AAT - Earnings call transcript Q1 2018 | American Assets Trust, Inc.

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Operator

Good day, ladies and gentlemen. And welcome to the first quarter 2018 American Assets Trust, Inc. earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions]. [Operator

this the be Wyll, conference President, Counsel. reminder, like I'd Senior call General turn to over conference a recorded. may now Vice As to Adam

You begin. may

Adam Wyll

like first quarter conference us I'd Good for earnings thank Assets XXXX American call. joining morning. Trust today to for everyone

Joining me of your take Rady questions the conclusion are call prepared and and remarks. These to Barton. on are of members available the our other our Ernest Bob management team at

significant is of amount quarter to Certain supplemental disclosure the on call a deemed be Securities this with and package Our may Reform our on valuable XXXX respect of to of Private Litigation provides forward-looking the financial XXXX. first information performance. currently website. operating within company's statements discussed meaning Act be The matters document available the

statements or Forward-looking to referring information any projected results. or include as as statements well annualized anticipated or events expected

of yesterday factors conditions, financial issued discussion conditions that in-depth other The in real and provide our reflected our earnings on on risk performance future forward-looking forward-looking assumptions including results risks report believe such XX-K statements these economic these package can we estate in statements, differ documents our construction. and and materially based are attained. we may interest but and limited future annual the may rates, operations not contained from be assurance costs financial a inherent release reporting the of of Risks we are in Although expectations conditions that the and and no that and Form information disclosure supplemental include, affect in our our expectations our assumptions, give more operations. to, reasonable will actual filed

supplemental income is contain Accepted with information and non-GAAP a or Assets of funds Accounting will company's results. now Securities the financial or call the discussion Exchange this depreciation I'll in information of such and earnings FFO; and CEO, net a also operations, from accordance reconciliations at website information Generally before to for prepared our this www.americanassetstrust.com. the quarter in and items over Explanations NOI. supplement EBITDA; net the American amortization, Ernest? first company's this Commission, to call to is interest, XXXX Rady, the and providing turn income, operating available data as and are and Ernest financial to on taxes, including of Chairman, quarter contained operating President or information, our to Principles. first Additionally, furnished begin non-GAAP

Ernest Rady

first you for XXXX Thanks, Adam. earnings quarter everyone. Trust call. Assets joining morning, And Thank American good

focus As into leasing. we our transition XXXX, is on, first,

We have office active in some very the and successes portfolio. regard effort this good enjoying are in

basis leased can you feet quarter As of change prior cash excess in of rent we at square percentage where an in office average first leasing the statistics, over XX.X%. see the have of XXX,XXX

We as see in leasing expect to more well. success the second quarter

lease the Center Kmart at Waikele Hawaii. and renovation Second, up in building at

are of We having beginning days very property this renovation to in within demolition and from active now. XX looking and this are forward building interest

and to Square in creative of space. our office create Oregon existing buildings Oregon, transformation of Portland, Third, at one into

dividends our a fifth, in paid the result on product new continued are towards seems Fourth, XXXX. of investment-grade transformation cash to And, interest significant. balance completion We forward to believe maintain will out And net in increasing for growth ultimately the looking shareholders. we end of focus to asset market's low-leverage, which our value this the be of sheet. shareholders, this the and flow

support. read stock run, peers disproportionately multi-family that diversification on our in segments. your additional we XXXX Vice several our seeing into over over said we report your and to are American annual we well the for strength years, but I've that our turn before, allowing Trust as favorably Trust, how our Executive prevailing available website forward you Bob over our office thank commentary your next outperform for American our addition, has high-barrier us our look to our on in you believe portfolio it at high-quality, Again, President In we Coast we markets despite from will that believe diversified now distinguishes us behalf coastal impacted CFO. as letter Assets West long the been encourage and as the all – headwinds confidence intend by what to our Bob? to Nevertheless, to retail manage we in company transform Assets I visions on our value competitors. of Barton, and now continued and of I'll

