SEGMENT REPORTING

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

SEGMENT REPORTING

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 office real estate, retail real estate, multifamily real estate and mixed-use real estate. 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 retail segment primarily include rental of retail 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,
	2023		2022
Total Office
Property revenue	$	50,970	$	49,569
Property expense	(14,821)		(13,330)
Segment profit	36,149		36,239
Total Retail
Property revenue	25,627		24,841
Property expense	(7,704)		(7,728)
Segment profit	17,923		17,113
Total Multifamily
Property revenue	15,563		13,889
Property expense	(6,531)		(6,079)
Segment profit	9,032		7,810
Total Mixed-Use
Property revenue	15,594		13,171
Property expense	(10,082)		(8,437)
Segment profit	5,512		4,734
Total segments’ profit	$	68,616	$	65,896

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

	Three Months Ended March 31,
	2023		2022
Total segments’ profit	$	68,616	$	65,896
General and administrative	(8,999)		(7,142)
Depreciation and amortization	(29,901)		(30,412)
Interest expense, net	(15,729)		(14,666)
Other income (expense), net	6,679		(162)
Net income	20,666		13,514
Net income attributable to restricted shares	(189)		(155)
Net income attributable to unitholders in the Operating Partnership	(4,341)		(2,836)
Net income attributable to American Assets Trust, Inc. stockholders	$	16,136	$	10,523

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

	March 31, 2023		December 31, 2022
Net Real Estate
Office	$	1,617,945	$	1,615,479
Retail	575,148		579,219
Multifamily	368,334		370,993
Mixed-Use	168,484		168,865
	$	2,729,911	$	2,734,556
Secured Notes Payable (1)
Office	$	75,000	$	75,000
	$	75,000	$	75,000

(1)Excludes debt issuance costs of $0.4 million and $0.4 million for each of the periods ended March 31, 2023 and December 31, 2022, respectively.

Capital expenditures for each segment for the three months ended March 31, 2023 and 2022 were as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Capital Expenditures (1)
Office	$	20,725	$	26,666
Retail	2,525		3,560
Multifamily	1,313		1,571
Mixed-Use	1,132		331
	$	25,695	$	32,128

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