What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-02 compared with 2024-05-03 · 237 added, 101 removed, 319 unchanged (51% of the section changed)

39 unchanged sentences

We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, or new information, data or methods, future events or other changes.

For a further discussion of these and other factors

that could impact our future results, performance or transactions, see the section entitled “Item 1A.

For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Item 1A.

Risk Factors” contained herein and in our annual report on Form 10-K for the year ended December 31, 2023.

1 unchanged sentence

We are a full service, vertically integrated and self-administered REIT that owns, operates, acquires and develops high quality retail, office, multifamily and mixed-use properties in attractive, high-barrier-to-entry markets in Southern California, Northern California, Washington, Oregon, Texas and Hawaii.

As of March 31, 2024, our portfolio was comprised of twelve retail shopping centers;

As of June 30, 2024, our portfolio was comprised of twelve retail shopping centers;

twelve office properties;

1 unchanged sentence

and six multifamily properties.

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

Additionally, as of June 30, 2024, we owned land at three of our properties that we classified as held for development and/or construction in progress.

Our core markets include San Diego, California;

4 unchanged sentences

Rady or his affiliates, including the Ernest Rady Trust U/D/T March 13, 1983, or the Rady Trust, and did not have any operating activity until the consummation of our initial public offering on January 19, 2011.

Our Company, as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.8% of our Operating Partnership as of March 31, 2024.

Our Company, as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.8% of our Operating Partnership as of June 30, 2024.

Accordingly, we consolidate the assets, liabilities and results of operations of our Operating Partnership.

14 unchanged sentences

and the ability to maintain historic occupancy and rental rates.

In consideration of these measures, we generally remove properties from same-store properties when we see a decline in a property's annualized base rent, occupancy and operating income within the calendar year as a direct result of ongoing redevelopment, development or expansion activity.

In consideration of these measures, we generally remove properties from same-store properties when we see a decline in a property's annualized base rent, occupancy and operating income within the

calendar year as a direct result of ongoing redevelopment, development or expansion activity.

Acquired properties are classified into same-store properties once we have owned such properties for the entirety of comparable period(s) and the properties are not under significant development or expansion.

Below is a summary of our same-store and redevelopment same-store composition for the three months ended March 31, 2024 and 2023.

Bel-Spring 520 is classified as a same-store property when compared to the designation for the three months ended March 31, 2023, because the property was acquired on March 8, 2022.

The 710 building at Lloyd Portfolio is classified as same-store property when compared to the designation for the three months ended March 31, 2023, because the property has been in operation for a full year since it was placed in service in November of 2022.

Below is a summary of our same-store and redevelopment same-store composition for the three and six months ended June 30, 2024 and 2023.

Bel-Spring 520 is classified as a same-store property when compared to the designation for the three and six months ended June 30, 2023, because the property was acquired on March 8, 2022.

The 710 building at Lloyd Portfolio is classified as same-store property when compared to the designation for the three and six months ended June 30, 2023, because the property has been in operation for a full year since it was placed in service in November of 2022.

One Beach Street continues to be identified as a same-store redevelopment property due to significant redevelopment activity.

Retail same-store net operating income decreased approximately 1.1% for the three months ended March 31, 2024 compared to the same period in 2023.

Office same-store net operating income increased 1.6% for the three months ended March 31, 2024 compared to the same period in 2023.

Three Months Ended March 31,

Retail same-store net operating income increased approximately 0.3% for the six months ended June 30, 2024 compared to the same period in 2023.

Office same-store net operating income decreased 0.3% for the six months ended June 30, 2024 compared to the same period in 2023.

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

2024 2023 2024 2023

Same-Store 30 30 30 29

7 unchanged sentences

We evaluate our properties on an ongoing basis to identify these types of opportunities.

We intend to opportunistically pursue projects in our development pipeline, including future phases of La Jolla Commons and Lloyd Portfolio, as well as other redevelopments at Waikele Center and One Beach Street.

We intend to opportunistically pursue projects in our development pipeline, including future phases of La Jolla Commons, Lloyd Portfolio and development of multifamily units at Lomas Santa Fe Plaza, as well as other redevelopments at Waikele Center and One Beach Street.

The commencement of these developments is based on, among other things, market conditions and our evaluation of whether such opportunities would generate appropriate risk-adjusted financial returns.

11 unchanged sentences

Any reduction in our tenants' abilities to pay base rent, percentage rent or other charges will adversely affect our financial condition and results of operations.

During the three months ended March 31, 2024, we signed 18 office leases for a total of 124,605 square feet of office space including 80,434 square feet of comparable renewal office space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash basis and increase on a GAAP basis of 7.9% and 10.9%, respectively.

During the three months ended June 30, 2024, we signed 18 office leases for a total of 96,042 square feet of office space including 52,618 square feet of comparable renewal office space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash basis and increase on a GAAP basis of 5.2% and 14.5%, respectively.

New office leases for comparable spaces were signed for 20,978 square feet at an average rental rate increase on a cash and GAAP basis of 4.1% and 26.4%, respectively.

Renewals for comparable office spaces were signed for 31,640 square feet at an average rental rate increase on a cash basis and increase on a GAAP basis of 5.7% and 9.7%, respectively.

Tenant improvements and incentives were $38.22 per square foot of office space for comparable new leases for the three months ended March 31, 2024, mainly due to new tenants at Lloyd District and Torrey Reserve.

