American Assets Trust, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS American Assets Trust, Inc. Consolidated Balance Sheets (In Thousands, Except Share Data) March 31, December 31, 2025 2024 (unaudited) ASSETS Real estate, at cost Operating real estate $ 3,521,083 $ 3,449,009 Construction in progress 185,202 176,868 Held for development 487 487 3,706,772 3,626,364 Accumulated depreciation ( 1,064,424 ) ( 1,038,878 ) Real estate, net 2,642,348 2,587,486 Cash and cash equivalents 143,915 425,659 Accounts receivable, net 7,104 6,905 Deferred rent receivables, net 87,170 88,059 Other assets, net 87,251 87,737 Real estate assets held for sale — 77,519 TOTAL ASSETS $ 2,967,788 $ 3,273,365 LIABILITIES AND EQUITY LIABILITIES: Secured notes payable, net $ 74,782 $ 74,759 Unsecured notes payable, net 1,611,299 1,935,756 Accounts payable and accrued expenses 57,763 63,693 Security deposits payable 8,913 8,896 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) EQUITY: American Assets Trust, Inc. stockholders’ equity 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 611 611 Additional paid-in capital 1,476,539 1,474,869 Accumulated dividends in excess of net income ( 282,387 ) ( 304,339 ) Accumulated other comprehensive income 3,617 4,760 Total American Assets Trust, Inc. stockholders’ equity 1,198,380 1,175,901 Noncontrolling interests ( 46,020 ) ( 51,580 ) Total equity 1,152,360 1,124,321 TOTAL LIABILITIES AND EQUITY $ 2,967,788 $ 3,273,365 The accompanying notes are an integral part of these consolidated financial statements. 1 Table of Contents American Assets Trust, Inc. Consolidated Statements of Comprehensive Income (Unaudited) (In Thousands, Except Shares and Per Share Data) Three Months Ended March 31, 2025 2024 REVENUE: Rental income $ 102,951 $ 105,021 Other property income 5,656 5,674 Total revenue 108,607 110,695 EXPENSES: Rental expenses 30,300 29,841 Real estate taxes 11,005 11,246 General and administrative 9,312 8,842 Depreciation and amortization 30,494 30,217 Total operating expenses 81,111 80,146 Gain on sale of real estate 44,476 — OPERATING INCOME 71,972 30,549 Interest expense, net ( 18,780 ) ( 16,255 ) Other income, net 915 10,329 NET INCOME 54,107 24,623 Net income attributable to restricted shares ( 203 ) ( 196 ) Net income attributable to unitholders in the Operating Partnership ( 11,369 ) ( 5,167 ) NET INCOME ATTRIBUTABLE TO AMERICAN ASSETS TRUST, INC. STOCKHOLDERS $ 42,535 $ 19,260 EARNINGS PER COMMON SHARE Earnings per common share, basic $ 0.70 $ 0.32 Weighted average shares of common stock outstanding - basic 60,537,300 60,309,921 Earnings per common share, diluted $ 0.70 $ 0.32 Weighted average shares of common stock outstanding - diluted 76,718,837 76,491,458 DIVIDENDS DECLARED PER COMMON SHARE $ 0.340 $ 0.335 COMPREHENSIVE INCOME Net income $ 54,107 $ 24,623 Other comprehensive income - unrealized (loss) income on swap derivatives during the period ( 1,192 ) 1,392 Reclassification of amortization of forward-starting swap included in interest expense ( 258 ) ( 98 ) Comprehensive income 52,657 25,917 Comprehensive income attributable to non-controlling interests ( 11,062 ) ( 5,439 ) Comprehensive income attributable to American Assets Trust, Inc. $ 41,595 $ 20,478 The accompanying notes are an integral part of these consolidated financial statements. 2 Table of Contents American Assets Trust, Inc. Consolidated Statement of Equity (Unaudited) (In Thousands, Except Share Data) American Assets Trust, Inc. Stockholders’ Equity Noncontrolling Interests - Unitholders in the Operating Partnership Total Common Shares Additional Paid-in Capital Accumulated Dividends in Excess of Net Income Accumulated Other Comprehensive Income (Loss) Shares Amount Balance at December 31, 2024 61,138,238 $ 611 $ 1,474,869 $ ( 304,339 ) $ 4,760 $ ( 51,580 ) $ 1,124,321 Net income — — — 42,738 — 11,369 54,107 Forfeiture of restricted stock ( 3,508 ) — — — — — — Dividends declared and paid — — — ( 20,786 ) — ( 5,502 ) ( 26,288 ) Stock-based compensation — — 1,670 — — — 1,670 Other comprehensive income - change in value of interest rate swaps — — — — ( 939 ) ( 253 ) ( 1,192 ) Reclassification of amortization of forward-starting swap included in interest expense — — — — ( 204 ) ( 54 ) ( 258 ) Balance at March 31, 2025 61,134,730 $ 611 $ 1,476,539 $ ( 282,387 ) $ 3,617 $ ( 46,020 ) $ 1,152,360 American Assets Trust, Inc. Stockholders’ Equity Noncontrolling Interests - Unitholders in the Operating Partnership Total Common Shares Additional Paid-in Capital Accumulated Dividends in Excess of Net Income Accumulated Other Comprehensive Income (Loss) Shares Amount Balance at December 31, 2023 60,895,786 $ 609 $ 1,469,206 $ ( 280,239 ) $ 8,282 $ ( 44,183 ) $ 1,153,675 Net income — — — 19,456 — 5,167 24,623 Forfeiture of restricted stock ( 1,295 ) — — — — — — Dividends declared and paid — — — ( 20,400 ) — ( 5,421 ) ( 25,821 ) Stock-based compensation — — 1,617 — — — 1,617 Other comprehensive loss - change in value of interest rate swaps — — — — 1,100 292 1,392 Reclassification of amortization of forward-starting swap included in interest expense — — — — ( 78 ) ( 20 ) ( 98 ) Balance at March 31, 2024 60,894,491 $ 609 $ 1,470,823 $ ( 281,183 ) $ 9,304 $ ( 44,165 ) $ 1,155,388 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents American Assets Trust, Inc. Consolidated Statements of Cash Flows (Unaudited) (In Thousands) Three Months Ended March 31, 2025 2024 OPERATING ACTIVITIES Net income $ 54,107 $ 24,623 Adjustments to reconcile net income to net cash provided by operating activities: Deferred rent revenue and amortization of lease intangibles 116 ( 3,150 ) Depreciation and amortization 30,494 30,217 Amortization of debt issuance costs and debt discounts 728 835 Provision for uncollectible rental income ( 10 ) 418 Gain on sale of real estate ( 44,476 ) — Stock-based compensation expense 1,670 1,617 Other noncash interest expense, net ( 258 ) ( 98 ) Other, net 731 ( 556 ) Changes in operating assets and liabilities Change in accounts receivable 1,432 ( 227 ) Change in other assets ( 682 ) ( 107 ) Change in accounts payable and accrued expenses ( 7,492 ) 979 Change in security deposits payable ( 219 ) ( 19 ) Change in other liabilities and deferred credits 728 246 Net cash provided by operating activities 36,869 54,778 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 provided by (used in) investing activities 32,675 ( 13,292 ) FINANCING ACTIVITIES Repayment of unsecured term loan ( 225,000 ) — Repayment of unsecured notes payable ( 100,000 ) — Dividends paid to common stock and unitholders ( 26,288 ) ( 25,821 ) 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 Cash and cash equivalents, end of period $ 143,915 $ 98,553 The accompanying notes are an integral part of these consolidated financial statements. 4 Table of Contents American Assets Trust, L.P. Consolidated Balance Sheets (In Thousands, Except Unit Data) March 31, December 31, 2025 2024 (unaudited) ASSETS Real estate, at cost Operating real estate $ 3,521,083 $ 3,449,009 Construction in progress 185,202 176,868 Held for development 487 487 3,706,772 3,626,364 Accumulated depreciation ( 1,064,424 ) ( 1,038,878 ) Real estate, net 2,642,348 2,587,486 Cash and cash equivalents 143,915 425,659 Accounts receivable, net 7,104 6,905 Deferred rent receivables, net 87,170 88,059 Other assets, net 87,251 87,737 Real estate assets held for sale — 77,519 TOTAL ASSETS $ 2,967,788 $ 3,273,365 LIABILITIES AND CAPITAL LIABILITIES: Secured notes payable, net $ 74,782 $ 74,759 Unsecured notes payable, net 1,611,299 1,935,756 Accounts payable and accrued expenses 57,763 63,693 Security deposits payable 8,913 8,896 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) CAPITAL: 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, 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 Accumulated other comprehensive income 5,115 6,565 Total capital 1,152,360 1,124,321 TOTAL LIABILITIES AND CAPITAL $ 2,967,788 $ 3,273,365 The accompanying notes are an integral part of these consolidated financial statements. 5 Table of Contents American Assets Trust, L.P. Consolidated Statements of Comprehensive Income (Unaudited) (In Thousands, Except Shares and Per Unit Data) Three Months Ended March 31, 2025 2024 REVENUE: Rental income $ 102,951 $ 105,021 Other property income 5,656 5,674 Total revenue 108,607 110,695 EXPENSES: Rental expenses 30,300 29,841 Real estate taxes 11,005 11,246 General and administrative 9,312 8,842 Depreciation and amortization 30,494 30,217 Total operating expenses 81,111 80,146 Gain on sale of real estate 44,476 — OPERATING INCOME 71,972 30,549 Interest expense, net ( 18,780 ) ( 16,255 ) Other income, net 915 10,329 NET INCOME 54,107 24,623 Net income attributable to restricted shares ( 203 ) ( 196 ) NET INCOME ATTRIBUTABLE TO AMERICAN ASSETS TRUST, L.P. $ 53,904 $ 24,427 EARNINGS PER UNIT - BASIC Earnings per unit, basic $ 0.70 $ 0.32 Weighted average units outstanding - basic 76,718,837 76,491,458 EARNINGS PER UNIT - DILUTED Earnings per unit, diluted $ 0.70 $ 0.32 Weighted average units outstanding - diluted 76,718,837 76,491,458 DISTRIBUTIONS PER UNIT $ 0.340 $ 0.335 COMPREHENSIVE INCOME Net income $ 54,107 $ 24,623 Other comprehensive income - unrealized (loss) income on swap derivatives during the period ( 1,192 ) 1,392 Reclassification of amortization of forward-starting swap included in interest expense ( 258 ) ( 98 ) Comprehensive income 52,657 25,917 Comprehensive income attributable to Limited Partners ( 11,062 ) ( 5,439 ) Comprehensive income attributable to General Partner $ 41,595 $ 20,478 The accompanying notes are an integral part of these consolidated financial statements. 6 Table of Contents American Assets Trust, L.P. Consolidated Statement of Partners' Capital (Unaudited) (In Thousands, Except Unit Data) Limited Partners' Capital (1) General Partner's Capital (2) Accumulated Other Comprehensive Income (Loss) Total Capital Units Amount Units Amount Balance at December 31, 2024 16,181,537 $ ( 53,385 ) 61,138,238 $ 1,171,141 $ 6,565 $ 1,124,321 Net income — 11,369 — 42,738 — 54,107 Forfeiture of restricted units — — ( 3,508 ) — — — Distributions — ( 5,502 ) — ( 20,786 ) — ( 26,288 ) Stock-based compensation — — — 1,670 — 1,670 Other comprehensive income - change in value of interest rate swap — — — — ( 1,192 ) ( 1,192 ) Reclassification of amortization of forward starting swaps included in interest expense — — — — ( 258 ) ( 258 ) Balance at March 31, 2025 16,181,537 $ ( 47,518 ) 61,134,730 $ 1,194,763 $ 5,115 $ 1,152,360 Limited Partners' Capital (1) General Partner's Capital (2) Accumulated Other Comprehensive Income (Loss) Total Capital Units Amount Units Amount Balance at December 31, 2023 16,181,537 $ ( 46,936 ) 60,895,786 $ 1,189,576 $ 11,035 $ 1,153,675 Net income — 5,167 — 19,456 — 24,623 Forfeiture of restricted units — — ( 1,295 ) — — — Distributions — ( 5,421 ) — ( 20,400 ) — ( 25,821 ) Stock-based compensation — — — 1,617 — 1,617 Other comprehensive loss - change in value of interest rate swap — — — — 1,392 1,392 Reclassification of amortization of forward starting swaps included in interest expense — — — — ( 98 ) ( 98 ) Balance at March 31, 2024 16,181,537 $ ( 47,190 ) 60,894,491 $ 1,190,249 $ 12,329 $ 1,155,388 (1) Consists of limited partnership interests held by third parties. (2) Consists of general partnership interests held by American Assets Trust, Inc. The accompanying notes are an integral part of these consolidated financial statements. 7 Table of Contents American Assets Trust, L.P. Consolidated Statements of Cash Flows (Unaudited, In Thousands) Three Months Ended March 31, 2025 2024 OPERATING ACTIVITIES Net income $ 54,107 $ 24,623 Adjustments to reconcile net income to net cash provided by operating activities: Deferred rent revenue and amortization of lease intangibles 116 ( 3,150 ) Depreciation and amortization 30,494 30,217 Amortization of debt issuance costs and debt discounts 728 835 Provision for uncollectible rental income ( 10 ) 418 Gain on sale of real estate ( 44,476 ) — Stock-based compensation expense 1,670 1,617 Other noncash interest expense, net ( 258 ) ( 98 ) Other, net 731 ( 556 ) Changes in operating assets and liabilities Change in accounts receivable 1,432 ( 227 ) Change in other assets ( 682 ) ( 107 ) Change in accounts payable and accrued expenses ( 7,492 ) 979 Change in security deposits payable ( 219 ) ( 19 ) Change in other liabilities and deferred credits 728 246 Net cash provided by operating activities 36,869 54,778 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 provided by (used in) investing activities 32,675 ( 13,292 ) FINANCING ACTIVITIES Repayment of unsecured term loan ( 225,000 ) — Repayment of unsecured notes payable ( 100,000 ) — Distributions ( 26,288 ) ( 25,821 ) 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 Cash and cash equivalents, end of period $ 143,915 $ 98,553 The accompanying notes are an integral part of these consolidated financial statements. 