SAN FRANCISCO, Feb. 2 /PRNewswire-FirstCall/ -- AMB Property
Corporation® (NYSE:AMB), a leading owner, operator and developer of
global industrial real estate, today reported results for the
fourth quarter and full year 2009. Funds from operations per fully
diluted share and unit ("FFOPS") was $0.29 for the fourth quarter
of 2009 and $0.72 for the full year 2009 compared to $(1.68) and
$0.77 for the same periods in 2008. Excluding the impact of early
debt extinguishment costs, preferred unit redemption discount and
restructuring charges, FFO as adjusted would have been $0.32 for
the fourth quarter, and $2.09 for full year 2009, which also
excludes the impact of impairments recognized in the first quarter.
Net income (loss) available to common stockholders per fully
diluted share ("EPS") for the fourth quarter of 2009 was $(0.05),
as compared to $(2.06) for the same quarter in 2008. EPS for the
full year 2009 was $(0.37), as compared to $(0.68) for 2008. The
loss in 2009 was primarily due to impairment charges that the
company incurred in the first quarter. "In 2009 we successfully
executed on the key priorities we identified in 2008. We are well
positioned to take advantage of emerging opportunities in 2010 and
beyond," said Hamid R. Moghadam, chairman & CEO. "We believe
the leading indicators of demand for industrial real estate reached
an inflection point during the fourth quarter. Against a
strengthening macroeconomic backdrop, we're seeing increased
interest from both investors and customers as they actively
re-engage in discussions and decisions regarding new investments
and space requirements." Owned and Managed Portfolio Operating
Results The company's operating results were in line with
expectations for the fourth quarter and full year 2009. AMB's
operating portfolio was 91.2 percent occupied at December 31, 2009,
up 20 basis points from September 30, 2009. Average occupancy
during the quarter was 90.7 percent, up 30 basis points from the
previous quarter. Cash-basis same store net operating income ("SS
NOI"), without the effects of lease termination fees, decreased 7.3
percent in the fourth quarter and 4.5 percent for the full year
from comparable periods, driven primarily by lower than average
same store occupancies. For the trailing four quarters ended
December 31, 2009, average rent change on renewals and rollovers in
AMB's operating portfolio decreased 6.9 percent. Leasing Activity
The company leased a total of 7.8 million square feet (719,900
square meters) in its operating portfolio in the fourth quarter and
29.0 million square feet (2.7 million square meters) in the full
year 2009. In its development portfolio, the company reduced
vacancy by 2.5 million square feet (233,600 square meters) in the
fourth quarter and 4.9 million square feet (455,300 square meters)
in the full year 2009. Disposition Activity During the fourth
quarter, the company completed dispositions totaling $93 million,
with gains of approximately $2 million and an 8.2 percent
stabilized capitalization rate, consisting of the following: -- The
sale of eight development and value-added conversion properties in
the Americas and Europe, including a land parcel, for an aggregate
price of $70 million; and -- The sale of four properties from its
U.S. operating portfolio for an aggregate price of $23 million. For
the year ended December 31, 2009, the company completed property
dispositions and contributions totaling $763 million, with a
stabilized capitalization rate of 6.8 percent. Financing Activities
The company completed more than $1.6 billion of debt repayments,
repurchases and extensions during the fourth quarter and $2.7
billion for the full year 2009. The net result of these
transactions further improved and extended the weighted average
remaining life of over 25 percent of its debt to more than five and
a half years at an average interest rate of 4.9 percent without
effectively increasing the company's total indebtedness. As of
December 31, 2009, the company's share of total debt to share of
total assets was 43.6 percent, which includes its share of joint
venture debt. The company's liquidity was $1.4 billion, consisting
of $1.2 billion of availability on its lines of credit and more
than $200 million of cash, cash equivalents and restricted cash.
