UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, DC
20549
Form 10-Q
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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31,
2011
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission File Number:
001-13545
(AMB Property Corporation)
001-14245
(AMB Property, L.P.)
AMB Property
Corporation
AMB Property, L.P.
(Exact Name of Registrant as
Specified in Its Charter)
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Maryland (AMB Property Corporation)
Delaware (AMB Property, L.P.)
(State or Other Jurisdiction
of
Incorporation or Organization)
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94-3281941 (AMB Property Corporation)
94-3285362 (AMB Property, L.P.)
(I.R.S. Employer
Identification No.)
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Pier 1, Bay 1, San Francisco, California
(Address of Principal
Executive Offices)
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94111
(Zip
Code)
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(415) 394-9000
(Registrants Telephone
Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past
90 days.
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AMB Property Corporation
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Yes þ No o
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AMB Property, L.P.
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Yes þ No o
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Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes þ No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
AMB Property Corporation:
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Large
accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
AMB Property, L.P.:
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Large
accelerated
filer o
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Accelerated
filer o
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Non-accelerated
filer þ
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange Act).
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AMB Property Corporation
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Yes o No þ
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AMB Property, L.P.
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Yes o No þ
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As of May 5, 2011, there were 169,576,043 shares of
AMB Property Corporations common stock, $0.01 par
value per share, outstanding.
EXPLANATORY
NOTE
This report combines the quarterly reports on
Form 10-Q
for the period ended March 31, 2011 of AMB Property
Corporation and AMB Property, L.P. Unless stated otherwise or
the context otherwise requires: references to AMB Property
Corporation, the Parent Company or the
parent company mean AMB Property Corporation, a
Maryland corporation, and its controlled subsidiaries; and
references to AMB Property, L.P., the
Operating Partnership or the operating
partnership mean AMB Property, L.P., a Delaware limited
partnership, and its controlled subsidiaries. The terms
the Company and the company mean the
parent company, the operating partnership and their controlled
subsidiaries on a consolidated basis. In addition, references to
the company, the parent company or the operating partnership
could mean the entity itself or one or a number of their
controlled subsidiaries.
The parent company is a real estate investment trust and the
general partner of the operating partnership. As of
March 31, 2011, the parent company owned an approximate
98.2% general partnership interest in the operating partnership,
excluding preferred units. The remaining approximate 1.8% common
limited partnership interests are owned by non-affiliated
investors and certain current and former directors and officers
of the parent company. As of March 31, 2011, the parent
company owned all of the preferred limited partnership units of
the operating partnership. As the sole general partner of the
operating partnership, the parent company has the full,
exclusive and complete responsibility for the operating
partnerships
day-to-day
management and control.
The company believes combining the quarterly reports on
Form 10-Q
of the parent company and the operating partnership into this
single report results in the following benefits:
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enhancing investors understanding of the parent company
and the operating partnership by enabling investors to view the
business as a whole in the same manner as management views and
operates the business;
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eliminating duplicative disclosure and providing a more
streamlined and readable presentation since a substantial
portion of the companys disclosure applies to both the
parent company and the operating partnership; and
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creating time and cost efficiencies through the preparation of
one combined report instead of two separate reports.
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Management operates the parent company and the operating
partnership as one enterprise. The management of the parent
company consists of the same members as the management of the
operating partnership. These members are officers of the parent
company and employees of the operating partnership.
There are few differences between the parent company and the
operating partnership, which are reflected in the disclosure in
this report. The company believes it is important to understand
the differences between the parent company and the operating
partnership in the context of how the parent company and the
operating partnership operate as an interrelated consolidated
company. The parent company is a real estate investment trust,
whose only material asset is its ownership of partnership
interests of the operating partnership. As a result, the parent
company does not conduct business itself, other than acting as
the sole general partner of the operating partnership, issuing
public equity from time to time and guaranteeing certain debt of
the operating partnership. The parent company itself does not
hold any indebtedness but guarantees some of the secured and
unsecured debt of the operating partnership, as disclosed in
this report. The operating partnership holds substantially all
the assets of the company and directly or indirectly holds the
ownership interests in the companys joint ventures. The
operating partnership conducts the operations of the business
and is structured as a partnership with no publicly traded
equity. Except for net proceeds from public equity issuances by
the parent company, which are contributed to the operating
partnership in exchange for partnership units, the operating
partnership generates the capital required by the companys
business through the operating partnerships operations, by
the operating partnerships direct or indirect incurrence
of indebtedness or through the issuance of partnership units of
the operating partnership or its subsidiaries.
Noncontrolling interests and stockholders equity and
partners capital are the main areas of difference between
the consolidated financial statements of the parent company and
those of the operating partnership. The common limited
partnership interests in the operating partnership are accounted
for as partners capital in the operating
partnerships financial statements and as noncontrolling
interests in the parent companys financial statements. The
noncontrolling interests in the operating partnerships
financial statements include the interests of
joint venture partners, and preferred limited partnership
unitholders (if applicable) and common limited partnership
unitholders of AMB Property II, L.P., a subsidiary of the
operating partnership. The noncontrolling interests in the
parent companys financial statements include the same
noncontrolling interests at the operating partnership level and
limited partnership unitholders of the operating partnership.
The differences between stockholders equity and
partners capital result from the differences in the equity
issued at the parent company and operating partnership levels.
To help investors understand the significant differences between
the parent company and the operating partnership, this report
presents the following separate sections for each of the parent
company and the operating partnership:
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consolidated financial statements;
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the following notes to the consolidated financial statements:
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Debt;
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Noncontrolling Interests;
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Stockholders Equity of the Parent Company/Partners
Capital of the Operating Partnership; and
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Liquidity and Capital Resources in the Managements
Discussion and Analysis of Financial Condition and Results of
Operations.
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This report also includes separate Part I, Item 4.
Controls and Procedures sections and separate Exhibits 31
and 32 certifications for each of the parent company and the
operating partnership in order to establish that the Chief
Executive Officer and the Chief Financial Officer of each entity
have made the requisite certifications and that the parent
company and operating partnership are compliant with
Rule 13a-15
or
Rule 15d-15
of the Securities Exchange Act of 1934 and 18 U.S.C.
§1350.
In order to highlight the differences between the parent company
and the operating partnership, the separate sections in this
report for the parent company and the operating partnership
specifically refer to the parent company and the operating
partnership. In the sections that combine disclosure of the
parent company and the operating partnership, this report refers
to actions or holdings as being actions or holdings of the
company. Although the operating partnership is generally the
entity that directly or indirectly enters into contracts and
joint ventures and holds assets and debt, reference to the
company is appropriate because the business is one enterprise
and the parent company operates the business through the
operating partnership.
As general partner with control of the operating partnership,
the parent company consolidates the operating partnership for
financial reporting purposes, and the parent company does not
have significant assets other than its investment in the
operating partnership. Therefore, the assets and liabilities of
the parent company and the operating partnership are the same on
their respective financial statements. The separate discussions
of the parent company and the operating partnership in this
report should be read in conjunction with each other to
understand the results of the company on a consolidated basis
and how management operates the company.
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
INDEX
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Page
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PART I. FINANCIAL INFORMATION
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Item 1.
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Financial Statements of AMB Property Corporation
(unaudited)
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Consolidated Balance Sheets as of March 31,
2011 and December 31, 2010
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1
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Consolidated Statements of Operations for the
Three Months Ended March 31, 2011 and 2010
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2
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Consolidated Statement of Equity for the Three
Months Ended March 31, 2011
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3
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Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2011 and 2010
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4
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Financial Statements of AMB Property, L.P. (unaudited)
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Consolidated Balance Sheets as of March 31,
2011 and December 31, 2010
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5
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Consolidated Statements of Operations for the
Three Months Ended March 31, 2011 and 2010
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6
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Consolidated Statement of Capital for the Three
Months Ended March 31, 2011
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7
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Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2011 and 2010
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8
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Notes to Consolidated Financial Statements of AMB
Property Corporation and AMB Property, L.P.
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9
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Item 2.
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Managements Discussion and Analysis of
Financial Condition and Results of Operations
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46
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Item 3.
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Quantitative and Qualitative Disclosures About
Market Risk
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89
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Item 4.
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Controls and Procedures (AMB Property
Corporation)
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91
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Controls and Procedures (AMB Property, L.P.)
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92
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PART II. OTHER INFORMATION
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Item 1.
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Legal Proceedings
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93
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Item 1A.
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Risk Factors
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94
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Item 2.
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Unregistered Sales of Equity Securities and Use
of Proceeds
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94
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Item 3.
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Defaults Upon Senior Securities
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94
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Item 4.
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(Removed and Reserved)
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94
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Item 5.
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Other Information
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94
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Item 6.
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Exhibits
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94
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EX-31.1 |
EX-31.2 |
EX-32.1 |
EX-32.2 |
EX-101 INSTANCE DOCUMENT |
EX-101 SCHEMA DOCUMENT |
EX-101 CALCULATION LINKBASE DOCUMENT |
EX-101 LABELS LINKBASE DOCUMENT |
EX-101 PRESENTATION LINKBASE DOCUMENT |
EX-101 DEFINITION LINKBASE DOCUMENT |
PART I
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Item 1.
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Financial
Statements of AMB Property Corporation and AMB Property,
L.P.
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AMB
PROPERTY CORPORATION
As of
March 31, 2011 and December 31, 2010
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March 31,
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December 31,
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2011
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2010
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(Unaudited, dollars in thousands)
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ASSETS
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Investments in real estate:
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Land
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$
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1,395,140
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$
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1,396,321
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Land held for development
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680,278
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672,883
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Buildings and improvements
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4,721,059
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4,808,667
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Construction in progress
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44,812
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28,305
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Total investments in properties
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6,841,289
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6,906,176
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Accumulated depreciation and amortization
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(1,313,547
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(1,268,093
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Net investments in properties
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5,527,742
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5,638,083
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Investments in unconsolidated joint ventures
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911,003
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883,241
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Properties held for sale or contribution, net
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346,242
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242,098
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Net investments in real estate
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6,784,987
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6,763,422
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Cash and cash equivalents
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203,626
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198,424
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Restricted cash
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31,662
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29,991
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Accounts receivable, net of allowance for doubtful accounts of
$8,735 and $9,551, respectively
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170,867
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167,735
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Deferred financing costs, net
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34,931
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38,079
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Other assets
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194,690
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175,244
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Total assets
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$
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7,420,763
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$
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7,372,895
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LIABILITIES AND EQUITY
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Liabilities:
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Debt:
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Secured debt
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$
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961,264
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$
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962,434
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Unsecured senior debt
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1,639,823
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1,685,956
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Unsecured credit facilities
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402,784
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268,933
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Other debt
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422,180
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413,976
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Total debt
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3,426,051
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3,331,299
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Security deposits
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56,420
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57,555
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Dividends payable
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3,330
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51,400
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Accounts payable and other liabilities
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234,869
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230,519
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Total liabilities
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3,720,670
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3,670,773
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Commitments and contingencies (Note 14)
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Equity:
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Stockholders equity:
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Series L preferred stock, cumulative, redeemable,
$.01 par value, 2,300,000 shares authorized and
2,000,000 issued and outstanding, $50,000 liquidation preference
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48,017
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48,017
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Series M preferred stock, cumulative, redeemable,
$.01 par value, 2,300,000 shares authorized and
2,300,000 issued and outstanding, $57,500 liquidation preference
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55,187
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55,187
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Series O preferred stock, cumulative, redeemable,
$.01 par value, 3,000,000 shares authorized and
3,000,000 issued and outstanding, $75,000 liquidation preference
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72,127
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72,127
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Series P preferred stock, cumulative, redeemable,
$.01 par value, 2,000,000 shares authorized and
2,000,000 issued and outstanding, $50,000 liquidation preference
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48,081
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48,081
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Common stock, $.01 par value, 500,000,000 shares
authorized, 169,550,704 and 168,736,081 issued and outstanding,
respectively
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1,692
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1,684
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Additional paid-in capital
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3,034,593
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3,071,134
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Retained deficit
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(9,519
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(17,695
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Accumulated other comprehensive income
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52,554
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42,188
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Total stockholders equity
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3,302,732
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3,320,723
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Noncontrolling interests:
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Joint venture partners
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342,514
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325,590
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Limited partnership unitholders
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54,847
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55,809
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Total noncontrolling interests
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397,361
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381,399
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Total equity
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3,700,093
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3,702,122
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Total liabilities and equity
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$
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7,420,763
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$
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7,372,895
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The accompanying notes are an integral part of these
consolidated financial statements.
1
AMB
PROPERTY CORPORATION
For the
Three Months Ended March 31, 2011 and 2010
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2011
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2010
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(Unaudited, dollars in thousands, except share and per share
amounts)
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REVENUES
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Rental revenues
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$
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158,085
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$
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146,645
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Private capital revenues
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7,683
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7,445
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Total revenues
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165,768
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154,090
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COSTS AND EXPENSES
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Property operating costs
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(31,256
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(28,093
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Real estate taxes
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(20,806
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(20,025
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Depreciation and amortization
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(54,986
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)
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(47,381
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General and administrative
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(30,661
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(31,951
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Restructuring charges
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(2,973
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Merger transaction costs
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(3,697
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Fund costs
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(241
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)
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(314
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Other expenses
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(946
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(1,191
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Total costs and expenses
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(142,593
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(131,928
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OTHER INCOME AND EXPENSES
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Development profits, net of taxes
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4,803
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Equity in earnings of unconsolidated joint ventures, net
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7,800
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3,875
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Other income
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1,238
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289
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Interest expense, including amortization
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(34,942
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(32,589
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Total other income and expenses, net
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(25,904
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(23,622
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|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
(2,729
|
)
|
|
|
(1,460
|
)
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
Income attributable to discontinued operations
|
|
|
870
|
|
|
|
840
|
|
Development profits, net of taxes
|
|
|
1,637
|
|
|
|
|
|
Gains from sale of real estate interests, net of taxes
|
|
|
14,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total discontinued operations
|
|
|
17,051
|
|
|
|
840
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
14,322
|
|
|
|
(620
|
)
|
Noncontrolling interests share of net (income) loss:
|
|
|
|
|
|
|
|
|
Joint venture partners share of net (income) loss
|
|
|
(2,049
|
)
|
|
|
375
|
|
Joint venture partners and limited partnership
unitholders share of development profits,
|
|
|
|
|
|
|
|
|
net of taxes
|
|
|
(29
|
)
|
|
|
(106
|
)
|
Limited partnership unitholders
|
|
|
(116
|
)
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
Total noncontrolling interests share of net (income) loss
|
|
|
(2,194
|
)
|
|
|
469
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to AMB Property Corporation
|
|
|
12,128
|
|
|
|
(151
|
)
|
Preferred stock dividends
|
|
|
(3,952
|
)
|
|
|
(3,952
|
)
|
Allocation to participating securities
|
|
|
(355
|
)
|
|
|
(344
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders
|
|
$
|
7,821
|
|
|
$
|
(4,447
|
)
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share attributable to common
stockholders
|
|
|
|
|
|
|
|
|
Loss from continuing operations (after preferred stock dividends)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
Discontinued operations
|
|
|
0.10
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common share attributable to common
stockholders
|
|
|
|
|
|
|
|
|
Loss from continuing operations (after preferred stock dividends)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
Discontinued operations
|
|
|
0.10
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic
|
|
|
168,099,995
|
|
|
|
148,666,418
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
168,099,995
|
|
|
|
148,666,418
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Preferred
|
|
|
Number
|
|
|
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Noncontrolling
|
|
|
|
|
|
|
Stock
|
|
|
of Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Income (Loss)
|
|
|
Interests
|
|
|
Total
|
|
|
Balance as of December 31, 2010
|
|
$
|
223,412
|
|
|
|
168,736,081
|
|
|
$
|
1,684
|
|
|
$
|
3,071,134
|
|
|
$
|
(17,695
|
)
|
|
$
|
42,188
|
|
|
$
|
381,399
|
|
|
$
|
3,702,122
|
|
Net income
|
|
|
3,952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,176
|
|
|
|
|
|
|
|
2,194
|
|
|
|
|
|
Unrealized gain (loss) on securities and derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,802
|
|
|
|
(281
|
)
|
|
|
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,564
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,407
|
|
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,381
|
|
|
|
18,381
|
|
Distributions and allocations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,225
|
)
|
|
|
(3,225
|
)
|
Stock-based compensation amortization and issuance of restricted
stock, net
|
|
|
|
|
|
|
519,408
|
|
|
|
5
|
|
|
|
6,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,621
|
|
Exercise of stock options
|
|
|
|
|
|
|
493,986
|
|
|
|
5
|
|
|
|
11,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,759
|
|
Conversion of partnership units
|
|
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeiture of stock
|
|
|
|
|
|
|
(217,521
|
)
|
|
|
(2
|
)
|
|
|
(7,890
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,892
|
)
|
Reallocation of partnership interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
261
|
|
|
|
|
|
|
|
|
|
|
|
(261
|
)
|
|
|
|
|
Dividends
|
|
|
(3,952
|
)
|
|
|
|
|
|
|
|
|
|
|
(47,282
|
)
|
|
|
|
|
|
|
|
|
|
|
(846
|
)
|
|
|
(52,080
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2011
|
|
$
|
223,412
|
|
|
|
169,550,704
|
|
|
$
|
1,692
|
|
|
$
|
3,034,593
|
|
|
$
|
(9,519
|
)
|
|
$
|
52,554
|
|
|
$
|
397,361
|
|
|
$
|
3,700,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
3
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Unaudited, dollars in thousands)
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
14,322
|
|
|
$
|
(620
|
)
|
Adjustments to net income (loss):
|
|
|
|
|
|
|
|
|
Straight-line rents and amortization of lease intangibles
|
|
|
(5,972
|
)
|
|
|
(4,289
|
)
|
Depreciation and amortization
|
|
|
54,986
|
|
|
|
47,381
|
|
Foreign exchange losses
|
|
|
928
|
|
|
|
2,837
|
|
Stock-based compensation amortization
|
|
|
6,621
|
|
|
|
6,812
|
|
Equity in earnings of unconsolidated joint ventures
|
|
|
(7,800
|
)
|
|
|
(3,875
|
)
|
Operating distributions received from unconsolidated joint
ventures
|
|
|
7,838
|
|
|
|
5,316
|
|
Development profits, net of taxes
|
|
|
|
|
|
|
(4,803
|
)
|
Debt premiums, discounts and finance cost amortization, net
|
|
|
3,887
|
|
|
|
3,341
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
28
|
|
|
|
1,279
|
|
Development profits, net of taxes
|
|
|
(1,637
|
)
|
|
|
|
|
Gains from sale of real estate interests, net of taxes
|
|
|
(14,544
|
)
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable and other assets
|
|
|
1,240
|
|
|
|
(1,369
|
)
|
Accounts payable and other liabilities
|
|
|
1,830
|
|
|
|
18,055
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
61,727
|
|
|
|
70,065
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
(2,072
|
)
|
|
|
(3,085
|
)
|
Cash paid for property acquisitions
|
|
|
|
|
|
|
(160
|
)
|
Additions to land, buildings, development costs, building
improvements and lease costs
|
|
|
(111,927
|
)
|
|
|
(53,361
|
)
|
Net proceeds from divestiture of real estate and securities
|
|
|
93,657
|
|
|
|
22,408
|
|
Additions to interests in unconsolidated joint ventures
|
|
|
(25,543
|
)
|
|
|
(153,211
|
)
|
Repayments from affiliates
|
|
|
|
|
|
|
4,157
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(45,885
|
)
|
|
|
(183,252
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from stock option exercises
|
|
|
7,990
|
|
|
|
1,548
|
|
Borrowings on secured debt
|
|
|
831
|
|
|
|
4,903
|
|
Payments on secured debt
|
|
|
(4,719
|
)
|
|
|
(134,070
|
)
|
Borrowings on other debt
|
|
|
|
|
|
|
4,300
|
|
Payments on other debt
|
|
|
|
|
|
|
(4,183
|
)
|
Borrowings on unsecured credit facilities
|
|
|
325,015
|
|
|
|
308,252
|
|
Payments on unsecured credit facilities
|
|
|
(189,074
|
)
|
|
|
(67,443
|
)
|
Payment of financing fees
|
|
|
(195
|
)
|
|
|
(431
|
)
|
Payments on senior debt
|
|
|
(44,000
|
)
|
|
|
|
|
Forfeiture of stock
|
|
|
(4,123
|
)
|
|
|
|
|
Contributions from noncontrolling interests
|
|
|
18,192
|
|
|
|
3,509
|
|
Dividends paid to common and preferred stockholders
|
|
|
(99,304
|
)
|
|
|
(45,644
|
)
|
Distributions to noncontrolling interests, including preferred
units
|
|
|
(2,988
|
)
|
|
|
(3,361
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
7,625
|
|
|
|
67,380
|
|
Net effect of exchange rate changes on cash
|
|
|
(18,265
|
)
|
|
|
12,027
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
5,202
|
|
|
|
(33,780
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
198,424
|
|
|
|
187,169
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
203,626
|
|
|
$
|
153,389
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of capitalized interest
|
|
$
|
21,230
|
|
|
$
|
15,994
|
|
|
|
|
|
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
|
|
Proceeds receivable for insured real estate loss
|
|
$
|
1,549
|
|
|
$
|
|
|
Non-cash stock option exercises
|
|
$
|
3,769
|
|
|
$
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
4
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Unaudited, dollars in thousands)
|
|
|
ASSETS
|
Investments in real estate:
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
1,395,140
|
|
|
$
|
1,396,321
|
|
Land held for development
|
|
|
680,278
|
|
|
|
672,883
|
|
Buildings and improvements
|
|
|
4,721,059
|
|
|
|
4,808,667
|
|
Construction in progress
|
|
|
44,812
|
|
|
|
28,305
|
|
|
|
|
|
|
|
|
|
|
Total investments in properties
|
|
|
6,841,289
|
|
|
|
6,906,176
|
|
Accumulated depreciation and amortization
|
|
|
(1,313,547
|
)
|
|
|
(1,268,093
|
)
|
|
|
|
|
|
|
|
|
|
Net investments in properties
|
|
|
5,527,742
|
|
|
|
5,638,083
|
|
Investments in unconsolidated joint ventures
|
|
|
911,003
|
|
|
|
883,241
|
|
Properties held for sale or contribution, net
|
|
|
346,242
|
|
|
|
242,098
|
|
|
|
|
|
|
|
|
|
|
Net investments in real estate
|
|
|
6,784,987
|
|
|
|
6,763,422
|
|
Cash and cash equivalents
|
|
|
203,626
|
|
|
|
198,424
|
|
Restricted cash
|
|
|
31,662
|
|
|
|
29,991
|
|
Accounts receivable, net of allowance for doubtful accounts of
$8,735 and $9,551, respectively
|
|
|
170,867
|
|
|
|
167,735
|
|
Deferred financing costs, net
|
|
|
34,931
|
|
|
|
38,079
|
|
Other assets
|
|
|
194,690
|
|
|
|
175,244
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
7,420,763
|
|
|
$
|
7,372,895
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND CAPITAL
|
Liabilities:
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
|
|
Secured debt
|
|
$
|
961,264
|
|
|
$
|
962,434
|
|
Unsecured senior debt
|
|
|
1,639,823
|
|
|
|
1,685,956
|
|
Unsecured credit facilities
|
|
|
402,784
|
|
|
|
268,933
|
|
Other debt
|
|
|
422,180
|
|
|
|
413,976
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
3,426,051
|
|
|
|
3,331,299
|
|
Security deposits
|
|
|
56,420
|
|
|
|
57,555
|
|
Distributions payable
|
|
|
3,330
|
|
|
|
51,400
|
|
Accounts payable and other liabilities
|
|
|
234,869
|
|
|
|
230,519
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,720,670
|
|
|
|
3,670,773
|
|
Commitments and contingencies (Note 14)
|
|
|
|
|
|
|
|
|
Capital:
|
|
|
|
|
|
|
|
|
Partners capital:
|
|
|
|
|
|
|
|
|
General partner, 169,321,293 and 168,506,670 units
outstanding, respectively; 2,000,000 Series L preferred
units issued and outstanding with a $50,000 liquidation
preference, 2,300,000 Series M preferred units issued and
outstanding with a $57,500 liquidation preference, 3,000,000
Series O preferred units issued and outstanding with a
$75,000 liquidation preference and 2,000,000 Series P
preferred units issued and outstanding with a $50,000
liquidation preference
|
|
|
3,302,732
|
|
|
|
3,320,723
|
|
Limited partners, 2,058,730 and 2,058,730 units
outstanding, respectively
|
|
|
37,352
|
|
|
|
37,773
|
|
|
|
|
|
|
|
|
|
|
Total partners capital
|
|
|
3,340,084
|
|
|
|
3,358,496
|
|
Noncontrolling interests:
|
|
|
|
|
|
|
|
|
Joint venture partners
|
|
|
342,514
|
|
|
|
325,590
|
|
Class B limited partnership unitholders
|
|
|
17,495
|
|
|
|
18,036
|
|
|
|
|
|
|
|
|
|
|
Total noncontrolling interests
|
|
|
360,009
|
|
|
|
343,626
|
|
|
|
|
|
|
|
|
|
|
Total capital
|
|
|
3,700,093
|
|
|
|
3,702,122
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and capital
|
|
$
|
7,420,763
|
|
|
$
|
7,372,895
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
5
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Unaudited, dollars in thousands, except unit and per unit
amounts)
|
|
|
REVENUES
|
|
|
|
|
|
|
|
|
Rental revenues
|
|
$
|
158,085
|
|
|
$
|
146,645
|
|
Private capital revenues
|
|
|
7,683
|
|
|
|
7,445
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
165,768
|
|
|
|
154,090
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
Property operating expenses
|
|
|
(31,256
|
)
|
|
|
(28,093
|
)
|
Real estate taxes
|
|
|
(20,806
|
)
|
|
|
(20,025
|
)
|
Depreciation and amortization
|
|
|
(54,986
|
)
|
|
|
(47,381
|
)
|
General and administrative
|
|
|
(30,661
|
)
|
|
|
(31,951
|
)
|
Restructuring charges
|
|
|
|
|
|
|
(2,973
|
)
|
Merger transaction costs
|
|
|
(3,697
|
)
|
|
|
|
|
Fund costs
|
|
|
(241
|
)
|
|
|
(314
|
)
|
Other expenses
|
|
|
(946
|
)
|
|
|
(1,191
|
)
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
(142,593
|
)
|
|
|
(131,928
|
)
|
|
|
|
|
|
|
|
|
|
OTHER INCOME AND EXPENSES
|
|
|
|
|
|
|
|
|
Development profits, net of taxes
|
|
|
|
|
|
|
4,803
|
|
Equity in earnings of unconsolidated joint ventures, net
|
|
|
7,800
|
|
|
|
3,875
|
|
Other income
|
|
|
1,238
|
|
|
|
289
|
|
Interest expense, including amortization
|
|
|
(34,942
|
)
|
|
|
(32,589
|
)
|
|
|
|
|
|
|
|
|
|
Total other income and expenses, net
|
|
|
(25,904
|
)
|
|
|
(23,622
|
)
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
(2,729
|
)
|
|
|
(1,460
|
)
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
Income attributable to discontinued operations
|
|
|
870
|
|
|
|
840
|
|
Development profits, net of taxes
|
|
|
1,637
|
|
|
|
|
|
Gains from sale of real estate interests, net of taxes
|
|
|
14,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total discontinued operations
|
|
|
17,051
|
|
|
|
840
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
14,322
|
|
|
|
(620
|
)
|
Noncontrolling interests share of net (income) loss:
|
|
|
|
|
|
|
|
|
Joint venture partners share of net (income) loss
|
|
|
(2,049
|
)
|
|
|
375
|
|
Joint venture partners and Class B limited
partnership unitholders
|
|
|
|
|
|
|
|
|
share of development profits, net of taxes
|
|
|
(9
|
)
|
|
|
(39
|
)
|
Class B limited partnership unitholders
|
|
|
(37
|
)
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
Total noncontrolling interests share of net (income) loss
|
|
|
(2,095
|
)
|
|
|
410
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to AMB Property, L.P.
|
|
|
12,227
|
|
|
|
(210
|
)
|
Series L, M, O and P preferred unit distributions
|
|
|
(3,952
|
)
|
|
|
(3,952
|
)
|
Allocation to participating securities
|
|
|
(355
|
)
|
|
|
(344
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common unitholders
|
|
$
|
7,920
|
|
|
$
|
(4,506
|
)
|
|
|
|
|
|
|
|
|
|
Income (loss) available to common unitholders attributable
to:
|
|
|
|
|
|
|
|
|
General partner
|
|
$
|
7,821
|
|
|
$
|
(4,447
|
)
|
Limited partners
|
|
|
99
|
|
|
|
(59
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common unitholders
|
|
$
|
7,920
|
|
|
$
|
(4,506
|
)
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common unit attributable to common
unitholders
|
|
|
|
|
|
|
|
|
Loss from continuing operations (after preferred unit
distributions)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
Discontinued operations
|
|
|
0.10
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common unitholders
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common unit attributable to common
unitholders
|
|
|
|
|
|
|
|
|
Loss from continuing operations (after preferred unit
distributions)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
Discontinued operations
|
|
|
0.10
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common unitholders
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
|
|
|
|
|
|
|
|
|
Basic
|
|
|
170,173,425
|
|
|
|
150,786,346
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
170,173,425
|
|
|
|
150,786,346
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Partner
|
|
|
Limited Partners
|
|
|
|
|
|
|
|
|
|
Preferred Units
|
|
|
Common Units
|
|
|
Common Units
|
|
|
Noncontrolling
|
|
|
|
|
|
|
Units
|
|
|
Amount
|
|
|
Units
|
|
|
Amount
|
|
|
Units
|
|
|
Amount
|
|
|
Interests
|
|
|
Total
|
|
|
Balance as of December 31, 2010
|
|
|
9,300,000
|
|
|
$
|
223,412
|
|
|
|
168,506,670
|
|
|
$
|
3,097,311
|
|
|
|
2,058,730
|
|
|
$
|
37,773
|
|
|
$
|
343,626
|
|
|
$
|
3,702,122
|
|
Net income
|
|
|
|
|
|
|
3,952
|
|
|
|
|
|
|
|
8,176
|
|
|
|
|
|
|
|
99
|
|
|
|
2,095
|
|
|
|
|
|
Unrealized gain (loss) on securities and derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,802
|
|
|
|
|
|
|
|
|
|
|
|
(281
|
)
|
|
|
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,407
|
|
Contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,381
|
|
|
|
18,381
|
|
Distributions and allocations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,225
|
)
|
|
|
(3,225
|
)
|
Stock-based compensation amortization and issuance of common
limited partnership units in connection with the issuance of
restricted stock, net
|
|
|
|
|
|
|
|
|
|
|
519,408
|
|
|
|
6,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,621
|
|
Issuance of common limited partnership units in connection with
the exercise of stock options
|
|
|
|
|
|
|
|
|
|
|
493,986
|
|
|
|
11,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,759
|
|
Conversion of Operating Partnership units to common stock
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeiture of common limited partnership units in connection
with the forfeiture of stock
|
|
|
|
|
|
|
|
|
|
|
(217,521
|
)
|
|
|
(7,892
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,892
|
)
|
Reallocation of interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
261
|
|
|
|
|
|
|
|
56
|
|
|
|
(317
|
)
|
|
|
|
|
Distributions
|
|
|
|
|
|
|
(3,952
|
)
|
|
|
|
|
|
|
(47,282
|
)
|
|
|
|
|
|
|
(576
|
)
|
|
|
(270
|
)
|
|
|
(52,080
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2011
|
|
|
9,300,000
|
|
|
$
|
223,412
|
|
|
|
169,321,293
|
|
|
$
|
3,079,320
|
|
|
|
2,058,730
|
|
|
$
|
37,352
|
|
|
$
|
360,009
|
|
|
$
|
3,700,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
7
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Unaudited, dollars in thousands)
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
14,322
|
|
|
$
|
(620
|
)
|
Adjustments to net income (loss):
|
|
|
|
|
|
|
|
|
Straight-line rents and amortization of lease intangibles
|
|
|
(5,972
|
)
|
|
|
(4,289
|
)
|
Depreciation and amortization
|
|
|
54,986
|
|
|
|
47,381
|
|
Foreign exchange losses
|
|
|
928
|
|
|
|
2,837
|
|
Stock-based compensation amortization
|
|
|
6,621
|
|
|
|
6,812
|
|
Equity in earnings of unconsolidated joint ventures
|
|
|
(7,800
|
)
|
|
|
(3,875
|
)
|
Operating distributions received from unconsolidated joint
ventures
|
|
|
7,838
|
|
|
|
5,316
|
|
Development profits, net of taxes
|
|
|
|
|
|
|
(4,803
|
)
|
Debt premiums, discounts and finance cost amortization, net
|
|
|
3,887
|
|
|
|
3,341
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
28
|
|
|
|
1,279
|
|
Development profits, net of taxes
|
|
|
(1,637
|
)
|
|
|
|
|
Gains from sale of real estate interests, net of taxes
|
|
|
(14,544
|
)
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable and other assets
|
|
|
1,240
|
|
|
|
(1,369
|
)
|
Accounts payable and other liabilities
|
|
|
1,830
|
|
|
|
18,055
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
61,727
|
|
|
|
70,065
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
(2,072
|
)
|
|
|
(3,085
|
)
|
Cash paid for property acquisitions
|
|
|
|
|
|
|
(160
|
)
|
Additions to land, buildings, development costs, building
improvements and lease costs
|
|
|
(111,927
|
)
|
|
|
(53,361
|
)
|
Net proceeds from divestiture of real estate and securities
|
|
|
93,657
|
|
|
|
22,408
|
|
Additions to interests in unconsolidated joint ventures
|
|
|
(25,543
|
)
|
|
|
(153,211
|
)
|
Repayments from affiliates
|
|
|
|
|
|
|
4,157
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(45,885
|
)
|
|
|
(183,252
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from stock option exercises
|
|
|
7,990
|
|
|
|
1,548
|
|
Borrowings on secured debt
|
|
|
831
|
|
|
|
4,903
|
|
Payments on secured debt
|
|
|
(4,719
|
)
|
|
|
(134,070
|
)
|
Borrowings on other debt
|
|
|
|
|
|
|
4,300
|
|
Payments on other debt
|
|
|
|
|
|
|
(4,183
|
)
|
Borrowings on unsecured credit facilities
|
|
|
325,015
|
|
|
|
308,252
|
|
Payments on unsecured credit facilities
|
|
|
(189,074
|
)
|
|
|
(67,443
|
)
|
Payment of financing fees
|
|
|
(195
|
)
|
|
|
(431
|
)
|
Payments on senior debt
|
|
|
(44,000
|
)
|
|
|
|
|
Forfeiture of units
|
|
|
(4,123
|
)
|
|
|
|
|
Contributions from noncontrolling interests
|
|
|
18,192
|
|
|
|
3,509
|
|
Distributions paid to partners
|
|
|
(99,880
|
)
|
|
|
(46,238
|
)
|
Distributions to noncontrolling interests, including preferred
units
|
|
|
(2,412
|
)
|
|
|
(2,767
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
7,625
|
|
|
|
67,380
|
|
Net effect of exchange rate changes on cash
|
|
|
(18,265
|
)
|
|
|
12,027
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
5,202
|
|
|
|
(33,780
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
198,424
|
|
|
|
187,169
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
203,626
|
|
|
$
|
153,389
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of capitalized interest
|
|
$
|
21,230
|
|
|
$
|
15,994
|
|
|
|
|
|
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
|
|
Proceeds receivable for insured real estate loss
|
|
$
|
1,549
|
|
|
$
|
|
|
Non-cash stock option exercises
|
|
$
|
3,769
|
|
|
$
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
8
|
|
1.
|
Organization
and Formation of the Parent Company and the Operating
Partnership
|
The Parent Company commenced operations as a fully integrated
real estate company effective with the completion of its initial
public offering on November 26, 1997. The Parent Company
elected to be taxed as a real estate investment trust
(REIT) under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the
Code), commencing with its taxable year ended
December 31, 1997, and believes its current organization
and method of operation will enable it to maintain its status as
a REIT. The Parent Company, through its controlling interest in
its subsidiary, the Operating Partnership, is engaged in the
ownership, acquisition, development and operation of industrial
properties in key distribution markets throughout the Americas,
Europe and Asia. Unless otherwise indicated, the notes to
consolidated financial statements apply to both the Parent
Company and the Operating Partnership.
The Company uses the terms industrial properties or
industrial buildings to describe the various types
of industrial properties in its portfolio and uses these terms
interchangeably with the following: logistics facilities,
centers or warehouses; distribution facilities, centers or
warehouses; High Throughput
Distribution®
(HTD®)
facilities; or any combination of these terms. The Company uses
the term owned and managed to describe assets in
which it has at least a 10% ownership interest, for which it is
the property or asset manager and which it currently intends to
hold long term. The Company uses the term joint
venture to describe all joint ventures, including
co-investment ventures, with real estate developers, other real
estate operators, or institutional investors where the Company
may or may not have control, act as the manager
and/or
developer, earn asset management distributions or fees, or earn
incentive distributions or promote interests. In certain cases,
the Company might provide development, leasing, property
management
and/or
accounting services, for which it may receive compensation. The
Company uses the term co-investment venture to
describe joint ventures with institutional investors, managed by
the Company, from which the Company typically receives
acquisition fees for acquisitions, portfolio and asset
management distributions or fees, as well as incentive
distributions or promote interests.
As of March 31, 2011, the Parent Company owned an
approximate 98.2% general partnership interest in the Operating
Partnership, excluding preferred units. The remaining
approximate 1.8% common limited partnership interests are owned
by non-affiliated investors and certain current and former
directors and officers of the Parent Company. As the sole
general partner of the Operating Partnership, the Parent Company
has full, exclusive and complete responsibility and discretion
in the
day-to-day
management and control of the Operating Partnership. Net
operating results of the Operating Partnership are allocated
after preferred unit distributions based on the respective
partners ownership interests. Certain properties are owned
by the Company through limited partnerships, limited liability
companies and other entities. The ownership of such properties
through such entities does not materially affect the
Companys overall ownership interests in the properties.
On January 30, 2011, the Parent Company and the Operating
Partnership entered into an Agreement and Plan of Merger (the
merger agreement) with ProLogis, a Maryland real
estate investment trust, New Pumpkin Inc., a Maryland
corporation and a wholly owned subsidiary of ProLogis, Upper
Pumpkin LLC, a Delaware limited liability company and a wholly
owned subsidiary of New Pumpkin, Inc., and Pumpkin LLC, a
Delaware limited liability company and a wholly owned subsidiary
of Upper Pumpkin, LLC. The merger agreement provides for a
merger of equals, in which through a series of transactions,
ProLogis and its newly formed subsidiaries will be merged with
and into the Parent Company (the merger), with the
Parent Company continuing as the surviving corporation with its
corporate name changed to ProLogis Inc. As a result
of the merger, each outstanding common share of beneficial
interest of ProLogis will be converted into the right to receive
0.4464 of a newly issued share of common stock of the Parent
Company. The merger is subject to customary closing conditions,
including receipt of approval of Parent Company stockholders and
ProLogis shareholders. See Part I, Item 2, The
Company section of Managements Discussion and
Analysis of Financial Condition and Results of Operations for a
more detailed discussion of the proposed merger.
9
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Through the Operating Partnership, the Company enters into
co-investment ventures with institutional investors. These
co-investment ventures provide the Company with an additional
source of capital and income. As of March 31, 2011, the
Company had twelve co-investment ventures, including the
co-investment ventures discussed below.
On March 3, 2011, the Company announced the formation of
AMB Europe Logistics JV, FCP-FIS, an unconsolidated
co-investment venture with Allianz Real Estate whose strategy is
to acquire, own and operate logistics properties primarily
within major seaport, airport and distribution markets in the
Eurozone. The initial third-party equity investment will be
approximately 400.0 million Euros (approximately
$566.3 million in U.S. dollars using the exchange rate
in effect at March 31, 2011) and the ventures
overall equity commitment is 470.0 million Euros
(approximately $665.4 million in U.S. dollars using
the same exchange rate), including the Companys 15%
co-investment. The co-investment venture is not expected to
utilize leverage on its investments. As of March 31, 2011,
no investments had been made in real estate properties within
this co-investment venture.
On March 16, 2011, the Company announced the formation of
AMB China Logistics Venture I, L.P., an unconsolidated
co-investment venture with HIP China Logistics Investments
Limited, whose strategy is to develop, acquire, own, operate and
manage logistics properties primarily within key markets in
China. The ventures overall equity commitment is
$588.0 million, of which the Company will contribute
$88.0 million for an approximate 15% ownership. The
co-investment venture is expected to utilize 50% leverage on its
investments. As of March 31, 2011, no investments had been
made in real estate properties within this co-investment venture.
Effective October 29, 2010, the name of the Companys
unconsolidated co-investment venture AMB Europe Fund I,
FCP-FIS was changed to AMB Europe Logistics Fund, FCP-FIS.
AMB Capital Partners, LLC, a Delaware limited liability company
(AMB Capital Partners), provides real estate
investment services to clients on a fee basis. Headlands Realty
Corporation, a Maryland corporation, conducts a variety of
businesses that includes development projects available for sale
or contribution to third parties and incremental income
programs. IMD Holding Corporation, a Delaware corporation,
conducts a variety of businesses that also includes development
projects available for sale or contribution to third parties.
AMB Capital Partners, Headlands Realty Corporation and IMD
Holding Corporation are direct subsidiaries of the Operating
Partnership.
As of March 31, 2011, the Company owned or had investments
in, on a consolidated basis or through unconsolidated
co-investment ventures, properties and development projects
expected to total approximately 161.0 million square feet
(15.0 million square meters) in 49 markets within 15
countries.
Of the approximately 161.0 million square feet as of
March 31, 2011:
|
|
|
|
|
on an owned and managed basis, which includes investments held
on a consolidated basis or through unconsolidated joint
ventures, the Company owned or partially owned approximately
140.2 million square feet (principally, warehouse
distribution buildings) that were 92.8% leased; the Company had
investments in 12 development projects, which are expected to
total approximately 5.3 million square feet upon
completion; the Company owned 25 projects, totaling
approximately 6.8 million square feet, which are available
for sale or contribution; and the Company had three value-added
acquisitions, totaling approximately 1.2 million square
feet;
|
|
|
|
through non-managed unconsolidated joint ventures, the Company
had investments in 46 industrial operating buildings, totaling
approximately 7.3 million square feet; and
|
|
|
|
the Company held approximately 152,000 square feet through
a ground lease, which is the location of the Companys
global headquarters.
|
Value-added acquisitions represent unstabilized properties
acquired by the Company, which generally have one or more of the
following characteristics: (i) existing vacancy, typically
in excess of 20%, (ii) short-term lease
10
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
rollover, typically during the first two years of ownership, or
(iii) significant capital improvement requirements,
typically in excess of 20% of the purchase price. The Company
excludes value-added acquisitions from its owned and managed and
consolidated operating statistics prior to stabilization
(generally 90% leased).
|
|
2.
|
Interim
Financial Statements
|
These consolidated financial statements included herein have
been prepared pursuant to the rules and regulations of the
United States Securities and Exchange Commission (the
SEC). Accordingly, certain information and note
disclosures normally included in the annual financial statements
prepared in accordance with accounting principles generally
accepted in the United States (GAAP) have been condensed or
omitted.
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments of a
normal, recurring nature, necessary for a fair statement of the
Companys consolidated financial position and results of
operations for the interim periods presented. The interim
results for the three months ended March 31, 2011 are not
necessarily indicative of future results. These financial
statements should be read in conjunction with the financial
statements and the notes thereto included in the Annual Report
on
Form 10-K
for the Parent Company and the Operating Partnership for the
year ended December 31, 2010.
Reclassifications. Certain items in the
consolidated financial statements for prior periods have been
reclassified to conform to current classifications.
Real Estate Impairment Losses and Restructuring
Charges. The Company conducts a comprehensive
review of all real estate asset classes in accordance with its
policy of accounting for the impairment or disposal of
long-lived assets, which indicates that asset values should be
analyzed whenever events or changes in circumstances indicate
that the carrying value of a property may not be fully
recoverable. The intended use of an asset, either held for sale
or held for the long term, can significantly impact how
impairment is measured. If an asset is intended to be held for
the long term, the impairment analysis is based on a two-step
test. The first test measures estimated expected future cash
flows over the holding period, including a residual value
(undiscounted and without interest charges), against the
carrying value of the property. If the asset fails the test,
then the asset carrying value is measured against the estimated
fair value from a market participant standpoint, with the excess
of the assets carrying value over the estimated fair value
recognized as an impairment charge to earnings. If an asset is
intended to be sold, impairment is tested based on a one-step
test, comparing the carrying value to the estimated fair value
less costs to sell. The estimation of expected future net cash
flows is inherently uncertain and relies on assumptions
regarding current and future economic and market conditions and
the availability of capital. The Company determines the
estimated fair values based on assumptions regarding rental
rates, costs to complete,
lease-up and
holding periods, as well as sales prices or contribution values.
The Company also utilizes the knowledge of its regional teams
and the recent valuations of its two open-ended funds, which
contain a large, geographically diversified pool of assets, all
of which are subject to third-party appraisals on at least an
annual basis. The Company did not recognize any real estate
impairment losses during the three months ended March 31,
2011 or 2010. Impairments may be necessary in the future in the
event that market conditions deteriorate and impact the factors
used to estimate fair value.
In the first quarter of 2011, the Company incurred
$3.8 million of losses on properties in the Companys
Japan markets associated with the March 2011 earthquake and
tsunami, which were partially offset by approximately
$1.5 million of expected insurance proceeds. The
$2.3 million of net uninsured losses were treated as
accelerated real estate depreciation and recorded in
depreciation expense and accumulated depreciation.
The Company did not recognize restructuring charges during the
three months ended March 31, 2011. The Company recognized
restructuring charges of approximately $3.0 million in the
three months ended March 31, 2010 associated with severance
and the termination of certain contractual obligations. The
majority of the restructuring charges were cash-related expenses.
11
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Investments in Consolidated and Unconsolidated Joint
Ventures. The Company holds interests in both
consolidated and unconsolidated joint ventures. The Company
consolidates joint ventures where it exhibits financial or
operational control. Control is determined using accounting
standards related to the consolidation of joint ventures and
variable interest entities. In June 2009, the FASB issued
amended guidance related to the consolidation of
variable-interest entities. These amendments require an
enterprise to qualitatively assess the determination of the
primary beneficiary of a variable interest entity
(VIE) based on whether the entity (1) has the
power to direct matters that most significantly impact the
activities of the VIE, and (2) has the obligation to absorb
losses or the right to receive benefits of the VIE that could
potentially be significant to the VIE. Additionally, they
require an ongoing reconsideration of the primary beneficiary
and provide a framework for the events that trigger a
reassessment of whether an entity is a VIE.
For joint ventures that are defined as variable interest
entities, the primary beneficiary consolidates the entity. In
instances where the Company is not the primary beneficiary, it
does not consolidate the joint venture for financial reporting
purposes. For joint ventures that are not defined as variable
interest entities, management first considers whether the
Company is the general partner or a limited partner (or the
equivalent in such investments which are not structured as
partnerships). The Company consolidates joint ventures where it
is the general partner (or the equivalent) and the limited
partners (or the equivalent) in such investments do not have
rights which would preclude control and, therefore,
consolidation for financial reporting purposes. For joint
ventures where the Company is the general partner (or the
equivalent), but does not control the joint venture as the other
partners (or the equivalent) hold substantive participating
rights, the Company uses the equity method of accounting. For
joint ventures where the Company is a limited partner (or the
equivalent), management considers factors such as ownership
interest, voting control, authority to make decisions, and
contractual and substantive participating rights of the partners
(or the equivalent) to determine if the presumption that the
general partner controls the entity is overcome. In instances
where these factors indicate the Company controls the joint
venture, the Company consolidates the joint venture; otherwise
it uses the equity method of accounting.
Under the equity method, investments in unconsolidated joint
ventures are initially recognized in the balance sheet at cost
and are subsequently adjusted to reflect the Companys
proportionate share of net earnings or losses of the joint
venture, distributions received, contributions, deferred gains
from the contribution of properties and certain other
adjustments, as appropriate. When circumstances indicate there
may have been a loss in value of an equity investment, the
Company evaluates the investment for impairment by estimating
the Companys ability to recover its investment or if the
loss in value is other than temporary. To evaluate whether an
impairment is other than temporary, the Company considers
relevant factors, including, but not limited to, the period of
time in any unrealized loss position, the likelihood of a future
recovery, and the Companys positive intent and ability to
hold the investment until the forecasted recovery. If the
Company determines the loss in value is other than temporary,
the Company recognizes an impairment charge to reflect the
investment at fair value. Fair value is determined through
various valuation techniques, including, but not limited to,
discounted cash flow models, quoted market values and third
party appraisals. No impairment charge was recognized for the
three months ended March 31, 2011 and 2010.
Fair Value of Financial Instruments. Due to
their short-term nature, the estimated fair value for cash and
cash equivalents, restricted cash, accounts receivable,
dividends and distributions payable, and accounts payable and
other liabilities approximate their book value. Based on
borrowing rates available to the Company at March 31, 2011,
the book value and the estimated fair value of total debt (both
secured and unsecured) were $3.4 billion and
$3.5 billion, respectively. Refer to Note 15 below
entitled Derivatives and Hedging Activities for the
related fair value disclosures.
Financial assets and liabilities recorded at fair value on the
consolidated balance sheets are categorized based on the inputs
to the valuation techniques as follows:
Level 1. Quoted prices in active markets
for identical assets or liabilities. Level 1 assets and
liabilities include debt and equity securities for which
instrument valuations are obtained from real-time quotes for
transactions in active exchange markets involving identical
assets. In addition, Level 1 assets and liabilities related
to the
12
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Companys deferred compensation plan are valued based upon
transactions in active exchange markets involving assets
identical to the underlying investments contained within the
plan.
Level 2. Observable inputs other than
Level 1 prices, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the
assets or liabilities. Level 2 assets and liabilities
include derivative contracts whose value is determined using a
pricing model with inputs that are observable in the market or
can be derived principally from or corroborated by observable
market data where applicable, such as equity prices, interest
rate yield curves, option volatility, currency rates and
counterparty credit risk.
Level 3. Unobservable inputs that are
supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
Level 3 assets and liabilities include financial
instruments whose value is determined using pricing models,
discounted cash flow methodologies, or similar techniques, as
well as instruments for which the determination of fair value
requires significant management judgment or estimation using
unobservable inputs. For the real estate assets included in
Level 3, the Company used the market participant pricing
approach, which estimates what a potential buyer would pay
today. The key inputs used in the model included capitalization
and rental growth rate assumptions, estimated costs to complete
and expected lease up and holding periods. When available,
current market information, like comparative sales price, was
used to determine capitalization and rental growth rates. When
market information was not readily available, the inputs were
based on the Companys understanding of market conditions
and the experience of the management team.
Fair
Value Measurements on a Recurring or Nonrecurring Basis as of
March 31, 2011
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
|
Assets/Liabilities
|
|
Assets/Liabilities
|
|
Assets/Liabilities
|
|
|
|
|
at Fair Value
|
|
at Fair Value
|
|
at Fair Value
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in real estate(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
89,430
|
|
|
$
|
89,430
|
|
Deferred compensation plan
|
|
|
21,183
|
|
|
|
|
|
|
|
|
|
|
|
21,183
|
|
Derivative assets
|
|
|
|
|
|
|
6,927
|
|
|
|
|
|
|
|
6,927
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
|
|
|
$
|
(1,204
|
)
|
|
$
|
|
|
|
$
|
(1,204
|
)
|
Deferred compensation plan
|
|
|
21,183
|
|
|
|
|
|
|
|
|
|
|
|
21,183
|
|
Fair
Value Measurements on a Recurring or Nonrecurring Basis as of
December 31, 2010
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
|
|
Assets/Liabilities
|
|
Assets/Liabilities
|
|
Assets/Liabilities
|
|
|
|
|
at Fair Value
|
|
at Fair Value
|
|
at Fair Value
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in real estate(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
100,283
|
|
|
$
|
100,283
|
|
Deferred compensation plan
|
|
|
19,123
|
|
|
|
|
|
|
|
|
|
|
|
19,123
|
|
Derivative assets
|
|
|
|
|
|
|
1,664
|
|
|
|
|
|
|
|
1,664
|
|
Investment securities
|
|
|
1,797
|
|
|
|
|
|
|
|
|
|
|
|
1,797
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
|
|
|
$
|
2,746
|
|
|
$
|
|
|
|
$
|
2,746
|
|
Deferred compensation plan
|
|
|
19,123
|
|
|
|
|
|
|
|
|
|
|
|
19,123
|
|
|
|
|
(1) |
|
Represents certain real estate assets held for sale, held for
contribution or reclassified between held for dispositions and
held for use categories on a consolidated basis that are marked
to their fair values at March 31, 2011 and
December 31, 2010, respectively, as a result of real estate
impairment losses, net of recoveries. |
13
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
3.
|
Real
Estate Acquisition and Development Activity
|
During the three months ended March 31, 2011 and 2010, the
Company did not acquire any properties, on a consolidated basis.
Within the Companys owned and managed portfolio, during
the three months ended March 31, 2011, 0.3 million
square feet was acquired by AMB U.S. Logistics Fund, L.P.
for an aggregate purchase price of $17.3 million, and less
than 0.1 million square feet was acquired by AMB Europe
Logistics Fund, FCP-FIS for an aggregate purchase price of
$5.2 million, both of which are unconsolidated
co-investment ventures.
As of March 31, 2011, the Company had 12
construction-in-progress
development projects, on an owned and managed basis, which are
expected to total approximately 5.3 million square feet and
have an aggregate estimated investment of $470.6 million
upon completion, net of $1.0 million of cumulative real
estate impairment losses to date. Five of these projects
totaling approximately 1.8 million square feet with an
aggregate estimated investment of $183.4 million were held
in an unconsolidated co-investment venture.
Construction-in-progress,
at March 31, 2011, included projects expected to be
completed through the third quarter of 2013.
On a consolidated basis, as of March 31, 2011, the Company
had an additional 24 pre-stabilized development projects
totaling approximately 6.6 million square feet, with an
aggregate estimated investment of $681.2 million, net of
$68.6 million of cumulative real estate impairment losses
to date, and an aggregate gross book value of
$668.5 million, net of cumulative real estate impairment
losses.
On a consolidated basis, as of March 31, 2011, the Company
and its development joint venture partners had funded an
aggregate of $814.3 million, or 78%, of the total estimated
investment before the impact of real estate impairment losses
and will need to fund an estimated additional
$223.7 million, or 22%, in order to complete the
Companys development portfolio.
In addition to its committed
construction-in-progress,
the Company held a total of 2,361 acres of land for future
development or sale, on a consolidated basis, approximately 86%
of which was located in the Americas. The Company currently
estimates that these 2,361 acres of land could support
approximately 42.7 million square feet of future
development.
The Companys development portfolio and land inventory does
not include value-added acquisitions.
|
|
4.
|
Development
Profits, Gains from Sale or Contribution of Real Estate
Interests and Discontinued Operations
|
Development Sales and Contributions. During
the three months ended March 31, 2011, the Company did not
sell any projects held within the development portfolio to third
parties and, as a result, recognized no development profits from
continuing operations. During the three months ended
March 31, 2010, the Company recognized development profits
of approximately $4.8 million as a result of the sale of
development projects to third-parties, aggregating approximately
0.3 million square feet for an aggregate sales price of
$22.9 million. This included the installment sale of
approximately 0.2 million square feet for
$12.5 million with development profits of $3.9 million
recognized in the three months ended March 31, 2010, which
was initiated in the fourth quarter of 2009 and completed in the
first quarter of 2010.
During the three months ended March 31, 2011 and 2010, the
Company made no contributions of completed development projects
to unconsolidated co-investment ventures.
Properties Held for Sale or Contribution,
Net. As of March 31, 2011, the Company held
for sale one property with an aggregate net book value of
$1.4 million. Properties held for sale either are not in
the Companys core markets, do not meet its current
investment objectives, or are included as part of its
development-for-sale
or value-added conversion programs. The sales of such properties
are generally subject to negotiation of acceptable terms and
other customary conditions. Properties held for sale are stated
at the lower of cost or estimated fair value less costs to sell.
As of December 31, 2010, the Company held for sale ten
properties with an aggregate net book value of
$55.9 million.
14
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
As of March 31, 2011, the Company held for contribution to
co-investment ventures 18 properties with an aggregate net book
value of $344.8 million, which, if contributed, will reduce
the Companys average ownership interest in these projects
from approximately 94% to an expected range of less than 40%. As
of December 31, 2010, the Company held for contribution to
co-investment ventures eight properties with an aggregate net
book value of $186.2 million.
During the three months ended March 31, 2011, no properties
were reclassified from held for sale or contribution to
investments in real estate as a result of the change in
managements intent to hold these assets. In accordance
with the Companys policies of accounting for the
impairment or disposal of long-lived assets, during the three
months ended March 31, 2011, the Company did not recognize
any additional depreciation expense and related accumulated
depreciation as a result of the reclassification of assets from
properties held for sale or contribution to investments in real
estate. During the three months ended March 31, 2010, the
Company recognized additional depreciation expense and related
accumulated depreciation of $1.2 million as a result of
similar reclassifications.
Discontinued Operations. The Company reports
its property sales as discontinued operations separately as
prescribed under its policy of accounting for the impairment or
disposal of long-lived assets. During the three months ended
March 31, 2011, the Company sold industrial operating
properties aggregating approximately 1.9 million square
feet for an aggregate sales price of $77.2 million. Of
these sales, 0.1 million square feet with a sales price of
$7.4 million, resulting in a gain of $1.6 million,
related to properties held in the operating portfolio which had
previously undergone development by the Company. These gains are
presented in development profits, net of taxes, as discontinued
operations in the consolidated statements of operations. The
remaining $69.8 million of operating property sales
resulted in gains of $14.5 million which were presented in
gains from sale of real estate interests, net of taxes as
discontinued operations in the consolidated statements of
operations. During the three months ended March 31, 2010,
the Company did not sell any industrial operating properties.
During the three months ended March 31, 2011 and 2010, the
Company did not sell any value-added conversion projects.
15
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following summarizes the condensed results of discontinued
operations, net of noncontrolling interests (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Rental revenues
|
|
$
|
2,385
|
|
|
$
|
3,812
|
|
Straight-line rents and amortization of lease intangibles
|
|
|
13
|
|
|
|
72
|
|
Property operating expenses
|
|
|
(765
|
)
|
|
|
(838
|
)
|
Real estate taxes
|
|
|
(778
|
)
|
|
|
(901
|
)
|
Depreciation and amortization
|
|
|
(28
|
)
|
|
|
(1,279
|
)
|
Other income and (expenses), net
|
|
|
43
|
|
|
|
1
|
|
Interest, including amortization
|
|
|
|
|
|
|
(27
|
)
|
|
|
|
|
|
|
|
|
|
Income attributable to discontinued operations
|
|
|
870
|
|
|
|
840
|
|
Development profits, net of taxes
|
|
|
1,637
|
|
|
|
|
|
Gains from sale of real estate interests, net of taxes
|
|
|
14,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations attributable to the Parent Company and
the Operating Partnership
|
|
$
|
17,051
|
|
|
$
|
840
|
|
|
|
|
|
|
|
|
|
|
Parent Company:
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
$
|
17,051
|
|
|
$
|
840
|
|
Noncontrolling interests:
|
|
|
|
|
|
|
|
|
Joint venture partners and limited partnership
unitholders share of (income) loss attributable to
discontinued operations
|
|
|
(6
|
)
|
|
|
1
|
|
Joint venture partners and limited partnership
unitholders share of gains from sale of real estate
interests, net of taxes
|
|
|
(285
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations attributable to the Parent Company
|
|
$
|
16,760
|
|
|
$
|
841
|
|
|
|
|
|
|
|
|
|
|
Operating Partnership:
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
$
|
17,051
|
|
|
$
|
840
|
|
Noncontrolling interests:
|
|
|
|
|
|
|
|
|
Joint venture partners and Class B limited
partnership unitholders share of loss (income)
attributable to discontinued operations
|
|
|
5
|
|
|
|
13
|
|
Class B limited partnership unitholders share of
development profits attributable to discontinued operations
|
|
|
20
|
|
|
|
|
|
Joint venture partners and Class B limited
partnership unitholders share of gains from sale of real
estate interests, net of taxes
|
|
|
(90
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations attributable to the Operating Partnership
|
|
$
|
16,986
|
|
|
$
|
853
|
|
|
|
|
|
|
|
|
|
|
The difference in income from discontinued operations, net of
noncontrolling interests, between the Parent Company and the
Operating Partnership is due to the inclusion of the Operating
Partnerships common limited partnership unitholders as
noncontrolling interests in the Parent Companys financial
statements.
16
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
As of March 31, 2011 and December 31, 2010, assets and
liabilities attributable to properties held for sale by the
Company consisted of the following (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2011
|
|
2010
|
|
Cash and cash equivalents
|
|
$
|
|
|
|
$
|
355
|
|
Accounts receivable, deferred financing costs and other assets
|
|
$
|
9
|
|
|
$
|
1,561
|
|
Accounts payable and other liabilities
|
|
$
|
8
|
|
|
$
|
831
|
|
|
|
5.
|
Debt of
the Parent Company
|
The Parent Company itself does not hold any indebtedness. All
debt is held directly or indirectly by the Operating
Partnership. The debt that is guaranteed by the Parent Company
is discussed below. Note 6 below entitled Debt of the
Operating Partnership should be read in conjunction with
this Note 5 for a discussion of the debt of the Operating
Partnership consolidated into the Parent Companys
financial statements. In this Note 5, the Parent
Company refers only to AMB Property Corporation and not to
any of its subsidiaries.
Unsecured
Senior Debt Guarantees
The Parent Company guarantees the Operating Partnerships
obligations with respect to its unsecured senior debt
securities. As of March 31, 2011, the Operating Partnership
had outstanding an aggregate of $1.7 billion in unsecured
senior debt securities, before unamortized net discounts, which
bore a weighted average interest rate of 5.5% and had an average
term of 6.0 years. The indenture for the senior debt
securities contains limitations on mergers or consolidations of
the Parent Company.
Other
Debt Guarantees
The Parent Company guarantees the Operating Partnerships
obligations with respect to certain of its other debt
obligations related to the following two facilities. In November
2010, the Operating Partnership paid off the outstanding Euro
tranche balance of its original $425.0 million
multi-currency term loan, which has a maturity of October 2012.
As of March 31, 2011, only the Japanese Yen tranche of the
term loan had an outstanding balance, which was approximately
$150.3 million in U.S. dollars, using the exchange
rate in effect on that date, and bore a weighted average
interest rate of 3.4%. Additionally, in November 2010, the
Operating Partnership entered into a 153.7 million Euro
senior unsecured term loan, maturing in November 2015. Using the
exchange rate in effect on March 31, 2011, the term loan
had an outstanding balance of approximately $217.6 million
in U.S. dollars, which bore a weighted average interest
rate of 1.2%. These term loans contain limitations on the
incurrence of liens and limitations on mergers or consolidations
of the Parent Company.
Unsecured
Credit Facility Guarantees
The Parent Company is a guarantor of the Operating
Partnerships obligations under its $600.0 million
(includes Euro, Yen, British pounds sterling, Canadian dollar or
U.S. dollar denominated borrowings) unsecured revolving
credit facility. In November 2010, the Operating Partnership
refinanced its $550.0 million multi-currency facility,
increasing the facility by $50.0 million and extending the
maturity to March 2014. This facility can be increased to up to
$800.0 million upon certain conditions. This facility had
no outstanding balance as of March 31, 2011.
The Parent Company and the Operating Partnership guarantee the
obligations of AMB Japan Finance Y.K., a subsidiary of the
Operating Partnership, under a Yen-denominated unsecured
revolving credit facility, as well as the obligations of any
other entity in which the Operating Partnership directly or
indirectly owns an ownership interest and which is selected by
the Operating Partnership from time to time to be a borrower
under and pursuant to the credit agreement. This credit facility
has an initial borrowing limit of 45.0 billion Yen, which,
using the exchange
17
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
rate in effect on March 31, 2011, equaled approximately
$541.3 million U.S. dollars and bore a weighted
average interest rate of 2.00%. Prior to its early renewal in
December 2010, this credit facility had a borrowing limit of
55.0 billion Yen. Additionally, upon renewal, the credit
facility maturity was extended to March 2014. As of
March 31, 2011, this facility had a balance of
$172.3 million, using the exchange rate in effect on that
date.
The Parent Company and the Operating Partnership guarantee the
obligations for such subsidiaries and other entities controlled
by the Operating Partnership that are selected by the Operating
Partnership from time to time to be borrowers under and pursuant
to a $500.0 million unsecured revolving credit facility.
The Operating Partnership and certain of its wholly owned
subsidiaries, each acting as a borrower, and the Parent Company
and the Operating Partnership, as guarantors, entered into this
credit facility, which has an option to further increase the
facility to up to $750.0 million and to extend the maturity
date by one year. As of March 31, 2011, this facility,
which matures in July 2011, had a balance of $230.5 million
using the exchange rate in effect on that date and bore a
weighted average interest rate of 1.09%.
The credit agreements related to the above facilities contain
limitations on the incurrence of liens and limitations on
mergers or consolidations of the Parent Company.
|
|
6.
|
Debt of
the Operating Partnership
|
As of March 31, 2011 and December 31, 2010, debt of
the Operating Partnership consisted of the following (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Wholly owned secured debt, varying interest rates from 2.0% to
7.6%, due December 2011 to July 2017 (weighted average interest
rates of 2.9% and 2.9% at March 31, 2011 and
December 31, 2010, respectively)
|
|
$
|
227,316
|
|
|
$
|
231,162
|
|
Consolidated joint venture secured debt, varying interest rates
from 1.1% to 8.3%, due July 2011 to November 2022 (weighted
average interest rates of 4.8% and 4.8% at March 31, 2011
and December 31, 2010, respectively)
|
|
|
733,882
|
|
|
|
731,183
|
|
Unsecured senior debt securities, varying interest rates from
3.3% to 7.5%, due September 2011 to July 2020 (weighted average
interest rates of 5.5% and 5.6% at March 31, 2011 and
December 31, 2010, respectively)
|
|
|
1,651,682
|
|
|
|
1,698,601
|
|
Other debt, varying interest rates from 1.2% to 5.8%, due
September 2012 to November 2015 (weighted average interest rates
of 2.5% and 3.3% at March 31, 2011 and December 31,
2010, respectively)
|
|
|
422,180
|
|
|
|
413,976
|
|
Unsecured credit facilities, variable interest rates, due July
2011 and March 2014 (weighted average interest rates of 1.5% and
1.7% at March 31, 2011 and December 31, 2010,
respectively)
|
|
|
402,784
|
|
|
|
268,933
|
|
|
|
|
|
|
|
|
|
|
Total debt before unamortized net discounts
|
|
|
3,437,844
|
|
|
|
3,343,855
|
|
Unamortized net discounts
|
|
|
(11,793
|
)
|
|
|
(12,556
|
)
|
|
|
|
|
|
|
|
|
|
Total consolidated debt
|
|
$
|
3,426,051
|
|
|
$
|
3,331,299
|
|
|
|
|
|
|
|
|
|
|
Wholly
Owned and Consolidated Joint Venture Secured Debt
Secured debt generally requires monthly principal and interest
payments. Some of the loans are cross-collateralized by multiple
properties. The secured debt is collateralized by deeds of
trust, mortgages or other instruments on certain properties and
is generally non-recourse. As of March 31, 2011 and
December 31, 2010, the total gross investment book value of
those properties securing the debt was $1.9 billion and
$1.8 billion, respectively, including $1.5 billion
held in consolidated joint ventures as of both balance sheet
dates. As of March 31, 2011, $691.1 million of the
secured debt obligations before unamortized net discounts bore
interest at
18
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
fixed rates (with a weighted average interest rate of 5.1%),
while the remaining $270.1 million bore interest at
variable rates (with a weighted average interest rate of 2.4%).
As of March 31, 2011, $583.6 million of the secured
debt before unamortized net discounts was held by the Operating
Partnerships co-investment ventures, including the
AMB-SGP, L.P. loan agreement discussed below.
Seven subsidiaries of AMB-SGP, L.P., a Delaware limited
partnership, which is a subsidiary of the Operating Partnership,
entered into a loan agreement for a $305.0 million secured
financing, and pursuant to the loan agreement, delivered four
promissory notes to the two lenders, each of which mature in
March 2012. One note has a principal of $160.0 million and
an interest rate that is fixed at 5.29%. The second note has an
initial principal borrowing of $40.0 million with a
variable interest rate of 81.0 basis points above the
one-month LIBOR rate. The third note has an initial principal
borrowing of $84.0 million and a fixed interest rate of
5.90%. The fourth note has an initial principal borrowing of
$21.0 million and bears interest at a variable rate of
135.0 basis points above the one-month LIBOR rate. The
aggregate principal amount outstanding under this loan agreement
as of March 31, 2011 was $287.9 million.
Unsecured
Senior Debt
As of March 31, 2011, the Operating Partnership had
outstanding an aggregate of $1.7 billion in unsecured
senior debt securities, before unamortized net discounts, which
bore a weighted average interest rate of 5.5% and had an average
term of 6.0 years.
The Parent Company guarantees the Operating Partnerships
obligations with respect to its unsecured senior debt
securities. The unsecured senior debt securities are subject to
various covenants of the Operating Partnership. These covenants
contain affirmative covenants, including compliance with
financial reporting requirements and maintenance of specified
financial ratios, and negative covenants, including limitations
on the incurrence of liens and limitations on mergers or
consolidations. The Operating Partnership was in compliance with
its financial covenants for all unsecured senior debt securities
at March 31, 2011.
Other
Debt
As of March 31, 2011, the Operating Partnership had
$422.2 million outstanding in other debt which bore a
weighted average interest rate of 2.5% and had an average term
of 3.1 years. Other debt includes a $70.0 million
credit facility obtained on August 24, 2007 by AMB
Institutional Alliance Fund II, L.P., a subsidiary of the
Operating Partnership, which had a $54.3 million balance
outstanding as of March 31, 2011. The $367.9 million
remaining outstanding balance of other debt, in
U.S. dollars using the exchange rates in effect on
March 31, 2011, is related to the Operating
Partnerships unsecured term loans discussed below.
In November 2010, the Operating Partnership paid off the
outstanding Euro tranche balance of its original
$425.0 million multi-currency term loan, which matures in
October 2012. As of March 31, 2011, only the Japanese Yen
tranche of the term loan had an outstanding balance, which was
approximately $150.3 million in U.S. dollars, using
the exchange rate in effect on that date, and bore a weighted
average interest rate of 3.4%.
Additionally, in November 2010, the Operating Partnership
entered into a 153.7 million Euro senior unsecured term
loan, maturing in November 2015. Using the exchange rate in
effect on March 31, 2011, the term loan had an outstanding
balance of approximately $217.6 million in
U.S. dollars, which bore a weighted average interest rate
of 1.2%.
The Parent Company guarantees the Operating Partnerships
obligations with respect to certain of its unsecured debt. These
covenants contain affirmative covenants, including compliance
with financial reporting requirements and maintenance of
specified financial ratios, and negative covenants, including
limitations on the incurrence of liens and limitations on
mergers or consolidations. The Operating Partnership was in
compliance with its financial covenants for all other debt at
March 31, 2011.
19
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Unsecured
Credit Facilities
As of March 31, 2011, the Operating Partnership had three
credit facilities with total capacity of approximately
$1.6 billion, of which approximately $1.2 billion was
available for future borrowings.
The Operating Partnership has a $600.0 million (includes
Euro, Yen, British pounds sterling, Canadian dollars or
U.S. dollar denominated borrowings) unsecured revolving
credit facility, guaranteed by the Parent Company. In November
2010, the Operating Partnership refinanced its
$550.0 million multi-currency facility, increasing the
facility by $50.0 million and extending the maturity to
March 2014. This facility can be increased to up to
$800.0 million upon certain conditions. As of
March 31, 2011, there was no outstanding balance on this
credit facility, and the remaining amount available was
$589.3 million, net of outstanding letters of credit of
$10.7 million, using the exchange rate in effect on that
date.
AMB Japan Finance Y.K., a subsidiary of the Operating
Partnership, has a Yen-denominated unsecured revolving credit
facility with an initial borrowing limit of 45.0 billion
Yen, which, using the exchange rate in effect on March 31,
2011, equaled approximately $541.3 million
U.S. dollars and bore a weighted average interest rate of
2.00%. Prior to its early renewal in December 2010, this credit
facility had a borrowing limit of 55.0 billion Yen.
Additionally, upon renewal, the credit facility maturity was
extended to March 2014 and is guaranteed by both the Parent
Company and the Operating Partnership. As of March 31,
2011, the outstanding balance on this credit facility, using the
exchange rate in effect on that date, was $172.3 million,
and the remaining amount available was $369.0 million.
The Operating Partnership and certain of its wholly owned
subsidiaries, each acting as a borrower, and the Parent Company
and the Operating Partnership, as guarantors, have a
$500.0 million unsecured revolving credit facility, which
has an option to further increase the facility to up to
$750.0 million and to extend the maturity date by one year.
The credit facility matures in July 2011. As of March 31,
2011, the outstanding balance on this credit facility, using the
exchange rates in effect on that date, was approximately
$230.5 million with a weighted average interest rate of
1.09%, and the remaining amount available was
$269.5 million.
The above credit facilities contain affirmative covenants of the
Operating Partnership, including compliance with financial
reporting requirements and maintenance of specified financial
ratios, and negative covenants of the Operating Partnership,
including limitations on the incurrence of liens and limitations
on mergers or consolidations. The Operating Partnership was in
compliance with its financial covenants under each of these
credit agreements at March 31, 2011.
20
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
As of March 31, 2011, the scheduled maturities and
principal payments of the Operating Partnerships total
debt were as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly Owned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured
|
|
|
|
|
|
|
Total
|
|
|
Consolidated
|
|
|
|
Total
|
|
|
|
Senior
|
|
|
Credit
|
|
|
Other
|
|
|
Secured
|
|
|
|
Wholly Owned
|
|
|
Joint Venture
|
|
|
|
Consolidated
|
|
|
|
Debt
|
|
|
Facilities(1)
|
|
|
Debt
|
|
|
Debt
|
|
|
|
Debt
|
|
|
Debt
|
|
|
|
Debt
|
|
2011
|
|
$
|
25,000
|
|
|
$
|
230,512
|
|
|
$
|
|
|
|
$
|
15,203
|
|
|
|
$
|
270,715
|
|
|
$
|
138,854
|
|
|
|
$
|
409,569
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
150,256
|
|
|
|
29,598
|
|
|
|
|
179,854
|
|
|
|
469,805
|
|
|
|
|
649,659
|
|
2013
|
|
|
293,897
|
|
|
|
|
|
|
|
|
|
|
|
23,710
|
|
|
|
|
317,607
|
|
|
|
104,852
|
|
|
|
|
422,459
|
|
2014
|
|
|
|
|
|
|
172,272
|
|
|
|
|
|
|
|
4,787
|
|
|
|
|
177,059
|
|
|
|
8,637
|
|
|
|
|
185,696
|
|
2015
|
|
|
112,491
|
|
|
|
|
|
|
|
217,624
|
|
|
|
7,721
|
|
|
|
|
337,836
|
|
|
|
16,943
|
|
|
|
|
354,779
|
|
2016
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
79,994
|
|
|
|
|
329,994
|
|
|
|
15,499
|
|
|
|
|
345,493
|
|
2017
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
66,303
|
|
|
|
|
366,303
|
|
|
|
490
|
|
|
|
|
366,793
|
|
2018
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
595
|
|
|
|
|
300,595
|
|
2019
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
29,412
|
|
|
|
|
279,412
|
|
2020
|
|
|
120,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,294
|
|
|
|
645
|
|
|
|
|
120,939
|
|
Thereafter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,450
|
|
|
|
|
2,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
$
|
1,651,682
|
|
|
$
|
402,784
|
|
|
$
|
367,880
|
|
|
$
|
227,316
|
|
|
|
$
|
2,649,662
|
|
|
$
|
788,182
|
(2)
|
|
|
$
|
3,437,844
|
|
Unamortized net (discounts) premiums
|
|
|
(11,859
|
)
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
|
|
(11,825
|
)
|
|
|
32
|
|
|
|
|
(11,793
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,639,823
|
|
|
$
|
402,784
|
|
|
$
|
367,880
|
|
|
$
|
227,350
|
|
|
|
$
|
2,637,837
|
|
|
$
|
788,214
|
|
|
|
$
|
3,426,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents three credit facilities with total borrowing capacity
of approximately $1.6 billion. Includes $142.0 million
in U.S. dollar borrowings and $172.3 million,
$64.9 million, $4.2 million and $19.4 million in
Yen, Canadian dollar, Euro and Singapore dollar-based borrowings
outstanding at March 31, 2011, respectively, translated to
U.S. dollars using the foreign exchange rates in effect on that
date. |
|
(2) |
|
Includes an outstanding balance of $54.3 million of other
debt on a $70.0 million credit facility held by AMB
Institutional Alliance Fund II, L.P. |
|
|
7.
|
Noncontrolling
Interests in the Parent Company
|
In this Note 7, the Parent Company refers only
to AMB Property Corporation and not to any of its subsidiaries.
Noncontrolling interests in the Parent Companys financial
statements include the common limited partnership interests in
the Operating Partnership, common limited and preferred limited
(if applicable) partnership interests in AMB Property II, L.P.,
a Delaware limited partnership and a subsidiary of the Operating
Partnership, and interests held by third party partners in joint
ventures. Such joint ventures hold approximately
20.9 million square feet and are consolidated for financial
reporting purposes.
21
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Parent Companys consolidated joint ventures
total investment and property debt at March 31, 2011 and
December 31, 2010 were as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Total Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companys
|
|
|
in Real Estate
|
|
|
Property Debt
|
|
|
Other Debt
|
|
|
|
Co-investment
|
|
Ownership
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
December 31,
|
|
Consolidated Joint Ventures
|
|
Venture Partner
|
|
Percentage
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
Co-investment Ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB Institutional Alliance Fund II, L.P.(1)
|
|
AMB Institutional Alliance REIT II, Inc.
|
|
|
24
|
%
|
|
$
|
521,227
|
|
|
$
|
518,516
|
|
|
$
|
182,849
|
|
|
$
|
184,292
|
|
|
$
|
54,300
|
|
|
$
|
54,300
|
|
AMB-SGP, L.P.(2)
|
|
Industrial JV Pte. Ltd.
|
|
|
50
|
%
|
|
|
480,302
|
|
|
|
479,635
|
|
|
|
325,876
|
|
|
|
327,301
|
|
|
|
|
|
|
|
|
|
AMB-AMS,
L.P.(3)
|
|
PMT, SPW and TNO
|
|
|
39
|
%
|
|
|
161,205
|
|
|
|
160,985
|
|
|
|
75,244
|
|
|
|
75,650
|
|
|
|
|
|
|
|
|
|
Other Industrial Operating Joint Ventures
|
|
|
|
|
83
|
%
|
|
|
348,690
|
|
|
|
372,536
|
|
|
|
57,435
|
|
|
|
62,210
|
|
|
|
|
|
|
|
|
|
Other Industrial Development Joint Ventures
|
|
|
|
|
41
|
%
|
|
|
224,609
|
|
|
|
181,600
|
|
|
|
92,510
|
|
|
|
81,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated Joint Ventures
|
|
|
|
|
|
|
|
$
|
1,736,033
|
|
|
$
|
1,713,272
|
|
|
$
|
733,914
|
|
|
$
|
731,229
|
|
|
$
|
54,300
|
|
|
$
|
54,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
AMB Institutional Alliance Fund II, L.P. is a co-investment
partnership, comprised of 13 institutional investors, which
invest through a private real estate investment trust, and one
third-party limited partner as of March 31, 2011. During
the third quarter of 2010, the Company purchased additional
shares from one of the existing institutional investors,
increasing the Companys ownership in the partnership to
approximately 24%. |
|
(2) |
|
AMB-SGP, L.P. is a co-investment partnership with Industrial JV
Pte. Ltd., a subsidiary of GIC Real Estate Pte. Ltd., the real
estate investment subsidiary of the Government of Singapore
Investment Corporation. |
|
(3) |
|
AMB-AMS,
L.P. is a co-investment partnership with three Dutch pension
funds. PMT is Stichting Pensioenfonds Metaal en Techniek, SPW is
Stichting Pensioenfonds voor de Woningcorporaties and TNO is
Stichting Pensioenfonds TNO. |
On August 2, 2010, the Company announced the formation of
AMB Mexico Fondo Logistico, a publicly traded co-investment
venture with a
10-year term
whose investment strategy is to develop, acquire, own, operate
and manage industrial distribution facilities primarily within
the Companys target markets in Mexico. Approximately
3.3 billion Pesos was raised from the third party investors
in the venture, comprised of institutional investors in Mexico,
primarily private pension plans. These contributions, net of
offering costs, held partially in Pesos and U.S. dollars,
totaled approximately $252.5 million using the exchange
rate in effect on March 31, 2011. These contributions,
excluding amounts transferred as detailed below, are held by a
third party trustee, which is not consolidated by the Company,
and, as such, the cash investment and equity interest of the
third party investors related to this portion of the
contributions are not reflected on the Companys
consolidated financial statements. During the three months ended
March 31, 2011, $4.1 million of the contributions made
by third party investors were transferred from the third party
trustee to the co-investment venture. The Company will
contribute 20% of the total equity, or approximately
$63.1 million, at full deployment, for total equity of
$315.6 million available for future investments. During the
three months ended March 31, 2011, the Company contributed
$1.0 million to this co-investment venture. As of
March 31, 2011, no investments had been made in real estate
properties within this co-investment venture.
22
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table reconciles the change in the Parent
Companys noncontrolling interests for the three months
ended March 31, 2010 (dollars in thousands):
|
|
|
|
|
Balance as of December 31, 2009
|
|
$
|
351,304
|
|
Net loss
|
|
|
(469
|
)
|
Contributions
|
|
|
3,769
|
|
Distributions and allocations
|
|
|
(2,173
|
)
|
Dividends
|
|
|
(946
|
)
|
|
|
|
|
|
Balance as of March 31, 2010
|
|
$
|
351,485
|
|
|
|
|
|
|
The following table details the noncontrolling interests of the
Parent Company as of March 31, 2011 and December 31,
2010 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
Redemption/Callable
|
|
|
2011
|
|
|
2010
|
|
|
Date
|
|
Joint venture partners
|
|
$
|
342,514
|
|
|
$
|
325,590
|
|
|
N/A
|
Limited partners in the Operating Partnership
|
|
|
37,352
|
|
|
|
37,773
|
|
|
N/A
|
Held through AMB Property II, L.P.:
|
|
|
|
|
|
|
|
|
|
|
Class B limited partners
|
|
|
17,495
|
|
|
|
18,036
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Total noncontrolling interests
|
|
$
|
397,361
|
|
|
$
|
381,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table distinguishes the Parent Companys
noncontrolling interests share of net income, including
noncontrolling interests share of development profits, for
the three months ended March 31, 2011 and 2010 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Joint venture partners share of net income (loss)
|
|
$
|
2,049
|
|
|
$
|
(375
|
)
|
Joint venture partners and common limited partners
share of development profits
|
|
|
20
|
|
|
|
67
|
|
Common limited partners in the Operating Partnerships
share of net income (loss)
|
|
|
79
|
|
|
|
(126
|
)
|
Held through AMB Property II, L.P.:
|
|
|
|
|
|
|
|
|
Class B common limited partnership units share of
development profits
|
|
|
9
|
|
|
|
39
|
|
Class B common limited partnership units share of net
income (loss)
|
|
|
37
|
|
|
|
(74
|
)
|
|
|
|
|
|
|
|
|
|
Total noncontrolling interests share of net income (loss)
|
|
$
|
2,194
|
|
|
$
|
(469
|
)
|
|
|
|
|
|
|
|
|
|
23
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
8.
|
Noncontrolling
Interests in the Operating Partnership
|
Noncontrolling interests in the Operating Partnership represent
limited partnership interests in AMB Property II, L.P., a
Delaware limited partnership, and interests held by third party
partners in several real estate joint ventures, aggregating
approximately 20.9 million square feet, which are
consolidated for financial reporting purposes.
The Operating Partnerships consolidated joint
ventures total investment and property debt at
March 31, 2011 and December 31, 2010 were as follows
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
Total Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partnerships
|
|
|
in Real Estate
|
|
|
Property Debt
|
|
|
Other Debt
|
|
|
|
Co-investment
|
|
Ownership
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
March 31,
|
|
|
December 31,
|
|
Consolidated Joint Ventures
|
|
Venture Partner
|
|
Percentage
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
Co-investment Ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB Institutional Alliance Fund II, L.P.
|
|
AMB Institutional Alliance REIT II, Inc.
|
|
|
24
|
%
|
|
$
|
521,227
|
|
|
$
|
518,516
|
|
|
$
|
182,849
|
|
|
$
|
184,292
|
|
|
$
|
54,300
|
|
|
$
|
54,300
|
|
AMB-SGP, L.P.
|
|
Industrial JV Pte. Ltd.
|
|
|
50
|
%
|
|
|
480,302
|
|
|
|
479,635
|
|
|
|
325,876
|
|
|
|
327,301
|
|
|
|
|
|
|
|
|
|
AMB-AMS,
L.P.
|
|
PMT, SPW and TNO
|
|
|
39
|
%
|
|
|
161,205
|
|
|
|
160,985
|
|
|
|
75,244
|
|
|
|
75,650
|
|
|
|
|
|
|
|
|
|
Other Industrial Operating Joint Ventures
|
|
|
|
|
83
|
%
|
|
|
348,690
|
|
|
|
372,536
|
|
|
|
57,435
|
|
|
|
62,210
|
|
|
|
|
|
|
|
|
|
Other Industrial Development Joint Ventures
|
|
|
|
|
41
|
%
|
|
|
224,609
|
|
|
|
181,600
|
|
|
|
92,510
|
|
|
|
81,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated Joint Ventures
|
|
|
|
|
|
|
|
$
|
1,736,033
|
|
|
$
|
1,713,272
|
|
|
$
|
733,914
|
|
|
$
|
731,229
|
|
|
$
|
54,300
|
|
|
$
|
54,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011, no investments had been made in real
estate properties within the AMB Mexico Fondo Logistico
co-investment venture.
The following table reconciles the change in the Operating
Partnerships noncontrolling interests for the three months
ended March 31, 2010 (dollars in thousands):
|
|
|
|
|
Balance as of December 31, 2009
|
|
$
|
312,743
|
|
Net loss
|
|
|
(410
|
)
|
Contributions
|
|
|
3,769
|
|
Distributions and allocations
|
|
|
(2,067
|
)
|
Distributions
|
|
|
(352
|
)
|
|
|
|
|
|
Balance as of March 31, 2010
|
|
$
|
313,683
|
|
|
|
|
|
|
The following table details the noncontrolling interests of the
Operating Partnership as of March 31, 2011 and
December 31, 2010 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
Redemption/Callable
|
|
|
2011
|
|
|
2010
|
|
|
Date
|
|
Joint venture partners
|
|
$
|
342,514
|
|
|
$
|
325,590
|
|
|
N/A
|
Held through AMB Property II, L.P.:
|
|
|
|
|
|
|
|
|
|
|
Class B limited partners
|
|
|
17,495
|
|
|
|
18,036
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Total noncontrolling interests
|
|
$
|
360,009
|
|
|
$
|
343,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table distinguishes the Operating
Partnerships noncontrolling interests share of net
income, including noncontrolling interests share of
development profits, for the three months ended March 31,
2011 and 2010 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Joint venture partners share of net income (loss)
|
|
$
|
2,049
|
|
|
$
|
(375
|
)
|
Held through AMB Property II, L.P.:
|
|
|
|
|
|
|
|
|
Class B common limited partnership units share of
development profits
|
|
|
9
|
|
|
|
39
|
|
Class B common limited partnership units share of net
income (loss)
|
|
|
37
|
|
|
|
(74
|
)
|
|
|
|
|
|
|
|
|
|
Total noncontrolling interests share of net income (loss)
|
|
$
|
2,095
|
|
|
$
|
(410
|
)
|
|
|
|
|
|
|
|
|
|
The Operating Partnership has consolidated joint ventures that
have finite lives under the terms of the joint venture
agreements. As of March 31, 2011, the aggregate book value
of the joint venture noncontrolling interests in the
accompanying consolidated balance sheets was approximately
$342.5 million. The Operating Partnership believes that the
aggregate settlement value of these interests was approximately
$453.5 million at March 31, 2011. However, there can
be no assurance that this will be the aggregate settlement value
of the interests. The aggregate settlement value is based on the
estimated liquidation values of the assets and liabilities and
the resulting proceeds that the Operating Partnership would
distribute to its joint venture partners upon dissolution, as
required under the terms of the respective joint venture
agreements. There can be no assurance that the estimated
liquidation values of the assets and liabilities and the
resulting proceeds that the Operating Partnership distributes
upon dissolution will be the same as the actual liquidation
values of such assets, liabilities and proceeds distributed upon
dissolution. Subsequent changes to the estimated fair values of
the assets and liabilities of the consolidated joint ventures
will affect the Operating Partnerships estimate of the
aggregate settlement value. The joint venture agreements do not
limit the amount to which the noncontrolling joint venture
partners would be entitled in the event of liquidation of the
assets and liabilities and dissolution of the respective joint
ventures.
|
|
9.
|
Investments
in Unconsolidated Joint Ventures
|
The Companys unconsolidated joint ventures net
equity investments at March 31, 2011 and December 31,
2010 were (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011
|
|
|
The Companys Net
|
|
|
|
|
|
|
The Companys
|
|
|
|
|
|
Equity Investments
|
|
|
Estimated
|
|
|
|
Ownership
|
|
|
Square
|
|
|
March 31,
|
|
|
December 31,
|
|
|
Investment
|
|
Unconsolidated Joint Ventures
|
|
Percentage
|
|
|
Feet
|
|
|
2011
|
|
|
2010
|
|
|
Capacity
|
|
|
Co-investment Ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB U.S. Logistics Fund, L.P.(1)
|
|
|
33
|
%
|
|
|
38,431,931
|
|
|
$
|
406,329
|
|
|
$
|
409,377
|
|
|
$
|
150,000
|
|
AMB Europe Logistics Fund, FCP-FIS(2)
|
|
|
37
|
%
|
|
|
10,887,361
|
|
|
|
174,127
|
|
|
|
172,903
|
|
|
|
300,000
|
|
AMB Japan Fund I, L.P.(3)
|
|
|
20
|
%
|
|
|
7,263,090
|
|
|
|
83,644
|
|
|
|
82,482
|
|
|
|
|
|
AMB-SGP Mexico, LLC(4)
|
|
|
22
|
%
|
|
|
6,352,103
|
|
|
|
20,193
|
|
|
|
20,646
|
|
|
|
|
|
AMB DFS Fund I, LLC(5)
|
|
|
15
|
%
|
|
|
195,210
|
|
|
|
14,303
|
|
|
|
14,426
|
|
|
|
|
|
AMB Brazil Logistics Partners Fund I, L.P.(6)
|
|
|
25
|
%
|
|
|
639,264
|
|
|
|
57,975
|
|
|
|
32,910
|
|
|
|
350,000
|
|
Other Industrial Operating Joint Ventures(7)
|
|
|
51
|
%
|
|
|
7,419,049
|
|
|
|
51,682
|
|
|
|
51,043
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Unconsolidated Joint Ventures(8)
|
|
|
|
|
|
|
71,188,008
|
|
|
$
|
808,253
|
|
|
$
|
783,787
|
|
|
$
|
800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
(1) |
|
An open-ended co-investment partnership formed in 2004 with
institutional investors, which invest through a private real
estate investment trust, and a third-party limited partner. |
|
(2) |
|
A Euro-denominated open-ended co-investment venture with
institutional investors. The institutional investors have
committed approximately 263.0 million Euros (approximately
$372.4 million in U.S. dollars, using the exchange rate at
March 31, 2011) for an approximate 63% equity
interest. Effective October 29, 2010, the name of AMB
Europe Fund I, FCP-FIS was changed to AMB Europe Logistics
Fund, FCP-FIS. |
|
(3) |
|
A Yen-denominated co-investment venture with 13 institutional
investors. The 13 institutional investors have committed
49.5 billion Yen (approximately $595.5 million in U.S.
dollars, using the exchange rate at March 31,
2011) for an approximate 80% equity interest. |
|
(4) |
|
A co-investment venture with Industrial (Mexico) JV Pte. Ltd., a
subsidiary of GIC Real Estate Pte. Ltd., the real estate
investment subsidiary of the Government of Singapore Investment
Corporation. |
|
(5) |
|
A co-investment venture with Strategic Realty Ventures, LLC. The
investment period for AMB DFS Fund I, LLC ended in June
2009, and the remaining capitalization of this fund as of
March 31, 2011 was the estimated investment of
$5.9 million to complete the existing development assets
held by the fund. Since inception, the Company has contributed
$28.9 million of equity to the fund. During each of the
three months ended March 31, 2011 and 2010, the Company
contributed $0.1 million to this co-investment venture. |
|
(6) |
|
A Brazilian Real denominated co-investment venture with a
third-party university endowment partner, which is consolidated
for accounting purposes. The third-party investor has committed
approximately 360.0 million Brazilian Reais for a 50%
equity interest (with a remaining uncalled commitment of
approximately $188.9 million in U.S. dollars, using the
exchange rate at March 31, 2011). This consolidated
co-investment venture does not hold any properties directly, but
holds a 50% equity interest in the unconsolidated joint venture
previously established with the Companys joint venture
partner Cyrela Commercial Properties. This structure results in
an effective 25% equity interest for the Company in the
ventures underlying development assets. During the three
months ended March 31, 2011, this joint venture commenced
development on 0.6 million square feet of properties. |
|
(7) |
|
Other Industrial Operating Joint Ventures includes joint
ventures between the Company and third parties which generally
have been formed to take advantage of a particular market
opportunity that can be accessed as a result of the joint
venture partners experience in the market. The Company
typically owns
40-60% of
these joint ventures. |
|
(8) |
|
In addition to the equity investment in the table, the Company,
through its investment in AMB Property Mexico, held equity
interests in various other unconsolidated ventures totaling
approximately $14.0 million and $13.3 million as of
March 31, 2011 and December 31, 2010, respectively.
Additionally, in December 2010, the Company entered into a
mortgage debt investment joint venture with a third-party
partner, in which it held an equity interest of
$87.6 million and $86.2 million as of March 31,
2011 and December 31, 2010, respectively. |
On March 3, 2011, the Company announced the formation of
AMB Europe Logistics JV, FCP-FIS, a co-investment venture with
Allianz Real Estate whose strategy is to acquire, own and
operate logistics properties primarily within major seaport,
airport and distribution markets in the Eurozone. The initial
third-party equity investment will be approximately
400.0 million Euros (approximately $566.3 million in
U.S. dollars using the exchange rate in effect at
March 31, 2011) and the ventures overall equity
commitment is 470.0 million Euros (approximately
$665.4 million in U.S. dollars using the same exchange
rate), including the Companys 15% co-investment. As of
March 31, 2011, no investments had been made in real estate
properties within this co-investment venture.
On March 16, 2011, the Company announced the formation of
AMB China Logistics Venture I, L.P., a co-investment
venture with HIP China Logistics Investments Limited, whose
strategy is to develop, acquire, own, operate and manage
logistics properties primarily within key markets in China. The
ventures overall equity
26
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
commitment is $588.0 million, of which the Company will
contribute $88.0 million for an approximate 15% ownership.
As of March 31, 2011, no investments had been made in real
estate properties within this co-investment venture.
For both the three months ended March 31, 2011 and 2010,
the Company received no distributions from its unconsolidated
joint ventures for the Companys share of the proceeds from
asset sales or financings during the respective periods.
The following table presents property related transactions for
the Companys unconsolidated co-investment ventures for the
three months ended March 31, 2011 and 2010 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB U.S. Logistics
|
|
AMB Europe Logistics Fund,
|
|
AMB DFS
|
|
|
Fund, L.P.
|
|
FCP-FIS
|
|
Fund I, LLC
|
|
|
For the Three Months Ended March 31,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Number of properties acquired
|
|
|
1
|
|
|
|
2
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square feet
|
|
|
278,365
|
|
|
|
687,932
|
|
|
|
29,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition cost(1)
|
|
$
|
17,300
|
|
|
$
|
45,552
|
|
|
$
|
5,202
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Development properties sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square feet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,817
|
|
|
|
|
|
Gross Sales Price
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
578
|
|
|
$
|
|
|
|
|
|
(1) |
|
Includes estimated total acquisition expenditures of
approximately $0.1 million for properties acquired by AMB
Europe Logistics Fund, FCP-FIS during the three months ended
March 31, 2011. Includes estimated total acquisition
expenditures of approximately $0.2 million for properties
acquired by AMB U.S. Logistics Fund, L.P. during the three
months ended March 31, 2010. |
The following table presents summarized income statement
information for the Companys unconsolidated joint ventures
for the three months ended March 31, 2011 and 2010 (dollars
in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
For the Three Months
|
|
|
|
Ended March 31, 2011
|
|
|
Ended March 31, 2010
|
|
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
|
|
|
|
|
|
|
|
|
|
Property
|
|
|
from
|
|
|
Net
|
|
|
|
|
|
Property
|
|
|
from
|
|
|
Net
|
|
|
|
|
|
|
Operating
|
|
|
Continuing
|
|
|
Income
|
|
|
|
|
|
Operating
|
|
|
Continuing
|
|
|
Income
|
|
Unconsolidated Joint Ventures:
|
|
Revenues
|
|
|
Expenses
|
|
|
Operations
|
|
|
(Loss)
|
|
|
Revenues
|
|
|
Expenses
|
|
|
Operations
|
|
|
(Loss)
|
|
|
Co-investment Ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB U.S. Logistics Fund, L.P.
|
|
$
|
71,051
|
|
|
$
|
(22,002
|
)
|
|
$
|
4,034
|
|
|
$
|
4,153
|
|
|
$
|
68,521
|
|
|
$
|
(19,228
|
)
|
|
$
|
1,663
|
|
|
$
|
1,663
|
|
AMB Europe Logistics Fund, FCP-FIS
|
|
|
26,369
|
|
|
|
(5,708
|
)
|
|
|
3,130
|
|
|
|
3,130
|
|
|
|
23,301
|
|
|
|
(5,257
|
)
|
|
|
339
|
|
|
|
339
|
|
AMB Japan Fund I, L.P.
|
|
|
29,185
|
|
|
|
(6,192
|
)
|
|
|
4,037
|
|
|
|
4,037
|
|
|
|
25,468
|
|
|
|
(5,433
|
)
|
|
|
5,246
|
|
|
|
5,246
|
|
AMB-SGP Mexico, LLC
|
|
|
8,922
|
|
|
|
(1,014
|
)
|
|
|
(1,881
|
)(1)
|
|
|
(1,881
|
)(1)
|
|
|
8,142
|
|
|
|
(1,555
|
)
|
|
|
(4,789
|
)(1)
|
|
|
(4,789
|
)(1)
|
AMB DFS Fund I, LLC
|
|
|
33
|
|
|
|
(431
|
)
|
|
|
(503
|
)
|
|
|
(420
|
)
|
|
|
|
|
|
|
(201
|
)
|
|
|
(283
|
)
|
|
|
(281
|
)
|
AMB Brazil Logistics Partners Fund I, L.P.(2)
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Co-investment Ventures
|
|
|
135,560
|
|
|
|
(35,347
|
)
|
|
|
8,855
|
|
|
|
9,057
|
|
|
|
125,432
|
|
|
|
(31,674
|
)
|
|
|
2,176
|
|
|
|
2,178
|
|
Other Industrial Operating Joint Ventures
|
|
|
8,534
|
|
|
|
(2,114
|
)
|
|
|
1,892
|
|
|
|
1,892
|
|
|
|
8,181
|
|
|
|
(1,978
|
)
|
|
|
1,503
|
|
|
|
1,503
|
|
Other Industrial Development Joint Ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Unconsolidated Joint Ventures
|
|
$
|
144,094
|
|
|
$
|
(37,461
|
)
|
|
$
|
10,747
|
|
|
$
|
10,949
|
|
|
$
|
133,613
|
|
|
$
|
(33,652
|
)
|
|
$
|
3,677
|
|
|
$
|
3,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
(1) |
|
Includes $3.8 million of interest expense on loans from
co-investment venture partners for each of the three months
ended March 31, 2011 and 2010. |
|
(2) |
|
This summarized financial information represents the financial
position and results of operation of the Companys joint
venture with its partner Cyrela Commercial Properties, of which
the Company holds a 25% equity interest through its 50%
co-investment in AMB Brazil Logistics Partners Fund I, L.P. |
In accordance with guidance issued by the FASB related to the
consolidation of VIEs, the Company has performed an analysis of
all of its joint venture entities to determine whether they
would qualify as VIEs and whether the joint ventures should be
consolidated or accounted for as an equity investment in an
unconsolidated joint venture. As a result of the Companys
qualitative assessment to determine whether these joint venture
entities are VIEs, the Company identified five joint venture
entities, owned in conjunction with the same joint venture
partner, which were VIEs based upon the criterion of having
insufficient equity investment at risk. Because these five joint
ventures, collectively referred to as the Five
Ventures, have partnership and management agreements with
the same joint venture partner and purposes that are nearly
identical, the following disclosures are made in the aggregate
for all Five Ventures. These Five Ventures have been formed as
limited liability companies with the sole purpose of acquiring,
developing, improving, maintaining, leasing, marketing and
selling properties for profit, with the majority of the business
activities to be financed by third-party debt. In determining
whether there was sufficient equity investment at risk, the
Company evaluated the individual balance sheets of the Five
Ventures by comparing the equity balance as well as the
outstanding debt balance to the total assets of the Five
Ventures.
After determining whether any joint ventures are VIEs, the
Company performs an assessment of which partner would be
considered the primary beneficiary of the identified VIEs and
would be required to consolidate the balance sheets and results
of operations of these entities on a quarterly basis. This
assessment is based upon which partner (1) had the power to
direct matters that most significantly impact the activities of
the VIEs, and (2) had the obligation to absorb losses or
the right to receive benefits of the VIEs that could potentially
be significant to the VIE based upon the terms of the
partnership and management agreements. Both the Company and the
joint venture partner in the entities had equal 50% ownership in
the Five Ventures, and per the terms of the partnership
agreement, they would both have an equal obligation to absorb
losses or the right to receive benefits of the VIEs. While the
joint venture partner is designated as the administrative member
and has the full power to manage the affairs and operations of
the Five Ventures, the partnership and management agreements
require consent of both partners for any major decisions, which
include: the adoption and any subsequent revision of the
operating budget and business plan; the entry into any
significant construction, development and property acquisition;
any capital transaction including sale, financing or refinancing
of the joint venture property; and the entry into or material
modification to any lease of the joint venture property. Based
upon this understanding, the Company concluded that both
partners shared equal power in the significant decisions of the
Five Ventures, as well as the financial rights and obligations,
and therefore neither partner would consolidate the Five
Ventures. As such, the Company accounts for the Five Ventures as
an equity investment in unconsolidated joint ventures.
The Company includes the following balances related to the Five
Ventures, as of March 31, 2011, in investments in
unconsolidated joint ventures in the consolidated balance sheet
as of March 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2011
|
|
|
Equity
|
|
Maximum Loss
|
|
|
Investment
|
|
Exposure
|
|
Five Ventures
|
|
$
|
3,426
|
|
|
$
|
3,426
|
(1)
|
|
|
|
(1) |
|
Per the partnership agreements for the Five Ventures, the
Companys liability is limited to its investment in the
entities. The Company does not guarantee any third-party debt
held by these Five Ventures. Capital contributions to the Five
Ventures subsequent to the initial capital contribution require
the unanimous approval of |
28
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
both the Company and the joint venture partner, and, as of
March 31, 2011, the Company has no commitment to make
additional contributions to the Five Ventures. |
|
|
10.
|
Stockholders
Equity of the Parent Company
|
Holders of common limited partnership units of the Operating
Partnership and class B common limited partnership units of
AMB Property II, L.P. have the right to require the Operating
Partnership or AMB Property II, L.P., as applicable, to redeem
part or all of their common limited partnership units or
class B common limited partnership units, as applicable,
for cash (based upon the fair market value of an equivalent
number of shares of common stock of the Parent Company at the
time of redemption). The right of the holders of common limited
partnership units is subject to the Operating Partnership or AMB
Property II, L.P., in its respective sole and absolute
discretion, electing to have the Parent Company exchange those
common limited partnership units for shares of the Parent
Companys common stock, whether or not such shares are
registered under the Securities Act of 1933, on a
one-for-one
basis, subject to adjustment in the event of stock splits, stock
dividends, issuance of certain rights, certain extraordinary
distributions and similar events. The redemption right is also
subject to the limits on ownership and transfer of common stock
set forth in the Parent Companys charter. With each
exchange of the Operating Partnerships common limited
partnership units for the Parent Companys common stock,
the Parent Companys percentage ownership in the Operating
Partnership will increase. The redemption right commences on or
after the first anniversary of a unitholder becoming a limited
partner of the Operating Partnership or of AMB Property II,
L.P., as applicable (or such other date agreed to by the
Operating Partnership or AMB Property II, L.P. and the unit
holder). During the three months ended March 31, 2011,
18,750 of the Operating Partnerships common limited
partnership units were exchanged for shares of the Parent
Companys common stock.
The Parent Company has authorized 100,000,000 shares of
preferred stock for issuance, of which the following series were
designated as of March 31, 2011: 2,300,000 shares of
series L cumulative redeemable preferred, of which
2,000,000 are outstanding; 2,300,000 shares of
series M cumulative redeemable preferred, all of which are
outstanding; 3,000,000 shares of series O cumulative
redeemable preferred, all of which are outstanding; and
2,000,000 shares of series P cumulative redeemable
preferred, all of which are outstanding.
The series L, M, O and P preferred stock have preference
rights with respect to distributions and liquidation over the
common stock. Holders of the series L, M, O and P preferred
stock are not entitled to vote on any matters, except under
certain limited circumstances. In the event of a cumulative
arrearage equal to six quarterly dividends, holders of the
series L, M, O and P preferred stock will have the right to
elect two additional members to serve on the Parent
Companys board of directors until dividends have been paid
in full. At March 31, 2011, there were no dividends in
arrears. The Parent Company may issue additional series of
preferred stock ranking on a parity with the series L, M, O
and P preferred stock, but may not issue any preferred stock
senior to the series L, M, O and P preferred stock without
the consent of two-thirds of the holders of each of the
series L, M, O and P preferred stock. The series L, M,
O and P preferred stock have no stated maturity and are not
subject to mandatory redemption or any sinking fund. The
series L and M preferred stock are redeemable solely at the
option of the Parent Company, in whole or in part, at $25.00 per
share, plus accrued and unpaid dividends. The series O and
P preferred stock will be redeemable at the option of the Parent
Company on and after December 13, 2010 and August 25,
2011, respectively, in whole or in part, at $25.00 per share,
plus accrued and unpaid dividends.
29
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table reconciles the change in the Parent
Companys consolidated stockholders equity for the
three months ended March 31, 2010 (dollars in thousands):
|
|
|
|
|
Balance as of December 31, 2009
|
|
$
|
3,291,320
|
|
Net loss
|
|
|
(620
|
)
|
Unrealized loss on securities and derivatives
|
|
|
(1,700
|
)
|
Currency translation adjustment
|
|
|
593
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
(1,727
|
)
|
Contributions
|
|
|
3,769
|
|
Distributions and allocations
|
|
|
(2,173
|
)
|
Stock-based compensation amortization and issuance of restricted
stock, net
|
|
|
6,812
|
|
Exercise of stock options
|
|
|
1,548
|
|
Forfeiture of stock
|
|
|
(1,671
|
)
|
Dividends
|
|
|
(46,783
|
)
|
|
|
|
|
|
Balance as of March 31, 2010
|
|
$
|
3,251,095
|
|
|
|
|
|
|
The following table sets forth the dividends or distributions
paid or payable per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
|
Ended March 31,
|
Paying Entity
|
|
Security
|
|
2011
|
|
2010
|
|
AMB Property Corporation
|
|
Common stock
|
|
$
|
0.280
|
|
|
$
|
0.280
|
|
AMB Property Corporation
|
|
Series L preferred stock
|
|
$
|
0.406
|
|
|
$
|
0.406
|
|
AMB Property Corporation
|
|
Series M preferred stock
|
|
$
|
0.422
|
|
|
$
|
0.422
|
|
AMB Property Corporation
|
|
Series O preferred stock
|
|
$
|
0.438
|
|
|
$
|
0.438
|
|
AMB Property Corporation
|
|
Series P preferred stock
|
|
$
|
0.428
|
|
|
$
|
0.428
|
|
In September 2010, the Parent Companys board of directors
approved a two-year common stock repurchase program for the
repurchase of up to $200.0 million of the parent
companys common stock. The Parent Company has not
repurchased any shares of its common stock under this program.
As of March 31, 2011, the Parent Companys stock
incentive plans have approximately 2.7 million shares of
common stock available for issuance as either stock options or
restricted stock grants. The fair value of each option grant is
generally estimated at the date of grant using the Black-Scholes
option-pricing model. The Parent Company uses historical data to
estimate option exercise and forfeitures within the valuation
model. Expected volatilities are based on historical volatility
of the Parent Companys stock. The risk-free rate for
periods within the expected life of the option is based on the
U.S. Treasury yield curve in effect at the time of the
grant.
The following table presents the assumptions and fair values for
grants made during 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Yield
|
|
Expected Volatility
|
|
Risk-free Interest Rate
|
|
Weighted Average
|
|
Weighted Average
|
|
|
|
|
Weighted
|
|
|
|
Weighted
|
|
|
|
Weighted
|
|
Expected Life
|
|
Grant Date
|
For the Quarter Ended
|
|
Range
|
|
Average
|
|
Range
|
|
Average
|
|
Range
|
|
Average
|
|
(Years)
|
|
Fair Value
|
|
March 31, 2011
|
|
3.4% - 5.0%
|
|
|
5.0
|
%
|
|
37.9% - 42.6%
|
|
|
38.0
|
%
|
|
2.4% - 2.7%
|
|
|
2.4
|
%
|
|
|
6.5
|
|
|
$
|
7.61
|
|
As of March 31, 2011, approximately 9,103,685 options and
1,382,296 non-vested stock awards were outstanding under the
plans. There were 925,979 stock options granted, 493,986 options
exercised, and 23,246 options forfeited during the three months
ended March 31, 2011. There were 548,389 restricted stock
awards made, 452,108 non-vested stock awards that vested and 122
non-vested stock awards that were forfeited during the three
months ended March 31, 2011. The grant date fair value of
restricted stock awards as of the grant dates of the awards
issued during the three months ended March 31, 2011 was
$33.00. The unamortized expense for restricted stock as
30
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
of March 31, 2011 was $30.9 million which is expected
to be recognized over a weighted average period of
2.8 years. As of March 31, 2011, the Parent Company
had $10.4 million of total unrecognized compensation cost
related to unvested options granted under the Parent
Companys stock incentive plans which is expected to be
recognized over a weighted average period of 1.6 years.
During the three months ended March 31, 2011, the Parent
Company did not issue any restricted share units
(RSUs). RSUs are granted to certain employees at a
rate of one common share per RSU and are valued on the grant
date based upon the market price of a common share on that date.
The value of the RSUs granted is recognized as compensation
expense over the applicable vesting period, which is generally
four years. Holders of RSUs do not receive voting rights, nor
are they eligible to receive dividends declared on outstanding
shares of common stock, during the vesting period. Shares of
common stock equivalent to the number of RSUs granted are
reserved for issuance until vesting of the RSUs has completed.
During the three months ended March 31, 2011, 25,122 RSUs
vested, and 58,893 RSUs are outstanding as of March 31,
2011.
|
|
11.
|
Partners
Capital of the Operating Partnership
|
Holders of common limited partnership units of the Operating
Partnership and class B common limited partnership units of
AMB Property II, L.P. have the right to require the Operating
Partnership or AMB Property II, L.P., as applicable, to redeem
part or all of their common limited partnership units or
class B common limited partnership units, as applicable,
for cash (based upon the fair market value of an equivalent
number of shares of common stock of the Parent Company at the
time of redemption). The right of the holders of common limited
partnership units is subject to the Operating Partnership or AMB
Property II, L.P., in its respective sole and absolute
discretion, electing to have the Parent Company exchange those
common limited partnership units for shares of the Parent
Companys common stock, whether or not such shares are
registered under the Securities Act of 1933, on a
one-for-one
basis, subject to adjustment in the event of stock splits, stock
dividends, issuance of certain rights, certain extraordinary
distributions and similar events. The redemption right is also
subject to the limits on ownership and transfer of common stock
set forth in the Parent Companys charter. With each
exchange of the Operating Partnerships common limited
partnership units for the Parent Companys common stock,
the Parent Companys percentage ownership in the Operating
Partnership will increase. The redemption right commences on or
after the first anniversary of a unitholder becoming a limited
partner of the Operating Partnership or of AMB Property II,
L.P., as applicable (or such other date agreed to by the
Operating Partnership or AMB Property II, L.P. and the unit
holder).
The series L, M, O and P preferred units have preference
rights with respect to distributions and liquidation over the
common units. The series L, M, O and P preferred units are
only redeemable if and when the shares of the series L, M,
O and P preferred stock are redeemed by the Parent Company. The
series L, M, O and P preferred stock have no stated
maturity and are not subject to mandatory redemption or any
sinking fund. Any such redemption would be for a purchase price
equivalent to that of the Parent Companys preferred stock.
The Parent Companys series L and M preferred stock
are redeemable solely at the option of the Parent Company, in
whole or in part, at $25.00 per share, plus accrued and unpaid
dividends. The series O and P preferred stock will be
redeemable solely at the option of the Parent Company on and
after December 13, 2010 and August 25, 2011,
respectively, in whole or in part, at $25.00 per share, plus
accrued and unpaid dividends.
The Operating Partnership has classified the preferred and
common units held by outside parties and by the Parent Company
as permanent equity based on the following considerations:
|
|
|
|
|
The Operating Partnership determined that settlement in the
Parent Companys stock is equivalent to settlement in
equity of the Operating Partnership. The Parent Companys
only significant asset is its interest in the Operating
Partnership and the Parent Company conducts substantially all of
its business through the Operating Partnership. The Parent
Companys stock is the economic equivalent of the Operating
Partnerships corresponding units. The Company has
concluded that a redemption and issuance of shares in exchange
for units does not represent a delivery of assets.
|
31
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
In accordance with the guidance for Contracts in Entitys
Own Equity, the Operating Partnership, as the issuer of the
units, controls the settlement options of the redemption of the
units (shares or cash). Pursuant to an assignment agreement, the
Parent Company has transferred to the Operating Partnership the
right to elect to acquire some or all of any tendered units from
the tendering partner in exchange for stock of the Parent
Company. The unitholder has no control over whether it receives
cash or Parent Company stock. There are no factors outside the
issuers control that could impact those settlement options
and there are no provisions that could require cash settlement
upon redemption of units. The Operating Partnership units that
are held by the Parent Company are redeemable only to maintain
the 1:1 ratio of outstanding shares of the Parent Company to the
outstanding units of the Operating Partnership and to facilitate
the transfer of cash to the Parent Company from the Operating
Partnership upon redemption of Parent Company stock. The Parent
Company and the Operating Partnership are structured and
operated as one interrelated, consolidated business under a
single management. The decision to pay cash or have the Parent
Company issue registered or unregistered shares of stock is made
by a single management team acting for both the Operating
Partnership and the Parent Company and causing the entities to
act in concert.
|
|
|
|
Management has concluded that there is no conflict in fiduciary
duty or interest with respect to the decision to settle a
redemption request in cash or common shares of the Parent
Company.
|
As of March 31, 2011, the Operating Partnership had
outstanding 169,321,293 common general partnership units;
2,058,730 common limited partnership units; 2,000,000 6.5%
series L cumulative redeemable preferred units; 2,300,000
6.75% series M cumulative redeemable preferred units;
3,000,000 7.00% series O cumulative redeemable preferred
units; and 2,000,000 6.85% series P cumulative redeemable
preferred units.
The following table reconciles the change in Operating
Partnerships partners capital for the three months
ended March 31, 2010 (dollars in thousands):
|
|
|
|
|
Balance as of December 31, 2009
|
|
$
|
3,291,320
|
|
Net loss
|
|
|
(620
|
)
|
Unrealized loss on securities and derivatives
|
|
|
(1,700
|
)
|
Foreign currency translation adjustments
|
|
|
593
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
(1,727
|
)
|
Contributions
|
|
|
3,769
|
|
Distributions and allocations
|
|
|
(2,173
|
)
|
Stock-based compensation amortization and issuance of common
limited partnership units in connection with the issuance of
restricted stock, net
|
|
|
6,812
|
|
Issuance of common limited partnership units in connection with
the exercise of stock options
|
|
|
1,548
|
|
Forfeiture of common limited partnership units in connection
with the forfeiture of stock
|
|
|
(1,671
|
)
|
Distributions
|
|
|
(46,783
|
)
|
|
|
|
|
|
Balance as of March 31, 2010
|
|
$
|
3,251,095
|
|
|
|
|
|
|
32
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table sets forth the distributions paid or payable
per unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
|
Ended March 31,
|
Paying Entity
|
|
Security
|
|
2011
|
|
2010
|
|
AMB Property, L.P.
|
|
Common limited partnership units
|
|
$
|
0.280
|
|
|
$
|
0.280
|
|
AMB Property, L.P.
|
|
Series L preferred units
|
|
$
|
0.406
|
|
|
$
|
0.406
|
|
AMB Property, L.P.
|
|
Series M preferred units
|
|
$
|
0.422
|
|
|
$
|
0.422
|
|
AMB Property, L.P.
|
|
Series O preferred units
|
|
$
|
0.438
|
|
|
$
|
0.438
|
|
AMB Property, L.P.
|
|
Series P preferred units
|
|
$
|
0.428
|
|
|
$
|
0.428
|
|
AMB Property II, L.P.
|
|
Class B common limited partnership units
|
|
$
|
0.280
|
|
|
$
|
0.280
|
|
For each share of common stock the Parent Company issues
pursuant to the Parent Companys and Operating
Partnerships stock incentive plans, the Operating
Partnership will issue a corresponding common partnership unit
to the Parent Company. As of March 31, 2011, the stock
incentive plans have approximately 2.7 million shares of
common stock available for issuance as either stock options or
restricted stock grants. Note 10 above entitled
Stockholders Equity of the Parent Company
should be read in conjunction with this Note 11 for a
discussion of the activity under the Parent Companys stock
incentive plans.
|
|
12.
|
Income
(Loss) Per Share and Unit
|
Effective January 1, 2009, the Company adopted a policy
which clarifies that share-based payment awards that entitle
their holders to receive nonforfeitable dividends before vesting
should be considered participating securities. As participating
securities, these instruments should be included in the
computation of earnings per share (EPS) using the
two-class method.
33
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Parent Company had no dilutive stock options outstanding for
either the three months ended March 31, 2011 or 2010. The
computation of the Parent Companys basic and diluted EPS
is presented below (dollars in thousands, except share and per
share amounts):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
Loss from continuing operations attributable to common
stockholders
|
|
$
|
(4,632
|
)
|
|
$
|
(992
|
)
|
Preferred stock dividends
|
|
|
(3,952
|
)
|
|
|
(3,952
|
)
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations (after noncontrolling
interests share of loss from continuing operations,
preferred stock dividends and preferred unit redemption discount)
|
|
|
(8,584
|
)
|
|
|
(4,944
|
)
|
Total discontinued operations attributable to common
stockholders after noncontrolling interests
|
|
|
16,760
|
|
|
|
841
|
|
Allocation to participating securities
|
|
|
(355
|
)
|
|
|
(344
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders
|
|
$
|
7,821
|
|
|
$
|
(4,447
|
)
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Basic
|
|
|
168,099,995
|
|
|
|
148,666,418
|
|
Stock option dilution(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
168,099,995
|
|
|
|
148,666,418
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share attributable to AMB
Property Corporation
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
Discontinued operations
|
|
|
0.10
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders(2)
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common share attributable to AMB
Property Corporation
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
Discontinued operations
|
|
|
0.10
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders(2)
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Excludes anti-dilutive stock options of 5,362,851 and 6,410,907
for the three months ended March 31, 2011 and 2010,
respectively. These weighted average shares relate to
anti-dilutive stock options, which are calculated using the
treasury stock method, and could be dilutive in the future. |
|
(2) |
|
In accordance with the Companys policies for EPS and
participating securities, the net income (loss) available to
common stockholders is adjusted for earnings distributed through
declared dividends and allocated to all participating securities
(weighted average common shares outstanding and unvested
restricted stock outstanding) under the two-class method. Under
this method, allocations were made to 1,269,422 and 1,228,034
unvested restricted shares outstanding for the three months
ended March 31, 2011 and 2010, respectively. |
When the Parent Company issues shares of common stock upon the
exercise of stock options or issues restricted stock, the
Operating Partnership issues corresponding common general
partnership units to the Parent Company on a
one-for-one
basis. The Operating Partnership had no dilutive stock options
outstanding for either the three months ended March 31,
2011 or 2010. Such dilution was computed using the treasury
stock method. The
34
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
computation of the Operating Partnerships basic and
diluted income (loss) per unit is presented below (dollars in
thousands, except unit and per unit amounts):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
Loss from continuing operations attributable to common
unitholders
|
|
$
|
(4,759
|
)
|
|
$
|
(1,063
|
)
|
Preferred stock distributions
|
|
|
(3,952
|
)
|
|
|
(3,952
|
)
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations (after noncontrolling
interests share of loss from continuing operations,
preferred unit distributions and preferred unit redemption
discount)
|
|
|
(8,711
|
)
|
|
|
(5,015
|
)
|
Total discontinued operations attributable to common unitholders
after noncontrolling interests
|
|
|
16,986
|
|
|
|
853
|
|
Allocation to participating securities
|
|
|
(355
|
)
|
|
|
(344
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common unitholders
|
|
$
|
7,920
|
|
|
$
|
(4,506
|
)
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
Basic
|
|
|
170,173,425
|
|
|
|
150,786,346
|
|
Stock option dilution(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common units
|
|
|
170,173,425
|
|
|
|
150,786,346
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common unit attributable to AMB
Property, L.P.
