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What changed in American Assets Trust, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of American Assets Trust, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+299 added−320 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-14)

Top changes in American Assets Trust, Inc.'s 2024 10-K

299 paragraphs added · 320 removed · 269 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeErnest Rady, our Chairman and Chief Executive Officer, and Robert Barton, our Chief Financial Officer, each have over 30 years of commercial real estate experience, and the other members of senior management, including Adam Wyll, our President and Chief Operating Officer, each have over 20 years of commercial real estate experience.
Biggest changeErnest Rady, our Chief Executive Officer (through December 31, 2024) and Executive Chairman (effective January 1, 2025), Adam Wyll, our President and Chief Operating Officer (through December 31, 2024) and President and Chief Executive Officer (effective January 1, 2025), and Robert Barton, our Chief Financial Officer and the other members of senior management, each have over 30 years of commercial real estate experience (or 25 years in the case of Mr.
Some of our policies, like those covering losses due to terrorism, hail, flood, named storm and earthquakes, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses for such events.
Some of our policies, like those covering losses due to terrorism, hail, flood, named storm, fire and earthquakes, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses for such events.
Business and Growth Strategies Our primary business objectives are to increase operating cash flows, generate long-term growth and maximize stockholder value. Specifically, we pursue the following strategies to achieve these objectives: • Capitalizing on Acquisition Opportunities in High-Barrier-to-Entry Markets.
Wyll). Business and Growth Strategies Our primary business objectives are to increase operating cash flows, generate long-term growth and maximize stockholder value. Specifically, we pursue the following strategies to achieve these objectives: • Capitalizing on Acquisition Opportunities in High-Barrier-to-Entry Markets.
As of December 31, 2023, our portfolio is comprised of twelve office properties; twelve retail shopping centers; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center; and six multifamily properties. Additionally, as of December 31, 2023, we owned land at three of our properties that we classified as held for development and construction in progress.
As of December 31, 2024, our portfolio is comprised of twelve office properties; twelve retail shopping centers; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center; and six multifamily properties. Additionally, as of December 31, 2024, we owned land at three of our properties that we classified as held for development and construction in progress.
Information related to our business segments for 2023, 2022 and 2021 is set forth in Note 17 to our consolidated financial statements in Item 8 of this Report. 7 Tenants Accounting for over 10% of Revenues None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2023, 2022 or 2021.
Information related to our business segments for 2024, 2023 and 2022 is set forth in Note 17 to our consolidated financial statements in Item 8 of this Report. 7 Tenants Accounting for over 10% of Revenues None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2024, 2023 or 2022.
We actively manage our properties, employ targeted leasing strategies, leverage our existing tenant relationships and focus on reducing operating expenses to increase occupancy rates at our properties, attract high quality tenants and increase property cash flows, thereby enhancing the value of our properties. Human Capital At December 31, 2023, we had 228 employees.
We actively manage our properties, employ targeted leasing strategies, leverage our existing tenant relationships and focus on reducing operating expenses to increase occupancy rates at our properties, attract high quality tenants and increase property cash flows, thereby enhancing the value of our properties. Human Capital At December 31, 2024, we had 226 employees.
After the completion of our initial public offering and the related acquisitions, our operations have been carried on through our Operating Partnership. American Assets Trust, Inc., as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.8% of our Operating Partnership as of December 31, 2023.
After the completion of our initial public offering and the related acquisitions, our operations have been carried on through our Operating Partnership. American Assets Trust, Inc., as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.9% of our Operating Partnership as of December 31, 2024.
Google LLC at The Landmark at One Market accounted for approximately 10.4%, 12.7% and 13.6% of total office segment revenues for the years ended December 31, 2023, 2022 and 2021, respectively. Foreign Operations We do not engage in any foreign operations or derive any revenue from foreign sources.
Google LLC at The Landmark at One Market accounted for approximately 12.3%, 10.4% and 12.7% of total office segment revenues for the years ended December 31, 2024, 2023 and 2022, respectively. Foreign Operations We do not engage in any foreign operations or derive any revenue from foreign sources.
As of December 31, 2023, our employees were: • 45.0% female; 54.5% male; and 0.5% non-binary; and • 55.3% ethnically diverse (i.e., Asian, African American, Hispanic or Latino and other (Native Hawaiian/ Pacific Islander and two or more of the foregoing)). 5 Tax Status We have elected to be taxed as a REIT and believe we are organized and operate in a manner that has allowed us to qualify and will allow us to remain qualified as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2011.
As of December 31, 2024, our employees were: • 44.2% female; 55.3% male; and 0.5% non-binary; and • 55.8% ethnically diverse (i.e., Asian, African American, Hispanic or Latino and other (Native Hawaiian/ Pacific Islander and two or more of the foregoing)). 5 Tax Status We have elected to be taxed as a REIT and believe we are organized and operate in a manner that has allowed us to qualify and will allow us to remain qualified as a REIT for federal income tax purposes.
LPL Holdings, Inc. at La Jolla Commons accounted for approximately 13.2%, 13.2% and 14.4% of total office segment revenues for the years ended December 31, 2023, 2022 and 2021, respectively.
LPL Holdings, Inc. at La Jolla Commons accounted for approximately 12.3%, 13.2% and 13.2% of total office segment revenues for the years ended December 31, 2024, 2023 and 2022, respectively.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese conditions, or similar conditions existing in the future, may adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock as a result of the following potential consequences, among others: • decreased demand for office, retail, multifamily and mixed-use space, which would cause market rental rates and property values to be negatively impacted; • reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; • our ability to obtain financing on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities and increase our future interest expense; and • one or more lenders under our third amended and restated credit facility could refuse to fund their financing commitment to us or could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.
Biggest changeThese conditions, or similar conditions existing in the future, may adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock as a result of the following potential consequences, among others: • decreased demand for office, retail, multifamily and mixed-use space, which would cause market rental rates and property values to be negatively impacted; • reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; • our ability to obtain financing on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities and increase our future interest expense; and • one or more lenders under our third amended and restated credit facility could refuse to fund their financing commitment to us or could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all. 15 We are subject to risks that affect the general retail environment, such as weakness in the economy, the level of consumer spending, the adverse financial condition of large retailing companies and competition from discount and internet retailers, any of which could adversely affect market rents for retail space and the willingness or ability of retailers to lease space in our shopping centers.
Our third amended and restated credit facility, note purchase agreements and amended term loan agreement restrict our ability to engage in some business activities, including our ability to incur additional indebtedness, make capital expenditures and make certain investments, which could adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock.
Our third amended and restated credit facility, note purchase agreements and amended and restated term loan agreement restrict our ability to engage in some business activities, including our ability to incur additional indebtedness, make capital expenditures and make certain investments, which could adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock.
Our third amended and restated credit facility, note purchase agreements and amended term loan agreement contain customary negative covenants and other financial and operating covenants that, among other things: • restrict our ability to incur additional indebtedness; • restrict our ability to incur additional liens; • restrict our ability to make certain investments (including certain capital expenditures); • restrict our ability to merge with another company; • restrict our ability to sell or dispose of assets; • restrict our ability to make distributions to American Assets Trust, Inc.'s stockholders or American Assets Trust, L.P.'s unitholders; and • require us to satisfy minimum financial coverage ratios, minimum tangible net worth requirements and/or maximum leverage ratios.
Our third amended and restated credit facility, note purchase agreements and amended and restated term loan agreement contain customary negative covenants and other financial and operating covenants that, among other things: • restrict our ability to incur additional indebtedness; • restrict our ability to incur additional liens; • restrict our ability to make certain investments (including certain capital expenditures); • restrict our ability to merge with another company; • restrict our ability to sell or dispose of assets; • restrict our ability to make distributions to American Assets Trust, Inc.'s stockholders or American Assets Trust, L.P.'s unitholders; and • require us to satisfy minimum financial coverage ratios, minimum tangible net worth requirements and/or maximum leverage ratios.
Our continued success and our ability to manage anticipated future growth depend, in large part, upon the efforts of key personnel, particularly Messrs. Rady, Barton and Wyll who have extensive market knowledge and relationships and exercise substantial influence over our operational, financing, acquisition and disposition activity.
Our continued success and our ability to manage anticipated future growth depend, in large part, upon the efforts of key personnel, particularly Messrs. Rady, Wyll and Barton who have extensive market knowledge and relationships and exercise substantial influence over our operational, financing, acquisition and disposition activity.
Rady requires him to devote a substantial portion of his business time and attention to our business. Mr. Rady continues to serve as our chairman of the board of directors and president of American Assets, Inc. and chairman of the board of directors of Insurance Company of the West. As such, Mr.
Rady requires him to devote a substantial portion of his business time and attention to our business. Mr. Rady continues to serve as the chairman of the board of directors and president of American Assets, Inc. and chairman of the board of directors of Insurance Company of the West. As such, Mr.
Rady and the death of his wife, in connection with a merger, consolidation or other combination of our assets with another entity, a sale of all or substantially all of our assets, a reclassification, recapitalization or change in any outstanding shares of our stock or other outstanding equity interests or an issuance of shares of our stock, in any case that requires approval by our common stockholders.
Rady and the death of his wife, in connection with a merger, consolidation or other combination of our assets with another entity, a sale of all or substantially all of our assets, a reclassification, recapitalization or change in any outstanding shares of our stock or other outstanding equity interests or an issuance of shares of our stock, in any case that requires approval by our common stockholders.
Such adverse impacts could depend on, among other factors: • the financial condition of our tenants and their ability or willingness to pay rent in full on a timely basis; • state, local, federal and industry-initiated efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent; • our need to defer or forgive rent and restructure leases with our tenants and our ability to do so on favorable terms or at all; • significant job losses in the industries of our tenants, which may decrease demand for our office and retail space, causing market rental rates and property values to be negatively impacted; • increased working from home, which may decrease demand for office space causing market rental rates and property values to be negatively impacted; • our ability to stabilize our development projects, renew leases or re-lease available space in our proprieties on favorable terms or at all, including as a result of a general decrease in demand for our office and retail space and occupancy in our hotel, deterioration in the economic and market conditions in the markets in which we own properties or due to pandemic-related restrictions that frustrate our leasing activities; • a severe and prolonged disruption and instability in the global financial markets, including the debt and equity capital markets, all of which have already experienced and may continue to experience significant volatility, or deteriorations in credit and financing conditions, may affect our or our tenants’ ability to access capital necessary to fund our respective business operations or replace or renew maturing liabilities on a timely basis, on attractive terms or at all and may adversely affect the valuation of financial assets and liabilities, any of which could affect our and our tenants’ ability to meet liquidity and capital expenditure requirements; • a refusal or failure of one or more lenders under our revolving line of credit to fund their respective financing commitments to us may affect our ability to access capital necessary to fund our business operations and to meet our liquidity and capital expenditure requirements; • the ability of potential buyers of properties identified for potential future capital recycling transactions to obtain debt financing, which has been and may continue to be constrained for some potential buyers; • a reduction in the values of our properties that could result in impairments or limit our ability to dispose of them at attractive prices or obtain debt financing secured by our properties; • complete or partial shutdowns of one or more of our tenants’ manufacturing facilities or distribution centers, temporary or long-term disruptions in our tenants’ supply chains from local, national and international suppliers or delays in the delivery of products, services or other materials necessary for our tenants’ operations, which could force our tenants to reduce, delay or eliminate offerings of their products and services, reduce or eliminate their revenues and liquidity and/or result in their bankruptcy or insolvency; • our ability to avoid delays or cost increases associated with building materials or construction services necessary for construction that could adversely impact our ability to continue or complete construction as planned, on budget or at all; • our and our tenants’ ability to manage our respective businesses to the extent our and their management or personnel are impacted in significant numbers by a pandemic and are not willing, available or allowed to conduct work; • certain of our tenants filing for bankruptcy due to financial hardships they suffered as a result of a pandemic; and • our and our tenants’ ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed to the extent necessary due to the unpredictable impacts of a pandemic.
Such adverse impacts could depend on, among other factors: • the financial condition of our tenants and their ability or willingness to pay rent in full on a timely basis; • state, local, federal and industry-initiated efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent; • our need to defer or forgive rent and restructure leases with our tenants and our ability to do so on favorable terms or at all; • significant job losses in the industries of our tenants, which may decrease demand for our office and retail space, causing market rental rates and property values to be negatively impacted; • increased working from home, which may decrease demand for office space causing market rental rates and property values to be negatively impacted; • our ability to stabilize our development projects, renew leases or re-lease available space in our proprieties on favorable terms or at all, including as a result of a general decrease in demand for our office and retail space and occupancy in our hotel, deterioration in the economic and market conditions in the markets in which we own properties or due to pandemic-related restrictions that frustrate our leasing activities; • a severe and prolonged disruption and instability in the global financial markets, including the debt and equity capital markets, all of which have already experienced and may continue to experience significant volatility, or deteriorations in credit and financing conditions, may affect our or our tenants’ ability to access capital necessary to fund our respective business operations or replace or renew maturing liabilities on a timely basis, on attractive terms or at all and may adversely affect the valuation of financial assets and liabilities, any of which could affect our and our tenants’ ability to meet liquidity and capital expenditure requirements; • a refusal or failure of one or more lenders under our revolving line of credit to fund their respective financing commitments to us may affect our ability to access capital necessary to fund our business operations and to meet our liquidity and capital expenditure requirements; • the ability of potential buyers of properties identified for potential future capital recycling transactions to obtain debt financing, which has been and may continue to be constrained for some potential buyers; • a reduction in the values of our properties that could result in impairments or limit our ability to dispose of them at attractive prices or obtain debt financing secured by our properties; • complete or partial shutdowns of one or more of our tenants’ manufacturing facilities or distribution centers, temporary or long-term disruptions in our tenants’ supply chains from local, national and international suppliers or delays in the delivery of products, services or other materials necessary for our tenants’ operations, which could force our tenants to reduce, delay or eliminate offerings of their products and services, reduce or eliminate their revenues and liquidity and/or result in their bankruptcy or insolvency; • our ability to avoid delays or cost increases associated with building materials or construction services necessary for construction that could adversely impact our ability to continue or complete construction as planned, on budget or at all; • our and our tenants’ ability to manage our respective businesses to the extent our and their management or personnel are impacted in significant numbers by a pandemic and are not willing, available or allowed to conduct work; 34 • certain of our tenants filing for bankruptcy due to financial hardships they suffered as a result of a pandemic; and • our and our tenants’ ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed to the extent necessary due to the unpredictable impacts of a pandemic.
Certain provisions of the Maryland General Corporation Law, or MGCL, may have the effect of inhibiting a third-party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including (1) “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or supermajority and stockholder voting requirements on these combinations; and (2) “control share” provisions that provide that “control shares” of our company (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights with respect to their 26 control shares, except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Certain provisions of the Maryland General Corporation Law, or MGCL, may have the effect of inhibiting a third-party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including (1) “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or supermajority and stockholder voting requirements on these combinations; and (2) “control share” provisions that provide that “control shares” of our company (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights with respect to their control shares, except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
These events include many of the risks set forth above under “Risks Related to Our Business and Operations,” as well as the following: • local oversupply or reduction in demand for office, retail, multifamily or mixed-use space; • adverse changes in financial conditions of buyers, sellers and tenants of properties; • vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below market renewal options, and the need to periodically repair, renovate and re-let space; • increased operating costs, including insurance premiums, utilities, real estate taxes and state and local taxes; • a favorable interest rate environment that may result in a significant number of potential residents of our multifamily apartment communities deciding to purchase homes instead of renting; • rent control or stabilization laws, or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs; 22 • civil unrest, acts of war, terrorist attacks, pandemics and natural disasters, including earthquakes, wildfires, tropical storms, hurricanes, tornadoes and floods, which may result in uninsured or underinsured losses; • decreases in the underlying value of our real estate; • changing submarket demographics; and • changing traffic patterns.
These events include many of the risks set forth above under “Risks Related to Our Business and Operations,” as well as the following: • local oversupply or reduction in demand for office, retail, multifamily or mixed-use space; • adverse changes in financial conditions of buyers, sellers and tenants of properties; • vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below market renewal options, and the need to periodically repair, renovate and re-let space; • increased operating costs, including insurance premiums, utilities, real estate taxes and state and local taxes; • a favorable interest rate environment that may result in a significant number of potential residents of our multifamily apartment communities deciding to purchase homes instead of renting; • rent control or stabilization laws, or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs; • civil unrest, acts of war, terrorist attacks, pandemics and natural disasters, including earthquakes, wildfires, tropical storms, hurricanes, tornadoes and floods, which may result in uninsured or underinsured losses; • decreases in the underlying value of our real estate; • changing submarket demographics; and • changing traffic patterns.
Because we own the Waikiki Beach Walk-Embassy Suites™ in Hawaii and the Santa Fe Park RV Resort in California, we are susceptible to risks associated with the hospitality industry, including: • competition for guests with other hospitality properties, some of which may have greater marketing and financial resources than the managers of our hospitality properties; • increases in operating costs from inflation, labor costs (including the impact of unionization), workers' compensation and healthcare related costs, utility costs, insurance and other factors that the managers of our hospitality properties may not be able to offset through higher rates; • the fluctuating and seasonal demands of business travelers and tourism, which seasonality may cause quarterly fluctuations in our revenues; • general and local economic conditions that may affect demand for travel in general; • periodic oversupply resulting from excessive new development; • unforeseen events beyond our control, such as terrorist attacks, travel-related health concerns, including pandemics and epidemics, imposition of taxes or surcharges by regulatory authorities, travel-related 16 accidents, climate change and unusual weather patterns, including natural disasters such as earthquakes, wildfires, tropical storms, hurricanes and tornadoes; and • decreased reimbursement revenue from the licensor for traveler reward programs.
Because we own the Waikiki Beach Walk-Embassy Suites™ in Hawaii and the Santa Fe Park RV Resort in California, we are susceptible to risks associated with the hospitality industry, including: • competition for guests with other hospitality properties, some of which may have greater marketing and financial resources than the managers of our hospitality properties; • increases in operating costs from inflation, labor costs (including the impact of unionization), workers' compensation and healthcare related costs, utility costs, insurance and other factors that the managers of our hospitality properties may not be able to offset through higher rates; • the fluctuating and seasonal demands of business travelers and tourism, which seasonality may cause quarterly fluctuations in our revenues; • general and local economic conditions that may affect demand for travel in general; • periodic oversupply resulting from excessive new development; • unforeseen events beyond our control, such as terrorist attacks, travel-related health concerns, including pandemics and epidemics, imposition of taxes or surcharges by regulatory authorities, travel-related accidents, climate change and unusual weather patterns, including natural disasters such as earthquakes, wildfires, tropical storms, hurricanes and tornadoes; and • decreased reimbursement revenue from the licensor for traveler reward programs.
In general, investments in mortgages are subject to several risks, including: • borrowers may fail to make debt service payments or pay the principal when due, which may make it necessary for us to foreclose our mortgages or engage in costly negotiations; • the value of the mortgaged property may be less than the principal amount of the mortgage note securing the property; • interest rates payable on the mortgages may be lower than our cost for the funds to acquire these mortgages; and 14 • the mortgages may be or become subordinated to mechanics' or materialmen's liens or property tax liens, in which case we would need to make payments to maintain the current status of a prior lien or discharge it in its entirety to protect such mortgage investment.
In general, investments in mortgages are subject to several risks, including: • borrowers may fail to make debt service payments or pay the principal when due, which may make it necessary for us to foreclose our mortgages or engage in costly negotiations; • the value of the mortgaged property may be less than the principal amount of the mortgage note securing the property; • interest rates payable on the mortgages may be lower than our cost for the funds to acquire these mortgages; and • the mortgages may be or become subordinated to mechanics' or materialmen's liens or property tax liens, in which case we would need to make payments to maintain the current status of a prior lien or discharge it in its entirety to protect such mortgage investment.
We also face significant competition for attractive acquisition opportunities from an indeterminate number of investors, including publicly traded and privately held REITs, private equity investors and institutional investment funds, some of which have greater financial resources than we do, a greater 11 ability to borrow funds to acquire properties and the ability to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices.
We also face significant competition for attractive acquisition opportunities from an indeterminate number of investors, including publicly traded and privately held REITs, private equity investors and institutional investment funds, some of which have greater financial resources than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices.
These provisions may have the effect of limiting or precluding a third-party from making an unsolicited acquisition proposal for us or of delaying, deferring or preventing a change in control of us under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then current market price.
These provisions may have the effect of limiting or precluding a third-party from making an unsolicited acquisition proposal for us or of delaying, deferring or preventing a change in control of us under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a 28 premium over the then current market price.
Whether we will experience another pandemic or similar health-related crisis and if so, the extent and duration of any governmental or business measures aimed to contain such illness, such as quarantines, 31 restrictions on travel, stay-at-home orders, density limitations, social distancing measures, restrictions on business operations and/or construction projects, is highly unpredictable.
Whether we will experience another pandemic or similar health-related crisis and if so, the extent and duration of any governmental or business measures aimed to contain such illness, such as quarantines, restrictions on travel, stay-at-home orders, density limitations, social distancing measures, restrictions on business operations and/or construction projects, is highly unpredictable.
If our competitors offer space at rental rates below current 15 market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates below those we currently charge or to offer more substantial rent abatements, tenant improvements, early termination rights or below market renewal options in order to retain tenants when our tenants' leases expire.
If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates below those we currently charge or to offer more substantial rent abatements, tenant improvements, early termination rights or below market renewal options in order to retain tenants when our tenants' leases expire.
Further, we offer the flexibility to work remotely in certain limited circumstances, which introduces heightened cybersecurity risks as remote working environments can 21 be less secure and more susceptible to cyberattacks due to cybersecurity risks associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
Further, we offer the flexibility to work remotely in certain limited circumstances, which introduces heightened cybersecurity risks as remote working environments can be less secure and more susceptible to cyberattacks due to cybersecurity risks associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
If we do incur material environmental liabilities in the future, we may face significant remediation costs, and we may find it difficult to sell any affected properties. Our properties may contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation.
If we do incur material environmental liabilities in the future, we may face significant remediation costs, and we may find it difficult to sell any affected properties. 25 Our properties may contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation.
In addition, our credit facility contains specific cross-default provisions with respect to specified other indebtedness, giving the lenders and/or note purchasers the right to declare a default if we are in default under other loans in some circumstances. The effective subordination of our unsecured indebtedness may reduce amounts available for payment on our unsecured indebtedness.
In addition, our credit facility contains specific cross-default provisions with respect to specified other indebtedness, giving the lenders and/or note purchasers the right to declare a default if we are in default under other loans in some circumstances. 14 The effective subordination of our unsecured indebtedness may reduce amounts available for payment on our unsecured indebtedness.
Our Operating Partnership will not indemnify or advance funds to any person with respect to any action 25 initiated by the person seeking indemnification without our approval (except for any proceeding brought to enforce such person's right to indemnification under the partnership agreement) or if the person is found to be liable to our Operating Partnership on any portion of any claim in the action.
Our Operating Partnership will not indemnify or advance funds to any person with respect to any action initiated by the person seeking indemnification without our approval (except for any proceeding brought to enforce such person's right to indemnification under the partnership agreement) or if the person is found to be liable to our Operating Partnership on any portion of any claim in the action.
Depending on the status of the various loan obligations for which the stock or units ultimately serve as collateral and the trading price of our common stock, our directors and/or officers, 28 and their affiliates, may experience a foreclosure or margin call that could result in the sale of the pledged stock or units, in the open market or otherwise.
Depending on the status of the various loan obligations for which the stock or units ultimately serve as collateral and the trading price of our common stock, our directors and/or officers, and their affiliates, may experience a foreclosure or margin call that could result in the sale of the pledged stock or units, in the open market or otherwise.
The prior owner of Del Monte Center entered into a fixed fee environmental services agreement in 1997 pursuant to which the 23 remediation will be completed for approximately $3.5 million, with the remediation costs paid for through funds held in an escrow account funded by the prior owner.
The prior owner of Del Monte Center entered into a fixed fee environmental services agreement in 1997 pursuant to which the remediation will be completed for approximately $3.5 million, with the remediation costs paid for through funds held in an escrow account funded by the prior owner.
If our operating costs increase as a result of any of the foregoing factors, our results of operations may be adversely affected. The expense of owning and operating a property is not necessarily reduced when circumstances such as market factors and competition cause a reduction in income from the property.
If our operating costs increase as a result of any of the foregoing factors, our results of operations may be adversely affected. 13 The expense of owning and operating a property is not necessarily reduced when circumstances such as market factors and competition cause a reduction in income from the property.
Our access to third-party sources of capital depends, in part, on: • general market conditions; • the market's perception of our growth potential; • our current debt levels; • our current and expected future earnings; • our cash flow and cash distributions; and • the market price per share of our common stock.
Our access to third-party sources of capital depends, in part, on: • general market conditions; • the market's perception of our growth potential; • our current debt levels; 22 • our current and expected future earnings; • our cash flow and cash distributions; and • the market price per share of our common stock.
Subject to these restrictions, we may enter into hedging transactions to protect us 13 from the effects of interest rate fluctuations on floating rate debt. Our hedging transactions may include entering into interest rate cap agreements or interest rate swap agreements. As described under Note 8.
Subject to these restrictions, we may enter into hedging transactions to protect us from the effects of interest rate fluctuations on floating rate debt. Our hedging transactions may include entering into interest rate cap agreements or interest rate swap agreements. As described under Note 8.
In addition, a sale or transfer by us to a third-party of our interests in the joint venture may be subject to consent rights or rights of first refusal, in favor of our joint venture partners, which would in each case restrict our 20 ability to dispose of our interest in the joint venture.
In addition, a sale or transfer by us to a third-party of our interests in the joint venture may be subject to consent rights or rights of first refusal, in favor of our joint venture partners, which would in each case restrict our ability to dispose of our interest in the joint venture.
Changes to our policies with regards to the foregoing could adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock. 27 Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Changes to our policies with regards to the foregoing could adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock. Our rights and the rights of our stockholders to take action against our directors and officers are limited.
In addition to these potential effects of a business downturn, mergers or consolidations among large 10 retail establishments could result in the closure of existing stores or duplicate or geographically overlapping store locations, which could include stores at our retail properties.
In addition to these potential effects of a business downturn, mergers or consolidations among large retail establishments could result in the closure of existing stores or duplicate or geographically overlapping store locations, which could include stores at our retail properties.
Furthermore, under certain circumstances, the franchisor may require us to make certain capital improvements to maintain the hotel in accordance with system standards, the cost of which can be substantial and may adversely affect our results of operations and reduce cash available for distribution to our stockholders and unitholders. 17 Embassy Suites™, our franchisor, has a right of first offer with respect to the Waikiki Beach Walk-Embassy Suites™, which may limit our ability to obtain the highest price possible for the hotel.
Furthermore, under certain circumstances, the franchisor may require us to make certain capital improvements to maintain the hotel in accordance with system standards, the cost of which can be substantial and may adversely affect our results of operations and reduce cash available for distribution to our stockholders and unitholders. 18 Embassy Suites™, our franchisor, has a right of first offer with respect to the Waikiki Beach Walk-Embassy Suites™, which may limit our ability to obtain the highest price possible for the hotel.
We may be adversely affected by trends in office real estate. In 2023, approximately 53% of our net operating income was from our office properties. Work from home, flexible work schedules, open workplaces, videoconferencing, and teleconferencing have become more common, particularly as a result of the pandemic. These practices may enable businesses to reduce their office space requirements.
We may be adversely affected by trends in office real estate. In 2024, approximately 53% of our net operating income was from our office properties. Work from home, flexible work schedules, open workplaces, videoconferencing, and teleconferencing have become more common, particularly as a result of the pandemic. These practices may enable businesses to reduce their office space requirements.
In addition, if a significant number of our stockholders determine to sell shares of our 30 stock in order to pay taxes owed on dividends, such sales may have an adverse effect on the per share trading price of our common stock. Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, such sales may have an adverse effect on the per share trading price of our common stock. 32 Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
Rady and his affiliates, directly or indirectly, own a substantial beneficial interest in our company on a fully diluted basis and have the ability to exercise significant influence on our company and our Operating Partnership, including the approval of significant corporate transactions. As of December 31, 2023, Mr.
Rady and his affiliates, directly or indirectly, own a substantial beneficial interest in our company on a fully diluted basis and have the ability to exercise significant influence on our company and our Operating Partnership, including the approval of significant corporate transactions. As of December 31, 2024, Mr.
The retail environment and the market for retail space have previously been, and could again be, adversely affected by weakness in the national, regional and local economies, inflation, high interest rate environments, the level of consumer spending and consumer confidence, the adverse financial condition of some large retailing companies, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets, increasing competition from discount retailers, outlet malls, internet retailers (including Amazon.com) and other online businesses and the COVID-19 pandemic and potentially other communicable diseases.
The retail environment and the market for retail space have previously been, and could again be, adversely affected by weakness in the national, regional and local economies, inflation, high interest rate environments, the level of consumer spending and consumer confidence, the adverse financial condition of some large retailing companies, the ongoing consolidation in the retail sector, the excess amount of retail space in a number of markets, increasing competition from discount retailers, outlet malls, internet retailers (including Amazon.com) and other online businesses and communicable diseases.
In addition, we may reduce or discontinue earthquake insurance on some or all of our properties in the future if the cost of premiums for any such policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss.
In addition, we may reduce or discontinue certain insurance policies on some or all of our properties in the future if the cost of premiums for any such policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss.
At December 31, 2023, we also had a third amended and restated credit facility with a capacity of $500 million, consisting of a revolving line of credit of $400 million and an unsecured term loan of $100 million (Term Loan A).
At December 31, 2024, we also had a third amended and restated credit facility with a capacity of $500 million, consisting of a revolving line of credit of $400 million and an unsecured term loan of $100 million (Term Loan A).
At February 14, 2024, we had total debt outstanding of $1.70 billion, excluding debt issuance costs, a portion of which contains non-recourse carve-out guarantees and environmental indemnities from us and our Operating Partnership, and we may incur significant additional debt to finance future acquisition and development activities.
At February 11, 2025, we had total debt outstanding of $1.70 billion, excluding debt issuance costs, a portion of which contains non-recourse carve-out guarantees and environmental indemnities from us and our Operating Partnership, and we may incur significant additional debt to finance future acquisition and development activities.
As of December 31, 2023, the limited partners, including Mr. Rady and his affiliates and our other executive officers and directors, owned approximately 22.8% of our outstanding common units and approximately 22.5% of our outstanding common stock, which together represent an approximate 38.8% beneficial interest in our company on a fully diluted basis.
As of December 31, 2024, the limited partners, including Mr. Rady and his affiliates and our other executive officers and directors, owned approximately 22.9% of our outstanding common units and approximately 22.8% of our outstanding common stock, which together represent an approximate 38.9% beneficial interest in our company on a fully diluted basis.
Among the reasons that these individuals are important to our success is that each has a national or regional industry reputation that attracts business and investment opportunities and assists us in negotiations with lenders, existing and potential tenants and industry personnel. If we lose their services, our relationships with such personnel could diminish.
Among the reasons that these individuals are important to our success is that each has a national or regional industry reputation that attracts business and investment opportunities and assists us in negotiations with lenders, existing and potential tenants and industry personnel. If we lose their services, our relationships with such personnel could diminish. Effective January 1, 2025, Mr.
As a result, in the event of an earthquake, we may be required to incur significant costs, and, to the extent that a loss exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties.
As a result, in the event of a natural disaster, we may be required to incur significant costs, and, to the extent that a loss exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties.
If the franchise license is terminated due to our failure to make required improvements or to otherwise comply with its terms, we may be liable to the franchisor for a termination payment, which we expect could be as high as approximately $7.7 million based on operating performance through December 31, 2023.
If the franchise license is terminated due to our failure to make required improvements or to otherwise comply with its terms, we may be liable to the franchisor for a termination payment, which we expect could be as high as approximately $8.2 million based on operating performance through December 31, 2024.
Our third amended and restated credit facility, the notes issued under our note purchase agreements and our amended and restated term loan agreement and our 3.375% senior notes due 2031 represent unsecured indebtedness.
Our third amended and restated credit facility, the notes issued under our note purchase agreements, our amended and restated term loan agreement, our 3.375% senior notes due 2031 and our 6.150% senior notes due 2034 represent unsecured indebtedness.
At December 31, 2023, 57% of the gross leaseable area of our portfolio is located in the State of California. Additionally, 14%, 13%, and 8% of the gross leaseable area of our portfolio is located in the States of Washington, Oregon and Texas, respectively, and we have a meaningful presence in Oahu, Hawaii.
At December 31, 2024, 57.1% of the gross leaseable area of our portfolio is located in the State of California. Additionally, 14.1%, 13.4%, and 8.1% of the gross leaseable area of our portfolio is located in the States of Washington, Oregon and Texas, respectively, and we have a meaningful presence in Oahu, Hawaii.
The impact of a future pandemic could have significant adverse impacts on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and to pay dividends and distributions to security holders in a variety of ways that are difficult to predict.
The impact of a future pandemic could have significant adverse impacts on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and to pay dividends and distributions to security holders and could also have a material adverse effect on the market value of our securities in a variety of ways that are difficult to predict.
As of December 31, 2023, leases representing 7.1% of the square footage and 8.8% of the annualized base rent of the properties in our office, retail and retail portion of our mixed-use portfolios will expire in 2024, and an additional 10.3% of the square footage of the properties in our office, retail and retail portion of our mixed-use portfolios was available.
As of December 31, 2024, leases representing 7.1% of the square footage and 7.5% of the annualized base rent of the properties in our office, retail and retail portion of our mixed-use portfolios will expire in 2025, and an additional 10.9% of the square footage of the properties in our office, retail and retail portion of our mixed-use portfolios was available.
Rady and his affiliates owned approximately 16.6% of our outstanding common stock and 19.39% of our outstanding common units, which together represent an approximate 35.8% beneficial interest in our company on a fully diluted basis. Consequently, Mr.
Rady and his affiliates owned approximately 16.5% of our outstanding common stock and 19.3% of our outstanding common units, which together represent an approximate 35.7% beneficial interest in our company on a fully diluted basis. Consequently, Mr.
As of December 31, 2023, the three largest tenants in our office portfolio - Google LLC, LPL Holdings, Inc. and Autodesk, Inc. - represented approximately 30.6% of the total annualized base rent in our office portfolio in the aggregate, and 13.5%, 10.1% and 7.0%, respectively, of the annualized base rent generated by our office properties.
As of December 31, 2024, the three largest tenants in our office portfolio - Google LLC, LPL Holdings, Inc. and Autodesk, Inc. - represented approximately 31.5% of the total annualized base rent in our office portfolio in the aggregate, and 14.0%, 10.6% and 6.9%, respectively, of the annualized base rent generated by our office properties.
For example, if we experienced a substantial or comprehensive loss of our Torrey Reserve Campus in San Diego, California, reconstruction could be delayed or prevented by the California Coastal Commission, which regulates land use in the California coastal zone.
Environmental and legal restrictions could also restrict the rebuilding of our properties. For example, if we experienced a substantial or comprehensive loss of our Torrey Reserve Campus in San Diego, California, reconstruction could be delayed or prevented by the California Coastal Commission, which regulates land use in the California coastal zone.
As permitted by Maryland law, our charter eliminates the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from (1) actual receipt of an improper benefit or profit in money, property or services; or (2) a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated.
As permitted by Maryland law, our charter eliminates the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from (1) actual receipt of an improper benefit or profit in money, property or services; or (2) a final judgment based upon a finding of active and deliberate dishonesty by the director or officer that was material to the cause of action adjudicated. 29 As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist.
As of December 31, 2023, our largest anchor tenants were Lowe's, Sprouts Farmers Market and Nordstrom Rack, which together represented approximately 10.4% of our total annualized base rent of our retail portfolio in the aggregate, and 5.3%, 2.8% and 2.3%, respectively, of the annualized base rent generated by our retail properties.
As of December 31, 2024, our largest anchor tenants were Lowe's, Sprouts Farmers Market and Marshalls, which together represented approximately 10.1% of our total annualized base rent of our retail portfolio in the aggregate, and 5.1%, 2.7% and 2.3%, respectively, of the annualized base rent generated by our retail properties.
Our charter, subject to certain exceptions, authorizes our board of directors to take such actions as it determines are advisable to preserve our qualification as a REIT.
Our charter contains certain ownership limits with respect to our stock. Our charter, subject to certain exceptions, authorizes our board of directors to take such actions as it determines are advisable to preserve our qualification as a REIT.
While we carry earthquake insurance on all of our properties, the amount of our earthquake insurance coverage may not be sufficient to fully cover losses from earthquakes and will be subject to limitations involving large deductibles or co-payments.
While we carry earthquake, flood and property insurance on all of our properties, the amount of our insurance coverage may not be sufficient to fully cover losses caused by such natural disasters and will be subject to limitations involving large deductibles or co-payments.
We have elected to be taxed as a REIT and believe we are organized and operate in a manner that has allowed us to qualify and will allow us to remain qualified as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2011.
We have elected to be taxed as a REIT and believe we are organized and operate in a manner that has allowed us to qualify and will allow us to remain qualified as a REIT for federal income tax purposes.
Our ability to acquire properties on favorable terms, or at all, may be exposed to the following significant risks: • we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete; • even if we enter into agreements for the acquisition of properties, these agreements are subject to conditions to closing, which we may be unable to satisfy; and • we may be unable to finance the acquisition on favorable terms or at all.
Our ability to acquire properties on favorable terms, or at all, may be exposed to the following significant risks: • we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete; • even if we enter into agreements for the acquisition of properties, these agreements are subject to conditions to closing, which we may be unable to satisfy; and • we may be unable to finance the acquisition on favorable terms or at all. 11 If we are unable to finance property acquisitions or acquire properties on favorable terms, or at all, our financial condition, results of operations, cash flow and per share trading price of our common stock could be adversely affected.
This, in turn, could reduce cash available for distribution to our stockholders and unitholders and may hinder our ability to raise more capital by issuing more stock or by borrowing more money.
If any of these events occur, our cash flow could be reduced. This, in turn, could reduce cash available for distribution to our stockholders and unitholders and may hinder our ability to raise more capital by issuing more stock or by borrowing more money.
Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms, which may adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock.
Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms, which may adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock. 24 Our property taxes could increase due to property tax rate changes or reassessment, which would adversely impact our cash flows.
In addition, sale of these shares or units, or the perception of possible future sales, could have a materially adverse effect on the trading price of our common stock or make it more difficult for us to raise additional capital through sales of equity securities.
In addition, sale of these shares or units, or the perception of possible future sales, could have a materially adverse effect on the trading price of our common stock or make it more difficult for us to raise additional capital through sales of equity securities. 30 Risks Related to Our Status as a REIT Failure to maintain our qualification as a REIT would have significant adverse consequences to us and the value of our common stock.
We face significant competition for acquisitions of real properties, which may reduce the number of acquisition opportunities available to us and increase the costs of these acquisitions. The current market for acquisitions continues to be extremely competitive.
In addition, failure to identify or complete acquisitions of suitable properties could slow our growth. We face significant competition for acquisitions of real properties, which may reduce the number of acquisition opportunities available to us and increase the costs of these acquisitions. The current market for acquisitions continues to be extremely competitive.
Therefore, as a result of the geographic concentration of our properties, we face risks, including disruptions to our business and the businesses of our tenants and higher costs, such as uninsured property losses, higher insurance premiums, and potential additional regulatory requirements by government agencies in response to perceived risks.
Therefore, as a result of the geographic concentration of our properties, we face risks, including disruptions to our business and the businesses of our tenants and higher costs, such as uninsured property losses, higher insurance premiums, and potential additional regulatory requirements by government agencies in response to perceived risks. 21 We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties.
Potential losses from earthquakes in California, Washington, Oregon and Hawaii may not be fully covered by insurance. Many of the properties we currently own are located in California, Washington, Oregon and Hawaii, which are areas especially subject to earthquakes.
Potential losses from earthquakes, fires, floods or other natural disasters may not be fully covered by insurance. Many of the properties we currently own are located in areas especially subject to earthquakes, fires, floods and other natural disasters.
Our failure to obtain such permits, licenses and zoning relief or to comply with applicable laws could have an adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common stock. 24 In addition, federal and state laws and regulations, including laws such as the ADA and the FHAA, impose further restrictions on our properties and operations.
Our failure to obtain such permits, licenses and zoning relief or to comply with applicable laws could have an adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common stock.
No reported decision of a Maryland appellate court has interpreted provisions similar to the provisions of the partnership agreement of our Operating Partnership that modify and reduce our fiduciary duties or obligations as the general partner or reduce or eliminate our liability for money damages to the Operating Partnership and its partners, and we have not obtained an opinion of counsel as to the enforceability of the provisions set forth in the partnership agreement that purport to modify or reduce the fiduciary duties that would be in effect were it not for the partnership agreement.
No reported decision of a Maryland appellate court has interpreted provisions similar to the provisions of the partnership agreement of our Operating Partnership that modify and reduce our fiduciary duties or obligations as the general partner or reduce or eliminate our liability for money damages to the Operating Partnership and its partners, and we have not obtained an opinion of counsel as to the enforceability of the provisions set forth in the partnership agreement that purport to modify or reduce the fiduciary duties that would be in effect were it not for the partnership agreement. 27 Our charter and bylaws, the partnership agreement of our Operating Partnership and Maryland law contain provisions that may delay, defer or prevent a change of control transaction that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest.
If we place mortgage debt on properties, we may be unable to refinance the properties when the loans become due, or to refinance on favorable terms. If interest rates are higher when we refinance our properties, our income could be reduced. If any of these events occur, our cash flow could be reduced.
If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties. If we place mortgage debt on properties, we may be unable to refinance the properties when the loans become due, or to refinance on favorable terms. If interest rates are higher when we refinance our properties, our income could be reduced.
As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist. Accordingly, in the event that actions taken in good faith by any of our directors or officers impede the performance of our company, your ability to recover damages from such director or officer will be limited.
Accordingly, in the event that actions taken in good faith by any of our directors or officers impede the performance of our company, your ability to recover damages from such director or officer will be limited.
These impacts may adversely affect our properties, our business, financial condition and results of operations. Climate change may adversely impact our properties directly, and may lead to additional compliance obligations and costs as well as additional taxes and fees . We cannot reliably predict the extent, rate, or impact of climate change.
We cannot predict how future laws and regulations, or future interpretations of current laws and regulations, related to climate change will affect our properties, business, results of operations and financial condition. 20 Climate change may adversely impact our properties directly, and may lead to additional compliance obligations and costs as well as additional taxes and fees .
Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of holders of units in our Operating Partnership, which may impede business decisions that could benefit our stockholders.
Rady has substantial influence on us and could exercise his influence in a manner that conflicts with the interests of other stockholders. 26 Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of holders of units in our Operating Partnership, which may impede business decisions that could benefit our stockholders.
We may not be able to rebuild our existing properties to their existing specifications if we experience a substantial or comprehensive loss of such properties. In the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications.
In the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications. Further, reconstruction or improvement of such a property would likely require significant upgrades to meet zoning and building code requirements.
At any time, our tenants may experience a downturn in their business that may significantly weaken their financial condition.
Our retail shopping center properties typically are anchored by large, nationally recognized tenants. At any time, our tenants may experience a downturn in their business that may significantly weaken their financial condition.
Pandemics and related governmental or business restrictions could adversely impact our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and to pay dividends and distributions to security holders.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. 33 Pandemics and related governmental or business restrictions could adversely impact our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and to pay dividends and distributions to security holders.
If we are unable to obtain rental rates that are on average comparable to our asking rents across our portfolio, then our ability to generate cash flow growth will be negatively impacted.
If we are unable to obtain rental rates that are on average comparable to our asking rents across our portfolio, then our ability to generate cash flow growth will be negatively impacted. 16 In addition, depending on asking rental rates at any given time as compared to expiring leases in our portfolio, from time to time rental rates for expiring leases may be higher than starting rental rates for new leases.
Risks Related to the Real Estate Industry Our performance and value are subject to risks associated with real estate assets and the real estate industry, including local oversupply, reduction in demand or adverse changes in financial conditions of buyers, sellers and tenants of properties, which could decrease revenues or increase costs, which would adversely affect our financial condition, results of operations, cash flow and the per share trading price of our common stock.
Any failure or perceived failure by us to comply with laws, regulations, policies or regulatory guidance relating to privacy or data security may result in governmental investigations and enforcement actions, litigation, fines and penalties or adverse publicity, and could cause our customers and consumers to lose trust in us, which could have an adverse effect on our reputation and business. 23 Risks Related to the Real Estate Industry Our performance and value are subject to risks associated with real estate assets and the real estate industry, including local oversupply, reduction in demand or adverse changes in financial conditions of buyers, sellers and tenants of properties, which could decrease revenues or increase costs, which would adversely affect our financial condition, results of operations, cash flow and the per share trading price of our common stock.
Depending on the outcome of these factors as well as the impact of the economic environment, we could experience delay or difficulty in implementing our growth strategy, including the development and redevelopment of our assets, on satisfactory terms, or be unable to implement this strategy.
Depending on the outcome of these factors as well as the impact of the economic environment, we could experience delay or difficulty in implementing our growth strategy, including the development and redevelopment of our assets, on satisfactory terms, or be unable to implement this strategy. 12 High mortgage rates and/or unavailability of mortgage debt may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our net income and the amount of cash distributions we can make.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code. 12 Our future acquisitions may not yield the returns we expect, and we may otherwise be unable to operate these properties to meet our financial expectations, which could adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock.
If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.
Also, the failure of our Operating Partnership or any subsidiary partnerships to qualify as a partnership could cause it to become subject to federal and state corporate income 29 tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners, including us.
Also, the failure of our Operating Partnership or any subsidiary partnerships to qualify as a partnership could cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners, including us. 31 The asset tests applicable to REITs limit our ability to own taxable REIT subsidiaries, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our taxable REIT subsidiaries are not conducted on arm's length terms.
Our property taxes could increase due to property tax rate changes or reassessment, which would adversely impact our cash flows. Even if we continue to qualify as a REIT for federal income tax purposes, we will be required to pay some state and local taxes on our properties.
Even if we continue to qualify as a REIT for federal income tax purposes, we will be required to pay some state and local taxes on our properties. The real property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities.
Our retail shopping center properties depend on anchor stores or major tenants to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants. Our retail shopping center properties typically are anchored by large, nationally recognized tenants.
Any such event could have an adverse effect on our financial condition, results of operations, cash flow and the per share trading price of our common stock. 10 Our retail shopping center properties depend on anchor stores or major tenants to attract shoppers and could be adversely affected by the loss of, or a store closure by, one or more of these tenants.
We must rely on third-party management companies to operate the Waikiki Beach Walk-Embassy Suites™ in order to maintain our qualification as a REIT under the Code, and, as a result, we will have less control than if we were operating the hotel directly.
Moreover, these properties may be affected by risks such as acts of terrorism and natural disasters, including major fires, floods and earthquakes, as well as severe or inclement weather, which could also decrease tourism activity in Hawaii or California. 17 We must rely on third-party management companies to operate the Waikiki Beach Walk-Embassy Suites™ in order to maintain our qualification as a REIT under the Code, and, as a result, we will have less control than if we were operating the hotel directly.
Further, population migration may occur in response to these or other factors and negatively impact our properties. Climate and other environmental changes may result in volatile or decreased demand for space at certain of our properties or, in extreme cases, our inability to operate certain properties at all.
Climate and other environmental changes may result in volatile or decreased demand for space at certain of our properties or, in extreme cases, our inability to operate certain properties at all. Climate change may also have indirect effects on our business by increasing the cost of insurance, or making insurance unavailable.
The real property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities. If the property taxes we pay increase, our cash flow would be adversely impacted, and our ability to pay any expected dividends to our stockholders and unitholders could be adversely affected.
If the property taxes we pay increase, our cash flow would be adversely impacted, and our ability to pay any expected dividends to our stockholders and unitholders could be adversely affected. As an owner of real estate, we could incur significant costs and liabilities related to environmental matters.
As such, the potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances in areas in which we operate. These may include changes in global weather patterns, which could include local changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperature averages or extremes.
We cannot reliably predict the extent, rate, or impact of climate change. As such, the potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances in areas in which we operate.
Under the ADA and the FHAA, all public accommodations must meet federal requirements related to access and use by disabled persons. Some of our properties may currently be in non-compliance with the ADA or the FHAA.
In addition, federal and state laws and regulations, including laws such as the ADA and the FHAA, impose further restrictions on our properties and operations. Under the ADA and the FHAA, all public accommodations must meet federal requirements related to access and use by disabled persons.
Wyll, as potential interim candidates for the roles of Chairman and/or Chief Executive Officer and/or as emergency interim executive committee members. 18 Many of our other senior executives also have extensive experience and strong reputations in the real estate industry, which aid us in identifying opportunities, having opportunities brought to us and negotiating with tenants and build-to-suit prospects.
Wyll brings to his role more than 25 years of experience in commercial real estate, acquisitions and dispositions, structured finance, leasing, and corporate and securities matters. 19 Many of our other senior executives also have extensive experience and strong reputations in the real estate industry, which aid us in identifying opportunities, having opportunities brought to us and negotiating with tenants and build-to-suite prospects.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Response Team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including third-party consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment. 33
Biggest changeThe Response Team members' relevant experience includes overseeing IT departments, reviewing existing security measures, and implementing solutions to mitigate security risks that may pose threats to a business. 35 Our Response Team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including third-party consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment. 36
Our Response Team includes our President and Chief Operating Officer, our Executive Vice President and Chief Financial Officer, our Director of IT, our Business Systems Manager, our Corporate Controller and our Director of Internal Audit.
Our Response Team includes our President and Chief Operating Officer (and current President and Chief Executive Officer effective January 1, 2025), our Executive Vice President and Chief Financial Officer, our Director of IT, our Business Systems Manager, our Corporate Controller and our Director of Internal Audit.
Board members receive presentations on cybersecurity topics from our President and Chief Operating Officer or external experts as part of the Board’s continuing education on topics that impact public companies.
Board members receive presentations on cybersecurity topics from our Director of IT and Legal Department or external experts as part of the Board’s continuing education on topics that impact public companies.
Removed
The Response Team members' relevant experience includes overseeing IT departments, reviewing existing security measures, and implementing solutions to mitigate security risks that may pose threats to a business.

Item 2. Properties

Properties — owned and leased real estate

36 edited+3 added−2 removed7 unchanged
Biggest changeRetail and Office Portfolios Property Location Year Built/ Renovated Number of Buildings Net Rentable Square Feet Percentage Leased Annualized Base Rent (1) Annualized Base Rent Per Leased Square Foot OFFICE PROPERTIES La Jolla Commons San Diego, CA 2008/2014 2 724,654 99.3 % $ 46,251,701 $ 64.28 Torrey Reserve Campus San Diego, CA 1996-2000/2014-2016/2021 14 547,035 92.2 26,721,473 52.98 Torrey Point San Diego, CA 2017 2 94,854 100.0 5,780,415 60.94 Solana Crossing Solana Beach, CA 1982/2005 4 224,009 88.3 9,150,509 46.26 The Landmark at One Market (2) San Francisco, CA 1917/2000 1 422,426 100.0 41,072,918 97.23 One Beach Street San Francisco, CA 1924/1972/1987/1992 1 100,270 — — — First & Main Portland, OR 2010 1 362,633 90.7 10,969,495 33.35 Lloyd Portfolio Portland, OR 1940-2015 3 549,959 79.4 15,287,045 35.01 City Center Bellevue Bellevue, WA 1987 1 498,606 85.7 25,454,376 59.57 Eastgate Office Park Bellevue, WA 1985 4 281,204 55.4 6,475,463 41.57 Corporate Campus East III Bellevue, WA 1986 4 159,578 85.0 6,253,631 46.10 Bel-Spring 520 Bellevue, WA 1983 2 93,295 73.1 2,989,023 43.83 Subtotal / Weighted Average Office Portfolio (3) 39 4,058,523 86.0 % $ 196,406,049 $ 56.27 RETAIL PROPERTIES Carmel Country Plaza San Diego, CA 1991 9 78,098 89.8 % $ 3,962,827 $ 56.51 Carmel Mountain Plaza (4) San Diego, CA 1994/2014 15 528,416 98.8 14,205,182 27.21 South Bay Marketplace (4) San Diego, CA 1997 9 132,877 97.8 2,454,484 18.89 Gateway Marketplace San Diego, CA 1997/2016 3 127,861 100.0 2,583,099 20.20 Lomas Santa Fe Plaza Solana Beach, CA 1972/1997 9 208,297 98.0 6,661,157 32.63 Solana Beach Towne Centre Solana Beach, CA 1973/2000/2004 12 246,651 96.5 6,847,560 28.77 Del Monte Center (4) Monterey, CA 1967/1984/2006 16 673,155 82.4 9,449,635 17.04 Geary Marketplace Walnut Creek, CA 2012 3 35,159 96.7 1,230,114 36.18 The Shops at Kalakaua Honolulu, HI 1971/2006 3 11,671 77.7 1,105,775 121.94 Waikele Center Waipahu, HI 1993/2008 9 418,047 99.7 12,838,467 30.80 Alamo Quarry Market (4) San Antonio, TX 1997/1999 16 588,148 98.5 14,813,996 25.57 Hassalo on Eighth - Retail (5) Portland, OR 2015 3 44,236 65.5 968,470 33.42 Subtotal / Weighted Average Retail Portfolio (1) 107 3,092,616 94.3 % $ 77,120,766 $ 26.44 Total / Weighted Average Retail and Office Portfolio (1) 146 7,151,139 89.6 % $ 273,526,815 $ 42.69 Mixed-Use Portfolio Retail Portion Location Year Built/ Renovated Number of Buildings Net Rentable Square Feet Percent Leased Annualized Base Rent Annualized Base Rent Per Leased Square Foot Waikiki Beach Walk—Retail Honolulu, HI 2006 3 93,925 95.1 % $ 9,545,747 $ 106.87 Hotel Portion Location Year Built/ Renovated Number of Buildings Units Average Occupancy Average Daily Rate Revenue per Available Room Waikiki Beach Walk—Embassy Suites TM Honolulu, HI 2008/2014/2020 2 369 85.2 % $ 373.50 $ 318.38 34 Multifamily Portfolio Property Location Year Built/ Renovated Number of Buildings Units Percentage Leased Annualized Base Rent Average Monthly Base Rent per Leased Unit Loma Palisades San Diego, CA 1958/2001 - 2008/2021 80 548 94.7 % $ 17,026,908 $ 2,734 Imperial Beach Gardens Imperial Beach, CA 1959/2008 26 160 92.5 4,703,988 2,649 Mariner’s Point Imperial Beach, CA 1986 8 88 87.5 2,288,280 2,476 Santa Fe Park RV Resort (6) San Diego, CA 1971/2007-2008 1 124 84.7 1,521,684 1,207 Pacific Ridge Apartments San Diego, CA 2013 3 533 94.0 23,798,100 3,958 Hassalo on Eighth - Multifamily (5) Portland, OR 2015 3 657 91.0 11,873,343 1,655 Total / Weighted Average Multifamily 121 2,110 92.3 % $ 61,212,303 $ 2,619 (1) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) under commenced leases for the month ended December 31, 2023 by 12.
Biggest changeRetail and Office Portfolios Property Location Year Built/ Most Recent Renovation Net Rentable Square Feet Percentage Leased Annualized Base Rent (1) Annualized Base Rent Per Leased Square Foot OFFICE PROPERTIES La Jolla Commons (2) San Diego, CA 2008/2014 725,439 98.5 % $ 46,530,658 $ 65.12 Torrey Reserve Campus San Diego, CA 1996/2022 551,005 79.1 23,840,979 54.70 Torrey Point San Diego, CA 2017 94,854 99.6 5,954,067 63.02 Solana Crossing Solana Beach, CA 1982/2022 224,009 77.4 8,218,550 47.40 The Landmark at One Market (3) San Francisco, CA 1917/2000 422,426 98.5 40,876,013 98.24 One Beach Street San Francisco, CA 1924/2024 100,270 — — — First & Main Portland, OR 2010 362,633 94.2 11,163,267 32.68 Lloyd Portfolio Portland, OR 1940/2022 568,270 82.1 14,987,738 32.12 City Center Bellevue Bellevue, WA 1987/2023 498,606 91.4 26,320,549 57.76 14Acres (4) Bellevue, WA 1985/2024 276,060 62.0 6,800,550 39.73 Timber Ridge (5) Bellevue, WA 1986 160,509 87.2 6,471,011 46.23 Timber Springs (6) Bellevue, WA 1983 93,295 59.2 2,626,198 47.55 Subtotal / Weighted Average Office Portfolio (7) 4,077,376 85.0 % $ 193,789,580 $ 55.92 RETAIL PROPERTIES Carmel Country Plaza San Diego, CA 1991 78,098 91.8 % $ 4,200,992 $ 58.60 Carmel Mountain Plaza (8) San Diego, CA 1994/2020 528,416 99.4 14,738,486 28.06 South Bay Marketplace (8) San Diego, CA 1997/2018 132,877 97.8 2,524,203 19.42 Gateway Marketplace San Diego, CA 1997/2016 127,861 98.7 2,533,074 20.07 Lomas Santa Fe Plaza Solana Beach, CA 1972/1997 208,297 96.3 6,588,028 32.84 Solana Beach Towne Centre Solana Beach, CA 1973/2004 246,651 95.9 7,098,293 30.01 Del Monte Center (8) Monterey, CA 1967/2018 673,155 82.8 10,475,471 18.79 Geary Marketplace Walnut Creek, CA 2012 35,159 100.0 1,236,025 35.16 The Shops at Kalakaua Honolulu, HI 1971/2006 11,893 100.0 1,194,000 100.40 Waikele Center Waipahu, HI 1993/2008 418,611 99.5 12,740,116 30.59 Alamo Quarry Market (8) San Antonio, TX 1997/1999 588,148 99.8 15,780,519 26.88 Hassalo on Eighth - Retail (9) Portland, OR 2015 44,236 57.5 847,389 33.31 Subtotal / Weighted Average Retail Portfolio (7) 3,093,402 94.5 % $ 79,956,596 $ 27.35 Total / Weighted Average Retail and Office Portfolio (7) 7,170,778 89.1 % $ 273,746,176 $ 42.85 Mixed-Use Portfolio Retail Portion Location Year Built/ Renovated Net Rentable Square Feet Percent Leased Annualized Base Rent Annualized Base Rent Per Leased Square Foot Waikiki Beach Walk—Retail Honolulu, HI 2006 93,925 90.5 % $ 10,004,777 $ 117.70 Hotel Portion Location Year Built/ Renovated Units Average Occupancy Average Daily Rate Revenue per Available Room Waikiki Beach Walk—Embassy Suites TM Honolulu, HI 2008/2020 369 85.9 % $ 370.96 $ 318.61 37 Multifamily Portfolio Property Location Year Built/ Renovated Units Percentage Leased Annualized Base Rent Average Monthly Base Rent per Leased Unit Loma Palisades San Diego, CA 1958/2022 548 96.0 % $ 17,699,328 $ 2,804 Imperial Beach Gardens Imperial Beach, CA 1959/2023 160 93.1 4,926,204 2,756 Mariner’s Point Imperial Beach, CA 1986 88 94.3 2,393,256 2,403 Santa Fe Park RV Resort (10) San Diego, CA 1971/2008 124 70.2 1,646,532 1,576 Pacific Ridge Apartments San Diego, CA 2013 533 97.0 24,201,228 3,901 Hassalo on Eighth - Multifamily (9) Portland, OR 2015 657 87.4 11,496,168 1,668 Total / Weighted Average Multifamily 2,110 91.8 % $ 62,362,716 $ 2,683 (1) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) under commenced leases for the month ended December 31, 2024 by 12.
However, changes in rental income associated with individual signed leases on comparable spaces may be positive or negative, and we can provide no assurance that the rents on new leases will continue to increase at the above disclosed levels, if at all. 38 The lease expirations for our multifamily portfolio and the hotel portion of our mixed-use portfolio are excluded from this table because multifamily unit leases generally have lease terms ranging from seven to fifteen months, with a majority having twelve-month lease terms, and because rooms in the hotel are rented on a nightly basis.
However, changes in rental income associated with individual signed leases on comparable spaces may be positive or negative, and we can provide no assurance that the rents on new leases will continue to increase at the above disclosed levels, if at all. 41 The lease expirations for our multifamily portfolio and the hotel portion of our mixed-use portfolio are excluded from this table because multifamily unit leases generally have lease terms ranging from seven to fifteen months, with a majority having twelve-month lease terms, and because rooms in the hotel are rented on a nightly basis.
Net rentable square footage may be adjusted from the prior period to reflect re-measurement of leased space at the properties. • Percentage leased for each of our retail and office properties and the retail portion of the mixed-use property is calculated as square footage under leases as of December 31, 2023, divided by net rentable square feet, expressed as a percentage.
Net rentable square footage may be adjusted from the prior period to reflect re-measurement of leased space at the properties. • Percentage leased for each of our retail and office properties and the retail portion of the mixed-use property is calculated as square footage under leases as of December 31, 2024, divided by net rentable square feet, expressed as a percentage.
Annualized base rent per leased square foot is calculated by dividing annualized base rent, by square footage under lease as of December 31, 2023. In the case of triple net or modified gross leases, annualized base rent does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses.
Annualized base rent per leased square foot is calculated by dividing annualized base rent, by square footage under lease as of December 31, 2024. In the case of triple net or modified gross leases, annualized base rent does not include tenant reimbursements for real estate taxes, insurance, common area or other operating expenses.
Average daily rate represents the average rate paid for the units sold and is calculated by dividing the total room revenue (i.e., excluding food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services) for the 12-month period ended December 31, 2023, by the number of units sold.
Average daily rate represents the average rate paid for the units sold and is calculated by dividing the total room revenue (i.e., excluding food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services) for the 12-month period ended December 31, 2024, by the number of units sold.
(2) This property contains 422,426 net rentable square feet consisting of The Landmark at One Market (378,206 net rentable square feet) as well as a separate long-term leasehold interest in approximately 44,220 net rentable square feet of space located in an adjacent six-story leasehold known as the Annex.
(3) This property contains 422,426 net rentable square feet consisting of The Landmark at One Market (378,206 net rentable square feet) as well as a separate long-term leasehold interest in approximately 44,220 net rentable square feet of space located in an adjacent six-story leasehold known as the Annex.
Percentage leased for our multifamily properties is calculated as total units rented as of December 31, 2023, divided by total units available, expressed as a percentage. • Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents, before abatements) for the month ended December 31, 2023, by 12.
Percentage leased for our multifamily properties is calculated as total units rented as of December 31, 2024, divided by total units available, expressed as a percentage. • Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents, before abatements) for the month ended December 31, 2024, by 12.
(2) Includes the retail portion related to the mixed-use property. Segment Diversification The following table sets forth information regarding the total property operating income for each of our segments for the year ended December 31, 2023 (dollars in thousands).
(2) Includes the retail portion related to the mixed-use property. Segment Diversification The following table sets forth information regarding the total property operating income for each of our segments for the year ended December 31, 2024 (dollars in thousands).
The following table sets forth information regarding the 25 tenants with the greatest annualized base rent for our combined office, retail and retail portion of our mixed-use property portfolios as of December 31, 2023.
The following table sets forth information regarding the 25 tenants with the greatest annualized base rent for our combined office, retail and retail portion of our mixed-use property portfolios as of December 31, 2024.
Revenue per available room, or RevPAR, represents the total unit revenue per total available units for the 12-month period ended December 31, 2023 and is calculated by multiplying average occupancy by the average daily rate.
Revenue per available room, or RevPAR, represents the total unit revenue per total available units for the 12-month period ended December 31, 2024 and is calculated by multiplying average occupancy by the average daily rate.
ITEM 2. PROPERTIES Our Portfolio As of December 31, 2023, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel.
ITEM 2. PROPERTIES Our Portfolio As of December 31, 2024, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.3 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel.
The net rentable square feet included in such office leases is generally determined consistently with the Building Owners and Managers Association, or BOMA, 2010 measurement guidelines.
The net rentable square feet included in such office leases is generally determined consistently with the Building Owners and Managers Association, or BOMA, 2017 measurement guidelines.
Additionally, as of December 31, 2023, we owned land at three of our properties that we classified as held for development or construction in progress.
Additionally, as of December 31, 2024, we owned land at three of our properties that we classified as held for development or construction in progress.
(2) Name withheld at tenant's request. 37 Geographic Diversification Our properties are located in Southern California, Northern California, Washington, Oregon, Texas and Hawaii. The following table shows the number of properties, the net rentable square feet and the percentage of total portfolio net rentable square footage in each region as of December 31, 2023.
(2) Name withheld at tenant's request. 40 Geographic Diversification Our properties are located in Southern California, Northern California, Washington, Oregon, Texas and Hawaii. The following table shows the number of properties, the net rentable square feet and the percentage of total portfolio net rentable square footage in each region as of December 31, 2024.
The square footage of available space excludes the space from 6 leases that terminated on December 31, 2023. In 2024, we expect a similar level of leasing activity for new and expiring leases compared to prior years with overall positive increases in rental income.
The square footage of available space excludes the space from 16 leases that terminated on December 31, 2024. In 2025, we expect a similar level of leasing activity for new and expiring leases compared to prior years with overall positive increases in rental income.
The square footage under lease includes leases which may not have commenced as of December 31, 2023.
The square footage under lease includes leases which may not have commenced as of December 31, 2024.
Total abatements for leases in effect as of December 31, 2023 for our multifamily portfolio equaled approximately $0.5 million for the year ended December 31, 2023. • Units represent the total number of units available for sale or rent at December 31, 2023. • Average occupancy represents the percentage of available units that were sold during the 12-month period ended December 31, 2023, and is calculated by dividing the number of units sold by the product of the total number of units and the total number of days in the period.
Total abatements for leases in effect as of December 31, 2024 for our multifamily portfolio equaled approximately $1.7 million for the year ended December 31, 2024. • Units represent the total number of units available for sale or rent at December 31, 2024. • Average occupancy represents the percentage of available units that were sold during the 12-month period ended December 31, 2024, and is calculated by dividing the number of units sold by the product of the total number of units and the total number of days in the period.
Only one tenant or affiliated group of tenants accounted for more than 9.3% of our annualized base rent as of December 31, 2023 for our office, retail and retail portion of our mixed-use property portfolio.
Only one tenant or affiliated group of tenants accounted for more than 9.5% of our annualized base rent as of December 31, 2024 for our office, retail and retail portion of our mixed-use property portfolio.
Total abatements for leases in effect as of December 31, 2023 for our retail and office portfolio equaled approximately $7.1 million for the year ended December 31, 2023. Total abatements for leases in effect as of December 31, 2023 for our mixed-use portfolio equaled approximately $0.1 million for the year ended December 31, 2023.
Total abatements for leases in effect as of December 31, 2024 for our retail and office portfolio equaled approximately $10.3 million for the year ended December 31, 2024. Total abatements for leases in effect as of December 31, 2024 for our mixed-use portfolio equaled approximately $0.1 million for the year ended December 31, 2024.
RevPAR does not include food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services. • Average monthly base rent per leased unit represents the average monthly base rent per leased units as of December 31, 2023. 36 Tenant Diversification At December 31, 2023, our operating portfolio had approximately 796 leases with office and retail tenants, of which 6 expired on December 31, 2023 and 9 had not yet commenced as of such date.
RevPAR does not include food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services. • Average monthly base rent per leased unit represents the average monthly base rent per leased units as of December 31, 2024. 39 Tenant Diversification At December 31, 2024, our operating portfolio had approximately 798 leases with office and retail tenants, of which 16 expired on December 31, 2024 and 22 had not yet commenced as of such date.
Our residential properties had 1,843 leases with residential tenants at December 31, 2023, excluding Santa Fe Park RV Resort. The retail portion of our mixed-use property had approximately 63 leases with retailers.
Our residential properties had 1,849 leases with residential tenants at December 31, 2024, excluding Santa Fe Park RV Resort. The retail portion of our mixed-use property had approximately 66 leases with retailers.
Retail portfolio leases signed but not commenced of 3,264, 1,200, and 27,037 square feet are expected to commence during the first, second and third quarters of 2024, respectively. (b) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) for signed but not commenced leases as of December 31, 2023 by 12.
Retail portfolio leases signed but not commenced of 1,898, 4,374, and 4,966 square feet are expected to commence during the first, second, and fourth quarters of 2025, respectively. (b) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) for signed but not commenced leases as of December 31, 2024 by 12.
Tenant Property(ies) Lease Expiration Total Leased Square Feet Rentable Square Feet as a Percentage of Total Annualized Base Rent (1) Annualized Base Rent as a Percentage of Total Google LLC The Landmark at One Market 12/31/2029 253,198 3.5 % $ 26,420,853 9.3 % LPL Holdings, Inc. La Jolla Commons 4/30/2029 421,001 5.8 19,886,757 7.0 Autodesk, Inc.
Tenant Property(ies) Lease Expiration Total Leased Square Feet Rentable Square Feet as a Percentage of Total Annualized Base Rent (1) Annualized Base Rent as a Percentage of Total Google LLC The Landmark at One Market 12/31/2029 253,198 3.5 % $ 27,117,548 9.5 % LPL Holdings, Inc. La Jolla Commons 4/30/2029 421,001 5.8 20,467,738 7.2 Autodesk, Inc.
The annualized base rent for La Jolla Commons has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $35,743,797 to our estimate of annual triple net operating expenses of $10,507,904 for an estimated annualized base rent on a modified gross lease basis of $46,251,701 for La Jolla Commons. b.
The annualized base rent for La Jolla Commons has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $36,379,330 to our estimate of annual triple net operating expenses of $10,151,328 for an estimated annualized base rent on a modified gross lease basis of $46,530,658 for La Jolla Commons. b.
The Landmark at One Market 12/31/2027 12/31/2028 138,615 1.9 13,670,631 4.8 Smartsheet, Inc. City Center Bellevue 12/31/2026 4/30/2029 123,041 1.7 6,998,327 2.5 Illumina, Inc.
The Landmark at One Market 12/31/2027 12/31/2028 138,615 1.9 13,330,960 4.7 Smartsheet, Inc. City Center Bellevue 12/31/2026 4/30/2029 123,041 1.7 7,168,221 2.5 Illumina, Inc.
The annualized base rent for Eastgate Office Park has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $4,656,039 to our estimate of annual triple net operating expenses of $1,819,424 for an estimated annualized base rent on a modified gross lease basis of $6,475,463 for Eastgate Office Park. c.
The annualized base rent for 14Acres has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $4,815,832 to our estimate of annual triple net operating expenses of $1,984,718 for an estimated annualized base rent on a modified gross lease basis of $6,800,550 for 14Acres. c.
Segment Number of Properties Property Operating Income Percentage of Property Operating Income Office 12 $ 146,517 52.8 % Retail 12 73,327 26.5 % Mixed-Use 1 33,805 12.2 % Multifamily 6 23,558 8.5 % Total 31 $ 277,207 100.0 % Lease Expirations The following table sets forth a summary schedule of the lease expirations for leases in place as of December 31, 2023, plus available space, for each of the ten calendar years beginning January 1, 2024 at the properties in our retail portfolio, office portfolio and the retail portion of our mixed-use portfolio.
Segment Number of Properties Property Operating Income Percentage of Property Operating Income Office 12 $ 153,544 52.9 % Retail 12 76,532 26.4 % Mixed-Use 1 36,583 12.6 % Multifamily 6 23,469 8.1 % Total 31 $ 290,128 100.0 % Lease Expirations The following table sets forth a summary schedule of the lease expirations for leases in place as of December 31, 2024, plus available space, for each of the ten calendar years beginning January 1, 2025 at the properties in our retail portfolio, office portfolio and the retail portion of our mixed-use portfolio.
The annualized base rent for Corporate Campus East III has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $4,508,259 to our estimate of annual triple net operating expenses of $1,745,372 for an estimated annualized base rent on a modified gross lease basis of $6,253,631 for Corporate Campus East III. d.
The annualized base rent for Timber Ridge has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $4,541,907 to our estimate of annual triple net operating expenses of $1,929,104 for an estimated annualized base rent on a modified gross lease basis of $6,471,011 for Timber Ridge. d.
Region Number of Properties Net Rentable Square Feet Percentage of Net Rentable Square Feet (1) Southern California 10 2,912,752 40.2 % Northern California 4 1,231,010 17.0 Washington 4 1,032,683 14.3 Oregon 3 956,828 13.2 Texas 1 588,148 8.1 Hawaii (2) 3 523,643 7.2 Total 25 7,245,064 100.0 % (1) Percentage of Net Rentable Square Feet is calculated based on the total net rentable square feet available in our retail portfolio, office portfolio and the retail portion of our mixed-use portfolio.
Region Number of Properties Net Rentable Square Feet Percentage of Net Rentable Square Feet (1) Southern California 10 2,917,507 40.2 % Northern California 4 1,231,010 16.9 Washington 4 1,028,470 14.2 Oregon 3 975,139 13.4 Texas 1 588,148 8.1 Hawaii (2) 3 524,429 7.2 Total 25 7,264,703 100.0 % (1) Percentage of Net Rentable Square Feet is calculated based on the total net rentable square feet available in our retail portfolio, office portfolio and the retail portion of our mixed-use portfolio.
The annualized base rent for Bel-Spring 520 has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $2,140,936 to our estimate of annual triple net operating expenses of $848,087 for an estimated annualized base rent on a modified gross lease basis of $2,989,023 for Bel-Spring 520.
The annualized base rent for Timber Springs has been adjusted for this presentation to reflect that the contractual triple net leases were instead structured as modified gross leases, by adding the contractual annualized triple net base rent of $1,889,523 to our estimate of annual triple net operating expenses of $736,675 for an estimated annualized base rent on a modified gross lease basis of $2,626,198 for Timber Springs.
We currently lease the Annex from an affiliate of the Paramount Group pursuant to a long-term master lease effective through June 30, 2026, which we have the option to extend until 2031 pursuant to one remaining five-year extension option.
We currently lease the Annex from an affiliate of the Paramount Group pursuant to a long-term master lease effective through June 30, 2026, which we have the option to extend until 2031 pursuant to one remaining five-year extension option. (4) 14Acres was formerly known as Eastgate Office Park. (5) Timber Ridge was formerly known as Corporate Campus East III.
(4) Net rentable square feet at certain of our retail properties includes square footage leased pursuant to ground leases, as described in the following table: Property Number of Ground Leases Square Footage Leased Pursuant to Ground Leases Aggregate Annualized Base Rent Carmel Mountain Plaza 5 17,607 $ 974,581 South Bay Marketplace 1 2,824 $ 114,552 Del Monte Center 1 212,500 $ 96,000 Alamo Quarry Market 3 20,694 $ 423,455 (5) The Hassalo on Eighth property is comprised of three multifamily buildings, each with a ground floor retail component: Velomor, Aster Tower and Elwood. 35 (6) The Santa Fe Park RV Resort is subject to seasonal variation, with higher rates of occupancy occurring during the summer months.
(c) Pro forma annualized base rent is calculated by dividing annualized base rent for commenced leases and for signed but not commenced leases as of December 31, 2024, by square footage under lease as of December 31, 2024. 38 (8) Net rentable square feet at certain of our retail properties includes square footage leased pursuant to ground leases, as described in the following table: Property Number of Ground Leases Square Footage Leased Pursuant to Ground Leases Aggregate Annualized Base Rent Carmel Mountain Plaza 5 17,607 $ 1,028,160 South Bay Marketplace 1 2,824 $ 114,552 Del Monte Center 1 212,500 $ 96,000 Alamo Quarry Market 3 20,694 $ 423,455 (9) The Hassalo on Eighth property is comprised of three multifamily buildings, each with a ground floor retail component: Velomor, Aster Tower and Elwood.
The number of units at the Santa Fe Park RV Resort includes 120 RV spaces and four apartments.
(10) The Santa Fe Park RV Resort is subject to seasonal variation, with higher rates of occupancy occurring during the summer months. The number of units at the Santa Fe Park RV Resort includes 120 RV spaces and four apartments.
(3) Lease data for signed but not commenced leases as of December 31, 2023 is in the following table: Leased Square Feet Annualized Base Pro Forma Annualized Under Signed But Annualized Rent per Base Rent per Not Commenced Leases (a) Base Rent (b) Leased Square Foot (b) Leased Square Foot (c) Office Portfolio $ 14,214 $ 687,781 $ 48.39 $ 56.37 Retail Portfolio 31,501 748,980 $ 23.78 $ 26.71 Total Retail and Office Portfolio $ 45,715 $ 1,436,761 $ 31.43 $ 42.87 (a) Office portfolio leases signed but not commenced of 7,016 and 7,198 square feet are expected to commence during the first and second quarters of 2024, respectively.
(7) Lease data for signed but not commenced leases as of December 31, 2024 is in the following table: Leased Square Feet Annualized Base Pro Forma Annualized Under Signed But Annualized Rent per Base Rent per Not Commenced Leases (a) Base Rent (b) Leased Square Foot (b) Leased Square Foot (c) Office Portfolio $ 73,609 $ 3,381,430 $ 45.94 $ 56.92 Retail Portfolio 11,238 767,399 $ 68.29 $ 27.62 Total Retail and Office Portfolio $ 84,847 $ 4,148,829 $ 48.90 $ 43.51 (a) Office portfolio leases signed but not commenced of 44,374, 8,764, and 20,471 are expected to commence during the first and second quarters of 2025, and the first quarter of 2026, respectively.
Year of Lease Expiration Square Footage of Expiring Leases Percentage of Portfolio Net Rentable Square Feet Annualized Base Rent (1) Percentage of Portfolio Annualized Base Rent Annualized Base Rent Per Leased Square Foot (2) Available 749,153 10.2 % $ — — % $ — Month to Month 87,179 1.2 1,190,762 0.4 13.66 2024 511,728 7.1 23,470,529 8.8 45.87 2025 648,514 9.0 23,958,594 8.9 36.94 2026 699,555 9.7 28,413,457 10.6 40.62 2027 865,844 12.0 36,508,531 13.6 42.17 2028 1,142,216 15.8 40,323,290 15.0 35.30 2029 1,231,670 17.0 64,575,137 24.1 52.43 2030 320,141 4.4 13,160,821 4.9 41.11 2031 327,884 4.5 12,399,549 4.6 37.82 2032 210,502 2.9 6,828,363 2.5 32.44 2033 116,966 1.6 6,103,288 2.3 52.18 Thereafter 286,961 4.0 11,219,456 4.3 39.10 Signed Leases Not Commenced 46,751 0.6 — — — Total: 7,245,064 100.0 % $ 268,151,777 100.0 % $ 37.01 (1) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) for the month ended December 31, 2023 for the leases expiring during the applicable period, by 12.
Year of Lease Expiration Square Footage of Expiring Leases Percentage of Portfolio Net Rentable Square Feet Annualized Base Rent (1) Percentage of Portfolio Annualized Base Rent Annualized Base Rent Per Leased Square Foot (2) Available 792,263 10.9 % $ — — % $ — Month to Month 106,848 1.5 1,065,424 0.4 9.97 2025 519,137 7.1 20,270,482 7.5 39.05 2026 658,869 9.1 27,756,754 10.3 42.13 2027 909,297 12.5 39,296,727 14.6 43.22 2028 1,298,243 17.9 46,517,500 17.3 35.83 2029 1,315,088 18.1 70,684,509 26.3 53.75 2030 422,622 5.8 17,152,763 6.4 40.59 2031 376,707 5.2 15,211,002 5.7 40.38 2032 193,731 2.7 6,646,566 2.5 34.31 2033 119,422 1.6 6,117,646 2.3 51.23 2034 266,020 3.7 11,070,436 4.1 41.62 Thereafter 199,466 2.7 7,159,319 4.3 35.89 Signed Leases Not Commenced 86,990 1.2 — — — Total: 7,264,703 100.0 % $ 268,949,128 100.0 % $ 37.02 (1) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) for the month ended December 31, 2024 for the leases expiring during the applicable period, by 12.
La Jolla Commons 10/31/2027 73,176 1.0 4,770,535 1.7 VMware, Inc City Center Bellevue 3/31/2028 75,000 1.0 4,559,084 1.6 Lowe's Waikele Center 5/31/2028 155,000 2.1 4,092,000 1.4 Clearesult Operating, LLC First & Main 4/30/2025 101,848 1.4 3,483,504 1.2 Industrious City Center Bellevue 4/30/2033 3/31/2034 55,256 0.8 3,205,289 1.1 State of Oregon: Department of Environmental Quality Lloyd Portfolio 10/31/2031 87,787 1.2 3,023,074 1.1 Top technology tenant (2) La Jolla Commons 8/31/2030 40,800 0.6 2,521,440 0.9 Genentech, Inc Lloyd Portfolio 10/31/2026 66,852 0.9 2,407,761 0.9 MEI Pharma, Inc.
La Jolla Commons 10/31/2027 73,176 1.0 4,937,503 1.7 VMware, Inc City Center Bellevue 3/31/2028 75,000 1.0 4,673,061 1.6 Lowe's Waikele Center 5/31/2028 155,000 2.1 4,092,000 1.4 Clearesult Operating, LLC First & Main 4/30/2025 101,848 1.4 3,588,009 1.3 Industrious City Center Bellevue 4/30/2033 3/31/2034 55,256 0.8 3,301,447 1.2 State of Oregon: Department of Environmental Quality Lloyd Portfolio 10/31/2031 87,787 1.2 3,113,766 1.1 Top technology tenant (2) Del Monte Center La Jolla Commons 1/31/2028 8/31/2030 47,826 0.7 2,813,083 1.0 Genentech, Inc Lloyd Portfolio 10/31/2026 66,852 0.9 2,479,993 0.9 Internal Revenue Service First & Main 8/31/2030 63,648 0.9 2,189,700 0.8 Sprouts Farmers Market Solana Beach Towne Centre Geary Marketplace Carmel Mountain Plaza 6/30/2029 9/30/2032 3/31/2035 71,431 1.0 2,174,838 0.8 Perkins Coie, LLP Torrey Reserve Campus 12/31/2028 36,980 0.5 2,032,036 0.7 Veterans Benefits Administration First & Main 8/31/2030 73,001 1.0 1,997,006 0.7 Troutman Pepper Locke, LLP First & Main Torrey Reserve Campus 1/31/2031 3/31/2035 32,380 0.4 1,848,457 0.7 Marshalls Carmel Mountain Plaza Solana Beach Towne Centre 1/31/2029 1/31/2035 68,055 0.9 1,822,561 0.6 Nordstrom Rack Carmel Mountain Plaza Alamo Quarry Market 9/30/2027 10/31/2027 69,047 1.0 1,804,269 0.6 US Bank La Jolla Commons Lomas Sante Fe Plaza 8/31/2027 8/31/2027 40,858 0.6 1,776,987 0.6 Databricks, Inc.
Removed
(c) Pro forma annualized base rent is calculated by dividing annualized base rent for commenced leases and for signed but not commenced leases as of December 31, 2023, by square footage under lease as of December 31, 2023.
Added
(2) Data for La Jolla Commons does not include La Jolla Commons - Tower III, which remains under development. However, as of December 31, 2024, 38,130 out of 206,231 rentable square feet, or 18.5%, of La Jolla Commons - Tower III has been leased.
Removed
Torrey Reserve Campus 11/30/2029 45,088 0.6 2,334,532 0.8 PIMCO Solana Crossing La Jolla Commons 5/12/2024 3/31/2034 38,302 0.5 2,304,262 0.8 Internal Revenue Service First & Main 8/31/2030 63,648 0.9 2,189,700 0.8 Sprouts Farmers Market Carmel Mountain Plaza, Solana Beach Towne Centre, Geary Marketplace 3/31/2025 6/30/2029 9/30/2032 71,431 1.0 2,121,187 0.8 California Bank & Trust Torrey Reserve Campus 2/29/2024 2/28/2034 34,731 0.5 2,095,596 0.7 WeWork Lloyd Portfolio 1/31/2032 55,395 0.8 2,058,075 0.7 Veterans Benefits Administration First & Main 8/31/2030 73,001 1.0 1,997,006 0.7 Perkins Coie, LLP Torrey Reserve Campus 12/31/2028 36,980 0.5 1,972,850 0.7 Troutman Sanders, LLP Torrey Reserve, First & Main 3/31/2025 4/30/2025 33,812 0.5 1,852,641 0.7 Nordstrom Rack Carmel Mountain Plaza, Alamo Quarry Market 9/30/2027 10/31/2027 69,047 1.0 1,804,269 0.6 Marshalls Solana Beach Towne Centre, Carmel Mountain Plaza 1/31/2025 1/31/2029 68,055 0.9 1,728,228 0.6 US Bank La Jolla Commons, Lomas Sante Fe Plaza 8/31/2027 40,858 0.6 1,701,942 0.6 Banner Corporation Corporate Campus East III 10/31/2027 46,572 0.6 1,630,020 0.6 TOTAL 2,268,494 31.3 % $ 120,829,563 42.6 % (1) Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents before abatements) for the month ended December 31, 2023 for the applicable lease(s) by (ii) 12.
Added
(6) Timber Springs was formerly known as Bel-Spring 520.
Added
City Center Bellevue 11/30/2027 1/31/2028 45,344 0.6 1,612,897 0.6 Vons Lomas Santa Fe Plaza 12/31/2027 49,895 0.7 1,609,086 0.6 PIMCO La Jolla Commons 3/31/2034 24,464 0.3 1,585,267 0.6 Banner Corporation Timber Ridge 10/31/2027 43,766 0.6 1,575,576 0.6 At Home Stores Carmel Mountain Plaza 7/31/2029 107,870 1.5 1,545,367 0.5 TOTAL 2,325,339 32.0 % $ 120,657,376 42.5 % (1) Annualized base rent is calculated by multiplying (i) base rental payments (defined as cash base rents before abatements) for the month ended December 31, 2024 for the applicable lease(s) by (ii) 12.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe may be subject to ongoing litigation and we expect to otherwise be party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 39 PART II
Biggest changeWe may be subject to ongoing litigation and we expect to otherwise be party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 42 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−1 removed3 unchanged
Biggest changeITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES American Assets Trust, Inc. Market Information and Holders Shares of American Assets Trust, Inc.'s common stock are listed on the NYSE under the symbol “AAT”. On February 8, 2024, we had 80 stockholders of record of our common stock.
Biggest changeITEM 5. MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES American Assets Trust, Inc. Market Information and Holders Shares of American Assets Trust, Inc.'s common stock are listed on the NYSE under the symbol “AAT”. On February 4, 2025, we had 80 stockholders of record of our common stock.
Equity Compensation Plan Information Information about our equity compensation plans is incorporated by reference in Item 12 of Part III of this annual report on Form 10-K. 40 Stock Performance Graph The information below shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act.
Equity Compensation Plan Information Information about our equity compensation plans is incorporated by reference in Item 12 of Part III of this annual report on Form 10-K. 43 Stock Performance Graph The information below shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act.
Dividend amounts depend on our available cash flows, financial condition and capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as our board of directors deems relevant. Recent Sales of Unregistered Equity Securities No unregistered equity securities were sold by us during 2023.
Dividend amounts depend on our available cash flows, financial condition and capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as our board of directors deems relevant. Recent Sales of Unregistered Equity Securities No unregistered equity securities were sold by us during 2024.
The graph below compares the cumulative total return on the company’s common stock with that of the Standard & Poor's 500 Stock Index, or S&P 500 Index, and an industry peer group, S&P 600 Real Estate Index from December 31, 2018 through December 31, 2023.
The graph below compares the cumulative total return on the company’s common stock with that of the Standard & Poor's 500 Stock Index, or S&P 500 Index, and an industry peer group, S&P 600 Real Estate Index from December 31, 2019 through December 31, 2024.
The comparisons in the graph are provided in accordance with the SEC disclosure requirements and are not intended to forecast or be indicative of the future performance of American Assets Trust, Inc. shares of common stock. 41 ITEM 6. [RESERVED] 42
The comparisons in the graph are provided in accordance with the SEC disclosure requirements and are not intended to forecast or be indicative of the future performance of American Assets Trust, Inc. shares of common stock. 44 ITEM 6. [RESERVED] 45
Purchases of Equity Securities by the Issuer and Affiliated Purchasers No equity securities were purchased by us during 2023.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers No equity securities were purchased by us during 2024.
As of February 8, 2024, we had 20 holders of record of American Assets Trust, L.P.'s operating partnership units, including American Assets Trust, Inc.
As of February 4, 2025, we had 20 holders of record of American Assets Trust, L.P.'s operating partnership units, including American Assets Trust, Inc.
Removed
We changed our industry index comparison to be consistent with the index comparison in our long-term equity incentive awards and also due to the change in our overall portfolio with the acquisition, development and redevelopment of multiple office projects.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

120 edited+22 added−28 removed128 unchanged
Biggest changeSegment capital expenditures for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands): Year Ended December 31, 2023 Segment Tenant Improvements and Leasing Commissions Maintenance Capital Expenditures Total Tenant Improvements, Leasing Commissions and Maintenance Capital Expenditures Redevelopment and Expansions New Development Total Capital Expenditures Office Portfolio $ 15,010 $ 21,665 $ 36,675 $ 7,251 $ 27,410 $ 71,336 Retail Portfolio 5,668 3,188 8,856 — 8,856 Multifamily Portfolio — 5,902 5,902 — 5,902 Mixed-Use Portfolio 512 3,281 3,793 — 3,793 Total $ 21,190 $ 34,036 $ 55,226 $ 7,251 $ 27,410 $ 89,887 Year Ended December 31, 2022 Segment Tenant Improvements and Leasing Commissions Maintenance Capital Expenditures Total Tenant Improvements, Leasing Commissions and Maintenance Capital Expenditures Redevelopment and Expansions New Development Total Capital Expenditures Office Portfolio $ 20,717 $ 8,558 $ 29,275 $ 20,502 $ 52,666 $ 102,443 Retail Portfolio 6,631 5,527 12,158 19 — 12,177 Multifamily Portfolio — 4,801 4,801 88 — 4,889 Mixed-Use Portfolio 350 1,296 1,646 — — 1,646 Total $ 27,698 $ 20,182 $ 47,880 $ 20,609 $ 52,666 $ 121,155 49 The decrease in tenant improvements and leasing commissions for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily related to tenant buildouts at The Landmark at One Market, City Center Bellevue and Alamo Quarry Market completed in the year ended December 31, 2022, partially offset by new tenant buildouts at Torrey Point, Carmel Mountain Plaza and Del Monte Center during the year ended December 31, 2023.
Biggest changeWe capitalized interest costs related to both development and redevelopment activities combined of $7.5 million and $7.8 million for the years ended December 31, 2024 and 2023, respectively. 52 Segment capital expenditures for the years ended December 31, 2024 and 2023 are as follows (dollars in thousands): Year Ended December 31, 2024 Segment Tenant Improvements and Leasing Commissions Capital Expenditures Total Tenant Improvements, Leasing Commissions and Capital Expenditures Redevelopment and Expansions New Development Total Capital Expenditures Office Portfolio $ 23,048 $ 18,329 $ 41,377 $ 1,979 $ 13,364 $ 56,720 Retail Portfolio 9,158 4,410 13,568 — — 13,568 Multifamily Portfolio — 5,637 5,637 — — 5,637 Mixed-Use Portfolio 425 1,057 1,482 — — 1,482 Total $ 32,631 $ 29,433 $ 62,064 $ 1,979 $ 13,364 $ 77,407 Year Ended December 31, 2023 Segment Tenant Improvements and Leasing Commissions Capital Expenditures Total Tenant Improvements, Leasing Commissions and Capital Expenditures Redevelopment and Expansions New Development Total Capital Expenditures Office Portfolio $ 15,010 $ 21,665 $ 36,675 $ 7,251 $ 27,410 $ 71,336 Retail Portfolio 5,668 3,188 8,856 — — 8,856 Multifamily Portfolio — 5,902 5,902 — — 5,902 Mixed-Use Portfolio 512 3,281 3,793 — — 3,793 Total $ 21,190 $ 34,036 $ 55,226 $ 7,251 $ 27,410 $ 89,887 The increase in tenant improvements and leasing commissions for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily related to tenant buildouts at La Jolla Commons, Lloyd Portfolio, Del Monte Center, City Center Bellevue and Alamo Quarry Market during the year ended December 31, 2024, partially offset by tenant buildouts completed at Torrey Reserve Campus, Torrey Point and Carmel Mountain Plaza during the year ended December 31, 2023.
Our significant accounting policies are more fully described in the notes to the consolidated financial statements included elsewhere in this report; however, the most critical accounting policies, which involve the use of estimates and assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows: 46 Revenue Recognition and Accounts Receivable Our leases with tenants are classified as operating leases.
Our significant accounting policies are more fully described in the notes to the consolidated financial statements included elsewhere in this report; however, the most critical accounting policies, which involve the use of estimates and assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows: Revenue Recognition and Accounts Receivable Our leases with tenants are classified as operating leases.
FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. FFO is a supplemental non-GAAP financial measure.
FFO represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses, real estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. 64 FFO is a supplemental non-GAAP financial measure.
As of December 31, 2023, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel.
As of December 31, 2023, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.3 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel.
For asset acquisitions not meeting the definition of a business, transaction costs are capitalized as part of the acquisition cost. 48 Capitalized Costs Certain external and internal costs directly related to the development and redevelopment of real estate, including pre-construction costs, real estate taxes, insurance, interest, construction costs and salaries and related costs of personnel directly involved, are capitalized.
For asset acquisitions not meeting the definition of a business, transaction costs are capitalized as part of the acquisition cost. Capitalized Costs Certain external and internal costs directly related to the development and redevelopment of real estate, including pre-construction costs, real estate taxes, insurance, interest, construction costs and salaries and related costs of personnel directly involved, are capitalized.
We make assumptions and estimates related to below market lease renewal options, which impact revenue in the period in which the renewal options are exercised and could result in significant increases to revenue if the renewal options are not exercised at which time the related below market lease liabilities would be written off as an increase to revenue.
We make assumptions and estimates related to below market 51 lease renewal options, which impact revenue in the period in which the renewal options are exercised and could result in significant increases to revenue if the renewal options are not exercised at which time the related below market lease liabilities would be written off as an increase to revenue.
Changes in interest rates may affect our success in 43 achieving earnings growth through acquisitions by affecting both the price that must be paid to acquire a property, as well as our ability to economically finance a property acquisition.
Changes in interest rates may affect our success in achieving earnings growth through acquisitions by affecting both the price that must be paid to acquire a property, as well as our ability to economically finance a property acquisition.
(2) Includes the retail portion of the mixed-use property only. 52 The increase in total property revenue was attributable primarily to the factors discussed below. Rental revenues. Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents.
(2) Includes the retail portion of the mixed-use property only. The increase in total property revenue was attributable primarily to the factors discussed below. Rental revenues. Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents.
The company has no obligation to sell the remaining shares available for sale under the 2021 ATM Program. Liquidity and Capital Resources of American Assets Trust, L.P.
The company has no obligation to sell the remaining shares available for sale under the 2021 ATM Program. 61 Liquidity and Capital Resources of American Assets Trust, L.P.
As of December 31, 2023, the company had the capacity to issue up to an additional $250.0 million in shares of common stock under the 2021 ATM Program. Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of the company's common stock and the company's capital needs.
As of December 31, 2024, the company had the capacity to issue up to an additional $250.0 million in shares of common stock under the 2021 ATM Program. Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of the company's common stock and the company's capital needs.
We also derive revenue from tenant recoveries and other property revenues, including parking income, lease termination fees, late fees, storage rents and other miscellaneous property revenues. Office Leases . Our office portfolio included twelve properties with a total of approximately 4.1 million rentable square feet available for lease as of December 31, 2023.
We also derive revenue from tenant recoveries and other property revenues, including parking income, lease termination fees, late fees, storage rents and other miscellaneous property revenues. Office Leases . Our office portfolio included twelve properties with a total of approximately 4.1 million rentable square feet available for lease as of December 31, 2024.
As of December 31, 2023, our portfolio was comprised of twelve office properties; twelve retail shopping centers; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center; and six multifamily properties. Additionally, as of December 31, 2023, we owned land at three of our properties that we classified as held for development or construction in progress.
As of December 31, 2024, our portfolio was comprised of twelve office properties; twelve retail shopping centers; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center; and six multifamily properties. Additionally, as of December 31, 2024, we owned land at three of our properties that we classified as held for development or construction in progress.
Acquired properties are classified to same-store properties once we have owned such properties for the entirety of comparable period(s) and the properties are not under significant development or expansion. Below is a summary of our same-store composition for the years ended December 31, 2023, 2022 and 2021.
Acquired properties are classified to same-store properties once we have owned such properties for the entirety of comparable period(s) and the properties are not under significant development or expansion. Below is a summary of our same-store composition for the years ended December 31, 2024, 2023 and 2022.
The sales of shares of the company's common stock made through the 2021 ATM Program are to be made in “at-the-market” offerings as defined in Rule 415 of the Securities Act. As of December 31, 2023, the company had not issued any shares of common stock under the 2021 ATM Program.
The sales of shares of the company's common stock made through the 2021 ATM Program are to be made in “at-the-market” offerings as defined in Rule 415 of the Securities Act. As of December 31, 2024, the company had not issued any shares of common stock under the 2021 ATM Program.
There was also an increase in rental expenses of $0.3 million at the retail portion of our mixed-use property related to excise taxes, employee costs and facilities expenses. Real Estate Taxes.
There was also an increase in rental expenses of $0.4 million at the retail portion of our mixed-use property related to excise taxes, employee costs and facilities expenses. Real Estate Taxes.
We cease capitalization on the portion substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with any remaining portion under construction. We capitalized external and internal costs related to both development and redevelopment activities combined of $24.0 million and $73.3 million for the years ended December 31, 2023 and 2022, respectively.
We cease capitalization on the portion substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with any remaining portion under construction. We capitalized external and internal costs related to both development and redevelopment activities combined of $16.3 million and $24.0 million for the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2023, the company has determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months.
As of December 31, 2024, the company has determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months.
Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent building improvements. The leases signed in 2023 will typically become effective in 2024, though some may not become effective until 2025.
Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent building improvements. 49 The leases signed in 2024 will typically become effective in 2025, though some may not become effective until 2026.
Additionally, as of December 31, 2023, we owned land at three of our properties that we classified as held for development or construction in progress.
Additionally, as of December 31, 2024, we owned land at three of our properties that we classified as held for development or construction in progress.
As of December 31, 2023, these properties were 86.0% leased. For the year ended December 31, 2023, the office segment contributed 47.1% of our total revenue. Historically, we have leased office properties to tenants primarily on a full service gross or a modified gross basis and to a limited extent on a triple-net lease basis.
As of December 31, 2024, these properties were 85.0% leased. For the year ended December 31, 2024, the office segment contributed 47.1% of our total revenue. Historically, we have leased office properties to tenants primarily on a full service gross or a modified gross basis and to a limited extent on a triple-net lease basis.
The average monthly base rent per leased unit as of December 31, 2023 was $2,619, compared to $2,483 at December 31, 2022. Mixed-Use Property Revenue . Our mixed-use property consists of approximately 94,000 rentable square feet of retail space and a 369-room all-suite hotel.
The average monthly base rent per leased unit as of December 31, 2024 was $2,683, compared to $2,619 at December 31, 2023. Mixed-Use Property Revenue . Our mixed-use property consists of approximately 94,000 rentable square feet of retail space and a 369-room all-suite hotel.
As of December 31, 2022, our operating portfolio was comprised of 30 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel.
As of December 31, 2024, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.3 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel.
Our core markets include San Diego, California; the San Francisco Bay Area, California; Bellevue, Washington; Portland, Oregon, and Oahu, Hawaii. American Assets Trust, Inc., as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.8% of our Operating Partnership as of December 31, 2023.
Our core markets include San Diego, California; the San Francisco Bay Area, California; Bellevue, Washington; Portland, Oregon, and Oahu, Hawaii. American Assets Trust, Inc., as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.9% of our Operating Partnership as of December 31, 2024.
The collectability of receivables is affected by numerous different factors including current economic trends, including the continued impact of COVID-19 on tenant's businesses and changes in tenants' payment patterns, tenant bankruptcies, the status of collectability of current cash rents receivable, tenants' recent and historical financial and operating results, changes in our tenants' credit ratings, communications between our operating personnel and tenants, the extent of security deposits and letters of credits held with respect to tenants, and the ability of the tenant to perform under the terms of their lease agreement when evaluating the adequacy of the allowance for doubtful accounts.
The collectability of receivables is affected by numerous different factors including current economic trends, changes in tenants' payment patterns, tenant bankruptcies, the status of collectability of current cash rents receivable, tenants' recent and historical financial and operating results, changes in our tenants' credit ratings, communications between our operating personnel and tenants, the extent of security deposits and letters of credits held with respect to tenants, and the ability of the tenant to perform under the terms of their lease agreement when evaluating the adequacy of the allowance for doubtful accounts.
We capitalized external and internal costs related to other property improvements combined of $54.2 million and $43.3 million for the years ended December 31, 2023 and 2022, respectively. Interest costs on developments and major redevelopments are capitalized as part of developments and redevelopments not yet placed in service.
We capitalized external and internal costs related to other property improvements combined of $52.2 million and $54.2 million for the years ended December 31, 2024 and 2023, respectively. Interest costs on developments and major redevelopments are capitalized as part of developments and redevelopments not yet placed in service.
There were $7.25 per square foot of retail space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2023. The rental increases associated with comparable spaces generally include all leases signed in arms-length transactions reflecting market leverage between landlords and tenants during the period.
There were $2.68 per square foot of retail space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2024. The rental increases associated with comparable spaces generally include all leases signed in arms-length transactions reflecting market leverage between landlords and tenants during the period.
Food and beverage sales are recognized when the customer has been served or at the time the transaction occurs. Revenue from room rental is included in rental revenue on the statement of comprehensive income. Revenue from other sales and services provided is included in other property income on the statement of comprehensive income.
Food and beverage sales are recognized when the customer has been served or at the time the transaction occurs. Revenue from room rental is included in rental revenue on the statement of comprehensive income.
Our retail portfolio included twelve properties with a total of approximately 3.1 million rentable square feet available for lease as of December 31, 2023. As of December 31, 2023, these properties were 94.3% leased. For the year ended December 31, 2023, the retail segment contributed 23.7%, of our total revenue.
Our retail portfolio included twelve properties with a total of approximately 3.1 million rentable square feet available for lease as of December 31, 2024. As of December 31, 2024, these properties were 94.5% leased. For the year ended December 31, 2024, the retail segment contributed 23.8%, of our total revenue.
A taxable REIT subsidiary is subject to federal and state income taxes. Property Acquisitions and Dispositions 2023 Acquisitions and Dispositions During the year ended December 31, 2023, there were no acquisitions or dispositions. 2022 Acquisitions and Dispositions On March 8, 2022, we acquired Bel-Spring 520 , consisting of an approximately 93,000 square feet, multi-tenant office campus in Bellevue, Washington.
A taxable REIT subsidiary is subject to federal and state income taxes. 54 Property Acquisitions and Dispositions 2024 Acquisitions and Dispositions During the year ended December 31, 2024, there were no acquisitions or dispositions. 2023 Acquisitions and Dispositions During the year ended December 31, 2023, there were no acquisitions or dispositions. 2022 Acquisitions and Dispositions On March 8, 2022, we acquired Timber Springs , consisting of an approximately 93,000 square feet, multi-tenant office campus in Bellevue, Washington.
The percentage leased was as follows for each segment as of December 31, 2023 and 2022: Percentage Leased (1) Year Ended December 31, 2023 2022 Office 86.0 % 88.9 % Retail 94.3 % 93.5 % Multifamily 92.3 % 91.8 % Mixed-Use (2) 95.1 % 93.8 % (1) The percentage leased includes the square footage under lease, including leases which may not have commenced as of December 31, 2023 or December 31, 2022, as applicable.
The percentage leased was as follows for each segment as of December 31, 2024 and 2023: Percentage Leased (1) Year Ended December 31, 2024 2023 Office 85.0 % 86.0 % Retail 94.5 % 94.3 % Multifamily 91.8 % 92.3 % Mixed-Use (2) 90.5 % 95.1 % (1) The percentage leased includes the square footage under lease, including leases which may not have commenced as of December 31, 2024 or December 31, 2023, as applicable.
The decrease in new development expenditures for the year ended December 31, 2023 compared to the year ended December 21, 2022 was primarily related to costs incurred for the development of Tower 3 at La Jolla Commons.
The decrease in new development expenditures for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily related to costs incurred for the development of Tower 3 at La Jolla Commons during the year ended December 31, 2023.
Our multifamily portfolio included six apartment properties, as well as an RV resort, with a total of 2,110 units (including 120 RV spaces) available for lease as of December 31, 2023. As of December 31, 2023, these properties were 92.3% leased. For the year ended December 31, 2023, the multifamily segment contributed 14.0% of our total revenue.
Our multifamily portfolio included six apartment properties, as well as an RV resort, with a total of 2,110 units (including 120 RV spaces) available for lease as of December 31, 2024. As of December 31, 2024, these properties were 91.8% leased. For the year ended December 31, 2024, the multifamily segment contributed 14.3% of our total revenue.
Mixed-use rental expenses increased $4.5 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to an increase of $4.2 million in hotel room expenses, personnel expenses and excise tax expenses at the hotel portion of our mixed-use property during the period.
Mixed-use rental expenses increased $0.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an increase of $0.4 million in hotel room expenses, personnel expenses and excise tax expenses at the hotel portion of our mixed-use property during the period.
Our capital expenditures during the year ending December 31, 2024 will depend upon acquisition opportunities, the level of improvements and redevelopments on existing properties and the timing and cost of development of our held for development and construction in progress properties.
Our capital expenditures for the year ending December 31, 2025 will depend upon acquisition opportunities, the level of improvements and renovations on existing properties and the timing and cost of development of our held for development and construction in progress properties.
Total retail rental revenue increased $3.8 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to new tenant leases signed, scheduled rent increases and tenants previously on alternate rent reverting back to basic monthly rent.
Total retail rental revenue increased $4.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to new tenant leases signed, scheduled rent increases and tenants previously on alternate rent reverting back to basic monthly rent.
NOI is used by investors and our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by (1) the cost of funds of the property owner, (2) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, or (3) general and administrative expenses and other gains and losses that are specific to the property owner.
Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. 63 NOI is used by investors and our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by (1) the cost of funds of the property owner, (2) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, or (3) general and administrative expenses and other gains and losses that are specific to the property owner.
Our properties are located in some of the nation's most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Washington, Oregon and Hawaii, which we believe allow us to take advantage of redevelopment opportunities that enhance our operating performance through renovation, expansion, reconfiguration, and/or retenanting. We evaluate our properties on an ongoing basis to identify these types of opportunities.
Our properties are located in some of the nation's most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Washington, Oregon and Hawaii, which we believe allow us to take advantage of redevelopment opportunities that enhance our operating performance through renovation, expansion, reconfiguration, and/or retenanting.
As of December 31, 2023, the company owned an approximate 78.8% partnership interest in the Operating Partnership. The remaining 21.2% are owned by non-affiliated investors and certain of the company's directors and executive officers.
As of December 31, 2024, the company owned an approximate 78.9% partnership interest in the Operating Partnership. The remaining 21.1% are owned by non-affiliated investors and certain of the company's directors and executive officers.
The following table sets forth a reconciliation of our FFO for the years ended December 31, 2023, 2022 and 2021 to net income, the nearest GAAP equivalent (in thousands, except per share and share data): Year Ended December 31, 2023 2022 2021 Net income $ 64,690 $ 55,877 $ 36,593 Plus: Real estate depreciation and amortization 119,500 123,338 116,306 Funds from operations, as defined by NAREIT $ 184,190 $ 179,215 $ 152,899 Less: Nonforfeitable dividends on restricted stock awards (749) (641) (557) FFO attributable to common stock and units $ 183,441 $ 178,574 $ 152,342 FFO per diluted share/unit $ 2.40 $ 2.34 $ 2.00 Weighted average number of common shares and units, diluted (1) 76,346,772 76,233,814 76,175,004 (1) For the years ended December 31, 2023, 2022 and 2021 the weighted average common shares used to compute FFO per diluted share include unvested restricted stock awards that are subject to time vesting, as the vesting of the restricted stock awards is dilutive in the computation of FFO per diluted shares, but is anti-dilutive for the computation of diluted EPS for the periods.
The following table sets forth a reconciliation of our FFO for the years ended December 31, 2024, 2023 and 2022 to net income, the nearest GAAP equivalent (in thousands, except per share and share data): Year Ended December 31, 2024 2023 2022 Net income $ 72,819 $ 64,690 $ 55,877 Plus: Real estate depreciation and amortization 125,461 119,500 123,338 Funds from operations, as defined by NAREIT $ 198,280 $ 184,190 $ 179,215 Less: Nonforfeitable dividends on restricted stock awards (754) (749) (641) FFO attributable to common stock and units $ 197,526 $ 183,441 $ 178,574 FFO per diluted share/unit $ 2.58 $ 2.40 $ 2.34 Weighted average number of common shares and units, diluted (1) 76,514,433 76,346,772 76,233,814 (1) For the years ended December 31, 2024, 2023 and 2022 the weighted average common shares used to compute FFO per diluted share include unvested restricted stock awards that are subject to time vesting, as the vesting of the restricted stock awards is dilutive in the computation of FFO per diluted shares, but is anti-dilutive for the computation of diluted EPS for the periods.
If the Operating Partnership fails to fulfill certain of its debt requirements, which trigger the company’s guarantee obligations, then the company will be required to fulfill its cash payment commitments under such guarantees. However, the company’s only significant asset is its investment in the Operating Partnership.
If the Operating Partnership fails to fulfill certain of its debt requirements, which trigger the company’s guarantee obligations, then the company will be required to fulfill its cash payment commitments under such guarantees.
We believe the Operating Partnership’s sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured line of credit, are adequate for it to make its distribution payments to the company and, in turn, for the company to make its dividend payments to its stockholders.
However, the company’s only significant asset is its investment in the Operating Partnership. 60 We believe the Operating Partnership’s sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured line of credit, are adequate for it to make its distribution payments to the company and, in turn, for the company to make its dividend payments to its stockholders.
While the amount of future expenditures will depend on numerous factors, we expect expenditures incurred in the year ending December 31, 2024 to decrease from the year ending December 31, 2023 as we expect to reach completion of development activities at La Jolla Commons during the first quarter of 2024.
While the amount of future expenditures will depend on numerous factors, we expect expenditures incurred in the year ending December 31, 2025 to decrease from the year ending December 31, 2024 as we reached completion of the development activities at La Jolla Commons in the year ended December 31, 2024.
Of the leases, 75 represent comparable leases where there was a prior tenant, with an increase of 6.5% in cash basis rent and an increase of 15.4% in straight-line rent compared to the prior leases. Multifamily Leases .
Of the leases, 80 represent comparable leases where there was a prior tenant, with an increase of 4.5% in cash basis rent and an increase of 25.0% in straight-line rent compared to the prior leases. 48 Multifamily Leases .
There were $46.55 per square foot of office space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2023.
There were $25.15 per square foot of office space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2024.
The effective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recorded in other comprehensive income which is included in accumulated other comprehensive income on our consolidated balance sheet and our consolidated statement of equity.
We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recorded in other comprehensive income which is included in accumulated other comprehensive income on our consolidated balance sheet and our consolidated statement of equity.
The increased property operating expenses billed are reflected as operating expenses and amounts recovered from tenants are reflected as rental income in the statements of operations. During the year ended December 31, 2023, we signed 49 office leases for 322,418 square feet with an average rent of $66.42 per square foot during the initial year of the lease term.
The increased property operating expenses billed are reflected as operating expenses and amounts recovered from tenants are reflected as rental income in the statements of operations. During the year ended December 31, 2024, we signed 67 office leases for 398,506 square feet with an average rent of $52.32 per square foot during the initial year of the lease term.
Multifamily property operating income increased $1.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to an overall decrease in average occupancy and increase in average monthly base rent of 90.0% and $2,581, respectively for the year ended December 31, 2023 compared to 92.9% and $2,349, respectively for the year ended December 31, 2022.
Multifamily property operating income increased $2.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an overall increase in average occupancy and monthly base rent of 91.0% and $2,718, respectively for the year ended December 31, 2024 compared to 90.0% and $2,581, respectively for the year ended December 31, 2023.
The purchase price was approximately $45.5 million, less seller credits of approximately $0.1 million of future rent abatement, approximately $0.6 million of contractual tenant improvements and closing costs of approximately $0.1 million. The property was acquired with cash on hand.
The purchase price was approximately $45.5 million, less seller credits of approximately $0.1 million of future rent abatement, approximately $0.6 million of contractual tenant improvements and closing costs of approximately $0.1 million. The property was acquired with cash on hand. During the year ended December 31, 2022, there were no dispositions.
Although our strategy is to hold our properties over the long-term, if our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to fair value and such loss could be material.
Although our strategy is to hold our properties over the long-term, if our strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized to reduce the property to fair value and such loss could be material. No impairment charges were recorded for the years ended December 31, 2024, 2023 or 2022.
The decrease in redevelopment expenditures for the year ended December 31, 2023 compared to the year ended December 31, 2022, was primarily related to the modernization costs of One Beach Street.
The decrease in redevelopment expenditures for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily related to the majority completion of the One Beach Street redevelopment during the year ended December 31, 2023.
New retail leases for comparable spaces were signed for 2,634 square feet at an average rental rate increase of 75.5% on a cash basis and an average rental rate increase of 145.7% on a straight-line basis (due to the modification of prior tenants' rent to cash-basis, which precluded straight-line rent for comparison).
New retail leases for comparable spaces were signed for 9,294 square feet at an average rental rate increase of 16.0% on a cash basis and an average rental rate increase of 669.3% on a straight-line basis (due to the modification of prior tenants' rent to cash-basis, which precluded straight-line rent for comparison).
The following is a reconciliation of our NOI to net income for the years ended December 31, 2023, 2022 and 2021 computed in accordance with GAAP (in thousands): Year Ended December 31, 2023 2022 2021 Net operating income $ 277,207 $ 270,215 $ 246,054 General and administrative (35,960) (32,143) (29,879) Depreciation and amortization (119,500) (123,338) (116,306) Interest expense, net (64,706) (58,232) (58,587) Loss on early extinguishment of debt — — (4,271) Other income (expense), net 7,649 (625) (418) Net income $ 64,690 $ 55,877 $ 36,593 60 Funds from Operations We present FFO because we consider FFO an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results.
The following is a reconciliation of our NOI to net income for the years ended December 31, 2024, 2023 and 2022 computed in accordance with GAAP (in thousands): Year Ended December 31, 2024 2023 2022 Net operating income $ 290,128 $ 277,207 $ 270,215 General and administrative (35,468) (35,960) (32,143) Depreciation and amortization (125,461) (119,500) (123,338) Interest expense, net (74,527) (64,706) (58,232) Other income (expense), net 18,147 7,649 (625) Net income $ 72,819 $ 64,690 $ 55,877 Funds from Operations We present FFO because we consider FFO an important supplemental measure of our operating performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results.
Of the leases, 34 represent comparable leases where there was a prior tenant, with an increase of 2.4% in cash basis rent and an increase of 10.8% in straight-line rent compared to the prior leases. Retail Leases .
Of the leases, 45 represent comparable leases where there was a prior tenant, with an increase of 6.0% in cash basis rent and an increase of 13.0% in straight-line rent compared to the prior leases. Retail Leases .
Property Expenses Total Property Expenses. Total property expenses consist of rental expenses and real estate taxes. Total property expenses increased by $11.5 million, or 8%, to $164.0 million for the year ended December 31, 2023, compared to $152.4 million for the year ended December 31, 2022.
Property Expenses Total Property Expenses. Total property expenses consist of rental expenses and real estate taxes. Total property expenses increased by $3.8 million, or 2%, to $167.7 million for the year ended December 31, 2024, compared to $164.0 million for the year ended December 31, 2023.
Renewals for comparable retail spaces were signed for 365,176 square feet at an average rental rate increase of 5.7% on a cash basis and an increase of 14.7% on a straight-line basis. Tenant improvements and incentives were $30.37 per square foot of retail space for comparable new leases for the twelve months ended December 31, 2023.
Renewals for comparable office spaces were signed for 163,116 square feet at an average rental rate increase of 5.0% on a cash basis and increase of 10.4% on a straight-line basis. Tenant improvements and incentives were $37.05 per square foot of office space for comparable new leases for the twelve months ended December 31, 2024.
New office leases for comparable spaces were signed for 42,739 square feet at an average rental rate increase of 19.9% on a cash basis and an average rental rate increase of 21.8% on a straight-line basis.
New office leases for comparable spaces were signed for 84,435 square feet at an average rental rate increase of 8.0% on a cash basis and an average rental rate increase of 18.5% on a straight-line basis.
Multifamily rental revenue increased $3.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to an overall increase in average monthly base rent of $2,581 for the year ended December 31, 2023, compared to $2,349 for the year ended December 31, 2022.
Multifamily rental revenue increased $3.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an overall increase in average monthly base rent and an increase in occupancy.
Net cash provided by operating activities increased $9.7 million to $188.8 million for the year ended December 31, 2023, compared to $179.1 million for the year ended December 31, 2022.
Net cash provided by operating activities increased $18.4 million to $207.1 million for the year ended December 31, 2024, compared to $188.8 million for the year ended December 31, 2023.
Net cash used in investing activities decreased $76.4 million to $89.9 million for the year ended December 31, 2023, compared to $166.3 million for the year ended December 31, 2022.
Net cash used in investing activities decreased $12.5 million to $77.4 million for the year ended December 31, 2024, compared to $89.9 million for the year ended December 31, 2023.
As of December 31, 2023, the retail portion of the property was 95.1% leased, and for the year ended December 31, 2023, the hotel had an average occupancy of 85.2%. For the year ended December 31, 2023, the mixed-use segment contributed 15.1%, of our total revenue.
As of December 31, 2024, the retail portion of the property was 90.5% leased, and for the year ended December 31, 2024, the hotel had an average occupancy of 85.9%. For the year ended December 31, 2024, the mixed-use segment contributed 14.8%, of our total revenue.
This increase in total property expenses was attributable primarily to the factors discussed below . Rental Expenses. Rental expenses increased $11.2 million, or 10%, to $118.8 million for the year ended December 31, 2023, compared to $107.6 million for the year ended December 31, 2022.
This increase in total property expenses was attributable primarily to the factors discussed below . Rental Expenses. Rental expenses increased $4.7 million, or 4%, to $123.5 million for the year ended December 31, 2024, compared to $118.8 million for the year ended December 31, 2023.
During the year ended December 31, 2023, we signed 86 retail leases for 405,144 square feet with an average rent of $34.18 per square foot during the initial year of the lease term, including leases signed for the retail portion of our mixed-use property.
During the year ended December 31, 2024, we signed 95 retail leases for 428,981 square feet with an average rent of $38.32 per square foot during the initial year of the lease term, including leases signed for the retail portion of our mixed-use property.
Total property revenue consists of rental revenue and other property income. Total property revenue increased $18.5 million, or 4%, to $441.2 million for the year ended December 31, 2023, compared to $422.6 million for the year ended December 31, 2022.
Total property revenue consists of rental revenue and other property income. Total property revenue increased $16.7 million, or 4%, to $457.9 million for the year ended December 31, 2024, compared to $441.2 million for the year ended December 31, 2023.
Renewals for comparable office spaces were signed for 218,507 square feet at an average rental rate increase of 0.1% on a cash basis and increase of 9.3% on a straight-line basis. Tenant improvements and incentives were $74.83 per square foot of office space for comparable new leases for the twelve months ended December 31, 2023.
Renewals for comparable retail spaces were signed for 383,056 square feet at an average rental rate increase of 4.0% on a cash basis and an increase of 18.1% on a straight-line basis. Tenant improvements and incentives were $32.36 per square foot of retail space for comparable new leases for the twelve months ended December 31, 2024.
Real estate tax expense increased $0.4 million, or 1%, to $45.2 million for the year ended December 31, 2023, compared to $44.8 million for the year ended December 31, 2022.
Real estate tax expense decreased $0.9 million, or 2%, to $44.2 million for the year ended December 31, 2024, compared to $45.2 million for the year ended December 31, 2023.
These increases are primarily related to Carmel Mountain Plaza, Lomas Santa Fe Plaza, Alamo Quarry Market, Waikele Center and Del Monte Center. Additionally, there was an increase in cost recoveries of $0.7 million.
These increases are primarily related to Carmel Mountain Plaza, Solana Beach Towne Center, Alamo Quarry Market and Del Monte Center. Additionally, there was an increase of $1.5 million in cost recoveries.
Retail property operating income increased $2.7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to new tenant leases signed, scheduled rent increases and tenants previously on alternate rent reverting back to basic monthly rent. These increases were partially offset by higher operating expenses related to facilities services and insurance expenses.
Retail property operating income increased $3.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to new tenant leases signed, scheduled rent increases and tenants previously on alternate rent reverting back to basic monthly rent.
If expected useful lives of our real estate assets were shortened, we would depreciate the assets over a shorter time period, resulting in an increase to depreciation expense and a corresponding decrease to net income on an annual basis. Acquisitions of properties are accounted for in accordance with the authoritative accounting guidance on acquisitions and business combinations.
Our estimates of useful lives have a direct impact on our net income. If expected useful lives of our real estate assets were shortened, we would depreciate the assets over a shorter time period, resulting in an increase to depreciation expense and a corresponding decrease to net income on an annual basis.
Accordingly, the extended collection period for straight-line rents along with our evaluation of tenant credit risk may result in the nonrecognition of a portion of straight-line rental income until the collection of such income is reasonably assured.
Accordingly, the extended collection period for straight-line rents along with our evaluation of tenant credit risk may result in the nonrecognition of a portion of straight-line rental income until the collection of such income is reasonably assured. Any changes to our conclusion regarding these assessments of collectability would have a direct impact on our net income.
During the twelve months ended December 31, 2023, we signed 86 retail leases for a total of 405,144 square feet of retail space including 367,810 square feet of comparable space leases, at an average rental rate increase of 6.5% on a cash basis and an average rental increase of 15.4% on a straight-line basis.
During the twelve months ended December 31, 2024, we signed 95 retail leases for a total of 428,981 square feet of retail space including 392,350 square feet of comparable space leases, at an average rental rate increase of 4.5% on a cash basis and an average rental increase of 25.0% on a straight-line basis.
Retail other property income increased $0.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to lease termination fees received at Carmel Mountain Plaza and Southbay Marketplace.
Retail other property income increased $0.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to lease termination fees received at Alamo Quarry Market and Solana Beach Towne Center in 2024, offset by lease termination fees received at Carmel Mountain Plaza and Southbay Marketplace in 2023.
These increases were partially offset by higher operating expenses related to utilities expenses, repairs and facilities services and insurance expenses.
These increases were partially offset by an increase in rental expenses related to facilities services, utilities expenses and insurance expenses.
NOI excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expense, other non-property income and losses, gains and losses from property dispositions, extraordinary items, tenant improvements and leasing commissions. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs.
NOI excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expense, other non-property income and losses, gains and losses from property dispositions, extraordinary items, tenant improvements and leasing commissions.
For our discussion related to the results of operations and liquidity and capital resources for the year ended December 31, 2022 compared to the year ended December 31, 2021 please refer to Part II, Item 7.
Results of Operations For our discussion of results of operations, we have provided information on a total portfolio and same-store basis. For our discussion related to the results of operations and liquidity and capital resources for the year ended December 31, 2023 compared to the year ended December 31, 2022 please refer to Part II, Item 7.
December 31, 2023 2022 2021 Same-Store 29 27 26 Non-Same Store 2 4 4 Total Properties 31 31 30 Redevelopment Same-Store 30 28 27 Total Development Properties 3 3 3 44 Revenue Base Rental income consists of scheduled rent charges, straight-line rent adjustments and the amortization of above market and below market rents acquired.
One Beach Street continues to be identified as a same-store redevelopment property due to significant construction activity. 47 December 31, 2024 2023 2022 Same-Store 30 29 27 Non-Same Store 1 2 4 Total Properties 31 31 31 Redevelopment Same-Store 31 30 28 Total Development Properties 3 3 3 Revenue Base Rental income consists of scheduled rent charges, straight-line rent adjustments and the amortization of above market and below market rents acquired.
No impairment charges were recorded for the years ended December 31, 2023, 2022 or 2021. 50 Income Taxes We elected to be taxed as a REIT under the Code commencing with the taxable year ended December 31, 2011.
Income Taxes We elected to be taxed as a REIT under the Code commencing with the taxable year ended December 31, 2011.
Other property income increased $1.7 million, or 8%, to $21.8 million for the year ended December 31, 2023, compared to $20.1 million for the year ended December 31, 2022.
Other property income increased $12.5 million, or 57%, to $34.2 million for the year ended December 31, 2024, compared to $21.8 million for the year ended December 31, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2022 Form 10-K, filed with the Securities and Exchange Commission on February 10, 2023. 51 Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 The following summarizes our consolidated results of operations for the year ended December 31, 2023 compared to our consolidated results of operations for the year ended December 31, 2022.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2023 Form 10-K, filed with the Securities and Exchange Commission on February 14, 2024.
Rental revenue increased $16.9 million, or 4%, to $419.4 million for the year ended December 31, 2023, compared to $402.5 million for the year ended December 31, 2022.
Rental revenue increased $4.2 million, or 1%, to $423.6 million for the year ended December 31, 2024, compared to $419.4 million for the year ended December 31, 2023.
Our capital investments will be funded on a short-term basis with cash on hand, cash flow from operations and/or our third amended and restated credit facility. 58 We intend to operate with and maintain a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment grade debt ratings.
We intend to operate with and maintain a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment grade debt ratings.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest Rate Risk Outstanding Debt The following discusses the effect of hypothetical changes in market rates of interest on the fair value of our total outstanding debt. Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our debt. Discounted cash flow analysis is generally used to estimate the fair value of our mortgages payable.
Biggest changeInterest rate risk amounts were determined by considering the impact of hypothetical interest rates on our debt. Discounted cash flow analysis is generally used to estimate the fair value of our mortgages payable. Considerable judgment is necessary to estimate the fair value of financial instruments.
Additionally, we consider our $325 million debt outstanding as of December 31, 2023, related to Term Loan A, Term Loan B and Term Loan C, to be fixed rate debt as the rate is effectively fixed by interest rate swap agreements.
Additionally, we consider our $325 million debt outstanding as of December 31, 2024, related to Term Loan A, Term Loan B and Term Loan C, to be fixed rate debt as the rate is effectively fixed by interest rate swap agreements.
Variable Interest Rate Debt At December 31, 2023, we had $325.0 million of variable rate debt outstanding, all of which is subject to interest rate swaps as described above.
Variable Interest Rate Debt At December 31, 2024, we had $325.0 million of variable rate debt outstanding, all of which is subject to interest rate swaps as described above.
This analysis assumes no change in our financial structure. Fixed Interest Rate Debt Except as described below, all of our outstanding debt obligations (maturing at various times through February 2031) have fixed interest rates which limit the risk of fluctuating interest rates. However, interest rate fluctuations may affect the fair value of our fixed rate debt instruments.
This analysis assumes no change in our financial structure. Fixed Interest Rate Debt Except as described below, all of our outstanding debt obligations (maturing at various times through October 2034) have fixed interest rates which limit the risk of fluctuating interest rates. However, interest rate fluctuations may affect the fair value of our fixed rate debt instruments.
If interest rates at December 31, 2023 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately $58.5 million.
If interest rates at December 31, 2024 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately $100.7 million.
At December 31, 2023, we had $1.4 billion of fixed-rate debt outstanding with an estimated fair value of $1.3 billion. If interest rates at December 31, 2023 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately $36.2 million.
At December 31, 2024, we had $1.7 billion of fixed-rate debt outstanding with an estimated fair value of $1.6 billion. If interest rates at December 31, 2024 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately $51.7 million.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.
Market risk refers to the risk of loss from adverse changes in market prices and interest rates. 61 We may enter into certain types of derivative financial instruments to further reduce interest rate risk. We use interest rate swap agreements, for example, to convert some of our variable rate debt to a fixed-rate basis or to hedge anticipated financing transactions.
We may enter into certain types of derivative financial instruments to further reduce interest rate risk. We use interest rate swap agreements, for example, to convert some of our variable rate debt to a fixed-rate basis or to hedge anticipated financing transactions.
We use derivatives for hedging purposes rather than speculation and do not enter into financial instruments for trading purposes. See the discussion under Note 8, “Derivative and Hedging Activities,” to the accompanying consolidated financial statements for certain quantitative details related to the interest rate swaps.
We use derivatives for hedging purposes rather than speculation and do not enter into financial instruments for trading purposes.
Removed
Considerable judgment is necessary to estimate the fair value of financial instruments.
Added
See the discussion under Note 8, “Derivative and Hedging Activities,” to the accompanying consolidated financial statements for certain quantitative details related to the interest rate swaps. 65 Interest Rate Risk Outstanding Debt The following discusses the effect of hypothetical changes in market rates of interest on the fair value of our total outstanding debt.

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