What changed in this filing

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Item 1. Financial Statements

2024-08-02 compared with 2024-05-03 · 193 added, 141 removed, 788 unchanged (30% of the section changed)

3 unchanged sentences

(In Thousands, Except Share Data)

March 31, December 31,

June 30, December 31,

Real estate, at cost

20 unchanged sentences

stockholders’ equity

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

Common stock, $ 0.01 par value, 490,000,000 shares authorized, 60,901,583 and 60,895,786 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,472,569 1,469,206

10 unchanged sentences

(In Thousands, Except Shares and Per Share Data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Rental income $ 105,094 $ 103,901 $ 210,115 $ 206,611

24 unchanged sentences

Net income $ 15,294 $ 15,397 $ 39,917 $ 36,063

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

Other comprehensive income - unrealized (loss) income on swap derivatives during the period ( 850 ) 4,360 542 2,091

Reclassification of amortization of forward-starting swap included in interest expense ( 99 ) ( 98 ) ( 197 ) ( 952 )

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 — — — 12,099 — 3,195 15,294

Issuance of restricted stock 9,180 — — — — — —

Forfeiture of restricted stock ( 2,088 ) — — — — — —

Dividends declared and paid — — — ( 20,402 ) — ( 5,421 ) ( 25,823 )

Stock-based compensation — — 1,746 — — — 1,746

Other comprehensive loss - change in value of interest rate swaps — — — — ( 669 ) ( 181 ) ( 850 )

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

Balance at June 30, 2024 60,901,583 $ 609 $ 1,472,569 $ ( 289,486 ) $ 8,557 $ ( 46,593 ) $ 1,145,656

American Assets Trust, Inc.

13 unchanged sentences

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

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

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

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

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

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

2 unchanged sentences

(In Thousands)

Three Months Ended March 31,

Six Months Ended June 30,

OPERATING ACTIVITIES

4 unchanged sentences

Amortization of debt issuance costs and debt discounts 1,670 1,718

Provision for uncollectable rental income 418 518

Provision for uncollectible rental income 490 739

Stock-based compensation expense 3,363 4,145

Lease termination income 11,065 —

Other noncash interest expense, net ( 197 ) ( 952 )

17 unchanged sentences

Dividends paid to common stock and unitholders ( 51,644 ) ( 50,756 )

Shares withheld for employee taxes — —

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

Net cash used in financing activities ( 51,644 ) ( 13,894 )

Net increase in cash and cash equivalents 31,992 35,138

5 unchanged sentences

(In Thousands, Except Unit Data)

March 31, December 31,

June 30, December 31,

Real estate, at cost

18 unchanged sentences

Commitments and contingencies (Note 11)

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

Limited partners' capital, 16,181,537 and 16,181,537 units issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

( 49,416 ) ( 46,936 )

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

General partner's capital, 60,901,583 and 60,895,786 units issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

1,183,692 1,189,576

6 unchanged sentences

(In Thousands, Except Shares and Per Unit Data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Rental income $ 105,094 $ 103,901 $ 210,115 $ 206,611

24 unchanged sentences

Net income $ 15,294 $ 15,397 $ 39,917 $ 36,063

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

Other comprehensive income - unrealized (loss) income on swap derivatives during the period ( 850 ) 4,360 542 2,091

Reclassification of amortization of forward-starting swap included in interest expense ( 99 ) ( 98 ) ( 197 ) ( 952 )

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 — 3,195 — 12,099 — 15,294

Issuance of restricted units — — 9,180 — — —

Forfeiture of restricted units — — ( 2,088 ) — — —

Distributions — ( 5,421 ) — ( 20,402 ) — ( 25,823 )

Stock-based compensation — — — 1,746 — 1,746

Other comprehensive loss - change in value of interest rate swap — — — — ( 850 ) ( 850 )

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

Balance at June 30, 2024 16,181,537 $ ( 49,416 ) 60,901,583 $ 1,183,692 $ 11,380 $ 1,145,656

Limited Partners' Capital (1)

