What changed in this filing

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Item 1. Financial Statements

2024-11-01 compared with 2024-08-02 · 183 added, 133 removed, 848 unchanged (27% of the section changed)

3 unchanged sentences

(In Thousands, Except Share Data)

June 30, December 31,

September 30, December 31,

Real estate, at cost

20 unchanged sentences

stockholders’ equity

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

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

Additional paid-in capital 1,474,554 1,469,206

10 unchanged sentences

(In Thousands, Except Shares and Per Share Data)

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

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

2024 2023 2024 2023

26 unchanged sentences

Other comprehensive income - unrealized (loss) income on swap derivatives during the period ( 3,733 ) 768 ( 3,191 ) 2,859

Other comprehensive income - unrealized (loss) on treasury locks during the period ( 1,345 ) — ( 1,345 ) —

Reclassification of amortization of forward-starting swap included in interest expense ( 98 ) ( 99 ) ( 295 ) ( 1,051 )

30 unchanged sentences

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

Net income — — — 16,851 — 4,467 21,318

Dividends declared and paid — — — ( 20,402 ) — ( 5,420 ) ( 25,822 )

Stock-based compensation — — 1,985 — — — 1,985

Other comprehensive loss - change in value of interest rate swaps — — — — ( 2,944 ) ( 789 ) ( 3,733 )

Other comprehensive loss - unrealized loss on treasury locks — — — — ( 1,061 ) ( 284 ) ( 1,345 )

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

Balance at September 30, 2024 60,901,583 $ 609 $ 1,474,554 $ ( 293,037 ) $ 4,475 $ ( 48,640 ) $ 1,137,961

American Assets Trust, Inc.

21 unchanged sentences

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

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

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

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

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

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

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

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

2 unchanged sentences

(In Thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES

6 unchanged sentences

Stock-based compensation expense 5,348 6,254

Lease termination income 11,065 —

Settlement of treasury locks ( 1,345 ) —

Other noncash interest expense, net ( 295 ) ( 1,051 )

13 unchanged sentences

Proceeds from unsecured term loan — 225,000

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

Repayment of unsecured term loan — ( 150,000 )

Proceeds from unsecured line of credit 100,000 —

Repayment of unsecured line of credit ( 100,000 ) ( 36,000 )

Proceeds from unsecured notes payable 523,273 —

Repayment of unsecured notes payable ( 100,000 ) —

Debt issuance costs ( 5,392 ) ( 2,145 )

Dividends paid to common stock and unitholders ( 77,466 ) ( 76,135 )

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

Net cash provided by (used in) financing activities 340,415 ( 39,280 )

Net increase in cash and cash equivalents 450,116 40,397

5 unchanged sentences

(In Thousands, Except Unit Data)

June 30, December 31,

September 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 June 30, 2024 and December 31, 2023, respectively

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

( 50,369 ) ( 46,936 )

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

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

1,182,126 1,189,576

6 unchanged sentences

(In Thousands, Except Shares and Per Unit Data)

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

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

2024 2023 2024 2023

26 unchanged sentences

Other comprehensive income - unrealized (loss) income on swap derivatives during the period ( 3,733 ) 768 ( 3,191 ) 2,859

Other comprehensive income - unrealized (loss) on treasury locks during the period ( 1,345 ) — ( 1,345 ) —

Reclassification of amortization of forward-starting swap included in interest expense ( 98 ) ( 99 ) ( 295 ) ( 1,051 )

26 unchanged sentences

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

Net income — 4,467 — 16,851 — 21,318

Distributions — ( 5,420 ) — ( 20,402 ) — ( 25,822 )

Stock-based compensation — — — 1,985 — 1,985

Other comprehensive loss - change in value of interest rate swap — — — — ( 3,733 ) ( 3,733 )

Other comprehensive income - unrealized loss on treasury locks — — — — ( 1,345 ) ( 1,345 )

Reclassification of amortization of forward starting swaps included in interest expense — — — — ( 98 ) ( 98 )

Balance at September 30, 2024 16,181,537 $ ( 50,369 ) 60,901,583 $ 1,182,126 $ 6,204 $ 1,137,961

