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 ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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 ~~47,127,760~~60,724,630 shares of common stock, par value $0.01 per share, outstanding as of ~~November 3, 2017.~~July 28, 2023.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended ~~September~~June 30, ~~2017~~2023 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 ~~September~~June 30, ~~2017,~~2023, American Assets Trust, Inc. owned an approximate ~~73.2%~~78.8% partnership interest in the Operating Partnership. The remaining ~~26.8%~~approximately 21.2% 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 debt refinancings, and can cause changes in its line of business, capital structure and distribution policies.

~~The company~~American Assets Trust, Inc. 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~~The management of American Assets Trust, Inc. and the Operating Partnership is the same and 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~~certain 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~~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~~American Assets Trust, Inc.'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~~American Assets Trust, Inc. 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~~

◦Debt;

◦Equity/Partners' Capital; and

◦Earnings Per Share/Unit; and

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•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.

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AMERICAN ASSETS TRUST, INC. AND AMERICAN ASSETS TRUST, L.P.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2023



PART 1. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Financial Statements of American Assets Trust, Inc.:
		Consolidated Balance Sheets as of ~~September 30, 2017~~June 3 0 , 2023 (unaudited) and December 31, ~~2016~~2022	1
		Consolidated Statements of Comprehensive Income (unaudited) for the three and ~~nine~~ six months ended ~~September 30, 2017~~June 3 0 , 2023 and ~~2016~~2022	2
		Consolidated Statement of Equity (unaudited) for the ~~nine~~ three and six months ended ~~September 30, 2017~~Ju ne 3 0 , 2023 and 2022	3
		Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~six months ended ~~September 30, 2017~~June 3 0 , 2023 and ~~2016~~2022	45
	Consolidated Financial Statements of American Assets Trust, L.P.:
		Consolidated Balance Sheets as of ~~September 30, 2017~~June 3 0 , 2023 (unaudited) and December 31, ~~2016~~2022	56
		Consolidated Statements of Comprehensive Income (unaudited) for the three and ~~nine~~ six months ended ~~September 30, 2017~~June 3 0 , 2023 and ~~2016~~2022	67
		Consolidated Statement of Partners' Capital (unaudited) for the ~~nine~~ three and six months ended ~~September 30, 2017~~June 3 0 , 2023 and 2022	78
		Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~six months ended ~~September 30, 2017~~June 3 0 , 2023 and ~~2016~~2022	810
	Notes to Consolidated Financial Statements (unaudited)		911
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2931
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		4950
Item 4.	Controls and Procedures		5051
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		5152
Item 1A.	Risk Factors		5152
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		5152
Item 3.	Defaults Upon Senior Securities		5153
Item 4.	Mine Safety Disclosures		5153
Item 5.	Other Information		5153
Item 6.	Exhibits		5253
SIGNATURES			5354

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PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

American Assets Trust, Inc.

Consolidated Balance Sheets

(In Thousands, Except Share Data)

September 30, December 31,
2017 2016
(unaudited)
ASSETS
Real estate, at cost
Operating real estate $ 2,525,628
$ 2,241,061
Construction in progress 66,218
50,498
Held for development 9,391
9,447
2,601,237
2,301,006
Accumulated depreciation (519,391 ) (469,460 )
Net real estate 2,081,846
1,831,546
Cash and cash equivalents 94,207
44,801
Restricted cash 10,124
9,950
Accounts receivable, net 8,649
9,330
Deferred rent receivables, net 38,614
38,452
Other assets, net 42,178
52,854
TOTAL ASSETS $ 2,275,618
$ 1,986,933
LIABILITIES AND EQUITY
LIABILITIES:
Secured notes payable, net $ 279,867
$ 445,180
Unsecured notes payable, net 1,044,934
596,350
Unsecured line of credit —
20,000
Accounts payable and accrued expenses 48,107
32,401
Security deposits payable 6,736
6,114
Other liabilities and deferred credits, net 47,423
48,337
Total liabilities 1,427,067
1,148,382
Commitments and contingencies (Note 12)

EQUITY:
American Assets Trust, Inc. stockholders’ equity
Common stock, $0.01 par value, 490,000,000 shares authorized, 47,130,063 and 45,732,109 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 471
457
Additional paid-in capital 917,334
874,597
Accumulated dividends in excess of net income (91,695 ) (77,296 )
Accumulated other comprehensive income 10,350
11,798
Total American Assets Trust, Inc. stockholders’ equity 836,460
809,556
Noncontrolling interests 12,091
28,995
Total equity 848,551
838,551
TOTAL LIABILITIES AND EQUITY $ 2,275,618
$ 1,986,933


	June 30,		December 31,
	2023		2022
	(unaudited)
ASSETS
Real estate, at cost
Operating real estate	$	3,489,314	$	3,468,537
Construction in progress	220,906		202,385
Held for development	547		547
	3,710,767		3,671,469
Accumulated depreciation	(988,560)		(936,913)
Real estate, net	2,722,207		2,734,556
Cash and cash equivalents	84,709		49,571


Accounts receivable, net	7,348		7,848
Deferred rent receivables, net	89,042		87,192
Other assets, net	109,154		108,714
TOTAL ASSETS	$	3,012,460	$	2,987,881
LIABILITIES AND EQUITY
LIABILITIES:
Secured notes payable, net	$	74,623	$	74,578
Unsecured notes payable, net	1,613,663		1,539,453
Unsecured line of credit, net	—		34,057

Accounts payable and accrued expenses	62,961		65,992
Security deposits payable	8,680		8,699
Other liabilities and deferred credits, net	76,417		79,577
Total liabilities	1,836,344		1,802,356
Commitments and contingencies (Note 11)
EQUITY:
American Assets Trust, Inc. stockholders’ equity
Common stock, $0.01 par value, 490,000,000 shares authorized, 60,724,630 and 60,718,653 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	607		607
Additional paid-in capital	1,465,346		1,461,201
Accumulated dividends in excess of net income	(262,745)		(251,167)
Accumulated other comprehensive income	11,524		10,624
Total American Assets Trust, Inc. stockholders’ equity	1,214,732		1,221,265
Noncontrolling interests	(38,616)		(35,740)
Total equity	1,176,116		1,185,525
TOTAL LIABILITIES AND EQUITY	$	3,012,460	$	2,987,881

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

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American Assets Trust, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

(In Thousands, Except Shares and Per Share Data)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
REVENUE:
Rental income $ 78,135
$ 71,852
$ 221,100
$ 207,318
Other property income 4,204
4,124
12,137
11,208
Total revenue 82,339
75,976
233,237
218,526
EXPENSES:
Rental expenses 21,177
20,591
60,877
58,634
Real estate taxes 8,535
7,396
23,975
20,446
General and administrative 4,958
4,513
15,171
13,456
Depreciation and amortization 21,192
17,992
63,360
53,159
Total operating expenses 55,862
50,492
163,383
145,695
OPERATING INCOME 26,477
25,484
69,854
72,831
Interest expense (13,873 ) (13,049 ) (39,856 ) (39,148 )
Other (expense) income, net (99 ) (577 ) 403
(454 )
NET INCOME 12,505
11,858
30,401
33,229
Net income attributable to restricted shares (60 ) (42 ) (181 ) (128 )
Net income attributable to unitholders in the Operating Partnership (3,351 ) (3,342 ) (8,220 ) (9,377 )
NET INCOME ATTRIBUTABLE TO AMERICAN ASSETS TRUST, INC. STOCKHOLDERS $ 9,094
$ 8,474
$ 22,000
$ 23,724

EARNINGS PER COMMON SHARE
Earnings per common share, basic $ 0.19
$ 0.19
$ 0.47
$ 0.52
Weighted average shares of common stock outstanding - basic 46,898,086
45,377,719
46,650,403
45,282,643

Earnings per common share, diluted $ 0.19
$ 0.19
$ 0.47
$ 0.52
Weighted average shares of common stock outstanding - diluted 64,093,066
63,272,702
64,081,697
63,180,637

DIVIDENDS DECLARED PER COMMON SHARE $ 0.26
$ 0.25
$ 0.78
$ 0.75

COMPREHENSIVE INCOME
Net income $ 12,505
$ 11,858
$ 30,401
$ 33,229
Other comprehensive (loss) - unrealized (loss) on swap derivative during the period 87
2,432
(1,427 ) (11,443 )
Reclassification of amortization of forward-starting swap included in interest expense (319 ) (58 ) (794 ) (173 )
Comprehensive income 12,273
14,232
28,180
21,613
Comprehensive income attributable to non-controlling interest (3,263 ) (4,018 ) (7,447 ) (6,086 )
Comprehensive income attributable to American Assets Trust, Inc. $ 9,010
$ 10,214
$ 20,733
$ 15,527


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
REVENUE:
Rental income	$	103,901	$	99,016	$	206,611	$	196,002
Other property income	5,820		5,139		10,864		9,623
Total revenue	109,721		104,155		217,475		205,625
EXPENSES:
Rental expenses	28,711		25,853		56,216		49,998
Real estate taxes	11,086		11,287		22,718		22,716
General and administrative	8,609		7,612		17,608		14,754
Depreciation and amortization	29,823		31,087		59,724		61,499
Total operating expenses	78,229		75,839		156,266		148,967
OPERATING INCOME	31,492		28,316		61,209		56,658
Interest expense, net	(16,368)		(14,547)		(32,097)		(29,213)


Other income (expense), net	273		(181)		6,951		(343)





NET INCOME	15,397		13,588		36,063		27,102
Net income attributable to restricted shares	(190)		(154)		(379)		(309)
Net income attributable to unitholders in the Operating Partnership	(3,224)		(2,852)		(7,565)		(5,688)
NET INCOME ATTRIBUTABLE TO AMERICAN ASSETS TRUST, INC. STOCKHOLDERS	$	11,983	$	10,582	$	28,119	$	21,105

EARNINGS PER COMMON SHARE
Earnings per common share, basic	$	0.20	$	0.18	$	0.47	$	0.35
Weighted average shares of common stock outstanding - basic	60,146,210		60,040,243		60,145,414		60,039,467

Earnings per common share, diluted	$	0.20	$	0.18	$	0.47	$	0.35
Weighted average shares of common stock outstanding - diluted	76,327,747		76,221,780		76,326,951		76,221,004

DIVIDENDS DECLARED PER COMMON SHARE	$	0.33	$	0.32	$	0.66	$	0.64

COMPREHENSIVE INCOME
Net income	$	15,397	$	13,588	$	36,063	$	27,102
Other comprehensive income - unrealized income on swap derivatives during the period	4,360		3,314		2,091		8,910

Reclassification of amortization of forward-starting swap included in interest expense	(98)		(275)		(952)		(550)

Comprehensive income	19,659		16,627		37,202		35,462
Comprehensive income attributable to non-controlling interests	(4,127)		(3,496)		(7,804)		(7,462)
Comprehensive income attributable to American Assets Trust, Inc.	$	15,532	$	13,131	$	29,398	$	28,000

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

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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, 2022	60,718,653	$	607	$	1,461,201	$	(251,167)	$	10,624	$	(35,740)	$	1,185,525
Net income	—	—		—		16,325		—		4,341		20,666


Forfeiture of restricted stock	(818)	—		—		—		—		—		—

Dividends declared and paid	—	—		—		(20,037)		—		(5,340)		(25,377)
Stock-based compensation	—	—		2,035				—		—		2,035

Other comprehensive income - change in value of interest rate swaps	—	—		—		—		(1,786)		(483)		(2,269)

Reclassification of amortization of forward-starting swap included in interest expense	—	—		—		—		(673)		(181)		(854)

Balance at March 31, 2023	60,717,835	607		1,463,236		(254,879)		8,165		(37,403)		1,179,726
Net income	—	—		—		12,173		—		3,224		15,397

Issuance of restricted stock	10,348	—		—		—		—		—		—
Forfeiture of restricted stock	(3,553)	—		—		—		—		—		—

Dividends declared and paid	—	—		—		(20,039)		—		(5,340)		(25,379)
Stock-based compensation	—	—		2,110		—		—		—		2,110

Other comprehensive income - change in value of interest rate swaps	—	—		—		—		3,436		924		4,360

Reclassification of amortization of forward-starting swap included in interest expense	—	—		—		—		(77)		(21)		(98)
Balance at June 30, 2023	60,724,630	$	607	$	1,465,346	$	(262,745)	$	11,524	$	(38,616)	$	1,176,116

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																							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, 2021																					Balance at December 31, 2021		60,525,580			$	605			$	1,453,272			$	(217,785)			$	2,872			$	(28,841)			$	1,210,123
Net income																					Net income		—			—		—				10,678				—				2,836				13,514

Forfeiture of restricted stock																					Forfeiture of restricted stock		(3,121)			—		—				—				—				—				—

Dividends declared and paid																					Dividends declared and paid		—			—		—				(19,367)				—				(5,178)				(24,545)
Stock-based compensation																					Stock-based compensation		—			—		1,489				—				—				—				1,489
Shares withheld for employee taxes																					Shares withheld for employee taxes		(416)			—		(15)				—				—				—				(15)
Other comprehensive income - change in value of interest rate swaps																					Other comprehensive income - change in value of interest rate swaps		—			—		—				—				4,408				1,188				5,596
Reclassification of amortization of forward-starting swap included in interest expense																					Reclassification of amortization of forward-starting swap included in interest expense		—			—		—				—				(217)				(58)				(275)

Balance at March 31, 2022																					Balance at March 31, 2022		60,522,043			605		1,454,746				(226,474)				7,063				(30,053)				1,205,887
Net income																					Net income		—			—		—				10,736								2,852				13,588

Issuance of restricted stock																					Issuance of restricted stock		6,072			—		—				—				—				—				—

Dividends declared and paid																					Dividends declared and paid		—			—		—				(19,369)				—				(5,178)				(24,547)
Stock-based compensation																					Stock-based compensation		—			—		2,001				—				—				—				2,001
Other comprehensive income - change in value of interest rate swaps																					Other comprehensive income - change in value of interest rate swaps		—			—		—				—				2,610				704				3,314

Reclassification of amortization of forward-starting swap realized gains included in interest expense																					Reclassification of amortization of forward-starting swap realized gains included in interest expense		—			—		—				—				(216)				(59)				(275)
Balance at June 30, 2022																					Balance at June 30, 2022		60,528,115			$	605	$	1,456,747			$	(235,107)			$	9,457			$	(31,734)			$	1,199,968

	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, 2016	45,732,109		$	457		$	874,597		$	(77,296	)		$	11,798								$	28,995	$	838,551
Net income	—		—		—			22,181				—			8,220			30,401
Common shares issued	700,000		7		30,068			—				—			—			30,075
Issuance of restricted stock	4,880		—		—			—				—			—			—
Forfeiture of restricted stock	(768	)	—		—			—				—			—			—
Conversion of operating partnership units	693,842		7		10,752			—				—			(10,759		)	—
Dividends declared and paid	—		—		—			(36,580		)		—			(13,592		)	(50,172		)
Stock-based compensation	—		—		1,917			—				—			—			1,917
Other comprehensive loss - change in value of interest rate swaps	—		—		—			—				(8,635		)	(3,459		)	(12,094		)
Other comprehensive income - unrealized gain on forward-starting interest rate swaps	—		—		—			—				7,765			2,902			10,667
Reclassification of amortization of forward-starting swap included in interest expense	—		—		—			—				(578		)	(216		)	(794		)
Balance at September 30, 2017	47,130,063		$	471	$	917,334		$	(91,695	)		$	10,350		$	12,091		$	848,551

Period
Amount per
Share/Unit
Period Covered Dividend Paid Date
First Quarter 2017 $ 0.26
January 1, 2017 to March 31, 2017 March 30, 2017
Second Quarter 2017 $ 0.26
April 1, 2017 to June 30, 2017 June 29, 2017
Third Quarter 2017 $ 0.26
July 1, 2017 to September 30, 2017 September 28, 2017

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American Assets Trust, Inc. and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

~~September~~June 30, ~~2017~~2023

(Unaudited)

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~~stock-based 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~~award or similar equity instrument.

The following table summarizes the activity of restricted stock awards during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~:2023:


	Units	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2023	574,044	$	20.98
Granted	10,348	19.33
Vested	(6,072)	32.94
Forfeited	(4,371)	20.92
Nonvested at June 30, 2023	573,949	$	20.87

Units Weighted Average Grant Date Fair Value
Nonvested at January 1, 2017 232,765
$31.24
Granted 4,880
$40.99
Vested (4,900 ) $40.81
Forfeited (768 ) $30.62
Nonvested at September 30, 2017 231,977
$31.25

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized ~~$0.6~~$2.1 million and $2.0 million in noncash compensation expense for ~~each of~~ the three ~~month periods~~months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, which is included in general and administrative ~~expense~~expenses on the consolidated statements of comprehensive income. We recognized ~~$1.9~~$4.1 million and $3.5 million in noncash compensation ~~expenses~~expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~2022, respectively. Unrecognized compensation expense was ~~$2.0~~$7.9 million at ~~September~~June 30, ~~2017~~.2023.

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 ~~231,977~~571,999 and ~~169,963~~483,110 for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~,2022, respectively, and ~~232,041~~572,623 and ~~171,760~~484,295 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, 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.

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 and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~,2022, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable. Additionally, the unvested restricted stock awards subject to time vesting are anti-dilutive for all periods presented, and accordingly, have been excluded from the weighted average common shares used to compute diluted EPS.