The company is committed to maintaining its solid financial
position and will continue to look for opportunities to further
term out its maturities and progress towards its long-term leverage
goals. Investment Activity Subsequent to quarter end, the company
invested $150 million into its core open-end funds, consisting of
$100 million in AMB Alliance Fund III and $50 million in AMB Europe
Fund I. AMB Alliance Fund III received $50 million in third-party
equity, subsequent to quarter end. The company expects AMB Alliance
Fund III and AMB Europe Fund I to reinstate their investor
distributions beginning in the first quarter. "We believe the best
way to invest in industrial real estate today is by increasing our
commitments to portfolios we have assembled very carefully over the
years. These portfolios are of very high quality, consistent with
our investment strategy and are of course very familiar to us,"
said Guy F. Jaquier, president, Europe & Asia; president,
Private Capital. FFO Guidance Subsequent to setting preliminary
2010 earnings guidance in October of 2009, the company completed
two transactions which will impact 2010 FFO. The November 2009 bond
offering will increase interest expense in 2010; this expense will
be partially offset by an increase in income related to the
company's investment, in its open-ended funds. Accordingly, the
company revises full-year 2010 FFO guidance to $1.26 to $1.33 per
share without recognition of gains from development activities,
non-cash impairment charges, early debt extinguishment costs or
restructuring charges. The company will provide updated details of
its outlook for 2010 guidance during its fourth quarter earnings
conference call. Supplemental Earnings Measures Included in the
footnotes to the company's attached financial statements is a
discussion of why management believes FFO, FFOPS and FFO, as
adjusted (the "FFO Measures") are useful supplemental measures of
operating performance, ways in which investors might use the FFO
Measures when assessing the company's financial performance and the
FFO Measures' limitations as a measurement tool. Reconciliation
from net income available to common stockholders to the FFO
Measures are provided in the attached tables and published in the
company's quarterly supplemental analyst package, available on the
company's website at http://www.amb.com/. AMB defines net operating
income ("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
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 cash-basis same store net operating income ("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 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, 2007. 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. A reconciliation
from net income to SS NOI is provided below (dollars in thousands)
and published in AMB's quarterly supplemental analyst package,
available on AMB's website at http://www.amb.com/. For the Quarters
Ended For the Years Ended December 31, December 31,
---------------------- ------------------- 2009 2008 2009 2008 ----
---- ---- ---- Net loss $(10,102) $(199,262) $(27,960) $(6,750)
Private capital income (10,503) (7,632) (37,879) (68,470)
Depreciation and amortization 51,869 38,233 179,894 164,188 Real
estate impairment losses - 183,754 174,410 183,754 General and
administrative and fund costs 31,369 40,802 116,315 145,040
Restructuring charges 2,544 12,306 6,368 12,306 Total other income
and expenses 39,610 31,815 90,484 20,213 Total discontinued
operations (1,753) 7,277 (94,725) (4,558) ------ ----- -------
------ NOI 103,034 107,293 406,907 445,723 Less non same-store NOI
(23,937) (17,385) (77,719) (96,766) Less non cash adjustments(1)
(1,379) 1,215 (398) (891) ------ ----- ---- ---- Cash-basis
same-store NOI $77,718 $91,123 $328,790 $348,066 ======= =======
======== ======== (1) Non-cash adjustments include straight line
rents and amortization of lease intangibles for the same store pool
only (dollars in thousands). "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 the
quarterly and full year 2009 results on Tuesday, February 2 at
10:00 AM PST / 1:00 PM EST. Stockholders and interested parties may
listen to a live broadcast of the conference call by dialing 877
447 8218 (from the U.S. and Canada) or +1 706 643 7823 (from all
other countries) and using reservation code 49918053. A webcast can
be accessed through the company's website at http://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 http://www.amb.com/ in
the Investor Relations section until 8:00 PM EST / 5:00 PM PST on
Friday, March 5, 2010 at 800 642 1687 (from the U.S. and Canada) or
+1 706 645 9291 (from all other countries) with the reservation
code 49918053. AMB Property Corporation.® Local partner to global
trade.(TM) AMB Property Corporation® is a leading owner, operator
and developer of industrial real estate, focused on major hub and
gateway distribution markets in the Americas, Europe and Asia. As
of December 31, 2009, AMB owned, or had investments in, on a
