What changed in this filing

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Item 1. Financial Statements

2025-05-02 compared with 2024-11-01 · 256 added, 305 removed, 726 unchanged (44% of the section changed)

3 unchanged sentences

(In Thousands, Except Share Data)

September 30, December 31,

March 31, December 31,

Real estate, at cost

9 unchanged sentences

Other assets, net 87,251 87,737

Real estate assets held for sale — 77,519

TOTAL ASSETS $ 2,967,788 $ 3,273,365

5 unchanged sentences

Other liabilities and deferred credits, net 62,671 62,588

Liabilities related to real estate assets held for sale — 3,352

Total liabilities 1,815,428 2,149,044

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

Common stock, $ 0.01 par value, 490,000,000 shares authorized, 61,134,730 and 61,138,238 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 1,476,539 1,474,869

10 unchanged sentences

(In Thousands, Except Shares and Per Share Data)

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

2024 2023 2024 2023

Three Months Ended March 31,

Rental income $ 102,951 $ 105,021

6 unchanged sentences

Total operating expenses 81,111 80,146

Gain on sale of real estate 44,476 —

OPERATING INCOME 71,972 30,549

17 unchanged sentences

Other comprehensive income - unrealized (loss) income on swap derivatives during the period ( 1,192 ) 1,392

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 ( 258 ) ( 98 )

22 unchanged sentences

Balance at March 31, 2025 61,134,730 $ 611 $ 1,476,539 $ ( 282,387 ) $ 3,617 $ ( 46,020 ) $ 1,152,360

Net income — — — 12,099 — 3,195 15,294

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

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

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

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

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

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

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

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.

13 unchanged sentences

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

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

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

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

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

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

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

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

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

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)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES

5 unchanged sentences

Provision for uncollectible rental income ( 10 ) 418

Gain on sale of real estate ( 44,476 ) —

Stock-based compensation expense 1,670 1,617

Settlement of treasury locks ( 1,345 ) —

Other noncash interest expense, net ( 258 ) ( 98 )

8 unchanged sentences

INVESTING ACTIVITIES

Acquisition of real estate ( 67,879 ) —

Capital expenditures ( 16,445 ) ( 10,939 )

Proceeds from sale of real estate, net of selling costs 117,784 —

Leasing commissions ( 785 ) ( 2,353 )

Net cash used in investing activities ( 56,763 ) ( 70,228 )

Net cash provided by (used in) investing activities 32,675 ( 13,292 )

FINANCING ACTIVITIES

Proceeds from unsecured term loan — 225,000

Repayment of unsecured term loan ( 225,000 ) —

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 ( 26,288 ) ( 25,821 )

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

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

Net cash used in financing activities ( 351,288 ) ( 25,821 )

Net (decrease) increase in cash and cash equivalents ( 281,744 ) 15,665

Cash and cash equivalents, beginning of period 425,659 82,888

4 unchanged sentences

(In Thousands, Except Unit Data)

September 30, December 31,

March 31, December 31,

Real estate, at cost

9 unchanged sentences

Other assets, net 87,251 87,737

Real estate assets held for sale — 77,519

TOTAL ASSETS $ 2,967,788 $ 3,273,365

5 unchanged sentences

Other liabilities and deferred credits, net 62,671 62,588

Liabilities related to real estate assets held for sale — 3,352

Total liabilities 1,815,428 2,149,044

Commitments and contingencies (Note 12)

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

Limited partners' capital, 16,181,537 and 16,181,537 units issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

( 47,518 ) ( 53,385 )

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

General partner's capital, 61,134,730 and 61,138,238 units issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

1,194,763 1,171,141

6 unchanged sentences

(In Thousands, Except Shares and Per Unit Data)

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

2024 2023 2024 2023

Three Months Ended March 31,

Rental income $ 102,951 $ 105,021

6 unchanged sentences

Total operating expenses 81,111 80,146

Gain on sale of real estate 44,476 —

OPERATING INCOME 71,972 30,549

17 unchanged sentences

Other comprehensive income - unrealized (loss) income on swap derivatives during the period ( 1,192 ) 1,392

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 ( 258 ) ( 98 )

18 unchanged sentences

Balance at March 31, 2025 16,181,537 $ ( 47,518 ) 61,134,730 $ 1,194,763 $ 5,115 $ 1,152,360

