American Assets Trust, Inc.

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.

Good morning, everyone, and thank you for joining us to review our fourth quarter and full year 2025 results, as well as our outlook for 2026. For the full year, we earned $2 of FFO per share, about 3% above our initial expectations. As we discussed coming into the year, we positioned 2025 as a reset, reflecting several known offsets for 2024, including the roll-off of one-time revenue items and the end of capitalized interest on certain projects. At the same time, we continue to invest in office leasing at our development and redevelopment projects and recycled capital into a high-quality San Diego multifamily acquisition that is performed in line with our underwriting. Against that backdrop, delivering above our initial guidance speaks to the quality of our assets and the teams executing across our markets. In fact, portfolio-wide, same store NOI ended slightly positive for the year, supported by strong collections and disciplined expense management, with our office and retail segments offsetting mixed performance from our multifamily and mixed-use segments. Importantly, our 2025 results reflected the themes we highlighted throughout the year. Office made continued progress leasing newer and redeveloped space, with tenant engagement improving in the second half, an increasingly concentrated and well-located Class A product. Retail again stood out, supported by low vacancy, limited near-term expirations, and a smaller watch list than a year ago. Multifamily worked through elevated new supply in our markets, which constrained near-term rent growth, and our teams focused on occupancy, revenue management, and expense discipline. And in Waikiki, we operated through a softer tourism year than expected, and our hotel results reflected that. But we believe that asset remains well-positioned within its competitive set as conditions improve. While macro uncertainty persists, we believe our coastal infill locations and high quality real estate position us to capture demand as it materializes. With that context, I'll walk through each segment and then conclude with our priorities for 2026. Across our West Coast office markets, we are seeing continued signs of stabilization and gradual improvement in leasing activity, with tenant engagement increasingly concentrated in the best assets. Conversations are becoming more active, decision timelines are improving, and demand is extending beyond renewals. In markets like San Diego and San Francisco, vacancy trends are showing early signs of stabilization supported by declining sublease availability and a more active leasing environment. In Bellevue, while overall vacancy remains relatively elevated, conditions have been comparatively much stronger than in Seattle with improving demand dynamics, reduced sublease pressure, and increased interest from technology and innovation-driven tenants. particularly in the CBD, which we expect over time to spill over into the surrounding suburbs. In Portland, our scale and longstanding presence continue to be an advantage in a market with relatively few institutional owners, which helps us compete effectively and win more than our fair share of leasing opportunities. Overall, while office market conditions continue to normalize at different paces, we are encouraged by the direction of travel and believe our portfolio is well-positioned to benefit as leasing momentum continues to build. Our office portfolio ended the quarter 83% leased, and our same-store office portfolio was 86% leased, up about 150 basis points from Q3. In addition, we have approximately 140,000 square feet of signed office leases that have not yet commenced paying cash rents. Same-store office NOI increased just over 1% for the quarter and nearly 2.5% for the full year. Looking ahead, roughly 8% of our total office square footage is scheduled to expire this year, which is consistent with the typical level of expirations we see each year. We are actively engaged on that rollover, and that figure includes known move-outs of about 4% of our office square footage, which we anticipated and are managing as part of our leasing strategy. During the fourth quarter, we executed 23 leases totaling over 193,000 square feet, with positive cash leasing spreads of 6.6% and gap leasing spreads of 11.5% for the quarter, and achieved our highest ever average base rents in our office portfolio. For the full year, total office leasing volume increased 55% over 2024, and leasing spreads increased 6.4% for cash and 14% for gap. We continue to see the strongest interest for well-located space that is move-in ready and amenity supported, and that is where our development and redevelopment efforts have been concentrated. At La Jolla Commons Tower 3, we ended the quarter at 35% leased, with another 15% in leased documentation currently, and our active prospect pipeline is growing. At 1 Beach Street, we ended the quarter at 15% leased and subsequently executed leases for an additional 21%, bringing the property to 36% leased today, with proposals for another 46% currently in negotiation. In response to increased demand for move-in ready space, we are advancing spec suite development at One Beach Street with permitting complete and work underway. As we move into 2026, we started the first quarter with momentum, having already executed approximately 68,000 square feet of leases with an additional 214,000 square feet in lease documentation. We have meaningful prospects engaged across the portfolio and remain focused on converting activity into signed leases and commenced rent. While larger blocks still require thoughtful execution, velocity has improved and the path from engagement to execution is shortening. At this point, we are targeting to end the year between 86% to 88% leased across our entire office portfolio, an increase of about 400 basis points at the midpoint from the end of 2025. We will do our best. Turning to retail, which remains a cornerstone of stability and represents 26% of portfolio NOI, we ended the year at 98% leased. Fourth quarter leasing totaled 43,000 square feet with positive cash and gap leasing