美国资产信托 (AAT) 2026年第三季度业绩电话会: 上调FFO指引

核心要点

• American Assets Trust 公布 2026 年第三季度每股摊薄 FFO 为 0.56 美元，比其内部预估高出约 0.05 美元。扣除一次性项目后，每股 FFO 为 0.53 美元。
• 全投资组合同店现金 NOI 同比增长 8.3%。扣除房产税退税及此前已计提准备金的写字楼应收账款追回后，增长率为 5.1%。
• 公司将 2026 全年每股摊薄 FFO 指引上调至 2.04 美元至 2.10 美元，中位数上调 2% 至 2.07 美元。
• 写字楼出租率提升至约 86%，同比上升近 400 个基点，环比上升 140 个基点。已签约但尚未起租的写字楼租约涉及约 1200 万美元的年化基础租金。
• 零售物业出租率维持在 98%，而圣迭戈公寓物业（不含房车公园）出租率为 97%，入住率为 95%。
• 管理层预计，在对 2027 年 3 月到期的债务进行再融资以及 1 月定期贷款利率掉期到期后，借贷成本将上升，尽管公司在三季度末拥有约 5.9 亿美元的流动资金。

核心财务数据

业务与经营业绩

写字楼业务

三季度末写字楼组合出租率约为 86%。American Assets Trust 在本季度完成了约 12.4 万平方英尺的租赁交易，可比现金租金溢价率为 2.1%，直线租金溢价率为 8.2%。

公司进入第四季度时，拥有约 21 万平方英尺已签约但尚未起租的租约，相当于约 1200 万美元的年化基础租金。此外，尚有 13.2 万平方英尺处于租约文件编制阶段，以及涉及约 17.8 万平方英尺的意向方案在洽谈中。

在 La Jolla Commons 三号楼，两份涉及整层、合计约 4.1 万平方英尺的租约正等待签署，另有 3600 平方英尺处于文件编制阶段。若顺利完成，该物业出租率将达到约 72%。管理层表示，租金水平和预期收益率仍在其承销预估范围内。

在 One Beach Street，二层剩余空间的意向方案正在进行洽谈。若完成签约，该物业出租率将提升至 82%。管理层表示意向租金超出预期，但强调交易尚未正式签署。

零售物业业务

零售物业组合出租率维持在 98%。AAT 完成了约 10.8 万平方英尺的租约签署，实现可比现金租金溢价率 7.4%，直线租金溢价率 16.8%。

零售物业 NOI 增长受益于费用报销增加、新签租约以及 Alamo Quarry、Lomas Santa Fe 和 Gateway Marketplace 等物业的租户扩租。管理层表示重点关注的租户名单较短，但将继续监控通胀和高利率带来的消费者压力。

公寓物业业务

不含房车公园，AAT 在圣迭戈的公寓社区在三季度末出租率为 97%，入住率为 95%。本季度新签及续租租金均上升了 4%。

Pacific Ridge 从夏季的季节性租户退租潮中恢复，入住率达到近 97%，而第二季度末为 77%，去年同期为 92%。波特兰的 Hassalo on Eighth 出租率为 92%，入住率为 91%，综合租金增长持平。

威基基海滩步道（Waikiki Beach Walk）

大使套房酒店（Embassy Suites）入住率从一年前的 78.3% 升至 88.5%。RevPAR（每间可售房收入）增长 13.3% 至 337 美元，ADR（平均每日房价）微涨 0.2% 至 381 美元。

管理层将入住率提高的部分原因归因于竞争对手酒店处于翻修中，使得 Embassy Suites 获得了额外的间夜量。公司提醒称，这一有利因素的可持续性尚存在不确定性。

管理层业绩指引

AAT 将 2026 全年每股摊薄 FFO 指引从 1.96-2.10 美元上调至 2.04-2.10 美元。新的中位数 2.07 美元较之前的 2.03 美元提高 2%。

管理层表示，该展望反映了租赁活动、合同租金递增、费用管控、房产税退税以及此前已计提准备金的写字楼应收款项追回。能否企及指引区间的上限，取决于被关注的零售租户能否按期履行租金义务、公寓物业表现超出预估以及 Embassy Suites 取得更强的业绩。

