SAN FRANCISCO, July 21 /PRNewswire-FirstCall/ -- AMB Property
Corporation® (NYSE: AMB), a leading owner, operator and developer
of global industrial real estate, today reported results for the
second quarter 2010. Funds from operations, as adjusted, per fully
diluted share and unit ("FFOPS, as adjusted") was $0.30 for the second quarter of 2010, as compared
to $0.37 for the same quarter in
2009. FFO, as adjusted for the second quarter of 2010, excludes
$0.01 of restructuring and debt
extinguishment charges.
Net income available to common stockholders per fully diluted
share ("EPS") for the second quarter of 2010 was $0.02, as compared to $0.12 for the same quarter in 2009. The
year-over-year change was primarily due to higher depreciation
expense and lower gains from disposition of operating
properties.
"Our second quarter results came in slightly ahead of our
expectations and our operating performance has begun to recover.
While we are encouraged by the recovery of many leading indicators
of our business, including global ocean and air cargo volumes, the
economic turbulence in the second quarter appears to have left our
customers in certain markets more cautious about leasing
decisions," said Hamid R. Moghadam,
chairman and CEO. "Consequently, we expect this dynamic will
contribute to lower full-year 2010 results than previously
expected, but remain confident in the prospects for AMB and
industrial real estate in 2011 and beyond."
Owned and Managed Portfolio Operating Results
Occupancy in AMB's operating portfolio was 91.8 percent at
June 30, 2010, up 130 basis points
from March 31, 2010. Average
occupancy during the second quarter was 90.1 percent. Cash-basis
same store net operating income ("SS NOI"), without the effect of
lease termination fees, decreased 6.0 percent in the second quarter
of 2010 compared with the same period in 2009, driven primarily by
lower average same store occupancy and increased levels of free
rent. Average rent on renewals and rollovers in AMB's operating
portfolio decreased 11.2 percent for the trailing four quarters
ended June 30, 2010.
Leasing Activity
The company commenced leases totaling approximately 7.9 million
square feet (735,400 square meters) in its global operating
portfolio during the quarter and 33.9 million square feet (3.2
million square meters) for the trailing four quarters ended
June 30, 2010. In addition, AMB
leased approximately 1.6 million square feet (149,300 square
meters) in its global development portfolio during the quarter.
Investment Activity
During the quarter, acquisitions totaled $42.7 million, including $29.4 million for AMB Europe Fund I and
$13.3 million for AMB's wholly-owned
portfolio. The company also acquired a land parcel in Brazil, the second acquisition through its
joint venture with Cyrela Commercial Properties (CCP). The 48 acres
have estimated build-out potential of 728,800 square feet (67,700
square meters).
Subsequent to quarter end, the company's two open-ended funds
received capital commitments comprising:
- $50.5 million in third-party
equity in AMB U.S. Logistics Fund; and
- $42.8 million in third-party
equity in AMB Europe Fund I.
Disposition Activities
During the second quarter, the company completed property
dispositions and contributions of $35
million, with a 6.0 percent capitalization rate,
comprising:
- The sale of five properties in the Americas for an aggregate
price of $12.6 million; and
- The transfer of two assets to AMB Europe Fund I in exchange for
additional units equal to the fair value of the assets, of
$22.4 million.
During the first half of 2010, the company completed property
dispositions and contributions of $57.9
million, with a stabilized capitalization rate of 6.9
percent.
Financing Activities
As previously announced on April
2010, the company completed the issuance and sale of
approximately 18.2 million shares of its common stock in a public
offering at a price of $27.50 per
share, generating approximately $479
million in net proceeds. The company used the proceeds for
general corporate purposes, including the reduction of
borrowings on its lines of credit and the funding of equity
investments into AMB U.S. Logistics Fund.
