Exhibit 99.1
FOR IMMEDIATE RELEASE
AMB PROPERTY CORPORATION® ANNOUNCES SECOND QUARTER 2010 RESULTS
SAN FRANCISCO, July 21, 2010 — AMB Property Corporation® (NYSE: AMB), a leading
owner, operator and developer of global industrial real estate, today reported results for the
second quarter 2010. Funds from operations, as adjusted, per fully diluted share and unit (“FFOPS,
as adjusted”) was $0.30 for the second quarter of 2010, as compared to $0.37 for the same quarter
in 2009. FFO, as adjusted for the second quarter of 2010, excludes $0.01 of restructuring and debt
extinguishment charges.
Net income available to common stockholders per fully diluted share (“EPS”) for the second quarter
of 2010 was $0.02, as compared to $0.12 for the same quarter in 2009. The year-over-year change was
primarily due to higher depreciation expense and lower gains from disposition of operating
properties.
“Our second quarter results came in slightly ahead of our expectations and our operating performance has begun to recover.
While we are encouraged by the recovery of many leading indicators of our business, including
global ocean and air cargo volumes, the economic turbulence in the second quarter appears to have
left our customers in certain markets more cautious about leasing decisions,” said Hamid R.
Moghadam, chairman and CEO. “Consequently, we expect this dynamic will contribute to lower
full-year 2010 results than previously expected, but remain confident in the prospects
for AMB and industrial real estate in 2011 and beyond.”
Owned and Managed Portfolio Operating Results
Occupancy in AMB’s operating portfolio was 91.8 percent at June 30, 2010, up 130 basis points
from March 31, 2010. Average occupancy during the second quarter was 90.1 percent. Cash-basis same
store net operating income (“SS NOI”), without the effect of lease termination fees, decreased 6.0
percent in the second quarter of 2010 compared with the same period in 2009, driven primarily by
lower average same store occupancy and increased levels of free rent. Average rent on renewals and
rollovers in AMB’s operating portfolio decreased 11.2 percent for the trailing four quarters ended
June 30, 2010.
Leasing Activity
The company commenced leases totaling approximately 7.9 million square feet (735,400 square
meters) in its global operating portfolio during the quarter and 33.9 million square feet (3.2
million square meters) for the trailing four quarters ended June 30, 2010.
In addition, AMB leased approximately 1.6 million square feet (149,300 square meters) in its
global development portfolio during the quarter.
Investment Activity
During the quarter, acquisitions totaled $42.7 million, including $29.4 million for AMB Europe
Fund I and $13.3 million for AMB’s wholly-owned portfolio. The company also acquired a land
Pier 1,
Bay 1 San Francisco, California 94111 United States Main +1 415 394 9000 Fax +1 415 394 9001
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parcel in Brazil, the second acquisition through its joint venture with Cyrela Commercial
Properties (CCP). The 48 acres have estimated build-out potential of 728,800 square feet (67,700
square meters).
Subsequent to quarter end, the company’s two open-ended funds received capital commitments
comprising:
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$50.5 million in third-party equity in AMB U.S. Logistics Fund; and |
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$42.8 million in third-party equity in AMB Europe Fund I. |
Disposition Activities
During the second quarter, the company completed property dispositions and contributions of
$35 million, with a 6.0 percent capitalization rate, comprising:
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The sale of five properties in the Americas for an aggregate price of $12.6
million; and |
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The transfer of two assets to AMB Europe Fund I in exchange for additional units
equal to the fair value of the assets, of $22.4 million. |
| During the first half of 2010, the company
completed property dispositions and contributions of $57.9 million, with a stabilized
capitalization rate of 6.9 percent. |
Financing Activities
As previously announced on April 2010, 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 used the proceeds for
general corporate purposes, including the reduction of borrowings on its lines of credit and the
funding of equity investments into AMB U.S. Logistics Fund.
The company completed more than $428 million of debt repayments and extensions during the second
quarter and $678 million year to date. AMB’s share of total debt was reduced by approximately $264
million during the quarter, and at June 30, 2010, AMB’s share of total debt to share of total
assets was 40.5 percent, as compared to 44.8 percent at the end of the first quarter of 2010.
The company’s liquidity at June 30, 2010 was approximately $1.5 billion, consisting of more than
$1.2 billion of availability on its lines of credit and approximately $292 million of unrestricted
cash and cash equivalents.
