What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-01 compared with 2025-05-02 · 254 added, 94 removed, 331 unchanged (51% of the section changed)

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

As of March 31, 2025, our portfolio was comprised of twelve office properties;

As of June 30, 2025, our portfolio was comprised of twelve office properties;

eleven retail shopping centers a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center;

and seven multifamily properties.

Additionally, as of March 31, 2025, we owned land at three of our properties that we classified as held for development and/or construction in progress.

Additionally, as of June 30, 2025, we owned land at two of our properties that we classified as held for development and/or construction in progress.

La Jolla Commons - Land, related to the build-out of La Jolla Commons III, was previously classified as held for development.

The build out of La Jolla Commons III is now complete and the building, inclusive of the land, was placed in operations as of April 1, 2025.

Our core markets include San Diego, California;

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

Our Company, as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.9% of our Operating Partnership as of March 31, 2025.

Our Company, as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.9% of our Operating Partnership as of June 30, 2025.

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

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

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

Accordingly, we recorded a gain on the sale of approximately $44.5 million for the six months ended June 30, 2025.

Critical Accounting Policies

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Properties are deemed stabilized typically at the earlier of (i) reaching 90% occupancy or (ii) four quarters following a property's inclusion in operating real estate.

We typically remove properties from same-store properties when the development, redevelopment or expansion has or is expected to have a significant impact on the property's annualized base rent, occupancy and operating income within the calendar year.

Our evaluation of significant impact related to development, redevelopment or expansion activity is based on quantitative and qualitative measures including, but not limited to, the following:

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

Below is a summary of our same-store and redevelopment same-store composition for the three months ended March 31, 2025 and 2024.

Below is a summary of our same-store and redevelopment same-store composition for the three and six months ended June 30, 2025 and 2024.

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

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

Del Monte Center was removed as a same-store and redevelopment same-store property when compared to the designations for the three months ended March 31, 2024, as it was sold on February 25, 2025.

Genesee Park is classified as a non-same-store property, as it was acquired on February 28, 2025.

Retail same-store net operating income increased approximately 5.0% for the three months ended March 31, 2025 compared to the same period in 2024.

Office same-store net operating income decreased 2.9% for the three months ended March 31, 2025 compared to the same period in 2024.

Three Months Ended March 31,

Del Monte Center was removed as a same-store and redevelopment same-store property when compared to the designations for the three and six months ended June 30, 2024, as it was sold on February 25, 2025.

Genesee Park is classified as a non-same-store property because it was acquired on February 28, 2025, and thus has not been owned for the comparable period.

La Jolla Commons III is classified as non-same store when compared to the designations for the three and six months ended June 30, 2024, as it was placed in operations on April 1, 2025.

La Jolla Commons III is a part of the La Jolla Commons office project, and not a stand-alone property.

Retail same-store operating income increased approximately 5.5% for the six months ended June 30, 2025 compared to the same period in 2024.

Office same-store operating income decreased 2.1% for the six months ended June 30, 2025 compared to the same period in 2024.

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

2025 2024 2025 2024

Same-Store 29 30 29 30

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Furthermore, we believe the locations of our properties and diversified portfolio will mitigate some of the potentially negative impact of the current economic environment.

During the three months ended March 31, 2025, we signed 19 office leases for a total of 139,616 square feet of office space including 44,422 square feet of comparable space leases, at an average rental rate increase on a cash and GAAP basis of 7.8% and 15.2%, respectively.

New office leases for comparable spaces were signed for 1,913 square feet at an average rental rate increase on a cash and GAAP basis of 4.4% and 0.6%, respectively.

During the three months ended June 30, 2025, we signed 20 office leases for a total of 102,290 square feet of office space including 69,363 square feet of comparable space leases (leases for which there was a prior tenant), at an average rental rate decrease on a cash basis and increase on a GAAP basis of 2.0% and 9.6%, respectively.

New office leases for comparable spaces were signed for 50,765 square feet at an average rental rate decrease on a cash basis and increase on a GAAP basis of 5.2% and 9.2%, respectively.

Renewals for comparable office spaces were signed for 18,598 square feet at an average rental rate increase on a cash and GAAP basis of 6.4% and 10.7%, respectively.

There were no new tenant improvements or incentives on office space for comparable new leases during the three months ended March 31, 2025.

During the three months ended March 31, 2025, we signed 16 retail leases for a total of 157,644 square feet of retail space including 155,944 square feet of renewals for comparable space leases, at an average rental rate increase on a cash and GAAP basis of 13.3% and 21.0%, respectively.

There were no new retail leases, tenant improvements, or incentives on retail space for comparable new leases during the three months ended March 31, 2025.

Tenant improvements and incentives were $48.15 per square foot of office space for comparable new leases for the three months ended June 30, 2025, mainly due to new tenants at 14Acres and Lloyd District.

During the three months ended June 30, 2025, we signed 32 retail leases for a total of 220,247 square feet of retail space including 213,073 square feet of comparable space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash and GAAP basis of 7.4% and 21.9%, respectively.

