Key Highlights

● Second-quarter FFO was $39.3 million, or $0.51 per diluted share and unit.

● Full-year 2026 FFO guidance of $1.96 to $2.10 was affirmed.

● A one-time tenant reserve at Torrey Reserve depressed same-store results.

● Liquidity was $609.7 million, including $500 million of undrawn revolver capacity.

American Assets Trust, Inc. (NYSE:AAT), a real estate investment trust listed on the New York Stock Exchange under the ticker AAT, reported second-quarter 2026 results on 28 July 2026. The quarter ended on 30 June 2026, and the company noted that the figures remained preliminary until its Form 10-Q was filed.

Funds from operations, a standard property-sector measure that adds back depreciation, came to $39.3 million, or $0.51 per diluted share and unit, compared with $39.7 million, or $0.52, a year earlier. Net income attributable to common stockholders was $5.2 million, or $0.09 per share, against $5.5 million, also $0.09 per share. The picture is therefore one of stability rather than expansion.

Six-month Comparison and the One-off Gain

The first-half numbers look much weaker on a headline basis. Net income to common stockholders was $10.3 million, down from $48.0 million, a fall of $37.7 million. The company attributed the gap mainly to a gain on the 2025 sale of Del Monte Center, which inflated last year's figure. Because such gains are excluded from funds from operations, that measure fell only modestly, from $79.7 million to $78.1 million, or from $1.04 to $1.02 per diluted share.

Higher interest expense also contributed, because capitalised interest on the La Jolla Commons III development stopped once the building entered service. Lower occupancy at First & Main and 14Acres, together with rising rental expenses, added further pressure.

Property Performance

Same-store cash net operating income, which tracks rental profit from a consistent set of properties, was $66.5 million for the quarter, up 0.3 per cent. Office was up 0.4 per cent, multifamily 0.9 per cent and mixed-use 0.7 per cent, while retail slipped 0.4 per cent. A one-time reserve against receivables from an office tenant at Torrey Reserve depressed the result; excluding it, the company said total growth would have been 1.3 per cent. It is pursuing recovery of the amounts.

Occupancy at 30 June 2026 was 84.4 per cent for office and 97.9 per cent for retail. Multifamily occupancy fell to 88.4 per cent from 94.7 per cent at the end of March. Leasing spreads were positive, with comparable office cash rents up 9.1 per cent and retail up 3.0 per cent in the quarter.

Balance Sheet and Guidance

Liquidity was $609.7 million, made up of $109.7 million in cash and $500 million of undrawn revolver capacity. The credit facility was amended and restated on 1 April 2026 with a $600 million capacity, maturing in April 2030, of which only a $100 million term loan was drawn. Unsecured notes, net, were $1.61 billion, and just one of 31 assets carried a mortgage.

Management affirmed full-year 2026 guidance for funds from operations of $1.96 to $2.10 per diluted share, with a midpoint of $2.03. That guidance excludes future acquisitions, disposals, equity transactions and financings. The board declared a third-quarter dividend of $0.34 per share, payable on 17 September 2026 to holders of record on 3 September.

Regional Concentration Is the Backdrop to a Steady FFO Quarter

The portfolio comprises about 4.3 million square feet of office, 2.4 million of retail, 2,302 apartments and a mixed-use property with a 369-room hotel, concentrated in Southern and Northern California, Washington, Oregon, Texas and Hawaii. Such concentration exposes results to regional office demand and consumer conditions.