SEGMENT REPORTING

3 Months Ended

Mar. 31, 2016

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 March 31,
	2016			2015
Total Retail
Property revenue	$	24,371		$	24,038
Property expense	(6,080		)	(6,000		)
Segment profit	18,291			18,038
Total Office
Property revenue	25,320			23,577
Property expense	(7,702		)	(6,821		)
Segment profit	17,618			16,756
Total Multifamily
Property revenue	6,294			4,310
Property expense	(2,820		)	(1,484		)
Segment profit	3,474			2,826
Total Mixed-Use
Property revenue	14,746			14,110
Property expense	(8,484		)	(8,363		)
Segment profit	6,262			5,747
Total segments’ profit	$	45,645		$	43,367

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

	Three Months Ended March 31,
	2016			2015
Total segments’ profit	$	45,645		$	43,367
General and administrative	(4,549		)	(5,016		)
Depreciation and amortization	(17,453		)	(15,107		)
Interest expense	(12,946		)	(11,795		)
Other income (expense), net	24			(70		)
Net income	10,721			11,379
Net income attributable to restricted shares	(43		)	(43		)
Net income attributable to unitholders in the Operating Partnership	(3,027		)	(3,309		)
Net income attributable to American Assets Trust, Inc. stockholders	$	7,651		$	8,027

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

	March 31, 2016		December 31, 2015
Net Real Estate
Retail	$	639,793	$	638,893
Office	800,358		796,773
Multifamily	207,725		208,730
Mixed-Use	189,124		190,466
	$	1,837,000	$	1,834,862
Secured Notes Payable(1)
Retail	$	59,905	$	60,065
Office	207,404		292,183
Multifamily	101,444		101,444
Mixed-Use	130,310		130,310
	$	499,063	$	584,002

(1) Excludes unamortized fair market value adjustments and debt issuance costs of $4.2 million and $5.0 million as of March 31, 2016 and December 31, 2015, respectively.

Capital expenditures for each segment for the three months ended March 31, 2016 and 2015 were as follows (in thousands):

	Three Months Ended March 31,
	2016		2015
Capital Expenditures (1)
Retail	$	5,414	$	935
Office	10,929		14,714
Multifamily (2)	1,344		28,948
Mixed-Use	65		371
	$	17,752	$	44,968

(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 Hassalo on Eighth, which consists of 657 multifamily units and approximately 47,000 square feet of retail space.