The following is a summary of the American Assets Trust, Inc. (AAT) Q4 2023 Earnings Call Transcript:
Financial Performance:
American Assets Trust reported Q4 and year-end 2023 FFO per share of $0.57 and $2.40 respectively and net income attributable to common shareholders was $0.17 and $0.84.
Same-store cash NOI for all sectors had a YoY growth of 2.6% in Q4 and 4.5% for year-end 2023 compared to 2022.
Liquidity at the end of Q4 was approx $483 million with a net debt to EBITDA of 6.5x on a trailing 12-month basis.
The company predicts a 5.8% decrease from 2023's $2.40 per FFO share in the 2024 FFO per share guidance which ranges from $2.19 to $2.33.
The expected operating capital expenditure for 2024 is approx $59 million.
Despite rising competition and increasing operating expenses, the company expects its properties to remain profitable due to their location and amenities.
Negative revenue changes are expected at the Embassy Suites Waikiki Hotel due to seasonality and the office segment due to delayed leasing decisions.
Business Progress:
American Assets Trust achieved its highest-ever FFO per share in 2023, a 3% increase from 2022, as well as the highest ever total revenue and net operating income.
The company executed 11 leases in Q4 2023 and has already signed 6 leases in 2024, totalling approximately 50,000 rentable sq ft, with rent increases of 10.7% on a cash basis and 26.6% on a straight-line basis.
The company's office portfolio was 86% leased at the end of Q4 2023.
The company has an objective to achieve a net debt to EBITDA of 5.5x or below and is focusing on leasing up La Jolla Commons III to achieve this.
A new fitness center designed by Gensler is in the permitting process with the San Diego city administration, and construction is set to start next month.
American Assets Trust is experiencing increased leasing activity and expects it to contribute to NOI and occupancy growth in the long term.
The company aims to improve its resident experience to maintain appeal in a competitive rental market condition in San Diego.
More details: American Assets Trust Inc IR
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