10 unchanged sentences

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

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 swaps 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

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

4 unchanged sentences

(Unaudited, In Thousands)

Three Months Ended March 31,

Six Months Ended June 30,

OPERATING ACTIVITIES

4 unchanged sentences

Amortization of debt issuance costs and debt discounts 1,670 1,718

Provision for uncollectable rental income 418 518

Provision for uncollectible rental income 490 739

Stock-based compensation expense 3,363 4,145

Lease termination income 11,065 —

Other noncash interest expense, net ( 197 ) ( 952 )

17 unchanged sentences

Distributions ( 51,644 ) ( 50,756 )

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

Net cash used in financing activities ( 51,644 ) ( 13,894 )

Net increase in cash and cash equivalents 31,992 35,138

5 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

We are a full service, vertically integrated, and self-administered REIT with approximately 228 employees providing substantial in-house expertise in asset management, property management, property development, leasing, tenant improvement construction, acquisitions, repositioning, redevelopment and financing.

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.

As of June 30, 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 June 30, 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:

22 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

June 30, 2024

Basis of Presentation

1 unchanged sentence

The equity interests of other investors in our Operating Partnership are reflected as noncontrolling interests.

The company follows the Financial Accounting Standards Board (the "FASB") guidance for determining whether an entity is a variable interest entity (“VIE”) and requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE.

The company follows the Financial Accounting Standards Board (the "FASB") guidance for determining whether an entity is a variable interest entity (“VIE”), which requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE.

Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

14 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental cash flow information

10 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

June 30, 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 three months ended March 31, 2024.

There have been no changes to our significant accounting policies during the six months ended June 30, 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 March 31, 2024 and December 31, 2023 was approximately $ 1.4 million and $ 1.4 million, respectively.

The provision for doubtful accounts at June 30, 2024 and December 31, 2023 was approximately $ 1.4 million and $ 1.4 million, respectively.

Recent Accounting Pronouncements

10 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

June 30, 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 March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

The following summarizes our acquired lease intangibles and leasing costs, which are included in other assets and other liabilities and deferred credits, as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

In-place leases $ 51,354 $ 51,575

24 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

June 30, 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 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.

However, as of June 30, 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):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

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

8 unchanged sentences

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):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Carrying Value Fair Value Carrying Value Fair Value

7 unchanged sentences

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

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):

The following is a summary of the terms of our outstanding interest rate swaps as of June 30, 2024 (dollars in thousands):

Swap Counterparty Notional Amount Effective Date Maturity Date Fair Value

8 unchanged sentences

During the next twelve months, we estimate the cash flow hedges in place will reduce interest expense by approximately $ 0.8 million.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative.

3 unchanged sentences

Other assets consist of the following (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Leasing commissions, net of accumulated amortization of $ 51,292 and $ 47,978 , respectively

9 unchanged sentences

Total other assets $ 97,924 $ 99,644

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

OTHER LIABILITIES AND DEFERRED CREDITS

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Acquired below market leases, net $ 15,089 $ 16,537

15 unchanged sentences

loan agreement, each discussed below.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

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 March 31, 2024 and December 31, 2023 (in thousands):

The following table is a summary of our total secured notes payable outstanding as of June 30, 2024 and December 31, 2023 (in thousands):

Principal Balance as of Stated Interest Rate Stated Maturity Date

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

Description of Debt June 30, 2024 December 31, 2023 as of June 30, 2024

City Center Bellevue (1)

7 unchanged sentences

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

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

As of June 30, 2024, the Operating Partnership was in compliance with these financial covenants.

Unsecured notes payable

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):

The following table is a summary of the Operating Partnership's total unsecured notes payable outstanding as of June 30, 2024 and December 31, 2023 (in thousands):

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

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

June 30, 2024 December 31, 2023 as of June 30, 2024

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

22 unchanged sentences

(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.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

(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.

On July 18, 2024, we borrowed $ 100 million on our Revolver Loan (as defined below) to repay the entirety of our Series F Notes upon their maturity on July 19, 2024.

