SAN FRANCISCO, Jan. 29 /PRNewswire-FirstCall/ -- AMB Property
Corporation(R) (NYSE:AMB), a leading owner, operator and developer
of industrial real estate, today reported results for the fourth
quarter and full year 2008. Funds from operations per fully diluted
share and unit ("FFOPS") were a $1.69 loss for the fourth quarter
of 2008 and income of $0.78 for the full year 2008 compared to
income of $1.20 and $3.51 for the same periods in 2007. Consistent
with its previous announcement, the company recognized charges in
the fourth quarter 2008 related to the valuation of its development
program and reduction in personnel of approximately $218 million or
$2.15 per share; these charges were almost entirely non-cash.
Excluding the impact of the impairments and restructuring charges,
FFO would have been $0.47 for the fourth quarter and $2.89 for the
full year 2008. Net income available to common stockholders per
fully diluted share ("EPS") was a loss of $2.07 for the fourth
quarter of 2008 compared to income of $0.92 for the same period in
2007. The loss was primarily attributable to impairment charges and
restructuring costs that the company incurred in the quarter. For
the full year 2008 EPS was a loss of $0.67 compared to income of
$2.96 for the same period in 2007. "In light of significant changes
in the capital markets and the global economic outlook, during the
quarter, we thought it was prudent to conduct a comprehensive
review of our portfolio," said Hamid R. Moghadam, AMB's chairman
& CEO. "While the magnitude of the impairment charges was
significant, the quality of our assets and our portfolio's
long-term earnings capacity remain intact." Operating Results AMB's
operating portfolio was 95.1 percent occupied at December 31, 2008
and maintained an average occupancy of 94.9 percent throughout the
year. Benefiting from occupancy gains and rising rents, cash basis
same store net operating income ("SS NOI"), without the effects of
lease termination fees, increased 0.2 percent in the fourth quarter
and 3.7 percent for the full year, over the same periods in 2007.
Average rent change on renewals and rollovers in AMB's operating
portfolio increased 2.5 percent in the quarter, and 3.1 percent for
the trailing four quarters ended December 31, 2008. Leasing
Activity During the fourth quarter of 2008, the company leased more
than 2.2 million square feet (206,400 square meters) of its
development pipeline, bringing the full-year total to a new annual
leasing record of approximately 8.3 million square feet (768,300
square meters) compared to approximately 8.2 million square feet
(761,800 square meters) of development leasing in 2007. Customers
that initiated and expanded their relationships with AMB in 2008
range from global consumer brands to third party logistics and air
freight forwarder companies and include: 3M, DHL, Dorel, KLM,
Kuehne + Nagel, Pepsico Canada, Schenker and Wincanton. In its
global operating portfolio, AMB leased more than 5.2 million square
feet (480,400 square meters) in the fourth quarter and more than
23.8 million square feet (2.2 million square meters) in the full
year 2008. In combination with leasing in its development pipeline,
the company leased a total of more than 32.1 million square feet
(3.0 million square meters) globally in the full year 2008. "We
were able to maintain strong leasing activity through year end
despite our customer's increasing caution regarding new space
commitments," stated Mr. Moghadam. "In fact, 2008 represented a
record leasing year for our development portfolio. These important
results are a testament to our focused investment strategy, the
quality of our portfolio, the strength of our customer
relationships and the diligence of our local teams." Investment
Activity The company's development-start and acquisition activities
in the quarter were commensurate with its plans to limit capital
deployment until the financial and real estate markets stabilize.
The company commenced development on previously committed projects
totaling 1.4 million square feet (131,200 square meters) during the
quarter, with an expected total investment of approximately $79.5
million. Development starts for the full year 2008 totaled $544.7
million, a 50 percent decrease from $1.1 billion in 2007. AMB's
global development pipeline at year end, which included investments
held through unconsolidated joint ventures, totaled approximately
16.4 million square feet (1.5 million square meters), with an
estimated total investment of $1.3 billion scheduled for delivery
through 2010. The company's share of the remaining funding required
to complete the development pipeline is projected to be $248.6
million. The development pipeline was more than 36 percent leased
as of year end 2008, with approximately 8.9 million square feet
(826,800 square meters) of leasing remaining in order to stabilize
the portfolio over the next 24 months. The company closed on a
previously committed acquisition of an industrial property in China
during the quarter, for a total investment of approximately $12.5
million. Acquisitions for the full year 2008 totaled more than $543
million globally, a 48 percent decrease from more than $1.0 billion
in 2007. "Until the financial and real estate markets stabilize,
our capital deployment activity will be limited to situations where
we are fulfilling prior commitments," said Mr. Moghadam. "Our focus
remains on preserving our balance sheet, reducing our cost
structure and preparing our company for future opportunities."
