- Earnings per share (EPS) for the quarter were $0.33, flat over the
    second quarter 2000, and $0.82 for the first half of the year, an
    increase of 20.6% over the first half of 2000
  - $16.1 million non-cash charge taken against earnings and funds from
    operations (FFO) for impairment reserves on all of the company's equity
    investments in technology and e-commerce companies
  - $17.8 million of gains on $61.6 million of property dispositions, which
    was not included in FFO
  - Adjusted EPS (before gains and extraordinary and one-time items) for
    the quarter increased 3.1% over the second quarter of 2000 to $0.33,
    and 3.0% over the first half of 2000 to $0.68
  - FFO per share, after non-cash charges of $0.18 per share, decreased
    25.9% from the second quarter 2000 to $0.43, and decreased 11.5% from
    the first half of 2000 to $1.00, after non-cash charges of $0.23 per
    share
  - Same store net operating income (NOI) growth was 6.8% for the quarter
    and 7.6% year-to-date
  - Raised $159 million of private capital commitments for AMB
    Institutional Alliance Fund II
  - Reduced debt by $56 million and repurchased 25,000 shares of common
    stock at $22.80 per share

SAN FRANCISCO, July 9 /PRNewswire/ -- AMB Property Corporation today reported earnings per share (EPS) of $0.33 for the second quarter 2001, flat over the second quarter of 2000. EPS for the first half of 2001 was $0.82, an increase of 20.6% over the first half of 2000. Adjusted EPS (before gains and extraordinary and one-time items) was $0.33 for the quarter, a 3.1% increase over the second quarter of 2000 and $0.68 for the first six months, a 3.0% increase over the first six months of 2000.

Earnings growth for the quarter was positively impacted by $17.8 million, or $0.21 per share, of gains from asset dispositions, partially offset by non-cash charges of $16.1 million, or $0.18 per share, for impairment reserves on all of the company's private equity investments in technology and e-commerce companies, and a $1.4 million, or $0.02 per share, depreciation charge for capitalized lease costs related to leases with Webvan Group, Inc.

Earnings growth was also driven by continued strong operating performance at the company's industrial properties. Same store cash basis net operating income (NOI) growth was 6.8% with a 49.4% increase in same store base rents on lease renewals and rollovers during the quarter, and 71.2% tenant retention at the same store properties. Year-to-date same store NOI growth was 7.6%. Rent increases on renewals and rollovers during the quarter for the entire industrial portfolio were 38.5% and tenant retention was 72.6%. Occupancy was 95.9% at quarter-end, down 0.1% from the end of the first quarter.

Funds from operations (FFO) per fully diluted share were $0.43 for the quarter, a decrease of 25.9% from the first quarter of 2000, and $1.00 for the first half of the year, a decrease of 11.5% from the first half of 2000. Excluding the non-cash charges for impairment reserves, FFO per fully diluted share was $0.61 for the quarter and $1.23 for the first six months, reflecting an increase of 5.2% and 8.8%, respectively. FFO per share for the quarter was driven by $0.06 of internal growth and $0.01 of growth from investment management revenues, offset by a $0.02 increase in general, administrative and other expenses and $0.02 of dilution from property contributions and sales to co-investment joint ventures. Gains on asset dispositions were not included in FFO.

"During 1999 and 2000, AMB made equity investments in eight private technology and e-commerce companies. In order to reflect changes in market conditions, we decided to fully reserve against our remaining net investments in these companies and take the charge against earnings this quarter. We learned a great deal about the impact of technology on our business and that of our customers through these investments. We are disappointed that these equity investments did not meet our financial expectations, but we believe that we have now put these challenges behind us," stated Hamid R. Moghadam, chairman and chief executive officer of AMB.

"Turning to our operating results, the strength of AMB's investment strategy and business model shines during the slower parts of the real estate cycle. Our same store NOI growth remains strong at 7.6% year-to-date with stable occupancy. We continued to outperform the national industrial market supported by the strength of our infill locations, particularly our Bay Area assets. Focusing our investments on industrial distribution facilities in major hub markets and gateway cities reduces our exposure to excess supply and provides AMB with solid operating fundamentals and added opportunities for growth," continued Moghadam.

