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,
	2018			2017			2018			2017
Total Retail
Property revenue	$	26,415		$	24,954		$	52,572		$	49,745
Property expense	(7,138		)	(6,794		)	(13,949		)	(13,485		)
Segment profit	19,277			18,160			38,623			36,260
Total Office
Property revenue	31,052			26,359			57,822			52,349
Property expense	(8,342		)	(8,045		)	(16,355		)	(15,846		)
Segment profit	22,710			18,314			41,467			36,503
Total Multifamily
Property revenue	12,622			11,023			25,046			18,914
Property expense	(5,020		)	(4,082		)	(10,017		)	(7,293		)
Segment profit	7,602			6,941			15,029			11,621
Total Mixed-Use
Property revenue	14,934			14,770			30,315			29,890
Property expense	(9,010		)	(8,824		)	(18,155		)	(18,516		)
Segment profit	5,924			5,946			12,160			11,374
Total segments’ profit	$	55,513		$	49,361		$	107,279		$	95,758

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,
	2018			2017			2018			2017
Total segments’ profit	$	55,513		$	49,361		$	107,279		$	95,758
General and administrative	(5,396		)	(5,131		)	(10,963		)	(10,213		)
Depreciation and amortization	(32,868		)	(24,182		)	(66,147		)	(42,168		)
Interest expense	(12,688		)	(12,652		)	(26,508		)	(25,983		)
Other income, net	(148		)	192			61			502
Net income	4,413			7,588			3,722			17,896
Net income attributable to restricted shares	(216		)	(61		)	(144		)	(121		)
Net income attributable to unitholders in the Operating Partnership	(1,125		)	(2,008		)	(959		)	(4,869		)
Net income attributable to American Assets Trust, Inc. stockholders	$	3,072		$	5,519		$	2,619		$	12,906

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



	June 30, 2018		December 31, 2017
Net Real Estate
Retail	$	630,860	$	658,654
Office	806,336		813,121
Multifamily	418,173		424,044
Mixed-Use	178,625		180,888
	$	2,033,994	$	2,076,707
Secured Notes Payable ⁽¹⁾
Retail	$	35,375	$	35,737
Office	170,038		170,408
Multifamily	—		73,744
Mixed-Use	—		—
	$	205,413	$	279,889


(1)	Excludes debt issuance costs of $0.3 million for each of the periods ending June 30, 2018 and December 31, 2017, respectively.

Capital expenditures for each segment for the three and six months ended June 30, 2018 and 2017 were as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Capital Expenditures ⁽¹⁾
Retail	$	3,228	$	2,800	$	5,457	$	4,046
Office	7,513		8,800		14,886		15,160
Multifamily	875		2,109		2,484		2,568
Mixed-Use	429		113		583		203
	$	12,045	$	13,822	$	23,410	$	21,977


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