During the quarter, AMB sold two properties and 95 acres of land to
third parties; the company also contributed one property to AMB
Europe Fund I. The aggregate price for development contributions
and sales totaled $23.0 million for the quarter and $592.6 million
for the full year 2008. Private Capital At year end, the company's
private capital business had more than $7.0 billion in assets under
management. During 2008, the company added $835 million in
properties to the company's funds across Japan, Mexico, Europe and
the U.S. "AMB is committed to the success of its private capital
franchise which is a significant part of our business," commented
John T. Roberts, AMB's president, Private Capital. "We continue to
build on our 26 years of working with institutional investors
highlighted by creating innovative funds and joint ventures. We are
committed to the continued success of our private capital business
by evolving our product offerings and by adapting to market
conditions in order to provide investors with attractive investment
opportunities." Capital Markets The company successfully completed
more than 35 capital market transactions for a total of
approximately $2.6 billion during 2008, with $323 million in the
fourth quarter, including refinancings, extensions and new
financings throughout the Americas, Europe and Asia. "Conversations
with our lenders have indicated that their first priority will be
rollover of existing maturities, followed by modest new allocations
for their best customers especially on well-located and leased
assets," said Thomas S. Olinger, AMB's chief financial officer.
"Given our long-standing lender relationships, well-laddered and
geographically diverse debt maturities, extension options and
modest loan-to-values, we believe we are well positioned to address
our upcoming maturities." As of December 31, 2008, the company's
total consolidated debt maturities for 2009 were $783 million.
Assuming the company exercises available extension options, the
company's total 2009 consolidated debt maturities would be $341
million. The company's total unconsolidated debt maturities for
2009 were $212 million as of December 31, 2008. Assuming the
company exercises available extension options, the total
unconsolidated debt maturities would be $173 million. Subsequent to
quarter end, the company exercised its option to extend the
maturity of its $325 million term loan from September 2009 to
September 2010. The company had approximately $934 million of
capacity as of December 31, 2008, consisting of $224 million of
consolidated cash and cash equivalents and $710 million of
availability on its lines of credit. In addition, the company has
approximately $1.1 billion of its share of properties available for
sale or contribution. 2009 FFO Guidance Given the uncertainties in
the current environment, going forward, the company will provide
2009 guidance for its real estate operations and private capital
revenues. Consistent with its previously announced 2009 dividend
policy, the company will not provide guidance on asset dispositions
and gain activity. The company updated its full year 2009 FFO
guidance, without gains from asset dispositions or gain activity,
of $1.80 to $1.90. Full year 2009 EPS guidance is $0.55 to $0.65.
Supplemental Earnings Measures Included in the footnotes to the
company's attached financial statements is a discussion of why
management believes FFO, FFOPS and FFO, excluding impairment and
restructuring charges (the "FFO Measures") are useful supplemental
measures of operating performance, ways in which investors might
use the FFO Measures when assessing the company's financial
performance and the FFO Measures' limitations as a measurement
tool. Reconciliation from net income to the FFO Measures are
provided in the attached tables and published in the company's
quarterly supplemental analyst package, available on the company's
website at http://www.amb.com/. The company believes that net
income, as defined by GAAP, is the most appropriate earnings
measure. However, the company considers cash-basis same store net
operating income (SS NOI) to be a useful supplemental measure of
its operating performance. Properties that are considered part of
the same store pool include all properties that were owned as of
the end of both the current and prior year reporting periods and
exclude development properties for both the current and prior
reporting periods. The same store pool is set annually and excludes
properties purchased and developments stabilized after December 31,
2006. In deriving SS NOI, the company defines NOI as rental
revenues, including reimbursements, less property operating
expenses, both of which are calculated in accordance with GAAP.
