Overall, its top 10 office tenants contribute more than half of its office rent and about a third of its total rent. That concentration is a bit of a concern. If one large tenant moves out, it could significantly impact its rental income. The REIT has less tenant concentration on the retail side, as the largest one -- Lowe's (NYSE: LOW) -- contributes 5.3% of the retail total and 1.5% of the overall portfolio's ABR. Meanwhile, the top 10 only supply 24.4% of the retail portfolio's ABR and 7% of its total rent.
American Assets Trust news
The pandemic had a significant impact on American Assets' portfolio in 2020. Many of the company's retail tenants struggled to pay rent due to the effect government-related shutdowns had on non-essential businesses and travel. Overall, same-store net operating income (NOI) at its retail portfolio declined by 20.2% compared to 2020. The company's multifamily portfolio also experienced some headwinds. Occupancy fell from 92.8% at the end of 2019 to 86.2% at the end of 2020, driving a 5.6% year-over-year decline in its NOI. On a more positive note, office NOI grew by 12.3% in 2020, thanks to strong rent growth and a solid collection rate.
American Assets continued to experience some pandemic-related headwinds in early 2021. While its rental collection rate improved to 93%, it continued to experience weakness in retail (84% of what it billed) and multifamily (95%). Meanwhile, new leases for existing space in its office and retail properties declined, as did occupancy levels, which put additional weight on NOI.
On a more positive note, American Assets completed its first public bond offering, raising $500 million of low-cost debt. It used those funds to repay its 2021 debt maturities and pay down some of its line of credit.
That gave the company more financial flexibility, which it used to acquire the Eastgate Office Park in Bellevue, WA. It's paying $125 million for the 280,000 square foot multi-tenant office campus that's currently more than 95% leased.
American Assets also started two development projects in 2021. It's investing $175 million to add 213,000 square feet of office space in San Diego and $42.8 million on a 102,000-square- foot office development in San Francisco. Meanwhile, it has several other development/redevelopment projects in the pipeline, which could see it add additional retail space in Hawaii and California, remodel an office building in Oregon, and develop office towers or mixed-use residential towers in Oregon.
American Assets Trust stock price
American Assets' diversified strategy hasn't created value for investors in recent years: