American Assets Trust ((AAT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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American Assets Trust’s recent earnings call painted a mixed picture, with strong leasing performances in the office and retail segments and an increased dividend, but also highlighted significant challenges in the multifamily and hotel segments. The company also acknowledged the need to address elevated leverage levels.
Office Leasing Success
The company reported a successful quarter in office leasing, completing approximately 180,000 square feet of leases. This achievement resulted in a 9% increase in comparable rent spreads on a cash basis and an 18% increase on a straight-line basis, showcasing robust demand and effective leasing strategies.
Retail Portfolio Performance
American Assets Trust’s retail portfolio demonstrated strong performance, with a 98% lease rate. Rent spreads increased by over 4% on a cash basis and 21% on a straight-line basis. Additionally, tenant sales and foot traffic remained solid, indicating a healthy retail environment.
Dividend Declaration
The Board of Directors approved a quarterly dividend of $0.34 per share for the fourth quarter, payable on December 18 to shareholders of record as of December 4. This decision reflects the company’s commitment to returning value to its shareholders.
Increased Guidance
The company raised its full-year 2025 guidance range to $1.93 to $2.01 per FFO share, marking a $0.02 increase from the prior guidance midpoint. This upward revision is attributed to strong leasing momentum and disciplined expense management.
Multifamily Portfolio Challenges
The multifamily segment faced challenges, with a same-store NOI decline of 8.3%. This was primarily due to supply headwinds in San Diego and elevated operating expenses, highlighting areas that require strategic attention.
Hawaii Hotel Performance
The Embassy Suites Waikiki experienced a 10% decline in NOI, with RevPAR down 11.7% and ADR down 5.4%. These decreases were driven by softer tourism and increased rate competition, posing challenges to the hotel segment.
Leverage Concerns
The company’s net debt-to-EBITDA ratio increased to 6.9x on a quarter annualized basis. American Assets Trust is focusing on reducing leverage towards a long-term target of 5.5x, indicating a strategic priority to strengthen its financial position.
Forward-Looking Guidance
In the third quarter of 2025, American Assets Trust reported a funds from operations (FFO) of $0.49 per diluted share, slightly exceeding internal projections. The company maintained stability in total revenue, reaching $110 million for the quarter, despite known challenges. Looking ahead, the company raised its full-year 2025 FFO guidance to a range of $1.93 to $2.01 per share, driven by leasing momentum and disciplined expense management.
In summary, American Assets Trust’s earnings call reflected a balanced outlook with strong performances in certain segments and challenges in others. The company’s increased dividend and raised guidance underscore its confidence in future growth, while addressing leverage concerns remains a key focus.