New retail leases for comparable spaces were signed for 20,654 square feet at an average rental rate increase on a cash and GAAP basis of 6.9% and 263.2%, respectively.

The rental rate increase on a GAAP basis is primarily attributable to our recognition of the prior tenant's rental revenue on a cash basis and the new tenant's rental revenue on a straight line basis.

Renewals for comparable retail spaces were signed for 192,419 square feet at an average rental rate increase on a cash and GAAP basis of 7.5% and 13.7%, respectively.

Tenant improvements and incentives were $33.48 per square foot of retail space for comparable new leases for the three months ended June 30, 2025, mainly due to new tenants at Gateway Marketplace, Alamo Quarry Market and Solana Beach Towne Centre.

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

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

We capitalized external and internal costs related to both development and redevelopment activities combined of $2.0 million and $3.5 million for the three months ended March 31, 2025 and 2024, respectively.

We capitalized external and internal costs related to other property improvements combined of $12.3 million and $9.6 million for the three months ended March 31, 2025 and 2024, respectively.

We capitalized external and internal costs related to new development, redevelopment, expansion and repositioning activities combined of $8.6 million and $4.8 million for the three months ended June 30, 2025 and 2024, respectively, and $10.6 million and $8.3 million for the six months ended June 30, 2025 and 2024, respectively.

We capitalized external and internal costs related to other property improvements combined of $12.8 million and $14.6 million for the three months ended June 30, 2025 and 2024, respectively, and $25.2 million and $24.1 million for the six months ended June 30, 2025 and 2024, respectively.

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

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

We capitalized interest costs related to development activities of $1.4 million and $2.1 million for the three months ended March 31, 2025 and 2024, respectively.

Since the build out of La Jolla Commons III is now complete and the building, inclusive of the land, was placed in operations as of April 1, 2025, there were no capitalized interest costs related to development activities for the three months ended June 30, 2025.

We capitalized interest costs related to development activities of $2.1 million for the three months ended June 30, 2024 and $1.4 million and $4.2 million for the six months ended June 30, 2025 and 2024, respectively.

Results of Operations

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

Comparison of the three months ended March 31, 2025 to the three months ended March 31, 2024

The following summarizes our consolidated results of operations for the three months ended March 31, 2025 compared to our consolidated results of operations for the three months ended March 31, 2024.

As of March 31, 2025, our operating portfolio was comprised of 31 retail, office, multifamily and mixed-use properties with an aggregate of approximately 6.6 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,302 residential units (including 120 RV spaces) and a 369-room hotel.

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

Additionally, as of March 31, 2025 and March 31, 2024, we owned land at three of our properties that we classified as held for development and/or construction in progress.

The following table sets forth selected data from our unaudited consolidated statements of comprehensive income for the three months ended March 31, 2025 and 2024 (dollars in thousands):

Three Months Ended March 31, Change %

Comparison of the three months ended June 30, 2025 to the three months ended June 30, 2024

The following summarizes our consolidated results of operations for the three months ended June 30, 2025 compared to our consolidated results of operations for the three months ended June 30, 2024.

As of June 30, 2025, our operating portfolio was comprised of 31 retail, office, multifamily and mixed-use properties with an aggregate of approximately 6.8 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,302 residential units (including 120 RV spaces) and a 369-room hotel.

Additionally, as of June 30, 2025, we owned land at two of our properties that we classified as held for development and/or construction in progress.

As of June 30, 2024, our operating portfolio was comprised of 31 retail, office, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of

retail and office space, including the retail portion of our mixed-use property, 2,110 residential units (including 120 RV spaces) and a 369-room hotel.

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

The following table sets forth selected data from our unaudited consolidated statements of comprehensive income for the three months ended June 30, 2025 and 2024 (dollars in thousands):

Three Months Ended June 30, Change %

Rental income $ 101,070 $ 105,094 $ (4,024) (4) %

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Total property expenses 40,323 40,348 (25) —

Net operating income 67,302 69,608 (2,306) (3)

Total property operating income 67,610 70,542 (2,932) (4)

General and administrative (8,850) (8,737) (113) 1

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Interest expense, net (19,784) (16,289) (3,495) 21

Gain on sale of real estate 44,476 — 44,476 100

Other income, net 927 789 138 17

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

Total property revenue decreased $2.1 million to $108.6 million for the three months ended March 31, 2025 compared to $110.7 million for the three months ended March 31, 2024.

The percentage leased was as follows for each segment as of March 31, 2025 and 2024:

Total property revenue decreased $3.0 million to $107.9 million for the three months ended June 30, 2025 compared to $110.9 million for the three months ended June 30, 2024.

The percentage leased was as follows for each segment as of June 30, 2025 and 2024:

Percentage Leased (1)

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95.0 % 95.7 %

(1) The percentage leased for our retail and office segments and the retail portion of the mixed-use segment includes square footage under leases, including leases which may not have commenced as of March 31, 2025 or 2024, as applicable.

Percentage leased for our multifamily properties includes total units rented and occupied as of March 31, 2025 or 2024, as applicable.

