UNITED STATES SECURITIES AND EXCHANGE COMMISSION
FORM 8-K/A
Amendment No. 1 to
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 11, 2003
AMB PROPERTY CORPORATION
| Maryland | 001-13545 | 94-3281941 | ||
| (State or other jurisdiction of | (Commission File Number) | (I.R.S. Employer | ||
| Incorporation) | Identification Number) |
Pier 1, Bay 1, San Francisco, CA 94111
415-394-9000
N/A
| ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. | ||||||||
| SIGNATURES | ||||||||
| EXHIBIT 23.1 | ||||||||
We hereby amend Item 7 of our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 22, 2003 to file audited financial statements and unaudited pro forma financial information related to certain real estate acquisitions we made through our subsidiaries during 2003.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
| (a) | Financial Statements: |
| (i) | Statements of Revenues and Certain Expenses for the Trans-Pacific Industrial Park | |||
| • | Report of Independent Auditors | |||
| • | Statements of Revenues and Certain Expenses for the Trans-Pacific Industrial Park for the five-month period ended May 31, 2003 (unaudited) and for the year ended December 31, 2002 | |||
| • | Notes to Statements of Revenues and Certain Expenses for the Trans-Pacific Industrial Park for the five-month period ended May 31, 2003 (unaudited) and for the year ended December 31, 2002 | |||
| (ii) | Statements of Revenues and Certain Expenses for the International Airport Center Portfolio | |||
| • | Report of Independent Auditors | |||
| • | Statements of Revenues and Certain Expenses for the International Airport Center Portfolio for the nine-month period ended September 30, 2003 (unaudited) and for the year ended December 31, 2002 | |||
| • | Notes to Statements of Revenues and Certain Expenses for the International Airport Center Portfolio for the nine-month period ended September 30, 2003 (unaudited) and for the year ended December 31, 2002 | |||
| (iii) | Statements of Revenues and Certain Expenses for the Saitama Distribution Portfolio | |||
| • | Report of Independent Auditors | |||
| • | Statements of Revenues and Certain Expenses for the Saitama Distribution Portfolio for the nine-month period ended September 30, 2003 (unaudited) and for the year ended December 31, 2002 | |||
| • | Notes to Statements of Revenues and Certain Expenses for the Saitama Distribution Portfolio for the nine-month period ended September 30, 2003 (unaudited) and for the year ended December 31, 2002 | |||
| (b) | Pro Forma Financial Information for AMB Property Corporation (Unaudited): |
| • | Pro Forma Consolidated Balance Sheet as of September 30, 2003 | |||
| • | Notes and adjustments to Pro Forma Consolidated Balance Sheet as of September 30, 2003 | |||
| • | Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 2003 | |||
| • | Notes and adjustments to Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 2003 | |||
| • | Pro Forma Consolidated Statement of Operations for the year ended December 31, 2002 | |||
| • | Notes and adjustments to Pro Forma Consolidated Statement of Operations for the year ended December 31, 2002 | |||
| (c) | Exhibits: |
| Exhibit Number | Description | |
| 23.1 | Consent of PricewaterhouseCoopers LLP |
Report of Independent Auditors
To AMB Property Corporation and AMB Property, L.P.:
We have audited the accompanying Statement of Revenues and Certain Expenses (the “Statement”) of Trans-Pacific Industrial Park (the “Portfolio”) for the year ended December 31, 2002. This Statement is the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on this Statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1 and is not intended to be a complete presentation of the Portfolio’s revenues and expenses.
In our opinion, the Statement referred to above presents fairly, in all material respects, the revenues and certain expenses described in Note 1 of the Portfolio for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.
PRICEWATERHOUSECOOPERS LLP
San Francisco, California
February 6, 2004
Trans-Pacific Industrial Park
Statements of Revenues and Certain Expenses
For the Year Ended December 31, 2002
and the Five-Month Period Ended May 31, 2003
| For the Five- | ||||||||
| For the | Month Period | |||||||
| Year Ended | Ended May 31, | |||||||
| December 31, | 2003 | |||||||
| 2002 |
(unaudited) |
|||||||
Revenues |
||||||||
Rental revenue |
$ | 6,079,554 | $ | 2,636,955 | ||||
Tenant reimbursements |
1,466,307 | 764,652 | ||||||
Other revenues |
6,909 | 17,574 | ||||||
Total revenues |
7,552,770 | 3,419,181 | ||||||
Expenses |
||||||||
Property operating |
849,424 | 352,735 | ||||||
Real estate taxes |
950,621 | 403,561 | ||||||
General and administrative |
115,947 | 80,074 | ||||||
Total expenses |
1,915,992 | 836,370 | ||||||
Revenues in excess of certain expenses |
$ | 5,636,778 | $ | 2,582,811 | ||||
The accompanying notes are an integral part of these financial statements.
Trans-Pacific Industrial Park
Notes to Financial Statements
For the Year Ended December 31, 2002
and the Five-Month Period Ended May 31, 2003
1. Background and Basis of Presentation
The accompanying statements of revenues and certain expenses present the results of operations of Trans-Pacific Industrial Park (the “Portfolio”) for the year ended December 31, 2002 and the five-month period ended May 31, 2003. The Portfolio was acquired by AMB Partners II, L.P. from JP Morgan on June 30, 2003 for approximately $73.9 million. The Portfolio consists of 11 industrial buildings aggregating approximately 1.5 million square feet (unaudited) and one parcel of land located in Fife, Washington.
The accompanying statements have been prepared on the accrual basis of accounting. The statements have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in current reports on Form 8-K/A of AMB Property Corporation and AMB Property, L.P. The statements are not intended to be a complete presentation of the revenues and expenses of the Portfolio for the five-month period ended May 31, 2003 and for the year ended December 31, 2002 as certain expenses, primarily depreciation and amortization expense, interest expense and other costs not directly related to the future operations of the Portfolio have been excluded.
2. Summary of Significant Accounting Policies
Revenue Recognition
Rental revenues from operating leases are recorded on a straight-line basis over the term of the leases. Tenant reimbursements represent recoveries from tenants for utilities and certain property maintenance expenses. Tenant reimbursements are recognized as revenues in the period the applicable costs are accrued.
Property Operating Expenses
Property operating expenses represent the direct expenses of operating the Portfolio and include maintenance, utilities, property management fees, repairs, and insurance cost that are expected to continue in the ongoing operation of the Portfolio. Expenditures for maintenance and repairs are charged to operations as incurred.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions of the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates used in the preparation of the financial statements.
Interim Statements
The statement for the five-month period ended May 31, 2003 is unaudited, however, in the opinion of management of AMB Property Corporation and AMB Property, L.P., all significant adjustments necessary for a fair presentation of the statement for the interim period have been included. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year for the operation of the Portfolio.
Report of Independent Auditors
To AMB Property Corporation and AMB Property, L.P.:
We have audited the accompanying Statement of Revenues and Certain Expenses (the “Statement”) of International Airport Center Portfolio (the “Portfolio”) for the year ended December 31, 2002. This Statement is the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on this Statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1 and is not intended to be a complete presentation of the Portfolio’s revenues and expenses.
In our opinion, the Statement referred to above presents fairly, in all material respects, the revenues and certain expenses described in Note 1 of the Portfolio for the year ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.
PRICEWATERHOUSECOOPERS LLP
San Francisco, California
September 22, 2003
International Airport Center Portfolio
Statements of Revenues and Certain Expenses
For the Year Ended December 31, 2002
and the Nine-Month Period Ended September 30, 2003
| For the | ||||||||
| Nine-Month | ||||||||
| For the | Period Ended | |||||||
| Year Ended | September 30, | |||||||
| December 31, | 2003 | |||||||
| 2002 |
(unaudited) |
|||||||
Revenues |
||||||||
Rental revenue |
$ | 9,786,980 | $ | 10,588,355 | ||||
Tenant reimbursements |
1,761,404 | 1,996,841 | ||||||
Other revenues |
502,246 | 137,523 | ||||||
Total revenues |
12,050,630 | 12,722,719 | ||||||
Expenses |
||||||||
Property operating |
1,557,212 | 1,490,724 | ||||||
Real estate taxes |
917,389 | 1,061,342 | ||||||
General and administrative |
287,862 | 664,853 | ||||||
Total expenses |
2,762,463 | 3,216,919 | ||||||
Revenues in excess of certain expenses |
$ | 9,288,167 | $ | 9,505,800 | ||||
The accompanying notes are an integral part of these financial statements.
