Good day, ladies and gentlemen and welcome to the First Quarter 2015 American Assets Trust Incorporated Earnings Conference Call. My name is Tony and I will be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Adam Wyll, Senior Vice President and General Counsel. Please proceed.

Good morning. I’d like to thank everyone for joining us today for American Assets Trust 2015 first quarter earnings conference call. Joining me on the call are Ernest Rady, John Chamberlain and Bob Barton. These and other members of our management team are available to take your questions at the conclusion of our prepared remarks. Our 2015 first quarter supplemental disclosure package provides a significant amount of valuable information with respect to the Company’s operating and financial performance. The document is currently available on our Web site. Certain matters discussed on this call may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any annualized or projected information, as well as statements referring to expected or anticipated events or results. Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, our future operations and our actual performance may differ materially from the information contained in our forward-looking statements and we can give no assurance that these expectations will be attained. Risks inherent in these assumptions include, but are not limited to future economic conditions, including interest rates, real estate conditions and the risks and cost of construction. The earnings release and supplemental reporting package that we issued yesterday, in our Annual Report filed on Form 10-K and our other financial disclosure documents provide a more in-depth discussion of Risk Factors that may affect our financial conditions and results of operations. Additionally this call will contain non-GAAP financial information including funds from operations or FFO, earnings before interest, taxes, depreciation and amortization or EBITDA and net operating income or NOI. American Assets is providing this information as a supplement to information prepared in accordance with generally accepted accounting principles. Explanations of such non-GAAP items and reconciliations to net income are contained in the Company’s supplemental operating and financial data for the first quarter of 2015 furnished to the Securities and Exchange Commission and this information is available on the Company’s Web site at www.americanassetstrust.com. I’ll now turn the call over to our Executive Chairman, Ernest Rady to begin our discussion of first quarter results. Ernest?

Thanks Adam and good morning everyone. Thank you for joining American Assets Trust’s first quarter 2015 earnings call. The performance of our premier portfolio of retail, office and multifamily assets continued to provide excellent and growing returns for our shareholders. Our FFO per share increased 10% and same-store NOI increased 7.5% year-over-year for the three months ended March 31, 2015 and Bob will cover this in more detail. Our strategy and portfolio continue to produce a continuous growing stream of predictable and consistent cash flows. Our strategy starts with the focus on accretive net asset value and or NAV and shareholder returns. If it isn’t an additive to existing net asset value we aren’t interested. It has taken us over 48 years to produce these very-very high quality assets that comprise our coastal West Coast portfolio today. Approximately 50% of the portfolio was developed by us and the remainder was accumulative through accretive acquisitions and tax deferred exchanges over several decades and we are not stopping here. We are not seeking to be the biggest just continue to be the best. Our high quality multi assets strategy continues to demonstrate the high quality diversity is additive to our ability to provide consistent growth, strong returns and value creation. It is with great enthusiasm that we look forward to have ground breaking of Torrey Point in June formally refer to Sorrento Point, a project that has taken us more than 17 years to solidify the necessary entitlements and permits to construct and this is one of the reasons that project will be accretive to NAV. We believe the office product that we will be developing will be the best office space in San Diego with commanding views of the Pacific Ocean overlooking the nature preserve, and adjoining the major freeway in San Diego. Exceeding that level of excitement is the nearing of our completion our Hassalo on Eight project in Portland, Oregon. Almost two years in the making we anticipate a very successful grand opening towards the end of the third quarter. We have scheduled an investor tour date of our Portland assets showcasing this new development at Hassalo on Eight on Thursday, September 4, 2015. We hope you can join us. More information will be sent out towards the end of the second quarter. Again on behalf of all of us at American Assets Trust we thank you for your confidence in allowing us to manage your company and we look forward to your continued support. And now I would like to turn it over to our President and CEO John Chamberlain, John would you please take it from here?

