SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 1, 2005
AMB PROPERTY CORPORATION
(Exact name of registrant as specified in its charter)
| |
|
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| Maryland |
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001-13545 |
|
94-3281941 |
(State or other
jurisdiction of
incorporation)
|
|
(Commission file number)
|
|
(I.R.S. employer
identification number) |
Pier 1, Bay 1, San Francisco, California 94111
(Address of principal executive offices) (Zip code)
415-394-9000
(Registrants’ telephone number, including area code)
n/a
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
| o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
| o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
| o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
| |
| o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
TABLE OF CONTENTS
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On February 1, 2005, we issued a press release entitled “AMB Property Corporation Announces Fourth
Quarter and Full Year 2004 Results,” which sets forth disclosure regarding our results of
operations for the fourth quarter of 2004 and full 2004 year. A copy of the press release is
attached hereto as Exhibit 99.1. This section and the attached exhibit are provided under Item 2.02
of Form 8-K and are furnished to, but not filed with, the Securities and Exchange Commission.
ITEM 8.01 OTHER EVENTS.
On February 1, 2005, we reported fourth quarter and full year 2004 earnings per share of $0.65 and
$1.39, respectively, exceeding our guidance of $0.47 to $0.57 for the quarter and $1.20 to $1.30
for the year. The better-than-expected earnings per share results stem primarily from higher gains
on sales of operating properties associated with our continued refinement of our portfolio.
Fourth quarter 2004 earnings per share increased 117% from earnings per share of $0.30 in the same
period of 2003. Earnings per share for fourth quarter 2004 included $0.40 per share in net gains
on dispositions of real estate while the same period in the prior year included $0.04 per share in
net gains. Full year 2004 earnings per share decreased 1.4% from earnings per share of $1.41 in
2003. Full year 2004 results include $0.55 of net gains on dispositions compared with $0.61 of net
gains in 2003.
Operating Results
Our industrial operating portfolio was 94.8% leased as of December 31, 2004, up 20 basis points
from September 30, 2004, and up 170 basis points from December 31, 2003.
Cash-basis same store net operating income increased 0.4% in fourth quarter 2004, driven primarily
by occupancy gains. For the full year 2004, same store net operating income declined 0.9%,
representing the impact of rental rate decreases on leases renewed or rolled over during the past
12 months, partially offset by occupancy increases.
Investment Activity
During the fourth quarter, we acquired 3.1 million square feet of distribution facilities in 16
buildings for a total expected investment of $200 million in metropolitan Paris, Amsterdam, Tokyo,
Chicago and Minneapolis. The transactions bring our full year acquisition activity to 7.6 million
square feet in 64 buildings with a total expected investment of $695 million.
We stabilized three industrial development projects during the fourth quarter. The buildings, which
are fully leased, comprise 1.2 million square feet for a total estimated investment of $47 million.
During 2004, our development completions totaled 2.1 million square feet of new facilities with a
total investment of $89 million.
New development and redevelopment starts in the quarter totaled approximately 1.6 million square
feet in six projects in Europe and the United States with an estimated total
investment of $151 million. We began the highest level of new development in our history during
2004 with approximately 6.1 million square feet of starts with an estimated total investment at
completion of $649 million. Our industrial development and renovation pipeline now totals 30
projects of approximately 8.9 million square feet in North America, Europe and Asia. Total
investment in the pipeline’s properties is estimated at $829 million. Deliveries are scheduled from
the first quarter of 2005 through the first quarter of 2008.
The quarter included sales of 14 buildings for a total disposition price of approximately $120
million, bringing the year’s disposition total to $200 million. In addition, we generated net
profits from our development-for-sale and contribution programs of $3.9 million in the quarter and
$8.0 million in the full year 2004.
In other investment activity during the quarter, we announced our planned acquisition of an
approximate 41% interest in G. Acción S.A. de C.V. (G. Acción), a Mexican public real estate
company. We began developing industrial real estate with G. Acción in Mexico in early 2002. Since
then, our activity in Mexico City and Guadalajara has included approximately 3.1 million square
feet of acquisition and development.
