American Assets Trust, Inc.

the American Assets Trust, Inc.' 's fourth quarter and year-end 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. As a reminder, today's earnings call is being recorded. I would now like to turn the call over to Meliana Leverton, Associate General Counsel of American Assets Trust. Please go ahead.

Thank you and good morning. The statements made on this earnings 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. You are cautioned not to place undue reliance on these forward-looking statements 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 is now my pleasure to turn the call over to Adam Weil, President and CEO of American Assets Trust.

Thank you, and good morning, everyone. Thank you for joining us today and for your continued support during these extraordinary times. To start, I'd like to reaffirm our steadfast commitment to disciplined decision-making that supports the long-term growth of our earnings and shareholder value. This approach, underpinned by our high-quality, irreplaceable, and diverse portfolio, robust balance sheet, exceptional management and employee team, and agile operating platform positions us to adapt to evolving market dynamics effectively. We remain confident that this strategy will enable us to grow earnings accretively and and drive sustained outperformance over the long term. In an environment where replacement costs for high quality properties continue to escalate, we believe today's valuations for premier assets like ours will look increasingly compelling in hindsight. This is particularly important as we address upcoming transaction activity later in our prepared remarks. Turning to our results, we are pleased with our continued strong performance across all segments. Building on back-to-back record FFO years in 2022, In 2023, 2024 marked yet another milestone as we achieved our highest FFO per share since our IPO more than 14 years ago. This achievement is complemented by record total revenue NOI aggregate dividends over $103 million and record average monthly base rents across our office, retail, and multifamily portfolios. Additionally, our Waikiki Beachwalk Embassy Sweeps delivered its highest ADR to date in 2024. These accomplishments are particularly noteworthy given the challenging and unpredictable economic cycles, global events, and unpredictability of interest rate movements that we continue to navigate. This also reflects the strategic capital improvements we've made to enhance and amenitize our properties, ensuring they remain best in class. This focus has been instrumental in driving tenant satisfaction, retention, and rent growth, especially for our high barrier to entry modern properties located in areas of growth, innovation and education, and with superior transportation access. Looking ahead, we continue to see significant opportunities for organic growth, including the lease-up and stabilization of our new developments, maximizing rental rates, prudent expense management, and the densification of existing assets with mixed-use multifamily developments that we will do our absolute best to capitalize on over time. Nevertheless, as you will repeatedly hear us say, our top priority remains maintaining a strong balance sheet, ample liquidity, and increasing dividends through long-term cash flow growth, ensuring we are well prepared to capitalize on opportunities while navigating any market volatility. As you will have noted from our initial guidance, which Bob will give additional details on in just a moment, 2025 represents a reset of sorts for our FFO compared to last year, primarily due to certain one-time opportunistic revenue-generating items in prior periods that we do not expect to reoccur this year. Absent these impacts, we still anticipate continued positive momentum in our core operational performance over the ensuing years. But at the same time, we are accounting for increased interest expense from our bond offering last fall and the discontinuation of capitalized interest on La Jolla Commons Tower 3 and One Beach Street and maintaining conservative collection reserves to safeguard our financial position. These measures reflect our commitment to balancing growth with prudent risk management as we move forward, noting that we have no debt maturities until 2027. In regards to our office segment, as we enter the new year, we remain optimistic about a gradual yet steady improvement in office utilization across our portfolio, driven by return to office mandates from many of our tenants, including some of the largest organizations in the country. While it is still early to fully assess the impact of these policies, We believe the superior quality and prime locations of our office assets, combined with best-in-class amenities, will continue to set us apart, leading to increased occupancy and leasing momentum over the ensuing years. Additionally, we are closely monitoring the new federal administration's policies, which appear to be supportive of business growth through tax reductions and regulatory easing. We anticipate that these measures will further strengthen tenant confidence and contribute to increased leasing activity. Looking ahead, we believe the Class A office market is positioned for meaningful improvement over the next 12 to 24 months, assuming economic stability in a favorable or at least stable interest rate environment, which should drive higher long-term occupancy and expanded space requirements. Encouragingly, office demand at a national level is approaching pre-pandemic levels, with quarterly net absorption turning positive for the first time in three years. Our office portfolio closed the year at 85% lease, reflecting a decrease of 200 basis points compared to the prior quarter. This decrease is primarily due to the remeasurement of certain properties, which resulted in additional vacancy. However, we expect to monetize this vacancy in the future. Additionally, the vacancy from a tenant, for which we received an $11 million termination fee in Q3 of 2024, as well as other tenant downsizing and attrition, contributed to the overall decline. In Q4, office leasing activity saw an approximately 2% increase on a cash basis and an 11% increase on a straight-line basis. Q1 has begun with strong momentum, having already executed leases for approximately 20,000 square feet, with an additional 105,000 square feet currently in lease documentation, including 53,000 square feet of net absorption. Notably, these