SAN FRANCISCO, July 17 /PRNewswire-FirstCall/ -- AMB Property
Corporation(R) (NYSE:AMB), a leading global developer and owner of
industrial real estate, today reported results for the second
quarter and first six months of 2007. Funds from operations per
fully diluted share and unit ("FFOPS") was $0.74 for the second
quarter of 2007, as compared to $0.87 for the same quarter in 2006.
The current quarter results include $0.27 per share of development
profits, as compared to $0.48 per share in the second quarter of
2006. FFOPS results in the second quarter exceeded the high end of
the company's previous guidance by $0.07 per share, primarily due
to the better than expected performance of the operating portfolio
and the timing of development gains. FFOPS for the six months ended
June 30, 2007 was $1.32, as compared to $1.39 for the same period
in 2006. Net income available to common stockholders per fully
diluted share ("EPS") for the second quarter of 2007 was $1.10, as
compared to $0.80 for the same quarter in 2006. EPS for the six
months ended June 30, 2007 was $1.35 as compared to $1.06 for the
same period in 2006. The increases for the quarter and year-to-date
were due primarily to the gain on the contribution of operating
properties to the company's Europe Fund I, which was formed in the
second quarter of 2007. OWNED AND MANAGED PORTFOLIO OPERATING
RESULTS AMB's operating portfolio occupancy at June 30, 2007 was
96.1%, up 80 basis points from March 31, 2007 and 90 basis points
from June 30, 2006. Benefiting from occupancy gains and rising
rents in many of the company's markets, cash-basis same store net
operating income ("SSNOI") in the second quarter of 2007 increased
5.8% over the same period in 2006. In the second quarter of 2007,
rents on lease renewals and rollovers in AMB's operating portfolio
increased 2.0%, as compared to a decline of 0.9% in the second
quarter of 2006. "Global trade continues to expand at more than
three times world GDP. Many of our customers are reconfiguring
their distribution networks to improve efficiencies, driving the
demand for new facilities in our target markets. Our solid
performance in the quarter reflects this dynamic," said Hamid R.
Moghadam, AMB chairman and CEO. "Our operating portfolio grew by
nearly 8.0 million square feet in the quarter, and at the same
time, our occupancy level improved and is on target to meet our
annual forecast. Market rents continue to rise in many of our
markets, resulting in our portfolio's fourth consecutive quarter of
positive rent growth on rollover. Importantly, conversations with
our customers point to continued growth in both sea container
traffic and air cargo volumes for the remainder of 2007, which puts
us in a good position for the balance of the year." INVESTMENT
ACTIVITY New development starts in the quarter totaled
approximately 3.2 million square feet in nine projects in North
America and Asia, and one value-added conversion project in San
Francisco, with an estimated total investment of $265 million. At
quarter end, AMB's development pipeline totaled 15.7 million square
feet in 41 projects globally and five value-added conversion
projects in California, with an estimated total investment of $1.5
billion. The company's development business includes contributions
of stabilized properties to affiliated private capital funds or
sale of projects to third parties. During the second quarter, AMB
contributed or sold nine development projects totaling 1.3 million
square feet for a gross sale price of $159 million. During the
quarter, AMB acquired 5.4 million square feet of industrial
distribution space in 23 properties at a total acquisition cost of
approximately $495 million, $478 million of which was acquired for
four of the company's co-investment funds: AMB Alliance Fund III,
AMB Japan Fund I, AMB Europe Fund I and AMB-SGP Mexico. The
acquisitions during the quarter expanded the company's presence in
several of its target markets in North America, Europe and Asia,
and included entry into the company's fifth Mexico target market,
Tijuana. "We have spent the past several years building a global
platform with local-market development, acquisition and management
teams focused on understanding and meeting our customers' rapidly
evolving real estate requirements. During the second quarter, we
deployed a record level of capital, highlighting the ability of our
regional teams to source attractive investment opportunities and to
meet customer needs," added Mr. Moghadam. "Further, our proven
track record in making quality investments allows us to continue to
grow our private capital franchise, boosting returns on invested
capital and providing us with an important source of recurring
income-benefiting both our private capital and public equity
investors." As previously announced, AMB formed AMB Europe Fund I
during the quarter with an initial contribution of 4.2 million
square feet of operating properties and 0.5 million square feet of
development properties. This open- end co-investment fund, with a
current gross asset value of approximately $719 million, is the
company's 10th active fund and the 11th fund formed since AMB's
1997 initial public offering. The fund targets investments of
distribution facilities in many major European metropolitan areas
with dynamic and diverse economies tied to global trade, including
markets in Belgium, France, Germany, Italy, the Netherlands, Spain,
the United Kingdom and Central/Eastern Europe. Additions and
Promotions of Company Officers During the quarter, Peter
Schuijlenburg joined AMB as vice president, general manager for the
company's business in Germany. Mr. Schuijlenburg is located in
AMB's Frankfurt office. The company announced the following officer
promotions during the quarter: Bobby Bransfield was promoted to
senior vice president, and Ken Kwan, Mary Lang, Jason Leong, Rowena
Manlapaz and David Mims were promoted to vice president.