Property operating expenses exclude depreciation, amortization,
general and administrative expenses and interest expense. The
company defines SS NOI to also exclude straight-line rents and
amortization of lease intangibles. The company considers SS NOI to
be an appropriate and useful supplemental performance measure
because it reflects the operating performance of the real estate
portfolio excluding effects of non-cash adjustments and provides a
better measure of actual cash basis rental growth for a
year-over-year comparison. In addition, the company believes that
SS NOI helps the investing public compare the company's operating
performance with that of other companies. While SS NOI is a
relevant and widely used measure of operating performance of real
estate investment trusts, it does not represent cash flow from
operations or net income as defined by GAAP and should not be
considered as an alternative to those measures in evaluating the
company's liquidity or operating performance. SS NOI also does not
reflect general and administrative expenses, interest expense,
depreciation and amortization costs, capital expenditures and
leasing costs, or trends in development and construction activities
that could materially impact its results from operations. Further,
the company's computation of SS NOI may not be comparable to that
of other real estate companies, as they may use different
methodologies for calculating SS NOI. Reconciliation from net
income to SS NOI is published in the company's quarterly
supplemental analyst package, available on the company's website at
http://www.amb.com/. "Owned and managed" is defined by the company
as assets in which the company has at least a 10 percent ownership
interest, is the property or asset manager, and which it intends to
hold for the long-term. Conference Call and Supplemental
Information The company will host a conference call to discuss the
quarterly and full year results on Thursday, January 29, 2009 at
1:00 PM EST. Stockholders and interested parties may listen to a
live broadcast of the conference call by dialing 877 447 8218 (from
the U.S. and Canada) or +1 706 643 7823 (from all other countries)
and using reservation code 78372583. A webcast can be accessed
through a link titled "Q4 2008 Earnings Conference Call" located in
the Investor Relations section of the company's website at
http://www.amb.com/. If you are unable to listen to the live
conference call, a telephone and webcast replay will be available
after 3:00 PM EST on Thursday, January 29, 2009 until 8:00 PM EST
on Friday, February 20, 2009. The telephone replay can be accessed
by dialing 800 642 1687 (from the U.S. and Canada) or +1 706 645
9291 (from all other countries) and using reservation code
78372583. The webcast replay can be accessed through a link in the
Investor Relations section of the company's website at
http://www.amb.com/. AMB Property Corporation.(R) Local partner to
global trade.(TM) AMB Property Corporation(R) is a leading owner,
operator and developer of industrial real estate, focused on major
hub and gateway distribution markets in the Americas, Europe and
Asia. As of December 31, 2008, AMB owned, or had investments in, on
a consolidated basis or through unconsolidated joint ventures,
properties and development projects expected to total approximately
160.0 million square feet (14.9 million square meters) in 49
markets within 15 countries. AMB invests in properties located
predominantly in the infill submarkets of its targeted markets. The
company's portfolio is comprised of High Throughput Distribution(R)
facilities -- industrial properties built for speed and located
near airports, seaports and ground transportation systems. AMB's
press releases are available on the company website at
http://www.amb.com/ or by contacting the Investor Relations
department at +1 415 394 9000. Some of the information included in
this press release contains forward- looking statements, such as
those related to continued demand for our product, status of key
operating metrics, our ability to capitalize on trends and realize
growth, effectiveness of our strategies, performance of our
portfolio, occupancy levels, rent growth, SS NOI growth, our
development projects (including completion, timing of stabilization
and delivery, our ability to lease such projects, square feet at
stabilization or completion, costs, share of remaining funding and
total investment amounts), our ability to contribute properties to
and acquire properties in our private capital co-investment
ventures, our ability to accomplish future business plans, strength
of our balance sheet, our ability to access credit markets and
enter into credit and financing agreements and to meet our
forecasts (including our FFO and EPS guidance), lenders'
priorities, our position to address debt maturities, our ability to
maintain credit extensions and business goals, which are made
pursuant to the safe-harbor provisions of Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. Because these forward-looking
statements involve risks and uncertainties, there are important
factors that could cause our actual results to differ materially
from those in the forward-looking statements, and you should not
rely on the forward-looking statements as predictions of future
events. The events or circumstances reflected in forward-looking
statements might not occur. You can identify forward-looking
statements by the use of forward- looking terminology such as
"believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "pro forma," "estimates" or
"anticipates" or the negative of these words and phrases or similar
words or phrases. You can also identify forward-looking statements
by discussions of strategy, plans or intentions. Forward-looking
statements are necessarily dependent on assumptions, data or
methods that may be incorrect or imprecise and we may not be able
to realize them. We caution you not to place undue reliance on
forward-looking statements, which reflect our analysis only and
speak only as of the date of this press release or the dates
indicated in the statements. We assume no obligation to update or
supplement forward- looking statements. 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: defaults on or non-renewal of leases by
tenants or renewal at lower than expected rent, increased interest
rates and operating costs or greater than expected capital
expenditures, our failure to obtain necessary outside financing,
re-financing risks, risks related to our obligations in the event
of certain defaults under joint venture and other debt, risks
related to debt and equity security financings (including dilution
risk), difficulties in identifying properties to acquire and in
effecting acquisitions, our failure to successfully integrate
acquired properties and operations, our failure to divest
properties we have contracted to sell or to timely reinvest
proceeds from any divestitures, risks and uncertainties affecting
property development, redevelopment, value-added conversion and
construction (including construction delays, cost overruns, our
inability to obtain necessary permits and public opposition to
these activities), our failure to qualify and maintain our status
as a real estate investment trust, risks related to our tax
structuring, failure to maintain our current credit agency ratings,
environmental uncertainties, risks related to natural disasters,
financial market fluctuations, changes in general economic
conditions or in the real estate sector, inflation risks, changes
in real estate and zoning laws, a downturn in the U.S., California
or global economy, risks related to doing business internationally
and global expansion, risks of opening offices globally, risks of
changing personnel and roles, losses in excess of our insurance
coverage, unknown liabilities acquired in connection with acquired
properties or otherwise and increases in real property tax rates.
Our success also depends upon economic trends generally, including
interest rates, income tax laws, governmental regulation,
legislation, population changes and certain other matters discussed
under the heading "Risk Factors" and elsewhere in our annual report
on Form 10-K for the year ended December 31, 2007 and our quarterly
report on Form 10-Q for the quarter ended September 30, 2008.
CONSOLIDATED STATEMENTS OF OPERATIONS(1) (in thousands, except per
share data) For the For the Quarters Years ended ended December 31,
December 31, 2008 2007 2008 2007 Revenues Rental revenues $157,112
$162,668 $646,575 $639,583 Private capital revenues(2) 7,632 9,700
68,470 31,707 Total revenues 164,744 172,368 715,045 671,290 Costs
and expenses Property operating costs (45,732) (45,021) (184,700)
(174,406) Depreciation and amortization (39,641) (40,183) (169,145)
(162,311) General and administrative(3) (40,651) (34,251) (143,982)
(129,510) Restructuring charges(4) (13,758) - (13,758) - Fund costs
(159) (297) (1,078) (1,076) Real estate impairment losses (190,400)
(900) (190,400) (1,157) Other expenses(5)(6) (2,446) (2,117) (520)
(5,112) Total costs and expenses (332,787) (122,769) (703,583)
(473,572) Other income and expenses Development profits, net of
taxes 4,836 34,802 81,084 124,288 (Losses) gains from sale or
contribution of real estate interests, net - (1,407) 19,967 73,436
Equity in earnings of unconsolidated joint ventures, net 2,762 181
17,121 7,467 Other (expenses) income(6) (5,784) 2,316 (5,835)
22,252 Interest expense, including amortization (33,228) (30,551)
(133,533) (126,968) Total other income and expenses, net (31,414)
5,341 (21,196) 100,475 (Loss) income before minority interests and
discontinued operations (199,457) 54,940 (9,734) 298,193 Minority
interests' share of loss (income) Joint venture partners' share of
income before discontinued operations (2,917) (6,603) (32,310)
(27,691) Joint venture partners' and limited partnership
unitholders' share of development profits (1,924) (8,835) (9,041)
(13,934) Preferred unitholders (1,432) (1,432) (5,727) (8,042)
Limited partnership unitholders 8,166 (57) 5,464 (5,158) Total
minority interests' share of loss (income) 1,893 (16,927) (41,614)
(54,825) (Loss) income from continuing operations (197,564) 38,013
(51,348) 243,368 Discontinued operations (Loss) income attributable
to discontinued operations, net of minority interests (94) 1,504
(401) 8,879 Development gains, net of taxes and minority interests
- 49,905 - 49,905 (Losses) gains from sale of real estate, net of
minority interests (306) 7,777 1,887 12,108 Total discontinued
operations (400) 59,186 1,486 70,892 Net (loss) income (197,964)
97,199 (49,862) 314,260 Preferred stock dividends (3,950) (3,950)
(15,806) (15,806) Preferred unit redemption issuance costs - - -
(2,930) Net (loss) income available to common stockholders
$(201,914) $93,249 $(65,668) $295,524 Net (loss) income per common
share (diluted) $(2.07) $0.92 $(0.67) $2.96 Weighted average common
shares (diluted) 97,584 101,121 97,404 99,808 (1) On July 1, 2008,
the partners of AMB Partners II (previously, a consolidated
co-investment venture) contributed their interests in AMB Partners
II to AMB Institutional Alliance Fund III in exchange for interests
in AMB Institutional Alliance Fund III, an unconsolidated
co-investment venture. (2) Includes incentive and promote
distributions for 2008 of $33.0 million for AMB Institutional
Alliance Fund III received during the quarter ended June 30, 2008
and of $1.0 million for the dissolution of AMB Erie co-investment
venture received during the quarter ended March 31, 2008. (3) For
the quarter and year ended December 31, 2008, includes an
impairment charge of $5.0 million for a reserve against tax assets.