AMB's investment strategy focuses on High Throughput Distribution(TM) facilities in eight hub markets and gateway cities where the company believes there are significant growth opportunities. At quarter-end, properties in these markets accounted for 71.9% of AMB's annual revenues. Acquisitions during the quarter totaled $71.9 million and 1.0 million square feet. AMB completed and stabilized two industrial development projects during the quarter, totaling 712,411 square feet for a total investment of $42.3 million. The industrial development and renovation pipeline currently stands at $254.2 million and consists of 4.5 million square feet, of which $144.2 million, or 56.7%, has been funded.

Dispositions during the quarter totaled $61.6 million and 1.3 million square feet, and included exiting the Nashville market. "We continue to sharpen our investment focus by opportunistically disposing of assets and redeploying the proceeds into properties that are more aligned with AMB's strategic direction. This quarter, we sold less-strategic assets and assets in non-core markets, recognizing $17.8 million in gain on these sales," said W. Blake Baird, president of AMB.

During the quarter, AMB announced the initial closing of AMB Institutional Alliance Fund II, a multi-investor fund including 10 pension funds, foundations and endowments that have co-invested alongside AMB. The initial closing represented $159 million of third party equity commitments, which amounts to a capitalization of approximately $400 million for Fund II when combined with debt financings and AMB's equity investment. AMB will maintain a minimum equity ownership of 20% of the fund and expects that Fund II will utilize no more than 50% leverage. AMB will receive acquisition fees and priority distributions for portfolio management services, and may receive a promoted interest if certain return thresholds are met.

"We have executed well on expanding our private capital programs by raising $284 million in third party private equity from co-investment partners in the first half of 2001, while keeping our common equity scarce," said Baird. Under a previously announced $100 million stock repurchase program, the company repurchased 25,000 shares of common stock during the quarter at a price of $22.80 per share, bringing the total repurchases under the program to $27.9 million at an average price of $18.98.

During the quarter, AMB reduced its share of total debt outstanding by $56 million, finishing the quarter with no outstanding borrowings on its $500 million unsecured credit facility and over $175 million of cash on its balance sheet. AMB's share of total debt-to-total market capitalization declined from the first quarter of 2001 by 170 basis points to 36.2%. "We have significant financial capacity through both our balance sheet and private capital programs which gives us flexibility to take advantage of market opportunities in coming quarters," stated Guy F. Jaquier, executive vice president and chief investment officer.

AMB named one new senior vice president and five vice presidents, effective July 1, 2001. Andrew Singer was promoted to Senior Vice President - Transactions, Robert Adams was promoted to Vice President - Information Systems, David Buxbaum was promoted to Vice President - Regional Manager, Stephen Lekki was promoted to Vice President - Transactions, Victoria Robinson was promoted to Vice President - Investor Relations, and David Twist was promoted to Vice President - Research. In addition, AMB Investment Management promoted Alison Hill to Vice President - Investment Management. "We are pleased to recognize the success and contributions of these members of our leadership team and congratulate them in their new roles," said Moghadam.

Earlier today, Webvan Group, Inc. announced it has ceased operations in all markets and will pursue an orderly sale of its assets and business. As of June 30, 2001 Webvan had four leases totaling 843,970 square feet with AMB, accounting for $3.6 million of annualized base rent and were current on all obligations as of June 30, 2001. Webvan was AMB's third largest customer at quarter-end and accounted for 0.8% of annualized base rents. As a result of this announcement and other previous announcements, AMB has taken a non-cash charge to depreciation totaling $1.4 million for capitalized lease costs. In addition, AMB wrote-off $1.4 million of straight-line rents receivable during the quarter; this amount did not affect earnings for the quarter because such expense was previously reserved. AMB expects to regain possession of all space and release it to new customers in subsequent quarters.

AMB will hold its second quarter 2001 conference call tomorrow, July 10, 2001 at 2:00 p.m. EDT (11:00 a.m. PDT). Stockholders and interested parties may access a webcast of the call through AMB's website at http://www.amb.com/ or a broadcast of the call by dialing 719-457-2637, reservation code 691846. For those who are not able to listen to the live broadcast, a replay will be available for one week following the call through AMB's website at http://www.amb.com/ or by dialing 719-457-0820, reservation code 691846.

AMB Property Corporation is one of the leading owners and operators of industrial real estate nationwide. As of June 30, 2001, AMB owned, managed and had renovation and development projects totaling 93.7 million square feet and 1,008 buildings in 26 metropolitan markets. AMB targets High Throughput Distribution(TM) properties -- industrial properties located in major distribution markets near airports, seaports and ground transportation systems. These HTD(TM) facilities are built for speed and benefit from barriers to entry due to their supply-constrained locations and proximity to large customer bases. AMB -- A tradition of nontraditional thinking(TM).

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
                                          June 30,   March 31,  December 31,
                                            2001        2001        2000
  Assets
  Investments in real estate:
    Total investments in properties      $4,361,498  $4,084,799  $4,026,597
    Accumulated depreciation               (213,923)   (202,188)   (177,467)
      Net investments in properties       4,147,575   3,882,611   3,849,130
    Investment in unconsolidated joint
     ventures                                83,865      85,317      80,432
    Properties held for divestiture, net     96,209     236,746     197,146
      Net investments in real estate      4,327,649   4,204,674   4,126,708
  Cash and cash equivalents                 176,584     152,224      42,722
  Mortgage receivables                       92,250     121,297     115,969
  Accounts receivable, net                   68,982      67,482      69,874
  Investments in affiliated companies (A)        --      47,285      35,731
  Investments in other companies, net
   (B)                                           --      15,343      15,965
  Other assets                               56,700      29,839      18,657
       Total assets                      $4,722,165  $4,638,144  $4,425,626

  Liabilities and Stockholders' Equity
  Secured debt                           $1,058,247  $1,014,054    $940,276
  Unsecured senior debt securities          755,000     755,000     680,000
  Unsecured credit facility                      --      94,000     216,000
  Alliance Fund II credit facility           98,100          --          --
  Other liabilities                         201,031     177,915     147,042
      Total liabilities                   2,112,378   2,040,969   1,983,318
  Minority interests:
    Preferred units                         342,966     342,911     318,053
    Minority interests                      476,937     457,372     356,325
      Total minority interests              819,903     800,283     674,378
  Stockholders' equity:
    Common stock                          1,693,784   1,700,792   1,671,830
    Preferred stock                          96,100      96,100      96,100
      Total stockholders' equity          1,789,884   1,796,892   1,767,930
       Total liabilities and
        stockholders' equity             $4,722,165  $4,638,144  $4,425,626

  (A) On May 31, 2001 the Company acquired all of the voting stock of
  Headlands Realty Corporation and its Investment Management Division.
  The Company began consolidating Headlands Realty Corporation and its
  Investment Management Division for financial reporting purposes effective
  May 31, 2001.

  (B) Net of impairment reserves totaling $23.2 million at June 30, 2001,
  $7.2 million at March 31, 2001 and $2.5 million at December 31, 2000.

                  Consolidated Statements of Operations
                (dollars in thousands, except share data)

                         Quarters Ended June 30,   Six Months Ended June 30,
                           2001           2000       2001           2000
  Revenues
  Rental revenues (B)    $139,535       $110,597   $275,336       $218,863
  Equity in
   earnings of
   unconsolidated
   joint ventures           1,255          1,317      2,729          2,559
  Investment
   management
   income (A)               1,544            704      3,964            952
  Interest and
   other income             3,692            861      8,831          1,428
    Total revenues        146,026        113,479    290,860        223,802
  Operating
   Expenses
  Property
   operating               33,640         25,088     66,560         50,061
  Interest,
   including
   amortization (C)        30,206         20,002     61,758         40,344
  Depreciation and
   amortization            27,323         22,631     54,177         41,823
  General,
   administrative,
   and other (A)            9,201          5,984     17,384         11,335
  Loss on
   investments in
   other companies         16,103             --     20,758             --
    Total expenses        116,473         73,705    220,637        143,563
       Income from
        operations         29,553         39,774     70,223         80,239
  Minority
   interests:
    Preferred units        (7,345)        (5,962)   (14,203)       (11,572)
    Minority
     interests             (9,629)        (4,221)   (15,768)        (8,021)
       Total
        minority
        interests         (16,974)       (10,183)   (29,971)       (19,593)
     Net income
      before gain from
      disposition of real
      estate               12,579         29,591     40,252         60,646
  Gain from
   disposition of
   real estate, net
   of minority
   interests               17,792            416     34,559            405
    Net income
     before
     extraordinary items   30,371         30,007     74,811         61,051
  Extraordinary
   items                     (438)            --       (438)            --
       Net income          29,933         30,007     74,373         61,051
  Preferred stock
   dividends               (2,125)        (2,125)    (4,250)        (4,250)
  Net income
   available to
   common
   stockholders           $27,808        $27,882    $70,123        $56,801
  Net income per
   common share:
    Basic                   $0.33          $0.33      $0.83          $0.68
    Diluted                 $0.33          $0.33      $0.82          $0.68
  Weighted average
   common shares:
    Basic              84,461,544     83,848,883  84,178,768    83,849,020
    Diluted            85,378,727     84,125,277  85,078,751    83,994,238


  (A) On May 31, 2001 the Company acquired all of the voting stock of
  Headlands Realty Corporation and its Investment Management Division.
  The Company began consolidating Headlands Realty Corporation and its
  Investment Management Division for financial reporting purposes effective
  May 31, 2001.

  (B) Includes straight-line rents of $2,141 and $2,183 for the quarters
  ended June 30, 2001 and 2000, respectively, and $3,469 and $5,343 for the
  six months ended June 30, 2001 and 2000, respectively.

  (C) Net of capitalized interest of $3,616 and $4,179 for the quarters
  ended June 30, 2001 and 2000, respectively and $7,198 and $7,194 for the
  six months ended June 30, 2001 and 2000, respectively.


             Consolidated Statements of Funds from Operations
                (dollars in thousands, except share data)

                                    Quarters Ended       Six Months Ended
                                       June 30,              June 30,
                                   2001       2000        2001       2000

  Income from operations         $29,553     $39,774    $70,223    $80,239

  Real estate related depreciation
   and amortization:
  Total depreciation
   and amortization               27,323      22,631     54,177     41,823
  FF& E Depreciation and
   ground lease amortization (A)   (492)       (231)      (973)       (634)
  FFO attributable to
   minority interests (B)        (8,539)     (2,681)   (15,726)     (5,307)

  Adjustments to derive FFO from
   unconsolidated JV's: (C)
  Company's share of net income  (1,255)     (1,317)    (2,729)     (2,559)
  Company's share of FFO           2,133       1,811      4,253      3,547
  Preferred stock dividends      (2,125)     (2,125)    (4,250)     (4,250)
  Preferred units distributions  (7,345)     (5,962)   (14,203)    (11,572)

  Funds from operations          $39,253     $51,900    $90,772   $101,287

  FFO per common share and unit:
  Basic                            $0.44       $0.58      $1.01      $1.13
  Diluted (D)                      $0.43       $0.58      $1.00      $1.13

  Weighted average common shares
   and units:

Basic 89,691,164 89,822,498 89,680,557 89,758,199

Diluted (D) 90,608,347 90,098,892 90,580,540 89,903,417

  (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 interests' share of NOI for the quarters ended June 30, 2001 and
  2000 was $16,274 and $5,379, respectively, and for the six months ended
  June 30, 2001 and 2000 was $26,220 and $10,141, respectively.

  (C) AMB's share of NOI for the quarters ended June 30, 2001 and 2000 was
  $2,263 and $2,101, respectively, and for the six months ended
  June 30, 2001 and 2000 was $5,081 and $4,109, respectively.

  (D) Includes the dilutive effect of stock options.

 

SOURCE: AMB Properties Corporation

Contact: investors, Victoria A. Robinson, Vice President - Investor
Relations, 877-285-3111, or fax, 415-394-9001, or [email protected], or media,
Christine G. Schadlich, Vice President - Corporate Communications,
415-733-5233, or fax, 415-394-9001, or [email protected], both of AMB
Property Corporation

Media contact & resources

Jennifer Nelson

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

Corporate Profile

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AMB Property Corporation Partners With 10 Institutional Investors to Form AMB Institutional Alliance Fund II
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