spreads for the quarter. In fact, for the year, leasing spreads were 7% on a cash basis and 22% on a gap basis, all supported by healthy sales and steady traffic across our centers. While a moderating labor market is impacting the broader consumer, Higher income households continue to drive a disproportionate share of spending. Given the quality, location, and demographics of our retail assets, that backdrop remains supportive of demand across our centers. As we've said in prior quarters, we really like the setup for our retail platform. Nationally, retail availability is expected to remain near record lows given limited news supply, which should continue to support asking rents. Our portfolio benefits from high barrier supply-constrained submarkets, strong occupancy, and a well-laddered expiration profile, which includes just 4% of our retail square footage expiring this year. Looking to 2026, we expect continued favorable performance and will stay disciplined on renewals, tenant quality, and CapEx prioritization. In multifamily, we ended the year 95.5% leased, excluding the RV part. and achieved approximately 1% net effective rent growth year-over-year versus the fourth quarter of 2024, a steady result in a competitive leasing environment. At the same time, operating conditions remain influenced by new supply across markets such as San Diego and Portland, which continues to weigh on near-term rent growth. Occupancy held stable through 2025, while pricing remained competitive as deliveries were absorbed and concessions persisted in certain submarkets. Consistent with the broader industry backdrop, we are not assuming a rapid improvement in 2026, which we view as more a period of stabilization than recovery, and we remain focused on execution, optimizing pricing and concessions by sub-market, maximizing occupancy, enhancing the resident experience, and tightly managing controllable expenses. In San Diego, our communities entered the fourth quarter 96% leased, excluding the RV park. Renewal rents increased while new lease pricing was more competitive as we prioritized occupancy, including more meaningful use of concessions late in the year. Genesee Park continues to perform in line with our underwriting, ending the year 97% occupied, and we continue to see attractive long-term mark-to-market opportunity as we execute the value-add plan. In Portland, Hasselow on 8th ended the year 91.5% leased. Blended net effective rents were approximately flat between new leases and renewals. At Waikiki Beachwalk, 2025 reflected softer tourism trends, which pressured both rate and occupancy at different points during the year. While overall visitation moderated, spending per visitor was steadier, supported by longer stays and higher daily spend. Industry data reflected this mix, with REVPAR down year over year despite relatively steadier demand among higher spending guests. Bob will provide more details on the strength of our balance sheet and capital allocation, but I want to address a point of significant frustration for our management team and board, which is our current share price. It is clear that many listed real estate companies have remained largely out of favor with the broader investment community throughout much of 2025, often trading at a substantial discount to the intrinsic value and quality of the underlying assets. AAT is no exception. The public market valuation in our view, fails to reflect the trophy nature of our primarily coastal portfolio and our long-term growth prospects. While we cannot control macro sentiment, it is our job to close that disconnect to the best of our abilities by delivering consistent operational execution, demonstrating the cash flow durability of our new developments and redevelopments, continuing to execute our strategy with discipline to create long-term value for our shareholders and position AAT to capture opportunities whether or not the environment is volatile or stable. Note that our board has declared a quarterly dividend of 34 cents per share for the first quarter, payable on March 19th to stockholders of record on March 5th. At this point in time, we expect to maintain the dividend at current levels with the outlook for our dividend coverage ratio improving as our office development stabilize and begin to contribute more meaningfully to cash flow. That said, our approach remains measured and we will continue to allocate capital prudently and reevaluate as conditions evolve. Looking ahead, we view 2026 as an opportunity to build upon the progress we made in our reset year. Our priorities are straightforward. One, continue to drive office leasing with a focus on converting improving prospect activity into signed leases and commenced revenue at our newer and repositioned assets. Two, maintain retail momentum by keeping our centers full, proactively managing expirations and staying focused on tenant quality. Three, manage through the multifamily supply cycle with disciplined revenue management and cost control, positioning the portfolio for better growth as supply moderates. Four, operate our hotel prudently while staying responsive to market demand and focused on managing costs and driving performance. And five, continue to be thoughtful with our capital and strengthen the balance sheet, all with the obvious goal of improving our valuation over time. You'll note that our FFO guidance in 2026 at the midpoint is 1.5% above 2025, and portfolio-wide same-store and OI growth, excluding reserves, is over 2%, which Bob will provide more details on in just a minute. Note that these estimates reflect our current view of leasing velocity, market rent growth, and operating costs across the portfolio. as well as the timing of lease commitments and the cadence of operating expenses across the year. As always, we take a realistic yet conservative approach to guidance with the goal of executing ahead of our midpoint over time. In closing, I want to thank our employees for their dedication and our tenants, partners, and shareholders for their continued confidence and support. With that, I'll turn the call over to Bob to discuss our financial results and initial guidance in more detail. Bob?

