UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, DC
20549
Form 10-Q/A
Amendment No. 1
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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 June 30, 2007
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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
(Exact Name of Registrant as
Specified in Its Charter)
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Maryland
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94-3281941
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(State or Other Jurisdiction
of
Incorporation or Organization)
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(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
(Registrant’s 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. Yes þ No o.
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of “accelerated filer and large
accelerated filer” in
Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated
filer þ Accelerated
filer o Non-accelerated
filer o
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
As of August 3, 2007, there were 99,910,837 shares of
the Registrant’s common stock, $0.01 par value per
share, outstanding.
AMB
PROPERTY CORPORATION
INDEX
This Quarterly Report on
Form 10-Q
for AMB Property Corporation for the quarter ended June 30,
2007 is being amended to revise Part I, Item 1 to
include in Note 7 of the Notes to Consolidated Financial
Statements summarized income statement information for the
Company’s unconsolidated co-investment joint ventures.
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Item 1.
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Financial
Statements
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AMB
PROPERTY CORPORATION
CONSOLIDATED
BALANCE SHEETS
As of June 30, 2007 and December 31, 2006
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June 30,
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December 31,
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2007
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2006
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(Unaudited, dollars in thousands)
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ASSETS
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Investments in real estate:
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Land
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$
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1,274,122
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$
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1,351,123
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Buildings and improvements
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3,757,804
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4,038,474
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Construction in progress
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1,375,056
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1,186,136
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Total investments in properties
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6,406,982
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6,575,733
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Accumulated depreciation and amortization
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(854,227
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)
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(789,693
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)
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Net investments in properties
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5,552,755
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5,786,040
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Investments in unconsolidated joint ventures
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349,534
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274,381
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Properties held for contribution, net
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245,632
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154,036
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Properties held for divestiture, net
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45,146
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20,916
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Net investments in real estate
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6,193,067
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6,235,373
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Cash and cash equivalents
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223,968
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174,763
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Restricted cash
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27,084
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21,115
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Accounts receivable, net of allowance for doubtful accounts of
$7,175 and $6,361, respectively
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166,449
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133,998
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Deferred financing costs, net
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24,861
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20,394
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Other assets
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123,835
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127,869
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Total assets
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$
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6,759,264
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$
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6,713,512
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Debt:
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Secured debt
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$
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1,340,702
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$
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1,395,354
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Unsecured senior debt
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1,057,498
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1,101,874
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Unsecured credit facilities
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562,184
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852,033
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Other debt
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85,110
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88,154
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Total debt
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3,045,494
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3,437,415
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Security deposits
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38,994
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36,106
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Dividends payable
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55,891
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48,967
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Accounts payable and other liabilities
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184,036
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186,807
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Total liabilities
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3,324,415
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3,709,295
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Commitments and contingencies (Note 11)
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Minority interests:
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Joint venture partners
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535,280
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555,201
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Preferred unitholders
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77,563
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180,298
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Limited partnership unitholders
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109,921
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102,061
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Total minority interests
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722,764
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837,560
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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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48,086
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Common stock, $.01 par value, 500,000,000 shares
authorized, 99,660,284 and 89,662,435 issued and outstanding,
respectively
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995
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895
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Additional paid-in capital
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2,308,531
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1,796,849
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Retained earnings
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181,215
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147,274
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Accumulated other comprehensive loss
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(2,068
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)
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(1,778
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)
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Total stockholders’ equity
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2,712,085
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2,166,657
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Total liabilities and stockholders’ equity
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$
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6,759,264
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$
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6,713,512
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The accompanying notes are an integral part of these
consolidated financial statements.
1
AMB
PROPERTY CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2007 and
2006
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For the Three Months
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For the Six Months
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Ended June 30,
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Ended June 30,
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2007
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2006
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2007
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2006
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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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162,914
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$
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170,974
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$
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324,996
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$
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342,276
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Private capital income
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8,518
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4,943
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14,443
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10,049
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Total revenues
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171,432
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175,917
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339,439
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352,325
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COSTS AND EXPENSES
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Property operating expenses
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(24,435
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)
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(23,765
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)
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|
(49,806
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)
|
|
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(48,065
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)
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Real estate taxes
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(18,869
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)
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|
|
(19,824
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)
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(37,745
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)
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|
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(39,667
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)
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Depreciation and amortization
|
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|
(41,483
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)
|
|
|
(44,500
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)
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|
|
(82,504
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)
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|
|
(87,254
|
)
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Impairment losses
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|
|
—
|
|
|
|
(5,394
|
)
|
|
|
(257
|
)
|
|
|
(5,394
|
)
|
|
General and administrative
|
|
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(30,260
|
)
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(25,142
|
)
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|
(60,114
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)
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|
|
(48,190
|
)
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Other expenses
|
|
|
(1,139
|
)
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|
|
296
|
|
|
|
(2,051
|
)
|
|
|
(241
|
)
|
|
Fund costs
|
|
|
(277
|
)
|
|
|
(479
|
)
|
|
|
(518
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)
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|
|
(1,093
|
)
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|
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|
|
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|
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Total costs and expenses
|
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|
(116,463
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)
|
|
|
(118,808
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)
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|
|
(232,995
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)
|
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|
(229,904
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)
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OTHER INCOME AND EXPENSES
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|
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Equity in earnings of unconsolidated joint ventures, net
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1,748
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|
|
8,278
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3,861
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|
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10,366
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Other income
|
|
|
6,472
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|
|
|
2,258
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|
|
|
11,979
|
|
|
|
5,765
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|
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Gains from sale or contribution of real estate interests, net
|
|
|
74,707
|
|
|
|
—
|
|
|
|
74,843
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|
|
|
—
|
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Development profits, net of taxes
|
|
|
28,996
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|
|
|
45,698
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|
|
|
41,188
|
|
|
|
46,372
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|
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Interest expense, including amortization
|
|
|
(33,369
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)
|
|
|
(44,310
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)
|
|
|
(67,951
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)
|
|
|
(83,704
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)
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|
|
|
|
|
|
|
|
|
|
|
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|
|
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Total other income and expenses, net
|
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|
78,554
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|
|
|
11,924
|
|
|
|
63,920
|
|
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|
(21,201
|
)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income before minority interests, discontinued operations and
cumulative effect of change in accounting principle
|
|
|
133,523
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|
|
|
69,033
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|
|
|
170,364
|
|
|
|
101,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Minority interests’ share of income:
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|
|
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|
|
|
|
|
|
|
|
|
|
|
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Joint venture partners’ share of income before minority
interests and discontinued operations
|
|
|
(8,067
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)
|
|
|
(8,895
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)
|
|
|
(15,260
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)
|
|
|
(17,297
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)
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Joint venture partners’ and limited partnership
unitholders’ share of development profits
|
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|
(2,574
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)
|
|
|
(1,619
|
)
|
|
|
(3,136
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)
|
|
|
(1,651
|
)
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Preferred unitholders
|
|
|
(1,480
|
)
|
|
|
(4,024
|
)
|
|
|
(5,179
|
)
|
|
|
(9,025
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)
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Limited partnership unitholders
|
|
|
(4,001
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)
|
|
|
(341
|
)
|
|
|
(4,495
|
)
|
|
|
(1,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total minority interests’ share of income
|
|
|
(16,122
|
)
|
|
|
(14,879
|
)
|
|
|
(28,070
|
)
|
|
|
(29,041
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before cumulative effect of
change in accounting principle
|
|
|
117,401
|
|
|
|
54,154
|
|
|
|
142,294
|
|
|
|
72,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income attributable to discontinued operations, net of minority
interests
|
|
|
484
|
|
|
|
4,126
|
|
|
|
1,238
|
|
|
|
6,471
|
|
|
Gains from dispositions of real estate, net of minority interests
|
|
|
384
|
|
|
|
17,073
|
|
|
|
419
|
|
|
|
24,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total discontinued operations
|
|
|
868
|
|
|
|
21,199
|
|
|
|
1,657
|
|
|
|
30,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before cumulative effect of change in accounting
principle
|
|
|
118,269
|
|
|
|
75,353
|
|
|
|
143,951
|
|
|
|
102,737
|
|
|
Cumulative effect of change in accounting principle
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
118,269
|
|
|
|
75,353
|
|
|
|
143,951
|
|
|
|
102,930
|
|
|
Preferred stock dividends
|
|
|
(3,952
|
)
|
|
|
(3,095
|
)
|
|
|
(7,904
|
)
|
|
|
(6,191
|
)
|
|
Preferred unit redemption (issuance costs) discount
|
|
|
(2,927
|
)
|
|
|
77
|
|
|
|
(2,927
|
