What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-01 compared with 2024-08-02 · 150 added, 141 removed, 415 unchanged (41% of the section changed)

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

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

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

twelve office properties;

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and six multifamily properties.

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.

Additionally, as of September 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;

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

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.

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

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

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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 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.

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

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

The 710 building within the Lloyd Portfolio is classified as same-store property when compared to the designation for the three and nine months ended September 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 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,

Additionally, this property was placed into operations on August 1, 2024, approximately one year after completing renovations.

Retail same-store net operating income increased approximately 2.3% for the nine months ended September 30, 2024 compared to the same period in 2023.

Office same-store net operating income increased 8.1% for the nine months ended September 30, 2024 compared to the same period in 2023.

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

2024 2023 2024 2023

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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 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.

During the three months ended September 30, 2024, we signed 14 office leases for a total of 105,746 square feet of office space including 57,935 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 7.8% and 16.4%, respectively.

New office leases for comparable spaces were signed for 16,671 square feet at an average rental rate increase on a cash and GAAP basis of 18.3% and 15.7%, 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 $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 office spaces were signed for 41,264 square feet at an average rental rate increase on a cash basis and GAAP basis of 3.8% and 16.7%, respectively.

Tenant improvements and incentives were $62.04 per square foot of office space for comparable new leases for the three months ended September 30, 2024, mainly due to new tenants at Torrey Reserve Campus and City Center Bellevue.

During the three months ended September 30, 2024, we signed 23 retail leases for a total of 133,499 square feet of retail space including 125,308 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 4.4% and 18.7%, respectively.

New retail leases for comparable spaces were signed for 505 square feet at an average rental rate decrease on a cash basis of 1.0% and increase on a GAAP basis of 5%.

Renewals for comparable retail spaces were signed for 124,803 square feet at an average rental rate increase on a cash and GAAP basis of 4.5% and 18.8%, respectively.

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.

There were no tenant improvements or incentives on retail space for comparable new leases during the three months ended September 30, 2024.

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

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

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

We capitalized external and internal costs related to both development and redevelopment activities combined of $4.6 million and $4.6 million for the three months ended September 30, 2024 and 2023, respectively, and $12.9 million and $19.9 million for the nine months ended September 30, 2024 and 2023, respectively.

We capitalized external and internal costs related to other property improvements combined of $15.0 million and $15.0 million for the three months ended September 30, 2024 and 2023, respectively, and $39.1 million and $40.6 million for the nine months ended September 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.

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

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.

We capitalized interest costs related to development activities of $1.7 million and $2.0 million for the three months ended September 30, 2024 and 2023, respectively, and $5.9 million and $5.7 million for the nine months ended September 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 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 %

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

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

As of September 30, 2024 and September 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 September 30, 2024 and September 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 September 30, 2024 and 2023 (dollars in thousands):

Three Months Ended September 30, Change %

Rental income $ 105,549 $ 105,494 $ 55 — %

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

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:

Total property revenue increased $11.6 million to $122.8 million for the three months ended September 30, 2024 compared to $111.2 million for the three months ended September 30, 2023.

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

Percentage Leased (1)

September 30,

Office 87.0 % 86.8 %

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96.3 % 95.1 %

(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 June 30, 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.

Percentage leased for our multifamily properties includes total units rented and occupied as of September 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 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.

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

Rental revenue stayed flat at $105.5 million for the three months ended September 30, 2024 and September 30, 2023.

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

Total Portfolio Same-Store Portfolio (1)

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

Three Months Ended September 30, Change % Three Months Ended September 30, Change %

2024 2023 2024 2023

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(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 $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.

Total office rental revenue decreased $1.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to a decrease of $1.2 million in rental revenue driven by lower occupancy and annualized base rents at Lloyd Portfolio, lower occupancy at Torrey Reserve Campus, and a decrease of $0.8 million in cost recoveries due to changes in tenant base years, a decrease in recoverable property expenses, and prior year tax refunds received that were passed back to tenants.

Total retail rental revenue increased $1.1 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to new tenant leases and scheduled rent increases at Solana Beach Towne Center, Carmel Country Plaza 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.

Multifamily revenue increased $1.1 million for the three months ended September 30, 2024 compared to the three months ended September 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 $2,733 and 90.1%, respectively for the three months ended September 30, 2024 compared to $2,572 and 88.5%, respectively for the three months ended September 30, 2023.

Total mixed-use rental revenue decreased $0.2 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to a decrease in average occupancy of 83.8% for the three months ended September 30, 2024, compared to 89.3% for the three months ended September 30, 2023.

This decrease was partially offset by an increase in rental revenue at the retail portion of our mixed-use property, primarily due to new tenant leases commencing at higher base rents.