写字楼租赁方面，在假设计划交易和其他预期活动顺利完成的前提下，管理层预计截至 2026 年底组合出租率将在 84%-86% 左右。

在已签约但未起租的 1200 万美元年化写字楼租金中，管理层预计 35% 将在 2026 年第四季度开始起租，约 60% 将在 2027 年上半年起租（偏向第一季度）。其余部分预计在更晚时候起租，有一小部分延伸至 2028 年。

风险与关注事项

• 持续的通胀和偏高的长期利率正给借贷成本、房地产价值及交易活动带来压力。
• 管理层预计，当 AAT 处理 2027 年 3 月到期债务以及 1 月定期贷款利率掉期到期时，再融资成本将会上升。
• 净债务 / EBITDA 仍高于公司 5.5 倍或更低的长期目标。
• 大型写字楼租赁更耗费时间才能完成，特别是面对成熟、高信用的租户及其法务团队时。
• 基因泰克（Genentech）正退租位于波特兰的约 7 万平方英尺空间，管理层表示这三个楼层目前尚无潜在意向租户。
• 欧胡岛旅游业表现仍不均衡，酒店房价竞争持续存在，预订能见度缩短。
• 第三季度股息支付率较高，部分原因在于与几年前签署的一份写字楼租约相关的巨额租户装修补贴报销。

分析师问答要点

• 写字楼项目储备：管理层表达了对近期签署 La Jolla Commons 租约的信心。管理层对 One Beach Street 也持乐观态度，但强调意向方案尚未推进至签署正式租约阶段。
• 租约起租时间：AAT 预计不会出现实质性延误，因为储备项目大部分涉及由房东控制的施工或具有固定起租日期的租户工程。
• 写字楼增长潜力：管理层指出，在其再开发资产中，包括 14Acres 和 Timber Springs 在内的贝尔维尤郊区项目组合，是入住率和 FFO 进一步提升的最大潜在来源。
• 零售定价：高入住率支撑了正向租金溢价，尽管管理层仍在持续平衡租金水平、租户信用与入住率。
• 资本回收：AAT 可能会考虑处置酒店、房车公园或其 Walnut Creek 零售物业。管理层表示，任何出售都必须综合考量税收、交易成本和现金流损失，且不会强行促成交易。

业绩电话会议完整文字记录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good morning, and welcome to the American Assets Trust, Inc.'s Third Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the call over to Meleana Leaverton, Associate General Counsel of American Assets Trust. Please go ahead.

Meleana Leaverton

Thank you, and good morning. The statements made on this earnings 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.

Yesterday afternoon, American Assets Trust's earnings release and supplemental information were furnished to the SEC on Form 8-K. Both are now available on the Investors section of its website, americanassetstrust.com. It is now my pleasure to turn the call over to Adam Wyll, President and CEO of American Assets Trust.

Adam Wyll

Good morning, everyone, and thank you for joining us today. We delivered a solid third quarter at American Assets Trust with encouraging operating results and continued progress on leasing across our portfolio. That performance came against a less predictable economic backdrop with long-term interest rates moving meaningfully higher and inflation proving more persistent than many had expected.

Despite these headwinds, the quarter demonstrated the durability of our high-quality coastal real estate and the strength of our vertically integrated operating platform. Periods like this reward patience and discipline and our approach of making measured decisions, allocating capital thoughtfully and maintaining a long-term perspective continues to serve us well.

For the third quarter, we generated $0.56 of FFO per diluted share, approximately $0.05 ahead of our internal projections. Portfolio-wide same-store cash NOI increased 8.3% for the quarter and is up 2.3% year-to-date. Quarterly growth was positive across all 4 operating segments with results benefiting in part from certain onetime items, primarily property tax refunds and the collection of a previously reserved office receivable.

Excluding those items, same-store cash NOI growth was 5.1%. Based on these results and our outlook for the balance of the year, we are raising our full year 2026 FFO guidance to $2.07 per share at the midpoint, a 2% increase from our prior midpoint.