Good morning and thank you Ernest. I want a quick correction on your preceding statement. The investor tour is Thursday September 24, 2015. And we look forward to seeing all of you there. Overall conditions in our core markets, Seattle, Portland, San Francisco, San Diego, and Oahu, continued to show significant signs of strength in all three of our asset classes. We expect this to continue into the foreseeable future. In addition to the comment on performance as Ernest just mentioned funds from operations increased 10% year-over-year to $0.43 per diluted share and net income available to common stockholders increased 74% to 8 million for three months ended March 31, 2015 compared to the same period in 2014, approximately 90,000 square feet of office space and 39,000 square feet of retail space were leased in the quarter. As per our multifamily portfolio as of March 31, the average monthly base rent per leased unit was $1,515 compared to an average monthly base rent per lease units of $1,445 as of March 31, 2014 an increase of 4.8%. Bob will provide more details on our FFO and same-store NOI shortly. In San Diego construction is complete on the five building 80,000 square foot expansion of Torrey Reserve lease up is well underway and we expect that effort to be complete by year-end. As previously mentioned our original development pro forma estimated a stabilized yield of 8.6%, based on what we know as of today it appears that, that estimate is very close to reality. We believe that upon stabilization the development will add approximately $1 in value to our net asset value. Additionally Sorrento Point now officially renamed Torrey Point is expected to break ground on June 15th. This two building approximately 90,000 square foot project is expected to take 18…

Thank you John and good morning everyone. Last night we reported first quarter 2015 FFO $0.43 per share. Net income attributable to common stockholders was $0.18 per share for the first quarter. The company's Board of Directors have declared dividend on its common stock of $0.2325 per share for the quarterly period ending June 30, 2015. American Assets had a solid first quarter performance. Our high quality coastal West Coast diversified strategy continues to have stellar performance. Our retail portfolio ended the quarter with 98.5% occupancy combined with the highest annualized base rents amongst our peers. On a year-over-year basis our retail occupancy is up 170 basis points leaving approximately 45,000 square feet vacant in our 3 million square foot retail portfolio. Our retail cash leasing spreads signed during the quarter were up 4.1% and are up 10.4% over the last four trailing quarters. It was a relatively quite quarter on the leasing front for the retail portfolio as we executed 11 leases for approximately 26,000 square feet which is less than 1% of our total retail portfolio. Our office portfolio ended the quarter at approximately 92.7% occupancy up 320 basis points on a year-over-year basis. The increase in net absorption for the office portfolio was due to leasing the top floor at One Beach Street in San Francisco and six smaller leases signed at our Torrey Reserve office campus. Our same-store office portfolio is 96% leased. We continue to see significant market rent growth across our office portfolio in all our core markets. Current in place office rents are still approximately 19.2% below market indicating we still have significant internal growth in our office portfolio. We expect strong same-store growth in our office portfolio for the next several quarters. Our office cash releasing spreads during the quarter were up…

[Operator Instructions] Your first question comes from the line of Mr. Paul Morgan of MLV Company.

This is Joe here for Paul. Same-store NOI growth for mixed use was somewhat muted at 12.7%, could you give us more details on that? Was it related to their demand side short-term impacts from the strong dollar? Thanks.

Good morning Joe this is Bob. Yes, you are right, on year-over-year basis Q1 ’15 compared to Q1 ’14 for mixed use is down somewhat in the hotel, but both ADR and RevPAR up and occupancy is down by approximately 120 basis points year-over-year to 89%. There is nothing unusual regarding Asia going on, when more seats are added in one location other seats are decreased so this nothing really happening with the arrivals, and it's not really impacted by the dollar so much from what we’re seeing. The primary reason that it is down this quarter on a year-over-year basis is due to the Pro Bowl not being in Hawaii this year, as it was played in Phoenix ATM in Arizona in January 2015. And the Pro Bowl that it is been played at the Aloha stadium in Halawa, Hawaii for 30 straight seasons from 1980 to 2009 then it was in Arizona and for the last four years it's been in Hawaii. So this one year that it hasn't been there has actually saw a slight decrease in our occupancy of the hotel and that’s what driving it.

