10q10k10q10k.net

What changed in American Assets Trust, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of American Assets Trust, Inc.'s 2022 and 2023 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 2023 report.

+276 added−295 removedSource: 10-K (2024-02-14) vs 10-K (2023-02-10)

Top changes in American Assets Trust, Inc.'s 2023 10-K

276 paragraphs added · 295 removed · 243 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

13 edited+0 added−2 removed65 unchanged
Biggest changeGoogle LLC at The Landmark at One Market accounted for approximately 12.7%, 13.6% and 14.1% of total office segment revenues for the years ended December 31, 2022, 2021 and 2020, respectively.
Biggest changeGoogle 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.
Regulation Our properties are subject to various covenants, laws, ordinances and regulations, including laws such as the Americans with Disabilities Act of 1990, or ADA, and the Fair Housing Amendment Act of 1988, or FHAA, that impose further restrictions on our properties and operations.
Regulation Our properties are subject to various covenants, laws, ordinances and regulations, including laws such as the Americans with Disabilities Act of 1990, or the ADA, and the Fair Housing Amendment Act of 1988, or the FHAA, that impose further restrictions on our properties and operations.
Our senior management team has strong experience and capabilities across the real estate sector with significant expertise in the office, retail and multifamily asset classes, which provides for flexibility in pursuing attractive acquisition, development 4 and repositioning opportunities.
Our senior management team has strong experience and capabilities across the real estate sector with significant expertise in the office, retail and multifamily asset classes, which provides for flexibility in pursuing attractive acquisition, development and repositioning opportunities.
The development and redevelopment potential at several of our properties presents compelling growth prospects and our expertise enhances our ability to capitalize on these opportunities. • Broad Real Estate Expertise with Office, Retail and Multifamily Focus.
The development and redevelopment potential at several of our properties presents compelling growth prospects and our expertise enhances our ability to capitalize on these opportunities. 4 • Broad Real Estate Expertise with Office, Retail and Multifamily Focus.
As of December 31, 2022, our portfolio is comprised of twelve retail shopping centers; twelve office properties; 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, 2022, we owned land at three of our properties that we classified as held for development and construction in progress.
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.
Information related to our business segments for 2022, 2021 and 2020 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, 2022, 2021 or 2020.
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.
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, 2022.
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.
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, 2022, we had 216 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, 2023, we had 228 employees.
Additionally, we provide competitive compensation and benefits. In addition to salaries, employees may be eligible to receive annual bonuses, stock-based compensation awards, a 401(k) plan with employee matching opportunities, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and family care resources.
In addition to salaries, employees may be eligible to receive annual bonuses, stock-based compensation awards, a 401(k) plan with employee matching opportunities, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, and family care resources.
We provide our employees with access to a variety of flexible and convenient health and wellness programs designed to support their physical and mental health by providing tools and resources to help them improve or maintain their health and encourage healthy behaviors.
We provide our employees with access to a variety of flexible and convenient health and wellness programs designed to support their physical and mental health by providing tools and resources to help them improve or maintain their health and encourage healthy behaviors. Additionally, we provide competitive compensation and benefits.
The safety and wellbeing of our employees is a paramount value for us, and the health and wellness of our employees is critical to our success.
The safety and well-being of our employees is a paramount value for us, and the health and wellness of our employees is critical to our success.
As of December 31, 2022, our employees were: • 44% female; 56% male; and • 53% 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, 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.
LPL Holdings, Inc. at La Jolla Commons accounted for approximately 13.2%, 14.4% and 15.3% of total office segment revenues for the years ended December 31, 2022, 2021 and 2020, respectively. Foreign Operations We do not engage in any foreign operations or derive any revenue from foreign sources.
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.
Removed
In response to COVID-19 and its variants, we implemented significant changes that we believe were and continue to be in the best interests of our employees and which comply with government orders in all the states and counties where we operate.
Removed
These changes include a number of new health-related measures, such as vaccination mandates for all employees (subject to certain permitted exceptions), requirements to wear face-masks at our properties to the extent required by government regulations, increased hygiene, cleaning and sanitizing procedures at our properties, social-distancing at our properties and limiting in-person meetings and other gatherings.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

73 edited+16 added−11 removed314 unchanged
Biggest changeThere is considerable uncertainty regarding, among other things, (i) the extent to which COVID-19 and its variants will continue to spread, (ii) the extent and duration of governmental or business measures aimed to contain the virus, such as instituting quarantines, restrictions on travel, “shelter in place” rules, stay-at-home orders, density limitations, social distancing measures, restrictions on business operations and/or construction projects (including, for some types of business operations and construction projects, possible required shut-downs) and (iii) whether any such measures that have been lifted will be reinstated, or whether more restrictive measures will be imposed.
Biggest changeWhether 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.
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.
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.
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.
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.
Our future acquisitions and our ability to successfully operate the properties we acquire in such acquisitions may be exposed to the following significant risks: • even if we are able to acquire a desired property, competition from other potential acquirers may significantly increase the purchase price; • we may acquire properties that are not accretive to our results upon acquisition, and we may not successfully manage and lease those properties to meet our expectations; • our cash flow may be insufficient to meet our required principal and interest payments; 12 • we may spend more than budgeted amounts to make necessary improvements or renovations to acquired properties; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result our results of operations and financial condition could be adversely affected; • market conditions may result in higher than expected vacancy rates and lower than expected rental rates; and • we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities, such as liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.
Our future acquisitions and our ability to successfully operate the properties we acquire in such acquisitions may be exposed to the following significant risks: • even if we are able to acquire a desired property, competition from other potential acquirers may significantly increase the purchase price; • we may acquire properties that are not accretive to our results upon acquisition, and we may not successfully manage and lease those properties to meet our expectations; • our cash flow may be insufficient to meet our required principal and interest payments; • we may spend more than budgeted amounts to make necessary improvements or renovations to acquired properties; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result our results of operations and financial condition could be adversely affected; • market conditions may result in higher than expected vacancy rates and lower than expected rental rates; and • we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities, such as liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.
These 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: 14 • 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.
These 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.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: 9 • our cash flow may be insufficient to meet our required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs; • we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; • we may be forced to dispose of one or more of our properties, possibly on unfavorable terms or in violation of certain covenants to which we may be subject; • we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and • our default under any loan with cross-default provisions could result in a default on other indebtedness.
Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following: • our cash flow may be insufficient to meet our required principal and interest payments; • we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs; • we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; • we may be forced to dispose of one or more of our properties, possibly on unfavorable terms or in violation of certain covenants to which we may be subject; • we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and • our default under any loan with cross-default provisions could result in a default on other indebtedness.
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.
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 addition, while such agreements would be intended to lessen the impact of rising interest rates on us, they could also expose us to the risk that the other parties to the agreements would not perform, we could incur significant costs associated with the settlement of the agreements or that the underlying transactions 13 could fail to qualify as highly-effective cash flow hedges under Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 815, Derivatives and Hedging .
In addition, while such agreements would be intended to lessen the impact of rising interest rates on us, they could also expose us to the risk that the other parties to the agreements would not perform, we could incur significant costs associated with the settlement of the agreements or that the underlying transactions could fail to qualify as highly-effective cash flow hedges under Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 815, Derivatives and Hedging .
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.
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.
If we are unable to do so or capital is otherwise unavailable, we may be unable to make the required expenditures. This could result in 15 non-renewals by tenants upon expiration of their leases, which could cause an adverse effect to our financial condition, results of operations, cash flow and per share trading price of our common stock.
If we are unable to do so or capital is otherwise unavailable, we may be unable to make the required expenditures. This could result in non-renewals by tenants upon expiration of their leases, which could cause an adverse effect to our financial condition, results of operations, cash flow and per share trading price of our common stock.
Lastly, 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 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.
Lastly, the potential physical impacts of climate change on our operations are highly uncertain, and would be particular to the geographic circumstances in 19 areas in which we operate. These may include changes 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.
