Net loss (income) attributable to restricted shares

(691)

10,308

(60)

Net loss (income) attributable to unitholders in the Operating Partnership

166

(2,861)

NET (LOSS) INCOME ATTRIBUTABLE TO AMERICAN ASSETS TRUST, INC. STOCKHOLDERS

$ (453)

$ 7,387

(LOSS) EARNINGS PER COMMON SHARE

(Loss) earnings per common share, basic (in USD per share)

$ (0.01)

$ 0.16

Weighted average shares of common stock outstanding-basic (in shares)

46,935,820

46,173,788

EARNINGS PER COMMON SHARE, DILUTED

(Loss) earnings per common share, diluted (in USD per share)

$ (0.01)

$ 0.16

Weighted average shares of common stock outstanding-diluted (in shares)

46,935,820

64,062,610

Dividends declared per common share (in USD per share)

$ 0.27

$ 0.26

Other comprehensive income (loss) - unrealized income (loss) on swap derivative during the period

$ 2,861

$ (996)

Reclassification of amortization of forward-starting swap included in interest expense

(320)

(145)

Comprehensive income

1,850

9,167

Comprehensive income attributable to non-controlling interest

502

2,484

Comprehensive income attributable to American Assets Trust, Inc.

1,348

6,683

American Assets Trust, L.P.

REVENUE:

Rental income

76,201

70,040

Other property income

4,531

3,752

Total revenue

80,732

73,792

EXPENSES:

Rental expenses

20,420

19,859

Real estate taxes

8,546

7,536

General and administrative

5,567

5,082

Depreciation and amortization

33,279

17,986

Total operating expenses

67,812

50,463

OPERATING INCOME

12,920

23,329

Interest expense

(13,820)

(13,331)

Other income, net

209

310

Net loss (income) attributable to restricted shares

(691)

10,308

(60)

NET (LOSS) INCOME ATTRIBUTABLE TO AMERICAN ASSETS TRUST, INC. STOCKHOLDERS

$ (619)

$ 10,248

(LOSS) EARNINGS PER COMMON SHARE

(Loss) earnings per common share, basic (in USD per share)

$ (0.01)

$ 0.16

Weighted average shares of common stock outstanding-basic (in shares)

64,130,800

64,062,610

EARNINGS PER COMMON SHARE, DILUTED

Weighted average shares of common stock outstanding-diluted (in shares)

64,130,800

64,062,610

Distributions per unit (in USD per share)

$ 0.27

$ 0.26

Other comprehensive income (loss) - unrealized income (loss) on swap derivative during the period

$ 2,861

$ (996)

Reclassification of amortization of forward-starting swap included in interest expense

(320)

(145)

Comprehensive income

1,850

9,167

Limited Partner | American Assets Trust, L.P.

EXPENSES:

^[1]

(166)

Comprehensive income attributable to American Assets Trust, Inc.

(502)

(2,484)

General Partner | American Assets Trust, L.P.

EXPENSES:

^[2]

(525)

Comprehensive income attributable to American Assets Trust, Inc.

$ 1,348

$ 6,683

[1]	Consists of limited partnership interests held by third parties.
[2]	Consists of general partnership interests held by American Assets Trust, Inc.

Consolidated Statement of Equity (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($)
$ in Thousands

Total

American Assets Trust, L.P.

Accumulated Other Comprehensive Income (Loss)

American Assets Trust, L.P.

Limited Partner

^[1]

American Assets Trust, L.P.

General Partner

Common Shares

Additional Paid-in Capital

Accumulated Dividends in Excess of Net Income

Accumulated Other Comprehensive Income (Loss)

Noncontrolling Interests - Unitholders in the Operating Partnership

Swap

American Assets Trust, L.P.

Swap

American Assets Trust, L.P.

Accumulated Other Comprehensive Income (Loss)

Swap

Accumulated Other Comprehensive Income (Loss)

Swap

Noncontrolling Interests - Unitholders in the Operating Partnership

Beginning Balance (in shares) at Dec. 31, 2017

47,204,588

Beginning Balance at Dec. 31, 2017

$ 844,144

$ 473

$ 919,066

$ (97,280)

$ 11,451

$ 10,434

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Net (loss) income

(691)

$ (691)

$ (166)

$ (525)

^[2]

(525)

(166)

Forfeiture of restricted stock (in shares)

(1,104)

Forfeiture of restricted stock

$ 0

Dividends declared and paid

(17,388)

(12,745)

Dividends declared and paid (noncontrolling interest)

(4,643)

Stock-based compensation

727

Other comprehensive income (loss) - change in value of interest rate swaps

2,861

$ 2,861

$ 2,107

$ 754

Reclassification of amortization of forward-starting swap included in interest expense

(320)

$ (320)

(234)

(86)

Ending Balance (in shares) at Mar. 31, 2018

47,203,484

Ending Balance at Mar. 31, 2018

829,333

$ 473

$ 919,793

(110,550)

13,324

6,293

Beginning partners' capital account (in shares) at Dec. 31, 2017

17,194,980

47,204,588

^[2]

Beginning partners' capital account at Dec. 31, 2017

844,144

15,750

$ 6,135

$ 822,259

^[2]

Increase (Decrease) in Partners' Capital [Roll Forward]

Net income

(691)

(166)

$ (525)

^[2]

$ (525)

(166)

Forfeiture of restricted units (in shares)

^[2]

(1,104)

Distributions

(17,388)

$ (4,643)

$ (12,745)

^[2]

Stock-based compensation

727

$ 727

^[2]

Other comprehensive income (loss) - unrealized income (loss) on swap derivative during the period

2,861

$ 2,861

$ 2,107

$ 754

Reclassification of amortization of forward-starting swap included in interest expense

$ (320)

(320)

$ (234)

$ (86)

Ending partners' capital account (in shares) at Mar. 31, 2018

17,194,980

47,203,484

^[2]

Ending partners' capital account at Mar. 31, 2018

$ 829,333

$ 18,291

$ 1,326

$ 809,716

^[2]

[1]	Consists of limited partnership interests held by third parties.
[2]	Consists of general partnership interests held by American Assets Trust, Inc.

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
OPERATING ACTIVITIES
Net (loss) income	$ (691)	$ 10,308
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Deferred rent revenue and amortization of lease intangibles	47	(1,007)
Depreciation and amortization	33,279	17,986
Amortization of debt issuance costs and debt fair value adjustments	446	1,716
Stock-based compensation expense	727	639
Settlement of derivative instruments	0	10,430
Other noncash interest expense	(320)	(145)
Other, net	2,031	796
Changes in operating assets and liabilities
Change in accounts receivable	577	1,726
Change in other assets	(337)	(1,038)
Change in accounts payable and accrued expenses	5,434	5,834
Change in security deposits payable	2,113	81
Change in other liabilities and deferred credits	666	279
Net cash provided by operating activities	43,972	47,605
INVESTING ACTIVITIES
Capital expenditures	(10,138)	(7,253)
Leasing commissions	(1,227)	(902)
Deposit on property acquisition	0	(5,000)
Net cash used in investing activities	(11,365)	(13,155)
FINANCING ACTIVITIES
Repayment of secured notes payable	(74,116)	(130,795)
Proceeds from unsecured line of credit	35,000	0
Repayment of unsecured line of credit	0	(20,000)
Proceeds from unsecured notes payable	0	250,000
Debt issuance costs	(2,656)	(1,812)
Proceeds from issuance of common stock, net	(176)
Proceeds from issuance of common stock, net		30,075
Dividends paid to common stock and unitholders	(17,388)	(16,723)
Net cash provided by (used in) financing activities	(59,336)	110,745
Net (decrease) increase in cash and cash equivalents	(26,729)	145,195
Cash, cash equivalents, and restricted cash equivalents, beginning of period	91,954	54,751
Cash, cash equivalents, and restricted cash equivalents, end of period	65,225	199,946
Cash and cash equivalents	55,336	190,110
Restricted cash	9,889	9,836
American Assets Trust, L.P.
OPERATING ACTIVITIES
Net (loss) income	(691)	10,308
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Deferred rent revenue and amortization of lease intangibles	47	(1,007)
Depreciation and amortization	33,279	17,986
Amortization of debt issuance costs and debt fair value adjustments	446	1,716
Stock-based compensation expense	727	639
Settlement of derivative instruments	0	10,430
Other noncash interest expense	(320)	(145)
Other, net	2,031	796
Changes in operating assets and liabilities
Change in accounts receivable	577	1,726
Change in other assets	(337)	(1,038)
Change in accounts payable and accrued expenses	5,434	5,834
Change in security deposits payable	2,113	81
Change in other liabilities and deferred credits	666	279
Net cash provided by operating activities	43,972	47,605
INVESTING ACTIVITIES
Capital expenditures	(10,138)	(7,253)
Leasing commissions	(1,227)	(902)
Deposit on property acquisition	0	(5,000)
Net cash used in investing activities	(11,365)	(13,155)
FINANCING ACTIVITIES
Repayment of secured notes payable	(74,116)	(130,795)
Proceeds from unsecured line of credit	35,000	0
Repayment of unsecured line of credit	0	(20,000)
Proceeds from unsecured notes payable	0	250,000
Debt issuance costs	(2,656)	(1,812)
Proceeds from issuance of common stock, net	(176)
Contributions from American Assets Trust, Inc.		30,075
Dividends paid to common stock and unitholders	(17,388)	(16,723)
Net cash provided by (used in) financing activities	(59,336)	110,745
Net (decrease) increase in cash and cash equivalents	(26,729)	145,195
Cash, cash equivalents, and restricted cash equivalents, beginning of period	91,954	54,751
Cash, cash equivalents, and restricted cash equivalents, end of period	65,225	199,946
Cash and cash equivalents	55,336	190,110
Restricted cash	$ 9,889	$ 9,836

