AMB Property Corporation , a leading owner and operator of industrial real estate, today reported second quarter 2003 earnings per share (EPS) of $0.19, compared with EPS of $0.31 for the same period in 2002. EPS in the quarter was below the company's guidance of $0.28 to $0.33 per share; the variance was largely a result of the company's decision to postpone the sale of, and the corresponding gain from, one of the company's remaining retail assets. The sale is expected to be completed before year end.

In the first half of 2003, EPS was $0.89, including $0.50 per share of gains on disposition of real estate, up from $0.65 per share in first half 2002 which included $0.03 of gains.

The company's industrial operating portfolio was 91.5% leased at the end of the second quarter, down 100 basis points from March 31, 2003 and down 290 basis points from June 30, 2002. Preliminary data indicate national industrial occupancy at the end of the second quarter was 88.5%. Cash-based same store net operating income decreased 2.4% in the quarter and increased 0.7% year to date.

Hamid R. Moghadam, chairman and CEO, said, "AMB's second quarter occupancy decline was consistent with the stalled economic environment. Importantly, based on preliminary national industrial data, our portfolio continues to outperform the industrial market by approximately 300 basis points. With the reduction in geopolitical tensions, domestic fiscal and monetary stimulus, and historically lean levels of inventory, we believe the stage is set for increased absorption of industrial space. However, persistently weak levels of capital spending and manufacturing output, combined with delayed decision making by users, could drive occupancies still lower before recovery begins. Long term, our outlook is positive and reflected in our increased acquisition and development activity in the second quarter."

Investment Activity

During second quarter 2003, AMB acquired 16 buildings totaling 2.1 million square feet for a total investment of $120.1 million. The company sold two buildings totaling 229,700 square feet for a disposition price of $15.1 million during the same period.

AMB began four development projects during the quarter with an estimated total investment of $42.1 million. AMB's committed industrial development and renovation pipeline through 2005 currently stands at $157.3 million and consists of an expected 2.8 million square feet, of which 60% has been funded and 20% has been preleased.

W. Blake Baird, AMB's president, noted, "During the last four quarters, AMB's share of dispositions has totaled more than $380 million, including assets in markets that no longer fit our investment strategy and properties at valuations we considered to be at premium levels. In addition, we have contributed nearly $75 million to co-investment joint ventures. Although these sales and contributions have diluted our near-term results, we believe they position the company for superior long-term growth and higher return on invested capital with a portfolio increasingly aligned with our investment focus and private capital model. Further, proceeds from these sales, along with our balance sheet and private capital sources, create significant capacity for future deployment. While we will continue to sell assets on an opportunistic basis, we've substantially achieved our near-term strategic disposition goals. Therefore, in the coming quarters, we expect AMB's net investment activity to begin to reflect the acquisition and development opportunities we are seeing in our targeted global distribution markets."

In addition to the developments begun in the second quarter, AMB has agreed to purchase a 32-acre (13 hectare) development parcel adjacent to Tokyo's Narita International Airport -- one of the world's busiest airports for international air cargo. The land purchase, which is subject to customary closing conditions and completion of infrastructure by the seller, is expected to be completed in May 2004. AMB and its development partner AMB BlackPine currently plan to develop approximately 1.5 million square feet (139,400 square meters) in seven distribution facilities on the site. The company's total investment in AMB Narita Air Cargo Center is expected to be approximately $150 million with delivery in four phases between 2005 and 2007.

Financing Activity and Staffing Update

During the quarter, AMB issued and sold 2,000,000 shares of its 6.5% Series L Cumulative Redeemable Preferred Stock at a price of $25.00 per share. In addition, the company announced the redemption of all 3,995,800 shares of its outstanding 8.5% Series A Cumulative Redeemable Preferred Stock; the shares will be redeemed on July 28, 2003.

In a recent promotion, Alison M. Hill was appointed senior vice president of AMB and senior vice president and chief operating officer of AMB's wholly owned subsidiary, AMB Capital Partners, LLC.

Supplemental Reporting Measure

AMB reports funds from operations per fully diluted share and unit (FFOPS) in accordance with the standards established by NAREIT as a supplemental earnings measure. Second quarter 2003 FFOPS was $0.52, compared with $0.60 for the same period in 2002. Current period FFO was above the company's guidance of $0.47 to $0.48 per share primarily as a result of net lease termination fees of $0.03 per share above the company's expectations. FFOPS for the first half of 2003 was $1.13, below 2002 FFOPS for the same period of $1.21.