(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.

10 unchanged sentences

• A maximum aggregate debt ratio of 60 %,

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

• A minimum debt service ratio of 1.5 x,

1 unchanged sentence

• 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.

As of June 30, 2024, the Operating Partnership was in compliance with all then in-place 3.375 % Senior Notes covenants.

Senior Guaranteed Notes

7 unchanged sentences

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.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

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 18, 2024, we borrowed $ 100 million on our Revolver Loan (as defined below) to repay the entirety of our Series F Notes upon their maturity on July 19, 2024.

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.

4 unchanged sentences

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.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

As of June 30, 2024, the Operating Partnership was in compliance with all loan covenants.

Third Amended and Restated Credit Facility

3 unchanged sentences

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 %.

As of June 30, 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 $ 0.97 million of net debt issuance costs which are recorded in other assets, net on the consolidated balance sheet.

For the six months ended June 30, 2024, the weighted average interest rate on the Revolver Loan was 6.53 %.

On July 18, 2024, we borrowed $ 100 million on our Revolver Loan to repay the entirety of our Series F Notes upon their maturity on July 19, 2024.

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.

1 unchanged sentence

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 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,

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

• 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,

3 unchanged sentences

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.

As of June 30, 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

1 unchanged sentence

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.

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

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

As of June 30, 2024, the entirety of the principal amounts of Term Loan B and Term Loan C were outstanding.

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.

4 unchanged sentences

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 March 31, 2024.

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

During the six months ended June 30, 2024, no common units were converted into shares of our common stock.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

Earnings Per Unit of the Operating Partnership

2 unchanged sentences

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 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.

The calculation of diluted EPU for the three months ended June 30, 2024 and 2023 does not include the weighted average of 583,239 and 571,999 unvested outstanding Operating Partnership units, respectively, and for the six months ended June 30, 2024 and 2023 does not include the weighted average of 584,225 and 572,623 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.

2 unchanged sentences

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

For the six months ended June 30, 2024, 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 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.

As of June 30, 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:

As of June 30, 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 six months ended June 30, 2024:

Period Amount per

1 unchanged sentence

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

Second Quarter 2024 $ 0.335 April 1, 2024 to June 30, 2024 June 20, 2024

Taxability of Dividends

3 unchanged sentences

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 three months ended March 31, 2024:

Units Weighted Average Grant Date Fair Value

Nonvested at January 1, 2024 585,865 $ 17.95

Forfeited ( 1,295 ) 17.32

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.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

June 30, 2024

The following table summarizes the activity of restricted stock awards during the six months ended June 30, 2024:

Units Weighted Average Grant Date Fair Value

Nonvested at January 1, 2024 585,865 $ 17.95

Granted 9,180 21.79

Vested ( 10,348 ) 19.33

Forfeited ( 3,383 ) 16.80

Nonvested at June 30, 2024 581,314 $ 17.65

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $ 1.7 million and $ 2.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 3.4 million and $ 4.1 million for the six months ended June 30, 2024 and 2023, respectively, which is included in general and administrative expenses on the consolidated statements of comprehensive income.

Unrecognized compensation expense was $ 6.1 million at June 30, 2024.

Earnings Per Share

1 unchanged sentence

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 585,210 and 573,253 for the three months ended March 31, 2024 and 2023, respectively.

The weighted average unvested shares outstanding, which are considered participating securities, were 583,239 and 571,999 for the three months ended June 30, 2024 and 2023, respectively, and 584,225 and 572,623 for the six months ended June 30, 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 months ended March 31, 2024 and 2023, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable.

For the three and six months ended June 30, 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)

June 30, 2024

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net income $ 15,294 $ 15,397 $ 39,917 $ 36,063

8 unchanged sentences

Income from operations attributable to unitholders in the Operating Partnership

3,195 3,224 8,362 7,565

Net income attributable to common stockholders—diluted

12 unchanged sentences

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 $ 0.9 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 June 30, 2024 and December 31, 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 and six months ended June 30, 2024, we recorded income tax expense of $ 0.2 million and $ 0.5 million, respectively.