consolidated basis or through unconsolidated joint ventures,
properties and development projects expected to total approximately
155.1 million square feet (14.4 million square meters) in 47
markets within 14 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®
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 our development projects (including completion,
timing of stabilization and delivery, our share of remaining
funding required, our ability to lease such projects, square feet
at stabilization or completion, costs and total investment
amounts), if and when our funds will reinstate investor
distributions, our ability to address our future capital
commitments, our ability to meet our forecasts (including our FFO,
EPS and operating guidance) and business goals, customer and
investor interest, a strengthening economy, cap rate stabilization
ability to complete current initiatives, take advantage of
opportunities, maintain a solid financial position, term out our
maturities and progress toward our leverage goals, which are made
pursuant to the safe-harbor provisions of Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. Because these forward-looking
statements involve risks and uncertainties, there are important
factors that could cause our actual results to differ materially
from those in the forward-looking statements, and you should not
rely on the forward-looking statements as predictions of future
events. The events or circumstances reflected in forward-looking
statements might not occur. You can identify forward-looking
statements by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "pro forma," "estimates" or
"anticipates" or the negative of these words and phrases or similar
words or phrases. You can also identify forward-looking statements
by discussions of strategy, plans or intentions. Forward-looking
statements are necessarily dependent on assumptions, data or
methods that may be incorrect or imprecise and we may not be able
to realize them. We caution you not to place undue reliance on
forward-looking statements, which reflect our analysis only and
speak only as of the date of this press release or the dates
indicated in the statements. We assume no obligation to update or
supplement forward-looking statements. The following factors, among
others, could cause actual results and future events to differ
materially from those set forth or contemplated in the
forward-looking statements: defaults on or non-renewal of leases by
tenants or renewal at lower than expected rent or failure to lease
at all or on expected terms, decreases in real estate values and
impairment losses, our failure to obtain, renew or extend financing
or re-financing, risks related to debt and equity security
financings (including dilution risk), our failure to divest
properties we have contracted to sell or to timely reinvest
proceeds from any divestitures, failure to maintain our current
credit agency ratings or comply with our debt covenants,
international currency and hedging risks, financial market
fluctuations, changes in general economic conditions, global trade
or in the real estate sector, inflation risks, a downturn in the
U.S., California or global economy, increased interest rates and
operating costs or greater than expected capital expenditures,
risks related to suspending, reducing or changing our dividends,
our failure to contribute properties to our co-investment ventures,
risks related to our obligations in the event of certain defaults
under co-investment ventures and other debt, difficulties in
identifying properties to acquire and in effecting acquisitions,
our failure to successfully integrate acquired properties and
operations, risks and uncertainties affecting property development,
value-added conversions, redevelopment 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,
environmental uncertainties, risks related to natural disasters,
changes in real estate and zoning laws, risks related to doing
business internationally and global expansion, risks of opening
offices globally, risks of changing personnel and roles, losses in
excess of our insurance coverage, unknown liabilities acquired in
connection with acquired properties or otherwise and increases in
real property tax rates. Our success also depends upon economic
trends generally, including interest rates, income tax laws,
governmental regulation, legislation, population changes and
certain other matters discussed under the heading "Risk Factors"
and elsewhere in our annual report on Form 10-K for the year ended
December 31, 2008. CONSOLIDATED STATEMENTS OF OPERATIONS(1) (in
thousands, except per share data) For the Quarters ended For the
Years ended December 31, December 31, ----------------------
------------------- 2009 2008 2009 2008 ---- ---- ---- ----
Revenues Rental revenues(1) $152,899 $151,606 $595,963 $625,093
Private capital revenues 10,503 7,632 37,879 68,470 ------ -----
------ ------ Total revenues 163,402 159,238 633,842 693,563
------- ------- ------- ------- Costs and expenses Property
operating costs(1) (49,865) (44,313) (189,056) (179,370)
Depreciation and amortization (51,869) (38,233) (179,894) (164,188)
General and administrative (31,131) (40,643) (115,253) (143,962)
Restructuring charges (2,544) (12,306) (6,368) (12,306) Fund costs
(238) (159) (1,062) (1,078) Real estate impairment losses -
(183,754) (174,410) (183,754) Other expenses(2) (2,176) (2,446)
(10,247) (520) ------ ------ ------- ---- Total costs and expenses
(137,823) (321,854) (676,290) (685,178) -------- -------- --------
-------- Other income and expenses Development profits, net of
taxes 1,368 4,836 35,874 81,084 Gains from sale or contribution of
real estate interests, net - - - 19,967 Equity in earnings of
unconsolidated joint ventures, net 3,824 2,762 11,331 17,121 Other
(expenses) income(2) (222) (3,061) 6,284 (3,124) Interest expense,
including amortization (30,790) (33,775) (121,459) (133,955) Loss
on early extinguishment of debt (11,614) (131) (12,267) (786)
------- ---- ------- ---- Total other income and expenses, net
(37,434) (29,369) (80,237) (19,693) ------- ------- ------- -------
Loss from continuing operations (11,855) (191,985) (122,685)
(11,308) Discontinued operations Income attributable to
discontinued operations 173 (6,996) 3,005 1,964 Development
profits, net of taxes - - 53,002 - Gains (losses) from sale of real
estate interests, net of taxes 1,580 (281) 38,718 2,594 ----- ----
------ ----- Total discontinued operations 1,753 (7,277) 94,725
4,558 ----- ------ ------ ----- Net loss (10,102) (199,262)
(27,960) (6,750) Noncontrolling interests' share of net (income)
loss Joint venture partners' share of net income (2,234) (2,954)
(11,063) (32,855) Joint venture partners' and limited partnership
unitholders' share of development profits (942) (1,924) (3,308)
(9,041) Preferred unitholders - (1,432) (4,295) (5,727) Limited
partnership unitholders 161 8,160 3,625 5,063 --- ----- ----- -----
Total noncontrolling interests' share of net (income) loss (3,015)
1,850 (15,041) (42,560) ------ ----- ------- ------- Net loss
attributable to AMB Property Corporation (13,117) (197,412)
(43,001) (49,310) Preferred stock dividends (3,950) (3,950)
(15,806) (15,806) Preferred unit redemption discount 9,759 - 9,759
- Allocation to participating securities(3) (257) - (1,029) (1,335)
---- ----- ------ ------ Net loss available to common stockholders
$(7,565) $(201,362) $(50,077) $(66,451) ======= ========= ========
======== Net loss per common share (diluted) $(0.05) $(2.06)
$(0.37) $(0.68) ====== ====== ====== ====== Weighted average common
shares (diluted) 147,047 97,584 134,321 97,404 ======= ======
======= ====== (1) On July 1, 2008, the partners of AMB Partners II
(previously, a consolidated co-investment venture) contributed
their interests in AMB Partners II to AMB Institutional Alliance
Fund III in exchange for interests in AMB Institutional Alliance
Fund III, an unconsolidated co-investment venture. Pro forma rental
revenues for the year ended December 31, 2008 would have been
$585,706 and pro forma operating expenses for the year ended
December 31, 2008 would have been $169,333 if AMB Partners II had
been deconsolidated as of January 1, 2008. (2) Includes changes in
liabilities and assets associated with AMB's deferred compensation
plan for the three and twelve months ended December 31, 2009 of
$969 and $7,823, respectively, and for the three and twelve months
ended December 31, 2008 of $(4,460) and $(7,828), respectively. (3)
Represents net income attributable to AMB Property Corporation, net
of preferred stock dividends, allocated to outstanding unvested
restricted shares. For the three and twelve months ended December
31, 2009, there were 919 unvested restricted shares outstanding.
For the three and twelve months ended December 31, 2008, there were
856 unvested restricted shares outstanding. CONSOLIDATED STATEMENTS
OF FUNDS FROM OPERATIONS(1) (in thousands, except per share data)
For the Quarters Ended For the Years Ended December 31, December
31, ---------------------- ------------------- 2009 2008 2009 2008
---- ---- ---- ---- Net loss available to common stockholders
$(7,565) $(201,362) $(50,077) $(66,451) (Gains) losses from sale or
contribution of real estate interests, net of taxes (1,580) 281
(38,718) (22,561) Depreciation and amortization Total depreciation
and amortization 51,869 38,233 179,894 164,188 Discontinued
operations' depreciation 57 1,412 2,042 5,011 Non-real estate
depreciation (2,576) (1,484) (8,593) (7,270) Adjustments to derive
FFO from consolidated joint ventures Joint venture partners'
noncontrolling interests (Net income) 2,234 2,954 11,063 32,855
Limited partnership unitholders' noncontrolling interests (Net
loss) (161) (8,160) (3,625) (5,063) Limited partnership
unitholders' noncontrolling interests (Development profits) 11 114
2,377 2,822 FFO attributable to noncontrolling interests (7,245)
(9,036) (26,695) (49,957) Adjustments to derive FFO from
unconsolidated joint ventures AMB's share of net income (3,824)
(2,762) (11,331) (17,121) AMB's share of FFO 12,549 10,015 42,938
42,742 Allocation to participating securities(2) (10) - - - --- ---
--- --- Funds from operations $43,759 $(169,795) $99,275 $79,195
======= ========= ======= ======= FFO per common share and unit
(diluted) $0.29 $(1.68) $0.72 $0.77 ===== ====== ===== =====
Weighted average common shares and units (diluted) 150,993 101,102
137,904 102,735 ======= ======= ======= ======= Adjustments for
impairment charges, restructuring charges, preferred unit
redemption discount and debt extinguishment Real estate impairment
losses $- $183,754 $174,410 $183,754 Discontinued operations' real
estate impairment losses - 10,164 7,443 10,164 Pursuit costs and
tax reserve - 11,834 - 11,834 AMB's share of real estate impairment
losses from unconsolidated joint ventures - 1,847 4,611 1,847 Joint
venture partners' noncontrolling interest share of real estate
impairment losses - (424) (4,876) (424) --- ---- ------ ---- AMB's
share of total impairment charges(1) - 207,175 181,588 207,175
Restructuring charges(1) 2,544 12,306 6,368 12,306 Loss on early
extinguishment of debt 11,614 131 12,267 786 Preferred unit
redemption discount (9,759) - (9,759) - Allocation to participating
securities(2) (27) (418) (898) (1,186) --- ---- ---- ------ Funds
from operations, as adjusted(1) $48,131 $49,399 $288,841 $298,276
======= ======= ======== ======== FFO, as adjusted per common share
and unit (diluted) $0.32 $0.49 $2.09 $2.90 ===== ===== ===== =====
Weighted average common shares and units (diluted) 150,993 101,112
137,904 102,735 ======= ======= ======= ======= (1) Funds From
Operations ("FFO"), Funds From Operations Per Share and Unit
("FFOPS") and FFO, as adjusted (together with FFO and FFOPS, the
"FFO Measures"). AMB believes that net income, as defined by U.S.
GAAP, is the most appropriate earnings measure. However, AMB
considers funds from operations, or FFO, FFO per share and unit, or
FFOPS, and FFO, as adjusted, to be useful supplemental measures of
its operating performance. AMB defines FFOPS as FFO per fully
diluted weighted average share of AMB's common stock and operating
partnership units. AMB calculates FFO as net income 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 of consolidated
and unconsolidated joint ventures. Unless stated otherwise, AMB
includes the gains from development, including those from
value-added conversion projects, before depreciation recapture, as
a component of FFO. AMB believes gains from development should be
included in FFO 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, consistent with the real estate investment trust
industry's long standing practice to include gains on the sale of
land in FFO. However, AMB's interpretation of FFO or FFOPS may not
be consistent with the views of others in the real estate
investment trust industry, who may consider it to be a divergence
from the NAREIT definition, and may not be comparable to FFO or
FFOPS reported by other real estate investment trusts that
interpret the current NAREIT definition differently than AMB does.
In connection with the formation of a joint venture, AMB may
warehouse assets that are acquired with the intent to contribute
these assets to the newly formed venture. Some of the properties
held for contribution may, under certain circumstances, be required
to be depreciated under U.S. GAAP. If this circumstance arises, AMB
intends to include in its calculation of FFO gains or losses
related to the contribution of previously depreciated real estate
to joint ventures. Although such a change, if instituted, will be a
departure from the current NAREIT definition, AMB believes such
calculation of FFO will better reflect the value created as a
result of the contributions. To date, AMB has not included gains or
losses from the contribution of previously depreciated warehoused
assets in FFO. In addition to presenting FFO as described above,
AMB presents FFO, as adjusted. AMB calculates FFO, as adjusted, as
FFO less 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
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 FFO and should not be considered a replacement of FFO
as AMB defines it or used as an alternative to net income or cash
as defined by U.S. GAAP. AMB believes that the FFO Measures are
meaningful supplemental measures of its operating performance
because historical cost accounting for real estate assets in
accordance with U.S. GAAP implicitly assumes that the value of real
estate assets diminishes predictably over time, as reflected
through depreciation and amortization expenses. However, since real
estate values have historically risen or fallen with market and
other conditions, many industry investors and analysts have
considered presentation of operating results for real estate
companies that use historical cost accounting to be insufficient.
Thus, the FFO Measures are supplemental measures of operating
performance for real estate investment trusts that exclude
historical cost depreciation and amortization, among other items,
from net income available to common stockholders, as defined by
U.S. GAAP. AMB believes that the use of the FFO Measures, combined
with the required U.S. GAAP presentations, has been beneficial in
improving the understanding of operating results of real estate
investment trusts among the investing public and making comparisons
of operating results among such companies more meaningful. AMB
considers the FFO Measures to be useful measures for reviewing
comparative operating and financial performance because, by
excluding gains or losses related to sales of previously
depreciated operating real estate assets and real estate
depreciation and amortization, the FFO Measures can help the
investing public compare the operating performance of a company's
real estate between periods or as compared to other companies.
While FFO and FFOPS are relevant and widely used measures of
operating performance of real estate investment trusts, the FFO
Measures do not represent cash flow from operations or net income
as defined by U.S. GAAP and should not be considered as
alternatives to those measures in evaluating AMB's liquidity or
operating performance. The FFO Measures also do not consider the
costs associated with capital expenditures related to AMB's real
estate assets nor are the FFO Measures necessarily indicative of
cash available to fund AMB's future cash requirements. Management
compensates for the limitations of the FFO Measures by providing
investors with financial statements prepared according to U.S.
GAAP, along with this detailed discussion of the FFO Measures and a
reconciliation of the FFO Measures to net income available to
common stockholders, a U.S. GAAP measurement. See Consolidated
Statements of Funds from Operations for a reconciliation of FFO
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") 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 $0.03 $0.10 AMB's share of
projected depreciation and amortization 1.27 1.27 AMB's share of
projected gains on disposition of operating properties recognized
to date (0.01) (0.01) Impact of additional dilutive securities,
other, rounding (0.03) (0.03) ----- ----- Projected Funds From
Operations (FFO) $1.26 $1.33 ===== ===== 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")(3) $1.26 $1.33 ===== =====
Amounts are expressed per share, except FFO and FFO, as adjusted,
excluding AMB's share of development gains, which are expressed per
share and unit. (2) Represents amount of FFO allocated to
outstanding unvested restricted shares. For the three and twelve
months ended December 31, 2009, there were 919 unvested restricted
shares. For the three and twelve months ended December 31, 2008,
there were 856 unvested restricted shares. (3) As development gains
are difficult to predict in the current economic environment,
management believes Projected FFO, as adjusted, excluding AMB's
share of development gains 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 ------------------------------------ December 31, 2009 December
31, 2008 ----------------- ----------------- Assets Investments in
real estate Total investments in properties $6,708,660 $6,603,856
Accumulated depreciation and amortization (1,113,808) (970,737)
---------- -------- Net investments in properties 5,594,852
5,633,119 Investments in unconsolidated joint ventures 462,130
431,322 Properties held for sale or contribution, net 214,426
609,023 ------- ------- Net investments in real estate 6,271,408
6,673,464 Cash and cash equivalents and restricted cash 206,077
251,231 Accounts receivable, net 155,958 160,528 Other assets
208,515 216,425 ------- ------- Total assets $6,841,958 $7,301,648
========== ========== Liabilities and equity Liabilities Secured
debt $1,096,554 $1,522,571 Unsecured senior debt 1,155,529
1,153,926 Unsecured credit facilities 477,630 920,850 Other debt
482,883 392,838 Accounts payable and other liabilities 338,042
345,259 ------- ------- Total liabilities 3,550,638 4,335,444
Equity Stockholders' equity Common equity 2,716,604 2,291,695
Preferred equity 223,412 223,412 ------- ------- Total
stockholders' equity 2,940,016 2,515,107 Noncontrolling interests
Joint venture partners 289,909 293,367 Preferred unitholders -
77,561 Limited partnership unitholders 61,395 80,169 ------ ------
Total noncontrolling interests 351,304 451,097 ------- -------
Total equity 3,291,320 2,966,204 --------- --------- Total
liabilities and equity $6,841,958 $7,301,648 ========== ==========
DATASOURCE: AMB Property Corporation CONTACT: Tracy A. Ward, Vice
president, IR & Corporate Communications of AMB Property
Corporation, +1-415-733-9565, Web Site: http://www.amb.com/
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