Net income — 3,195 — 12,099 — 15,294

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

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

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

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

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

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

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

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)

10 unchanged sentences

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

Net income — 3,224 — 12,173 — 15,397

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

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

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

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

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

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

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

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)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES

5 unchanged sentences

Provision for uncollectible rental income ( 10 ) 418

Gain on sale of real estate ( 44,476 ) —

Stock-based compensation expense 1,670 1,617

Settlement of treasury locks ( 1,345 ) —

Other noncash interest expense, net ( 258 ) ( 98 )

8 unchanged sentences

INVESTING ACTIVITIES

Acquisition of real estate ( 67,879 ) —

Capital expenditures ( 16,445 ) ( 10,939 )

Proceeds from sale of real estate, net of selling costs 117,784 —

Leasing commissions ( 785 ) ( 2,353 )

Net cash used in investing activities ( 56,763 ) ( 70,228 )

Net cash provided by (used in) investing activities 32,675 ( 13,292 )

FINANCING ACTIVITIES

Proceeds from unsecured term loan — 225,000

Repayment of unsecured term loan ( 225,000 ) —

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 )

Distributions ( 26,288 ) ( 25,821 )

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

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

Net cash used in financing activities ( 351,288 ) ( 25,821 )

Net (decrease) increase in cash and cash equivalents ( 281,744 ) 15,665

Cash and cash equivalents, beginning of period 425,659 82,888

13 unchanged sentences

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

As of September 30, 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.

As of March 31, 2025, we owned or had a controlling interest in 31 office, retail, multifamily and mixed-use operating properties, the operations of which we consolidate.

Additionally, as of March 31, 2025, 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:

La Jolla Commons One Beach Street Corporate Campus East III

Torrey Reserve Campus First & Main Bel-Spring 520

La Jolla Commons One Beach Street 14Acres (formerly known as Eastgate Office Park)

Torrey Reserve Campus First & Main Timber Ridge (formerly known as Corporate Campus East III)

Torrey Point Lloyd Portfolio

Solana Crossing City Center Bellevue

The Landmark at One Market Eastgate Office Park

Carmel Country Plaza Gateway Marketplace Alamo Quarry Market

Carmel Mountain Plaza Del Monte Center Hassalo on Eighth - Retail

South Bay Marketplace Geary Marketplace

Lomas Santa Fe Plaza The Shops at Kalakaua

Solana Beach Towne Centre Waikele Center

Loma Palisades Hassalo on Eighth - Residential

Imperial Beach Gardens

Solana Crossing City Center Bellevue Timber Springs (formerly known as Bel-Spring 520)

The Landmark at One Market

Carmel Country Plaza Gateway Marketplace Hassalo on Eighth - Retail

Carmel Mountain Plaza Geary Marketplace

South Bay Marketplace The Shops at Kalakaua

Lomas Santa Fe Plaza Waikele Center

Solana Beach Towne Centre Alamo Quarry Market

Loma Palisades Hassalo on Eighth - Multifamily

Imperial Beach Gardens Genesee Park

Mariner's Point

9 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

March 31, 2025

Basis of Presentation

18 unchanged sentences

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

Nine Months Ended September 30,

Three Months Ended March 31,

Supplemental cash flow information

10 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

March 31, 2025

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, 2024.

There have been no changes to our significant accounting policies during the nine months ended September 30, 2024.

There have been no changes to our significant accounting policies during the three months ended March 31, 2025.

Segment Information

Segment information is prepared on the same basis that our chief operating decision maker reviews information for operational decision-making purposes.

We operate in four business segments:

the acquisition, redevelopment, ownership and management of office real estate, retail real estate, multifamily real estate and mixed-use real estate.

The products for our office segment primarily include rental of office space and other tenant services, including tenant reimbursements, parking and storage space rental.

Segment information is prepared on the same basis that our management reviews information for operational decision-making purposes.

We operate in four reportable business segments:

the acquisition, redevelopment, ownership and management of retail real estate, office real estate, multifamily real estate and mixed-use real estate.

The products for our retail segment primarily include rental of retail space and other tenant services, including tenant reimbursements, parking and storage space rental.