8 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements June 30, 2024 (Unaudited) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Organization American Assets Trust, Inc. (which may be referred to in these financial statements as the “company,” “we,” “us,” or “our”) is a Maryland corporation formed on July 16, 2010 that did not have any operating activity until the consummation of our initial public offering on January 19, 2011. The company is the sole general partner of American Assets Trust, L.P., a Maryland limited partnership formed on July 16, 2010 (the “Operating Partnership”). The company’s operations are carried on through our Operating Partnership and its subsidiaries, including our taxable real estate investment trust ("REIT") subsidiary ("TRS"). Since the formation of our Operating Partnership, the company has controlled our Operating Partnership as its general partner and has consolidated its assets, liabilities and results of operations. 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 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: Office 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 Timber Springs (formerly known as Bel-Spring 520) The Landmark at One Market Retail 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 Multifamily Loma Palisades Hassalo on Eighth - Multifamily Imperial Beach Gardens Genesee Park Mariner's Point Santa Fe Park RV Resort Pacific Ridge Apartments Mixed-Use Waikiki Beach Walk Retail and Embassy Suites™ Hotel Held for Development and/or Construction in Progress La Jolla Commons – Land Solana Crossing – Land Lloyd Portfolio – Construction in Progress 9 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) Basis of Presentation Our consolidated financial statements include the accounts of the company, our Operating Partnership and our subsidiaries. The equity interests of other investors in our Operating Partnership are reflected as noncontrolling interests. The company follows the Financial Accounting Standards Board (the "FASB") guidance for determining whether an entity is a variable interest entity (“VIE”), which requires the performance of a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE. Under this guidance, an entity would be required to consolidate a VIE if it has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. American Assets Trust, Inc. has concluded that the Operating Partnership is a VIE, and because American Assets Trust, Inc. has both the power and the rights to control the Operating Partnership, American Assets Trust, Inc. is the primary beneficiary and is required to continue to consolidate the Operating Partnership. Substantially all of the assets and liabilities of the company are related to the Operating Partnership VIE. All intercompany transactions and balances are eliminated in consolidation. The accompanying consolidated financial statements of the company and the Operating Partnership have been prepared in accordance with the rules applicable to Form 10-Q and include all information and footnotes required for interim financial statement presentation, but do not include all disclosures required under accounting principles generally accepted in the United States (“GAAP”) for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments, except as otherwise noted) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and notes therein included in the company's and Operating Partnership's annual report on Form 10-K for the year ended December 31, 2024. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using our best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates. Any reference to the number of properties, number of units, square footage, employee numbers or percentages of beneficial ownership of our shares are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board. Consolidated Statements of Cash Flows—Supplemental Disclosures The following table provides supplemental disclosures related to the Consolidated Statements of Cash Flows (in thousands): Three Months Ended March 31, 2025 2024 Supplemental cash flow information Total interest costs incurred $ 20,210 $ 18,311 Interest capitalized $ 1,430 $ 2,056 Interest expense, net $ 18,780 $ 16,255 Cash paid for interest, net of amounts capitalized $ 33,996 $ 21,178 Cash paid for income taxes $ 335 $ 490 Supplemental schedule of noncash investing and financing activities Accounts payable and accrued liabilities for construction in progress $ 12,283 $ 18,254 Accrued leasing commissions $ 4,207 $ 2,576 10 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) 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 three months ended March 31, 2025. Segment Information 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. 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. Revenue Recognition and Accounts Receivable Our leases with tenants are classified as operating leases. Substantially all such leases contain fixed rent escalations which occur at specified times during the term of the lease. Base rents are recognized on a straight-line basis from when the tenant controls the space through the term of the related lease, net of valuation adjustments, based on management's assessment of credit, collection and other business risks. We make estimates of the collectability of our current accounts receivable and straight-line rents receivable which require significant judgment by management. The collectability of receivables is affected by numerous different factors including current economic conditions, the impact of tenant bankruptcies, the status of collectability of current cash rents receivable, tenants' recent and historical financial and operating results, changes in our tenants' credit ratings, communications between our operating personnel and tenants, the extent of security deposits and letters of credit held with respect to tenants, and the ability of tenants to perform under the terms of their lease agreement. The provision for doubtful accounts at March 31, 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, 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). 11 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures . This pronouncement requires enhanced income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This pronouncement is effective for annual periods in fiscal years beginning after December 15, 2024, and should be applied either prospectively or retrospectively. 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. 12 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) NOTE 2. REAL ESTATE Acquisitions 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): Genesee Park 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): Genesee Park Revenues $ 359 Operating expenses 518 Operating income ( 159 ) Other income, net $ 2 Net income attributable to American Assets Trust, Inc. $ ( 157 ) Dispositions 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. 