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
Discontinued operations
|
|
|
0.10
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common unitholders(2)
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per common unit attributable to AMB
Property, L.P.
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
Discontinued operations
|
|
|
0.10
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common unitholders(2)
|
|
$
|
0.05
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Excludes anti-dilutive stock options of 5,362,851 and 6,410,907
for the three months ended March 31, 2011 and 2010,
respectively. These weighted average shares relate to
anti-dilutive stock options, which are calculated using the
treasury stock method, and could be dilutive in the future. |
|
(2) |
|
In accordance with the Companys policies for EPS and
participating securities, the net income (loss) available to
common unitholders is adjusted for earnings distributed through
declared distributions and allocated to all participating
securities (weighted average common units outstanding and
unvested restricted units outstanding) under the two-class
method. Under this method, allocations were made to 1,269,422
and 1,228,034 unvested restricted units outstanding for the
three months ended March 31, 2011 and 2010, respectively. |
35
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Company has two lines of business: real estate operations
and private capital. Real estate operations is comprised of
various segments while private capital consists of a single
segment, on which the Company evaluates its performance. For
further details, refer to Note 17 of Part IV,
Item 15 of the Annual Report on
Form 10-K
for the Parent Company and the Operating Partnership for the
year ended December 31, 2010.
Summary information for the reportable segments is as follows
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
Property NOI(2)
|
|
|
Development Gains (Losses)
|
|
|
|
For the Three Months
|
|
|
For the Three Months
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
Ended March 31,
|
|
|
Ended March 31,
|
|
Segments(1)
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
U.S. Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southern California
|
|
$
|
20,553
|
|
|
$
|
19,540
|
|
|
$
|
15,738
|
|
|
$
|
15,154
|
|
|
$
|
|
|
|
$
|
5
|
|
No. New Jersey/New York
|
|
|
15,912
|
|
|
|
14,694
|
|
|
|
9,191
|
|
|
|
8,965
|
|
|
|
|
|
|
|
|
|
San Francisco Bay Area
|
|
|
21,408
|
|
|
|
19,936
|
|
|
|
15,147
|
|
|
|
13,703
|
|
|
|
|
|
|
|
566
|
|
Chicago
|
|
|
8,922
|
|
|
|
9,527
|
|
|
|
5,053
|
|
|
|
5,930
|
|
|
|
|
|
|
|
|
|
On-Tarmac
|
|
|
12,396
|
|
|
|
12,863
|
|
|
|
5,673
|
|
|
|
6,482
|
|
|
|
|
|
|
|
|
|
South Florida
|
|
|
9,536
|
|
|
|
10,405
|
|
|
|
6,336
|
|
|
|
7,001
|
|
|
|
|
|
|
|
|
|
Seattle
|
|
|
4,658
|
|
|
|
3,771
|
|
|
|
3,558
|
|
|
|
2,713
|
|
|
|
|
|
|
|
|
|
Toronto
|
|
|
7,304
|
|
|
|
7,353
|
|
|
|
4,801
|
|
|
|
5,209
|
|
|
|
|
|
|
|
|
|
Baltimore/Washington
|
|
|
4,958
|
|
|
|
5,647
|
|
|
|
3,546
|
|
|
|
3,940
|
|
|
|
|
|
|
|
|
|
Non U.S. Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
7,236
|
|
|
|
5,673
|
|
|
|
4,334
|
|
|
|
2,860
|
|
|
|
|
|
|
|
(122
|
)
|
Japan
|
|
|
10,484
|
|
|
|
8,015
|
|
|
|
7,558
|
|
|
|
5,456
|
|
|
|
|
|
|
|
|
|
Other Markets
|
|
|
31,144
|
|
|
|
28,816
|
|
|
|
19,971
|
|
|
|
18,970
|
|
|
|
1,637
|
|
|
|
4,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total markets
|
|
|
154,511
|
|
|
|
146,240
|
|
|
|
100,906
|
|
|
|
96,383
|
|
|
|
1,637
|
|
|
|
4,803
|
|
Straight-line rents and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of lease intangibles
|
|
|
5,972
|
|
|
|
4,289
|
|
|
|
5,972
|
|
|
|
4,289
|
|
|
|
|
|
|
|
|
|
Discontinued operations
|
|
|
(2,398
|
)
|
|
|
(3,884
|
)
|
|
|
(855
|
)
|
|
|
(2,145
|
)
|
|
|
(1,637
|
)
|
|
|
|
|
Private capital income
|
|
|
7,683
|
|
|
|
7,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
165,768
|
|
|
$
|
154,090
|
|
|
$
|
106,023
|
|
|
$
|
98,527
|
|
|
$
|
|
|
|
$
|
4,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The markets included in U.S. markets are a subset of the
Companys regions defined as East, West and Central in the
Americas. Japan is a part of the Companys Asia region. |
|
(2) |
|
Property net operating income (NOI) is defined as
rental revenues, including reimbursements, less property
operating expenses. NOI excludes depreciation, amortization,
general and administrative expenses, restructuring charges, real
estate impairment losses, debt extinguishment losses,
development profits (losses), gains (losses) from sale or
contribution of real estate interests, and interest expense. The
Company 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 the
Companys 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 the Companys operating performance with that of
other companies. Real estate impairment losses have been
excluded in deriving NOI because the Company does not consider
its impairment losses to be a property operating expense. |
36
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
The Company 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 the Companys assets but do not reflect the
current operating performance of the assets with respect to
their revenues or expenses. The Companys 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 the Companys real estate operations
and should be excluded from its calculation of NOI. |
In addition, the Company believes that NOI helps investors
compare the operating performance of its real estate as compared
to other companies. While 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 the Companys
liquidity or operating performance. 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 the
Companys results from operations. Further, the
Companys computation of NOI may not be comparable to that
of other real estate companies, as they may use different
methodologies for calculating NOI. For a reconciliation of NOI
to net income, see the table below.
The following table is a reconciliation from NOI to reported net
income (loss), a financial measure under GAAP (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Property NOI
|
|
$
|
106,023
|
|
|
$
|
98,527
|
|
Private capital revenues
|
|
|
7,683
|
|
|
|
7,445
|
|
Depreciation and amortization
|
|
|
(54,986
|
)
|
|
|
(47,381
|
)
|
General and administrative
|
|
|
(30,661
|
)
|
|
|
(31,951
|
)
|
Restructuring charges
|
|
|
|
|
|
|
(2,973
|
)
|
Merger transaction costs
|
|
|
(3,697
|
)
|
|
|
|
|
Fund costs
|
|
|
(241
|
)
|
|
|
(314
|
)
|
Other expenses
|
|
|
(946
|
)
|
|
|
(1,191
|
)
|
Development profits, net of taxes
|
|
|
|
|
|
|
4,803
|
|
Equity in earnings of unconsolidated joint ventures, net
|
|
|
7,800
|
|
|
|
3,875
|
|
Other income
|
|
|
1,238
|
|
|
|
289
|
|
Interest expense, including amortization
|
|
|
(34,942
|
)
|
|
|
(32,589
|
)
|
Total discontinued operations
|
|
|
17,051
|
|
|
|
840
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
14,322
|
|
|
$
|
(620
|
)
|
|
|
|
|
|
|
|
|
|
37
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Companys total assets by reportable segments were
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
Total Assets as of
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
U.S. Markets
|
|
|
|
|
|
|
|
|
Southern California
|
|
$
|
642,317
|
|
|
$
|
640,329
|
|
No. New Jersey/New York
|
|
|
556,126
|
|
|
|
558,653
|
|
San Francisco Bay Area
|
|
|
761,172
|
|
|
|
754,632
|
|
Chicago
|
|
|
294,121
|
|
|
|
297,081
|
|
On-Tarmac
|
|
|
144,359
|
|
|
|
148,327
|
|
South Florida
|
|
|
402,348
|
|
|
|
401,298
|
|
Seattle
|
|
|
144,853
|
|
|
|
146,275
|
|
Toronto
|
|
|
313,649
|
|
|
|
307,472
|
|
Baltimore/Washington
|
|
|
133,118
|
|
|
|
133,197
|
|
Non U.S. Markets
|
|
|
|
|
|
|
|
|
Europe
|
|
|
611,551
|
|
|
|
573,172
|
|
Japan
|
|
|
739,218
|
|
|
|
758,855
|
|
Other Markets
|
|
|
1,508,403
|
|
|
|
1,519,047
|
|
|
|
|
|
|
|
|
|
|
Total markets
|
|
|
6,251,235
|
|
|
|
6,238,338
|
|
Investments in unconsolidated joint ventures
|
|
|
911,003
|
|
|
|
883,241
|
|
Non-segment assets
|
|
|
258,525
|
|
|
|
251,316
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
7,420,763
|
|
|
$
|
7,372,895
|
|
|
|
|
|
|
|
|
|
|
|
|
14.
|
Commitments
and Contingencies
|
Commitments
Lease Commitments. The Company has entered
into operating ground leases on certain land parcels, primarily
on-tarmac facilities and office space with remaining lease terms
of 1 to 79 years. Buildings and improvements subject to
ground leases are depreciated ratably over the lesser of the
terms of the related leases or 40 years.
Standby Letters of Credit. As of
March 31, 2011, the Company had provided approximately
$13.2 million in letters of credit, of which
$10.7 million was provided under the Operating
Partnerships $600.0 million unsecured credit
facility. The letters of credit were required to be issued under
certain ground lease provisions, bank guarantees and other
commitments.
Guarantees and Contribution
Obligations. Excluding parent guarantees
associated with debt or contribution obligations as discussed in
Notes 5, 6 and 9 above, as of March 31, 2011, the
Company had outstanding guarantees and contribution obligations
in the aggregate amount of $406.2 million as described
below.
As of March 31, 2011, the Company had outstanding bank
guarantees in the amount of $0.3 million used to secure
contingent obligations, primarily obligations under development
and purchase agreements. As of March 31, 2011, the Company
also guaranteed $61.3 million and $84.0 million on
outstanding loans on five of its consolidated joint ventures and
three of its unconsolidated joint ventures, respectively.
Also, the Company has entered into contribution agreements with
its unconsolidated co-investment ventures. These contribution
agreements require the Company to make additional capital
contributions to the applicable
38
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
co-investment
venture upon certain defaults by the co-investment venture of
certain of its debt obligations to the lenders. Such additional
capital contributions will cover all or part of the applicable
co-investment ventures debt obligation and may be greater
than the Companys share of the co-investment
ventures debt obligation or the value of its share of any
property securing such debt. The Companys contribution
obligations under these agreements will be reduced by the
amounts recovered by the lender and the fair market value of the
property, if any, used to secure the debt and obtained by the
lender upon default. The Companys potential obligations
under these contribution agreements totaled $260.6 million
as of March 31, 2011.
As of March 31, 2011, the Company may make additional
capital contributions to current and planned co-investment
ventures of up to $464.6 million pursuant to the terms of
the co-investment venture agreements.
Performance and Surety Bonds. As of
March 31, 2011, the Company had outstanding performance and
surety bonds in an aggregate amount of $4.8 million. These
bonds were issued in connection with certain of its development
projects and were posted to guarantee certain property tax
obligations and the construction of certain real property
improvements and infrastructure. The performance and surety
bonds are renewable and expire upon the payment of the property
taxes due or the completion of the improvements and
infrastructure.
Promote Interests and Other Contractual
Obligations. Upon the achievement of certain
return thresholds and the occurrence of certain events, the
Company may be obligated to make payments to certain of its
joint venture partners pursuant to the terms and provisions of
their contractual agreements with the Operating Partnership.
From time to time in the normal course of the Companys
business, the Company enters into various contracts with third
parties that may obligate it to make payments, pay promotes or
perform other obligations upon the occurrence of certain events.
Contingencies
Litigation. In the normal course of business,
from time to time, the Company may be involved in legal actions
relating to the ownership and operations of its properties and
its other business activities. Management does not expect that
the liabilities, if any, that may ultimately result from such
legal actions will have a material adverse effect on the
consolidated financial position, results of operations or cash
flows of the Company.
The Parent Company and the Operating Partnership have been named
as defendants in several pending putative shareholder class
actions filed in connection with the combination of the Parent
Company and ProLogis (the Merger).
Three of the actions were filed in the District Court for the
City and County of Denver, Colorado. These cases have been
consolidated, and on or about April 1, 2011, plaintiffs
filed a consolidated class action complaint against ProLogis,
the members of the ProLogis board of trustees, the Parent
Company, New Pumpkin Inc., Upper Pumpkin LLC, Pumpkin LLC and
the Operating Partnership. The complaint alleges that
ProLogis trustees breached their fiduciary duties in
connection with entering into the merger agreement and that
ProLogis, the Parent Company, New Pumpkin Inc., Upper Pumpkin
LLC, Pumpkin LLC and the Operating Partnership aided and abetted
the breaches of those fiduciary duties. The complaint further
alleges that the registration statement filed on
Form S-4
in connection with the special meetings of the shareholders of
each of the Parent Company and ProLogis to vote on the
transaction (the Registration Statement) contains
material omissions and misstatements. The plaintiffs seek, among
other relief, an order to (i) enjoin the defendants from
consummating the Merger unless and until ProLogis adopts and
implements a procedure or process reasonably designed to enter
into a merger agreement providing the best possible value for
ProLogis shareholders, (ii) direct the defendants to
exercise their fiduciary duties to obtain a transaction that is
in the best interests of ProLogis shareholders and to
refrain from entering into any transaction until the process for
the sale or merger of ProLogis is completed and the highest
possible value obtained, (iii) rescind the merger
agreement, to the extent already implemented, and
(iv) award plaintiffs costs and disbursements of the
action. Defendants have moved to stay the Colorado action in
favor of the Maryland action described below. Plaintiffs have
moved for expedited discovery, and the defendants have opposed
that motion.
39
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Two of the actions were filed in the Circuit Court of Maryland
for Baltimore City. The actions have been consolidated, and the
plaintiffs filed a consolidated class action and derivative
complaint on or about March 28, 2011. The Maryland
consolidated complaint names the same defendants as the Colorado
consolidated complaint. The complaint alleges that the members
of the ProLogis board of trustees breached their fiduciary
duties in connection with the Merger and that the Parent Company
and the Operating Partnership aided and abetted the breaches of
those fiduciary duties. The complaint further alleges that the
Registration Statement is misleading and incomplete. The
plaintiffs in this action seek, among other relief, an order to
(i) enjoin, preliminarily and permanently, the Merger,
(ii) rescind the Merger in the event it is consummated or
award rescissory damages, (iii) direct the defendants to
account to plaintiffs and all other members of the class for all
damages, profits and any special benefits defendants obtained as
a result of their breaches of fiduciary duties, and
(iv) award plaintiffs the costs of the action. Defendants
moved to dismiss the Maryland action for failure to state a
claim and to stay all discovery pending a ruling on their motion
to dismiss; the plaintiffs moved for expedited discovery in
advance of a preliminary injunction hearing. On April 15,
2011, the parties to the Maryland action executed a memorandum
of understanding that embodies their agreement in principle on
the structure of a proposed settlement. The proposed settlement,
which is subject to confirmatory discovery and court approval
following notice to the class of all ProLogis shareholders
during the period from January 30, 2011 through the date of
the consummation of the proposed merger (the Class),
would dismiss all causes of action asserted in the Maryland
consolidated complaint and release all claims that members of
the Class may have arising out of or relating in any manner to
the proposed merger, including all claims being asserted in the
Colorado action. Pursuant to the terms of the proposed
settlement, defendants agreed to make certain supplemental
disclosures to shareholders in the Registration Statement. The
parties reported to the Maryland court on April 18, 2011
that they had reached agreement on a proposed settlement and
executed a memorandum of understanding. On April 27, 2011,
the parties to the consolidated action in Colorado reached an
agreement in principle on the structure of a proposed
settlement. Under the proposed settlement, which is subject to
confirmatory discovery and approval of the Maryland court
following notice to the Class, defendants agreed to make
additional disclosures in the Registration Settlement.
The Parent Company and the Operating Partnership believe that
the claims asserted against them in these lawsuits are without
merit and intend to defend themselves vigorously against the
claims.
Environmental Matters. The Company monitors
its properties for the presence of hazardous or toxic
substances. The Company is not aware of any environmental
liability with respect to the properties that would have a
material adverse effect on the Companys business, assets
or results of operations. However, there can be no assurance
that such a material environmental liability does not exist. The
existence of any such material environmental liability would
have an adverse effect on the Companys results of
operations and cash flow. The Company carries environmental
insurance and believes that the policy terms, conditions, limits
and deductibles are adequate and appropriate under the
circumstances, given the relative risk of loss, the cost of such
coverage and current industry practice.
General Uninsured Losses. The Company carries
property and rental loss, liability, flood and terrorism
insurance. The Company believes that the policy terms,
conditions, limits and deductibles are adequate and appropriate
under the circumstances, given the relative risk of loss, the
cost of such coverage and current industry practice. In
addition, a significant number of the Companys properties
are located in areas that are subject to earthquake activity. As
a result, the Company has obtained limited earthquake insurance
on those properties. There are, however, certain types of
extraordinary losses, such as those due to acts of war, that may
be either uninsurable or not economically insurable. Although
the Company has obtained coverage for certain acts of terrorism,
with policy specifications and insured limits that it believes
are commercially reasonable, there can be no assurance that the
Company will be able to collect under such policies. Should an
uninsured loss occur, the Company could lose its investment in,
and anticipated profits and cash flows from, a property.
Captive Insurance Company. The Company has a
wholly owned captive insurance company, Arcata National
Insurance Ltd. (Arcata), which provides insurance coverage for
all or a portion of losses below the
40
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
attachment point of the Companys third-party insurance
policies. The captive insurance company is one element of the
Companys overall risk management program. The Company
capitalized Arcata in accordance with the applicable regulatory
requirements. Arcata establishes annual premiums based on
projections derived from the past loss experience at the
Companys properties. Like premiums paid to third-party
insurance companies, premiums paid to Arcata may be reimbursed
by customers pursuant to specific lease terms. Through this
structure, the Company believes that it has more comprehensive
insurance coverage at an overall lower cost than would otherwise
be available in the market.
|
|
15.
|
Derivatives
and Hedging Activities
|
Risk
Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its
business operations and economic conditions. The Company
principally manages its exposures to a wide variety of business
and operational risks through management of its core business
activities. The Company manages economic risks, including
interest rate, liquidity, and credit risk primarily by managing
the amount, sources, and duration of its debt funding and the
use of derivative financial instruments. Specifically, the
Company enters into derivative financial instruments to manage
exposures that arise from business activities that result in the
receipt or payment of future known and uncertain cash amounts,
the value of which are determined by interest rates. The
Companys derivative financial instruments are used to
manage differences in the amount, timing, and duration of the
Companys known or expected cash receipts and its known or
expected cash payments principally related to the Companys
borrowings. The Companys derivative financial instruments
in effect at March 31, 2011 used to manage these exposures
and differences were 24 outstanding interest rate swaps and one
interest rate cap hedging cash flows of variable rate borrowings
based on U.S. LIBOR.
Certain of the Companys foreign operations expose the
Company to fluctuations of foreign interest rates and exchange
rates. These fluctuations may impact the value of the
Companys cash receipts and payments in terms of the
Companys functional currency. The Company enters into
derivative financial instruments to protect the value or fix the
amount of certain obligations in terms of its functional
currency, the U.S. dollar. At March 31, 2011, the
Company had four foreign exchange forward contracts hedging
intercompany loans.
Cash Flow
Hedges of Interest Rate Risk
The Companys objectives in using interest rate derivatives
are to add stability to interest expense and to manage its
exposure to interest rate movements. To accomplish this
objective, the Company primarily uses interest rate swaps and
caps as part of its interest rate risk management strategy.
Interest rate swaps designated as cash flow hedges involve the
receipt of variable-rate amounts from a counterparty in exchange
for the Company making fixed-rate payments over the life of the
agreements without exchange of the underlying notional amount.
Interest rate caps designated as cash flow hedges involve the
receipt of variable-rate amounts from a counterparty if interest
rates rise above the strike rate on the contract in exchange for
an upfront premium.
The effective portion of changes in the fair value of
derivatives designated and that qualify as cash flow hedges is
recorded in accumulated other comprehensive (loss) income as a
separate component of stockholders equity for the Parent
Company and within partners capital for the Operating
Partnership and is subsequently reclassified into earnings in
the period that the hedged forecasted transaction affects
earnings. During the three months ended ended March 31,
2011, such derivatives were used to hedge the variable cash
flows associated with existing variable-rate borrowings.
Amounts reported in accumulated other comprehensive (loss)
income related to derivatives will be reclassified to interest
expense as interest payments are made on the Companys
variable-rate borrowings. For the next twelve months from
March 31, 2011, the Company estimates that an additional
$0.1 million will be reclassified as a decrease to interest
expense.
41
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
As of March 31, 2011, the Company had the following
outstanding interest rate derivatives that were designated as
cash flow hedges of interest rate risk:
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Trade Notional
|
Related Derivatives
|
|
Instruments
|
|
Amount
|
|
|
|
|
(in thousands)
|
|
Interest rate swaps (EUR)
|
|
|
18
|
|
|
$
|
1,121,109
|
(1)
|
Interest rate swap (JPY)
|
|
|
5
|
|
|
$
|
231,634
|
|
Interest rate cap (USD)
|
|
|
1
|
|
|
$
|
26,500
|
|
|
|
|
(1) |
|
Includes five interest rate swaps entered into for the same
notional amount with each of three different lenders. See
Part 1, Item 3: Quantitative and
Qualitative Disclosures About Market Risk for a detail of
the individual interest rate swaps. |
Non-designated
Derivatives
Derivatives not designated as hedges are not speculative and are
used to manage the Companys exposure to identified risks,
such as foreign currency exchange rate fluctuations, but do not
meet the strict hedge accounting requirements of the accounting
policy for derivative instruments and hedging activities. At
March 31, 2011, the Company had four foreign exchange
forward contracts hedging intercompany loans, one interest rate
swap and one interest rate cap hedging a construction loan and
other variable rate borrowings which were not designated as
hedges. Changes in the fair value of derivatives not designated
in hedging relationships are recorded directly in earnings and
are offset by changes in the fair value of the underlying assets
or liabilities being hedged, which are also recorded in earnings.
As of March 31, 2011, the Company had the following
outstanding derivatives that were non-designated hedges:
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Trade Notional
|
Related Derivatives
|
|
Instruments
|
|
Amount
|
|
|
|
|
(in thousands)
|
|
Interest rate swap (EUR)
|
|
|
1
|
|
|
$
|
26,617
|
|
Foreign exchange forward contracts
|
|
|
4
|
|
|
$
|
451,446
|
|
The table below presents the fair value of the Companys
derivative financial instruments as well as their classification
on the consolidated balance sheets as of March 31, 2011 and
December 31, 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value of Derivative Instruments at March 31,
2011
|
|
|
|
Asset Derivatives
|
|
|
Liability Derivatives
|
|
|
|
Balance Sheet
|
|
|
|
|
|
Balance Sheet
|
|
|
|
|
|
|
Location
|
|
|
Fair Value
|
|
|
Location
|
|
|
Fair Value
|
|
|
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
|
Other assets
|
|
|
$
|
5,607
|
|
|
|
Other liabilities
|
|
|
$
|
727
|
|
Interest rate cap
|
|
|
Other assets
|
|
|
|
4
|
|
|
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
5,611
|
|
|
|
|
|
|
$
|
727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
|
Other assets
|
|
|
$
|
977
|
|
|
|
Other liabilities
|
|
|
$
|
|
|
Foreign exchange forward contracts
|
|
|
Other assets
|
|
|
|
339
|
|
|
|
Other liabilities
|
|
|
|
477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
1,316
|
|
|
|
|
|
|
$
|
477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative instruments
|
|
|
|
|
|
$
|
6,927
|
|
|
|
|
|
|
$
|
1,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value of Derivative Instruments at December 31,
2010
|
|
|
|
Asset Derivatives
|
|
|
Liability Derivatives
|
|
|
|
Balance Sheet
|
|
|
|
|
|
Balance Sheet
|
|
|
|
|
|
|
Location
|
|
|
Fair Value
|
|
|
Location
|
|
|
Fair Value
|
|
|
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap
|
|
|
Other assets
|
|
|
$
|
835
|
|
|
|
Other liabilities
|
|
|
$
|
1,730
|
|
Interest rate cap
|
|
|
Other assets
|
|
|
|
8
|
|
|
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
843
|
|
|
|
|
|
|
$
|
1,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
|
Other assets
|
|
|
$
|
713
|
|
|
|
Other liabilities
|
|
|
$
|
|
|
Interest rate cap
|
|
|
Other assets
|
|
|
|
108
|
|
|
|
Other liabilities
|
|
|
|
1,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
821
|
|
|
|
|
|
|
$
|
1,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative instruments
|
|
|
|
|
|
$
|
1,664
|
|
|
|
|
|
|
$
|
2,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The tables below present the effect of the Companys
derivative financial instruments on the consolidated statements
of operations for the three months ended March 31, 2011 and
2010 (in thousands):
|
|
|
|
|
|
|
|
|
Location of (Loss) Gain
|
|
|
|
Derivative Instruments Not
|
|
Recognized in Statement
|
|
Amount of (Loss) Gain
|
|
Designated as Hedging Instruments
|
|
of Operations
|
|
Recognized
|
|
|
For the three months ended March 31, 2011
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
Other income (expense)
|
|
$
|
(15,581
|
)
|
Interest rate swaps
|
|
Interest expense
|
|
|
(224
|
)
|
Interest rate swaps
|
|
Other income (expense)
|
|
|
220
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
(15,585
|
)
|
|
|
|
|
|
|
|
For the three months ended March 31, 2010
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
Other income (expense)
|
|
$
|
16,878
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
16,878
|
|
|
|
|
|
|
|
|
43
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of Loss
|
|
|
|
|
|
(Loss) Gain Recognized
|
|
|
Reclassified from
|
|
Loss Reclassified
|
|
|
|
in Accumulated Other
|
|
|
Accumulated OCI into
|
|
from Accumulated
|
|
|
|
Comprehensive (Loss)
|
|
|
Statement of
|
|
OCI into Statement
|
|
Derivative Instruments in
|
|
Income (OCI)
|
|
|
Operations
|
|
of Operations
|
|
Cash Flow Hedging Relationships
|
|
(Effective Portion)
|
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
|
For the three months ended March 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
$
|
5,456
|
|
|
Interest expense
|
|
$
|
(318
|
)
|
Interest rate caps
|
|
|
(19
|
)
|
|
Interest expense
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,437
|
|
|
|
|
$
|
(332
|
)
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
$
|
(238
|
)
|
|
Interest expense
|
|
$
|
(801
|
)
|
Interest rate caps
|
|
|
(88
|
)
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(326
|
)
|
|
|
|
$
|
(801
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Credit-risk-related
Contingent Features
In order to limit the financial risks associated with derivative
applications, the Company requires rigorous counterparty
selection criteria and agreements to minimize counterparty risk
for
over-the-counter
derivatives. For the Companys derivatives, the
counterparty is typically the same entity as, or an affiliate
of, the lender.
The Companys agreements with its derivative counterparties
contain default and termination provisions related to the
Companys debt. If certain of the Companys
indebtedness (excluding its corporate lines of credit and
intra-company indebtedness) in an amount in excess of three
percent of the Companys equity, as determined at the end
of the last fiscal year, becomes, or becomes capable of being
declared, due and payable earlier than it otherwise would have
been, then the Company could also be declared in default on its
derivative obligations. Also, if an event of default occurs
under the Companys corporate lines of credit and, as a
result, amounts outstanding under such lines are declared or
become due and payable in an amount in excess of three percent
of the Companys equity, as determined at the end of the
last fiscal year, it shall constitute an additional termination
event under the derivative contracts.
In April 2011, the Company contributed $168 million of real
estate assets to AMB China Logistics Venture I, L.P.
Additionally, the Company acquired the joint venture
partners 50% interest in its AMB-SGP, L.P. co-investment
venture.
In April 2011, third party investors committed
$87.6 million of equity to AMB U.S. Logistics Fund,
L.P., of which $29.6 million was contributed during April.
On April 28, 2011, the Securities and Exchange Commission
declared the Companys registration statement on
Form S-4
relating to the proposed merger with ProLogis effective. The
special meeting for the Companys common stockholders to
vote on the proposed merger will be June 1, 2011. Subject
to receipt of stockholder approval and satisfaction or waiver of
the other closing conditions, the anticipated effective date of
the merger is June 3, 2011.
On May 3, 2011, the Operating Partnership commenced offers
to exchange all outstanding notes of certain series issued by
ProLogis (the ProLogis Notes) for corresponding
series of notes to be issued by the Operating Partnership and
guaranteed by the Company (the AMB LP Notes) in
the aggregate principal amount of
44
AMB
PROPERTY CORPORATION AND AMB PROPERTY, L.P.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
approximately $4.6 billion (the exchange
offers). The closing of the exchange offer transactions
are contingent on and conditioned upon the closing of the
pending merger transaction with ProLogis. In the event that the
pending merger transaction is not completed, the exchange offers
will not close. The AMB LP Notes will be issued under and
governed by the terms of a new Operating Partnership indenture.
The Operating Partnership is making the exchange offers and, on
behalf of the combined company, the solicitation of consents to
amend the ProLogis indenture governing the ProLogis Notes. A
holder who does not validly tender its ProLogis Notes for
exchange, or whose notes are not accepted for exchange, will
remain a holder of such ProLogis Notes. If the proposed
amendments to the ProLogis indenture are adopted, all such
ProLogis Notes will be governed by the ProLogis indenture as
amended by the proposed amendments, which will have less
restrictive terms and afford reduced protections to the holders
of such securities compared to those currently in the ProLogis
indenture. The Operating Partnership is making the exchange
offers and, on behalf of the combined company, the solicitation
of consents in anticipation of the pending merger of equals of
the Company and ProLogis. For more information on the exchange
offers and the solicitation of consents, see the registration
statement on Form S-4 filed by the Company and the
Operating Partnership with the SEC on May 3, 2011 and a
related letter of transmittal and consent that contains a more
complete description of the terms and conditions of the exchange
offers and the solicitation of consents.
45
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Item 2.
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Managements
Discussion and Analysis of Financial Condition and Results of
Operations
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Some of the information included in this quarterly report on
Form 10-Q
contains forward-looking statements, such as those related to
our capital resources, portfolio performance, results of
operations and managements beliefs and expectations, 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 the companys 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 the
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 the company may not be able to realize them.
The following factors, among others, apply to the
companys business as a whole and could cause its actual
results and future events to differ materially from those set
forth or contemplated in the forward-looking statements:
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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);
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risks associated with using debt to fund the companys
business activities, including re-financing and interest rate
risks;
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the companys failure to obtain, renew, or extend
necessary financing or access the debt or equity markets;
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the companys failure to maintain its current credit
agency ratings or comply with its debt covenants;
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risks related to the proposed merger transaction with
ProLogis, including litigation related to the merger, any
decreases in the market price of ProLogis stock and the risk
that, if completed, the merger may not achieve its intended
results;
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risks associated with the ability to consummate the proposed
merger transaction with ProLogis and the timing of the closing
of the merger;
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risks related to the companys obligations in the event
of certain defaults under co-investment venture and other
debt;
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risks associated with equity and debt securities financings
and issuances (including the risk of dilution);
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defaults on or non-renewal of leases by customers, lease
renewals at lower than expected rent or failure to lease
properties at all or on favorable rents and terms;
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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;
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unknown liabilities acquired in connection with acquired
properties, portfolios of properties, or interests in
real-estate related entities;
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the companys failure to successfully integrate acquired
properties and operations;
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risks and uncertainties affecting property development,
redevelopment and value-added conversion (including construction
delays, cost overruns, the companys inability to obtain
necessary permits and financing,
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the companys inability to lease properties at all or at
favorable rents and terms, and public opposition to these
activities);
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the companys 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;
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risks and uncertainties relating to the disposition of
properties to third parties and the companys ability to
effect such transactions on advantageous terms and to timely
reinvest proceeds from any such dispositions;
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risks of doing business internationally and global expansion,
including unfamiliarity with new markets and currency risks;
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risks of changing personnel and roles;
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losses in excess of the companys insurance coverage;
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changes in local, state and federal regulatory requirements,
including changes in real estate and zoning laws;
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increases in real property tax rates;
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risks associated with the companys tax structuring;
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increases in interest rates and operating costs or greater
than expected capital expenditures; and
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environmental uncertainties and risks related to natural
disasters.
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In addition, if the parent company fails to qualify and
maintain its status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended, then the parent
companys actual results and future events could differ
materially from those set forth or contemplated in the
forward-looking statements.
The companys 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 the Annual Report on
Form 10-K
for AMB Property Corporation and AMB Property, L.P. for the year
ended December 31, 2010, and the Amendment No. 2 to
the Registration Statement on
Form S-4
for AMB Property Corporation, filed with the SEC on
April 28, 2011, and any amendments thereto. The company
cautions you not to place undue reliance on forward-looking
statements, which reflect the companys analysis only and
speak as of the date of this report or as of the dates indicated
in the statements. All of the companys forward-looking
statements, including those in this report, are qualified in
their entirety by this statement. The company assumes no
obligation to update or supplement forward-looking
statements.
The company uses the terms industrial properties or
industrial buildings to describe the various types
of industrial properties in its portfolio and uses these terms
interchangeably with the following: logistics facilities,
centers or warehouses, High Throughput
Distribution®
(HTD®)
facilities; or any combination of these terms. The company uses
the term owned and managed to describe assets in
which it has at least a 10% ownership interest, for which it is
the property or asset manager and which it currently intends to
hold for the long term. The company uses the term joint
venture to describe all joint ventures, including
co-investment ventures with real estate developers, other real
estate operators, or institutional investors where the company
may or may not have control, act as the manager
and/or
developer, earn asset management distributions or fees, or earn
incentive distributions or promote interests. In certain cases,
the company might provide development, leasing, property
management
and/or
accounting services, for which it may receive compensation. The
company uses the term co-investment venture to
describe joint ventures with institutional investors, managed by
the company, from which the company typically receives
acquisition fees for acquisitions, portfolio and asset
management distributions or fees, as well as incentive
47
distributions or promote interests. Unless otherwise indicated,
managements discussion and analysis applies to both the
operating partnership and the parent company.
The companys website address is
http://www.amb.com.
The company posts and will post announcements and other company
information, some of which may be material, in the Investor
Relations section of the companys website. Investors
should visit the companys website regularly to access such
information. The annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
of the parent company and any amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 are available on the
companys website free of charge as soon as reasonably
practicable after the company electronically files such material
with, or furnishes it to, the SEC. The public may read and copy
these materials at the SECs Public Reference Room at
100 F Street, NE, Washington, DC 20549. The public may
obtain information on the operation of the Public Reference Room
by calling the SEC at
1-800-SEC-0330.
The SEC maintains a website that contains such reports, proxy
and information statements and other information, and the
Internet address is
http://www.sec.gov.
The companys Corporate Governance Principles and Code of
Business Conduct are also posted on the companys website.
Information contained on the companys website is not and
should not be deemed a part of this report or any other report
or filing filed with or furnished to the SEC. The operating
partnership does not have a separate internet address and its
SEC reports are available free of charge upon request to the
attention of the companys Investor Relations Department,
AMB Property Corporation, Pier 1, Bay 1, San Francisco,
CA 94111. The following marks are registered trademarks of
AMB Property Corporation:
AMB®;
and High Throughput
Distribution®
(HTD®).
48
THE
COMPANY
The company is 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, 2011, the company owned, or had investments in,
on a consolidated basis or through unconsolidated joint
ventures, properties and development projects expected to total
approximately 161.0 million square feet (15.0 million
square meters) in 49 markets within 15 countries.
Of the approximately 161.0 million square feet as of
March 31, 2011:
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on an owned and managed basis, which includes investments held
on a consolidated basis or through unconsolidated joint
ventures, the company owned or partially owned approximately
140.2 million square feet (principally, warehouse
distribution buildings) that were 92.8% leased; the company had
investments in 12 development projects, which are expected to
total approximately 5.3 million square feet upon
completion; the company owned 25 development projects, totaling
approximately 6.8 million square feet, which are available
for sale or contribution; and the company had three value-added
acquisitions, totaling approximately 1.2 million square
feet;
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through non-managed unconsolidated joint ventures, the company
had investments in 46 industrial operating buildings, totaling
approximately 7.3 million square feet; and
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152,000 square feet of office space subject to a ground
lease, which is the location of its global headquarters.
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The companys business is operated primarily through the
operating partnership. As of March 31, 2011, the parent
company owned an approximate 98.2% general partnership interest
in the operating partnership, excluding preferred units. As the
sole general partner of the operating partnership, the parent
company has the full, exclusive and complete responsibility for
and discretion in its
day-to-day
management and control.
The parent company is a self-administered and self-managed real
estate investment trust and it expects that it has qualified,
and will continue to qualify, as a real estate investment trust
for federal income tax purposes beginning with the year ended
December 31, 1997. As a self-administered and self-managed
real estate investment trust, the companys own employees
perform its corporate, administrative and management functions,
rather than the company relying on an outside manager for these
services.
The company believes that real estate is fundamentally a local
business and is best operated by local teams in each of its
markets. As a vertically integrated company, the company
actively manages its portfolio of properties. In select markets,
the company may, from time to time, establish relationships with
third-party real estate management firms, brokers and developers
that provide some property-level administrative and management
services under the companys direction.
The parent company was incorporated in the state of Maryland in
1997, and the operating partnership was formed in the state of
Delaware in 1997. See Part I, Item 1: Note 13 of
Notes to Consolidated Financial Statements for
segment information related to the companys operations and
information regarding geographic areas.
The companys global headquarters are located at Pier 1,
Bay 1, San Francisco, California 94111; the companys
telephone number is
(415) 394-9000.
The companys other principal office locations are in
Amsterdam, Boston, Chicago, Los Angeles, Mexico City, Shanghai,
Singapore and Tokyo.
Investment
Strategy
The companys investment strategy focuses on providing
distribution and logistics space to customers whose businesses
are tied to global trade and depend on the efficient movement of
goods through the global supply chain. The companys
properties are primarily located in the worlds busiest
distribution markets featuring large, supply-constrained infill
locations with dense populations and proximity to airports,
seaports and ground transportation systems. When measured by
annualized base rent, on an owned and managed basis, a
substantial majority of the companys portfolio of
industrial properties is located in its target markets and much
of this is in infill submarkets. Infill locations are
characterized by supply constraints on the availability of land
for competing projects as well as physical, political or
economic barriers to new development. The company believes that
its facilities are essential to
49
creating efficiencies in the supply chain, and that its business
encompasses a blend of real estate, global logistics and
infrastructure.
In its target markets, the company focuses on
HTD®
facilities, industrial properties designed to facilitate the
rapid distribution of its customers products rather than
the long-term storage of goods. The companys investment
focus on
HTD®
assets is based on what it believes to be a global trend toward
lower inventory levels and expedited supply chains.
