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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
_________________________
FORM 8-K
_________________________
CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):
October 24, 2019
_________________________
American Assets Trust, Inc.
(Exact name of registrant as specified in its charter)
_________________________

Maryland
001-35030
27-3338708
(State or other jurisdiction
of incorporation)
(Commission
File No.)
(I.R.S. Employer
Identification No.)

11455 El Camino Real, Suite 200
San Diego, California 92130
(Address of principal executive offices and Zip Code)

(858) 350-2600
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report.)

_________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Securities registered pursuant to Section 12(b) of the Act:
Name of Registrant
Title of each class
Trading Symbol
Name of each exchange on which registered
American Assets Trust, Inc.
Common Stock, par value $0.01 per share
AAT
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.






Item 2.02
Results of Operations and Financial Condition.

On October 29, 2019, American Assets Trust, Inc. (the “Company”) issued a press release regarding its financial results for the quarter ending September 30, 2019. Also on October 29, 2019, the Company made available on the "Investors" page of its website at www.americanassetstrust.com certain supplemental information concerning the Company’s financial results and operations for the quarter ending September 30, 2019. Copies of the press release and supplemental information are attached hereto as Exhibits 99.1 and 99.2, respectively.

Exhibits 99.1 and 99.2, are being furnished pursuant to Item 2.02 and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 5.02    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arranges of Certain Officers.

On October 24, 2019, the Board of Directors of the Company appointed Adam Wyll to the position of Executive Vice President - Chief Operating Officer. Mr. Wyll also serves as the Company's General Counsel and Secretary. Mr. Wyll has served as the Company's Senior Vice President, General Counsel and Secretary since the Company's initial public offering in January 2011. Mr. Wyll holds a doctorate of jurisprudence degree from the University of Texas at Austin, School of Law and bachelor of business administration degree in finance from the University of Texas at Austin, School of Business.

Item 7.01
Regulation FD Disclosure.

As discussed in Item 2.02 above, the Company issued a press release regarding its financial results for the quarter ending September 30, 2019 and made available on its website certain supplement information relating thereto.

The information being furnished pursuant to Item 7.01 and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.


Item 9.01
Financial Statements and Exhibits.
(d)    Exhibits:
The following exhibits are filed herewith:
Exhibit Number
 
Exhibit Description
99.1**
 
99.2**
 
_____________________
** Furnished herewith


3


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
American Assets Trust, Inc.
 
By:
/s/ Robert F. Barton
 
Robert F. Barton
Executive Vice President, CFO
October 29, 2019
 
 


4
Exhibit


https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg

American Assets Trust, Inc. Reports Third Quarter 2019 Financial Results

Net income available to common stockholders of $12.9 million and $32.9 million for the three and nine months ended September 30, 2019, respectively, or $0.22 and $0.63 per diluted share, respectively
Funds From Operations per diluted share increased 8% and 1% year-over-year for the three and nine months ended September 30, 2019, respectively, or $0.57 and $1.63 per diluted share, respectively
Same-store cash NOI increased 1.6% and decreased 1.0% year-over-year for the three and nine months ended September 30, 2019, respectively. Excluding lease termination fees, same-store cash NOI increased 0.6% and 1.0% year-over-year for the three and nine months ended September 30, 2019, respectively

SAN DIEGO, California - 10/29/2019 - American Assets Trust, Inc. (NYSE: AAT) (the “company”) today reported financial results for its third quarter ended September 30, 2019.

Third Quarter Highlights
Net income available to common stockholders of $12.9 million and $32.9 million for the three and nine months ended September 30, 2019, respectively, or $0.22 and $0.63 per diluted share, respectively
Funds From Operations increased 8% and 1% year-over-year to $0.57 and $1.63 per diluted share for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018
Same-store cash NOI increased 1.6% and decreased 1.0% year-over-year for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018
Increasing quarterly dividend 7% to $0.30 per share of common stock in the fourth quarter of 2019 compared to the third quarter of 2019
Introducing 2020 annual guidance midpoint of $2.42 with a range of $2.38 to $2.46 of FFO per diluted share, a 9% increase over the revised 2019 annual guidance midpoint; excluding 2019 lease termination fees, the increase is 13% over the revised 2019 annual guidance midpoint
2020 same-store cash NOI estimated to increase approximately 9% over the 2019 full year same-store cash NOI forecast based on an approximately 4.0% same-store cash NOI increase in retail, an approximately 14.0% same-store cash NOI increase in office and an approximately 3.5% same-store cash NOI increase in multifamily
Leased approximately 71,000 comparable office square feet at an average straight-line basis and cash-basis contractual rent increase of 29% and 12%, respectively, during the three months ended September 30, 2019
Leased approximately 30,000 comparable retail square feet at an average straight-line basis and cash-basis contractual rent increase of 9% and 3%, respectively, during the three months ended September 30, 2019
Closed a privately placed debt offering of $150 million of eleven-year senior guaranteed notes, due July 30, 2030, with a fixed interest rate of 3.91% and an effective interest rate of 3.88% net of settlement of a treasury lock contract


1



Financial Results
Net income attributable to common stockholders was $12.9 million, or $0.22 per basic and diluted share for the three months ended September 30, 2019 compared to $10.4 million, or $0.22 per basic and diluted share for the three months ended September 30, 2018. For the nine months ended September 30, 2019, net income attributable to common stockholders was $32.9 million, or $0.63 per basic and diluted share compared to $13.0 million, or $0.28 per basic and diluted share, for the nine months ended September 30, 2018. The year-over-year increase is primarily due to a decrease in depreciation expense at Waikele Center attributed to the redevelopment of the former Kmart space, an increase in lease termination fees at Carmel Mountain Plaza attributed to the termination of our former ground lease, and an increase in annualized base rents at The Landmark at One Market, City Center Bellevue, and Lloyd District Portfolio.