13 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) NOTE 3. ACQUIRED IN-PLACE LEASES AND ABOVE/BELOW MARKET LEASES The following summarizes our acquired lease intangibles and leasing costs, which are included in other assets and other liabilities and deferred credits, as of March 31, 2025 and December 31, 2024 (in thousands): March 31, 2025 December 31, 2024 In-place leases $ 51,120 $ 49,813 Accumulated amortization ( 36,976 ) ( 35,798 ) Above market leases 432 432 Accumulated amortization ( 413 ) ( 403 ) Acquired lease intangible assets, net $ 14,163 $ 14,044 Below market leases $ 42,420 $ 42,420 Accumulated accretion ( 29,904 ) ( 29,344 ) Acquired lease intangible liabilities, net $ 12,516 $ 13,076 NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability. The hierarchy for inputs used in measuring fair value is as follows: 1. Level 1 Inputs—quoted prices in active markets for identical assets or liabilities 2. Level 2 Inputs—observable inputs other than quoted prices in active markets for identical assets and liabilities 3. Level 3 Inputs—unobservable inputs The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities are reasonable estimates of fair value, using Level 1 inputs, because of the short-term nature of these instruments. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. We measure the fair value of our deferred compensation liability, which is included in other liabilities and deferred credits on the consolidated balance sheet, on a recurring basis using Level 2 inputs. We measure the fair value of this liability based on prices provided by independent market participants that are based on observable inputs using market-based valuation techniques. The fair value of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contract at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The changes in the fair value of the derivatives that are designated as cash flow hedges are being recorded in accumulated other comprehensive income (loss) and will be subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. We incorporate credit valuation adjustments to appropriately reflect both our own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of non-performance risk, we considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. 14 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 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): March 31, 2025 December 31, 2024 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Deferred compensation liability $ — $ 2,945 $ — $ 2,945 $ — $ 2,968 $ — $ 2,968 Interest rate swap asset $ — $ 4,024 $ — $ 4,024 $ — $ 5,215 $ — $ 5,215 The fair value of our secured notes payable and unsecured senior guaranteed notes are sensitive to fluctuations in interest rates. Discounted cash flow analysis using observable market interest rates (Level 2) is generally used to estimate the fair value of our secured notes payable, using rates ranging from 6.7 % to 7.0 %. Considerable judgment is necessary to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. The carrying values of our term loans set forth below are deemed to be at fair value since the outstanding debt is directly tied to the monthly Secured Overnight Financing Rate (“SOFR”). A summary of the carrying amount and fair value of our secured financial instruments, all of which are based on Level 2 inputs, is as follows (in thousands): March 31, 2025 December 31, 2024 Carrying Value Fair Value Carrying Value Fair Value Secured notes payable, net $ 74,782 $ 72,977 $ 74,759 $ 74,231 Unsecured term loans, net $ 99,771 $ 100,000 $ 324,739 $ 325,000 Unsecured senior guaranteed notes, net $ 499,248 $ 476,830 $ 599,172 $ 571,543 Senior notes, net $ 1,012,280 $ 965,742 $ 1,011,845 $ 959,234 NOTE 5. DERIVATIVE AND HEDGING ACTIVITIES Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The following is a summary of the terms of our outstanding interest rate swaps as of March 31, 2025 (dollars in thousands): Swap Counterparty Notional Amount Effective Date Maturity Date Fair Value Bank of America, N.A. $ 50,000 1/14/2022 1/5/2027 $ 2,011 Wells Fargo Bank, N.A. $ 50,000 1/14/2022 1/5/2027 $ 2,013 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. 15 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) 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. This analysis reflects the contractual terms of the derivative, including the period to maturity, and counterparty credit risk and uses observable market-based inputs, including interest rate curves, and implied volatilities. The fair value of the interest rate swap is determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. NOTE 6. OTHER ASSETS Other assets consist of the following (in thousands): March 31, 2025 December 31, 2024 Leasing commissions, net of accumulated amortization of $ 52,593 and $ 51,068 , respectively $ 35,629 $ 34,862 Interest rate swap asset 4,024 5,215 Acquired above market leases, net 19 29 Acquired in-place leases, net 14,144 14,015 Lease incentives, net of accumulated amortization of $ 1,239 and $ 1,171 , respectively 2,870 1,760 Other intangible assets, net of accumulated amortization of $ 2,144 and $ 2,062 , respectively 1,475 1,560 Debt issuance costs on line of credit, net of accumulated amortization of $ 2,105 and $ 1,943 , respectively 486 648 Right-of-use lease asset, net 18,350 18,993 Prepaid expenses and other 10,254 10,655 Total other assets $ 87,251 $ 87,737 NOTE 7. OTHER LIABILITIES AND DEFERRED CREDITS Other liabilities and deferred credits consist of the following (in thousands): March 31, 2025 December 31, 2024 Acquired below market leases, net $ 12,516 $ 13,076 Prepaid rent and deferred revenue 19,232 17,408 Deferred compensation 2,945 2,968 Deferred tax liability 781 781 Straight-line rent liability 7,224 7,692 Lease liability 19,955 20,638 Other liabilities 18 25 Total other liabilities and deferred credits, net $ 62,671 $ 62,588 Straight-line rent liability relates to leases which have rental payments that decrease over time or one-time upfront payments for which the rental revenue is deferred and recognized on a straight-line basis. NOTE 8. DEBT Debt of American Assets Trust, Inc. American Assets Trust, Inc. does not hold any indebtedness. All debt is held directly or indirectly by the Operating Partnership; however, American Assets Trust, Inc. 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. 16 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) Debt of American Assets Trust, L.P. Secured notes payable The following table is a summary of our total secured notes payable outstanding as of March 31, 2025 and December 31, 2024 (in thousands): Principal Balance as of Stated Interest Rate Stated Maturity Date Description of Debt March 31, 2025 December 31, 2024 as of March 31, 2025 City Center Bellevue (1) $ 75,000 $ 75,000 5.08 % October 1, 2027 75,000 75,000 Debt issuance costs, net of accumulated amortization of $ 655 and $ 632 , respectively ( 218 ) ( 241 ) Total Secured Notes Payable Outstanding $ 74,782 $ 74,759 (1) Interest only. The Operating Partnership has provided a carve-out guarantee on the mortgage at City Center Bellevue. Certain loans require the Operating Partnership to comply with various financial covenants. 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 March 31, 2025 and December 31, 2024 (in thousands): Description of Debt Principal Balance as of Stated Interest Rate Stated Maturity Date March 31, 2025 December 31, 2024 as of March 31, 2025 Term Loan A $ 100,000 $ 100,000 Variable (1) January 5, 2027 Term Loan B — 150,000 Variable (3) January 5, 2025 (2) Term Loan C — 75,000 Variable (3) January 5, 2025 (2) Senior Guaranteed Notes, Series C — 100,000 4.50 % April 1, 2025 (4) Senior Guaranteed Notes, Series D 250,000 250,000 4.29 % (5) March 1, 2027 Senior Guaranteed Notes, Series E 100,000 100,000 4.24 % (6) May 23, 2029 Senior Guaranteed Notes, Series G 150,000 150,000 3.91 % (7) July 30, 2030 3.375 % Senior Notes 500,000 500,000 3.38 % February 1, 2031 6.150 % Senior Notes 525,000 525,000 6.15 % (8) October 1, 2034 1,625,000 1,950,000 Debt discount and issuance costs, net of accumulated amortization of $ 10,433 and $ 9,890 , respectively ( 13,701 ) ( 14,244 ) Total Unsecured Notes Payable $ 1,611,299 $ 1,935,756 (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 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 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. 17 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) (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. The treasury lock contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 4.18 % per annum. (7) The Operating Partnership entered into a treasury lock contract on June 20, 2019, which was settled on July 17, 2019 at a gain 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 3.88 % per annum. (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. Senior Notes 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. The 3.375 % Senior Notes were priced at 98.935 % of the principal amount with a yield to maturity of 3.502 %. The net proceeds of the 3.375 % Senior Notes, after the issuance discount, underwriting fees, and other costs were approximately $ 489.7 million, which were primarily used to (i) prepay our $ 150 million Senior Guaranteed Notes, Series A, with a make-whole payment (as defined in the Note Purchase Agreement for the Series A Notes) thereon of approximately $ 3.9 million, on January 26, 2021, (ii) repay our $ 100 million then outstanding balance under our then-existing revolver loan on January 26, 2021, (iii) fund the development of the La Jolla Commons III office building and (iv) for general corporate purposes. On September 17, 2024, the Operating Partnership issued $ 525 million of senior unsecured notes (the “ 6.150 % Senior Notes”) that mature October 1, 2034, and bear interest at 6.150 % per annum. The 6.150 % Senior Notes were priced at 99.671 % of the principal amount with a yield to maturity of 6.194 %. The net proceeds of the 6.150 % Senior Notes, after the issuance discount, underwriting fees, and other costs, were approximately $ 518.2 million. 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. 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 3.375 % Senior Notes and the 6.150 % Senior Notes include a number of customary financial covenants, including: • A maximum aggregate debt ratio of 60 %, • A minimum debt service ratio of 1.5 x, • A maximum secured debt ratio of 40 %, • A minimum maintenance of total unencumbered assets of 150 %. 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. 18 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) Senior Guaranteed Notes On October 31, 2014, the Operating Partnership entered into a note purchase agreement (the “Note Purchase Agreement”) with a group of institutional purchasers that provided for the private placement of an aggregate of $ 350 million of senior guaranteed notes, of which (i) $ 150 million are designated as 4.04 % Senior Guaranteed Notes, Series A, due October 31, 2021 (the “Series A Notes”), (ii) $ 100 million are designated as 4.45 % Senior Guaranteed Notes, Series B, due February 2, 2025 (the “Series B Notes”) and (iii) $ 100 million are designated as 4.50 % Senior Guaranteed Notes, Series C, due April 1, 2025 (the “Series C Notes”). The Series A Notes were issued on October 31, 2014, the Series B Notes were issued on February 2, 2015 and the Series C Notes were issued on April 2, 2015. The Series A Notes, the Series B Notes and the Series C Notes will pay interest quarterly on the last day of January, April, July and October until their respective maturities. 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. On May 23, 2017, the Operating Partnership entered into a Note Purchase Agreement for the private placement of $ 100 million of 4.24 % Senior Guaranteed Notes, Series E, due May 23, 2029 (the “Series E Notes”). The Series E Notes were issued on May 23, 2017 and pay interest semi-annually on the 23rd of May and November until their respective maturities. On July 19, 2017, the Operating Partnership entered into a Note Purchase Agreement for the private placement of $ 100 million of 3.78 % Senior Guaranteed Notes, Series F, due July 19, 2024 (the “Series F Notes”). The Series F Notes were issued on July 19, 2017 and pay interest semi-annually on the 31st of January and July until their respective maturities. On July 18, 2024, we borrowed $ 100 million on our Revolver Loan 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. The Note Purchase Agreements contain 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 Note Purchase Agreement and the Notes, upon certain events of default, including, but not limited to, (i) a default in the payment of any principal, Make-Whole Amount or interest under the Notes, and (ii) a default in the payment of certain other indebtedness by us or our subsidiaries, the principal, accrued and unpaid interest, and the make-whole amount on the outstanding Notes will become due and payable at the option of the purchasers. The Operating Partnership's obligations under the Notes are fully and unconditionally guaranteed by the Operating Partnership and certain of the Operating Partnership's subsidiaries. Certain loans require the Operating Partnership to comply with various financial covenants, including the maintenance of minimum debt coverage ratios. As of March 31, 2025, the Operating Partnership was in compliance with all loan covenants. 