SAN FRANCISCO, April 21 /PRNewswire-FirstCall/ -- AMB Property
Corporation® (NYSE: AMB), a leading owner, operator and developer
of global industrial real estate, today reported results for the
first quarter 2010. Funds from operations, as adjusted, per fully
diluted share and unit ("FFOPS, as adjusted"), was $0.31 for the first quarter of 2010, as compared
to $0.77 for the same quarter in
2009. The year-over-year change was primarily due to higher
development gains in 2009 relative to 2010.
Net income available to common stockholders per fully diluted
share ("EPS") for the first quarter of 2010 was a loss of
$0.03, as compared to a loss of
$1.24 for the same quarter in 2009,
principally due to non-cash impairment charges incurred in first
quarter 2009.
"In the first quarter of 2010, we made excellent progress on the
key priorities that we established for the year, and we are
beginning to capitalize on growth opportunities," said Hamid R. Moghadam, chairman & CEO. "The
global economic recovery is well underway and the leading
indicators of demand for industrial real estate are gaining
momentum. We are seeing this play out in leasing activity as there
was an encouraging uptick during the first quarter, supporting our
forecast for a recovery of operating fundamentals in the back half
of 2010."
Owned and Managed Portfolio Operating Results
The company's operating results were in line with expectations
for the first quarter of 2010. AMB's operating portfolio was 90.5
percent occupied at March 31, 2010,
with an average occupancy rate of 90.3 percent for the quarter.
Cash-basis same store net operating income ("SS NOI"), without the
effect of lease termination fees, decreased 5.1 percent in the
first quarter 2010 compared with the same period in 2009, driven
primarily by lower average same store occupancies. For the trailing
four quarters ended March 31, 2010,
average rents on renewals and rollovers in AMB's operating
portfolio decreased 9.1 percent.
Leasing Activity
During the quarter, the company commenced leases totaling
approximately 8.4 million square feet (784,000 square meters) in
its global operating portfolio, and leased approximately 1.2
million square feet (107,000 square meters) in its global
development portfolio.
Investment Activity
As previously announced, the company's two open-end funds
received investments during the first quarter comprising:
- $150 million investment by AMB,
consisting of $100 million in AMB
U.S. Logistics Fund and $50 million
in AMB Europe Fund I; and
- $50 million in new third-party
equity in AMB U.S. Logistics Fund.
Additionally, AMB U.S. Logistics Fund cleared its redemption
queue in the first quarter.
Subsequent to quarter end, new investments into AMB U.S.
Logistics Fund totaled an additional $79
million, consisting of $50
million from AMB and $29
million from new and existing third-party equity
investors.
"We are in active discussions to raise capital for both our
existing open-end funds as well as for our new vehicles in all of
the regions where we operate," said Guy F.
Jaquier, president, Europe
& Asia; president, Private
Capital. "There is strong interest from large, global investors who
are on the leading edge of the investment curve and want to align
with an experienced and well-capitalized operator with a focused
strategy."
During the quarter, AMB U.S. Logistics Fund acquired two assets
for a total investment of approximately $45.6 million. The company also acquired its
first land parcel in Brazil
through its joint venture with Cyrela Commercial Properties (CCP).
The 58 acres acquired are in Sao
Paulo and have an estimated build-out potential of 1.2
million square feet (108,000 square meters).
During the quarter, the company completed dispositions of
development assets totaling $22.9
million, including approximately $12.5 million related to an installment sale
completed in the first quarter of 2010, at a stabilized cap rate of
8.2 percent. Development gains recognized in FFO, as adjusted for
the quarter, were $3.3 million with a
margin of 13.6 percent.
Financing Activities
The company's liquidity at March 31,
2010 was $1.2 billion,
consisting of more than $900 million
of availability on its lines of credit and approximately
$250 million of cash, cash
equivalents and restricted cash.
Subsequent to quarter end, the company completed the issuance
and sale of approximately 18.2 million shares of its common stock
in a public offering at a price of $27.50 per share, generating approximately
$479 million in net proceeds. The
company intends to use the proceeds to fund deployment
opportunities including equity investments in its open-end funds
and new ventures, acquisitions, development and other general
corporate purposes. In the interim, the company will use the
proceeds to reduce borrowings on its lines of credit. The offering
allows the company to take advantage of emerging opportunities
while preserving its financial strength.
