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EQUITY OF AMERICAN ASSETS TRUST, INC.
 12 Months Ended
Dec. 31, 2022
Equity [Abstract]  
EQUITY OF AMERICAN ASSETS TRUST, INC. EQUITY OF AMERICAN ASSETS TRUST, INC.
Stockholders' Equity

On December 3, 2021, we entered into a new ATM equity program, with five sales agents under which we may, from time to time, offer and sell shares of our common stock having an aggregate offering price of up to $250 million. The sale of shares of our common stock made through the ATM equity program are made in "at-the-market" offerings as defined in Rule 415 of the Securities Act of 1933, as amended. For the year ended December 31, 2022, no shares of common stock were sold through the ATM equity program.

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 December 31, 2022, we had the capacity to issue up to $250 million in shares of our common stock under our current 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. As of December 31, 2022, we have no obligation to sell the remaining shares available for sale under the active ATM equity program.
Preferred Stock Authorized Shares
We have been authorized to issue 10,000,000 shares of preferred stock with a par value of $0.01, of which no shares were outstanding at December 31, 2022. Upon issuance, our board of directors has the ability to define the terms of the preferred shares, including voting rights, liquidation preferences, conversion and redemption provisions and dividend rates. 
Dividends
The following table lists the dividends declared and paid on our shares of common stock and Noncontrolling Common Units for the years ended December 31, 2022, 2021 and 2020:
PeriodAmount per Share/UnitPeriod CoveredDividend Paid Date
First Quarter 2020$0.30 January 1, 2020 to March 31, 2020March 26, 2020
Second Quarter 2020$0.20 April 1, 2020 to June 30, 2020June 25, 2020
Third Quarter 2020$0.25 July 1, 2020 to September 30, 2020September 24, 2020
Fourth Quarter 2020$0.25 October 1, 2020 to December 31, 2020December 24, 2020
First Quarter 2021$0.28 January 1, 2021 to March 31, 2021March 25, 2021
Second Quarter 2021$0.28 April 1, 2021 to June 30, 2021June 24, 2021
Third Quarter 2021$0.30 July 1, 2021 to September 30, 2021September 23, 2021
Fourth Quarter 2021$0.30 October 1, 2021 to December 31, 2021December 23, 2021
First Quarter 2022$0.32 January 1, 2022 to March 31, 2022March 24, 2022
Second Quarter 2022$0.32 April 1, 2022 to June 30, 2022June 23, 2022
Third Quarter 2022$0.32 July 1, 2022 to September 30, 2022September 22, 2022
Fourth Quarter 2022$0.32 October 1, 2022 to December 31, 2022December 22, 2022
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 loss on extinguishment of debt, revenue recognition and compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation. A summary of the income tax status of dividends per share paid is as follows:
Year Ended December 31,
202220212020
Per Share%Per Share%Per Share%
Ordinary income$1.18 92.1 %$0.73 62.6 %$0.66 66.0 %
Capital gain— — %— — %— — %
Return of capital0.10 7.9 %0.43 37.4 %0.34 34.0 %
Total$1.28 100.0 %$1.16 100.0 %$1.00 100.0 %
Stock-Based Compensation
The company has established the 2011 Equity Incentive Award Plan, which provides for grants to directors, employees and consultants of the company and the Operating Partnership of stock options, restricted stock, dividend equivalents, stock payments, performance shares, LTIP units, stock appreciation rights and other incentive awards. In June 2020, at the annual shareholder meeting, the shareholders approved the Amended and Restated 2011 Equity Incentive Award Plan (the "Amended and Restated 2011 Plan"). An aggregate of 4,054,411 shares of our common stock are authorized for issuance under awards granted pursuant to the Amended and Restated 2011 Plan, and as of December 31, 2022, 2,183,962 shares of common stock remain available for future issuance.
The following shares of restricted common stock have been issued as of December 31, 2022:
GrantFair Value at Grant DateNumber
June 9, 2020 (1)
$33.296,008 
December 4, 2020 (2)
19.02 - 20.83
311,566 
June 8, 2021 (1)
38.595,184 
December 9, 2021 (3)
24.27 - 25.17
224,635 
June 7, 2022 (1)
32.946,072 
December 7, 2022 (4)
$18.53 - $19.52
319,610 
(1)     Restricted common stock issued to members of the company's non-employee directors. These awards of restricted stock will vest subject to the director's continued service on the Board of Directors on the earlier of (i) the one year anniversary of the date of grant or (ii) the date of the next annual meeting of our stockholders, if such non-employee director continues his or her service on the Board of Directors until the next annual meeting of stockholders, but not thereafter, pursuant to our independent director compensation policy.
(2)    Restricted common stock issued to certain of the company's senior management and other employees, which are subject to quantitative and qualitative performance criteria based vesting. Up to one-third of the shares of restricted stock may vest based on such performance criteria determined as of November 30, 2021, 2022 and 2023, subject to the employee's continued employment on those dates.
(3)    Restricted common stock issued to certain of the company's senior management and other employees, which are subject to quantitative and qualitative performance criteria based vesting. Up to one-third of the shares of restricted stock may vest based on such performance criteria determined as of November 30, 2022, 2023 and 2024, subject to the employee's continued employment on those dates.
(4)    Restricted common stock issued to certain of the company's senior management and other employees, which are subject to quantitative and qualitative performance criteria based vesting. Up to one-third of the shares of restricted stock may vest based on such performance criteria determined as of November 30, 2023, 2024 and 2025, subject to the employee's continued employment on those dates.
For the 2019 grants and 2020 grants, the fair value of the awards was estimated using a Monte Carlo Simulation model. Our stock price, along with the stock prices of the group of peer REITs, is assumed to follow the Multivariate Geometric Brownian Motion Process. Multivariate Geometric Brownian Motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case, the stock price) to vary randomly from its current value and take any value greater than zero. The volatilities of the returns on the stock price of the company and the group REITs were estimated based on a three year look-back period. The expected growth rate of the stock prices over the “derived service period” of the employee is determined with consideration of the risk free rate as of the grant date.
For the 2021 grants and 2022 grants, the fair value of the awards was estimated using a Monte Carlo Simulation model. For the 2021 and 2022 grants vesting is subject to multiple vesting conditions as follows: (1) a service condition which requires continued employment of the employee as of each vesting date during the three-year vesting term for the employee to be eligible for vesting, (2) a performance condition with respect to our FFO per share for the FFO performance periods and (3) a market condition with respect to our relative total shareholder return performance over a one-year, two-year and three-year performance as compared to a pre-determined index. On each measurement date the performance condition and market condition performance will determine the number of shares that vest. We measure stock-based compensation expense based on the fair value of the award on the grant date, adjusted for changes to probabilities of achieving performance targets, and recognize expense over the vesting period. For the restricted stock grants that are time-vesting, issued to our non-employee directors, we estimate the stock compensation expense based on the fair value of the stock at the grant date.
The following table summarizes the activity of non-vested restricted stock awards during the year ended December 31, 2022:
2022
UnitsWeighted Average Grant Date Fair Value
Balance at beginning of year487,397 $23.78 
Granted325,682 19.28 
Vested(132,239)24.86 
Forfeited(106,796)23.78 
Balance at end of year574,044 $20.98 
We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $8.7 million, $8.5 million and $6.3 million in noncash compensation expense for the years ended December 31, 2022, 2021 and
2020, respectively, each of which is included in general and administrative expense on the statement of comprehensive income. Unrecognized compensation expense was $9.4 million at December 31, 2022, which will be recognized over a weighted-average period of 1.52 years.
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. For the years ended December 31, 2022, 2021 and 2020, we had a weighted average of approximately 489,765 shares, 485,202 shares and 357,048 unvested shares outstanding, respectively, which are considered participating securities. Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares.
Diluted EPS is calculated by dividing the net income attributable 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 year ended December 31, 2022, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable. 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.
 