Before turning to the portfolio, a word on the macro environment. Persistent inflation continues to put upward pressure on interest rates, affecting real estate owners through borrowing costs, asset values and transaction activity, and we are no exception.

Today, all of our debt is fixed rate or swapped to fixed with no maturities until March 2027. However, as we refinance that maturity and our term loan swap expires in January, we expect our borrowing costs to increase, and we'll reflect that in our 2027 outlook in February. We have ample liquidity and multiple avenues to address the maturity, allowing us to be deliberate about timing and execution.

At the same time, the underlying fundamentals of our real estate remain healthy. New construction starts across our property types are at or near historic lows in many of our markets and higher financing and construction costs make new development even harder to justify. That reinforces the long-term value of our coastal assets.

And while inflation pressures operating costs, contractual rent escalations, expense recoveries and more frequent repricing in our multifamily and hotel businesses help us offset those pressures. Turning to portfolio updates. Office touring and prospect activity held up well across our markets, particularly for well-located amenitized buildings backed by financially strong ownership. That is where we compete.

Larger leasing decisions can still take time, but our pipeline remains healthy. And so far, we have not seen the move in rates materially affect tenant decision-making. The fundamentals continue to vary by market. UTC and Del Mar Heights are among San Diego's most sought-after office submarkets with very limited new competitive supply.

San Francisco is benefiting from a more active technology and AI tenant base with growing demand for quality space. Bellevue is showing improving conditions in its best locations, and Portland remains more selective, but we continue to win more than our fair share of deals.

Across all 4 markets, leasing activity has been steady, and we're seeing consistent tenant interest in our properties. Our office portfolio ended the quarter approximately 86% leased, up nearly 400 basis points from a year ago and 140 basis points sequentially.

During Q3, we completed approximately 124,000 square feet of leasing with comparable cash rent spreads of 2.1% and straight-line spreads of 8.2%. We entered the fourth quarter with approximately 210,000 square feet of executed leases, representing about $12 million in annualized base rent that has not yet commenced.

Additionally, we have another 132,000 square feet in lease documentation and proposals outstanding on approximately 178,000 square feet. Our focus is on getting those signed leases paying rent while continuing to convert our pipeline into executed leases.

Our spec suite program is an important part of that leasing effort. Tenants increasingly want high-quality move-in ready space and our ability to deliver it helps shorten the leasing cycle. Since the beginning of 2024, 42% of our spec suite square footage has been pre-leased before construction was finished.

More than 50% has leased within 3 months of completing construction and more than 75% within 6 months. We'll take that batting average. At La Jolla Commons Tower III, we are out for signature as of this morning for 2 full floors totaling approximately 41,000 square feet with a high credit quality prospective tenant.

We're also in documentation for an additional 3,600 square feet on another floor. Assuming both leases are executed, the building would be approximately 72% leased. We expect to finalize both leases in the near future. This reflects the type of tenant demand we anticipated when we developed Tower III and with few competing large blocks of quality space in UTC, we like our positioning for the remaining space.

At One Beach Street in San Francisco, we are exchanging proposals on the remaining space on the second floor. If completed, that transaction would bring the property to 82% leased. The building's waterfront setting, distinctive character and quality have resonated with prospects.

The spec suites we built on the first and second floor are doing exactly what we hoped, helping convert touring activity into active proposal negotiations. In the North Waterfront submarket, home to One Beach Street vacancy is roughly 19%, well below the citywide rate of nearly 28%. Taken together, these negotiations represent meaningful progress towards stabilizing 2 of our most significant office investments.

To be clear, these transactions are not yet executed and remain subject to completion. Assuming they are completed as currently contemplated, along with our other expected leasing activity, we now anticipate ending 2026 between approximately 84% and 86% leased across our office portfolio.

The next step is getting these transactions finalized and converting our broader leasing activity into commenced rent and cash flow. Our retail portfolio continues to perform well, ending Q3 at 98% leased, consistent with the high occupancy levels we've sustained over time. With limited new retail construction, healthy demand for well-located space and our exposure to affluent established trade areas, we like the positioning of this portfolio.

