SEGMENT REPORTING

3 Months Ended

Mar. 31, 2017

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,
	2017			2016
Total Retail
Property revenue	$	24,791		$	24,371
Property expense	(6,691		)	(6,080		)
Segment profit	18,100			18,291
Total Office
Property revenue	25,990			25,320
Property expense	(7,801		)	(7,702		)
Segment profit	18,189			17,618
Total Multifamily
Property revenue	7,891			6,294
Property expense	(3,211		)	(2,820		)
Segment profit	4,680			3,474
Total Mixed-Use
Property revenue	15,120			14,746
Property expense	(9,692		)	(8,484		)
Segment profit	5,428			6,262
Total segments’ profit	$	46,397		$	45,645

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

	Three Months Ended March 31,
	2017			2016
Total segments’ profit	$	46,397		$	45,645
General and administrative	(5,082		)	(4,549		)
Depreciation and amortization	(17,986		)	(17,453		)
Interest expense	(13,331		)	(12,946		)
Other income, net	310			24
Net income	10,308			10,721
Net income attributable to restricted shares	(60		)	(43		)
Net income attributable to unitholders in the Operating Partnership	(2,861		)	(3,027		)
Net income attributable to American Assets Trust, Inc. stockholders	$	7,387		$	7,651

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

	March 31, 2017		December 31, 2016
Net Real Estate
Retail	$	625,896	$	629,261
Office	810,913		813,414
Multifamily	201,955		203,014
Mixed-Use	184,559		185,857
	$	1,823,323	$	1,831,546
Secured Notes Payable(1)
Retail	$	36,249	$	36,424
Office	206,242		206,550
Multifamily	73,744		73,744
Mixed-Use	—		130,310
	$	316,235	$	447,028

(1) Excludes unamortized fair market value adjustments and debt issuance costs of $0.5 million and $1.8 million as of March 31, 2017 and December 31, 2016, respectively.

Capital expenditures for each segment for the three months ended March 31, 2017 and 2016 were as follows (in thousands):

	Three Months Ended March 31,
	2017		2016
Capital Expenditures (1)
Retail	$	1,246	$	5,414
Office	6,360		10,929
Multifamily	459		1,344
Mixed-Use	90		65
	$	8,155	$	17,752

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