HTD®
facilities generally have a variety of physical and location
characteristics that allow for the rapid transport of goods from
point to point. These physical characteristics could include
numerous dock doors, shallower building depths, fewer columns,
large truck courts and more space for trailer parking. The
company believes that these building characteristics help its
customers reduce their costs and become more efficient in their
logistics operations. The companys customers include
logistics, freight forwarding and air-express companies with
time-sensitive needs that value facilities proximate to
transportation infrastructure.
The company believes that changes in global trade have been a
primary driver of demand for industrial real estate for decades.
The company has observed that demand for industrial real estate
is further influenced by the long-term relationship between
trade and GDP. Trade and GDP are correlated as higher levels of
investment, production and consumption within a globalized
economy are consistent with increased levels of imports and
exports. As the world produces and consumes more, the company
believes that the volume of global trade will continue to
increase at a rate in excess of growth in global GDP. In the
first quarter of 2011, consumption improved as evidenced by
container volumes that were above peak levels. Furthermore, real
inventories recovered approximately halfway from their trough
and are expected to continue building throughout the year.
Management believes that the recovery in global trade is on
track and is expected to lead to an increase in demand for
logistics space globally. Global trade volumes are currently
above peak levels and IMF forecasts for 2011 indicate 7% growth
in global trade. Management believes that its key hub and
gateway markets will continue to lead the recovery in operating
fundamentals and that a stronger recovery of fundamentals is
expected to take hold later in 2011, with further increases in
positive net absorption and declining availabilities.
Primary
Sources of Revenue and Earnings
The primary source of the companys core earnings is
revenue received from its real estate operations and private
capital business. The principal contributor of its core earnings
is rent received from customers under long-term (generally three
to 10 years) operating leases at its properties, including
reimbursements from customers for certain operating costs and
asset management fees. The company also generates core earnings
from its private capital business, including priority
distributions, acquisition and development reimbursements,
promote interests and incentive distributions from its
co-investment ventures. The company may generate additional
earnings from the disposition of assets in its
development-for-sale
and value-added conversion programs, as well as from land sales.
Long-Term
Growth Strategies
The company believes that its long-term growth will be driven by
its ability to:
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maintain and increase occupancy rates
and/or
increase rental rates at its properties;
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raise third-party equity and grow earnings generated from its
private capital business by way of the acquisition and
development of new properties or through the possible management
of third party assets co-invested with the company;
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acquire industrial real estate with total returns above the
companys cost of capital; and
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develop properties profitably and then either hold or sell them
to third-parties.
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Growth
through Operations
The company seeks to generate long-term internal growth by
maintaining a high occupancy rate and competitive rents at its
properties and by controlling expenses, thus capitalizing on the
economies of scale inherent in owning, operating and growing a
large global portfolio. The company actively manages its
portfolio by
50
establishing leasing strategies and negotiating lease terms,
pricing, and level and timing of property improvements. With
respect to its leasing strategies, the company takes a long-term
view to ensure it maximizes the value of its real estate. The
company leased 8.9 million square feet of its operating
portfolio in the first quarter of 2011, which represents the
highest level of leasing for a first quarter and the second
highest level of leasing for any quarter in the companys
history. The company believes that its long-standing focus on
customer relationships and ability to provide global solutions
for a well-diversified customer base in the logistics, shipping
and air cargo industries will enable it to continue to
capitalize on opportunities as they arise.
The company believes the strategic infill locations within its
portfolio, the experience of its cycle-tested operations team
and its ability to respond quickly to the needs of its customers
provides a competitive advantage in leasing. Management believes
the companys regular maintenance, capital expenditure,
energy management and sustainability programs create cost
efficiencies that benefit the company and its customers.
Growth
through Co-Investments
The company, through AMB Capital Partners, LLC, its private
capital group, was one of the pioneers of the real estate
investment trust (REIT) industrys co-investment model and
has more than 27 years of experience in asset management
and fund formation. The company co-invests in properties with
private capital investors through partnerships, limited
liability companies or other joint ventures. The company has a
direct and long-standing relationship with a significant number
of institutional investors. As of March 31, 2011, more than
58% of the companys owned and managed operating portfolio
is held through its co-investment ventures and funds. The
company tailors industrial portfolios to investors
specific needs in separate or commingled accounts and deploys
capital in both close- ended and open-ended structures, while
providing complete portfolio management and financial reporting
services. Generally, the company is the largest investor in its
open-ended funds and owns a
10-50%
interest in its co-investment ventures. The company believes its
significant ownership in each of its funds provides a strong
alignment of interests with its co-investment partners
interests.
The company believes its co-investment program with private
capital investors will continue to serve as a source of capital
for new investments and revenues for its stockholders. In
anticipation of the formation of future co-investment ventures,
the company may also hold acquired and newly developed
properties for contribution to future co-investment ventures.
The company may make additional investments through its existing
co-investment ventures or to new co-investment ventures in the
future and currently plans to do so. The company is in various
stages of discussions with prospective investors to attract new
capital to take advantage of potential future opportunities and
these capital-raising activities may include the formation of
new joint ventures. Such transactions, if the company completes
them, may be material individually or in aggregate.
Growth
through Acquisitions and Capital Redeployment
The company believes its acquisition experience and its network
of property management, leasing and acquisition resources will
continue to provide opportunities for growth. In addition to its
internal resources, the company has long-standing relationships
with lenders, leasing and investment sales brokers, as well as
third-party local property management firms, which may give it
access to additional acquisition opportunities. The company is
actively monitoring opportunities in its target markets and
intends to acquire high-quality, well-located industrial real
estate.
Additionally, the company seeks to acquire industrial properties
that are wholly or partially vacant as a part of
managements belief that the discount in pricing attributed
to the operating challenges of such a property could provide
greater returns once it is stabilized. Value-added acquisitions
represent unstabilized properties acquired by the company, which
generally have one or more of the following characteristics:
(i) existing vacancy, typically in excess of 20%,
(ii) short-term lease rollover, typically during the first
two years of ownership, or (iii) significant capital
improvement requirements, typically in excess of 20% of the
purchase price. The company excludes value-added acquisitions
from its owned and managed and consolidated operating statistics
prior to stabilization (generally 90% leased) in order to
provide investors with data which it feels better reflect the
performance of its core portfolio. The company strives to
enhance the quality of its portfolio through acquisitions that
are accretive
51
to the companys earnings and its net asset value. The
company also seeks to redeploy capital from the sale of
non-strategic assets into properties that better fit its current
investment focus.
The company is generally engaged in various stages of
negotiations for a number of acquisitions and other
transactions, some of which may be significant, that may
include, but are not limited to, individual properties, large
multi-property portfolios and platforms and property-owning or
real-estate-related entities.
Growth
through Development
The companys development business consists of conventional
development,
build-to-suit
development, redevelopment, value-added conversions and land
sales. In the first quarter of 2011, AMB initiated development
projects in Beijing, Hamburg, Sao Paolo and Osaka, markets in
which customer demand exceeds existing supply. The company
believes, over the long term, customer demand for new industrial
space in strategic markets tied to global trade will continue to
outpace supply, most notably in major gateway markets in Asia,
Europe and the Americas. The company believes that developing,
redeveloping
and/or
expanding of well-located, high-quality industrial properties
provides higher rates of return than may be obtained from
purchasing existing properties. However, new developments,
redevelopments and value-added conversions may require
significant management attention and capital investment to
maximize returns. The company pursues development projects
directly and in co-investment ventures and development joint
ventures, providing it with the flexibility to pursue
development projects independently or in partnerships, depending
on market conditions, submarkets or building sites and
availability of capital. Completed development and redevelopment
properties are held in its owned and managed portfolio or sold
to third parties.
Management believes its long-standing focus on infill locations
can at times lead to opportunities to enhance value through the
conversion of some of the companys industrial properties
to higher and better uses. Value-added conversion projects
generally involve a significant enhancement or a change in use
of the property from an industrial facility to a higher and
better use, including use as research & development,
manufacturing, office, residential, or retail properties.
Activities required to prepare the property for conversion to a
higher and better use may include rezoning, redesigning,
reconstructing and re-tenanting. The sales price of a
value-added conversion project is generally based on the
underlying land value, reflecting its ultimate conversion to a
higher and better use and, as such, little to no residual value
is ascribed to the industrial building. Generally, the company
expects to sell to third parties these value-added conversion
projects at some point in the re-entitlement and conversion
process, thus recognizing the enhanced value of the underlying
land that supports the propertys repurposed use.
Proposed
Merger with ProLogis
On January 30, 2011, the parent company and the operating
partnership entered into an Agreement and Plan of Merger (the
merger agreement) with ProLogis, a Maryland real
estate investment trust, New Pumpkin Inc., a Maryland
corporation and a wholly owned subsidiary of ProLogis, Upper
Pumpkin LLC, a Delaware limited liability company and a wholly
owned subsidiary of New Pumpkin Inc., and Pumpkin LLC, a
Delaware limited liability company and a wholly owned subsidiary
of Upper Pumpkin, LLC. The merger agreement provides for a
merger of equals, in which through a series of transactions,
ProLogis and its newly formed subsidiaries will be merged with
and into the parent company (the merger), with the
parent company continuing as the surviving corporation with its
corporate name changed to ProLogis Inc. As a result
of the merger, each outstanding common share of beneficial
interest of ProLogis will be converted into the right to receive
0.4464 of a newly issued share of common stock of the parent
company. The merger is subject to customary closing conditions,
including receipt of approval of parent company stockholders and
ProLogis shareholders.
The merger transactions entail the following steps:
(1) Pumpkin LLC will be merged with and into ProLogis, with
ProLogis continuing as the surviving entity and as a wholly
owned subsidiary of Upper Pumpkin, LLC; (2) then, New
Pumpkin, Inc. will be merged with and into the parent company
with the parent company continuing as the surviving corporation
and its corporate name changed, and (3) then, the surviving
corporation will contribute all of the outstanding equity
interests of Upper Pumpkin, LLC to the operating partnership in
exchange for the issuance by the operating partnership of
partnership interests to the surviving corporation. As a result
of these merger transactions, the combined company will be
structured as an umbrella partnership real estate investment
52
trust, or UPREIT, which, like the parent company,
will own substantially all of its assets and conduct all of its
operations through the operating partnership.
Additional
Information About the Proposed Transaction and Where to Find
it:
In connection with the proposed transaction, the company filed
with the SEC a registration statement on
Form S-4,
which became effective on April 28, 2011, that includes a
joint proxy statement of ProLogis and the company and also
constitutes a prospectus of the company. ProLogis and the
company have also filed other relevant documents with the SEC
regarding the proposed transaction. INVESTORS ARE URGED TO READ
THE JOINT PROXY STATEMENT/PROSPECTUS, ANY AMENDMENTS THERETO AND
OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of the
joint proxy statement/prospectus, any amendments thereto and
other relevant documents filed by ProLogis and the company with
the SEC at the SECs website at www.sec.gov. Copies
of the documents filed by ProLogis with the SEC are available
free of charge on ProLogis website at www.prologis.com or
by contacting ProLogis Investor Relations at +1-303-567-5690.
Copies of the documents filed by the company with the SEC are
available free of charge on the companys website at
www.amb.com or by contacting AMB Investor Relations at
+1-415-394-9000.
The company and ProLogis and their respective directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies
in respect of the proposed transaction. You can find information
about the companys executive officers and directors in the
companys definitive proxy statement filed with the SEC on
March 23, 2011. You can find information about
ProLogis executive officers and directors in
ProLogis Amendment No. 1 to Annual Report on
Form 10-K
for the year ended December 31, 2010 filed with the SEC on
March 28, 2011. Additional information regarding the
interests of such potential participants is included in the
joint proxy statement/prospectus, any amendments thereto and
other relevant documents filed with the SEC. You may obtain free
copies of these documents from the company or ProLogis using the
sources indicated above.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such jurisdiction. No offering of securities shall be made
except by means of a prospectus meeting the requirements of
Section 10 of the U.S. Securities Act of 1933, as
amended.
Managements
Overview
From managements perspective, the global economic recovery
is continuing and the fundamentals of logistics real estate
continue to improve. As such, management expects there to be an
increase in demand for industrial real estate globally and
management believes that the company has a leading position and
competitive advantage in pursuing growth opportunities. To that
end, the companys three priorities for 2011 are to:
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increase the utilization of its assets;
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scale the organization and become more profitable; and
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form new co-investment ventures and funds.
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Management expects to see earnings growth if the company is able
to improve asset utilization by returning its owned and managed
portfolio closer to its historical occupancy average of 95%;
complete the
lease-up of
its development portfolio; and realize value from its land bank
through new ventures, sales and future
build-to-suit
projects. Management believes real inventories in the
U.S. have recovered approximately halfway from their trough
and are expected to continue building throughout the year. The
company is underway with development projects in Beijing,
Hamburg, Sao Paolo and Osaka, markets in which customer demand
exceeds existing supply. Furthermore, the company is currently
evaluating multiple opportunities in its target markets around
the globe and management believes that additional capital
deployment opportunities will begin to surface in 2011.
Management believes that its ability to provide multiple forms
of consideration to institutional investors, lenders and private
developers provide the company with proprietary access to
acquisition opportunities. Additionally, management believes its
53
existing and new private capital co-investment ventures and
joint ventures are well positioned to benefit from the expected
shift in customer demand for high-quality, well-located
industrial real estate.
Strength
of Balance Sheet and Liquidity
As of March 31, 2011 the companys share of liquidity
was more than $1.4 billion, consisting of approximately
$1.2 billion of availability on its lines of credit and
approximately $204 million of unrestricted cash and cash
equivalents.
Real
Estate Operations
Fundamentals in the U.S. industrial real estate market
further improved in the first quarter of 2011. According to CBRE
Econometric Advisors, the availability rate declined
20 basis points to 14.1% and net absorption was positive
29.3 million square feet. Over the past four quarters,
66 million square feet has been absorbed, the largest four
quarter total since the first quarter of 2008. The recovery
continues to be broad-based in the first quarter with over 60%
of the markets in the U.S. reflecting positive net
absorption. Availabilities in the coastal markets declined
40 basis points to 11.6% after peaking at 12.5% in the
first quarter of 2010. The company continues to believe that
record-low construction, when met by stronger demand, will drive
the availability rate back down and that there will be a
substantial improvement in net absorption in 2011.
Cash-basis same-store net operating income (SS NOI),
without the effects of lease termination fees, increased
0.2 percent during the first quarter of 2011 compared with
the same period in 2010, driven by increases in occupancy. This
increase in quarterly SS NOI marked the second consecutive
quarter of positive
year-over-year
performance.
Rent changes on rollovers declined 12.6% on a trailing
four-quarter basis and decreased 12.1% for the quarter. Rent
changes on rollover were negative for the first quarter of 2011,
and management believes they will remain negative through 2011,
although management also believes net effective rents have
bottomed in most of the companys markets today. As such,
management does not believe such declines represent a material
trend that will impact future operating results in the long-term.
Capital
Deployment
The company commenced new development in the quarter totaling
approximately 3.1 million square feet (290,720 square
meters) in Brazil, China, Japan and Germany, with an estimated
total investment of $299.9 million. During the quarter,
acquisitions, with a weighted average capitalization rate of
6.2%, totaled $22.5 million, including $17.3 million
for AMB U.S. Logistics Fund, L.P. and $5.2 million for
AMB Europe Logistics Fund, FCP-FIS. As of March 31, 2011,
the company held a total of 2,594 acres of land for future
development or sale on an owned and managed basis, approximately
87% of which is located in the Americas. The company currently
estimates that these 2,594 acres of land could support
approximately 46.5 million square feet of future
development.
Private
Capital Business
Following a record year in 2010, the company raised
approximately $1.1 billion in private capital in the first
quarter of 2011, which made it a record quarter of fund raising
for AMB. In fact, that figure represents an AMB record for any
prior
12-month
period, as well. Management believes that private capital
continues to be an important driver of the business; with the
third party equity raised in the first quarter, the company has
$3.2 billion of capacity in its funds that can be used to
invest in opportunities around the world. As of March 31,
2011, the company had assets under management in co-investment
ventures with a gross book value of approximately
$8.3 billion.
On March 3, 2011, the company announced the formation of
AMB Europe Logistics JV, FCP-FIS, an unconsolidated
co-investment venture with Allianz Real Estate whose strategy is
to acquire, own and operate logistics properties primarily
within major seaport, airport and distribution markets in the
Eurozone. The initial third-party equity investment will be
approximately 400.0 million Euros (approximately
$566.3 million in U.S. dollars using the exchange rate
in effect at March 31, 2011) and the ventures
overall equity commitment is 470.0 million Euros
(approximately $665.4 million in U.S. dollars using
the same exchange rate), including the
54
companys 15% co-investment. As of March 31, 2011, no
investments had been made in real estate properties within this
co-investment venture.
On March 16, 2011, the company announced the formation of
AMB China Logistics Venture I, L.P., an unconsolidated
co-investment venture with HIP China Logistics Investments
Limited, whose strategy is to develop, acquire, own, operate and
manage logistics properties primarily within key markets in
China. The ventures overall equity commitment is
$588.0 million, of which the company will contribute
$88.0 million for an approximate 15% ownership. As of
March 31, 2011, no investments had been made in real estate
properties within this co-investment venture.
Subsequent to March 31, 2011, the company made
contributions of $168 million of real estate assets to AMB
China Logistics Venture I, L.P. in exchange for cash and a
15% partnership interest. Additionally, the company acquired the
partners 50% interest in its AMB-SGP, L.P. co-investment
venture.
Subsequent to March 31, 2011, third party investors made
capital commitments of $87.6 million to AMB
U.S. Logistics Fund, L.P., of which $29.6 million was
contributed in April 2011.
Equity holders in two of the companys co-investment
ventures, AMB U.S. Logistics Fund, L.P. and AMB Europe
Logistics Fund, FCP-FIS, have a right to request that the
ventures redeem their interests under certain conditions. The
redemption right of investors in AMB Europe Logistics Fund,
FCP-FIS is exercisable beginning after July 1, 2011. As of
March 31, 2011, AMB U.S. Logistics Fund, L.P. had
received one redemption request for $12.2 million, which
will be funded in the second quarter of 2011.
Summary
of Key Transactions
During the three months ended March 31, 2011, the company
completed the following significant transactions:
|
|
|
|
|
Acquired two properties aggregating approximately
0.3 million square feet for an aggregate price of
$22.5 million with a weighted average capitalization rate
of 6.2%, including approximately 0.3 million square feet
for $17.3 million for AMB U.S. Logistics Fund, L.P.,
as well as less than 0.1 million square feet for
$5.2 million for AMB Europe Logistics Fund, FCP-FIS, which
are unconsolidated co-investment ventures;
|
|
|
|
Sold development properties aggregating less than
0.1 million square feet for an aggregate sales price of
$0.6 million from AMB DFS Fund I, LLC, an
unconsolidated co-investment venture;
|
|
|
|
Sold industrial operating properties aggregating approximately
1.9 million square feet for an aggregate sales price of
$77.2 million with a weighted average capitalization rate
of 8.4%;
|
|
|
|
Formed AMB Europe Logistics JV, FCP-FIS, a co-investment venture
with Allianz Real Estate whose strategy is to acquire, own and
operate logistics properties primarily within major seaport,
airport and distribution markets in the Eurozone; and
|
|
|
|
Formed AMB China Logistics Venture I, L.P., a co-investment
venture with HIP China Logistics Investments Limited whose
investment strategy is to develop, acquire, own, operate and
manage logistics properties primarily within key markets in
China.
|
See Part I, Item 1, Notes 3 and 4 of the
Notes to Consolidated Financial Statements for a
more detailed discussion of the companys acquisition,
development and disposition activity.
Critical
Accounting Policies
In the preparation of financial statements, the company utilizes
certain critical accounting policies. There have been no
material changes in the companys significant accounting
policies included in the notes to its audited financial
statements included in the Annual Report on
Form 10-K
for the parent company and the operating partnership for the
year ended December 31, 2010.
55
CONSOLIDATED
RESULTS OF OPERATIONS
The analysis below includes changes attributable to same store
growth, acquisitions, development activity and divestitures. The
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 stabilized after
December 31, 2009 (generally defined as properties that are
90% occupied). As of March 31, 2011, the same store
industrial pool consisted of properties aggregating
approximately 70.6 million square feet. The companys
future financial condition and results of operations, including
rental revenues, may be impacted by the acquisition and
disposition of additional properties, and expenses may vary
materially from historical results. Acquisition and development
property divestiture activity for the three months ended
March 31, 2011 and 2010 was as follows:
|
|
|
|
|
|
|
|
|
|
|
For the Three
|
|
|
Months Ended
|
|
|
March 31,
|
|
|
2011
|
|
2010
|
|
Development Properties Sold or Contributed:(1)
|
|
|
|
|
|
|
|
|
Square feet (in thousands)(2)
|
|
|
|
|
|
|
312
|
|
|
|
|
(1) |
|
Excludes value-added acquisitions. |
|
(2) |
|
For the three months ended March 31, 2010, the square
footage includes 0.2 million square feet related to an
installment sale initiated in the fourth quarter of 2009 and
completed in the first quarter of 2010. |
For the
Three Months Ended March 31, 2011 and 2010 (dollars in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
|
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
Revenues
|
|
2011
|
|
|
2010
|
|
|
$ Change
|
|
|
% Change
|
|
|
Rental revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store
|
|
$
|
128.4
|
|
|
$
|
128.8
|
|
|
$
|
(0.4
|
)
|
|
|
(0.3
|
)%
|
Development
|
|
|
10.9
|
|
|
|
7.1
|
|
|
|
3.8
|
|
|
|
53.5
|
%
|
Other industrial
|
|
|
18.8
|
|
|
|
10.8
|
|
|
|
8.0
|
|
|
|
74.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total rental revenues
|
|
|
158.1
|
|
|
|
146.7
|
|
|
|
11.4
|
|
|
|
7.8
|
%
|
Private capital revenues
|
|
|
7.7
|
|
|
|
7.4
|
|
|
|
0.3
|
|
|
|
4.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
165.8
|
|
|
$
|
154.1
|
|
|
$
|
11.7
|
|
|
|
7.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total rental revenues increased $11.4 million from the
prior year mainly due to increased occupancy, as consolidated
average occupancy increased to 91.6% in the first quarter of
2011 as compared to 88.5% for the same period in 2010. Rental
revenues from development increased $3.8 million primarily
due to increased occupancy of the companys development
portfolio as the company continues
lease-up of
the development pool. Other industrial revenues include rental
revenues from stabilized development projects that are not yet
part of the same store
56
operating pool of properties. The increase in these revenues of
$8.0 million primarily reflects the further
lease-up of
the companys development portfolio and higher occupancy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
|
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
Costs and Expenses
|
|
2011
|
|
|
2010
|
|
|
$ Change
|
|
|
% Change
|
|
|
Property operating costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental expenses
|
|
$
|
31.3
|
|
|
$
|
28.1
|
|
|
$
|
3.2
|
|
|
|
11.4
|
%
|
Real estate taxes
|
|
|
20.8
|
|
|
|
20.0
|
|
|
|
0.8
|
|
|
|
4.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property operating costs
|
|
$
|
52.1
|
|
|
$
|
48.1
|
|
|
$
|
4.0
|
|
|
|
8.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same store
|
|
$
|
41.7
|
|
|
$
|
40.2
|
|
|
$
|
1.5
|
|
|
|
3.7
|
%
|
Development
|
|
|
4.8
|
|
|
|
3.5
|
|
|
|
1.3
|
|
|
|
37.1
|
%
|
Other industrial
|
|
|
5.6
|
|
|
|
4.4
|
|
|
|
1.2
|
|
|
|
27.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property operating costs
|
|
|
52.1
|
|
|
|
48.1
|
|
|
|
4.0
|
|
|
|
8.3
|
%
|
Depreciation and amortization
|
|
|
55.0
|
|
|
|
47.4
|
|
|
|
7.6
|
|
|
|
16.0
|
%
|
General and administrative
|
|
|
30.7
|
|
|
|
31.9
|
|
|
|
(1.2
|
)
|
|
|
(3.8
|
)%
|
Restructuring charges
|
|
|
|
|
|
|
3.0
|
|
|
|
(3.0
|
)
|
|
|
n/m
|
|
Merger transaction costs
|
|
|
3.7
|
|
|
|
|
|
|
|
3.7
|
|
|
|
n/m
|
|
Fund costs
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
(0.1
|
)
|
|
|
(33.3
|
)%
|
Other expenses
|
|
|
0.9
|
|
|
|
1.2
|
|
|
|
(0.3
|
)
|
|
|
(25.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
$
|
142.6
|
|
|
$
|
131.9
|
|
|
$
|
10.7
|
|
|
|
8.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total property operating costs increased $4.0 million from
the prior year. The increase in same store operating costs of
$1.5 million was primarily due to an increase in roads and
grounds expenses, utilities expenses, and ground rent expenses,
partially offset by a decrease in real estate taxes. The
increase in development operating costs of $1.3 million was
primarily due to an increase in real estate taxes, utilities,
and repairs and maintenance expenses. The increase in other
industrial operating costs of $1.2 million was primarily
due to an increase in real estate taxes, utilities, and roads
and grounds expenses during the first quarter of 2011. The
increase in depreciation and amortization expenses of
$7.6 million is primarily due to increased asset
stabilizations and assets moving out of the held for sale or
contribution pools in the early part of 2010, as well as
$2.3 million of accelerated depreciation for uninsured
losses related to the Japan earthquake and tsunami of March
2011. The decrease in general and administrative expense of
$1.2 million is primarily due to higher capitalized
development costs and lower computer and software expenses,
partially offset by an increase in professional service
expenses. During the three months ended March 31, 2010, the
company recorded $3.0 million in restructuring charges
associated with severance and the termination of certain
contractual obligations. No restructuring charges were
recognized during the three months ended March 31, 2011.
Merger transaction costs of $3.7 million were incurred in
the first quarter of 2011 related to the potential merger with
ProLogis, while none were incurred in the same period in 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
|
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
Other Income and (Expenses)
|
|
2011
|
|
|
2010
|
|
|
$ Change
|
|
|
% Change
|
|
|
Development profits, net of taxes
|
|
$
|
|
|
|
$
|
4.8
|
|
|
$
|
(4.8
|
)
|
|
|
n/m
|
|
Equity in earnings of unconsolidated joint ventures, net
|
|
|
7.8
|
|
|
|
3.9
|
|
|
|
3.9
|
|
|
|
100.0
|
%
|
Other income
|
|
|
1.2
|
|
|
|
0.3
|
|
|
|
0.9
|
|
|
|
300.0
|
%
|
Interest expense, including amortization
|
|
|
(34.9
|
)
|
|
|
(32.6
|
)
|
|
|
2.3
|
|
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income and (expenses), net
|
|
$
|
(25.9
|
)
|
|
$
|
(23.6
|
)
|
|
$
|
(2.3
|
)
|
|
|
(9.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
Development profits decreased $4.8 million as no properties
held in the development portfolio were sold to third parties in
the first quarter of 2011. During the three months ended
March 31, 2010, the company recognized development profits
of approximately $4.8 million as a result of the sale of
development projects to third parties, aggregating approximately
0.3 million square feet for an aggregate sales price of
$22.9 million. This included the installment sale of
approximately 0.2 million square feet for
$12.5 million with development profits of $3.9 million
recognized in the three months ended March 31, 2010, which
was initiated in the fourth quarter of 2009 and completed in the
first quarter of 2010. Equity in earnings of unconsolidated
joint ventures increased $3.9 million primarily due to
increased ownership in the companys unconsolidated joint
ventures, increased asset base, as well as increased levels of
occupancy in the operating portfolio of those joint ventures.
Other income increased $0.9 million from the prior year
primarily due to higher investment income in the first quarter
of 2011, partially offset by increased foreign currency exchange
rate losses in 2011 as compared to the same period in 2010.
Interest expense increased $2.3 million over the same
period in the prior year primarily due to additional bond
issuances in 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
|
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
Discontinued Operations
|
|
2011
|
|
|
2010
|
|
|
$ Change
|
|
|
% Change
|
|
|
Income attributable to discontinued operations
|
|
$
|
0.9
|
|
|
$
|
0.8
|
|
|
$
|
0.1
|
|
|
|
12.5
|
%
|
Development profits, net of taxes
|
|
|
1.6
|
|
|
|
|
|
|
|
1.6
|
|
|
|
n/m
|
|
Gains from sale of real estate interests, net of taxes
|
|
|
14.5
|
|
|
|
|
|
|
|
14.5
|
|
|
|
n/m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total discontinued operations
|
|
$
|
17.0
|
|
|
$
|
0.8
|
|
|
$
|
16.2
|
|
|
|
2,025.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The changes in income attributable to discontinued operations
and gains from sale of real estate interests, net of taxes were
primarily due to industrial operating property sales in the
first quarter of 2011 as compared to the first quarter of 2010.
During the three months ended March 31, 2011, the company
sold industrial operating properties aggregating approximately
1.9 million square feet for an aggregate sales price of
$77.2 million. Of these sales, 0.1 million square feet
with a sales price of $7.4 million, resulting in a gain of
$1.6 million, related to properties held in the operating
portfolio which had previously undergone development by the
company. These gains are presented in development profits, net
of taxes, as discontinued operations in the consolidated
statements of operations. The remaining $69.8 million of
operating property sales resulted in gains of $14.5 million
which were presented in gains from sale of real estate
interests, net of taxes as discontinued operations in the
consolidated statements of operations. During the three months
ended March 31, 2010, the company did not sell any
industrial operating properties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
|
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
Preferred Stock/Units
|
|
2011
|
|
|
2010
|
|
|
$ Change
|
|
|
% Change
|
|
|
Preferred stock dividends/unit distributions
|
|
$
|
(4.0
|
)
|
|
$
|
(4.0
|
)
|
|
$
|
|
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total preferred stock/units
|
|
$
|
(4.0
|
)
|
|
$
|
(4.0
|
)
|
|
$
|
|
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDITY
AND CAPITAL RESOURCES OF THE PARENT COMPANY
In this Liquidity and Capital Resources of the Parent
Company section, the parent company refers
only to AMB Property Corporation and not to any of its
subsidiaries.
The parent companys business is operated primarily through
the operating partnership. The parent company issues public
equity from time to time, but does not otherwise conduct any
business or generate any capital itself. The parent company
itself does not hold any indebtedness, and its only material
asset is its ownership of partnership interests of the operating
partnership. The parent companys principal funding
requirement is the payment of dividends on its common and
preferred stock. The parent companys principal source of
funding for its dividend payments is distributions it receives
from the operating partnership.
58
As of March 31, 2011, the parent company owned an
approximate 98.2% general partnership interest in the operating
partnership, excluding preferred units. The remaining
approximate 1.8% common limited partnership interests are owned
by non-affiliated investors and certain current and former
directors and officers of the parent company. As of
March 31, 2011, the parent company owned all of the
preferred limited partnership units of the operating
partnership. As the sole general partner of the operating
partnership, the parent company has the full, exclusive and
complete responsibility for the operating partnerships
day-to-day
management and control. The parent company causes the operating
partnership to distribute all, or such portion as the parent
company may in its discretion determine, of its available cash
in the manner provided in the operating partnerships
partnership agreement. Generally, if distributions are made,
distributions are paid in the following order of priority:
first, to satisfy any prior distribution shortfall to the parent
company as the holder of preferred units; second, to the parent
company as the holder of preferred units; and third, to the
holders of common units of the operating partnership, including
the parent company, in accordance with the rights of each such
class.
As general partner with control of the operating partnership,
the parent company consolidates the operating partnership for
financial reporting purposes, and the parent company does not
have significant assets other than its investment in the
operating partnership. Therefore, the assets and liabilities of
the parent company and the operating partnership are the same on
their respective financial statements. However, all debt is held
directly or indirectly at the operating partnership level, and
the parent company has guaranteed some of the operating
partnerships secured and unsecured debt as discussed
below. As the parent company consolidates the operating
partnership, the section entitled Liquidity and Capital
Resources of the Operating Partnership should be read in
conjunction with this section to understand the liquidity and
capital resources of the company on a consolidated basis and how
the company is operated as a whole.
Capital
Resources of the Parent Company
Distributions from the operating partnership are the parent
companys principal source of capital. The parent company
receives proceeds from equity issuances from time to time, but
is required by the operating partnerships partnership
agreement to contribute the proceeds from its equity issuances
to the operating partnership in exchange for partnership units
of the operating partnership.
As circumstances warrant, the parent company may issue equity
from time to time on an opportunistic basis, dependent upon
market conditions and available pricing. The operating
partnership may use the proceeds to repay debt, including
borrowings under its lines of credit, to make acquisitions of
properties, portfolios of properties or U.S. or foreign
property-owning or real estate-related entities, to invest in
existing or newly created joint ventures or for general
corporate purposes.
Common and Preferred Equity. The parent
company has authorized for issuance 100,000,000 shares of
preferred stock, of which the following series were designated
as of March 31, 2011: 2,300,000 shares of
series L cumulative redeemable preferred stock, of which
2,000,000 are outstanding; 2,300,000 shares of
series M cumulative redeemable preferred stock, all of
which are outstanding; 3,000,000 shares of series O
cumulative redeemable preferred stock, all of which are
outstanding; and 2,000,000 shares of series P
cumulative redeemable preferred stock, all of which are
outstanding.
59
In September 2010, the parent companys board of directors
approved a two-year common stock repurchase program for the
repurchase of up to $200.0 million of the parent
companys common stock. The parent company has not
repurchased any shares of its common stock under this program.
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Equity as of March 31, 2011
|
|
|
|
Shares/Units
|
|
|
Market
|
|
|
Market
|
|
Security
|
|
Outstanding
|
|
|
Price(1)
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
Common stock
|
|
|
169,550,704
|
(4)
|
|
$
|
35.97
|
|
|
$
|
6,098,739
|
|
Common limited partnership units(2)
|
|
|
3,022,993
|
|
|
$
|
35.97
|
|
|
|
108,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
172,573,697
|
|
|
|
|
|
|
$
|
6,207,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total options outstanding
|
|
|
|
|
|
|
|
|
|
|
9,103,685
|
|
Dilutive effect of stock options(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Dollars, per share/unit |
|
(2) |
|
Includes class B common limited partnership units issued by
AMB Property II, L.P. |
|
(3) |
|
Computed using the treasury stock method and an average share
price for the parent companys common stock of $34.04 for
the quarter ended March 31, 2011. All stock options were
anti-dilutive as of March 31, 2011. |
|
(4) |
|
Includes 1,269,422 shares of unvested restricted stock. |
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock as of March 31, 2011 (dollars in
thousands)
|
|
|
Dividend
|
|
|
Liquidation
|
|
|
Redemption/Callable
|
Security
|
|
Rate
|
|
|
Preference
|
|
|
Date
|
|
Series L preferred stock
|
|
|
6.50
|
%
|
|
$
|
50,000
|
|
|
June 2008
|
Series M preferred stock
|
|
|
6.75
|
%
|
|
|
57,500
|
|
|
November 2008
|
Series O preferred stock
|
|
|
7.00
|
%
|
|
|
75,000
|
|
|
December 2010
|
Series P preferred stock
|
|
|
6.85
|
%
|
|
|
50,000
|
|
|
August 2011
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average/total
|
|
|
6.80
|
%
|
|
$
|
232,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests in the parent company represent the
common limited partnership interests in the operating
partnership, limited partnership interests in AMB Property II,
L.P., a Delaware limited partnership, and interests held by
third-party partners in joint ventures. Such joint ventures held
approximately 20.9 million square feet as of March 31,
2011, and are consolidated for financial reporting purposes.
Please see Explanatory Note at the beginning of this
quarterly report on
Form 10-Q
and Part I, Item 1, Note 7 of the
Notes to Consolidated Financial Statements for a
discussion of the noncontrolling interests of the parent company.
In order to maintain financial flexibility and facilitate the
deployment of capital through market cycles, the parent company
presently intends over the long term to operate with a parent
companys share of total
debt-to-parent
companys share of total market capitalization ratio or
parent companys share of total
debt-to-parent
companys share of total assets of approximately 45% or
less. In order to operate at this targeted ratio over the long
term, the parent company is currently exploring various options
to monetize its development assets through possible contribution
to funds where capacity is available, the formation of joint
ventures and the sale to third parties. It is also exploring the
potential sale of industrial operating assets to further enhance
liquidity. As of March 31, 2011, the parent companys
share of total
debt-to-parent
companys share of total assets ratio was 43.0%. (See
footnote 1 to the Capitalization Ratios table below for the
definitions of parent companys share of total market
capitalization, market equity, parent
companys share of total debt and parent
companys share of total assets.) The parent company
typically finances its co-investment ventures with secured debt
at a
loan-to-value
ratio of
50-65%
pursuant to its co-investment venture agreements. Additionally,
the operating partnership currently intends to manage its
capitalization in order to maintain an investment grade rating
on its senior unsecured debt. Regardless of these policies,
however, the parent companys and operating
partnerships organizational documents do not limit the
amount of indebtedness that either entity may incur.
Accordingly, management could alter or eliminate these
60
policies without stockholder or unitholder approval or
circumstances could arise that could render the parent company
or the operating partnership unable to comply with these
policies. For example, decreases in the market price of the
parent companys common stock have caused an increase in
the ratio of parent companys share of total
debt-to-parent
companys share of total market capitalization.
|
|
|
|
|
Capitalization Ratios as of March 31, 2011
|
|
Parent companys share of total
debt-to-parent
companys share of total market capitalization(1)
|
|
|
38.6
|
%
|
Parent companys share of total debt plus
preferred-to-parent
companys share of total market capitalization(1)
|
|
|
40.9
|
%
|
Parent companys share of total
debt-to-parent
companys share of total assets(1)
|
|
|
43.0
|
%
|
Parent companys share of total debt plus
preferred-to-parent
companys share of total assets(1)
|
|
|
45.5
|
%
|
|
|
|
(1) |
|
Although the parent company does not hold any indebtedness
itself, the parent companys total debt reflects the
consolidation of the operating partnerships total debt for
financial reporting purposes. The parent companys
definition of total market capitalization for the
parent company is total debt plus preferred equity liquidation
preferences plus market equity. The definition of parent
companys share of total market capitalization is the
parent companys share of total debt plus preferred equity
liquidation preferences plus market equity. The definition of
market equity is the total number of outstanding
shares of common stock of the parent company and common limited
partnership units of the operating partnership and AMB Property
II, L.P. multiplied by the closing price per share of the parent
companys common stock as of March 31, 2011. The
definition of preferred is preferred equity
liquidation preferences. Parent companys share of
total debt is the parent companys pro rata portion
of the total debt based on the parent companys percentage
of equity interest in each of the consolidated and
unconsolidated joint ventures holding the debt. Parent
companys share of total assets is the parent
companys pro rata portion of the gross book value of real
estate interests plus cash and other assets. As of
March 31, 2011, the parent companys share of total
assets was approximately $9.4 billion. The parent company
believes that share of total debt is a meaningful supplemental
measure, which enables both management and investors to analyze
the parent companys leverage and to compare the parent
companys leverage to that of other companies. In addition,
it allows for a more meaningful comparison of the parent
companys debt to that of other companies that do not
consolidate their joint ventures. Parent companys share of
total debt is not intended to reflect the parent companys
actual liability should there be a default under any or all of
such loans or a liquidation of the joint ventures. For a
reconciliation of parent companys share of total debt to
total consolidated debt, a GAAP financial measure, please see
the table of debt maturities and capitalization in the section
below entitled Liquidity and Capital Resources of the
Operating Partnership. |
Liquidity
of the Parent Company
The liquidity of the parent company is dependent on the
operating partnerships ability to make sufficient
distributions to the parent company. The primary cash
requirement of the parent company is its payment of dividends to
its stockholders. The parent company also guarantees some of the
operating partnerships secured and unsecured debt
described in the Debt guarantees section below. If
the operating partnership fails to fulfill its debt
requirements, which trigger parent guarantee obligations, then
the parent company will be required to fulfill its cash payment
commitments under such guarantees.
The parent company believes the operating partnerships
sources of working capital, specifically its cash flow from
operations and borrowings available under its unsecured credit
facilities, are adequate for it to make its distribution
payments to the parent company and, in turn, for the parent
company to make its dividend payments to its stockholders.
However, there can be no assurance that the operating
partnerships sources of capital will continue to be
available at all or in amounts sufficient to meet its needs,
including its ability to make distribution payments to the
parent company. The unavailability of capital could adversely
affect the operating partnerships ability to pay its
distributions to the parent company, which will, in turn,
adversely affect the parent companys ability to pay cash
dividends to its stockholders and the market price of the parent
companys stock.