2010 FFO Guidance
The company maintains its previous full-year 2010 FFO, as
adjusted, guidance of $1.26 to $1.33
per share, which excludes the recognition of gains from development
activities and impairment and restructuring charges. The
company will provide updated details of its outlook for 2010
guidance during its first quarter earnings conference call.
Annual Meeting of Stockholders
The Annual Meeting of Stockholders will be held on Thursday, May 6, 2010 at 2:00 PM PDT / 5:00 PM
EDT. Stockholders are invited to attend the meeting at the
company's global headquarters located at Pier 1, Bay 1,
San Francisco, Calif. The proxy
statement, Annual Report to Stockholders, voting materials and
meeting information were mailed on or about March 24, 2010. Stockholders who are unable to
attend the annual meeting may listen to a live webcast through a
link on the company website at www.amb.com in the Investor
Relations section.
Supplemental Earnings Measures
Included in the footnotes to the company's attached financial
statements is a discussion of why management believes FFO, as
adjusted, and FFOPS, as adjusted, (the "FFO Measures, as adjusted")
are useful supplemental measures of operating performance, ways in
which investors might use the FFO Measures, as adjusted, when
assessing the company's financial performance and the limitations
of the FFO Measures, as adjusted as a measurement tool.
Reconciliation from net income available to common stockholders to
the FFO Measures, as adjusted are provided in the attached tables
and published in the company's quarterly supplemental analyst
package, available on the company's website at www.amb.com.
AMB defines net operating income ("NOI") as rental revenues,
including reimbursements, less property operating expenses. NOI
excludes depreciation, amortization, general and administrative
expenses, restructuring charges, real estate impairment losses,
development profits (losses), gains (losses) from sale or
contribution of real estate interests, and interest expense. AMB
believes that net income, as defined by GAAP, is the most
appropriate earnings measure. However, NOI is a useful supplemental
measure calculated to help investors understand AMB's operating
performance, excluding the effects of costs and expenses which are
not related to the performance of the assets. NOI is widely used by
the real estate industry as a useful supplemental measure, which
helps investors compare AMB's operating performance with that of
other companies. Real estate impairment losses have been excluded
in deriving NOI because AMB does not consider its impairment losses
to be a property operating expense. AMB believes that the exclusion
of impairment losses from NOI is a common methodology used in the
real estate industry. Real estate impairment losses relate to the
changing values of AMB's assets but do not reflect the current
operating performance of the assets with respect to their revenues
or expenses. AMB's real estate impairment losses are non-cash
charges which represent the write down in the value of assets when
estimated fair value over the holding period is lower than current
carrying value. The impairment charges were principally a result of
increases in estimated capitalization rates and deterioration in
market conditions that adversely impacted underlying real estate
values. Therefore, the impairment charges are not related to the
current performance of AMB's real estate operations and should be
excluded from its calculation of NOI.
AMB considers cash-basis same store net operating income ("SS
NOI") to be a useful supplemental measure of our operating
performance for properties that are considered part of the same
store pool. AMB defines SS NOI as NOI on a same store basis
excluding straight line rents and amortization of lease
intangibles. Same store pool includes all properties that are owned
as of the end of both the current and prior year reporting periods
and excludes 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, 2008. AMB considers SS NOI to be an
appropriate and useful supplemental performance measure because it
reflects the operating performance of the real estate portfolio
excluding effects of the aforementioned adjustments and
provides a better measure of actual cash basis rental growth for a
year-over-year comparison. In addition, AMB believes that SS NOI
helps investors compare the operating performance of AMB's real
estate as compared to other companies. While SS NOI 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 our liquidity or
operating performance. SS NOI also does not reflect general and
administrative expenses, interest expenses, real estate impairment
losses, depreciation and amortization costs, capital expenditures
and leasing costs, or trends in development and construction
activities that could materially impact our results from
operations. Further, AMB's computation of SS NOI may not be
comparable to that of other real estate companies, as they may use
different methodologies for calculating SS NOI. A reconciliation
from net income to SS NOI is provided below (dollars in thousands)
and published in AMB's quarterly supplemental analyst package,
available on AMB's website at www.amb.com.
