U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 20, 2010
AMB PROPERTY CORPORATION
(Exact name of registrant as specified in its charter)
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Maryland
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001-13545
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94-3281941
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(State or other jurisdiction of
incorporation)
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(Commission file number)
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(I.R.S. employer identification
number)
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Pier 1, Bay 1, San Francisco, California 94111
(Address of principal executive offices) (Zip code)
415-394-9000
(Registrants telephone number, including area code)
n/a
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 20, 2010, we issued a press release entitled AMB Property Corporation Announces Third
Quarter 2010 Results, which sets forth disclosure regarding our results of operations for the
third quarter 2010. A copy of the press release is attached hereto as Exhibit 99.1. This section
and the attached exhibit are provided under Item 2.02 of Form 8-K and are furnished to, but not
filed with, the U.S. Securities and Exchange Commission.
ITEM 8.01 OTHER EVENTS.
On October 20, 2010, we reported results for the third quarter of 2010. Funds from operations, as
adjusted, per fully diluted share and unit was $0.32 for the third quarter of 2010, as compared to
$0.71 for the same quarter in 2009. The year-over-year change was primarily due to higher
development profits recognized in the third quarter of 2009. FFO, as adjusted for the third quarter
of 2010, excludes $0.02 of restructuring and debt extinguishment charges.
Net income available to common stockholders per fully diluted share for the third quarter of 2010
was $0.04, as compared to $0.43 for the same quarter in 2009. The year-over-year change was
primarily due to higher development profits recognized in 2009 relative to 2010.
Owned and Managed Portfolio Operating Results
Occupancy in our operating portfolio was 92.6 percent at September 30, 2010, up 80 basis points
from June 30, 2010. Average occupancy during the third quarter was 91.7 percent. Cash-basis same
store net operating income, without the effect of lease termination fees, decreased 3.0 percent in
the third quarter of 2010 compared with the same period in 2009, driven primarily by increased
levels of free rent. Average rent on renewals and rollovers in our operating portfolio decreased
11.8 percent for the trailing four quarters ended September 30, 2010.
Leasing Activity
We commenced leases totaling approximately 8.1 million square feet (751,100 square meters) in our
global operating portfolio during the quarter and 32.2 million square feet (3.0 million square
meters) for the trailing four quarters ended September 30, 2010. In addition, we leased
approximately 1.7 million square feet (158,700 square meters) in our global development portfolio
during the third quarter and 7.0 million square feet (649,100 square meters) for the trailing four
quarters ended September 30, 2010.
Investment Activity
During the quarter, we acquired five assets for a total investment of $110.9 million including
$74.8 million for AMB U.S. Logistics Fund, $12.5 million for AMB Europe Fund I and $23.6 million
for our wholly-owned portfolio. Year-to-date acquisition investments total $199.1 million. We also
acquired our first land parcel in Rio de Janeiro,
the third acquisition through our joint venture with Cyrela Commercial Properties (CCP). Its 86
acres have estimated build-out potential of 1.5 million square feet (143,200 square meters).
New development starts in the quarter totaled approximately 920,500 square feet (85,500 square
meters) in Brazil and China, with an estimated total investment of $70 million.
During the quarter, we formed AMB Mexico Fondo Logistico, the first-of-its kind industrial venture
for Mexican pension plans (AFORES). We raised third-party capital of $3.3 billion pesos (USD $242.7
million) and committed USD $60.7 million for a total equity of USD $303.4 million.
As previously announced, our two open-end funds received capital commitments totaling $95.1 million
during the third-quarter, comprising:
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$50.5 million in third-party equity in AMB U.S. Logistics Fund; and
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$44.6 million in third-party equity in AMB Europe Fund I.
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Subsequent to quarter end, we invested $100 million, including $50 million in AMB U.S. Logistics
Fund and $50 million in AMB Europe Fund I.
Disposition Activities
During the third quarter, we completed property dispositions of $39.4 million, with a 7.7 percent
stabilized capitalization rate. The sale of three operating assets and two development properties
in the Americas and Europe represent the disposition of non-strategic assets that achieved maximum
value. During the first three quarters of 2010, we completed property dispositions and
contributions of $97.3 million, with a stabilized capitalization rate of 7.2 percent.