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business and Organization

American Assets Trust, Inc. (which may be referred to in these financial statements as the “Company,” “we,” “us,” or “our”) is a Maryland corporation formed on July 16, 2010 that did not have any operating activity until the consummation of our initial public offering on January 19, 2011. The Company is the sole general partner of American Assets Trust, L.P., a Maryland limited partnership formed on July 16, 2010 (the “Operating Partnership”). The Company’s operations are carried on through our Operating Partnership and its subsidiaries, including our taxable real estate investment trust ("REIT") subsidiary ("TRS"). Since the formation of our Operating Partnership, the Company has controlled our Operating Partnership as its general partner and has consolidated its assets, liabilities and results of operations.

We are a full service vertically integrated and self-administered REIT with approximately 195 employees providing substantial in-house expertise in asset management, property management, property development, leasing, tenant improvement construction, acquisitions, repositioning, redevelopment and financing.

As of March 31, 2018, we owned or had a controlling interest in 26 office, retail, multifamily and mixed-use operating properties, the operations of which we consolidate. Additionally, as of March 31, 2018, we owned land at four of our properties that we classify as held for development and/or construction in progress. A summary of the properties owned by us is as follows:



Retail
Carmel Country Plaza	Gateway Marketplace	Alamo Quarry Market
Carmel Mountain Plaza	Del Monte Center	Hassalo on Eighth - Retail
South Bay Marketplace	Geary Marketplace
Lomas Santa Fe Plaza	The Shops at Kalakaua
Solana Beach Towne Centre	Waikele Center

Office
Torrey Reserve Campus	Lloyd District Portfolio
Solana Beach Corporate Centre	City Center Bellevue
The Landmark at One Market
One Beach Street
First & Main

Multifamily
Loma Palisades	Hassalo on Eighth - Residential
Imperial Beach Gardens
Mariner's Point
Santa Fe Park RV Resort
Pacific Ridge Apartments

Mixed-Use
Waikiki Beach Walk Retail and Embassy Suites™ Hotel

Held for Development and/or Construction in Progress
Solana Beach Corporate Centre – Land
Solana Beach – Highway 101 – Land
Torrey Point – Construction in Progress
Lloyd District Portfolio – Construction in Progress

Basis of Presentation

Our consolidated financial statements include the accounts of the Company, our Operating Partnership and our subsidiaries. The equity interests of other investors in our Operating Partnership are reflected as noncontrolling interests.

All significant intercompany transactions and balances are eliminated in consolidation.

The accompanying consolidated financial statements of the Company and the Operating Partnership have been prepared in accordance with the rules applicable to Form 10-Q and include all information and footnotes required for interim financial statement presentation, but do not include all disclosures required under accounting principles generally accepted in the United States (“GAAP”) for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments, except as otherwise noted) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and notes therein included in the Company's and Operating Partnership's annual report on Form 10-K for the year ended December 31, 2017.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using our best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates.

Any reference to the number of properties, number of units, square footage, employee numbers or percentages of beneficial ownership of our shares are unaudited and outside the scope of our independent registered public accounting firm’s review of our financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board.

Consolidated Statements of Cash Flows—Supplemental Disclosures

The following table provides supplemental disclosures related to the Consolidated Statements of Cash Flows (in thousands):



	Three Months Ended March 31,
	2018			2017
Supplemental cash flow information
Total interest costs incurred	$	14,277		$	13,702
Interest capitalized	$	457		$	371
Interest expense	$	13,820		$	13,331
Cash paid for interest, net of amounts capitalized	$	14,059		$	10,708
Cash paid for income taxes	$	31		$	46
Supplemental schedule of noncash investing and financing activities
Accounts payable and accrued liabilities for construction in progress	$	(706	)	$	577
Accrued leasing commissions	$	710		$	193
Reduction to capital for prepaid offering costs	$	176		$	—

Significant Accounting Policies

We describe our significant accounting policies in Note 1 to the consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2017. Except for the adoption of the accounting standards during the first quarter of 2018 as discussed below, there have been no changes to our significant accounting policies during the three months ended March 31, 2018.

Segment Information

Segment information is prepared on the same basis that our chief operating decision maker 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.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2016-2, Leases. This pronouncement is expected to result in the recognition of a right-to-use asset and related liability to account for future obligations under ground lease agreements for which we are the lessee. In addition, this pronouncement will require that lessees and lessors capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. As of March 31, 2018, the remaining contractual payments under lease agreements for which we are the lessee aggregated approximately $37.5 million.

As a lessor, under current accounting standards, we recognize rental revenue from our operating leases on a straight-line basis over the respective lease terms. We commence recognition of rental revenue at the date the property is ready for its intended use and the tenant takes possession of or controls the physical use of the property. Under current accounting standards, tenant recoveries related to payments of real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses are considered lease components. We recognize these tenant recoveries as revenue when services are rendered in an amount equal to the related operating expenses incurred that are recoverable under the terms of the applicable lease.

Under this pronouncement, each lease agreement will be evaluated to identify the lease components and nonlease components at lease inception. The total consideration in the lease agreement will be allocated to the lease and nonlease components based on their relative standalone selling prices. Lessors will continue to recognize the lease revenue component using an approach that is substantially equivalent to existing guidance for operating leases (straight-line basis). In March 2018, the FASB approved an amendment to the lease ASU that would allow lessors to elect, as a practical expedient, not to allocate the total consideration to lease and nonlease components based on their relative standalone selling prices. This practical expedient will allow lessors to elect a combined single lease component presentation if (i) the timing and pattern of the revenue recognition of the combined single lease component is the same, and (ii) the related lease component and, the combined single lease component would be classified as an operating lease.

The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We plan to adopt the provisions of ASU No. 2016-2 effective January 1, 2019 using the modified retrospective approach. We continue to evaluate the impact this pronouncement will have on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The pronouncement was issued to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements for U.S. GAAP and International Financial Reporting Standards. The pronouncement is effective for reporting periods beginning after December 15, 2017. We adopted the provisions of the ASU effective January 1, 2018 using the modified retrospective approach. As discussed above, leases are specifically excluded from this and will be governed by the applicable lease codification..

We evaluated the revenue recognition for all contracts within this scope under existing accounting standards and under the new revenue recognition ASU and confirmed that there were no differences in the amounts recognized or the pattern of recognition. This evaluation included revenues from the hotel portion of our mixed-use property, parking income and excise taxes charged to customers. Therefore, the adoption of this ASU did not result in an adjustment to our retained earnings on January 1, 2018.

ACQUIRED IN-PLACE LEASES AND ABOVE/BELOW MARKET LEASES

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

ACQUIRED IN-PLACE LEASES AND ABOVE/BELOW MARKET LEASES

The following summarizes our acquired lease intangibles and leasing costs, which are included in other assets and other liabilities and deferred credits, as of March 31, 2018 and December 31, 2017 (in thousands):



	March 31, 2018			December 31, 2017
In-place leases	$	48,442		$	54,206
Accumulated amortization	(40,699		)	(45,835		)
Above market leases	21,262			21,262
Accumulated amortization	(20,306		)	(20,084		)
Acquired lease intangible assets, net	$	8,699		$	9,549
Below market leases	$	67,348		$	67,423
Accumulated accretion	(38,103		)	(37,241		)
Acquired lease intangible liabilities, net	$	29,245		$	30,182

FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability. The hierarchy for inputs used in measuring fair value is as follows:


1.	Level 1 Inputs—quoted prices in active markets for identical assets or liabilities


2.	Level 2 Inputs—observable inputs other than quoted prices in active markets for identical assets and liabilities


3.	Level 3 Inputs—unobservable inputs

Except as disclosed below, the carrying amounts of our financial instruments approximate their fair value. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

We measure the fair value of our deferred compensation liability, which is included in other liabilities and deferred credits on the consolidated balance sheet, on a recurring basis using Level 2 inputs. We measure the fair value of this liability based on prices provided by independent market participants that are based on observable inputs using market-based valuation techniques.

The fair value of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contract at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The effective portion of changes in the fair value of the derivatives that are designated as cash flow hedges are being recorded in accumulated other comprehensive (loss) income and will be subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.

We incorporate credit valuation adjustments to appropriately reflect both our own non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of non-performance risk, we considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2018 we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative position and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivative. As a result, we have determined that our derivative valuation in its entirety is classified in Level 2 of the fair value hierarchy.