Our board of directors, without stockholder approval, has the power under our charter to amend our charter to increase the aggregate number of shares of stock or the number of shares of stock of any class or series that we are authorized to issue, to 25 authorize us to issue authorized but unissued shares of our common stock or preferred stock and to classify or reclassify any unissued shares of our common stock or preferred stock into one or more classes or series of stock and set the terms of such newly classified or reclassified shares.
Our board of directors, without stockholder approval, has the power under our charter to amend our charter to increase the aggregate number of shares of stock or the number of shares of stock of any class or series that we are authorized to issue, to authorize us to issue authorized but unissued shares of our common stock or preferred stock and to classify or reclassify any unissued shares of our common stock or preferred stock into one or more classes or series of stock and set the terms of such newly classified or reclassified shares.
Competitive housing in a particular area and an increase in the affordability of owner occupied single and multifamily homes due to, among other things, housing prices, oversupply, mortgage interest rates and tax incentives and government 20 programs to promote home ownership, could adversely affect our ability to retain residents, lease apartment homes and increase or maintain rents.
Competitive housing in a particular area and an increase in the affordability of owner occupied single and multifamily homes due to, among other things, housing prices, oversupply, mortgage interest rates and tax incentives and government programs to promote home ownership, could adversely affect our ability to retain residents, lease apartment homes and increase or maintain rents.
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.
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.
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. 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 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.
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.
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.
Rady and the death of his wife, in connection with a 26 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.
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.
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.
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.
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.
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.
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 real property taxes on our properties may increase as property tax rates change or as our properties 22 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.
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.
Although we strive to identify, analyze, and respond to the risk and 19 opportunities that climate change presents, at this time, there can be no assurance that climate change will not have an adverse effect on the value of our properties and our financial performance.
Although we strive to identify, analyze, and respond to the risk and opportunities that climate change presents, at this time, there can be no assurance that climate change will not have an adverse effect on the value of our properties and our financial performance.
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.
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.
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.
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.
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.
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.
Such issuances would reduce our ownership percentage in our Operating Partnership and affect the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to American Assets Trust, 27 Inc.'s stockholders or American Assets Trust, L.P.'s unitholders.
Such issuances would reduce our ownership percentage in our Operating Partnership and affect the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to American Assets Trust, Inc.'s stockholders or American Assets Trust, L.P.'s unitholders.
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.
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.
At the same time, we, as the general partner of our Operating Partnership, have fiduciary duties and obligations to our Operating Partnership and its limited partners 24 under Maryland law and pursuant to the partnership agreement of our Operating Partnership in connection with the management of our Operating Partnership.
At the same time, we, as the general partner of our Operating Partnership, have fiduciary duties and obligations to our Operating Partnership and its limited partners under Maryland law and pursuant to the partnership agreement of our Operating Partnership in connection with the management of our Operating Partnership.
We also may be required to make distributions to American Assets Trust, Inc.'s stockholders or 30 American Assets Trust, L.P.'s unitholders at disadvantageous times or when we do not have funds readily available for distribution.
We also may be required to make distributions to American Assets Trust, Inc.'s stockholders or American Assets Trust, L.P.'s unitholders at disadvantageous times or when we do not have funds readily available for distribution.
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; 31 • 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 as a result of COVID-19, 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 restrictions intended to prevent the spread of COVID-19 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 COVID-19 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 COVID-19; 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 COVID-19.
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.
Rady will continue to devote a majority of his business time and attention to us, we 18 cannot accurately predict the amount of time and attention that will be required of Mr. Rady to perform such ongoing duties. To the extent that Mr.
Rady will continue to devote a majority of his business time and attention to us, we cannot accurately predict the amount of time and attention that will be required of Mr. Rady to perform such ongoing duties. To the extent that Mr.
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 (including as it may relate to the ongoing impact of COVID-19); • 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.
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.
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, 2022, 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, 2023, Mr.
The continuing, unpredictable development of the impacts of COVID-19, restrictions intended to prevent its spread, and the volatile financial, economic and capital markets environment present material risks and uncertainties with respect to 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.
The continuing, unpredictable development of the impacts of COVID-19, restrictions intended to prevent its spread, and the volatile financial, economic and capital markets environment present material risks and uncertainties with respect to 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. 32 ITEM 1B.
As a result, we may not be able to avoid 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.
As a result, we may not be able to avoid another pandemic’s 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.
At December 31, 2022, 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, 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.
To the extent that we do so, we will be subject to the following risks associated with such development and redevelopment activities (including as they may relate to the ongoing impact of COVID-19): • unsuccessful development or redevelopment opportunities could result in direct expenses to us; • construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable; • time required to complete the construction or redevelopment of a project or to lease up the completed project may be greater than originally anticipated, thereby adversely affecting our cash flow and liquidity; • contractor and subcontractor disputes, strikes, labor disputes or supply disruptions; • failure to achieve expected occupancy and/or rent levels within the projected time frame, if at all; • delays with respect to obtaining or the inability to obtain necessary zoning, occupancy, land use and other governmental permits, and changes in zoning and land use laws; • occupancy rates and rents of a completed project may not be sufficient to make the project profitable; • our ability to dispose of properties developed or redeveloped with the intent to sell could be impacted by the ability of prospective buyers to obtain financing given the current state of the credit markets; and • the availability and pricing of financing to fund our development activities on favorable terms or at all.
To the extent that we do so, we will be subject to the following risks associated with such development and redevelopment activities: • unsuccessful development or redevelopment opportunities could result in direct expenses to us; • construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable; • time required to complete the construction or redevelopment of a project or to lease up the completed project may be greater than originally anticipated, thereby adversely affecting our cash flow and liquidity; • contractor and subcontractor disputes, strikes, labor disputes or supply disruptions; • failure to achieve expected occupancy and/or rent levels within the projected time frame, if at all; • delays with respect to obtaining or the inability to obtain necessary zoning, occupancy, land use and other governmental permits, and changes in zoning and land use laws; • occupancy rates and rents of a completed project may not be sufficient to make the project profitable; • our ability to dispose of properties developed or redeveloped with the intent to sell could be impacted by the ability of prospective buyers to obtain financing given the current state of the credit markets; and • the availability and pricing of financing to fund our development activities on favorable terms or at all.
At December 31, 2022, 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, 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).
In periods of prolonged economic decline or government-imposed restrictions on operations (such as restrictions intended to reduce the spread of COVID-19), there is a higher than normal risk that co-tenancy provisions will be triggered as there is a higher risk of tenants closing stores or terminating leases during these periods.
In periods of prolonged economic decline or government-imposed restrictions on operations (such as restrictions intended to reduce the spread of illness), there is a higher than normal risk that co-tenancy provisions will be triggered as there is a higher risk of tenants closing stores or terminating leases during these periods.
We mitigate the risk of disruptions, breaches or disclosure of this confidential personally identifiable information by implementing a variety of security measures including (among others) engaging reputable, recognized firms to help us design and maintain our information technology and data security systems, and to test and verify their proper and secure operations on a periodic basis.
We mitigate the risk of disruptions, breaches or disclosure of this personal, confidential personally and other sensitive information by implementing a variety of security measures including (among others) engaging reputable, recognized firms to help us design and maintain our information technology and data security systems, and to test and verify their proper and secure operations on a periodic basis.
At February 10, 2023, 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 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.
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 ongoing impact of COVID-19 and its variants.
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.
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 $6.0 million based on operating performance through December 31, 2022.
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.
As of December 31, 2022, the three largest tenants in our office portfolio - Google LLC, LPL Holdings, Inc. and Autodesk, Inc. - represented approximately 30.4% of the total annualized base rent in our office portfolio in the aggregate, and 13.5%, 10.1% and 6.8%, respectively, of the annualized base rent generated by our office properties.
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, 2022, the limited partners, including Mr. Rady and his affiliates and our other executive officers and directors, owned approximately 22.7% of our outstanding common units and approximately 20.9% of our outstanding common stock, which together represent an approximate 37.5% beneficial interest in our company on a fully diluted basis.
