On Wednesday, American Assets Trust (NYSE:AAT) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
American Assets Trust reported first quarter 2026 FFO of $0.51 per diluted share, starting the year in line with expectations.
The company successfully recast and upsized its unsecured credit facility, increasing the revolving line of credit from $400 million to $500 million, enhancing financial flexibility.
Office leasing showed strong activity with a 4.8% cash leasing spread and an 86% leased rate for the same store office portfolio.
Retail assets remained robust with a 98% lease rate, while multifamily operations navigated a competitive supply environment with stable results.
The company reaffirmed its full-year FFO guidance range of $1.96 to $2.10 per share, with potential to reach the upper end if certain factors align.
The board approved a quarterly dividend of $0.34 per share, maintaining the current payout ratio despite elevated levels due to leasing-related capital expenditures.
Management highlighted the impact of AI on office demand and investments in technology to improve operations.
Tourism recovery at Waikiki Beachwalk remains gradual, with long-term confidence in the asset’s value despite current challenges.
Full Transcript
OPERATOR
Good morning and welcome to the American Assets Trust first quarter 2026 earnings call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your questions, please press Star then two. Please note this event is being recorded. I would now like to turn the call over to Meliana Leverton, Associate General Counsel of American Assets Trust. Please go ahead.
Meliana Leverton (Associate General Counsel)
Thank you and good morning. The statements made on this earnings call include forward looking statements based on current expectations, which statements are subject to risks and uncertainties discussed in the Company’s filings with the SEC. You are cautioned not to place undue reliance on these forward looking statements as actual events could cause the Company’s results to differ materially from these forward looking statements. Yesterday afternoon, American Assets Trust’s earnings release and supplemental information were furnished to the SEC on Form 8K. Both are now available on the Investor SECtion of its website americanassetstrust.com. it is now my pleasure to turn the call over to Adam Weil, President and CEO of American Assets Trust.
Adam Weil (President and CEO)
Good morning everyone and thank you for joining us today. At American Assets Trust we continue to approach this market with the same mindset that has guided us across cycles. Patient, disciplined and with a long term focus. That mindset, combined with the quality of our assets and our platform, guides how we allocate capital, manage risk and run our business. We started 2026 in line with our expectations, generating 51 cents of FFO per diluted share and continuing to make progress against the priorities we laid out last quarter. Across the portfolio we saw encouraging activity, most notably in office leasing. While our retail assets remained highly leased and consistent, our multi family teams operated well through a competitive supply environment and Waikiki Beachwalk delivered steady results against a still mixed tourism backdrop. Before turning to the portfolio, I want to highlight a significant balance sheet accomplishment. On April 1, we successfully completed the recast and upsize of our unsecured credit facility. We increased our revolving line of credit from $400 million to $500 million and extended the maturity of the revolver and our $100 million term loan to April 1, 2030. Altogether, this facility provides us with $600 million of total unsecured borrowing capacity. This outcome reflects the quality of our portfolio, the strength of our banking relationships and the confidence of our lender group has in our credit. Importantly, it gives us enhanced financial flexibility and Runway as we execute our leasing and operating objectives now with no debt maturities until 2027, that added capacity is particularly valuable in the current market. While the macro backdrop remains uneven, our tenants are generally well capitalized and the markets where we operate continue to benefit from diversified economies, strong demographics and meaningful barriers to new supply. Those structural advantages matter, particularly during periods when the broader landscape is less predictable. One topic that has generated considerable discussion in our office segment is artificial intelligence. AI is driving investment, business formation and growth across technology, infrastructure and innovation oriented companies along with the professional and advisory ecosystem that supports them. While its impact on office demand will vary by industry, we believe the net effect in our markets has been constructive. At the same time, the bar for office space keeps rising. When companies make office commitments today, they are focused on location, amenities, flexibility, ownership quality and the ability to attract talent attributes that define our post office portfolio. On our own platform, we are investing in technology to improve how we operate, from work order management and preventative maintenance analytics to tenant communication tools, while also building the data foundation for future AI capabilities. We are early in this effort, but we believe it can become a differentiator as we improve the tenant experience and our operating margins. In office, the momentum we flagged last quarter carried forward Demand concentrates at the top of the market and well located, well amenitized buildings with strong ownership. That is where we compete. Our office portfolio ended the quarter 84.5% leased and our same store office portfolio ended the quarter 86% leased, same store office cash NOI came in essentially flat year over year modestly ahead of our internal expectations, reflecting the known move outs we’ve previously previously discussed. During the quarter we executed approximately 237,000 square feet of office leases with comparable cash leasing spreads of 4.8% and straight line leasing spreads of 10.6%. Meanwhile, of our 14 non comparable leases in Q1, which are now separately disclosed in our supplemental, 12 were new tenants, nine of which were in our Spec Suite program. Underscoring the role that program is playing in converting demand into executed leases, we entered the second quarter on solid footing, including approximately 244,000 square feet of previously signed leases not yet commenced, another 122,000 square feet in lease documentation, and a proposal pipeline of over 200,000 square feet at La Jolla Commons Tower 3. The building is currently 49% leased with proposals out on another 30% of the building. The UTC submarket has limited large block availabilities outside of Tower 3 and with no meaningful new supply on the horizon we believe we are in a strong position to capture large tenant requirements in the submarket, including several active requirements we are tracking today. At 1 Beach street the building is currently 36% leased. While 1 larger opportunity we referenced last quarter did not move forward, our leasing focus has shifted toward building a broader pipeline of smaller and mid sized tenants. We already have permits in hand and work underway to advance our spec suite build out, positioning us to capture tenants seeking high quality move in ready space. Prospect activity has improved and the execution across the portfolio has been strong. We remain confident that the trajectory of our office portfolio, including our progress towards stabilizing Tower 3 and one beach will translate into increased cash flow as these leases convert to revenue. Last quarter I mentioned our goal of ending the year …
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