|
For the Quarters
Ended
|
|
|
March
31,
|
|
|
2010
|
|
2009
|
|
Net loss
|
$
(620)
|
|
$
(123,024)
|
|
Private capital income
|
(7,445)
|
|
(11,695)
|
|
Depreciation and
amortization
|
48,634
|
|
42,125
|
|
Real estate impairment
losses
|
-
|
|
175,887
|
|
General and administrative and fund
costs
|
32,265
|
|
31,574
|
|
Restructuring charges
|
2,973
|
|
-
|
|
Total other income and
expenses
|
24,837
|
|
5,954
|
|
Total discontinued
operations
|
154
|
|
(18,485)
|
|
NOI
|
100,798
|
|
102,336
|
|
Less non same-store NOI
|
(16,122)
|
|
(11,468)
|
|
Less non cash
adjustments(1)
|
(2,520)
|
|
(417)
|
|
Cash-basis same-store NOI
|
$
82,156
|
|
$
90,451
|
|
Less lease termination fees
|
$
(638)
|
|
$
(783)
|
|
Cash-basis same-store NOI, excluding
lease termination fees
|
$
81,518
|
|
$
89,668
|
|
|
|
|
|
|
(1) Non-cash adjustments
include straight line rents and amortization of lease intangibles
for the same store pool only.
|
|
|
|
|
|
"Owned and managed" is defined by the company as assets in which
the company has at least a 10 percent ownership interest, is the
property or asset manager, and which it currently intends to hold
for the long-term.
Conference Call Information
The company will host a conference call to discuss first quarter
2010 results on Wednesday, April 21,
2010 at 10:00 AM PDT /
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 64883230. A webcast can be
accessed through the company's website at www.amb.com in the
Investor Relations section.
If you are unable to listen to the live conference call, a
telephone, podcast and webcast replay will be available through the
company's website at www.amb.com in the Investor Relations section
after 12:00 PM PDT / 3:00 PM EDT on Wednesday,
April 21, 2010 until 5:00 PM
PDT / 8:00 PM EDT on
Friday, May 21, 2010 at 800 642 1687
(from the U.S. and Canada) or +1
706 645 9291 (from all other countries), with the reservation code
64883230. The webcast and podcast will be available for the same
time period and can be accessed through the company's website at
http://www.amb.com/ in the Investor Relations section.
AMB Property Corporation.® Local partner to global
trade.™
AMB Property Corporation® is a leading owner, operator and
developer of global industrial real estate, focused on major hub
and gateway distribution markets in the Americas, Europe and Asia. As of March 31,
2010, AMB owned, or had investments in, on a consolidated
basis or through unconsolidated joint ventures, properties and
development projects expected to total approximately 155.7 million
square feet (14.5 million square meters) in 48 markets within 15
countries. AMB invests in properties located predominantly in the
infill submarkets of its targeted markets. The company's portfolio
comprises High Throughput Distribution® 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
+1 415 394 9000.
Some of the information included in this press release contains
forward-looking statements, such as those related to our guidance
regarding our operations and performance (including guidance
regarding FFO, as adjusted excluding development gains), our
ability to address our growth priorities, demand for industrial
real estate, forecasts for economic and real estate recovery,
raising capital for our funds, creation of new funds and joint
ventures, the use of proceeds of our equity offering, our ability
to take advantage of opportunities and preserve financial strength
and information regarding our development projects (including
estimated build-out potential) and the maintenance of a solid
balance sheet, 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 numerous
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," "forecasting," "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 should not be read as guarantees of future performance
or results, and will not necessarily be accurate indicators of
whether, or the time at which, such performance or results will be
achieved. There is no assurance that the events or circumstances
reflected in forward-looking statements will occur or be achieved.
