Exhibit 99.1
FOR IMMEDIATE RELEASE
AMB PROPERTY CORPORATION ANNOUNCES FIRST QUARTER
2004 RESULTS
AMB Accelerates Capital Deployment Globally; Development Pipeline Now
Totals $383 Million
SAN FRANCISCO, April 14, 2004 – AMB Property Corporation (NYSE: AMB), a leading
developer and owner of industrial real estate, today reported first quarter
2004 earnings per share (EPS) of $0.19. This compares to EPS of $0.69 reported
in the same period last year, which included $0.53 per share of net gains on
dispositions of real estate and net lease termination fees.
The company’s industrial operating portfolio was 92.7% leased as of March 31,
2004, compared with 93.1% as of December 31, 2003. Preliminary data from Torto
Wheaton Research indicate national industrial occupancy at the end of the first
quarter was 88.3%, essentially unchanged from the fourth quarter of 2003.
Cash-basis same store net operating income decreased 3.1% compared with a
decline of 14.5% last quarter, driven by lower average same store occupancies
and rental rate declines. Rents on lease renewals and rollovers decreased by
14.7% during the quarter, compared with 15.7% last quarter.
Hamid R. Moghadam, chairman and CEO, said, “As the national economy
strengthens,
we continue to see the fundamentals in place for a recovery in industrial real
estate. The Industrial Production index has not only returned to levels last
seen in December 2000, it has grown steadily over the last six monthly
reporting periods. The inventory-to-sales ratio is at an historic low, and
total business inventories have begun to expand, pointing to an increase in
demand for industrial space as businesses meet restocking requirements. First
quarter industrial absorption was positive for the third consecutive quarter,
and positive economic trends should result in additional absorption and
occupancy gains as the year progresses. While we have yet to see meaningful
gains in national industrial occupancy,
it is clear that the decline is over; we are encouraged by the signs of
recovery.”
Investment Activity
During the first quarter, AMB acquired 1.3 million square feet in seven
buildings globally
for a total investment of $134.2 million. Properties acquired in the quarter
included $97.6 million of facilities in Boston and Los Angeles, part of the
previously announced International Airport Centers (IAC) portfolio. The balance
of the quarter’s acquisition activity expanded the company’s industrial
holdings in key distribution markets of northern New Jersey, Miami, Mexico City
and Tokyo.
Development starts in the quarter totaled approximately 1.8 million square feet
in six projects with an expected total investment of $152.0 million. The two
largest projects total approximately 1.3 million square feet of industrial
product and are located in the company’s target markets of Mexico City and
Tokyo.
With Mexico City-based partner G.Acción, AMB is developing the
571,300-square-foot Encino Distribution Center in Mexico City’s premier
distribution park, San Martin Obispo.
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Page 2 |
AMB and G.Acción have completed or are currently developing an anticipated 2.3
million square feet in San Martin Obispo and completed projects in the park are
100% occupied.
In Japan, AMB and Tokyo-based AMB BlackPine began construction on Phase I of
AMB Narita Air Cargo Center I immediately adjacent to Tokyo’s Narita
International Airport. When complete, AMB Narita Air Cargo Center I is expected
to be Japan’s largest dedicated air cargo logistics park with an anticipated
1.7 million square feet of facilities. Phase I is expected to be stabilized in
early 2006 and will provide an anticipated 685,000 square feet in two buildings
of two and four stories.
The company’s industrial development and renovation pipeline in North America,
Europe and Asia, totals an estimated 6.7 million square feet with deliveries
slated through 2006. Total investment in the current development pipeline is
estimated at $385.2 million.
AMB’s president, W. Blake Baird, commented, “We are seeing a much better
opportunity set for new development globally to serve our customers’ needs.
This is particularly true
of Japan and Mexico, which together accounted for 74% of our new development
starts
in the first quarter. Combined with our acquisition activity and additional
development opportunities, we are well on our way to reach our goal of creating
a trade-focused international platform that represents at least 15% of our
business over the next three to four years.”
The company disposed of one building in the San Francisco Bay Area consisting
of 48,400 square feet for $5.0 million during the quarter.
