SEGMENT REPORTING (Notes)

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

SEGMENT REPORTING

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,
	2013			2012			2013			2012
Total Retail
Property revenue	$	23,524		$	23,694		$	69,175		$	67,837
Property expense	(6,445		)	(6,828		)	(17,476		)	(18,648		)
Segment profit	17,079			16,866			51,699			49,189
Total Office
Property revenue	22,664			19,586			67,598			55,500
Property expense	(6,636		)	(6,054		)	(19,656		)	(17,430		)
Segment profit	16,028			13,532			47,942			38,070
Total Multifamily
Property revenue	4,155			3,906			12,004			10,957
Property expense	(1,525		)	(1,558		)	(4,383		)	(4,437		)
Segment profit	2,630			2,348			7,621			6,520
Total Mixed-Use
Property revenue	14,975			13,579			41,635			38,051
Property expense	(8,592		)	(8,132		)	(24,931		)	(23,365		)
Segment profit	6,383			5,447			16,704			14,686
Total segments’ profit	$	42,120		$	38,193		$	123,966		$	108,465

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,
	2013			2012			2013			2012
Total segments’ profit	$	42,120		$	38,193		$	123,966		$	108,465
General and administrative	(4,031		)	(3,894		)	(12,658		)	(11,530		)
Depreciation and amortization	(16,648		)	(16,094		)	(50,614		)	(45,277		)
Interest expense	(14,764		)	(14,247		)	(44,244		)	(42,176		)
Other income (expense), net	(419		)	8			(763		)	(355		)
Income from continuing operations	6,258			3,966			15,687			9,127
Discontinued operations
Results from discontinued operations	—			319			—			653
Net income	6,258			4,285			15,687			9,780
Net income attributable to restricted shares	(132		)	(133		)	(397		)	(396		)
Net income attributable to unitholders in the Operating Partnership	(1,903		)	(1,335		)	(4,752		)	(3,022		)
Net income attributable to American Assets Trust, Inc. stockholders	$	4,223		$	2,817		$	10,538		$	6,362

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

	September 30, 2013		December 31, 2012
Net Real Estate
Retail	$	655,569	$	669,177
Office	774,775		759,203
Multifamily	35,757		36,391
Mixed-Use	199,688		203,411
	$	1,665,789	$	1,668,182
Secured Notes Payable(1)
Retail	$	395,677	$	397,732
Office	427,499		428,194
Multifamily	101,444		101,444
Mixed-Use	130,310		130,310
	$	1,054,930	$	1,057,680

(1) Excludes unamortized fair market value adjustments of $10.8 million and $13.0 million as of September 30, 2013 and December 31, 2012, respectively.

Capital expenditures for each segment for the three and nine months ended September 30, 2013 and 2012 were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Capital Expenditures (1)
Retail	$	616	$	4,292	$	3,143	$	11,734
Office	11,690		10,381		30,991		15,534
Multifamily	351		259		700		782
Mixed-Use	275		108		646		253
	$	12,932	$	15,040	$	35,480	$	28,303

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