Limited Partners' Capital (1)

18 unchanged sentences

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

Net income — 3,168 — 11,967 — 15,135

Forfeiture of restricted units — — — — — —

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

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

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

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

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

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

4 unchanged sentences

(Unaudited, In Thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES

6 unchanged sentences

Stock-based compensation expense 5,348 6,254

Lease termination income 11,065 —

Settlement of treasury locks ( 1,345 ) —

Other noncash interest expense, net ( 295 ) ( 1,051 )

13 unchanged sentences

Proceeds from unsecured term loan — 225,000

Repayment of unsecured term loan — ( 150,000 )

Proceeds from unsecured line of credit 100,000 —

Repayment of unsecured line of credit ( 100,000 ) ( 36,000 )

Proceeds from unsecured notes payable 523,273 —

Repayment of unsecured notes payable ( 100,000 ) —

1 unchanged sentence

Distributions ( 77,466 ) ( 76,135 )

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

Net cash provided by (used in) financing activities 340,415 ( 39,280 )

Net increase in cash and cash equivalents 450,116 40,397

14 unchanged sentences

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

As of 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.

As of September 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 September 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)

June 30, 2024

September 30, 2024

Basis of Presentation

18 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental cash flow information

10 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

September 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 six months ended June 30, 2024.

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

The provision for doubtful accounts at September 30, 2024 and December 31, 2023 was approximately $ 1.6 million and $ 1.4 million, respectively.

Recent Accounting Pronouncements

10 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

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

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

September 30, 2024 December 31, 2023

In-place leases $ 50,077 $ 51,575

24 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

September 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 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.

However, as of September 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):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

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

1 unchanged sentence

Interest rate swap asset $ — $ 4,773 $ — $ 4,773 $ — $ 7,963 $ — $ 7,963

Interest rate swap liability $ — $ — $ — $ — $ — $ — $ — $ —

The fair value of our secured notes payable and unsecured senior guaranteed notes are sensitive to fluctuations in interest rates.

2 unchanged sentences

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

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

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

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Carrying Value Fair Value Carrying Value Fair Value

2 unchanged sentences

Unsecured senior guaranteed notes, net $ 699,073 $ 680,206 $ 798,772 $ 770,998

Senior unsecured notes, net $ 493,210 $ 414,185 $ 492,694 $ 405,860

Senior notes, net $ 1,011,408 $ 969,628 $ 492,694 $ 405,860

DERIVATIVE AND HEDGING ACTIVITIES

2 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.

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

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

Swap Counterparty Notional Amount Effective Date Maturity Date Fair Value

6 unchanged sentences

Mizuho Capital Markets LLC $ 75,000 1/5/2023 1/5/2025 $ 61

Prior to the issuance of the 6.150 % Senior Notes, the Operating Partnership entered into a treasury lock contract on September 9, 2024 for $ 150 million and September 10, 2024 for an additional $ 150 million, which were both settled on September 10, 2024 at a combined loss of approximately $ 1.3 million.

As a result of the loss on these treasury lock contracts and the debt discount, the effective rate on our 6.150 % Senior Notes is 6.209 % per annum.

The treasury lock contracts have been deemed to be highly effective cash flow hedges and have been designated as accounting hedges.

Any gains or losses incurred upon the settlement of these treasury lock contracts are included in accumulated other comprehensive income and are amortized to interest expense over the life of the 6.150 % Senior Notes.

The effective portion of changes in the fair value of the derivatives that are designated as cash flow hedges are being recorded in accumulated other comprehensive income and will be subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings for as long as hedged cash flows remain probable.

During the next twelve months, we estimate the cash flow hedges in place will reduce interest expense by approximately $ 0.9 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):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Leasing commissions, net of accumulated amortization of $ 51,815 and $ 47,978 , respectively

9 unchanged sentences

Total other assets $ 92,468 $ 99,644

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

OTHER LIABILITIES AND DEFERRED CREDITS

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Acquired below market leases, net $ 14,430 $ 16,537

12 unchanged sentences

however, American Assets Trust, Inc.