Robert Barton

Good morning. FFO of night, $X.XX quarter we Last And XXXX thank share. reported first per you, Ernest.

stockholders to and in Directors paid quarterly XXXX. better net current its embark June the We ending XX, June we will quarter, six period declared the the a of of dividend building redevelopment record of with of Board reported XXXX The per XX, company's attributable a common for has June share to The Hawaii building also that months the $X.XX on share first common primarily stockholders Waikele of over dividend the upon Center for XXXX. a on loss XXXX the of higher the stock in as our associated Kmart of of be depreciation use XX, marketplace. result $X.XX the on first at to per acceleration

XX.X%, approximately square our retail Our with retail year-over-year the portfolio the our approximately first a annualized ended quarter basis, the basis peers. points down XXXX, base amongst was On highest from which quarter of occupancy significant XX XXX,XXX rents retail combined foot feet at primarily been previously square to at had retail is that Hawaii, million-plus space approximately portion of Authority leased feet. of to Waikele Center consisted Sports X square in our portfolio. the attributed the vacancy leaving A XX,XXX in vacant

construction of the be optimistic and grocer a finalizing with will process the in remain lease remaining are national shortly. a and We comments lease that signed plans

of these prior our primarily approximately or square leases, representing as XXX,XXX leases square XX X.X% of approximately On cash previously of were retail at Center a feet, were quarter signed, annual XXXX. of leases leased. of rent the basis, signed, XXX,XXX-square leases, feet consisting a result second the Of comparable trailing four XXX,XXX the XX% space the basis for spaces the During Lowe's portfolio. retail quarters, XX the feet in Waikele renewal over decreased total

Excluding XXXX. the Lowe's XX, renewal, retail average comparable square leased we of basis an approximately ended XX-month increase at period during feet rent XXX,XXX the March cash X.X%

Torrey increase or square million Our XXX,XXX of our approximately foot Diego, on XXX to approximately a office basis, basis portfolio leaving increase our XX.X%, square a campus the of in an X.X% primarily quarter X.X an ended San at feet year-over-year of approximately in Reserve vacancy occupancy portfolio. points due at

office trailing portfolio. leased. four the during were XXX,XXX leases. these During or comparable square a spaces our XX cash approximately the were leases basis, signed, rent quarters, year, the for basis XX increased leases, of signed feet, of previously leases the XX% Of annual consisting approximately prior On representing square new feet over XXX,XXX total XX.X%

markets Our San seeing and demand. Bellevue, and pricing Washington office in strong are portfolio Francisco

recall, you at XX,XXX had fourth As square tenants Bellevue, quarter of we Center may two feet at consisting expiring year-end. the City approximately in

City to Bellevue's increase at XX.X% quarter, XXXX. tenants of at over spaces first of end new increasing Center, the leased have a basis the end XQ re-leased percentage XX.X% lease to and During cash from approximately the XX% expiring QX the prior XXXX at comparable been these all of

to District Waikiki Multi-family X%, increased revenues Francisco Walk, on our Embassy Lloyd increased Walk of cash Oregon. incremental Let's first of solely an Diego, retail a was the X% third X.X%. office NOI a same-store cash first debt represents increased quarter. in is in from San Embassy at bankruptcy Forever previously to NOI first XXXX. XXX relates two properties did property quarter expenses. X.X%. Retail, that One the first due Forever combined quarter quarter building Portland, of in NOI Hotel in talk owned first in and property Broken building approximately increase the building, part further, up Beach in healthy NOI acquired Same-store retail the of up were The wholesale XX mixed-use The approximately primarily we locations, same-store Suites at growth quarter, in the NOI in quarter San expense acquisition Diego consisting significant third large still points. primarily XXXX. of didn't moment. the which XX.X% XXXX to multi-family campus at basis experience for the about the partner of combined the of cash on NOI declared land rents this the rental the San down the quarter. first Same-store of reported in same-store increase then a building one-time increase rent We partially Center increased own the the Market XX.X%, for basis the following Landmark to Absent quarter the for with relating in at X.X% the NOI our Waikiki Japanese $XXX,XXX who Suites the the offset in bad – not the by Beach Portfolio XX Forever Monterey XXXX that incremental a NOI of due the the recorded XX Torrey the Same-store we Reserve from is Del and Monte in the and cash Peninsula. Hotel to