19 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) Third Amended and Restated Credit Facility On January 5, 2022, the Operating Partnership entered into the third amended and restated credit facility (the “Third Amended and Restated Credit Facility”) , which amended and restated our then-existing credit facility. The Third Amended and Restated Credit Facility provides for aggregate, unsecured borrowings of up to $ 500 million, consisting of a revolving line of credit of $ 400 million (the “Revolver Loan”) and a term loan of $ 100 million (“Term Loan A”). The Revolver Loan initially matures on January 5, 2026, subject to two , six-month extension options. Term Loan A matures on January 5, 2027, with no further extension options. 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. On January 14, 2022, the Operating Partnership entered into an interest rate swap agreement intended to fix the interest rate associated with the Term Loan A at approximately 2.70 % through January 5, 2027, subject to adjustments based on our consolidated leverage ratio. The Third Amended and Restated Credit Facility includes a number of customary financial covenants, including: • A maximum leverage ratio (defined as total indebtedness net of certain cash and cash equivalents to total asset value) of 60 %, • A maximum secured leverage ratio (defined as total secured debt to secured total asset value) of 40 %, • A minimum fixed charge coverage ratio (defined as consolidated earnings before interest, taxes, depreciation and amortization to consolidated fixed charges) of 1.50 x, • A minimum unsecured interest coverage ratio of 1.75 x, • A maximum unsecured leverage ratio of 60 %, and • Recourse indebtedness at any time cannot exceed 15 % of total asset value. The Third Amended and Restated Credit Facility also provides that our annual distributions may not exceed the greater of (1) 95 % of our funds from operations (“FFO”) or (2) the amount required for us to (a) qualify and maintain our REIT status and (b) avoid the payment of federal or state income or excise tax. If certain events of default exist or would result from a distribution, we may be precluded from making distributions other than those necessary to qualify and maintain our status as a REIT. As of March 31, 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 On January 5, 2023, we entered into the amended and restated term loan agreement (the “Amended and Restated Term Loan Agreement”), which amended and restated our then-existing term loan agreement. 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. On January 2, 2025, we repaid the entirety of Term Loan B and Term Loan C. 20 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) NOTE 9. 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 21.1 % 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 three months ended March 31, 2025, no common units were converted into shares of our common stock. Earnings Per Unit of the Operating Partnership Basic earnings per unit (“EPU”) of the Operating Partnership is computed by dividing income applicable to unitholders by the weighted average Operating Partnership units outstanding, as adjusted for the effect of participating securities. Operating Partnership units granted in equity-based payment transactions that have non-forfeitable dividend equivalent rights are considered participating securities prior to vesting. The impact of unvested Operating Partnership unit awards on EPU has been calculated using the two-class method whereby earnings are allocated to the unvested Operating Partnership unit awards based on distributions and the unvested Operating Partnership units’ participation rights in undistributed earnings. The calculation of diluted EPU for the three months ended March 31, 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. NOTE 10. EQUITY OF AMERICAN ASSETS TRUST, INC. Stockholders' Equity On December 3, 2021, we entered into an at-the-market ("ATM") equity program with five sales agents in which we may, from time to time, offer and sell shares of our common stock having an aggregate offering price of up to $ 250 million. The sales of shares of our common stock made through the ATM equity program, as amended, are made in "at-the-market" offerings as defined in Rule 415 of the Securities Act of 1933, as amended. For the three months ended March 31, 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 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 March 31, 2025, we have no obligation to sell the remaining shares available for sale under the ATM equity program. 21 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) Dividends 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 Share/Unit Period Covered Dividend Paid Date First Quarter 2025 $ 0.340 January 1, 2025 to March 31, 2025 March 20, 2025 Taxability of Dividends Earnings and profits, which determine the taxability of distributions to stockholders and holders of common units, may differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of revenue recognition and compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation. Stock-Based Compensation We follow the FASB guidance related to stock-based compensation which establishes financial accounting and reporting standards for stock-based employee compensation plans, including all arrangements by which employees receive shares of stock or other equity instruments of the employer. The guidance also defines a fair value-based method of accounting for an employee stock award or similar equity instrument. The following table summarizes the activity of restricted stock awards during the three months ended March 31, 2025: Units Weighted Average Grant Date Fair Value Nonvested at January 1, 2025 600,938 $ 19.40 Granted — — Vested — — Forfeited ( 3,508 ) 17.67 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 We have calculated earnings per share (“EPS”) under the two-class method. 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 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 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. 