SEGMENT REPORTING

9 Months Ended

Sep. 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 September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Total Retail
Property revenue	$	24,970		$	24,177		$	73,384		$	70,746
Property expense	(6,827		)	(6,197		)	(19,085		)	(18,703		)
Segment profit	18,143			17,980			54,299			52,043
Total Office
Property revenue	25,008			23,416			72,621			68,721
Property expense	(7,198		)	(6,813		)	(21,007		)	(19,791		)
Segment profit	17,810			16,603			51,614			48,930
Total Multifamily
Property revenue	4,999			4,320			13,754			12,660
Property expense	(2,126		)	(1,532		)	(5,252		)	(4,513		)
Segment profit	2,873			2,788			8,502			8,147
Total Mixed-Use
Property revenue	16,312			15,430			44,334			41,395
Property expense	(9,510		)	(8,731		)	(26,176		)	(24,541		)
Segment profit	6,802			6,699			18,158			16,854
Total segments’ profit	$	45,628		$	44,070		$	132,573		$	125,974

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,
	2015			2014			2015			2014
Total segments’ profit	$	45,628		$	44,070		$	132,573		$	125,974
General and administrative	(6,357		)	(4,682		)	(16,161		)	(13,929		)
Depreciation and amortization	(15,761		)	(16,352		)	(46,154		)	(50,902		)
Interest expense	(11,258		)	(13,325		)	(34,250		)	(40,396		)
Gain on sale of real estate	7,121			—			7,121			—
Other income (expense), net	(347		)	(621		)	(440		)	352
Net income	19,026			9,090			42,689			21,099
Net income attributable to restricted shares	(32		)	(95		)	(115		)	(259		)
Net income attributable to unitholders in the Operating Partnership	(5,432		)	(2,578		)	(12,277		)	(6,108		)
Net income attributable to American Assets Trust, Inc. stockholders	$	13,562		$	6,417		$	30,297		$	14,732

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

	September 30, 2015		December 31, 2014
Net Real Estate
Retail	$	625,138	$	639,456
Office	771,370		757,854
Multifamily	248,804		182,468
Mixed-Use	191,784		195,622
	$	1,837,096	$	1,775,400
Secured Notes Payable(1)
Retail	$	60,222	$	161,975
Office	292,461		426,254
Multifamily	101,444		101,444
Mixed-Use	130,310		130,310
	$	584,437	$	819,983

(1) Excludes unamortized fair market value adjustments of $5.0 million and $7.2 million as of September 30, 2015 and December 31, 2014, respectively.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Capital Expenditures (1)
Retail	$	2,544	$	2,094	$	5,235	$	4,725
Office	7,616		7,247		37,202		22,928
Multifamily (2)	16,678		25,007		75,374		66,647
Mixed-Use	50		445		587		3,382
	$	26,888	$	34,793	$	118,398	$	97,682

(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.