Private Capital Activity
We received approximately $336.5 million in private equity capital commitments during the fourth
quarter in two separate investment funds. In what we believe to be the publicly traded REIT
industry’s first open-end commingled fund, we raised $136.5 million of equity from 12 pension
funds, foundations and private investors to form AMB Institutional Alliance Fund III. The fund’s
primary investment focus is to acquire stabilized industrial facilities near key U.S. passenger and
cargo airports, seaports and highway systems in major metropolitan markets.
During the fourth quarter, we also formed AMB-SGP Mexico, LLC, a joint venture with GIC Real Estate
Pte Ltd (GIC RE), a global investor in real estate on behalf of the Government of Singapore. The
fund’s primary investment purpose is to invest in completed developments in targeted distribution
markets in Mexico delivered by us and our local partner, G. Acción. GIC RE’s equity commitment to
the fund is $200 million. Our interest in the fund is approximately 20%.
Promotions and Addition of Our Officers
We announced eight officer promotions effective January 1, 2005. Jay R. Cornforth, Martin J.
Coyne, Rohn T. Grazer and Nina A. Tran have been promoted to senior vice president. R. Craig
Blanchard, Drew Hess, Andrew G. Smith and Mohsen Vessali have been promoted to vice president.
In addition, vice presidents Elizabeth M. Wheeler, Amy A. Pallas, Scott Recknor, Robert B.
Antrobius and Oliver J. Treneman have joined our offices in San Francisco, Los Angeles and Shanghai
in renewal leasing and development roles.
Supplemental Earnings Measure
We report funds from operations per fully diluted share and unit (FFOPS) in accordance with the
standards established by NAREIT. Fourth quarter 2004 FFOPS was $0.62, compared with $0.59 in the
same period of 2003. FFOPS for the full year ended December 31, 2004 was $2.30 compared with $2.13
for 2003. The quarterly and full year FFOPS results were at the low end of our guidance of $0.62 to
$0.68 per share and $2.30 to $2.36 per share respectively due primarily to delayed timing of
anticipated profits associated with land sales. These land sales, with anticipated gains of
approximately $0.05 per share, had previously been scheduled to occur by year-end 2004 and are now
expected to close during 2005.
Included in the footnotes to our attached financial statements is a discussion of why management
believes FFO is a useful supplemental measure of operating performance, ways in which investors
might use FFO when assessing our financial performance and FFO’s limitations as a measurement tool.
A reconciliation from net income to funds from operations is provided in the attached tables and
published in our quarterly supplemental analyst package, available on our website at www.amb.com.
AMB Property Corporation
As of December 31, 2004, we owned, managed and had renovation and development projects totaling
110.7 million square feet (10.3 million square meters) and 1,108 buildings in 38 markets within
eight countries. We invest in properties located predominantly in the infill submarkets of its
targeted markets. Our portfolio is comprised of High Throughput Distribution® facilities
– industrial properties built for speed and located near airports, seaports and ground
transportation systems.