The products for our office segment primarily include rental of office space and other tenant services, including tenant reimbursements, parking and storage space rental.

The products for our multifamily segment include rental of apartments and other tenant services.

6 unchanged sentences

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

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

The provision for doubtful accounts at March 31, 2025 and December 31, 2024 was approximately $ 1.6 million and $ 2.0 million, respectively.

Other revenue recognition policies

When we enter into a transaction to sell a property or a portion of a property, we evaluate the recognition of the sale under ASC 610-20, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets,” to determine whether and when control transfers and how to measure the associated gain or loss.

We determine the transaction price based on the consideration we expect to receive.

Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of a gain recognized will not occur.

We analyze the risk of a significant gain reversal and if necessary limit the amount of variable consideration recognized in order to mitigate this risk.

The estimation of variable consideration requires us to make assumptions and apply significant judgment.

Recent Accounting Pronouncements

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

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

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

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

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures, that requires the quarterly disclosure of segment expenses if they are (i) significant to the segment, (ii) regularly provided to the chief operating decision maker (“CODM”), and (iii) included in each reported measure of a segment’s profit or loss.

In addition, this ASU requires an annual disclosure of the CODM’s title and a description of how the CODM uses the segment’s profit/loss measure to assess segment performance and to allocate resources.

We retrospectively adopted ASU 2023-07 during the year ended December 31, 2024.

While the adoption has no impact on our financial statements, it has resulted in incremental disclosures within the footnotes to our consolidated financial statements (see Note 17 Segment Reporting).

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

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

2 unchanged sentences

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

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures.

This pronouncement requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, and should be applied either prospectively or retrospectively, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024-03.

American Assets Trust, Inc.

1 unchanged sentence

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

March 31, 2025

On February 28, 2025, we acquired Genesee Park in San Diego, California, consisting of a 192 -unit apartment community.

The purchase price was $ 67.9 million , excluding closing costs of approximately $ 0.1 million.

The property was acquired with cash on hand, primarily from the proceeds received on the sale of Del Monte Center on February 25, 2025.

The financial information set forth below summarizes the company’s purchase price allocation for Genesee Park during the three months ended March 31, 2025 (in thousands):

Land $ 27,125

Building 38,101

Land improvements 1,156

Furniture, fixtures, and equipment 274

Total real estate 66,656

Lease intangibles 1,373

Prepaid expenses and other assets 114

Assets acquired $ 68,143

Security deposits payable ( 236 )

Other liabilities and deferred credits ( 28 )

Liabilities assumed $ ( 264 )

The following table summarizes the operating results for Genesee Park included in the company's historical consolidated statement of operations for the period of acquisition through March 31, 2025 (in thousands):

Revenues $ 359

Operating expenses 518

Operating income ( 159 )

Other income, net $ 2

Net income attributable to American Assets Trust, Inc.

On February 25, 2025, we sold Del Monte Center, which is located in Monterey, California and was previously included in our retail segment.

The sale price of this property was $ 123.5 million, less closing costs and prorations, resulting in net proceeds of approximately $ 117.8 million.

Accordingly, we recorded a gain on sale of approximately $ 44.5 million for the three months ended March 31, 2025.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

ACQUIRED IN-PLACE LEASES AND ABOVE/BELOW MARKET LEASES

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

September 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 March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

In-place leases $ 51,120 $ 49,813

24 unchanged sentences

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

March 31, 2025

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

However, as of September 30, 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 March 31, 2025 we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative position and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivative.

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

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

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

7 unchanged sentences

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Carrying Value Fair Value Carrying Value Fair Value

7 unchanged sentences

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

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):

The following is a summary of the terms of our outstanding interest rate swaps as of March 31, 2025 (dollars in thousands):

Swap Counterparty Notional Amount Effective Date Maturity Date Fair Value

3 unchanged sentences

$ 50,000 1/14/2022 1/5/2027 $ 2,013

Wells Fargo Bank, N.A.

