SEGMENT REPORTING

6 Months Ended

Jun. 30, 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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Total Retail
Property revenue	$	24,954		$	24,881		$	49,745		$	49,252
Property expense	(6,794		)	(6,964		)	(13,485		)	(13,044		)
Segment profit	18,160			17,917			36,260			36,208
Total Office
Property revenue	26,359			25,278			52,349			50,598
Property expense	(8,045		)	(7,547		)	(15,846		)	(15,249		)
Segment profit	18,314			17,731			36,503			35,349
Total Multifamily
Property revenue	11,023			7,060			18,914			13,354
Property expense	(4,082		)	(2,852		)	(7,293		)	(5,672		)
Segment profit	6,941			4,208			11,621			7,682
Total Mixed-Use
Property revenue	14,770			14,600			29,890			29,346
Property expense	(8,824		)	(8,644		)	(18,516		)	(17,128		)
Segment profit	5,946			5,956			11,374			12,218
Total segments’ profit	$	49,361		$	45,812		$	95,758		$	91,457

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,
	2017			2016			2017			2016
Total segments’ profit	$	49,361		$	45,812		$	95,758		$	91,457
General and administrative	(5,131		)	(4,394		)	(10,213		)	(8,943		)
Depreciation and amortization	(24,182		)	(17,714		)	(42,168		)	(35,167		)
Interest expense	(12,652		)	(13,153		)	(25,983		)	(26,099		)
Other income, net	192			99			502			123
Net income	7,588			10,650			17,896			21,371
Net income attributable to restricted shares	(61		)	(43		)	(121		)	(86		)
Net income attributable to unitholders in the Operating Partnership	(2,008		)	(3,008		)	(4,869		)	(6,035		)
Net income attributable to American Assets Trust, Inc. stockholders	$	5,519		$	7,599		$	12,906		$	15,250

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

	June 30, 2017		December 31, 2016
Net Real Estate
Retail	$	622,873	$	629,261
Office	812,437		813,414
Multifamily	427,333		203,014
Mixed-Use	183,321		185,857
	$	2,045,964	$	1,831,546
Secured Notes Payable(1)
Retail	$	36,082	$	36,424
Office	170,764		206,550
Multifamily	73,744		73,744
Mixed-Use	—		130,310
	$	280,590	$	447,028

(1) Excludes unamortized fair market value adjustments and debt issuance costs of $0.4 million and $1.8 million as of June 30, 2017 and December 31, 2016, respectively.

Capital expenditures for each segment for the three and six months ended June 30, 2017 and 2016 were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Capital Expenditures (1)
Retail	$	2,800	$	4,250	$	4,046	$	9,664
Office	8,800		10,710		15,160		21,639
Multifamily	2,109		475		2,568		1,819
Mixed-Use	113		51		203		116
	$	13,822	$	15,486	$	21,977	$	33,238

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