Financing Activities
During the quarter, AMB issued $100 million of fixed-rate senior unsecured
notes under AMB Property, L.P.’s medium-term note program. The notes mature on
March 1, 2009
and bear an annual interest rate of 3.5%.
Supplemental Earnings Measure
AMB reports funds from operations per fully diluted share and unit (FFOPS) in
accordance with the standards established by NAREIT. First quarter 2004 FFOPS
was $0.53, at the high end of the company’s guidance, compared with $0.60 in
the same period of 2003. FFOPS for the first quarter included less than $0.01
per share in net lease termination fees compared to $0.08 per share in the same
period last year.
Included in the footnotes to the company’s attached financial statements is a
discussion of why management believes FFO is a useful supplemental measure of
operating performance, of ways in which investors might use FFO when assessing
the company’s financial performance, and of FFO’s limitations as a measurement
tool.
A reconciliation from net income to funds from operations is provided in the
attached tables and published in AMB’s quarterly supplemental analyst package,
available on the company’s website at www.amb.com.
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Page 3 |
Conference Call and Supplemental Information
AMB will host a conference call to discuss its first quarter 2004 results on
April 15, 2004 at 10:00 AM PDT/1:00 PM EDT. Stockholders and interested parties
may listen to a live broadcast of the conference call by dialing +1 877 359
6098 and using reservation code 6382534 or by webcast through a link on the
company’s website at www.amb.com. If you are unable to listen to the live
conference call, a telephone and webcast replay will be available after 12:00
PM PDT on Thursday, April 15, 2004. The telephone replay will be available
until 5:00 PM PDT on Friday, May 14, 2004 and can be accessed by dialing +1 800
642 1687 or +1 706 645 8600 and using reservation code 6382534. The webcast can
be accessed through a link on the company’s website at www.amb.com and will be
available until 5:00 PM PDT on Friday, May 14, 2004. In addition, the company
will post a summary of the guidance given on the call and a supplement
detailing the components of net asset value to the Investor Information portion
of its website on Tuesday, April 20, 2004 by
5:00 PM PDT.
AMB Property Corporation. Local partner to global trade.™
AMB Property Corporation is a leading owner and operator of industrial real
estate, focused on major hub and gateway distribution markets throughout North
America, Europe and Asia. As of March 31, 2004 AMB owned, managed and had
renovation and development projects totaling 104.5 million square feet (9.7
million square meters) and 1,070 buildings in 36 markets within seven
countries. AMB invests in properties located predominantly in the infill
submarkets of its targeted markets. The company’s portfolio is comprised of
High Throughput Distribution ® facilities –industrial properties built
for speed and located near airports, seaports and ground transportation
systems.
AMB’s press releases are available on the company website at www.amb.com or by
contacting the Investor Relations department at 1-877-285-3111.
This document contains forward-looking statements such the size, completion
and total investment in development projects which are made pursuant to the
safe-harbor provisions of Section 21E of the Securities Exchange Act of
1934. Forward-looking statements involve numerous risks and uncertainties
and should not be relied upon as predictions of future events. The events
or circumstances reflected in our forward-looking statements might not
occur. We assume no obligation to update or supplement forward-looking
statements. For further information on factors that could impact AMB and
the statements contained herein, reference should be made to AMB’s filings
with the Securities and Exchange Commission, including AMB’s annual report
on Form 10-K for the year ended December 31, 2003.
AMB CONTACTS
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| Investors/Analysts |
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Media |
| John P. Cummings |
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Lauren L. Barr |
Direct
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+1 415 733 9565
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Direct
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+1 415 733 9477 |
Fax
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+1 415 394 9001
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Fax
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+1 415 394 9001 |
Email
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jcummings@amb.com
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Email
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lbarr@amb.com |
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Page 4 |
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
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As of
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March 31, 2004
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December 31, 2003
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Assets |
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Investments in real estate: |
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Total investments in properties |
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$ |
5,730,654 |
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$ |
5,491,707 |
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Accumulated depreciation |
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(511,611 |
) |
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(474,452 |
) |
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Net investments in properties |
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5,219,043 |
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5,017,255 |
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Investment in unconsolidated joint ventures |
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54,006 |
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52,009 |
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Properties held for divestiture, net |
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9,628 |
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11,751 |
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Net investments in real estate |
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5,282,677 |
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5,081,015 |
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Cash and cash equivalents |
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150,903 |
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156,663 |
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Mortgages receivable |
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23,620 |
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43,145 |
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Accounts receivable, net |
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92,081 |
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88,452 |
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Other assets |
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69,669 |
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51,391 |
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Total assets |
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$ |
5,618,950 |
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$ |
5,420,666 |
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Liabilities and Stockholders’ Equity |
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Secured debt |
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$ |
1,457,630 |
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$ |
1,363,890 |
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Unsecured senior debt securities |
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1,025,000 |
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925,000 |
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Unsecured debt |
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9,482 |
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9,628 |
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Unsecured credit facility |
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261,369 |
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275,739 |
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Accounts payable and other liabilities |
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208,614 |
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187,095 |
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Total liabilities |
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2,962,095 |
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2,761,352 |
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Minority interests: |
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Joint venture partners |
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663,087 |
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659,487 |
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Preferred unitholders |
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241,873 |
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241,899 |
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Limited partnership unitholders |
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89,688 |
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91,029 |
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Total minority interests |
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994,648 |
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992,415 |
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Stockholders’ equity: |
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Common stock |
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1,558,995 |
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1,563,526 |
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Preferred stock |
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103,212 |
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103,373 |
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Total stockholders’ equity |
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1,662,207 |
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1,666,899 |
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Total liabilities and stockholders’ equity |
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$ |
5,618,950 |
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$ |
5,420,666 |
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Page 5 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
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For the Quarters Ended |
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March 31,
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2004
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2003
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Revenues |
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Rental revenues |
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$ |
163,812 |
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$ |
148,523 |
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Private capital income |
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2,429 |
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2,361 |
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Total revenues |
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166,241 |
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150,884 |
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Costs and expenses |
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Property operating costs |
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(43,472 |
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(39,656 |
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Depreciation and amortization |
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(38,234 |
) |
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(34,433 |
) |
General and administrative |
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(15,036 |
) |
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(12,186 |
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Total costs and expenses |
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(96,742 |
) |
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(86,275 |
) |
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Operating income |
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69,499 |
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64,609 |
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Other income and expenses |
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Equity in earnings of unconsolidated joint ventures |
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1,709 |
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1,235 |
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Interest and other income |
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1,665 |
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1,393 |
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Gains from dispositions of real estate |
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— |
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7,429 |
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Interest, including amortization |
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(39,425 |
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(35,914 |
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Total other income and expenses |
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(36,051 |
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(25,857 |
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Income before minority interests and discontinued operations |
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33,448 |
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38,752 |
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Minority interests’ share of income: |
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Joint venture partners’ share of operating income |
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(9,229 |
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(7,636 |
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Preferred unitholders |
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(4,912 |
) |
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(6,380 |
) |
Limited partnership unitholders |
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(955 |
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(1,328 |
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Total minority interests’ share of income |
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(15,096 |
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(15,344 |
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Income from continuing operations |
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18,352 |
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23,408 |
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Discontinued operations: |
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Income attributable to discontinued operations, net of minority interests |
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(246 |
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7,941 |
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(Loss) Gain from disposition of real estate, net of minority interests |
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(286 |
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28,029 |
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Total discontinued operations |
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(532 |
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35,970 |
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Net income |
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17,820 |
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59,378 |
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Preferred stock dividends |
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(1,783 |
) |
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(2,123 |
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Net income available to common stockholders |
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$ |
16,037 |
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$ |
57,255 |
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Net income per common share (diluted) |
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$ |
0.19 |
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$ |
0.69 |
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Weighted average common shares (diluted) |
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84,861,965 |
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82,514,156 |
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Page 6 |
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (1)
(dollars in thousands, except per share data)
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For the Quarters Ended |
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March 31,
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2004
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2003 (2)
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| Net income |
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$ |
17,820 |
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$ |
59,378 |
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| Loss (Gain) from disposition of real estate, net of minority interests |
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286 |
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(35,458 |
) |
| Real estate related depreciation and amortization: |
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| Total depreciation and amortization |
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38,234 |
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34,433 |
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| Discontinued operations’ depreciation |
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17 |
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|
740 |
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| FF& E depreciation |
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(175 |
) |
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|
(189 |
) |
| Adjustments to derive FFO from consolidated JVs: |
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| Joint venture partners’ minority interests (NI) |
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9,229 |
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|
7,636 |
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| Limited partnership unitholders’ minority interests (NI) |
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|
955 |
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1,328 |
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| Discontinued operations’ minority interests (NI) |
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(16 |
) |
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604 |
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| FFO attributable to minority interests |
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(17,861 |
) |
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(14,983 |
) |
| Adjustments to derive FFO from unconsolidated JVs: |
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| AMB’s share of net income |
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(1,709 |
) |
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(1,235 |
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| AMB’s share of FFO |
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2,493 |
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|
2,491 |
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| Preferred stock dividends |
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(1,783 |
) |
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(2,123 |
) |
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| Funds from operations |
|
$ |
47,490 |
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$ |
52,622 |
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| FFO per common share and unit (diluted) |
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$ |
0.53 |
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$ |
0.60 |
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| Weighted average common shares and units (diluted) |
|
|
89,617,834 |
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87,360,543 |
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| 1) |
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The Company believes that net income, as defined by GAAP, is the most
appropriate earnings measure. However, the Company considers funds from
operations, or FFO, as defined by NAREIT, to be a useful supplemental measure
of its operating performance. FFO is defined as net income, calculated in
accordance with GAAP, less gains (or losses) from dispositions of real estate
held for investment purposes and real estate-related depreciation, and
adjustments to derive the Company’s pro rata share of FFO of consolidated and
unconsolidated joint ventures. Further, the Company does not adjust FFO to
eliminate the effects of non-recurring charges. The Company believes that FFO,
as defined by NAREIT, is a meaningful supplemental measure of its operating
performance because historical cost accounting for real estate assets in
accordance with GAAP implicitly assumes that the value of real estate assets
diminishes predictably over time, as reflected through depreciation and
amortization expenses. However, since real estate values have historically
risen or fallen with market and other conditions, many industry investors and
analysts have considered presentation of operating results for real estate
companies that use historical cost accounting to be insufficient. Thus, NAREIT
created FFO as a supplemental measure of operating performance for real estate
investment trusts that excludes historical cost depreciation and amortization,
among other items, from net income, as defined by GAAP. The Company believes
that the use of FFO, combined with the required GAAP presentations, has been
beneficial in improving the understanding of operating results of real estate
investment trusts among the investing public and making comparisons of
operating results among such companies more meaningful. The Company considers
FFO to be a useful
measure for reviewing comparative operating and financial performance because,
by excluding gains or losses related to sales of previously depreciated
operating real estate assets and real estate depreciation and amortization, FFO
can help the investing public compare the operating performance of a company’s
real estate between periods or as compared to other companies. While FFO is a
relevant and widely used measure of operating performance of real estate
investment trusts, it does not represent cash flow from operations or net
income as defined by GAAP and should not be considered as an alternative to
those measures in evaluating the Company’s liquidity or operating performance.
FFO also does not consider the costs associated with capital expenditures
related to the Company’s real estate assets nor is FFO necessarily indicative
of cash available to fund our future cash requirements. Further, the Company’s
computation of FFO may not be comparable to FFO reported by other real estate
investment trusts that do not define the term in accordance with the current
NAREIT definition or that interpret the current NAREIT definition differently
than the Company does. |
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| 2) |
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Effective January 1, 2003, the Company discontinued its practice of
deducting amortization of investments in leasehold interests from FFO as such
an adjustment is not provided for in NAREIT’s FFO definition. As a result, FFO
for the periods presented has been adjusted to reflect the changes. |