Other property income .

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 increased $11.6 million, or 203% to $17.3 million for the three months ended September 30, 2024 compared to $5.7 million for the three months ended September 30, 2023.

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

Total Portfolio Same-Store Portfolio

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

Three Months Ended September 30, Change % Three Months Ended September 30, Change %

2024 2023 2024 2023

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$ 17,261 $ 5,704 $ 11,557 203 % $ 17,248 $ 5,698 $ 11,550 203 %

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.

Office other property income increased by $11.0 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to a lease termination fee received at Torrey Reserve Campus.

Retail other property income increased by $0.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to lease termination fees received at Alamo Quarry Market.

Multifamily other property income increased by $0.1 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to an increase in utilities meter income.

Property Expenses

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

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.

Total property expenses increased $1.1 million, or 3%, to $42.4 million, for the three months ended September 30, 2024 compared to $41.3 million for the three months ended September 30, 2023.

Rental Expenses.

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 expenses increased $1.4 million, or 5%, to $31.4 million for the three months ended September 30, 2024 compared to $29.9 million for the three months ended September 30, 2023.

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

Total Portfolio Same-Store Portfolio

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

Three Months Ended September 30, Change % Three Months Ended September 30, Change %

2024 2023 2024 2023

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$ 31,361 $ 29,912 $ 1,449 5 % $ 30,889 $ 29,640 $ 1,249 4 %

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.

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

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

Multifamily rental expense increased $0.2 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to an increase in insurance expense, utilities expense and facilities services.

Mixed-use rental expense increased $0.2 million for the three months ended September 30, 2024 compared to the three months ended September 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 and an increase in room-related expenses at the hotel portion of our mixed-use property.

Real Estate Taxes.

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 taxes decreased $0.4 million, or 3%, to $11.0 million for the three months ended September 30, 2024 compared to $11.4 million for the three months ended September 30, 2023.

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

Total Portfolio Same-Store Portfolio

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

Three Months Ended September 30, Change % Three Months Ended September 30, Change %

2024 2023 2024 2023

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$ 11,044 $ 11,399 $ (355) (3) % $ 10,907 $ 11,328 $ (421) (4) %

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.

Office real estate taxes decreased $0.8 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to real estate tax refunds received at La Jolla Commons.

Retail real estate taxes increased $0.3 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to an increase in property tax assessment at Alamo Quarry Market and tax refunds received at Del Monte Center during the three months ended September 30, 2023.

Multifamily real estate taxes increased $0.1 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to an increase in property tax assessments at Pacific Ridge Apartments.

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

Property Operating Income

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 increased $10.5 million, or 15%, to $80.4 million for the three months ended September 30, 2024, compared to $69.9 million for the three months ended September 30, 2023.

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

Total Portfolio Same-Store Portfolio

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

Three Months Ended September 30, Change % Three Months Ended September 30, Change %

2024 2023 2024 2023

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$ 80,405 $ 69,887 $ 10,518 15 % $ 81,001 $ 70,224 $ 10,777 15 %

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.

Total office property operating income increased $9.0 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a $11.0 million in lease termination fee received at Torrey Reserve Campus and lower real estate taxes due to tax refunds received at La Jolla Commons.

These increases were offset by a decrease of $1.2 million in rental revenue driven primarily by lower occupancy and annualized base rents at Lloyd Portfolio, lower occupancy at Torrey Reserve Campus, a decrease in cost recoveries, and an increase in rental expenses related to utilities expenses, insurance expense and repairs and maintenance expense.

Total retail property operating income increased $1.2 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to higher rental revenue at Solana Beach Towne Center, Carmel Country Plaza and Del Monte Center due to new tenant leases, scheduled rent increases and an increase in cost recoveries.

These increases were offset by higher real estate tax expense and rental expenses attributable to facilities services and marketing expense.

Total multifamily property operating income increased $0.9 million for the three months ended September 30, 2024 compared to the three months ended September 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 $2,733 and 90.1%, respectively, for the three months ended September 30, 2024 compared to $2,572 and 88.5%, respectively, for the three months ended September 30, 2023.

Total mixed-use property operating income decreased $0.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to a decrease in occupancy of 83.8% for the three months ended September 30, 2024, compared to 89.3%.

There was also an increase in rental expenses and real estate taxes due to an increase in property tax assessment.

General and Administrative.

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.

General and administrative expenses increased $0.2 million, or 2%, for the three months ended September 30, 2024, compared to the three months ended September 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 legal expenses 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 $1.2 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.

Depreciation and amortization expense increased $3.7 million, or 12%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

This was due to the acceleration of assets related to a tenant vacating their space early at Torrey Reserve Campus.

