AMB Property Corporation , a leading global developer and owner of industrial real estate, today reported third quarter and year-to-date 2005 earnings per share (EPS) of $0.31 and $1.27, respectively. As a result of the timing of gain recognition in connection with the sale of an operating property in the quarter, EPS was $0.04 below the midpoint of the company's guidance of $0.34 to $0.36 for the quarter. The majority of the deferred gain is expected to be realized and included in the company's 2006 EPS results.

Third quarter 2005 EPS decreased 11.4% from EPS of $0.35 in the same period of 2004, primarily reflecting the impact of higher lease termination fees received in 2004. In the first nine months of 2005, EPS increased 74.0% over the comparable period of 2004, primarily driven by development, contribution and disposition gains.

Operating Results

AMB's industrial operating portfolio was 94.6% occupied at both September 30, 2005 and September 30, 2004, an increase of ten basis points from June 30, 2005. Based on preliminary data provided by Torto Wheaton Research (TWR), AMB estimates that U.S. industrial vacancy at the end of the third quarter was 10.0%, representing a 40 basis point improvement in occupancy rates from the prior quarter -- the sixth consecutive quarter of improvement nationally.

Reflecting the decrease in industrial rents nationally from their peak levels in 2000-2001, rents on lease renewals and rollovers in AMB's operating portfolio declined 7.6% in the third quarter 2005, an improvement from declines of 14.6% in the prior quarter and 13.2% in the third quarter of 2004. Cash-basis same store net operating income (NOI) decreased 4.5% in the third quarter of 2005, reflecting the receipt of $5.0 million in same store lease termination fees in the quarter ended September 30, 2004, versus approximately $0.1 million in the quarter ended September 30, 2005.

Hamid R. Moghadam, AMB's chairman and CEO, said, "The key drivers of demand for industrial real estate continue their positive trend. The Production and New Orders components of the ISM Index are at their highest levels since July 2004. Despite high energy prices, year-over-year shipping volumes have increased approximately 10% and international air cargo volumes are up more than 3%, a demonstration of the power of global trade. These factors contributed to the estimated 90 million square feet of national industrial space absorption in the third quarter -- the highest level of quarterly absorption in the last five years. At this level, industrial real estate markets are approaching equilibrium for supply and demand, somewhat ahead of our earlier expectations, spurring rent growth in many of our key markets."

Investment Activity

During the third quarter, the company began development on eight new distribution facilities in Canada, the U.S. and four countries in Europe. The projects are expected to comprise approximately 2.0 million square feet of space with a total expected investment amount of $162.9 million. AMB's development and renovation pipeline now totals 39 projects of approximately 9.7 million square feet globally with an estimated total investment of $923.3 million. These projects are scheduled for delivery through the first quarter of 2008. The pipeline is 67% funded to date.

AMB placed three industrial development projects into operation in the third quarter of 2005. The buildings, held as part of the company's investment portfolio, total approximately 1.1 million square feet and were completed for an aggregate investment of approximately $41.4 million. The new distribution facilities are 100% leased and are located in southern California's Inland Empire and Miami, Florida.

The company completed two additional development projects in the quarter and made them available for sale to third parties or for contribution to private capital funds. Located in Mexico City and northern New Jersey, the buildings total approximately 1.2 million square feet and have an estimated total investment of $82.7 million. Year to date, AMB has sold or contributed eight development properties generating net gains to the company of approximately $16.2 million.

During the third quarter, AMB acquired 1.8 million square feet of distribution facilities in eight buildings with a total acquisition cost of approximately $158.5 million. The properties expand AMB's customer offerings in major distribution hubs in the U.S., Japan and Europe.

W. Blake Baird, AMB's president, said, "We are rapidly expanding our global platform to serve distribution customers in markets essential to trade. This quarter, we entered Brussels and Rotterdam. In addition, we secured a land position to enter Milan with an expected 1.3 million square foot multi- phase development. Our land positions globally can now support approximately 23 million square feet of future development beyond our $923 million pipeline of development currently under way."