)
|
|
|
(1,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
111,390
|
|
|
$
|
72,335
|
|
|
$
|
133,120
|
|
|
$
|
95,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations (after preferred stock
dividends) before cumulative effect of change in accounting
principle
|
|
$
|
1.12
|
|
|
$
|
0.59
|
|
|
$
|
1.37
|
|
|
$
|
0.75
|
|
|
Discontinued operations
|
|
|
0.01
|
|
|
|
0.24
|
|
|
|
0.02
|
|
|
|
0.35
|
|
|
Cumulative effect of change in accounting principle
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
1.13
|
|
|
$
|
0.83
|
|
|
$
|
1.39
|
|
|
$
|
1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations (after preferred stock
dividends) before cumulative effect of change in accounting
principle
|
|
$
|
1.09
|
|
|
$
|
0.56
|
|
|
$
|
1.33
|
|
|
$
|
0.72
|
|
|
Discontinued operations
|
|
|
0.01
|
|
|
|
0.24
|
|
|
|
0.02
|
|
|
|
0.34
|
|
|
Cumulative effect of change in accounting principle
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
1.10
|
|
|
$
|
0.80
|
|
|
$
|
1.35
|
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
98,937,407
|
|
|
|
87,317,494
|
|
|
|
95,631,984
|
|
|
|
86,915,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
101,361,013
|
|
|
|
90,135,659
|
|
|
|
98,305,299
|
|
|
|
90,147,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
2
AMB
PROPERTY CORPORATION
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY
For the Six Months Ended June 30, 2007
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Preferred
|
|
|
Number
|
|
|
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
|
|
|
|
|
Stock
|
|
|
of Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Income (Loss)
|
|
|
Total
|
|
|
|
|
(Unaudited, dollars in thousands, except share amounts)
|
|
|
|
|
Balance as of December 31, 2006
|
|
$
|
223,417
|
|
|
|
89,662,435
|
|
|
$
|
895
|
|
|
$
|
1,796,849
|
|
|
$
|
147,274
|
|
|
$
|
(1,778
|
)
|
|
$
|
2,166,657
|
|
|
Net income
|
|
|
7,904
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
133,120
|
|
|
|
—
|
|
|
|
|
|
|
Unrealized gain on securities and derivatives
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
305
|
|
|
|
|
|
|
Currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(595
|
)
|
|
|
|
|
|
Total comprehensive income
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,734
|
|
|
Issuance of common stock, net
|
|
|
—
|
|
|
|
8,365,800
|
|
|
|
84
|
|
|
|
471,988
|
|
|
|
—
|
|
|
|
—
|
|
|
|
472,072
|
|
|
Stock-based compensation amortization and issuance of restricted
stock, net
|
|
|
—
|
|
|
|
19,734
|
|
|
|
—
|
|
|
|
9,403
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,403
|
|
|
Exercise of stock options
|
|
|
—
|
|
|
|
1,305,433
|
|
|
|
13
|
|
|
|
21,907
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,920
|
|
|
Conversion of partnership units
|
|
|
—
|
|
|
|
306,882
|
|
|
|
3
|
|
|
|
18,595
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,598
|
|
|
Forfeiture of restricted stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,331
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,331
|
)
|
|
Reallocation of partnership interest
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,323
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,323
|
)
|
|
Offering costs
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(557
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(562
|
)
|
|
Dividends
|
|
|
(7,904
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(99,179
|
)
|
|
|
—
|
|
|
|
(107,083
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2007
|
|
$
|
223,412
|
|
|
|
99,660,284
|
|
|
$
|
995
|
|
|
$
|
2,308,531
|
|
|
$
|
181,215
|
|
|
$
|
(2,068
|
)
|
|
$
|
2,712,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
3
AMB
PROPERTY CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2007 and 2006
| |
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
(Unaudited, dollars in thousands)
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
143,951
|
|
|
$
|
102,930
|
|
|
Adjustments to net income:
|
|
|
|
|
|
|
|
|
|
Straight-line rents and amortization of lease intangibles
|
|
|
(4,950
|
)
|
|
|
(11,300
|
)
|
|
Depreciation and amortization
|
|
|
82,504
|
|
|
|
87,254
|
|
|
Impairment losses
|
|
|
257
|
|
|
|
5,394
|
|
|
Exchange losses
|
|
|
2,883
|
|
|
|
—
|
|
|
Stock-based compensation amortization
|
|
|
9,403
|
|
|
|
10,941
|
|
|
Equity in earnings of unconsolidated joint ventures
|
|
|
(3,861
|
)
|
|
|
(10,366
|
)
|
|
Operating distributions received from unconsolidated joint
ventures
|
|
|
7,409
|
|
|
|
1,147
|
|
|
Gains from sale or contribution of real estate interests, net
|
|
|
(74,843
|
)
|
|
|
—
|
|
|
Development profits, net of taxes
|
|
|
(41,188
|
)
|
|
|
(46,372
|
)
|
|
Debt premiums, discounts and finance cost amortization, net
|
|
|
958
|
|
|
|
5,247
|
|
|
Total minority interests’ share of net income
|
|
|
28,070
|
|
|
|
29,041
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
8
|
|
|
|
452
|
|
|
Joint venture partners’ share of net income
|
|
|
(63
|
)
|
|
|
139
|
|
|
Limited partnership unitholders’ share of net income
|
|
|
59
|
|
|
|
324
|
|
|
Gains from dispositions of real estate, net of minority interests
|
|
|
(419
|
)
|
|
|
(24,087
|
)
|
|
Cumulative effect of change in accounting principle
|
|
|
—
|
|
|
|
(193
|
)
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable and other assets
|
|
|
(29,194
|
)
|
|
|
13,635
|
|
|
Accounts payable and other liabilities
|
|
|
10,596
|
|
|
|
(4,239
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
131,580
|
|
|
|
159,947
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
(5,979
|
)
|
|
|
5,353
|
|
|
Cash paid for property acquisitions
|
|
|
(32,948
|
)
|
|
|
(311,507
|
)
|
|
Additions to land, buildings, development costs, building
improvements and lease costs
|
|
|
(537,709
|
)
|
|
|
(497,947
|
)
|
|
Net proceeds from divestiture of real estate
|
|
|
402,614
|
|
|
|
149,559
|
|
|
Additions to interests in unconsolidated joint ventures
|
|
|
(47,512
|
)
|
|
|
(5,121
|
)
|
|
Capital distributions received from unconsolidated joint ventures
|
|
|
218
|
|
|
|
13,633
|
|
|
Repayment of mortgage and loan receivables
|
|
|
1,589
|
|
|
|
2,805
|
|
|
Cash transferred to unconsolidated joint venture
|
|
|
(32,465
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(252,192
|
)
|
|
|
(643,225
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, net
|
|
|
472,072
|
|
|
|
—
|
|
|
Proceeds from stock option exercises
|
|
|
21,920
|
|
|
|
33,400
|
|
|
Borrowings on secured debt
|
|
|
509,033
|
|
|
|
196,149
|
|
|
Payments on secured debt
|
|
|
(237,541
|
)
|
|
|
(208,377
|
)
|
|
Borrowings on other debt
|
|
|
15,956
|
|
|
|
65,000
|
|
|
Payments on other debt
|
|
|
(19,347
|
)
|
|
|
(746
|
)
|
|
Borrowings on unsecured credit facilities
|
|
|
709,176
|
|
|
|
646,509
|
|
|
Payments on unsecured credit facilities
|
|
|
(986,558
|
)
|
|
|
(252,828
|
)
|
|
Payment of financing fees
|
|
|
(10,956
|
)
|
|
|
(5,736
|
)
|
|
Net proceeds from issuances of senior debt
|
|
|
24,889
|
|
|
|
99,456
|
|
|
Payments on senior debt
|
|
|
(70,000
|
)
|
|
|
(25,000
|
)
|
|
Issuance costs on preferred stock or units
|
|
|
(562
|
)
|
|
|
(217
|
)
|
|
Repurchase of preferred units
|
|
|
(102,735
|
)
|
|
|
(88,180
|
)
|
|
Contributions from co-investment partners
|
|
|
30,335
|
|
|
|
124,185
|
|
|
Dividends paid to common and preferred stockholders
|
|
|
(100,237
|
)
|
|
|
(86,536
|
)
|
|
Distributions to minority interests, including preferred units
|
|
|
(78,182
|
)
|
|
|
(52,810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
177,263
|
|
|
|
444,269
|
|
|
Net effect of exchange rate changes on cash
|
|
|
(7,446
|
)
|
|
|
8,473
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
49,205
|
|
|
|
(30,536
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
174,763
|
|
|
|
232,881
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
223,968
|
|
|
$
|
202,345
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
Cash paid for interest, net of capitalized interest
|
|
$
|
64,900
|
|
|
$
|
77,244
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
|
|
|
Acquisition of properties
|
|
$
|
35,050
|
|
|
$
|
399,625
|
|
|
Assumption of secured debt
|
|
|
—
|
|
|
|
(61,006
|
)
|
|
Assumption of other assets and liabilities
|
|
|
388
|
|
|
|
(19,096
|
)
|
|
Acquisition capital
|
|
|
(590
|
)
|
|
|
(8,016
|
)
|
|
Minority interest contribution, including units issues
|
|
|
(1,900
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash paid for property acquisitions
|
|
$
|
32,948
|
|
|
$
|
311,507
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred unit redemption issuance costs
|
|
$
|
2,927
|
|
|
$
|
1,020
|
|
|
Contribution of properties to unconsolidated joint ventures, net
|
|
$
|
60,027
|
|
|
$
|
126,067
|
|
|
Purchase of equity interest of unconsolidated joint venture, net
|
|
$
|
26,031
|
|
|
$
|
—
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
4
AMB
PROPERTY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2007
(unaudited)
|
|
|
1.
|
Organization
and Formation of the Company
|
AMB Property Corporation, a Maryland corporation (the
“Company”), commenced operations as a fully integrated
real estate company effective with the completion of its initial
public offering on November 26, 1997. The 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 Company, through its
controlling interest in its subsidiary, AMB Property, L.P., a
Delaware limited partnership (the “Operating
Partnership”), is engaged in the acquisition, development
and operation of industrial properties in key distribution
markets throughout North America, Europe and Asia. The Company
uses the terms “industrial properties” or
“industrial buildings” to describe 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 intends to hold for
the long-term. Unless the context otherwise requires, the
“Company” means AMB Property Corporation, the
Operating Partnership and their other controlled subsidiaries.
As of June 30, 2007, the Company owned an approximate 95.8%
general partnership interest in the Operating Partnership,
excluding preferred units. The remaining approximate 4.2% common
limited partnership interests are owned by non-affiliated
investors and certain current and former directors and officers
of the Company. As the sole general partner of the Operating
Partnership, the 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 Company’s overall ownership
interests in the properties.
Through the Operating Partnership, the Company enters into
co-investment joint ventures with institutional investors. These
co-investment joint ventures provide the Company with an
additional source of capital and income. As of June 30,
2007, the Company had investments in five consolidated and five
unconsolidated co-investment joint ventures. Effective
October 1, 2006, the Company deconsolidated AMB
Institutional Alliance Fund III, L.P., an open-ended
co-investment partnership formed in 2004 with institutional
investors, on a prospective basis, due to the re-evaluation of
the Company’s accounting for its investment in the fund in
light of changes to the partnership agreement regarding the
general partner’s rights effective October 1, 2006.
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 include 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 June 30, 2007, the Company owned or had investments
in, on a consolidated basis or through unconsolidated joint
ventures, properties and development projects expected to total
approximately 136.7 million square feet (12.7 million
square meters) in 1,152 buildings in 44 markets within thirteen
countries. Additionally, as of June 30, 2007, the Company
managed, but did not have a significant ownership interest in,
industrial and other properties, totaling approximately
1.5 million square feet.
5
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Of the approximately 136.7 million square feet as of
June 30, 2007:
|
|
|
| |
•
|
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
111.3 million square feet (principally warehouse
distribution buildings) that were 96.1% leased;
|
| |
| |
•
|
on an owned and managed basis, which includes investments held
on a consolidated basis or through unconsolidated joint
ventures, the Company had investments in 46 industrial
development projects, which are expected to total approximately
15.7 million square feet upon completion;
|
| |
| |
•
|
on a consolidated basis, the Company owned nine development
projects, totaling approximately 2.2 million square feet,
which are available for sale or contribution;
|
| |
| |
•
|
through non-managed unconsolidated joint ventures, the Company
had investments in 46 industrial operating properties, totaling
approximately 7.3 million square feet; and
|
| |
| |
•
|
the Company held approximately 0.2 million square feet
through its investment in AMB Pier One, LLC. which is the
location of the Company’s global headquarters.
|
|
|
|
2.
|
Interim
Financial Statements
|
The 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 presentation of
the Company’s consolidated financial position and results
of operations for the interim periods. The interim results for
the three and six months ended June 30, 2007 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 Company’s
Annual Report on
Form 10-K
for the year ended December 31, 2006 and its Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2007.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
Investments in Real Estate. Investments in
real estate and leasehold interests are stated at cost unless
circumstances indicate that cost cannot be recovered, in which
case, the carrying value of the property is reduced to its
estimated fair value. The Company also regularly reviews the
impact of above or below-market leases, in-place leases and
lease origination costs for acquisitions, and records an
intangible asset or liability accordingly. Carrying values for
financial reporting purposes are reviewed for impairment on a
property-by-property
basis whenever events or changes in circumstances indicate that
the carrying value of a property may not be fully recoverable.
Impairment is recognized when estimated expected future cash
flows (undiscounted and without interest charges) are less than
the carrying value of the property. The estimation of expected
future net cash flows is inherently uncertain and relies on
assumptions regarding current and future economics and market
conditions and the availability of capital. If impairment
analysis assumptions change, then an adjustment to the carrying
value of the Company’s long-lived assets could occur in the
future period in which the assumptions change. To the extent
that a property is impaired, the excess of the carrying amount
of the property over its estimated fair value is charged to
earnings. As a result of leasing activity and the economic
environment, the Company re-evaluated the carrying value of its
investments and recorded an impairment charge on one of its
investments of $0.3 million during the six months ended
June 30, 2007.
6
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Reclassifications. Certain items in the
consolidated financial statements for prior periods have been
reclassified to conform to current classifications.
Comprehensive Income. The Company reports
comprehensive income in its Statement of Stockholders’
Equity. Comprehensive income was $114.7 million and
$77.2 million for the three months ended June 30, 2007
and 2006, respectively. Comprehensive income was
$140.7 million and $104.7 million for the six months
ended June 30, 2007 and 2006, respectively.
International Operations. The U.S. dollar
is the functional currency for the Company’s subsidiaries
operating in the United States and Mexico. Other than Mexico,
the functional currency for the Company’s subsidiaries
operating outside the United States is generally the local
currency of the country in which the entity is located,
mitigating the effect of currency exchange gains and losses. The
Company’s 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. These gains
(losses) are included in accumulated other comprehensive income
(loss) as a separate component of stockholders’ equity.
The Company’s 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. These gains (losses) are included in the Company’s
results of operations.
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 entity’s 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.
Goodwill and Intangible Assets. The Company
has classified as goodwill the cost in excess of fair value of
the net assets of companies acquired in purchase transactions.
As prescribed in the Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other Intangible
Assets, issued by the Financial Accounting Standards Board
(FASB) goodwill and certain indefinite lived intangible assets,
including excess reorganization value and certain trademarks,
are no longer amortized, but are subject to at least annual
impairment testing. The Company tests annually (or more often,
if necessary) for impairment under SFAS No. 142. The
Company determined that there was no impairment to goodwill and
intangible assets during the quarter ended June 30, 2007.
New Accounting Pronouncements. In July 2006,
the FASB issued FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes — an interpretation of
FASB Statement No. 109, (FIN 48), which clarifies
the accounting and disclosure for uncertainty in tax positions.
FIN 48 seeks to reduce the diversity in practice associated
with certain aspects of the recognition and measurement related
to accounting for income taxes. Adoption of FIN 48 on
January 1, 2007 did not have a material effect on the
Company’s financial statements.
The tax years 2002 through 2006 remain open to examination by
the major taxing jurisdictions to which the Company is subject.
|
|
|
3.
|
Real
Estate Acquisition and Development Activity
|
Acquisition Activity. During the three months
ended June 30, 2007, on an owned and managed basis, the
Company acquired 23 industrial properties, aggregating
approximately 5.4 million square feet for a total expected
investment of $494.6 million (includes acquisition costs of
$487.6 million and estimated acquisition capital of
$7.0 million). Of the 23 industrial properties acquired,
three industrial properties aggregating approximately
0.2 million square feet for a total expected investment of
$16.6 million (includes acquisition costs of
$16.0 million
7
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
and estimated acquisition capital of $0.6 million) were
acquired directly by the Company and 20 industrial properties
aggregating approximately 5.2 million square feet for a
total expected investment of $478.0 million (includes
acquisition costs of $471.6 million and estimated
acquisition capital of $6.4 million) were acquired through
four of its unconsolidated joint ventures. During the six months
ended June 30, 2007, on an owned and managed basis, the
Company acquired 31 industrial properties aggregating
approximately 7.2 million square feet for a total expected
investment of $636.4 million (includes acquisition costs of
$624.6 million and estimated acquisition capital of
$11.8 million). During the three months ended June 30,
2006, the Company acquired eight industrial properties,
aggregating approximately 2.5 million square feet for a
total expected investment of $246.8 million (includes
acquisition costs of $241.8 million and estimated
acquisition capital of $5.0 million). During the six months
ended June 30, 2006, the Company acquired 14 industrial
properties, aggregating approximately 4.6 million square
feet for a total expected investment of $400.1 million
(includes acquisition costs of $392.0 million and estimated
acquisition capital of $8.1 million).
Development Starts. During the three months
ended June 30, 2007, the Company initiated nine new
industrial development projects in North America and Asia and
one value-added conversion project in North America with a total
expected investment of $265.1 million, aggregating
approximately 3.2 million square feet. During the six
months ended June 30, 2007, the Company initiated 14 new
industrial development projects in North America and Asia
and one value-added conversion project in North America with a
total expected investment of $455.8 million, aggregating
approximately 5.1 million square feet. During the three
months ended June 30, 2006, the Company initiated four new
industrial development projects in North America and Asia with a
total estimated investment of $134.6 million, aggregating
an estimated 2.0 million square feet. During the six months
ended June 30, 2006, the Company initiated 11 new
industrial development projects in North America and Asia with a
total expected investment of $353.4 million, aggregating
approximately 4.9 million square feet.