During the third quarter of 2019, the company generated funds from operations (“FFO”) for common stockholders of $43.0 million, or $0.57 per diluted share, compared to $34.1 million, or $0.53 per diluted share, for the third quarter of 2018. For the nine months ended September 30, 2019, the company generated FFO for common stockholders of $112.5 million, or $1.63 per diluted share, compared to $103.8 million, or $1.62 per diluted share, for the nine months ended September 30, 2018. The increase in FFO from the corresponding periods in 2018 was primarily due to the increase in annualized base rents at The Landmark at One Market, City Center Bellevue, and Lloyd District Portfolio, an increase in lease termination fees at Carmel Mountain Plaza attributed to the termination of our former ground lease, and the acquisition of La Jolla Commons on June 20, 2019 partially offset by the expiration of the Kmart lease at Waikele Center on June 30, 2018.

FFO is a non-GAAP supplemental earnings measure which the company considers meaningful in measuring its operating performance. A reconciliation of FFO to net income is attached to this press release.

Leasing
The portfolio leased status as of the end of the indicated quarter was as follows:
 
September 30, 2019
June 30, 2019
September 30, 2018
Total Portfolio
 
 
 
Retail
98.0%
97.5%
98.5%
Office
94.7%
93.7%
91.4%
Multifamily
90.5%
92.6%
92.3%
Mixed-Use:
 
 
 
Retail
98.0%
98.2%
95.9%
Hotel
92.1%
91.7%
93.6%
 
 
 
 
Same-Store Portfolio
 
 
Retail (1)
97.7%
97.1%
98.3%
Office (2)
95.5%
95.0%
93.5%
Multifamily
90.5%
92.6%
92.3%
(1) Same-store retail leased percentages exclude Waikele Center, due to significant redevelopment activity.
(2) Same-store office leased percentages includes the 830 building at Lloyd District Portfolio which was placed into operations on August 1, 2019 after renovating the building. Same-store office leased percentages excludes Torrey Point, which was placed into operations and became available for occupancy in August 2018 and La Jolla Commons, which was acquired on June 20, 2019. Torrey Point and La Jolla Commons will be included in same-store office leased percentages commencing in the fourth quarter of 2019 and third quarter of 2020, respectively.

During the third quarter of 2019, the company signed 43 leases for approximately 133,300 square feet of retail and office space, as well as 610 multifamily apartment leases. Renewals accounted for 89% of the comparable retail leases, 64% of the comparable office leases and 52% of the residential leases.


2



Retail and Office
On a comparable space basis (i.e. leases for which there was a former tenant) during the third quarter 2019 and trailing four quarters ended September 30, 2019, our retail and office leasing spreads are shown below:
 
 
Number of Leases Signed
Comparable Leased Sq. Ft.
Average Cash Basis % Change Over Prior Rent
Average Cash Contractual Rent Per Sq. Ft.
Prior Average Cash Contractual Rent Per Sq. Ft.
Straight-Line Basis % Change Over Prior Rent
Retail
Q3 2019
19
30,000
 
2.8%
 
$59.44
$57.81
 
9.3%
 
Last 4 Quarters
61
181,000
 
3.7%
 
$46.40
$44.73
 
10.6%
 
 
 
 
 
 
 
 
 
 
 
 
 
Office
Q3 2019
14
71,000
 
12.0%
 
$51.95
$46.40
 
29.2%
 
Last 4 Quarters
47
494,000
 
45.5%
 
$73.75
$50.70
 
69.3%
 

Multifamily
The average monthly base rent per leased unit for same-store properties for the third quarter of 2019 was $2,073 compared to an average monthly base rent per leased unit of $2,053 for the third quarter of 2018, an increase of approximately 1%.

Same-Store Cash Net Operating Income
For the three and nine months ended September 30, 2019, same-store cash NOI increased 1.6% and decreased 1.0%, respectively, compared to the three and nine months ended September 30, 2018. The same-store cash NOI by segment was as follows (in thousands):
 
Three Months Ended (2)
 
 
 
 
Nine Months Ended (2)
 
 
 
 
September 30,
 
 
 
 
September 30,
 
 
 
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Cash Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail (1)
$
15,221

 
$
16,024

 
(5.0
)
%
 
$
44,878

 
$
46,677

 
(3.9
)
%
Office (1)
19,132

 
17,307

 
10.5

 
 
56,027

 
55,995

 
0.1

 
Multifamily
7,367

 
7,741

 
(4.8
)
 
 
23,353

 
22,848

 
2.2

 
Mixed-Use

 

 

 
 

 

 

 
Same-store Cash NOI (3)
$
41,720

 
$
41,072

 
1.6

%
 
$
124,258

 
$
125,520

 
(1.0
)
%

(1)
Same-store cash NOI for the three and nine months ended September 30, 2018 includes cash lease termination fees received of $0.3 million and $3.3 million, respectively. However, the lease termination fees for 2019 recognized at Carmel Mountain Plaza during the first quarter 2019 were non-cash lease termination fees. Excluding lease termination fees for the three and nine months ended September 30, 2019, Office same-store cash NOI would have 6.5% and 3.7%, respectively.

(2)
Same-store portfolio excludes (i) Waikele Center due to significant redevelopment activity; (ii) Torrey Point, which was placed into operations and became available for occupancy in August 2018; (iii) La Jolla Commons, which was acquired on June 20, 2019; (iv) Waikiki Beach Walk - Embassy Suites™ and Waikiki Beach Walk - Retail, due to significant spalling repair activity; and (v) land held for development.

(3)
Excluding lease termination fees for the three and nine months ended September 30, 2019, same-store cash NOI would have been 0.6% and 1.0%, respectively.

Same-store cash NOI is a non-GAAP supplemental earnings measure which the company considers meaningful in measuring its operating performance. A reconciliation of same-store cash NOI to net income is attached to this press release.


3



Balance Sheet and Liquidity
At September 30, 2019, the company had gross real estate assets of $3.2 billion and liquidity of $465.6 million, comprised of cash and cash equivalents of $115.6 million and $350.0 million of availability on its line of credit.

For the quarter ended September 30, 2019, we issued 234,814 shares of common stock through our at-the-market equity program at a weighted average price per share of $47.23, resulting in net proceeds of $10.9 million. We intend to use the proceeds primarily to fund development activities at Lloyd District Portfolio, Waikele Center and La Jolla Commons.