$ 150,000 1/5/2023 1/5/2025 $ 373

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 $ 1.0 million.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

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):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Leasing commissions, net of accumulated amortization of $ 52,593 and $ 51,068 , respectively

5 unchanged sentences

Other intangible assets, net of accumulated amortization of $ 2,144 and $ 2,062 , respectively

Debt issuance costs, net of accumulated amortization of $ 1,782 and $ 1,296 , respectively

Debt issuance costs on line of credit, net of accumulated amortization of $ 2,105 and $ 1,943 , respectively

Right-of-use lease asset, net 18,350 18,993

1 unchanged sentence

Total other assets $ 87,251 $ 87,737

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):

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Acquired below market leases, net $ 12,516 $ 13,076

12 unchanged sentences

however, American Assets Trust, Inc.

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.

has guaranteed the Operating Partnership's obligations under the (i) 3.375 % and 6.150 % 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)

March 31, 2025

Debt of American Assets Trust, L.P.

Secured notes payable

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

The following table is a summary of our total secured notes payable outstanding as of March 31, 2025 and December 31, 2024 (in thousands):

Principal Balance as of Stated Interest Rate Stated Maturity Date

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

Description of Debt March 31, 2025 December 31, 2024 as of March 31, 2025

City Center Bellevue (1)

7 unchanged sentences

Certain loans require the Operating Partnership to comply with various 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

As of March 31, 2025, the Operating Partnership was in compliance with these financial covenants.

Unsecured notes payable

The following table is a summary of the Operating Partnership's total unsecured notes payable outstanding as of September 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 March 31, 2025 and December 31, 2024 (in thousands):

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

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

March 31, 2025 December 31, 2024 as of March 31, 2025

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

4 unchanged sentences

January 5, 2025 (2)

Senior Guaranteed Notes, Series F (4)

— 100,000 3.78 % (4)

July 19, 2024

Senior Guaranteed Notes, Series B 100,000 100,000 4.45 % February 2, 2025

Senior Guaranteed Notes, Series C — 100,000 4.50 % April 1, 2025 (4)

14 unchanged sentences

(1) The Operating Partnership entered into two interest rate swap agreements that are intended to fix the interest rate associated with Term Loan A at approximately 2.70 % through its maturity date, subject to adjustments based on our consolidated leverage ratio.

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

(2) On January 2, 2025, we repaid the entirety of Term Loan B and Term Loan C.

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

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

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

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

(4) The Senior C Notes were prepaid in full on February 3, 2025, without penalty or premium.

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

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

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

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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.

(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

(8) The Operating Partnership entered into a treasury lock contracts 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 contracts were deemed to be a highly effective cash flow hedges, accordingly, the effective interest rate is approximately 6.209 % per annum.

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.

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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.

The net proceeds of the 6.150 % Senior Notes, after the issuance discount, underwriting fees, and other costs, were approximately $ 518.2 million.

To date, the net proceeds were used to repay the $ 100 million then outstanding balance under our Revolver Loan on September 19, 2024, our Series B Notes in the amount of $ 100 million on December 2, 2024, and our Series C Notes in the amount of $ 100 million on February 3, 2025.

The remaining net proceeds are intended to be used for working capital and general corporate purposes.

Prior to the issuance of the 6.150 % Senior Notes, the Operating Partnership entered into treasury lock contracts 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.

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

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.

As of March 31, 2025, the Operating Partnership was in compliance with all then in-place 3.375 % Senior Notes and 6.15 % Senior Notes covenants.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

Senior Guaranteed Notes

3 unchanged sentences

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

On December 2, 2024, we repaid the entirety of the $ 100 million Series B Notes.

On February 3, 2025, we repaid the entirety of the $ 100 million Series C Notes.

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

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

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”).

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

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

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

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

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

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

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

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

As of March 31, 2025, the Operating Partnership was in compliance with all loan covenants.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

Third Amended and Restated Credit Facility

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

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.

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

As of March 31, 2025, 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 $ 0.5 million of net debt issuance costs which are recorded in other assets, net on the consolidated balance sheet.

For the three months ended March 31, 2025, the weighted average interest rate on the Revolver Loan was 5.35 %.

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.

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

As of March 31, 2025, the Operating Partnership was in compliance with all then in-place Third Amended and Restated Credit Facility covenants.

Amended and Restated Term Loan Agreement

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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 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 %.

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

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

On January 2, 2025, we repaid the entirety of Term Loan B and Term Loan C.

American Assets Trust, Inc.

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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.