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.
Our information technology, or IT, networks and related systems, are essential to the operation of our business and our ability to perform day-to-day operations, and, in some cases, may be critical to the operations of certain of our tenants.
Our IT Systems are essential to the operation of our business and our ability to perform day-to-day operations, and, in some cases, may be critical to the operations of certain of our tenants.
The ongoing impacts of COVID-19, including future mutations and related variants of the virus, 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 in a variety of ways that are difficult to predict.
We may be adversely affected by trends in office real estate. In 2022, approximately 54% of our net operating income was from our office properties. Work from home, flexible work schedules, open workplaces, videoconferencing, and teleconferencing are becoming more common, particularly as a result of COVID-19. These practices may enable businesses to reduce their office space requirements.
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.
COVID-19 and governmental or business restrictions intended to prevent its spread 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.
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.
A security breach could additionally cause the disclosure or misuse of confidential or proprietary information (including personal information of our residents and/or employees) and damage to our reputation. 21 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.
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.
Rady and his affiliates owned approximately 15.5% of our outstanding common stock and 19.4% of our outstanding common units, which together represent an approximate 34.7% beneficial interest in our company on a fully diluted basis. Consequently, Mr.
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.
A continuation of the movement towards these practices could, over time, erode the overall demand for office space and, in turn, place downward pressure on occupancy, rental rates and property valuations, which may adversely affect our financial condition, results of operations and cash flow.
A continuation of the movement towards these practices could, over time, erode the overall demand for office space and, in turn, place downward pressure on occupancy, rental rates and property valuations, which may adversely affect our financial condition, results of operations and cash flow. 9 We have a substantial amount of indebtedness, which may expose us to the risk of default under our debt obligations.
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.
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.
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.
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.
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, 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.
To maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, which could adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock. 29 To maintain our REIT status, we generally must distribute to our stockholders at least 90% of our net taxable income each year, excluding net capital gains, and we will be subject to regular U.S. federal corporate income taxes to the extent that we distribute less than 100% of our net taxable income each year, including net capital gains.
To maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, which could adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock.
The continuing impacts of COVID-19 and governmental or business restrictions intended to prevent its spread remain highly unpredictable and volatile and have had a significant adverse impact on economic and market conditions around the world during the last three years, including in the United States and specifically in the markets in which we own properties (including development projects).
The COVID-19 pandemic and governmental and business restrictions intended to prevent the viruses spread had a significant adverse impact on economic and market conditions around the world, including in the United States and specifically in the markets in which we own properties.
As a result of all these factors, our failure to maintain our qualification as a REIT also could impair our ability to expand our business and raise capital, and could materially and adversely affect the value of our common stock. 28 Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations.
As a result of all these factors, our failure to maintain our qualification as a REIT also could impair our ability to expand our business and raise capital, and could materially and adversely affect the value of our common stock.
The existence of this right of first offer could adversely impact our ability to obtain the highest possible price for the hotel as, during the term of the franchise agreement, we would not be able to offer the hotel to potential purchasers through a competitive bid process or in a similar manner designed to maximize the value obtained for the property without first offering to sell this property to the franchisor. 17 Our real estate development activities are subject to risks particular to development, such as unanticipated expenses, delays and other contingencies, any of which could adversely affect our financial condition, results of operations, cash flow and the per share trading price of our common stock.
The existence of this right of first offer could adversely impact our ability to obtain the highest possible price for the hotel as, during the term of the franchise agreement, we would not be able to offer the hotel to potential purchasers through a competitive bid process or in a similar manner designed to maximize the value obtained for the property without first offering to sell this property to the franchisor.
This plan is reviewed at least annually by our Board with input from our Nominating and Governance Committee and currently includes Dr. Robert Sullivan (Board member), Mr. Barton and Mr. Wyll, as potential interim candidates for the roles of Chairman and/or Chief Executive Officer and/or as emergency interim executive committee members.
This plan is reviewed at least annually by our Board with input from our Nominating and Governance Committee and currently includes Dr. Robert Sullivan (Board member), Mr. Barton and Mr.
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.
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.
Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.
Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.
The occurrence of any of the situations described above, particularly if it involves an anchor tenant with leases in multiple locations, could seriously harm our performance and could adversely affect the value of the applicable retail property. 10 As of December 31, 2022, our largest anchor tenants were Lowe's, Sprouts Farmers Market and Nordstrom Rack, which together represented approximately 10.3% of our total annualized base rent of our retail portfolio in the aggregate, and 5.0%, 2.9% and 2.4%, respectively, of the annualized base rent generated by our retail properties.
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.
We may be unable to renew leases, lease vacant space or re-let space as leases expire, thereby increasing or prolonging vacancies, which could adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock. 11 As of December 31, 2022, leases representing 6.8% of the square footage and 9.9% of the annualized base rent of the properties in our office, retail and retail portion of our mixed-use portfolios will expire in 2023, and an additional 9.1% of the square footage of the properties in our office, retail and retail portion of our mixed-use portfolios was available.
We may be unable to renew leases, lease vacant space or re-let space as leases expire, thereby increasing or prolonging vacancies, which could adversely affect our financial condition, results of operations, cash flow and per share trading price of our common stock.
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. 16 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.
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.
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.
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.
We face risks associated with security breaches, whether through cyber-attacks or cyber-intrusions over the internet, malware, computer viruses, attachments to e-mails and/or employees or third-parties with access to our systems. We face the risk of ransomware or other cyber-attacks aimed at disrupting the availability of systems, applications, networks or data important to our business operations.
We and our third-party providers face risks associated with security breaches, whether through cyberattacks or cyber-intrusions over the internet, bugs, malware, computer viruses, attachments to e-mails and/or employees or third-parties with access to our IT Systems, all of which create an ever-evolving landscape of cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and data that we and our providers process.
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.
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.
We rely on information technology in our operations, and any breach, interruption or security failure of that technology could have a negative impact on our business, operations and/or financial condition. Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber-attacks.
We rely on information technology in our operations, and are subject to laws and regulations concerning data privacy and security. Any breach, interruption or security failure of that technology or any failure to comply with applicable laws could have a negative impact on our business, operations and/or financial condition.
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. 23 When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time.
When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants.
Additionally, we collect and hold personal information of our residents and prospective residents in connection with our leasing activities at our multifamily locations. We also collect and hold personal information of our employees in connection with their employment.
We also cannot guarantee that applicable insurance will be available to us in the future on economically reasonable terms or at all. Additionally, as part of our normal business activities,we collect and hold personal information of our residents and prospective residents in connection with our leasing activities at our multifamily locations.
For instance we have previously seen a material reduction in rent collections from certain tenants, particularly retail tenants, as a result of such measures. There can be no assurance as to how long any restrictions intended to prevent the spread of COVID-19 may remain in place in the states and cities where we own properties.
For instance, we previously saw a material reduction in rent collections from certain tenants, particularly retail tenants, as a result of the COVID-19 pandemic and related governmental and business measures.
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.
Our real estate development activities are subject to risks particular to development, such as unanticipated expenses, delays and other contingencies, any of which could adversely affect our financial condition, results of operations, cash flow and the per share trading price of our common stock. We may engage in development and redevelopment activities with respect to certain of our properties.
Removed
We have a substantial amount of indebtedness, which may expose us to the risk of default under our debt obligations.
Added
The occurrence of any of the situations described above, particularly if it involves an anchor tenant with leases in multiple locations, could seriously harm our performance and could adversely affect the value of the applicable retail property.
Removed
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.
Added
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.
Removed
We may engage in development and redevelopment activities with respect to certain of our properties.
Added
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.
Removed
In addition, we engage third-party service providers that may have access to such personal information in connection with providing business services to us, whether through our own IT networks and related systems, or through the third-party service providers’ IT networks and related systems.