The company completed more than $428
million of debt repayments and extensions during the second
quarter and $678 million year to
date. AMB's share of total debt was reduced by approximately
$264 million during the quarter, and
at June 30, 2010, AMB's share of
total debt to share of total assets was 40.5 percent, as compared
to 44.8 percent at the end of the first quarter of 2010.
The company's liquidity at June 30,
2010 was approximately $1.5
billion, consisting of more than $1.2
billion of availability on its lines of credit and
approximately $292 million of
unrestricted cash and cash equivalents.
Subsequent to quarter end, the company closed two yen-denominated financing transactions in
Japan totaling $189 million (USD equivalent). The financings
consisted of a $113 million 10-year
unsecured corporate term-loan at a fixed rate of 3.25 percent and a
$76 million non-recourse seven-year
mortgage loan at a 2.9 percent fixed rate. The proceeds from both
financings were used to pay down borrowings on the company's yen
line of credit.
2010 FFO Guidance
The company revises its previous full-year 2010 Core FFO, as
adjusted guidance to $1.20 to $1.26
per share, excluding the recognition of gains from development
activities, early debt extinguishment costs and restructuring
charges. The company will provide updated details of its outlook
for 2010 guidance during its second quarter earnings conference
call.
Supplemental Earnings Measure
Included in the footnotes to the company's attached financial
statements is a discussion of why management believes FFO, as
adjusted, and FFOPS, as adjusted (the "FFO Measures, as adjusted")
are useful supplemental measures of operating performance, ways in
which investors might use the FFO Measures, as adjusted, when
assessing the company's financial performance and the limitations
of the FFO Measures, as adjusted, as a measurement tool.
Reconciliation from net income to the FFO Measures, as adjusted,
are provided in the attached tables and published in the company's
quarterly supplemental analyst package, available on the company's
website at www.amb.com.
AMB defines NOI as rental revenues, including reimbursements,
less property operating expenses. NOI excludes depreciation,
amortization, general and administrative expenses, restructuring
charges, real estate impairment losses, development profits
(losses), gains (losses) from sale or contribution of real estate
interests, and interest expense. AMB believes that net income, as
defined by GAAP, is the most appropriate earnings measure. However,
NOI is a useful supplemental measure calculated to help investors
understand AMB's operating performance, excluding the effects of
gains (losses), costs and expenses which are not related to the
performance of the assets. NOI is widely used by the real estate
industry as a useful supplemental measure, which helps investors
compare AMB's operating performance with that of other companies.
Real estate impairment losses have been excluded in deriving NOI
because AMB does not consider its impairment losses to be a
property operating expense. AMB believes that the exclusion of
impairment losses from NOI is a common methodology used in the real
estate industry. Real estate impairment losses relate to the
changing values of AMB's assets but do not reflect the current
operating performance of the assets with respect to their revenues
or expenses. AMB's real estate impairment losses are non-cash
charges which represent the write down in the value of assets when
estimated fair value over the holding period is lower than current
carrying value. The impairment charges were principally a result of
increases in estimated capitalization rates and deterioration in
market conditions that adversely impacted underlying real estate
values. Therefore, the impairment charges are not related to the
current performance of AMB's real estate operations and should be
excluded from its calculation of NOI.
AMB considers SS NOI to be a useful supplemental measure of our
operating performance for properties that are considered part of
the same store pool. AMB defines Cash-basis SS NOI as NOI on a same
store basis excluding straight line rents and amortization of lease
intangibles. Same store pool includes all properties that are owned
as of the end of both the current and prior year reporting periods
and excludes 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, 2008. AMB 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, AMB believes that SS NOI helps investors
compare the operating performance of AMB's real estate as compared
to 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 our liquidity or operating
performance. SS NOI also does not reflect general and
administrative expenses, interest expenses, real estate impairment
losses, depreciation and amortization costs, capital expenditures
and leasing costs, or trends in development and construction
activities that could materially impact our results from
operations. Further, AMB'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 provided in the attached tables and
published in the company's quarterly supplemental analyst package,
available on the company's website at www.amb.com.
