American Assets Trust, Inc.

Previous wording

We are a full service, vertically integrated and self-administered REIT that owns, operates, acquires and develops high quality office, retail, multifamily and mixed-use properties in attractive, high-barrier-to-entry markets in Southern California, Northern California, Washington, Oregon, Texas, and Hawaii. As of December 31, 2024, our portfolio was comprised of twelve office properties; twelve retail shopping centers; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center; and six multifamily properties. Additionally, as of December 31, 2024, we owned land at three of our properties that we classified as held for development or construction in progress. Our core markets include San Diego, California; the San Francisco Bay Area, California; Bellevue, Washington; Portland, Oregon, and Oahu, Hawaii. American Assets Trust, Inc., as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned 78.9% of our Operating Partnership as of December 31, 2024. Accordingly, we consolidate the assets, liabilities and results of operations of our Operating Partnership.

Current wording

We are a full service, vertically integrated and self-administered REIT that owns, operates, acquires and develops high quality office, retail, multifamily and mixed-use properties in attractive, high-barrier-to-entry markets in Southern California, Northern California, Washington, Oregon, Texas, and Hawaii. As of December 31, 2025, our portfolio was comprised of twelve office properties; eleven retail shopping centers; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center; and seven multifamily properties. Additionally, as of December 31, 2025, we owned land at two of our properties that we classified as held for development or construction in progress. La Jolla Commons - Land, related to the development of La Jolla Commons III, was previously classified as held for development. The development of La Jolla Commons III is now complete and the building, inclusive of the land, was placed in operations as of April 1, 2025. 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 78.95% of our Operating Partnership as of December 31, 2025. Accordingly, we consolidate the assets, liabilities and results of operations of our Operating Partnership.

Previous wording

We intend to opportunistically pursue projects in our development pipeline including future phases of Lloyd Portfolio, other redevelopments at Waikele Center, as well as multifamily development opportunities within our existing portfolio, namely at Lomas Santa Fe Plaza, Solana Beach Towne Centre and Carmel Mountain Plaza. The commencement of these developments is based on, among other things, market conditions and our evaluation of whether such opportunities would generate appropriate risk adjusted financial returns. Our redevelopment and development opportunities are subject to various factors, including market conditions and may not ultimately come to fruition. We continue to review acquisition opportunities in our primary markets that would complement our portfolio and provide long-term growth opportunities. Some of our acquisitions do not initially contribute significantly to earnings growth; however, we believe they provide long-term re-leasing growth, redevelopment opportunities and other strategic opportunities. Any growth from acquisitions is contingent on our ability to find properties that meet our qualitative standards at prices that meet our financial hurdles. Changes in interest rates may affect our success in achieving earnings growth through acquisitions by affecting both the price that must be paid to acquire a property, as well as our ability to economically finance a property acquisition. 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.

Current wording

We intend to opportunistically pursue projects in our development pipeline, including future phases of Lloyd Portfolio, other redevelopments at Waikele Center, as well as multifamily development opportunities within our existing portfolio, namely at Lomas Santa Fe Plaza, Solana Beach Towne Centre, Carmel Mountain Plaza, and Genesee Park. The commencement of these developments is based on, among other things, market conditions and our evaluation of whether such opportunities would generate appropriate risk-adjusted financial returns. Our redevelopment and development opportunities are subject to various factors, including market conditions and may not ultimately come to fruition. We continue to review acquisition opportunities in our primary markets that would complement our portfolio and provide long-term growth opportunities. Some of our acquisitions do not initially contribute significantly to earnings growth; however, we believe they provide long-term re-leasing growth, redevelopment opportunities and other strategic opportunities. Any growth from acquisitions is contingent on our ability to find properties that meet our qualitative standards at prices that meet our financial hurdles. Changes in interest rates may affect our success in achieving earnings growth through acquisitions by affecting both the price that must be paid to acquire a property, as well as our ability to economically finance a property acquisition. 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.

Previous wording

We have provided certain information on a total portfolio, same-store and redevelopment same-store basis. Information provided on a same-store basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties for which significant redevelopment or expansion occurred during either of the periods being compared, properties under development, properties classified as held for development and properties classified as discontinued operations. Information provided on a redevelopment same-store basis includes the results of properties undergoing significant redevelopment for the entirety or portion of both periods being compared. Same-store and redevelopment same-store is considered by management to be an important measure because it assists in eliminating disparities due to the development, acquisition or disposition of properties during the particular period presented, and thus provides a more consistent performance measure for the comparison of the company's stabilized and redevelopment properties, as applicable. Additionally, redevelopment same-store is considered by management to be an important measure because it assists in evaluating the timing of the start and stabilization of our redevelopment opportunities and the impact that these redevelopments have in enhancing our operating performance.