A summary of our financial liabilities that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows (in thousands):



	March 31, 2018								December 31, 2017
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Deferred compensation liability	$	—	$	1,224	$	—	$	1,224	$	—	$	1,156	$	—	$	1,156
Interest rate swap asset	$	—	$	7,941	$	—	$	7,941	$	—	$	5,091	$	—	$	5,091
Interest rate swap liability	$	—	$	—	$	—	$	—	$	—	$	10	$	—	$	10

The fair value of our secured notes payable and unsecured senior guaranteed notes are sensitive to fluctuations in interest rates. Discounted cash flow analysis using observable market interest rates (Level 2) is generally used to estimate the fair value of our secured notes payable, using rates ranging from 3.8% to 4.9%.

Considerable judgment is necessary to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. The carrying values of our revolving line of credit and term loan set forth below are deemed to be at fair value since the outstanding debt is directly tied to monthly LIBOR contracts. A summary of the carrying amount and fair value of our secured financial instruments, all of which are based on Level 2 inputs, is as follows (in thousands):



	March 31, 2018				December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
Secured notes payable, net	$	205,486	$	210,402	$	279,550	$	286,156
Unsecured term loans, net	$	248,430	$	250,000	$	248,839	$	250,000
Unsecured senior guaranteed notes, net	$	796,748	$	786,549	$	796,631	$	802,699
Unsecured line of credit, net	$	33,031	$	35,000	$	—	$	—

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

DERIVATIVE AND HEDGING ACTIVITIES

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE AND HEDGING ACTIVITIES

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The following is a summary of the terms of our outstanding interest rate swaps as of March 31, 2018 (dollars in thousands):



Swap Counterparty	Notional Amount		Effective Date	Maturity Date	Fair Value
Bank of America, N.A.	$	100,000	1/9/2014	1/9/2019	$	228
U.S. Bank N.A.	$	100,000	3/1/2016	3/1/2023	$	5,116
Wells Fargo Bank, N.A.	$	50,000	5/2/2016	3/1/2023	$	2,597

The effective portion of changes in the fair value of the derivatives that are designated as cash flow hedges are being recorded in accumulated other comprehensive income and will be subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings for as long as hedged cash flows remain probable.

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, counter party credit risk and uses observable market-based inputs, including interest rate curves, and implied volatilities. The fair value of the interest rate swap is determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

OTHER LIABILITIES AND DEFERRED CREDITS

3 Months Ended

Mar. 31, 2018

Other Liabilities Disclosure [Abstract]

OTHER LIABILITIES AND DEFERRED CREDITS

Other liabilities and deferred credits consist of the following (in thousands):



	March 31, 2018		December 31, 2017
Acquired below market leases, net	$	29,245	$	30,182
Prepaid rent and deferred revenue	10,253		8,429
Interest rate swap liability	—		10
Deferred rent expense and lease intangible	2,248		1,670
Deferred compensation	1,224		1,156
Deferred tax liability	123		123
Straight-line rent liability	5,188		4,428
Other liabilities	67		63
Total other liabilities and deferred credits, net	$	48,348	$	46,061

Straight-line rent liability relates to leases which have rental payments that decrease over time or one-time upfront payments for which the rental revenue is deferred and recognized on a straight-line basis.

DEBT

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

DEBT

Debt of American Assets Trust, Inc.

American Assets Trust, Inc. does not hold any indebtedness. All debt is held directly or indirectly by the Operating Partnership; however, American Assets Trust, Inc. has guaranteed the Operating Partnership's obligations under the (i) amended and restated credit facility, (ii) term loans and (iii) senior guaranteed notes. Additionally, American Assets Trust, Inc. has provided carve-out guarantees on certain property-level mortgage debt.

Debt of American Assets Trust, L.P.

Secured notes payable

The following is a summary of our total secured notes payable outstanding as of March 31, 2018 and December 31, 2017 (in thousands):



	Principal Balance as of						Stated Interest Rate		Stated Maturity Date
Description of Debt	March 31, 2018			December 31, 2017			as of March 31, 2018		Stated Maturity Date
Loma Palisades ⁽¹⁾⁽²⁾	—			73,744			6.09	%	July 1, 2018
One Beach Street ⁽¹⁾	21,900			21,900			3.94	%	April 1, 2019
Torrey Reserve—North Court ⁽³⁾	19,925			20,023			7.22	%	June 1, 2019
Torrey Reserve—VCI, VCII, VCIII ⁽³⁾	6,731			6,764			6.36	%	June 1, 2020
Solana Beach Corporate Centre I-II ⁽³⁾	10,665			10,721			5.91	%	June 1, 2020
Solana Beach Towne Centre ⁽³⁾	35,552			35,737			5.91	%	June 1, 2020
City Center Bellevue ⁽¹⁾	111,000			111,000			3.98	%	November 1, 2022
	205,773			279,889
Debt issuance costs, net of accumulated amortization of $798 and $1,191, respectively	(287		)	(339		)
Total Secured Notes Payable Outstanding	$	205,486		$	279,550


(1)	Interest only.


(2)	Loan repaid in full, without premium or penalty, on March 30, 2018.


(3)	Principal payments based on a 30-year amortization schedule.

Certain loans require us to comply with various financial covenants. As of March 31, 2018, the Operating Partnership was in compliance with these financial covenants.

Unsecured notes payable

The following is a summary of the Operating Partnership's total unsecured notes payable outstanding as of March 31, 2018 and December 31, 2017 (in thousands):



Description of Debt	Principal Balance as of						Stated Interest Rate			Stated Maturity Date
Description of Debt	March 31, 2018			December 31, 2017			as of March 31, 2018			Stated Maturity Date
Term Loan A	$	100,000		$	100,000		Variable		⁽¹⁾	January 9, 2019
Senior Guaranteed Notes, Series A	150,000			150,000			4.04	%	⁽²⁾	October 31, 2021
Term Loan B	100,000			100,000			Variable		⁽³⁾	March 1, 2023
Term Loan C	50,000			50,000			Variable		⁽⁴⁾	March 1, 2023
Senior Guaranteed Notes, Series F	100,000			100,000			3.78	%	⁽⁵⁾	July 19, 2024
Senior Guaranteed Notes, Series B	100,000			100,000			4.45	%		February 2, 2025
Senior Guaranteed Notes, Series C	100,000			100,000			4.50	%		April 1, 2025
Senior Guaranteed Notes, Series D	250,000			250,000			4.29	%	⁽⁶⁾	March 1, 2027
Senior Guaranteed Notes, Series E	100,000			100,000			4.24	%	⁽⁷⁾	May 23, 2029
	1,050,000			1,050,000
Debt issuance costs, net of accumulated amortization of $6,159 and $5,866, respectively	(4,822		)	(4,530		)
Total Unsecured Notes Payable	$	1,045,178		$	1,045,470


(1)	The Operating Partnership has entered into an interest rate swap agreement that is intended to fix the interest rate associated with Term Loan A at approximately 3.08% through its maturity date and extension options, subject to adjustments based on our consolidated leverage ratio.


(2)	The Operating Partnership entered into a one-month forward-starting seven-year swap contract on August 19, 2014, which was settled on September 19, 2014 at a gain of approximately $1.6 million. The forward-starting seven-year swap contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 3.88% per annum.

(3)

The Operating Partnership has entered into an interest rate swap agreement that is intended to fix the interest rate associated with Term Loan B at approximately 3.15% through its maturity date, subject to adjustments based on our consolidated leverage ratio. Effective March 1, 2018, the effective interest rate associated with Term Loan B is approximately 2.75%, subject to adjustments based on our consolidated leverage ratio.

(4)

The Operating Partnership has entered into an interest rate swap agreement that is intended to fix the interest rate associated with Term Loan C at approximately 3.14% through its maturity date, subject to adjustments based on our consolidated leverage ratio. Effective March 1, 2018, the effective interest rate associated with Term Loan C is approximately 2.74%, subject to adjustments based on our consolidated leverage ratio.


(5)	The Operating Partnership entered into a treasury lock contract on May 31, 2017, which was settled on June 23, 2017 at a loss of approximately $0.5 million. The treasury lock contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 3.85% per annum.


(6)	The Operating Partnership entered into forward-starting interest rate swap contracts on March 29, 2016 and April 7, 2016, which were settled on January 18, 2017 at a gain of approximately $10.4 million. The forward-starting interest swap rate contracts were deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 3.87% per annum.


(7)	The Operating Partnership entered into a treasury lock contract on April 25, 2017, which was settled on May 11, 2017 at a gain of approximately $0.7 million. The treasury lock contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 4.18% per annum.

Certain loans require us to comply with various financial covenants. As of March 31, 2018, the Operating Partnership was in compliance with these financial covenants.