… 20 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

35 edited+0 added−2 removed10 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 2 724,648 99.0 % $ 44,541,508 $ 62.09 Torrey Reserve Campus San Diego, CA 1996-2000/2014-2016/2021 14 547,035 95.2 24,544,722 47.13 Torrey Point San Diego, CA 2017 2 93,264 96.8 5,426,536 60.11 Solana Beach Corporate Centre Solana Beach, CA 1982/2005 4 224,009 85.1 7,887,387 41.38 The Landmark at One Market (2) San Francisco, CA 1917/2000 1 422,426 100.0 39,562,897 93.66 One Beach Street San Francisco, CA 1924/1972/1987/1992 1 100,270 — — — First & Main Portland, OR 2010 1 360,314 95.0 10,984,368 32.09 Lloyd Portfolio Portland, OR 1940-2015 3 547,864 89.5 16,684,740 34.03 City Center Bellevue Bellevue, WA 1987 1 496,357 89.7 24,963,482 56.07 Eastgate Office Park Bellevue, WA 1985 4 281,204 64.7 7,284,888 40.04 Corporate Campus East III Bellevue, WA 1986 4 159,578 85.0 5,818,665 42.90 Bel-Spring 520 Bellevue, WA 1983 2 93,295 69.4 2,571,405 39.71 Subtotal / Weighted Average Office Portfolio (3) 39 4,050,264 88.9 % $ 190,270,598 $ 52.84 RETAIL PROPERTIES Carmel Country Plaza San Diego, CA 1991 9 78,098 87.6 % $ 3,667,449 $ 53.61 Carmel Mountain Plaza (4) San Diego, CA 1994/2014 15 528,416 99.3 13,318,240 25.38 South Bay Marketplace (4) San Diego, CA 1997 9 132,877 100.0 2,499,291 18.81 Gateway Marketplace San Diego, CA 1997/2016 3 127,861 100.0 2,663,055 20.83 Lomas Santa Fe Plaza Solana Beach, CA 1972/1997 9 208,297 97.7 6,329,685 31.10 Solana Beach Towne Centre Solana Beach, CA 1973/2000/2004 12 246,651 96.2 6,554,948 27.63 Del Monte Center (4) Monterey, CA 1967/1984/2006 16 673,155 82.3 9,253,568 16.70 Geary Marketplace Walnut Creek, CA 2012 3 35,159 95.6 1,221,287 36.33 The Shops at Kalakaua Honolulu, HI 1971/2006 3 11,671 77.7 1,032,073 113.81 Waikele Center Waipahu, HI 1993/2008 9 418,047 100.0 12,298,465 29.42 Alamo Quarry Market (4) San Antonio, TX 1997/1999 16 588,148 94.1 14,418,643 26.05 Hassalo on Eighth - Retail (5) Portland, OR 2015 3 44,236 65.5 943,261 32.55 Subtotal / Weighted Average Retail Portfolio (1) 107 3,092,616 93.5 % $ 74,199,965 $ 25.66 Total / Weighted Average Retail and Office Portfolio (1) 146 7,142,880 90.9 % $ 264,470,563 $ 40.73 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 93.8 % $ 8,785,614 $ 99.72 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 76.9 % $ 367.97 $ 282.99 33 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 94.3 % $ 16,734,228 $ 2,699 Imperial Beach Gardens Imperial Beach, CA 1959/2008 26 160 91.3 4,539,336 2,590 Mariner’s Point Imperial Beach, CA 1986 8 88 94.3 2,202,696 2,212 Santa Fe Park RV Resort (6) San Diego, CA 1971/2007-2008 1 124 96.0 2,043,288 1,430 Pacific Ridge Apartments San Diego, CA 2013 3 533 88.6 20,721,768 3,657 Hassalo on Eighth - Multifamily (5) Portland, OR 2015 3 657 91.3 11,482,272 1,595 Total / Weighted Average Multifamily 121 2,110 91.8 % $ 57,723,588 $ 2,483 (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, 2022 by 12.
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.
Total abatements for leases in effect as of December 31, 2022 for our multifamily portfolio equaled approximately $0.5 million for the year ended December 31, 2022. • Units represent the total number of units available for sale or rent at December 31, 2022. • Average occupancy represents the percentage of available units that were sold during the 12-month period ended December 31, 2022, 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, 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.
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, 2022, 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, 2023, 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, 2022. 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, 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.
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, 2022, 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, 2023, by the number of units sold.
ITEM 2. PROPERTIES Our Portfolio As of December 31, 2022, 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, 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.
Percentage leased for our multifamily properties is calculated as total units rented as of December 31, 2022, 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, 2022, by 12.
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.
(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, 2022 (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, 2023 (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, 2022.
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.
Revenue per available room, or RevPAR, represents the total unit revenue per total available units for the 12-month period ended December 31, 2022 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, 2023 and is calculated by multiplying average occupancy by the average daily rate.
(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, 2022, by square footage under lease as of December 31, 2022.
(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.
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. 37 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 15 months, with a majority having 12-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. 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.
Additionally, as of December 31, 2022, we owned land at three of our properties that we classified as held for development or construction in progress.
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.
(2) Name withheld at tenant's request. 36 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, 2022.
(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.
The square footage of available space excludes the space from 13 leases that terminated on December 31, 2022. In 2023, 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 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 under lease includes leases which may not have commenced as of December 31, 2022.
The square footage under lease includes leases which may not have commenced as of December 31, 2023.
Only one tenant or affiliated group of tenants accounted for more than 9.4% of our annualized base rent as of December 31, 2022 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 9.3% of our annualized base rent as of December 31, 2023 for our office, retail and retail portion of our mixed-use property portfolio.
(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 (a) Aggregate Annualized Base Rent Carmel Mountain Plaza 5 17,607 $ 763,098 South Bay Marketplace 1 2,824 $ 114,552 Del Monte Center 1 212,500 $ 96,000 Alamo Quarry Market 3 20,694 $ 410,151 (a) 2,912 square feet of the ground leases at Carmel Mountain Plaza expire during the third quarter of 2023, with no extension options as of December 31, 2022 (5) The Hassalo on Eighth property is comprised of three multifamily buildings, each with a ground floor retail component: Velomor, Aster Tower and Elwood. 34 (6) The Santa Fe Park RV Resort is subject to seasonal variation, with higher rates of occupancy occurring during the summer months.
(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.
Our residential properties had 1,818 leases with residential tenants at December 31, 2022, excluding Santa Fe Park RV Resort. The retail portion of our mixed-use property had approximately 60 leases with retailers.
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.
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 % $ 25,651,314 9.4 % LPL Holdings, Inc. La Jolla Commons 4/30/2029 421,001 5.8 19,305,775 7.1 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 % $ 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.
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, 2022. 35 Tenant Diversification At December 31, 2022, our operating portfolio had approximately 834 leases with office and retail tenants, of which 10 expired on December 31, 2022 and there were 22 that 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, 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.
Total abatements for leases in effect as of December 31, 2022 for our retail and office portfolio equaled approximately $8.4 million for the year ended December 31, 2022. Total abatements for leases in effect as of December 31, 2022 for our mixed-use portfolio equaled approximately $1.2 million for the year ended December 31, 2022.
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.
Region Number of Properties Net Rentable Square Feet Percentage of Net Rentable Square Feet (1) Southern California 10 2,911,156 40.2 % Northern California 4 1,231,010 17.0 Washington 4 1,030,434 14.2 Oregon 3 952,414 13.2 Texas 1 588,148 8.1 Hawaii (2) 3 523,643 7.2 Total 25 7,236,805 100.0 % (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 2,912,752 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.
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 $1,970,275 to our estimate of annual triple net operating expenses of $601,131 for an estimated annualized base rent on a modified gross lease basis of $2,571,406 for Bel-Spring 520.
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 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 $4,286,679 to our estimate of annual triple net operating expenses of $1,531,986 for an estimated annualized base rent on a modified gross lease basis of $5,818,665 for Corporate Campus East III. d.