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

March 31, 2025

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

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

Noncontrolling interests consisted of 16,181,537 common units (the “noncontrolling common units”), and represented approximately 21.2 % of the ownership interests in our Operating Partnership at September 30, 2024.

Noncontrolling interests consisted of 16,181,537 common units (the “noncontrolling common units”), and represented approximately 21.1 % of the ownership interests in our Operating Partnership at March 31, 2025.

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

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

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

During the three months ended March 31, 2025, no common units were converted into shares of our common stock.

Earnings Per Unit of the Operating Partnership

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

The calculation of diluted EPU for the three months ended September 30, 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.

The calculation of diluted EPU for the three months ended March 31, 2025 and 2024 does not include the weighted average of 599,868 and 585,210 unvested outstanding Operating Partnership units, respectively, as these equity securities are either considered contingently issuable or the effect of including these equity securities was anti-dilutive to income from continuing operations and net income attributable to the unitholders.

EQUITY OF AMERICAN ASSETS TRUST, INC.

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

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

For the three months ended March 31, 2025, no shares of common stock were sold through the ATM equity program.

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

As of September 30, 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 March 31, 2025, we had the capacity to issue up to $ 250 million in shares of our common stock under our current ATM equity program.

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

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

As of March 31, 2025, we have no obligation to sell the remaining shares available for sale under the ATM equity program.

American Assets Trust, Inc.

1 unchanged sentence

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:

March 31, 2025

The following table lists the dividends declared and paid on our shares of common stock and noncontrolling common units during the three months ended March 31, 2025:

Period Amount per

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First Quarter 2025 $ 0.340 January 1, 2025 to March 31, 2025 March 20, 2025

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

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

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

The following table summarizes the activity of restricted stock awards during the three months ended March 31, 2025:

Units Weighted Average Grant Date Fair Value

Nonvested at January 1, 2025 600,938 $ 19.40

Granted 9,180 21.79

Vested ( 10,348 ) 19.33

Forfeited ( 3,508 ) 17.67

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.

Nonvested at March 31, 2025 597,430 $ 19.41

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $ 1.7 million and $ 1.6 million for the three months ended March 31, 2025 and 2024, respectively, which is included in general and administrative expenses on the consolidated statements of comprehensive income.

Unrecognized compensation expense was $ 8.3 million at March 31, 2025.

Earnings Per Share

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

The weighted average unvested shares outstanding, which are considered participating securities, were 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.

The weighted average unvested shares outstanding, which are considered participating securities, were 599,868 and 585,210 for the three months ended March 31, 2025 and 2024, respectively.

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

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

For the three and nine months ended September 30, 2024 and 2023, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable.

For the three months ended March 31, 2025 and 2024, 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.

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Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

March 31, 2025

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

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

2024 2023 2024 2023

Three Months Ended March 31,

Net income $ 54,107 $ 24,623

8 unchanged sentences

Income from operations attributable to unitholders in the Operating Partnership

4,467 3,168 12,829 10,733

Net income attributable to common stockholders—diluted

12 unchanged sentences

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

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

A deferred tax asset is included in our consolidated balance sheets of $ 1.0 million and $ 1.0 million, and a deferred tax liability is included in our consolidated balance sheets of $ 0.8 million and $ 0.8 million as of March 31, 2025 and December 31, 2024, respectively, in relation to real estate asset basis differences and prepaid expenses for our TRS.

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

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.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

For the three months ended March 31, 2025, we recorded income tax expense of $ 0.4 million.

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

COMMITMENTS AND CONTINGENCIES

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Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

We are currently a party to various legal proceedings.

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Also, under our leases, tenants are typically obligated to indemnify us from and against all liabilities, costs and expenses imposed upon or asserted against us as owner of the properties due to certain matters relating to the operation of the properties by the tenant.

See Footnote 12 for description of our leases, as a lessee.

See Note 13 Leases for description of our leases, as a lessee.

We have management agreements with Outrigger Hotels & Resorts or an affiliate thereof (“Outrigger”) pursuant to which Outrigger manages each of the retail and hotel portions of the Waikiki Beach Walk property.

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

If the franchise license is terminated due to our failure to make required improvements or to otherwise comply with its terms, we may be liable to the franchisor for a termination payment, which could be as high as $ 8.1 million based on operating performance through September 30, 2024.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

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

The environmental issue existed at purchase and remains in remediation.

