AMB Property Corporation(R) , a leading global developer and owner of industrial real estate, today reported results for the second quarter and first six months of 2008. Funds from operations per fully diluted share and unit ("FFOPS") was $1.06 for the second quarter of 2008, as compared to $0.74 for the same quarter in 2007. The second quarter results included $0.32 per share of scheduled incentive distributions from the company's private capital business. FFOPS for the six months ended June 30, 2008 was $1.71, as compared to $1.32 for the same period in 2007.

Net income available to common stockholders per fully diluted share ("EPS") for the second quarter of 2008 was $0.73. This compares to $1.10 for the same quarter in 2007, which included the gain on the contribution of operating properties to AMB's Europe Fund I, formed in June 2007. EPS for the six months ended June 30, 2008 was $1.12, as compared to $1.35 for the same period in 2007.

Owned and Managed Portfolio Operating Results

AMB's operating portfolio was 95.2% occupied at June 30, 2008, up 40 basis points from March 31, 2008. Cash-basis same store net operating income ("SSNOI") increased 3.3% in the second quarter and 5.4% in the first six months of 2008, over the same periods in 2007. When the effects of lease termination fees are excluded from this metric, the increases were 3.7% for the quarter and 5.5% for the first six months. For the trailing four quarters ended June 30, 2008, average rents on lease renewals and rollovers in AMB's operating portfolio increased 4.3%, following an average increase of 4.2% for the trailing four quarters ended March 31, 2008.

"Higher energy prices and the dislocation in the credit markets are creating a challenging environment for industrial demand in the U.S. and Europe; however, our portfolio continues to perform well despite the downturn -- a testament to our strategic focus on major supply-constrained markets essential to global trade," said Hamid R. Moghadam, AMB's chairman & CEO. "While it's too soon to predict the long-term impact of rising transportation costs on distribution networks, year-to-date leasing velocity in our portfolio and dialogue with our customers indicate that our infill locations in major metropolitan areas should continue to outperform the broader market."

Investment Activity

During the quarter, the company commenced development on 3.3 million square feet in the Americas, Europe and Asia, with an estimated total investment of $248 million. At quarter end, AMB's development pipeline, which included investments held through unconsolidated joint ventures, totaled approximately 17.3 million square feet globally, with an estimated total investment of $1.6 billion.

The company's development business includes contributions of stabilized properties to affiliated private capital co-investment ventures or sale of projects to third parties. During the second quarter, AMB contributed or sold 1.9 million square feet in the Americas and Asia, including contributions to three of its co-investment ventures, for an aggregate contribution value and disposition price of approximately $221 million.

During the quarter, AMB acquired 1.5 million square feet of industrial distribution space for an aggregate acquisition cost of approximately $146 million. The acquisitions expanded AMB's presence in target markets in the Americas and Europe, including the Port of Hamburg, which is continental Europe's second largest port and where AMB is a leading private owner of port-related distribution space.

Private Capital

Subsequent to quarter end, AMB and the City and County of San Francisco Employees' Retirement System contributed their interests in AMB Partners II, a co-investment venture comprising 10.3 million square feet of U.S. industrial property, to AMB Institutional Alliance Fund III in exchange for partnership interests in Fund III. "This transaction represents an opportunity for our partner to transfer its investment to our flagship U.S. fund, with the benefits of the fund's open-end structure. As well, the fund is acquiring a portfolio of high-quality and known assets in its target markets, thereby solidifying its position as a premier vehicle for investing in industrial real estate in the U.S.," commented John T. Roberts, Jr., president of AMB's private capital business.

Financing Activities

Demonstrating the strength of the company's balance sheet and its financial flexibility, AMB Property, L.P. issued $325 million of senior unsecured notes during the second quarter 2008. The coupon on the notes is 6.30% with an effective rate of 6.06%, as a result of a treasury lock. At June 30, 2008, AMB's share of total debt to total market capitalization was 42.1%.

2008 Guidance

The company confirms its previous full year 2008 FFO guidance of $3.85 to $4.05 per share. Full year EPS guidance is $2.55 to $2.75 per share.

Company Officer Promotions and Additions

During the quarter, the company announced the following officer promotions, effective July 1, 2008: Will O'Donnell was promoted to senior vice president; and Nick Chung, Irene Duran, Mike Fangman, Adrian Fernandez, Erin Marenghi, Rita McLean, Greydie Sargent, Brian Scruggs, Nancy Schultz, Satoshi Takeda, Leo Wang, Tracy Ward, David Yu, and Bob Vereschagin were promoted to vice president. In addition, John Drake and Mark Gschwind joined the company during the quarter as vice president.