Development Completions. During the three
months ended June 30, 2007, the Company completed nine
industrial projects with a total investment of
$225.9 million, aggregating approximately 2.2 million
square feet. One of these completed projects with a total
investment of $23.4 million and approximately
0.4 million square feet was contributed to an
unconsolidated joint venture, two projects with a total
investment of $12.4 million and aggregating approximately
0.2 million square feet were sold to third parties, and six
projects with a total investment of $190.1 million and
aggregating approximately 1.6 million square feet were
available for sale or contribution as of June 30, 2007.
During the six months ended June 30, 2007, the Company
completed 16 industrial projects with a total investment of
$293.7 million, aggregating approximately 3.1 million
square feet. One of these completed projects with a total
investment of $10.7 million and approximately
0.2 million square feet was placed in operations, three
projects with a total investment of $42.2 million and
approximately 0.7 million square feet were contributed to
unconsolidated joint ventures, five projects with a total
investment of $35.9 million and aggregating approximately
0.3 million square feet were sold to third parties, and
seven projects with a total investment of $204.9 million
and aggregating approximately 1.9 million square feet were
available for sale or contribution as of June 30, 2007.
During the three months ended June 30, 2006, the Company
completed four industrial buildings with a total investment of
$55.0 million, aggregating approximately 0.5 million
square feet. Three of these completed buildings with a total
investment of $52.5 million and aggregating approximately
0.5 million square feet were placed in operations, and one
approximately 32,000 square foot building with a total
investment of $2.5 million was sold to a third party.
During the six months ended June 30, 2006, the Company
completed 11 industrial buildings with a total investment of
$347.3 million, aggregating 2.6 million square feet.
Five of these completed buildings with a total investment of
$77.5 million and aggregating approximately
0.8 million square feet were placed in operations, one
0.8 million square foot building with a total investment of
$177.9 million was contributed to an unconsolidated joint
venture, one approximately 32,000 square foot building with
a total investment of $2.5 million was sold to a third
party, and four buildings with a total investment of
$89.4 million and aggregating approximately
1.0 million square feet were available for sale or
contribution as of June 30, 2006.
Development Pipeline. As of June 30,
2007, the Company had 46 industrial projects in its development
pipeline, which are expected to total approximately
15.7 million square feet and have an aggregate estimated
8
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
investment of $1.5 billion upon completion. The Company has
an additional nine development projects available for sale or
contribution totaling approximately 2.2 million square
feet, with an aggregate estimated investment of
$227.1 million. As of June 30, 2007, the Company and
its joint venture partners had funded an aggregate of
$972.0 million and needed to fund an estimated additional
$490.0 million in order to complete its development
pipeline. The development pipeline, at June 30, 2007,
included projects expected to be completed through the second
quarter of 2009. In addition, during the three months ended
June 30, 2007, the Company acquired 515 acres of land
for industrial warehouse development in North America and Asia
for approximately $72.4 million. During the six months
ended June 30, 2007, the Company acquired 937 acres of
land for industrial warehouse development in North America and
Asia for approximately $113.2 million.
|
|
|
4.
|
Gains
from Dispositions of Real Estate Interests, Development Profits
and Discontinued Operations
|
Development Sales. During the three months
ended June 30, 2007, the Company sold three development
projects totaling approximately 0.2 million square feet for
an aggregate sale price of $20.9 million, resulting in an
after-tax gain of $3.0 million. During the six months ended
June 30, 2007, the Company sold five development projects
totaling approximately 0.3 million square feet for an
aggregate sale price of $45.6 million, resulting in an
after-tax gain of $6.3 million. During the three months
ended June 30, 2006, the Company sold an approximately
32,000 square foot development project for
$2.9 million, resulting in an after-tax gain of
$0.1 million. For the six months ended June 30, 2006,
the Company sold one land parcel and an approximately
32,000 square foot development project for an aggregate
sale price of $7.6 million, resulting in an after-tax gain
of $0.8 million. During the three and six months ended
June 30, 2006, the Company received approximately
$0.4 million in connection with the condemnation of a
parcel of land resulting in a loss of $1.0 million,
$0.8 million of which was the joint venture partner’s
share.
Discontinued Operations. The Company reports
its property divestitures as discontinued operations separately
as prescribed under the provisions of SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. During the three and six months ended June 30,
2007, the Company did not divest itself of any industrial
properties. During the three months ended June 30, 2006,
the Company divested itself of eight industrial buildings,
aggregating approximately 0.5 million square feet, for an
aggregate price of $37.1 million, with a resulting net gain
of $17.1 million. During the six months ended June 30,
2006, the Company divested itself of 12 industrial buildings,
aggregating approximately 0.9 million square feet, for an
aggregate price of $53.9 million, with a resulting net gain
of $24.1 million.
Development Contributions. During the three
months ended June 30, 2007, the Company contributed three
completed development projects aggregating 0.7 million
square feet and three completed development projects aggregating
0.5 million square feet to AMB Institutional Alliance
Fund III, L.P. and newly formed AMB Europe Fund I,
FCP-FIS, respectively, both unconsolidated joint ventures. As a
result of these contributions, the Company recognized an
aggregate after-tax gain of $26.0 million, representing the
portion of the Company’s interest in the contributed
properties acquired by the third-party investors for cash.
During the six months ended June 30, 2007, the Company
contributed four completed development projects aggregating
1.0 million square feet, three completed development
projects aggregating 0.5 million square feet and one
0.2 million square foot completed development project into
AMB Institutional Alliance Fund III, L.P., AMB Europe
Fund I, FCP-FIS, and AMB-SGP Mexico, LLC, respectively, all
unconsolidated joint ventures. In addition, two land parcels
were contributed into AMB DFS Fund I, LLC. As a result of
these contributions, the Company recognized an aggregate
after-tax gain of $34.9 million, representing the portion
of the Company’s interest in the contributed properties
acquired by the third-party investors for cash. During the three
months ended June 30, 2006, the Company contributed one
completed development project totaling approximately
0.8 million square feet into AMB Japan Fund I, L.P.,
and one completed development project totaling approximately
0.6 million square feet into AMB-SGP Mexico, LLC, both
unconsolidated joint ventures. As a result of these
contributions, the Company recognized an aggregate after-tax
gain of $46.6 million representing the portion of its
interest in the contributed properties acquired by the
third-party co-investors for cash. No other contributions were
made during the six months ended June 30, 2006.
9
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Gains from Sale or Contribution of Real Estate
Interests. During the three months ended
June 30, 2007, the Company contributed approximately
4.2 million square feet in operating properties, to its
newly formed unconsolidated co-investment joint venture, AMB
Europe Fund I, FCP-FIS, a Euro-denominated open-ended
co-investment joint venture, and contributed an approximate
0.2 million square foot operating property into AMB
Institutional Alliance Fund III, L.P. for a total of
approximately $520.3 million. The Company recognized a gain
of $74.7 million on the contributions, representing the
portion of the Company’s interest in the contributed
properties acquired by the third-party investors for cash.
During the six months ended June 30, 2007, the Company
contributed operating properties for approximately
$524.9 million, aggregating approximately 4.5 million
square feet, into AMB Europe Fund I, FCP-FIS, AMB
Institutional Alliance Fund III, L.P. and AMB-SGP Mexico,
LLC. The Company recognized a gain of $74.8 million on the
contributions, representing the portion of the Company’s
interest in the contributed properties acquired by the
third-party investors for cash. During the three and six months
ended June 30, 2006, there were no comparable events.
Properties Held for Contribution. As of
June 30, 2007, the Company held for contribution to
co-investment joint ventures 12 industrial projects with an
aggregate net book value of $245.6 million, which, when
contributed to a joint venture, will reduce the Company’s
average ownership interest in these projects from approximately
93% currently to an expected range of
15-20%.
Properties Held for Divestiture. As of
June 30, 2007, the Company held for divestiture five
industrial projects with an aggregate net book value of
$45.1 million. These properties either are not in the
Company’s core markets, do not meet its current investment
objectives, or are included as part of its development-for-sale
program. The divestitures of the properties are subject to
negotiation of acceptable terms and other customary conditions.
Properties held for divestiture are stated at the lower of cost
or estimated fair value less costs to sell.
The following summarizes the condensed results of operations of
the properties held for divestiture and sold under
SFAS No. 144 (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
|
|
|
|
|
For the Three Months Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Rental revenues
|
|
$
|
(178
|
)
|
|
$
|
4,183
|
|
|
$
|
(241
|
)
|
|
$
|
9,232
|
|
|
Straight-line rents and amortization of lease intangibles
|
|
|
—
|
|
|
|
207
|
|
|
|
—
|
|
|
|
362
|
|
|
Property operating expenses
|
|
|
(14
|
)
|
|
|
(739
|
)
|
|
|
(50
|
)
|
|
|
(2,195
|
)
|
|
Real estate taxes
|
|
|
(59
|
)
|
|
|
(595
|
)
|
|
|
(92
|
)
|
|
|
(1,222
|
)
|
|
Depreciation and amortization
|
|
|
(4
|
)
|
|
|
62
|
|
|
|
(8
|
)
|
|
|
(452
|
)
|
|
General and administrative
|
|
|
—
|
|
|
|
166
|
|
|
|
—
|
|
|
|
166
|
|
|
Other income and expenses, net
|
|
|
—
|
|
|
|
15
|
|
|
|
2
|
|
|
|
19
|
|
|
Interest, including amortization
|
|
|
764
|
|
|
|
1,036
|
|
|
|
1,623
|
|
|
|
1,024
|
|
|
Joint venture partners’ share of (income) loss
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
63
|
|
|
|
(139
|
)
|
|
Limited partnership unitholders’ share of income
|
|
|
(23
|
)
|
|
|
(207
|
)
|
|
|
(59
|
)
|
|
|
(324
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income attributable to discontinued operations
|
|
$
|
484
|
|
|
$
|
4,126
|
|
|
$
|
1,238
|
|
|
$
|
6,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2007 and December 31, 2006, assets and
liabilities attributable to properties held for divestiture
under the provisions of SFAS No. 144 consisted of the
following (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2007
|
|
2006
|
|
|
|
Other assets
|
|
$
|
123
|
|
|
$
|
165
|
|
|
Accounts payable and other liabilities
|
|
$
|
4,840
|
|
|
$
|
1,602
|
|
10
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
As of June 30, 2007 and December 31, 2006, debt
consisted of the following (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Wholly-owned secured debt, varying interest rates from 1.1% to
9.0%, due December 2007 to January 2012 (weighted average
interest rate of 6.0% and 5.6% at June 30, 2007 and
December 31, 2006, respectively)
|
|
$
|
220,968
|
|
|
$
|
368,332
|
|
|
Consolidated joint venture secured debt, varying interest rates
from 3.5% to 9.4%, due September 2007 to February 2024 (weighted
average interest rates of 6.2% and 6.5% at June 30, 2007
and December 31, 2006, respectively)
|
|
|
1,114,797
|
|
|
|
1,020,678
|
|
|
Unsecured senior debt securities, varying interest rates from
3.5% to 8.0%, due August 2007 to June 2018 (weighted average
interest rates of 6.2% and 6.2% at June 30, 2007 and
December 31, 2006, respectively and of unamortized
discounts of $10.0 million and $10.6 million,
respectively)
|
|
|
1,067,491
|
|
|
|
1,112,491
|
|
|
Other debt, varying interest rates from 3.4% to 7.5%, due August
2007 to November 2015 (weighted average interest rates of 6.4%
and 6.6% at June 30, 2007 and December 31, 2006,
respectively)
|
|
|
85,110
|
|
|
|
88,154
|
|
|
Unsecured credit facilities, variable interest rates, due
February 2010 and June 2010 (weighted average interest rates of
2.1% and 3.1% at June 30, 2007 and December 31, 2006,
respectively)
|
|
|
562,184
|
|
|
|
852,033
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt before unamortized net (discounts)
|
|
|
3,050,550
|
|
|
|
3,441,688
|
|
|
Unamortized net discounts
|
|
|
(5,056
|
)
|
|
|
(4,273
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated debt
|
|
$
|
3,045,494
|
|
|
$
|
3,437,415
|
|
|
|
|
|
|
|
|
|
|
|
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
or mortgages on certain properties and is generally
non-recourse. As of June 30, 2007 and December 31,
2006, the total gross investment book value of those properties
securing the debt was $2.3 billion and $2.6 billion,
respectively, including $1.9 billion and $1.9 billion,
respectively, in consolidated joint ventures. As of
June 30, 2007, $1.1 billion of the secured debt
obligations bore interest at fixed rates with a weighted average
interest rate of 6.3% while the remaining $228.7 million
bore interest at variable rates (with a weighted average
interest rate of 5.3%).
On December 8, 2006, the Operating Partnership executed a
228.0 million Euros facility agreement (approximately
$308.5 million in U.S. dollars, using the exchange
rate at June 30, 2007), which provides that certain of the
Company’s affiliates may borrow either acquisition loans,
up to a 100.0 million Euros sub-limit (approximately
$135.4 million in U.S. dollars, using the exchange
rate at June 30, 2007), or secured term loans, in
connection with properties located in France, Germany, the
Netherlands, the United Kingdom, Italy or Spain. On
March 21, 2007, the Operating Partnership increased the
facility amount limit from 228.0 million Euros to
328.0 million Euros (approximately $436.3 million in
U.S. dollars, using the exchange rate at June 30,
2007). Drawings under the term facility bear interest at a rate
of 65 basis points over EURIBOR and may occur until, and
mature on, April 30, 2014. Drawings under the acquisition
loan facility bear interest at a rate of 75 basis points
over EURIBOR and are repayable within six months of the date of
advance, unless extended. The Operating Partnership initially
guaranteed the acquisition loan facility and was the carve-out
indemnitor in respect of the term loans. According to the
facility agreement, these responsibilities will be transferred
upon the occurrence of certain events, and the Operating
Partnership will be fully discharged from all such obligations
upon such transfer. On June 12, 2007, AMB Europe
Fund I, FCP-FIS, assumed, and the Operating Partnership was
released from, all of the
11
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Operating Partnership’s obligations and liabilities under
the facility agreement. On June 12, 2007, there were
200.7 million Euros (approximately $271.8 million in
U.S. dollars, using the exchange rate at June 30,
2007) of term loans and no acquisition loans outstanding
under the facility agreement.