Dividends
The company declared dividends on its shares of common stock of $0.28 per share for the third quarter of 2019. The dividends were paid on September 26, 2019.

In addition, the company has declared a dividend on its common stock of $0.30 per share for the fourth quarter of 2019, which is a 7% increase over the prior quarterly dividend per share. The dividend will be paid on December 26, 2019 to stockholders of record on December 12, 2019.

Guidance
The company tightened its guidance range for full year 2019 FFO per diluted share of $2.20 to $2.24 per share from the prior guidance of $2.18 to $2.26 per share.

Additionally, the company is introducing its guidance for full year 2019 FFO per diluted share of $2.38 to $2.46 per share, an increase of 9% from the revised 2019 annual guidance midpoint; excluding 2019 lease termination fees, the increase is 13% over the revised 2019 annual guidance midpoint. The company's guidance excludes any impact from future acquisitions, dispositions, equity issuances or repurchases, future debt financings or repayments. Management will discuss the company's guidance in more detail on tomorrow's earnings call.

The foregoing estimates are forward-looking and reflect management's view of current and future market conditions, including certain assumptions with respect to leasing activity, rental rates, occupancy levels, interest rates, credit spreads and the amount and timing of acquisition and development activities. The company's actual results may differ materially from these estimates.

Conference Call
The company will hold a conference call to discuss the results for the third quarter of 2019 on Wednesday, October 30, 2019 at 8:00 a.m. Pacific Time (“PT”). To participate in the event by telephone, please dial 1-877-868-5513 and use the pass code 2047236. A telephonic replay of the conference call will be available beginning at 2:00 p.m. PT on Wednesday, October 30, 2019 through Wednesday, November 6, 2019. To access the replay, dial 1-855-859-2056 and use the pass code 2047236. A live on-demand audio webcast of the conference call will be available on the company's website at www.americanassetstrust.com. A replay of the call will also be available on the company's website.

Supplemental Information
Supplemental financial information regarding the company's third quarter 2019 results may be found on the “Investors” page of the company's website at www.americanassetstrust.com. This supplemental information provides additional detail on items such as property occupancy, financial performance by property and debt maturity schedules.

4



Financial Information
American Assets Trust, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share Data)
 
September 30, 2019
 
December 31, 2018
Assets
(unaudited)
 
 
 

Real estate, at cost
 
 

 
 
 

Operating real estate
$
3,082,598

 
$
2,549,571

Construction in progress
 
73,340

 
 
71,228

Held for development
 
547

 
 
9,392

 
 
3,156,485

 
 
2,630,191

Accumulated depreciation
 
(642,188
)
 
 
(590,338
)
Net real estate
 
2,514,297

 
 
2,039,853

Cash and cash equivalents
 
115,568

 
 
47,956

Restricted cash
 
10,494

 
 
9,316

Accounts receivable, net
 
9,561

 
 
9,289

Deferred rent receivables, net
 
47,361

 
 
39,815

Other assets, net
 
91,677

 
 
52,021

Total assets
$
2,788,958

 
$
2,198,250

Liabilities and equity
 
 

 
 
 

Liabilities:
 
 

 
 
 

Secured notes payable, net
$
162,159

 
$
182,572

Unsecured notes payable, net
 
1,195,525

 
 
1,045,863

Unsecured line of credit, net
 

 
 
62,337

Accounts payable and accrued expenses
 
63,205

 
 
46,616

Security deposits payable
 
7,855

 
 
8,844

Other liabilities and deferred credits, net
 
61,990

 
 
49,547

Total liabilities
 
1,490,734

 
 
1,395,779

Commitments and contingencies
 
 

 
 
 

Equity:
 
 

 
 
 

American Assets Trust, Inc. stockholders' equity
 
 
 
 
 
Common stock, $0.01 par value, 490,000,000 shares authorized, 59,956,972 and 47,335,409 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
 
599

 
 
474

Additional paid-in capital
 
1,450,816

 
 
920,661

Accumulated dividends in excess of net income
 
(139,307
)
 
 
(128,778
)
Accumulated other comprehensive income
 
5,162

 
 
10,620

Total American Assets Trust, Inc. stockholders' equity
 
1,317,270

 
 
802,977

Noncontrolling interests
 
(19,046
)
 
 
(506
)
Total equity
 
1,298,224

 
 
802,471

Total liabilities and equity
$
2,788,958

 
$
2,198,250


5



American Assets Trust, Inc.
Unaudited Consolidated Statements of Operations
(In Thousands, Except Shares and Per Share Data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
Rental income
$
93,147

 
$
78,079

 
$
249,634

 
$
231,172

Other property income
5,215

 
4,428

 
18,160

 
17,090

Total revenue
98,362

 
82,507

 
267,794

 
248,262

Expenses:
 
 
 
 
 
 
 
Rental expenses
23,989

 
21,383

 
66,611

 
62,685

Real estate taxes
10,942

 
8,787

 
29,263

 
25,961

General and administrative
6,479

 
5,176

 
18,495

 
16,139

Depreciation and amortization
26,568

 
19,886

 
69,733

 
86,033

Total operating expenses
67,978

 
55,232

 
184,102

 
190,818

Operating income
30,384

 
27,275

 
83,692

 
57,444

Interest expense
(13,734
)
 
(12,879
)
 
(40,212
)
 
(39,387
)
Gain on sale of real estate

 

 
633

 

Other income (expense), net
(131
)
 
(125
)
 
(410
)
 
(64
)
Net income
16,519

 
14,271

 
43,703

 
17,993

Net income attributable to restricted shares
(92
)
 
(71
)
 
(277
)
 
(215
)
Net income attributable to unitholders in the Operating Partnership
(3,565
)
 
(3,806
)
 
(10,553
)
 
(4,765
)
Net income attributable to American Assets Trust, Inc. stockholders
$
12,862

 
$
10,394

 
$
32,873

 
$
13,013

 
 
 
 
 
 
 
 
Net income per share
 
 
 
 
 
 
 
Basic income attributable to common stockholders per share
$
0.22

 
$
0.22

 
$
0.63

 
$
0.28

Weighted average shares of common stock outstanding - basic
59,441,887

 
46,959,752

 
52,239,668

 
46,945,095

 
 