Thanks, Adam, and good morning, everyone. Last evening, we reported fourth quarter and full year 2025 FFO per year per share of 47 cents and $2, respectively. Net income attributable to common shareholders for the fourth quarter and full year 2025 was 5 cents per share and 92 cents per share, respectively. Fourth quarter FFO decreased by approximately 2 cents to $0.47 per share compared to Q3 2025. This decline was primarily attributable to termination fees recognized in Q3 that did not reoccur in Q4. Let's talk about same-store cash NOI. For the full year ended 2025, same-store cash NOI increased by 0.5% compared to 2024. The key drivers of same-store NOI were, number one, office increase, 2.3% for the year, driven primarily by higher base rent and improved expense recoveries, including contributions from the Databricks expansion and new leasing at City Center Bellevue, partially offset by known move-outs at First and Main, Torrey Reserve, and Eastgate. Secondly, retail increased 1.2% for the year, reflecting strong first half growth of 5.4% in Q1 and 4.5% in Q2-25, partially offset by the impact of four tenant move-outs in Q3 and Q4, two at Y. Kelly Center and two at Gateway Marketplace. Of note, the Gateway spaces have since been backfilled through an expansion by Hobby Lobby and new lease with Wingstop, both scheduled to commence rent on July 1, 2026. Thirdly, multifamily declined 3.2% for the year, driven by flat to modestly lower rents, elevated concessions amid new supply in our two markets, and higher operating expenses, trends we've seen across the multifamily industry in our markets as well. And fourth, our mixed use declined as well, by 6.7% in 2025 versus 2024. As softer Waikiki hotel demand, continued pressure from Japan-related travel and higher operating expenses weighed on results. Occupancy averaged roughly 82%, about 360 basis points lower year over year, while ADR was essentially flat at about $370, driving rev par down approximately 7% to about 296. Despite the soft year, we continue to outperform our comp set in Waikiki, and we believe the fundamentals of Waikiki remain attractive over the longer term as this cycle normalizes. Meanwhile, the retail portion of Waikiki Beach Walk increased 8% year-over-year, driven by higher base and percentage rents and lower debt expense. As it relates to liquidity, at the end of the fourth quarter, we had liquidity of approximately $529 million, comprised of approximately $129 million in cash and cash equivalents, and $400 million of availability on our revolving line of credit. We are currently in the process of renewing our credit facility, which now matures in early July. As a reminder, we previously extended the maturity to move the renewal cycle away from the first week of the year, which created timing challenges for all parties. We expect to close on our recast in Q2. Additionally, as of the end of the fourth quarter, our leverage, which we measure in terms of net debt to EBITDA, with 6.9 times on a trailing 12-month basis and 7.1 times on a quarter annualized basis. Our objective is to achieve and maintain long-term net debt 5.5 times or below. Our interest coverage and fixed charge coverage ratio ended the quarter at three times on a trailing 12-month basis. Let's talk for a moment regarding the dividend payout ratio. For a REIT, We look at it as total dividends divided by funds available for distribution, also known as FAT or FFO. As Adam mentioned, we continue to expand our dividend to remain at current levels. While our 2025 payout ratio is just under 100% due primarily to elevated cap expanding, our 2026 outlook implies a payout ratio of approximately 89%. Assuming continued progress in leasing and a stable operating environment, we would expect the payout ratio to trend lower beyond 2026 towards our goal of 85%. And we will continue to monitor coverage closely. Let's talk about 2026 guidance. We are introducing our 2026 FFO per share guidance range of $1.96. to $2.10 per FFO share with a midpoint of $2.03, which is approximately 1.5% increase over 2025 actual FFO of $2 per share. Starting with 2025 FFO of $2 per share, there are nine items in aggregate that drive the change to our 2026 midpoint. Number one, same-store cash NOI for all segments combined, excluding reserves, which I will discuss in more detail in a few minutes, is expected to increase by 2.2% in 2026. By segment and on the same-store NOI basis versus 2025, the expected contribution to FFO per share is as follows. Office is