Percentage leased for our multifamily properties includes total units rented and occupied as of June 30, 2025 or 2024, as applicable.

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

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

Rental revenue decreased $2.1 million, or 2%, to $103.0 million for the three months ended March 31, 2025 compared to $105.0 million for the three months ended March 31, 2024.

Rental revenue decreased $4.0 million, or 4%, to $101.1 million for the three months ended June 30, 2025 compared to $105.1 million for the three months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio (1)

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

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

2025 2024 2025 2024

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(ii) Del Monte Center (retail), which was sold on February 25, 2025;

(iii) Genesee Park (multifamily), which was acquired on February 28, 2025 and (iv) land held for development.

Total office rental revenue decreased $0.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to lower occupancy and annualized base rents at Torrey Reserve Campus, lower occupancy at Lloyd Portfolio, and a decrease in cost recoveries of $0.2 million due to changes in tenant base years, a decrease in recoverable property expenses, and prior year tax refunds received that were passed back to tenants.

Same-store retail rental revenue increased $0.5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to new tenant leases and scheduled rent increases at Alamo Quarry Market and Solana Beach Towne Center.

Additionally, there was an increase of $0.2 million in cost recoveries.

Same-store multifamily revenue increased $0.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to an overall increase in average monthly base rent and a slight decrease in occupancy.

Same-store average monthly base rent and occupancy was $2,777 and 90.5%, for the three months ended March 31, 2025, respectively, compared to $2,681 and 92.3%, for the three months ended March 31, 2024, respectively.

Total mixed-use rental revenue decreased $0.4 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to a decrease in tourism, which led to a decrease in average occupancy and revenue per available room to 84.6% and $298 for the three months ended March 31, 2025, respectively, compared to 89.8% and $320 for the three months ended March 31, 2024, respectively.

(iii) Genesee Park (multifamily), which was acquired on February 28, 2025, (iv) La Jolla Commons III (office), which was placed into operations on April 1, 2025 and (v) land held for development (office).

Same-store office rental revenue decreased $1.4 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to lower occupancy and annualized base rents at Torrey Reserve Campus and First & Main, lower occupancy at Lloyd Portfolio, and a decrease in cost recoveries of $0.3 million due to changes in tenant base years, a decrease in recoverable property expenses, and prior year tax refunds received that were passed back to tenants.

Same-store retail rental revenue increased $0.2 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to new tenant leases and scheduled rent increases at Carmel Mountain Plaza, Geary Marketplace, Alamo Quarry Market and Solana Beach Towne Center.

These increases were offset by a decrease of $0.2 million in cost recoveries.

Same-store multifamily revenue decreased $0.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to an overall decrease in occupancy.

Same-store average monthly base rent and occupancy was $2,791 and 89.0%, for the three months ended June 30, 2025, respectively, compared to $2,730 and 90.8%, for the three months ended June 30, 2024, respectively.

Total mixed-use rental revenue decreased $0.3 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to a decrease in tourism, which led to a decrease in average occupancy and revenue per available room to 86.0% and $305 for the three months ended June 30, 2025, respectively, compared to 86.4% and $317 for the three months ended June 30, 2024, respectively.

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

Other property income .

Other property income stayed flat at $5.7 million for the three months ended March 31, 2025 and March 31, 2024.

Other property income increased $1.1 million, or 18%, to $6.9 million for the three months ended June 30, 2025 compared to $5.8 million for the three months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio

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

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

2025 2024 2025 2024

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$ 6,863 $ 5,796 $ 1,067 18 % $ 6,839 $ 5,790 $ 1,049 18 %

Office other property income increased $0.7 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to lease termination fees received at Timber Ridge.

Retail other property income increased $0.2 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to lease termination fees received at Alamo Quarry Market.

Mixed-use other property income increased $0.2 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to an increase in parking garage income at the retail portion of our mixed-use property.

Property Expenses

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

Total property expenses increased $0.2 million, or 1%, to $41.3 million, for the three months ended March 31, 2025 compared to $41.1 million for the three months ended March 31, 2024.

Total property expenses stayed flat at $40.3 million for the three months ended June 30, 2025 and June 30, 2024.

Rental Expenses.

Rental expenses increased $0.5 million, or 2%, to $30.3 million for the three months ended March 31, 2025 compared to $29.8 million for the three months ended March 31, 2024.

Rental expenses increased $0.2 million, or 1%, to $29.7 million for the three months ended June 30, 2025 compared to $29.5 million for the three months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio

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

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

2025 2024 2025 2024

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$ 29,678 $ 29,505 $ 173 1 % $ 28,366 $ 28,033 $ 333 1 %

Office rental expense increased $0.7 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to a $0.3 million increase at La Jolla Commons Tower III related to new operations and amenities and a $0.4 million increase related to higher utilities expense and insurance expense.

Retail rental expense decreased $0.5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to $0.5 million written off in the first quarter of 2024 for non-recurring costs relating to construction in progress for then-prospective construction at Waikele Center and a $0.2 million decrease due to the sale of Del Monte Center in the first quarter of 2025.

These decreases were partially offset by an increase in facilities services and utilities expense.

