Quarterly Report (10-q)

Date : 05/03/2019 @ 7:16PM
Source : Edgar (US Regulatory)
Stock : American Assets Trust Inc (AAT)
Quote : 46.96  0.0 (0.00%) @ 12:00AM

Quarterly Report (10-q)

0.010.010.010.0050.0050.0050.0050prime rateEurodollarfederal funds rate2990003850000.101.51.75P12YP15YP13YP14Yfalsefalse--12-31--12-31Q1Q1201920192019-03-312019-03-3110-Q10-Q0001500217000150957048006276falsefalseLarge Accelerated FilerNon-accelerated FilerAMERICAN ASSETS TRUST, INC.AMERICAN ASSETS TRUST, L.P.falsefalseAAT67100068440004060007084000174585863332750.010.0149000000049000000047335409474868940.0170.01350.0120.007LIBORLIBORP7Y2859700029537000100000981000102500047335409474868944733540947486894171776081717760817177608171776087700000 0001500217 2019-01-01 2019-03-31 0001500217 2019-05-03 0001500217 aat:AmericanAssetsTrustL.P.Member 2019-01-01 2019-03-31 0001500217 2019-03-31 0001500217 2018-12-31 0001500217 us-gaap:CommonStockMember 2019-03-31 0001500217 us-gaap:CommonStockMember 2018-12-31 0001500217 2018-01-01 2018-03-31 0001500217 us-gaap:SwapMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001500217 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001500217 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001500217 us-gaap:RetainedEarningsMember 2019-03-31 0001500217 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001500217 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001500217 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0001500217 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001500217 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001500217 us-gaap:NoncontrollingInterestMember 2018-12-31 0001500217 us-gaap:NoncontrollingInterestMember 2019-03-31 0001500217 us-gaap:RetainedEarningsMember 2018-12-31 0001500217 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001500217 us-gaap:SwapMember us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0001500217 us-gaap:SwapMember 2019-01-01 2019-03-31 0001500217 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001500217 us-gaap:SwapMember 2018-01-01 2018-03-31 0001500217 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0001500217 us-gaap:CommonStockMember 2017-12-31 0001500217 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0001500217 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001500217 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0001500217 us-gaap:CommonStockMember 2018-03-31 0001500217 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001500217 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0001500217 us-gaap:RetainedEarningsMember 2017-12-31 0001500217 us-gaap:NoncontrollingInterestMember 2018-01-01 2018-03-31 0001500217 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001500217 us-gaap:SwapMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0001500217 2018-03-31 0001500217 us-gaap:NoncontrollingInterestMember 2018-03-31 0001500217 us-gaap:NoncontrollingInterestMember 2017-12-31 0001500217 2017-12-31 0001500217 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001500217 us-gaap:SwapMember us-gaap:NoncontrollingInterestMember 2018-01-01 2018-03-31 0001500217 us-gaap:RetainedEarningsMember 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member 2018-01-01 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:LimitedPartnerMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:GeneralPartnerMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:GeneralPartnerMember 2018-01-01 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:LimitedPartnerMember 2018-01-01 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:LimitedPartnerMember 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:LimitedPartnerMember 2017-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:GeneralPartnerMember 2017-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:GeneralPartnerMember 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:SwapMember 2018-01-01 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member 2017-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:SwapMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:LimitedPartnerMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:GeneralPartnerMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:SwapMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:GeneralPartnerMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:SwapMember us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:LimitedPartnerMember 2018-12-31 0001500217 2019-01-01 0001500217 us-gaap:AboveMarketLeasesMember 2018-12-31 0001500217 us-gaap:LeaseAgreementsMember 2019-03-31 0001500217 us-gaap:AboveMarketLeasesMember 2019-03-31 0001500217 us-gaap:LeaseAgreementsMember 2018-12-31 0001500217 us-gaap:LeasesAcquiredInPlaceMember 2019-03-31 0001500217 us-gaap:LeasesAcquiredInPlaceMember 2018-12-31 0001500217 srt:MaximumMember us-gaap:FairValueInputsLevel2Member 2019-03-31 0001500217 srt:MinimumMember us-gaap:FairValueInputsLevel2Member 2019-03-31 0001500217 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001500217 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001500217 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001500217 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001500217 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001500217 us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001500217 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001500217 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-03-31 0001500217 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-12-31 0001500217 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-03-31 0001500217 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2019-03-31 0001500217 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0001500217 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:LineOfCreditMember 2018-12-31 0001500217 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:LineOfCreditMember 2019-03-31 0001500217 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:LineOfCreditMember 2018-12-31 0001500217 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SeniorNotesMember 2018-12-31 0001500217 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:LineOfCreditMember 2019-03-31 0001500217 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SeniorNotesMember 2019-03-31 0001500217 us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorNotesMember 2019-03-31 0001500217 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:SecuredDebtMember 2018-12-31 0001500217 us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:U.S.BankN.A.Member aat:InterestRateSwap312023Member us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:U.S.BankN.A.Member aat:InterestRateSwap312023Member us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:WellsFargoBankN.A.Member aat:InterestRateSwap312023Member us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:WellsFargoBankN.A.Member aat:InterestRateSwap312023Member us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:BankofAmericaN.A.Member aat:InterestRateSwap192021Member us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:BankofAmericaN.A.Member aat:InterestRateSwap192021Member us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesAMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesBMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanBMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesCMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesDMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanAMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesFMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesBMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesFMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesFMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesAMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesBMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesEMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesAMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanCMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesCMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanBMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesCMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanCMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesDMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanAMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesDMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesEMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanAMember us-gaap:UnsecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanBMember us-gaap:UnsecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanCMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesEMember us-gaap:UnsecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TorreyReserveNorthCourtMember us-gaap:SecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:SecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SolanaBeachTowneCentreMember us-gaap:SecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:CityCenterBellevueMember us-gaap:SecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TorreyReserveMember us-gaap:SecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:CityCenterBellevueMember us-gaap:SecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TorreyReserveMember us-gaap:SecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SolanaBeachTowneCentreMember us-gaap:SecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TorreyReserveNorthCourtMember us-gaap:SecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:CityCenterBellevueMember us-gaap:SecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TorreyReserveNorthCourtMember us-gaap:SecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SolanaBeachCorporateCentreOneToTwoMember us-gaap:SecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TorreyReserveMember