Subsequent to quarter end, the company closed two yen-denominated financing transactions in Japan
totaling $189 million (USD equivalent). The financings consisted of a $113 million 10-year
unsecured corporate term-loan at a fixed rate of 3.25 percent and a $76 million non-recourse
seven-year mortgage loan at a 2.9 percent fixed rate. The proceeds from both financings were used
to pay down borrowings on the company’s yen line of credit.
2010 FFO Guidance
The company revises its previous full-year 2010 Core FFO, as adjusted guidance to $1.20 to
$1.26 per share, excluding the recognition of gains from development activities, early debt
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extinguishment costs and restructuring charges. The company will provide updated details of its
outlook for 2010 guidance during its second quarter earnings conference call.
Supplemental Earnings Measure
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 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 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 gains (losses), 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 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 Cash-basis 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 non-cash 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
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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. Reconciliation from net income to SS NOI is 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.
The
following table reconciles consolidated cash-basis SS NOI and NOI
from net loss for the three and six months ended June 30, 2010 and
2009 (dollars in thousands):
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For the Quarters Ended |
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For the Six Months Ended |
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June 30, |
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June 30, |
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2010 |
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2009 |
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2010 |
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2009 |
|
Net income (loss) |
|
$ |
9,313 |
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$ |
29,034 |
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$ |
8,693 |
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$ |
(94,322 |
) |
Private capital income |
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(6,845 |
) |
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(7,795 |
) |
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(14,290 |
) |
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(19,490 |
) |
Depreciation and amortization |
|
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48,278 |
|
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38,523 |
|
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|
96,667 |
|
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80,427 |
|
Real estate impairment losses |
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— |
|
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— |
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— |
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175,887 |
|
General and administrative and fund costs |
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30,246 |
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25,963 |
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62,511 |
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57,538 |
|
Restructuring charges |
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872 |
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3,824 |
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3,845 |
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3,824 |
|
Total other income and expenses |
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26,094 |
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20,824 |
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50,931 |
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26,778 |
|
Total discontinued operations |
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(4,659 |
) |
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(12,549 |
) |
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(4,904 |
) |
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(31,418 |
) |
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NOI |
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103,299 |
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97,824 |
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203,453 |
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199,224 |
|
Less non same-store NOI |
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(17,894 |
) |
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(9,562 |
) |
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(33,440 |
) |
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(20,293 |
) |
Less non cash adjustments(1) |
