American Assets Trust: Elevated Leverage and Soft Leasing Trends Justify Sell Stance

Ronald Kamdem, an analyst from Morgan Stanley, maintained the Sell rating on American Assets. The associated price target remains the same with $17.00.

Ronald Kamdem has given his Sell rating due to a combination of factors that indicate a less compelling risk‑reward profile for American Assets Trust at this time. The company’s latest quarter showed funds from operations coming in just below expectations, and its guidance for 2026 was also slightly under consensus, suggesting limited near‑term earnings momentum. At the same time, leverage remains elevated and dividend payout ratios have edged higher, which reduces balance-sheet flexibility and heightens sensitivity to operating or macro headwinds. Leasing trends were mixed, with lower total office and retail square footage signed versus the prior quarter and moderating cash re-leasing spreads, pointing to a more challenging environment for rent growth.

In addition, office occupancy is still relatively soft despite a recent sequential improvement, reflecting ongoing pressure in West Coast office markets that make it harder to fully stabilize the portfolio. Retail occupancy remains high but showed a small downtick, and multifamily demand, while improving, is not strong enough to fully offset the headwinds in other segments. The firm also highlighted uncertainties around capital recycling plans, tourism-driven performance at the Embassy Suites asset, and the path to bringing leverage down toward management’s target. Taken together, these factors support a cautious stance and underpin Kamdem’s view that the stock has downside risk relative to alternatives in the sector, resulting in his Sell recommendation.