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

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

We believe the funds in the escrow account are sufficient for the remaining work to be performed.

However, if further work is required that costs more than the remaining escrow funds, we may be required to pay such overage, although we may have a contractual claim for such costs against the prior owner or our environmental remediation consultant.

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 $ 8.2 million based on operating performance through March 31, 2025.

Concentrations of Credit Risk

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The ability of the tenants to honor the terms of their respective leases is dependent upon the economic, regulatory, social, and health factors affecting the markets in which the tenants operate.

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 47.6 % of total revenues for the nine months ended September 30, 2024.

Sixteen 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 46.8 % of total revenues for the three months ended March 31, 2025.

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 23.3 % of total revenues for the nine months ended September 30, 2024.

Furthermore, tenants in the retail industry accounted for 22.7 % of total revenues for the three months ended March 31, 2025.

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

For the three months ended March 31, 2025 and 2024, no tenant accounted for more than 10% of our total rental revenue.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

Lessor Operating Leases

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

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

As of March 31, 2025, 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):

2025 (nine months ending December 31, 2025) $ 184,004

Thereafter 217,546

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

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

Our lease agreements do not contain any residual value guarantees or material restrictive covenants.

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 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

As of March 31, 2025, current annual payments under the operating leases are as follows for the years ended December 31 (in thousands):

2025 (nine months ending December 31, 2025) $ 2,662

Thereafter 5,375

2 unchanged sentences

Present value of lease liability $ 19,955

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

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

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

2024 2023 2024 2023

Three Months Ended March 31,

Operating lease cost $ 910 $ 970

Sublease income ( 860 ) ( 859 )

Total lease cost (income) $ 90 $ ( 46 ) $ 198 $ 138

Total lease cost $ 50 $ 111

Weighted-average remaining lease term - operating leases (in years) 6.3

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

Nine Months Ended September 30,

Three Months Ended March 31,

Operating cash flow information:

2 unchanged sentences

The subleases contain extension options, subject to our ability to extend the Annex Lease, that can extend the subleases through December 31, 2039 at the fair rental value at the time the extension option is exercised.

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

COMPONENTS OF RENTAL INCOME AND EXPENSE

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

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

2024 2023 2024 2023

Three Months Ended March 31,

Lease rental income

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Total rental income $ 102,951 $ 105,021

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.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

Minimum rents include $ 0.4 million and $ 2.2 million for the three months ended March 31, 2025 and 2024, 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 $ 0.7 million for the three months ended March 31, 2025 and 2024, respectively.

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

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

2024 2023 2024 2023

Three Months Ended March 31,

Rental operating $ 14,617 $ 13,716

2 unchanged sentences

Marketing 573 1,029

Rent 925 885 2,619 2,651

Hawaii excise tax 1,005 1,035

1 unchanged sentence

Total rental expenses $ 30,300 $ 29,841

OTHER INCOME, NET

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

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

2024 2023 2024 2023

Three Months Ended March 31,

Interest and investment income $ 1,332 $ 589

1 unchanged sentence

Other non-operating income — 10,000

Total other income, net $ 1,739 $ 321 $ 12,857 $ 7,272

Total other income $ 915 $ 10,329

For the three months ended March 31, 2024, other non-operating income includes the net settlement payment of approximately $ 10.0 million received on January 2, 2024 related to building specifications for one of the existing buildings at our office project in University Town Center (San Diego).

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

RELATED PARTY TRANSACTIONS

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

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

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

Rady, our Executive Chairman, for office space at Torrey Point to replace a previously existing lease with AAI at Torrey Reserve Campus.

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

Rental revenue recognized on the AAI 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 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 or capitalized as debt financing costs, if applicable, in accordance with accounting principals.

Rental revenue recognized on the AAI lease of $ 0.1 million and $ 0.1 million for the three months ended March 31, 2025 and 2024, respectively, is included in rental income on the statements of comprehensive income.

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 $ 0.8 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.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

The operating expenses of WBW CHP LLC are recovered through reimbursements from its members, and reimbursements to WBW CHP LLC of $ 0.3 million and $ 0.3 million for the three months ended March 31, 2025 and 2024, respectively, are included in rental expenses on the consolidated statements of comprehensive income.

SEGMENT REPORTING

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures.