As of June 30, 2007, the Operating Partnership had
outstanding an aggregate of $1.1 billion in unsecured
senior debt securities, which bore a weighted average interest
rate of 6.2% and had an average term of 4.5 years. These
unsecured senior debt securities include $300.0 million in
notes issued in June 1998, $205.0 million of medium-term
notes, which were issued under the Operating Partnership’s
2000 medium-term note program, $275.0 million of
medium-term notes, which were issued under the Operating
Partnership’s 2002 medium-term note program,
$175.0 million of medium-term notes, which were issued
under the Operating Partnership’s 2006 medium-term note
program and approximately $112.5 million of
5.094% Notes Due 2015, which were issued to Teachers
Insurance and Annuity Association of America on July 11,
2005 in a private placement, in exchange for the cancelled
$100.0 million of notes that were issued in June 1998,
resulting in a discount of approximately $12.5 million. The
unsecured senior debt securities are subject to various
covenants. The Company guarantees the Operating
Partnership’s obligations with respect to its unsecured
senior debt securities. Management believes that the Company and
the Operating Partnership were in compliance with their
financial covenants as of June 30, 2007.
As of June 30, 2007, the Company had $85.1 million
outstanding in other debt which bore a weighted average interest
rate of 6.4% and had an average term of 5.0 years. Other
debt includes a $65.0 million non-recourse credit facility
obtained by AMB Partners II, L.P., a subsidiary of the Operating
Partnership, which had a $65.0 million balance outstanding
as of June 30, 2007. The Company also had
$20.1 million outstanding in other non-recourse debt.
The Operating Partnership has a $550.0 million (includes
Euros, Yen, British Pounds Sterling or U.S. dollar
denominated borrowings) unsecured revolving credit facility
which matures on June 1, 2010. The Company is a guarantor
of the Operating Partnership’s obligations under the credit
facility. The line carries a one-year extension option and can
be increased to up to $700.0 million upon certain
conditions. The rate on the borrowings is generally LIBOR plus a
margin, based on the Operating Partnership’s long-term debt
rating, which was 42.5 basis points as of June 30,
2007, with an annual facility fee of 15 basis points. The
four-year credit facility includes a multi-currency component,
under which up to $550.0 million can be drawn in
U.S. dollars, Euros, Yen or British Pounds Sterling. The
Operating Partnership uses the credit facility principally for
acquisitions, funding development activity and general working
capital requirements. As of June 30, 2007, the outstanding
balance on this credit facility, using the exchange rate in
effect on June 30, 2007, was $43.4 million and the
remaining amount available was $489.3 million, net of
outstanding letters of credit of $17.3 million. The credit
agreement contains 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. Management believes that the Company
and the Operating Partnership were in compliance with their
financial covenants under this credit agreement at June 30,
2007.
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 June 30,
2007, equaled approximately $365.3 million
U.S. dollars. On June 15, 2007, AMB Japan Finance Y.K.
exercised an existing accordion feature to increase this
unsecured revolving credit facility to 55.0 billion Yen,
which using the exchange rate in effect on June 30, 2007,
equaled approximately $446.5 million U.S. dollars. The
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 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
12
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
assets or equity in entities holding such real estate assets.
The credit facility matures in June 2010 and has a one-year
extension option. The extension option is subject to the
satisfaction of certain conditions and the payment of an
extension fee equal to 0.15% of the outstanding commitments
under the facility at that time. The rate on the borrowings is
generally TIBOR plus a margin, which is based on the credit
rating of the Operating Partnership’s long-term debt and
was 42.5 basis points as of June 30, 2007. In
addition, there is an annual facility fee, payable in quarterly
amounts, which is based on the credit rating of the Operating
Partnership’s long-term debt, and was 15 basis points
of the outstanding commitments under the facility as of
June 30, 2007. As of June 30, 2007, the outstanding
balance on this credit facility, using the exchange rate in
effect on June 30, 2007, was $360.4 million in
U.S. dollars. The credit agreement contains affirmative
covenants, including 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. Management believes
that the Company, the Operating Partnership and AMB Japan
Finance Y.K. were in compliance with their financial covenants
under this credit agreement at June 30, 2007.
The Operating Partnership also has a $250.0 million
unsecured revolving credit facility. The Company along with 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 their credit
facility. The credit facility includes a multi-currency
component under which up to $250.0 million can be drawn in
U.S. dollars, Hong Kong dollars, Singapore dollars,
Canadian dollars and Euros. The line, which matures in February
2010 and carries a one-year extension option, can be increased
to up to $350.0 million upon certain conditions and the
payment of an extension fee equal to 0.15% of the outstanding
commitments. The rate on the borrowings is generally LIBOR plus
a margin, based on the credit rating of the Operating
Partnership’s senior unsecured long-term debt, which was
60 basis points as of June 30, 2007, with an annual
facility fee based on the credit rating of the Operating
Partnership’s senior unsecured long-term debt. 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 June 30, 2007, the
outstanding balance on this credit facility was approximately
$158.3 million. The credit agreement contains affirmative
covenants, including financial reporting requirements and
maintenance of specified financial ratios by the Operating
Partnership, and negative covenants, including limitations on
the incurrence of liens and limitations on mergers or
consolidations. Management believes that the Company and the
Operating Partnership were in compliance with their financial
covenants under this credit agreement at June 30, 2007.
On February 14, 2007, seven subsidiaries of AMB-SGP, L.P.,
a Delaware limited partnership, which is a subsidiary of the
Company, entered into a loan agreement for a $305 million
secured financing. On the same day, pursuant to the loan
agreement, the same seven subsidiaries delivered four promissory
notes to the two lenders, each of which matures on March 5,
2012. One note has a principal of $160 million and an
interest rate that is fixed at 5.29%. The second note has an
initial principal borrowing of $40 million with a variable
interest rate of 81 basis points above the one-month LIBOR
rate. The third note has an initial principal borrowing of
$84 million and a fixed interest rate of 5.90%. The fourth
note has an initial principal borrowing of $21 million and
bears interest at a variable rate of 135 basis points above
the one-month LIBOR rate.
13
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
As of June 30, 2007, the scheduled maturities of the
Company’s total debt, excluding unamortized secured debt
premiums and discounts, were as follows (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly-owned
|
|
|
Joint Venture
|
|
|
Unsecured
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
|
|
|
Secured
|
|
|
Senior Debt
|
|
|
Credit
|
|
|
Other
|
|
|
|
|
|
|
|
Debt
|
|
|
Debt
|
|
|
Securities
|
|
|
Facilities
|
|
|
Debt
|
|
|
Total
|
|
|
|
|
2007
|
|
$
|
57,917
|
|
|
$
|
29,640
|
|
|
$
|
55,000
|
|
|
$
|
—
|
|
|
$
|
13,179
|
|
|
$
|
155,736
|
|
|
2008
|
|
|
69,188
|
|
|
|
79,398
|
|
|
|
175,000
|
|
|
|
—
|
|
|
|
810
|
|
|
|
324,396
|
|
|
2009
|
|
|
25,799
|
|
|
|
127,993
|
|
|
|
100,000
|
|
|
|
—
|
|
|
|
873
|
|
|
|
254,665
|
|
|
2010
|
|
|
65,905
|
|
|
|
95,179
|
|
|
|
250,000
|
|
|
|
562,184
|
|
|
|
941
|
|
|
|
974,209
|
|
|
2011
|
|
|
115
|
|
|
|
189,611
|
|
|
|
75,000
|
|
|
|
—
|
|
|
|
1,014
|
|
|
|
265,740
|
|
|
2012
|
|
|
2,044
|
|
|
|
449,587
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,093
|
|
|
|
452,724
|
|
|
2013
|
|
|
—
|
|
|
|
46,447
|
|
|
|
175,000
|
|
|
|
—
|
|
|
|
65,920
|
|
|
|
287,367
|
|
|
2014
|
|
|
—
|
|
|
|
4,076
|
|
|
|
—
|
|
|
|
—
|
|
|
|
616
|
|
|
|
4,692
|
|
|
2015
|
|
|
—
|
|
|
|
18,780
|
|
|
|
112,491
|
|
|
|
—
|
|
|
|
664
|
|
|
|
131,935
|
|
|
2016
|
|
|
—
|
|
|
|
54,995
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54,995
|
|
|
Thereafter
|
|
|
—
|
|
|
|
19,091
|
|
|
|
125,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
144,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sub Total
|
|
|
220,968
|
|
|
|
1,114,797
|
|
|
|
1,067,491
|
|
|
|
562,184
|
|
|
|
85,110
|
|
|
|
3,050,550
|
|
|
Unamortized net discounts
|
|
|
1,225
|
|
|
|
3,712
|
|
|
|
(9,993
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,056
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated debt
|
|
$
|
222,193
|
|
|
$
|
1,118,509
|
|
|
$
|
1,057,498
|
|
|
$
|
562,184
|
|
|
$
|
85,110
|
|
|
$
|
3,045,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests in the Company represent the limited
partnership interests in the Operating Partnership, limited
partnership interests in AMB Property II, L.P., a Delaware
limited partnership, and interests held by certain third parties
in several real estate joint ventures, aggregating approximately
35.6 million square feet, which are consolidated for
financial reporting purposes. Such investments are consolidated
because the Company exercises significant rights over major
operating decisions such as approval of budgets, selection of
property managers, asset management, investment activity and
changes in financing. These joint venture investments do not
meet the variable interest entity criteria under FASB
Interpretation No. 46R, Consolidation of Variable
Interest Entities.
Effective October 1, 2006, the Company deconsolidated AMB
Institutional Alliance Fund III, L.P., an open-ended
co-investment partnership formed in 2004 with institutional
investors, on a prospective basis, due to the re-evaluation of
the Company’s accounting for its investment in the fund in
light of changes to the partnership agreement regarding the
general partner’s rights effective October 1, 2006.
Through the Operating Partnership, the Company enters into
co-investment joint ventures with institutional investors. The
Company’s co-investment joint ventures are engaged in the
acquisition, ownership, operation, management and, in some
cases, the renovation, expansion and development of industrial
buildings in target markets in North America.
14
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company’s consolidated co-investment joint
ventures’ total investment and property debt at
June 30, 2007 and December 31, 2006 (dollars in
thousands) were:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company’s
|
|
|
in Real Estate(1)
|
|
|
Property Debt(2)
|
|
|
Other Debt
|
|
|
|
|
Joint Venture
|
|
Ownership
|
|
|
June 30,
|
|
|
December 31,
|
|
|
June 30,
|
|
|
December 31,
|
|
|
June 30,
|
|
|
December 31,
|
|
|
Co-investment Joint Venture
|
|
Partner
|
|
Percentage
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
AMB/Erie, L.P.
|
|
Erie Insurance Company and affiliates
|
|
|
50
|
%
|
|
$
|
52,654
|
|
|
$
|
52,942
|
|
|
$
|
20,318
|
|
|
$
|
20,605
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
AMB Partners II, L.P.
|
|
City and County of San Francisco Employees’ Retirement
System
|
|
|
20
|
%
|
|
|
687,323
|
|
|
|
679,138
|
|
|
|
320,662
|
|
|
|
323,532
|
|
|
|
65,000
|
|
|
|
65,000
|
|
|
AMB-SGP, L.P.
|
|
Industrial JV Pte Ltd(3)
|
|
|
50
|
%
|
|
|
448,399
|
|
|
|
444,990
|
|
|
|
348,928
|
|
|
|
235,480
|
|
|
|
—
|
|
|
|
—
|
|
|
AMB Institutional Alliance Fund II, L.P.
