SEGMENT REPORTING

6 Months Ended

Jun. 30, 2015

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,
	2015			2014			2015			2014
Total Retail
Property revenue	$	24,376		$	23,570		$	48,414		$	46,569
Property expense	(6,258		)	(6,448		)	(12,258		)	(12,506		)
Segment profit	18,118			17,122			36,156			34,063
Total Office
Property revenue	24,036			22,447			47,613			45,305
Property expense	(6,988		)	(6,085		)	(13,809		)	(12,978		)
Segment profit	17,048			16,362			33,804			32,327
Total Multifamily
Property revenue	4,445			4,210			8,755			8,340
Property expense	(1,642		)	(1,554		)	(3,126		)	(2,981		)
Segment profit	2,803			2,656			5,629			5,359
Total Mixed-Use
Property revenue	13,912			11,972			28,022			25,965
Property expense	(8,303		)	(7,542		)	(16,666		)	(15,810		)
Segment profit	5,609			4,430			11,356			10,155
Total segments’ profit	$	43,578		$	40,570		$	86,945		$	81,904

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,
	2015			2014			2015			2014
Total segments’ profit	$	43,578		$	40,570		$	86,945		$	81,904
General and administrative	(4,788		)	(4,635		)	(9,804		)	(9,247		)
Depreciation and amortization	(15,286		)	(18,209		)	(30,393		)	(34,550		)
Interest expense	(11,197		)	(13,439		)	(22,992		)	(27,071		)
Other income (expense), net	(23		)	1,064			(93		)	973
Net income	12,284			5,351			23,663			12,009
Net income attributable to restricted shares	(40		)	(94		)	(83		)	(164		)
Net income attributable to unitholders in the Operating Partnership	(3,536		)	(1,544		)	(6,845		)	(3,530		)
Net income attributable to American Assets Trust, Inc. stockholders	$	8,708		$	3,713		$	16,735		$	8,315

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

	June 30, 2015		December 31, 2014
Net Real Estate
Retail	$	631,593	$	639,456
Office	771,055		757,854
Multifamily	237,969		182,468
Mixed-Use	193,097		195,622
	$	1,833,714	$	1,775,400
Secured Notes Payable(1)
Retail	$	60,371	$	161,975
Office	292,724		426,254
Multifamily	101,444		101,444
Mixed-Use	130,310		130,310
	$	584,849	$	819,983

(1) Excludes unamortized fair market value adjustments of $5.7 million and $7.2 million as of June 30, 2015 and December 31, 2014, respectively.

Capital expenditures for each segment for the three and six months ended June 30, 2015 and 2014 were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Capital Expenditures (1)
Retail	$	1,756	$	1,125	$	2,691	$	2,631
Office	14,872		8,590		29,586		15,681
Multifamily (2)	29,748		19,763		58,696		41,640
Mixed-Use	166		2,115		537		2,937
	$	46,542	$	31,593	$	91,510	$	62,889

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

(2) Multifamily capital expenditures include all capital expenditures incurred for the new development project Lloyd District Portfolio - Phase I, which consists of 657 multifamily units and approximately 47,000 square feet of retail space.