SAN FRANCISCO, April 20, 2011 /PRNewswire/ -- AMB Property
Corporation® (NYSE: AMB), a leading owner, operator and developer
of global industrial real estate, today reported results for the
first quarter of 2011. Core FFO per fully diluted share and unit,
as adjusted, was $0.32 for the first
quarter of 2011 as compared to $0.29
the same period in 2010. Core FFO, as adjusted, excludes the
recognition of development gains of $1.1
million and merger costs of $3.7
million. Funds from operations, as adjusted, per fully
diluted share and unit, was $0.33 for
the first quarter of 2011 as compared to $0.31 the same period in 2010. FFO, as adjusted,
includes development gains but excludes merger transaction
costs.
Net income available to common stockholders per fully diluted
share ("EPS") for the first quarter of 2011 was $0.05, as compared to a loss of $(0.03) for the same quarter in 2010.
"The global economic recovery is continuing to gain strength as
we anticipated," said Hamid R.
Moghadam, chairman and CEO. "Global consumption, production
and trade are past previous peak levels today and we
expect U.S. inventory growth to accelerate this year. With
emerging markets already ahead of the curve, we believe a broader
improvement of operating fundamentals will lead to an increase in
demand for logistics space globally."
Owned and Managed Portfolio Operating Results
AMB's operating portfolio was 92.8 percent occupied as of
March 31, 2011, with an average
occupancy rate of 92.4 percent for the quarter. Cash-basis same
store net operating income ("SS NOI") increased by 0.2 percent for
the first quarter as compared to (5.1) percent for the same period
in 2010. Average rent on renewals and rollovers in AMB's operating
portfolio decreased 12.6 percent for the trailing four quarters
ended March 31, 2011.
Leasing Activity
During the first quarter, the company leased a total of 8.9
million square feet (826,800 square meters) of its operating
portfolio. This volume of leasing represents the highest first
quarter in its 27-year history. The company leased 469,000 square
feet (40,500 square meters) of its development portfolio in the
first quarter 2011.
Private Capital Activity
During the first quarter, the company raised a record
$1.1 billion in new third party
equity, including:
- $566 million (400 million euros using the March 31, 2011 exchange rate) raised for AMB
Europe Logistics Joint Venture, focused on core investments;
and
- $500 million raised for AMB China
Logistics Venture I, a development joint venture.
"AMB raised more third party equity in the first quarter alone
than we have ever done in a full year. Private capital will
continue to be an important driver of the business, and today we
have $3.2 billion of capital in our
various partnerships and ventures available for future deployment,"
said Guy F. Jaquier, president,
Europe & Asia president; Private Capital. "Large global
institutions are seeking general partners with a commitment to
aligning interests through co-investment, deep operating and sector
expertise, and a strong track record across cycles. We line up well
with these requirements."
Subsequent to quarter end, the company raised $87.6 million of third-party equity in AMB U.S.
Logistics Fund.
Capital Deployment
During the first quarter, the company deployed approximately
$323 million of capital, which
included:
- $300 million of new development
starts in Japan, Brazil, China, and Germany;
- Approximately $23 million in
acquisitions at a stabilized capitalization rate of 6.2 percent,
comprised of two properties totaling approximately 308,300
square feet (28,640 square meters); and
- Dispositions totaling approximately $78
million in the first quarter.
Subsequent to quarter end, $168
million of assets were contributed by AMB to AMB's China
Logistics Venture I Fund comprising approximately 2.6 million
square feet (241,000 square meters) of operating and properties
under development with a build out potential of 2.4 million square
feet (227,000 square meters).
Also subsequent to quarter end, the company acquired its
partner's 50 percent interest in its AMB-SGP Joint Venture.
Liquidity
As of March 31, 2011, the
company's liquidity was more than $1.4
billion, consisting of approximately $1.2 billion of availability on its lines of
credit and approximately $204 million
of unrestricted cash and cash equivalents.
