Good day, and welcome to the American Assets Trust Third Quarter 2022 Earnings Conference Call. As a reminder, today's conference call is being recorded. All participants will be in a listen-only mode. Please note that statements made on this conference call include forward-looking statements based on current expectations, which statements are subject to risks and uncertainties discussed in the company's filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements as actual events could cause the company's results to differ materially from these forward-looking statements. It is now my pleasure to introduce your host Mr. Adam Wyll, President and COO for American Assets Trust. Thank you. Mr. Wyll, you may begin.

Thank you, operator. Good morning, everyone. Welcome to American Assets Trust Third Quarter 2022 Earnings Call. Yesterday afternoon, our earnings release and supplemental information were furnished to the SEC on Form 8-K. Both are now available on the Investors section of our website americanassetstrust.com. And with that quick intro, I'll turn the call over to Ernest Rady, our Chairman and CEO to begin the discussion of our third quarter 2022 results. Ernest?

Thanks, Adam, and good morning everyone. As you all are aware, we are seeing considerable volatility in the capital markets and uncertainty in the economy that seems likely to continue for the next few quarters at a minimum, given persistent inflation, rising interest rates and national and global politics, not to mention what I consider to have been excessive and unprecedented fiscal stimulus in the United States. These are times unlike any other that I've seen and it is clear there is no monetary policy playbook for a clear and obvious course correction. But that's why I feel more than ever quality matters: quality of our assets, quality of our balance sheet and more than anything else, quality of our people who are the stewards of our organization that work hard to optimize our long-term growth, shareholder wealth creation and investing and improving what we consider to be among the best assets in our markets for each of our asset classes. As you've likely heard about an ongoing flight to quality in commercial real estate, we know that our irreplaceable properties are sought after by tenants, not just based on being the most desirable product, but also amongst the most desirable locations, amenities, access to public transportation, passive growth and sustainability elements. Of course, we also treat our tenants very well and are flexible with tenant lease requirements which we believe also differentiates us from our peers. Though we may be in for a prolonged macroeconomic challenges, we continue to believe that these factors will continue to contribute to our relative outperformance in the long-term. In Q3 2022, we are encouraged by operating from a fundamentals and earnings trajectory as we built on our solid growth in Q1 and Q2. As you'll hear in a bit, we are now estimating 2022 to achieve our highest FFO per share since our IPO over 11 years ago, higher than pre-COVID 2019 FFO per share and that is based on optimism for continued near-term growth across all our assets. Again, our growth this year has been notwithstanding the difficult economic cycle and volatility that we are faced with to date. To me that speaks volumes about American Assets Trust and we still see a meaningful opportunity for growth in the ensuing years that we will do our absolute best to capitalize on the prospective lease-up of our new developments and continued rebound of our Waikiki Beach Walk Retail and Embassy Suites, particularly as Asian tourists begin to slowly return to Oahu. Clearly, the market view of AAT based under share price is inconsistent with our actual performance and the quality of our assets and our people and how we have executed our strategies and stewardship, but we'll do our best to bridge that depth. I also want to mention the Board of Directors has approved the quarterly dividend of $0.32 for the fourth quarter. The dividend will be paid on December 22 to shareholders of record December 8. Finally on the development front, both La Jolla Commons III and One Beach remain on time and on budget. And we continue to remain optimistic, by the leasing prospects and base requirements, but we do not have any specific news to share on that trend at this time. Adam, Bob and Steve will go into more detail on our various asset segments, financial results and guidance updates. On behalf of all of us at American Trust, we thank you for your confidence in allowing us to manage your company and for your continued support. I'm now going to turn the call back to Adam. Adam, please?