as square X.X%. at Tenant continue tenants our Waikiki per to good the from excellent addition, high months was In Retail foot the up Beach location Walk XX for economy. sales and rolling remain benefit $X,XXX

per first Turning quarter. $X.XX to increased the results, $X.XX quarter FFO approximately FFO to fourth compared to our share

quarter activity. first following results The include the

from an reduction first share both increased And to Ridge expense FFO provided of stock approximately base increased FFO rent portfolio in in in by annualized and First, Hassalo portfolio expenses non-cash on increase our Eighth resulted primarily third, $X.XX. activity XQ approximately one-time office results XXXX, $X.XX, $X.XX Pacific for properties. G&A modification share. at option per FFO a the quarter per increased per Multi-family share by due approximately

in the of our million Now, and cash which to line was as we balance of equivalents million at sheet of the the had our quarter, comprised XXXX. increased availability look and liquidity, and of approximately $XXX $XX beginning end of credit, million at million cash $XXX we of of $XXX as liquidity, first on

measure times high our by Our EBITDA, still to which standards. X.X leverage, which was net is we terms of debt in

quarter our of get plan consists is the with that evaluate. in our existing combined on internal our have continuing continue and That which focused as to organic an mature, EBITDA We One XXXX, they for we the our board maturities ratio. to down debt down by paying sure fourth to thing management are net X.X portfolio. improve of roadmap times leverage growth debt to to

the coverage Our X.X quarter interest at fixed charge coverage ratio and ended times.

XXXX Let's guidance. talk about the

$X.XX guidance of XXXX $X.XX reaffirming $X.XX FFO a share. with of lastly, range midpoint our we're So, to per per share,

dispositions, acquisitions, we debt issuances future As from repayments have other discussed. or already repurchases, or equity than future always, excludes what our guidance any impact refinancings

Our will Waikele guidance assumes XXXX XXXX. months that of Center, rent of end expires we remaining the two which at Kmart's June receive at in lease the

continue our our to will our as as We analysis quarterly and numbers. best you share of and interpretations with be possible transparent

years sheet the call for over coming We balance stronger prepared will and with that than over believe opportunities themselves even quarters. in Operator, on to are I'll you we well questions. the the an prior capitalize turn execute present to now

Operator

Instructions]. you. Thank [Operator

Our first Morgan the Hill Stanley. line of from question of comes Rich

Your line now open. is

Richard Hill

guess, too. the good me Coast from I guys. morning. morning East Hey, Good on

to pretty maybe like to to a us and quarter looks relative XQ. XQ wanted and back Just – come good

your how of should maybe same-store guide, and on should think previously, we sorry end mentioned any to pool? we the we about meet the FFO update to same-store ability should I'm some the range? NOI given the – think And how if So, about top how changes the this think of about you

Ernest Rady

should which no about have The to I Well, will something you it we're control. And over the is we going very our us think give market that hopeful. that But how do think think we're best. properties is opportunity. we

prayerful. hope do comes about. itself. And think for are guidance We And you something the we Bob, it want speaks I add to

Robert Barton

too. Rich. Hey, your thanks questions Yeah, for

Forever includes the supplemental shows same-store was pool, same-store building. In the the the approximately retail in X%, what, but terms up, XX that it disclosure of

Richard Hill

Yeah.

Robert Barton

in is basis XXX fourth The the And amount the quarter. incremental we quarter included that first and points.

because it's we that, thing to separating right without So land We own include that thought to do disclose the it underneath it that, it X.X%. out. the already was is but versus

quarter. on that XXXX we in what our we've the out out assumptions terms building, of first of included for Waikele in In pulled same-store That was our guidance. pulled

Richard Hill

that's Okay, helpful.