us-gaap:SecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SolanaBeachCorporateCentreOneToTwoMember us-gaap:SecuredDebtMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:SecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SolanaBeachCorporateCentreOneToTwoMember us-gaap:SecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SolanaBeachTowneCentreMember us-gaap:SecuredDebtMember 2018-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:RevolvingCreditFacilityMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesFMember us-gaap:ForwardContractsMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:ForwardContractsMember 2017-01-18 2017-01-18 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesDMember us-gaap:ForwardContractsMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanAMember us-gaap:InterestRateSwapMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanBMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:UnsecuredDebtMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanAMember us-gaap:UnsecuredDebtMember 2019-01-09 2019-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:UnsecuredDebtMember 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember aat:TermLoanAMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-09 2019-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember us-gaap:RevolvingCreditFacilityMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanBMember us-gaap:InterestRateSwapMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember aat:TermLoanBMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember aat:TermLoanBMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanAMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-09 2019-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanAMember us-gaap:UnsecuredDebtMember us-gaap:BaseRateMember 2019-01-09 2019-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:ForwardContractsMember 2017-05-11 2017-05-11 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanBMember us-gaap:UnsecuredDebtMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesAMember us-gaap:ForwardContractsMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:ForwardContractsMember 2014-09-19 2014-09-19 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:UnsecuredDebtMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember us-gaap:RevolvingCreditFacilityMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SecondAmendedandRestatedCreditFacilityMember 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember aat:TermLoanAMember us-gaap:BaseRateMember 2019-01-09 2019-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember aat:TermLoanAMember us-gaap:BaseRateMember 2019-01-09 2019-01-09 0001500217 us-gaap:LineOfCreditMember 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember aat:TermLoanBMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:RevolvingCreditFacilityMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanCMember us-gaap:InterestRateSwapMember 2017-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember aat:TermLoanAMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-09 2019-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanBMember us-gaap:InterestRateSwapMember 2017-12-31 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember us-gaap:RevolvingCreditFacilityMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember aat:TermLoanBMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanCMember us-gaap:InterestRateSwapMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:ForwardContractsMember 2017-06-23 2017-06-23 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember us-gaap:RevolvingCreditFacilityMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:SecuredDebtMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanBTermLoanCMember us-gaap:UnsecuredDebtMember 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:SeniorGuaranteedNotesSeriesEMember us-gaap:ForwardContractsMember 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanBMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:RevolvingCreditFacilityMember aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanAMember us-gaap:UnsecuredDebtMember 2019-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:ForwardContractsMember 2014-08-19 2014-08-19 0001500217 aat:TermLoanAMember us-gaap:UnsecuredDebtMember aat:FederalFundsRateMember 2019-01-09 2019-01-09 0001500217 aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:TermLoanAMember us-gaap:UnsecuredDebtMember us-gaap:EurodollarMember 2019-01-09 2019-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanCMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember aat:TermLoanCMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanCMember us-gaap:UnsecuredDebtMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:TermLoanCMember us-gaap:UnsecuredDebtMember us-gaap:EurodollarMember 2018-01-09 2018-01-09 0001500217 aat:TermLoanBMember us-gaap:UnsecuredDebtMember us-gaap:EurodollarMember 2016-03-01 2016-03-01 0001500217 aat:SecondAmendedandRestatedCreditFacilityMember us-gaap:LineOfCreditMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember aat:TermLoanCMember us-gaap:BaseRateMember 2018-01-09 2018-01-09 0001500217 aat:TermLoanCMember us-gaap:UnsecuredDebtMember aat:FederalFundsRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member aat:TermLoanCMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MinimumMember aat:TermLoanCMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:TermLoanBMember us-gaap:UnsecuredDebtMember aat:FederalFundsRateMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member srt:MaximumMember aat:TermLoanCMember us-gaap:UnsecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-01-09 2018-01-09 0001500217 aat:AmericanAssetsTrustL.P.Member us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsTrustL.P.Member aat:OperatingPartnershipUnitsMember 2019-01-01 2019-03-31 0001500217 us-gaap:SubsequentEventMember aat:AtMarketEquityProgramMember 2019-04-02 2019-04-02 0001500217 aat:AtMarketEquityProgramMember 2018-03-02 2018-03-02 0001500217 aat:AtMarketEquityProgramMember 2019-03-31 0001500217 aat:AtMarketEquityProgramMember 2015-05-27 0001500217 aat:AtMarketEquityProgramMember 2015-05-27 2015-05-27 0001500217 aat:OtherOfferingCostsMember aat:AtMarketEquityProgramMember 2019-01-01 2019-03-31 0001500217 aat:AtMarketEquityProgramMember 2019-01-01 2019-03-31 0001500217 aat:CommissionsMember aat:AtMarketEquityProgramMember 2019-01-01 2019-03-31 0001500217 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-03-31 0001500217 us-gaap:RestrictedStockUnitsRSUMember 2019-03-31 0001500217 us-gaap:RestrictedStockUnitsRSUMember 2018-12-31 0001500217 aat:OperatingPartnershipUnitsMember 2019-01-01 2019-03-31 0001500217 aat:OperatingPartnershipUnitsMember 2018-01-01 2018-03-31 0001500217 aat:OutriggerHotelsAndResortsMember 2019-01-01 2019-03-31 0001500217 aat:WbwHotelLesseeLlcMember 2019-01-01 2019-03-31 0001500217 aat:TotalRevenuesMember aat:OfficeSegmentMember 2019-01-01 2019-03-31 0001500217 aat:FutureTimePeriodAfterMember aat:WbwHotelLesseeLlcMember 2019-03-31 0001500217 aat:WaikikiBeachWalkRetailMember 2019-01-01 2019-03-31 0001500217 aat:FutureTimePeriodPriorMember aat:WbwHotelLesseeLlcMember 2019-03-31 0001500217 aat:TotalRevenuesMember aat:RetailSegmentMember 2019-01-01 2019-03-31 0001500217 srt:MaximumMember aat:OutriggerHotelsAndResortsMember 2019-01-01 2019-03-31 0001500217 srt:MinimumMember aat:DelMonteCenterAffiliatesMember 2019-01-01 2019-03-31 0001500217 srt:MaximumMember aat:DelMonteCenterAffiliatesMember 2019-01-01 2019-03-31 0001500217 aat:FutureYearPeriodTwoMember aat:OutriggerHotelsAndResortsMember 2019-01-01 2019-03-31 0001500217 aat:FutureYearPeriodFourMember aat:OutriggerHotelsAndResortsMember 2019-01-01 2019-03-31 0001500217 aat:FutureYearPeriodThreeMember aat:OutriggerHotelsAndResortsMember 2019-01-01 2019-03-31 0001500217 aat:FutureYearPeriodOneMember aat:OutriggerHotelsAndResortsMember 2019-01-01 2019-03-31 0001500217 aat:LandMarkAtOneMarketMember 2019-01-01 2019-03-31 0001500217 srt:MaximumMember 2019-01-01 2019-03-31 0001500217 aat:LandMarkAtOneMarketMember 2019-03-31 0001500217 srt:MinimumMember 2019-01-01 2019-03-31 0001500217 aat:MultifamilySegmentMember 2018-01-01 2018-03-31 0001500217 aat:OfficeSegmentMember 2019-01-01 2019-03-31 0001500217 aat:RetailSegmentMember 2018-01-01 2018-03-31 0001500217 aat:MixedUseSegmentMember 2019-01-01 2019-03-31 0001500217 aat:OfficeSegmentMember 2018-01-01 2018-03-31 0001500217 aat:MultifamilySegmentMember 2019-01-01 2019-03-31 0001500217 aat:RetailSegmentMember 2019-01-01 2019-03-31 0001500217 aat:MixedUseSegmentMember 2018-01-01 2018-03-31 0001500217 aat:WBWCHPLLCMember 2018-01-01 2018-03-31 0001500217 aat:AAIAviationInc.Member us-gaap:BoardOfDirectorsChairmanMember 2018-01-01 2018-03-31 0001500217 aat:InsuranceCompanyoftheWestIncMember us-gaap:BoardOfDirectorsChairmanMember 2017-07-01 0001500217 aat:AmericanAssetsInc.Member us-gaap:BoardOfDirectorsChairmanMember us-gaap:ScenarioForecastMember 2019-01-01 2019-12-31 0001500217 aat:AAIAviationInc.Member us-gaap:BoardOfDirectorsChairmanMember 2019-01-01 2019-03-31 0001500217 aat:WBWCHPLLCMember 2019-01-01 2019-03-31 0001500217 aat:AmericanAssetsInc.Member us-gaap:BoardOfDirectorsChairmanMember 2019-03-31 0001500217 aat:MixedUseSegmentMember 2018-12-31 0001500217 aat:OfficeSegmentMember 2018-12-31 0001500217 aat:MultifamilySegmentMember 2018-12-31 0001500217 aat:RetailSegmentMember 2018-12-31 0001500217 aat:MixedUseSegmentMember 2019-03-31 0001500217 aat:OfficeSegmentMember 2019-03-31 0001500217 aat:MultifamilySegmentMember 2019-03-31 0001500217 aat:RetailSegmentMember 2019-03-31 aat:Segment aat:Room iso4217:USD xbrli:shares xbrli:shares xbrli:pure aat:Extension_Option iso4217:USD aat:Property aat:Employee utreg:M aat:Agent

