EQUITY OF AMERICAN ASSETS TRUST, INC.

3 Months Ended

Mar. 31, 2019

Stockholders' Equity

On May 27, 2015, we entered into an at-the-market ("ATM") equity program with five sales agents in which we may, from time to time, offer and sell shares of our common stock having an aggregate offering price of up to $250.0 million. On March 2, 2018, we amended certain of these equity programs, terminated one such program and entered into a new equity program with one new sales agent. The sales of shares of our common stock made through the ATM equity program, as amended, are made in "at-the-market" offerings as defined in Rule 415 of the Securities Act of 1933, as amended. During the three months ended March 31, 2019, the following shares of common stock were sold through the ATM equity programs (in thousands, except per share data and share amounts):



	Three Months Ended March 31, 2019
Number of shares of common stock issued through ATM programs	162,531
Weighted average price per share	$45.53

Proceeds, gross	$	7,401
Sales agent compensation	(74		)
Offering costs	(293		)
Proceeds, net	$	7,034

Additionally, we issued 519,382 shares of common stock through the ATM program that settled after March 31, 2019 at a weighted average price per share of $45.57, resulting in additional net proceeds of $23.4 million.

We intend to use the net proceeds from the ATM equity program to fund our development or redevelopment activities, repay amounts outstanding from time to time under our revolving line of credit or other debt financing obligations, fund potential acquisition opportunities and/or for general corporate purposes. As of March 31, 2019, we had the capacity to issue up to an additional $168.8 million in shares of our common stock under our ATM equity program. Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of our common stock and our capital needs. We have no obligation to sell the remaining shares available for sale under the ATM equity program.

Dividends

The following table lists the dividends declared and paid on our shares of common stock and noncontrolling common units during the three months ended March 31, 2019:



Period	Amount per Share/Unit		Period Covered	Dividend Paid Date
First Quarter 2019	$	0.28	January 1, 2019 to March 31, 2019	March 28, 2019

Taxability of Dividends

Earnings and profits, which determine the taxability of distributions to stockholders and holders of common units, may differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of revenue recognition and compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation.

Stock-Based Compensation

We follow the FASB guidance related to stock compensation which establishes financial accounting and reporting standards for stock-based employee compensation plans, including all arrangements by which employees receive shares of stock or other equity instruments of the employer. The guidance also defines a fair value-based method of accounting for an employee stock option or similar equity instrument.

The following table summarizes the activity of restricted stock awards during the three months ended March 31, 2019:



	Units		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2019	342,093		$28.33
Granted	—		—
Vested	—		—
Forfeited	(11,046	)	$28.41
Nonvested at March 31, 2019	331,047		$28.32

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $1.1 million and $0.7 million in noncash compensation expense for the three month periods ended March 31, 2019 and 2018, respectively, which is included in general and administrative expense on the consolidated statements of comprehensive income. Unrecognized compensation expense was $5.4 million at March 31, 2019.

Earnings Per Share

We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation methodology whereby EPS for each class of common stock and participating security is calculated according to dividends declared and participation rights in undistributed earnings. The weighted average unvested shares outstanding, which are considered participating securities, were 333,275 and 263,606 for the three months ended March 31, 2019 and 2018, respectively. Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares as these unvested shares have nonforfeitable dividend equivalent rights.

Diluted EPS is calculated by dividing the net income applicable to common stockholders for the period by the weighted average number of common and dilutive instruments outstanding during the period using the treasury stock method. For the three months ended March 31, 2019, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable. For the three months ended March 31, 2018, shares associated with convertible securities were not included because the inclusion would be anti-dilutive. Additionally, the unvested restricted stock awards subject to time vesting are anti-dilutive for all periods presented, and accordingly, have been excluded from the weighted average common shares used to compute diluted EPS.

The computation of basic and diluted EPS is presented below (dollars in thousands, except share and per share amounts):



	Three Months Ended March 31,
	2019			2018
NUMERATOR
Net income (loss)	$	15,243		$	(691	)
Less: Net (income) loss attributable to restricted shares	(93		)	72
Less: (Income) loss from operations attributable to unitholders in the Operating Partnership	(4,055		)	166
Net income (loss) attributable to common stockholders—basic	$	11,095		$	(453	)
Income (loss) from operations attributable to American Assets Trust, Inc. common stockholders—basic	$	11,095		$	(453	)
Plus: Income (loss) from operations attributable to unitholders in the Operating Partnership	4,055			—
Net income attributable to common stockholders—diluted	$	15,150		$	(453	)
DENOMINATOR
Weighted average common shares outstanding—basic	47,004,465			46,935,820
Effect of dilutive securities—conversion of Operating Partnership units	17,177,608			—
Weighted average common shares outstanding—diluted	64,182,073			46,935,820

Earnings (loss) per common share, basic	$	0.24		$	(0.01	)
Earnings (loss) per common share, diluted	$	0.24		$	(0.01	)