Page 2
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| |
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|
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|
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|
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|
|
|
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As of |
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| |
|
December 31, 2004 |
|
|
September 30, 2004 |
|
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June 30, 2004 |
|
|
March 31, 2004 |
|
|
December 31, 2003 |
|
| |
|
|
|
|
|
|
|
|
|
(Restated) (1) |
|
|
(Restated) (1) |
|
|
(Restated) (1) |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments in properties |
|
$ |
6,526,144 |
|
|
$ |
6,302,529 |
|
|
$ |
6,051,308 |
|
|
$ |
5,730,654 |
|
|
$ |
5,491,707 |
|
Accumulated depreciation |
|
|
(615,646 |
) |
|
|
(595,438 |
) |
|
|
(560,877 |
) |
|
|
(524,115 |
) |
|
|
(485,559 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investments in properties |
|
|
5,910,498 |
|
|
|
5,707,091 |
|
|
|
5,490,431 |
|
|
|
5,206,539 |
|
|
|
5,006,148 |
|
Investment in unconsolidated joint ventures |
|
|
55,166 |
|
|
|
48,601 |
|
|
|
52,579 |
|
|
|
54,006 |
|
|
|
52,009 |
|
Properties held for contribution, net |
|
|
— |
|
|
|
11,854 |
|
|
|
11,143 |
|
|
|
— |
|
|
|
— |
|
Properties held for divestiture, net |
|
|
87,340 |
|
|
|
59,924 |
|
|
|
39,246 |
|
|
|
9,628 |
|
|
|
11,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investments in real estate |
|
|
6,053,004 |
|
|
|
5,827,470 |
|
|
|
5,593,399 |
|
|
|
5,270,173 |
|
|
|
5,069,908 |
|
Cash and cash equivalents |
|
|
146,593 |
|
|
|
174,323 |
|
|
|
146,136 |
|
|
|
150,903 |
|
|
|
156,663 |
|
Mortgages receivable |
|
|
13,738 |
|
|
|
23,068 |
|
|
|
23,594 |
|
|
|
23,620 |
|
|
|
43,145 |
|
Accounts receivable, net |
|
|
109,028 |
|
|
|
102,078 |
|
|
|
96,524 |
|
|
|
92,081 |
|
|
|
88,452 |
|
Other assets |
|
|
64,580 |
|
|
|
94,711 |
|
|
|
76,958 |
|
|
|
69,669 |
|
|
|
51,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
6,386,943 |
|
|
$ |
6,221,650 |
|
|
$ |
5,936,611 |
|
|
$ |
5,606,446 |
|
|
$ |
5,409,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured debt |
|
$ |
1,892,524 |
|
|
$ |
1,617,944 |
|
|
$ |
1,552,084 |
|
|
$ |
1,457,630 |
|
|
$ |
1,363,890 |
|
Unsecured senior debt securities |
|
|
1,003,940 |
|
|
|
1,025,000 |
|
|
|
1,025,000 |
|
|
|
1,025,000 |
|
|
|
925,000 |
|
Unsecured debt |
|
|
9,028 |
|
|
|
9,182 |
|
|
|
9,334 |
|
|
|
9,482 |
|
|
|
9,628 |
|
Unsecured credit facilities |
|
|
351,699 |
|
|
|
583,864 |
|
|
|
428,502 |
|
|
|
261,369 |
|
|
|
275,739 |
|
Accounts payable and other liabilities |
|
|
262,286 |
|
|
|
278,350 |
|
|
|
256,574 |
|
|
|
208,614 |
|
|
|
187,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
3,519,477 |
|
|
|
3,514,340 |
|
|
|
3,271,494 |
|
|
|
2,962,095 |
|
|
|
2,761,352 |
|
Minority interests: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners |
|
|
828,622 |
|
|
|
701,639 |
|
|
|
698,549 |
|
|
|
662,235 |
|
|
|
658,723 |
|
Preferred unitholders |
|
|
278,378 |
|
|
|
278,378 |
|
|
|
241,899 |
|
|
|
241,873 |
|
|
|
241,899 |
|
Limited partnership unitholders |
|
|
89,326 |
|
|
|
88,026 |
|
|
|
88,190 |
|
|
|
89,036 |
|
|
|
90,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total minority interests |
|
|
1,196,326 |
|
|
|
1,068,043 |
|
|
|
1,028,638 |
|
|
|
993,144 |
|
|
|
991,070 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
1,567,936 |
|
|
|
1,536,063 |
|
|
|
1,533,275 |
|
|
|
1,547,995 |
|
|
|
1,553,764 |
|
Preferred stock |
|
|
103,204 |
|
|
|
103,204 |
|
|
|
103,204 |
|
|
|
103,212 |
|
|
|
103,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
1,671,140 |
|
|
|
1,639,267 |
|
|
|
1,636,479 |
|
|
|
1,651,207 |
|
|
|
1,657,137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
6,386,943 |
|
|
$ |
6,221,650 |
|
|
$ |
5,936,611 |
|
|
$ |
5,606,446 |
|
|
$ |
5,409,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(1) In the prior quarter, management restated AMB’s previously issued financial
statements for the years ended December 31, 2003, 2002 and 2001 filed on Form 10-K/A and for the