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             

 
AMERICAN ASSETS TRUST, INC.
(Exact Name of Registrant as Specified in its Charter)
Commission file number: 001-35030

AMERICAN ASSETS TRUST, L.P.
(Exact Name of Registrant as Specified in its Charter)
Commission file number: 333-202342-01
 
 
 
Maryland (American Assets Trust, Inc.)
27-3338708 (American Assets Trust, Inc.)
 
Maryland (American Assets Trust, L.P.)
27-3338894 (American Assets Trust, L.P.)
 
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
 
 
 
 
11455 El Camino Real, Suite 200,
San Diego, California
(Address of Principal Executive Offices)
92130
(Zip Code)
 
(858) 350-2600
(Registrant’s Telephone Number, Including Area Code)
 
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    

American Assets Trust, Inc.              x   Yes    o    No
American Assets Trust, L.P.             x   Yes    o   No
(American Assets Trust, L.P. became subject to filing requirements under Section 13 of the Securities Exchange Act of 1934, as amended, upon effectiveness of its Registration Statement on Form S-3 on February 6, 2015 and has filed all required reports subsequent to that date.)
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).    
    
American Assets Trust, Inc.              x   Yes    o    No
American Assets Trust, L.P.             x   Yes    o    No
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
American Assets Trust, Inc.
Large Accelerated Filer
x
 
Accelerated Filer
o
Non-Accelerated Filer
o
(Do not check if a smaller reporting company)
Smaller reporting company
o
Emerging growth company
o
 
 
 

American Assets Trust, L.P.
Large Accelerated Filer
o
 
Accelerated Filer
o
Non-Accelerated Filer
x
(Do not check if a smaller reporting company)
Smaller reporting company
o
Emerging growth company
o
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
 
 
 
 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      
    
American Assets Trust, Inc.              o   Yes     x   No
American Assets Trust, L.P.             o   Yes     x   No

Securities registered pursuant to Section 12(b) of the Act:
Name of Registrant
Title of each class
Trading Symbol
Name of each exchange on which registered
American Assets Trust, Inc.
Common Stock, par value $0.01 per share
AAT
New York Stock Exchange
American Assets Trust, L.P.
None
None
None

American Assets Trust, Inc. had 48,006,276 shares of common stock, par value $0.01 per share, outstanding as of May 3, 2019 .




EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended  March 31, 2019  of American Assets Trust, Inc., a Maryland corporation, and American Assets Trust, L.P., a Maryland limited partnership, of which American Assets Trust, Inc. is the parent company and sole general partner. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our” or “the company” refer to American Assets Trust, Inc. together with its consolidated subsidiaries, including American Assets Trust, L.P. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “our Operating Partnership” or “the Operating Partnership” refer to American Assets Trust, L.P. together with its consolidated subsidiaries.

American Assets Trust, Inc. operates as a real estate investment trust, or REIT, and is the sole general partner of the Operating Partnership. As of  March 31, 2019 , American Assets Trust, Inc. owned an approximate  73.3%  partnership interest in the Operating Partnership. The remaining 26.7% partnership interests are owned by non-affiliated investors and certain of our directors and executive officers. As the sole general partner of the Operating Partnership, American Assets Trust, Inc. has full, exclusive and complete authority and control over the Operating Partnership’s day-to-day management and business, can cause it to enter into certain major transactions, including acquisitions, dispositions and refinancings, and can cause changes in its line of business, capital structure and distribution policies.

The company believes that combining the quarterly reports on Form 10-Q of American Assets Trust, Inc. and the Operating Partnership into a single report will result in the following benefits:

better reflects how management and the analyst community view the business as a single operating unit;
enhance investors' understanding of American Assets Trust, Inc. and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;
greater efficiency for American Assets Trust, Inc. and the Operating Partnership and resulting savings in time, effort and expense; and
greater efficiency for investors by reducing duplicative disclosure by providing a single document for their review.

Management operates American Assets Trust, Inc. and the Operating Partnership as one enterprise. The management of American Assets Trust, Inc. and the Operating Partnership are the same.

There are a few differences between American Assets Trust, Inc. and the Operating Partnership, which are reflected in the disclosures in this report. We believe it is important to understand the differences between American Assets Trust, Inc. and the Operating Partnership in the context of how American Assets Trust, Inc. and the Operating Partnership operate as an interrelated consolidated company. American Assets Trust, Inc. is a REIT, whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, American Assets Trust, Inc. does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing certain debt of the Operating Partnership. American Assets Trust, Inc. itself does not hold any indebtedness. The Operating Partnership holds substantially all the assets of the company, directly or indirectly holds the ownership interests in the company’s real estate ventures, conducts the operations of the business and is structured as a partnership with no publicly-traded equity. Except for net proceeds from public equity issuances by American Assets Trust, Inc., which are generally contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the company’s business through the Operating Partnership’s operations, by the Operating Partnership’s direct or indirect incurrence of indebtedness or through the issuance of operating partnership units.

