Welcome to American Assets Trust, Inc E arnings Conference Call. My name is Janine. I'll be your Operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press zero one on your touch-tone phone. I will now turn the call over to Adam Wyll, President and COO. You may begin.
Thank you, Operator. Good morning, everyone. Welcome to American Assets Trust Second Quarter 2022 earnings call. Yesterday afternoon, our earnings release and supplemental information were furnished to the SEC on Form 8-K. Both are now available on the Investors section of our website, americanassetstrust.com. During this call, we will discuss non-GAAP financial measures, which are reconciled to our GAAP financial results in our earnings release and supplemental information. We will also be making forward-looking statements based on our current expectations, which statements are subject to risks and uncertainties discussed in our SEC filings. You are cautioned not to place undue reliance on these forward-looking statements, as actual events could cause our results to differ materially from these forward-looking statements. With that, I'll turn it over to Ernest Rady, our Chairman and CEO, to begin the discussion of our second quarter 2022 results. Ernest?
Thanks, Adam. Well done, and good morning, everyone. As we've shared in the past, with each business decision that we make, we take the path that we believe will optimize the long-term growth of our earnings and net asset value as we work hard to create shareholder value. That includes remaining disciplined with respect to our strong balance sheet and continuing to invest in and improve our irreplaceable properties to remain among the best in our markets for each of our asset classes. Particularly, as we see an ongoing flight to quality based on location, amenities, asset quality, public transportation, and capital requirements, which are factors we believe will contribute to our outperformance in the long term. In Q2 2022, we were encouraged by our operating fundamentals despite volatility in capital markets and general economic uncertainty as we build upon our great progress from Q1.
We're pleased to see better than budgeted financial results in our portfolio in Q2, driven primarily by better than expected performance out of our Multifamily properties and Waikiki Beach Walk Embassy Suites. We continue to believe there is meaningful growth potential for our Embassy Suites, particularly as Asian travelers return to Oahu. As we've mentioned previously, Asian travelers have historically represented approximately 40% of all tourists vacationing in Oahu but remain a small fraction of that at this point in time. We expect that to change over the next year or two. Meanwhile, though we believe that our earnings trajectory looks steady and promising, we understand the challenges presented by inflationary, recessionary forces and the potential for a slower economic growth period ahead. We remain vigilant and focused on being prepared for any scenario to the best of our capabilities.
As you will hear shortly, we're increasing our guidance for the rest of the year based on our optimism for continued near-term growth across our assets. I also want to mention that the Board of Directors has approved a quarterly dividend of $0.32 for the third quarter, which is supported by our financial results and is an expression of our board's confidence in the embedded growth of our portfolio this year and beyond. The dividend will be paid on September 22nd to shareholders of record on September 8th. Finally, on the development front, both La Jolla Commons III and One Beach Street remain on time and on budget, and we continue to remain very optimistic about the leasing prospects. We do not have any specific news to share on that front at this time.
Adam, Bob, and Steve will go into more detail on our various asset segments, financial results, and guidance updates, and I will be available for any questions you may have at the conclusion of their prepared remarks. On behalf of all of us at American Assets Trust, we thank you for your confidence in allowing us to manage your company and for your continued support. I'm now going to turn the call back over to Adam. Adam, please.
Thank you, Ernest. As Ernest alluded, we believe our underlying fundamentals and asset quality support a favorable long-term view of American Assets Trust, regardless of the prevailing volatility in today's financial markets. Along those lines, we currently estimate that our office tenants are just below 50% physical occupancy at our office campuses, and that has remained somewhat static over the past quarter. Nevertheless, we believe the demand for premium office space like ours will remain strong, as we believe tenants will prioritize office space quality to help retain and attract talent. You'll hear more about our successful office leasing activity from Steve Center shortly.
In Q2, our San Diego Multifamily portfolio produced favorable rent growth, where we saw leases on vacant units rent at an average of approximately 23% over the prior rates, while rates on renewed units increased an average of 10% over prior rents, which was capped due to rent laws in California. As the rental market in San Diego County has remained strong, little to no concessions were offered on these units. At Pacific Ridge, occupancy dipped to the low 80s% at the end of June due to the expected seasonal move out of units in May, primarily occupied by students. We had actually anticipated much lower occupancy at Pacific Ridge, but it fared better than expected as a result of several master leases that commenced in May and June.