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

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

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

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

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

Principal Balance as of Stated Interest Rate Stated Maturity Date

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

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

City Center Bellevue (1)

7 unchanged sentences

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

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

As of September 30, 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)

September 30, 2024

Unsecured notes payable

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):

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

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

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

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

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

5 unchanged sentences

Senior Guaranteed Notes, Series F (4)

— 100,000 3.78 % (4)

July 19, 2024

8 unchanged sentences

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

6.150 % Senior Notes

525,000 — 6.15 % (8)

October 1, 2034

2,050,000 1,625,000

Debt discount and issuance costs, net of accumulated amortization of $ 8,981 and $ 7,259 , respectively

4 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.

7 unchanged sentences

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

3.375 % Senior Notes

(8) The Operating Partnership entered into a treasury lock contract on September 9, 2024 for $ 150 million and September 10, 2024 for an additional $ 150 million, which were both settled on September 10, 2024 at a combined loss of approximately $ 1.3 million.

The treasury lock contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 6.209 % per annum.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

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

1 unchanged sentence

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

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

On September 17, 2024, the Operating Partnership issued $ 525 million of senior unsecured notes (the “ 6.150 % Senior Notes”) that mature October 1, 2034, and bear interest at 6.150 % per annum.

The 6.150 % Senior Notes were priced at 99.671 % of the principal amount with a yield to maturity of 6.194 %.

The net proceeds of the 6.150 % Senior Notes, after the issuance discount, underwriting fees, and other costs, were approximately $ 518.2 million, and were initially used to repay the $ 100 million then outstanding balance under our Revolver Loan on September 19, 2024.

We expect the remaining net proceeds to be primarily used for repayment of our Series B Notes and Series C Notes (as defined below), in each case at or prior to maturity, and for working capital and for general corporate purposes.

As a result of the loss on these treasury lock contracts and the debt discount, the effective rate on our 6.150 % Senior Notes is 6.209 % per annum.

The treasury lock contracts have been deemed to be highly effective cash flow hedges and have been designated as accounting hedges.

The 3.375 % Senior Notes and the 6.150 % Senior Notes include a number of customary financial covenants, including:

• A maximum aggregate debt ratio of 60 %,

2 unchanged sentences

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

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

As of September 30, 2024, the Operating Partnership was in compliance with all then in-place 3.375 % Senior Notes and 6.15 % Senior Notes covenants.

Senior Guaranteed Notes

5 unchanged sentences

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

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

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

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

September 30, 2024

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

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

7 unchanged sentences

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

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

As of September 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 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 %.

As of September 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 $ 0.81 million of net debt issuance costs which are recorded in other assets, net on the consolidated balance sheet.

For the nine months ended September 30, 2024, the weighted average interest rate on the Revolver Loan was 6.52 %.

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.

With the proceeds of our 6.15 % Senior Notes, we repaid in full the $ 100 million outstanding balance on our Revolver Loan on September 19, 2024.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 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 % to 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 % to 0.50 % (with respect to the Revolver Loan) and (ii) 0.20 % to 0.70 % (with respect to Term Loan A), in each case based on our consolidated leverage ratio.

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

2 unchanged sentences

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

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,

4 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 June 30, 2024, the Operating Partnership was in compliance with all then in-place Third Amended and Restated Credit Facility covenants.

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

As of September 30, 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 leverage ratio and applicable year of Term Loan B and Term Loan C) ranging from 0.20 % to 0.90 %.

1 unchanged sentence

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

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

2 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 June 30, 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 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

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

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 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.

The calculation of diluted EPU for the three months ended September 30, 2024 and 2023 does not include the weighted average of 581,314 and 573,949 unvested outstanding Operating Partnership units, respectively, and for the nine months ended September 30, 2024 and 2023 does not include the weighted average of 583,247 and 573,070 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 six months ended June 30, 2024, no shares of common stock were sold through the ATM equity program.

For the nine months ended September 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 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.