quarters ended March 31, 2004 and June 30, 2004 filed on Form 10-Q/A to reflect additional
depreciation expense. The restatement affected the Company’s depreciation expense, net income and
earnings per share for the prior periods. The net impact of the restatement of depreciation expense
on earnings per share results reduced EPS by $0.02 from $1.43 to $1.41 for 2001; by $0.04 from
$1.37 to $1.33 for 2002 and by $0.06 from $1.47 to $1.41 for 2003. This restatement of depreciation
expense did not impact the Company’s previously reported funds from operations (FFO) per fully
diluted share and unit as, in accordance with NAREIT’s FFO definition, the Company adds back real
estate-related depreciation to calculate FFO. Please see the Company’s October 12, 2004 earnings
press release, its annual report for the year ended December 31, 2003 in Amendment No. 2 on Form
10-K/A, its quarterly report for the quarter ended March 31, 2004 in Amendment No. 1 on Form 10-Q/A
and its quarterly report for the quarter ended June 30, 2004 in Amendment No. 1 on Form 10-Q/A for
more detail. |
Page 3
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Quarters Ended |
|
|
For the Years Ended |
|
| |
|
December 31, |
|
|
December 31, |
|
| |
|
2004 |
|
|
2003 |
|
|
2004 |
|
|
2003 |
|
| |
|
|
|
|
|
(Restated) (1) |
|
|
|
|
|
|
(Restated) (1) |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues |
|
$ |
169,550 |
|
|
$ |
151,242 |
|
|
$ |
652,794 |
|
|
$ |
573,292 |
|
Private capital income |
|
|
4,818 |
|
|
|
5,493 |
|
|
|
12,895 |
|
|
|
13,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
174,368 |
|
|
|
156,735 |
|
|
|
665,689 |
|
|
|
586,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating costs |
|
|
(43,431 |
) |
|
|
(39,699 |
) |
|
|
(168,506 |
) |
|
|
(152,023 |
) |
Depreciation and amortization |
|
|
(43,168 |
) |
|
|
(34,823 |
) |
|
|
(160,026 |
) |
|
|
(132,167 |
) |
Impairment losses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,251 |
) |
General and administrative |
|
|
(13,987 |
) |
|
|
(12,234 |
) |
|
|
(58,956 |
) |
|
|
(46,429 |
) |
Fund costs |
|
|
(1,004 |
) |
|
|
(186 |
) |
|
|
(1,741 |
) |
|
|
(825 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
(101,590 |
) |
|
|
(86,942 |
) |
|
|
(389,229 |
) |
|
|
(336,695 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
72,778 |
|
|
|
69,793 |
|
|
|
276,460 |
|
|
|
249,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated joint ventures |
|
|
525 |
|
|
|
1,223 |
|
|
|
3,781 |
|
|
|
5,445 |
|
Interest income and other, net |
|
|
682 |
|
|
|
865 |
|
|
|
3,958 |
|
|
|
4,009 |
|
Gains from dispositions of real estate |
|
|
5,219 |
|
|
|
— |
|
|
|
5,219 |
|
|
|
7,429 |
|
Development profits, net of taxes |
|
|
3,772 |
|
|
|
8,929 |
|
|
|
8,528 |
|
|
|
14,441 |
|
Interest expense, including amortization |
|
|
(39,401 |
) |
|
|
(38,537 |
) |
|
|
(157,852 |
) |
|
|
(146,230 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income and expenses |
|
|
(29,203 |
) |
|
|
(27,520 |
) |
|
|
(136,366 |
) |
|
|
(114,906 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before minority interests and discontinued operations |
|
|
43,575 |
|
|
|
42,273 |
|
|
|
140,094 |
|
|
|
135,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests’ share of income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners’ share of income |
|
|
(10,000 |
) |
|
|
(7,972 |
) |
|
|
(37,817 |
) |
|
|
(31,726 |
) |
Joint venture partners’ share of development profits |
|
|
(64 |
) |
|
|
(4,996 |
) |
|
|
(958 |
) |
|
|
(8,442 |
) |
Preferred unitholders |
|
|
(5,395 |
) |
|
|
(5,534 |
) |
|
|
(20,161 |
) |
|
|
(24,607 |
) |
Limited partnership unitholders |
|
|
(970 |
) |
|
|
(888 |
) |
|
|
(3,318 |
) |
|
|
(2,890 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total minority interests’ share of income |
|
|
(16,429 |
) |
|
|
(19,390 |
) |
|
|
(62,254 |
) |
|
|
(67,665 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
27,146 |
|
|
|
22,883 |
|
|
|
77,840 |
|
|
|
67,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income attributable to discontinued operations, net of minority interests |