Multifamily rental expense increased $0.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to the acquisition of Genesee Park and an overall increase in insurance expense across our other multifamily properties.

Mixed-use rental expense increased $0.1 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to an increase in repairs and maintenance expense and facilities services at the retail portion of our mixed-use property.

Office rental expense increased $0.3 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to an increase at La Jolla Commons Tower III related to new operations and amenities.

Same-store office rental expense decreased $0.1 million due to lower parking garage expense and other operating expense.

Retail rental expense decreased $1.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to the sale of Del Monte Center in the first quarter of 2025.

Multifamily rental expense increased $0.8 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to the acquisition of Genesee Park.

Same-store multifamily rental expense increased $0.1 million due to an overall increase in utilities expense and repairs and maintenance expense across most of our other multifamily properties.

Mixed-use rental expense increased $0.2 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to an increase in room related expenses at the hotel portion of our mixed-use property and an increase in repairs and maintenance expense and excise tax expense at the retail portion of our mixed-use property.

Real Estate Taxes.

Real estate taxes decreased $0.2 million, or 2%, to $11.0 million for the three months ended March 31, 2025 compared to $11.2 million for the three months ended March 31, 2024.

Real estate taxes decreased $0.2 million, or 2%, to $10.6 million for the three months ended June 30, 2025 compared to $10.8 million for the three months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio

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

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

2025 2024 2025 2024

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$ 10,645 $ 10,843 $ (198) (2) % $ 9,936 $ 10,665 $ (729) (7) %

Same-store office real estate taxes decreased $0.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to a decrease in property tax assessments at City Center Bellevue, 14Acres and Timber Ridge, partially offset by an increase at First & Main due to real estate tax refunds received during the three months ended March 31, 2024.

Retail real estate taxes decreased $0.3 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to real estate tax refunds received at Del Monte Center during the three months ended March 31, 2024.

Multifamily real estate taxes increased $0.1 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to the acquisition of Genesee Park and an increase in property tax assessments at Pacific Ridge Apartments.

Mixed-use real estate taxes increased $0.1 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to an increase in property tax assessments.

Property Net Operating Income

Property net operating income decreased $2.3 million, or 3%, to $67.3 million for the three months ended March 31, 2025, compared to $69.6 million for the three months ended March 31, 2024.

Same-store office real estate taxes decreased $0.2 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to a decrease in property tax assessments at City Center Bellevue, 14Acres and Timber Ridge, partially offset by an increase at La Jolla Commons due to real estate tax refunds received during the three months ended June 30, 2024.

Same-store retail real estate taxes decreased $0.7 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to a decrease in property tax assessments at Alamo Quarry Market and an increase in real estate tax refunds received at Alamo Quarry Market and Carmel Mountain Plaza.

Multifamily real estate taxes increased $0.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to the acquisition of Genesee Park and an increase in property tax assessments at Pacific Ridge Apartments.

Mixed-use real estate taxes increased $0.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to an increase in property tax assessments.

Property Operating Income

Property operating income decreased $2.9 million, or 4%, to $67.6 million for the three months ended June 30, 2025, compared to $70.5 million for the three months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio

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

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

2025 2024 2025 2024

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$ 67,610 $ 70,542 $ (2,932) (4) % $ 68,329 $ 68,443 $ (114) — %

Total office net operating income decreased $1.5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to a decrease of $0.8 million in rental revenue driven primarily by lower occupancy and annualized base rents at Torrey Reserve Campus, lower occupancy at Lloyd Portfolio, a decrease in cost recoveries, and an increase in rental expenses related to the operations and amenities at La Jolla Commons Tower III and overall increase in utilities expense and insurance expense.

Same-store retail net operating income increased $0.8 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to new tenant leases and scheduled rent increases at Alamo Quarry Market and Solana Beach Towne Center and an increase in cost recoveries.

Additionally there was a decrease in rental expenses due to $0.5 million written off in the first quarter of 2024 for non-recurring costs relating to construction in progress for then-prospective construction at Waikele Center, partially offset by an increase in facilities and utilities expenses.

Same-store multifamily net operating income increased $0.1 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to an overall increase in average monthly base rent and a slight decrease in occupancy.

These increases were offset by higher insurance expense across our same-store multifamily properties.

Total mixed-use net operating income decreased $0.6 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to a decrease in tourism, which led to a decrease in average occupancy and revenue per available room to 84.6% and $298 for the three months ended March 31, 2025, respectively, compared to 89.8% and $320 for the three months ended March 31, 2024, respectively.

Same-store office operating income decreased $1.2 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to a decrease in rental revenue driven primarily by lower occupancy and annualized base rents at Torrey Reserve Campus and First & Main, lower occupancy at Lloyd Portfolio, a decrease in cost recoveries, and a decrease in parking garage expense and other operating expense.

Same-store retail operating income increased $1.0 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to new tenant leases and scheduled rent increases at Carmel Mountain Plaza, Geary Marketplace, Alamo Quarry Market and Solana Beach Towne Center.