pending deals that have not yet been executed include the top floor of or 16,000 feet at La Jolla Commons Tower 3 and 29,000 square feet at Timber Ridge and Suburban Bellevue, which will bring that property to 97% leased. Additionally, our exposure to GSA tenants constitutes less than 5% of our total office square footage and approximately 3% of total office rent. The majority of these GSA tenants are secured under firm lease agreements with at least three years remaining. Furthermore, we have been informed that all GSA tenants intend to return to the office five days a week in the early part of this year. As of today, just under 8% of our office portfolio is scheduled for lease rollovers in 2025, with an average deal size of 7,000 square feet. We anticipate approximately 181,000 square feet of attrition from known move-outs at First and Main and 14 Acres, formerly Eastgate. Office leasing activity remains focused on high quality, modernized and fully built out spaces as tenants increasingly seek options that allow for immediate occupancy with minimal downtime and upfront capital investment. Following our prepared remarks, Steve Center will be available to address any questions regarding our office portfolio. Turning to our retail segment, representing 27% of our portfolio NOI, our best in class retail segment continued to excel in 2024 with properties that dominate their trade areas and are at 95% lease with 5% same-store NOI growth in 2024. Taking into account the renewal assigned so far in 2025, we have less than 4% of our retail portfolio expiring in 2025. We are encouraged by positive leasing spreads, 6.5% increase on a cash basis, and a 31% increase on a straight-line basis for Q4 transactions, and strong tenant sales supported by resilient consumer spending and the affluent supply-constrained markets in which our properties reside. We remain confident in our ability to backfill known vacancies, including our two-party city locations that have closed or are about to close, which will constrain 2025 same-store retail NOI numbers. And we are otherwise monitoring other retailers like Petco, Michaels, and Angelica Theaters. Finally, with respect to our multifamily segment, we realized same-store cash and OI growth of over 6% in 2024 as compared to 2023. Our San Diego multifamily communities ended Q4 with a lease percentage of 97%, and we saw a blended decrease of approximately 4% between new move-ins and renewals as we worked to push our lease percentage 3% higher in what is typically a seasonally slower period with end-of-the-year concessions granted in the markets. Recent trends indicate improving rental rates, and we anticipate further momentum in the spring and summer leasing seasons. Net effective rents for our San Diego multifamily leases are now 2% higher year over year compared to the fourth quarter of 2023. Also, pleased to report that we have extended our master lease with the University of San Diego for another three years directly across the street from Pacific Ridge, which will cover well over 100 units until the summer of 2029. including annual rent bumps of 5% through 2026 and 3.5% through 2029. Up in the Pacific Northwest, our Hasolo and 8th community in Portland saw a blended increase of approximately 2% between new move-ins and renewals as our lease percentage ended the year at 92%. Net effective rents for our multifamily leases at Hasolo are up about 3.5% year-over-year compared to the fourth quarter of 2023. We remain bullish overall on our multifamily fundamentals in San Diego, supported by fairly low unemployment rates, prestigious universities, strong demographics, income growth, and very high homeownership costs. And in Portland, where there has been some supply shock that is still being absorbed, we expect new completions to slow in 2025, with vacancy rates expected to decline as well, which hopefully sets the stage for rent growth later this year or next. Next, as mentioned earlier, I'm pleased to share a few updates on our long-term portfolio strategy as we are constantly evaluating opportunities to maximize value for our stakeholders and position ourselves for long-term growth. Notably, we have entered into an agreement to sell Del Monte Center in Monterey, California. This decision reflects our strategy to focus on markets where we can achieve greater economies of scale and operational efficiencies. The sale, expected to close in late February, subject to customary closing conditions, allows us to recycle capital into opportunities better aligned with our long-term growth objectives. By concentrating on markets where we have established a greater presence, we're not only strengthening our position, but also ensuring that our resources are aligned with our long-term objectives. This decision underscores our dedication to delivering sustainable long-term growth and value creation while maintaining our ability to be nimble as the circumstances dictate. Additionally, we are an escrow and a multifamily community in San Diego with a terrific location, including very strong transit and retail access, which we believe has substantial upside. This property, owned by the same family for decades, has rents that we believe are significantly below market, possibly 30% plus, with potential densification opportunity. We believe with certain upgrades, process improvements, and our form of management that we can generate an effect an attractive unlevered IRR over a long-term hold. The acquisition of this almost 200-unit property is expected to close in late February, subject to customary closing conditions. While Del Monte Center is being sold at a higher current yield than the initial yield on the prospective multifamily community acquisition, the decision reflects our focus on long-term value creation rather than short-term yield metrics and further enhances our multifamily portfolio in a high-growth market. Lastly, I'm pleased to announce that the Board of Directors has approved a 1.5% increase in our quarterly dividend to $0.34 per share for Q1, reflecting our confidence in the company's long-term financial performance and outlook. The dividend will be paid on March 20th to shareholders of record as of March 6th. On behalf of the entire team at American Assets Trust, including Ernest, who will be available during Q&A, thank you for your confidence and continued support. With that, I'll turn the call over to Bob to discuss our financial results and initial guidance in more detail.