 
 
 
 
 
 
Diluted income attributable to common stockholders per share
$
0.22

 
$
0.22

 
$
0.63

 
$
0.28

Weighted average shares of common stock outstanding - diluted
75,832,435

 
64,137,360

 
69,010,772

 
64,133,584

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.28

 
$
0.27

 
$
0.84

 
$
0.81

 
 
 
 
 
 
 
 


6



Reconciliation of Net Income to Funds From Operations
The company's FFO attributable to common stockholders and operating partnership unitholders and reconciliation to net income is as follows (in thousands except shares and per share data, unaudited):
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2019
 
September 30, 2019
Funds From Operations (FFO)
 
 
 
 
 
Net income
$
16,519

 
$
43,703

Depreciation and amortization of real estate assets
 
26,568

 
 
69,733

Gain on sale of real estate
 

 
 
(633
)
FFO, as defined by NAREIT
$
43,087

 
$
112,803

Less: Nonforfeitable dividends on restricted stock awards
 
(88
)
 
 
(273
)
FFO attributable to common stock and units
$
42,999

 
$
112,530

FFO per diluted share/unit
$
0.57

 
$
1.63

Weighted average number of common shares and units, diluted
 
75,833,650

 
 
69,012,122


Reconciliation of Same-Store Cash NOI to Net Income
The company's reconciliation of Same-Store Cash NOI to Net Income is as follows (in thousands, unaudited):
 
Three Months Ended (1)
 
Nine Months Ended (1)
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Same-store cash NOI
$
41,720

 
$
41,072

 
$
124,258

 
$
125,520

Non-same-store cash NOI
14,488

 
9,041

 
31,599

 
29,677

Tenant improvement reimbursements (2)
1,054

 
263

 
7,949

 
4,220

Cash NOI
$
57,262

 
$
50,376

 
$
163,806

 
$
159,417

Non-cash revenue and other operating expenses (3)
6,169

 
1,961

 
8,114

 
199

General and administrative
(6,479
)
 
(5,176
)
 
(18,495
)
 
(16,139
)
Depreciation and amortization
(26,568
)
 
(19,886
)
 
(69,733
)
 
(86,033
)
Interest expense
(13,734
)
 
(12,879
)
 
(40,212
)
 
(39,387
)
Gain on sale of real estate

 

 
633

 

Other income (expense), net
(131
)
 
(125
)
 
(410
)
 
(64
)
Net income
$
16,519

 
$
14,271

 
$
43,703

 
$
17,993

 
 
 
 
 
 
 
 
Number of properties included in same-store analysis
24
 
24
 
24
 
23
(1)
Same-store portfolio includes the 830 building at Lloyd District Portfolio which was placed into operations on August 1, 2019 after renovating the building. Same-store portfolio excludes (i) Waikele Center, due to significant redevelopment activity; (ii) Torrey Point, which was placed into operations and became available for occupancy in August 2018; (iii) La Jolla Commons, which was acquired on June 20, 2019; (iv) Waikiki Beach Walk - Embassy Suites™ and Waikiki Beach Walk - Retail, due to significant spalling repair activity and (v) land held for development.
(2)
Tenant improvement reimbursements are excluded from same-store cash NOI to provide a more accurate measure of operating performance.
(3)
Represents adjustments related to the straight-line rent income recognized during the period offset by cash received during the period and the provision for bad debts recorded for deferred rent receivable balances; the amortization of above (below) market rents, the amortization of lease incentives paid to tenants, the amortization of other lease intangibles, lease termination fees at Carmel Mountain Plaza, and straight-line rent expense for our lease of the Annex at The Landmark at One Market.
 


Reported results are preliminary and not final until the filing of the company's Form 10-Q with the Securities and Exchange Commission and, therefore, remain subject to adjustment.

7



Use of Non-GAAP Information
Funds from Operations
The company calculates FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT. FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures.

FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the company's operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year-over-year, captures trends in occupancy rates, rental rates and operating costs. The company also believes that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the company's operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the company's properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the company's properties, all of which have real economic effects and could materially impact the company's results from operations, the utility of FFO as a measure of the company's performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the NAREIT definition as the company does, and, accordingly, the company's FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of the company's performance. FFO should not be used as a measure of the company's liquidity, nor is it indicative of funds available to fund the company's cash needs, including the company's ability to pay dividends or service indebtedness. FFO also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

Cash Net Operating Income
The company uses cash net operating income ("NOI") internally to evaluate and compare the operating performance of the company's properties. The company believes cash NOI provides useful information to investors regarding the company's financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level, and when compared across periods, can be used to determine trends in earnings of the company's properties as this measure is not affected by (1) the non-cash revenue and expense recognition items, (2) the cost of funds of the property owner, (3) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP or (4) general and administrative expenses and other gains and losses that are specific to the property owner. The company believes the exclusion of these items from net income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating the company's properties as well as trends in occupancy rates, rental rates and operating costs. Cash NOI is a measure of the operating performance of the company's properties but does not measure the company's performance as a whole. Cash NOI is therefore not a substitute for net income as computed in accordance with GAAP.

Cash NOI, is a non-GAAP financial measure of performance. The company defines cash 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), adjusted for non-cash revenue and operating expense items such as straight-line rent, amortization of lease intangibles, amortization of lease incentives and other adjustments. Cash NOI also excludes general and administrative expenses, depreciation and amortization, interest expense, other nonproperty income and losses, acquisition-related expense, gains and losses from property dispositions, extraordinary items, tenant improvements, and leasing commissions. Other REITs may use different methodologies for calculating cash NOI, and accordingly, the company's cash NOI may not be comparable to the cash NOIs of other REITs.