International Airport
Center Portfolio
Notes to Financial Statements
For the Year Ended December 31, 2002
and the Nine-Month Period Ended September 30, 2003
1. Background and Basis of Presentation
The accompanying statements of revenues and certain expenses present the results of operations of International Airport Center Portfolio (the “Portfolio”) for the year ended December 31, 2002 and the nine-month period ended September 30, 2003. The Portfolio was acquired by AMB Property, L.P. through its affiliates on three dates (October 9, 2003, December 5, 2003 and December 10, 2003) from International Airport Centers L.L.C. and certain of its affiliated entities for approximately $194 million. The Portfolio consisted, as of December 10, 2003, of 28 industrial buildings aggregating approximately 1.7 million square feet (unaudited) located in various market hubs in the United States.
The accompanying statements have been prepared on the accrual basis of accounting. The statements have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in current reports on Form 8-K/A of AMB Property Corporation and AMB Property, L.P. The statements are not intended to be a complete presentation of the revenues and expenses of the Portfolio for the nine-month period ended September 30, 2003 and for the year ended December 31, 2002 as certain expenses, primarily depreciation and amortization expense, interest expense and other costs not directly related to the future operations of the Portfolio have been excluded.
2. Summary of Significant Accounting Policies
Revenue Recognition
Rental revenues from operating leases are recorded on a straight-line basis over the term of the leases. Tenant reimbursements represent recoveries from tenants for utilities and certain property maintenance expenses. Tenant reimbursements are recognized as revenues in the period the applicable costs are accrued.
Property Operating Expenses
Property operating expenses represent the direct expenses of operating the Portfolio and include maintenance, utilities, property management fees, repairs, and insurance cost that are expected to continue in the ongoing operation of the Portfolio. Expenditures for maintenance and repairs are charged to operations as incurred.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions of the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates used in the preparation of the financial statements.
Interim Statements
The statement for the nine-month period ended September 30, 2003 is unaudited, however, in the opinion of management of AMB Property Corporation and AMB Property, L.P., all significant adjustments necessary for a fair presentation of the statement for the interim period have been included. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year for the operation of the Portfolio.
Report of Independent Auditors
To AMB Property Corporation and AMB Property, L.P.:
We have audited the accompanying Statement of Revenues and Certain Expenses (the “Statement”) of Saitama Distribution Center 1 (the “Properties”), for the year ended 31 December 2002. This Statement is the responsibility of the Properties’ management. Our responsibility is to express an opinion on the Statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement is prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1 to the Statement and is not intended to be a complete presentation of the Properties’ revenues and expenses.
In our opinion, the Statement referred to above presents fairly, in all material respects, the revenues and certain expenses of the Properties for the year ended 31 December 2002 in conformity with accounting principles generally accepted in the United States of America.
PRICEWATERHOUSECOOPERS
Tokyo, Japan
19 November 2003
Saitama Distribution
Center 1
Statements of Revenues and Certain Expenses
For the Year Ended December 31, 2002
and the Nine-Month Period Ended September 30, 2003
| For the Year Ended December 31, 2002 |
For the Nine-Month Period Ended September 30, 2003 (unaudited) |
|||||||
Revenues |
||||||||
Rental revenue |
$ | 4,403,235 | $ | 3,444,370 | ||||
Tenant reimbursements |
76,045 | 59,130 | ||||||
Other revenues |
10,512 | 10,465 | ||||||
Total revenues |
4,489,792 | 3,513,965 | ||||||
Expenses |
||||||||
Property operating |
472,601 | 351,387 | ||||||
Real estate taxes |
315,243 | 238,656 | ||||||
General and administrative |
80 | 881 | ||||||
Total expenses |
787,924 | 590,924 | ||||||
Revenues in excess of certain expenses |
$ | 3,701,868 | $ | 2,923,041 | ||||
The accompanying notes are an integral part of these statements.
Saitama Distribution Center 1
Notes to Financial Statements
For the Year Ended December 31, 2002
and the Nine-Month Period Ended September 30, 2003
1. Background and Basis of Presentation
The Statements of Revenues and Certain Expenses present the results of operations of the Saitama Distribution Center 1(herein referred to collectively as the “Properties”), for the year ended December 31, 2002 and the nine-month period ended September 30, 2003. The Properties were acquired by AMB Tokorozawa Y.K. on December 8, 2003 for $36.6 million. The Properties are located at Minami Nagai, Tokorozawa City, at the southeastern edge of the Saitama prefecture, and consist of a 5-story building built in 1990 that totals 157,614 square feet and a 4-story building built in 1989 that totals 205,438 square feet (unaudited). The Properties are currently 100% leased to three tenants.
The accompanying statements have been prepared on the accrual basis of accounting. The statements have been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and for inclusion in current reports on Form 8-K/A of AMB Property Corporation and AMB Property, L.P. The statements are not intended to be a complete presentation of the revenues and expenses of the Properties for the nine-month period ended September 30, 2003 and for the year ended December 31, 2002 as certain expenses, primarily depreciation and amortization expense, interest expense and other costs not directly related to the future operations of the Properties have been excluded.
2. Summary of Significant Accounting Policies
Revenue Recognition
Rental revenues from operating leases are recorded on a straight-line basis over the term of the leases. Tenant reimbursements represent recoveries from tenants for utilities and certain property maintenance expenses. Tenant reimbursements are recognized as revenues in the period the applicable costs are accrued.
Property Operating Expenses
Property operating expenses represent the direct expenses of operating the Properties and include maintenance, utilities, property management fees, repairs, and insurance cost that are expected to continue in the ongoing operation of the Properties. Expenditures for maintenance and repairs are charged to operations as incurred.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions of the reported amounts of revenues and certain expenses during the reporting period. Actual results could differ from those estimates used in the preparation of the financial statements.
Saitama Distribution Center 1
Notes to Financial Statements
For the Year Ended December 31, 2002
and the Nine-Month Period Ended September 30, 2003
Interim Statements
The statement for the nine-month period ended September 30, 2003 is unaudited, however, in the opinion of management of AMB Property Corporation and AMB Property, L.P., all significant adjustments necessary for a fair presentation of the statement for the interim period have been included. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year for the operation of the Properties.
Foreign Currency Translation
For operations outside the United States of America that prepare financial statements in currencies other than the U.S. dollar, results of operations are translated at average exchange rates during the period. The translations of Japanese yen amounts into U.S. dollars have been made at the rate of JPY125.26 to U.S.$1.00 for the Year 2002, and of JPY118.27 to U.S.$1.00 for the Year 2003.
3. Tenant Leases
All three tenants occupy space at LP-112 and LP-113 under the traditional Japanese commercial lease structure. The leases effectively renew automatically every year or every two years at the then prevailing market rent. Throughout the lease term, however, tenants have the right to terminate the lease following a certain notice period. These tenants account for approximately 27%, 32% and 41% of annual base rents.
AMB PROPERTY CORPORATION
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
BACKGROUND
The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2003 has been prepared to reflect: (i) effect of acquisitions by AMB Property Corporation (the “Company”) from the period from October 1, 2003 through December 31, 2003 and (ii) the issuance of unsecured senior debt securities, as if such transactions had occurred on September 30, 2003.
The accompanying unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2003 has been prepared to reflect: (i) the incremental effect of the acquisitions of properties by the Company in 2003 (the “2003 Property Acquisitions”), (ii) the divestiture of certain properties in the period from October 1, 2003 through December 31, 2003 and (iii) the issuance of unsecured senior debt securities, as if such transactions had occurred on January 1, 2002 and were carried forward through September 30, 2003.
