Exhibit 99.1
AMB PROPERTY CORPORATION® ANNOUNCES FIRST QUARTER 2010 RESULTS
SAN FRANCISCO, April 21, 2010 — 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. |
|
|
|
|
|
Page 2 |
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
|
|
|
|
|
|
Page 3 |
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
|
|
|
|
|
|
Page 4 |
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 intangibiles 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
|
|
|
|
|
|
Page 5 |
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 acquisiti
ons 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
|
|
|
|
|
|
Page 6 |
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.
AMB CONTACTS
| |
|
|
|
Tracy A. Ward
|
|
Jon M. Boilard |
Vice President, IR & Corporate Communications
|
|
Director, Media and Public Relations |
Direct +1 415 733 9565
|
|
Direct +1 415 733 9561 |
Email tward@amb.com
|
|
Email jboilard@amb.com |
|
|
|
|
|
|
Page 7 |
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. |
|
|
|
|
|
|
Page 8 |
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 |
|
|
|
|
|
|
Page 9 |
|
|
|
| |
|
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. |
|
|
|
|
|
|
Page 10 |
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 |
|
|
|
|
|
|
|
|