(4) Restructuring charges represent costs related to the exit of
selected markets as well as severance expense related to the
general reorganization of the company. (5) For the quarter and year
ended December 31, 2008, includes $6.8 million to write-off pursuit
costs. (6) Includes changes in liabilities and assets associated
with AMB's deferred compensation plan. CONSOLIDATED STATEMENTS OF
FUNDS FROM OPERATIONS(1) (in thousands, except per share data) For
the For the Quarters Years ended ended December 31, December 31,
2008 2007 2008 2007 Net (loss) income available to common
stockholders $(201,914) $93,249 $(65,668) $295,524 Losses (gains)
from sale or contribution of real estate, net of minority interests
306 (6,370) (21,854) (85,544) Depreciation and amortization Total
depreciation and amortization 39,641 40,183 169,145 162,311
Discontinued operations' depreciation 4 49 54 1,415 Non-real estate
depreciation (1,484) (1,658) (7,270) (5,623) Adjustments to derive
FFO from consolidated joint ventures Joint venture partners'
minority interests (Net income) 2,917 6,603 32,310 27,691 Limited
partnership unitholders' minority interests (Net (loss) income)
(8,166) 57 (5,464) 5,158 Limited partnership unitholders' minority
interests (Development profits) 114 3,384 2,822 7,148 Discontinued
operations' minority interests (Net (loss) income) (4) 66 217 390
FFO attributable to minority interests (9,036) (15,555) (49,957)
(62,902) Adjustments to derive FFO from unconsolidated joint
ventures AMB's share of net income (2,762) (181) (17,121) (7,467)
AMB's share of FFO 10,015 6,083 42,742 27,391 Funds from operations
$(170,369) $125,910 $79,956 $365,492 FFO per common share and unit
(diluted) $(1.69) $1.20 $0.78 $3.51 Weighted average common shares
and units (diluted) 101,102 105,130 102,856 104,169 Adjustments for
impairment and restructuring charges Real estate impairment losses
$190,400 $190,400 Pursuit costs and tax reserve 11,834 11,834 AMB's
share of real estate impairment losses from unconsolidated joint
ventures 1,847 1,847 Joint venture partners' minority interest
share of real estate impairment losses (424) (424) Total impairment
charges(3) 203,657 203,657 Restructuring charges(4) 13,758 13,758
Funds from operations, excluding impairment and restructuring
charges $47,046 $297,371 FFO, excluding impairment and
restructuring charges per common share and unit (diluted) $0.47
$2.89 (1) Funds From Operations ("FFO"), Funds From Operations Per
Share and Unit ("FFOPS") and FFO, excluding impairment and
restructuring charges (together with FFO and FFOPS, the "FFO
Measures") AMB believes that net income, as defined by U.S. GAAP,
is the most appropriate earnings measure. However, AMB considers
funds from operations, or FFO, FFO per share and unit, or FFOPS,
and FFO, excluding impairment and restructuring charges, to be
useful supplemental measures of its operating performance. AMB
defines FFOPS as FFO per fully diluted weighted average share of
AMB's common stock and operating partnership units. AMB calculates
FFO as net income, calculated in accordance with U.S. GAAP, less
gains (or losses) from dispositions of real estate held for
investment purposes and real estate-related depreciation, and
adjustments to derive AMB's pro rata share of FFO of consolidated
and unconsolidated joint ventures. AMB includes the gains from
development, including those from value-added conversion projects,
before depreciation recapture, as a component of FFO. AMB believes
that value-added conversion dispositions are in substance land
sales and as such should be included in FFO, consistent with the
real estate investment trust industry's long standing practice to
include gains on the sale of land in FFO. However, AMB's
interpretation of FFO or FFOPS may not be consistent with the views
of others in the real estate investment trust industry, who may