During the quarter, we executed approximately 108,000 square feet of leases with comparable cash spreads of 7.4% and straight-line spreads of 16.8%. Tenant health is strong. Our watch list is short, and our leasing teams are pursuing opportunities to improve tenant mix and grow rents as space turns over.

Although we are watching the consumer closely, particularly as inflation and higher interest rates affect household budgets, these properties are important locations for our tenants and dependable sources of cash flow for AAT. As it relates to multifamily in San Diego, market-wide vacancy has begun to move lower and rent growth has returned to positive territory, encouraging signs following an extended period of new deliveries.

Excluding the RV Park, our San Diego communities ended the quarter 97% leased and 95% occupied with both renewal rents and new lease rents increasing 4% during Q3. Notably, Pacific Ridge rebounded from its seasonal summer turnover, ending Q3 nearly 97% occupied compared to 77% at the end of Q2 and 92% a year ago.

In Portland, Hassalo on Eighth operates in a competitive urban apartment market, although recent market data also points to improving absorption and a slowing construction pipeline. Hassalo ended the quarter 92% leased and 91% occupied with flat blended rent growth.

In both markets, our teams are focused on occupancy, retention and capturing improved rent growth as conditions normalize. It's worth mentioning that both our retail and multifamily portfolios achieved record average rental rates during the quarter.

At Waikiki Beach Walk, our Embassy Suites hotel performed better than we had anticipated for the quarter, even as Oahu works through a softer tourism environment. Visitor demand is uneven and rate competition is still a factor, particularly for more value-conscious travelers.

We are managing the hotel carefully, focusing on rate integrity, occupancy and expense control. The retail component of Waikiki Beach Walk provides stability and our fee simple ownership of this irreplaceable asset remains a meaningful advantage. For Q3, hotel RevPAR was 13% above last year, driven by occupancy, while average daily rate held steady.

Before wrapping up, a few comments on capital allocation, starting with our dividend. Our Board has declared a quarterly dividend of $0.34 per share payable on December 17 to shareholders of record as of December 10. Our dividend payout ratio was elevated in the third quarter, in part due to a large tenant improvement reimbursement tied to an office lease signed several years ago.

Much of our current office capital spending is concentrated in 2 areas: our spec suite program and tenant improvements on signed leases. Both support our leasing efforts and future rental income. We've also substantially completed our office amenity investments, which reduces our remaining capital commitments in that area.

As that spending moderates and recently signed leases begin paying cash rent, we expect dividend coverage to improve gradually. Our Board continues to monitor the payout ratio closely. On external growth, we continue to evaluate and underwrite potential acquisitions as well as opportunities to recycle capital from existing assets.

Higher rates may create more opportunities as owners work through debt maturities, although we have not yet seen transaction pricing fully adjust to the higher cost of capital.

Our bar remains high and any investment must offer compelling risk-adjusted returns and strengthen our portfolio over the long term. We have no need to force a transaction simply to get bigger. In closing, I'm encouraged by what we accomplished this quarter and the opportunities we have ahead of us.

We exceeded our projections, raised our full year guidance and advanced significant office leasing activity that if finalized, would put 2 of our major office investments meaningfully closer to stabilization. Our focus now is on converting that leasing momentum into cash flow while maintaining the operating and financial discipline that has served us well across cycles. I want to thank our entire team for their hard work and execution this quarter. With that, I'll turn the call over to Bob to review our financial results and updated outlook in more detail.

Robert Barton

Thanks, Adam, and good morning, everyone. Yesterday afternoon, we reported third quarter 2026 FFO of $0.56 per diluted share and net income attributable to common stockholders of $0.13 per diluted share. Excluding the onetime items Adam discussed earlier, primarily property tax refunds and the collection of a previously reserved office receivable, FFO would have been $0.53 per diluted share.

FFO increased $0.05 per diluted share compared to the second quarter, driven primarily by 4 items: approximately $0.02 per share from the collection of a previously reserved office receivable at COASTAL COLLECTION at Torrey Reserve, approximately $0.01 per share from property tax refunds at Waikele Center and Hassalo on Eighth.