expected to increase approximately 3.3% or $0.06 per share. Retail is expected to increase approximately 1.7% or $0.02 per share. Multifamily is expected to increase approximately 2.2% or $0.01 per FFO share. And mixed use is expected to decrease approximately 3.3% or $0.01 per FFO share. For our embassy suites in Waikiki, our 2026 outlook, prepared in collaboration with our partners at Outrigger, assumes approximately 2.5% revenue growth and 4% expense growth, reflecting inflationary pressures in Hawaii, including food, labor, and overhead. Within that, we assume average occupancy is expected to increase by approximately 1%. Average ADR is expected to be flat and increase approximately 0.5% from $360 in 2025 to $362 in 2026. Average REVPAR is expected to increase approximately 2% from $296 in 2025 to $302 in 2026. Let's talk about non-same-store cash NOI. It's driven primarily by two assets, La Jolla Commons III, which was completed in the second quarter of 2024, and Genesee Park, our multifamily acquisition, that closed in the first quarter of 2025. Together, these non-same-store assets are expected to contribute approximately three cents per share to FFO in 2026. Number three, Credit reserves that we are budgeting are expected to reduce 2026 FFO by approximately 4 cents per share. Of that amount, roughly 2 cents per share is allocated to office and 2 cents per share to retail. In total, these reserves represent about 64 basis points of our expected 2026 revenue, which we believe is a reasonable level. As we did last year, we are taking a conservative approach given the uncertainty in the macro environment, and our goal is to reduce these amounts over the course of the year as performance and collections materialize. Number four, G&A is budgeted to decline in 2026, which we expect will contribute approximately $0.04 per share to FFO. This is primarily due to meaningfully lower professional fees and other non-recurring costs that were incurred in 2025 and are not expected to repeat at the same level in 2026. Number five, interest expenses expected to increase in 2026, primarily due to the end of the capitalized interest related to La Jolla Commons III, which we expect will reduce FFO by approximately two cents per share. Number six, other income is expected to be lower in 2026, primarily due to lower budgeted interest income, which we expect will reduce FFO by approximately two cents per share. Number seven, non-recurring termination fees recognized in 2025 will not be included in our 2026 guidance, which will reduce FFO by approximately 2.5 cents per share. Number eight, 2026 gap adjustments are expected to increase FFO by approximately one cent per share. The majority of the variance relates to the related impact of straight light rents. Number nine, we have no contribution from Del Monte Center in 2026, following its sale at 2025. Because the asset contributed for roughly two months in 2025 prior to the sale, the year-over impact is expected to be a reduction of approximately $0.01 per share. These items, in aggregate, represent approximately $0.03 per share, which bridges 2025 FFO of $2 per share to the midpoint of 2026 guidance of $2.03 per FFO share. While we believe the 2026 guidance is our best estimate as of the date of this earnings call, we do believe that it is possible that we could perform towards the upper end of this guidance range. Key factors that would support that include, number one, converting a meaningful portion of our speculative office leasing activity earlier in the year. Number two, continued rent collections from the tenants for which we have reserved. And three, better than budgeted performance in both multifamily and mixed-use projects through improved occupancy and pricing and or lowering operating expenses. As always, our guidance, our NOI bridge, and these prepared remarks exclude any impact from future acquisitions, dispositions, equity issuances or repurchases, future debt refinancings or repayments other than what we have already discussed. We will continue our best to be as transparent as possible and share with you our analysis and interpretations of our quarterly numbers. I also want to briefly note that any non-GAAP financial measures that we've discussed, like NOI, are reconciled to our GAAP financial results in our earnings release and supplemental information. I'll now turn the call back over to the operator for Q&A.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Hendel St. Just with Mizuho. Please go ahead.