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: changes in general economic conditions
in California, the U.S. or
globally (including financial market fluctuations), global trade or
in the real estate sector (including risks relating to decreasing
real estate valuations and impairment charges); risks associated
with using debt to fund the company's business activities,
including refinancing and interest rate risks (including inflation
risks); the company's failure to obtain, renew, or extend necessary
financing or access the debt or equity markets; the company's
failure to maintain its current credit agency ratings or comply
with its debt covenants; risks related to the company's obligations
in the event of certain defaults under co-investment venture and
other debt; risks associated with equity and debt securities
financings and issuances (including the risk of dilution); defaults
on or non-renewal of leases by customers or renewal at lower than
expected rent or failure to lease at all or on expected terms;
difficulties in identifying properties, portfolios of properties,
or interests in real-estate related entities or platforms to
acquire and in effecting acquisitions on advantageous terms and the
failure of acquisitions to perform as the company expects; unknown
liabilities acquired in connection with the acquired properties,
portfolios of properties, or interests in real-estate related
entities; the company's failure to successfully integrate acquired
properties and operations; risks and uncertainties affecting
property development, redevelopment and value-added conversion
(including construction delays, cost overruns, the company's
inability to obtain necessary permits and financing, the company's
inability to lease properties at all or at favorable rents and
terms, and public opposition to these activities); the company's
failure to set up additional funds, attract additional investment
in existing funds or to contribute properties to its co-investment
ventures due to such factors as its inability to acquire, develop,
or lease properties that meet the investment criteria of such
ventures, or the co-investment ventures' inability to access debt
and equity capital to pay for property contributions or their
allocation of available capital to cover other capital
requirements; risks and uncertainties relating to the disposition
of properties to third parties and the company's ability to effect
such transactions on advantageous terms and to timely reinvest
proceeds from any such dispositions; risks of doing business
internationally and global expansion, including unfamiliarity with
the new markets and currency and hedging risks; risks of changing
personnel and roles; risks related to suspending, reducing or
changing the company's dividends; losses in excess of the company's
insurance coverage; changes in local, state and federal laws and
regulatory requirements, including changes in real estate, tax and
zoning laws; increases in real property tax rates; risks associated
with the company's tax structuring; increases in interest rates and
operating costs or greater than expected capital expenditures;
environmental uncertainties; risks related to natural disasters;
and our failure to qualify and maintain our status as a real estate
investment trust. Our success also depends upon economic
trends generally, various market conditions and fluctuations and
those other risk factors discussed under the heading "Risk Factors"
and elsewhere in our most recent annual report on Form 10-K for the
year ended December 31, 2009.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
For the Quarters
Ended March 31,
|
|
|
2010
|
|
2009
|
|
Revenues
|
|
|
|
|
Rental
revenues
|
$
150,507
|
|
$
151,724
|
|
Private capital
revenues
|
7,445
|
|
11,695
|
|
Total
revenues
|
157,952
|
|
163,419
|
|
Costs and
expenses
|
|
|
|
|
Property operating
costs
|
(49,709)
|
|
(49,388)
|
|
Depreciation and
amortization
|
(48,634)
|
|
(42,125)
|
|
General and
administrative
|
(31,951)
|
|
(31,313)
|
|
Restructuring
charges
|
(2,973)
|
|
-
|
|
Fund
costs
|
(314)
|
|
(261)
|
|
Real estate
impairment losses
|
-
|
|
(175,887)
|
|
Other (expenses)
income(1)
|
(1,191)
|
|
662
|
|
Total costs and
expenses
|
(134,772)
|
|
(298,312)
|
|
Other income and
expenses
|
|
|
|
|
Development
profits, net of taxes
|
4,803
|
|
33,286
|
|
Equity in earnings
(losses) of unconsolidated joint ventures, net
|
3,875
|
|
(34)
|
|
Other income
(expenses)(1)
|
289
|
|
(7,069)
|
|
Interest expense,
including amortization
|
(32,613)
|
|
(32,799)
|
|
Total other income
and expenses, net
|
(23,646)
|
|
(6,616)
|
|
Loss from
continuing operations
|
(466)
|
|
(141,509)
|
|
Discontinued
operations
|
|
|
|
|
Loss attributable
to discontinued operations
|
(154)
|
|
(461)
|
|
Gains from sale of
real estate interests, net of taxes
|
-
|
|
18,946
|
|
Total discontinued
operations
|
(154)
|
|
18,485
|
|
Net
loss
|
(620)
|
|
(123,024)
|
|
Noncontrolling interests' share of net
(income) loss
|
|
|
|
|
Joint venture
partners' share of net loss
|
375
|
|
1,846
|
|
Joint venture
partners' and limited partnership unitholders' share of development
profits
|
(106)
|
|
(1,108)
|
|
Preferred
unitholders
|
-
|
|
(1,432)
|
|
Limited
partnership unitholders
|
200
|
|
5,320
|
|
Total
noncontrolling interests' share of net (income) loss
|
469
|
|
4,626
|
|
Net loss
attributable to AMB Property Corporation
|
(151)
|
|
(118,398)
|
|
Preferred stock
dividends
|
(3,952)
|
|
(3,952)
|
|
Allocation to
participating securities(2)
|
(344)
|
|
(258)
|
|
Net loss available to common
stockholders
|
$
(4,447)
|
|
$
(122,608)
|
|
Net loss per common share
(diluted)
|
$
(0.03)
|
|
$
(1.24)
|
|
Weighted average common shares
(diluted)
|
148,666
|
|
98,916
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes changes in
liabilities and assets associated with AMB’s deferred compensation
plan for the three months ended March 31, 2010 of $919.