Current wording

We have provided certain information on a total portfolio, same-store and redevelopment same-store basis. Information provided on a same-store basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties for which significant redevelopment or expansion occurred during either of the periods being compared, properties under development, properties classified as held for development and properties classified as discontinued operations. Information provided on a redevelopment same-store basis includes the results of properties undergoing significant redevelopment for the entirety or portion of both periods being compared. Same-store and redevelopment same-store are considered by management to be important measures because they assist in eliminating disparities due to the development, acquisition or disposition of properties during the particular period presented, and thus provide a more consistent performance measure for the comparison of the company's stabilized and redevelopment properties, as applicable. Additionally, redevelopment same-store is considered by management to be an important measure because it assists in evaluating the timing of the start and stabilization of our redevelopment opportunities and the impact that these redevelopments have in enhancing our operating performance.

Previous wording

While there is judgment surrounding changes in designations, we typically reclassify significant development, redevelopment or expansion properties to same-store properties once they are stabilized. Properties are deemed stabilized typically at the earlier of (1) reaching 90% occupancy or (2) four quarters following a property's inclusion in operating real estate. We typically remove properties from same-store properties when the development, redevelopment or expansion has or is expected to have a significant impact on the property's annualized base rent, occupancy and operating income within the calendar year. Acquired properties are classified to same-store properties once we have owned such properties for the entirety of comparable period(s) and the properties are not under significant development or expansion.

Current wording

While there is judgment surrounding changes in designations, we typically reclassify significant development, redevelopment or expansion properties into same-store properties once they are stabilized. Properties are deemed stabilized typically at the earlier of (1) reaching 90% occupancy or (2) four quarters following a property's inclusion in operating real estate. We typically remove properties from same-store properties when the development, redevelopment or expansion has or is expected to have a significant impact on the property's annualized base rent, occupancy and operating income within the calendar year. Our evaluation of significant impact related to development, redevelopment or expansion activity is based on quantitative and qualitative measures including, but not limited to, the following: the total budgeted cost of planned construction activity compared to the property’s annualized base rent, occupancy and operating income within the calendar year; percentage of development, redevelopment or expansion square footage to total property square footage; and the ability to maintain historic occupancy and rental rates. In consideration of these measures, we generally remove properties from same-store properties when we see a decline in a property's annualized base rent, occupancy and operating income within the calendar year as a direct result of ongoing redevelopment, development or expansion activity. Acquired properties are classified into same-store properties once we have owned such properties for the entirety of comparable period(s) and the properties are not under significant development or expansion.

Previous wording

Below is a summary of our same-store composition for the years ended December 31, 2024, 2023 and 2022. For the year ended December 31, 2024, when compared to the designations for the year ended December 31, 2023, Timber Springs is classified as a same-store property for the year ended December 31, 2024, because the property was acquired on March 8, 2022. The 710 building within the Lloyd Portfolio is classified as a same-store property when compared to the designation for the year ended December 31, 2023, because the property has been in operation for a full year since it was placed in service in November 2022. One Beach Street continues to be identified as a same-store redevelopment property due to significant redevelopment activity. Additionally, this property was placed into operations on August 1, 2024, approximately one year after completing renovations.

Current wording

For the year ended December 31, 2024, when compared to the designations for the year ended December 31, 2023, Timber Springs was classified as a same-store property for the year ended December 31, 2024, because the property was acquired on March 8, 2022. The 710 building within the Lloyd Portfolio was classified as a same-store property when compared to the designation for the year ended December 31, 2023, because the property had been in operation for a full year since it was placed in service in November 2022. One Beach Street is identified as a non-same-store property for the years ended December 31, 2024 and 2023, due to significant redevelopment activity. Additionally, this property was placed into operations on August 1, 2024, approximately one year after completing renovations.