During the three months ended March 31, 2024, we signed 30 retail leases for a total of 109,414 square feet of retail space including 103,311 square feet of comparable renewal retail space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash and GAAP basis of 1.9% and 22.3%, respectively.

Tenant improvements and incentives were $34.71 per square foot of office space for comparable new leases for the three months ended June 30, 2024, mainly due to a new tenant at First & Main.

During the three months ended June 30, 2024, we signed 19 retail leases for a total of 68,735 square feet of retail space including 64,127 square feet of comparable renewal retail space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash and GAAP basis of 5.8% and 34.4%, respectively.

New retail leases for comparable spaces were signed for 1,064 square feet at an average rental rate increase on a cash and GAAP basis of 22.7% and 0%, respectively.

Renewals for comparable retail spaces were signed for 63,063 square feet at an average rental rate increase on a cash and GAAP basis of 4.7% and 17.9%, respectively.

Tenant improvements and incentives were $41.14 per square foot of retail space for comparable new leases for the three months ended March 31, 2024, mainly due to new tenants at Del Monte Center and Solana Beach Towne Centre.

Tenant improvements and incentives were $18.80 per square foot of retail space for comparable new leases for the three months ended June 30, 2024, mainly due to a new tenant at Waikiki Beach Walk Retail.

The rental increases associated with comparable spaces generally include all leases signed in arms-length transactions reflecting market leverage between landlords and tenants during the period.

13 unchanged sentences

We cease capitalization on the portion substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with any remaining portion under construction.

We capitalized external and internal costs related to both development and redevelopment activities combined of $3.5 million and $9.6 million for the three months ended March 31, 2024 and 2023, respectively.

We capitalized external and internal costs related to other property improvements combined of $9.6 million and $12.4 million for the three months ended March 31, 2024 and 2023, respectively.

We capitalized external and internal costs related to both development and redevelopment activities combined of $4.8 million and $5.6 million for the three months ended June 30, 2024 and 2023, respectively, and $8.3 million and $15.3 million for the six months ended June 30, 2024 and 2023, respectively.

We capitalized external and internal costs related to other property improvements combined of $14.6 million and $13.2 million for the three months ended June 30, 2024 and 2023, respectively, and $24.1 million and $25.5 million for the six months ended June 30, 2024 and 2023, respectively

Interest costs on developments and major redevelopments are capitalized as part of developments and redevelopments not yet placed in service.

2 unchanged sentences

If the time period for capitalizing interest is extended, however, more interest is capitalized, thereby decreasing interest expense and increasing net income during that period.

We capitalized interest costs related to development activities of $2.1 million and $1.8 million for the three months ended March 31, 2024 and 2023, respectively.

We capitalized interest costs related to development activities of $2.1 million and $1.9 million for the three months ended June 30, 2024 and 2023, respectively, and $4.2 million and $3.8 million for the six months ended June 30, 2024 and 2023, respectively.

Results of Operations

For our discussion of results of operations, we have provided information on a total portfolio and same-store basis.

Comparison of the three months ended March 31, 2024 to the three months ended March 31, 2023

The following summarizes our consolidated results of operations for the three months ended March 31, 2024 compared to our consolidated results of operations for the three months ended March 31, 2023.

As of March 31, 2024 and March 31, 2023, our operating portfolio was comprised of 31 retail, office, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,110 residential units (including 120 RV spaces) and a 369-room hotel.

Additionally, as of March 31, 2024 and March 31, 2023, we owned land at three of our properties that we classified as held for development and/or construction in progress.

The following table sets forth selected data from our unaudited consolidated statements of comprehensive income for the three months ended March 31, 2024 and 2023 (dollars in thousands):

Three Months Ended March 31, Change %

Comparison of the three months ended June 30, 2024 to the three months ended June 30, 2023

The following summarizes our consolidated results of operations for the three months ended June 30, 2024 compared to our consolidated results of operations for the three months ended June 30, 2023.

As of June 30, 2024 and June 30, 2023, our operating portfolio was comprised of 31 retail, office, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,110 residential units (including 120 RV spaces) and a 369-room hotel.

Additionally, as of June 30, 2024 and June 30, 2023, we owned land at three of our properties that we classified as held for development and/or construction in progress.

The following table sets forth selected data from our unaudited consolidated statements of comprehensive income for the three months ended June 30, 2024 and 2023 (dollars in thousands):

Three Months Ended June 30, Change %

Rental income $ 105,094 $ 103,901 $ 1,193 1 %

8 unchanged sentences

Interest expense, net (16,289) (16,368) 79 —

Other income (expense), net 10,329 6,679 3,650 55

Other income, net 789 273 516 189

Net income 15,294 15,397 (103) (1)

6 unchanged sentences

Total property revenue consists of rental revenue and other property income.

Total property revenue increased $2.9 million to $110.7 million for the three months ended March 31, 2024 compared to $107.8 million for the three months ended March 31, 2023.

The percentage leased was as follows for each segment as of March 31, 2024 and 2023:

Total property revenue increased $1.2 million to $110.9 million for the three months ended June 30, 2024 compared to $109.7 million for the three months ended June 30, 2023.

The percentage leased was as follows for each segment as of June 30, 2024 and 2023:

Percentage Leased (1)

4 unchanged sentences

95.7 % 94.6 %

(1) The percentage leased for our retail and office segments and the retail portion of the mixed-use segment includes square footage under leases, including leases which may not have commenced as of March 31, 2024 or 2023, as applicable.