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American Assets Trust, Inc. and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

~~September~~June 30, ~~2017~~2023

(Unaudited)

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
NUMERATOR
Net income	$	15,397	$	13,588	$	36,063	$	27,102
Less: Net income attributable to restricted shares	(190)		(154)		(379)		(309)
Less: Income from operations attributable to unitholders in the Operating Partnership	(3,224)		(2,852)		(7,565)		(5,688)

Net income attributable to common stockholders—basic	$	11,983	$	10,582	$	28,119	$	21,105
Income from operations attributable to American Assets Trust, Inc. common stockholders—basic	$	11,983	$	10,582	$	28,119	$	21,105
Plus: Income from operations attributable to unitholders in the Operating Partnership	3,224		2,852		7,565		5,688

Net income attributable to common stockholders—diluted	$	15,207	$	13,434	$	35,684	$	26,793
DENOMINATOR
Weighted average common shares outstanding—basic	60,146,210		60,040,243		60,145,414		60,039,467
Effect of dilutive securities—conversion of Operating Partnership units	16,181,537		16,181,537		16,181,537		16,181,537
Weighted average common shares outstanding—diluted	76,327,747		76,221,780		76,326,951		76,221,004

Earnings per common share, basic	$	0.20	$	0.18	$	0.47	$	0.35
Earnings per common share, diluted	$	0.20	$	0.18	$	0.47	$	0.35

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
NUMERATOR
Net income from operations $ 12,505
$ 11,858
$ 30,401
$ 33,229
Less: Net income attributable to restricted shares (60 ) (42 ) (181 ) (128 )
Less: Income from operations attributable to unitholders in the Operating Partnership (3,351 ) (3,342 ) (8,220 ) (9,377 )
Net income attributable to common stockholders—basic $ 9,094
$ 8,474
$ 22,000
$ 23,724
Income from operations attributable to American Assets Trust, Inc. common stockholders—basic $ 9,094
$ 8,474
$ 22,000
$ 23,724
Plus: Income from operations attributable to unitholders in the Operating Partnership 3,351
3,342
8,220
9,377
Net income attributable to common stockholders—diluted $ 12,445
$ 11,816
$ 30,220
$ 33,101
DENOMINATOR
Weighted average common shares outstanding—basic 46,898,086
45,377,719
46,650,403
45,282,643
Effect of dilutive securities—conversion of Operating Partnership units 17,194,980
17,894,983
17,431,294
17,897,994
Weighted average common shares outstanding—diluted 64,093,066
63,272,702
64,081,697
63,180,637

Earnings per common share, basic $ 0.19
$ 0.19
$ 0.47
$ 0.52
Earnings per common share, diluted $ 0.19
$ 0.19
$ 0.47
$ 0.52

NOTE ~~11.~~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.~~Taxes.

A deferred tax asset is included in our consolidated balance sheets of $0.7 million and $0.7 million, and a deferred tax liability is included in our consolidated balance sheets of ~~$0.2~~$0.9 million and ~~$0.3~~$0.9 million as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively, in relation to real estate asset basis differences of property subject to ~~the Texas margin tax~~state taxes based on income and certain prepaid expenses of our TRS.

Income tax expense is recorded in other (expense) income, ~~(expense),~~ net on our consolidated statements of comprehensive income. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, we recorded income tax expense of $0.2 million and ~~income tax benefit of $0.03~~$0.5 million, respectively. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022, we recorded income tax expense of ~~$0.6~~$0.2 million ~~for each period.~~and $0.4 million, respectively.

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American Assets Trust, Inc. and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2023

(Unaudited)

NOTE ~~12.~~11. COMMITMENTS AND CONTINGENCIES

Legal

We are sometimes involved in various disputes, lawsuits, warranty claims, environmental considerations, 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.

~~Table of Contents~~

~~American Assets Trust, Inc. and American Assets Trust, L.P.~~

~~Notes to Consolidated Financial Statements—(Continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

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 amount within the range is accrued. Legal fees related to litigation are expensed as incurred. We do not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on our financial position or overall trends in results of operations; however, litigation is subject to inherent uncertainties. Also, under our leases, tenants are typically obligated to indemnify us from and against all liabilities, costs and expenses imposed upon or asserted against us as owner of the properties due to certain matters relating to the operation of the properties by the tenant.

Commitments

~~At The Landmark at One Market, we lease (the "Annex Lease"),~~See Footnote 12 for description of our leases, as ~~lessee,~~ a ~~building adjacent to The Landmark under an operating lease effective through June 30, 2021, which we have the option to extend until 2031 by way of~~ ~~twofive-year extension options.~~lessee.

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

~~Current minimum annual payments under the leases are as follows, as of September 30, 2017 (in thousands):~~

Year Ending December 31,
2017 (three months ending December 31, 2017) $ 810
⁽¹⁾
2018 3,274

2019 3,347

2020 3,422

2021 3,460
⁽²⁾
Thereafter 24,823

Total $ 39,136


~~(1)~~	~~Lease payments on the FHB Sublease are based on the stated lease rate of $70,578 through the end of the lease term, December 31, 2021.~~


~~(2)~~	Lease payments on the Annex Lease will be equal to fair rental value from July 2021 through the end of the options lease term. In the table, we have shown the option lease payments for this period based on the stated rate for the month of June 2021 of $217,744.

We have management agreements with Outrigger Hotels & Resorts or an affiliate thereof (“Outrigger”) pursuant to which Outrigger manages each of the retail and hotel portions of the Waikiki Beach Walk property. Under the management agreement with Outrigger relating to the retail portion of Waikiki Beach Walk (the “retail management agreement”), we pay Outrigger a monthly management fee of 3.0% of net revenues from the retail portion of Waikiki Beach Walk. Pursuant to the terms of the retail management agreement, if the agreement is terminated in certain instances, including our election not to repair damage or destruction at the property, a condemnation or our failure to make required working capital infusions, we would be obligated to pay Outrigger a termination fee equal to the sum of the management fees paid for the two ~~calendar~~ months immediately preceding the termination date. The retail management agreement may not be terminated by us or by Outrigger without cause. Under our management agreement with Outrigger relating to the hotel portion of Waikiki Beach Walk (the “hotel management agreement”), we pay Outrigger a monthly management fee of 6.0% of the hotel's gross operating profit, as well as 3.0% of the hotel's gross revenues; provided that the aggregate management fee payable to Outrigger for any year shall not exceed 3.5% of the hotel's gross revenues for such fiscal year. Pursuant to the terms of the hotel management agreement, if the agreement is terminated in certain instances, including upon a transfer by us of the hotel or upon a default by us under the hotel management agreement, we would be required to pay a cancellation fee calculated by multiplying (1) the management fees for the previous 12 months by (2) ~~(a)~~ ~~eight, if the agreement is terminated in the first~~ 11 ~~years of its term,~~four, three, two 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. Additionally, we have a management agreement with Outrigger pursuant to which Outrigger manages our Waikele Center and Shops at Kalakaua. In connection with such management agreement, we pay Outrigger a fixed management fee of $12,000 per month in the aggregate plus additional amounts for any lease renewal services provided by Outrigger at our request. This management agreement can be terminated by us at any time and for any reason on 30 days' notice without any cancellation or termination fees.

~~Table of Contents~~

~~American Assets Trust, Inc. and American Assets Trust, L.P.~~

~~Notes to Consolidated Financial Statements—(Continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

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%~~5.0% of the hotel's gross room revenue, ~~through December 2021 and~~ ~~5.0%~~ ~~of the hotel's gross room revenue thereafter,~~ as well as a monthly program fee equal to 4.0% of the hotel's gross room revenue. If the franchise license is terminated due to our failure to make required improvements or to otherwise comply with its terms, we may be liable to the franchisor for a termination payment, which could be as high as ~~$7.5~~$7.0 million based on operating performance through ~~September~~June 30, ~~2017~~.2023.

Table of Contents

American Assets Trust, Inc. and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2023

(Unaudited)

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

In connection with our initial public offering, we entered into tax protection agreements with certain limited partners of our Operating Partnership. These agreements provide that if we dispose of any interest with respect to Carmel Country Plaza, Carmel Mountain Plaza, Del Monte Center, Loma Palisades, Lomas Santa Fe Plaza, Waikele Center or the Torrey Plaza (formerly ICW Plaza) portion of Torrey Reserve Campus, in a taxable transaction during the period from the closing of our initial public offering through January 19, 2018, we will indemnify such limited partners for their tax liabilities attributable to their share of the built-in gain that existed with respect to such property interest as of the time of our initial public offering and tax liabilities incurred as a result of the reimbursement payment. Subject to certain exceptions and limitations, the indemnification rights will terminate for any such protected partner that sells, exchanges or otherwise disposes of more than ~~50%~~ of his or her common units. We have no present intention to sell or otherwise dispose of the properties or interest therein in taxable transactions during the restriction period. If we were to trigger the tax protection provisions under these agreements, we would be required to pay damages in the amount of the taxes owed by these limited partners (plus additional damages in the amount of the taxes incurred as a result of such payment).

Concentrations of Credit Risk

Our properties are located in Southern California, Northern California, ~~Hawaii,~~Washington, Oregon, Texas and ~~Washington.~~Hawaii. The ability of the tenants to honor the terms of their respective leases is dependent upon the economic, regulatory, social, and ~~social~~health factors affecting the markets in which the tenants operate. ~~Thirteen~~Fifteen of our consolidated properties are located in Southern California, which exposes us to greater economic risks than if we owned a more geographically diverse portfolio. Tenants in the retail industry accounted for ~~32.7%~~23.7% of total revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~.2023. This makes us susceptible to demand for retail rental space and subject to the risks associated with an investment in real estate with a concentration of tenants in the retail industry. Furthermore, tenants in the office industry accounted for ~~33.9%~~47.4% of total revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~.2023. This makes us susceptible to demand for office rental space and subject to the risks associated with an investment in real estate with a concentration of tenants in the office industry. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~,2022, no tenant accounted for more than 10% of our total rental revenue.

~~Table of Contents~~

~~American Assets Trust, Inc. and American Assets Trust, L.P.~~

~~Notes to Consolidated Financial Statements—(Continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

NOTE ~~13. OPERATING~~12. LEASES

Lessor Operating Leases

We determine if an arrangement is a lease at inception. Our lease agreements are generally for real estate, and the determination of whether such agreements contain leases generally does not require significant estimates or judgments. We lease real estate under operating leases.

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

Leases at our office and retail properties and the retail portion of our mixed-use property may contain lease extension options, at our lessee's discretion. The extension options are generally for 3 to 10 years and contain primarily rent at fixed rates or the prevailing market rent. The extension options are generally exercisable 6 to 12 months prior to the expiration of the lease and require the lessee to not be in default of the lease terms.

We attempt to maximize the amount we expect to derive from the underlying real estate property following the end of a lease, to the extent it is not extended. We maintain a proactive leasing and capital improvement program that, combined with the quality and locations of our properties, has made our properties attractive to tenants. However, the residual value of a real estate property is still subject to various market-specific, asset-specific, and tenant-specific risks and characteristics.

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American Assets Trust, Inc. and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2023

(Unaudited)

As of ~~September~~June 30, ~~2017~~,2023, minimum future rentals from noncancelable operating leases, before any reserve for uncollectible amounts and assuming no early lease terminations, at our office and retail properties and the retail portion of our mixed-use property are as follows (in thousands):

Year Ending December 31,
2017 (three months ending December 31, 2017) $ 43,663
2018 170,293
2019 140,849
2020 117,179
2021 95,218
Thereafter 255,893
Total $ 823,095


Year Ending December 31,
2023 (six months ending December 31, 2023)	$	186,351
2024	241,130
2025	221,970
2026	205,360
2027	179,884
Thereafter	332,536
Total	$	1,367,231

The above future minimum rentals exclude residential leases, which typically ~~have a term of 12~~range from 7 to 15 months, ~~or less,~~ and exclude the hotel, as rooms are rented on a nightly basis.

Lessee Operating Leases

At The Landmark at One Market, we lease, as lessee, a building adjacent to The Landmark at One Market under an operating lease effective through June 30, 2026, which we have the option to extend until 2031 by way of the remaining five years extension option (the "Annex Lease"). The lease payments under the extension option provided for under the Annex Lease will be equal to the fair rental value at the time the extension option is exercised. The extension option is included in the calculation of the right-of-use asset and lease liability as we are reasonably certain of exercising the extension option.

Our lease agreements do not contain any residual value guarantees or material restrictive covenants. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement in determining the present value of lease payments.

Current annual payments under the operating leases are as follows, as of June 30, 2023 (in thousands):


Year Ending December 31,
2023 (six months ending December 31, 2023)	$	1,689
2024	3,428
2025	3,531
2026	3,584
2027	3,584
Thereafter	12,543
Total lease payments	28,359
Imputed interest	(3,858)
Present value of lease liability	$	24,501

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American Assets Trust, Inc. and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

June 30, 2023

(Unaudited)

Lease costs under the operating leases are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023			2022
Operating lease cost	$	927	$	844	$	1,854		$	1,689

Sublease income	(836)		(944)		(1,839)			(1,707)
Total lease cost (income)	$	91	$	(100)	$	15		$	(18)

Weighted-average remaining lease term - operating leases (in years)					8.0
Weighted-average discount rate - operating leases					3.19		%

Supplemental cash flow information and non-cash activity related to our operating leases are as follow (in thousands):


	Six Months Ended June 30,
	2023		2022
Operating cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	1,640	$	1,592

Subleases

At The Landmark at One Market, we (as sublandlord) sublease the Annex Lease building under operating leases effective through December 31, 2029. The subleases contain extension options, subject to our ability to extend the Annex Lease, that can extend the subleases through December 31, 2039 at the fair rental value at the time the extension option is exercised.

NOTE ~~14.~~13. COMPONENTS OF RENTAL INCOME AND EXPENSE

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Lease rental income
Office	$	50,269	$	48,949	$	99,595	$	96,999
Retail	24,707		23,286		49,385		47,327
Multifamily	14,146		13,167		28,663		26,083
Mixed-use	3,024		2,814		5,974		5,614
Percentage rent	605		756		1,160		1,238
Hotel revenue	10,491		9,414		20,509		17,469
Other	659		630		1,325		1,272
Total rental income	$	103,901	$	99,016	$	206,611	$	196,002

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Minimum rents
Retail $ 19,520
$ 18,524
$ 56,598
$ 55,548
Office 23,494
22,458
69,829
67,427
Multifamily 11,473
7,451
28,957
19,806
Mixed-use 2,671
2,650
7,813
7,962
Cost reimbursement 8,838
8,344
24,854
23,832
Percentage rent 700
685
1,611
1,572
Hotel revenue 11,006
11,371
30,216
30,045
Other 433
369
1,222
1,126
Total rental income $ 78,135
$ 71,852
$ 221,100
$ 207,318

~~Minimum rents include $0.0~~Lease rental income includes $1.0 million and ~~$(0.3)~~$0.1 million for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$(0.3)~~$3.2 million and $3.8 million for ~~each of~~ the ~~nine month periods~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, to recognize ~~minimum rents~~lease rental income on a straight-line basis. In addition, net amortization of above and below market leases included in ~~minimum rents were~~lease rental income was $0.8 million and ~~$0.9~~$0.8 million for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$2.5~~$1.6 million and ~~$2.6~~$1.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

2527

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Total Retail
Property revenue $ 26,547
$ 25,064
$ 76,292
$ 74,316
Property expense (6,934 ) (7,159 ) (20,419 ) (20,203 )
Segment profit 19,613
17,905
55,873
54,113
Total Office
Property revenue 26,653
25,818
79,002
76,416
Property expense (7,874 ) (8,146 ) (23,720 ) (23,395 )
Segment profit 18,779
17,672
55,282
53,021
Total Multifamily
Property revenue 12,410
8,053
31,324
21,407
Property expense (5,281 ) (3,288 ) (12,574 ) (8,960 )
Segment profit 7,129
4,765
18,750
12,447
Total Mixed-Use
Property revenue 16,729
17,041
46,619
46,387
Property expense (9,623 ) (9,394 ) (28,139 ) (26,522 )
Segment profit 7,106
7,647
18,480
19,865
Total segments’ profit $ 52,627
$ 47,989
$ 148,385
$ 139,446

Table of Contents

American Assets Trust, Inc. and American Assets Trust, L.P.

Notes to Consolidated Financial Statements—(Continued)

~~September~~June 30, ~~2017~~2023

(Unaudited)

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total segments’ profit	$	69,924	$	67,015	$	138,541	$	132,911
General and administrative	(8,609)		(7,612)		(17,608)		(14,754)
Depreciation and amortization	(29,823)		(31,087)		(59,724)		(61,499)
Interest expense, net	(16,368)		(14,547)		(32,097)		(29,213)


Other income (expense), net	273		(181)		6,951		(343)





Net income	15,397		13,588		36,063		27,102
Net income attributable to restricted shares	(190)		(154)		(379)		(309)
Net income attributable to unitholders in the Operating Partnership	(3,224)		(2,852)		(7,565)		(5,688)
Net income attributable to American Assets Trust, Inc. stockholders	$	11,983	$	10,582	$	28,119	$	21,105

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Total segments’ profit $ 52,627
$ 47,989
$ 148,385
$ 139,446
General and administrative (4,958 ) (4,513 ) (15,171 ) (13,456 )
Depreciation and amortization (21,192 ) (17,992 ) (63,360 ) (53,159 )
Interest expense (13,873 ) (13,049 ) (39,856 ) (39,148 )
Other (expense) income, net (99 ) (577 ) 403
(454 )
Net income 12,505
11,858
30,401
33,229
Net income attributable to restricted shares (60 ) (42 ) (181 ) (128 )
Net income attributable to unitholders in the Operating Partnership (3,351 ) (3,342 ) (8,220 ) (9,377 )
Net income attributable to American Assets Trust, Inc. stockholders $ 9,094
$ 8,474
$ 22,000
$ 23,724

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


	June 30, 2023		December 31, 2022
Net Real Estate
Office	$	1,617,689	$	1,615,479
Retail	570,556		579,219
Multifamily	366,231		370,993
Mixed-Use	167,731		168,865
	$	2,722,207	$	2,734,556
Secured Notes Payable (1)
Office	$	75,000	$	75,000



	$	75,000	$	75,000

(1)Excludes debt issuance costs of $0.4 million and $0.4 million for each of the periods ended June 30, 2023 and December 31, 2022, respectively.