8



About American Assets Trust, Inc.
American Assets Trust, Inc. is a full service, vertically integrated and self-administered real estate investment trust, or REIT, headquartered in San Diego, California. The company has over 50 years of experience in acquiring, improving, developing and managing premier retail, office and residential properties throughout the United States in some of the nation’s most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Oregon, Washington, Texas and Hawaii.  The company's retail portfolio comprises approximately 3.1 million rentable square feet, and its office portfolio comprises approximately 3.4 million square feet. In addition, the company owns one mixed-use property (including approximately 97,000 rentable square feet of retail space and a 369-room all-suite hotel) and 2,112 multifamily units. In 2011, the company was formed to succeed to the real estate business of American Assets, Inc., a privately held corporation founded in 1967 and, as such, has significant experience, long-standing relationships and extensive knowledge of its core markets, submarkets and asset classes. For additional information, please visit www.americanassetstrust.com.

Forward Looking Statements
This press release may contain forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. While forward-looking statements reflect the company's good faith beliefs, assumptions and expectations, they are not guarantees of future performance. For a further discussion of these and other factors that could cause the company's future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company's annual report on Form 10-K filed on February 15, 2019, and other risks described in documents subsequently filed by the company from time to time with the Securities and Exchange Commission. The company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes.

Source: American Assets Trust, Inc.

Investor and Media Contact:
American Assets Trust
Robert F. Barton
Executive Vice President and Chief Financial Officer
858-350-2607


9
Exhibit
 
 
 
THIRD QUARTER 2019
 
Supplemental Information
 
 


https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-coverpicture2019q3a04.jpg


 
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 
Investor and Media Contact
American Assets Trust, Inc.
Robert F. Barton
Executive Vice President and Chief Financial Officer
858-350-2607


 
 
 
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

American Assets Trust, Inc.'s Portfolio is concentrated in high-barrier-to-entry markets
with favorable supply/demand characteristics
 
 
 
 
 
 
 
 
 
 
 
 
            https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-map2019q3a04.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail
 
Office
 
Multifamily
Mixed-Use
Market
 
 Square Feet
 
 Square Feet
 
 Units
 Square Feet
 
Suites
San Diego
 
1,322,012

 
1,545,777

 
1,455

(1)

 

 
 
 
 
 
 
 
 
 
 
 
San Francisco
 
35,156

 
516,985

 

 

 

 
 
 
 
 
 
 
 
 
 
 
Oahu
 
429,718

 

 

 
96,707

 
369

 
 
 
 
 
 
 
 
 
 
 
Monterey
 
673,572

 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
San Antonio
 
588,970

 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
Portland
 
44,153

 
875,639

 
657

 

 

 
 
 
 
 
 
 
 
 
 
 
Seattle
 

 
497,472

 

 

 

 
 
 
 
 
 
 
 
 
 
 
Total
 
3,093,581

 
3,435,873

 
2,112

 
96,707

 
369

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Square Feet
 
%
 
NOI % (2)
Note: Circled areas represent all markets in which American Assets Trust, Inc. currently owns and operates its real estate properties. Size of circle denotes approximation of square feet / units. Net rentable square footage may be adjusted from the prior periods to reflect re-measurement of leased space at the properties.
 
Retail
 
3.1

million
 
48%
 
28%
 
Office
 
3.4

million
 
52%
 
49%
Data is as of September 30, 2019.
 
Totals
 
6.5

million
 
 
 
 
(1) Includes 122 RV spaces.
 
 
 
 
 
 
 
 
 
(2) Percentage of Net Operating Income (NOI) calculated for the three months ended September 30, 2019. Reconciliation of NOI to net income is included in the Glossary of Terms.
 
 
 
 
 
 
 
 
 

Third Quarter 2019 Supplemental Information
                               Page 2

 
 
INDEX
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

 
THIRD QUARTER 2019 SUPPLEMENTAL INFORMATION
 
1.
FINANCIAL HIGHLIGHTS
 
 
Consolidated Balance Sheets
 
Consolidated Statements of Operations
 
Funds From Operations (FFO), FFO As Adjusted & Funds Available for Distribution
 
Corporate Guidance
 
Same-Store Net Operating Income (NOI)
 
Same-Store Cash NOI Comparison excluding Redevelopment
 
Same-Store Cash NOI Comparison with Redevelopment
 
Cash NOI By Region
 
Cash NOI Breakdown
 
Property Revenue and Operating Expenses
 
Segment Capital Expenditures
 
Summary of Outstanding Debt
 
Market Capitalization
 
Summary of Development Opportunities
2.
PORTFOLIO DATA
 
 
Property Report
 
Retail Leasing Summary
 
Office Leasing Summary
 
Multifamily Leasing Summary
 
Mixed-Use Leasing Summary
 
Lease Expirations
 
Portfolio Leased Statistics
 
Top Tenants - Retail
 
Top Tenants - Office
3.
APPENDIX
 
 
Glossary of Terms
This Supplemental Information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act). Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: adverse economic or real estate developments in our markets; our failure to generate sufficient cash flows to service our outstanding indebtedness; defaults on, early terminations of or non-renewal of leases by tenants, including significant tenants; difficulties in identifying properties to acquire and completing acquisitions; difficulties in completing dispositions; our failure to successfully operate acquired properties and operations; our inability to develop or redevelop our properties due to market conditions; fluctuations in interest rates and increased operating costs; risks related to joint venture arrangements; our failure to obtain necessary outside financing; on-going litigation; general economic conditions; financial market fluctuations; risks that affect the general retail, office, multifamily and mixed-use environment; the competitive environment in which we operate; decreased rental rates or increased vacancy rates; conflicts of interests with our officers or directors; lack or insufficient amounts of insurance; environmental uncertainties and risks related to adverse weather conditions and natural disasters; other factors affecting the real estate industry generally; limitations imposed on our business and our ability to satisfy complex rules in order for us to continue to qualify as a REIT for U.S. federal income tax purposes; and changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates and taxation of REITs.
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, or new information, data or methods, future events or other changes. For a further discussion of these and other factors that could impact our future results, refer to our Annual Report on Form 10-K filed on February 15, 2019 and other risks described in documents subsequently filed by us from time to time with the Securities and Exchange Commission.