Percentage leased for our multifamily properties includes total units rented and occupied as of March 31, 2024 or 2023, as applicable.

Percentage leased for our multifamily properties includes total units rented and occupied as of June 30, 2024 or 2023, as applicable.

(2) Includes the retail portion of the mixed-use property only.

The increase in total property revenue was attributable primarily to new retail leases, higher average monthly base rents within the multifamily segment and an increase in occupancy and rate at Waikiki Beach Walk Embassy Suites™ and factors discussed below.

The increase in total property revenue was attributable primarily to higher average monthly base rents within the multifamily segment, new tenant leases commenced within the retail segment and an increase in occupancy and rate at Waikiki Beach Walk Embassy Suites™ and factors discussed below.

Rental revenues .

Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents.

Rental revenue increased $2.3 million, or 2%, to $105.0 million for the three months ended March 31, 2024 and March 31, 2023.

Rental revenue increased $1.2 million, or 1%, to $105.1 million for the three months ended June 30, 2024 and June 30, 2023.

Rental revenue by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio (1)

Three Months Ended March 31, Change % Three Months Ended March 31, Change %

Three Months Ended June 30, Change % Three Months Ended June 30, Change %

2024 2023 2024 2023

5 unchanged sentences

(1) For this table and tables following, the same-store portfolio excludes One Beach Street due to significant redevelopment and land held for development.

Total office rental revenue increased $0.3 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to higher annualized base rents at Torrey Reserve, Solana Crossing, Torrey Point and La Jolla Commons attributable to new leases and scheduled rent increases.

Total retail rental revenue increased $0.5 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to new tenant leases and scheduled rent increases.

These increases were primarily related to Carmel Mountain Plaza, Waikele Center and Del Monte Center.

Multifamily revenue increased $0.8 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to an overall increase in average monthly base rent, with a slight decrease in occupancy.

Average monthly base rent and occupancy was $2,681 and 92.3%, respectively for the three months ended March 31, 2024 compared to $2,514 and 93.0%, respectively for the three months ended March 31, 2023.

Total mixed-use rental revenue increased $0.8 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to an increase in tourism, which led to an increase in average occupancy and revenue per available room to 89.8% and $320 for the three months ended March 31, 2024, respectively, compared to 81.9% and $302 for the three months ended March 31, 2023, respectively.

Total office rental revenue decreased $1.0 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to a decrease of $0.6 million in cost recoveries, partially due to prior year tax refunds received at La Jolla Commons and First & Main that were passed back to tenants, and a decrease of $0.4 million in rental revenue driven by lower occupancy and annualized base rents at Lloyd Portfolio.

Total retail rental revenue increased $0.8 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to new tenant leases and scheduled rent increases at Solana Beach Towne Center, Waikele Center and Del Monte Center.

Additionally, there was an increase of $0.4 million in cost recoveries.

Multifamily revenue increased $1.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an overall increase in average monthly base rent and an increase in occupancy.

Average monthly base rent and occupancy was $2,730 and 90.8%, respectively for the three months ended June 30, 2024 compared to $2,587 and 87.7%, respectively for the three months ended June 30, 2023.

Total mixed-use rental revenue increased $0.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an increase in tourism, which led to an increase in average occupancy and revenue per available room to 86.4% and $317 for the three months ended June 30, 2024, respectively, compared to 84.4% and $312 for the three months ended June 30, 2023, respectively.

Other property income .

Other property income increased $0.6 million, or 12%, to $5.7 million for the three months ended March 31, 2024 compared to $5.0 million for the three months ended March 31, 2023.

Other property income stayed flat at $5.8 million for the three months ended June 30, 2024 and three months ended June 30, 2023.

Other property income by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio

Three Months Ended March 31, Change % Three Months Ended March 31, Change %

Three Months Ended June 30, Change % Three Months Ended June 30, Change %

2024 2023 2024 2023

4 unchanged sentences

$ 5,796 $ 5,820 $ (24) — % $ 5,790 $ 5,814 $ (24) — %

Office other property income increased by $0.4 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to lease settlement fees received at Torrey Reserve.

Retail other property income decreased by $0.1 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to lease settlement fees received at Solana Beach Towne Center and Hassalo on Eighth - Retail in 2023.

Mixed-use other property income increased by $0.3 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to increased tourism and hotel occupancy which led to an increase in other room rental income at the hotel portion of our mixed-use property and an increase in parking garage income at the retail portion of our mixed-use property.

Office other property income increased by $0.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to lease settlement fees received at Torrey Reserve Campus.

Retail other property income decreased by $0.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to lease termination fees received at Carmel Mountain Plaza in 2023.

Mixed-use other property income increased by $0.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an increase in parking garage income at the retail portion of our mixed-use property.

Property Expenses

1 unchanged sentence

Total property expenses consist of rental expenses and real estate taxes.

Total property expenses increased $1.9 million, or 5%, to $41.1 million, for the three months ended March 31, 2024 compared to $39.1 million for the three months ended March 31, 2023.

Total property expenses increased $0.6 million, or 1%, to $40.3 million, for the three months ended June 30, 2024 compared to $39.8 million for the three months ended June 30, 2023.

Rental Expenses.

Rental expenses increased $2.3 million, or 8%, to $29.8 million for the three months ended March 31, 2024 compared to $27.5 million for the three months ended March 31, 2023.

Rental expenses increased $0.8 million, or 3%, to $29.5 million for the three months ended June 30, 2024 compared to $28.7 million for the three months ended June 30, 2023.