Your next question comes from the line of Mr. Todd Thomas of KeyBanc Capital Markets. Please proceed.

This is Grant Keeney on for Todd. Sounds like the pre-leasing at Hassalo's going very well. I know it just started recently. But I was curious how rental rates and the initial reception has been versus your initial expectations?

I would say we’re meeting our expectations rental rates are in line with our original projections. Our focus now is filling the project as quickly as possible. And we will focus on pushing rents after we hit a 60%, 70% occupancy level, but at the moment the focus is fill it up, the reception in the community has been incredibly positive and we’re doing everything we can to capitalize on that momentum at the moment.

And then, I know you mentioned that acquisitions, the cap rates are very low returns, can't be justified right now. But I was just curious if there is anything that you guys have in the pipeline or if you're getting out bid or you're not -- just give me that far to due diligence. Like how would you kind of characterize the environment there?

I think what we’re looking at is that prices for acquisition as John and you have both stated are daunting. The only opportunity that we see is to trade and the property we have with an exorbitantly low cap rate for another property which unfortunately will also have a low cap rate. But we hope the property we trade if we’re successful in affecting that we trade for, will have a better future than the one we have and that’s what we’re looking at. We’re looking at can we do a trade which perhaps at the moment is not cause for applause but couple of years from now through the management of the property, improving the quality of the propriety will have a better future than what we have that’s our opportunity now and that’s kind of the generally speaking that’s the only opportunity we see.

It’s not necessarily an arbitrage on cap rates we’re not finding that, but we are looking for opportunities that provide a better internal growth and a flight to quality. So if we can match those two metrics up with a potential acquisition we will execute.

Are you focusing on any specific property type?

No, we’re looking at -- we are looking primarily at retail and multifamily assets not necessarily ups assets.

Okay. And then I just want to touch on the M&A environment. It sounds like -- or not sounds like, but it is picking up a bit in the space. And I was just curious how you view M&A in the space and what role AAT may play, if any?

Well, we have such a high quality portfolio that defined an M&A opportunity would be diluting the quality of the portfolio we have because there are no other portfolio I know that has the quality assets that we have. So it’s a very difficult assignment we have always felt and continue to express the confidence of the portfolio that we have over the next decade. There may be a quarter here or quarter there where we’re not as successful as we have been -- as expected over the next decade this portfolio will produce elegant returns I think comparable with anything available in the marketplace in not only REIT space but throughout the investment opportunities available.

Your next question comes from the line of Mr. Blaine Heck, Wells Fargo. Please proceed.

Has there been any more discussion on the different options at Oregon Square? I think last quarter you guys were contemplating either the headquarters of an energy company, senior housing and/or multifamily units. Can you just give an update on maybe which way it looks to be leaning?

We continue to evaluate those three options. We are going through the design review process currently. It’s somewhat of a plug and play scenario. So the ultimate mix of what will be built in Oregon Square is still undermined because it doesn’t have to be determined yet. That decision will come sometime as we near the stabilization of the first phase Hassalo on Eight before we begin the Oregon Square project. So we have in our runways leading us to Oregon Square at the moment is probably a 12 month period so time is on our side.

And given that I know it's early on in the process, but is there any color you can give on maybe the possible scope of that and maybe the cost for that phase of development?

Not at all, we’re at a very preliminary design phase.

Okay.

A great size, a great piece of land equivalent of four city blocks sitting in the heart of very economically vibrant area and we’re really excited about the opportunity. We’re just not sure which of all the opportunities available to us will be the most compelling and that’s we have to continue to look for what’s really best for the company in the long run. And we’re fortunate we’re having all these opportunities to assess and decide which one to avail ourselves on.

And whatever we did on a risk adjusted basis going to be accretive to our shareholders I mean I look at it as well that’s a land -- the way I look at it it’s a land history and we have cash flow whatever that development being from the existing site. So this is going to be accretive which way we look at it.