|
|
AMB Institutional Alliance REIT II, Inc.(4)
|
|
|
20
|
%
|
|
|
523,766
|
|
|
|
519,534
|
|
|
|
240,812
|
|
|
|
243,263
|
|
|
|
—
|
|
|
|
—
|
|
|
AMB-AMS,
L.P.(5)
|
|
PMT, SPW and TNO(6)
|
|
|
39
|
%
|
|
|
155,235
|
|
|
|
153,563
|
|
|
|
84,118
|
|
|
|
78,904
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
$
|
1,867,377
|
|
|
$
|
1,850,167
|
|
|
$
|
1,014,838
|
|
|
$
|
901,784
|
|
|
$
|
65,000
|
|
|
$
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Company also had other consolidated joint ventures with
total investments in real estate of $606.0 million as of
June 30, 2007. |
| |
|
(2) |
|
The Company also had other consolidated joint ventures with
property debt of $103.7 million as of June 30, 2007. |
| |
|
(3) |
|
A subsidiary of GIC Real Estate Pte. Ltd., the real estate
investment subsidiary of the Government of Singapore Investment
Corporation. |
| |
|
(4) |
|
Comprised of 14 institutional investors as stockholders and one
third-party limited partner as of June 30, 2007. |
| |
|
(5) |
|
AMB-AMS,
L.P. is a co-investment partnership with three Dutch pension
funds. |
| |
|
(6) |
|
PMT is Stichting Pensioenfonds Metaal en Techniek, SPW is
Stichting Pensioenfonds voor de Woningcorporaties and TNO is
Stichting Pensioenfonds TNO. |
The following table details the minority interests as of
June 30, 2007 and December 31, 2006 (dollars in
thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
Redemption/Callable
|
|
|
|
2007
|
|
|
2006
|
|
|
Date
|
|
|
|
Joint Venture Partners
|
|
$
|
535,280
|
|
|
$
|
555,201
|
|
|
N/A
|
|
Limited Partners in the Operating Partnership
|
|
|
78,491
|
|
|
|
74,780
|
|
|
N/A
|
|
Series J preferred units (liquidation preference of $40,000)
|
|
|
—
|
|
|
|
38,883
|
|
|
Redeemed in April 2007
|
|
Series K preferred units (liquidation preference of $40,000)
|
|
|
—
|
|
|
|
38,932
|
|
|
Redeemed in April 2007
|
|
Held through AMB Property II, L.P.:
|
|
|
|
|
|
|
|
|
|
|
|
Class B Limited Partners
|
|
|
31,430
|
|
|
|
27,281
|
|
|
N/A
|
|
Series D preferred units (liquidation preference of $79,767)
|
|
|
77,563
|
|
|
|
77,684
|
|
|
February 2012
|
|
Series I preferred units (liquidation preference of $25,500)
|
|
|
—
|
|
|
|
24,799
|
|
|
Repurchased in April 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total minority interests
|
|
$
|
722,764
|
|
|
$
|
837,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table distinguishes the minority interests’
share of income, including minority interests’ share of
development profits, but excluding minority interests’
share of discontinued operations for the three and six months
ended June 30, 2007 and 2006 (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
For the Six Months
|
|
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Joint Venture Partners’ share of income
|
|
$
|
8,067
|
|
|
$
|
8,895
|
|
|
$
|
15,260
|
|
|
$
|
17,297
|
|
|
Joint Venture Partners’ share of development profits
|
|
|
2,574
|
|
|
|
1,619
|
|
|
|
3,136
|
|
|
|
1,651
|
|
|
Common limited partners in the Operating Partnership
|
|
|
3,025
|
|
|
|
325
|
|
|
|
3,386
|
|
|
|
1,026
|
|
|
Series J preferred units (redeemed in April 2007)
|
|
|
9
|
|
|
|
795
|
|
|
|
804
|
|
|
|
1,590
|
|
|
Series K preferred units (redeemed in April 2007)
|
|
|
9
|
|
|
|
795
|
|
|
|
804
|
|
|
|
1,590
|
|
|
Held through AMB Property II, L.P.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B common limited partnership units
|
|
|
976
|
|
|
|
16
|
|
|
|
1,109
|
|
|
|
42
|
|
|
Series D preferred units (liquidation preference of $79,767)
|
|
|
1,337
|
|
|
|
1,546
|
|
|
|
2,936
|
|
|
|
3,091
|
|
|
Series E preferred units (repurchased in June 2006)
|
|
|
—
|
|
|
|
178
|
|
|
|
—
|
|
|
|
392
|
|
|
Series F preferred units (repurchased in September 2006)
|
|
|
—
|
|
|
|
200
|
|
|
|
—
|
|
|
|
400
|
|
|
Series H preferred units (repurchased in March 2006)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
815
|
|
|
Series I preferred units (repurchased in April 2007)
|
|
|
125
|
|
|
|
510
|
|
|
|
635
|
|
|
|
1,020
|
|
|
Series N preferred units (repurchased in January 2006)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total minority interests’ share of income
|
|
$
|
16,122
|
|
|
$
|
14,879
|
|
|
$
|
28,070
|
|
|
$
|
29,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has consolidated joint ventures that have finite
lives under the terms of the partnership agreements. As of
June 30, 2007 and December 31, 2006, the aggregate
book value of the joint venture minority interests in the
accompanying consolidated balance sheets was approximately
$535.3 million and $555.2 million, respectively, and
the Company believes that the aggregate settlement value of
these interests was approximately $1.1 billion and
$1.0 billion, respectively. However, there can be no
assurance that the aggregate settlement value of the interests
will be as such. The aggregate settlement value is based on the
estimated liquidation values of the assets and liabilities and
the resulting proceeds that the Company 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 Company
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 Company’s
estimate of the aggregate settlement value. The joint venture
agreements do not limit the amount to which the minority joint
venture partners would be entitled in the event of liquidation
of the assets and liabilities and dissolution of the respective
joint ventures.
On April 17, 2007, the Operating Partnership redeemed all
800,000 of its outstanding 7.95% Series J Cumulative
Redeemable Preferred Limited Partnership Units from a single
institutional investor and all 800,000 of its outstanding 7.95%
Series K Cumulative Redeemable Preferred Limited
Partnership Units from another single institutional investor.
The Operating Partnership redeemed the Series J Cumulative
Redeemable Preferred Limited Partnership Units for
$40.0 million, plus accrued and unpaid distributions
through April 16, 2007. The Operating Partnership redeemed
the Series K Cumulative Redeemable Preferred Limited
Partnership Units for $40.0 million, plus accrued and
unpaid distributions through April 16, 2007. Also, on
April 17, 2007, another of the Company’s subsidiaries,
AMB Property II, L.P., a Delaware limited partnership,
repurchased all 510,000 of its outstanding 8.00% Series I
Cumulative Redeemable Preferred Limited Partnership Units from a
single institutional investor. AMB Property II, L.P. repurchased
the units for $25.5 million, plus accrued and unpaid
distributions through
16
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
April 16, 2007, less applicable withholding, on the
Series I Cumulative Redeemable Preferred Limited
Partnership Units. The Company wrote-off approximately
$2.9 million in deferred issuance costs related to the
redemption of the Series J and K units and the repurchase
of the Series I units.
On January 29, 2007, the 7.75% Series D Cumulative
Redeemable Preferred Limited Partnership Units of AMB Property
II, L.P., were transferred from one institutional investor to
another institutional investor. In connection with that
transfer, AMB Property II, L.P., agreed to amend the terms of
the Series D Cumulative Redeemable Preferred Limited
Partnership Units to, among other things, change the rate
applicable to the Series D Cumulative Redeemable Preferred
Limited Partnership Units from 7.75% to 7.18% and change the
date prior to which the Series D Cumulative Redeemable
Preferred Limited Partnership Units may not be redeemed from
May 5, 2004 to February 22, 2012.
Effective January 27, 2006, Robert Pattillo Properties,
Inc. exercised its rights under its Put Agreement, dated
September 24, 2004, with the Operating Partnership, and
sold all 729,582 of its 5.00% Series N Cumulative
Redeemable Preferred Limited Partnership Units in one of the
Company’s subsidiaries, AMB Property II, L.P., to the
Operating Partnership for an aggregate price of
$36.6 million, including accrued and unpaid distributions.
Also on January 27, 2006, AMB Property II, L.P.,
repurchased all of the 5.00% Series N Cumulative Redeemable
Preferred Limited Partnership Units from the Operating
Partnership for an aggregate price of $36.6 million and
cancelled all of the outstanding series N preferred units
as of such date.
On March 21, 2006, AMB Property II, L.P., repurchased all
840,000 of its outstanding 8.125% Series H Cumulative
Redeemable Preferred Limited Partnership Units from a single
institutional investor for an aggregate price of
$42.8 million, including accrued and unpaid distributions.
In addition, the Company recognized a reduction of income
available to common stockholders of $1.1 million for the
related original issuance costs.
On June 30, 2006, AMB Property II, L.P., repurchased all
220,440 of its outstanding 7.75% Series E Cumulative
Redeemable Preferred Limited Partnership Units from a single
institutional investor for an aggregate price of
$10.9 million, including accrued and unpaid distributions.
In addition, the Company recognized an increase in income
available to common stockholders of $0.1 million for the
discount on repurchase, net of original issuance costs.
On September 21, 2006, AMB Property II, L.P., repurchased
all 201,139 of its outstanding 7.95% Series F Cumulative
Redeemable Preferred Limited Partnership Units from a single
institutional investor for an aggregate price of
$10.0 million, including accrued and unpaid distributions.
17
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
|
|
|
7.
|
Investments
in Unconsolidated Joint Ventures
|
The Company’s unconsolidated joint ventures’ net
equity investments at June 30, 2007 and December 31,
2006 (dollars in thousands) were:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company’s
|
|
|
|
|
Square
|
|
|
June 30,
|
|
|
December 31,
|
|
|
Ownership
|
|
|
Unconsolidated Joint Ventures
|
|
Feet
|
|
|
2007
|
|
|
2006
|
|
|
Percentage
|
|
|
|
|
Co-Investment Joint Ventures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMB Institutional Alliance Fund III, L.P.(1)
|
|
|
17,999,126
|
|
|
$
|
139,448
|
|
|
$
|
136,971
|
|
|
|
20
|
%
|
|
AMB Europe Fund I, FCP-FIS(2)
|
|
|
6,005,508
|
|
|
|
48,686
|
|
|
|
n/a
|
|
|
|
20
|
%
|
|
AMB Japan Fund I, L.P.(3)
|
|
|
4,877,468
|
|
|
|
44,905
|
|
|
|
31,811
|
|
|
|
20
|
%
|
|
AMB DFS Fund I, LLC(4)
|
|
|
1,218,483
|
|
|
|
17,833
|
|
|
|
11,700
|
|
|
|
15
|
%
|
|
AMB-SGP Mexico, LLC(5)
|
|
|
4,688,440
|
|
|
|
12,839
|
|
|
|
7,601
|
|
|
|
20
|
%
|
|
Other Industrial Operating Joint Ventures
|
|
|
7,669,507
|
|
|
|
49,361
|
|
|
|
47,955
|
|
|
|
53
|
%
|
|
G. Accion, S.A. de C.V., (G.Accion)
|
|
|
n/a
|
|
|
|
36,462
|
|
|
|
38,343
|
|
|
|
39
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Unconsolidated Joint Ventures
|
|
|
42,458,532
|
|
|
$
|
349,534
|
|
|
$
|
274,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
AMB Institutional Alliance Fund III, L.P. is an open-ended
co-investment partnership formed in 2004 with institutional
investors, which invests through a private real estate
investment trust. Prior to October 1, 2006, the Company
accounted for AMB Institutional Alliance Fund III, L.P. as
a consolidated joint venture. |
| |
|
(2) |
|
AMB Europe Fund I, FCP-FIS, is an open-ended co-investment
venture formed in 2007 with institutional investors. This fund
is Euro-denominated. U.S. dollar amounts are converted at the
exchange rate in effect on June 30, 2007. |
| |
|
(3) |
|
AMB Japan Fund I, L.P. is a co-investment partnership
formed in 2005 with institutional investors. This fund is
Yen-denominated. U.S. dollar amounts are converted at the
exchange rate in effect on June 30, 2007. |
| |
|
(4) |
|
AMB DFS Fund I, LLC is a co-investment partnership formed
in 2006 with a subsidiary of GE Real Estate to build and sell
properties. |
| |
|
(5) |
|
AMB-SGP Mexico, LLC, is a co-investment partnership formed in
2004 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. |
The table below presents summarized income statement information
for the Company’s unconsolidated
co-investment
joint ventures for the three and six months ended June 30,
2007 and 2006 (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
|
|
|
June 30, 2007
|
|
|
June 30, 2006
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
(loss)
|
|
|
|
|
|
|
|
|
(loss)
|
|
|
|
|
|
|
|
|
|
|
from
|
|
|
Net
|
|
|
|
|
|
from
|
|
|
Net
|
|
|
|
|
|
|
|
Continuing
|
|
|
Income
|
|
|
|
|
|
Continuing
|
|
|
Income
|
|
|
Co-Investment Unconsolidated Joint Ventures:
|
|
Revenues
|
|
|
Operations
|
|
|
(loss)
|
|
|
Revenues
|
|
|
Operations
|
|
|
(loss)
|
|
|
|
|
AMB Institutional Alliance Fund III, L.P.(1)
|
|
$
|
33,324
|
|
|
$
|
3,917
|
|
|
$
|
3,924
|
|
|
$
|
18,299
|
|
|
$
|
2,815
|
|
|
$
|
2,991
|
|
|
AMB Japan Fund I, L.P.(2)
|
|
|
11,448
|
|
|
|
1,510
|
|
|
|
1,510
|
|
|
|
2,673
|
|
|
|
253
|
|
|
|
253
|
|
|
AMB Europe Fund I, FCP-FIS(3)
|
|
|
2,860
|
|
|
|
432
|
|
|
|
432
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
AMB-SGP Mexico, LLC(4)
|
|
|
5,347
|
|
|
|
(2,688
|
)
|
|
|
(2,688
|
)
|
|
|
3,073
|
|
|
|
(1,992
|
)
|
|
|
(1,992
|
)
|
|
AMB DFS Fund I, LLC(5)
|
|
|
—
|
|
|
|
(16
|
)
|
|
|
(16
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
52,979
|
|
|
$
|
3,155
|
|
|
$
|
3,162
|
|
|
$
|
24,045
|
|
|
$
|
1,076
|
|
|
$
|
1,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
For the Six Months Ended
|
|
|
|
|
June 30, 2007
|
|
|
June 30, 2006
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
|
|
|
(loss)
|
|
|
|
|
|
|
|
|
(loss)
|
|
|
|
|
|
|
|
|
|
|
from
|
|
|
Net
|
|
|
|
|
|
from
|
|
|
Net
|
|
|
|
|
|
|
|
Continuing
|
|
|
Income
|
|
|
|
|
|
Continuing
|
|
|
Income
|
|
|
Co-Investment Unconsolidated Joint Ventures:
|
|
Revenues
|
|
|
Operations
|
|
|
(loss)
|
|
|
Revenues
|
|
|
Operations
|
|
|
(loss)
|
|
|
|
|
AMB Institutional Alliance Fund III, L.P.(1)
|
|
$
|
62,714
|
|
|
$
|
6,829
|
|
|
$
|
6,851
|
|
|
$
|
33,952
|
|
|
$
|
4,650
|
|
|
$
|
5,086
|
|
|
AMB Japan Fund I, L.P.(2)
|
|
|
22,381
|
|
|
|
3,696
|
|
|
|
3,696
|
|
|
|
5,468
|
|
|
|
384
|
|
|
|
384
|
|
|
AMB Europe Fund I, FCP-FIS(3)
|
|
|
2,860
|
|
|
|
432
|
|
|
|
432
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
AMB-SGP Mexico, LLC(4)
|
|
|
9,654
|
|
|
|
(4,807
|
)
|
|
|
(4,807
|
)
|
|
|
6,120
|
|
|
|
(3,338
|
)
|
|
|
(3,338
|
)
|
|
AMB DFS Fund I, LLC(5)
|
|
|
—
|
|
|
|
(55
|
)
|
|
|
(55
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
97,609
|
|
|
$
|
6,095
|
|
|
$
|
6,117
|
|
|
$
|
45,540
|
|
|
$
|
1,696
|
|
|
$
|
2,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
AMB Institutional Alliance Fund III, L.P. is an open-ended
co-investment partnership formed in 2004 with institutional
investors, which invest through a private REIT. Prior to
October 1, 2006, the Company accounted for AMB
Institutional Alliance Fund III, L.P. as a consolidated
joint venture. |
| |
|
(2) |
|
AMB Japan Fund I is a co-investment partnership formed in
2005 with institutional investors. The fund is Yen-denominated.