Japan Update
All of the company's facilities in Japan are fully operational. With the
exception of its facility in Sendai, damages were largely
superficial and repairs have been substantially completed. AMB's
portion, including its share of the Japan Fund, of uninsured losses
associated with the earthquake is approximately $2.7 million. AMB is providing displaced
customers and relief agencies with temporary space to support
recovery efforts. AMB made a donation to the Red Cross
International Response Fund for relief and recovery efforts and is
also encouraging employees to contribute to the rescue efforts with
the company matching these contributions.
FFO Guidance
The company maintains its previous full-year 2011 Core FFO, as
adjusted, guidance of $1.30 to $1.40
per share, which excludes the recognition of gains from development
activities and excludes any impact of costs associated with the
proposed merger with ProLogis.
Conference Call Information
The company will host a conference call to discuss first quarter
2011 results on Wednesday, April 20
at 10:00 AM PDT / 1:00 PM EDT. Stockholders and interested parties
may listen to a live broadcast of the conference call by dialing
877 256 7020 (from the U.S. and Canada) or +1 706 643 7823 (from all other
countries) and using reservation code 54105336. A webcast can be
accessed through the company's website at www.amb.com in the
Investor Relations section.
If you are unable to listen to the live conference call, a
telephone and webcast replay will be available through the
company's website at www.amb.com in the Investor Relations section
until 5:00 PM PDT / 8:00 PM EDT / on Friday,
May 20, 2011 at 800 642 1687 (from the U.S. and Canada) or +1 706 645 9291 (from all other
countries) with the reservation code 54105336. The webcast and
podcast will be available for the same time period and can be
accessed through the company's website at www.amb.com in the
Investor Relations section.
Supplemental Earnings Measures
Included in the footnotes to the company's attached financial
statements is a discussion of why management believes FFO, as
adjusted, FFOPS, as adjusted, Core FFO, as adjusted, and Core
FFOPS, as adjusted and FFO, as defined by NAREIT (the "FFO
Measures, as adjusted"), are useful supplemental measures of
operating performance, ways in which investors might use the FFO
Measures, as adjusted when assessing the company's financial
performance and the limitations of the FFO Measures, as adjusted,
as a measurement tool. Reconciliation from net income (loss)
available to common stockholders to the FFO Measures, as adjusted
are provided in the attached tables and published in the company's
quarterly supplemental analyst package, available on the company's
website at www.amb.com.
AMB defines 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,
merger transaction costs, development profits (losses), gains
(losses) from sale or contribution of real estate interests, and
interest expense. AMB believes that net income, as defined by GAAP,
is the most appropriate earnings measure. However, NOI is a useful
supplemental measure calculated to help investors understand AMB's
operating performance, excluding the effects of gains (losses),
costs and expenses which are not related to the performance of the
assets. NOI is widely used by the real estate industry as a useful
supplemental measure, which helps investors compare AMB's operating
performance with that of other companies. Real estate impairment
losses have been excluded in deriving NOI because AMB does not
consider its impairment losses to be a property operating expense.
AMB believes that the exclusion of impairment losses from NOI is a
common methodology used in the real estate industry. Real estate
impairment losses relate to the changing values of AMB's assets but
do not reflect the current operating performance of the assets with
respect to their revenues or expenses. AMB's real estate impairment
losses are non-cash charges which represent the write down in the
value of assets when estimated fair value over the holding period
is lower than current carrying value. The impairment charges were
principally a result of increases in estimated capitalization rates
and deterioration in market conditions that adversely impacted
underlying real estate values. Therefore, the impairment charges
are not related to the current performance of AMB's real estate
operations and should be excluded from its calculation of NOI.