Robert Barton

Yeah.

that. on different anything changed haven't we So,

approximately our the consistent our so, And for with of that same-store is still beginning rent July incorporates X% the assumption guidance Kmart retail year, not and of paying X. also original

they that will – months. two hopeful remaining So, pay we're we're the just

Richard Hill

All right.

response, decent it was your appreciate leaves bit but So, given what me quarter. little pretty Ernest, more, thought I wanting a a we

environment, and but, conservative not from want being point. to – what look, be I'm mouth, Ernest? best words this try to want maintain in and your you to going hearing you think fair, your to conservative uncertain at to put you want Is I you, maintain – that you're

Ernest Rady

have play and out lower will little we that whether to properties the the end. Bob are opportunities said, Whether and the the upside. we're determine the we'll some takes, But negotiation those which offer the Right. is the middle market do availability projection. as top while But will reaffirming of over those on we next take and be our end end, significant – or advantage that it of something opportunities time able

Richard Hill

back queue guys. in Okay. In interest anymore of Thanks, people the jump other chance, I'll questions. with the giving a

Robert Barton

you. Thank

Ernest Rady

much. very you Thank

Operator

you. Thank

line of question Capital. comes the Hawthorne RBC Brian next from Our of

Brian Hawthorne

you there what able and Can space you update provide it? on Portland an to happened the FamilyCare Hi. were backfill and in

Ernest Rady

who's efficient documentation in lease a going to [ph] done have. signed great over ask I'm Yes. job this. effective We're Steve our He leasing and the agreements taken and a we way that office Center, with in very has

Steve Center

in We're documentation. lease [ph]

Ernest Rady

And until but we'll better we very count that a like are on as done anything in let favorable. have absolutely repositioning outcome. got it we we've on the very we know soon be say space. outcome. job because as that reluctant signed. a to are you great favorable Steve a but not counting the favorable to is And certain counting documents So, it. signed, But We're do it. I'm documentation anything, on is looks say he's

Brian Hawthorne

One of the the the And with then, expire, all Okay, on question size? tranches at great. Market? are had salesforce.com same another three you Have And office space. they its then, that discussions regarding lease

Ernest Rady

higher that us we've think don't at outcome had I below is the want notified you taking We've out. was considerably than and I considerable that rental say add What to salesforce can than are Bob, rate do what interest to the rental again, at are And space them a has space market. be, market negotiations paying. to more that. significantly that That started will moving salesforce much they're Steve, rates anything? place, that's rented now.

Robert Barton

Yeah, to spaces your question, the approximately same size. these are

So, a expire, third, a as they and third it's a third.

Ernest Rady

Yeah. Thanks, Bob.

Brian Hawthorne

go on. a that Is sorry, Okay. –

Ernest Rady

such It's because something appears salesforce opportunity opportunity. have an that to the A market what that a rental significant not between difference opportunity. It's has and rates we significant to And the bear. a there was now be.

Brian Hawthorne

Sure, okay. And then, one last one.

Diego. good right was San activity Ridge this lease in was the that So, there the pickup in behind Pacific something else on improvement? putting in or there team simply Was ground

Ernest Rady

have that – restraint, It it managed. well, say, not over, I was with to took was we would it all due when well significantly

And place charge in the We in have the team person humming. across a new from is table me. and sitting now it's

a but We've good it out. ground be. will She's is on [indiscernible], property. the got statement? I it She's there exploring good manage results as is. and Is that the conclusion to stage over that a much results what But come can buy and best now. is me. team we're she are what is that Abigail significant make significant of that exactly think out and better months opportunity experience potential agrees so we'll got XX the gaining have fair next results a It's see can we how she did fright, with we the that to opportunity produce we how nodding think we're march head. get the her now I the straightened or the to we We know we on in Rex And charge.

Brian Hawthorne

for it questions. Thank taking Okay. you That's for my me.