Rental expense by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio

Three Months Ended March 31, Change % Three Months Ended March 31, Change %

Three Months Ended June 30, Change % Three Months Ended June 30, Change %

2024 2023 2024 2023

4 unchanged sentences

$ 29,505 $ 28,711 $ 794 3 % $ 29,152 $ 28,474 $ 678 2 %

Office rental expense increased $0.6 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to an increase in utilities expenses, janitorial expenses, security services and insurance expense.

Retail rental expense increased $0.7 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to $0.5 million written off in the first quarter for non-recurring costs incurred in prior periods relating to construction in progress for then-prospective construction at Waikele Center.

Additionally, there was an increase in insurance expense and employee related costs.

Multifamily rental expense increased $0.4 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to an increase in insurance expense and employee related costs.

Mixed-use rental expense increased $0.6 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to an increase in hotel room expenses and employee related costs at the hotel portion of our mixed-use property.

Office rental expense increased $0.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an increase in janitorial expenses, security services and repairs and maintenance expense.

Retail rental expense increased $0.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an increase in facilities services and repairs and maintenance expense.

Multifamily rental expense increased $0.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an increase in insurance expense and facilities services.

Mixed-use rental expense increased $0.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an increase in repairs and maintenance expense and employee related costs at the retail portion of our mixed-use property.

Real Estate Taxes.

Real estate taxes decreased $0.4 million, or 3%, to $11.2 million for the three months ended March 31, 2024 compared to $11.6 million for the three months ended March 31, 2023.

Real estate taxes decreased $0.2 million, or 2%, to $10.8 million for the three months ended June 30, 2024 compared to $11.1 million for the three months ended June 30, 2023.

Real estate tax expense by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio

Three Months Ended March 31, Change % Three Months Ended March 31, Change %

Three Months Ended June 30, Change % Three Months Ended June 30, Change %

2024 2023 2024 2023

4 unchanged sentences

$ 10,843 $ 11,086 $ (243) (2) % $ 10,793 $ 11,058 $ (265) (2) %

Office real estate taxes decreased $0.4 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to a one-time real estate tax refund received at First & Main and a decrease in property tax assessments at City Center Bellevue.

Retail real estate taxes decreased $0.1 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to a decrease in property tax assessment at Alamo Quarry Market.

Mixed-use real estate taxes increased $0.1 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to an increase in property tax assessment.

Office real estate taxes decreased $0.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to real estate tax refunds received at La Jolla Commons and First & Main.

Multifamily real estate taxes decreased $0.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due real estate tax refunds received at Pacific Ridge Apartments.

Mixed-use real estate taxes increased $0.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an increase in property tax assessment.

Property Operating Income

Property operating income increased $1.0 million, or 1%, to $69.6 million for the three months ended March 31, 2024, compared to $68.6 million for the three months ended March 31, 2023.

Property operating income increased $0.6 million, or 1%, to $70.5 million for the three months ended June 30, 2024, compared to $69.9 million for the three months ended June 30, 2023.

Property operating income by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio

Three Months Ended March 31, Change % Three Months Ended March 31, Change %

Three Months Ended June 30, Change % Three Months Ended June 30, Change %

2024 2023 2024 2023

4 unchanged sentences

$ 70,542 $ 69,924 $ 618 1 % $ 70,939 $ 70,183 $ 756 1 %

Total office property operating income increased $0.5 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to higher annualized base rents at Torrey Reserve, Solana Crossing, Torrey Point and La Jolla Commons.

Additionally, there was an increase in other property income related to lease settlement fees received at Torrey Reserve and lower real estate taxes at City Center Bellevue and First & Main.

These increases were offset by higher rental expenses related to utilities expense, janitorial expense, security services and insurance expense.

Total retail property operating income decreased $0.2 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to increased rental expenses attributable to higher insurance expense, and employee-related costs, and $0.5 million written off in the first quarter for non-recurring costs incurred in prior periods relating to construction in progress for then-prospective construction at Waikele Center.

These decreases were offset by higher rental revenue at Carmel Mountain Plaza, Waikele Center and Del Monte Center due to new tenant leases and scheduled rent increases.

Total multifamily property operating income increased $0.3 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to higher rental revenue due to an overall increase in average monthly base rent to $2,681 for the three months ended March 31, 2024 compared to $2,514 for the three months ended March 31, 2023.

These increases were offset by higher rental expenses related to insurance expense and employee-related costs.

Total mixed-use property operating income increased $0.4 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to increase in tourism, which led to an increase in average occupancy and revenue per available room to 89.8% and $320, respectively, for the three months ended March 31, 2024, compared to 81.9% and $302, respectively, for the three months ended March 31, 2023.

This also led to an increase in other room rental income at the hotel portion of our mixed-use property.

These increases were offset by higher hotel room expenses and employee related costs at the hotel portion of our mixed-use property.

Total office property operating income decreased $1.0 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to a decrease of $0.6 million in cost recoveries, a decrease of $0.4 million in rental revenue driven by lower occupancy and annualized base rents at Lloyd Portfolio and an increase of $0.2 million in rental expenses related to janitorial expenses, security services and repairs and maintenance expense.

These decreases were offset by an increase in other property income related to lease settlement fees received at Torrey Reserve Campus and lower real estate taxes due to tax refunds received at La Jolla Commons and First & Main.

Total retail property operating income increased $0.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to higher rental revenue at Solana Beach Towne Center, Waikele Center and Del Monte Center due to new tenant leases and scheduled rent increases and an increase in cost recoveries.

