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): April 8, 2003
AMB PROPERTY CORPORATION
| Maryland | 001-13545 | 94-3281941 | ||
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| (State or other jurisdiction of Incorporation) |
(Commission File Number) | (I.R.S. Employer Identification Number) |
Pier 1, Bay 1, San Francisco, California 94111
415-394-9000
n/a
| ITEM 5 OTHER EVENTS. | ||||||||
| ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS. | ||||||||
| ITEM 9 REGULATION FD DISCLOSURE. | ||||||||
| SIGNATURES | ||||||||
| Exhibit 99.1 | ||||||||
ITEM 5 OTHER EVENTS.
On April 7, 2003, AMB Property Corporation announced first quarter 2003 results as follows:
AMB Property Corporation today reported first quarter 2003 earnings per share (EPS) of $0.69, 109% above EPS of $0.33 for the same period in 2002 and above the company’s guidance of $0.60 to $0.65 per share for the quarter. EPS during the quarter was positively impacted by gains from dispositions and net lease termination fees of $0.45 and $0.08 per share, respectively. Occupancy in the company’s industrial operating portfolio was 92.5% at the quarter’s end, down 210 basis points from 2002 year-end results. Same store cash net operating income increased 3.8% in the quarter.
Investment Activity
During the quarter, AMB acquired with its partner, Codina Group, 438 acres of land for development in Miami’s Airport West submarket for $29.7 million. The master planned park, called Beacon Lakes, represents the last large developable land parcel within Airport West. The site is fully entitled for 6.8 million square feet of properties for lease or sale. During the quarter, AMB and Codina began development of the first two buildings at Beacon Lakes; together, the buildings will comprise approximately 389,000 square feet. The two new distribution facilities are expected to stabilize in the first half of 2005 at an estimated investment of $20.3 million.
Other investment activity in the quarter included the acquisition of two industrial buildings for a total of $10.9 million, comprising 238,300 square feet. In addition, the company stabilized two buildings in Southern California with a total investment of $12.6 million aggregating 160,900 square feet. New development starts, totaling $36.4 million, include the two Beacon Lakes buildings as well as two additional projects scheduled for completion in the fall of 2004. AMB’s committed industrial development and renovation pipeline through 2005 currently stands at $132.8 million and consists of 2.2 million square feet, of which 48% has been funded and 22% has been preleased.
Dispositions in the quarter totaled $220.9 million, representing both direct sales and contributions of assets, resulting in net gains of $37.1 million. The company sold $127.0 million in assets, totaling 1.6 million square feet which include both opportunistic sales and sales of assets that no longer fit our investment strategy. Contributions in the quarter consisted of a portfolio of 24 buildings, valued at $94.0 million, to a joint venture with an affiliate of Citigroup Alternative Investments. AMB will maintain a 15% ownership interest in the joint venture, called Industrial Fund I. Unlike AMB’s other co-investment joint ventures, this fund is unconsolidated and is structured for a five-year term with opportunistic dispositions intended before or at the end of the term.
Advancing the company’s international expansion, AMB has entered into a letter of intent to form a joint venture with Tokyo-based industrial property specialists, BlackPine. The joint venture, AMB BlackPine, will focus on development, acquisition and operation of distribution facilities serving logistics and airfreight customers in greater Tokyo. Tokyo
is one of the world’s largest industrial real estate markets; its airport, Narita International, consistently ranks as one of the busiest in the world for international air cargo volume.
AMB’s private capital activity in the quarter consisted of an approximate $43 million equity commitment from Mn Services, one of the largest pension fund managers in the Netherlands. AMB’s planned co-investment contributions and expected debt financings will result in a partnership with an estimated $200 million in purchasing power for investments in distribution facilities within targeted U.S. hub and gateway markets. AMB will contribute 38% of the equity and will receive compensation consistent with its existing private capital partnerships.
Common Stock Repurchases and Dividend Activity
During the quarter, AMB repurchased a total of 787,800 shares of its common stock for a total investment of $20.6 million, at a weighted average price of $26.10 per share. Currently, $110.0 million of capacity remains under the company’s repurchase plan. Since AMB’s IPO in 1997, the company has repurchased a total of 6.2 million shares at a weighted average price of $24.03 per share.