Additionally there was a decrease in real estate taxes due to lower property tax assessments at Alamo Quarry Market and an increase in real estate tax refunds received at Alamo Quarry Market and Carmel Mountain Plaza.

Same-store multifamily operating income decreased $0.3 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to a decrease in occupancy.

Same-store average monthly base rent and occupancy was $2,791 and 89.0%, respectively, for the three months ended June 30, 2025, compared to $2,730 and 90.8%, respectively, for the three months ended June 30, 2024.

Additionally, there was an increase in utilities expense and repairs and maintenance expense across most of our other multifamily properties.

Total mixed-use operating income decreased $0.3 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 primarily due to a decrease in tourism, which led to a decrease in average occupancy and revenue per available room to 86.0% and $305, respectively, for the three months ended June 30, 2025, compared to 86.4% and $317, respectively, for the three months ended June 30, 2024.

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

General and Administrative.

General and administrative expenses increased $0.5 million, or 5%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

General and administrative expenses increased $0.1 million, or 1%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This increase was primarily due to higher employee-related costs, including, without limitation, with respect to base pay and benefits for certain salaried and hourly workers.

Depreciation and Amortization.

Depreciation and amortization expense increased $0.3 million, or 1%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

This was due to the new building improvement assets at One Beach Street placed into operations as of August 1, 2024 and the building improvement assets at 14Acres completed at the end of 2024.

Depreciation and amortization expense increased $1.8 million, or 6%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This increase was primarily due to $1.0 million related to the recent acquisition of Genesee Park on February 28, 2025, $0.9 million related to La Jolla Commons III, which was placed in service on April 1, 2025, and $0.6 million related to acceleration of depreciation of assets attributable to a lease for which the tenant vacated their space early at Waikiki Beach Walk - Retail.

These increases were partially offset by lower depreciation expense at Del Monte Center, which was sold on February 25, 2025.

Interest Expense, net.

Interest expense increased $2.5 million, or 16%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

This increase was primarily due to the closing of our 6.150% Senior Notes on September 17, 2024 and partially offset by a decrease in interest expense related to the maturity and repayment of our Series F Notes on July 19, 2024, Term Loan B and Term Loan C on January 2, 2025 and Series C Notes on February 3, 2025.

Interest expense increased $3.5 million, or 21%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This increase was primarily due to the closing of our 6.150% Senior Notes on September 17, 2024 and a decrease in capitalized interest related to La Jolla Commons III being placed in service on April 1, 2025.

These increases were partially offset by a decrease in interest expense related to the maturity and repayment of our Series F Notes on July 19, 2024, Series B Notes on December 2, 2024, Term Loan B and Term Loan C on January 2, 2025 and Series C Notes on February 3, 2025.

Other Income, net.

Other income, net increased $0.1 million, or 17%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

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

Comparison of the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024

The following summarizes our consolidated results of operations for the six months ended June 30, 2025 compared to our consolidated results of operations for the six months ended June 30, 2024.

The following table sets forth selected data from our unaudited consolidated statements of income for the six months ended June 30, 2025 and 2024 (dollars in thousands):

Six Months Ended June 30, Change %

Rental income $ 204,021 $ 210,115 $ (6,094) (3) %

Other property income 12,519 11,470 1,049 9

Total property revenues 216,540 221,585 (5,045) (2)

Rental expenses 59,978 59,346 632 1

Real estate taxes 21,650 22,089 (439) (2)

Total property expenses 81,628 81,435 193 —

Total property operating income 134,912 140,150 (5,238) (4)

General and administrative (18,162) (17,579) (583) 3

Depreciation and amortization (63,276) (61,228) (2,048) 3

Interest expense, net (38,564) (32,544) (6,020) 18

Gain on sale of real estate 44,476 — 44,476 100

Other income, net 1,842 11,118 (9,276) (83)

Net income 61,228 39,917 21,311 53

Net income attributable to restricted shares (409) (391) (18) 5

Net income attributable to unitholders in the Operating Partnership

(12,828) (8,362) (4,466) 53

Net income attributable to American Assets Trust, Inc.

$ 47,991 $ 31,164 $ 16,827 54 %

Total property revenues .

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

Total property revenue decreased $5.0 million, or 2%, to $216.5 million for the six months ended June 30, 2025 compared to $221.6 million for the six months ended June 30, 2024.

The percentage leased was as follows for each segment as of June 30, 2025 and 2024:

Percentage Leased (1)

Office 82.0 % 86.6 %

Retail 97.7 % 94.5 %

Multifamily 88.1 % 90.0 %

Mixed-Use (2)

95.0 % 95.7 %

Percentage leased for our multifamily properties includes total units rented and occupied as of June 30, 2025 or 2024, as applicable.

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

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

Rental revenues .