These increases were offset by lower property income due to lease termination fees received at Carmel Mountain Plaza in 2023 and higher rental expenses attributable to facilities services and repairs and maintenance expense.

Total multifamily property operating income increased $1.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an overall increase in average monthly base rent and an increase in occupancy.

Average monthly base rent and occupancy was $2,730 and 90.8%, respectively, for the three months ended June 30, 2024 compared to $2,587 and 87.7%, respectively, for the three months ended June 30, 2023.

Total mixed-use property operating income increased $0.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to increase in tourism, which led to an increase in average occupancy and revenue per available room to 86.4% and $317, respectively, for the three months ended June 30, 2024, compared to 84.4% and $312, respectively, for the three months ended June 30, 2023.

There was also an increase in parking income at the retail portion of our mixed-use property.

These increases were offset by higher real estate taxes due to an increase in property tax assessment.

General and Administrative.

General and administrative expenses decreased $0.2 million, or 2%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This decrease was primarily due to lower general legal expense and stock-based compensation expense, attributable to a decrease in the number of restricted stock awards granted as part of our 2023 grant.

These decreases were offset by higher employee-related costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits.

General and administrative expenses increased $0.1 million, or 1%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

This increase was primarily due to higher employee-related costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits, offset by lower stock-based compensation expense, attributable to a decrease in the number of restricted stock awards granted as part of our 2023 grant.

Depreciation and Amortization.

Depreciation and amortization expense increased $0.3 million, or 1%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This was due to new building improvements and furniture and equipment assets placed into service in 2023.

Depreciation and amortization expense increased $1.2 million, or 4%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

This was due to new building improvements and tenant improvement assets placed into service and acceleration of assets related to a tenant vacating their space early at Torrey Reserve Campus.

Interest Expense, net.

Interest expense increased $0.5 million, or 3%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This increase was primarily due to higher interest on our $225 million Amended and Restated Term Loan Agreement and related amortization of loan fees.

These increases were offset by an increase in capitalized interest related to our development projects.

Other Income (Expense), Net.

Other income, net increased $3.7 million, or 55%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This increase was primarily due to the net settlement payment of approximately $10 million received during the first quarter of 2024 relating to building specifications for one of the existing buildings at our office project in University Town Center (San Diego), compared to the net settlement payment of approximately $6.3 million received on January 3, 2023 related to certain building systems at our Hassalo on Eighth property.

Interest expense decreased $0.1 million, or less than 1%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

This decrease was primarily due to an increase in capitalized interest related to our development projects offset by higher interest on our $225 million Amended and Restated Term Loan Agreement.

Other Income, net.

Other income, net increased $0.5 million, or 189%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

This increase was primarily due to interest and investment income attributed to higher yield on our average cash balance during the period.

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

The following summarizes our consolidated results of operations for the six months ended June 30, 2024 compared to our consolidated results of operations for the six months ended June 30, 2023.

The following table sets forth selected data from our unaudited consolidated statements of income for the six months ended June 30, 2024 and 2023 (dollars in thousands):

Six Months Ended June 30, Change %

Rental income $ 210,115 $ 206,611 $ 3,504 2 %

Other property income 11,470 10,864 606 6

Total property revenues 221,585 217,475 4,110 2

Rental expenses 59,346 56,216 3,130 6

Real estate taxes 22,089 22,718 (629) (3)

Total property expenses 81,435 78,934 2,501 3

Total property income 140,150 138,541 1,609 1

General and administrative (17,579) (17,608) 29 —

Depreciation and amortization (61,228) (59,724) (1,504) 3

Interest expense, net (32,544) (32,097) (447) 1

Other income, net 11,118 6,951 4,167 60

Net income 39,917 36,063 3,854 11

Net income attributable to restricted shares (391) (379) (12) 3

Net income attributable to unitholders in the Operating Partnership

(8,362) (7,565) (797) 11

Net income attributable to American Assets Trust, Inc.

$ 31,164 $ 28,119 $ 3,045 11 %

Total property revenues .

Total property revenue consists of rental revenue and other property income.

Total property revenue increased $4.1 million, or 2%, to $221.6 million for the six months ended June 30, 2024 compared to $217.5 million for the six months ended June 30, 2023.

The percentage leased was as follows for each segment as of June 30, 2024 and 2023:

Percentage Leased (1)

Office 86.6 % 87.4 %

Retail 94.5 % 94.6 %

Multifamily 90.0 % 85.9 %

Mixed-Use (2)

95.7 % 94.6 %

Percentage leased for our multifamily properties includes total units rented and occupied as of June 30, 2024 or 2023, as applicable.

(2) Includes the retail portion of the mixed-use property only.

The increase in total property revenue was attributable primarily to the factors discussed below.

Rental revenues .

Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents.

Rental revenue increased $3.5 million, or 2%, to $210.1 million for the six months ended June 30, 2024 compared to $206.6 million for the six months ended June 30, 2023.

Rental revenue by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio (1)

Six Months Ended June 30, Change % Six Months Ended June 30, Change %

2024 2023 2024 2023

Office $ 99,641 $ 100,290 $ (649) (1) $ 99,641 $ 100,290 $ (649) (1)

Retail 51,976 50,750 1,226 2 51,976 50,750 1,226 2

Multifamily 30,767 28,829 1,938 7 30,767 28,829 1,938 7

Mixed-Use 27,731 26,742 989 4 27,731 26,742 989 4

$ 210,115 $ 206,611 $ 3,504 2 % $ 210,115 $ 206,611 $ 3,504 2 %

(1) For this table and tables following, the same-store portfolio excludes One Beach Street due to significant redevelopment and land held for development.