Hey, guys. Thanks for taking my question. Appreciate all the detail. Maybe you wanted to start with the office portfolio. Notice that TIs, especially for renewals, were elevated. I guess I'm curious if that's a strategic decision you're making there, more reflective of a weak demand environment concerns about AI. And what can you tell us about the conversations for your upcoming explorations? The rents on some of those, I think, are pretty elevated. Curious kind of how that compares to current market.

Thanks. Let me kick that off and I'll hand it over to Steve real quick. And hello, Handel. Nice to have you on the call today. As you know, it's true that office leasing today obviously carries a higher capital burden than pre-pandemic, mainly from whether that's amenities or TIs, commissions, and the investment needed to deliver space that's move-in ready. And we expect that to moderate over time as occupancy improves and availability tightens, particularly in our better buildings and submarkets. The pricing power and the concession levels will tend to normalize, but Steve's got some more specific information particular to our portfolio that he can share on that front.

Go ahead, Al. Good question, and There's a really positive answer to it. Really, it's skewed high because of Autodesk going as long as they could on the second floor, which is a critical space for them. They approached us to add term early. So their lease wasn't up for a couple of years, but that second floor is critical to them. So they came to us and said, would you extend? And we did that at almost a very positive rate. And we gave them $35 a foot TIs to do so. And that's 45,000 feet. So added to that smart sheet did the same thing. They extended their second floor space, which is where the company gathers. They extended it by six years. They came to us early, said this is a critical space for us. We want to rejigger it, and so we need some money to do that, and we want to go six years longer. So when you strip those two renewals out of the metric on the TIs, the remainder is at $6.41 versus $31. So I wouldn't believe... Yeah, those two don't create a trend. Those are an anomaly.

Got it, got it. No, I appreciate that, Steve. I wanted to also ask about the balance sheet, Bob. I know you've got some pretty good liquidity on hand. The leverage is still sitting here at kind of seven times plus EBITDA. You mentioned the five and a half target. I guess I'm curious if there's any sense of timeline to get there. I'm presuming that's going to come from, you know, kind of internal cash flow. But just curious kind of what the... the steps and potential timeline to get to that target. Any thoughts there would be appreciated.

Handel, good question. The timeline is really as soon as we lease up La Jolla Commons 3 in One Beach, and Steve will have more information on that in a few minutes. But the sooner we can get those properties leased up, we will be at the very low end of six. And then from there, we'll work down to the five and a half. We were at five and a half before COVID. So a lot of things have happened. But anyway, that's the timeline.