(2) Represents net income attributable
to AMB Property Corporation, net of preferred stock dividends,
allocated to outstanding unvested restricted shares. For the three
months ended March 31, 2010, there were 1,228 unvested restricted
shares outstanding. For the three months ended March 31, 2009,
there were 895 unvested restricted shares outstanding.
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF FUNDS FROM OPERATIONS, AS
ADJUSTED(1)
|
|
(in thousands,
except per share data)
|
|
|
For the Quarters
Ended March 31,
|
|
|
2010
|
|
2009
|
|
Net loss available
to common stockholders
|
$
(4,447)
|
|
$
(122,608)
|
|
Gains from sale or
contribution of real estate interests, net of taxes
|
-
|
|
(18,946)
|
|
Depreciation and
amortization
|
|
|
|
|
Total depreciation
and amortization
|
48,634
|
|
42,125
|
|
Discontinued
operations' depreciation
|
26
|
|
1,334
|
|
Non-real estate
depreciation
|
(2,545)
|
|
(2,137)
|
|
Adjustment for
depreciation on development profits
|
(1,546)
|
|
-
|
|
Adjustments to
derive FFO, as adjusted from consolidated joint ventures
|
|
|
|
|
Joint venture
partners' noncontrolling interests (Net loss)
|
(375)
|
|
(1,846)
|
|
Limited
partnership unitholders' noncontrolling interests (Net
loss)
|
(200)
|
|
(5,320)
|
|
Limited
partnership unitholders' noncontrolling interests (Development
profits)
|
106
|
|
1,108
|
|
FFO, as adjusted
attributable to noncontrolling interests
|
(5,380)
|
|
(8,588)
|
|
Adjustments to
derive FFO, as adjusted from unconsolidated joint
ventures
|
|
|
|
|
AMB's share of net
(income) loss
|
(3,875)
|
|
34
|
|
AMB's share of
FFO, as adjusted
|
14,453
|
|
12,135
|
|
Adjustments for
impairment charges and restructuring charges
|
|
|
|
|
Real estate
impairment losses
|
-
|
|
175,887
|
|
Discontinued
operations' real estate impairment losses
|
-
|
|
5,966
|
|
Restructuring
charges
|
2,973
|
|
-
|
|
Allocation to
participating securities(2)
|
(42)
|
|
(450)
|
|
Funds from
operations, as adjusted(1)
|
$
47,782
|
|
$
78,694
|
|
|
|
|
|
|
FFO, as adjusted
per common share and unit (diluted)
|
$
0.31
|
|
$
0.77
|
|
Weighted average
common shares and units (diluted)
|
152,770
|
|
102,353
|
|
|
|
|
|
|
(1) Funds From Operations, as adjusted ("FFO, as
adjusted") and Funds from Operations per Share and Unit, as
adjusted ("FFOPS, as adjusted") (together with FFO, as adjusted,
and FFOPS, as adjusted, the "FFO Measures, as adjusted"). AMB
believes that net income, as defined by U.S. GAAP, is the most
appropriate earnings measure. However, AMB considers funds from
operations, as adjusted (or FFO, as adjusted) and FFO, as adjusted,
per share and unit (or FFOPS, as adjusted) to be useful
supplemental measures of its operating performance. AMB defines
FFOPS, as adjusted, as FFO, as adjusted, per fully diluted weighted
average share of AMB's common stock and operating partnership
units. AMB calculates FFO, as adjusted, as net income or loss
available to common stockholders, 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, as adjusted, of consolidated and unconsolidated joint
ventures. This calculation also includes adjustments for
items as described below.