Total office rental revenue decreased $0.6 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to a decrease of $0.9 million in cost recoveries at La Jolla Commons and First & Main as prior year tax refunds received were passed back to tenants.

This decrease was offset by higher rental revenue of $0.3 million at La Jolla Commons, Torrey Reserve Campus and Solana Crossing driven by higher annualized rents offset by lower occupancy and annualized base rents at Lloyd Portfolio.

Retail rental revenue increased $1.2 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to new tenant leases signed, scheduled rent increases and tenants previously on alternate rent reverting back to basic monthly rent.

These increases are primarily related to Carmel Mountain Plaza, Solana Beach Towne Center, Alamo Quarry Market and Del Monte Center.

Additionally, there was an increase in cost recoveries of $0.5 million.

Multifamily revenue increased $1.9 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to an overall increase in average monthly base rent and an increase in occupancy.

Average monthly base rent and occupancy was $2,705 and 91.6% for the six months ended June 30, 2024 compared to $2,549 and 90.3% for the six months ended June 30, 2023.

Mixed-use rental revenue increased $1.0 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to an increase in tourism, which led to an increase in average occupancy and revenue per available room to 88.1% and $318 for the six months ended June 30, 2024, respectively, compared to 83.2% and $307 for the six months ended June 30, 2023, respectively.

Other property income .

Other property income increased $0.6 million, or 6%, to $11.5 million for the six months ended June 30, 2024 compared to $10.9 million for the six months ended June 30, 2023.

Other property income by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio

Six Months Ended June 30, Change % Six Months Ended June 30, Change %

2024 2023 2024 2023

Office $ 3,351 $ 2,899 $ 452 16 $ 3,338 $ 2,892 $ 446 15

Retail 525 778 (253) (33) 525 778 (253) (33)

Multifamily 1,923 1,927 (4) — 1,923 1,927 (4) —

Mixed-Use 5,671 5,260 411 8 5,671 5,260 411 8

$ 11,470 $ 10,864 $ 606 6 % $ 11,457 $ 10,857 $ 600 6 %

Office other property income increased $0.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to lease settlement fees received at Torrey Reserve Campus.

Retail other property income decreased $0.3 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to lease termination fees received at Carmel Mountain Plaza and Solana Beach Towne Center in 2023.

Total mixed-use other property income increased $0.4 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to increased tourism and hotel occupancy which led to an increase in other room rental income at the hotel portion of our mixed-use property and increase in parking income at the retail portion of our mixed-use property.

Property Expenses

Total Property Expenses.

Total property expenses consist of rental expenses and real estate taxes.

Total property expenses increased by $2.5 million, or 3%, to $81.4 million for the six months ended June 30, 2024, compared to $78.9 million for the six months ended June 30, 2023.

This increase in total property expenses was attributable primarily to the factors discussed below .

Rental Expenses.

Rental expenses increased $3.1 million, or 6%, to $59.3 million for the six months ended June 30, 2024, compared to $56.2 million for the six months ended June 30, 2023.

Rental expense by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio

Six Months Ended June 30, Change % Six Months Ended June 30, Change %

2024 2023 2024 2023

Office $ 20,259 $ 19,404 $ 855 4 $ 19,654 $ 18,978 $ 676 4

Retail 9,195 8,230 965 12 9,195 8,230 965 12

Multifamily 10,291 9,745 546 6 10,291 9,745 546 6

Mixed-Use 19,601 18,837 764 4 19,601 18,837 764 4

$ 59,346 $ 56,216 $ 3,130 6 % $ 58,741 $ 55,790 $ 2,951 5 %

Office rental expenses increased $0.9 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to an increase in repairs and maintenance services, utilities expenses, facility services and insurance expense.

Retail rental expenses increased $1.0 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to $0.5 million written off in the first quarter for non-recurring costs incurred in prior periods relating to construction in progress for then-prospective construction at Waikele Center.

Additionally, there was an increase in security services, insurance expense and facilities services.

Multifamily rental expenses increased $0.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to an increase in facilities services, insurance expense and an increase in property-level personnel compensation expenses.

Total mixed-use rental expenses increased $0.8 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to an increase of $0.6 million in hotel room related expenses, employee costs and excise tax expenses at the hotel portion of our mixed-use property.

There was also an increase in rental expenses of $0.2 million at the retail portion of our mixed-use property related to excise tax and employee costs.

Real Estate Taxes.

Real estate tax expense remained largely unchanged at $22.1 million for both the six months ended June 30, 2024, and the six months ended June 30, 2023.

Real estate tax expense by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio

Six Months Ended June 30, Change % Six Months Ended June 30, Change %

2024 2023 2024 2023

Office $ 9,678 $ 10,310 $ (632) (6) $ 9,578 $ 10,233 $ (655) (6)

Retail 6,926 7,029 (103) (1) 6,926 7,029 (103) (1)

Multifamily 3,515 3,572 (57) (2) 3,515 3,572 (57) (2)

Mixed-Use 1,970 1,807 163 9 1,970 1,807 163 9

$ 22,089 $ 22,718 $ (629) (3) % $ 21,989 $ 22,641 $ (652) (3) %

Office real estate taxes decreased $0.6 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to real estate tax refunds received at La Jolla Commons and First & Main, offset by higher tax consultant fees related to these refunds.