As part of its expansion into Canada, AMB acquired an approximate 5% interest in IAT Air Cargo Facilities Income Fund (IAT), a Canadian income trust specializing in aviation-related real estate at Canada's leading international airports. AMB has also acquired the management company which provides property management, leasing and development services for IAT's 1.3 million square foot portfolio.

During the third quarter, AMB completed opportunistic sales of six operating properties which no longer fit the company's property type or submarket focus, including the last of the company's shopping center assets. The buildings comprised approximately 645,000 square feet and totaled approximately $76.8 million in gross disposition proceeds.

Private Capital Financing

Subsequent to the end of the third quarter, AMB Institutional Alliance Fund III closed on an additional $20 million of third party equity. Fund III, the company's open-end commingled fund, had its initial closing in the fourth quarter of 2004 and has thus far raised $251 million in third-party equity. The Fund invests in operating and renovation properties in the U.S. and had investments in real estate of $672.9 million at September 30, 2005.

Supplemental Earnings Measure

AMB reports funds from operations per fully diluted share and unit (FFOPS) in accordance with the standards established by NAREIT. Third quarter 2005 FFOPS was $0.50, at the top end of the company's guidance of $0.48 to $0.50 per share. A year ago, third quarter FFOPS was $0.61; FFOPS for the first nine months of 2005 was $1.59 compared with $1.68 in the same period of 2004. The 2004 results benefited from the receipt of $8.1 million in lease termination fees.

Included in the footnotes to the company's attached financial statements is a discussion of why management believes FFO is a useful supplemental measure of operating performance, of ways in which investors might use FFO when assessing the company's financial performance, and of FFO's limitations as a measurement tool. A reconciliation from net income to funds from operations is provided in the attached tables and published in AMB's quarterly supplemental analyst package, available on the company's website at

Conference Call and Supplemental Information

The company will host a conference call to discuss the quarterly results on Wednesday, October 12, 2005 at 1:00 PM EDT/10:00 AM PDT. The live broadcast of the call can be accessed by dialing +1-877-447-8218 or +1-706-643-7823 and using reservation code 9566985; the live webcast can be accessed through a link on the company's website at Replays of both the telephone and webcast formats of the call will be available from 12:00 PM PDT on October 12, 2005 through 5:00 PM PDT Friday, November 11, 2005. The telephone replay can be accessed by dialing +1-800-642-1687 or +1-706-645-9291 and using reservation code 9566985; the webcast can be accessed through a link on the company's website at

In addition, the company will post a summary of the guidance given on the call and a supplement detailing the components of net asset value to the Investor Information portion of its website on Friday, October 14, 2005 by 5:00 PM PDT.

AMB Property Corporation. Local partner to global trade(TM).

AMB Property Corporation is a leading owner and operator of industrial real estate, focused on major hub and gateway distribution markets throughout North America, Europe and Asia. As of September 30, 2005 AMB owned, managed and had renovation and development projects totaling 118.0 million square feet (11.0 million square meters) and 1,109 buildings in 40 markets within ten 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 or by contacting the Investor Relations department at 1-877-285-3111.

Some of the information included in this report contains forward-looking statements, such as those related to the company's interpretation of trends regarding national and portfolio industrial space absorption; the total expected investment in acquisitions; the timing of sales and contributions of properties; size and timing of deliveries and total investment in development projects; and use of private capital funds for planned investment activity 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: defaults on or non-renewal of leases by tenants, increased interest rates and operating costs, our failure to obtain necessary outside financing, 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, environmental uncertainties, risks related to natural disasters, financial market fluctuations, changes in real estate and zoning laws, risks related to doing business internationally 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 "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Business Risks" and elsewhere in our most recent annual report on Form 10-K for the year ended December 31, 2004.

   Margan Mitchell
   Vice President, Corporate Communications
   Direct   +1-415-733-9477
   Email    [email protected]

   Evaleen G. Andamo
   Director, Investor Relations
   Direct   +1-415-733-9565
   Email    [email protected]

                       CONSOLIDATED BALANCE SHEETS
                          (dollars in thousands)

                                                 As of
                             September    June 30,   March 31,  December 31,
                              30, 2005      2005        2005        2004
  Investments in real
    Total investments in
     properties              $6,898,824  $6,680,432  $6,608,737  $6,526,144
    Accumulated depreciation   (721,892)   (683,679)   (652,085)   (615,646)
      Net investments in
       properties             6,176,932   5,996,753   5,956,652   5,910,498
    Investments in
     unconsolidated joint
     ventures                   115,624     121,000     105,127      55,166
    Properties held for
     contribution, net           80,245          --          --          --
    Properties held for
     divestiture, net            45,742      75,472      49,455      87,340
      Net investments in
       real estate            6,418,543   6,193,225   6,111,234   6,053,004
  Cash and cash equivalents     162,437     169,471     215,068     146,593
  Mortgages and loans
   receivable                    21,652      21,682      21,710      13,738
  Accounts receivable, net      158,000     173,360     135,768     109,028
  Other assets                   75,605      66,633      71,304      64,580
       Total assets          $6,836,237  $6,624,371  $6,555,084  $6,386,943

  Liabilities and
   Stockholders' Equity
  Secured debt               $2,051,480  $1,843,861  $1,915,702  $1,892,524
  Unsecured senior debt
   securities                 1,003,940   1,003,940   1,003,940   1,003,940
  Unsecured debt                 24,175       8,710       8,869       9,028
  Unsecured credit
   facilities                   472,291     549,397     422,616     351,699
  Accounts payable and other
   liabilities                  262,425     242,944     258,159     262,286
      Total liabilities       3,814,311   3,648,852   3,609,286   3,519,477
  Minority interests:
    Joint venture partners      933,262     906,527     884,188     828,622
    Preferred unitholders       278,378     278,378     278,378     278,378
    Limited partnership
     unitholders                 86,719      89,601      89,377      89,326
      Total minority
       interests              1,298,359   1,274,506   1,251,943   1,196,326
  Stockholders' equity:
    Common stock              1,620,363   1,597,809   1,590,651   1,567,936
    Preferred stock             103,204     103,204     103,204     103,204
      Total stockholders'
       equity                 1,723,567   1,701,013   1,693,855   1,671,140
       Total liabilities and
        stockholders' equity $6,836,237  $6,624,371  $6,555,084  $6,386,943

                (dollars in thousands, except share data)

                           For the Quarters Ended  For the Nine Months Ended
                                   September 30,           September 30,
                                 2005        2004        2005        2004
  Rental revenues              $169,658    $165,063    $505,030    $470,751
  Private capital income          5,764       2,726      12,520       8,077
    Total revenues              175,422     167,789     517,550     478,828
  Costs and expenses
  Property operating costs      (43,646)    (41,226)   (130,842)   (120,849)
  Depreciation and
   amortization                 (44,471)    (39,488)   (132,294)   (112,362)
  General and administrative    (19,665)    (15,656)    (57,070)    (44,869)
  Fund costs                       (329)        (78)     (1,073)       (737)
    Total costs and expenses   (108,111)    (96,448)   (321,279)   (278,817)
       Operating income          67,311      71,341     196,271     200,011
  Other income and expenses
  Equity in earnings of
   unconsolidated joint
   ventures                       1,529         603       9,959       3,256
  Other income and expenses, net  2,897       1,253       3,224       3,219
  Gains from dispositions of
   real estate                       --          --      18,923          --
  Development profits, net
   of taxes                         398       1,521      20,322       4,756
  Interest expense,
   including amortization       (40,760)    (40,287)   (122,345)   (119,309)
    Total other income and
     expenses                   (35,936)    (36,910)    (69,917)   (108,078)
       Income before
        minority interests
        and discontinued
        operations               31,375      34,431     126,354      91,933
  Minority interests' share
   of income:
    Joint venture partners'
     share of income            (10,902)     (9,958)    (33,070)    (27,811)
    Joint venture partners'
     share of development
     profits                        (21)       (145)    (10,136)       (894)
    Preferred unitholders        (5,368)     (4,942)    (16,104)    (14,766)
    Limited partnership
     unitholders                   (636)       (846)     (1,713)     (2,099)
       Total minority
        interests' share of
        income                  (16,927)    (15,891)    (61,023)    (45,570)
       Income from
        operations               14,448      18,540      65,331      46,363
  Discontinued operations:
    Income attributable to
     operations, net of
     minority interests             290       3,059       3,620       8,849
    Gain from disposition of
     real estate, net of
     minority interests          14,330      10,450      47,673      12,325
       Total discontinued
        operations               14,620      13,509      51,293      21,174
         Net income              29,068      32,049     116,624      67,537
  Preferred stock dividends      (1,783)     (1,783)     (5,349)     (5,349)
  Net income available to
   common stockholders          $27,285     $30,266    $111,275     $62,188
  Net income per common
   share (diluted)                $0.31       $0.35       $1.27       $0.73
  Weighted average common
   shares (diluted)          88,373,479  85,395,787  87,424,751  85,012,460

                (dollars in thousands, except share data)

                           For the Quarters Ended  For the Nine Months Ended
                                   September 30,           September 30,
                                 2005        2004        2005        2004
  Net income                    $29,068     $32,049    $116,624     $67,537
  Gains from disposition of
   real estate, net of
   minority interests           (14,330)    (10,450)    (66,596)    (12,325)
  Depreciation and
    Total depreciation and
     amortization                44,471      39,488     132,294     112,362
    Discontinued operations'
     depreciation                   239       3,136       1,468      10,369
    Non-real estate
     depreciation                  (892)       (172)     (2,439)       (508)
  Adjustments to derive FFO
   from consolidated JVs:
    Joint venture partners'
     minority interests (Net
     income)                     10,902       9,958      33,070      27,811
    Limited partnership
     unitholders' minority
     interests (Net income)         636         846       1,713       2,099
    Limited partnership
     unitholders' minority
     interests (Development
     profits)                        16          79         568         222
    Discontinued operations'
     minority interests (Net
     income)                         22       2,728         611       4,150
    FFO attributable to
     minority interests         (24,944)    (22,193)    (72,634)    (58,172)
  Adjustments to derive FFO
   from unconsolidated JVs:
    AMB's share of net
    income                       (1,529)       (603)     (9,959)     (3,256)
    AMB's share of FFO            4,592       1,661      11,808       6,089
    AMB's share of
     development profits,
     net of taxes                    --          --       5,441          --
  Preferred stock dividends      (1,783)     (1,783)     (5,349)     (5,349)
      Funds from operations     $46,468     $54,744    $146,620    $151,029
      FFO per common share
       and unit (diluted)         $0.50       $0.61       $1.59       $1.68

      Weighted average
       common shares and
       units (diluted)       93,034,016  90,146,245  92,121,224  89,764,633

(1) Funds From Operations ("FFO"). 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 NAREIT, to be a useful supplemental measure 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. Further, the Company does not adjust FFO to eliminate the effects of non-recurring charges. The Company believes that FFO, as defined by NAREIT, is a meaningful supplemental measure 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 as a supplemental measure of operating performance for real estate investment trusts that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. The Company believes that the use of FFO, 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 to be a useful measure 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 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 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 the Company's liquidity or operating performance. FFO also does not consider the costs associated with capital expenditures related to the Company's real estate assets nor is FFO necessarily indicative of cash available to fund the Company's future cash requirements. Further, the Company's computation of FFO may not be comparable to FFO reported by other real estate investment trusts that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company does.

SOURCE: AMB Property Corporation

CONTACT: Margan Mitchell, Vice President, Corporate Communications,
+1-415-733-9477, or [email protected], or Evaleen G. Andamo, Director,
Investor Relations, +1-415-733-9565, or [email protected], both of AMB Property

Media contact & resources

Jennifer Nelson

SVP, Head of Global Corporate Communications
+1 (415) 733 9409
[email protected]
San Francisco, California USA

Corporate Profile

Park Grande, Building


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