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(2,698 |
) |
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77 |
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(5,219 |
) |
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(350 |
) |
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Cash-basis same-store NOI |
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$ |
82,707 |
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$ |
88,339 |
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$ |
164,794 |
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$ |
178,581 |
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Less lease termination fees |
|
$ |
(596 |
) |
|
$ |
(478 |
) |
|
$ |
(1,233 |
) |
|
$ |
(1,261 |
) |
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Cash-basis same-store NOI, excluding lease termination fees |
|
$ |
82,111 |
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$ |
87,861 |
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$ |
163,561 |
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$ |
177,320 |
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| (1) |
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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 second quarter 2010 results on Wednesday,
July 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 84063539. 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 and webcast replay will be
available through the company’s website at www.amb.com in the
Investor Relations section until 8:00
PM EDT/5:00 PM PDT on Friday, August 20, 2010 at 800 642 1687 (from the U.S. and Canada) or +1 706
645 9291 (from all other countries), with the reservation code 84063539. 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.™
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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 June 30, 2010, AMB owned, or had investments in, on a consolidated basis or through
unconsolidated joint ventures, properties and development projects expected to total approximately
156.1 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 the recovery of our operating performance, long term prospects for AMB
and industrial real estate, the recovery of leading business indicators, estimated build-out
potential of AMB’s acquisitions, 2010 results and FFO, as adjusted, guidance, 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 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,” “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 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 regulatory requirements, including changes in real estate 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
CONTACTSmailto:
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Tracy A. Ward
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Jon M. Boilard |
Vice President, IR & Corporate Communications
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Director, Media and Public Relations |
Direct +1 415 733 9565
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Direct +1 415 733 9561 |
Email tward@amb.com
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Email jboilard@amb.com |
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Page 6 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
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For the Quarters Ended June 30, |
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For the Six Months Ended June 30, |
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2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Revenues |
|
|
|
|
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|
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|
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|
Rental revenues |
|
$ |
151,773 |
|
|
$ |
140,777 |
|
|
$ |
301,306 |
|
|
$ |
291,253 |
|
Private capital revenues |
|
|
6,845 |
|
|
|
7,795 |
|
|
|
14,290 |
|
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|
19,490 |
|
|
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|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
158,618 |
|
|
|
148,572 |
|
|
|
315,596 |
|
|
|
310,743 |
|
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|
|
|
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|
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|
Costs and expenses |
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
Property operating costs |
|
|
(48,474 |
) |
|
|
(42,953 |
) |
|
|
(97,853 |
) |
|
|
(92,029 |
) |
Depreciation and amortization |
|
|
(48,278 |
) |
|
|
(38,523 |
) |
|
|
(96,667 |
) |
|
|
(80,427 |
) |
General and administrative |
|
|
(30,093 |
) |
|
|
(25,641 |
) |
|
|
(62,043 |
) |
|
|
(56,954 |
) |
Restructuring charges |
|
|
(872 |
) |
|
|
(3,824 |
) |
|
|
(3,845 |
) |
|
|
(3,824 |
) |
Fund costs |
|
|
(153 |
) |
|
|
(322 |
) |
|
|
(468 |
) |
|
|
(584 |
) |
Real estate impairment losses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(175,887 |
) |
Other expenses(1) |
|
|
1,271 |
|
|
|
(4,207 |
) |
|
|
80 |
|
|
|
(3,545 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
(126,599 |
) |
|
|
(115,470 |
) |
|
|
(260,796 |