September 30, 2017 December 31, 2016
Net Real Estate
Retail $ 662,820
$ 629,261
Office 811,193
813,414
Multifamily 425,771
203,014
Mixed-Use 182,062
185,857
$ 2,081,846
$ 1,831,546
Secured Notes Payable ⁽¹⁾

Retail $ 35,914
$ 36,424
Office 170,589
206,550
Multifamily 73,744
73,744
Mixed-Use —
130,310
$ 280,247
$ 447,028


~~(1)~~	~~Excludes unamortized fair market value adjustments and debt issuance costs of $0.4 million and $1.8 million as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively.~~

Capital expenditures for each segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Capital Expenditures (1)
Office	$	19,812	$	30,051	$	40,537	$	56,717
Retail	1,645		3,697		4,170		7,257
Multifamily	1,216		1,315		2,529		2,886
Mixed-Use	718		121		1,850		452
	$	23,391	$	35,184	$	49,086	$	67,312

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

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Capital Expenditures ⁽¹⁾

Retail $ 3,803
$ 2,203
$ 7,849
$ 11,867
Office 10,555
11,637
25,715
33,276
Multifamily 1,953
213
4,521
2,032
Mixed-Use 211
100
414
216
$ 16,522
$ 14,153
$ 38,499
$ 47,391


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

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

~~The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report.~~ We make statements in this report that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange ~~Act).~~Act. In particular, statements pertaining to our capital resources, portfolio performance and results of operations contain forward-looking statements. Likewise, ~~all of~~ our statements regarding anticipated growth in our funds from operations and anticipated market conditions, demographics and results of operations are forward-looking statements. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,~~” “pro forma,~~” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be incorrect or imprecise and we may not be able to realize them. We do not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

•adverse economic or real estate developments in our markets;

~~our failure to generate sufficient cash flows to service our outstanding indebtedness;~~

•defaults on, early terminations of or non-renewal of leases by tenants, including significant tenants;

~~difficulties in identifying properties to acquire and completing acquisitions;~~•decreased rental rates or increased vacancy rates;

~~difficulties in completing dispositions;~~

•our failure to ~~successfully operate acquired properties~~generate sufficient cash flows to service our outstanding indebtedness;

•fluctuations in interest rates and ~~operations;~~increased operating costs;

•our failure to obtain necessary outside financing;

•our inability to develop or redevelop our properties due to market conditions;

~~fluctuations in interest rates and increased operating costs;~~

~~risks related to joint venture arrangements;~~

~~our failure to obtain necessary outside financing;~~

~~on-going litigation;~~

•general economic conditions;

•financial market fluctuations;

•risks that affect the general office, retail, ~~office,~~ multifamily and mixed-use environment;

•the competitive environment in which we operate;

~~decreased rental rates~~•the impact of epidemics, pandemics, or ~~increased vacancy rates;~~other outbreaks of illness, disease or virus (such as the outbreak of COVID-19 and its variants) and the actions taken by government authorities and others related thereto, including the ability of our company, our properties and our tenants to operate;

•difficulties in identifying properties to acquire and completing acquisitions;

•our failure to successfully operate acquired properties and operations;

•risks related to joint venture arrangements;

•on-going litigation;

•difficulties in completing dispositions;

•conflicts of interests with our officers or directors;

•lack or insufficient amounts of insurance;

•environmental uncertainties and risks related to adverse weather conditions and natural disasters;

•other factors affecting the real estate industry generally;

•limitations imposed on our business and our ability to satisfy complex rules in order for usAmerican Assets Trust, Inc. to continue to qualify as a ~~real estate investment trust, or~~ REIT, for U.S. federal income tax purposes; and

•changes in governmental regulations or interpretations thereof, such as real estate and zoning laws and increases in real property tax rates and taxation of REITs.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors,

or new information, data or methods, future events or other changes. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Item 1A. Risk Factors” contained herein and in our annual report on Form 10-K for the year ended December 31, ~~2016.~~2022.

Table of Contents

Overview

References to “we,” “our,” “us” and “our company” refer to American Assets Trust, Inc., a Maryland corporation, together with our consolidated subsidiaries, including American Assets Trust, L.P., a Maryland limited partnership, of which we are the sole general partner and which we refer to in this report as our Operating Partnership.

We are a full service, vertically integrated and self-administered REIT that owns, operates, acquires and develops high quality retail, office, multifamily and mixed-use properties in attractive, high-barrier-to-entry markets in Southern California, Northern California, Washington, Oregon, ~~Washington,~~ Texas and Hawaii. As of ~~September~~June 30, ~~2017~~,2023, our portfolio was comprised of twelve retail shopping centers; ~~seven~~twelve office properties; a mixed-use property consisting of a 369-room all-suite hotel and a retail shopping center; and six multifamily properties. Additionally, as of ~~September~~June 30, ~~2017~~,2023, we owned land at ~~four~~three of our properties that we classified as held for development and/or construction in progress. Our core markets include San ~~Diego;~~Diego, California; the San Francisco Bay ~~Area;~~Area, California; Bellevue, Washington; Portland, ~~Oregon; Bellevue, Washington;~~Oregon and Oahu, Hawaii. We are a Maryland corporation formed on July 16, 2010 to acquire the entities owning various controlling and noncontrolling interests in real estate assets owned and/or managed by Ernest S. Rady or his affiliates, including the Ernest Rady Trust U/D/T March 13, 1983, or the Rady Trust, and did not have any operating activity until the consummation of our initial public offering on January 19, 2011. Our Company, as the sole general partner of our Operating Partnership, has control of our Operating Partnership and owned ~~73.2%~~78.8% of our Operating Partnership as of ~~September~~June 30, ~~2017~~.2023. Accordingly, we consolidate the assets, liabilities and results of operations of our Operating Partnership.

~~Acquisitions~~

On April 28, 2017, we acquired the Pacific Ridge Apartments, a 533 unit, multifamily community, built in 2013 and located in San Diego, California. The purchase price was approximately $232 million, excluding closing costs and prorations. On July 6, 2017, we acquired Gateway Marketplace, an approximately 128,000 square feet dual-grocery anchored shopping center located in Chula Vista, California. The purchase price was approximately $42 million, excluding closing costs and prorations. On September 1, 2017, we acquired the building and related improvements in which Forever 21 and Gold's Gym are currently in tenancy at Del Monte Center for approximately $5.3 million.

~~These properties were acquired with cash on hand and borrowings under our Amended and Restated Credit Agreement.~~

Critical Accounting Policies

We identified certain critical accounting policies that affect certain of our more significant estimates and assumptions used in preparing our consolidated financial statements in our annual report on Form 10-K for the year ended December 31, ~~2016~~.2022. We have not made any material changes to these policies during the periods covered by this ~~report.~~report, other than those described in Footnote 1.

Same-store

We have provided certain information on a total portfolio, same-store and redevelopment same-store basis. Information provided on a same-store basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties for which significant redevelopment or expansion occurred during either of the periods being compared, properties under development, properties classified as held for development and properties classified as discontinued operations. Information provided on a redevelopment same-store basis includes the results of properties undergoing significant redevelopment for the entirety or portion of both periods being compared. Same-store and redevelopment same-store isare considered by management to be important measures because they assist in eliminating disparities due to the development, acquisition or disposition of properties during the particular period presented, and thus ~~provides~~provide a more consistent performance measure for the comparison of the ~~Company's~~company's stabilized and redevelopment properties, as applicable. Additionally, redevelopment same-store is considered by management to be an important measure because it assists in evaluating the timing of the start and stabilization of our redevelopment opportunities and the impact that these redevelopments have in enhancing our operating performance.

While there is judgment surrounding changes in designations, we typically reclassify significant development, redevelopment or expansion properties into same-store properties once they are stabilized. Properties are deemed stabilized typically at the earlier of (i) reaching 90% occupancy or (ii) four quarters following a property's inclusion in operating real estate. We typically remove properties from same-store properties when the development, redevelopment or expansion has or

is expected to have a significant impact on the property's annualized base rent, occupancy and operating income within the calendar year. Our evaluation of significant impact related to development, redevelopment or expansion activity is based on quantitative and qualitative measures including, but not limited to, the following: the total budgeted cost of planned construction activity compared to the property’s annualized base rent, occupancy and property operating income within the calendar year; percentage of development, redevelopment or expansion square footage to total property square footage; and the ability to maintain historic occupancy and rental rates. In consideration of these measures, we generally remove properties from same-store properties when we see a decline in a property's annualized base rent, occupancy and operating income within the calendar year as a direct result of ongoing redevelopment, development or expansion activity. Acquired properties are classified into same-store properties once we have owned such properties for the entirety of comparable period(s) and the properties are not under significant development or expansion.

Table of Contents

Below is a summary of our same-store composition for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016. For the quarter ended September 30, 2017, Torrey Reserve Campus~~2022. Because Bel-Spring 520 was acquired on March 8, 2022, it was reclassified as a same-store property and ~~Lloyd District Portfolio were removed from non-same-store properties and classified as same-store properties when compared to the designations~~is comparable for the quarter ended September 30, 2016. These properties were classified as redevelopment same-store properties in prior periods, however, as construction activity has ceased and comparable periods of operation are available, redevelopment same-store classification is no longer applicable. For the quarter ended September 30, 2017, Pacific Ridge Apartments and Gateway Marketplace were classified as a non-same-store properties as they were acquired on April 28, 2017 and July 6, 2017, respectively.

~~For the nine~~three months ended ~~September~~June 30, 2017, Lloyd District Portfolio was transferred into same-store properties due to the completion of development activity at Hassalo on Eighth - Retail, which was completed during the fourth quarter of 2016. For the nine months ended September 30, 2017, Pacific Ridge Apartments2023, and ~~Gateway Marketplace were~~is classified as non-same-store ~~properties as they were acquired on April 28, 2017 and July 6, 2017, respectively, when compared to the designations~~property for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2023.

In our determination of same-store and redevelopment same-store properties for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017, Torrey Reserve Campus~~2023, One Beach Street has been identified as a same-store redevelopment property due to significant ~~construction~~redevelopment activity.

Retail same-store net operating income increased approximately 6.6% for the six months ended June 30, 2023 compared to the same period in 2022. Office same-store net operating income increased ~~approximately 5.7%~~0.6% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the same period in ~~2016.~~2022. Office redevelopment same-store net operating income increased ~~approximately 4.3%~~0.3% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the same period in ~~2016.~~2022.


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Same-Store	30	27	29	27
Non-Same-Store	1	4	2	4
Total Properties	31	31	31	31

Redevelopment Same-Store	31	28	30	28

Total Development Properties	3	3	3	3

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Same-Store 22
20
21
20
Non-Same Store 4
4
5
4
Total Properties 26
24
26
24

Redevelopment Same-Store N/A
N/A
22
22

Total Development Properties 4
4
4
4

Outlook

We seek growth in earnings, funds from operations and cash flows primarily through a combination of the following: growth in our same-store portfolio, growth in our portfolio from property development and redevelopments and expansion of our portfolio through property acquisitions. Our properties are located in some of the nation's most dynamic, high-barrier-to-entry markets primarily in Southern California, Northern California, Washington, Oregon ~~Washington~~ and Hawaii, which allow us to take advantage of redevelopment opportunities that enhance our operating performance through renovation, expansion, reconfiguration and/or retenanting. We evaluate our properties on an ongoing basis to identify these types of opportunities.

We intend to opportunistically pursue ~~the~~projects in our development ofpipeline, including future phases of La Jolla Commons and Lloyd ~~District~~ Portfolio, as well as other redevelopments at Waikele Center and One Beach Street. The commencement of these developments is based on, among other things, market conditions and our evaluation of whether such opportunities would generate appropriate risk-adjusted financial returns. Our redevelopment and development opportunities are subject to various factors, including market conditions and may not ultimately come to fruition.

We continue to review acquisition opportunities in our primary markets that would complement our portfolio and provide long-term growth opportunities. Some of our acquisitions do not initially contribute significantly to earnings growth; however, we believe they provide long-term re-leasing growth, redevelopment opportunities and other strategic opportunities. Any growth from acquisitions is contingent upon our ability to find properties that meet our qualitative standards at prices that meet our financial hurdles. Changes in interest rates may affect our success in achieving earnings growth through acquisitions by affecting both the price that must be paid to acquire a property, as well as our ability to economically finance a property acquisition. Generally, our acquisitions are initially financed by available cash, mortgage loans and/or borrowings under our revolving line of credit, which may be repaid later with funds raised through the issuance of new equity or new long-term debt.

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COVID-19

We continue to closely monitor the impact of COVID-19 on our business. We are unable to predict the future impact that COVID-19 will have on our financial condition, results of operations and cash flows due to numerous uncertainties, including the scope, severity and duration of the virus (including future mutations), governmental, business and individual actions taken to stop its the spread or to mitigate its impact, the availability and adoption of COVID-19 vaccines, and the economic effects of the virus and containment measures, among others. Although many measures aimed to stop the spread of COVID-19 have been lifted, we cannot predict whether they will be reinstated or whether more restrictive measures may be imposed. It is also unclear whether customers’ concerns about the transmission of COVID-19 or other diseases will impact their willingness to visit certain of our tenants' businesses.

We believe our financial condition and liquidity are currently strong. Although there is uncertainty related to COVID-19’s impact on our future results, we believe our efficient business model and steps we have taken to strengthen our balance sheet will continue to allow us to manage our business through this evolving crisis.

Leasing

Our same-store growth is primarily driven by increases in rental rates on new leases and lease renewals and changes in portfolio occupancy. Over the long-term, we believe that the infill nature and strong demographics of our properties provide us with a strategic advantage, allowing us to maintain relatively high occupancy and increase rental rates. We have continued to see signs of improvement for many of our tenants, as well as increased interest from prospective tenants for our spaces. While there can be no assurance that these positive signs will continue,Furthermore, we ~~remain cautiously optimistic regarding the improved trends we have seen over the past few years. We~~ believe the locations of our properties and ~~diverse tenant base~~diversified portfolio will mitigate some of the potentially negative impact of the current economic environment. However, ~~any~~in 2020 through 2022 due to COVID-19, we saw a meaningful negative impact on certain of our tenants' operations and ability to pay rent, primarily in the retail sector. Any reduction in our tenants' abilities to pay base rent, percentage rent or other charges, including as a result of COVID-19, will adversely affect our financial condition and results of operations.

During the three months ended ~~September~~June 30, ~~2017,~~2023, we signed ~~12 retail~~13 office leases for a total of ~~24,711~~120,365 square feet of ~~retail~~office space including ~~24,190~~119,307 square feet of comparable renewal office space leases (leases for which there was a prior tenant), at an average rental rate decrease on a cash basis ~~of 1.2%~~ and ~~an average rental rate~~ increase on a GAAP basis of ~~8.4%. New retail leases for comparable spaces were signed for 4,785 square feet at an average rental rate decrease on a cash~~3.5% and ~~GAAP basis of 12.3% and 2.5%, respectively. Renewals for comparable retail spaces were signed for~~ ~~19,405~~ ~~square feet at an average rental rate decrease on a cash basis of~~ ~~0.1%~~ ~~and an average rental rate increase on a GAAP basis of~~ ~~9.6%~~. Tenant improvements and incentives were $57.47 per square foot of retail space for comparable new leases for the three months ended September 30, 2017, mainly attributed to tenants at Del Monte Center.

~~During the three months ended September 30, 2017, we signed 22 office leases for a total of 123,140 square feet of office space including~~ ~~68,920~~ ~~square feet of comparable space leases, at an average rental rate increase on a cash and GAAP basis of 10.3% and 14.5%~~4.5%, respectively. New office leases for comparable spaces were signed for ~~20,253~~6,431 square feet at an average rental rate increase on a cash and GAAP basis of ~~15.8%~~23.0% and ~~26.0%~~19.6%, respectively. Renewals for comparable office spaces were signed for ~~48,667~~112,876 square feet at an average rental rate decrease on a cash basis and increase on a GAAP basis of 4.1% and 4.2%, respectively. Tenant improvements and incentives were $30.27 per square foot of office space for comparable new leases for the three months ended June 30, 2023, mainly due to a tenant at Solana Crossing.

During the three months ended June 30, 2023, we signed 21 retail leases for a total of 121,955 square feet of retail space including 96,955 square feet of comparable renewal retail space leases (leases for which there was a prior tenant), at an average rental rate increase on a cash and GAAP basis of 2.9% and 2.1%, respectively. Renewals for comparable retail spaces were signed for 96,955 square feet at an average rental rate increase on a cash and GAAP basis of ~~7.5%~~2.9% and ~~8.7%~~2.1%, respectively. ~~Tenant improvements and incentives~~There were ~~$43.34 per square foot of office space~~no new retail leases for comparable ~~new leases for~~spaces signed during the three months ended ~~September~~June 30, ~~2017, mainly attributed to tenants at City Center Bellevue and One Beach Street.~~2023.

The rental increases associated with comparable spaces generally include all leases signed in arms-length transactions reflecting market leverage between landlords and tenants during the period. The comparison between average rent for expiring leases and new leases is determined by including minimum rent ~~and percentage rent~~ paid on the expiring lease and minimum ~~rent and, in some instances, projections of first lease year percentage~~ rent to be paid on the new lease. In some instances, management exercises judgment as to how to most effectively reflect the comparability of spaces reported in this calculation. The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. Tenant improvements and incentives include the total dollars committed for the improvement of a space as it relates to a specific lease, but may also include base-building costs (i.e. expansion, escalators or new entrances) which are required to make the space leasable. Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent building improvements.

The leases signed in ~~2017~~2023 generally become effective over the following year, though some may not become effective until ~~2018~~2024 and beyond. Further, there is risk that some new tenants will not ultimately take possession of their space and that tenants for both new and renewal leases may not pay all of their contractual rent due to operating, financing or other matters. ~~However, we believe that these increases do provide information about the tenant/landlord relationship and the potential fluctuations we may achieve in rental income over time.~~

~~Through the remainder~~

Table of 2017, we believe our leasing volume will be in-line with our historical averages and result in overall positive increases in rental income. However, changes in rental income associated with individual signed leases onContents

~~comparable spaces may be positive or negative, and we can provide no assurance that the rents on new leases will continue to increase at the above disclosed levels, if at all.~~

Capitalized Costs

Certain external and internal costs directly related to the development and redevelopment of real estate, including pre-construction costs, real estate taxes, insurance, interest, construction costs and salaries and related costs of personnel directly involved, are capitalized. We capitalize costs under development until construction is substantially complete and the property is held available for occupancy. The determination of when a development project is substantially complete and when capitalization must cease involves a degree of judgment. We consider a construction project as substantially complete and held available for occupancy upon the completion of landlord-owned tenant improvements or when the lessee takes possession of the unimproved space for construction of its own improvements, but not later than one year from cessation of major construction activity. We cease capitalization on the portion substantially completed and occupied or held available for occupancy, and capitalize only those costs associated with any remaining portion under construction.

We capitalized external and internal costs related to both development and redevelopment activities combined of ~~$1.4~~$5.6 million and ~~$6.2~~$22.8 million for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016, respectively. We capitalized external~~2022, respectively, and ~~internal costs related to both development and redevelopment activities combined of $8.7~~$15.3 million and ~~$24.7~~$45.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

We capitalized external and internal costs related to other property improvements combined of ~~$8.4~~$13.2 million and ~~$8.6~~$10.2 million for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016, respectively. We capitalized external~~2022, respectively, and ~~internal costs related to other property improvements combined of $23.0~~$25.5 million and ~~$20.4~~$19.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

We capitalized internal costs for salaries and related benefits for development and redevelopment activities and other property improvements, which are not significant for the three and nine months ended September 30, 2017 and ~~2016, respectively.~~

Interest costs on developments and major redevelopments are capitalized as part of developments and redevelopments not yet placed in service. Capitalization of interest commences when development activities and expenditures begin and end upon completion, which is when the asset is ready for its intended use as noted above. We make judgments as to the time period over which to capitalize such costs and these assumptions have a direct impact on net income because capitalized costs are not subtracted in calculating net income. If the time period for capitalizing interest is extended, however, more interest is capitalized, thereby decreasing interest expense and increasing net income during that period. We capitalized interest costs related to development activities of ~~$0.4~~$1.9 million and ~~$0.3~~$1.4 million for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016, respectively. We capitalized interest costs related to development activities of $1.2~~2022, respectively, and $3.8 million and $2.6 million for ~~each of~~ the ~~nine month periods~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively.

Results of Operations

For our discussion of results of operations, we have provided information on a total portfolio and same-store basis.

Comparison of the three months ended ~~September~~June 30, ~~2017~~2023 to the three months ended ~~September~~June 30, ~~2016~~2022

The following summarizes our consolidated results of operations for the three months ended ~~September~~June 30, ~~2017~~2023 compared to our consolidated results of operations for the three months ended ~~September~~June 30, ~~2016~~.2022. As of ~~September~~June 30, ~~2017~~,2023, our operating portfolio was comprised of 2631 retail, office, multifamily and mixed-use properties with an aggregate of approximately ~~6.1 million~~ rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,112 residential units (including 122 RV spaces) and a 369-room hotel. Additionally, as of September 30, 2017, we owned land at four of our properties that we classified as held for development and/or construction in progress. As of September 30, 2016, our operating portfolio was comprised of 24 retail, office, multifamily and mixed-use properties with an aggregate of approximately 5.97.2 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, ~~1,579~~2,110 residential units (including ~~122~~120 RV spaces) and a 369-room hotel. Additionally, as of ~~September~~June 30, ~~2016,~~2023, we owned land at ~~four~~three of our properties that we classified as held for development and/or construction in progress. As of June 30, 2022, our operating portfolio was comprised of 31 retail, office, multifamily and mixed-use properties with an aggregate of approximately 7.2 million rentable square feet of retail and office space, including the retail portion of our mixed-use property, 2,110 residential units (including 120 RV spaces) and a 369-room hotel. Additionally, as of June 30, 2022, we owned land at three of our properties that we classified as held for development and/or construction in progress.

Table of Contents

The following table sets forth selected data from our unaudited consolidated statements of comprehensive income for the three months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 (dollars in thousands):

Three Months Ended September 30, Change %
2017 2016
Revenues
Rental income $ 78,135
$ 71,852
$ 6,283
9 %
Other property income 4,204
4,124
80
2
Total property revenues 82,339
75,976
6,363
8
Expenses
Rental expenses 21,177
20,591
586
3
Real estate taxes 8,535
7,396
1,139
15
Total property expenses 29,712
27,987
1,725
6
Total property income 52,627
47,989
4,638
10
General and administrative (4,958 ) (4,513 ) (445 ) 10
Depreciation and amortization (21,192 ) (17,992 ) (3,200 ) 18
Interest expense (13,873 ) (13,049 ) (824 ) 6
Other expense, net (99 ) (577 ) 478
(83 )
Net income 12,505
11,858
647
5
Net income attributable to restricted shares (60 ) (42 ) (18 ) 43
Net income attributable to unitholders in the Operating Partnership (3,351 ) (3,342 ) (9 ) —
Net income attributable to American Assets Trust, Inc. stockholders $ 9,094
$ 8,474
$ 620
7 %


	Three Months Ended June 30,				Change		%
	2023		2022
Revenues
Rental income	$	103,901	$	99,016	$	4,885	5	%
Other property income	5,820		5,139		681		13
Total property revenues	109,721		104,155		5,566		5
Expenses
Rental expenses	28,711		25,853		2,858		11
Real estate taxes	11,086		11,287		(201)		(2)
Total property expenses	39,797		37,140		2,657		7
Total property income	69,924		67,015		2,909		4
General and administrative	(8,609)		(7,612)		(997)		13
Depreciation and amortization	(29,823)		(31,087)		1,264		(4)
Interest expense, net	(16,368)		(14,547)		(1,821)		13


Other income (expense), net	273		(181)		454		(251)






Net income	15,397		13,588		1,809		13
Net income attributable to restricted shares	(190)		(154)		(36)		23
Net income attributable to unitholders in the Operating Partnership	(3,224)		(2,852)		(372)		13
Net income attributable to American Assets Trust, Inc. stockholders	$	11,983	$	10,582	$	1,401	13	%

Revenue

Total property revenues. Total property revenue consists of rental revenue and other property income. Total property revenue increased ~~$6.4~~$5.6 million, or 8%5%, to ~~$82.3~~$109.7 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$76.0~~$104.2 million for the three months ended ~~September~~June 30, ~~2016~~.2022. The percentage leased was as follows for each segment as of ~~September~~June 30, ~~2017~~2023 and ~~2016~~:2022:


	Percentage Leased(1)
	June 30,
	2023		2022
Office	87.4	%	91.0	%
Retail	94.6	%	92.5	%
Multifamily	85.9	%	92.0	%
Mixed-Use (2)	94.6	%	94.9	%

(1)The percentage leased for our retail and office segments and the retail portion of the mixed-use segment includes square footage under leases, including leases which may not have commenced as of June 30, 2023 or 2022, as applicable. Percentage leased for our multifamily properties includes total units rented and occupied as of June 30, 2023 or 2022, as applicable.

(2)Includes the retail portion of the mixed-use property only.

Percentage Leased ⁽¹⁾
September 30,
2017 2016
Retail 97.0 % 97.0 %
Office 89.9 % 89.9 %
Multifamily 91.3 % 91.7 %
Mixed-Use ⁽²⁾
93.7 % 98.8 %

Table of Contents


~~(1)~~	~~The percentage leased includes the square footage under lease, including leases which may not have commenced as of~~ ~~September 30, 2017~~ or ~~September 30, 2016, as applicable.~~


~~(2)~~	~~Includes the retail portion of the mixed-use property only.~~

The increase in total property revenue was attributable primarily to new retail leases, higher annualized base rents within the office segment and an increase in occupancy and rate at Waikiki Beach Walk Embassy Suites™ and factors discussed below.

Rental revenues. Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents. Rental revenue increased ~~$6.3~~$4.9 million,, or 9%5%, to ~~$78.1~~$103.9 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$71.9~~$99.0 million for the three months ended ~~September~~June 30, ~~2016~~.2022. Rental revenue by segment was as follows (dollars in thousands):

Total Portfolio
Same-Store Portfolio⁽¹⁾
Three Months Ended September 30, Change % Three Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 26,191
$ 24,724
$ 1,467
6 % $ 25,049
$ 24,590
$ 459
2 %
Office 25,385
24,294
1,091
4
25,324
24,247
1,077
4
Multifamily 11,519
7,462
4,057
54
4,823
4,615
208
5
Mixed-Use 15,040
15,372
(332 ) (2 ) 15,040
15,372
(332 ) (2 )
$ 78,135
$ 71,852
$ 6,283
9 % $ 70,236
$ 68,824
$ 1,412
2 %


	Total Portfolio								Same-Store Portfolio(1)
	Three Months Ended June 30,				Change		%		Three Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	50,598	$	49,291	$	1,307	3		$	50,598	$	49,291	$	1,307	3
Retail	25,438		24,035		1,403		6		25,438		24,035		1,403		6
Multifamily	14,224		13,225		999		8		14,224		13,225		999		8
Mixed-Use	13,641		12,465		1,176		9		13,641		12,465		1,176		9
	$	103,901	$	99,016	$	4,885	5	%	$	103,901	$	99,016	$	4,885	5	%

~~(1)~~

For this table and tables following, the same-store portfolio excludes: (i) Hassalo on Eighth - Multifamily, which became available for occupancy in July and October of 2015; (ii) Hassalo on Eighth - Retail, which was placed in operation in April and July of 2016; (iii) the Pacific Ridge Apartments as it was acquired on April 28, 2017; (iv) Gateway Marketplace as it was acquired on July 6, 2017; and (v) land held for development.

(1)For this table and tables following, the same-store portfolio excludes: (i) One Beach Street, due to significant redevelopment activity; (ii) the 710 building at Lloyd District Portfolio which was placed into operations on November 1, 2022, approximately one year after completing renovations of the building and (iii) land held for development.

Total ~~retail~~office rental revenue increased ~~$1.5~~$1.3 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to the acquisition of Gateway Marketplace on July 6, 2017, which had rental revenue of approximately $0.8 million during the period. The increase in total retail rental revenue is also attributed to the completion of Hassalo on Eighth - Retail, which became available forhigher occupancy ~~during 2016,~~at Torrey Point and ~~had incremental rental revenue during the three months ended September 30, 2017 of approximately $0.2 million. Same-store~~higher annualized base rents at Torrey Reserve and Corporate Campus East III.

Total retail rental revenue increased ~~$0.5~~$1.4 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~higher annualized base rents~~new tenant leases and ~~additional cost reimbursements at~~prior tenants on alternate rent reverting back to basic monthly rent. These increases were primarily related to Carmel Mountain Plaza, Alamo Quarry Market, Del Monte Center and Lomas Santa Fe ~~Plaza and Alamo Quarry Market. The increases in same-store retail rental revenue are offset by lower annualized base rents at Waikele Center during the quarter.~~Plaza.

~~Total office rental~~Multifamily revenue increased ~~$1.1~~$1.0 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~higher annualized~~an overall increase in average monthly base ~~rents~~rent, with an overall decrease in occupancy due to seasonality at Pacific Ridge Apartments. Average monthly base rent and ~~additional cost reimbursements during~~occupancy was $2,587 and 87.7%, respectively for the three months ended ~~September~~June 30, ~~2017, primarily at~~2023 compared to $2,297 and 93.2%, respectively for the Lloyd District Portfolio, The Landmark at One Market, Torrey Reserve Campus and First & Main. The increase in total office rental revenue during the quarter is offset by a decrease in the percentage leased at One Beach Street.three months ended June 30, 2022.

Total ~~multifamily~~mixed-use rental revenue increased ~~$4.1~~$1.2 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~the acquisition of the Pacific Ridge Apartments on April 28, 2017,~~an increase in tourism, which ~~had rental~~led to an increase in average occupancy and revenue ~~of approximately $3.8 million during the quarter. Same-store multifamily rental revenue increased $0.2 million compared~~per available room to ~~the three months ended September 30, 2016 due to higher average base rent per unit of $1,866~~84.4% and $312 for the three months ended ~~September~~June 30, ~~2017~~2023, respectively, compared to ~~$1,732~~78.8% and $280 for ~~the~~ three months ended ~~September~~June 30, ~~2016.~~2022, respectively.

~~Mixed-use rental revenue decreased $0.3~~

Table of Contents

Other property income. Other property income increased $0.7 million, or 13%, to $5.8 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~the three months ended September 30, 2016 primarily due to lower revenue per available room of $324~~$5.1 million for the three months ended ~~September~~June 30, ~~2017 compared to $335 for the three months ended September 30, 2016.~~

~~Other property income. Other property income increased~~ ~~$0.1 million, or~~ 2%~~, to~~ ~~$4.2 million~~ ~~for the~~ ~~three months ended September 30, 2017~~ ~~compared to~~ ~~$4.1 million~~ ~~for the~~ ~~three months ended September 30, 2016~~.2022. Other property income by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio
Three Months Ended September 30, Change % Three Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 356
$ 340
$ 16
5 % $ 312
$ 314
$ (2 ) (1 )%
Office 1,268
1,524
(256 ) (17 ) 1,329
1,571
(242 ) (15 )
Multifamily 891
591
300
51
400
319
81
25
Mixed-Use 1,689
1,669
20
1
1,689
1,669
20
1
$ 4,204
$ 4,124
$ 80
2 % $ 3,730
$ 3,873
$ (143 ) (4 )%


	Total Portfolio								Same-Store Portfolio
	Three Months Ended June 30,				Change		%		Three Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	1,621	$	1,302	$	319	25		$	1,615	$	1,275	$	340	27
Retail	463		303		160		53		463		303		160		53
Multifamily	969		989		(20)		(2)		969		989		(20)		(2)
Mixed-Use	2,767		2,545		222		9		2,767		2,545		222		9
	$	5,820	$	5,139	$	681	13	%	$	5,814	$	5,112	$	702	14	%

Office other property income ~~decreased~~increased by $0.3 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended June 30, 2022 primarily due to lease termination fees ~~for tenants~~received in the second quarter of 2023 at ~~Torrey Reserve Campus received during the three months ended September 30, 2016.~~Solana Crossing and an increase in parking garage income at Lloyd Portfolio, City Center Bellevue and First & Main.

~~Multifamily~~Retail other property income increased ~~$0.3~~by $0.2 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended June 30, 2022 primarily due to lease termination fees received in the ~~acquisition~~second quarter of ~~the Pacific Ridge Apartments on April 28, 2017, which had~~2023 at Carmel Mountain Plaza.

Mixed-use other property income ~~of approximately~~increased by $0.2 million ~~during the quarter. The increase is also attributed to an increase in occupancy at Hassalo on Eighth - Multifamily~~ for the three months ended ~~September~~June 30, ~~2017.~~2023 compared to the three months ended June 30, 2022 primarily due to increased tourism and hotel occupancy which led to an increase in other room rental income and excise tax at the hotel portion of our mixed-use property.

Property Expenses

Total Property Expenses. Total property expenses consist of rental expenses and real estate taxes. Total property expenses increased ~~$1.7~~$2.7 million, or 6%7%, to ~~$29.7~~$39.8 million, for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$28.0~~$37.1 million for the three months ended ~~September~~June 30, ~~2016.~~2022.

Rental Expenses. Rental expenses increased ~~$0.6~~$2.9 million, or 3%11%, to ~~$21.2 million for the~~ ~~three months ended September 30, 2017~~ ~~compared to $20.6~~$28.7 million for the three months ended ~~September~~June 30, ~~2016.~~2023 compared to $25.9 million for the three months ended June 30, 2022. Rental expense by segment was as follows (dollars in thousands):


	Total Portfolio								Same-Store Portfolio
	Three Months Ended June 30,				Change		%		Three Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	9,877	$	8,911	$	966	11		$	9,608	$	8,718	$	890	10
Retail	4,178		3,909		269		7		4,178		3,909		269		7
Multifamily	5,000		4,458		542		12		5,000		4,458		542		12
Mixed-Use	9,656		8,575		1,081		13		9,656		8,575		1,081		13
	$	28,711	$	25,853	$	2,858	11	%	$	28,442	$	25,660	$	2,782	11	%

Total Portfolio Same-Store Portfolio
Three Months Ended September 30, Change % Three Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 3,456
$ 4,252
$ (796 ) (19 )% $ 3,309
$ 4,210
$ (901 ) (21 )%
Office 5,064
5,127
(63 ) (1 ) 5,065
5,127
(62 ) (1 )
Multifamily 3,756
2,506
1,250
50
1,333
1,265
68
5
Mixed-Use 8,901
8,706
195
2
8,901
8,706
195
2
$ 21,177
$ 20,591
$ 586
3 % $ 18,608
$ 19,308
$ (700 ) (4 )%

~~Retail~~Office rental ~~expenses decreased $0.8~~expense increased $1.0 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due ~~a decrease~~to an increase in ~~bad debt~~utilities expenses, facility services and insurance expenses.

Retail rental expense for the three months ended September 30, 2017 at Waikele Center and Carmel Mountain Plaza attributed to the Sports Authority bankruptcy in 2016. The decrease in retail rental expenses was minimally offset by rental expenses for Gateway Marketplace, which was acquired on July 6, 2017, and had rental expenses of approximately $0.1 million during the period.

~~Multifamily rental expenses~~ increased ~~$1.3~~$0.3 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~the acquisition of the Pacific Ridge Apartments on April 28, 2017, which had~~an increase in repairs and maintenance, employee related costs and insurance expenses.