The following table reconciles consolidated cash-basis SS NOI
and NOI from net loss for the three and six months ended
June 30, 2010 and 2009 (dollars in
thousands):
|
For the Quarters
Ended
|
|
For the Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Net income (loss)
|
$ 9,313
|
|
$ 29,034
|
|
$ 8,693
|
|
$ (94,322)
|
|
Private capital
income
|
(6,845)
|
|
(7,795)
|
|
(14,290)
|
|
(19,490)
|
|
Depreciation and
amortization
|
48,278
|
|
38,523
|
|
96,667
|
|
80,427
|
|
Real estate impairment
losses
|
-
|
|
-
|
|
-
|
|
175,887
|
|
General and administrative and
fund costs
|
30,246
|
|
25,963
|
|
62,511
|
|
57,538
|
|
Restructuring charges
|
872
|
|
3,824
|
|
3,845
|
|
3,824
|
|
Total other income and
expenses
|
26,094
|
|
20,824
|
|
50,931
|
|
26,778
|
|
Total discontinued
operations
|
(4,659)
|
|
(12,549)
|
|
(4,904)
|
|
(31,418)
|
|
NOI
|
103,299
|
|
97,824
|
|
203,453
|
|
199,224
|
|
Less non same-store
NOI
|
(17,894)
|
|
(9,562)
|
|
(33,440)
|
|
(20,293)
|
|
Less non cash
adjustments(1)
|
(2,698)
|
|
77
|
|
(5,219)
|
|
(350)
|
|
Cash-basis same-store
NOI
|
$ 82,707
|
|
$ 88,339
|
|
$ 164,794
|
|
$ 178,581
|
|
Less lease termination
fees
|
$ (596)
|
|
$ (478)
|
|
$ (1,233)
|
|
$ (1,261)
|
|
Cash-basis same-store NOI,
excluding lease termination fees
|
$ 82,111
|
|
$ 87,861
|
|
$ 163,561
|
|
$ 177,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Non-cash adjustments include
straight line rents and amortization of lease intangibles for the
same store pool only.
|
|
|
|
|
|
|
|
|
|
"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 currently intends to hold
for the long-term.
Conference Call Information
The company will host a conference call to discuss second
quarter 2010 results on Wednesday, July 21,
2010 at 10:00 AM PDT /
1:00 PM EDT. 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 84063539. A webcast can be
accessed through the company's website at www.amb.com in the
Investor Relations section.
If you are unable to listen to the live conference call, a
telephone and webcast replay will be available through the
company’s website at www.amb.com in the Investor Relations section
until 8:00 PM EDT/5:00 PM PDT on Friday,
August 20, 2010 at 800 642 1687 (from the U.S. and
Canada) or +1 706 645 9291 (from
all other countries), with the reservation code 84063539. The
webcast and podcast will be available for the same time period and
can be accessed through the company's website at
http://www.amb.com/ in the Investor Relations section.