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

Rental revenue decreased $6.1 million, or 3%, to $204.0 million for the six months ended June 30, 2025 compared to $210.1 million for the six months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio (1)

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

2025 2024 2025 2024

Office $ 97,636 $ 99,641 $ (2,005) (2) $ 97,362 $ 99,641 $ (2,279) (2)

Retail 46,994 51,976 (4,982) (10) 45,379 44,750 629 1

Multifamily 32,364 30,767 1,597 5 30,894 30,767 127 —

Mixed-Use 27,027 27,731 (704) (3) 27,027 27,731 (704) (3)

$ 204,021 $ 210,115 $ (6,094) (3) % $ 200,662 $ 202,889 $ (2,227) (1) %

(1) For this table and the tables following, the same-store portfolio excludes:

(i) One Beach Street (office) due to significant redevelopment;

(ii) Del Monte Center (retail), which was sold on February 25, 2025;

Same-store office rental revenue decreased $2.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to lower occupancy and annualized base rents at Torrey Reserve Campus and First & Main, lower occupancy at Lloyd Portfolio, and a decrease in cost recoveries of $0.5 million due to changes in tenant base years, a decrease in recoverable property expenses, and prior year tax refunds received that were passed back to tenants.

Same-store retail rental revenue increased $0.6 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to new tenant leases and scheduled rent increases at Carmel Mountain Plaza, Alamo Quarry Market and Solana Beach Towne Center.

Same-store multifamily revenue increased $0.1 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to an overall increase in average monthly base rent, while occupancy had a slight decrease.

Same-store average monthly base rent and occupancy was $2,784 and 89.7% for the six months ended June 30, 2025 compared to $2,705 and 91.6% for the six months ended June 30, 2024.

Mixed-use rental revenue decreased $0.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to a decrease in tourism, which led to a decrease in average occupancy and revenue per available room to 85.3% and $302 for the six months ended June 30, 2025, respectively, compared to 88.1% and $318 for the six months ended June 30, 2024, respectively.

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

Other property income .

Other property income increased $1.0 million, or 9%, to $12.5 million for the six months ended June 30, 2025 compared to $11.5 million for the six months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio

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

2025 2024 2025 2024

Office $ 4,063 $ 3,351 $ 712 21 $ 4,029 $ 3,338 $ 691 21

Retail 662 525 137 26 670 523 147 28

Multifamily 1,895 1,923 (28) (1) 1,883 1,923 (40) (2)

Mixed-Use 5,899 5,671 228 4 5,899 5,671 228 4

$ 12,519 $ 11,470 $ 1,049 9 % $ 12,481 $ 11,455 $ 1,026 9 %

Office other property income increased $0.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to a $0.7 million lease termination fee received at Timber Ridge.

Retail other property income increased $0.1 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to lease termination fees received at Alamo Quarry Market.

Total mixed-use other property income increased $0.2 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to an increase in parking income at the retail portion of our mixed-use property.

Property Expenses

Total Property Expenses.

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

Total property expenses increased by $0.2 million to $81.6 million for the six months ended June 30, 2025, compared to $81.4 million for the six months ended June 30, 2024.

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

Rental Expenses.

Rental expenses increased $0.6 million, or 1%, to $60.0 million for the six months ended June 30, 2025, compared to $59.3 million for the six months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio

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

2025 2024 2025 2024

Office $ 21,278 $ 20,259 $ 1,019 5 $ 20,011 $ 19,654 $ 357 2

Retail 7,542 9,195 (1,653) (18) 6,726 7,084 (358) (5)

Multifamily 11,251 10,291 960 9 10,490 10,291 199 2

Mixed-Use 19,907 19,601 306 2 19,907 19,601 306 2

$ 59,978 $ 59,346 $ 632 1 % $ 57,134 $ 56,630 $ 504 1 %

Office rental expenses increased $1.0 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to an increase at La Jolla Commons Tower III related to new operations and amenities.

Same-store office rental expense increased $0.4 million due to higher utilities expense.

Retail rental expenses decreased $1.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to $0.5 million written off during the first quarter of 2024 for non-recurring costs related to construction in progress for then-prospective construction at Waikele Center and a $1.3 million decrease due to the sale of Del Monte Center in the first quarter of 2025.

These decreases were partially offset by an increase in utilities expense and facilities services.

Multifamily rental expenses increased $1.0 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to the acquisition of Genesee Park and an overall increase in insurance expense, utilities expense and repairs and maintenance expense across most of our other multifamily properties.

Total mixed-use rental expenses increased $0.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to an increase in facilities service expense, excise tax expense and repairs and maintenance expense at the retail portion of our mixed-use property.

Real Estate Taxes.

Real estate tax expense decreased $0.4 million, or 2% to $21.7 million for the six months ended June 30, 2025, compared to $22.1 million for the six months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio

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

2025 2024 2025 2024

Office $ 10,035 $ 9,678 $ 357 4 $ 9,163 $ 9,578 $ (415) (4)

Retail 5,797 6,926 (1,129) (16) 5,879 6,478 (599) (9)

Multifamily 3,733 3,515 218 6 3,623 3,515 108 3

Mixed-Use 2,085 1,970 115 6 2,085 1,970 115 6

$ 21,650 $ 22,089 $ (439) (2) % $ 20,750 $ 21,541 $ (791) (4) %

Same-store office real estate taxes decreased $0.4 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to a decrease in property tax assessments at City Center Bellevue, 14Acres and Timber Ridge, partially offset by an increase at La Jolla Commons due to real estate tax refunds received during the six months ended June 30, 2024.