Multifamily rental ~~expenses of approximately $1.3 million during the quarter.~~

~~Mixed-use rental expenses~~expense increased ~~$0.2~~$0.5 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to an increase in ~~bad debt~~repairs and maintenance, facilities services and employee related costs.

Mixed-use rental expense increased $1.1 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 primarily due to an increase in hotel room expenses, general excise tax expenses and employee related costs at the hotel portion of our mixed-use property and general excise tax expense and employee related costs at the retail portion of our mixed-use ~~property during the quarter.~~property. These increases are in line with increased tourism and higher hotel occupancy as travel restrictions to Hawaii were relaxed in 2022.

Table of Contents

Real Estate Taxes. Real estate taxes ~~increased $1.1~~decreased $0.2 million, or ~~15%~~2%, to ~~$8.5~~$11.1 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$7.4~~$11.3 million for the three months ended ~~September~~June 30, ~~2016.~~2022. Real estate tax expense by segment was as follows (dollars in thousands):


	Total Portfolio								Same-Store Portfolio
	Three Months Ended June 30,				Change		%		Three Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	5,017	$	5,152	$	(135)	(3)		$	4,975	$	5,103	$	(128)	(3)
Retail	3,377		3,521		(144)		(4)		3,377		3,521		(144)		(4)
Multifamily	1,786		1,763		23		1		1,786		1,763		23		1
Mixed-Use	906		851		55		6		906		851		55		6
	$	11,086	$	11,287	$	(201)	(2)	%	$	11,044	$	11,238	$	(194)	(2)	%

Total Portfolio Same-Store Portfolio
Three Months Ended September 30, Change % Three Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 3,478
$ 2,907
$ 571
20 % $ 3,307
$ 2,863
$ 444
16 %
Office 2,810
3,019
(209 ) (7 ) 2,807
3,016
(209 ) (7 )
Multifamily 1,525
782
743
95
439
433
6
1
Mixed-Use 722
688
34
5
722
688
34
5
$ 8,535
$ 7,396
$ 1,139
15 % $ 7,275
$ 7,000
$ 275
4 %

~~Retail~~Office real estate taxes ~~increased $0.6~~decreased $0.1 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to an adjustment in levy taxes at City Center Bellevue partially offset by an increase in ~~the assessed~~property value ~~of Alamo Quarry Market~~assessments at Eastgate Office Park and the acquisition of Gateway Marketplace on July 6, 2017, which had real estate taxes of approximately $0.1 million during the period. The increase in retail real estate taxes for the three months ended September 30, 2017 is approximately 90% recoverable from tenants.Corporate Campus East III.

~~Office~~Retail real estate taxes decreased ~~$0.2~~$0.1 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due ~~to nonrecurring real estate taxes for tenants with~~lower tax ~~exemptions~~assessment at ~~One Beach Street.~~Alamo Quarry Market.

~~Multifamily~~Mixed-use real estate taxes increased ~~$0.7~~$0.1 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to the ~~acquisition~~COVID-19 pandemic and its financial burden on the hospitality industry, as a result of which Honolulu County reduced the ~~Pacific Ridge Apartments on April 28, 2017, which had real estate taxes of approximately $0.7 million during the quarter.~~tax burden for hotels for 2021 through 2022.

Property Operating Income

Property operating income increased ~~$4.6~~$2.9 million, or ~~10%~~4%, to ~~$52.6~~$69.9 million for the three months ended ~~September~~June 30, ~~2017,~~2023, compared to ~~$48.0~~$67.0 million for the three months ended ~~September~~June 30, ~~2016~~.2022. Property operating income by segment was as follows (dollars in thousands):


	Total Portfolio								Same-Store Portfolio
	Three Months Ended June 30,				Change		%		Three Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	37,325	$	36,530	$	795	2		$	37,630	$	36,745	$	885	2
Retail	18,346		16,908		1,438		9		18,346		16,908		1,438		9
Multifamily	8,407		7,993		414		5		8,407		7,993		414		5
Mixed-Use	5,846		5,584		262		5		5,846		5,584		262		5
	$	69,924	$	67,015	$	2,909	4	%	$	70,229	$	67,230	$	2,999	4	%

Total Portfolio Same-Store Portfolio
Three Months Ended September 30, Change % Three Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 19,613
$ 17,905
$ 1,708
10 % $ 18,745
$ 17,831
$ 914
5 %
Office 18,779
17,672
1,107
6
18,781
17,675
1,106
6
Multifamily 7,129
4,765
2,364
50
3,451
3,236
215
7
Mixed-Use 7,106
7,647
(541 ) (7 ) 7,106
7,647
(541 ) (7 )
$ 52,627
$ 47,989
$ 4,638
10 % $ 48,083
$ 46,389
$ 1,694
4 %
Total office property operating income increased $0.8 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022, primarily due to higher occupancy at Torrey Point, higher annualized base rents at Torrey Reserve and Corporate Campus East III and an increase in parking garage income at Lloyd Portfolio, City Center Bellevue and First & Main. This increase in revenue was partially offset by higher rental expenses related to utilities, facilities and insurance expenses as our tenants' employees return to the office in-person.

Total retail property operating income increased ~~$1.7~~$1.4 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~the acquisition of Gateway Marketplace~~new tenant leases, prior tenants on ~~July 6, 2017~~alternate rent reverting back to basic monthly rent and ~~higher annualized base rents and additional cost reimbursements~~one-time lease termination fees received at ~~same-store retail properties during the quarter. The increase is also attributed to the decrease in bad debt expense for same-store retail properties during the quarter.~~

~~Office property operating income increased $1.1 million for the three months ended September 30, 2017 compared to the three months ended September 30, 2016~~Carmel Mountain Plaza. Additionally, real estate taxes decreased primarily due to anlower tax assessment at Alamo Quarry Market. This increase in ~~annualized base rents~~revenue was partially offset by higher rental expenses related to repairs and ~~additional cost reimbursements during the three months ended September 30, 2017.~~maintenance, employee related costs and insurance expenses.

Total multifamily property operating income increased ~~$2.4~~$0.4 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to an overall increase in average monthly base rent of $2,587 for the ~~acquisition~~three months ended June 30, 2023 compared to $2,297 for the three months ended June 30, 2022. Average occupancy decreased to 87.7% for the three months ended June 30, 2023 compared to 93.2% for the three months ended June 30, 2022. This increase in revenue was partially offset by an increase in rental expenses related to repairs and maintenance and facilities services.

Table of ~~the Pacific Ridge Apartments on April 28, 2017. Same-store~~Contents

Total mixed-use property operating income increased ~~$0.2~~$0.3 million for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the three months ended ~~September~~June 30, ~~2016~~2022 primarily due to increase in tourism and related increase in hotel occupancy. This led to an increase in average occupancy and revenue per available room to 84.4% and $312, respectively, for the three months ended June 30, 2023, compared to 78.8% and $280, respectively, for three months ended June 30, 2022. This also led to an increase in other room rental income and excise tax at the hotel portion of our mixed-use property. These increases were offset by higher ~~average base rent per unit during~~hotel room expenses, general excise tax expenses and employee related costs at both the ~~quarter.~~hotel and retail portions of our mixed-use property.

~~Mixed use property operating income decreased $0.5~~Other

General and Administrative. General and administrative expenses increased to $8.6 million for the three months ended ~~September~~June 30, ~~2017~~2023, compared to the three months ended September 30, 2016 primarily due to lower revenue per available room at the hotel and increase in bad debt expense at the retail portion of our mixed-use property during the quarter.

~~Other~~

~~General and Administrative.~~ ~~General and administrative expenses increased $0.4 million, or 10%, to $5.0~~$7.6 million for the three months ended ~~September~~June 30, ~~2017, compared to $4.5 million for the three months ended September 30, 2016.~~2022. This increase was primarily due to an increase in stock-based compensation expense and employee-related ~~costs.~~costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits.

Depreciation and Amortization. Depreciation and amortization expense ~~increased $3.2 million, or 18%,~~decreased to ~~$21.2~~$29.8 million for the three months ended ~~September~~June 30, ~~2017,~~2023, compared to ~~$18.0~~$31.1 million for the three months ended ~~September~~June 30, ~~2016.~~2022. This was due to acceleration of assets related to tenants vacating space during the three months ended June 30, 2022 at City Center Bellevue, Eastgate Office Park, Corporate Campus East III and Alamo Quarry Market. This decrease was partially offset by new building and tenant improvement assets put into service in 2023 at Torrey Reserve Campus.

Interest Expense, net. Interest expense increased by $1.8 million, or 13%, to $16.4 million for the three months ended June 30, 2023, compared to $14.5 million for the three months ended June 30, 2022. This increase was primarily due to ~~depreciation~~higher interest on our $225 million Amended and Restated Term Loan Agreement and related amortization ~~attributable~~of loan fees. These increases were offset by an increase in capitalized interest related to the acquisitions of Pacific Ridge Apartments on April 28, 2017, which had depreciation and amortization expense of approximately $3.0 million during the quarter, and Gateway Marketplace on July 6, 2017, which had depreciation and amortization expense of approximately $0.2 million during the quarter.our development projects.

~~Interest Expense.~~ ~~Interest expense~~Other Income (Expense), Net. Other income, net increased ~~$0.8~~$0.5 million, or 6%251%, to ~~$13.9~~other income, net of $0.3 million for the three months ended ~~September~~June 30, ~~2017,~~2023, compared to ~~$13.0~~other expense, net of $0.2 million for the three months ended ~~September~~June 30, ~~2016. This increase was~~2022, primarily due to ~~the closing~~an increase of $0.4 million in interest and investment income attributed to higher yield on our offerings of Series D Notes on March 1, 2017, Series E Notes on May 23, 2017 and Series F Notes on July 19, 2017, offset by the payoff of property mortgages for Southbay Marketplace fourth quarter of 2016, Waikiki Beach Walk - Retailaverage cash balance during the ~~first quarter~~period.

Table of ~~2017 and Solana Beach Corporate Center III-IV during the second quarter of 2017.~~Contents

~~Other Expense, Net.~~ Other income, net decreased $0.5 million, or 83%, to $0.1 million for the three months ended September 30, 2017, compared to $0.6 million for the three months ended September 30, 2016, primarily due to a decrease in tax expense during the period attributed to losses associated with our TRS lease.

Comparison of the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2023 to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2022

The following summarizes our consolidated results of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to our consolidated results of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~.2022.

The following table sets forth selected data from our unaudited consolidated statements of income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 (dollars in thousands):


	Nine Months Ended September 30,						Change			%			Six Months Ended June 30,				Change		%
	2017			2016									2023		2022
Revenues												Revenues
Rental income	$	221,100		$	207,318		$	13,782		7	%	Rental income	$	206,611	$	196,002	$	10,609	5	%
Other property income	12,137			11,208			929			8		Other property income	10,864		9,623		1,241		13
Total property revenues	233,237			218,526			14,711			7		Total property revenues	217,475		205,625		11,850		6
Expenses												Expenses
Rental expenses	60,877			58,634			2,243			4		Rental expenses	56,216		49,998		6,218		12
Real estate taxes	23,975			20,446			3,529			17		Real estate taxes	22,718		22,716		2		—
Total property expenses	84,852			79,080			5,772			7		Total property expenses	78,934		72,714		6,220		9
Total property income	148,385			139,446			8,939			6		Total property income	138,541		132,911		5,630		4
General and administrative	(15,171		)	(13,456		)	(1,715		)	13		General and administrative	(17,608)		(14,754)		(2,854)		19
Depreciation and amortization	(63,360		)	(53,159		)	(10,201		)	19		Depreciation and amortization	(59,724)		(61,499)		1,775		(3)
Interest expense	(39,856		)	(39,148		)	(708		)	2		Interest expense	(32,097)		(29,213)		(2,884)		10

Other income (expense), net	403			(454		)	857			189		Other income (expense), net	6,951		(343)		7,294		(2,127)

Net income	30,401			33,229			(2,828		)	(9	)	Net income	36,063		27,102		8,961		33
Net income attributable to restricted shares	(181		)	(128		)	(53		)	41		Net income attributable to restricted shares	(379)		(309)		(70)		23
Net income attributable to unitholders in the Operating Partnership	(8,220		)	(9,377		)	1,157			(12	)	Net income attributable to unitholders in the Operating Partnership	(7,565)		(5,688)		(1,877)		33
Net income (loss) attributable to American Assets Trust, Inc. stockholders	$	22,000		$	23,724		$	(1,724	)	(7	)%
Net income attributable to American Assets Trust, Inc. stockholders												Net income attributable to American Assets Trust, Inc. stockholders	$	28,119	$	21,105	$	7,014	33	%

Revenue

Total property revenues. Total property revenue consists of rental revenue and other property income. Total property revenue increased ~~$14.7~~$11.9 million, or 7%6%, to ~~$233.2~~$217.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$218.5~~$205.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~.2022. The percentage leased was as follows for each segment as of ~~September~~June 30, ~~2017~~2023 and ~~2016~~:2022:


						Percentage Leased(1)
	Percentage Leased ⁽¹⁾					June 30,
	September 30,					2023		2022
	2017		2016
Office					Office	87.4	%	91.0	%
Retail	97.0	%	97.0	%	Retail	94.6	%	92.5	%
Office	89.9	%	89.9	%
Multifamily	91.3	%	91.7	%	Multifamily	85.9	%	92.0	%
Mixed-Use ⁽²⁾	93.7	%	98.8	%	Mixed-Use (2)	94.6	%	94.9	%


~~(1)~~	~~The percentage leased includes the square footage under lease, including leases which may not have commenced as of~~ ~~September 30, 2017~~ or ~~September 30, 2016, as applicable.~~


~~(2)~~	~~Includes the retail portion of the mixed-use property only.~~

(2)Includes the retail portion of the mixed-use property only.

Table of Contents

The increase in total property revenue was attributable primarily to the factors discussed below.

Rental revenues. Rental revenue includes minimum base rent, cost reimbursements, percentage rents and other rents. Rental revenue increased ~~$13.8~~$10.6 million,, or 7%5%, to ~~$221.1~~$206.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$207.3~~$196.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~.2022. Rental revenue by segment was as follows (dollars in thousands):

Total Portfolio
Same-Store Portfolio⁽¹⁾
Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 75,161
$ 73,369
1,792
2 % $ 73,364
$ 73,146
$ 218
— %
Office 74,996
72,400
2,596
4
61,977
59,780
2,197
4
Multifamily 29,053
19,831
9,222
47
14,090
13,541
549
4
Mixed-Use 41,890
41,718
172
—
41,890
41,718
172
—
$ 221,100
$ 207,318
$ 13,782
7 % $ 191,321
$ 188,185
$ 3,136
2 %


	Total Portfolio								Same-Store Portfolio(1)
	Six Months Ended June 30,				Change		%		Six Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	100,290	$	97,702	$	2,588	3		$	98,674	$	96,761	$	1,913	2
Retail	50,750		48,552		2,198		5		50,750		48,552		2,198		5
Multifamily	28,829		26,199		2,630		10		28,829		26,199		2,630		10
Mixed-Use	26,742		23,549		3,193		14		26,742		23,549		3,193		14
	$	206,611	$	196,002	$	10,609	5	%	$	204,995	$	195,061	$	9,934	5	%

~~(1)~~

(1)For this table and tables following, the same-store portfolio excludes: (i) Torrey Reserve Campus due to significant redevelopment activity during the period; (ii) Hassalo on Eighth - Multifamily, which became available for occupancy in July and October of 2015; (iii) Hassalo on Eighth - Retail, which was placed in operation in April and July of 2016; (iv) the Pacific Ridge Apartments as it was acquired April 28, 2017; (v) Gateway Marketplace as it was acquired on July 6, 2017; and (vi) land held for development.

~~Total retail rental revenue increased $1.8 million for~~ the ~~nine months ended September 30, 2017 compared to~~tables following, the ~~nine months ended September 30, 2016 primarily~~same-store portfolio excludes: (i) One Beach Street, due to significant redevelopment activity; (ii) Bel-Spring 520, which was acquired on March 8, 2022; (iii) the ~~acquisition~~710 building at Lloyd District Portfolio which was placed into operations on November 1, 2022, approximately one year after completing renovations of ~~Gateway Marketplace on July 6, 2017, which had rental revenue of approximately $0.8 million during~~ the ~~period. The increase in total retail rental revenue is also attributed to the completion of Hassalo on Eighth - Retail, which became available~~building and (iv) land held for occupancy during 2016, and had incremental rental revenue of approximately $0.8 million during the period. Same-store retail rental revenue increased $0.2 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to higher annualized base rents and additional cost reimbursements at Lomas Santa Fe Plaza, Carmel Mountain Plaza and Alamo Quarry Market. The increases in same-store retail rental revenue are offset by a decrease in vacancy and lower annualized base rents at Waikele Center during the period.development.

Total office rental revenue increased $2.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 due to the acquisition of Bel-Spring 520 which accounted for $0.7 million of the increase. Same store office rental revenue increased by $1.9 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to higher annualized base rents ~~and additional cost reimbursements during the period, primarily~~ at ~~Lloyd District Portfolio,~~Torrey Reserve and The Landmark at One Market and higher occupancy at Torrey Point. Additionally, there was an increase of $0.9 million related to cost recoveries at Torrey Reserve, First & Main and ~~Torrey Reserve Campus.~~The Landmark at One Market.

~~Multifamily~~Retail rental revenue increased ~~$9.2~~$2.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~the acquisition~~new tenant leases signed and tenants previously on alternate rent reverting back to basic monthly rent. These increases are primarily related to Carmel Mountain Plaza, Lomas Santa Fe Plaza, Alamo Quarry Market and Waikele Center. Additionally, there was an increase in cost recoveries of ~~the Pacific Ridge Apartments on April 28, 2017, which had rental~~$0.3 million as new leases were executed and COVID-related rent concessions were provided during 2020 and 2021.