Financing Activities
During the third quarter we completed approximately $1.4 billion of new financings, including $566
million of wholly owned debt and $789 million for our co-investment ventures in Europe, Japan, and
the U.S.
Additionally, we have $1.6 billion of capital markets transactions currently being negotiated. This
activity includes the renewal of our two lines of credit, a corporate term loan and $415 million of
refinancing for AMB U.S. Logistics Fund. The net effect of all activity both completed and underway
for the AMB U.S. Logistics Fund is to extend the weighted average maturity from more than four to
over seven years, and reduce the Funds cost of capital by approximately 30 basis points.
We expect to complete approximately $3.0 billion of capital markets activity in the second half of
2010.
Our liquidity at September 30, 2010 was approximately $1.7 billion, consisting of approximately
$1.5 billion of availability on our lines of credit and more than $200 million of unrestricted
cash and cash equivalents.
SUPPLEMENTAL EARNINGS MEASURES
Included in the footnotes to our attached financial statements is a discussion of why management
believes FFO, as adjusted, and FFOPS, as adjusted (or 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 our 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, is provided in the attached tables.
We define 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. We believe 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 our 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
our operating performance with that of other companies. Real estate impairment losses have been
excluded in deriving NOI because we do not consider our impairment losses to be a property
operating expense. We believe 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 our assets but do not reflect the current operating performance of the assets with
respect to their revenues or expenses. Our 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 our real estate operations and should be excluded from our calculation of
NOI.
We consider SS NOI to be a useful supplemental measure of our operating performance for properties
that are considered part of the same store pool. We define 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. We consider 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, we believe that SS NOI helps investors compare the operating performance
of our 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, our
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.
The following table reconciles consolidated cash-basis SS NOI and NOI from net loss for the three
and nine months ended September 30, 2010 and 2009 (dollars in thousands):
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For the Quarters Ended
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For the Nine Months Ended
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September 30,
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September 30,
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2010
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2009
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2010
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2009
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Net income (loss)
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$
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13,592
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$
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76,464
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$
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22,285
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$
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(17,858
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Private capital income
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(7,569
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(7,886
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(21,859
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(27,376
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Depreciation and amortization
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50,590
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45,975
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145,437
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124,808
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Real estate impairment losses
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172,059
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General and administrative and fund costs
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28,861
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27,409
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91,371
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84,947
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Restructuring charges
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1,029
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4,874
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3,824
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Total other income and expenses
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30,058
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22,618
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80,991
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49,542
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Total discontinued operations
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(12,237
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(64,045
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(18,450
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(92,157
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NOI
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104,324
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100,535
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304,649
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297,789
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Less non same-store NOI
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(19,450
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(12,719
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(50,770
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(32,506
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Less non cash adjustments
(1)
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(1,652
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(835
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(6,895
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(1,179
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Cash-basis same-store NOI
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$
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83,222
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$
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86,981
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$
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246,984
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$
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264,104
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Less lease termination fees
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$
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(1,649
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$
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(1,297
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$
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(2,882
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$
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(2,446
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Cash-basis same-store NOI, excluding lease termination fees
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$
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81,573
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$
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85,684
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$
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244,102
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$
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261,658
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(1)
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Non-cash adjustments include straight line rents and amortization of lease
intangibles for the same store pool only.
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Owned
and managed is defined by us as assets in which we have at least a
10 percent ownership interest, are the property or asset
manager, and which we currently intend to hold for the long-term.
We are an 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 September 30, 2010, we owned,
or had investments in, on a consolidated basis or through unconsolidated joint ventures, properties
and development projects expected to total approximately 158.4 million square feet (14.7 million
square meters) in 49 markets within 15 countries. We invest in properties located predominantly in
the infill submarkets of our targeted markets. Our portfolio comprises High Throughput
Distribution® facilitiesindustrial properties built for speed and located near airports, seaports
and ground transportation systems.
FORWARD LOOKING STATEMENTS
Some of the information included in this press release contains forward-looking statements, such as
those related to positive net absorption, future investments in AMB Mexico Fondo Logistico, renewal
of our lines of credit, future financing activity including a corporate term loan and USLF
refinancings, extension of USLF debt maturities and the reduction of USLFs cost of capital,
ability to access attractive financing globally, our debt maturities, our growth opportunities, retention of our target leverage levels,
operating forecasts, the recovery of our operating performance, long term prospects for us and
industrial real estate, the recovery of leading business indicators, estimated build-out potential
of our acquisitions and estimated total investment of development starts, 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 our
business activities, including refinancing and interest rate risks (including inflation risks); our
failure to obtain, renew, or extend necessary financing or access the debt or equity markets; our
failure to maintain our current credit agency ratings or comply with our debt covenants; risks
related to our 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 we
expect; unknown liabilities acquired in connection with the
acquired properties, portfolios of
properties, or interests in real-estate related entities; our failure to successfully integrate
acquired properties and operations; risks and uncertainties affecting property development,
redevelopment and value-added conversion (including construction delays, cost overruns, our
inability to obtain necessary permits
and financing, our inability to lease properties at all or at favorable rents and terms, and public
opposition to these activities); our failure to set up additional funds, attract additional
investment in existing funds or to contribute properties to our co-investment ventures due to such
factors as our 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 our 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 our dividends; losses in excess of our
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 our 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)
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For the Quarters Ended September 30,
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For the Nine Months Ended September 30,
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2010
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2009
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2010
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2009
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Revenues
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Rental revenues
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$
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151,127
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$
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145,681
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$
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447,129
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$
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432,889
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Private capital revenues
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7,569
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7,886
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21,859
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27,376
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Total revenues
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158,696
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153,567
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468,988
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460,265
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Costs and expenses
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Property operating costs
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(46,803
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(45,146
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(142,480
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)
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(135,100
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)
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Depreciation and amortization
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(50,590
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(45,975
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(145,437
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)
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(124,808
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)
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General and administrative
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(28,715
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(27,169
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(90,758
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(84,123
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Restructuring charges
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(1,029
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)
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(4,874
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)
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(3,824
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)
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Fund costs
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(146
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)
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(240
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)
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(613
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)
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(824
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)
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Real estate impairment losses
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(172,059
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)
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Other expenses
(1)
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(1,330
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)
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(3,049
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)
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(1,251
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)
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(6,593
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)
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Total costs and expenses
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(128,613
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)
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(121,579
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)
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(385,413
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)
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(527,331
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)
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Other income and expenses
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Development profits, net of taxes
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717
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1,220
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5,719
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34,506
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Equity in earnings of unconsolidated joint ventures, net
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3,348
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3,257
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12,416
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7,507
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Other income
(1)
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1,299
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3,452
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2,035
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3,911
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Interest expense, including amortization
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(32,125
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)
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(27,498
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)
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(97,364
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)
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(88,216
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Loss on early extinguishment of debt
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(1,967
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(2,546
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(657
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Total other income and expenses, net
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(28,728
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(19,569
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(79,740
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(42,949
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Income (loss) from continuing operations
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1,355
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12,419
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3,835
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(110,015
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Discontinued operations
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Income attributable to discontinued operations
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742
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2,609
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2,707
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2,017
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Development profits, net of taxes
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53,002
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53,002
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Gains from sale of real estate interests, net of taxes
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11,495
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8,434
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15,743
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|
|
37,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total discontinued operations
|
|
|
12,237
|
|
|
|
64,045
|
|
|
|
18,450
|
|
|
|
92,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
13,592
|
|
|
|
76,464
|
|
|
|
22,285
|
|
|
|
(17,858
|
)
|
Noncontrolling interests share of net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners share of net income
|
|
|
(2,527
|
)
|
|
|
(6,058
|
)
|
|
|
(4,220
|
)
|
|
|
(8,829
|
)
|
Joint venture partners and limited partnership unitholders share of development profits
|
|
|
(6
|
)
|
|
|
(1,388
|
)
|
|
|
(93
|
)
|
|
|
(2,445
|
)
|
Preferred unitholders
|
|
|
|
|
|
|
(1,431
|
)
|
|
|
|
|
|
|
(4,295
|
)
|
Limited partnership unitholders
|
|
|
(132
|
)
|
|
|
(447
|
)
|
|
|
(5
|
)
|
|
|
3,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noncontrolling interests share of net income (loss)
|
|
|
(2,665
|
)
|
|
|
(9,324
|
)
|
|
|
(4,318
|
)
|
|
|
(12,026
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to AMB Property Corporation
|
|
|
10,927
|
|
|
|
67,140
|
|
|
|
17,967
|
|
|
|
(29,884
|
)
|
Preferred stock dividends
|
|
|
(3,952
|
)
|
|
|
(3,952
|
)
|
|
|
(11,856
|
)
|
|
|
(11,856
|
)
|
Allocation to participating securities
(2)
|
|
|
(340
|
)
|
|
|
(398
|
)
|
|
|
(1,021
|
)
|
|
|
(773
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders
|
|
$
|
6,635
|
|
|
$
|
62,790
|
|
|
$
|
5,090
|
|
|
$
|
(42,513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share (diluted)
|
|
$
|
0.04
|
|
|
$
|
0.43
|
|
|
$
|
0.03
|
|
|
$
|
(0.33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares (diluted)
|
|
|
166,997
|
|
|
|
145,659
|
|
|
|
160,187
|
|
|
|
129,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes changes in liabilities and assets associated with AMBs deferred
compensation plan for the three and nine months ended September 30, 2010 of $1,086 and $391,
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 nine months
ended September 30, 2010, there were 1,216 unvested restricted shares outstanding. For the three
and nine months ended September 30, 2009, there were 920 unvested restricted shares outstanding.
|
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS, AS ADJUSTED
(1)
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarters Ended September 30,
|
|
|
For the Nine Months Ended September 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
Net income (loss) available to common stockholders
|
|
$
|
6,635
|
|
|
$
|
62,790
|
|
|
$
|
5,090
|
|
|
$
|
(42,513
|
)
|
Gains from sale or contribution of real estate interests, net of taxes
|
|
|
(11,495
|
)
|
|
|
(8,434
|
)
|
|
|
(15,743
|
)
|
|
|
(37,138
|
)
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation and amortization
|
|
|
50,590
|
|
|
|
45,975
|
|
|
|
145,437
|
|
|
|
124,808
|
|
Discontinued operations depreciation
|
|
|
890
|
|
|
|
1,260
|
|
|
|
3,224
|
|
|
|
5,202
|
|
Non-real estate depreciation
|
|
|
(1,969
|
)
|
|
|
(1,927
|
)
|
|
|
(6,526
|
)
|
|
|
(6,017
|
)
|
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)
|
|
|
2,527
|
|
|
|
6,058
|
|
|
|
4,220
|
|
|
|
8,829
|
|
Limited partnership unitholders noncontrolling interests (Net income (loss))
|
|
|
132
|
|
|
|
447
|
|
|
|
5
|
|
|
|
(3,543
|
)
|
Limited partnership unitholders noncontrolling interests (Development profits)
|
|
|
11
|
|
|
|
1,388
|
|
|
|
117
|
|
|
|
2,445
|
|
FFO, as adjusted attributable to noncontrolling interests
|
|
|
(7,855
|
)
|
|
|
(8,587
|
)
|
|
|
(20,797
|
)
|
|
|
(24,326
|
)
|
Adjustments to derive FFO, as adjusted from unconsolidated joint ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMBs share of net income
|
|
|
(3,348
|
)
|
|
|
(3,257
|
)
|
|
|
(12,416
|
)
|
|
|
(7,507
|
)
|
AMBs share of FFO, as adjusted
|
|
|
15,936
|
|
|
|
11,079
|
|
|
|
45,833
|
|
|
|
35,000
|
|
Adjustments for impairments, restructuring charges and debt extinguishment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate impairment losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,059
|
|
Discontinued operations real estate impairment losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,794
|
|
Restructuring charges
|
|
|
1,029
|
|
|
|
|
|
|
|
4,874
|
|
|
|
3,824
|
|
Loss on early extinguishment of debt
|
|
|
1,967
|
|
|
|
|
|
|
|
2,546
|
|
|
|
657
|
|
Allocation to participating securities
(2)
|
|
|
(52
|
)
|
|
|
(261
|
)
|
|
|
(125
|
)
|
|
|
(889
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations, as adjusted
(1)
|
|
$
|
54,998
|
|
|
$
|
106,531
|
|
|
$
|
154,193
|
|
|
$
|
240,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO, as adjusted per common share and unit (diluted)
|
|
$
|
0.32
|
|
|
$
|
0.71
|
|
|
$
|
0.94
|
|
|
$
|
1.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares and units (diluted)
|
|
|
170,985
|
|
|
|
149,088
|
|
|
|
164,277
|
|
|
|
133,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 AMBs 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 AMBs 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 industrys long standing practice to include gains on the sale of land in funds from
operations. However, AMBs 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 AMBs 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 AMBs results of operations. The economics underlying these items reflect market and financing
conditions in the short-term but can obscure AMBs performance and the value of AMBs 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 AMBs business model and its potential performance isolated from the volatility of the
current economic environment and unobscured by costs (or gains) resulting from AMBs 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 AMBs 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 companys 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 AMBs liquidity or operating performance. The FFO Measures, as adjusted,
also do not consider the costs associated with capital expenditures related to AMBs real estate
assets nor are the FFO Measures, as adjusted, necessarily indicative of cash available to fund
AMBs 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.