Supplemental Earnings Measure AMB reports FFOPS and unit in
accordance with the standards established by the National
Association of Real Estate Investment Trusts. Included in the
footnotes to the company's attached financial statements is a
discussion of why management believes FFOPS is a useful
supplemental measure of operating performance, ways in which
investors might use FFOPS when assessing the company's financial
performance and FFOPS's limitations as a measurement tool.
Reconciliation from net income to funds from operations and FFOPS
is provided in the attached tables and published in AMB'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
(SSNOI) 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,
2005. In deriving SSNOI, the company defines NOI as rental revenues
(as calculated in accordance with GAAP), including reimbursements,
less straight-line rents, amortization of lease intangibles, and
property operating expenses, which excludes depreciation,
amortization, general and administrative expenses and interest
expense. The company considers SSNOI 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 SSNOI helps the investing
public compare the company's operating performance with that of
other companies. While SSNOI 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 AMB's liquidity or operating performance.
SSNOI 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 SSNOI may
not be comparable to that of other real estate companies, as they
may use different methodologies for calculating SSNOI.
Reconciliation from net income to SSNOI 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% 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 its second quarter 2007 results on Wednesday, July 18, 2007
at 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 5562755. A webcast can be accessed
through a link titled "Q2 2007 Earnings Conference Call" located on
the home page 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 EDT on
Wednesday, July 18, 2007 until 8:00 PM EDT on Friday, August 17,
2007. 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 5562755. The webcast replay
can be accessed through the link on 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 global
developer and owner of industrial real estate, focused on major hub
and gateway distribution markets throughout North America, Europe
and Asia. As of June 30, 2007, AMB owned, or had investments in, on
a consolidated basis or through unconsolidated joint ventures,
properties and development projects expected to total approximately
136.7 million square feet (12.7 million square meters) in 44
markets within 13 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 demand for our product, occupancy levels and
rental rate growth, growth in sea container traffic and air cargo
volumes, development, value-added conversion, redevelopment and
renovation projects (including our ability to lease such projects,
square feet at stabilization or completion, costs and total
investment amounts), and our ability to grow our private capital
business and returns on invested capital and source investment
opportunities, and our ability to accomplish future business plans
(such as expansion into additional markets) and to meet our
forecasts 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,
increased interest rates and operating costs, 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 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, 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, 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, 2006. CONSOLIDATED BALANCE
SHEETS (dollars in thousands) June 30, December 31, 2007 2006
Assets Investments in real estate: Total investments in properties
$6,406,982 $6,575,733 Accumulated depreciation (854,227) (789,693)
Net investments in properties (1) 5,552,755 5,786,040 Investments
in unconsolidated joint ventures 349,534 274,381 Properties held