consider it to be a divergence from the NAREIT definition, and may
not be comparable to FFO or FFOPS reported by other real estate
investment trusts that interpret the current NAREIT definition
differently than AMB does. In connection with the formation of a
joint venture, AMB may warehouse assets that are acquired with the
intent to contribute these assets to the newly formed venture. Some
of the properties held for contribution may, under certain
circumstances, be required to be depreciated under U.S. GAAP. If
this circumstance arises, AMB intends to include in its calculation
of FFO gains or losses related to the contribution of previously
depreciated real estate to joint ventures. Although such a change,
if instituted, will be a departure from the current NAREIT
definition, AMB believes such calculation of FFO will better
reflect the value created as a result of the contributions. To
date, AMB has not included gains or losses from the contribution of
previously depreciated warehoused assets in FFO. In addition to
presenting FFO as described above, AMB presents FFO, excluding
impairment and restructuring charges. AMB calculates FFO, excluding
impairment and restructuring charges, as FFO less impairment and
restructuring charges and adjustments to derive AMB's share of
impairment charges from consolidated and unconsolidated joint
ventures. To the extent that the book value of a land parcel or
development asset exceeded the fair market value of a property,
based on its intended holding period, a non-cash impairment charge
was recognized for the shortfall. The impairment charges were
principally a result of increases in estimated capitalization rates
and deterioration in market conditions that adversely impacted
values. AMB also recognized charges to write-off pursuit costs
related to development projects it no longer plans to commence and
to establish a reserve against tax assets associated with the
reduction of its development activities. The restructuring charges
reflected costs associated with AMB's reduction in global headcount
and cost structure. Although difficult to predict, these charges
may be recurring given the uncertainty of the current economic
climate and its adverse effects on the real estate markets. While
not infrequent or unusual in nature, these charges are subject to
market fluctuations that can have inconsistent effects on AMB's
results of operations. The economics underlying these charges
reflect market conditions in the short-term but can obscure the
value of AMB's long-term investment decisions and strategies.
Management believes FFO, excluding impairment and restructuring
charges, is significant and useful to both it and its investors
because it more appropriately reflects the value and strength of
AMB's business model and its potential performance isolated from
the volatility of the current economic environment. However, in
addition to the limitations of FFO Measures generally discussed
below, FFO, excluding impairment and restructuring charges, does
not present a comprehensive measure of AMB's financial condition
and operating performance. This measure is a modification of the
NAREIT definition of FFO and should not be considered a replacement
of FFO as AMB defines it or used as an alternative to net income or
cash as defined by U.S. GAAP. AMB believes that the FFO Measures
are meaningful supplemental measures of its operating performance
because historical cost accounting for real estate assets in
accordance with U.S. GAAP implicitly assumes that the value of real
estate assets diminishes predictably over time, as reflected
through depreciation and amortization expenses. However, since real
estate values have historically risen or fallen with market and
other conditions, many industry investors and analysts have
considered presentation of operating results for real estate
companies that use historical cost accounting to be insufficient.