In light of the SEC's recent rulemaking regarding the use of non-GAAP financial measures and its related discussions of FFO, the company determined that it should no longer exclude the amortization of investments in leasehold interests from FFO. This change has added $0.01 and $0.02 per share, respectively, to FFO for the quarter and six months ended June 30, 2003. Excluding this change and the net lease termination fees referred to above, second quarter 2003 FFOPS would have been in line with the company's guidance. A reconciliation from net income to funds from operations is provided in the attached tables and published in AMB's quarterly supplemental analyst package and is available on the company's website at www.amb.com.

Conference Call and Supplemental Information

The company will host a conference call to discuss its second quarter 2003 results on July 9, 2003 at 11:00 AM PDT/2:00 PM EDT. Stockholders and interested parties may listen to a live broadcast of the conference call by dialing +1 719 457 2641 and using reservation code 489745 or by webcast through a link on the company's website at www.amb.com. If you are unable to listen to the live conference call, a telephone and webcast replay will be available after 5:00 PM PDT on Wednesday, July 9, 2003. The telephone replay will be available until 5:00 PM PDT on Wednesday, July 30, 2003 and can be accessed by dialing +1 719 457 0820 and using reservation code 489745. The webcast can be accessed through a link on the company's website at www.amb.com and will be available until 5:00 PM PDT on Wednesday, July 30, 2003.

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 Monday, July 14 by 5:00 PM PDT.

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 June 30, 2003 AMB owned, managed and had renovation and development projects totaling 96.5 million square feet (9.0 million square meters) and 1,005 buildings in 30 markets. AMB invests in industrial properties located predominantly in the infill submarkets of its targeted markets. The company's portfolio is comprised largely of High Throughput Distribution(R) facilities -- industrial properties built for speed and located near airports, seaports and ground transportation systems.

AMB's press releases are available on the company website at www.amb.com or by contacting the Investor Relations department at 1-877-285-3111.

This document 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 customers, 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 divest of properties that we have contracted to sell or timely reinvest proceeds from any such divestitures, 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 our status as a real estate investment trust under the Internal Revenue Code, environmental uncertainties, risks related to natural disasters, financial market fluctuations, changes in real estate and zoning laws, increases in real property tax rates and the risks of doing business internationally, including currency risks. 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 March 31, 2003. The quarterly financial data contained herein is unaudited and the historical financial information is not necessarily indicative of future results.

                         Consolidated Balance Sheets
                            (dollars in thousands)

                                                       As of
                                          June 30,   March 31,  December 31,
                                            2003        2003        2002
  Assets
  Investments in real estate:
    Total investments in properties      $5,016,014  $4,869,741  $4,925,982
    Accumulated depreciation               (412,990)   (382,900)   (362,540)
      Net investments in properties       4,603,024   4,486,841   4,563,442
    Investment in unconsolidated joint
     ventures                                68,566      67,754      64,428
    Properties held for divestiture, net     73,000      59,742     107,871
      Net investments in real estate      4,744,590   4,614,337   4,735,741
  Cash and cash equivalents                  91,161     149,908     117,214
  Mortgage receivable                        13,097      13,112      13,133
  Accounts receivable, net                   83,116      76,056      74,207
  Other assets                               44,300      51,909      52,199
      Total assets                       $4,976,264  $4,905,322  $4,992,494

  Liabilities and Stockholders' Equity
  Secured debt                           $1,215,135  $1,250,528  $1,284,675
  Unsecured senior debt securities          800,000     800,000     800,000
  Unsecured debt                              9,909      10,050      10,186
  Alliance Fund II credit facility               --      51,500      45,500
  Unsecured credit facility                  19,420      17,464      95,000
  Accounts payable and other liabilities    167,621     188,050     181,716
      Total liabilities                   2,212,085   2,317,592   2,417,077
  Minority interests:
    Preferred units                         308,369     308,369     308,369
    Minority interests                      733,304     592,260     582,898
      Total minority interests            1,041,673     900,629     891,267
  Stockholders' equity:
    Common stock                          1,578,087   1,591,107   1,588,156
    Preferred stock                         144,419      95,994      95,994
      Total stockholders' equity          1,722,506   1,687,101   1,684,150
      Total liabilities and
       stockholders' equity              $4,976,264  $4,905,322  $4,992,494


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


                           For the Quarters Ended   For the Six Months Ended
                                    June 30,                June 30,
                                  2003        2002        2003        2002
  Revenues and other income
  Rental revenues              $147,961    $139,124    $305,233    $279,179
  Equity in earnings of
   unconsolidated joint
   ventures                       1,622       1,638       2,857       3,121
  Private capital income          3,555       3,114       5,916       5,702
  Interest and other income       1,549       3,330       2,942       7,312
    Total revenues              154,687     147,206     316,948     295,314
  Expenses
  Property operating
   expenses                      38,607      33,671      78,803      67,620
  Interest, including
   amortization (A)              36,645      36,484      73,750      71,177
  Depreciation and
   amortization (B)              38,094      29,967      72,893      57,678
  General and administrative     12,170      10,762      24,344      21,831
    Total expenses              125,516     110,884     249,790     218,306
       Income before
        minority interests
        and gains                29,171      36,322      67,158      77,008
  Minority interests' share
   of income:
    Preferred units              (6,379)     (6,510)    (12,759)    (12,367)
    Minority interests           (9,843)     (8,760)    (20,941)    (18,522)
       Total minority
        interests share of
        income                  (16,222)    (15,270)    (33,700)    (30,889)
       Income from
        continuing
        operations, before
        gains from
        dispositions             12,949      21,052      33,458      46,119
  Gains from dispositions of
   real estate, net of
   minority interests                --       2,768       7,429       2,480
       Income from
        continuing
        operations               12,949      23,820      40,887      48,599
  Discontinued operations:
    Income attributable to
     discontinued
     operations, net of
     minority interests           1,310       5,030       3,106      10,554
    Gains from dispositions
     of real estate, net of
     minority interests           3,867          --      33,511          --
       Total discontinued
        operations                5,177       5,030      36,617      10,554
         Net income              18,126      28,850      77,504      59,153
  Preferred stock dividends      (2,195)     (2,125)     (4,318)     (4,250)
  Net income available to
   common stockholders          $15,931     $26,725     $73,186     $54,903

  Net income per common
   share (diluted)                $0.19       $0.31       $0.89       $0.65

  Weighted average common
   shares (diluted)          82,465,984  85,529,416  82,520,038  85,120,197

  (A) Interest expense for the quarter and six months ended June 30, 2002,
      was adjusted for the retroactive adoption of SFAS No. 145, which
      resulted in the reclassification of debt extinguishment costs of
      $0.1 million and $0.3 million, respectively, from extraordinary items.
  (B) Includes unrealized losses resulting from the impairment of
      investments in real estate and leasehold interests that continue to he
      held for long-term investment.  For the quarter and six months ended
      June 30, 2003, such amounts totaled $5.2 million.  Also, during the
      quarter ended June 30, 2003, the Company recorded a reduction of
      depreciation expense of $2.1 million for the recovery, through a legal
      settlement, of capital expenditures paid in prior years.


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


                           For the Quarters Ended   For the Six Months Ended
                                     June 30,                June 30,
                                  2003       2002(A)      2003       2002(B)
  Net income                    $18,126     $28,850     $77,504     $59,153
  Gains from dispositions of
   real estate                   (3,867)     (2,768)    (40,940)     (2,480)
  Real estate related
   depreciation and
   amortization:
    Total depreciation and
     amortization                38,094      29,967      72,893      57,678
    Discontinued operations'
     depreciation                   240       2,005         614       3,969
    FF& E depreciation             (189)       (174)       (378)       (347)
    Ground lease
     amortization(B)                 --        (345)         --        (690)
  Adjustments to derive FFO
   from consolidated JVs:
    Minority interests            9,834       8,869      21,017      18,635
    FFO attributable to
     minority interests         (15,519)    (11,274)    (30,502)    (24,118)
  Adjustments to derive FFO
   from unconsolidated JVs:
    AMB's share of net
     income                      (1,622)     (1,638)     (2,857)     (3,121)
    AMB's share of FFO            2,645       2,700       5,275       4,673
  Preferred stock dividends      (2,195)     (2,125)     (4,318)     (4,250)
      Funds from operations     $45,547     $54,067     $98,308    $109,102

      FFO per common share
       and unit (diluted)         $0.52       $0.60       $1.13       $1.21

      Weighted average
       common shares and
       units (diluted)       87,302,896  90,462,332  87,364,056  90,055,320

  (A) FFO for the quarter and six months ended June 30, 2002, was adjusted
      for the retroactive adoption of SFAS No. 145 for the treatment of
      extraordinary items, resulting in a reduction of $0.1 million and
      $0.3 million, respectively, from previously reported FFO.
  (B) In the quarter ended June 30, 2003, and effective January 1, 2003, the
      Company discontinued its practice of deducting amortization of
      investments in leasehold interests from FFO as such an adjustment is
      not provided for in NAREIT's FFO definition.  As a result, FFO for the
      six months ended June 30, 2003, includes an adjustment of $0.9 million
      to reflect the change. Had the Company not made the change, reported
      FFO per share for the quarter and six months ended June 30, 2003,
      would have been $0.51 and $1.11, respectively. Had the Company made
      the change effective January 1, 2002, reported FFO per share for the
      quarter and six months ended June 30, 2002, would have been $0.60 and
      $1.22, respectively.

SOURCE: AMB Property Corporation

CONTACT: Investors/Analysts: Michelle C. Wells, 1-877-285-3111, or
[email protected], or Media: Lauren L. Barr, +1-415-733-9477, 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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