AMERICAN ASSETS TRUST, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

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Forward-looking statements

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, ("the Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended, ("the
Exchange Act"). In particular, statements pertaining to our capital resources,
portfolio performance and results of operations contain forward-looking
statements. Likewise, 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," "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:

•the impact of epidemics, pandemics, or 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;

•unfavorable economic or real estate developments on our markets;

• our inability to generate sufficient cash flow to service our outstanding debt;

•default, early termination or non-renewal of leases by tenants, including significant tenants;

•difficulties in identifying the assets to be acquired and making the acquisitions;

•difficulties in completing arrangements;

• our inability to successfully operate acquired properties and operations;

• 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 agreements;

• our inability to obtain the necessary external financing;

•ongoing disputes;

•general economic conditions;

•fluctuations in the financial markets;

•risks that affect the general office, retail, multi-family and mixed environment;

•the competitive environment in which we operate;

• lower rental rates or higher vacancy rates;

•conflicts of interest with our officers or directors;

•the absence or insufficient amounts of insurance;

•environmental uncertainties and risks related to climatic hazards and natural disasters;

•other factors affecting the real estate sector in general;

•limitations imposed on our business and our ability to satisfy complex rules in
order for American Assets Trust, Inc. to continue to qualify as a 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, new information, data or methods, future events or other
changes. For a further discussion of these and other factors, 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, 2021.
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Contents

Insight

References to “we”, “us”, “our” and “our company” refer to American Assets Trust, Inc.a Maryland company, as well as our consolidated subsidiaries, including American Assets Trust, LPa Maryland limited partnership, of which we are the sole general partner and which we refer to in this report as our Operational 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, Texas and Hawaii.
As of June 30, 2022, our portfolio was comprised of twelve retail shopping
centers; 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 June 30, 2022, we owned land at three of our properties that
we classified as held for development and/or construction in progress. Our core
markets include San Diego, California; the San Francisco Bay Area, California;
Bellevue, Washington; Portland, 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 78.8% of our Operating Partnership as of
June 30, 2022. Accordingly, we consolidate the assets, liabilities and results
of operations of our Operating Partnership.

Acquisitions

On March 8, 2022, we acquired Bel-Spring 520 in Bellevue, Washington, consisting
of an approximately 93,000 square feet, multi-tenant office campus. The purchase
price was $45.5 million, excluding closing costs and prorations. We acquired the
property with cash on hand.

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, 2021. We have not made any material changes to these policies
during the periods covered by this 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 are 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 a more consistent performance measure for
the comparison of the 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
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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.

Below is a summary of our same-store composition for the three and six months
ended June 30, 2022 and 2021. Waikiki Beach Walk Retail and Embassy Suites™
Hotel is reclassified to same-store properties due to significant spalling
repair activity disrupting the hotel portion of the property's operations, which
was completed as of September 30, 2020. Eastgate Office Park is classified as a
non-same-store property, as it was acquired on July 7, 2021. Corporate Campus
East III is also classified as a non-same-store property, as it was acquired on
September 10, 2021. Bel-Spring 520 is also classified as a non-same-store
property, as it was acquired on March 8, 2022.

In our determination of same-store and redevelopment same-store properties for
the six months ended June 30, 2022, One Beach Street has been identified as a
same-store redevelopment property due to significant redevelopment activity.
Retail same-store net operating income increased approximately 11.3% for the six
months ended June 30, 2022 compared to the same period in 2021. Office
same-store net operating income increased 0.4% for the six months ended June 30,
2022 compared to the same period in 2021. Office redevelopment same-store net
operating income increased 0.3% for the six months ended June 30, 2022 compared
to the same period in 2021.

                                              Three Months Ended June 30,                                Six Months Ended June 30,
                                         2022                            2021                      2022                            2021
Same-Store                                    27                              26                        27                              26
Non-Same-Store                                 4                               2                         4                               2
Total Properties                              31                              28                        31                              28

Redevelopment Same-Store                      28                              27                        28                              27

Total Development Properties                   3                               3                         3                               3




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 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 projects in our development pipeline,
including future phases of La Jolla Commons and Lloyd 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 the COVID-19 pandemic on all
aspects of our business and geographies, including how it has and will impact
our tenants and business partners. We are unable to predict the future impact
that the COVID-19 pandemic will have on our financial condition, results of
operations and cash flows due to numerous uncertainties. These uncertainties
include the scope, severity and duration of the pandemic (including as the
pandemic evolves due to future mutations of the COVID-19 virus), the ongoing
governmental, business and individual actions taken to contain the pandemic or
mitigate its impact, the availability and adoption of COVID-19 vaccines and the
direct and indirect economic effects of the pandemic and containment measures,
among others. The outbreak of COVID-19 in many countries, including the United
States, has significantly adversely impacted global economic activity and has
contributed to significant volatility and negative pressure in financial
markets. The global impact of the pandemic continues to rapidly evolve. Certain
states and cities, including where we own properties, have development sites and
where our principal place of business is located, have at various points in
time, reacted by instituting quarantines, restrictions on travel, "stay-at-home"
orders or "shelter in place" rules, social distancing measures, and restrictions
on business operations and/or construction projects (including, required
shut-downs in some instances). It is unclear how customers' concerns about
COVID-19 transmission and sensitivities to the transmission of other diseases
will impact their willingness to visit certain of our tenants' businesses. As a
result, the COVID-19 pandemic has negatively impacted almost every industry
directly or indirectly, including industries in which the Company and our
tenants operate, and may continue to do so. Further, the impacts of a potential
worsening of global economic conditions and the continued disruptions to, and
volatility in, the credit and financial markets, consumer spending as well as
other unanticipated consequences remain unknown.

We believe our financial condition and liquidity are currently strong. Although
there is uncertainty related to the COVID-19 pandemic'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. We continue to manage all aspects of our business
including, but not limited to, monitoring the financial health of our tenants,
vendors, and other third-party relationships, and developing new opportunities
for growth. Due to the constantly changing nature of the COVID-19 pandemic, we
cannot reasonably estimate with any degree of certainty the future impact the
pandemic may have on our results of operations, financial position, and
liquidity.