Previous wording

Office Leases. Our office portfolio included twelve properties with a total of approximately 4.1 million rentable square feet available for lease as of December 31, 2024. As of December 31, 2024, these properties were 85.0% leased. For the year ended December 31, 2024, the office segment contributed 47.1% of our total revenue. Historically, we have leased office properties to tenants primarily on a full service gross or a modified gross basis and to a limited extent on a triple-net lease basis. We expect to continue to do so in the future. A full-service gross or modified gross lease has a base year expense stop, whereby the tenant pays a stated amount of certain expenses as part of the rent payment, while future increases in property operating expenses (above the base year stop) are billed to the tenant based on such tenant's proportionate square footage of the property. 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.

Current wording

Office Leases. Our office portfolio included twelve properties with a total of approximately 4.3 million rentable square feet available for lease as of December 31, 2025. As of December 31, 2025, these properties were 83.1% leased. For the year ended December 31, 2025, the office segment contributed 47.2% 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 expect to continue to do so in the future. A full-service gross or modified gross lease has a base year expense stop, whereby the tenant pays a stated amount of certain expenses as part of the rent payment, while future increases in property operating expenses (above the base year stop) are billed to the tenant based on such tenant's proportionate square footage of the property. 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.

Previous wording

During the year ended December 31, 2024, we signed 67 office leases for 398,506 square feet with an average rent of $52.32 per square foot during the initial year of the lease term. Of the leases, 45 represent comparable leases where there was a prior tenant, with an increase of 6.0% in cash basis rent and an increase of 13.0% in straight-line rent compared to the prior leases.

Current wording

During the year ended December 31, 2025, we signed 82 office leases for 616,680 square feet with an average rent of $55.50 per square foot during the initial year of the lease term. Of the leases, 46 represent comparable leases where there was a prior tenant, with an increase of 6.4% in cash basis rent and an increase of 13.8% in straight-line rent compared to the prior leases.

Previous wording

Retail Leases. Our retail portfolio included twelve properties with a total of approximately 3.1 million rentable square feet available for lease as of December 31, 2024. As of December 31, 2024, these properties were 94.5% leased. For the year ended December 31, 2024, the retail segment contributed 23.8%, of our total revenue. Historically, we have leased retail properties to tenants primarily on a triple-net lease basis, and we expect to continue to do so in the future. In a triple-net lease, the tenant is responsible for all property taxes and operating expenses. As such, the base rent payment does not include any operating expense, but rather all such expenses, to the extent they are paid by the landlord, are billed to the tenant. The full amount of the expenses for this lease type, to the extent they are paid by the landlord, is reflected in operating expenses, and the reimbursement is reflected as rental income in the statements of operations.

Current wording

Retail Leases. Our retail portfolio included eleven properties with a total of approximately 2.4 million rentable square feet available for lease as of December 31, 2025. As of December 31, 2025, these properties were 97.7% leased. For the year ended December 31, 2025, the retail segment contributed 21.8%, of our total revenue. Historically, we have leased retail properties to tenants primarily on a triple-net lease basis, and we expect to continue to do so in the future. In a triple-net lease, the tenant is responsible for all property taxes and operating expenses. As such, the base rent payment does not include any operating expense, but rather all such expenses, to the extent they are paid by the landlord, are billed to the tenant. The full amount of the expenses for this lease type, to the extent they are paid by the landlord, is reflected in operating expenses, and the reimbursement is reflected as rental income in the statements of operations.

Previous wording

During the year ended December 31, 2024, we signed 95 retail leases for 428,981 square feet with an average rent of $38.32 per square foot during the initial year of the lease term, including leases signed for the retail portion of our mixed-use property. Of the leases, 80 represent comparable leases where there was a prior tenant, with an increase of 4.5% in cash basis rent and an increase of 25.0% in straight-line rent compared to the prior leases.

Current wording

During the year ended December 31, 2025, we signed 91 retail leases for 546,406 square feet with an average rent of $32.59 per square foot during the initial year of the lease term, including leases signed for the retail portion of our mixed-use property. Of the leases, 80 represent comparable leases where there was a prior tenant, with an increase of 7.1% in cash basis rent and an increase of 21.8% in straight-line rent compared to the prior leases.

Previous wording

Multifamily Leases. Our multifamily portfolio included six apartment properties, as well as an RV resort, with a total of 2,110 units (including 120 RV spaces) available for lease as of December 31, 2024. As of December 31, 2024, these properties were 91.8% leased. For the year ended December 31, 2024, the multifamily segment contributed 14.3% of our total revenue. Our multifamily leases, other than at our RV resort, generally have lease terms ranging from 7 to 15 months, with a majority having 12-month lease terms. Tenants normally pay a base rental amount, usually quoted in terms of a monthly rate for the respective unit. Spaces at the RV resort can be rented at a daily, weekly, or monthly rate. The average monthly base rent per leased unit as of December 31, 2024 was $2,683, compared to $2,619 at December 31, 2023.

