John Chamberlain, president and CEO of American Assets Trust (NYSE: AAT), joined REIT.com for a CEO Spotlight video interview at REITWorld 2014: NAREIT’s Annual Convention for All Things REIT at the Atlanta Marriott Marquis.
American Assets Trust acquires and develops retail, office, multifamily and hospitality properties in high-barrier-to-entry markets, primarily in Southern California, Northern California, Oregon, Washington and Hawaii.
Discussing investment opportunities, Chamberlain said compelling acquisition opportunities are not available at this time. “Things are very, very expensive, and the returns that we can find through development far exceed what we would obtain in an acquisition,” Chamberlain said.
In terms of development, American Assets Trust has about $300 million in projects underway, and its development pipeline “is probably more than twice that amount,” according to Chamberlain. He noted that the company's development program is mainly focused on the retail and multifamily sectors, where the firm expects to see the most growth opportunities.
Turning to the impact of macroeconomic factors on the company’s results, Chamberlain pointed out that its Hawaii hotel operations are directly influenced by the strength of the dollar versus Asian currencies.
“The Asian markets are where most of the growth is occurring in terms of tourism for Hawaii. If the dollar is up, we tend to see Asian visitorship fall off a little bit, so that’s something we always keep an eye on,” he said.
With regard to office space, job growth is the key factor, according to Chamberlain. He emphasized that American Assets Trust is active in office markets linked to the technology sector.
“If tech slows down, we’re going to be impacted. At the moment, that doesn’t appear to be the case,” he said.
Meanwhile, wage growth is important for the multifamily sector, Chamberlain explained.
“Without real wage growth, you’re not going to see rent growth because people can’t afford to pay more,” he said.
As for the retail sector, Chamberlain expressed confidence that the company’s retail tenants are not threated by the growth of e-commerce.