Meanwhile, leasing for the upcoming fall season is well underway, which includes an additional master lease for over 40 units with the University of San Diego. We expect Pacific Ridge's occupancy to rebound into the mid-90s% by the end of August as the university begins its fall quarter before Labor Day. Additionally, our Hassalo on Eighth Multifamily in Portland came in above our internal expectations in Q2, as the Portland Multifamily market has recently picked up some momentum as a result of a continued influx of people moving to Portland and corresponding decrease in unemployment rates. Even with all of its challenges the past few years, Time Magazine recently listed Portland as one of the world's greatest places in 2022.
In Q2, we saw vacant units at Hassalo lease at an average of approximately 15% over prior rents, and renewal units lease at an average of approximately 6% increase, with concessions ranging from zero to eight weeks, depending on product type, and most recently, over the past few weeks, no concessions at all. Later this month, a new bicycle and pedestrian bridge two blocks from Hassalo will connect the central east side of Portland to the Lloyd neighborhood, which we are optimistic will bring additional rental prospects to Hassalo. On the retail front, we continue to see a rising tide in our retail portfolio.
In Q2, our four largest renewals, totaling approximately 130,000 sq ft, were Whole Foods at Alamo Quarry Market, Vons at Lomas Santa Fe Plaza, and Petco and Ross at Southbay Marketplace, with rents increasing 10%, 15%, 8%, and 10% respectively later this year or early next upon renewal. Additionally, we have a meaningful amount of new deals in documentation and remain positive about prospects of getting those deals done. Not including those pending deals, that leaves us with about 2% of our retail portfolio expiring through the end of 2022 and less than 7% expiring in 2023, assuming lease options are not exercised. Finally, I just wanted to point out that in Q2, we issued our 2021 sustainability report, which highlights our ESG initiatives and goals, and that is available on our website.
With that, I'll turn the call over to Bob to discuss financial results and updated guidance in more detail.
Thanks, Adam, and good morning, everyone. Last night we reported second quarter 2022 FFO per share of $0.58, and second quarter 2022 net income attributable to common stockholders per share of $0.18. Second quarter results are primarily comprised of actual FFO increasing by approximately $0.01- $0.58 per FFO per share, compared to the first quarter of 2022, primarily related to outperformance by the Embassy Suites by Hilton Waikiki Beach Walk on the Hawaiian island of Oahu. Let's talk about same-store cash NOI. Same-store cash NOI in Q2 2022 ended at approximately 3.6% growth year-over-year for the second quarter. Same-store office was approximately flat in Q2 as a result of the remaining lease abatement for one of our large tenants at our landmark building at One Beach Street in San Francisco.
We expect same-store office to return to a double-digit increase in Q3, similar to Q1. The retail sector had a 1.8% decrease in same-store cash NOI in Q2, but when excluding prior year COVID-related accounts receivable collections, the retail same-store cash NOI percentage increases to a positive 1% growth year-over-year. To put it in perspective, for the year ending 2022, we are expecting same-store cash NOI metrics to be approximately as follows. Office ending at 8.3%, retail ending at negative 3.7%, Multifamily 10.6%, mixed-use at 49%, for a total same-store cash NOI of 7.4%.
Excluding a $2.4 million property tax refund received at Alamo Quarry Market in 2021 and higher collections of COVID back rent in 2021 for prior periods, retail same-store cash NOI is expected to be approximately +3% for the year, and total same-store cash NOI is expected to be approximately 9.5% for the year ending 2022. To me, this shows that retail growth is much stronger on a comparative year-over-year basis when excluding those one-time items. Meanwhile, the retail sector is also showing positive signs in the cash basis leasing spreads. In Q2, we are showing a 5.7% cash basis change over the prior rent and 20% on a GAAP basis for the retail sector.
Office leasing spreads continued to be strong in Q2 with leasing spreads on a cash basis and GAAP basis at 20% change over the prior rent. Our liquidity at the end of the second quarter of 2022, we had a liquidity of approximately $461 million, comprised of approximately $61 million in cash and cash equivalents and $400 million of availability on our revolving line of credit. Our leverage, which we measure in terms of net debt- to- EBITDA, was 6.7x. Our objective continues to be to achieve and maintain a net debt- to- EBITDA of 5.5x or below. Our interest coverage and fixed charge coverage ratio in the quarter at 3.9x. Let's talk about 2022 guidance update.
We are once again increasing our 2022 FFO per share guidance range to $2.21-$2.27 per FFO share with a midpoint of $2.24 per FFO share. It is a 3% increase from our previously updated guidance issued in our Q1 2022 earnings call that had a range of $2.13-$2.21 with a midpoint of $2.17. Let's walk through the following four items that make up this increase in 2022 FFO guidance. First, our Waikiki Beach Walk Embassy Suites and retail contributed approximately $0.02 per FFO share of outperformance Q2 2022 that was not previously included in our 2022 guidance. Second, our Multifamily properties contributed approximately $0.02 per FFO share of outperformance in Q2 2022 that was not previously included in our 2022 guidance.
Third, our straight-line rent, G&A and interest savings contributed another $0.02 of FFO per share of outperformance in Q2 that was not previously included in our 2022 guidance. Fourth, our retail properties contributed approximately $0.01 of FFO per share of outperformance in Q2 2022 that was not previously included in our 2022 guidance. These adjustments, when added together, will be approximately $0.07 per FFO share and represent the increase in the 2022 midpoint over our previous 2022 guidance midpoint. While we believe the 2022 updated guidance is our best estimate as of this earnings call, we do believe that it is also possible that we could perform to the high end of this guidance range. In order to do that, tourism and spending in Waikiki needs to maintain its positive trajectory.
As of the end of Q2 2022, our forecast for calendar year 2022 is that our Embassy Suites will end at approximately 83% of 2019 pre-COVID NOI, up from our estimate of 74% at the end of Q1 2022. Embassy Suites has the potential to do much more, but remains dependent on our Japanese tourism opening back up and more favorable foreign exchange rates to our Japanese guests as the foreign exchange rate between Japan and the U.S. has been at recent highs. As always, our guidance, our NOI bridge, and these prepared remarks exclude any impact from future acquisitions, dispositions, equity issuances or repurchases, future debt refinancings or repayments other than what we've already discussed. We will continue to do our best and be as transparent as possible and share with you our analysis and interpretations of our quarterly numbers.
I'll now turn the call over to Steve Center, our Senior Vice President of Office Properties, for a brief update on our office segment. Steve?
Thanks, Bob. At the end of the second quarter, net of our two redevelopments, our office portfolio stood at approximately 93% leased. Netting out our three recent acquisitions, our same store portfolio was approximately 96% leased. The momentum in our office portfolio continues. In the second quarter, we executed 15 leases totaling approximately 148,000 rentable sq ft, including approximately 12,000 rentable sq ft of comparable new leases, with increases over prior rent of 48.9% on a straight line basis, and approximately 116,000 rentable sq ft of comparable renewal leases, with increases over prior rent of 18.3% on a straight line basis, including renewing VMware and 75,000 rentable sq ft at City Center Bellevue, and approximately 20,000 rentable sq ft of non-comparable new leases.
Throughout our office portfolio, we are reaping the benefits of the multiple initiatives we have been employing to drive occupancy and rent growth, including renovating buildings with significant vacancy and/or rollover, furthering amenity packages, aggregating and white boxing larger blocks of space where there is scarcity, and improving smaller spaces to be turnkey and move-in ready. Notably, we continue to realize meaningful increases in occupancy and rent growth resulting from these initiatives. For example, with our recent 25,000 rentable sq ft lease to Seismic at Torrey Reserve, our San Diego office portfolio is now 95% leased. The 10,000 rentable sq ft comparable new lease portion of that lease produced an increase over prior rent of 49% on a straight-line basis.
In addition to the initiatives outlined above, we are expanding access to medical office users in select markets and buildings in response to a very tight market conditions, producing longer term leases at what we believe are premium rents relative to traditional office tenants. Along those lines, we are in lease documentation at Torrey Reserve with an existing medical user to renew them in approximately 4,000 rentable sq ft and expand them into an additional 7,400 rentable sq ft that we believe will provide a much better return than a comparable office lease. We have agreed to terms on a new 7,400 rentable square foot medical lease at Solana Crossing at a triple net rate that is 35% higher than a comparable office lease. We continue to invest in our office portfolio.
In addition to the redevelopments at One Beach in San Francisco and Oregon Square in Portland, and the development of Tower III at La Jolla Commons in San Diego, we are underway on the following projects: Major renovations at Eastgate Office Park.
New amenities at City Center Bellevue, including a fitness center, a bike hub with showers and lockers, and a conference center. Renovations and common area enhancements at Solana Crossing. New amenities at Corporate Campus East III, and new amenities at First & Main and Lloyd Center Tower in Portland, including a fitness center, conference center, and lounge in each building. We continue to believe that strategic investments in our portfolio will position us to continue to capture more than our fair share of net absorption at premium rents despite current market headwinds. I'll now turn the call back over to the Operator for Q&A.
Thank you. If you have a question, please press zero one on your touch-tone phone. If you wish to be removed from the queue, please press zero two. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press zero one on your touch-tone phone. Our first question comes from Todd Thomas. Please go ahead.
Morning, Todd.
Hey, morning. This is Arthur Porto on for Todd Thomas today. Thanks for taking the question. Just gonna jump into it for the first one. Looks like you've increased exposure to office over the last several quarters, you know, mainly through acquisitions. We're sort of wondering if your view around office has changed at all at the margin. As you think about deploying incremental capital going forward, would you look at possibly other property types today, given what maybe sounds like changes in asset pricing?
Well, let me answer that from my point of view. We were fortunate enough a year ago to borrow half a billion dollars, $500 million, at 3 3/8% for 10 years. When we looked at how we were going to invest that money, we looked at apartments, which are priced now to perfection, retail, which has issues that we have to deal with and is also priced for perfection. We found some office opportunities that we could buy at below replacement cost and improve. I think that's proved to be a very good strategy. In the short run, it's not acceptable, obviously, in the marketplace because office is out of favor. If you wanna make money, you gotta buy 'em when they hate 'em and sell 'em when they love 'em.
Buffett said that, and that's our strategy. Right now we have a full plate. We have great properties to develop in absolutely the best locations in the path of growth where there's barriers to entry. That's our strategy, and we're just executing on it. Where we go from here will be governed by what I said at the outset. We wanna create long-term growth and shareholder value and net asset value. I hope that answers your question.
Thank you. That's helpful.
Thank you.
My second question, occupancy fell sequentially at the recent Eastgate Office Park acquisition. Could you maybe speak to that decrease in occupancy and maybe talk about the strategy and timeframe to release the space?
First of all, Eastgate is a fantastic project. I'm so happy we bought that. It's absolutely amazing. Steve has been the author of that acquisition and the impetus upon the growth, and I'm not gonna deprive him of the pleasure of describing it. Thanks for the good question, Arthur. You know, this is not a surprise to us. We knew we were buying vacancy. We knew he had certain customers in that project that were not premium rent-paying customers but more commodity space users. Case in point, this quarter, we lost two tenants at Eastgate. Both were insurance-related businesses, both paying below market rents of $26 and $28 a foot triple net versus the current market of $35-$36 triple net. In both cases, they just shut down operations.
One shut down the company operations, the other shut down the local operation. Again, these weren't unexpected. We saw Eastgate as a value to take something that had been leased by the past or the prior two owners as more of a commodity project. We saw outstanding bones, tremendous amenities that just hadn't been paid much attention to for the last couple of owners, and so we're gonna improve it significantly. I would suggest that the process we're starting at Eastgate is similar to the process we went through at Torrey Reserve, and now we're at the culmination of that transformation at Torrey Reserve, and I touched on the results with the latest deals and reaching 95% occupancy at premium rent. We think we're gonna have a similar outcome there with Eastgate. A little more perspective on Eastgate.
We acquired the equivalent of a health club, but we didn't pay for it. It came without having to pay for it. We're gonna be able to rent at market rents. We're gonna be able to offer costs that are similar to market, but add the amenities that we paid nothing for to our prospective tenants. I'm really bullish on Eastgate.
That's helpful and great to hear. Thanks for that. Just one more quick question. Apartment rents increased in the quarter by looks like 3.5% over 1Q. Are you seeing that pace of growth moderate, or do you anticipate that you'll be able to maintain pricing power as the year progresses?
Well, I don't, but Abigail might want to answer that question. I think the market's strong and getting stronger in all our apartment markets. Abigail, do you wanna add to that?
Sure. Good morning. I think in San Diego County, you know, in the second quarter, occupancy has been really strong, not only in the portfolio, but in the county. When you think about living in San Diego and what it has to offer, we do believe that strong will continue to remain strong into the third quarter and into the remaining of the year. As we mentioned, rents across the board have been averaging upwards of 23% over prior. We still feel positive about that and look forward to that in the next several months, especially during the current season.
During this time, we are improving our projects, so with landscaping, roofing, soundproofing. We will have better projects at the end of this current situation than we had at the beginning. I think that will help us command more rent as well. We love our apartments.
Great. Thanks for the time, everyone.
Thank you. Thanks for your interest.
We have no further questions at this time. I will now turn the call over to Ernest Rady for closing remarks.
Okay, thanks you guys for listening. We have a great portfolio. We think it's gonna continue to produce results which are gonna be more than acceptable, and we're happy to do this. We love this company. We love this job, and we hope we please our stockholders. Thank you.
Thank you, ladies, and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.