AMB Property Corporation.® Local partner to global
trade.™
AMB Property Corporation® is a leading owner, operator and
developer of global industrial real estate, focused on major hub
and gateway distribution markets in the Americas, Europe and Asia. As of June 30,
2010, AMB owned, or had investments in, on a consolidated
basis or through unconsolidated joint ventures, properties and
development projects expected to total approximately 156.1 million
square feet (14.5 million square meters) in 48 markets within 15
countries. AMB invests in properties located predominantly in the
infill submarkets of its targeted markets. The company's portfolio
comprises High Throughput Distribution® 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
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 the recovery
of our operating performance, long term prospects for AMB and
industrial real estate, the recovery of leading business
indicators, estimated build-out potential of AMB’s acquisitions,
2010 results and FFO, as adjusted, guidance, 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 report 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: changes in general economic conditions in California, the U.S. or globally (including
financial market fluctuations), global trade or in the real estate
sector (including risks relating to decreasing real estate
valuations and impairment charges); risks associated with using
debt to fund the company's business activities, including
refinancing and interest rate risks (including inflation risks);
the company's failure to obtain, renew, or extend necessary
financing or access the debt or equity markets; the company's
failure to maintain its current credit agency ratings or comply
with its debt covenants; risks related to the company's obligations
in the event of certain defaults under co-investment venture and
other debt; risks associated with equity and debt securities
financings and issuances (including the risk of dilution); defaults
on or non-renewal of leases by customers or renewal at lower than
expected rent or failure to lease at all or on expected terms;
difficulties in identifying properties, portfolios of properties,
or interests in real-estate related entities or platforms to
acquire and in effecting acquisitions on advantageous terms and the
failure of acquisitions to perform as the company expects; unknown
liabilities acquired in connection with the acquired properties,
portfolios of properties, or interests in real-estate related
entities; the company's failure to successfully integrate acquired
properties and operations; risks and uncertainties affecting
property development, redevelopment and value-added conversion
(including construction delays, cost overruns, the company's
inability to obtain necessary permits and financing, the company's
inability to lease properties at all or at favorable rents and
terms, and public opposition to these activities); the company's
failure to set up additional funds, attract additional investment
in existing funds or to contribute properties to its co-investment
ventures due to such factors as its inability to acquire, develop,
or lease properties that meet the investment criteria of such
ventures, or the co-investment ventures' inability to access debt
and equity capital to pay for property contributions or their
allocation of available capital to cover other capital
requirements; risks and uncertainties relating to the disposition
of properties to third parties and the company's ability to effect
such transactions on advantageous terms and to timely reinvest
proceeds from any such dispositions; risks of doing business
internationally and global expansion, including unfamiliarity with
the new markets and currency and hedging risks; risks of changing
personnel and roles; risks related to suspending, reducing or
changing the company's dividends; losses in excess of the company's
insurance coverage; changes in local, state and federal regulatory
requirements, including changes in real estate and zoning laws;
increases in real property tax rates; risks associated with the
company's tax structuring; increases in interest rates and