Current wording

Multifamily Leases. Our multifamily portfolio included six apartment properties, as well as an RV resort, with a total of 2,302 units (including 120 RV spaces) available for lease as of December 31, 2025. As of December 31, 2025, these properties were 91.1% occupied. For the year ended December 31, 2025, the multifamily segment contributed 15.8% of our total revenue. Our multifamily leases, other than at our RV resort, generally have lease terms ranging from 7 to 15 months, with a majority having 12-month lease terms. Tenants normally pay a base rental amount, usually quoted in terms of a monthly rate for the respective unit. Spaces at the RV resort can be rented at a daily, weekly, or monthly rate. The average monthly base rent per occupied unit as of December 31, 2025 was $2,684, compared to $2,683 at December 31, 2024.

Previous wording

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. Revenue from the mixed-use property consists of revenue earned from retail leases, and revenue earned from the hotel, which consists of room revenue, food and beverage services, parking and other guest services. As of December 31, 2024, the retail portion of the property was 90.5% leased, and for the year ended December 31, 2024, the hotel had an average occupancy of 85.9%. For the year ended December 31, 2024, the mixed-use segment contributed 14.8%, of our total revenue. We have leased the retail portion of such property to tenants primarily on a triple-net lease basis, and we expect to continue to do so in the future. As such, the base rent payment under such leases does not include any operating expenses, but rather all such expenses, to the extent they are paid by the landlord, are billed to the tenant. Rooms at the hotel portion of our mixed-use property are rented on a nightly basis.

Current wording

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. Revenue from the mixed-use property consists of revenue earned from retail leases, and revenue earned from the hotel, which consists of room revenue, food and beverage services, parking and other guest services. As of December 31, 2025, the retail portion of the property was 96.2% leased, and for the year ended December 31, 2025, the hotel had an average occupancy of 82.3%. For the year ended December 31, 2025, the mixed-use segment contributed 15.1%, of our total revenue. We have leased the retail portion of such property to tenants primarily on a triple-net lease basis, and we expect to continue to do so in the future. As such, the base rent payment under such leases does not include any operating expenses, but rather all such expenses, to the extent they are paid by the landlord, are billed to the tenant. Rooms at the hotel portion of our mixed-use property are rented on a nightly basis.

Previous wording

During the twelve months ended December 31, 2024, we signed 67 office leases for a total of 398,506 square feet of office space including 247,551 square feet of comparable space leases, at an average rental rate increase of 6.0% on a cash basis and an average rental increase of 13.0% on a straight-line basis. New office leases for comparable spaces were signed for 84,435 square feet at an average rental rate increase of 8.0% on a cash basis and an average rental rate increase of 18.5% on a straight-line basis. Renewals for comparable office spaces were signed for 163,116 square feet at an average rental rate increase of 5.0% on a cash basis and increase of 10.4% on a straight-line basis. Tenant improvements and incentives were $37.05 per square foot of office space for comparable new leases for the twelve months ended December 31, 2024. There were $25.15 per square foot of office space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2024.

Current wording

During the twelve months ended December 31, 2025, we signed 82 office leases for a total of 616,680 square feet of office space including 370,619 square feet of comparable space leases (leases for which there was a previous tenant), at an average rental rate increase on a cash and GAAP basis of 6.4% and 13.8%, respectively. New office leases for comparable spaces were signed for 119,206 square feet at an average rental rate increase on a cash and GAAP basis of 3.4% and 16.3%, respectively. Renewals for comparable office spaces were signed for 251,413 square feet at an average rental rate increase on a cash and GAAP basis of 7.7% and 12.8%, respectively. Tenant improvements and incentives were $28.33 per square foot of office space for comparable new leases for the twelve months ended December 31, 2025, mainly due to new tenants at City Center Bellevue, Lloyd Portfolio and 14Acres. There were $21.47 per square foot of office space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2025.