Ernest Rady

your you interest, sir. for Thank

Operator

from next of Schimdt question Our Bank Craig comes America. line of the

open. Your line is now

Craig Schimdt

What the is your of for assumption rest for for the same-property year? NOI office the

Ernest Rady

Is this Craig?

Robert Barton

Yes.

Craig Schimdt

Yes.

Ernest Rady

know it But for because You through didn't Craig welcome. garbled. it kind come through we of clearly. didn't sure. I Craig, came either And, Craig was know

Robert Barton

And of Center, our City Same-store at be affirming XXXX was to because flat we're that had flat. we that guidance, made the be Bellevue. Right assumption space for office to would the lease now, going Craig. guidance. Yes, office guidance XXXX

that in probably a first point feet So, that the revenue in see straight in won't basis been from until the time. quarter third on that leased the we probably this at quarter, has XX,XXX line square

year. speak we'll our So, right for numbers what has the But assumption the we're impact in makes that. updating of be on as guidance and going later see we that that's that now, the $X.XX leased to midpoint

Craig Schimdt

Great.

quarter and tenant the good CapEx, is Looking first run at or maintenance rate improvement, commissions is leasing somewhat it a elevated?

Robert Barton

think a run it's rate. I Overall, good

with $XX this last about from think quarter. think the quarter we CapEx. down I I million was And for operational ended year fourth

a it's think I on So, runway. a trend fair

Ernest Rady

more to which Steve, that to upside there's of do, other the we the be, hopeful. we to a fair activity would have makes office say And going the express be. in I going actually, leasing it's any it there's in more But, lot term? CapEx leasing, think me you more

Steve Center

We've we're what us. advantage will of the give market great taking assets No. got and

Ernest Rady

got advantage we've us. and are assets, and taking to the great available location great great that And we're Yeah. management opportunities of

Craig Schimdt

Great, you. thank

Ernest Rady

you, Thank Craig.

Operator

comes Our line Todd the of from next of KeyBanc question Markets. Thomas Capital

Unidentified Analyst

This Point in noticed for This to I is us Drew just placed wanted on Hey, give Todd. morning, that see just could if good the on development that asset. is you an back Torrey pipeline. update was guys. I

Ernest Rady

Go ahead, Bob.

it. into back it put You

Robert Barton

Yeah.

as just there put to it we So, we're show your going our in just along. leasing statistics

end lower of on lead that that anywhere going to take the to in in rates a marketplace. we we're seeing is the seen high of activity range the – tenant We rates the the there the are one to have – and end the there have a us lot – a would you tenant one And of that rates would in range. we've –

of showing very and that's news product have we'll we So, good for the you there. think out future. hopeful you range that the in just We're that we're

Ernest Rady

online. of account the late On project that rain, months six was coming

So, last, we've lot for interest. We've only been quarter. really had what, effectively a of show it able to the

We have one tenant that solid. looks really

another we it's just land lot thought tenant at have a of turned remaining tenant piece that be we rate. there's the property. space interest and a question that a will the somebody when to out right a But be We and a of of It's tenant. not in great great

Unidentified Analyst

side did asset of more potential because solidify of tenant it equation? they their something – decide the that or not the Was on at all to was

Ernest Rady

a up they the were And the couldn't that about. significant We going come did the some they letter then, We money, eventually put funds rent we were they not they They amounts promised. hopeful raise – of them. rent of of and on lose just don't anything collected their credit. rest raise had were they evaporated. to hopeful. They of which But

Unidentified Analyst

I see. then you talk acquisition all? Thanks are at side, seeing Are guys that you for on the Can guys that. interested? anything? And about you

Ernest Rady

We look. continue to

on thing As agenda pointed conservative the first Bob our to is our out, financial maintain profile.

set to to but in-house, we have our if have something something we Frankly, resources what those at objective. take to elegant have than opportunities opportunities, to look we in-house that difficult sell. find present of some look. to But that which but So, something, acquire to do upside so we continue liquid and would we is very would it's have more were better, back continue that would