Lease

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. Furthermore, we believe the
locations of our properties and diversified portfolio will mitigate some of the
potentially negative impact of the current economic environment. However, in the
short-term due to the COVID-19 pandemic, we have seen 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 the COVID-19
pandemic, will adversely affect our financial condition and results of
operations.
During the three months ended June 30, 2022, we signed 15 office leases for a
total of 148,677 square feet of office space including 128,335 square feet of
comparable renewal office space leases (leases for which there was a prior
tenant), at an average rental rate increase on a cash and GAAP basis of 21.1%
and 20.7%, respectively. New office leases for comparable spaces were signed for
12,365 square feet at an average rental rate increase on a cash and GAAP basis
of 15.1% and 48.9%, respectively. Renewals for comparable office spaces were
signed for 115,970 square feet at an average rental rate increase on a cash and
GAAP basis of 21.8% and 18.3%, respectively. Tenant improvements and incentives
were $91.28 per square foot of office space for comparable new leases for the
three months ended June 30, 2022, mainly due to tenants at Torrey Reserve
Campus.

During the three months ended June 30, 2022, we signed 21 retail leases for a
total of 77,201 square feet of retail space including 67,209 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 basis of 5.7% and increase
on a GAAP basis of 20.2%, respectively. New retail leases for comparable spaces
were signed for 4,004 square feet at an average rental rate increase on a cash
basis of 5.1%. Renewals for comparable retail spaces were signed for 63,205
square feet at an average rental rate increase on a cash basis of 5.8% and
increase on a GAAP basis of 11.9%, respectively. Tenant improvements and
incentives were $44.89 per square foot of retail space for comparable new leases
for the three months ended June 30, 2022, mainly due to tenants at Carmel
Mountain Plaza.

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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 2022 generally become effective over the following year,
though some may not become effective until 2023 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.

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 $22.8 million and $15.9 million for the
three months ended June 30, 2022 and 2021, respectively, and $45.5 million and
$19.8 million for the six months ended June 30, 2022 and 2021, respectively.

We capitalized external and internal costs related to other property
improvements combined of $10.2 million and $13.5 million for the three months
ended June 30, 2022 and 2021, respectively, and $19.1 million and $22.9 million
for the six months ended June 30, 2022 and 2021, 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 $1.4 million and $0.7 million for the three months ended June 30,
2022 and 2021, respectively, and $2.6 million and $1.2 million for the six
months ended June 30, 2022 and 2021, respectively.

Operating results

For our analysis of operating results, we have provided information on a total portfolio and on a comparable store basis.

Comparison of the three months ended June 30, 2022 at the end of three months
June 30, 2021

The following summarizes our consolidated results of operations for the three
months ended June 30, 2022 compared to our consolidated results of operations
for the three months ended June 30, 2021. 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, 2,112 residential units (including 122 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. As of June 30, 2021, our operating portfolio was comprised of 28
retail, office, multifamily and mixed-use properties with an aggregate of
approximately 6.6 million rentable
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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 June 30, 2021, we owned land at three of our
properties that we classified as held for development and/or construction in
progress.

The following table sets forth selected data from our unaudited consolidated
statements of comprehensive income for the three months ended June 30, 2022 and
2021 (dollars in thousands):

                                                           Three Months Ended June 30,
                                                             2022                  2021             Change              %
Revenues
Rental income                                          $       99,016          $  87,639          $ 11,377               13  %
Other property income                                           5,139              4,170               969               23
Total property revenues                                       104,155             91,809            12,346               13
Expenses
Rental expenses                                                25,853             20,204             5,649               28
Real estate taxes                                              11,287             10,612               675                6
Total property expenses                                        37,140             30,816             6,324               21
Total property income                                          67,015             60,993             6,022               10
General and administrative                                     (7,612)            (6,924)             (688)              10
Depreciation and amortization                                 (31,087)           (27,646)           (3,441)              12
Interest expense                                              (14,547)           (14,862)              315               (2)

Other (expense) income, net                                      (181)               (74)             (107)             145

Net income                                                     13,588             11,487             2,101               18
Net income attributable to restricted shares                     (154)              (135)              (19)              14
Net income attributable to unitholders in the
Operating Partnership                                          (2,852)            (2,411)             (441)              18
Net income attributable to American Assets Trust, Inc.
stockholders                                           $       10,582          $   8,941          $  1,641               18  %


Revenue

Total property revenues. Total property revenue consists of rental revenue and
other property income. Total property revenue increased $12.3 million, or 13%,
to $104.2 million for the three months ended June 30, 2022 compared to $91.8
million for the three months ended June 30, 2021. The percentage leased was as
follows for each segment as of June 30, 2022 and 2021:

                      Percentage Leased(1)
                            June 30,
                          2022             2021
Office                        91.0  %     90.3  %
Retail                        92.5  %     91.1  %
Multifamily                   92.0  %     87.8  %
Mixed-Use (2)                 94.9  %     89.2  %


(1) Percentage leased includes area leased, including leases that may not have commenced on June 30, 2022 or 2021, as the case may be. (2) Includes only the commercial part of the mixed-use building.

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The increase in total property revenue was attributable primarily to the new
acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring
520, the increase in occupancy and rate at Waikiki Beach Walk Embassy Suites™,
the increase in occupancy and annualized base rent in our multifamily portfolio
and factors discussed below.