Noncontrolling interests and stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of American Assets Trust, Inc. and those of American Assets Trust, L.P. The partnership interests in the Operating Partnership that are not owned by American Assets Trust, Inc. are accounted for as partners’ capital in the Operating Partnership’s financial statements and as noncontrolling interests in American Assets Trust, Inc.’s financial statements. To help investors understand the significant differences between the company and the Operating Partnership, this report presents the following separate sections for each of American Assets Trust, Inc. and the Operating Partnership:

consolidated financial statements;
the following notes to the consolidated financial statements:
Debt;
Equity/Partners' Capital; and
Earnings Per Share/Unit; and
Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations.




This report also includes separate Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of American Assets Trust, Inc. and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of American Assets Trust, Inc. have made the requisite certifications and American Assets Trust, Inc. and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.





AMERICAN ASSETS TRUST, INC. AND AMERICAN ASSETS TRUST, L.P.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2019
 
PART 1. FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
 
Consolidated Financial Statements of American Assets Trust, Inc.:
 
 
 
 
 
 
 
 
 
 
Consolidated Financial Statements of American Assets Trust, L.P.:
 
 
 
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



American Assets Trust, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share Data)
 
 
March 31,
 
December 31,
 
2019
 
2018
 
(unaudited)
 
 
ASSETS
 
 
 
Real estate, at cost
 
 
 
Operating real estate
$
2,569,407

 
$
2,549,571

Construction in progress
77,094

 
71,228

Held for development
9,392

 
9,392

 
2,655,893

 
2,630,191

Accumulated depreciation
(609,020
)
 
(590,338
)
Net real estate
2,046,873

 
2,039,853

Cash and cash equivalents
54,538

 
47,956

Restricted cash
9,777

 
9,316

Accounts receivable, net
9,137

 
9,289

Deferred rent receivables, net
40,554

 
39,815

Other assets, net
56,169

 
52,021

TOTAL ASSETS
$
2,217,048

 
$
2,198,250

LIABILITIES AND EQUITY
 
 
 
LIABILITIES:
 
 
 
Secured notes payable, net
$
162,688

 
$
182,572

Unsecured notes payable, net
1,045,709

 
1,045,863

Unsecured line of credit, net
86,438

 
62,337

Accounts payable and accrued expenses
53,683

 
46,616

Security deposits payable
7,579

 
8,844

Other liabilities and deferred credits, net
55,618

 
49,547

Total liabilities
1,411,715

 
1,395,779

Commitments and contingencies (Note 11)

 


EQUITY:
 
 
 
American Assets Trust, Inc. stockholders’ equity
 
 
 
Common stock, $0.01 par value, 490,000,000 shares authorized, 47,486,894 and 47,335,409 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
475

 
474

Additional paid-in capital
928,792

 
920,661

Accumulated dividends in excess of net income
(130,841
)
 
(128,778
)
Accumulated other comprehensive income
8,825

 
10,620

Total American Assets Trust, Inc. stockholders’ equity
807,251

 
802,977

Noncontrolling interests
(1,918
)
 
(506
)
Total equity
805,333

 
802,471

TOTAL LIABILITIES AND EQUITY
$
2,217,048

 
$
2,198,250

The accompanying notes are an integral part of these consolidated financial statements.

1


American Assets Trust, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
(In Thousands, Except Shares and Per Share Data)
 
Three Months Ended March 31,
 
2019
 
2018
REVENUE:
 
 
 
Rental income
$
76,831

 
$
76,201

Other property income
8,488

 
4,531

Total revenue
85,319

 
80,732

EXPENSES:
 
 
 
Rental expenses
20,796

 
20,420

Real estate taxes
9,046

 
8,546

General and administrative
6,073

 
5,567

Depreciation and amortization
20,583

 
33,279

Total operating expenses
56,498

 
67,812

OPERATING INCOME
28,821

 
12,920

Interest expense
(13,349
)
 
(13,820
)
Other (expense) income, net
(229
)
 
209

NET INCOME (LOSS)
15,243

 
(691
)
Net (income) loss attributable to restricted shares
(93
)
 
72

Net (income) loss attributable to unitholders in the Operating Partnership
(4,055
)
 
166

NET INCOME (LOSS) ATTRIBUTABLE TO AMERICAN ASSETS TRUST, INC. STOCKHOLDERS
$
11,095

 
$
(453
)
 
 
 
 
EARNINGS (LOSS) PER COMMON SHARE
 
 
 
Earnings (loss) per common share, basic
$
0.24

 
$
(0.01
)
Weighted average shares of common stock outstanding - basic
47,004,465

 
46,935,820

 
 
 
 
Earnings (loss) per common share, diluted
$
0.24

 
$
(0.01
)
Weighted average shares of common stock outstanding - diluted
64,182,073

 
46,935,820

 
 
 
 
DIVIDENDS DECLARED PER COMMON SHARE
$
0.28

 
$
0.27

 
 
 
 
COMPREHENSIVE INCOME
 
 
 
Net income (loss)
$
15,243

 
$
(691
)
Other comprehensive (loss) income - unrealized (loss) income on swap derivative during the period
(2,132
)
 
2,861

Reclassification of amortization of forward-starting swap included in interest expense
(320
)
 
(320
)
Comprehensive income
12,791

 
1,850

Comprehensive income attributable to non-controlling interest
(3,398
)
 
(502
)
Comprehensive income attributable to American Assets Trust, Inc.
$
9,393

 
$
1,348


The accompanying notes are an integral part of these consolidated financial statements.

2


American Assets Trust, Inc.
Consolidated Statement of Equity
(Unaudited)
(In Thousands, Except Share Data)
 
 
American Assets Trust, Inc. Stockholders’ Equity
 
Noncontrolling Interests - Unitholders in the Operating Partnership
 
Total
 
Common Shares
 
Additional
Paid-in
Capital
 
Accumulated
Dividends in
Excess of Net
Income
 
Accumulated Other Comprehensive Income (Loss)
 
 
Shares
 
Amount
 
 
Balance at December 31, 2018
47,335,409

 
$
474

 
$
920,661

 
$
(128,778
)
 
$
10,620

 
$
(506
)
 
$
802,471

Net income

 

 

 
11,188

 

 
4,055

 
15,243

Common shares issued
162,531

 
1

 
7,033

 

 

 

 
7,034

Forfeiture of restricted stock
(11,046
)
 

 

 

 

 

 

Dividends declared and paid

 

 

 
(13,251
)
 

 
(4,810
)
 
(18,061
)
Stock-based compensation

 

 
1,098

 

 

 

 
1,098

Other comprehensive income - change in value of interest rate swaps

 

 

 

 
(1,561
)
 
(571
)
 
(2,132
)
Reclassification of amortization of forward-starting swap included in interest expense

 

 

 

 
(234
)
 