AMB considers 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, 2009. 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, merger transaction costs, 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 (loss) to SS NOI is
provided below (dollars in thousands) and published in AMB's
quarterly supplemental analyst package, available on AMB's website
at www.amb.com.
|
For the
Quarters Ended
|
|
|
|
March
31,
|
|
|
|
2011
|
|
2010
|
|
|
Net income (loss)
|
$
14,322
|
|
$
(620)
|
|
|
Private capital
income
|
(7,683)
|
|
(7,445)
|
|
|
Depreciation and
amortization
|
54,986
|
|
47,381
|
|
|
General and administrative and
fund costs
|
30,902
|
|
32,265
|
|
|
Restructuring charges
|
-
|
|
2,973
|
|
|
Merger transaction
costs
|
3,697
|
|
-
|
|
|
Total other income and
expenses
|
26,850
|
|
24,813
|
|
|
Total discontinued
operations
|
(17,051)
|
|
(840)
|
|
|
NOI
|
106,023
|
|
98,527
|
|
|
Less non same-store
NOI
|
(18,888)
|
|
(11,233)
|
|
|
Less non cash
adjustments(1)
|
(2,279)
|
|
(2,877)
|
|
|
Cash-basis same-store
NOI
|
$
84,856
|
|
$
84,417
|
|
|
Less lease termination
fees
|
$
(393)
|
|
$
(638)
|
|
|
Cash-basis same-store NOI,
excluding lease termination fees
|
$
84,463
|
|
$
83,779
|
|
|
|
|
|
|
|
|
|
(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.
AMB Property Corporation.® Local partner to global
trade.™
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 March 31,
2011, AMB owned, or had investments in, on a consolidated
basis or through unconsolidated joint ventures, properties and
development projects expected to total approximately 161 million
square feet (15 million square meters) in 49 markets within 15
countries. AMB invests in properties located predominantly in the
infill submarkets of its targeted markets. The company's portfolio
is comprised of High Throughput Distribution® facilities—industrial
properties built for speed and located near airports, seaports and
ground transportation systems.
AMB's press releases are available on the company website at
www.amb.com or by contacting the Investor Relations department at
+1 415 394 9000.
Some of the information included in this press release contains
forward-looking statements, such as those related to positive net
absorption, global economic recovery, global consumption,
production and trade levels, U.S. inventory growth, damage
estimates from the Japan
earthquake, future investments in our co-investment ventures and
joint ventures, renewal of our lines of credit, future financing
activity, ability to access attractive financing globally, taking
advantage of current interest rates and term out our debt
maturities, our growth opportunities, retention of our target
leverage levels, operating forecasts, the recovery of our operating
performance, improvements in the operating environment and customer
demand, long term prospects for AMB and industrial real estate, the
recovery of leading business indicators, estimated build-out
potential of AMB's acquisitions, estimated total investment of
development starts, and 2010 and 2011 results and Core FFO, as
adjusted, guidance, which are made pursuant to the safe-harbor
provisions of Section 21E of the Securities Exchange Act of 1934,
as amended, and Section 27A of the Securities Act of 1933, as
amended. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause our
actual results to differ materially from those in the
forward-looking statements, and you should not rely on the
forward-looking statements as predictions of future events. The
events or circumstances reflected in forward-looking statements
might not occur. You can identify forward-looking statements by the
use of forward-looking terminology such as "believes," "expects,"
"may," "will," "should," "seeks," "approximately," "intends,"
"plans," "pro forma," "estimates" or "anticipates" or the negative
of these words and phrases or similar words or phrases. You can
also identify forward-looking statements by discussions of
strategy, plans or intentions. Forward-looking statements are
necessarily dependent on assumptions, data or methods that may be
incorrect or imprecise and we may not be able to realize them. We
caution you not to place undue reliance on forward-looking
statements, which reflect our analysis only and speak only as of
the date of this report or the dates indicated in the statements.
