 23.6 % of total revenues for the nine months ended September 30, 2023.

This makes us susceptible to demand for retail rental space and subject to the risks associated with an investment in real estate with a concentration of tenants in the retail industry.

Furthermore, tenants in the office industry accounted for 47.2 % of total revenues for the nine months ended September 30, 2023.

Tenants in the office industry accounted for 46.7 % of total revenues for the three months ended March 31, 2024.

This makes us susceptible to demand for office rental space and subject to the risks associated with an investment in real estate with a concentration of tenants in the office industry.

For the nine months ended September 30, 2023 and 2022, no tenant accounted for more than 10% of our total rental revenue.

Furthermore, tenants in the retail industry accounted for 23.5 % of total revenues for the three months ended March 31, 2024.

This makes us susceptible to demand for retail rental space and subject to the risks associated with an investment in real estate with a concentration of tenants in the retail industry.

For the three months ended March 31, 2024 and 2023, no tenant accounted for more than 10% of our total rental revenue.

Lessor Operating Leases

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Our leases with office, retail, mixed-use and residential tenants are classified as operating leases.

Leases at our office and retail properties and the retail portion of our mixed-use property generally range from three to ten years (certain leases with anchor tenants may be longer), and in addition to minimum rents, usually provide for cost recoveries for the tenant’s share of certain operating costs.

Leases at our office and retail properties and the retail portion of our mixed-use property generally range from three years to ten years (certain leases with anchor tenants may be longer), and in addition to minimum rents, usually provide for cost recoveries for the tenant’s share of certain operating costs.

Our leases may also include variable lease payments in the form of percentage rents based on the tenant’s level of sales achieved in excess of a breakpoint threshold.

Leases on apartments generally range from 7 to 15 months, with a majority having 12-month lease terms.

Leases on apartments generally range from seven months to fifteen months , with a majority having 12 -month lease terms.

Rooms at the hotel portion of our mixed-use property are rented on a nightly basis.

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We attempt to maximize the amount we expect to derive from the underlying real estate property following the end of a lease, to the extent it is not extended.

We maintain a proactive leasing and capital improvement program that, combined with the quality and locations of our properties, has made our properties attractive to tenants.

However, the residual value of a real estate property is still subject to various market-specific, asset-specific, and tenant-specific risks and characteristics.

We maintain a proactive leasing and capital improvement program that, combined with

American Assets Trust, Inc.

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Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

As of September 30, 2023, minimum future rentals from noncancelable operating leases, before any reserve for uncollectible amounts and assuming no early lease terminations, at our office and retail properties and the retail portion of our mixed-use property are as follows (in thousands):

Year Ending December 31,

2023 (three months ending December 31, 2023) $ 59,230

March 31, 2024

the quality and locations of our properties, has made our properties attractive to tenants.

However, the residual value of a real estate property is still subject to various market-specific, asset-specific, and tenant-specific risks and characteristics.

As of March 31, 2024, minimum future rentals from noncancelable operating leases, before any reserve for uncollectible amounts and assuming no early lease terminations, at our office and retail properties and the retail portion of our mixed-use property are as follows for the years ended December 31 (in thousands):

2024 (nine months ending December 31, 2024) $ 187,854

Thereafter 246,380

Total $ 1,267,973

The above future minimum rentals exclude residential leases, which typically range from 7 to 15 months, and exclude the hotel, as rooms are rented on a nightly basis.

The above future minimum rentals exclude residential leases, which typically range from seven months to fifteen months , and exclude the hotel, as rooms are rented on a nightly basis.

Lessee Operating Leases

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At The Landmark at One Market, we lease, as lessee, a building adjacent to The Landmark at One Market under an operating lease effective through June 30, 2026, which we have the option to extend until 2031 (the "Annex Lease").

The lease payments under the extension option pursuant to the Annex Lease will be equal to the fair rental value at the time the extension option is exercised.

The lease payments under the extension option provided for under the Annex Lease will be equal to the fair rental value at the time the extension option is exercised.

The extension option is included in the calculation of the right-of-use asset and lease liability as we are reasonably certain of exercising the extension option.

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As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement in determining the present value of lease payments.

Current annual payments under the operating leases are as follows, as of September 30, 2023 (in thousands):

Year Ending December 31,

2023 (three months ending December 31, 2023) $ 844

As of March 31, 2024, current annual payments under the operating leases are as follows for the years ended December 31 (in thousands):

2024 (nine months ending December 31, 2024) $ 2,584

Thereafter 8,959

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Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

Lease costs under the operating leases are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Operating lease cost $ 970 $ 927

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Supplemental cash flow information and non-cash activity related to our operating leases are as follow (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Operating cash flow information:

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The principal components of rental income are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Lease rental income

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Total rental income $ 105,021 $ 102,710

Lease rental income includes $ 0.4 million and $ 2.5 million for the three months ended September 30, 2023 and 2022, respectively, and $ 3.6 million and $ 6.3 million for the nine months ended September 30, 2023 and 2022, respectively, to recognize lease rental income on a straight-line basis.

