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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (date of earliest event reported): January 14, 2003

AMB PROPERTY CORPORATION

(Exact name of registrant as specified in its charter)
         
Maryland
(State or other
jurisdiction of
Incorporation)
  001-13545
(Commission File Number)
  94-3281941
(I.R.S. Employer
Identification
Number)

Pier 1, Bay 1, San Francisco, California 94111

(Address of principal executive offices) (Zip Code)

415-394-9000

(Registrants’ telephone number, including area code)

n/a

(former name or former address, if changed since last report)

 


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ITEM 5 OTHER EVENTS.
SIGNATURES


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ITEM 5 OTHER EVENTS.

On January 14, 2003, AMB Property Corporation announced fourth quarter and full-year 2002 results as follows:

Earnings per share (EPS) for the fourth quarter were $0.43, including $0.16 per share in net gains; EPS for the full year was $1.37, including $0.24 per share in net gains. Fourth quarter and full-year 2002 EPS were positively impacted by lease termination fees of $0.10 and $0.13 per share, respectively, net of related charges for straight line rents and capitalized leasing costs. Fourth quarter 2002 EPS increased 43.3% from EPS of $0.30 in the same period of 2001; full-year 2002 EPS decreased 6.8% from EPS of $1.47 in the same period of 2001.

AMB’s industrial portfolio, predominantly located in infill submarkets of major distribution markets, was 94.6% leased as of December 31, 2002, 20 basis points above portfolio occupancy as of September 30, 2002 and December 31, 2001. The Company’s same store cash basis net operating income increased 10.1% during the quarter and 3.5% during the year. Tenant retention was 74.2% during 2002, while rents on renewals and rollovers decreased by 1.0% during the year.

Investment Activity

During the fourth quarter, AMB acquired seven properties for a total investment of $157.2 million, disposed of a 4.4 million square foot industrial portfolio in Houston and Dallas for an aggregate price of $155.3 million and sold an additional $73.2 million co-investment partnership interest to an existing partner. Other industrial sales activity in the quarter included two development for sale projects for $5.9 million. During the quarter, AMB also completed and stabilized five industrial development projects, totaling 1.7 million square feet for a total investment of $57.8 million. The industrial development and renovation pipeline through 2004 currently stands at $106.8 million and consists of an estimated 1.7 million square feet, of which $57.8 million, or 54.1%, has been funded and 28% is preleased. AMB’s full-year 2002 transaction activity included $403.3 million in acquisitions, $394.1 million in dispositions and contributions to joint ventures and $135.4 million in development completions.

Additional investment activity in the quarter included the repurchase of 2.2 million shares of AMB’s common stock for a total investment of $57.9 million, at a weighted average purchase price of $26.08 per share. During the fourth quarter, the board of directors increased the Company’s common share repurchase plan to $200 million, from $100 million; $130.6 million of repurchase capacity remains under the updated plan. Since its IPO, the Company has repurchased a total of 5.4 million shares of common stock for a total investment of $129.3 million, at a weighted average purchase price of $23.72 per share.

AMB’s private capital activity in the quarter consisted of an additional $110 million equity commitment from long-standing joint venture partner, the City and County of San Francisco Employees’ Retirement System (CCSFERS). The new equity increases

 


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CCSFERS’ ownership in the existing partnership from 50% to 80% and provides the partnership with additional capital for further investment in distribution facilities nationwide.

AMB renewed its $500 million unsecured revolving line of credit during the quarter. The three-year credit facility includes a multi-currency component under which up to $150 million can be drawn in British pounds sterling, euros or yen. The line of credit matures in December 2005 and replaces the Company’s previous $500 million credit facility, which was to mature in May 2003.

Company Director and Officer Changes

AMB’s board of directors appointed J. Michael Losh as an independent director to the Company’s board. Losh, who joined the board of directors and audit committee on January 1, 2003, brings to AMB 36 years of financial and international expertise, most recently as General Motor’s chief financial officer.

The Company also announced officer promotions for the new year: Mo Barzegar was promoted to senior vice president, international; Tamra Browne to senior vice president and general counsel; Steve Campbell to senior vice president, environmental and engineering; John Meyer to senior vice president, airport facilities; Jill Blechschmidt to vice president, regional manager; Dave King to vice president, regional manager; and Steve Lueck, to vice president, regional manager.

CONSOLIDATED BALANCE SHEETS
(dollars in thousands)

                                             
        As of
       
        December 31, 2002   September 30, 2002   June 30, 2002   March 31, 2002   December 31, 2001
       
 
 
 
 
Assets
                                       
Investments in real estate:
                                       
 
Total investments in properties
  $ 4,924,982     $ 4,883,497     $ 4,732,321     $ 4,566,951     $ 4,530,711  
 
Accumulated depreciation
    (362,540 )     (344,949 )     (311,058 )     (289,701 )     (265,653 )
 
   
     
     
     
     
 
   
Net investments in properties
    4,562,442       4,538,548       4,421,263       4,277,250       4,265,058  
 
Investment in unconsolidated joint ventures
    64,428       64,822       64,083       71,137       71,097  
 