We assume no obligation to update or supplement forward-looking
statements. The following factors, among others, could cause actual
results and future events to differ materially from those set forth
or contemplated in the forward-looking statements: changes in
general economic conditions in California, the U.S. or globally (including
financial market fluctuations), global trade or in the real estate
sector (including risks relating to decreasing real estate
valuations and impairment charges); risks associated with using
debt to fund the company's business activities, including
refinancing and interest rate risks; the company's failure to
obtain, renew, or extend necessary financing or access the debt or
equity markets; the company's failure to maintain its current
credit agency ratings or comply with its debt covenants; risks
related to the proposed merger transaction with ProLogis, including
litigation related to the merger, any decreases in the price of
ProLogis stock, and the risk that, if completed, the merger may not
achieve its intended results; risks associated with the ability to
consummate the merger and the timing of the closing of the merger;
risks related to the company's obligations in the event of certain
defaults under co-investment venture and other debt; risks
associated with equity and debt securities financings (including
risk of dilution); defaults on or non-renewal of leases by
customers, lease renewals at lower than expected rent or failure to
lease properties at all or on favorable rents and terms;
difficulties in identifying properties, portfolios of properties,
or interests in real-estate related entities or platforms to
acquire and in effecting acquisitions on advantageous terms and the
failure of acquisitions to perform as the company expects; unknown
liabilities acquired in connection with the acquired properties,
portfolios of properties, or interests in real-estate related
entities; the company's failure to successfully integrate acquired
properties and operations; risks and uncertainties affecting
property development, redevelopment and value-added conversion
(including construction delays, cost overruns, the company's
inability to obtain necessary permits and financing, the company's
inability to lease properties at all or at favorable rents and
terms, and public opposition to these activities); the company's
failure to set up additional funds, attract additional investment
in existing funds or to contribute properties to its co-investment
ventures due to such factors as its inability to acquire, develop,
or lease properties that meet the investment criteria of such
ventures, or the co-investment ventures' inability to access debt
and equity capital to pay for property contributions or their
allocation of available capital to cover other capital
requirements; risks and uncertainties relating to the disposition
of properties to third parties and the company's ability to effect
such transactions on advantageous terms and to timely reinvest
proceeds from any such dispositions; risks of doing business
internationally and global expansion, including unfamiliarity with
the new markets and currency risks; risks of changing personnel and
roles; losses in excess of the company's insurance coverage;
changes in local, state and federal regulatory requirements,
including changes in real estate, tax and zoning laws; increases in
real property tax rates; risks associated with the company's tax
structuring; increases in interest rates and operating costs or
greater than expected capital expenditures; environmental