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 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 $33,834,361 to our estimate of annual triple net operating expenses of $10,707,147 for an estimated annualized base rent on a modified gross lease basis of $44,541,508 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 $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 Landmark at One Market 12/31/2023 12/31/2027 138,615 1.9 12,965,599 4.7 Smartsheet, Inc. City Center Bellevue 12/31/2026 4/30/2029 123,041 1.7 6,830,332 2.5 Illumina, Inc.
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 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 $5,221,371 to our estimate of annual triple net operating expenses of $2,063,517 for an estimated annualized base rent on a modified gross lease basis of $7,284,888 for Eastgate Office Park. c.
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.
Segment Number of Properties Property Operating Income Percentage of Property Operating Income Office 12 $ 145,913 54.0 % Retail 12 70,606 26.1 Mixed-Use 1 31,883 11.8 Multifamily 6 21,813 8.1 Total 31 $ 270,215 100.0 % Lease Expirations The following table sets forth a summary schedule of the lease expirations for leases in place as of December 31, 2022, plus available space, for each of the ten calendar years beginning January 1, 2023 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 $ 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.
La Jolla Commons 10/31/2027 73,176 1.0 4,609,212 1.7 VMware, Inc City Center Bellevue 3/31/2028 75,000 1.0 4,447,886 1.6 Lowe's Waikele Center 5/31/2028 155,000 2.1 3,720,000 1.4 Clearesult Operating, LLC First & Main 4/30/2025 101,848 1.4 3,382,042 1.2 Industrious City Center Bellevue 4/30/2033 3/31/2034 55,256 0.8 3,111,931 1.1 State of Oregon: Department of Environmental Quality Lloyd District Portfolio 10/31/2031 87,787 1.2 2,935,024 1.1 Top technology tenant (2) La Jolla Commons 8/31/2030 47,826 0.7 2,737,440 1.0 Genentech, Inc Lloyd District Portfolio 10/31/2026 66,852 0.9 2,337,632 0.9 MEI Pharma, Inc.
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.
(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, 2022 by 12. 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.
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 for signed by not commenced leases.
Torrey Reserve Campus 11/30/2029 45,088 0.6 2,266,536 0.8 Internal Revenue Service First & Main 8/31/2030 63,648 0.9 2,189,700 0.8 Sprouts Farmers Market Solana Beach Towne Centre, Carmel Mountain Plaza, Geary Marketplace 6/30/2024 3/31/2025 9/30/2032 71,431 1.0 2,121,187 0.8 California Bank & Trust Torrey Reserve Campus 2/28/2024 34,731 0.5 2,034,559 0.7 WeWork Lloyd District Portfolio 1/31/2032 55,395 0.8 1,998,131 0.7 Veterans Benefits Administration First & Main 8/31/2030 74,885 1.0 1,997,006 0.7 Perkins Coie, LLP Torrey Reserve Campus 12/31/2028 36,980 0.5 1,915,389 0.7 Nordstrom Rack Carmel Mountain Plaza, Alamo Quarry Market 9/30/2027 10/31/2027 69,047 1.0 1,804,269 0.7 Troutman Sanders, LLP Torrey Reserve Campus First & Main 3/31/2025 4/30/2025 33,812 0.5 1,798,680 0.7 Marshalls Solana Beach Towne Centre, Carmel Mountain Plaza 1/31/2025 1/31/2029 68,055 0.9 1,728,228 0.6 Banner Corporation Corporate Campus East III 10/31/2027 46,572 0.6 1,583,448 0.6 Pillsbury Winthrop Shaw Pittman, LLP Torrey Reserve Campus 11/30/2033 26,152 0.4 1,474,973 0.5 Cisco Systems, Inc.
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.
(3) Lease data for signed but not commenced leases as of December 31, 2022 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 $ 84,437 $ 4,498,255 $ 53.27 $ 54.09 Retail Portfolio 47,335 1,577,101 $ 33.32 $ 26.21 Total Retail and Office Portfolio $ 131,772 $ 6,075,356 $ 46.11 $ 41.67 (a) Office portfolio leases signed but not commenced of 27,753, 39,266 and 17,418 square feet are expected to commence during the first, second and third quarters of 2023, respectively.
(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.
Retail portfolio leases signed but not commenced of 4,264, 11,300, 11,350, 19,433 and 988 square feet are expected to commence during the first, second, third and fourth quarters of 2023 and the fourth quarter of 2024, respectively.
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.
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 655,974 9.1 % $ — — % $ — Month to Month 81,211 1.1 918,795 0.4 11.31 2023 495,608 6.8 25,605,784 9.9 51.67 2024 774,422 10.7 28,504,521 11.0 36.81 2025 648,046 9.0 23,516,747 9.1 36.29 2026 641,173 8.9 25,381,358 9.8 39.59 2027 831,859 11.5 33,430,534 12.9 40.19 2028 961,495 13.3 26,153,158 10.1 27.20 2029 1,063,288 14.7 58,172,606 22.5 54.71 2030 285,949 4.0 12,089,145 4.7 42.28 2031 279,759 3.9 10,462,653 4.0 37.40 2032 207,678 2.9 6,397,112 2.5 30.80 Thereafter 173,197 2.4 7,719,987 3.0 44.57 Signed Leases Not Commenced 137,146 1.9 — — — Total: 7,236,805 100.0 % $ 258,352,400 100.0 % $ 35.70 (1) Annualized base rent is calculated by multiplying base rental payments (defined as cash base rents (before abatements)) for the month ended December 31, 2022 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 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.
Removed
Annualized base rent per leased square foot is calculated by dividing annualized base rent, by square footage for signed by not commenced leases.
Removed
City Center Bellevue 2/28/2023 25,689 0.4 1,426,234 0.5 TOTAL 2,250,085 31.1 % $ 116,372,527 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, 2022 for the applicable lease(s) by (ii) 12.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
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. 38 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. 39 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed3 unchanged
Biggest changeOur previous industry peer group was Dow Jones Equity All REIT Index, since the SNL US REIT Equity Index was retired in August 2021. The stock price performance graph assumes that an investor invested $100 in each of American Assets Trust, Inc. and these indices, and the reinvestment of any dividends.
Biggest changeThe stock price performance graph assumes that an investor invested $100 in each of American Assets Trust, Inc. and these indices, and the reinvestment of any dividends.
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. 39 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. 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.
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 2022.
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.
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. 40 ITEM 6. [RESERVED] 41
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 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, 2017 through December 31, 2022.
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.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers No equity securities were purchased by us during 2022.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers No equity securities were purchased by us during 2023.
ITEM 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 3, 2023, we had 78 stockholders of record of our common stock.
ITEM 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.
As of February 3, 2023, we had 20 holders of record of American Assets Trust, L.P.'s operating partnership units, including American Assets Trust, Inc.
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.

Item 7. Management's Discussion & Analysis

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

105 edited+16 added−36 removed155 unchanged
Biggest changeRental expense by segment was as follows (dollars in thousands): Total Portfolio Same-Store Portfolio Year Ended December 31, Year Ended December 31, 2022 2021 Change % 2022 2021 Change % Office $ 36,985 $ 30,506 $ 6,479 21 % $ 32,306 $ 28,341 $ 3,965 14 % Retail 16,631 15,676 955 6 16,631 15,676 955 6 Multifamily 19,152 16,269 2,883 18 19,152 16,269 2,883 18 Mixed-Use 34,877 24,529 10,348 42 34,877 24,529 10,348 42 $ 107,645 $ 86,980 $ 20,665 24 % $ 102,966 $ 84,815 $ 18,151 21 % Total office rental expenses increased $6.5 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to $2.5 million related to the recent acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520.
