AMB Property Corporation
AMB's industrial portfolio, predominantly located in infill submarkets of major distribution markets, was 94.6% leased as of December 31, 2002, 20 basis points above portfolio occupancy as of September 30, 2002 and December 31, 2001. The Company's same store cash basis net operating income increased 10.1% during the quarter and 3.5% during the year. Tenant retention was 74.2% during 2002, while rents on renewals and rollovers decreased by 1.0% during the year.
Chairman and CEO, Hamid R. Moghadam, commented, "We are pleased with our full-year results in what turned out to be a difficult operating environment. Our unique investment and operating strategies led to results that we believe will set the standard for occupancy and same store net operating income growth in the industrial sector." Moghadam added, "Based on available data since 1989, the national industrial real estate market did not post a single year of negative net absorption prior to 2001. Following an unprecedented two consecutive years of negative net absorption in 2001 and 2002, we are seeing indications of increased leasing demand which we believe will lead to positive -- albeit modest -- net absorption in 2003."
Investment Activity
During the fourth quarter, AMB acquired seven properties for a total investment of $157.2 million, disposed of a 4.4 million square foot industrial portfolio in Houston and Dallas for an aggregate price of $155.3 million and sold an additional $73.2 million co-investment partnership interest to an existing partner. Other industrial sales activity in the quarter included two development for sale projects for $5.9 million. During the quarter, AMB also completed and stabilized five industrial development projects, totaling 1.7 million square feet for a total investment of $57.8 million. The industrial development and renovation pipeline through 2004 currently stands at $106.8 million and consists of an estimated 1.7 million square feet, of which $57.8 million, or 54.1%, has been funded and 28% is preleased. AMB's full-year 2002 transaction activity included $403.3 million in acquisitions, $394.1 million in dispositions and contributions to joint ventures and $135.4 million in development completions.
W. Blake Baird, AMB president, commented, "We are optimizing our portfolio through strategic dispositions domestically, including exiting certain non-strategic markets, and targeted acquisitions in the U.S. and abroad. Although our net dispositions of more than $50 million in the fourth quarter are dilutive in the short-term, we believe capital redeployment into investments more closely aligned with our investment focus will offer superior long-term total returns." Baird added, "Importantly, our fourth quarter transaction activity included the entry into Guadalajara, Paris and Singapore and the exit from one-third of our facilities in Dallas and all but our on- tarmac activities in Houston."
Additional investment activity in the quarter included the repurchase of 2.2 million shares of AMB's common stock for a total investment of $57.9 million, at a weighted average purchase price of $26.08 per share. During the fourth quarter, the board of directors increased the Company's common share repurchase plan to $200 million, from $100 million; $130.6 million of repurchase capacity remains under the updated plan. Since its IPO, the Company has repurchased a total of 5.4 million shares of common stock for a total investment of $129.3 million, at a weighted average purchase price of $23.72 per share.
AMB's private capital activity in the quarter consisted of an additional $110 million equity commitment from long-standing joint venture partner, the City and County of San Francisco Employees' Retirement System (CCSFERS). The new equity increases CCSFERS' ownership in the existing partnership from 50% to 80% and provides the partnership with additional capital for further investment in distribution facilities nationwide.
AMB renewed its $500 million unsecured revolving line of credit during the quarter. The three-year credit facility includes a multi-currency component under which up to $150 million can be drawn in British pounds sterling, euros or yen. The line of credit matures in December 2005 and replaces the Company's previous $500 million credit facility, which was to mature in May 2003.
Company Director and Officer Changes
AMB's board of directors appointed J. Michael Losh as an independent director to the Company's board. Losh, who joined the board of directors and audit committee on January 1, 2003, brings to AMB 36 years of financial and international expertise, most recently as General Motor's chief financial officer.
"AMB is committed to market-leading corporate governance. We take pride in our strong, independent and active board and consider Mike an important addition. He brings an extensive combination of operating, financial and international business experience to our board and we look forward to working with him," noted Moghadam.
The Company also announced officer promotions for the new year: Mo Barzegar was promoted to senior vice president, international; Tamra Browne to senior vice president and general counsel; Steve Campbell to senior vice president, environmental and engineering; John Meyer to senior vice president, airport facilities; Jill Blechschmidt to vice president, regional manager; Dave King to vice president, regional manager; and Steve Lueck, to vice president, regional manager.
"We are pleased to recognize this group of talented individuals for their sustained contributions to our business. They are integral to our pursuit of enduring excellence," noted Baird.
Supplemental Reporting Measure
AMB provides supplemental financial data -- including an analysis of funds from operations -- in its supplemental analyst package, located on the Investor Information section of its web site (www.amb.com).
Conference Call
AMB will host a conference call to discuss its fourth quarter and full-year 2002 results on Wednesday, January 15, 2003 at 11:00 AM PST/2:00 PM EST. Stockholders and interested parties may listen to a live broadcast of the conference call by dialing (719) 457-2633 and using reservation code 493454 or by webcast through a link on the Company's website at www.amb.com. If you are unable to listen to the live conference call, a telephone and webcast replay will be available after 5 PM PST on Wednesday, January 15, 2003. The telephone replay will be available until 5:00 PM PST on Wednesday, February 19, 2003 and can be accessed by dialing (719) 457-0820 and using reservation code 493454. The webcast can be accessed through a link on the Company's website at www.amb.com and will be available until 5 PM PST on Wednesday, February 19, 2003.
AMB Property Corporation is a leading owner and operator of industrial real estate, in North America, Europe and Asia. As of December 31, 2002 AMB owned, managed and had renovation and development projects totaling 94.6 million square feet (8.8 million square meters) and 992 buildings in 30 markets. AMB invests in industrial properties located predominantly in infill submarkets of major hub and gateway distribution markets. The Company's portfolio is comprised largely 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 toll-free at 877-285-3111.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
As of
Dec. 31, Sept. 30, June 30,
2002 2002 2002
Assets
Investments in
real estate:
Total investments
in properties $4,925,982 $4,883,497 $4,732,321
Accumulated
depreciation (362,540) (344,949) (311,058)
Net investments
in properties 4,563,442 4,538,548 4,421,263
Investment in
unconsolidated
joint ventures 64,428 64,822 64,083
Properties held for
divestiture, net 107,871 105,613 133,934
Net investments
in real estate 4,735,741 4,708,983 4,619,280
Cash and cash
equivalents 117,214 90,840 119,287
Mortgage receivables 13,133 13,155 87,175
Accounts receivable, net 74,207 81,003 80,366
Other assets, including
discontinued operations 52,199 48,608 39,390
Total assets $4,992,494 $4,942,589 $4,945,498
Liabilities and
Stockholders' Equity
Secured debt $1,284,675 $1,305,320 $1,360,436
Unsecured senior
debt securities 800,000 800,000 800,000
Unsecured debt 10,186 10,319 --
Alliance Fund II
credit facility 45,500 72,500 52,000
Unsecured credit facility 95,000 12,000 --
Other liabilities, including
discontinued operations 181,716 189,076 162,629
Total liabilities 2,417,077 2,389,215 2,375,065
Minority interests:
Preferred units 308,369 308,388 315,847
Minority interests 582,898 506,533 508,577
Total minority
interests 891,267 814,921 824,424
Stockholders' equity:
Common stock 1,588,156 1,642,459 1,649,909
Preferred stock 95,994 95,994 96,100
Total stockholders'
equity 1,684,150 1,738,453 1,746,009
Total liabilities
and stockholders'
equity $4,992,494 $4,942,589 $4,945,498
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
March 31, 2002 Dec. 31, 2001
Assets
Investments in real estate:
Total investments
in properties $4,566,951 $4,530,711
Accumulated depreciation (289,701) (265,653)
Net investments in
properties 4,277,250 4,265,058
Investment in unconsolidated
joint ventures 71,137 71,097
Properties held for
divestiture, net 139,370 157,174
Net investments in
real estate 4,487,757 4,493,329
Cash and cash equivalents 99,492 81,732
Mortgage receivables 87,214 87,214
Accounts receivable, net 75,399 70,794
Other assets, including
discontinued operations 39,392 35,874
Total assets $4,789,254 $4,768,943
Liabilities and Stockholders' Equity
Secured debt $1,237,564 $1,228,214
Unsecured senior debt securities 800,000 780,000
Unsecured debt -- --
Alliance Fund II credit facility 116,000 123,500
Unsecured credit facility -- 12,000
Other liabilities, including
discontinued operations 155,568 138,601
Total liabilities 2,309,132 2,282,315
Minority interests:
Preferred units 275,987 275,987
Minority interests 455,428 458,299
Total minority interests 731,415 734,286
Stockholders' equity:
Common stock 1,652,607 1,656,242
Preferred stock 96,100 96,100
Total stockholders' equity 1,748,707 1,752,342
Total liabilities and
stockholders' equity $4,789,254 $4,768,943
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data)
For the Quarters For the Twelve Months
Ended Ended
December 31, December 31,
2002 2001 2002 2001
Revenues
Rental revenues $157,262 $136,581 $588,522 $530,041
Equity in earnings
of unconsolidated
joint ventures 1,231 1,102 5,674 5,467
Private capital
income 2,725 2,950 11,193 10,972
Interest and
other income 539 3,826 10,454 16,297
Total revenues 161,757 144,459 615,843 562,777
Expenses
Property operating 39,164 33,590 145,870 127,753
Interest, including
amortization 37,442 33,019 147,101 124,866
Depreciation and
amortization 37,286 26,504 127,160 104,838
General administrative
and other (A) 13,000 9,640 47,207 35,820
Loss on investments
in other companies -- --- --- 20,758
Total expenses 126,892 102,753 467,338 414,035
Income before
minority
interests
and gains 34,865 41,706 148,505 148,742
Minority interests'
share of income:
Preferred units (6,379) (7,056) (25,149) (28,682)
Minority interests (8,324) (8,526) (37,806) (34,835)
Total minority
interests (14,703) (15,582) (62,955) (63,517)
Net income before
discontinued
operations and
gains from
dispositions 20,162 26,124 85,550 85,225
Gains on developments
and dispositions
and discontinued
operations:
Gains on developments
held for sale 414 11,828 1,032 13,169
Gains/(losses) from
disposition of
real estate, net
of minority
interests (B) 5,309 (10,073) 7,789 23,259
Discontinued
operations 4,697 4,124 18,494 16,300
Gains from
disposition
of real estate,
discontinued
operations 7,428 -- 11,372 --
Total gains on
developments and
dispositions and
discontinued
operations 17,848 5,879 38,687 52,728
Net income 38,010 32,003 124,237 137,953
Preferred stock
dividends (2,123) (2,125) (8,496) (8,500)
Preferred unit
redemption
discount/(premium) -- (4,400) 412 (4,400)
Net income available
to common
stockholders $35,887 $25,478 $116,153 $125,053
Net income per
common share
(diluted) $0.43 $0.30 $1.37 $1.47
Weighted average
common shares
(diluted) 83,648,772 84,338,812 84,795,987 85,214,066
(A) Prior to May 31, 2001, G&A did not include expenses incurred by two
unconsolidated preferred stock subsidiaries, Headlands Realty
Corporation and AMB Capital Partners. Adjusted G&A for the twelve
months ended December 31, 2001, would have been $39,353 had the
subsidiaries been consolidated beginning January 1, 2001.
(B) Includes unrealized losses of $1.2 million and $8.6 million for the
quarters ended December 31, 2002 and 2001, respectively and $1.2
million and $18.6 million for the twelve months ended December 31,
2002 and 2001, respectively.
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS
AND SUPPLEMENTAL CASH FLOW INFORMATION
(dollars in thousands, except share data)
Quarters Months Ended
December 31, December 31,
2002 2001 2002 2001
Income before minority
interests and gains $34,865 $41,706 $148,505 $148,742
Gains on developments
held for sale 414 11,828 1,032 13,169
Total depreciation
and amortization 37,286 26,504 127,160 104,838
FF& E depreciation,
ground lease
amortization
and other (A) (708) (507) (2,450) (1,963)
Discontinued
operations' FFO 6,613 5,905 26,023 22,900
FFO attributable to
minority interests (14,298) (11,025) (52,051) (40,144)
Adjustments to
derive FFO from
unconsolidated JVs:
AMB's share of
net income (1,231) (1,102) (5,674) (5,467)
AMB's share of FFO 2,117 1,526 8,728 8,014
Preferred stock
dividends (2,123) (2,125) (8,496) (8,500)
Preferred units
distributions (6,379) (7,056) (25,149) (28,682)
Funds from
operations $56,556 $65,654 $217,628 $212,907
Weighted average
common shares and
units (diluted) 88,495,159 89,317,086 89,689,310 89,954,598
Supplemental Cash
Flow Information:
Straight-line rents $628 $2,514 $11,013 $10,093
AMB's share of
unconsolidated
JV's NOI $2,713 $2,357 $11,055 $10,181
JV Partners' share
of cash basis NOI $24,914 $20,587 $86,482 $65,010
Discontinued
operations' NOI $7,650 $7,372 $29,949 $27,642
Stock-based
compensation
amortization $1,315 $797 $5,265 $2,725
Capitalized interest $1,762 $2,836 $6,919 $13,650
Recurring capital
expenditures:
Tenant
improvements $4,340 $2,149 $18,977 $8,168
Lease commissions
and other
lease costs 3,910 3,779 17,684 19,822
Building
improvements 4,725 8,716 18,270 19,852
Sub-total 12,975 14,644 54,931 47,842
JV Partners' share
of capital
expenditures (1,955) (2,995) (9,547) (5,824)
AMB's share of
recurring
capital
expenditures $11,020 $11,649 $45,384 $42,018
(1) Ground lease amortization represents the amortization of the
Company's investments in ground leased properties, for which the
Company does not have a purchase option.
SOURCE: AMB Property Corporation
CONTACT: Investors/Analysts, Michelle C. Wells, Investor Relations,
+1-877-285-3111, or fax, +1-415-394-9001, or
Sara J. Butz, Media Relations, +1-415-733-9478, or fax, +1-415-394-9001, or
Web site: http://www.amb.com/