Got it. No, I appreciate that, Bob. And then last one, if I could, Adam, just going back to some of the comments you made in your initial remarks, I understand the frustration with the stock. And obviously, it seems front and center for you guys. I guess, just curious on kind of what some of the steps you might be willing to take there beyond kind of the execution as you laid out? Are you open to any strategic asset sales to capture that arbitrage between where the private market is, where your stock is trading, any asset sales, anything that perhaps you see that you can, from an action perspective, steps you could take to really reinvigorate the stock, the multiple? Thank you.

Yeah, that's a good question. That's a billion-dollar question. Look, Handa, we continue to be pragmatic on asset sales. If we can sell an asset at a price we think reflects long-term value and redeploy those proceeds to improve the balance sheet or fund higher return opportunities, we'll do that. But we're not going to sell assets at a discount just to check a box either. So the main messaging for us is more so discipline. And as retail continues to perform well and office really seems to be improving from what we're seeing, We feel like we have time on our side to be selective. So to kind of force that issue is not something we're going to do. But we'll continue to look at opportunities. The bar is high for us to find something to buy. We would certainly need a compelling basis. Durable cash flow is a clear path to value creation. And at today's pricing and financing levels, that's a much narrower set for us. So we're just trying to be smart with what we've got and not chase external growth for the sake of activity.

Great, guys. Thank you for the color and best of luck this year. Thanks a lot.

The next question comes from Todd Thomas with KeyBank Capital Markets. Please go ahead.

Hi, thanks. Good morning. First, I just wanted to ask about the guidance assumptions in the office segment first related to the 86% to 88% year-end lease rate. Relative to where you ended the year, 83.1%, for the total portfolio. Where are you today, pro forma, what's been leased already year to date, including One Beach Street, where it sounds like there's been some good progress and all of the known move outs that you discussed? I'm just trying to get a sense for how much of that target is speculative in nature as you move through the year.

So right now, I think Adam mentioned it, we've got, we signed 68,000 feet in 11 deals already this year. And we have another 13 deals in lease documentation for a total of 214,000 feet. And then behind that, we've got another 235,000 feet of proposals that I'd put better than 50-50. So the pipeline is significant. They're in that 86-88%. There is speculative leasing at But we've had some really interesting positive surprises lately. For instance, we had a full-floor tenant in Portland that was a known move out that came back and said, we're no longer interested in moving to the suburbs. We're back to being committed to the downtown market. And so we have RFPs to renew them and downsize them slightly in the existing space that they're in. And also our first and main property isn't a candidate for them as well. But candidly, We think we're going to get a letter of intent today that makes first of May not a viable alternative anymore. So that's one example. We've had tenants come out of nowhere that turn into leases, you know, looking at a spec suite, touring it one week, and then we're in leases the next. That happened at Torrey Reserve. That happened, we had a tenant that thought they were going to be purchased. This is city center Bellevue at 7,000 foot space. They thought they were going to be purchased. They turned it down, took additional VC money. and now they signed a lease for 7,000 feet there, and we had another one do the same thing at city center. So we're seeing a lot of positive surprises, and we're fortunate we've been making the investment to make these spaces ready to move into, because we're reaping the benefits of that now. So to that end, at La Jolla Commons 3, for example, we specced out the fourth floor, and with a lease that we have out for signature, we have one space left on that floor. We're delivering the fifth floor spaces Later this year, end of summer, early fall, we've already leased one of them, and we're in play on a handful of others. So the spec suite development and delivery leads to very quick lease. We can convert to leases and cash flow. And so I think we're speccing about 44% of our vacancy right now. And so with these experiences I'm telling you about and the pipeline we've got ahead of us, we're feeling pretty good.

Okay. All right, that's helpful. And then is there additional leasing assumed in the non-same-store portfolio? I guess primarily La Jolla Phase 3, you know, as it pertains to the guidance. I guess I would have thought that the contribution from lease-up could be potentially more meaningful. What's assumed in the guidance for lease-up at La Jolla Phase 3?