The accompanying unaudited pro forma consolidated statement of operations for the year ended December 31, 2002 has been prepared to reflect: (i) the incremental effect of the acquisition of properties during 2002 by the Company (the “2002 Property Acquisitions”), (ii) the divestiture of certain properties during 2002 and 2003, (iii) the 2003 Property Acquisitions and (iv) the issuance of unsecured senior debt securities, as if such transactions and adjustments had occurred on January 1, 2002 and were carried forward through December 31, 2002.
These unaudited pro forma consolidated statements should be read in connection with the historical consolidated financial statements and notes thereto included in the Company’s and AMB Property, L.P.’s (the “Operating Partnership”) Annual Reports on Form 10-K for the year ended December 31, 2002 and Quarterly Reports on Form 10-Q for the quarter ended September 30, 2003. In the opinion of management, the pro forma consolidated financial information provides for all adjustments necessary to reflect the effects of the above transactions.
The pro forma information is unaudited and is not necessarily indicative of the consolidated results that would have occurred if the transactions and adjustments reflected therein had been consummated in the period or on the date presented, or on any particular date in the future, nor does it purport to represent the financial position, results of operations or cash flows for future periods.
AMB PROPERTY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2003
(UNAUDITED, IN THOUSANDS)
| COMPANY (1) | ACQUISITION | PRO FORMA | |||||||||||||
Assets |
|||||||||||||||
Net investments in real estate |
$ | 4,728,444 | $ | 336,134 | (2) | $ | 5,064,578 | ||||||||
Cash and cash equivalents |
152,432 | (63,100 | )(2) | 89,332 | |||||||||||
Mortgage receivable |
13,066 | — | 13,066 | ||||||||||||
Accounts receivable, net |
80,927 | — | 80,927 | ||||||||||||
Other assets |
70,208 | — | 70,208 | ||||||||||||
Total assets |
$ | 5,045,077 | $ | 273,034 | $ | 5,318,111 | |||||||||
Liabilities and Stockholders’ Equity |
|||||||||||||||
Secured debt |
$ | 1,312,105 | $ | 33,117 | (2) | $ | 1,345,222 | ||||||||
Unsecured senior debt securities |
800,000 | 125,000 | (3) | 925,000 | |||||||||||
Unsecured debt |
9,772 | — | 9,772 | ||||||||||||
Unsecured credit facility |
91,335 | 86,857 | (2) | 178,192 | |||||||||||
Accounts payable and other liabilities |
179,558 | — | 179,558 | ||||||||||||
Total liabilities |
2,392,770 | 244,974 | 2,637,744 | ||||||||||||
Minority interests: |
|||||||||||||||
Joint venture partners |
644,413 | 23,574 | (2) | 667,987 | |||||||||||
Preferred unitholders |
305,197 | — | 305,197 | ||||||||||||
Limited partnership unitholders |
88,553 | 4,486 | (2) | 93,039 | |||||||||||
Total minority interests |
1,038,163 | 28,060 | 1,066,223 | ||||||||||||
Stockholders’ equity: |
|||||||||||||||
Common stock |
1,565,923 | — | 1,565,923 | ||||||||||||
Preferred stock |
48,221 | — | 48,221 | ||||||||||||
Total stockholders’ equity |
1,614,144 | — | 1,614,144 | ||||||||||||
Total liabilities and stockholders’ equity |
$ | 5,045,077 | $ | 273,034 | $ | 5,318,111 | |||||||||
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2003
(UNAUDITED, DOLLARS IN THOUSANDS)
(1) Reflects the historical consolidated balance sheet of AMB Property Corporation (the “Company”) as of September 30, 2003. See the historical consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.
(2) Reflects the acquisition of the International Airport Center Portfolio, East Grand Airfreight 1 & 2, Saitama Distribution Center 1, Airport Plaza, the Fairmeadows Portfolio, Bourget Distribution Center, FRA Logistics Center and Fairmeadows Portfolio B, which were acquired after September 30, 2003. The source of fundings for these acquisitions consisted of approximately $298,531 in cash, $33,117 of assumed debt and $4,486 of AMB Property II, L.P.’s class B common limited partnership units. The cash portion of the acquisition price was funded with existing cash, proceeds from two unsecured senior debt securities totaling $125,000, borrowings on the unsecured credit facility and contributions from joint venture partners. The following table sets forth the sources and uses of fundings used for these acquisitions:
| Sources of Fundings | ||||
| Amount | ||||
Assumed debt |
$ | 33,117 | ||
Existing cash |
63,100 | |||
Unsecured senior debt securities |
125,000 | |||
Unsecured credit facility |
86,857 | |||
AMB Property II, L.P. partnership units |
4,486 | |||
Joint
venture partner contributions |
23,574 | |||
| $ | 336,134 | |||
| Uses of Fundings | ||||
| Property | Purchase Price | |||
International Airport Center Portfolio |
$ | 194,041 | ||
East Grand Airfreight 1 & 2 |
9,283 | |||
Saitama
Distribution Center 1 |
36,646 | |||
Airport Plaza |
6,904 | |||
Fairmeadows Portfolio |
25,463 | |||
Bourget Distribution Center |
33,901 | |||
FRA Logistics Center |
19,875 | |||
Fairmeadows Portfolio B |
10,021 | |||
| $ | 336,134 | |||
(3) On November 10, 2003, the Operating Partnership issued $75.0 million aggregate principal amount of senior unsecured notes to Teachers Insurance and Annuity Association of America. The Company guaranteed the principal amount and interest on the notes, which mature on November 1, 2013, and bear interest at 5.53% per annum. These senior unsecured notes have been reflected as if they were issued on September 30, 2003. Teachers has agreed that until November 10, 2005, the Operating Partnership can require Teachers to return the notes to it for cancellation for an obligation of equal dollar amount under a first mortgage loan to be secured by properties determined by the Operating Partnership, except that in the event the ratings on Operating Partnership’s senior unsecured debt are downgraded by two ratings agencies to BBB-, the Operating Partnership will only have ten days after the last of these downgrades to exercise this right. During the period when the Operating Partnership can exercise its cancellation right and until any mortgage loans close, Teachers has agreed not to sell, contract to sell, pledge, transfer or otherwise dispose of, any portion of the notes.
In addition, on November 21, 2003, the Operating Partnership issued $50.0 million aggregate principal amount of floating rate senior unsecured notes. The Company guaranteed the principal amount and interest on the notes, which mature on November 21, 2006, and bear interest at a floating rate of 3-month LIBOR telerate plus 40 basis points. These senior unsecured notes have been reflected as if they were issued on September 30, 2003.