Supplemental Earnings Measure

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

The company believes that net income, as defined by GAAP, is the most appropriate earnings measure. However, the company considers cash-basis same store net operating income (SSNOI) to be a useful supplemental measure of its operating performance. Properties that are considered part of the same store pool include all properties that were owned as of the end of both the current and prior year reporting periods and exclude development properties for both the current and prior reporting periods. The same store pool is set annually and excludes properties purchased and developments stabilized after December 31, 2006. In deriving SSNOI, the company defines NOI as rental revenues, including reimbursements, less property operating expenses, both of which are calculated in accordance with GAAP. Property operating expenses exclude depreciation, amortization, general and administrative expenses and interest expense. The company defines SSNOI to also exclude straight-line rents and amortization of lease intangibles. The company considers SSNOI to be an appropriate and useful supplemental performance measure because it reflects the operating performance of the real estate portfolio excluding effects of non-cash adjustments and provides a better measure of actual cash basis rental growth for a year-over-year comparison. In addition, the company believes that SSNOI helps the investing public compare the company's operating performance with that of other companies. While SSNOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating the company's liquidity or operating performance. SSNOI also does not reflect general and administrative expenses, interest expense, depreciation and amortization costs, capital expenditures and leasing costs, or trends in development and construction activities that could materially impact its results from operations. Further, the company's computation of SSNOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating SSNOI. Reconciliation from net income to SSNOI is published in the company's quarterly supplemental analyst package, available on the company's website at

"Owned and managed" is defined by the company as assets in which the company has at least a 10% ownership interest, is the property or asset manager, and which it intends to hold for the long-term.

Conference Call and Supplemental Information

The company will host a conference call to discuss its second quarter 2008 results on Wednesday, July 16, 2008 at 1:00 PM EDT. Stockholders and interested parties may listen to a live broadcast of the conference call by dialing 877 447 8218 (from the U.S. and Canada) or +1 706 643 7823 (from all other countries) and using reservation code 52517905. A webcast can be accessed through a link titled "Q2 2008 Earnings Conference Call" located on the home page of the company's website at

If you are unable to listen to the live conference call, a telephone and webcast replay will be available after 3:00 PM EDT on Wednesday, July 16, 2008 until 8:00 PM EDT on Friday, August 15, 2008. The telephone replay can be accessed by dialing 800 642 1687 (from the U.S. and Canada) or +1 706 645 9291 (from all other countries) and using reservation code 52517905. The webcast replay can be accessed through the link on the company's website at

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

AMB Property Corporation(R) is a leading global developer and owner of industrial real estate, focused on major hub and gateway distribution markets in the Americas, Europe and Asia. As of June 30, 2008, AMB owned, or had investments in, on a consolidated basis or through unconsolidated joint ventures, properties and development projects expected to total approximately 155.5 million square feet (14.5 million square meters) in 47 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(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 +1 415 394 9000.

Some of the information included in this press release contains forward-looking statements such as those related to continued demand for our product, status of key operating metrics, our ability to capitalize on trends and realize growth, effectiveness of our strategies, performance of our portfolio, occupancy levels, rent growth, SSNOI growth, our development projects (including completion, timing of stabilization, our ability to lease such projects, square feet at stabilization or completion, costs and total investment amounts), our ability to accomplish future business plans, strength of our balance sheet, our ability to access credit markets and enter into credit and financing agreements and to meet our forecasts (including our FFO and EPS guidance) and business goals, which are made pursuant to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from those in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future events. The events or circumstances reflected in forward-looking statements might not occur. You can identify forward-looking statements by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "pro forma," "estimates" or "anticipates" or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We caution you not to place undue reliance on forward-looking statements, which reflect our analysis only and speak only as of the date of this 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 or renewal at lower than expected rent, increased interest rates and operating costs or greater than expected capital expenditures, our failure to obtain necessary outside financing, re-financing risks, risks related to our obligations in the event of certain defaults under joint venture and other debt, risks related to debt and equity security financings (including dilution risk), difficulties in identifying properties to acquire and in effecting acquisitions, our failure to successfully integrate acquired properties and operations, our failure to divest properties we have contracted to sell or to timely reinvest proceeds from any divestitures, risks and uncertainties affecting property development, redevelopment, value-added conversion and construction (including construction delays, cost overruns, our inability to obtain necessary permits and public opposition to these activities), our failure to qualify and maintain our status as a real estate investment trust, risks related to our tax structuring, failure to maintain our current credit agency ratings, environmental uncertainties, risks related to natural disasters, financial market fluctuations, changes in general economic conditions or in the real estate sector, inflation risks, changes in real estate and zoning laws, a downturn in the U.S., California or global economy, risks related to doing business internationally and global expansion, 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, 2007.

                  (in thousands, except per share data)

                                      For the Quarters   For the Six Months
                                       ended June 30,      ended June 30,
                                       2008      2007      2008      2007
    Rental revenues                  $167,886  $158,883  $334,430  $316,947
    Private capital revenues(1)        41,413     8,518    51,336    14,443
      Total revenues                  209,299   167,401   385,766   331,390
  Costs and expenses
    Property operating costs          (48,108)  (42,568)  (94,208)  (86,121)
    Depreciation and amortization     (40,841)  (40,173)  (82,462)  (80,564)
    General and administrative        (33,794)  (30,260)  (68,947)  (60,114)
    Fund costs                           (384)     (277)     (606)     (518)
    Impairment losses                       -         -         -      (257)
    Other expenses                     (1,422)   (1,139)   (1,330)   (2,051)
      Total costs and expenses       (124,549) (114,417) (247,553) (229,625)
  Other income and expenses
    Development gains, net of taxes    30,402    28,996    48,222    41,188
    Gains from sale or contribution
     of real estate interests, net          -    74,707    19,967    74,843
    Equity in earnings of
     unconsolidated co-investment
     ventures                           6,059     1,748     8,987     3,861
    Other income                        1,909     6,472     6,345    11,979
    Interest expense, including
     amortization                     (36,555)  (33,151)  (67,514)  (67,490)
      Total other income and
       expenses                         1,815    78,772    16,007    64,381
    Income from operations before
     minority interests                86,565   131,756   154,220   166,146
    Minority interests' share of
     Co-investment venture partners'
      share of income                  (6,103)   (7,912)  (25,047)  (14,904)
     Co-investment venture partners'
      and limited partnership
      unitholders' share of
      development gains                (1,371)   (2,574)   (6,113)   (3,136)
     Preferred unitholders             (1,432)   (1,480)   (2,864)   (5,179)
     Limited partnership unitholders   (1,740)   (3,928)   (2,719)   (4,321)
      Total minority interests'
       share of income                (10,646)  (15,894)  (36,743)  (27,540)
       Income from continuing
        operations                     75,919   115,862   117,477   138,606
    Discontinued operations
     Income attributable to
      discontinued operations, net of
      minority interests                  297     2,023       272     4,926
     Gains from disposition of real
      estate, net of minority interests   803       384     2,202       419
      Total discontinued operations     1,100     2,407     2,474     5,345
       Net income                      77,019   118,269   119,951   143,951
    Preferred stock dividends          (3,952)   (3,952)   (7,904)   (7,904)
    Preferred unit redemption
     (issuance costs) discount              -    (2,927)        -    (2,927)
  Net income available to common
   stockholders                       $73,067  $111,390  $112,047  $133,120
  Net income per common share
   (diluted)                            $0.73     $1.10     $1.12     $1.35
  Weighted average common shares
   (diluted)                           99,432   101,361    99,666    98,305

(1) Includes incentive and promote distributions for 2008 of $33.0 million for AMB Institutional Alliance Fund III received during the quarter ended June 30, 2008 and $1.0 million for the dissolution of AMB Erie co-investment venture received during the quarter ended March 31, 2008.

                  (in thousands, except per share data)

                                      For the Quarters   For the Six Months
                                       ended June 30,      ended June 30,
                                       2008      2007      2008      2007
  Net income available to common
   stockholders                       $73,067  $111,390  $112,047  $133,120
    Gains from sale or contribution
     of real estate, net of minority
     interests                           (803)  (75,091)  (22,169)  (75,262)
    Depreciation and amortization
      Total depreciation and
       amortization                    40,841    40,173    82,462    80,564
      Discontinued operations'
       depreciation                        51     1,314       103     1,948
      Non-real estate depreciation     (2,155)   (1,401)   (3,789)   (2,578)
    Adjustments to derive FFO from
     consolidated co-investment
      Co-investment venture partners'
       minority interests (Net income)  6,103     7,912    25,047    14,904
      Limited partnership unitholders'
       minority interests (Net income)  1,740     3,928     2,719     4,321
      Limited partnership unitholders'
       minority interests (Development
       profits)                         1,175     1,251     1,704     1,801
      Discontinued operations' minority
       interests (Net income)               9       253       396       526
      FFO attributable to minority
       interests                      (16,417)  (15,312)  (32,993)  (31,616)
    Adjustments to derive FFO from
     unconsolidated co-investment
      AMB's share of net income        (6,059)   (1,748)   (8,987)   (3,861)
      AMB's share of FFO               12,276     5,805    21,138    11,480
  Funds from operations              $109,828   $78,474  $177,678  $135,347
  FFO per common share and unit
   (diluted)                            $1.06     $0.74     $1.71     $1.32
  Weighted average common shares and
   units (diluted)                    103,405   105,807   103,641   102,866

(1) Funds From Operations ("FFO") and Funds From Operations Per Share and Unit ("FFOPS"). 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, and FFO per share and unit, or FFOPS, 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, 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. AMB does not adjust FFO to eliminate the effects of non-recurring charges. AMB includes the gains from development, including those from value added conversion projects, before depreciation recapture, as a component of FFO. 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 National Association of Real Estate Investment Trusts' (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 co-investment 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.

AMB believes that FFO and FFOPS 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, FFO and FFOPS are supplemental measures of operating performance for real estate investment trusts that exclude historical cost depreciation and amortization, among other items, from net income, as defined by U.S. GAAP. AMB believes that the use of FFO and FFOPS, 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 FFO and FFOPS to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses related to sales of previously depreciated operating real estate assets and real estate depreciation and amortization, FFO and FFOPS can help the investing public compare the operating performance of a company's real estate between periods or as compared to other companies. While FFO and FFOPS are relevant and widely used measures of operating performance of real estate investment trusts, these 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. FFO and FFOPS also do not consider the costs associated with capital expenditures related to AMB's real estate assets nor are FFO or FFOPS necessarily indicative of cash available to fund AMB's future cash requirements.

The following table reconciles projected FFO from projected net income for the year ended December 31, 2008:

                                                    Low               High

  Projected net income                             $2.55             $2.75
  AMB's share of projected depreciation
   and amortization                                 1.49              1.51
  AMB's share of projected gains on
   disposition of operating properties             (0.12)            (0.14)
  Impact of additional dilutive
   securities, other, rounding                     (0.07)            (0.07)
  Projected Funds From Operations (FFO)            $3.85             $4.05

Amounts are expressed per share, except FFO which is expressed per share and unit.

                      CONSOLIDATED BALANCE SHEETS(1)
                          (dollars in thousands)

                                                        As of
                                            June 30, 2008  December 31, 2007
    Investments in real estate
      Total investments in properties         $6,101,579      $6,709,545
      Accumulated depreciation                  (894,230)       (916,686)
        Net investments in properties          5,207,349       5,792,859
      Investments in unconsolidated
       co-investment ventures                    373,202         356,194
      Properties held for contribution, net(2) 1,442,708         488,339
      Properties held for divestiture, net        85,040          40,513
        Net investments in real estate         7,108,299       6,677,905
    Cash and cash equivalents and
     restricted cash                             378,526         250,416
    Accounts receivable, net                     224,390         184,270
    Other assets                                 215,577         149,812
  Total assets                                $7,926,792      $7,262,403

  Liabilities and stockholders' equity
    Secured debt                              $1,481,422      $1,471,087
    Unsecured senior debt                      1,153,270       1,003,123
    Unsecured credit facilities                  916,485         876,105
    Other debt                                   568,498         144,529
    Accounts payable and other
     liabilities                                 384,040         306,196
          Total liabilities                    4,503,715       3,801,040
    Minority interests
      Co-investment venture partners             532,173         517,572
      Preferred unitholders                       77,561          77,561
      Limited partnership unitholders            100,748         102,278
          Total minority interests               710,482         697,411
    Stockholders' equity
      Common equity                            2,489,183       2,540,540
      Preferred equity                           223,412         223,412
          Total stockholders' equity           2,712,595       2,763,952
   Total liabilities and stockholders'
    equity                                    $7,926,792      $7,262,403

(1) During the quarter ended June 30, 2008, AMB acquired an additional 19% interest in G. Accion, a Mexican real estate company, increasing its ownership to 58%. As a result of the increase in ownership, AMB began consolidating G. Accion during the quarter. Properties held for divestiture, total assets and total liabilities include $27,680, $146,092 and $93,257, respectively, related to G. Accion as of June 30, 2008.

(2) June 30, 2008 balance includes $628 million of net investments from AMB Partners II that will be contributed to AMB Institutional Alliance Fund III in the third quarter of 2008.

First Call Analyst:
FCMN Contact: [email protected]

SOURCE: AMB Property Corporation

CONTACT: Margan S. Mitchell, Vice President, Corporate Communications,
+1-415-733-9477, fax, +1-415-477-2177, [email protected], or Rachel E.M.
Bennett, Director, Media, +1-415-733-9532, fax, +1-415-477-2063,
[email protected], or Tracy A. Ward, Vice President, Investor Relations,
+1-415-733-9565, fax, +1-415-477-2044, [email protected], all 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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