Previous wording

During the twelve months ended December 31, 2024, we signed 95 retail leases for a total of 428,981 square feet of retail space including 392,350 square feet of comparable space leases, at an average rental rate increase of 4.5% on a cash basis and an average rental increase of 25.0% on a straight-line basis. New retail leases for comparable spaces were signed for 9,294 square feet at an average rental rate increase of 16.0% on a cash basis and an average rental rate increase of 669.3% on a straight-line basis (due to the modification of prior tenants' rent to cash-basis, which precluded straight-line rent for comparison). Renewals for comparable retail spaces were signed for 383,056 square feet at an average rental rate increase of 4.0% on a cash basis and an increase of 18.1% on a straight-line basis. Tenant improvements and incentives were $32.36 per square foot of retail space for comparable new leases for the twelve months ended December 31, 2024. There were $2.68 per square foot of retail space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2024.

Current wording

During the twelve months ended December 31, 2025, we signed 91 retail leases for a total of 546,406 square feet of retail space including 509,924 square feet of comparable space leases, at an average rental rate increase on a cash and GAAP basis of 7.1% and 21.8%, respectively. New retail leases for comparable spaces were signed for 25,372 square feet at an average rental rate increase on a cash and GAAP basis of 9.9% and 436.8% (due to the modification of prior tenants' rent to cash-basis, which precluded straight-line rent for comparison), respectively. Renewals for comparable retail spaces were signed for 484,552 square feet at an average rental rate increase on a cash and GAAP basis of 6.9% and 15.6%, respectively. Tenant improvements and incentives were $42.85 per square foot of retail space for comparable new leases for the twelve months ended December 31, 2025, mainly due to new tenants at Gateway Marketplace, Alamo Quarry Market, Lomas Santa Fe Plaza and Carmel Country Plaza. There were $5.78 per square foot of retail space of tenant improvement or incentives for comparable renewal leases for the twelve months ended December 31, 2025.

Previous wording

We capitalized external and internal costs related to both development and redevelopment activities combined of $16.3 million and $24.0 million for the years ended December 31, 2024 and 2023, respectively.

Current wording

We capitalized external and internal costs related to new development, redevelopment, expansion and repositioning activities combined of $22.7 million and $16.3 million for the years ended December 31, 2025 and 2024, respectively.

Previous wording

We capitalized external and internal costs related to other property improvements combined of $52.2 million and $54.2 million for the years ended December 31, 2024 and 2023, respectively.

Current wording

We capitalized external and internal costs related to other property improvements combined of $55.5 million and $52.2 million for the years ended December 31, 2025 and 2024, respectively.

Previous wording

Interest costs on developments and major redevelopments are capitalized as part of developments and redevelopments not yet placed in service. Capitalization of interest commences when development activities and expenditures begin and end upon completion, which is when the asset is ready for its intended use as noted above. We make judgments as to the time period over which to capitalize such costs and these assumptions have a direct impact on net income because capitalized costs are not subtracted in calculating net income. If the time period for capitalizing interest is extended, more interest is capitalized, thereby decreasing interest expense and increasing net income during that period. We capitalized interest costs related to both development and redevelopment activities combined of $7.5 million and $7.8 million for the years ended December 31, 2024 and 2023, respectively.

Current wording

Interest costs on developments and major redevelopments are capitalized as part of developments and redevelopments not yet placed in service. Capitalization of interest commences when development activities and expenditures begin and end upon completion, which is when the asset is ready for its intended use as noted above. We make judgments as to the time period over which to capitalize such costs and these assumptions have a direct impact on net income because capitalized costs are not subtracted in calculating net income. If the time period for capitalizing interest is extended, more interest is capitalized, thereby decreasing interest expense and increasing net income during that period. We capitalized interest costs related to both development and redevelopment activities combined of $1.4 million and $7.5 million for the years ended December 31, 2025 and 2024, respectively.

Previous wording

The increase in tenant improvements and leasing commissions for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily related to tenant buildouts at La Jolla Commons, Lloyd Portfolio, Del Monte Center, City Center Bellevue and Alamo Quarry Market during the year ended December 31, 2024, partially offset by tenant buildouts completed at Torrey Reserve Campus, Torrey Point and Carmel Mountain Plaza during the year ended December 31, 2023.

Current wording

The increase in tenant improvements and leasing commissions for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily related to new tenant build-outs at Coastal Collection at Torrey Reserve, Solana Crossing, 14 Acres, Timber Ridge and Carmel Country Plaza during the year ended December 31, 2025, partially offset by tenant build-outs completed at La Jolla Commons, City Center Bellevue and Alamo Quarry Market during the year ended December 31, 2024. Additionally, the decrease in retail tenant improvements and leasing commissions is due to the sale of Del Monte Center during the first quarter of 2025.