Approximately $0.01 per share of outperformance from Embassy Suites at Waikiki Beach Walk, and approximately $0.01 per share from lower G&A. Turning to same-store cash NOI. The portfolio-wide results were strong. Same-store cash NOI increased 8.3% year-over-year. Excluding onetime items, growth was 5.1%. This distinction is important.

The 8.3% reflects the reported results, including the benefit of onetime items, while the 5.1% provides a clearer view of underlying operating performance. Let me briefly walk through the results by segment. For office, same-store cash NOI increased 7.9%. Excluding the collection of the previously reserved office receivable and the real estate tax refunds, growth would have been 4.8%, primarily reflecting higher base rent from recently commenced leases.

Retail same-store cash NOI increased 9.6%. Excluding real estate tax refunds, growth would have been 6.3%, driven by higher expense reimbursements at Alamo Quarry, higher base rents from new leases and tenant expansions at Alamo Quarry, Lomas Santa Fe, and Gateway Marketplace, and lower rental expenses at Carmel Mountain Plaza.

Multifamily same-store cash NOI increased 10.2% or 10.8%, excluding the RV Park. Excluding real estate tax refunds, growth would have been 4.9%, primarily reflecting stronger performance income at Pacific Ridge and Imperial Beach Gardens. And mixed-use same-store cash NOI increased 3.9%.

Embassy Suites at Waikiki Beach Walk performed well, with hotel NOI increasing to approximately $3.1 million from $2.6 million a year ago. The hotel's performance was partially offset by lower NOI in the retail portion of the property, primarily because a bad debt collection in the prior year quarter did not recur.

At Embassy Suites, occupancy increased to 88.5% from 78.3% a year ago. RevPAR increased 13.3% to $337, while ADR increased 0.2% to $381. Overall, our same-store portfolio continued to demonstrate solid operating performance with growth supported by leasing activity, rental income and expense management, supplemented by onetime items.

Turning to our balance sheet and liquidity. We ended the quarter with approximately $590 million of total liquidity, consisting of $90 million in cash and $500 million available under our revolving credit facility. Net debt to EBITDA was 6.4x on a quarterly annualized basis and 6.9x on a trailing 12-month basis.

Our long-term target remains 5.5x or below. Our interest coverage ratio and fixed charge coverage ratio were 3.3x on a quarterly annualized basis and 3.1x on a trailing 12-month basis. Turning to guidance. We are increasing our full year 2026 FFO guidance range to $2.04 to $2.10 per diluted share with a midpoint of $2.07. This compares with our previously issued range of $1.96 to $2.10 with a midpoint of $2.03. The increase represents approximately 2% growth at the midpoint.

Our outlook reflects continued momentum across our core sectors, supported by leasing activity, contractual rent increases, disciplined operating expense management, the collection of a previously reserved office receivable and real estate tax refunds.

Our guidance assumes a stable operating environment, continued tenant demand and a prudent approach to risk management. While our guidance represents our best estimate based on the information available today, we believe there is potential to perform toward the upper end of the range as several favorable developments occur.

First, the majority of retail tenants for whom we have established credit reserves must continue to meet their rent obligations. As of the third quarter, approximately $0.005 per share of FFO was reserved for tenants considered at risk based on a probability weighted approach.

Second, our multifamily segment would need to outperform expectations through improved occupancy, continued rent growth, or better-than-expected expense management. Third, Embassy Suites would need to deliver stronger results. We remain cautiously optimistic about the potential for domestic and international travel to improve.

We will continue to monitor these factors closely as the year progresses. As a reminder, our guidance excludes the impact of future acquisitions, dispositions, equity issuances or repurchases and debt refinancing or repayments, except for those already disclosed.

We remain committed to transparency, and we'll continue to provide clear insight into our quarterly results and the key assumptions underlying our outlook. Finally, the non-GAAP financial measures discussed today, including NOI, are reconciled to the most directly comparable GAAP measures in our earnings release and supplemental materials. With that, I'll turn the call back over to the operator for questions.