Yeah, well, what we said, I mean, it's driven primarily by the two assets, La Jolla Commons 3 and Genesee Park. So La Jolla Commons 3, I think Steve touched on that just a minute ago. So we put approximately, the two assets together was approximately three cents per share of FFO that's contributing on the non-save store cash NY.

And Todd, this is first generation space at La Jolla Commons 3, so we're not reflecting those rents until they commence and those are later in the year.

Okay, got it. Right, so there's concessions initially. I guess, Bob, yeah, you've talked about $0.30 of FFO from the combination of La Jolla, One Beach, and I think the Bellevue redevelopment. Can you sort of provide an update as to how much of that is expected to be online in 26 versus how much more there is to come beyond 26 from those assets and the lease up and stabilization?

Yeah, we can put something together, but I don't try to put those numbers together with the activity that Steve has just recently seen at OneBeach. I think it's going to be positive, significantly positive.

Steve, do you want to mention anything on that? Well, sure. The first lease signed at One Beach, 13,000 feet roughly, that's going to commence April 2nd. That's when we move them in. Then that same tenant is taking the rest of the floor. That lease commences February 1st of next year. two months of free rent on that one. So you're going to get a bunch of cash flow next year from that one. Um, you know, the spec suites are, are at lawyer commons three are going to produce revenue this year. Uh, we've got a larger tenant for 25,000 feet that we're in lease documentation with that will take us to, and I'm one specs we can play. That'll take us to 50% least, um, the small specs, we 4,000 feet that rental commence immediately as soon as we sign the lease. And then, um, the larger deal will take some time to build out. That's gonna be a tenant build that'll start paying rent next year. And then let's talk about 14 Acres or Eastgate. We've got a spec suite program in place there, but we've got several deals that are signed already or are in the process of being signed that'll kick in. So we've made really good progress there. That's one where we have known move outs that are offsetting that progress, but we're leasing the spaces that we're delivering in spec conditions. So that's another big contributor.

Yeah, so Todd, to get back to your question on that $0.30 that we had talked about on one of our presentations, and we'll update that in the next month or so. But basically, I stick to that $0.30. It's just a question of timing.

So, yeah, 14 acres in Q4, we signed two deals, totally 19,000 feet. The way it comes, we signed three deals totaling 17,500. One beach, we signed the 13,000-footer, and we just signed yesterday the remainder of that third floor. So that's just some color on Q4 and where we are right now.

Got it. That's helpful. So it seems like some of the leasing progress will be better reflected when cash rent commences later in 26 and really more meaningfully in 27 at the rate and pace that activity is picking up here. And then I just wanted to ask one more question just back on the balance sheet and Bob, your comments around the revolver. You know, any expectations on, you know, changes in pricing as you look to, you know, sort of amend the facility? And do you plan to maintain the $400 million of capacity?

Well, our banking syndicate supports us whether we go $400 million or $500 million. So we're just talking internally, trying to make the best decision, what's the best outcome for us on that. Right now, we're leaning towards the $500 million, but if we go $400 million, that's okay, too. We have a very supportive bank syndicate. It's a great team to work with, and they're open to whatever we want to do on that. Pushing it out to an early July maturity will be better for all people. We used to have the cadence where everybody, both the banking syndicate and AAT, were running in circles trying to get that closed every four years. And so now it's a lot easier for the banking syndicate and our team just to push it out a little bit further.

And, Todd, we expect the pricing grid to stay the same.

Okay. All right. Thank you. Thanks, Todd.

The next question comes from Ronald Camden with Morgan Stanley. Please go ahead.

Hey, guys. This is Matt on for Ron. You guys mentioned in your prepared remarks there's a lot of leasing activity going on with One Beach and La Jolla Commons. Could you guys talk to any of the tenant types driving the demand, how you guys are feeling about the stabilization of the assets compared to the past few quarters? Just any additional color there would be helpful.

You're a star.