Multifamily revenue ~~of approximately $6.6~~increased $2.6 million for the ~~period. The~~six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to an overall increase in ~~multifamily rental revenue is also attributed to an increase in occupancy at Hassalo on Eighth - Multifamily~~average monthly base rent of $2,549 for the ~~nine~~six months ended ~~September~~June 30, ~~2017, which had incremental rental revenue of approximately $2.1 million during~~2023 compared to $2,257 for the ~~period. Same-store multifamily rental revenue increased $0.5 million during the period due to higher average base rent per unit of $1,810 during the nine~~six months ended ~~September~~June 30, ~~2017~~2022. Average occupancy decreased to 90.3% for the six months ended June 30, 2023 compared to ~~$1,688 during~~94.2% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022.

Mixed-use rental revenue increased ~~$0.2~~$3.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~higher~~the Waikiki Beach Walk hotel portion of our mixed use property. This increase was due to the lifting of COVID-19 travel restrictions, which led to an increase in average occupancy and revenue per available room ~~of $300~~to 83.2% and $307 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023, respectively, compared to ~~$297~~75.8% and $262 for the ~~nine~~six months ended ~~September~~June 30, ~~2016 and an increase in occupancy to 93% for nine months ended September 30, 2017 compared to 90% for the nine months ended September 30, 2016.~~2022, respectively.

Other property income. Other property income increased ~~$0.9~~$1.2 million, or 8%13%, to ~~$12.1~~$10.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$11.2~~$9.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~.2022. Other property income by segment was as follows (dollars in thousands):


	Total Portfolio								Same-Store Portfolio
	Six Months Ended June 30,				Change		%		Six Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	2,899	$	2,460	$	439	18		$	2,875	$	2,397	$	478	20
Retail	778		627		151		24		778		627		151		24
Multifamily	1,927		1,904		23		1		1,927		1,904		23		1
Mixed-Use	5,260		4,632		628		14		5,260		4,632		628		14
	$	10,864	$	9,623	$	1,241	13	%	$	10,840	$	9,560	$	1,280	13	%

Office other property income increased $0.4 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to due to lease termination fees received during 2023 at Solana Crossing and an increase in parking garage income at Lloyd Portfolio, City Center Bellevue and First & Main.

Table of Contents

Total Portfolio Same-Store Portfolio
Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 1,131
$ 947
$ 184
19 % $ 991
$ 921
$ 70
8 %
Office 4,006
4,016
(10 ) —
4,020
3,803
217
6
Multifamily 2,271
1,576
695
44
1,028
935
93
10
Mixed-Use 4,729
4,669
60
1
4,729
4,669
60
1
$ 12,137
$ 11,208
$ 929
8 % $ 10,768
$ 10,328
$ 440
4 %

~~Total retail~~Retail other property income increased $0.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 primarily due to the lease termination fees received at Carmel Mountain Plaza during 2023.

Total mixed-use other property income increased $0.6 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to increased tourism and hotel occupancy which led to an increase in ~~lease termination fees~~other room rental income and excise tax at ~~Del Monte Center and an increase in parking garage income at Hassalo on Eighth - Retail during~~ the ~~period.~~

Same-store office other property income increased $0.2 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to parking garage income at Lloyd District Portfolio due to the completionhotel portion of ~~the shared Hassalo on Eighth parking garage, which was placed into service during the fourth quarter of 2015, and an increase in lease termination fees at One Beach Street.~~

Total multifamily other property income increased $0.7 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 due to the acquisition of the Pacific Ridge Apartments on April 28, 2017, which had other property income of approximately $0.3 million during the period and an increase in occupancy at Hassalo on Eighth - Multifamily, which had incremental other property income of approximately $0.3 million during the period.our mixed-use property.

Property Expenses

Total Property Expenses. Total property expenses consist of rental expenses and real estate taxes. Total property expenses increased by ~~$5.8~~$6.2 million, or 7%9%, to ~~$84.9~~$78.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, compared to ~~$79.1~~$72.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. This increase in total property expenses was attributable primarily to the factors discussed below.

Rental Expenses. Rental expenses increased ~~$2.2~~$6.2 million, or 4%12%, to ~~$60.9~~$56.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~,2023, compared to ~~$58.6~~$50.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~.2022. Rental expense by segment was as follows (dollars in thousands):


	Total Portfolio								Same-Store Portfolio
	Six Months Ended June 30,				Change		%		Six Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	19,404	$	17,151	$	2,253	13		$	18,544	$	16,577	$	1,967	12
Retail	8,230		7,913		317		4		8,230		7,913		317		4
Multifamily	9,745		8,773		972		11		9,745		8,773		972		11
Mixed-Use	18,837		16,161		2,676		17		18,837		16,161		2,676		17
	$	56,216	$	49,998	$	6,218	12	%	$	55,356	$	49,424	$	5,932	12	%

Total Portfolio Same-Store Portfolio
Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 10,412
$ 11,487
$ (1,075 ) (9 )% $ 10,154
$ 11,374
$ (1,220 ) (11 )%
Office 15,411
15,284
127
1
12,822
13,033
(211 ) (2 )
Multifamily 8,973
7,253
1,720
24
3,763
3,599
164
5
Mixed-Use 26,081
24,610
1,471
6
26,081
24,610
1,471
6
$ 60,877
$ 58,634
$ 2,243
4 % $ 52,820
$ 52,616
$ 204
— %

~~Total retail~~Office rental expenses ~~decreased $1.1~~increased $2.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~a decrease in bad debt expense for Waikele Center~~$0.2 million related to the ~~Sports Authority bankruptcy recorded during the second quarter~~acquisition of 2016. The decrease in retail rental expenses was minimally offset by rental expenses for Gateway Marketplace, which was acquired on July 6, 2017, and had rental expenses of approximately $0.1 million during the period.

~~Total~~Bel-Spring 520. Same-store office rental expenses increased ~~$0.1~~$2.0 million due to an increase in repairs and maintenance services, utilities expenses, facility services, insurance expense and other operating expenses as our tenants' employees have started returning to the office in-person.

Retail rental expenses increased $0.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 primarily due to an increase in ~~bad debt expense for~~repairs and maintenance, facilities services and insurance expenses in the ~~nine months ended September 30, 2017 at One Beach Street and an increase in building expenses at Torrey Reserve Campus attributed to an increase in occupancy at the property during the~~ period. ~~The increase in total office rental expenses is offset by a decrease in salary expense at the Lloyd District Portfolio.~~

~~Total multifamily~~Multifamily rental expenses increased ~~$1.7~~$1.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, 2016 primarily due to the acquisition of the Pacific Ridge Apartments on April 28, 2017, which had rental expenses of approximately $1.8 million during the period. The increase in total multifamily rental expenses was offset by a decrease in salary expense and utility expenses at Hassalo on Eighth.

~~Mixed-use rental expenses increased $1.5 million during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~2022 primarily due to an increase in ~~bad debt expense primarily at the hotel portion of our mixed-use property attributable~~utilities expenses, facilities services and repairs and maintenance, related to ~~a bankruptcy filed by one of the hotel's travel agencies. The~~janitorial, electrical and painting services. Additionally, there was an increase in property-level personnel compensation expenses and insurance expenses.

Total mixed-use rental expenses ~~is also attributed~~increased $2.7 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to an increase of $2.5 million in hotel room expenses, personnel expenses and excise tax expenses at the hotel portion of our mixed-use property ~~attributable to~~during the period. There was also an increase in ~~occupancy during~~rental expenses of $0.2 million at the ~~period.~~retail portion of our mixed-use property related to excise tax, employee costs and facilities expenses. These increases are due to tourism as travel restrictions to Hawaii have been relaxed.

Table of Contents

Real Estate Taxes. Real estate tax expense ~~increased $3.5 million, or 17%, to $24.0~~remained largely unchanged at $22.7 million for both the ~~nine~~six months ended ~~September~~June 30, ~~2017~~ ~~compared to $20.4 million for~~2023, and the ~~nine~~six months ended ~~September~~June 30, ~~2016~~.2022. Real estate tax expense by segment was as follows (dollars in thousands):


	Total Portfolio								Same-Store Portfolio
	Six Months Ended June 30,				Change		%		Six Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	10,310	$	10,242	$	68	1		$	10,077	$	10,064	$	13	—
Retail	7,029		7,245		(216)		(3)		7,029		7,245		(216)		(3)
Multifamily	3,572		3,527		45		1		3,572		3,527		45		1
Mixed-Use	1,807		1,702		105		6		1,807		1,702		105		6
	$	22,718	$	22,716	$	2	—	%	$	22,485	$	22,538	$	(53)	—	%

Total Portfolio Same-Store Portfolio
Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 10,007
$ 8,716
$ 1,291
15 % $ 9,736
$ 8,625
$ 1,111
13 %
Office 8,309
8,111
198
2
6,632
6,519
113
2
Multifamily 3,601
1,707
1,894
111
1,300
1,282
18
1
Mixed-Use 2,058
1,912
146
8
2,058
1,912
146
8
$ 23,975
$ 20,446
$ 3,529
17 % $ 19,726
$ 18,338
$ 1,388
8 %

~~Total retail~~Office real estate taxes increased ~~$1.3~~$0.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, 2016 primarily due to an increase in the assessed values of Alamo Quarry Market and Waikele Center. The increase is also attributed to the acquisition of Gateway Marketplace on July 6, 2017, which had real estate taxes of approximately $0.1 million during the period. The increase in retail real estate taxes for the nine months ended September 30, 2017 is approximately 89% recoverable from tenants.

Total office real estate taxes increased $0.2 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to an increase in the assessed values of City Center Bellevue and Torrey Reserve Campus. The increase in real estate taxes is partially offset by nonrecurring real estate taxes for tenants with tax exemptions at First & Main. The increase in office real estate taxes for the nine months ended September 30, 2017 is approximately 22% recoverable from tenants.

~~Multifamily real estate taxes increased $1.9 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~2022 primarily due to the acquisition of ~~the Pacific Ridge Apartments on April 28, 2017, which had~~Bel-Spring 520.

Retail real estate taxes ~~of approximately $1.2~~decreased $0.2 million ~~during~~for the ~~quarter. The increase is also attributed~~six months ended June 30, 2023 compared to ~~receipt of assessed taxes at Hassalo on Eighth - Multifamily, which were estimated for by~~ the ~~Company during the prior period and had incremental~~six months ended June 30, 2022 primarily due to a one-time real estate tax ~~expense of approximately $0.7 million~~refund received during ~~the period.~~2023 at Carmel Mountain Plaza and lower tax assessments at Alamo Quarry Market.

Mixed-use real estate taxes increased $0.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 primarily due to ~~an increase in real estate taxes for~~ the ~~hotel portion of our mixed-use property that are assessed annually based~~COVID-19 pandemic and its financial burden on the ~~hotel's room rates,~~hospitality industry, as a result of which ~~have increased from~~Honolulu County reduced the ~~prior year.~~

tax burden for hotels for 2021 through 2022 which has not continued to 2023.

Property Operating Income

Property operating income increased ~~$8.9~~$5.6 million, or 6%4%, to ~~$148.4~~$138.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~,2023, compared to ~~$139.4~~$132.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~.2022. Property operating income by segment was as follows (dollars in thousands):

Total Portfolio Same-Store Portfolio
Nine Months Ended September 30, Change % Nine Months Ended September 30, Change %
2017 2016 2017 2016
Retail $ 55,873
$ 54,113
$ 1,760
3 % $ 54,465
$ 54,068
$ 397
1 %
Office 55,282
53,021
2,261
4
46,543
44,031
2,512
6
Multifamily 18,750
12,447
6,303
51
10,055
9,595
460
5
Mixed-Use 18,480
19,865
(1,385 ) (7 ) 18,480
19,865
(1,385 ) (7 )
$ 148,385
$ 139,446
$ 8,939
6 % $ 129,543
$ 127,559
$ 1,984
2 %

Total retail property operating income increased $1.8 million during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to the acquisition of Gateway Marketplace on July 6, 2017 and an increase in the percentage leased at Hassalo on Eighth - Retail during the period. The increase is also attributed to the decrease in bad debt expense for same-store retail properties during the period.


	Total Portfolio								Same-Store Portfolio
	Six Months Ended June 30,				Change		%		Six Months Ended June 30,				Change		%
	2023		2022						2023		2022
Office	$	73,475	$	72,769	$	706	1		$	72,928	$	72,517	$	411	1
Retail	36,269		34,021		2,248		7		36,269		34,021		2,248		7
Multifamily	17,439		15,803		1,636		10		17,439		15,803		1,636		10
Mixed-Use	11,358		10,318		1,040		10		11,358		10,318		1,040		10
	$	138,541	$	132,911	$	5,630	4	%	$	137,994	$	132,659	$	5,335	4	%

Total office property operating income increased ~~$2.3~~$0.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016 primarily due to higher annualized base rents and additional cost reimbursements during the nine months ended September 30, 2017.~~

~~Total multifamily property operating income increased $6.3 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily~~2022 due to the acquisition of ~~the Pacific Ridge Apartments on April 28, 2017 and an increase in occupancy at Hassalo on Eighth - Multifamily~~Bel-Spring 520, which had incremental property operating income of approximately $0.3 million during the period. Same-store property operating income increased ~~$0.5~~$0.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022, primarily due to higher ~~average~~cost recoveries and higher occupancy at Torrey Point and higher annualized base rent ~~per unit during~~at Torrey Reserve Campus and The Landmark at One Market. These increases were partially offset by higher operating expenses as our tenants' employees have started returning to the ~~period.~~office in-person.

~~Mixed-use~~Total retail property operating income ~~decreased $1.4~~increased $2.2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016. The decrease~~2022 primarily due to new tenant leases signed and tenants previously on alternate rent reverting back to basic monthly rent. Additionally, there was an increase in cost recoveries and a one-time lease termination fee received at Carmel Mountain Plaza. These increases were partially offset by higher rental expenses related to repairs and maintenance, facilities services and insurance expense.

Total multifamily property operating income increased $1.6 million during the six months ended June 30, 2023 compared to the six months ended June 30, 2022 primarily due to an overall increase in ~~bad debt expense during~~average monthly base rent of $2,549 for the ~~period at~~six months ended June 30, 2023 compared to $2,257 for the ~~hotel attributed~~six months ended June 30, 2022. Average occupancy decreased to ~~a bankruptcy filed~~90.3% for the six months ended June 30, 2023 compared to 94.2% for the six months ended June 30, 2022. This increase in average monthly base rent was partially offset by ~~one~~higher utilities expenses, facilities services and repairs and maintenance.

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Total mixed-use property operating income increased $1.0 million for the ~~hotel's travel agents and for tenants at~~six months ended June 30, 2023 compared to the ~~retail~~six months ended June 30, 2022 primarily due to the Waikiki Beach Walk hotel portion of our ~~mixed-use~~mixed use property. This increase was due to the lifting of COVID-19 travel restrictions, which led to an increase in average occupancy and revenue per available room to 83.2% and $307 for the six months ended June 30, 2023, respectively, compared to 75.8% and $262 for the six months ended June 30, 2022, respectively. This increase was partially offset by higher rental expenses related to room expenses, personnel costs, facilities expenses and excise tax expenses.

Other

General and Administrative. General and administrative expenses increased ~~$1.7~~$2.9 million, or ~~13%~~19%, to ~~$15.2~~$17.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, compared to ~~$13.5~~$14.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. This increase was primarily due to ~~an increase in~~stock-based compensation expense, general legal expenses and employee-related ~~costs.~~costs, including, without limitation, with respect to base pay for certain salaried and hourly workers and benefits.

Depreciation and Amortization. Depreciation and amortization expense ~~increased $10.2~~decreased $1.8 million, or ~~19%~~3%, to ~~$63.4~~$59.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, compared to ~~$53.2~~$61.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. This was due to acceleration of assets related to tenants vacating space during the six months ended June 30, 2022 at City Center Bellevue, Eastgate Office Park, Corporate Campus East III and Alamo Quarry Market. This decrease was partially offset by new building and tenant improvement assets put into service in 2023 at Torrey Reserve Campus, Bel-Spring 520 and First & Main.

Interest Expense. Interest expense increased $2.9 million, or 10%, to $32.1 million for the six months ended June 30, 2023 compared to $29.2 million for the six months ended June 30, 2022. This increase was primarily due to ~~depreciation~~higher interest on our $225 million Amended and Restated Term Loan Agreement and related amortization ~~attributable to the acquisitions~~ of Pacific Ridge Apartments on April 28, 2017, which had depreciation and amortization expense of approximately $8.8 million during the period, and Gateway Marketplace on July 6, 2017, which had depreciation and amortization expense of approximately $0.2 million during the period. The increase is also due to the depreciation and amortization attributable to the completion of the Hassalo on Eighth retail buildings completed in 2016.

~~Interest Expense.~~ ~~Interest expense increased $0.7 million, or 2%, to $39.9 million for the nine months ended September 30, 2017 compared to $39.1 million for the nine months ended September 30, 2016.~~loan fees. This ~~increase~~ was ~~primarily due to the closing of our offerings of Series D Notes on March 1, 2017, Series E Notes on May 23, 2017 and Series F Notes on July 19, 2017,~~partially offset by lower interest expense on the ~~payoff of property mortgages for Southbay Marketplace fourth quarter of 2016, Waikiki Beach Walk - Retail during the first quarter of 2017~~new non-recourse mortgage on City Center Bellevue and ~~Solana Beach Corporate Center III-IV during the second quarter of 2017.~~increase in capitalized interest related to our development projects.

Other Income (Expense), Net. Other income, net increased ~~$0.9~~$7.3 million,~~, or 189%~~ or 2,127%, to ~~$0.4~~other income, net of $7.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, compared to other expense, net of ~~$0.5~~$0.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022 primarily due to the net settlement payment of approximately $6.3 million received on January 3, 2023 related to certain building systems at our Hassalo on Eighth property and an increase of $0.9 million in interest and investment income attributed to higher yield on our average cash ~~balances~~balance during the period. ~~The decrease is also attributed to income tax benefit during the period attributed to losses associated with our TRS lease.~~

Liquidity and Capital Resources of American Assets Trust, Inc.

