Sign in

You're signed outSign in or to get full access.

AA

American Assets Trust, Inc. (AAT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 results featured GAAP diluted EPS of $0.70 driven by a $44.5M gain on sale (Del Monte Center), while FFO per diluted share was $0.52 and same-store cash NOI rose 3.1% YoY .
  • Revenue of $108.6M missed Wall Street consensus ($112.0M)* and GAAP EPS of $0.70 beat consensus ($0.06)*, with the EPS beat largely non-recurring due to the asset sale gain .
  • Management affirmed FY 2025 FFO guidance at $1.87–$2.01 (midpoint $1.94), and declared a Q2 2025 dividend of $0.340 per share, signaling confidence despite macro and tourism headwinds .
  • Strategic capital recycling (Del Monte sale; Genesee Park acquisition) and debt repayments strengthened liquidity ($544M) and pushed maturities out to 2027, a key support for the stock’s medium-term setup .

What Went Well and What Went Wrong

What Went Well

  • Office and retail leasing momentum: ~44k comparable office SF signed with +8% cash rent spreads and +15% straight-line; ~156k comparable retail SF with +13% cash and +21% straight-line spreads, supporting rent roll durability .
  • Liquidity and leverage: ~$544M liquidity (cash ~$144M, undrawn $400M revolver) and no maturities until 2027 after repaying Term Loan B/C and Series C notes totaling $325M .
  • Strategic recycling and multifamily upside: Sold Del Monte Center for $123.5M; acquired Genesee Park (192 units) for $67.9M, with vacant units leasing ~40% above in-place rents and renewals capped at ~8.5% per California law .

What Went Wrong

  • Mixed-Use (Waikiki) softness: Q1 NOI declined ~11.6% YoY; hotel paid occupancy ~85% vs ~90% in prior year; RevPAR $298 down 7% YoY and ADR $353 down 1%, reflecting weaker domestic tourism and rate competition .
  • Office pressure pockets: Lower occupancy from move-outs in the Lloyd Portfolio and Torrey Reserve weighed on results and contributed to YoY FFO decline, alongside higher interest expense .
  • Revenue below consensus: Q1 revenue of $108.6M missed street ($112.0M)*, reflecting portfolio changes (disposition) and hotel headwinds, even as same-store cash NOI improved .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$110.695 $113.460 $108.607
GAAP Diluted EPS ($)$0.32 $0.15 $0.70
FFO per diluted share ($)$0.71 $0.55 $0.52
Net Income ($USD Millions)$19.260 $8.977 $42.535
Net Income Margin %17.56%*8.24%*39.53%*
EBIT Margin %27.86%*27.58%*25.55%*

Values marked with * retrieved from S&P Global.

Segment Same-Store Cash NOI (cash basis):

Segment ($USD Thousands)Q1 2024Q1 2025YoY Change
Office$33,515 $35,318 +5.4%
Retail$15,551 $16,383 +5.4%
Multifamily$9,513 $9,562 +0.5%
Mixed-Use$6,066 $5,363 −11.6%
Total$64,645 $66,626 +3.1%

Key KPIs:

KPIQ3 2024Q4 2024Q1 2025
Office leased (%)87.0% 85.0% 85.5%
Retail leased (%)94.5% 94.5% 97.4%
Multifamily leased (%)90.3% 91.8% 90.0%
Mixed-Use Retail leased (%)96.3% 90.5% 89.3%
Hotel paid occupancy (%)86.7% 85.9% 84.6%

Leasing spreads (comparable):

SegmentQ1 2025 Cash %Q1 2025 Straight-Line %
Office7.8% 15.2%
Retail13.3% 21.0%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FFO per diluted shareFY 2025$1.87–$2.01 (mid $1.94) $1.87–$2.01 (mid $1.94) Maintained
Dividend per shareQ1 2025$0.340 declared Paid $0.340 (Mar 20) Maintained
Dividend per shareQ2 2025N/ADeclared $0.340 (pay Jun 19; record Jun 5) Initiated for Q2
Liquidity postureQ1 2025$825.7M at 12/31/24 $543.9M at 3/31/25 Lower (post debt repayment), still strong