U.S. dollar amounts are converted at the average exchange rates
in effect during the three and six months ended June 30,
2007 and 2006. |
| |
|
(3) |
|
AMB Europe Fund I, FCP-FIS, is an open-ended co-investment
venture formed in 2007 with institutional investors. This fund
is Euro-denominated. U.S. dollar amounts are converted at the
average exchange rates in effect during the three and six months
ended June 30, 2007. |
| |
|
(4) |
|
AMB-SGP Mexico, LLC, is a co-investment partnership formed in
2004 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) |
|
AMB DFS Fund I, LLC is a co-investment partnership formed
in 2006 with a subsidiary of GE Real Estate to build and sell
properties. |
On December 30, 2004, the Company formed AMB-SGP Mexico,
LLC, a joint 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, in which the Company retained an approximate 20%
interest. For the six months ended June 30, 2007, the
Company recognized a gain of approximately $0.1 million
from the contribution of one approximately 0.1 million
square foot operating property for $4.6 million. This gain
is presented in gains from sale or contribution of real estate
interests, net, on consolidated statements of operations. In
addition, the Company recognized development profits from the
contribution of one completed development project aggregating
approximately 0.2 million square feet with a contribution
value of $14.2 million. For the three and six months ended
June 30, 2006, the Company recognized development profits
of $3.4 million from the contribution of one completed
development project for $38.4 million aggregating
approximately 0.6 million square feet.
On June 30, 2005, the Company formed AMB Japan Fund I,
L.P., a joint venture with 13 institutional investors, in which
the Company retained an approximate 20% interest. The 13
institutional investors have committed 49.5 billion Yen
(approximately $401.9 million in U.S. dollars, using
the exchange rate at June 30, 2007) for an approximate
80% equity interest. For the three and six months ended
June 30, 2006, the Company recognized development profits
of $43.2 million from the contribution to this fund of one
completed development project for $243.0 million (using the
exchange rate on the date of contribution) aggregating
approximately 0.8 million square feet.
On October 17, 2006, the Company formed AMB DFS
Fund I, LLC, a merchant development joint venture with GE
Real Estate (“GE”), in which the Company retained an
approximate 15% interest. The joint venture is
19
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
expected to have total investment capacity of approximately
$500.0 million to pursue development-for-sale opportunities
primarily in U.S. markets other than those the Company
identifies as its target markets. GE and the Company have
committed $425.0 million and $75.0 million of equity,
respectively. For the three and six months ended June 30,
2007, the Company recognized development profits from the
contribution to this fund of approximately 82 acres of land
with a contribution value of approximately $30.3 million.
Effective October 1, 2006, the Company deconsolidated AMB
Institutional Alliance Fund III, L.P., an open-ended
co-investment partnership formed in 2004 with institutional
investors, on a prospective basis, due to the re-evaluation of
the Company’s accounting for its investment in the fund in
light of changes to the partnership agreement regarding the
general partner’s rights effective October 1, 2006.
For the three months ended June 30, 2007, the Company
contributed one approximately 0.2 million square foot
operating property and three completed development projects
totaling approximately 0.7 million square feet to this fund
for approximately $74.8 million. For the six months ended
June 30, 2007, the Company contributed one approximately
0.2 million square foot operating property and four
completed development projects, aggregating approximately
1.0 million square feet for approximately
$116.6 million.
On June 12, 2007, the Company formed AMB Europe
Fund I, FCP-FIS, a Euro-denominated open-ended
co-investment joint venture with institutional investors, in
which the Company retained an approximate 20% interest. The
institutional investors have committed approximately
263.0 million Euros (approximately $356.2 million in
U.S. dollars, using the exchange rate at June 30,
2007) for an approximate 80% equity interest. During the
three and six months ended June 30, 2007, the Company
contributed approximately 4.2 million square feet of
operating properties and approximately 0.5 million square
feet of completed development projects to this fund for
approximately 439.0 million Euros (approximately
$584.0 million in U.S. dollars, using the exchange
rate at the date of contribution).
During the three months ended June 30, 2007, the Company
recognized gains from the contribution of real estate interests,
net, of approximately $74.7 million, representing the
portion of the Company’s interest in the contributed
properties acquired by the third party investors for cash, as a
result of the contribution of approximately 4.2 million
square feet of operating properties to AMB Europe Fund I,
FCP-FIS, and one operating property to AMB Institutional
Alliance Fund III, L.P. During the six months ended
June 30, 2007, the Company recognized gains from the
contribution of real estate interests, net, of approximately
$74.8 million, representing the portion of the
Company’s interest in the contributed properties acquired
by the third party investors for cash, as a result of the
contribution of approximately 4.2 million square feet of
operating properties to AMB Europe Fund I, FCP-FIS, and two
operating properties to AMB-SGP Mexico, LLC, and AMB
Institutional Alliance Fund III, L.P.
As a result of the contribution of six completed development
projects to AMB Europe Fund I, FCP-FIS, and AMB
Institutional Alliance Fund III, L.P., the Company
recognized development profits of approximately
$26.0 million during the three months ended June 30,
2007, representing the portion of the Company’s interest in
the contributed properties acquired by the third party investors
for cash. During the six months ended June 30, 2007, the
Company recognized development profits of approximately
$34.9 million, representing the portion of the
Company’s interest in the contributed properties acquired
by the third party investors for cash, as a result of the
contribution of eight completed development projects and
approximately 82 acres of land to AMB Europe Fund I,
FCP-FIS, AMB-SGP Mexico, LLC, AMB Institutional Alliance
Fund III, L.P., and AMB DFS Fund I, LLC.
Under the agreements governing the joint ventures, the Company
and the other parties to the joint ventures may be required to
make additional capital contributions and, subject to certain
limitations, the joint ventures may incur additional debt.
During the three months ended June 30, 2007, the Company
exercised its option to purchase the remaining equity interest,
based on the fair market value as stipulated in the joint
venture agreement, in AMB Pier One, LLC, for a nominal amount.
AMB Pier One, LLC, is a joint venture related to the 2000
redevelopment of the pier which
20
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
houses the Company’s global headquarters in
San Francisco, California. As a result, the investment was
consolidated as of June 30, 2007.
As of June 30, 2007, the Company also had an approximate
39.0% unconsolidated equity interest in G.Accion, a Mexican real
estate company. G.Accion provides management and development
services for industrial, retail, residential and office
properties in Mexico. In addition, as of June 30, 2007, a
subsidiary of the Company also had an approximate 5% interest in
IAT Air Cargo Facilities Income Fund (IAT), a Canadian income
trust specializing in aviation-related real estate at
Canada’s leading international airports. This equity
investment of approximately $2.9 million and
$2.7 million, respectively, is included in other assets on
the consolidated balance sheets as of June 30, 2007 and
December 31, 2006.
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, commencing generally on or
after the first anniversary of the holder becoming a limited
partner of the Operating Partnership or 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 applicable unit
holders), to require the Operating Partnership or AMB Property
II, L.P., as applicable, to redeem part or all of their common
units or class B common limited partnership units, as
applicable, for cash (based upon the fair market value, as
defined in the applicable partnership agreement, of an
equivalent number of shares of common stock of the Company at
the time of redemption) or the Operating Partnership or AMB
Property II, L.P. may, in its respective sole and absolute
discretion (subject to the limits on ownership and transfer of
common stock set forth in the Company’s charter), elect to
have the Company exchange those common units or class B
common limited partnership units, as applicable, for shares of
the Company’s common stock 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. With each redemption or exchange of the
Operating Partnership’s common units, the Company’s
percentage ownership in the Operating Partnership will increase.
Common limited partners and class B common limited partners
may exercise this redemption right from time to time, in whole
or in part, subject to certain limitations. During the six
months ended June 30, 2007, the Operating Partnership
redeemed 306,882 of its common limited partnership units for an
equivalent number of shares of the Company’s common stock.
During the six months ended June 30, 2007, the Company
issued approximately 8.4 million shares of its common stock
for net proceeds of approximately $472.1 million, which
proceeds were contributed to the Operating Partnership in
exchange for the issuance of approximately 8.4 million
general partnership units. As a result of the common stock
issuance, there was a significant reallocation of partnership
interests due to the difference in the Company’s stock
price at issuance as compared to the book value per share at the
time of issuance. The Company intends to use the proceeds from
the offering for general corporate purposes and, over the long
term, to expand its global development business.
The Company has authorized 100,000,000 shares of preferred
stock for issuance, of which the following series were
designated as of June 30, 2007: 1,595,337 shares of
series D cumulative redeemable preferred, all of which are
outstanding; 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.
21
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table sets forth the dividends or distributions
paid or payable per share or unit:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
|
|
|
|
|
|
|
For the Three Months Ended June 30,
|
|
|
Ended June 30,
|
|
|
Paying Entity
|
|
Security
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
AMB Property Corporation
|
|
Common stock
|
|
$
|
0.500
|
|
|
$
|
0.460
|
|
|
$
|
1.000
|
|
|
$
|
0.920
|
|
|
AMB Property Corporation
|
|
Series L preferred stock
|
|
$
|
0.406
|
|
|
$
|
0.406
|
|
|
$
|
0.813
|
|
|
$
|
0.813
|
|
|
AMB Property Corporation
|
|
Series M preferred stock
|
|
$
|
0.422
|
|
|
$
|
0.422
|
|
|
$
|
0.844
|
|
|
$
|
0.844
|
|
|
AMB Property Corporation
|
|
Series O preferred stock
|
|
$
|
0.438
|
|
|
$
|
0.438
|
|
|
$
|
0.875
|
|
|
$
|
0.875
|
|
|
AMB Property Corporation
|
|
Series P preferred stock
|
|
$
|
0.428
|
|
|
|
n/a
|
|
|
$
|
0.856
|
|
|
|
n/a
|
|
|
Operating Partnership
|
|
Common limited partnership units
|
|
$
|
0.500
|
|
|
$
|
0.460
|
|
|
$
|
1.000
|
|
|
$
|
0.920
|
|
|
Operating Partnership
|
|
Series J preferred units(1)
|
|
$
|
0.011
|
|
|
$
|
0.994
|
|
|
$
|
1.005
|
|
|
$
|
1.988
|
|
|
Operating Partnership
|
|
Series K preferred units(1)
|
|
$
|
0.011
|
|
|
$
|
0.994
|
|
|
$
|
1.005
|
|
|
$
|
1.988
|
|
|
AMB Property II, L.P.
|
|
Class B common limited partnership units
|
|
$
|
0.500
|
|
|
$
|
0.460
|
|
|
$
|
1.000
|
|
|
$
|
0.920
|
|
|
AMB Property II, L.P.
|
|
Series D preferred units
|
|
$
|
0.838
|
|
|
$
|
0.969
|
|
|
$
|
1.840
|
|
|
$
|
1.938
|
|
|
AMB Property II, L.P.
|
|
Series E preferred units(2)
|
|
|
n/a
|
|
|
$
|
0.807
|
|
|
|
n/a
|
|
|
$
|
1.776
|
|
|
AMB Property II, L.P.
|
|
Series F preferred units(3)
|
|
|
n/a
|
|
|
$
|
0.994
|
|
|
|
n/a
|
|
|
$
|
1.988
|
|
|
AMB Property II, L.P.
|
|
Series H preferred units(4)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
0.970
|
|
|
AMB Property II, L.P.
|
|
Series I preferred units(5)
|
|
$
|
0.244
|
|
|
$
|
1.000
|
|
|
$
|
1.244
|
|
|
$
|
2.000
|
|
|
AMB Property II, L.P.
|
|
Series N preferred units(6)
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
$
|
0.215
|
|
|
|
|
|
(1) |
|
In April 2007, the Operating Partnership redeemed all of its
Series J and Series K preferred units. |
| |
|
(2) |
|
In June 2006, AMB Property II, L.P. repurchased all of its
outstanding Series E preferred units. |
| |
|
(3) |
|
In September 2006, AMB Property II, L.P. repurchased all of its
outstanding Series F preferred units. |
| |
|
(4) |
|
In March 2006, AMB Property II, L.P. repurchased all of its
outstanding Series H preferred units. |
| |
|
(5) |
|
In April 2007, AMB Property II, L.P., repurchased all of its
Series I preferred units. |
| |
|
(6) |
|
The holder of the Series N preferred units exercised its
put option in January 2006 and sold all of its Series N
preferred units to the Operating Partnership and AMB Property
II, L.P. repurchased all of such units from the Operating
Partnership. |
In December 2005, the Company’s board of directors approved
a new two-year common stock repurchase program for the
discretionary repurchase of up to $200.0 million of its
common stock. The Company did not repurchase or retire any of
its shares of common stock during the six months ended
June 30, 2007.