In this “Liquidity and Capital Resources of American Assets Trust, Inc.” section, the term the “company” refers only to American Assets Trust, Inc. on an unconsolidated basis, and excludes the Operating Partnership and all other subsidiaries.

The company’s business is operated primarily through the Operating Partnership, of which the company is the parent company and sole general partner, and which it consolidates for financial reporting purposes. Because the company operates on a consolidated basis with the Operating Partnership, the section entitled “Liquidity and Capital Resources of American Assets Trust, L.P.” should be read in conjunction with this section to understand the liquidity and capital resources of the company on a consolidated basis and how the company is operated as a whole.

The company issues public equity from time to time, but does not otherwise generate any capital itself or conduct any business itself, other than incurring certain expenses in operating as a public company which are fully reimbursed by the Operating Partnership. The company itself does not have any indebtedness, and its only material asset is its ownership of partnership interests of the Operating Partnership. Therefore, the consolidated assets and liabilities and the consolidated revenues and expenses of the company and the Operating Partnership are the same on their respective financial statements. However, all debt is held directly or indirectly by the Operating Partnership. The company’s principal funding requirement is the payment of dividends on its common stock. The company’s principal source of funding for its dividend payments is distributions it receives from the Operating Partnership.

As of ~~September~~June 30, ~~2017~~,2023, the company owned an approximate ~~73.2%~~78.8% partnership interest in the Operating Partnership. The remaining ~~26.8%~~approximately 21.2% are owned by non-affiliated investors and certain of the company's directors and executive officers. As the sole general partner of the Operating Partnership, American Assets Trust, Inc. has the 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 causes the Operating Partnership to distribute such portion of its available cash as the company may in its discretion determine, in the manner provided in the Operating Partnership’s partnership agreement.

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The liquidity of the company is dependent on the Operating Partnership’s ability to make sufficient distributions to the company. The primary cash requirement of the company is its payment of dividends to its stockholders. The company also guarantees some of the Operating Partnership’s debt, as discussed further in Note 87 of the Notes to Consolidated Financial Statements included elsewhere herein. If the Operating Partnership fails to fulfill certain of its debt requirements, which trigger the company’s guarantee obligations, then the company will be required to fulfill its cash payment commitments under such guarantees. However, the company’s only significant asset is its investment in the Operating Partnership.

We believe the Operating Partnership’s sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured line of credit, are adequate for it to make its distribution payments to the company and, in turn, for the company to make its dividend payments to its stockholders. As of ~~September~~June 30, ~~2017~~,2023, the company has determined that it has adequate working capital to meet its dividend funding obligations for the next 12 months. However, we cannot assure you that the Operating Partnership’s sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including its ability to make distribution payments to the company. The unavailability of capital could adversely affect the Operating Partnership’s ability to pay its distributions to the company, which would in turn, adversely affect the company’s ability to pay cash dividends to its stockholders.

Our short-term liquidity requirements consist primarily of funds to pay for future dividends expected to be paid to the company’s stockholders, operating expenses and other expenditures directly associated with our properties, interest expense and scheduled principal payments on outstanding indebtedness, general and administrative expenses, funding construction projects, capital expenditures, tenant improvements and leasing commissions.

The company may from time to time seek to repurchase or redeem the Operating Partnership’s outstanding debt, the company’s shares of common stock or other securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases or redemptions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

For the company to maintain its qualification as a REIT, it must pay dividends to its stockholders aggregating annually at least 90% of its REIT taxable income, excluding net capital gains. While historically the company has satisfied this distribution requirement by making cash distributions to American Assets Trust, Inc.'s stockholders or American Assets Trust, L.P.'s unitholders, it may choose to satisfy this requirement by making distributions of cash or other property, including, in limited

circumstances, the company’s own stock. As a result of this distribution requirement, the Operating Partnership cannot rely on retained earnings to fund its ongoing operations to the same extent that other companies whose parent companies are not REITs can. The company may need to continue to raise capital in the equity markets to fund the operating partnership’s working capital needs, acquisitions and developments. Although there is no intent at this time, if market conditions deteriorate, the company may also delay the timing of future development and redevelopment projects as well as limit future acquisitions, reduce the Operating Partnership’s operating expenditures, or re-evaluate its dividend policy.

The company is a well-known seasoned issuer. As circumstances warrant, the company may issue equity from time to time on an opportunistic basis, dependent upon market conditions and available pricing. When the company receives proceeds from preferred or common equity issuances, it is required by the Operating Partnership’s partnership agreement to contribute the proceeds from its equity issuances to the Operating Partnership in exchange for partnership units of the Operating Partnership. The Operating Partnership may use the proceeds to repay debt, to develop new or existing properties, to acquire properties or for general corporate purposes.

In ~~February 2015,~~January 2021, the company filed a universal shelf registration statement on Form ~~S-3~~S-3ASR with the SEC, which ~~was deemed automatically~~became effective upon filing and which ~~provides for~~replaced the prior Form S-3ASR that was filed with the SEC in February 2018. The universal shelf registration statement permits the company from time to time to offer and sell equity securities of ~~unspecified amounts of securities.~~the company. However, there can be no assurance that the company will be able to complete any such offerings of securities. Factors influencing the availability of additional financing include investor perception of our prospects and the general condition of the financial markets, among others.

~~In May 2015,~~

On December 3, 2021, we entered into ana new ATM equity program with five sales agents inunder 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. The ~~sales~~sale of shares of ~~the company's~~our common stock made through the ATM equity program are made in ~~“at-the-market”~~"at-the-market" offerings as defined in Rule 415 of the Securities ~~Act. As~~Act of ~~September~~1933, as amended. For the three months ended June 30, ~~2017, we had the capacity to issue up to an additional $176.2 million in~~2023, no shares of common stock ~~under~~were sold through the ATM equity program.

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We intend to use the net proceeds to fund development or redevelopment activities, repay amounts outstanding from time to time under our amended and restated credit facility or other debt financing obligations, fund potential acquisition opportunities and/or for general corporate purposes. Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of the company's common stock and the company's capital needs. We have no obligation to sell the remaining shares available for sale under the ATM equity program.

Liquidity and Capital Resources of American Assets Trust, L.P.

In this “Liquidity and Capital Resources of American Assets Trust, L.P.” section, the terms “we,” “our” and “us” refer to the Operating Partnership together with its consolidated subsidiaries, or the Operating Partnership and American Assets Trust, Inc. together with their consolidated subsidiaries, as the context requires. American Assets Trust, Inc. is our sole general partner and consolidates our results of operations for financial reporting purposes. Because we operate on a consolidated basis with American Assets Trust, Inc., the section entitled “Liquidity and Capital Resources of American Assets Trust, Inc.” should be read in conjunction with this section to understand our liquidity and capital resources on a consolidated basis.

Due to the nature of our business, we typically generate significant amounts of cash from operations. The cash generated from operations is used for the payment of operating expenses, capital expenditures, debt service and dividends to American Assets Trust, Inc.'s stockholders and our unitholders. As a REIT, American Assets Trust, Inc. must generally make annual distributions to its stockholders of at least 90% of ~~our~~its net taxable income. As of ~~September~~June 30, ~~2017~~,2023, we held ~~$94.2~~$84.7 million in cash and cash equivalents.

Our short-term liquidity requirements consist primarily of operating expenses and other expenditures associated with our properties, regular debt service requirements, dividend payments to American Assets Trust, Inc.'s stockholders required to maintain its REIT status, distributions to our unitholders, capital expenditures and, potentially, acquisitions. We expect to meet our short-term liquidity requirements through net cash provided by operations, reserves established from existing cash and, if necessary, borrowings available under our credit facility.

Our long-term liquidity needs consist primarily of funds necessary to pay for the repayment of debt at maturity, property acquisitions, tenant improvements and capital improvements. We expect to meet our long-term liquidity requirements to pay scheduled debt maturities and to fund property acquisitions and capital improvements with net cash from operations, long-term secured and unsecured indebtedness and, if necessary, the issuance of equity and debt securities. We also may fund property acquisitions and capital improvements using our amended and restated credit facility pending permanent financing. We believe that we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity. However, we cannot be assured that this will be the case. Our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our ability to access the equity capital

markets will be dependent on a number of factors as well, including general market conditions for REITs and market perceptions about our company.

Our overall capital requirements for the remainder of ~~2017~~2023 and first half of 2024 will depend upon acquisition opportunities and the level of improvements and redevelopments on existing properties and the timing and cost of development of Torrey Point. Construction for Torrey Point was completed during the third quarter of 2017, resulting in approximately 88,000 additional square feet of office space. We expect to invest approximately $56 million related to Torrey Point, of which approximately $38 million has been incurred as of September 30, 2017, noting the remaining amount will be incurred as the property is leased to tenants.properties. Our capital investments will be funded on a short-term basis with, among other sources of capital, cash on hand, cash flow from operations and/or our revolving line of credit. On a long-term basis, our capital investments may be funded with additional long-term ~~debt.~~debt, including, without limitation, mortgage debt and unsecured notes. Our ability to incur additional debt will be dependent on a number of factors, including, without limitation, our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our capital investments may also be funded by issuing additional equity including, without limitation, shares issued by American Assets Trust, Inc. under its ATM equity ~~program.~~program or through an underwritten public offering. Although there is no intent at this time, if market conditions deteriorate or fail to improve, we may also delay the timing of future development and redevelopment projects as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy.

In ~~February 2015,~~January 2021, the Operating Partnership filed a universal shelf registration on Form S-3 ASR with the SEC which provided for the registration of an unspecified amount of debt securities by the Operating Partnership. However, there can be no assurance that the Operating Partnership will be able to complete any such offerings of debt securities. Factors influencing the availability of additional financing include investor perception of our prospects and the general condition of the financial markets, among others.

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Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements.

Cash Flows

Comparison of the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022

Cash, ~~and~~ cash equivalents, and restricted cash were ~~$94.2~~$84.7 million and ~~$62.0~~$60.8 million at ~~September~~June 30, ~~2017~~2023 and ~~2016~~,2022, respectively.

Net cash provided by operating activities increased ~~$23.0~~$12.1 million to ~~$125.8~~$98.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$102.7~~$86.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The increase in cash from operations was primarily due to the ~~acquisition of the Pacific Ridge Apartments, which were acquired~~net settlement received related to certain building systems at our Hassalo on ~~April 28, 2017~~Eighth, increase in rental revenue and ~~the settlements of the March 2016 Swap~~changes in operating assets and ~~April 2016 Swap, which will be amortized over the Series D Notes, and April 2017 Treasury Lock, which will be amortized over the Series E Notes.~~liabilities.

Net cash used in investing activities ~~increased $271.1~~decreased $63.4 million to ~~$318.3~~$49.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to ~~$47.2~~$112.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~.2022. The ~~increase~~decrease in cash used was primarily due to the ~~acquisitions~~acquisition of ~~Pacific Ridge Apartments~~Bel-Spring 520 on ~~April 28, 2017~~March 8, 2022, and ~~Gateway Marketplace on July 6, 2017, offset by the completion of development activity~~decrease in capital expenditures at ~~the Hassalo on Eighth retail buildings during 2016.~~La Jolla Commons III and One Beach Street.

Net cash ~~provided~~used by financing activities ~~increased $275.5~~decreased $38.5 million to ~~cash provided of $242.0~~$13.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to cash used in financing activities of ~~$33.5~~$52.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The ~~increase~~decrease in cash ~~provided~~used by financing activities was primarily due to the ~~closing of Series D Notes issued on March 1, 2017~~term loan agreement that was amended and ~~Series E Notes on May 23, 2017 and Series F Notes on July 19, 2017. The~~restated, among other things, to increase isthe fully drawn borrowings from $150 million to $225 million. This was partially offset by the repayment of the ~~mortgage at Waikiki Beach Walk Retail~~outstanding balance on the revolving line of credit and ~~Solana Beach Corporate Centre III-IV in 2017.~~payment of quarterly dividends.

Net Operating Income

Net Operating Income, or NOI, is a non-GAAP financial measure of performance. We define NOI as operating revenues (rental income, tenant reimbursements, lease termination fees, ground lease rental income and other property income) less property and related expenses (property expenses, ground lease expense, property marketing costs, real estate taxes and insurance). NOI excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expense, other ~~nonproperty~~non-property income and losses, gains and losses from property dispositions, extraordinary items, tenant improvements, and leasing commissions. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to the NOIs of other REITs.

NOI is used by investors and our management to evaluate and compare the performance of our properties and to determine trends in earnings and to compute the fair value of our properties as it is not affected by (1) the cost of funds of the

property owner, (2) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP or (3) general and administrative expenses and other gains and losses that are specific to the property owner. The cost of funds is eliminated from net income because it is specific to the particular financing capabilities and constraints of the owner. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital, which may have changed or may change in the future. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our retail, office, multifamily or mixed-use properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is intended to be captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale, which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales. We believe that eliminating these costs from net income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.

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However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, interest income and other expense, depreciation and amortization expense and gains or losses from the sale of properties, and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income, which further limits its usefulness.

NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income computed in accordance with GAAP and discussions elsewhere in “Management's Discussion and Analysis of Financial Condition and Results of Operations” regarding the components of net income that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, our NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as we do.

The following is a reconciliation of our NOI to net income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 computed in accordance with GAAP (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net operating income	$	69,924	$	67,015	$	138,541	$	132,911
General and administrative	(8,609)		(7,612)		(17,608)		(14,754)
Depreciation and amortization	(29,823)		(31,087)		(59,724)		(61,499)
Interest expense, net	(16,368)		(14,547)		(32,097)		(29,213)


Other income (expense), net	273		(181)		6,951		(343)





Net income	$	15,397	$	13,588	$	36,063	$	27,102

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net operating income $ 52,627
$ 47,989
$ 148,385
$ 139,446
General and administrative (4,958 ) (4,513 ) (15,171 ) (13,456 )
Depreciation and amortization (21,192 ) (17,992 ) (63,360 ) (53,159 )
Interest expense (13,873 ) (13,049 ) (39,856 ) (39,148 )
Other income, net (99 ) (577 ) 403
(454 )
Net income $ 12,505
$ 11,858
$ 30,401
$ 33,229

Funds from Operations

We calculate funds from operations ~~or FFO,~~("FFO"), in accordance with the standards established by the National Association of Real Estate Investment Trusts ~~or NAREIT.~~("NAREIT"). FFO represents net income ~~(loss)~~ (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses, real-estate related depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures.

FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real-estate related depreciation and amortization and gains and losses from property dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other

REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, accordingly, our FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or service indebtedness. FFO also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

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The following table sets forth a reconciliation of our FFO for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 to net income, the nearest GAAP equivalent (in thousands, except per share and share data):


	Three Months Ended June 30,		Six Months Ended June 30,
	2023			2023
Funds from Operations (FFO)
Net income	$	15,397		$	36,063
Plus: Real estate depreciation and amortization	29,823			59,724


Funds from operations	45,220			95,787

Less: Nonforfeitable dividends on incentive restricted stock awards	(186)			(373)
FFO attributable to common stock and units	$	45,034		$	95,414
FFO per diluted share/unit	$	0.59		$	1.25
Weighted average number of common shares and units, diluted (1)	76,328,181			76,328,678

(1)The weighted average common shares used to compute FFO per diluted share include unvested restricted stock awards that are subject to time vesting, which were excluded from the computation of diluted EPS, as the vesting of the restricted stock awards is dilutive in the computation of FFO per diluted share but is anti-dilutive for the computation of diluted EPS for the period. Diluted shares exclude incentive restricted stock as these awards are considered contingently issuable.


	Six Months Ended June 30,
	2023		2022
OPERATING ACTIVITIES
Net income	$	36,063	$	27,102


Adjustments to reconcile net income to net cash provided by operating activities:
Deferred rent revenue and amortization of lease intangibles	(4,950)		(5,425)
Depreciation and amortization	59,724		61,499
Amortization of debt issuance costs and debt discounts	1,718		1,279


Provision for uncollectable rental income	739		(86)


Stock-based compensation expense	4,145		3,490




Other noncash interest expense, net	(952)		(549)
Other, net	432		(1,724)
Changes in operating assets and liabilities
Change in accounts receivable	(3)		314
Change in other assets	(1,374)		(1,459)
Change in accounts payable and accrued expenses	1,723		(46)
Change in security deposits payable	(19)		474
Change in other liabilities and deferred credits	872		1,188


Net cash provided by operating activities	98,118		86,057
INVESTING ACTIVITIES
Acquisition of real estate	—		(45,167)
Capital expenditures	(44,411)		(63,060)

Leasing commissions	(4,675)		(4,252)



Net cash used in investing activities	(49,086)		(112,479)
FINANCING ACTIVITIES



Proceeds from unsecured term loan	225,000		—

Repayment of unsecured line of credit	(36,000)		—


Repayment of unsecured term loan	(150,000)		—

Debt issuance costs	(2,138)		(3,245)


Dividends paid to common stock and unitholders	(50,756)		(49,092)

Shares withheld for employee taxes	—		(15)
Net cash used in financing activities	(13,894)		(52,352)
Net increase (decrease) in cash and cash equivalents	35,138		(78,774)
Cash and cash equivalents, beginning of period	49,571		139,524
Cash and cash equivalents, end of period	$	84,709	$	60,750



	Nine Months Ended September 30,
	2017			2016
OPERATING ACTIVITIES
Net income	$	30,401		$	33,229
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred rent revenue and amortization of lease intangibles	(2,233		)	(2,297		)
Depreciation and amortization	63,360			53,159
Amortization of debt issuance costs and debt fair value adjustments	2,625			3,354
Stock-based compensation expense	1,917			1,855
Settlement of derivative instruments	10,667			—
Other noncash interest expense	(794		)	(173		)
Other, net	1,665			1,168
Changes in operating assets and liabilities
Change in restricted cash	115			1,177
Change in accounts receivable	211			(1,564		)
Change in other assets	(548		)	(23		)
Change in accounts payable and accrued expenses	17,299			10,983
Change in security deposits payable	622			142
Change in other liabilities and deferred credits	462			1,717
Net cash provided by operating activities	125,769			102,727
INVESTING ACTIVITIES
Acquisition of real estate	(278,141		)	—
Capital expenditures	(34,757		)	(45,583		)
Change in restricted cash	(1,688		)	200
Leasing commissions	(3,742		)	(1,808		)
Deposit on property acquisition	—			—
Net cash used in investing activities	(318,328		)	(47,191		)
FINANCING ACTIVITIES
Change in restricted cash	1,400			—
Repayment of secured notes payable	(166,781		)	(113,512		)
Proceeds from unsecured term loan	—			150,000
Proceeds from unsecured line of credit	173,000			10,000
Repayment of unsecured line of credit	(193,000		)	(40,000		)
Proceeds from unsecured notes payable	450,000			—
Debt issuance costs	(2,557		)	(2,107		)
Proceeds from issuance of common stock, net	30,075			9,665
Dividends paid to common stock and unitholders	(50,172		)	(47,536		)
Shares withheld for employee taxes	—			(12		)
Net cash provided by (used in) financing activities	241,965			(33,502		)
Net increase in cash and cash equivalents	49,406			22,034
Cash and cash equivalents, beginning of period	44,801			39,925
Cash and cash equivalents, end of period	$	94,207		$	61,959


	Six Months Ended June 30,
	2023		2022
OPERATING ACTIVITIES
Net income	$	36,063	$	27,102


Adjustments to reconcile net income to net cash provided by operating activities:
Deferred rent revenue and amortization of lease intangibles	(4,950)		(5,425)
Depreciation and amortization	59,724		61,499
Amortization of debt issuance costs and debt discounts	1,718		1,279

Provision for uncollectable rental income	739		(86)

Stock-based compensation expense	4,145		3,490



Other noncash interest expense, net	(952)		(549)

Other, net	432		(1,724)
Changes in operating assets and liabilities
Change in accounts receivable	(3)		314
Change in other assets	(1,374)		(1,459)
Change in accounts payable and accrued expenses	1,723		(46)
Change in security deposits payable	(19)		474
Change in other liabilities and deferred credits	872		1,188


Net cash provided by operating activities	98,118		86,057
INVESTING ACTIVITIES
Acquisition of real estate	—		(45,167)
Capital expenditures	(44,411)		(63,060)

Leasing commissions	(4,675)		(4,252)


Net cash used in investing activities	(49,086)		(112,479)
FINANCING ACTIVITIES




Proceeds from unsecured term loan	225,000		—


Repayment of unsecured line of credit	(36,000)		—


Repayment of unsecured notes payable	(150,000)		—

Debt issuance costs	(2,138)		(3,245)


Distributions	(50,756)		(49,092)

Shares withheld for employee taxes	—		(15)


Net cash used in financing activities	(13,894)		(52,352)
Net increase (decrease) in cash and cash equivalents	35,138		(78,774)
Cash and cash equivalents, beginning of period	49,571		139,524
Cash and cash equivalents, end of period	$	84,709	$	60,750



	Nine Months Ended September 30,
	2017			2016
OPERATING ACTIVITIES
Net income	$	30,401		$	33,229
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred rent revenue and amortization of lease intangibles	(2,233		)	(2,297		)
Depreciation and amortization	63,360			53,159
Amortization of debt issuance costs and debt fair value adjustments	2,625			3,354
Stock-based compensation expense	1,917			1,855
Settlement of derivative instruments	10,667			—
Other noncash interest expense	(794		)	(173		)
Other, net	1,665			1,168
Changes in operating assets and liabilities
Change in restricted cash	115			1,177
Change in accounts receivable	211			(1,564		)
Change in other assets	(548		)	(23		)
Change in accounts payable and accrued expenses	17,299			10,983
Change in security deposits payable	622			142
Change in other liabilities and deferred credits	462			1,717
Net cash provided by operating activities	125,769			102,727
INVESTING ACTIVITIES
Acquisition of real estate	(278,141		)	—
Capital expenditures	(34,757		)	(45,583		)
Change in restricted cash	(1,688		)	200
Leasing commissions	(3,742		)	(1,808		)
Deposit on property acquisition	—			—
Net cash used in investing activities	(318,328		)	(47,191		)
FINANCING ACTIVITIES
Change in restricted cash	1,400			—
Repayment of secured notes payable	(166,781		)	(113,512		)
Proceeds from unsecured term loan	—			150,000
Proceeds from unsecured line of credit	173,000			10,000
Repayment of unsecured line of credit	(193,000		)	(40,000		)
Proceeds from unsecured notes payable	450,000			—
Debt issuance costs	(2,557		)	(2,107		)
Contributions from American Assets Trust, Inc.	30,075			9,665
Distributions	(50,172		)	(47,536		)
Shares withheld for employee taxes	—			(12		)
Net cash provided by (used in) financing activities	241,965			(33,502		)
Net increase in cash and cash equivalents	49,406			22,034
Cash and cash equivalents, beginning of period	44,801			39,925
Cash and cash equivalents, end of period	$	94,207		$	61,959


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

~~Retail~~Office
~~Carmel Country Plaza~~La Jolla Commons		~~Gateway Marketplace~~One Beach Street		~~Alamo Quarry Market~~Corporate Campus East III
~~Carmel Mountain Plaza~~		~~Del Monte Center~~	~~Hassalo on Eighth - Retail~~
~~South Bay Marketplace~~	~~Geary Marketplace~~
~~Lomas Santa Fe Plaza~~	~~The Shops at Kalakaua~~
~~Solana Beach Towne Centre~~	~~Waikele Center~~

~~Office~~
Torrey Reserve Campus	~~Lloyd District Portfolio~~First & Main		Bel-Spring 520
Torrey Point		Lloyd Portfolio
Solana ~~Beach Corporate Centre~~Crossing		City Center Bellevue
The Landmark at One Market		Eastgate Office Park
~~One Beach Street~~
~~First & Main~~					Multifamily
Loma Palisades		Hassalo on Eighth - Residential
~~Multifamily~~
~~Loma Palisades~~
Imperial Beach Gardens
Mariner's Point
Santa Fe Park RV Resort
Pacific Ridge Apartments
~~Hassalo on Eighth - Residential~~
Mixed-Use
~~Mixed-Use~~
Waikiki Beach Walk Retail and Embassy Suites™ Hotel

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


x	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934~~


o	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934~~



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
REVENUE:
Rental income	$	78,135		$	71,852		$	221,100		$	207,318
Other property income	4,204			4,124			12,137			11,208
Total revenue	82,339			75,976			233,237			218,526
EXPENSES:
Rental expenses	21,177			20,591			60,877			58,634
Real estate taxes	8,535			7,396			23,975			20,446
General and administrative	4,958			4,513			15,171			13,456
Depreciation and amortization	21,192			17,992			63,360			53,159
Total operating expenses	55,862			50,492			163,383			145,695
OPERATING INCOME	26,477			25,484			69,854			72,831
Interest expense	(13,873		)	(13,049		)	(39,856		)	(39,148		)
Other (expense) income, net	(99		)	(577		)	403			(454		)
NET INCOME	12,505			11,858			30,401			33,229
Net income attributable to restricted shares	(60		)	(42		)	(181		)	(128		)
Net income attributable to unitholders in the Operating Partnership	(3,351		)	(3,342		)	(8,220		)	(9,377		)
NET INCOME ATTRIBUTABLE TO AMERICAN ASSETS TRUST, INC. STOCKHOLDERS	$	9,094		$	8,474		$	22,000		$	23,724

EARNINGS PER COMMON SHARE
Earnings per common share, basic	$	0.19		$	0.19		$	0.47		$	0.52
Weighted average shares of common stock outstanding - basic	46,898,086			45,377,719			46,650,403			45,282,643

Earnings per common share, diluted	$	0.19		$	0.19		$	0.47		$	0.52
Weighted average shares of common stock outstanding - diluted	64,093,066			63,272,702			64,081,697			63,180,637

DIVIDENDS DECLARED PER COMMON SHARE	$	0.26		$	0.25		$	0.78		$	0.75

COMPREHENSIVE INCOME
Net income	$	12,505		$	11,858		$	30,401		$	33,229
Other comprehensive (loss) - unrealized (loss) on swap derivative during the period	87			2,432			(1,427		)	(11,443		)
Reclassification of amortization of forward-starting swap included in interest expense	(319		)	(58		)	(794		)	(173		)
Comprehensive income	12,273			14,232			28,180			21,613
Comprehensive income attributable to non-controlling interest	(3,263		)	(4,018		)	(7,447		)	(6,086		)
Comprehensive income attributable to American Assets Trust, Inc.	$	9,010		$	10,214		$	20,733		$	15,527


	Limited Partners' Capital (1)			General Partner's Capital (2)				Accumulated Other Comprehensive Income (Loss)		Total Capital
	Units	Amount		Units		Amount
Balance at December 31, 2022	16,181,537	$	(39,127)	60,718,653		$	1,210,641	$	14,011	$	1,185,525
Net income	—	4,341		—		16,325		—		20,666



Forfeiture of restricted units	—	—		(818)		—		—		—
Distributions	—	(5,340)		—		(20,037)		—		(25,377)
Stock-based compensation	—	—		—		2,035		—		2,035

Other comprehensive income - change in value of interest rate swap	—	—		—		—		(2,269)		(2,269)

Reclassification of amortization of forward starting swaps included in interest expense	—	—		—		—		(854)		(854)

Balance at March 31, 2023	16,181,537	(40,126)		60,717,835		1,208,964		10,888		1,179,726
Net income	—	3,224		—		12,173		—		15,397


Issuance of restricted units	—	—		10,348		—		—		—
Forfeiture of restricted units	—	—		(3,553)		—		—		—
Distributions	—	(5,340)		—		(20,039)		—		(25,379)
Stock-based compensation	—	—		—		2,110		—		2,110

Other comprehensive income - change in value of interest rate swap	—	—		—		—		4,360		4,360

Reclassification of amortization of forward-starting swap realized gains included in interest expense	—	—		—		—		(98)		(98)
Balance at June 30, 2023	16,181,537	$	(42,242)	$	60,724,630	$	1,203,208	$	15,150	$	1,176,116



	Limited Partners' Capital ⁽¹⁾					General Partner's Capital ⁽²⁾					Accumulated Other Comprehensive Income (Loss)			Total Capital
	Units		Amount			Units		Amount			Accumulated Other Comprehensive Income (Loss)			Total Capital
Balance at December 31, 2016	17,888,822		$	24,315		45,732,109		$	797,758		$	16,478		$	838,551
Net income	—		8,220			—		22,181			—			30,401
Contributions from American Assets Trust, Inc.	—		—			700,000		30,075			—			30,075
Conversion of operating partnership units	(693,842	)	(10,759		)	693,842		10,759			—			—
Issuance of restricted units	—		—			4,880		—			—			—
Forfeiture of restricted units	—		—			(768	)	—			—			—
Distributions	—		(13,592		)	—		(36,580		)	—			(50,172		)
Stock-based compensation	—		—			—		1,917			—			1,917
Other comprehensive loss - change in value of interest rate swap	—		—			—		—			(12,094		)	(12,094		)
Other comprehensive income - unrealized gain on forward-starting interest rate swaps	—		—			—		—			10,667			10,667
Reclassification of amortization of forward-starting swap included in interest expense	—		—			—		—			(794		)	(794		)
Balance at September 30, 2017	17,194,980		$	8,184		47,130,063		$	826,110		$	14,257		$	848,551



	Pacific Ridge Apartments		Gateway Marketplace
Land	$	47,972	$	17,363
Building	171,813		19,192
Land improvements	3,403		1,522
Furniture, fixtures, and equipment	3,281		930
Total real estate	226,469		39,007
Lease intangibles	5,592		2,920
Prepaid expenses and other assets	424		—
Assets acquired	$	232,485	$	41,927
Accounts payable and accrued expenses	$	74	$	203
Security deposits payable	673		22
Other liabilities and deferred credits	49		1,034
Liabilities assumed	$	796	$	1,259



	Pacific Ridge Apartments			Gateway Marketplace		Total
Revenues	$	6,884		$	806	$	7,690
Operating expenses	$	11,813		$	499	$	12,312
Operating (loss) income	$	(4,929	)	$	307	$	(4,622	)
Net (loss) income attributable to American Assets Trust, Inc.	$	(4,929	)	$	307	$	(4,622	)


	June 30, 2023		December 31, 2022
In-place leases	$	58,119	$	58,119
Accumulated amortization	(37,139)		(34,593)
Above market leases	1,885		1,885
Accumulated amortization	(1,799)		(1,778)
Acquired lease intangible assets, net	$	21,066	$	23,633
Below market leases	$	52,832	$	52,832
Accumulated accretion	(34,766)		(33,168)
Acquired lease intangible liabilities, net	$	18,066	$	19,664



	September 30, 2017			December 31, 2016
In-place leases	$	54,206		$	48,741
Accumulated amortization	(45,154		)	(38,906		)
Above market leases	21,262			21,667
Accumulated amortization	(19,854		)	(19,579		)
Acquired lease intangible assets, net	$	10,460		$	11,923
Below market leases	$	67,423		$	66,521
Accumulated accretion	(36,252		)	(33,073		)
Acquired lease intangible liabilities, net	$	31,171		$	33,448


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~~


	June 30, 2023								December 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Deferred compensation liability	$	—	$	2,429	$	—	$	2,429	$	—	$	2,411	$	—	$	2,411
Interest rate swap asset	$	—	$	11,881	$	—	$	11,881	$	—	$	9,986	$	—	$	9,986
Interest rate swap liability	$	—	$	—	$	—	$	—	$	—	$	196	$	—	$	196


	June 30, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
Secured notes payable, net	$	74,623	$	75,301	$	74,578	$	75,129
Unsecured term loans, net	$	322,917	$	325,000	$	249,428	$	250,000
Unsecured senior guaranteed notes, net	$	798,567	$	767,584	$	798,362	$	761,470
Senior unsecured notes, net	$	492,178	$	387,150	$	491,663	$	403,500
Unsecured line of credit, net	$	—	$	—	$	34,057	$	36,000



Swap Counterparty	Notional Amount		Effective Date	Maturity Date	Fair Value
Bank of America, N.A.	$	100,000	1/9/2014	1/9/2019	$	(358	)
U.S. Bank N.A.	$	100,000	3/1/2016	3/1/2023	$	2,396
Wells Fargo Bank, N.A.	$	50,000	5/2/2016	3/1/2023	$	1,228


	June 30, 2023		December 31, 2022
Leasing commissions, net of accumulated amortization of $46,768 and $43,078, respectively	$	38,044	$	38,436
Interest rate swap asset	11,881		9,986
Acquired above market leases, net	86		107
Acquired in-place leases, net	20,980		23,526
Lease incentives, net of accumulated amortization of $1,111 and $1,012, respectively	1,446		1,296
Other intangible assets, net of accumulated amortization of $1,732 and $1,549, respectively	1,986		2,165
Debt issuance costs, net of accumulated amortization of $577 and $0, respectively	1,620		—

Right-of-use lease asset, net	22,723		23,921
Prepaid expenses and other	10,388		9,277
Total other assets	$	109,154	$	108,714



	September 30, 2017		December 31, 2016
Acquired below market leases, net	$	31,171	$	33,448
Prepaid rent and deferred revenue	9,450		7,720
Interest rate swap liability	358		1,067
Deferred rent expense and lease intangible	1,716		1,756
Deferred compensation	1,158		1,006
Deferred tax liability	201		265
Straight-line rent liability	3,309		3,028
Other liabilities	60		47
Total other liabilities and deferred credits, net	$	47,423	$	48,337


	Principal Balance as of				Stated Interest Rate		Stated Maturity Date
Description of Debt	June 30, 2023		December 31, 2022		as of June 30, 2023


City Center Bellevue (1)	$	75,000	$	75,000	5.08	%	October 1, 2027
	75,000		75,000

Debt issuance costs, net of accumulated amortization of $497 and $452, respectively	(377)		(422)
Total Secured Notes Payable Outstanding	$	74,623	$	74,578


~~(2)~~	~~Loan repaid in full, without premium or penalty, on March 1, 2017.~~


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


~~(4)~~	~~Loan repaid in full, without premium or penalty, on April 3, 2017.~~


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


~~(2)~~	The Operating Partnership has an option to extend the term loan up to one time, with such extension for a 12-month period. The foregoing extension option is exercisable by us subject to the satisfaction of certain conditions.


~~(3)~~	The Operating Partnership entered into a one-month forward-starting seven-year swap contract on August 19, 2014, which was settled on September 19, 2014 at a gain of approximately $1.6 million. The forward-starting seven-year swap contract was deemed to be a highly effective cash flow hedge, accordingly, the effective interest rate is approximately 3.88% per annum.


~~(5)~~	~~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.~~


~~(6)~~	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.


~~(7)~~	~~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.~~


~~(8)~~	~~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.~~



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Number of shares of common stock issued through ATM programs	—		700,000
Weighted average price per share	N/A		$43.46

Proceeds, gross	$	—	$	30,425
Sales agent compensation	—		(304		)
Offering costs	—		(46		)
Proceeds, net	$	—	$	30,075



Period	Amount per Share/Unit		Period Covered	Dividend Paid Date
First Quarter 2017	$	0.26	January 1, 2017 to March 31, 2017	March 30, 2017
Second Quarter 2017	$	0.26	April 1, 2017 to June 30, 2017	June 29, 2017
Third Quarter 2017	$	0.26	July 1, 2017 to September 30, 2017	September 28, 2017



	Units		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2017	232,765		$31.24
Granted	4,880		$40.99
Vested	(4,900	)	$40.81
Forfeited	(768	)	$30.62
Nonvested at September 30, 2017	231,977		$31.25