As of September 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 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:

As of September 30, 2024, we have no obligation to sell the remaining shares available for sale under the ATM equity program.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

The following table lists the dividends declared and paid on our shares of common stock and noncontrolling common units during the nine months ended September 30, 2024:

Period Amount per

2 unchanged sentences

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

Third Quarter 2024 $ 0.335 July 1, 2024 to September 30, 2024 September 19, 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.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

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

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

Units Weighted Average Grant Date Fair Value

3 unchanged sentences

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.

Nonvested at September 30, 2024 581,314 $ 17.65

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $ 2.0 million and $ 2.1 million for the three months ended September 30, 2024 and 2023, respectively, and $ 5.3 million and $ 6.3 million for the nine months ended September 30, 2024 and 2023, respectively, which is included in general and administrative expenses on the consolidated statements of comprehensive income.

Unrecognized compensation expense was $ 4.7 million at September 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 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.

The weighted average unvested shares outstanding, which are considered participating securities, were 581,314 and 573,949 for the three months ended September 30, 2024 and 2023, respectively, and 583,247 and 573,070 for the nine months ended September 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 and six months ended June 30, 2024 and 2023, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable.

For the three and nine months ended September 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.

2 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

September 30, 2024

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

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

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

2024 2023 2024 2023

24 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.

A deferred tax asset is included in our consolidated balance sheets of $ 0.8 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 September 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.

For the three and nine months ended September 30, 2024, we recorded income tax expense of $ 0.2 million and $ 0.7 million, respectively.

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

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

September 30, 2024

COMMITMENTS AND CONTINGENCIES

24 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 $ 8.1 million based on operating performance through June 30, 2024.

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

September 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 46.5 % of total revenues for the six months ended June 30, 2024.

Tenants in the office industry accounted for 47.6 % of total revenues for the nine months ended September 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 23.7 % of total revenues for the six months ended June 30, 2024.

Furthermore, tenants in the retail industry accounted for 23.3 % of total revenues for the nine months ended September 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 six months ended June 30, 2024 and 2023, no tenant accounted for more than 10% of our total rental revenue.

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

Lessor Operating Leases

16 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

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

September 30, 2024

As of September 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 (three months ending December 31, 2024) $ 57,370

Thereafter 283,059

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 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

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

2024 (three months ending December 31, 2024) $ 870

Thereafter 8,959

5 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

September 30, 2024

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

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

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

2024 2023 2024 2023

5 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

Operating cash flow information:

4 unchanged sentences

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

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

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

2024 2023 2024 2023

8 unchanged sentences

Total rental income $ 105,549 $ 105,494 $ 315,664 $ 312,105

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.

Lease rental income includes $ 0.4 million and $ 0.4 million for the three months ended September 30, 2024 and 2023, respectively, and $ 3.0 million and $ 3.6 million for the nine months ended September 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 $ 0.6 million and $ 0.8 million for the three months ended September 30, 2024 and 2023, respectively, and $ 2.1 million and $ 2.3 million for the nine months ended September 30, 2024 and 2023, respectively.

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

September 30, 2024

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

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

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

2024 2023 2024 2023

9 unchanged sentences

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

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

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

2024 2023 2024 2023

7 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 six months ended June 30, 2024 and 2023, respectively, is included in rental income on the statements of comprehensive income.

Rental revenue recognized on the AAI lease of $ 0.2 million and $ 0.2 million for the nine months ended September 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 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.

For the nine months ended September 30, 2024 and 2023, we incurred approximately $ 0.1 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.

These expenses are recorded as general and administrative expenses in our consolidated statements of comprehensive income.

These expenses are recorded as general and administrative expenses in our consolidated statements of comprehensive income or capitalized as debt financing costs, if applicable, in accordance with accounting principals.

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 $ 0.5 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.

The operating expenses of WBW CHP LLC are recovered through reimbursements from its members, and reimbursements to WBW CHP LLC of $ 0.8 million and $ 0.9 million for the nine months ended September 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)

June 30, 2024

September 30, 2024

SEGMENT REPORTING

14 unchanged sentences

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

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

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

2024 2023 2024 2023

17 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

June 30, 2024

September 30, 2024

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

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

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

2024 2023 2024 2023

10 unchanged sentences

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

June 30, 2024 December 31, 2023

September 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 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,

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

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

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

2024 2023 2024 2023

6 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