American Assets Trust, Inc. Reports Fourth Quarter and Year-End 2017 Financial Results

World News: . []

SAN DIEGO, Feb. 13, 2018 (GLOBE NEWSWIRE) -- American Assets Trust, Inc. (NYSE:AAT) (the “company”) today reported financial results for its fourth quarter and year ended December 31, 2017.

Net income attributable to common stockholders was $7.1 million, or $0.15 per basic and diluted share for the three months ended December 31, 2017 compared to $8.9 million, or $0.19 per basic and diluted share for the three months ended December 31, 2016.  The decrease from the corresponding period in 2016 was primarily due to an increase in bad debt expense at Lloyd District Portfolio and increase in general and administrative expenses during the period related to a one-time non-cash charge associated with the vesting modification of previously granted restricted stock awards.  The vesting modification was approved by our compensation committee during the fourth quarter of 2017 to adjust vesting based on their analysis of our relative total shareholder return over a three year period instead of our prior performance metric of relative forward FFO multiple. For the year ended December 31, 2017, net income attributable to common stockholders was $29.1 million, or $0.62 per basic and diluted share compared to $32.6 million, or $0.72 per basic and diluted share for the year ended December 31, 2016.  The decrease was primarily due to an increase in depreciation and amortization expense attributed to the acquisition of the Pacific Ridge Apartments on April 28, 2017 and an increase in general and administrative expenses, as previously noted.

During the fourth quarter of 2017, the company generated funds from operations (“FFO”) for common stockholders of $29.6 million, or $0.46 per diluted share, compared to $30.5 million, or $0.48 per diluted share, for the quarter ended December 31, 2016.  The decrease in FFO from the corresponding period in 2016 was primarily due to an increase in bad debt expense and general and administrative expenses during the period, as noted above.  For the year ended December 31, 2017, the company generated FFO for common stockholders of $123.2 million, or $1.92 per diluted share, compared to $116.8 million, or $1.85 per diluted share, for the year ended December 31, 2016.  The increase in FFO from the prior year was primarily due to additional operating income from Hassalo on Eighth due to an increase in the percentage leased, the acquisitions of the Pacific Ridge Apartments on April 28, 2017 and Gateway Marketplace on July 6, 2017, offset by the increase in general and administrative expenses during the period, as noted above.

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.

The portfolio leased status as of the end of the indicated quarter was as follows:

(1) Total retail leased percentage includes the retail components of Hassalo on Eighth.  The Elwood, Velomor and Aster Tower buildings of Hassalo on Eighth were placed in operations in April 2016, July 2016 and October 2016, respectively.  Same-store retail leased percentages exclude Hassalo on Eighth and Gateway Marketplace, which was acquired on July 6, 2017.(2) Excluding the 21 off-line units associated with the Loma Palisades repositioning, total multifamily leased percentage was 92.7% and 92.3% at December 31, 2017 and September 30, 2017, respectively, and same-store multifamily leased percentage was 93.4% and 93.1% at December 31, 2017 and September 30, 2017, respectively.(3) Same-store multifamily leased percentages excludes the Pacific Ridge Apartments, which was acquired on April 28, 2017.

During the fourth quarter of 2017, the company signed 24 leases for approximately 81,600 square feet of retail and office space, as well as 439 multifamily apartment leases.  Renewals accounted for 78.6% of the comparable retail leases, 60.0% of the comparable office leases and 46.2% of the residential leases. 

(1) Retail leasing spreads were significantly impacted by the Lowe's renewal at Waikele Center of approximately 155,000 square feet during the second quarter of 2017.  Excluding the Lowe's renewal at Waikele Center, we leased approximately 154,000 comparable retail square feet at an average GAAP-basis and cash-basis contractual rent increase of 18.9% and 7.5%, respectively, during the twelve month period ended December 31, 2017.

The average monthly base rent per leased unit for same-store properties for the year ended December 31, 2017 was $1,816 compared to an average monthly base rent per leased unit of $1,702 for the year ended December 31, 2016, an increase of approximately 7%.

For the three months ended December 31, 2017, the Pacific Ridge Apartments was classified as a non same-store property.  For the year ended December 31, 2017, Hassalo on Eighth and the Pacific Ridge Apartments were classified as non same-store properties.