Rental revenues. Rental revenue includes minimum base rent, cost reimbursements,
percentage rents and other rents. Rental revenue increased $11.4 million, or
13%, to $99.0 million for the three months ended June 30, 2022 compared to $87.6
million for the three months ended June 30, 2021. Rental revenue by segment was
as follows (dollars in thousands):
                                                Total Portfolio                                                        Same-Store Portfolio(1)
                         Three Months Ended June 30,                                                 Three Months Ended June 30,
                           2022                 2021             Change              %                 2022                 2021             Change             %
Office               $       49,291          $ 43,282          $  6,009              14          $       44,618          $ 43,496          $ 1,122               3
Retail                       24,035            22,525             1,510               7                  24,035            22,525            1,510               7
Multifamily                  13,225            11,825             1,400              12                  13,225            11,825            1,400              12
Mixed-Use                    12,465            10,007             2,458              25                  12,465            10,007            2,458              25
                     $       99,016          $ 87,639          $ 11,377              13  %       $       94,343          $ 87,853          $ 6,490               7  %



(1)For this table and tables following, the same-store portfolio excludes: (i)
One Beach Street, due to significant redevelopment activity; (ii) Eastgate
Office Park, which was acquired on July 7, 2021; (iii) Corporate Campus East
III, which was acquired on September 10, 2021; (iv) Bel-Spring 520, which was
acquired on March 8, 2022 and (v) land held for development.

Total office rental revenue increased $6.0 million for the three months ended
June 30, 2022 compared to the three months ended June 30, 2021 primarily due to
the recent acquisitions of Eastgate Office Park, Corporate Campus East III and
Bel-Spring 520, which accounted for $4.7 million of the increase. The increase
in total office rental revenue is partially offset by the decrease in rental
revenue at One Beach Street due to expiration of leases to allow for the
modernization of the property. Same-store office rental revenue increased by
$1.1 million due to higher occupancy at La Jolla Commons and Torrey Reserve
Campus, and higher annualized base rent at La Jolla Commons and The Landmark at
One Market.

Total retail rental revenue increased $1.5 million for the three months ended
June 30, 2022 compared to the three months ended June 30, 2021 primarily due to
approximately $1.0 million for new tenant leases and previous tenants on
alternate rent reverting back to basic monthly rent. Additionally, there was an
increase in cost recoveries of $0.5 million as COVID-related rent concessions
were provided during 2020 and 2021.

Multifamily revenue increased $1.4 million for the three months ended June 30,
2022 compared to the three months ended June 30, 2021 primarily due to an
overall increase in occupancy and average monthly base rent of 93.2% and $2,297,
respectively for the three months ended June 30, 2022 compared to 87.8% and
$2,187, respectively for the three months ended June 30, 2021.

Total mixed-use rental revenue increased $2.5 million for the three months ended
June 30, 2022 compared to the three months ended June 30, 2021 primarily due to
lifting of COVID-19 travel restrictions, which led to an increase in average
occupancy and revenue per available room to 78.8% and $280 for the three months
ended June 30, 2022, respectively, compared to 67.2% and $184 for three months
ended June 30, 2021, respectively. The retail portion of our mixed-use property
had a decrease in revenue of $0.8 million due to the termination of the
Quicksilver lease during the second quarter of 2021 and alternate rent provided
to certain tenants.
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Other property income. Other property income increased $1.0 million, or 23%, to
$5.1 million for the three months ended June 30, 2022 compared to $4.2 million
for the three months ended June 30, 2021. Other property income by segment was
as follows (dollars in thousands):
                                               Total Portfolio                                                          Same-Store Portfolio
                         Three Months Ended June 30,                                                Three Months Ended June 30,
                           2022                 2021             Change             %                 2022                 2021             Change             %
Office               $        1,302          $  1,288          $    14               1          $        1,221          $  1,141          $    80               7
Retail                          303               456             (153)            (34)                    303               456             (153)            (34)
Multifamily                     989               914               75               8                     989               914               75               8
Mixed-Use                     2,545             1,512            1,033              68                   2,545             1,512            1,033              68
                     $        5,139          $  4,170          $   969              23  %       $        5,058          $  4,023          $ 1,035              26  %


Same-Store Office other property income increased $0.1 million for the three
months ended June 30, 2022 primarily due to an increase in parking garage income
at City Center Bellevue, First & Main and Lloyd Portfolio, partially offset by
lease termination fees received at City Center Bellevue during 2021.

Other retail property income decreased by $0.2 million for the three months ended June 30, 2022 primarily due to lease settlement and termination fees received in 2021 at Alamo Quarry Market and Del Monte Center.

Multifamily other property income increased by $0.1 million for the three months
ended June 30, 2022 primarily due to an increase in parking garage income at
Hassalo on Eighth - Residential and meter income at Loma Palisades, Pacific
Ridge Apartments and Santa Fe Park RV Resort.

Mixed-use other property income increased by $1.0 million for the three months
ended June 30, 2022 compared to the three months ended June 30, 2021 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
and an increase in parking garage income at the retail 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 $6.3 million, or 21%, to
$37.1 million, for the three months ended June 30, 2022 compared to $30.8
million for the three months ended June 30, 2021.

Rental Expenses. Rental expenses increased $5.6 million, or 28%, to $25.9
million for the three months ended June 30, 2022 compared to $20.2 million for
the three months ended June 30, 2021. Rental expense by segment was as follows
(dollars in thousands):
                                               Total Portfolio                                                          Same-Store Portfolio
                         Three Months Ended June 30,                                                Three Months Ended June 30,
                           2022                 2021             Change             %                 2022                 2021             Change             %
Office               $        8,911          $  6,815          $ 2,096              31          $        7,733          $  6,624          $ 1,109              17
Retail                        3,909             3,713              196               5                   3,909             3,713              196               5
Multifamily                   4,458             3,788              670              18                   4,458             3,788              670              18
Mixed-Use                     8,575             5,888            2,687              46                   8,575             5,888            2,687              46
                     $       25,853          $ 20,204          $ 5,649              28  %       $       24,675          $ 20,013          $ 4,662              23  %


Office rental expense increased $2.1 million for the three months ended June 30,
2022 compared to the three months ended June 30, 2021 primarily due to $1.0
million related to the recent acquisitions of Eastgate Office Park, Corporate
Campus East III and Bel-Spring 520. Same-store office rental expenses increased
$1.1 million due to an increase in repairs and maintenance services, utilities
expenses and facility services, as the "stay-at home" orders issued by state and
local governments related to the COVID-19 pandemic were relaxed in 2021 and our
tenants' employees have started returning to the office in-person.