AMB PROPERTY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| 2003 Property | |||||||||||||||||||||||
| Company(1) | Dispositions | Acquisitions | Other | Pro Forma | |||||||||||||||||||
Revenues |
|||||||||||||||||||||||
Rental revenues |
$ | 450,912 | $ | (2,684 | )(2) | $ | 26,118 | (3) | $ | — | $ | 474,346 | |||||||||||
Private capital income |
7,844 | — | 373 | (3) | — | 8,217 | |||||||||||||||||
Total revenues |
458,756 | (2,684 | ) | 26,491 | — | 482,563 | |||||||||||||||||
Costs and expenses |
|||||||||||||||||||||||
Property operating costs |
(118,228 | ) | 703 | (2) | (8,554 | )(3) | — | (126,079 | ) | ||||||||||||||
Depreciation and amortization |
(99,269 | ) | 1,785 | (2) | (4,918 | )(4) | — | (102,402 | ) | ||||||||||||||
Impairment losses |
(5,251 | ) | — | — | — | (5,251 | ) | ||||||||||||||||
General and administrative |
(35,187 | ) | 9 | (2) | — | — | (35,178 | ) | |||||||||||||||
Total costs and expenses |
(257,935 | ) | 2,497 | (13,472 | ) | — | (268,910 | ) | |||||||||||||||
Other income and expenses |
|||||||||||||||||||||||
Equity in earnings of unconsolidated joint ventures |
4,222 | — | — | — | 4,222 | ||||||||||||||||||
Interest and other income |
3,643 | (147 | )(2) | — | — | 3,496 | |||||||||||||||||
Gains from dispositions of real estate |
7,429 | — | — | — | 7,429 | ||||||||||||||||||
Development profits, net of minority interests and taxes |
2,181 | — | — | — | 2,181 | ||||||||||||||||||
Interest, including amortization |
(107,963 | ) | — | (3,991 | )(5) | (3,823 | )(7) | (115,777 | ) | ||||||||||||||
Total other income and expenses |
(90,488 | ) | (147 | ) | (3,991 | ) | (3,823 | ) | (98,449 | ) | |||||||||||||
Income before minority interests |
110,333 | (334 | ) | 9,028 | (3,823 | ) | 115,204 | ||||||||||||||||
Minority interests’ share of income:
|
|||||||||||||||||||||||
Joint venture partners |
(26,410 | ) | 1,112 | (2) | (4,125 | )(3) | — | (29,423 | ) | ||||||||||||||
Preferred unitholders |
(19,073 | ) | — | — | — | (19,073 | ) | ||||||||||||||||
Limited partnership unitholders |
(3,093 | ) | (43 | )(6) | (245 | )(6) | 191 | (6) | (3,190 | ) | |||||||||||||
Total minority interests share of income |
(48,576 | ) | 1,069 | (4,370 | ) | 191 | (51,686 | ) | |||||||||||||||
Income from continuing operations |
61,757 | 735 | 4,658 | (3,632 | ) | 63,518 | |||||||||||||||||
Preferred stock dividends |
(5,788 | ) | — | — | — | (5,788 | ) | ||||||||||||||||
Preferred stock and unit redemption discount/(issuance costs) |
(3,671 | ) | — | — | — | (3,671 | ) | ||||||||||||||||
Income from continuing operations available to common stockholders |
$ | 52,298 | $ | 735 | $ | 4,658 | $ | (3,632 | ) | $ | 54,059 | ||||||||||||
Basic Income Per Common Share |
|||||||||||||||||||||||
Income from continuing operations available to common stockholders |
$ | 0.65 | $ | 0.67 | |||||||||||||||||||
Diluted Income Per Common Share |
|||||||||||||||||||||||
Income from continuing operations available to common stockholders |
$ | 0.63 | $ | 0.65 | |||||||||||||||||||
Weighted Average Common Shares Outstanding |
|||||||||||||||||||||||
Basic |
81,072,304 | 145,548 | (8) | 81,217,852 | |||||||||||||||||||
Diluted |
82,539,800 | 145,548 | (8) | 82,685,348 | |||||||||||||||||||
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(1) Reflects the historical consolidated operations of AMB Property Corporation (the “Company”) for the nine months ended September 30, 2003. See the historical consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. The Company is the sole general partner of AMB Property, L.P., a Delaware limited partnership (the “Operating Partnership”).
(2) Reflects the elimination of the historical revenues and expenses for the applicable period related to the divestiture of certain properties for the period from October 1, 2003 to December 31, 2003:
Revenues |
||||||
Rental revenues |
$ | 2,684 | ||||
Total revenues |
2,684 | |||||
Costs and expenses |
||||||
Property operating costs |
(703 | ) | ||||
Depreciation and amortization |
(1,785 | ) | ||||
General and administrative |
(9 | ) | ||||
Total costs and expenses |
(2,497 | ) | ||||
Other income and expenses |
||||||
Interest and other income |
147 | |||||
Interest, including amortization |
— | |||||
Total other income and expenses |
147 | |||||
Income before minority interests |
334 | |||||
Minority interests’ share of income: |
||||||
Joint venture partners |
(1,112 | ) | ||||
Limited partnership unitholders |
43 | |||||
Total minority interests’ share of income |
(1,069 | ) | ||||
Loss from continuing operations |
$ | (735 | ) | |||
During the period from October 1, 2003 to December 31, 2003, the Company divested itself of three industrial buildings, one retail center, and a land parcel, aggregating approximately 0.2 million square feet, for an aggregate price of $28.0 million with a resulting net gain of $3.3 million.
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(3) The following table sets forth the incremental rental revenues and operating expenses of the 2003 Property Acquisitions during the nine-month period ended September 30, 2003 based on the historical operations of such properties for the periods prior to acquisition by the Operating Partnership. In addition, the following table sets forth the private capital income which is earned based on 7.5% of the minority interests share of net operating income.
| Revenues in | |||||||||||||||||||||||||
| Operating | Excess of Certain | Private Capital | Minority Interests | ||||||||||||||||||||||
| Acquisition Date | Rental Revenues | Expenses | Expenses | Income | Share of Income | ||||||||||||||||||||
| Trans-Pacific Industrial Park | June 30, 2003 | $ | 3,419 | $ | 836 | $ | 2,583 | $ | 155 | $ | 1,772 | ||||||||||||||
| International Airport Center Portfolio | Various | 12,723 | 3,217 | 9,506 | — | — | |||||||||||||||||||
| Saitama Distribution Center 1 | December 5, 2003 | 3,514 | 591 | 2,923 | — | — | |||||||||||||||||||
Audited total |
19,656 | 4,644 | 15,012 | 155 | 1,772 | ||||||||||||||||||||
| Gratigny Distribution Center | January 7, 2003 | — | — | — | — | — | |||||||||||||||||||
| Northfield Distribution Center Phase II | March 13, 2003 | — | — | — | — | — | |||||||||||||||||||
| Yohan Industrial | May 22, 2003 | 410 | 270 | 140 | 8 | 62 | |||||||||||||||||||
| Marlin Distribution Center | June 11, 2003 | — | — | — | — | — | |||||||||||||||||||
| Utah Airfreight | June 30, 2003 | 653 | 214 | 439 | 26 | 289 | |||||||||||||||||||
| IAT Portfolio | July 31, 2003 | 1,661 | 2,860 | (1,199 | ) | — | — | ||||||||||||||||||
| Stone Distribution Center | July 31, 2003 | 150 | 22 | 128 | 8 | 71 | |||||||||||||||||||
| Fairmeadows Portfolio A | September 30, 2003 | 223 | 81 | 142 | 9 | 41 | |||||||||||||||||||
| Dolphin Distribution Center | September 30, 2003 | 130 | 22 | 108 | 6 | 38 | |||||||||||||||||||
| Panther Distribution | September 30, 2003 | 102 | 20 | 82 | — | — | |||||||||||||||||||
| East Grand Airfreight 1 & 2 | November 14, 2003 | 127 | 101 | 26 | — | — | |||||||||||||||||||
| Airport Plaza | December 9, 2003 | — | — | — | — | — | |||||||||||||||||||
| Fairmeadows Portfolio | December 11, 2003 | 1,943 | 213 | 1,730 | 104 | 1,143 | |||||||||||||||||||
| Bourget Distribution Center | December 15, 2003 | — | — | — | — | — | |||||||||||||||||||
| FRA Logistics Center | December 15, 2003 | — | — | — | — | — | |||||||||||||||||||
| Fairmeadows Portfolio B | December 29, 2003 | 1,063 | 107 | 956 | 57 | 709 | |||||||||||||||||||
| $ | 26,118 | $ | 8,554 | $ | 17,564 | $ | 373 | $ | 4,125 | ||||||||||||||||
The Operating Partnership purchased the 2003 Property Acquisitions with proceeds from dispositions, borrowings on the unsecured credit facility, the unsecured senior notes offerings and the assumption of mortgage indebtedness. The adjustments reflect additional interest expense related to borrowings on the unsecured credit facility and assumption of mortgage indebtedness related to the 2003 Property Acquisitions.