uncertainties and 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, 2010.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(in
thousands, except per share data)
|
|
|
|
|
|
|
|
For the
Quarters Ended March 31,
|
|
|
2011
|
|
2010
|
|
Revenues
|
|
|
|
|
Rental revenues
|
$ 158,085
|
|
$ 146,645
|
|
Private capital
revenues
|
7,683
|
|
7,445
|
|
Total revenues
|
165,768
|
|
154,090
|
|
Costs and
expenses
|
|
|
|
|
Property operating
costs
|
(52,062)
|
|
(48,118)
|
|
Depreciation and
amortization
|
(54,986)
|
|
(47,381)
|
|
General and
administrative
|
(30,661)
|
|
(31,951)
|
|
Restructuring
charges
|
-
|
|
(2,973)
|
|
Merger transaction
costs
|
(3,697)
|
|
-
|
|
Fund costs
|
(241)
|
|
(314)
|
|
Other
expenses(1)
|
(946)
|
|
(1,191)
|
|
Total costs and
expenses
|
(142,593)
|
|
(131,928)
|
|
Other income
and expenses
|
|
|
|
|
Development profits, net
of taxes
|
-
|
|
4,803
|
|
Equity in earnings of
unconsolidated joint ventures, net
|
7,800
|
|
3,875
|
|
Other income(1)
|
1,238
|
|
289
|
|
Interest expense,
including amortization
|
(34,942)
|
|
(32,589)
|
|
Total other income and
expenses, net
|
(25,904)
|
|
(23,622)
|
|
Loss from continuing
operations
|
(2,729)
|
|
(1,460)
|
|
Discontinued
operations
|
|
|
|
|
Income attributable to
discontinued operations
|
870
|
|
840
|
|
Development profits, net
of taxes
|
1,637
|
|
-
|
|
Gains from sale of real
estate interests, net of taxes
|
14,544
|
|
-
|
|
Total discontinued
operations
|
17,051
|
|
840
|
|
Net income
(loss)
|
14,322
|
|
(620)
|
|
Noncontrolling interests' share
of net (income) loss
|
|
|
|
|
Joint venture partners'
share of net (income) loss
|
(2,049)
|
|
375
|
|
Joint venture partners'
and limited partnership unitholders' share of development profits,
net of taxes
|
(29)
|
|
(106)
|
|
Limited partnership
unitholders
|
(116)
|
|
200
|
|
Total noncontrolling
interests' share of net (income) loss
|
(2,194)
|
|
469
|
|
Net income (loss)
attributable to AMB Property Corporation
|
12,128
|
|
(151)
|
|
Preferred stock
dividends
|
(3,952)
|
|
(3,952)
|
|
Allocation to
participating securities(2)
|
(355)
|
|
(344)
|
|
Net income (loss) available to
common stockholders
|
$
7,821
|
|
$ (4,447)
|
|
|
|
|
|
|
Net income (loss) per common
share (diluted)
|
$
0.05
|
|
$
(0.03)
|
|
Weighted average common shares
(diluted)
|
168,100
|
|
148,666
|
|
|
|
|
|
(1) Includes changes in liabilities and assets associated with
AMB's deferred compensation plan for the three months ended
March 31, 2011 and 2010 of $775
and $919, respectively.
(2) Represents net income attributable to AMB Property
Corporation, net of preferred stock dividends, allocated to
outstanding unvested restricted shares. For the three months ended
March 31, 2011, there were 1,269
unvested restricted shares outstanding. For the three months
ended March 31, 2010, there were
1,228 unvested restricted shares outstanding.
CONSOLIDATED
STATEMENTS OF FUNDS FROM OPERATIONS, AS ADJUSTED (1)
|
|
(in
thousands, except per share data)
|
|
|
For the
Quarters Ended March 31,
|
|
|
2011
|
|
2010
|
|
Net income
(loss) available to common stockholders
|
$ 7,821
|
|
$ (4,447)
|
|
Gains from sale or
contribution of real estate interests, net of taxes
|
(14,544)
|
|
-
|
|
Depreciation and
amortization
|
|
|
|
|
Total depreciation and
amortization
|
54,986
|
|
47,381
|
|
Discontinued operations'
depreciation
|
28
|
|
1,279
|
|
Non-real estate
depreciation
|
(1,897)
|
|
(2,545)
|
|
Adjustment for
depreciation on development profits
|
(525)
|
|
(1,546)
|
|
Adjustments to derive FFO,
as defined by NAREIT, from noncontrolling interests
|
|
|
|
|
Joint venture partners'
noncontrolling interests (Net income (loss))
|
2,049
|
|
(375)
|
|
Limited partnership
unitholders' noncontrolling interests (Net income (loss)
|
|
|
|
|
and development
profits)
|
145
|
|
(94)
|
|
FFO, as defined by NAREIT,
attributable to joint venture partners' noncontrolling
interests
|
(7,542)
|
|
(5,380)
|
|
Adjustments
to derive FFO, as defined by NAREIT, from unconsolidated joint
ventures
|
|
|
|
|
AMB's share of net
income
|
(7,800)
|
|
(3,875)
|
|
AMB's share of FFO, as
defined by NAREIT
|
20,881
|
|
14,453
|
|
Funds from operations, as
defined by NAREIT(1)
|
$ 53,602
|
|
$ 44,851
|
|
Adjustments for
impairments, restructuring charges, merger transaction
costs
|
|
|
|
|
and debt
extinguishment
|
|
|
|
|
Restructuring
charges
|
-
|
|
2,973
|
|
Merger transaction
costs
|
3,697
|
|
-
|
|
Allocation to
participating securities(2)
|
(69)
|
|
(42)
|
|
Funds from operations, as
adjusted(1)
|
$ 57,230
|
|
$ 47,782
|
|
|
|
|
|
|
FFO, as adjusted per common
share and unit (diluted)
|
$ 0.33
|
|
$ 0.31
|
|
Weighted average common shares
and units (diluted)
|
172,973
|
|
152,770
|
|
|
|
|
|
|
|
|
|
|
|
Core Funds From Operations, as
adjusted
|
|
|
|
|
Funds from operations, as
adjusted
|
$ 57,230
|
|
$ 47,782
|
|
Development profits, net
of taxes
|
(1,112)
|
|
(3,257)
|
|
Joint venture partners'
and limited partnership unitholders' share of
development
|
|
|
|
|
profits, net
of taxes
|
29
|
|
106
|
|
Limited partnership
unitholders' noncontrolling interests (Development
profits)
|
(29)
|
|
(106)
|
|
Allocation to
participating securities(2)
|
8
|
|
26
|
|
Core Funds From Operations, as
adjusted(1)
|
$ 56,126
|
|
$ 44,551
|
|
|
|
|
|
|
Core FFO, as adjusted per common
share and unit (diluted)
|
$ 0.32
|
|
$ 0.29
|
|
Weighted average common shares
and units (diluted)
|
172,973
|
|
152,770
|
|
|
|
|
|
(1) Funds From Operations, as adjusted, ("FFO, as adjusted,"),
Funds From Operations, Per Share and Unit, as adjusted
("FFOPS, as adjusted"), Core FFO, as adjusted, Core FFO
Per Share and Unit, as adjusted, ("Core FFOPS, as adjusted" ) and
Funds From Operations, as defined by NAREIT ("FFO, as defined by
NAREIT")( together with FFO, as adjusted, FFOPS, as adjusted, Core
FFO, as adjusted, Core FFOPS, as adjusted, and FFO, as defined by
NAREIT, 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), FFO per share and unit, as adjusted (or
FFOPS, as adjusted), Core FFO, as adjusted, Core FFO per share and
unit, as adjusted (or Core FFOPS, as adjusted) and FFO, as defined
by NAREIT, to be useful supplemental measures of its operating
performance. AMB defines FFOPS, as adjusted, as FFO, as adjusted,
per fully diluted weighted average share of AMB's common stock and
operating partnership units. AMB calculates FFO, as adjusted, as
net income ( or loss) available to common stockholders, calculated
in accordance with U.S. GAAP, less gains (or losses) from
dispositions of real estate held for investment purposes and real
estate-related depreciation, and adjustments to derive AMB's pro
rata share of FFO, as adjusted, of consolidated and unconsolidated
joint ventures. AMB defines Core FFOPS, as adjusted as Core FFO, as
adjusted per fully diluted weighted share of AMB's common stock and
operating partnership units. AMB calculates Core FFO, as adjusted
as FFO, as adjusted excluding AMB's share of development profits.
These calculations also include adjustments for items as described
below.
Unless stated otherwise, AMB includes the gains from
development, including those from value-added conversion projects
before depreciation recapture, as a component of FFO, as adjusted.
AMB believes gains from development should be included in FFO, as
adjusted, to more completely reflect the performance of one of our
lines of business. AMB believes that value-added conversion
dispositions are in substance land sales and as such should be
included in FFO, as adjusted, consistent with the real estate
investment trust industry's long standing practice to include gains
on the sale of land in funds from operations. However, AMB's
interpretation of FFO, as adjusted, or FFOPS, as adjusted, may not
be consistent with the views of others in the real estate
investment trust industry, who may consider it to be a divergence
from the NAREIT definition, and may not be comparable to funds from
operations or funds from operations per share and unit reported by
other real estate investment trusts that interpret the current
NAREIT definition differently than AMB does. In connection with the
formation of a joint venture, AMB may warehouse assets that are
acquired with the intent to contribute these assets to the newly
formed venture. Some of the properties held for contribution may,
under certain circumstances, be required to be depreciated under
U.S. GAAP. AMB includes in its calculation of FFO, as
adjusted, gains or losses related to the contribution of previously
depreciated real estate to joint ventures. Although it is a
departure from the current NAREIT definition, AMB believes such
calculation of FFO, as adjusted, better reflects the value created
as a result of the contributions.
In addition, AMB calculates FFO, as adjusted, to exclude
impairment and restructuring charges, merger transaction costs,
debt extinguishment losses and the 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 preferred unit
redemption discount reflects the gain associated with the discount
to liquidation preference in the 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.
The merger transaction costs, which reflected costs associated with
AMB's potential merger transaction with ProLogis, represented
fluctuations that can have inconsistent effects on AMB's results of
operations. Management believes FFO, as adjusted, is significant
and useful to both it and its investors. FFO, as adjusted, more
appropriately reflects the value and strength of AMB's business
model and its potential performance isolated from the volatility of
the current economic environment and unobscured by costs (or gains)
resulting from AMB's management of its financing profile in
response to the tightening of the capital markets. However, in
addition to the limitations of FFO Measures, as adjusted, generally
discussed below, FFO, as adjusted, does not present a comprehensive
measure of AMB's financial condition and operating performance.
This measure is a modification of the NAREIT definition of funds
from operations and should not be used as an alternative to net
income or cash as defined by U.S. GAAP.
AMB believes that the FFO Measures, as adjusted, are meaningful
supplemental measures of its operating performance because
historical cost accounting for real estate assets in accordance
with U.S. GAAP implicitly assumes that the value of real estate
assets diminishes predictably over time, as reflected through
depreciation and amortization expenses. However, since real estate
values have historically risen or fallen with market and other
conditions, many industry investors and analysts have considered
presentation of operating results for real estate companies that
use historical cost accounting to be insufficient. Thus, the FFO
Measures, as adjusted, are supplemental measures of operating
performance for real estate investment trusts that exclude
historical cost depreciation and amortization, among other items,
from net income available to common stockholders, as defined by
U.S. GAAP. AMB believes that the use of the FFO Measures, as
adjusted, combined with the required U.S. GAAP presentations, has
been beneficial in improving the understanding of operating results
of real estate investment trusts among the investing public and
making comparisons of operating results among such companies more
meaningful. AMB considers the FFO Measures, as adjusted, to be
useful measures for reviewing comparative operating and financial
performance because, by excluding gains or losses related to sales
of previously depreciated operating real estate assets and real
estate depreciation and amortization, the FFO Measures, as
adjusted, can help the investing public compare the operating
performance of a company's real estate between periods or as
compared to other companies. While funds from operations and funds
from operations per share are relevant and widely used measures of
operating performance of real estate investment trusts, the FFO
Measures, as adjusted, do not represent cash flow from operations
or net income as defined by U.S. GAAP and should not be considered
as alternatives to those measures in evaluating AMB's liquidity or
operating performance. The FFO Measures, as adjusted, also do not
consider the costs associated with capital expenditures related to
AMB's real estate assets nor are the FFO Measures, as adjusted,
necessarily indicative of cash available to fund AMB's future cash
requirements. Management compensates for the limitations of the FFO
Measures, as adjusted, by providing investors with financial
statements prepared according to U.S. GAAP, along with this
detailed discussion of the FFO Measures, as adjusted, and a
reconciliation of the FFO Measures, as adjusted, to net income
available to common stockholders, a U.S. GAAP measurement.
See Consolidated Statements of Funds from Operations, as
adjusted for a reconciliation of FFO, as adjusted, from net income
(loss) available to common stockholders and a reconciliation of
Core FFO, as adjusted from FFO, as adjusted.