(1)    Same-store portfolio excludes (i) Hassalo on Eighth - Retail, which was placed in operations in April, July and October of 2016; (ii) the Pacific Ridge Apartments, which was acquired on April 28, 2017; (iii) Gateway Marketplace, which was acquired on July 6, 2017; and (iv) land held for development.(2)    Same-store portfolio excludes (i) Torrey Reserve Campus due to significant redevelopment activity during the period; (ii) Hassalo on Eighth - Multifamily, which became available for occupancy in July and October of 2015; (iii) Hassalo on Eighth - Retail, which was placed in operations in April, July and October of 2016; (iv) the Pacific Ridge Apartments, which was acquired on April 28, 2017; (v) Gateway Marketplace, which was acquired on July 6, 2017; and (vi) land held for development.

On a same-store GAAP basis, retail NOI for the three months ended December 31, 2017 was consistent with the corresponding period in 2016.  On a same-store cash basis, retail NOI for the three months ended December 31, 2017 increased from the prior period due to higher annualized base rents at Carmel Mountain Plaza and Del Monte Center.  On a same-store GAAP and cash basis, retail NOI for the year ended December 31, 2017 was consistent with the prior year.

On a same-store GAAP basis, office NOI decreased for the three months ended December 31, 2017 compared to the corresponding period in 2016 primarily due to an increase in bad debt expense for a tenant at the Lloyd District Portfolio.  On a same-store cash basis, office NOI decreased for the three months ended December 31, 2017 compared to the corresponding period in 2016 primarily due to rent abatements at First & Main and City Center Bellevue. On a same-store GAAP and cash basis, office NOI increased for the year ended December 31, 2017 compared to the corresponding period in 2016 due to higher annualized base rents, specifically at the Lloyd District Portfolio, the Landmark at One Market and First & Main.

On a same-store GAAP and cash basis, multifamily NOI increased for the three months and year ended December 31, 2017 compared to the corresponding periods in 2016 primarily due to an increase in average monthly base rent during 2017.  This increase was achieved notwithstanding the current repositioning of 21 off-line units at Loma Palisades, which was recently completed at the end of the fourth quarter of 2017.

On a same-store GAAP basis, mixed-use NOI for the three months ended December 31, 2017 was consistent with the corresponding period in 2016.  On a same-store cash basis mixed-use NOI decreased for the three months ended December 31, 2017 compared to the same period in 2016 primarily due to a decrease in the percentage leased at the retail portion of our mixed-use property. On a same-store GAAP and cash basis, mixed-use NOI decreased for the year ended December 31, 2017 compared to the corresponding period in 2016 primarily due to an increase in bad debt expense at the hotel portion of our mixed-use property and a decrease in the percentage leased at the retail portion of our mixed-use property.

Additionally, on January 9, 2018, our $150 million term loan agreement was amended to, among other things, (1) decrease the applicable leverage-based and ratings-based pricing spreads effective as of March 1, 2018 and (2) include an accordion feature to allow us to increase the term loan from its current $150 million to up to $300 million, subject to certain conditions. The $150 million term loan is unsecured.

In addition, the company has declared a dividend on its common stock of $0.27 per share for the quarter ending March 31, 2018. The dividend will be paid on March 29, 2018 to stockholders of record on March 15, 2018.

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.

(1)    Same-store portfolio excludes (i) Hassalo on Eighth - Retail, which was placed in operations in April, July and October of 2016; (ii) the Pacific Ridge Apartments, which was acquired on April 28, 2017; (iii) Gateway Marketplace, which was acquired on July 6 2017; and (iv) land held for development.(2)    Same-store portfolio excludes (i) Torrey Reserve Campus due to significant redevelopment activity during the period; (ii) Hassalo on Eighth - Multifamily, which became available for occupancy in July and October of 2015; (iii) Hassalo on Eighth - Retail, which was placed in operations in April, July and October of 2016; (iv) the Pacific Ridge Apartments, which was acquired on April 28, 2017; (v) Gateway Marketplace, which was acquired on July 6 2017; and (vi) land held for development.(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 City Center Bellevue, and straight-line rent expense for our leases of the Annex at The Landmark at One Market and retail space at Waikiki Beach Walk - Retail.

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

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 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.

 

More news and information about American Assets Trust, Inc.

Published By:

Globe Newswire: 21:15 GMT Tuesday 13th February 2018

Published: .

Search for other references to "american" on SPi News


Previous StoryNext Story

SPi News is published by Sector Publishing Intelligence Ltd.
© Sector Publishing Intelligence Ltd 2018. [Admin Only]
 
Sector Publishing Intelligence Ltd.
Ground Floor Offices, Little Keep Gate, Barrack Road, Dorchester, Dorset DT1 1AH
Registered in England and Wales number 0751938.
 
Privacy Policy | Terms and Conditions | Contact Us
 

Advertising on SPi News: Information For Advertisers