operating costs or greater than expected capital expenditures;
environmental uncertainties; risks related to natural disasters;
and our failure to qualify and maintain our status as a real estate
investment trust. Our success also depends upon economic
trends generally, various market conditions and fluctuations and
those other risk factors discussed under the heading "Risk Factors"
and elsewhere in our most recent annual report on Form 10-K for the
year ended December 31, 2009.
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
(in thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended June
30,
|
|
For the Six Months Ended June
30,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Revenues
|
|
|
|
|
|
|
|
|
Rental revenues
|
$ 151,773
|
|
$ 140,777
|
|
$ 301,306
|
|
$ 291,253
|
|
Private capital
revenues
|
6,845
|
|
7,795
|
|
14,290
|
|
19,490
|
|
Total
revenues
|
158,618
|
|
148,572
|
|
315,596
|
|
310,743
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Property operating
costs
|
(48,474)
|
|
(42,953)
|
|
(97,853)
|
|
(92,029)
|
|
Depreciation and
amortization
|
(48,278)
|
|
(38,523)
|
|
(96,667)
|
|
(80,427)
|
|
General and
administrative
|
(30,093)
|
|
(25,641)
|
|
(62,043)
|
|
(56,954)
|
|
Restructuring charges
|
(872)
|
|
(3,824)
|
|
(3,845)
|
|
(3,824)
|
|
Fund costs
|
(153)
|
|
(322)
|
|
(468)
|
|
(584)
|
|
Real estate impairment
losses
|
-
|
|
-
|
|
-
|
|
(175,887)
|
|
Other expenses(1)
|
1,271
|
|
(4,207)
|
|
80
|
|
(3,545)
|
|
Total costs and
expenses
|
(126,599)
|
|
(115,470)
|
|
(260,796)
|
|
(413,250)
|
|
Other income and
expenses
|
|
|
|
|
|
|
|
|
Development profits, net of
taxes
|
199
|
|
-
|
|
5,002
|
|
33,286
|
|
Equity in earnings of
unconsolidated joint ventures, net
|
5,193
|
|
4,284
|
|
9,068
|
|
4,250
|
|
Other income(1)
|
448
|
|
7,528
|
|
737
|
|
459
|
|
Interest expense, including
amortization
|
(32,626)
|
|
(27,772)
|
|
(65,239)
|
|
(60,571)
|
|
Loss on early extinguishment of
debt
|
(579)
|
|
(657)
|
|
(579)
|
|
(657)
|
|
Total other income
and expenses, net
|
(27,365)
|
|
(16,617)
|
|
(51,011)
|
|
(23,233)
|
|
Income (loss) from continuing operations
|
4,654
|
|
16,485
|
|
3,789
|
|
(125,740)
|
|
Discontinued
operations
|
|
|
|
|
|
|
|
|
Income attributable to
discontinued operations
|
411
|
|
2,459
|
|
656
|
|
2,714
|
|
Gains from sale of real estate
interests, net of taxes
|
4,248
|
|
10,090
|
|
4,248
|
|
28,704
|
|
Total discontinued
operations
|
4,659
|
|
12,549
|
|
4,904
|
|
31,418
|
|
Net
income (loss)
|
9,313
|
|
29,034
|
|
8,693
|
|
(94,322)
|
|
Noncontrolling interests' share
of net income (loss)
|
|
|
|
|
|
|
|
|
Joint venture partners' share of
net income
|
(2,068)
|
|
(4,949)
|
|
(1,693)
|
|
(2,771)
|
|
Joint venture partners' and
limited partnership unitholders' share of development
profits
|
21
|
|
-
|
|
(85)
|
|
(1,108)
|
|
Preferred unitholders
|
-
|
|
(1,432)
|
|
-
|
|
(2,864)
|
|
Limited partnership
unitholders
|
(75)
|
|
(1,279)
|
|
125
|
|
4,041
|
|
Total
noncontrolling interests' share of net income (loss)
|
(2,122)
|
|
(7,660)
|
|
(1,653)
|
|
(2,702)
|
|
Net
income (loss) attributable to AMB Property Corporation
|
7,191
|
|
21,374
|
|
7,040
|
|
(97,024)
|
|
Preferred stock
dividends
|
(3,952)
|
|
(3,952)
|
|
(7,904)
|
|
(7,904)
|
|
Allocation to participating
securities(2)
|
(342)
|
|
(260)
|
|
(684)
|
|
(521)
|
|
Net income (loss) available to
common stockholders
|
$
2,897
|
|
$ 17,162
|
|
$
(1,548)
|
|
$(105,449)
|
|
Net income (loss) per common
share (diluted)
|
$
0.02
|
|
$
0.12
|
|
$
(0.01)
|
|
$
(0.86)
|
|
Weighted average common shares
(diluted)
|
165,658
|
|
145,380
|
|
156,793
|
|
121,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes changes in liabilities and assets associated with
AMB’s deferred compensation plan for the three and six months ended
June 30, 2010 of $(1,615) and $(696), respectively.
(2) Represents net income attributable to AMB Property
Corporation, net of preferred stock dividends, allocated to
outstanding unvested restricted shares. For the three and six
months ended June 30, 2010, there
were 1,222 unvested restricted shares outstanding. For the three
and six months ended June 30, 2009,
there were 930 unvested restricted shares outstanding.