22 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) The computation of basic and diluted EPS is presented below (dollars in thousands, except share and per share amounts): Three Months Ended March 31, 2025 2024 NUMERATOR Net income $ 54,107 $ 24,623 Less: Net income attributable to restricted shares ( 203 ) ( 196 ) Less: Income from operations attributable to unitholders in the Operating Partnership ( 11,369 ) ( 5,167 ) Net income attributable to common stockholders—basic $ 42,535 $ 19,260 Income from operations attributable to American Assets Trust, Inc. common stockholders—basic $ 42,535 $ 19,260 Plus: Income from operations attributable to unitholders in the Operating Partnership 11,369 5,167 Net income attributable to common stockholders—diluted $ 53,904 $ 24,427 DENOMINATOR Weighted average common shares outstanding—basic 60,537,300 60,309,921 Effect of dilutive securities—conversion of Operating Partnership units 16,181,537 16,181,537 Weighted average common shares outstanding—diluted 76,718,837 76,491,458 Earnings per common share, basic $ 0.70 $ 0.32 Earnings per common share, diluted $ 0.70 $ 0.32 NOTE 11. INCOME TAXES We elected to be taxed as a REIT and operate in a manner that allows us to qualify as a REIT for federal income tax purposes commencing with our initial taxable year. As a REIT, we are generally not subject to corporate level income tax on the earnings distributed currently to our stockholders that we derive from our REIT qualifying activities. Taxable income from non-REIT activities managed through our TRS is subject to federal and state income taxes. We lease our hotel property to a wholly owned TRS that is subject to federal and state income taxes. We account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between GAAP carrying amounts and their respective tax bases. 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 $ 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 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. NOTE 12. COMMITMENTS AND CONTINGENCIES Legal We are sometimes involved in various disputes, lawsuits, warranty claims, environmental considerations, and other matters arising in the ordinary course of business. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters. 23 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) We are currently a party to various legal proceedings. We accrue a liability for litigation if an unfavorable outcome is probable and the amount of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, we accrue the best estimate within the range; however, if no amount within the range is a better estimate than any other amount, the minimum amount within the range is accrued. Legal fees related to litigation are expensed as incurred. We do not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on our financial position or overall trends in results of operations; however, litigation is subject to inherent uncertainties. 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. Commitments 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. Under the management agreement with Outrigger relating to the retail portion of Waikiki Beach Walk (the “retail management agreement”), we pay Outrigger a monthly management fee of 3.0 % of net revenues from the retail portion of Waikiki Beach Walk. Pursuant to the terms of the retail management agreement, if the agreement is terminated in certain instances, including our election not to repair damage or destruction at the property, a condemnation or our failure to make required working capital infusions, we would be obligated to pay Outrigger a termination fee equal to the sum of the management fees paid for the two months immediately preceding the termination date. The retail management agreement may not be terminated by us or by Outrigger without cause. Under our management agreement with Outrigger relating to the hotel portion of Waikiki Beach Walk (the “hotel management agreement”), we pay Outrigger a monthly management fee of 6.0 % of the hotel's gross operating profit, as well as 3.0 % of the hotel's gross revenues; provided that the aggregate management fee payable to Outrigger for any year shall not exceed 3.5 % of the hotel's gross revenues for such fiscal year. The hotel management agreement may not be terminated by us or by Outrigger without cause. Additionally, we have a management agreement with Outrigger pursuant to which Outrigger manages our Waikele Center and Shops at Kalakaua. In connection with such management agreement, we pay Outrigger a fixed management fee of $ 12,000 per month in the aggregate plus additional amounts for any lease renewal services provided by Outrigger at our request. This management agreement can be terminated by us at any time and for any reason on 30 days' notice without any cancellation or termination fees. A wholly owned subsidiary of our Operating Partnership, WBW Hotel Lessee LLC, entered into a franchise license agreement with Embassy Suites Franchise LLC, the franchisor of the brand “Embassy Suites™,” to obtain the non-exclusive right to operate the hotel under the Embassy Suites TM brand for 20 years. The franchise license agreement provides that WBW Hotel Lessee LLC must comply with certain management, operational, record keeping, accounting, reporting and marketing standards and procedures. In connection with this agreement, we are also subject to the terms of a product improvement plan pursuant to which we expect to undertake certain actions to ensure that our hotel's infrastructure is maintained in compliance with the franchisor's brand standards. 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 $ 8.2 million based on operating performance through March 31, 2025. Concentrations of Credit Risk Our properties are located in Southern California, Northern California, Washington, Oregon, Texas and Hawaii. 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. 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 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 three months ended March 31, 2025 and 2024, no tenant accounted for more than 10% of our total rental revenue. 24 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) NOTE 13. LEASES Lessor Operating Leases We determine if an arrangement is a lease at inception. Our lease agreements are generally for real estate, and the determination of whether such agreements contain leases generally does not require significant estimates or judgments. We lease real estate under operating leases. Our leases with office, retail, mixed-use and residential tenants are classified as operating leases. Leases at our office and retail properties and the retail portion of our mixed-use property generally range from three years to ten years (certain leases with anchor tenants may be longer), and in addition to minimum rents, usually provide for cost recoveries for the tenant’s share of certain operating costs. Our leases may also include variable lease payments in the form of percentage rents based on the tenant’s level of sales achieved in excess of a breakpoint threshold. Leases on apartments generally range from seven months to fifteen months , with a majority having 12 -month lease terms. Rooms at the hotel portion of our mixed-use property are rented on a nightly basis. Leases at our office and retail properties and the retail portion of our mixed-use property may contain