|
|
|
|
(2)
|
|
Represents amount of FFO allocated to outstanding unvested restricted shares. For
the three and nine months ended September 30, 2010, there were 1,216 unvested restricted shares.
For the three and nine months ended September 30, 2009, there were 920 unvested restricted shares.
|
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
September 30, 2010
|
|
|
December 31, 2009
|
|
Assets
|
|
|
|
|
|
|
|
|
Investments in real estate
|
|
|
|
|
|
|
|
|
Total investments in properties
|
|
$
|
6,871,262
|
|
|
$
|
6,708,660
|
|
Accumulated depreciation and amortization
|
|
|
(1,219,307
|
)
|
|
|
(1,113,808
|
)
|
|
|
|
|
|
|
|
Net investments in properties
|
|
|
5,651,955
|
|
|
|
5,594,852
|
|
Investments in unconsolidated joint ventures
|
|
|
690,088
|
|
|
|
462,130
|
|
Properties held for sale or contribution, net
|
|
|
228,349
|
|
|
|
214,426
|
|
|
|
|
|
|
|
|
Net investments in real estate
|
|
|
6,570,392
|
|
|
|
6,271,408
|
|
Cash and cash equivalents and restricted cash
|
|
|
205,591
|
|
|
|
206,077
|
|
Accounts receivable, net
|
|
|
159,093
|
|
|
|
155,958
|
|
Other assets
|
|
|
188,650
|
|
|
|
208,515
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
7,123,726
|
|
|
$
|
6,841,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Secured debt
|
|
$
|
968,085
|
|
|
$
|
1,096,554
|
|
Unsecured senior debt
|
|
|
1,571,271
|
|
|
|
1,155,529
|
|
Unsecured credit facilities
|
|
|
249,108
|
|
|
|
477,630
|
|
Other debt
|
|
|
278,443
|
|
|
|
482,883
|
|
Accounts payable and other liabilities
|
|
|
357,800
|
|
|
|
338,042
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,424,707
|
|
|
|
3,550,638
|
|
Equity
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
Common equity
|
|
|
3,107,871
|
|
|
|
2,716,604
|
|
Preferred equity
|
|
|
223,412
|
|
|
|
223,412
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
3,331,283
|
|
|
|
2,940,016
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
Joint venture partners
|
|
|
306,575
|
|
|
|
289,909
|
|
Limited partnership unitholders
|
|
|
61,161
|
|
|
|
61,395
|
|
|
|
|
|
|
|
|
Total noncontrolling interests
|
|
|
367,736
|
|
|
|
351,304
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
3,699,019
|
|
|
|
3,291,320
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
7,123,726
|
|
|
$
|
6,841,958
|
|
|
|
|
|
|
|
|
|
|
|
ITEM 9.01
|
|
FINANCIAL STATEMENTS AND EXHIBITS.
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
99.1
|
|
AMB Property Corporation Press Release dated October 20, 2010.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
|
|
|
|
|
|
AMB Property Corporation
(Registrant)
|
|
Date: October 20, 2010
|
By:
|
/s/ Tamra D. Browne
|
|
|
|
Tamra D. Browne
|
|
|
|
Senior Vice President, General
Counsel and Secretary
|
|
Exhibits
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
99.1
|
|
AMB Property Corporation Press Release dated October 20, 2010.
|
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