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

For the three months ended March 31, 2025, the CODM for the company was comprised of our President and Chief Executive Officer and our Chief Financial Officer.

Segment information is prepared on the same basis that our management reviews information for operational decision-making purposes.

We operate in four business segments:

the acquisition, redevelopment, ownership and management of office real estate, retail real estate, multifamily real estate and mixed-use real estate.

The products for our office segment primarily include rental of office space and other tenant services, including tenant reimbursements, parking and storage space rental.

We review operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment.

However, we have aggregated our properties into reportable segments as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies.

We operate in four reportable business segments:

the acquisition, redevelopment, ownership and management of retail real estate, office real estate, multifamily real estate and mixed-use real estate.

The products for our retail segment primarily include rental of retail space and other tenant services, including tenant reimbursements, parking and storage space rental.

The products for our office segment primarily include rental of office space and other tenant services, including tenant reimbursements, parking and storage space rental.

The products for our multifamily segment include rental of apartments and other tenant services.

The products of our mixed-use segment include rental of retail space and other tenant services, including tenant reimbursements, parking and storage space rental and operation of a 369 -room all-suite hotel.

We evaluate the performance of our segments based on segment profit, which is defined as property revenue less property expenses.

We do not use asset information as a measure to assess performance and make decisions to allocate resources.

Therefore, depreciation and amortization expense is not allocated among segments.

General and administrative expenses, interest expense, depreciation and amortization expense and other income and expense are not included in segment profit as our internal reporting addresses these items on a corporate level.

Regular reportable segment updates are provided directly to the CODM.

These updates include the performance of our segments based on segment profit which is defined as property revenue less property expenses, and this serves as the profit or loss measure used by the CODM for performance assessment and resource allocation.

We consider segment profit to be an appropriate supplemental measure to net income because it assists both investors and the CODM in understanding the core operations of our properties.

Segment profit provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income.

Segment profit is not a measure of operating income or cash flows from operating activities as measured by GAAP, and it is not indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

Not all companies calculate segment profit in the same manner.

We consider segment profit to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our properties.

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

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

2024 2023 2024 2023

A significant segment expense is a category of expenses and amounts regularly provided to the CODM that is included in the calculation of each reported measure of segment profit or loss.

Further, the CODM will use this measure to assess segment performance in deciding how to allocate resources.

Significant expenses included in the reportable segment profit or loss measure are presented by rental expenses and real estate taxes for each reportable segment.

Rental expenses includes facilities service expense, utilities expense, repairs and maintenance expense, insurance expense and other costs.

The following table represents the significant segment expenses and operating activity within our reportable segments (in thousands):

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

Three Months Ended March 31,

Property revenue $ 50,881 $ 51,682

Rental expenses 10,874 10,135

Real estate taxes 4,826 4,857

Property expense 15,700 14,992

1 unchanged sentence

Property revenue 24,648 26,026

Rental expenses 4,186 4,728

Real estate taxes 3,229 3,573

Property expense 7,415 8,301

2 unchanged sentences

Property revenue 16,831 16,299

Rental expenses 5,349 5,150

Real estate taxes 1,908 1,831

Property expense 7,257 6,981

2 unchanged sentences

Property revenue 16,247 16,688

Rental expenses 9,891 9,828

Real estate taxes 1,042 985

Property expense 10,933 10,813

1 unchanged sentence

Total segments’ profit $ 67,302 $ 69,608

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

September 30, 2024

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

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

2024 2023 2024 2023

Three Months Ended March 31,

Total segments’ profit $ 67,302 $ 69,608

2 unchanged sentences

Interest expense, net ( 18,780 ) ( 16,255 )

Gain on sale of real estate 44,476 —

Other income (expense), net 915 10,329

4 unchanged sentences

stockholders $ 42,535 $ 19,260

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

September 30, 2024 December 31, 2023

American Assets Trust, Inc.

and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

March 31, 2025

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

March 31, 2025 December 31, 2024

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 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

(1) Excludes unamortized debt issuance costs of $ 0.2 million and $ 0.2 million for each of the periods ended March 31, 2025 and December 31, 2024, respectively.

Capital expenditures for each segment for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

Three Months Ended March 31,

Capital Expenditures (1)

6 unchanged sentences

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