Third Quarter 2019 Supplemental Information
                               Page 3

 
 
 
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 






FINANCIAL HIGHLIGHTS





Third Quarter 2019 Supplemental Information
                               Page 4

 
 
CONSOLIDATED BALANCE SHEETS
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

(Amounts in thousands, except shares and per share data)
September 30, 2019
 
December 31, 2018
 
(unaudited)
 
(audited)
ASSETS
 
 
 
Real estate, at cost
 
 
 
Operating real estate
$
3,082,598

 
$
2,549,571

Construction in progress
73,340

 
71,228

Held for development
547

 
9,392

 
3,156,485

 
2,630,191

Accumulated depreciation
(642,188
)
 
(590,338
)
Net real estate
2,514,297

 
2,039,853

Cash and cash equivalents
115,568

 
47,956

Restricted cash
10,494

 
9,316

Accounts receivable, net
9,561

 
9,289

Deferred rent receivable, net
47,361

 
39,815

Other assets, net
91,677

 
52,021

TOTAL ASSETS
$
2,788,958

 
$
2,198,250

LIABILITIES AND EQUITY
 
 
 
LIABILITIES:
 
 
 
Secured notes payable, net
$
162,159

 
$
182,572

Unsecured notes payable, net
1,195,525

 
1,045,863

Unsecured line of credit, net

 
62,337

Accounts payable and accrued expenses
63,205

 
46,616

Security deposits payable
7,855

 
8,844

Other liabilities and deferred credits, net
61,990

 
49,547

Total liabilities
1,490,734

 
1,395,779

Commitments and contingencies
 
 
 
EQUITY:
 
 
 
American Assets Trust, Inc. stockholders' equity
 
 
 
Common stock, $0.01 par value, 490,000,000 shares authorized, 59,956,972 and 47,335,409 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
599

 
474

Additional paid in capital
1,450,816

 
920,661

Accumulated dividends in excess of net income
(139,307
)
 
(128,778
)
Accumulated other comprehensive income
5,162

 
10,620

Total American Assets Trust, Inc. stockholders' equity
1,317,270

 
802,977

Noncontrolling interests
(19,046
)
 
(506
)
Total equity
1,298,224

 
802,471

TOTAL LIABILITIES AND EQUITY
$
2,788,958

 
$
2,198,250


Third Quarter 2019 Supplemental Information
                               Page 5

 
 
CONSOLIDATED STATEMENTS OF OPERATIONS
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

(Unaudited, amounts in thousands, except shares and per share data)
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
REVENUE:
 
 
 
 
 
 
 
Rental income
$
93,147

 
$
78,079

 
$
249,634

 
$
231,172

Other property income
5,215

 
4,428

 
18,160

 
17,090

Total revenue
98,362

 
82,507

 
267,794

 
248,262

EXPENSES:
 
 
 
 
 
 
 
Rental expenses
23,989

 
21,383

 
66,611

 
62,685

Real estate taxes
10,942

 
8,787

 
29,263

 
25,961

General and administrative
6,479

 
5,176

 
18,495

 
16,139

Depreciation and amortization
26,568

 
19,886

 
69,733

 
86,033

Total operating expenses
67,978

 
55,232

 
184,102

 
190,818

OPERATING INCOME
30,384

 
27,275

 
83,692

 
57,444

Interest expense
(13,734
)
 
(12,879
)
 
(40,212
)
 
(39,387
)
Gain on sale of real estate

 

 
633

 

Other (expense) income, net
(131
)
 
(125
)
 
(410
)
 
(64
)
NET INCOME
16,519

 
14,271

 
43,703

 
17,993

Net income attributable to restricted shares
(92
)
 
(71
)
 
(277
)
 
(215
)
Net income attributable to unitholders in the Operating Partnership
(3,565
)
 
(3,806
)
 
(10,553
)
 
(4,765
)
NET INCOME ATTRIBUTABLE TO AMERICAN ASSETS TRUST, INC. STOCKHOLDERS
$
12,862

 
$
10,394

 
$
32,873

 
$
13,013

 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE
 
 
 
 
 
 
 
Basic income from operations attributable to common stockholders per share
$
0.22

 
$
0.22

 
$
0.63

 
$
0.28

Weighted average shares of common stock outstanding - basic
59,441,887

 
46,959,752

 
52,239,668

 
46,945,095

Diluted income from continuing operations attributable to common stockholders per share
$
0.22

 
$
0.22

 
$
0.63

 
$
0.28

Weighted average shares of common stock outstanding - diluted
75,832,435

 
64,137,360

 
69,010,772

 
64,133,584


Third Quarter 2019 Supplemental Information
                               Page 6

 
 
FUNDS FROM OPERATIONS, FFO AS ADJUSTED & FUNDS AVAILABLE FOR DISTRIBUTION
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

(Unaudited, amounts in thousands, except shares and per share data)
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Funds from Operations (FFO) (1)
 
 
 
 
 
 
 
Net income
$
16,519

 
$
14,271

 
$
43,703

 
$
17,993

Depreciation and amortization of real estate assets
26,568

 
19,886

 
69,733

 
86,033

Gain on sale of real estate

 

 
(633
)
 

FFO, as defined by NAREIT
43,087

 
34,157

 
112,803

 
104,026

Less: Nonforfeitable dividends on restricted stock awards
(88
)
 
(70
)
 
(273
)
 
(211
)
FFO attributable to common stock and common units
$
42,999

 
$
34,087

 
$
112,530

 
$
103,815

 
 
 
 
 
 
 
 
FFO per diluted share/unit
$
0.57

 
$
0.53

 
$
1.63

 
$
1.62

 
 
 
 
 
 
 
 
Weighted average number of common shares and common units, diluted (2)
75,833,650

 
64,137,727

 
69,012,122

 
64,133,629

 
 
 
 
 
 
 
 
Funds Available for Distribution (FAD) (1)
$
14,724

 
$
22,849

 
$
40,804

 
$
75,301

 
 
 
 
 
 
 
 
Dividends
 
 
 
 
 
 
 
Dividends declared and paid
$
21,353

 
$
17,388

 
$
57,667

 
$
52,164

Dividends declared and paid per share/unit
$
0.28

 
$
0.27

 
$
0.84

 
$
0.81


Third Quarter 2019 Supplemental Information
                               Page 7