Should the parent company face a situation in which the
operating partnership does not have sufficient cash available
through its operations to continue operating its business as
usual (including making its distributions to the parent
company), the operating partnership may need to find alternative
ways to increase the operating partnerships
61
liquidity. Such alternatives, which would be done through the
operating partnership, may include, without limitation,
divesting itself of properties and decreasing the operating
partnerships cash distribution to the parent company.
Other alternatives are for the parent company to pay some or all
of its dividends in stock rather than cash or issuing its equity
in public or private transactions whether or not at favorable
pricing or on favorable terms.
If the operating partnership is unable to obtain new financing
or refinance or extend principal payments due at maturity or pay
them with proceeds from other capital transactions, then its
cash flow may be insufficient to pay its distributions to the
parent company, which will have, as a result, insufficient funds
to pay cash dividends to the parent companys stockholders.
Furthermore, if prevailing interest rates or other factors at
the time of refinancing (such as the reluctance of lenders to
make commercial real estate loans) result in higher interest
rates upon refinancing, then the operating partnerships
interest expense relating to that refinanced indebtedness would
increase. This increased interest expense of the operating
partnership would adversely affect the parent companys
ability to pay cash dividends to its stockholders and the market
price of its stock.
The operating partnership may, from time to time, seek to retire
or purchase its outstanding debt through cash purchases
and/or
exchanges for the parent companys equity securities in
open market purchases, privately negotiated transactions or
otherwise. Such repurchases or exchanges, if any, will depend on
prevailing market conditions, the parent companys
liquidity requirements, contractual restrictions and other
factors. The amounts involved may be material.
For the parent company to maintain its qualification as a real
estate investment trust, it must pay dividends to its
stockholders aggregating annually at least 90% of its REIT
taxable income. While historically the parent company has
satisfied this distribution requirement by making cash
distributions to its stockholders, it may choose to satisfy this
requirement by making distributions of cash or other property,
including, in limited circumstances, the parent companys
own stock. As a result of this distribution requirement, the
operating partnership cannot rely on retained earnings to fund
its on-going operations to the same extent that other companies
whose parent companies are not real estate investment trusts
can. The parent company may need to continue to raise capital in
the equity markets to fund the operating partnerships
working capital needs, acquisitions and developments.
As circumstances warrant, the parent company may issue equity
securities from time to time on an opportunistic basis,
dependent upon market conditions and available pricing. The
parent company would contribute any such proceeds to the
operating partnership, which would then use the proceeds to
repay debt, including borrowings under its lines of credit, to
make acquisitions of properties, portfolios of properties or
U.S. or foreign property-owning or real estate-related
entities or platforms, to invest in existing or newly created
joint ventures or for general corporate purposes.
Dividends. The following table sets forth the
parent companys dividends paid or payable per share for
the three months ended March 31, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
|
Ended March 31,
|
Paying Entity
|
|
Security
|
|
2011
|
|
2010
|
|
AMB Property Corporation
|
|
Common stock
|
|
$
|
0.280
|
|
|
$
|
0.280
|
|
AMB Property Corporation
|
|
Series L preferred stock
|
|
$
|
0.406
|
|
|
$
|
0.406
|
|
AMB Property Corporation
|
|
Series M preferred stock
|
|
$
|
0.422
|
|
|
$
|
0.422
|
|
AMB Property Corporation
|
|
Series O preferred stock
|
|
$
|
0.438
|
|
|
$
|
0.438
|
|
AMB Property Corporation
|
|
Series P preferred stock
|
|
$
|
0.428
|
|
|
$
|
0.428
|
|
The parent company anticipates that the operating partnership
will be required to use proceeds from debt and equity financings
(including the issuance of equity by the parent company) and the
divestiture of properties, in addition to cash from its
operations, to make its distribution payments and repay its
maturing debt as it comes due. However, the parent company and
the operating partnership may not be able to issue such
securities on favorable terms or at all. The parent
companys or the operating partnerships inability to
issue securities on favorable terms or at all would adversely
affect the operating partnerships financial condition,
results of operations and cash flow and its ability to pay
distributions to the parent company, which will, in turn,
adversely affect the market price of the parent companys
stock and the parent companys ability to pay cash
dividends to its stockholders.
62
Cash flows generated by the operating partnership were
sufficient to cover the operating partnerships
distributions for the three months ended March 31, 2011 and
2010, including its distributions to the parent company, which
were, in turn, paid to the parent companys stockholders as
dividends. Cash flows from the operating partnerships real
estate operations and private capital businesses, which are
included in Net cash provided by operating
activities in the parent companys Cash Flows from
Operating Activities and cash flows from the operating
partnerships real estate development and operations
businesses which are included in Net proceeds from
divestiture of real estate and securities in the parent
companys Cash Flows from Investing Activities in its
Consolidated Statements of Cash Flows, were sufficient to pay
dividends on the parent companys common stock and
preferred stock, distributions on common and preferred limited
partnership units of the operating partnership and AMB Property
II, L.P. and distributions to noncontrolling interests for the
three months ended March 31, 2011 and 2010. The parent
company uses proceeds from the operating partnership included in
Cash Flows from Investing Activities (specifically, the proceeds
from sales and contributions of properties as part of its real
estate development and operations businesses) to fund dividends
and distributions not covered by Cash Flows from Operating
Activities, if any.
The following table sets forth the summary of the parent
companys dividends and the operating partnerships
distributions paid or payable for the three months ended
March 31, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
Summary of Dividends and Distributions Paid
|
|
2011
|
|
|
2010
|
|
|
|
(dollars in thousands)
|
|
|
Net cash provided by operating activities
|
|
$
|
61,727
|
|
|
$
|
70,065
|
|
Dividends paid to common and preferred stockholders(1)
|
|
|
(99,304
|
)
|
|
|
(45,644
|
)
|
Distributions to noncontrolling interests, including preferred
units
|
|
|
(2,988
|
)
|
|
|
(3,361
|
)
|
|
|
|
|
|
|
|
|
|
(Deficiency) excess of net cash provided by operating activities
over dividends and distributions paid
|
|
$
|
(40,565
|
)
|
|
$
|
21,060
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from divestiture of real estate and securities
|
|
$
|
93,657
|
|
|
$
|
22,408
|
|
|
|
|
|
|
|
|
|
|
Excess of net cash provided by operating activities and net
proceeds from divestiture of real estate over dividends and
distributions paid
|
|
$
|
53,092
|
|
|
$
|
43,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Partnership unit distributions paid to the parent company by the
operating partnership are, in turn, paid by the parent company
as dividends to its stockholders. The increase in 2011 as
compared to 2010 was due to timing of the first quarter dividend
payment being accelerated in 2011 as a result of the proposed
merger with ProLogis. |
Debt guarantees. The parent company is the
guarantor of the operating partnerships obligations with
respect to its unsecured senior debt securities. As of
March 31, 2011, the operating partnership had outstanding
an aggregate of $1.7 billion in unsecured senior debt
securities, before unamortized net discounts, which bore a
weighted average interest rate of 5.5% and had an average term
of 6.0 years. The indenture for the senior debt securities
contains limitations on mergers or consolidations of the parent
company.
The parent company guarantees the operating partnerships
obligations with respect to certain of its other debt
obligations related to the following two facilities. In November
2010, the operating partnership paid off the outstanding Euro
tranche balance of its original $425.0 million
multi-currency term loan, which has a maturity of October 2012.
As of March 31, 2011, only the Japanese Yen tranche of the
term loan had an outstanding balance, which was approximately
$150.3 million in U.S. dollars, using the exchange
rate in effect on that date, and bore a weighted average
interest rate of 3.4%. Additionally, in November 2010, the
operating partnership entered into a 153.7 million Euro
senior unsecured term loan, maturing in November 2015. Using the
exchange rate in effect on March 31, 2011, the term loan
had an outstanding balance of approximately $217.6 million
in U.S. dollars, which bore a weighted average interest
rate of 1.2%. These term loans contain limitations on the
incurrence of liens and limitations on mergers or consolidations
of the parent company.
The parent company is a guarantor of the operating
partnerships obligations under its $600.0 million
(includes Euro, Yen, British pounds sterling, Canadian dollar or
U.S. dollar denominated borrowings) unsecured revolving
credit facility. In November 2010, the operating partnership
refinanced its $550.0 million multi-currency facility,
63
increasing the facility by $50.0 million and extending the
maturity to March 2014. The facility can be increased to up to
$800.0 million upon certain conditions. This facility had
no outstanding balance as of March 31, 2011.
The parent company, along with the operating partnership,
guarantees the obligations of AMB Japan Finance Y.K., a
subsidiary of the operating partnership, under its credit
facility, as well as the obligations of any other entity in
which the operating partnership directly or indirectly owns an
ownership interest and which is selected by the operating
partnership from time to time to be a borrower under and
pursuant to the credit agreement. This credit facility has an
initial borrowing limit of 45.0 billion Yen, which, using
the exchange rate in effect at March 31, 2011, equaled
approximately $541.3 million U.S. dollars. Prior to
its early renewal in December 2010, this credit facility had a
borrowing limit of 55.0 billion Yen. Additionally, upon
renewal, the credit facility maturity was extended to March
2014. As of March 31, 2011, this facility had a balance of
$172.3 million, using the exchange rate in effect on that
date, and bore a weighted average interest rate of 2.00%.
The parent company and the operating partnership guarantee the
obligations for such subsidiaries and other entities controlled
by the operating partnership that are selected by the operating
partnership from time to time to be borrowers under and pursuant
to a $500.0 million unsecured revolving credit facility.
The operating partnership and certain of its wholly owned
subsidiaries, each acting as a borrower, with the parent company
and the operating partnership as guarantors, entered into this
credit facility, which has an option to further increase the
facility to up to $750.0 million and to extend the maturity
date by one year. As of March 31, 2011, this facility,
which matures in July 2011, had a balance of
$230.5 million, using the exchange rate in effect on that
date, and bore a weighted average interest rate of 1.09%.
The credit agreements related to the above facilities contain
limitations on the incurrence of liens and limitations on
mergers or consolidations of the parent company.
Potential Contingent and Unknown
Liabilities. Contingent and unknown liabilities
may include claims for indemnification by officers and directors
and tax, legal and regulatory liabilities.
LIQUIDITY
AND CAPITAL RESOURCES OF THE OPERATING PARTNERSHIP
Balance Sheet Strategy. In general, the
operating partnership uses unsecured lines of credit, unsecured
notes, common and preferred equity (issued by the parent
company, the operating partnership and their subsidiaries, as
applicable) to capitalize its wholly owned assets. Over time,
the operating partnership plans to retire non-recourse, secured
debt encumbering its wholly owned assets and replace that debt
with unsecured notes where practicable. In managing the
co-investment ventures, in general, the operating partnership
uses non-recourse, secured debt to capitalize its co-investment
ventures.
The operating partnership currently expects that its principal
sources of working capital and funding for debt service,
development, acquisitions, expansion and renovation of
properties will include:
|
|
|
|
|
cash on hand and cash flow from operations;
|
|
|
|
borrowings under its unsecured credit facilities;
|
|
|
|
other forms of secured or unsecured financing;
|
|
|
|
assumption of debt related to acquired properties;
|
|
|
|
proceeds from limited partnership unit offerings (including
issuances of limited partnership units by the operating
partnerships subsidiaries);
|
|
|
|
proceeds from debt securities offerings by the operating
partnership;
|
|
|
|
proceeds from equity offerings by the parent company;
|
|
|
|
net proceeds from divestitures of properties;
|
|
|
|
private capital from co-investment partners;
|
64
|
|
|
|
|
net proceeds from contributions of properties and completed
development projects to its co-investment ventures; and
|
|
|
|
net proceeds from the sales of development projects, value-added
conversion projects and land to third parties.
|
The operating partnership currently expects that its principal
funding requirements will include:
|
|
|
|
|
debt service;
|
|
|
|
distributions on outstanding common, preferred and general
partnership units;
|
|
|
|
working capital;
|
|
|
|
acquisitions of properties, portfolios of properties, interests
in real-estate related entities or platforms;
|
|
|
|
investments in existing or newly formed joint ventures; and
|
|
|
|
development, expansion and renovation of properties.
|
Capital
Resources of the Operating Partnership
The operating partnership believes its sources of working
capital, specifically its cash flow from operations, and
borrowings available under its unsecured credit facilities, are
adequate for it to meet its current liquidity requirements.
However, there can be no assurance that the operating
partnerships sources of capital will continue to be
available at all or in amounts sufficient to meet its needs. The
unavailability of capital could adversely affect the operating
partnerships financial condition, results of operations,
cash flow and the ability to pay cash distributions to its
unitholders and make payments to its noteholders.
For the parent company to maintain its qualification as a real
estate investment trust, it must pay dividends to its
stockholders aggregating annually at least 90% of its taxable
income. As a result of this distribution requirement, the
operating partnership cannot rely on retained earnings to fund
its on-going operations to the same extent that other
corporations whose parent companies are not real estate
investment trusts can. The operating partnership may need to
continue to raise capital in both the debt and equity markets to
fund its working capital needs, acquisitions and developments.
Cash Flows. For the three months ended
March 31, 2011, cash provided by operating activities was
$61.7 million as compared to $70.1 million for the
same period in 2010. This change is primarily due to changes in
the operating partnerships accounts receivable and other
assets and accounts payable and other liabilities. Cash used in
investing activities was $45.9 million for the three months
ended March 31, 2011, as compared to cash used in investing
activities of $183.3 million for the same period in 2010.
This change is primarily due to a decrease in additions to
interests in unconsolidated joint ventures and an increase in
additions to land, buildings, development costs, building
improvements and lease costs, partially offset by an increase in
net proceeds from divestiture of real estate and securities.
Cash provided by financing activities was $7.6 million for
the three months ended March 31, 2011, as compared to cash
provided by financing activities of $67.4 million for the
same period in 2010. This change is due primarily to a decrease
in net borrowings on unsecured credit facilities, a decrease in
net borrowings on senior debt and an increase in distributions
paid. This activity was partially offset by a decrease in net
payments on secured debt.
Partners Capital. As of March 31,
2011, the operating partnership had outstanding 169,321,293
common general partnership units; 2,058,730 common
limited partnership units; 2,000,000 6.50% series L
cumulative redeemable preferred units; 2,300,000 6.75%
series M cumulative redeemable preferred units; 3,000,000
7.00% series O cumulative redeemable preferred units; and
2,000,000 6.85% series P cumulative redeemable preferred
units.
Development Completions. Development
completions are generally defined as properties that are 90%
occupied or pre-leased, or that have been substantially complete
for at least 12 months. Development completions
65
on a consolidated basis, during the three months ended
March 31, 2011 and 2010 were as follows, excluding
value-added acquisitions (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Available for Sale or Contribution:
|
|
|
|
|
|
|
|
|
Number of projects
|
|
|
|
|
|
|
6
|
|
Square feet
|
|
|
|
|
|
|
1,578,067
|
|
Estimated investment(1)
|
|
$
|
|
|
|
$
|
162,962
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
Number of projects
|
|
|
|
|
|
|
6
|
|
Square feet
|
|
|
|
|
|
|
1,578,067
|
|
Estimated investment(1)
|
|
$
|
|
|
|
$
|
162,962
|
|
|
|
|
(1) |
|
Estimated investment is before the impact of cumulative real
estate impairment losses. |
Development sales to third parties during the three months ended
March 31, 2011 and 2010 were as follows, excluding
value-added acquisitions (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
Ended March 31,
|
|
|
2011
|
|
2010(1)
|
|
Square feet
|
|
|
|
|
|
|
312,103
|
|
Gross sales price
|
|
$
|
7,400
|
(2)
|
|
$
|
22,893
|
|
Net proceeds
|
|
$
|
7,316
|
(2)
|
|
$
|
21,936
|
|
Development profits, net of taxes
|
|
$
|
1,637
|
(2)
|
|
$
|
4,803
|
|
|
|
|
(1) |
|
Includes the installment sale of 0.2 million square feet
for $12.5 million gross sales price ($12.0 million net
proceeds) with development gains of $3.9 million recognized
in the three months ended March 31, 2010, which was
initiated in the fourth quarter of 2009 and completed in the
first quarter of 2010. |
|
(2) |
|
Includes 0.1 million square feet of industrial operating
properties which had previously undergone development by the
company. As such, these gains were presented as development
profits, net of taxes within discontinued operations in the
consolidated statements of operations. |
The company made no development contributions to co-investment
ventures during either the three months ended March 31,
2011 or 2010.
Properties Held for Sale or Contribution,
Net. As of March 31, 2011, the operating
partnership held for sale one property with an aggregate net
book value of $1.4 million. Properties held for sale either
are not in the operating partnerships core markets, do not
meet its current investment objectives, or are included as part
of its
development-for-sale
or value-added conversion programs. The sales of such properties
are generally subject to negotiation of acceptable terms and
other customary conditions. Properties held for sale are stated
at the lower of cost or estimated fair value less costs to sell.
As of December 31, 2010, the operating partnership held for
sale ten properties with an aggregate net book value of
$55.9 million.
As of March 31, 2011, the operating partnership held for
contribution to co-investment ventures 18 properties with an
aggregate net book value of $344.8 million, which, when
contributed, will reduce its average ownership interest in these
projects from approximately 94% to an expected range of less
than 40%. As of December 31, 2010, the operating
partnership held for contribution to co-investment ventures
eight properties with an aggregate net book value of
$186.2 million.
As of March 31, 2011, no properties were reclassified from
held for sale or contribution to investments in real estate as a
result of the change in managements intent to hold these
assets. In accordance with the operating partnerships
policies of accounting for the impairment or disposal of
long-lived assets, during the three months
66
ended March 31, 2011, the operating partnership did not
recognize any additional depreciation expense and related
accumulated depreciation from the reclassification of assets
from properties held for sale and contribution to investments in
real estate. During the three months ended March 31, 2010,
the operating partnership recognized additional depreciation
expense and related accumulated depreciation of
$1.2 million as a result of similar reclassifications.
Gains from Sale of Real Estate Interests, Net of
Taxes. During the three months ended
March 31, 2011, the Company sold industrial operating
properties aggregating approximately 1.9 million square
feet for an aggregate sales price of $69.8 million
resulting in gains of $14.5 million. During the three
months ended March 31, 2010, the operating partnership did
not sell any industrial operating properties.
Co-investment Ventures. The operating
partnership enters into co-investment ventures with
institutional investors, which are managed by the operating
partnerships private capital group and provide it with an
additional source of capital to fund certain acquisitions,
development projects and renovation projects, as well as private
capital income. The operating partnership holds interests in
both consolidated and unconsolidated co-investment ventures.
Third-party equity interests in the consolidated co-investment
ventures are reflected as noncontrolling interests in the
consolidated financial statements. As of March 31, 2011,
the operating partnership owned approximately 81.5 million
square feet of its properties (50.6% of the total operating and
development portfolio) through its consolidated and
unconsolidated co-investment ventures. The operating partnership
may make additional investments through these co-investment
ventures or new co-investment ventures in the future and
presently plans to do so.
On August 2, 2010, the company announced the formation of
AMB Mexico Fondo Logistico, a publicly traded co-investment
venture with a
10-year term
whose investment strategy is to develop, acquire, own, operate
and manage industrial distribution facilities primarily within
the companys target markets in Mexico. Approximately
3.3 billion Pesos was raised from the third party investors
in the venture, comprised of institutional investors in Mexico,
primarily private pension plans. These contributions, net of
offering costs, held partially in Pesos and U.S. dollars,
totaled approximately $252.5 million using the exchange
rate in effect on March 31, 2011. These contributions,
excluding amounts transferred as detailed below, are held by a
third party trustee, which is not consolidated by the company,
and, as such, the cash investment and equity interest of the
third party investors related to this portion of the
contributions are not reflected on the Companys
consolidated financial statements. During the three months ended
March 31, 2011, $4.1 million of the contributions made
by third party investors were transferred from the third party
trustee to the co-investment venture. The company will
contribute 20% of the total equity, or approximately
$63.1 million, at full deployment, for total equity of
$315.6 million available for future investments. During the
three months ended March 31, 2011, the company contributed
$1.0 million to this co-investment venture, which is
consolidated by the company.
On March 3, 2011, the company announced the formation of
AMB Europe Logistics JV, FCP-FIS, an unconsolidated
co-investment venture with Allianz Real Estate whose strategy is
to acquire, own and operate logistics properties primarily
within major seaport, airport and distribution markets in the
Eurozone. The initial third-party equity investment will be
approximately 400.0 million Euros (approximately
$566.3 million in U.S. dollars using the exchange rate
in effect at March 31, 2011) and the ventures
overall equity commitment is 470.0 million Euros
(approximately $665.4 million in U.S. dollars using
the same exchange rate), including the companys 15%
co-investment.
On March 16, 2011, the company announced the formation of
AMB China Logistics Venture I, L.P., an unconsolidated
co-investment venture with HIP China Logistics Investments
Limited, whose strategy is to develop, acquire, own, operate and
manage logistics properties primarily within key markets in
China. The ventures overall equity commitment is
$588.0 million, of which the company will contribute
$88.0 million for an approximate 15% ownership.
67
The following table summarizes the operating partnerships
consolidated co-investment ventures at March 31, 2011
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
Approximate
|
Consolidated Co-investment
|
|
Co-investment Venture
|
|
Ownership
|
Venture
|
|
Partner
|
|
Percentage
|
|
AMB Institutional Alliance Fund II, L.P.
|
|
AMB Institutional Alliance REIT II, Inc.
|
|
|
24%
|
|
AMB-SGP, L.P.
|
|
Industrial JV Pte. Ltd.
|
|
|
50%
|
|
AMB-AMS,
L.P.
|
|
PMT, SPW and TNO
|
|
|
39%
|
|
AMB Mexico Fondo Logistico
|
|
Various
|
|
|
20%
|
|
|
|
|
(1) |
|
AMB Mexico Fondo Logistico has an estimated investment capacity
of approximately $600 million using the exchange rate in
effect on March 31, 2011. |
Please see Part I, Item 1, Note 8 of the
Notes to Consolidated Financial Statements for a
discussion of the operating partnerships consolidated
co-investment ventures.
The following table summarizes the operating partnerships
unconsolidated co-investment ventures at March 31, 2011
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate
|
|
Operating
|
|
Estimated
|
Unconsolidated Co-investment
|
|
Co-Investment Venture
|
|
Ownership
|
|
Partnerships Net
|
|
Investment
|
Venture
|
|
Partner
|
|
Percentage
|
|
Equity Investment
|
|
Capacity
|
|
AMB U.S. Logistics Fund, L.P.
|
|
AMB U.S. Logistics REIT, Inc.
|
|
|
33%
|
|
|
$
|
406,329
|
|
|
$
|
150,000
|
(1)
|
AMB Europe Logistiscs Fund, FCP-FIS(2)
|
|
Institutional investors
|
|
|
37%
|
|
|
$
|
174,127
|
|
|
$
|
300,000
|
(1)
|
AMB Japan Fund I, L.P.
|
|
Institutional investors
|
|
|
20%
|
|
|
$
|
83,644
|
|
|
$
|
|
|
AMB-SGP Mexico, LLC
|
|
Industrial (Mexico) JV Pte. Ltd.
|
|
|
22%
|
|
|
$
|
20,193
|
|
|
$
|
|
|
AMB DFS Fund I, LLC
|
|
Strategic Realty Ventures, LLC
|
|
|
15%
|
|
|
$
|
14,303
|
|
|
$
|
|
(3)
|
AMB Brazil Logistics Partners Fund I, L.P.
|
|
Major university endowment
|
|
|
25%
|
|
|
$
|
57,975
|
|
|
$
|
350,000
|
|
AMB Europe Logistics JV, FCP-FIS
|
|
Allianz Real Estate
|
|
|
15%
|
|
|
|
n/a
|
|
|
$
|
650,000
|
(1)
|
AMB China Logistics Venture I, L.P.
|
|
HIP China Logistics Investments, Ltd.
|
|
|
15%
|
|
|
|
n/a
|
|
|
$
|
1,100,000
|
|
|
|
|
(1) |
|
The investment capacity of AMB U.S. Logistics Fund, L.P., AMB
Europe Logistics Fund, FCP-FIS and AMB Europe Logistics JV,
FCP-FIS, as open-ended funds, is not limited. Investment
capacity is estimated based on the cash of the fund and
additional leverage and may change. |
|
(2) |
|
Effective October 29, 2010, the name of AMB Europe
Fund I, FCP-FIS was changed to AMB Europe Logistics Fund,
FCP-FIS. |
|
(3) |
|
The investment period for AMB DFS Fund I, LLC ended in June
2009, and, as of March 31, 2011, the remaining estimated
investment is $5.9 million to complete the existing
development assets held by the fund. |
In addition to the equity investments shown above, the operating
partnership, through its investment in AMB Property Mexico, held
equity interests in various other unconsolidated ventures
totaling approximately $14.0 million and $13.3 million
as of March 31, 2011 and December 31, 2010,
respectively. Additionally, in December 2010, the company
entered into a mortgage debt investment joint venture with a
third-party partner and held an equity interest of
$87.6 million and $86.2 million as of March 31,
2011 and December 31, 2010, respectively.
Please see Part I, Item 1, Note 9 of the
Notes to Consolidated Financial Statements for a
discussion of the operating partnerships unconsolidated
co-investment ventures.
Debt. In order to maintain financial
flexibility and facilitate the deployment of capital through
market cycles, the operating partnership presently intends over
the long term to operate with an operating partnerships
share of total
debt-to-operating
partnerships share of total market capitalization ratio or
operating partnerships share of total
debt-to-operating
partnerships share of total assets of approximately 45% or
less. In order to operate at this targeted ratio over the long
term, the operating partnership is currently exploring various
options to monetize its development assets through possible
contribution to funds where capacity is available, the formation
of joint
68
ventures and the sale to third parties. The operating
partnership is also exploring the potential sale of operating
assets to further enhance liquidity. As of March 31, 2011,
the operating partnerships share of total
debt-to-operating
partnerships share of total assets ratio was 43.0%. (See
footnote 1 to the Capitalization Ratios table below for the
definitions of operating partnerships share of total
market capitalization, market capital,
operating partnerships share of total debt and
operating partnerships share of total assets.)
The operating partnership typically finances its co-investment
ventures with secured debt at a
loan-to-value
ratio of
50-65% per
its co-investment venture agreements. Additionally, the
operating partnership currently intends to manage its
capitalization in order to maintain an investment grade rating
on its senior unsecured debt. Regardless of these policies,
however, the operating partnerships organizational
documents do not limit the amount of indebtedness that it may
incur. Accordingly, management could alter or eliminate these
policies without unitholder approval or circumstances could
arise that could render it unable to comply with these policies.
For example, decreases in the market price of the parent
companys common stock have caused an increase in the ratio
of operating partnerships share of total
debt-to-operating
partnerships share of total market capitalization.
As of March 31, 2011, the aggregate principal amount of the
operating partnerships secured debt was $1.0 billion,
excluding $0.1 million of unamortized net premiums. Of the
$1.0 billion of secured debt, $733.9 million,
excluding unamortized discounts, is secured by properties in the
operating partnerships joint ventures. Such secured debt
is generally non-recourse and, as of March 31, 2011, bore
interest at rates varying from 1.1% to 8.3% per annum (with a
weighted average rate of 4.3%) and had final maturity dates
ranging from July 2011 to November 2022. As of March 31,
2011, $691.1 million of the secured debt obligations bore
interest at fixed rates (with a weighted average interest rate
of 5.1%), while the remaining $270.1 million bore interest
at variable rates (with a weighted average interest rate of
2.4%). As of March 31, 2011, $583.6 million of the
secured debt before unamortized premiums was held by
co-investment ventures, including the AMB-SGP, L.P. loan
agreement discussed below.
Seven subsidiaries of AMB-SGP, L.P., a Delaware limited
partnership, which is a subsidiary of the operating partnership,
entered into a loan agreement for a $305.0 million secured
financing, and pursuant to the loan agreement, delivered four
promissory notes to the two lenders, each of which mature in
March 2012. One note has a principal of $160.0 million and
an interest rate that is fixed at 5.29%. The second note has an
initial principal borrowing of $40.0 million with a
variable interest rate of 81.0 basis points above the
one-month LIBOR rate. The third note has an initial principal
borrowing of $84.0 million and a fixed interest rate of
5.90%. The fourth note has an initial principal borrowing of
$21.0 million and bears interest at a variable rate of
135.0 basis points above the one-month LIBOR rate. The
aggregate principal amount outstanding under this loan agreement
as of March 31, 2011 was $287.9 million.
As of March 31, 2011, the operating partnership had
outstanding an aggregate of $1.7 billion in unsecured
senior debt securities, before unamortized net discounts, which
bore a weighted average interest rate of 5.5% and had an average
term of 6.0 years. The unsecured senior debt securities are
subject to various covenants. The covenants contain affirmative
covenants, including compliance with financial reporting
requirements and maintenance of specified financial ratios, and
negative covenants, including limitations on the incurrence of
liens and limitations on mergers or consolidations.
As of March 31, 2011, the operating partnership had
$422.2 million outstanding in other debt which bore a
weighted average interest rate of 2.5% and had an average term
of 3.1 years. Other debt includes a $70.0 million
credit facility obtained on August 24, 2007 by AMB
Institutional Alliance Fund II, L.P., a subsidiary of the
operating partnership, which had a $54.3 million balance
outstanding as of March 31, 2011. The remaining
$367.9 million outstanding in other debt, using the
exchange rates in effect on March 31, 2011, is related to
the term loans discussed below.
In November 2010, the operating partnership paid off the
outstanding Euro tranche balance of its original
$425.0 million multi-currency term loan, which has a
maturity of October 2012. As of March 31, 2011, only the
Japanese Yen tranche of the term loan had an outstanding
balance, which was approximately $150.3 million in
U.S. dollars, using the exchange rate in effect on that
date, and bore a weighted average interest rate of 3.4%.
Additionally, in November 2010, the operating partnership
entered into a 153.7 million Euro senior unsecured term
loan, maturing in November 2015. Using the exchange rate in
effect on March 31, 2011, the term loan had an
69
outstanding balance of approximately $217.6 million in
U.S. dollars, which bore a weighted average interest rate
of 1.2%.
The parent company guarantees the operating partnerships
obligations with respect to certain of its unsecured debt. These
unsecured credit facilities contain affirmative covenants,
including compliance with financial reporting requirements and
maintenance of specified financial ratios, and negative
covenants, including limitations on the incurrence of liens and
limitations on mergers or consolidations. The operating
partnership was in compliance with its financial covenants under
its unsecured credit facilities at March 31, 2011.
If the operating partnership is unable to refinance or extend
principal payments due at maturity or pay them with proceeds
from other capital transactions, then its cash flow may be
insufficient to pay cash distributions to the operating
partnerships unitholders in all years and to repay debt
upon maturity. Furthermore, if prevailing interest rates or
other factors at the time of refinancing (such as the reluctance
of lenders to make commercial real estate loans) result in
higher interest rates upon refinancing, then the interest
expense relating to that refinanced indebtedness would increase.
This increased interest expense would adversely affect its
financial condition, results of operations, cash flow and
ability to pay cash distributions to its unitholders and make
payments to its noteholders.
The operating partnership may from time to time seek to retire
or purchase its outstanding debt through cash purchases
and/or
exchanges for equity securities in open market purchases,
privately negotiated transactions or otherwise. Such repurchases
or exchanges, if any, will depend on prevailing market
conditions, its liquidity requirements, contractual restrictions
and other factors. The amounts involved may be material.
A downgrade in the operating partnerships credit ratings
on its long term debt could adversely affect its business and
financial condition. A decrease in the operating
partnerships credit ratings could cause a negative
reaction in the public and private markets for the parent
companys and the operating partnerships securities,
increase difficulty in accessing optimally priced financing and
damage public perception of the companys business. Also,
if the long-term debt ratings of the operating partnership fall
below current levels, the borrowing cost of debt under the
operating partnerships unsecured credit facilities and
certain term loans will increase. In addition, if the long-term
debt ratings of the operating partnership fall below investment
grade, the operating partnership may be unable to request
borrowings in currencies other than U.S. dollars or
Japanese Yen, as applicable. However, the lack of other currency
borrowings does not affect the operating partnerships
ability to fully draw down under the credit facilities or term
loans. Also, the operating partnerships lenders will not
be able to terminate its credit facilities or certain term loans
in the event that its credit rating falls below investment grade
status. None of the operating partnerships credit
facilities contain covenants regarding the parent companys
stock price or market capitalization, thus a decrease in the
parent companys stock price is not expected to impact the
operating partnerships ability to borrow under its
existing lines of credit. While the operating partnership
currently does not expect its long-term debt ratings to fall
below investment grade, in the event that the ratings do fall
below those levels, it may be unable to exercise its options to
extend the term of its credit facilities and the loss of the
operating partnerships ability to borrow in foreign
currencies could affect its ability to optimally hedge its
borrowings against foreign currency exchange rate changes.
In addition, based on publicly available information regarding
its lenders, the operating partnership currently does not expect
to lose borrowing capacity under its existing lines of credit as
a result of a dissolution, bankruptcy, consolidation, merger or
other business combination among its lenders. The operating
partnerships access to funds under its credit facilities
is dependent on the ability of the lenders that are parties to
such facilities to meet their funding commitments to the
operating partnership. If the operating partnership does not
have sufficient cash flows and income from its operations to
meet its financial commitments and lenders are not able to meet
their funding commitments to the operating partnership, the
operating partnerships business, results of operations,
cash flows and financial condition could be adversely affected.
The operating partnerships primary financial covenants
with respect to its credit facilities generally relate to fixed
charge or debt service coverage, liabilities to asset value,
debt to asset value and unencumbered cash flow. As of
March 31, 2011, the operating partnership was in compliance
with its financial covenants under its credit facilities. There
can be no assurance, however, that if the financial markets and
economic conditions worsen, the operating partnership will be
able to continue to comply with its financial covenants.
70
Certain of the operating partnerships third party
indebtedness is held by its consolidated or unconsolidated joint
ventures. In the event that a joint venture partner is unable to
meet its obligations under the operating partnerships
joint venture agreements or the third party debt agreements, the
operating partnership may elect to pay its joint venture
partners portion of debt to avoid foreclosure on the
mortgaged property or permit the lender to foreclose on the
mortgaged property to meet the joint ventures debt
obligations. In either case, the operating partnership would
lose income and asset value on the property.
In addition, increases in the cost of credit and difficulty in
accessing the capital and credit markets may adversely impact
the occupancy of the operating partnerships properties,
the disposition of its properties, private capital raising and
contribution of properties to its co-investment ventures. If it
is unable to contribute completed development properties to its
co-investment ventures or sell its completed development
projects to third parties, the operating partnership will not be
able to recognize gains from the contribution or sale of such
properties and, as a result, the net income available to its
common unitholders and its funds from operations will decrease.
Additionally, business layoffs, downsizing, industry slowdowns
and other similar factors that affect the operating
partnerships customers may adversely impact the operating
partnerships business and financial condition such as
occupancy levels of its properties. Furthermore, general
uncertainty in the real estate markets has resulted in
conditions where the pricing of certain real estate assets may
be difficult due to uncertainty with respect to capitalization
rates and valuations, among other things, which may add to the
difficulty of buyers or the operating partnerships
co-investment ventures to obtain financing on favorable terms to
acquire such properties or cause potential buyers to not
complete acquisitions of such properties. The market uncertainty
with respect to capitalization rates and real estate valuations
also adversely impacts the operating partnerships net
asset value.
While the operating partnership believes that it has sufficient
working capital and capacity under its credit facilities to
continue its business operations as usual in the near term,
turbulence in the global markets and economies and prolonged
declines in business and consumer spending may adversely affect
its liquidity and financial condition, as well as the liquidity
and financial condition of its customers. If these market
conditions persist, recur or worsen in the long term, they may
limit the operating partnerships ability, and the ability
of its customers, to timely replace maturing liabilities and
access the capital markets to meet liquidity needs. In the event
that it does not have sufficient cash available to it through
its operations to continue operating its business as usual, the
operating partnership may need to find alternative ways to
increase its liquidity. Such alternatives may include, without
limitation, divesting the operating partnership of properties,
whether or not they otherwise meet its strategic objectives in
the long term, at less than optimal terms; issuing and selling
the operating partnerships debt and equity in public or
private transactions under less than optimal conditions;
entering into leases with the operating partnerships
customers at lower rental rates or less than optimal terms;
entering into lease renewals with the operating
partnerships existing customers with a decrease in rental
rates at turnover or on suboptimal terms; or paying a portion of
the parent companys dividends in stock rather than cash.
There can be no assurance, however, that such alternative ways
to increase its liquidity will be available to the operating
partnership. Additionally, taking such measures to increase its
liquidity may adversely affect the operating partnerships
business, results of operations and financial condition.
As circumstances warrant, the operating partnership may issue
debt securities from time to time on an opportunistic basis,
dependent upon market conditions and available pricing. The
operating partnership would use the proceeds to repay debt,
including borrowings under its lines of credit, to make
acquisitions of properties, portfolios of properties or
U.S. or foreign property-owning or real estate-related
entities or platforms, to invest in newly formed or existing
joint ventures, or for general corporate purposes.
Credit Facilities. The operating partnership
has a $600.0 million (includes Euro, Yen, British pounds
sterling, Canadian dollar or U.S. dollar denominated
borrowings) unsecured revolving credit facility. In November
2010, the operating partnership refinanced its
$550.0 million multi-currency facility, increasing the
facility by $50.0 million and extending the maturity to
March 2014. The parent company is a guarantor of the operating
partnerships obligations under the credit facility. The
facility can be increased to up to $800.0 million upon
certain conditions. The rate on the borrowings is generally
LIBOR plus a margin, which was 185 basis points as of
March 31, 2011, based on the operating partnerships
long-term debt rating, with an annual facility fee of
35.0 basis points. If the operating partnerships
long-term debt ratings fall below investment grade, it will be
unable to request money market loans and borrowings in Euros,
Yen or British pounds sterling. The four-year credit facility
includes a
71
multi-currency component, under which up to $600.0 million
can be drawn in Euros, Yen, British pounds sterling, Canadian
Dollars or U.S. dollars. The operating partnership uses the
credit facility principally for acquisitions, funding
development activity and general working capital requirements.
As of March 31, 2011, there was no outstanding balance on
this credit facility, and the remaining amount available was
$589.3 million, net of outstanding letters of credit of
$10.7 million, using the exchange rate in effect on that
date.
AMB Japan Finance Y.K., a subsidiary of the operating
partnership, has a Yen-denominated unsecured revolving credit
facility with an initial borrowing limit of 45.0 billion
Yen, which, using the exchange rate in effect at March 31,
2011, equaled approximately $541.3 million
U.S. dollars and bore a weighted average interest rate of
2.00%. The parent company, along with the operating partnership,
guarantees the obligations of AMB Japan Finance Y.K. under the
credit facility, as well as the obligations of any other entity
in which the operating partnership directly or indirectly owns
an ownership interest and which is selected by the operating
partnership from time to time to be a borrower under and
pursuant to the credit agreement. The borrowers intend to use
the proceeds from the facility to fund the acquisition and
development of properties and for other real estate purposes in
Japan, China and South Korea. Generally, borrowers under the
credit facility have the option to secure all or a portion of
the borrowings under the credit facility with certain real
estate assets or equity in entities holding such real estate
assets. Prior to its early renewal in December 2010, this credit
facility had a borrowing limit of 55.0 billion Yen.
Additionally, upon renewal, the credit facility maturity was
extended to March 2014. The rate on the borrowings is generally
Yen LIBOR plus a margin, which was 185 basis points as of
March 31, 2011, based on the credit rating of the operating
partnerships long-term debt. In addition, there is an
annual facility fee, payable in quarterly amounts, which is
based on the credit rating of the operating partnerships
long-term debt, and was 35.0 basis points as of
March 31, 2011. As of March 31, 2011, the outstanding
balance on this credit facility, using the exchange rate in
effect on that date was $172.3 million, and the remaining
amount available was $369.0 million.