Biggest changeRental expense by segment was as follows (dollars in thousands): Total Portfolio Same-Store Portfolio Year Ended December 31, Year Ended December 31, 2023 2022 Change % 2023 2022 Change % Office $ 40,627 $ 36,985 $ 3,642 10 % $ 38,656 $ 35,564 $ 3,092 9 % Retail 18,008 16,631 1,377 8 18,008 16,631 1,377 8 Multifamily 20,788 19,152 1,636 9 20,788 19,152 1,636 9 Mixed-Use 39,378 34,877 4,501 13 39,378 34,877 4,501 13 $ 118,801 $ 107,645 $ 11,156 10 % $ 116,830 $ 106,224 $ 10,606 10 % Total office rental expenses increased $3.6 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to an increase of $3.1 million in same-store office rental expenses related to an increase in repairs and maintenance services, utilities expenses, facility services, insurance expenses and other operating expenses as our tenants' employees have started returning to the office in-person.
Because we operate on a consolidated basis with 58 American Assets Trust, Inc., the section entitled “Liquidity and Capital Resources of American Assets Trust, Inc.” should be read in conjunction with this section to understand our liquidity and capital resources on a consolidated basis. Due to the nature of our business, we typically generate significant amounts of cash from operations.
Because we operate on a consolidated basis with American Assets Trust, Inc., the section entitled “Liquidity and Capital Resources of American Assets Trust, Inc.” should be read in conjunction with this section to understand our liquidity and capital resources on a consolidated basis. Due to the nature of our business, we typically generate significant amounts of cash from operations.
For the year ended December 31, 2022, when compared to the designations for the year ended December 31, 2021, Waikiki Beach Walk-Retail and Embassy Suites™ Hotel is reclassified to same-store due to significant spalling repair activity impacting the hotel portion of the property's operations, which was completed on September 30, 2020.
For the year ended December 31, 2022, when compared to the designations for the year ended December 31, 2021, Waikiki Beach Walk-Retail and Embassy Suites™ Hotel was reclassified to same-store due to significant spalling repair activity impacting the hotel portion of the property's operations, which was completed on September 30, 2020.
As of December 31, 2022, 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, 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.
The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital 45 investment made in the space and the specific lease structure.
The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure.
(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.
(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.
Any changes to our conclusion regarding these assessments of collectability would have a direct impact on our net income. 47 Since the onset of COVID-19 in 2020, we have provided lease concessions to certain tenants, primarily within the retail segment, in the form of rent deferrals and abatements in recognition of the adverse impact that COVID-19 had on such tenants, although the concessions provided during the year ended December 31, 2022 were immaterial to us.
Any changes to our conclusion regarding these assessments of collectability would have a direct impact on our net income. 47 Since the onset of COVID-19 in 2020, we have provided lease concessions to certain tenants, primarily within the retail segment, in the form of rent deferrals and abatements in recognition of the adverse impact that COVID-19 had on such tenants, although the concessions provided during the year ended December 31, 2023 were immaterial to us.
Eastgate Office Park is classified as non-same-store, as it was acquired on July 7, 2021. Corporate Campus East III is classified as non-same-store, as it was acquired on September 10, 2021. Bel-Spring 520 is classified as non-same-store, as it was acquired on March 8, 2022.
Eastgate Office Park was classified as non-same-store, as it was acquired on July 7, 2021. Corporate Campus East III was classified as non-same-store, as it was acquired on September 10, 2021. Bel-Spring 520 was classified as non-same-store, as it was acquired on March 8, 2022.
As of December 31, 2022, 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, 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.
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, 2022.
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.
As of December 31, 2022, 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, 2022, we owned land at three of our properties that we classified as held for development or construction in progress.
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.
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, 2022.
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.
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, 2022, 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, 2023, the company had not issued any shares of common stock under the 2021 ATM Program.
Changes in interest rates may affect our success in 42 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 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.
Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent building improvements. The leases signed in 2022 will typically become effective in 2023, though some may not become effective until 2024.
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.
No impairment charges were recorded for the years ended December 31, 2022, 2021 or 2020. 50 Income Taxes We elected to be taxed as a REIT under the Code commencing with the taxable year ended December 31, 2011.
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.
Our capital expenditures during the year ending December 31, 2023 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 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.
As of December 31, 2022, 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, 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.
For our discussion related to the results of operations and liquidity and capital resources for the year ended December 31, 2021 compared to the year ended December 31, 2020 please refer to Part II, Item 7.
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.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2021 Form 10-K, filed with the Securities and Exchange Commission on February 11, 2022. 51 Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 The following summarizes our consolidated results of operations for the year ended December 31, 2022 compared to our consolidated results of operations for the year ended December 31, 2021.
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.
The properties were acquired with cash on hand. During the year ended December 31, 2021, there were no dispositions. 2020 Acquisitions and Dispositions During the year ended December 31, 2020, there were no acquisitions or dispositions. Results of Operations For our discussion of results of operations, we have provided information on a total portfolio and same-store basis.
The properties were acquired with cash on hand. During the year ended December 31, 2021, there were no dispositions. Results of Operations For our discussion of results of operations, we have provided information on a total portfolio and same-store basis.
During 2022, there were no dispositions. 2021 Acquisitions and Dispositions On July 7, 2021, we acquired E astgate Office Park, consisting of an approximately 280,000 square feet, multi-tenant office campus in Bellevue, Washington. The purchase price was approximately $125 million, excluding closing costs of approximately $0.2 million.
During the year ended December 31, 2022, there were no dispositions. 2021 Acquisitions and Dispositions On July 7, 2021, we acquired E astgate Office Park, consisting of an approximately 280,000 square feet, multi-tenant office campus in Bellevue, Washington. The purchase price was approximately $125 million, excluding closing costs of approximately $0.2 million.
Additionally, as of December 31, 2021, we owned land at three of our properties that we classified as held for development or construction in progress.
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.
The average monthly base rent per leased unit as of December 31, 2022 was $2,483, compared to $2,201 at December 31, 2021. 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, 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.
We capitalized external and internal costs related to other property improvements combined of $43.3 million and $40.2 million for the years ended December 31, 2022 and 2021, 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 $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.
As of December 31, 2021, our operating portfolio was comprised of 30 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.1 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 7.2 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.
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 $73.3 million and $53.3 million for the years ended December 31, 2022 and 2021, 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 $24.0 million and $73.3 million for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2022, the company has 57 determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months.
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.
There were $3.18 per square foot of retail space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2022. 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 $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.
The increase in new development expenditures for the year ended December 31, 2022 compared to the year ended December 21, 2021 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, 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.
December 31, 2022 2021 2020 Same-Store 27 26 24 Non-Same Store 4 4 4 Total Properties 31 30 28 Redevelopment Same-Store 28 27 26 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.
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.
Our cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not match, such as notional amounts, settlement dates, reset dates, calculation periods and the use of LIBOR or SOFR, as the case may be.
Our cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not match, such as notional amounts, settlement dates, reset dates, calculation periods and the use of SOFR.
This increase was primarily due to stock-based compensation expense and employee-related costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits. Depreciation and amortization.
This increase was primarily due to increases in stock-based compensation expense, general legal expenses and employee-related costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits. Depreciation and amortization.
The increase in redevelopment expenditures for the year ended December 31, 2022 compared to the year ended December 31, 2021, was primarily related to the modernization costs of One Beach Street.
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.
As of December 31, 2022, these properties were 88.9% leased. For the year ended December 31, 2022, the office segment contributed 48.1% 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, 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.
We capitalized interest costs related to both development and redevelopment activities combined of $5.8 million and $3.0 million for the years ended December 31, 2022 and 2021, respectively.
We capitalized interest costs related to both development and redevelopment activities combined of $7.8 million and $5.8 million for the years ended December 31, 2023 and 2022, respectively.
Our retail portfolio included twelve properties with a total of approximately 3.1 million rentable square feet available for lease as of December 31, 2022. As of December 31, 2022, these properties were 93.5% leased. For the year ended December 31, 2022, the retail segment contributed 23.9%, 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, 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.
Mixed-use rental expenses increased $10.3 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to an increase 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 $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.
Multifamily property operating income increased $2.8 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to an overall increase in occupancy and average monthly base rent of 92.9% and $2,349, respectively, for the year ended December 31, 2022 compared to 92.1% and $2,160, respectively for the year ended December 31, 2021.
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.