Operator

[Operator Instructions] Our first question comes from Todd Thomas with KeyBanc Capital Markets.

分析师问答

Todd Thomas

Adam, the leasing pipelines that you discussed, I think it was about 132,000 in lease documentation, maybe proposals that are out for another 178,000 square feet that included some of the leasing at La Jolla and One Beach. What's your confidence level around getting those leases executed? And then any change in urgency for tenants to execute leases here over the last several months? And how are the rents relative to what you were initially underwriting?

Adam Wyll

Yes, sure. So, Todd, on the leases we discussed for La Jolla Commons, and I'll have Steve supplement this also. We're fairly confident that we're going to get those executed here in short order, if not in the next few days. The One Beach proposals that we mentioned, I think we're fairly confident, but we don't want to get over our skis on that one until we have lease documentations going out, but there is meaningful interest, particularly now that the spec suite is completed. There's been heightened tours and proposal activity over there.

So as for whether we get all that done this year, I think that's kind of the focus, obviously, and we're relatively optimistic we'll get it done. If we get all of that done, we're going to obviously trend towards the higher end of our lease percentage range that I gave, which was 84% to 86%, keeping in mind that Genentech space, which is, call it, 70,000 or so square feet moves out at the end of this month. So we're going to kind of recapture some of that lost square footage and maybe do even a little better.

But of course, as you know, Todd, we're a little bit more conservative on this stuff. So we want to give you guys a range so we don't underperform. With respect to the timing of these deals happening, like I said, sometimes these things take a little bit longer right now to get the deals done, particularly the larger square footage deals and with sophisticated high credit tenants, they've got their legal teams and their business teams.

So we're seeing kind of a longer lead time to get deals cut than we used to, but we're not losing deals during that process. Steve, do you want to layer on to that?

Steve Center

Yes, Todd, you had asked about the rents. At La Jolla Commons III, we're in our range, including the yield that we expected. So we're doing well in that regard. And at One Beach, I think we're exceeding our expectations, frankly, in terms of where the rents are coming in. So we're doing what we thought we would do.

Todd Thomas

Okay. That's helpful. On the current leased pipeline that has not yet commenced, so the $12 million of annualized office rent, the new property level disclosure is helpful, by the way. But I'm just curious if you can talk about sort of the timing and the schedule for that to come online through 2027. And are there any major remaining conditions before those tenants begin paying rent?

Adam Wyll

So sure. So on the signed but not commenced numbers that I gave, Todd, 35% of it will commence in Q4 of this year. So that's to say, this quarter, this upcoming Q4 and about 60% of that number is going to start in the first half of next year, front-loaded more so in Q1 and the remainder through the end of the year, a little bit bleeds into 2028.

As for the conditions, a lot of this is either landlord build where we control and we're very confident in our timing and ability to deliver the space or tenant build where it's a set commencement date anyway. So we don't think there's going to be any conditions that cause any of these commencement dates to slip.

Todd Thomas

Okay. And then on the Genentech move out, just how are conversations there around backfilling? Any update there that you can share?

Adam Wyll

Not backfilling those 3 floors, but we've got really positive activity at First & Main right now. And so we also closed a 17,000-foot lease in our 710 renovation. So overall, we're doing really well in Portland. Genentech, no prospects yet. But again, we've got really good tenant activity at First & Main.

Operator

Our next question comes from Haendel St. Juste with KeyBanc Capital Markets.

Ravi Vaidya

This is Ravi on behalf -- on the line for Haendel from Mizuho, not KeyBanc, but just wanted to ask here about the change in guide, large increase at the low end of the guide. Can we just do a before and after comparison? And what was embedded? What were some of the assumptions for the prior low end of the guide that is no longer the case as you think about '26?

Adam Wyll

So Ravi, you're asking -- say that again?

Ravi Vaidya

I just wanted to understand some of the moving parts that drove the lift in the guidance.

Adam Wyll

Okay. Well, I mean, you saw in Q3, we had $0.04 or $0.05 of outperformance and a few cents of that related to property tax refunds that will not be recurring in Q4, and we had a collection of a previously reserved office receivable that was probably $0.01 and change.