CONSOLIDATED STATEMENTS OF FUNDS
FROM OPERATIONS, AS ADJUSTED(1)
|
|
|
(in thousands, except per share
data)
|
|
|
|
|
|
For the Quarters Ended June
30,
|
|
For the Six Months Ended June
30,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Net income (loss) available to
common stockholders
|
$
2,897
|
|
$ 17,162
|
|
$
(1,548)
|
|
$(105,449)
|
|
Gains from sale or contribution
of real estate interests, net of taxes
|
(4,248)
|
|
(10,090)
|
|
(4,248)
|
|
(28,704)
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
Total depreciation
and amortization
|
48,278
|
|
38,523
|
|
96,667
|
|
80,427
|
|
Discontinued
operations' depreciation
|
243
|
|
793
|
|
514
|
|
2,348
|
|
Non-real estate
depreciation
|
(2,012)
|
|
(1,953)
|
|
(4,557)
|
|
(4,090)
|
|
Adjustment for
depreciation on development profits
|
-
|
|
-
|
|
(1,546)
|
|
-
|
|
Adjustments to derive FFO, as
adjusted from consolidated joint ventures
|
|
|
|
|
|
|
|
|
Joint venture
partners' noncontrolling interests (Net income)
|
2,068
|
|
4,949
|
|
1,693
|
|
2,771
|
|
Limited partnership
unitholders' noncontrolling interests (Net income
(loss))
|
75
|
|
1,279
|
|
(125)
|
|
(4,041)
|
|
Limited partnership
unitholders' noncontrolling interests (Development (losses)
profits)
|
(2)
|
|
-
|
|
104
|
|
1,108
|
|
FFO, as adjusted
attributable to noncontrolling interests
|
(7,562)
|
|
(7,151)
|
|
(12,942)
|
|
(15,739)
|
|
Adjustments to derive FFO, as
adjusted from unconsolidated joint ventures
|
|
|
|
|
|
|
|
|
AMB's share of net
income
|
(5,193)
|
|
(4,284)
|
|
(9,068)
|
|
(4,250)
|
|
AMB's share of FFO,
as adjusted
|
15,444
|
|
11,786
|
|
29,897
|
|
23,921
|
|
Adjustments for impairments,
restructuring charges and debt extinguishment
|
|
|
|
|
|
|
|
|
Real estate
impairment losses
|
-
|
|
-
|
|
-
|
|
175,887
|
|
Discontinued
operations' real estate impairment losses
|
-
|
|
-
|
|
-
|
|
5,966
|
|
Restructuring
charges
|
872
|
|
3,824
|
|
3,845
|
|
3,824
|
|
Loss on early
extinguishment of debt
|
579
|
|
657
|
|
579
|
|
657
|
|
Allocation to
participating securities(2)
|
(31)
|
|
(86)
|
|
(73)
|
|
(474)
|
|
Funds from operations, as
adjusted(1)
|
$ 51,408
|
|
$ 55,409
|
|
$ 99,192
|
|
$ 134,162
|
|
|
|
|
|
|
|
|
|
|
FFO, as adjusted per common
share and unit (diluted)
|
$
0.30
|
|
$
0.37
|
|
$
0.62
|
|
$
1.07
|
|
Weighted average common shares
and units (diluted)
|
169,006
|
|
148,815
|
|
160,941
|
|
125,451
|
|
|
|
|
|
|
|
|
|
(1) Funds From Operations, as adjusted ("FFO, as
adjusted") and Funds From Operations Per Share and Unit, as
adjusted ("FFOPS, as adjusted") (together with FFO, as adjusted and
FFOPS, as adjusted, the "FFO Measures, as adjusted"). AMB believes
that net income, as defined by U.S. GAAP, is the most appropriate
earnings measure. However, AMB considers funds from operations, as
adjusted (or FFO, as adjusted) and FFO, as adjusted, per share and
unit (or FFOPS, as adjusted) to be useful supplemental measures of
its operating performance. AMB defines FFOPS, as adjusted, as FFO,
as adjusted, per fully diluted weighted average share of AMB's
common stock and operating partnership units. AMB calculates FFO,
as adjusted, as net income (or loss) available to common
stockholders, 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, as adjusted, of consolidated
and unconsolidated joint ventures. This calculation also includes
adjustments for items as described below.
Unless stated otherwise, AMB includes the gains from
development, including those from value-added conversion projects,
before depreciation recapture, as a component of FFO, as
adjusted. AMB believes gains from development should be
included in FFO, as adjusted, to more completely reflect the
performance of one of our lines of business. AMB believes that
value-added conversion dispositions are in substance land sales and
as such should be included in FFO, as adjusted, consistent with the
real estate investment trust industry's long standing practice to
include gains on the sale of land in funds from operations.
However, AMB's interpretation of FFO, as adjusted, or FFOPS, as
adjusted, 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
funds from operations or funds from operations per share and unit
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, as adjusted, 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, as adjusted, 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, as adjusted.
In addition, AMB calculates FFO, as adjusted, to exclude
impairment and restructuring charges, debt extinguishment losses
and the Series D preferred unit redemption discount. The impairment
charges were principally a result of increases in estimated
capitalization rates and deterioration in market conditions that
adversely impacted values. The restructuring charges reflected
costs associated with AMB's reduction in global headcount and cost
structure. Debt extinguishment losses generally included the costs
of repurchasing debt securities. AMB repurchased certain tranches
of senior unsecured debt to manage its debt maturities in response
to the current financing environment, resulting in greater debt
extinguishment costs. The Series D preferred unit redemption
discount reflects the gain associated with the discount to
liquidation preference in the Series D preferred unit redemption
price less costs incurred as a result of the redemption. Although
difficult to predict, these items may be recurring given the
uncertainty of the current economic climate and its adverse effects
on the real estate and financial markets. While not infrequent or
unusual in nature, these items result from market fluctuations that
can have inconsistent effects on AMB's results of operations. The
economics underlying these items reflect market and financing
conditions in the short-term but can obscure AMB's performance and
the value of AMB's long-term investment decisions and strategies.
Management believes FFO, as adjusted, is significant and
useful to both it and its investors. FFO, as adjusted, 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 and unobscured by costs (or gains)
resulting from AMB's management of its financing profile in
response to the tightening of the capital markets. However, in
addition to the limitations of FFO Measures, as adjusted, generally
discussed below, FFO, as adjusted, does not present a comprehensive
measure of AMB's financial condition and operating performance.
This measure is a modification of the NAREIT definition of funds
from operations and should not be used as an alternative to net
income or cash as defined by U.S. GAAP.
AMB believes that the FFO Measures, as adjusted, 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, as adjusted, are supplemental measures of operating
performance for real estate investment trusts that exclude
historical cost depreciation and amortization, among other items,
from net income available to common stockholders, as defined by
U.S. GAAP. AMB believes that the use of the FFO Measures, as
adjusted, 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, as adjusted, 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, as
adjusted, can help the investing public compare the operating
performance of a company's real estate between periods or as
compared to other companies. While funds from operations and funds
from operations per share are relevant and widely used measures of
operating performance of real estate investment trusts, the FFO
Measures, as adjusted, 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, as adjusted, also do not
consider the costs associated with capital expenditures related to
AMB's real estate assets nor are the FFO Measures, as adjusted,
necessarily indicative of cash available to fund AMB's future cash
requirements. Management compensates for the limitations of
the FFO Measures, as adjusted, by providing investors with
financial statements prepared according to U.S. GAAP, along with
this detailed discussion of the FFO Measures, as adjusted, and a
reconciliation of the FFO Measures, as adjusted, to net income
available to common stockholders, a U.S. GAAP
measurement.
See Consolidated Statements of Funds from Operations, as
adjusted for a reconciliation of FFO, as adjusted, from net income
available to common stockholders.