Unidentified Analyst

all? I or others that? favoring Can about you not talk see. any when And are at types favoring you property guys you look

Ernest Rady

than property, our taken in on have hue has down. retail before. obviously, prices different of come has not the Well, quality a it Sure. And

re-position. change, buying I've if some to probably might anyway. and that frankly, there what of. some I opportunity we so that the office in in there. couldn't know still Portland office sky become have prices office, In So, to we – on busy look if that opportunity that we I so high had ourselves at an take doing and we're had with in don't And avail have we're optimistic there's development so trying apartments, But, office we're building we it we an well are

portfolio doing – and can. think them we're lie I with well well we opportunities our So, that as – existing considering with as our in

Unidentified Analyst

sorry – And just my last then guys. Great.

any last just last you the quarter, my follow-up discount guys on buybacks published more versus that. were heavily NAV? Are $XX you considering than Just your stock given

Ernest Rady

discount the Yeah, is pathetic.

as up If you we best because it and buy But But the been shares have back the But mid-sized word can't when window could I is a the money personally. as out I open, I to have shrinking. the wanted that's the we'd logic see we're to like you economies of of come grow of truth, smallish know, REIT scale. with. buying the don't taking and was and company stock

Robert Barton

like we renovation yield have that to plus, of Waikele, we allocate places we Well, investors. the can where is the for accretive money, a when our think

Ernest Rady

opportunity a More in yes. point, good true, That's Bob. the portfolio. That's

Unidentified Analyst

the see. right. guys. Thanks, Appreciate All I time.

Ernest Rady

Thank you, sir.

Operator

comes Germain Our Mitch the line next JMP question from of of Securities.

now is open. Your line

Mitch Germain

Most I guys. been about morning, my of hearing Good know Authority that there's I I quarters. questions one. are have The Sports we've backfill. just guess that of couple answered. gross been a know for

you're So, that just of that portfolio seeing this bit taking a or leases? tenants the stance ask, really to toward one this something signing leads throughout a more just circumstance? is me cautious Is are

Ernest Rady

it's think I one Chris to moving here. a different He slower. be is seems Sullivan have everybody view. little may But sitting circumstance. just a

are want it in progress hand, the it do you reviewing making On Chris, process in make does the to of – legal. other anything? and it is we add

Chris Sullivan

anchor Just of involved. sort time-consuming, briefly. are quite quite leases those Mitch, always

very companies You're large with working quite a with pipeline.

the it's also execute most lease issues. process documentation it's a anchors know that everything for a until the process construction So, aren't a goes construction And going on quite of and and and for operations. to absolutely larger of resolved they with to their all store's certain those get a

So, with a it's process just an anchor. long

Ernest Rady

is this different… And no

Mitch Germain

Great.

Ernest Rady

the They're retailers. situations. been Mitch. different easy, three But no maybe boxes probably times checking – some many never it's it's in twice, It's like

Mitch Germain

your for Thanks Understood. time.

Ernest Rady

own Thanks, The impatience. our differentiating factor Mitch. is

Operator

you. Thank

of line from comes Advisors. the question Street of next Green Tibone Vince Our

is now Your line open.

Vince Tibone

Good morning.

Ernest Rady

Vince. morning, Good

Robert Barton

Good Vince. morning,

Vince Tibone

last follow-up Just question a the on on quick Waikele.

the in would or in XXXX stabilizing would maybe on think be grocer then lease maybe I the probably If at there you've think time by the or of XXXX. Do same on kind the grocer Waikele to is updates you still time Kmart any hopefully, previously delaying purposefully the be there that's open box broader case line the would be, and thought spend rolling are center and the redevelopment? appreciated. as capital

Chris Sullivan

building just issue not cranes get up, cities, in go like that. very time-consuming. taking It's it's – just around permitting the I Vince, everywhere. amount you've it Most see of entire any process and be process travel the just got cranes the process would any time. you is city through, a timing lot. And and you a issue. the everything to environmental an know pipeline And of larger enormous to those of building those departments it's of

