SEGMENT REPORTING

6 Months Ended

Jun. 30, 2020

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,
	2020		2019		2020		2019
Total Office
Property revenue	43,880		30,200		$	88,389	$	58,006
Property expense	(11,601)		(9,269)		(23,394)		(17,758)
Segment profit	32,279		20,931		64,995		40,248
Total Retail
Property revenue	$	21,492	$	25,871	47,318		55,308
Property expense	(4,907)		(7,731)		(12,238)		(14,885)
Segment profit	16,585		18,140		35,080		40,423
Total Multifamily
Property revenue	12,463		12,897		25,288		25,796
Property expense	(5,313)		(4,883)		(10,823)		(9,956)
Segment profit	7,150		8,014		14,465		15,840
Total Mixed-Use
Property revenue	4,274		15,145		17,857		30,322
Property expense	(4,121)		(9,218)		(13,100)		(18,344)
Segment profit	153		5,927		4,757		11,978
Total segments’ profit	$	56,167	$	53,012	$	119,297	$	108,489

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,
	2020		2019		2020		2019
Total segments’ profit	$	56,167	$	53,012	$	119,297	$	108,489
General and administrative	(6,679)		(5,943)		(13,499)		(12,016)
Depreciation and amortization	(26,493)		(22,582)		(53,955)		(43,165)
Interest expense	(13,331)		(13,129)		(26,803)		(26,478)
Gain on sale of real estate	—		633		—		633
Other income (expense), net	162		(50)		270		(279)





Net income	9,826		11,941		25,310		27,184
Net income attributable to restricted shares	(69)		(92)		(173)		(185)
Net income attributable to unitholders in the Operating Partnership	(2,101)		(2,933)		(5,413)		(6,988)
Net income attributable to American Assets Trust, Inc. stockholders	$	7,656	$	8,916	$	19,724	$	20,011

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


	June 30, 2020		December 31, 2019
Net Real Estate
Office	$	1,319,025	$	1,317,854
Retail	617,530		624,912
Multifamily	395,254		401,152
Mixed-Use	180,264		179,557
	$	2,512,073	$	2,523,475
Secured Notes Payable ⁽¹⁾
Office	$	111,000	$	127,768
Retail	—		34,235


	$	111,000	$	162,003

(1)Excludes debt issuance costs of $0.1 million and $0.1 million for each of the periods ended June 30, 2020 and December 31, 2019, respectively.

Capital expenditures for each segment for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Capital Expenditures ⁽¹⁾
Office	$	9,281	$	17,418	$	27,481	$	33,901
Retail	2,805		6,650		6,363		11,441
Multifamily	860		685		2,144		1,456
Mixed-Use	2,262		3,271		3,145		3,663
	$	15,208	$	28,024	$	39,133	$	50,461

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