For the three and six months ended June 30, 2023, we recorded income tax expense of $ 0.2 million and $ 0.5 million, respectively.

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

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.

June 30, 2024

COMMITMENTS AND CONTINGENCIES

20 unchanged sentences

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.

2 unchanged sentences

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 $ 7.9 million based on operating performance through March 31, 2024.

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 $ 8.1 million based on operating performance through June 30, 2024.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

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

8 unchanged sentences

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

Tenants in the office industry accounted for 46.5 % of total revenues for the six months ended June 30, 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.

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

Furthermore, tenants in the retail industry accounted for 23.7 % of total revenues for the six months ended June 30, 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.

For the six months ended June 30, 2024 and 2023, no tenant accounted for more than 10% of our total rental revenue.

Lessor Operating Leases

11 unchanged sentences

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

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.

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

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

June 30, 2024

As of June 30, 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 (six months ending December 31, 2024) $ 123,201

Thereafter 249,046

10 unchanged sentences

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.

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

As of June 30, 2024, current annual payments under the operating leases are as follows for the years ended December 31 (in thousands):

2024 (six months ending December 31, 2024) $ 1,740

Thereafter 8,959

5 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

June 30, 2024

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Operating lease cost $ 815 $ 927 $ 1,786 $ 1,854

4 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

Operating cash flow information:

4 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Lease rental income

7 unchanged sentences

Total rental income $ 105,094 $ 103,901 $ 210,115 $ 206,611

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.

Lease rental income includes $ 0.4 million and $ 1.0 million for the three months ended June 30, 2024 and 2023, respectively, and $ 2.6 million and $ 3.2 million for the six months ended June 30, 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 June 30, 2024 and 2023, respectively, and $ 1.4 million and $ 1.6 million for the six months ended June 30, 2024 and 2023, respectively.

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

June 30, 2024

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Rental operating $ 13,452 $ 12,911 $ 27,167 $ 25,351

2 unchanged sentences

Marketing 611 569 1,640 1,077

Rent 769 883 1,694 1,766

Hawaii excise tax 1,040 1,016 2,075 1,987

3 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Interest and investment income $ 990 $ 460 $ 1,579 $ 893

1 unchanged sentence

Other non-operating income — — 10,000 6,515

Total other income (expense), net $ 10,329 $ 6,679

Total other income, net $ 789 $ 273 $ 11,118 $ 6,951

RELATED PARTY TRANSACTIONS

2 unchanged sentences

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 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.

Rental revenue recognized on the AAI lease of $ 0.1 million and $ 0.1 million for the six months ended June 30, 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 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.

For the six months ended June 30, 2024 and 2023, we incurred approximately $ 0.0 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.

1 unchanged sentence

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 $ 0.3 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.

The operating expenses of WBW CHP LLC are recovered through reimbursements from its members, and reimbursements to WBW CHP LLC of $ 0.5 million and $ 0.5 million for the six months ended June 30, 2024 and 2023, respectively, are included in rental expenses on the consolidated statements of comprehensive income.

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

June 30, 2024

SEGMENT REPORTING

14 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Property revenue $ 51,310 $ 52,219 $ 102,992 $ 103,189

16 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

March 31, 2024

June 30, 2024

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Total segments’ profit $ 70,542 $ 69,924 $ 140,150 $ 138,541

9 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Net Real Estate

7 unchanged sentences

$ 75,000 $ 75,000

(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,

(1) Excludes debt issuance costs of $ 0.3 million and $ 0.3 million for each of the periods ended June 30, 2024 and December 31, 2023, respectively.

Capital expenditures for each segment for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Capital Expenditures (1)

5 unchanged sentences

(1) Capital expenditures represent cash paid for capital expenditures during the period and include leasing commissions paid.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

SUBSEQUENT EVENT

On July 18, 2024, we borrowed $ 100 million on our Revolver Loan to repay the entirety of our Series F Notes upon their maturity on July 19, 2024.

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