(86
)
 
(320
)
Balance at March 31, 2019
47,486,894

 
$
475

 
$
928,792

 
$
(130,841
)
 
$
8,825

 
$
(1,918
)
 
$
805,333

 
American Assets Trust, Inc. Stockholders’ Equity
 
Noncontrolling Interests - Unitholders in the Operating Partnership
 
Total
 
Common Shares
 
Additional
Paid-in
Capital
 
Accumulated
Dividends in
Excess of Net
Income
 
Accumulated Other Comprehensive Income (Loss)
 
 
Shares
 
Amount
 
 
Balance at December 31, 2017
47,204,588

 
$
473

 
$
919,066

 
$
(97,280
)
 
$
11,451

 
$
10,434

 
$
844,144

Net loss

 

 

 
(525
)
 

 
(166
)
 
(691
)
Forfeiture of restricted stock
(1,104
)
 

 

 

 

 

 

Dividends declared and paid

 

 

 
(12,745
)
 

 
(4,643
)
 
(17,388
)
Stock-based compensation

 

 
727

 

 

 

 
727

Other comprehensive income - change in value of interest rate swaps

 

 

 

 
2,107

 
754

 
2,861

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

 

 

 

 
(234
)
 
(86
)
 
(320
)
Balance at March 31, 2018
47,203,484

 
$
473

 
$
919,793

 
$
(110,550
)
 
$
13,324

 
$
6,293

 
$
829,333




The accompanying notes are an integral part of these consolidated financial statements.

3


American Assets Trust, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
 
Three Months Ended March 31,
 
2019
 
2018
OPERATING ACTIVITIES
 
 
 
Net income (loss)
$
15,243

 
$
(691
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Deferred rent revenue and amortization of lease intangibles
(1,111
)
 
47

Depreciation and amortization
20,583

 
33,279

Amortization of debt issuance costs and debt fair value adjustments
368

 
446

Stock-based compensation expense
1,098

 
727

Lease termination income
(4,518
)
 

Other noncash interest expense
(320
)
 
(320
)
Other, net
678

 
2,031

Changes in operating assets and liabilities
 
 
 
Change in accounts receivable
466

 
577

Change in other assets
45

 
(337
)
Change in accounts payable and accrued expenses
7,150

 
5,434

Change in security deposits payable
(1,265
)
 
2,113

Change in other liabilities and deferred credits
(1,586
)
 
666

Net cash provided by operating activities
36,831

 
43,972

INVESTING ACTIVITIES
 
 
 
Capital expenditures
(20,932
)
 
(10,138
)
Leasing commissions
(1,505
)
 
(1,227
)
Net cash used in investing activities
(22,437
)
 
(11,365
)
FINANCING ACTIVITIES
 
 
 
Repayment of secured notes payable
(19,909
)
 
(74,116
)
Proceeds from unsecured line of credit
24,000


35,000

Debt issuance costs
(415
)
 
(2,656
)
Proceeds from issuance of common stock, net
7,034

 
(176
)
Dividends paid to common stock and unitholders
(18,061
)
 
(17,388
)
Net cash used in financing activities
(7,351
)
 
(59,336
)
Net increase (decrease) in cash and cash equivalents
7,043

 
(26,729
)
Cash, cash equivalents and restricted cash, beginning of period
57,272

 
91,954

Cash, cash equivalents and restricted cash, end of period
$
64,315

 
$
65,225


The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statement of cash flows:
 
Three Months Ended March 31,
 
2019
 
2018
Cash and cash equivalents
$
54,538

 
$
55,336

Restricted cash
9,777

 
9,889

Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows
$
64,315

 
$
65,225

The accompanying notes are an integral part of these consolidated financial statements.

4


American Assets Trust, L.P.
Consolidated Balance Sheets
(In Thousands, Except Unit Data)
 
 
March 31,
 
December 31,
 
2019
 
2018
 
(unaudited)
 
 
ASSETS
 
 
 
Real estate, at cost
 
 
 
Operating real estate
$
2,569,407

 
$
2,549,571

Construction in progress
77,094

 
71,228

Held for development
9,392

 
9,392

 
2,655,893

 
2,630,191

Accumulated depreciation
(609,020
)
 
(590,338
)
Net real estate
2,046,873

 
2,039,853

Cash and cash equivalents
54,538

 
47,956

Restricted cash
9,777

 
9,316

Accounts receivable, net
9,137

 
9,289

Deferred rent receivables, net
40,554

 
39,815

Other assets, net
56,169

 
52,021

TOTAL ASSETS
$
2,217,048

 
$
2,198,250

LIABILITIES AND CAPITAL
 
 
 
LIABILITIES:
 
 
 
Secured notes payable, net
$
162,688

 
$
182,572

Unsecured notes payable, net
1,045,709

 
1,045,863

Unsecured line of credit, net
86,438

 
62,337

Accounts payable and accrued expenses
53,683

 
46,616

Security deposits payable
7,579

 
8,844

Other liabilities and deferred credits
55,618

 
49,547

Total liabilities
1,411,715

 
1,395,779

Commitments and contingencies (Note 11)

 


CAPITAL:
 
 
 
Limited partners' capital, 17,177,608 and 17,177,608 units issued and outstanding as of March 31, 2019 and December 31, 2018, respectively
(5,232
)
 
(4,477
)
General partner's capital, 47,486,894 and 47,335,409 units issued and outstanding as of March 31, 2019 and December 31, 2018, respectively
798,426

 
792,357

Accumulated other comprehensive income
12,139

 
14,591

Total capital
805,333

 
802,471

TOTAL LIABILITIES AND CAPITAL
$
2,217,048

 
$
2,198,250


The accompanying notes are an integral part of these consolidated financial statements.


5


American Assets Trust, L.P.
Consolidated Statements of Comprehensive Income
(Unaudited)
(In Thousands, Except Shares and Per Unit Data)
 
Three Months Ended March 31,
 
2019
 
2018
REVENUE:
 
 
 
Rental income
$
76,831

 
$
76,201

Other property income
8,488

 
4,531

Total revenue
85,319

 
80,732

EXPENSES:
 
 
 
Rental expenses
20,796

 
20,420

Real estate taxes
9,046

 
8,546

General and administrative
6,073

 
5,567

Depreciation and amortization
20,583

 
33,279

Total operating expenses
56,498

 
67,812

OPERATING INCOME
28,821

 
12,920

Interest expense
(13,349
)
 
(13,820
)
Other (expense) income, net
(229
)
 
209

NET INCOME (LOSS)
15,243

 
(691
)
Net income (loss) attributable to restricted shares
(93
)
 
72

NET INCOME (LOSS) ATTRIBUTABLE TO AMERICAN ASSETS TRUST, L.P.
$
15,150

 
$
(619
)
 
 
 
 
EARNINGS (LOSS) PER UNIT - BASIC
 
 
 
