Equity

6 Months Ended

Jun. 30, 2012

Equity [Abstract]

Equity

NOTE 9. EQUITY

Noncontrolling Interests

Noncontrolling interests in our Operating Partnership are interests in the Operating Partnership that are not owned by us. Noncontrolling interests consisted of 18,394,476 common units (the “noncontrolling common units”), and represented approximately 32% of the ownership interests in our Operating Partnership at June 30, 2012. Common units and shares of our common stock have essentially the same economic characteristics in that common units and shares of our common stock share equally in the total net income or loss distributions of our Operating Partnership. Investors who own common units have the right to cause our Operating Partnership to redeem any or all of their common units for cash equal to the then-current market value of one share of our common stock, or, at our election, shares of our common stock on a one-for-one basis.

During the six months ended June 30, 2012, approximately 1,613 common units were converted into shares of our common stock at a price per share of $22.56.

Dividends

The following table lists the dividends declared and paid on our shares of common stock and noncontrolling common units during the six months ended June 30, 2012:

Period	Amount  per Share/Unit		Period Covered	Dividend Paid Date
First Quarter 2012	$	0.21	January 1, 2012 to March 31, 2012	March 30, 2012
Second Quarter 2012	$	0.21	April 1, 2012 to June 30, 2012	June 29, 2012

Taxability of Dividends

Earnings and profits, which determine the taxability of distributions to stockholders and holders of common units, may differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of loss on extinguishment of debt, revenue recognition and compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation.

Stock-Based Compensation

Concurrently with the closing of the Offering, we made grants of restricted shares of our common stock to certain executive officers pursuant to the terms of their employment agreements. These awards were made pursuant to our 2011 Equity Incentive Award Plan (the “2011 Plan”) and are subject to either timing-based vesting or performance-based vesting. Those awards subject to time-based vesting will vest, subject to the recipient’s continued employment, in two substantially equal installments on each of the third and fourth anniversaries of the date of grant. The vesting of those restricted stock awards subject to performance-based vesting is based on the achievement of absolute and relative total shareholder return hurdles over a three-year performance period, commencing on January 19, 2011. Following the completion of the three-year performance period, our compensation committee will determine the number of shares to which the executive officer is entitled based on our performance relative to the performance hurdles set forth in the restricted stock award agreement he entered into in connection with his initial award grant. These shares will then vest in two substantially equal installments, with the first installment vesting on the third anniversary of the date of grant and the second installment vesting on the fourth anniversary of the date of grant, subject to the executive officer’s continued employment on those dates.

We granted each of our non-employee directors restricted shares of our common stock pursuant to the 2011 Plan, either concurrently with the closing of the Offering or at the time the director was formally appointed to our board of directors (the “Board”). These awards of restricted stock will vest ratably as to one-third of the shares granted on each of the first three anniversaries of the date of grant, subject to the director’s continued service on our Board.

On March 16, 2011, we granted a total of 123,950 restricted shares of our common stock to certain other employees, and on January 19, 2012, we granted an additional 2,000 restricted shares of our common stock to employees, all pursuant to the 2011 Plan. These shares are subject to performance-based vesting, with substantially the same terms described above.

For the performance-based stock awards, the fair value of the awards was estimated using a Monte Carlo Simulation model. Our stock price, along with the stock prices of a group of peer REITs, is assumed to follow the Multivariate Geometric Brownian Motion Process. Multivariate Geometric Brownian Motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case, the stock price) to vary randomly from its current value and take any value greater than zero. The volatilities of the returns on the stock price of the Company and the group of REITs were estimated based on a three year look-back period. The expected growth rate of the stock prices over the “derived service period” of the employee is determined with consideration of the risk free rate as of the grant date. For the restricted stock grants that are time-vesting, we estimate the stock compensation expense based on the fair value of the stock at the grant date.

The following table summarizes the activity of restricted stock awards during the six months ended June 30, 2012:

	Units			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2012		628,712		$	15.43
Granted		2,000			12.26
Vested		(2,600	)		20.50
Forfeited		(2,253	)		12.52
Nonvested at June 30, 2012		625,859		$	15.50

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $1.4 million and $1.2 million in noncash compensation expense for the six months ended June 30, 2012 and 2011, respectively, which is included in general and administrative expense on the consolidated statements of operations. Unrecognized compensation expense was $5.6 million at June 30, 2012.

Earnings Per Share

We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation methodology whereby EPS for each class of common stock and participating security is calculated according to dividends declared and participation rights in undistributed earnings. For the three and six months ended June 30, 2012, we had a weighted average of approximately 626,274 and 626,771 unvested shares outstanding, respectively, which are considered participating securities. Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares.

Diluted EPS is calculated by dividing the net income applicable to common stockholders for the period by the weighted average number of common and dilutive instruments outstanding during the period using the treasury stock method. For the three and six months ended June 30, 2012, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable. Additionally, the unvested restricted stock awards subject to time vesting are anti-dilutive for all periods presented and accordingly, have been excluded from the weighted average common shares used to compute diluted EPS. Since we were in a net loss position for the six months ended June 30, 2011, all potentially dilutive instruments were anti-dilutive and have been excluded from our computation of weighted average dilutive shares outstanding.

The computation of basic and diluted EPS is presented below (dollars in thousands, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Numerator
Income from continuing operations	$	2,624		$	(7	)	$	5,495		$	13,259
Less: Net income attributable to restricted shares		(131	)		(132	)		(263	)		(218	)
Plus: Loss from continuing operations attributable to Predecessor’s noncontrolling interests in consolidated real estate entities		—			—			—			2,454
Less: Income from continuing operations attributable to Predecessor’s controlled owners’ equity		—			—			—			(17,009	)
Less: (Income) loss from continuing operations attributable to unitholders in the Operating Partnership		(804	)		46			(1,687	)		488
Income (loss) from continuing operations attributable to American Assets Trust, Inc. common stockholders—basic		1,689			(93	)		3,545			(1,026	)
Plus: Results from discontinued operations attributable to American Assets Trust, Inc. common stockholders		—			312			—			547
Net income (loss) attributable to common stockholders—basic	$	1,689		$	219		$	3,545		$	(479	)
Income (loss) from continuing operations attributable to American Assets Trust, Inc. common stockholders—basic	$	1,689		$	(93	)	$	3,545		$	(1,026	)
Plus: Income from continuing operations attributable to unitholders in the Operating Partnership		804			(46	)		1,687			—
Income (loss) from continuing operations attributable to common stockholders—diluted		2,493			(139	)		5,232			(1,026	)
Plus: Results from discontinued operations attributable to American Assets Trust, Inc. common stockholders		—			312			—			547
Plus: Results from discontinued operations attributable to unitholders in the Operating Partnership		—			150			—			—
Net income (loss) attributable to common stockholders—diluted	$	2,493		$	323		$	5,232		$	(479	)
Denominator
Weighted average common shares outstanding—basic		38,659,155			38,655,084			38,658,162			34,810,932
Effect of dilutive securities—conversion of Operating Partnership units		18,396,089			18,396,089			18,396,347			—
Weighted average common shares outstanding—diluted		57,055,244			57,051,173			57,054,509			34,810,932
Earnings (loss) per common share—basic
Continuing operations	$	0.04		$	—		$	0.09		$	(0.03	)
Discontinued operations		—			0.01			—			0.02
	$	0.04		$	0.01		$	0.09		$	(0.01	)
Earnings (loss) per common share—diluted
Continuing operations	$	0.04		$	—		$	0.09		$	(0.03	)
Discontinued operations		—			0.01			—			0.02
	$	0.04		$	0.01		$	0.09		$	(0.01	)