On May 10, 2007 at the Company’s Annual Meeting of
Stockholders, the Company’s stockholders approved the
adoption of the Amended and Restated 2002 Stock Option and
Incentive Plan, which reserved for issuance under the plan an
additional 7.5 million shares of the Company’s common
stock. With the inclusion of these shares, the Company’s
stock incentive plans have approximately 10.2 million
shares of common stock still available for issuance as either
stock options or restricted stock grants, of which
9.5 million are eligible to be used for new grants. The
fair value of each option grant was generally estimated at the
date of grant using the Black-Scholes option-pricing model. The
Company uses historical data to estimate option exercise and
forfeitures within the valuation model. Expected volatilities
are based on historical volatility of the Company’s 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 fair values of grants issued
during the quarters ended June 30, 2007 and 2006, were
$10.15 and $8.54, respectively. The weighted average grant date
fair value of restricted stock awards calculated as of the grant
dates of the awards and issued during the quarters ended
June 30, 2007 and 2006, were $58.77 and $50.50,
respectively. The following
22
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
assumptions are used for grants during the six months ended
June 30, 2007 and 2006, respectively: dividend yields of
3.4% and 3.5%; expected volatility of 18.7% and 17.9%; risk-free
interest rates of 4.5% and 4.6%; and expected lives of six years.
As of June 30, 2007, approximately 6,054,697 options and
653,427 non-vested stock awards were outstanding under the
plans. There were 534,338 stock options granted, 1,305,433
options exercised, and 38,574 options forfeited during the six
months ended June 30, 2007. There were 270,653 restricted
stock awards made during the six months ended June 30,
2007. 208,211 non-vested stock awards vested and 20,564
non-vested stock awards were forfeited during the six months
ended June 30, 2007. The related stock option expense was
$1.3 million and $1.0 million and the related
restricted stock compensation expense was $3.0 million and
$5.1 million for the three months ended June 30, 2007
and 2006, respectively. The related stock option expense was
$3.2 million and $3.1 million and the related
restricted stock compensation expense was $6.2 million and
$7.8 million for the six months ended June 30, 2007
and 2006, respectively. The expense is included in general and
administrative expenses in the accompanying consolidated
statements of operations.
The Company’s only dilutive securities outstanding for the
three and six months ended June 30, 2007 and 2006 were
stock options and shares of restricted stock granted under its
stock incentive plans. The effect on income per share was to
increase weighted average shares outstanding. Such dilution was
computed using the treasury stock
23
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
method. The computation of basic and diluted earnings per share
(“EPS”) is presented below (dollars in thousands,
except share and per share amounts):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
For the Six Months
|
|
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before cumulative effect of
change in accounting principle
|
|
$
|
117,401
|
|
|
$
|
54,154
|
|
|
$
|
142,294
|
|
|
$
|
72,179
|
|
|
Preferred stock dividends
|
|
|
(3,952
|
)
|
|
|
(3,095
|
)
|
|
|
(7,904
|
)
|
|
|
(6,191
|
)
|
|
Preferred unit redemption discount/issuance costs
|
|
|
(2,927
|
)
|
|
|
77
|
|
|
|
(2,927
|
)
|
|
|
(1,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before cumulative effect of
change in accounting principle (after preferred stock dividends)
|
|
|
110,522
|
|
|
|
51,136
|
|
|
|
131,463
|
|
|
|
64,968
|
|
|
Total discontinued operations
|
|
|
868
|
|
|
|
21,199
|
|
|
|
1,657
|
|
|
|
30,558
|
|
|
Cumulative effect of change in accounting principle
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
111,390
|
|
|
$
|
72,335
|
|
|
$
|
133,120
|
|
|
$
|
95,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
98,937,407
|
|
|
|
87,317,494
|
|
|
|
95,631,984
|
|
|
|
86,915,959
|
|
|
Stock options and restricted stock dilution(1)
|
|
|
2,423,606
|
|
|
|
2,818,165
|
|
|
|
2,673,315
|
|
|
|
3,231,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares
|
|
|
101,361,013
|
|
|
|
90,135,659
|
|
|
|
98,305,299
|
|
|
|
90,147,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations (after preferred stock
dividends) before cumulative effect of change in accounting
principle
|
|
$
|
1.12
|
|
|
$
|
0.59
|
|
|
$
|
1.37
|
|
|
$
|
0.75
|
|
|
Discontinued operations
|
|
|
0.01
|
|
|
|
0.24
|
|
|
|
0.02
|
|
|
|
0.35
|
|
|
Cumulative effect of change in accounting principle
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
1.13
|
|
|
$
|
0.83
|
|
|
$
|
1.39
|
|
|
$
|
1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations (after preferred stock
dividends) before cumulative effect of change in accounting
principle
|
|
$
|
1.09
|
|
|
$
|
0.56
|
|
|
$
|
1.33
|
|
|
$
|
0.72
|
|
|
Discontinued operations
|
|
|
0.01
|
|
|
|
0.24
|
|
|
|
0.02
|
|
|
|
0.34
|
|
|
Cumulative effect of change in accounting principle
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
1.10
|
|
|
$
|
0.80
|
|
|
$
|
1.35
|
|
|
$
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Excludes anti-dilutive stock options of 623,347 and 437,228, for
the three and six months ended June 30, 2007, respectively.
Excludes anti-dilutive stock options of 704,323 and 548,195, for
the three and six months ended June 30, 2006, respectively.
These weighted average shares relate to anti-dilutive stock
options, which is calculated using the treasury stock method,
and could be dilutive in the future. |
24
AMB
PROPERTY CORPORATION
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:
|
|
|
| |
•
|
Real Estate Operations. The Company operates
industrial properties and manages its business by geographic
markets. Such industrial properties typically comprise multiple
distribution warehouse facilities suitable for single or
multiple customers who are engaged in various types of
businesses. The geographic markets where the Company owns
industrial properties are managed separately because it believes
each market has its own economic characteristics and requires
its own operating, pricing and leasing strategies. Each market
is considered to be an individual operating segment. The
accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The
Company evaluates performance based upon property net operating
income of the combined properties in each segment, which are
listed below. In addition, the Company’s development
business is included under real estate operations. It primarily
consists of the Company’s development of real estate
properties that are subsequently contributed to a joint venture
fund in which the Company has an ownership interest in and acts
as manager for, or that are sold to third parties. The Company
evaluates performance of the development business by reported
operating segment based upon gains generated from the
disposition
and/or
contribution of real estate. The assets of the development
business generally include properties under development and land
held for development. During the period between the completion
of development of a property and the date the property is
contributed to an unconsolidated joint venture or sold to a
third party, the property and its associated rental income and
property operating costs are included in the real estate
operations segment because the primary activity associated with
the property during that period is leasing. Upon contribution or
sale, the resulting gain or loss is included as gains from
dispositions of real estate interests or development profits, as
appropriate.
|
| |
| |
•
|
Private Capital. The Company, through its
private capital group, AMB Capital Partners, LLC, provides real
estate investment, portfolio management and reporting services
to co-investment joint ventures and clients. The private capital
income earned consists of acquisition and development fees,
asset management fees and priority distributions, and promoted
interests and incentive distributions from the Company’s
co-investment joint ventures and AMB Capital Partners’
clients. With respect to the Company’s U.S. and Mexico
funds and joint ventures, the Company typically earns a
90 basis points acquisition fee on the acquisition cost of
third party acquisitions, asset management priority
distributions of 7.5% of net operating income on stabilized
properties, 70 basis points of total projected costs as
asset management fees on renovation or development properties,
and incentive distributions of 15% of the return over a 9%
internal rate of return and 20% of the return over a 12%
internal rate of return to investors on a periodic basis or at
the end of a fund’s life. In Japan, the Company earns a
90 basis points acquisition fee on the acquisition cost of
third party acquisitions, asset management priority
distributions of 1.5% of 80% of the committed equity during the
investment period and then 1.5% of unreturned equity, and
incentive distributions of 20% of the return over a 10% internal
rate of return and 25% of the return over a 13% internal rate of
return to investors at the end of a fund’s life. In Europe,
the Company earns a 90 basis points acquisition fee on the
acquisition cost of third party acquisitions, asset management
fees of 75 basis points on the gross asset value of the
fund, and incentive distributions of 20% of the return over a 9%
internal rate of return and 25% of the return over a 12%
internal rate of return to investors on a periodic basis. The
accounting policies of the segment are the same as those
described in the summary of significant accounting policies
under Note 2, Interim Financial Statements. The Company
evaluates performance based upon private capital income.
|
The segment information in the following tables for the three
and six months ended June 30, 2006 and as of
December 31, 2006, have been reclassified to conform to
current presentation.
25
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
Summary information for the reportable segments is as follows
(dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
Property NOI(2)
|
|
|
Development Gains
|
|
|
|
|
For the
|
|
|
For the
|
|
|
For the
|
|
|
|
|
Three Months
|
|
|
Three Months
|
|
|
Three Months
|
|
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
Segments(1)
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
U.S. Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southern California
|
|
$
|
27,428
|
|
|
$
|
27,840
|
|
|
$
|
21,809
|
|
|
$
|
21,962
|
|
|
$
|
336
|
|
|
$
|
—
|
|
|
No. New Jersey/New York
|
|
|
17,561
|
|
|
|
20,400
|
|
|
|
11,932
|
|
|
|
14,903
|
|
|
|
—
|
|
|
|
—
|
|
|
San Francisco Bay Area
|
|
|
21,077
|
|
|
|
20,980
|
|
|
|
16,617
|
|
|
|
16,439
|
|
|
|
—
|
|
|
|
—
|
|
|
Chicago
|
|
|
12,966
|
|
|
|
13,643
|
|
|
|
9,014
|
|
|
|
9,748
|
|
|
|
—
|
|
|
|
—
|
|
|
On-Tarmac
|
|
|
13,419
|
|
|
|
13,849
|
|
|
|
7,706
|
|
|
|
7,934
|
|
|
|
—
|
|
|
|
—
|
|
|
South Florida
|
|
|
11,055
|
|
|
|
10,319
|
|
|
|
7,246
|
|
|
|
6,809
|
|
|
|
4,159
|
|
|
|
176
|
|
|
Seattle
|
|
|
9,106
|
|
|
|
9,768
|
|
|
|
7,131
|
|
|
|
7,683
|
|
|
|
5,161
|
|
|
|
(986
|
)
|
|
Non — U.S. Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
10,208
|
|
|
|
7,961
|
|
|
|
8,302
|
|
|
|
6,291
|
|
|
|
15,807
|
|
|
|
—
|
|
|
Asia
|
|
|
1,928
|
|
|
|
5,726
|
|
|
|
869
|
|
|
|
2,910
|
|
|
|
—
|
|
|
|
43,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total markets
|
|
|
124,748
|
|
|
|
130,486
|
|
|
|
90,626
|
|
|
|
94,679
|
|
|
|
25,463
|
|
|
|
42,415
|
|
|
Other Markets
|
|
|
35,753
|
|
|
|
38,724
|
|
|
|
26,498
|
|
|
|
29,608
|
|
|
|
3,533
|
|
|
|
3,283
|
|
|
Straight-line rents and amortization of lease intangibles
|
|
|
2,235
|
|
|
|
6,154
|
|
|
|
2,235
|
|
|
|
6,154
|
|
|
|
—
|
|
|
|
—
|
|
|
Discontinued operations
|
|
|
178
|
|
|
|
(4,390
|
)
|
|
|
251
|
|
|
|
(3,056
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Private capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private capital income
|
|
|
8,518
|
|
|
|
4,943
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
171,432
|
|
|
$
|
175,917
|
|
|
$
|
119,610
|
|
|
$
|
127,385
|
|
|
$
|
28,996
|
|
|
$
|
45,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
Property NOI(2)
|
|
|
Development Gains
|
|
|
|
|
For the
|
|
|
For the
|
|
|
For the
|
|
|
|
|
Six Months
|
|
|
Six Months
|
|
|
Six Months
|
|
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
Segments(1)
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
U.S. Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southern California
|
|
$
|
53,847
|
|
|
$
|
55,255
|
|
|
$
|
42,598
|
|
|
$
|
43,780
|
|
|
$
|
9,340
|
|
|
$
|
—
|
|
|
No. New Jersey/New York
|
|
|
35,551
|
|
|
|
40,053
|
|
|
|
24,074
|
|
|
|
28,250
|
|
|
|
—
|
|
|
|
—
|
|
|
San Francisco Bay Area
|
|
|
42,688
|
|
|
|
42,535
|
|
|
|
33,723
|
|
|
|
33,392
|
|
|
|
—
|
|
|
|
—
|
|
|
Chicago
|
|
|
26,480
|
|
|
|
27,272
|
|
|
|
18,221
|
|
|
|
19,072
|
|
|
|
2,668
|
|
|
|
—
|
|
|
On-Tarmac
|
|
|
26,879
|
|
|
|
27,904
|
|
|
|
14,982
|
|
|
|
15,802
|
|
|
|
—
|
|
|
|
—
|
|
|
South Florida
|
|
|
21,772
|
|
|
|
19,570
|
|
|
|
14,483
|
|
|
|
13,104
|
|
|
|
4,637
|
|
|
|
850
|
|
|
Seattle
|
|
|
18,430
|
|
|
|
19,122
|
|
|
|
14,325
|
|
|
|
14,929
|
|
|
|
5,161
|
|
|
|
(986
|
)
|
|
Non — U.S. Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
21,950
|
|
|
|
14,493
|
|
|
|
17,662
|
|
|
|
11,523
|
|
|
|
15,807
|
|
|
|
—
|
|
|
Asia
|
|
|
3,346
|
|
|
|
15,599
|
|
|
|
1,519
|
|
|
|
10,848
|
|
|
|
—
|
|
|
|
43,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total markets
|
|
|
250,943
|
|
|
|
261,803
|
|
|
|
181,587
|
|
|
|
190,700
|
|
|
|
37,613
|
|
|
|
43,089
|
|
|
Other Markets
|
|
|
68,862
|
|
|
|
78,767
|
|
|
|
50,525
|
|
|
|
58,721
|
|
|
|
3,575
|
|
|
|
3,283
|
|
|
Straight-line rents and amortization of lease intangibles
|
|
|
4,950
|
|
|
|
11,300
|
|
|
|
4,950
|
|
|
|
11,300
|
|
|
|
—
|
|
|
|
—
|
|
|
Discontinued operations
|
|
|
241
|
|
|
|
(9,594
|
)
|
|
|
383
|
|
|
|
(6,177
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Private capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private capital income
|
|
|
14,443
|
|
|
|
10,049
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
339,439
|
|
|
$
|
352,325
|
|
|
$
|
237,445
|
|
|
$
|
254,544
|
|
|
$
|
41,188
|
|
|
$
|
46,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The markets included are a subset of the Company’s regions
defined as East, Southwest and West Central in North America,
Europe and Asia. |
| |
|
(2) |
|
Property net operating income (“NOI”) is defined as
rental revenue, including reimbursements, less property
operating expenses, which excludes depreciation, amortization,
general and administrative expenses and interest expense. For a
reconciliation of NOI to net income, see the table below. |
The Company considers NOI to be an appropriate and useful
supplemental performance measure because NOI reflects the
operating performance of the Company’s real estate
portfolio on a segment basis, and the Company uses NOI to make
decisions about resource allocations and to assess regional
property level performance. However, NOI should not be viewed as
an alternative measure of the Company’s financial
performance since it does not reflect general and administrative
expenses, interest expense, depreciation and amortization costs,
capital expenditures and leasing costs, or trends in development
and construction activities that could materially impact the
Company’s results from operations. Further, the
Company’s NOI may not be comparable to that of other real
estate companies, as they may use different methodologies for
calculating NOI.
