U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

AMB PROPERTY CORPORATION

(Exact name of registrant as specified in its charter)

Maryland		001-13545		94-3281941
(State or other jurisdiction of incorporation)		(Commission file number)		(I.R.S. employer identification number)

Pier 1, Bay 1, San Francisco, California 94111
(Address of principal executive offices) (Zip code)

415-394-9000
(Registrants’ telephone number, including area code)

n/a
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On April 21, 2010, we issued a press release entitled “AMB Property Corporation Announces First Quarter 2010 Results,” which sets forth disclosure regarding our results of operation for the first quarter 2010. A copy of the press release is attached hereto as Exhibit 99.1. This section and the attached exhibit are provided under Item 2.02 of Form 8-K and are furnished to, but not filed with, the U.S. Securities and Exchange Commission.

ITEM 8.01 OTHER EVENTS.

On April 21, 2010, we reported results for the first quarter 2010. Funds from operations, as adjusted, per fully diluted share and unit 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 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.

Owned and Managed Portfolio Operating Results

Our operating results were in line with expectations for the first quarter of 2010. Our 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, 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 our operating portfolio decreased 9.1 percent.

Leasing Activity

During the quarter, we commenced leases totaling approximately 8.4 million square feet (784,000 square meters) in our global operating portfolio and leased approximately 1.2 million square feet (107,000 square meters) in our global development portfolio.

Investment Activity

As previously announced, our two open-end funds received investments during the first quarter comprising:

	•		$150 million investment by us, consisting of $100 million in AMB U.S. Logistics Fund (formerly AMB Alliance Fund III) 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 us and $29 million from new and existing third-party equity investors.

During the quarter, AMB U.S. Logistics Fund acquired two assets for a total investment of approximately $45.6 million. We also acquired our first land parcel in Brazil through our 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, we 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

Our liquidity at March 31, 2010 was $1.2 billion, consisting of more than $900 million of availability on our lines of credit and approximately $250 million of cash, cash equivalents and restricted cash.

Subsequent to quarter end, we completed the issuance and sale of approximately 18.2 million shares of our common stock in a public offering at a price of $27.50 per share, generating approximately $479 million in net proceeds. We intend to use the net proceeds for general corporate purposes, which may include equity investments in co-investment funds, acquisitions of properties, portfolios of properties or interests in property-owning or real estate-related entities; development, redevelopment or value-added conversion activities; the repayment of indebtedness (which may include intercompany indebtedness); the redemption or other repurchase of outstanding securities; loans to affiliated entities; capital expenditures and increasing our working capital. Pending such uses, we used the net proceeds to reduce borrowings under our unsecured credit facilities and invested in short-term securities.

SUPPLEMENTAL EARNINGS MEASURES

Included in the footnotes to our attached financial statements is a discussion of why management believes FFO, as adjusted, and FFOPS, as adjusted (or 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 our 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, is provided in the attached tables.

We define net operating income, or 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. We believe 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 our 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 our operating performance with that of other companies. Real estate impairment losses have been excluded in deriving NOI because we do not consider our impairment losses to be a property operating expense. We believe 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 our assets but do not reflect the current operating performance of the assets with respect to their revenues or expenses. Our 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 our real estate operations and should be excluded from our calculation of NOI.

We consider cash-basis same store net operating income, or SS NOI to be a useful supplemental measure of our operating performance for properties that are considered part of the same store pool. We define 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. We consider 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, we believe that SS NOI helps investors compare the operating performance of our 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, our 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).

		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

“Owned and managed” is defined by us as assets in which we have at least a 10 percent ownership interest, are the property or asset manager, and which we currently intend to hold for the long-term.

We are an 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, we 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. We invest in properties located predominantly in the infill submarkets of our targeted markets. Our portfolio comprises High Throughput Distribution^® facilities—industrial properties built for speed and located near airports, seaports and ground transportation systems.

FORWARD LOOKING STATEMENTS

Some of the information included in this report contains forward-looking statements, such as those related to 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), 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. All of our forward-looking statements are qualified in their entirety by this statement. 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 our business activities, including refinancing and interest rate risks (including inflation risks); our failure to obtain, renew, or extend necessary financing or access the debt or equity markets; our failure to maintain our current credit agency ratings or comply with our debt covenants; risks related to our 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 we expect; unknown liabilities acquired in connection with the acquired properties, portfolios of properties, or inte rests in real-estate related entities; our failure to successfully integrate acquired properties and operations; risks and uncertainties affecting property development, redevelopment and value-added conversion (including construction delays, cost overruns, our inability to obtain necessary permits and financing, our inability to lease properties at all or at favorable rents and terms, and public opposition to these activities); our failure to set up additional funds, attract additional investment in existing funds or to contribute properties to our co-investment ventures due to such factors as our 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 our 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

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

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

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

     (d) Exhibits:

Exhibit
Number		Description
99.1		AMB Property Corporation Press Release dated April 21, 2010.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibits

Exhibit
Number		Description
99.1		AMB Property Corporation Press Release dated April 21, 2010.