Previous wording

The decrease in capital expenditures for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily related to the renovations completed at City Center Bellevue and La Jolla Commons during the year ended December 31, 2023, partially offset by an increase at Alamo Quarry Market during the year ended December 31, 2024.

Current wording

The decrease in capital expenditures for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily related to the renovations completed at Imperial Beach, 14 Acres and Lloyd Portfolio during the year ended December 31, 2024, partially offset by an increase at La Jolla Commons I and II, First & Main and Alamo Quarry Market during the year ended December 31, 2025.

Previous wording

Our capital expenditures for the year ending December 31, 2025 will depend upon acquisition opportunities, the level of improvements and renovations on existing properties and the timing and cost of development of our held for development and construction in progress properties. While the amount of future expenditures will depend on numerous factors, we expect expenditures incurred in the year ending December 31, 2025 to decrease from the year ending December 31, 2024 as we reached completion of the development activities at La Jolla Commons in the year ended December 31, 2024.

Current wording

Our capital expenditures for the year ending December 31, 2026 will depend upon acquisition opportunities, the level of improvements and renovations on existing properties and the timing and cost of development of our held for development and construction in progress properties. While the amount of future expenditures will depend on numerous factors, we expect expenditures incurred in the year ending December 31, 2026 to increase from the year ending December 31, 2025 as we continue our renovations at Genesee Park, build-out amenities and speculative suites at One Beach Street and incur first generation tenant improvements at La Jolla Commons III.

Previous wording

Any interest rate swaps associated with our cash flow hedges are recorded at fair value on a recurring basis. We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recorded in other comprehensive income which is included in accumulated other comprehensive income on our consolidated balance sheet and our consolidated statement of equity. 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. In addition, we evaluate the default risk of the counterparty by monitoring the credit worthiness of the counterparty which includes reviewing debt ratings and financial performance. However, management does not anticipate non-performance by the counterparty. If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recognized in earnings in the period affected.

Current wording

Any interest rate swaps associated with our cash flow hedges are recorded at fair value on a recurring basis. We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recorded in other comprehensive income which is included in accumulated other comprehensive income on our consolidated balance sheet and our consolidated statement of equity. 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 Secured Overnight Financing Rate (SOFR). In addition, we evaluate the default risk of the counterparty by monitoring the credit worthiness of the counterparty which includes reviewing debt ratings and financial performance. However, management does not anticipate non-performance by the counterparty. If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recognized in earnings in the period affected.

Previous wording

The following summarizes our consolidated results of operations for the year ended December 31, 2024 compared to our consolidated results of operations for the year ended December 31, 2023. As of December 31, 2024, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.3 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel. Additionally, as of December 31, 2024, we owned land at three of our properties that we classified as held for development or construction in progress. As of December 31, 2023, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.3 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel. 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.

Current wording

The following summarizes our consolidated results of operations for the year ended December 31, 2025 compared to our consolidated results of operations for the year ended December 31, 2024. As of December 31, 2025, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 6.8 million rentable square feet of office and retail space (including mixed-use retail space), 2,302 residential units (including 120 RV spaces) and a 369-room hotel. Additionally, as of December 31, 2025, we owned land at two of our properties that we classified as held for development or construction in progress. As of December 31, 2024, our operating portfolio was comprised of 31 office, retail, multifamily and mixed-use properties with an aggregate of approximately 7.3 million rentable square feet of office and retail space (including mixed-use retail space), 2,110 residential units (including 120 RV spaces) and a 369-room hotel. Additionally, as of December 31, 2024, we owned land at three of our properties that we classified as held for development or construction in progress.

Previous wording

Total property revenues. Total property revenue consists of rental revenue and other property income. Total property revenue increased $16.7 million, or 4%, to $457.9 million for the year ended December 31, 2024, compared to $441.2 million for the year ended December 31, 2023. The percentage leased was as follows for each segment as of December 31, 2024 and 2023:

Current wording

Total property revenues. Total property revenue consists of rental revenue and other property income. Total property revenue decreased $21.7 million, or 5%, to $436.2 million for the year ended December 31, 2025, compared to $457.9 million for the year ended December 31, 2024. The percentage leased was as follows for each segment as of December 31, 2025 and 2024:

Previous wording

(1)The percentage leased includes the square footage under lease, including leases which may not have commenced as of December 31, 2024 or December 31, 2023, as applicable.