On January 9, 2018, we entered into the Third Amendment to the Term Loan Agreement (as so amended, the "Term Loan Agreement"), which maintains the seven-year $150 million unsecured term loan (referred to herein as Term Loan B and Term Loan C) to the Operating Partnership that matures on March 1, 2023 (the “$150mm Term Loan”). Effective as of March 1, 2018, borrowings under the Term Loan Agreement with respect to the $150mm Term Loan bear interest at floating rates equal to, at the Operating Partnership’s option, either (1) LIBOR, plus a spread which ranges from 1.20% to 1.70% based on the Operating Partnership’s consolidated leverage ratio, or (2) a base rate equal to the highest of (a) 0%, (b) the prime rate, (c) the federal funds rate plus 50 bps or (d) the Eurodollar rate plus 100 bps, in each case plus a spread which ranges from 0.70% to 1.35% based on the Operating Partnership’s consolidated leverage ratio. Additionally, the Operating Partnership may elect for borrowings to bear interest based on a ratings-based pricing grid as per the Operating Partnership’s then-applicable investment grade debt ratings under the terms set forth in the Term Loan Agreement.

Second Amended and Restated Credit Facility

On January 9, 2018, we entered into a second amended and restated credit agreement (the "Second Amended and Restated Credit Facility"). The Second Amended and Restated Credit Facility provides for aggregate, unsecured borrowing of $450 million, consisting of a revolving line of credit of $350 million (the "Revolver Loan") and a term loan of $100 million (the "Term Loan A"). The Second Amended and Restated Credit Facility has an accordion feature that may allow us to increase the availability thereunder up to an additional $350 million, subject to meeting specified requirements and obtaining additional commitments from lenders. At March 31, 2018, there was $35 million outstanding under the Revolver Loan with approximately $2.0 million of debt issuance costs, net.

Borrowings under the Second Amended and Restated Credit Agreement initially bear interest at floating rates equal to, at our option, either (1) LIBOR, plus a spread which ranges from (a) 1.05% to 1.50% (with respect to the Revolver Loan) and (b) 1.30% to 1.90% (with respect to Term Loan A), in each case based on our consolidated leverage ratio, or (2) a base rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 50 bps or (c) LIBOR plus 100 bps, plus a spread which ranges from (i) 0.10% to 0.50% (with respect to the Revolver Loan) and (ii) 0.30% to 0.90% (with respect to Term Loan A), in each case based on our consolidated leverage ratio. For the three months ended March 31, 2018, the weighted average interest rate on the Revolver Loan was 3.40%.

The Revolver Loan initially matures on January 9, 2022, subject to our option to extend the Revolver Loan up to two times, with each such extension for a six-month period. The Term Loan A matures on January 9, 2019 with no further extension options. The foregoing extension options are exercisable by us subject to the satisfaction of certain conditions.

Additionally, the Second Amended and Restated Credit Facility includes a number of customary financial covenants, including:


•	A maximum leverage ratio (defined as total indebtedness net of certain cash and cash equivalents to total asset value) of 60%,


•	A maximum secured leverage ratio (defined as total secured debt to secured total asset value) of 40%,


•	A minimum fixed charge coverage ratio (defined as consolidated earnings before interest, taxes, depreciation and amortization to consolidated fixed charges) of 1.50x,


•	A minimum unsecured interest coverage ratio of 1.75x,


•	A maximum unsecured leverage ratio of 60%, and


•	Recourse indebtedness at any time cannot exceed 15% of total asset value.

The Second Amended and Restated Credit Facility provides that our annual distributions may not exceed the greater of (1) 95% of our funds from operation ("FFO") or (2) the amount required for us to (a) qualify and maintain our REIT status and (b) avoid the payment of federal or state income or excise tax. If certain events of default exist or would result from a distribution, we may be precluded from making distributions other than those necessary to qualify and maintain our status as a REIT.

As of March 31, 2018, the Operating Partnership was in compliance with the financial covenants in the Second Amended and Restated Credit Facility.

PARTNERS CAPITAL OF AMERICAN ASSETS TRUST, L.P.	3 Months Ended
PARTNERS CAPITAL OF AMERICAN ASSETS TRUST, L.P.	Mar. 31, 2018
Equity [Abstract]
PARTNERS' CAPITAL OF AMERICAN ASSETS TRUST, L.P.	PARTNERS' CAPITAL OF AMERICAN ASSETS TRUST, L.P. Noncontrolling interests in our Operating Partnership are interests in the Operating Partnership that are not owned by us. Noncontrolling interests consisted of 17,194,980 common units (the “noncontrolling common units”), and represented approximately 26.8% of the ownership interests in our Operating Partnership at March 31, 2018. Common units and shares of our common stock have essentially the same economic characteristics in that common units and shares of our common stock share equally in the total net income or loss distributions of our Operating Partnership. Investors who own common units have the right to cause our Operating Partnership to redeem any or all of their common units for cash equal to the then-current market value of one share of our common stock, or, at our election, shares of our common stock on a one-for-one basis. During the three months ended March 31, 2018, no common units were converted into shares of our common stock. (Loss) Earnings Per Unit of the Operating Partnership Basic (loss) earnings per unit (“EPU”) of the Operating Partnership is computed by dividing income 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 that have non-forfeitable dividend equivalent rights 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. For the three months ended March 31, 2018, shares associated with convertible securities were not included because the inclusion would be anti-dilutive. The calculation of diluted EPU for the three month periods ended March 31, 2017 does not include the weighted average of 232,099 unvested Operating Partnership units, as these equity securities are either considered contingently issuable or the effect of including these equity securities was anti-dilutive to income from continuing operations and net income attributable to the unitholders.

EQUITY OF AMERICAN ASSETS TRUST, INC.

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

EQUITY OF AMERICAN ASSETS TRUST, INC.

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, 2018, 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 March 31, 2018, we had the capacity to issue up to an additional $176.2 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, 2018:



Period	Amount per Share/Unit		Period Covered	Dividend Paid Date
First Quarter 2018	$	0.27	January 1, 2018 to March 31, 2018	March 29, 2018

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, 2018:



	Units		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2018	268,768		$29.89
Granted	—		—
Vested	—		—
Forfeited	(1,104	)	$29.71
Nonvested at March 31, 2018	267,664		$29.89

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $0.7 million and $0.6 million in noncash compensation expense for the three month periods ended March 31, 2018 and 2017, respectively, which is included in general and administrative expense on the consolidated statements of comprehensive (loss) income. Unrecognized compensation expense was $3.3 million at March 31, 2018.

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 263,606 and 232,099 for the three months ended March 31, 2018 and 2017, 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. For the three months ended March 31, 2018, shares associated with convertible securities were not included because the inclusion would be anti-dilutive.

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, 2018, shares associated with convertible securities were not included because the inclusion would be anti-dilutive. For the three months ended March 31, 2017, 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.

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



	Three Months Ended March 31,
	2018			2017
NUMERATOR
Net (loss) income from operations	$	(691	)	$	10,308
Less: Net loss (income) attributable to restricted shares	72			(60		)
Less: Loss (income) from operations attributable to unitholders in the Operating Partnership	166			(2,861		)
(Loss) income from continuing operations attributable to American Assets Trust, Inc. common stockholders—basic	(453		)	7,387
Net (loss) income attributable to common stockholders—basic	$	(453	)	$	7,387
(Loss) income from operations attributable to American Assets Trust, Inc. common stockholders—basic	$	(453	)	$	7,387
Plus: Income from operations attributable to unitholders in the Operating Partnership	—			2,861
(Loss) income from continuing operations attributable to common stockholders—diluted	(453		)	10,248
Net (loss) income attributable to common stockholders—diluted	$	(453	)	$	10,248
DENOMINATOR
Weighted average common shares outstanding—basic	46,935,820			46,173,788
Effect of dilutive securities—conversion of Operating Partnership units	—			17,888,822
Weighted average common shares outstanding—diluted	46,935,820			64,062,610

(Loss) earnings per common share, basic	$	(0.01	)	$	0.16
(Loss) earnings per common share, diluted	$	(0.01	)	$	0.16

INCOME TAXES	3 Months Ended
INCOME TAXES	Mar. 31, 2018
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES We elected to be taxed as a REIT and operate in a manner that allows us to qualify as a REIT for federal income tax purposes commencing with our initial taxable year. As a REIT, we are generally not subject to corporate level income tax on the earnings distributed currently to our stockholders that we derive from our REIT qualifying activities. Taxable income from non-REIT activities managed through our TRS is subject to federal and state income taxes. We lease our hotel property to a wholly owned TRS that is subject to federal and state income taxes. We account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between GAAP carrying amounts and their respective tax bases. Additionally, we classify certain state taxes as income taxes for financial reporting purposes in accordance with ASC Topic 740, Income Taxes. A deferred tax liability is included in our consolidated balance sheets of $0.1 million as of March 31, 2018 and December 31, 2017, respectively, in relation to real estate asset basis differences of property subject to state taxes based on income and certain prepaid expenses of our TRS. Income tax benefit is recorded in other income, net on our consolidated statements of comprehensive (loss) income. For the three months ended March 31, 2018 and 2017, we recorded income tax benefit of $0.1 million and $0.2 million, respectively.

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Legal

We are sometimes involved in various disputes, lawsuits, warranty claims, environmental and other matters arising in the ordinary course of business. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.