Earnings (loss) per unit, basic
$
0.24

 
$
(0.01
)
Weighted average units outstanding - basic
64,182,073

 
64,130,800

 
 
 
 
EARNINGS (LOSS) PER UNIT - DILUTED
 
 
 
Earnings (loss) per unit, diluted
$
0.24

 
$
(0.01
)
Weighted average units outstanding - diluted
64,182,073

 
64,130,800

 
 
 
 
DISTRIBUTIONS PER UNIT
$
0.28

 
$
0.27

 
 
 
 
COMPREHENSIVE INCOME
 
 
 
Net income (loss)
$
15,243

 
$
(691
)
Other comprehensive income (loss) - unrealized income (loss) on swap derivative during the period
(2,132
)
 
2,861

Reclassification of amortization of forward-starting swap included in interest expense
(320
)
 
(320
)
Comprehensive income
12,791

 
1,850

Comprehensive income attributable to Limited Partners
(3,398
)
 
(502
)
Comprehensive income attributable to General Partner
$
9,393

 
$
1,348


The accompanying notes are an integral part of these consolidated financial statements.


6


American Assets Trust, L.P.
Consolidated Statement of Partners' Capital
(Unaudited)
(In Thousands, Except Unit Data)
 
 
Limited Partners' Capital (1)
 
General Partner's Capital (2)
 
Accumulated Other Comprehensive Income (Loss)
 
Total Capital
 
Units
 
Amount
 
Units
 
Amount
 
Balance at December 31, 2018
17,177,608

 
$
(4,477
)
 
47,335,409

 
$
792,357

 
$
14,591

 
$
802,471

Net income

 
4,055

 

 
11,188

 

 
15,243

Contributions from American Assets Trust, Inc.

 

 
162,531

 
7,034

 

 
7,034

Forfeiture of restricted units

 

 
(11,046
)
 

 

 

Distributions

 
(4,810
)
 

 
(13,251
)
 

 
(18,061
)
Stock-based compensation

 

 

 
1,098

 

 
1,098

Other comprehensive income - change in value of interest rate swap

 

 

 

 
(2,132
)
 
(2,132
)
Reclassification of amortization of forward-starting swap included in interest expense

 

 

 

 
(320
)
 
(320
)
Balance at March 31, 2019
17,177,608

 
$
(5,232
)
 
47,486,894

 
$
798,426

 
$
12,139

 
$
805,333


 
Limited Partners' Capital (1)
 
General Partner's Capital (2)
 
Accumulated Other Comprehensive Income (Loss)
 
Total Capital
 
Units
 
Amount
 
Units
 
Amount
 
Balance at December 31, 2017
17,194,980

 
$
6,135

 
47,204,588

 
$
822,259

 
$
15,750

 
$
844,144

Net loss

 
(166
)
 

 
(525
)
 

 
(691
)
Forfeiture of restricted units

 

 
(1,104
)
 

 

 

Distributions

 
(4,643
)
 

 
(12,745
)
 

 
(17,388
)
Stock-based compensation

 

 

 
727

 

 
727

Other comprehensive income - change in value of interest rate swap

 

 

 

 
2,861

 
2,861

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

 

 

 

 
(320
)
 
(320
)
Balance at March 31, 2018
17,194,980

 
$
1,326

 
47,203,484

 
$
809,716

 
$
18,291

 
$
829,333



(1) Consists of limited partnership interests held by third parties.
(2) Consists of general partnership interests held by American Assets Trust, Inc.
The accompanying notes are an integral part of these consolidated financial statements.


7


American Assets Trust, L.P.
Consolidated Statements of Cash Flows
(Unaudited, In Thousands)
 
Three Months Ended March 31,
 
2019
 
2018
OPERATING ACTIVITIES
 
 
 
Net income (loss)
$
15,243

 
$
(691
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Deferred rent revenue and amortization of lease intangibles
(1,111
)
 
47

Depreciation and amortization
20,583

 
33,279

Amortization of debt issuance costs and debt fair value adjustments
368

 
446

Stock-based compensation expense
1,098

 
727

Lease termination income
(4,518
)
 

Other noncash interest expense
(320
)
 
(320
)
Other, net
678

 
2,031

Changes in operating assets and liabilities
 
 
 
Change in accounts receivable
466

 
577

Change in other assets
45

 
(337
)
Change in accounts payable and accrued expenses
7,150

 
5,434

Change in security deposits payable
(1,265
)
 
2,113

Change in other liabilities and deferred credits
(1,586
)
 
666

Net cash provided by operating activities
36,831

 
43,972

INVESTING ACTIVITIES
 
 
 
Capital expenditures
(20,932
)
 
(10,138
)
Leasing commissions
(1,505
)
 
(1,227
)
Net cash used in investing activities
(22,437
)
 
(11,365
)
FINANCING ACTIVITIES
 
 
 
Repayment of secured notes payable
(19,909
)
 
(74,116
)
Proceeds from unsecured line of credit
24,000

 
35,000

Debt issuance costs
(415
)
 
(2,656
)
Contributions from American Assets Trust, Inc.
7,034

 
(176
)
Distributions
(18,061
)
 
(17,388
)
Net cash used in financing activities
(7,351
)
 
(59,336
)
Net increase (decrease) in cash and cash equivalents
7,043

 
(26,729
)
Cash, cash equivalents and restricted cash, beginning of period
57,272

 
91,954

Cash, cash equivalents and restricted cash, end of period
$
64,315

 
$
65,225


The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statement of cash flows:
 
Three Months Ended March 31,
 
2019
 
2018
Cash and cash equivalents
$
54,538

 
$
55,336

Restricted cash
9,777

 
9,889

Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows
$
64,315

 
$
65,225

The accompanying notes are an integral part of these consolidated financial statements.


8

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements
March 31, 2019
(Unaudited)



NOTE 1. 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 186 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, 2019 , we owned or had a controlling interest in 27 office, retail, multifamily and mixed-use operating properties, the operations of which we consolidate. Additionally, as of March 31, 2019 , we owned land at three 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
First & Main
 
Torrey Point
Lloyd District Portfolio
 
Solana Crossing (formerly Solana Beach Corporate Centre)
City Center Bellevue
 
The Landmark at One Market
 
 
One Beach Street
 
 
 
 
 
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 Crossing – Land
Solana Beach – Highway 101 – Land
Lloyd District Portfolio – Construction in Progress


9

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


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, 2018 .
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,
 
2019
 
2018
Supplemental cash flow information
 
 
 
Total interest costs incurred
$
13,534

 
$
14,277

Interest capitalized
$
185

 
$
457

Interest expense
$
13,349

 
$
13,820

Cash paid for interest, net of amounts capitalized
$
13,301

 
$
14,059

Cash paid for income taxes
$
157

 
$
31

Supplemental schedule of noncash investing and financing activities
 

 
 

Accounts payable and accrued liabilities for construction in progress
$
12,838

 
$
5,674

Accrued leasing commissions
$
663

 
$
710

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, 2018 . Except for the adoption of the accounting standards during the first quarter of 2019 as discussed below, there have been no changes to our significant accounting policies during the three months ended March 31, 2019 .
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

10

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


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. 2016-02, Leases (Topic 842), which provides the principles for the recognition, measurement, presentation and disclosure of leases. This ASU significantly changes the accounting for leases by requiring lessees to recognize assets and liabilities for leases greater than 12 months on their balance sheet. The lessor model stays substantially the same; however, there were modifications to conform lessor accounting with the lessee model, eliminate real estate specific guidance, further define certain lease and non-lease components, and change the definition of initial direct costs of leases requiring significantly more leasing related costs to be expensed upfront.

We adopted the provisions of ASU No. 2016-02 effective January 1, 2019 using the modified retrospective approach. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements , which allows lessors to elect a practical expedient by class of underlying assets to not separate non-lease components from the lease component if certain conditions are met. The lessor’s practical expedient election would be limited to circumstances in which the non-lease components otherwise would be accounted for under the new revenue guidance and both (i) the timing and pattern of transfer are the same for the non-lease component and the related lease component and (ii) the lease component would be classified as an operating lease. The Company elected the practical expedient, which allows the Company the ability to combine the lease and non-lease components if the underlying asset meets the criteria above. Due to our election of the practical expedient approach, approximately $7.8 million of non-lease components are combined with lease rental income. ASU 2018-11 also includes an optional transition method in addition to the existing requirements for transition to the new standard by recognizing a cumulative effect adjustment to the opening balance sheet of retained earnings in the period of adoption. Consequently, a company’s reporting for the comparative periods presented in the financial statements would continue to be in accordance with previous GAAP (Topic 840). The Company elected this practical expedient as well. Further, bad debt expense, which has previously been recorded in rental expenses, has now been classified as a contra-revenue account in rental income in the Company’s consolidated statements of comprehensive income.

We evaluated all leases within this scope under existing accounting standards and under the new ASU lease standard recognized approximately $7.7 million of right-of-use assets and lease liabilities. Approximately $0.8 million of deferred rent expense was reclassified to lease liability within the other liabilities and deferred credits, net.
    
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 are 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.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Topics. The pronouncement requires companies to adopt a new approach to estimating credit losses on certain types of financial instruments, such as trade and other receivables and loans. The standard requires entities to estimate a lifetime expected credit loss for most financial instruments, including trade receivables. The pronouncement is effective for fiscal years and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. We continue to evaluate the impact this pronouncement will have on our consolidated financial statements.



11

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


NOTE 2. 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, 2019 and December 31, 2018 (in thousands): 
 
March 31, 2019
 
December 31, 2018
In-place leases
$
40,884

 
$
40,884

Accumulated amortization
(35,058
)
 
(34,603
)
Above market leases
11,963

 
11,963

Accumulated amortization
(11,587
)
 
(11,445
)
Acquired lease intangible assets, net
$
6,202

 
$
6,799

Below market leases
$
63,172

 
$
63,172

Accumulated accretion
(38,288
)
 
(37,220
)
Acquired lease intangible liabilities, net
$
24,884

 
$
25,952


NOTE 3. 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 income (loss) 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, 2019 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.


12

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


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, 2019
 
December 31, 2018
 
Level 1
Level 2
Level 3
Total
 
Level 1
Level 2
Level 3
Total
Deferred compensation liability
$

$
1,438

$

$
1,438

 
$

$
1,424

$

$
1,424

Interest rate swap asset
$

$
4,160

$

$
4,160

 
$

$
6,002

$

$
6,002

Interest rate swap liability
$

$
1,092

$

$
1,092

 
$

$
801

$

$
801


  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 4.6% .
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, 2019
 
December 31, 2018
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Secured notes payable, net
$
162,688

 
$
166,043

 
$
182,572

 
$
183,253

Unsecured term loans, net
$
248,494

 
$
250,000

 
$
248,765

 
$
250,000

Unsecured senior guaranteed notes, net
$
797,215

 
$
802,198

 
$
797,098

 
$
790,267

Unsecured line of credit, net
$
86,438

 
$
88,000

 
$
62,337

 
$
64,000


NOTE 4. 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, 2019 (dollars in thousands):
Swap Counterparty
 
Notional Amount
 
Effective Date
 
Maturity Date
 
Fair Value
Bank of America, N.A.
 
$
100,000

 
1/9/2019
 
1/9/2021
 
$
(1,092
)
U.S. Bank N.A.
 
$
100,000

 
3/1/2016
 
3/1/2023
 
$
2,763

Wells Fargo Bank, N.A.
 
$
50,000

 
5/2/2016
 
3/1/2023
 
$
1,397


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. 

13

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


NOTE 5. OTHER ASSETS

Other assets consist of the following (in thousands):  
 
March 31, 2019
 
December 31, 2018
Leasing commissions, net of accumulated amortization of $29,537 and $28,597, respectively
$
28,895

 
$
28,796

Interest rate swap asset
4,160

 
6,002

Acquired above market leases, net
376

 
518

Acquired in-place leases, net
5,826

 
6,281

Lease incentives, net of accumulated amortization of $385 and $299, respectively
676

 
747

Other intangible assets, net of accumulated amortization of $1,025 and $981, respectively
2,949

 
2,994

Right-of-use lease asset
6,973

 

Prepaid expenses and other
6,314

 
6,683

Total other assets
$
56,169

 
$
52,021


NOTE 6. OTHER LIABILITIES AND DEFERRED CREDITS
Other liabilities and deferred credits consist of the following (in thousands):
 
March 31, 2019
 
December 31, 2018
Acquired below market leases, net
$
24,884

 
$
25,952

Prepaid rent and deferred revenue
11,020

 
11,634

Interest rate swap liability
1,092

 
801

Deferred rent expense and lease intangible
1,424

 
2,210

Deferred compensation
1,438

 
1,424

Deferred tax liability
93

 
93

Straight-line rent liability
7,929

 
7,393

Lease liability
7,692

 

Other liabilities
46

 
40

Total other liabilities and deferred credits, net
$
55,618

 
$
49,547


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.
NOTE 7. 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.

14

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


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, 2019 and December 31, 2018 (in thousands):
 
Principal Balance as of
 
Stated Interest Rate
 
Stated Maturity Date
Description of Debt
March 31, 2019
 
December 31, 2018
 
as of March 31, 2019
Torrey Reserve—North Court (1)(2)

 
19,620

 
7.22
%
 
June 1, 2019
Torrey Reserve—VCI, VCII, VCIII (2)
6,600

 
6,635

 
6.36
%
 
June 1, 2020
Solana Crossing I-II (2)
10,444

 
10,502

 
5.91
%
 
June 1, 2020
Solana Beach Towne Centre (2)
34,812

 
35,008

 
5.91
%
 
June 1, 2020
City Center Bellevue (3)
111,000

 
111,000

 
3.98
%
 
November 1, 2022
 
162,856

 
182,765

 
 
 
 
Debt issuance costs, net of accumulated amortization of $406 and $671, respectively
(168
)
 
(193
)
 
 
 
 
Total Secured Notes Payable Outstanding
$
162,688

 
$
182,572

 
 
 
 

(1)
Loan repaid in full, without premium or penalty, on March 1, 2019.
(2)
Principal payments based on a 30 -year amortization schedule.
(3)
Interest only.
Certain loans require us to comply with various financial covenants. As of March 31, 2019 , the Operating Partnership was in compliance with these financial covenants.