|
|
1,108 |
|
|
|
2,078 |
|
|
|
5,626 |
|
|
|
18,869 |
|
Gain from disposition of real estate, net of minority interests |
|
|
29,680 |
|
|
|
3,317 |
|
|
|
42,005 |
|
|
|
42,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total discontinued operations |
|
|
30,788 |
|
|
|
5,395 |
|
|
|
47,631 |
|
|
|
61,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
57,934 |
|
|
|
28,278 |
|
|
|
125,471 |
|
|
|
129,128 |
|
Preferred stock dividends |
|
|
(1,782 |
) |
|
|
(1,211 |
) |
|
|
(7,131 |
) |
|
|
(6,999 |
) |
Preferred stock unit issuance costs |
|
|
— |
|
|
|
(1,742 |
) |
|
|
— |
|
|
|
(5,413 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders |
|
$ |
56,152 |
|
|
$ |
25,325 |
|
|
$ |
118,340 |
|
|
$ |
116,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share (diluted) |
|
$ |
0.65 |
|
|
$ |
0.30 |
|
|
$ |
1.39 |
|
|
$ |
1.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares (diluted) |
|
|
86,263,305 |
|
|
|
83,667,798 |
|
|
|
85,368,626 |
|
|
|
82,852,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(1)In the prior quarter, management restated AMB’s previously issued
financial statements for the years ended December 31, 2003, 2002 and 2001 filed on Form 10-K/A and
for the quarters ended March 31, 2004 and June 30, 2004 filed on Form 10-Q/A to reflect additional
depreciation expense. The restatement affected the Company’s depreciation expense, net income and
earnings per share for the prior periods. The net impact of the restatement of depreciation expense
on earnings per share results reduced EPS by $0.02 from $1.43 to $1.41 for 2001; by $0.04 from
$1.37 to $1.33 for 2002 and by $0.06 from $1.47 to $1.41 for 2003. This restatement of depreciation
expense did not impact the Company’s previously reported funds from operations (FFO) per fully
diluted share and unit as, in accordance with NAREIT’s FFO definition, the Company adds back real
estate-related depreciation to calculate FFO. Please see the Company’s October 12, 2004 earnings
press release, its annual report for the year ended December 31, 2003 in Amendment No. 2 on Form
10-K/A, its quarterly report for the quarter ended March 31, 2004 in Amendment No. 1 on Form 10-Q/A
and its quarterly report for the quarter ended June 30, 2004 in Amendment No. 1 on Form 10-Q/A for
more detail. |
Page 4
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (2)
(dollars in thousands, except share data)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Quarters Ended |
|
|
For the Years Ended |
|
| |
|
December 31, |
|
|
December 31, |
|
| |
|
2004 |
|
|
2003 (3) |
|
|
2004 |
|
|
2003 (3) |
|
| |
|
|
|
|
|
(Restated) (1) |
|
|
|
|
|
|
(Restated) (1) |
|
Net income |
|
$ |
57,934 |
|
|
$ |
28,278 |
|
|
$ |
125,471 |
|
|
$ |
129,128 |
|
Gain from disposition of real estate, net of minority interests |
|
|
(34,899 |
) |
|
|
(3,317 |
) |
|
|
(47,224 |
) |
|
|
(50,325 |
) |
Real estate related depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total depreciation and amortization |
|
|
43,168 |
|
|
|
34,823 |
|
|
|
160,026 |
|
|
|
132,167 |
|
Discontinued operations’ depreciation |
|
|
1,451 |
|
|
|
2,321 |
|
|
|
7,324 |
|
|
|
10,170 |
|
FF&E depreciation |
|
|
(363 |
) |
|
|
(172 |
) |
|
|
(871 |
) |
|
|
(720 |
) |
Adjustments to derive FFO from consolidated JVs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint venture partners’ minority interests (NI) |
|
|
10,000 |
|
|
|
7,972 |
|
|
|
37,817 |
|
|
|
31,726 |
|
Limited partnership unitholders’ minority interests (NI) |
|
|
970 |
|
|
|
888 |
|
|
|
3,318 |
|
|
|
2,890 |
|
Limited partnership unitholders’ minority interests (Development profits) |
|
|
213 |
|
|
|
229 |
|
|
|
435 |
|
|
|
344 |
|
Discontinued operations’ minority interests (NI) |
|
|
678 |
|
|
|
640 |
|
|
|
4,573 |
|
|
|
4,991 |
|
FFO attributable to minority interests |
|
|
(22,020 |
) |
|
|
(17,756 |
) |
|
|
(80,192 |
) |
|
|
(65,603 |
) |
Adjustments to derive FFO from unconsolidated JVs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB’s share of net income |
|
|
(525 |
) |
|
|
(1,223 |
) |
|
|
(3,781 |
) |
|
|
(5,445 |
) |
AMB’s share of FFO |