Thus, the FFO Measures are supplemental measures of operating
performance for real estate investment trusts that exclude
historical cost depreciation and amortization, among other items,
from net income, as defined by U.S. GAAP. AMB believes that the use
of the FFO Measures, combined with the required U.S. GAAP
presentations, has been beneficial in improving the understanding
of operating results of real estate investment trusts among the
investing public and making comparisons of operating results among
such companies more meaningful. AMB considers the FFO Measures to
be useful measures for reviewing comparative operating and
financial performance because, by excluding gains or losses related
to sales of previously depreciated operating real estate assets and
real estate depreciation and amortization, the FFO Measures can
help the investing public compare the operating performance of a
company's real estate between periods or as compared to other
companies. While FFO and FFOPS are relevant and widely used
measures of operating performance of real estate investment trusts,
the FFO Measures do not represent cash flow from operations or net
income as defined by U.S. GAAP and should not be considered as
alternatives to those measures in evaluating AMB's liquidity or
operating performance. The FFO Measures also do not consider the
costs associated with capital expenditures related to AMB's real
estate assets nor are the FFO Measures necessarily indicative of
cash available to fund AMB's future cash requirements. Management
compensates for the limitations of the FFO Measures by providing
investors with financial statements prepared according to U.S.
GAAP, along with this detailed discussion of the FFO Measures and a
reconciliation of the FFO Measures to net income, a U.S. GAAP
measurement. See Consolidated Statements of Funds from Operations
for a reconciliation of FFO from net income. The following table
reconciles projected FFO from projected net income for the year
ended December 31, 2009: 2009 Low High Projected net income $0.55
$0.65 AMB's share of projected depreciation and amortization 1.55
1.55 Impact of additional dilutive securities, other, rounding
(0.05) (0.05) Projected Funds From Operations (FFO) $2.05 $2.15
AMB's share of development gains recognized in January 2009 0.25
0.25 Projected FFO, excluding AMB's share of development gains(2)
$1.80 $1.90 Amounts are expressed per share, except FFO which is
expressed per share and unit. (2) As Development gains are
difficult to predict in the current economic environment,
management believes Projected FFO, excluding AMB's share of
development gains is the more appropriate and useful measure to
reflect its assessment of AMB's projected operating performance.
(3) Impairment charges represent the write down of assets due to
estimated fair value being lower than carry value, as well as
certain other charges associated with pursuit costs, tax asset
reserves and restructuring costs. (4) Restructuring charges
represent costs related to the exit of selected markets as well as
severance expense related to the general reorganization of the
company. CONSOLIDATED BALANCE SHEETS(1)(2) (dollars in thousands)
As of December 31, 2008 December 31, 2007 Assets Investments in
real estate Total investments in properties $6,598,328 $6,709,545
Accumulated depreciation and amortization (970,843) (916,686) Net
investments in properties 5,627,485 5,792,859 Investments in
unconsolidated joint ventures 431,322 356,194 Properties held for
contribution, net 600,852 488,339 Properties held for divestiture,
net 8,171 40,513 Net investments in real estate 6,667,830 6,677,905
Cash and cash equivalents and restricted cash 251,231 250,416
Accounts receivable, net 160,266 184,270 Other assets 213,982
149,812 Total assets $7,293,309 $7,262,403 Liabilities and
stockholders' equity Secured debt $1,522,571 $1,471,087 Unsecured
senior debt 1,153,926 1,003,123 Unsecured credit facilities 920,850
876,105 Other debt 392,838 144,529 Accounts payable and other
liabilities 335,845 306,196 Total liabilities 4,326,030 3,801,040
Minority interests Joint venture partners 293,367 517,572 Preferred
unitholders 77,561 77,561 Limited partnership unitholders 80,205
102,278 Total minority interests 451,133 697,411 Stockholders'
equity Common equity 2,292,734 2,540,540 Preferred equity 223,412
223,412 Total stockholders' equity 2,516,146 2,763,952 Total
liabilities and stockholders' equity $7,293,309 $7,262,403 (1)
During the quarter ended September 30, 2008, AMB acquired the
remaining equity interest (approximately 42%) in G. Accion, a
Mexican real estate company. Total assets and total liabilities
include $174,206 and $126,003, respectively, related to G. Accion
as of December 31, 2008. (2) On July 1, 2008, the partners of AMB
Partners II (previously, a consolidated co-investment venture)
contributed their interests in AMB Partners II to AMB Institutional
Alliance Fund III in exchange for interests in AMB Institutional
Alliance Fund III, an unconsolidated co-investment venture.
DATASOURCE: AMB Property Corporation CONTACT: Tracy A. Ward, Vice
President, IR & Corporate Communications, +1-415-733-9565, , or
Rachel E. M. Bennett, Director, Media and Public Relations,
+1-415-733-9532, , both of AMB Property Corporation Web site:
http://www.amb.com/
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