SEGMENT REPORTING

6 Months Ended

Jun. 30, 2014

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 June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Total Retail
Property revenue	$	23,570		$	23,497		$	46,569		$	45,651
Property expense	(6,448		)	(6,060		)	(12,506		)	(11,031		)
Segment profit	17,122			17,437			34,063			34,620
Total Office
Property revenue	22,433			22,512			45,264			44,934
Property expense	(6,085		)	(6,584		)	(12,978		)	(13,020		)
Segment profit	16,348			15,928			32,286			31,914
Total Multifamily
Property revenue	4,210			3,974			8,340			7,849
Property expense	(1,554		)	(1,416		)	(2,981		)	(2,858		)
Segment profit	2,656			2,558			5,359			4,991
Total Mixed-Use
Property revenue	11,972			12,931			25,965			26,660
Property expense	(7,542		)	(8,102		)	(15,810		)	(16,339		)
Segment profit	4,430			4,829			10,155			10,321
Total segments’ profit	$	40,556		$	40,752		$	81,863		$	81,846

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Total segments’ profit	$	40,556		$	40,752		$	81,863		$	81,846
General and administrative	(4,635		)	(4,426		)	(9,247		)	(8,627		)
Depreciation and amortization	(18,209		)	(16,953		)	(34,550		)	(33,966		)
Interest expense	(13,439		)	(14,744		)	(27,071		)	(29,480		)
Other income (expense), net	1,078			(65		)	1,014			(344		)
Net income	5,351			4,564			12,009			9,429
Net income attributable to restricted shares	(94		)	(133		)	(164		)	(265		)
Net income attributable to unitholders in the Operating Partnership	(1,544		)	(1,354		)	(3,530		)	(2,849		)
Net income attributable to American Assets Trust, Inc. stockholders	$	3,713		$	3,077		$	8,315		$	6,315

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

	June 30, 2014		December 31, 2013
Net Real Estate
Retail	$	644,811	$	651,707
Office	751,171		750,890
Multifamily	116,513		74,612
Mixed-Use	197,531		199,627
	$	1,710,026	$	1,676,836
Secured Notes Payable(1)
Retail	$	302,963	$	303,249
Office	426,758		427,256
Multifamily	101,444		101,444
Mixed-Use	130,310		130,310
	$	961,475	$	962,259

(1) Excludes unamortized fair market value adjustments of $8.6 million and $10.1 million as of June 30, 2014 and December 31, 2013, respectively.

Capital expenditures for each segment for the three and six months ended June 30, 2014 and 2013 were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Capital Expenditures (1)
Retail	$	1,125	$	580	$	2,631	$	2,527
Office	8,590		11,439		15,681		19,301
Multifamily	19,763		206		41,640		349
Mixed-Use	2,115		83		2,937		371
	$	31,593	$	12,308	$	62,889	$	22,548

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