Ernest Rady

with to frustration. But a been safe proceeding permitting. our impatience, It's both leads at legal, the pace to has say just it's normal which and construction process

Vince Tibone

the tenant is on to a one that need like your side, tenant? comment space And thanks. leasing a you kind maybe solid just then office office a to of to just Oregon this Square referring attract expand like Were on into or to more WeWork-type about I or Okay, converting creative the of you more – space. refurbishment

Ernest Rady

are to But qualifies refurbishing goes, the building the in the longest the we for it the make visibly can we far possibly the – thing of we [indiscernible] one as with have is there to that, that implementing. only appealing. rent process lease building one do protection. first we have so And we for get it's at have would tenant And refurbishing. the The tenant that qualifies best-quality as for there highest like

Vince Tibone

I from the related the moving all Okay. District that portfolio, lease shot Lloyd make want Is sure Square? pieces I all fourth quarter. the the just Oregon up to understand here. the I percentage saw to

Robert Barton

space, Oregon put and it renovate redevelopment. starting creative and that office because progress construction out pulled building that One into in to Yes, Square we're into we

year-and-a-half, out last almost not the Oregon Square. have For operations of two had coming we years, any

that So, that and shot up. that pulled we out

Vince Tibone

Got That's it, I have. all you. okay. Thank

Ernest Rady

costs have risen. and course, have entitlement it with to happened have Square building. justify But to enough apartment Oregon XXX-unit What's is, not the we a build about construction risen of rents

So a have and And done of of we've we make something good our deed. availability, have we the that entitlement, say just asking. ambition, the lots for before you stockholders lots economics sense can to thanks to

Operator

you. Thank

the comes line question from St. next Haendel Our

of Juste Mizuho.

Your line is now open.

Ernest Rady

Hey, morning. Haendel. Good

Haendel St. Juste

Hey. morning, Ernest. Good

I So, on in for a foot side. was Bellevue. up first the were a that question guess, quarter. office TIs $XX first I you assume

that put shortly? the gap so, space implications think there there high that we curious, care I'm of versus type San As might a you And Francisco portfolio what about in hear for this is that thoughts on between market share XXs we significant above think the vacating package paying I think $XXX, tenant opportunity? capture TI they're your has in need to what probably so rents what any are significant somewhere to do salesforce together the you for new office currently, to

Ernest Rady

to the say. it and some. said we actually I to going are If want compelling. tell then you, be economics But spend, get I something Until comes you. we I'd to documentation, now, I either don't would misleading back myself Whatever misleading are or

the we're a the differential market we can to to company. significant get So, don't between indicates add what to to excited I than do know that is is that the rent That I market. are what economics compelling. And have that opportunity and paying, about other for salesforce this the the

Haendel St. Juste

Certainly understand that.

Just any was Bellevue? quarter assume TIs color the or more on to safe the in it is first that

Robert Barton

really Yeah. Bellevue. We page, big of quarter, the a to related to a Bellevue. TIs relate majority in statistic done lease on a leasing that of and leases – quite first lot the had

Haendel St. Juste

Sorry, at color for can that you try some year-end give to get around that from us let I drop Okay. you. by more question you. EBITDA can't some not Maybe I and a least you, Bob, to X.X roadmap your meat you have to while like teaser XXXX? times to debt get

Ernest Rady

tried over it. Could in couldn't Haendel? to Bob. but just He do he one he, [ph], here Okay. put

Robert Barton

sorry, I'm Haendel, what? we –

Haendel St. Juste

XXX getting as to on going million-ish see now based we was say, about target to I implies right numbers. it your current

part curious re-dev your And I'm maybe then have perhaps side. So, of read-through that, about what, free dispositions how much as does new that any, re-dev cash could versus potential is activity? the on near-term that if for starts talk you organic of flow? And

Robert Barton

mostly – access assumptions Well, operating have we we have. every have corporate REITs that And an has internal there's different all other that. a and go into like most that REIT, to we, in tools the toolbox model the