|
|
1,460 |
|
|
|
2,135 |
|
|
|
7,549 |
|
|
|
9,755 |
|
Preferred stock dividends |
|
|
(1,782 |
) |
|
|
(1,211 |
) |
|
|
(7,131 |
) |
|
|
(6,999 |
) |
Preferred stock unit issuance costs |
|
|
— |
|
|
|
(1,742 |
) |
|
|
— |
|
|
|
(5,413 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations |
|
$ |
56,285 |
|
|
$ |
51,865 |
|
|
$ |
207,314 |
|
|
$ |
186,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per common share and unit (diluted) |
|
$ |
0.62 |
|
|
$ |
0.59 |
|
|
$ |
2.30 |
|
|
$ |
2.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares and units (diluted) |
|
|
91,003,313 |
|
|
|
88,360,432 |
|
|
|
90,120,250 |
|
|
|
87,616,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(1)In the prior quarter, management restated AMB’s previously issued financial
statements for the years ended December 31, 2003, 2002 and 2001 filed on Form 10-K/A and for the
quarters ended March 31, 2004 and June 30, 2004 filed on Form 10-Q/A to reflect additional
depreciation expense. The restatement affected the Company’s depreciation expense, net income and
earnings per share for the prior periods. The net impact of the restatement of depreciation expense
on earnings per share results reduced EPS by $0.02 from $1.43 to $1.41 for 2001; by $0.04 from
$1.37 to $1.33 for 2002 and by $0.06 from $1.47 to $1.41 for 2003. This restatement of depreciation
expense did not impact the Company’s previously reported funds from operations (FFO) per fully
diluted share and unit as, in accordance with NAREIT’s FFO definition, the Company adds back real
estate-related depreciation to calculate FFO. Please see the Company’s October 12, 2004 earnings
press release, its annual report for the year ended December 31, 2003 in Amendment No. 2 on Form
10-K/A, its quarterly report for the quarter ended March 31, 2004 in Amendment No. 1 on Form 10-Q/A
and its quarterly report for the quarter ended June 30, 2004 in Amendment No. 1 on Form 10-Q/A for
more detail. |
| |
| |
|
(2)Funds From Operations (“FFO”). The Company believes that net income, as
defined by GAAP, is the most appropriate earnings measure. However, the Company considers funds
from operations, or FFO, as defined by NAREIT, to be a useful supplemental measure of its operating
performance. FFO is defined as net income, calculated in accordance with GAAP, less gains (or
losses) from dispositions of real estate held for investment purposes and real estate-related
depreciation, and adjustments to derive the Company’s pro rata share of FFO of consolidated and
unconsolidated joint ventures. Further, the Company does not adjust FFO to eliminate the effects of
non-recurring charges. The Company believes that FFO, as defined by NAREIT, is a meaningful
supplemental measure of its operating performance because historical cost accounting for real
estate assets in accordance with 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, NAREIT
created FFO as a supplemental measure of operating performance for real estate investment trusts
that excludes historical cost depreciation and amortization, among other items, from net income, as
defined by GAAP. The Company believes that the use of FFO, combined with the required 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 FFO to be a useful measure 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, FFO can help the investing public compare the operating performance
of a company’s real estate between periods or as compared to other companies. While FFO is a
relevant and widely used measure of operating performance of real estate investment trusts, it does
not |
Page 5
| |
|
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 Company’s liquidity or operating
performance. FFO also does not consider the costs associated with capital expenditures related to
the Company’s real estate assets nor is FFO necessarily indicative of cash available to fund the
Company’s future cash requirements. Further, the Company’s computation of FFO may not be
comparable to FFO reported by other real estate investment trusts that do not define the term in