The Gratigny Distribution Center, Northfield Distribution Center Phase II, Marlin Distribution Center, Airport Plaza, Bourget Distribution Center and FRA Logistics Center do not have historical revenue and operating expenses as they were either a sale/leaseback transaction or were vacant prior to acquisition. As such, no property operations have been reflected in the accompanying pro forma statement of operations related to this acquisition.
The minority interest share of income includes the minority interest share of depreciation and amortization (see (4) below for the depreciation and amortization adjustment).
(4) The following table sets forth the initial allocation of land and building and other costs based on the preliminary purchase price allocation for the 2003 Property Acquisitions. This table also reflects the estimated incremental depreciation and amortization for the 2003 Property Acquisitions using a 40 year life for building and other costs based on the preliminary purchase price allocation in accordance with Statement of Financial Accounting Standard No. 141, Business Combinations (“SFAS 141”).
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
| Building and | Depreciation and | ||||||||||||||||||||
| Acquisition Date | Land | Other Costs | Total Purchase Price | Amortization | |||||||||||||||||
| Trans-Pacific Industrial Park | June 30, 2003 | $ | 31,675 | $ | 42,210 | $ | 73,885 | $ | 523 | ||||||||||||
| International Airport Center Portfolio | Various | 78,892 | 115,149 | 194,041 | 2,224 | ||||||||||||||||
| Saitama Distribution Center 1 | December 5, 2003 | 8,143 | 28,503 | 36,646 | 662 | ||||||||||||||||
Audited total |
118,710 | 185,862 | 304,572 | 3,409 | |||||||||||||||||
| Gratigny Distribution Center | January 7, 2003 | 1,551 | 2,380 | 3,931 | — | ||||||||||||||||
| Northfield Distribution Center Phase II | March 13, 2003 | 2,502 | 4,055 | 6,557 | — | ||||||||||||||||
| Yohan Industrial | May 22, 2003 | 5,904 | 7,323 | 13,227 | 71 | ||||||||||||||||
| Marlin Distribution Center | June 11, 2003 | 1,076 | 2,169 | 3,245 | — | ||||||||||||||||
| Utah Airfreight | June 30, 2003 | 18,753 | 8,381 | 27,134 | 104 | ||||||||||||||||
| IAT Portfolio | July 31, 2003 | — | 30,086 | 30,086 | 437 | ||||||||||||||||
| Stone Distribution Center | July 31, 2003 | 2,242 | 3,266 | 5,508 | 47 | ||||||||||||||||
| Fairmeadows Portfolio A | September 30, 2003 | 5,382 | 5,289 | 10,671 | 99 | ||||||||||||||||
| Dolphin Distribution Center | September 30, 2003 | 1,581 | 3,602 | 5,183 | 67 | ||||||||||||||||
| Panther Distribution | September 30, 2003 | 1,840 | 3,252 | 5,092 | 61 | ||||||||||||||||
| East Grand Airfreight 1 & 2 | November 14, 2003 | 5,093 | 4,190 | 9,283 | 91 | ||||||||||||||||
| Airport Plaza | December 9, 2003 | 1,811 | 5,093 | 6,904 | — | ||||||||||||||||
| Fairmeadows Portfolio | December 11, 2003 | 8,320 | 17,143 | 25,463 | 405 | ||||||||||||||||
| Bourget Distribution Center | December 15, 2003 | 10,058 | 23,843 | 33,901 | — | ||||||||||||||||
| FRA Logistics Center | December 15, 2003 | — | 19,875 | 19,875 | — | ||||||||||||||||
| Fairmeadows Portfolio B | December 29, 2003 | 4,913 | 5,108 | 10,021 | 127 | ||||||||||||||||
| $ | 189,736 | $ | 330,917 | $ | 520,653 | $ | 4,918 | ||||||||||||||
The Gratigny Distribution Center, Northfield Distribution Center Phase II, Marlin Distribution Center, Airport Plaza, Bourget Distribution Center and FRA Logistics Center were either a sale/leaseback transaction or were vacant prior to acquisition. As such, no depreciation and amortization adjustment has been reflected in the accompanying pro forma statement of operations related to these acquisitions.
(5) The following table sets forth the assumed mortgages, interest rates and the incremental interest expense related to the assumed mortgages, which approximate fair value, for the 2003 Property Acquisitions. In addition, this table sets forth the incremental interest expense for the line of credit based on the average additional outstanding balance of the line of credit multiplied by the average interest rate.
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
| Assumed | Interest | Incremental | ||||||||||
| Property | Mortgage | Rate | Interest Expense | |||||||||
Stone Distribution Center |
$ | 3,100 | 6.95 | % | $ | 125 | ||||||
Fairmeadows Portfolio A |
4,400 | 5.75 | % | 189 | ||||||||
International Airport Center
Portfolio |
15,941 | 7.67 | % | 914 | ||||||||
East Grand Airfreight 1 & 2 |
4,255 | 8.00 | % | 255 | ||||||||
Airport Plaza |
4,444 | 6.35 | % | 211 | ||||||||
Fairmeadows Portfolio |
1,765 | 7.00 | % | 92 | ||||||||
Fairmeadows Portfolio B |
6,712 | 7.00 | % | 352 | ||||||||
| 40,617 | 7.16 | % | 2,138 | |||||||||
Line of credit |
||||||||||||
Average balance outstanding |
88,257 | 2.10 | % | 1,853 | ||||||||
Total/weighted average |
$ | 128,874 | 3.70 | % | $ | 3,991 | ||||||
(6) Reflects the limited partnership unitholders share of income based on the limited partnership unitholders’ average ownership of 5.5% of the Operating Partnership.
(7) On November 10, 2003, the Operating Partnership issued $75.0 million aggregate principal amount of senior unsecured notes to Teachers Insurance and Annuity Association of America. The Company guaranteed the principal amount and interest on the notes, which mature on November 1, 2013, and bear interest at 5.53% per annum. These senior unsecured notes have been reflected as if they were issued on January 1, 2002 and were carried forward through September 30, 2003. Teachers has agreed that until November 10, 2005, the Operating Partnership can require Teachers to return the notes to it for cancellation for an obligation of equal dollar amount under a first mortgage loan to be secured by properties determined by the Operating Partnership, except that in the event the ratings on Operating Partnership’s senior unsecured debt are downgraded by two ratings agencies to BBB-, the Operating Partnership will only have ten days after the last of these downgrades to exercise this right. During the period when the Operating Partnership can exercise its cancellation right and until any mortgage loans close, Teachers has agreed not to sell, contract to sell, pledge, transfer or otherwise dispose of, any portion of the notes.
In addition, on November 21, 2003, the Operating Partnership issued $50.0 million aggregate principal amount of floating rate senior unsecured notes. The Company guaranteed the principal amount and interest on the notes, which mature on November 21, 2006, and bear interest at a floating rate of 3-month LIBOR telerate plus 40 basis points. These senior unsecured notes have been reflected as if they were issued on January 1, 2002 and were carried forward through September 30, 2003.
If market rates of interest on our variable rate debt increased by 10% (or approximately 20 basis points), then the increase in interest expense on the variable debt would be $0.8 million annually.
(8) In connection with the acquisition of East Grand Airfreight 1&2 on November 14, 2003, AMB Property II, L.P. issued 145,548 of its class B common limited partnership units, which, upon redemption, are exchangeable for cash or, at the option of AMB Property II, L.P., for shares of the common stock of the Company on a one-for-one basis.