The following table sets forth a reconciliation of our FFO for the years ended December 31, 2022, 2021 and 2020 to net income, the nearest GAAP equivalent (in thousands, except per share and share data): Year Ended December 31, 2022 2021 2020 Net income $ 55,877 $ 36,593 $ 35,588 Plus: Real estate depreciation and amortization 123,338 116,306 108,292 Funds from operations, as defined by NAREIT $ 179,215 $ 152,899 $ 143,880 Less: Nonforfeitable dividends on restricted stock awards (641) (557) (377) FFO attributable to common stock and units $ 178,574 $ 152,342 $ 143,503 FFO per diluted share/unit $ 2.34 $ 2.00 $ 1.89 Weighted average number of common shares and units, diluted (1) 76,233,814 76,175,004 76,122,842 (1) For the years ended December 31, 2022, 2021 and 2020 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, 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.
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, 2022. As of December 31, 2022, these properties were 91.8% leased. For the year ended December 31, 2022, the multifamily segment contributed 13.8% 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, 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.
The following is a reconciliation of our NOI to net income for the years ended December 31, 2022, 2021 and 2020 computed in accordance with GAAP (in thousands): Year Ended December 31, 2022 2021 2020 Net operating income $ 270,215 $ 246,054 $ 223,454 General and administrative (32,143) (29,879) (26,581) Depreciation and amortization (123,338) (116,306) (108,292) Interest expense (58,232) (58,587) (53,440) Loss on early extinguishment of debt — (4,271) — Other income (expense), net (625) (418) 447 Net income $ 55,877 $ 36,593 $ 35,588 61 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, 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 percentage leased was as follows for each segment as of December 31, 2022 and 2021: Percentage Leased (1) Year Ended December 31, 2022 2021 Office 88.9 % 90.4 % Retail 93.5 % 92.6 % Multifamily 91.8 % 96.0 % Mixed-Use (2) 93.8 % 89.6 % 52 (1) The percentage leased includes the square footage under lease, including leases which may not have commenced as of December 31, 2022 or December 31, 2021, as applicable.
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.
There were $11.39 per square foot of office space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2022.
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.
Total retail rental revenue increased $6.3 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to approximately $4.2 million for new tenant leases signed and tenants previously on alternate rent reverting back to basic monthly rent.
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.
A taxable REIT subsidiary is subject to federal and state income taxes. Property Acquisitions and 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. 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.
Cash Flows Comparison of the year ended December 31, 2022 to the year ended December 31, 2021 Total cash, cash equivalents, and restricted cash were $49.6 million and $139.5 million at December 31, 2022 and 2021, respectively.
Cash Flows Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 Total cash, cash equivalents, and restricted cash were $82.9 million and $49.6 million at December 31, 2023 and 2022, respectively.
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, 2022, we signed 64 office leases for 475,401 square feet with an average rent of $60.16 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, 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.
Of the leases, 69 represent comparable leases where there was a prior tenant, with an increase of 5.1% in cash basis rent and an increase of 17.2% in straight-line rent compared to the prior leases. Multifamily Leases .
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 .
Real estate tax expense increased $2.0 million, or 5%, to $44.8 million for the year ended December 31, 2022, compared to $42.8 million for the year ended December 31, 2021.
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.
New retail leases for comparable spaces were signed for 14,511 square feet at an average rental rate increase of 16.0% on a cash basis and an average rental rate increase of 701.9% (due to the modification of prior tenants' rent to cash-basis, which precluded straight-line rent for comparison) on a straight-line basis.
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).
Mixed-use rental revenue increased $14.5 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to an increase of $13.2 million related to the Waikiki Beach Walk hotel portion of our mixed use property.
Mixed-use rental revenue increased $5.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to an increase of $4.7 million at the Waikiki Beach Walk hotel portion of our mixed-use property.
Retail other property income decreased $0.1 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to the lease termination fees received at Carmel Mountain Plaza and Del Monte Center during the year ended December 31, 2021.
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.
Generally, our acquisitions are initially financed by available cash, mortgage loans and/or borrowings under our credit facility, which may be repaid later with funds raised through the issuance of new equity or new long-term debt.
Generally, our acquisitions are initially financed by available cash, mortgage loans and/or borrowings under our credit facility, which may be repaid later with funds raised through the issuance of new equity or new long-term debt. Same-store We have provided certain information on a total portfolio, same-store and redevelopment same-store basis.
Property Expenses Total Property Expenses. Total property expenses consist of rental expenses and real estate taxes. Total property expenses increased by $22.7 million, or 17%, to $152.4 million for the year ended December 31, 2022, compared to $129.8 million for the year ended December 31, 2021.
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.
While the amount of future expenditures will depend on numerous factors, we expect expenditures incurred in the year ending December 31, 2023 to decrease from the year ending December 31, 2022 as we near completion of development activities at La Jolla Commons and renovations at One Beach Street.
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.
Multifamily rental revenue increased $5.2 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to an overall increase in occupancy and average monthly base rent of 92.9% and $2,349, respectively, for the year ended December 31, 2022, compared to 92.1% and $2,160, respectively, for the year ended December 31, 2021.
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.
Mixed-use other property income increased $3.2 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to an increase in other room rental income and rent excise tax at the hotel portion of our mixed-use property and an increase in parking garage income and rent excise tax at the retail portion of our mixed-use property.
Mixed-use other property income increased $1.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to increased tourism and hotel occupancy which led to an increase in other room rental income and excise taxes at the hotel portion of our mixed-use property and an increase in parking garage income at the retail portion of our mixed-use property.
Renewals for comparable retail spaces were signed for 305,149 square feet at an average rental rate increase of 4.5% on a cash basis and an increase of 9.3% on a straight-line basis. Tenant improvements and incentives were $32.87 per square foot of retail space for comparable new leases for the twelve months ended December 31, 2022.
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.
Net cash provided by operating activities increased $10.7 million to $179.1 million for the year ended December 31, 2022, compared to $168.3 million for the year ended December 31, 2021.
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.
As of December 31, 2022, the retail portion of the property was 93.8% leased, and for the year ended December 31, 2022, the hotel had an average occupancy of 76.9%. For the year ended December 31, 2022, the mixed-use segment contributed 14.2%, of our total revenue.
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.
Of the leases, 43 represent comparable leases where there was a prior tenant, with an increase of 17.1% in cash basis rent and an increase of 21.7% in straight-line rent compared to the prior leases. Retail Leases .
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 .
Renewals for comparable office spaces were signed for 307,083 square feet at an average rental rate increase of 16.4% on a cash basis and increase of 18.9% on a straight-line basis. Tenant improvements and incentives were $55.06 per square foot of office space for comparable new leases for the twelve months ended December 31, 2022.
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.
This increase in total property expenses was attributable primarily to the factors discussed below . Rental Expenses. Rental expenses increased $20.7 million, or 24%, to $107.6 million for the year ended December 31, 2022, compared to $87.0 million for the year ended December 31, 2021.
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.
During the year ended December 31, 2022, we signed 91 retail leases for 390,425 square feet with an average rent of $32.96 per square foot during the initial year of the lease term, including leases signed for the retail portion of our mixed-use 44 property.
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.
Net cash used in investing activities decreased $146.0 million to $166.3 million for the year ended December 31, 2022, compared to $312.3 million for the year ended December 31, 2021.
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.
Total property revenue consists of rental revenue and other property income. Total property revenue increased $46.8 million, or 12%, to $422.6 million for the year ended December 31, 2022, compared to $375.8 million for the year ended December 31, 2021.
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.
New office leases for comparable spaces were signed for 45,842 square feet at an average rental rate increase of 22.5% on a cash basis and an average rental rate increase of 44.3% on a straight-line basis.
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.
During the twelve months ended December 31, 2022, we signed 91 retail leases for a total of 390,425 square feet of retail space including 319,660 square feet of comparable space leases, at an average rental rate increase of 5.1% on a cash basis and an average rental increase of 17.2% on a straight-line basis.
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.