lease extension options, at our lessee's discretion. The extension options are generally for 3 to 10 years and contain primarily rent at fixed rates or the prevailing market rent. The extension options are generally exercisable 6 to 12 months prior to the expiration of the lease and require the lessee to not be in default of the lease terms. We attempt to maximize the amount we expect to derive from the underlying real estate property following the end of a lease, to the extent it is not extended. We maintain a proactive leasing and capital improvement program that, combined with the quality and locations of our properties, has made our properties attractive to tenants. However, the residual value of a real estate property is still subject to various market-specific, asset-specific, and tenant-specific risks and characteristics. As of March 31, 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 2026 242,095 2027 218,970 2028 175,482 2029 116,968 Thereafter 217,546 Total $ 1,155,065 The above future minimum rentals exclude residential leases, which typically range from seven months to fifteen months , and exclude the hotel, as rooms are rented on a nightly basis. Lessee Operating Leases We determine if an arrangement is a lease at inception. Our lease agreements are generally for real estate, and the determination of whether such agreements contain leases generally does not require significant estimates or judgments. We lease real estate under operating leases. At The Landmark at One Market, we lease, as lessee, a building adjacent to The Landmark at One Market under an operating lease effective through June 30, 2026, which we have the option to extend until 2031 (the "Annex Lease"). The lease payments under the extension option provided for under the Annex Lease will be equal to the fair rental value at the time the extension option is exercised. 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. 25 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) 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 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 2026 3,584 2027 3,584 2028 3,584 2029 3,584 Thereafter 5,375 Total lease payments 22,373 Imputed interest ( 2,418 ) Present value of lease liability $ 19,955 Lease costs under the operating leases are as follows (in thousands): Three Months Ended March 31, 2025 2024 Operating lease cost $ 910 $ 970 Sublease income ( 860 ) ( 859 ) Total lease cost $ 50 $ 111 Weighted-average remaining lease term - operating leases (in years) 6.3 Weighted-average discount rate - operating leases 3.19 % Supplemental cash flow information and non-cash activity related to our operating leases are as follow (in thousands): Three Months Ended March 31, 2025 2024 Operating cash flow information: Cash paid for amounts included in the measurement of lease liabilities $ 870 $ 844 Subleases At The Landmark at One Market, we (as sublandlord) sublease the Annex Lease building under operating leases effective through December 31, 2029. 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. 26 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) NOTE 14. COMPONENTS OF RENTAL INCOME AND EXPENSE The principal components of rental income are as follows (in thousands): Three Months Ended March 31, 2025 2024 Lease rental income Office $ 48,861 $ 49,635 Retail 24,742 25,166 Multifamily 15,820 15,279 Mixed-use 3,356 2,981 Percentage rent ( 385 ) 548 Hotel revenue 9,908 10,733 Other 649 679 Total rental income $ 102,951 $ 105,021 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 March 31, 2025 2024 Rental operating $ 14,617 $ 13,716 Hotel operating 7,348 7,419 Repairs and maintenance 5,269 5,124 Marketing 573 1,029 Rent 909 925 Hawaii excise tax 1,005 1,035 Management fees 579 593 Total rental expenses $ 30,300 $ 29,841 NOTE 15. OTHER INCOME The principal components of other income, net are as follows (in thousands): Three Months Ended March 31, 2025 2024 Interest and investment income $ 1,332 $ 589 Income tax expense ( 417 ) ( 260 ) Other non-operating income — 10,000 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). 27 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) NOTE 16. 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 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 $ 0.1 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 $ 0.3 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. NOTE 17. 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 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. 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. 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. 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): 28 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) Three Months Ended March 31, 2025 2024 Total Office 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 Segment profit 35,181 36,690 Total Retail 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 Segment profit 17,233 17,725 Total Multifamily 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 Segment profit 9,574 9,318 Total Mixed-Use Property revenue 16,247 16,688 Rental expenses 9,891 9,828 Real estate taxes 1,042 985 Property expense 10,933 10,813 Segment profit 5,314 5,875 Total segments’ profit $ 67,302 $ 69,608 The following table is a reconciliation of segment profit to net income attributable to stockholders (in thousands): Three Months Ended March 31, 2025 2024 Total segments’ profit $ 67,302 $ 69,608 General and administrative ( 9,312 ) ( 8,842 ) Depreciation and amortization ( 30,494 ) ( 30,217 ) Interest expense, net ( 18,780 ) ( 16,255 ) Gain on sale of real estate 44,476 — Other income (expense), net 915 10,329 Net income 54,107 24,623 Net income attributable to restricted shares ( 203 ) ( 196 ) Net income attributable to unitholders in the Operating Partnership ( 11,369 ) ( 5,167 ) Net income attributable to American Assets Trust, Inc. stockholders $ 42,535 $ 19,260 29 Table of Contents American Assets Trust, Inc. and American Assets Trust, L.P. Notes to Consolidated Financial Statements—(Continued) March 31, 2025 (Unaudited) 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 Office $ 1,593,384 $ 1,597,458 Retail 474,314 478,037 Multifamily 414,326 351,016 Mixed-Use 160,324 160,975 $ 2,642,348 $ 2,587,486 Secured Notes Payable (1) Office $ 75,000 $ 75,000 $ 75,000 $ 75,000 (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, 2025 2024 Capital Expenditures (1) Office $ 14,311 $ 8,986 Retail 1,449 2,779 Multifamily 491 1,200 Mixed-Use 979 327 $ 17,230 $ 13,292 (1) Capital expenditures represent cash paid for capital expenditures during the period and include leasing commissions paid. 30 Table of Contents