Thank you, Ernest. As Ernest alluded to and as we continue to reiterate, despite the headwinds of today's economic conditions and capital market challenges, we believe our underlying fundamentals and asset quality support a favorable long-term view of American Assets Trust. In addition to our asset quality and strong balance sheet, we have minimal lease maturities in 2023, single-digit percentages for both office and retail and low single-digit percentages assuming options are exercised. A highly diversified tenant credit and a well-staggered debt maturity schedule, not to mention having a diversified portfolio that helped us navigate through COVID, as certain of our segments proved more resilient than others at varying times. Meanwhile, since Labor Day we have seen incremental progress of return to work in our office portfolio from Q2 to Q3 with strength in San Diego and Portland and fairly strong utilization at Landmark in San Francisco by our two office tenants at about 75% Tuesday through Thursday and 50% Monday and Friday, as this building serves as a hub for one tenant in San Francisco and as the other's headquarters. Meanwhile, Bellevue continues to lag office utilization relative to our other markets. Of course, we still believe there's meaningful upside to our office utilization looking out several quarters, as employers continue to convey their intentions to us for their employees being in the office. And as we anticipate employers ultimately having more leverage with employees with our view of softening and more balanced labor markets over the next few quarters. In Q3, our San Diego multifamily portfolio continued its favorable rent growth, where we saw leases on vacant units rent at an average of approximately 31% over the prior rates, while rates on renewed units increased an average of 13% over prior rents with virtually no concessions in Q3. Additionally, in San Diego, net effective rents for new multifamily leases are now 22% above pre-COVID levels and 16% higher year-over-year, compared to the third quarter of 2019 and 2021, respectively. Additionally, our Hassalo on Eighth multifamily in Portland came in above our internal expectations in Q3, as the Portland multifamily market has continued its rebound. In Q3 we saw vacant units at Hassalo leased at an average of approximately 21% over prior rents and renewal units leased at an average of approximately 8% over prior rates, in all cases with no concessions given during Q3. In Portland net effective rents for new multifamily leases are now back near pre-COVID levels and 18% higher year-over-year compared to the third quarter of 2019 and 2021, respectively. We expect to see some deceleration of rent growth in our multifamily portfolio into Q4 as we move into a seasonally slower time of year. Meanwhile, we remain confident about our retail portfolio that is among the best in class in our markets. In Q3, we saw comparable retail leasing spreads increase approximately 7% and 28% on a cash basis and GAAP basis respectively, buoyed by favorable leasing activity in the quarter. On the heels of Q2 which also saw similar favorable comparable leasing spreads on a cash and GAAP basis. We have a fair amount of retail deals and documentation right now and remain optimistic those deals will get inked in Q4. Briefly with respect to ESG, we continue to make meaningful progress towards our ESG goals and are pleased to have achieved for the first time an A disclosure from GRESB which measures the level of public stakeholder engagement and communication of a company's ESG initiatives. We were ranked first out of our disclosure comparison group. And also we earned a four-star GRESB on standing investments good for second out of our peer comparison group. As you know we are committed to rolling up our sleeves and prudently advancing our ESG initiatives in the years to come. And we'll do our best to be transparent on those efforts. With that I'll turn the call over to Bob, to discuss financial results and updated guidance in more detail.

Thanks, Adam. Good morning, everybody. Last night, we reported third quarter 2022 FFO per share of $0.63 and third quarter 2022, net income attributable to common stockholders per share of $0.21. Third quarter FFO increased approximately $0.05 over the second quarter of '22 and is comprised of the following: First, the Embassy Suites Waikiki hotel increased by approximately $0.02 per FFO share during the high season of Q3 over Q2. And second, two items that we look at as nonrecurring revenue in determining a run rate are. First, accelerated revenue recognition related to tenant improvements over straight-line rent related to the early termination of a tenant at City Center Bellevue was approximately $0.02 per FFO share. And secondly, an accelerated deferral rent payment was received by a tenant at first and main in Q3 '22 that generated approximately $0.01 per FFO share. Same-store cash NOI in Q3 '22 ended at approximately 11.3% growth year-over-year for the third quarter. Same-store office was approximately 14.8% in Q3 as a result of the remaining lease abatements burning off of one of our large tenants at our Landmark building in San Francisco. The retail sector had a negative 3.8% decrease in same-store cash NOI in Q3. But when excluding prior year COVID-related accounts receivable collections, real estate tax refund at Alamo Quarry in 2021, the retail same-store cash NOI percentage increases to a positive 1% growth year-over-year. Retail growth is much stronger on a comparative year over base, when excluding those one-time items. Let's talk about liquidity. At the end of the third quarter of '22, we had liquidity of approximately $427 million comprised of approximately $63 million in cash and cash equivalents and $364 million of availability on our revolving line of credit. Our leverage which we measure in terms of net debt to EBITDA was 6.4 times. Our objective is to achieve and maintain a net debt to EBITDA of 5.5 times or below. Our interest coverage and fixed charge coverage ratio ended the quarter at 4.1 times. Let's talk about '22 guidance for a moment. We are once again increasing our '22 FFO per share guidance range to $2.30 to $2.34 per FFO share with a midpoint of $2.32 per FFO share, a 3.6% increase from our previously updated guidance. To hit a midpoint of $2.32, we are expecting Q4 to be approximately $0.54 per FFO share, which is a decrease from Q3 of approximately $0.09 per FFO share. The majority of this expected decrease from Q3 is comprised of the following. First, Embassy Suites Waikiki Beach Walk is expected to be lower by approximately $0.03 per FFO share, due to the normal seasonality between the high season of Q3 and Q4. Second, G&A is expected to be higher in Q4, thereby decreased FFO by approximately $0.02 per FFO share, due to the expected inflationary adjustments at year-end. And third, nonrecurring accelerated revenue recognition related to TI overages and an accelerated deferred rent payment which occurred in Q3 will not reoccur in Q4 and thereby decrease FFO by approximately $0.03 per FFO share. It is also possible that we could perform to the high end of the updated guidance range. If tourism and spending in Waikiki maintains its positive trajectory, as we expect that Embassy Suites will end approximately equal to 2019 pre-COVID NOI, up from our estimate of 89% at the end of Q2 '22 with incremental improvement depending on the magnitude of Japanese tourism to Oahu. As always, our guidance and our NOI bridge in these prepared remarks exclude any impact of future acquisitions, dispositions, equity issuances or repurchases, future debt, refinancings or repayments other than what we've already discussed. We will continue our best to be as transparent as possible and share with you our analysis and interpretations of our quarterly numbers. I'll now turn the call over to Steve Center, our Senior Vice President of Office Properties for a brief update on our Office segment.

Thanks, Bob. At the end of the third quarter our office portfolio remains stable with our same-store portfolio remaining at approximately 96% leased. The quality of our portfolio continues to yield strong rent growth. In the third quarter we executed 13 leases totaling approximately 59,000 rentable square feet including on comparable new lease for approximately 18,000 rentable square feet with increases over prior rent of 55% on a straight-line basis approximately 25,000 rentable square feet of comparable renewal leases with increases over prior rent of 19.6% on a straight-line basis and approximately 16,000 rental square feet of non-comparable new leases. Office leasing spreads continue to be strong in Q3 with leasing spreads of 24% increase on a cash basis over the prior rent and a 35% increase on a GAAP basis. As we shared last quarter, we have expanded access to medical office users in select markets and buildings in response to very tight market conditions producing longer-term leases at premium rents relative to traditional office tenants. In Q3, we renewed an existing medical user in approximately 4,000 rentable square feet. And earlier this month we expanded them into an additional 7,400 square feet. The triple net rate for this expansion is approximately 40% greater than comparable office lease. We have a lease out for signature for a 7,400 rental square foot medical use at Solana Crossing at a triple net rate that is 35% higher than a comparable office lease. And we are continuing to invest in our properties. In addition to the redevelopment of One Beach in San Francisco and the development of Tower III at La Jolla Commons in San Diego, we are underway on the following projects: major renovations at Eastgate Office Park; new amenities at City Center Bellevue including a fitness center and bike club with showers and lockers and a conference center; renovations and common area enhancements at Solana Crossing; a new fitness center at Corporate Campus East III; new amenities at First & Main and Lloyd Center Tower in Portland, including a fitness center, conference center and lounge at each building. We continue to believe the strategic investments in our office portfolio will position us to continue to capture more than our fair share of net absorption at premium rents despite current market headwinds. I'll now turn the call back over to the operator for Q&A.

We will now begin the question-and-answer session. Our first question will come from Todd Thomas of KeyBanc Capital Markets. Please go ahead.

Good morning, Todd

Hi, thanks. Hi. Good morning. Bob just in the context of the updated guidance I was just wondering if you could provide updated same-store forecast for the various segments like you have in prior quarters?

Yes, we have the information available. For prior quarters, I want to point out that if you compare it to the 2021 real estate property tax refund I mentioned, we expect retail to be up by approximately 4.2% for the year-end 2022. The total same-store cash NOI is projected to be 8.6% at year-end, and about 10.4% excluding the Alamo real estate property tax at year-end. Does that answer your question, or were you looking for a quarter-by-quarter breakdown?

Yes, you're tracking well ahead in all four segments you discussed from a same-store perspective. I wanted to know if you are updating your full-year forecasts. That's helpful for retail, but what are your expectations for office mixed-use? Overall, it seems like you're continuing to exceed expectations from a same-store standpoint this year.

Yes. For the year 2022, our expectation is that office would be 8.8%. Again, these are approximations. Retail would be 2.3%, without factoring in the prior year 2021 real estate tax refund at Alamo. Multifamily, we think will come in approximately 11%. And we think mixed-use will end the year approximately 56%, but we'll put in the actual numbers on Q4 call.

All right. Got it. That's helpful. And then with regards to two asset-specific questions. I guess first, the leasing momentum that you discussed at Hassalo has that continued in October in terms of rent levels and concessions?

October has been a bit of a slow month, but the metrics are still in place.

Okay. And then for the hotel, you're expecting sort of a $0.02 decrease I guess sequentially or – sorry, $0.03 decrease sequentially as you head into the fourth quarter. We're almost through October. Can you just provide a little bit of an update in terms of occupancy and rate and what you're seeing there, heading into the end of the year?

Bob?

Yes, I believe that occupancy and rates are stable, and it mainly depends on Japanese tourism. November is usually a shoulder month, which is generally weaker than summer. October seems to be on track, but we might experience some decline in November. However, we remain optimistic about Waikiki Beach Walk. For the first three quarters of this year, we achieved 99% of pre-COVID levels on a year-to-date basis compared to the pre-COVID period. We are hopeful to see if this trend will continue into the fourth quarter.

Okay. And then just Bob lastly, I guess the term loans B and C $150 million, that matures in May of next year. What are your current thoughts there on refinancing those two term loans?

Yes. Our current thought is that we will refinance. We have a great banking syndicate, so it’s likely that we will refinance those and possibly add a little to it. The term will probably be two years, plus a one-year option. I think what we believe is the best approach for our company is to be prudent in order to navigate the upcoming recession, if one occurs, and then be prepared to move forward as we emerge from it.

Okay. I understand there could be a lot of changes between now and then, but what kind of change in rates or pricing do you expect if you were to approach the market today regarding the 2.65% on those two term loans?

Well, it's definitely going to be higher. And we're still pricing that out as we speak. So, I don't have a number for you, but it will be higher.

Okay. All right. Thank you.

Thank you, Todd.

Thank you, Todd. Thank you for your interest. Thank you for allowing us to manage the company. I do have to express my concern, that there's this disconnect between the market value of our stock and the market value of our assets, and the quality of the assets and the management. We hope at some point this gap narrows. In the meantime, it is disconcerting. But thanks for your interest, and we look for many more years of being able to report good results. And good job Bob, Steve and all. Bye-bye.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.