AMB PROPERTY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| 2002 | 2003 | |||||||||||||||||||||||||
| Property | Property | |||||||||||||||||||||||||
| Company(1) | Dispositions | Acquisitions | Acquisitions | Other | Pro Forma | |||||||||||||||||||||
Revenues |
||||||||||||||||||||||||||
Rental revenues |
$ | 588,522 | $ | (24,968 | )(2) | $ | 31,862 | (3) | $ | 34,029 | (7) | $ | — | $ | 629,445 | |||||||||||
Private capital income |
11,193 | — | 435 | (3) | 643 | (7) | — | 12,271 | ||||||||||||||||||
Total revenues |
599,715 | (24,968 | ) | 32,297 | 34,672 | — | 641,716 | |||||||||||||||||||
Costs and expenses |
||||||||||||||||||||||||||
Property operating costs |
(145,870 | ) | 5,374 | (2) | (9,998 | )(3) | (8,813 | )(7) | — | (159,307 | ) | |||||||||||||||
Depreciation and amortization |
(127,160 | ) | 3,160 | (2) | (2,401 | )(4) | (6,839 | )(8) | — | (133,240 | ) | |||||||||||||||
General and administrative |
(47,207 | ) | 81 | (2) | — | — | — | (47,126 | ) | |||||||||||||||||
Total costs and expenses |
(320,237 | ) | 8,615 | (12,399 | ) | (15,652 | ) | — | (339,673 | ) | ||||||||||||||||
Other income and expenses |
||||||||||||||||||||||||||
Equity in earnings of unconsolidated joint ventures |
5,674 | — | — | — | — | 5,674 | ||||||||||||||||||||
Interest and other income |
10,454 | (2 | )(2) | — | — | — | 10,452 | |||||||||||||||||||
Gains
from dispositions of real estate, net of minority interests |
7,789 | — | — | — | — | 7,789 | ||||||||||||||||||||
Development profits, net of minority interests and taxes |
1,032 | — | — | — | — | 1,032 | ||||||||||||||||||||
Interest, including amortization |
(147,101 | ) | 2,902 | (2) | (4,353 | )(5) | (6,193 | )(9) | (5,097 | )(10) | (159,842 | ) | ||||||||||||||
Total other income and expenses |
(122,152 | ) | 2,900 | (4,353 | ) | (6,193 | ) | (5,097 | ) | (134,895 | ) | |||||||||||||||
Income before minority interests |
157,326 | (13,453 | ) | 15,545 | 12,827 | (5,097 | ) | 167,148 | ||||||||||||||||||
Minority interests’ share of income: |
||||||||||||||||||||||||||
Joint venture partners |
(30,963 | ) | 2,049 | (2) | (4,846 | )(3) | (7,236 | )(7) | — | (40,996 | ) | |||||||||||||||
Preferred unitholders |
(25,149 | ) | — | — | — | — | (25,149 | ) | ||||||||||||||||||
Limited partnership unitholders |
(6,843 | ) | 627 | (6) | (535 | )(6) | (279 | )(6) | 255 | (6) | (6,775 | ) | ||||||||||||||
Total minority interests share of income |
(62,955 | ) | 2,676 | (5,381 | ) | (7,515 | ) | 255 | (72,920 | ) | ||||||||||||||||
Income from continuing operations |
94,371 | (10,777 | ) | 10,164 | 5,312 | (4,842 | ) | 94,228 | ||||||||||||||||||
Preferred stock dividends |
(8,496 | ) | — | — | — | — | (8,496 | ) | ||||||||||||||||||
Preferred stock and unit redemption discount/(issuance costs) |
412 | — | — | — | — | 412 | ||||||||||||||||||||
Income from continuing operations available to common stockholders |
$ | 86,287 | $ | (10,777 | ) | $ | 10,164 | $ | 5,312 | $ | (4,842 | ) | $ | 86,144 | ||||||||||||
Basic Income Per Common Share |
||||||||||||||||||||||||||
Income from continuing operations available to common stockholders |
$ | 1.04 | $ | 1.03 | ||||||||||||||||||||||
Diluted Income Per Common Share |
||||||||||||||||||||||||||
Income from continuing operations available to common stockholders |
$ | 1.02 | $ | 1.01 | ||||||||||||||||||||||
Weighted Average Common Shares Outstanding |
||||||||||||||||||||||||||
Basic |
83,310,885 | 145,548 | (11) | 83,456,433 | ||||||||||||||||||||||
Diluted |
84,795,987 | 145,548 | (11) | 84,941,535 | ||||||||||||||||||||||
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(1) Reflects the historical consolidated operations of AMB Property Corporation (the “Company”) for the year ended December 31, 2002. See the historical consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.
(2) Reflects the elimination of the historical revenues and expenses for the applicable period related to the divestiture of certain properties in 2003 as follows:
Revenues |
||||||
Rental revenues |
$ | 24,968 | ||||
Total revenues |
24,968 | |||||
Costs and expenses |
||||||
Property operating costs |
(5,374 | ) | ||||
Depreciation and amortization |
(3,160 | ) | ||||
General and administrative |
(81 | ) | ||||
Total costs and expenses |
(8,615 | ) | ||||
Other income and expenses |
||||||
Interest and other income |
2 | |||||
Interest, including amortization |
(2,902 | ) | ||||
Total other income and expenses |
(2,900 | ) | ||||
Income before minority interests |
13,453 | |||||
Minority interests’ share of income: |
||||||
Joint venture partners |
(2,049 | ) | ||||
Limited partnership unitholders |
(627 | ) | ||||
Total minority interests’ share of income |
(2,676 | ) | ||||
Income from continuing operations |
$ | 10,777 | ||||
(3) The following table sets forth the incremental rental revenues and operating expenses of properties acquired during the year ended December 31, 2002 based on the historical operations of such properties for the periods prior to acquisition by the Operating Partnership. In addition, the following table sets forth the private capital income which would have been earned in the period prior to acquisition by the Operating Partnership based on 7.5% of the minority interests share of net operating income.
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
| Revenues in | ||||||||||||||||||||||||
| Operating | Excess of Certain | Private Capital | Minority Interests | |||||||||||||||||||||
| Acquisition Date | Rental Revenues | Expenses | Expenses | Income | Share of Income | |||||||||||||||||||
| Northfield Distribution Center | January 15, 2002 | $ | 134 | $ | 51 | $ | 83 | $ | 5 | $ | 57 | |||||||||||||
| BWIP #5 & #6 | January 31, 2002 | 85 | 21 | 64 | 4 | 25 | ||||||||||||||||||
| Chancellory Warehouse | February 15, 2002 | — | — | — | — | — | ||||||||||||||||||
| Puget Sound Airfreight | March 29, 2002 | 47 | 19 | 28 | 2 | 13 | ||||||||||||||||||
| Thorndale | May 1, 2002 | 270 | 79 | 191 | 11 | 120 | ||||||||||||||||||
| Dellamor Portfolio | May 9, 2002 | 1,015 | 211 | 804 | 48 | 543 | ||||||||||||||||||
| Renton Portfolio | June 3, 2002 | 1,862 | 322 | 1,540 | 92 | 1,026 | ||||||||||||||||||
| Earlington Building | June 3, 2002 | 337 | 55 | 282 | 17 | 195 | ||||||||||||||||||
| IAD Cargo Building 5 | June 25, 2002 | 3,718 | 1,088 | 2,630 | — | — | ||||||||||||||||||
| JFK Tarmac #75 and #77 | August 1, 2002 | 9,624 | 5,713 | 3,911 | — | — | ||||||||||||||||||
| Orchard Hill Industrial | August 19, 2002 | 185 | 33 | 152 | 9 | 102 | ||||||||||||||||||
| Interstate Crossdock | August 7, 2002 | 1,983 | 219 | 1,764 | — | — | ||||||||||||||||||
| Highway 17 Distribution | September 19, 2002 | 1,415 | 203 | 1,212 | — | — | ||||||||||||||||||
| Sunset Distribution Center | September 10, 2002 | — | — | — | — | — | ||||||||||||||||||
| Marina Business Park | September 12, 2002 | 630 | 115 | 515 | 31 | 348 | ||||||||||||||||||
| Skyland Crossdock | November 4, 2002 | 943 | 295 | 648 | 39 | 445 | ||||||||||||||||||
| Paris Nord I | November 15, 2002 | 767 | 134 | 633 | 38 | 427 | ||||||||||||||||||
| Park One | December 27, 2002 | 6,116 | 1,016 | 5,100 | — | — | ||||||||||||||||||
| Poplar Gateway | November 8, 2002 | 822 | 160 | 662 | 40 | 451 | ||||||||||||||||||
| Cabrillo Distribution Center | December 27, 2002 | 1,909 | 264 | 1,645 | 99 | 1,094 | ||||||||||||||||||
| $ | 31,862 | $ | 9,998 | $ | 21,864 | $ | 435 | $ | 4,846 | |||||||||||||||
The Operating Partnership purchased the 2002 Property Acquisitions with borrowings on the unsecured credit facility, the assumption of mortgage indebtedness and contributions from minority interests. The adjustments reflect additional interest expense related to borrowings on the unsecured credit facility and assumption of mortgage indebtedness related to the 2002 Property Acquisitions.
The Chancellory Warehouse and Sunset Distribution Center were vacant prior to acquisition. As such, no property rental revenues and operating expenses have been reflected in the accompanying pro forma statement of operations related to this acquisition.
The minority interest share of income includes the minority interest share of depreciation and amortization and the minority interest share of interest expense (see (4) and (5), respectively, for the depreciation and amortization and the interest expense adjustment).
(4) The following table sets forth the initial allocation of land and building and other costs based on the preliminary purchase price allocation for the 2002 Property Acquisitions. In addition, this table also reflects the estimated incremental depreciation and amortization for the 2002 Property Acquisitions using a 40 year life for building and other costs based on the preliminary purchase price allocation in accordance with SFAS 141.
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
| Acquisition | Building and | Depreciation and | ||||||||||||||||||
| Date | Land | Other Costs | Total Purchase Price | Amortization | ||||||||||||||||
Northfield Distribution Center |
1/15/02 | $ | 3,944 | $ | 16,033 | $ | 19,977 | $ | 16 | |||||||||||
BWIP #5 & #6 |
1/31/02 | 2,258 | 5,149 | 7,407 | 11 | |||||||||||||||
Chancellory Warehouse |
2/15/02 | 2,009 | 6,106 | 8,115 | — | |||||||||||||||
Puget Sound Airfreight |
3/29/02 | 1,329 | 1,830 | 3,159 | 11 | |||||||||||||||
Thorndale |
5/1/02 | 4,130 | 4,216 | 8,346 | 35 | |||||||||||||||
Dellamor Portfolio |
5/9/02 | 12,061 | 11,577 | 23,638 | 102 | |||||||||||||||
Renton Portfolio |
6/3/02 | 25,959 | 14,792 | 40,751 | 156 | |||||||||||||||
Earlington Building |
6/3/02 | 2,766 | 3,234 | 6,000 | 34 | |||||||||||||||
IAD Cargo Building 5 |
6/25/02 | — | 39,050 | 39,050 | 471 | |||||||||||||||
JFK Tarmac #75 and #77 |
8/1/02 | — | 30,965 | 30,965 | 452 | |||||||||||||||
Orchard Hill Industrial |
8/19/02 | 1,212 | 1,411 | 2,623 | 22 | |||||||||||||||
Interstate Crossdock |
8/7/02 | 12,712 | 19,295 | 32,007 | 289 | |||||||||||||||
Highway 17 Distribution |
9/19/02 | 8,185 | 6,516 | 14,701 | 117 | |||||||||||||||
Sunset Distribution Center |
9/10/02 | 6,718 | 2,765 | 9,483 | — | |||||||||||||||
Marina Business Park |
9/12/02 | 3,280 | 4,316 | 7,596 | 75 | |||||||||||||||
Skyland Crossdock |
11/4/02 | — | 7,250 | 7,250 | 153 | |||||||||||||||
Paris Nord I |
11/15/02 | 2,864 | 4,723 | 7,587 | 103 | |||||||||||||||
Park One |
12/27/02 | 75,000 | 431 | 75,431 | 11 | |||||||||||||||
Poplar Gateway |
11/8/02 | 4,551 | 3,152 | 7,703 | 67 | |||||||||||||||
Cabrillo Distribution Center |
12/27/02 | 7,563 | 11,177 | 18,740 | 276 | |||||||||||||||
| $ | 176,541 | $ | 193,988 | $ | 370,529 | $ | 2,401 | |||||||||||||
The Chancellory Warehouse and Sunset Distribution Center were vacant prior to acquisition. As such, no depreciation and amortization expense have been reflected in the accompanying pro forma statement of operations related to these acquisitions.
(5) The following table sets forth the calculation of the incremental interest expense based on assumed mortgages, which approximate fair value, related to the 2002 Property Acquisitions. In addition, this table sets forth the incremental interest expense for the line of credit based on the average additional outstanding balance of the line of credit multiplied by the average interest rate.
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
| Assumed | Interest | Incremental | ||||||||||
| Property | Mortgage | Rate | Interest Expense | |||||||||
BWIP #5 & #6 |
$ | 3,600 | 7.50 | % | $ | 23 | ||||||
IAD Cargo Building 5 |
14,205 | 6.63 | % | 454 | ||||||||
JFK Tarmac #75 and #77 |
10,363 | 7.50 | % | 454 | ||||||||
Total/weighted average |
28,168 | 7.06 | % | 931 | ||||||||
| Line of credit | ||||||||||||
Average balance outstanding |
142,564 | 2.40 | % | 3,422 | ||||||||
Total/weighted average |
$ | 170,732 | 3.17 | % | $ | 4,353 | ||||||
(6) Reflects the limited partnership unitholders’ share of income based on the limited partnership unitholders’ average ownership of 5.5% of the Operating Partnership.
(7)The following table sets forth the incremental effects of the 2003 Property Acquisitions during the year ended December 31, 2002 based on the historical operations of such properties.
| Revenues in | |||||||||||||||||||||||||
| Operating | Excess of Certain | Private Capital | Minority Interests | ||||||||||||||||||||||
| Acquisition Date | Rental Revenues | Expenses | Expenses | Income | Share of Income | ||||||||||||||||||||
| Trans-Pacific Industrial Park | June 30, 2003 | $ | 7,553 | $ | 1,916 | $ | 5,637 | $ | 338 | $ | 3,936 | ||||||||||||||
| International Airport Center Portfolio | Various | 12,051 | 2,762 | 9,289 | — | — | |||||||||||||||||||
| Saitama Distribution Center 1 | December 5, 2003 | 4,490 | 788 | 3,702 | — | — | |||||||||||||||||||
Audited total |
24,094 | 5,466 | 18,628 | 338 | 3,936 | ||||||||||||||||||||
| Gratigny Distribution Center | January 7, 2003 | — | — | — | — | — | |||||||||||||||||||
| Northfield Distribution Center Phase II | March 13, 2003 | — | — | — | — | — | |||||||||||||||||||
| Yohan Industrial | May 22, 2003 | 1,055 | 694 | 361 | 22 | 160 | |||||||||||||||||||
| Marlin Distribution Center | June 11, 2003 | — | — | — | — | ||||||||||||||||||||
| Utah Airfreight | June 30, 2003 | 1,317 | 433 | 884 | 53 | 582 | |||||||||||||||||||
| IAT Portfolio | July 31, 2003 | 2,860 | 1,492 | 1,368 | — | — | |||||||||||||||||||
| Stone Distribution Center | July 31, 2003 | 258 | 38 | 220 | 13 | 121 | |||||||||||||||||||
| Fairmeadows Portfolio A | September 30, 2003 | 299 | 108 | 191 | 11 | 56 | |||||||||||||||||||
| Dolphin Distribution Center | September 30, 2003 | 173 | 29 | 144 | 9 | 50 | |||||||||||||||||||
| Panther Distribution | September 30, 2003 | 137 | 26 | 111 | — | — | |||||||||||||||||||
| East Grand Airfreight 1 & 2 | November 14, 2003 | 169 | 134 | 35 | — | — | |||||||||||||||||||
| Airport Plaza | December 9, 2003 | — | — | — | — | — | |||||||||||||||||||
| Fairmeadows Portfolio | December 11, 2003 | 2,598 | 285 | 2,313 | 139 | 1,618 | |||||||||||||||||||
| Bourget Distribution Center | December 15, 2003 | — | — | — | — | — | |||||||||||||||||||
| FRA Logistics Center | December 15, 2003 | — | — | — | — | — | |||||||||||||||||||
| Fairmeadows Portfolio B | December 29, 2003 | 1,069 | 108 | 961 | 58 | 713 | |||||||||||||||||||
| $ | 34,029 | $ | 8,813 | $ | 25,216 | $ | 643 | $ | 7,236 | ||||||||||||||||
The Operating Partnership purchased the 2003 Property Acquisitions with proceeds from dispositions, borrowings on the unsecured credit facility, the unsecured notes offerings and the assumption of mortgage indebtedness.
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
The Gratigny Distribution Center, Northfield Distribution Center Phase II, Marlin Distribution Center, Airport Plaza, Bourget Distribution Center and FRA Logistics Center do not have historical operations as they were either a sale/leaseback transaction or were vacant prior to acquisition. As such, no property operations have been reflected in the accompanying pro forma statement of operations related to this acquisition.
The minority interest share of income includes the minority interest share of depreciation and amortization and the minority interest share of interest income (see (4) and (5), respectively, for the depreciation and amortization and interest adjustment).
(8) The following table sets forth the initial allocation of land and building and other costs based on the preliminary purchase price allocation for the 2003 Property Acquisitions. In addition, this table also reflects the estimated incremental depreciation and amortization for the 2003 Property Acquisitions using a 40 year life for building and other costs based on the preliminary purchase price allocation.
| Building and | Total | Depreciation and | |||||||||||||||||||
| Acquisition Date | Land | Other Costs | Purchase Price | Amortization | |||||||||||||||||
| Trans-Pacific Industrial Park | June 30, 2003 | $ | 31,675 | $ | 42,210 | $ | 73,885 | $ | 1,055 | ||||||||||||
| International Airport Center Portfolio | Various | 78,892 | 115,149 | 194,041 | 2,879 | ||||||||||||||||
| Saitama Distribution Center 1 | December 5, 2003 | 8,143 | 28,503 | 36,646 | 713 | ||||||||||||||||
Audited total |
118,710 | 185,862 | 304,572 | 4,647 | |||||||||||||||||
| Gratigny Distribution Center | January 7, 2003 | 1,551 | 2,380 | 3,931 | — | ||||||||||||||||
| Northfield Distribution Center Phase II | March 13, 2003 | 2,502 | 4,055 | 6,557 | — | ||||||||||||||||
| Yohan Industrial | May 22, 2003 | 5,904 | 7,323 | 13,227 | 183 | ||||||||||||||||
| Marlin Distribution Center | June 11, 2003 | 1,076 | 2,169 | 3,245 | — | ||||||||||||||||
| Utah Airfreight | June 30, 2003 | 18,753 | 8,381 | 27,134 | 210 | ||||||||||||||||
| IAT Portfolio | July 31, 2003 | — | 30,086 | 30,086 | 752 | ||||||||||||||||
| Stone Distribution Center | July 31, 2003 | 2,242 | 3,266 | 5,508 | 82 | ||||||||||||||||
| Fairmeadows Portfolio A | September 30, 2003 | 5,382 | 5,289 | 10,671 | 132 | ||||||||||||||||
| Dolphin Distribution Center | September 30, 2003 | 1,581 | 3,602 | 5,183 | 90 | ||||||||||||||||
| Panther Distribution | September 30, 2003 | 1,840 | 3,252 | 5,092 | 81 | ||||||||||||||||
| East Grand Airfreight 1 & 2 | November 14, 2003 | 5,093 | 4,190 | 9,283 | 105 | ||||||||||||||||
| Airport Plaza | December 9, 2003 | 1,811 | 5,093 | 6,904 | — | ||||||||||||||||
| Fairmeadows Portfolio | December 11, 2003 | 8,320 | 17,143 | 25,463 | 429 | ||||||||||||||||
| Bourget Distribution Center | December 15, 2003 | 10,058 | 23,843 | 33,901 | — | ||||||||||||||||
| FRA Logistics Center | December 15, 2003 | — | 19,875 | 19,875 | — | ||||||||||||||||
| Fairmeadows Portfolio B | December 29, 2003 | 4,913 | 5,108 | 10,021 | 128 | ||||||||||||||||
| $ | 189,736 | $ | 330,917 | $ | 520,653 | $ | 6,839 | ||||||||||||||
(9) The following table sets forth the assumed mortgages, interest rates and the incremental interest expense related to the assumed mortgages, which approximate fair value, for the 2003 Property Acquisitions. In addition, this table sets forth the incremental interest expense for the line of credit based on the average additional outstanding balance of the line of credit multiplied by the average interest rate.
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
| Assumed | Interest | Incremental | ||||||||||
| Property | Mortgage | Rate | Interest Expense | |||||||||
Stone Distribution Center |
$ | 3,100 | 6.95 | % | $ | 215 | ||||||
Fairmeadows Portfolio A |
4,400 | 5.75 | % | 253 | ||||||||
International Airport Center
Portfolio |
15,941 | 7.67 | % | 1,222 | ||||||||
East Grand Airfreight 1 & 2 |
4,255 | 8.00 | % | 340 | ||||||||
Airport Plaza |
4,444 | 6.35 | % | 282 | ||||||||
Fairmeadows Portfolio |
1,765 | 7.00 | % | 125 | ||||||||
Fairmeadows Portfolio B |
6,712 | 7.00 | % | 470 | ||||||||
| 40,617 | 7.16 | % | 2,907 | |||||||||
| Line of credit | ||||||||||||
Average balance outstanding |
156,489 | 2.10 | % | 3,286 | ||||||||
Total/weighted average |
$ | 198,506 | 3.13 | % | $ | 6,193 | ||||||
(10) On November 10, 2003, the Operating Partnership issued $75.0 million aggregate principal amount of senior unsecured notes to Teachers Insurance and Annuity Association of America. The Company guaranteed the principal amount and interest on the notes, which mature on November 1, 2013, and bear interest at 5.53% per annum. These senior unsecured notes have been reflected as if they were issued on January 1, 2002 and were carried forward through September 30, 2003. Teachers has agreed that until November 10, 2005, the Operating Partnership can require Teachers to return the notes to it for cancellation for an obligation of equal dollar amount under a first mortgage loan to be secured by properties determined by the Operating Partnership, except that in the event the ratings on Operating Partnership’s senior unsecured debt are downgraded by two ratings agencies to BBB-, the Operating Partnership will only have ten days after the last of these downgrades to exercise this right. During the period when the Operating Partnership can exercise its cancellation right and until any mortgage loans close, Teachers has agreed not to sell, contract to sell, pledge, transfer or otherwise dispose of, any portion of the notes.
In addition, on November 21, 2003, the Operating Partnership issued $50.0 million aggregate principal amount of floating rate senior unsecured notes. The Company guaranteed the principal amount and interest on the notes, which mature on November 21, 2006, and bear interest at a floating rate of 3-month LIBOR telerate plus 40 basis points. These senior unsecured notes have been reflected as if they were issued on January 1, 2002 and were carried forward through September 30, 2003.
If market rates of interest on our variable rate debt increased by 10% (or approximately 20 basis points), then the increase in interest expense on the variable rate debt would be $0.8 million annually.
(11) In connection with the acquisition of East Grand Airfreight 1&2 on November 14, 2003, AMB Property II, L.P. issued 145,548 of its class B common limited partnership units, which, upon redemption, are exchangeable for cash or, at the option of AMB Property II, L.P., for shares of the common stock of the Company on a one-for-one basis.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMB Property Corporation | ||||
| (Registrant) | ||||
| Date: February 23, 2004 | By: | /s/ Michael A. Coke | ||
| Michael A. Coke Chief Financial Officer and Executive Vice President (Duly Authorized Officer and Principal Financial and Accounting Officer) |
||||
Exhibit Index
| Exhibit Number | Description | |
| 23.1 | Consent of PricewaterhouseCoopers LLP |