Unless stated otherwise, AMB includes the gains
from development, including those from value-added conversion
projects, before depreciation recapture, as a component of FFO, as
adjusted. AMB believes gains from development should be
included in FFO, as adjusted, to more completely reflect the
performance of one of our lines of business. AMB believes that
value-added conversion dispositions are in substance land sales and
as such should be included in FFO, as adjusted, consistent with the
real estate investment trust industry's long standing practice to
include gains on the sale of land in funds from operations.
However, AMB's interpretation of FFO, as adjusted, or FFOPS, as
adjusted, 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 NAREIT definition, and may not be comparable to
funds from operations or funds from operations per share and unit
reported by other real estate investment trusts that interpret the
current NAREIT definition differently than AMB does. In
connection with the formation of a joint 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, as adjusted, 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, as adjusted, 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, as
adjusted.
In addition, AMB calculates FFO, as adjusted, to
exclude impairment and restructuring charges, debt extinguishment
losses and the Series D preferred unit redemption discount. The
impairment charges were principally a result of increases in
estimated capitalization rates and deterioration in market
conditions that adversely impacted values. The restructuring
charges reflected costs associated with AMB's reduction in global
headcount and cost structure. Debt extinguishment losses generally
included the costs of repurchasing debt securities. AMB repurchased
certain tranches of senior unsecured debt to manage its debt
maturities in response to the current financing environment,
resulting in greater debt extinguishment costs. The Series D
preferred unit redemption discount reflects the gain associated
with the discount to liquidation preference in the Series D
preferred unit redemption price less costs incurred as a result of
the redemption. Although difficult to predict, these items may be
recurring given the uncertainty of the current economic climate and
its adverse effects on the real estate and financial markets. While
not infrequent or unusual in nature, these items result from market
fluctuations that can have inconsistent effects on AMB's results of
operations. The economics underlying these items reflect market and
financing conditions in the short-term but can obscure AMB's
performance and the value of AMB's long-term investment decisions
and strategies. Management believes FFO, as adjusted, is
significant and useful to both it and its investors. FFO, as
adjusted, more appropriately reflects the value and strength of
AMB's business model and its potential performance isolated from
the volatility of the current economic environment and unobscured
by costs (or gains) resulting from AMB's management of its
financing profile in response to the tightening of the capital
markets. However, in addition to the limitations of FFO Measures,
as adjusted, generally discussed below, FFO, as adjusted, does not
present a comprehensive measure of AMB's financial condition and
operating performance. This measure is a modification of the NAREIT
definition of funds from operations and should not be used as an
alternative to net income or cash as defined by U.S.
GAAP.
AMB believes that the FFO Measures, as adjusted,
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, the FFO Measures, as adjusted, are supplemental measures of
operating performance for real estate investment trusts that
exclude historical cost depreciation and amortization, among other
items, from net income available to common stockholders, as defined
by U.S. GAAP. AMB believes that the use of the FFO Measures, as
adjusted, 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 the FFO Measures, as adjusted, 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, the FFO Measures, as
adjusted, can help the investing public compare the operating
performance of a company's real estate between periods or as
compared to other companies. While funds from operations and funds
from operations per share and unit are relevant and widely used
measures of operating performance of real estate investment trusts,
the FFO Measures, as adjusted, 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. The FFO Measures, as adjusted,
also do not consider the costs associated with capital expenditures
related to AMB's real estate assets nor are the FFO Measures, as
adjusted, necessarily indicative of cash available to fund AMB's
future cash requirements. Management compensates for the
limitations of the FFO Measures, as adjusted, by providing
investors with financial statements prepared according to U.S.
