SEGMENT REPORTING

Segment information is prepared on the same basis that our management reviews information for operational decision-making purposes. We review operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. However, we have aggregated our properties into reportable segments as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies.

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):



	Year Ended December 31,
	2017			2016			2015
Total Retail
Property revenue	$	103,968		$	100,982		$	98,795
Property expense	(28,524		)	(27,934		)	(25,672		)
Segment profit	75,444			73,048			73,123
Total Office
Property revenue	105,694			103,254			97,651
Property expense	(33,120		)	(31,839		)	(28,843		)
Segment profit	72,574			71,415			68,808
Total Multifamily
Property revenue	43,533			29,188			19,455
Property expense	(17,898		)	(12,498		)	(8,334		)
Segment profit	25,635			16,690			11,121
Total Mixed-Use
Property revenue	61,788			61,664			59,722
Property expense	(37,135		)	(35,660		)	(35,157		)
Segment profit	24,653			26,004			24,565
Total segments’ profit	$	198,306		$	187,157		$	177,617

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



	Year Ended December 31,
	2017			2016			2015
Total segments' profit	$	198,306		$	187,157		$	177,617
General and administrative	(21,382		)	(17,897		)	(20,074		)
Depreciation and amortization	(83,278		)	(71,319		)	(63,392		)
Interest expense	(53,848		)	(51,936		)	(47,260		)
Gain on sale of real estate	—			—			7,121
Other income (expense), net	334			(368		)	(97		)
Net income	40,132			45,637			53,915
Net income attributable to restricted shares	(241		)	(189		)	(168		)
Net income attributable to unitholders in the Operating Partnership	(10,814		)	(12,863		)	(15,238		)
Net income attributable to American Assets Trust, Inc. stockholders	$	29,077		$	32,585		$	38,509

The following table shows net real estate and secured note payable balances for each of the segments, along with their capital expenditures for each year (in thousands):



	December 31, 2017		December 31, 2016
Net real estate
Retail	$	658,654	$	629,261
Office	813,121		813,414
Multifamily	424,044		203,014
Mixed-Use	180,888		185,857
	$	2,076,707	$	1,831,546
Secured Notes Payable ⁽¹⁾
Retail	$	35,737	$	36,424
Office	170,408		206,550
Multifamily	73,744		73,744
Mixed-Use	—		130,310
	$	279,889	$	447,028
Capital Expenditures ⁽²⁾
Retail	$	10,412	$	13,371
Office	35,023		46,476
Multifamily	6,318		2,463
Mixed-Use	670		895
	$	52,423	$	63,205


(1)	Excludes unamortized fair market value adjustments and debt issuance costs of $0.3 million and $1.8 million as of December 31, 2017 and 2016, respectively.


(2)	Capital expenditures represent cash paid for capital expenditures during the year and includes leasing commissions paid.