for contribution, net 245,632 154,036 Properties held for
divestiture, net 45,146 20,916 Net investments in real estate
6,193,067 6,235,373 Cash and cash equivalents and restricted cash
251,052 195,878 Accounts receivable, net 166,449 133,998 Other
assets 148,696 148,263 Total assets $6,759,264 $6,713,512
Liabilities and stockholders' equity Secured debt $1,340,702
1,395,354 Unsecured senior debt 1,057,498 1,101,874 Unsecured
credit facilities 562,184 852,033 Other debt 85,110 88,154 Accounts
payable and other liabilities 278,921 271,880 Total liabilities
3,324,415 3,709,295 Minority interests: Joint venture partners
535,280 555,201 Preferred unitholders 77,563 180,298 Limited
partnership unitholders 109,921 102,061 Total minority interests
722,764 837,560 Stockholders' equity: Common equity 2,488,673
1,943,240 Preferred equity 223,412 223,417 Total stockholders'
equity 2,712,085 2,166,657 Total liabilities and stockholders'
equity $6,759,264 $6,713,512 (1) Includes AMB's 100% ownership
interest in Park One, a 19.9 acre land parcel leased to a parking
lot operator in the Los Angeles market immediately adjacent to LAX,
for approximately $76 million. CONSOLIDATED STATEMENTS OF
OPERATIONS(1) (dollars in thousands, except share data) For the For
the Quarters Ended Six Months Ended June 30, June 30, 2007 2006
2007 2006 Revenues Rental revenues (2) $162,914 $170,974 $324,996
$342,276 Private capital income 8,518 4,943 14,443 10,049 Total
revenues 171,432 175,917 339,439 352,325 Costs and expenses
Property operating costs (3) (43,304) (43,589) (87,551) (87,732)
Depreciation and amortization (41,483) (44,500) (82,504) (87,254)
Impairment losses - (5,394) (257) (5,394) General and
administrative (30,260) (25,142) (60,114) (47,997) Other expenses
(4) (1,139) 296 (2,051) (241) Fund costs (277) (479) (518) (1,093)
Total costs and expenses (116,463) (118,808) (232,995) (229,711)
Other income and expenses Equity in earnings of unconsolidated
joint ventures (5) 1,748 8,278 3,861 10,366 Other income (4) 6,472
2,258 11,979 5,765 Gains from sale or contribution of real estate
interests, net 74,707 - 74,843 - Development profits, net of taxes
28,996 45,698 41,188 46,372 Interest expense, including
amortization (33,369) (44,310) (67,951) (83,704) Total other income
and expenses 78,554 11,924 63,920 (21,201) Income from operations
before minority interests 133,523 69,033 170,364 101,413 Minority
interests' share of income: Joint venture partners' share of income
(8,067) (8,895) (15,260) (17,297) Joint venture partners' and
limited partnership unitholders' share of development profits
(2,574) (1,619) (3,136) (1,651) Preferred unitholders (1,480)
(4,024) (5,179) (9,025) Limited partnership unitholders (4,001)
(341) (4,495) (1,068) Total minority interests' share of income
(16,122) (14,879) (28,070) (29,041) Income from continuing
operations 117,401 54,154 142,294 72,372 Discontinued operations:
Income attributable to discontinued operations, net of minority
interests 484 4,126 1,238 6,471 Gains from disposition of real
estate, net of minority interests 384 17,073 419 24,087 Total
discontinued operations 868 21,199 1,657 30,558 Net income 118,269
75,353 143,951 102,930 Preferred stock dividends (3,952) (3,095)
(7,904) (6,191) Preferred unit redemption (issuance costs) discount
(2,927) 77 (2,927) (1,020) Net income available to common
stockholders $111,390 $72,335 $133,120 $95,719 Net income per
common share (diluted) $1.10 $0.80 $1.35 $1.06 Weighted average
common shares (diluted) 101,361,013 90,135,659 98,305,299
90,147,493 (1) Effective October 1, 2006, AMB deconsolidated AMB
Alliance Fund III on a prospective basis. (2) Pro forma rental
revenues for the quarter and six months ended June, 2006 would have
been $152,676 and $308,402, respectively, if AMB Institutional
Alliance Fund III had been deconsolidated as of January 1, 2006.
(3) Pro forma property operating costs for the quarter and six
months ended June 30, 2006 would have been $39,188 and $79,278,
respectively, if AMB Institutional Alliance Fund III had been
deconsolidated as of January 1, 2006. (4) Includes changes in
liabilities and assets associated with AMB's deferred compensation
plan. (5) Includes gains on sale of operating properties of $0.0
million and $7.7 million, for the quarters ended June 30, 2007 and
2006, respectively. Includes gains on sale of operating properties
of $0.0 million and $8.3 million, for the six months ended June 30,
2007 and 2006, respectively. CONSOLIDATED STATEMENTS OF FUNDS FROM
OPERATIONS(1) (dollars in thousands, except share data) For the For
the Quarters Ended Six Months Ended June 30, June 30, 2007 2006
2007 2006 Net income available to common stockholders $111,390
$72,335 $133,120 $95,719 Gains from sale or contribution of real
estate, net of minority interests (75,091) (17,073) (75,262)
(24,087) Depreciation and amortization: Total depreciation and
amortization 41,483 44,500 82,504 87,254 Discontinued operations'
depreciation 4 (62) 8 452 Non-real estate depreciation (1,401)
(1,068) (2,578) (2,068) Adjustments to derive FFO from consolidated
JVs: Joint venture partners' minority interests (Net income) 8,067
8,895 15,260 17,297 Limited partnership unitholders' minority
interests (Net income) 4,001 341 4,495 1,068 Limited partnership
unitholders' minority interests (Development profits) 1,251 2,208
1,801 2,240 Discontinued operations' minority interests (Net income
(loss)) 25 209 (4) 463 FFO attributable to minority interests
(15,312) (21,748) (31,616) (42,183) Adjustments to derive FFO from
unconsolidated JVs: AMB's share of net income (1,748) (8,278)
(3,861) (10,366) AMB's share of FFO 5,805 2,096 11,480 5,305 Funds
from operations $78,474 $82,355 $135,347 $131,094 FFO per common
share and unit (diluted) $0.74 $0.87 $1.32 $1.39 Weighted average
common share and unit (diluted) 105,806,524 94,520,866 102,866,432
94,534,263 Estimated FFO by business line (1) Capital Partners FFO
per common share and unit (diluted) (1) $0.05 $0.02 $0.07 $0.04 %
of reported FFO 6.7% 2.3% 5.3% 2.9% Development FFO per common
share and unit (diluted) (1) $0.24 $0.48 $0.36 $0.48 % of reported
FFO 32.4% 55.1% 27.4% 34.6% Real estate operations FFO per common
share and unit (diluted) (1) $0.45 $0.37 $0.89 $0.87 % of reported
FFO 60.9% 42.6% 67.3% 62.5% Total FFO per common share and unit
(diluted) $0.74 $0.87 $1.32 $1.39 (1) Funds From Operations and
Funds from Operations per Share and Unit. The company believes that
net income, as defined by GAAP, is the most appropriate earnings
measure. However, the company considers funds from operations, or
FFO, as defined by the National Association of Real Estate
Investment Trusts, or NAREIT, and funds from operations per fully
diluted share and unit, or FFOPS, to be useful supplemental
measures of its operating performance. FFO is defined as net
income, calculated in accordance with GAAP, less gains (or losses)
from dispositions of real estate held for investment purposes and
real estate-related depreciation, and adjustments to derive the
company's pro rata share of FFO of consolidated and unconsolidated
joint ventures. FFOPS is FFO per share of fully diluted weighted
average company common stock share and partnership unit. Further,
the company does not adjust FFO or FFOPS to eliminate the effects
of non-recurring charges. The company believes that FFO and FFOPS,
as defined by NAREIT, are meaningful supplemental measures of its
operating performance because historical cost accounting for real
estate assets in accordance with 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, NAREIT created FFO and FFOPS as 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 GAAP. The company believes
that the use of FFO and FFOPS, combined with the required 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. The company considers FFO and FFOPS
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, FFO and FFOPS 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,
they do not represent cash flow from operations or net income as
defined by GAAP and should not be considered as alternatives to
those measures in evaluating the company's liquidity or operating
performance. FFO and FFOPS also do not consider the costs
associated with capital expenditures related to the company's real
estate assets nor are FFO or FFOPS necessarily indicative of cash
available to fund the company's future cash requirements. Further,
the company's computation of FFO and FFOPS may not be comparable to
FFO or FFOPS reported by other real estate investment trusts that
do not define the terms in accordance with the current NAREIT
definition or that interpret the current NAREIT definition
differently than the company does. Estimated FFO by Business Line
is FFO generated by the Company's Capital Partners, development and
real estate operations business lines. Estimated Capital Partners
and Development FFO was determined by reducing Capital Partner
Income and Development Profits, net of taxes by their respective
estimated share of general and administrative expenses. Capital
Partners and Developments estimated allocation of total general and
administrative expenses was based on their respective percentage of
actual direct general and administrative expenses incurred.
Estimated Real Estate Operations FFO represents total Company FFO
less estimated FFO attributable to Capital Partners and
Development. Management believes estimated FFO by business line is
a useful supplemental measure of its operating performance because
it helps the investing public compare the operating performance of
a company's respective business lines to other companies'
comparable business lines. Further, AMB's computation of FFO by
business line may not be comparable to that reported by other real
estate investment trusts as they may use different methodologies in
computing such measures. DATASOURCE: AMB Property Corp. CONTACT:
Margan S. Mitchell, Vice President, Corporate Communications of AMB
Property Corp., +1-415-733-9477, Web site: http://www.amb.com/
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