Additionally, the increase was also due to new building improvement assets with One Beach Street placed into operations as of August 1, 2024 and new tenant improvement and leasing commission assets placed into service.

Interest Expense, net.

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.

Interest expense increased $1.9 million, or 12%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

This increase was primarily due to the closing of our 6.150% Senior Notes on September 17, 2024 and the $100 million draw on our Revolver Loan on July 18, 2024 which was subsequently repaid on September 19, 2024.

These increases were partially offset by a decrease in interest expense related to the maturity and repayment of our Series F Notes on July 19, 2024.

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.

Other income, net increased $1.4 million, or 442%, for the three months ended September 30, 2024, compared to the three months ended September 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 %

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

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

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

Nine Months Ended September 30, Change %

Rental income $ 315,664 $ 312,105 $ 3,559 1 %

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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:

Total property revenue increased $15.7 million, or 5%, to $344.4 million for the nine months ended September 30, 2024 compared to $328.7 million for the nine months ended September 30, 2023.

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

Percentage Leased (1)

September 30,

Office 87.0 % 86.8 %

3 unchanged sentences

96.3 % 95.1 %

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

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

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

2 unchanged sentences

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 increased $3.6 million, or 1%, to $315.7 million for the nine months ended September 30, 2024 compared to $312.1 million for the nine months ended September 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 %

Nine Months Ended September 30, Change % Nine Months Ended September 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 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.

Total office rental revenue decreased $2.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to a decrease of $1.6 million in cost recoveries due to changes in tenant base years, a decrease in recoverable property expenses, prior year tax refunds received that were passed back to tenants, and a decrease of $0.9 million in rental revenue driven primarily by lower occupancy and annualized base rents at Lloyd Portfolio.

Retail rental revenue increased $2.3 million for the nine months ended September 30, 2024 compared to the nine months ended September 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 $0.9 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.

Multifamily revenue increased $3.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 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 $2,714 and 91.1% for the nine months ended September 30, 2024 compared to $2,557 and 89.7% for the nine months ended September 30, 2023.

Mixed-use rental revenue increased $0.8 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an increase in average occupancy to 86.7% for the nine months ended September 30, 2024, compared to 85.3% for the nine months ended September 30, 2023.

There was also an increase in rental revenue at the retail portion of our mixed-use property, primarily due to new tenant leases commencing at higher base rents.

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 increased $12.2 million, or 73%, to $28.7 million for the nine months ended September 30, 2024 compared to $16.6 million for the nine months ended September 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 %

Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %

2024 2023 2024 2023

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$ 28,731 $ 16,568 $ 12,163 73 % $ 28,705 $ 16,555 $ 12,150 73 %

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.

Office other property income increased $11.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to a $11.0 million lease termination fee and $0.5 million lease settlement fee received at Torrey Reserve Campus.

Retail other property income increased $0.2 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to lease termination fees received at Alamo Quarry Market and Solana Beach

Towne Center in 2024, offset by the lease termination fees received at Carmel Mountain Plaza and Southbay Market Place in 2023.

Total multifamily other property income increased $0.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an increase in utilities meter income.

Total mixed-use other property income increased $0.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 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

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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.

Total property expenses increased by $3.6 million, or 3%, to $123.8 million for the nine months ended September 30, 2024, compared to $120.2 million for the nine months ended September 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 expenses increased $4.6 million, or 5%, to $90.7 million for the nine months ended September 30, 2024, compared to $86.1 million for the nine months ended September 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 %

Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %

2024 2023 2024 2023

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$ 90,707 $ 86,128 $ 4,579 5 % $ 89,630 $ 85,430 $ 4,200 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.

Office rental expenses increased $1.8 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an increase in repairs and maintenance services, utilities expenses, facilities services and insurance expense.

Retail rental expenses increased $1.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to $0.5 million written off in the three months ended March 31, 2024 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 utilities expense, insurance expense and facilities services.

Multifamily rental expenses increased $0.7 million for the nine months ended September 30, 2024 compared to the nine months ended September 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 $1.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an increase of $0.7 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 $0.3 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 decreased $1.0 million, or (3)% to $33.1 million for the nine months ended September 30, 2024, compared to $34.1 million for the nine months ended September 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 %

Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %

2024 2023 2024 2023

4 unchanged sentences

$ 33,133 $ 34,117 $ (984) (3) % $ 32,896 $ 33,969 $ (1,073) (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.

Office real estate taxes decreased $1.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 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 increased $0.2 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to real estate tax refunds received at Carmel Mountain Plaza and Alamo Quarry Market during 2023.