Retail rental expense increased $0.2 million for the three months ended June 30,
2022 compared to the three months ended June 30, 2021 primarily due to an
increase in repairs and maintenance and facilities services in the period, as
restrictions on business operations from orders issued by state and local
governments related to the COVID-19 pandemic were eased during the first half of
2021.
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Multifamily rental expense increased $0.7 million for the three months ended
June 30, 2022 compared to the three months ended June 30, 2021 primarily due to
an increase in repairs and maintenance, landscaping and facilities services.
Additionally there was an increase in property personnel compensation expenses.

Mixed-use rental expense increased $2.7 million for the three months ended June
30, 2022 compared to the three months ended June 30, 2021 primarily due to an
increase in hotel room expenses and general excise tax expenses at the hotel
portion of our mixed-use property during the period. These increases are in line
with increased tourism and higher hotel occupancy as travel restrictions to
Hawaii have been relaxed.

Real Estate Taxes. Real estate taxes increased $0.7 million, or 6%, to $11.3
million for the three months ended June 30, 2022 compared to $10.6 million for
the three months ended June 30, 2021. Real estate tax expense by segment was as
follows (dollars in thousands):
                                                Total Portfolio                                                          Same-Store Portfolio
                         Three Months Ended June 30,                                                 Three Months Ended June 30,
                           2022                 2021             Change             %                  2022                 2021             Change             %
Office               $        5,152          $  4,833          $   319                7          $        4,733          $  4,776          $   (43)             (1)
Retail                        3,521             3,022              499               17                   3,521             3,022              499              17
Multifamily                   1,763             1,705               58                3                   1,763             1,705               58               3
Mixed-Use                       851             1,052             (201)             (19)                    851             1,052             (201)            (19)
                     $       11,287          $ 10,612          $   675                6  %       $       10,868          $ 10,555          $   313               3  %


Office real estate taxes increased $0.3 million for the three months ended June
30, 2022 compared to the three months ended June 30, 2021 primarily due to $0.3
million related to the recent acquisitions of Eastgate Office Park, Corporate
Campus East III and Bel-Spring 520.

Retail real estate taxes increased $0.5 million for the three months ended June
30, 2022 compared to the three months ended June 30, 2021 due to a 2021 catch-up
for prior year tax assessment reconciliations which led to a decrease in the
overall taxes owed at Alamo Quarry Market, which was recorded in June 2021.

Mixed-use real estate taxes decreased $0.2 million for the three months ended
June 30, 2022 compared to the three months ended June 30, 2021 primarily due to
the COVID-19 pandemic and its financial burden on the hospitality industry, as a
result of which the Honolulu County reduced the tax burden for hotels for 2021
through 2022.

Property Operating Income

Property operating income increased $6.0 million, or 10%, to $67.0 million for
the three months ended June 30, 2022, compared to $61.0 million for the three
months ended June 30, 2021. Property operating income by segment was as follows
(dollars in thousands):
                                               Total Portfolio                                                          Same-Store Portfolio
                         Three Months Ended June 30,                                                Three Months Ended June 30,
                           2022                 2021             Change             %                 2022                 2021             Change             %
Office               $       36,530          $ 32,922          $ 3,608              11          $       33,373          $ 33,237          $   136               -
Retail                       16,908            16,246              662               4                  16,908            16,246              662               4
Multifamily                   7,993             7,246              747              10                   7,993             7,246              747              10
Mixed-Use                     5,584             4,579            1,005              22                   5,584             4,579            1,005              22
                     $       67,015          $ 60,993          $ 6,022              10  %       $       63,858          $ 61,308          $ 2,550               4  %


Total office property operating income increased $3.6 million for the three
months ended June 30, 2022 compared to the three months ended June 30, 2021
primarily due to the recent acquisitions of Eastgate Office Park, Corporate
Campus East III, Bel-Spring 520, which had incremental property operating income
of approximately $3.4 million during the period. Same-store property operating
income increased $0.1 million for the three months ended June 30, 2022 compared
to the three months ended June 30, 2021, primarily due to higher occupancy at La
Jolla Commons and Torrey Reserve Campus, and higher annualized base rent at La
Jolla Commons and The Landmark at One Market.

Total retail property operating income increased $0.7 million for the three
months ended June 30, 2022 compared to the three months ended June 30, 2021
primarily due to approximately $1.0 million for new tenant leases and previous
tenants on alternate rent reverting back to basic monthly rent. Additionally,
there was an increase in cost recoveries of $0.5 million as COVID-related rent
concessions were provided during 2020 and 2021. This increase in revenue was
partially offset by an
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increase in rental expenses of $0.2 million related to repairs and maintenance
and facilities services, and an increase in real estate taxes of $0.5 million
related to prior year tax assessment reconciliations.

Total multifamily property operating income increased $0.7 million for the three
months ended June 30, 2022 compared to the three months ended June 30, 2021
primarily due to an overall increase in occupancy and average monthly base rent
of 93.2% and $2,297, respectively, for the three months ended June 30, 2022
compared to 87.8% and $2,187, respectively for the three months ended June 30,
2021. This increase in revenue was partially offset by an increase in rental
expenses related to repairs and maintenance, landscaping and facilities
services.

Total mixed-use property operating income increased $1.0 million for the three
months ended June 30, 2022 compared to the three months ended June 30, 2021
primarily due to the return of tourism and related increase in hotel occupancy
as travel to Hawaii has increased through 2021. This led to an increase in
average occupancy and revenue per available room to 78.8% and $280,
respectively, for the three months ended June 30, 2022, compared to 67.2% and
$184, respectively, for three months ended June 30, 2021. This also led to an
increase in other room rental income and excise tax at the hotel portion of
our mixed-use property and an increase in parking garage income at the retail
portion of our mixed-use property. These increases were offset by higher hotel
room expenses and general excise tax expenses at the hotel portion of our
mixed-use property during the period.