 
 
FUNDS FROM OPERATIONS, FFO AS ADJUSTED & FUNDS AVAILABLE FOR DISTRIBUTION (CONTINUED)
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

(Unaudited, amounts in thousands, except shares and per share data)
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2019
 
2018
 
2019
 
2018
Funds Available for Distribution (FAD) (1)
 
 
 
 
 
 
 
FFO
$
43,087

 
$
34,157

 
$
112,803

 
$
104,026

Adjustments:
 
 
 
 
 
 
 
Tenant improvements, leasing commissions and maintenance capital expenditures
(23,608
)
 
(10,363
)
 
(68,067
)
 
(31,661
)
Net effect of straight-line rents (3)
(5,140
)
 
(1,169
)
 
(1,091
)
 
2,034

Amortization of net above (below) market rents (4)
(1,062
)
 
(782
)
 
(2,781
)
 
(2,221
)
Net effect of other lease assets (5)
33

 
(9
)
 
(4,242
)
 
(11
)
Amortization of debt issuance costs and debt fair value adjustment
372

 
359

 
1,096

 
1,165

Non-cash compensation expense
1,130

 
726

 
3,359

 
2,180

Nonforfeitable dividends on restricted stock awards
(88
)
 
(70
)
 
(273
)
 
(211
)
FAD
$
14,724

 
$
22,849

 
$
40,804

 
$
75,301

 
 
 
 
 
 
 
 
Summary of Capital Expenditures
 
 
 
 
 
 
 
Tenant improvements and leasing commissions
$
14,518

 
$
6,391

 
$
40,237

 
$
18,139

Maintenance capital expenditures
9,090

 
3,972

 
27,830

 
13,522

 
$
23,608

 
$
10,363

 
$
68,067

 
$
31,661


Notes:
(1)
See Glossary of Terms.
(2)
For the three and nine months ended September 30, 2019 and 2018, the weighted average common shares and common units used to compute FFO per diluted share/unit include operating partnership common units and unvested restricted stock awards that are subject to time vesting. The shares/units used to compute FFO per diluted share/unit include additional shares/units which were excluded from the computation of diluted EPS, as they were anti-dilutive for the periods presented.
(3)
Represents the straight-line rent income recognized during the period offset by cash received during the period and the provision for bad debts recorded for deferred rent receivable balances.
(4)
Represents the adjustment related to the acquisition of buildings with above (below) market rents.
(5)
Represents adjustments related to amortization of lease incentives paid to tenants, amortization of lease intangibles, lease termination fees at Carmel Mountain Plaza and straight-line rent expense for our leases at the Annex at the Landmark at One Market.

Third Quarter 2019 Supplemental Information
                               Page 8

 
 
CORPORATE GUIDANCE
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

(Amounts in thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior 2019 Guidance Range (1) (2)
 
Revised 2019 Guidance Range (2)
Funds from Operations (FFO):
 
 
 
 
 
 
 
 
Net income
 
$
56,151

 
$
61,287

 
$
59,647

 
$
62,476

Depreciation and amortization of real estate assets
 
84,191

 
84,191

 
96,301

 
96,301

FFO, as defined by NAREIT
 
140,342

 
145,478

 
155,948

 
158,777

Less: Nonforfeitable dividends on restricted stock awards
 
(377
)
 
(377
)
 
(377
)
 
(377
)
FFO attributable to common stock and units
 
$
139,965

 
$
145,101

 
$
155,571

 
$
158,400

Weighted average number of common shares and units, diluted
 
64,203,832

 
64,203,832

 
70,776,971

 
70,776,971

FFO per diluted share, updated
 
$
2.18

 
$
2.26

 
$
2.20

 
$
2.24

 
 
 
 
 
 
 
 
 
 
 
2020 Guidance Range (2)
 
 
 
 
Funds from Operations (FFO):
 
 
 
 
 
 
 
 
Net income
 
$
79,330

 
$
85,414

 
 
 
 
Depreciation and amortization of real estate assets
 
102,050

 
102,050

 
 
 
 
FFO, as defined by NAREIT
 
181,380

 
187,464

 
 
 
 
Less: Nonforfeitable dividends on incentive stock awards
 
(396
)
 
(396
)
 
 
 
 
FFO attributable to common stock and units
 
$
180,984

 
$
187,068

 
 
 
 
Weighted average number of common shares and units, diluted
 
76,043,952

 
76,043,952

 
 
 
 
FFO per diluted share, updated
 
$
2.38

 
$
2.46

 
 
 
 

Notes:
(1)
Prior 2019 Guidance Range as reported in the company's Fourth Quarter 2018 Amended and Restated Supplemental Information.
(2)
The company's guidance excludes any impact from future acquisitions, dispositions, equity issuances or repurchases, future debt financings or repayments.

These estimates are forward-looking and reflect management's view of current and future market conditions, including certain assumptions with respect to leasing activity, rental rates, occupancy levels, interest rates and the amount and timing of acquisition and development activities. Our actual results may differ materially from these estimates.


Third Quarter 2019 Supplemental Information
                               Page 9

 
 
SAME-STORE NET OPERATING INCOME (NOI)
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

(Unaudited, amounts in thousands)
Three Months Ended September 30, 2019
 
Retail
 
Office
 
Multifamily
 
Mixed-Use
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
Same-store
$
21,933

 
$
32,832

 
$
12,655

 
$

 
$
67,420

Non-same store (1)
3,915

 
9,978

 

 
17,049

 
30,942

Total
25,848

 
42,810

 
12,655

 
17,049

 
98,362

Real estate expenses
 
 
 
 
 
 
 
 
 
Same-store
6,228

 
8,686

 
5,367

 

 
20,281

Non-same store (1)
1,578

 
2,941

 

 
10,131

 
14,650

Total
7,806

 
11,627

 
5,367

 
10,131

 
34,931

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Same-store
15,705

 
24,146

 
7,288

 

 
47,139

Non-same store (1)
2,337

 
7,037

 