AMB increased its regular cash dividend for the quarter ending March 31, 2003 to $0.415 per common share. The new rate reflects an annualized dividend of $1.66 per share and reflects an increase of 1.2% over the 2002 annual dividend of $1.64 per common share. The company expects its dividend once again in 2003 to be comprised of income from operations and gains on sales of property and does not expect a return of capital component to the dividend.
Consolidated Balance Sheets
| As of | |||||||||||
| March 31, 2003 | December 31, 2002 | ||||||||||
Assets |
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Investments in real estate: |
|||||||||||
Total investments in properties |
$ | 4,869,741 | $ | 4,925,982 | |||||||
Accumulated depreciation |
(382,900 | ) | (362,540 | ) | |||||||
Net investments in properties |
4,486,841 | 4,563,442 | |||||||||
Investment in unconsolidated joint ventures |
67,754 | 64,428 | |||||||||
Properties held for divestiture, net |
59,742 | 107,871 | |||||||||
Net investments in real estate |
4,614,337 | 4,735,741 | |||||||||
Cash and cash equivalents |
149,908 | 117,214 | |||||||||
Mortgage receivable |
13,112 | 13,133 | |||||||||
Accounts receivable, net |
76,056 | 74,207 | |||||||||
Other assets |
51,909 | 52,199 | |||||||||
Total assets |
$ | 4,905,322 | $ | 4,992,494 | |||||||
Liabilities and Stockholders’ Equity |
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Secured debt |
$ | 1,250,528 | $ | 1,284,675 | |||||||
Unsecured senior debt securities |
800,000 | 800,000 | |||||||||
Unsecured debt |
10,050 | 10,186 | |||||||||
Alliance Fund II credit facility |
51,500 | 45,500 | |||||||||
Unsecured credit facility |
17,464 | 95,000 | |||||||||
Accounts payable and other liabilities |
188,050 | 181,716 | |||||||||
Total liabilities |
2,317,592 | 2,417,077 | |||||||||
Minority interests: |
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Preferred units |
308,369 | 308,369 | |||||||||
Minority interests |
592,260 | 582,898 | |||||||||
Total minority interests |
900,629 | 891,267 | |||||||||
Stockholders’ equity: |
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Common stock |
1,591,107 | 1,588,156 | |||||||||
Preferred stock |
95,994 | 95,994 | |||||||||
Total stockholders’ equity |
1,687,101 | 1,684,150 | |||||||||
Total liabilities and stockholders’ equity |
$ | 4,905,322 | $ | 4,992,494 | |||||||
Consolidated Statement of Operations
| For the Quarters Ended | |||||||||||
| March 31, | |||||||||||
| 2003 | 2002 | ||||||||||
Revenues and other income |
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Rental revenues |
$ | 158,036 | $ | 141,781 | |||||||
Equity in earnings of unconsolidated joint ventures |
1,235 | 1,483 | |||||||||
Private capital income |
2,361 | 2,588 | |||||||||
Interest and other income |
1,393 | 2,850 | |||||||||
Total revenues |
163,025 | 148,702 | |||||||||
Expenses |
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Property operating expenses |
40,387 | 34,503 | |||||||||
Interest, including amortization (1) |
37,180 | 35,004 | |||||||||
Depreciation and amortization |
35,022 | 27,832 | |||||||||
General and administrative (2) |
12,174 | 10,137 | |||||||||
Total expenses |
124,763 | 107,476 | |||||||||
Income before minority interests and gains |
38,262 | 41,226 | |||||||||
Minority interests’ share of income: |
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Preferred units |
(6,380 | ) | (5,857 | ) | |||||||
Minority interests |
(11,183 | ) | (9,766 | ) | |||||||
Total minority interests share of income |
(17,563 | ) | (15,623 | ) | |||||||
Income from continuing operations, before gains/(losses) from
dispositions |
20,699 | 25,603 | |||||||||
Gains/(losses) from dispositions of real estate, net of minority interests |
7,429 | (288 | ) | ||||||||
Income from continuing operations |
28,128 | 25,315 | |||||||||
Discontinued operations: |
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Income attributable to discontinued operations, net of minority interests |
1,606 | 4,988 | |||||||||
Gains from disposition of real estate, net of minority interests |