GAAP, along with this detailed discussion of the FFO Measures, as
adjusted, and a reconciliation of the FFO Measures, as adjusted, to
net income available to common stockholders, a U.S. GAAP
measurement.
|
|
|
|
|
|
The following table reconciles projected FFO, as
adjusted excluding AMB's share of development gains (or "Core FFO")
from projected net income available to common stockholders for the
year ended December 31, 2010:
|
|
|
2010
|
|
|
Low
|
High
|
|
|
|
|
|
Projected net income available to
common stockholders
|
$ 0.01
|
$ 0.08
|
|
AMB's share of projected depreciation
and amortization
|
1.29
|
1.29
|
|
AMB's share of depreciation on
development profits recognized to date
|
(0.01)
|
(0.01)
|
|
Impact of additional dilutive
securities, other, rounding
|
(0.03)
|
(0.03)
|
|
Projected Funds From Operations, as
adjusted (FFO, as adjusted)
|
$
1.26
|
$
1.33
|
|
|
|
|
|
Restructuring charges
|
0.02
|
0.02
|
|
AMB's share of development gains
recognized to date
|
(0.02)
|
(0.02)
|
|
Projected FFO, as adjusted excluding
AMB's share of
|
|
|
|
development gains
(or "Core FFO, as adjusted")(3)
|
$
1.26
|
$
1.33
|
|
Amounts are expressed per share, except FFO, as
adjusted and FFO, as adjusted, excluding AMB's share of development
gains, which are expressed per share and unit.
(2) Represents amount of FFO allocated
to outstanding unvested restricted shares. For the three months
ended March 31, 2010, there were 1,228 unvested restricted shares.
For the three months ended March 31, 2009, there were 895 unvested
restricted shares.
(3) As development gains are difficult to predict
in the current economic environment, management believes Projected
FFO, as adjusted, excluding AMB's share of development gains
is the more appropriate and useful measure to reflect its
assessment of AMB's projected operating performance.
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|
|
|
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(dollars in
thousands)
|
|
|
As
of
|
|
|
March 31,
2010
|
|
December 31,
2009
|
|
Assets
|
|
|
|
|
Investments in
real estate
|
|
|
|
|
Total investments
in properties
|
$
6,780,943
|
|
$
6,708,660
|
|
Accumulated
depreciation and amortization
|
(1,156,998)
|
|
(1,113,808)
|
|
Net investments in
properties
|
5,623,945
|
|
5,594,852
|
|
Investments in
unconsolidated joint ventures
|
606,838
|
|
462,130
|
|
Properties held
for sale or contribution, net
|
147,838
|
|
214,426
|
|
Net investments in
real estate
|
6,378,621
|
|
6,271,408
|
|
Cash and cash
equivalents and restricted cash
|
175,338
|
|
206,077
|
|
Accounts
receivable, net
|
142,393
|
|
155,958
|
|
Other
assets
|
213,119
|
|
208,515
|
|
Total assets
|
$
6,909,471
|
|
$
6,841,958
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Liabilities
|
|
|
|
|
Secured
debt
|
$
963,893
|
|
$
1,096,554
|
|
Unsecured senior
debt
|
1,155,945
|
|
1,155,529
|
|
Unsecured credit
facilities
|
715,998
|
|
477,630
|
|
Other
debt
|
477,884
|
|
482,883
|
|
Accounts payable
and other liabilities
|
344,656
|
|
338,042
|
|
Total
liabilities
|
3,658,376
|
|
3,550,638
|
|
Equity
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Common
equity
|
2,676,198
|
|
2,716,604
|
|
Preferred
equity
|
223,412
|
|
223,412
|
|
Total
stockholders' equity
|
2,899,610
|
|
2,940,016
|
|
Noncontrolling
interests
|
|
|
|
|
Joint venture
partners
|
291,283
|
|
289,909
|
|
Limited
partnership unitholders
|
60,202
|
|
61,395
|
|
Total
noncontrolling interests
|
351,485
|
|
351,304
|
|
Total
equity
|
3,251,095
|
|
3,291,320
|
|
Total liabilities and
equity
|
$
6,909,471
|
|
$
6,841,958
|
|
|
|
|
|
|
|
|
|
|
SOURCE AMB Property Corporation