accordance with the current NAREIT definition or that interpret the current NAREIT definition
differently than the Company does. |
| |
| |
|
(3)Effective January 1, 2003, the Company discontinued its practice of
deducting amortization of investments in leasehold interests from FFO as such an adjustment is not
provided for in NAREIT’s FFO definition. As a result, FFO for the periods presented has been
adjusted to reflect the changes. |
Forward Looking Statements
Some of the information included in this report contains forward-looking statements, such as those
related to the total expected investment in acquisitions; size and timing of deliveries and total
investment in development projects; goals regarding amount of non-U.S. investment; and use of
private capital funds for planned investment activity which are made pursuant to the safe-harbor
provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of
the Securities Act of 1933, as amended. Because these forward-looking statements involve risks and
uncertainties, there are important factors that could cause our actual results to differ materially
from those in the forward-looking statements, and you should not rely on the forward-looking
statements as predictions of future events. The events or circumstances reflected in
forward-looking statements might not occur. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,”
“should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates”
or the negative of these words and phrases or similar words or phrases. You can also identify
forward-looking statements by discussions of strategy, plans or intentions. Forward-looking
statements are necessarily dependent on assumptions, data or methods that may be incorrect or
imprecise and we may not be able to realize them. We caution you not to place undue reliance on
forward-looking statements, which reflect our analysis only and speak only as of the date of this
report or the dates indicated in the statements. We assume no obligation to update or supplement
forward-looking statements. The following factors, among others, could cause actual results and
future events to differ materially from those set forth or contemplated in the forward-looking
statements: defaults on or non-renewal of leases by tenants, increased interest rates and operating
costs, our failure to obtain necessary outside financing, difficulties in identifying properties to
acquire and in effecting acquisitions, our failure to successfully integrate acquired properties
and operations, our failure to divest properties we have contracted to sell or to timely reinvest
proceeds from any divestitures, risks and uncertainties affecting property development and
construction (including construction delays, cost overruns, our inability to obtain necessary
permits and public opposition to these activities), our failure to qualify and maintain our status
as a real estate investment trust, environmental uncertainties, risks related to natural disasters,
financial market fluctuations, changes in real estate and zoning laws, risks related to doing
business internationally and increases in real property tax rates. Our success also depends upon
economic trends generally, including interest rates, income tax laws, governmental regulation,
legislation, population changes and certain other matters discussed under the heading “Management’s
Discussion and Analysis of Financial Condition and Results of Operations - Business Risks”
and elsewhere in our most recent annual report for the year ended December 31, 2003 in Amendment
No. 2 on Form 10-K/A.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
| |
|
|
| Exhibit |
|
|
| Number |
|
Description |
99.1
|
|
AMB Property Corporation Press Release dated February 1, 2005. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
| |
|
|
|
|
| |
AMB Property Corporation
(Registrant)
|
|
| Date: February 2, 2005 |
By: |
/s/ Tamra D. Browne
|
|
| |
|
|
|
| |
|
Tamra D. Browne
Senior Vice President, General
Counsel and Secretary |
|
Exhibits
| |
|
|
| Exhibit |
|
|
| Number |
|
Description |
99.1
|
|
AMB Property Corporation Press Release dated February 1, 2005. |