Mixed-use real estate taxes increased $0.2 million for the nine months ended September 30, 2024 compared to the nine months ended September 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 increased $12.1 million, or 6%, to $220.6 million for the nine months ended September 30, 2024, compared to $208.4 million for the nine months ended September 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 %

Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %

2024 2023 2024 2023

4 unchanged sentences

$ 220,555 $ 208,428 $ 12,127 6 % $ 221,843 $ 209,261 $ 12,582 6 %

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.

Total office property operating income increased $8.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to a $11.0 million lease termination fee received at Torrey Reserve Campus and lower real estate taxes due to tax refunds received at La Jolla Commons and First & Main.

These increases were offset by a decrease in rental revenue driven by lower occupancy and annualized base rents at Lloyd Portfolio, a decrease in cost recoveries, and an increase in rental expenses related to utilities expenses, insurance expense and repairs and maintenance expense.

Total retail property operating income increased $1.3 million during the nine months ended September 30, 2024 compared to the nine months ended September 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 three months ended March 31, 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 $2.4 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an overall increase in average monthly base rent and an increase in occupancy to $2,714 and 91.1%, respectively, for the nine months ended September 30, 2024 compared to $2,557 and 89.7%, respectively, for the nine months ended September 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.

Total mixed-use property operating income decreased $0.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an increase in real estate taxes and higher rental expenses related to room expenses, personnel costs, facilities expenses and excise tax expenses.

This was partially offset by an increase in revenue at the Waikiki Beach Walk hotel portion of our mixed use property, as average occupancy increased to 86.7% for the nine months ended September 30, 2024, compared to 85.3% for the nine months ended September 30, 2023, respectively.

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.

General and administrative expenses increased $0.2 million, or 1%, to $26.6 million for the nine months ended September 30, 2024, compared to $26.5 million for the nine months ended September 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.

Depreciation and amortization expense increased $5.2 million, or 6%, to $94.8 million for the nine months ended September 30, 2024, compared to $89.6 million for the nine months ended September 30, 2023.

This was due to the 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.

Interest expense increased $2.4 million, or 5%, to $50.8 million for the nine months ended September 30, 2024 compared to $48.4 million for the nine months ended September 30, 2023.

This increase was primarily due to the closing of our 6.150% Senior Notes on September 17, 2024, the $100 million draw on our Revolver Loan on July 18, 2024, which was subsequently repaid on September 19, 2024, and higher interest on our $225 million Amended and Restated Term Loan Agreement.

These increases were partially offset by a decrease in interest expense related to the maturity and repayment of our Series F Notes on July 19, 2024.

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.

Other income, net increased $5.6 million, or 77%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

This increase was primarily due to the net settlement payment of approximately $10.0 million received during the three months ended March 31, 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 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.

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

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

As of September 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.

As the sole general partner of the Operating Partnership, American Assets Trust, Inc.

has the full, exclusive and complete authority and control over the Operating Partnership’s day-to-day management and business, can cause it to enter into certain major transactions, including acquisitions, dispositions and refinancings, and can cause changes in its line of business, capital structure and distribution policies.

capital structure and distribution policies.

The company causes the Operating Partnership to distribute such portion of its available cash as the company may in its discretion determine, in the manner provided in the Operating Partnership’s partnership agreement.

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

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.

As of September 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.

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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.

For the three months ended September 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.

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

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

As of September 30, 2024, we held $533.0 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.

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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 first half of 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 nine months ending September 30, 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.

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

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.

Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023

Cash, cash equivalents, and restricted cash were $533.0 million and $90.0 million at September 30, 2024 and 2023, respectively.

Net cash provided by operating activities increased $16.6 million to $166.5 million for the nine months ended September 30, 2024 compared to $149.9 million for the nine months ended September 30, 2023.

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

Net cash used in investing activities decreased $13.5 million to $56.8 million for the nine months ended September 30, 2024 compared to $70.2 million for the nine months ended September 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 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.

This was partially offset by the repayment of the outstanding balance on the revolving line of credit.

Net cash provided in financing activities increased $379.7 million to $340.4 million for the nine months ended September 30, 2024 compared to cash used in financing activities of $39.3 million for the nine months ended September 30, 2023.

The increase in cash provided in financing activities was primarily due to the proceeds received from the issuance of the 6.15% Senior Notes, partially offset by the repayment of the then-outstanding $100 million on our Revolver Loan.

The $100 million draw on our Revolver Loan was used to repay the entirety of our Series F Notes upon maturity on July 19, 2024.

Net Operating Income

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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 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,

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

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

2024 2023 2024 2023

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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 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,

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

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

Funds from Operations (FFO)

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis