American Assets Trust, Inc.AAT
American Assets Trust, Inc. Leases Disclosure
LEASES
Lessor Operating Leases
We determine if an arrangement is a lease at inception. Our lease agreements are generally for real estate, and the determination of whether such agreements contain leases generally does not require significant estimates or judgments. We lease real estate under operating leases.
Our leases with office, retail, mixed-use and residential tenants are classified as operating leases. Leases at our office and retail properties and the retail portion of our mixed-use property generally range from three years to ten years (certain leases with anchor tenants may be longer), and in addition to minimum rents, usually provide for cost recoveries for the tenant’s share of certain operating costs. Our leases may also include variable lease payments in the form of percentage rents based on the tenant’s level of sales achieved in excess of a breakpoint threshold. Leases on apartments generally range from seven months to fifteen months, with a majority having 12 month lease terms. Rooms at the hotel portion of our mixed-use property are rented on a nightly basis.
Leases at our office and retail properties and the retail portion of our mixed-use property may contain lease extension options, at our lessee's discretion. The extension options are generally for 3 to 10 years and contain primarily rent at fixed rates or the prevailing market rent. The extension options are generally exercisable 6 to 12 months prior to the expiration of the lease and require the lessee to not be in default of the lease terms.
We attempt to maximize the amount we expect to derive from the underlying real estate property following the end of a lease, to the extent it is not extended. We maintain a proactive leasing and capital improvement program that, combined with the quality and locations of our properties, has made our properties attractive to tenants. However, the residual value of a real estate property is still subject to various market-specific, asset-specific, and tenant-specific risks and characteristics.
At December 31, 2025, our office, retail and mixed-use properties are located in five states: California, Washington, Oregon, Texas and Hawaii. At December 31, 2025, we had approximately 801 leases with office and retail tenants, including the retail portion of our mixed-use property. Our multifamily properties are located in Southern California and Portland, Oregon, and we had 2,041 leases with residential tenants at December 31, 2025, excluding Santa Fe Park RV Resort.
As of December 31, 2025, minimum future rentals from noncancelable operating leases before any reserve for uncollectible amounts and assuming no early lease terminations, at our office and retail properties and the retail portion of our mixed-use property are as follows for the years ended December 31 (in thousands):
| 2026 | $ | 256,537 | |||
| 2027 | 245,106 | ||||
| 2028 | 205,330 | ||||
| 2029 | 146,129 | ||||
| 2030 | 90,673 | ||||
| Thereafter | 216,878 | ||||
| Total | $ | 1,160,653 | |||
The above future minimum rentals exclude residential leases, which typically range from seven months to fifteen months, and exclude the hotel, as rooms are rented on a nightly basis.
Lessee Operating Leases
We determine if an arrangement is a lease at inception. Our lease agreements are generally for real estate, and the determination of whether such agreements contain leases generally does not require significant estimates or judgments. We lease real estate under operating leases.
At The Landmark at One Market, we lease, as lessee, a building adjacent to The Landmark at One Market under an operating lease effective through June 30, 2031 (the “Annex Lease”). The lease payments under the Annex Lease are equal to the fair rental value at the time the extension option was exercised. In June 2025, we exercised the final five-year extension option to extend the Annex Lease through June 30, 2031, which was memorialized in a lease amendment executed in August 2025.
Our lease agreements do not contain any residual value guarantees or material restrictive covenants. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement in determining the present value of lease payments.
Current annual payments under the operating leases are as follows, as of December 31, 2025 (in thousands):
| Year Ending December 31, | |||||
| 2026 | $ | 3,584 | |||
| 2027 | 3,637 | ||||
| 2028 | 3,746 | ||||
| 2029 | 3,859 | ||||
| 2030 | 3,975 | ||||
| Thereafter | 2,017 | ||||
| Total lease payments | 20,818 | ||||
| Imputed interest | (2,044) | ||||
| Present value of lease liability | $ | 18,774 | |||
Lease costs under the operating leases are as follows (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease cost | $ | 3,731 | $ | 3,727 | ||||
| Sublease income | (3,429) | (3,445) | ||||||
| Total lease cost | $ | 302 | $ | 282 | ||||
| Weighted-average remaining lease term - operating leases (in years) | 5.5 | |||||||
| Weighted-average discount rate - operating leases | 3.19 | % | ||||||
Supplemental cash flow information and non-cash activity related to our operating leases are as follow (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating cash flow information: | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | 3,531 | $ | 3,428 | ||||
Subleases
At The Landmark at One Market, we (as sublandlord) sublease the Annex Lease building under operating leases effective through June 30, 2031. The subleases contain extension options, subject to our ability to extend the Annex Lease, that can extend the subleases through December 31, 2039 at the fair rental value at the time the extension option is exercised.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 6, 2026 | Showing above |
| 2024 | Feb 12, 2025 | |
| 2023 | Feb 14, 2024 | |
| 2022 | Feb 10, 2023 | |
| 2021 | Feb 11, 2022 | |
| 2020 | Feb 16, 2021 | |
| 2019 | Feb 14, 2020 | |
| 2018 | Feb 15, 2019 | |
| 2017 | Feb 16, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 19, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.