X.X. counting EBITDA. to help think catalysts five which accomplishment, And us our towards step increase significant a that will be EBITDA going there, the So, debt timing. that just it's on the matter reducing to to There's we seven net that's we're or get a of in

also have property. We We other opportunities. a could low-hanging sell

not the certain may point, we a ATM But a to portfolio. at get do the an basis, that is we is to core are on We opportunities or quarterly Obviously, some Something right time, could all the market the could raise look other. that proceeds. if use at we'll through at going feel, there. equity those we what to

that less. is, you've is is quarter X.X a to estimate than real debt team and X.X. management the fourth that right it or think I back It net focus our got or focus XXXX. that's quarter two – a longer by a that but EBITDA is that getting board to best focused you've getting of on got – And to may down take now the our down

Ernest Rady

heart many our of this my discounted say, selling of at selling does warms and anything is the that properties cockles not neither to Needless price. stock

of So, our through that to be thing appealing do operations. to would is bet it us the most all and best

Haendel St. Juste

you issuing making and target because, that without or for equity. was that you that, point get wondering, understand to And appreciate without dispositions I I certainly could Ernest,

Ernest Rady

We're going to try like hell.

Haendel St. Juste

Thank you.

Ernest Rady

you. Thank

Operator

Capital. comes question the next our of And Brian from of Hawthorne you. line Thank RBC

Your line open. now is

Michael Carroll

have do? you do of I that was Thanks. asked. that to Ernest, know, just you something to actually dive into just guess selling what you This see sale? like point I you kind want wanted question asset much, that to assets outlook? an What Is but Brian. Mike or is type too Carroll pursue with do I disposition the at to that that pursue don't that would

Ernest Rady

better we found Well, we something if first trade something something sell, all, then else. what to than sell of would we into would have, we

because not with do hate property, great have produce I'd a operations the if all, lot tears. and I'm it. a the of to part it has have it's of of property, suffering one to that promised, Second going Bob do But might we don't we without but which piece pain, multiples to

Michael Carroll

– Portland like now. sorry, in is quarters? that going Hassalo. And then, market activity It had you at the some can market touch asked this decent few was seems already on the if that on apartment right you past there – improving over been Has

Ernest Rady

of has. hasn't And rental. gotten it that somewhat The It's think but worse. are extent out whack city like, economy costs with Not buoyant. gotten construction better. I still certainly it is to the any we'd now the

and about it's eventually, between up. million. to $XXX I've And $XXX million cost that cost before, So, to as million said and replacement think somewhere $XXX is going us catch we the build

in improving that's So productivity. is increase on coming stream us. increase the only economy going nothing's going undercut Portland to inflation value the property helping with and the And the in us tailwind

Robert Barton

And of supply. absorption the overall the

Ernest Rady

Yeah. Yeah.

Michael Carroll

What have is now market? on in the availability Do that right hand? you that

Robert Barton

don't. I No,

Ernest Rady

a as a afford to It's complicated build. jewel to property has a anybody an be that location, as a an location, of property and availability up. market. could sopped got again, we've excellent improving some good But, in There's

So, we're return we're and maximize that from and as try we quickly going can. to going just to back, property going the we're as sit to – not back sit

Michael Carroll

you. Thank great. Okay,

Ernest Rady

Thank you.

Robert Barton

you. Thank

Operator

the Thank over for time. like you. Rady, back to remarks. showing I'm at questions any CEO, Ernest Mr. no call And closing this I'd further to hand

Ernest Rady

are interest. Okay. conclusion Again, well we performing stockholders thank for you all one If and can. our is thank for dedicated for your as you confidence with you left we we all all to your today, as of

we and tools we for you, again, Thank your so time. take we'll do this. the the best and the assets advantage opportunity have to have much have our of and We

Operator

program. gentlemen, in thank today's you and conclude conference. does today's This participating for Ladies

You may all Everyone, disconnect. day. have a great

American Assets Trust (AAT) 3 May 182018 Q1 Earnings call transcript