Earnings Per Unit of the Operating Partnership
    Basic earnings (loss) per unit (“EPU”) of the Operating Partnership is computed by dividing income (loss) applicable to unitholders by the weighted average Operating Partnership units outstanding, as adjusted for the effect of participating securities. Operating Partnership units granted in equity-based payment transactions are considered participating securities prior to vesting. The impact of unvested Operating Partnership unit awards on EPU has been calculated using the two-class method whereby earnings are allocated to the unvested Operating Partnership unit awards based on distributions and the unvested Operating Partnership units’ participation rights in undistributed earnings (losses).
    The calculation of diluted earnings per unit for the year ended December 31, 2022, 2021 and 2020 does not include 489,765, 485,202, and 357,048 unvested weighted average Operating Partnership units, respectively, as these equity securities are either considered contingently issuable or the effect of including these equity securities was anti-dilutive.
The computation of basic and diluted EPS for American Assets Trust, Inc. is presented below (dollars in thousands, except share and per share amounts):
Year Ended December 31,
202220212020
NUMERATOR
Net income$55,877 $36,593 $35,588 
Less: Net income attributable to restricted shares(648)(564)(383)
Less: Income attributable to unitholders in the Operating Partnership
(11,723)(7,653)(7,545)
Net income attributable to common stockholders—basic
$43,506 $28,376 $27,660 
Income attributable to American Assets Trust, Inc. common stockholders—basic
$43,506 $28,376 $27,660 
Plus: Income attributable to unitholders in the Operating Partnership
11,723 7,653 7,545 
Net income attributable to common stockholders—diluted
$55,229 $36,029 $35,205 
DENOMINATOR
Weighted average common shares outstanding—basic
60,048,970 59,990,740 59,806,309 
Effect of dilutive securities—conversion of Operating Partnership units
16,181,537 16,181,537 16,313,454 
Weighted average common shares outstanding—diluted
76,230,507 76,172,277 76,119,763 
Earnings per common share, basic$0.72 $0.47 $0.46 
Earnings per common share, diluted$0.72 $0.47 $0.46