Bob, it looks like there's about $30 million left to spend on the first phase of the Hassalo. You're expecting to start Torrey Point this quarter, which has roughly $40 million of spend in the next 18 months. We know you're expecting to fund $30 million of the spend with the balance of your ATM and you have $55 million of cash. So it looks like your sources of funds are there. But should we also expect any further issuance to EIC, given that you want to continue to de-lever?

I think in the near-term no, I don't think there will be any additional private placements to a Ernest affiliated company. In one of the footnotes that we have put in it is either supplemental or the Q which will be released this Friday is that if you look at the private placements that we've done with Ernest related companies. They have always been approved by the Board, approved by legal counsel and approved by the New York Stock Exchange, and additionally at the end of the day his ownership is less now than it was in at the IPO. So all he is trying to do is maintain his position not increase his position from where he was at the IPO. So to answer your question, yes, we will use the rest of the ATM, I don't anticipate anything any additional private placements to a Ernest Rady-affiliated company to the rest of this year. And I think does that answer your question, Ernest do you want say anything?

In my own defense I have to tell you that through the issuance ATM my interest has declined somewhat and I value our interest in these properties to such a great extent I had my way I would like to at least maintain my share, that has not been possible under these circumstances that existed. But going forward, the advantage of being public is we have every opportunity available to us to finance our growth. And that’s really strikes the company. The quality of the portfolio, the access to capital, and management if I may say so with all do immodesty that I think has proven that it's amongst the best. So that’s where we are.

Maybe one for Jim if he is there, I'm not sure he is. But can you just give an update on the lease up of the remainder of the space at First and Main?

Well, the First and Main piece as you probably know is comprised of 121,000 square foot floor and then another 4,700 foot piece and that is all that is left out of 350,000 square feet. Have a quite a bit of activity on the space, and as you probably also know Blaine the market in Portland has tightened up measurably in the last six to nine months where we probably are priced at the top of the market, the market is coming towards this and I think that gives us a much larger potential base of being able to fill that. I also we wouldn’t preclude the possibility of maybe some interesting tenants expanding over the next couple of years as well, so looking very positive.

[Operator Instructions] Your next question comes from the line of Haendel St. Juste of Morgan Stanley. Please proceed.

A couple of quick ones from me here, so I guess first, curious on your multifamily strategy during the seasonally slower first-quarter period. It looks like you gave up a bit of occupancy, 70 Bps or so, but gained, it looks like 5% or so on rent. What were you seeing during the quarter?

Russell Rodriguez who handles that portfolio for us would like to answer that question. So Russell would you be kind enough.

You are exactly correct, we have maintained over the past four quarters an occupancy at 98% plus and our rent growth was trending along those same line, however now we’re pushing our rent growth and our asking prices as we go in for a busy lease season at the top of the market as much as we can handle. So with that yes, our occupancy has stabilized and trended down maybe less than 1%, but at the same time the fundamentals are there for an unprecedented leasing season the spring and summer. You are right on Haendel and thank you for noticing.

Do you by the way have a breakdown between what was perhaps or new renewal lease growth for your multifamily segment?

Absolutely, we’re right now realizing a greater than 50% renewal in our portfolio. We are finding that after our existing residents go and test the market the quality of product that we’re offering they are choosing to stay even as we increased their rents greater than ever.

Do you have the breakdown of what that rent growth is in terms of what is sort of new tenant versus renewal rate growth?

We push our renewal rates the highest we can which is 9% for a renewal with 30 day notice and greater than 9% with a 60 day notice. And if we get the unit back and it's a candidate for a renovation we’re seeing a greater than 20% renewal to market rates and we’re getting it.

Haendel this is Bob, we do that comparability, non-comparable and comparable for office and retail but we haven't done that for multifamily. But Russell shared the information with you it is something that we might consider going forward.

Certainly, I'd appreciate it. The apartment REITs do it. So some comparability, that would be appreciated. While I have you, too, Bob, on the retail leasing side you mentioned in your numbers that the leasing activity was a bit below prior quarters, but the spreads, they were pretty consistent. Was the slowdown the function of space availability or perhaps an intentional strategic decision type to retaining pricing power? And then how should we think about leasing spread growth for your retail over the coming quarters, especially in light of your comments that you said that you expected your portfolio to have excellent growth in 2015?

For our guidance we still have 5% I think it was for the retail if 5% is our guidance for that and if you look at where our insights rates are compared to market our insights is still a 10% below market. I think it’s on a tenant-by-tenant basis. The only thing I can tell is that we’re going to get the maximum rents at every opportunity and I think that you will see the strength for instance HomeGoods opened up at Lomas Santa Fe Plaza in San Diego. And they start to paying rent in February this year. So you’ll see the growth in that. And Caramel Mountain Plaza, we’re repositioning the western end of that where used to have the Reading theater, and that tenant is upgrading that to the what’s name of the…?

Angelika.

Angelika Cinema and trying to add some retail and restaurant space around that. So what we have is so special in San Diego where the entitlements are very hard to get and the demand for the space just gets greater and greater. So we’ll capitalize on every opportunity we have if the tenant falls out it’s always an opportunity to raise rents with the better and strong tenant.

Held that pick up business.

And the slowdown in overall volume, though, for the quarter compared to prior quarters, was that tied to, perhaps, you trying to leverage pricing power or perhaps certain occupancy?

Yes, I think that the velocity is down just because we’re at 98% occupied. So there is not that much space at least.

Appreciate it, guys. Thank you.

A terrible problem, isn’t it?

Indeed.

So enjoy dealing with that problem. And thank you for the good question.

Your next question comes from the line of Mr. Rich Moore of RBC Capital Markets. Please proceed.

Good morning guys. This Jim on the line of Rich I was hoping that you guys could give me an outlook for the different property types on the West Coast?

Outlook in terms of what in terms of the markets, the same-store?

So in terms of tenant demand and then investment availability?

Let me color that question a little bit before we try and answer it. First of all we’re not typical West Coast we’re coastal West Coast. If you go inland 30, 40 miles we don’t consider that West Coast. Our West Coast properties are coastal West Coast and I think that we have proved over the last four years and the last decades and we think we’ll improve over the coming decades that coastal West Coast is a very-very-very special strategy and one that is difficult to create as far demand for properties on the West Coast and its entirety. John, do you care to answer that or do you have an answer?

I think that’s absolutely correct. In terms of investment it’s a very difficult market. There are plenty of institutional office properties that continue to come to market. There are very few retail properties and the cap rates at which multifamily is selling in as Ernest says the coastal West Coast markets the cap rates are so low it would be dilutive for us to pursue an acquisition. So it’s a very difficult investment environment, it’s a very positive rental environment and we’re focused on continuing to manage what we owned and improve the properties at all three asset classes performance to the best of our ability.

Okay, thanks. And then I think your markets seeing the meaningful impact from the decline in oil either from a consumer demand standpoint or from tenants related to oil industries.

You kind of faded out there, would you be kind enough to repeat that question we missed a couple of key words.

Yes, of course. So in your markets have you seen meaningful impact from the decline in oil either from a consumer demand standpoint or from tenants related to the oil industries?

Gas went back up to four bucks today, so nobody is getting a discount at the wallet.

The only place where we saw an impact was at the Embassy Hotel in Waikiki. We saw their utility cost came down due to the lower cost of oil and we saw that down by just around 100,000 or less.

The freeways are busier I will tell you that, and there is more cars on the freeway and they are driving faster if they can, that’s about the only thing I can quantify. We’re starting to look like New York City.

We will now turn the call over to our Executive Chairmen Mr. Ernest Rady for closing remarks. And thank you for your participation in the question-and-answer session.

On prior occasions I told you how grateful we are for your interest in the company. At this time I would like to express our pride in having such a distinguished shareholder group and our appreciation for you giving us the opportunity to manage your investments. So thank you, thank you, thank you for your participation and thank you for your confidence. And we hope to continue to earn for many, many years to come. Thanks for joining us.

Ladies and gentlemen, that concludes today's conference call. You may now disconnect and everyone have a great day.