Retail real estate taxes decreased $0.1 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to a real estate tax refund received at Del Monte Center.

Multifamily real estate taxes decreased $0.1 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to tax refunds received at Pacific Ridge Apartments.

Mixed-use real estate taxes increased $0.2 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to an increase in property tax assessment.

Property Operating Income

Property operating income increased $1.6 million, or 1%, to $140.2 million for the six months ended June 30, 2024, compared to $138.5 million for the six months ended June 30, 2023.

Property operating income by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio

Six Months Ended June 30, Change % Six Months Ended June 30, Change %

2024 2023 2024 2023

Office $ 73,055 $ 73,475 $ (420) (1) $ 73,747 $ 73,971 $ (224) —

Retail 36,380 36,269 111 — 36,380 36,269 111 —

Multifamily 18,884 17,439 1,445 8 18,884 17,439 1,445 8

Mixed-Use 11,831 11,358 473 4 11,831 11,358 473 4

$ 140,150 $ 138,541 $ 1,609 1 % $ 140,842 $ 139,037 $ 1,805 1 %

Total office property operating income decreased $0.4 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to higher operating expenses related to utilities expenses, repairs and facilities services and insurance expense.

Additionally, there was a decrease due to lower cost recoveries.

These decreases were partially offset by higher annualized base rents at Torrey Reserve Campus, La Jolla Commons and Solana Crossing, lease settlement fees received at Torrey Reserve Campus and lower real estate taxes due to refunds received at La Jolla Commons and First & Main.

Total retail property operating income increased $0.1 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to new tenant leases signed, scheduled rent increases and tenants previously on alternate rent reverting back to basic monthly rent and an increase in cost recoveries.

These increases were partially offset by higher facilities services and insurance expense, and $0.5 million written off in the first quarter of 2024 for non-recurring costs incurred in prior periods relating to construction in progress for then-prospective construction at Waikele Center.

Total multifamily property operating income increased $1.4 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to an overall increase in average monthly base rent and an increase in occupancy to $2,705 and 91.6%, respectively, for the six months ended June 30, 2024 compared to $2,549 and 90.3%, respectively, for the six months ended June 30, 2023.

This increase was partially offset by higher insurance expenses, facilities services and personnel compensation expenses.

Total mixed-use property operating income increased $0.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to the Waikiki Beach Walk hotel portion of our mixed use property, which had an increase in average occupancy and revenue per available room of 88.1% and $318 for the six months ended June 30, 2024, respectively, compared to 83.2% and $307 for the six months ended June 30, 2023, respectively.

This increase was partially offset by higher rental expenses related to room expenses, personnel costs, facilities expenses and excise tax expenses.

General and Administrative.

General and administrative expenses stayed flat at $17.6 million for the six months ended June 30, 2024 and six months ended June 30, 2023.

This was primarily due to higher employee-related costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits, offset by lower legal fees and stock-based compensation expense, attributable to a decrease in the number of restricted stock awards granted as part of our 2023 grant.

Depreciation and Amortization.

Depreciation and amortization expense increased $1.5 million, or 3%, to $61.2 million for the six months ended June 30, 2024, compared to $59.7 million for the six months ended June 30, 2023.

This was due to new building improvements and tenant improvement assets placed into service in 2024 and acceleration of assets related to a tenant vacating their space early at Torrey Reserve Campus.

Interest Expense, net.

Interest expense increased $0.4 million, or 1%, to $32.5 million for the six months ended June 30, 2024 compared to $32.1 million for the six months ended June 30, 2023.

This increase was primarily due to higher interest on our $225 million Amended and Restated Term Loan Agreement, partially offset by an increase in capitalized interest related to our development projects.

Other Income, net.

Other income, net increased $4.2 million, or 60%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

This increase was primarily due to the net settlement payment of approximately $10.0 million received during the first quarter of 2024 relating to building specifications for one of the existing buildings at our office project in University Town Center (San Diego), compared to the net settlement payment of approximately $6.3 million received on January 3, 2023 related to certain building systems at our Hassalo on Eighth property and an increase of $0.6 million in interest and investment income attributed to higher yield on our average cash balance during the period.

Liquidity and Capital Resources of American Assets Trust, Inc.

9 unchanged sentences

The company’s principal source of funding for its dividend payments is distributions it receives from the Operating Partnership.

As of March 31, 2024, the company owned an approximate 78.8% partnership interest in the Operating Partnership.

As of June 30, 2024, the company owned an approximate 78.8% partnership interest in the Operating Partnership.

The remaining approximately 21.2% are owned by non-affiliated investors and certain of the company's directors and executive officers.

8 unchanged sentences

We believe the Operating Partnership’s sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured line of credit, are adequate for it to make its distribution payments to the company and, in turn, for the company to make its dividend payments to its stockholders.

As of March 31, 2024, the company has determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months.

As of June 30, 2024, the company has determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months.

However, we cannot assure you that the Operating Partnership’s sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including its ability to make distribution payments to the company.

20 unchanged sentences

We intend to use the net proceeds to fund development or redevelopment activities, repay amounts outstanding from time to time under our amended and restated credit facility or other debt financing obligations, fund potential acquisition opportunities and/or for general corporate purposes.

Actual future sales will depend on a variety of factors including, but not

limited to, market conditions, the trading price of the company's common stock and the company's capital needs.

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

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

For the three months ended June 30, 2024, no shares of common stock were sold through the ATM equity program.

We have no obligation to sell the remaining shares available for sale under the ATM equity program.

9 unchanged sentences

must generally make annual distributions to its stockholders of at least 90% of its net taxable income.

As of March 31, 2024, we held $98.6 million in cash and cash equivalents.

As of June 30, 2024, we held $114.9 million in cash and cash equivalents.

Our short-term liquidity requirements consist primarily of operating expenses and other expenditures associated with our properties, regular debt service requirements, dividend payments to American Assets Trust, Inc.'s stockholders required to maintain its REIT status, distributions to our unitholders, capital expenditures and, potentially, acquisitions.

7 unchanged sentences

Our ability to access the equity capital markets will be dependent on a number of factors as well, including general market conditions for REITs and market perceptions about our company.

Our overall capital requirements for the remainder of 2024 and for the three months ending March 31, 2025 will depend upon acquisition opportunities and the level of improvements and redevelopments on existing properties.

Our overall capital requirements for the remainder of 2024 and for the first half of 2025 will depend upon acquisition opportunities and the level of improvements and redevelopments on existing properties.

Our capital investments will be funded on a short-term basis with, among other sources of capital, cash on hand, cash flow from operations and/or our revolving line of credit.

10 unchanged sentences

We currently do not have any off-balance sheet arrangements.

Comparison of the three months ended March 31, 2024 to the three months ended March 31, 2023

Cash, cash equivalents, and restricted cash were $98.6 million and $87.3 million at March 31, 2024 and 2023, respectively.

Net cash provided by operating activities increased $2.8 million to $54.8 million for the three months ended March 31, 2024 compared to $52.0 million for the three months ended March 31, 2023.

The increase in cash from operations was primarily due to the net settlement received relating to building specifications for one of the existing buildings at our office project in University Town Center (San Diego), increase in rental revenue and changes in operating assets and liabilities.

Net cash used in investing activities decreased $12.4 million to $13.3 million for the three months ended March 31, 2024 compared to $25.7 million for the three months ended March 31, 2023.

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023

Cash, cash equivalents, and restricted cash were $114.9 million and $84.7 million at June 30, 2024 and 2023, respectively.

Net cash provided by operating activities increased $15.9 million to $114.1 million for the six months ended June 30, 2024 compared to $98.1 million for the six months ended June 30, 2023.

The increase in cash from operations was primarily due to the net settlement received relating to building specifications for one of the existing buildings at our office project in University Town Center (San Diego), lease termination fees received which will be recognized in the third quarter of 2024, increase in rental revenue and changes in operating assets and liabilities.

Net cash used in investing activities decreased $18.7 million to $30.4 million for the six months ended June 30, 2024 compared to $49.1 million for the six months ended June 30, 2023.

The decrease in cash used was primarily due to the decrease in capital expenditures at La Jolla Commons III and One Beach Street as these projects have completed construction.

Net cash used by financing activities increased $37.3 million to $25.8 million for the three months ended March 31, 2024 compared to cash provided by financing activities of $11.5 million for the three months ended March 31, 2023.

Net cash used in financing activities increased $37.7 million to $51.6 million for the six months ended June 30, 2024 compared to cash used in financing activities of $13.9 million for the six months ended June 30, 2023.

The increase in cash used in financing activities was primarily due to the term loan agreement that was amended and restated in 2023, among other things, to increase the fully drawn borrowings from $150 million to $225 million.

17 unchanged sentences

NOI is therefore not a substitute for net income as computed in accordance with GAAP.

This measure should be analyzed in conjunction with net income computed in accordance with GAAP and discussions elsewhere in “Management's Discussion and

Analysis of Financial Condition and Results of Operations” regarding the components of net income that are eliminated in the calculation of NOI.

This measure should be analyzed in conjunction with net income computed in accordance with GAAP and discussions elsewhere in “Management's Discussion and Analysis of Financial Condition and Results of Operations” regarding the components of net income that are eliminated in the calculation of NOI.

Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, our NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as we do.

The following is a reconciliation of our NOI to net income for the three months ended March 31, 2024 and 2023 computed in accordance with GAAP (in thousands):

Three Months Ended March 31,

The following is a reconciliation of our NOI to net income for the three and six months ended June 30, 2024 and 2023 computed in accordance with GAAP (in thousands):

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

2024 2023 2024 2023

Net operating income $ 70,542 $ 69,924 $ 140,150 $ 138,541

3 unchanged sentences

Interest expense, net (16,289) (16,368) (32,544) (32,097)

Other income (expense), net 10,329 6,679

Other income, net 789 273 11,118 6,951

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

11 unchanged sentences

FFO also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

The following table sets forth a reconciliation of our net income for the three months ended March 31, 2024 to FFO, the nearest GAAP equivalent (in thousands, except per share and share data):

Three Months Ended March 31,

The following table sets forth a reconciliation of our net income for the three and six months ended June 30, 2024 to FFO, the nearest GAAP equivalent (in thousands, except per share and share data):

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

Funds from Operations (FFO)

6 unchanged sentences

Weighted average number of common shares and units, diluted (1)

76,495,008 76,493,569

(1) The weighted average common shares used to compute FFO per diluted share include unvested restricted stock awards that are subject to time vesting, which were excluded from the computation of diluted EPS, as the vesting of the restricted stock awards is dilutive in the computation of FFO per diluted share but is anti-dilutive for the computation of diluted EPS for the period.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis