AMB Property Corporation
Funds from Operations per fully diluted share and unit (FFOPS) rose to $0.74 for the fourth quarter 2001 and $2.37 for the full year 2001; a 23.3% and 2.2% increase, respectively, over the same periods in 2000. FFOPS for fourth quarter and full year 2001 include, respectively, $0.13 and $0.15 of net gains from Headlands Realty, the company's subsidiary for development and redevelopment of projects held for sale. Full year 2001 and 2000 FFOPS was negatively impacted by non-cash charges for impairment reserves on all of the company's private equity investments of $0.23 and $0.03, respectively.
Internal growth, measured by same store cash basis net operating income, was 6.3% for the year and 3.5% for the quarter and was driven by strong rental increases as a result of leasing activity in both 2000 and 2001. For the entire industrial portfolio, the company had rental increases on renewals and rollovers of 4.3% and 20.4% for the fourth quarter and full year, respectively, and tenant retention of 65.0% and 66.8% for the fourth quarter and full year, respectively. Occupancy for the company's industrial portfolio was at 94.5% as of December 31, 2001, down 210 basis points (bps) from the third quarter. The decline in occupancy during the quarter was in line with expectations and was primarily the result of vacancies related to a previously disclosed bankrupt tenant (86 bps), acquired vacancy (44 bps) and developments placed in service prior to stabilized occupancy (38 bps).
Chairman and CEO Hamid R. Moghadam stated, "In 2001 we entered the first recession in a decade and industrial real estate nationally saw an occupancy drop of approximately 300 basis points. In that environment AMB grew its EPS 8.9% and FFO 2.2% for the year, including a $20.8 million non-cash write off of our venture capital investments, while our same store NOI grew over 6%. Our results continue to benefit from our focused infill investment strategy, our alliance-based operating model and the power of our investment management business. In addition to the strong operating results of our industrial assets within infill sub-markets, we demonstrated an additional benefit of those locations during 2001 with higher and better use conversions and the subsequent realization of tremendous gains in an otherwise slow economy. Illustrating this, our Watertown project just outside of Boston was acquired in 1998 and, through redevelopment and new development over the last three years, provided a total economic gain of $21 million in 2001, over our total investment of $33 million."
During the full year 2001, AMB sold properties for an aggregate price of $193.4 million, totaling 3.2 million square feet, of less-strategic assets and assets in non-core markets, including $3.0 million, totaling 25,000 square feet, in the fourth quarter. Full year 2001 property acquisitions totaled $428.3 million and 6.8 million square feet, including $144.8 million in assets, totaling 2.3 million square feet, in the fourth quarter. Additionally, property contributions to co-investment ventures during the full year 2001 totaled $539.2 million. "We continued to execute our capital deployment strategy with a goal of improving the strategic fit of our portfolio by disposing of assets that do not fit our investment strategy and acquiring properties in our supply constrained hub and gateway markets," commented AMB President, W. Blake Baird.
AMB placed in service 11 industrial developments and renovation projects during 2001, for a total of 2.3 million square feet and a total investment of $148.0 million, including four projects in the fourth quarter totaling 839,000 square feet for a total investment of $57.3 million. AMB's current committed development pipeline, with deliveries through 2003, stands at $154.4 million and consists of 3.1 million square feet, of which $100.3 million, or 65%, has been funded to date and 54% has been preleased.
AMB Investment Management, Inc. was renamed AMB Capital Partners, LLC as of January 1, 2002 to better reflect its role as a partner with private and institutional investors. AMB Capital Partners, LLC, a wholly owned subsidiary of AMB, raised $320 million in private equity capital during 2001.
AMB repurchased 323,000 common shares for a total cost of $7.6 million during the fourth quarter at an average cost of $23.38 per share, bringing total share repurchases under the previously announced share repurchase plan to 2.8 million shares for a total price of $60.0 million, or an average cost of $21.17 per share. AMB's Board of Directors approved a new $100 million common stock repurchase plan during the fourth quarter which will expire in December 2003; the new plan replaced the original plan, created in 1999, which expired in December 2001. In addition, the company repurchased all of its outstanding 8.75% Series C Cumulative Redeemable Preferred Limited Partnership Units for $115.7 million.
AMB also announced the addition of Frank Wade and J. Thomas Mercer as Senior Vice Presidents. Mr. Wade, previously with a major international airport and logistics facility development consultation firm, will lead AMB's international business development initiatives. Mr. Mercer has over 15 years of development experience with both public and private national industrial development organizations and will be responsible for AMB's customer-driven development opportunities. "We have added resources to our team to take advantage of two opportunities we see in the current marketplace. Tom will coordinate development of properties for our customers, many of whom we cannot accommodate in our existing portfolio. Frank will, working with our key integrator, logistics and freight forwarder customers, target airport-adjacent capital deployment opportunities at the largest non-US air cargo airports, " commented Mr. Baird.
In addition, AMB announced three officer promotions: Daniel L. Anderson to Senior Vice President, Regional Manager; Gayle P. Starr to Senior Vice President, Capital Markets; and Fritz E. Wyler to Vice President, Customer Alliances.
AMB will host its fourth quarter 2001 conference call tomorrow, January 23, 2002 at 11:00 AM PST/ 2:00 PM EST. Stockholders and interested parties may listen to a live broadcast of the call by dialing 719-457-2679 and using reservation code 582817. You may also access the conference call over the Internet through AMB's website at http://www.amb.com/. To listen to the call live, please go to the web site at least fifteen minutes early to register, download and install any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available on our website shortly after the call.
AMB Property Corporation is one of the leading owners and operators of industrial real estate nationwide. As of December 31, 2001, AMB owned, managed and had renovation and development projects totaling 94.1 million square feet and 1,017 buildings in 26 metropolitan markets. AMB targets industrial properties located near airports, seaports and ground transportation systems. The company's portfolio is comprised of High Throughput Distribution(R) facilities -- industrial properties built for speed and benefiting from barriers to entry due to their infill locations and proximity to large customer bases. AMB -- A tradition of nontraditional thinking(R).
NOTE: 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.
This press release contains forward-looking statements about business strategy and future plans, which are made pursuant to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve numerous risks and uncertainties and should not be relied upon as predictions of future events. The events or circumstances reflected in our forward-looking statements might not occur. In particular, a number of factors could cause AMB's actual results to differ materially from those anticipated, including, among other things, defaults on or non-renewal of leases by tenants, increased interest rates and operating costs, AMB's failure to obtain necessary outside financing, difficulties in identifying properties to acquire and in effecting acquisitions, AMB's failure to successfully integrate acquired properties and operations, AMB's failure to timely reinvest proceeds from any such dispositions, risks and uncertainties affecting property development and construction (including construction delays, cost overruns, AMB's inability to obtain necessary permits and public opposition to these activities), AMB's failure to qualify and maintain its status as a real estate investment trust under the Internal Revenue Code, environmental uncertainties, risks related to natural disasters, financial market fluctuations, risks arising from the California energy shortage, changes in real estate and zoning laws and increases in real property tax rates. AMB's success also depends upon economic trends generally, including interest rates, income tax laws, governmental regulation, legislation and population changes. For further information on these and other factors that could impact AMB and the statements contained herein, reference should be made to AMB's filings with the Securities and Exchange Commission, including AMB's quarterly report on Form 10-Q for the quarter ended September 30, 2001.
Consolidated Balance Sheets (dollars in thousands) As of December 31, September 30, June 30, 2001 2001 2001 Assets Investments in real estate: Total investments in properties $4,530,711 $4,433,847 $4,361,498 Accumulated depreciation (265,653) (239,144) (213,923) Net investments in properties 4,265,058 4,194,703 4,147,575 Investment in unconsolidated joint ventures 71,097 85,707 83,865 Properties held for divestiture, net 157,174 106,054 96,209 Net investments in real estate 4,493,329 4,386,464 4,327,649 Cash and cash equivalents 81,732 256,872 176,584 Mortgage receivables 87,214 92,232 92,250 Accounts receivable, net 70,794 68,811 68,982 Investments in affiliated companies(A) -- -- -- Investments in other companies, net -- -- -- Other assets 27,824 27,245 56,700 Total assets $4,760,893 $4,831,624 $4,722,165 Liabilities and Stockholders' Equity Secured debt $1,220,164 $1,102,801 $1,058,247 Unsecured senior debt securities 780,000 780,000 755,000 Unsecured credit facility 12,000 -- -- Alliance Fund II credit facility 123,500 125,000 98,100 Other liabilities 138,601 197,377 201,031 Total liabilities 2,274,265 2,205,178 2,112,378 Minority interests: Preferred units 275,987 381,834 342,966 Minority interests 458,299 477,224 476,937 Total minority interests 734,286 859,058 819,903 Stockholders' equity: Common stock 1,656,242 1,671,288 1,693,784 Preferred stock 96,100 96,100 96,100 Total stockholders' equity 1,752,342 1,767,388 1,789,884 Total liabilities and stockholders' equity $4,760,893 $4,831,624 $4,722,165 (A) On May 31, 2001, the Company acquired all of the voting stock of Headlands Realty and AMB Investment Management. The Company began consolidating Headlands Realty Corporation and its Investment Management Division for financial reporting purposes effective May 31, 2001. Consolidated Balance Sheets (dollars in thousands) As of March 31, December 31, 2001 2000 Assets Investments in real estate: Total investments in properties $4,084,799 $4,026,597 Accumulated depreciation (202,188) (177,467) Net investments in properties 3,882,611 3,849,130 Investment in unconsolidated joint ventures 85,317 80,432 Properties held for divestiture, net 236,746 197,146 Net investments in real estate 4,204,674 4,126,708 Cash and cash equivalents 152,224 42,722 Mortgage receivables 121,297 115,969 Accounts receivable, net 67,482 69,874 Investments in affiliated companies(A) 47,285 35,731 Investments in other companies, net 15,343 15,965 Other assets 29,839 18,657 Total assets $4,638,144 $4,425,626 Liabilities and Stockholders' Equity Secured debt $1,014,054 $940,276 Unsecured senior debt securities 755,000 680,000 Unsecured credit facility 94,000 216,000 Alliance Fund II credit facility -- -- Other liabilities 177,915 147,042 Total liabilities 2,040,969 1,983,318 Minority interests: Preferred units 342,911 318,053 Minority interests 457,372 356,325 Total minority interests 800,283 674,378 Stockholders' equity: Common stock 1,700,792 1,671,830 Preferred stock 96,100 96,100 Total stockholders' equity 1,796,892 1,767,930 Total liabilities and stockholders' equity $4,638,144 $4,425,626 (A) On May 31, 2001, the Company acquired all of the voting stock of Headlands Realty and AMB Investment Management. The Company began consolidating Headlands Realty Corporation and its Investment Management Division for financial reporting purposes effective May 31, 2001. Consolidated Statement of Operations (dollars in thousands, except share data) For the Quarters For the Twelve Ended Months Ended December 31, December 31, 2001 2000 2001 2000 Revenues Rental revenues(A) $146,641 $126,808 $568,066 $464,164 Equity in earnings of unconsolidated joint ventures 1,102 1,206 5,467 5,212 Investment management income 2,950 2,122 10,972 4,282 Interest and other income 3,835 4,898 16,340 6,549 Total revenues 154,528 135,034 600,845 480,207 Operating Expenses Property operating 36,287 30,275 138,196 107,730 Interest, including amortization(B) 34,231 27,364 128,985 90,270 Depreciation and amortization 28,276 25,223 111,414 90,358 General, administrative, and other 9,640 6,428 35,820 23,750 Loss on investments in other companies -- 2,500 20,758 2,500 Total expenses 108,434 91,790 435,173 314,608 Income before minority interests and gains (losses) 46,094 43,244 165,672 165,599 Minority interests share of income: Preferred units (7,056) (6,835) (28,682) (24,613) Minority interests (8,535) (5,449) (34,859) (20,348) Total minority interests (15,591) (12,284) (63,541) (44,961) Gain (loss) from disposition of real estate, net of minority interests: Gains on developments held for sale 11,828 -- 13,169 -- Gain (loss) from disposition of real estate, net(C) (10,073) (5,076) 23,259 1,144 Total Gain (loss) from disposition of real estate 1,755 (5,076) 36,428 1,144 Net income before extraordinary items 32,258 25,884 138,559 121,782 Extraordinary items (early debt extinguishments) (255) -- (606) -- Net income 32,003 25,884 137,953 121,782 Preferred stock dividends (2,125) (2,125) (8,500) (8,500) Preferred unit redemption premium (4,400) -- (4,400) -- Net income available to common stockholders $25,478 $23,759 $125,053 $113,282 Net income per common share: Basic $0.31 $0.28 $1.49 $1.35 Diluted $0.30 $0.28 $1.47 $1.35 Weighted average common shares: Basic 83,264,975 83,814,658 84,174,644 83,697,170 Diluted 84,338,812 84,528,547 85,214,066 84,155,306 (A) Includes straight-line rents of $2,514 and $4,018 for the quarters and $10,093 and $10,203 for the twelve months ended December 31, 2001 and 2000, respectively. (B) Net of capitalized interest of $2,836 and $3,938 for the quarters and $13,650 and $15,461 for the twelve months ended December 31, 2001 and 2000, respectively. (C) Includes impairment write-downs on assets held for sale and other operating properties of $8,600 and $5,900 for the quarters and $18,600 and $5,900 for the twelve months ended December 31, 2001 and 2000, respectively. Consolidated Statements of Funds from Operations (dollars in thousands, except share data) For the Quarters For the Twelve Ended Months Ended December 31, December 31, 2001 2000 2001 2000 Income before minority interest and gains (losses) $46,094 $43,244 $165,672 $165,599 Gains on developments held for sale 11,828 -- 13,169 -- Real estate related depreciation and amortization: Total depreciation and amortization 28,276 25,223 111,414 90,358 FF& E Depreciation and ground lease amortization(A) (507) (257) (1,963) (1,114) FFO attributable to minority interests(B) (11,025) (5,486) (40,144) (15,055) Adjustments to derive FFO from unconsolidated JV's:(C) Company's share of net income (1,102) (1,206) (5,467) (5,212) Company's share of FFO 1,526 1,700 8,014 7,188 Preferred stock dividends (2,125) (2,125) (8,500) (8,500) Preferred units distributions (7,056) (6,835) (28,682) (24,613) Funds from operations $65,909 $54,258 $213,513 $208,651 FFO per common share and unit: Basic $0.75 $0.61 $2.40 $2.33 Diluted(D) $0.74 $0.60 $2.37 $2.32 Weighted average common shares and units: Basic 88,243,249 89,619,042 88,915,176 89,566,375 Diluted(D) 89,317,086 90,332,931 89,954,598 90,024,511 (A) 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. (B) Represents FFO attributable to minority interests in consolidated joint ventures whose interests are not exchangeable into common stock. The minority interest's share of NOI for the quarters ended December 31, 2001 and 2000, was $20,587 and $8,042, respectively, and for the twelve months ended December 31, 2001 and 2000, was $65,010 and $24,979, respectively. (C) AMB's share of NOI for the quarters ended December 31, 2001 and 2000, was $2,357 and $1,998, respectively, and for the twelve months ended December 31, 2001 and 2000, was $10,181 and $8,338, respectively. (D) Includes the dilutive effect of stock options.
SOURCE: AMB Property Corp.
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