The operating partnership and certain of its wholly owned
subsidiaries, each acting as a borrower, with the parent company
and the operating partnership as guarantors, have a
$500.0 million unsecured revolving credit facility. The
parent company, along with the operating partnership, guarantees
the obligations for such subsidiaries and other entities
controlled by the operating partnership that are selected by the
operating partnership from time to time to be borrowers under
and pursuant to this credit facility. Generally, borrowers under
the credit facility have the option to secure all or a portion
of the borrowings under the credit facility. The credit facility
includes a multi-currency component under which up to
$500.0 million can be drawn in U.S. dollars, Hong Kong
dollars, Singapore dollars, Canadian dollars, British pounds
sterling and Euros. The line, which matures in July 2011,
carries a one-year extension option, which the operating
partnership may exercise at its sole option so long as the
operating partnerships long-term debt rating is investment
grade, among other things. Additionally, this facility has an
option to be increased to up to $750.0 million. The rate on
the borrowings is generally LIBOR plus a margin, which was
60.0 basis points as of March 31, 2011, based on the
credit rating of the operating partnerships senior
unsecured long-term debt, with an annual facility fee based on
the credit rating of the operating partnerships senior
unsecured long-term debt. If the operating partnerships
long-term debt ratings fall below investment grade, it will be
unable to request borrowings in any currency other than
U.S. dollars. The borrowers intend to use the proceeds from
the facility to fund the acquisition and development of
properties and general working capital requirements. As of
March 31, 2011, the outstanding balance on this credit
facility, using the exchange rates in effect on that date, was
approximately $230.5 million with a weighted average
interest rate of 1.09%, and the remaining amount available was
$269.5 million.
The above credit facilities contain affirmative covenants,
including compliance with financial reporting requirements and
maintenance of specified financial ratios, and negative
covenants of the operating partnership, including limitations on
the incurrence of liens and limitations on mergers or
consolidations. The operating partnership was in compliance with
its financial covenants under each of these credit agreements as
of March 31, 2011.
72
The tables below summarize the operating partnerships debt
maturities, principal payments and capitalization and reconcile
operating partnerships share of total debt to total
consolidated debt as of March 31, 2011 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly Owned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMBs
|
|
|
|
Unsecured
|
|
|
|
|
|
|
Total
|
|
|
|
Consolidated
|
|
|
|
Total
|
|
|
|
Unconsolidated
|
|
|
|
|
|
|
|
Share of
|
|
|
|
Senior
|
|
|
Credit
|
|
|
Other
|
|
|
Secured
|
|
|
|
Wholly Owned
|
|
|
|
Joint
|
|
|
|
Consolidated
|
|
|
|
Joint
|
|
|
|
Total
|
|
|
|
Total
|
|
|
|
Debt
|
|
|
Facilities(1)
|
|
|
Debt
|
|
|
Debt
|
|
|
|
Debt
|
|
|
|
Venture Debt
|
|
|
|
Debt
|
|
|
|
Venture Debt
|
|
|
|
Debt
|
|
|
|
Debt
|
|
2011
|
|
$
|
25,000
|
|
|
$
|
230,512
|
|
|
$
|
|
|
|
$
|
15,203
|
|
|
|
$
|
270,715
|
|
|
|
$
|
138,854
|
|
|
|
$
|
409,569
|
|
|
|
$
|
293,559
|
|
|
|
$
|
703,128
|
|
|
|
$
|
410,012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
150,256
|
|
|
|
29,598
|
|
|
|
|
179,854
|
|
|
|
|
469,805
|
|
|
|
|
649,659
|
|
|
|
|
429,864
|
|
|
|
|
1,079,523
|
|
|
|
|
473,661
|
|
2013
|
|
|
293,897
|
|
|
|
|
|
|
|
|
|
|
|
23,710
|
|
|
|
|
317,607
|
|
|
|
|
104,852
|
|
|
|
|
422,459
|
|
|
|
|
721,396
|
|
|
|
|
1,143,855
|
|
|
|
|
542,064
|
|
2014
|
|
|
|
|
|
|
172,272
|
|
|
|
|
|
|
|
4,787
|
|
|
|
|
177,059
|
|
|
|
|
8,637
|
|
|
|
|
185,696
|
|
|
|
|
553,802
|
|
|
|
|
739,498
|
|
|
|
|
384,253
|
|
2015
|
|
|
112,491
|
|
|
|
|
|
|
|
217,624
|
|
|
|
7,721
|
|
|
|
|
337,836
|
|
|
|
|
16,943
|
|
|
|
|
354,779
|
|
|
|
|
493,705
|
|
|
|
|
848,484
|
|
|
|
|
521,419
|
|
2016
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
79,994
|
|
|
|
|
329,994
|
|
|
|
|
15,499
|
|
|
|
|
345,493
|
|
|
|
|
171,422
|
|
|
|
|
516,915
|
|
|
|
|
392,479
|
|
2017
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
66,303
|
|
|
|
|
366,303
|
|
|
|
|
490
|
|
|
|
|
366,793
|
|
|
|
|
92,783
|
|
|
|
|
459,576
|
|
|
|
|
387,426
|
|
2018
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
595
|
|
|
|
|
300,595
|
|
|
|
|
98,859
|
|
|
|
|
399,454
|
|
|
|
|
332,953
|
|
2019
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
|
29,412
|
|
|
|
|
279,412
|
|
|
|
|
14,043
|
|
|
|
|
293,455
|
|
|
|
|
271,219
|
|
2020
|
|
|
120,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,294
|
|
|
|
|
645
|
|
|
|
|
120,939
|
|
|
|
|
214,012
|
|
|
|
|
334,951
|
|
|
|
|
191,268
|
|
Thereafter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,450
|
|
|
|
|
2,450
|
|
|
|
|
476,200
|
|
|
|
|
478,650
|
|
|
|
|
158,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
$
|
1,651,682
|
|
|
$
|
402,784
|
|
|
$
|
367,880
|
|
|
$
|
227,316
|
|
|
|
$
|
2,649,662
|
|
|
|
$
|
788,182
|
(2)
|
|
|
$
|
3,437,844
|
|
|
|
$
|
3,559,645
|
|
|
|
$
|
6,997,489
|
|
|
|
$
|
4,065,252
|
|
Unamortized net (discounts) premiums
|
|
|
(11,859
|
)
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
|
|
(11,825
|
)
|
|
|
|
32
|
|
|
|
|
(11,793
|
)
|
|
|
|
(4,740
|
)
|
|
|
|
(16,533
|
)
|
|
|
|
(10,021
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
$
|
1,639,823
|
|
|
$
|
402,784
|
|
|
$
|
367,880
|
|
|
$
|
227,350
|
|
|
|
$
|
2,637,837
|
|
|
|
$
|
788,214
|
|
|
|
$
|
3,426,051
|
|
|
|
$
|
3,554,905
|
|
|
|
$
|
6,980,956
|
|
|
|
$
|
4,055,231
|
|
Joint venture partners share of debt(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(448,927
|
)
|
|
|
|
(448,927
|
)
|
|
|
|
(2,476,798
|
)
|
|
|
|
(2,925,725
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating partnerships share of total debt(4)
|
|
$
|
1,639,823
|
|
|
$
|
402,784
|
|
|
$
|
367,880
|
|
|
$
|
227,350
|
|
|
|
$
|
2,637,837
|
|
|
|
$
|
339,287
|
|
|
|
$
|
2,977,124
|
|
|
|
$
|
1,078,107
|
|
|
|
$
|
4,055,231
|
|
|
|
$
|
4,055,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average interest rate
|
|
|
5.5
|
%
|
|
|
1.5
|
%
|
|
|
2.1
|
%
|
|
|
2.9
|
%
|
|
|
|
4.2
|
%
|
|
|
|
4.8
|
%
|
|
|
|
4.4
|
%
|
|
|
|
4.5
|
%
|
|
|
|
4.4
|
%
|
|
|
|
4.4
|
%
|
Weighted average remaining maturity (years)
|
|
|
6.0
|
|
|
|
1.4
|
|
|
|
3.4
|
|
|
|
4.7
|
|
|
|
|
4.8
|
|
|
|
|
1.7
|
|
|
|
|
4.1
|
|
|
|
|
4.5
|
|
|
|
|
4.3
|
|
|
|
|
4.5
|
|
|
|
|
(1) |
|
Represents three credit facilities with total borrowing capacity
of approximately $1.6 billion. Includes $142.0 million
in U.S. dollar borrowings and $172.3 million,
$64.9 million, $4.2 million and $19.4 million in
Yen, Canadian dollar, Euro and Singapore dollar-based borrowings
outstanding at March 31, 2011, respectively, translated to
U.S. dollars using the foreign exchange rates in effect on that
date. |
|
(2) |
|
Includes an outstanding balance of $54.3 million of other
debt on a $70.0 million credit facility held by AMB
Institutional Alliance Fund II, L.P. |
|
(3) |
|
Joint venture partners share of total debt represents the
combined joint venture partners pro rata portion of the
total debt based on the percentage of equity interest of the
joint venture partners in each of the consolidated or
unconsolidated joint ventures holding the debt. |
|
(4) |
|
Operating partnerships share of total debt represents the
operating partnerships pro rata portion of the total debt
based on the operating partnerships percentage of equity
interest in each of the consolidated or unconsolidated joint
ventures holding the debt. The operating partnership believes
that operating partnerships share of total debt is a
meaningful supplemental measure, which enables both management
and investors to analyze its leverage and to compare its
leverage to that of other companies. In addition, it allows for
a more meaningful comparison of the operating partnerships
debt to that of other companies that do not consolidate their
joint ventures. Operating partnerships share of total debt
is not intended to reflect the operating partnerships
actual liability should there be a default under any or all of
such loans or a liquidation of the co-investment ventures. The
above table reconciles operating partnerships share of
total debt to total consolidated debt, a GAAP financial measure. |
73
As of March 31, 2011, the operating partnership had debt
maturing in 2011 through 2014, assuming extension options are
exercised, as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After Extension Options(1)(2)
|
|
Wholly owned debt
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
Unsecured Senior Debt
|
|
$
|
25,000
|
|
|
$
|
|
|
|
$
|
293,897
|
|
|
$
|
|
|
Credit Facilities
|
|
|
|
|
|
|
230,512
|
|
|
|
|
|
|
|
|
|
Other Debt
|
|
|
|
|
|
|
150,256
|
|
|
|
|
|
|
|
|
|
Operating Partnership Secured Debt
|
|
|
14,233
|
|
|
|
27,921
|
|
|
|
22,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
39,233
|
|
|
|
408,689
|
|
|
|
316,307
|
|
|
|
|
|
Consolidated Joint Ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB-AMS,
L.P.
|
|
|
|
|
|
|
|
|
|
|
39,135
|
|
|
|
|
|
AMB Institutional Alliance Fund II, L.P.
|
|
|
|
|
|
|
3,811
|
|
|
|
198,800
|
|
|
|
4,571
|
|
AMB-SGP, L.P.
|
|
|
37,963
|
|
|
|
287,914
|
|
|
|
|
|
|
|
|
|
Other Industrial Operating Joint Ventures
|
|
|
38,573
|
|
|
|
50,075
|
|
|
|
21,527
|
|
|
|
4,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
76,536
|
|
|
|
341,800
|
|
|
|
259,462
|
|
|
|
8,630
|
|
Unconsolidated Joint Ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB-SGP Mexico
|
|
|
58,825
|
|
|
|
162,885
|
|
|
|
|
|
|
|
|
|
AMB Japan Fund I, L.P.
|
|
|
147,738
|
|
|
|
206,760
|
|
|
|
479,807
|
|
|
|
|
|
AMB-Europe Logistics Fund, FCP-FIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
434,391
|
|
AMB U.S. Logistics Fund, L.P.
|
|
|
24,088
|
|
|
|
29,174
|
|
|
|
180,656
|
|
|
|
91,069
|
|
Other Industrial Operating Joint Ventures
|
|
|
30,842
|
|
|
|
|
|
|
|
56,916
|
|
|
|
30,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
261,493
|
|
|
|
398,819
|
|
|
|
717,379
|
|
|
|
556,121
|
|
Total Consolidated
|
|
|
115,769
|
|
|
|
750,489
|
|
|
|
575,769
|
|
|
|
8,630
|
|
Total Unconsolidated
|
|
|
261,493
|
|
|
|
398,819
|
|
|
|
717,379
|
|
|
|
556,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
377,262
|
|
|
$
|
1,149,308
|
|
|
$
|
1,293,148
|
|
|
$
|
564,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Partnerships Share(3)
|
|
$
|
145,034
|
|
|
$
|
668,683
|
|
|
$
|
574,237
|
|
|
$
|
208,847
|
|
|
|
|
(1) |
|
Excludes scheduled principal amortization of debt maturing in
years subsequent to 2014, as well as debt premiums and discounts. |
|
(2) |
|
Subject to certain conditions. |
|
(3) |
|
Total operating partnerships share represents the
operating partnerships pro-rata portion of total debt
maturing in 2011 through 2014 based on its percentage of equity
interest in each of the consolidated and unconsolidated joint
ventures holding the debt. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Capital as of March 31, 2011
|
|
|
|
Units
|
|
|
Market
|
|
|
|
|
Security
|
|
Outstanding
|
|
|
Price(1)
|
|
|
Market Value
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
Common general partnership units
|
|
|
169,321,293
|
(4)
|
|
$
|
35.97
|
|
|
$
|
6,090,487
|
|
Common limited partnership units(2)
|
|
|
3,022,993
|
|
|
$
|
35.97
|
|
|
|
108,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
172,344,286
|
|
|
|
|
|
|
$
|
6,199,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total options outstanding
|
|
|
|
|
|
|
|
|
|
|
9,103,685
|
|
Dilutive effect of stock options(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumes that the operating partnerships common partnership
units are exchanged for the parent companys common stock
on a
one-for-one
basis because there is no public market for the operating
partnerships units. Dollars, in thousands. |
74
|
|
|
(2) |
|
Includes class B common limited partnership units issued by
AMB Property II, L.P. |
|
(3) |
|
Computed using the treasury stock method and an average share
price for the parent companys common stock of $34.04 for
the quarter ended March 31, 2011. All stock options were
anti-dilutive as of March 31, 2011. |
|
(4) |
|
Includes 1,269,422 shares of unvested restricted stock. |
|
|
|
|
|
|
|
|
|
|
|
Preferred units as of March 31, 2011 (dollars in
thousands)
|
|
|
Distribution
|
|
|
Liquidation
|
|
|
Redemption/Callable
|
Security
|
|
Rate
|
|
|
Preference
|
|
|
Date
|
|
Series L preferred units
|
|
|
6.50
|
%
|
|
$
|
50,000
|
|
|
June 2008
|
Series M preferred units
|
|
|
6.75
|
%
|
|
|
57,500
|
|
|
November 2008
|
Series O preferred units
|
|
|
7.00
|
%
|
|
|
75,000
|
|
|
December 2010
|
Series P preferred units
|
|
|
6.85
|
%
|
|
|
50,000
|
|
|
August 2011
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average/total
|
|
|
6.80
|
%
|
|
$
|
232,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests in the operating partnership represent
limited partnership interests in AMB Property II, L.P., a
Delaware limited partnership, and interests held by third-party
partners in joint ventures. Such joint ventures held
approximately 20.9 million square feet as of March 31,
2011 and are consolidated for financial reporting purposes.
Please see Explanatory Note at the beginning of this
quarterly report on
Form 10-Q
and Part I, Item 1, Note 8 of the
Notes to Consolidated Financial Statements for a
discussion of the noncontrolling interests of the operating
partnership.
|
|
|
|
|
Capitalization Ratios as of March 31, 2011
|
|
Operating partnerships share of total
debt-to-operating
partnerships share of total market capitalization(1)
|
|
|
38.7%
|
|
Operating partnerships share of total debt plus
preferred-to-operating
partnerships share of total market capitalization(1)
|
|
|
40.9%
|
|
Operating partnerships share of total
debt-to-operating
partnerships share of total assets(1)
|
|
|
43.0%
|
|
Operating partnerships share of total debt plus
preferred-to-operating
partnerships share of total assets(1)
|
|
|
45.5%
|
|
|
|
|
(1) |
|
The operating partnerships definition of total
market capitalization for the operating partnership is
total debt plus preferred equity liquidation preferences plus
market capital. The definition of operating
partnerships share of total market capitalization is
the operating partnerships share of total debt plus
preferred equity liquidation preferences plus market capital.
The operating partnerships definition of market
capital is the total number of outstanding common general
partnership units of the operating partnership and common
limited partnership units of AMB Property II, L.P. multiplied by
the closing price per share of the parent companys common
stock as of March 31, 2011. The definition of
preferred is preferred equity liquidation
preferences. Operating partnerships share of total
debt is the operating partnerships pro rata portion
of the total debt based on its percentage of equity interest in
each of the consolidated and unconsolidated joint ventures
holding the debt. Operating partnerships share of
total assets is the operating partnerships pro rata
portion of the gross book value of real estate interests plus
cash and other assets. As of March 31, 2011, the operating
partnerships share of total assets was approximately
$9.4 billion. The operating partnership believes that
operating partnerships share of total debt is a meaningful
supplemental measure, which enables both management and
investors to analyze its leverage and to compare its leverage to
that of other companies. In addition, it allows for a more
meaningful comparison of the operating partnerships debt
to that of other companies that do not consolidate their joint
ventures. Operating partnerships share of total debt is
not intended to reflect the operating partnerships actual
liability should there be a default under any or all of such
loans or a liquidation of the joint ventures. For a
reconciliation of operating partnerships share of total
debt to total consolidated debt, a GAAP financial measure,
please see the table of debt maturities and capitalization above. |
75
Liquidity
of the Operating Partnership
As of March 31, 2011, the operating partnership had
$203.6 million in cash and cash equivalents and
$31.7 million in restricted cash. During the three months
ended March 31, 2011, the operating partnership decreased
the availability under its lines of credit by approximately
$147 million while increasing its share of outstanding debt
by approximately $66 million. As of March 31, 2011,
the operating partnership had $1.2 billion available for
future borrowings under its three multi-currency lines of
credit, representing line utilization of 25%.
The operating partnerships available cash and cash
equivalents are held in accounts managed by third party
financial institutions and consist of invested cash and cash in
its operating accounts. The invested cash is invested in money
market funds that invest solely in direct obligations of the
government of the United States or in time deposits with certain
financial institutions. To date, the operating partnership has
experienced no loss or lack of access to its invested cash or
cash equivalents; however, the operating partnership can provide
no assurances that access to its invested cash and cash
equivalents will not be impacted by adverse conditions in the
financial markets.
At any point in time, the operating partnership also has a
significant amount of cash deposits in its operating accounts
that are with third party financial institutions, which was, as
of March 31, 2011, approximately $172.5 million on a
consolidated basis. These balances exceed the Federal Deposit
Insurance Corporation insurance limits. While the operating
partnership monitors daily the cash balances in its operating
accounts and adjusts the cash balances as appropriate, these
cash balances could be impacted if the underlying financial
institutions fail or be subject to other adverse conditions in
the financial markets. To date, the operating partnership has
experienced no loss or lack of access to cash in its operating
accounts.
The following table sets forth the operating partnerships
distributions paid or payable per unit for the three months
ended March 31, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
|
|
March 31,
|
Paying Entity
|
|
Security
|
|
2011
|
|
2010
|
|
AMB Property, L.P.
|
|
Common limited partnership units
|
|
$
|
0.280
|
|
|
$
|
0.280
|
|
AMB Property, L.P.
|
|
Series L preferred units
|
|
$
|
0.406
|
|
|
$
|
0.406
|
|
AMB Property, L.P.
|
|
Series M preferred units
|
|
$
|
0.422
|
|
|
$
|
0.422
|
|
AMB Property, L.P.
|
|
Series O preferred units
|
|
$
|
0.438
|
|
|
$
|
0.438
|
|
AMB Property, L.P.
|
|
Series P preferred units
|
|
$
|
0.428
|
|
|
$
|
0.428
|
|
AMB Property II, L.P.
|
|
Class B common limited partnership units
|
|
$
|
0.280
|
|
|
$
|
0.280
|
|
The operating partnership anticipates that it will be required
to use proceeds from debt and equity financings and the
divestitures of properties, in addition to cash from its
operations, to make its distribution payments and repay its
maturing debt as it comes due. However, the operating
partnership may not be able to obtain future financings on
favorable terms or at all. The operating partnerships
inability to obtain future financings on favorable terms or at
all would adversely affect its financial condition, results of
operations, cash flow and ability to pay cash distributions to
its unitholders and make payments to its noteholders. The
operating partnership is currently exploring various options to
monetize its development assets including contribution to funds
where investment capacity is available, the formation of joint
ventures and the sale of assets to third parties. The operating
partnership is also exploring the potential sale of operating
assets to further enhance liquidity. There can be no assurance,
however, that the operating partnership will choose to or be
able to monetize any of its assets.
Cash flows generated by the operating partnerships
business were sufficient to cover its distributions for the
three months ended March 31, 2011 and 2010, including its
distributions to the parent company, which are, in turn, paid to
the parent companys stockholders as dividends and
distributions. Cash flows from the operating partnerships
real estate operations and private capital businesses, which are
included in Net cash provided by operating
activities in its Cash Flows from Operating Activities and
cash flows from its real estate development and operations
businesses which are included in Net proceeds from
divestiture of real estate and securities in its Cash
Flows from Investing Activities in its Consolidated Statements
of Cash Flows, were sufficient to pay distributions on common
and preferred limited partnership units of the operating
partnership and AMB Property II, L.P. and distributions to
noncontrolling interests for the three months ended
March 31, 2011 and 2010. The
76
operating partnership uses proceeds from its businesses included
in Cash Flows from Investing Activities (specifically, the
proceeds from sales and contributions of properties as part of
its real estate development and operations businesses) to fund
distributions not covered by Cash Flows from Operating
Activities.
The following table sets forth the summary of the operating
partnerships distributions paid or payable for the three
months ended March 31, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
Summary of Distributions Paid
|
|
2011
|
|
|
2010
|
|
|
|
(Dollars in thousands)
|
|
|
Net cash provided by operating activities
|
|
$
|
61,727
|
|
|
$
|
70,065
|
|
Distributions paid to partners(1)
|
|
|
(99,880
|
)
|
|
|
(46,238
|
)
|
Distributions to noncontrolling interests, including preferred
units
|
|
|
(2,412
|
)
|
|
|
(2,767
|
)
|
|
|
|
|
|
|
|
|
|
(Deficiency) excess of net cash provided by operating activities
over distributions paid
|
|
$
|
(40,565
|
)
|
|
$
|
21,060
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from divestiture of real estate
|
|
$
|
93,657
|
|
|
$
|
22,408
|
|
|
|
|
|
|
|
|
|
|
Excess of net cash provided by operating activities and net
proceeds from divestiture of real estate over distributions paid
|
|
$
|
53,092
|
|
|
$
|
43,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The increase in 2011 as compared to 2010 was due to timing of
the first quarter dividend payment being accelerated in 2011 as
a result of the proposed merger with ProLogis. |
Capital
Commitments of the Operating Partnership
Development starts, generally defined as projects where the
operating partnership has obtained building permits and has
begun physical construction, during the three months ended
March 31, 2011 and 2010 on an owned and managed basis were
as follows, excluding value-added acquisitions (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
The Americas:
|
|
|
|
|
|
|
|
|
Number of new development projects
|
|
|
1
|
|
|
|
|
|
Square feet
|
|
|
602,611
|
|
|
|
|
|
Estimated total investment(1)
|
|
$
|
58,040
|
|
|
$
|
|
|
Europe:
|
|
|
|
|
|
|
|
|
Number of new development projects
|
|
|
1
|
|
|
|
|
|
Square feet
|
|
|
305,351
|
|
|
|
|
|
Estimated total investment(1)
|
|
$
|
34,150
|
|
|
$
|
|
|
Asia:
|
|
|
|
|
|
|
|
|
Number of new development projects
|
|
|
2
|
|
|
|
|
|
Square feet
|
|
|
2,221,314
|
|
|
|
|
|
Estimated total investment(1)
|
|
$
|
207,744
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
Number of new development projects
|
|
|
4
|
|
|
|
|
|
Square feet
|
|
|
3,129,276
|
|
|
|
|
|
Estimated total investment(1)
|
|
$
|
299,934
|
|
|
$
|
|
|
Total
construction-in-progress
estimated investment(1)(2)
|
|
$
|
471,617
|
|
|
$
|
300,768
|
|
Total
construction-in-progress
invested to date(3)
|
|
$
|
196,771
|
|
|
$
|
269,612
|
|
Total
construction-in-progress
remaining to invest(3)(4)
|
|
$
|
274,846
|
|
|
$
|
31,156
|
|
|
|
|
(1) |
|
Includes total estimated cost of development, renovation, or
expansion, including initial acquisition costs, prepaid ground
leases, buildings, and associated carry costs. Estimated total
investments are based on current forecasts and are subject to
change.
Non-U.S.
dollar investments are translated into U.S. dollars using the
exchange rate as of March 31, 2011 or 2010, as applicable. |
|
(2) |
|
Excludes the impact of real estate impairment losses and
includes value-added conversions. |
|
(3) |
|
Amounts include capitalized interest and overhead costs, as
applicable. |
|
(4) |
|
Calculated using estimated total investment before the impact of
real estate impairment losses. |
77
Development Portfolio. As of March 31,
2011, the operating partnership had 12
construction-in-progress
development projects, on an owned and managed basis, which are
expected to total approximately 5.3 million square feet and
have an aggregate estimated investment of $470.6 million
upon completion, net of $1.0 million of cumulative real
estate impairment losses to date. Five of these projects
totaling approximately 1.8 million square feet with an
aggregate estimated investment of $183.4 million were held
in an unconsolidated co-investment venture.
Construction-in-progress,
at March 31, 2011, included projects expected to be
completed through the third quarter of 2013.
On an owned and managed basis, the operating partnership had an
additional 25 development projects available for sale or
contribution totaling approximately 6.8 million square
feet, with an aggregate estimated investment of
$699.3 million, net of $68.6 million of cumulative
real estate impairment losses to date, and an aggregate net book
value of $686.6 million.
As of March 31, 2011, on an owned and managed basis, the
operating partnership and its development joint venture partners
have funded an aggregate of $952.0 million, or 77%, of the
total estimated investment before the impact of real estate
investment losses and will need to fund an estimated additional
$287.5 million, or 23%, in order to complete its
development portfolio.
In addition to its committed development pipeline, the operating
partnership held a total of 2,594 acres of land for future
development or sale, on an owned and managed basis,
approximately 87% of which was located in the Americas. This
included 234 acres that were held in unconsolidated joint
ventures. The operating partnership currently estimates that
these 2,594 acres of land could support approximately
46.5 million square feet of future development.
Lease Commitments. The operating partnership
has entered into operating ground leases on certain land
parcels, primarily on-tarmac facilities and office space with
remaining lease terms from 1 to 79 years. These buildings
and improvements subject to ground leases are amortized ratably
over the lesser of the terms of the related leases or
40 years.
Co-Investment Ventures. The operating
partnership enters into co-investment ventures with
institutional investors, acting as the general partner or
manager of such ventures. These co-investment ventures are
managed by the operating partnerships private capital
group and provide the company with an additional source of
capital to fund acquisitions, development projects and
renovation projects, as well as private capital income. As of
March 31, 2011, the operating partnership had investments
in co-investment ventures with a gross book value of
approximately $1.2 billion, which are consolidated for
financial reporting purposes, and net equity investments in
unconsolidated co-investment ventures of $756.6 million and
a gross book value of approximately $7.2 billion. As of
March 31, 2011, the operating partnership may make
additional capital contributions to current and planned
co-investment ventures of up to $464.6 million pursuant to
the terms of the co-investment venture agreements. From time to
time, the operating partnership may raise additional equity
commitments for AMB U.S. Logistics Fund, L.P., an
open-ended unconsolidated co-investment venture formed in 2004
with institutional investors, most of whom invest through a
private real estate investment trust, and for AMB Europe
Logistics Fund, FCP-FIS, an open-ended unconsolidated
co-investment venture formed in 2007 with institutional
investors. This could increase the operating partnerships
obligation to make additional capital commitments to these
ventures. Pursuant to the terms of the partnership agreement of
AMB U.S. Logistics Fund, L.P., and the management
regulations of AMB Europe Logistics Fund, FCP-FIS, the operating
partnership is obligated to contribute 20% of the total equity
commitments until such time when its total equity commitment is
greater than $150.0 million or 150.0 million Euros,
respectively, at which time, its obligation is reduced to 10% of
the total equity commitments. The operating partnership expects
to fund these contributions with cash from operations,
borrowings under its credit facilities, debt or equity issuances
or net proceeds from property divestitures, which could
adversely affect its cash flow.
On August 2, 2010, the company announced the formation of
AMB Mexico Fondo Logistico, a publicly traded co-investment
venture with a
10-year term
whose investment strategy is to develop, acquire, own, operate
and manage industrial distribution facilities primarily within
the companys target markets in Mexico. Approximately
3.3 billion Pesos was raised from the third party investors
in the venture, comprised of institutional investors in Mexico,
primarily private pension plans. These contributions, net of
offering costs, held partially in Pesos and U.S. dollars,
totaled approximately $252.5 million using the exchange
rate in effect on March 31, 2011. These
78
contributions, excluding amounts transferred as detailed below,
are held by a third party trustee, which is not consolidated by
the company, and, as such, the cash investment and equity
interest of the third party investors related to this portion of
the contributions are not reflected on the companys
consolidated financial statements. During the three months ended
March 31, 2011, $4.1 million of the contributions made
by third party investors were transferred from the third party
trustee to the co-investment venture. The company will
contribute 20% of the total equity, or approximately
$63.1 million, at full deployment, for total equity of
$315.6 million available for future investments. During the
three months ended March 31, 2011, the company contributed
$1.0 million to this co-investment venture. The
co-investment venture is expected to utilize 50% to 65% leverage
on its investments. As of March 31, 2011, no investments
had been made in real estate properties within this
co-investment venture, which is consolidated by the company.
On March 3, 2011, the company announced the formation of
AMB Europe Logistics JV, FCP-FIS, an unconsolidated
co-investment venture with Allianz Real Estate whose strategy is
to acquire, own and operate logistics properties primarily
within major seaport, airport and distribution markets in the
Eurozone. The initial third-party equity investment will be
approximately 400.0 million Euros (approximately
$566.3 million in U.S. dollars using the exchange rate
in effect at March 31, 2011) and the ventures
overall equity commitment is 470.0 million Euros
(approximately $665.4 million in U.S. dollars using
the same exchange rate), including the companys 15%
co-investment. The co-investment venture is not expected to
utilize leverage on its investments. As of March 31, 2011,
no investments had been made in real estate properties within
this co-investment venture.
On March 16, 2011, the company announced the formation of
AMB China Logistics Venture I, L.P., an unconsolidated
co-investment venture with HIP China Logistics Investments
Limited, whose strategy is to develop, acquire, own, operate and
manage logistics properties primarily within key markets in
China. The ventures overall equity commitment is
$588.0 million, of which the company will contribute
$88.0 million for an approximate 15% ownership. The
co-investment venture is expected to utilize 50% leverage on its
investments. As of March 31, 2011, no investments had been
made in real estate properties within this co-investment venture.
Captive Insurance Company. In December 2001,
the operating partnership formed a wholly owned captive
insurance company, Arcata National Insurance Ltd. (Arcata),
which provides insurance coverage for all or a portion of losses
below the attachment point of the operating partnerships
third-party insurance policies. The captive insurance company is
one element of the operating partnerships overall risk
management program. The company capitalized Arcata in accordance
with the applicable regulatory requirements. Arcata establishes
annual premiums based on projections derived from the past loss
experience of the operating partnerships properties. Like
premiums paid to third-party insurance companies, premiums paid
to Arcata may be reimbursed by customers pursuant to specific
lease terms. Through this structure, the operating partnership
believes that it has more comprehensive insurance coverage at an
overall lower cost than would otherwise be available in the
market.
Potential Contingent and Unknown
Liabilities. Contingent and unknown liabilities
may include the following:
|
|
|
|
|
liabilities for environmental conditions;
|
|
|
|
losses in excess of insured coverage;
|
|
|
|
claims of customers, vendors or other persons dealing with the
companys predecessors prior to the companys
formation or acquisition transactions that had not been asserted
or were unknown prior to the operating partnerships
formation or acquisition transactions;
|
|
|
|
claims for indemnification by the general partners, officers and
directors and others indemnified by the former owners of the
operating partnerships properties;
|
|
|
|
accrued but unpaid liabilities incurred in the ordinary course
of business; and
|
|
|
|
tax, legal and regulatory liabilities.
|
79
Capital
Deployment
Land acquisitions during the three months ended March 31,
2011 and 2010 were as follows, excluding value-added
acquisitions (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
The Americas:
|
|
|
|
|
|
|
|
|
Acres
|
|
|
|
|
|
|
58
|
|
Estimated build out potential (square feet)
|
|
|
|
|
|
|
1,162,103
|
|
Investment(1)
|
|
$
|
|
|
|
$
|
21,321
|
|
Europe:
|
|
|
|
|
|
|
|
|
Acres
|
|
|
12
|
|
|
|
|
|
Estimated build out potential (square feet)
|
|
|
305,351
|
|
|
|
|
|
Investment(1)
|
|
$
|
9,973
|
|
|
$
|
|
|
Asia:
|
|
|
|
|
|
|
|
|
Acres
|
|
|
13
|
|
|
|
|
|
Estimated build out potential (square feet)
|
|
|
1,143,223
|
|
|
|
|
|
Investment(1)
|
|
$
|
2,686
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
|
|
|
|
|
|
Acres
|
|
|
25
|
|
|
|
58
|
|
Estimated build out potential (square feet)
|
|
|
1,448,574
|
|
|
|
1,162,103
|
|
Investment(1)
|
|
$
|
12,659
|
|
|
$
|
21,321
|
|
|
|
|
(1) |
|
Represents actual cost incurred to date including initial
acquisition, associated closing costs, infrastructure and
associated capitalized interest and overhead costs. |
Acquisition activity, including value-added acquisitions, during
the three months ended March 31, 2011 and 2010 was as
follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Number of properties acquired by AMB U.S. Logistics Fund,
L.P.
|
|
|
1
|
|
|
|
2
|
|
Square feet
|
|
|
278,365
|
|
|
|
687,932
|
|
Expected investment(1)
|
|
$
|
17,300
|
|
|
$
|
45,552
|
|
Number of properties acquired by AMB Europe Logistics Fund,
FCP-FIS
|
|
|
1
|
|
|
|
|
|
Square feet
|
|
|
29,956
|
|
|
|
|
|
Expected investment(1)
|
|
$
|
5,202
|
|
|
$
|
|
|
Total number of properties acquired
|
|
|
2
|
|
|
|
2
|
|
Total square feet
|
|
|
308,321
|
|
|
|
687,932
|
|
Total acquisition cost
|
|
$
|
22,386
|
|
|
$
|
45,400
|
|
Total acquisition capital
|
|
|
116
|
|
|
|
152
|
|
|
|
|
|
|
|
|
|
|
Total expected investment(1)
|
|
$
|
22,502
|
|
|
$
|
45,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes total estimated cost of development, renovation, or
expansion, including initial acquisition costs, prepaid ground
leases, buildings, tenant improvements and associated
capitalized interest and overhead costs. Estimated total
investments are based on current forecasts and are subject to
change.
Non-U.S.
dollar investments are translated into U.S. dollars using the
exchange rate as of March 31, 2011 or 2010, as applicable. |
80
OFF-BALANCE
SHEET ARRANGEMENTS
Standby Letters of Credit. As of
March 31, 2011, the company had provided approximately
$13.2 million in letters of credit, of which
$10.7 million were provided under the operating
partnerships $600.0 million unsecured credit
facility. The letters of credit were required to be issued under
certain ground lease provisions, bank guarantees and other
commitments.
Guarantees and Contribution
Obligations. Excluding parent guarantees
associated with debt or contribution obligations as discussed in
Part I, Item 1, Notes 5, 6 and 9 of the
Notes to Consolidated Financial Statements, as of
March 31, 2011, the company had outstanding guarantees and
contribution obligations in the aggregate amount of
$406.2 million as described below.
As of March 31, 2011, the company had outstanding bank
guarantees in the amount of $0.3 million used to secure
contingent obligations, primarily obligations under development
and purchase agreements. As of March 31, 2011, the company
also guaranteed $61.3 million and $84.0 million on
outstanding loans on five of its consolidated joint ventures and
three of its unconsolidated joint ventures, respectively.
Also, the company has entered into contribution agreements with
certain of its unconsolidated co-investment ventures. These
contribution agreements require the company to make additional
capital contributions to the applicable co-investment venture
fund upon certain defaults by the co-investment venture of
certain of its debt obligations to the lenders. Such additional
capital contributions will cover all or part of the applicable
co-investment ventures debt obligation and may be greater
than the companys share of the co-investment
ventures debt obligation or the value of the
companys share of any property securing such debt. The
companys contribution obligations under these agreements
will be reduced by the amounts recovered by the lender and the
fair market value of the property, if any, used to secure the
debt and obtained by the lender upon default. The companys
potential obligations under these contribution agreements
totaled $260.6 million as of March 31, 2011.
Performance and Surety Bonds. As of
March 31, 2011, the company had outstanding performance and
surety bonds in an aggregate amount of $4.8 million. These
bonds were issued in connection with certain of the
companys development projects and were posted to guarantee
certain property tax obligations and the construction of certain
real property improvements and infrastructure. Performance and
surety bonds are renewable and expire upon the payment of the
property taxes due or the completion of the improvements and
infrastructure.
Promote Interests and Other Contractual
Obligations. Upon the achievement of certain
return thresholds and the occurrence of certain events, the
company may be obligated to make payments to certain of its
joint venture partners pursuant to the terms and provisions of
their contractual agreements with the company. From time to time
in the normal course of its business, the company enters into
various contracts with third parties that may obligate the
company to make payments, pay promotes, or perform other
obligations upon the occurrence of certain events.
SUPPLEMENTAL
EARNINGS MEASURES
Funds
From Operations, as adjusted (FFO, as adjusted),
Funds From Operations Per Share and Unit, as adjusted
(FFOPS, as adjusted), Core Funds From Operations, as
adjusted (Core FFO, as adjusted), Core Funds From
Operations Per Share and Unit, as adjusted (Core FFOPS, as
adjusted) and Funds From Operations, as defined by NAREIT
(FFO, as defined by NAREIT).
The company believes that net income, as defined by
U.S. GAAP, is the most appropriate earnings measure.
However, the company considers funds from operations, as
adjusted (or FFO, as adjusted), FFO per share and unit, as
adjusted (or FFOPS, as adjusted), Core FFO, as adjusted, Core
FFO per share and unit, as adjusted (or Core FFOPS, as adjusted)
and FFO, as defined by NAREIT (together, the FFO Measures,
as adjusted) to be useful supplemental measures of its
operating performance. The company defines FFOPS, as adjusted,
as FFO, as adjusted, per fully diluted weighted average share of
the parent companys common stock and operating partnership
units. The company 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 the
companys pro rata share of FFO, as adjusted of
consolidated and unconsolidated joint ventures. The company
defines Core FFOPS, as adjusted as Core
81
FFO, as adjusted per fully diluted weighted share of the parent
companys common stock and operating partnership units. The
company calculates Core FFO, as adjusted as FFO, as adjusted
excluding the companys share of development profits. These
calculations also include adjustments for items as described
below.
Unless stated otherwise, the company includes the gains from
development, including those from value-added conversion
projects, before depreciation recapture, as a component of FFO,
as adjusted. The company believes gains from development should
be included in FFO, as adjusted, to more completely reflect the
performance of one of its lines of business. The company
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
industrys long standing practice to include gains on the
sale of land in funds from operations. However, the
companys 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 National Association of Real Estate
Investment Trusts (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 the company does. In connection with the formation of a
joint venture, the company 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. The company includes in its calculation of
FFO, as adjusted, gains or losses related to the contribution of
previously depreciated real estate to joint ventures. Although
it is a departure from the current NAREIT definition, the
company believes such calculation of FFO, as adjusted, better
reflects the value created as a result of the contributions.
In addition, the company calculates FFO, as adjusted, to exclude
impairment and restructuring charges, merger transaction costs,
debt extinguishment losses and the 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 the
companys reduction in global headcount and cost structure.
Debt extinguishment losses generally included the costs of
repurchasing debt securities. The company 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 preferred unit redemption
discount reflects the gain associated with the discount to
liquidation preference in the 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 the
companys results of operations. The economics underlying
these items reflect market and financing conditions in the
short-term but can obscure the companys performance and
the value of the companys long-term investment decisions
and strategies. The merger transaction costs, which reflected
costs associated with the companys potential merger
transaction with ProLogis, represented fluctuations that can
have inconsistent effects on the companys results of
operations. 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 the
companys business model and its potential performance
isolated from the volatility of the current economic environment
and unobscured by costs (or gains) resulting from the
companys management of its financing profile in response
to the tightening of the capital markets. However, in addition
to the limitations of the FFO Measures, as adjusted, generally
discussed below, FFO, as adjusted, does not present a
comprehensive measure of the companys 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.