We are currently a party to various legal proceedings. We accrue a liability for litigation if an unfavorable outcome is probable and the amount of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, we accrue the best estimate within the range; however, if no amount within the range is a better estimate than any other amount, the minimum within the range is accrued. Legal fees related to litigation are expensed as incurred. We do not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on our financial position or overall trends in results of operations; however, litigation is subject to inherent uncertainties. Also, under our leases, tenants are typically obligated to indemnify us from and against all liabilities, costs and expenses imposed upon or asserted against us as owner of the properties due to certain matters relating to the operation of the properties by the tenant.

Commitments

At the Landmark at One Market, we lease (the "Annex Lease"), as lessee, a building adjacent to the Landmark at One Market under an operating lease effective through June 30, 2021, which we have the option to extend until 2031 by way of two five-year extension options.

At Waikiki Beach Walk, we sublease (the "FHB Sublease") a portion of the building of which Quiksilver is currently in possession, under an operating lease effective through December 31, 2021.

Current minimum annual payments under the leases are as follows, as of March 31, 2018 (in thousands):



Year Ending December 31,
2018 (nine months ending December 31, 2018)	$	2,464
2019	3,347
2020	3,422
2021	3,460		⁽¹⁾
2022	2,613
Thereafter	22,210
Total	$	37,516


(1)	Lease payments on the Annex Lease will be equal to fair rental value from July 2021 through the end of the extended lease term. In the table above, we have shown the option lease payments for this period based on the stated rate for the month of June 2021 of $217,744.

We have management agreements with Outrigger Hotels & Resorts or an affiliate thereof (“Outrigger”) pursuant to which Outrigger manages each of the retail and hotel portions of the Waikiki Beach Walk property. Under the management agreement with Outrigger relating to the retail portion of Waikiki Beach Walk (the “retail management agreement”), we pay Outrigger a monthly management fee of 3.0% of net revenues from the retail portion of Waikiki Beach Walk. Pursuant to the terms of the retail management agreement, if the agreement is terminated in certain instances, including our election not to repair damage or destruction at the property, a condemnation or our failure to make required working capital infusions, we would be obligated to pay Outrigger a termination fee equal to the sum of the management fees paid for the two calendar months immediately preceding the termination date. The retail management agreement may not be terminated by us or by Outrigger without cause. Under our management agreement with Outrigger relating to the hotel portion of Waikiki Beach Walk (the “hotel management agreement”), we pay Outrigger a monthly management fee of 6.0% of the hotel's gross operating profit, as well as 3.0% of the hotel's gross revenues; provided that the aggregate management fee payable to Outrigger for any year shall not exceed 3.5% of the hotel's gross revenues for such fiscal year. Pursuant to the terms of the hotel management agreement, if the agreement is terminated in certain instances, including upon a transfer by us of the hotel or upon a default by us under the hotel management agreement, we would be required to pay a cancellation fee calculated by multiplying (1) the management fees for the previous 12 months by (2) (a) eight, if the agreement is terminated in the first 11 years of its term, or (b) four, three, two or one, if the agreement is terminated in the twelfth, thirteenth, fourteenth or fifteenth year, respectively, of its term. The hotel management agreement may not be terminated by us or by Outrigger without cause.

A wholly owned subsidiary of our Operating Partnership, WBW Hotel Lessee LLC, entered into a franchise license agreement with Embassy Suites Franchise LLC, the franchisor of the brand “Embassy Suites™,” to obtain the non-exclusive right to operate the hotel under the Embassy Suites^TM brand for 20 years. The franchise license agreement provides that WBW Hotel Lessee LLC must comply with certain management, operational, record keeping, accounting, reporting and marketing standards and procedures. In connection with this agreement, we are also subject to the terms of a product improvement plan pursuant to which we expect to undertake certain actions to ensure that our hotel's infrastructure is maintained in compliance with the franchisor's brand standards. In addition, we must pay to Embassy Suites Franchise LLC a monthly franchise royalty fee equal to 4.0% of the hotel's gross room revenue through December 2021 and 5.0% of the hotel's gross room revenue thereafter, as well as a monthly program fee equal to 4.0% of the hotel's gross room revenue. If the franchise license is terminated due to our failure to make required improvements or to otherwise comply with its terms, we may be liable to the franchisor for a termination payment, which could be as high as $7.5 million based on operating performance through March 31, 2018.

Our Del Monte Center property has ongoing environmental remediation related to ground water contamination. The environmental issue existed at purchase and remains in remediation. The final stages of the remediation will include routine, long term ground monitoring by the appropriate regulatory agency over the next five to seven years. The work performed is financed through an escrow account funded by the seller upon purchase of the Del Monte Center. We believe the funds in the escrow account are sufficient for the remaining work to be performed. However, if further work is required costing more than the remaining escrow funds, we could be required to pay such overage, although we may have a contractual claim for such costs against the prior owner or our environmental remediation consultant.

Concentrations of Credit Risk

Our properties are located in Southern California, Northern California, Hawaii, Oregon, Texas, and Washington. The ability of the tenants to honor the terms of their respective leases is dependent upon the economic, regulatory and social factors affecting the markets in which the tenants operate. Thirteen of our consolidated properties are located in Southern California, which exposes us to greater economic risks than if we owned a more geographically diverse portfolio. Tenants in the retail industry accounted for 32.4% of total revenues for the three months ended March 31, 2018. This makes us susceptible to demand for retail rental space and subject to the risks associated with an investment in real estate with a concentration of tenants in the retail industry. Furthermore, tenants in the office industry accounted for 33.2% of total revenues for the three months ended March 31, 2018. This makes us susceptible to demand for office rental space and subject to the risks associated with an investment in real estate with a concentration of tenants in the office industry. For the three months ended March 31, 2018 and 2017, no tenant accounted for more than 10% of our total rental revenue.

OPERATING LEASES

3 Months Ended

Mar. 31, 2018

Leases [Abstract]

OPERATING LEASES

Our leases with office, retail, mixed-use and residential tenants are classified as operating leases. Leases at our office and retail properties and the retail portion of our mixed-use property generally range from three to ten years (certain leases with anchor tenants may be longer), and in addition to minimum rents, usually provide for cost recoveries for the tenant’s share of certain operating costs and also may include percentage rents based on the tenant’s level of sales achieved. Leases on apartments generally range from 7 to 15 months, with a majority having 12-month lease terms. Rooms at the hotel portion of our mixed-use property are rented on a nightly basis.

As of March 31, 2018, minimum future rentals from noncancelable operating leases, before any reserve for uncollectible amounts and assuming no early lease terminations, at our office and retail properties and the retail portion of our mixed-use property are as follows (in thousands):



Year Ending December 31,
2018 (nine months ending December 31, 2018)	$	130,747
2019	159,736
2020	139,343
2021	116,692
2022	97,455
Thereafter	241,894
Total	$	885,867

The above future minimum rentals exclude residential leases, which typically have a term of 12 months or less, and exclude the hotel, as rooms are rented on a nightly basis.

COMPONENTS OF RENTAL INCOME AND EXPENSE

3 Months Ended

Mar. 31, 2018

Operating Leases, Income Statement, Lease Revenue [Abstract]

COMPONENTS OF RENTAL INCOME AND EXPENSE

The principal components of rental income are as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Minimum rents
Retail	$	19,654	$	18,534
Office	23,306		23,122
Multifamily	11,486		7,235
Mixed-use	2,825		2,561
Cost reimbursement	8,342		7,888
Percentage rent	436		455
Hotel revenue	9,783		9,865
Other	369		380
Total rental income	$	76,201	$	70,040

Minimum rents include $(0.8) million and $0.2 million for the three months ended March 31, 2018 and 2017, respectively, to recognize minimum rents on a straight-line basis. In addition, net amortization of above and below market leases included in minimum rents were $0.7 million and $0.9 million for the three months ended March 31, 2018 and 2017, respectively.

The principal components of rental expenses are as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Rental operating	$	8,660	$	8,073
Hotel operating	6,032		6,551
Repairs and maintenance	3,001		2,531
Marketing	412		436
Rent	794		757
Hawaii excise tax	1,033		1,025
Management fees	488		486
Total rental expenses	$	20,420	$	19,859

OTHER INCOME, NET

3 Months Ended

Mar. 31, 2018

Other Income and Expenses [Abstract]

OTHER EXPENSE, NET

OTHER INCOME, NET

The principal components of other income, net, are as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Interest and investment income	$	140	$	147
Income tax benefit	65		163
Other non-operating income	4		—
Total other income, net	$	209	$	310

RELATED PARTY TRANSACTIONS	3 Months Ended
RELATED PARTY TRANSACTIONS	Mar. 31, 2018
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONS We maintain a workers' compensation insurance policy with Insurance Company of the West, a California corporation ("ICW"), which is an insurance company majority owned and controlled by Ernest Rady, our Chief Executive Officer, President and Chairman of the Board. The workers' compensation policy was renewed on July 1, 2016 and the premium was approximately $0.2 million for the period from July 1, 2016 through July 1, 2017. We renewed this policy with ICW during the second quarter of 2017 and the premium is approximately $0.2 million for the period from July 1, 2017 through July 1, 2018. During the first quarter of 2018, we signed a lease agreement with EDisability, LLC, an entity majority owned and controlled by Mr. Rady, for office space at Torrey Reserve Campus. Rent commences on June 1, 2018 for an initial lease term of five years at an average annual rental rate of $0.2 million. Rental revenue recognized on the lease will be included in rental income on the statements of comprehensive (loss) income. The Waikiki Beach Walk entities have a 47.7% investment in WBW CHP LLC, an entity that was formed to, among other things, construct a chilled water plant to provide air conditioning to the property and other adjacent facilities. The operating expenses of WBW CHP LLC are recovered through reimbursements from its members, and reimbursements to WBW CHP LLC of $0.3 million and $0.3 million for the three months ended March 31, 2018 and 2017, respectively, are included in rental expenses on the statements of comprehensive (loss) income.