27
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The following table is a reconciliation from NOI to reported net
income, a financial measure under GAAP (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
For the Six Months
|
|
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
|
Property NOI
|
|
$
|
119,610
|
|
|
$
|
127,385
|
|
|
$
|
237,445
|
|
|
$
|
254,544
|
|
|
Development profits, net of taxes
|
|
|
28,996
|
|
|
|
45,698
|
|
|
|
41,188
|
|
|
|
46,372
|
|
|
Private capital income
|
|
|
8,518
|
|
|
|
4,943
|
|
|
|
14,443
|
|
|
|
10,049
|
|
|
Depreciation and amortization
|
|
|
(41,483
|
)
|
|
|
(44,500
|
)
|
|
|
(82,504
|
)
|
|
|
(87,254
|
)
|
|
Impairment losses
|
|
|
—
|
|
|
|
(5,394
|
)
|
|
|
(257
|
)
|
|
|
(5,394
|
)
|
|
General and administrative
|
|
|
(30,260
|
)
|
|
|
(25,142
|
)
|
|
|
(60,114
|
)
|
|
|
(48,190
|
)
|
|
Other expenses
|
|
|
(1,139
|
)
|
|
|
296
|
|
|
|
(2,051
|
)
|
|
|
(241
|
)
|
|
Fund costs
|
|
|
(277
|
)
|
|
|
(479
|
)
|
|
|
(518
|
)
|
|
|
(1,093
|
)
|
|
Equity in earnings of unconsolidated joint ventures
|
|
|
1,748
|
|
|
|
8,278
|
|
|
|
3,861
|
|
|
|
10,366
|
|
|
Other income
|
|
|
6,472
|
|
|
|
2,258
|
|
|
|
11,979
|
|
|
|
5,765
|
|
|
Gains from sale or contribution of real estate interests
|
|
|
74,707
|
|
|
|
—
|
|
|
|
74,843
|
|
|
|
—
|
|
|
Interest, including amortization
|
|
|
(33,369
|
)
|
|
|
(44,310
|
)
|
|
|
(67,951
|
)
|
|
|
(83,704
|
)
|
|
Total minority interests’ share of income
|
|
|
(16,122
|
)
|
|
|
(14,879
|
)
|
|
|
(28,070
|
)
|
|
|
(29,041
|
)
|
|
Total discontinued operations
|
|
|
868
|
|
|
|
21,199
|
|
|
|
1,657
|
|
|
|
30,558
|
|
|
Cumulative effect of change in accounting principle
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
118,269
|
|
|
$
|
75,353
|
|
|
$
|
143,951
|
|
|
$
|
102,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
The Company’s total assets by reportable segments were
(dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
Total Assets as of
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
U.S. Markets
|
|
|
|
|
|
|
|
|
|
Southern California
|
|
$
|
911,325
|
|
|
$
|
895,610
|
|
|
No. New Jersey/New York
|
|
|
623,024
|
|
|
|
607,727
|
|
|
San Francisco Bay Area
|
|
|
739,570
|
|
|
|
703,660
|
|
|
Chicago
|
|
|
440,369
|
|
|
|
446,662
|
|
|
On-Tarmac
|
|
|
204,784
|
|
|
|
210,798
|
|
|
South Florida
|
|
|
347,772
|
|
|
|
371,603
|
|
|
Seattle
|
|
|
377,861
|
|
|
|
380,459
|
|
|
Non-U.S.
Marktes
|
|
|
|
|
|
|
|
|
|
Europe
|
|
|
313,261
|
|
|
|
723,326
|
|
|
Asia
|
|
|
556,561
|
|
|
|
434,706
|
|
|
|
|
|
|
|
|
|
|
|
|
Total markets
|
|
|
4,514,527
|
|
|
|
4,774,551
|
|
|
Other Markets
|
|
|
1,619,374
|
|
|
|
1,430,308
|
|
|
Investments in unconsolidated joint ventures
|
|
|
349,534
|
|
|
|
274,381
|
|
|
Non-segment assets
|
|
|
275,829
|
|
|
|
234,272
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
6,759,264
|
|
|
$
|
6,713,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
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 one to 55 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 June 30,
2007, the Company had provided approximately $23.6 million
in letters of credit, of which $17.3 million were provided
under the Operating Partnership’s $550.0 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. Other
than parent guarantees associated with unsecured debt or
contribution obligations as discussed in Part I,
Item 1: Notes 5 and 7 of the “Notes to
Consolidated Financial Statements,” as of June 30,
2007, the Company had outstanding guarantees and contribution
obligations in the aggregate amount of $340.8 million as
described below.
As of June 30, 2007, the Company had outstanding guarantees
in the amount of $70.3 million in connection with certain
acquisitions. As of June 30, 2007, the Company also
guaranteed $27.1 million and $83.2 million on
outstanding loans on three of its consolidated joint ventures
and two of its unconsolidated joint ventures, respectively.
In addition, as of June 30, 2007, the Company has
guaranteed $13.2 million on outstanding property debt
incurred by its unconsolidated joint ventures. Such guarantees
will require payment by the Company of all or part of the
applicable joint venture’s debt obligations upon certain
defaults by the joint venture. The Company’s potential
29
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
obligations under these guarantees may be greater than the
Company’s share of the applicable joint venture fund’s
debt obligations or the value of its share of any property
securing such debt.
Also, the Company has entered into contribution agreements in
connection with certain contributions of properties to its
unconsolidated joint venture funds. These contribution
agreements require the Company to make additional capital
contributions to the applicable joint venture fund upon certain
defaults by the joint venture of its debt obligations to the
lenders. Such additional capital contributions will cover all or
part of the applicable joint venture’s debt obligation and
may be greater than the Company’s share of the joint
venture’s debt obligation or the value of its share of any
property securing such debt. The Company’s 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 Company’s potential obligations
under these contribution agreements are $147.0 million as
of June 30, 2007.
Performance and Surety Bonds. As of
June 30, 2007, the Company had outstanding performance and
surety bonds in an aggregate amount of $14.1 million. These
bonds were issued in connection with certain of its development
projects and were posted to guarantee certain 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 taxes due or the completion
of the improvements and infrastructure.
Promoted 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 Company’s
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.
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.
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 Company’s 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 Company’s 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 Company’s 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.
30
AMB
PROPERTY CORPORATION
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)
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 deductible under the
Company’s third-party policies. The captive insurance
company is one element of the Company’s 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 Company’s properties. Annually, the
Company engages an independent third party to perform an
actuarial estimate of future projected claims, related
deductibles and projected expenses necessary to fund associated
risk management programs. Premiums paid to Arcata may be
adjusted based on this estimate. 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.
On July 16, 2007, certain wholly-owned subsidiaries and the
Operating Partnership, each acting as a borrower, and the
Company and the Operating Partnership, as guarantors, entered
into a fifth amended and restated revolving credit agreement for
a $500 million unsecured revolving credit facility that
replaced the $250 million unsecured revolving credit
facility the Company executed on June 13, 2006. The fifth
amended and restated credit facility amends the fourth amended
and restated credit facility to, among other things, increase
the facility amount to $500 million with an option to
further increase the facility to $750 million, to extend
the maturity date to June 2011 and to allow for borrowing in
Indian Rupees. See Note 5, Debt, for a more detailed
discussion of the Company’s credit facilities.
On or about August 9, 2007, the Company expects to settle a
repurchase of 114,638 shares of its common stock at an
average price of $50.27 per share or approximately
$5.8 million. This stock repurchase was made pursuant to
the Company’s stock repurchase program approved by the
Company’s board of directors in December 2005. This stock
repurchase program allows for the discretionary repurchase of up
to $200.0 million of the Company’s common stock and
expires on December 31, 2007. The Company publicly
announced this stock repurchase program on December 7, 2005.
31
Unless otherwise indicated below, the Commission file number to
the exhibit is
No. 001-13545.
| |
|
|
|
|
Exhibit
|
|
|
|
Number
|
|
Description
|
|
|
|
|
3
|
.1
|
|
Articles Supplementary Redesignating and Reclassifying
510,000 Shares of 8.00% Series I Cumulative Redeemable
Preferred Stock as Preferred Stock (incorporated by reference to
Exhibit 3.1 of AMB Property Corporation’s Current
Report on
Form 8-K
filed on May 16, 2007).
|
|
|
3
|
.2
|
|
Articles Supplementary Redesignating and Reclassifying
800,000 Shares of 7.95% Series J Cumulative Redeemable
Preferred Stock as Preferred Stock (incorporated by reference to
Exhibit 3.2 of AMB Property Corporation’s Current
Report on
Form 8-K
filed on May 16, 2007).
|
|
|
3
|
.3
|
|
Articles Supplementary Redesignating and Reclassifying
800,000 Shares of 7.95% Series K Cumulative Redeemable
Preferred Stock as Preferred Stock (incorporated by reference to
Exhibit 3.3 of AMB Property Corporation’s Current
Report on
Form 8-K
filed on May 16, 2007).
|
|
|
10
|
.1
|
|
Amended and Restated 2002 Stock Option and Incentive Plan of AMB
Property Corporation and AMB Property, L.P. (incorporated by
reference to Exhibit 10.1 of AMB Property
Corporation’s Current Report on
Form 8-K
filed on May 15, 2007).
|
|
|
31
|
.1
|
|
Rule 13a-14(a)/15d-14(a) Certifications
dated August 9, 2007 (filed with AMB Property
Corporation’s Quarterly Report on
Form 10-Q
on August 9, 2007).
|
|
|
31
|
.2
|
|
Rule 13a-14(a)/15d-14(a) Certifications
dated October 25, 2007.
|
|
|
32
|
.1
|
|
18 U.S.C. § 1350 Certifications dated August 9,
2007. 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
our filings, whether made before or after the date hereof,
regardless of any general incorporation language in such filing
(filed with AMB Property Corporation’s Quarterly Report on
Form 10-Q
on August 9, 2007).
|
|
|
32
|
.2
|
|
18 U.S.C. § 1350 Certifications dated October 25,
2007. 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
our filings, whether made before or after the date hereof,
regardless of any general incorporation language in such filing.
|
32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Amendment No. 1
to the report to be signed on its behalf by the undersigned
thereunto duly authorized.
AMB PROPERTY CORPORATION
Registrant
|
|
|
| |
By:
|
/s/ Hamid
R. Moghadam
|
Hamid R. Moghadam
Chairman of the Board and
Chief Executive Officer
(Duly Authorized Officer and
Principal Executive Officer)
|
|
|
| |
By:
|
/s/ Thomas
S. Olinger
|
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: October 25, 2007