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Bear of the Day: American Assets Trust (AAT)

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Headquartered in San Diego, California, American Assets Trust (AAT - Free Report) is a full service, vertically integrated and self-administered Real Estate Investment Trust (REIT). It acquires, improves, develops and manages premier retail, office and residential properties throughout the US.

The company has the following segments -- Retail, Office, Multifamily and Mixed-Use.

Lackluster Results

The REIT reported Q3 results that were below our estimates. Adjusted Funds from Operations were $0.52 per share, below the Zacks Consensus Estimate of $0.54.

The company also downgraded its guidance for FY 2017 FFO per diluted share to $1.99 to $2.01 per share from the prior guidance range of $2.00 to $2.06 per share.

Falling Estimates

Analysts have been cutting their estimates after weak results. The Zacks Consensus Estimate for the current year has fallen to $2.06 per share from $2.22 before the results.

The company has missed Zacks Consensus Estimates in all of last four quarters, with an average negative surprise of 3.5%.

The Bottom Line

Interest rates are rising this year as many fear that tax cuts may lead to overheating of the economy and force the Fed to be more aggressive in raising rates. While the broader market and many cyclical sectors had a very strong start to the year, rate-sensitive sectors -- Utilities and Real Estate -- are in the red this year.

The stock is down more than 17% in the past one year. In addition of Zacks Rank #5 (Strong Sell), the industry rank of 248 out of 265 (bottom 6%) also suggests underperformance in the short term.

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