The following table reconciles projected Core FFO, as adjusted,
from projected net income available to common stockholders for the
year ended December 31, 2011:
|
2011
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
Projected net income available
to common stockholders
|
$
0.04
|
|
$
0.14
|
|
AMB's share of projected
depreciation and amortization
|
1.37
|
|
1.37
|
|
AMB's share of depreciation on
development profits recognized to date
|
0.00
|
|
0.00
|
|
AMB's share of gains on
dispositions of operating properties recognized to date
|
(0.09)
|
|
(0.09)
|
|
Merger transaction
costs
|
0.02
|
|
0.02
|
|
Impact of additional dilutive
securities, other, rounding
|
(0.03)
|
|
(0.03)
|
|
Projected Funds From Operations,
as adjusted (FFO, as adjusted)
|
$
1.31
|
|
$
1.41
|
|
AMB's share of development
profits recognized to date
|
(0.01)
|
|
(0.01)
|
|
Projected Core FFO, as
adjusted(3)
|
$
1.30
|
|
$
1.40
|
|
|
|
|
|
Amounts are expressed per share, except FFO, as adjusted and
Core FFO, as adjusted, which are expressed per share and unit.
(2) Represents amount of FFO, as adjusted allocated to
outstanding unvested restricted shares. For the three months ended
March 31, 2011, there were 1,269
unvested restricted shares. For the three months ended March 31, 2010, there were 1,228 unvested
restricted shares.
(3) As development gains are difficult to predict in the current
economic environment, management believes Core FFO, as adjusted, is
the more appropriate and useful measure to reflect its assessment
of AMB's projected operating performance.
CONSOLIDATED
BALANCE SHEETS
|
|
(dollars in
thousands)
|
|
|
As
of
|
|
|
March 31,
2011
|
|
December 31,
2010
|
|
Assets
|
|
|
|
|
Investments in real
estate
|
|
|
|
|
Total investments in
properties
|
$
6,841,289
|
|
$
6,906,176
|
|
Accumulated depreciation
and amortization
|
(1,313,547)
|
|
(1,268,093)
|
|
Net investments in
properties
|
5,527,742
|
|
5,638,083
|
|
Investments in
unconsolidated joint ventures
|
911,003
|
|
883,241
|
|
Properties held for sale
or contribution, net
|
346,242
|
|
242,098
|
|
Net investments in real
estate
|
6,784,987
|
|
6,763,422
|
|
Cash and cash equivalents
and restricted cash
|
235,288
|
|
228,415
|
|
Accounts receivable,
net
|
170,867
|
|
167,735
|
|
Other assets
|
229,621
|
|
213,323
|
|
Total assets
|
$
7,420,763
|
|
$
7,372,895
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Secured debt
|
$
961,264
|
|
$
962,434
|
|
Unsecured senior
debt
|
1,639,823
|
|
1,685,956
|
|
Unsecured credit
facilities
|
402,784
|
|
268,933
|
|
Other debt
|
422,180
|
|
413,976
|
|
Accounts payable and other
liabilities
|
294,619
|
|
339,474
|
|
Total
liabilities
|
3,720,670
|
|
3,670,773
|
|
Equity
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Common equity
|
3,079,320
|
|
3,097,311
|
|
Preferred
equity
|
223,412
|
|
223,412
|
|
Total stockholders'
equity
|
3,302,732
|
|
3,320,723
|
|
Noncontrolling
interests
|
|
|
|
|
Joint venture
partners
|
342,514
|
|
325,590
|
|
Limited partnership
unitholders
|
54,847
|
|
55,809
|
|
Total noncontrolling
interests
|
397,361
|
|
381,399
|
|
Total equity
|
3,700,093
|
|
3,702,122
|
|
Total liabilities and
equity
|
$
7,420,763
|
|
$
7,372,895
|
|
|
|
|
|
SOURCE AMB Property Corporation