) |
|
|
(413,250 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development profits, net of taxes |
|
|
199 |
|
|
|
— |
|
|
|
5,002 |
|
|
|
33,286 |
|
Equity in earnings of unconsolidated joint ventures, net |
|
|
5,193 |
|
|
|
4,284 |
|
|
|
9,068 |
|
|
|
4,250 |
|
Other income(1) |
|
|
448 |
|
|
|
7,528 |
|
|
|
737 |
|
|
|
459 |
|
Interest expense, including amortization |
|
|
(32,626 |
) |
|
|
(27,772 |
) |
|
|
(65,239 |
) |
|
|
(60,571 |
) |
Loss on early extinguishment of debt |
|
|
(579 |
) |
|
|
(657 |
) |
|
|
(579 |
) |
|
|
(657 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income and expenses, net |
|
|
(27,365 |
) |
|
|
(16,617 |
) |
|
|
(51,011 |
) |
|
|
(23,233 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations |
|
|
4,654 |
|
|
|
16,485 |
|
|
|
3,789 |
|
|
|
(125,740 |
) |
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income attributable to discontinued operations |
|
|
411 |
|
|
|
2,459 |
|
|
|
656 |
|
|
|
2,714 |
|
Gains from sale of real estate interests, net of taxes |
|
|
4,248 |
|
|
|
10,090 |
|
|
|
4,248 |
|
|
|
28,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total discontinued operations |
|
|
4,659 |
|
|
|
12,549 |
|
|
|
4,904 |
|
|
|
31,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
9,313 |
|
|
|
29,034 |
|
|
|
8,693 |
|
|
|
(94,322 |
) |
Noncontrolling interests’ share of net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners’ share of net income |
|
|
(2,068 |
) |
|
|
(4,949 |
) |
|
|
(1,693 |
) |
|
|
(2,771 |
) |
Joint venture partners’ and limited partnership unitholders’ share of development profits |
|
|
21 |
|
|
|
— |
|
|
|
(85 |
) |
|
|
(1,108 |
) |
Preferred unitholders |
|
|
— |
|
|
|
(1,432 |
) |
|
|
— |
|
|
|
(2,864 |
) |
Limited partnership unitholders |
|
|
(75 |
) |
|
|
(1,279 |
) |
|
|
125 |
|
|
|
4,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total noncontrolling interests’ share of net income (loss) |
|
|
(2,122 |
) |
|
|
(7,660 |
) |
|
|
(1,653 |
) |
|
|
(2,702 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to AMB Property Corporation |
|
|
7,191 |
|
|
|
21,374 |
|
|
|
7,040 |
|
|
|
(97,024 |
) |
Preferred stock dividends |
|
|
(3,952 |
) |
|
|
(3,952 |
) |
|
|
(7,904 |
) |
|
|
(7,904 |
) |
Allocation to participating securities(2) |
|
|
(342 |
) |
|
|
(260 |
) |
|
|
(684 |
) |
|
|
(521 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders |
|
$ |
2,897 |
|
|
$ |
17,162 |
|
|
$ |
(1,548 |
) |
|
$ |
(105,449 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share (diluted) |
|
$ |
0.02 |
|
|
$ |
0.12 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.86 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares (diluted) |
|
|
165,658 |
|
|
|
145,380 |
|
|
|
156,793 |
|
|
|
121,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
|
Includes changes in liabilities and assets associated with AMB’s deferred
compensation plan for the three and six months ended June 30, 2010 of $(1,615) and $(696),
respectively. |
| |
| (2) |
|
Represents net income attributable to AMB Property Corporation, net of preferred
stock dividends, allocated to outstanding unvested restricted shares. For the three and six months
ended June 30, 2010, there were 1,222 unvested restricted shares outstanding. For the three and six
months ended June 30, 2009, there were 930 unvested restricted shares outstanding. |
|
|
|
| |
|
|
|
|
|
Page 7 |
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS, AS ADJUSTED(1)
(in thousands, except per share data)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Quarters Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
| |
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Net income (loss) available to common stockholders |
|
$ |
2,897 |
|
|
$ |
17,162 |
|
|
$ |
(1,548 |
) |
|
$ |
(105,449 |
) |
Gains from sale or contribution of real estate interests, net of taxes |
|
|
(4,248 |
) |
|
|
(10,090 |
) |
|
|
(4,248 |
) |
|
|
(28,704 |
) |
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation and amortization |
|
|
48,278 |
|
|
|
38,523 |
|
|
|
96,667 |
|
|
|
80,427 |
|
Discontinued operations’ depreciation |
|
|
243 |
|
|
|
793 |
|
|
|
514 |
|
|
|
2,348 |
|
Non-real estate depreciation |
|
|
(2,012 |
) |
|
|
(1,953 |
) |
|
|
(4,557 |
) |
|
|
(4,090 |
) |
Adjustment for depreciation on development profits |
|
|
— |
|
|
|
— |
|
|
|
(1,546 |
) |
|
|
— |
|
Adjustments to derive FFO, as adjusted from consolidated joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners’ noncontrolling interests (Net income) |
|
|
2,068 |
|
|
|
4,949 |
|
|
|
1,693 |
|
|
|
2,771 |
|
Limited partnership unitholders’ noncontrolling interests (Net income (loss)) |
|
|
75 |
|
|
|
1,279 |
|
|
|
(125 |
) |
|
|
(4,041 |
) |
Limited partnership unitholders’ noncontrolling interests (Development (losses) profits) |
|
|
(2 |
) |
|
|
— |
|
|
|
104 |
|
|
|
1,108 |
|
FFO, as adjusted attributable to noncontrolling interests |
|
|
(7,562 |
) |
|
|
(7,151 |
) |
|
|
(12,942 |
) |
|
|
(15,739 |
) |
Adjustments to derive FFO, as adjusted from unconsolidated joint ventures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB’s share of net income |