Other property income increased $4.5 million, or 29%, to $20.1 million for the year ended December 31, 2022, compared to $15.6 million for the year ended December 31, 2021.
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.
Property operating income increased $24.2 million, or 10%, to $270.2 million for the year ended December 31, 2022, compared to $246.1 million for the year ended December 31, 2021.
Property operating income increased $7.0 million, or 3%, to $277.2 million for the year ended December 31, 2023, compared to $270.2 million for the year ended December 31, 2022.
This increase was due to the lifting of COVID-19 travel restrictions, which led to an increase in average occupancy and revenue per available room to 76.9% and $283 for the year ended December 31, 2022, respectively, compared to 66.4% and $185 for the year ended December 31, 2021, respectively.
This was due to an increase in average occupancy and revenue per available room to 85.2% and $318 for the year ended December 31, 2023, respectively, compared to 76.9% and $283 for the year ended December 31, 2022, respectively.
The decrease in cash used was primarily due to our recent acquisition of Bel-Spring 520 on March 8, 2022, and increased capital expenditures at La Jolla Commons III and One Beach Street, compared to the cash used for the year ended December 31, 2021 related to our acquisitions of Eastgate Office Park and Corporate Campus East III.
The decrease in cash used was primarily due to the acquisition of Bel-Spring 520 on March 8, 2022, and decrease in capital expenditures at La Jolla Commons III and One Beach Street.
Same-store office rental revenue increased $5.0 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to higher annualized base rents at La Jolla Commons and Landmark at One Market and higher occupancy at La Jolla Commons and Torrey Reserve Campus.
Total office rental revenue increased $4.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to an increase of $3.2 million in same-store office rental revenue due to higher annualized base rents at Torrey Reserve Campus, Solana Crossing and The Landmark at One Market.
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.
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.
Multifamily other property income increased $0.6 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily to an increase in parking garage income at Hassalo on Eighth - Residential, an increase in meter income at Loma Palisades and Pacific Ridge Apartments, and an increase in security deposits applied at Pacific Ridge Apartments.
Multifamily other property income decreased $0.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to a decrease in meter income and late fees at Pacific Ridge Apartments, Loma Palisades and Hassalo on Eighth - Multifamily.
Because the company operates on a consolidated basis with the Operating Partnership, the section entitled “Liquidity and Capital Resources of American Assets Trust, L.P.” should be read in conjunction with this section to understand the liquidity and capital resources of the company on a consolidated basis and how the company is operated as a whole.
Because the company operates on a consolidated basis with the Operating Partnership, the section entitled “Liquidity and Capital Resources of American Assets Trust, L.P.” should be read in conjunction with this section to understand the liquidity and capital resources of the company on a consolidated basis and how the company is operated as a whole. 56 The company issues public equity from time to time, but does not otherwise generate any capital itself or conduct any business itself, other than incurring certain expenses in operating as a public company which are fully reimbursed by the Operating Partnership.
Rental revenue increased $42.3 million, or 12%, to $402.5 million for the year ended December 31, 2022, compared to $360.2 million for the year ended December 31, 2021.
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.
Mixed-use real estate taxes decreased $0.3 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to COVID-19 and its financial burden on the hospitality industry, as a result of which Honolulu County reduced the tax burden for hotels for 2021 through 2022. Property Operating Income.
Mixed-use real estate taxes increased $0.3 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to discontinuation of a reduction in tax burden that was formerly provided by Honolulu County to hotels during 2021 and 2022 in response to the COVID-19 pandemic. Property Operating Income.
Rental revenue by segment was as follows (dollars in thousands): Total Portfolio Same-Store Portfolio (1) Year Ended December 31, Year Ended December 31, 2022 2021 Change % 2022 2021 Change % Office $ 198,197 $ 181,916 $ 16,281 9 % $ 180,257 $ 175,296 $ 4,961 3 % Retail 99,585 93,249 6,336 7 99,585 93,249 6,336 7 Multifamily 54,075 48,896 5,179 11 54,075 48,896 5,179 11 Mixed-Use 50,650 36,147 14,503 40 50,650 36,147 14,503 40 $ 402,507 $ 360,208 $ 42,299 12 % $ 384,567 $ 353,588 $ 30,979 9 % (1) For this table and tables following, the same-store portfolio excludes (i) One Beach Street, due to significant redevelopment activity; (ii) Eastgate Office Park which was acquired on July 7, 2021; (iii) Corporate Campus East III which was acquired on September 10, 2021; (iv) Bel-Spring 520 which was acquired on March 8, 2022; (v) the 710 building at Lloyd District Portfolio which was placed into operations on November 1, 2022, approximately one year after completing renovations of the building and (vi) land held for development.
Rental revenue by segment was as follows (dollars in thousands): Total Portfolio Same-Store Portfolio (1) Year Ended December 31, Year Ended December 31, 2023 2022 Change % 2023 2022 Change % Office $ 202,248 $ 198,197 $ 4,051 2 % $ 198,960 $ 195,740 $ 3,220 2 % Retail 103,355 99,585 3,770 4 103,355 99,585 3,770 4 Multifamily 57,973 54,075 3,898 7 57,973 54,075 3,898 7 Mixed-Use 55,797 50,650 5,147 10 55,797 50,650 5,147 10 $ 419,373 $ 402,507 $ 16,866 4 % $ 416,085 $ 400,050 $ 16,035 4 % (1) For this table and tables following, the same-store portfolio excludes (i) One Beach Street, due to significant redevelopment activity; (ii) Bel-Spring 520, which was acquired on March 8, 2022; (iii) the 710 building at Lloyd Portfolio which was placed into operations on November 1, 2022, approximately one year after completing renovations of the building and (iv) land held for development.

… 77 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−1 removed5 unchanged
Biggest changeIf interest rates at December 31, 2022 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately $68.1 million. Additionally, we consider our $100 million Term Loan A, outstanding as of December 31, 2022 to be fixed rate debt as the rate is effectively fixed by an interest rate swap agreement.
Biggest changeIf 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.
Market risk refers to the risk of loss from adverse changes in market prices and interest rates. 62 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.
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.
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 May 2029) 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 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.
At December 31, 2022, we had $1.4 billion of fixed-rate debt outstanding with an estimated fair value of $1.2 billion. If interest rates at December 31, 2022 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately $45.0 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.
We have entered into term loans that have interest rates that contain both fixed and variable components. See the discussion under Note 8 to the accompanying consolidated financial statements for details related to the interest rate swaps and for a discussion on how we value derivative financial instruments.
See the discussion under Note 8 to the accompanying consolidated financial statements for details related to the interest rate swaps and for a discussion on how we value derivative financial instruments.
Based upon this amount of variable rate debt and the specific terms, if market interest rates increased 1.0%, our annual interest expense would increase by approximately $0.2 million with a corresponding decrease in our net income and cash flows for the year.
Based upon this amount of variable rate debt and the specific terms, if market interest rates increased or decreased by 1.0%, our annual interest expense would not change, nor would there be a change in our net income and cash flows for the year, since this variable rate debt is effectively fixed by interest rate swap agreements.
Variable Interest Rate Debt Generally, we believe that our primary interest rate risk is due to fluctuations in interest rates on our variable rate debt. At December 31, 2022, we had $250 million of variable rate debt outstanding, of which $100 million are subject to interest rate swaps as described above.
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.
Also, we consider our $150 million debt outstanding as of December 31, 2022, related to Term Loan B and Term Loan C, to be fixed rate debt through November 30, 2022 as the rate was effectively fixed by an interest rate swap agreement until such date, before it became variable rate debt from December 1, 2022 to December 31, 2022.
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.
Removed
Conversely, if market rates decreased 1.0%, our annual interest expense would decrease by approximately $0.2 million with a corresponding increase in our net income and cash flows for the year.
Added
We have historically entered into forward starting interest rate swaps in order to economically hedge against the risk of rising interest rates that would affect our interest expense related to our future anticipated debt issuances as part of our overall borrowing program.

Other AAT 10-K year-over-year comparisons