SEGMENT REPORTING

3 Months Ended

Mar. 31, 2019

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,
	2019			2018
Total Retail
Property revenue	$	29,437		$	26,157
Property expense	(7,154		)	(6,811		)
Segment profit	22,283			19,346
Total Office
Property revenue	27,806			26,770
Property expense	(8,489		)	(8,013		)
Segment profit	19,317			18,757
Total Multifamily
Property revenue	12,899			12,424
Property expense	(5,073		)	(4,997		)
Segment profit	7,826			7,427
Total Mixed-Use
Property revenue	15,177			15,381
Property expense	(9,126		)	(9,145		)
Segment profit	6,051			6,236
Total segments’ profit	$	55,477		$	51,766

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



	Three Months Ended March 31,
	2019			2018
Total segments’ profit	$	55,477		$	51,766
General and administrative	(6,073		)	(5,567		)
Depreciation and amortization	(20,583		)	(33,279		)
Interest expense	(13,349		)	(13,820		)
Other (expense) income, net	(229		)	209
Net income (loss)	15,243			(691		)
Net (income) loss attributable to restricted shares	(93		)	72
Net (income) loss attributable to unitholders in the Operating Partnership	(4,055		)	166
Net income (loss) attributable to American Assets Trust, Inc. stockholders	$	11,095		$	(453	)

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



	March 31, 2019		December 31, 2018
Net Real Estate
Retail	$	633,605	$	628,734
Office	828,746		822,574
Multifamily	409,006		412,042
Mixed-Use	175,516		176,503
	$	2,046,873	$	2,039,853
Secured Notes Payable ⁽¹⁾
Retail	$	34,812	$	35,008
Office	128,044		147,757
Multifamily	—		—
Mixed-Use	—		—
	$	162,856	$	182,765


(1)	Excludes debt issuance costs of $0.2 million and $0.2 million for each of the periods ending March 31, 2019 and December 31, 2018, respectively.

Capital expenditures for each segment for the three months ended March 31, 2019 and 2018 were as follows (in thousands):



	Three Months Ended March 31,
	2019		2018
Capital Expenditures ⁽¹⁾
Retail	$	4,791	$	2,229
Office	16,483		7,373
Multifamily	771		1,609
Mixed-Use	392		154
	$	22,437	$	11,365

(1)

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