So the operating outperformance outside of that, that would be more reoccurring would probably be maybe $0.01, $0.015. So if you kind of triangulate our midpoint based on where we are year-to-date, that constitutes $0.50 or so of Q4 FFO and that's where we get to the midpoint. Do we think we're going to underperform that? I mean it's highly unlikely absent something happening that's highly unexpected at this point.

And more likely than not, we have the ability to outperform that number, Ravi, by either collecting our reserved tenants on the bad debt side or outperformance on multifamily, which happens seasonally in Q4 for us often, or if the hotel outperforms better than expected and the visibility in the hotel is a little bit more challenged now than it used to be with bookings happening a little bit closer to their occupancy. So kind of a long-winded way of saying we don't expect to miss the midpoint. I think that best bet is that we have a good chance to beat it, but we'll see how it plays out. Bob, do you have anything to supplement on that?

Robert Barton

No, I think you nailed it on that. Ravi, do you have any other questions on that?

Ravi Vaidya

No, that was very helpful. I wanted to ask about the SNO pipeline, and I know you touched about it earlier with Todd's question, but maybe you guys have commentary regarding the growth inflection in the core headed into '27 and '28 as those signed leases come online, particularly across your office portfolio?

Adam Wyll

Yes. So we're not really looking to provide any incremental guidance on what next year is going to look like, Ravi. I mean that SNO pipeline that you mentioned is in the supplemental and kind of breaks it down by quarterly expected commencement date. So we would say to kind of bank on that.

And as we come back to you guys early next year, and we'll have had a couple more months of hopefully, really positive sustained leasing activity, we'll be able to come back at you with where we're seeing our same-store growth on the office and every other sector and where we're looking to end next year.

If you look at our top 10 list, you'll see there's a couple of expirations on the office side coming towards the end of 2027. Most of that will be collected throughout next year, and we've got some work to do to either backfill that or extend those folks. But not otherwise in a position to tell you where the trajectory or momentum will be for next year.

Ravi Vaidya

Got it. Understood. And maybe just one here on Embassy Suites. Occupancy increased pretty dramatically on a year-over-year basis, close to 1,000 bps seems like, and rate was fairly flat. It also seems that Japanese tourism is still fairly sidelined. Can you please help us reconcile what drove the occupancy increase for the hotel?

Adam Wyll

Bob, he's asking what drove the occupancy increase at the hotel. Do you want to hit that one?

Robert Barton

Well, for Q3, Ravi, I mean, typically, during Q3, we're up $0.02 of FFO just related to the Embassy Suites. And then in Q4, historically, we're down $0.01, $0.015 on that. So there's nothing specific other than people are coming to visit it during the third quarter.

Ravi Vaidya

Got it.

Adam Wyll

The reality is, Ravi, just there were some hotels were down for renovation. So there was the ability to grab incremental occupancy. Even though rates stayed flat, we were able to grab some more room nights, and that obviously played through into our earnings. Whether that's sustainable or not, we'll see through the end of this year, but we're going to grab whatever occupancy we can.

Operator

Our next question comes from Ronald Kamdem with Morgan Stanley.

Ronald Kamdem

Great. A couple of quick ones for me. Just starting with the retail portfolio, it looked pretty full, right, 98-plus percent occupancy. I guess just curious of how you guys are thinking about sort of the pricing dynamics and the ability to sort of drive same-store higher in that portfolio just from a high level?

Adam Wyll

Yes, I'll kick it off and then turn it over to our retail guy. But obviously, when we're at 98% leased, that's kind of telling us that there's a lot of demand for the spaces we have in our properties. And as these leases roll, we're pushing rents as much as we can, Ron.

In many instances, if a space goes vacant on us, there's numerous retailers that want to get in and kind of compete for the tenant mix, and we're selective on who we want to put into these properties. And obviously, where inflation is and rates are, we're not looking to go downward in rate.