15

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


Unsecured notes payable
The following is a summary of the Operating Partnership's total unsecured notes payable outstanding as of March 31, 2019 and December 31, 2018 (in thousands):
Description of Debt
Principal Balance as of
 
Stated Interest Rate
 
Stated Maturity Date
March 31, 2019
 
December 31, 2018
 
as of March 31, 2019
 
Term Loan A
$
100,000

 
$
100,000

 
Variable

(1)  
 
January 9, 2021
 
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 $7,084 and $6,844, respectively
(4,291
)
 
(4,137
)
 
 
 
 
 
 
Total Unsecured Notes Payable
$
1,045,709

 
$
1,045,863

 
 
 
 
 
 
 
(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 4.13% through its stated maturity date, subject to adjustments based on our consolidated leverage ratio.
(2)
The Operating Partnership entered into a one-month forward-starting seven years 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, 2019 , the Operating Partnership was in compliance with these financial covenants.

Amended Term Loan Agreement

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 years $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

16

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


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, 2019 , there was $88 million outstanding under the Revolver Loan with approximately $1.6 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, 2019 , the weighted average interest rate on the Revolver Loan was 3.60% .
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 months period. The extension options are exercisable by us subject to the satisfaction of certain conditions. The Term Loan A had a maturity date of January 9, 2019, but was extended prior to its maturity date, as described below.
On January 9, 2019, we entered into the first amendment (“First Amendment”) to the Second Amended and Restated Credit Facility, which extended the maturity date of Term Loan A to January 9, 2021, subject to three , one year extension options.   Additionally, in connection with the First Amendment, borrowings under the Second Amended and Restated Credit Facility with respect to Term Loan A bear interest at floating rates equal to, at our option, either (1) LIBOR , plus a spread which ranges from 1.20% to 1.70% based on our consolidated total 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) the Eurodollar rate plus 100 bps, in each case plus a spread which ranges from 0.20% to 0.70% based on our consolidated total leverage ratio. The foregoing rates are intended to be more favorable than previously contained in the Second Amended and Restated Credit Facility (prior to entry into the First Amendment) with respect to Term Loan A.
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, 2019 , the Operating Partnership was in compliance with the financial covenants in the Second Amended and Restated Credit Facility.

17

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


NOTE 8. 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 17,177,608 common units (the “noncontrolling common units”), and represented approximately 26.7% of the ownership interests in our Operating Partnership at March 31, 2019 . 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, 2019 , no common units were converted into shares of our common stock.
Earnings (Loss) Per Unit of the Operating Partnership
Basic earnings (loss) 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.
The calculation of diluted EPU for the three months ended March 31, 2019 does not include the weighted average of 333,275 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. For the three months ended March 31, 2018, shares associated with convertible securities were not included because the inclusion would be anti-dilutive.
NOTE 9. 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, 2019 , the following shares of common stock were sold through the ATM equity programs (in thousands, except per share data and share amounts):
 
Three Months Ended March 31, 2019
Number of shares of common stock issued through ATM programs
162,531
Weighted average price per share
$45.53
 
 
Proceeds, gross
$
7,401

Sales agent compensation
(74
)
Offering costs
(293
)
Proceeds, net
$
7,034


 Additionally, we issued 519,382 shares of common stock through the ATM program that settled after March 31, 2019 at a weighted average price per share of $45.57 , resulting in additional net proceeds of $23.4 million .


18

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


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, 2019 , we had the capacity to issue up to an additional $168.8 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, 2019 :  
Period
 
Amount per
Share/Unit
 
Period Covered
 
Dividend Paid Date
First Quarter 2019
 
$
0.28

 
January 1, 2019 to March 31, 2019
 
March 28, 2019

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, 2019 :
 
Units
 
Weighted Average Grant Date Fair Value
Nonvested at January 1, 2019
342,093

 
$28.33
Granted

 

Vested

 

Forfeited
(11,046
)
 
$28.41
Nonvested at March 31, 2019
331,047

 
$28.32

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $1.1 million and $0.7 million in noncash compensation expense for the three month periods ended March 31, 2019 and 2018 , respectively, which is included in general and administrative expense on the consolidated statements of comprehensive income. Unrecognized compensation expense was $5.4 million at March 31, 2019 .
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 333,275 and 263,606 for the three months ended March 31, 2019 and 2018 , 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.

19

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


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, 2019 , diluted shares exclude incentive restricted stock as these awards are considered contingently issuable. For the three months ended March 31, 2018, shares associated with convertible securities were not included because the inclusion would be anti-dilutive. 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,
 
2019
 
2018
NUMERATOR
 
 
 
Net income (loss)
$
15,243

 
$
(691
)
Less: Net (income) loss attributable to restricted shares
(93
)
 
72

Less: (Income) loss from operations attributable to unitholders in the Operating Partnership
(4,055
)
 
166

Net income (loss) attributable to common stockholders—basic
$
11,095

 
$
(453
)
Income (loss) from operations attributable to American Assets Trust, Inc. common stockholders—basic
$
11,095

 
$
(453
)
Plus: Income (loss) from operations attributable to unitholders in the Operating Partnership
4,055

 

Net income attributable to common stockholders—diluted
$
15,150

 
$
(453
)
DENOMINATOR
 
 
 
Weighted average common shares outstanding—basic
47,004,465

 
46,935,820

Effect of dilutive securities—conversion of Operating Partnership units
17,177,608

 

Weighted average common shares outstanding—diluted
64,182,073

 
46,935,820

 
 
 
 
Earnings (loss) per common share, basic
$
0.24

 
$
(0.01
)
Earnings (loss) per common share, diluted
$
0.24

 
$
(0.01
)

NOTE 10. 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, 2019 and December 31, 2018 , 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 expense is recorded in other (expense) income, net on our consolidated statements of comprehensive income. For the three months ended March 31, 2019 , we recorded income tax expense of $0.2 million . For the three months ended March 31, 2018 , we recorded income tax benefit of $0.1 million .

20

American Assets Trust, Inc. and American Assets Trust, L.P.
Notes to Consolidated Financial Statements—(Continued)
March 31, 2019
(Unaudited)


NOTE 11. 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
See Footnote 12 for description of our leases, as a lessee.
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 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 du