One, we're feeling very positive. We're feeling much better about the pipeline. The quality of attendance at La Jolla Commons 3, it's diverse. We have legal software as a service. We have a really prominent insurance company that we just signed up. And we have an international bank, and it's a wealth management arm of an international bank. So we're seeing these really high-quality companies. tenants that are looking to take advantage of that A-plus environment. And so we're just seeing more and more of that. We just signed a letter of intent where it leases, as I alluded to earlier, with another – it's a consulting firm. It's an engineering firm, an international engineering firm. This is their headquarters in San Diego. So we expect to see more of the same in diversity, really high-end tenants at La Jolla Commerce 3. At one beach, the first tenant is AI, and several of the tenants we're seeing in Bellevue are AI as well. The other proposal we're undertaking right now is not AI. It's technology-related, but it's not part of the AI wave. So it's good. That would be a long-term lease and take the entire second floor. So we'll see how that plays out. Okay, great.

And then I also noticed in the quarter that 92% of the office leasing was from renewals versus 70, I want to say 73% in 3Q. Was that just largely due to the large renewals that you guys did in the quarter with Autodesk, some of the other top tenants? And if we could expect kind of more of the same going forward, or is that just like a lumpiness factor?

No, it's a great question. I'm glad you asked it because I think there's a... there's a gap in what we exhibit. So what I'm getting at is we did 193,000 feet in the quarter of leasing. What you're talking about, the 135 is comparable leasing, new and renewal. We did 60,000 feet of new leases on top of that. So all of the Tower 3, One Beach, and all the leases we're doing at 14 Acres or Eastgate are all non-comparable leases. And so if you look at the year, We did 246,000 feet of those non-comparable leases in 2025. That's 5.8% of the portfolio that if you just look at same-store comparable leasing, you're going to miss that. So we need to do a better job of articulating that going forward. Okay, great. And then in terms of the overall year, over 53% of the leases were newer expansion.

Got it. Okay, that's all from me. Thanks. Thanks, Matt.

The next question comes from Dylan Berwinski with Green Street. Please go ahead.

Hi, guys. Thanks for taking the question. Most of my questions have already been asked, but I guess just going, maybe speaking a little bit to the credit reserves of 4 cents that you guys have baked into guidance, can you kind of just talk about that? I know you mentioned half office, half retail, but are these sort of tenants that have a looming bankruptcy, or are you guys just sort of baking in some sort of conservatism as we get into 2026 here?

Yeah, so on the retail side, which we mentioned is a steadier part of the portfolio, we're not really seeing much of a broad-based deterioration in tenant health right now, and so our watch list is manageable. We're keeping an eye on a theater in one of our projects and maybe a few on the fringe, like pet supply companies. But other than potentially mom and pops, there's nothing on the radar that we're expecting, so we're just kind of taking a kind of a generalized reserve on retail. And on the office side, it's kind of a hybrid of credit reserve and speculative leasing reserve. Like we're ambitious in our office leasing expectations and the credit quality, of course, but we want to be measured too. So there's no specific office tenant that we have kind of acute concerns about. But we're just going to take a reserve because, you know, things fall out throughout the year every so often and we just want to model appropriately.

That's helpful. And then maybe just touching on the office side of things, you know, you guys mentioned expectations for a big jump in office lease percentage this year. I guess, how do you guys sort of envision the path back to sort of 90% plus occupancy? Do you guys view that as sort of being able to do that in the next sort of two years, or is that sort of more a longer-term goal in your guys' mind?

I would say two years is reasonable.

I mean, it's within the realm of reason for sure, but we don't want to overpromise that. That's our goal to get back to the 90% threshold, but we're going to take it a year at a time or quarter to quarter and get there.

But we're really poised to do it now. We've made the investment in the spec suites. Everything we're doing is completed this year. So we've got really a lot of great inventory that's not going to take a bunch of time to deliver. So we're anticipating some good results.

That's all for me. Thanks, guys. Thanks, Bill.

This concludes our question and answer session. I would like to turn the conference back over to Adam Weil for any closing remarks.

Thanks, everybody, for joining us on the call today. We appreciate your time and continued support and hope you have a great first quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.