 
6,918

 
16,292

Total
$
18,042

 
$
31,183

 
$
7,288

 
$
6,918

 
$
63,431

Same-store NOI
$
15,705

 
$
24,146

 
$
7,288

 
$

 
$
47,139

Net effect of straight-line rents (2)
(131
)
 
(3,531
)
 
79

 

 
(3,583
)
Amortization of net above (below) market rents (3)
(353
)
 
(456
)
 

 

 
(809
)
Net effect of other lease intangibles (4)

 
27

 

 

 
27

Tenant improvement reimbursements (5)

 
(1,054
)
 

 

 
(1,054
)
Same-store cash NOI (5)
$
15,221

 
$
19,132

 
$
7,367

 
$

 
$
41,720


Notes:
(1)
Same-store and non-same store classifications are determined based on properties held on September 30, 2019 and 2018. See Glossary of Terms.
(2)
Represents the straight-line rent income recognized during the period offset by cash received during the period and the provision for bad debts recorded for deferred rent receivable balances.
(3)
Represents the adjustment related to the acquisition of buildings with above (below) market rents.
(4)
Represents adjustments related to amortization of lease incentives paid to tenants, amortization of lease intangibles and straight-line rent expense for our leases at the Annex at the Landmark at One Market.
(5)
Tenant improvement reimbursements are excluded from same-store cash NOI to provide a more accurate measure of operating performance.


NOI and same-store cash NOI are non-GAAP supplemental earnings measures which we consider meaningful in measuring our operating performance. Reconciliations of NOI and same-store cash NOI to net income are included in the Glossary of Terms.


Third Quarter 2019 Supplemental Information
                               Page 10

 
 
SAME-STORE NET OPERATING INCOME (NOI) (CONTINUED)
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

(Amounts in thousands)
Nine Months Ended September 30, 2019
 
Retail
 
Office
 
Multifamily
 
Mixed-Use
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
Same-store
$
69,456

 
$
88,899

 
$
38,451

 
$

 
$
196,806

Non-same store (1)
11,700

 
11,917

 

 
47,371

 
70,988

Total
81,156

 
100,816

 
38,451

 
47,371

 
267,794

Real estate expenses
 
 
 
 
 
 
 
 
 
Same-store
18,025

 
25,224

 
15,323

 

 
58,572

Non-same store (1)
4,666

 
4,161

 

 
28,475

 
37,302

Total
22,691

 
29,385

 
15,323

 
28,475

 
95,874

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Same-store
51,431

 
63,675

 
23,128

 

 
138,234

Non-same store (1)
7,034

 
7,756

 

 
18,896

 
33,686

Total
$
58,465

 
$
71,431

 
$
23,128

 
$
18,896

 
$
171,920

Same-store NOI
$
51,431

 
$
63,675

 
$
23,128

 
$

 
$
138,234

Net effect of straight-line rents (2)
(1,018
)
 
1,378

 
225

 

 
585

Amortization of net above (below) market rents (3)
(1,112
)
 
(1,239
)
 

 

 
(2,351
)
Net effect of other lease assets (4)
(4,406
)
 
145

 

 

 
(4,261
)
Tenant improvement reimbursements (5)
(17
)
 
(7,932
)
 

 

 
(7,949
)
Same-store cash NOI (5) 
$
44,878

 
$
56,027

 
$
23,353

 
$

 
$
124,258


Notes:
(1)
Same-store and non-same store are determined based on properties held on September 30, 2019 and 2018. See Glossary of Terms.
(2)
Represents the straight-line rent income recognized during the period offset by cash received during the period and the provision for bad debts recorded for deferred rent receivable balances.
(3)
Represents the adjustment related to the acquisition of buildings with above (below) market rents.
(4)
Represents adjustments related to amortization of lease incentives paid to tenants, amortization of lease intangibles, lease termination fees at Carmel Mountain Plaza and straight-line rent expense for our leases at the Annex at the Landmark at One Market.
(5)
Tenant improvement reimbursements are excluded from Same-store Cash NOI to provide a more accurate measure of operating performance.

NOI and same-store cash NOI are non-GAAP supplemental earnings measures which we consider meaningful in measuring our operating performance. Reconciliations of NOI and same-store cash NOI to net income are included in the Glossary of Terms.




Third Quarter 2019 Supplemental Information
                               Page 11

 
 
SAME-STORE CASH NOI COMPARISON EXCLUDING REDEVELOPMENT
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

(Unaudited, amounts in thousands)
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
September 30,
 
 
 
September 30,
 
 
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Cash Basis:
 
 
 
 
 
 
 
 
 
 
 
Retail
$
15,221

 
$
16,024

 
(5.0
)%
 
$
44,878

 
$
46,677

 
(3.9
)%
Office
19,132

 
17,307

 
10.5

 
56,027

 
55,995

 
0.1

Multifamily
7,367

 
7,741

 
(4.8
)
 
23,353

 
22,848

 
2.2

Mixed-Use

 

 

 

 

 

Same-store Cash NOI (1)(2)
$
41,720

 
$
41,072

 
1.6
 %
 
$
124,258

 
$
125,520

 
(1.0
)%

Notes:
(1)
Excluding lease termination fees, for the three and nine months ended September 30, 2019 and 2018, same-store cash NOI would be 0.6% and 1.0%, respectively.
(2)
See Glossary of Terms.


Same-store cash NOI is a non-GAAP supplemental earnings measure which we consider meaningful in measuring our operating performance. A reconciliation of same-store cash NOI to net income is included in the Glossary of Terms.


Third Quarter 2019 Supplemental Information
                               Page 12

 
 
SAME-STORE CASH NOI COMPARISON WITH REDEVELOPMENT
https://cdn.kscope.io/62711cf3bd129514fb313d91386693de-aat2019q3a16.jpg
 
 

(Unaudited, amounts in thousands)
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
September 30,
 
 
 
September 30,
 
 
 
2019
 
2018
 
Change
 
2019
 
2018
 
Change
Cash Basis:
 
 
 
 
 
 
 
 
 
 
 
Retail
$
17,484

 
$
18,357

 
(4.8
)%
 
$
51,534

 
$
56,667

 
(9.1
)%
Office
19,101

 
17,263

 
10.6

 
55,663

 
55,692