American Assets Trust(AAT) - 2024 Q4 - Annual Report

Portfolio Composition - As of December 31, 2024, the portfolio includes twelve office properties, twelve retail shopping centers, one mixed-use property with a 369-room hotel, and six multifamily properties[35]. - The operating portfolio as of December 31, 2024, includes 31 properties with approximately 7.3 million rentable square feet of office and retail space, 2,110 residential units, and a 369-room hotel[179]. - The total net rentable square feet across all properties is 7,264,703, with Southern California contributing 40.2% of this total[196]. - The office portfolio includes 12 properties with approximately 4.1 million rentable square feet, 85.0% of which were leased as of December 31, 2024[233]. Financial Performance - In 2024, approximately 53% of the company's net operating income was derived from office properties, indicating a significant reliance on this segment[58]. - The total annualized base rent for the retail and office portfolio is $273,746,176, with an average rent per leased square foot of$42.85 and an overall leased percentage of 89.1%[180]. - The total property operating income for the office segment was $153,544,000, representing 52.9$76,532,000, accounting for 26.4% of the total[198]. Growth Strategy - The company aims to pursue growth through strategic acquisitions of high-quality properties in high-barrier-to-entry markets[42]. - The company plans to selectively reposition and redevelop existing properties and pursue ground-up development opportunities[42]. - The company aims for growth in earnings and cash flows through property development, acquisitions, and redevelopment opportunities[223]. - The company evaluates properties continuously to identify redevelopment opportunities that enhance operating performance[224]. Debt and Financial Risks - The company had total debt outstanding of $1.70 billion as of February 11, 2025, which may expose it to risks of default under its debt obligations[60]. - High mortgage rates may hinder the company's ability to finance or refinance properties, potentially reducing net income and cash distributions[74]. - The company is exposed to foreclosure risks due to mortgage debt obligations, which could adversely affect its property portfolio value[75]. - The company’s ability to grow is limited if it cannot obtain additional capital, especially in unfavorable economic conditions[72]. Tenant and Lease Information - As of December 31, 2024, the three largest tenants in the office portfolio accounted for approximately 31.5$3,381,430, with a rent per leased square foot of $45.94[187]. - The total annualized base rent for signed but not commenced leases in the retail portfolio is$767,399, with a rent per leased square foot of $68.29[187]. Market and Competitive Environment - The company operates in a highly competitive environment, which may limit suitable acquisition opportunities and increase acquisition costs[50]. - The company faces competition from other developers and operators in its markets, which may affect its ability to lease properties and maintain rental rates[49]. - The company faces significant risks in the retail real estate market, including competition from discount and internet retailers, which could adversely affect market rents and tenant demand[88]. - The company competes with numerous developers and operators, which may lead to decreased occupancy and rental rates if competitors offer lower rates[90]. Environmental and Regulatory Risks - The company is exposed to potential environmental liabilities, including contamination issues at certain properties, which could impact financial performance[47]. - The company may face liabilities related to environmental issues, including mold and air quality problems, which could lead to costly remediation efforts[133]. - The company is subject to laws and regulations related to climate change, which could result in substantial compliance costs[112]. - The company’s properties are vulnerable to climate change impacts, which may lead to additional compliance obligations and costs[113]. Operational and Management Risks - The company is focused on proactive asset and property management to increase occupancy rates and enhance property cash flows[42]. - The company relies on third-party management for its hospitality properties, which may limit operational control and increase financial risks[99]. - The company has implemented various security measures to mitigate risks associated with information technology and data security[121]. - The Audit Committee receives quarterly reports on cybersecurity risks and oversees the cybersecurity risk management program, ensuring governance and risk oversight[175]. Shareholder and Governance Issues - The company is committed to maintaining its REIT status by distributing at least 90% of its net taxable income to stockholders[44]. - The company’s ability to generate revenues in excess of expenses is crucial for making expected distributions to stockholders and unitholders[124]. - The board of directors can increase the number of authorized shares without stockholder approval, potentially diluting existing shares[141]. - The partnership agreement includes provisions that may delay or prevent unsolicited acquisitions, potentially affecting stockholder interests[145].