The 84 year old Chairman and CEO of American Assets Trust (AAT), Ernest Rady, has been a buyer of this diversified REIT for well over a decade and last week was no exception. I normally don’t pay a lot of attention to these “perpetual” buyers but AAT grabbed my attention during the pandemic related downturn in REITs and especially in REITs that focused on the retail or office segments. AAT dropped to the low $20s twice during the depths of the pandemic but did not stay there for very long. When reviewing the REIT at that time I realized that it had a portfolio of premium properties that was better positioned to ride out a downturn.
Mr. Rady founded American Assets Trust 55 years ago in 1967 and this diversified REIT currently sports a portfolio that spans retail, office, hotels and multifamily across 5 different states. Most of this San Diego based company’s properties are concentrated in California, Hawaii, Oregon and Washington, with one location in San Antonio, Texas. I’ve had a chance to visit one of their properties (shown below) near Waikiki beach in Hawaii but at the time did not realize it was an AAT property.
The more I dig into the company, the more I like it, especially after the recent pullback in the stock. The company increased its full year funds from operations (FFO) forecast to $2.21 to $2.27 with a midpoint of $2.24 from a prior forecast of $2.13 to $2.21 with a midpoint of $2.17, which once again was an increase from the prior quarter. You get the gist.
The company is benefiting from both rising rents and improved occupancy rates year-over-year across all its verticals. Same store sales occupancy across all verticals, with the exception of multifamily, also saw improvement on a sequential quarter basis. The stock trades at 13 times full year 2022 FFO (based on the company’s current forecast) and sports an attractive dividend yield of 4.23%.
I plan to do a deeper dive into the company either for our next mid-month update or the monthly newsletter and will look into the strength of their balance sheet, debt maturities, cap rates and new developments among other things. This company is not going to blow the lights out but could be a strong contender for a position in the real estate portion of my portfolio.