Properties held for divestiture, net
    107,871       105,613       133,934       139,370       157,174  
 
   
     
     
     
     
 
   
Net investments in real estate
    4,735,741       4,708,983       4,619,280       4,487,757       4,493,329  
Cash and cash equivalents
    117,214       90,840       119,287       99,492       81,732  
Mortgage receivables
    13,133       13,155       87,175       87,214       87,214  
Accounts receivable, net
    74,207       81,003       80,366       75,399       70,794  
Other assets, including discontinued operations
    52,199       48,608       39,390       39,392       35,874  
 
   
     
     
     
     
 
   
Total assets
  $ 4,992,494     $ 4,942,589     $ 4,945,498     $ 4,789,254     $ 4,768,943  
 
   
     
     
     
     
 
Liabilities and Stockholders’ Equity
                                       
Secured debt
  $ 1,284,675     $ 1,305,320     $ 1,360,436     $ 1,237,564     $ 1,228,214  
Unsecured senior debt securities
    800,000       800,000       800,000       800,000       780,000  
Unsecured debt
    10,186       10,319                    
Alliance Fund II credit facility
    45,500       72,500       52,000       116,000       123,500  
Unsecured credit facility
    95,000       12,000                   12,000  
Other liabilities, including discontinued operations
    181,716       189,076       162,629       155,568       138,601  
 
   
     
     
     
     
 
   
Total liabilities
    2,417,077       2,389,215       2,375,065       2,309,132       2,282,315  
Minority interests:
                                       
 
Preferred units
    308,369       308,388       315,847       275,987       275,987  
 
Minority interests
    582,898       506,533       508,577       455,428       458,299  
 
   
     
     
     
     
 
   
Total minority interests
    891,267       814,921       824,424       731,415       734,286  
Stockholders’ equity:
                                       
 
Common stock
    1,588,156       1,642,459       1,649,909       1,652,607       1,656,242  
 
Preferred stock
    95,994       95,994       96,100       96,100       96,100  
 
   
     
     
     
     
 
   
Total stockholders’ equity
    1,684,150       1,738,453       1,746,009       1,748,707       1,752,342  
 
   
     
     
     
     
 
   
Total liabilities and stockholders’ equity
  $ 4,992,494     $ 4,942,589     $ 4,945,498     $ 4,789,254     $ 4,768,943  
 
   
     
     
     
     
 

 

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data)

                                     
        For the Quarters Ended   For the Twelve Months Ended
        December 31,   December 31,
       
 
        2002   2001   2002   2001
       
 
 
 
Revenues
                               
Rental revenues
  $ 157,262     $ 136,581     $ 588,522     $ 530,041  
Equity in earnings of unconsolidated joint ventures
    1,231       1,102       5,674       5,467  
Private capital income
    2,725       2,950       11,193       10,972  
Interest and other income
    539       3,826       10,454       16,297  
 
   
     
     
     
 
 
Total revenues
    161,757       144,459       615,843       562,777  
Expenses
                               
Property operating
    39,164       33,590       145,870       127,753  
Interest, including amortization
    37,442       33,019       147,101       124,866  
Depreciation and amortization
    37,286       26,504       127,160       104,838  
General administrative and other (1)
    13,000       9,640       47,207       35,820  
Loss on investments in other companies
                      20,758  
 
   
     
     
     
 
 
Total expenses
    126,892       102,753       467,338       414,035  
 
   
     
     
     
 
   
Income before minority interests and gains
    34,865       41,706       148,505       148,742  
Minority interests’ share of income:
                               
 
Preferred units
    (6,379 )     (7,056 )     (25,149 )     (28,682 )
 
Minority interests
    (8,324 )     (8,526 )     (37,806 )     (34,835 )
 
   
     
     
     
 
   
Total minority interests
    (14,703 )     (15,582 )     (62,955 )     (63,517 )
 
   
     
     
     
 
   
Net income before discontinued operations and gains from dispositions
    20,162       26,124       85,550       85,225  
Gains on developments and dispositions and discontinued operations:
                               
 
Gains on developments held for sale
    414       11,828       1,032       13,169  
 
Gains/(losses) from disposition of real estate, net of minority interests (2)
    5,309       (10,073 )     7,789       23,259  
 
Discontinued operations
    4,697       4,124       18,494       16,300  
 
Gains from disposition of real estate, discontinued operations
    7,428             11,372        
 
   
     
     
     
 
   
Total gains on developments and dispositions and discontinued operations
    17,848       5,879       38,687       52,728  
 
   
     
     
     
 
   
Net income
    38,010       32,003       124,237       137,953  
Preferred stock dividends
    (2,123 )     (2,125 )     (8,496 )     (8,500 )
Preferred unit redemption discount/(premium)
          (4,400 )     412       (4,400 )
 
   
     
     
     
 
Net income available to common stockholders
  $ 35,887     $ 25,478     $ 116,153     $ 125,053  
 
   
     
     
     
 
Net income per common share (diluted)
  $ 0.43     $ 0.30     $ 1.37     $ 1.47  
 
   
     
     
     
 
Weighted average common shares (diluted)
    83,648,772       84,338,812       84,795,987       85,214,066  
 
   
     
     
     
 

(1)  Prior to May 31, 2001, G&A did not include expenses incurred by two unconsolidated preferred stock subsidiaries, Headlands Realty Corporation and AMB Capital Partners. Adjusted G&A for the twelve months ended December 31, 2001, would have been $39,353 had the subsidiaries been consolidated beginning January 1, 2001.