The following table reconciles projected FFO, as adjusted
excluding AMB's share of development gains (or "Core FFO, as
adjusted") from projected net income available to common
stockholders for the year ended December 31,
2010:
|
2010
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
Projected net income available
to common stockholders
|
$ (0.02)
|
|
$ 0.04
|
|
AMB's share of projected
depreciation and amortization
|
1.29
|
|
1.29
|
|
AMB's share of depreciation on
development profits recognized to date
|
(0.01)
|
|
(0.01)
|
|
AMB's share of gains on
dispositions of operating properties recognized to date
|
(0.03)
|
|
(0.03)
|
|
Impact of additional dilutive
securities, other, rounding
|
(0.03)
|
|
(0.03)
|
|
Projected Funds From Operations,
as adjusted (FFO, as adjusted)
|
$ 1.20
|
|
$ 1.26
|
|
|
|
|
|
|
Restructuring charges
|
0.02
|
|
0.02
|
|
AMB's share of development gains
recognized to date
|
(0.02)
|
|
(0.02)
|
|
Projected FFO, as adjusted
excluding AMB's share of
|
|
|
|
|
development gains (or "Core FFO,
as adjusted")(3)
|
$ 1.20
|
|
$ 1.26
|
|
|
|
|
|
Amounts are expressed per share, except FFO, as adjusted, and
Core FFO, as adjusted, which are expressed per share and unit.
(2) Represents amount of FFO allocated to outstanding unvested
restricted shares. For the three and six months ended June 30, 2010, there were 1,222 unvested
restricted shares. For the three and six months ended June 30, 2009, there were 930 unvested restricted
shares.
(3) As development gains are difficult to predict in the current
economic environment, management believes Core FFO, as adjusted, is
the more appropriate and useful measure to reflect its assessment
of AMB’s projected operating performance.
CONSOLIDATED BALANCE
SHEETS
|
|
(dollars in
thousands)
|
|
|
As of
|
|
|
June 30, 2010
|
|
December 31, 2009
|
|
Assets
|
|
|
|
|
Investments in real
estate
|
|
|
|
|
Total investments in
properties
|
$
6,834,736
|
|
$
6,708,660
|
|
Accumulated depreciation and
amortization
|
(1,196,321)
|
|
(1,113,808)
|
|
Net investments in
properties
|
5,638,415
|
|
5,594,852
|
|
Investments in unconsolidated
joint ventures
|
687,201
|
|
462,130
|
|
Properties held for sale or
contribution, net
|
131,155
|
|
214,426
|
|
Net investments in real
estate
|
6,456,771
|
|
6,271,408
|
|
Cash and cash equivalents and
restricted cash
|
240,694
|
|
206,077
|
|
Accounts receivable,
net
|
156,655
|
|
155,958
|
|
Other assets
|
205,872
|
|
208,515
|
|
Total assets
|
$
7,059,992
|
|
$
6,841,958
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Secured debt
|
$
944,787
|
|
$
1,096,554
|
|
Unsecured senior debt
|
1,156,361
|
|
1,155,529
|
|
Unsecured credit
facilities
|
422,483
|
|
477,630
|
|
Other debt
|
471,024
|
|
482,883
|
|
Accounts payable and other
liabilities
|
346,027
|
|
338,042
|
|
Total liabilities
|
3,340,682
|
|
3,550,638
|
|
Equity
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
Common equity
|
3,127,926
|
|
2,716,604
|
|
Preferred equity
|
223,412
|
|
223,412
|
|
Total stockholders'
equity
|
3,351,338
|
|
2,940,016
|
|
Noncontrolling
interests
|
|
|
|
|
Joint venture
partners
|
306,414
|
|
289,909
|
|
Limited partnership
unitholders
|
61,558
|
|
61,395
|
|
Total noncontrolling
interests
|
367,972
|
|
351,304
|
|
Total equity
|
3,719,310
|
|
3,291,320
|
|
Total liabilities and
equity
|
$
7,059,992
|
|
$
6,841,958
|
|
|
|
|
|
|
|
|
|
|
SOURCE AMB Property Corporation