Current wording

(1)The percentage leased includes the square footage under lease, including leases which may not have commenced as of December 31, 2025 or December 31, 2024, as applicable. Leased units for our multifamily properties include total units leased and occupied as of the applicable date.

Previous wording

The increase in total property revenue was attributable primarily to the factors discussed below.

Current wording

The decrease in total property revenue was attributable primarily to the factors discussed below.

Previous wording

Rental revenues. Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents. Rental revenue increased $4.2 million, or 1%, to $423.6 million for the year ended December 31, 2024, compared to $419.4 million for the year ended December 31, 2023. Rental revenue by segment was as follows (dollars in thousands):

Current wording

Rental revenues. Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents. Rental revenue decreased $13.1 million, or 3%, to $410.5 million for the year ended December 31, 2025, compared to $423.6 million for the year ended December 31, 2024. Rental revenue by segment was as follows (dollars in thousands):

Previous wording

(1)For this table and tables following, the same-store portfolio excludes One Beach Street due to significant redevelopment and land held for development.

Current wording

(1)For this table and the tables following, the same-store portfolio excludes: (i) One Beach Street (office) due to significant redevelopment; (ii) Del Monte Center (retail), which was sold on February 25, 2025; (iii) Genesee Park (multifamily), which was acquired on February 28, 2025, (iv) La Jolla Commons III (office), which was placed into operations on April 1, 2025 and (v) land held for development (office).

Previous wording

Total retail rental revenue increased $4.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to new tenant leases signed, scheduled rent increases and tenants previously on alternate rent reverting back to basic monthly rent. These increases are primarily related to Carmel Mountain Plaza, Solana Beach Towne Center, Alamo Quarry Market and Del Monte Center. Additionally, there was an increase of $1.5 million in cost recoveries.

Current wording

Total retail rental revenue decreased $13.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to the sale of Del Monte Center on February 25, 2025. Same-store retail rental revenue increased $0.8 million due to new tenant leases and scheduled rent increases at Carmel Mountain Plaza and Alamo Quarry Market.

Previous wording

Multifamily rental revenue increased $3.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an overall increase in average monthly base rent and an increase in occupancy. Average monthly base rent and occupancy was $2,718 and 91.0% for the year ended December 31, 2024, compared to $2,581 and 90.0% for the year ended December 31, 2023.

Current wording

Multifamily rental revenue increased $3.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to the acquisition of Genesee Park on February 28, 2025. Same-store multifamily rental revenue decreased $0.3 million due to a decrease in occupancy and a slight increase in average monthly base rent. Same-store average monthly base rent and occupancy was $2,775 and 89.5% for the year ended December 31, 2025, compared to $2,718 and 91.0% for the year ended December 31, 2024.

Previous wording

Mixed-use rental revenue increased $0.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an increase in rental revenue at the retail portion of our mixed-use property, largely attributable to an increase in cost recoveries and new tenant leases commencing at higher base rents. Additionally, there was a minimal increase in rental revenue at the Waikiki Beach Walk hotel portion of our mixed-use property, due to a slight increase in average occupancy to 85.9% for the year ended December 31, 2024 compared to 85.2% for the year ended December 31, 2023.

Current wording

Mixed-use rental revenue decreased $2.1 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a decrease in tourism, which led to a decrease in average occupancy and revenue per available room to 82.3% and $296 for the year ended December 31, 2025 compared to 85.9% and $319 for the year ended December 31, 2024. This decrease was partially offset by an increase in rental revenue at the retail portion of our mixed-use property, primarily due to new tenant leases commencing at higher base rents and an increase in cost recoveries.

Previous wording

Other property income. Other property income increased $12.5 million, or 57%, to $34.2 million for the year ended December 31, 2024, compared to $21.8 million for the year ended December 31, 2023. Other property income by segment was as follows (dollars in thousands):

Current wording

Other property income. Other property income decreased $8.5 million, or 25%, to $25.7 million for the year ended December 31, 2025, compared to $34.2 million for the year ended December 31, 2024. Other property income by segment was as follows (dollars in thousands):

Previous wording

Retail other property income increased $0.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to lease termination fees received at Alamo Quarry Market and Solana Beach Towne Center in 2024, offset by lease termination fees received at Carmel Mountain Plaza and Southbay Marketplace in 2023.

Current wording

Retail other property income decreased $0.5 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to lease termination fees received at Alamo Quarry Market and Solana Beach Towne Center in 2024.

Previous wording

Mixed-use other property income increased $0.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an increase in other room rental income 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.

Current wording

Mixed-use other property income increased $0.5 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to an increase in parking income and lease settlement fees received at the retail portion of our mixed-use property.

Previous wording

Total Property Expenses. Total property expenses consist of rental expenses and real estate taxes. Total property expenses increased by $3.8 million, or 2%, to $167.7 million for the year ended December 31, 2024, compared to $164.0 million for the year ended December 31, 2023. This increase in total property expenses was attributable primarily to the factors discussed below.

Current wording

Total Property Expenses. Total property expenses consist of rental expenses and real estate taxes. Total property expenses increased by $1.9 million, or 1%, to $169.6 million for the year ended December 31, 2025, compared to $167.7 million for the year ended December 31, 2024. This increase in total property expenses was attributable primarily to the factors discussed below.

Previous wording

Rental Expenses. Rental expenses increased $4.7 million, or 4%, to $123.5 million for the year ended December 31, 2024, compared to $118.8 million for the year ended December 31, 2023. Rental expense by segment was as follows (dollars in thousands):

Current wording

Rental Expenses. Rental expenses increased $1.1 million, or 1%, to $124.6 million for the year ended December 31, 2025, compared to $123.5 million for the year ended December 31, 2024. Rental expense by segment was as follows (dollars in thousands):

Previous wording

Total office rental expenses increased $2.6 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an increase in facilities services, repairs and maintenance services, utilities expenses and insurance expenses.

Current wording

Total office rental expenses increased $3.0 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a $1.5 million increase at La Jolla Commons Tower III related to new operations and amenities. Same-store office rental expense increased $1.6 million due to higher utilities expense, facilities services expense and repairs and maintenance expense.

Previous wording

Real Estate Taxes. Real estate tax expense decreased $0.9 million, or 2%, to $44.2 million for the year ended December 31, 2024, compared to $45.2 million for the year ended December 31, 2023. Real estate tax expense by segment was as follows (dollars in thousands):

Current wording

Real Estate Taxes. Real estate tax expense increased $0.8 million, or 2%, to $45.0 million for the year ended December 31, 2025, compared to $44.2 million for the year ended December 31, 2024. Real estate tax expense by segment was as follows (dollars in thousands):

Previous wording

Retail real estate taxes increased $0.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an increase in property tax assessment at Alamo Quarry Market and real estate tax refunds received at Carmel Mountain Plaza during 2023.

Current wording

Retail real estate taxes decreased $2.0 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to the sale of Del Monte Center on February 25, 2025 and a decrease in property tax assessments at Alamo Quarry Market and real estate tax refunds received at Alamo Quarry Market and Carmel Mountain Plaza in 2025.

Previous wording

Mixed-use real estate taxes increased $0.3 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an increase in property tax assessment.

Current wording

Mixed-use real estate taxes increased $0.2 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to an increase in property tax assessments.

Previous wording

Property operating income increased $12.9 million, or 5%, to $290.1 million for the year ended December 31, 2024, compared to $277.2 million for the year ended December 31, 2023. Property operating income by segment was as follows (dollars in thousands):

Current wording

Property operating income decreased $23.5 million, or 8%, to $266.6 million for the year ended December 31, 2025, compared to $290.1 million for the year ended December 31, 2024. Property operating income by segment was as follows (dollars in thousands):

Previous wording

Multifamily property operating income increased $2.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to an overall increase in average occupancy and monthly base rent of 91.0% and $2,718, respectively for the year ended December 31, 2024 compared to 90.0% and $2,581, respectively for the year ended December 31, 2023. These increases were partially offset by higher utilities expenses, insurance expenses and facilities expenses.

Current wording

Multifamily operating income increased $0.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to the acquisition of Genesee Park. Same-store multifamily operating income decreased $1.0 million due to a decrease in average occupancy and a slight increase in monthly base rent of 89.5% and $2,775, respectively, for the year ended December 31, 2025 compared to 91.0% and $2,718, respectively, for the year ended December 31, 2024. Additionally, there was an increase in insurance expense, facilities services expense, repairs and maintenance expense and real estate tax expense.