American Assets Trust, Inc.

Welcome to American Assets Trust, Inc.' 's second quarter 2024 earnings call. As a reminder, today's conference is being recorded. Please note that statements made on this conference call include forward-looking statements based on current expectations, which statements are subject to risks and uncertainties discussed in the company's filings with the SEC. Your caution not to place undue reliance on these forward-looking statements is as actual events could cause the company's results to differ materially from these forward-looking statements. Yesterday afternoon, American Assets Trust's earnings release and supplemental information were furnished to the SEC on Form 8K. Both are now available on the Investors section of its website, AmericanAssetsTrust.com. It's now my pleasure to turn the call over to Ernest Rady, Chairman and CEO of American Assets Trust.

Good morning, everyone. At American Assets Trust, I can assure you every strategic and operational decision is driven by our commitment to maximize both long and short-term value. This dedication is reflected in our efforts to maintain a robust balance sheet and our continuous investment in enhancing our irreplaceable properties, ensuring they remain top tier in the respective markets. In Q2 2024, our operating fundamentals once again exceeded expectations, even amidst much of the pessimistic market sentiment surrounding commercial real estate, particularly in the office sector. Very upsetting to me, frankly. Our strong performance has prompted us to raise our full-year guidance once more, underscoring our confidence in our earnings trajectory for the remainder of 2024. This success highlights the exceptional quality of our properties, the exceptional ability of our people, and the expertise of our team who drive our long-term growth and shareholder wealth creation. On that note, I am pleased to announce that Adam Weil, who's been with us now for 20 years, right? Correct. You joined us when you were three, right, Adam? We have a young president. Our current president CEO will be stepping into the role of CEO on January 1st, 2025. Adam has been an integral part of our team, contributing at all levels of our organization for two decades. His leadership, expertise, executional skills, and deep understanding of the real estate industry in our portfolio has been invaluable to our success. Thank you, Adam. Adam's promotion to CEO is a natural progression for both him and American Assets Trust, reflecting the confidence of our board and I have in his ability to steer our company toward continued success. Congratulations, and again, thanks, Adam. To our investors and stakeholders, I want to assure you that this transition will be seamless. I'm in good health, thank goodness, and will assume the role of Executive Chairman on January 1st, 2025, continuing to lead our board meetings and strategy. Additionally, our incredibly talented, dedicated, and long-tenured executive management team will remain intact, including our CFO, Bob Parton, who suggests he has another decade on him at AAT, at least. He joined when he was four. I am continually impressed by this team's cohesion, collaborative spirit and experience which fosters a strong sense of trust and mutual respect, enabling them to tackle challenges effectively and drive innovation. My colleagues Adam, Bob, Steve, Chris, and Abigail will cover our various asset segments, financial results, and update guidance shortly. But first, I am pleased to announce the Board of Directors has approved a quarterly dividend of $0.335 per share for the third quarter. This decision highlights our strong financial performance and emphasizes the Board's belief in our continued success. The dividend will be paid on September 19 to shareholders of record September 5. I'd like to express my ardor. our sincere confidence and gratitude for your support and allow us to steward your company. Now I'll hand the call over to Adam to commence a deeper dive into our quarterly performance and future outlook.

Thanks, Ernest. I am honored to take on the CEO role at the start of 2025. Ernest, your entrepreneurial spirit, visionary leadership, business acumen, and mentorships have been pivotal not only for my development but also for the entire management team for which we are immensely grateful. I sincerely appreciate the trust you and our board have placed in my leadership. I'm also thankful for Bob's support as well as all of my colleagues on our exceptional management team. Our daily collaboration has fostered a true sense of family among us as we've navigated numerous challenges and celebrated many successes over the years. Teamwork and resilience thrive at American Assets Trust thanks to the tone Ernest has said at the top. Turning to our results, as Ernest mentioned, we have once again delivered strong operating performance across all segments of our diversified portfolio, including the highest quality office, retail, multifamily, and mixed-use properties. In times of economic and business unpredictability, it is crucial for us to focus on what we can control. This means adapting to and meeting evolving market demands in a volatile economy, particularly in commercial real estate. We have a proven track record of overcoming challenges with resilience, and we are confident that our high-quality operating platform and real estate portfolio will remain steadfast despite the volatile financial markets. Moving forward, we will continue to base our strategy and decision-making on actions we believe will drive long-term financial outperformance. On the office utilization front, our estimates and those of our tenants indicate that office usage has remained relatively stable from Q1 to Q2. Specifically, San Diego and San Francisco are experiencing utilization rates between 70 and 80%, with San Francisco largely driven by our two anchor tenants at Landmark, while Bellevue and Portland are at about 60 to 75%. We anticipate that a few more known return-to-office mandates from existing tenants, once implemented, can increase these figures by year-end. Meanwhile, we understand that nationwide office utilization is just north of 50% of pre-pandemic levels. Of course, the quality and location of our office buildings and the robust amenities we offer are key differentiators in our higher utilization, not to mention leasing efforts compared to the competitors in our submarkets. In the retail sector, which represents 27% of our portfolio NOI, we are currently about 95% leased. We have successfully renewed nearly all lease expirations this year and have begun executing on our 2025 renewals. As anticipated, our comparable retail leasing spreads have continued to trend positively each quarter over the past several years, with a 6% increase on a cash basis and a 34% increase on a straight line basis for Q2 transactions. We are often asked about consumer spending at our retail properties. While we are not completely insulated from a potential slowdown, we believe that consumer spending is more resilient in the densely populated areas with favorable demographics surrounding our top-tier shopping centers. Foot traffic has remained strong, supporting ongoing demand for the limited vacant space at our well-managed properties, especially given the very limited supply growth in our sub-market. As a result, our retail portfolio achieved its highest average base rent per square foot in Q2 since our IPO, which ranks among the top two of the retail peers that we track. Turning to our multifamily portfolio, specifically at our San Diego communities, we ended Q2 in with an occupancy rate of 89% and a leased percentage of 95%. The dip in occupancy is mainly due to the seasonal move out of students at our Pacific Ridge apartments. We note that leases for vacant units were rented at an average rate approximately 4% lower than prior rents, largely due to expiring prior tenancies that saw premiums of 20 plus percent over the base rate for month to month holdovers. while renewed units experienced an average increase of 9%, resulting in a blended average increase of 4% with minimal concessions offered. While the year began with the slowdown in rents, the stronger spring and summer leasing season in Q2 has allowed us to increase rates, especially on renewals. In Q2, at our Haslow and 8th multifamily community in Portland, we maintained flat rates on a blended basis between new move-ins and renewals, with our lease percentage holding steady at 96% and minimal concessions offered. While we had hoped for a slight increase in blended rates, maintaining flat rates still represents an improvement over prior quarters in Portland. Q3 has begun positively at Hasolo, and we are optimistic about sustaining this momentum. Meanwhile, it's worth noting that our multifamily portfolio achieved its highest ever average base rent in Q2 since our IPO, as we saw our same-store NOI increase almost 10% year-over-year for Q2, with very strong collections in Q2. and net effective rents for our entire multifamily portfolio are now 3% higher year-over-year compared to Q2 2023. Finally, we released our 2023 Sustainability Report in Q2, showcasing our operations and highlighting our initiatives and vision on various topics, including environmental sustainability, social responsibility, corporate governance, and human capital. You can find it on our website, and we hope you find it informative. With that, I'll turn the call over to Bob to discuss financial results and updated guidance in more detail.