The company 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
82
by U.S. GAAP. The company 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. The
company 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 companys 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 the companys liquidity or operating
performance. The FFO Measures, as adjusted, also do not consider
the costs associated with capital expenditures related to the
companys real estate assets nor are the FFO Measures, as
adjusted, necessarily indicative of cash available to fund the
companys 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.
83
The following table reflects the calculation of FFO, as
adjusted, reconciled from net income (loss) available to common
unitholders of the operating partnership and common stockholders
of the parent company and the calculation of Core FFO, as
adjusted, reconciled from FFO, as adjusted, for the three months
ended March 31, 2011 and 2010 (dollars in thousands, except
share and per share amounts):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Net income (loss) available to common unitholders of the
operating partnership
|
|
$
|
7,920
|
|
|
$
|
(4,506
|
)
|
Net (loss) income available to common unitholders of the
operating partnership attributable to limited partners of the
operating partnership
|
|
|
(99
|
)
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders of the parent
company
|
|
|
7,821
|
|
|
|
(4,447
|
)
|
Gains from sale or contribution of real estate interests, net
|
|
|
(14,544
|
)
|
|
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
Total depreciation and amortization
|
|
|
54,986
|
|
|
|
47,381
|
|
Discontinued operations depreciation
|
|
|
28
|
|
|
|
1,279
|
|
Non-real estate depreciation
|
|
|
(1,897
|
)
|
|
|
(2,545
|
)
|
Adjustment for depreciation on development profits
|
|
|
(525
|
)
|
|
|
(1,546
|
)
|
Adjustments to derive FFO, as defined by NAREIT, from
consolidated joint ventures:
|
|
|
|
|
|
|
|
|
Joint venture partners noncontrolling interests (Net
income (loss))
|
|
|
2,049
|
|
|
|
(375
|
)
|
Limited partnership unitholders noncontrolling interests
(Net income (loss) and development profits)
|
|
|
145
|
|
|
|
(94
|
)
|
FFO, as defined by NAREIT, attributable to noncontrolling
interests
|
|
|
(7,542
|
)
|
|
|
(5,380
|
)
|
Adjustments to derive FFO, as defined by NAREIT, from
unconsolidated joint ventures:
|
|
|
|
|
|
|
|
|
The companys share of net income
|
|
|
(7,800
|
)
|
|
|
(3,875
|
)
|
The companys share of FFO, as defined by NAREIT
|
|
|
20,881
|
|
|
|
14,453
|
|
|
|
|
|
|
|
|
|
|
Funds from operations, as defined by NAREIT
|
|
|
53,602
|
|
|
|
44,851
|
|
|
|
|
|
|
|
|
|
|
Adjustments for impairments, restructuring charges and debt
extinguishment:
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
|
|
|
|
2,973
|
|
Merger transaction costs
|
|
|
3,697
|
|
|
|
|
|
Allocation to participating securities(1)
|
|
|
(69
|
)
|
|
|
(42
|
)
|
|
|
|
|
|
|
|
|
|
Funds from operations, as adjusted
|
|
$
|
57,230
|
|
|
$
|
47,782
|
|
|
|
|
|
|
|
|
|
|
Basic FFO, as adjusted, per common share and unit
|
|
$
|
0.33
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
Diluted FFO, as adjusted, per common share and unit
|
|
$
|
0.33
|
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares and units:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
171,137,688
|
|
|
|
152,042,559
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
172,972,812
|
|
|
|
152,769,638
|
|
|
|
|
|
|
|
|
|
|
Core funds from operations (Core FFO), as adjusted
|
|
|
|
|
|
|
|
|
Funds from operations, as adjusted
|
|
$
|
57,230
|
|
|
$
|
47,782
|
|
Development profits, net of taxes
|
|
|
(1,112
|
)
|
|
|
(3,257
|
)
|
Joint venture partners and limited partnership
unitholders share of development profits, net of taxes
|
|
|
29
|
|
|
|
106
|
|
Limited partnership unitholders noncontrolling interests
(Development profits)
|
|
|
(29
|
)
|
|
|
(106
|
)
|
Allocation to participating securities(1)
|
|
|
8
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
Core funds from operations, as adjusted
|
|
$
|
56,126
|
|
|
$
|
44,551
|
|
|
|
|
|
|
|
|
|
|
Basic Core FFO, as adjusted, per common share and unit
|
|
$
|
0.33
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
Diluted Core FFO, as adjusted, per common share and unit
|
|
$
|
0.32
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares and units:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
171,137,688
|
|
|
|
152,042,559
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
172,972,812
|
|
|
|
152,769,638
|
|
|
|
|
|
|
|
|
|
|
84
|
|
|
(1) |
|
To be consistent with the companys policies of determining
whether instruments granted in share-based payment transactions
are participating securities and accounting for earnings per
share, the FFO, as adjusted, per common share and unit is
adjusted for FFO, as adjusted, distributed through declared
dividends and allocated to all participating securities
(weighted average common shares and units outstanding and
unvested restricted shares outstanding) under the two-class
method. The same allocation is made for Core FFO, as adjusted,
per common share and unit. Under this method, allocations were
made to 1,269,422 unvested restricted shares outstanding for the
three months ended March 31, 2011. Allocations were made to
1,228,034 unvested restricted shares outstanding for the three
months ended March 31, 2010. |
Same
Store Net Operating Income (SS NOI)
The company defines net operating income, or NOI, as rental
revenues, including reimbursements, less property operating
expenses. NOI excludes depreciation, amortization, general and
administrative expenses, restructuring charges, merger
transaction costs, real estate impairment losses, development
profits (losses), gains (losses) from sale or contribution of
real estate interests, and interest expense. The company
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 the
companys 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 the
companys operating performance with that of other
companies. Real estate impairment losses have been excluded in
deriving NOI because the company does not consider its
impairment losses to be a property operating expense. The
company 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
the companys assets but do not reflect the current
operating performance of the assets with respect to their
revenues or expenses. The companys 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
the companys real estate operations and should be excluded
from its calculation of NOI.
The company considers same store net operating income, or SS
NOI, and cash-basis SS NOI to be useful supplemental measures of
its operating performance for properties that are considered
part of the same store pool. The company defines SS NOI as NOI
on a same store basis. The company defines cash-basis SS NOI as
SS NOI excluding straight-line rents and amortization of lease
intangibles. The 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, 2009. The company considers
cash-basis 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
certain adjustments and provides a better measure of actual
cash-basis rental growth for a
year-over-year
comparison. In addition, the company believes that SS NOI and
cash-basis SS NOI help investors compare the operating
performance of its real estate as compared to other companies.
While SS NOI and cash-basis SS NOI are relevant and widely used
measures of operating performance of real estate investment
trusts, they do not represent cash flow from operations or net
income as defined by GAAP and should not be considered as
alternatives to those measures in evaluating the companys
liquidity or operating performance. SS NOI and cash-basis SS NOI
also do not reflect general and administrative expenses,
restructuring charges, interest expenses, real estate impairment
losses, merger transaction costs, depreciation and amortization
costs, capital expenditures and leasing costs, or trends in
development and construction activities that could materially
impact the companys results from operations. Further, the
companys computation of SS NOI and cash-basis SS NOI may
not be comparable to that of other real estate companies, as
they may use different methodologies for calculating SS NOI and
cash-basis SS NOI.
85
The following table reconciles SS NOI, cash-basis SS NOI and
cash-basis SS NOI, excluding lease termination fees from net
income (loss) for the three months ended March 31, 2011 and
2010 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
Net income (loss)
|
|
$
|
14,322
|
|
|
$
|
(620
|
)
|
Private capital revenues
|
|
|
(7,683
|
)
|
|
|
(7,445
|
)
|
Depreciation and amortization
|
|
|
54,986
|
|
|
|
47,381
|
|
General and administrative and fund costs
|
|
|
30,902
|
|
|
|
32,265
|
|
Restructuring charges
|
|
|
|
|
|
|
2,973
|
|
Meger transaction costs
|
|
|
3,697
|
|
|
|
|
|
Total other income and expenses
|
|
|
26,850
|
|
|
|
24,813
|
|
Total discontinued operations
|
|
|
(17,051
|
)
|
|
|
(840
|
)
|
|
|
|
|
|
|
|
|
|
Net operating income
|
|
|
106,023
|
|
|
|
98,527
|
|
Less non same-store NOI
|
|
|
(18,888
|
)
|
|
|
(11,233
|
)
|
Less non-cash adjustments(1)
|
|
|
(2,279
|
)
|
|
|
(2,877
|
)
|
|
|
|
|
|
|
|
|
|
Cash-basis same-store NOI
|
|
$
|
84,856
|
|
|
$
|
84,417
|
|
|
|
|
|
|
|
|
|
|
Less lease termination fees
|
|
|
(393
|
)
|
|
|
(638
|
)
|
|
|
|
|
|
|
|
|
|
Cash-basis same-store NOI, excluding lease termination fees
|
|
$
|
84,463
|
|
|
$
|
83,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Non-cash adjustments include straight-line rents and
amortization of lease intangibles for the same store pool only. |
OWNED AND
MANAGED OPERATING AND LEASING STATISTICS
Owned and
Managed Operating and Leasing Statistics (1)
The following table summarizes key operating and leasing
statistics for all of the companys owned and managed
operating properties for the quarter ended March 31, 2011:
|
|
|
|
|
Operating Portfolio
|
|
|
|
Square feet owned(2)(3)
|
|
|
140,188,197
|
|
Occupancy percentage(3)
|
|
|
92.8
|
%
|
Average occupancy percentage
|
|
|
92.4
|
%
|
Weighted average lease terms (years):
|
|
|
|
|
Original
|
|
|
6.2
|
|
Remaining
|
|
|
3.4
|
|
Trailing four quarters tenant retention
|
|
|
61.4
|
%
|
Trailing four quarters rent change on renewals and rollovers:(4)
|
|
|
|
|
Percentage
|
|
|
(12.6
|
)%
|
Same space square footage commencing (millions)
|
|
|
24.4
|
|
Trailing four quarters second generation leasing activity:(5)
|
|
|
|
|
Tenant improvements and leasing commissions per sq. ft.:
|
|
|
|
|
Retained
|
|
$
|
1.45
|
|
Re-tenanted
|
|
$
|
2.52
|
|
Weighted average
|
|
$
|
2.05
|
|
Square footage commencing (millions)
|
|
|
31.5
|
|
86
|
|
|
(1) |
|
Schedule includes owned and managed operating properties. This
excludes development and renovation projects, recently completed
development projects available for sale or contribution and
value-added acquisitions. |
|
(2) |
|
As of March 31, 2011, the company had investments in
7.3 million square feet of operating properties through its
investments in non-managed unconsolidated joint ventures and
152,000 square feet, which is the location of its global
headquarters. |
|
(3) |
|
On a consolidated basis, the company had approximately
77.8 million rentable square feet with an occupancy rate of
92.1% at March 31, 2011. |
|
(4) |
|
Rent changes on renewals and rollovers are calculated as the
difference, weighted by square feet, of the net annualized base
rent (ABR) due the first month of a term commencement and the
net ABR due the last month of the former customers term.
If free rent is granted, then the first positive full rent value
is used as a point of comparison. The rental amounts exclude
base stop amounts, holdover rent and premium rent charges. If
either the previous or current lease terms are under
12 months, then they are excluded from this calculation. If
the lease is first generation or there is no prior lease for
comparison, then it is excluded from this calculation. |
|
(5) |
|
Second generation tenant improvements and leasing commissions
per square foot are the total cost of tenant improvements,
leasing commissions and other leasing costs incurred during
leasing of second generation space divided by the total square
feet leased. Costs incurred prior to leasing available space are
not included until such space is leased. Second generation space
excludes newly developed square footage or square footage vacant
at acquisition. |
The table below summarizes key operating and leasing statistics
for the companys owned and managed operating properties
for the quarter ended March 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
|
|
|
|
|
|
Total/Weighted
|
Owned and Managed Property Data(1)
|
|
Americas
|
|
Europe
|
|
Asia
|
|
Average
|
|
For the quarter ended March 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable square feet
|
|
|
112,766,343
|
|
|
|
13,513,165
|
|
|
|
13,908,689
|
|
|
|
140,188,197
|
|
Occupancy percentage at period end(2)
|
|
|
92.5
|
%
|
|
|
92.9
|
%
|
|
|
95.4
|
%
|
|
|
92.8
|
%
|
Trailing four quarters same space square footage leased
|
|
|
20,427,653
|
|
|
|
1,208,225
|
|
|
|
2,742,707
|
|
|
|
24,378,585
|
|
Trailing four quarters rent change on renewals and
rollovers(2)(3)
|
|
|
(14.5
|
)%
|
|
|
(13.2
|
)%
|
|
|
(4.3
|
)%
|
|
|
(12.6
|
)%
|
|
|
|
(1) |
|
Schedule includes owned and managed operating properties which
the company defines as properties in which it has at least a 10%
ownership interest, for which the company is the property or
asset manager and which the company currently intends to hold
for the long term. This excludes development and renovation
projects, recently completed development projects available for
sale or contribution and value-added acquisitions. |
|
(2) |
|
On a consolidated basis, for the Americas, Europe and Asia,
occupancy percentage at period end for 2011 was 91.5% and 96.2%
and 96.2%, respectively, and trailing four quarters rent change
on renewals and rollovers at period end for 2011 was (14.1)%,
(29.2)% and 6.2% respectively. Properties in Europe are
primarily held in the unconsolidated co-investment venture AMB
Europe Logistics Fund, FCP-FIS. |
|
(3) |
|
Rent changes on renewals and rollovers are calculated as the
difference, weighted by square feet, of the net ABR due the
first month of a term commencement and the net ABR due the last
month of the former customers term. If free rent is
granted, then the first positive full rent value is used as a
point of comparison. The rental amounts exclude base stop
amounts, holdover rent and premium rent charges. If either the
previous or current lease terms are under 12 months, then
they are excluded from this calculation. If the lease is first
generation or there is no prior lease for comparison, then it is
excluded from this calculation. |
87
Owned and
Managed Same Store Operating Statistics (1)
The following table summarizes key operating and leasing
statistics for the companys owned and managed same store
operating properties as of and for the three months ended
March 31, 2011:
|
|
|
|
|
Same Store Pool(2)
|
|
|
|
Square feet in same store pool(3)
|
|
|
128,889,462
|
|
% of total square feet
|
|
|
91.9
|
%
|
Occupancy percentage(3)
|
|
|
92.4
|
%
|
Average occupancy percentage
|
|
|
92.0
|
%
|
Weighted average lease terms (years):
|
|
|
|
|
Original
|
|
|
6.2
|
|
Remaining
|
|
|
3.3
|
|
Trailing four quarters tenant retention
|
|
|
61.2
|
%
|
Trailing four quarters rent change on renewals and rollovers:(4)
|
|
|
|
|
Percentage
|
|
|
(13.0
|
)%
|
Same space square footage commencing (millions)
|
|
|
21.9
|
|
Growth % increase (decrease) (including straight-line rents):
|
|
|
|
|
Revenues(5)
|
|
|
0.9
|
%
|
Expenses(5)
|
|
|
4.1
|
%
|
Net operating income, excluding lease termination
fees(5)(6)
|
|
|
(0.3
|
)%
|
Growth % increase (excluding straight-line rents):
|
|
|
|
|
Revenues(5)
|
|
|
1.4
|
%
|
Expenses(5)
|
|
|
4.1
|
%
|
Net operating income, excluding lease termination fees(5)(6)
|
|
|
0.2
|
%
|
|
|
|
(1) |
|
Schedule includes owned and managed operating properties. This
excludes development and renovation projects, recently completed
development projects available for sale or contribution and
value-added acquisitions. |
|
(2) |
|
Same store pool includes all properties that are owned as of
both the current and prior year reporting periods and excludes
development properties for both the current and prior reporting
years. The same store pool is set annually and excludes
properties purchased and developments stabilized after
December 31, 2009 (generally defined as properties that are
90% leased or properties that have been substantially complete
for at least 12 months). |
|
(3) |
|
On a consolidated basis, the company had approximately
70.6 million square feet with an occupancy rate of 91.6% at
March 31, 2011. |
|
(4) |
|
Rent changes on renewals and rollovers are calculated as the
difference, weighted by square feet, of the net ABR due the
first month of a term commencement and the net ABR due the last
month of the former customers term. If free rent is
granted, then the first positive full rent value is used as a
point of comparison. The rental amounts exclude base stop
amounts, holdover rent and premium rent charges. If either the
previous or current lease terms are under 12 months, then
they are excluded from this calculation. If the lease is first
generation or there is no prior lease for comparison, then it is
excluded from this calculation. |
|
(5) |
|
For the three months ended March 31, 2011, on a
consolidated basis, the percentage change was 0.9%, 3.3% and
(0.2)%, respectively, for revenues, expenses and net operating
income (including straight-line rents) and 1.6%, 3.3% and 0.8%,
respectively, for revenues, expenses and net operating income
(excluding straight-line rents). |
|
(6) |
|
See Supplemental Earnings Measures above for a
discussion of same store net operating income and cash-basis
same store net operating income and a reconciliation of same
store net operating income and cash-basis same store net
operating income and net income. |
88
|
|
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
Market risk is the risk of loss from adverse changes in market
prices, interest rates and international exchange rates. The
companys future earnings and cash flows are dependent upon
prevailing market rates. Accordingly, the company manages its
market risk by matching projected cash inflows from operating,
investing and financing activities with projected cash outflows
for debt service, acquisitions, capital expenditures,
distributions to stockholders and unitholders, payments to
noteholders, and other cash requirements. The majority of the
companys outstanding debt has fixed interest rates, which
minimize the risk of fluctuating interest rates. The
companys exposure to market risk includes interest rate
fluctuations in connection with its credit facilities and other
variable rate borrowings and its ability to incur more debt
without stockholder and unitholder approval, thereby increasing
its debt service obligations, which could adversely affect its
cash flows.
The table below summarizes the maturities and interest rates
associated with the companys fixed and variable rate debt
outstanding at book value and estimated fair value before
unamortized net discounts of $11.8 million as of
March 31, 2011 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
|
Fixed rate debt(1)
|
|
$
|
97,197
|
|
|
$
|
541,602
|
|
|
$
|
366,762
|
|
|
$
|
13,425
|
|
|
$
|
354,779
|
|
|
$
|
1,386,870
|
|
|
$
|
2,760,635
|
|
|
$
|
2,816,313
|
|
Average interest rate
|
|
|
6.2
|
%
|
|
|
5.1
|
%
|
|
|
6.1
|
%
|
|
|
5.3
|
%
|
|
|
2.7
|
%
|
|
|
5.1
|
%
|
|
|
5.0
|
%
|
|
|
n/a
|
|
Variable rate debt(2)
|
|
$
|
312,372
|
|
|
$
|
108,057
|
|
|
$
|
55,697
|
|
|
$
|
172,271
|
|
|
$
|
|
|
|
$
|
28,812
|
|
|
$
|
677,209
|
|
|
$
|
682,542
|
|
Average interest rate
|
|
|
1.8
|
%
|
|
|
1.8
|
%
|
|
|
2.8
|
%
|
|
|
1.5
|
%
|
|
|
|
%
|
|
|
2.3
|
%
|
|
|
1.8
|
%
|
|
|
n/a
|
|
Interest payments(3)
|
|
$
|
11,729
|
|
|
$
|
29,523
|
|
|
$
|
23,821
|
|
|
$
|
3,264
|
|
|
$
|
9,458
|
|
|
$
|
71,675
|
|
|
$
|
149,470
|
|
|
|
n/a
|
|
|
|
|
(1) |
|
Represents 80.3% of all outstanding debt at March 31, 2011. |
|
(2) |
|
Represents 19.7% of all outstanding debt at March 31, 2011. |
|
(3) |
|
Represents interest expense related only to the debt balances
maturing in each respective year, based upon interest rates at
the balance sheet date. |
If market rates of interest on the companys variable rate
debt increased or decreased by 10%, then the increase or
decrease in interest cost on the companys variable rate
debt would be $1.2 million (net of the swap) annually. As
of March 31, 2011, the book value and the estimated fair
value of the companys total consolidated debt (both
secured and unsecured) were $3.4 billion and
$3.5 billion, respectively, based on the companys
estimate of current market interest rates. As of
December 31, 2010, the book value and the estimated fair
value of the companys total consolidated debt (both
secured and unsecured) were $3.3 billion and
$3.4 billion, based on our estimate of current market
interest rates.
As of March 31, 2011 and December 31, 2010, variable
rate debt comprised 19.7% and 38.8%, respectively, of all the
companys outstanding debt. Variable rate debt was
$0.7 billion and $0.7 billion as of March 31,
2011 and December 31, 2010, respectively.
Financial Instruments. The company records all
derivatives on the balance sheet at fair value as an asset or
liability. For derivatives that qualify as cash flow hedges, the
offset to this entry is to accumulated other comprehensive
income as a separate component of stockholders equity for
the parent company, partners capital for the operating
partnership or income. For derivatives which do not qualify as
cash flow hedges, the offset to the change in fair value on the
derivative asset or liability is recorded directly in earnings
as gains or losses through other income (expenses). For revenues
or expenses denominated in non-functional currencies, the
company may use derivative financial instruments to manage
foreign currency exchange rate risk. The companys
derivative financial instruments in effect at March 31,
2011 were 24 interest rate swaps and one interest rate cap
hedging cash flows of variable rate borrowings based on
U.S. LIBOR and four foreign exchange forward contracts
hedging intercompany loans. The company does not hold or issue
derivatives for trading purposes.
89
The following table summarizes the companys financial
instruments as of March 31, 2011 (in thousands):
Cash Flow
Hedges EUR Swaps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receive-Floating
|
|
|
|
Pay-Fixed
|
|
|
Notional Amount
|
|
|
|
|
Derivative Type
|
|
Index
|
|
Maturity Date
|
|
Strike Rate
|
|
|
(USD Equivalent)
|
|
|
Fair Value
|
|
|
Swap
|
|
3 mo. EURIBOR
|
|
December-11
|
|
|
1.2600
|
%
|
|
$
|
8,141
|
|
|
$
|
14
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-12
|
|
|
1.1575
|
%
|
|
$
|
118,704
|
|
|
$
|
214
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-12
|
|
|
1.1710
|
%
|
|
$
|
69,244
|
|
|
$
|
118
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-12
|
|
|
1.1550
|
%
|
|
$
|
29,676
|
|
|
$
|
54
|
|
Swap
|
|
3 mo. EURIBOR
|
|
December-12
|
|
|
1.7300
|
%
|
|
$
|
11,539
|
|
|
$
|
52
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-13
|
|
|
1.4875
|
%
|
|
$
|
118,704
|
|
|
$
|
884
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-13
|
|
|
1.5010
|
%
|
|
$
|
69,244
|
|
|
$
|
505
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-13
|
|
|
1.4850
|
%
|
|
$
|
29,676
|
|
|
$
|
222
|
|
Swap
|
|
3 mo. EURIBOR
|
|
December-13
|
|
|
2.2200
|
%
|
|
$
|
13,309
|
|
|
$
|
73
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-14
|
|
|
1.9975
|
%
|
|
$
|
118,704
|
|
|
$
|
960
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-14
|
|
|
2.0110
|
%
|
|
$
|
69,244
|
|
|
$
|
547
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-14
|
|
|
1.9950
|
%
|
|
$
|
29,676
|
|
|
$
|
240
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-15
|
|
|
2.5875
|
%
|
|
$
|
118,704
|
|
|
$
|
658
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-15
|
|
|
2.6010
|
%
|
|
$
|
69,244
|
|
|
$
|
368
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
January-15
|
|
|
2.5850
|
%
|
|
$
|
29,676
|
|
|
$
|
164
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
September-15
|
|
|
3.0025
|
%
|
|
$
|
118,704
|
|
|
$
|
298
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
September-15
|
|
|
3.0160
|
%
|
|
$
|
69,244
|
|
|
$
|
163
|
|
Swap(1)
|
|
1 mo. EURIBOR
|
|
September-15
|
|
|
3.0000
|
%
|
|
$
|
29,676
|
|
|
$
|
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,121,109
|
|
|
$
|
5,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow
Hedges JPY Swaps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receive-Floating
|
|
|
|
Pay-Fixed
|
|
|
Notional Amount
|
|
|
|
|
Derivative Type
|
|
Index
|
|
Maturity Date
|
|
Strike Rate
|
|
|
(USD Equivalent)
|
|
|
Fair Value
|
|
|
Swap
|
|
3 mo. JPY TIBOR
|
|
October-12
|
|
|
0.6000
|
%
|
|
$
|
150,256
|
|
|
$
|
(341
|
)
|
Swap
|
|
3 mo. JPY LIBOR
|
|
September-16
|
|
|
2.5200
|
%
|
|
$
|
25,382
|
|
|
$
|
(32
|
)
|
Swap
|
|
3 mo. JPY LIBOR
|
|
September-16
|
|
|
2.5200
|
%
|
|
$
|
15,638
|
|
|
$
|
(20
|
)
|
Swap
|
|
3 mo. JPY LIBOR
|
|
July-17
|
|
|
2.8800
|
%
|
|
$
|
24,720
|
|
|
$
|
(205
|
)
|
Swap
|
|
3 mo. JPY LIBOR
|
|
July-17
|
|
|
2.8800
|
%
|
|
$
|
15,638
|
|
|
$
|
(129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
231,634
|
|
|
$
|
(727
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow
Hedges USD Caps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receive-Floating
|
|
|
|
Pay-Fixed
|
|
|
Notional Amount
|
|
|
|
|
Derivative Type
|
|
Index
|
|
Maturity Date
|
|
Strike Rate
|
|
|
(USD Equivalent)
|
|
|
Fair Value
|
|
|
Cap
|
|
1 mo. USD LIBOR
|
|
October-12
|
|
|
4.2500
|
%
|
|
$
|
26,500
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,500
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90
Non-Designated
Hedges FX Forward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pay-Fixed
|
|
|
Buy Notional Amount
|
|
|
|
|
Derivative Type
|
|
Forward Rate
|
|
|
Maturity Date
|
|
Strike Rate
|
|
|
(USD Equivalent)
|
|
|
Fair Value
|
|
|
FX Forward
|
|
|
1.41682
|
|
|
June-11
|
|
|
EUR 124,143
|
|
|
$
|
175,762
|
|
|
$
|
290
|
|
FX Forward
|
|
|
1.6049
|
|
|
June-11
|
|
|
GBP 15,800
|
|
|
$
|
25,323
|
|
|
$
|
49
|
|
FX Forward
|
|
|
0.97329
|
|
|
June-11
|
|
|
CAD 165,000
|
|
|
$
|
169,998
|
|
|
$
|
(326
|
)
|
FX Forward
|
|
|
0.97325
|
|
|
June-11
|
|
|
CAD 78,000
|
|
|
$
|
80,363
|
|
|
$
|
(151
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
451,446
|
|
|
$
|
(138
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Designated
Hedges IR Swap
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receive-Floating
|
|
|
|
Pay-Fixed
|
|
|
Notional Amount
|
|
|
|
|
Derivative Type
|
|
Index
|
|
Maturity Date
|
|
Strike Rate
|
|
|
(USD Equivalent)
|
|
|
Fair Value
|
|
|
Swap
|
|
3 mo. EURIBOR
|
|
June-11
|
|
|
4.4500
|
%
|
|
$
|
26,617
|
|
|
$
|
977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,617
|
|
|
$
|
977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total USD Equivalent Amount
|
|
|
|
|
|
|
|
$
|
1,857,306
|
|
|
$
|
5,723
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes five interest rate swaps entered into for the same
notional amount with each of three different lenders. |
International Operations. The companys
exposure to market risk also includes foreign currency exchange
rate risk. The U.S. dollar is the functional currency for
the companys subsidiaries operating in the United States,
Mexico and certain subsidiaries in Europe. The functional
currency for the companys subsidiaries operating outside
the United States, other than Mexico and certain subsidiaries in
Europe, is generally the local currency of the country in which
the entity or property is located, mitigating the effect of
foreign exchange gains and losses. The companys
subsidiaries whose functional currency is not the
U.S. dollar translate their financial statements into
U.S. dollars. Assets and liabilities are translated at the
exchange rate in effect as of the financial statement date. The
company translates income statement accounts using the average
exchange rate for the period and significant nonrecurring
transactions using the rate on the transaction date. The gains
(losses) resulting from the translation are included in
accumulated other comprehensive income as a separate component
of stockholders equity for the parent company or
partners capital for the operating partnership and totaled
$1.6 million and $0.6 million for the three months
ended March 31, 2011 and 2010, respectively.
The companys international subsidiaries may have
transactions denominated in currencies other than their
functional currency. In these instances, non-monetary assets and
liabilities are reflected at the historical exchange rate,
monetary assets and liabilities are remeasured at the exchange
rate in effect at the end of the period and income statement
accounts are remeasured at the average exchange rate for the
period. The company also records gains or losses in the income
statement when a transaction with a third party, denominated in
a currency other than the entitys functional currency, is
settled and the functional currency cash flows realized are more
or less than expected based upon the exchange rate in effect
when the transaction was initiated. For the three months ended
March 31, 2011 and 2010, total unrealized and realized
losses from remeasurement and translation included in the
companys results of operations were $(1.3) million
and $(1.0) million, respectively.
Item 4.
The parent company maintains disclosure controls and procedures
that are designed to ensure that information required to be
disclosed in its reports filed under the Securities Exchange Act
of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the
U.S. Securities and Exchange Commissions rules and
forms, and that such information is accumulated and communicated
to its management, including its chief executive officer and
chief financial officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, the parent
companys management recognizes that any controls and
procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired
control objectives, and its management is required to apply its
91
judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Also, the parent company has
investments in certain unconsolidated entities, which are
accounted for using the equity method of accounting. As the
parent company does not control or manage these entities, its
disclosure controls and procedures with respect to such entities
may be substantially more limited than those it maintains with
respect to its consolidated subsidiaries.
As required by
Rule 13a-15(b)
or
Rule 15d-15(b)
of the Securities Exchange Act of 1934, as amended, management
of the parent company carried out an evaluation, under the
supervision and with participation of its chief executive
officer and chief financial officer, of the effectiveness of the
design and operation of its disclosure controls and procedures
that were in effect as of the end of the quarter covered by this
report. Based on the foregoing, the parent companys chief
executive officer and chief financial officer each concluded
that its disclosure controls and procedures were effective at
the reasonable assurance level.
During the third fiscal quarter of 2010, the parent company
began migrating certain of its financial processing systems to
Yardi software. This Yardi software implementation is part of
the parent companys initiative to transform its technology
platform in support of its global operating platform. The parent
company plans to continue implementing such software throughout
other parts of its business over the next several fiscal
quarters. In connection with the Yardi software implementation
and resulting business process changes, the parent company
continues to enhance the design and documentation of its
internal control processes to ensure suitable controls over its
financial reporting.
Except as described above, there have been no changes in the
parent companys internal control over financial reporting
during its most recent fiscal quarter that have materially
affected, or are reasonably likely to materially affect, its
internal control over financial reporting.
Controls
and Procedures (AMB Property, L.P.)
The operating partnership maintains disclosure controls and
procedures that are designed to ensure that information required
to be disclosed in its reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the
U.S. Securities and Exchange Commissions rules and
forms, and that such information is accumulated and communicated
to its management, including the chief executive officer and
chief financial officer of its general partner, as appropriate,
to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures,
the operating partnerships management recognizes that any
controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the
desired control objectives, and its management is required to
apply its judgment in evaluating the cost-benefit relationship
of possible controls and procedures. Also, the operating
partnership has investments in certain unconsolidated entities,
which are accounted for using the equity method of accounting.
As the operating partnership does not control or manage these
entities, its disclosure controls and procedures with respect to
such entities may be substantially more limited than those it
maintains with respect to its consolidated subsidiaries.
As required by
Rule 13a-15(b)
or
Rule 15d-15(b)
of the Securities Exchange Act of 1934, as amended, management
of the operating partnership carried out an evaluation, under
the supervision and with participation of the chief executive
officer and chief financial officer of its general partner, of
the effectiveness of the design and operation of its disclosure
controls and procedures that were in effect as of the end of the
quarter covered by this report. Based on the foregoing, the
chief executive officer and chief financial officer of the
operating partnerships general partner each concluded that
its disclosure controls and procedures were effective at the
reasonable assurance level.
During the third fiscal quarter of 2010, the operating
partnership began migrating certain of its financial processing
systems to Yardi software. This Yardi software implementation is
part of the operating partnerships initiative to transform
its technology platform in support of its global operating
platform. The operating partnership plans to continue
implementing such software throughout other parts of its
business over the next several fiscal quarters. In connection
with the Yardi software implementation and resulting business
process changes, the operating partnership continues to enhance
the design and documentation of its internal control processes
to ensure suitable controls over its financial reporting.
92
Except as described above, there have been no changes in the
operating partnerships internal control over financial
reporting during its most recent fiscal quarter that have
materially affected, or are reasonably likely to materially
affect, its internal control over financial reporting.
PART II
|
|
Item 1.
|
Legal
Proceedings
|
The parent company and the operating partnership have been named
as defendants in several pending putative shareholder class
actions filed in connection with the combination of the parent
company and ProLogis (the Merger).
Three of the actions were filed in the District Court for the
City and County of Denver, Colorado. These cases have been
consolidated, and on or about April 1, 2011, plaintiffs
filed a consolidated class action complaint against ProLogis,
the members of the ProLogis board of trustees, the parent
company, New Pumpkin Inc., Upper Pumpkin LLC, Pumpkin LLC and
the operating partnership. The complaint alleges that
ProLogis trustees breached their fiduciary duties in
connection with entering into the merger agreement and that
ProLogis, the parent company, New Pumpkin Inc., Upper
Pumpkin LLC, Pumpkin LLC and the operating partnership aided and
abetted the breaches of those fiduciary duties. The complaint
further alleges that the registration statement filed on
Form S-4
in connection with the special meetings of the shareholders of
each of the parent company and ProLogis to vote on the
transaction (the Registration Statement) contains
material omissions and misstatements. The plaintiffs seek, among
other relief, an order to (i) enjoin the defendants from
consummating the Merger unless and until ProLogis adopts and
implements a procedure or process reasonably designed to enter
into a merger agreement providing the best possible value for
ProLogis shareholders, (ii) direct the defendants to
exercise their fiduciary duties to obtain a transaction that is
in the best interests of ProLogis shareholders and to
refrain from entering into any transaction until the process for
the sale or merger of ProLogis is completed and the highest
possible value obtained, (iii) rescind the merger
agreement, to the extent already implemented, and
(iv) award plaintiffs costs and disbursements of the
action. Defendants have moved to stay the Colorado action in
favor of the Maryland action described below. Plaintiffs have
moved for expedited discovery, and the defendants have opposed
that motion.
Two of the actions were filed in the Circuit Court of Maryland
for Baltimore City. The actions have been consolidated, and the
plaintiffs filed a consolidated class action and derivative
complaint on or about March 28, 2011. The Maryland
consolidated complaint names the same defendants as the Colorado
consolidated complaint. The complaint alleges that the members
of the ProLogis board of trustees breached their fiduciary
duties in connection with the Merger and that the parent company
and the operating partnership aided and abetted the breaches of
those fiduciary duties. The complaint further alleges that the
Registration Statement is misleading and incomplete. The
plaintiffs in this action seek, among other relief, an order to
(i) enjoin, preliminarily and permanently, the Merger,
(ii) rescind the Merger in the event it is consummated or
award rescissory damages, (iii) direct the defendants to
account to plaintiffs and all other members of the class for all
damages, profits and any special benefits defendants obtained as
a result of their breaches of fiduciary duties, and
(iv) award plaintiffs the costs of the action. Defendants
moved to dismiss the Maryland action for failure to state a
claim and to stay all discovery pending a ruling on their motion
to dismiss; the plaintiffs moved for expedited discovery in
advance of a preliminary injunction hearing. On April 15,
2011, the parties to the Maryland action executed a memorandum
of understanding that embodies their agreement in principle on
the structure of a proposed settlement. The proposed settlement,
which is subject to confirmatory discovery and court approval
following notice to the class of all ProLogis shareholders
during the period from January 30, 2011 through the date of
the consummation of the proposed merger (the Class),
would dismiss all causes of action asserted in the Maryland
consolidated complaint and release all claims that members of
the Class may have arising out of or relating in any manner to
the proposed merger, including all claims being asserted in the
Colorado action. Pursuant to the terms of the proposed
settlement, defendants agreed to make certain supplemental
disclosures to shareholders in the Registration Statement. The
parties reported to the Maryland court on April 18, 2011
that they had reached agreement on a proposed settlement and
executed a memorandum of understanding. On April 27, 2011,
the parties to the consolidated action in Colorado reached an
agreement in principle on the structure of a proposed
settlement. Under the proposed
93
settlement, which is subject to confirmatory discovery and
approval of the Maryland court following notice to the Class,
defendants agreed to make additional disclosures in the
Registration Statement.
The parent company and the operating partnership believe that
the claims asserted against them in these lawsuits are without
merit and intend to defend themselves vigorously against the
claims.
The risk factors discussed under the heading Risk
Factors and elsewhere in the Annual Report on
Form 10-K
for the parent company and the operating partnership for the
year ended December 31, 2010, and the Amendment No. 2
to the Registration Statement on
Form S-4
for AMB Property Corporation, filed with the SEC on
April 28, 2011, and any amendments thereto, continue to
apply to the companys business.
|
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
None.
|
|
Item 3.
|
Defaults
Upon Senior Securities
|
None.
|
|
Item 4.
|
(Removed
and Reserved)
|
|
|
Item 5.
|
Other
Information
|
None.
Unless otherwise indicated below, the Commission file number to
the exhibit is
No. 001-13545.
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
31
|
.1
|
|
Rule 13a-14(a)/15d-14(a)
Certifications dated May 9, 2011 for AMB Property
Corporation.
|
|
31
|
.2
|
|
Rule 13a-14(a)/15d-14(a)
Certifications dated May 9, 2011 for AMB Property, L.P.
|
|
32
|
.1
|
|
18 U.S.C. § 1350 Certifications dated May 9, 2011
for AMB Property Corporation. The certifications in this exhibit
are being furnished solely to accompany this report pursuant to
18 U.S.C. § 1350, and are not being filed for purposes
of Section 18 of the Securities Exchange Act of 1934, as
amended, and are not to be incorporated by reference into any of
the parent companys filings, whether made before or after
the date hereof, regardless of any general incorporation
language in such filing.
|
|
32
|
.2
|
|
18 U.S.C. § 1350 Certifications dated May 9, 2011
for AMB Property, L.P. The certifications in this exhibit are
being furnished solely to accompany this report pursuant to
18 U.S.C. § 1350, and are not being filed for purposes
of Section 18 of the Securities Exchange Act of 1934, as
amended, and are not to be incorporated by reference into any of
the operating partnerships filings, whether made before or
after the date hereof, regardless of any general incorporation
language in such filing.
|
|
101
|
|
|
The following materials from the Quarterly Reports on
Form 10-Q
of AMB Property Corporation and AMB Property, L.P. for the
period ended March 31, 2011 formatted in XBRL (eXtensible
Business Reporting Language): (i) the Consolidated Balance
Sheets, (ii) the Consolidated Statements of Operations,
(iii) the Consolidated Statement of Equity, (iv) the
Consolidated Statement of Capital, (v) the Consolidated
Statements of Cash Flows, and (vi) related notes to these
financial statements, tagged as blocks of text.
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AMB
PROPERTY CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMB PROPERTY CORPORATION
Registrant
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By:
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/s/ Hamid
R. Moghadam
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Hamid R. Moghadam
Chairman of the Board and
Chief Executive Officer
(Duly Authorized Officer and
Principal Executive Officer)
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By:
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/s/ Thomas
S. Olinger
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Thomas S. Olinger
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
Nina A. Tran
Senior Vice President and
Chief Accounting Officer
(Duly Authorized Officer and Principal
Accounting Officer)
Date: May 9, 2011
95
AMB
PROPERTY, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMB PROPERTY, L.P., REGISTRANT
By: AMB Property Corporation,
its general partner
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By:
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/s/ Hamid
R. Moghadam
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Hamid R. Moghadam
Chairman of the Board and
Chief Executive Officer
(Duly Authorized Officer and
Principal Executive Officer)
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By:
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/s/ Thomas
S. Olinger
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Thomas S. Olinger
Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
Nina A. Tran
Senior Vice President and
Chief Accounting Officer
(Duly Authorized Officer and Principal
Accounting Officer)
Date: May 9, 2011
96