(2)  Includes unrealized losses $1.2 million and of $8.6 million for the quarters ended December 31, 2002 and 2001, respectively and $1.2 million and $18.6 million for the twelve months ended December 31, 2002 and 2001, respectively.

 

CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS AND SUPPLEMENTAL CASH FLOW INFORMATION
(dollars in thousands, except share data)

                                       
          For the Quarters Ended   For the Twelve Months Ended
          December 31,   December 31,
         
 
          2002   2001   2002   2001
         
 
 
 
Income before minority interests and gains
  $ 34,865     $ 41,706     $ 148,505     $ 148,742  
Gains on developments held for sale
    414       11,828       1,032       13,169  
Total depreciation and amortization
    37,286       26,504       127,160       104,838  
FF& E depreciation, ground lease amortization and other (1)
    (708 )     (507 )     (2,450 )     (1,963 )
Discontinued operations’ FFO
    6,613       5,905       26,023       22,900  
FFO attributable to minority interests
    (14,298 )     (11,025 )     (52,051 )     (40,144 )
Adjustments to derive FFO from unconsolidated JVs:
                               
 
AMB’s share of net income
    (1,231 )     (1,102 )     (5,674 )     (5,467 )
 
AMB’s share of FFO
    2,117       1,526       8,728       8,014  
Preferred stock dividends
    (2,123 )     (2,125 )     (8,496 )     (8,500 )
Preferred units distributions
    (6,379 )     (7,056 )     (25,149 )     (28,682 )
 
   
     
     
     
 
Funds from operations
  $ 56,556     $ 65,654     $ 217,628     $ 212,907  
 
   
     
     
     
 
Weighted average common shares and units (diluted)
    88,495,159       89,317,086       89,689,310       89,954,598  
 
   
     
     
     
 
Supplemental Cash Flow Information:
                               
Straight-line rents
  $ 628     $ 2,514     $ 11,013     $ 10,093  
AMB’s share of unconsolidated JV’s NOI
  $ 2,713     $ 2,357     $ 11,055     $ 10,181  
JV Partners’ share of cash basis NOI
  $ 24,914     $ 20,587     $ 86,482     $ 65,010  
Discontinued operations’ NOI
  $ 7,650     $ 7,372     $ 29,949     $ 27,642  
Stock-based compensation amortization
  $ 1,315     $ 797     $ 5,265     $ 2,725  
Capitalized interest
  $ 1,762     $ 2,836     $ 6,919     $ 13,650  
Recurring capital expenditures:
                               
   
Tenant improvements
  $ 4,340     $ 2,149     $ 18,977     $ 8,168  
   
Lease commissions and other lease costs
    3,910       3,779       17,684       19,822  
   
Building improvements
    4,725       8,716       18,270       19,852  
 
   
     
     
     
 
     
Sub-total
    12,975       14,644       54,931       47,842  
   
JV Partners’ share of capital expenditures
    (1,955 )     (2,995 )     (9,547 )     (5,824 )
 
   
     
     
     
 
     
AMB’s share of recurring capital expenditures
  $ 11,020     $ 11,649     $ 45,384     $ 42,018  
 
   
     
     
     
 

(1)  Ground lease amortization represents the amortization of the Company’s investments in ground leased properties, for which the Company does not have a purchase option.

 

Forward Looking Statements

Some of the information included in this report contains forward-looking statements, such as statements pertaining to earnings and results of operations and future plans. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. The events or circumstances reflected in forward-looking statements might not occur. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them. We caution you not to place undue reliance on forward-looking statements, which reflect our analysis only and speak only as of the date of this report or the dates indicated in the statements. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated

 


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in the forward-looking statements: defaults on or non-renewal of leases by tenants, increased interest rates and operating costs, our failure to obtain necessary outside financing, difficulties in identifying properties to acquire and in effecting acquisitions, our failure to successfully integrate acquired properties and operations, our failure to divest of properties we have contracted to sell or to timely reinvest proceeds from any divestitures, risks and uncertainties affecting property development and construction (including construction delays, cost overruns, our inability to obtain necessary permits and public opposition to these activities), our failure to qualify and maintain our status as a real estate investment trust, environmental uncertainties, risks related to natural disasters, financial market fluctuations, changes in real estate and zoning laws, risks related to doing business internationally and increases in real property tax rates. Our success also depends upon economic trends generally, including interest rates, income tax laws, governmental regulation, legislation, population changes and certain other matters discussed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Risks” and elsewhere in our most recent annual report on Form 10-K and under the heading “Other Information—Business Risks” and elsewhere in our most recent quarterly report on Form 10-Q.

 


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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    AMB Property Corporation
             (Registrant)
         
Date: January 15, 2003   By:   /s/ Tamra Browne
       
        Tamra Browne
Senior Vice President,
General Counsel and Secretary