|
|
(5,193 |
) |
|
|
(4,284 |
) |
|
|
(9,068 |
) |
|
|
(4,250 |
) |
AMB’s share of FFO, as adjusted |
|
|
15,444 |
|
|
|
11,786 |
|
|
|
29,897 |
|
|
|
23,921 |
|
Adjustments for impairments, restructuring charges and debt extinguishment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate impairment losses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
175,887 |
|
Discontinued operations’ real estate impairment losses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,966 |
|
Restructuring charges |
|
|
872 |
|
|
|
3,824 |
|
|
|
3,845 |
|
|
|
3,824 |
|
Loss on early extinguishment of debt |
|
|
579 |
|
|
|
657 |
|
|
|
579 |
|
|
|
657 |
|
Allocation to participating securities(2) |
|
|
(31 |
) |
|
|
(86 |
) |
|
|
(73 |
) |
|
|
(474 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations, as adjusted(1) |
|
$ |
51,408 |
|
|
$ |
55,409 |
|
|
$ |
99,192 |
|
|
$ |
134,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO, as adjusted per common share and unit (diluted) |
|
$ |
0.30 |
|
|
$ |
0.37 |
|
|
$ |
0.62 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares and units (diluted) |
|
|
169,006 |
|
|
|
148,815 |
|
|
|
160,941 |
|
|
|
125,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (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 |
|
|
|
| |
|
|
|
|
|
Page 8 |
|
|
|
| |
|
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 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. |
| |
| |
|
See Consolidated Statements of Funds from Operations, as adjusted for a reconciliation of FFO, as
adjusted, from net income available to common stockholders. |
| |
| |
|
The following table reconciles projected FFO, as adjusted excluding AMB’s share of development
gains (or “Core FFO, as adjusted”) 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 |
|
$ |
(0.02 |
) |
|
$ |
0.04 |
|
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 |
) |
AMB’s share of gains on dispositions of operating properties recognized to date |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
Impact of additional dilutive securities, other, rounding |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
|
|
|
|
|
Projected Funds From Operations, as adjusted (FFO, as adjusted) |
|
$ |
1.20 |
|
|
$ |
1.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
$ |
1.20 |
|
|
$ |
1.26 |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Amounts are expressed per share, except FFO, as adjusted, and Core FFO, as adjusted, which are
expressed per share and unit. |
| |
| (2) |
|
Represents amount of FFO allocated to outstanding unvested restricted shares. For
the three and six months ended June 30, 2010, there were 1,222 unvested restricted shares. For the
three and six months ended June 30, 2009, there were 930 unvested restricted shares. |
| |
| (3) |
|
As development gains are difficult to predict in the current economic environment,
management believes Core FFO, as adjusted, is the more appropriate and useful measure to reflect
its assessment of AMB’s projected operating performance. |
|
|
|
| |
|
|
|
|
|
Page 9 |
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| |
|
|
|
|
|
|
|
|
| |
|
As of |
|
| |
|
June 30, 2010 |
|
|
December 31, 2009 |
|
Assets |
|
|
|
|
|
|
|
|
Investments in real estate |
|
|
|
|
|
|
|
|
Total investments in properties |
|
$ |
6,834,736 |
|
|
$ |
6,708,660 |
|
Accumulated depreciation and amortization |
|
|
(1,196,321 |
) |
|
|
(1,113,808 |
) |
|
|
|
|
|
|
|
Net investments in properties |
|
|
5,638,415 |
|
|
|
5,594,852 |
|
Investments in unconsolidated joint ventures |
|
|
687,201 |
|
|
|
462,130 |
|
Properties held for sale or contribution, net |
|
|
131,155 |
|
|
|
214,426 |
|
|
|
|
|
|
|
|
Net investments in real estate |
|
|
6,456,771 |
|
|
|
6,271,408 |
|
Cash and cash equivalents and restricted cash |
|
|
240,694 |
|
|
|
206,077 |
|
Accounts receivable, net |
|
|
156,655 |
|
|
|
155,958 |
|
Other assets |
|
|
205,872 |
|
|
|
208,515 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
7,059,992 |
|
|
$ |
6,841,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Secured debt |
|
$ |
944,787 |
|
|
$ |
1,096,554 |
|
Unsecured senior debt |
|
|
1,156,361 |
|
|
|
1,155,529 |
|
Unsecured credit facilities |
|
|
422,483 |
|
|
|
477,630 |
|
Other debt |
|
|
471,024 |
|
|
|
482,883 |
|
Accounts payable and other liabilities |
|
|
346,027 |
|
|
|
338,042 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,340,682 |
|
|
|
3,550,638 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Common equity |
|
|
3,127,926 |
|
|
|
2,716,604 |
|
Preferred equity |
|
|
223,412 |
|
|
|
223,412 |
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
3,351,338 |
|
|
|
2,940,016 |
|
Noncontrolling interests |
|
|
|
|
|
|
|
|
Joint venture partners |
|
|
306,414 |
|
|
|
289,909 |
|
Limited partnership unitholders |
|
|
61,558 |
|
|
|
61,395 |
|
|
|
|
|
|
|
|
Total noncontrolling interests |
|
|
367,972 |
|
|
|
351,304 |
|
|
|
|
|
|
|
|
Total equity |
|
|
3,719,310 |
|
|
|
3,291,320 |
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
7,059,992 |
|
|
$ |
6,841,958 |
|
|
|
|
|
|
|
|