Assumptions: Guidance excludes future acquisitions/dispositions, equity/debt actions beyond those disclosed .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q1 2025)Trend
Office demand/RTWQ3 2024: strong comparable office spreads, portfolio 87% leased; bond issuance . Q4 2024: office same-store cash NOI −2.8% YoY; abatement/one-time factors .Increased touring; ~140k sf office activity; +8% cash/+15% straight-line spreads; La Jolla Commons III penthouse leased; Bellevue momentum .Improving quality-driven demand; occupancy rebuilding in key submarkets.
Retail resilienceQ3 2024: retail spreads +4–19% cash; NOI +7% YoY . Q4 2024: retail same-store cash NOI +11.4% YoY .97% leased; Q1 spreads +13% cash/+21% straight-line; collections strong .Stable to strengthening.
MultifamilyQ3 2024: San Diego strong; Portland digesting supply . Q4 2024: multifamily NOI +5.5% YoY .San Diego ~95% leased; blended rents +2%; Portland ~90% leased; blended rents +3% with flat net effective rents .San Diego solid; Portland stabilizing later in 2025.
Mixed-Use (Waikiki)Q3 2024: hotel occupancy 83.8%, ADR $402 . Q4 2024: occupancy 83.6%, ADR $360 .Lower-than-anticipated occupancy (~85%); RevPAR $298; ADR $353; NOI decline ~11.6% YoY .Soft near-term; expected recovery as tourism normalizes.
Balance sheet/LeverageQ3 2024: issued $525M 6.15% notes due 2034 . Q4 2024: liquidity $825.7M; 2025 guidance introduced .Liquidity ~$544M; repaid $325M of debt; no maturities until 2027; net debt/EBITDA 6.2x TTM .Strengthened maturity profile; moderated cash post-repayment.
Capital recyclingQ3 2024: disposition prep noted; spreads strong . Q4 2024: guidance includes credit reserves .Del Monte sale ($123.5M); Genesee Park acquired ($67.9M); holding residual cash; underwriting supports ~40% vacant rent lift .Active recycling; multifamily upside.

Management Commentary

  • “During Q1, our performance was in line with our initial guidance with FFO per diluted share of $0.52 and same-store cash NOI up 3% over the same period last year.” — Adam Wyll, President & CEO .
  • “We executed over 158,000 square feet of new and renewal [retail] leases in Q1 with spreads… increasing by 13% on a cash basis and 21% on a straight-line basis.” — Adam Wyll .
  • “First quarter 2025 FFO decreased by approximately $0.03… primarily due to the impact of the Del Monte Center disposition…” — Robert Barton, CFO .
  • “We are reaffirming our full year ’25 guidance range of $1.87 to $2.01 per FFO share… with potential to perform towards the upper end of the range” subject to reserves holding, multifamily outperformance, and tourism improvement — Robert Barton .
  • “Genesee Park… vacant units leasing at or above our projected pro forma rents, generally a 40% increase… renewals capped at ~8.5% per California law.” — Adam Wyll .

Q&A Highlights

  • Bellevue pipeline: Timber Ridge now 97% leased; prospective deals at Bel-Spring and Eastgate (14 Acres); City Center Bellevue proposals could take occupancy to ~95% — supportive submarket fundamentals vs Seattle .
  • Acquisitions posture: Monitoring opportunities but comfortable holding residual Del Monte proceeds as cash given macro uncertainty; focus on multifamily and retail .
  • La Jolla Commons III: Stabilization timeline pushed; spec suites and amenity build-out (conference center, restaurant, café) underway to accelerate leasing .

Estimates Context

Q1 2025Consensus*Actual
Revenue ($USD Millions)$112.05*$108.61
GAAP EPS ($)$0.06*$0.70
  • Result vs Street: Revenue below consensus; GAAP EPS materially above due to a $44.5M gain on sale (non-recurring) .
  • FFO consensus: Not available in S&P Global in this pull; management reaffirmed FY FFO guidance $1.87–$2.01 .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quarter quality: Same-store cash NOI +3.1% YoY and strong leasing spreads underscore rent roll health; GAAP EPS is inflated by non-recurring gain; FFO is the better operating read-through .
  • Balance sheet de-risked: Debt repayments and no maturities until 2027 support optionality; liquidity remains ample ($544M) for opportunistic recycling .
  • Retail and San Diego multifamily remain core strengths; mixed-use Hawaii is a near-term drag but management expects normalization over time .
  • Office trajectory improving in targeted submarkets (UTC, Bellevue) with spreads positive and amenity investments to catalyze leasing; watch Lloyd Portfolio and Torrey Reserve for occupancy rebuild .
  • Guidance credibility: Affirmation of FY FFO range and Q2 dividend continuation suggest stable outlook; upside levers include reserved tenants paying, multifamily outperformance, and tourism recovery .
  • Near-term trading lens: Expect investors to discount GAAP EPS beat; focus should remain on FFO trajectory, leasing progress at La Jolla Commons III and Bellevue, and hotel trends into summer travel season .
  • Medium-term thesis: High-barrier coastal assets plus disciplined capital allocation and lower leverage can compound through cycle; watch further recycling into multifamily and sustained positive leasing spreads .

Notes: Values marked with * retrieved from S&P Global.