Other

General and Administrative. General and administrative expenses increased to
$7.6 million for the three months ended June 30, 2022, compared to $6.9 million
for the three months ended June 30, 2021. This increase was primarily due to an
increase in stock-based compensation expense and employee-related 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
to $31.1 million for the three months ended June 30, 2022, compared to $27.6
million for the three months ended June 30, 2021. This increase was primarily
due to $2.9 million related to the recent acquisitions of Eastgate Office Park,
Corporate Campus East III and Bel-Spring 520. Additionally, there was higher
depreciation and amortization at The Landmark at One Market and Alamo Quarry
Market due to new tenant improvements that were put into service in 2021. This
increase was offset by a decrease at One Beach Street due to acceleration of
certain assets during the first quarter of 2021 related to the modernization of
the building.

Interest Expense. Interest expense decreased by $0.3 million, or 2%, to $14.5
million for the three months ended June 30, 2022, compared to $14.9 million for
the three months ended June 30, 2021. This decrease was primarily due to an
increase in capitalized interest related to our development projects, partially
offset by an increase in interest expense related to our Term Loan A, which
changed from an unhedged variable interest rate to a fixed interest rate at the
beginning of 2022 as we entered into two interest rate swaps agreements to lock
the rate against future fluctuations.

Other (Expense) Income, Net. Other expense, net increased $0.1 million, or 145%,
to other expense, net of $0.2 million for the three months ended June 30, 2022,
compared to other expense, net of $0.1 million for the three months ended June
30, 2021 primarily due to the decrease in interest and investment income
attributed to the lower yield on our average cash balance during the period.
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Comparison of the six months ended June 30, 2022 half-year ended June 30, 2021

The following is a summary of our consolidated operating results for the six months ended June 30, 2022 compared to our consolidated results of operations for the six months ended June 30, 2021.

The following table sets forth selected data from our unaudited consolidated
statements of income for the six months ended June 30, 2022 and 2021 (dollars in
thousands):
                                                                Six Months Ended June 30,
                                                                 2022                  2021             Change              %
Revenues
Rental income                                              $      196,002          $ 168,769          $ 27,233              16  %
Other property income                                               9,623              7,026             2,597              37
Total property revenues                                           205,625            175,795            29,830              17
Expenses
Rental expenses                                                    49,998             38,450            11,548              30
Real estate taxes                                                  22,716             21,966               750               3
Total property expenses                                            72,714             60,416            12,298              20
Total property income                                             132,911            115,379            17,532              15
General and administrative                                        (14,754)           (13,747)           (1,007)              7
Depreciation and amortization                                     (61,499)           (55,147)           (6,352)             12
Interest expense                                                  (29,213)           (28,867)             (346)              1
Loss on early extinguishment of debt                                    -             (4,271)            4,271             100
Other (expense) income, net                                          (343)              (127)             (216)            170

Net income                                                         27,102             13,220            13,882             105
Net income attributable to restricted shares                         (309)              (272)              (37)             14

Net income attributable to unitholders as of Operational partnership

                                                        (5,688)            (2,750)           (2,938)            107
Net income attributable to American Assets Trust, Inc.
stockholders                                               $       21,105          $  10,198          $ 10,907             107  %


Revenue

Total property revenues. Total property revenue consists of rental revenue and
other property income. Total property revenue increased $29.8 million, or 17%,
to $205.6 million for the six months ended June 30, 2022 compared to $175.8
million for the six months ended June 30, 2021. The percentage leased was as
follows for each segment as of June 30, 2022 and 2021:

                                           Percentage Leased(1)
                                                 June 30,
                                             2022               2021
                     Office                        91.0  %     90.3  %
                     Retail                        92.5  %     91.1  %
                     Multifamily                   92.0  %     87.8  %
                     Mixed-Use (2)                 94.9  %     89.2  %



(1)The percentage leased includes the square footage under lease, including
leases which may not have commenced as of June 30, 2022 or June 30, 2021, as
applicable.
(2)Includes the retail portion of the mixed-use property only.

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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 $27.2 million, or
16%, to $196.0 million for the six months ended June 30, 2022 compared to $168.8
million for the six months ended June 30, 2021. Rental revenue by segment was as
follows (dollars in thousands):
                                                Total Portfolio                                                          Same-Store Portfolio(1)
                          Six Months Ended June 30,                                                    Six Months Ended June 30,
                           2022                  2021             Change              %                 2022                  2021             Change              %
Office               $       97,702          $  86,918          $ 10,784              12          $       88,750          $  86,914          $  1,836               2
Retail                       48,552             44,009             4,543              10                  48,552             44,009             4,543              10
Multifamily                  26,199             23,640             2,559              11                  26,199             23,640             2,559              11
Mixed-Use                    23,549             14,202             9,347              66                  23,549             14,202             9,347              66
                     $      196,002          $ 168,769          $ 27,233              16  %       $      187,050          $ 168,765          $ 18,285              11  %



(1)For this table and the tables following, the same-store portfolio excludes:
(i) One Beach Street, due to significant redevelopment activity; (ii) Eastgate
Office Park which was acquired on July 7, 2021; (iii) Corporate Campus East III
which was acquired on September 10, 2021; (iv) Bel-Spring 520, which was
acquired on March 8, 2022 and (v) land held for development.

Total office rental revenue increased $10.8 million for the six months ended
June 30, 2022 compared to the six months ended June 30, 2021 due to the new
acquisitions of Eastgate Office Park, Corporate Campus East III and Bel-Spring
520 which accounted for $9 million of the increase. Same store office rental
revenue increased by $1.8 million for the six months ended June 30, 2022
compared to the six months ended June 30, 2021 primarily due to higher
annualized base rents at The Landmark at One Market and higher occupancy at
Torrey Reserve Campus. Additionally, there was an increase of $0.7 million
related to cost recoveries at La Jolla Commons, First & Main and The Landmark at
One Market.

Retail rental revenue increased $4.5 million for the six months ended June 30,
2022 compared to the six months ended June 30, 2021 primarily due to
approximately $2.4 million for tenants who were changed to alternate rent or to
cash basis of revenue recognition during 2020 and 2021as the collectability of
rent was determined to be no longer probable for certain tenants. There was also
an increase of $0.8 million for new tenant leases signed and tenants previously
on alternate rent reverting back to basic monthly rent. Additionally, there was
an increase in cost recoveries of $1.3 million as COVID-related rent concessions
were provided during 2020 and 2021.

Multifamily revenue increased $2.6 million for the six months ended June 30,
2022 compared to the six months ended June 30, 2021 primarily due to an overall
increase in occupancy and average monthly base rent of 94.2% and $2,257,
respectively for the six months ended June 30, 2022 compared to 88.6% and
$2,181, respectively for the six months ended June 30, 2021.

Mixed-use rental revenue increased $9.3 million for the six months ended June
30, 2022 compared to the six months ended June 30, 2021 primarily due to an
increase of $8 million related to 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 to 75.8% and $262 for the six months ended June 30, 2022,
respectively, compared to 57.4% and $142 for the six months ended June 30, 2021,
respectively. Waikiki Beach Walk retail portion increased $1.3 million as
tenants were changed to alternate rent or to cash basis of revenue recognition
during 2020 and 2021 as the collectability of rent was determined to be no
longer probable for certain tenants.
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Other property income. Other property income increased $2.6 million, or 37%, to
$9.6 million for the six months ended June 30, 2022 compared to $7.0 million for
the six months ended June 30, 2021. Other property income by segment was as
follows (dollars in thousands):
                                               Total Portfolio                                                        Same-Store Portfolio
                         Six Months Ended June 30,                                                 Six Months Ended June 30,
                           2022                2021             Change             %                 2022                2021             Change             %
Office               $       2,460          $  2,116          $   344              16          $       2,308          $  1,944          $   364              19
Retail                         627               746             (119)            (16)                   627               746             (119)            (16)
Multifamily                  1,904             1,651              253              15                  1,904             1,651              253              15
Mixed-Use                    4,632             2,513            2,119              84                  4,632             2,513            2,119              84
                     $       9,623          $  7,026          $ 2,597              37  %       $       9,471          $  6,854          $ 2,617              38  %


Office other property income increased $0.3 million for the six months ended
June 30, 2022 compared to the six months ended June 30, 2021 primarily due to an
increase in parking garage income at Lloyd Portfolio, City Center Bellevue and
First & Main, partially offset by lease termination and settlement fees received
at One Beach and City Center Bellevue during 2021.

Retail other property income decreased $0.1 million for the six months ended
June 30, 2022 compared to the six months ended June 30, 2021 primarily due to
the lease termination fees received at Alamo Quarry Market and Del Monte Center
during 2021.

Multifamily other property income increased $0.3 million for the six months
ended June 30, 2022 compared to the six months ended June 30, 2021 primarily to
an increase in parking garage income at Hassalo on Eighth - Residential and an
increase in meter income at Loma Palisades and Santa Fe Park RV Resort.

Total mixed-use other property income increased $2.1 million for the six months
ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due
to an increase in other room rental income and rent excise tax at the hotel
portion and an increase in parking garage income at the retail portion of our
mixed-use property. We expect to see a steady increase in tourism and hotel
occupancy in Oahu once the COVID-19 vaccine is available more globally and
travel restrictions are lifted.

Real estate expenses

Total Property Expenses. Total property expenses consist of rental expenses and
real estate taxes. Total property expenses increased by $12.3 million, or 20%,
to $72.7 million for the six months ended June 30, 2022, compared to $60.4
million for the six months ended June 30, 2021. This increase in total property
expenses was attributable primarily to the factors discussed below.

Rental Expenses. Rental expenses increased $11.5 million, or 30%, to $50.0
million for the six months ended June 30, 2022, compared to $38.5 million for
the six months ended June 30, 2021. Rental expense by segment was as follows
(dollars in thousands):
                                               Total Portfolio                                                         Same-Store Portfolio
                         Six Months Ended June 30,                                                  Six Months Ended June 30,
                           2022                2021             Change              %                 2022                2021             Change            %
Office               $      17,151          $ 13,497          $  3,654              27          $      14,978          $ 13,097          $ 1,881             14
Retail                       7,913             7,240               673               9                  7,913             7,240              673              9
Multifamily                  8,773             7,574             1,199              16                  8,773             7,574            1,199             16
Mixed-Use                   16,161            10,139             6,022              59                 16,161            10,139            6,022             59
                     $      49,998          $ 38,450          $ 11,548              30  %       $      47,825          $ 38,050          $ 9,775             26  %


Office rental expenses increased $3.7 million for the six months ended June 30,
2022 compared to the six months ended June 30, 2021 primarily due to $1.8
million related to the recent acquisitions of Eastgate Office Park, Corporate
Campus East III and Bel-Spring 520. Same-store office rental expenses increased
$1.9 million due to an increase in repairs and maintenance services, utilities
expenses and facility services, as the "stay-at home" orders issued by state and
local governments related to the COVID-19 pandemic were relaxed in 2021 and our
tenants' employees have started returning to the office in-person.

Retail rental expenses increased $0.7 million for the six months ended June 30,
2022 compared to the six months ended June 30, 2021 primarily due to an increase
in repairs and maintenance, facilities services, utilities expenses and
marketing expenses in the period, as restrictions on business operations from
orders issued by state and local governments related to the COVID-19 pandemic
were eased during the first half of 2021.
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Multifamily rental expenses increased $1.2 million for the six months ended June
30, 2022 compared to the six months ended June 30, 2021 primarily due to an
increase in utilities expenses and repairs and maintenance, related to
landscaping, plumbing and painting services. Additionally, there was an increase
in property-level personnel compensation expenses.

Total mixed-use rental expenses increased $6.0 million for the six months ended
June 30, 2022 compared to the six months ended June 30, 2021 primarily due to an
increase in hotel room expenses and personnel expenses at the hotel portion of
our mixed-use property during the period. These increases are due to tourism and
an increase in hotel occupancy as the COVID-19 vaccine has become more widely
available and travel restrictions to Hawaii have been relaxed.

Real Estate Taxes. Real estate tax expense increased $0.8 million, or 3%, to
$22.7 million for the six months ended June 30, 2022 compared to $22.0 million
for the six months ended June 30, 2021. Real estate tax expense by segment was
as follows (dollars in thousands):
                                               Total Portfolio                                                        Same-Store Portfolio
                         Six Months Ended June 30,                                                 Six Months Ended June 30,
                           2022                2021             Change             %                 2022                2021             Change             %
Office               $      10,242          $  9,515          $   727               8          $       9,452          $  9,400          $    52               1
Retail                       7,245             6,937              308               4                  7,245             6,937              308               4
Multifamily                  3,527             3,410              117               3                  3,527             3,410              117               3
Mixed-Use                    1,702             2,104             (402)            (19)                 1,702             2,104             (402)            (19)
                     $      22,716          $ 21,966          $   750               3  %       $      21,926          $ 21,851          $    75               -  %


Office real estate taxes increased $0.7 million for the six months ended June
30, 2022 compared to the six months ended June 30, 2021 primarily due to $0.7
million related to the recent acquisitions of Eastgate Office Park, Corporate
Campus East III and Bel-Spring 520.

Retail real estate taxes increased $0.3 million for the six months ended June
30, 2022 compared to the six months ended June 30, 2021 primarily due to a 2021
catch-up for prior year tax assessment reconciliations which led to a decrease
in the overall taxes owed at Alamo Quarry Market, which was recorded in June
2021.

Multifamily real estate taxes increased $0.1 million for the six months ended
June 30, 2022 compared to the six months ended June 30, 2021 primarily due to an
increase in tax assessments for Hassalo on Eighth - Residential.

Mixed-use real estate taxes decreased $0.4 million for the six months ended June
30, 2022 compared to the six months ended June 30, 2021 primarily due to the
COVID-19 pandemic and its financial burden on the hospitality industry, as a
result of which the Honolulu County reduced the tax burden for hotels for 2021
through 2022.

Property Operating Income

Property operating income increased $17.5 million, or 15%, to $132.9 million for
the six months ended June 30, 2022, compared to $115.4 million for the six
months ended June 30, 2021. Property operating income by segment was as follows
(dollars in thousands):
                                                Total Portfolio                                                            Same-Store Portfolio
                          Six Months Ended June 30,                                                    Six Months Ended June 30,
                           2022                  2021             Change              %                 2022                  2021             Change              %
Office               $       72,769          $  66,022          $  6,747              10          $       66,628          $  66,361          $    267                -
Retail                       34,021             30,578             3,443              11                  34,021             30,578             3,443               11
Multifamily                  15,803             14,307             1,496              10                  15,803             14,307             1,496               10
Mixed-Use                    10,318              4,472             5,846             131                  10,318              4,472             5,846              131
                     $      132,911          $ 115,379          $ 17,532              15  %       $      126,770          $ 115,718          $ 11,052               10  %


Total office property operating income increased $6.7 million during the six
months ended June 30, 2022 compared to the six months ended June 30, 2021
primarily due to the recent acquisitions of Eastgate Office Park, Corporate
Campus East III, and Bel-Spring 520, which had incremental property operating
income of approximately $6.5 million during the period. Same-store property
operating income increased $0.3 million for the six months ended June 30, 2022
compared to the six months ended June 30, 2021, primarily due to higher
occupancy at La Jolla Commons and Torrey Reserve Campus, and higher annualized
base rent at La Jolla Commons and The Landmark at One Market.
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Total retail property operating income increased $3.4 million during the six
months ended June 30, 2022 compared to the six months ended June 30, 2021
primarily due to an increase of $2.4 million for tenants who were changed to
alternate rent or to cash basis of revenue recognition during 2020 and 2021 as
the collectability of rent was determined to be no longer probable for certain
tenants. Additionally, there was an increase in cost recoveries of $1.3 million
as COVID-related rent concessions were provided during 2020 and 2021. These
increases were partially offset by higher repairs and maintenance expense,
facilities services, utilities expenses and marketing expenses in the period, as
restrictions on business operations from orders issued by state and local
governments related to the COVID-19 pandemic were eased during the first half of
2021.

Total multifamily property operating income increased $1.5 million during the
six months ended June 30, 2022 compared to the six months ended June 30, 2021
primarily due to an overall increase in occupancy and average monthly base rent
of 94.2% and $2,257, respectively, for the six months ended June 30, 2022
compared to 88.6% and $2,181, respectively for the six months ended June 30,
2021. These increases were partially offset by higher utilities expenses and
repairs and maintenance.

Total mixed-use property operating income increased $5.8 million for the six
months ended June 30, 2022 compared to the six months ended June 30, 2021
primarily due to an increase of $3.9 million related to 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 to 75.8% and $262 for the six months ended June 30,
2022, respectively, compared to 57.4% and $142 for the six months ended June 30,
2021, respectively. Additionally, there was an increase of $1.9 million at the
retail portion of our mixed-use property related to parking garage income and
tenants who were changed to alternate rent or to cash basis of revenue
recognition during 2020 and 2021 as the collectability of rent was determined to
be no longer probable for certain tenants.

Other

General and Administrative. General and administrative expenses increased $1.0
million, or 7%, to $14.8 million for the six months ended June 30, 2022,
compared to $13.7 million for the six months ended June 30, 2021. This increase
was primarily due to stock-based compensation expense and employee-related
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
$6.4 million, or 12%, to $61.5 million for the six months ended June 30, 2022,
compared to $55.1 million for the six months ended June 30, 2021. This increase
was primarily due to a $5.9 million increase related to the recent acquisitions
of Eastgate Office Park, Corporate Campus East III and Bel-Spring 520.
Additionally, there was an increase in depreciation and amortization at The
Landmark at One Market due to building and tenant improvements that were put
into service in 2021. These increases were offset by lower depreciation and
amortization at One Beach due to the modernization of the property and
depreciation of assets, which was accelerated in 2021.

Interest Expense. Interest expense increased $0.3 million, or 1%, to $29.2
million for the six months ended June 30, 2022 compared to $28.9 million for the
six months ended June 30, 2021. This increase was primarily due to the closing
of our 3.375% Senior Notes offering on January 26, 2021. Additionally, an
increase in interest expense related to our Term Loan A, which changed from an
unhedged variable interest rate to a fixed interest rate at the beginning of
2022, as we entered into two interest rate swaps agreements to lock the rate
against future fluctuation. These increases were offset by an increase in
capitalized interest related to our development projects.

Loss on early extinguishment of debt. Debt extinguishment expense decreased $4.3 million for the six months ended June 30, 2022 due to the repayment of the Senior Secured Notes, Series A, with make-up payments, the January 26, 2021.

Other (Expense) Income, Net. Other expense, net increased $0.2 million, or 170%,
to other expense, net of $0.3 million for the six months ended June 30, 2022,
compared to other expense, net of $0.1 million for the six months ended June 30,
2021 primarily due to the decrease in interest and investment income attributed
to the lower yield on our average cash balance during the period and an increase
in income tax for our taxable REIT subsidiary.

Liquidity and capital resources of American Assets Trust, Inc.

In this “Liquidity and capital resources of American Assets Trust, Inc.“, the term “company” refers only to American Assets Trust, Inc. on a non-consolidated basis, and excludes Operational 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
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  Table of Contents
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 June 30, 2022, the company owned an approximate 78.8% partnership interest
in the Operating Partnership. The remaining 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.

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 8 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 June 30, 2022, 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. The
COVID-19 pandemic has temporarily impacted, and is expected to continue to
temporarily impact some of our tenants' ability or willingness to remit rent
payments due to the tenants' operations being affected by state and local
stay-at-home orders.

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.
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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 January 2021, the company filed a universal shelf registration statement on
Form S-3ASR with the SEC, which became effective upon filing and which 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 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.

On December 3, 2021, we entered into a new ATM equity program with five sales
agents under 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
sale of shares of our common stock made through the ATM equity program are made
in "at-the-market" offerings as defined in Rule 415 of the Securities Act of
1933, as amended. For the three months ended June 30, 2022, no shares of common
stock were sold through the ATM equity program.

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, LP

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 its net taxable income. As of June 30, 2022, we
held $60.8 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.
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Our overall capital requirements for the remainder of 2022 and first quarter
2023 will depend upon acquisition opportunities and the level of improvements
and redevelopments on existing 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,
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 or through an underwritten public offering. Although there is no intent
at this time, if market conditions deteriorate or fail to improve, including as
a result of the COVID-19 pandemic, 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. The
COVID-19 pandemic has impacted, and is expected to continue to impact, the
timing of future development and redevelopment projects due to, among other
things, capital requirements and permitting delays caused by local government
shutdowns or reduced operations.

In 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.

Off-balance sheet arrangements

We currently have no off-balance sheet arrangements.

Cash flow

Comparison of the six months ended June 30, 2022 at the end of six months June 30, 2021

Cash, cash equivalents and restricted cash have been $60.8 million and $370.0 million at June 30, 2022 and 2021, respectively.

Net cash provided by operating activities increased $9.3 million to $86.1
million for the six months ended June 30, 2022 compared to $76.7 million for the
six months ended June 30, 2021. The increase in cash from operations was
primarily due to the increase in rental revenue from the hotel portion of our
mixed-use property, our recent acquisitions of Eastgate Office Park, Corporate
Campus East III and Bel-Spring 520 and changes in operating assets and
liabilities.

Net cash used in investing activities increased $75.4 million to $112.5 million
for the six months ended June 30, 2022 compared to $37.1 million for the six
months ended June 30, 2021. The increase was primarily due to our newest
acquisition of Bel-Spring 520 on March 8, 2022, and capital expenditures at La
Jolla Commons III and One Beach Street.

Net cash used in financing activities increased $243.7 million to $52.4 million
for the six months ended June 30, 2022 compared to cash provided by financing
activities of $191.3 million for the six months ended June 30, 2021. The
increase in cash used in financing activities was primarily due to quarterly
dividends for the first half of 2022 and debt issuance costs related to our
Third Amended and Restated Credit Facility. Whereas, the cash provided by
financing activities through the second quarter of 2021 was related to the
issuance of the 3.375% Senior Notes on January 26, 2021, partially offset by the
repayment of the outstanding balance on the revolving line of credit and the
Senior Guaranteed Notes, Series A on January 26, 2021.

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 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.
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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.

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 six
months ended June 30, 2022 and 2021 computed in accordance with GAAP (in
thousands):

                                                Three Months Ended June 30,                 Six Months Ended June 30,
                                                  2022                  2021                 2022                  2021
Net operating income                        $       67,015          $  60,993          $      132,911          $ 115,379
General and administrative                          (7,612)            (6,924)                (14,754)           (13,747)
Depreciation and amortization                      (31,087)           (27,646)                (61,499)           (55,147)
Interest expense                                   (14,547)           (14,862)                (29,213)           (28,867)
Loss on early extinguishment of debt                     -                  -                       -             (4,271)

Other (expense) income, net                           (181)               (74)                   (343)              (127)

Net income                                  $       13,588          $  11,487          $       27,102          $  13,220



Funds from Operations

We calculate funds from operations ("FFO"), in accordance with the standards
established by the National Association of Real Estate Investment Trusts
("NAREIT"). FFO represents net income (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.
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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.

The following table provides a reconciliation of our FFOs for the three and six months ended June 30, 2022 to net income, nearest GAAP equivalent (in thousands, except per share and share data):

                                                                                          Six
                                                                                         Months
                                                             Three Months Ended June     Ended
                                                                       30,              June 30,
                                                                   2022                               2022
Funds from Operations (FFO)
Net income                                                   $       13,588                      $     27,102
Plus: Real estate depreciation and amortization                      31,087                            61,499

Funds from operations                                                44,675                            88,601

Less: Non-forfeitable dividends on restricted stock incentive awards

                                                                 (153)                             (306)
FFO attributable to common stock and units                   $       44,522                      $     88,295
FFO per diluted share/unit                                   $         0.58                      $       1.16

Weighted average number of common shares and units, diluted (1)

                                                              76,222,271                        76,221,747


(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.

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