EQUITY OF AMERICAN ASSETS TRUST, INC.

9 Months Ended

Sep. 30, 2019

Stockholders' Equity

On May 27, 2015, we entered into an at-the-market ("ATM") equity program with five sales agents in which we may, from time to time, offer and sell shares of our common stock having an aggregate offering price of up to $250.0 million. On March 2, 2018, we amended certain of these equity programs, terminated one such program and entered into a new equity program with one new sales agent. The sales of shares of our common stock made through the ATM equity program, as amended, are made in "at-the-market" offerings as defined in Rule 415 of the Securities Act of 1933, as amended. During the three and nine months ended September 30, 2019, the following shares of common stock were sold through the ATM equity programs (in thousands, except per share data and share amounts):



	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Number of shares of common stock issued through ATM programs	234,814			916,727
Weighted average price per share	$47.23			$45.99

Proceeds, gross	$	11,089		$	42,161
Sales agent compensation	(111		)	(422		)
Offering costs	(58		)	(430		)
Proceeds, net	$	10,920		$	41,309

We intend to use the net proceeds from the ATM equity program to fund our development or redevelopment activities, repay amounts outstanding from time to time under our revolving line of credit or other debt financing obligations, fund potential acquisition opportunities and/or for general corporate purposes. As of September 30, 2019, we had the capacity to issue up to an additional $134.0 million in shares of our common stock under our ATM equity program. Actual future sales will depend on a variety of factors including, but not limited to, market conditions, the trading price of our common stock and our capital needs. We have no obligation to sell the remaining shares available for sale under the ATM equity program.

In June 2019, we issued and sold 10,925,000 shares of common stock in an underwritten public offering. The shares of common stock that we issued and sold included the full exercise of the underwriters' option to purchase 1,425,000 additional shares. We received net proceeds of approximately $472.6 million, after deducting underwriting discounts, commissions and offering expenses.

Dividends

The following table lists the dividends declared and paid on our shares of common stock and noncontrolling common units during the nine months ended September 30, 2019:



Period	Amount per Share/Unit		Period Covered	Dividend Paid Date
First Quarter 2019	$	0.28	January 1, 2019 to March 31, 2019	March 28, 2019
Second Quarter 2019	$	0.28	April 1, 2019 to June 30, 2019	June 27, 2019
Third Quarter 2019	$	0.28	July 1, 2019 to September 30, 2019	September 26, 2019

Taxability of Dividends

Earnings and profits, which determine the taxability of distributions to stockholders and holders of common units, may differ from income reported for financial reporting purposes due to the differences for federal income tax purposes in the treatment of revenue recognition and compensation expense and in the basis of depreciable assets and estimated useful lives used to compute depreciation.

Stock-Based Compensation

We follow the FASB guidance related to stock compensation which establishes financial accounting and reporting standards for stock-based employee compensation plans, including all arrangements by which employees receive shares of stock or other equity instruments of the employer. The guidance also defines a fair value-based method of accounting for an employee stock option or similar equity instrument.

The following table summarizes the activity of restricted stock awards during the nine months ended September 30, 2019:



	Units		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2019	342,093		$28.33
Granted	4,412		45.35
Vested	(5,320	)	37.58
Forfeited	(11,636	)	$28.33
Nonvested at September 30, 2019	329,549		$28.41

We recognize noncash compensation expense ratably over the vesting period, and accordingly, we recognized $1.1 million and $0.7 million in noncash compensation expense for the three-month periods ended September 30, 2019 and 2018, respectively, which is included in general and administrative expense on the consolidated statements of comprehensive income. We recognized $3.4 million and $2.2 million in noncash compensation expense for the nine months ended September 30, 2019 and 2018, respectively. Unrecognized compensation expense was $3.3 million at September 30, 2019.

Earnings Per Share

We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation methodology whereby EPS for each class of common stock and participating security is calculated according to dividends declared and participation rights in undistributed earnings. The weighted average unvested shares outstanding, which are considered participating securities, were 329,652 and 262,605 for the three months ended September 30, 2019 and 2018, respectively and 331,245 and 265,762 for the nine months ended September 30, 2019 and 2018, respectively. Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares as these unvested shares have nonforfeitable dividend equivalent rights.

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 months ended September 30, 2019 and 2018, diluted shares exclude incentive restricted stock as these awards are considered contingently issuable. Additionally, the unvested restricted stock awards subject to time vesting are anti-dilutive for all periods presented, and accordingly, have been excluded from the weighted average common shares used to compute diluted EPS.

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
NUMERATOR
Net income	$	16,519		$	14,271		$	43,703		$	17,993
Less: Net income attributable to restricted shares	(92		)	(71		)	(277		)	(215		)
Less: Income from operations attributable to unitholders in the Operating Partnership	(3,565		)	(3,806		)	(10,553		)	(4,765		)
Net income attributable to common stockholders—basic	$	12,862		$	10,394		$	32,873		$	13,013
Income from operations attributable to American Assets Trust, Inc. common stockholders—basic	$	12,862		$	10,394		$	32,873		$	13,013
Plus: Income from operations attributable to unitholders in the Operating Partnership	3,565			3,806			10,553			4,765
Net income attributable to common stockholders—diluted	$	16,427		$	14,200		$	43,426		$	17,778
DENOMINATOR
Weighted average common shares outstanding—basic	59,441,887			46,959,752			52,239,668			46,945,095
Effect of dilutive securities—conversion of Operating Partnership units	16,390,548			17,177,608			16,771,104			17,188,489
Weighted average common shares outstanding—diluted	75,832,435			64,137,360			69,010,772			64,133,584

Earnings per common share, basic	$	0.22		$	0.22		$	0.63		$	0.28
Earnings per common share, diluted	$	0.22		$	0.22		$	0.63		$	0.28