Same-store retail real estate taxes decreased $0.6 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to a decrease in property tax assessments at Alamo Quarry Market and an increase in real estate tax refunds received at Alamo Quarry Market and Carmel Mountain Plaza.

Same-store multifamily real estate taxes increased $0.1 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to an increase in property tax assessments mainly at Pacific Ridge Apartments and Loma Palisades.

Mixed-use real estate taxes increased $0.1 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to an increase in property tax assessments.

Property Operating Income

Property operating income decreased $5.2 million, or 4%, to $134.9 million for the six months ended June 30, 2025, compared to $140.2 million for the six months ended June 30, 2024.

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

Total Portfolio Same-Store Portfolio

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

2025 2024 2025 2024

Office $ 70,386 $ 73,055 $ (2,669) (4) $ 72,217 $ 73,747 $ (1,530) (2)

Retail 34,317 36,380 (2,063) (6) 33,444 31,711 1,733 5

Multifamily 19,275 18,884 391 2 18,664 18,884 (220) (1)

Mixed-Use 10,934 11,831 (897) (8) 10,934 11,831 (897) (8)

$ 134,912 $ 140,150 $ (5,238) (4) % $ 135,259 $ 136,173 $ (914) (1) %

Same-store office operating income decreased $1.5 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to a decrease in rental revenue driven primarily by lower occupancy and annualized base rents at Torrey Reserve Campus and First & Main, lower occupancy at Lloyd Portfolio, a decrease in cost recoveries, and an increase in utilities expense.

These decreases were partially offset by an increase in lease termination fees received at Timber Ridge.

Same-store retail operating income increased $1.7 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to new tenant leases and scheduled rent increases at Carmel Mountain Plaza, Geary Marketplace, Alamo Quarry Market and Solana Beach Towne Center.

Same-store multifamily operating income decreased $0.2 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to an overall increase in average monthly base rent, while occupancy had a slight decrease.

Same-store average monthly base rent and occupancy was $2,784 and 89.7%, respectively, for the six months ended June 30, 2025 compared to $2,705 and 91.6%, respectively, for the six months ended June 30, 2024.

Additionally, there was an increase in insurance expense, utilities expense and repairs and maintenance expense.

Total mixed-use operating income decreased $0.9 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily due to a decrease in tourism, which led to a decrease in average occupancy and revenue per available room to 85.3% and $302 for the six months ended June 30, 2025, respectively, compared to 88.1% and $318 for the six months ended June 30, 2024, respectively.

Additionally, there was an increase in rental expense at the retail portion of our mixed-use property.

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

General and Administrative.

General and administrative expenses increased $0.6 million, or 3%, to $18.2 million for the six months ended June 30, 2025, compared to $17.6 million for the six months ended June 30, 2024.

This was primarily due to higher employee-related costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits.

Depreciation and Amortization.

Depreciation and amortization expense increased $2.0 million, or 3%, to $63.3 million for the six months ended June 30, 2025, compared to $61.2 million for the six months ended June 30, 2024.

This increase was primarily due to $1.4 million related to the recent acquisition of Genesee Park on February 28, 2025, $1.1 million related to La Jolla Commons III, which was placed in service on April 1, 2025, and $0.6 million related to acceleration of depreciation of assets attributable to a lease for which the tenant vacated their space early at Waikiki Beach Walk - Retail.

These increases were partially offset by lower depreciation expense at Torrey Reserve Campus due to asset acceleration for a tenant vacating their space early in 2024 and Del Monte Center, which was sold on February 25, 2025.

Interest Expense, net.

Interest expense increased $6.0 million, or 18%, to $38.6 million for the six months ended June 30, 2025 compared to $32.5 million for the six months ended June 30, 2024.

This increase was partially offset by a decrease in interest expense related to the maturity and repayment of our Series F Notes on July 19, 2024, Series B Notes on December 2, 2024, Term Loan B and Term Loan C on January 2, 2025 and Series C Notes on February 3, 2025.

Gain on sale of real estate.

Gain on sale of real estate of $44.5 million during the period relates to our sale of Del Monte Center on February 25, 2025.

Other Income, net.

Other income, net decreased $9.4 million, or 91%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

This decrease was primarily due to the net settlement payment of approximately $10 million received during the first quarter of 2024 relating to building specifications for one of the existing buildings at our office project in University Town Center (San Diego).

This decrease was partially offset by an increase in interest and investment income attributed to a higher yield on our average cash balance during the period.

Other income, net decreased $9.3 million, or 83%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

This decrease was primarily due to the net settlement payment of approximately $10.0 million received during the three months ended March 31, 2024 relating to building specifications for one of the existing buildings at our office project in University Town Center (San Diego).

This decrease was partially offset by an increase in interest and investment income attributed to higher yield on our average cash balance during the period.

Liquidity and Capital Resources of American Assets Trust, Inc.

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

As of March 31, 2025, the company owned an approximate 78.9% partnership interest in the Operating Partnership.