SEGMENT REPORTING

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

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 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,
	2018			2017
Total Retail
Property revenue	$	26,157		$	24,791
Property expense	(6,811		)	(6,691		)
Segment profit	19,346			18,100
Total Office
Property revenue	26,770			25,990
Property expense	(8,013		)	(7,801		)
Segment profit	18,757			18,189
Total Multifamily
Property revenue	12,424			7,891
Property expense	(4,997		)	(3,211		)
Segment profit	7,427			4,680
Total Mixed-Use
Property revenue	15,381			15,120
Property expense	(9,145		)	(9,692		)
Segment profit	6,236			5,428
Total segments’ profit	$	51,766		$	46,397

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



	Three Months Ended March 31,
	2018			2017
Total segments’ profit	$	51,766		$	46,397
General and administrative	(5,567		)	(5,082		)
Depreciation and amortization	(33,279		)	(17,986		)
Interest expense	(13,820		)	(13,331		)
Other income, net	209			310
Net (loss) income	(691		)	10,308
Net loss (income) attributable to restricted shares	72			(60		)
Net loss (income) attributable to unitholders in the Operating Partnership	166			(2,861		)
Net (loss) income attributable to American Assets Trust, Inc. stockholders	$	(453	)	$	7,387

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



	March 31, 2018		December 31, 2017
Net Real Estate
Retail	$	644,573	$	658,654
Office	809,621		813,121
Multifamily	421,101		424,044
Mixed-Use	179,687		180,888
	$	2,054,982	$	2,076,707
Secured Notes Payable ⁽¹⁾
Retail	$	35,552	$	35,737
Office	170,221		170,408
Multifamily	—		73,744
Mixed-Use	—		—
	$	205,773	$	279,889


(1)	Excludes debt issuance costs of $0.3 million for each of the periods ending March 31, 2018 and December 31, 2017, respectively.

Capital expenditures for each segment for the three months ended March 31, 2018 and 2017 were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Capital Expenditures ⁽¹⁾
Retail	$	2,229	$	1,246
Office	7,373		6,360
Multifamily	1,609		459
Mixed-Use	154		90
	$	11,365	$	8,155


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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Business and Organization



Retail
Carmel Country Plaza	Gateway Marketplace	Alamo Quarry Market
Carmel Mountain Plaza	Del Monte Center	Hassalo on Eighth - Retail
South Bay Marketplace	Geary Marketplace
Lomas Santa Fe Plaza	The Shops at Kalakaua
Solana Beach Towne Centre	Waikele Center

Office
Torrey Reserve Campus	Lloyd District Portfolio
Solana Beach Corporate Centre	City Center Bellevue
The Landmark at One Market
One Beach Street
First & Main

Multifamily
Loma Palisades	Hassalo on Eighth - Residential
Imperial Beach Gardens
Mariner's Point
Santa Fe Park RV Resort
Pacific Ridge Apartments

Mixed-Use
Waikiki Beach Walk Retail and Embassy Suites™ Hotel

Held for Development and/or Construction in Progress
Solana Beach Corporate Centre – Land
Solana Beach – Highway 101 – Land
Torrey Point – Construction in Progress
Lloyd District Portfolio – Construction in Progress

Basis of Presentation

All significant intercompany transactions and balances are eliminated in consolidation.

Significant Accounting Policies

Segment Information

Recent Accounting Pronouncements

Fair Value Measurement, Policy

A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability. The hierarchy for inputs used in measuring fair value is as follows:


1.	Level 1 Inputs—quoted prices in active markets for identical assets or liabilities


2.	Level 2 Inputs—observable inputs other than quoted prices in active markets for identical assets and liabilities


3.	Level 3 Inputs—unobservable inputs

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Consolidated Statements of Cash Flows-Supplemental Disclosures

The following table provides supplemental disclosures related to the Consolidated Statements of Cash Flows (in thousands):



	Three Months Ended March 31,
	2018			2017
Supplemental cash flow information
Total interest costs incurred	$	14,277		$	13,702
Interest capitalized	$	457		$	371
Interest expense	$	13,820		$	13,331
Cash paid for interest, net of amounts capitalized	$	14,059		$	10,708
Cash paid for income taxes	$	31		$	46
Supplemental schedule of noncash investing and financing activities
Accounts payable and accrued liabilities for construction in progress	$	(706	)	$	577
Accrued leasing commissions	$	710		$	193
Reduction to capital for prepaid offering costs	$	176		$	—

ACQUIRED IN-PLACE LEASES AND ABOVE/BELOW MARKET LEASES (Tables)

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of acquired lease intangibles included in other assets and other liabilities



	March 31, 2018			December 31, 2017
In-place leases	$	48,442		$	54,206
Accumulated amortization	(40,699		)	(45,835		)
Above market leases	21,262			21,262
Accumulated amortization	(20,306		)	(20,084		)
Acquired lease intangible assets, net	$	8,699		$	9,549
Below market leases	$	67,348		$	67,423
Accumulated accretion	(38,103		)	(37,241		)
Acquired lease intangible liabilities, net	$	29,245		$	30,182

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Financial liabilities measured at fair value on recurring basis

A summary of our financial liabilities that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows (in thousands):



	March 31, 2018								December 31, 2017
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Deferred compensation liability	$	—	$	1,224	$	—	$	1,224	$	—	$	1,156	$	—	$	1,156
Interest rate swap asset	$	—	$	7,941	$	—	$	7,941	$	—	$	5,091	$	—	$	5,091
Interest rate swap liability	$	—	$	—	$	—	$	—	$	—	$	10	$	—	$	10

Carrying amount and fair value of financial instruments

A summary of the carrying amount and fair value of our secured financial instruments, all of which are based on Level 2 inputs, is as follows (in thousands):



	March 31, 2018				December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
Secured notes payable, net	$	205,486	$	210,402	$	279,550	$	286,156
Unsecured term loans, net	$	248,430	$	250,000	$	248,839	$	250,000
Unsecured senior guaranteed notes, net	$	796,748	$	786,549	$	796,631	$	802,699
Unsecured line of credit, net	$	33,031	$	35,000	$	—	$	—

DERIVATIVE AND HEDGING ACTIVITIES (Tables)

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives

The following is a summary of the terms of our outstanding interest rate swaps as of March 31, 2018 (dollars in thousands):



Swap Counterparty	Notional Amount		Effective Date	Maturity Date	Fair Value
Bank of America, N.A.	$	100,000	1/9/2014	1/9/2019	$	228
U.S. Bank N.A.	$	100,000	3/1/2016	3/1/2023	$	5,116
Wells Fargo Bank, N.A.	$	50,000	5/2/2016	3/1/2023	$	2,597

OTHER ASSETS (Tables)

3 Months Ended

Mar. 31, 2018

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of Other Assets

Other assets consist of the following (in thousands):



	March 31, 2018		December 31, 2017
Leasing commissions, net of accumulated amortization of $29,689 and $28,318, respectively	$	21,089	$	20,633
Interest rate swap asset	7,941		5,091
Acquired above market leases, net	956		1,178
Acquired in-place leases, net	7,743		8,371
Lease incentives, net of accumulated amortization of $171 and $136, respectively	881		916
Other intangible assets, net of accumulated amortization of $1,112 and $1,115, respectively	214		227
Prepaid expenses and other	6,459		5,945
Total other assets	$	45,283	$	42,361

DEBT (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Summary of total secured notes payable outstanding

The following is a summary of the Operating Partnership's total unsecured notes payable outstanding as of March 31, 2018 and December 31, 2017 (in thousands):



Description of Debt	Principal Balance as of						Stated Interest Rate			Stated Maturity Date
Description of Debt	March 31, 2018			December 31, 2017			as of March 31, 2018			Stated Maturity Date
Term Loan A	$	100,000		$	100,000		Variable		⁽¹⁾	January 9, 2019
Senior Guaranteed Notes, Series A	150,000			150,000			4.04	%	⁽²⁾	October 31, 2021
Term Loan B	100,000			100,000			Variable		⁽³⁾	March 1, 2023
Term Loan C	50,000			50,000			Variable		⁽⁴⁾	March 1, 2023
Senior Guaranteed Notes, Series F	100,000			100,000			3.78	%	⁽⁵⁾	July 19, 2024
Senior Guaranteed Notes, Series B	100,000			100,000			4.45	%		February 2, 2025
Senior Guaranteed Notes, Series C	100,000			100,000			4.50	%		April 1, 2025
Senior Guaranteed Notes, Series D	250,000			250,000			4.29	%	⁽⁶⁾	March 1, 2027
Senior Guaranteed Notes, Series E	100,000			100,000			4.24	%	⁽⁷⁾	May 23, 2029
	1,050,000			1,050,000
Debt issuance costs, net of accumulated amortization of $6,159 and $5,866, respectively	(4,822		)	(4,530		)
Total Unsecured Notes Payable	$	1,045,178		$	1,045,470


(1)	The Operating Partnership has entered into an interest rate swap agreement that is intended to fix the interest rate associated with Term Loan A at approximately 3.08% through its maturity date and extension options, subject to adjustments based on our consolidated leverage ratio.


(2)	The Operating Partnership entered into a one-month forward-starting seven-year swap contract on August 19, 2014, which was settled on September 19, 2014 at a gain of approximately $1.6 million. The forward-starting seven-year swap contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 3.88% per annum.

(3)

(4)


(5)	The Operating Partnership entered into a treasury lock contract on May 31, 2017, which was settled on June 23, 2017 at a loss of approximately $0.5 million. The treasury lock contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 3.85% per annum.


(6)	The Operating Partnership entered into forward-starting interest rate swap contracts on March 29, 2016 and April 7, 2016, which were settled on January 18, 2017 at a gain of approximately $10.4 million. The forward-starting interest swap rate contracts were deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 3.87% per annum.


(7)	The Operating Partnership entered into a treasury lock contract on April 25, 2017, which was settled on May 11, 2017 at a gain of approximately $0.7 million. The treasury lock contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 4.18% per annum.

The following is a summary of our total secured notes payable outstanding as of March 31, 2018 and December 31, 2017 (in thousands):



	Principal Balance as of						Stated Interest Rate		Stated Maturity Date
Description of Debt	March 31, 2018			December 31, 2017			as of March 31, 2018		Stated Maturity Date
Loma Palisades ⁽¹⁾⁽²⁾	—			73,744			6.09	%	July 1, 2018
One Beach Street ⁽¹⁾	21,900			21,900			3.94	%	April 1, 2019
Torrey Reserve—North Court ⁽³⁾	19,925			20,023			7.22	%	June 1, 2019
Torrey Reserve—VCI, VCII, VCIII ⁽³⁾	6,731			6,764			6.36	%	June 1, 2020
Solana Beach Corporate Centre I-II ⁽³⁾	10,665			10,721			5.91	%	June 1, 2020
Solana Beach Towne Centre ⁽³⁾	35,552			35,737			5.91	%	June 1, 2020
City Center Bellevue ⁽¹⁾	111,000			111,000			3.98	%	November 1, 2022
	205,773			279,889
Debt issuance costs, net of accumulated amortization of $798 and $1,191, respectively	(287		)	(339		)
Total Secured Notes Payable Outstanding	$	205,486		$	279,550


(1)	Interest only.


(2)	Loan repaid in full, without premium or penalty, on March 30, 2018.


(3)	Principal payments based on a 30-year amortization schedule.

EQUITY OF AMERICAN ASSETS TRUST, INC. (Tables)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Dividends declared and paid on shares of common stock and noncontrolling common units

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, 2018:



Period	Amount per Share/Unit		Period Covered	Dividend Paid Date
First Quarter 2018	$	0.27	January 1, 2018 to March 31, 2018	March 29, 2018

Activity of restricted stock awards

The following table summarizes the activity of restricted stock awards during the three months ended March 31, 2018:



	Units		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2018	268,768		$29.89
Granted	—		—
Vested	—		—
Forfeited	(1,104	)	$29.71
Nonvested at March 31, 2018	267,664		$29.89

Computation of basic and 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,
	2018			2017
NUMERATOR
Net (loss) income from operations	$	(691	)	$	10,308
Less: Net loss (income) attributable to restricted shares	72			(60		)
Less: Loss (income) from operations attributable to unitholders in the Operating Partnership	166			(2,861		)
(Loss) income from continuing operations attributable to American Assets Trust, Inc. common stockholders—basic	(453		)	7,387
Net (loss) income attributable to common stockholders—basic	$	(453	)	$	7,387
(Loss) income from operations attributable to American Assets Trust, Inc. common stockholders—basic	$	(453	)	$	7,387
Plus: Income from operations attributable to unitholders in the Operating Partnership	—			2,861
(Loss) income from continuing operations attributable to common stockholders—diluted	(453		)	10,248
Net (loss) income attributable to common stockholders—diluted	$	(453	)	$	10,248
DENOMINATOR
Weighted average common shares outstanding—basic	46,935,820			46,173,788
Effect of dilutive securities—conversion of Operating Partnership units	—			17,888,822
Weighted average common shares outstanding—diluted	46,935,820			64,062,610

(Loss) earnings per common share, basic	$	(0.01	)	$	0.16
(Loss) earnings per common share, diluted	$	(0.01	)	$	0.16

COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Current minimum annual payments under the leases

Current minimum annual payments under the leases are as follows, as of March 31, 2018 (in thousands):



Year Ending December 31,
2018 (nine months ending December 31, 2018)	$	2,464
2019	3,347
2020	3,422
2021	3,460		⁽¹⁾
2022	2,613
Thereafter	22,210
Total	$	37,516


(1)	Lease payments on the Annex Lease will be equal to fair rental value from July 2021 through the end of the extended lease term. In the table above, we have shown the option lease payments for this period based on the stated rate for the month of June 2021 of $217,744.

COMPONENTS OF RENTAL INCOME AND EXPENSE (Tables)

3 Months Ended

Mar. 31, 2018

Operating Leases, Income Statement, Lease Revenue [Abstract]

Principal components of rental income

The principal components of rental income are as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Minimum rents
Retail	$	19,654	$	18,534
Office	23,306		23,122
Multifamily	11,486		7,235
Mixed-use	2,825		2,561
Cost reimbursement	8,342		7,888
Percentage rent	436		455
Hotel revenue	9,783		9,865
Other	369		380
Total rental income	$	76,201	$	70,040

Principal components of rental expenses

The principal components of rental expenses are as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Rental operating	$	8,660	$	8,073
Hotel operating	6,032		6,551
Repairs and maintenance	3,001		2,531
Marketing	412		436
Rent	794		757
Hawaii excise tax	1,033		1,025
Management fees	488		486
Total rental expenses	$	20,420	$	19,859

SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Schedule of segments operating activity

The following table represents operating activity within our reportable segments (in thousands):



	Three Months Ended March 31,
	2018			2017
Total Retail
Property revenue	$	26,157		$	24,791
Property expense	(6,811		)	(6,691		)
Segment profit	19,346			18,100
Total Office
Property revenue	26,770			25,990
Property expense	(8,013		)	(7,801		)
Segment profit	18,757			18,189
Total Multifamily
Property revenue	12,424			7,891
Property expense	(4,997		)	(3,211		)
Segment profit	7,427			4,680
Total Mixed-Use
Property revenue	15,381			15,120
Property expense	(9,145		)	(9,692		)
Segment profit	6,236			5,428
Total segments’ profit	$	51,766		$	46,397

Reconciliation of segment profit to net income attributable to stockholders

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



	Three Months Ended March 31,
	2018			2017
Total segments’ profit	$	51,766		$	46,397
General and administrative	(5,567		)	(5,082		)
Depreciation and amortization	(33,279		)	(17,986		)
Interest expense	(13,820		)	(13,331		)
Other income, net	209			310
Net (loss) income	(691		)	10,308
Net loss (income) attributable to restricted shares	72			(60		)
Net loss (income) attributable to unitholders in the Operating Partnership	166			(2,861		)
Net (loss) income attributable to American Assets Trust, Inc. stockholders	$	(453	)	$	7,387

Net real estate and secured note payable balances by segments

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



	March 31, 2018		December 31, 2017
Net Real Estate
Retail	$	644,573	$	658,654
Office	809,621		813,121
Multifamily	421,101		424,044
Mixed-Use	179,687		180,888
	$	2,054,982	$	2,076,707
Secured Notes Payable ⁽¹⁾
Retail	$	35,552	$	35,737
Office	170,221		170,408
Multifamily	—		73,744
Mixed-Use	—		—
	$	205,773	$	279,889


(1)	Excludes debt issuance costs of $0.3 million for each of the periods ending March 31, 2018 and December 31, 2017, respectively.