In addition, net amortization of above and below market leases included in lease rental income was $ 0.8 million and $ 0.8 million for the three months ended September 30, 2023 and 2022, respectively, and $ 2.3 million and $ 2.5 million for the nine months ended September 30, 2023 and 2022, respectively.

Lease rental income includes $ 2.2 million and $ 2.2 million for the three months ended March 31, 2024 and 2023, respectively, to recognize lease rental income on a straight-line basis.

In addition, net amortization of above and below market leases included in lease rental income was $ 0.7 million and $ 0.8 million for the three months ended March 31, 2024 and 2023, respectively.

American Assets Trust, Inc.

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Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

The principal components of rental expenses are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Rental operating $ 13,716 $ 12,440

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Marketing 1,029 508

Rent 885 815 2,651 2,405

Hawaii excise tax 1,035 971

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Total rental expenses $ 29,841 $ 27,506

OTHER INCOME (EXPENSE), NET

The principal components of other income (expense), net, are as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

OTHER INCOME, NET

The principal components of other income, net, are as follows (in thousands):

Three Months Ended March 31,

Interest and investment income $ 589 $ 434

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RELATED PARTY TRANSACTIONS

During the first quarter of 2019, we terminated a lease agreement with American Assets, Inc.

("AAI"), an entity owned and controlled by Ernest Rady, our Chief Executive Officer and Chairman of the Board, and entered into a new lease agreement with AAI for office space at Torrey Reserve Campus.

Rents commenced on March 1, 2019 for an initial lease term of three years at an average annual rental rate of $ 0.2 million.

During the third quarter of 2020, we entered into a new lease with AAI for office space at Torrey Point to replace its existing lease at Torrey Reserve Campus.

During the third quarter of 2020, we entered into a lease with American Assets, Inc.

("AAI"), an entity owned and controlled by Ernest Rady, our Chief Executive Officer and Chairman of the Board, for office space at Torrey Point to replace a previously existing lease with AAI at Torrey Reserve Campus.

Rents commenced on March 1, 2021 for an initial lease term of ten years at an average annual rental rate of $ 0.2 million.

Rental revenue recognized on the AAI leases of $ 0.2 million and $ 0.2 million for the nine months ended September 30, 2023 and 2022, respectively, is included in rental income on the statements of comprehensive income.

Rental revenue recognized on the AAI lease of $ 0.1 million and $ 0.1 million for the three months ended March 31, 2024 and 2023, respectively, is included in rental income on the statements of comprehensive income.

On occasion, the company utilizes aircraft services provided by AAI Aviation, Inc.

("AAIA"), an entity owned and controlled by Mr.

For the nine months ended September 30, 2023 and 2022, we incurred approximately $ 0.1 million and $ 0.2 million of expenses, respectively, related to aircraft services of AAIA or reimbursement to Mr.

For the three months ended March 31, 2024 and 2023, we incurred approximately $ 0.02 million and $ 0.1 million of expenses, respectively, related to aircraft services of AAIA or reimbursement to Mr.

Rady (or his trust) for use of the aircraft owned by AAIA.

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The Waikiki Beach Walk entities have a 47.7 % investment in WBW CHP LLC, an entity that was formed to, among other things, construct a chilled water plant to provide air conditioning to the property and other adjacent facilities.

The operating expenses of WBW CHP LLC are recovered through reimbursements from its members, and reimbursements to WBW CHP LLC of $ 0.9 million and $ 0.9 million for the nine months ended September 30, 2023 and 2022, respectively, are included in rental expenses on the consolidated statements of comprehensive income.

The operating expenses of WBW CHP LLC are recovered through reimbursements from its members, and reimbursements to WBW CHP LLC of $ 0.3 million and $ 0.3 million for the three months ended March 31, 2024 and 2023, respectively, are included in rental expenses on the consolidated statements of comprehensive income.

American Assets Trust, Inc.

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Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

SEGMENT REPORTING

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The following table represents operating activity within our reportable segments (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Property revenue $ 51,682 $ 50,970

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Notes to Consolidated Financial Statements—(Continued)

September 30, 2023

March 31, 2024

The following table is a reconciliation of segment profit to net income attributable to stockholders (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Total segments’ profit $ 69,608 $ 68,616

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The following table shows net real estate and secured note payable balances for each of the segments (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Net Real Estate

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$ 75,000 $ 75,000

(1) Excludes debt issuance costs of $ 0.4 million and $ 0.4 million for each of the periods ended September 30, 2023 and December 31, 2022, respectively.

Capital expenditures for each segment for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

(1) Excludes debt issuance costs of $ 0.3 million and $ 0.3 million for each of the periods ended March 31, 2024 and December 31, 2023, respectively.

Capital expenditures for each segment for the three months ended March 31, 2024 and 2023 were as follows (in thousands):

Three Months Ended March 31,

Capital Expenditures (1)

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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.

What changed 10-Q

Item 1. Financial Statements