Generally speaking, if you look at our spreads over the past many quarters, even if you look at the past 3 or 4, 5 years, we seem to have positive spreads more times than not. And I think that's indicative of the quality and the location of these assets. But of course, there's also the mom-and-pop guys. Some may fall through and they're paying high rents and you may need to backfill with someone that has a little bit more credit that's not going to pay as much. But -- so we're trying to balance between credit and rate and of course, occupancy. So Sully, do you have anything to add to that?

Christopher Sullivan

I think you've answered the question perfectly. There's nothing I can add to that.

Adam Wyll

Okay. We'll do our best. Of course, we're greedy, Ron, and we're going to grab as much cash as we can from these tenants within reason so that they can still sustain their business and have proper occupancy costs.

Ronald Kamdem

Great. And then on the office side, I guess if I could ask a two-parter. One is just -- obviously, we've talked about La Jolla Commons and One Beach. Besides those 2 properties, where do you think is sort of the most obvious lift in vacancy that you could sort of tackle to get the occupancy higher? And then would love an update on your thoughts on capital recycling at this point in the portfolio about where you could sell or if you're interested in buying anything?

Adam Wyll

Let me hit the first one and then Steve can supplement that. I think you've heard Bob mention in the past, Ron, that we have $0.30 or so of incremental FFO from our redevelopment properties, that's La Jolla Commons, One Beach and also our suburban Bellevue portfolio. So if you were to ask me where the biggest lift is, it is in that portfolio, the suburban Bellevue one. Of the $0.30 of incremental FFO potential and assuming some of these deals get inked that I mentioned in my script, we'd probably be probably at about 20% in place -- I mean, $0.20 in place and $0.10 speculative. And most of that speculative is going to come out of 14Acres in Bellevue and Timber Springs in Bellevue, which have gone through renovation and amenitization and are -- we were just up there a week or 2 ago.

These are beautiful assets, and we think there's going to be some overflow from Downtown Bellevue, which has been really crushing it lately. Steve, do you want to layer on to that?

Steve Center

Yes. In terms of the markets, we're seeing good results across all 4. San Diego -- well, by square footage, San Diego is the biggest, but it's also our biggest portfolio. San Francisco, with those spec suites completed, we expect to lease the rest of One Beach. We've got some good traction in Portland, as I alluded to earlier.

And then Bellevue, first of all, our tower in City Center Bellevue is over 95% leased. We do have some rollover, but we've got great activity there behind it. And then we're making some gains. Right now, the I-520 corridor has gotten more active. So we've got multiple proposals going on up there. And I-90 is still the laggard, but it's interesting.

We've leased 35% of that asset since the beginning of 2025. We just had some unexpected losses due to business shutdowns that really negated that. So that's been active as well. We've been winning more than our fair share of deals in that submarket, too. So -- we see gains across all, I would say, San Diego #1, San Francisco #2, Portland #3, and Bellevue probably last just because our tower is nearly full.

Ronald Kamdem

Great. And then thoughts on capital recycling here?

Adam Wyll

Yes. So we regularly ask ourselves whether we're the best long-term owner of each asset we own and whether that capital could earn a better return elsewhere. So if we can achieve attractive pricing and use the proceeds to improve the balance sheet or earn a better return elsewhere, we're all on board with that.

But we have to look at the full economics, too, and that includes taxes and transaction costs and the cash flow we would give up. Joint ventures and partnerships can be alternatives to an outright sale. But our objective, Ron, is to improve our long-term value per share -- we'll be patient until the economics support that.

And on the recycling side, there's a few assets that we would consider disposing of, but they're still part of our core portfolio. So it's going to be very compelling. And whether that's the hotel or the RV Park or maybe our retail property up in Walnut Creek, these are alternatives for us to recycle out of. But when you have great assets, we got to be right on both sides of the equation to make sense of it. And we've taken a run at a couple, but we haven't won. We're not going to get over our skis, like I said earlier. So we'll see how it plays out. We're not going to force it.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Adam Wyll for any closing remarks.

Adam Wyll

Well, we appreciate everyone's time and listening to our call today and your support. It means a lot to us. We hope everyone has a great week, and we'll talk to you in a few months. Cheers.

Operator

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