Capital expenditures for each segment

Capital expenditures for each segment for the three months ended March 31, 2018 and 2017 were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Capital Expenditures ⁽¹⁾
Retail	$	2,229	$	1,246
Office	7,373		6,360
Multifamily	1,609		459
Mixed-Use	154		90
	$	11,365	$	8,155


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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) Employee Segment Room Property
Accounting Policies [Abstract]
Number of employees \| Employee	195
Office, retail, multifamily, and mixed-use operating properties	26
Properties held for development	4
Number of operating segments \| Segment	4
Room in mixed-use segment all-suite hotel \| Room	369
Future minimum lease obligations \| $	$ 37,516

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Supplement Disclosures Related to Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Accounting Policies [Abstract]
Total interest costs incurred	$ 14,277	$ 13,702
Interest capitalized	457	371
Interest expense	13,820	13,331
Cash paid for interest, net of amounts capitalized	14,059	10,708
Cash paid for income taxes	31	46
Accounts payable and accrued liabilities for construction in progress	(706)	577
Accrued leasing commissions	710	193
Reduction to capital for prepaid offering costs	$ 176	$ 0

ACQUIRED IN-PLACE LEASES AND ABOVE/BELOW MARKET LEASES Acquired Lease Intangibles and Leasing Costs Included in Other Assets and Other Liabilities and Deferred Credits (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired above market leases, net	$ 956	$ 1,178
Other intangible assets, accumulated amortization	(1,112)	(1,115)
Below market leases	67,348	67,423
Below market leases, accumulated amortization	(38,103)	(37,241)
Acquired lease intangible liabilities, net	29,245	30,182
Leases, Acquired-in-Place
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired above market leases, net	48,442	54,206
Other intangible assets, accumulated amortization	(40,699)	(45,835)
Above Market Leases
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired above market leases, net	21,262	21,262
Other intangible assets, accumulated amortization	(20,306)	(20,084)
Lease Agreements
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired lease intangible assets, net	$ 8,699	$ 9,549

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - Fair Value, Inputs, Level 2	3 Months Ended
	Mar. 31, 2018
Minimum
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value assumptions, interest rate	3.80%
Maximum
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value assumptions, interest rate	4.90%

FAIR VALUE OF FINANCIAL INSTRUMENTS - Financial Liabilities Fair Value Measurement on a Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation liability	$ 1,224	$ 1,156
Interest rate swap asset	7,941	5,091
Interest rate swap liability	0	10
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation liability	0	0
Interest rate swap asset	0	0
Interest rate swap liability	0	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation liability	1,224	1,156
Interest rate swap asset	7,941	5,091
Interest rate swap liability	0	10
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation liability	0	0
Interest rate swap asset	0	0
Interest rate swap liability	$ 0	$ 0

FAIR VALUE OF FINANCIAL INSTRUMENTS - Carrying Amount and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Secured notes payable, net \| Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	$ 205,486	$ 279,550
Unsecured term loans, net \| Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	248,430	248,839
Unsecured term loans, net \| Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	250,000	250,000
Unsecured senior guaranteed notes, net \| Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	796,748	796,631
Unsecured line of credit, net \| Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	33,031	0
Unsecured line of credit, net \| Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	35,000	0
Fair Value, Inputs, Level 2 \| Secured notes payable, net \| Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	210,402	286,156
Fair Value, Inputs, Level 2 \| Unsecured senior guaranteed notes, net \| Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term debt, fair value	$ 786,549	$ 802,699

DERIVATIVE AND HEDGING ACTIVITIES (Details) - Designated as Hedging Instrument - Cash Flow Hedging - American Assets Trust, L.P.	3 Months Ended
	Mar. 31, 2018 USD ($)
Interest Rate Swap, 1/9/2019 \| Bank of America, N.A.
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Amount	$ 100,000,000
Effective Date	Jan. 09, 2014
Maturity Date	Jan. 09, 2019
Interest rate swap asset	$ 228,000
Interest Rate Swap, 3/1/2023 \| U.S. Bank N.A.
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Amount	$ 100,000,000
Effective Date	Mar. 01, 2016
Maturity Date	Mar. 01, 2023
Interest rate swap asset	$ 5,116,000
Interest Rate Swap, 3/1/2023 \| Wells Fargo Bank, N.A.
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Amount	$ 50,000,000
Effective Date	May 02, 2016
Maturity Date	Mar. 01, 2023
Interest rate swap asset	$ 2,597,000

OTHER ASSETS (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Leasing commissions, net of accumulated amortization of $29,689 and $28,318, respectively	$ 21,089	$ 20,633
Interest rate swap asset	7,941	5,091
Acquired above market leases, net	956	1,178
Acquired in-place leases, net	7,743	8,371
Lease incentives, net of accumulated amortization of $171 and $136, respectively	881	916
Other intangible assets, net of accumulated amortization of $1,112 and $1,115, respectively	214	227
Prepaid expenses and other	6,459	5,945
Total other assets	45,283	42,361
Leasing commissions, accumulative amortization	29,689	28,318
Lease incentives, accumulated amortization	171	136
Other intangible assets, accumulated amortization	$ 1,112	$ 1,115

OTHER LIABILITIES AND DEFERRED CREDITS (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Other Liabilities Disclosure [Abstract]
Acquired below market leases, net	$ 29,245	$ 30,182
Prepaid rent and deferred revenue	10,253	8,429
Interest rate swap liability	0	10
Deferred rent expense and lease intangible	2,248	1,670
Deferred compensation	1,224	1,156
Deferred tax liability	123	123
Straight-line rent liability	5,188	4,428
Other liabilities	67	63
Total other liabilities and deferred credits, net	$ 48,348	$ 46,061

DEBT - Summary of Total Secured Notes Payable Outstanding (Details) - American Assets Trust, L.P. - Secured notes payable, net - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2018

Dec. 31, 2017

Period of amortization schedule (in years)

$ 205,773

$ 279,889

Debt issuance costs, net

(287)

(339)

Total Debt Outstanding

$ 205,486

279,550

30 years

Debt issuance costs, accumulated amortization

$ 798

1,191

Loma Palisades

^[1],[2]

$ 0

73,744

^[1],[2]

6.09%

^[1],[2]

Jul. 01, 2018

One Beach Street

^[1]

$ 21,900

21,900

^[1]

3.94%

Torrey Reserve North Court

^[1]

Apr. 01, 2019

^[3]

$ 19,925

20,023

^[3]

7.22%

^[3]

Jun. 01, 2019

Torrey Reserve

^[3]

$ 6,731

6,764

^[3]

6.36%

Solana Beach Corporate Centre One To Two

^[3]

Jun. 01, 2020

^[3]

$ 10,665

10,721

^[3]

5.91%

Solana Beach Towne Centre

^[3]

Jun. 01, 2020

^[3]

$ 35,552

35,737

^[3]

5.91%

^[3]

Jun. 01, 2020

City Center Bellevue

^[1]

$ 111,000

^[1]

3.98%

^[1]

Nov. 01, 2022

[1]	Interest only.
[2]	Loan repaid in full, without premium or penalty, on March 30, 2018.
[3]	Principal payments based on a 30-year amortization schedule.

DEBT - Summary of Total Unsecured Notes Payable Outstanding (Details) - American Assets Trust, L.P. - USD ($)
$ in Thousands

3 Months Ended

Jun. 23, 2017

May 11, 2017

Jan. 18, 2017

Sep. 19, 2014

Aug. 19, 2014

Mar. 31, 2018

Dec. 31, 2017

Forward Contracts

Gain on derivative settlement

Derivative contract term

7 years

$ 700

$ 10,400

$ 1,600

Loss on derivative settlement

$ 500

Unsecured term loans, net

Debt issuance costs, accumulated amortization

$ 1,050,000

Debt issuance costs, net

(4,822)

(4,530)

Total Debt Outstanding

1,045,178

1,045,470

$ 6,159

5,866

Term Loan A | Interest Rate Swap

Derivative fixed interest rate (in percent)

3.08%

Term Loan A | Unsecured term loans, net

Jan. 09, 2019

Senior Guaranteed Notes, Series A | Forward Contracts

$ 100,000

100,000

Senior Guaranteed Notes, Series A | Unsecured term loans, net

3.88%

^[1]

4.04%

Oct. 31, 2021

Term Loan B | Interest Rate Swap

$ 150,000

Derivative fixed interest rate (in percent)

2.75%

3.15%

Term Loan B | Unsecured term loans, net

Mar. 01, 2023

Term Loan C | Interest Rate Swap

$ 100,000

Derivative fixed interest rate (in percent)

2.74%

3.14%

Term Loan C | Unsecured term loans, net

Mar. 01, 2023

Senior Guaranteed Notes, Series F | Forward Contracts

$ 50,000

Senior Guaranteed Notes, Series F | Unsecured term loans, net

3.85%

^[2]

3.78%

Jul. 19, 2024

Senior Guaranteed Notes, Series B | Unsecured term loans, net

$ 100,000

100,000

4.45%

Feb. 02, 2025

Senior Guaranteed Notes, Series C | Unsecured term loans, net

$ 100,000

100,000

4.50%

Apr. 01, 2025

Senior Guaranteed Notes, Series D | Forward Contracts

$ 100,000

100,000

Senior Guaranteed Notes, Series D | Unsecured term loans, net

3.87%

^[3]

4.29%

Mar. 01, 2027

Senior Guaranteed Notes, Series E | Forward Contracts

$ 250,000

250,000

Senior Guaranteed Notes, Series E | Unsecured term loans, net

4.18%

^[4]

4.24%

May 23, 2029