29,644 | — | |||||||||
Total discontinued operations |
31,250 | 4,988 | |||||||||
Net income |
59,378 | 30,303 | |||||||||
Series A preferred stock dividends |
(2,123 | ) | (2,125 | ) | |||||||
Net income available to common stockholders |
$ | 57,255 | $ | 28,178 | |||||||
Net income per common share (diluted) |
$ | 0.69 | $ | 0.33 | |||||||
Weighted average common shares (diluted) |
82,514,156 | 84,781,872 | |||||||||
| (1) | Interest expense for the quarter ended March 31, 2002, was adjusted for the retroactive adoption of SFAS No. 145, which resulted in the reclassification of debt extinguishment costs of $0.2 million from extraordinary items. | |
| (2) | General and administrative expense for the quarter ended March 31, 2002, was adjusted for the retroactive adoption of SFAS No. 123, Accounting for Stock-Based Compensation, which resulted in an additional expense of $0.2 million. |
Consolidated Statemensts of
Funds from Operations and EBITDA
| For the Quarters Ended | ||||||||||
| March 31, | ||||||||||
| 2003 | 2002 (1) | |||||||||
Net income available to common stockholders |
$ | 57,255 | $ | 28,178 | ||||||
Gains from dispositions of real estate |
(37,073 | ) | 288 | |||||||
Real estate related depreciation and amortization: |
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Total depreciation and amortization |
35,022 | 27,832 | ||||||||
Discontinued operations’ depreciation |
151 | 1,843 | ||||||||
FF& E depreciation, ground lease amortization and
other (2) |
(1,033 | ) | (674 | ) | ||||||
Adjustments to derive FFO from consolidated JVs: |
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Minority interests |
11,183 | 9,766 | ||||||||
FFO attributable to minority interests |
(14,983 | ) | (12,844 | ) | ||||||
Adjustments to derive FFO from unconsolidated JVs: |
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AMB’s share of net income |
(1,235 | ) | (1,483 | ) | ||||||
AMB’s share of FFO |
2,491 | 2,129 | ||||||||
Funds from operations |
$ | 51,778 | $ | 55,035 | ||||||
FFO per common share and unit (diluted) |
$ | 0.59 | $ | 0.61 | ||||||
Weighted average common shares and units (diluted) |
87,360,543 | 89,724,953 | ||||||||
Income before minority interests and gains |
$ | 38,262 | $ | 41,226 | ||||||
Interest, including amortization |
37,180 | 35,004 | ||||||||
Depreciation and amortization |
35,022 | 27,832 | ||||||||
Stock-based compensation amortization |
1,941 | 859 | ||||||||
Discontinued operations’ EBITDA |
1,799 | 7,894 | ||||||||
Adjustments to derive EBITDA from unconsolidated JVs: |
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AMB’s share of net income |
(1,235 | ) | (1,483 | ) | ||||||
AMB’s share of FFO |
2,491 | 2,129 | ||||||||
AMB’s share of interest expense |
577 | 515 | ||||||||
EBITDA |
$ | 116,037 | $ | 113,976 | ||||||
| (1) | FFO for the quarter ended March 31, 2002, was adjusted for the retroactive adoption of SFAS No. 123, Accounting for Stock-Based Compensation, and SFAS No. 145 for the treatment of extraordinary items, resulting in a reduction of $0.4 million from previously reported FFO. | |
| (2) | 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. |
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
| (c) | Exhibits: |
| Exhibit | ||
| Number | Description | |
| 99.1 | AMB Property Corporation Press Release dated April 7, 2003. |
ITEM 9 REGULATION FD DISCLOSURE.
Pursuant to Securities and Exchange Commission Release No. 33-8216 dated March 27, 2003, the information provided herein is being provided under Item 12 of Form 8-K.
On April 7, 2003, we issued a press release entitled “AMB Property Corporation Announced First Quarter 2003 Results,” which sets forth our results of operations for the first quarter of 2003. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
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 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.
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: April 8, 2003 | By: | /s/ Tamra Browne | ||
| Tamra Browne | ||||
| Senior Vice President, General Counsel and Secretary | ||||