Segment Reporting

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Segment Reporting

NOTE 15. SEGMENT REPORTING

Segment information is prepared on the same basis that our management reviews information for operational decision-making purposes. We operate in four business segments: the acquisition, redevelopment, ownership and management of retail real estate, office real estate, multifamily real estate and mixed-use real estate. The products for our retail segment primarily include rental of retail space and other tenant services, including tenant reimbursements, parking and storage space rental. The products for our office segment primarily include rental of office space and other tenant services, including tenant reimbursements, parking and storage space rental. The products for our multifamily segment include rental of apartments and other tenant services. The products of our mixed-use segment include rental of retail space and other tenant services, including tenant reimbursements, parking and storage space rental and operation of a 369-room all-suite hotel.

We evaluate the performance of our segments based on segment profit, which is defined as property revenue less property expenses. We do not use asset information as a measure to assess performance and make decisions to allocate resources. Therefore, depreciation and amortization expense is not allocated among segments. General and administrative expenses, interest expense, depreciation and amortization expense and other income and expense are not included in segment profit as our internal reporting addresses these items on a corporate level.

Segment profit is not a measure of operating income or cash flows from operating activities as measured by GAAP, and it is not indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity. Not all companies calculate segment profit in the same manner. We consider segment profit to be an appropriate supplemental measure to net income because it assists both investors and management in understanding the core operations of our properties.

The following table represents operating activity within our reportable segments (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total Retail
Property revenue	$	23,694		$	21,494		$	67,837		$	64,923
Property expense		(6,828	)		(5,981	)		(18,648	)		(17,433	)
Segment profit		16,866			15,513			49,189			47,490
Total Office
Property revenue		21,657			18,335			60,838			45,767
Property expense		(6,807	)		(6,209	)		(19,458	)		(15,029	)
Segment profit		14,850			12,126			41,380			30,738
Total Multifamily
Property revenue		3,906			3,803			10,957			10,588
Property expense		(1,558	)		(1,387	)		(4,437	)		(3,974	)
Segment profit		2,348			2,416			6,520			6,614
Total Mixed-Use
Property revenue		13,579			12,661			38,051			32,998
Property expense		(8,132	)		(8,000	)		(23,365	)		(21,084	)
Segment profit		5,447			4,661			14,686			11,914
Total segments’ profit	$	39,511		$	34,716		$	111,775		$	96,756

The following table is a reconciliation of segment profit to net income attributable to stockholders (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Total segments’ profit	$	39,511		$	34,716		$	111,775		$	96,756
General and administrative		(3,959	)		(3,733	)		(11,716	)		(10,786	)
Depreciation and amortization		(16,432	)		(15,827	)		(46,356	)		(41,916	)
Interest expense		(14,690	)		(14,738	)		(43,522	)		(41,791	)
Early extinguishment of debt		—			—			—			(25,867	)
Loan transfer and consent fees		—			—			—			(9,019	)
Gain on acquisition		—			—			—			46,371
Other income (expense), net		68			(108	)		(188	)		(179	)
Income from continuing operations		4,498			310			9,993			13,569
Discontinued operations
Results from discontinued operations		(213	)		4,308			(213	)		5,100
Net income		4,285			4,618			9,780			18,669
Net income attributable to restricted shares		(133	)		(132	)		(396	)		(350	)
Net loss attributable to Predecessor’s noncontrolling interests in consolidated real estate entities		—			—			—			2,458
Net income attributable to Predecessor’s controlled owners’ equity		—			—			—			(16,995	)
Net income attributable to unitholders in the Operating Partnership		(1,335	)		(1,434	)		(3,022	)		(1,209	)
Net income attributable to American Assets Trust, Inc. stockholders	$	2,817		$	3,052		$	6,362		$	2,573

The following table shows net real estate and secured note payable balances for each of the segments (in thousands):

	September 30, 2012		December 31, 2011
Net Real Estate
Retail	$	652,766	$	655,450
Office		804,811		551,955
Multifamily		36,587		37,187
Mixed-Use		204,331		208,089
	$	1,698,495	$	1,452,681
Secured Notes Payable (1)
Retail	$	398,404	$	400,320
Office		347,635		327,331
Multifamily		101,444		101,444
Mixed-Use		130,310		130,310
	$	977,793	$	959,405

(1) Excludes unamortized fair market value adjustments of $(13.7) million and $(15.9) million as of September 30, 2012 and December 31, 2011, respectively.

Capital expenditures for each segment for the three and nine months ended September 30, 2012 and 2011 were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Capital Expenditures (1)
Retail	$	4,292	$	1,574	$	11,734	$	2,521
Office		10,381		1,638		15,737		3,850
Multifamily		259		335		782		472
Mixed-Use		108		670		253		800
	$	15,040	$	4,217	$	28,506	$	7,643

(1) Capital expenditures represent cash paid for capital expenditures during the period and include leasing commissions paid.