As of June 30, 2025, the company owned an approximate 78.9% partnership interest in the Operating Partnership.

The remaining approximately 21.1% are owned by non-affiliated investors and certain of the company's directors and executive officers.

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

As of March 31, 2025, the company has determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months.

As of June 30, 2025, the company has determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months.

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

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

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

For the three months ended June 30, 2025, no shares of common stock were sold through the ATM equity program.

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

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

As of March 31, 2025, we held $143.9 million in cash and cash equivalents.

As of June 30, 2025, we held $143.7 million in cash and cash equivalents.

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

We expect to meet

our short-term liquidity requirements through net cash provided by operations, reserves established from existing cash and, if necessary, borrowings available under our credit facility.

We expect to meet our short-term liquidity requirements through net cash provided by operations, reserves established from existing cash and, if necessary, borrowings available under our credit facility.

Our long-term liquidity needs consist primarily of funds necessary to pay for the repayment of debt at maturity, property acquisitions, tenant improvements and capital improvements.

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

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

Our overall capital requirements for the remainder of 2025 and for the first half of 2026 will depend upon acquisition opportunities and the level of improvements and redevelopments on existing properties.

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

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

Comparison of the three months ended March 31, 2025 to the three months ended March 31, 2024

Cash, cash equivalents, and restricted cash were $143.9 million and $98.6 million at March 31, 2025 and 2024, respectively.

Net cash provided by operating activities decreased $17.9 million to $36.9 million for the three months ended March 31, 2025 compared to $54.8 million for the three months ended March 31, 2024.

The decrease in cash from operations was primarily due to the net settlement received during the first quarter of 2024 relating to the building specifications for one of the existing buildings at our office project in University Town Center (San Diego), and a decrease in rental revenue and changes in operating assets and liabilities.

Net cash provided by investing activities increased $46.0 million to $32.7 million for the three months ended March 31, 2025 compared to cash used in investing activities of $13.3 million for the three months ended March 31, 2024.

The increase in cash provided was primarily due to the proceeds from the sale of Del Monte Center, offset by the use of cash for the acquisition of Genesee Park and an increase in capital expenditures related to new office tenant improvement projects and continuous efforts to build out La Jolla Commons.

Net cash used in financing activities increased $325.5 million to $351.3 million for the three months ended March 31, 2025 compared to $25.8 million for the three months ended March 31, 2024.

Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024

Cash, cash equivalents, and restricted cash were $143.7 million and $114.9 million at June 30, 2025 and 2024, respectively.

Net cash provided by operating activities decreased $28.0 million to $86.0 million for the six months ended June 30, 2025 compared to $114.1 million for the six months ended June 30, 2024.

The decrease in cash from operations was primarily due to the net settlement received during the first quarter of 2024 relating to the building specifications for one of the existing buildings at our office project in University Town Center (San Diego), lease termination fees received at Torrey Reserve Campus during the second quarter of 2024 and a decrease in rental revenue and changes in operating assets and liabilities.

Net cash provided by investing activities increased $40.0 million to $9.6 million for the six months ended June 30, 2025 compared to cash used in investing activities of $30.4 million for the six months ended June 30, 2024.

The increase in cash provided was primarily due to the proceeds from the sale of Del Monte Center, offset by the use of cash for the acquisition of Genesee Park and an increase in capital expenditures related to new office tenant improvement projects, leasing commissions and continuous efforts to build out La Jolla Commons III.

Net cash used in financing activities increased $325.9 million to $377.6 million for the six months ended June 30, 2025 compared to $51.6 million for the six months ended June 30, 2024.

The increase in cash used in financing activities was primarily due to the repayment of the $225 million aggregate outstanding balance on our Term Loan B and Term Loan C on January 2, 2025 and the repayment of the $100 million outstanding balance on our Series C Notes, on February 3, 2025.

Net Operating Income

Net Operating Income, or NOI, is a non-GAAP financial measure of performance.

Net Operating Income (“NOI”), is a non-GAAP financial measure of performance.

We define NOI as operating revenues (rental income, tenant reimbursements, lease termination fees, ground lease rental income and other property income) less property and related expenses (property expenses, ground lease expense, property marketing costs, real estate taxes and insurance).

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

The following is a reconciliation of our NOI to net income for the three months ended March 31, 2025 and 2024 computed in accordance with GAAP (in thousands):

Three Months Ended March 31,

The following is a reconciliation of our NOI to net income for the three and six months ended June 30, 2025 and 2024 computed in accordance with GAAP (in thousands):

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

2025 2024 2025 2024

Net operating income $ 67,610 $ 70,542 $ 134,912 $ 140,150

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

The following table sets forth a reconciliation of our net income for the three months ended March 31, 2025 to FFO, the nearest GAAP equivalent (in thousands, except per share and share data):

Three Months Ended March 31,

The following table sets forth a reconciliation of our net income for the three and six months ended June 30, 2025 to FFO, the nearest GAAP equivalent (in thousands, except per share and share data):

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

Funds from Operations (FFO)

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

76,711,831 76,716,676

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

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis